OU LLB 1st Sem | Law of Contract 1 | March 2020 Question Paper
Answers
1. Essentials of a valid contract:
A valid contract requires an offer, acceptance, lawful consideration, competency of parties, free consent, lawful object, certainty, possibility of performance, and legal enforceability under the Indian Contract Act, 1872.
2. Doctrine of privity of contract:
Only parties to a contract can enforce its terms. Exceptions include beneficiary of a trust, family settlements, and agency agreements.
3. Fraud:
Fraud involves intentional misrepresentation, concealment of facts, or deceit to induce another into a contract, as per Section 17 of the Indian Contract Act, 1872.
4. Wagering agreement:
Agreements based on uncertain future events, where neither party has control over the outcome, are void under Indian law.
5. Appropriation of payments:
When a debtor owes multiple debts, payment is appropriated according to their instructions. If no instructions are provided, the creditor decides.
6. Rights of finder of lost goods:
A finder can retain the goods until the owner pays compensation and may sell them if the owner is untraceable after reasonable effort.
7. Remedies for breach of contract:
Remedies include damages (compensatory, nominal, or liquidated), specific performance, rescission, and injunctions.
8. Declaratory Decrees:
A declaratory decree establishes legal rights or status without providing any specific relief, governed by Section 34 of the Specific Relief Act, 1963.
9. Define 'consideration' and explain the exceptions to the rule that a contract without consideration is void:
Consideration is something of value exchanged for a promise. Exceptions include contracts made out of natural love, contracts for charity, or promissory estoppel.
10. What is the effect of agreements made by persons not qualified to contract, and what are the contracts with a minor to be valid?
Agreements with incompetent persons, like minors, are void. However, minors can enforce beneficial contracts, such as for necessities.
11. Examine the various ways in which a contract may be discharged:
Contracts can be discharged by performance, mutual consent, impossibility, lapse of time, breach, or operation of law.
12. Explain in detail the various kinds of Injunctions:
Injunctions can be temporary (maintain status quo during litigation) or perpetual (permanent order to refrain from an act). Mandatory injunctions compel performance of a specific act.
13. Mr. Arun offers by a letter to sell his car to Mrs. Radha for Rs.80,000/-. Mrs. Radha at the same time offers by a letter to buy Arun's car for Rs.80,000/-. The two letters cross each other in the post. Is there a concluded contract between Mr. Arun and Mrs. Radha?
No, there is no concluded contract because there is no meeting of minds or mutual acceptance.
14. Mr. Balu tells his wife that he would commit suicide if she did not transfer her personal assets to him. She does so under this threat. Can the wife avoid the contract?
Yes, the contract is voidable as it was obtained under undue influence and coercion, per Section 16 of the Indian Contract Act.
15. 'X' saves the property of 'Y' from fire intending to do so gratuitously. Subsequently, he claims compensation from 'Y' on the ground that 'Y' enjoyed the benefit of 'X' services. Will 'X' succeed in the case?
Yes, 'X' can claim compensation under Section 70 of the Indian Contract Act, which provides for reimbursement for non-gratuitous services.
16. Mr. Rahim contracts to sell a plot to Mr. Ganesh for Rs.2 Lakh. Mr. Rahim afterwards conveys that plot for Rs.3 Lakh to Mr. Sudheer, who has notice of the earlier contract. Can Mr. Ganesh file a suit for specific performance of the contract against Mr. Sudheer?
Yes, Mr. Ganesh can sue for specific performance as Mr. Sudheer had prior notice of the existing contract, violating the Specific Relief Act, 1963.
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