LL.B. (Hons.) / LL.B. 3-Year / 5-Year Integrated Programme
Law of Contract - I (Indian Contract Act, 1872)
General Instructions
- Answer all questions in Part A. Part A is compulsory.
- In Part B, answer any FOUR out of FIVE questions.
- In Part C, answer any ONE out of TWO questions.
- Part D is compulsory.
- Marks are indicated against each question.
- Refer to relevant statutory provisions, judicial decisions, and illustrations where required.
- Use of bare Acts is permitted. No commentary or guidebooks are allowed.
Part A - Short Answer Questions
Answer ALL questions. Each question carries 2 marks. Write concise answers in 3-5 sentences. (10 × 2 = 20 Marks)
Define 'proposal' and 'acceptance' under Sections 2(a) and 2(b) of the Indian Contract Act, 1872. When does a proposal become a promise?[2 Marks]
Explain the rule in Lalman Shukla v Gauri Dutt (1913). What principle of contract law does this case establish regarding knowledge of an offer?[2 Marks]
What is meant by 'consensus ad idem'? Why is it essential for the formation of a valid contract? Give one illustration from the Act.[2 Marks]
Distinguish between 'fraud' (Section 17) and 'misrepresentation' (Section 18) of the Indian Contract Act, 1872. State the key difference in mens rea.[2 Marks]
Explain the meaning of 'reciprocal promises' under Section 2(f). What are the rules for performance of reciprocal promises under Sections 51-54?[2 Marks]
State the exceptions to the rule 'No consideration, no contract' recognised under Section 25 of the Indian Contract Act.[2 Marks]
What is a 'contract of indemnity' under Section 124? How does it differ from a 'contract of guarantee' under Section 126?[2 Marks]
Define 'bailment' under Section 148. Distinguish between 'bailment' and 'pledge' with one example each.[2 Marks]
What is an 'agent' under Section 182? Can a minor be appointed as an agent? Refer to Section 184 and explain the consequences.[2 Marks]
Explain the concept of 'quasi-contracts' under Sections 68-72 of the Indian Contract Act. Why are they termed 'quasi-contractual obligations' despite the absence of actual agreement?[2 Marks]
Part B - Essay / Descriptive Questions
Answer any FOUR out of the following FIVE questions. Each question carries 10 marks. (4 × 10 = 40 Marks)
"Every contract is an agreement, but every agreement is not a contract." Discuss this statement in light of Sections 2(e), 2(h), and 10 of the Indian Contract Act, 1872. Explain the essential elements that transform a social or domestic agreement into an enforceable contract, with reference to Balfour v Balfour (1919) on domestic agreements, Rose & Frank Co. v J.R. Crompton & Bros. (1925) on intention to create legal relations, and the distinction between agreements void under Sections 24-30.[10 Marks]
Discuss the doctrine of consideration under Indian law. Is the Indian law on consideration wider than English law? Examine with reference to: (a) Past consideration under Section 2(d) and its validity unlike in English law, (b) Adequacy of consideration under Explanation 2 to Section 25, (c) Performance of an existing duty as consideration -- Stilk v Myrick (1809) and Williams v Roffey Bros (1991), and (d) The definition of valuable consideration in Currie v Misa (1875). Also discuss all three exceptions under Section 25 with illustrations.[10 Marks]
Examine the law relating to void agreements under the Indian Contract Act, 1872. Discuss in detail the agreements declared void under Sections 24-30, with special emphasis on: (a) Agreements in restraint of marriage (Section 26) and its absolute prohibition, (b) Agreements in restraint of trade (Section 27) and the test of reasonableness as applied in Niranjan Shankar Golikari v Century Spinning (1967) and Superintendent and Remembrancer of Legal Affairs v Anil Kumar Bhunja (1979), and (c) Agreements by way of wager (Section 30) and their distinction from contingent contracts under Section 31. Refer to Gherulal Parakh v Mahadeodas Maiya (1959) on the scope of wagering agreements.[10 Marks]
Discuss in detail the law relating to contracts of indemnity and guarantee under Sections 124-147 of the Indian Contract Act, 1872. Explain: (a) The rights of the indemnity-holder under Section 125 and the broader rights recognised in Gajanan Moreshwar v Moreshwar Madan (1942) beyond the statutory text, (b) The nature of surety's liability as co-extensive with the principal debtor under Section 128 and its implications, (c) The modes of discharge of surety under Sections 133-139 including variance, release, compounding, and creditor's act or omission, and (d) The rights of surety on payment under Sections 140-141 including the doctrine of subrogation. Refer to the Bank of Bihar v Damodar Prasad (1969) on the continuing nature of guarantee.[10 Marks]
"The law of agency is essentially the law of delegated authority." Discuss the creation, types, and termination of agency under Sections 182-238 of the Indian Contract Act. Explain: (a) Agency by estoppel, necessity, and ratification under Sections 186-196, (b) The extent of an agent's authority -- actual, apparent, and ostensible authority under Sections 188-190, (c) The distinction between sub-agent and substituted agent under Sections 191-195, (d) The personal liability of an agent under Section 230 and its exceptions, and (e) Irrevocable agency under Section 202. Refer to Bolton Partners v Lambert (1889) on ratification relating back to the original act, and Bhagwandas Goverdhandas Kedia v Girdharilal Parshottamdas (1966) on implied authority of agents.[10 Marks]
Part C - Problem / Case Study Questions
Answer any ONE of the following TWO questions. Each question carries 30 marks. Apply relevant legal provisions and case law to the facts. (1 × 30 = 30 Marks)
Priya, an elderly widow aged 72, owns a valuable commercial property in Mumbai worth Rs. 5 crore. Her nephew Rakesh, who manages her financial affairs, persuades her to sell the property to him for Rs. 80 lakh, telling her that the property market has crashed and the property is worth no more than Rs. 1 crore. Rakesh also tells her that if she does not sell immediately, the Municipal Corporation will acquire the property under eminent domain (which is false). Priya, who is illiterate and in poor health, agrees and executes a sale deed. Six months later, Priya's daughter Sunita discovers the transaction and advises her mother to challenge it. Priya files a suit seeking to set aside the contract.[30 Marks]
(a) Was there 'undue influence' within the meaning of Section 16 of the Indian Contract Act? Analyse the fiduciary relationship between Priya and Rakesh in light of the presumption under Section 16(2) and the unconscionable nature of the bargain. Refer to Ranganayakamma v Alwar Setti (1889) and Mannu Singh v Umadat Pande (1890). Does the inadequacy of consideration (Rs. 80 lakh for Rs. 5 crore property) shift the burden of proof to Rakesh?[8 Marks]
(b) Does the false statement regarding Municipal Corporation acquisition amount to 'coercion' under Section 15 or 'fraud' under Section 17? Can it constitute both? Analyse the elements of fraud under Section 17(1)-(5) and discuss whether a false representation of law amounts to fraud. Refer to Derry v Peek (1889) on the requirement of knowledge of falsity.[8 Marks]
(c) What remedies are available to Priya? Can the registered sale deed be set aside under Section 19A despite being a completed and registered transaction? Discuss the limitation period for filing such suits under Article 59 of the Limitation Act, 1963. Is Priya within time?[7 Marks]
(d) Assuming the contract is set aside, can Priya also claim damages from Rakesh for the period during which she was deprived of her property? Discuss the relationship between rescission and damages, and whether consequential losses are recoverable under Section 75 of the Indian Contract Act.[7 Marks]
Alpha Constructions Ltd. enters into a contract with the State Government to build a 200-bed hospital within 18 months for Rs. 50 crore. The contract contains: (i) Time is of the essence of the contract, (ii) For every week of delay, Alpha shall pay Rs. 5,00,000 as liquidated damages, (iii) Alpha shall not sub-contract any portion of the work without prior written approval. After completing 60% of the construction, unprecedented floods (recognised as a National Disaster by NDMA) cause severe damage to the construction site, destroying materials worth Rs. 8 crore and rendering the site inaccessible for 4 months. Alpha writes to the State Government seeking extension of time, additional compensation for flood damage, and relief from the liquidated damages clause for the period of inaccessibility. The State Government refuses all requests and terminates the contract after the 18-month period expires, forfeiting Alpha's security deposit of Rs. 5 crore.[30 Marks]
(a) Can Alpha invoke the doctrine of frustration under Section 56 of the Indian Contract Act? Does the flood amount to an 'impossibility of performance' or merely 'increased difficulty of performance'? Discuss the distinction with reference to Satyabrata Ghose v Mugneeram Bangur (1954) and Energy Watchdog v CERC (2017). Does the presence of a force majeure clause affect the applicability of Section 56?[8 Marks]
(b) Is the liquidated damages clause of Rs. 5,00,000 per week enforceable? Apply Section 74 of the Indian Contract Act and the principles from Fateh Chand v Balkishan Das (1963) and Kailash Nath Associates v DDA (2015). Can the State Government forfeit the security deposit of Rs. 5 crore, or must it prove actual loss suffered?[8 Marks]
(c) Does the force majeure event entitle Alpha to extension of time despite the 'time is of the essence' clause under Section 55? What is the effect of part performance (60% completion) under Section 65? Discuss Alpha's right to claim compensation for work already completed on a quantum meruit basis under Section 70. Refer to Alopi Parshad v Union of India (1960) on the limits of the frustration doctrine.[7 Marks]
(d) Is the State Government's termination of the contract lawful? Discuss the principles governing termination of government contracts with reference to ABL International Ltd. v Export Credit Guarantee Corporation (2004) and the requirement of reasonableness and fair dealing in contracts with the State under Article 14 of the Constitution.[7 Marks]
Part D - Case Analysis
This question is compulsory. Analyse the given case in detail. (1 × 10 = 10 Marks)
Critically analyse the decision of the Privy Council in Mohori Bibee v Dharmodas Ghose (1903) 30 IA 114 and its enduring impact on the law relating to minor's agreements in India.[10 Marks]
(a) State the facts and the key question of law before the Privy Council. What was the conflict between the Calcutta High Court's and the lower court's views regarding the nature of a minor's agreement?[2 Marks]
(b) What did the Privy Council hold regarding the nature of a minor's agreement? Explain the reasoning behind holding that a minor's agreement is 'void ab initio' and not merely 'voidable.' How does this interpretation of Section 11 read with Sections 2(h) and 10 of the Indian Contract Act differ from the English position?[3 Marks]
(c) Discuss the implications of this decision on: (i) Can a minor be a beneficiary under a contract -- refer to Raghava Chariar v Srinivasa (1917)? (ii) Is the doctrine of estoppel applicable against a minor who fraudulently misrepresents his age? (iii) Can restitution be ordered under Sections 64 or 65 against a minor, or does Section 68 (necessaries) provide the only remedy?[3 Marks]
(d) Evaluate the contemporary relevance of this decision. Should the law be reformed to protect parties who deal with minors in good faith, particularly in the context of modern e-commerce transactions, online subscriptions, and digital contracts entered into by minors? Refer to the recommendations of the Law Commission of India, if any.[2 Marks]