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.
- Support your answers with relevant statutory provisions, case laws, and illustrations wherever applicable.
- Candidates are permitted to use bare Acts. No commentary or guidebooks are allowed.
- Answers must be written legibly in the medium opted by the candidate.
Part A - Short Answer Questions
Answer ALL questions. Each question carries 2 marks. Write concise answers in 3-5 sentences. (10 × 2 = 20 Marks)
Distinguish between 'void agreement' and 'voidable contract' under the Indian Contract Act, 1872 with one illustration each.[2 Marks]
What is meant by 'privity of contract'? State the general rule and one recognised exception under Indian law.[2 Marks]
Define 'consideration' under Section 2(d) of the Indian Contract Act. Can a stranger to consideration sue under Indian law? Refer to Chinnaya v Ramayya (1882).[2 Marks]
Explain the doctrine of 'Quantum Meruit' with reference to Section 70 of the Indian Contract Act, 1872.[2 Marks]
What constitutes 'free consent' under Section 14 of the Indian Contract Act? Name all five vitiating factors.[2 Marks]
Distinguish between 'coercion' (Section 15) and 'undue influence' (Section 16) with one example each.[2 Marks]
What is a 'contingent contract' under Section 31? How does it differ from a wagering agreement under Section 30?[2 Marks]
State the rule regarding agreements 'in restraint of trade' under Section 27. What is the sole statutory exception?[2 Marks]
Explain the concept of 'anticipatory breach of contract' with reference to Frost v Knight (1872).[2 Marks]
What is 'novation' under Section 62 of the Indian Contract Act? How does it differ from 'alteration'?[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)
"An agreement enforceable by law is a contract." (Section 2(h), Indian Contract Act, 1872). Critically analyse the essential elements required for a valid contract under the Indian Contract Act. Discuss each element with relevant provisions and decided cases, including Mohori Bibee v Dharmodas Ghose (1903) on capacity to contract and Carlill v Carbolic Smoke Ball Co. (1893) on the nature of general offers and intention to create legal relations.[10 Marks]
Examine the law relating to 'offer and acceptance' as the foundation of contractual obligations. Discuss the rules governing communication, revocation, and acceptance of proposals under Sections 3-9 of the Indian Contract Act. Refer to Lalman Shukla v Gauri Dutt (1913) on knowledge of offer, Harvey v Facey (1893) on invitations to treat, Felthouse v Bindley (1862) on silence as acceptance, and the postal rule as applied in Adams v Lindsell (1818).[10 Marks]
"Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake." Critically examine the provisions relating to free consent under Sections 14-22 of the Indian Contract Act. Discuss the consequences of absence of free consent on the validity of a contract, with special reference to Ranganayakamma v Alwar Setti (1889) on coercion, Derry v Peek (1889) on the distinction between fraud and innocent misrepresentation, and Allcard v Skinner (1887) on undue influence. Also distinguish between bilateral mistake (Section 20) and unilateral mistake (Section 22).[10 Marks]
Explain the doctrine of frustration of contracts as recognised under Section 56 of the Indian Contract Act, 1872. How does the Indian position on supervening impossibility differ from the English doctrine of frustration developed in Taylor v Caldwell (1863)? Discuss with reference to Satyabrata Ghose v Mugneeram Bangur & Co. (1954) on the scope of Section 56, and the impact of changed circumstances on contractual obligations as observed in Energy Watchdog v CERC (2017). Can a force majeure clause in the contract exclude the operation of Section 56?[10 Marks]
Discuss the various remedies available for breach of contract under the Indian Contract Act, 1872 and the Specific Relief Act, 1963. Explain the rules governing the measure of damages under Section 73 with reference to the remoteness test in Hadley v Baxendale (1854). Distinguish between liquidated damages and penalty under Section 74 of the Indian Contract Act, referring to Fateh Chand v Balkishan Das (1963) on reasonable compensation and ONGC v Saw Pipes (2003) on genuine pre-estimate of loss. Also discuss when specific performance may be granted as an alternative to damages.[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)
Arjun, a 17-year-old student, enters into an agreement with Bharat, a moneylender, to borrow Rs. 5,00,000 at 18% annual interest by misrepresenting his age as 19 years. Arjun executes a mortgage of his ancestral property as security. He uses Rs. 2,00,000 to purchase a luxury car and Rs. 3,00,000 for his college education. Upon discovering Arjun's real age, Bharat files a suit for recovery of the loan, enforcement of the mortgage, and alternatively, compensation under Section 65 of the Indian Contract Act. Meanwhile, Arjun's father Chandra had stood as guarantor for the loan without knowledge of Arjun's minority.[30 Marks]
(a) Is the agreement between Arjun and Bharat valid? What is the nature of a minor's agreement under Indian law? Discuss the ratio in Mohori Bibee v Dharmodas Ghose (1903) and explain why a minor's agreement is void ab initio and not merely voidable. Can Bharat invoke estoppel against Arjun on the ground of fraudulent misrepresentation of age?[8 Marks]
(b) Can Bharat enforce the mortgage or claim restitution of the loan amount under Section 64 or Section 65 of the Indian Contract Act? Discuss the Doctrine of Restitution as applied to minors with reference to Khan Gul v Lakha Singh (1928) and the Specific Relief Act provisions. Can the court order Arjun to return the luxury car or the traceable proceeds under equitable principles?[8 Marks]
(c) What is the liability of Chandra as guarantor for a minor's debt? Is a contract of guarantee for a minor's debt enforceable when the principal contract is void? Refer to the principles laid down in Kashiba v Shripat (1894) and Section 127 of the Indian Contract Act on the nature of surety's liability.[7 Marks]
(d) Assuming Arjun attains majority and ratifies the agreement, does the ratification validate the original void agreement? Discuss with reference to Section 68 (supply of necessaries) and whether the college education component could be recovered on that basis.[7 Marks]
Meera, an established classical singer, enters into a contract with Neptune Entertainment Pvt. Ltd. to perform exclusively at their concert series across 10 Indian cities between January and June 2024 for a total fee of Rs. 50,00,000. The contract contains the clause: "In the event of cancellation by the artist, the artist shall pay Rs. 1,00,00,000 as compensation." After performing in 4 cities, Meera receives an offer from Zenith Productions for Rs. 1,50,00,000 for 6 concerts in the same period. She informs Neptune that she will not perform the remaining 6 concerts and signs with Zenith. Neptune suffers the following losses: (i) Rs. 8,00,000 on venue bookings for the remaining 6 cities, (ii) Rs. 5,00,000 on advertising, (iii) estimated loss of profit of Rs. 15,00,000, and (iv) loss of business reputation (unquantified).[30 Marks]
(a) Has Meera committed a breach of contract? What is the nature of the breach? Can Neptune claim damages even before the dates of the remaining performances? Discuss with reference to Hochster v De la Tour (1853) on anticipatory breach and the position under Sections 39 and 55 of the Indian Contract Act.[8 Marks]
(b) Is the compensation clause of Rs. 1,00,00,000 enforceable, or is it in the nature of a penalty? Apply Section 74 of the Indian Contract Act and the test laid down in Fateh Chand v Balkishan Das (1963) and ONGC v Saw Pipes (2003). What is the maximum amount Neptune can recover under this clause?[8 Marks]
(c) Applying the principles of Hadley v Baxendale (1854) and Section 73 of the Indian Contract Act, analyse which heads of damages Neptune can legitimately claim. Specifically, can Neptune recover (i) the venue booking costs, (ii) advertising expenses, (iii) loss of estimated profits, and (iv) loss of business reputation? Also discuss whether Neptune has a duty to mitigate its damages.[7 Marks]
(d) Can Neptune seek an injunction restraining Meera from performing for Zenith Productions? Discuss the principles governing negative injunctions in contracts of personal service with reference to Lumley v Wagner (1852) and Section 42 of the Specific Relief Act, 1963.[7 Marks]
Part D - Case Analysis
This question is compulsory. Analyse the given case in detail. (1 × 10 = 10 Marks)
Critically analyse the Supreme Court decision in Central Inland Water Transport Corporation Ltd. v Brojo Nath Ganguly (1986) AIR 1986 SC 1571.[10 Marks]
(a) What were the material facts and the key legal issue before the Supreme Court? Briefly state the contractual clause under challenge and the circumstances of the employee's termination.[2 Marks]
(b) How did the Court apply Section 23 of the Indian Contract Act to strike down the termination clause as being opposed to public policy? Explain the Court's reasoning regarding 'unconscionable bargains' and its characterisation of the employment contract as a contract of adhesion where the employee had no real bargaining power.[3 Marks]
(c) How did the Court expand the scope of 'public policy' under Section 23 beyond the traditional heads recognised in English law? Discuss the significance of the Court reading Article 14 of the Constitution into contractual fairness, and its observation that public policy must be interpreted in the context of the Preamble and Directive Principles.[3 Marks]
(d) What is the contemporary relevance of this decision in the context of standard-form contracts in employment, insurance, and e-commerce? Has the principle been applied or distinguished in subsequent decisions?[2 Marks]