SRM Institute of Science and Technology (Ramapuram)

College of Science and Humanities

Department of Commerce
Business Law Question Bank
UNIT-I
Part A (2 marks question):
1. Define a contract in the context of legal agreements.
2. What is the nature of a contract?
3. List two essential elements of a valid contract.
4. Name two forms of contracts commonly used in business transactions.
5. Explain the concept of validity in relation to contracts.
6. What is meant by the formation of a contract?
7. Define the term "performance" in the context of contract law.
8. Define the term contract
9. Give an example of void contract
10. Explain the concept of “performance” in relation to contracts
11. What are the different forms of contract?
12. State the significance of contract validity
13. Identify the two requirements for the formation of contract
14. What does it for a contact to be voidable?
15. Describe the meaning of “consideration” in a contact?

Part B (16 marks question):

1. Analyze the nature of a contract and discuss its significance in legal agreements.
2. Explain the essentials of a valid contract and provide examples to illustrate each
element.
3. Compare and contrast two forms of contracts commonly used in commercial
transactions, highlighting their advantages and disadvantages.
4. Evaluate the concept of validity in contract law and discuss the factors that can render
a contract invalid.
5. Describe the process of contract formation, including the key steps and elements
involved.
6. Discuss the various methods of contract performance and analyze their importance in
fulfilling contractual obligations.
7. Critically examine the role of consideration in determining the enforceability of a
contract.
8. Analyze the legal remedies available for breach of contract and discuss their
significance in protecting the rights of parties.
9. Explore the concept of "void" and "voidable" contracts, providing examples and
discussing the consequences of each.
10. Assess the role of good faith and fair dealing in contract law and its impact on the
interpretation and enforcement of contractual terms.

UNIT-II

PART-A (2 Marks)

1. Define the term "offer" in contract law.

2. What is meant by the "acceptance" of an offer?
3. Explain the importance of communication in the formation of a contract.
4. Discuss the concept of offer and acceptance by post.
5. What is the significance of consideration in a contract?
6. Give an example of a valid consideration in a contract.
7. Differentiate between unilateral and bilateral consideration.
8. State one essential requirement of consideration in a contract.
9. Explain the role of consideration in creating a legally binding contract.
10. Define the term "communication of offer" in contract law.
11. Discuss the legal consequences of a valid acceptance of an offer.
12. Describe the process of offer and acceptance in forming a contract.
13. What is the effect of a counteroffer on the original offer in a contract negotiation?
14. Provide an example of an offer that can be revoked by the offeror.
15. Name two elements required for a valid acceptance of an offer.

PART-B (16 Marks)

1. Analyze the legal requirements for a valid offer, including the intention to create legal
relations, certainty, and communication. Discuss how these requirements apply in a
real-life scenario.
2. Discuss the significance of communication in the formation of a contract, focusing on
the role of communication in offer and acceptance. Provide examples to illustrate
your points.
3. Sarah received an offer by post and accepted it by email. Analyze the validity of this
acceptance, considering the rules regarding acceptance by post. Discuss the legal
consequences of this form of acceptance.
4. "Consideration is an essential element of a valid contract." Evaluate this statement,
discussing the purpose and significance of consideration in contract law. Provide
examples to support your arguments.
5. Discuss the differences between unilateral and bilateral consideration in contracts,
providing examples of each. Evaluate the advantages and disadvantages of each type
of consideration.
6. Analyze the essentials of consideration in a contract, including adequacy, sufficiency,
and past consideration. Discuss the legal implications of each essential and their
impact on the validity of a contract.
7. Explain the concept of "communication of offer" in contract law. Discuss the various
methods of communication and their legal implications in the context of offer and
acceptance.
8. David received an offer from Mary, but he made a counteroffer with modified terms.
Analyze the legal consequences of a counteroffer and its effect on the original offer.
Provide examples to illustrate your points.
9. Synthesize the rules and principles governing the revocation of an offer. Discuss the
circumstances under which an offer can be revoked and the methods of revocation
available to the offeror.
10. Analyze the legal consequences of a valid acceptance in a contract, including the
formation of a binding agreement and the obligations of the parties. Discuss the
remedies available in case of a breach of the accepted contract.
11. Compare and contrast the communication of an offer and the communication of
acceptance in contract law. Discuss the legal implications of each form of
communication and their role in the formation of a contract.
12. Evaluate the legal validity of an acceptance made through instant messaging
platforms, such as WhatsApp or Messenger. Discuss the factors that may impact the
effectiveness of such acceptance in forming a contract.
13. Discuss the concept of "consideration" in contracts, emphasizing its role in
distinguishing contracts from mere gifts. Analyze the exceptions or situations where
consideration may not be necessary for a contract to be enforceable.
14. Analyze the legal requirements for a valid acceptance, including the mode, time, and
manner of acceptance. Discuss the consequences of a defective or improper
acceptance in relation to the formation of a contract.
15. Synthesize the key elements of a valid offer, valid acceptance, and consideration,
explaining how they interact to form a binding contract. Illustrate your answer with
an example scenario to demonstrate the application of these elements.

UNIT-III
Part- A (2 marks)
1. Define the term "capacity" in the context of contract law.
2. What is meant by "free consent" in contract law?
3. Explain the concept of a "void agreement."
4. Differentiate between void agreements and voidable agreements.
5. Discuss the legal consequences of entering into an illegal agreement.
6. Define the term "minor" in contract law.
7. Name two factors that affect the capacity of parties in a contract.
8. Provide an example of a void agreement.
9. State one circumstance in which a contract becomes voidable.
10. Explain the effect of a minor's contract in contract law.
11. What is the significance of free consent in the enforceability of a contract?
12. Discuss the legal implications of entering into a contract with a person lacking
capacity.
13. Give an example of an agreement that is both illegal and void.
14. Describe the rights of a minor in relation to a contract.
15. Name two elements required for a valid consent in a contract.

Part-B (16 Marks)

1. Analyze the concept of capacity in contract law, discussing the different categories of
parties with limited capacity, such as minors, mentally incapacitated individuals, and
intoxicated persons. Discuss the legal implications and consequences of entering into
contracts with parties lacking capacity.
2. Discuss the significance of free consent in contract law, considering the principles of
coercion, undue influence, and misrepresentation. Explain how these factors affect
the enforceability of a contract and the remedies available to an aggrieved party.
3. Evaluate the legal implications of a void agreement, discussing the reasons for its
invalidity and the legal consequences for the parties involved. Provide examples of
void agreements and analyze their impact on the rights and obligations of the parties.
4. Compare and contrast void agreements and voidable agreements, considering their
respective characteristics, legal consequences, and the options available to the
aggrieved party. Provide examples to illustrate the differences between these types of
agreements.
5. Analyze the legal consequences of entering into an illegal agreement, discussing the
public policy considerations behind the invalidity of such agreements. Evaluate the
impact of illegality on the rights and obligations of the parties and the availability of
remedies.
6. Discuss the rights and liabilities of minors in contract law, considering their capacity
to enter into contracts and the legal protection afforded to them. Analyze the
exceptions and limitations to a minor's liability in contractual obligations.
7. Evaluate the role of consent in contract formation, focusing on the importance of
genuine, free, and voluntary consent. Discuss the legal consequences of a lack of free
consent, such as coercion, undue influence, and misrepresentation, and the remedies
available to the aggrieved party.
8. Analyze the legal implications of a minor misrepresenting their age during contract
formation. Discuss the rights and responsibilities of both parties in such a scenario
and the available legal remedies.
9. Synthesize the key concepts of capacity, free consent, and illegality in contract law.
Discuss how these concepts interact and impact the validity, enforceability, and rights
of the parties in a contractual agreement. Provide examples to support your analysis.
10. Discuss the factors that may render a contract voidable, such as fraud, mistake, undue
influence, or misrepresentation. Analyze the legal consequences and remedies
available to the aggrieved party in each of these scenarios.

Part A – 2 Marks
Unit IV
1. What do you mean by Performance Contracts?
2. Write short notes on: a) Actual Performance, b) Attempted performance.
3. Explain the concept of performance in contract law
4. Define Tender and explain its purpose in business law.
5. Write the nature of Tender of goods.
6. Explain the meaning of Tender of Money.
7. What is Contingent Contract?
8. What are Quasi-Contracts in business law?
9. What do you understand by discharge of a contract?
10. Write a short note on anticipatory breach of contract.
11. What do you understand by a material alteration?
12. What is Novation?
13. Write shot notes on : a) Waiver, b) Rescission.
14. What do you understand by a breach of contract?
15. Write a note on discharge of a contract by consent.
16. Define the term special damages in breach of contract.
17. Explain the meaning of exemplary damages.
18. Give the meaning for nominal damages.
19. When does a claim for ‘Quantum Meruit’ arise?
20. Explain the nature of Injunction.

Part B – 16 Marks
Unit IV
1. Summarize the essentials of a Valid Tender Performance.
2. “Quasi contracts are not contracts in the strictest sense. They are only obligations
created by law”. Discuss
3. What are the salient features of a Quasi Contract?
4. Discuss the different modes by which a contract may be discharged.
5. Explain the consequences of anticipatory breach of contract.
6. What are the various ways I which a contract may be discharged?
7. State briefly the principles on which damages are awarded on the breach of
contract.
8. Differentiate an actual breach and anticipatory breach of contract.
9. Explain the remedies for a breach of contract.
10. What are the consequences of breach of contract? Explain with suitable examples.

Part A – 2 Marks
Unit V
1. Define Sale of Goods Act 1930.
2. Define contingent goods.
3. What is meant by specific goods?
4. Write the nature of sale and agreement to sell.
5. Short notes : a) Formation b) Wholesomeness
6. What is conditions to wholesomeness?
7. What do you understand by Caveat Emptor?
8. ‘A breach of conditions cannot be treated as a breach of warranty’ - Comment.
9. Define condition.
10. When can ‘condition’ be treated as ‘warranty’? Comment.
11. Define Warranty.
12. Who is an unpaid seller?
13. Mention any two rights of unpaid seller.
14. Write short notes on particular lien & General lien.
15. What is Ex-ship contract?
16. Distinguish between Sale Agreement and Hire Purchase Agreement.
17. Write a note on Instalment Deliveries.
18. ‘Custody or control of goods’ implies ‘Property in Goods’. Comment.
19. Define “Goods” under Sales of Goods Act, 1930.
20. What are the conditions to be satisfied in the condition of Fitness?

Part A – 16 Marks
1. State briefly the essential element of a contract of sale under the Sale of Goods
Act, 1930. Examine whether there should be an agreement between parties in order to
constitute a sale
under the said Act.
2. Distinguish “sale” from an “agreement to sell” under the Sale of Goods Act, 1930.
3. Define the term ‘warranty’. What are the kinds of implied warranties under the
provisions of the Sale of Goods Act, 1930?
4. Explain the doctrine of ‘caveat emptor’ with its exceptions.
5. Explain the rules regarding transfer of ownership from seller to the buyer.
6. Explain the different modes of effective delivery of goods.
7. Can an unpaid seller exercise his right of lien or stoppage in transit on the goods
transferred by way of sale or other disposition by the buyer?
8. Explain the nature of right of lien. When can the unpaid seller exercise the right of
lien? Under what circumstances is the lien terminated?
9. Explain the circumstances under which sale by non-owners is regarded as
legitimate sale and the buyer acquires better title than that of the seller over the goods.
10. Conditions and Warranties are considered as exceptions to the general rule of
“caveat emptor”. Discuss.

Answers to Questions

Part A

Here are the answers to the questions:

1. Define a contract in the context of legal agreements.

A contract is a legally binding agreement between two or more parties that creates
enforceable rights and obligations.

2. What is the nature of a contract?

The nature of a contract is that it is a formal agreement enforceable by law, which
requires mutual consent, intention, and consideration between parties.

3. List two essential elements of a valid contract.

Offer and Acceptance

Lawful Consideration

4. Name two forms of contracts commonly used in business transactions.

Written contracts

Oral contracts

5. Explain the concept of validity in relation to contracts.

A valid contract is one that meets all legal requirements such as offer, acceptance,
consideration, and mutual consent, making it enforceable by law.

6. What is meant by the formation of a contract?

The formation of a contract refers to the process in which an offer is made by one
party, accepted by the other, and supported by consideration, creating mutual
obligations.

7. Define the term "performance" in the context of contract law.

Performance refers to the execution of the duties and obligations outlined in a
contract by the parties involved.

8. Define the term contract.

A contract is a legally enforceable agreement between two or more parties that
creates rights and obligations.

9. Give an example of a void contract.

A contract for an illegal activity, such as selling illegal drugs, is considered void.

10. Explain the concept of “performance” in relation to contracts.

Performance in relation to contracts means fulfilling the terms of the contract as
agreed, such as delivering goods or completing services.

11. What are the different forms of contract?

Express contracts (where terms are clearly stated)

Implied contracts (where terms are inferred from actions or conduct)

12. State the significance of contract validity.

The validity of a contract ensures that it is legally enforceable, meaning that the
courts can compel compliance or provide remedies for breach.

13. Identify the two requirements for the formation of a contract.

Offer and Acceptance

Consideration

14. What does it mean for a contract to be voidable?

A voidable contract is a valid contract that can be legally canceled or rescinded by
one of the parties due to certain defects, such as coercion, fraud, or undue influence.

15. Describe the meaning of “consideration” in a contract.

Consideration refers to something of value (such as money, services, or goods)
exchanged between the parties as part of the agreement in a contract.

Part B

Here are the answers to the 16-mark questions:

1. Analyze the nature of a contract and discuss its significance in legal agreements.
The nature of a contract lies in its legally binding aspect, where the parties involved
enter into a mutual agreement with specific obligations. A contract creates
enforceable rights and duties, ensuring that all parties act in accordance with the
terms of the agreement. The significance of a contract is that it provides certainty and
structure in business transactions, as it outlines what each party is expected to deliver,
when, and how. Without contracts, disputes would arise more frequently, and legal
recourse would be unclear.

2. Explain the essentials of a valid contract and provide examples to illustrate each
element.
A valid contract must meet the following essentials:
Offer and Acceptance: One party makes a clear offer, and the other party accepts it.
For example, if a person offers to sell their car for a specific price and the buyer
agrees to that price, this is a valid offer and acceptance.

Intention to Create Legal Relations: The parties must intend for the contract to be
legally binding. For instance, agreements in social or family settings generally lack
such intention, but business agreements do.

Lawful Consideration: There must be something of value exchanged between the

parties. In a sales contract, the consideration would be the price paid for goods or
services.

Capacity to Contract: The parties must be legally capable of entering into a contract,
such as being of sound mind and not a minor.

Free Consent: The agreement must not be made under duress, fraud, undue influence,
or mistake.

Legality of Object: The purpose of the contract must be legal. Contracts for illegal
activities, like gambling or drug trade, are invalid.

3. Compare and contrast two forms of contracts commonly used in commercial

transactions, highlighting their advantages and disadvantages.

Written Contracts: These are contracts where the terms are explicitly documented.
Advantages:

Clear terms prevent misunderstandings.

Provides strong evidence in case of disputes.

Disadvantages:

Time-consuming to draft.

Often requires legal assistance, increasing costs.

Oral Contracts: These are agreements made verbally.

Advantages:

Quick to form without legal formalities.

Suitable for small, simple agreements.

Disadvantages:
Hard to prove in court due to lack of evidence.

Misunderstandings may arise over the terms agreed.

4. Evaluate the concept of validity in contract law and discuss the factors that can
render a contract invalid.
Validity in contract law refers to a contract that is enforceable because it meets all
legal requirements. Factors that can render a contract invalid include:

Lack of capacity: If one party is a minor, mentally incapacitated, or intoxicated.

Illegality: If the subject matter of the contract is illegal, such as a contract for an
illegal activity.

Lack of consent: If one party’s agreement is obtained through coercion, fraud, undue
influence, or misrepresentation.

Mistake: A fundamental mistake about the terms or subject matter may invalidate the
contract.

5. Describe the process of contract formation, including the key steps and elements
involved.
Contract formation involves the following steps:

Offer: One party proposes terms to another, stating what they are willing to provide.

Acceptance: The other party agrees to the terms without modifying them.

Consideration: Something of value is exchanged between the parties.

Mutual Intent: Both parties must intend to create a legally binding agreement.

Capacity and Legality: Both parties must have the legal ability to contract, and the
contract's purpose must be lawful.

Consent: Both parties must voluntarily enter into the contract, with full understanding
of the terms.
6. Discuss the various methods of contract performance and analyze their importance
in fulfilling contractual obligations.

Actual Performance: When all parties fulfill their contractual duties, the contract is
completed. This is important as it satisfies the agreed terms and avoids legal disputes.

Attempted Performance (Tender): When one party offers to fulfill their obligations
but is prevented from doing so by the other party. In such cases, the party who
tendered performance is discharged from their obligations.

Substantial Performance: In some cases, partial performance that is close to fulfilling

the contract can discharge obligations, though the party may be required to
compensate for any incomplete parts.

Anticipatory Breach: When a party indicates they will not perform the contract in the
future, the other party may treat it as a breach and sue for damages.

7. Critically examine the role of consideration in determining the enforceability of a

contract.
Consideration is the value exchanged between parties in a contract. Without
consideration, a contract is usually unenforceable because there is no reciprocal
obligation. The role of consideration ensures that each party gets something of value,
creating fairness and mutuality in agreements. For example, in a sales contract, the
seller provides goods, and the buyer provides payment, making the contract
enforceable. Consideration must be lawful, real, and not illusory. It also prevents one-
sided promises or gifts from being enforceable as contracts.

8. Analyze the legal remedies available for breach of contract and discuss their
significance in protecting the rights of parties.
Legal remedies for breach of contract include:

Damages: The non-breaching party is awarded monetary compensation for losses.

This is the most common remedy and aims to restore the injured party to the position
they would have been in had the contract been fulfilled.

Specific Performance: The court orders the breaching party to fulfill their contractual
obligations, often used in cases involving unique goods or property.

Injunction: A court may issue an order preventing a party from doing something that
would violate the contract.

Rescission: The contract is canceled, and both parties are returned to their pre-
contractual positions.
Quantum Meruit: The non-breaching party is compensated for the value of the work
or services they have already provided.

9. Explore the concept of "void" and "voidable" contracts, providing examples and
discussing the consequences of each.

Void Contract: A void contract is one that is invalid from the start and has no legal
effect. An example is a contract for illegal activities, like drug trafficking. Since it is
void, no party can enforce its terms.

Voidable Contract: A voidable contract is valid but can be voided at the discretion of
one of the parties, usually due to defects like misrepresentation or undue influence.
For example, a contract signed under duress is voidable at the option of the coerced
party. If voided, both parties are released from their obligations.

10. Assess the role of good faith and fair dealing in contract law and its impact on the
interpretation and enforcement of contractual terms.
Good faith and fair dealing require that parties to a contract act honestly and fairly
towards each other, avoiding deception and withholding of essential information. This
principle is crucial for the interpretation of ambiguous terms and for ensuring that
neither party exploits the other. It prevents bad faith conduct, such as deliberately
making a contract difficult to perform or withholding critical information that would
affect the contract's execution. Courts often interpret contracts with this principle in
mind to enforce fairness.

Unit II

Part A

Here are the answers to the Part-A questions:

1. Define the term "offer" in contract law.

An offer is a clear proposal made by one party to another, intending to create legal
relations upon acceptance.

2. What is meant by the "acceptance" of an offer?

Acceptance is the unqualified agreement to the terms of an offer, resulting in a
binding contract.
3. Explain the importance of communication in the formation of a contract.
Communication ensures that all parties are aware of the offer, acceptance, and terms,
preventing misunderstandings and establishing mutual consent.

4. Discuss the concept of offer and acceptance by post.

In the postal rule, an acceptance sent by post is effective when posted, not when
received by the offeror, making the contract binding at the moment of posting.

5. What is the significance of consideration in a contract?

Consideration represents the value exchanged between the parties, ensuring that the
agreement is enforceable in court.

6. Give an example of a valid consideration in a contract.

A payment of money in exchange for goods or services is a valid consideration.

7. Differentiate between unilateral and bilateral consideration.

Unilateral consideration involves one party making a promise in exchange for an act
(e.g., a reward for finding lost property).

Bilateral consideration involves mutual promises exchanged between two parties

(e.g., a contract to sell and buy goods).

8. State one essential requirement of consideration in a contract.

Consideration must be lawful and have value recognized by the law.

9. Explain the role of consideration in creating a legally binding contract.

Consideration acts as evidence that both parties have agreed to exchange something
of value, making the agreement enforceable.

10. Define the term "communication of offer" in contract law.

Communication of an offer refers to making the terms of the offer known to the
offeree so they can accept or reject it.

11. Discuss the legal consequences of a valid acceptance of an offer.

Upon valid acceptance, a binding contract is formed, and both parties are obligated to
fulfill the agreed terms.

12. Describe the process of offer and acceptance in forming a contract.

One party makes an offer with specific terms, and the other party must accept the
offer without modifications, resulting in the formation of a contract.

13. What is the effect of a counteroffer on the original offer in a contract negotiation?
A counteroffer rejects the original offer and proposes new terms, effectively
terminating the original offer.

14. Provide an example of an offer that can be revoked by the offeror.

An offer to sell a car can be revoked before it is accepted, provided the revocation is
communicated to the offeree.

15. Name two elements required for a valid acceptance of an offer.

Acceptance must be unconditional (without modifications).

Acceptance must be communicated to the offeror.

Part B

Here are the answers to the Part-B questions:

1. Legal Requirements for a Valid Offer: A valid offer must include an intention to
create legal relations, certainty, and communication. The offeror must show a
willingness to be bound by the terms, the terms must be clear (e.g., price, subject
matter), and the offer must be communicated to the offeree. In real life, if someone
offers to sell a car for $5,000 to a specific person, these elements are met once the
offer is communicated, and the offeree understands the intent and specific terms.

2. Significance of Communication in Contract Formation: Communication ensures

that both offer and acceptance are known by the parties, confirming their consent to
the contract terms. For instance, if one party makes an offer verbally and the other
accepts by email, communication ensures that both know the terms and acceptance,
making the contract enforceable.
3. Validity of Sarah’s Acceptance by Email: Under the postal rule, acceptance is
typically valid when posted. However, if Sarah accepted by email instead of post, the
acceptance may only be valid once it is received, depending on the terms of the offer.
The legal consequences hinge on the method specified by the offeror, but email
acceptance could be valid if no method was mandated.

4. Significance of Consideration in a Contract: Consideration is what each party

exchanges in a contract, making it legally binding. For example, paying money for
goods/services is a form of consideration. Without consideration, a contract may be
viewed as a gift and not legally enforceable. Consideration demonstrates mutual
exchange, a key part of contract law.

5. Unilateral vs. Bilateral Consideration: In unilateral contracts, one party promises

something in return for an action (e.g., a reward for finding a lost pet). In bilateral
contracts, both parties exchange promises (e.g., buying/selling goods). Bilateral
contracts offer certainty to both parties, while unilateral contracts only bind the
offeror once the action is completed.

6. Essentials of Consideration:

Adequacy: Consideration doesn’t need to be equal, but it must have value.

Sufficiency: Consideration must be something of legal value, like money or services.

Past Consideration: Past actions typically cannot serve as consideration unless they
were done at the promisor's request. If any element is missing, the contract may be
void or unenforceable.

7. Communication of Offer: Offers must be communicated in a way that the offeree

knows about the terms. This can be done verbally, in writing, or electronically. The
method of communication can impact acceptance; for example, if an offer is made
over email, acceptance by post may not be valid unless specified.

8. Legal Consequences of a Counteroffer: A counteroffer terminates the original offer

and replaces it with a new one. For example, if Mary offers to sell her car for $10,000
and David counteroffers $9,000, the original offer is void, and Mary can either accept
or reject David’s counteroffer.
9. Rules Governing the Revocation of an Offer: An offer can be revoked before it is
accepted, but the revocation must be communicated. For instance, if a person offers to
sell a house and then decides to revoke it, they must inform the other party before
acceptance. Once revoked, the original offer no longer stands.

10. Legal Consequences of Valid Acceptance: Upon valid acceptance, a contract is

formed, binding both parties to the terms. If one party breaches the contract, remedies
like damages, specific performance, or rescission may be available to protect the non-
breaching party.

11. Comparison: Communication of Offer vs. Acceptance: An offer can be

communicated in any reasonable manner, while acceptance must conform to the
offeror’s terms. The offeror controls the method and timing of acceptance, making it
critical to match the specified method to form a valid contract.

12. Validity of Acceptance Through Instant Messaging: Acceptance via instant

messaging is valid if it meets the offeror’s specified method of communication.
Factors like time zones and delivery receipts (e.g., read receipts on WhatsApp) may
impact whether the acceptance is considered immediate or delayed.

13. Consideration vs. Gift: Consideration distinguishes a contract from a gift since it
involves a mutual exchange of value. However, in cases like promissory estoppel, a
contract may still be enforceable even without traditional consideration if one party
relied on a promise to their detriment.

14. Legal Requirements for Valid Acceptance: Acceptance must be communicated,

match the offer’s terms, and be made in the prescribed manner (if specified).
Defective acceptance (e.g., late or improper method) may render the contract invalid
or allow the offeror to reject the acceptance.

15. Key Elements of a Contract: A valid contract requires an offer, acceptance, and
consideration. For instance, John offers to sell his bike for $100 (offer), Mary agrees
to buy it (acceptance), and the $100 is exchanged (consideration), forming a binding
contract. Without any of these elements, no enforceable contract exists.

Unit III

Part A
Here are the answers to Part A questions:

1. Capacity in Contract Law:

Capacity refers to the legal ability of a person to enter into a contract. This means the
person must be of sound mind, legal age, and not disqualified by law.

2. Free Consent in Contract Law:

Free consent means that all parties agree to the terms of the contract without coercion,
undue influence, fraud, misrepresentation, or mistake.

3. Void Agreement:
A void agreement is a contract that is unenforceable by law from the very beginning,
meaning it has no legal effect.

4. Void vs. Voidable Agreements:

A void agreement is invalid from the start and has no legal effect, whereas a voidable
agreement is valid until one party decides to void it due to certain legal reasons, such
as misrepresentation or coercion.

5. Legal Consequences of an Illegal Agreement:

An illegal agreement is void and unenforceable, meaning neither party can seek legal
recourse. Additionally, parties involved may face penalties depending on the
illegality.

6. Minor in Contract Law:

A minor is a person who is under the legal age of majority (usually 18 years old) and
thus lacks full legal capacity to enter into a binding contract.

7. Two Factors Affecting Capacity:

Age (being a minor)

Mental soundness (insanity or mental incapacity)

8. Example of a Void Agreement:

An agreement to perform an illegal activity, like a contract for selling illegal drugs, is
void.
9. Circumstance for a Voidable Contract:
A contract becomes voidable if one party was induced to enter the contract under
duress or fraud.

10. Effect of a Minor's Contract:

A minor's contract is generally voidable at the option of the minor. Minors are not
bound by the contracts they enter into, but the other party may be.

11. Significance of Free Consent:

Free consent ensures that all parties willingly agree to the contract terms. Without
free consent, the contract may be deemed voidable.

12. Legal Implications of Contracting with a Person Lacking Capacity:

Contracts with persons lacking capacity (e.g., minors or mentally unsound
individuals) are either void or voidable, and they may not be enforceable.

13. Example of an Illegal and Void Agreement:

A contract for committing a crime, such as a contract to steal, is both illegal and void.

14. Rights of a Minor in Contracts:

Minors have the right to void contracts they enter into. Contracts entered with minors
are typically unenforceable against them but binding on the other party.

15. Two Elements for Valid Consent:

Absence of coercion, undue influence, fraud, misrepresentation, or mistake

Mutual agreement

Part B

Here are responses to the Part B questions on contract law:

1. Capacity in Contract Law

Capacity refers to the legal ability to enter into a binding contract. In contract law,
certain categories of people have limited capacity:

Minors: Contracts with minors are typically voidable at the minor's option, except for
contracts involving necessities like food, clothing, or education.

Mentally Incapacitated Individuals: Those with mental incapacity cannot form

binding contracts if they are unable to understand the nature and consequences of the
agreement.

Intoxicated Persons: Contracts made under severe intoxication, where the person does
not understand the terms, can also be voidable. The legal implications include the
inability to enforce contracts against these parties, and any consideration exchanged
may need to be returned. Courts aim to protect these individuals, ensuring fairness
and avoiding exploitation.

2. Free Consent in Contract Law

Free consent is essential for a valid contract. Factors affecting free consent include:

Coercion: Forcing someone to enter a contract through threats or physical force

invalidates the agreement.

Undue Influence: Exploiting a position of power or trust to influence someone’s

decision can render a contract voidable.

Misrepresentation: Giving false information to induce consent affects the contract’s

validity. When consent is compromised, the aggrieved party can seek remedies such
as rescission (canceling the contract) or damages for losses suffered.

3. Legal Implications of a Void Agreement

A void agreement is invalid from the beginning and has no legal effect. Common
reasons for void agreements include:

Agreements to perform illegal activities (e.g., a contract to sell drugs).

Agreements that lack consideration or clear terms. Void agreements do not create
legal rights or obligations, and the parties cannot enforce them. For example, a
contract to commit fraud is void, and neither party can seek legal remedies for breach.

4. Void vs. Voidable Agreements

Void Agreement: Invalid from the outset and unenforceable (e.g., illegal contracts).

Voidable Agreement: Initially valid but can be annulled at the option of one party
(e.g., contracts with minors or contracts made under undue influence). The legal
consequences differ: in a void agreement, the contract is non-binding from the start,
while in a voidable agreement, it remains binding until the aggrieved party takes
action to void it. For example, a contract signed under duress is voidable.

5. Legal Consequences of Illegal Agreements

Illegal agreements are void due to the violation of public policy or laws.
Consequences include:

The inability to enforce any rights under the agreement.

Parties involved may face penalties for engaging in illegal activities. Courts do not
provide remedies for parties in an illegal contract, as they aim to deter unlawful
behavior. For instance, a contract involving bribery is unenforceable, and both parties
may face legal sanctions.

6. Rights and Liabilities of Minors in Contract Law

Minors generally lack the capacity to enter binding contracts, protecting them from
exploitation. Contracts entered into by minors are voidable at the minor's option.
Exceptions include:

Contracts for necessities: Minors can be held liable for reasonable costs of essential
goods or services.

Beneficial contracts: Contracts that benefit the minor, such as apprenticeships, may
be enforceable. Minors can void contracts, but they must return any benefits received
if possible. For example, if a minor buys a car and later returns it, they may need to
return the car in good condition.

7. Role of Consent in Contract Formation

Consent must be free, genuine, and voluntary for a contract to be valid. Lack of free
consent, through coercion, undue influence, or misrepresentation, makes a contract
voidable. Legal consequences include:

Coercion: The aggrieved party can void the contract.

Undue Influence: The influenced party can rescind the contract.

Misrepresentation: The deceived party can either void the contract or seek damages.
The remedies available aim to restore fairness, either through contract cancellation or
compensation for losses.

8. Minor Misrepresenting Their Age

If a minor misrepresents their age, the contract may still be voidable. However, courts
are unlikely to enforce contracts against minors, even if they lie about their age, as the
legal system prioritizes the protection of minors. The other party may have limited
remedies, such as recovering any property or goods exchanged if feasible. For
example, if a minor misrepresents their age to rent an apartment, they can void the
lease, but the landlord may seek the return of the property.

9. Interaction of Capacity, Free Consent, and Illegality

The concepts of capacity, free consent, and illegality interact to determine the validity
and enforceability of contracts:

Contracts with parties lacking capacity (minors, mentally incapacitated persons) or

without free consent (coerced, deceived) are voidable.

Contracts for illegal purposes are void. For example, a contract with a minor to
perform an illegal act would be void due to both the lack of capacity and the illegal
nature of the agreement. These concepts protect vulnerable parties and maintain
public order.

10. Factors Rendering a Contract Voidable

Several factors can render a contract voidable, including:

Fraud: Deception that induces a party to enter the contract.

Mistake: A fundamental misunderstanding about key facts (mutual or unilateral).

Undue Influence: Exploiting a position of power.

Misrepresentation: Providing false information that leads to the agreement. In these

scenarios, the aggrieved party may void the contract and seek remedies such as
rescission or damages. For example, a contract entered into under fraudulent
circumstances may be voidable, and the injured party can cancel the contract or claim
damages for losses incurred.
These concepts reflect how fairness, protection, and public policy are balanced in
contract law.

Unit IV

Part A

Here are responses to the Unit IV Part A questions on contract law:

1. Performance Contracts
Performance contracts involve an agreement in which one party promises to perform
a specific task or service for another party in exchange for consideration (usually
payment).

2. Short Notes: a) Actual Performance – Occurs when both parties fulfill their
contractual obligations as agreed, and the contract is completed.
b) Attempted Performance – Happens when one party tries to fulfill their obligation,
but the other party refuses or prevents the performance.

3. Performance in Contract Law

Performance refers to fulfilling contractual obligations as agreed in a contract. Each
party must complete their part of the deal, whether it involves delivering goods,
paying money, or providing services.

4. Tender and Its Purpose in Business Law

A tender is a formal offer to perform an obligation, such as supplying goods or paying
a debt. Its purpose is to demonstrate readiness and willingness to fulfill contractual
duties, which may discharge the performing party from liability if the other party
refuses.

5. Nature of Tender of Goods

A tender of goods is an offer by one party to deliver goods in accordance with the
contract terms. The goods must be delivered at the agreed time and place, and the
buyer must have the opportunity to inspect them.

6. Tender of Money
A tender of money refers to an offer to pay a debt or fulfill a financial obligation
under a contract. If a debtor offers the correct amount as agreed, they fulfill their
obligation even if the creditor refuses to accept it.
7. Contingent Contract
A contingent contract is a contract that depends on the occurrence or non-occurrence
of a future uncertain event. If the event happens, the contract is enforceable;
otherwise, it may not be.

8. Quasi-Contracts in Business Law

Quasi-contracts are obligations imposed by law to prevent unjust enrichment. Even
though there is no formal agreement, the law creates a contract-like obligation to
compensate a party who has provided a benefit.

9. Discharge of a Contract
Discharge of a contract refers to the termination of the contractual obligations, either
by performance, agreement, impossibility, breach, or operation of law.

10. Anticipatory Breach of Contract

This occurs when one party declares their intention not to fulfill their contractual
obligations before the performance is due. The non-breaching party can treat this as
an immediate breach and seek remedies.

11. Material Alteration

Material alteration refers to a significant change made to the terms of a contract
without the consent of the other party, rendering the contract voidable.

12. Novation
Novation is the replacement of one party in a contract or the substitution of a new
contract for the old one, with the consent of all original parties.

13. Short Notes: a) Waiver – Voluntary relinquishment of a legal right or claim under
a contract.
b) Rescission – The cancellation of a contract, restoring the parties to their pre-
contractual positions.

14. Breach of Contract

A breach of contract occurs when one party fails to fulfill their obligations as agreed,
either by refusing to perform, performing incompletely, or not performing on time.

15. Discharge of a Contract by Consent

A contract can be discharged by mutual agreement between the parties, either by
forming a new agreement or releasing each other from further obligations.

16. Special Damages in Breach of Contract

Special damages refer to compensation for losses that are not a direct result of the
breach but arise due to specific circumstances known to both parties at the time of
contract formation.

17. Exemplary Damages

Exemplary (or punitive) damages are awarded to punish the wrongdoer and deter
similar behavior, beyond compensating the injured party.

18. Nominal Damages

Nominal damages are a small sum awarded when a legal wrong has occurred but the
injured party did not suffer significant harm or financial loss.

19. Claim for Quantum Meruit

A claim for quantum meruit arises when one party has partially performed under a
contract, but the contract is later terminated. The performing party can claim
reasonable compensation for the work done.

20. Nature of Injunction

An injunction is a court order compelling a party to do or refrain from doing a
specific act, often used to prevent a breach of contract or protect a party's rights.

Part B

Here are responses to the Unit IV Part B questions on contract law:

1. Essentials of a Valid Tender Performance A valid tender performance must:

Be unconditional: The tender must fulfill the contract without any conditions or
qualifications.

Be made at the proper time and place: Performance must align with the agreed time
and location as per the contract terms.

Be for the exact amount or goods: The tender must meet the specific contractual
obligations regarding quality, quantity, or payment.
Be communicated: The tender must be properly conveyed to the other party.

Be capable of being performed: The tender must involve the readiness and ability to
perform the contractual obligations.

2. "Quasi contracts are not contracts in the strictest sense. They are only obligations
created by law." Quasi-contracts differ from traditional contracts in that they lack
mutual consent or an agreement between the parties. They arise from equitable
principles, where the law imposes an obligation to prevent unjust enrichment. For
example, if a person receives services by mistake (e.g., an overpayment), the law
requires the recipient to repay the value, even though no contract existed between the
parties.

3. Salient Features of a Quasi Contract

Absence of agreement: There is no formal offer or acceptance, unlike in regular

contracts.

Imposed by law: Quasi-contracts are created by law to prevent unjust enrichment.

Legal obligation: A duty is imposed on one party to compensate the other, despite no
formal contract.

Unjust enrichment: The primary aim is to ensure that one party is not unjustly
enriched at the expense of another.

4. Modes by Which a Contract May Be Discharged A contract may be discharged

through:

Performance: Fulfillment of all contractual obligations.

Mutual agreement: Parties agree to end or modify the contract (e.g., novation or
rescission).

Impossibility of performance: Events like death or destruction of the subject matter

may make performance impossible.

Lapse of time: If the time for performance expires, the contract may be discharged.
Breach: A party fails to meet obligations, discharging the other party from their
duties.

Operation of law: Bankruptcy, insolvency, or a change in the law can discharge a

contract.

5. Consequences of Anticipatory Breach of Contract In an anticipatory breach, one

party indicates they will not perform their future obligations before the due date. The
non-breaching party can either:

Treat the breach as immediate and sue for damages, or

Wait until the performance date and hold the breaching party accountable if they fail
to perform. This allows the non-breaching party to mitigate their losses or pursue
remedies.

6. Various Ways a Contract May Be Discharged

By performance: When both parties fulfill their obligations.

By agreement or consent: Novation, rescission, or waiver.

By impossibility: Where performance is objectively impossible (e.g., force majeure).

By breach: When one party fails to perform or anticipatorily breaches the contract.

By operation of law: Such as the death of a party, bankruptcy, or legal alterations.

7. Principles of Damages on Breach of Contract

Compensatory: Damages aim to compensate the non-breaching party for the actual
loss suffered due to the breach.

Foreseeability: Damages must be a foreseeable result of the breach.

Mitigation: The injured party must take reasonable steps to minimize their losses.

Remoteness: Damages that are too remote from the breach will not be awarded.
Types: Damages can include general, special, nominal, exemplary, and liquidated
damages.

8. Difference Between Actual Breach and Anticipatory Breach

Actual Breach: Occurs when a party fails to perform their obligations on the due date
or performs incompletely.

Anticipatory Breach: Occurs when one party, before the performance date, informs or
indicates that they will not perform their obligations. The non-breaching party can
treat the contract as immediately breached.

9. Remedies for Breach of Contract

Damages: Compensation for financial losses due to the breach.

Specific Performance: Court order requiring the breaching party to fulfill their
contractual obligations.

Injunction: Court order preventing a party from doing something that would breach
the contract.

Rescission: Termination of the contract and returning the parties to their pre-
contractual positions.

Quantum Meruit: Reasonable compensation for services or goods provided when the
contract has been partially performed.

10. Consequences of Breach of Contract

Monetary damages: The non-breaching party is compensated for their losses.

Specific performance: The court orders the breaching party to complete their
contractual duties.

Contract termination: The non-breaching party may treat the contract as terminated
and is discharged from further performance.
Example: If a contractor fails to complete a building project on time, the client can
claim damages for the delay and additional costs incurred, or seek specific
performance to compel the contractor to finish the project.

Unit v

Part A

Here are brief answers for each of the questions in Unit V related to the Sale of
Goods Act, 1930:

1. Sale of Goods Act 1930: This Act governs the sale of goods in India, outlining the
rights, duties, and remedies available to buyers and sellers. It applies to the transfer of
ownership of goods from a seller to a buyer for a price.

2. Contingent Goods: These are goods that are not presently in existence but are
expected to be acquired or produced by the seller after making a contract of sale,
subject to a future condition.

3. Specific Goods: These are goods that are identified and agreed upon at the time of
making a contract of sale, where the goods are already in existence and are
specifically mentioned.

4. Nature of Sale and Agreement to Sell:

A sale transfers ownership of goods from the seller to the buyer immediately.

An agreement to sell implies that the transfer of ownership will happen in the future
or upon fulfilling certain conditions.

5. Short Notes:

a) Formation: Refers to how a contract of sale is created, which includes an offer to

sell and an acceptance of that offer, along with consideration (the price).

b) Wholesomeness: In the context of sale of goods, it refers to the condition where

goods are fit for human consumption or intended use, especially when it comes to
food and medicine.
6. Conditions to Wholesomeness: Goods must be free from defects, safe, and fit for
the purpose for which they are intended, especially when such purpose is made
known to the seller by the buyer.

7. Caveat Emptor: A Latin term meaning "let the buyer beware," implying that the
buyer must take care when purchasing goods and should examine them before
completing the sale.

8. Breach of Conditions vs Breach of Warranty: A breach of condition is a serious

breach that allows the buyer to repudiate the contract, whereas a breach of warranty
allows the buyer to claim damages but not to reject the goods.

9. Condition: A condition is a fundamental stipulation in a contract, the breach of

which gives the right to repudiate the contract or claim damages.

10. Condition Treated as Warranty: A condition may be treated as a warranty when

the buyer decides to accept the goods despite the breach of the condition, in which
case they can only claim damages, not repudiate the contract.

11. Warranty: A warranty is a stipulation that is collateral to the main purpose of the
contract, where its breach only entitles the aggrieved party to claim damages, not to
repudiate the contract.

12. Unpaid Seller: A seller who has not received the whole of the price or a bill of
exchange or any other negotiable instrument that has been dishonored.

13. Two Rights of Unpaid Seller:

Right of lien: To retain possession of the goods until payment is made.

Right of resale: To resell the goods if the buyer defaults in payment.

14. Particular Lien & General Lien:

Particular Lien: The right to retain possession of specific goods until payment is
made.

General Lien: The right to retain any goods in possession until a general balance of
account is paid.

15. Ex-ship Contract: A contract in which the seller is responsible for delivering the
goods on board a ship to the buyer, and the risk passes to the buyer once the goods
are unloaded from the ship.

16. Sale Agreement vs Hire Purchase Agreement:

Sale Agreement: Immediate transfer of ownership upon sale.

Hire Purchase Agreement: Ownership transfers only after the last installment is paid.

17. Instalment Deliveries: This refers to a contract of sale where goods are delivered
in parts or installments, rather than all at once.

18. Custody or Control of Goods Implies Property in Goods: This statement suggests
that having custody or control over goods can imply ownership, but legally, property
in goods means ownership, which is distinct from mere custody.

19. Goods under the Sale of Goods Act, 1930: Goods are all movable property except
money and actionable claims. This includes things like stock, crops, and goods to be
manufactured or acquired.

20. Conditions for Fitness: The goods must be reasonably fit for the purpose for
which the buyer has made known to the seller at the time of the contract.

Part B

Here are explanations for the questions in Part A related to the Sale of Goods Act,
1930:

1. Essential Elements of a Contract of Sale under the Sale of Goods Act, 1930:
Two Parties: A buyer and a seller.

Goods: The subject of the contract must be movable goods.

Price: Consideration must be in the form of money.

Transfer of Ownership: Ownership of goods must transfer from the seller to the
buyer.

Consent: There must be a mutual agreement between the buyer and seller.

Yes, there must be an agreement between the parties to constitute a sale. Without
agreement, no valid contract of sale can arise. This agreement can be either a "sale" or
an "agreement to sell."

2. Distinguishing Sale from Agreement to Sell:

Sale: Ownership of the goods is transferred immediately from the seller to the buyer.

Agreement to Sell: Ownership is transferred at a future date or upon fulfillment of a

condition.

Risk: In a sale, the risk passes to the buyer immediately; in an agreement to sell, the
risk remains with the seller until ownership is transferred.

Consequences of Breach: A breach of sale can lead to a claim for damages and
rejection of goods, while an agreement to sell can only result in a claim for damages
if breached before completion.

3. Definition of Warranty & Types of Implied Warranties:

Warranty: A collateral promise or condition that the goods will meet certain
standards. A breach of warranty allows the buyer to claim damages but does not give
the right to reject goods.

Implied Warranties:

Quiet possession: The buyer will have undisturbed possession of the goods.

Freedom from encumbrances: The goods are free from any third-party claims.
Fitness for purpose: The goods should serve the purpose for which the buyer bought
them, provided this purpose was made known to the seller.

4. Doctrine of Caveat Emptor with Exceptions:

Caveat Emptor: "Let the buyer beware," implying that the buyer must inspect the
goods and cannot hold the seller responsible for defects unless expressly stated.

Exceptions:

When the buyer relies on the seller’s expertise.

When there is a sale by description or sample, and the goods do not match.

Where the seller actively conceals defects.

If there is an implied warranty of merchantability.

5. Rules Regarding Transfer of Ownership:

Ownership is transferred as per the terms of the contract between the seller and buyer.

In the case of specific goods, ownership transfers immediately when the contract is
made.

In the case of unascertained goods, ownership transfers when the goods are
ascertained and appropriated to the contract.

The intention of the parties is the primary consideration in deciding when ownership
is transferred.

6. Modes of Effective Delivery of Goods:

Actual Delivery: Physical transfer of goods to the buyer.

Constructive Delivery: The buyer is given control over the goods without physically
handing them over (e.g., transfer of documents).
Symbolic Delivery: A token or symbol representing the goods (e.g., handing over a
key to a warehouse where goods are stored) is delivered to the buyer.

7. Right of Lien or Stoppage in Transit: An unpaid seller can exercise the right of lien
if they still possess the goods and have not been fully paid. Stoppage in transit can be
exercised if the buyer becomes insolvent before the goods are delivered. However,
once the buyer sells the goods or otherwise transfers ownership, the seller's right to
lien or stoppage may no longer be exercised.

8. Nature of Right of Lien & Termination:

The right of lien is the seller's right to retain possession of the goods until full
payment is received.

The unpaid seller can exercise the right of lien if:

The goods have been sold on credit, and the credit term has expired.

The buyer has become insolvent.

Termination of Lien:

When the seller delivers the goods to the buyer or to a carrier for transmission to the
buyer.

If the buyer or their agent lawfully obtains possession of the goods.

9. Sale by Non-Owners and Legitimate Sale: Generally, a person cannot transfer a

better title than they themselves possess (nemo dat quod non habet). However, certain
exceptions exist where a sale by a non-owner is legitimate:

Sale by a mercantile agent acting in the ordinary course of business.

Sale by a person in possession of goods under a voidable contract.

Sale by a seller who continues in possession after sale.

Sale by a buyer who obtains possession before the seller retains ownership.
10. Conditions and Warranties as Exceptions to Caveat Emptor:

A buyer is protected when there are implied conditions or warranties in the contract
of sale. For example, if goods are sold by description, they must correspond with the
description. Similarly, the implied condition of merchantability ensures that goods are
fit for the purpose they are purchased for, provided the buyer relies on the seller’s
expertise. These exceptions provide protection beyond the basic "buyer beware"
principle.