Pratik upadhyay Roll No.

56 Section A

Short Answer Questions

1. Define a Contract

Ans. There are many definition given by different authors for “Contract”, they are as follows:

A contract is an agreement made between two or more parties which the law will enforce. Sec. 2 (h)
defines contract as an agreement enforceable by law. The definition is based on Pollock’s definition which
as follows: “Every agreement and promise enforceable at law is a contract.”

Sir William Anson defines a contract as “a legally binding agreement between two or more persons by
which rights are acquired by one or more to acts or forbearances on the part of the others”

According to Salmond, a contract is “an agreement creating and defining obligations between the parties.”

Contract = Agreement + Enforceability at law

2. What are agreements?

Ans. Agreement is a very wide term, As per sec. 2(e) An agreement is defined as “every promise and every
set of promises, forming consideration for each other”

An agreement may be a social agreement or a legal agreement. If A invites B to a dinner and B accepts the
invitation, it is a social agreement.

A social agreement does not give rise to contractual obligations and is not enforceable in a court of law.
It is only those agreements which are enforceable in a court of law which are contracts.

3. What do you mean by void Contract?

Ans. As per sec. 2(g) A contract which ceases to be enforceable by law becomes void when it ceases to
be enforceable.

A contingent contract to do or not to do something on the happening of an event becomes void when the
event becomes impossible. (Sec 32) Whereas, a contingent contract is a contract to do or not to do
something.

Example: A contracts to pay B a sum of money when B marries C. C dies without being married to B. The
contract becomes void.

4. Explain voidable contract.

Ans. As per sec. 2 (i), Voidable contract is defined as “An agreement which is enforceable by law at the
option of one or more of the parties thereto, but not at the option of the other or others, is a voidable
contract”
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A contract becomes voidable because of following reasons:

i. When the essential element of free consent in a contract is missing.

ii. When the consent of a party to a contract is not free, i.e. it is caused by coercion, undue
influence, misrepresentation or fraud, the contract is voidable at his option (Sec. 19, 19-A)

A contract becomes voidable in the following two cases also:

(1) When a person promises to do something for another person for a consideration, but the other
person prevents him from performing his promise, the contract becomes voidable at his option (Sec
53)
(2) When a party to a contract promises to perform an obligation within a specified time, any failure on
his part to perform has obligation within the fixed time makes contract voidable at the option of
promise (Sec 55, para 11)

5. What is an illegal contract?

Ans. An illegal agreement is one which transgresses some rule of basic public policy or which is criminal in
nature or which is immoral.

Such an agreement is a nullity and has much wider import than a void contract

All illegal agreements are void, but all void agreements or contracts are not necessarily illegal

Example: B borrows Rs. 5000, from A and enters into a contract with an alien to import prohibited goods.
A knows of the purpose of the loan. The transaction between B and A is collateral to the main agreement.
It is illegal since the main agreement is illegal.

6. What do you understand by an unenforceable contract?

Ans. An unenforceable contract is one which cannot be enforced in a Court of law because of some
technical defect such as absence of writing or where the remedy has been barred by lapse of time. The
contract may be carried out by the parties concerned; but in the event of breach or repudiation of such a
contract, the aggrieved party will not be entitled to the legal remedies.

7. What is a implied contract?

Ans. An implied contract is one which is inferred from the acts or conduct of the parties of course of
dealings between them. It is not the result of any express promise, or promises by the parties but of their
particular acts.

It may also result from a continuing course of the parties. Where the proposal or acceptance of any
promise is made otherwise than in words, the promise is said to be implied (Sec. 9). An implied promise
results in an implied contract.
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8. What are Quasi Contracts?

Ans. Generally a contract comes into existence as a result of offer made by one party and its acceptance
by the other party, with free will of both the parties. However under certain conditions even though no
will is expressed by both the parties for creating contractual relations, the law creates and enforces legal
rights and obligations. Such contracts are known as Quasi Contracts. The principle behind Quasi Contracts
is that a person shall not be allowed to enrich himself at the expense of another.

9. What is an executory contract?

Ans. ‘Executory’ means that which remains to be carried into effect. An executor contract is one in which
both the parties have yet to perform their obligations.

Example: A agrees to paint a picture for B for rs. 100. The contract is executory if A has not yet painted
the picture and B has not paid the price.

Similarly, if A agrees to engage B as his servant from the next month, the contract is executor

10. What do you mean by an Unilateral Contract?

Ans. A unilateral or one-sided contract is one in which only one party has to fulfil his obligation at the time
of the formation of the contract, the other party having fulfilled his obligation at the time of the contract
or before the contract comes into existence. Such contracts are also known as contracts with executed
consideration.

Example: A permits a railway coolie to carry his luggage and place it in a carriage. A contract comes into
existence as soon as the luggage is placed in the carriage. But by that time the coolie has already
performed his obligation. Now only A has to fulfill his obligation, i.e. pay reasonable charges to the coolie.

11. What do you mean by Bilateral Contract?

Ans. A bilateral contract is one in which the obligations on the part of both the parties to the contract are
outstanding at the time of the formation of the contract. In this sense, bilateral contracts are similar to
executory contracts and are also known as contracts with executory considerations.
Pratik upadhyay Roll No. 56 Section A

Long Answer Questions

1. Define a Contract. Differentiate it from an agreement

Ans.

Definition:

A contract is an agreement made between two or more parties which the law will enforce. Sec. 2 (h)
defines contract as an agreement enforceable by law. The definition is based on Pollock’s definition which
as follows: “Every agreement and promise enforceable at law is a contract.”

Difference

Point of Difference Contract Agreement

Meaning The contract is defined as an
Agreement which can be
enforceable by law. All the
agreements which have a need
for legal obligation can become
contracts
Obligation The contract consists of a legal
obligation of the performance of
an action.
Nature & Scope The contract is very narrow in
scope and not very complex in
nature.
Relation All Contracts are Agreements
since to form a contract, there
should be an agreement
between the parties.
Writing & Registration Contracts are usually are in
written form and registered
because oral contracts are hard
to prove in legal grounds.
An Agreement is a common
understanding between two
parties which obtained from the
offer made by an individual and
acceptance of another individual
An Agreement is purely a social
or domestic obligation.
An agreement is wider in scope
and very complex in nature.
All Agreements are not contracts
because of no legal obligation.
Agreements are usually oral in
form and no need for
registration and some
agreements are also created in
writing form.

2. Define a Contract. What are the elements of a valid contract?

Ans.

Definition:

A contract is an agreement to do or not to do an act.

Indian Contract Act defines a contract as “an agreement, enforceable by law” [Section 2(h)]
Pratik upadhyay Roll No. 56 Section A

Contract = An agreement + Its enforceability at law.

The two main elements of contracts are:

1. An agreement between two or more persons "To Do" or "Not to Do" something.

2. An enforceability of such an agreement at law i.e. personal rights and personal obligations created and
defined by agreement must be recognized by law

The following are the essential elements of a valid contract:

1. Offer and Acceptance. In order to create a valid contract, there must be a 'lawful offer' by one party
and 'lawful acceptance' of the same by the other party.

2. Intention to Create Legal Relationship. In case, there is no such intention on the part of parties,
there is no contract. Agreements of social or domestic nature do not contemplate legal relations.
Case: - Balfour vs. Balfour(1919)

3.Lawful Consideration. Consideration has been defined in various ways. According to Blackstone,
“Consideration is recompense given by the party contracting to another." In other words of Pollock,
"Consideration is the price for which the promise of the another is brought."
consideration is known as quid pro-quo or something in return.

4. Capacity of parties. The parties to an agreement must be competent t contract. If either of the parties
does not have the capacity to contract, the contract is not valid.
According the following persons are incompetent to contract.
(a) Minors, (b) Persons of unsound mind, and
(c) persons disqualified by law to which they are subject.

5. Free Consent. 'Consent' means the parties must have agreed upon the same thing in the same sense.
According to Section 14, Consent is said to be free when it is not caused by-
(1) Coercion, or (2) Undue influence, or (3) Fraud, or
(4) Mis-representation, or (5) Mistake.
An agreement should be made by the free consent of the parties.

6. Lawful Object. The object of an agreement must be valid. Object has nothing to do with
consideration. It means the purpose or design of the contract. Thus, when one hires a house for use as a
gambling house, the object of the contract is to run a gambling house.
The Object is said to be unlawful if-
(a) it is forbidden by law;
(b) it is of such nature that if permitted it would defeat the provision of any law;
(c) it is fraudulent;
(d) it involves an injury to the person or property of any other;
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(e) the court regards it as immoral or opposed to public policy.

7. Certainty of Meaning. According to Section 29,"Agreement the meaning of which is not certain or
capable of being made certain are void."

8. Possibility of Performance. If the act is impossible in itself, physically or legally, if cannot be enforced
at law. For example, Mr. A agrees with B to discover treasure by magic. Such Agreements is not
enforceable.

9. Not declared to be void or illegal. The agreement though satisfying all the conditions for a valid
contract must not have been expressly declared void by any law in force in the country. Agreements
mentioned in Section 24 to 30 of the Act have been expressly declared to be void for example
agreements in restraint of trade, marriage, legal proceedings etc.

10. Legal Formalities. An oral Contract is a perfectly valid contract, expect in those cases where writing,
registration etc. is required by some statute. In India writing is required in cases of sale, mortgage, lease
and gift of immovable property, negotiable instruments; memorandum and articles of association of a
company, etc. Registration is required in cases of documents coming within the scope of section 17 of
the Registration Act.

All the elements mentioned above must be in order to make a valid contract. If any one of them is
absent the agreement does not become a contract.

3. Distinguish between void contracts and voidable contracts.

Ans.

Point of Difference Void Contract Voidable Contract

Meaning The type of contract which
cannot be enforceable is known
as void contract.
Defined In Section 2 (j) of the Indian
Contract Act, 1872.
Nature The contract is valid, but
subsequently becomes invalid
due to some reasons.
Reasons Subsequent illegality or
impossibility of any act which is
to be performed in the future.
Rights to Party A void contract is valid when it is
made. But subsequently it
becomes void due to one reason
or the other.
The contract in which one of the
two parties has the option to
enforce or rescind it, is known as
voidable contract.
Section 2 (i) of the Indian
Contract Act, 1872.
The contract is valid, until the
party whose consent is not free,
does not revokes it.
If the consent of both the parties
is not independent
A voidable contract gives rights
to the aggrieved party to rescind
the contract, and claim the
damages, etc. in certain cases.
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Suit for Damages Not given by any party to Damages can be claimed by the
another party for the non- aggrieved party.
performance, but any benefit
received by any party must be
restored back.

4. Distinguish between void agreements and illegal agreements

Ans.

Point of Difference Void Agreements Illegal Agreements

Meaning An agreement, which lacks legal An agreement whose creation is
enforceability, is void forbidden by the court of law is
agreement. an illegal agreement.
Consequence An agreement becomes void An illegal agreement is void ab
when it loses its enforceability initio i.e. void from the very
by law. beginning.
Prohibition by IPC No Yes
Scope Void agreements are having a Whereas scope of illegal
wide scope agreements is narrow
Penalty Parties to void agreement are Parties to illegal agreement are
not liable for any penalty under penalized.
law.
Connected Agreements May not necessarily be void, All connected agreements are
they may be valid also. void.

5. State whether all void agreements are illegal

Ans. Void Agreement:

An agreement not enforceable by law is said to be void. A void agreement does not create any legal rights
and obligations. It is a nullity and is destitute of legal effects, altogether. It is void ab initio i.e., from the
very beginning as for example, an agreement with a minor or an agreement without consideration.

Illegal Agreement:

An illegal agreement is one which transgresses some rule of basic public policy or which is criminal in
nature or which is immoral. Such an agreement is a nullity and has much wider import than a void contract.
All illegal agreements are void, but all void agreements or contracts are not necessarily illegal.

An illegal agreement is not only void as between the immediate parties but has this further effect that
even the collateral transactions to it become tainted with illegality. A collateral transaction is one which
is subsidiary, incidental or auxiliary to the principal or original contract.
Pratik upadhyay Roll No. 56 Section A

Example: B borrows Rs. 5000, from A and enters into a contract with an alien to import prohibited goods.
A knows of the purpose of the loan. The transaction between B and A is collateral to the main agreement.
It is illegal since the main agreement is illegal.

If the main agreement is void, the collateral transactions to it are not affected. In the above case, if B had
entered into a void agreement with a minor. The contract between B and A would not have been affected.

Thus we can say that all illegal agreements are void, but all void agreements or contracts are not
necessarily illegal.

6. Name the contracts expressly declared void by the Contract Act

Ans. Agreements which have been expressly declared as void by the Indian Contract Act are:-

Agreements

1. Agreements made by incompetent parties. (Sec. 11)

2. Agreements made under a mutual mistake of fact. (Sec. 20)

3. Agreements the consideration or object of which is unlawful. (Sec. 23)

4. Agreement, the consideration or object of which is unlawful in part. (Sec. 24)

5. Agreements made without consideration. (Sec. 25)

6. Agreements in restraint of marriage. (Sec. 26)

7. Agreement in restraint of trade. (Sec. 27)

8. Agreement in restraint of legal proceedings. (Sec. 28)

9. Agreement the meaning of which is uncertain. (Sec. 29)

10. Agreements by way of wager. (Sec. 30)

11. Agreements to do impossible acts. (Sec. 56)

7. Distinguish between valid, void and voidable contracts.

Ans.

1. VALID CONTRACT:-
Valid contract is that which is enforceable at law. It creates legal obligations between the parties. It
enables one party to compel another party to do something or not to do something.

Parties Obligations:-
In case of valid contract all the parties to the contract are legally responsible for the performance of a
Pratik upadhyay Roll No. 56 Section A

contract. If one party breaks the contract other has right to be enforced through the court.

Example:- Amun proposes sell his one acre land to Nasir for one lac and the parties are capable to do
the contract by law. So this contract is valid. If Amun fails to deliver the land Nasir can sue him in the
court for the delivery of land. On other hand Nasir fails to make the payment, Amun can sue him for the
recovery of payment.

2. VOID CONTRACT :-
Definition :- "An agreement not enforceable at law is a void contract".

Originally it is a valid contract but due to certain reasons it becomes void after its formation. A void
contract cannot be enforced by either party.

Features of Void Contract:-

a. It is not enforceable by law.
b. It creates no legal rights.
c. It creates no obligations on any party.
d. An agreement which is against the public policy or against any law is also void.
e. Under this contract no compensation can be paid to any party.
An agreement in restraint of marriage and trade are common examples of void contract.

Example :- Sachin and Isha contract to marry on next Sunday. Isha dies before the Sunday. The contract
becomes void.

Rights and Duties:-

In this case the parties are not legally responsible to fulfill the contract. If any party has received any
benefit is bound to return.
This contract takes place when consent of one of the parties is not free.

3. VOIDABLE CONTRACT:-
"An agreement which is enforceable by law at the option of one or more of the parties, there to but not
at the option of the other or others is a voidable contract".

Features of Voidable Contract:-

a. It is enforceable at law at the option of one or more of the parties.
b. A voidable contract can only be objected by the party who has been subject to fraud, coercion,
misrepresentation and undue influence.
c. If the contract is revoked by a person rightfully then he can also receive the compensation.
d. The contract is voidable at the option of the party whose consent is caused.
e. Contracts caused by fraud, undue influence, misrepresentation or by coercion are voidable contracts.
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Example :- Mr. Qadir threatens to shoot Mr. Shah to purchase a car for one lac. Mr. Shah agrees the
contract was made by coercion and is voidable at the option of Mr. Shah.

Rights and Duties:-

The aggrieved party can cancel such contract within a reasonable time. It is also entitled to be
compensated by the other party.

Burden of Proof:-
It is the responsibility of the aggrieved party to prove that her consent was obtained by fraud or
coercion. If it fails to prove in the court then contract will remain valid.
If the contract is not written or not registered it can not be enforced. But as you will remove this defect
the contract can be enforced.

Example:- Suppose "A" borrows the money from "B" and writes a pronote but proper amount stamps
are not posted on the pronote. Now in this case contract is valid but not enforceable by law.

4. UNENFORCEABLE CONTRACT:-
Contract is called unenforceable when due to some technical difficulty or lack of any formality required
by the special provisions of law a valid contract is not enforced by the court.

8. Distinguish between executed and executory contracts

Ans. Executed Contract:

A contract in which both the parties performed their respective promises. When a contract has been
completely performed, it is termed as executed contract, i.e. it is a contract where, under the terms of a
contract, nothing remains to be done by either party.

A contract may be executed at once i.e. at the time when it is made. For example, in case of cash sales,
the contract is executed at once. It may become executed in some future date when the terms of the
contract are carried out.

Executory Contract:

A contract in which the promises of both the parties have yet to be performed. Thus, executory contract
is that where under the terms of a contract something remains to be done by the parties.

In other words, where one or both the parties to the contract have still to perform their obligations in
future, the contract is termed as executory contract.

Example:

X agreed to sell his car to Y for Rs. 2, 00,000. Car was to be delivered by X on 20th of next month, and price
was to be paid by 30th of that month.
Pratik upadhyay Roll No. 56 Section A

It is an executory contract, as both the parties have to perform their respective obligation in future.

9. Distinguish between express and implied contracts

Ans.

Point of Difference Express Contract Implied Contract

Meaning Express contract is one in which Implied contract refers to a
the proposal and acceptance, contract wherein the proposal
that results in an agreement, and acceptance, leading to the
enforceable by law, is expressed contract, is expressed non-
verbally. verbally, i.e. through other
means.
Contract Creation By words By conduct or Behavior
Example Leasing agreement Sale by fall of hammer in an
auction sale.