PLUS
Legal Aptitude
Contracts – 1
Number of Questions : 10
1. Principle 1: When one person signifies to
another his willingness to do or abstain from
doing anything, with a view to obtaining
assent of that other to such act or abstinence,
he is said to make a proposal.
Principle 2: When a person to whom such
willingness is signified, assents to the
proposal, he is said to have accepted the offer.
Facts: A and B are friends. A says to B "I will
give my car to you" and B in reply says "I will
give Rs. 50,000/-". B refuses to keep his word.
A moves to court contending that an offer was
made to B and he accepted it, therefore a
valid contract has come into existence. B by
refusing to honour his word has made a breach
of the contract. Decide.
(a) A valid contract has not come into
existence as no offer was made by A.
(b) A valid contract has come into existence
as an offer was made by A.
(c) A valid contract has come into existence
as the offer was accepted by B.
(d) A valid contract has not come into
existence as the offer was not accepted
by A.
Legal Aptitude – 3
03
CEX–9237/21-B
2. Principle 1: An invitation to an offer is not an
offer but offers to make offer or an offer to
negotiate. An invitation to offer indicates the
process of negotiation that precedes the
making of offer.
Principle 2: An offer involves a promise and
request.
Facts: An advertisement on an airline bill board
says "Fly from Delhi to Mumbai for Rs. 3200,
call our customer care". X calls the customer
care asking for a ticket for coming week. The
airline refuses to issue a ticket for Rs. 3200
and instead offers a ticket for Rs. 6000. The
customer insists that the airline has made
an offer and he has accepted the offer. Decide
whether the airline has made an offer or an
invitation to offer?
(a) The airline has made an offer to sell the
ticket for Rs. 3200 as their advertisement
contains both a promise and a request.
(b) The airline has made an invitation to offer
as their advertisement makes only a
promise and not a request.
(c) The airline has made an invitation to offer
as their advertisement makes a request
and not a promise.
(d) The airline has neither made an offer nor
an invitation to offer.
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3. Principle 1: A contract is an agreement that 4.
binds both the parties ie. when the
communication of acceptance is complete.
Principle 2: The communication of
acceptance is complete as against the offeror
when it put in the course of transmission by
the offeree and against the offeree when it
comes to the knowledge of the offeror. An
acceptance may be revoked at any time
before the communication of acceptance is
complete as against the acceptor. In other
words, before the letter of acceptance reaches
the offeror.
Facts: X sends a letter to Y by post on 3rd
January, 2015 expressing his intention to sell
his farm for Rs. 50,000. Y receives the letter
on the 5th January, 2015. Y sends his assent
via a letter posted on 7th January, 2015 which
reaches the X on the 9th January, 2015. Based
on the facts, decide when does a valid
contract come into existence binding both the
parties?
(a) A valid contract arises on 9th January,
when the communication of acceptance
is complete against the offeree, because
on that day both parties incur binding
obligations.
(b) A valid contract arises on 7th January,
when the letter of acceptance is posted
because on that day both parties incur
binding obligations.
(c) A valid contract arises against X on the
5th January when his letter is received
and against Y on 9th January when his
acceptance is received by X binding both
the parties.
(d) A valid contract arises against X on the
5.
7th January, when the letter of acceptance
is posted by Y and against Y on the 9th
January, when the letter of acceptance is
received by X.
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Principle 1: When at the desire of the
promisor, the promisee or any other person
has done or abstained from doing something,
or does or abstains from doing something, or
promises to do or abstain from doing
something, such act or abstinence or promise
is called a consideration for the promise.
Principle 2: The rule of privity to contract
lays down that no stranger to a contract can
sue on the basis of the contract.
Facts: Santa said to Banta "Plough my field
and I shall pay you a sum of Rs. 1000/-".
Banta was taken ill and he asked his son
Zanta to plough Santa's field. Zanta ploughed
Santa's field and when Banta asked Santa to
pay the promised sum, he refused on the
ground that he had asked Banta and not Zanta
to plough the field. Banta and Zanta brought
a suit against Santa for breach of contract.
Decide.
(a) Both Banta and Zanta can file a suit
against Santa, as Santa entered into a
contract with Banta and Zanta furnished
consideration for the contract.
(b) Only Banta can file a suit for breach of
contract as he was the original party to
the contract. Zanta was stranger to the
contract.
(c) Only Zanta can file a suit for breach of
contract as he furnished the consideration,
i.e. ploughed the field, for the contract.
(d) Neither Santa nor Zanta can file a suit for
breach of contract. Santa though entered
into the contract but did not furnish the
consideration i.e. plough the field and
Zanta though furnished consideration but
he was a stranger to the contract.
Principle: Coercion refers to the committing
or threatening to commit, any act forbidden
by the Indian Penal Code, with the intention
of causing any person to enter into an
agreement.
Legal Aptitude – 3
 Facts: A, a 25 yr old man was romantically
involved with B's daughter C who was 21 yrs
old and intended to get married. A asks B to
sell his plot of land to him for Rs. 50,000/-. B
refuses as the price quoted by A is too low. A
threatens B that if he does not sell this plot
to him, than he will elope with his daughter
bringing shame to his family. B sells the plot
to A. Afterwards B files a suit for nullification
of the sale on the ground that the same was
obtained by coercion. Decide.
(a) B cannot have the sale nullified as there
was no coercion.
(b) B can have the sale nullified as the sale
was obtained by coercion.
(c) B cannot have the sale nullified as being
the natural guardian of his daughter, he
should be careful about her conduct.
(d) B can have the sale nullified as the
prospect of shame amounts to coercion.
6. Principle: A contract is said to be induced
by undue influence where the relations
subsisting between the parties are such that
one of the parties is in a position to dominate
the will of the other and uses that position to
obtain an unfair advantage over the other.
Facts: A wanted to buy a new television set.
A goes to Excel electronics showroom. A
had in mind a TV set of a certain brand.
However the salesman in the showroom
persuades and impresses upon A to purchase
another TV set which costs double the
amount which he would have paid for the other
TV set. The salesman informs him that the
other TV set has lot of problems and
customers who bought that brand are in fact
returning the TV. The representation made by
the salesman was false. The salesman had
an ulterior motive in selling the more expensive
TV as he would have got higher commission
from the company. A purchased the TV set
recommended by the salesman but later finds
out that all the representations made by the
salesman were false and realizes that he
purchased the TV only under the influence of
the salesman. Decide.
Legal Aptitude – 3
(a) The transaction is not hit by undue
influence as A was transacting with the
salesman for the first time.
(b) The transaction is hit by undue influence
as A realized that he allowed the salesman
to dominate his will.
(c) The transaction is hit by undue influence
as the salesman obtained an undue
advantage for himself by selling a higher
priced TV.
(d) The transaction is not hit by undue
influence as A entered into the transaction
voluntarily.
7. Principle: In order to avoid a contract on the
basis of misrepresentation, the plaintiff must
prove that the statement was false, it was
one of the facts, and was addressed to the
plaintiff and induced him to enter into the
contract.
Facts: Byomkesh wanted to buy a new
microwave oven. He went to the store and
asked the store manager to show him the
best microwave oven. The shopkeeper gave
him an oven and said that he believes that
this is the best oven available in the market.
Byomkesh worked for a consumer research
forum and knew that the particular brand was
not the best in market. He still purchased the
oven because it was compact and would have
occupied less space. Later on Byomkesh
sues the shopkeeper. Decide whether the
store keeper has committed
misrepresentation?
(i) The store manager has committed
misrepresentation as the statement made
by him was false.
(ii) The store manager committed
misrepresentation as his statement was
addressed to Byomkesh.
(iii) The store manager has not committed
misrepresentation as he qualified his
statement by saying "I believe".
(iv) The store manager has not committed
misrepresentation as the representation
did not induce Byomkesh to enter into
the contract.
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 Options:
(a) Only (i) (b) Both (i) and (ii)
(b) Only (iv) (d) Both (iii) and (iv)
8. Principle: Fraud means the active
concealment of a fact by one having
knowledge or belief of the fact with the intent
to deceive another party or to induce him to
enter into the contract.
Facts: A recently acquired a large sum left
behind by his deceased uncle. He wanted to
invest the money and thought of buying a flat.
He went to property dealer and enquired about
the flats and their rates. The property dealer
gave him the information sought by A.
However the property dealer did not inform
him that the prices of the same flat are going
to fall in next few weeks going by the recent
market trends. A enters into a contract to buy
B's flat for a certain sum. A few weeks after
the contract is concluded it is brought to the
knowledge of A that the property rates have
fallen. A sought to have the contract set aside
on the basis of the fraud. Decide.
(a) A can have the contract set aside as there
was active concealment by the property
dealer.
(b) A cannot have the contract set aside as
active concealment requires
communication from the other party that
conceals information. Silence does not
amount to active concealment.
(c) A can have the contract set aside as the
information provided by the property dealer
induced him to enter into the contract.
(d) A cannot have the contract set aside as
the information was received from the
property dealer.
9. Principle: Where both the parties to an
agreement are under a mistake as to a matter
of fact essential to the agreement, the
agreement is void.
Facts: A agrees to sell to B a specific cargo
of goods supposed to be on its way from
© LST 2020 Replication or other unauthorised use of this material is prohibited by the copyright laws of India
Page 4
England to Mumbai. It turns out that, before
the day of the bargain, the ship conveying
the cargo had been cast away and the goods
were lost. Neither party was aware of these
facts. Decide whether the agreement is void
or not?
(a) The agreement is not void since there was
no mutual mistake between the parties.
(b) The agreement is void as the both the
parties are under a mistake as to matter
of fact essential to the agreement.
(c) The agreement is not void as even though
the parties are under a mistake, the same
is not regarding a matter of fact essential
to the agreement.
(d) The agreement is voidable at the option
of either of the parties.
10. Principle: Every person is competent to
contract who is of the age of majority
according to the law to which he is subject,
and who is of sound mind, and is not
disqualified from contracting by any law to
which he is subject.
Explanation: Any contract which is entered
by a minor is void ab initio..
Facts: X, a minor entered into an agreement
with Y, wherein X promised to sell his house
to Y for a sum of Rs. 20,000 to be paid in two
equal installments. When X's mother was
informed about the contract she moved to
court, as the guardian of X, to have the contract
set aside on the ground that X is not
competent to contract due to his minority.
Decide upon the validity of the contract?
(a) The agreement is valid as X entered into
the contract voluntarily.
(b) The agreement is voidable at the option
of X.
(c) The agreement is void ab initio.
(d) The agreement is valid at the option of X's
mother, since she is the guardian of X.
Legal Aptitude – 3
 CEX–9237/21-B Legal Aptitude – 3
Answers and Explanations
1 a 2 c 3 d 4 b 5 a
1. a In this case, no contract has come into existence as
no offer was made by A. An offer, as defined by the
principle, involves two concepts, firstly a promise and
secondly a request, both made by the party offering.
In this case even though A made a promise to give his
car but there was no request from his side. The words
appearing in the principle "with the view of obtaining
the assent of that other to such act or abstinence"
show that there is a concept of request also involved.
However there was no request for a payment made,
thus it does not constitute a proposal. A mere promise
without a request for something in return does not
constitute a proposal. The issue of acceptance does
not arise here since there was no proposal in the first
place.
2. c In this case, the airline has made an invitation to offer.
It was not an offer because an offer must be capable
of being accepted on its own. In this case, the
advertisement was not capable of being accepted on
its own, the prospective customer had to call the
airlines. It brings us to the issue of invitation to offer.
Offer as the principle states, must involve both promise
and request. In this case, there was a request by the
airline to call the customer care to secure a ticket,
there was no promise made on part of the airline that
the ticket will be offered. Thus it was merely an
invitation to offer by the airline. The customer making
the call made the offer to the company and it was upto
the company whether or not to accept the offer.
3. d As per the law laid down by the contract act, a valid
contract arises only when both parties are bound by
an agreement. However due to the postal rule stated
by the contract act, the parties to a contract may be
bound by the terms of the agreement on different
dates. In this case, X becomes bound by the terms of
the contract on the 7th January when the letter of
acceptance is posted by Y. As per the principle, an
offeror, in this case, X can revoke his offer only before
the letter of acceptance is posted by the offeree i.e Y.
Once the letter of acceptance is posted he becomes
bound by the contract. Y posts his acceptance on the
7th January, and since X cannot revoke his proposal
X, becomes bound by the contract. As far as Y is
concerned, he becomes bound by the contract only
when the letter of acceptance is received by X. Before
that he has the option to revoke his acceptance without
Legal Aptitude – 3
PLUS
6 a 7 d 8 d 9 b 10 c
incurring any liability. Since the letter of acceptance is
received by X on the 9th January, Y becomes bound
by the contract on that day.
4. b In this case, only Santa can file a suit for breach of
contract. Zanta being a stranger to the contract has
no locus to file a suit for breach. As far as the issue of
consideration moving from Zanta, the same has no
bearing on the suit as the principle clearly states that
when at the desire of the promisor, the promisee or
any other person. Therefore the consideration may
move from any other person also, i.e. apart from the
promisee, and the same shall not have any effect on
the validity of the contract.
5. a B cannot have the sale nullified as there was no
coercion on part of A. Coercion is defined as committing
or threatening to commit an act prohibited by the IPC. A
threatened to elope with B's daughter with whom he
was romantically involved. The use of word "elope"
indicates that the act on part of A and C would have
been voluntary and with consent of C. Since the act
of two consenting adults eloping does not amount to a
crime under the IPC, there was no coercion. Also an
act, which does not amount to a crime, cannot be said
constitute coercion even if brings shame to the family.
6. a In this case, the transaction is not hit by undue
influence, the first requirement in order to prove undue
influence is that there must be subsisting relations
between the parties. In other words, there has to be a
pre-existing relationship. In this case, A was
transacting with the salesman for the first time. There
was no subsisting relationship between the parties.
Since there were no subsisting relations between the
parties, the question of undue influence does not arise.
7. d In this case, the store manager is not liable for
misrepresentation as firstly he used the words "I
believe" therefore he expressed an opinion and did
not make a statement of fact and secondly Byomkesh
knew that the product he was purchasing is not the
best in the market but he still bought it. He did not rely
on the statement made by the store manager. In other
words, the statement did not induce him to enter the
contract. Therefore the store manager cannot be held
liable for misrepresentation.
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8. d In this case, A cannot have the contract set aside on
the basis of fraud. In case of fraud, the most important
requirement is that active concealment must be on
part of the other party to the contract. In this case, the
other party did not conceal any information from A, the
facts do no suggest that any query was made by A
from B. the queries were directed to the property
dealer who was not the other party to the contract
nor the fact suggest that he was acting as their agent.
Therefore the contract cannot be set aside on the
basis of fraud. As far as the issue of active
concealment is concerned, the property dealer merely
adopted silence as regards the market trends, he did
not make any statement concealing facts. Therefore
there was no active concealment. Also, there was no
intent to deceive.
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9. b The agreement is void as the goods, which were the
essential element of the agreement, had been lost at
the time of the agreement and both parties were
unaware of the same. Thus both parties were under
a mistake as to fact essential to the contract.
10. c The contract is void ab initio i.e. void from the beginning
or non-existent. The principle clearly states that only a
person who is of the age of majority is competent to
contract. In this case, X being a minor was not
competent to do so. Therefore the contract was void
ab initio. The question of contract being void or voidable
presupposes the existence of a contract. Since in this
case, X could not have entered into a contract in the
first place, no contract pre-existed.
Legal Aptitude – 3