Pre-Final Examination

20 September 2022 – 24 September 2022

IV Semester 5 Year B.A. LL.B/B.B.A. LL.B/B.Com. LL.B
Subject: Law of Contract-1

Duration: 3hour Max. Marks: 80

Instructions: 1. Answer all five Units.

2. One essay type question and short note/ problem is
compulsory for each Unit.
3. Figures to the right indicate marks.
4. Answer should be written in English.

UNIT – I

Q. No.1. (a) “All contracts are agreements, but all agreements are not necessarily
contracts.” Explain.
Definition clauses: Section 2: The formation of a contract from offer-
acceptance-set of promises-consideration-enforceability-contract. (3)
When can agreements be considered as a valid contract: Essentials of a
valid contract: Section 10: All agreements are contract if they are made
by the free consent of parties competent to contract, for a lawful
consideration and with a lawful object, and are not hereby expressly
declared to be void. (6)
2 case laws (1)

Marks: 10
OR

(a) Explain the doctrine of privity of contract. State the exceptions if any.
Marks: 10
The general principle of privity of contract: No party can enforce the contract if they are
not party to it: Explanation: Principle commonly followed in India and England (4)
Evolution through Case Laws: Dutton Vs. Poole, Dunlop Pneumatic Vs. Selfridge case,
Tweddle Vs. Atkinson (4)
rd
Exceptions to the principle of privity: where 3 party enforceability is allowed: beneficial
contracts/trust, covenants running with land, family settlements, etc. (2)

Q. No.1. (b) Mr. ‘X’ invited Mr. ‘Y’ for a dinner and Mr. ‘Y’ accordingly accepted
the invitation. The dinner was arranged in a five-star hotel with premium
reservation for elite guests but Mr. ‘Y’ could not attend the dinner. Mr ‘X’
has filed a suit to recover expenses incurred in hosting the dinner. Decide.
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Y cannot be held liable for breach. Intention to contract: When the matter is related to
social arrangements, there is usually no intention to create a legal obligation
against the other party, unless the intention is expressly mentioned. (4)
Case Law (2)
Marks: 6
OR
(b) Thejus made a proposal to Ravi in June 2021. Ravi accepted it in August
2022. Is it valid acceptance? Marks: 6
Lapse of Offer: Section 6: where there is a delay from the date of offer in
acceptance of the offer, the delay may lead to the lapse of the standing
offer/expiry. In case there is no time mentioned for the lapse, expiry of
reasonable time can lead to lapse of offer. (4)
Case Law (2)

UNIT – II

Q. No.2. (a) What is meant by capacity to enter into a contract? Explain with the
concept with the help of judicial pronouncements. Marks: 10
Capacity to contract/competency to contract: where the statute (ICA)
establishes who is competent to contract: person of majority and person
of sound mind. (3)
Minor’s agreement: nature: Void Ab Initio: effect: no contractual liability on
minor, no estoppel on minority, doctrine of equitable restitution,
Specific Relief Act (sec 33) (4)
Unsound person: who, at the time of entering the contract, was unsound, or
was under such mental state where the person cannot be considered to
know what he/she is entering into. Nature: Void Ab Initio: Difference
in India and England (3)
Case law (1)
OR

(a) “Agreement in restraint of trade is void”. Discuss this statement and state
the exceptions. Marks: 10
Section 27: Agreement in restraint of trade: from lawful exercising of
profession, trade or business: Void: Exception: where goodwill is sold. It is
subsequent to the freedom of trade and commerce (FR), all restraint covered
whether partial or whole. (4)
Exceptions: Statutory exceptions sale of goodwill, covenant along with
partnership act; judicial exceptions: trade combinations, solus or exclusive
dealing agreements, restraint upon employees during employment etc (4)
Case Law (2)

2
 Q. No.2. (b) Rajath and Priyanka entered an agreement before the marriage. In the
agreement it was pre-determined mutually by them that they shall live
separately after two weeks into their marriage and finally file a divorce. Is it a
valid agreement ? Marks: 6
Not a valid agreement: Section 23 and 24: unlawful object/consideration:
void agreement. Unlawful object includes anything that is against public
policy (4)
Case Laws (2)
OR
(b) John chartered a ship from Alex, who without proper verification stated
the ship was certain not more than 3500 tonnage register. The ship turned out
to be of 4000 tonnage. John wants to repudiate the contract. Advise John. Cite
relevant case laws. Marks: 6

Case of misrepresentation: Section 18 where the person is not authorised to

make such statement even though he had bonafide belief on it to be true.
Unwarranted statements. Believing on such statement, the other party entered
into contract. It is voidable at the option of the whom the consent was so
taken. (4)
Case Law: Bombay Oceanic Steam Navigation Co. Vs. Sundardas
Dharamsay (1890) 14 ILR Bom 241 (2)

UNIT – III

Q. No.3. (a) Explain the different modes of discharge of contract. Marks: 10

Discharge of contract: when the persons are discharged from the contractual
obligations with each other, it is termed as discharge of contract. (3)
Discharge by performance
Discharge by mutual consent
Discharge by impossibility of performance
Discharge of breach of contract
Discharge by lapse of time, operation of law etc (5)
Case Laws (2)

OR

(a) Explain the law relating to performance of reciprocal promises.

Marks: 10
Section 51 to 54:
Promisor not bound to perform unless reciprocal promisee ready and willing to
perform (2)
Order of performance of reciprocal promises as expressly fixed by law or as the
nature of the transaction requires (2)

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 When one party prevents the other from performing his promise, the contract
becomes voidable (2)
In case of default in performance of promise to be performed first, such promisor
cannot claim the performance of the reciprocal promise. (2)
Case Laws and illustrations: (2)

Q. No.3. (b) Ms. Sandhya, a famous singer agreed to sing in a programme arranged by
Tejus. But, before the programme Ms. Sandhya dies. Can Tejus compel Ms.
Roopa who is the daughter of deceased Sandhya to sing in the programme
Marks: 6
No. Impossibility of performance due to death; Tejus cannot compel Ms.
Roopa to sing in the programme as the promise is in the nature where the
personal characteristic/creative characteristic of a particular individual was
made. Though the liability due to breach can be upon the legal representative
of the party, such case being an exception. Thus, no claim against Ms. Roopa,
for the actual performance of promise.
(5)
Case Law (1)
OR
(b) ‘X’ agreed to let-out his Grand Convention Centre to ‘Y’ for rupees three
lakhs for the marriage of Y’s son. Before the date of marriage, the
Convention Centre was destroyed by fire. ‘Y’ sues ‘X’ for breach of
contract. Decide. Marks: 6
Doctrine of frustration: impossibility of performance due to loss of property.
Thus, it cannot be breach of contract. . (5)
Case Laws (1)
UNIT – IV

Q. No.4. (a) Who is a ‘finder of the goods’ and what are the duties of a finder of the
goods? Marks: 10
Finder of the goods is not the actual owner of the goods but the one who
found it. Though there is no contract entered into between the owner of
the lost goods and the finder of the lost goods, there arises a contractual
obligation upon the finder to re-allocate the lost goods to the owner. (3)
In such instance, the liability of the finder is similar to that of a bailee
under the contract of bailment. (1)
Section 151: take reasonable care
Section 156 and 157: not to mix the goods with his own
Section 169: bound to return the goods to true owner
Section 161: due to the default of the finder, any loss, destruction or
deterioration caused to the goods, the finder to compensate. (5)
Section 169: exceptions: where goods can be sold.
Case Laws (1)

4
 OR
(a) Explain general and special damages with the help of decided cases
Marks: 10
Remedies to the breach of contract can be in the nature of
damages/compensation that can be given for the loss caused to one party due
to the non-performance of another party.
Special damages: compensation that can be accurately assessed
General damages: compensation that cannot be accurately assessed
Case Law (1)

Q. No.4 . (b) Shekhar leaves a valuable article by mistake at the house of Manu. Can
Shekhar recover the article from Manu. Marks: 6
Yes. Shekhar can recover the article from Manu as under section 72,
responsibility of returning the goods that have been acquired out of mistake
falls under the bracket of quasi contract. (5)
Case Law (1)
OR
(b) ‘A’ contracts to supply goods on a specified day to 'B'. A does not supply
on that day, as a consequence B has to close the factory. Advise remedies
available to B. Marks : 6

UNIT – V

Q. No.5. (a) What is specific performance of contract? What are the conditions
to claim it? Marks: 10
Specific performance is one of the remedies for the breach of contract
where the relief is in specie; the compulsion of the exact performance
to be done of which, the breach has taken place. (6)
Conditions to claim: when there exists no standard for ascertaining
actual damage; when compensation of money is not adequate relief. (3)
Case Laws (1)

OR
What is the nature of specific relief under the Specific Relief Act, 1963? Also
explain the significance of the legislation. Marks: 10
Relief in specie, a remedy established on the principles of justice, equity and good
conscience; evolved from the Equity courts of England; where common law does
not have a remedy for the breach, recourse taken to specific relief.
In India, Act of 1877 was the act established for Specific Relief, but was altered
various times until it was repealed in the year 1963 with a new Specific Relief Act
of 1963 based on the recommendations of the Law of Commission of India (9th
Report); (4)

5
Nature: equitable restitution, prior to 2018 it was considered as a discretionary
power of the court but after 2018, it is a matter of right which can be enforced upon
suit. (3)
Significance of legislation: for the purposes of serving justice, equity and good
conscience. Where the remedy of compensation is not adequate, specific
performance can be enforced. (3)

Q. No.5. (b) Radha is the owner of a building. Radha got dispossessed from the
building by Anu by using force against Radha. Advise Radha.
Marks: 6
Radha can file a suit for ejectment under section 5 following the procedure of CPC.
Radha being the owner, thus the title/ownership is with Radha. Thus, suit for
ejectment would suffice the restoration of immovable property under Section 5. (4)
Case Laws , illustrations (2)
OR
Rakesh, a famous Carnatic musician had agreed with ‘Swaraganga’ theatre to
perform on the Navaratri festival days at the theatre. Later, Rakesh, refuses to
perform on the said days. ‘Swaraganga’ theatre wishes to make him sing on the said
days. Advise.
Marks: 6
Swaraganga theatre will not succeed in bringing a suit for specific performances
upon Rakesh as it is one of the limitations of the Specific Relief Act that the
contracts which involve personable qualifications cannot be provided as a specific
remedy. (3)
Section 14(c) specifies the same. Section 14 gives a list of circumstances where
specific performance cannot be enforced. (2)
Case Laws, illustrations (1)
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