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Topics of Law Test 14

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Topics of Law Test 14
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  • Question 1
    1 / -0
    X agrees with Y to discover gold through magic. The agreement is void because of _______________.
    Solution
    Under section 56 of the Contract Act, agreement to do an act impossible in nature, itself is void. This is also known as Doctrine of Frustration. In the present case, X and Y have agreement of discovering gold through magic which in eyes of law is impossible in nature and hence, is void. 
  • Question 2
    1 / -0
    X promised Y to pay Rs 10,000 to him if he murders Z. Y murdered Z, but X refuses to pay the promised sum to him. Y cannot enforce the agreement because of _________________.
    Solution
    As per section 23 of the Contract Act, those agreements are void which have unlawful considerations. The consideration or object of an agreement is lawful, unless it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. 
    In the present case, the consideration of the agreement between X and Y is to murder Z which in itself is an illegal  and forbidden act and defeat the provisions of law and hence this agreement cannot be enforced by Y due to illegality of the consideration.
  • Question 3
    1 / -0
    _________ is/are a valid agreement(s)?
    Solution
    Section 26 of the Contract act considers agreements in restraint of marriage void unless the marriage is of a minor and hence it has not been declared void and is valid. Also, agreement to marry a particular person is a valid agreement.
    Section 28 of the act declares agreement in restraint of legal proceedings to be void with an exception that those contracts by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration. Hence, it is a valid agreement.

     

  • Question 4
    1 / -0
    X agrees with Y to bring the Moon down to the Earth. This agreement is a _______ agreement.
    Solution
    Indian Contract Act, 1872 has declared void those agreements, object or consideration of which are uncertain as per section 29 of the act which says that Agreements, the meaning of which is not certain, or capable of being made certain, are void. 
    In the present case, X has agreed to bring the Moon to the Earth which is an impossible event and hence is void.
  • Question 5
    1 / -0
    State which of the following agreements are void?
    Solution
    Every agreement by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent.
    Hence, all the options are restraint in the legal proceedings.
  • Question 6
    1 / -0
    P agrees to give his daughter to Q for concumbage on payment of Rs. 20,000. This agreement is void because of :
    Solution
    As per section 23 of Indian Contract Act, 1872, all those agreements, the consideration or object of which is unlawful i.e. it is forbidden by law; 14 or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. 
    In the present case, what P is doing is immoral in nature and hence is void because of the illegality of the object agreement. 
  • Question 7
    1 / -0
    Which of these types of agreements have been treated as "agreement against public policy" by various courts?
    Solution
    An agreement which is opposed to “Public Policy” cannot be enforced by either of the parties to it as per section 23 of the Contract Act. The question as to whether an agreement is opposed to public policy or not is to be decided on general principles only and not by considering the terms of any particular contract. Courts have developed the concept of 'contrary to public policy' on case to case basis. For example :

    All trade with enemies is against public policy. Thus it is unlawful and is void. However, if a contract is made during peace times and later on war breaks out, one of the two things may result, Either the contract is suspended or it stands dissolved depending upon the intention of the parties to contract.

    Agreements entered into for using corrupt influence in procuring Government jobs, titles or honours are unlawful and therefore are not enforceable.
    In agreement in which one party agrees to drop criminal proceedings pending in a court in consideration of some amount of money, is unlawful. Therefore, such an agreement cannot be enforced except where crime is compoundable. 
    Agreements between enterprises engaged in identical or similar trade of goods or provision of services including cartels, are presumed to have appreciable adverse effect on competition and, therefore, are anti-competitive and void.

  • Question 8
    1 / -0
    An agreement by a debtor with the lender to the effect that he would not leave job or further borrow from any body or change his residence is ____________.
    Solution
    Indian Contract Act, 1872 has declared those contract which restricts personal freedom as a void contract. This is because anything restricting personal freedom contained in the contract as per section 23 of the act, and contrary to public policy. As in the present case, the agreement requires debtor to not leave job as well as his residence and no further borrowings from anybody which is restricting personal freedom of the debtor and is also restraint of trade under section 27 of the act.  
  • Question 9
    1 / -0
    Which of the following agreements is considered agreements in restraint of trade?
    Solution
    As per section 27 of the Indian Contract Act, 1872, every agreement by which anyone is restrained from exercising a lawful profession or trade or business of any kind, is to that extent void. However, there are certain exceptions to this law based on statutory rule and judicial interpretations which include:
    • There are provisions in the Partnership act which validate agreements in restraint of trade like Section 11 enables partners during the continuance of the firm to restrict their mutual liberty by agreeing that none of them shall carry on any business other than that of the firm.
    • Under trade combinations certain regulations as to the opening and closing of business in the market, licensing of traders, supervision and control of dealers and the mode of dealing are not illegal.
    • Solus or Exclusive dealing agreements are that a producer or manufacturer likes to market his goods through a sole agent or distributor and the latter agrees in turn not to deal with the goods of any other manufacturer. A producer may, for example, agree to sell all his outputs to one consumer who, in turn, agrees not to buy his requirements from any other source. These agreements are valid in nature.
    • An agreement of employment does not fall within Section 27. An agreement to serve exclusively for a week, a day, or even for an hour, necessarily prevents the person so agreeing to serve from exercising his calling during that period for anyone else than the person with whom he so agrees.
  • Question 10
    1 / -0
    X agrees to advance Rs. 5000 to Y subject to the condition that Y divorce his wife and marry X's daughter. This agreement is _________.
    Solution
    As per section 23 of the act the consideration or object of an agreement is lawful, unless it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. 
    In this case, X has agreed to pay Y when he divorces his wife and marries X's daughter. This act in itself is immoral and opposed to public policy and morality and hence is void. 
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