CLAT Contract Law 2 — Questions and Answers
Question 1: Which section of the Indian Contract Act, 1872 deals with 'offer' (proposal)?
- Section 2(a) (Correct answer)
- Section 2(b)
- Section 2(c)
- Section 2(d)
Correct answer: Section 2(a)
Section 2(a) defines a proposal (offer) as when one person signifies to another his willingness to do or abstain from doing anything, with a view to obtaining the other's assent.
Question 2: Which of the following best describes 'consideration' under Section 2(d) of the Indian Contract Act?
- Something done, abstained from, or promised at the promisor's desire (Correct answer)
- A monetary payment made at the time of contract
- A written acknowledgment of the contract's terms
- The legal capacity of the parties to contract
Correct answer: Something done, abstained from, or promised at the promisor's desire
Section 2(d) defines consideration as something done, abstained from, or promised at the desire of the promisor — it need not be money and can be past, present, or future.
Question 3: The maxim 'ex nudo pacto non oritur actio' means:
- No action arises from a bare agreement without consideration (Correct answer)
- A contract made under duress is void
- Fraud vitiates everything
- Performance must be exact to discharge a contract
Correct answer: No action arises from a bare agreement without consideration
The Latin maxim means that a naked pact (agreement without consideration) cannot give rise to a legal action, reflecting the importance of consideration.
Question 4: Under the Indian Contract Act, which of the following agreements is expressly declared void?
- Agreement in restraint of marriage (Correct answer)
- Agreement to refer disputes to arbitration
- Agreement to sell goods below market price
- Agreement where price is not fixed by the parties
Correct answer: Agreement in restraint of marriage
Section 26 declares agreements in restraint of marriage (other than for minors) to be void, as they are contrary to public policy.
Question 5: Anticipatory breach of contract occurs when:
- A party repudiates the contract before the performance date arrives (Correct answer)
- A party performs the contract defectively
- The contract is frustrated by an external event
- One party fails to give notice of cancellation
Correct answer: A party repudiates the contract before the performance date arrives
Anticipatory breach happens when a promisor, before the time for performance, expressly or by conduct refuses to perform, entitling the promisee to sue immediately.
Question 6: Which doctrine allows a court to enforce a promise even without consideration if the promisee has relied on it to their detriment?
- Promissory estoppel (Correct answer)
- Doctrine of frustration
- Doctrine of privity
- Unjust enrichment
Correct answer: Promissory estoppel
Promissory estoppel prevents a promisor from going back on a promise if the promisee has acted on it to their detriment, even without formal consideration.
Question 7: Under Section 73 of the Indian Contract Act, compensation for breach of contract is given for:
- Loss or damage naturally arising from the breach or reasonably foreseeable by both parties (Correct answer)
- All losses suffered by the aggrieved party without limitation
- Only mental anguish and distress caused by the breach
- Exemplary damages to punish the defaulting party
Correct answer: Loss or damage naturally arising from the breach or reasonably foreseeable by both parties
Section 73 limits compensation to losses that naturally arose in the usual course or that both parties knew at the time of the contract were likely to result from its breach.
CLAT Contract Law 2
Which section of the Indian Contract Act, 1872 deals with 'offer' (proposal)?