Basic Theory | Part 2 | Law of Contracts

Q1. Who are not competent to enter into a contract ?

Ans. The following persons are not competent to contract:

  • Persons who are minor, i.e. has age less than 18 years;
  • Persons with unsound mind i.e. idiots, lunatics, drunkards;
  • Person who are disqualified by law, i.e.  alien enemies, foreign sovereign,
    insolvents, convicts, corporation, barristers.

Q2. When a contract with a minor is not held to be void ?

Ans. The exception in rule for a minor entering into a contract is that, if a minor enters into a contract and the enforcement of such contract is beneficial for the minor then it will not be held to be void.

Q3. What do you mean by consent in a contract ?

Ans. A consent is an important criterion while entering into a contract. When two persons agree on the same thing in the same sense, it is termed as consent [Section 13].

Q4. When is a consent said to be not a free consent ?

Ans. A consent should be free and not caused by coercion, undue influence, misrepresentation, fraud or mistake. If consent is obtained by the influence of any one of the above said, then the consent so obtained is said to be not a free consent, and the contract becomes voidable.

Q5. Give an illustration of not a free consent.

Ans. Illustration: A threatened to kill B if he does not sell his plot of land to A. B out of fear signs the contract for selling his plot of land to A. Here, the consent of B is not free, but by coercion. B can later avoid the sale on the ground that he was compelled to agree to the sale and the consent given was not free consent.

Q6. What agreements are said to be unlawful agreements ?

Ans. The following agreements that are said to be unlawful agreements and become unenforceable:

  • illegal
  • immoral
  • against public policy
  • wager

Q7. What is a wager, give an illustration ?

Ans. Wager is a contract where one person promises to pay the other, money on the happening of an uncertain future event and the other person promises to pay on the non-happening of the event. There is a reciprocal promise involved in a wager. Wager is like a bet where the happening of an uncertain event is the condition on which the promise depends. As per the Indian Contract Act 1872, agreements entered into by way of wager are not enforceable.

Illustration: A agrees to give Rs. 10,000/- to B if India wins the match on 5th August. B agrees to pay A the same amount if India does not win the match. Such an agreement is a wager and is void.

Q8. What is a Contingent Contract ? Give an illustration.

Ans. A Contingent Contract is also called as a Conditional contract. It is a contract to do something or not to do something on the happening or non-happening of an event, which is collateral to the contract. Contingent contracts cannot be enforced until the uncertain future event happens. Contingent contracts are valid contracts, however if the uncertain future event becomes impossible, contingent contracts become void.

Illustration: A agrees to sell his property to B if he wins the case involving his property. This is a case of contingent contract, because the performance of the contract is based on the happening of an uncertain event. The uncertain future event being winning the case.

Q9. What is Discharge of Contract ?

Ans. A contract give rise to the mutual obligations of parties in a contract. When the mutual obligations of the parties are fulfilled, the contract comes to an end. When the contract is ended, it is said to be discharged. In other words, Discharge means termination of the contractual relations of the parties to the contract.

Q10. What are the ways by which a Discharge of contract can be performed ?

Ans. A Discharge of contract can be done in following ways :

  • discharge by Performance
  • discharge by Agreement or Consent
  • discharge by Impossibility of Performance
  • discharge by Lapse of time
  • discharge by Operation of law
  • discharge by Breach of contract.

Q11. What do you mean by Doctrine of Restitution ?

Ans. When a contract is breached by a party the affected party is awarded damages. The monetary compensation given to the affected party for the caused loss or injury due to the breach is called damages.

The objective of awarding damages by the court is to put the affected party in the same position as he would have been, if the contract had not been breached. This, under the contract law, is called the Doctrine of Restitution. The basis of this Doctrine is awarding damages for the pecuniary loss incurred by the party to the contract.

Q12. Give an illustration for damages ?

Ans. Illustration: A agrees to deliver 100 litres of milk to B on 5th May. On 5th May, A delivers only 60 litres of milk to B. B is entitled for damages from A for the loss that he suffered because of A (non delivery of required quantity of milk).

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