QUESTION AND ANSWERS CA-FOUNDATION
INTRODUCTION TO CONTRACT
CASE STUDIES THEORETICAL QUESTIONS
Q-1 Father promised to pay his son a sum of rs one lakh Q-2 Explain the essential elements of a
is the son passed C.A. examination in the first attempt. valid contract.
The son passed the examination in first attempt, but
the father failed to pay the amount as promised. Son Q-3 An illegal agreement void but void
files a suit for recovery of the amount. State along with agreement is not necessarily
reasons whether son can recover the amount under illegal.Explain.
the Indian Contract Act, 1872
Hint:- There is no contract between son and father as Q-4 “Void agreement” and “ Void
they do not intent to create legal relationship. Thus Son contract” are same. Offer views based on
cannot recover the amount from Father. rule position.
OFFER
CASE STUDIES
Q-5 Mr D started self service system in his Shop. Mr. A entered in the shop, took a basket and after
taking articles of his choice into the basket reached the cashier for payments. The cashier refuses to
accept the price. Can Mr. D be compelled to sell the said articles to Mr. D. Decide.
Hint:-Displaying articles is an invitation to offer not an offer. Therefore, D is not bound by it and A
cannot compel him for the same. For more details, Refer case of ‘Pharmaceutical Society of Great
Britain v Boots Cash Chemist Ltd.’
Q-6 “Good Girl” Soap Co. advertised that it would give reward of Rs. 1000 who developed skin disease
after using “Good Girl” soap of the Company for a certain period according to the printed directions.
Miss Rakhi purchased the advertised “Good Girl” and developed skin disease in spite of using this
soap according to the printed instructions. She claimed reward of Rs. 1000. The company refused the
reward on the ground that offer was not made to her and that in any case she had not communicated
her acceptance of the offer.
Decide whether Miss rakhi can claim reward or not. Refer the relevant case law, if any.
Hint:-This is a general offer provided by the company and therefore Company is bound by it. Therefore,
Miss Rakhi can claim compensation from the Company. For more refer case of “Carlill v Carbolic Smoke
ball co.”
Q-7 Makhan, seeing a mobile phone in a showcase of a shop which was marked for sale for ` 2,000, enters
the shop, places ` 2,000 on cash counter and told to give him displayed mobile. Shop owner refused. Can
the shop owner refuse to sale the displayed mobile?
Q-8 “B” offered to sell his car to “A” for 75,000. “A” accepts to purchase at 74,950. “B” refuses.
Subsequently ‘A’ agrees to purchase at 75,000 but ‘B’ refused. ‘A’ sued ‘B’ for specific performance of
the contract. State legal position?
Hint:- A has provided Counter offer to Mr. B by saying that he will purchase the car at 74,950/’. Once
the counter offer is provided, the original offer becomes rejected and once the original offer is rejected
, it cannot be revived again. Therefore, A cannot sue B.
Q-9 Comment on the following based on legal provisions.
Death or insanity of the proposer automatically revokes the proposal.
THEORETICAL QUESTIONS
1 CA Ankit Oberoi
, QUESTION AND ANSWERS CA-FOUNDATION
Q-10 Write short notes on Counter offer
Q-11 When an offer lapses?
ACCEPTANCE
CASE STUDIES THEORETICAL QUESTIONS
Q-12 Ramaswami proposed to sell his house to Q-13 Explain in brief the rules relating to
Ramanathan. Ramanathan sent his acceptance by post. “acceptance” of an offer under the
Next day, Ramanathan sends a telegram withdrawing his Provisions of the Indian Contract Act,
acceptance. Examine the validity of the acceptance in 1872.
the light of the following:-
(i)He telegram of revocation of acceptance was received Q-14 What are essential elements of a valid
by Ramaswami before the letter of acceptance. acceptance?
(ii)The telegram of revocation and letter of acceptance
both reached together. Q-15 Write explanatory notes on;
Hint:- Mere mental acceptance is no acceptance
i) The revocation is valid and there is no Contract
ii) If Ramaswami opens the telegram (containing the
revocation of acceptance) first and reads it:- Then the
revocation is valid and there is no contract.
If Ramaswami opens the telegram (containing the
acceptance) first and reads it:- Then the revocation is not
valid and there is a contract.
CONSIDERATION
CASE STUDIES
Q-16 X transferred his house to his daughter M by way of gift. The gift deed, executed by X, contained
a direction that M shall pay a sum of Rs. 5000 per month to N (the sister of the executant).
Consequently, M executed an instrument in favour of N agreeing to pay the said sum. Afterwards, M
refused to pay the sum to N saying that she is not liable to N because no consideration had moved
from her. Decide with reasons under the provisions of The Indian Contract Act, 1872 whether M is
liable to pay the said sum to N.
Hint:- Refer Case of “Chinnaya V Rammaya” which states that consideration need not to be received
from the promise, it can be received from third party also. Therefore, N has the right to receive money
from M.
Q-17 Mr Singh an old man, by a registered deed of gift, granted certain locked property to A, By the
terms of the deed, it was stipulated that an annuity of Rs. 2000 should be paid every year to B, who
was the brother of Mr. Singh.. On the same day, A made a promise with B and executed in favour an
agreement to give effect to stipulation. A failed to pay the stipulated sum. In an action against her by
B, she contended that since B had not furnished any consideration, he has no rights of action.
Examining the Provisions of the Indian Contract Act, 1872, decide whether the contention of A is
valid?
Hint:- Refer the case of “Chinnaya V Rammaya”
Q-18 The father of a minor girl, Anu, entered into an agreement for her marriage with Vishal.
Afterwards, Vishal refused to marry Anu. ON attaining majority, Anu filed a suit against Vishal for
2 CA Ankit Oberoi
, QUESTION AND ANSWERS CA-FOUNDATION
damages for breach of promises to marry. Vishal contended that Anu cannot enforce the contract as
she was not a party to the agreement between him and Anu’s father. Is Vishal ‘s contention valid?
Hint:- beneficiary can enforce a contract even if he is a stranger to the contract. Therefore, Anu has the
right to take action Vishal.
THEORETICAL QUESTIONS
Q-19 Are there any circumstances under which a contract, under the provisions of the Indian Contract
Act, 1872 without consideration is void? Explain.
CAPACITY TO CONTRACT
CASE STUDIES
Q-20 Ramesh, aged 16 years, was studying in an engineering college. On 1st march 2011 he took a
loan of rs. 1 lakh from Suresh for the payment of his college fee and agreed to pay by 30 th may 2012.
Ramesh possesses assets worth rs. 10 lakhs. On the due date Ramesh fails to pay back the loan to
Suresh. Suresh now wants to recover the loan from Ramesh out of his assets. Whether Suresh would
succeed? Decide, referring to the Provisions of the Indian Contract Act, 1872.
Hint:- Ramesh is liable for Rs. 1 lakh since the person who supplies necessities to the incompetent
person is entitled to be reimbursed from the property of Such incompetent Person.
Q-21 X, a minor was studying in M.com in a college. On 1st July 2005 he took a loan of rs. 10,000 from
B for the payment of his college fee and to purchase books agreed to pay by 31st December 2005. X
possesses assets worth rs. 2 lakhs. On the due date X fails to pay back the loan to B. B now wants to
recover the loan from X out of his assets. Whether B would succeed? Decide, referring to the
Provisions of the Indian Contract Act, 1872.
Hint:- X is liable for Rs. 10000 since the person who supplies necessities to the incompetent person is
entitled to be reimbursed from the property of Such incompetent Person.
Q-22 State whether correct or incorrect:-
(iii) A minor on his attaining majority can validate any agreement which was entered into when he was
a minor and which was void.
Hint:-Incorrect, minor cannot ratify the void agreement on attaining the age of Majority.
Q-23 W, the wife of H, who is lunatic, purchases a diamond set of ` 10 lacs from a jeweller on credit.
Referring to the previsions of the Indian Contract Act, 1872, decide whether the jeweller is entitled
to claim the above amount from the property of H.
Hint:-H will not be liable for the purchases of his lunatic. Law provides that the property of lunatic is
liable for the necessaries to him/her.
FREE CONSENT
CASE STUDIES
3 CA Ankit Oberoi
INTRODUCTION TO CONTRACT
CASE STUDIES THEORETICAL QUESTIONS
Q-1 Father promised to pay his son a sum of rs one lakh Q-2 Explain the essential elements of a
is the son passed C.A. examination in the first attempt. valid contract.
The son passed the examination in first attempt, but
the father failed to pay the amount as promised. Son Q-3 An illegal agreement void but void
files a suit for recovery of the amount. State along with agreement is not necessarily
reasons whether son can recover the amount under illegal.Explain.
the Indian Contract Act, 1872
Hint:- There is no contract between son and father as Q-4 “Void agreement” and “ Void
they do not intent to create legal relationship. Thus Son contract” are same. Offer views based on
cannot recover the amount from Father. rule position.
OFFER
CASE STUDIES
Q-5 Mr D started self service system in his Shop. Mr. A entered in the shop, took a basket and after
taking articles of his choice into the basket reached the cashier for payments. The cashier refuses to
accept the price. Can Mr. D be compelled to sell the said articles to Mr. D. Decide.
Hint:-Displaying articles is an invitation to offer not an offer. Therefore, D is not bound by it and A
cannot compel him for the same. For more details, Refer case of ‘Pharmaceutical Society of Great
Britain v Boots Cash Chemist Ltd.’
Q-6 “Good Girl” Soap Co. advertised that it would give reward of Rs. 1000 who developed skin disease
after using “Good Girl” soap of the Company for a certain period according to the printed directions.
Miss Rakhi purchased the advertised “Good Girl” and developed skin disease in spite of using this
soap according to the printed instructions. She claimed reward of Rs. 1000. The company refused the
reward on the ground that offer was not made to her and that in any case she had not communicated
her acceptance of the offer.
Decide whether Miss rakhi can claim reward or not. Refer the relevant case law, if any.
Hint:-This is a general offer provided by the company and therefore Company is bound by it. Therefore,
Miss Rakhi can claim compensation from the Company. For more refer case of “Carlill v Carbolic Smoke
ball co.”
Q-7 Makhan, seeing a mobile phone in a showcase of a shop which was marked for sale for ` 2,000, enters
the shop, places ` 2,000 on cash counter and told to give him displayed mobile. Shop owner refused. Can
the shop owner refuse to sale the displayed mobile?
Q-8 “B” offered to sell his car to “A” for 75,000. “A” accepts to purchase at 74,950. “B” refuses.
Subsequently ‘A’ agrees to purchase at 75,000 but ‘B’ refused. ‘A’ sued ‘B’ for specific performance of
the contract. State legal position?
Hint:- A has provided Counter offer to Mr. B by saying that he will purchase the car at 74,950/’. Once
the counter offer is provided, the original offer becomes rejected and once the original offer is rejected
, it cannot be revived again. Therefore, A cannot sue B.
Q-9 Comment on the following based on legal provisions.
Death or insanity of the proposer automatically revokes the proposal.
THEORETICAL QUESTIONS
1 CA Ankit Oberoi
, QUESTION AND ANSWERS CA-FOUNDATION
Q-10 Write short notes on Counter offer
Q-11 When an offer lapses?
ACCEPTANCE
CASE STUDIES THEORETICAL QUESTIONS
Q-12 Ramaswami proposed to sell his house to Q-13 Explain in brief the rules relating to
Ramanathan. Ramanathan sent his acceptance by post. “acceptance” of an offer under the
Next day, Ramanathan sends a telegram withdrawing his Provisions of the Indian Contract Act,
acceptance. Examine the validity of the acceptance in 1872.
the light of the following:-
(i)He telegram of revocation of acceptance was received Q-14 What are essential elements of a valid
by Ramaswami before the letter of acceptance. acceptance?
(ii)The telegram of revocation and letter of acceptance
both reached together. Q-15 Write explanatory notes on;
Hint:- Mere mental acceptance is no acceptance
i) The revocation is valid and there is no Contract
ii) If Ramaswami opens the telegram (containing the
revocation of acceptance) first and reads it:- Then the
revocation is valid and there is no contract.
If Ramaswami opens the telegram (containing the
acceptance) first and reads it:- Then the revocation is not
valid and there is a contract.
CONSIDERATION
CASE STUDIES
Q-16 X transferred his house to his daughter M by way of gift. The gift deed, executed by X, contained
a direction that M shall pay a sum of Rs. 5000 per month to N (the sister of the executant).
Consequently, M executed an instrument in favour of N agreeing to pay the said sum. Afterwards, M
refused to pay the sum to N saying that she is not liable to N because no consideration had moved
from her. Decide with reasons under the provisions of The Indian Contract Act, 1872 whether M is
liable to pay the said sum to N.
Hint:- Refer Case of “Chinnaya V Rammaya” which states that consideration need not to be received
from the promise, it can be received from third party also. Therefore, N has the right to receive money
from M.
Q-17 Mr Singh an old man, by a registered deed of gift, granted certain locked property to A, By the
terms of the deed, it was stipulated that an annuity of Rs. 2000 should be paid every year to B, who
was the brother of Mr. Singh.. On the same day, A made a promise with B and executed in favour an
agreement to give effect to stipulation. A failed to pay the stipulated sum. In an action against her by
B, she contended that since B had not furnished any consideration, he has no rights of action.
Examining the Provisions of the Indian Contract Act, 1872, decide whether the contention of A is
valid?
Hint:- Refer the case of “Chinnaya V Rammaya”
Q-18 The father of a minor girl, Anu, entered into an agreement for her marriage with Vishal.
Afterwards, Vishal refused to marry Anu. ON attaining majority, Anu filed a suit against Vishal for
2 CA Ankit Oberoi
, QUESTION AND ANSWERS CA-FOUNDATION
damages for breach of promises to marry. Vishal contended that Anu cannot enforce the contract as
she was not a party to the agreement between him and Anu’s father. Is Vishal ‘s contention valid?
Hint:- beneficiary can enforce a contract even if he is a stranger to the contract. Therefore, Anu has the
right to take action Vishal.
THEORETICAL QUESTIONS
Q-19 Are there any circumstances under which a contract, under the provisions of the Indian Contract
Act, 1872 without consideration is void? Explain.
CAPACITY TO CONTRACT
CASE STUDIES
Q-20 Ramesh, aged 16 years, was studying in an engineering college. On 1st march 2011 he took a
loan of rs. 1 lakh from Suresh for the payment of his college fee and agreed to pay by 30 th may 2012.
Ramesh possesses assets worth rs. 10 lakhs. On the due date Ramesh fails to pay back the loan to
Suresh. Suresh now wants to recover the loan from Ramesh out of his assets. Whether Suresh would
succeed? Decide, referring to the Provisions of the Indian Contract Act, 1872.
Hint:- Ramesh is liable for Rs. 1 lakh since the person who supplies necessities to the incompetent
person is entitled to be reimbursed from the property of Such incompetent Person.
Q-21 X, a minor was studying in M.com in a college. On 1st July 2005 he took a loan of rs. 10,000 from
B for the payment of his college fee and to purchase books agreed to pay by 31st December 2005. X
possesses assets worth rs. 2 lakhs. On the due date X fails to pay back the loan to B. B now wants to
recover the loan from X out of his assets. Whether B would succeed? Decide, referring to the
Provisions of the Indian Contract Act, 1872.
Hint:- X is liable for Rs. 10000 since the person who supplies necessities to the incompetent person is
entitled to be reimbursed from the property of Such incompetent Person.
Q-22 State whether correct or incorrect:-
(iii) A minor on his attaining majority can validate any agreement which was entered into when he was
a minor and which was void.
Hint:-Incorrect, minor cannot ratify the void agreement on attaining the age of Majority.
Q-23 W, the wife of H, who is lunatic, purchases a diamond set of ` 10 lacs from a jeweller on credit.
Referring to the previsions of the Indian Contract Act, 1872, decide whether the jeweller is entitled
to claim the above amount from the property of H.
Hint:-H will not be liable for the purchases of his lunatic. Law provides that the property of lunatic is
liable for the necessaries to him/her.
FREE CONSENT
CASE STUDIES
3 CA Ankit Oberoi
