1 . Legal Principle : A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind.
Factual Situation : Mr. Jamal is a patient in a lunatic asylum who experiences intervals of sound mind. Jamal entered into a contract during such interval of sound mind. On having suffered losses. he challenged the validity of the contract on the ground that he not only vas mentally unsound but also lived in lunatic asylum.
(a) The contract is valid.
(b) The contract is invalid.
(c) The contract is voidable at the option offer. Jamal.
(d) The contract is voidable at the option of the opposite party
Answer : A
Explanation : A person of unsound mind can enter into contract while he was sound and the agreement is valid.
2. Legal Principle : A person who is usually of sound mind. but occasionally of unsound mind. may not make a contract when he is of unsound mind.
Factual Situation : One of the purposes of the business party was to strike business deals and Mr. Animesh was well aware fit. Still. Mr. Animesh drank so much at the party that he could not understand the terns of a contract, or form a rational judgment as to its effect on his interests. He still went ahead and entered into a few contracts at the party One of such agreements had very oppressive terms and conditions for Mr. Animesh and therefore he challenges the validity of the contract. He will:
(a) Fail because he knew the purpose of the busing party and should have behaved more responsibly
(b) Succeed because he was temporarily of unsound mind because of his drunk state.
(c) Fail because being drunk even to the extent of not being able to understand the terms of the contract cannot be considered as unsound mind
(d) Succeed because oppressive terms and conditions in the contract show that it could have been agreed to only by a person of unsound mind.
Answer : B
Explanation: If drunken person enters into an agreement which usually a sound person will not, and later when he come back to soundness, does not ratify, that contract is not valid.
3. Legal Principle :A contract is said to be induced by undue influence where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.
Factual Situation : Mr. Ashwini having advanced money to his son, Bhuvan, during his minority upon Bhuvan’s coming of age obtains. By misuse of parental influence, a bond from Bhuvan for a greater amount than the sum due in respect of the advance.
(a) Ashwini employed undue influence.
(b) Ashwini did not employ undue influence.
(c) Father and son cannot ever enter into a valid contract.
(d) Ashwini employed coercion.
Explanation – undue influence.
4. Legal Principle : When consent to an agreement is caused by coercion, fraud or Misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
Factual Situation : Mr. Arun, intending to deceive Mr. Prakash, falsely represented that Five hundred tonnes of fertllizer are made annually at his factory and thereby induced Mr.Prakash to buy the factory
(a) The contract is voidable at the option of Mr. Prakash.
(b) The contract is voidable at the option of Mr. Arun.
(c) The contract is void.
(d) The contract is valid.
Answer : A
Explanation : Misrepresentation is the fact here, so it is voidable at the option of the person whose decision so obtained.
5. Legal Principle : Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement. the agreement is void.
Factual Situation : Mr. Rupesh agrees to buy from Mr. Jalaj a certain car. It turns out that the car was scraped at the time of bargain, though neither party was aware of the fact.
(a) The agreement is valid.
(b) The agreement is void.
(c) The agreement is voidable at the instance of either parties.
(d) The agreement is void because Mr. Jalaj played a fraud upon Mr. Rupesh.
Answer : B
Explanation : As both parties were not knowing about the current position of the subject, the contract is void.
6. Legal Principle : Every agreement of which the object or consideration is unlawful is void.
Factual Situation : Mr. Thomas promises Mr. Jhonson to drop a prosecution which he has instituted against Mr. Jhonson for robbery and Mr. Jhonson promises to restore the value of the things taken.
(a) The agreement is void, as its object is unlawful.
(b) The agreement is valid.
(c) The agreement is voidable at the instance of Mr. Thomas.
(d) The agreement is voidable at the instance of Mr. Jhonson.
Answer : A
Explanation : unlawful consideration.
7. Legal Principle : A stranger to a contract cannot sue for want of privity of contract.
Factual situation : A. who is indebted to B. sells his property to C. and C the purchaser of the property promises to pay off the debt to B. C fails to pay B.
(a) B has no right to sue C for there is no privily of contract between B and C.
(b) B has the right to sue C as there is privily of contract between B and C.
(c) C has no legal obligation to A to pay B oft
(d) Once the property is sold to C. B can only sue C and not A
Answer : A
Explanation : stranger to contract have no right to sue.
8. Legal Principle : All illegal agreements are void but all void agreements are not necessarily illegal
Factual Situation :A had borrowed Rs. 1.000 from B to buyer pistol to shoot C which he did. He, however, failed to repay B and B decides to recover this money from A by filing a suit.
(a) The contract between A and B is illegal.
(b) The contract between A and B will be illegal only fit is established that B was aware of the purpose at the time of the borrowing.
(c) The contract between A and B is void but not illegal.
(d) The contract between A and B is valid even if B was aware of the purpose at the time of borrowing.
Answer : A
Explanation : the purpose of the contract is illegal.