Q1. What is the difference between a contract and an agreement?

Ans. There are few essential elements which are required to be fulfilled in order to make a contract
legal. These elements are- Offer, acceptance, consideration, free consent which are required to make an
agreement. Agreements which are enforceable by law are contract. Every contract is an agreement but
every agreement is not contract.

Q2. Will an executed term sheet / memorandum of understanding be considered as an offer or an

Ans. An executed term sheet shall be considered as an offer. As term sheet is the document which
highlights the key terms provided in the contract. The meaning of offer is an agreement to do or abstain
to do something in return. As the term sheet only specifies what is given in the contract it does not
reflect any features of acceptance.

Q3.Will execution of a term sheet or a memorandum of understanding between parties make the terms
and conditions mentioned therein binding between the parties upon execution?

Ans. No

Q4. (a) Will this term sheet binding or not binding?

(b) Suggest points / terms, if any, that the parties should have considered at the time of drafting the
above paragraphs. In case you believe there are no such additional points, you may answer accordingly.

Ans.a) this term sheet is partially binding on the parties as the intention of not creating a binding force is
specifically mentioned along with its exceptions.

b) The terms while drafting the term sheet is ambiguous by simple reading. The language used is not
strictly denoting whether this term sheet is creating legal obligation or not. At the end it is mentioned
that the “conditions given in the term sheets are subject to change” defies the whole purpose of term
sheet to clearly state the exact conditions of the contract.

Q5. Given below are two statements:

A. Statement I: A agrees to sell to B “white horse for rupees five hundred or rupees one thousand".
This agreement is void.
B. Statement II: A agrees to sell to B “a hundred tons of oil”. This agreement is voidable.

Name which statement is correct and which statement is incorrect

Ans. A. incorrect

B.incorrect

Q6. Which one of the following is a void contract?

A. A contract which ceases to be enforceable by law

C. Express contract

Ans 6. A is the void contract

Q 7. Arrange the following in the correct sequence.

A. Offer of proposal B. Contract C. Promise D. Agreement E. Acceptance

Ans. a,e, c,d,b

8. Under which of the following conditions can a proposal be revoked according to the Indian Contract
Act 1872? A. By the communication of notice of revocation by the proposer to the other party

B. By the failure of the acceptor to fulfil a condition of proposal

C. By the death or insanity of the proposer

D. By the lapse of the time prescribed

E. By notice of revocation after the acceptance is communicated

Ans. B

9. A and B, being traders, enter upon a contract. A has private information of a change in prices which
would affect B’s willingness to proceed with the contract. Will A be bound to inform the same to B? Give
reasons for your answer.

Ans. No, a is not bound to give information.

10. A and B enter into a contract. A was under a mistake on a fact about the subject matter of the
contract. B had the correct facts about the same subject matter. Is this contract valid or void?

Ans. Void contract

11. A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay. It
turns out, before the day of the bargain, the ship conveying the cargo has been cast away and the goods
lost. Neither party was aware of the facts. Is this contract valid or voidable?

Ans. voidable

12. A entered into a contract when he was 16 years of age. Upon attaining 18 years of age, can A
confirm his acceptance to the terms of the contract?

Ans. Yes. There is a case of mohini bibi v damodar das which specifies the conditions of minor entering
into a contract.
13. A promises to obtain for B an employment in the public service and B promises to pay Rs. 1,000 to A.
A. Is this a contract? B. Is this contract valid, void or voidable? Provide reasons for your answer.

Ans. This contract is void because it is for unlawful purpose.

14. A shareholders’ agreement between shareholders of Company A provided for a restriction on the
promoters from having any interest (ownership or management) in any other company. Is this
agreement valid? Give reasons for your answer.

Ans. Yes this is a valid contract. As in case of Gilford v horne that a person cannot use his position to
manipulate the customers of the company in which he was a managing director in case if he leaves.

15. A makes a contract with B to buy B’s house if A survives C. A. When will this contract be enforceable?
B. Will this contract become impossible at any time? How? If yes, then will it be valid after that?

16. A agrees to pay B a sum of money if certain ship does not return. The ship is sunk. A. When will this
contract be enforceable? B. Will this contract become impossible at any time? How? If yes, then will it
be valid after that?

Ans. A. when the conditions will be be able to be fulfill the contract

B . yes.

17. A promises to pay B a sum of money if a certain ship does not return within a year. A. When will this
contract be enforceable? B. Will this contract become impossible at any time? How? If yes, then will it
be valid after that?

18. A promises to pay B a sum of money if the government demonetizes Rs. 2000 notes to be effective
on or before June 30, 2023. Is this a valid contract? Give reasons for your answer.

Ans. No.

19. A orally permits B to use the intellectual property rights of A for a certain sum of money. Is this a
valid contract? Give reasons for your answer.

Ans. yes

20. A agrees to extend a corporate guarantee from its holding company C as security to B for a loan that
A takes from B. The corporate guarantee is not issued to B. A. Can B enforce its right against C and
require C to issue the corporate guarantee to B? B. A is in default in repayment of the loan to B. Can B
enforce its right against C?