BUSINESS LAWS

QUESTIONS FOR PRACTICE

Question 1

Srishti, a minor, falsely representing her age, enters into an agreement with an authorised Laptop dealer
Mr. Gupta, owner of SP Laptops, for purchase of Laptop on credit amounting 60,000/-for purchasing a
laptop, on 1st August 2021. She promised to pay back the outstanding amount with interest 16% р.а. by
31st July 2022. She told him that in case she wonRs.t be able to pay the outstanding amount, her father
Mr. Ram will pay back on her behalf. After One year, when Srishti was asked to pay the outstanding
amount with interest she refused to pay the amount and told the owner that she is minor and now he
canRs.t recover a single penny from her. She will be adult on 1st January 2024, only after that agreement
can be ratified. Explain by which of the following way Mr. Gupta will succeed in recovering the outstanding
amount with reference to the Indian Contract Act, 1872.

(i) By filing a case against Srishti, a minor for recovery of outstanding amount with interest?

(ii) By filing a case against Mr. Ram, father of Srishti for recovery of outstanding amount?

(ili) By filing a case against Srishti, a minor for recovery of outstanding amount after she attains maturity?

Question 2

Chandan was suffering from some disease and was in great pain. He went to Dr. Jhunjhunwala whose
consultation fee was Rs. 300. The doctor agreed to treat him but on the condition that Chandan had to sign
a promissory note of Rs. 5000 payable to doctor. Chandan signed the promissory note and gave it to
doctor. On recovering from the disease, Chandan refused to honour the promissory note. State with
reasons, can doctor recover the amount of promissory note under the provisions of the Indian Contract Act,
1872?

Question 3

Mr. SHYAM owned a motor car. He approached Mr. HARISH and offered to sell his motor car for 3,00,000.
Mr. SHYAM told Mr. HARISH that the motor car is running at the rate of 20 KMs per litre of petrol. Both the
fuel meter and the speed meter of the car were working perfectly. Mr. HARISH agreed with the proposal of
Mr. SHYAM and took delivery of the car by paying* 3,00,000/- to Mr. SHYAM. After 10 days, Mr. HARISH
came back with the car and stated that the claim made by Mr. SHYAM regarding fuel efficiency was not
correct and therefore there was a case of misrepresentation. Referring to the provisions of the Indian
Contract Act, 1872, decide and write whether Mr. HARISH can rescind the contract on the above ground.
Question 4

Mr. S, aged 58 years was employed in a Government department. He was going to retire after two years.
Mr. D made a proposal to Mr. S, to apply for voluntary retirement from his post so that Mr. D can be
appointed in his place. Mr. D offered a sum of 10 Lakhs as consideration to Mr. S in order to induce him to
retire.

Mr. S refused at first instance but when he evaluated the amount offered as consideration is just double of
his cumulative remuneration to be received during the tenure of two years of employment, he agreed to
receive the consideration and accepted the above agreement to receive money to retire from his office.

Whether the above agreement is valid? Explain with reference to provision of the Indian Contract Act,
1872?

Question 5

Mr. Pratham applied for a job as principal of a school. The school management decided to appoint him.
One member of the school management committee privately informed Mr. Pratham that he was appointed
but official communication was not given from the school. Later, the management of the school decided to
appoint someone else as a principal. Mr. Pratham filed a suit against the school for cancellation of his
appointment and claimed damages for loss of salary. State with reasons, will Mr. Pratham be successful in
suit filed against school under the Indian Contract Act, 1872?

Question 6

Rahul, a minor, falsely representing his age, enters into an agreement with a shopkeeper for a loan amount
for purchasing a laptop. He gave his expensive watch as a security and took a loan of 40,000. He was very
happy to get * 40,000 and quickly went to the market and purchased a laptop worth Rs. 30,000. He happily
spent the rest of the amount with his friends on a pleasure trip.

Later on, Rahul realized that his watch was an expensive watch and he should not have given like this to
the shopkeeper. So, he went back to the shopkeeper and asked for his watch back. Also, he refused to
repay the loan amount. The shopkeeper disagrees to this and files a case against minor for recovery of the
loan amount. Can the shopkeeper succeed in recovering the loan amount under the Indian
Contract Act, 1872?
Question 7

Mr. Ram Lal Birla was a big businessman of city Pune having two sons and one married daughter. He
decided to gift his one house to his daughter. For this purpose, he called his lawyer at his house and made
a written document for such gift. The lawyer advised him to get the transfer document properly registered.
When they both were going for registratio nof document, they met with an accident and both of them died.

Later, his daughter found the document and claimed the house on the basis of that document. Explain,
whether she can get the house as gift under the Indian Contract Act, 1872?

Question 8

PQR, a hospital in Delhi, recruits Dr. A, on contract basis for a period of 3 months. The hospital
management promises to pay Dr. A, a lumpsum amount of Rs.1,00,000 if Dr. A test positive for noval
corona virus (Covid 19) during the contract period of 3 months.

Identify the type of contract and highlight the rule of enforcement.

Also, what will happen if Dr. A does not contract Covid 19.

Question 9

Karan agreed to purchase wooden table for his study room from Mr. X. Table was in good condition and
was examined by Karan before purchasing. He found no defects in it and paid Rs.20,000 for that table.
Later on, it was found that one leg of table is broken, and Mr. X has pasted the wood and tried to hide the
defects in the table.

Can Karan return the table and claim the amount back? Discuss the same with reference to Indian
Contract Act, 1872.

Question 10

A enters into a contract with B that he (A) sells his house for Rs.10,00,000 to B. Further they both signed
an agreement that if B uses the house for gambling purposes, then B shall pay A Rs.50,000 for it. B agreed
to this, however after a year of sale, B started gambling business in that house. Can A claim Rs.50,000
from B? Discuss with reference to the provisions of Indian Contract Act, 1872.

Question 11

Mr. Aseem is a learned advocate. His car was stolen from his house. He gave an advertisement in
newspaper that he will give the reward of 10,000 who will give the information about his car. Mr. Vikram
reads the advertisement and on making some efforts got the stolen car and informed Mr. Aseem. Mr.
Aseem found his car but denied giving reward of 10,000 to Mr. Vikram with the words, "An advertisement in
newspaper is justan invitation to make offer and not an offer. Hence, he is not liable to make the reward."
State with reasons whether under Indian Contract Act, 1872, Mr. Vikram can claim the reward of 10,000.
Question 12

Mr. X was a Disk Jockey at a five star hotel bar. As per the contract, he is supposed to perform every
weekend (i.e. twice a week). Mr. X will be paid Rs. 1500 per day. However, after a month, Mr. X willfully
absents himself from the performance.

(i) Does the hotel have the right to end the contract?

(ii) If the hotel sends out a mail to X that they are interested to continue the contract and X accepts, can the
hotel rescind the contract after a month on this ground subsequently?

(iii) In which of the cases – (termination of contract or continuance of contract) can the hotel claim damages
that it has suffered as a result of this breach?

Or
Mr. Singhania entered into a contract with Mr. Sonu to sing in his hotel for six weeks on every Saturday and
Sunday. Mr. Singhania promised to pay Rs. 20,000 for every performance. Mr. Sonu performed for two
weeks but on third week his health condition was very bad, so he did not come to sing. Mr. Singhania
terminated the contract. State in the light of provisions of the Indian Contract Act, 1872:-

(a) Can Mr. Singhania terminate the contract with Mr. Sonu?

(b) What would be your answer in case Mr. Sonu turns up in fourth week and Mr. Singhania allows him to
perform without saying anything?

(c) What would be your answer in case Mr. Sonu sends Mr. Mika on his place in third week and Mr.
Singhania allows him to perform without saying anything?

Question 13

X, Y and Z jointly borrowed Rs. 90,000 from L. Decide each of the following in the light of the Indian
Contract Act, 1872:

(i) Whether L can compel only Y to pay the entire loan of Rs. 90,000?

(ii) Whether L can compel only the legal representatives of Y to pay the loan of Rs. 90,000, if X, Y and Z
died?

(iii) Whether Y and Z are released from their liability to L and X is released from his liability to Y and Z for
contribution, if L releases X from his liability and sues Y and Z for payment?

Or
A, B, C and D are the four partners in a firm. They jointly promised to pay Rs. 6,00,000 to F. B and C have
become insolvent. B was unable to pay any amount and C could pay only Rs. 50,000. A is compelled to
pay the whole amount to F. Decide the extent to which A can recover the amount from D with reference to
the provisions of the Indian Contract Act, 1872.
Question 14

X agrees to pay Y Rs. 1,00,000/-, if Y kills Z. To pay Y, X borrows Rs. 1,00,000/- from W, who is also aware
of the purpose of the loan. Y kills Z but X refuses to pay. X also to repay the loan to W. Explain the validity
of the contract.

(i) Between X and Y.

(ii) Between X and W

Question 15

Mr. Y aged 21 years, lost his mental balance after the death of his parents in an accident. He was left with
his grandmother aged 85 years, incapable of walking and dependent upon him. Mr. M their neighbour, out
of pity, started supplying food and other necessaries to both of them. Mr. Y and his grandmother used to
live in the house built by his parents. Mr. M also provided grandmother some financial assistance for her
emergency medical treatment. After supplying necessaries to Mr. Y for four years, Mr. M approached the
former asking him to payback Rs. 15 Lakhs inclusive of Rs. 7 Lakhs incurred for the medical treatment of
the lady (grandmother). Mr. Y pleaded that he has got his parent's jewellery to sell to a maximum value of
Rs. 4 Lakhs, which may be adjusted against the dues. Mr. M refused and threatened Mr. Y of legal suit to
be brought against for recovering the money.

Now, you are to decide upon based on the provisions of the Indian Contract Act, 1872:

(i) Will Mr. M succeed in filing the suit to recover money? Elaborate the related provisions?

(ii) What is the maximum amount- of money that can be recovered by Mr. M?

(iii) Shall the provisions of the above act also apply to the medical treatment given to the grandmother?

Question 16

Radha invited her ten close friends to celebrate her 25th birthday party on 1st January, 2023 at 7.30 P.M.
at a well-known "Hi-Fi Restaurant" at Tonk Road, Jaipur. All invited friends accepted the invitation and
promised to attend the said party. On request of the hotel manager, Radha deposited Rs. 5,000/- as non-
refundable security for the said party. On the scheduled date and time, three among ten invited friends did
not turn up for the birthday party and did not convey any prior communication to her. Radha, enraged with
the behaviour of the three friends, wanted to sue them for loss incurred in the said party. Advise as per the
provisions of the Indian Contract Act, 1872.

Would your answer differ if the said party had been a "Contributory 2023 New Year celebration Party"
organized by Radha?
Question 17

Mr. S promises Mr. M to paint a family picture for Rs. 20,000 and assures to complete his assignment by
15th March, 2023. Unfortunately, Mr. S died in a road accident on 1st March, 2023 and his assignment
remains undone. Can Mr. M bind the legal representative of Mr. S for the promise made by Mr. S? Suppose
Mr. S had promised to deliver some photographs to Mr. M on 15th March, 2023 against a payment of Rs.
10,000 but he dies before that day. Will his representative be bound to deliver the photographs in this
situation?

Decide as per the provisions of the Indian Contract Act, 1872.

Question 18

T owes G, the following debts as per the table given below:

Amount of the Debt (in Rs.) Position of Debt

5,000 Time barred on 01st July, 2023

as per the provisions of the
Limitation Act,1963

3,000 Time barred on 01st July, 2023

as per the provisions of the
Limitation Act,1963

12,500 Due on 1st April, 2022

10,000 Due on 15th July, 2023

7,500 Due on 25th November, 2023

G makes payment on 1st April, 2023 mentioned as below without any notice regarding how to appropriate
the amount/ payment.

(i) A cheque of Rs. 12,500

(ii) A cheque of Rs. 4,000.

In such a situation how the appropriation of the payment is done against the debts as per the provisions of
the Indian Contract Act, 1872 by assuming that T also has not appropriated the amount received towards
any particular debt.

Question 19

A mobile phone was displayed in a shop with a price tag of Rs.10,000 attached to the mobile display box.
As the price displayed was very less as compared to M.R.P. of the mobile phone, Y, a customer rushed to
the cash counter and asked the shopkeeper to receive the payment and pack up the mobile phone. The
shopkeeper refused to hand over the mobile phone to Y in consideration of the price indicated in the price
tag attached to the mobile phone. Y seeks your advice whether he can sue to shopkeeper for the above
cause under the Indian Contract Act, 1872.
Question 20

Mr. J entered into an agreement with Mr. S to purchase his house for Rs. 20 lakh, within three months. He
also paid Rs. 50,000/- as token money. In the meanwhile, in an anti-encroachment drive of the local
administration, Mr. S's house was demolished. When Mr. J was informed about the incident he asked for
the refund of token money.

Referring to the relevant provisions of the Indian Contract Act, 1872 state whether Mr. J is entitled to the
refund of the amount paid

Question 21

M Ltd., contract with Shanti Traders to make and deliver certain machinery to them by 30.6.2017 for Rs.
11.50 lakhs. Due to labour strike, M Ltd. could not manufacture and deliver the machinery to Shanti
Traders. Later, Shanti Traders procured the machinery from another manufacturer for Rs. 12.75 lakhs. Due
to this Shanti Traders was also prevented from performing a contract which it had made with Zenith
Traders at the time of their contract with M Ltd. and were compelled to pay compensation for breach of
contract. Advise Shanti Traders the amount of compensation which it can claim from M Ltd., referring to the
legal provisions of the Indian Contract Act, 1872.

Question 22

Mr. X and Mr. Y entered into a contract on 1st August, 2018, by which. Mr. X had to supply 50 tons of sugar
to Mr. Y at a certain price strictly within a period of 10 days of the contract. Mr. Y also paid an amount of
Rs. 50,000 towards advance as per the terms of the above contract. The mode of transportation available
between their places is roadway only. Severe flood came on 2nd August, 2018 and the only road
connecting their places was damaged and could not be repaired within 15 days. Mr. X offered to supply
sugar on 20th August, 2018 for which Mr. Y did not agree. On 1st September, 2018, Mr. X claimed
compensation of Rs. 10,000 from Mr. Y for refusing to accept the supply of sugar, which was not there
within the purview of the contract. On the other hand, Mr. Y claimed for refund of Rs. 50.000 which he had
paid as advance in terms of the contract. Analyse the above situation in terms of the provisions of the
Indian Contract Act, 1872 and decide on Y's contention.

Question 23

Mr. Sohanlal sold 10 acres of his agricultural land to Mr. Mohanlal on 25th September 2018 for Rs. 25
Lakhs. The Property papers mentioned a condition, amongst other details, that whosoever purchases the
land is free to use 9 acres as per his choice but the remaining 1 acre has to be allowed to be used by Mr.
Chotelal, son of the seller for carrying out farming or other activity of his choice. On 12th October, 2018, Mr.
Sohanlal died leaving behind his son and life. On 15th October, 2018 purchaser started construction of an
auditorium on the whole 10 acres of land and denied any land to the son.

Now Mr. Chotelal wants to file a case against the purchaser and get a suitable redressed. Discuss the
above in light of provisions of Indian Contract Act, 1872 and decide upon Mr. Chotelal's plan of action?
Question 24

X found a wallet in a restaurant. He enquired of all the customers present there but the true owner could
not be found. He handed over the same to the manager of the restaurant to keep till the true owner is
found. After a week he went back to the restaurant to enquire about the wallet. The manager refused to
return it back to X, saying that it did not belong to him.

In the light of the Indian Contract Act, 1872, can X recover it from the Manager?

Question 25

Mr. X a businessman has been fighting a long drawn litigation with Mr. Y an industrialist. To support his
legal campaign he enlists the services of Mr. C a Judicial officer stating that the amount of Rs.10 lakhs
would be paid to him if he does not take up the brief of Mr. Y.

Mr. C agrees but, at the end of the litigation Mr. X refuses to pay to Mr. C. Decide whether Mr. C can
recover the amount promised by Mr. X under the provisions of the Indian Contract Act, 1872?

Question 26

In light of provisions of the Indian Contract Act, 1872 answer the following:

(i) Mr. S and Mr. R made contract wherein Mr. S agreed to deliver paper cup manufacture machine to Mr. R
and to receive payment on delivery. On the delivery date, Mr. R didn't pay the agreed price. Decide
whether Mr. S is bound to fulfil his promise at the time of delivery?

(ii) Mr. Y given loan to Mr. G of INR 30,00,000. Mr. G defaulted the loan on due date and debt became time
barred. After the time barred debt, Mr. G agreed to settle the full amount to Mr. Y. Whether acceptance
of time barred debt Contract is enforceable in law?

(iii) A & B entered into a contract to supply unique item, alternate of which is not available in the market. A
refused to supply the agreed unique item to B. What directions could be given by the court for breach of
such contract?

Question 27

Mr. D was in urgent need of money amounting Rs 5,00,000. He asked Mr. K for the money. Mr. K lent the
money on the sureties of A, B and N without any contract between them in case of default in repayment of
money by D to K. D makes default in payment. B refused to contribute, examine whether B can escape
liability?
Question 28

Mr. Chetan was appointed as Site Manager of ABC Constructions Company on a two years contract at a
monthly salary of Rs 50,000. Mr. Pawan gave a surety in respect of Mr. Chetan’s conduct. After six months
the company was not in position to pay Rs 50,000 to Mr. Chetan because of financial constraints. Chetan
agreed for a lower salary of Rs 30,000 from the company. This was not communicated to Mr. Pawan. Three
months afterwards it was discovered that Chetan had been doing fraud since the time of his appointment.
What is the liability of Mr. Pawan during the whole duration of Chetan’s Appointment.