Performance Of Contracts MCQ Quiz - Objective Question with Answer for Performance Of Contracts - Download Free PDF

The correct answer is Sec. 56

Key Points

• Section 56 of the Indian Contract Act states:
  • An agreement to do an act impossible in itself is void.
  • A contract to do an act which becomes impossible, or by reason of some event which the promisor could not prevent, becomes unlawful after the contract is made, becomes void when the act becomes impossible or unlawful.
• Doctrine of Frustration:
  • The doctrine of frustration comes into play when performance of the contract becomes impossible due to events beyond the control of the parties.
  • This makes the contract void because the object of the contract can no longer be fulfilled.
  • It discharges the parties from further obligations.
• Examples:
  • A contracts to perform in a musical concert. Before the date, A meets with an accident and becomes permanently disabled. The contract becomes frustrated.
  • A contracts to export goods to a country, but war breaks out and the trade route is blocked. The contract is frustrated.

The correct answer is The contract is discharged by impossibility of performance

Key Points

• Section 56 of the Indian Contract Act deals with the Discharge by Impossibility of Performance:
  • When a contract is formed, both parties are expected to fulfill their obligations as per the terms of the agreement.
  • However, if an unforeseen event occurs that makes the performance of the contract impossible, the contract can be discharged.
  • In this case, the music hall rented out by 'C' to 'X' was completely destroyed by fire before the scheduled concerts. This event was beyond the control of either party and rendered the performance of the contract impossible.
  • As a result, the contract is automatically discharged due to the impossibility of performance, and neither party is held liable for non-performance.
     

Additional Information

• 'C' cannot be discharged from performance of Contract:
  • This option is incorrect because 'C' can indeed be discharged from the contract due to the impossibility of performance caused by the fire.
• Contract becomes voidable at the option of X:
  • This option is incorrect because the contract does not become voidable; instead, it is automatically discharged due to the impossibility of performance.
• The contract is void ab initio:
  • This option is incorrect as 'void ab initio' means the contract was void from the beginning. In this case, the contract was valid when formed but became impossible to perform later due to the fire.

The correct answer is 'need not be performed'

Key Points

• Novation, Rescission, and Alteration under Section 62 of the Indian Contract Act, 1872:
  • According to Section 62 of the Indian Contract Act, 1872, if the parties to a contract agree to:
    • Substitute a new contract for the existing one (Novation), or
    • Rescind the contract (mutually cancel it), or
    • Alter the terms of the contract (modification with mutual consent),
    then the original contract need not be performed
  • This principle ensures that parties have the flexibility to modify, replace, or cancel their contractual obligations through mutual consent.
  • Once a new contract is substituted or the existing contract is rescinded, the original obligations are extinguished.

Additional Information

• Still Needs to be Performed:
  • This option is incorrect because, under Section 62, once novation, rescission, or alteration occurs, the original contract ceases to exist, and there is no obligation to perform it.
• Needs to be Partly Performed:
  • If the contract is partially performed, the parties may agree to settle or modify only the remaining obligations.
  • However, if complete novation or rescission occurs, then the original contract does not require partial performance.
• Gets in Abeyance:
  • "Abeyance" means temporary suspension, which is not the correct legal effect of novation or rescission.
  • Instead, the original contract is **discharged** and no longer needs to be performed.

The correct answer is Option 1.

Key Points Section 62 of the Indian Contract Act, 1872:

• Section 62 deals with the "Novation of Contract", which means:
  • The substitution of an old contract with a new contract, either involving a change in the parties or in the terms of the contract.
  • When a novation occurs, the original contract is discharged, and the new contract is enforced.

Application to the Case:

1. Substitution of Debtor:

   • Here, the original debtor (Suman) is substituted with Kusum, as agreed by all three parties (Suman, Pushpa, and Kusum).
   • This constitutes a valid novation under Section 62.

2. Effect of Novation:

   • The old contract between Suman and Pushpa is discharged.
   • A new contract is created between Pushpa and Kusum, where Kusum becomes the debtor to Pushpa for Rs. 50,000.

The correct answer is Option 4.

Key PointsSection 55 of the Indian Contract Act:
Effect of failure to perform at fixed time, in contract in which time is essential.—

When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

Effect of such failure when time is not essential.—If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

Effect of acceptance of performance at time other than that agreed upon.—If, in case of a contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so.

The correct answer is option 2 (A) and (B) only

Key Points

A contract is deemed to be dissolved because of impending impossibility if the act becomes unlawful or impossible.

Destruction of the subject matter of the contract where neither party is obligated to perform. In such cases, the original contract becomes void.

Death of the parties: The death of the promisor terminates the existing contract.

Important PointsIn contract law, rescission is defined as the cancellation of a contract between parties. Rescission is the reversal of a transaction. This is done in order to restore the parties, as far as possible,  to the position they were in before they entered into a contract Rescission.

Remission of a contract relieves the promisor of his obligations by merely paying a lesser amount or performance under the promise. Section 63 of the Indian Contract Act, 1872, contains three essential elements- acceptance of lesser amount, waiver, and extension of time.

The correct answer is All of the above.

Key Points

•  Section 38 of the Indian Contract Act deals with the effect of refusal to accept offer of performance.
• It states that where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promisor is not responsible for non-performance, nor does he thereby lose his rights under the contract.
• Every such offer must fulfil the following conditions:—
• (1) it must be unconditional;
• (2) it must be made at a proper time and place, and under such circumstances that the person to whom it is made may have a reasonable opportunity of ascertaining that the person by whom it is made is able and willing there and then to do the whole of what he is bound by his promise to do;
• (3) if the offer is an offer to deliver anything to the promisee, the promisee must have a reasonable opportunity of seeing that the thing offered is the thing which the promisor is bound by his promise to deliver.
• An offer to one of several joint promisees has the same legal consequences as an offer to all of them.

The correct answer is "When an indivisible contract for a lumpsum is partly performed."

Key Points Quantum Meruit:

• The phrase "as much as is earned" is literally translated as "quantum meruit."
• When one party to a contract is prevented from completing his contract performance by the other party, he can sue for quantum meruit.
• As a result, he must be compensated fairly for the portion of the contract that he has already completed.

Important Points

•  Quantum Meruit is, payment in proportion to the amount of work done, where one of his parties has fulfilled part of his promise and then the contract person is breached, then a claim for quantum merit arises.
• When the original contract is discharged, i.e. when the indivisible contract for a lump sum amount of a debt is partly executed, then the claim of quantum merit cannot be successful.

The correct answer is novation.

Key Points

• Section 62 of the Indian Contract Act, 1872 deals with the Effect of novation, rescission, and alteration of contract.
• It states that —If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract, need not be performed.
• When the parties to a contract agree to substitute the existing contract for a new contract, that is called novation.

The correct answer is Section 43

Key Points

• Section 43 clarifies that each of two or more joint promisors has the right to compel every other co-promisor to contribute equally towards fulfilling the promise, except when the contract explicitly indicates a different arrangement.
• This ensures that the burden of the promise is shared equally among all joint promisors, promoting fairness and reducing the risk of undue pressure on any individual promisor, while allowing for the efficient fulfillment of contractual obligations.

The correct answer is Section 45.

Key Points

• Section 45 of the Indian Contract Act, 1872, provides for the Devolution of joint rights.
• It states that —When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any of them, with the representative of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly.

The correct answer is Option 4

Key Points Quantum meruit is Latin phrase related to Indian Contract Act, 1872 which means “What one has earned” or “as much as he earned” Quantum meruit means a demand for a justifiable sum in relation to services or commodities provided to the defendant Thus, the law of quantum meruit means a promise to pay a reasonable fee for the labour and materials provided even if there is no explicit contract.

The correct answer is Agreement to do impossible act.

Key Points

• Section 56 of the Indian Contract Act, 1872, provides for the Agreement to do impossible act.
• It states that —An agreement to do an act impossible in itself is void.
  Contract to do an act afterwards becoming impossible or unlawful.—A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
  Compensation for loss through non-performance of act known to be impossible or unlawful.— Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the nonperformance of the promise.

The correct answer is option 3.

Key Points

• Section 42 of Indian Contract Act- Devolution of Joint Liabilities
  • Joint Promise:

           This section applies when two or more persons have made a joint promise as part of a contract.

• Joint Lives:

            Unless the contract indicates a contrary intention, all parties to the joint promise are collectively responsible for fulfilling the promise during their joint lives.

• After Death of Any Party:

           After the death of any one of the parties to the joint promise, the legal representative of the deceased person becomes jointly responsible with the                         surviving parties to fulfill the promise.

• Survivorship:

          After the death of any party, the surviving parties, along with the legal representative of the deceased party, continue to be jointly responsible for fulfilling               the promise.

• Death of Last Survivor:

          After the death of the last surviving party, the representatives of all the parties must jointly fulfill the promise.

Additional Information

•  In essence, Section 42 of the Act establishes the principle that joint promises create joint liabilities that extend beyond the lifetime of any individual party involved.

The correct answer is option 1.Key Points

• Section 52 of Indian Contract Act 1872 deals with order of performance of reciprocal promises.
• Where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order; and where the order is not expressly fixed by the contract, they shall be performed in that order which the nature of the transaction requires.