Paper II – Contract Law & Negotiable Instruments Act

General Principles and Formation of Contract (Covers Syllabus points 1 & 2: General features, formation, offer,
acceptance, privity)

• Distinguish between Offer and invitation to offer. (5 marks)

• Write a short note on Privity of Contract. (5 marks)
• Define a contract & List the essential elements required for a valid contract according to the Indian Contract
Act, 1872. (5 marks)
• Explain the doctrine of 'Privity of Contract' with exceptions, if any. (5 marks)
• Critically examine law relating to 'Government Contracts' with special reference to the concept of provisional
acceptance and its consequences. (5 marks)
• 'X' was the owner of a cat named 'Kitty', which went missing. In order to look for his missing cat, X published a
notice in the newspaper, through which he announced a reward of Rs. 10,000 to any person who could find
'Kitty'. Y, an enthusiastic animal welfare worker, found 'Kitty' in a park. 'Kitty' wore a name tag on which the
contact details of X had been printed. Y contacted X and informed him that 'Kitty' had been found by him and
asked X to meet him at a nearby restaurant. As Y waited at the restaurant for X to come and take back 'Kitty', Y
saw the notice that had been put up near the nameboard of the restaurant with the picture of 'Kitty' and the
details about the reward. Y now claims that he is entitled to the amount of reward from X. However, X
maintains that since Y was not aware of the reward when he found 'Kitty', he could not raise the claim to the
reward. How will you decide? Discuss in the light of relevant case law. (15 marks)
• Mr. A puts up a notice in a local newspaper offering a reward of ₹10,000 to anyone who finds and returns his
lost laptop. Mr. B, unaware of the reward offer, finds the laptop and returns it to Mr. A. When Mr. B learns
about the reward, he approaches Mr. A to claim it. However, Mr. A refused to pay, arguing that there was no
contract between them. Analyze the situation based on the principles of unilateral contracts and discuss whether
Mr. B has a valid claim for the reward. (30 marks)
• Discuss the legal issues involved in Bhagwandas Govardhan Kedia vs M/s Girdharilal Parshottamdas & Co.
(AIR 1966 SC 543), bringing out clearly the difference of opinion between the majority and minority judges.
Also state which view you support and why? Give reasons. (30 marks)

Consideration (Covers Syllabus point 2: necessity, classification, privity of contract, charitable subscription; point 3:
consideration related to discharge)

• "A contract without consideration is void." Give the exceptions to this rule? (5 marks)
• Discuss the definition of consideration as provided in the Indian Contract Act, 1872. Also give suitable
examples. (5 marks)
• Mr. X promised to transfer his ancestral property to his son, Mr. Y, as a token of love and affection. In reliance
on this promise, Mr. Y spends a significant amount of money renovating and maintaining the property.
However, later, Mr. X changes his mind and refuses to transfer the property, stating that there was no
consideration for the promise. Examine the validity of Mr. X's argument in light of the principles of
consideration in contract law. (30 marks)

Capacity & Factors Invalidating Contracts / Void and Voidable Agreements (Covers Syllabus points 3 & 4:
minority, undue influence, coercion, unlawful objects, immoral agreements, restraint of marriage/trade, void/voidable
nature)

• A, being in debt to B, the money-lender, of his village, contracts a fresh loan on terms which appear to be
unconscionable. Discuss if the contract could be said to be induced by undue influence. Also, discuss in the
light of Section 16(3) of the Indian Contract Act, 1872 that on whom would the burden of proof lie in the
present case? (5 marks)
• Reflect upon the nature of an agreement with a party incompetent to enter into contract. Explain whether rule of
estoppel, ratification and restitution can be applied against a minor or not? (5 marks)
• "An agreement in restraint of trade is void". Explain with exceptions, if any. (5 marks)
• Kripto Co Ltd is a leading company in garment manufacturing. Workers of the company asked the management
for a pay hike. The management refused to increase the salaries. Workers knew that the Company had
committed to supply large number of garments to its customers as Ganesh Festival is nearby. Therefore, workers
threatened the management that if the company does not increase the salary they will go for strike. As Company
is going to suffer huge loss due to strike, the management agreed to hike the salaries and requested the workers
to continue to work. As a result, workers agreed to work. Management refused to pay the increased salary in the
next month as their obligation for Ganesh festival already fulfilled. Workers filed a case against management for
breach of contract. Management argued that the agreement is voidable due to coercion. Decide whether the
Company is liable to pay the increased salary to the workers. (15 marks)
 • 'X' an advocate accepted a Vakalatnama from 'Y' to act for him in a certain suit on receiving his usual fee.
Subsequently 'Y' agreed to pay him a certain sum of money as a special reward if the suit was decided in his
favour. 'Y' later did not pay the agreed sum of money to 'X'. Therefore, 'X' brings a suit against 'Y' claiming this
amount. Examine the above-mentioned problem and decide with reference to statutory provisions and decided
cases. (15 marks)
• Parties to the contract must be competent. Discuss how far a minor is competent to enter into an agreement.
Ramesh a minor requested Harish to supply food on his 17th birthday for a party. The cost of food is Rs. 5000/-.
Ramesh agree to pay the amount with 10% interest when he became a major. After attaining majority, he
promised in writing to pay the amount to Harish. Is Ramesh liable to pay the amount after attaining the
majority? If Harish again supplied food for the 18th birthday of Ramesh and Ramesh agreed to pay total
12000/- including the Rs. 5000/- of 17th birthday party food, is Ramesh Liable for entire amount? (30 marks)

Performance, Discharge, Breach, Impossibility/Frustration (Covers Syllabus point 4: offer of performance, time,
reciprocal promises, contracts which need not be performed, breach, impossibility of performance, frustration, discharge
by operation of law)

• Time is an essence of contract. (5 marks)

• Write a short note on Doctrine of frustration (5 marks)
• Explain how impossibility of performance is not treated as an excuse for not paying compensation. (5 marks)
• Discuss the various modes of discharge of a contract under the Indian Contract Act. Explain the circumstances
in which a contract can be discharged by agreement, performance, operation of law, and breach. (15 marks)
• 'S' agreed to let out his Kala Bhavan to 'J' for Rupees 10 lakhs for the marriage of J's son. Before the date of
marriage the Kala Bhavan was destroyed by fire. 'J' sues 'S' for breach of contract. Decide with the help of
relevant provisions and decided cases. (15 marks)
• A entered into a contract with B for exhibition of a film in B's cinema hall on 25th December, 2022. On that
very day, a fire broke out in the pantry of the cinema hall and the hall was destroyed. Consequently, B could not
exhibit the film as promised. A sues B for breach of contract and claims damages. In the light of the law on
frustration of contract, decide. Also, discuss the different grounds of frustration of contract that have been
accepted by courts. (Part of 30 marks total)

Damages, Remedies, Specific Relief, Quasi Contracts (Covers Syllabus points 5 & 6: Damages, Quasi contracts,
Specific relief, rescission, rectification, cancellation, injunction)

• Explain the following terms as per the Indian Contract Act: (i) Quasi Contract (Part of 5 marks total)
• Explain the following terms as per the Indian Contract Act: (iii) Remedies for breach of contract (Part of 5
marks total)
• Enumerate the circumstances provided under provisions of the Specific Relief Act, 1963 in which an injunction
cannot be granted with the help of suitable illustrations and decided cases. (5 marks)
• Write short notes on the following terms as per the Indian Contract Act: a) Damages as a remedy for breach of
contract. (3 marks each part)
• Write short notes on the following terms as per the Indian Contract Act: b) Specific performance of contract. (3
marks each part)
• Rani a famous singer agrees to sing for "Vedika" theatre for 2 nights in every week during the next 6 weeks.
The theatre Manager and Rani enter into an agreement on the basis of Rs. 5000/- for a night's performance. She
performs as per agreement for 3 weeks. Later on, she does not perform the 4th week and starts performing in
another theatre namely "The Rock". Manager of Vedika theatre approaches you for legal advice. Give him the
appropriate legal remedies available against Rani with sound reasons. (15 marks)
• What do you understand by breach of contract? Explain in detail the various remedies that are available for the
breach of contract under the Indian Contract Act, 1872. (15 marks)
• Elucidate the contribution of the Supreme Court of India on quasi contract. Is the Indian Contract Act, 1872
exhaustive on this subject? Explain. (15 marks)
• Quasi contract though not contracts in a strict sense but they create contractual obligations. Explain various
quasi contractual relationships enumerated by the Indian Contract Act. Ms. Nitya Menon was selected for the
post of Assistant Public Prosecutor through a written test and a viva. Accordingly, she was posted in the post.
After two months of her appointment, it was realized that her qualifications were not proper and accordingly she
was removed from the service. The State wants to recover the two months' salary that was paid to Nitya. She
contended that the salary was paid for her services. Can the state recover the salary? Explain with reasons. (30
marks)
• "Where two parties have made a contract which one of them has broken, the damages which the other party
ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered
either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such
as may reasonably be supposed to have been in the contemplation of both parties at the time they made the
contract, as the probable result of the breach of it." Examine the above statement and explain the difference
 between general damages and special damages with reference to statutory provisions and decided cases. (30
marks)
• A entered into a contract with B for exhibition of a film... fire destroyed hall scenario... A sues B for breach of
contract and claims damages. (Part of 30 marks total)

Indemnity and Guarantee (Covers Syllabus point 6: contracts of indemnity and guarantee, surety's liability, discharge
of surety, rights of surety)

• Write short notes on the following terms as per the Indian Contract Act: d) Contract of indemnity. (3 marks each
part)
• A,B,C stands as sureties to D for Rs.60,000/-. D failed to pay the amount to the creditor. Who are liable to pay
to the creditor and how much? Can the creditor claim entire money from one surety? Can A, B, C insist that the
creditor file a case against D first and if he fails to pay only then would they pay? (15 marks)

Bailment (Covers Syllabus point 7: bailment - general features)

• Write short notes on the following terms as per the Indian Contract Act: e) Bailment. (3 marks each part)
• Elaborate upon the concept of bailment. Give suitable examples to explain the essential elements of a valid
bailment. (5 marks)

Sale of Goods (Covers Syllabus point 8: sale and agreement to sell, formalities, price, conditions and warranties,
fundamental breach, transfer of property/title, passing of risk, performance, C.I.F/F.O.B contracts, rights of buyer, suits
for breach, rights of unpaid seller, auction sale, hire purchase)

• Distinguish between 'Sale' and 'Agreement to Sell' in the light of the provisions of the Sale of Goods Act, 1930.
(5 marks)
• Examine the role of transfer of property in the sale of goods and its significance under Indian law. (5 marks)
• What remedies are available to the buyer for breach of contract in the sale of goods? (5 marks)
• A furniture store delivered a set of chairs to Priya's residence. Upon inspection, Priya discovered that one of the
chairs was damaged. Discuss the provisions of the Sale of Goods Act, 1930 regarding acceptance and rejection
of goods. What steps can Priya take to address the issue? (15 marks)
• Write notes on the following: a. Unpaid seller and his rights under the Sale of Goods Act, 1930 b. Difference
between conditions and warranties under the Sale of Goods Act, 1930. (7.5 marks each part, total 15 marks)
• Elaborate upon the principle of caveat emptor. Are there any exceptions to the rule? Discuss in the light of the
provisions of Sale of Goods Act, 1930. Also give suitable examples. (Part of 30 marks total)

Partnerships (Covers Syllabus point 9: essentials, comparison, types, formation, property, holding out, illegal
partnership, relation b/w partners & 3rd parties, incoming/outgoing partners, retirement, dissolution, settlement of
accounts, sale of goodwill, registration)

• Write a short note on the definition of partnership as contained in the Indian Partnership Act, 1932. Also,
explain, what is meant by partnership at will. (5 marks)
• Write notes on the following: a. Position of Minor under the Indian Partnership Act, 1932 b. Effect of non-
registration of a partnership firm. (7.5 marks each part, total 15 marks)

Negotiable Instruments Act (Covers Syllabus points 1, 2, & 3 under Negotiable Instrument Act: negotiability,
endorsement, dishonoured/overdue instrument, presentment, parties, holder/holder in due course, liabilities, discharge,
material alteration, protection of bankers, dishonour, noting, protest, cheques, crossing, evidence rules, presumptions,
promissory notes)

• Define cheque and bill of exchange. (5 marks)

• Explain the liabilities of the following parties to a Negotiable Instrument: (i) Maker of a Promissory Note (ii)
Acceptor of a Bill of Exchange. (Part of 5 marks total)
• Define the concept of a "holder in due course" in the context of negotiable instruments. (5 marks)
• How is 'negotiable instrument' defined in the Negotiable Instruments Act, 1881? Also, discuss the essentials of a
valid promissory note. (5 marks)
• Critically analyse the provisions related to dishonour of cheques under Section 138 of the Negotiable
Instruments Act, 1881. Explore the criminal liability imposed on the drawer in case of dishonour and the
remedies available to the payee. Consider recent legal developments and case law to support your analysis. (15
marks)
• "Negotiable Instrument should be negotiable as apparent on its face without reference to secret title to it."
Reflect upon the statement with reference to: holder-in-due course and case laws. Also bring out, if any,
difference between holder and the real creditor. (15 marks)
• a. How is 'cheque' defined in the Negotiable Instruments Act, 1881? Discuss the law relating to dishonour of
cheques in case of insufficiency of funds, as contained in Section 138 of the Act. Are the offences punishable
under the Negotiable Instruments Act, 1881 compoundable? b. Write a note on the presumptions as to
negotiable instruments as contained in Section 118 of the Negotiable Instruments Act, 1881. (30 marks total)