Contract Law

If you're interviewing for law jobs, you're probably wondering what type of questions you'll be asked. Here are some most common interview questions on Contract Law to help you in your job preparation.

Q.1 What is a Contract?
A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is legally charted because it meets the requirements and approval of the law.
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Q.2 What are the contract elements?

For a contract to be legally binding it must contain four essential elements:

1. an offer.

2. an acceptance.

3. an intention to create a legal relationship.

4. a consideration (usually some asset).

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Q.3 Explain the Indian Contract Act, 1872?
The Indian Contract Act, 1872 prescribes the law relating to contracts in India and is the key act regulating Indian contract law. The Act is based on the principles of English Common Law. It is relevant to all the states of India. It determines the circumstances in which promises made by the parties to a contract shall be legally binding.
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Q.4 In how many sections is the Indian Contract Act, 1872 divided?

The Act as enacted originally had 266 Sections:

1. General Principles of Law of Contract – Sections 01 to 75

2. Contract relating to Sale of Goods – Sections 76 to 123

3. Special Contracts- Indemnity, Guarantee, Bailment & Pledge and Agency – Sections 124 to 238

4. Contracts relating to Partnership – Sections 239 to 266

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Q.5 What do you understand by Contract of indemnity?
A contract by which one party promises to save the other from dropping caused to him by the contract of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity".
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Q.6 List the requirements of a valid offer?
1. Must be firm. 2. Must be complete. 3. Must be clear and certain. 4. Must meet the requirements of the Consumer Protection Act.
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Q.7 List the requirements of a valid Acceptance?

1. Must be unqualified.

2. Must be by the person to whom the offer was made.

3. Must be a conscious response to the offer.

4. Must be in the form prescribed by the offeror, if any.

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Q.8 What is "Contract of guarantee", "surety", "principal debtor" and "creditor"?
A "contract of guarantee" is a contract to do the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the "surety", the person in respect of whose default the guarantee is given is called the "principal debtor", and the person to whom the guarantee is given is called the "creditor". A guarantee may be either oral or written.
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Q.9 State the ways an offer may be terminated?

1. Rejection of the offer

2. Acceptance of the offer

3. Effluxion of the prescribed time, or of a reasonable time

4. Death of either party

5. Revocation of the offer

6. Loss of legal capacity to act

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Q.10 What is an Option?
An option is defined as a substantive offer, reinforced by an agreement in terms of which the offeror undertakes to keep his offer open to the offere for a specified period.
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Q.11 What is the right of pre-emption?
A right of pre-emption is a kind of right of preference. It is given by a imminent seller to a imminent purchaser, to give the purchaser preference if the prospective seller should decide to sell.
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Q.12 State the requirements For Restitutio In Integrum?
1. Misrepresentation by the other party 2. Inducement 3. Intention to induce 4. Materiality
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Q.13 What is Misrepresentation?
A misrepresentation is overall a false statement of past or present fact made by a contractual party to another prior to the conclusion of a contract and regarding some matter or circumstance relating to the contract.
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Q.14 What is a Contingent contract?
A "contingent contract" is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.
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Q.15 What are Tacit Terms?
A tacit term is one that the parties did not specifically agree upon, but which both or all of them expected to form part of their agreement. It is a wordless understanding having the same legal effect as an express term.
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Q.16 State the Devolution of joint rights?
When a person has made a promise to two or more persons jointly, then unless 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 one of them, with the representative of such deceased person jointly with the survivor, and, after the death of the last survivor, with the representatives of all jointly.
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Q.17 Define Fraud?
Fraud means and includes any of the below mentioned acts committed by a party to a contract, or with his connivance, or by his agents , with intent to deceive another party thereto or his agent, or to induce him to enter into the contract: 1. the suggestion as a fact, of that which is not true, by one who does not believe it to be true; 2. the active concealment of a fact by one having knowledge or belief of the fact; 3. a promise made without any intention of performing it; 4. any other act fitted to deceive; 5. any such act or omission as the law specially declares to be fraudulent.
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Q.18 What is undue influence?
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.
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Q.19 Define Coercion?
"Coercion" is the committing, or threatening to commit, any act forbidden by the Indian Penal Code (45 of 1860) or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.
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Q.20 What is a Consent?
Two or more persons are said to consent when they agree upon the same thing in the same sense.
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Q.21 What is the Parol Evidence Rule?
The parol evidence rule tells that where the parties intended their agreement to be fully and finally embodied in writing, evidence to contradict, vary, add to, or subtract from the terms of the writing is inadmissible.
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Q.22 State the requirements for a valid session?

1. An entitlement by the cedent to dispose of the personal right

2. The capacity of the personal right to be ceded

3. A transfer agreement

4. Formalities

5. Legality

6. Absence of prejudice to the debtor

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Q.23 State the rights of surety on payment or performance?
Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor.
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Q.24 State the ways in which obligations may be terminated?

1. By performance, agreement

2. Release and waiver

3. Novation

4. Compromise

5. Effluxion of time

6. Notice

7. By law

8. Set-off

9. Merger

10. Supervening impossibility of performance

11. Prescription

12. Insolvency

13. Death

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Q.25 Briefly discuss Compromise?
Compromise is an agreement in terms of which parties resolve a dispute or some uncertainty between themselves. Compromise differs from true novation in that compromise does not require a valid old obligation to have existed.
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Q.26 Define a bailment?
A "bailment" is the transfer of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them.
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Q.27 When is a discharge called a discharge by performance?
A contract is said to be discharged by performance when both the parties perform all the primary obligations both express and implied which are set out under the contract.
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Q.28 What is discharge by mutual agreement?
If both the parties to the contract, expressly or impliedly, agree to terminate the contract, the contract is said to have been discharged by mutual consent.
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Q.29 How could be a contract be discharged by breach?
If a party to a contract fails to perform his obligation according to the time and place specified, then he is said to have committed a breach of contract.
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Q.30 How can a contract be discharged by operation of law?
If the material terms of a contract are altered, an innocent party i.e., without the consent of the other party, the other party can avoid the contract may be discharged from their contractual obligations.
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Q.31 What is Lapse of time in Contract law?
Lapse of time operates to discontinue an offer in which the intended recipient does not respond to it within the time stipulated therein or within a reasonable time.
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Q.32 When can a contract be discharged by the impossibility of Performance?
If it is impossible for any of the parties to the contract to perform their obligations, then the impossibility of performance leads to a discharge of the contract.
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Q.33 State the Exceptions to the Doctrine of supervening impossibility?

1. Difficulty of Performance.

2. Commercial Impossibility.

3. Default of a Third Party.

4. Strikes, Lockouts and Civil Disturbances.

5. Partial Impossibilities.

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Q.34 What is the most common remedy for breach of contract?
Compensatory damages is the most common breach of contract remedy. When compensatory damages are awarded, a court orders the person that breached the contract to pay the other person sufficient money to get what they were promised in the contract elsewhere.
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Q.35 What is a breach of contract?
A contract is said to be breached or broken when one of the parties fails or deny to perform his obligations, or his promise under the contract. Therefore, it can be said that when a binding agreement is not honoured by one or more parties by non-performance of his promise, the agreement can be said to be breached.
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Q.36 What is the main objective of the Specific Relief Act?
The main objective of the Specific Relief Act is that no person shall live with the damages and losses and those who have caused such a situation must be in a position to restore all unlawful benefits received by them. This act focuses on providing justice to all and not unjust favouring a single party.
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Q.37 Define "Pledge", "pawnor", and "pawnee"?
The bailment of goods as security for payment of a debt or performance of a promise is called "pledge". The bailor is in this case called the "pawnor". The bailee is called "pawnee".
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Q.38 What is the responsibility of a Bailor to a bailee?
The bailor is responsible to the bailee for any dropping which the bailee may comfort by reason that the bailor was not entitled to make the bailment, or to receive back the goods, or to give directions, respecting them.
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Q.39 What is an Agent and Principal?
An agent is a person employed to do any act for another, who basically deals with third persons. The person for whom such act is done, or represented, is called the principal.
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Q.40 Who is a Sub-agent?
A sub-agent is a person employed by, and acting under the control of, the original agent in the business of the agency.
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Q.41 What are International contracts?
International contracts are the primary legal aid put in place for companies to control their risks when working in the global or international market.
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Q.42 List the different types of International Contracts?
1. International distribution agreements 2. Intellectual property licenses 3. Investment agreements 4. International sales contracts 5. Supply agreements 6. Letters of credit 7. Franchise agreements 8. Joint venture agreements 9. Development agreements
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Q.43 What is the purpose of CISG?
The major purpose of the CISG is to provide a modern, uniform and fair regime for contracts for the international sale of goods.
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Q.44 What does INCOTERMS 2010 means?
Incoterms 2010 refer to the issue of transporting products from the exporter to the importer. Incoterms also include carrying products, covering the costs of transport itself, insurance costs, cost of risk transfer for the condition of products at various points in the transport process.
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Q.45 What is UNCITRAL and what is its purpose?
UNCITRAL is the central legal body of the U.N,'s system in the field of international trade law. The core function of the UNCITRAL is the modernization and harmonization of rules on international business. The organization is responsible for helping to facilitate international trade and investment.
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Q.46 What is Regional Trade Blocs?
A regional trading bloc is a group of countries within a geographical region that protect themselves from imports from non-members.
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Q.47 List the 10 major regional trade blocs across the world?
These include the ASEAN, APEC, BRICS, EU, NAFTA, CIS, COMESA, SAARC, MERCOSUR, IOR-ARC.
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Q.48 What is the International Commercial Law?
International Commercial Law is a body of legal rules, conventions, treaties, domestic legislation and commercial customs or usages, that governs international commercial or business transactions.
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Q.49 Who can employ an Agent?
Any person who is of the age of majority according to the law , and who is of sound mind, may employ an agent.
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Q.50 What is the Responsibility of finder of goods?
A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.
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Q.51 Which Indian state is exempted under the Indian contract act, 1872?
Jammu & Kashmir
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Q.52 How many types does contract can be classified into, on basis of formation?
A contract can be classified into 3 cateogies on the basis of formation.
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Q.53 Which section of Indian contract Act, 1872 focuses on free consent?
Section 10 of Indian Contract Act, 1872 focuses on free consent
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Q.54 What is essential of a valid contract?
The essential elements of a Valid Contract are: Offer and Acceptance. In order to create a valid contract, there must be an agreement between the two parties. An offer from one party to do or abstain from doing a particular act and its acceptance by the other party are two basic elements of an agreement.
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Q.55 What does section 25 of Indian contract Act, 1872 enlists?
Agreement made without consideration
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Q.56 What is Nudum Pactum?
A promise without consideration
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