TN State Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 1.
What is law?
Answer:
Law means set of rules which governs our behaviour and relating in a civilised society.

Question 2.
Why should one know law?
Answer:
One to should know the law which he is subjected to because ignorance of law is no excuse.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 3.
Can a minor enter into a Contract?
Answer:
Minor is a person who has not completed at the age of 18. A person legally capable of making an agreement only can enter into contract.

Question 4.
Who can enter into a contract?
Answer:

  1. Person legally capable of making an agreement only can enter into contract.
  2. The parties to a contract must have capacity to make valid contract (legal ability) to make valid contract.
  3. The Indian contract act specifies that every person is competent to contract.
  4. Insolvents, and convicts are not competent to contract.

Question 5.
Define Contract.
Answer:
Contract 2(h) An agreement enforceable by law is a contract.
Contract = Agreement + Enforceability by law.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 6.
Define Offer.
Answer:
Offer (i.e. Proposal) [section 2(a)] When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other person either to such act or abstinence, he is said to make a proposal.

Question 7.
What do you mean by Agreement?
Answer:
An Agreement is every promise or every set of promises forming consideration for each other. .
Agreement offer / proposal + Acceptance.

Question 8.
Define a Voidable Contract.
Answer:
An agreement which is enforceable by law at the option of one or more parties but not at the option of the other or others is a voidable contract. This is the result of coercion, undue influence, fraud and misrepresentation.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 9.
What do you mean by Revocation?
Answer:
“Revocation of an offer means withdrawal of his offer” by the offeror.
An offer can be revoked.

  1. Expressly.
  2. Impliedly
  3. The communication of revocation (of an offer or an acceptance) is complete.

Question 10.
Who is a promisor, promisee?
Answer:
A promisor:
A person who makes a promise. The person who has become obliged through a promise towards another.

A promisee:
A person to whom a promise is made. According to sec. 41. If a promisee accepts the performance of the promise by a third person he cannot afterwards enforce it against the promise.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 11.
Explain the essentials of a Valid Contract.
Answer:
Essentials of a valid Contract:“All agreements are contracts, if they are made among parties – by free consent of the parties, competent to contract, for a lawful consideration and with a lawful object, and not hereby expressly declared to be void.” Sec. 10

(i) Offer and Acceptance:
There must be two parties to an agreement namely one party making the offer and the other party accepting it.

(ii) Legal Relationship:
The parties must have the intention to create legal relationship between them. An agreement of Social or domestic nature is not at all a contract.

(iii) Lawful Consideration (quid pro quo):
As per Contract Act under Sec.2 (d) Consideration means something in return. A contract without consideration becomes invalid.

(iv) Lawful Object (Section 23):
The object of agreement should be lawful and legal. It must not be immoral, illegal or opposed to public policy.

(v) Free Consent (Section 13 & 14):
Consent of the parties must be free and genuine. Consent means agreeing upon same thing in the same sense at the same time i.e. there should be consensus – ad – idem. Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 12.
Difference between Contract and Agreement.
Answer:

Basis  Contract

 Agreement

Definition  A contract is an agreement enforceable by law.  An Agreement is every promise or every set of promises forming consideration.
Enforceability  Every contract is enforceable.  Every promise is not enforceable.
Interrelationship  A contract includes an agreement.  An agreement does not include a contract.
Validity  Only legal agreements are called contracts.  An agreement may be both legal and illegal.
Legal Obligation  Every contract contains a legal obligation.  It is not necessary for every agreement to have legal obligation.

Question 13.
Explain the classification of Contract on the basis of the validity.
Answer:
(i) Valid Contract:
An agreement which fulfils all the essentials prescribed by law on the basis of its creation.
eg: S offers to sell his car for ₹ 2,00,000 to T. T agrees to buy it. It is a Valid Contract.

(ii) Void Contract (a):
A contract which ceases to be enforceable by law. A contract which does not satisfy any of the essential elements of a valid contract is said to be Void.

(iii) Voidable Contract (b):
An agreement which is enforceable by law at the option of one or more parties but not at the option of the other or others is a voidable contract.

(iv) Illegal Contract:
It is a contract which is forbidden by law. All illegal agreements are Void but all void agreements or contracts are not necessarily illegal. Contract that is immoral or opposed to public policy are illegal in nature.

(v) Unenforceable Contract:
Where a contract is unenforceable because of some technical defect i.e. absence in writing barred by imitation etc. If the parties perform the contract it will be valid, but the Court will not compel them if they do not.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 14.
Explain the classification of contract on the basis of the Formation.
Answer:
(i) Express Contract:
A contract made by word spoken or written. According to Section. 9, in so for as the proposal or acceptance of any promise is made; in words, the promise is said to be express, eg: P says to Q ‘will you buy my bicycle for ₹ 1,000?” Q says to P “Yes”.

(ii) Implied Contract:
The implied contract is one, which is not expressly written but understood by the conduct of parties. Where the proposal or acceptance of any promise is made otherwise than in words, the promise is said to be implied.
eg: A gets into a public bus, there is an implied contract that he will pay the bus fare.

(iii) Quasi Contract:
It is a contract created by law. Actually, there is no contract. It is based on the principle that “a person shall not be allowed to enrich himself unjustly at the expense of the other”. In other words it is an obligation of one party to another imposed by law independent of an agreement between the parties.

(iv) Tacit Contract:
A contract is said to be tacit when it has to be inferred from the conduct of the parties. For example obtaining cash through automatic teller machine, sale by fall of hammer of an auction sale.

Question 15.
Explain the classification of Contract on tn basis of the Performance.
Answer:
(i) Executed Contract:
A contract in which both the parties have fulfilled their obligations j under the contract.
eg: X contracts to buy a car from Y by paying cash, Y instantly delivers his car.

(ii) Executory Contract:
A contract in which both the parties are yet to fulfil their i obligations, it is said to be an executory contract.
eg: A agrees to buy B’s cycle by promising to pay cash on 15 June, B agrees to deliver the cycle on 20 June.

(iii) Unilateral Contract:
A unilateral contract is a one sided contract in which only one party has performed his promise or obligation, the other party has to perform his promise or obligation, eg: X promises 1 to pay Y a sum of ₹ 10,000 for the goods to be delivered by Y. X paid the money and Y is yet to deliver the goods.

(iv) Bilateral Contract:
A contract in which both the parties commit to perform their respective promises is called a bilateral contract.
eg: R offers to sell his fiat cartoS for ₹ 10,00,000 on acceptance of R’s offer by S, there is a promise by R to Sell the car and there is a promise by S to purchase the car, there are two promises.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 16.
A agrees to pay B (₹20,000) and in consideration, B agrees to unload 10 bags of sugar from a truck in 5 minutes. Is it a Valid contract?
Answer:
(i) It is hot a valid contract.
(ii) Because unloading time is too short.

Question 17.
X writes to Y, “As a doctor you treat my wife without charging, I promise to pay you ₹ 10,000/-. “X” does not pay. Advise Y.
Answer:
As per your promise, I treated your wife. Hence it is left upto you to fulfil your promise to pay me ₹ 10,000/-.

Question 18.
P owes Q ₹ 10,000/- for the last 10 years and the payment is time barred. P signs a pro-note for it. Is it a valid contract? If yes, give reason.
Answer:
No. It is not a valid contract. The pronote will be renewed every year.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 19.
After studying this chapter any one can enter into Valid Contract and can also identify the essentials present in the contract.
Answer:
When one person signifies to another his willingness to do or to abstain from doing anything with the accent of that other person.

Question 20.
After understanding this chapter entering into Offer and giving Acceptance becomes easier.
Answer:
An agreement of purity social or domestic nature is not at all a contract.
An invitation to a dinner does not create any legal relation and hence, is not a contract.
Offer = proposal
Acceptance = proposal is accepted.

Question 21.
After going through this chapter the value of consideration and the requirement for return payment can be understood better.
Answer:
A contract is a agreement enforceable by law. Every contract is enforceable. A contract includes an agreement.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 22.
After reviewing this chapter the parties who are allowed to enter and the parties who are not allowed to enter into a contract can be clearly demarcated.
Answer:
Who are allowed to enter into contract:
An agreement includes not only theseagreements which can be enforceable by law but also these which may not be enforceable. A minor cannot enter into contract.

Who are not allowed to enter into contract:
There may be agreement to do an illegal act. eg: Smuggling goods. Which cannot be enforceable by law.

Question 23.
After analysing this chapter an obligation imposed by law – Quasi Contracts are better understood and distinguished from other contracts.
Answer:
Quasi contract is an obligation of one party to another imposed by law independed of an agreement between the parties.
Illegal contract:
It is a contract which is forbidden by law. All illegal agreement are void but all void agreements or contracts are not necessarily illegal.

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Choose the Correct Answer:

Question 1.
An agreement enforceable by law is a:
(a) enforceable acceptance
(b) accepted offer
(c) approved promise
(d) contract
Answer:
(d) contract

Question 2.
Every promise and every set of promises, forming the consideration for each other, is an:
(a) agreement
(b) contract
(c) offer
(d) acceptance
Answer:
(a) agreement

Question 3.
Void agreement signifies:
(a) agreement illegal in nature
(b) agreement not enforceable by law
(c) agreement violating legal procedure
(d) agreement against public policy.
Answer:
(b) agreement not enforceable by law

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Question 4.
Acceptance to be valid must:
(a) be absolute
(b) be unqualified
(c) both be absolute & unqualified
(d) be conditional.
Answer:
(c) both be absolute & unqualified

Question 5.
A contract with or by a minor is a:
(a) valid contract
(b) void contract
(c) voidable contract
(d) voidable at the option of either party.
Answer:
(b) void contract

Samacheer Kalvi TN Board 11th Commerce Important Questions Chapter 29 Elements of Contract

Samacheer Kalvi 11th Commerce Notes Chapter 29 Elements of Contract

→ Every promise and set of promises forming consideration for each other is an agreement, in short Agreement = offer + Acceptance.

→ An agreement enforceable by law in a contract. As per the Indian contract act 1872, a “contract” is an agreement enforceable by law. The agreements not enforceable by law are not contracts. An “agreement” means is “a promise or a set of promises” forming consideration for each other.

→ A promise arises when a proposal is accepted. By implication an agreement is an accepted proposal. In other words, an agreement consists of an “offer” and its “acceptance”.
Agreement = Offer / proposal + Acceptance
Contract = Agreement + Enforceability by law.

→ Agreements may be classified into two categories,

  1. Agreement not enforceable by law
  2. Agreement enforceable by law.

TN Board 11th Commerce Important Questions

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