Legal Reasoning Practice Test (CLAT)

Direction for question: Read the passage given below and answer the question that follows:

Section 56 of the Indian Contract Act lays down the simple principle that an agreement to do an act impossible in itself is void. The second paragraph of Section 56 lays down the effect of the subsequent impossibility of performance. Sometimes the performance of a contract is quite possible when it is made by the parties. But some event subsequently happens which renders its performance impossible or unlawful. In either case, the contract becomes void.

The section also states that when a person has promised to do something which he knew or could have reasonably known, and which the promisee did not know to be impossible or unlawful, such promisor will have to provide compensation to such promisee for any loss which the promisee might have sustained through the non-performance of the promise.

A change in circumstances often leads to frustration with contracts. A contract may be frustrated where there exists a change in circumstances, after the contract was made, which is not the fault of either of the parties, which renders the contract either impossible to perform or deprives the contract of its commercial purpose. Where a contract is found to be frustrated, each party is discharged from future obligations under the contract and neither party may sue for breach. The Supreme Court in the case of SatyabrataGhose v. MugneeramBangur& Co had observed that ―This much is clear that the word ‗impossible‘ has not been used here in the sense of physical or literal impossibility. The performance of the act may not be literally impossible but it may be impracticable and useless from the point of view of the object and purpose that the parties had in view; and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested their bargain, it can very well be said that the promisor finds it impossible to do the act which he promises to do.

It has also been ruled in the case of Maritime National Fish Ltd v. Ocean Trawlers Ltd that the essence of 'frustration' is that it should not be due to the act or election of the parties. Frustration should arise without blame or fault on either side. Reliance cannot be placed on self-induced frustration.

Q ➤ Xavier enters into a contract with Connor, a magician by profession. The contract stipulates that Connor will perform a magic show at the birthday party of Xavier‘s daughter, making a pot of gold literally appear out of thin air, on the payment of an advance. Connor claims that this is not illusion, but a real magic work. At the party, when Connor is about to perform the magic trick, he trips over a chair and hits his head on a table, thereby fainting. Later, Xavier sues Connor for non-performance of his promise under the contract. Which of these statements is true?

a) Xavier will succeed in his claim as Connor had already taken an advance amount for his performance, therefore he was obligated to carry out his promise under the contract.
b) Connor can sue Xavier for negligence as the latter was not careful enough because of which Connor suffered injuries.
c) The contract is void as making gold appear out of thin air is an impossible act, therefore a contract to do such an act is void.
d) Connor‘s injury was not foreseeable by anyone, hence Xavier suit ought to be rejected.

Q ➤ On August 23, 2018, Maria and Rebello enter into a contract to get married on January 1, 2019. Their respective families are witnesses to this contract. However, between September and November 2018, Rebello’s mental condition starts deteriorating and he is subsequently hospitalized in December, 2018 at a mental institution. Maria and her family is not aware of such developments and come to know of it only in January 2020. Maria asks for your legal advice. What would you suggest?

a) Maria‘s parents should sue Rebello’s family for committing fraud in not having told them about Rebello’s mental condition before the two of them entered into a contract of marriage.
b) Maria should sue Rebello for compensation as he failed to perform his obligations under the contract they entered into.
c) The contract to enter into marriage is void as the event which led to its non-performance happened subsequent to the contract.
d) None of the above

Q ➤ ABC, a shipping company based in Portugal, enters into a contract with Fortune Growth, a gas pipeline company to transport coal to one of its subsidiaries in the Netherlands. However, in the intervening period, Portugal declares war on the Netherlands because of which all cargo ships from Portugal are not allowed to depart for the Netherlands. The non-supply of coal causes significant financial losses to Fortune Growth. Which statement best describes the situation?

a) Fortune Growth should claim compensation from ABC for failure to perform its duties under the contract.
b) Fortune Growth should sue the government of Portugal for having caused the non-performance of its contract.
c) The contract between ABC and Fortune Growth is void because it was for an illegal purpose.
d) The contract between ABC and Fortune Growth is void because its performance is rendered impossible because of the war.

Q ➤ Arunima, a model, enters into a contract with a production company for shooting a song video. The contract requires her to shoot for at least 5 hours every day for a specific period of 3 weeks on a beach. However, during the second week, the weather department issued warnings of strong tidal waves, restricting anyone‘s access to the beach. The song video could not be shot in 3 weeks. Can the contract said to be frustrated?

a) No, the production company could have waited for the tidal waves to abate and shoot it after that.
b) Yes, as strong tidal waves are not the fault of either party which rendered the contract impossible to be performed.
c) No, as the song could have been shot in any other location.
d) None of the above.

Q ➤ A enters into a contract with B to supply goods to his office. A decides to procure the goods from C. However, on the date of delivery of goods to B, A tells him that because C was unable to import the goods subsequent to the contract between A and B, he could not supply the same to B. Does the contract between A and B stand frustrated?

a) Yes, the event happened subsequent to the contract causing the contract to not be performed.
b) No, A‘s obligations under the contract continue to exist as the procuring of goods by A can possibly be done by more methods than just procuring it from C.
c) Yes, as A cannot be held responsible for C‘s behaviour.
d) None of the above.

Direction for question: Read the passage given below and answer the question that follows:

Rohan was a mischievous 16 year old boy. Since his parents had passed away, he lived with his uncle. Though Rohan was fairly young, his build made him look much older. On several occasions Rohan would take advantage of the same.

One day, while watching television he saw an advertisement for a new television. He was very interested in purchasing the same, but his uncle refused to buy it. He categorized that as ‗unnecessary expenditure‘. In order to purchase that television, Rohan devised a plan. He collected all the electronics in his house and created an inventory, after which he began to hunt for buyers of second-hand electronics.

One such buyer was a small company called YouTryWeBuy(YTWB), with Mr. Shree being the person who authorized purchases. Rohan decided that he shall deal with Mr. Shree and approached him the next day.

Rohan had hatched a scheme wherein he would sell some of the electronics and take an advance on the rest, which he would use to buy the television. He had no intention in supplying the actual number of electronics to YTWB.

Rohan approached Mr. Shree, posing as a 22 year old college student wanting to get rid of his electronics before shifting out of his hostel. Mr. Shree bought into the charade and ended up giving a substantial advance to Rohan. Subsequently, according to plan, Rohan purchased the television and began dodging all calls/notices sent in by YTWB.

Finally, YTWB sued Rohan for the supply of the remaining electronics. Rohan pleaded that he was a minor, and hence the agreement between him and YTWB was void. YTWB argued that Rohan had misrepresented his age and was thus liable.

Keep in mind the following-

Principle 1: Section 11 of the Indian Contract Act, 1872 states that- ―Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject.‖

Principle 2: There can be no ratification of a void agreement.

Principle 3: If a minor obtains property or goods by misrepresenting his age, he can be compelled to restore it as long as the same is traceable in his possession. If that is not the case, or if he has obtained cash/converted the goods for the same, the minor cannot be so compelled. This is a duty arising from equitable principles.

Principle 4: If the minor seeks the help of the Court for cancellation of the contract, the Court has the power to require the minor to restore all benefits received by him/her under such an agreement.

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Total 5 Questions
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Legal Reasoning Practice Test (CLAT) - 03 [CONTRACT]

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