MCQ 20 Dec 2023

Daily practice questions for CLAT - (20 December 2023)



The law relating to 'offer' and 'acceptance' is not simple. In Hamilton, Rau and Winthraub on Contracts, the learned authors referred to a decision of Habaska Seed Co. Vs. Harsh 98 Nob 89, 152 NW 310 wherein the purported offer "I want $ 2.25 cent per cent for this seed fobcowell," was held not be an offer on the ground that the defendant did not say "I offer to sell you. At page 346 of the said treatise, it is stated: "The rules of offer and acceptance are usually favourites of law students; they are easily stated and tend to be rather mechanical in their operation. They also involve situations that are relatively easy to grasp and in which various policy consideration are close to the surface. However, one should not assume that one has mastered the law of contracts simply because one is conversant with rules of offer and acceptance. Indeed the writings of modern contracts scholars tend to deprecate the importance of the rules of offer and acceptance. In Halsbury's Laws of England, 4th Edition, Volume-9, the meaning of 'offer' has been stated in paragraph 227 at page 98 in the following terms: Meaning of offer: An offer is an expression by one person or group of persons or by agents on his behalf, made to another, of his willingness to be bound to a contract with that other on terms either certain or capable of being rendered certain. An offer may be made to an individual or to a group of persons or to the world at large. It may be made expressly by words, or it may be implied from the product of the offerer." In Cheshire, Fifoot & Furmston's Law of Contract (14th edition) at Page 62 the law is stated as under:- "It has been established ever since the case of Payne v Cave in 1789 that revocation is possible and effective at any time before acceptance: up to this moment ex hypothesis no legal obligation exists. Nor, as the law stands, is it relevant that the offeror has declared himself ready to keep the offer open for a given period. Such intimation is but part and parcel of the original offer, which must stand or fall as a whole. The offeror may, of course, bind himself, by a separate and specific contract, to keep the offer; but the offeree, if such is his allegation, must provide all the elements of a valid contract, including assent and consideration. In Routledge v Grant the defendant offered on 18 March to buy the plaintiff's house for a certain sum, 'a definite answer to be given within six weeks from the date'. Best CJ held that the defendant could withdraw at any moment before acceptance, even though the time limit had not expired. The plaintiff could only have held the defendant to his offer throughout the period, if he had bought the option by a separate and binding contract."

Question1:- A, runs an insurance company, and employs an agent to sell insurance plans. Determine.
  • A. An offer by A’s agent would be considered as an offer by A
  • B. An offer by A’s agent would not be considered as an offer by A
  • C. An offer by A’s agent would be considered as a voidable offer by A
  • D. An offer by A’s agent on his behalf would be void
Answer is A is correct. As per the Indian Contract Act, in an agent-principal relationship, the principal would be liable for the acts of the agent which have been made within the scope of the agency. Therefore, an offer by A’s agent would be considered as an offer by A. Hence, (A) is the correct answer.
Question2:- Which of the following statements is correct with respect to revocation of an offer?
  • A. An offer can be revoked any time after it has been made
  • B. An offer can only be revoked until it has been accepted
  • C. An offer can be revoked within 7 days of acceptance
  • D. An offer cannot be revoked
Answer is B is correct. According to Section 2 of the Indian Contract Act, 1872, a proposal or an offer becomes a promise once it is accepted by the other party. Therefore, a proposal can only be revoked before it is accepted by the other party and not after the acceptance. Hence, (B) is the correct answer.
Question3:- A visits a bar and gets completely drunk and makes an offer to B that he will buy his watch for Rs. 10 lakhs, and B subsequently accepts it. Determine.
  • A. A would have to buy the watch as the offer has been accepted
  • B. A would not have to buy the watch as the offer is not valid
  • C. A would have to pay compensation to B
  • D. A would not have to buy the watch if B was also drunk during the time of entering into the contract
Answer is B is correct. According to Section 12 of the Indian Contract Act, 1872, a person is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests.
As stated in the aforementioned situation, if a person is so drunk that he cannot understand the terms of a contract, then he cannot enter into a valid contract. Therefore, the offer made by A would be invalid as he cannot enter into a legally binding contract during such a drunken state. Hence, (B) is the correct answer.
Question4:- A makes an offer to B on the telephone that he would buy his car for Rs. 1 Lakh, however due to connectivity issues, B was unable to hear the offer. Determine.
  • A. The communication of the offer would still be complete
  • B. The communication of the offer would not be complete
  • C. The communication of offer would be complete only through a written contract
  • D. The communication of the offer would be partially complete
Answer is B is correct. According to the Indian Contract Act, the communication of an offer on a telephone or telegram is complete when the offeree hears the offer. In this case, since B did not hear the offer, the communication of the offer would also be not complete. Hence, (B) is the correct answer.
Question5 :- A who lives in Uttar Pradesh makes an offer to B, who lives in Rajasthan, and B subsequently accepts it. Decide the place of completion of such a contract.
  • A. Uttar Pradesh
  • B. Rajasthan
  • C. Either Uttar Pradesh or Rajasthan
  • D. None of the above
Answer is B is correct. According to the Indian Contract Act, 1872 the place of completion of the contract is the place where the other party accepts the offer, and in this case, since B lives in Rajasthan, the place of completion of the contract would also be Rajasthan. Hence, (B) is the correct answer.