ICAP CAF-4 Contract Act 1872: practice questions with answers

Answer: C. Section 7 of the Contract Act, 1872 requires an acceptance to be absolute and unqualified. A reply that accepts only on a new or different term (here, free delivery to Lahore instead of collection from Faisalabad) is not an acceptance. It is a counter-proposal (a new proposal under section 2(a)) and it rejects the original offer.

No contract exists unless Saqib accepts Mahnoor's counter-proposal. If Saqib refuses, Mahnoor cannot go back and accept the original offer, because it has been rejected.

Answer: A. Lack of free consent (section 14) usually makes a contract voidable, not void:

- coercion, fraud and misrepresentation: voidable at the option of the party whose consent was so caused (section 19);
- undue influence: voidable at that party's option, and the court may set it aside absolutely or on terms (section 19A).

Mistake is treated differently. Where both parties are under a mistake as to a matter of fact essential to the agreement, the agreement is void (section 20). A mistake of only one party does not make a contract voidable (section 22), and a mistake as to a law in force in Pakistan has no effect (section 21).

Answer: D. Section 25 of the Contract Act, 1872: an agreement made without consideration is void, except in three cases. The third is a promise made in writing and signed by the person to be charged (or his authorised agent) to pay wholly or in part a debt which the creditor could have enforced but for the law of limitation (section 25(3)).

Application: the loan of Rs 900,000 became time-barred in 2024. Rehan's letter of 12 January 2027 is written and signed by him and promises to pay part of that debt. It is enforceable, but only for the amount promised: Rs 550,000. The remaining Rs 350,000 stays unenforceable.

The registration requirement in section 25(1) applies only to a promise made out of natural love and affection between near relations.

Answer: A. Section 35 of the Contract Act, 1872: a contingent contract to do something if a specified uncertain event happens within a fixed time becomes void if, at the expiry of that time, the event has not happened (or if, before that time, it becomes impossible).

Application:
1. The purchase was contingent on the authority's approval on or before 31 May 2027 (a fixed time).
2. On 31 May 2027 the approval had not been given. It came on 9 June 2027, after the fixed time.

The agreement became void on 31 May 2027. Neither party can enforce it, so Shehzad may refuse to buy. A contingent contract is not void merely because the event is the act of a third party (sections 31-32).

Answer: D. Section 43 of the Contract Act, 1872:
- The promisee may compel any one joint promisor to perform the whole promise, so Margalla could recover Rs 2,700,000 from Hamid alone.
- Each joint promisor may compel the others to contribute equally, unless the contract shows a contrary intention.
- If one promisor defaults in contributing, the remaining promisors bear the loss in equal shares.

Computation:
- Equal share = Rs 2,700,000 / 3 = Rs 900,000 each.
- Ghazala's unpaid share of Rs 900,000 is borne equally by Nabeel and Hamid: Rs 450,000 each.
- Nabeel's total contribution = Rs 900,000 + Rs 450,000 = Rs 1,350,000.

Hamid bears the same Rs 1,350,000 himself (Rs 2,700,000 paid less Rs 1,350,000 recovered).

Answer: B. A person of unsound mind is not competent to contract (sections 11-12), so the sales are not enforceable as contracts. Section 68 of the Contract Act, 1872 creates a relation resembling a contract: a person who supplies necessaries suited to the condition in life of a person incapable of contracting is entitled to be reimbursed from the property of that person.

Application:
- Prescribed medicines of Rs 145,000 are necessaries suited to Salman's condition: recoverable.
- A gold watch of Rs 380,000 is not a necessary: not recoverable.

Total recoverable = Rs 145,000, out of Salman's property (his flat and bank deposit), not from him personally.