Contract Law (CLAT Legal-Aptitude): Questions 58 - 59 of 97

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Passage

PRINCIPLES:

A. The act of using threats to force another person to enter into a contract is called coercion.

B. The act of using influence on another and taking undue advantage of that person is called undue influence.

C. In order to prove coercion, the existence of the use of threat, in any form and manner, is necessary. If coercion is proved, the person who has been so threatened can refuse to abide by the contract.

D. In order to prove undue-influence, there has to be a pre-existing relationship between the parties to a contract. The relationship has to be of such a nature that one is in a position to influence the other. If it is proven that there has been undue influence, the party who has been so influenced need not enforce the contract or perform his obligations under the contract.

FACTS:

Aadil and Baalu are best friends. Aadil is the son of multi-millionaire business person, Chulbul who owns Maakhan Pharmaceuticals. Baalu is the son of a bank employee, Dhanraj. One day, Aadil is abducted from his office by Baalu. Chulbul receives a phone call from Dhanraj telling him that if he does not make Baalu the CEO of Maakhan Pharmaceuticals, Aadil will be killed. Chulbul reluctantly agrees to make the Baalu the CEO. Subsequently Chulbul and Baalu sign an employment contract. However as soon as Aadil is released and safely returns home, Chulbul tells Baalu that he shall not enforce the employment contract. Baalu and Dhanraj are not sure as to what is to be done next.

Question number: 58 (4 of 4 Based on Passage) Show Passage

» Contract Law

MCQ▾

Question

In the above fact situation:

Choices

Choice (4) Response

a.

There is no undue influence

b.

There is undue influence exercised by Dhanraj on Baalu.

c.

There is undue influence exercised by Aadil on Chulbul

d.

None of the above

Question number: 59

» Contract Law

MCQ▾

Question

PRINCIPLE: All agreements are contracts if they are made by the free consent of parties

competent to contract, for a lawful consideration and with a lawful object, and are

not hereby expressly declared to be void. Consent is said to be free when it is devoid of coercion, undue influence, fraud, misrepresentation. “Coercion” is the committing, or threating to commit, any act forbidden by the Indian Penal Code 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.

FACTS: Rama bai is a maid and works under Banjari. Rama bai has not worked under Banjari since six months but still she is paid her monthly salary by Banjari and that too on time. One day, due to accident of her husband, she needs money for her dealings and goes to borrow the same from Banjari. Banjari agrees to give the money but charges an interest rate of a massive sixty percent on the same. Rama urgently needs the money so she borrows the same. Is the agreement void?

Choices

Choice (4) Response

a.

Yes, the agreement stands annulled as there is coercion happening.

b.

No, all conditions for a contract stand fulfilled.

c.

Yes, there seems to be an infusing factor of undue influence in the present case vitiating free consent.

d.

Yes, there cannot be any agreement or a contract done by a maid as a party.

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