B.Com. (Programme) Sem 1 Business Laws Dec 2025 Question Paper with Solutions

For full marks, cover: for each statement, a clear verdict (true or false), the section of the Indian Contract Act, 1872 that decides it, the reasoning, an illustration or case, and a one-line conclusion. (i) section 2(g) and 2(j), a void agreement against a void contract, section 56 as an example; (ii) section 25, Explanation 2 and illustrations (f) and (g); (iii) section 56, frustration, Satyabrata Ghose and Alopi Parshad, and the role of a force majeure clause.

(i) A void contract is void-ab-initio

False.

The Act separates a void agreement from a void contract.

1. Section 2(g) says: "An agreement not enforceable by law is said to be void." Such an agreement is void from the very beginning (ab initio). It never becomes a contract. An agreement with a minor is an example.

The difference matters in practice. Section 65 deals with a contract that is discovered to be void or becomes void. Any person who received an advantage under it must restore it or pay for it. A party who paid an advance under a contract that later became void can therefore recover it.

(ii) Consideration need not be adequate

True.

The law requires that there must be consideration, but it does not ask whether the consideration is equal in value to the promise. Explanation 2 to section 25 says: "An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given."

The reasons are practical:

1. The parties are the best judges of their own bargain.
2. Courts cannot fix the "right" price of everything.
3. People may have good private reasons to accept less.

In Satyabrata Ghose v. Mugneeram Bangur and Co., AIR 1954 SC 44, a company had agreed to sell plots in a development scheme after building roads and drains. Part of the land was requisitioned by the government during the war. The Supreme Court held that "impossible" in section 56 means impracticable or useless from the point of view of the object of the contract. It found that the requisition was temporary and did not destroy the basis of the contract. The contract was not frustrated.

In Alopi Parshad and Sons Ltd. v. Union of India, AIR 1960 SC 588, agents supplying ghee to the army claimed higher rates because wartime prices had risen sharply. The Supreme Court held that section 56 does not let a court excuse a party from performance merely because it has become onerous. Higher cost is not impossibility.

On the same reasoning, a strike or lockout does not discharge a contract by itself.

Two qualifications. First, many commercial contracts contain a force majeure clause that expressly covers strikes, lockouts and riots. Such a clause will suspend or end the contract as it provides. Second, if a disorder makes performance truly impossible, for example by destroying the subject matter, section 56 may apply.