Standard form of Contract — MCQs

All questions with answers and explanations

Read the full set here, or use the practice card above to test yourself one question at a time.

1. A standard form contract is best described as:

   • A contract negotiated equally between two businesses
   • A pre-drafted contract offered on a take-it-or-leave-it basis (correct answer)
   • A contract that must be registered
   • An oral agreement between friends

   Explanation. A standard form contract (contract of adhesion) is pre-drafted by one party, usually with greater bargaining power, and offered without real room for negotiation.

2. In L'Estrange v. Graucob, the court held that a person who signs a contractual document:

   • Is bound only if they read it
   • Is bound by its terms whether or not they read it (correct answer)
   • Can cancel within 7 days
   • Is never bound by exclusion clauses

   Explanation. Signature is treated as conclusive proof of assent to a document's terms, whether or not the signatory actually read it, absent fraud or misrepresentation.

3. Central Inland Water Transport Corp. v. Brojo Nath Ganguly held that unconscionable standard form terms are void under:

   • Section 10
   • Section 23, as being against public policy (correct answer)
   • Section 2(d)
   • Section 4 of the IT Act

   Explanation. The Supreme Court held such terms void under Section 23 as against public policy, especially where bargaining power is grossly unequal.

4. Which legislation gives legal recognition to electronic contracts in India?

   • The Indian Contract Act, 1872 alone
   • The Information Technology Act, 2000 (correct answer)
   • The Companies Act, 2013
   • The Sale of Goods Act, 1930

   Explanation. While the Contract Act's ordinary rules apply to e-contracts, the Information Technology Act, 2000 (Sections 4, 10A) specifically removes doubt about their enforceability.

5. Under Section 10A of the IT Act, 2000, a contract formed through electronic means:

   • Is automatically void
   • Cannot be held unenforceable merely because it was formed electronically (correct answer)
   • Requires a digital signature to be valid
   • Is only valid for government contracts

   Explanation. Section 10A states an electronic contract cannot be deemed unenforceable solely on the ground that it was formed electronically.

6. In Trimex International v. Vedanta Aluminium, the Supreme Court held that a contract was formed:

   • Only once a formal signed document was executed
   • Once offer and acceptance were complete through email exchange (correct answer)
   • Only through a registered deed
   • Never, since no signature existed

   Explanation. The Court held a binding contract existed once offer and acceptance were complete via email — the later absence of a signed document didn't undo it.

7. A clickwrap e-contract is one where the user:

   • Signs a physical document
   • Explicitly clicks 'I Agree' to terms (correct answer)
   • Simply browses a website with no action
   • Calls customer support to confirm

   Explanation. A clickwrap contract requires an explicit affirmative action — clicking 'I Agree' — as opposed to browsewrap, where terms apply merely by using the site.

8. Section 4 of the IT Act, 2000 provides that:

   • Electronic records satisfy legal 'in writing' requirements (correct answer)
   • All contracts must be electronic
   • E-contracts require witnesses
   • Digital signatures are mandatory for all deals

   Explanation. Section 4 gives legal recognition to electronic records — wherever a law requires something 'in writing', an accessible electronic version satisfies that requirement.

9. Under the Consumer Protection Act, 2019, an 'unfair contract' includes terms that:

   • Are written in small print only
   • Cause a significant change in the consumer's rights, such as unilateral termination without reasonable cause (correct answer)
   • Are signed by a minor
   • Are made electronically

   Explanation. Section 2(46) defines an unfair contract as one whose terms cause a significant change in the consumer's rights, with listed examples such as manifestly excessive deposits and unilateral termination.