Contracts with insane persons and persons disqualified by law — 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. In Indar Singh v. Parmeshwardhari Singh, property worth about ₹25,000 was sold for only ₹7,000. This grossly inadequate price was treated by the court as:

   • Irrelevant to the seller's mental capacity
   • Strong evidence that the seller could not understand the transaction (correct answer)
   • Proof of fraud by the buyer alone
   • A ground for specific performance

   Explanation. The Patna High Court treated the grossly unfair price as strong evidence that the seller could not understand the transaction or judge whether it was in his own interest — the sale was held void for want of capacity.

2. A foreign sovereign or accredited diplomat can generally be sued in an Indian court:

   • Freely, like any other person
   • Only with the consent of the Central Government (Section 86, CPC) (correct answer)
   • Never, under any circumstances
   • Only in the Supreme Court

   Explanation. Section 86 of the Code of Civil Procedure, 1908 requires the Central Government's consent before a foreign sovereign, ambassador, or accredited diplomat can be sued in an Indian court.

3. An undischarged insolvent's capacity to contract over property that has vested in the Official Assignee/Receiver is:

   • Unrestricted
   • Restricted — they cannot contract over that property until discharged (correct answer)
   • Restricted only for property outside India
   • Restricted only if the debt exceeds ₹1 lakh

   Explanation. An undischarged insolvent cannot deal with property that has passed by law to the official receiver or assignee.

4. A convict's capacity to enter into contracts is:

   • Permanently lost, even after release
   • Suspended during the period of the sentence, and revives on release (correct answer)
   • Unaffected by imprisonment
   • Only affected for contracts above ₹10,000

   Explanation. A convict is treated as unable to contract while serving the sentence. Capacity is complete once the sentence ends.

5. The Section 68 necessaries exception applies to:

   • Minors only
   • Persons of unsound mind only
   • Both minors and persons of unsound mind (correct answer)
   • Neither — it applies only to insolvents

   Explanation. Section 68 applies equally to minors and persons of unsound mind — necessaries supplied to either are recoverable from their property, not from them personally.