AIBE Law of Contract, Specific Relief, Property Laws & Negotiable Instruments PYQs

Most Repeated: Law of Contract, Specific Relief, Property Laws & Negotiable Instruments Act PYQs

These are the AIBE 2026 Most Repeated Law of Contract, Specific Relief, Property Laws & Negotiable Instruments Act:

1. A, by falsely representing that his land is free from all encumbrances, induces B to purchase it. Later, B discovers that the property is already mortgaged. What is the legal effect of B's consent?

(1) The contract is void
(2) The contract is voidable at the option of B
(3) The contract is illegal
(4) The contract remains valid and enforceable

Answer: (2) The contract is voidable at the option of B

The correct answer is (2) The contract is voidable at the option of B. Under Sections 17 and 19 of the Indian Contract Act, 1872, a contract entered into through fraud is not void from the beginning but becomes voidable at the option of the party whose consent was obtained by fraud. In this case, A falsely represented that the land was free from encumbrances even though it was mortgaged. B relied on this misrepresentation and purchased the property. Since B's consent was not free and was obtained through fraud, B has the right to rescind the contract or affirm it and claim damages. Therefore, the contract is voidable at B's option.

2. A promises to pay B ₹50,000 if B marries C. B marries C. Subsequently, A refuses to pay the amount. Which of the following is correct?

(1) The agreement is void for uncertainty
(2) The agreement is void as being against public policy
(3) The agreement is enforceable as a valid contract
(4) The agreement is void for lack of consideration

Answer: (3) The agreement is enforceable as a valid contract

The correct answer is (3) The agreement is enforceable as a valid contract. According to Section 2(d) of the Indian Contract Act, consideration may consist of an act performed at the desire of the promisor. Here, A promised to pay ₹50,000 if B married C. B fulfilled the condition by marrying C, thereby providing valid consideration. Since all essential elements of a valid contract are present, the agreement is legally enforceable. A cannot refuse payment after B has performed the agreed act.

3. X guarantees repayment of a loan advanced by a bank to Y. Y defaults. The bank directly proceeds against X without first suing Y. Is the action maintainable?

(1) No, the bank must first sue Y
(2) No, unless the guarantee expressly permits it
(3) Yes, the liability of the surety is co-extensive with that of the principal debtor
(4) Yes, but only with the permission of the court

Answer: (3) Yes, the liability of the surety is co-extensive with that of the principal debtor

The correct answer is (3) Yes, the liability of the surety is co-extensive with that of the principal debtor. Section 128 of the Indian Contract Act provides that the liability of a surety is co-extensive with that of the principal debtor unless otherwise agreed. Therefore, once Y defaults in repayment, the bank can directly proceed against X, the guarantor, without first suing Y. The creditor is not required to exhaust remedies against the principal debtor before enforcing the guarantee against the surety.

4. A contracts to sell a rare painting to B. Before delivery, A refuses to perform the contract. Which remedy is most appropriate for B?

(1) Recovery of possession
(2) Specific performance
(3) Criminal prosecution
(4) Rescission only

Answer: (2) Specific performance

The correct answer is (2) Specific performance. A rare painting is a unique item and cannot easily be replaced in the market. Under the Specific Relief Act, courts may grant specific performance where monetary compensation is not an adequate remedy. Since the painting has special and unique value, damages alone may not compensate B adequately. Therefore, B can seek a decree directing A to perform the contract and deliver the painting.

5. A files a suit seeking to restrain B from demolishing a disputed boundary wall until the rights of the parties are finally determined. Which relief is most appropriate?

(1) Mandatory injunction
(2) Declaratory decree
(3) Temporary injunction
(4) Recovery of damages

Answer: (3) Temporary injunction

The correct answer is (3) Temporary injunction. A temporary injunction is granted to preserve the status quo until the final determination of rights by the court. In this case, if B demolishes the disputed boundary wall before the suit is decided, A may suffer irreparable injury. Therefore, the court may issue a temporary injunction restraining B from demolishing the wall until the dispute is finally resolved.

6. A is in lawful possession of immovable property but his title is denied by B. Which remedy under the Specific Relief Act may A seek?

(1) Declaratory decree
(2) Specific performance
(3) Rescission of contract
(4) Rectification of instrument

Answer: (1) Declaratory decree

The correct answer is (1) Declaratory decree. Under Section 34 of the Specific Relief Act, a person entitled to a legal character or right to property may seek a declaration from the court when that right is denied or threatened. Since A is already in possession of the property and B is merely disputing his title, the appropriate remedy is to seek a declaratory decree affirming A's ownership rights.

7. During the pendency of a suit concerning ownership of a house, the defendant transfers the house to a third party. Which doctrine applies?

(1) Caveat emptor
(2) Part performance
(3) Lis pendens
(4) Election

Answer: (3) Lis pendens

The correct answer is (3) Lis pendens. Section 52 of the Transfer of Property Act embodies the doctrine of lis pendens, which means "pending litigation." The doctrine prevents parties from transferring property involved in a legal dispute in a manner that affects the rights of other parties. Therefore, if the defendant transfers the house during the pendency of the suit, the transferee will remain bound by the outcome of the litigation.

8. A mortgages his property to B as security for repayment of a loan. Ownership remains with A, but B acquires:

(1) Absolute ownership
(2) Possession only
(3) An interest in the property as security
(4) No legal right in the property

Answer: (3) An interest in the property as security

The correct answer is (3) An interest in the property as security. Section 58 of the Transfer of Property Act defines a mortgage as the transfer of an interest in specific immovable property for the purpose of securing repayment of a debt. Ownership generally remains with the mortgagor, but the mortgagee acquires a legal interest in the property as security for the loan. Hence, B acquires a secured interest rather than full ownership.

9. A transfers ownership of his house to B without consideration and accepts the transfer voluntarily. The transaction is known as:

(1) Lease
(2) Mortgage
(3) Exchange
(4) Gift

Answer: (4) Gift

The correct answer is (4) Gift. Under Section 122 of the Transfer of Property Act, a gift is the voluntary transfer of existing property made without consideration and accepted by the donee. In the present case, A transferred ownership of his house to B voluntarily and without receiving any consideration, and B accepted the transfer. Therefore, the transaction is a valid gift.

10. Under the doctrine of part performance, a transferee who has taken possession in pursuance of a contract can:

(1) Claim ownership immediately
(2) Defend his possession against the transferor
(3) Transfer ownership to a third party
(4) Automatically obtain title by prescription

Answer: (2) Defend his possession against the transferor

The correct answer is (2) Defend his possession against the transferor. Section 53A of the Transfer of Property Act protects a transferee who has taken possession of property in part performance of a written contract and is willing to perform his part of the bargain. The doctrine does not confer ownership upon the transferee, but it allows him to protect and defend his possession against the transferor. Thus, the transferee may use the doctrine as a shield to resist eviction, though not as a sword to claim title.

Why Contract Law Matters in AIBE 21

• Contract Law is a high-weightage subject and contributes a significant number of questions in AIBE 21.

• Core topics like consideration, free consent, guarantee, agency, and breach of contract are frequently tested.

• Most questions are practical and scenario-based, reflecting real-life legal disputes.

• The subject is highly scoring because its concepts and provisions are well-defined and predictable.

• Direct questions from the Indian Contract Act, 1872, are regularly asked in AIBE.

• Contract Law is closely connected with the Specific Relief Act, Commercial Laws, and Property Laws.

• Many Contract Law PYQs are repeated with minor changes, making PYQ practice highly effective.

• A strong grasp of Contract Law helps candidates quickly navigate the Bare Act during the open-book exam.

• Mastering key Contract Law concepts can significantly improve overall AIBE scores and increase passing chances.