1st MID TERM QUESTION PAPER

MERCANTILE LAW
MULTIPLE CHOICE QUESTIONS (MCQ’s) (1x25=25 Marks)
1. Consideration ………….
a) may move from promise b) must move from promisee only
c) must move from third part d) may move from promisee or any other person
2. Which of the following is not an exception to the rule – No consideration, No Contract,
a) Compensation for involuntary services. c) Contract of agency.
b) Love and affection. d) Completed Gifts.
3. Ambika who lost horse announced in a newspaper a reward of Rs. 10000 to anyone who found out the horse and brought it to
him. Babu a servant of Ambika found the horse and brought it to Ambika At that time Babu was not aware of the award
announced in the newspaper. Coming to know that of it later, Babu sues Ambika for recovery of the reward.
a) Babu can sue Ambika for the reward. b) Babu can get reward from Ambika
c) Ambika is liable to pay reward. d) Ambika is not liable to pay reward.
4. Ram offered to sell his car to Hari for Rs 10 lakh. But Hari offered to buy it for Rs.. 8 lakh. Ram refused to sell at that price.
Subsequently Hari offered to buy the car for Rs. 10 lakh. In this case:
a) Ram is bound sell the car to Hari as Hari has accepted the offer by accepting to pay Rs. 10 lakh as per the offer.
b) Ram is not bound to sell the car as there was a counter offer from Hari initially which brings an end to the original offer.
c) Hari can insist Ram to sell the car as he has accepted to pay Rs. 10 lakh.
d) Ram can revoke the offer at his option
5. Which of the following statements are correct?
i. Consideration is not required for the creation a gratuitous agency
ii. Consideration is not required for giving a gift
iii. Consideration is not required for rendering service to relatives
iv. Consideration is not required for promise to pay time barred-debt
a) (i), (ii), (iii) b) (ii), (iii), (iv) c) (i), (ii), (iv) d) (i), (iii), (iv)
6. An acceptance may be revoked by the acceptor at any time before the letter of acceptance is:
a) posted by the acceptor. b) read by the offerer.
c) signed by the acceptor. d) comes to the knowledge of the offerer.
7. Compensation for Past Voluntary service is binding if:
a) The service should have been rendered voluntarily
b) The service should have been rendered for the promisor
c) The promisor must be in existence at the time when services were rendered
d) All of the above
8. Which of the following statement is false? Consideration……
a) must be of something which carries some value. b) may move from either promisee or any other person.
c) must move adequately as-per the value of the thing. d) must be sufficient and lawful.
9. X, Y and z are partners in a trade. Z without the knowledge of X and Y, obtains for his own sole benefit a lease of the house in
which the partnership business is carried on. In this case:
a) X and Y are not entitled to participate in the benefit of the lease.
b) X and Y are entitled to participate in the benefit of the lease.
c) Z is not bound to account for the profit and pay it to the firm.
d) Z can account certain % of the profit and distributed to X and Y
10. Which of the following is legal requirement of a valid acceptance?
a) It may or may not communicate to the other party.
b) It may be made with some additional indefinite terms.
c) It must be made with a view to be bound by the offer.
d) Acceptance made mentally without any communication.
11. Which of the following statement is true?
a) There can be a stranger to a contract. c) There can be a stranger to a contract and consideration
b) There can be stranger to a consideration. d) None of the above.
12. Public notice is not required to be given in cases of:
a) on expulsion or retirement of a partner.
b) on the dissolution of the firm
c) on the election to become or not to become a partner by a minor partner on his attaining majority.
d) on the retirement or insanity or permanent incapacity of a dormant partner
13. A Partner must contribute additional capital in excess of capital mentioned in Partnership deed if?
a) All other partners request for it.
b) Majority of partners request for it
c) One of partners request for it
d) Cannot be compelled at all.
 1st MID TERM QUESTION PAPER
MERCANTILE LAW
14. Reconstitution of a firm takes place by way of:
a) Expulsion of a partner c) Introduction of a partner
b) Insolvency of a partner d) All of the above
15. Ram and Hari were rival traders in Pokhara, Nepal. Ram agreed to pay Rs. 5,000. if Hari closes his business in that locality. Hari
accordingly did so but Ram refused to pay. In this case:
a) Ram will be liable to pay the sum as per agreement.
b) Hari can bring an action against Ram to. pay the promised amount.
c) Hari cannot claim anything from Ram as it is an agreement relating to restraint of trade.
d) Ram can ask Hari to continue his business as usual instead of paying the sum.
16. Which of the considerations do not show unlawful?
a) immoral b) fraudulent c) agreement opposed to public policy d) minor beneficiary
17. S sent his servant L, to trace his missing nephew. Later S offered a reward for anyone who found missing nephew. L, ignorant
of the announcement, traced the boy, Subsequently, he claimed the reward when he came to know of it
a) L is entitled to the reward. c) S has to find his nephew himself.
b) L was not entitled to the reward. d) No reward can be given for tracing.
18. Right of a partner does not include ………….
a) right to have access to books of account and inspect them.
b) right to retire by giving notice to all other partners in any case.
c) right not to be expelled from the firm by any majority of partners
d) right to carry on competing business after retirement or expulsion.
19. An implied authority of a partner of a trading firm does not include …………..
a) To sell and purchase the goods of the firm b) To settle accounts with the persons dealing with the firm
c) To engage a lawyer to submit dispute to arbitration d) To pledge the goods of the firm as security for borrowing money
20. Which of the following statement is true?
a) A contract can be terminated only by not performing it at all.
b) Communication of offer is complete when it is put in the course of transmission to the offeree.
c) A general offer can be accepted by a class or group of persons only.
d) An acceptance can be revoked at any time before the letter of acceptance reaches the offerer.
21. An acceptance may be revoked by the acceptor at any time before the letter of acceptance is:
a) posted by the acceptor. b) read by the offerer.
c) signed by the acceptor. d) comes to the knowledge of the offerer.
22. A display of goods in a shop with price tag attached is:
a) valid offer to sell at printed price. b) an invitation to receive offer at printed price.
c) an offer to the public at large acceptable by anybody. d) an express offer to sell at printed price.
23. A contract may/should be performed by
a) The promisor b) The promisor's agent
c) Promisor's legal representatives d) All the above
24. A minor's liability for 'necessaries' supplied to him;
a) Arises after he attains majority age b) Is against only minor's property .
c) Does not arise at all. d) Arises if minor gives a promise for it
25. A partnership firm is compulsorily dissolved where ………….
a) All partners have become insolvent. c) The fix term has expired
b) Firm's business has become unlawful d) In cases (a) and (b) only
 1st MID TERM QUESTION PAPER
MERCANTILE LAW
SUBJECTIVE QUESTIONS: (5*5=25 Marks)

1. Distinguish the following: (2*2.5= 5 Marks)

a. Dissolution of firm and Dissolution of Partnership
b. Void and Voidable Contract
2. Describe Contingent Contract? Explain the rules of Contingent Contract?
3. What are the matters to be set out in an application for the registration of a firm as per the Partnership Act,
2020?
4. Explain the following statements: (2*2.5= 5 Marks)
a. “Partnership arises from the agreement not from the status.”
b. “An act of partner, which is done to carry on, in the usual way business of the kind carried on the firm,
binds the firm.”
5. Write Short notes on the following: (5*2 = 10 Marks)
a. Presumptions of Undue Influence
b. Consideration must be real but need not be adequate
c. Counter offer amounts to rejection of original offer
d. Silence as to Fraud
e. “Ignorantia juris non Excusat.”