1. The provisions of about 6.

The term law in the expression

communication of acceptance in “forbidden by law” would include
various legal systems falls into any enactment or rule of law for the
which of the following categories? time being in force in India which
A. The system of information would fall under which of the
B. The system of declaration following sub heads?
C. The mixed or electric system A. The provisions of any legislative
D. All of them enactment
Ans: D B. The rules of Hindu or Mahomedan law
2. The relation of dependence may C. Other rules for the time being in force
arise: in India
A. From a special authority or confidence D. All of them
committed to the donee Ans: D
B. From the feebleness in body or mind of 7. The terms ‘benefit’ and
the donor ‘detriment’ have been used by
C. Either (A) or (B) courts in which of the following
D. None of these senses in Section 2 of the Indian
Ans: C Contract Act, 1872?
3. The right to surety to indemnity is A. Act which value
an incident of the guarantee: B. Such acts, the performance of which is
A. The principal-debtor will be liable not already legal due from promise
B. Without the necessity of any further C. Both (A) and (B)
request for all sums subsequently paid by D. None of these
the surety under the guarantee as money Ans: C
paid to the use of the principal-debtor 8. The theories or juristic bases for
C. Both (A) and (B) the doctrine of frustration were
D. None of these evolved for justifying the departure
Ans: C from the doctrine of absolute
4. The rule of limitation in a foreign contracts. The main theories are:
country, where the contract is made, I. Implied term theory
may be set up as a defence to a suit II. Basis or foundation of the contracts
filed in India if: III. Just and reasonable solution
A. The rule has extinguished the contract IV. Radical change in the obligation under
B. The parties were domiciled in that the contracts
foreign country during the period A. II, III
prescribed by that rule B. IV
C. Both (A) and (B) C. I
D. None of these D. All of them
Ans: C Ans: D
5. The subject-matter of Section 8 of 9. The UNIDROIT principles expressly
the Indian Contract Act, 1872 is provide that in ascertaining the
divided in to: intention of parties, be it the
A. Performance of the conditions of a subjective intention or the
proposal and ‘reasonableness’ test, regard shall
B. Acceptance of any consideration for be had to which of the following
reciprocal promise which may be offered circumstances:
with a proposal, I. Preliminary negotiation between the
C. Both (A) and (B) parties
D. None of these II. Practices which the parties have
Ans: C established between themselves
III. The conduct of the parties subsequent specific movable property (goods)
to conclusion of the contract must be vacated by:
IV. The nature and purpose of the A. Its owner or possessor (bailor)
contract B. His agent duly authorised for that
V. The meaning commonly given to terms purpose, in favour of another per son
and expressions in the trade concerned (the bailee)
VI. Usages C. Either (A) or (B)
A. I, II, IV, V D. None of these
B. Ill, IV, VI Ans: C
C. IV, V 15. To which of the following the lien
D. All of them claimable under S. 221 of the Indian
Ans: D Contract Act is confined to?
10. The use of the word person in A. Commission
Section 2 (c) of the Indian Contract B. Disbursement
Act, 1872 indicates: C. Services in respect of the specific
A. Just a human being property
B. It must be given extended sense to D. All of them
include governments Ans: D
C. Both (A) and (B) 16. Unconscionable contract is an:
D. None of these A. Agreement that is so outrageously
Ans: B unfair to one party that a Court refuses
11. The word ‘loss or damage may to enforce it in a Court of law
be: B. Agreement that is so outrageously
A. Harm to person unfair to one party which can still be
B. Harm to property enforced it in a Court of law
C. Injury to economic position C. Either (A) or (B)
D. All of them D. None of these
Ans: D Ans: A
12. The word ‘signifies’ in the 17. Under Section 18 of the Indian
definition of S. 2 of the Indian Contract Act, 1872,
Contract Act, 1872 indicates: misrepresentation falls under:
A. That the offer must be communicated A. A statement of fact, which is false,
to the person to whom it is made would be misrepresentation if the maker
B. That the offer need not be believes it to be true, but which is not
communicated to the person to whom it justified by the information he possesses
is made B. Any breach of duty which gains an
C. Either (A) or (B) advantage to the person committing it by
D. None of these misleading another to his prejudice, there
Ans: A being no intention to deceive
13. Time and place for performance C. Causing a party to an agreement to
of promise, where time is specified make a mistake as to the substance of
and no application to be made in the thing which is the subject of the
which of the following in the Indian agreement, even though done innocently
Contract Act, 1872 D. All of them
A. Section 42 Ans: D
B. Section 36 18. Under Section 55 of the Indian
C. Section 47 Contract Act a vendor has no right
D. Section 40 to make time of the essence of the
Ans: C contract unless:
14. To constitute a bailment, the A. The vendor is able, ready and willing
actual or constructive possession of to proceed to completion
B. When the vendor purports to make to the positions in which they stood when
time of the essence of the contract, the the contract was made
purchaser must be guilty of such default III. Third parties have during the
as to entitle the vendor to rescind the subsistence of the contract, acquired
contract, subject to it being done by a rights in good faith without notice and for
reasonable notice value
C. Both (A) and (B) IV. Only a part of the contract is sought to
D. None of these be rescinded and such part is not
Ans: C severable from the rest of the contract
19. Under Section 55 of the Indian A. I, III
Contract Act, 1872 the intention of B. II, IV
the parties can be ascertained from: C. IV
I. The express words used in the contract D. All of them
II. The nature of the property which forms Ans: D
the subject matter of the contract 23. Under which of the following
III. The nature of the contract itself pawnee is not to retain for debt or
IV. The surrounding circumstances promise other than that for which
A. II, III goods pledged in the Indian
B. IV Contract Act, 1872?
C. I A. Section 174
D. All of them B. Section 171
Ans: D C. Section 173
20. Under which of the following any D. Section 178
provision of the Indian Contract Act, Ans: A
1872 would be void, if inconsistent 24. Unless the terms of the
with the fundamental rights? guarantee provide other, the surety
A. Article 11 of the Constitution of India is entitled to claim relief from the
B. Article 12 of the Constitution of India principal-debtor immediately:
C. Article 13 of the Constitution of India A. As often as he pays anything under his
D. Article 14 of the Constitution of India guarantee as it falls due
Ans: C B. And is not required to pay the whole
21. Under which of the following debt due from the principal-debtor before
bailee is not responsible on re- compelling reimbursement
delivery to bailor without title in the C. Both (A) and (B)
Indian Contract Act, 1872? D. None of these
A. Section 166 Ans: C
B. Section 159 25. Void contract is:
C. Section 163 A. A contract which ceases to be
D. Section 160 enforceable by law but is in effect
Ans: A B. A contract which ceases to be
22. Under which of the following enforceable by law is no longer
circumstances as per the Special enforceable
Relief Act, 1963, the Court may C. Either (A) or (B)
refuse to rescind the contract in a D. None of these
suit for rescission? Ans: B
I. The plaintiff was has expressly or 26. What are the conditions for the
implied ratified the contract application of the S. 235 of the
II. Due to change in circumstances after Indian Contract Act?
the making of the contract (not due to I. The agent has made an untrue
the act of the defendant himself), the representation that he is authorised
parties cannot be substantially restored agent of another (which may also be a
representation as to the extent of balance for time-to- time owing by
authority of the agent) the principal-debtor to the creditor
II. The representation relates to fact times runs:
III. The third party has been misled or A. Only from the date when each of such
induced to deal with the agent on the balance is constituted by the excess of
faith of such representation total debits over total credits
IV. The principal has repudiated or B. Not from the date when each advance
refused to ratify the transaction is made to the principal-debtor
V. The third party has suffered a loss in C. Either (A) or (B)
consequence D. None of these
A. I, II Ans: A
B. II, IV 31. Where a contract is one of
C. Ill, IV guarantee:
D. All of them A. The surety need not be called upon to
Ans: D pay unless the principal-debtor has
27. What is the purpose of the rule committed a default
of mitigation? B. The surety is entitled to all the rights,
A. To prevent the waste of limited viz, of discharge, subrogation of
resources in society which forces the securities, indemnity from the principal-
innocent party, the plaintiff to find a debtor, etc. provided in ss. 133 to 145;
substitute after the defendant’s breach though an indemnifier is entitled to rights
B. To enable the defendant to commit given by ss. 140 and 141
efficient breach of contract where the C. Both (A) and (B)
defendant deliberately would break his D. None of these
contractual relationship for a better Ans: C
opportunity 32. Where the bailment is for hire, it
C. Both (A) and (B) may be:
D. None of these I. Hiring the use of goods
Ans: C II. Hiring the use of labour or work on or
28. When a statute clearly covers a with regard to the goods
case, it is hardly necessary to refer III. Hiring of custody i.e. of services in
to decisions. In which of the keeping the goods
following cases it was so upheld? IV. Hiring of carriage of goods
A. Lala Kapurchand Godhav. MirNawab A. I, II
Himayatalikhan Azamjah B. II, IV
B. State of Madras v. Gannon Durkerley & C. Ill, IV
Co. Ltd. D. All of them
C. Firm Kanhaiyalal v. Dineshchandra Ans: D
D. Bhagwandas Goverdhandas Kedia v. 33. Where the law is codified, it is of
Girdharilal Parshottamdas and Co. little avail enquire what is the law
Ans: A apart from such codification. The
29. When did the Indian Contract code itself must be looked to as the
Act, 1872 come into force? guide in the matter. This refers to
A. September 1 which of the following cases:
B. September 5 A. Burn & Co. v. McDonald
C. September7 B. Produce Brokers Co. Ltd. v. Olympia Oil
D. September 10 and Cake Co. Ltd.
Ans: A C. Moult v. Halliday
30. When the guarantee is D. Llyod v. Guibert
expressed to be a continuing Ans: A
guarantee and to apply to the
34. Where the seller wrongfully B. The thing done or the goods delivered
neglects or refuses to deliver the must be done or delivered without
goods to the buyer, the buyer may intention to do so gratuitously
sue the seller for: C. The person to whom goods are to
A. Damages for non-delivery delivered enjoys the benefit thereof
B. Specific performance subject to the D. All of them
provisions of the Specific Relief Act, 1963 Ans: D
C. Breach of warranty in which event the 39. Which of the following are the
buyer may set up against the seller such requirements for the application of
breach in diminution or extinction of the the provisions of Section 69 of the
price or sue the seller for damages for Indian Contract Act, 1872?
breach of warranty A. The plaintiff must have made an
D. All of them actual or virtual payment of money
Ans: D B. The plaintiff must have been
35. Which of the deals with the compelled to pay this money to a third
effect of novation, rescission and party
alteration of contract in the Indian C. The defendant must have been legally
Contract Act, 1872? liable to pay the third party. Though the
A. Section 68 plaintiff would usually stand in some kind
B. Section 50 of relationship to the person for whom he
C. Section 61 paid, no relationship of privity is
D. Section 62 necessary to give a right of action
Ans: D D. All of them
36. Which of the following Ans: D
Amendment Acts inserted Section 40. Which of the following binds the
19A into the Indian Contract Act? principal under S. 229 of the Indian
A. Indian Contract (Amendment) Act, Contract Act?
1899 (6 of 1899) A. Notice or intimation given to an agent
B. Indian Contract (Amendment) Act, B. Knowledge of any fact material to such
1899 (7 of 1899) transaction acquired by the agent
C. Indian Contract (Amendment) Act, C. Either (A) or (B)
1899 (8 of 1899) D. None of these
D. Indian Contract (Amendment) Act, Ans: C
1899 (9 of 1899) 41. Which of the following cases S.
Ans: A 235 of the Indian Contract Act, 1872
37. Which of the following are does not apply?
essential conditions of pledge? A. The case of a man who represents that
A. Bailment of goods he has authority from another when he
B. Bailment by way of security has no authority whatever
C. Security of payment of debt B. The case of a man who represents that
D. All of them he has certain authority from another
Ans: D when he has authority of another
38. Which of the following are the description
conditions for the application of C. The case of an agent whose authority
Section 70 of the Indian Contract is terminated without his knowledge
Act, 1872? D. Both (A) and (B)
A. The goods are to be delivered lawfully Ans: D
or something has to be done for another 42. Which of the following
person lawfully conditions are essential before the
application of the second paragraph
of Section 56 of Indian Contract Act, 48. Which of the following deals with
1872? agent’s duty on termination of
A. A valid and subsisting contract before agency by principal’s death or
the parties insanity in the Indian Contract Act,
B. There must be some part of the 1872?
contract yet to be performed A. Section 200
C. The contract after it is entered into B. Section 203
becomes impossible of performance C. Section 209
D. All of them D. Section 204
Ans: D Ans: C
43. Which of the following damages 49. Which of the following deals with
are punitive in nature? agent’s duty to pay sums received
A. Aggravated damages for principal in the Indian Contract
B. Exemplary damages Act, 1872?
C. Both (A) and (B) A. Section 211
D. None of these B. Section 219
Ans: B C. Section 218
44. Which of the following deals with D. Section 210
“Continuing guarantee” in the Ans: C
Indian Contract Act, 1872? 50. Which of the following deals with
A. Section 129 agreement in restraint of marriage
B. Section 126 void in the Indian Contract Act,
C. Section 123 1872?
D. Section 130 A. Section 22
Ans: A B. Section 26
45. Which of the following deals with C. Section 19
“when agent cannot delegate” in D. Section 20
the Indian Contract Act, 1872? Ans: B
A. Section 190 51. Which of the following deals with
B. Section 191 agreement to do impossible act in
C. Section 185 the Indian Contract Act, 1872?
D. Section 181 A. Section 52
Ans: A B. Section 56
46. Which of the following deals with C. Section 55
“when principal may revoke agent’s D. Section 59
authority” in the Indian Contract Ans: B
Act, 1872? 52. Which of the following deals with
A. Section 203 agreement void where both parties
B. Section 205 are under mistake as to matter of
C. Section 192 fact in the Indian Contract Act,
D. Section 204 1872?
Ans: A A. Section 14
47. Which of the following deals with B. Section 18
agent’s accounts in the Indian C. Section 19
Contract Act, 1872? D. Section 20
A. Section 211 Ans: D
B. Section 219 53. Which of the following deals with
C. Section 213 agreements by way of wager, void in
D. Section 210 the Indian Contract Act, 1872?
Ans: C A. Section 22
B. Section 30
C. Section 19 B. Section 28
D. Section 20 C. Section 19
Ans: B D. Section 32
54. Which of the following deals with Ans: D
agreements void, if consideration 60. Which of the following deals with
and objects unlawful in part in the how revocation of proposal is made
Indian Contract Act, 1872? in the Indian Contract Act, 1872?
A. Section 22 A. Section 2
B. Section 28 B. Section 6
C. Section 19 C. Section 3
D. Section 24 D. Section 4
Ans: D Ans: B
55. Which of the following deals with 61. Which of the following deals with
communication, acceptance and liability of co-sureties bound in
revocation of proposals in the Indian different sums in the Indian Contract
Contract Act, 1872? Act, 1872?
A. Section 1 A. Section 149
B. Section 2 B. Section 135
C. Section 3 C. Section 147
D. Section 4 D. Section 140
Ans: C Ans: C
56. Which of the following deals with 62. Which of the following deals with
contract caused by mistake of one reimbursement of person paying
party as to matter of fact in the money due by another, in payment
Indian Contract Act, 1872? of which he is interested in the
A. Section 14 Indian Contract Act, 1872?
B. Section 22 A. Section 68
C. Section 19 B. Section 50
D. Section 10 C. Section 69
Ans: B D. Section 59
57. Which of the following deals with Ans: C
definition of “Undue influence” in 63. Which of the following deals with
the Indian Contract Act, 1872? skill and diligence required from
A. Section 14 agent in the Indian Contract Act,
B. Section 18 1872?
C. Section 19 A. Section 211
D. Section 16 B. Section 212
Ans: D C. Section 215
58. Which of the following deals with D. Section 210
Effect of mistakes as to law in the Ans: B
Indian Contract Act, 1872? 64. Promises, express or implied are
A. Section 21 dealt under which of the following of
B. Section 18 the Indian Contract Act, 1872?
C. Section 19 A. Section 9
D. Section 10 B. Section 2
Ans: A C. Section 3
59. Which of the following deals with D. Section 4
enforcement of contracts contingent Ans. (A)
on an event happening in the Indian 65. Promisor not bound to perform,
Contract Act, 1872? unless reciprocal promise ready and
A. Section 22 willing to perform is dealt under
which of the following in the Indian B. persons to whom the representor
Contract Act, 1872? intended the representation to be passed
A. Section 51 C. members of class at which the
B. Section 50 representation was directed
C. Section 55 D. All of them
D. Section 59 Ans. (D)
Ans. (A) 71. Right of person dealing with
66. Quasi or Constructive Contracts agent personally liable is discussed
is one where an implied contract has under which of the following in the
also been applied to a class of Indian Contract Act, 1872?
obligations which are imposed or A. Section 238
created by law without regard to the B. Section 222
assent of the party bound: C. Section 236
A. On the ground that they are dictated D. Section 233
by reason and justice Ans. (D)
B. Which are allowed to be enforced by 72. Right of principal when agent
an action ex contractu, for there is no deals, on his own account, in
agreement business of agency without
C. But they are clothed with the principal’s consent is dealt under
semblance of contract for the purpose of which of the following in the Indian
remedy Contract Act, 1872?
D. All of them A. Section 211
Ans. (D) B. Section 219
67. Reciprocal contract is: C. Section 217
A. A contract in which the consideration D. Section 215
consists of mutual promises Ans. (D)
B. A bilateral agreement 73. Section 11 of the Indian Contract
C. both (A) and (B) Act, 1872 deals with which of the
D. None of these following?
Ans. (C) A. personal capacity arising from age
68. Reimbursement under Section B. personal capacity arising from
69 of the Indian Contract Act, 1872 soundness of mind
claimed ___________ from the date on C. personal capacity arising from the
which the money was paid. provisions of law
A. within a year D. All of them
B. within two years Ans. (D)
C. within three years 74. Section 127 provides that
D. within three and a half years ______________ is sufficient
Ans. (C) consideration for the guarantee.
69. Relation between principal and A. anything done
person duly appointed by agent to B. a promise made for the benefit of the
act in business of agency principal-debtor
A. Section 180 C. either (A) or (B)
B. Section 190 D. None of these
C. Section 185 Ans. (C)
D. Section 194 75. Section 128 of the Indian
Ans. (D) Contract Act, 1872 explains the
70. Representees may be: quantum of surety’s obligation:
A. persons to whom the representation is A. When the terms of the contract do not
directly made and their principals limit it
B. When the terms of the contract limit it
C. either (A) or (B) the creditor has against the principal-
D. None of these debtor
Ans. (A) C. both (A) and (B)
76. Section 134 of the Indian D. None of these
Contract would not apply where the Ans. (C)
release or discharge: 80. Section 17(1) defines which of
A. is not caused at the instance the following ingredients?
B. is not caused by any act of the creditor I. There should be a suggestion as to a
C. either (A) or (B) fact
D. None of these II. The fact suggested should not be true
Ans. (C) III. The suggestion should have been
77. Section 135 of the Indian made by a person who does not believe
Contract Act, 1872 deals with: it to be true
A. The case in which the surety is IV. The suggestion should be made with
discharged by a contract between the intent either to deceive or to induce the
creditor and the principal-debtor, entered other party to enter into contract
into without the surety’s consent, to give A. I, II, IV
time to, or not to sue, the principal- B. II, IV
debtor C. III. IV
B. The case of mere forbearance to sue D. All of them
as distinguished from forbearance Ans. (D)
springing from a contract and provides 81. Section 201 of the Indian
that the surety shall not be discharged in Contract Act is not exhaustive. An
such a case agency may be terminated by other
C. both (A) or (B) modes such as:
D. None of these I. my mutual agreement
Ans. (C) II. completion of the term of agency by
78. Section 13 8 of the Indian expiry of time agreed upon
Contract Act, 1872 is a necessary III. destruction of the subject-matter of
consequence of the principle laid the agency
down in___________ and must be taken IV. the agency becoming subsequently
as a deliberate extension of a rule unlawful
which in the common law V. Dissolution of the principal firm
A. S. 44; is limited to the case of co- A. I, II
sureties contracting severally and not B. II, IV
jointly C. Ill, V
B. S. 44; is limited to the case of co- D. All of them
sureties contracting severally Ans. (D)
C. S. 44; is limited to the case of co- 82. Section 202 of the Indian
sureties contracting jointly Contract Act, 1872 does not require
D. None of these that the documents authorising the
Ans. (A) agent:
79. Section 139 of the Indian A. contain reference to the interest of the
Contract Act, 1872 is a residual agent secured by the document
section, the object of which is to: B. give the power to appropriate the
A. Ensure that no arrangement different amounts collected towards any debt due
from that contained in the surety’s to the agent
contract is forced upon him C. either (A) or (B)
B. Ensure the surety, if he pays the debt, D. None of these
has the benefit of every remedy which Ans. (C)
83. Section 227 of the Indian 88. Section 69 of the Indian Contract
Contract Act, 1872, provides that Act, 1872 embodies which of the
where the agent exceeds the following doctrines?
authority and does certain acts, the A. Doctrine of frustration
principal would be bound only by B. Doctrine of unjust enrichment
those acts which are authorised, C. Doctrine of implied contract
provided: D. None of these
A. they can be separated from Ans. (B)
unauthorised acts 89. Section 72 of the Indian Contract
B. they cannot be separated by those Act, 1872 has been restricted to
acts that are beyond authorisation cases of payment of delivery:
C. both (A) and (B) A. made by mistake
D. None of these B. made under coercion
Ans. (C) C. either (A) or (B)
84. Section 27 of the Specific Relief D. None of these
Act gives power to the Courts to Ans. (C)
adjudge rescission of a contract 90. Section 74 of the Indian Contract
where a contract is unlawful: Act, 1872 applies to:
A. for causes not apparent on its face A. Compromise decrees
B. the defendant is more to blame than B. It is open to a court executing such
the plaintiff decree to go behind it if it contains a
C. both (A) and (B) stipulation which is by way of penalty
D. None of these C. both (A) and (B)
Ans. (C) D. None of these
85. Section 39 deals with: Ans. (C)
A. refusal or renunciation by the promisor 91. Section 74 of the Indian Contract
to perform Act, 1872 requires proofs of:
B. disabling himself from performing the A. general damages
promise in its entirety B. actual or quantum of damages
C. either (A) or (B) C. either (A) or (B)
D. None of these D. None of these
Ans. (C) Ans. (A)
86. Section 41 of the Indian Contract 92. Where there are two courts
Act applies to cases of: which would normally have the
A. assignment jurisdiction, an agreement to file
B. subrogation suit in one of those courts alone, is:
C. both (A) and (B) (a) void
D. None of these (b) valid
Ans. (A) (c) voidable
87. Section 65 of the Indian Contract (d) unenforceable.
Act, 1872 provides that when the Ans. (b)
contract becomes void, any person 93. An obligation under a contract
who has received any advantage stands discharged:
under it is: (a) by proper performance
A. bound to restore it (b) by dispensation with the performance
B. make compensation for it to the (c) by death of the contracting party if
person from whom it was received the contract is personal in nature
C. either (A) or (B) (d) all the above.
D. None of these Ans. (d)
Ans. (C) 94. Under assignment of contract:
(a) benefits under the contract can be (a) the acceptor need not have the
assigned without the consent of other knowledge of the offer
party (b) the acceptor must have the
(b) burden under the contract cannot be knowledge of the offer before acceptance
assigned without the consent of other by performance
party (c) the acceptor may acquire the
(c) both (a) & (b) knowledge of the offer after the
(d) neither (a) nor (b). performance of the condition amounting
Ans. (c) to acceptance
95. In cases of refusal to perform by (d) none of the above.
one party, the other party: Ans. (b)
(a) can ignore the notice of refusal for 100. The principle, performance of a
the time being and wait till the time condition is a sufficient acceptance
when the contract is to be executed without notification is contained in:
(b) can treat the repudiation as wrongful (a) section 8
putting an end to the contract (b) section 7
(c) can waive his right to rescission by (c) section 6
acquiescence (d) section 9.
(d) all the above. Ans. (a)
Ans. (d) 101. No contract can arise:
96. A contract is not frustrated: (a) if the offer is not made to an
(a) by commercial impossibility ascertained person
(b) by imposition of government (b) if the offer is made to an ascertained
restrictions or orders person
(c) by destruction of subject matter of (c) if the acceptance is made by an
contract unascertained person
(d) all the above. (d) if the acceptance is made by an
Ans. (a) ascertained person.
97. Under section 73 of the Contract Ans. (c)
Act: 102. An acceptance containing
(a) special damages cannot be claimed additions, limitations or other
(b) special damages can be claimed if the modifications shall amount to:
party breaking the contract is made (a) rejection of the offer
known of the special circumstances at (b) a valid acceptance
any time before the breach (c) a counter offer
(c) special damages can be claimed if the (d) both (a) & (c).
party breaking the contract is made Ans. (d)
known of the special circumstances at 103. On approval of tender:
the time of contract (a) a concluded contract arises
(d) none of the above. immediately
Ans. (c) (b) a concluded contract arises only
98. Section 73 of the Contract Act when an order is placed on the basis of
applies to contract: tender
(a) for sale of moveable properties (c) the tender is converted into a
(b) for sale of immoveable properties standing offer
(c) both (a) & (b) (d) both (b) & (c).
(d) none of the above. Ans. (d)
Ans. (c) 104. A clause in the tender
99. In cases of general offer, for a authorising the party inviting
valid contract: tenders to terminate the contract at
any time for future supplies:
(a) destroys the very basis of the C. This revocation discharge A from all
contract & the clause is void liability to B for any subsequent discount.
(b) does not destroy the basis of the But A is liable to b for the 2,000 rupees
contract & the clause is valid on default of C
(c) makes the entire contract void D. None of these
(d) makes the contract voidable. Ans. (C)
Ans. (b) 109. A, in consideration that B will
105. Presumption of undue influence employ C in collecting the rents of
can be raised in cases of: B’s zamindari, promises B to be
(a) apparently unconscious bargaining responsible, to the amount of 5,000
(b) relationship of parties being such that rupees, for the due collection and
one party is in a position to dominate the payment by C of those rents.
will of the other A. This is discontinuing guarantee
(c) contract with pardanashin lady B. This is a continuing guarantee
(d) all the above. C. This is stipulation by penalty
Ans. (d) D. None of these
106. Mere silence is not fraud Ans. (B)
unless: 110. A, intending to deceive B,
(a) there is a duty to speak falsely represents that 500 maunds
(b) the silence is deceptive of indigo are made annually at A’s
(c) there is a change in the factory, and thereby induces B to
circumstances to be brought to the buy the factory.
notice of other party A. The contract is not voidable only at the
(d) all the above. option of B
Ans. (d) B. The contract is voidable only at the
107. Frustration of contract implies: option of B
(a) commercial hardship C. either (A) or (B)
(b) physical impossibility due to D. None of these
disappearance of the subject matter of Ans. (B)
the contract or the object has failed to 111. A, on board an English ship on
materialise the high seas, causes B to enter into
(c) both (a) & (b) an agreement by an act amounting
(d) neither (a) nor (b) nor (c). to criminal intimidation under the
Ans. (b) Indian Penal Code (45 of 1860). A
108. A, in consideration of B’s afterwards sues B for breach of
discounting, at A’s request, bills of contract in Calcutta
exchange for C, guarantees to B, for A. A has not employed coercion, as his
twelve months, the due payment of act is not an offence by the law of
all such bills to extent of 5,000 England
rupees. B discounts bills for C to the B. A has not employed coercion, as
extent of 2,000 rupees. Afterwards, Section 506 of the Indian Penal Code (45
at the end of three months, A of 1860) was not in force at that time
revokes the guarantee. when or place where the act was done
A. This revocation does not discharge A C. A has employed coercion, although his
from all liability to B for any subsequent act is not an offence by the law of
discount. But A is liable to b for the 2,000 England, and although section 506 of the
rupees on default of C Indian Penal Code (45 of 1860) was not in
B. This revocation discharge A from all force at that time when or place where
liability to B for any subsequent discount. the act was done
But A is not liable to b for the 2,000 D. None of these
rupees on default of C Ans. (C)
112. A, the captain of B’s ship, signs and A has entered into a contract for the
bills of landing without having sale of one hundred tons of coconut-oil
received on board the goods C. either (A) or (B)
mentioned therein. D. None of these
A. The bills of lading are not void as Ans. (B)
between B and the pretended consignor 115. A, who is B’s mukhtar, promises
B. The bills of lading are partially void as to exercise his influence, as such,
between B and the pretended consignor with B in favour of C, and C promises
C. The bills of lading are void as between to pay 1,000 rupees to A.
B and the pretended consignor A. The agreement is void, because it is
D. None of these immoral
Ans. (C) B. The agreement is not void, because it
113. A, the owner of a boat, is not immoral
contracts with B to take a cargo of C. either (A) or (B)
jute to Mirzapur, for sale at that D. None of these
place, starting on a specified day. Ans. (A)
The boat, owing to some avoidable 116. A, who owes 500 rupees worth
cause, does not start at the time of rice to B. A is acting as agent for
appointed, whereby the arrival of C in the transaction, but B has
the cargo at Mirzapur is delayed neither knowledge nor reasonable
beyond the time when it would have ground of suspicion that such is the
arrived if the boat had sailed case.
according to the contract. After that A. C can compel B to take the rice
date, and before the arrival of the without allowing him to set-off A’s debt
cargo, the price of jute falls. B. C cannot compel B to take the rice by
A. The measure of the compensation allowing him to set-off A’s debt
payable to B by A is the sum of the price C. C cannot compel B to take the rice
for which B could have obtained for the without allowing him to set-off A’s debt
cargo at Mirzapur at the time when it D. None of these
would have arrived if forwarded in due Ans. (C)
course, and its market price at the when 117. A, who owes money to B, a
it actually arrived money-lender, undertakes to repay
B. The measure of the compensation him by delivering to him 10 maunds
payable to B by A is the difference of grain on a certain date, and
between the price which B could have stipulates that, in the event of his
obtained for the cargo at Mirzapur at the not delivering the stipulated amount
time when it would have arrived if by the stipulated date, he shall be
forwarded in due course, and its market liable to deliver 20 maunds. This is a
price at the when it actually arrived stipulation by way penalty.
C. either (A) and (B) A. B is only entitled to reasonable
D. None of these consideration in case of breach
Ans. (B) B. B is not entitled to reasonable
114. A, who is a dealer in coconut-oil consideration in case of breach
only, agrees to sell to B ‘one C. either (A) or (B)
hundred tons of oil’. D. None of these
A. The nature of A’s trade affords no Ans. (A)
indication of the meaning of the words, 118. A, without authority, buys
and A has entered into a contract for the goods for B, Afterwards B sells them
sale of one hundred tons of coconut-oil to C on his own account.
B. The nature of A’s trade affords an
indication of the meaning of the words,
A. B’s conduct does not imply a B. If B sues on this bond, the Court may
ratification of the purchase made for him set the bond aside
by A C. either (A) or (B)
B. B’s conduct implies a ratification of the D. None of these
purchase made for A by him Ans. (B)
C. B’s conduct implies a ratification of the 122. Accessory contract is made for
purchase made for him by A assuring the performance of a prior
D. None of these contract by the same parties or by:
Ans. (C) A. Suretyship
119. A, without B’s authority, lends B. Mortgage
B’s money to C. Afterwards B C. Pledge
accepts interest on the money from D. All of them
C. Ans. (D)
A. B’s conduct does not imply a 123. According to UN Draft
ratification of the loan Convention on Independent
B. B’s conduct implies a partial Guarantees and Stand-by Letters of
ratification of the loan Credit, the guarantor may refuse
C. B’s conduct implies a ratification of the payment under the guarantee if the
loan demand is improper. A demand may
D. None of these be improper if:
Ans. (C) A. Any document is forged
120. A’s estate is sold for arrears of B. No payment is due on the basis
revenue under the provisions of an asserted in the demand and the
Act of the Legislature, by which the supporting documents
defaulter is prohibited from C. Judging by the type and purpose of the
purchasing the estate. B, upon an undertaking, the demand has no
understanding with A, becomes the conceivable basis
purchaser, and agrees to convey the D. All of them
estate to A upon receiving form him Ans. (D)
the price which B has paid. 124. According to UN Draft
A. The agreement is not void, as it does Convention on Independent
renders the transaction, in effect, a Guarantees and Stand-by Letters of
purchase by the defaulter, and would not Credit, judging by the type and
defeat the object of the law purpose of the undertaking, the
B. The agreement is void, but it does not demand has no conceivable basis if:
render the transaction, in effect, a I. The contingency or risk against which
purchase by the defaulter, and would not the undertaking was designed to secure
defeat the object of the law the beneficiary has undoubtedly not
C. The agreement is void, as it renders materialised
the transaction, in effect, a purchase by II. The underlying obligations of the
the defaulter, and would so defeat the principal/applicant has been declared
object of the law invalid by a Court or arbitral tribunal,
D. None of these unless the undertaking indicates that
Ans. (C) such contingency falls within the risk to
121. A’s son has forged B’s name to be covered by the undertaking
a promissory note. B under threat of III. The secured obligation has
prosecuting A’s son, obtains a bond undoubtedly been fulfilled to the
from A for the amount of the forged satisfaction of the beneficiary
note. IV. Fulfilment of the underlying obligation
A. If B sues on this bond, the Court will has clearly been prevented by wilful
not set the bond aside misconduct of the beneficiary
A. II, III, IV D. Section 210
B. Ill, IV Ans. (C)
C. I, IV 130. Agent’s authority may be
D. All of them expressed or implied under which of
Ans. (D) the following in the Indian Contract
125. Acquittal contract is a Act, 1872?
discharge from an obligation by: A. Section 186
A. Deed B. Section 190
B. Prescription C. Section 185
C. Tenure D. Section 181
D. All of them Ans. (A)
Ans. (D) 131. Which of the following deals
126. Affirmation of contract is a: with an agent’s duty in conducting
A. The confirmation by behaviour that a principal’s business in the Indian
contract is valid, as opposed to trying to Contract Act, 1872?
get out of it for some good reason. A. Section 211
B. It may be by declaration of intention, B. Section 219
inferred from, say, selling goods bought C. Section 215
under the contract, or allowing time to D. Section 210
elapse without pursuing a remedy Ans. (A)
C. either (A) and (B) 132. Agent’s lien on principal’s
D. None of these property comes under which of the
Ans. (C) following in the Indian Contract Act,
127. Agent not entitled to 1872?
remuneration for business A. Section 220
misconducted comes under which of B. Section 221
the following in the Indian Contract C. Section 226
Act, 1872? D. Section 210
A. Section 220 Ans. (B)
B. Section 219 133. Which of the following deals
C. Section 215 with an agent’s responsibility for
D. Section 210 sub-agent appointed without
Ans. (A) authority in the Indian Contract Act,
128. Agent to be indemnified against 1872?
consequences of acts done in good A. Section 180
faith is discussed under which of the B. Section 190
following in the Indian Contract Act C. Section 193
1872? D. Section 181
A. Section 220 Ans. (C)
B. Section 219 134. Although there may be
C. Section 226 apparent consent to the terms
D. Section 223 between the parties, real consent
Ans. (D) may not be found, hence agreement
129. Agent to be indemnified against is negative in which of the following
consequences of lawful acts is situations?
discussed under which of the A. offers and acceptance do not coincide
following in the Indian Contract Act, B. mistake as to identity of the person
1872? contracted with
A. Section 220 C. mistake in relation to a written
B. Section 219 document: non est factum
C. Section 222 D. All of them
Ans. (D) by his principal for such losses and a
135. An action for breach of suit to enforce and suit enforce it is
contract, at the option of the governed by_________.
plaintiff, can be brought at the A. Art. 65 of Scheduled I of the Limitation
place: Act, 1963
A. where the defendant voluntarily B. Art. 75 of Scheduled I of the Limitation
resides or carries on business Act, 1963
B. where the defendant personally works C. Art. 83 of Scheduled I of the Limitation
for gain Act, 1963
C. where the cause of action wholly or in D. None of these
part arises Ans. (C)
D. either of them 140. An agreement between a
Ans. (D) husband and a deserting wife
136. An agent is: whereby the husband promised a
A. A person employed to do act or for weekly maintenance and she
another promised to indemnify him against
B. A person employed to represent all debts and not to pledge his
another in dealings with third persons credit, is an agreement for
C. either (A) and (B) consideration.
D. None of these A. She had forfeited her right of
Ans. (C) maintenance by the desertion
137. An agent of a foreign company B. She did not forfeit her right of
for sale of its machine agreed with maintenance by the desertion
the purchaser that the purchaser C. She had partly forfeited her right to
will deduct his commission and pay maintenance by the desertion
the balance of price to the company. D. None of these
A. The purchaser was not liable to the Ans. (B)
agent for the commission 141. An agreement between two
B. The agent was liable to the purchaser neighbouring firms carrying on the
for the commission same business, not to employ
C. The purchaser was liable to the agent servants in their respective
for the commission employment during the previous five
D. None of these years, was held to be void as being
Ans. (C) unreasonable and excessive in the
138. An agent of a foreign company interest of the parties because:
for sale of its machine agreed with A. it applied to all employees without
the purchaser that the purchaser distinction between those for example
will deduct his commission and pay who did manual labour and those who
the balance of price to the company. possessed of trade secrets or confidential
The purchaser was liable to the information
agent for the commission. In which B. the real reason of the agreement was
of the following cases was it upheld? the proximity of the two firms and there
A. Continental and Eastern Agencies v. was no provision for limiting the duration
Coal India Limited of the period while the proximity
B. Bhatinda Chemicals v. M V. “Z-Press continued
Nuptse”. C. both (A) and (B)
C. State of Gujarat v. Vora Fiddali. D. None of these
D. S.N. Prasad v. Monnet Finance Ltd. Ans. (C)
Ans. (A) 142. An application by an employee
139. An agent sustaining loses in his seeking voluntary retirement
agency has a right to be recouped benefits can be withdrawn any time
before it is accepted by the A. Section 42
employer. In which of the following B. Section 36
cases it was upheld? C. Section 43
A. Saurabh Prasad v. DLF Universal Ltd D. Section 40
B. Ceilena v. Ulhas Ans. (C)
C. Food Corporation of India v. Ramesh 147. Application for performance on
Kumar certain day to be at proper time and
D. None of these place is dealt under which of the
Ans. (C) following in the Indian Contract Act,
143. An auctioneer’s request for 1872?
bids is not an offer, but an invitation A. Section 42
to the customers to bid; the bid B. Section 36
constitutes the offer, which is C. Section 43
accepted by the auctioneer in a D. Section 48
customary manner, usually by the Ans. (D)
fall of hammer. Which of the 148. Apportionment of relief or
following cased held that the bidder compensation obtained by such
may withdraw the bid until it is suits is dealt under which of the
accepted? following in the Indian Contract Act,
A. Firm Durga Prasad Mutsaddi Lal v. Firm 1872?
Rulia Mal Doogar Mal A. Section 176
B. Tata Cellular v. Union of India B. Section 171
C. Bengal Coal Co. Ltd., v. Homee Wadia C. Section 181
& Co. D. Section 178
D. Joravarmull Champalal v. Jeygopaldas Ans. (C)
Chanshamdas 149. As a general rule, interest can
Ans. (D) be awarded only if:
144. Anticipatory breach of contract A. it is payable by custom
is: B. if there is an agreement, either
A. The refusal by any party to a contract express or implied, to pay interest
before the due date for performance, to C. under the provisions of any
perform, substantive law entitling the plaintiff to
B. His disabling himself from being able recover the same
then to perform D. all of them
C. either (A) or (B) Ans. (D)
D. None of these 150. As per principle mentioned in
Ans. (C) the second paragraph of Section 56
145. Any condition to be performed of the Indian Contract Act, 1872, a
by the creditor, to render the promise is discharged if, for some
principal-debtor liable: cause which the promisor could not
A. must be performed before the surety prevent, performance may become
can be liable impossible by:
B. must be immediately performed after I. change in law rendering a contract
the surety is made liable unlawful or impossible of performance
C. either (A) or (B) II. destruction or non-existence of the
D. None of these specific subject matter assumed by the
Ans. (A) parties to exist or continue in existence
146. Any one of joint promisors may III. the non-existence of a state of things
be compelled to perform under assumed as the foundation of the
which of the following in the Indian contract
Contract Act, 1872?
IV. such circumstances intervening which prevent the sale is the consequent
render the performance within the time annulment of his own lease, pays to
in the way contemplated, impossible, be the Government the sum due
although, performance of the contract from A.
according to its terms may be literally A. A is not bound to make good to B the
possible, the death or disability of the amount so paid
promisor, where the promise was to B. A is partly bound to make good to B
perform something in person the amount so paid
A. II, III C. A is bound to make good to B the
B. IV amount so paid
C. I D. None of these
D. All of them Ans. (C)
Ans. (D) 154. B is indebted to C and A is
151. B accepts A’s proposal by a surety for the debt. C demands
letter sent by post. The payment from A, and on his refusal
communication of the acceptance is sues him for the amount. A defends
complete. the suit, having reasonable grounds
A. As against B, when the letter is for doing so, but he is compelled to
posted; as against A, when the letter is pay the amount of the debt with
received by B costs.
B. As against A, when the letter is A. He cannot recover from B the amount
received; as against B, when the letter is paid by him for costs
posted by A B. He can recover from B only the
C. As against A, when the letter is principal debt
posted; as against B, when the letter is C. He can recover from B the amount
received by A paid by him for costs, as well as the
D. None of these principal debt
Ans. (C) D. None of these
152. B contracts to build a ship for C Ans. (C)
for a given sum, to be paid by 155. B owes A 2,000 rupees. A
instalments as the work reaches desires B to pay the amount to A’s
certain stages. A becomes surety to account with C, a banker. B, who
C for B’s due performance of the also banks with C, orders the
contract. C, without the knowledge amount to be transferred from his
of A, prepays to B the last two account to A’s credit, and this is
instalments. done by C. Afterwards, and before A
A. A is partly discharged by this pre- knows of the transfer, C fails.
payment A. There has been a good payment by B
B. A is not discharged by this pre- B. There has been no payment by B
payment C. either (A) or (B)
C. A is discharged by this pre-payment D. None of these
D. None of these Ans. (A)
Ans. (C) 155. B owes to C a debt guaranteed
153. B holds land in Bengal, on a by A. The debt becomes payable. C
lease granted by A, the zamindar. does not due B for a year after the
The revenue payable by A to the debt has become payable.
Government being in arrear, his land A. A is partly discharged from his surety
is advertised for sale by the ship
Government. Under the revenue law, B. A is discharged from his surety ship
the consequence of such sale will be C. A is not discharged from his surety
annulment of B’s lease. B, to ship
D. None of these 161. When the consent to the
Ans. (C) contract is caused by coercion, the
156. B revokes his acceptance to A’s contract under section 19 is:
proposal by telegram. The (a) valid
revocation is complete: (b) voidable
A. As against A and B, when the telegram (c) void
is dispatched (d) illegal.
B. As against A and B, when the telegram Ans. (b)
when A receives it 162. A’s son forged B’s name to a
C. As against B when the telegram is promissory note. B under threat of
dispatched, and as against A when it prosecuting A’s son obtains a bond
reaches him from A for the amount of the forged
D. None of these note. If B sues on this bond the
Ans. (C) court:
157. Which one of the following is (a) has no jurisdiction in this case
correct: (b) must not set aside the bond
(a) past consideration is no consideration (c) may set aside the bond
(b) consideration can be past, present or (d) none of above.
future Ans. (c)
(c) consideration can only be present 163. When the consent is caused by
(d) consideration can only be present & misrepresentation, the contract
future. under section 19 is:
Ans. (b) (a) valid
158. Past consideration is valid in: (b) void
(a) England only (c) voidable
(b) India only (d) illegal.
(c) both in England & India Ans. (c)
(d) neither in England nor in India. 164. When the consent is caused by
Ans. (c) undue influence, the contract under
159. An agreement not to raise the section 19A is:
plea of limitation is: (a) valid
(a) valid & binding (b) void
(b) void (c) voidable
(c) voidable (d) illegal.
(d) illegal. Ans. (c)
Ans. (b) 165. Where both the parties are
160. A letter of acceptance sent by under mistake as to matter of fact,
post is lost in transit: the contract under section 20 is:
(a) there is a concluded contract as the (a) voidable
letter of acceptance is put in the course (b) void
of transmission (c) valid
(b) there is no concluded contract as the (d) illegal.
acceptance has not come to the Ans. (b)
knowledge of the proposer 166. Where one of the parties is
(c) there is no concluded contract as the under a mistake as to matter of fact
acceptance has not been communicated the contract is:
to the proposer (a) valid
(d) all the above. (b) void
Ans. (a) (c) voidable
(d) illegal.
Ans. (a)
167. Considerations & objects are 173. Consent is free under section
unlawful where it is: 14 if not caused by:
(a) forbidden by law or defeat the (a) coercion & undue influence
provision of any law (b) fraud and misrepresentation
(b) which is fraudulent (c) mistake subject to the provisions of
(c) which is immoral & against the public sections 20, 21 and 22
policy (d) all the above.
(d) all the above. Ans. (d)
Ans. (d) 174. Consent under section 13
168. If only a part of the means:
consideration or object is unlawful, (a) agreeing on the same thing in the
the contract under section 24 shall same sense
be: (b) agreeing on the same thing at the
(a) valid same time
(b) voidable (c) agreeing on the same thing at
(c) void different time
(d) illegal. (d) agreeing on different things at
Ans. (c) different times.
169. A contract without Ans. (a)
consideration under section 25 is: 175. A contract which is valid
(a) valid initially however, ceases to be
(b) voidable enforceable subsequently,
(c) void the contract:
(d) illegal. (a) remains valid
Ans. (c) (b) becomes voidable when it ceases to
170. Consideration should be be enforceable
something in return of promise (c) becomes void when it ceases to be
which: enforceable
(a) both the law and parties regard, as (d) becomes void since inception.
having some value Ans. (c)
(b) only law regards a having some value 176. Agreements, the meaning of
(c) only the parties regard some value which is not certain or not capable
(d) only adequate value necessary. of being made certain under section
Ans. (a) 29 is:
171. If the proposer prescribes the (a) void
mode & manner of acceptance, the (b) voidable
acceptance: (c) illegal
(a) can be in any manner & mode (d) valid.
(b) should be in the manner & mode Ans. (a)
prescribed 177. An agreement in restraint of
(c) can be in any reasonable mode & trade under section 27 is:
manner (a) valid
(d) all the above. (b) voidable
Ans. (b) (c) void
172. Parties are not competent to (d) unenforceable.
contract if any of them is: Ans. (c)
(a) minor 178. An agreement in restraint of
(b) insane trade is valid under section 27 if
(c) declared unqualified relates to:
(d) all the above. (a) sale of goodwill
Ans. (d) (b) mutual adjustment
(c) business contingency 185. If only a part of the
(d) none of the above. consideration or object is unlawful,
Ans. (a) the contract under section 24 shall
179. An agreement not to pursue be:
any legal remedy to enforce the (a) valid to the extent the same are
rights under section 28 is: lawful
(a) valid (b) void to the extent the same are
(b) voidable unlawful
(c) void (c) void as a whole
(d) unenforceable. (d) valid as a whole.
Ans. (c) Ans. (c)
180. An agreement not to persue 186. An agreement shall be void on
legal remedies but to refer the account of:
dispute to the arbitrator, under (a) mistake of fact by one party
section 28 is: (b) mistake of fact by both the parties
(a) valid (c) mistake of foreign law
(b) voidable (d) both (a) & (b).
(c) void Ans. (b)
(d) unenforceable. 187. A, B and C are sureties to D for
Ans. (a) the sum of 3,000 rupees lent to E. E
181. An agreement to refer the makes default in payment.
dispute to the arbitrator is valid: A. A and B are liable, as between
(a) in respect of disputes already arisen themselves, to pay 1,000 rupees each
(b) in respect of disputes which may arise B. A and C are liable, as between
in future themselves, to pay 1,000 rupees each
(c) both (a) & (b) C. A, B and C are liable, as between
(d) neither (a) nor (b). themselves, to pay 1,000 rupees each
Ans. (c) D. None of these
182. An agreement by way of wager Ans: C
under section 30 is: 188. A, B and C are under a joint
(a) void promise to pay D 3,000 rupees. C is
(b) voidable unable to pay anything and A is
(c) valid compelled to pay the whole.
(d) unenforceable. A. A is entitled to receive 1,500 rupees
Ans. (a) from B
183. An agreement in connection B. A is not entitled to receive any money
with horse-racing under section 30 from B
is: C. A is entitled to receive 1,500 rupees
(a) unlawful from C
(b) void D. None of these
(c) voidable Ans: A
(d) valid. 189. A, B and C jointly promise to
Ans. (d) pay D 3,000 rupees.
184. An agreement in restraint of A. D may compel A to pay him 3,000
marriage under section 26 is: rupees
(a) void B. D may compel B to pay him 3,000
(b) voidable rupees
(c) valid C. D may compel C to pay him 3,000
(d) unenforceable. rupees
Ans. (a) D. All of them
Ans: D
190. A, B and C, as sureties for D, D. None of these
enter into three several bonds, each Ans: B
in a different penalty, namely, A in 194. A, being owner of a ship and
the penalty of 10,000 rupees, B in cargo, authorizes B to procure an
that of 20,000 rupees, C that of insurance for 4,000 rupees on the
40,000 rupees, conditioned for D’s ship. B procures a policy for 4,000
duly accounting to E. D makes rupees on the ship, and another for
default to the extent of 40,000 the like sum on the cargo.
rupees. A. A is bound to pay the premium for the
A. A is liable to pay 15000 rupees, and B policy on the ship
and C 1000 rupees each B. A is bound to pay the premium for the
B. A is liable to pay 5000 rupees, and B policy on the cargo
and C 10000 rupees each C. A is bound to pay the premium for the
C. A is liable to pay 10000 rupees, and B policy on the ship, but not the premium
and C 1500 rupees each for the policy on the cargo
D. None of these D. None of these
Ans: C Ans: C
191. A, B and C jointly promise to 195. A, contracts to buy B’s ship for
pay D the sum of 3,000 rupees. C is 60,000 rupees, but breaks his
compelled to pay the whole. A is promise.
insolvent, but his assets are A. A must pay to B, by way of
sufficient to pay one-half of his compensation, the excess, if any, of the
debts. contract price for which B can obtain for
A. C is entitled to receive 1250 rupees the ship at the time of the breach of
from A’s estate, and 500 rupees from B promise
B. C is entitled to receive 500 rupees B. A must pay to B, by way of
from A’s estate, and no money from B compensation, a partial amount of the
C. C is entitled to receive 500 rupees contract price for which B can obtain for
from A’s estate, and 1,250 rupees from B the ship at the time of the breach of
D. None of these promise
Ans: C C. A must pay to B, by way of
192. A, being B’s agent for the sale compensation, the excess, if any, of the
of goods, induces C to buy them by contract price over the price which B can
misrepresentation, which he was not obtain for the ship at the time of the
authorized by B to make. breach of promise
A. The contract is not voidable, as D. None of these
between B and C, at the option of C Ans: C
B. The contract is partially voidable, as 196. A, having contracted with B to
between B and C, at the option of C supply B with 1,000 tons of iron at
C. The contract is voidable, as between B 100 rupees a ton, to be delivered at
and C, at the option of C a stated time, contracts with C for
D. None of these the purchase of 1,000 tons of iron at
Ans: C 80 rupees a ton, telling C that he
193. A, being entitled to an estate does so for the purpose of
for the life of B, agrees to sell it to performing his contract with B. C
C, B was dead at the time of the fails to perform his contract with A,
agreement, but both parties were who cannot procure other iron, and
ignorant of the fact. B, in consequence, rescinds the
A. The agreement cannot be voided contract.
B. The agreement is void
C. Either (A) or (B)
A. C must pay to A 5000 rupees, being C. A is not liable to make good to B
the profit which A would have made by anything except the principal sum he
the performance of his contract with B contracted to pay, together with interest
B. C must pay to A 10,000 rupees, being upon the day of payment
the profit which A would have made by D. None of these
the performance of his contract with B Ans. (C)
C. C must pay to A 20,000 rupees, being 200. A contracts to pay B a sum of
the profit which A would have made by money when B marries C. C dies
the performance of his contract with B without being married to B.
D. None of these A. The contract still can be forced
Ans: C B. The contract becomes void
197. A, who is a dealer in coconut-oil C. either (A) or (B)
only, agrees to sell to B ‘one D. None of these
hundred tons of oil’. Ans. (B)
A. The nature of A’s trade affords no 201. A contract to repair B’s house
indication of the meaning of the words, in a certain manner, and receives
and Ahas entered into a contract for the payment in advance. A repairs the
sale of one hundred tons of coconut-oil house, but not according to
B. The nature of A’s trade affords an contract.
indication of the meaning of the words, A. B is not entitled to recover from A the
and Ahas entered into a contract for the cost of making the repair conform to the
sale of one hundred tons of coconut-oil contract
C. Either (A) or (B) B. B is entitled to partly recover from A
D. None of these the cost of making the repair conform to
Ans: B the contract
198. A contracts to marry B, being C. B is entitled to recover from A the cost
already married to C, and being of making the repair conform to the
forbidden by the law to which he is contract
subject to practice polygamy. This D. None of these
causes loss to B Ans. (C)
A. A need not make compensation to B 202. A contracts to sell and deliver
for the nonperformance of his promise 50 maunds of saltpetre to B, at a
B. A must make compensation to B for certain price to be paid on delivery.
the nonperformance of his promise A breaks his promise.
C. either (A) or (B) A. B is not entitled to receive from A, by
D. None of these way of compensation, the sum, if any, by
Ans. (B) which the contract price falls short of the
199. A contracts to pay a sum of price for which B might have obtained 50
money to B on a day specified. A maunds of saltpetre of like quality at the
does not pay the money on that day. time when the saltpetre ought to have
B, in consequence of not receiving been delivered
the money on that day, is unable to B. B is entitled to receive from A, by way
pay his debts, and is totally ruined. of compensation, the sum, if any, by
A. A is liable to make good to B anything which the contract price does not fall
except the principal sum he contracted short of the price for which B might have
to pay, together with interest upon the obtained 50 maunds of saltpetre of like
day of payment quality at the time when the saltpetre
B. A is liable to partially make good to B ought to have been delivered
anything except the principal sum he C. B is entitled to receive from A, by way
contracted to pay, together with interest of compensation, the sum, if any, by
upon the day of payment which the contract price falls short of the
price for which B might have obtained 50 A. B must pay to A, by way of
maunds of saltpetre of like quality at the compensation, the sum of the contract
time when the saltpetre ought to have price of the iron and the sum for which A
been delivered could have obtained and delivered it
D. None of these B. B must pay to A, by way of
Ans. (C) compensation, the difference between
203. A contracts to sell and deliver the contract price of the iron and the sum
500 bales of cotton to B on a fixed for which A could have obtained and
day. A knows nothing of B’s mode of delivered it
conducing his business. A breaks the C. either (A) or (B)
promise, and B, having no cotton, is D. None of these
obliged to close his mill. Ans. (B)
A. A is responsible to B for the loss 206. A contracts to take in cargo for
caused to B by closing of the mill B at a foreign port. A’s Government
B. A is not responsible to B for the loss afterwards declares war against the
caused to B by closing of the mill country in which the port is situated.
C. either (A) or (B) A. The contract cannot become void
D. None of these when war is declared
Ans. (B) B. The contract becomes partly void
204. A contracts to sell and deliver when war is declared
to B, on the first of January, certain C. The contract becomes void when war
cloth which B intends to is declared
manufacture into caps of a D. None of these
particular kind, for which there is Ans. (C)
not demand, except at that season. 207. A contracts with B for a fixed
The cloth is not delivered till after price to build a house for b within a
the appointed time, and too late to stipulated time, B supplying the
be used that year in making the necessary timber. C guarantees A’s
caps. performance of the contract. B omits
A. B is entitled to receive from A, by way to supply then timber.
of compensation, the difference between A. C is not discharged from his suretyship
the contract price of the cloth and its B. C is partly discharged from his
market price at the time of delivery suretyship
B. B is entitled to receive from A, by way C. C is discharged from his suretyship
of compensation, the difference between D. None of these
the contract price of the cloth and the Ans. (C)
profits which he expected to obtain by 208. A contracts with B that, if A
making caps practices as a surgeon within
C. B is entitled to receive from A, by way Calcutta, he will pay B Rs. 5,000. A
of compensation, the difference between practices as a surgeon in Calcutta.
the contract price of the cloth and the A. B is entitled to such compensation, not
expenses which he has been put to in exceeding Rs.3,000 as the Court
making preparation for the manufacture considers reasonable
D. None of these B. B is entitled to such compensation, not
Ans. (A) exceeding Rs.4,000 as the Court
205. A contracts to supply B with a considers reasonable
certain quantity of iron at a fixed C. B is entitled to such compensation, not
price, being a higher price than that exceeding Rs.5,000 as the Court
for which A could procure and considers reasonable
deliver the iron. B wrongfully D. None of these
refuses to receive the iron. Ans. (C)
209. A contracts with B to deliver to 213. A contracts with B to make and
him 250 maunds of rice before the deliver to B, by a fixed day, for a
1st of May. A delivers 130 maunds specified price, a certain piece of
only before that day and none after. machinery. A does not deliver the
B retains the 130 maunds after the piece of machinery at the time
1st of May. specified, and, in consequences of
A. He is not bound to pay A for them this; B is obliged to procure another
B. He is bound to pay A for them at a higher price than the which he
C. He is partially bound to pay A for them was to have paid to A, and is
D. None of these prevented from performing a
Ans. (B) contract which B had made with a
210. A contracts with B to deliver to third person at the time of his
him, at a specified price, certain contract with A (but which had not
merchandise on board a ship which been then communicated to A), and
cannot arrive for a month, and B is compelled to make compensation
engages to pay for the merchandise for breach of that contract.
within a week from the date of the A. A must pay to B, by way of
contract. B does not pay within a compensation, the sum of the contract
week. price of the price of machinery and the
A. A’s promise to deliver and need not be sum paid by B for another, but not the
performed sum paid by B to the third person by way
B. A’s promise to deliver and needs to be of compensation
performed B. A must pay to B, by way of
C. B must make compensation compensation, the difference between
D. both (A) and (C) the contract price of the price of
Ans. (D) machinery and the sum paid by B for
211. A contracts with B to execute another, along the sum paid by B to the
certain builders’ work for a fixed third person by way of compensation
price B supplying the scaffolding and C. A must pay to B, by way of
timber, and the work cannot be compensation, the difference between
executed. the contract price of the price of
A. A need not execute the work machinery and the sum paid by B for
B. B is bound to make compensation to A another, but not the sum paid by B to the
for any loss caused to him by the non- third person by way of compensation
performance of the contract D. None of these
C. either (A) or (B) Ans. (C)
D. both (A) and (B) 214. A contracts with B to repair B’s
Ans. (D) house. B neglects or refuses to point
212. A contracts with B to grow a out to A the places in which his
crop of indigo on A’s land and to house requires repair.
deliver it to B at a fixed rate, and C A. A is excused for the non-performance
guarantees A’s performance of this of the contract if it is caused by such
contract. B diverts a stream of water neglect or refusal
which is necessary for irrigation of B. A cannot be excused for the non-
A’s land, and thereby prevents him performance of the contract even if it is
from raising the indigo. caused by such neglect or refusal
A. A is liable on his guarantee C. B is excused for his negligence or
B. A is partly liable on his guarantee refusal to point out to A the places in
C. A is no longer liable on his guarantee which his house requires repair
D. None of these D. None of these
Ans. (C) Ans. (A)
215. A contractual provision security D. None of these
deposit in a commercial contract Ans. (B)
cannot be questioned: 218. A desires B, who owes him
A. on the basis of its quantum Rs.100, to send him a note for
B. on the ground that the other party Rs.100 by post.
does not have a similar liability A. The debt is discharged only when A
C. either (A) or (B) receives the due amount
D. None of these B. The debt is discharged as soon as B
Ans. (C) puts into the post a letter containing the
216. A delivers a rough diamond to note duly addressed to A
B, a jeweller, to be cut and polished, C. either (A) or (B)
which is accordingly done. D. None of these
A. B is not entitled to retain the stone till Ans. (B)
he is paid for the services he has 219. A directs B to see A’s estate. B,
rendered on looking over the estate before
B. B is entitled to retain the stone till he selling it, finds a mine on the estate
is not paid for the services he has which is unknowns to A. B informs A
rendered that he wishes to buy the estate for
C. B is entitled to retain the stone till he himself, but conceals the discovery
is paid for the services he has rendered of the mine. A allows B to buy in
D. None of these ignorance of the existence of the
Ans. (C) mine. A, on discovering that B knew
217. A delivers to B, a common of the mine at the time he bought
carrier, a machine, to be conveyed, the estate:
without delay, to A’s mill, informing A. may repudiate the sale at his option
B that this mill is stopped for want B. may adopt the sale at his option
of machine. B unreasonably delays C. either (A) or (B)
the delivery of the machine, and A, D. None of these
in consequence, loses a profitable Ans. (C)
contract with the Government. 220. A directs B to sell A’s estate. B
A. A is entitled to receive from B, by way boys the estate for himself in the
of compensation, the average amount of name of C. A, on discovering that B
profit which would have been made by has bought the estate for himself,
the working of the mill during the time may repudiate the sale:
that delivery of it was delayed, along A. if he can show that B has dishonestly
with the loss sustained through loss of concealed any material fact
the Government contract B. if he can show that the sale has been
B. A is entitled to receive from B, by way disadvantageous to him
of compensation, the average amount of C. either (A) or (B)
profit which would have been made by D. None of these
the working of the mill during the time Ans. (C)
that delivery of it was delayed, but not 221. A directs B to sell goods for
the loss sustained through loss of the him, and agrees to give B five per
Government contract cent commission on the price
C. A is not entitled to receive from B, by fetched by the goods. A afterwards
way of compensation, the average by letter, revokes B’s authority. B
amount of profit which would have been after the letter is sent, but before he
made by the working of the mill during receives it, sells the goods for 100
the time that delivery of it was delayed, rupees.
but the loss sustained thought loss of the A. The sale is not binding on A, and B is
Government contract entitled to five rupees as his commission
B. The sale is binding on A, and B is not B. A must make compensation to B
entitled to five rupees as his commission C. either (A) or (B)
C. The sale is binding on A, and B is D. None of these
entitled to five rupees as his commission Ans. (B)
D. None of these 226. A employs B to beat C, and
Ans. (C) agrees to indemnify him against all
222. A directs B, his agent, to buy a consequence of the act. B thereupon
certain house for him. B tells A it beats C, and to pay damages to C for
cannot be bought, and buys the so doing.
house for himself. A. A is liable to indemnify B for those
A. A cannot, on discovering that B has damages
bought the house, compel him to sell it to B. A is partially liable to indemnify B for
A at the price he gave for it those damages
B. A can, on discovering that B has C. A is not liable to indemnify B for those
bought the house, file a suit against him damages
C. A may, on discovering that B has D. None of these
bought the house, compel him to sell it to Ans. (C)
A at the price he gave for it 227. A employs B to recover 1,000
D. None of these rupees from C. Through B’s
Ans. (C) misconduct the money is not
223. A directs B, his agent, to pay recovered.
certain money to C, A dies, and D A. B is entitled to remuneration from his
takes out probate to his will. B, after services, and must make good the loss
A’s death, but before hearing of it, B. B is entitled to no remuneration from
pays the money to C. his services, and need not make good the
A. The payment is not as against D, the loss
executor C. B is entitled to no remuneration from
B. The payment is good as against D, the his services, and must make good the
executor loss
C. either (A) or (B) D. None of these
D. None of these Ans. (C)
Ans. (B) 228. A employs B to recover 100,000
224. A directs B, his solicitor, to sell rupees from C, and to lay it out on
his estate by auction, and so employ good security. B recovers 1,00,000
an auctioneer for the purpose. B rupees and lays out 90,000 rupees
names C, an auctioneer, to conduct on good security, but lays out
the sale. 10,000 rupees, on security which he
A. C is a sub-agent, and A’s sub-agent for ought to have known to be bad,
the conduct of the sale whereby A loses 2,000 rupees.
B. C is not a sub-agent, but B’s agent for A. B is not entitled to remuneration for
the conduct of the sale recovering the 1,00,000 rupees and for
C. C is not a sub-agent, but A’s agent for investing the 90,000 rupees. He is
the conduct of the sale entitled to any remuneration for
D. None of these investing the 10,000 rupees, and he
Ans. (C) must make good the 2,000 rupees to B
225. A employs B as a bricklayer in B. B is entitled to remuneration for
building a house, and puts up the recovering the 1,00,000 rupees and not
scaffolding himself. The scaffolding for investing the 90,000 rupees. He is
is un-skilfully put up, and B is in entitled to any remuneration for
consequence hurt. investing the 10,000 rupees, and he
A. A need not make compensation to B must make good the 2,000 rupees to B
C. B is entitled to remuneration for 233. A finds B’s purse and gives it to
recovering the 1,00,000 rupees and for him. B promises to give ARs. 50/-
investing the 90,000 rupees. He is not A. This is not a contract
entitled to any remuneration for B. This is a contract
investing the 10,000 rupees, and he C. either (A) or (B)
must make good the 2,000 rupees to B D. None of these
D. None of these Ans. (B)
Ans. (C) 234. A fraudulently inform B that A’s
229. A empowers B to let A’s house. estate is free from encumbrance. B
Afterwards A lets it himself. thereupon buys the estate. The
A. This is not an implied revocation of B’s estate is subject to a mortgage.
authority A. B may avoid the contract
B. This is an implied revocation of A’s B. B may insist on its being carried out,
authority and the mortgage- debt redeemed
C. This is an implied revocation of B’s C. either (A) or (B)
authority D. None of these
D. None of these Ans. (C)
Ans. (C) 235. A gives a guarantee to C for
230. A engages B as clerk to collect goods supplied by C to B C supplies
money for him. B fails to account for goods to B, and afterwards B
some of his receipts, and A in becomes embarrassed and contracts
consequence calls upon him to with his creditors (including C to
furnish security for his duly assign to them his property in
accounting. A does not acquaint C consideration) of their releasing him
with B’s previous conduct. B from their demands.
afterwards makes default. A. Here B is not released from his debt by
A. The guarantee is not invalid the contract with C, and A is discharged
B. The guarantee is partly invalid from his surety ship
C. The guarantee is invalid B. Here B is released from his debt by the
D. None of these contract with C, and A is not discharged
Ans. (C) from his surety ship
231. A enters into a contract with B C. Here B is released from his debt by the
to sell him 100 bales of cotton, and contract with C, and A is discharged from
afterwards discover that B was his surety ship
acting as agent for C. D. None of these
A. A may sue B for the price of the cotton Ans. (C)
B. A may sue C for the price of the cotton 236. A gives a recognizance binding
C. A may sue either B or C, or both, for him in a penalty of Rs.500 to appear
the price of the cotton in Court on a certain day. He forfeits
D. None of these his recognizance.
Ans. (C) A. He is not liable to pay the penalty
232. A entrusts B with negotiable B. He is liable to partially pay the penalty
instrument endorsed in blank. B C. He is liable to pay the whole penalty
sells them to C in violation of private D. None of these
orders from A. Ans. (C)
A. The sale is not good 237. A gives authority to B to sell A’s
B. The sale is partly good land, and to pay himself, out of the
C. The sale is good proceeds, the debts due to him from
D. None of these A.
Ans. (C) A. A can revoke this authority but cannot
terminate it by his insanity or death
B. A cannot revoke this authority, but it A. A is liable on his guarantee for any
can be terminated by his insanity or goods supplied after this new
death arrangement
C. A cannot revoke this authority, nor can B. A is not liable on his guarantee for any
it be terminated by his insanity or death goods supplied after this new
D. None of these arrangement
Ans. (C) C. A is partly liable on his guarantee for
238. A gives B a bond for the any goods supplied after this new
repayment of Rs.1,000 with interest arrangement
at 12 percent at the end of six D. None of these
months, with a stipulation that, in Ans. (B)
case of default, interest shall be 241. A guarantee caused but the
payable at the rate of 75 percent misrepresentation may be invalid if
from the date of default. This is a the misrepresentation has been
stipulation by way of penalty. effected by a third party with the
A. B is only entitled to recover from A creditor’s knowledge or assent. The
such compensation as the Court guarantee may, therefore be
considers reasonable affected by the misrepresentation
B. B is only entitled to recover from A by the principal-debtor, or a third
such compensation he considers party on the grounds of:
reasonable A. agency
C. B is not entitled to recover from A such B. notice
compensation C. both (A) and (B)
D. None of these D. None of these
Ans. (A) Ans. (C)
239. A gives cloth to B, a tailor, to 242. A guarantees C against the
make into a coat; B promises A to misconduct of B in an office to which
deliver the coat as soon as it is B is appointed by C, and of which
finished, and to give A three the duties are defined by an Act of
months, credit for the price. the Legislature. By a subsequent Act
A. B is entitled to retain the coat until he the nature of the office is materially
is paid altered. Afterwards, B misconduct’s
B. B is not entitled to retain the coat until himself.
he is not paid A. A is not discharged by the change
C. B is not entitled to retain the coat until from future liability under the guarantee,
he is paid though the misconduct of B is in respect
D. None of these of a duty not affected by the later Act
Ans. (C) B. A is discharged by the change from
240. A gives to C a continuing future liability under the guarantee,
guarantee to the extent of 3,000 though the misconduct of B is in respect
rupees for any oil supplied by C to B of a duty affected by the later Act
on credit. Afterwards B becomes C. A is discharged by the change from
embarrassed, and, without the future liability under the guarantee,
knowledge of A, B and C contract though the misconduct of B is in respect
that C shall continue to supply B of a duty not affected by the later Act
with oil for ready money, and that D. None of these
the payments shall be applied to the Ans. (C)
then, existing debts between B and 243. A guarantees payment to B of
C. the price of five sacks of flour to be
delivered by B to C and to be paid
for in a month. B delivers five sacks
to C. C pays for them. Afterwards B gives notice of revocation. C
delivers four sacks to C, which C dishonours the bill at maturity.
does not pay for. A. A is liable upon his guarantee
A. The guarantee given by A is a B. A is not liable upon his guarantee
continuing guarantee, and according he C. A is partly liable upon his guarantee
is liable for the price of the four sacks D. None of these
B. The guarantee given by A is a Ans. (A)
continuing guarantee, but not the price 247. A guarantees to C payment for
of the four sacks iron to be supplied by him to B to B
C. The guarantee given by A was not a the amount of 2,000 tons. B and C
continuing guarantee, and according he have privately agreed and B should
is not liable for the price of the four sacks pay five rupees per ton beyond the
D. None of these market price, such excess to be
Ans. (C) applied in liquidation of an old debt.
244. A guarantees payment to B, a This agreement is concealed from A.
tea-dealer, to the amount of Rs.100, A. A is partly liable as a surety
for any tea he may from time to time B. A is liable as a surety
supply to C. B supplies C with tea to C. A is not liable as a surety
above the value of Rs.100, and C D. None of these
pays B for it. Afterward B supplies C Ans. (C)
with tea to the value of Rs.200. C 248. The agent has a right to be
fails to pay. indemnified:
A. The guarantee given by A was not a (a) for all the consequences of all lawful
continuing guarantee, and he is not acts done by the agent
accordingly liable to B to the extent of (b) for all the consequences of all
Rs.100 unlawful acts done in good faith by the
B. The guarantee given by A was a agent
continuing guarantee, and he is also (c) for all the consequences of unlawful
liable to B to the extent of Rs.200 acts, known to be unlawful, but not
C. The guarantee given by A was a criminal acts
continuing guarantee, and he is (d) both (a) & (b).
accordingly liable to B to the extent of Ans. (a)
Rs.100 249. Which of the following rights
D. None of these is/are not available to the agent:
Ans. (C) (a) right to retain
245. A guarantees to B the payment (b) right to compensation
of a bill of exchange by C, the (c) right to sell
acceptor. The bill is dishonored by C. (d) all the above.
A. A is liable only for the amount of the Ans. (c)
bill 250. Which of the following rights
B. A is liable only for any interest and is/are available to the agent:
charges which may have become due on (a) right to remuneration & compensation
it (b) right to retain
C. either (A) or (B) (c) right to indemnity
D. both (A) and (B) (d) all the above.
Ans. (D) Ans. (d)
246. A guarantees to B, the extent 251. B, the proprietor of a
of 10,000 rupees, that C shall pay all newspaper, publishes, at A’s
the bills that B shall draw upon him. request, a libel upon C in the paper,
B draws upon C, C accepts the bill. A and A agrees to identify B against
the consequences of the publication,
and all costs and damages of any (b) good
action in respect thereof. B is sued (c) no legal identity
by C and has to pay damages, and (d) depends on the court.
also incurs expenses. Decide in the Ans. (b)
light of section 224 of the Indian 256. A owes B, under a contract, a
Contract Act, 1872: sum of money, the amount of which
(a) A is not liable to B upon indemnity has not been ascertained. A, without
(b) A is liable to B upon indemnity ascertaining the amount, gives to B,
(c) A is not liable to C upon indemnity and B, in satisfaction
(d) none of above. thereof accepts the sum of Rs. 2000.
Ans. (a) This is a discharge of –
252. Which of the following cases is (a) whole debt
related to letter of intent: (b) part debt
(a) D.R.S.A. v. M/s. Bindal Agrochemical (c) earnest money
Ltd., AIR 2006 SC 871 (d) previous debt.
(b) Union of India v. Maddala Thathaiah, Ans. (a)
AIR 1966 SC 1724 257. In which of the following
(c) Patna Regional Dev. Authority v. judgments it was told that: “the
Rashtriya Pariyojna Nirman Nigam, AIR principle of unjust enrichment
1966 SC 2074 cannot be extended to give a right
(d) Bhagwandas v. Girdharilal and. Co., to the State to recover or realize
AIR 1966 SC 543. vend fee after the concerned statute
Ans. (a) for realisation or recovery of vend
253. If only a part of the fee has been struck down”:
consideration or object is unlawful, (a) Somaiya Organics (India) Ltd. v. State
the contract under Section 24 of the of Uttar Pradesh, AIR 2001 SC 1725
Indian Contract Act, 1872 shall be: (b) V.R. Subramanyam v. B. Thayapa,
(a) Valid to the extent the same are (1961) 3 SCR 663
lawful (c) Jugapatiraja v. Sadnusannama, AIR
(b) Void to the extent the same are 1916 Mad 980
unlawful (d) none of the above.
(c) Void as a whole Ans. (a)
(d) Valid as a whole. 258. In which of the following cases,
Ans. (b) the Supreme Court held that the
254. A contract may be vitiated by: time was essence of contract:
(i) Fraud (a) A.K. Lakshmipathi v. R.S. Pannalal, AIR
(ii) Mistake 2010 SC 577
(iii) Frustration (b) Ceilena v. Ulhas, AIR 2010 SC 603
(iv) Undue influence. (c) Khanapuram v. Adm. Officer, AIR 2010
Find correct answer using codes: SC 615
Codes: (d) H.D.F.C. Bank Ltd. v. J.J. Mannan, AIR
(a) Only (i) is correct 2010 SC 618.
(b) Only (i) and (ii) and correct Ans. (a)
(c) Only (i), (ii) and (iii) are correct 259. In which case it was held that if
(d) All are correct. arbitrator acts in disregard of the
Ans. (d) contract and without jurisdiction
255. A entrusts B with negotiable then he commits legal misconduct:
instruments endorsed in blank. B (a) Beed District Central Co-operative
sells them to C in violation of private Bank Ltd. v. State of Maharashtra (2006)
orders from A. The sale is: (b) Food Corporation of India v. Chandu
(a) bad Construction (2007)
(c) Gurpreet Singh v. Union of India (c) Bar Council of Delhi v. Surender, AIR
(2005) 2010 Del 75
(d) Saurabh Prasad v. DLF Universal Ltd. (d) Purabi Dasgupta v. Arun Kumar, AIR
(2004) 2010 Gau 66.
Ans. (b) Ans. (a)
260. If instead of avoiding the 263. A valid Lease can be
contract the contractor accepts the determined by:
belated performance of reciprocal (a) efflux of time
obligation on the part of the (b) frustration
employer, the innocent party i.e., (c) force majure
the contractor, cannot claim (d) none of the above.
compensation for any loss Ans. (a)
occasioned by the non-performance 264. “Deed of cancellation of
of the reciprocal promise by the contract amounts to rescission of
employer at the time agreed, unless contract and any rescission must be
at the time of such acceptance, he only bilateral” This contention was
gives notice to the promisor of his held in case of:
intention to do so. In which case it (a) E.R. Kalaiban v. I.G. of Registration
was held: Chennai, AIR 2010 Mad 18.
(a) State of Kerala v. M.A. Mathai (2007) (b) K.L. Sahoo v. L/C, AIR 2010 Ori 19
(b) Punjab State Civil Supplies Co-op. Ltd. (c) A.K. Mahato v. State of Bihar, AIR
v. Sikander Singh (2006) 2010 Pat 19
(c) Shin Satellite Public Co. Ltd. v. Jain (d) Md. Moinuddin v. Md. Mustafa, AIR
Studios Limited (2005) 2010 Pat 224.
(d) K.C. Skaria v. The Government of Ans. (a)
State of Kerala (2004). 265. Almost all insurances other
Ans. (a) than……………………….. insurances are
261. In which case it was held that contracts of indemnity:
when charge or pledge is enforced (a) life & personal accident
by way of sale of the pledged or (b) marine & general
hypothecated goods the sale is for (c) fire & life
consideration and falls within the (d) none of the above
ambit of section 2(xxi) of Limitation Ans. (a)
Act: 266. Contract cannot be said to be
(a) Federal Bank Ltd. v. State of Kerala void on ground of:
(2007) (a) over consideration
(b) Hardev Singh v. Gurmail Singh (2006) (b) inadequacy of consideration
(c) Jatinder Nath v. Chopra Land (c) over consideration or inadequacy of
Developers (2005) consideration
(d) none of the above. (d) neither (a) nor (b).
Ans. (a) Ans. (d)
262. In which of the following cases 267. Bank guarantee is independent
it was held that the “Liability of contract between:
guarantor is coextensive with that of (a) creditor and debtor
principal debtors”: (b) bank and beneficiary
(a) Infrastructure Leasing & Financial (c) buyer and seller
Services Ltd. v. Vijay V. Prabhu, AIR 2010 (d) none of the above.
Bom 72. Ans. (b)
(b) Manita Khurana v. Indra Khurana, AIR 268. The indemnity-holder can
2010 Del 69. recover all costs he has been
compelled to pay in suit to which the 272. The largest number of cases
promise to indemnify relates if: decided under the original
A. the promisor had authorised him to paragraph related to stipulations
bring or to defend the suit providing for interest. Those
B. in bringing or defending the suit he stipulations may be divided into
had not contravened the orders of the which of the following classes?
promisor, and had acted in a prudent I. Stipulations for payment on interest at
manner a higher rate on default on the part of
C. either (A) or (B) debtor to pay the principal of part thereof
D. None of these or interest on the due date
Ans. (C) II. Stipulation for payment on default of
269. The Indian Contract Act, 1872 compound interest
continued to in operation by virtue III. Stipulations for payment of interest at
of: a specified rate if the principal or part
A. Article 371 (1) of the Constitution of thereof is not paid on the due date
India IV. Stipulations for payment of interest at
B. Article 372 (1) of the Constitution of a lower rate if interest paid on due dates
India V. Stipulations for payment of interest
C. Article 373 (1) of the Constitution of from the date of the bond, but at an
India exorbitant rate
D. Article 374 (1) of the Constitution of A. II, III, IV
India B. IV, V
Ans. (B) C. I, V
270. The ingredients of a pawn are: D. All of them
A. The property pledged should actually Ans. (D)
or constructively delivered to the pawnee 273. The law throws its protection
B. A pawnee has a only special property around pardanashin woman by
in the pledge, the general property reason:
remains in the pawnor and wholly reverts A. of the purda
to him on discharge of the debt B. of those disabilities which arise out of
C. both (A) and (B) the seclusion which the pardanshin
D. None of these women suffer
Ans. (C) C. both (A) and (B)
271. The language of the second D. None of these
paragraph of the present section is Ans. (C)
open to which of the following 274. The liability of the surety could
construction? not be enforced:
A. The bailor is under a duty to take A. Where the original contract was
reasonable care to make the goods unenforceable for want of registration
reasonably safe for the purpose for which B. Where the parties were entitled to
he knows they have been hired equities under the doctrine of part
B. The bailor is under a duty to supply performance
goods that are reasonably safe, the only C. both (A) and (B)
defence being that the defect is latent D. None of these
one that could not be discovered by any Ans. (C)
care or skill 275. The nature of a fidelity
C. There is an absolute guarantee of guarantee gives rise:
fitness A. to a duty of more excessive disclosure
D. All of them than is required in the case of a
Ans. (D) guarantee for payment of debt
B. to a duty of nominal disclosure than is C. I, V
required in the case of a guarantee for D. All of them
payment of debt Ans. (D)
C. either (A) or (B) 279. The principal is liable to the
D. None of these unauthorised acts of the agent if:
Ans. (A) A. by word
276. The obligation of the bailee B. by conduct
____________ is the essence of C. he induces a third party to believe that
bailment the unauthorised acts are within the
A. to return the goods scope of agent’s authority
B. to deal with the goods according to D. All of them
the directions Ans. (D)
C. either (A) or (B) 280. The principle of quasi-estoppel
D. None of these or promissory estoppel more aptly
Ans. (C) called is that when one party to a
277. The pawnee cannot retain the contract in the absence of a fresh
goods for payment of any other debt consideration agrees not to enforce
or performance of any promise other his rights, an equity will be raised in
than that for which the goods are favour of another party, but subject
pledged, unless: to the qualification that:
A. There is a specific contract to the A. the other party has changed his
effect as stated in S. 174 of the Indian position
Contract Act, 1872 B. the promisor can resile from his
B. The pawnee falls in any of the promise on giving reasonable notice –
categories of persons mentioned in S. may not be formal – giving the promisee
171 of the Indian Contract Act, 1872 a reasonable opportunity of resuming his
entitled to a general lien position
C. either (A) or (B) C. the promise only becomes final and
D. None of these irrevocable if the promisee cannot his
Ans. (C) position
278. The plaintiff is awarded D. all of them
nominal damages when: Ans. (D)
I. the defendant’s breach of contract has 281. The principle of unjust
in fact caused no loss to the plaintiff enrichment could not give a right to
II. the defendant has committed a the state to recover or realise vend
technical breach of contract and the fee after the statue has been struck
plaintiff had no intention of performing down. In which of the following
his terms cases it was upheld?
III. the plaintiff fails to prove the loss that A. HDFC Bank Ltd. v. J. J. Mannan
he may have suffered from the breach of B. P. T. Reddy v. Jyoti Reddy
contract C. Somaiya Organics (India) Ltd v. State
IV. he has suffered actual damage, which of Uttar Pradesh
has arisen, not from the defendant’s D. None of these
wrongful act, but from the conduct of the Ans. (C)
plaintiff himself, or an external event 282. The principle on which the law
V. the plaintiff merely seeks to establish accords protection to pardanashin
the infringement of his legal right, women is founded on
without being concerned about actual A. equity
loss. B. good conscience
A. II, III C. both (A) and (B)
B. IV D. None of these
Ans. (C) 287. The rule in Section 204 of the
283. The provisions of Section 128 of Indian Contract Act, 1872 is
the Indian Contract Act, 1872 does connected with the principal’s duty
not apply to: to indemnify the agent under:
A. a surety for a person ordered to keep A. S. 222 of the Indian Contract Act
good behaviour B. S. 223 of the Indian Contract Act
B. consequences of recovery of debt C. S. 224 of the Indian Contract Act
C. both (A) and (B) D. None of these
D. None of these Ans. (A)
Ans. (C) 289. The rule of limitation in a
284. The relation of dependence foreign country, where the contract
may arise: is made, may be set up as a defence
A. from a special authority or confidence to a suit filed in India if:
committed to the donee A. the rule has extinguished the contract
B. from the feebleness in body or mind of B. the parties were domiciled in that
the donor foreign country during the period
C. either (A) or (B) prescribed by that rule
D. None of these C. both (A) and (B)
Ans. (C) D. None of these
285. The right to appoint is subject Ans. (C)
to which of the following 290. The rules against penalty under
exceptions? Section 74 of the Indian Contract
I. Where the act to be performed is Act, 1872, do not apply where:
personal in character A. the obligation is one of debt
II. Where the transaction is required by B. a sum is payable on an event other
statute to be done by or to be evidenced than breach
by the signature of the principal himself C. stipulated sum is payable upon the
III. Where the competency to do the act exercise by one party of an option to
arises by virtue of the holding of some terminate the contract
public office D. all of them
IV. Where the competency arises by Ans. (D)
virtue of some power, authority, or duty 291. The subject-matter of Section 8
of a personal nature and requiring skill or of the Indian Contract Act, 1872 is
discretion for its exercise divided in to:
V. Where the statute imposes on a person A. performance of the conditions of a
a duty which he is not free to delegate proposal and
A. I, II B. acceptance of any consideration for
B. II, IV reciprocal promise which may be offered
C. III, V with a proposal,
D. All of them C. both (A) and (B)
Ans. (D) D. None of these
286. The right to surety to indemnity Ans. (C)
is an incident of the guarantee: 292. The term ‘pardanashin’ means:
A. the principal-debtor will be liable A. screened from view
B. without the necessity of any further B. placed behind a screen
request for all sums subsequently paid by C. veiled
the surety under the guarantee as money D. All of them
paid to the use of the principal-debtor Ans. (D)
C. both (A) and (B) 293. A agrees to sell a horse worth
D. None of these Rs.1,000/- for Rs.10/-. A denies that
Ans. (C)
his consent to the agreement was 297. A agrees to sell to B ‘one
freely given. thousand maunds of rice at a price
A. The inadequacy of the consideration is to be fixed by C’. As the price is
a fact which the court should take into capable of being made certain.
account in considering whether or not A’s A. There is no uncertainty here to make
consent was freely given the agreement void
B. The adequacy of the consideration is a B. There is uncertainty here to make the
fact which the court should take into agreement void
account in considering whether or not A’s C. There is uncertainty but the
consent was freely given agreement cannot be made void
C. The inadequacy of the consideration is D. None of these
a fact which the court should take not Ans. (A)
into account in considering whether or 298. A agrees with B to discover
not A’s consent was freely given treasure by magic.
D. None of these A. The agreement is not voided
Ans. (A) B. The agreement is partly void
294. A agrees to sell B’s hundred C. The agreement is void
tons of oil’. There is nothing D. None of these
whatever to show what king of oil Ans. (C)
was intended. 289. A and B agree that A shall pay
A. The agreement is void for uncertainty B 1,000 rupee, for which B shall
B. The agreement is not void in spite of afterwards deliver to A either rice or
the uncertainty smuggled opium.
C. either (A) of (B) A. It is a contract
D. None of these B. It is a void agreement
Ans. (A) C. either (A) or (B)
295. A agrees to sell his house to B D. both (A) and (B)
for 10,000 rupees. Here, B’s promise Ans. (D)
to pay the sum of 10,000 rupees is 290. A and B agree that A shall sell B
the consideration for A’s promise to a house for 10,000 rupees, but that
sell the house, and A’s promise to if B uses it as a gambling house, he
sell the house is the consideration shall pay A 50,000 rupees for it.
for B’s promise to pay the 10,000 A. It is a contract
rupees. B. It is a void agreement
A. These are unlawful considerations C. either (A) or (B)
B. These are lawful considerations D. both (A) and (B)
C. either (A) or (B) Ans. (D)
D. None of these 291. A and B contract that A shall
Ans. (B) build a house for B at a fixed price.
296. A promises to pay B 1,000 A. A’s promise to build the house must be
rupees at the end of the six months. performed before B’s promise to pay for
If C, who owes that sum to B, fails to it
pay it. B promises to grant time to C B. A’s promise to build the house can be
accordingly. Here, the promise of delayed before B’s promise to pay for it
each party is the consideration for C. either (A) or (B)
the promise of the other party. D. None of these
A. These are unlawful considerations Ans. (A)
B. These are lawful considerations 292. A and B contract that A shall
C. either (A) or (B) deliver goods to B to be paid for by
D. None of these B on delivery.
Ans. (B)
A. A need not deliver the goods, unless B B. The fact that A to the knowledge of C,
is ready and willing to pay for the goods made the note as surety for B, is partly
on delivery an answer to a suit by C against A upon
B. B need not pay for the goods unless A the note
is ready and willing to deliver them on C. The fact that A to the knowledge of C,
payment made the note as surety for B, is no
C. both (A) and (B) answer to a suit by C against A upon the
D. either (A) or (B) note
Ans. (C) D. None of these
293. A and B contract that B shall Ans. (C)
execute some work for A for a 296. A authorizes B, a merchant in
thousand rupees. B is ready and Calcutta, to recover the moneys due
willing to execute the work to A from C & Co. B instructs D, a
accordingly, but A prevents him from solicitor, to take legal proceeding
doing so. against C & Co for the recovery of
A. The contract is not voidable at the the money.
option of B; and if he elects to rescind it, A. D is a sub-agent, but is not solicitor for
he is entitled to recover from A A
compensation for any loss which he has B. D is not a sub-agent, but is solicitor for
incurred by its non-performance B
B. The contract is voidable at the option C. D is not a sub-agent, but is solicitor for
of B; and if he elects to rescind it, he is A
not entitled to recover from A D. None of these
compensation for any loss which he has Ans. (C)
incurred by its non-performance 297. A bails a barrel of Cape flour
C. The contract is voidable at the option worth Rs.45, to B, B, without A’s
of B; and if he elects to rescind it, he is consent, mixes the flour with
entitled to recover from A compensation country flour of his own, worth Rs.25
for any loss which he has incurred by its a barrel.
non-performance A. B need not compensate A for the loss
D. None of these of his flour
Ans. (C) B. B must partially compensate A for the
294. A and B jointly owe 100 rupees loss of his flour
to C, A alone pays the amount to C, C. B must compensate A for the loss of
and B, not knowing of this fact, pays his flour
100 rupees over again to C. D. None of these
A. C is not bound to repay the amount to Ans. (C)
B 298. A borrows Rs.100 from B and
B. C is bound to partially repay the gives him a bond for Rs.200, payable
amount to B by five yearly instalments of Rs.40,
C. C is bound to repay the amount to B with a stipulation that in default of
D. None of these payment of any instalment, the
Ans. (C) whole shall become due.
295. A and B make a joint and A. This is a stipulation by way of penalty
several promissory note to C. A B. This is not a stipulation by way of
makes it, in fact, as surety for B, and penalty
C knows this at the time when the C. either (A) or (B)
note is made. D. None of these
A. The fact that A to the knowledge of C, Ans. (A)
made the note as surety for B, is answer 299. A claim for compensation under
to a suit by C against A upon the note s 55 of the Indian Contract Act, 1872
would be barred, if the promise 302. A consigns provisions to B at
accepts performance after the Calcutta, with directions to send
stipulated time, unless he had given them immediately to C, at Cuttack.
notice to the promisor of his A. B may not sell the provisions at
intention to claim compensation at Calcutta, if they will not bear the journey
the time of the delayed acceptance. to Cuttack without spoiling
In which of the following cases it B. B may partly sell the provisions at
was upheld? Calcutta, if they will not bear the journey
A. Punjab State Civil Supplies Co-op. Ltd. to Cuttack without spoiling
v. Sikander Singh C. B may sell the provisions at Calcutta, if
B. Gurpreet Singh v. Union of India they will not bear the journey to Cuttack
C. State of Kerala v. M. A. Mathai without spoiling
D. None of these D. None of these
Ans. (C) Ans. (C)
300. A consignment insured for 303. A contract between a debtor
transit was damaged. The insurer and a creditor that the debtor
settled the claim with the insured, should sell and the creditor should
took from the insured a letter of accept any property in satisfaction
subrogation-cum-special power of of the debt, may operate, in which of
attorney, and filed a complaint in the following ways?
the name before the Consumer A. The contract by itself may operate as
Forum. It was held that the insurer an absolute discharge of the debt, giving
could file a complaint in the name of the creditor thereafter only the remedy
the insured as his power of attorney by way of the specific performance of the
holder of insured, or jointly with the contract
insured under the subrogation. It did B. It may operate only as a conditional
not matter whether the subrogation discharge of the debt giving the creditor
was based in common law not put in in case of the debtor’s default a right to
writing, or was evidenced by an claim either performance of the contract
instrument or letter. In which of the or if he elects to put an end to it, the
following cases it was upheld: payment of the debt
A. Md. Moinuddin v. Md. Mustafa C. The contract may be an independent
B. Bar Council of Delhi v. Surender transaction in the sense that it does not
C. Economic Transport Organization v. affect the rights of the creditors or the
Charan Spinning Mill obligations of the debtor till the sale is
D. None of these actually completed
Ans. (C) D. All of them
301. A consigns goods to B for sale, Ans. (D)
and gives him instructions not to 304. A contract of guarantee
sell under a fixed price. C, being involves:
ignorant of B’s instruction, enters A. creditor
into a contract with B to buy the B. surety
goods at a price lower than the C. principal debtor
reserved price. D. All of them
A. A is not bound by the contract Ans. (D)
B. A is partially bound by the contract 305. A contract to sing for B at a
C. A is bound by the contract concert for 1,000 rupees, which are
D. None of these paid in advance. A is too ill to sing.
Ans. (C) A. A is not bound to make compensation
to B for the loss of the profits which B
would have made if A had been able to C. I, VI
sing D. All of them
B. A is not bound to make compensation Ans. (D)
or refund to B 308. A contracts to buy of B, at a
C. A must refund to B the 1,000 rupees stated price, 50 maunds of rice, no
paid in advance time being fixed for delivery. A
D. both (A) and (C) afterwards informs B that he will not
Ans. (D) accept the rice if tendered to him.
306. A contract with B to pay B A. B is not entitled to receive from A, by
Rs.1,000 if he fails to pay B Rs.500 way of compensation, the amount, if any,
on that day. by which the contract price exceeds that
A. B is entitled to recover form A such which B can obtain for the rice at the
compensation, not exceeding Rs.1,000, time when A informs B that he will not
as the Court considers reasonable accept it
B. B is entitled to recover form A such B. B is entitled to receive from A, by way
compensation, not exceeding Rs.2,000, of compensation, the amount, if any, by
as the Court considers reasonable which the contract price does not exceed
C. B is entitled to recover form A such that which B can obtain for the rice at the
compensation, not exceeding Rs.3,000, time when A informs B that he will not
as the Court considers reasonable accept it
D. None of these C. B is entitled to receive from A, by way
Ans. (A) of compensation, the amount, if any, by
307. A contract would not be which the contract price exceeds that
discharged by the impossibility, which B can obtain for the rice at the
even though the supervening event time when A informs B that he will not
makes performance impossible or accept it
unlawful if: D. None of these
I. The contract is absolute in terms and Ans. (C)
can be held to cover the frustrating 309. A contracts to deliver to B at
events his warehouse, on the first March,
II. The contract makes full and complete 1873, 100 bales of cotton of a
provision for a given contingency particular quality. In order to make
III. It can be reasonably supposed to be an offer of performance with the
within the contemplation of the parties to effect stated in this section, under
the contract at the time they made the any such circumstances so that B
contract may have a reasonable opportunity
IV. Where the event is such that any of of satisfying himself that the thing
the parties could foresee or could have offered is cotton of the quality
foreseen with reasonable diligence contracted for, and that there are
V. If only a portion of the contract 100 bales
becomes impossible or difficult to A. A can bring the cotton to B’s
perform warehouse any day
VI. If despite the supervening events, the B. A must bring the cotton to B’s
object and purpose of the contract is not warehouse on the appointed day
rendered useless, and the contract can C. A need not bring the cotton to B’s
be performed substantially in accordance warehouse at all
with the original intention of the parties, D. None of these
though not literally in accordance with Ans. (B)
the language of the agreement 310. A contracts to indemnify B
A. II, III against the consequences of any
B. IV, V proceedings which C may take
against B in respect of a certain sum D. None of these
of 200 rupees. Ans: A
A. This is contract of indemnity 315. A agrees to pay B a sum of
B. This is not a valid contract of money if a certain ship does not
indemnity return. The ship is sunk.
C. This is contract of stipulation A. The contract cannot be enforced when
D. None of these the ship sinks
Ans. (A) B. The contract can be enforced when
311. _______ of the Indian Contract the ship sinks
Act, 1872 prescribes that the C. Either (A) or (B)
acceptance must be made in a D. None of these
reasonable manner. If the proposer Ans: B
has prescribed a manner of 316. A contracts to let his ship to B
acceptance, the acceptance must be for a year, from the first of January,
made in that manner, if not so made, for a certain price. Freights rise,
there is a contract only if the and, on the first of January, the hire
proposer ‘accepts the acceptance’ obtainable for the ship is higher
A. Section 7(2) than the contract price. A breaks his
B. Section 7(3) promise. He must pay to B, by way
C. Section 7(4) of compensation, a sum equal to the
D. None of these difference between the contract
Ans: A price and the price for which B could
312. _______ describes a voidable hire a similar ship for a year on and
contract as one which is enforceable form the first January.
by the law at the option of the A. He must pay to B, by way of
parties, but not at the option of the compensation, twice the difference
others. between the contract price and the price
A. Section 2 (g) of the Indian Contract for which B could hire a similar ship for a
Act, 1872 year on and form the first January.
B. Section 2 (h) of Indian Contract Act, B. He must pay to B, by way of
1872 compensation, a sum equal to the
C. Section 2 (i) of Indian Contract Act, difference between the contract price
1872 and the price for which B could hire a
D. None of these similar ship for a year on and form the
Ans: C first January
313. A agrees to buy from B a C. either (A) and (B)
certain horse. It turns out that the D. None of these
horse was dead at the time of the Ans. (B)
bargain, though neither party was 317. ‘A’ agrees to let her daughter
aware of the fact. ‘B’ for hire to ‘C’ for concubinage,
A. The agreement cannot be voided without the consent of ‘B’, the
B. The agreement is void contract is:
C. Either (A) or (B) (a) void as the consent of ‘B’ the
D. None of these daughter has not taken
Ans: B (b) void being immoral
314. A agrees to pay B 1,000 rupees (c) voidable at the instance of ‘B’
if B will marry A’s daughter C. C was (d) valid as ‘A’ & ‘C’ entered into contract
dead at the time of the agreement. with their free consent.
A. The agreement is void Ans. (b)
B. The agreement is not void 318. ‘X’ in consideration of Rs.
C. Either (A) or (B) 10,000 lent by Y & Z, provides Y & Z
jointly to repay them that sum with (a) motive of breach
interest on a specified day. Y dies. (b) manner of breach
The right to claim the performance: (c) inconvenience caused by non-
(a) is available to Y’s representatives performance
alone (d) all the above.
(b) is available to Z alone Ans. (c)
(c) is available to Y’s representatives & Z 324. Which of the following is not
both relevant in determining of quantum
(d) is available to Y’s representatives & of damage:
after the death of Z, his representatives. (a) motive
Ans. (c) (b) manner
319. The doctrine of impossibility of (c) loss suffered
performance rendering contracts (d) both (a) & (b).
void is based on: Ans. (a)
(a) implied term 325. Pre-contract expenditure may
(b) just & reasonable solution be recovered as damage:
(c) supervening impossibility (a) generally
(d) unjust enrichment. (b) always
Ans. (c) (c) only if it is within the contemplation of
320. The age of majority for the parties
purpose of Contract Act is: (d) none of the above.
(a) 18 years Ans. (c)
(b) 21 years 326. Duty to mitigate damages on
(c) 16 years for girls & 18 years for boys the part of injured party arises:
(d) 18 years for girls & 21 years for boys. (a) in cases of anticipatory breach
Ans. (a) (b) in cases of breach at the time fixed
321. A contract signed between two for performance of the contract
countries without specifying as to (c) both (a) & (b)
which country’s law shall govern in (d) either (a) or (b).
cases of dispute: Ans. (d)
(a) it shall be governed by the law of the 327. A sum fixed before hand as
country where the proposal was made amount of compensation payable in
(b) it shall be governed by the law of the the event of breach of contract is
country where the contract was called:
concluded (a) liquidated damages
(c) it shall be governed by the law of the (b) penalty
country which the parties intended to (c) either (a) or (b)
apply, i.e., where the contract is localised (d) neither (a) nor (b)
(d) it shall be governed by the law where Ans. (c)
the contract is performed. 328. The essense of liquidated
Ans. (c) damage is:
322. The damages under section 73 (a) genuine pre-estimate of damage
of Indian Contract Act are: (b) less than probable damage
(a) liquidated (c) more than probable damage
(b) compensatory (d) payment of money in terrorem.
(c) penal Ans. (a)
(d) none of the above. 389. A contract of indemnity as a
Ans. (b) contract by which one party
323. While determining damages promises to save the other party
which of the following are taken into from the loss caused to him by the
account: conduct of the promisor himself or
of any other person, has been (c) cab be of future debt if some debt is
defined: incurred after the guarantee
(a) under section 124 (d) all the above.
(b) under section 123 Ans. (d)
(c) under section 125 397. A guarantee obtained by
(d) under section 126. misrepresentation or concealment
Ans. (a) is:
390. A contract of guarantee has (a) invalid
been defined: (b) valid
(a) under section 123 (c) voidable
(b) under section 124 (d) illegal.
(c) under section 125 Ans. (a)
(d) under section 126. 398. Which of the following is a valid
Ans. (d) guarantee:
391. Surety is a person: (a) guarantee of a minor’s debt
(a) in respect of whose default the (b) guarantee of a debt of a company
guarantee is given acting ultra vires in obtaining the loan
(b) who gives the guarantee (c) both (a) & (b)
(c) to whom the guarantee is given (d) neither (a) nor (b).
(d) none of the above. Ans. (a)
Ans. (b) 399. The liability of the surety:
392. Creditor is a person: (a) is co-extensive with that of the
(a) to whom the guarantee is given principal debtor
(b) who gives the guarantee (b) extends to the whole of the amount
(c) in respect of whose default the for which the principal debtor is liable
guarantee is given (c) both (a) & (b)
(d) none of the above. (d) neither (a) nor (b).
Ans. (a) Ans. (a)
393. A guarantee: 400. Under the contract of
(a) has to be in writing guarantee, the liability of the
(b) can be oral surety:
(c) can be oral or in writing (a) can be limited
(d) neither (a) or (b). (b) cannot be limited & has to extend to
Ans. (c) the whole of the amount due from the
394. Liability of the surety is: principal debtor
(a) conditional on default (c) can be extended to penalties also
(b) independent of default (d) both (b) & (c).
(c) can be conditional and can be Ans. (b)
independent 401. A guarantee which extends to a
(d) either (a) or (b). series of transactions under section
Ans. (a) 129 is called:
395. A valid guarantee can be given: (a) an absolute guarantee
(a) only if there is no principal debt (b) a continuing guarantee
(b) only if there is a principal debt (c) an invalid guarantee
(c) irrespective of any debt (d) a conditional guarantee.
(d) both (a) & (c). Ans. (b)
Ans. (b) 402. A continuing guarantee applies
396. A guarantee to be valid: to:
(a) can only be of a present debt (a) a specific transaction
(b) can be of past debt if some further (b) a specific number of transactions
debt is incurred after the guarantee (c) any number of transactions
(d) reasonable number of transactions. (c) if principal debtor is liable, guarantor
Ans. (a) is liable
403. A continuing guarantee under (d) all the above.
section 130 is: Ans. (c)
(a) revocable absolutely 409. In a contract of guarantee:
(b) irrevocable absolutely (a) there are two parties and one
(c) revocable as regards future contract
transaction (b) there are two parties and two
(d) either (a) or (b). contracts
Ans. (c) (c) there are three parties & three
404. The liability of surety on his contracts
death under section 131 in case of (d) there are three parties & one
continuing guarantee: contract.
(a) is terminated absolutely Ans. (d)
(b) does not stand terminated as regards 410. In case of co-sureties, release
past transaction of one surety by the creditor:
(c) stands terminated as regards future (a) amounts to discharge of other
transaction sureties
(d) both (b) & (c). (b) does not amount to discharge of
Ans. (c) other sureties
405. The surety stands discharged: (c) amounts to discharge of the surety so
(a) by revocation released vis-a-vis co-sureties as well
(b) by death (d) none of the above.
(c) by variance in terms of the contract Ans. (b)
without his consent 411. On payment or performance of
(d) in (a), (b) & (c) above. the liability the surety:
Ans. (c) (a) is invested with all the rights the
406. Under the contract of creditor had against the principal debtor
guarantee, a creditor: (b) is entitled to the every security which
(a) has to avail his remedies first against the creditor has against the principal
the principal debtor debtor
(b) can avail his remedies against the (c) is entitled to be indemnified by the
principal debtor as well as the surety principal debtor
(c) can avail his remedy against the (d) all the above.
surety alone Ans. (a)
(d) both (b) & (c). 412. A guarantees to C, to the
Ans. (a) extent of 2,000 rupees, payment for
407. Surety stands discharged: rice to be supplied by C to B. C
(a) by an agreement between the supplies to B rice to a less amount
creditor and the principal debtor than 2,000 rupees but obtains from
(b) by an agreement between the A payments of the sum of 2,000
creditor & a third party for not to sue the rupees in respect of the rice
principal debtor supplied.
(c) both (a) & (b) above A. A can recover from B more than the
(d) neither (a) nor (b). price of the rice actually supplied
Ans. (a) B. A can recover from B only the price of
408. Under a contract of guarantee: the rice actually supplied
(a) if principal debtor is not liable, C. A cannot recover from B more than the
guarantor is not liable price of the rice actually supplied
(b) if principal debtor is not liable, D. None of these
guarantor is liable Ans. (C)
413. A guarantor may recover from which A is to provide, and to bring it
the principal-debtor, the costs of to Calcutta, the freight to be paid
defending an action brought against when earned. B’s ship does not go
him by the creditor: to Bombay, but A has opportunities
A. If he undertook the defence with the of procuring suitable conveyance for
debtor’s authority the cargo upon terms as
B. Reasonably defended the proceedings advantageous as those on which he
in the debtor’s interest had chartered the ship. A avails
C. The costs were for some reason himself of those opportunities, but
unavoidably incurred, but not if he has is put to trouble and expense in
incurred costs solely for his own benefit doing so.
D. All of them A. A is not entitled to receive
Ans. (D) compensation from B in respect of such
414. A having advanced money to trouble and expense
his son, B, during his minority, upon B. A is entitled to receive partial
B’s coming of age obtains, by compensation from B in respect of such
misuse of parental influence, a bond trouble and expense
from B for a greater amount than C. A is entitled to receive compensation
the sum due in respect of the from B in respect of such trouble and
advance. expense
A. A did not employ undue influence D. None of these
B. A employs undue influence Ans. (C)
C. either (A) or (B) 418. A hires B’s ship to take in and
D. None of these convey, from Calcutta to the
Ans. (B) Mauritius, a cargo to be provided by
415. A hires a carriage of B. The A, B receiving a certain freight for
carriage is unsafe, though B is not its conveyance. A does not provide
aware of it, and A is injured. any cargo for the ship.
A. B is not responsible to A for the injury A. A cannot claim the performance of B’s
B. B is partly responsible to A for the promise
injury B. A must make compensation to B for
C. B’s responsible to A for the injury the loss which B sustains by the non-
D. None of these performance of the contract
Ans. (C) C. either (A) or (B)
416. A hires a horse in Calcutta from D. both (A) and (B)
B expressly to march to Banaras. A Ans. (D)
rides with due care, but marches to 419. A instructs B, a merchant, to
Cuttack instead. The horse buy a ship for him. B employs a ship-
accidentally falls and is injured. surveyor of good reputation to
A. A is not liable to make compensation choose a ship for A. The surveyor
to B for the injury to the horse makes the choice negligently and
B. A is partially liable to make the ship turns out to be
compensation to B for the injury to the unseaworthy and is lost.
horse A. B is but not the surveyor is,
C. A is liable to make compensation to B responsible to A
for the injury to the horse B. B and the surveyor is, responsible to A
D. None of these C. B is not, but the surveyor is,
Ans. (C) responsible to A
417. A hires B’s ship to go to D. None of these
Bombay, and there takes on board, Ans. (C)
on the first of January, a cargo,
420. A is employed by B by buy from Ans. (C)
C certain goods, of which C is the 423. A is entitled to succeed to an
apparent owner, and buys them estate at the death of B, B dies; C
accordingly. In the course of the having received intelligence of B’s
treaty for the sale. A learns that the death, prevents the intelligence
goods really belonged to D, but B is reaching A, and thus induces A to
ignorant of that fact. sell him his interest in the estate.
A. B is entitled to set-off a debt owning to A. The sale is not voidable at the option
him from C against the price of the goods of A
B. B is partially entitled to set-off a debt B. The sale is voidable at the option of A
owning to him from C against the price of C. either (A) or (B)
the goods D. None of these
C. B is not entitled to set-off a debt Ans. (B)
owning to him from C against the price of 424. A leaves a cow in the custody
the goods of B to be taken care of. The cow has
D. None of these a calf.
Ans. (C) A. B is not bound to deliver the calf but
421. A is employed by B to buy from the cow to A
C goods of which C is the apparent B. B is bound to deliver the calf but not
owner. A was, before he was so the cow to A
employed a servant of C, and then C. B is bound to deliver the calf as well as
learnt that the goods really the cow to A
belonged to D, but B is ignorant of D. None of these
the fact. Ans. (C)
A. In spite of the knowledge of his agent, 425. A lends a horse to B for his own
B may not setoff against the price of the riding only. B allows C, a member of
goods a debt owing to him from C his family, to ride the horse. C rides
B. In spite of the knowledge of his agent, with care, but the horse accidentally
B may partially set-off against the price fall and is injured.
of the goods a debt owing to him from C A. B is not liable to make compensation
C. In spite of the knowledge of his agent, to A for the injury done to the horse
B may set-off against the price of the B. B is partly liable to make
goods a debt owing to him from C compensation to A for the injury done to
D. None of these the horse
Ans. (C) C. B is liable to make compensation to A
422. A is employed by B, residing in for the injury done to the horse
London, to recover at Bombay a debt D. None of these
due to B. Ans. (C)
A. A may adopt any illegal process 426. A lends a horse, which he
necessary for the purpose of recovering knows to be vicious, to B. He does
the debt, and may give a valid discharge not disclose the fact that the horse
for the same is vicious. The horse runs away. B is
B. A may not adopt any legal process thrown and injured.
necessary for the purpose of recovering A. A is not responsible to B for damage
the debt, and may give a valid discharge sustained
for the same B. A is partly responsible to B for damage
C. A may adopt any legal process sustained
necessary for the purpose of recovering C. A is responsible to B for damage
the debt, and may give a valid discharge sustained
for the same D. None of these
D. None of these Ans. (C)
427. A lets to B, for hire, a horse for 431. A owes B 10,000 rupees, A
his own riding. B drives the horse in enters into an arrangement with B,
his carriage. and gives B a mortgage of his (A’s)
A. This is not, at the option of A, a estate for 5,000 rupees in place of
termination of the bailment the debt of 10,000 rupees.
B. This is partly, at the option of A, a A. This is new contract
termination of the bailment B. This extinguishes the old contract
C. This is, at the option of A, a C. This further renews the old contract
termination of the bailment D. both (A) and (B)
D. None of these Ans. (D)
Ans. (C) 432. A owes B 2,000 rupees, B
428. A makes a contract with B to accepts some of A’s goods in
buy B’s horse if A survives C. reduction of the debt.
A. This contract cannot be enforced by A. The delivery of the goods operates as
law unless and until A dies in C’s lifetime a part payment
B. This contract cannot be enforced by B. The delivery of the goods does not
law unless and until C dies in A’s lifetime amount to part payment
C. This contract can be enforced by law C. either (A) or (B)
during C and A’s lifetime D. None of these
D. None of these Ans. (A)
Ans. (B) 433. A owes B 5,000 rupees. A pays
429. A makes a contract with B to to B, and B accepts, in satisfaction
sell a horse to B at a specified price, of the whole debt, 2,000 rupees paid
if C, to whom the horse had been at the time and place at which the
offered, refuses to buy him. 5,000 rupees were payable.
A. This contract cannot be enforced by A. Partial debt is discharged
law unless and until A refuses to sell the B. The whole debt is not discharged
horse C. The whole debt is discharged
B. This contract cannot be enforced by D. None of these
law unless and until C refuses to buy the Ans. (C)
horse 444. A owes B 5,000 rupees. C pays
C. The contract cannot be enforced by to B 1,000 rupees and B accepts
law unless and until C refuses to buy the them, in satisfaction of his claim on
horse A.
D. None of these A. This payment is a partial discharge of
Ans. (C) the whole claim
430. A owes B 1,000 rupees under a B. This payment is not a discharge of the
contract. B owes B 1,000 rupees. B whole claim
order A to credit C with 1,000 rupees C. This payment is a discharge of the
in his books, but C does not assent whole claim
to the arrangement. D. None of these
A. B does not owes C 1,000 rupees, as Ans. (C)
new contract has been entered into 445. A owes B, 2,000 rupees, and is
B. B still owes C 1,000 rupees, even also indebted to other creditors. A
though a new contract has been entered makes an arrangement with his
into creditors, including B, to pay them a
C. B still owes C 1,000 rupees, and no [composition] of eight annas in the
new contract has been entered into rupee upon their respective
D. None of these demands.
Ans. (C) A. Payments to B of 1,000 rupees is a
partial discharge of B’s demand
B. Payments to B of 1,000 rupees is not a B. The payment is to be applied to the
discharge of B’s demand discharge of the promissory note
C. Payments to B of 1,000 rupees is a C. either (A) or (B)
discharge of B’s demand D. both (A) and (B)
D. None of these Ans. (B)
Ans. (C) 450. A owns a shop in Serampur,
446. A owes B, among other debts, living himself in Calcutta, and
1,000 rupees upon a promissory visiting the shop occasionally. The
note, which falls due on the first shop is managed by B, and he is in
June. He owes B no other debt of the habit of ordering goods from C
that amount. On the first June in the name of A for the purposes of
A pays to B 1,000 rupees. the shop, and of paying for them out
A. The payment is to be applied equally of A’s funds without A’s knowledge.
to all the debts owed by A A. B has no implied authority from A to
B. The payment is to be applied to the order goods from C in the name of A for
discharge of the promissory note the purposes of the shop
C. either (A) or (B) B. B has an implied authority from A to
D. both (A) or (B) order goods from C in the name of A for
Ans. (B) his own purposes
447. A owes B, under a contract a C. B has an implied authority from A to
sum of money the amount of which order goods from C in the name of A for
has not been ascertained. A, without the purposes of the shop
ascertaining the amount, gives to B, D. None of these
and B, in satisfaction thereof, Ans. (C)
accepts, the sum of 2,000 rupees. 451. A owns B Rs.1,000/-, but the
A. This is a partial discharge of the whole debt is barred by the Limitation Act.
debt, whatever may be its amount A signs a written promise to pay B
B. This is not discharge of the whole Rs.500/- on account of the debt.
debt, whatever may be its amount A. This is not a contract
C. This is discharge of the whole debt, B. This is a contract
whatever may be its amount C. either (A) or (B)
D. None of these D. None of these
Ans. (C) Ans. (B)
448. A owes money to B under a 452. A party to a contract may lose
contract. The old debt of A to B is at its contractual rights or benefits
an end. It is agreed between A, B under the contract because of the
and C, that B shall thenceforth undue influence of the third party
accept C as his debtor instead of A. where:
A. New debt from C to B has been A. he was in conspiracy with the third
contracted party exercising undue influence
B. New debt from A to C has been B. he was the agent of the third party
contracted exercising undue influence
C. either (A) or (B) C. either (A) or (B)
D. None of these D. None of these
Ans. (A) Ans. (C)
449. A owes to B, among other 453. A pays B 1,000 rupees in
debts, the sum of 567 rupees. B consideration of B’s promising to
writes to A and demands payment of marry C, A’s daughter. C is dead at
this sum. A sends to B 567 rupees. the time of the promise.
A. The payment is to be applied equally A. The agreement is void
to all the debts owed by A
B. The agreement is not void, and B must B. Whether the fraud is committed for
repay A the 1,000 rupees. the benefit of the agent
C. B must repay A the 1,000 rupees. C. either (A) or (B)
D. both (A) and (C) D. None of these
Ans. (D) Ans. (C)
454. A person shall be deemed to 457. A principal is:
have traded with the enemy, if he A. A person for whom such act is done, or
had any commercial, financial or who is represented
other intercourse or dealings with, B. A person for whom one is represented
or for the benefits of, an enemy, C. either (A) or (B)
and, in particular, if he has: D. None of these
A. supplied any goods to or for the Ans. (C)
benefit of the enemy or obtained any 458. A promise to abstain from suing
goods from an enemy, or traded in or can be a consideration, but only
carried, any goods consigned to or from when the person suing has a
an enemy or destined for or coming from subsisting right to sue. Therefore,
enemy territory non-payment of instalment of a debt
B. paid or transmitted any money, fixed under the Debt Collection act,
negotiable instrument or security for which had become barred under the
money to or for the benefit of an enemy Act, cannot be a good consideration
or to take place in enemy territory of a promise to pay these
C. performed any obligation to, or instalments by a third party. In
discharged an obligation of, an enemy, which of the following cases it was
whether the obligation was undertaken held?
before or after the commencement of the A. Bank of New India Ltd., v. G. Govinda
provisions Prabhu
D. all of them B. Tulsidas Nathudas v. Narayan Ajabrao
Ans. (D) Raut
455. A pledger cannot compel the C. Lakshmi Chand v. Niader Mai
pledgee to exercise the power of D. Kedarnath Gangagopal Misra v.
sale as a means of discharging or Sitaram Narayan Moharil
satisfying the decree. His only rights Ans. (B)
are: 459. A promise to deliver goods to B
A. In case the pledgee exercises the on a certain day on payment of
power, to insist that it should be honestly Rs.1,000. A dies before that day.
and properly done and the sale proceeds A. A’s representatives are not bound to
applied to the debt deliver the goods to B, and B is not
B. In case the pledgee does not exercise bound to pay the Rs.1000 to A’s
the power, to redeem the pledge on representatives
payment of the debt or so much of it as B. A’s representatives are bound to
remains otherwise unpaid deliver the goods to B, but B is not bound
C. In case the sale is improperly to pay the Rs.1000 to A’s representatives
exercised, to get damages caused C. A’s representatives are bound to
thereby deliver the goods to B, and B is bound to
D. All of them pay the Rs.1000 to A’s representatives
Ans. (D) D. None of these
456. A principal is liable for the Ans. (C)
agent’s fraud acting within the 460. A promise to paint a picture for
scope of his authority? B by a certain day, at a certain price.
A. Whether the fraud is committed for A dies before the day.
the benefit of the principal
A. The contractor cannot be enforced by other party. They are lawful
A’s representatives only considerations.
B. The contractor cannot be enforced A. These are unlawful considerations
either by B’s representatives only B. These are lawful considerations
C. The contractor can be enforced by A’s C. either (A) or (B)
representatives and not by B D. None of these
D. both (A) and (B) Ans. (B)
Ans. (D) 465. A promises to obtain for B an
461. A promises B to drop a employment in the public service
prosecution which he has instituted and B promises to pay 1,000 rupees
against B for robbery, and B to A.
promises to restore the value of the A. The agreement is void, as the
things taken. consideration for it is unlawful
A. The agreement is not void, as its B. The agreement is void, but the
object is unlawful consideration is not unlawful
B. The agreement is void, as its object is C. The agreement is not void, as the
lawful consideration is not unlawful
C. The agreement is void, as its object is D. None of these
unlawful Ans. (A)
D. None of these 466. A promises to paint a picture
Ans. (C) for B. B afterwards forbids him to do
462. A promises B to sell him one so.
hundred bales of merchandise, to be A. A needs to perform the promise
delivered next day, and B promises B. A is no longer bound to perform the
A to pay for them within a month. A promise
does not deliver according to C. B cannot forbid A
his promise. D. None of these
A. B’s promise to pay need not be Ans. (B)
performed 467. A promises to pay B a sum of
B. B’s promise to pay needs to be money if a certain ship does not
performed return within a year.
C. A must make compensation A. The contract cannot be enforced if the
D. both (A) and (C) ship does not return with the year, or is
Ans. (D) burnt within the year
463. A promises to deliver goods at B. The contract may be enforced if the
B’s warehouse on first January. On ship does not return with the year, or is
that day A brings the goods to B’s burnt within the year
warehouse, but after the usual hour C. either (A) or (B)
for closing it, and they are not D. None of these
received. Ans. (B)
A. A has performed his promise 468. A promises to pay B a sum of
B. A has not performed his promise money if a certain ship returns
C. either (A) or (B) within a year.
D. None of these A. The contract cannot be enforced if the
Ans. (B) ship returns within the year; and can be
464. A promises to maintain B’s enforced only if the ship is burnt within
child, and B promises to pay A 1,000 the year
rupees yearly for the purpose. Here B. The contract may be enforced if the
the promise of each party is the ship returns within the year; and
consideration for the promise of the becomes void if the ship is burnt within
the year
C. either (A) or (B) 473. A promises, for no
D. None of these considerations, to give to B
Ans. (B) Rs.1,000/-
469. A promises to pay B a sum of A. This is a void agreement
money. A may perform this promise, B. This is not a void agreement
A. by personally paying the money to B C. either (A) or (B)
B. by causing it to be paid to B by D. None of these
another Ans. (A)
C. either (A) or (B) 474. A proposes, by a letter sent by
D. both (A) and (B) post, to sell his house to B. B
Ans. (D) accepts the proposal by a letter sent
470. A promises to pay B a sum of by post.
money, if A dies before the time A. A cannot revoke his proposal at any
appointed for payment, time before or at the moment when B
A. his representative must perform the posts his letter of acceptance.
promise B. A may revoke his proposal at any time
B. his representative must employ some before or at the moment when B posts
proper person to do so his letter of acceptance, but can
C. either (A) or (B) afterwards
D. both (A) and (B) C. A may revoke his proposal at any time
Ans. (D) before or at the moment when B posts
471. A promises to superintend, on his letter of acceptance, but not
behalf of B, a legal manufacturer of afterwards
indigo, and an illegal traffic in other D. None of these
articles. B promises to pay to A a Ans. (C)
salary of 10,000 rupees a year. 475. A proposes, by a letter sent by
A. The agreement is not void, the object post, to sell his house to B. B
of A’s promise, and the consideration for accepts the proposal by a letter sent
B’s promise, being in part unlawful by post.
B. The agreement is void, the object of A. B cannot revoke his acceptance at any
A’s promise, and the consideration for B’s time before or at the moment when the
promise, being in fully unlawful letter communicating it reaches A.
C. The agreement is void, the object of B. B may revoke his acceptance at any
A’s promise, and the consideration for B’s time before or at the moment when the
promise, being in part unlawful letter communicating it reaches A, but
D. None of these can afterwards
Ans. (C) C. B may revoke his acceptance at any
472. A promises, for a certain sum time before or at the moment when the
paid to him by B, to make good to B letter communicating it reaches A, but
the value of his ship if it is wrecked not afterwards
on a certain voyage. Here, A’s D. None of these
promise is the consideration for B’s Ans. (C)
payment, and B’s payment is the 476. A proposes, by letter, to sell a
consideration for A’s promise. house to B at a certain price.
A. These are unlawful considerations A. The communication of the proposal is
B. These are lawful considerations complete when the letter is posted was
C. either (A) or (B) posted by A
D. None of these B. The communication of the proposal is
Ans. (B) complete when B receives the letter
C. either (A) or (B)
D. None of these
Ans. (B) Ans. (C)
477. A puts M as apprentice to B, 481. A sells certain merchandise to
and gives a guarantee to B for M’s B, warranting it to be of a particular
fidelity. B promises on his part that quality, and B, in reliance upon the
he will at least once month, see M warranty, sells it to C with a similar
makes up the cash. B omits to see warranty. The goods prove to be not
this done as promised, and M according to the warranty, and B
embezzles. becomes liable to pay C a sum of
A. A is liable to B on his guarantee money by way of compensation.
B. A is partly liable to B on his guarantee A. B is not entitled to be reimbursed this
C. A is not liable to B on his guarantee sum by A
D. None of these B. B is entitled to be partially reimbursed
Ans. (C) this sum by A
478. A railway company refused to C. B is entitled to be reimbursed this sum
deliver up certain goods to the by A
consignee except upon the payment D. None of these
of an illegal charge for carriage. The Ans. (C)
consignee pays the sum charged in 482. Contracts may be of two
order to obtain the goods. classes, one where consideration is
A. He is not entitled to recover so much executed and the other where it is
of the charge as was illegally excessive executor. This distinction was
B. He is entitled to recover over and approved by the Supreme Court in
above the charge as was illegally which of the following cases?
excessive A. Board of Revenue Madras v. Annamalai
C. He is entitled to recover so much of & Co. (Pvt.) Ltd.
the charge as was illegally excessive B. Suraj Narain Dube v. Sukhu Aheer
D. None of these C. Union of India v. Chaman lal Loona and
Ans. (C) Co.
479. A revokes his proposal made to D. Lala Babu Ram v. Ganga Devi
B by telegram. The revocation is Ans: C
complete: 483. Co-sureties need:
A. As against A and B, when the telegram A. Not be bound under the same contract
is dispatched B. The right to contribution being
B. As against A and B, when the telegram independent of any agreement for that
when B receives it purpose
C. As against A, when the telegram is C. Both (A) and (B)
dispatched. It is complete as against B D. None of these
when B receives it Ans: C
D. None of these 484. Decisions under Section 178 of
Ans. (C) the Indian Contract Act may be
480. A saves B’s property from fire. divided into which of the following
A. A is entitled to compensation from B, if groups according to the character of
the circumstances show that he intended the pawnor’s possession?
to act gratuitously I. Pledge by a commission agent
B. A is not entitled to compensation from employed to sell goods or by a broker
B, whatever the circumstances show that employed to sell goods on jangad terms
his intentions i.e. on terms that he shall take offers to
C. A is not entitled to compensation from his principal, who accept or reject them
B, if the circumstances show that he II. Pledge by seller who has been left in
intended to act gratuitously possession of the goods sold
D. None of these
III. Pledge by a person in bare custody of A. An agreement by which a person
goods delivers a thing to another on the
IV. Pledge by a person who has agreed to condition that he will restore it to him
buy goods under a hire purchase B. A contract based on mutual trust and
agreement and who has not made confidence
default in payment of the instalments C. Both (A) and (B)
V. Pledge by a person entrusted with D. None of these
goods for a specific purpose Ans: C
A. I, II 489. Period of limitation for a suit
B. II, IV against pawnee to recover the thing
C. Ill, V pledged is:
D. All of them (a) 1 year from the date of pawn
Ans: D (b) 3 years from the date of pawn
485. Disclosure or non-disclosure of (c) 12 years from the date of pawn
principal is immaterial for (d) 30 years from the date of pawn.
application of: Ans. (c)
A. S. 230(1) of the Indian Contract Act, 490. The pawnee has a right to
1872 retain the goods pledged:
B. S. 230(2) of the Indian Contract Act, (a) for payment of debt interest & all
1872 necessary expenses in respect of goods
C. S. 230(3) of the Indian Contract Act, pledged
1872 (b) for payment of debt other than the
D. None of these debt in respect of goods pledged
Ans: A (c) for payment of interest & necessary
486. Effect of failure to perform at expenses in respect of goods other than
fixed time, in contract in which time the one pledged
is essential is dealt under which of (d) all the above.
the following in the Indian Contract Ans. (a)
Act, 1872? 491. The pawnee has no right to
A. Section 55 retain the goods:
B. Section 50 (a) for payment of necessary expenses in
C. Section 52 respect of goods pledged
D. Section 59 (b) for payment of extraordinary
Ans: A expenses incurred in the preservation of
487. Except the equitable principles, goods
in terms which of the following (c) for payment of debt or interest in
sections of the Indian Contract Act, respect of goods pledged
1872 cannot be applied to (d) none of the above.
transactions where the bond is given Ans. (b)
to the Court in view of the fact that 492. Which of the following is an
there is no creditor as required by S. offer:
126 of the Indian Contract Act, (a) A bid at an auction sale
1872? (b) Banker’s catalogue of charges
A. Section 133 (c) Menu card at a restaurant
B. Section 135 (d) All of the above.
C. Section 139 Ans. (a)
D. All of them 493. If a future event on which a
Ans: D contract is contingent is the way in
488. Fiduciary contract: which a person will act at an
unspecified time, the event shall be
considered to become impossible:
(a) When such person does anything (c) ‘A’ can be forced to sing at the
which renders it impossible that he concert
should so act within any definite time, (d) ‘A’ is bound to refund only that
(b) Otherwise than under further money out of Rs. 50,000 that he has not
contingencies spent.
(c) Both (a) and (b) above Ans. (b)
(d) None of the above. 497. Where persons reciprocally
Ans. (c) promise, firstly to do certain things
494. In which case it was held that a which are legal and secondly, under
contract through telephone is specified circumstances, to do
concluded at the place where certain other things which are illegal
acceptance is heard: the:
(a) Lalman Shukla v. Gauri Dutt, (1913) (a) first set of promise is a contract, but
XL ALJR 489 (All) the second is a void agreement
(b) Carlill v. Carbolic Smoke Ball Co., (b) first set of promise is voidable but the
(1981-4) All ER Rep. 127 second set is a void agreement
(c) Bhagwandas Goverdhandas Kedia v. (c) entire set of promises is void
M/s. Girdhari Lai Parshottamdas and Co., (d) entire set of promises is valid.
AIR 1966 SC 543 Ans. (a)
(d) Satyabrata Ghose v. Mugneeram 498. In which of the following cases,
Bangur and Co., AIR 1954 SC a contingent contract becomes void:
Ans. (c) (a) If the contract contemplates the
495. ‘A’ applies to a banker for a happening of the event within a certain
loan at a time when there is time, and event does not happen or its
stringency in the money market. The happening becomes impossible
banker declines to make the loan (b) If the performance is made to depend
except at an unusually high rate of upon an event which is already
interest. ‘A’ accepts the loan on impossible
these terms. In this case the (c) If the event contemplated does not
contract is: happen
(a) vitiated by undue influence (d) Both (a) and (b) above.
(b) valid because this is a transaction in Ans. (d)
the ordinary cause of business 499. If the pawner makes a default
(c) void because the banker took unfair in payment of debt, at the stipulated
advantage of stringency in the money time:
market (a) the pawnee has a right to sell the
(d) voidable at the option of ‘A’ who was goods pledged without notice to the
deceived by the banker. pawner
Ans. (b) (b) the pawnee has a right to sell the
496. ‘A’ contract to sing for ‘B’ at a goods pledged after giving a reasonable
concert for Rs. 50,000 which are notice of sale to the pawner
paid in advance ‘A’ is too ill to sing (c) has no right to sell the goods pledged
on the day of the concert. The but has a right to retain the goods as
consequence is: collateral security for the debt
(a) ‘A’ is bound to make compensation to (d) neither has a right to sell the goods
‘B’ for the loss of the profits which ‘B’ nor retain the goods as collateral security
would have made if ‘A’ had been able to but has a right to sue for pawner upon
sing the debt.
(b) ‘A’ is bound to refund to ‘B’ Rs. Ans. (b)
50,000 paid in advance 500. Goods may be pledged:
(a) by the owner of goods
(b) by the servant in the absence of 505. Amongst the following who is
owner not an agent:
(c) by the person who is left with the (a) an independent buyer
goods for some special purpose (b) a person who advices another in
(d) all the above. matters of business
Ans. (a) (c) a procurement agent
501. Which of the following is (d) all the above.
correct Ans. (c)
(a) pledge made by a mercantile agent is 506. Two or more persons can be
valid employed to act as agents:
(b) pledge made by a person in (a) jointly
possession under voidable contract is (b) severally
valid (c) jointly & severally
(c) pledge by a person having a limited (d) either (a) or (b) or (c).
interest is valid to the extent of that Ans. (d)
interest 507. An authority given to two or
(d) all the above. more persons is generally given:
Ans. (a) (a) jointly
502. Agent is a: (b) severally
(a) person employed to do any act for (c) jointly & severally
another or to represent in dealings with (d) either (a) or (b) or (c).
third person Ans. (a)
(b) person for whom the act is done or 508. An agent appointed by more
who is represented in dealings with third than one principal is liable:
person (a) severally
(c) person from whom the person (b) jointly
employed to do any act, has to get die (c) jointly & severally
work done (d) either (a) or (b) or (c).
(d) all the above. Ans. (d)
Ans. (a) 509. Who can appoint an agent:
503. Principal is a: (a) a minor of sound mind
(a) person employed to do any act for (b) a major of sound mind
another or to represent in dealings with (c) a person of unsound mind
third person (d) both (a) & (b).
(b) person for whom the act is done or Ans. (b)
who is so represented in dealings with 510. Who can become an agent:
third persons (a) a major of sound mind
(c) person from whom, the person (b) a major of unsound mind
employed to do any act, has to get the (c) a minor of sound mind
work done (d) a minor of unsound mind.
(d) all the above. Ans. (a)
Ans. (b) 511. Authority of an agent:
504. Amongst the following who is (a) has to be expressed
an agent: (b) has to be implied
(a) a domestic servant (c) can be expressed or implied
(b) a person aiding another in the (d) either (a) or (b) or (c).
performance of his legal or contractual Ans. (c)
obligations of third persons 512. A wife has an implied authority
(c) a person who tills another’s field of the husband to buy articles of
(d) none of the above. household necessity:
Ans. (c) (a) if the wife is living with her husband
(b) if the wife is living separately (d) the sub-agent is not responsible to
(c) if the wife is living with her husband the principal.
not in a domestic establishment Ans. (b)
(d) if the wife gets a reasonable 517. In case of fraud & wilful wrong
allowance from the husband for her by the sub- agent:
needs. (a) the sub-agent is directly liable to the
Ans. (a) agent
513. The principle of agency of (b) the sub-agent & the agent both are
necessity is: liable to the principal
(a) unknown to the law of agency (c) the agent alone is liable to the
(b) applicable in normal situations principal
(c) applicable in emergent situations (d) both (a) & (b).
where communication with the principal Ans. (a)
is possible 518. A person whom the agent
(d) applicable in emergent situation names to act for the principal in the
where the communication with the business of agency, under the
principal is not possible. express or implied authority to
Ans. (d) name, is called:
514. An agent can lawfully employ a (a) sub-agent
sub-agent: (b) substituted agent
(a) originally (c) agent
(b) if the ordinary custom of trade (d) procured agent.
permits Ans. (b)
(c) if the nature of the agency permits 519. For the acts of the substituted
(d) both (b) & (c). agent:
Ans. (b) (a) the agent is responsible to the
515. In case of a sub-agent lawfully principal
appointed, which of the following is (b) the agent is not responsible to the
correct: principal
(a) as regards third parties the sub-agent (c) the substituted agent is not
binds the principal as an original agent responsible to the principal
can (d) none of the above.
(b) as regards third parties, the sub- Ans. (a)
agent cannot bind the principal as an 520. Substituted agent is liable to
original agent the principal:
(c) as regards third parties the sub-agent (a) only in case of fraud & wilful default
can bind only the original agent, who has (b) irrespective of fraud & wilful default,
appointed the sub-agent in all cases
(d) as regards third parties, the sub- (c) alongwith the agent
agent can neither bind the principal nor (d) both (a) & (c).
the original agent. Ans. (b)
Ans. (a) 521. In case the sub-agent is not
516. For the acts of sub-agent, lawfully appointed, for the acts of
lawfully appointed: such sub-agent, the agent
(a) the agent is not responsible to the appointing the sub-agent is liable:
principal (a) towards the principal only
(b) the agent is responsible to the (b) towards the third parties only
principal (c) towards the principal and third parties
(c) the sub-agent is responsible to the both
principal directly (d) towards none.
Ans. (c)
522. Any act is done, without the Ans. (c)
authority or knowledge of a person 528. Which of the following is
on behalf of that person, that correct:
person: (a) agency stands terminated by the
(a) can disown the act destruction of subject matter of agency
(b) can ratify the act (b) agency stands terminated by
(c) either ratify or disown the act happening of an event rendering the
(d) can disown the act but cannot ratify object of the agency unlawful
the same. (c) agency stands terminated by the
Ans. (c) frustration of the objects of agency due
523. Ratification of an act: to impossibility
(a) has to be express only (d) none of the above.
(b) has to be implied Ans. (d)
(c) can be either express or implied 529. Principal can revoke the
(d) has to be both expressed and implied. authority given to the agent:
Ans. (c) (a) at any time before the authority has
524. Ratification takes effect: been exercised
(a) prospectively (b) at any time after the authority has
(b) retrospectively been partly exercised without liability
(c) prospectively or retrospectively towards the acts done
depending on the facts & circumstances (c) at any time after the authority has
of case been fully exercised
(d) prospectively or retrospectively (d) all the above.
depending on the agreement between Ans. (a)
the parties. 530. An authority given by two or
Ans. (b) more principals can be terminated:
525. Which of the following acts (a) by notice of revocation or
cannot be ratified: renunciation given by or to all the
(a) lawful or unlawful acts capable of principals
being done by the agent (b) by notice of revocation or
(b) where knowledge of facts to the renunciation given by or to any one of
ratifying person is defective the principals
(c) act which are unauthorised at the (c) by notice of revocation or
time of its being done renunciation given by or to both the
(d) all the above. principals if there are only two principals
Ans. (b) (d) none of the above.
526. Agency can be terminated: Ans. (a)
(a) by revocation by the principal 531. With the termination of
(b) by notice of renunciation by the agent authority of an agent:
(c) by efflux of time (a) the authority of sub-agent or
(d) either (a) or (b). substituted agent does not come to an
Ans. (d) end
527. Agency stands terminated: (b) the authority of sub-agent comes to
(a) by the death, insolvency or insanity of an end but not of substituted agent
the principal (c) the authority of sub-agent does not
(b) by the death, insolvency or insanity of come to an end but that of a substituted
the agent agent
(c) by the death, insolvency or insanity of (d) the authority of sub-agent and
either the principal or the agent substituted agent both comes to an end.
(d) by the death, insolvency or insanity of Ans. (d)
the principal and the agent both.
532. If the amount due to the agent 537. An agreement enforceable at
for commission or remuneration is law is a
not paid or accounted for, the agent: (a) enforceable acceptance
(a) has a right of lien only over the (b) accepted offer
movable property of the principal (c) approved promise
(b) has a right of lien only over the (d) contract
immovable property of the principal 538. Every promise and every set of
(c) has a right of lien over the goods, promises, forming the consideration for
papers and property movable or each other, is an
immovable of the principal (a) agreement
(d) does not have a right of lien over the (b) contract
papers. (c) offer
Ans. (c) (d) acceptance.
533. Right of lien, of an agent: 539. Promises which form the
(a) is extinguished by his parting with the consideration or part of the consideration
possession of the goods for each other are called
(b) is extinguished by destruction of (a) reciprocal promises
goods accidentally (b) cross offers (c) conditional offer
(c) both (a) & (b) are correct (d) conditional promises.
(d) neither (a) nor (b) is correct. 540. An agreement not enforceable by
Ans. (a) law is stated to be void under
534. When a sub-contractor had (a) section 2(d)
under-taken some part of the work (b) section 2(e)
in connection with the project which (c) section 2(f)
was entrusted to contractor, he (d) section 2(g).
cannot be treated as: 541. Void agreement signifies
(a) agent (a) agreement illegal in nature
(b) sub-agent (b) agreement not enforceable by law
(c) sub-contractor (c) agreement violating legal procedure
(d) none of the above. (d) agreement against public policy.
Ans. (b) 542. Offer as defined under section 2(a)
535. There can also be………… by is
estoppel: (a) communication from one person to
(a) ownership another
(b) possession (b) suggestion by one person to another
(c) fraud (c) willingness to do or abstain from
(d) sale. doing an act in order to obtain the assent
Ans. (d) of other thereto
536. Under the Contract Act, if the (d) none of the above.
existing cause of action gets 543. Under section 2(b) if the person to
substituted by new cause of action whom the proposal is made signifies his
arising out of agreement, then: assent the proposal is said
(a) the admiralty claim is maintainable to have been
(b) the admiralty claim is not (a) accepted
maintainable (b) agreed
(c) admiralty claim is superseded by (c) provisionally agreed
other claims (d) tentatively accepted.
(d) changes in cause of action does not 544. A proposal when accepted becomes
affect admiralty claim. (a) promise under section 2(b)
Ans. (b) (b) agreement under section 2(e)
(c) contract under section 2(h) (d) none (a) an offer
of the above. (b) an invitation to offer
545. When, at the desire of the promisor, (c) a counter offer
the promisee or any other person has (d) a promise.
done or abstained from 553. Communication of acceptance is
doing or, does or abstain from doing or complete as against the acceptor
promises to do or to abstain from doing (a) when it comes to the knowledge of
something, such act or the proposer
abstinence or promise under section 2(d) (b) when it is put in the course of
is called transmission
(a) reciprocal promise (c) when it is communicated to the
(b) consideration for the promise acceptor that the acceptance has
(c) counter offer (d) acceptance. reached the proposer
546. Promises which form the (d) when the proposer conveys the
consideration or part thereof, for each acceptance to the acceptor.
other under section 2(F) are called 554. Revocation of offer by letter or
(a) acceptances for different proposals telegram can be complete
(b) agreements (c) reciprocal promises (a) when it is despatched
(d) consideration. (b) when it is received by the offeree
547. Every promise or set of promises (c) when it reaches the offeree
forming the consideration for each other (d) both (a) and (c).
under section 2(e) is called 555. Acceptance to be valid must
(a) reciprocal promise (a) be absolute
(b) contract (b) be unqualified
(c) agreement (c) both be absolute & unqualified
(d) none of the above. (d) be conditional.
548. An agreement enforceable by law at 556. A contract with or by a minor is a
the instance of one party & not of other (a) valid contract
party under section 2(i) is (b) void contract
called (c) voidable contract
(a) a valid contract (d) voidable at the option of either party.
(b) an illegal contract 557. An acceptance can be revoked
(c) void contract (a) at any time before the communication
(d) a voidable contract. of acceptance is complete as against the
549. Which is correct promisee
(a) proposal + acceptance = promise (b) after its acceptance comes to the
(b) promise + consideration = agreement knowledge of the promisee
(c) agreement + enforceability = (c) both (a) & (b)
contract (d) neither (a) nor (b).
(d) all the above. 558. Enforceable agreements are the one
550. Under section 2(c) promisor is the (a) made by free consent
(a) person who makes the proposal (b) parties to the contract are competent
(b) person who accepts the proposal to enter into an agreement
(c) person who makes the promise (c) having lawful consideration & lawful
(d) person to whom the proposal is made. object
551. Under section 2(c) promisee is the (d) all the above.
(a) person who makes the proposal 559. Competency to contract relates to
(b) person who accepts the proposal (a) age of the parties
(c) person who makes the promise (b) soundness of mind of the parties
(d) person to whom proposal is made. (c) both age & soundness of mind
552. Tender is (d) intelligence of the parties.
560. Which one of the following is correct (b) voidable
(a) past consideration is no consideration (c) void
(b) consideration can be past, present or (d) illegal.
future 567. Consideration should be something
(c) consideration can only be present in return of promise which
(d) consideration can only be present & (a) both the law and parties regard, as
future. having some value
561. A letter of acceptance sent by post (b) only law regards a having some
is lost in transit value
(a) there is a concluded contract as the (c) only the parties regard some value
letter of acceptance is put in the course (d) only adequate value necessary.
of transmission 568. If the proposer prescribes the mode
(b) there is no concluded contract as the & manner of acceptance, the acceptance
acceptance has not come to the (a) can be in any manner & mode
knowledge of the proposer (b) should be in the manner & mode
(c) there is no concluded contract as the prescribed
acceptance has not been communicated (c) can be in any reasonable mode &
to the proposer manner
(d) all the above. (d) all the above.
562. When the consent to the contract is 569. Parties are not competent to
caused by coercion, the contract under contract if any of them is
section 19 is (a) minor
(a) valid (b) insane
(b) voidable (c) declared unqualified
(c) void (d) all the above.
(d) illegal. 570. Consent under section 13 means
563. When the consent is caused by (a) agreeing on the same thing in the
undue influence, the contract under same sense
section 19A is (b) agreeing on the same thing at the
(a) valid same time
(b) void (c) voidable (c)agreeing on the same thing at
(d) illegal. different time
564. Where both the parties are under (d) agreeing on different things at
mistake as to matter of fact, the contract different times.
under section 20 is 571. Agreements, the meaning of which
(a) voidable is not certain or not capable of being
(b) void made certain under section 29 is
(c) valid (a) void
(d) illegal. (b) voidable
565. Considerations & objects are (c) illegal
unlawful where it is (d) valid
(a) forbidden by law or defeat the 572. An agreement in restraint of trade
provision of any law under section 27 is
(b) which is fraudulent (a) valid
(c) which is immoral & against the public (b) voidable
policy (c) void
(d) all the above. (d) unenforceable
566. If only a part of the consideration or 573. An agreement not to persue legal
object is unlawful, the contract under remedies but to refer the dispute to the
section 24 shall be arbitrator, under section 28
(a) valid is
(a) valid (b) any breach of duty, which gains an
(b) voidable advantage to the person committing it,
(c) void by misleading another to his
(d) unenforceable. prejudice
574. An agreement to refer the dispute to (c) causing a party to make an
the arbitrator is valid agreement to make a mistake as to the
(a) in respect of disputes already arisen subject matter of contract (d) all the
(b) in respect of disputes which may arise above.
in future 580. A person is deemed to be in a
(c) both (a) & (b) position to dominate the will of another
(d) neither (a) nor (b) by undue influence if the mental capacity
575. An agreement by way of wager is affected temporarily or permanently by
under section 30 is (a) reason of age
(a) void (b) reason of illness
(b) voidable (c) mental or bodily distress
(c) valid (d) all the above.
(d) unenforceable 581. An agreement to remain unmarried
576. An agreement in connection with is
horse- racing under section 30 is (a) valid
(a) unlawful (b) voidable
(b) void (c) void
(c) voidable (d) unenforceable.
(d) valid. 582. A general offer open for world at
577. Coercion which vitiates free consent large can be accepted
under section 15 is (a) by sending a communication of
(a) committing or threatening to commit acceptance
any act which is forbidden by law (b) by complying with the conditions of
(b) committing or threatening to commit offer
any act which is forbidden by Indian (c) by tendering himself to comply the
Penal Code conditions of offer
(c) unlawful detaining or threatening to (d) none of the above.
detain any property with an intention to 583. Contract without consideration
causing any person to enter into made in writing & registered and made
an agreement on account of natural love and affection
(d) all the above. is
578. Law of contract primarily (a) void
(a) specifies the circumstances in which (b) voidable
promises are binding on the parties to (c) valid
the contract (d) unenforceable.
(b) lays down certain norms by which the (d) neither void nor voidable.
parties are bound 584. A contract based on the happening
(c) lays down the circumstances under or non- happening of a future event
which a promise may be made under section 31 is called (a)
(d) all the above. a contingent contract
579. Misrepresentation under section 18 (b) a wagering contract
means (c) a contract marked with uncertainty
(a) a positive assertion, in a manner not and hence void (d) none of the above.
warranted by the information of the 585. A contingent contract
person making it, not true but he (a) is void
believes it to be true (b) never becomes void
(c) becomes void when the event (a) is a question of fact
becomes impossible (b) is a question of law
(d) is voidable. (c) is a mixed question of fact & law
586. A contract with minor is (d) is a question of prudence.
(a) voidable at the instance of the minor 594. A contract not specifying the place
(b) voidable at the instance of other of performance
party (a) performed at any place to the
(c) void knowledge of the promisee
(d) valid. (b) the promisor has to apply to the
587. An agreement to do an act promisee for appointment of a place of
impossible in itself under section 56 is performance & perform the promise at
(a) void that place
(b) valid (c) the promisor need not seek any
(c) voidable instructions from the promisee as to the
(d) unenforceable. place of performance
588. A promisor can perform (d) the promisor can perform the promise
(a) the promise himself at a place other than the place appointed
(b) the promise through his by the promisee.
representative competent to perform (d) remains valid & can be performed at
(c) the promise through his any subsequent time without being liable
representative irrespective of the for the loss suffered by the promisee.
competency of that representative (d) 595. In contract for sale of immovable
both (a) & (b) property the presumption is that the time
589. A promisee can accept the is
performance (a) the essence of the contract
(a) from the promisor himself (b) not the essence of the contract
(b) from the representative of the (c) the essence of the contract but failure
promisor competent to perform does not make the contract voidable
(c) from a third person (d) all the above. (d) not the essence of the contract but
590. In case of joint promise, generally makes the contract voidable at the
the performance must be by instance of the other party.
(a) all the promisors jointly 596. Reciprocal promises provide for
(b) any one of them individually doing certain things which are legal &
(c) one not authorised to perform certain others which are
(d) none of the above. illegal, under section 57
591. In cases of joint promise generally a (a) the entire set of promises is void
promisee can compel (b) the first set is voidable, but the
(a) all the joint promisors to perform second set is void
(b) any one of them to perform (c) the first set is valid but the second set
(c) some of them to perform (d) all the is void
above. (d) the entire set of promises is valid.
592. In a contract not specifying the time 597. A contract, performance of which
for performance, the promisor can becomes impossible or unlawful becomes
perform the contract (a) void when the performance becomes
(a) within any time howsoever long it unlawful or impossible
may be (b) void
(b) within the shortest time (c) voidable when the performance
(c) within a reasonable time (d) none of becomes impossible.
the above. (d) neither becomes void nor voidable
593. What is a reasonable time for 598.Which law governs contracts in
performance of a contract India?
a) Indian Penal Code 606.Which of the following is not a
b) Indian Contract Act, 1872 discharge of a contract?
c) Transfer of Property Act a) Novation
d) Civil Procedure Code b) Intention to contract
599.A contract becomes void when it c) Lapse of time
ceases to be enforceable by law d) Performance
under which section? 607.A minor’s agreement is
a) Section 10 considered as what?
b) Section 2(j) a) Void ab initio
c) Section 4 b) Voidable
d) Section 9 c) Valid
600.An agreement not enforceable d) Illegal
by law is termed as what? 608.Which of the following refers to
a) Contract the ‘capacity to contract’?
b) Void contract a) Competence of parties
c) Void agreement b) Offer and acceptance
d) Valid contract c) Consideration
601.Which of the following is an d) Object of the contract
essential element of a valid 609.In which of the following cases
contract? can a contract be declared voidable?
a) Illegal object a) Free consent
b) Free consent b) Coercion
c) Coercion c) Capacity to contract
d) Fraud d) Lawful consideration
602.Which section of the Indian 610.Which of the following sections
Contract Act defines a contract? deals with the performance of
a) Section 10 reciprocal promises?
b) Section 2(a) a) Section 31
c) Section 2(h) b) Section 51-54
d) Section 12 c) Section 61
603.A contract that is formed d) Section 62
without consideration is generally 611.A contract in restraint of trade
considered as what? is generally considered as what?
a) Valid a) Void
b) Void b) Valid
c) Illegal c) Voidable
d) Enforceable d) Illegal
604.Which of the following is not an 612.What is ‘misrepresentation’ in
offer under contract law? contract law?
a) A proposal a) False statement made without
b) An invitation to offer intent to deceive
c) A promise b) Fraudulent act
d) An agreement c) Coercion
605.An offer is said to be accepted d) Free consent
when the acceptance is 613.Which of the following is not a
communicated under which section? type of offer?
a) Section 5 a) General offer
b) Section 4 b) Non-competitive offer
c) Section 2(e) c) Cross offer
d) Section 7 d) Specific offer
614.Consideration must move at the c) Enforceable at the time of agreement
desire of whom? d) Illegal
a) The promisee 622.Which of the following contracts
b) The promisor is considered ‘voidable’?
c) The third party a) Contracts with a minor
d) The government b) Contracts induced by fraud
615.Which section of the Indian c) Contracts with illegal consideration
Contract Act defines coercion? d) Contracts lacking consideration
a) Section 10 623.The legal rule ‘ex turpi causa
b) Section 14 non oritur actio’ means what?
c) Section 15 a) No action arises from a wrongful
d) Section 16 cause
616.Which of the following is not a b) No contract without consideration
lawful consideration under contract c) No one is above the law
law? d) Contracts are sacred
a) Legal service 624.Which of the following is not an
b) Promise to pay money essential element of a contract?
c) Performance of an illegal act a) Lawful object
d) Delivery of goods b) Free consent
617.The principle of ‘quantum c) Written agreement
meruit’ means what? d) Competence to contract
a) Discharge of a contract 625.Which section of the Indian
b) As much as is earned Contract Act deals with ‘void
c) As much as is paid agreements’?
d) Compensation for damages a) Section 12
618.Which of the following is b) Section 24
necessary for a valid acceptance? c) Section 15
a) Conditional acceptance d) Section 2(g)
b) Absolute and unqualified 626.What is ‘novatio’ in contract
c) Acceptance with modifications law?
d) Vague acceptance a) Substitution of a new contract in
619.Which section of the Indian place of an old one
Contract Act deals with the b) Agreement without consideration
‘Agreement in Restraint of c) Discharge of contract by performance
Marriage’? d) Mistake in contract
a) Section 26 627.What is the meaning of ‘free
b) Section 27 consent’ in contract law?
c) Section 28 a) Consent under pressure
d) Section 29 b) Consent without coercion, fraud,
620.Which section deals with the or mistake
effect of a mistake on a contract? c) Conditional consent
a) Section 20-22 d) Consent through misrepresentation
b) Section 19 DNYANSAGAR ARTS AND COMMERCE
c) Section 10 COLLEGE, BALEWADI, PUNE45
d) Section 24
621.Which of the following is true Subject – Business Law (503)
regarding a contingent contract? Class : TY BBA (2013 Pattern)
a) Depends on an uncertain future
event
b) Depends on a certain event PROF . SWATI BHALERAO
www.dacc.edu.in
 6. Two persons have the capacity to
Unit 1. - Indian Contract Act 1872 contract:
A. If both are not of unsound mind
1. Which of the following is not a B. If none is disqualified from contracting
necessary feature to convert a proposal by any law to which he is subject
into a promise: C. If both have attained the age of
A. The acceptance must be absolute maturity
B. The acceptance must be within the D. All of the above
prescribed time limit
C. The acceptance must be conditional 7. A contract can be performed by:
D. The acceptance must be expressed in A. promisor himself
some usual and reasonable manner B. agent of the promisor
C. legal representative of the promisor
2. In an executed contract, the obligation D. either of these three
of ________:
A. both the parties have been fulfilled 8. In a contract not specifying the time
B. both the parties are outstanding for performance, the promisor can
C. obligation of one party is outstanding perform the contract:
D. none of these A. immediately
B. within the shortest time
3. A contract with or by a minor is a: C. within a reasonable time
A. valid contract D. within next 21days
B. void contract
C. voidable contract 9. When the consent of a party is not
D. voidable at the option of either party free, the contract is:
A. void
4. The term consideration is defined in __ B. voidable
section of the Indian Contract Act, 1872. C. valid
A. 2(a) D. illegal.
B. 2(d)
C. 3(a) 10. In Case of Illegal agreements, the
D. 2(h) collateral agreements are:
A. valid
5. An agreement & contract are one and B. void
same thing: C. voidable
A. True D. any of these.
B. False
C. Depends on the situation 11. A agrees to sell his car worth `
D. None of these 1,00,000 to B for ` 20,000 only and A’s
consent was obtained by
coercion. Here, the agreement is:
DNYANSAGAR ARTS AND COMMERCE A. void
COLLEGE, BALEWADI, PUNE45 B. valid
C. voidable
Subject – Business Law (503) D. unlawful.
Class : TY BBA (2013 Pattern)
DNYANSAGAR ARTS AND COMMERCE
COLLEGE, BALEWADI, PUNE45
PROF . SWATI BHALERAO
www.dacc.edu.in Subject – Business Law (503)
Class : TY BBA (2013 Pattern)
 Subject – Business Law (503)
Class : TY BBA (2013 Pattern)
PROF . SWATI BHALERAO
www.dacc.edu.in
PROF . SWATI BHALERAO
12. Contract caused by which of following www.dacc.edu.in
is voidable?
1. Fraud 17. Goods displayed in a Shop window
2. Mis-representation with a price label will amount to:
3. Coercion A. Offer
4. Bilateral Mistake B. Acceptance of offer
A. 1, 2, 3 C. Invitation to offer
B. 2, 3, 4 D. Counter offer
C. 1, 2, 4
D. 1, 2, 3, 4 18. The Indian Contract Act came into
force on:
13. An insurance contract is A. 15th September, 1872
A. Contingent contract B. 1st September, 1872
B. Wagering agreement C. 1st October, 1872
C. Unenforceable contract D. 15th October, 1872.
D. Void contract
19. . Which of the following acts does not
14. Agreement is defined in section of fall under the categories of fraud?
the Indian Contract Act, 1872. A. Intentional false statement of facts
A. 2(c) B. Active concealment of facts
B. 2(e) C. False statement in good faith
C. 2(g) D. Promise made without intention to
D. 2(i) perform.

15. Every Contract is an agreement but 20. The two types of breach are —
every agreement is not a contract. This A. Actual breach and Deemed breach
statement is - B. Actual breach and Conditional breach
A. Wrong C. Actual breach and Anticipatory breach
B. Correct D. Actual breach and Remedial breach
C. Correct Subject to certain exceptions
D. Partially correct. 21. The contracts of indemnity,
guarantee, bailment, pledge and agency
16. Contract is defined as an agreement is covered by section —
enforceable by Law, vide section — of the A. Section 1-75
Indian Contract B. Section 76-100
Act. C. Section 124-128
A. 2(e) D. Section 124-238
B. 2(f)
C. 2(h) 22. A wrong statement made is called —
D. 2(i) A. Misrepresentation
B. Fraud
C. Undue Influence
DNYANSAGAR ARTS AND COMMERCE D. Mistake
COLLEGE, BALEWADI, PUNE45
DNYANSAGAR ARTS AND COMMERCE
COLLEGE, BALEWADI, PUNE45
 B. Contract become voidable & damages
Subject – Business Law (503) are not payable
Class : TY BBA (2013 Pattern) C. Contract become void & damages are
payable
D. Contract become void & damages are
PROF . SWATI BHALERAO not payable.
www.dacc.edu.in DNYANSAGAR ARTS AND COMMERCE
COLLEGE, BALEWADI, PUNE45

23. A menu card handed by a waiter in a Subject – Business Law (503)

hotel is an offer — Class : TY BBA (2013 Pattern)
i. True
ii. Partly True
iii. False PROF . SWATI BHALERAO
iv. Can’t Say www.dacc.edu.in

24. According to performance, contract

are:— 29. A contract creates
A. Unilateral
B. Bilateral A. Rights and obligations of the parties to
C. Multilateral it
D. Both (a) and (b) B. Obligations of the parties to it
C. Mutual understanding between the
parties to it
25. Quid Pro Quo means — D. Mutual lawful rights and obligations of
A. Meeting of Minds the parties to it.
B. Something in return
C. To do something 30. Which of the following is not a
D. Promise necessary feature for free consent:
A. A When the consent is not caused by
26. Offer can be revoked — coercion
A. Before its acceptance B. B When the consent is not caused by
B. By withdrawal of acceptance undue influence
C. Both (a) & (b) C. C When the consent is not caused by
D. None of these mistake
D. D When the consent is not caused by
27. In case of innocent misrepresentation misunderstanding
—
A. Contract become voidable and
damages are payable Answer Key
B. Contract become voidable and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
damages are not payable CABBBDDCBBCAABB
C. Contract become valid and damages 16 17 18 19 20 21 22 23 24 25 26 27 28
are payable 29 30
D. Contract remains valid and damages CCBCCDACDBABADD
are not payable.
Unit 2. Sale of Goods.(Sale of Goods
28. . In case of willful misrepresentation Act,1930)
or fraud—
A. Contract becomes voidable & 31. What is the purpose behind the
damages are payable enactment of Sale of Goods Act, 1930?
a) To define the laws relating to the sale
of goods c) When the time elapses or the
b) To consolidate and amend the laws conditions subject to which the property
relating to the sale of goods in the goods is to be
c) To consolidate, amend and define the transferred are fulfilled
laws relating to the sale of goods d) Agreement to sell is deemed to be sale
d) To define and amend the laws relating
to the sale of goods 36. What can be the subject matter of
the contract of sale as per section 6 of
32. Section 2(1) of Sale of Goods Act Sale of Goods Act:
defines ‘buyer’ as: a) Only existing goods owned or
a) Person who buys goods and services possessed by the owner
b) Person who agrees to buy goods b) Only Future goods
c) Person who buys or agrees to buy c) Existing goods which are neither
goods owned nor possessed by the owner
d) Person who buys or agrees to buy d) Existing goods, owned or possessed by
goods and services the owner or future goods

33. Before the enactment of Sale of 37. In a contract for sale of specific
Goods Act, the provisions regarding Sale goods, the goods, without the knowledge
of Goods were of seller perished at
contained in: the time when the contract was made,
a) Indian Contract Act, 1872 the contract is:
b) Indian Registration Act, 1908 a) A voidable contract at the instance of
c) Transfer of Property Act, 1882 seller
d) Indian Partnership Act, 1932 b) A voidable contract at the instance of
buyer
34. Which of the following cannot be said c) A voidable contract subject to approval
to be included in the term “goods” of the civil court
defined under d) A void contract
section 2(7) of the Sale of Goods Act,
1930: 38. A contract of sale may be made:
a) Stock a) A in writing or by word of mouth
b) Shares b) partly in writing of partly by word of
c) Growing crops mouth
d) Actionable claims c) by the implied conduct of parties
d) All of the above
35. When does an agreement to sell
become a sale as per the provisions of 39. As per section 2, sub section 7 every
Sale Of Goods Act, kind of moveable property other than
1930: actionable claim
a) When the seller transfers the property and money is called
in goods a) Goods
b) When the seller agrees to transfer the b) Future goods
property in goods c) Both (a) and (b)
DNYANSAGAR ARTS AND COMMERCE d) None of above
COLLEGE, BALEWADI, PUNE45
40. In the Contract of Sale, there is an
Subject – Business Law (503) implied warranty that:
Class : TY BBA (2013 Pattern) a) Seller has a right to sell the goods
b) The buyer has the right to have and a) who only agrees to sell the goods
enjoy the quiet possession of goods only. b) who only sells the goods
c) The goods shall be free from any c) who sells or agrees to sell
charge or encumbrance d) who transfers the possession of the
d) The buyer has the right to have and goods to the other part
enjoy the quiet possession of goods and
that the goods shall 46. X purchases a car from Y. After 6
be free from any charge or encumbrance months, Z, the true owner of the car,
demanded it from X. X
41. Choose the most appropriate answer. had to return it to its true owner. X was
Unless otherwise agreed, the goods entitled to recover the full price even
remain at seller’s though several
risk until: months have passed. This is an example
a) The goods have been delivered to the of:
buyer a) Condition as to description
b) The goods have been utilised by the b) Condition as to sample
buyer c) Condition as to title
c) The price to the goods has been d) Condition as to fitness
received by seller
d) The property therein has been 47. Where the seller wrongfully neglects
transferred to the buyer or refuses to deliver the goods to the
buyer, the buyer
42. A contract of sale can be: may sue for:
a) Absolute only a) Damages for non-delivery
b) Conditional only b) Damages for non-acceptance
c) Absolute or conditional c) Specific performance
d) Conditional only with the consent of d) Compensation
the buyer
48. Where the seller wrongfully neglects
43. Where the transfer of the property in or refuses to deliver the goods to the
the goods is to take place at a future buyer, the buyer
time or subject to may sue for:
some condition, then such contract is a) Damages for non-delivery
called: b) Damages for non-acceptance
a) An agreement to sell c) Specific performance
b) A contract to Sale d) Compensation
c) Future Contract
d) Conditional contract 49. In case of breach of condition, the
breach gives rise to:
44. What are the requisites of contract of a) Claim for damages
sale: b) Rejection of goods
a) An Offer and delivery of goods c) A right to repudiate the contract
b) An Offer to buy or sell goods, for a d) A right of indemnification
price and its acceptance
c) An Offer, delivery, possession and 50. When the price is not determined in
acceptance the contract or agreed between the
d) An Offer, price, delivery and parties, the buyer
acceptance shall pay the seller:
a) a fair price
45. According to Sale of Goods Act, 1930, b) a reasonable price
‘seller’ means a person: c) market price
d) average price b) buyer
c) property
51. Condition is a stipulation which is d) Possession
a) Essential to the main purpose of
contract 58. The sale of Goods Act enforces in the
b) Collateral to the main purpose of year
contract a) 1935
c) Not essential to the main purpose of b) 1930
contract c) 1945
d) Collateral to the main purpose of d) 1955
contract
52. The sale of goods Act deals only with 59. The subject matter of the contract
goods which are ______________ in nature under Sale of goods Act must be
a) Immovable a) Money
b) Movable b) Goods
c) Specific c) Immovable Goods
d) All of the above d) All of the above

53. Goods that are identified at the time 60. A consideration in contract of sale
of contract of sale is called must be ______________ only
________________ goods a) Goods
a) Specific Goods b) movable only
b) ascertained goods c) price
c) clear Goods d) Purchase
d) both a & b
61. A sale is a ______________ contract
54. _________________ is a Stipulation a) Implied
which is Collateral to purpose of contract b) Executed
a) Condition c) Agreed
b) Warranty d) Executory
c) Guaranty
d) Collateral Contract 62. An agreement to sell is a
______________ contract
55. __________________________ is the a) Implied
concept of “LET THE BUYER BEWARE”. b) Executed
a) Information Center c) Agreed
b) Unfair Trade Practices d) Executory
c) Caveat Emptor
d) Buyer Kingdom 63. Ascertained goods is otherwise
called as _______________ goods
56. ___________________ and a) specific
_______________ are the two parties b) generic
involved in Contract of sale c) future
a) Seller & Buyer d) none of the above
b) Agent & Principle
c) Customer & Sales man 64. Unascertained goods is otherwise
d) Customer and supplier called as _______________ goods
a) specific
57. It is a standard rule that risk follows b) generic
____________________ c) future
a) Seller d) none of the above
 71. The doctrine of caveat emptor is
given in section ______ , and it implies
65. Goods identified and agreed upon at ______.
the time a contract of sale is made is a) 15, let the seller beware
called b) 16, let the buyer beware
a) Ascertained c) 18, let seller take care of buyer’s
b) Specific interest
c) both a & b d) 17, let the buyer claim damages
d) Nor a neither b
72. An/A ______ sale is complete on the
66. A contract for the sale of ‘future ______ .
goods’ is ____. a) Auction, fall of hammer
a) sale b) Ideal, payment of Price
b) agreement to sell c) Outstanding, delivery of goods
c) sale on approval d) Both (B) and (C)
d) hire purchase agreement
73. The Sale of Goods Act deals with
67. Section _____ of the Sale of Goods Act a) Movable goods
defines delivery. b) Immovable goods
a) 2(3) c) Intangible goods
b) 2(2) d) Future goods
c) 2(4)
d) 2(5) 74. Sale of Goods means ______ .
a) Transfer of possession
68. Buyer can suit for non-delivery u/s b) Transfer of ownership
______ of Sale of Goods Act, 1930. c) Both of A and B
a) 57 d) Bailment of goods
b) 59
c) 58 75. Breach of warranty results in ______ .
d) 60 a) Refusal of goods
b) Termination of contract of sale
69. The terms ‘condition’ and ‘warranty’ c) Claim for damage
are defined in ______ and ______ of the d) Both of A and B
Sale of Goods
Act, 1930. 76. Sale of Goods involve ______ .
a) Section 12 (1), 12(2) a) Transfer of ownership and possession
b) Section 12 (2), 12(3) b) Transfer of possession but not
c) Section 12 (3), 12(4) ownership
d) Section 7 and 8 c) passing of liabilities
d) Creation a charge on goods
70. The loss of destruction of goods falls
on ______ in case of sale, and on___ in 77. Breach of condition gives a right to
case of ______ whereas breach of warranty gives
agreement to sell. a right to ______
a) Buyer, seller a) Rejection of goods, Repudiation of
b) seller, buyer contract
c) auctioner, agent b) denial of contract, claim for damages
d) none of them c) Claim for damages, Rejection of goods
d) Claim for damages, Repudiation of
Contract
78. Risk of goods prima facia passes with 85. 'Goods' within the meaning of section
______ . 2(7) of the Sale of Goods Act, 1930
a) Transfer of ownership includes
b) Delivery of goods a) actionable claim(s)
c) Payment of price b) money
d) Contract is formed c) both (a) and (b)
d) neither (a) nor (b).
79. Which of the following is the right of
unpaid seller of goods 86. Section 2(7) of the Sale of Goods Act,
a) Right of lien 1930, the term 'goods' does not include
b) Right of stoppage-in-transit a) stock and share
c) Right of Resale b) growing crops
d) All of these c) grass
d) neither (a) nor (b) nor (c).
80. The sale of goods act introduced in
the year 87. Transfer of actionable claim(s) is
a) 1950 governed by
b) 1935 a) The Transfer of Property Act, 1882
c) 1930 b) The Sale of Goods Act, 1930
d) 1949 c) The Indian Contract Act, 1872
d) all the above.
81. 'Delivery' within the meaning of
section 2(1) of the Sale of Goods Act, 88. 'A person is said to be 'insolvent'
1930, can be who has ceased to pay his debts in the
a) actual ordinary course of
b) constructive business, or cannot pay his debts as they
c) symbolic become due whether he has committed
d) either (a) or (b) or (c). an act of
insolvency or not', is the definition of
82. Which of the following is an instance insolvency given in
of constructive delivery of goods a) The Indian Partnership Act, 1932
a) the transfer of bill of lading b) The Sale of Goods Act, 1930
b) attornment by a person in possession c) The Indian Contract Act, 1872
of the goods d) all the above.
c) both (a) and (b)
d) None 89. The question of the insolvency of a
buyer, under the Sale of Goods Act,
83. The minimum number of persons 1930, is of importance
required for a sale is in connection with
a) two a) the seller's lien on the goods
b) five b) the right of stoppage in transit
c) ten c) both (a) and (b)
d) twenty. d) only (a) and not (b).

84. Under section 2(6) of the Sale of 90. "Mercantile agent" means the person
Goods Act, 1930 'future goods' means a) who sell goods, or consigns for the
a) goods which are not yet in existence purpose of sell, or buy goods or raise
b) unascertained goods money on security of
c) ascertained goods goods
d) specific goods b) who only sell or purchase
c) who only consign goods
d) who only transfer goods. a) 0
b) unlimited
Answer Key c) 50
31 32 33 34 35 36 37 38 39 40 41 42 43 d) 100
44 45 46 47 48 49 50
DCADCDDDADDCACCDAACB 97. Transfer of shares in the company is
51 52 53 54 55 56 57 58 59 60 61 62 63 a) Restricted
64 65 66 67 68 69 70 b) Freely transferable
ABCBCACBBCBDABBBBABA c) Prohibited
71 72 73 74 75 76 77 78 79 80 81 82 83 d) None of these
84 85 86 87 88 89 90
BAABCABADCDBAADDABCA 98. A company is named as govt.
company if it is holds ______% of paid up
Unit 3 The Companies Act, 1956 share capital
91. The term company is defined under a) more than 30
which sec of the Act? b) more than 40
a) Sec 3(1) c) more than 50
b) Sec4 (2) d) None
c) Sec2 (4)
d) Sec1 (3) 99. The companies which are formed
under special Act. Those companies are
92. Property of the company belongs called as
to_______ a) Chartered companies
a) Company b) Statutory companies
b) Share holders c) Registered companies
c) Members d) None of these
d) Promoters
100. The companies which are formed
93. Minimum number of members in case under companies Act. 1956. They will be
of public company_______ called as
a) 1 a) Chartered companies
b) 2 b) Statutory companies
c) 5 c) Registered companies
d) 7 d) None of these

94. Minimum number of members in case 101. Can private company go for public
of private company is issue?
a) 1 a) Yes
b) 2 b) No.
c) 3
d) 7 102. Can private company accept
deposits from the public?
95. Maximum no. of members in case of a) Yes
private company is b) No
a) 50
b) 100 103. Minimum paid up share capital in
c) 150 case of a private company is _______
d) 200 a) 1 Lakh
b) 2 Lakhs
96. Maximum no .of members in case of c) 3 Lakhs
public company is d) 4 Lakhs
 company
104. Minimum paid up share capital in ______
case of a public company is ________ a) 34
a) 1 Lakh b) 43
b) 3 Lakhs c) 53
c) 5 Lakhs d) 35
d) 7 Lakhs
111. Central Government permission is
105. Minimum no. of Directors in case of required in case of _______ conversion
a public company is __________ __________
a) 1 a) Private to public
b) 2 b) Public to private
c) 3 c) Both (a) or (b)
d) 4 d) None of the above

106. The companies which are formed 112. Can private company go for public
under special charter granted by the king issue?
or queen a) Yes
of England are called b) No.
a) Statutory companies
b) Registered companies 113. Can private company accept
c) Chartered companies deposits from the public?
d) None of these a) Yes
b) No
107. The companies which are formed
under special Act. Those companies are 114. A company is named as govt.
called as company if it is holds ______% of paid up
a) Chartered companies share capital
b) Statutory companies a) more than 30
c) Registered companies b) more than 40
d) None of these c) more than 50
d) None
108. The companies which are formed
under companies Act. 1956. They will be 115. Which companies are exempted to
called as add “Ltd” or “Pvt Ltd” at the end of their
a) Chartered companies name
b) Statutory companies a) Private
c) Registered companies b) Govt
d) None of these c) Defunct
d) Association not for profits
109. Under which sec. a private company
can voluntarily converted into public 116. If a company which is formed with
company unlimited liability wants to convert to
_______ limited
a) 34 liability
b) 44 then it should pass
c) 54 a) Ordinary resolution
d) 64 b) Special resolution
c) No need
110. Under which sec. a private company
can automatically converted into a public
117. Maximum capital of private D. None of the above
company is
a) 50 Lakhs 124. Private company can start its
b) 1 Crore business immediately after the issue of
c) 1.5 Crore A. Certificate of commencement of
d) Unlimited. Business
B. Certificate of Incorporation
118. Transfer of shares in case of private C. Both
company is D. None of the above
A. Prohibited
B. Restricted 125. Public company Should start
C. Freely transferable business only after getting
D. None of these A. Certificate of Incorporation
B. Commencement of business
119. Invitation to public offering shares C. None of these
or debentures in case of private company
A. Prohibited
B. Restricted Answer Key
C. Acceptable 91 92 93 94 95 96 97 98 99 100 101 102
D. None of these 103 104 105
AADBDBBCBCBBACC
120. How many members should sign the 106 107 108 109 110 111 112 113 114
MOA in case of public company ________ 115 116 117 118 119 120
a) 1 CBCBBBBBCDBCBAD
b) 3 121 122 123 124 125
c) 5 BAAAB
d) 7

121. How many members should sign the Unit 4. Information Technology Act, 2000
MOA in case of private company ________
A. 1 126. When IT Act 2000 came into effect?
B. 2 A. October 17, 2000
C. 3 B. October 17, 2001
D. 4 C. November 11, 2000
D. November 11, 2001
122. In case of appointment of Directors
______ form is to be filed 127. How many schedules are there in IT
A. 29 Act 2000?
B. 32 A. 3
C. 18 B. 4
D. 1 C. 6
D. 2
123. ______ is the conclusive evidence in
case of company that statutory 128. Which is the Act which provides
requirements legal framework for e-Governance in
have India
complied with A. IT (amendment) Act 2008
A. Certificate of Incorporation B. Indian Penal Code
B. Certificate of commencement of C. IT Act 2000
Business D. None of the above
C. Both
129. Which section of IT Act deals with B. BSNL IT Policy
the legal recognition of electronic C. RBI Act 1934.
records? D. The Indian Evidence Act, 1872
A. Section 2
B. Section 5 136. Controller of Certifying Authorities
C. Section 6 (CCA) work under ?
D. Section 4 A. Prime Minister office
B. Reserve Bank of India
130. What is/are component of IT Act C. Ministry of Communication & IT
2000 ? D. autonomous body
A. Legal Recognition to Digital Signatures
B. Regulation of Certification Authorities. 137. Which Act in India focuses on data
C. Digital Certificates privacy and information technology?
D. All the above A. Banking Regulation Act 1949
B. IT Act 2000
131. The section deals with legal C. Indian Penal Code
recognition of digital signature D. IT (amendment) Act 2008
A. Section 3
B. Section 5 138. Which section of IT Act deals with
C. Section 6 the appointment of Controller of
D. Section 4 certifying
authorities
132. The section deals with the use of A. Section 17
electronic records and digital signature in B. Section 15
Government and its agencies C. Section 10
A. Section 3 D. Section 5
B. Section 5
C. Section 6 139. Which section of IT Act 2000 deals
D. Section 7 with the punishment for cheating by
impersonation
133. Major amendments to IT Act 2000 by using computer resources?
was introduced in the form of IT A. Section 66D
(amendment) Act B. Section 66C
2008, which came into effect on C. Section 66B
A. 01 June 2008 D. Section 66F
B. 27 October 2009
C. 27 October 2008 140. The following punishment is
D. 03 July 2009 mentioned in which section of IT Act
2000 '3 years of
134. IT Act 2000 amended various imprisonment and/or 5 lakh repees
sections of which of the following Acts? penalty for first conviction & 5 years of
A. Indian Penal Code 1860 imprisonment
B. Reserve Bank of India Act 1934 and/or 10 lakh rupees penalty
C. Indian Evidence Act 1872 & Bankers A. Section 67
Book Evidence Act 1891 B. Section 66
D. All of the above C. Section 65
D. Section 64
135. Which among following Act is not
ammended in Information Technology Act 141. Which section of IT Act deals with
2000 ? Hacking of computer systems and its
A. The Bankers Books Evidence Act, 1891 penalties?
A. Section 65 147. What is the punishment for identity
B. Section 66 theft in IT Act?
C. Section 62 A. Two year imprisonment or 1 lakh
D. Section 67 rupees penalty or both
B. Three year imprisonment or 1 lakh
rupees penalty or both
C. Three year imprisonment or 2 lakh
rupees penalty or both
142. What is the punishment for hacking D. None of the above
of computers?
A. Three year imprisonment or 10 lakh 148. What is the penalty for destroying
rupees penalty or both computer source code?
B. Life Imprisonment A. Three year imprisonment or 3 lakh
C. Three year imprisonment or 5 lakh rupees penalty or both
rupees penalty or both B. Two year imprisonment or 2 lakh
D. Three year imprisonment or 2 lakh rupees penalty or both
rupees penalty or both C. Three year imprisonment or 5 lakh
rupees penalty or both
143. Which section of IT Act deals with D. Three year imprisonment or 2 lakh
Cyber terrorism? rupees penalty or both
A. Section 66C
B. Section 66B 149. Which are the sections of IT Act
C. Section 66F applicable for Cyber pornography?
D. Section 66A A. 66, 66A, 66B
B. 67, 67A, 67B
144. Which section of IT Act was C. 67, 67C, 67D
invalidated by Supreme Court of India D. None of the above
A. Section 66F
B. Section 66B 150. Which section of IT Act deals with
C. Section 66D Child pornography?
D. Section 66A A. Section 67F
B. Section 67D
145. The date on which Supreme Court of C. Section 67C
India invalidated Section 66A of IT Act D. Section 67B
2000:
A. 24.03.2015 151. What is the maximum penalty for
B. 31.03.2015 damage to Computer, Computer
C. 01.01.2015 systems,
D. 01.06.2015 unauthorized access, download of data,
infecting with virus, denial of access etc
146. What is the penalty for publishing as per Section
images of a person's private parts 43
without consent, A. Rs. 50 lakh
as per IT Act 2000? B. Rs.1 crore
A. 5 years imprisonment or 5 lakh rupees C. Rs. 5 crore
penalty or both D. Rs.75 lakh
B. Life imprisonment
C. 3 years imprisonment or 2 lakh rupees 152. Which section of IT Act 2000
penalty or both propose a punishment of life
D. None of the above imprisonment?
A. Section 66F
B. Section 66C 158. As per RTI Act, a body established,
C. Section 66B owned, funded, controlled by Central
D. Section 66A Govt / State
Govt / UT is called a -------
153. Which are the section of the IT Act a) Information Commission
deals with Credit card fraud? b) RTI Cell
A. 42, 67, 67A, 67B c) Public authority
B. 66, 66C, 66D d) CPIO
C. 43, 66, 66C, 66D
D. None of the above 159. Information refers to
a) Records and documents
154. Which of the following is an example b) Emails & opinions
of Intellectual property ? c) Samples & models
A. Patent d) Data in electronic form
B. Trade Marks e) All of the above
C. Copyright
D. All of above 160. Right to information means right to
a) inspect work and records
155. What is the time limit for filing b) taking notes or certified copies
appeal against the order of Cyber c) taking certified samples of material
appellate tribunal? d) obtaining information in electronic
A. 30 days form
B. 90 days e) All of the above
C. 60 days
D. 45 days 161. Who is supposed to provide
information under RTI Act 2005 ?
Answer Key a) Public authority
126 127 128 129 130 131 132 133 134 b) Central Information Commission
135 136 137 138 139 140 c) Duly appointed CPIO
ABCDDBCBDBCDAAA d) All of the above
141 142 143 144 145 146 147 148 149
150 151 152 153 154 155 162. Third party means a person
BCCDACBDBDBACDC a) other than the citizen including a
public authority
5 The Right To Information Act, 2005 b) First appellate authority
c) CPIO
156. RTI Act got the approval of the d) A political party
President of India on
A. 1.1.2005 163. Under voluntary disclosure of
B. 1.6.2005 information, every public authority shall
C. 15.6.2005 publish
D. 25.6.2005 different prescribed types of information
on their website within ---- days of
157. RTI Act 2005 extends to the whole enactment
of India except a) 30
a) North East states b) 60
b) Nagaland only c) 90
c) J&K only d) 120
d) Arunachal Pradesh only
164. Who will appoint / designate the
CPIO / PIO ?
a) First appellate authority 171. If the applicant had to submit the
b) Head of public authority RTI application to the APIO, he should be
c) Central Information Commission provided
d) All of the above information within --- days from the date
of receipt of application by the APIO
165. Who will appoint / designate the a) 45
First Appellate authority ? b) 90
a) CPIO c) 35
b) Head of public authority d) 30
c) Central Information Commission
d) All of the above 172. An applicant making a request
under RTI Act should
166. What is the difference between CPIO a) intimate the location of the
and PIO ? information
a) Both are same b) intimate the reasons for seeking
b) PIO is junior to CPIO information
c) CPIO is junior to PIO c) be personally present to collect
d) All of the above information
d) None of the above
Samiti (NVS) is a
a) First appellate authority 173. Which of these is not a valid mode
b) CPIO of payment of RTI fees ?
c) PIO a) Demand draft
d) Public authority b) Indian postal order
c) Postal stamps
168. Assistant PIO (APIO) wherever d) Cash under receipt
designated, will ------
a) Assist the PIO 174. RTI application should be made
b) Receive and forward the RTI a) Orally
applications to PIO b) In writing
c) Provide information on behalf of PIO c) Through electronic means
d) All of the above d) All of the above
e) b) & c) only
169. Person assisting the PIO / CPIO in
providing information to the applicants is 175. RTI application should only be made
called in
a) First appellate authority a) English
b) APIO b) Hindi
c) Deemed PIO c) Official language of the area of the
d) All of the above applicant
d) Any of the above
170. The PIO / CPIO will provide
information to the applicant within 30 176. If the information sought is not
days from the date pertaining to the public authority to
of receipt of RTI application in the which the
a) Office of public authority application is addressed, it should be
b) Section headed by him a) rejected
c) Office of deemed PIO b) Disqualified
d) All of the above c) Transferred to the appropriate
public authority within 5 days
d) All of the above
 182. Fee for the first hour of inspection of
177. Application fee under RTI Act in case records is Rs.---
of NVS is ---- for all other than those a) 25
falling under b) 50
BPL category. c) 0
a) Rs. 10/- d) 10
b) Rs. 20/-
c) Depends on case to case 183. Fee for each subsequent hour (after
d) Rs. 50/- first hour) for inspection of records is
a) 10
178. If the applicant is not below poverty b) 25
line and if the RTI application is not c) 5
accompanied d) 15
by requisite application fee, the
application
a) should be referred to first appellate 184. Exemption from disclosure of
authority information is provided in Section ---- of
b) can be rejected RTI Act
c) should be considered a) 6
d) All of the above b) 8
c) 7
179. If the information sought pertains to d) 5
life & liberty of a person, it should be
provided 185. Information which relates to
within ---- from the time of receipt of personal information, the disclosure of
application. which has no
a) 24 hours relationship to any public activity or
b) 48 hours interest can be denied under Section -----
c) 60 hours of RTI Act
d) 72 hours a) 6(3)
b) 8(1)(e)
180. CPIO can charge the applicant with c) 5(4)
this amount d) 8(1)(j)
a) cost of man-hours spent for
providing information 186. An employee who assists the PIO in
b) cost of postage to send information providing information to the applicant is
c) cost towards photocopies wherever called
applicable a) Deemed PIO
d) cost of internet data to send b) Assistant PIO
information by email c) Apellate authority
d) Information Commissioner
181. If the information is sought and
provided in a floppy or diskette, a 187. Section 6(3) of RTI Act deals with
maximum of Rs. ----- can be charged a) Transfer of RTI application
from the applicant for the same b) Rejection of RTI application
a) 35 c) Deemed PIO
b) 25 d) None of the above
c) 50
d) 20 188. Section 11 of RTI Act deals with
a) Transfer of RTI application
b) Rejection of RTI application
c) Third party Information request with malafide intention, the
d) Deemed PIO penalty will be Rs. --- per day, subject to
a maximum of
189. Final decision on third party Rs.----
information should be taken by the PIO a) Rs. 250, max Rs. 10,000
within ---- days b) Rs. 250, max Rs. 20,000
a) 30 c) Rs. 250, max Rs. 15,000
b) 35 d) Rs. 250, max Rs. 25,000
c) 40
d) 60 195. Which of the following is not come
under the definition of 'information'
190. Notice to third party on information under RTI Act
sought, shall be given within --- days 2005?
from the
date of receipt of such application (a) Log books
a) 10 (b) File notings
b) 05 (c) Data material held in any electronic
c) 07 form
d) 14 (d) Circulars

191. Section 19 of RTI Act deals with 196. The officer designated by the public
a) First appellate authority authorities in all administrative units or
b) Appeals offices
c) Rejection of information under it to provide information to the
d) Transfer of application citizens requesting for information under
the Act is
192. First appeal can be preferred after know as
expiry of ---- days time after the RTI (a) Appellate Authority
application is (b) Chief Information Commissioner (CIC)
made or within ---- days from the date of (c) Public Information Officer (PIO)
receipt of the unsatisfactory reply from (d) Assistant Public Information Officer
the PIO.
a) 45 197. What is the time limit to get the
b) 25 information under RTI Act 2005?
c) 30
d) 40 (a) 15 days
(b) 45 days
193. Second appeal to the Central (c) 60 days
Information Commission can be made (d) 30 days
within 90 days
against the PIO if 198. .What is the time limit to get the
a) reply is not satisfactory information concerning the life and
b) reply is incomplete liberty of a
c) Reply is delayed person?
d) Any of the above
(a) 48 hours
194. If CIC finds a PIO to have provided (b) 24 hours
incomplete, misleading information or (c) 5 days
denied the (d) 10 days
199. If the interests of a third party are a) Recognized by Central
involved in information sought for, the Government
maximum b) Recognized by state
time limit to get the information will be government
c) Both the above
(a) 30 days d) None of the above
(b) 40 days Ans:c(2a)
(c) 45 days 4. Consumer Protection Act is applicable
(d) 60 days to
A. immovable goods
200. What is the fee for getting B. movable goods
information under RTI Act C. specific goods and services
D. all goods and services ANSWER: D
(a) Rs.20/- 5. The total number of rights given to
(b) Rs.50/- consumers as per consumer protection
(c) Rs.100/- Act is
(d) Rs.10/- A. 5
B. 4
Answer Key C. 6
156 157 158 159 160 161 162 163 164 D. 8 ANSWER: C
165 166 167 168 169 170 6. “Consumer has the right to present
CCCEECADBBADBCA before the appropriate forum or
171 172 173 174 175 176 177 178 179 authorities all those matters which
180 181 182 183 184 185 effect his interests “this right of
CDCEDCABBCCCCBD consumer is termed as right to be
186 187 188 189 190 191 192 193 194 A. informed
195 196 197 198 199 200 B. heard
AACCBBCDDBCDABD C. safety
D. educated ANSWER: B
7. The rights of consumers as per
MCQs on CONSUMER PROTECTION consumer protection Act does not include
ACT 1986 right to be
1. The Consumer protection act A. informed
1986 enacted in B. heard
a) 15 Jun 2005 C. safety
b) 24 Oct 1986 D. presented *ANSWER: D*
c) 24 Dec 1986 8. When the seller manipulates the price
d) 1 Jan 1986 Ans:c then it is
2. The Consumer protection act A. Restrictive trade practices
1986 extends to B. unfair trade practices
a) The whole India C. caveat emptor
b) The whole India except D. none of the above ANSWER: A
Nagaland tribal area, 9. Complainant means
c) The whole India except a) Consumer
Nagaland tribal area and Jammu and b) Any voluntary consumer
Kashmir association registered under the
d) The whole India except Jammu companies act 1956.
and Kashmir c) The central govt or any state
Ans:d(1) govt
3. Appropriate laboratory means a
laboratory or organization
 d) One or more consumer where accountancy, industry& public affairs
there are numerous consumers having e) All the above
the same interest Ans:e(10)
e) All the above 15. Mark the correct option
Ans: E a) Every member of district forum
10. Complaint means allegation in shall hold office a term of 5 years or up
writing made by a complainant that to age 65 years
a) An unfair trade practice or b) The member of district forum
restrictive trade practice has been shall eligible for reappointment for
adapted by any traders or service another term
provider c) Members of district forum may
b) The goods bought by him or resign his office in writing addressed to
agreed to be bought by him suffer from state government
one or more defect d) All the above
c) A traders or the service provider Ans:d(10)
as the case may be has charged for the 16. Jurisdiction of district for is
goods or for the services rupees
mentioned in the complaint a price in
excess of the price a) Exceed twenty lac
d) All the above b) exceed 50 lac
Ans: D c) Up to twenty lac
11. The following is not a consumer d) twenty to fifty lac Ans:c(11)
a) The insurance company 17. The complaint shall ordinarily be
b) A licensee to run a phone decided within
c) A lottery ticket holder a) Twenty one days from the date
d) All the above Ans:d on which the complaint was received
12. Which one of the following know b) Thirty days from the date on
as Consumer disputes redressal agency which the complaint was received
a) District forum c) Forty five days from the date
b) State commission on which the complaint was received
c) National commission d) No time limit
d) All the above Ans:d(9) Ans:a(12)
13. President of district forum is
a) Collector of the district 18. Where the complaint alleges a
b) A person who are qualified as defect in the goods which cannot be
advocate determined without proper
c) A person who are qualified to analysis or test of the goods, the sample
be a district judge, of goods forwarded to appropriate
d) None of these laboratory for
Ans:c(10) laboratory test. Such types of case
14. Mark the correct option relating finding report within ______days
to district forum
a) It should have two member , a) 30 b) 40 c) 45
one of whom shall be a woman d) 60 Ans: c (13)
b) Members age shall not be less 19. Every complaint shall be heard
than 35 years old as expeditiously as possible and
c) Possess a bachelors of degree endeavour shall be made to
from recognized university decide the complaint within a period of
d) Ten year knowledge and ____from the date of receipt of notice by
experience in dealing with problems opposite party
relating to economics, law, commerce,
 where the complaint does not require B. state commission
analysis or testing of commodities and C. national commission
within____, if it D. none of the above *ANSWER: D*
requires analysis or testing of 27. In which of the forum there is
commodities. compulsion that a female should be a
a) 3 Months, 5 months member of the forum
b) 45 days, 90 days A. District forum
c) 30 days, 90 days B. state commission
d) None of these Ans:a C. national commission
(13) D. all of the above *ANSWER: D*
20. Provided that the minimum 28. The term of office for a member is
amount of sum so payable shall not be _______ year in all redress forum
less than ____ of the value of A. 5 B. 10 C. 7 D. 35 *ANSWER: B*
such defective goods sold or services 29. The jurisdiction of a state commission
provided, as the case may be to such is
consumers. A. below 20 lakhs B. 20 lakhs to 1 crore
a) Rs 25000/- C. above 1 crore D. none of the above
c) 10 % *ANSWER: B*
c) 5% 30. The complaint be in consumer with in
d) None of these ________ of cause occurred
Ans:c(13) A. 6 months B. 1 year C. 2 years D. 3
21. Any person aggrieved by an months *ANSWER: C*
order made by the District forum may 31. On receiving the complaint the forum
prefer an appeal such order to will direct the opposite party to answer
the State commission within on that within __ days
a) 60 days A. 15 B. 20 C. 5 D. 1 *ANSWER: D*
b) 90 days 32. On receiving the complaint the forum
c) 1 month will direct the opposite party to answer
d) Thirty days on that with in ____
Ans:d(15) days and may extent the period for
22. The minimum age limit for being a _________________ more days.
member of district forum as per A. 1 & 15 B. 15 & 1 C. 10 & 1 D. 0 & 1
consumer protection act is *ANSWER: A*
A. 65 B. 35 C. 40 D. 30 *ANSWER: B* 33. If the opposite party admits the claim
23. The maximum age limit of a person the case will be decided by the forum on
who can be a member in state the basis of records
commission is available within _________months
A. 65 B. 70 C. 35 D. 60 *ANSWER: A A. 6 B. 1 C. 3 D. 9 *ANSWER: C*
* 34. In case of goods for which the testing
24. The maximum age limit of a person is available the forum must decide the
who can be a member in national case within ___ months.
commission is A. 6 B. 5 C. 3 D. 9 *ANSWER: B*
A. 65 B. 70 C. 35 D. 60 *ANSWER: B* 35. Appeal against the district forum can
25. To be a member in any redress forum be done in _________________
the person should have minimum A. State forum
________ years of experience B. high court
A. 5 B. 10 C. 12 D. 15 *ANSWER: B* C. national forum D. supreme court
26. Among the following which forum can 36. Appeal against the national forum
reappoint the same person as its can be done in __________
member? A. district court
A. District forum B. high court
C. supreme court D. state forum b) 25
37. Any appeal against a forum must be c) 30
done in a higher forum within ___ days d) 10
A. 45 11. Liability of a member in case of a
B. 30 private company is
C. 60 a) Limited
D. 90 b) Unlimited
MCQs on COMAPNIES ACT 1956 c) Both (a) or (b) d) None of the above
1. The term company is defined under 12. Maximum no. of persons in case of
which sec of the Act? partnership banking business ______
a) Sec 3 (1) b) Sec 4 (2) c) Sec 2 (4) d) a) 10
Sec 1 (3) b) 20
2. Property of the company belongs to c) 30
a) Company b) Share holders c) Members d) 5
d) Promoters 13. Minimum paid up share capital in
3. Which company shares can be freely case of a private company is _______
transferable a) 1 Lakh
a) Private Company b) Public Company c) b) 2 Lakhs
Both (a) & (b) d) None of the above c) 3 Lakhs
4. Minimum number of members in case d) 4 Lakhs
of public company 14. Minimum paid up share capital in
a) 1 b) 2 c) 5 d) 7 case of a public company is ________
5. Minimum number of members in case a) 1 Lakh
of private company is b) 3 Lakhs
a) 1 b) 2 c) 3 d) c) 5 Lakhs
6. Maximum no. of members in case of d) 7 Lakhs
private company is 15. Minimum no. of Directors in case of a
a) 50 b) 100 c) 150 d) 200 public company is __________
7. Maximum no .of members in case of a) 1
public company is b) 2
1) 0 b) unlimited c) 50 d) 100 c) 3
8. How many months did the company d) 4
can continue its business u/s 45 _______ 16. Minimum no. of Directors in case of
a) 1 private company is _______
b) 2 a) 1
c) 5 b) 2
d) 6 c) 3
9. Minimum subscription should be d) 4
received with in ______days 17. Age limit of Directors in case of public
a) 120 company is ______
b) 125 a) 65
c) 130 b) 70
d) 135 c) 75
*ANSWER: A* d) 80
*ANSWER: C* 18. Age limit of Directors in case of
*ANSWER: B* private company is _________
10. If minimum subscription is not a) 65
received application money should be b) 70
refunded with in c) 75
______days d) No limit
a) 20
19. The liability of members if company a) A.O.A
is limited by guarantee. b) M.O.A
a) Unpaid value of shares c) Partnership deed.
c) Unlimited liability d) None of these
b) Guarantee amount d) None of these
d) None of the above d) None of these
20. The liability of members if company 29. A company is named as govt.
is limited by shares company if it is holds ______% of paid up
a) Unpaid value of shares share capital
c) Unlimited liability a) more than 30 b) more than 40 c) more
b) Guarantee amount than 50 d) None
d) None of the above 30. Which companies are exempted to
21. Company’s owners are shareholders. add “Ltd” or “Pvt Ltd” at the end of their
So the company property belongs to the name
share holders. Do you a) Private
agree with this statement? b) Govt
a) Yes c) Defunct
b) No d) Association not for profits
22. Company will have fundamental 31.. If the companies does not increase
rights. their paid up capital by 1/5 lakhs with in
a) True 2 years such
b) False companies are known as ___________
23. XYZ Company shares are totally held a) Private
by government. The company will be b) Public
government. c) Defunct
a) True d) Govt Company
b) False 32. Under which sec. a private company
24. If the company failed to refund can voluntarily converted into public
application money with in 130 days from company _______
the date of issue of a) 34
prospectus on non- receipt of minimum b) 44
subscription who will be personally liable. c) 54
a) Company d) 64
b) Directors 33. Under which sec. a private company
c) Shareholders d) None of these can automatically converted into a public
25. Transfer of shares in the company is company ______
a) Restricted a) 34
b) Freely transferable b) 43
c) Prohibited c) 53
d) None of these d) 35
26. Transfer of shares in the partnership 34. Central Government permission is
firm is required in case of _______ conversion
a) Restricted __________
b) Freely transferable a) Private to public
27. Generally Company liability is b) Public to private
a) Limited c) Both (a) or (b) d) None of the above
b) Unlimited 35. With in how many days prospectus or
c) Prohibited statement in lieu of prospectus should
c) Situation does not arise file with ROC_______
28. Generally rights and obligations of a) 30
the company are regulated in b) 40
c) 20 c. A proposal
d) 50 d. An agreement
36. ________% of shares should be held by e. An acceptance
a company in another company so as to 2. An agreement that is enforceable by
become subsidiary law at the option of one or more parties,
a) more than 50 but not at the
b) more than 40 option of the other party, is
c) more than 30 called_____________
d) more than 20 a. A valid contract
37. According to which sec. name of the b. A void contract
company should end with “Ltd” or “Pvt c. An illegal contract
Ltd” d. A voidable contract
a) 10 e. An unenforceable contract
b) 11 3. A contract that ceases to be
c) 12 enforceable by law is called______________
d) 13 a. A void contract
38. The companies which are formed b. A valid contract
under special charter granted by the king c. A voidable contract
or queen of England are d. An illegal contract
called e. An executory contract
a) Statutory companies 4. When, at the desire of the promisor,
b) Registered companies c) Chartered the promisee or any other person
companies d) None of these performs or abstains
39.The companies which are formed from performing, or promises to perform
under special Act. Those companies are or abstain from performing an act, such
called as act or
a) Chartered companies abstinence is referred to
b) Statutory companies as_________________
c) Registered companies d) None of a. A proposal
these b. An agreement
40.Accepting of deposits from public in c. A consideration
case of private company is d. A contract
a) Prohibited e. An acceptance
b) Restricted 5. When the person to whom a proposal
c) Acceptable is made signifies their assent, the
d) None of these proposal is
considered______________
MCQ BOOKLET a. A contract
The Indian Contract Act, 1872 b. A promise
The Indian Contract Act, 1872 MCQ c. A void agreement
BOOKLET d. A consideration
Booklet e. An offer
1. When a person signifies to another his 6. Every promise or set of promises that
willingness to do or to abstain from doing forms the consideration for each other is
something, called___________
with a view to obtaining the other a. A contract
person's assent to such an act or b. An offer
abstinence, he is said to c. A proposal
make______________ d. An agreement
a. A contract e. A voidable contract
b. A promise 2
The Indian Contract Act, 1872 MCQ d. The acceptance is received and
BOOKLET confirmed by the proposer
Booklet e. The proposal is retracted by the
7. Promises that form the consideration acceptor before it reaches the proposer
or part of the consideration for each 11. The communication of an acceptance
other are is considered complete, as against the
called____________ acceptor,
a. Voidable promises when_______________
b. Conditional promises a. The proposer sends a confirmation
c. Reciprocal promises b. The acceptance is put in transmission
d. Unilateral promises by the acceptor
e. Executory promises c. The proposal is accepted in writing
8. The communication of proposals, d. The acceptance comes to the
acceptances, and revocations is knowledge of the proposer
considered to occur by e. The acceptor sends a notification of
any act or omission of the party acceptance
proposing, accepting, or revoking, 12. The communication of a revocation is
which_____________ considered complete, as against the
a. Forms a valid contract regardless of person who
communication makes it, when______________
b. Intends or results in the a. It is received by the other party
communication of the proposal, b. It is put into a course of transmission
acceptance, or revocation and is out of the power of the person who
c. Automatically binds the parties makes
involved it
d. Requires formal written c. The other party acknowledges the
communication between the parties revocation
e. Is implied through mutual agreement d. It is verbally communicated
9. The communication of a proposal is e. It is withdrawn before being
considered complete transmitted
when________________ 3
a. It is sent by the proposer The Indian Contract Act, 1872 MCQ
b. The proposer performs an act to BOOKLET
signify the proposal Booklet
c. It is accepted by the other party 13. The communication of a revocation is
d. It is acknowledged by a third party considered complete, as against the
e. It comes to the knowledge of the person to whom it is
person to whom it is made made, when_______________
10. The communication of an acceptance a. It is received by a third party
is considered complete, as against the b. It is put into a course of transmission
proposer, c. It comes to his knowledge
when____________ d. The revocation is rejected
a. The proposer acknowledges the e. The acceptance is still pending
acceptance 14. A proposal may be revoked at any
b. The acceptance is sent and reaches time before_______________
the proposer a. The proposer sends the proposal
c. It is put in a course of transmission to b. The acceptor accepts the proposal
the proposer and is out of the power of c. The communication of acceptance is
the received by the proposer
acceptor d. The communication of acceptance is
complete as against the proposer
e. The acceptance is acknowledged by a b. Only when verbal consent is given by
third party the acceptor
15. An acceptance may be revoked at c. When the conditions of the proposal
any time before: are performed or consideration for a
a. The communication of the acceptance reciprocal promise
is complete as against the acceptor is accepted
b. The proposer receives the acceptance d. When the proposer reaffirms the
c. The proposal is retracted by the proposal after initial communication
proposer e. Only after both parties sign a formal
d. The acceptance is transmitted agreement
e. The acceptor sends the acceptance 4
16. Under what circumstances is a The Indian Contract Act, 1872 MCQ
proposal considered revoked as per the BOOKLET
Contract Act? Booklet
a. By the communication of acceptance 19. How is a promise classified under the
by the acceptor to the proposer Contract Act?
b. By the failure of the proposer to a. A promise is always express,
communicate the proposal properly. regardless of how it is communicated
c. By the acceptor’s failure to fulfil a b. A promise is express if the proposal or
condition subsequent to acceptance acceptance is made in writing only
d. By the death or insanity of the c. A promise is implied when it is made in
proposer, even if the acceptor is unaware words
of it d. A promise is express if the proposal or
e. By the lapse of the time prescribed in acceptance is made in words, and
the proposal for its acceptance, or by a implied if made
reasonable otherwise than in words
time if no time is prescribed e. A promise is implied only if both
17. What are the conditions for parties agree to it verbally
converting a proposal into a promise 20. Which of the following statements
according to the Contract Act? accurately reflects the conditions under
a. Acceptance must be conditional and in which an agreement
writing becomes a contract under Indian
b. Acceptance must be absolute and contract law?
unqualified, and expressed in a usual and a. An agreement is a contract if made by
reasonable parties who consent freely, irrespective
manner unless otherwise prescribed of whether
c. Acceptance must be absolute, the object or consideration is lawful
unqualified, and communicated in any b. A contract requires the free consent of
form, irrespective of parties competent to contract, a lawful
the prescribed manner consideration,
d. The proposer can insist on a different and a lawful object, but the agreement
form of acceptance after the acceptance must also be in writing and witnessed
is c. Any agreement with lawful
communicated consideration and lawful object
e. The acceptor must communicate the automatically becomes a
acceptance only in the manner contract, even if consent is not entirely
prescribed, without free
exceptions d. All agreements are contracts if made
18. When is a proposal considered by the free consent of competent parties,
accepted according to the Contract Act? for lawful
a. Only when communicated in writing
consideration and a lawful object, unless e. If the person is of sound mind before
expressly declared void, and it may be or after entering the contract, but not
subject to necessarily at
additional requirements like writing or the time of making it
witnesses if specified by existing laws 5
e. The law requires that every contract The Indian Contract Act, 1872 MCQ
be in writing, witnessed, and registered BOOKLET
to be valid, Booklet
regardless of the consideration or object 23. According to Indian Contract Act,
involved when can a person who is usually of
21. Under Contract Act, who is unsound mind enter into a
considered competent to contract? valid contract?
a. Anyone of sound mind, regardless of a. A person of unsound mind can never
their age or legal disqualification enter into a contract, regardless of their
b. A person who has attained the age of mental state
majority and is of sound mind, unless at the time
prohibited by b. A person of unsound mind may make a
any law to which they are subject contract at any time, as long as it is in
c. Any individual, provided they are not writing
mentally incapacitated or under any legal c. A person who is usually of unsound
disqualification mind may make a contract only when
d. A person who is of the age of majority they are of sound
and not disqualified by law, even if they mind at the time of entering the contract
are of d. A person of unsound mind can make a
unsound mind contract if both parties agree to it, even
e. Only those who are of sound mind, if the person
have attained majority, and have never is unsound at the time
been subject to e. A person who is of unsound mind can
any legal restrictions make a contract only with the approval of
22. When is a person considered to be of a legal
sound mind for the purpose of making a guardian
contract under 24. When is a person who is usually of
Indian contract law? sound mind unable to enter into a valid
a. If the person is capable of forming a contract according to
rational judgment at any time, Indian Contract Act?
irrespective of when the a. A person who is usually of sound mind
contract is made can make a contract at any time,
b. When the person can understand the regardless of their
contract and form a rational judgment mental state at the time of the contract
about its effect b. A person who is usually of sound mind
on their interests at the time of making cannot make a contract when they are
the contract occasionally
c. If the person has a general of unsound mind at the time of entering
understanding of the law, regardless of the contract
their ability to judge the c. A person of sound mind may make a
contract’s effect on their interests contract at any time, provided the other
d. When the person can form a rational party agrees
judgment as to the effect of the contract d. A person who is usually of sound mind
on other may make a contract even when
parties, regardless of their own interests occasionally of
unsound mind, as long as the contract is b. Coercion includes only physical threats
written and witnessed made against a person to force them into
e. A person who is usually of sound mind a contract
may not make a contract unless they c. Coercion involves economic pressure
obtain a that does not necessarily involve illegal
medical certificate of soundness actions or
25. What does it mean for two or more threats
persons to consent according to the d. Coercion is any act that causes
Contract Act? someone to agree to a contract without
a. Consent occurs when parties have their knowledge
different interpretations of the 6
agreement The Indian Contract Act, 1872 MCQ
b. Consent is established when parties BOOKLET
agree on different aspects of the same Booklet
agreement e. Coercion is the committing or
c. Consent can be inferred if one party threatening to commit acts forbidden by
understands the agreement even if the the Indian Penal
other does not Code, or unlawfully detaining property to
d. Consent is only valid if all parties sign compel someone to agree
the contract in writing 28. What constitutes "undue influence" in
e. Consent is achieved when parties the context of Contract Act?
agree upon the same thing in the same a. A contract is induced by undue
sense influence when one party is in a
26. Under what conditions is consent dominant position and uses
considered free according to contract it to gain an unfair advantage over the
law? other
a. Consent is free when it is given b. Undue influence occurs only when one
voluntarily, regardless of the presence of party threatens the other to gain an
coercion or advantage in a
influence contract
b. Consent is said to be free only if it is c. Undue influence refers to any form of
given without any mistakes, persuasion used to encourage a party to
misrepresentations, or enter a
misunderstandings contract
c. Consent can be considered free even if d. Undue influence involves economic
it is influenced by external factors, as pressure applied to persuade someone to
long as the agree to
person understands the terms unfavorable terms
d. Consent is free when it is not caused e. A contract is under undue influence
by coercion, undue influence, fraud, when both parties are aware of the terms
misrepresentation, or mistake that would but one is
have prevented its existence less informed
e. Consent is free if it is expressed 29. In which situations is a person
clearly, even if influenced by considered to be in a position to
misrepresentation dominate the will of another under
27. What does "coercion" entail under the concept of undue influence?
Indian Contract Act? a. When one party has a legal claim
a. Coercion refers to any form of pressure against the other, regardless of their
to enter into an agreement, regardless of relationship
its legality
b. When a person holds real or apparent d. Fraud only applies when the deceit
authority over another, or stands in a leads to a measurable financial loss for
fiduciary the other party
relationship, or makes a contract with e. Fraud includes actions such as
someone whose mental capacity is suggesting false facts, concealing true
impaired facts, making
c. When one party uses persuasive promises without intent to perform, and
language to convince the other to agree any act designed to deceive, as well as
to a contract any specific
d. When the parties have a long-standing acts defined as fraudulent by law
relationship that influences their 32. Under what conditions can mere
decisions silence be considered fraudulent in the
e. When a contract is made with an context of contract law?
individual who is temporarily distracted a. Silence is always considered fraud if it
or uninterested affects the willingness of a party to enter
30. What happens when a person in a into a
position to dominate another’s will enters contract
into an unconscionable b. Silence is deemed fraudulent only
contract? when it is intentional and results in
a. The burden of proof lies on the financial loss for the
affected party to show that undue other party
influence was exerted 7
b. The contract is automatically void, The Indian Contract Act, 1872 MCQ
regardless of the circumstances BOOKLET
surrounding it Booklet
c. The provisions of the Indian Evidence c. Mere silence about facts does not
Act have no relevance in such cases constitute fraud unless it is the duty of
d. The person dominating the will must the person to
prove that the contract was not induced speak or their silence is equivalent to
by undue making a statement
influence if the transaction appears d. Silence can be considered fraud only if
unconscionable the party has explicitly stated that they
e. The person who is dominated has no will disclose
recourse if they agreed to the contract all relevant information
voluntarily e. Silence is never fraudulent, regardless
31. Which of the following accurately of the circumstances surrounding the
reflects the definition of "fraud" in contract
contract law? 33. Which of the following statements
a. Fraud is defined solely as the act of accurately defines "misrepresentation" in
making false statements with the contract law?
intention to deceive a. Misrepresentation involves making
another party false claims that the person knows to be
b. Fraud refers to any miscommunication untrue,
between parties, regardless of intent or regardless of the context
knowledge b. Misrepresentation includes positive
of the facts assertions made without warrant,
c. Fraud is limited to the actions of the breaches of duty that
principal party to the contract, excluding lead to an advantage without intent to
agents or deceive, and causing a party to make a
other involved parties mistake
about the substance of an agreement, or fraudulent silence had the means of
even if done innocently discovering the truth with ordinary
c. Misrepresentation is limited to diligence
intentional deceit aimed at causing c. A contract remains voidable even if the
financial harm to another affected party had access to the truth but
party did not
d. Misrepresentation can only occur if the verify it
party making the assertion is aware that d. The contract is voidable only if the
the misrepresentation was intentional,
information is incorrect regardless of the
e. Misrepresentation refers solely to affected party's ability to discover the
situations where one party intentionally truth
misleads another e. A contract is voidable whenever
for personal gain misrepresentation or fraud is involved,
34. What are the implications of consent regardless of its
caused by coercion, fraud, or impact on consent
misrepresentation in contract 36. What is the power of the court
law? regarding a contract induced by undue
a. An agreement induced by coercion, influence?
fraud, or misrepresentation is a. A contract induced by undue influence
automatically void is automatically void and cannot be
b. An agreement is voidable at the option enforced by
of the party whose consent was caused either party
by coercion, b. A contract induced by undue influence
fraud, or misrepresentation, who may is voidable at the option of the party
also insist on performance of the contract affected and
as if the may be set aside by the court, either
representations were true absolutely or with terms and conditions if
c. The affected party must accept the any benefit
contract as it is, regardless of any was received
coercion or c. The contract is voidable only if undue
misrepresentation involved influence was proven to cause financial
d. Consent caused by fraud or harm
misrepresentation allows the party to d. A contract induced by undue influence
seek damages only, not can only be set aside if both parties
specific performance agree to it
e. A party whose consent was influenced 8
can only cancel the contract, not enforce The Indian Contract Act, 1872 MCQ
it BOOKLET
35. When is a contract not voidable due Booklet
to misrepresentation or fraudulent e. The court can set aside the contract
silence? only if no benefit has been received by
a. A contract is always voidable when the affected
consent is caused by misrepresentation, party
regardless of 37. What happens to an agreement when
the circumstances both parties are under a mistake
b. The contract is not voidable if the regarding an essential fact?
party whose consent was caused by a. The agreement is voidable at the
misrepresentation discretion of either party
b. The agreement is valid, but can be
renegotiated based on the mistake
c. The agreement remains binding unless b. A contract dependent on the mutual
the mistake causes significant financial consent of the parties involved
harm c. A contract to do or not do something,
d. The agreement can only be voided if contingent on the occurrence or non-
one party was aware of the mistake occurrence of a
e. The agreement is automatically void if future collateral event
both parties are under a mistake d. A contract that is enforceable only
regarding an after a dispute between the parties
essential fact e. A contract with fixed obligations,
38. What is the legal status of an irrespective of external factors
erroneous opinion regarding the value of 42. When can a contingent contract
the subject matter in an based on an uncertain future event be
agreement? enforced by law?
a. It is considered a mistake of fact, a. It can be enforced as soon as the
making the agreement void contract is signed
b. It is not deemed a mistake of fact and b. It is enforceable if the event becomes
does not affect the validity of the impossible
agreement c. It is enforceable regardless of whether
c. It makes the agreement voidable at the event happens or not
the option of the affected party d. It is enforceable only if and when the
d. It is a valid reason to renegotiate the uncertain event happens
terms of the agreement e. It is automatically enforceable after a
e. It renders the agreement void if both specific period of time
parties agree on the erroneous value 9
39. Which of the following situations will The Indian Contract Act, 1872 MCQ
not make a contract voidable due to a BOOKLET
mistake? Booklet
a. A misunderstanding regarding a law 43. What is the status of a contingent
applicable in India agreement based on an impossible
b. A misunderstanding about a law event, whether the parties
enforced outside India are aware of the impossibility or not?
c. An incorrect belief about a fact a. The agreement is valid until the
relevant to the contract impossibility is discovered
d. An error related to foreign legal b. The agreement becomes void only if
provisions both parties know of the impossibility
e. A mistake involving a law not c. The agreement is enforceable if one
applicable in India party is unaware of the impossibility
40. Under what circumstances is the d. The agreement remains valid if both
consideration or object of an agreement parties were unaware of the impossibility
considered unlawful and e. The agreement is void from the
void? beginning, regardless of the parties'
a. If it is simply unethical knowledge
b. If it is expressly permitted by law 44. What happens to the performance of
c. If it is forbidden by law or defeats the promises in a contract if the promisor
provisions of any law dies before performing,
d. If it is advantageous to both parties unless a contrary intention appears in
e. If it involves mutual consent the contract?
41. What is a "contingent contract"? a. The contract becomes automatically
a. A contract that is immediately void
enforceable regardless of conditions b. The promises bind the representatives
of the promisor
c. The contract is transferred to the court 48. What is the liability of a promisor who
for enforcement promises to perform an act that he
d. The performance is excused by default knows is impossible or
e. The contract requires renegotiation unlawful, while the promisee is unaware
with new terms of this?
45. When is a contingent contract a. The promisor is not liable for any loss
considered impossible if it depends on b. The promisor must compensate the
the way a person will act at promisee for any loss due to non-
an unspecified time? performance
a. When the person takes any action that c. The promisor can be excused if the
makes it impossible to act within a promisee agrees
definite time or 10
under further contingencies The Indian Contract Act, 1872 MCQ
b. When the person delays the action BOOKLET
indefinitely Booklet
c. When the contract specifies no time d. The promisor's liability is limited to a
limit for the person to act nominal amount
d. When the person refuses to act, but e. The promisor can avoid compensation
the situation remains unchanged if he claims ignorance
e. When the person declares an intention 49. What can a creditor do when a debtor
not to perform the action fails to specify which debt a payment
46. When can a contingent contract applies to and there
based on the non-happening of an are no other indicators?
uncertain future event be a. The creditor must return the payment
enforced? to the debtor
a. It can be enforced as soon as the b. The creditor must apply the payment
contract is signed to the oldest debt
b. It can be enforced only when the event c. The creditor is obligated to wait for
happens further instructions from the debtor
c. It can be enforced regardless of d. The creditor cannot apply the payment
whether the event happens or not to any debt that is barred by limitation
d. It can be enforced before the event law
becomes impossible e. The creditor can apply the payment to
e. It can be enforced when the non- any lawful debt that is due and payable
happening of the event becomes at his
impossible discretion
47. What is the status of a contract to do 50. What happens when neither party
an act that becomes impossible or makes an appropriation for a payment
unlawful after the contract towards debts?
is made? a. The payment is returned to the debtor
a. The contract remains valid until the b. The payment is applied to the most
parties decide to cancel it recent debt only
b. The contract becomes void when the c. The payment is applied to discharge
act becomes impossible or unlawful the debts in chronological order,
c. The contract is automatically renewed regardless of
under new terms limitation laws
d. The contract is enforceable if both d. The payment can only be applied to
parties agree debts that are not barred by limitation
e. The contract can be modified to laws
accommodate the change e. The payment is divided equally among
all debts regardless of their age
51. What is the obligation of a creditor a. They are not entitled to any
when a debtor makes a payment with an reimbursement
express intimation or b. They can seek reimbursement only if
under circumstances implying that it the other person agrees
should be applied to a particular debt? 11
a. The creditor can choose which debt to The Indian Contract Act, 1872 MCQ
apply the payment to BOOKLET
b. The payment must be applied to the Booklet
specified debt as intended by the debtor c. They are entitled to be reimbursed by
c. The payment is returned to the debtor the individual responsible for the
for reallocation payment
d. The payment can be divided among all d. They can demand additional
debts at the creditor's discretion compensation for their efforts
e. The payment must be held in escrow e. They must wait for the other person to
until further notice default before claiming reimbursement
52. What happens to the original contract 55. What obligation does a person have if
when the parties agree to substitute a they benefit from something that another
new contract, rescind, person lawfully did
or alter it? or delivered, without the intention of
a. The original contract remains in effect doing it gratuitously?
b. The original contract must be a. The beneficiary has no obligation to
performed before any changes can be compensate
made b. The beneficiary must make
c. The original contract is automatically compensation or restore the delivered
void item
d. The original contract need not be c. The beneficiary can choose whether to
performed compensate or not
e. The original contract requires formal d. The beneficiary is only obligated if
cancellation by the court there was a written agreement
53. What right does a person have who e. The beneficiary must provide a favor in
supplies necessaries to someone return
incapable of entering into a 56. What responsibility does a person
contract? assume when they find goods belonging
a. The supplier has no right to to another and take
reimbursement them into their custody?
b. The supplier is entitled to a. They have no responsibility for the
reimbursement from the property of the goods
incapable person b. They can keep the goods as their own
c. The supplier can demand payment c. They must immediately return the
from the incapable person's guardians goods to the owner
d. The supplier must seek court approval d. They are only responsible if they agree
for reimbursement to hold the good
e. The supplier can only claim e. They are subject to the same
reimbursement if the incapable person responsibility as a bailee
agrees 57. What type of compensation is a party
54. What right does a person have if they entitled to when a contract is breached?
pay money that someone else is legally a. Compensation for any remote and
obligated to pay, indirect losses
and they have a vested interest in that b. Compensation only for losses that the
payment? parties were aware could result from the
breach
c. Compensation for any and all damages Booklet
sustained, regardless of their nature c. They are liable to pay the entire sum
d. Compensation for losses that naturally mentioned in the bond
arise in the usual course of events or d. They can negotiate a lower payment
were after the breach
foreseeable by the parties e. They are liable only if the breach
e. Compensation for emotional distress affects the public
caused by the breach 61. What is the entitlement of a person
58. What is the entitlement of a person who rightfully rescinds a contract?
injured by the failure to discharge an a. They are not entitled to any
obligation resembling a compensation
contract? b. They are entitled to compensation for
a. They can claim any amount they wish damages sustained due to the non-
b. They are entitled to the same fulfillment of the
compensation as if there had been a contract
contractual agreement c. They can claim punitive damages
c. They must first prove that a formal regardless of actual loss
contract existed d. They can only claim compensation if
d. They cannot claim compensation there was a written agreement
unless the obligation was written e. They must return any benefits
e. They can only claim damages for received from the contract before
emotional distress claiming compensation
59. What is the entitlement of a party 62. What is required when a promisor is
when a contract is breached and a to perform a promise without application
specific sum or penalty is from the promisee,
stipulated in the contract? and no time is specified in the contract?
a. They can claim any amount for a. The promise must be performed
damages, regardless of the stipulated immediately
amount b. The promise must be performed within
b. They are entitled to reasonable a reasonable time
compensation not exceeding the c. The promise can be performed at the
stipulated amount or promisor's discretion
penalty, regardless of actual damages d. The promise is considered void if not
c. They must prove actual damage to performed within a week
receive any compensation e. The promise can be postponed
d. They can only claim half of the indefinitely
stipulated amount 63. What is the duty of the promisee
e. They are entitled to a penalty even if when a promise is to be performed on a
no breach occurred certain day, and the
60. What is the liability of a person who promisor has not agreed to perform it
enters into a bail-bond or similar without application?
instrument for the performance a. The promisee must perform the
of a public duty, if they breach the promise themselves
condition of that instrument? b. The promisee is not required to do
a. They are liable only for partial anything
payment of the bond c. The promisee must wait for the
b. They are not liable if they claim promisor to initiate contact
ignorance of the conditions d. The promisee can apply at any time
12 and place of their choosing
The Indian Contract Act, 1872 MCQ
BOOKLET
e. The promisee must apply for e. It must be delivered without prior
performance at a proper place and within notice
usual business 67. What condition allows a seller of a
hours business's good-will to agree not to carry
64. What is the obligation of individuals on a similar business?
who make a joint promise, unless stated a. The agreement must be indefinite in
otherwise in the duration
contract? b. The agreement must specify local
a. Only one person is responsible for limits and appear reasonable to the court
fulfilling the promise c. The seller must pay a fee to the buyer
b. The promise can be ignored after the d. The seller must have no other
death of any party business interests
c. Only the last survivor is responsible for e. The agreement must be made in
fulfilling the promise writing and notarized
d. The promise is void upon the death of 68. What happens to contingent
the first promisor contracts if a specified uncertain event
e. All individuals must fulfill the promise does not occur within the fixed
during their joint lives and their time or becomes impossible before that
representatives must time?
fulfill it after their deaths a. The contract remains valid until
65. What happens when a promisor another event occurs
makes an offer of performance to the b. The contract can be enforced if both
promisee, and the offer is parties agree
not accepted? c. The contract automatically extends for
a. The promisor is responsible for non- another term
performance d. The contract is still valid but
b. The promisor loses all rights under the unenforceable
contract e. The contract becomes void if the event
c. The promisor is not responsible for has not happened by the expiration of
non-performance and retains rights the fixed
under the contract time or if the event becomes impossible
d. The promisee must pay a penalty for before that time
refusal to accept 69. Under what conditions can contingent
e. The offer becomes void immediately contracts be enforced when they are
66. What is one of the conditions that based on a specified
must be fulfilled for an offer of uncertain event not happening within a
performance to be valid? fixed time?
a. It can be conditional a. The contract is enforced only if both
13 parties agree
The Indian Contract Act, 1872 MCQ b. The contract remains valid indefinitely
BOOKLET c. The contract is automatically void after
Booklet the fixed time, regardless of the event
b. It must be made at any time and place d. The contract can be enforced at any
c. It must be made without the time, even if the event has occurred
opportunity for the promisee to verify the e. The contract may be enforced after
offer the fixed time has expired if the event
d. It must be made under circumstances has not
allowing the promisee to ascertain the happened, or if it becomes certain before
promisor's that time that the event will not happen
ability to perform
70. What is the flexibility given to a e. Only amounts authorized by the
promisor when a promise is to be promisor in writing
performed on a certain day and 73. What is the primary purpose of a
the promisor has agreed to perform it "contract of guarantee"?
without application by the promisee? a. To assure a third party's performance
a. The promisor must perform the without any obligation
promise at the exact time requested by b. To provide a loan with collateral from
the promisee the guarantor
b. The promisor can delay performance c. To agree to perform a promise or
until the next business day discharge a liability of a third person in
c. The promisor must notify the promisee case of their
before performing default
d. The promisor can perform it at any d. To create a partnership where all
time during usual business hours on that parties share liabilities equally
day and at e. To transfer ownership of property as
the appropriate place security for a debt
e. The promisor can only perform in the 74. In a contract of guarantee, which of
morning hours the following correctly identifies the roles
71. Which of the following best describes of the parties
a contract where one party agrees to involved?
protect the other from a. The surety is the creditor, the principal
losses due to actions taken either by debtor is the guarantor, and the creditor
themselves or by a third party? is the
a. A contract that only involves the debtor
actions of the promisor b. The principal debtor guarantees the
b. A contractual agreement to reimburse surety's obligations, and the creditor is
for losses incurred in business merely an
c. A contract of indemnity, ensuring observer
coverage against specific losses c. The creditor provides the guarantee,
d. An agreement that guarantees while the surety and principal debtor are
performance by a third party interchangeable roles
e. A contract of bailment focused solely d. The surety provides the guarantee, the
on the care of property principal debtor is the one whose default
14 prompts
The Indian Contract Act, 1872 MCQ the guarantee, and the creditor is the
BOOKLET one receiving the guarantee
Booklet e. The principal debtor and surety are the
72. In a contract of indemnity, what can same person, while the creditor has no
the promisee recover from the promisor role in the
when acting within guarantee
the scope of their authority? 75. What can serve as sufficient
a. Only the damages paid in any suit consideration for a surety providing a
related to the indemnity guarantee?
b. All damages, costs, and sums paid a. Only a monetary payment made
under a compromise, provided certain directly to the surety
conditions are b. Anything done or promised for the
met benefit of the principal debtor
c. Only costs incurred in defending a suit, c. A written agreement detailing the
regardless of the circumstances terms of the guarantee
d. A flat fee for legal representation, d. A mutual understanding without any
regardless of the outcome formal promise
e. An unrelated act of kindness from the d. The creditor must seek court approval
creditor to revoke the guarantee
76. What does it mean when it is stated e. The continuing guarantee becomes
that the liability of the surety is co- void for all past transactions
extensive with that of the 80. What happens to the liability of a
principal debtor? surety if there is a change in the terms of
a. The surety’s liability is always less the contract between
than that of the principal debtor the principal debtor and the creditor,
b. The surety is only liable for a portion of made without the surety's consent?
the principal debtor's obligations a. The surety remains liable for all future
c. The surety's liability matches the full transactions
extent of the principal debtor's b. The surety is discharged from liability
obligations, unless for transactions occurring after the
specified otherwise in the contract change
d. The surety is not liable at all if the c. The surety can only be discharged if
principal debtor defaults the principal debtor agrees
e. The surety can only be held liable if d. The surety's liability is increased with
the principal debtor has no assets the new terms
77. What is the term used for a e. The surety must continue to fulfill
guarantee that covers multiple obligations until formally revoked
transactions over time? 81. Under what circumstances is the
a. Temporary guarantee surety discharged from their liability?
b. Conditional guarantee a. When the creditor fails to inform the
c. Continuing guarantee surety about the debtor's actions
15 b. When the principal debtor defaults but
The Indian Contract Act, 1872 MCQ the creditor does not take legal action
BOOKLET c. When the principal debtor is released
Booklet from liability through a contract with the
d. Fixed guarantee creditor or
e. Non-revocable guarantee due to the creditor’s actions that legally
78. How can a surety revoke a continuing discharge the debtor
guarantee for future transactions? d. When the principal debtor makes a
a. By notifying the creditor partial payment to the creditor
b. By verbal agreement with the principal e. When the creditor extends the
debtor deadline for repayment without informing
c. By simply ceasing to perform the surety
obligations 82. When is a surety discharged from
d. By revoking any related contracts their liability in a contract between the
e. By informing the principal debtor only creditor and the principal
79. What effect does the death of the debtor?
surety have on a continuing guarantee a. When the creditor refuses to sue the
regarding future principal debtor
transactions? b. When the creditor gives time or enters
a. The guarantee remains in effect until into a composition with the principal
formally revoked debtor, unless
b. The guarantee is automatically the surety consents
transferred to the principal debtor c. When the principal debtor requests
c. The guarantee is revoked for future more time to pay without the surety’s
transactions, unless specified otherwise knowledge
in the d. When the creditor initiates legal action
contract against the principal debtor
e. When the surety is unaware of any debtor
communication between the debtor and c. When the creditor allows the principal
the creditor debtor to renegotiate the terms
83. Does the creditor’s mere forbearance d. When the creditor extends additional
to sue the principal debtor discharge the credit to the principal debtor without
surety? consulting the
a. Yes, the surety is discharged surety
immediately e. When the surety does not make timely
b. No, unless the guarantee provides payments
otherwise 86. When does a surety acquire all the
c. Yes, if the forbearance lasts for more rights of the creditor against the principal
than a year debtor?
d. Yes, unless the debtor agrees to new a. When the creditor initiates legal action
terms against the principal debtor
e. No, but only if the surety agrees in b. When the surety notifies the creditor
writing of their intention to take over the debt
16 c. When the surety fully performs or pays
The Indian Contract Act, 1872 MCQ for the guaranteed debt or duty
BOOKLET d. When the principal debtor defaults but
Booklet does not inform the surety
84. What happens when a creditor e. When the creditor agrees to transfer
releases one co-surety in the presence of the rights to the surety
other co-sureties? 87. Under what circumstance is a surety
a. All co-sureties are discharged from discharged from liability when the
their liabilities creditor holds security
b. Only the co-surety released is against the principal debtor?
discharged from liability to the creditor a. When the surety is unaware of the
and other sureties security held by the creditor
c. The release of one co-surety does not b. When the principal debtor provides
discharge the others, nor does it free the additional security without notifying the
released surety
surety from responsibility to the other c. When the surety refuses to take
sureties responsibility for the security
d. The creditor must release all co- d. When the creditor loses or parts with
sureties to discharge the debt the security without the surety’s consent
e. The co-surety is released only from e. When the creditor demands payment
future liabilities, but remains responsible before the security is realized
for past 88. When is a guarantee considered
debts invalid due to the actions of the creditor?
85. Under what condition is a surety a. When the creditor fails to inform the
discharged from liability due to the surety about the risks involved
actions or omissions of the b. When the creditor does not disclose
creditor? the financial condition of the principal
a. When the creditor delays the debtor
repayment of the loan c. When the creditor obtains the
b. When the creditor acts in a way guarantee without the principal debtor's
inconsistent with the rights of the surety consent
or fails to d. When the surety fails to verify the
perform a duty owed to the surety, terms of the contract
impairing the surety’s remedy against
the principal
e. When the creditor misrepresents or 92. In the case of co-sureties for the
knowingly assents to misrepresentation same debt or duty, what is their liability
concerning a in the absence of a contract
material part of the transaction to the contrary?
89. Under what condition is a guarantee a. Each co-surety is liable to pay the
invalid due to the creditor’s conduct? entire debt
a. When the creditor does not disclose b. Each co-surety is liable to pay an equal
minor details of the transaction share of the unpaid debt
b. When the creditor fails to notify the c. Co-sureties are liable only if they have
surety of the principal debtor's past knowledge of each other
defaults d. Only one co-surety is liable if the
c. When the creditor does not inform the principal debtor defaults
surety of changes in the interest rate e. Each co-surety's liability is determined
d. When the creditor remains silent about by the creditor's discretion
material circumstances relevant to the 93. How are co-sureties who are bound in
transaction different sums liable to pay in the event
e. When the surety refuses to inquire of default?
about the terms of the contract a. Each co-surety pays an equal share of
90. When is a guarantee invalid due to the total debt, regardless of their
the absence of a co-surety? respective
17 obligations
The Indian Contract Act, 1872 MCQ b. The co-surety with the largest
BOOKLET obligation pays the full amount
Booklet c. Co-sureties are not liable if their
a. When the creditor fails to inform the obligations differ
surety about the co-surety’s obligations d. Each co-surety’s liability is determined
b. When the principal debtor does not solely by the creditor's decision
agree to the involvement of the co-surety e. Co-sureties are liable to pay equally,
c. When the creditor acts on the but only up to the limits of their
guarantee without the co-surety joining respective obligations
as promised 94. In the context of a "bailment," who is
d. When the co-surety is unaware of the the person delivering the goods, and
guarantee’s terms what is the nature of the
e. When the surety withdraws their contract between the two parties?
guarantee before the co-surety joins a. The bailee delivers the goods for a
91. What is the surety entitled to recover specified purpose, and the bailor is
from the principal debtor in a contract of bound to return them
guarantee? b. The bailor delivers the goods to the
a. Sums that the surety has rightfully bailee, who must return or dispose of
paid under the guarantee them according
b. Any sum paid under the guarantee, to the bailor's directions once the
whether rightful or wrongful purpose is fulfilled
c. Only sums that the surety has paid c. The bailee delivers the goods to the
wrongfully bailor, with no obligation to return them
d. All amounts paid by the surety, d. The bailor delivers the goods, and the
including legal fees bailee has full ownership
e. Any losses incurred due to the e. The bailee is free to use the goods as
principal debtor’s default, regardless of he wishes without the need to return
payment them
95. How can delivery be made to the
bailee in a bailment arrangement?
a. By physically handing over the goods b. If the bailor changes his mind about
only the contract
b. By simply notifying the bailee of the c. If the bailee fails to return the goods
goods’ location on time
c. By transferring ownership of the goods d. If the goods are damaged through
to the bailee normal use
d. By sending the goods via courier e. If the bailee does anything with the
without any prior agreement goods that is inconsistent with the
e. By any action that effectively puts the conditions of the
goods in the possession of the bailee or bailment
an authorized 99. What happens if the bailee uses the
person on their behalf bailed goods in a manner not consistent
96. What is the bailor’s obligation with the conditions
regarding faults in the bailed goods? of the bailment?
a. The bailor is not required to disclose a. The bailee is not liable for any damage
any faults in the goods b. The bailee is liable to compensate the
b. The bailor is only responsible for bailor for any damage arising from such
damages if the bailee complains use
c. The bailor is liable for damages only if c. The bailor must accept the bailee's
the bailee was aware of the faults actions as long as the goods are returned
18 d. The bailee can only be liable if the
The Indian Contract Act, 1872 MCQ damage was intentional
BOOKLET e. The bailee is automatically discharged
Booklet from the contract
d. The bailor has no responsibility if the 100. What occurs if the bailee mixes the
goods are bailed for hire bailor's goods with his own, with the
e. The bailor must disclose known faults bailor's consent?
that materially affect the use or create a. The bailor loses all rights to the goods
extraordinary b. The bailee gains sole ownership of the
risks for the bailee mixture
97. What standard of care is the bailee c. Both the bailor and the bailee have an
required to exercise regarding the goods interest in the mixture proportional to
bailed to him? their respective
a. The bailee must take exceptional care shares
beyond what is reasonable d. The mixture must be returned to the
b. The bailee is only required to ensure bailor intact
the goods are not intentionally damaged e. The bailee must separate the goods
c. The bailee must follow the specific before any sale
instructions of the bailor, regardless of 101. If the bailee, without the consent of
general care the bailor, mixes the goods of the bailor
d. The bailee must take care equivalent with his own goods,
to that of a person of ordinary prudence and the goods can be separated or
regarding his divided, what is the outcome regarding
own goods of similar characteristics the property in the
e. The bailee has no obligation to take goods and the responsibilities of the
care if the goods are not of high value bailee?
98. Under what condition can a bailor a. The property in the goods is
avoid a contract of bailment? transferred to the bailee, and he bears no
a. If the bailee uses the goods for expenses
personal purposes
b. The property in the goods remains c. The bailee must bear all expenses
with the bailor only, and the bailee must without any compensation from the
return the goods bailor
immediately d. The bailor can choose whether or not
c. The property in the goods remains with to reimburse the bailee for expenses
the parties respectively, but the bailee e. The bailor shall repay the bailee for
must bear necessary expenses incurred for the
the expenses of separation and any purpose of the
damage arising from the mixture bailment
d. The bailee has the right to sell the 104. If a lender loans a thing for
goods as they become his property upon gratuitous use for a specified time or
mixing purpose, what obligation does
e. The goods automatically become the the lender have if the borrower suffers a
property of the bailor, and the bailee is loss from this return?
entitled to a. The lender can require the return at
compensation any time without any obligation to
19 indemnify the
The Indian Contract Act, 1872 MCQ borrower
BOOKLET b. The lender can only require the return
Booklet after the specified time has elapsed
102. If the bailee, without the consent of c. If the borrower suffers a loss exceeding
the bailor, mixes the goods of the bailor the benefit derived from the loan, the
with his own goods lender must
in such a way that it is impossible to indemnify the borrower for that excess
separate the goods bailed from the other loss
goods and return d. The borrower must return the item
them, what is the entitlement of the immediately upon the lender's request,
bailor? regardless of
a. The bailor is entitled to compensation any loss
from the bailee for the loss of the goods e. The lender must compensate the
b. The bailor loses ownership of the borrower for all benefits derived from the
goods completely and cannot claim loan, regardless
compensation of any loss incurred
c. The bailor is entitled to a refund of the 105. What is the duty of the bailee
original value of the goods from the regarding the return of goods once the
bailee time for which they were
d. The bailor must bear the expenses of bailed has expired or the purpose has
the mixture and cannot claim anything been accomplished?
from the bailee a. The bailee must wait for the bailor to
e. The bailee has the right to sell the ask for the goods before returning them
mixed goods as they now own them b. The bailee can keep the goods as long
103. In a situation where goods are to be as they want after the time expires
kept, carried, or worked on by the bailee c. The bailee should sell the goods if the
for the bailor bailor does not ask for them
without any remuneration for the bailee, d. The bailee must only return the goods
what is the obligation of the bailor if they have been damaged
regarding expenses? e. The bailee must return or deliver the
a. The bailor is not responsible for any goods as directed by the bailor, without
expenses incurred by the bailee demand
b. The bailor must pay the bailee a fixed
fee for their services
106. What happens to a gratuitous 109. What happens if the bailor has no
bailment if either the bailor or the bailee title to the goods, and the bailee, acting
dies? in good faith, returns
a. The bailment continues until the the goods according to the bailor's
agreed time is over directions?
b. The bailment is transferred to the heirs a. The bailee is not responsible to the
of the deceased owner for the delivery of the goods
c. The bailee must return the goods only b. The bailee is responsible to the owner
if asked by the bailor’s family for delivering the goods back
d. The gratuitous bailment is terminated c. The bailee must seek permission from
by the death of either the bailor or the the owner before returning the goods
bailee d. The bailee can keep the goods if the
e. The bailment can only be terminated bailor has no title
by the bailor’s death, not the bailee’s e. The bailee is only responsible if the
107. What is the obligation of the bailee delivery was made after a specific time
regarding any increase or profit from the 110. What can a person, other than the
goods bailed, if bailor, do if they claim ownership of
there is no contract stating otherwise? goods that have been
a. The bailee can keep any increase or bailed?
profit for themselves a. The person must return the goods to
b. The bailee must return only the the bailor immediately
original goods, not any increase or profit b. The person can keep the goods
20 without any further action
The Indian Contract Act, 1872 MCQ c. The person has to negotiate directly
BOOKLET with the bailor for the return of the goods
Booklet d. The person can apply to the Court to
c. The bailee must decide whether to stop the delivery of the goods to the
return the increase or profit bailor and to
d. The bailee can keep the increase or decide the title to the goods
profit as a reward for their services e. The person must provide evidence to
e. The bailee is bound to deliver any the bailee before any action can be taken
increase or profit to the bailor or 111. What rights does the finder of lost
according to the bailor’s goods have regarding compensation or
directions reward from the
108. What is the bailor's responsibility to owner?
the bailee if the bailor was not entitled to a. The finder can sue the owner for
make the bailment compensation for preserving the goods
or give directions regarding the goods? b. The finder has no right to retain the
a. The bailor is not responsible for any goods until compensation is received
loss the bailee incurs c. The finder must return the goods
b. The bailor must compensate the bailee immediately without any claim for
for any loss sustained due to his lack of compensation
entitlement d. The finder may retain the goods until
c. The bailee must bear all losses without compensation for trouble and expenses is
recourse to the bailor received
d. The bailor is only responsible for losses e. The finder cannot claim any reward,
that occur during transportation even if the owner has offered one
e. The bailor must return the original 112. Under what circumstances can the
goods to the bailee, regardless of any finder of lost goods, commonly the
loss subject of sale, sell the
item?
a. The finder can sell the goods 115. What is the bailment of goods as
immediately upon finding them security for the payment of a debt or
b. The finder can sell the goods only if performance of a promise
the owner refuses to pay the full value of called, and what are the parties involved
the item known as?
c. The finder may sell the goods if the a. The bailment is called a "pledge," the
owner cannot be found and the item is in bailor is called the "pawnor," and the
danger of bailee is called
perishing or losing most of its value the "pawnee”
d. The finder can sell the goods when the b. The bailment is called a "lien," the
lawful charges exceed the full value of bailor is called the "debtor," and the
the item bailee is called the
e. The finder may sell the goods only "creditor”
after keeping them for a specified period c. The bailment is called "security," and
113. What right does the bailee have both parties are called "pledgees”
after rendering a service involving labor d. The bailment is called "mortgage," and
or skill on the bailed the bailor is called the "mortgagor”
goods? e. The bailment is called "pledge," and
21 both parties are known as "pledgers”
The Indian Contract Act, 1872 MCQ 116. What can the pawnee retain the
BOOKLET pledged goods for, in addition to the
Booklet payment of the debt or
a. The bailee must return the goods performance of the promise?
immediately, regardless of payment a. The pawnee can only retain the goods
b. The bailee can keep the goods for the principal debt amount
permanently if payment is not made b. The pawnee may retain the goods only
c. The bailee has the right to retain the for the debt or promise, but not for any
goods until he receives due payment for additional
the services costs
rendered, unless there is a contract c. The pawnee may retain the goods for
stating otherwise the payment of the debt, interest on the
d. The bailee must seek legal action to debt, and
claim remuneration before retaining the necessary expenses incurred for
goods possession or preservation of the goods
e. The bailee can sell the goods to d. The pawnee can retain the goods
recover the payment owed for services indefinitely without any obligation to
114. Who has the right to retain goods as return them
security for a general balance of account e. The pawnee can only retain the goods
in the absence until the bailor demands their return
of a contract to the contrary? 117. In the absence of a contract, for
a. Only bankers and policy-brokers what debt or promise can the pawnee
b. All bailees have this right retain the pledged
automatically goods?
c. Only attorneys of a High Court and a. The pawnee can retain the goods only
bankers can retain goods as security for the specific debt or promise for which
d. No one has the right to retain goods they were
without an express contract pledged
e. Bankers, factors, wharfingers, b. The pawnee can retain the goods for
attorneys of a High Court, and policy- any debt owed by the pawnor, even if
brokers can retain unrelated to
goods for a general balance of account the pledge
c. The pawnee can retain the goods for d. The pawnee cannot take any action
all future debts without any contract and must wait until the pawnor repays
d. The pawnee must return the goods the debt
immediately after the first payment is e. The pawnee can keep the entire
made proceeds of the sale, even if it exceeds
e. The pawnee is always presumed to the debt
have a right to retain the goods for future 120. What can the pawnor do if they
debts, default on payment of the debt or
regardless of the contract performance of the promise,
118. What is the pawnee entitled to but wish to redeem the pledged goods
receive from the pawnor in relation to before they are sold?
extraordinary expenses a. The pawnor cannot redeem the goods
incurred for the preservation of the after default
pledged goods? b. The pawnor may redeem the goods at
22 any time without paying any additional
The Indian Contract Act, 1872 MCQ expenses
BOOKLET c. The pawnor can redeem the goods
Booklet only after the sale is completed
a. The pawnee is not entitled to any d. The pawnor may redeem the goods at
compensation for extraordinary expenses any time before the actual sale, but must
b. The pawnee can only claim ordinary pay any
expenses for the goods expenses arising from the default
c. The pawnee must bear all expenses e. The pawnor must repay the full
related to the preservation of the goods amount without any option to redeem
without the goods
claiming from the pawnor 121. When is a pledge made by a
d. The pawnee can claim compensation mercantile agent in possession of goods
only for expenses incurred after the or documents of title
pledge is valid, even if the agent lacks explicit
terminated authority from the owner?
e. The pawnee is entitled to receive from a. The pledge is always invalid unless the
the pawnor any extraordinary expenses owner explicitly authorizes it
incurred for b. The pledge is valid only if the pawnee
preserving the pledged goods knows the mercantile agent personally
119. What are the rights of the pawnee if c. The pledge is valid only if the owner
the pawnor defaults in payment of the directly authorizes the pawnee
debt or performance d. The pledge is valid only if the goods
of the promise for which the goods were are sold immediately after the pledge
pledged? e. The pledge is valid if the mercantile
a. The pawnee must return the goods to agent acts in the ordinary course of
the pawnor immediately, even if the debt business and the
is not paid pawnee acts in good faith without
b. The pawnee can sell the goods knowing the agent lacks authority to
pledged without giving any notice to the pledge
pawnor 122. Under what conditions does a
c. The pawnee may either retain the pawnee acquire a good title to goods
goods as collateral security or sell them pledged by a pawnor who
after giving the has possession of the goods under a
pawnor reasonable notice voidable contract?
a. The pawnee acquires a good title only
if the contract has been rescinded
b. The pawnee acquires a good title only c. No consideration is necessary to create
if they are aware of the pawnor's defect an agency
of title d. A minimum financial deposit is
c. The pawnee acquires a good title if the required to form an agency
contract has not been rescinded, and the e. Consideration is only required if the
pawnee agent is a minor
acts in good faith and without notice of 126. Who is considered a "sub-agent" in
the pawnor's defect of title the context of agency law?
d. The pawnee cannot acquire a good a. A person directly employed by the
title under any circumstances if the principal to assist the agent
contract is voidable b. A person acting independently but in
e. The pawnee acquires a good title only collaboration with the original agent
if the goods are immediately sold after c. A person who acts on behalf of the
the pledge principal without the agent’s knowledge
123. Who is eligible to employ an agent? d. A person employed by, and acting
a. Only individuals who are minors under the control of, the original agent in
b. Any person who is of the age of the business
majority and of sound mind of the agency
c. Only individuals who are financially e. A person who replaces the original
independent agent permanently
d. Any person, regardless of age or 127. According to Section 192, when a
mental state sub-agent is properly appointed, how are
e. Only individuals with legal training the responsibilities
23 distributed between the principal, agent,
The Indian Contract Act, 1872 MCQ and sub-agent?
BOOKLET a. The principal is not responsible for the
Booklet acts of the sub-agent in any case
124. Who can become an agent, and b. The principal is bound by the sub-
under what conditions can they be held agent's acts, while the sub-agent is
responsible to the accountable to the
principal? agent, not the principal, except for fraud
a. Only individuals who are of the age of or willful misconduct
majority and of sound mind can become c. The agent is responsible to the
agents and principal for the acts of the sub-agent,
be held responsible to the principal and the sub-agent is
b. Any person, regardless of age or responsible to the principal for all acts
mental state, can become an agent and d. The sub-agent is responsible to both
be held the agent and the principal for all acts,
responsible regardless of
c. Minors can become agents and be held the nature of the wrong
responsible to the principal e. The sub-agent is responsible only to
d. Only third parties can appoint an agent third parties for his acts, not to the agent
e. No restrictions exist for becoming an or principal
agent or being held responsible to the 128. What happens when an agent, with
principal express or implied authority, names
125. What is required to create an another person to act
agency relationship? for the principal in the agency?
a. Consideration is always necessary to a. The named person becomes a sub-
create an agency agent of the original agent
b. A formal contract with consideration is b. The named person is considered an
required to establish an agency independent contractor
c. The original agent retains all a. The principal is always bound by the
responsibilities and the named person agent's acts, regardless of authority
has no authority b. The principal is bound if the agent has
d. The named person becomes an agent a history of similar acts
only if the principal gives express c. The principal is bound if their words or
approval conduct led third parties to believe the
e. The named person is an agent of the acts were
principal for the specific tasks entrusted within the agent's authority
to him d. The principal is only bound if the third
129. Under what circumstances can an party can prove they relied on the
agency be terminated? agent's
a. Only by the principal revoking representation
authority or the agent renouncing their e. The principal is bound only if the agent
role has acted negligently
b. By the principal revoking authority, 132. Under what circumstance is a
agent renouncing, completion of the principal required to compensate their
business, either agent?
party's death or insanity, or the a. The principal is required to
principal's insolvency compensate the agent only if the agent
c. Exclusively when both parties agree to has acted negligently
terminate the agency b. The principal must compensate the
24 agent for any injury caused by external
The Indian Contract Act, 1872 MCQ factors
BOOKLET c. The principal is liable to compensate
Booklet the agent only if a written contract states
d. Automatically after a specified so
duration, regardless of other factors d. The principal is only responsible for
e. Only through a formal written notice compensation if the agent reports the
from the principal injury
130. What are the liabilities of a person immediately
falsely representing themselves as an e. The principal must compensate the
authorized agent? agent for injuries caused by the
a. They are not liable unless the alleged principal's neglect or
employer formally denies the lack of skill
representation 133. When can a principal revoke the
b. They are liable for compensation to a authority given to their agent?
third party for any loss if their acts are a. The principal can revoke authority only
not ratified by if the agent agrees to the revocation
the alleged employer b. The principal may revoke authority at
c. They can only be held liable if the third any time before it has been exercised to
party proves fraud bind the
d. They are exempt from liability if the principal, unless stated otherwise in the
third party had prior knowledge of the previous section
false c. The principal can revoke authority only
representation during a specified period
e. They are only responsible for d. The principal cannot revoke authority
compensation if the loss occurred due to once the agent has acted on it
negligence e. The principal must provide written
131. Under what condition is a principal notice to revoke authority
bound by acts performed by an agent
without authority?
134. What authority does an agent have d. The agent must only choose agents
when authorized to perform an act or who have a proven track record
conduct a business? e. The agent can choose anyone without
a. An agent can only perform the specific concern for discretion or prudence
act assigned to them 137. Under what condition can an agent
b. An agent can only perform acts that employ another to perform acts they are
are explicitly mentioned in their authority personally
c. An agent has authority only for actions obligated to perform?
that directly benefit the principal a. An agent can always employ another,
d. An agent can do every lawful thing regardless of their obligations
necessary to perform the act or conduct b. An agent can employ another only if
the business the principal approves the action
e. An agent must seek prior approval for c. An agent must seek permission from
any action taken in conducting business the third party before employing another
135. What authority does an agent have d. An agent can delegate tasks if they
in an emergency situation? are overwhelmed with work
a. An agent can take any action without e. An agent cannot employ another
limitation, regardless of the unless trade customs allow for a sub-
circumstances agent or the nature
b. An agent can only take actions that of the agency requires it
have been pre-approved by the principal 138. How can ratification of an agent's
c. An agent has the authority to perform acts be manifested?
acts necessary to protect the principal a. Ratification can only be expressed
from loss, as through written consent
a prudent person would in similar b. Ratification can be either expressed or
circumstances implied based on the conduct of the
25 principal
The Indian Contract Act, 1872 MCQ c. Ratification is automatic if the principal
BOOKLET does not object within a certain
Booklet timeframe
d. An agent must consult with the d. Ratification must always be verbal and
principal before taking any emergency cannot be implied
actions e. Ratification can only occur after a
e. An agent cannot take any action in an formal review of the agent's actions
emergency unless explicitly stated in 139. What is the limitation of ratification
their authority regarding unauthorized acts done on
136. What is the responsibility of an behalf of another?
agent when selecting another agent for a. Ratification can validate any
the principal? unauthorized act regardless of its impact
a. The agent must select the best agent b. Ratification is effective only if the third
available, regardless of circumstances person consents to it
b. The agent must exercise ordinary c. Ratification can be applied
prudence in selecting another agent; if retroactively to all unauthorized acts
they do, they are d. Unauthorized acts can be ratified if the
not liable for that agent's acts or principal pays a fee
negligence e. An unauthorized act cannot be ratified
c. The agent is responsible for any acts if it would subject a third person to
or negligence of the agent selected, damages or
regardless of terminate their rights or interests
their discretion
140. Under what condition cannot a c. The agent must notify the third parties
principal revoke the authority given to an involved but is not responsible for
agent? preservation
a. The principal can revoke authority at d. The agent has no obligations and can
any time, regardless of the agent's act independently of the principal's
actions representatives
b. The principal can revoke authority only e. The agent is only responsible for
if the agent agrees to the revocation returning the property to the principal's
c. The principal can revoke authority as representatives.
long as they notify the agent 143. What is the employer's liability
d. The principal cannot revoke authority when an agent performs an act in good
after it has been partly exercised faith?
concerning acts and a. The employer is not liable for any
obligations that have already arisen from actions taken by the agent
those actions b. The employer can only indemnify the
e. The principal can revoke authority if agent if the act benefits the employer
the agent has acted against the c. The employer is liable only if the agent
principal's interests. explicitly requests indemnification
141. What is required when an agent's d. The employer is liable only for acts
authority is revoked or renounced? performed with explicit authority
a. No notice is required; the principal can e. The employer is liable to indemnify the
revoke authority at any time agent for consequences arising from the
b. Immediate revocation is allowed act, even
without any notice if it injures third parties' rights
c. Reasonable notice must be given, or 144. In the context of agency, who is
the party responsible for the damage referred to as the "agent" and who is the
must "principal"?
compensate the other a. The agent is the person employing
26 another, and the principal is the person
The Indian Contract Act, 1872 MCQ employed
BOOKLET b. The agent is the individual responsible
Booklet for decisions, while the principal is the
d. Notice can be given verbally or in one taking
writing, and it does not need to be action
reasonable c. The agent and principal are the same
e. Only the agent needs to be notified; entity in different roles
the principal does not need to provide d. The agent is the person representing
notice another in dealings, while the principal is
142. What is the agent's responsibility the person
when an agency is terminated due to the for whom the act is done
principal's death or e. The agent is a third party involved in
unsound mind? the transaction, and the principal is the
a. The agent is required to protect and buyer
preserve the interests entrusted to him 145. What is required for valid ratification
on behalf of the in relation to knowledge of facts?
principal's representatives a. A person can ratify regardless of their
b. The agent must cease all activities knowledge of the facts
immediately without any further b. Ratification is valid if the person has
obligations some knowledge of the facts, even if it's
not complete
c. A person must be informed only of the a. The agent can keep the sums received
benefits of the act to ratify it for personal use
d. Ratification can occur based on b. The agent must pay all sums received
hearsay or assumptions about the facts to the principal after deducting any
e. Valid ratification requires that a person necessary
has complete and accurate knowledge of expenses
the c. The agent is only required to report the
relevant facts amounts received to the principal
146. What is the legal effect of contracts d. The agent must invest the sums
made and obligations arising through an received on behalf of the principal
agent on behalf of e. The agent can withhold payment if
a principal? they believe the principal has violated
a. They are considered invalid unless the their agreement
principal personally approves them 149. What is an agent's duty in situations
b. They have different legal where they encounter difficulties?
consequences than contracts made a. The agent should act independently
directly by the principal without consulting the principal
c. They can be enforced as if the b. The agent can make arbitrary
principal had entered into the contracts decisions without notifying the principal
and performed the c. The agent must defer all decisions
acts personally until the principal is available
d. They require additional documentation d. The agent is obligated to seek the
to be enforceable principal's instructions and communicate
e. They can only be enforced if the agent diligently
is authorized in writing e. The agent should prioritize personal
147. What obligations does an agent judgment over communication with the
have when conducting the business of principal
their principal? 150. What is the agent's right regarding
a. The agent can act based on personal the retention of the principal's goods and
judgment regardless of the principal's property in the
directions absence of a contract to the contrary?
b. The agent must follow the principal's a. The agent must return all goods
directions or, in their absence, adhere to immediately regardless of any payments
local customs owed
for similar business b. The agent can retain the principal's
c. The agent is not responsible for any goods until they are paid for their
losses or profits incurred while commission and
conducting business expenses
27 c. The agent has no right to retain any
The Indian Contract Act, 1872 MCQ property of the principal
BOOKLET d. The agent can sell the goods if the
Booklet principal does not pay immediately
d. The agent can only conduct business e. The agent can retain the goods only if
with prior written consent from the they have a written agreement with the
principal principal
e. The agent must always prioritize profit- 28
making over following the principal's The Indian Contract Act, 1872 MCQ
instructions BOOKLET
148. What is the obligation of an agent Booklet
regarding sums received on behalf of the ANSWER KEYS
principal? 1. Ans. c. A proposal,
Explanation: Section 2. Interpretation- Explanation: Section 2 Interpretation-
clause: (a) When one person signifies to clause: (f) Promises which form the
another his consideration or
willingness to do or to abstain from doing part of the consideration for each other
anything, with a view to obtaining the are called reciprocal promises.
assent of 8. Ans. b. Intends or results in the
that other to such act or abstinence, he communication of the proposal,
is said to make a proposal. acceptance, or revocation,
2. Ans. d. A voidable contract, Explanation: Section 3. Communication,
Explanation: Section 2. Interpretation- acceptance and revocation of proposals:
clause: (i) An agreement which is The
enforceable by law communication of proposals the
at the option of one or more of the acceptance of proposals, and the
parties thereto, but not at the option of revocation of proposals
the other or others, and acceptances, respectively, are
is a voidable contract. deemed to be made by any act or
3. Ans. a. A void contract, omission of the party
Explanation: Section 2. Interpretation- proposing, accepting or revoking by
clause: (j) A contract which ceases to be which he intends to communicate such
enforceable proposal,
by law becomes void when it ceases to acceptance or revocation, or which has
be enforceable. the effect of communicating it.
4. Ans. c. A consideration, 29
Explanation: Section 2. Interpretation- The Indian Contract Act, 1872 MCQ
clause: (d) When, at the desire of the BOOKLET
promisor, the Booklet
promisee or any other person has done 9. Ans. e. It comes to the knowledge of
or abstained from doing, or does or the person to whom it is made,
abstains from Explanation: Section 4. Communication
doing, or promises to do or to abstain when complete: The communication of a
from doing, something, such act or proposal
abstinence or is complete when it comes to the
promise is called a consideration for the knowledge of the person to whom it is
promise. made.
5. Ans. b. A promise, 10. Ans. c. It is put in a course of
Explanation: Section 2 Interpretation- transmission to the proposer and is out of
clause: (b) When the person to whom the the power of the
proposal is acceptor,
made signifies his assent thereto, the Explanation: Section 4. Communication
proposal is said to be accepted. A when complete: The communication of
proposal, when an
accepted, becomes a promise. acceptance is complete, as against the
6. Ans. d. An agreement, proposer, when it is put in a course of
Explanation: Section 2 Interpretation- transmission
clause: (e) Every promise and every set to him, so as to be out of the power of
of promises, the acceptor; as against the acceptor,
forming the consideration for each other, when it comes
is an agreement. to the knowledge of the proposer.
7. Ans. c. Reciprocal promises, 11. Ans. d. The acceptance comes to the
knowledge of the proposer,
Explanation: Section 4. Communication Explanation: Section 4. Communication
when complete: The communication of when complete: Section 5. Revocation
an of proposals
acceptance is complete, as against the and acceptances: An acceptance may be
proposer, when it is put in a course of revoked at any time before the
transmission communication of
to him, so as to be out of the power of the acceptance is complete as against
the acceptor; as against the acceptor, the acceptor, but not afterwards.
when it comes 16. Ans. e. By the lapse of the time
to the knowledge of the proposer. prescribed in the proposal for its
12. Ans. b. It is put into a course of acceptance, or by a
transmission and is out of the power of reasonable time if no time is prescribed,
the person who 30
makes it, The Indian Contract Act, 1872 MCQ
Explanation: Section 4. Communication BOOKLET
when complete: The communication of a Booklet
revocation Explanation: Section 6. Revocation how
is complete, as against the person who made: A proposal is revoked— (1) by the
makes it, when it is put into a course of communication of notice of revocation by
transmission the proposer to the other party; (2) by
to the person to whom it is made, so as the lapse of
to be out of the power of the person who the time prescribed in such proposal for
makes it; its acceptance, or, if no time is so
as against the person to whom it is prescribed, by the
made, when it comes to his knowledge. lapse of a reasonable time, without
13. Ans. c. It comes to his knowledge, communication of the acceptance; (3) by
Explanation: Section 4. Communication the failure of
when complete: The communication of a the acceptor to fulfil a condition
revocation precedent to acceptance; or (4) by the
is complete, as against the person who death or insanity of
makes it, when it is put into a course of the proposer, if the fact of his death or
transmission insanity comes to the knowledge of the
to the person to whom it is made, so as acceptor
to be out of the power of the person who before acceptance.
makes it; 17. Ans. b. Acceptance must be absolute
as against the person to whom it is and unqualified, and expressed in a usual
made, when it comes to his knowledge. and
14. Ans. d. The communication of reasonable manner unless otherwise
acceptance is complete as against the prescribed,
proposer, Explanation: Section 7. Acceptance
Explanation: Section 4. Communication must be absolute: In order to convert a
when complete: Section 5. Revocation proposal into a
of proposals promise, the acceptance must— (1) be
and acceptances: A proposal may be absolute and unqualified; (2) be
revoked at any time before the expressed in some
communication of its usual and reasonable manner, unless the
acceptance is complete as against the proposal prescribes the manner in which
proposer, but not afterwards. it is to
15. Ans. a. The communication of the be accepted. If the proposal prescribes a
acceptance is complete as against the manner in which it is to be accepted, and
acceptor, the
acceptance is not made in such manner, and with a lawful object, and are not
the proposer may, within a reasonable hereby expressly declared to be void.
time after Nothing herein
the acceptance is communicated to him, contained shall affect any law in force in
insist that his proposal shall be accepted 1 India and not hereby expressly
in the repealed by which
prescribed manner, and not otherwise; any contract is required to be made in
but if he fails to do so, he accepts the writing2 or in the presence of witnesses,
acceptance. or any law
18. Ans. c. When the conditions of the relating to the registration of documents.
proposal are performed or consideration 21. Ans. b. A person who has attained
for a reciprocal the age of majority and is of sound mind,
promise is accepted, unless prohibited
Explanation: Section 8 Acceptance by by any law to which they are subject,
performing conditions, or receiving Explanation: Section 11. Who are
consideration: competent to contract: Every person is
Performance of the conditions of a competent to
proposal, or the acceptance of any contract who is of the age of majority
consideration for a according to the law to which he is
reciprocal promise which may be offered subject, and who is
with a proposal, is an acceptance of the of sound mind and is not disqualified
proposal. from contracting by any law to which he
19. Ans. d. A promise is express if the is subject.
proposal or acceptance is made in words, 31
and implied if The Indian Contract Act, 1872 MCQ
made otherwise than in words, BOOKLET
Explanation: Section 9 Promises, express Booklet
and implied: In so far as the proposal or 22. Ans. b. When the person can
acceptance of any promise is made in understand the contract and form a
words, the promise is said to be express. rational judgment about
In so far as its effect on their interests at the time of
such proposal or acceptance is made making the contract,
otherwise than in words, the promise is Explanation: Section 12. What is a sound
said to be mind for the purposes of contracting: A
implied. person is
20. Ans. d. All agreements are contracts said to be of sound mind for the purpose
if made by the free consent of competent of making a contract, if, at the time when
parties, for he makes
lawful consideration and a lawful object, it, he is capable of understanding it and
unless expressly declared void, and it of forming a rational judgment as to its
may be effect upon
subject to additional requirements like his interests.
writing or witnesses if specified by 23. Ans. c. A person who is usually of
existing laws, unsound mind may make a contract only
Explanation: Section 10. What when they are
agreements are contracts: All of sound mind at the time of entering the
agreements are contracts if contract,
they are made by the free consent of Explanation: Section 12. What is a sound
parties competent to contract, for a mind for the purposes of contracting: A
lawful consideration person
who is usually of unsound mind, but Explanation: Section 15. "Coercion"
occasionally of sound mind, may make a defined: "Coercion" is the committing, or
contract when threatening
he is of sound mind. to commit, any act forbidden by the
24. Ans. b. A person who is usually of Indian Penal Code (45 of 1860) or the
sound mind cannot make a contract unlawful detaining,
when they are or threatening to detain, any property, to
occasionally of unsound mind at the time the prejudice of any person whatever,
of entering the contract, with the
Explanation: Section 12. What is a sound intention of causing any person to enter
mind for the purposes of contracting: A into an agreement.
person 28. Ans. a. A contract is induced by
who is usually of sound mind, but undue influence when one party is in a
occasionally of unsound mind, may not dominant position
make a contract and uses it to gain an unfair advantage
when he is of unsound mind. over the other,
25. Ans. e. Consent is achieved when Explanation: Section 16. Undue influence
parties agree upon the same thing in the defined-- (1) A contract is said to be
same sense, induced by
Explanation: Section 13. "Consent" "undue influence" where the relations
defined: Two or more persons are said to subsisting between the parties are such
consent when that one of
they agree upon the same thing in the the parties is in a position to dominate
same sense. the will of the other and uses that
26. Ans. d. Consent is free when it is not position to obtain
caused by coercion, undue influence, an unfair advantage over the other.
fraud, 32
misrepresentation, or mistake that would The Indian Contract Act, 1872 MCQ
have prevented its existence, BOOKLET
Explanation: Section 14. "Free consent" Booklet
defined: Consent is said to be free when 29. Ans. b. When a person holds real or
it is not apparent authority over another, or
caused by-- (1) coercion, as defined in stands in a fiduciary
section 15, or (2) undue influence, as relationship, or makes a contract with
defined in someone whose mental capacity is
section 16, or (3) fraud, as defined in impaired,
section 17, or (4) misrepresentation, as Explanation: Section 16 Undue influence
defined in defined: (2) In particular and without
section 18, or (5) mistake, subject to the prejudice to
provisions of sections 20, 21 and 22. the generality of the foregoing principle,
Consent is a person is deemed to be in a position to
said to be so caused when it would not dominate
have been given but for the existence of the will of another- (a) where he holds a
such real or apparent authority over the other,
coercion, undue influence, fraud, or where
misrepresentation or mistake. he stands in a fiduciary relation to the
27. Ans. e. Coercion is the committing or other; or (b) where he makes a contract
threatening to commit acts forbidden by with a person
the Indian whose mental capacity is temporarily or
Penal Code, or unlawfully detaining permanently affected by reason of age,
property to compel someone to agree, illness, or
mental or bodily distress. 32. Ans. c. Mere silence about facts does
30. Ans. d. The person dominating the not constitute fraud unless it is the duty
will must prove that the contract was not of the person
induced by to speak or their silence is equivalent to
undue influence if the transaction making a statement,
appears unconscionable, Explanation: Section 17. "Fraud"
Explanation: Section 16 Undue influence defined: Explanation.—Mere silence as to
defined: (3) Where a person who is in a facts likely to
position to affect the willingness of a person to enter
dominate the will of another, enters into into a contract is not fraud, unless the
a contract with him, and the transaction circumstances of the case are such that,
appears, on regard being had to them, it is the duty
the face of it or on the evidence of the person
adduced, to be unconscionable, the keeping silence to speak, or unless his
burden of proving that silence is, in itself, equivalent to speech.
such contract was not induced by undue 33. Ans. b. Misrepresentation includes
influence shall lie upon the person in a positive assertions made without
position to warrant, breaches of
dominate the will of the other. Nothing in duty that lead to an advantage without
this sub-section shall affect the intent to deceive, and causing a party to
provisions of section make a
111 of the Indian Evidence Act, 1872. mistake about the substance of an
31. Ans. e. Fraud includes actions such as agreement, even if done innocently,
suggesting false facts, concealing true Explanation: Section 18.
facts, making "Misrepresentation" defined:
promises without intent to perform, and "Misrepresentation" means and
any act designed to deceive, as well as includes— (1) the positive assertion, in a
any specific manner not warranted by the information
acts defined as fraudulent by law, of the
Explanation: Section 17. "Fraud" person making it, of that which is not
defined: "Fraud" means and includes any true, though he believes it to be true; (2)
of the following any breach of
acts committed by a party to a contract, duty which, without an intent to deceive,
or with his connivance, or by his agent1 , gains an advantage to the person
with intent committing it, or
to deceive another party thereto of his any one claiming under him; by
agent, or to induce him to enter into the misleading another to his prejudice, or to
contract:— the prejudice of
(1) the suggestion, as a fact, of that any one claiming under him; (3) causing,
which is not true, by one who does not however innocently, a party to an
believe it to be agreement, to
true; (2) the active concealment of a fact make a mistake as to the substance of
by one having knowledge or belief of the the thing which is the subject of the
fact; (3) a agreement.
promise made without any intention of 33
performing it; (4) any other act fitted to The Indian Contract Act, 1872 MCQ
deceive; (5) BOOKLET
any such act or omission as the law Booklet
specially declares to be fraudulent. 34. Ans. b. An agreement is voidable at
the option of the party whose consent
was caused by
coercion, fraud, or misrepresentation, and may be set aside by the court, either
who may also insist on performance of absolutely or with terms and conditions if
the contract any
as if the representations were true, benefit was received,
Explanation: Section 19. Voidability of Explanation: Section 19A. Power to set
agreements without free consent: When aside contract induced by undue
consent to influence-- When
an agreement is caused by coercion, consent to an agreement is caused by
fraud or misrepresentation, the undue influence, the agreement is a
agreement is a contract voidable
contract voidable at the option of the at the option of the party whose consent
party whose consent was so caused. A was so caused. Any such contract may
party to a be set aside
contract whose consent was caused by either absolutely or, if the party who was
fraud or misrepresentation, may, if he entitled to avoid it has received any
thinks fit, insist benefit
that the contract shall be performed, and thereunder, upon such terms and
that he shall be put in the position in conditions as to the Court may seem just.
which he 37. Ans. e. The agreement is
would have been if the representations automatically void if both parties are
made had been true. under a mistake regarding an
35. Ans. b. The contract is not voidable if essential fact,
the party whose consent was caused by Explanation: Section 20. Agreement
misrepresentation or fraudulent silence void where both parties are under
had the means of discovering the truth mistake as to matter
with ordinary of fact: Where both the parties to an
diligence, agreement are under a mistake as to a
Explanation: Section 19. Voidability of matter of fact
agreements without free consent: essential to the agreement, the
Exception.—If agreement is void.
such consent was caused by 38. Ans. b. It is not deemed a mistake of
misrepresentation or by silence, fact and does not affect the validity of
fraudulent within the meaning the agreement,
of section 17, the contract, nevertheless, Explanation: Section 20. Agreement
is not voidable, if the party whose void where both parties are under
consent was so mistake as to matter
caused had the means of discovering the of fact: Explanation.--An erroneous
truth with ordinary diligence. opinion as to the value of the thing which
Explanation.—A fraud forms the
or misrepresentation which did not cause subject-matter of the agreement, is not
the consent to a contract of the party on to be deemed a mistake as to a matter of
whom fact.
such fraud was practised, or to whom 39. Ans. a. A misunderstanding regarding
such misrepresentation was made, does a law applicable in India,
not render a Explanation: Section 21 Effect of
contract voidable. mistakes as to law: A contract is not
36. Ans. b. A contract induced by undue voidable because it
influence is voidable at the option of the was caused by a mistake as to any law in
party affected force in India; but a mistake as to a law
not in force
in India has the same effect as a mistake 43. Ans. e. The agreement is void from
of fact. the beginning, regardless of the parties'
34 knowledge,
The Indian Contract Act, 1872 MCQ Explanation: Section 36 Agreement
BOOKLET contingent on impossible events void:
Booklet Contingent
40. Ans. c. If it is forbidden by law or agreements to do or not to do anything,
defeats the provisions of any law, if an impossible event happens, are void,
Explanation: Section 23 What whether
considerations and objects are lawful, the impossibility of the event is known or
and what not: The not to the parties to the agreement at
consideration or object of an agreement the time when
is lawful, unless— it is forbidden by law; it is made.
or is of 44. Ans. b. The promises bind the
such a nature that, if permitted, it would representatives of the promisor,
defeat the provisions of any law; or is Explanation: Section 37. Obligation of
fraudulent ; or parties to contracts: The parties to a
involves or implies, injury to the person contract must
or property of another; or the Court either perform, or offer to perform, their
regards it as respective promises, unless such
immoral, or opposed to public policy. In performance is
each of these cases, the consideration or dispensed with or excused under the
object of provisions of this Act, or of any other law.
an agreement is said to be unlawful. Promises
Every agreement of which the object or bind the representatives of the promisors
consideration in case of the death of such promisors
is unlawful is void. before
41. Ans. c. A contract to do or not do performance, unless a contrary intention
something, contingent on the occurrence appears from the contract.
or non-occurrence 45. Ans. a. When the person takes any
of a future collateral event, action that makes it impossible to act
Explanation: Section 31. "Contingent within a definite
contract" defined: A "contingent contract time or under further contingencies,
is a contract Explanation: Section 34. When event on
to do or not to do something, if some which contract is contingent to be
event, collateral to such contract, does or deemed
does not impossible, if it is the future conduct of a
happen. living person: If the future event on which
42. Ans. d. It is enforceable only if and a contract
when the uncertain event happens, is contingent is the way in which a
Explanation: Section 32. Enforcement of person will act at an unspecified time,
contracts contingent on an event the event shall be
happening: considered to become impossible when
Contingent contracts to do or not to do such person does anything which renders
anything if an uncertain future event it
happens cannot impossible that he should so act within
be enforced by law unless and until that any definite time, or otherwise than
event has happened. If the event under further
becomes contingencies.
impossible, such contracts become void. 35
The Indian Contract Act, 1872 MCQ 49. Ans. e. The creditor can apply the
BOOKLET payment to any lawful debt that is due
Booklet and payable at his
46. Ans. e. It can be enforced when the discretion,
non-happening of the event becomes Explanation: Section 60. Application of
impossible, payment where debt to be discharged is
Explanation: Section 33. Enforcement of not
contracts contingent on an event not indicated.: Where the debtor has
happening: omitted to intimate and there are no
Contingent contracts to do or not to do other circumstances
anything if an uncertain future event indicating to which debt the payment is
does not happen to be applied, the creditor may apply it at
can be enforced when the happening of his
that event becomes impossible, and not discretion to any lawful debt actually due
before. and payable to him from the debtor,
47. Ans. b. The contract becomes void whether its
when the act becomes impossible or recovery is or is not barred by the law in
unlawful, force for the time being as to the
Explanation: Section 56. Agreement to limitation of suits.
do impossible act: An agreement to do 50. Ans. c. The payment is applied to
an act discharge the debts in chronological
impossible in itself is void. Contract to do order, regardless of
an act afterwards becoming impossible limitation laws,
or Explanation: Section 61. Application of
unlawful.—A contract to do an act which, payment where neither party
after the contract is made, becomes appropriates: Where
impossible, neither party makes any appropriation,
or, by reason of some event which the the payment shall be applied in
promisor could not prevent, unlawful, discharge of the
becomes void debts in order of time, whether they are
when the act becomes impossible or or are not barred by the law in force for
unlawful. the time
48. Ans. b. The promisor must being as to the limitation of suits. If the
compensate the promisee for any loss debts are of equal standing, the payment
due to non-performance, shall be
Explanation: Section 56. Agreement to applied in discharge of each
do impossible act: Compensation for loss proportionally.
through 51. Ans. b. The payment must be applied
non-performance of act known to be to the specified debt as intended by the
impossible or unlawful.—Where one debtor,
person has Explanation: Section 59. Application of
promised to do something which he payment where debt to be discharged is
knew, or, with reasonable diligence, indicated:
might have known, Where a debtor, owing several distinct
and which the promisee did not know, to debts to one person, makes a payment to
be impossible or unlawful, such promisor him, either
must with express intimation, or under
make compensation to such promisee for circumstances implying, that the
any loss which such promisee sustains payment is to be applied
through
the non-performance of the promise.
to the discharge of some particular debt, Explanation: Section 70. Obligation of
the payment, if accepted, must be person enjoying benefit of non-gratuitous
applied act: Where
accordingly. a person lawfully does anything for
52. Ans. d. The original contract need not another person, or delivers anything to
be performed, him, not intending
36 to do so gratuitously, and such other
The Indian Contract Act, 1872 MCQ person enjoys the benefit thereof, the
BOOKLET latter is bound to
Booklet make compensation to the former in
Explanation: Section 62. Effect of respect of, or to restore, the thing so
novation, rescission, and alteration of done or delivered.
contract: If the 56. Ans. e. They are subject to the same
parties to a contract agree to substitute a responsibility as a bailee,
new contract for it, or to rescind or alter Explanation: Section 71. Responsibility
it, the of finder of goods: A person who finds
original contract, need not be performed. goods
53. Ans. b. The supplier is entitled to belonging to another, and takes them
reimbursement from the property of the into his custody, is subject to the same
incapable person, responsibility
Explanation: Section 68. Claim for as a bailee.
necessaries supplied to person incapable 57. Ans. d. Compensation for losses that
of contracting, naturally arise in the usual course of
or on his account: If a person, incapable events or were
of entering into a contract, or any one foreseeable by the parties,
whom he is Explanation: Section 73. Compensation
legally bound to support, is supplied by for loss or damage caused by breach of
another person with necessaries suited contract:
to his When a contract has been broken, the
condition in life, the person who has party who suffers by such breach is
furnished such supplies is entitled to be entitled to receive,
reimbursed from the party who has broken the
from the property of such incapable contract, compensation for any loss or
person. damage caused
54. Ans. c. They are entitled to be to him thereby, which naturally arose in
reimbursed by the individual responsible the usual course of things from such
for the payment, breach, or
Explanation: Section 69. which the parties knew, when they made
Reimbursement of person paying money the contract, to be likely to result from
due by another, in the breach
payment of which he is interested: A of it. Such compensation is not to be
person who is interested in the payment given for any remote and indirect loss or
of money which damage
another is bound by law to pay, and who sustained by reason of the breach.
therefore pays it, is entitled to be 58. Ans. b. They are entitled to the same
reimbursed by compensation as if there had been a
the other. contractual
55. Ans. b. The beneficiary must make agreement,
compensation or restore the delivered Explanation: Section 73. Compensation
item, for loss or damage caused by breach of
contract:
Compensation for failure to discharge Government or of any State Government,
obligation resembling those created by gives any bond for the performance of
contract. When any public
an obligation resembling those created duty or act in which the public are
by contract has been incurred and has interested, he shall be liable, upon
not been breach of the condition
discharged, any person injured by the of any such instrument, to pay the whole
failure to discharge it is entitled to sum mentioned therein.
receive the same 61. Ans. b. They are entitled to
compensation from the party in default, compensation for damages sustained
as if such person had contracted to due to the non-fulfillment
discharge it and of the contract,
had broken his contract. Explanation: Section 75. Party rightfully
37 rescinding contract, entitled to
The Indian Contract Act, 1872 MCQ compensation: A
BOOKLET person who rightfully rescinds a contract
Booklet is entitled to compensation for any
59. Ans. b. They are entitled to damage which
reasonable compensation not exceeding he has sustained through the non-
the stipulated amount fulfilment of the contract.
or penalty, regardless of actual damages, 62. Ans. b. The promise must be
Explanation: Section 74. Compensation performed within a reasonable time,
for breach of contract where penalty Explanation: Section 46. Time for
stipulated for: performance of promise, when no
When a contract has been broken, if a application is to be
sum is named in the contract as the made and no time is specified: Where, by
amount to be the contract, a promisor is to perform his
paid in case of such breach, or if the promise
contract contains any other stipulation by without application by the promisee, and
way of penalty, no time for performance is specified, the
the party complaining of the breach is engagement must be performed within a
entitled, whether or not actual damage reasonable time. Explanation.—The
or loss is question "what
proved to have been caused thereby, to is a reasonable time" is, in each
receive from the party who has broken particular case, a question of fact.
the contract 63. Ans. e. The promisee must apply for
reasonable compensation not exceeding performance at a proper place and within
the amount so named or, as the case usual
may be, the business hours,
penalty stipulated for. Explanation: Section 48. Application for
60. Ans. c. They are liable to pay the performance on certain day to be at
entire sum mentioned in the bond, proper time
Explanation: Section 74. Compensation and place: When a promise is to be
for breach of contract where penalty performed on a certain day, and the
stipulated for: promisor has not
Exception.-- When any person enters into undertaken to perform it without
any bail-bond, recognizance or other application by the promisee, it is the duty
instrument of the, promisee
of the same nature, or, under the to apply for performance at a proper
provisions of any law, or under the orders place and within the usual hours of
of the Central business.
Explanation—The question "what is a promisor is not responsible for non-
proper time and place" is, in each performance, nor does he thereby lose
particular case, a his rights under
question of fact. the contract. Every such offer must fulfil
64. Ans. e. All individuals must fulfill the the following conditions:— (1) it must be
promise during their joint lives and their unconditional; (2) it must be made at a
representatives proper time and place, and under such
must fulfill it after their deaths, circumstances
Explanation: Section 42. Devolution of that the person to whom it is made may
joint liabilities: When two or more have a reasonable opportunity of
persons have ascertaining that
made a joint promise, then, unless a the person by whom it is made is able
contrary intention appears by the and willing there and then to do the
contract, all such whole of what he
persons, during their joint lives, and, is bound by his promise to do; (3) if the
after the death of any of them, his offer is an offer to deliver anything to the
representative jointly promisee,
38 the promisee must have a reasonable
The Indian Contract Act, 1872 MCQ opportunity of seeing that the thing
BOOKLET offered is the thing
Booklet which the promisor is bound by his
with the survivor or survivors, and, after promise to deliver. An offer to one of
the death of the last survivor, the several joint
representatives of promisees has the same legal
all jointly, must fulfil the promise. consequences as an offer to all of them.
65. Ans. c. The promisor is not 67. Ans. b. The agreement must specify
responsible for non-performance and local limits and appear reasonable to the
retains rights under the court,
contract, Explanation: Section 27. Agreement in
Explanation: Section 38. Effect of restraint of trade, void: Every agreement
refusal to accept offer of performance: by which
Where a promisor any one is restrained from exercising a
has made an offer of performance to the lawful profession, trade or business of
promisee, and the offer has not been any kind, is to
accepted, the that extent void. Exception 1.Saving of
promisor is not responsible for non- agreement not to carry on business of
performance, nor does he thereby lose which good
his rights under will is sold. One who sells the good-will of
the contract. a business may agree with the buyer to
66. Ans. d. It must be made under refrain
circumstances allowing the promisee to from carrying on a similar business,
ascertain the within specified local limits, so long as
promisor's ability to perform, the buyer, or any
Explanation: Section 38. Effect of person deriving title to the good-will from
refusal to accept offer of performance: him, carries on a like business therein,
Where a promisor provided
has made an offer of performance to the that such limits appear to the Court
promisee, and the offer has not been reasonable, regard being had to the
accepted, the nature of the
business.
68. Ans. e. The contract becomes void if Explanation: Section 47. Time and place
the event has not happened by the for performance of promise: When a
expiration of the promise is
fixed time or if the event becomes to be performed on a certain day, and
impossible before that time, the promisor has undertaken to perform
Explanation: Section 35. When it without
contracts become void which are application by the promisee, the
contingent on happening promisor may perform it at any time
of specified event within fixed time: during the usual hours
When contracts may be enforced, which of business on such day and at the place
are contingent at which the promise ought to be
on specified event not happening within performed.
fixed time: Contingent contracts to do or 71. Ans. c. A contract of indemnity,
not to do ensuring coverage against specific
anything if a specified uncertain event losses,
happens within a fixed time become void Explanation: Section 124. "Contract of
if, at the indemnity" defined: A contract by which
expiration of the time fixed, such event one party
has not happened, or if, before the time promises to save the other from loss
fixed, such caused to him by the conduct of the
event becomes impossible. promisor himself,
69. Ans. e. The contract may be enforced or by the conduct of any other person, is
after the fixed time has expired if the called a contract of indemnity.
event has not 72. Ans. b. All damages, costs, and sums
happened, or if it becomes certain before paid under a compromise, provided
that time that the event will not happen, certain conditions
Explanation: Section 35. When are met,
contracts become void which are Explanation: Section 125. Rights of
contingent on happening indemnity-holder when sued: The
of specified event within fixed time: promise in a contract
When contracts may be enforced, which of indemnity, acting within the scope of
are contingent his authority, is entitled to recover from
39 the
The Indian Contract Act, 1872 MCQ promisor— (1) all damages which he may
BOOKLET be compelled to pay in any suit in
Booklet respect of any
on specified event not happening within matter to which the promise to indemnify
fixed time.—Contingent contracts to do applies; (2) all costs which he may be
or not to do compelled
anything, if a specified uncertain event to pay in any such suit if, in bringing or
does not happen within a fixed time may defending it, he did not contravene the
be enforced orders of the
by law when the time fixed has expired promisor, and acted as it would have
and such event has not happened or, been prudent for him to act in the
before the time absence of any
fixed has expired, if it becomes certain contract of indemnity, or if the promisor
that such event will not happen. authorized him to bring or defend the
70. Ans. d. The promisor can perform it suit; (3) all
at any time during usual business hours sums which he may have paid under the
on that day and terms of any compromise of any such
at the appropriate place, suit, if the
compromise was not contrary to the made, for the benefit of the principal
orders of the promisor, and was one debtor, may be a sufficient consideration
which it would have to the surety
been prudent for the promisee to make in for giving the guarantee.
the absence of any contract of 76. Ans. c. The surety's liability matches
indemnity, or if the the full extent of the principal debtor's
promisor authorized him to compromise obligations,
the suit. unless specified otherwise in the
73. Ans. c. To agree to perform a promise contract,
or discharge a liability of a third person in Explanation: Section 128. Surety's
case of their liability: The liability of the surety is co-
default, extensive with
Explanation: Section 126. "Contract of that of the principal debtor, unless it is
guarantee", "surety", "principal debtor" otherwise provided by the contract.
and "creditor": 77. Ans. c. Continuing guarantee,
A "contract of guarantee" is a contract to Explanation: Section 129. "Continuing
perform the promise, or discharge the guarantee": A guarantee which extends
liability, of a to a series
third person in case of his default. of transactions, is called a "continuing
74. Ans. d. The surety provides the guarantee".
guarantee, the principal debtor is the one 78. Ans. a. By notifying the creditor,
whose default Explanation: Section 130. Revocation of
prompts the guarantee, and the creditor continuing guarantee: A continuing
is the one receiving the guarantee, guarantee may
Explanation: Section 126. "Contract of at any time be revoked by the surety, as
guarantee", "surety", "principal debtor" to future transactions, by notice to the
and creditor.
"creditor": A "contract of guarantee" is a 79. Ans. c. The guarantee is revoked for
contract to perform the promise, or future transactions, unless specified
discharge the otherwise in the
liability, of a third person in case of his contract,
default. The person who gives the Explanation: Section 131. Revocation of
guarantee is called continuing guarantee by surety's death:
the "surety"; the person in respect of The death
whose default the guarantee is given is of the surety operates, in the absence of
called the any contract to the contrary, as a
"principal debtor", and the person to revocation of a
whom the guarantee is given is called continuing guarantee, so far as regards
the "creditor". A future transactions.
guarantee may be either oral or written. 80. Ans. b. The surety is discharged from
40 liability for transactions occurring after
The Indian Contract Act, 1872 MCQ the change,
BOOKLET Explanation: Section 133. Discharge of
Booklet surety by variance in terms of contract:
75. Ans. b. Anything done or promised for Any
the benefit of the principal debtor, variance, made without the surety’s
Explanation: Section 127. Consideration consent, in the terms of the contract
for guarantee: Anything done, or any between the
promise principal debtor and the creditor,
discharges the surety as to transactions
subsequent to the
variance. 84. Ans. c. The release of one co-surety
81. Ans. c. When the principal debtor is does not discharge the others, nor does it
released from liability through a contract free the
with the creditor released surety from responsibility to the
or due to the creditor’s actions that other sureties,
legally discharge the debtor, Explanation: Section 138. Release of
Explanation: Section 134. Discharge of one co-surety does not discharge others:
surety by release or discharge of Where
principal debtor: there are co-sureties, a release by the
The surety is discharged by any contract creditor of one of them does not
between the creditor and the principal discharge the others;
debtor, by neither does it free the surety so
which the principal debtor is released, or released from his responsibility to the
by any act or omission of the creditor, other sureties.
the legal 85. Ans. b. When the creditor acts in a
consequence of which is the discharge of way inconsistent with the rights of the
the principal debtor. surety or fails to
82. Ans. b. When the creditor gives time perform a duty owed to the surety,
or enters into a composition with the impairing the surety’s remedy against
principal debtor, the principal debtor,
unless the surety consents, Explanation: Section 139. Discharge of
41 surety of creditor's act or omission
The Indian Contract Act, 1872 MCQ impairing
BOOKLET surety's eventual remedy: If the creditor
Booklet does any act which is inconsistent with
Explanation: Section 135. Discharge of the rights of
surety when creditor compounds with, the surety, or omits to do any act which
gives time his duty to the surety requires him to do,
to, or agrees not to sue, principal debtor: and the
A contract between the creditor and the eventual remedy of the surety himself
principal against the principal debtor is thereby
debtor, by which the creditor makes a impaired, the
composition with, or promises to give surety is discharged.
time to, or not 86. Ans. c. When the surety fully
to sue, the principal debtor, discharges performs or pays for the guaranteed debt
the surety, unless the surety assents to or duty,
such Explanation: Section 140. Rights of
contract. surety on payment or performance:
83. Ans. b. No, unless the guarantee Where a
provides otherwise, guaranteed debt has become due, or
Explanation: Section 137. Creditor's default of the principal debtor to perform
forbearance to sue does not discharge a guaranteed
surety: Mere duty has taken place, the surety upon
forbearance on the part of the creditor to payment or performance of all that he is
sue the principal debtor or to enforce any liable for, is
other invested with all the rights which the
remedy against him does not, in the creditor had against the principal debtor.
absence of any provision in the 87. Ans. d. When the creditor loses or
guarantee to the parts with the security without the
contrary, discharge the surety. surety’s consent,
Explanation: Section 141. Surety's right surety joins: Where a person gives a
to benefit of creditor's securities: A guarantee upon a contract that the
surety is entitled creditor shall not
to the benefit of every security which the act upon it until another person has
creditor has against the principal debtor joined in it as co-surety, the guarantee is
at the time not valid if that
when the contract of suretyship is other person does not join.
entered into, whether the surety knows 91. Ans. a. Sums that the surety has
of the existence rightfully paid under the guarantee,
of such security or not; and if the creditor Explanation: Section 145. Implied
loses, or, without the consent of the promise to indemnify surety: In every
surety, parts contract of
with such security, the surety is guarantee there is an implied promise by
discharged to the extent of the value of the principal debtor to indemnify the
the security. surety, and
88. Ans. e. When the creditor the surety is entitled to recover from the
misrepresents or knowingly assents to principal debtor whatever sum he has
misrepresentation rightfully paid
concerning a material part of the under the guarantee, but, no sums which
transaction, he has paid wrongfully.
Explanation: Section 142. Guarantee 92. Ans. b. Each co-surety is liable to pay
obtained by misrepresentation invalid: an equal share of the unpaid debt,
Any guarantee Explanation: Section 146. Co-sureties
which has been obtained by means of liable to contribute equally: Where two or
misrepresentation made by the creditor, more
or with his persons are co-sureties for the same debt
knowledge and assent, concerning a or duty, either jointly or severally, and
material part of the transaction, is whether
invalid. under the same or different contracts,
42 and whether with or without the
The Indian Contract Act, 1872 MCQ knowledge of each
BOOKLET other, the co-sureties, in the absence of
Booklet any contract to the contrary, are liable,
89. Ans. d. When the creditor remains as between
silent about material circumstances themselves, to pay each an equal share
relevant to the of the whole debt, or of that part of it
transaction, which remains
Explanation: Section 143. Guarantee unpaid by the principal debtor.
obtained by concealment invalid: Any 93. Ans. e. Co-sureties are liable to pay
guarantee equally, but only up to the limits of their
which the creditor has obtained by respective
means of keeping silence as to material obligations,
circumstances, Explanation: Section 147. Liability of co-
is invalid. sureties bound in different sums: Co-
90. Ans. c. When the creditor acts on the sureties who
guarantee without the co-surety joining are bound in different sums are liable to
as promised, pay equally as far as the limits of their
Explanation: Section 144. Guarantee on respective
contract that creditor shall not act on it obligations permit.
until co
94. Ans. b. The bailor delivers the goods from such faults. If the goods are bailed
to the bailee, who must return or dispose for hire, the bailor is responsible for such
of them damage,
according to the bailor's directions once whether he was or was not aware of the
the purpose is fulfilled, existence of such faults in the goods
Explanation: Section 148. "Bailment", bailed.
"bailor" and "bailee" defined: A 97. Ans. d. The bailee must take care
"bailment" is the equivalent to that of a person of ordinary
delivery of goods by one person to prudence
another for some purpose, upon a regarding his own goods of similar
contract that they characteristics,
shall, when the purpose is accomplished, Explanation: Section 151. Care to be
be returned or otherwise disposed of taken by bailee: In all cases of bailment
according to the bailee is
the directions of the person delivering bound to take as much care of the goods
them. The person delivering the goods is bailed to him as a man of ordinary
called the prudence would,
"bailor". The person to whom they are under similar circumstances, take of his
delivered is called, the "bailee". own goods of the same bulk, quality and
95. Ans. e. By any action that effectively value as
puts the goods in the possession of the the goods bailed.
bailee or an 98. Ans. e. If the bailee does anything
authorized person on their behalf, with the goods that is inconsistent with
43 the conditions of
The Indian Contract Act, 1872 MCQ the bailment,
BOOKLET Explanation: Section 153. Termination of
Booklet bailment by bailee's act inconsistent with
Explanation: Section 149. Delivery to conditions: A contract of bailment is
bailee how made: The delivery to the avoidable at the option of the bailor, if
bailee may be the bailee does
made by doing anything which has the any act with regard to the goods bailed,
effect of putting the goods in the inconsistent with the conditions of the
possession of the bailment.
intended bailee or of any person 99. Ans. b. The bailee is liable to
authorized to hold them on his behalf. compensate the bailor for any damage
96. Ans. e. The bailor must disclose arising from such use
known faults that materially affect the Explanation: Section 154. Liability of
use or create bailee making unauthorized use of goods
extraordinary risks for the bailee, bailed: If
Explanation: Section 150. Bailor's duty the bailee makes any use of the goods
to disclose faults in goods bailed: The bailed which is not according to the
bailor is bound conditions of the
to disclose to the bailee faults in the bailment, he is liable to make
goods bailed, of which the bailor is compensation to the bailor for any
aware, and which damage arising to the goods
materially interfere with the use of them, from or during such use of them.
or expose the bailee to extraordinary 100. Ans. c. Both the bailor and the
risks; and if bailee have an interest in the mixture
he does not make such disclosure, he is proportional to their
responsible for damage arising to the respective shares,
bailee directly
Explanation: Section 155. Effect of 103. Ans. e. The bailor shall repay the
mixture, with bailor's consent, of his bailee for necessary expenses incurred
goods with bailee's: for the purpose
If the bailee, with the consent of the of the bailment,
bailor, mixes the goods of the bailor with Explanation: Section 158. Repayment,
his own goods, by bailor, of necessary expenses: Where,
the bailor and the bailee shall have an by the
interest, in proportion to their respective conditions of the bailment, the goods are
shares, in to be kept or to be carried, or to have
the mixture thus produced. work done
101. Ans. c. The property in the goods upon them by the bailee for the bailor,
remains with the parties respectively, but and the bailee is to receive no
the bailee remuneration, the bailor
must bear the expenses of separation shall repay to the bailee the necessary
and any damage arising from the expenses incurred by him for the purpose
mixture, of the
Explanation: Section 156. Effect of bailment.
mixture, without bailor's consent, when 104. Ans. c. If the borrower suffers a loss
the good can be exceeding the benefit derived from the
separated: If the bailee, without the loan, the
consent of the bailor, mixes the goods of lender must indemnify the borrower for
the bailor with that excess loss,
his own goods, and the goods can be Explanation: Section 159. Restoration of
separated or divided, the property in the goods lent gratuitously: The lender of a
goods remains thing for
44 use may at any time require its return, if
The Indian Contract Act, 1872 MCQ the loan was gratuitous, even though he
BOOKLET lent it for a
Booklet specified time or purpose. But if, on the
in the parties respectively; but the bailee faith of such loan made for a specified
is bound to bear the expense of time or
separation or purpose, the borrower has acted in such
division, and any damage arising from a manner that the return of the thing lent
the mixture. before the
102. Ans. a. The bailor is entitled to time agreed upon would cause him loss
compensation from the bailee for the loss exceeding the benefit actually derived by
of the goods, him from
Explanation: Section 157. Effect of the loan, the lender must, if he compels
mixture, without bailor's consent, when the return, indemnify the borrower for
the goods cannot the amount in
be separated: If the bailee, without the which the loss so occasioned exceeds the
consent of the bailor, mixes the goods of benefit so derived.
the bailor 105.
with his own goods, in such a manner Ans. e. The bailee must return or deliver
that it is impossible to separate the the goods as directed by the bailor,
goods bailed from without
the other goods, and deliver them back, demand,
the bailor is entitled to be compensated Explanation: Section 160. Return of
by the bailee goods bailed, on expiration of time or
for the loss of the goods. accomplishment
of purpose: It is the duty of the bailee to 109.
return, or deliver according to the bailors Ans. a. The bailee is not responsible to
directions, the owner for the delivery of the goods,
the goods bailed, without demand, as Explanation: Section 166. Bailee not
soon as the time for which they were responsible on re-delivery to bailor
bailed has without title: If the
expired, or the purpose for which they bailor has no title to the goods, and the
were bailed has been accomplished. bailee, in good faith, delivers them back
106. to, or
bailee, according to the directions of, the bailor,
Ans. d. The gratuitous bailment is the bailee is not responsible to the owner
terminated by the death of either the in respect
bailor or the of such deliver.
Explanation: Section 162. Termination of 110.
gratuitous bailment by death: A Ans. d. The person can apply to the Court
gratuitous bailment to stop the delivery of the goods to the
is terminated by the death either of the bailor and to decide the title to the
bailor or of the bailee. goods,
107. Explanation: Section 167. Right of third
Ans. e. The bailee is bound to deliver any person claiming goods bailed: If a person,
increase or profit to the bailor or other than
according the bailor, claims goods bailed he may
to the bailor’s directions, apply to the Court to stop the delivery of
45 the goods
The Indian Contract Act, 1872 MCQ to the bailor, and to decide the title to
BOOKLET the goods.
Booklet 111.
Explanation: Section 163. Bailor entitled Ans. d. The finder may retain the goods
to increase or profit from goods bailed: In until compensation for trouble and
the expenses
absence of any contract to the contrary, is received,
the bailee is bound to deliver to the Explanation: Section 168. Right of finder
bailor, or of goods: The finder of goods has no right
according to his directions, any increase to sue
or profit which may have accrued from the owner for compensation for trouble
the goods and expense voluntarily incurred by him
bailed. to preserve
108. the goods and to find out the owner; but
Ans. b. The bailor must compensate the he may retain the goods against the
bailee for any loss sustained due to his owner until he
lack receives such compensation; and, where
of entitlement, the owner has offered a specific reward
Explanation: Section 164. Bailor's for the
responsibility to bailee: The bailor is return of goods lost, the finder may sue
responsible to the for such reward, and may retain the
bailee for any loss which the bailee may goods until he
sustain by reason that the bailor was not receives it.
entitled to 112.
make the bailment, or to receive back Ans. c. The finder may sell the goods if
the goods, or to give directions the owner cannot be found and the item
respecting them. is in
danger of perishing or losing most of its policy-brokers: Bankers, factors,
value, wharfingers, attorneys of a High Court
Explanation: Section 169. When finder and policy-brokers
of thing commonly on sale may sell it: may, in the absence of a contract to the
When a thing contrary, retain as a security for a
which is commonly the subject of sale is general balance
lost, if the owner cannot with reasonable of account, any goods bailed to them;
diligence but no other persons have a right to
be found, or if he refuses, upon demand, retain, as a
to pay the lawful charges of the finder, security for such balance, goods bailed to
the finder them, unless there is an express contract
may sell it— (1) when the thing is in to that
danger of perishing or of losing the effect.
greater part of its 115.
value, or, (2) when the lawful charges of Ans. b. The bailment is called a "lien," the
the finder, in respect of the thing found, bailor is called the "debtor," and the
amount to bailee
two-thirds of its value. is called the "creditor”,
46 Explanation: Section 172. "Pledge",
The Indian Contract Act, 1872 MCQ "Pawnor" and "Pawnee" defined: The
BOOKLET bailment of
Booklet goods as security for payment of a debt
113. or performance of a promise is called
Ans. c. The bailee has the right to retain "pledge". The
the goods until he receives due payment bailor is in this case called the "pawnor".
for The bailee is called the "pawnee".
the services rendered, unless there is a 116.
contract stating otherwise, Ans. c. The pawnee may retain the goods
Explanation: Section 170. Bailee's for the payment of the debt, interest on
particular lien: Where the bailee has, in the
accordance with debt, and necessary expenses incurred
the purpose of the bailment, rendered for possession or preservation of the
any service involving the exercise of goods,
labour or skill in Explanation: Section 173. Pawnee's
respect of the goods bailed, he has, in right of retainer: The pawnee may retain
the absence of a contract to the contrary, the goods
a right to pledged, not only for payment of the
retain such goods until he receives due debt or the performance of the promise,
remuneration for the services he has but for the
rendered in interest of the debt, and all necessary
respect of them. expenses incurred by him in respect of
114. the possession
Ans. e. Bankers, factors, wharfingers, or for the preservation of the goods
attorneys of a High Court, and policy- pledged.
brokers 117.
can retain goods for a general balance of Ans. a. The pawnee can retain the goods
account, only for the specific debt or promise for
Explanation: Section 171. General lien which they were pledged,
of bankers, factors, wharfingers, Explanation: Section 174. Pawnee not to
attorneys and retain for debt or promise other than that
for which
goods pledged: The pawnee shall not, in liable to pay the balance. If the proceeds
the absence of a contract to that effect, of the sale are greater than the amount
retain the so due, the
goods pledged for any debt or promise pawnee shall pay over the surplus to the
other than the debt or promise for which pawnor.
they are 120.
pledged; but such contract, in the Ans. d. The pawnor may redeem the
absence of anything to the contrary, shall goods at any time before the actual sale,
be presumed in but
regard to subsequent advances made by must pay any expenses arising from the
the pawnee. default,
118. Explanation: Section 177. Defaulting
Ans. e. The pawnee is entitled to receive pawnor's right to redeem: If a time is
from the pawnor any extraordinary stipulated for the
expenses incurred for preserving the payment of the debt, of performance of
pledged goods, the promise, for which the pledge is
Explanation: Section 175. Pawnee's made, and the
right as to extraordinary expenses pawnor makes default in payment of the
incurred: The debt or performance of the promise at
pawnee is entitled to receive from the the stipulated
pawnor extraordinary expenses incurred time, he may redeem the goods pledged
by him for at any subsequent time before the actual
the preservation of the goods pledged. sale of
47 them; but he must, in that case, pay, in
The Indian Contract Act, 1872 MCQ addition, any expenses which have arisen
BOOKLET from his
Booklet default.
119. 121.
Ans. c. The pawnee may either retain the Ans. e. The pledge is valid if the
goods as collateral security or sell them mercantile agent acts in the ordinary
after giving the pawnor reasonable course of
notice, business and the pawnee acts in good
Explanation: Section 176. Pawnee's faith without knowing the agent lacks
right where pawnor makes default: If the authority to
pawnor pledge,
makes default in payment of the debt, or Explanation: Section 178. Pledge by
performance, at the stipulated time of mercantile agent: Where a mercantile
the promise, agent is, with
in respect of which the goods were the consent of the owner, in possession
pledged, the pawnee may bring a suit of goods or the document of title to
against the pawnor goods, any
upon the debt or promise, and retain the pledge made by him, when acting in the
goods pledge as a collateral security; or ordinary course of business of a
he may mercantile agent,
sell the thing pledged, on giving the shall be as valid as if he were expressly
pawnor reasonable notice of the sale. If authorised by the owner of the goods to
the proceeds of make the
such sale are less than the amount due same; provided that the pawnee acts in
in respect of the debt or promise, the good faith and has not at the time of the
pawnor is still pledge
notice that the pawnor has not authority to the provisions in that behalf herein
to pledge. contained.
122. 125.
Ans. c. The pawnee acquires a good title Ans. c. No consideration is necessary to
if the contract has not been rescinded, create an agency,
and Explanation: Section 185. Consideration
the pawnee acts in good faith and not necessary: No consideration is
without notice of the pawnor's defect of necessary to
title, create an agency.
Explanation: Section 178A. Pledge by 126.
person in possession under voidable Ans. d. A person employed by, and acting
contract: When under the control of, the original agent in
the pawnor has obtained possession of the business of the agency,
the goods pledged by him under a Explanation: Section 191. "Sub-agent"
contract voidable defined: A "sub-agent" is a person
under section 19 or section 19A, but the employed by,
contract has not been rescinded at the and acting under the control of, the
time of the original agent in the business of the
pledge, the pawnee acquires a good title agency.
to the goods, provided he acts in good 127.
faith and Ans. b. The principal is bound by the sub-
without notice of the pawnor's defect of agent's acts, while the sub-agent is
title. accountable to the agent, not the
123. principal, except for fraud or willful
Ans. a. Any person who is of the age of misconduct,
majority and of sound mind, Explanation: Section 192.
Explanation: Section 183. Who may Representation of principal by sub-agent
employ agent: Any person who is of the properly appointed:
age of majority Where a sub-agent is properly appointed,
according to the law to which he is the principal is, so far as regards third
subject, and who is of sound mind, may persons,
employ an agent. represented by the sub-agent, and is
48 bound by and responsible for his acts, as
The Indian Contract Act, 1872 MCQ if he were an
BOOKLET agent originally appointed by the
Booklet principal. Agent's responsibility for sub-
124. agent.—The agent
Ans. a. Only individuals who are of the is responsible to the principal for the acts
age of majority and of sound mind can of the sub-agent. Sub-agent's
become responsibility.—The
agents and be held responsible to the sub-agent is responsible for his acts to
principal, the agent, but not to the principal,
Explanation: Section 184. Who may be except in cases of
an agent: As between the principal and fraud or wilful wrong.
third 128.
persons, any person may become an to him,
agent, but no person who is not of the Ans. e. The named person is an agent of
age of majority the principal for the specific tasks
and of sound mind can become an agent, entrusted
so as to be responsible to his principal
according
Explanation: Section 194. Relation with him as such agent, is liable, if his
between principal and person duly alleged employer does not ratify his acts,
appointed by agent to make
to act in business of agency: Where an compensation to the other in respect of
agent, holding an express or implied any loss or damage which he has
authority to incurred by so
name another person to act for the dealing.
principal in the business of the agency, 131.
has named Ans. c. The principal is bound if their
another person accordingly, such person words or conduct led third parties to
is not a sub-agent, but an agent of the believe the
principal for acts were within the agent's authority,
such part of the business of the agency Explanation: Section 237. Liability of
as is entrusted to him. principal inducing belief that agent's
129. unauthorized acts
Ans. b. By the principal revoking were authorized: When an agent has,
authority, agent renouncing, completion without authority, done acts or incurred
of the obligations to
business, either party's death or insanity, third persons on behalf of his principal,
or the principal's insolvency, the principal is bound by such acts or
Explanation: Section 201. Termination of obligations, if
agency: An agency is terminated by the he has by his words or conduct induced
principal such third persons to believe that such
revoking his authority; or by the agent acts and
renouncing the business of the agency; obligations were within the scope of the
or by the agent's authority.
business of the agency being completed; 132.
or by either the principal or agent dying Ans. e. The principal must compensate
or the agent for injuries caused by the
becoming of unsound mind; or by the principal's
principal being adjudicated an insolvent neglect or lack of skill,
under the Explanation: Section 225. Compensation
provisions of any Act for the time being to agent for injury caused by principal's
in force for the relief of insolvent debtors. neglect:
49 The principal must make compensation
The Indian Contract Act, 1872 MCQ to his agent in respect of injury1 caused
BOOKLET to such
Booklet agent by the principal's neglect or want
130. of skill.
Ans. b. They are liable for compensation 133.
to a third party for any loss if their acts Ans. b. The principal may revoke
are authority at any time before it has been
not ratified by the alleged employer, exercised
Explanation: Section 235. Liability of to bind the principal, unless stated
pretended agent: A person untruly otherwise in the previous section,
representing Explanation: Section 203. When
himself to be the authorized agent of principal may revoke agent's authority:
another, and thereby inducing a third The principal may,
person to deal save as is otherwise provided by the last
preceding section, revoke the authority
given to his
agent at any time before the authority ordinary prudence would exercise in his
has been exercised so as to bind the own case; and, if he does this, he is not
principal. responsible
134. to the principal for the acts or negligence
Ans. d. An agent can do every lawful of the agent so selected.
thing necessary to perform the act or 137.
conduct Ans. e. An agent cannot employ another
the business, unless trade customs allow for a sub-
Explanation: Section 188. Extent of agent
agent's authority: An agent, having an or the nature of the agency requires it,
authority to do Explanation: Section 190. When agent
an act, has authority to do every lawful cannot delegate: An agent cannot
thing which is necessary in order to do lawfully employ
such act. An another to perform acts which he has
agent having an authority to carry on a expressly or impliedly undertaken to
business, has authority to do every lawful perform
thing personally, unless by the ordinary
necessary for the purpose, or usually custom of trade a sub-agent may, or,
done in the course, of conducting such from the nature of
business. the agency, a sub-agent must, be
135. employed.
Ans. c. An agent has the authority to 138.
perform acts necessary to protect the Ans. b. Ratification can be either
principal expressed or implied based on the
from loss, as a prudent person would in conduct of the
similar circumstances, principal,
Explanation: Section 189. Agent's Explanation: Section 197. Ratification
authority in an emergency: An agent has may be expressed or implied: Ratification
authority, in an may be
emergency, to do all such acts for the expressed or may be implied in the
purpose of protecting his principal from conduct of the person on whose behalf
loss as would the acts are
be done by a person of ordinary done.
prudence, in his own case, under similar 139.
circumstances. Ans. b. An unauthorized act cannot be
50 ratified if it would subject a third person
The Indian Contract Act, 1872 MCQ to
BOOKLET damages or terminate their rights or
Booklet interests,
136. Explanation: Section 200. Ratification of
Ans. b. The agent must exercise ordinary unauthorized act cannot injure third
prudence in selecting another agent; if person: An
they act done by one person on behalf of
do, they are not liable for that agent's another, without such other persons
acts or negligence, authority, which, if
Explanation: Section 195. Agent's duty done with authority, would have the
in naming such person: In selecting such effect of subjecting a third person to
agent for damages, or of
his principal, an agent is bound to terminating any right or interest of a
exercise the same amount of discretion third person, cannot, by ratification, be
as a man of made to have
such effect. reasonable steps for the protection and
140. preservation of the interests entrusted to
Ans. d. The principal cannot revoke him.
authority after it has been partly 143.
exercised Ans. e. The employer is liable to
concerning acts and obligations that indemnify the agent for consequences
have already arisen from those actions, arising from
Explanation: Section 204. Revocation the act, even if it injures third parties'
where authority has been partly rights,
exercised: The Explanation: Section 223. Agent to be
principal cannot revoke the authority indemnified against consequences of
given to his agent after the authority has acts done in
been partly good faith: Where one person employs
exercised, so far as regards such acts another to do an act, and the agent does
and obligations as arise from acts already the act in
done in the good faith, the employer is liable to
agency. indemnify the agent against the
141. consequences of that
Ans. c. Reasonable notice must be given, act, though it cause an injury to the
or the party responsible for the damage rights of third persons.
must compensate the other, 144.
Explanation: Section 206. Notice of Ans. d. The agent is the person
revocation or renunciation: Reasonable representing another in dealings, while
notice must be the principal
given of such revocation or renunciation, is the person for whom the act is done,
otherwise the damage thereby resulting Explanation: Section 182. "Agent" and
to the "principal" defined: An "agent" is a
principal or the agent, as the case may person employed to
be, must be made good to the one by the do any act for another, or to represent
other. another in dealings with third persons.
51 The person for
The Indian Contract Act, 1872 MCQ whom such act is done, or who is so
BOOKLET represented, is called the "principal".
Booklet 145.
142. Ans. e. Valid ratification requires that a
Ans. a. The agent is required to protect person has complete and accurate
and preserve the interests entrusted to knowledge
him of the relevant facts,
on behalf of the principal's Explanation: Section 198. Knowledge
representatives, requisite for valid ratification: No valid
Explanation: Section 209. Agent's duty ratification can
on termination of agency by principal's be made by a person whose knowledge
death or of the facts of the case is materially
insanity: When an agency is terminated defective.
by the principal dying or becoming of 146.
unsound mind, Ans. c. They can be enforced as if the
the agent is bound to take, on behalf of principal had entered into the contracts
the representatives of his late principal, and
all performed the acts personally,
Explanation: Section 226. Enforcement diligently,
and consequences of agent's contracts: Explanation: Section 214. Agent's duty
Contracts to communicate with principal: It is the
entered into through an agent, and duty of an
obligations arising from acts done by an agent, in cases of difficulty, to use all
agent, may be reasonable diligence in communicating
enforced in the same manner, and will with his
have the same legal consequences, as if principal, and in seeking to obtain his
the contracts instructions.
had been entered into and the acts done 150.
by the principal in person. Ans. b. The agent can retain the
147. principal's goods until they are paid for
Ans. b. The agent must follow the their
principal's directions or, in their absence, commission and expenses,
adhere Explanation: Section 221. Agent's lien
to local customs for similar business, on principal's property: In the absence of
Explanation: Section 211. Agent's duty any contract
in conducting principal's business: An to the contrary, an agent is entitled to
agent is retain goods, papers and other property,
bound to conduct the business of his whether
principal according to the directions movable or immovable of the principal
given by the received by him, until the amount due to
principal, or, in the absence of any such himself for
directions, according to the custom which commission, disbursements and services
prevails in respect of the same has been paid or
in doing business of the same kind at the accounted
place where the agent conducts such for to him.
business. 53
When the agent acts otherwise, if any
loss be sustained, he must make it good
to his
principal, and if any profit accrues, he
must account for it.
148.
Ans. b. The agent must pay all sums
received to the principal after deducting
any
necessary expenses,
52
The Indian Contract Act, 1872 MCQ
BOOKLET
Booklet
Explanation: Section 218. Agent's duty
to pay sums received for principal:
Subject to such
deductions, the agent is bound to pay to
his principal all sums received on his
account.
149.
Ans. d. The agent is obligated to seek the
principal's instructions and communicate