Law of Contract II - MCQ
Law of Contract II - MCQ
D. None of these
a. S.124 does not deal with those classes of cases where the indemnity arises from
loss caused by events or accidents which do not or may not depend upon the
conduct of the indemnifier or any other person, or by reason of liability incurred
by something done by the indemnified at the request of the indemnifier.
b. Indemnity holder was entitled either to get the indemnifier to pay off the claim
or to pay into Court sufficient money which would constitute a fund for paying
off the claim whenever it was made.
A. Only a
B. Only b
C. Either a or b
D. Both
3. C contracts to lend B 5,000 rupees on the 1st March. A guarantees repayment. C pays the
5,000 rupees to B on the 1st January.
i. A is discharged from his liability
ii. A is not discharged from his liability
iii. A is discharged from his liability as terms
are varied.
4. A contracts with B for a fixed price to build a house for B within a stipulated time, B
supplying the necessary timber. C guarantees A‟s performance of the contract. B omits to
supply the timber.
i. C is not discharged from his suretyship.
ii. C is discharged from his suretyship.
iii. C is discharged from his suretyship because
of omission by B
5. A hires a horse in Calcutta from B expressly to march to Benares. A rides with due care,
but marches to Cuttack instead. The horse accidentally falls and is injured.
a. A is liable.
b. A is not liable.
c. A is liable to make compensation to B making unauthorized use of goods bailed
d. A is liable to make compensation to B as due amount of care is not taken.
6. If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own
goods in such a manner that it is impossible to separate the goods bailed from the other
goods and deliver them back, the bailor is entitled to be :
7. The delivery of goods by one person to another for some purpose, upon a contract and
that they shall, when the purpose is accomplished, be returned or otherwise disposed of by
accounting to the directions of the person delivering them, then it is called :
A) Contingent contract
B) Bailment
C) Pledge
D) Contract of indemnity
10. A delivers a rough diamond to B, a jeweller, to be cut and polished, which is accordingly
done.
A. B is not entitled to retain the stone till he is paid for the services he has rendered
B. B is entitled to retain the stone till he is not paid for the services he has rendered
C. B is entitled to retain the stone till he is paid for the services he has rendered
D. None of these
11. Any one can become an ____________ between the principal and third party.
A. Agent
B. Principal
C. Contractor
D. Party to the contract
12. The consideration in case of Contract of Agency ______________
A. can be past, present, future
B. Need not be adequate
C. Need to be real
D. Not Mandatory
13. A sub-agent is a person -------
A) Who works under the main agent
B) Who carries out the order and direction of a person under whom he works
directly
C) Who works on behalf of the main agent
D) Employed by and acting under the control of the original agent in the business
of agency
14. Substituted agent is -----------
A) Agent’s agent
B) Principal’s agent
C) None of the above
D) Both (A) and (B)
15. To start a partnership business, what should be the minimum number of partners?
A) 2
B) 10
C) 4
D) 20
21. Which types of partnership have no agreement in terms of the duration of partnership?
A) Partnership-at-will
B) Limited partnership
C) General partnership
D) Particular partnership
23. Statement : A Burmese Buddhist husband and wife carrying on business as such are not
partners in such business
Reason : The relation of partnership arises from contract and not from status
a. Statement and Reason are not correct.
b. Statement and Reason are correct.
c. Statement is correct and Reason is not correct.
d. Statement is not correct and Reason are correct.
24. In Which of the following cases a person can be called a partner if profit is shared
(a) by a lender of money to persons engaged or about to engage in any business,
(b) by a servant or agent as remuneration,
(c) by the widow or child of a deceased partner, as annuity, or
(d) by a previous owner or part owner of the business, as consideration for the sale of the goodwill
or share thereof,
i. Only a & b
ii. Only a & c
iii. None of above
iv. all of above
a. It must be in writing
b.It must be transferable
c. It must be registered
d.It must be signed
26. Person who takes the instruments bonafide for value before it is overdue, in good faith,
is known as:
i. Holder in due course
ii. Holder
iii. Holder for value
iv. None of the above
27.An instrument containing a promise to __________ is valid promissory note.
a. A particular person
b. A particular person or his order
c.The order of a particular person
d.All of these
30.A negotiable instrument that is payable to order can be transferred by:
a.Simple delivery
b.Endorsement and delivery
c.Endorsement
d.Registered post
31.‘A’ signs the instrument in the following manner. State the instrument which cannot be
considered as promissory
note.
47. In all cases of bailment, the bailee is bound to take as much care of the goods bailed to him
as a man of ordinary prudence would under similar circumstances. The statement is -----------
a) True
b) False
c) Partly correct
d) None of the above
51. A breach of condition may be treated as a breach of warranty and not vice versa. The statement
is
a)True
b) False
c)Depends
d) None of the above
52. --------- is a mercantile agent who guarantees the performance of the contract by the third
person on the payment of some extra commission.
a) Broker
b)Factor
c)Auctioneer
d) Del credere agent
53. A directs B, his agent, to pay certain money to C, A dies, and D takes out probate to his will.
B, after A’s death, but before hearing of it, pays the money to C.
a) The payment is not as against D, the executor
b) The payment is good as against D, the executor
c) either (A) or (B)
d) None of these
54. A directs B, his solicitor, to sell his estate by auction, and so employ an auctioneer for the
purpose. B names C, an auctioneer, to conduct the sale.
a) C is a sub-agent, and A’s sub-agent for the conduct of the sale
b) C is not a sub-agent, but B’s agent for the conduct of the sale
c) C is not a sub-agent, but A’s agent for the conduct of the sale
d) None of these
55. A employs B to beat C, and agrees to indemnify him against all consequence of the act. B
thereupon beats C, and to pay damages to C for so doing.
a) A is liable to indemnify B for those damages
b) A is partially liable to indemnify B for those damages
c) A is not liable to indemnify B for those damages
d) None of these
56. Where no provision is made by contract between the partners for the duration of their
partnership, or for the determination of their partnership, the partnership is called as:
a) Particular partnership
b) Partnership for a fixed term
c) partnership at will
d) None of the above
57. What are the right of partners after dissolution:
a) To have the surplus distributed among the partners or their representatives according to
their rights.
b) To have business wound up after dissolution
c) To have the property of the firm applied in payment of the debts and liabilities of the firm.
d) All of the above
58. The dissolution of partnership means:
a) It means the dissolution of partnership between all the partners of a firm
b) It means the change in the relations of the partners
c) It means the reconstitution of the firm.
d) None of the above.
59. In what circumstances a partner may retire:
a) In accordance with an express agreement by the partners
b) Where the partnership is at will, by giving notice in writing to all the other partners of his
intention to retire.
c) With the consent of all the other partners
d) All of the above.
60. What would be the position, where a minor elects not to become a partner:
a) He shall be entitled to sue the partners for his share of the property and profits.
b) His rights and liabilities shall continue to be those of a minor under this section up to the
date on which he gives public notice.
c) His share shall not be liable for any acts of the firm done after the date of the notice.
d) All of the above
61. Whether a notice given to a partner, who habitually acts in the business of the firm of any
matter relating to the affairs of the firm, will be deemed as notice to the firm:
a) It will deemed as personal information to that partner
b) Yes, it operates as notice to the firm, except in the case of a fraud on the firm committed
by or with the consent of that partner
c) It depends on the nature of the concerned partner whether he inform so to other partners
d) No, it will not deemed as notice to the firm.
62. Where a partner wilfully or persistently commits breach of agreements relating to the
management of the affairs of the firm or the conduct of its business, or otherwise so conducts
himself in matters relating to the business that it is not reasonably practicable for the other partners
to carry on the business in partnership with him. The other partner(s) may:
a) The partnership firm comes to an end automatically
b) The other partners may decide to leave the firm.
c) File a suit in the court for the dissolution of the firm.
d) The other partners may decide to expel the concerned partner
63. Who is not liable for the acts of the partners done after dissolution, if done before the
dissolution, until public notice is given of the dissolution
a) A partner who, not having been known to the person dealing with the firm to be a partner,
retires from the firm (sleeping or dormant partner).
b) The estate of a partner who dies
c) Who is adjudicated an insolvent
d) All of the above
64. On attaining the majority, the minor partner has to decide and give a public notice within the
prescribed period, whether he will continue as partner in the firm or will quit. What is that
prescribed period:
a) Within twelve months of his attaining majority or of his obtaining knowledge that he had
been admitted to the benefits of partnership, whichever date is later
b) Within three months of his attaining majority or of his obtaining knowledge that he had
been admitted to the benefits of partnership, whichever date is later
c) Within six months of his attaining majority or of his obtaining knowledge that he had been
admitted to the benefits of partnership, whichever date is later
d) Within nine month of his attaining majority or of his obtaining knowledge that he had
been admitted to the benefits of partnership, whichever date is later
65. M/s XYZ is partnership firm and X, Y and Z are the partners. During the course of business
travel, partner X recovered a sum of Rs. 15000 in cash from the debtor of the firm and credit in his
personal bank account. The act of X will amounts to:
a) After utilising the amount for few days, he returned back the money to the firm, so it will
not come under the mis-appropriation of the funds.
b) Nothing wrong in it, since he has personally made efforts in realising the dues from the
debtor.
c) Mis-appropriating the funds of the firm and utilisation of the same for the personal gain.
d) None of the above.
67. What is the purpose behind the enactment of Sale of Goods Act, 1930?
a) To define the laws relating to the sale of goods
b) To consolidate and amend the laws relating to the sale of goods
c) To consolidate, amend and define the laws relating to the sale of goods
d) To define and amend the laws relating to the sale of goods
68. When does the property in the goods pass to the buyer in case of a contract for the sale of
unascertained or future goods by description:
a) When the goods of that description and in a deliverable state are unconditionally appropriated
to the contract either by the seller or by the buyer with the assent of each other
b) When the goods of that description and in a deliverable state are conditionally appropriated to
the contract either by the seller or by the buyer with the assent of each other
c) When the goods of that description and in a non-deliverable state are conditionally appropriated
to the contract either by the seller or by the buyer with the assent of each other
d) When the goods of that description and in a non-deliverable state are unconditionally
appropriated to the contract either by the seller or by the buyer with the assent of each other
69. Choose the most appropriate option out of the following in respect to return of rejected goods
by the buyer:
a) Buyer is not bound to return any type of rejected goods, having right to do so, if he intimates to
the seller that he refuses to accept the same
b) Buyer is bound to return all types of rejected goods
c) Buyer is bound to return only those rejected goods which are perishable
d) Buyer is bound to return only those rejected goods which are sold by description.
71. X purchases a car from Y. After 6 months, Z, the true owner of the car, demanded it from X.
X had to return it to its true owner. X was entitled to recover the full price even though several
months have passed. This is an example of:
a) Condition as to description
b) Condition as to sample
c) Condition as to title
d) Condition as to fitness
72. A drug was sold by an auction and according to the usage of trade it was to disclose in advance
of any vast damage caused in the quality of the drug but such disclosure was not made and the
drug was found to be defective. This is an example of:
a) Warranty as to undisturbed possession
b) Warranty as to quality or fitness by usage of trade
c) Warranty as to non-existence of encumbrances
d) Disclosure of dangerous nature of goods
73. Before the enactment of Sale of Goods Act, the provisions regarding Sale of Goods were
contained in:
a) Indian Contract Act, 1872
b) Indian Registration Act, 1908
c) Transfer of Property Act, 1882
d) Indian Partnership Act, 1932
74. Which of the following cannot be said to be included in the term “goods” defined under section
2(7) of the Sale of Goods Act, 1930:
a) Stock
b) Shares
c) Growing crops
d) Actionable claims
75. What can be the subject matter of the contract of sale as per section 6 of Sale of Goods Act:
a) Only existing goods owned or possessed by the owner
b) Only Future goods
c) Existing goods which are neither owned nor possessed by the owner
d) Existing goods, owned or possessed by the owner or future goods
76. Person named in the instrument to whom money is directed to be paid is known as
_______________.
a) Drawer
b) Acceptor
c) Maker
d) Payee
77. Days of grace provided to the Instruments at maturity is _______________
a) 1 day
b) 2 days
c) 3 days
d) 5 days
78. Validity period for the presentment of cheque in bank is _______________
a) 3 months
b) 6 months
c) 1 year
d) 2 years
79. A negotiable instrument drawn in favour of minor is
a) Void
b) Void but enforceable
c) Valid
d) None of these
80. ‘A’ signs the instrument in the following manner. State the instrument which cannot be
considered as promissory note.
a) I promise to pay B or order INR 500.
b) I acknowledge myself to be indebted to B for INR 1,000 to be paid on demand for value
received.
c) I promise to pay B INR 10,000 after three months.
d) I promise to pay B INR 500 seven days after my marriage with C.
81. P obtains a cheque drawn by M by way of gift. Here P is a:
a) Holder in due course
b) Holder for value
c) Holder
d) None of the above
82. A draws a cheque in favour of M, a minor. M endorses the same in favour of X. The cheque is
dishonoured by the bank on grounds of inadequate funds. As per the provisions of Negotiable
Instruments Act, 1881:
a) M is liable to X
b) X can proceed against A
c) No one is liable in this case
d) M can proceed against A
83. A draws a bill on B. B accepts the bill without any consideration. The bill is transferred to C
without consideration. C transferred it to D for value. Decide as per provisions of Negotiable
Instruments Act, 1881-
a. D can sue only A
b. D can sue A or B only
c. D can sue any of the parties A, B or C
d. D cannot sue any of the parties A, B or C
84. Until the bill is accepted, the liability of drawee is __________.
a. Primary and unconditional
b. Primary and conditional
c. Secondary and conditional
d. None of these
85. Dishonour of Negotiable Instrument by Non Payment is covered under section in Negotiable
Instrument Act 1882…
a) Section 90
b) Section 91
c) Section 92
d) Section 93
86. Which case deals with vicarious liability of a principal?
a) Llyod v. Grace Smith & Co.
b) Mellors v. Shaw
c) Longman v. Ble
d) Rapp v. Latham
87. Which case deals with mutual agency under Partnership?
a) Walker v. Hirsch
b) R.R. Sarna v. Reuben
c) Abdul Badsha v. Century Wool Industry
d) Cox v. Hickman
88. Landmark judgment with respect to Partnership at Will?
a) Bhagat Ram Mohanlal v. Commr of P.E.T
b) Moss v. Elphick
c) Ram Laxman Sugar Mills v. CIT
d) Pratt v. Strick
89. In which case it was held A thing to be considered a good under section 171 of the Indian
Contract Act, should have marketability, and the person to whom it is bailed should be in a position
to dispose it of in consideration of money.
a) R.D. Saxena v. Balram Prasad Sharma
b) R.R. Sarna v. Reuben
c) Abdul Badsha v. Century Wool Industry
d) Longman v. Ble
90. With respect to multicity cheque dishonor the offence under section 138 shall be inquired into
and tried only by a court within whose local jurisdiction:
A. if the cheque is presented for payment by the payee or holder in due course, otherwise
through an account, the branch of the drawee bank where the drawer maintains the account,
is situated.
B. if the cheque is delivered for collection through an account, the branch of the bank where
the payee or holder in due course, as the case may be, maintains the account, is situated.
C. Both the options A and B are correct.
D. None of the above.
91. Who can make negotiation of a negotiable instrument:Which is not the right of a holder:
99. A is a stipulation collateral to main purpose of the contract and the breach of which gives rise
to a right to claim for damages but not to a right to reject goods and treat the contract as repudiated:
A. Condition
B. Warranty
C. Terms of contract
D. Disclaimer
100. How many parties are there in a contract of indemnity and guarantee respectively?
(a) 2 and 3
(b) 3 and 2
(c) 2 and 5
(d) 5 and 2
103. Statement I: In a contract of guarantee when a surety discharges a debt payable by the
principal debtor to creditor, he on such payment can proceed against the principal debtor in his
own right.
Statement II: In case of a contract of indemnity, the indemnifier can sue third parties in his own
name, but might bring the suit in the name of the indemnified.
A. Statement I is correct but Statement II is incorrect
B. Statement II is correct but Statement I is incorrect
C. Both Statement I and II are correct
D. Both Statement I and II are incorrect
107. Any guarantee which the creditor has obtained by means of keeping silence as to material
circumstances is:
A. valid
B. considered to be his approval
C. invalid
D. considered to be his denial
108. A transfers possession or custody of the farmland to his son, S. S shall pay rent or a lease fee
in return. S only receives custody and control of the property, but A still owns it. A is thus
responsible for paying the property taxes and is liable for what happens on the land. This kind of
contract or arrangement is called:
A. Guarantee
B. Bailment
C. Pledge
D. Set off
109. Which of these contracts has three parties consisting of creditor, principle debtor and surety:
A. Contract of indemnity
B. Contract of surety
C. Contract of pledge
D. Contract of guarantee
A) Partnership contract
B) Agreement
C) Partnership deed
D) Partnership Act
111. In absence of a partnership agreement, what will be the percentage of profit sharing ratio
between the partners?
A) Unequal
B) Equal
C) It will depend on the experience of a partner
D) It will depend on a partner’s capital
112. Which is not a feature of a partnership business?
A) Mutual agency
B) Limited liability of the partners
C) Limited life
D) Ease of formation
113. On the death of a partner, public notice of the death is not given and the firm continues the
business, then for the acts of the firm done after his death, the estate of the deceased partner is-
A. Liable
B. Not liable
C. Treated as security
D. Proportionately liable
114. A retiring partner has the right to carry on a business competing with that of the firm, but
cannot-
A. Use the name of the firm
B. Represent himself to be a partner
C. Solicit firm’s existing customer
D. All of the above
115.An incoming partner, who has been validly admitted in the firm, is-
A. Liable for the past debts of the firm
B. Not Liable for the past debts of the firm
C. Liable for the past debts of the firm incurred after his admission
D. Both a and c
116. The firm is bound by an act of a partner done without any express or implied authority if such
act is-
A. Done to protect the firm from loss
B. Done in emergency
C. Reasonable circumstances
D. All of the above
117. Which of the following acts are within the implied authority of a partner?
A. To engage a lawyer and defend the action brought against the firm
B. To engage servants to perform the business of the firm
C. To purchase goods of the kind used in the firm’s business.
D. All of the above
118. Before attaining the age of majority, a minor admitted to the benefits of a firm has the right
to-
A. Receive agreed ahre of the property and of profits
B. Sue the firm for his share of property or profits
C. Accessand to inspect the account of the firm
D. All of the above
120. It is a ----------------- obligation of a banker to honour the cheques of the customer drawn
against
current
a) Mutual
b) Statutory
c) Non Statutory
d) All of the above
121.The Negotiable Instruments (Amendment) Bill, 2017 inserted a provision allowing a court
trying an offence related to cheque bouncing, to direct the drawer (person who writes the cheque)
to pay interim compensation to the complainant. The interim compensation will not exceed ___%
of the cheque amount?
a) 15%
b) 25%
c) 30%
d) 20%
122.If a Minor draw, indorse, deliver and negotiate Negotiable Instruments, it binds __
a) All the parties except minor
b) All the parties including minor
c) Minor Only
d) Minor and Only Drawer
e) Minor and the Drawee
125. The goods identified and agreed upon at the time a contract of sale is made is called:
A. Goods
B. Future Goods
C. Specific Goods
D. None of the above
A. open plot
B. standing crop
C. building
D. Land
148. A gives certain diamonds to B for sale or return basis. On the same date, B gives the diamonds
to C on sale or return and from C they are lost. Who will bear the loss?
A. B because by transferring the diamonds further B has adopted the transaction
B. B because property in diamonds passed to B
C. B because he did something inconsistent with the ownership of A
D. All of the above
151. The term “Partnership” is defined in Section ------- of the Indian partnership act, 1932.
A) 2
B) 3
C) 4
D) 5
152. Persons who have entered into partnership with one another are collectively called as --------
A) Partners
B) Directors
C) Firm
D) None of the above
158. When a minor becomes a partner, his personal liability commences from ------
A) The date of his first admission
B) The date of majority
C) The date fixed by all the partners
D) Any one of the above
160. Which of the following is a ground for dissolution u/s 44 of the Indian Partnership Act, 1932?
A) Misconduct
B) Permanent incapacity
C) Unsoundness of mind
D) All of the above
163. When does the offence u/s 138 of the Negotiable Instruments Act, complete?
A) When the drawer fails to pay the cheque amount within 15 days of the notice by the holder
B) When information regarding dishonor is received by the holder from the bank
C) When notice of dishonour is received by the drawer
D) When the cheque is dishonoured.
164. A person committing an offence u/s 138 shall be punished with for a term of imprisonment
which may extend to
A) 6 months
B) 1 year
C) 2 years
D) 3 years
Q. 171 Which of the following sections envisages provision for interim compensation in cases
where complaints are filed under section 138 of the Negotiable Instrument Act, 1881?
a) Section 143
b) Section 143-A
c) Section 144
d) Section 145
Q.172 Which of the following sections empowers the court to try the offence under Section 138
summarily?
a) Section 143
b) Section 143-A
c) Section 146
d) Section 147
Q.173 Which of the following provisions envisages the power of Appellate Court to order payment
pending appeal against conviction?
a) Section 148
b) Section 139
c) Section 146
d) Section 147
Q.174 According to Section 147 of the Negotiable Instruments Act, 1881 which of the following
statements is true:
a) every offence punishable under this Act shall be compoundable
b) every offence punishable under this Act shall be Non- compoundable
c) A or b
d) A and b
Q.175 Every trial under Section 143 of the Negotiable Instruments Act, 1881 shall be conducted
as expeditiously as possible and an endeavour shall be made to conclude the trial within:
a) six months from the date of filing of the complaint
b) five months from the date of filing of the complaint,
c) six months from the date of sending the legal notice.
d) None of these
Q.176 A “bill of exchange” is an instrument in writing containing (Choose the inappropriate
option)
a) an unconditional order,
b) signed by the maker,
c) directing a certain person to pay a certain sum of money only to, or to the order of, a certain
person or to the bearer of the instrument.
d) An conditional order and signed by the drawee
Q. 177 The liability of holding out can be incurred by
a) Minor
b) Major
c) Either a or b
d) both a or b
Q. 178 The principle of holding out has been mentioned in which of the following sections?
a) Sec 28 of the Indian Partnership Act 1932
b) Sec 26
c) Sec 27
d) Sec 25
Q. 179 Under section 14 of the Indian Partnership Act , 1932 goodwill of the firm constitutes:
a) Property of the firm
b) Property of the managing partner
c) Property of the partner having the highest share in the profits
d) None of these
Q.184 . Goods that are identified at the time of contract of sale is called ________________ goods
a) Specific Goods
b) ascertained goods
c) unascertained Goods
d) both a & b
Q185 . _________________ is a Stipulation which is Collateral to purpose of contract
a) Condition
b) Warranty
c) Guaranty
d) Collateral Contract
Q.187 ___________________ and _______________ are the two parties involved in Contract
of sale
a) Seller & Buyer
b) Agent & Principal
c) Customer & Sales man
d) Customer and supplier
Q.190 which of the following section of the Sales of goods Act, 1930 defines unpaid seller:
a) Section 45
b) Section 46
c) Section 47
d) Section 48
Q.191 Where there is a contract for the sale of specific or ascertained goods the property in them
is transferred to the buyer at the time when the:
a) Parties intend the property in goods to pass
b) Contract is entered into
c) Price is paid
d) Delivery of goods has been made
Q.192 A contract of sale can be:
a) Absolute only
b) Conditional only
c) Absolute or conditional
d) Conditional only with the consent of the buyer
Q.193 According to Sale of Goods Act, 1930, ‘seller’ means a person:
a) who only agrees to sell the goods
b) who only sells the goods
c) who sells or agrees to sell
d) who transfers the possession of the goods to the other party
Q.194 _____________ is termed as consideration in a contract of sale:
a) Exchange money
b) Barter money
c) Price
d) Reward
Q.195 In case of breach of condition, the breach gives rise to:
a) Claim for damages
b) Rejection of goods
c) A right to repudiate the contract
d) None of these
Q.196 Section 2(7) of the Sales of Goods Act, 1930
a) Goods
b) Future Goods
c) Both a and b
d) None of these
Q.197. Section 55 of the Sales of Goods Act, 1930:
a) Suit for price
b) Suit for damages
c) None of these
d) Both of these
Q.198 Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the
buyer may sue for:
a) Damages for non-delivery
b) Damages for non-acceptance
c) Specific performance
d) Compensation
Q.199 Which of the following provisions effects of non registration of partnership firm has been
enunciated ?
a) Section 67
b) Section 69
c) Section 68
d) Section 65
Q.200 Rights of Indemnity holder have been mentioned in which of the following provisions of
the Indian Contract Act , 1872
a) Section 125
b) Section 135
c) Section 123
d) None of these