100+ Important questions and answers on the law of contract especially compiled for UPSC, Civil Services, IAS, Indian Judicial Service and other Competitive Exams!
1. A guarantees to C, to the extent of 2,000 rupees, payment for rice to be supplied by C to B. C supplies to B rice to a less amount than 2,000 rupees but obtains from A payments of the sum of 2,000 rupees in respect of the rice supplied.
A. A can recover from B more than the price of the rice actually supplied
B. A can recover from B only the price of the rice actually supplied
C. A cannot recover from B more than the price of the rice actually supplied
D. None of these
Ans. (C)
2. A guarantor may recover from the principal-debtor, the costs of defending an action brought against him by the creditor:
A. If he undertook the defence with the debtor’s authority
B. Reasonably defended the proceedings in the debtor’s interest
C. The costs were for some reason unavoidably incurred, but not if he has incurred costs solely for his own benefit
D. All of them
Ans. (D)
3. A having advanced money to his son, B, during his minority, upon B’s coming of age obtains, by misuse of parental influence, a bond from B for a greater amount than the sum due in respect of the advance.
A. A did not employ undue influence
B. A employs undue influence
C. either (A) or (B)
D. None of these
Ans. (B)
4. A hires a carriage of B. The carriage is unsafe, though B is not aware of it, and A is injured.
A. B is not responsible to A for the injury
B. B is partly responsible to A for the injury
C. B’s responsible to A for the injury
D. None of these
Ans. (C)
5. A hires a horse in Calcutta from B expressly to march to Banaras. A rides with due care, but marches to Cuttack instead. The horse accidentally falls and is injured.
A. A is not liable to make compensation to B for the injury to the horse
B. A is partially liable to make compensation to B for the injury to the horse
C. A is liable to make compensation to B for the injury to the horse
D. None of these
Ans. (C)
6. A hires B’s ship to go to Bombay, and there takes on board, on the first of January, a cargo, which A is to provide, and to bring it to Calcutta, the freight to be paid when earned. B’s ship does not go to Bombay, but A has opportunities of procuring suitable conveyance for the cargo upon terms as advantageous as those on which he had chartered the ship. A avails himself of those opportunities, but is put to trouble and expense in doing so.
A. A is not entitled to receive compensation from B in respect of such trouble and expense
B. A is entitled to receive partial compensation from B in respect of such trouble and expense
C. A is entitled to receive compensation from B in respect of such trouble and expense
D. None of these
Ans. (C)
7. A hires B’s ship to take in and convey, from Calcutta to the Mauritius, a cargo to be provided by A, B receiving a certain freight for its conveyance. A does not provide any cargo for the ship.
A. A cannot claim the performance of B’s promise
B. A must make compensation to B for the loss which B sustains by the non-performance of the contract
C. either (A) or (B)
D. both (A) and (B)
Ans. (D)
8. A instructs B, a merchant, to buy a ship for him. B employs a ship-surveyor of good reputation to choose a ship for A. The surveyor makes the choice negligently and the ship turns out to be unseaworthy and is lost.
A. B is but not the surveyor is, responsible to A
B. B and the surveyor is, responsible to A
C. B is not, but the surveyor is, responsible to A
D. None of these
Ans. (C)
9. A is employed by B by buy from C certain goods, of which C is the apparent owner, and buys them accordingly. In the course of the treaty for the sale. A learns that the goods really belonged to D, but B is ignorant of that fact.
A. B is entitled to set-off a debt owning to him from C against the price of the goods
B. B is partially entitled to set-off a debt owning to him from C against the price of the goods
C. B is not entitled to set-off a debt owning to him from C against the price of the goods
D. None of these
Ans. (C)
10. A is employed by B to buy from C goods of which C is the apparent owner. A was, before he was so employed a servant of C, and then learnt that the goods really belonged to D, but B is ignorant of the fact.
A. In spite of the knowledge of his agent, B may not setoff against the price of the goods a debt owing to him from C
B. In spite of the knowledge of his agent, B may partially set-off against the price of the goods a debt owing to him from C
C. In spite of the knowledge of his agent, B may set-off against the price of the goods a debt owing to him from C
D. None of these
Ans. (C)
11. A is employed by B, residing in London, to recover at Bombay a debt due to B.
A. A may adopt any illegal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same
B. A may not adopt any legal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same
C. A may adopt any legal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same
D. None of these
Ans. (C)
12. A is entitled to succeed to an estate at the death of B, B dies; C having received intelligence of B’s death, prevents the intelligence reaching A, and thus induces A to sell him his interest in the estate.
A. The sale is not voidable at the option of A
B. The sale is voidable at the option of A
C. either (A) or (B)
D. None of these
Ans. (B)
13. A leaves a cow in the custody of B to be taken care of. The cow has a calf.
A. B is not bound to deliver the calf but the cow to A
B. B is bound to deliver the calf but not the cow to A
C. B is bound to deliver the calf as well as the cow to A
D. None of these
Ans. (C)
14. A lends a horse to B for his own riding only. B allows C, a member of his family, to ride the horse. C rides with care, but the horse accidentally fall and is injured.
A. B is not liable to make compensation to A for the injury done to the horse
B. B is partly liable to make compensation to A for the injury done to the horse
C. B is liable to make compensation to A for the injury done to the horse
D. None of these
Ans. (C)
15. A lends a horse, which he knows to be vicious, to B. He does not disclose the fact that the horse is vicious. The horse runs away. B is thrown and injured.
A. A is not responsible to B for damage sustained
B. A is partly responsible to B for damage sustained
C. A is responsible to B for damage sustained
D. None of these
Ans. (C)
16. A lets to B, for hire, a horse for his own riding. B drives the horse in his carriage.
A. This is not, at the option of A, a termination of the bailment
B. This is partly, at the option of A, a termination of the bailment
C. This is, at the option of A, a termination of the bailment
D. None of these
Ans. (C)
17. A makes a contract with B to buy B’s horse if A survives C.
A. This contract cannot be enforced by law unless and until A dies in C’s lifetime
B. This contract cannot be enforced by law unless and until C dies in A’s lifetime
C. This contract can be enforced by law during C and A’s lifetime
D. None of these
Ans. (B)
18. A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse had been offered, refuses to buy him.
A. This contract cannot be enforced by law unless and until A refuses to sell the horse
B. This contract cannot be enforced by law unless and until C refuses to buy the horse
C. The contract cannot be enforced by law unless and until C refuses to buy the horse
D. None of these
Ans. (C)
19. A owes B 1,000 rupees under a contract. B owes B 1,000 rupees. B order A to credit C with 1,000 rupees in his books, but C does not assent to the arrangement.
A. B does not owes C 1,000 rupees, as new contract has been entered into
B. B still owes C 1,000 rupees, even though a new contract has been entered into
C. B still owes C 1,000 rupees, and no new contract has been entered into
D. None of these
Ans. (C)
20. A owes B 10,000 rupees, A enters into an arrangement with B, and gives B a mortgage of his (A’s) estate for 5,000 rupees in place of the debt of 10,000 rupees.
A. This is new contract
B. This extinguishes the old contract
C. This further renews the old contract
D. both (A) and (B)
Ans. (D)
21. A owes B 2,000 rupees, B accepts some of A’s goods in reduction of the debt.
A. The delivery of the goods operates as a part payment
B. The delivery of the goods does not amount to part payment
C. either (A) or (B)
D. None of these
Ans. (A)
22. A owes B 5,000 rupees. A pays to B, and B accepts, in satisfaction of the whole debt, 2,000 rupees paid at the time and place at which the 5,000 rupees were payable.
A. Partial debt is discharged
B. The whole debt is not discharged
C. The whole debt is discharged
D. None of these
Ans. (C)
23. A owes B 5,000 rupees. C pays to B 1,000 rupees and B accepts them, in satisfaction of his claim on A.
A. This payment is a partial discharge of the whole claim
B. This payment is not a discharge of the whole claim
C. This payment is a discharge of the whole claim
D. None of these
Ans. (C)
24. A owes B, 2,000 rupees, and is also indebted to other creditors. A makes an arrangement with his creditors, including B, to pay them a [composition] of eight annas in the rupee upon their respective demands.
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 discharge of B’s demand
C. Payments to B of 1,000 rupees is a discharge of B’s demand
D. None of these
Ans. (C)
25. A owes B, among other debts, 1,000 rupees upon a promissory note, which falls due on the first June. He owes B no other debt of that amount. On the first June A pays to B 1,000 rupees.
A. The payment is to be applied equally to all the debts owed by A
B. The payment is to be applied to the discharge of the promissory note
C. either (A) or (B)
D. both (A) or (B)
Ans. (B)
26. A owes B, under a contract a sum of money the amount of which has not been ascertained. A, without ascertaining the amount, gives to B, and B, in satisfaction thereof, accepts, the sum of 2,000 rupees.
A. This is a partial discharge of the whole debt, whatever may be its amount
B. This is not discharge of the whole debt, whatever may be its amount
C. This is discharge of the whole debt, whatever may be its amount
D. None of these
Ans. (C)
27. A owes money to B under a contract. The old debt of A to B is at an end. It is agreed between A, B and C, that B shall thenceforth accept C as his debtor instead of A.
A. New debt from C to B has been contracted
B. New debt from A to C has been contracted
C. either (A) or (B)
D. None of these
Ans. (A)
28. A owes to B, among other debts, the sum of 567 rupees. B writes to A and demands payment of this sum. A sends to B 567 rupees.
A. The payment is to be applied equally to all the debts owed by A
B. The payment is to be applied to the discharge of the promissory note
C. either (A) or (B)
D. both (A) and (B)
Ans. (B)
29. A owns a shop in Serampur, living himself in Calcutta, and visiting the shop occasionally. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purposes of the shop, and of paying for them out of A’s funds without A’s knowledge.
A. B has no implied authority from A to order goods from C in the name of A for the purposes of the shop
B. B has an implied authority from A to order goods from C in the name of A for his own purposes
C. B has an implied authority from A to order goods from C in the name of A for the purposes of the shop
D. None of these
Ans. (C)
30. A owns B Rs.1,000/-, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs.500/- on account of the debt.
A. This is not a contract
B. This is a contract
C. either (A) or (B)
D. None of these
Ans. (B)
31. A party to a contract may lose its contractual rights or benefits under the contract because of the undue influence of the third party where:
A. he was in conspiracy with the third party exercising undue influence
B. he was the agent of the third party exercising undue influence
C. either (A) or (B)
D. None of these
Ans. (C)
32. A pays B 1,000 rupees in consideration of B’s promising to marry C, A’s daughter. C is dead at the time of the promise.
A. The agreement is void
B. The agreement is not void, and B must repay A the 1,000 rupees.
C. B must repay A the 1,000 rupees.
D. both (A) and (C)
Ans. (D)
33. A person shall be deemed to have traded with the enemy, if he had any commercial, financial or other intercourse or dealings with, or for the benefits of, an enemy, and, in particular, if he has:
A. supplied any goods to or for the benefit of the enemy or obtained any goods from an enemy, or traded in or carried, any goods consigned to or from an enemy or destined for or coming from enemy territory
B. paid or transmitted any money, negotiable instrument or security for money to or for the benefit of an enemy or to take place in enemy territory
C. performed any obligation to, or discharged an obligation of, an enemy, whether the obligation was undertaken before or after the commencement of the provisions
D. all of them
Ans. (D)
34. A pledger cannot compel the pledgee to exercise the power of sale as a means of discharging or satisfying the decree. His only rights are:
A. In case the pledgee exercises the power, to insist that it should be honestly and properly done and the sale proceeds applied to the debt
B. In case the pledgee does not exercise the power, to redeem the pledge on payment of the debt or so much of it as remains otherwise unpaid
C. In case the sale is improperly exercised, to get damages caused thereby
D. All of them
Ans. (D)
35. A principal is liable for the agent’s fraud acting within the scope of his authority?
A. Whether the fraud is committed for the benefit of the principal
B. Whether the fraud is committed for the benefit of the agent
C. either (A) or (B)
D. None of these
Ans. (C)
36. A principal is:
A. A person for whom such act is done, or who is represented
B. A person for whom one is represented
C. either (A) or (B)
D. None of these
Ans. (C)
37. A promise to abstain from suing can be a consideration, but only when the person suing has a subsisting right to sue. Therefore, non-payment of instalment of a debt fixed under the Debt Collection act, which had become barred under the Act, cannot be a good consideration of a promise to pay these instalments by a third party. In which of the following cases it was held?
A. Bank of New India Ltd., v. G. Govinda Prabhu
B. Tulsidas Nathudas v. Narayan Ajabrao Raut
C. Lakshmi Chand v. Niader Mai
D. Kedarnath Gangagopal Misra v. Sitaram Narayan Moharil
Ans. (B)
38. A promise to deliver goods to B on a certain day on payment of Rs.1,000. A dies before that day.
A. A’s representatives are not bound to deliver the goods to B, and B is not bound to pay the Rs.1000 to A’s representatives
B. A’s representatives are bound to deliver the goods to B, but B is not bound to pay the Rs.1000 to A’s representatives
C. A’s representatives are bound to deliver the goods to B, and B is bound to pay the Rs.1000 to A’s representatives
D. None of these
Ans. (C)
39. A promise to paint a picture for B by a certain day, at a certain price. A dies before the day.
A. The contractor cannot be enforced by A’s representatives only
B. The contractor cannot be enforced either by B’s representatives only
C. The contractor can be enforced by A’s representatives and not by B
D. both (A) and (B)
Ans. (D)
40. A promises B to drop a prosecution which he has instituted against B for robbery, and B promises to restore the value of the things taken.
A. The agreement is not void, as its object is unlawful
B. The agreement is void, as its object is lawful
C. The agreement is void, as its object is unlawful
D. None of these
Ans. (C)
41. A promises B to sell him one hundred bales of merchandise, to be delivered next day, and B promises A to pay for them within a month. A does not deliver according to his promise.
A. B’s promise to pay need not be performed
B. B’s promise to pay needs to be performed
C. A must make compensation
D. both (A) and (C)
Ans. (D)
42. A promises to deliver goods at B’s warehouse on first January. On that day A brings the goods to B’s warehouse, but after the usual hour for closing it, and they are not received.
A. A has performed his promise
B. A has not performed his promise
C. either (A) or (B)
D. None of these
Ans. (B)
43. A promises to maintain B’s child, and B promises to pay A 1,000 rupees yearly for the purpose. Here the promise of each party is the consideration for the promise of the other party. They are lawful considerations.
A. These are unlawful considerations
B. These are lawful considerations
C. either (A) or (B)
D. None of these
Ans. (B)
44. A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A.
A. The agreement is void, as the consideration for it is unlawful
B. The agreement is void, but the consideration is not unlawful
C. The agreement is not void, as the consideration is not unlawful
D. None of these
Ans. (A)
45. A promises to paint a picture for B. B afterwards forbids him to do so.
A. A needs to perform the promise
B. A is no longer bound to perform the promise
C. B cannot forbid A
D. None of these
Ans. (B)
46. A promises to pay B a sum of money if a certain ship does not return within a year.
A. The contract cannot be enforced if the ship does not return with the year, or is burnt within the year
B. The contract may be enforced if the ship does not return with the year, or is burnt within the year
C. either (A) or (B)
D. None of these
Ans. (B)
47. A promises to pay B a sum of money if a certain ship returns within a year.
A. The contract cannot be enforced if the ship returns within the year; and can be enforced only if the ship is burnt within the year
B. The contract may be enforced if the ship returns within the year; and becomes void if the ship is burnt within the year
C. either (A) or (B)
Ans. (B)
48. A promises to pay B a sum of money. A may perform this promise,
A. by personally paying the money to B
B. by causing it to be paid to B by another
C. either (A) or (B)
D. both (A) and (B)
Ans. (D)
49. A promises to pay B a sum of money, if A dies before the time appointed for payment,
A. his representative must perform the promise
B. his representative must employ some proper person to do so
C. either (A) or (B)
D. both (A) and (B)
Ans. (D)
50. A promises to superintend, on behalf of B, a legal manufacturer of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 rupees a year.
A. The agreement is not void, the object of A’s promise, and the consideration for B’s promise, being in part unlawful
B. The agreement is void, the object of A’s promise, and the consideration for B’s promise, being in fully unlawful
C. The agreement is void, the object of A’s promise, and the consideration for B’s promise, being in part unlawful
D. None of these
Ans. (C)
51. A promises, for a certain sum paid to him by B, to make good to B the value of his ship if it is wrecked on a certain voyage. Here, A’s promise is the consideration for B’s payment, and B’s payment is the consideration for A’s promise.
A. These are unlawful considerations
B. These are lawful considerations
C. either (A) or (B)
D. None of these
Ans. (B)
52. A promises, for no considerations, to give to B Rs.1,000/-
A. This is a void agreement
B. This is not a void agreement
C. either (A) or (B)
D. None of these
Ans. (A)
53. A proposes, by a letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post.
A. A cannot revoke his proposal at any time before or at the moment when B posts his letter of acceptance.
B. A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but can afterwards
C. A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards
D. None of these
Ans. (C)
54. A proposes, by a letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post.
A. B cannot revoke his acceptance at any time before or at the moment when the letter communicating it reaches A.
B. B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but can afterwards
C. B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards
D. None of these
Ans. (C)
55. A proposes, by letter, to sell a house to B at a certain price.
A. The communication of the proposal is complete when the letter is posted was posted by A
B. The communication of the proposal is complete when B receives the letter
C. either (A) or (B)
D. None of these
Ans. (B)
56. A puts M as apprentice to B, and gives a guarantee to B for M’s fidelity. B promises on his part that he will at least once month, see M makes up the cash. B omits to see this done as promised, and M embezzles.
A. A is liable to B on his guarantee
B. A is partly liable to B on his guarantee
C. A is not liable to B on his guarantee
D. None of these
Ans. (C)
57. A railway company refused to deliver up certain goods to the consignee except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods.
A. He is not entitled to recover so much of the charge as was illegally excessive
B. He is entitled to recover over and above the charge as was illegally excessive
C. He is entitled to recover so much of the charge as was illegally excessive
D. None of these
Ans. (C)
58. A revokes his proposal made to B by telegram. The revocation is complete:
A. As against A and B, when the telegram is dispatched
B. As against A and B, when the telegram when B receives it
C. As against A, when the telegram is dispatched. It is complete as against B when B receives it
D. None of these
Ans. (C)
59. A saves B’s property from fire.
A. A is entitled to compensation from B, if the circumstances show that he intended to act gratuitously
B. A is not entitled to compensation from B, whatever the circumstances show that his intentions
C. A is not entitled to compensation from B, if the circumstances show that he intended to act gratuitously
D. None of these
Ans. (C)
60. A sells certain merchandise to B, warranting it to be of a particular quality, and B, in reliance upon the warranty, sells it to C with a similar warranty. The goods prove to be not according to the warranty, and B becomes liable to pay C a sum of money by way of compensation.
A. B is not entitled to be reimbursed this sum by A
B. B is entitled to be partially reimbursed this sum by A
C. B is entitled to be reimbursed this sum by A
D. None of these
Ans. (C)
61. Contracts may be of two classes, one where consideration is executed and the other where it is executor. This distinction was approved by the Supreme Court in which of the following cases?
A. Board of Revenue Madras v. Annamalai & Co. (Pvt.) Ltd.
B. Suraj Narain Dube v. Sukhu Aheer
C. Union of India v. Chaman lal Loona and Co.
D. Lala Babu Ram v. Ganga Devi
Ans: C
62. Co-sureties need:
A. Not be bound under the same contract
B. The right to contribution being independent of any agreement for that purpose
C. Both (A) and (B)
D. None of these
Ans: C
63. Decisions under Section 178 of the Indian Contract Act may be divided into which of the following groups according to the character of the pawnor’s possession?
I. Pledge by a commission agent employed to sell goods or by a broker employed to sell goods on jangad terms i.e. on terms that he shall take offers to his principal, who accept or reject them
II. Pledge by seller who has been left in possession of the goods sold
III. Pledge by a person in bare custody of goods
IV. Pledge by a person who has agreed to buy goods under a hire purchase agreement and who has not made default in payment of the instalments
V. Pledge by a person entrusted with goods for a specific purpose
A. I, II
B. II, IV
C. Ill, V
D. All of them
Ans: D
64. Disclosure or non-disclosure of principal is immaterial for application of:
A. S. 230(1) of the Indian Contract Act, 1872
B. S. 230(2) of the Indian Contract Act, 1872
C. S. 230(3) of the Indian Contract Act, 1872
D. None of these
Ans: A
65. Effect of failure to perform at fixed time, in contract in which time is essential is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 55
B. Section 50
C. Section 52
D. Section 59
Ans: A
66. Except the equitable principles, in terms which of the following sections of the Indian Contract Act, 1872 cannot be applied to transactions where the bond is given to the Court in view of the fact that there is no creditor as required by S. 126 of the Indian Contract Act, 1872?
A. Section 133
B. Section 135
C. Section 139
D. All of them
Ans: D
67. Fiduciary contract:
A. An agreement by which a person delivers a thing to another on the condition that he will restore it to him
B. A contract based on mutual trust and confidence
C. Both (A) and (B)
D. None of these
Ans: C
68. Period of limitation for a suit against pawnee to recover the thing pledged is:
(a) 1 year from the date of pawn
(b) 3 years from the date of pawn
(c) 12 years from the date of pawn
(d) 30 years from the date of pawn.
Ans. (c)
69. The pawnee has a right to retain the goods pledged:
(a) for payment of debt interest & all necessary expenses in respect of goods pledged
(b) for payment of debt other than the debt in respect of goods pledged
(c) for payment of interest & necessary expenses in respect of goods other than the one pledged
(d) all the above.
Ans. (a)
70. The pawnee has no right to retain the goods:
(a) for payment of necessary expenses in respect of goods pledged
(b) for payment of extraordinary expenses incurred in the preservation of goods
(c) for payment of debt or interest in respect of goods pledged
(d) none of the above.
Ans. (b)
71. Which of the following is an offer:
(a) A bid at an auction sale
(b) Banker’s catalogue of charges
(c) Menu card at a restaurant
(d) All of the above.
Ans. (a)
72. If a future event on which a contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to become impossible:
(a) When such person does anything which renders it impossible that he should so act within any definite time,
(b) Otherwise than under further contingencies
(c) Both (a) and (b) above
(d) None of the above.
Ans. (c)
73. In which case it was held that a contract through telephone is concluded at the place where acceptance is heard:
(a) Lalman Shukla v. Gauri Dutt, (1913) XL ALJR 489 (All)
(b) Carlill v. Carbolic Smoke Ball Co., (1981-4) All ER Rep. 127
(c) Bhagwandas Goverdhandas Kedia v. M/s. Girdhari Lai Parshottamdas and Co., AIR 1966 SC 543
(d) Satyabrata Ghose v. Mugneeram Bangur and Co., AIR 1954 SC 44.
Ans. (c)
74. ‘A’ applies to a banker for a loan at a time when there is stringency in the money market. The banker declines to make the loan except at an unusually high rate of interest. ‘A’ accepts the loan on these terms. In this case the contract is:
(a) vitiated by undue influence
(b) valid because this is a transaction in the ordinary cause of business
(c) void because the banker took unfair advantage of stringency in the money market
(d) voidable at the option of ‘A’ who was deceived by the banker.
Ans. (b)
75. ‘A’ contract to sing for ‘B’ at a concert for Rs. 50,000 which are paid in advance ‘A’ is too ill to sing on the day of the concert. The consequence is:
(a) ‘A’ is bound to make compensation to ‘B’ for the loss of the profits which ‘B’ would have made if ‘A’ had been able to sing
(b) ‘A’ is bound to refund to ‘B’ Rs. 50,000 paid in advance
(c) ‘A’ can be forced to sing at the concert
(d) ‘A’ is bound to refund only that money out of Rs. 50,000 that he has not spent.
Ans. (b)
76. Where persons reciprocally promise, firstly to do certain things which are legal and secondly, under specified circumstances, to do certain other things which are illegal the:
(a) first set of promise is a contract, but the second is a void agreement
(b) first set of promise is voidable but the second set is a void agreement
(c) entire set of promises is void
(d) entire set of promises is valid.
Ans. (a)
77. In which of the following cases, a contingent contract becomes void:
(a) If the contract contemplates the happening of the event within a certain time, and event does not happen or its happening becomes impossible
(b) If the performance is made to depend upon an event which is already impossible
(c) If the event contemplated does not happen
(d) Both (a) and (b) above.
Ans. (d)
78. If the pawner makes a default in payment of debt, at the stipulated time:
(a) the pawnee has a right to sell the goods pledged without notice to the pawner
(b) the pawnee has a right to sell the goods pledged after giving a reasonable notice of sale to the pawner
(c) has no right to sell the goods pledged but has a right to retain the goods as collateral security for the debt
(d) neither has a right to sell the goods nor retain the goods as collateral security but has a right to sue for pawner upon the debt.
Ans. (b)
79. Goods may be pledged:
(a) by the owner of goods
(b) by the servant in the absence of owner
(c) by the person who is left with the goods for some special purpose
(d) all the above.
Ans. (a)
80. Which of the following is correct
(a) pledge made by a mercantile agent is valid
(b) pledge made by a person in possession under voidable contract is valid
(c) pledge by a person having a limited interest is valid to the extent of that interest
(d) all the above.
Ans. (a)
81. Agent is a:
(a) person employed to do any act for another or to represent in dealings with third person
(b) person for whom the act is done or who is represented in dealings with third person
(c) person from whom the person employed to do any act, has to get die work done
(d) all the above.
Ans. (a)
82. Principal is a:
(a) person employed to do any act for another or to represent in dealings with third person
(b) person for whom the act is done or who is so represented in dealings with third persons
(c) person from whom, the person employed to do any act, has to get the work done
(d) all the above.
Ans. (b)
83. Amongst the following who is an agent:
(a) a domestic servant
(b) a person aiding another in the performance of his legal or contractual obligations of third persons
(c) a person who tills another’s field
(d) none of the above.
Ans. (c)
84. Amongst the following who is not an agent:
(a) an independent buyer
(b) a person who advices another in matters of business
(c) a procurement agent
(d) all the above.
Ans. (c)
85. Two or more persons can be employed to act as agents:
(a) jointly
(b) severally
(c) jointly & severally
(d) either (a) or (b) or (c).
Ans. (d)
86. An authority given to two or more persons is generally given:
(a) jointly
(b) severally
(c) jointly & severally
(d) either (a) or (b) or (c).
Ans. (a)
87. An agent appointed by more than one principal is liable:
(a) severally
(b) jointly
(c) jointly & severally
(d) either (a) or (b) or (c).
Ans. (d)
(a) a minor of sound mind
(b) a major of sound mind
(c) a person of unsound mind
(d) both (a) & (b).
Ans. (b)
(a) a major of sound mind
(b) a major of unsound mind
(c) a minor of sound mind
(d) a minor of unsound mind.
Ans. (a)
(a) has to be expressed
(b) has to be implied
(c) can be expressed or implied
(d) either (a) or (b) or (c).
Ans. (c)
91. A wife has an implied authority of the husband to buy articles of household necessity:
(a) if the wife is living with her husband
(b) if the wife is living separately
(c) if the wife is living with her husband not in a domestic establishment
(d) if the wife gets a reasonable allowance from the husband for her needs.
Ans. (a)
92. The principle of agency of necessity is:
(a) unknown to the law of agency
(b) applicable in normal situations
(c) applicable in emergent situations where communication with the principal is possible
(d) applicable in emergent situation where the communication with the principal is not possible.
Ans. (d)
93. An agent can lawfully employ a sub-agent:
(a) originally
(b) if the ordinary custom of trade permits
(c) if the nature of the agency permits
(d) both (b) & (c).
Ans. (b)
94. In case of a sub-agent lawfully appointed, which of the following is correct:
(a) as regards third parties the sub-agent binds the principal as an original agent can
(b) as regards third parties, the sub-agent cannot bind the principal as an original agent
(c) as regards third parties the sub-agent can bind only the original agent, who has appointed the sub-agent
(d) as regards third parties, the sub-agent can neither bind the principal nor the original agent.
Ans. (a)
95. For the acts of sub-agent, lawfully appointed:
(a) the agent is not responsible to the principal
(b) the agent is responsible to the principal
(c) the sub-agent is responsible to the principal directly
(d) the sub-agent is not responsible to the principal.
Ans. (b)
96. In case of fraud & wilful wrong by the sub- agent:
(a) the sub-agent is directly liable to the agent
(b) the sub-agent & the agent both are liable to the principal
(c) the agent alone is liable to the principal
(d) both (a) & (b).
Ans. (a)
97. A person whom the agent names to act for the principal in the business of agency, under the express or implied authority to name, is called:
(a) sub-agent
(b) substituted agent
(c) agent
(d) procured agent.
Ans. (b)
98. For the acts of the substituted agent:
(a) the agent is responsible to the principal
(b) the agent is not responsible to the principal
(c) the substituted agent is not responsible to the principal
(d) none of the above.
Ans. (a)
99. Substituted agent is liable to the principal:
(a) only in case of fraud & wilful default
(b) irrespective of fraud & wilful default, in all cases
(c) alongwith the agent
(d) both (a) & (c).
Ans. (b)
100. In case the sub-agent is not lawfully appointed, for the acts of such sub-agent, the agent appointing the sub-agent is liable:
(a) towards the principal only
(b) towards the third parties only
(c) towards the principal and third parties both
(d) towards none.
Ans. (c)
101. Any act is done, without the authority or knowledge of a person on behalf of that
(a) can disown the act
(b) can ratify the act
(c) either ratify or disown the act
(d) can disown the act but cannot ratify the same.
Ans. (c)
(a) has to be express only
(b) has to be implied
(c) can be either express or implied
(d) has to be both expressed and implied.
Ans. (c)
103. Ratification takes effect:
(a) prospectively
(b) retrospectively
(c) prospectively or retrospectively depending on the facts & circumstances of case
(d) prospectively or retrospectively depending on the agreement between the parties.
Ans. (b)
104. Which of the following acts cannot be ratified:
(a) lawful or unlawful acts capable of being done by the agent
(b) where knowledge of facts to the ratifying person is defective
(c) act which are unauthorised at the time of its being done
(d) all the above.
Ans. (b)
105. Agency can be terminated:
(a) by revocation by the principal
(b) by notice of renunciation by the agent
(c) by efflux of time
(d) either (a) or (b).
Ans. (d)
106. Agency stands terminated:
(a) by the death, insolvency or insanity of the principal
(b) by the death, insolvency or insanity of the agent
(c) by the death, insolvency or insanity of either the principal or the agent
(d) by the death, insolvency or insanity of the principal and the agent both.
Ans. (c)
107. Which of the following is correct:
(a) agency stands terminated by the destruction of subject matter of agency
(b) agency stands terminated by happening of an event rendering the object of the agency unlawful
(c) agency stands terminated by the frustration of the objects of agency due to impossibility
(d) none of the above.
Ans. (d)
108. Principal can revoke the authority given to the agent:
(a) at any time before the authority has been exercised
(b) at any time after the authority has been partly exercised without liability towards the acts done
(c) at any time after the authority has been fully exercised
(d) all the above.
Ans. (a)
109. An authority given by two or more principals can be terminated:
(a) by notice of revocation or renunciation given by or to all the principals
(b) by notice of revocation or renunciation given by or to any one of the principals
(c) by notice of revocation or renunciation given by or to both the principals if there are only two principals
(d) none of the above.
Ans. (a)
110. With the termination of authority of an agent:
(a) the authority of sub-agent or substituted agent does not come to an end
(b) the authority of sub-agent comes to an end but not of substituted agent
(c) the authority of sub-agent does not come to an end but that of a substituted agent
(d) the authority of sub-agent and substituted agent both comes to an end.
Ans. (d)
111. If the amount due to the agent for commission or remuneration is not paid or accounted for, the agent:
(a) has a right of lien only over the movable property of the principal
(b) has a right of lien only over the immovable property of the principal
(c) has a right of lien over the goods, papers and property movable or immovable of the principal
(d) does not have a right of lien over the papers.
Ans. (c)
112. Right of lien, of an agent:
(a) is extinguished by his parting with the possession of the goods
(b) is extinguished by destruction of goods accidentally
(c) both (a) & (b) are correct
(d) neither (a) nor (b) is correct.
Ans. (a)
113. When a sub-contractor had under-taken some part of the work in connection with the project which was entrusted to contractor, he cannot be treated as:
(a) agent
(b) sub-agent
(c) sub-contractor
(d) none of the above.
Ans. (b)
114. There can also be………… by estoppel:
(a) ownership
(b) possession
(c) fraud
(d) sale.
Ans. (d)
115. Under the Contract Act, if the existing cause of action gets substituted by new cause of action arising out of agreement, then:
(a) the admiralty claim is maintainable
(b) the admiralty claim is not maintainable
(c) admiralty claim is superseded by other claims
(d) changes in cause of action does not affect admiralty claim.
Ans. (b)