General knowledge questions and answers on the law of contract especially compiled for UPSC, civil services, IAS, Indian judicial services and other competitive exams!
1. A, in consideration of B’s discounting, at A’s request, bills of exchange for C, guarantees to B, for twelve months, the due payment of all such bills to extent of 5,000 rupees. B discounts bills for C to the extent of 2,000 rupees. Afterwards, at the end of three months, A revokes the guarantee.
A. This revocation does not discharge A from all liability to B for any subsequent discount. But A is liable to b for the 2,000 rupees on default of C
B. This revocation discharge A from all liability to B for any subsequent discount. But A is not liable to b for the 2,000 rupees on default of C
C. This revocation discharge A from all liability to B for any subsequent discount. But A is liable to b for the 2,000 rupees on default of C
D. None of these
Ans. (C)
2. A, in consideration that B will employ C in collecting the rents of B’s zamindari, promises B to be responsible, to the amount of 5,000 rupees, for the due collection and payment by C of those rents.
A. This is discontinuing guarantee
B. This is a continuing guarantee
C. This is stipulation by penalty
D. None of these
Ans. (B)
3. A, intending to deceive B, falsely represents that 500 maunds of indigo are made annually at A’s factory, and thereby induces B to buy the factory.
A. The contract is not voidable only at the option of B
B. The contract is voidable only at the option of B
C. either (A) or (B)
D. None of these
Ans. (B)
4. A, on board an English ship on the high seas, causes B to enter into an agreement by an act amounting to criminal intimidation under the Indian Penal Code (45 of 1860). A afterwards sues B for breach of contract in Calcutta
A. A has not employed coercion, as his act is not an offence by the law of England
B. A has not employed coercion, as Section 506 of the Indian Penal Code (45 of 1860) was not in force at that time when or place where the act was done
C. A has employed coercion, although his act is not an offence by the law of England, and although section 506 of the Indian Penal Code (45 of 1860) was not in force at that time when or place where the act was done
D. None of these
Ans. (C)
5. A, the captain of B’s ship, signs bills of landing without having received on board the goods mentioned therein.
A. The bills of lading are not void as between B and the pretended consignor
B. The bills of lading are partially void as between B and the pretended consignor
C. The bills of lading are void as between B and the pretended consignor
D. None of these
Ans. (C)
6. A, the owner of a boat, contracts with B to take a cargo of jute to Mirzapur, for sale at that place, starting on a specified day. The boat, owing to some avoidable cause, does not start at the time appointed, whereby the arrival of the cargo at Mirzapur is delayed beyond the time when it would have arrived if the boat had sailed according to the contract. After that date, and before the arrival of the cargo, the price of jute falls.
A. The measure of the compensation payable to B by A is the sum of the price for which B could have obtained for the cargo at Mirzapur at the time when it would have arrived if forwarded in due course, and its market price at the when it actually arrived
B. The measure of the compensation payable to B by A is the difference between the price which B could have obtained for the cargo at Mirzapur at the time when it would have arrived if forwarded in due course, and its market price at the when it actually arrived
C. either (A) and (B)
D. None of these
Ans. (B)
7. A, who is a dealer in coconut-oil only, agrees to sell to B ‘one hundred tons of oil’.
A. The nature of A’s trade affords no indication of the meaning of the words, and A has entered into a contract for the sale of one hundred tons of coconut-oil
B. The nature of A’s trade affords an indication of the meaning of the words, and A has entered into a contract for the sale of one hundred tons of coconut-oil
C. either (A) or (B)
D. None of these
Ans. (B)
8. A, who is B’s mukhtar, promises to exercise his influence, as such, with B in favour of C, and C promises to pay 1,000 rupees to A.
A. The agreement is void, because it is immoral
B. The agreement is not void, because it is not immoral
C. either (A) or (B)
D. None of these
Ans. (A)
9. A, who owes 500 rupees worth of rice to B. A is acting as agent for C in the transaction, but B has neither knowledge nor reasonable ground of suspicion that such is the case.
A. C can compel B to take the rice without allowing him to set-off A’s debt
B. C cannot compel B to take the rice by allowing him to set-off A’s debt
C. C cannot compel B to take the rice without allowing him to set-off A’s debt
D. None of these
Ans. (C)
10. A, who owes money to B, a money-lender, undertakes to repay him by delivering to him 10 maunds of grain on a certain date, and stipulates that, in the event of his not delivering the stipulated amount by the stipulated date, he shall be liable to deliver 20 maunds. This is a stipulation by way penalty.
A. B is only entitled to reasonable consideration in case of breach
B. B is not entitled to reasonable consideration in case of breach
C. either (A) or (B)
D. None of these
Ans. (A)
11. A, without authority, buys goods for B, Afterwards B sells them to C on his own account.
A. B’s conduct does not imply a ratification of the purchase made for him by A
B. B’s conduct implies a ratification of the purchase made for A by him
C. B’s conduct implies a ratification of the purchase made for him by A
D. None of these
Ans. (C)
12. A, without B’s authority, lends B’s money to C. Afterwards B accepts interest on the money from C.
A. B’s conduct does not imply a ratification of the loan
B. B’s conduct implies a partial ratification of the loan
C. B’s conduct implies a ratification of the loan
D. None of these
Ans. (C)
13. A’s estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing the estate. B, upon an understanding with A, becomes the purchaser, and agrees to convey the estate to A upon receiving form him the price which B has paid.
A. The agreement is not void, as it does renders the transaction, in effect, a purchase by the defaulter, and would not defeat the object of the law
B. The agreement is void, but it does not render the transaction, in effect, a purchase by the defaulter, and would not defeat the object of the law
C. The agreement is void, as it renders the transaction, in effect, a purchase by the defaulter, and would so defeat the object of the law
D. None of these
Ans. (C)
14. A’s son has forged B’s name to a promissory note. B under threat of prosecuting A’s son, obtains a bond from A for the amount of the forged note.
A. If B sues on this bond, the Court will not set the bond aside
B. If B sues on this bond, the Court may set the bond aside
C. either (A) or (B)
D. None of these
Ans. (B)
15. Accessory contract is made for assuring the performance of a prior contract by the same parties or by:
A. Suretyship
B. Mortgage
C. Pledge
D. All of them
Ans. (D)
16. According to UN Draft Convention on Independent Guarantees and Stand-by Letters of Credit, the guarantor may refuse payment under the guarantee if the demand is improper. A demand may be improper if:
A. Any document is forged
B. No payment is due on the basis asserted in the demand and the supporting documents
C. Judging by the type and purpose of the undertaking, the demand has no conceivable basis
D. All of them
Ans. (D)
17. According to UN Draft Convention on Independent Guarantees and Stand-by Letters of Credit, judging by the type and purpose of the undertaking, the demand has no conceivable basis if:
I. The contingency or risk against which the undertaking was designed to secure the beneficiary has undoubtedly not materialised
II. The underlying obligations of the principal/applicant has been declared invalid by a Court or arbitral tribunal, unless the undertaking indicates that such contingency falls within the risk to be covered by the undertaking
III. The secured obligation has undoubtedly been fulfilled to the satisfaction of the beneficiary
IV. Fulfilment of the underlying obligation has clearly been prevented by wilful misconduct of the beneficiary
A. II, III, IV
B. Ill, IV
C. I, IV
D. All of them
Ans. (D)
18. Acquittal contract is a discharge from an obligation by:
A. Deed
B. Prescription
C. Tenure
D. All of them
Ans. (D)
19. Affirmation of contract is a:
A. The confirmation by behaviour that a contract is valid, as opposed to trying to get out of it for some good reason.
B. It may be by declaration of intention, inferred from, say, selling goods bought under the contract, or allowing time to elapse without pursuing a remedy
C. either (A) and (B)
D. None of these
Ans. (C)
20. Agent not entitled to remuneration for business misconducted comes under which of the following in the Indian Contract Act, 1872?
A. Section 220
B. Section 219
C. Section 215
D. Section 210
Ans. (A)
21. Agent to be indemnified against consequences of acts done in good faith is discussed under which of the following in the Indian Contract Act 1872?
A. Section 220
B. Section 219
C. Section 226
D. Section 223
Ans. (D)
22. Agent to be indemnified against consequences of lawful acts is discussed under which of the following in the Indian Contract Act, 1872?
A. Section 220
B. Section 219
C. Section 222
D. Section 210
Ans. (C)
23. Agent’s authority may be expressed or implied under which of the following in the Indian Contract Act, 1872?
A. Section 186
B. Section 190
C. Section 185
D. Section 181
Ans. (A)
24. Which of the following deals with an agent’s duty in conducting principal’s business in the Indian Contract Act, 1872?
A. Section 211
B. Section 219
C. Section 215
D. Section 210
Ans. (A)
25. Agent’s lien on principal’s property comes under which of the following in the Indian Contract Act, 1872?
A. Section 220
B. Section 221
C. Section 226
D. Section 210
Ans. (B)
26. Which of the following deals with an agent’s responsibility for sub-agent appointed without authority in the Indian Contract Act, 1872?
A. Section 180
B. Section 190
C. Section 193
D. Section 181
Ans. (C)
27. Although there may be apparent consent to the terms between the parties, real consent may not be found, hence agreement is negative in which of the following situations?
A. offers and acceptance do not coincide
B. mistake as to identity of the person contracted with
C. mistake in relation to a written document: non est factum
D. All of them
Ans. (D)
28. An action for breach of contract, at the option of the plaintiff, can be brought at the place:
A. where the defendant voluntarily resides or carries on business
B. where the defendant personally works for gain
C. where the cause of action wholly or in part arises
D. either of them
Ans. (D)
29. An agent is:
A. A person employed to do act or for another
B. A person employed to represent another in dealings with third persons
C. either (A) and (B)
D. None of these
Ans. (C)
30. An agent of a foreign company for sale of its machine agreed with the purchaser that the purchaser will deduct his commission and pay the balance of price to the company.
A. The purchaser was not liable to the agent for the commission
B. The agent was liable to the purchaser for the commission
C. The purchaser was liable to the agent for the commission
D. None of these
Ans. (C)
31. An agent of a foreign company for sale of its machine agreed with the purchaser that the purchaser will deduct his commission and pay the balance of price to the company. The purchaser was liable to the agent for the commission. In which of the following cases was it upheld?
A. Continental and Eastern Agencies v. Coal India Limited
B. Bhatinda Chemicals v. M V. “Z-Press Nuptse”.
C. State of Gujarat v. Vora Fiddali.
D. S.N. Prasad v. Monnet Finance Ltd.
Ans. (A)
32. An agent sustaining loses in his agency has a right to be recouped by his principal for such losses and a suit to enforce and suit enforce it is governed by_________.
A. Art. 65 of Scheduled I of the Limitation Act, 1963
B. Art. 75 of Scheduled I of the Limitation Act, 1963
C. Art. 83 of Scheduled I of the Limitation Act, 1963
D. None of these
Ans. (C)
33. An agreement between a husband and a deserting wife whereby the husband promised a weekly maintenance and she promised to indemnify him against all debts and not to pledge his credit, is an agreement for consideration.
A. She had forfeited her right of maintenance by the desertion
B. She did not forfeit her right of maintenance by the desertion
C. She had partly forfeited her right to maintenance by the desertion
D. None of these
Ans. (B)
34. An agreement between two neighbouring firms carrying on the same business, not to employ servants in their respective employment during the previous five years, was held to be void as being unreasonable and excessive in the interest of the parties because:
A. it applied to all employees without distinction between those for example who did manual labour and those who possessed of trade secrets or confidential information
B. the real reason of the agreement was the proximity of the two firms and there was no provision for limiting the duration of the period while the proximity continued
C. both (A) and (B)
D. None of these
Ans. (C)
35. An application by an employee seeking voluntary retirement benefits can be withdrawn any time before it is accepted by the employer. In which of the following cases it was upheld?
A. Saurabh Prasad v. DLF Universal Ltd
B. Ceilena v. Ulhas
C. Food Corporation of India v. Ramesh Kumar
D. None of these
Ans. (C)
36. An auctioneer’s request for bids is not an offer, but an invitation to the customers to bid; the bid constitutes the offer, which is accepted by the auctioneer in a customary manner, usually by the fall of hammer. Which of the following cased held that the bidder may withdraw the bid until it is accepted?
A. Firm Durga Prasad Mutsaddi Lal v. Firm Rulia Mal Doogar Mal
B. Tata Cellular v. Union of India
C. Bengal Coal Co. Ltd., v. Homee Wadia & Co.
D. Joravarmull Champalal v. Jeygopaldas Chanshamdas
Ans. (D)
37. Anticipatory breach of contract is:
A. The refusal by any party to a contract before the due date for performance, to perform,
B. His disabling himself from being able then to perform
C. either (A) or (B)
D. None of these
Ans. (C)
38. Any condition to be performed by the creditor, to render the principal-debtor liable:
A. must be performed before the surety can be liable
B. must be immediately performed after the surety is made liable
C. either (A) or (B)
D. None of these
Ans. (A)
39. Any one of joint promisors may be compelled to perform under which of the following in the Indian Contract Act, 1872?
A. Section 42
B. Section 36
C. Section 43
D. Section 40
Ans. (C)
40. Application for performance on certain day to be at proper time and place is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 42
B. Section 36
C. Section 43
D. Section 48
Ans. (D)
41. Apportionment of relief or compensation obtained by such suits is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 176
B. Section 171
C. Section 181
D. Section 178
Ans. (C)
42. As a general rule, interest can be awarded only if:
A. it is payable by custom
B. if there is an agreement, either express or implied, to pay interest
C. under the provisions of any substantive law entitling the plaintiff to recover the same
D. all of them
Ans. (D)
43. As per principle mentioned in the second paragraph of Section 56 of the Indian Contract Act, 1872, a promise is discharged if, for some cause which the promisor could not prevent, performance may become impossible by:
I. change in law rendering a contract unlawful or impossible of performance
II. destruction or non-existence of the specific subject matter assumed by the parties to exist or continue in existence
III. the non-existence of a state of things assumed as the foundation of the contract
IV. such circumstances intervening which render the performance within the time in the way contemplated, impossible, although, performance of the contract according to its terms may be literally possible, the death or disability of the promisor, where the promise was to perform something in person
A. II, III
B. IV
C. I
D. All of them
Ans. (D)
44. B accepts A’s proposal by a letter sent by post. The communication of the acceptance is complete.
A. As against B, when the letter is posted; as against A, when the letter is received by B
B. As against A, when the letter is received; as against B, when the letter is posted by A
C. As against A, when the letter is posted; as against B, when the letter is received by A
D. None of these
Ans. (C)
45. B contracts to build a ship for C for a given sum, to be paid by instalments as the work reaches certain stages. A becomes surety to C for B’s due performance of the contract. C, without the knowledge of A, prepays to B the last two instalments.
A. A is partly discharged by this pre-payment
B. A is not discharged by this pre-payment
C. A is discharged by this pre-payment
D. None of these
Ans. (C)
46. B holds land in Bengal, on a lease granted by A, the zamindar. The revenue payable by A to the Government being in arrear, his land is advertised for sale by the Government. Under the revenue law, the consequence of such sale will be annulment of B’s lease. B, to prevent the sale is the consequent annulment of his own lease, pays to be the Government the sum due from A.
A. A is not bound to make good to B the amount so paid
B. A is partly bound to make good to B the amount so paid
C. A is bound to make good to B the amount so paid
D. None of these
Ans. (C)
47. B is indebted to C and A is surety for the debt. C demands payment from A, and on his refusal sues him for the amount. A defends the suit, having reasonable grounds for doing so, but he is compelled to pay the amount of the debt with costs.
A. He cannot recover from B the amount paid by him for costs
B. He can recover from B only the principal debt
C. He can recover from B the amount paid by him for costs, as well as the principal debt
D. None of these
Ans. (C)
48. B owes A 2,000 rupees. A desires B to pay the amount to A’s account with C, a banker. B, who also banks with C, orders the amount to be transferred from his account to A’s credit, and this is done by C. Afterwards, and before A knows of the transfer, C fails.
A. There has been a good payment by B
B. There has been no payment by B
C. either (A) or (B)
D. None of these
Ans. (A)
49. B owes to C a debt guaranteed by A. The debt becomes payable. C does not due B for a year after the debt has become payable.
A. A is partly discharged from his surety ship
B. A is discharged from his surety ship
C. A is not discharged from his surety ship
D. None of these
Ans. (C)
50. B revokes his acceptance to A’s proposal 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 A receives it
C. As against B when the telegram is dispatched, and as against A when it reaches him
D. None of these
Ans. (C)
51. Which one of the following is correct:
(a) past consideration is no consideration
(b) consideration can be past, present or future
(c) consideration can only be present
(d) consideration can only be present & future.
Ans. (b)
52. Past consideration is valid in:
(a) England only
(b) India only
(c) both in England & India
(d) neither in England nor in India.
Ans. (c)
53. An agreement not to raise the plea of limitation is:
(a) valid & binding
(b) void
(c) voidable
(d) illegal.
Ans. (b)
54. A letter of acceptance sent by post is lost in transit:
(a) there is a concluded contract as the letter of acceptance is put in the course of transmission
(b) there is no concluded contract as the acceptance has not come to the knowledge of the proposer
(c) there is no concluded contract as the acceptance has not been communicated to the proposer
(d) all the above.
Ans. (a)
55. When the consent to the contract is caused by coercion, the contract under section 19 is:
(a) valid
(b) voidable
(c) void
(d) illegal.
Ans. (b)
56. A’s son forged B’s name to a promissory note. B under threat of prosecuting A’s son obtains a bond from A for the amount of the forged note. If B sues on this bond the court:
(a) has no jurisdiction in this case
(b) must not set aside the bond
(c) may set aside the bond
(d) none of above.
Ans. (c)
57. When the consent is caused by misrepresentation, the contract under section 19 is:
(a) valid
(c) voidable
(d) illegal.
Ans. (c)
58. When the consent is caused by undue influence, the contract under section 19A is:
(a) valid
(b) void
(c) voidable
(d) illegal.
Ans. (c)
59. Where both the parties are under mistake as to matter of fact, the contract under section 20 is:
(a) voidable
(b) void
(c) valid
(d) illegal.
Ans. (b)
60. Where one of the parties is under a mistake as to matter of fact the contract is:
(a) valid
(b) void
(c) voidable
(d) illegal.
Ans. (a)
61. Considerations & objects are unlawful where it is:
(a) forbidden by law or defeat the provision of any law
(b) which is fraudulent
(c) which is immoral & against the public policy
(d) all the above.
Ans. (d)
62. If only a part of the consideration or object is unlawful, the contract under section 24 shall be:
(a) valid
(b) voidable
(c) void
(d) illegal.
Ans. (c)
63. A contract without consideration under section 25 is:
(a) valid
(b) voidable
(c) void
(d) illegal.
Ans. (c)
64. Consideration should be something in return of promise which:
(a) both the law and parties regard, as having some value
(b) only law regards a having some value
(c) only the parties regard some value
(d) only adequate value necessary.
Ans. (a)
65. If the proposer prescribes the mode & manner of acceptance, the acceptance:
(a) can be in any manner & mode
(b) should be in the manner & mode prescribed
(c) can be in any reasonable mode & manner
(d) all the above.
Ans. (b)
66. Parties are not competent to contract if any of them is:
(a) minor
(b) insane
(c) declared unqualified
(d) all the above.
Ans. (d)
67. Consent is free under section 14 if not caused by:
(a) coercion & undue influence
(b) fraud and misrepresentation
(c) mistake subject to the provisions of sections 20, 21 and 22
(d) all the above.
Ans. (d)
68. Consent under section 13 means:
(a) agreeing on the same thing in the same sense
(b) agreeing on the same thing at the same time
(c) agreeing on the same thing at different time
(d) agreeing on different things at different times.
Ans. (a)
69. A contract which is valid initially however, ceases to be enforceable subsequently, the contract:
(a) remains valid
(b) becomes voidable when it ceases to be enforceable
(c) becomes void when it ceases to be enforceable
(d) becomes void since inception.
Ans. (c)
70. Agreements, the meaning of which is not certain or not capable of being made certain under section 29 is:
(a) void
(b) voidable
(c) illegal
(d) valid.
Ans. (a)
71. An agreement in restraint of trade under section 27 is:
(a) valid
(b) voidable
(c) void
(d) unenforceable.
Ans. (c)
72. An agreement in restraint of trade is valid under section 27 if relates to:
(a) sale of goodwill
(b) mutual adjustment
(c) business contingency
(d) none of the above.
Ans. (a)
73. An agreement not to pursue any legal remedy to enforce the rights under section 28 is:
(a) valid
(c) void
Ans. (c)
74. An agreement not to persue legal remedies but to refer the dispute to the arbitrator, under section 28 is:
(a) valid
(b) voidable
(c) void
(d) unenforceable.
Ans. (a)
75. An agreement to refer the dispute to the arbitrator is valid:
(a) in respect of disputes already arisen
(b) in respect of disputes which may arise in future
(c) both (a) & (b)
(d) neither (a) nor (b).
Ans. (c)
76. An agreement by way of wager under section 30 is:
(a) void
(b) voidable
(c) valid
(d) unenforceable.
Ans. (a)
77. An agreement in connection with horse-racing under section 30 is:
(a) unlawful
(b) void
(c) voidable
(d) valid.
Ans. (d)
78. An agreement in restraint of marriage under section 26 is:
(a) void
(b) voidable
(c) valid
(d) unenforceable.
Ans. (a)
79. If only a part of the consideration or object is unlawful, the contract under section 24 shall be:
(a) valid to the extent the same are lawful
(b) void to the extent the same are unlawful
(c) void as a whole
(d) valid as a whole.
Ans. (c)
80. An agreement shall be void on account of:
(a) mistake of fact by one party
(b) mistake of fact by both the parties
(c) mistake of foreign law
(d) both (a) & (b).
Ans. (b)
81. A, B and C are sureties to D for the sum of 3,000 rupees lent to E. E makes default in payment.
A. A and B are liable, as between themselves, to pay 1,000 rupees each
B. A and C are liable, as between themselves, to pay 1,000 rupees each
C. A, B and C are liable, as between themselves, to pay 1,000 rupees each
D. None of these
Ans: C
82. A, B and C are under a joint promise to pay D 3,000 rupees. C is unable to pay anything and A is compelled to pay the whole.
A. A is entitled to receive 1,500 rupees from B
B. A is not entitled to receive any money from B
C. A is entitled to receive 1,500 rupees from C
D. None of these
Ans: A
83. A, B and C jointly promise to pay D 3,000 rupees.
A. D may compel A to pay him 3,000 rupees
B. D may compel B to pay him 3,000 rupees
C. D may compel C to pay him 3,000 rupees
D. All of them
Ans: D
84. A, B and C, as sureties for D, enter into three several bonds, each in a different penalty, namely, A in the penalty of 10,000 rupees, B in that of 20,000 rupees, C that of 40,000 rupees, conditioned for D’s duly accounting to E. D makes default to the extent of 40,000 rupees.
A. A is liable to pay 15000 rupees, and B and C 1000 rupees each
B. A is liable to pay 5000 rupees, and B and C 10000 rupees each
C. A is liable to pay 10000 rupees, and B and C 1500 rupees each
D. None of these
Ans: C
85. A, B and C jointly promise to pay D the sum of 3,000 rupees. C is compelled to pay the whole. A is insolvent, but his assets are sufficient to pay one-half of his debts.
A. C is entitled to receive 1250 rupees from A’s estate, and 500 rupees from B
B. C is entitled to receive 500 rupees from A’s estate, and no money from B
C. C is entitled to receive 500 rupees from A’s estate, and 1,250 rupees from B
D. None of these
Ans: C
86. A, being B’s agent for the sale of goods, induces C to buy them by misrepresentation, which he was not authorized by B to make.
A. The contract is not voidable, as between B and C, at the option of C
B. The contract is partially voidable, as between B and C, at the option of C
C. The contract is voidable, as between B and C, at the option of C
D. None of these
Ans: C
87. A, being entitled to an estate for the life of B, agrees to sell it to C, B was dead at the time of the agreement, but both parties were ignorant of the fact.
A. The agreement cannot be voided
B. The agreement is void
C. Either (A) or (B)
D. None of these
Ans: B
88. A, being owner of a ship and cargo, authorizes B to procure an insurance for 4,000 rupees on the ship. B procures a policy for 4,000 rupees on the ship, and another for the like sum on the cargo.
A. A is bound to pay the premium for the policy on the ship
B. A is bound to pay the premium for the policy on the cargo
C. A is bound to pay the premium for the policy on the ship, but not the premium for the policy on the cargo
D. None of these
Ans: C
89. A, contracts to buy B’s ship for 60,000 rupees, but breaks his promise.
A. A must pay to B, by way of compensation, the excess, if any, of the contract price for which B can obtain for the ship at the time of the breach of promise
B. A must pay to B, by way of compensation, a partial amount of the contract price for which B can obtain for the ship at the time of the breach of promise
C. A must pay to B, by way of compensation, the excess, if any, of the contract price over the price which B can obtain for the ship at the time of the breach of promise
D. None of these
Ans: C
90. A, having contracted with B to supply B with 1,000 tons of iron at 100 rupees a ton, to be delivered at a stated time, contracts with C for the purchase of 1,000 tons of iron at 80 rupees a ton, telling C that he does so for the purpose of performing his contract with B. C fails to perform his contract with A, who cannot procure other iron, and B, in consequence, rescinds the contract.
A. C must pay to A 5000 rupees, being the profit which A would have made by the performance of his contract with B
B. C must pay to A 10,000 rupees, being the profit which A would have made by the performance of his contract with B
C. C must pay to A 20,000 rupees, being the profit which A would have made by the performance of his contract with B
D. None of these
Ans: C
91. A, in consideration of B’s discounting, at A’s request, bills of exchange for C, guarantees to B, for twelve months, the due payment of all such bills to extent of 5,000 rupees. B discounts bills for C to the extent of 2,000 rupees. Afterwards, at the end of three months, A revokes the guarantee.
A. This revocation does not discharge A from all liability to B for any subsequent discount. But A is liable to b for the 2,000 rupees on default of C
B. This revocation discharge A from all liability to B for any subsequent discount. But A is not liable to b for the 2,000 rupees on default of C
C. This revocation discharge A from all liability to B for any subsequent discount. But A is liable to b for the 2,000 rupees on default of C
D. None of these
Ans: C
92. A, intending to deceive B, falsely represents that 500 maunds of indigo are made annually at A’s factory, and thereby induces B to buy the factory.
A. The contract is not voidable only at the option of B
B. The contract is voidable only at the option of B
C. Either (A) or (B)
D. None of these
Ans: B
93. A, the captain of B’s ship, signs bills of landing without having received on board the goods mentioned therein.
A. The bills of lading are not void as between B and the pretended consignor
B. The bills of lading are partially void as between B and the pretended consignor
C. The bills of lading are void as between B and the pretended consignor
D. None of these
Ans: C
94. A, who is a dealer in coconut-oil only, agrees to sell to B ‘one hundred tons of oil’.
A. The nature of A’s trade affords no indication of the meaning of the words, and Ahas entered into a contract for the sale of one hundred tons of coconut-oil
B. The nature of A’s trade affords an indication of the meaning of the words, and Ahas entered into a contract for the sale of one hundred tons of coconut-oil
C. Either (A) or (B)
D. None of these
Ans: B
95. A, who owes 500 rupees worth of rice to B. A is acting as agent for C in the transaction, but B has neither knowledge nor reasonable ground of suspicion that such is the case.
A. C can compel B to take the rice without allowing him to set-off A’s debt
B. C cannot compel B to take the rice by allowing him to set-off A’s debt
C. C cannot compel B to take the rice without allowing him to set-off A’s debt
D. None of these
Ans: C
96. A, without authority, buys goods for B, Afterwards B sells them to C on his own account.
A. B’s conduct does not imply a ratification of the purchase made for him by A
B. B’s conduct implies a ratification of the purchase made for A by him
C. B’s conduct implies a ratification of the purchase made for him by A
D. None of these
Ans: C
97. A’s estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing the estate. B, upon an understanding with A, becomes the purchaser, and agrees to convey the estate to A upon receiving form him the price which B has paid.
A. The agreement is not void, as it does renders the transaction, in effect, a purchase by the defaulter, and would not defeat the object of the law
B. The agreement is void, but it does not render the transaction, in effect, a purchase by the defaulter, and would not defeat the object of the law
C. The agreement is void, as it renders the transaction, in effect, a purchase by the defaulter, and would so defeat the object of the law
D. None of these
Ans: C
98. Accessory contract is made for assuring the performance of a prior contract by the same parties or by:
A. Suretyship
B. Mortgage
C. Pledge
D. All of them
Ans: D
99. According to UN Draft Convention on Independent Guarantees and Stand-by Letters of Credit, judging by the type and purpose of the undertaking, the demand has no conceivable basis if:
I. The contingency or risk against which the undertaking was designed to secure the beneficiary has undoubtedly not materialised
II. The underlying obligations of the principal/applicant has been declared invalid by a Court or arbitral tribunal, unless the undertaking indicates that such contingency falls within the risk to be covered by the undertaking
III. The secured obligation has undoubtedly been fulfilled to the satisfaction of the beneficiary
IV. Fulfilment of the underlying obligation has clearly been prevented by wilful misconduct of the beneficiary
C. I, IV
D. All of them
Ans: D
100. Affirmation of contract is a:
A. The confirmation by behaviour that a contract is valid, as opposed to trying to get out of it for some good reason.
B. It may be by declaration of intention, inferred from, say, selling goods bought under the contract, or allowing time to elapse without pursuing a remedy
C. Either (A) and (B)
D. None of these
Ans: C
101. Agent to be indemnified against consequences of acts done in good faith is discussed under which of the following in the Indian Contract Act, 1872?
A. Section 220
B. Section 219
C. Section 226
D. Section 223
Ans: D
102. Agent’s authority may be expressed or implied under which of the following in the Indian Contract Act, 1872?
A. Section 186
B. Section 190
C. Section 185
D. Section 181
Ans: A
103. Agent’s lien on principal’s property comes under which of the following in the Indian Contract Act, 1872?
A. Section 220
B. Section 221
C. Section 226
D. Section 210
Ans: B
104. Although there may be apparent consent to the terms between the parties, real consent may not be found, hence agreement is negative in which of the following situations?
A. Offers and acceptance do not coincide
B. Mistake as to identity of the person contracted with
C. Mistake in relation to a written document: non est factum
D. All of them
Ans: D
105. An agent is:
A. A person employed to do act or for another
B. A person employed to represent another in dealings with third persons
C. Either (A) or (B)
D. None of these
Ans: C
106. An agent of a foreign company for sale of its machine agreed with the purchaser that the purchaser will deduct his commission and pay the balance of price to the company. The purchaser was liable to the agent for the commission. In which of the following cases was it upheld?
A. Continental and Eastern Agencies v. Coal India Limited
B. Bhatinda Chemicals v. M V. “Z-Press Nuptse”.
C. State of Gujarat v. Vora Fiddali.
D. S.N. Prasad v. Monnet Finance Ltd.
Ans: A