Objective questions and answers on the law of contract especially compiled for UPSC, Civil Services, IAS and Indian Judicial Service examinations!
1. A agrees to sell a horse worth Rs.1,000/- for Rs.10/-. A denies that his consent to the agreement was freely given.
A. The inadequacy of the consideration is a fact which the court should take into account in considering whether or not A’s consent was freely given
B. The adequacy of the consideration is a fact which the court should take into account in considering whether or not A’s consent was freely given
C. The inadequacy of the consideration is a fact which the court should take not into account in considering whether or not A’s consent was freely given
D. None of these
Ans. (A)
2. A agrees to sell a horse worth Rs.1,000/- for Rs.10/-. A’s consent to the agreement was freely given.
A. The agreement is a contract due to the adequacy of the consideration
B. The agreement is a not contract notwithstanding the inadequacy of the consideration
C. The agreement is a contract notwithstanding the inadequacy of the consideration
D. None of these
Ans. (C)
3. A agrees to sell B ‘all the grain in my granary at Ramnagar’
A. There is no uncertainty here to make the agreement void
B. There is uncertainty here to make the agreement void
C. There is uncertainty but the agreement cannot be made void
D. None of these
Ans. (A)
4. A agrees to sell B one hundred tons of oil of a specified description, known as an article of commerce.
A. There is uncertainty here to make the agreement void
B. There is no uncertainty here to make the agreement void
C. There is uncertainty but the agreement cannot be made void
D. None of these
Ans. (B)
5. A agrees to sell B’s hundred tons of oil’. There is nothing whatever to show what king of oil was intended.
A. The agreement is void for uncertainty
B. The agreement is not void in spite of the uncertainty
C. either (A) of (B)
D. None of these
Ans. (A)
6. A agrees to sell his house to B for 10,000 rupees. Here, B’s promise to pay the sum of 10,000 rupees is the consideration for A’s promise to sell the house, and A’s promise to sell the house is the consideration for B’s promise to pay the 10,000 rupees.
A. These are unlawful considerations
B. These are lawful considerations
C. either (A) or (B)
D. None of these
Ans. (B)
7. A promises to pay B 1,000 rupees at the end of the six months. If C, who owes that sum to B, fails to pay it. B promises to grant time to C accordingly. Here, the promise of each party is the consideration for the promise of the other party.
A. These are unlawful considerations
B. These are lawful considerations
C. either (A) or (B)
D. None of these
Ans. (B)
8. A agrees to sell to B ‘my white horse for rupees five hundred or rupees one thousand. There is nothing to show which of the two prices was to be given.
A. The agreement is void
B. The agreement is not void
C. either (A) or (B)
D. None of these
Ans. (A)
9. A agrees to sell to B ‘one thousand maunds of rice at a price to be fixed by C’. As the price is capable of being made certain.
A. There is no uncertainty here to make the agreement void
B. There is uncertainty here to make the agreement void
C. There is uncertainty but the agreement cannot be made void
D. None of these
Ans. (A)
10. A agrees to sell to B a specific cargo of goods supposed to be on its way from English to Bombay. It turns out that, before the day of bargain, the ship conveying the cargo had been cast away, and the goods lost. Neither party was aware of these facts.
A. The agreement cannot be voided
B. The agreement is void
C. either (A) or (B)
D. None of these
Ans. (B)
11. A agrees with B to discover treasure by magic.
A. The agreement is not voided
B. The agreement is partly void
C. The agreement is void
D. None of these
Ans. (C)
12. A and B agree that A shall pay B 1,000 rupee, for which B shall afterwards deliver to A either rice or smuggled opium.
A. It is a contract
B. It is a void agreement
C. either (A) or (B)
D. both (A) and (B)
Ans. (D)
13. A and B agree that A shall sell B a house for 10,000 rupees, but that if B uses it as a gambling house, he shall pay A 50,000 rupees for it.
A. It is a contract
B. It is a void agreement
C. either (A) or (B)
D. both (A) and (B)
Ans. (D)
14. A and B are mutually indebted. A and B settle an account by setting off one item against another, and B pays A the balance found to be due from him upon such settlement
A. This amounts to a payment by A only
B. This amounts to a payment by B only
C. either (A) and (B)
D. both (A) and (B)
Ans. (D)
15. A and B contract that A shall build a house for B at a fixed price.
A. A’s promise to build the house must be performed before B’s promise to pay for it
B. A’s promise to build the house can be delayed before B’s promise to pay for it
C. either (A) or (B)
D. None of these
Ans. (A)
16. A and B contract that A shall deliver goods to B at the price to be paid by instruments, the first instalment to be paid on delivery.
A. A need not deliver, unless B is ready and willing to pay the first instalment on delivery
B. B need not pay the first instalment, unless A is ready and willing to deliver the goods on payment of the first instalment
C. either (A) or (B)
D. both (A) and (B)
Ans. (D)
17. A and B contract that A shall deliver goods to B to be paid for by B on delivery.
A. A need not deliver the goods, unless B is ready and willing to pay for the goods on delivery
B. B need not pay for the goods unless A is ready and willing to deliver them on payment
C. both (A) and (B)
D. either (A) or (B)
Ans. (C)
18. A and B contract that A shall make over his stock-in-trade to B at a fixed price, and B promise to give security for the payment of the money.
A. A’s promise need not be performed until the security is given, for the nature of the transaction requires that A should have security before he delivers up his stock
B. A’s promise must be performed before the security is given, for the nature of the transaction does not requires that A should have security before he delivers up his stock
C. either (A) or (B)
D. None of these
Ans. (A)
19. A and B contract that B shall execute some work for A for a thousand rupees. B is ready and willing to execute the work accordingly, but A prevents him from doing so.
A. The contract is not voidable at the option of B; and if he elects to rescind it, he is entitled to recover from A compensation for any loss which he has incurred by its non-performance
B. The contract is voidable at the option of B; and if he elects to rescind it, he is not entitled to recover from A compensation for any loss which he has incurred by its non-performance
C. The contract is voidable at the option of B; and if he elects to rescind it, he is entitled to recover from A compensation for any loss which he has incurred by its non-performance
D. None of these
Ans. (C)
20. A and B contract to marry each other. Before the time fixed for the marriage. A goes mad.
A. The contract cannot become void
B. The contract becomes partly void
C. The contract becomes void
D. None of these
Ans. (C)
21. A and B jointly owe 100 rupees to C, A alone pays the amount to C, and B, not knowing of this fact, pays 100 rupees over again to C.
A. C is not bound to repay the amount to B
B. C is bound to partially repay the amount to B
C. C is bound to repay the amount to B
D. None of these
Ans. (C)
22. A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation
A. The agreement cannot be voided
B. The agreement is void
C. either (A) or (B)
D. None of these
Ans. (B)
23. A and B make a joint and several promissory note to C. A makes it, in fact, as surety for B, and C knows this at the time when the note is made.
A. The fact that A to the knowledge of C, made the note as surety for B, is answer to a suit by C against A upon the note
B. The fact that A to the knowledge of C, made the note as surety for B, is partly an answer to a suit by C against A upon the note
C. The fact that A to the knowledge of C, made the note as surety for B, is no answer to a suit by C against A upon the note
D. None of these
Ans. (C)
24. A applies to a banker for a loan at a time when there is a 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.
A. This is not a transaction in the ordinary course of business, and the contract is induced by under influence
B. This is a transaction in the ordinary course of business, and the contract is not induced by under influence
C. either (A) or (B)
Ans. (B)
25. A authorizes B, a merchant in Calcutta, to recover the moneys due to A from C & Co. B instructs D, a solicitor, to take legal proceeding against C & Co for the recovery of the money.
A. D is a sub-agent, but is not solicitor for A
B. D is not a sub-agent, but is solicitor for B
C. D is not a sub-agent, but is solicitor for A
D. None of these
Ans. (C)
26. A bails 100 bags of cotton marked with a particular mark to B, B without A’s consent, mixes the 100 bales with other bales of his own, bearing a different mark.
A. A is not entitled to have his 100 bales returned, and B is bound to bear all the expenses incurred in the separation of the bales and any other incidental damage
B. A is entitled to have his 100 bales returned, and B is not bound to bear all the expenses incurred in the separation of the bales and any other incidental damage
C. A is entitled to have his 100 bales returned, and B is bound to bear all the expenses incurred in the separation of the bales and any other incidental damage
D. None of these
Ans. (C)
27. A bails a barrel of Cape flour worth Rs.45, to B, B, without A’s consent, mixes the flour with country flour of his own, worth Rs.25 a barrel.
A. B need not compensate A for the loss of his flour
B. B must partially compensate A for the loss of his flour
C. B must compensate A for the loss of his flour
D. None of these
Ans. (C)
28. A becomes surety to C for B’s conduct as manager in C’s bank. Afterwards, B and C contract, without A’s consent, that B’s salary shall be raised, and that he shall become liable for one-fourth of the losses on overdrafts. B allows a customer to overdraw, and the bank loses a sum of money.
A. A is not discharged from his surety-ship by the variance made without his consent, and is not liable to make good this loss
B. A is discharged from his surety-ship by the variance made without his consent, and is liable to make good this loss
C. A is discharged from his surety-ship by the variance made without his consent, and is not liable to make good this loss
D. None of these
Ans. (C)
29. A borrows Rs.100 from B and gives him a bond for Rs.200, payable by five yearly instalments of Rs.40, with a stipulation that in default of payment of any instalment, the whole shall become due.
A. This is a stipulation by way of penalty
B. This is not a stipulation by way of penalty
C. either (A) or (B)
D. None of these
Ans. (A)
30. A buys goods form B, knowing that he is an agent for their sale, but not knowing who is the principal, B’s principal is the person entitled to claim from A the price of the goods.
A. A can, in a suit by the principal, set-off against that claim a debt due to C himself from B
B. A can partially, in a suit by the principal, set-off against that claim a debt due to C himself from B
C. A cannot, in a suit by the principal, set-off against that claim a debt due to C himself from B
D. None of these
Ans. (C)
31. A claim for compensation under s 55 of the Indian Contract Act, 1872 would be barred, if the promise accepts performance after the stipulated time, unless he had given notice to the promisor of his intention to claim compensation at the time of the delayed acceptance. In which of the following cases it was upheld?
A. Punjab State Civil Supplies Co-op. Ltd. v. Sikander Singh
B. Gurpreet Singh v. Union of India
C. State of Kerala v. M. A. Mathai
D. None of these
Ans. (C)
32. A company’s agreement to pay bonus to its workmen is not frustrated by it subsequently discovering that its expectations of its state of prosperity envisaged earlier have not been fulfilled. An increase in expense is not a ground of frustration. In which of the following cases this was upheld?
A. K. L. Sahoo v. LIC
B. Premier Explosives Ltd. v. Chairman and Managing Director, Singreni Collieries Co. Ltd.
C. A. K. Mahato v. State of Bihar
D. None of these
Ans. (B)
33. A consignment insured for transit was damaged. The insurer settled the claim with the insured, took from the insured a letter of subrogation-cum-special power of attorney, and filed a complaint in the name before the Consumer Forum. It was held that the insurer could file a complaint in the name of the insured as his power of attorney holder of insured, or jointly with the insured under the subrogation. It did not matter whether the subrogation was based in common law not put in writing, or was evidenced by an instrument or letter. In which of the following cases it was upheld:
A. Md. Moinuddin v. Md. Mustafa
B. Bar Council of Delhi v. Surender
C. Economic Transport Organization v. Charan Spinning Mill
D. None of these
Ans. (C)
34. A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out the amount of his own advances.
A. A can revoke this authority but cannot terminate it by his insanity or death
B. A cannot revoke this authority, but it can be terminated by his insanity or death
C. A cannot revoke this authority, nor can it be terminated by his insanity or death
D. None of these
Ans. (C)
35. A consigns goods to B for sale, and gives him instructions not to sell under a fixed price. C, being ignorant of B’s instruction, enters into a contract with B to buy the goods at a price lower than the reserved price.
A. A is not bound by the contract
B. A is partially bound by the contract
C. A is bound by the contract
D. None of these
Ans. (C)
36. A consigns goods to B, a merchant for sale. B, due course, employs an auctioneer in good credit to sell the goods of A, and allows the auctioneer to receive the proceeds of the sale. The auctioneer afterwards becomes insolvent without having accounted for the proceeds.
A. B is responsible to A for the proceeds
B. B is partly responsible to A for the proceeds
C. B is not responsible to A for the proceeds
D. None of these
Ans. (C)
37. A consigns provisions to B at Calcutta, with directions to send them immediately to C, at Cuttack.
A. B may not sell the provisions at Calcutta, if they will not bear the journey to Cuttack without spoiling
B. B may partly sell the provisions at Calcutta, if they will not bear the journey to Cuttack without spoiling
C. B may sell the provisions at Calcutta, if they will not bear the journey to Cuttack without spoiling
D. None of these
Ans. (C)
38. A constitutes B his agent to carry on his business of a shipbuilder.
A. B may not purchase timber and other materials, and hire workmen, for the purpose of carrying on the business
B. B may use both legal and illegal means for the purpose of carrying on the business
C. B may purchase timber and other materials, and hire workmen, for the purpose of carrying on the business
D. None of these
Ans. (C)
39. A contract between a debtor and a creditor that the debtor should sell and the creditor should accept any property in satisfaction of the debt, may operate, in which of the following ways?
A. The contract by itself may operate as an absolute discharge of the debt, giving the creditor thereafter only the remedy by way of the specific performance of the contract
B. It may operate only as a conditional discharge of the debt giving the creditor in case of the debtor’s default a right to claim either performance of the contract or if he elects to put an end to it, the payment of the debt
C. The contract may be an independent transaction in the sense that it does not affect the rights of the creditors or the obligations of the debtor till the sale is actually completed
D. All of them
Ans. (D)
40. A contract in general restraint of marriage is unenforceable on the ground of public policy:
A. Whether it contains an express undertaking that the subject will not marry
B. Whether it is merely a contract, which on financial or grounds tends to discourage a subject from marrying
C. either (A) or (B)
D. None of these
Ans. (C)
41. A contract of guarantee involves:
A. creditor
B. surety
C. principal debtor
D. All of them
Ans. (D)
42. A contract of guarantee may be made:
A. By a company, by writing under its common seal
B. On behalf of a company, by any person acting under its authority, express or implied. Directors may bind themselves personally by a guarantee which they sign or adopt
C. either (A) or (B)
D. None of these
Ans. (C)
43. A contract to sing for B at a concert for 1,000 rupees, which are paid in advance. A is too ill to sing.
A. A is not bound to make compensation to B for the loss of the profits which B would have made if A had been able to sing
B. A is not bound to make compensation or refund to B
C. A must refund to B the 1,000 rupees paid in advance
D. both (A) and (C)
Ans. (D)
44. A contract with B to pay B Rs.1,000 if he fails to pay B Rs.500 on that day.
A. B is entitled to recover form A such compensation, not exceeding Rs.1,000, as the Court considers reasonable
B. B is entitled to recover form A such compensation, not exceeding Rs.2,000, as the Court considers reasonable
C. B is entitled to recover form A such compensation, not exceeding Rs.3,000, as the Court considers reasonable
D. None of these
Ans. (A)
45. A contract would not be discharged by the impossibility, even though the supervening event makes performance impossible or unlawful if:
I. The contract is absolute in terms and can be held to cover the frustrating events
II. The contract makes full and complete provision for a given contingency
III. It can be reasonably supposed to be within the contemplation of the parties to the contract at the time they made the contract
IV. Where the event is such that any of the parties could foresee or could have foreseen with reasonable diligence
V. If only a portion of the contract becomes impossible or difficult to perform
VI. If despite the supervening events, the object and purpose of the contract is not rendered useless, and the contract can be performed substantially in accordance with the original intention of the parties, though not literally in accordance with the language of the agreement
A. II, III
B. IV, V
C. I, VI
D. All of them
Ans. (D)
46. A contracts to act at a theatre for six months in consideration of a sum paid in advance by B. On several occasions A is too ill to act.
A. The contract to act on those occasions cannot become void
B. The contract to act on those occasions becomes partly void
C. The contract to act on those occasions becomes void
D. None of these
Ans. (C)
47. A contracts to buy of B, at a stated price, 50 maunds of rice, no time being fixed for delivery. A afterwards informs B that he will not accept the rice if tendered to him.
A. B is not entitled to receive from A, by way of compensation, the amount, if any, by which the contract price exceeds that which B can obtain for the rice at the time when A informs B that he will not accept it
B. B is entitled to receive from A, by way of compensation, the amount, if any, by which the contract price does not exceed that which B can obtain for the rice at the time when A informs B that he will not accept it
C. B is entitled to receive from A, by way of compensation, the amount, if any, by which the contract price exceeds that which B can obtain for the rice at the time when A informs B that he will not accept it
D. None of these
Ans. (C)
48. A contracts to deliver 50 maunds of saltpeter to B on the first of January, at a certain price, B, afterwards, before the first of January, contracts to sell saltpetre to C at a price higher than the market price of the first of January. A breaks his promise.
A. In estimating the compensation payable by A to B the profit which would have arisen to B from the sale to C, is to be taken into account
B. In estimating the compensation payable by A to B, the loss which would have arisen to B from the sale to C, is to be taken into account
C. In estimating the compensation payable by A to B, the market price of the first of January, and not the profit which would have arisen to B from the sale to C, is to be taken into account
D. None of these
Ans. (C)
49. A contracts to deliver to B at his warehouse, on the first March, 1873, 100 bales of cotton of a particular quality. In order to make an offer of performance with the effect stated in this section, under any such circumstances so that B may have a reasonable opportunity of satisfying himself that the thing offered is cotton of the quality contracted for, and that there are 100 bales
A. A can bring the cotton to B’s warehouse any day
B. A must bring the cotton to B’s warehouse on the appointed day
C. A need not bring the cotton to B’s warehouse at all
D. None of these
Ans. (B)
50. A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees.
A. This is contract of indemnity
B. This is not a valid contract of indemnity
C. This is contract of stipulation
D. None of these
Ans. (A)
51. _______ of the Indian Contract Act, 1872 prescribes that the acceptance must be made in a reasonable manner. If the proposer has prescribed a manner of acceptance, the acceptance must be made in that manner, if not so made, there is a contract only if the proposer ‘accepts the acceptance’
A. Section 7(2)
B. Section 7(3)
C. Section 7(4)
D. None of these
Ans: A
52. _______ describes a voidable contract as one which is enforceable by the law at the option of the parties, but not at the option of the others.
A. Section 2 (g) of the Indian Contract Act, 1872
B. Section 2 (h) of Indian Contract Act, 1872
C. Section 2 (i) of Indian Contract Act, 1872
D. None of these
Ans: C
53. A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware 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
54. A agrees to pay B 1,000 rupees if B will marry A’s daughter C. C was dead at the time of the agreement.
A. The agreement is void
B. The agreement is not void
C. Either (A) or (B)
D. None of these
Ans: A
55. A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk.
A. The contract cannot be enforced when the ship sinks
B. The contract can be enforced when the ship sinks
C. Either (A) or (B)
D. None of these
Ans: B
56. A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A’s consent to the agreement was freely given.
A. The agreement is a contract due to the adequacy of the consideration
B. The agreement is a not contract notwithstanding the inadequacy of the consideration
C. The agreement is a contract notwithstanding the inadequacy of the consideration
D. None of these
Ans: C
57. A agrees to sell B one hundred tons of oil of a specified description, known as an article of commerce.
A. There is uncertainty here to make the agreement void
B. There is no uncertainty here to make the agreement void
C. There is uncertainty but the agreement cannot be made void
D. None of these
Ans: B
58. A agrees to sell his house to B for 10,000 rupees. Here, B’s promise to pay the sum of 10,000 rupees is the consideration for A’s promise to sell the house, and A’s promise to sell the house is the consideration for B’s promise to pay the 10,000 rupees.
A. These are unlawful considerations
B. These are lawful considerations
C. Either (A) or (B)
D. None of these
Ans: B
59. A agrees to sell to B ‘my white horse for rupees five hundred or rupees one thousand. There is nothing to show which of the two prices was to be given.
A. The agreement is void
B. The agreement is not void
C. Either (A) or (B)
D. None of these
Ans: A
60. A agrees to sell to B a specific cargo of goods supposed to be on its way from English to Bombay. It turns out that, before the day of bargain, the ship conveying the cargo had been cast away, and the goods lost. Neither party was aware of these facts.
A. The agreement cannot be voided
B. The agreement is void
C. Either (A) or (B)
D. None of these
Ans: B
61. A and B agree that A shall pay B 1,000 rupee, for which B shall afterwards deliver to A either rice or smuggled opium.
A. It is a contract
B. It is a void agreement
C. Either (A) or (B)
D. Both (A) and (B)
Ans: D
62. A and B are mutually indebted. A and B settle an account by setting off one item against another, and B pays A the balance found to be due from him upon such settlement
A. This amounts to a payment by A only
B. This amounts to a payment by B only
C. Either (A) and (B)
D. Both (A) and (B)
Ans: D
63. A and B contract that A shall deliver goods to B at the price to be paid by instruments, the first instalment to be paid on delivery.
A. A need not deliver, unless B is ready and willing to pay the first instalment on delivery
B. B need not pay the first instalment, unless A is ready and willing to deliver the goods on payment of the first instalment
C. Either (A) or (B)
D. Both (A) and (B)
Ans: D
64. A and B contract that A shall make over his stock-in-trade to B at a fixed price, and B promise to give security for the payment of the money.
A. A’s promise need not be performed until the security is given, for the nature of the transaction requires that A should have security before he delivers up his stock
B. A’s promise must be performed before the security is given, for the nature of the transaction does not requires that A should have security before he delivers up his stock
C. Either (A) or (B)
D. None of these
Ans: A
65. A and B contract to marry each other. Before the time fixed for the marriage. A goes mad.
A. The contract cannot become void
B. The contract becomes partly void
C. The contract becomes void
D. None of these
Ans: C
66. A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation
A. The agreement cannot be voided
B. The agreement is void
C. Either (A) or (B)
D. None of these
Ans: B
67. A applies to a banker for a loan at a time when there is a 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.
A. This is not a transaction in the ordinary course of business, and the contract is induced by under influence
B. This is a transaction in the ordinary course of business, and the contract is not induced by under influence
C. Either (A) or (B)
D. None of these
Ans: B
68. A bails 100 bags of cotton marked with a particular mark to B, B without A’s consent, mixes the 100 bales with other bales of his own, bearing a different mark.
A. A is not entitled to have his 100 bales returned, and B is bound to bear all the expenses incurred in the separation of the bales and any other incidental damage
B. A is entitled to have his 100 bales returned, and B is not bound to bear all the expenses incurred in the separation of the bales and any other incidental damage
C. A is entitled to have his 100 bales returned, and B is bound to bear all the expenses incurred in the separation of the bales and any other incidental damage
D. None of these
Ans: C
69. A becomes surety to C for B’s conduct as manager in C’s bank. Afterwards, B and C contract, without A’s consent, that B’s salary shall be raised, and that he shall become liable for one-fourth of the losses on overdrafts. B allows a customer to overdraw, and the bank loses a sum of money.
A. A is not discharged from his surety-ship by the variance made without his consent, and is not liable to make good this loss
B. A is discharged from his surety-ship by the variance made without his consent, and is liable to make good this loss
C. A is discharged from his surety-ship by the variance made without his consent, and is not liable to make good this loss
D. None of these
Ans: C
70. A buys goods form B, knowing that he is an agent for their sale, but not knowing who is the principal, B’s principal is the person entitled to claim from A the price of the goods.
A. A can, in a suit by the principal, set-off against that claim a debt due to C himself from B
B. A can partially, in a suit by the principal, set-off against that claim a debt due to C himself from B
C. A cannot, in a suit by the principal, set-off against that claim a debt due to C himself from B
D. None of these
Ans: C
71. A contracts to let his ship to B for a year, from the first of January, for a certain price. Freights rise, and, on the first of January, the hire obtainable for the ship is higher than the contract price. A breaks his promise. He must pay to B, by way of compensation, a sum equal to the difference between the contract price and the price for which B could hire a similar ship for a year on and form the first January.
A. He must pay to B, by way of compensation, twice the difference between the contract price and the price for which B could hire a similar ship for a year on and form the first January.
B. He must pay to B, by way of compensation, a sum equal to the difference between the contract price and the price for which B could hire a similar ship for a year on and form the first January
C. either (A) and (B)
D. None of these
Ans. (B)
72. ‘A’ agrees to let her daughter ‘B’ for hire to ‘C’ for concubinage, without the consent of ‘B’, the contract is:
(a) void as the consent of ‘B’ the daughter has not taken
(b) void being immoral
(c) voidable at the instance of ‘B’
(d) valid as ‘A’ & ‘C’ entered into contract with their free consent.
Ans. (b)
73. ‘X’ in consideration of Rs. 10,000 lent by Y & Z, provides Y & Z jointly to repay them that sum with interest on a specified day. Y dies. The right to claim the performance:
(a) is available to Y’s representatives alone
(b) is available to Z alone
(c) is available to Y’s representatives & Z both
(d) is available to Y’s representatives & after the death of Z, his representatives.
Ans. (c)
74. The doctrine of impossibility of performance rendering contracts void is based on:
(a) implied term
(b) just & reasonable solution
(c) supervening impossibility
(d) unjust enrichment.
Ans. (c)
75. The age of majority for the purpose of Contract Act is:
(a) 18 years
(b) 21 years
(c) 16 years for girls & 18 years for boys
(d) 18 years for girls & 21 years for boys.
Ans. (a)
76. A contract signed between two countries without specifying as to which country’s law shall govern in cases of dispute:
(a) it shall be governed by the law of the country where the proposal was made
(b) it shall be governed by the law of the country where the contract was concluded
(c) it shall be governed by the law of the country which the parties intended to apply, i.e., where the contract is localised
(d) it shall be governed by the law where the contract is performed.
Ans. (c)
77. The damages under section 73 of Indian Contract Act are:
(a) liquidated
(b) compensatory
(c) penal
(d) none of the above.
Ans. (b)
78. While determining damages which of the following are taken into account:
(a) motive of breach
(b) manner of breach
(c) inconvenience caused by non-performance
(d) all the above.
Ans. (c)
79. Which of the following is not relevant in determining of quantum of damage:
(a) motive
(b) manner
(c) loss suffered
(d) both (a) & (b).
Ans. (a)
80. Pre-contract expenditure may be recovered as damage:
(a) generally
(b) always
(c) only if it is within the contemplation of parties
(d) none of the above.
Ans. (c)
81. Duty to mitigate damages on the part of injured party arises:
(a) in cases of anticipatory breach
(b) in cases of breach at the time fixed for performance of the contract
(c) both (a) & (b)
(d) either (a) or (b).
Ans. (d)
82. A sum fixed before hand as amount of compensation payable in the event of breach of contract is called:
(a) liquidated damages
(b) penalty
(c) either (a) or (b)
(d) neither (a) nor (b)
Ans. (c)
83. The essense of liquidated damage is:
(a) genuine pre-estimate of damage
(b) less than probable damage
(c) more than probable damage
(d) payment of money in terrorem.
Ans. (a)
84. A contract of indemnity as a contract by which one party promises to save the other party from the loss caused to him by the conduct of the promisor himself or of any other person, has been defined:
(a) under section 124
(b) under section 123
(c) under section 125
(d) under section 126.
Ans. (a)
85. A contract of guarantee has been defined:
(a) under section 123
(b) under section 124
(c) under section 125
(d) under section 126.
Ans. (d)
86. Surety is a person:
(a) in respect of whose default the guarantee is given
(b) who gives the guarantee
(c) to whom the guarantee is given
(d) none of the above.
Ans. (b)
87. Creditor is a person:
(a) to whom the guarantee is given
(b) who gives the guarantee
(c) in respect of whose default the guarantee is given
(d) none of the above.
Ans. (a)
88. A guarantee:
(a) has to be in writing
(b) can be oral
(c) can be oral or in writing
(d) neither (a) or (b).
Ans. (c)
89. Liability of the surety is:
(a) conditional on default
(b) independent of default
(c) can be conditional and can be independent
(d) either (a) or (b).
Ans. (a)
90. A valid guarantee can be given:
(a) only if there is no principal debt
(b) only if there is a principal debt
(c) irrespective of any debt
(d) both (a) & (c).
Ans. (b)
91. A guarantee to be valid:
(a) can only be of a present debt
(b) can be of past debt if some further debt is incurred after the guarantee
(c) cab be of future debt if some debt is incurred after the guarantee
(d) all the above.
Ans. (d)
92. A guarantee obtained by misrepresentation or concealment is:
(a) invalid
(b) valid
(c) voidable
(d) illegal.
Ans. (a)
93. Which of the following is a valid guarantee:
(a) guarantee of a minor’s debt
(b) guarantee of a debt of a company acting ultra vires in obtaining the loan
(c) both (a) & (b)
(d) neither (a) nor (b).
Ans. (a)
94. The liability of the surety:
(a) is co-extensive with that of the principal debtor
(b) extends to the whole of the amount for which the principal debtor is liable
(c) both (a) & (b)
(d) neither (a) nor (b).
Ans. (a)
95. Under the contract of guarantee, the liability of the surety:
(a) can be limited
(b) cannot be limited & has to extend to the whole of the amount due from the principal debtor
(c) can be extended to penalties also
(d) both (b) & (c).
Ans. (b)
96. A guarantee which extends to a series of transactions under section 129 is called:
(a) an absolute guarantee
(b) a continuing guarantee
(c) an invalid guarantee
(d) a conditional guarantee.
Ans. (b)
97. A continuing guarantee applies to:
(a) a specific transaction
(b) a specific number of transactions
(c) any number of transactions
(d) reasonable number of transactions.
Ans. (a)
98. A continuing guarantee under section 130 is:
(a) revocable absolutely
(b) irrevocable absolutely
(c) revocable as regards future transaction
(d) either (a) or (b).
Ans. (c)
99. The liability of surety on his death under section 131 in case of continuing guarantee:
(a) is terminated absolutely
(b) does not stand terminated as regards past transaction
(c) stands terminated as regards future transaction
(d) both (b) & (c).
Ans. (c)
100. The surety stands discharged:
(b) by death
(c) by variance in terms of the contract without his consent
(d) in (a), (b) & (c) above.
Ans. (c)
101. Under the contract of guarantee, a creditor:
(a) has to avail his remedies first against the principal debtor
(b) can avail his remedies against the principal debtor as well as the surety
(c) can avail his remedy against the surety alone
(d) both (b) & (c).
Ans. (a)
102. Surety stands discharged:
(a) by an agreement between the creditor and the principal debtor
(b) by an agreement between the creditor & a third party for not to sue the principal debtor
(c) both (a) & (b) above
(d) neither (a) nor (b).
Ans. (a)
103. Under a contract of guarantee:
(a) if principal debtor is not liable, guarantor is not liable
(b) if principal debtor is not liable, guarantor is liable
(c) if principal debtor is liable, guarantor is liable
(d) all the above.
Ans. (c)
104. In a contract of guarantee:
(a) there are two parties and one contract
(b) there are two parties and two contracts
(c) there are three parties & three contracts
(d) there are three parties & one contract.
Ans. (d)
105. In case of co-sureties, release of one surety by the creditor:
(a) amounts to discharge of other sureties
(b) does not amount to discharge of other sureties
(c) amounts to discharge of the surety so released vis-a-vis co-sureties as well
(d) none of the above.
Ans. (b)
106. On payment or performance of the liability the surety:
(a) is invested with all the rights the creditor had against the principal debtor
(b) is entitled to the every security which the creditor has against the principal debtor
(c) is entitled to be indemnified by the principal debtor
(d) all the above.
Ans. (a)