Questions and answers on the law of contract especially compiled for UPSC, civil services, IAS and Indian judicial service examinations!
1. For the benefit contemplated under Section 141 of the Indian Contract Act, 1872 is not a requisite:
A. Payment by the surety of the guaranteed debt, or performance of the duty guaranteed
B. To entitle the surety to the discharge
C. Either (A) or (B)
D. None of these
Ans: C
2. General lien of bankers, factors, wharfingers, attorneys, and policy brokers are dealt under which of the following in the Indian Contract Act, 1872?
A. Section 176
B. Section 171
C. Section 173
D. Section 178
Ans: B
3. Guarantee can be of which of the following types?
A. One is a promise by the surety which becomes effective if the principal-debtor fails to perform his obligations
B. One is a promise by the surely which becomes effective if the principal-debtor will perform his obligations
C. Both (A) and (B)
D. None of these
Ans: C
4. Hire-purchase contract:
A. Contain a provision giving the hirer an option to acquire title to the asset upon the fulfilment of agreed conditions
B. Contain a provision giving the hirer an option to discharge the title to the asset upon the fulfilment of agreed conditions
C. Either (A) or (B)
D. None of these
Ans: A
5. Honeymoon contract is:
A. An initial contract between an employer and union when the union accepts most or all of the employer’s terms
B. An initial contract between an employer and union when the union accepts all of the employer’s terms
C. Either (A) or (B)
D. None of these
Ans: C
6. If a broker buys good on behalf of an undisclosed principal, he cannot sue the principal:
A. Non-acceptance of the goods
B. For goods bargained and sold
C. Either (A) or (B)
D. None of these
Ans: C
7. If on comprehensive consideration, the Court finds that the real purpose for which the stipulation was incorporated in the contract was that by reason of its burdensome or oppressive character, it may operate in terrorem over the promisor so as to drive him to fulfil the contract, then the provision will be held to be one by way of penality. Thus:
A. An amount will be penalty if the sum named is extravagant and unconscionable
B. It is penalty if the breach consists in paying of money and the sum stipulated is greater than the sum which ought to have been paid
C. There is a presumption (but nothing more) that where a single lump sum is payable as compensation on the happening of one or more events some of which cause damage and other trifling, the sum named will be a penalty in such cases, separate amounts must be fixed for each possible event
D. All of them
Ans: D
8. If the person entitled to rescind has put it out his power to restore the former state of things it is too late to rescind
A. By acts of ownership or the like
B. By adopting and accepting dealings with the subject- matter of the contract which alter its character as the conversion shares in a company
C. If he has allowed third persons to acquire rights under the contract value
D. All of them
Ans: D
9. Implied authority is divided as:
I. Incidental authority
II. Usual authority
III. Customary authority
IV. Authority derived from circumstances of the case, being a residuary category
A. I, II
B. II, IV
C. Ill, IV
D. All of them
Ans: D
10. In dealing with cases of undue influence, which of the following questions which the Court should consider?
I. Whether the transaction is a righteous transaction, that is, whether it is thing which a right-minded person might be expected to do
II. Whether it was improvident, that is to say, whether it shows so much improvidence as to suggest the idea that the donor was not master of himself and nor in a state of mind to weigh what he was doing
III. Whether it was a matter requiring a legal advisor
IV. Whether the intention of making the gift originated with the donor
A. I, III
B. II, IV
C. II, III, IV
D. All of them
Ans: D
11. In determining what is penal in case of compromise decrees, which of the following factors must be considered?
A. Whether the decree-holder is claiming something more than what he claims in the suit or he claims in the execution by way of penalty only that much of the just claim to which he is entitled
B. Whether the just part of the claim is conceded by the defendant judgment-debtor in complying with the terms of the compromise within a certain period
C. Whether the judgment debtor failed to comply with the terms of the compromise without any just and proper cause so as to disentitle him to the concession allowed to him by the decree holder under the compromise
D. All of them
Ans: D
12. In fiduciary relationships, the person in whom confidence is reposed is under a duty:
A. To act honestly
B. To act with due diligence and skill
C. Both (A) and (B)
D. None of these
Ans: C
13. In order to invoke the provisions of S. 25 of the Indian Contract Act, 1872 which of the following conditions must be satisfied?
A. It must refer to a debt which the creditor but for the period of limitation might have enforced
B. There must be a distinct promise to pay wholly or in part such debts
C. The promise must be in writing signed by the person or by his duly appointed agent
D. All of them
Ans: D
14. In practice courts would be reluctant to intervene in a contract on the ground of mistake for which of the following reasons?
I. The need to protect the rights of third parties to a contract who have acquired interest in the subject matter in good faith and for value, where the contract is partly performed, serious practical difficulties may arise in adjusting the rights of the parties if the contract is to be held void
II. The parties must be held to their bargains, once they have agreed on the same terms and in the same sense, and made to rely o the stipulation made by them in the contract for protection of facts not known to them at the time of making the contract
III. It would be unreasonable to hold that a person should not enter into a contract unless he is able to perform it, because when he so contracts, he takes the risk that performance may prove difficult or even impossible in the circumstances existing at the date of the contract
IV. There should not be a temptation for any party to get out a bad bargain V. Rendering the whole contract” void or inoperative, is a drastic proceeding, which would threaten the sanctity of contracts if it could be invoked whenever a party claims that he or both parties had made a serious mistake
A. I, III
B. II, IV
C. IV, V
D. All of them
Ans: D
15. In the matter of commission of wrong:
A. There can be no agency
B. An agent cannot plead in defence the directions of his principal
C. An agent cannot carry out such directions he would be disobeying his principal
D. All of them
Ans: D
16. In which of the following cases in which a person who is not the owner of goods may make a valid pledge thereof?
A. A seller left in possession after sale
B. A buyer to whom possession has been delivered before payment of the price
C. Both (A) and (B)
D. None of these
Ans: C
17. In which of the following cases it was held that a contract of insurance would be regarded as complete when the insurer initials a slip setting out the essential terms of the contract even though the formal policy is yet to be issued?
A. Citadel Insurance Co. v. Atlantic Union Insurance Co.
B. Vishweswaradas Gokuldas v. BK Narayan Singh
C. LIC of India v. Jay a Chandel
D. United India Insurance Company Ltd., v. Mohanlal Aggarwal
Ans: A
18. In which of the following categories claims of refund of taxes would be tenable under S. 72 of the Indian Contract Act, 1872?
A. Illegal levy
B. Unconstitutional levy
C. Mistake of law
D. All of them
Ans: D
19. In which of the following exceptional cases a man will be relieved of the consequences of an illegal contract?
A. Where the illegal purpose has not yet been substantially carried out before it is sought to recover the money paid or goods delivered in furtherance of it
B. Where the plaintiff is not in pari delicto with the defendant
C. Where the plaintiff does not have to rely upon the illegality to make out his claim
D. All of them
Ans: D
20. In which of the following the Law Commission of India also recommended other specific amendments about prescriptive clauses in contracts (S. 28) which was accepted when the Act was amended in 1997?
A. The 97th Report of 1984
B. The 97th Report of 1986
C. The 97th Report of 1988
D. The 97th Report of 1990
Ans: A
21. In which of the following way the validity of the restraint is assessed?
A. Whether the agreement amounts to a restraint in order to attract the doctrine
B. Whether the restraint protects a legitimate interest of the covenantee
C. Whether the covenant is reasonable
Ans: D
22. In which of the following ways the enforceability of a contract may be affected by the statutory provision which renders particular conduct unlawful?
I. The contract may be to do something which the statute forbids
II. The contract may be one which the statute expressly or impliedly prohibits
III. The contract although lawful on its face, may be made in order to effect a purpose which the statute renders unlawful
IV. The contract, although lawful according to its own terms, may be performed in a manner which the statute prohibits
A. I, III
B. II, IV
C. IV
D. All of them
Ans: D
23. Interest prior to the commencement of suit is claimable under:
A. Agreement or usage, trade
B. A statutory provision
C. The Interest Act for a sum certain where notice is given
D. Either Dof them
Ans:
24. It has long been settled under the English Law that ‘surety is entitled to come’ to the Court ‘to compel the principal- debtor to pay what is due from him’ provided that:
A. An ascertained debt is actually due
B. The relief is not limited
C. Both (A) and (B)
D. None of these
Ans: C
25. It is usual for parties to a contract to stipulate expressly or impliedly that the contract shall be determinable in certain circumstances, such as:
A. Notice at the option of anyone of either party, with or without reasons forthwith or after a specified period of time
B. On the happening of a particular event, viz, in shipping contracts, in the event of war, blockade or prohibition on loading; or in lease, on insolvency of the lessee
C. Non-performance or breach of a term of the contract, viz. right of re-entry in leases for non-payment of rent or breach of conditions
D. All of them
Ans: D
26. Mode of communicating or revoking recession of voidable contract is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 68
B. Section 50
C. Section 61
D. Section 66
Ans: D
27. Non-liability of employer of agent to do a criminal act is discussed under which of the following in the Indian Contract Act, 1872?
B. Section 219
C. Section 226
D. Section 210
Ans: A
28. Obligation of person who has received advantage under void agreement, or contract that becomes void under which of the following in the Indian Contract Act, 1872?
A. Section 68
B. Section 50
C. Section 65
D. Section 59
Ans: C
29. Open-end contract is one:
A. Which permits buyer to make purchases over a period of time by making changes in the price or terms by the seller
B. Which permits buyer to make purchases over a period of time without change in the price or terms by the seller
C. Which restricts buyer to make purchases over a period of time without change in the price or terms by the seller
D. None of these
Ans: B
30. Partial decisions do not completely destroy the contractual relation between the parties. Hence a contract may be varied in which of the following ways?
A. By way of partial decision, without the substitution of new terms in place of those rescind
B. By way of partial decision, with the substitution of new terms for those rescinded
C. By the addition of new terms without any partial rescission at all
D. All of them
Ans: D
31. Payment under a bank guarantee may be refused or restrained:
I. Where the bank knows that the documents presented by the beneficiary for seeking enforcement are forged or fraudulent
II. Where a fraud by one of the parties to the underlying contrast has been established, and the bank has notice of the fraud
III. Where a case of apprehension of irretrievable injustices is made out
IV. Where the guarantee is conditional and the condition has not been complied with
V. Where the conditions necessary for invoking a conditional bank guarantee have not risen
VI. Where the purpose for which a conditional guarantee was given has been accomplished VII. Where the period stipulated for invocation for the guarantee has expired
A. II, III, IV
B. IV, VI
C. I, VII
D. All of them
Ans: D
32. Person falsely contracting as agent, not entitled to performance is discussed under which of the following in the Indian Contract Act, 1872?
A. Section 238
B. Section 222
C. Section 236
D. Section 240
Ans: C
33. Pledge by mercantile agent is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 178
B. Section 171
C. Section 173
D. Section 172
Ans: A
34. Pledge where pawnor has only a limited interest suits by bailors against wrong-doers is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 176
B. Section 184
C. Section 179
D. Section 178
Ans: C
35. Principal not bound when excess of agent’s authority is not separable is discussed under which of the following in the Indian Contract Act, 1872?
A. Section 220
B. Section 219
C. Section 228
D. Section 210
Ans: C
36. Privity of contract is:
A. The relationship between the parties to a contract, allowing them to sue each other
B. The relationship between the parties to a contract that prevents a third party from suing
C. Both (A) and (B)
D. None of these
Ans: C
37. Promises, express or implied are dealt under which of the following of the Indian Contract Act, 1872?
A. Section 9
B. Section 2
C. Section 3
D. Section 4
Ans: A
38. Quasi or Constructive Contracts is one where an implied contract has also been applied to a class of obligations which are imposed or created by law without regard to the assent of the party bound:
A. On the ground that they are dictated by reason and justice
B. Which are allowed to be enforced by an action ex contractu, for there is no agreement
C. But they are clothed with the semblance of contract for the purpose of remedy
D. All of them
Ans: D
39. Reimbursement under Section 69 of the Indian Contract Act, 1872 claimed_________ from the date on which the money was paid.
A. Within a year
B. Within two years
C. Within three years
D. Within three and a half years
Ans: C
40. Representees may be:
A. Persons to whom the representation is directly made and their principals
B. Persons to whom the representor intended the representation to be passed
C. Members of class at which the representation was directed
D. All of them
Ans: D
41. Right of principal when agent deals, on his own account, in business of agency without principal’s consent is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 211
B. Section 219
C. Section 217
D. Section 215
Ans: D
42. Section 127 provides that__________ is sufficient consideration for the guarantee.
A. Anything done
B. A promise made for the benefit of the principal- debtor
C. Either (A) or (B)
D. None of these
Ans: C
43. Section 134 of the Indian Contract would not apply where the release or discharge:
A. Is not caused at the instance
B. Is not caused by any act of the creditor
C. Either (A) or (B)
D. None of these
Ans: C
44. For the benefit contemplated under Section 141 of the Indian Contract Act, 1872 is not a requisite:
A. Payment by the surety of the guaranteed debt, or performance of the duty guaranteed
B. To entitle the surety to the discharge
C. either (A) or (B)
D. None of these
Ans. (C)
45. Fraud means and includes:
A. Any of the following acts (suggestion, concealment of fact, promise made without the intention of performing it, any other act fitted to deceive, any such act or omission as the law specially declares to be fraudulent) committed by the party to a contract
B. Any of the following acts (suggestion, concealment of fact, promise made without the intention of performing it, any other act fitted to deceive, any such act or omission as the law specially declares to be fraudulent) committed with connivance or by his agent with the intent to deceive another party thereto or his agent
C. Any of the following acts (suggestion, concealment of fact, promise made without the intention of performing it, any other act fitted to deceive, any such act or omission as the law specially declares to be fraudulent) committed with the intent to deceive another party thereto or his agent to induce him to enter into the contract
D. All of them
Ans. (D)
46. General lien of bankers, factors, wharfingers, attorneys, and policy brokers are dealt under which of the following in the Indian Contract Act, 1872?
A. Section 176
B. Section 171
C. Section 173
D. Section 178
Ans. (B)
47. Goods supplied by the plaintiff to the defendant and admitted to have been received by the latter raise a presumption of an order having been placed by the defendant.
A. It is important to find out whether or not the order was by a partner or a person authorized. The initial onus cannot be discharged, and privity cannot be established
B. It can be plainly concluded that the defendant placed the order hence the initial onus is true and privity can be established
C. It is immaterial whether or not the order was by a partner or a person authorized. The initial onus was discharged, and privity established
D. None of these
Ans. (C)
48. Guarantee can be of which of the following types?
A. One is a promise by the surety which becomes effective if the principal-debtor fails to perform his obligations
B. One is a promise by the surety which becomes effective if the principal-debtor will perform his obligations
C. both (A) and (B)
D. None of these
Ans. (C)
49. Hardship occurs where the occurrence of events fundamentally alters the equilibrium of the contract, either because of the cost of the disadvantaged party’s performance has increased or because the value of what it has to receive has decreased, provided the events meet which of the following requirements:
I. The events occur or become known to it after the conclusion of the contract
II. The events could not reasonably have been taken into account at the time of conclusion of the contract
III. The events are beyond its control
IV. The risk of the events were not assumed by it
A. II, III
B. IV
C. I
D. All of them
Ans. (D)
50. Hire-purchase contract:
A. Contain a provision giving the hirer an option to acquire title to the asset upon the fulfilment of agreed conditions
B. Contain a provision giving the hirer an option to discharge the title to the asset upon the fulfilment of agreed conditions
C. either (A) or (B)
D. None of these
Ans. (A)
51. The uniform customs and practices for documentary credits formulated by the International Chamber of Commerce are deemed to be incorporated in each documentary credit which is expressed to be subject to the provisions. Even in the absence such incorporation; they can be taken into account as part of mercantile customs and practices, unless they are contradicted. In which of the following cases it has been so upheld?
A. Hardev Singh v. Gurmail Singh
B. Jatinder Nath v. Chopra Land Developers
C. Federal Bank Ltd. v. V M Jog Engineering Ltd
Ans. (C)
52. Honeymoon contract is:
A. An initial contract between an employer and union when the union accepts most or all of the employer’s terms
B. An initial contract between an employer and union when the union accepts all of the employer’s terms
C. either (A) or (B)
D. None of these
Ans. (C)
53. However where the right of forfeiture accompanies strict obligation to perform in time and the express stipulation that the time shall be of essence, it has been held in the light of the other circumstances that time was of essence. In which of the following cases it upheld?
A. V. R. Subramanyam v. B. Thayapa
B. Khanapuram v. Adm Officer
C. A. K Lakshmipati v. R. S. Pannalal
D. None of these
Ans. (C)
54. If a broker buys good on behalf of an undisclosed principal, he cannot sue the principal:
A. non-acceptance of the goods
B. for goods bargained and sold
C. either (A) or (B)
D. None of these
Ans. (C)
55. If a person finds property not in possession of anyone, he commits an offence of dishonest misappropriation of property if he appropriates it to his own use when he:
I. knows the owner
II. has the means of discovering the owner
III. before he has used reasonable means to discover and give notice to the owner
IV. has kept the property for a reasonable time to enable the owner to claim it
A. II, III
B. IV
C. I
D. All of them
Ans. (D)
56. If on comprehensive consideration, the Court finds that the real purpose for which the stipulation was incorporated in the contract was that by reason of its burdensome or oppressive character, it may operate in terrorem over the promisor so as to drive him to fulfil the contract, then the provision will be held to be one by way of penalty. Thus:
A. an amount will be penalty if the sum named is extravagant and unconscionable
B. it is penalty if the breach consists in paying of money and the sum stipulated is greater than the sum which ought to have been paid
C. there is a presumption (but nothing more) that where a single lump sum is payable as compensation on the happening of one or more events some of which cause damage and other trifling, the sum named will be a penalty in such cases, separate amounts must be fixed for each possible event
D. All of them
Ans. (D)
57. If the parties fail to reach agreement on the adaptation of the contract to changed circumstances within a reasonable time, either party may resort to the Court. The Court may when this is reasonable:
A. order the termination of the contract at a date and terms to be fixed by the Court
B. adapt the contract with a view to restore its equilibrium
C. either (A) or (B)
D. None of these
Ans. (C)
58. If the person entitled to rescind has put it out his power to restore the former state of things__________ it is too late to rescind
A. by acts of ownership or the like
B. by adopting and accepting dealings with the subject- matter of the contract which alter its character as the conversion shares in a company
C. if he has allowed third persons to acquire rights under the contract value
D. all of them
Ans. (D)
59. In assessing damages for wrongful dismissal, the Court has to make which of the following calculations?
A. What the position would have been if the old employment has run its full course
B. What the plaintiff has done since his dismissal
C. both (A) and (B)
D. None of these
Ans. (C)
60. Implied authority is divided as:
A. Incidental authority
B. Usual authority
C. Customary authority
D. Authority derived from circumstances of the case, being a residuary category
A. I, II
B. II, IV
C. III, IV
D. All of them
Ans. (D)
61. Implied Contract is one:
A. Where the intention of the parties is not expressed, but an agreement in fact, creating an obligation, is implied or presumed from their acts
B. Implied by law from the facts and circumstances of the transaction, although they are even against the consent of the party to be bound
C. both (A) and (B)
D. None of these
Ans. (C)
62. In dealing with cases of undue influence, which of the following questions which the Court should consider?
I. whether the transaction is a righteous transaction, that is, whether it is thing which a right-minded person might be expected to do
II. whether it was improvident, that is to say, whether it shows so much improvidence as to suggest the idea that the donor was not master of himself and nor in a state of mind to weigh what he was doing
III. whether it was a matter requiring a legal advisor
IV. whether the intention of making the gift originated with the donor
A. I, III
B. II, IV
C. II, III, IV
D. All of them
Ans. (D)
63. In deciding whether information amounted to a trade secret, which of the following factors are relevant?
I. The status of the employee and the nature of his work
II. The nature of the information itself
III. Whether the employer impressed the confidentiality of the information of his employees
IV. Whether the information could easily be isolated from other information which the employer was free to use
A. I, III
B. II, IV
C. IV
D. All of them
Ans. (D)
64. In determining what is penal in case of compromise decrees, which of the following factors must be considered?
A. Whether the decree-holder is claiming something more than what he claims in the suit or he claims in the execution by way of penalty only that much of the just claim to which he is entitled
B. Whether the just part of the claim is conceded by the defendant judgment-debtor in complying with the terms of the compromise within a certain period
C. Whether the judgment debtor failed to comply with the terms of the compromise without any just and proper cause so as to disentitle him to the concession allowed to him by the decree holder under the compromise
D. All of them
Ans. (D)
65. In English law, equity could however allow specific performance, notwithstanding failure to observe the time fixed where it could do so without injustice to the parties. In which of the following this relief is not available?
A. Where the parties have expressly stipulated in their contract that the time fixed for the performance must be exactly complied with
B. Where the circumstances of the contract or the nature of the subject matter indicate that the fixed date must be exactly complied with
C. Where time was not originally of the essence of the contract, but one party has been guilty of undue delay, the other party may give notice requiring contract to be performed within reasonable time
D. All of them
Ans. (D)
66. In fiduciary relationships, the person in whom confidence is reposed is under a duty:
A. To act honestly
B. To act with due diligence and skill
C. both (A) and (B)
D. None of these
Ans. (C)
67. In order to comply with Article 299, the contract must be:
A. executed by a person duly authorised by the President or Governor, as the case may be
B. must be executed by such person on behalf of the President or Governor as the case may be
C. must be expressed to be made by the President or Governor i.e. in the name of the President or the Governor
D. All of them
Ans. (D)
68. In order to invoke the provisions of S. 25 of the Indian Contract Act, 1872 which of the following conditions must be satisfied?
A. it must refer to a debt which the creditor but for the period of limitation might have enforced
B. there must be a distinct promise to pay wholly or in part such debts
C. the promise must be in writing signed by the person or by his duly appointed agent
D. All of them
Ans. (D)
69. In order to raise the presumption of undue influence, it is essential to prove:
A. That the relationship of the contracting parties was such that one was in a position to dominate the will of the other
B. That position was used to obtain an unfair advantage
C. both (A) and (B)
D. None of these
Ans. (C)
70. In practice courts would be reluctant to intervene in a contract on the ground of mistake for which of the following reasons?
I. the need to protect the rights of third parties to a contract who have acquired interest in the subject matter in good faith and for value, where the contract is partly performed, serious practical difficulties may arise in adjusting the rights of the parties if the contract is to be held void
II. the parties must be held to their bargains, once they have agreed on the same terms and in the same sense, and made to rely o the stipulation made by them in the contract for protection of facts not known to them at the time of making the contract
III. it would be unreasonable to hold that a person should not enter into a contract unless he is able to perform it, because when he so contracts, he takes the risk that performance may prove difficult or even impossible in the circumstances existing at the date of the contract
IV. there should not be a temptation for any party to get out a bad bargain V. Rendering the whole contract’ void or inoperative, is a drastic proceeding, which would threaten the sanctity of contracts if it could be invoked whenever a party claims that he or both parties had made a serious mistake
A. I, III
B. II, IV
C. IV, V
D. All of them
Ans. (D)
71. In the context of a criminal case for the offence of breach of trust it was held that an agreement between a retailer and the Government for distribution of food through a fair price shop must satisfy which of the following elements of bailment?
I. there was delivery of goods
II. goods were delivered by the Government to the retailer
III. the purpose was to enable the retailer to sell to the consumers
IV. the contract was that when so sold, the retailer would get the price and the Government, the money deposited by the retailer
A. I, II
B. II, IV
C. III, IV
D. All of them
Ans. (D)
72. In the matter of commission of wrong:
A. there can be no agency
B. an agent cannot plead in defence the directions of his principal
C. an agent cannot carry out such directions he would be disobeying his principal
D. All of them
Ans. (D)
73. In which of the following cases an exception is binding?
A. If the proposer has waived the requirement of communication
B. Where the acceptance, though received, is not read or where ‘the listener’ on the telephone does not catch the words of acceptance but nevertheless does not ask for them to be repeated
C. Where the acceptance is sent by post, the acceptance binds the offer or even though it never reaches him
D. All of them
Ans. (D)
74. Under section 62, the original contract need not be performed if there is:
(a) novation of contract
(b) rescission of contract
(c) alteration of contract
Ans. (d)
75. A promisee can:
(a) dispense with the performance in whole only
(b) dispense with the performance in part only
(c) dispense with the performance wholly or in part
(d) all the above.
Ans. (c)
76. If a person at whose instance the contract is voidable rescinds it:
(a) the other party is relieved of his promise
(b) the other party is liable to compensate the person who has rescinded the contract
(c) the other party is not liable to compensate the person rescinding the contract
(d) none of the above.
Ans. (a)
77. Benefits received by a party under a void contract:
(a) is liable to restore the benefits to the party from whom the benefits are received
(b) not liable to restore the benefits to that party
(c) liable to restore the benefits to third party
(d) liable to surrender the benefits to the State.
Ans. (a)
78. In contracts of sale of movable properties:
(a) time is presumed to be of the essence of the contract
(b) time is not presumed to be of the essence of the contract
(c) both (a) & (b).
(d) no presumption as to time can be raised.
Ans. (a)
79. Under the Indian Contract Act:
(a) a stranger to the contract can sue
(b) a stranger to the contract cannot sue
(c) a stranger but beneficiary under the contract can sue
(d) none of the above.
Ans. (d)
80. A contract can be discharged:
(a) by performance of the contract
(b) by frustration of the contract
(c) both (a) & (b)
(d) neither (a) nor (b).
Ans. (c)
81. Novation of a contract means:
(a) the renewal of original contract
(b) substitution of a new contract in place of original contract
(c) cancellation of contract
(d) alteration of the contract.
Ans. (b)
82. Rescission of the contract means:
(a) the renewal of original contract
(b) cancellation of contract
(c) alteration of contract
(d) substitution of new contract in place of earlier one.
Ans. (b)
83. A person enjoying the benefits of a lawful non-gratuitous act of another:
(a) is liable to compensate that another
(b) is not liable to compensate that another
(c) that another cannot claim any compensation
(d) both (b) & (c).
Ans. (a)
84. Claim for necessaries of life supplied to a minor under section 68:
(a) cannot be enforced at all
(b) can be enforced against the minor personally on attaining majority
(c) can be enforced against the minor’s property or estate
(d) can be enforced against the guardian, if any, of the minor.
Ans. (c)
85. Claim for necessaries of life supplied to a lunatic under section 68:
(a) can be enforced against the lunatic’s property or estate
(b) can be enforced against the lunatic personally when he ceases to be lunatic
(c) cannot be enforced against the lunatic or his estate
(d) can be enforced against the guardian of the lunatic.
Ans. (a)
86. In case of breach of contract, compensation can be claimed under section 73:
(a) for the proximate and natural consequences of breach
(b) for remote consequence of the breach
(c) for indirect consequences of the breach
(d) all the above.
Ans. (a)
87. In estimating the damage:
(a) the means available with the party claiming damages, to minimise the damages shall be considered
(b) such means shall not be considered
(c) the party is not under any obligation to take steps within its reach to minimise the loss
(d) both (b) & (c).
Ans. (a)
88. A and B being traders, entered upon a contract. A has private information of a change in prices which would affect B’s willingness to proceed with the contract:
(a) A is bound to inform B
(b) A is not bound to inform B
(c) B is bound to be informed
(d) none of above.
Ans. (b)
89. In which of the following cases, the Supreme Court held that, in a case of breach of contract, the proof of loss not necessary when genuine pre-estimated loss is stipulated in contract:
(a) Roop Kumar v. Mohan Thedani, Supreme Court, 2003
(b) ONGC Ltd. v. Saw Pipes Ltd., Supreme Court, 2003
(c) Pawan Hans Ltd. v. Union of India, Supreme Court, 2003
(d) SBI v. United Commercial Bank, Delhi High Court, 2003.
Ans. (b)
90. When a contract provides for a specified sum in case of breach:
(a) it prescribes the minimum liability
(b) it prescribes the maximum limit of liability
(c) it prescribes neither the minimum nor the maximum extent of liability
(d) none of the above.
Ans. (b)
(a) where the actual damage or loss has been proved to be caused by breach
(b) where the actual damage or loss has not been proved to be caused by the breach
(c) in both (a) & (b)
(d) neither (a) nor (b) nor (c).
Ans. (c)
(a) cases where the aggrieved party is seeking to recover a fixed amount on breach of contract
(b) cases where an amount received under the contract is sought to be forfeited
(c) both (a) & (b)
(d) cases where in consequence of breach no legal injury at all has resulted.
Ans. (a)
(a) it is not a part of purchase price
(b) it is given at the time of conclusion of the contract
(c) it can be given at any time
(d) it is a guarantee of due performance of the contract.
Ans. (d)
94. Under section 74 the court cannot award damages:
(a) less than the amount stated in the contract
(b) equal to the amount stated in the contract
(c) more than the amount stated in the contract
(d) none of the above.
Ans. (c)
95. Where the rate of interest prescribed in case of breach is too high, the court can interfere:
(a) on the proof of coercion
(b) on the proof of undue influence
(c) on the satisfaction that the stipulation is by way of penalty
(d) on the ground of equity.
Ans. (c)
96. A partnership firm consists of three partners ‘A’, ‘B’ & ‘C’, and owes ‘R’ sum of Rs. 15,000. ‘A’ wants to retire and it is agreed amongst all the three partners and ‘R’ that after retirement of ‘A’, ‘B’ & ‘C’ as continuing partners shall be liable for the dues of ‘R’. After the retirement of ‘A’, ‘R’ sues ‘A’ for recovery of Rs. 15,000:
(a) ‘R’ has an option to sue the firm consisting of ‘B’ & ‘C’ or the retired partner ‘A’
(b) ‘R’ has a right to sue ‘A’ to the extent of Rs. 5000 being the portion attributable to ‘A’
(c) ‘R’ has no right to sue ‘A’ as after the retirement of ‘A’ a new agreement came into being between ‘R’ & the firm and ‘A’ stood discharged of his liability towards ‘R’
(d) ‘R’ can sue the firm consisting of ‘B’ & ‘C’ alongwith ‘A’ as liability of all the partners is joint & several.
Ans. (c)
97. The law relating to tender of performance is laid down in:
(a) section 37
(b) section 35
(c) section 36
(d) section 38.
Ans. (a)
(a) a valid transaction in the ordinary course of business
(b) a transaction vitiated by coercion
(c) a transaction vitiated by undue influence
(d) a transaction vitiated by fraud.
Ans. (c)
99. A wagering contract is void under:
(a) section 28
(b) section 29
(c) section 30
(d) section 31.
Ans. (c)
100. ‘X’ and ‘Y’ agreed to marry each other on a certain date and before that ‘X’ goes mad. ‘Y’ cancelled the contract & sued for damages:
(a) No cause of action arises till the date of marriage
(b) on account of X’s going mad, the contract frustrated & void. Y has no right to sue for damages
(c) the contract itself is void
(d) Y is guilty of breach of contract.
Ans. (b)
101. ‘A’ promises to make a sculpture for ‘B’:
(a) ‘A’ must perform this promise personally
(b) A’s son can perform the promise
(c) A’s servant can perform the promise
(d) A’s employer can perform the promise.
Ans. (a)
102. ‘X’, a Delhi merchant & native of Delhi entered into contract with ‘Y’, a Jabalpur merchant for the purchase of 50 quintals of Sitaphal. In Delhi Sitaphal is a vegetable, while in Jabalpur it is a fruit:
(a) the terms of contract are to be interpreted as per meaning of the proposer
(b) the terms of the contract have to be interpreted as per the meaning understood by the acceptor
(c) the contract is void on account of mutual mistake as to the meaning of sitaphal
(d) no concluded contract has come into being as there was no meeting of minds.
Ans. (c)
103. If a promisee accepts an anticipatory breach committed by the promisor, then:
(a) the promisee need not perform his part of the contract but he cannot claim damages from the promisor
(b) the promisee need not perform his part of the contract but he can claim damages only after the date of performance
(c) the promisee need not perform his part of the contract and can claim damages without waiting till the date of performance
(d) the promisee must perform his part of the contract before claiming damages from the promisor
Ans. (c)
104. ‘X’ enters into a contract with Y for which Y is guilty of fraud. X can:
(a) set aside the contract & recover damages
(b) set aside the contract but cannot recover damages
(c) recover damages but cannot set aside the award
(d) recover damages for actual loss suffered
Ans. (a)
105. ‘X’ agreed to supply 1000 tons of iron at Rs. 100 per ton to ‘Y’ to be delivered not later than 31- 1-2002. ‘X’ also entered into a contract with ‘A’ for purchase of 1000 tons of iron at Rs. 80 per ton telling ‘A’ clearly that the iron is needed before 31-1-2002 for supply to ‘Y’ to fulfil the contract with Y. ‘A’ fails to supply the iron to ‘X’ who in turn failed to supply the same to ‘Y’. In an action by ‘X’ against ‘A’:
(a) ‘X’ can recover damages for the loss of profit at the rate of Rs. 20 per ton i.e., the loss of profit
(b) X can recover damages for the loss or profit he would have earned by timely supply to ‘Y’ and also the damages which ‘X’ might have paid to ‘Y’ on account of breach of contract
(c) ‘X’ can recover damages which ‘X’ might have paid to ‘Y’ on account of breach of contract
(d) X can recover damages in the form of penalty.
Ans. (b)
106. An offer was sent by post, the acceptor wrote ‘accepted’ on the letter, put it in his drawer & forgot about it. The transaction is a:
(a) valid contract
(b) a voidable contract
(c) a void contract
(d) no agreement as the acceptance was never communicated to the proposer.
Ans. (d)
107. X holds land on a lease granted by Y. The revenue payable by Y to the Government being in arrears, the land is advertised for sale by the Government under the relevant law, the consequent of which is annulment of ‘X’s lease. ‘X’ in order to prevent the sale & consequent annulment of lease pays the dues of Y to the Government:
(a) ‘X’ is entitled to re-imbursement of the amount so paid from Y
(b) ‘X’ is not entitled to anything from Y for want of any contract between them
(c) X is not entitled to any amount from Y because X has paid the amount to save his own tenancy
(d) ‘X’ is not entitled to anything from Y, as it is a gratuitous act of ‘X’.
Ans. (a)
108. An employer asks his employee/servant to sell his servant’s goods at a price for less than the market price/fair price. Servant can avoid the contract on the ground:
(a) undue influence
(b) coercion
(c) mistake
(d) fraud.
Ans. (a)