Questions and answers on the law of contract for UPSC, Civil Services, IAS, Indian Judicial Service and other Competitive Exams!
1. Section 138 of the Indian Contract Act, 1872 is a necessary consequence of the principle laid down in_________ and must be taken as a deliberate extension of a rule which in the common law
A. S. 44; is limited to the case of co-sureties contracting severally and not jointly
B. S. 44; is limited to the case of co-sureties contracting severally
C. S. 44; is limited to the case of co-sureties contracting jointly
D. None of these
Ans: A
2. Section 17(1) defines which of the following ingredients?
I. There should be a suggestion as to a fact
II. The fact suggested should not be true
III. The suggestion should have been made by a person who does not believe it to be true
IV. The suggestion should be made with intent either to deceive or to induce the other party to enter into contract
A. I, II, IV
B. II, IV
D. All of them
Ans: D
3. Section 202 of the Indian Contract Act, 1872 does not require that the documents authorising the agent:
A. Contain reference to the interest of the agent secured by the document
B. Give the power to appropriate the amounts collected towards any debt due to the agent
C. Either (A) or (B)
D. None of these
Ans: C
4. Section 27 of the Specific Relief Act gives power to the Courts to adjudge rescission of a contract where a contract is unlawful:
A. For causes not apparent on its face
B. The defendant is more to blame than the plaintiff
C. Both (A) and (B)
D. None of these
Ans: C
5. Section 41 of the Indian Contract Act applies to cases of:
A. Assignment
B. Subrogation
C. Both (A) and (B)
D. None of these
Ans: A
6. Section 69 of the Indian Contract Act, 1872 embodies which of the following doctrines?
A. Doctrine of frustration
B. Doctrine of unjust enrichment
C. Doctrine of implied contract
D. None of these
Ans: B
7. Section 74 of the Indian Contract Act, 1872 applies to:
A. Compromise decrees
B. It is open to a court executing such decree to go behind it if it contains a stipulation which is by way of penalty
C. Both (A) and (B)
D. None of these
Ans: C
8. Section 75 of the Indian Contract Act, 1872 must be read as supplementary to
I. Section 39 of the Indian Contract Act, 1872
II. Section 53 of the Indian Contract Act, 1872
III. Section 55 of the Indian Contract Act, 1872
IV. Section 64 of the Indian Contract Act, 1872
V. Section 65 of the Indian Contract Act, 1872
A. II, III, IV
B. IV, V
C. I, V
D. All of them
Ans: D
9. Since a contract is concluded by the mere acceptance of an offer, the terms of the intended or proposed agreement must be indicated with sufficient definiteness in the offer itself. The terms of the offer must therefore be definite and certain. Which of the following cases held that the proposal must be sufficiently definite to permit the conclusion of the contract by mere acceptance?
A. Coffee Board Bangalore v. Janab Dada Haji Ibrahim Halari
B. Gorakh Nand Yadav v. District Magistrate, Gorakhpur
C. Sanwarmal Goenka v. Soumyendra Chandra Gooptu
D. Nandganj Sihori Sugar Co. Ltd., v. Badri Nath Dixit
Ans: A
10. Sub-section 1 of Section 16 of Indian Contract Act, 1872 requires the Court trying a case to consider which of the following?
A. Are the relations between the donor and the done such that the done is in a position to dominate the will of the donor?
B. Has the done use that position to obtain an unfair advantage over the donor?
C. Either (A) or (B)
D. Both (A) and (B)
Ans: D
11. Suit by bailor or bailee against wrong-doer is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 176
B. Section 179
C. Section 180
D. Section 178
Ans: C
12. Terms of contract relate to statements, assertions, or representations contained in a written contract which relate to the subject matter of the contract and:
A. To something to be done
B. To something not be done under the contract
C. Has no application to a provision in the nature of a condition precedent to the very existence or formation of a contract
D. All of them
Ans: D
13. The agency extends to receiving notice on behalf of his principal of whatever is material to be stated in the course of the proceedings. For this rule to operate:
I. The agent must be under a duty to communicate
II. The information must be material
III. It must have been obtained in the course of business for which the agent has been engaged
IV. The agent is not privy to a fraud on the principal
A. I, II
B. II, IV
C. Ill, IV
D. All of them
Ans: D
14. The agent may be disentitled to relief under S. 226 of the Indian Contract Act, 1872:
A. If the injury was due to his own contributory negligence
B. If the injury is on the ground of common employment
C. Either (A) or (B)
D. None of these
Ans: C
15. The article of Fuller and Perdue on “The Reliance Interest in Contract Damages” adopted the method of viewing the remedies for breach of contract in terms of the interests which the remedies served to protect. Which of the following interests were identified by them?
A. The expectation interest
B. The reliance interest
C. The restitution interest
D. All of them
Ans: D
16. The balance to the provisions of Section 11 of the Indian Contract Act, 1872 is found in:
A. Section 66 of the Indian Contract Act, 1872
B. Section 67 of the Indian Contract Act, 1872
C. Section 68 of the Indian Contract Act, 1872
D. None of these
Ans: C
17. The basis of relief on the ground of economic duress is not clear from the judgment in case of Dai-ichi Karkaria Pvt. Ltd. v. Oil and Natural Gas Commission because:
A. The decision has been given in proceedings seeking interim injunction, where the Court has to decide whether interim injunction ought to be issued. The decision can be sustained solely on the equitable principles on which the Court may refuse to grant injunction
B. The Court has discussed the effect of economic duress as a ground of invalidating a contract on the basis of a prima facie case in interlocutory proceedings
C. The effect of such duress on the contract, i.e. whether it is voidable for lack of free consent, or is void being against public policy is not clear from the judgment
D. All of them
Ans: D
18. The cases in which power under Article 226 or 14 of the Constitution can be exercised for breaches of alleged obligations of the state, or its agents, can be divided which of the following types?
I. Where a petitioner makes a grievance of breach of promise on the part of the state in cases where on assurance or promises made by the state, he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Article 299 of the Constitution.
II. Where the contract entered into between the person aggrieved and the state is in exercise of a statutory power under certain Acts or rules framed there under and the petitioner alleges a breach on the part of the state.
III. Where the contract entered into heaven between the state and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract and the petitioner complains about breach of such contract by the State.
IV. Where the contract entered into between the State and the person aggrieved is non statutory and purely contractual, but such a contract has been cancelled on a ground de hors any of the terms of the contract, and which is per se violative of Article 14 of the Constitution.
A. I. III
B. II, IV
C. II, III, IV
D. All of them
Ans: D
19. The conditions which entitle an agent to exceed his authority under the doctrine of necessity are:
A. That he could not communicate with his principal
B. That the course he took was necessary in the sense that it was in the circumstances the only reasonable and prudent course to take
C. That he acted bona fide in the interest of the parties concerned
D. All of them
Ans: D
20. The creditor may file a suit at his option only against the surety. In which of the following cases it was upheld?
A. K. C. Skaria v. The Government of State of Kerala
B. Purabi Dasgupta v. Aran Kumar
C. Infrastructure Leasing and Financial Services Ltd. v. Vijay V. Prabhu
D. None of these
Ans: C
21. The defence of invalidity of contract for non-compliance of Article 299 must be specifically pleaded, unless it is patent from allegations in the plaint or evidence adduced by the plaintiff. This question has arisen in which of the following types of cases:
A. Cases under ss. 7 (d) and 9A of the Representation of People’s Act, 1951 in connection with disqualification from being elected to the Parliament of state legislature
B. Where the contracts did not comply with the exact requirements of Article 299 (1)
C. Contracts entered in the exercise of statutory powers
D. All of them
Ans: D
22. The doctrine of privity means:
A. That a person cannot acquire rights to liabilities arising under a contract to which he is not a party
B. That a person cannot be subject to liabilities arising under a contract to which he is not a party
C. That a contract between A and B can affect the legal rights of C indirectly
D. All of them
Ans: D
23. The duty of utmost good faith is of universal application to all policies of insurance although there are differences in the detail affecting the way in which the duty is applied. In practical application it means that either party has the right to avoid the contract if:
A. There has been a failure by the other party to disclose a material fact
B. That there has been on the part of the other party a misrepresentation of a material fact
C. Either (A) or (B)
D. None of these
Ans: C
24. The extent of an agent’s authority, whether express or implied, depends upon:
A. The nature of act or business for which he has been appointed
B. Things which are incidental to the business or are usually done in carrying it out
C. The usual customs and usages of the trade
D. All of them
Ans: D
25. The final draft of the Indian Contract Act, 1872 was the work of:
A. Sir James Fitzjames Stephen
B. Sir Frederick Pollock
C. Either (A) or (B)
D. Both (A) and (B)
Ans: D
26. The general principle of the common law is that in the formation of a contract:
A. The consideration is given
B. The consideration is to accepted in exchange of a promise
C. Both (A) and (B)
D. None of these
Ans: C
27. The guarantor’s right to indemnification is a right to be reimbursed:
I. The amount which he actually paid for the principal- debtor – with interest
II. Because, he is entitled to full indemnification from the principal-debtor
A. I is true but II is false
B. I is false but II is true
C. Both (I) and (II) are true
D. None of these
Ans: C
28. The Indian Contract Act, 1872 continued to in operation by virtue of:
A. Article 371 (1) of the Constitution of India
B. Article 372 (1) of the Constitution of India
C. Article 373 (1) of the Constitution of India
D. Article 374 (1) of the Constitution of India
Ans: B
29. The language of the second paragraph of the present section is open to which of the following construction?
A. The bailor is under a duty to take reasonable care to make the goods reasonably safe for the purpose for which he knows they have been hired
B. The bailor is under a duty to supply goods that are reasonably safe, the only defence being that the defect is latent one that could not be discovered by any care or skill
C. There is an absolute guarantee of fitness
D. All of them
Ans: D
30. The law throws its protection around pardanashin woman by reason:
A. Of the purda
B. Of those disabilities which arise out of the seclusion which the pardanshin women suffer
C. Both (A) and (B)
D. None of these
Ans: C
31. The nature of a fidelity guarantee gives rise:
A. To a duty of more excessive disclosure than is required in the case of a guarantee for payment of debt
B. To a duty of nominal disclosure than is required in the case of a guarantee for payment of debt
C. Either (A) or (B)
D. None of these
Ans: A
32. The pawnee cannot retain the goods for payment of any other debt or performance of any promise other than that for which the goods are pledged, unless:
A. There is a specific contract to the effect as stated in S. 174 of the Indian Contract Act, 1872
B. The pawnee falls in any of the categories of persons mentioned in S. 171 of the Indian Contract Act, 1872 entitled to a general lien
C. Either (A) or (B)
D. None of these
Ans: C
33. The principal is liable to the unauthorised acts of the agent if:
A. By word
B. By conduct
C. He induces a third party to believe that the unauthorised acts are within the scope of agent’s authority
D. All of them
Ans: D
34. The principle of unjust enrichment could not give a right to the state to recover or realise vend fee after the statue has been struck down. In which of the following cases it was upheld?
A. HDFC Bank Ltd. v. J. J. Mannan
B. P. T. Reddy v. Jyoti Reddy
C. Somaiya Organics (India) Ltd v. State of Uttar Pradesh
D. None of these
Ans: C
35. 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)
36. In which of the following cases it was held that a clause in the franchise agreement between the two companies by which the company G agreed not to sell, assign, transfer, pledge, mortgage, lease or license or in any other way encumber or dispose off in whole or part, the agreement or any interest therein, either directly or indirectly not to pass by operation of law or in any other manner without the consent of company C. It was held that interim injunction could not be issued restraining the shareholders of G from transferring their shared as they were not parties to the contract between G and C:
A. Sandhya Sah v. New India Assurance Co.
B. Ramnath Exports Private Ltd., v. The Chairman, Air India
C. Gujarat Bottling Co. Ltd. v. Coca Cola Co.
D. Des Raj Rahwa v. Concord of India Insurance Co. Ltd.,
Ans. (C)
37. 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. J ay a Chan del
D. United India Insurance Company Ltd., v. Mohanlal Aggarwal
Ans. (A)
38. In which of the following cases it was held that the electricity dues of a former owner of property cannot be recovered from the purchaser of the premises, unless the rules, or terms or conditions of supply, authorize the supplier to do so.
A. State of Bihar v. Charanjit Lal Chandha
B. Paschimanchal Vidhyut Vitran Nigam Ltd., v. DVS Steels and Alloys (P) Ltd.
C. Uttar Haryana Bijli Vitran Nigam v. Sahibji Traders
D. Sona Co-operative Housing Society Pvt. Ltd. v. Gujarat Electricity Board
Ans. (B)
39. 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)
40. In which of the following circumstances S. 141 of the Indian Contract Act, 1872 does not apply?
A. Where the loss of property is due to act of God or enemies of the state
B. Where loss is due to unavoidable accident
C. Where creditor and the debtor agree between themselves to vary their original contract by reducing the amount to be advanced and the number of properties to be given as security, there being no parting of security in such as case
D. All of them
Ans. (D)
41. 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)
42. In which of the following the guarantor may terminate the guarantee at any time?
A. A continuing guarantee, where the consideration is not an entire consideration, but the guarantee is not given in respect of a continuing indebtness, then, in the absence of a provision as to notice
B. A continuing guarantee, where the consideration is not an entire consideration, but the guarantee is given in respect of a continuing indebtness, then, in the absence of a provision as to notice
C. A continuing guarantee, where the consideration is not an entire consideration, but the guarantee is given in respect of a continuing credit, then, in the absence of a provision as to notice
D. None of these
Ans. (B)
43. 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)
44. In which of the following the principle of promissory estoppel differs from estoppels?
A. It applies to promises, not representation of facts
B. It is generally only suspensory in operation
C. It is not clear to what extent the representee need have changed his position on his detriment in reliance on the representation
D. All of them
Ans. (D)
45. 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
D. All of them
Ans. (D)
46. In which of the following ways tax is collected by the authorities under the statute in the category of illegal levy?
A. Misconstruction of the provisions of the statute, or the rules or notifications made under it
B. By their wrong interpretation
C. By an erroneous determination of the relevant facts, i.e. an erroneous finding of facts
D. All of them
Ans. (D)
47. 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)
48. Income tax including the surtax must be taken into account while assessing damages for either actual or prospective loss of earnings. This rule will apply in which of the following conditions:
A. The money, for the loss of which damages are awarded, would have been subject to tax as, “income”
B. The damages are not subject to tax in the hands of the plaintiff. Thus the taxation factor would not be taken into account in respect of loss of a capital asset, because this would not be subject to income tax
C. both (A) and (B)
D. None of these
Ans. (C)
49. 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 of them
Ans. (D)
50. It has been stated that the courts should not refuse to enforce legal rights simply because they arose out of or were associated with an unlawful purpose unless:
I. the statues discloses an intention that those rights should be unenforceable in all circumstances
II(a) the sanction of refusing to enforce those rights is not disproportionate to the seriousness of the unlawful conduct
II(b) the imposition of the sanction is necessary, having regard to the terms of the statute, to protect its objects or policies
II(c) the statutes does not disclose an intention that the sanctions and remedies contained in the statute are to be the only legal consequences of a breach of the statute or the frustration of its policies
A. I, II(a)
B. II(a), II(c)
C. I, II(c)
D. All of them
Ans. (D)
51. 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)
52. It is submitted that the use of the word ‘or’ in Section 3 of the Indian Contract Act, 1872, indicates that a communication of a proposal etc. is made by an act which:
A. is intended to communicate it
B. has the effect of communicating it
C. both (A) or (B)
D. None of these
Ans. (C)
53. 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)
54. Liability of party preventing event on which contract is to take effect falls under which of the following in the Indian Contract Act, 1872?
A. Section 56
B. Section 50
C. Section 53
D. Section 59
Ans. (C)
55. 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)
56. No man can exclude himself from the protection of courts by contracts. The citizen has the right to have his legal position determined by the ordinary tribunals, except, and subject to contract when:
A. when there is an arbitration clause which is valid and binding under the law
B. when parties to a contract agree as to the jurisdiction to which dispute in respect of the contract shall be discharged
C. both (A) and (B)
D. None of these
Ans. (C)
57. Non-liability of employer of agent to do a criminal act is discussed under which of the following in the Indian Contract Act, 1872?
A. Section 224
B. Section 219
C. Section 226
D. Section 210
Ans. (A)
58. Novation under Section 62 of the Indian Contract Act, 1872 is brought about by:
A. Introduction of new parties
B. By alteration between the same parties by introduction of new terms
C. either (A) or (B)
D. None of these
Ans. (C)
59. 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)
60. On the whole, the law as to enhance rate of interest under Section 74 of the Indian Contract Act, 1872 as amended may now be stated as:
A. A stipulation for increased interest from the date of the bond is always in the nature of a penalty, and, relief will be granted against it
B. A stipulation for increased interest from the date default may be stipulation by way of penalty, and whenever it is so, relief will be granted under the section as amended and not independently of it as before the amendment. Whether such a stipulation is penal is a question of construction dependent upon the consideration set out above
C. both (A) and (B)
D. None of these
Ans. (C)
61. 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)
62. Order of performance of reciprocal promises falls under which of the following in the Indian Contract Act, 1872?
A. Section 56
B. Section 52
C. Section 55
D. Section 59
Ans. (B)
63. 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)
64. Parties to a contract would fix such a sum in advance at the time of making the contract because:
I. it facilitates calculation of risks
II. it alleviates, the difficulty and expense of proving damage or loss and facilitates recovery of damages
III. it avoids the difficulty in assessment, even where the consequences of breach are ascertainable
IV. it avoids the risk of under compensation, where the party may otherwise not be able to recover indirect, consequential loss by the rule of remoteness
V. It gives the promise an assurance that he may safely rely on the fulfilment of the promise
VI. It enables the parties to make provision for liquidated damages for specific breaches
VII. It enables parties to make provision for different sums for different specified breaches
A. II, III, IV
B. IV, V
C. I, VI
D. All of them
Ans. (D)
65. 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)
66. Performance in manner or at time prescribed or sanctioned by promise is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 49
B. Section 50
C. Section 43
D. Section 40
Ans. (B)
67. 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)
68. Place for performance of promise, where no application to be made and no place fixed for performance is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 49
B. Section 36
C. Section 43
D. Section 40
Ans. (A)
69. 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)
70. Pledge by person in possession under voidable contract is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 178
B. Section 178A
C. Section 173
D. Section 172
Ans. (B)
71. 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)
72. Principal how far bound, when agent exceeds authority is discussed under which of the following in the Indian Contract Act, 1872?
A. Section 220
B. Section 227
D. Section 210
Ans. (B)
73. 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)
74. Principal’s right to benefit gained by agent dealing on his own account in business of agency is dealt under which of the following in the Indian Contract Act, 1872?
A. Section 216
B. Section 219
C. Section 215
D. Section 210
Ans. (A)
75. 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)
76. Promisee may dispense with or remit performance of promise under which of the following in the Indian Contract Act, 1872?
A. Section 63
B. Section 50
C. Section 61
D. Section 59
Ans. (A)
77. Under the Indian Contract Act consideration:
(a) may proceed from the promisee
(b) may proceed from any other person
(c) both (a) & (b)
(d) neither (a) nor (b).
Ans. (c)
78. Under the Indian Contract Act:
(a) a third person from whom the consideration has proceeded can sue
(b) a third person cannot sue even if the consideration has proceeded from him
(c) a third person who is the beneficiary under the contract can sue
(d) a third person cannot sue at all for want of privity of contract.
Ans. (c)
79. An executed consideration:
(a) is an act or actual forbearance against a future promise
(b) liability is outstanding on one side only
(c) can be positive or negative
(d) all the above.
Ans. (d)
(a) consists of a promise in future
(b) liability is outstanding on both the parties
(c) is a promise for a promise
(d) all the above.
Ans. (d)
81. Where the proposal & acceptance is through letters, the contract is made:
(a) at the place where the letter of acceptance is posted
(b) at the place where the acceptance is received
(c) at the place at which the acceptance is addressed
(d) all the above.
Ans. (a)
82. In cases of acceptance on phone, the contract is made:
(a) at the place from where the acceptance is made
(b) at the place where the acceptance is communicated
(c) at the place where the offer was made
(d) all the above.
Ans. (a)
83. An acceptance on telephone should be:
(a) audible to the offeror
(b) heard by the offeror
(c) understood by the offeror
(d) all the above.
Ans. (d)
84. If an acceptance on phone is drowned by noise & is not heard by the proposer:
(a) no contract is concluded
(b) a valid contract is concluded
(c) there is a voidable contract
(d) the contract is void.
Ans. (a)
85. In cases of general offer to public at large:
(a) notifying the acceptance to the proposer is necessary
(b) the performance of his part of the contract amounts to acceptance
(c) the performance of condition as acceptance is not necessary
(d) none of the above.
Ans. (b)
86. Incidents of a contract are governed by the law of the State:
(a) where the proposal was made
(b) where the proposal was communicated
(c) where the acceptance was made
(d) where the contract is made.
Ans. (d)
87. Minor entering into a contract misrepresenting his age:
(a) is estopped from pleading his minority
(b) cannot be estopped from pleading his minority
(c) the contract is void
(d) both (b) & (c).
Ans. (d)
(a) is void ab initio & cannot be ratified
(b) can be ratified by the minor during minority
(c) can be ratified on attaining majority
(d) both (b) & (c).
Ans. (a)
89. A contract is voidable under section 21:
(a) because of mistake as to Indian law
(b) because of mistake as to foreign law on the part of both the parties
(c) both (a) & (b)
(d) neither (a) nor (b).
Ans. (b)
90. An agreement in restraint of legal proceedings:
(a) if imposes total prohibition shall be void
(b) if imposes total or partial prohibition shall be void
(c) if imposes partial prohibition shall be valid
(d) if imposes total prohibition shall be valid.
Ans. (b)
91. Surety is entitled to be indemnified by the principal debtor:
(a) in respect of a sum rightfully paid
(b) in respect of a sum wrongfully paid
(c) in respect of a sum paid rightfully or wrongfully
(d) all the above.
Ans. (a)
92. Under section 146, the co-sureties are liable to contribute:
(a) equally
(b) unequally
(c) according to their capacity
(d) either (a) or (b) or (c).
Ans. (a)
93. If the co-sureties are bound in different sums, they are liable to pay:
(a) equally subject to the limit of their respective obligation
(b) equally without any limit
(c) equally irrespective of their obligation but subject to the limit
(d) either (b) or (c).
Ans. (a)
94. Surety on payment or performance of his liability, against the principal debtor:
(a) has right of subrogation
(b) has right like creditor had against principal debtor
(c) both (a) & (b)
(d) either (a) or (b).
Ans. (b)
(a) change of custody
(b) change of possession
(c) change of custody and possession both
(d) neither change of custody nor possession.
Ans. (b)
(a) the goods is delivered by one person to another for some purpose to be specifically returned or otherwise disposed of as per the order of bailor
(b) the goods delivered to be returned by way of an equivalent in money
(c) the goods delivered to be returned by way of an equivalent in other commodities
(d) all the above.
Ans. (a)
(a) who delivers the goods
(b) to whom the goods are delivered
(c) through whom the goods are delivered
(d) any of the above depending on the circumstances.
Ans. (b)
(a) who delivers the goods
(b) to whom the goods are delivered
(c) through whom the goods are delivered
(d) who carries the goods.
Ans. (a)
99. Bailee is bound to take care of goods:
(a) as an expert
(b) as a lay man
(c) as a man of ordinary prudence
(d) both (b) & (c).
Ans. (c)
100. The liability of bailee, as regards the goods is equivalent to that of:
(a) of a common carrier
(b) an innkeeper
(c) both of common carrier and innkeeper
(d) neither of common carrier nor innkeeper.
Ans. (a)
101. An agreement by a bailee supportive to exempt him wholly from liability for negligence is:
(a) valid
(b) invalid
(c) voidable
(d) void.
Ans. (a)
102. If the bailee does any act inconsistent with the conditions of bailment, with regard to goods:
(a) the contract becomes void
(b) the contract becomes voidable at the option of the bailee
(c) the contract becomes voidable at the option of the bailor
(d) the contract remains valid.
Ans. (c)
(a) the bailee is liable to bear the expenses of separation of goods & damages arising therefrom, if the goods can be separated or divided
(b) the bailee is liable to compensate the bailor for the loss of goods, if the goods are irresponsible
(c) both (a) & (b)
(d) neither (a) nor (b).
Ans. (a)
104. In case of a gratuitous bailment, the bailee is:
(a) entitled to necessary expenses incurred by him for the purposes of bailment
(b) not entitled to any expenses
(c) entitled to necessary expenses and additional changes
(d) either (b) or (c).
Ans. (a)
105. After the expiry of time or accomplishment of purpose of bailment:
(a) the bailee is to return the goods without demand
(b) the bailee is to return the goods only on demand
(c) the bailee is to pay the money equivalent
(d) the bailee is to pay the equivalent in other commodity.
Ans. (a)
106. The bailee is excused from returning of the goods:
(a) if there is a breach of warranty in respect of goods bailed
(b) if the goods are seized by the Government
(c) both (a) & (b)
(d) neither (a) nor (b).
Ans. (c)
107. A gratuitous bailment is terminated:
(a) on the death of bailor
(b) on the death of bailee
(c) on the death of either bailor or bailee
(d) on the death of bailor and bailee both.
Ans. (c)
108. In case of bailment by joint owners:
(a) the bailee has to deliver the goods to all the joint owners
(b) the bailee has to deliver the goods to any one of the joint owners with the consent of other joint owners
(c) the bailee can deliver the goods to one of the joint owners even without the consent of other joint owners
(d) either (a) or (c).
Ans. (d)
109. A particular lien under section 170 of the Act can be exercised:
(a) has right to retain the goods until the receipt of remuneration for services incurred by him
(b) for charges on account of labour or skill employed or expenses incurred
(c) for general balance of accounts and the charges on account of labour & skill employed & expenses incurred
(d) either (b) or (c).
Ans. (a)
(a) entitled to claim compensation
(b) entitled to retain the goods
(c) not entitled to claim compensation and thus not entitled to retain the goods
(d) both (a) & (b).
Ans. (b)
(a) entitled to the specific reward offered by the owner for the return of goods
(b) can retain the goods so long as the specific reward is not given by the owner
(c) both (a) and (b)
(d) either (a) or (b).
Ans. (b)
112. Pledge under section 172 of Indian Contract Act has been defined as:
(a) a licence to take possession of goods
(b) an agreement to give possession of goods
(c) bailment of goods as a security for payment of a debt or for performance of a promise
(d) both (a) & (b).
Ans. (c)
113. For the purpose of pledge, delivery of possession of goods:
(a) has to be actual
(b) may be constructive
(c) either actual or constructive
(d) may be symbolic.
Ans. (a)
114. In a pledge, the general property or ownership in ‘goods’:
(a) continues in pledgor
(b) transferred to the pledgee
(c) cannot be transferred to the pledgee
(d) either (a) or (b).
Ans. (a)
115. A pawnee, in the event of default in payment of debt by the pawner, has a right:
(a) to retain the goods pledged as collateral security
(b) to sue the pawner
(c) to sell the goods pledged
(d) all the above.
Ans. (d)