1

Chapter=1 Kinds And Nature Of Contracts

1. Which of the following is correct? a. Indian Contract Act, 1882 b. Indian Contract Act, 1972 c. Indian Contract Act, 1872 d. Indian Contract Act, 1888 2. An agreement consists of reciprocal promises between at least a. Four parties b. Six Parties c. Three Parties d. Partially correct 3. Every contract is an agreement but every agreement is not a contract. This statement isa. Wrong b. Correct c. Correct subject to certain exception d. Partially correct 4. A Promises to deliver his watch to B and, in return, B promises to pay a sum of Rs. 2,000. There is said to be a/an a. Agreement b. Proposal c. Acceptance d. Offer 5. An Agreement isa. Offer b. Offer + Acceptance + Consideration c. Contract d. Offer + Acceptance 6. Contracta. Offer + Acceptance b. Offer + Acceptance + Consideration c. Agreement + Consideration d. Agreement + enforceability at law. 7. K owns a residential flat in Chennai. He is entitled to quiet possession and enjoyment of his property. This is called a. Rights in Personam b. Right against the whole world & is available to the owner c. Constitutional Right d. There is not right at all. 8. Hari owes Rs. 1,00,000 to Jaya is entitled to recover this amount from Hari. This is called a. Rights in Personam b. Constitutional Right c. There is no right at all 9. A contract is said to be executed when it has been performed wholly on a. One side b. Two sides c. More than two sides d. All of the above 10. Valid contract a. Are made by free consent

b. Are those where the parties to the contract are competent to enter into an agreement c. Have lawful consideration & lawful object d. All of the above. 11.A contract which ceases to be enforceable by law become void a. Before it ceases to be enforceable b. No, such condition is necessary c. When it ceases to be enforceable d. When it becomes void. 12.A contract which is valid initially however ceases to be enforceable subsequentlya. Becomes void when it ceases to be enforceable b. Remains valid c. Becomes voidable when it ceases to be enforceable d. Becomes void since inception 13.Contract, when ceases to be enforceable by law becomes a / an a. Unenforceable Contract b. Void Contract c. Void Agreement d. Voidable contract 14.An agreement to commit a crime or a tort is a. Void b. Voidable c. Valid d. Unenforceable you cannot get it enforced in the court of law/ 15.Agreement which do not create legal obligations can also b e considered as contract. a. True b. Partly true c. False d. None of the above 16.A invites B for his sons wedding. B accepts the invitation. In this case, there is a / an a. There is no consideration b. There is no intention to create legal relationship c. There is no written document. d. There is no formal acceptance of the offer. 17.F promised to pay his son S a sum of Rs. 1, 00,000 if S passed C.A exams in the first attempt. S passed the exam in the first attempt, but F failed to pay the amount. S files a suit for recovery of the amount. State whether S can recover the amount under the Indian Contract Act, 1872. a. S can sue F for not honouring his words b. S has to pay Rs. 1 lakh to F c. S has no remedy against F d. S has to write exam again, to claim the reward 18.One of the clauses in an agreement was This agreement shall not be legally enforceable, but binding in honour only. In such case, the agreement is a. Invalid b. Valid c. Illegal d. Infructuous

19.One of the clauses in an agreement was This arrangement is not a formal or legal agreement, and shall not be subject to legal jurisdiction in a Court of Law. In such case, the agreement is a. Invalid b. Valid c. Illegal d. Infructuous 20.In agreement of purely domestic/social nature, the intention of the parties to create legal relationship is a. To b e proved to the satisfaction of the Court b. Presumed to exist c. Required to the extent of consideration d. Not relevant at all. 21.N obtained Ks acceptance by fraud. The contract can avoided at Ks instance, this is a case of a. Void agreement b. Voidable contract c. Unlawful contract (fraud is a civil wrong) d. Void contract 22.Voidable contract is one a. Which is lawful b. Which is invalid c. Which is valid as long as it is not avoided by the party entitled to do so. d. Which is unlawful. 23.When the contract is perfectly valid in its substance but cannot be enforced because of certain technical defects. This is called a/an a. Unilateral contract b. Bilateral contract c. Unenforceable contract d. Void contract 24.is without any legal effect and cannot be enforced in a Court of Law a. Valid contract b. Void contract c. Unenforceable contract 25. is forbidden by law. The court will not enforce such a contract. a. Valid contract b. Void contract c. Voidable contract d. Unenforceable contract 26.When the agreement is not in written form, barred by limitation, etc. it is an example of a. Valid contract b. Illegal contract c. Voidable contract d. unenforceable contract 27.A consignment is delivered at a wrong place. There is an implied condition for the recipient of return it, so that it can be delivered to the intended consignee. This is an example of a. Express contract b. Implied contract

c. Tacit contract d. Unlawful contract 28.D agrees to by Vs cycle by promising to pay cash on 15th July. V agrees to deliver the cycle on 20th July. This is a case of a. Executed contract b. Executory contract c. Void contract d. Illegal contract 29.G books a ticket with Indian Airlines from Delhi to Chennai on 16th June, date of travel being 16th July. Indian Airlines has to perform its part of contract on 16th July. This is an example o f a. Void contract b. Illegal Contract c. Unilateral contract d. Bilateral contract Answers. 1 C 2 D 3 B 4 A 5 B 6 7 8 9 10 D B A A D 11 12 13 14 15 C A C D C 16 17 18 19 20 A B C B B 21 22 23 24 25 A B C C B 26 27 28 29 30 B D B B C

Chapter 2 Offer & Acceptence

1. Section 2(b) states, When the person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted becomes a/an.. a. Contract b. Agreement c. Promise d. Offer 2. Silence cannot amount to offer by conduct. a. True b. Partly True c. False d. None of the above 3. A Company announced a reward of 100 to anyone who contracted influenza after using its Smoke Balls for a certain period. Mrs. C used the Smoke Balls but contracted influenza. She claimed the reward but the Company rejected her claim stating that she did not communicate her acceptance to the Company. Here:a. Acceptance is not communicated and reward cannot be claimed b. Offer is not communicated and reward cannot be claimed c. Acceptance need not be communicated and reward can be claimed d. There is no claim since reward cannot be given for contracting diseases.

4. L Offered to take a house on lease for a period of 3 years at Rs. 1 Lakh p.a. if the house was Put through repairs and rooms were handsomely decorated. Here, there is no offer since a. There is no legal obligation b. There is no communication of offer c. Amount to a promise d. Amount to acceptance 5. If the agreement contains a basis for ascertaining the meaning of a vague term, the agreement is .on the ground of its being vague. a. Illegal b. Void c. Not void d. Unenforceable 6. ..is expression of initial intention. a. Invitation of offer b. Offer c. Proposal d. Acceptance 7. Statement of lowest price at which the Vendor would sell his goods constitutesa. A valid contract b. A implied contract c. An express contract d. No contract 8. Goods advertised for sale by auction, does not constitute a contract sincea. There is no contract with any person who attends the sale b. It is a social obligation c. There is no communication of offer d. There is not consent of the offeree 9. In a self-service departmental store, customers pick-up articles and take them to the cashiers desk to pay. The Customers action in packing up particular gods is a/ana. Invitation to offer b. Offer c. Bid d. Acceptance 10. In a self-service departmental store, a valid contract is concluded by offer and its acceptance, whena. Customers enter the Department Store b. Customers pick up the articles c. Customers take the articles to the Cashiers desk d. Proposals cannot be advertised, while advertisements cannot be proposed. 11. The different between an advertisement for sale and a proposal is a. No difference at all b. A proposal becomes a promise as soon as the party to whom it is made accepts it but an advertisement is only an invitation to offer. c. Every case will have to be viewed according to the circumstances. d. Proposals cannot be advertised, while advertisements cannot be proposed.

12.A clause in a tender authorizing the party inviting tenders to terminate the contract at any time for future supplies a. Destroys the very basis of the contracts and the clause is void b. Makes the entire contract void c. Makes the contract voidable d. Does not destroy the basis of the contract & the clause is valid. 13.A tender will be irrevocable where a. Tenderer has, for some consideration, promised not to withdraw b. There is s statutory prohibition against withdrawal c. Either (a) or (b) d. Neither (a) nor (b) 14.When a tenderer offers to supply a definite quantity of goods it is called as a. Definite tender b. Express tender c. Standing tender d. General tender 15.When a Tenderer offers to supply goods periodically or in accordance with the requirements of the Offers, it is called as a. Definite Tender b. Express Tender c. Standing Tender d. Implied Tender 16.There is a Counter-Offer-when a. The Offeree gives conditional acceptance or introduces a fresh term in acceptance. b. The Offeror makes a fresh offer c. The Offeror makes some query d. The Offeror accepts it. 17.M offers to sell his car for Rs. 3.8 Lakhs to N.N says, he would buy it for Rs. 3.5 Lakhs. The counter-Offer by N for Rs. 3.5 Lakhs a. Cannot be accepted by M b. May be accepted by M c. Is irrational d. Is illegal 18.A wrotes to B, Will you buy my car for Rs.4.5 Lakhs? Reply by next Sunday. B communicates his acceptance on Monday next. In such case a. A is not bound to Bs delayed acceptance b. A is bound to Bs acceptance c. B has to make a Counter Offer d. There is no offer at all. 19.X offered to purchase shares in a company by writing a letter on 1st May. The company allotted shares on 1st November of that year. X refused the shares. Is Xs action valid: a. Yes shares cannot be allotted on the faith of letter written by X b. Yes, share cannot be allotted in the second half of a calendar year c. Yes, offer lapsed as it was not accepted within a reasonable time. d. No, X has to accept and pay for the shares 20.Communication of proposal is complete onlya. When it comes to the knowledge of the person to whom it is made b. When the proposal is communicated to the person to whom it is made. c. When it is put in the course of transmission

d. All of the above 21.An offer can be accepted by--a. Notice of acceptance b. Performance of condition specified in the offer c. Acceptance of consideration for a reciprocal promises d. All of the above 22.Express offers and Acceptance may be proved by the agreement between the parties but implied offers can be proved only by a. Words b. Conduct c. Circumstantial evidence d. Prima facie evidence. 23.S sent his servant L, to trace his missing nephew. Later, S offered a reward for anyone who found out his missing nephew. L, ignorant of the announcement, traced the boy. Subsequently, he claimed the reward, when he came to know of it. L is not entitled to the reward sincea. No reward can be given for tracing missing persons. b. Offer was not made to an ascertained person c. It is the servants duty to help his master. d. Revocation of the offer. 24.Performance of conditions of an offer; for the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is a/ana. Acceptance of the offer b. Rejection of the offer c. Couonter-offer d. Revocation of the offer. 25.A mere variation in the language which does not involve any difference in substance would not make the acceptance ineffective. a. True b. Partly true c. False d. None of the above 26.F offers to sell his house to G for Rs. 20 Lakhs. G replies that he would buy the house provided his solicitor approves of Fs title to the house. The offer did not contain any mention as to title. The acceptance is a. Qualified, hence invalid b. Conditional, hence invalid c. Valid d. Both (a) and (b) 27.M offered to sell his land to N for Rs. 70 Lakhs. N replied purporting to accepts and enclosed Rs. 20 Lakhs, promising to pay the balance of Rs. 50 Lakhs by monthly installments of Rs. 10 Lakhs eachin this case-monthly installments of Rs.10 Lakhs each. In this casea. There is no valid acceptance b. The contract is voidable at Ms option c. The contract is voidable at Ns option d. There is a valid acceptance 28.Silence constitutes a valid acceptance only ifa. Offeree has, by his previous conduct, indicated that silence amounts to his acceptance.

b. Offer contains a term that Offerees silence will constitute acceptance c. Both (a) and (b) d. Either (a) or (b) 29.Acceptance cannot be implied merely from silence of Offeree, even if it is expressly state in the offer itself . In such cases, mere silence cannot constitute acceptance a. True b. Partly true c. False d. None of the above

Answers
1. 2 3 4 5 C A C C B 6 7 8 9 10 C B D A B 11 12 13 14 15 D B D C A 16 17 18 19 20 C A B A C 21 22 23 24 25 A D B D A 26 27 28 29 30 A C A A A

CHAPTER-3 CONSIDERATION
1. A Passenger deposited a bag in the cloakroom at a Railway Station. Acknowledgement Receipt given to him carried, on the face of it, the ward Seek back. One condition limited the liability of Railway for any package to Rs. 100. The bag was lost, and passenger claimed Rs. 2,4000 being its value, pleading that he had not read conditions. Can the passenger win the case? a. Yes, railway company cannot take undue advantage b. Yes, damages are payable for loss of property c. No, suit for value below Rs. 5,000 is not permissible in law. d. No, the passenger had constructive notice of conditions whether he read them or not. 2. A passenger was traveling with luggage from Dublin to Whitehaven on a ticket, on the back of which there was a term that exempted the shipping Company from liability for loss of luggage. He never looked at the back of the ticket and there was nothing on the face of it to draw his attention to the terms on its back. He lost his luggage and sued for damages. Can the passenger win the case? a. Yes, Shipping Company cannot take undue advantage. b. Yes, passenger is not bound by something which was not communicated to him. c. No, suit for loss of luggage is not permissible in law. d. No, the passenger had constructive notice of conditions whether he read them or not. 3. In case an acceptance on phone, the contract is made at the placea. Where the acceptance is communicated b. Where the offer was made c. From where the acceptance is made

d. All of the above 4. K, an actress was engaged for a tour. The agreement provided that if the party went to London, K would be engaged at a salary to be mutually agreed between them. In such a case a. The contract is in restraint of trade b. The contract is contingent c. The contract is unenforceable d. There is not contract. 5. J engages M, an artist, to paint a portrait of his uncle and promises to pay M Rs. 10,000 for the work. Later, K refuse to pay stating that consideration must move from his uncle. Which of the following statements is correct? a. K is bound to pay M b. K is not bound to pay M c. Uncle is bound to pay M d. M cannot claim anything from K or his uncle. 6. As long as there is a consideration for a promise, it is immaterial who has furnished a. True b. Partly True c. False d. None of the above 7. Consideration must be something which the Promisor a. is already bound to do b. is not already bound to do c. may voluntarily do d. must not do. 8. An Executory Consideration a. Is an outstanding liability on both the parties b. Consists of a promise I future c. Is a promise Reciprocal promises. d. All the above. 9. An Executory Consideration is a. Consideration promised by the executive of a company b. Consideration which consists simply of a mutual exchange of each being a consideration for the other c. Consideration which should be executed before the Registrar d. Consideration which should be executed before the Court. 10. A promises to pay an existing debt punctually if, B, the creditor, gives him a discount . Is this consideration valid? a. Yes , it is genuine consideration b. No, promisor is already bound to pay punctually c. No, inadequate consideration d. Yes, enforceable consideration. 11.Which of the following is good and valid consideration? a. Forbearance to sue b. Compounding, with Creditors c. Compromise of Disputed Claims d. All of the above 12.A Hindu husband by a registered document, after referring to quarrels an disagreements between himself and his wife, promised to pay his

10

wife a sum of money for her maintenance and separate residence. The above contract is void sincea. Document is registered b. Agreement is in restraint of marital duties c. Natural love and affection was missing d. Agreement has an illegal object 13.A promise made without consideration is valid ifa. It is promise to compensate wholly or in part, a person who has already voluntarily done something for the promisor b. Something which the promisor was legally compellable to do c. Either (a) or (b) d. Neither (A) or (b) 14. X supports Ys infantson. Y promises to pay Xs expenses. The contract isa. Void b. Illegal c. Valid d. Unenforceable 15.K signs a written promise to pay L a time barred debt. At the time of signing the promise, the amount is not ascertained. Hence, k promises to pay what is due, after taking accounts. The contract isa. Void b. Illegal c. Valid d. Voidable 16.No Consideration No Contract does not apply to completed gifts, i.e. gifts given and accepted. a. True b. Partly true c. False d. None of the above 17.If a person promises to contribute to charity and on this faith, the promise undertakes a liability to the extent not exceeding the promised subscription, the contract shall be valid. a. True b. Partly true c. False d. None of the above 18.A promised to pay B, who had received summons, to appear at a trail in a civil suit, a certain sum being a compensation for loss of time during his attendance. The promise is void sincea. Object is immoral b. Consideration is illusory c. Agreement is in restraint if legal proceedings d. All of the above 19.If only a part of the consideration or object is unlawful, the contract isa. Valid to the extent the same are lawful b. Void to the extent the same are unlawful c. Valid as a whole. d. Void as a whole. 20.A person who is not a party to a contract but has some interest in the consideration of that contract-

11

a. Cannot enforce that contract b. Can enforce that contract c. Can enforce that contract subject to certain exceptions d. Can wait for the parties to perform the contract. 21.Under the Indian Contract Act, a strangera. To the contract cannot sue b. To the contract can sue 22.Only those persons, who are parties to a contract, can sue and be sued upon the contract. This Rule is called the doctrine ofa. Promissory Estoppels b. Right of Privilege Suit c. Privities of contract d. Rights in Rem. 23.A who is indebted to B, sells his property to C. C promises to pay off the debt to B, when C fails to pay B has no right to sue C, becausea. The object is unlawful b. There is no consideration between B and C c. B is a stranger to Contract between A and C d. The consideration is inadequate 24.In which of the following situations, a stranger to contract can file a valid suit? a. Assignment of a contract b. Contracts entered into through an Agent c. Covenants running with land d. All of the above. 25.Marriage Settlement, Partition and other Family Arrangements can be enforced by beneficiary who is not a party to the contract, only if such agreement isa. Registered b. Reduced to writing c. Either (a) or (b) d. Both (a) or (b) 26.The assignee of a contract cannot enforce the promise since there is no consideration flowing from him to the Promisor: a. True b. Partly true c. False d. None of the above 27.The purchaser of immovable property who has notice that the owner of the land is bound by certain conditions or covenants created by an agreement affecting the land, shall be bound by such conditions, even though he is not a party to the original agreement containing those conditions or covenants. a. True b. Partly true c. False d. None of the above 28. A husband who was separated from his wife executed a separation deed by which he promised to pay the Trustee all the expenses for her maintenance. The agreement created a trust in favour of his wife. The agreement isa. Void due to lack of consideration

12

b. Valid and could be enforced by the wife c. Valid but not enforceable by the wife d. Void but Court can entertain a petition by the Wife. 29.Two brothers, on partition of family joint properties agreed to invest in equal shares for their mothers maintenance. There was no separate agreement with the mother. In such case, the mother a. Cannot enforce the contract b. Can sue for setting aside the partition. c. Is entitled to require her sons to make the investment d. Is entitled to the entire property.

Answers 1 2 3 4 5 D B C D A 6 7 8 9 10 A B D B B 11 12 13 14 15 D C C C A 16 17 18 19 20 A A B D C 21 22 23 24 25 C C C D B 26 27 28 29 C A B C

Chapter-4 Capacity to Contract

1. A convict when undergoing imprisonment a. Is capable of entering into a contract b. Is incapable of entering into a contract c. Is capable of entering into a contract, if it is permitted by the law d. Is capable of passing on consideration 2. A corporation cannot enter into contracts that area. Ultra vires its Memorandum of Association b. Strictly of a personal nature as it is only an artificial person c. Either (a) or (b) d. Neither (a) or (b) 3. The age of majority for the purpose of the Indian Contract Act is a. 16 years for girls & 18 years boys b. 18 years girls & 21 years for boy c. 18 years d. 21 years 4. Parents of Guardian shall.for branch of contract by Minor.

13

5.

6.

7.

8.

9.

a. Be held liable b. Not be held liable c. Be imprisoned d. Not be questioned D, a Minor, entered into a contact for borrowing a sum of Rs. 20,000 out of which lender paid him sum of Rs. 8,000. D executed mortgage of property in favour the lender. The mortage isa. Valid to the extent of b. Valid to the extent of Rs. 20,000 c. Totally invalid d. Validated on attaining majority Identify the incorrect sentence from the following. a. A Minor can be a beneficiary b. A Minor can be admitted to the benefits of a Partnership c. A Minor cannot plead minority d. A Minor can be held liable in tort. A Minor speculated in the Stock Exchange and became liable to Stock Brokers for Rs.1 Lakhs. Subsequent to attaining majority he gave two bills of exchange for Rs. 45,000 each in satisfaction of the original debt. a. Minor is liable for Rs. 1 Lakh. b. Minor is liable for Rs. 90,000 c. Minor is liable for Rs. 10,000 d. Minor is not liable for any amount. A is a minor, B approaches A for a loan on the basis of a mortage of the house owned by B. hence, A advances the money and B executed a mortage in favour of A, a minor. In these circumstancesa. The mortage is not enforceable by A, because he is a minor b. The mortage is enforceable but only when he attains majority c. The mortage is enforceable by a even though he is a Minor d. There is no mortage at all. When a contract is entered in on behalf of a Minor by his Parents/Guardians/Manager of his estate, it can be specifically enforced by or against the minor if the contract is a. Within the scope of the authority of the Parent/Guardian/Manager b. For the benefit of the minor c. Either (a) or (b) d. Both (a) or (b)

14

10.The Principle of Estoppel cannot be applied against a Minor sincea. He has no sound mind b. He has no privilege to cheat persons by making any representation c. He will be induced by dishonest traders to declare in writing that he is major at the time of entering in a contract d. He has not attained the age of majority. 11.Parents or Guardian shall be liable to creditors when the Minor is acting as agent of the Parents or Guardian. a. True b. Partly true c. False d. None of the above 12.Education and Marriage of a Female have also been hele do be necessaries in India a. True b. Partly true false c. None of the above 13.Which of these is a not a necessary for a minor? a. Leading money to a Minor for defending a suit on his behalf in which his property is in jeopardy b. Lending money to a Minor for defending him in necessary prosecution c. Leading money to a Minor for paying his Creditors in respect of horse racing & betting debts d. Lending money to a Minor for saving his property from sale in execution of a degree. 14.Which of these is a not a necessary for a Minor? a. Provision of education b. Provision of medical and legal advice c. Provision of a house on rent for the purpose of living ad continuing his studies d. Provision of intoxicants and alcoholic drinks. 15.A minor who was a student, bought 11 fancy coats from N. He was , at that time, adequately provided with clothes, but N did not know this fact. In such a case a. Minor is personally liable to pay for the coats b. Minors property can be attached for payment

15

c. Minor is liable since he has misled N into supply of coats d. Minor or his property is not liable at all. 16.A person who is usually of unsound mind, but occasionally of sound mind a. May enter into a contract when he is of sound mind b. May not make a contract even when he is of sound mind c. Cannot enter into a contract at all. d. Can enter into a contract at all times but can plead innocence. 17.A patient in a lunatic asylum, who is at intervals of sound mind, may contract during those intervals. a. True b. Partly true c. False d. None of the above. 18.A sane man who is delirious from fever or who is so drunk that he cannot understand terms of a contract or form a judgment, cannot contract while such delirium or drunkenness lasts a. True b. Partly true c. False d. None of the above 19.Whether a party to a contract, at the time of entering into a contract, is of sound mind or not is a question of fact to be decided by the Court a. True b. Partly true c. False d. None of the above 20.consensus-ad-idem meansa. General consensus b. Meeting of minds upon the same thing in the same sense c. Reaching an agreement d. Reaching of contract 21.Inadequacy of consideration is relevant in determining the question of a. Capacity of parties b. Possibility of performance c. Legality of object d. Free consent 22.Coercion, if employed..does not amount of free consent

16

a. At a place where Indian Penal code is not in force b. At a place where Indian Penal Code is in force c. Either (a) or (b) d. In the court 23. A person is deemed to be in a position to dominate the will of another if a. He holds a real or apparent authority over the other b. He stands in a fiduciary relation to the other c. He makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness or mental or bodily distress d. All of the above. 24.When the consent is caused by undue influence, the contract is a. Valid b. Void c. Voidable d. Illegal 25.An illiterate old woman made a gift deed of practically her entire property to he nephew whom managed her affairs. The gift can be set aside on the ground of a. Mistake b. Coericion c. Fraud d. Both (a) and (b) 26.The burden of proof that consent was obtained by undue influence lies on a. The person whom seeks to avoid the contract. b. The person who employs the undue influence. c. Either (a) or (b) d. Both (a) or (b) 27.Mere proof of nearness of relationship is not sufficient for the court to assume that one relation was in a position to dominate the will of another. a. True b. Partly true c. False d. None of the above. 28.Which of these constitute Fraud? a. Suggestions as a Fact, of something which is not true, by a person who does not believe it to be true

17

b. Active concealment of Fact by one having knowledge or belief of the c. Promise made without any intention of performing it d. All of the above 29.Active concealment of a fact by one having knowledge or belief of the fact is an example of a. Fraud b. Coercion c. Mistake d. Undue influence 30.When a person positively asserts that a fact is true when his information does not warrant it to be so, though he believes it to be true, there is a. Misrepresentation b. Fraud c. Undue influence d. Coercion.

Answers 1 2 3 4 5 D C C D C 6 7 8 9 10 C D C D D 11 12 13 14 15 A A C D D 16 17 18 19 20 A A B A B 21 22 23 24 25 D C C C D 26 27 28 29 30 A A D A A

Chapter-5 Free consent

1. Under English Law, if the threat is in relation to goods or property of another person, it is not duress. a. True b. Partly true c. False d. None of the above 2. A Carrier Company refuses to deliver certain goods to the consignee, except upon payment of an illegal charge for carriage. The Consignee pays the sum charged and obtains the goods. In this case

18

3.

4.

5.

6.

7.

a. Consignee is entitled to recover so much of the charge as was illegally excessive. b. Consignee is entitled to recover the entire charges c. Consignee is not entitled to recover any amount d. Consignee is not entitled to return of goods. Ds son forged Bs name to a Pro Note. B under threat of persecuting Ds son and exercising undue influence obtains a bond from D for the amount of the forged note. The Bond a. Is valid b. Is void an initio c. Is voidable d. Can be set aside by the court A minor girl who lost her parents lived with her cousin brother who was in the position of her parents. She executed an unconscionable gift deed in his favour. This gift deed can be set aside on grounds of a. Mistake b. Undue influence c. Fraud d. Coercion. To prove undue influence, the plaintiff has to prove that a. The relations subsisting between the parties are such that the Defendant was in a position to dominate the will of the Plaintiff b. The Defendant used that position to obtain an unfair advantage from the plaintiff c. Both (a) or (b) d. Neither (a) or (b) Which of the following relationships do not raise a presumption of undue influence? a. Guardian & Ward b. Doctor & Patient c. Husband & Wife d. Fiance and Fiancee If the contract is avoided on grounds of .it is at the discretion of the Court to direct the aggrieved party to restore or refund the benefit received. a. Undue Influence b. Coercion

19

c. Fraud d. Misrepresentation 8. Which of these does not constitute Fraud? a. Promise made without any intention of performing it b. Physical threat to the person or property of another c. Any act fitted to deceive d. Any such act or omission as specifically declared by law to be fraudulent. 9. A mere attempt at deceit by one party. a. Is not fraud unless the other party is actually deceived. b. Is fraud whether the other party has been derived or not c. Amounts to undue influence 10.Mere silence as to facts, likely to affect the willingness of a person to enter into a contract is not Fraud. a. True b. Partly true c. False d. None of the above 11.Duty to speak exists in case a. Where the parties stand in a fiduciary relationship b. Where contract is a one of ubberima fidei (requiring utmost good faith) c. Both (a) or (b) d. Neither (a) or (b) 12. Where consent is obtained by fraud, the D frauded party has the following remedies a. He can rescind the contract with in a reasonable time. b. He can insist on the performance of the contract upon a condition that he shall be put on the position in which he would have been if the representations made had been true. c. He can sue for damages d. All of the above 13.In which of the following cases, the contract cannot be avoided on ground of fraud? a. A fraud which did not cause the consent of the party to the agreement.

20

b. Where the consent was caused by silence amounting to fraud, if the party whose consent was so caused, had the means to discover the truth with ordinary diligence. c. Where a party enters into a contract in ignorance of fraud. d. All of the above. 14.Where interest of third parties intervene, before the contract is avoided, such contract cannot be rescinded, even if the consent of the party is caused by fraud. a. True b. Partly true c. False d. None of the above 15.X brought shares in a company on the faith of a prospectus that contained an untrue statement as to the Directorship of J, X had never heard of J and hence such statement was immaterial from his view point. X claimed damages for fraud. His claim will be dismissed on the ground that a. There was no fraud at all. b. Fraud in company prospectus is not covered by Indian Contract Act. c. The untrue statement had not induced him to buy the shares. d. All of the above. 16.Shri krishnan, a candidate for L.L.B. part-I exam, who short of attendance, did not mention that fact in the admission form for the examination of Kurukshetra University authorities made proper enquiries to discover the truth. It was held by the Supreme court that a. There was fraud by the candidate b. There was no fraud by the candidate c. There was misrepresentation d. There was mistake on the part of the candidate 17.Misrepresentation need not be made directly to the person involved. A wrong statement of facts made to a third person with an intent to communicate it to the party involved amounts to misrepresentation a. True b. Partly true c. False d. None of the above 18.Where consent is caused by Fraud or Misrepresentation, the aggrieved party can sue for damages.

21

a. True b. Partly true c. False d. None of the above 19.The contract cannot be rescinded on grounds of misrepresentation a. If the party takes a benefit under the contract, or in some other way affirms the contract, after coming to know of such misrepresentation b. Where restoration of the original position is not possible c. Where a third party h as acquired rights in the subject matter for value and in good faith. d. All of the above 20.P offers, to sell a painting to K which P knows is the copy of a well know masterpiece. K thinking that the painting is original devides to buy it at a very high price. Is this a valid contact? a. No, P is guilty of misrepresentation b. No, P is guilty of fraud c. Yes, K has an erroneous belief as to the value of the painting. d. Yes, price is not a criteria for setting aside the contract 21.N, came in person to jewellers shop and chose some jewels. The jeweler was prepared to sell to him as a casual customer. N tendered payment by cheque signing in the name of G, a person of credit. N later took the jewels, which he pledged with B. the Pledge made with B is a. Illegal b. Valid c. Void d. Voidable 22. An old illiterate man was made to sign a bill of exchange, by means of a false representation that it was a guarantee. The contract is a. Illegal b. Valid c. Void d. Voidable 23.A contract can be avoided on grounds of unilateral mistake if such mistake relates to the nature of the contract, and not to the terms of the contract. a. True b. Partly true c. False

22

d. None of the above 24.One Blenkarn, knowledge that Blenkiron& Co. were reputed customers of Lindsay & Co., placed and order with Lindsay & Co. by imitating signatures of Blenkiron. Goods were then sold to Cundy, an innocent buyer. Lindsay & Co. sued Cundy for recovery of goods. In the case a. Cundy has good title to goods and can retain them b. Sale made by Blenkarn to Cundy is valid. c. Both (A) and (b) d. Lindsay never intended to contract with Blenkarn, there was no contract, so, Cundys title is defective. 25.S knew that on account of his critictism of plays in past, he would not be allowed entry at a theatre. The Managing Director of the theatre, gave instructions that a ticket should not be sold to S. S, however, obtained a ticket through one of his friends. On being refused admission to the theatre, he sued for damages for breach of contract. a. S is entitled to damages b. S is entitled to enter the theatre c. There is a valid contract between the theatre company and S d. There is no contract between the theatre company and s. 26. Cundy vs. Lindsay Case deals with a. Coercion b. Undue influence c. Mistake as to the nature of transaction d. Mistake as regards identity. 27.An agreement is void when there is a. Mistake to fact by both the parties b. Mistake of fact by both the parties c. Mistake of foreign law d. All the above 28.Bilateral Mistake as to fact renders an agreement void since a. There is no consideration b. Such agreement are unlawful. c. There is no agreement as there is absence of consensus. d. It is opposed to public policy 29.A sells a painting to B saying that it is an original wark of Picasso. Unknown to both the parties, the original painting was stolen and its copy was placed there. The contract is void on the grounds of :

23

a. Bilateral mistake as to quality of the subject matter b. Unilateral mistake as to quality of the subject matter c. Mistake as to law d. Mistake as to identity of art items 30.P wrote to H inquiring price of rifles suggesting that he might buy as many as 50. On receipt of information, he telegraphed, Send three rifles. Due to telegraphic mistake message was transmitted as Send the rifles. H dispatched 50 rifles. In this case: a. There is no contract b. There is a valid contract c. He has to accept the loss on 50 rifles d. He has to accept the loss on 3 rifles. 1 2 3 4 5 A A C B C 6 7 8 9 10 C A B A A 11 12 13 14 15 C D D A C 16 17 18 19 20 B A B D C 21 22 23 24 25 B C A D D 26 27 28 29 30 D B C A A

Chapter-6 legality of object and consideration

1. Amar promises to drop prosecution which he has institute against Balu for robbery. Balu promises to restore value of things taken. The agreement is valid on grounds a. Contingment b. Valid c. Voidable d. Of stifling prosecution 2. Arun estate is sold for arrears for revenue. As per the Act, the defaulter is prohibited from purchasing it. Bhat agrees with Arun to purchase the estate and convey it back to Arun for the price which Bhatt has paid. The agreement is a. Legal b. Valid c. Voidable

24

3.

4.

5.

6.

7.

8.

d. Void Which of the following agreements are valid? a. Uncertain agreements b. Wagering agreements c. Agreements contingent upon in possible events. d. None of the above Which of the following agreements are voidd? a. Agreements to be impossible acts. b. Agreements do reciprocal promises, one set of which is legal, and the other part is illegal. c. Both (a) or(b) d. Neither (a) or (b) Of the following agreements which one is not void? a. Agreement without consideration b. Agreement in restraint of marriage c. Wagering agreement d. Agreement with a handicapped person In case of a void contract, there is no legal remedy for the parties to the contract. a. True b. Partly true c. False d. None of the above. S a seller of imitation jewellery, sells his business to B and promises, not to carry on business in imitation jewellery and real jewellery. The agreement is a. Valid with regard to imitation jewellery and void as regards Real jewellery b. Void with regard to limitation jewellery; and valid as regards Real Jewellery. c. Wholly void d. Fully valid. Trade Combination agreements like opening and closing of business ventures, licensing of traders, supervisions and control of dealers, etc. are a. Void since they are in restraint of trade. b. Valid even if they are in restraint of trade. c. Voidable at the option of the aggrieved party. d. Immoral and hence void and initio

25

9. If the seller agrees to supply all the goods produced by him to a certain buyer and to nobody else, and Buyer also, in turn, undertakes to accept the whole of the quantity, the agreement is--a. Void agreement b. Solus agreement c. Illegal agreement d. Unlawful agreement 10.An employer can restrain his employee from acting in theatre plays or in performing an art, during the course of his employemt. a. True b. Partly true c. False d. None of the above. 11. An agreement in restraint of legal proceedings, if it imposes a. Total prohibition shall be void b. Total or partial prohibition shall be void c. Partial prohibition shall be valid d. Total prohibition shall be valid. 12.Which of the following agreements is void? a. Restricting absolutely, and party, from enforcing his rights under or in respect of any contract by usual legal proceedings in the Ordinary Tribunals b. Limiting the time within which any party may enforce his rights by way of legal proceedings in the Ordinary Tribunals. c. Extinguishing the rights of any party to the agreement. d. All of the above 13.Any agreement which discharges any party thereto from liability; under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights is a. Void b. Enforceable c. Valid d. Voidable 14.An express agreement between parties to vest jurisdiction to refer any dispute to a specified Curt amounts to contracting against statute and hence void. a. True

26

b. Partly true c. False d. None of the above. 15.An agreement between two parties to refer to arbitration, any question between them that has already arisen is valid a. If it can be inferred by conduct of parties b. If it is in writing c. Either (a) or (b) d. Neither (A) or (B) 16.M promised to pay n for his services at his (M) sole discretion found to be fair ad reasonable. However, N dissatisfied with payment made by M wanted to sue hm. Ns suit will be a. Valid b. Invalid c. Restricted only to payment of remuneration and not damages d. Restrict only to damages and not remuneration 17.A agreed to pay a certain sum when he was able to pay. The agreement is void on grounds of a. Inadequacy of consideration b. Agreement to agree in future c. Uncertainty d. All of the above 18.A agrees to sell to B, 200 tons of oil. A deals only in coconut oil. The agreement is a. Valid b. Void due to uncertainly of meaning c. Illegal d. Opposed to public policy 19.Illegal agreements are a. Not enforceable by law b. Forbidden under law c. Either (a) or (b) d. Both (a) or (b) 20.The maximum in pari delicto, portior est. conditio defendentis means a. The defendant can be pardoned if his condition demands so b. The defendant has to prove his innocence beyond doubt. c. In cases of equal guilt, the defendant is in a better position.

27

d. The law assumes that the defendant is innocent. 21. Monies paid or properties transferred under illegal agreements a. Can be recovered in all cases b. Can be recovered only if they exist in specie c. Cannot be recovered unless court directs so d. Cannot b e recovered at all. 22. In wagering agreements neither party should have interest in the happening (or non-happening) of the event other than a. His honour or prestige b. The sum or stake he stands to win or lose c. Either (a) or (b) d. Both (a) or (b) 23.where a person enters into a wagering transaction through an agent, and the agent fails to carry out the Principals instructions? a. Principal can sue Agent for breach of contract of agency b. Principal cannot sue Agent for breach of contract of agency c. Principal can sue Agent for damages d. Principal can sue Agent to recover the betting moneys paid. 24.A, in Mumbai, bets with B and loses. A applies to C for a loan in order to pay B. C gives the loan to a to enable him to pay B. In this case a. C can recover the amount of loan from A b. C cannot recover the amount of loan from A c. C can recover the amount from B d. C can recover the amount from A or B 25.Transactions for sale and purchase of stocks and shares or for sale and delivery of goods, with a clear intention only to settle the price difference are a. Wagering Agreements b. Not Wagering agreements c. Contingent Contracts d. Voidable Agreements 26.As per the Prize Competition Act, 1955, prize competitions in game of skill are not wagers provided the prize money does not exceed a. Rs.10 b. Rs.100 c. Rs.1,00 d. Rs. 10,000

28

27.Where a wagering transaction amounts to a lottery, it is a. Valid b. Enforceable c. Illegal as per sec.294-A of the Indian Panal Code d. Voidable 28.As per Sec. 294A of the Indian Panal Code, anyone who keeps any office or place for the purpose of drawing a lottery (other than a State Lottery or a lottery authorized by the State Government) shall be punished with upto 6 months imprisonment and / or fine. a. True b. Partly true c. False d. None of the above 29.An agreement to buy a ticket for a lottery is not a Wagering Agreement. a. True b. Partly true c. False d. None of the above 30.Government authorized Lottery is a. A crime and hence punishable b. Void and unenforceable transaction c. Legal but not enforceable transaction d. Enforceable transaction Answers 1 2 3 4 5 D D D C D 6 7 8 9 10 A A B B C 11 12 13 14 15 B D A C B 16 17 18 19 20 B C A D C 21 22 23 24 25 D B B B A 26 27 28 29 30 C C A C D

Chapter-7 Performance of contract

29

1. A sum of money was agreed to be paid to the father in consideration of breaking his daughter in marriage. The agreement is void o grounds of being a. Restraint of Marriage b. Marriage brokerage contract c. Restraint of personal liberty d. Restraint of legal proceedings 2. When the performance of a contract becomes impossible, the purpose which the parties had in mind is frustrated. If the purpose becomes impossible because of supervising event, the promisor is excuse from the performance of the contract. This is known a. Doctrine of frustration b. Initial impossibility c. Unlawful consideration d. All of the above 3. One cannot plead doctrine of frustration for ones own in action. a. True b. Partly true c. False d. None of the above 4. A musical hall was agreed to be let out on certain dates, but before those dates the hall was destroyed by fire. The contract becomes void on the ground of a. Impossibility of performance b. Illegality of object c. Unlawful consideration d. All of the above 5. A stationer agreed to supply white paper at a single rate contracted for one year. Later, due to steep increase in market price, contractor stated that he would suffer very heavy loss by supplying at the contracted rates. Under the contract, rates were to be firm except for statutory levies. In this case a. Stationer cannot claim that contract had become commercially impossible of performance b. Stationer can claim that contract had become commercially impossible of performance. c. Stationer can claim revision of contract rates. d. All of the above.

30

6. Unconditional contracts are called----------------contracts. a. Unenforceable b. Contingent c. Quasi d. None of the above 7. The collateral event to a Contingent Contract should be a/an a. Uncertain Event b. Certain Event c. Either (a) or (b) d. Neither (a) or (b) 8. Contracts contingent upon the happening of an certain Future Event cannot be enforce by law a. At all b. Unless and until such an event has happened c. Unless and until such an event has not happened d. At the option of the Promisor 9. A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. The contract can be enforced a. When the ship sinks b. Before the ship sinks. c. When the ship returns d. Only in International Court of Justice 10.A promise to pay B a sum of money if a certain ship returns within a year. The contract a. May be enforced if the ship returns within the year b. Becomes void, if the ship is burnt within the year. c. Both (a) or (b) d. Any one of (a) or (b) is true 11.Contracts contingent upon the non-happening of Uncertain future Event within a fixed time, can be enforced by law a. When time fixed has expired and such event has not happened b. Before expiry of the time fixed, it becomes certain that such event will not happen. c. Either (a) or (b) d. Neither (a)or (b) 12.There can be a volid contract contingent upon the behavior of a person at an unspecified time of future.

31

a. True b. Partly true c. False d. None of the above. 13.A agrees to pay B a sum of money if b marries C. But C marries D. although it is possible that D may die and that C may afterwards marry B, the marriage of B and C a. Will be considered unlawful b. Will be considered impossible c. Will be considered contingent d. Will be considered necessary 14.All Wagering Agreements and contingent contracts are void. a. True b. Partly true c. False d. None of the above 15.Every contingent contract is calid and enforceable until it becomes void a. True b. Partly true c. False d. None of the above 16.Wagering Agreements is valid contract a. Wagering Agreement b. Is a game of chance c. Is a voidable contract d. Is a quasi-contract 17.A is not a game, but contingent upon the happening or nonhappening of a uncertain future event. a. Wagering Agreement b. Quasi contract c. Continous Contract d. Contingent Contract 18. In a Wagering Agreement, the future event is the ..in determining the agreement. a. Primary factor b. Collateral aspect c. Either (a) or (b)

32

d. Both (a) or (b) 19.In a contingent contract, the future event is the..in determining the agreement a. Primary factor b. Collateral aspect c. Either (a) or (b) d. Both (a) or (b) 20.Every contingent contract is necessarily a Wagering agreement. a. True b. Partly true c. False d. None of the above 21.The parties to a contract need not perform when the performance is a. Dispensed with b. Excused under the provisions of any law c. Either (a) or (b) d. Neither (a) or (b) 22.A promises to deliver goods to B on a certain day on payment of Rs. 50,000. A dies before that day. a. The contract becomes void and cannot be enforced against legal representatives of A. b. The contract becomes impossible due to the death of A. c. The contract can be enforced against As representatives and B is bound to pay Rs. 50,000 to As representatives. d. The contract is illegal. 23.Upon an offer of performance by the Promisor, if the Promisee neglects to provide or does not provide reasonable facilities for performance, the promisor is a. Bound to offer performance again b. Excused by such neglect or refusal as to any non-performance caused thereby c. Not entitled to remuneration d. Not entitled to sue the Promisee 24.An offer of performance is known as a. Offer b. Proposal c. Tender

33

d. Acceptance 25.R contracts to deliver 100 bags of Basmati Rice at Ts godown on a specified date. T should bring the whol lot of 100 bags to Ts godown, on the specified date, and offer T an opportunity of inspecting the same to ensure that all 100 bags are there and it is of the same quality as contracted. Such a tender is a. Invalid b. Unenforceable c. Valid d. Void 26.Where the Promisor has offered to perform his promise to the Promisee/any one of Joint Promisee, and the promise refuses to accept his performance a. Promisor is not responsible for non-performance b. Promisor does not lose his rights under the contract c. Both (a) or (b) d. Neither (a) or (b) 27.In which of the following cases, the Promisor is at fault? a. Promise does not give reasonable facilities for performance b. Promisor has disabled himself from performing his promise in entirely c. Promisor has refuse to perform his promise in entirely d. Both (b) and (c) 28.A, a singer enters into a contract with B, the manager of a theatre to sing at his theatre two nights in every week during the next two months and B engages to pay her Rs. 1,00,000 for each nights performance. On the sixth night, a willfully absents himself from the theatre. If A turns up after a week and B without anything allowed A to perform that night. a. B is at liberty to put an end to the contract b. B cannot put an end to the contract but can claim damages from A c. The contract is left at the liberty of A d. The contract is unlawful 29.Only the Promisor should perform the promise personally in the following situations a. Where the parties intendedperformance of the promise by the promisor himself

34

b. Where performance involves the exercise of personal skills by the Promisor c. Where the promise is founded on personal confidence between the parties. d. All of the above. 30.A Promises to deliver 10 bags of wheat to B. In case of As death before performance, As representatives a. Are not bound by the promise b. Shall be bound to deliver the wheat to B. c. Shall be bound to deliver the wheat to B but their liability is limited to the value of the property inherited from the deceased. d. Shall avoid the contract Answers 1 2 3 4 5 B A A A A 6 7 8 9 10 D A B A C 11 12 13 14 15 C A B B A 16 17 18 19 20 B D A B C 21 22 23 24 25 C C B C C 26 27 28 29 30 C D B D C

Chapter-8 Discharge of Contract

1. A , B and C jointly promise to pay D Rs. 3,000. D may compel a. A, B and C jointly to pay him Rs. 3,000 b. A to pay him Rs. 3,000 c. A or B or C to pay him Rs. 3,000 d. A, B and C jointly and separately to pay Rs. 3,000. 2. A partner of the firm is a joint promisor with other partners. He is entitled to claim contribution from other partners when he pays the debt of the firm. a. True b. Partly true c. False d. None of the above.

35

3. K sued some of the Partners of A firm ABC Co., for damages, but then he settled his claim against one of them and agreed to withdraw his claim and suit against that partner. In this case a. K cannot continue the suit against the other Partners. b. The suit could be carried on against rest of the partners. c. K cannot sue the firm at all. d. The partner who is discharged has to file a suit against the firm. 4. X, Y and Z are partners of software business jointly promise to pay Rs. 30,000 to A .Over a period of time Y became insolvent, but his assents are sufficient to pay 1/4th of his debts. Z is compelled to pay the whole a. Z has to bear the entire amount of liability b. X has to bear the entire loss arising out of Ys insolvency c. X and Z have to bear equally, the loss arising out of Ys insolvency. d. Z can recover back the entire amount from A. 5. When time is not the essence of a contract, it is expected that the promisor would perform his promise a. Within a suitable time b. Within a reasonable time c. Within the stipulated time d. Within the shortest time. 6. Reasonable time for performance of a contract is a a. Question of law b. Question of fact c. Mixed question of fact and law d. Question of prudence 7. A promises to deliver goods at Bs warehouse on the 1st January. On that day, A brings the goods Bs warehouse but after the usual hour for closing it and they are not received which one of the following is correct.? a. A has not kept his promise b. A kept his promise as time was not specified. c. A performs his duty as time is not the essence of the contract d. All of these. 8. Where the terms of agreement openly state that a particular act as regards furtherance of a contract has to be done in a particular manner, the parties have no liability to innovate their own manner of performance of contract. a. True b. Partly true

36

c. False d. None of the above 9. B owes A Rs. 50,000. A desires B to pay the amount to As account with C, a banker. B who also banks with C orders the amount to be transferred from his account to As credit and this is done by C. Subsequently before A knows of the transfer, C fails. In this case a. B has not paid A properly b. There has been a good payment by B. c. It is As responsibility to pay B. d. The ase is not covered by the Indian Contract Act. 10.A owes B Rs. 50,000. B accepts some of As goods in reduction of debt. In such case, the delivery of goods a. Operates as a part of the payment b. Does not reduce As liability to B c. Is against the provisions of Contract Act d. Is without any consideration. 11.In contract of sale of movable properties, time is a. Not presumed to be the essence of the contract b. Presumed to be the essence of the contract c. No presumption as to time can be raise d. All of the above 12.A and B contract that A shall hand over his stock in trade to B at a fixed price, and B promises to give security for payment of money. As promise need not be performed until the security is given, because the nature of transaction requires that A should have a security before he delivers up his stock. a. True b. Partly true c. False d. None of the above 13.A and B agree that A shall sell his house to B for Rs. 10 lakhs; but if B is going to use it is a gambling house, he shall sell it for Rs. 50 lakhs. In this case a. Promise of selling the house and paying Rs. 10 lakhs is a valid contract. b. Promise of selling the house where B is to use it for an unlawful purpose, is a void agreement.

37

c. The whole contract is valid d. Both (a) and (b) are correct. 14.The Creditor may also, until he has declared the appropriation to the Debtor, alter the appropriation a. True b. Partly true c. False d. None of the above. 15.Where the Debtor does not expressly intimate or where the circumstances attending on a payment do not indicate intention, the Creditor may apply it to a. Any disputed debt due b. Any lawful debt due c. To the last debt d. To the first debt 16.Where neither the creditor or debtor makes any appropriaction and there are many debts of equal standing in the orders of time, payment shall be applied in discharge of a. The smallest debt b. The largest debt c. Each proportionally d. Any debt to which the amount tallies. 17.A contract can be discharged by performance in which of the following ways? a. Actual performance b. Offer to perform i.e. tender c. Either (a) or (b) d. Both (a) or (b) 18.A agrees upon a promissory note to pay Rs. 50,000 to B, B alters the amount as Rs. 50,000. A is liable to pay a. Rs. 5,000 b. Rs. 50,000 c. Rs. 45,000 d. Not liable at all. 19.A Bill of Exchange which was accepted by K, reaches Ks hands after being negotiated and endorsed through 4 other parties. The contract is a. Void

38

b. Discharged c. Rescinded d. Voidable 8 20.In discharge of contract by novation, the consideration for the new contract is a. The discharge of the Original Contract b. To be separately identified c. To be decided by the parties. d. All of the above. 21.Partial Rescission of a contract occurs where the original contract is varied by a. Rescinding some terms of the contract b. Substituting new terms for those rescinded c. Adding new terms without any rescinding the original terms. d. All of the above 22. Rescission of Voidable Contract may also be revoked and the parties can get back on the original contract. a. True b. Partly true c. False d. None of the above 23.A promises to supply 50 sets of Mens Suit of a particular type to B three months hence. By that time there is no demand for those suits. A and B can rescind the contract. This is called. a. Mutual Rescission b. Breach c. Impossibility of performance d. Revocation of proposal 24.A contracts with B to supply certain goods at Bs warehouse by 15th May and B agrees to pay on delivery. Both of them may agree to modify the term; say, delivery on 18th May and payment one week since delivery. The original contract is discharged by a. Alteration of contract b. Novation of contract c. Remission of contract d. Rescission of contract

39

25. A owes B Rs. 50,000. Due date of payment is 25th March. A pays to B Rs. 30,000 on 25th March, who accepts it in full satisfaction of the debt. The debt discharged on account of a. Remission of part of the performance of a promise b. Extension time of performance c. Acceptance of any other satisfaction instead of performance. d. All of the above 26.No consideration is necessary for a waiver. a. True b. Partly true c. False d. None of the above 27.Novation can be made by a. Change in the terms of the contract b. Change in the contracting parties c. Either (a) or (b) d. Neither (a) or (b) 28.In case of Novation a. Old contract need not be performed b. New contract must be performed c. Both (a) and (b) d. Neither (a) or (b) 29.In case of Alteration a. Old term and conditions need not be performed. b. New terms and conditions must be performed c. Both (a) or (B) d. Neither (a) nor (b) 30.Breaking of an obligation which one is bound to do under a contract is called a. Avoidance b. Breach c. Voidability d. Rescission

40

Answers 1 2 3 4 5 D A B C B 6 7 8 9 10 B A A B A 11 12 13 14 15 B A D A B 16 17 18 19 20 C C A B A 21 22 23 24 25 D A A A A 26 27 28 29 30 A C C C A

Chapter-9 Remedies For Breach Of Contract

1. A agrees to deliver 100 bags of sugar to B at a certain price on 1st September. If a refuses or fails to deliver the goods on 1st September. If A refuses or fails to deliver the goods on 1st September, there is an a. Actual Breach on the due date of performance b. Anticipatory Breach on the due date of performance c. Actual Brach during the course of performance d. Anticipatory Breach during the course of performance 2. Where in an anticipatory breach, the promise opts to put an end to the contract and treat the anticipatory breach as actual breach of contract, the Promise. a. is excused from performing or further performance of his promise. b. has to perform his part of the promise fully c. has to perform his part of the promise fully d. has to consider the contract as illegal. 3. Where in an anticipatory breach, the Promisee opts to put an end to the contract and treat the anticipatory breach as actual breach, the Promisee can sue the Promisor for breach of contract a. Only after the due date of performance b. Immediately without waiting till date of performance. c. (a) or (b) whichever is earlier d. (a) or (b) whichever is later. 4. Incase of anticipatory breach, where the Promisee electsto keep the contract alive, if during the time the contract remains open, some event happens discharging the Promisor from his liability, the Contract becomes a. Illegal

41

b. Void c. Voidable d. Contingent 5. In case of anticipatory breach, where the Promisee opts to keep the contract alive till the actual date of performances, the amount of damages = Price prevailing on the date of performance- contract Price a. True b. Partly true c. False d. None of the above 6. In which of the following situations, specific performance can granted? a. Where it is probable that compensation in money cannot be got for non-performance b. Where there is no exact substitute or alternative to the subject matter of the contract. c. Neither (a) or (b) d. Either (a) or (b) 7. G agreed to but the whole of the electric energy required for his house from a certain company. In this cases, he can be restrained by an injunction from buying electricity from any other person. a. True b. Partly true c. False d. None of the above 8. The Right to sue on Quantum Meruit lies with a. The party at fault i.e. who has not performed his promise. b. The party who is not at fault, i.e. who has performed his party of the contract c. Either (a) or (b) d. Both (a) or (b) 9. Quantum Meruit is applicable i.e. there is a right to sue in case where a. Contract is discovered to be unenforceable b. One party abandons performance c. Act is done without intention of gratuitousness d. All of the above 10.S, a singer, contract with H, manager of a theatre, to sing at his theatre for two nights every week during next two months. H agrees to pay her Rs.

42

1000 for each nights performance. On sixth night, willfully absents herself, and H,. in consequence rescinds the contract. In this case a. H has no obligations to S b. H must pay $ for five nights on which she had performed c. S has no remedy against H. d. The contract is illegal. 11.To a contract to render services, if there is no express or implied intention to provide remuneration; then the party rendering services can sue upon quantum meruit for ..remuneration. a. Substantial b. Adequate c. Reasonable d. Minimum 12.When an indivisible contract for lump sum is completely performed, but badly, the person who has performed, can a. Claim the lumpsum b. Claim the lumpsum less deduction for bad work. c. Not claim any amount at all. d. Perform the work again. 13.A greed to decorate Bs flat for a lump sum of Rs. 3,00,000. A did the work but B complained of faulty workmanship. It costs B Rs. 50,000 to remedy the defect. A can recover from B a. Rs. 3,00,000 b. Rs. 50,00,00 c. Rs. 2,50,000 d. Rs. 3.50,000 14.Damages are also applicable in respect of failure to discharge a Quasicontract, in the same manner as in respect of breach of contracts. a. True b. Partly true c. False d. None of the above 15.When the Seller retains goods after the breach, he can recover from the buyer any further loss if the market falls, also he is liable to have the damages reduced if the market rises. a. True b. Partly true

43

c. False d. None of the above 16.Special Damages can be claimed if the party breaking the contract is made known of the special circumstances at any time after the breach. a. True b. Partly true c. False d. None of the above 17.Damages awarded simply to recognize the right of the party to claim damages for the breach of the contract are called a. General damages b. Special damages c. Vindictive damages d. Nominal damages 18.In case of damages for inconvenience and discomfort, the measure of damages is not affected by the motive or manner of breach. a. True b. Partly True c. False d. None of the above 19.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. Neither (a) nor (b) d. Either (a) or (b) 20.The intention for fixing/ stipulating Penalty is a. Recovery of damages that might arise due to breach b. To ensure performance of a contract c. Either (a) or (b) d. Both (a) or (b) 21.If the compensation to be paid on breach of contract is the genuine preestimate of the prospective damages, it is known as a. Penalty l b. liquidated Damages c. Uniliquidated Damages d. Special Damages

44

22. P contracts to deliver 50 units of a Petrol Engine to Q on a stipulated; failing which he shall pay Rs. 5 lakhs. Neither the price of Engine nor loss on failure of delivery would amount to Rs. 5 lakh. In such case the amount of Rs. 5 lakhs is a a. Exemplary Damages b. Penalty c. Liquidated damages d. Special Damages 23.A contracts with B that if A practices as a surgeon within Calcutta, he will pay Rs. 5,000. Practices as surgeon in Calcutta. Be is entitled to such compensation a. Exceeding Rs. 5,000 b. Not exceeding Rs. 5,000 c. Not exceeding Rs. 5,000 as the Court considers reasonable d. As B may wish. 24.A stipulation for increased interest from the date of default is known as a. Compensation b. Penalty c. Liquidated damages d. Damages 25.In a contract of debt, when a sum is expressed to be payable on a certain date and a further sum is stipulated to be payable in the event of default, then later sum is by way of a. Liquidated Damages b. Penalty c. Special Damages d. Nominal Damages 26.A who is a builder, agrees to erect and finish a house by 1st Jan, so that B may give possession of the house at that time to C to whom B has contracted to let it. A is informed of the contract between B and C. a builds the house so badly that it falls down before 1st January has to be rebuilt by B. As a consequence. B loses the rent which he was to have received from C, and is obliged to make compensation to C for the breach of his contract. A must make compensation to B for a. The cost of rebuilding the house b. The rent lost c. The compensation made to C

45

d. All the above. 27.In case of..the measure of damages depends upon the severity of shock to the sentiments of the Promisee/aggrieved party. a. Nominal Damages b. General Damages c. Vindictive Damages d. Special Damages 28.Nominal Damages may be very small, say, even a rupee. a. True b. Partly true c. False d. None of the above 29.The intention for fixing / stipulating Liquidated Damages is a. Recovery of damages that might arise due to breach. b. To ensure performance of a contract c. Either (A) or (b) d. Both (a) or (b) 30.The essence of Liquidated Damages is that it should be a. Genuine pre-estimate of damage b. More than probable damage c. Less than probable damage d. Any of the above Answers 1 2 3 4 5 A A B B A 6 7 8 9 10 D A B D B 11 12 13 14 15 C B C A C 16 17 18 19 20 C D A D B 21 22 23 24 25 B B C D B 26 27 28 29 30 D C A A A

Chapter-10
1. X leaves his goods at Ys place who consumes them. Y is bound to pay price. Ys act of consumption of goods constitutes an implied promise to pay, under the principle of a. Contractual Obligations b. Quasi contractual Obligations

46

2.

3.

4.

5.

6.

c. Semi contractual Obligations d. Deemed contractual Obligations Quasi Contract rests on the principle of a. Equality / Equity b. There cannot be unjust enrichment of a party at the expenses of another c. Neither (A) not (b) d. Both (a) and (b) Quasi Contracts or Implied Contracts are exceptional kinds of contracts by which a. One party is bound to pay money in consideration of something done or suffered by the other party. b. No contractual relation exists between the parties c. No contract has been made by the parties d. All of these If a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person, with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person. a. True b. Partly true c. False d. None of the above A whom supplies the wife and children of B, a lunatic, with necessaries suitable to their condition in life, is entitled to be reimbursed from a. Bs property b. B personally c. B s wife and children d. The court A person, who is interested in the payment of money and pays such money, which another is bond by law to pay, is entitled to be reimbursed by the other. a. True b. Partly true c. False d. None of the above

47

7. To claim reimbursement of money paid on behalf of another person, which of the following is not required? a. There should be some legal or other coercive proves compelling the payment. b. Original liability should be of another person c. Payment must be made to their party to whom another party was liable. d. The payment must be voluntary 8. To attract obligation for enjoying benefit of non-gratuitous act, which of the following are required? a. The thing or act must be one lawfully. b. Intention must be to do it non-gratuitously. c. Person for whom the act is done must have enjoyed its benefit d. All of the above 9. A saves Bs property from fire. A is entitled to compensation from B, if the circumstances show that A intended to act a. Gratuitously b. Non-gratuitously c. Either (A) nor (B) d. Neither (a) nor (b) 10.A person who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as a a. BAILEE b. True Owner c. Thief d. Trespasser 11.A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it. a. True b. Partly true c. False d. None of the above 12.A and B jointly owe Rs. 10 Lakhs to C. A alone pays the amount to C and B, not knowin this fact pays Rs. 10 Lakhs over again to C. a. C is bound to repay the amount to B b. C is bound to repay the amount to B and A jointly c. C is bound to repay the amount to A and B equally

48

d. C is not bound to repay the amount to B. 13. Damages under section 73 of Indian Contract Act are a. Compensatory b. Liquidated c. Penal d. Collateral 14.are awarded with a view to punish the defendant, and not soley with the idea of awarding compensation to the plaintiff. a. Special Damages b. Ordinary Damages c. Nominal Damages d. Exemplary or Vindictive Damages 15.Hadley v/s Baxendale case is a leading case on a. Breach of Implied Term b. Anticipatory Breach c. Remoteness of Damages d. Bilateral Mistake of Fact 16. In case the contact is divisible, and one party has enjoyed the benefit of part performance, then, the other party may sue on quantum meruit. a. True b. Partly true c. False d. None of the above 17.Quantum meruit means a. A non-gratutious promise b. As implied promise c. Either (a) or (b) d. Neither (a) nor (b) 18.In which of the following situations, Specific Performance is not granted? a. Where monetary compensation is an adequate relief. b. Where the contract is of a personal nature c. Either (A) or (B) d. Neither (A) nor (b) 19...means an order of the Court restraining a person from doing what he promised not to do. a. Quantum Meruit b. Rescission

49

c. Injunction d. Specific Performance 20.In which of the following situations, specific performance can be granted? a. Where monetary compensation is not an adequate relief. b. Where there is no standard for ascertaining the actual damage c. Either (a) or (b) d. Neither (a) or (b) 21.In case of anticipatory breach, the promise opts to put an end to the contract and treat the anticipatory breach as actual breach, the amount of damages = Price prevailing as on the date of refusal to perform Contract Price. a. True b. Partly true c. False d. None of the above 22.A promise may dispense with the performance of a promise a. Wholly b. in part c. false d. neither (a) nor (b) 23.a Creditor agrees with his Debtor and a third party to accept that third as his Debtor. The contract is discharged by a. performer b. alteration c. waiver d. remission 24.in case of alteration, there is a change in the parties and new parties may be included. a. True b. Partly true c. False d. None of the above 25.A contracts with B to deliver 90 kg. of material X if 15th June. B may rescind the contract. The contract is discharged due to a. Mutual decision b. A failure to perform c. Impossibility of performance

50

d. Revocation of proposal 26.A bill of exchange which was accepted by K, reaches Ks hands after being negotiated and endorsed through 4 other parties. The contract is discharged due to a. Merging of inferior right in a superior right b. Debt barred by law of limitation c. Rights and liabilities vesting in the same person d. Breach of contract 27.A owes B totally Rs. 25,000. He sends a cheque for Rs. 10,000 stating that it shall be appropriated towards he first sum of Rs. 10,000 he took from B. B shall appropriate it a. Towards any debt due from A b. Towards any time barred debt due from A c. Towards that debt as indicated by A. d. Towards that debt as indicated by A. 28.A and B contract that B shall build a house for A for Rs. 9 Lakhs. B is ready and willing to construct the house, but A prevents him from doing so. In this case a. B can opt to rescind the contract b. B is eintitled to recover compensation for any loss suffered by him c. Either (a) or (b) d. Both (a) and (b) 29.If a contract expressly provides for the order of performances of reciprocal promises, the promises shall be performed a. In the order mentioned and not otherwise b. In any reasonable order c. In any appropriate order d. In any order what so ever 30.Where a witness who has received summons to appear at a trial, a promise to pay him anything beyond his expenses is a. Void since consideration is illusory b. Valid c. Unlawful d. In restraint of legal proceedings. Answers

51

1 2 3 4 5

B D D A A

6 7 8 9 10

A D D B A

11 12 13 14 15

A A A D C

16 17 18 19 20

A C C C C

21 22 23 24 25

A C D C B

26 27 28 29 30

C D D A A