IMTC631 - Legal & Regulatory Environment of Business

 
 1. `Misrepresentation', means and includes 

 The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true,
though he believes it to be true.

 Any breach of duty which, without intent to deceive, gains an advantage of the person committing it, or any one claiming
under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him.

 Causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the
subject of the agreement 

 All of the above

2. A contract stands discharged by 

 Performance

 Substituted agreement 

 Impossibility of performance 

 All of the above

3. The expression 'Nemo datquod non-habet' means

 Let the buyer become 

 only the owner of the goods can transfer a title thereto 

 one cannot give what one does not have 

 Condition as to little may be negative by express terms

4. Undue influence cannot be presumed between 

 Guardian and ward 

 Mother and daughter

 Both (a) and (b) 

 Doctor and patient.

5. The right not to perform a contractual obligation is known as 

 Injunction 

 Rescission

 Specific performance 

 Quantum meruit

6. Which of the following is not an essential element of a valid contract? 

 Offer and acceptance

 Free consent and consideration

  Lawful object

 Performance

7. Which of the following is irrelevant in case of a contract of personal nature? 

 Damages 

 Rescission 

 Injunction 

 Specific performance

8. Which of the following clauses is not mandatory as regards consideration? 

 Consideration must move at the desire of the promisor 

 Consideration may be past, present, or future

 Consideration must be legal 

 Consideration must be adequate

9. A contract of guarantee is invalid 

 When the guarantee has been obtained by misrepresentation 

 When guarantee has been obtained by concealment of material facts 

 When co-surety (if any) fails to join the surety

 In all the above cases

10. Which among the following persons are not competent to contract? 

 Minors 

 Persons of an unsound mind 

 Persons disqualified from contracting 

 All the above.

11. A finder of lost goods has a right to sell the goods found by him 

 Where the owner cannot, with reasonable diligence, be found and if found, refuses to pay the lawful charges of
finder of goods 

 The goods are in danger of perishing or of losing the greater part of their value 

 When the lawful charges of the finder for preservation and finding out the owner amounts to two-thirds of the
value of the goods 

 In all the above cases

12. The exceptions arising under judicial interpretation of Section 27 do not include 

 Trade combinations 

 Exclusive dealing agreements 

  Sale of goodwill 

 Service agreements

13. Which of the following transactions does not fall in the ambit of bailment? 

 Delivering goods for carriage 

 Delivering goods for repair with or without remuneration 

 Placing of ornaments in a bank locker 

 Delivering goods to a creditor to serve as security of loan

14. which is allowed to remain open for acceptance over a period of time is known as 

 General offer 

 Specific offer 

 Standing offer 

 Counter-offer

15. The term nuchtm pactum implies: 

 Something of value 

 Bare promise 

 Inadequacy of consideration 

 Stranger to consideration

16. Who among the following can demand performance? 

 Promisee 

 Legal representative  

 Joint promisee 

 All of the above

17. Which of the following rule does not apply to a valid offer

 The offer must be certain, definite, and not vague 

 The offer must be communicated 

 The offer must be unconditional

18. A minor was facing a criminal prosecution for smuggling drugs. He borrowed '5000 to hire an advocate to defend him
in the court of law. What is the remedy available to the creditor if the minor does not return the money on his own? 

 The creditor cannot recover the amount from the minor since a contract with a minor is void ab initio. 

 The amount of loan can be recovered from minor's property since it is a loan for necessaries.
  The creditor can recover his amount of loan from the minor on his (minor's) attaining the age of majority. 

 The creditor can recover his amount from the parent or guardian of the minor.

19. Dealings with commercial sex workers have already been regarded as 

 Immoral 

 Opposed to public policy

 Forbidden by law 

 Fraudulent

20. The relationship of principal and agent may be created by 

 Express or implied offer

 Ratification 

 Operation 

 Any of the above

21. An agreement that provides for release or forfeiture of rights if no suit is brought within the time stipulated in the
agreement is 

 Valid 

 Void 

 Void and illegal 

 Enforceable

22. A continuing guarantee may be revoked 

 By a notice of revocation by the surety 

 By death of the surety

 In the same manner in which the surety is discharged

 By any of the above-mentioned way

23. The doctrine of 'Constructive consideration' implies: 

 As long as there is a consideration for a promise, it is immaterial who has finished it.

 Consideration must be real and not illusory.

 Consideration must be legal. 

 Consideration must move at the desire of the promisor.

24. An act or a promise is forbidden by law when

 It is punishable under the criminal law of the country or is prohibited by special legislation derived from the
legislature 
  It defeats the provision of any law

 It is fraudulent

 It involves or implies injury to person or property of another.

25. The term 'wholesomeness' in relation to sale of goods means

 that the goods are fit for human consumption

 that the goods are of merchantable quality

 that the goods are suitable for a particular purpose

 that the goods are of merchantable quality as well as suitable for a particular purpose

26. Which of the following is not a basic requirement to form a valid contract of sale?

 Two parties

 Transfer of property in goods 

 Consideration in price

 Delivery of goods

27. Agency is irrevocable

 Where the agent has an interest in the property that forms the subject matter of the agency 

 Where the agent has partly exercised his authority

 Where the agent has incurred a personal liability

 In all the above cases

28. The party whose consent was caused by misrepresentation loses the right to rescind the contract

 If he could discover the truth with ordinary diligence 

 If his consent is not induced by misrepresentation

 In both (a) and (b) cases

 In none of the above cases

29. The crucial test of agency is that

 A person possessing capacity to contract may lawfully do by himself or he may get it done by another 

 He who acts through an agent is himself acting

 Acts of the agent bind the principal

 The principal is not responsible if the agent exceeds his authority

30. Which of the following is not a void agreement?

 Agreement in restraint of marriage 

 Agreement in restraint of trade

 Agreement in restraint of legal proceeding 

 Service rendered without mandate

  Set-2

1. The right not to perform a contractual obligation is known as

 Injunction

 Rescission

 Specific performance 

 Quantum meruit

2. Which of the following is not a basic requirement to form a valid contract of sale?

 Two parties

 Transfer of property in goods 

 Consideration in price

 Delivery of goods

3. A substituted agreement embraces

 Novation and rescission only 

 Alteration and remission only 

 Waiver alone

 All of the above

4. An offer which is allowed to remain open for acceptance over a period of time is known as

 General offer 

 Specific offer 

 Standing offer 

 Counter-offer

5. Implied agency includes

 Agency by estoppel 

 Agency by holding out 

 Agency by necessity 

 All of the above

6. Consideration and object of an agreement are unlawful if

 It is forbidden by law

 It defeats the provisions of any law or it is fraudulent

  It involves or implies injury to the person or property of another or the court regards it as immoral or opposed to
public policy

 In all the above cases

7. Which is the odd one out?

 Specific goods 

 Future goods 

 Ascertained  goods 

 Unascertained  goods

8. A minor can be

 A promisor 

 A promisee

 Both (a) or (b)

 None of the above

9. A void contract is

 Not enforceable at all

 Enforceable at the option of either party

 Enforceable at the option of the aggrieved party only

 Enforceable at the option of the party who is not aggrieved

10. In which of the following cases the rule 'no consideration no contract' does not apply?

 Agreements in writing 

 Promise to compensate 

 Creation of an agency 

 In all of the above cases

11. Which of the following is not a void agreement?

 Agreement in restraint of marriage 

 Agreement in restraint of trade

 Agreement in restraint of legal proceeding 

 Service rendered without mandate

12. Against the principle debtor the surety has,

 Right of suborganization
  Right of indemnity

 Both(a) and (b)

 None 

13. An illegal agreement taints and renders all the incidental transactions

 Void

 Illegal

 Void ab initio 

 Enforceable

14. Which of the following is one of the exceptions to wagering agreements

 Lottery

 Crossword puzzle

 Athletic competitions

 Competitive event where prize depends upon chance

15. Dealings with commercial sex workers have already been regarded as

 Immoral

 Opposed to public policy 

 Forbidden by law

 Fraudulent

16. To make an effective acceptance, which of the following requirements must be fulfilled?

 Acceptance must be absolute and unqualified

 Acceptance must be communicated to the offeror 

 Acceptance must be in the prescribed manner

 All of the above

17. Which of the following is mistaken in respect of a contract of sale?

 There may be immediate delivery of goods

 The delivery of goods or payment of price or both may be made at some future date 

 There may be immediate delivery of goods but price to be paid at some future date 

 None of the above

18. `Misrepresentation', means and includes

  The positive assertion, in a manner not warranted by the information of the person making it, of that which is not
true, though 

 U he believes it to be true.

 Any breach of duty which, without intent to deceive, gains an advantage of the person committing it, or any one
claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him.

 Causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is
the subject.

19. Identical offers made by two parties to each other, in ignorance of each other's offer are known as

 Counter offer

 Cross-offers

 Standing offers

 None of the above

20. Undue influence cannot be presumed between

 Guardian and ward 

 Mother and daughter 

 Both (a) and (b)

 Doctor and patient

21. Identical offers made by two parties to each other, in ignorance of each other's offer are known as?

 Counter offer 

 Cross offer

 Standing offer

 None of the above

22. Where a party restrained from beach of a negative term of a contract, this refers to

 Resuccion

 Injection

 Quantum meriuts

 Damage

23. Which of the following does not fall under the "head of public policy"?

 Training with enemy

 Illegal cohabitation

 Marriage breakage agreements

 Trafficking in public office

24. The doctrine of “Constructive consideration" implies 

 As long as there is a consideration for a promise 

 Consideration must be real and not illusory

 Consideration must be legal 

 Consideration as must move desired to 

25.  In which of the following cases the agreement is void ab initio?

 Coercion 

 Fraud

 Bilateral Mistake

 Misrepresentation

26. A valid contract becomes a void contract due to

 Supervening impossibility

 Change of low 

 Repudiation of a voidable contract 

 All

27. Which of the following is not essential element of valid contract?

 Offer and acceptance

 Free consent and consideration

 Lawful object 

 Performance

28. The doctrine of caveat emptor does not employee.

 Where the sellers make a false or misrepresentation or fraud

 Where the seller conceals a defect in the good.

 In case of implied condition and warranties

 In the above.

29. The expression 'Nem det quad non habet' means

 Let the buyer beware

 Only the owner of the goods can transfer title thereto

 One cannot give what one does not have

  Condition as to little may be negative by express time

30. A contract stands is discharged by:

 Performance

 Substituted agreement 

 Impossibly of performance

 All of the above

31. The term "Wholesomeness" in relation to sale of goods mean.

1. that the good fit for human consumption.

2. That are good are of merchantable quality

3. That are the goods are suitable for particular purpose

4. That the good are merchantable quality as well as suitable for a particular purpose
1. In case of joint promise, a promise can compel-
a) Till the joint promisors to perform
b) Any one of them to perform
c) Some of them to perform
d) Any of the above
2. Contract to marry a person shall be performed by:
a) A third person
b) Promisor himself
c) Representative of the promisor
d) None of the above
3. A contract can be discharged-
a) By operation of law
b) By lapse of time
c) By performance
d) By all of the above
4. _______means termination of contract.
a) Rescission
b) Injunction
c) Specific performance
d) Quantum meruit
5. Where there is breach of contract, special damages are awarded only when:
a) There are special circumstances
b) There is special loss
c) There is notice of the likely special loss
d) In all cases
6. Vindictive damages are awarded-
a) For wrongful dishonor of cheque by a banker
b) For a breach of promise to marry
c) Neither (a) nor (b)
d) Either (a) or (b)
7. In which of the following situations, specific performance can be granted?
a) When there is no exact substitute or alternative to the subject matter of the contract
b) When it is probable that compensation in money cannot equate neon – performance
c) (a) or (b)
d) (a) and (b)
8. Which of the following statement is incorrect?
a) Ordinary damages are recoverable
b) Special damages are recoverable only if the parties knew about them
c) Remote or indirect damages are not recoverable
d) None of these statements is incorrect
9. In case of reciprocal promise, first to do things which are legal are _____ and second to do things which are illegal
are_____.
a) Valid, void
b) Void, voidable
c) Valid, illegal
d) None
10. Promissory estoppel is sometimes spoken of as a substitute for-
a) Novation
b) Quasi contract
c) Consideration
d) Coercion
11. Injunction may be-
a) Temporary
b) Perpetual
c) (a) or (b)
d) None of these
12. In case of anticipatory breach, the agreed party may be treated -
a) As operative and wait till the time for performance arrive
b) As discharged and bring an immediate action for damages
c) Exercise either (a) or (b)
d) Only option (a) is available
13. Actual breach may be-
a) During the course of performance
b) On the date of performance
c) Both (a) and (b)
d) Either (a) and (b)
14. Specific performance may be ordered by court if-
a) There is no standard for ascertain actual damage
b) Pecuniary compensation is not adequate relief
c) The act is done wholly one part of trust
d) (a) or (b) or (c)
15. Performance of offer to the contract is provided in the Indian Contract Act, 1872 in-
a) Section 35
b) Section 36
 c) Section 37
d) Section 40
16. ‘A’ buys a TV set from ‘B’. ‘B’ agrees to deliver the set to ’A’. After some time during the day, ‘B’ sells the same to ‘C’ at a
higher price. Decide title of the good.
a) ‘C’ gets a good title
b) ‘A’ gets a good title
c) Nobody gets a good title
d) None of these
17. Novation may take place between-
a) Different parties
b) The same parties
c) Whether (a) or (b)
d) Both (a) or (b)
18. Discharge of contracts by implied consent does not include-
a) Novations
b) Actual performance
c) Merger
d) Waiver
19. A contract is discharged by alteration which means the-
a) Acceptance of closer performance
b) Cancellation of the existing contract
c) Change in one or more terms of contract
d) Abandonment of rights by a party
20. A change in nature of obligation of contract known as-
a) Alteration
b) Repudiation
c) Material Alteration
d) Rescission
21. ‘A’ as surety ‘B’, makes a bond jointly with ‘B’, to ‘C’ , to secure to loan from ‘C’ to ‘B’ afterwards ‘C’ obtains from ‘B’ a
further security for the same debt, subsequently, ‘C’ gives up the further security decide.
a) A is discharged
b) A is not discharged
c) B cannot file a suit
d) None of these
Breach of Contract
22. The breach of contract means the:
a) Performance of contract by both the parties
b) Failure of a party to perform his obligations
c) Payment of compensation due to non-performance
d) Postponement of the performance of contract
23. The breach of contract occurs when a party-
a) Fails to perform his obligations on due date
b) Declares not to perform his obligation on due date
c) Both (a) or (b)
d) None of these
24. The breach of contract may be:
a) Actual breach only
b) Anticipatory breach only
c) Either (a) or (b)
d) None of these
25. When on the due date of performance or during the performance, a party fails to perform his obligation, it is known as:
a) Actual breach of contract
b) Anticipatory breach of contract
c) Abandonment of contract
d) Cancellation of contract
26. When prior to the due date of performance, the promisor absolutely-
a) Actual breach of contract
b) Cancellation of contract
c) Anticipatory breach of contract
d) Abandonment of contract
Breach of Contract: A Mode of Discharge of Contract
27. A breach of contract:
a) Discharges the other party from performing his obligations
b) Does not discharge the other party from performance
c) Gives one more chance to defaulting party to perform the contract
d) Is not recognized under the Indian law
28. Anticipatory breach is the repudiation of the contract-
a) On due date of performance
b) During the performance
c) Before the due date of performance
d) Both (a) and (b)
29. A contracted to supply 100 bags of rice to B on 30th December, 2006. Before the due date of performance, A informed B
that he will not supply any rice to B as contracted. In this case,
a) There is anticipatory breach of contract
b) B may immediately treat the contract cancelled
 c) Both of these
d) None of these
30. The doctrine of anticipatory breach has been incorporated in:
a) Section 37
b) Section 39
c) Section 41
d) Section 43
31. In case of anticipatory breach of contract, the aggrieved party may treat the contract as-
a) Discharged and bring an immediate action for damages
b) Operative and wait till the time for performance arrives
c) Exercise either option (a) or (b)
d) Only option (a) is available
32. An anticipatory breach of contract does not give any right to claim compensation.
a) True
b) False
Remedies for Breach of Contract
33. In case of breach of contract, which of the following remedy is available to aggrieved party?
a) Suit for rescission
b) Suit for damages
c) Suit for specific performances
d) All of these
34. When a party rightfully rescinds the contract, he is-
a) Discharged from all obligations under the contract
b) Entitled to receive compensation, from the defaulting party, for damages due to non-performance
c) Only (a) as there is no provision for compensation
d) Both (a) and (b) as section 75 makes provision for damages
35. A party entitled to rescind the contract loses the remedy, where-
a) He has ratified the contract
b) Third party has acquired right in good faith
c) Contract is not separable and rescission is sought of a part only
d) All of these
36. The court may grant rescission where the contract is:
a) Void
b) Uncertain
c) Voidable at the option of plaintiff
d) Voidable at the option of defendant
37. In case of breach of contract, how an aggrieved party can recover compensation from defaulting party?
a) By suit for injunction
b) By suit for damages
c) By suit for specific performance
d) None of these
38. In case of breach of contract, the remedies of way of suit for quantum meruit and suit for injunction are also available to
the aggrieved party.
a) True
b) False
39. Damages for breach of contract, are awarded by courts to-
a) Prevent the breach of contract
b) Punish the liable party
c) Compensate the aggrieved party
d) Discourage private contract
40. Quantum meruit means:
a) As much as is earned
b) As much as is paid
c) Non-Gratuitous promise
d) Liquidated damages
41. Where a party is entitled to claim compensation to the work done by him, it is possible by way of:
a) Suit for damages
b) Suit for injunction
c) Suit for quantum meruit
d) None of these
42. The right to claim a quantum meruit is available to the party in addition to the right to claim damages in case of breach of
contract.
a) True
b) False
43. A was engaged by B to write some material to be published in installments in a weekly magazine of B, after a few issues
of the magazine, it was discounted by B. In this case, A recover compensation from B for the work done?
a) Yes
b) No
44. The claim on quantum meruit can always be filed by a party who is not at fault.
a) True, as the defaulting party has no claim no quantum meruit.
b) False, as the defaulting party may also sue on quantum merit for work done if contract is divisible and the other party has accepted
work done.
45. The specific performance of a contract may be ordered by the council where the damages-
a) Are nominal only
b) Are adequate remedy
 c) Can be ascertained
d) Are not adequate remedy
46. Ordering the relief by way of specific performance of contract is-
a) At the discretion of contract
b) Right of a person and the court must give it
c) Provided in the Indian contract act
d) Both (b) and (c)
47. In which of the following cases specific performance of contracts is not allowed by courts?
a) Where compensation in terms of money is an adequate relief
b) Where contract is of personal nature i.e., depends upon personal skill or
qualifications of parties
c) Where the contract is not fair and just
d) All of these
48. In which of the following cases specific performance can be allowed?
a) Contract to sing a song
b) Contract to paint a picture
c) Contract to enter into partnership at will
d) None of these
49. A court order for restraining a person from doing something which he promised not to do can be obtained by filling a
suit for-
a) Injunction
b) Specific performance
c) Quantum meruit
d) None of these
Damages for Breach of Contract
50. It is the right of an aggrieved party to claim damages from the defaulting party for the breach of contract.
a) True
b) False
51. The damages for breach of contract are awarded by the courts in order to-
a) Punish the liable party
b) Compensate the aggrieved party
c) Prevent breach of contract
d) Discourage private contracts
52. Ordinary damages are those damages, which are-
a) Agreed at the time of contract
b) Awarded by way of Punishment
c) Natural and probable consequence of the breach
d) Deposited in the court immediately on breach
53. Special damages are those damages which are-
a) Due to some special or unusual circumstances
b) Awarded by way of punishment
c) Agreed at the time of contract
d) Deposited in the court immediately
54. Law governing the payment of damages is based on the leading English case:
a) Hadley. V. Sullivan
b) Hobbs V. London Rail Co.
c) Hadley v Baxendale
d) None of these
55. Which of the following statements is incorrect?
a) Ordinary damages are recoverable
b) Special damages are recoverable only if the parties knew about them
c) Remote or indirect damages are not recoverable
d) All of these
56. Special damages i.e., the damages which arise due to some special or unusual circumstances-
a) Are not recoverable altogether
b) Are illegal being punitive in nature
c) Cannot be claimed as a matter of right
d) Can be claimed as a matter of right
57. Nominal damages are very small in amount and are awarded-
a) To punish the defaulting party
b) Simply to establish party’s right to claim damages
c) To discourage breach of contract
d) Only to influential parties
58. Law governing the damages is based on the leading English case Hadley v Baxendale (1854) 9 Ex. 341, and is
incorporated in-
a) Section 73
b) Section 74
c) Section 75
d) None of these
59. Remote or indirect damages are not due to natural and probable consequence of the breach. These are-
a) Recoverable
b) Not recoverable
c) Illegal
d) Both (b) and (c)
60. Generally, which of the following damages are not recoverable?
a) Ordinary damages
b) Special damages
c) Remote damages
d) Nominal damages
61. Exemplary or vindictive damages are punitive in nature and as a rule these are not awarded by the courts.
a) True
b) False
62. In case of breach of contract for the sale of goods, the measure of damages is the difference between the contract price
and merit price.
a) Enforcement of contract
b) Breach
c) Making of contract
d) None of these
63. The damages to be payable are determined keeping in view the loss suffered on the date of-
a) Making the contract
b) Breach
c) Enforcement of right
d) None of these
64. As a general rule, the exemplary damages are not allowed. However, the court may award these damages in case of -
a) Breach of promise to marry
b) Wrongful dishonor of customer’s cheque by banker
c) Breach of contract to sell superior quality goods
d) Both (a) and (b)
65. Where a banker wrongfully dishonors a customer’s cheque, the court may award-
a) Ordinary damages
b) Special damages
c) Exemplary damages
d) None of these
66. An amount of compensation fixed payable in case of breach and which is fair and genuine pre-estimate of probable
damages is known as:
a) Liquidated damages
b) Nominal damages
c) Special damages
d) Penalty
67. An amount of compensation fixed for breach, which is disproportionate to the damages which may result on breach, is
known as-
a) Exemplary damages
b) Special damages
c) Liquidated damages
d) Penalty
68. A stipulation which provides that an increased rate of interest will be paid from the date of default is regarded as-
a) Remote damages
b) Increased damages
c) Penalty
d) None of these
69. A stipulation which provides that in case of default, the money repaid shall be double the amount barrowed, is regarded
as-
a) Liquidated claim
b) Penalty
c) Increased liability
d) None of these
70. A stipulation which provides that in case of default the whole of the barrowed money shall become due is:
a) Penalty
b) Not penalty
c) Punitive damages
d) None of these
71. Which of the following statements is incorrect?
a) In both the cases of ‘liquidated damages’ and ‘penalty’, reasonable
compensation is allowed by the courts.
b) The amount fixed, whether named liquidated damages or penalty,
determines the maximum liability in case of breach
c) The courts generally reduce the amount if it appears by way of partly
d) Where the amount appears to be penalty, nothing is allowed by the courts
as penalty is not enforceable
72. The ‘earnest money’ is a part of purchase price paid in advance and is liable to be forfeited, where as the security deposit
is refundable and not liable to be forfeited.
a) True, as it is the legal position.
b) False, as both can be forfeited.
73. Which one of the following is relevant in normal circumstances in determining the amount of damages from breach of
contract?
a) Normally expected loss
b) Difference between market price and contract price
c) Sudden closure price of production
d) Additional expenses for production the goods
74. A party does not suffer any loss in case of breach of contracts is entitled to-
a) Statutory damages
b) Liquidated damages
c) Exemplary damages
d) Nominal damages
75. Specific performance may be ordered by the court when-
a) Damages are an adequate remedy
b) Damages are not an adequate remedy
c) Defaulting party is not ready to pay damages
d) Contract is not voidable
76. Damages which are aggrieved party claims besides general damages for any loss he has suffered owing to special
circumstances known to both the parties at the time of singing the contract are known as:
a) General damages
b) Special damages
c) Nominal damages
d) Vindictive damages
77. The remedies open to a person suffering from breach of contract is-
a) Suit for damages
b) Suit for injunction
c) Suit upon quantum meruit
d) All of these
78. ________ damages are measured on the basis of extent of shock to the sentiments of promisee.
a) Vindictive
b) Nominal
c) Loss of reputation
d) Discomfort
79. In case of anticipatory breach, where the promise acts to 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) Voidable
b) Illegal
c) Contingent
d) Void
80. P contracts with Q to deliver possession of a house under construction within a period of six months. Failing which he
would pay the monthly rental of Q. The monthly rental payable by P for Q is in the nature of-
a) Penalty
b) Liquidated damages
c) Exemplary damages
d) Special damages
81. N chartered M’s ship and agreed to load it with a cargo arrives within 50 days. N was unable to supply cargo but M
continued to demand it. Meanwhile war broke out, rendering the performance impossible. In such a case-
a) M cannot sue for damages
b) Contract is discharged
c) Neither (a) nor (b)
d) Both (a) and (b)
82. In which of the following cases a claim is not enforceable on the ground of quantum meruit?
a) A is engaged by B to write a book to be published in installments in
a weekly magazine. The magazine is abandoned after a few issues.
b) A is employed as a managing director in a company. After he renders
service for some time, it is found that the directors were not qualified to
appoint him as such.
c) A undertakes to build a house for B for Rs.25,000, but after having done
half the work he abandons the contract. B afterwards completes the house.
d) A decorates S flat and fits a wardrobe and a book. Case for U lump sum
of Rs.15,000. The work is done but B complaints of faulty workmanship
83. G a film star agreed to act exclusively for Y, a film producer, for one year. During the year, she contracted to act for some
other producer. In this case, Y-
a) Can restrain G by the injunction
b) Cannot sue G at all
c) Has to produce the film with other actors only
d) Cannot restrain G by an injunction
84. E contract to marry F. Before the agreed date of marriage, E marries K. Here F is entitled to sue E for-
a) Anticipatory breach in an express manner
b) Actual breach in an express manner
c) Anticipatory breach in an implied manner
d) Actual breach in an implied manner

KEY
1. d 2. b 3. d 4. a 5. c 6. d 7. d 8. d 9. a 10. c
11. c 12. c 13. b 14. d 15. c 16. a 17. b 18. b 19. c 20. c
21. a 22. b 23. c 24. c 25. c 26. c 27. a 28. c 29. c 30. b
31. c 32. b 33. d 34. d 35. d 36. c 37. b 38. a 39. c 40. a
41. c 42. a 43. a 44. b 45. d 46. a 47. d 48. d 49. a 50. a
51. b 52. c 53. a 54. c 55. d 56. c 57. b 58. a 59. b 60. c
61. a 62. b 63. b 64. d 65. c 66. a 67. d 68. c 69. b 70. b
71. d 72. a 73. b 74. d 75. b 76. b 77. d 78. a 79. d 80. b
81. d 82. c 83. a 84. c
Assignment-1
1. Agency is irrevocable
 Where the agent has an interest in the property that forms the subject matter of the agency 
 Where the agent has partly exercised his authority

 Where the agent has incurred a personal liability

 In all the above cases

2. The party whose consent was caused by misrepresentation loses the right to rescind the contract
 If he could discover the truth with ordinary diligence 
 If his consent is not induced by misrepresentation

 In both (a) and (b) cases

 In none of the above cases

3. The crucial test of agency is that

 A person possessing capacity to contract may lawfully do by himself or he may get it done by another 

 He who acts through an agent is himself acting

 Acts of the agent bind the principal

 The principal is not responsible if the agent exceeds his authority

4. A substituted agreement embraces

 Novation and rescission only 

 Alteration and remission only 

 Waiver alone

 All of the above

5. Which of the following rule does not apply to a valid offer

 The offer must be certain, definite, and not vague 

 The offer must be communicated 

 The offer must be unconditional

6. Specific performance is not granted when

 monetary compensation is adequate remedy

 It will be inequitable to either party

 The court cannot supervise its execution

 All of these

7. Discharge of a contract’ due to ‘material alteration falls’ under

 Novation

 Operation of law

 Substituted Agreement

 Remission

8. When a transaction is simply void but not illegal the collateral transaction would be

 Void

 Illegal

 Void and Illegal

 Valid

9. Which of the following is not an implied condition in contract of sale?

 Condition as to quality & Fitness

 Condition As To Merchantability quality

 Conditions As To Wholesomeness

 Condition as to free from Encumbrances

10. To avail relief under condition as to fitness the condition(s) to be satisfied is/are

 The exact purpose must have disclosed

 The seller must have a dealer in such goods

 The Buyer must have relied upon the seller's skill or judgement

 All of these.

11. The bailer is duty bound to compensate bailee for necessary expenses incurred by the later in preserving the
goods bailed in the case of

 Gratuitous Bailment

 Non-gratuitous Bailment

 Both Gratuitous Bailment and Non-gratuitous Bailment

 None of these

12. The relationship of principal and agent may be created by 

 Express or implied offer

 Ratification 

 Operation 

 Any of the above

13. An agent can retain from any sums received on account of the principal for the following payments?
  All of these

14. A contract stands discharged by

1. Performance

2. Substituted agreement

3. Impossibility of performance

4. All of the above

15. An offer which is allowed to remain open for acceptance over a period of time is known as

 General offer 

 Specific offer 

 Standing offer 

 Counter-offer

16. A minor was facing a criminal prosecution for smuggling drugs. He borrowed '5000 to hire an advocate to defend
him in the court of law. What is the remedy available to the creditor if the minor does not return the money on his
own? 

 The creditor cannot recover the amount from the minor since a contract with a minor is void ab initio. 

 The amount of loan can be recovered from minor's property since it is a loan for necessaries.

 The creditor can recover his amount of loan from the minor on his (minor's) attaining the age of majority. 

 The creditor can recover his amount from the parent or guardian of the minor.

17. For a contract of sale to be void on ground of destruction of subject matter. Which of thefollowing conditions
must be satisfied?

 All of these

18. Which among the following persons are not competent to contract? 
 Minors 

 Persons of an unsound mind 

 Persons disqualified from contracting 

 All the above.

19. The exceptions arising under judicial interpretation of Section 27 do not include 

 Trade combinations 

 Exclusive dealing agreements 

 Sale of goodwill 

 Service agreements
20. Who among the following are usually regarded as persons of unsound mind?

 Lunatics

 Idiots

 Intoxicated persons

 All of the above

21. Dealings with commercial sex workers have already been regarded as 
 Immoral 

 Opposed to public policy

 Forbidden by law

 Fraudulent

22. An illegal agreement taints and renders all the incidental transactions

 Void

 Illegal

 Void ab initio 

 Enforceable

23. Which is the odd one out?

 Specific goods 

 Future goods 

 Ascertained  goods

 Unascertained  goods

24. Which of the following transactions does not fall in the ambit of bailment? 

 Delivering goods for carriage 

 Delivering goods for repair with or without remuneration 

 Placing of ornaments in a bank locker 

 Delivering goods to a creditor to serve as security of loan

25. A person is deemed to be in a position to dominate the will of another where

 He holds a real or apparent relation to the other
 He stands in a fiduciary relation to the other
 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
 All of these

26. An agreement that provides for release or forfeiture of rights if no suit is brought within the time stipulated in the
agreement is
 Valid 
 Void 

 Void and illegal

 Enforceable
27. Which of the following contracts can be enforced against a minor
 Contract for the benefit of a minor
 contract for supply of necessary
 Both A & B
 None of the above

28. None of the above Consideration and object of an agreement are unlawful if

 It is forbidden by law

 It defeats the provisions of any law or it is fraudulent

 It involves or implies injury to the person or property of another or the court regards it as immoral or
opposed to public policy

 In all the above cases

29. A void contract is

 Not enforceable at all

 Enforceable at the option of either party

 Enforceable at the option of the aggrieved party only

 Enforceable at the option of the party who is not aggrieved

30. The indemnity holder is entitled to

 All damages which in respect of any matter for which the indemnity has been Apply

 All damages which he may be compelled to pay in any suit

 All sums that he may have paid under the terms of any under the term compromise of such suit.

 All of these
 Assignment-2
1. An agent can retain from any sums received on account of the principal for the following payments?
 All of these

2. Which of the following is one of the exceptions to wagering agreements

 Lottery

 Crossword puzzle

 Athletic competitions

 Competitive event where prize depends upon chance

3. The bailer is duty bound to compensate bailee for necessary expenses incurred by the later in preserving the
goods bailed in the case of
 Gratuitous Bailment

 Non-gratuitous Bailment

 Both Gratuitous Bailment and Non-gratuitous Bailment

 None of these

4. The party whose consent was caused by misrepresentation loses the right to rescind the contract
 If he could discover the truth with ordinary diligence 

 If his consent is not induced by misrepresentation

 In both (a) and (b) cases

 In none of the above cases

5. Which of the following creates jus in rem (i.e., gives the right to the buyers to enjoy the goods as against the
whole world including the seller)
 Sale

 Agreement to sell

 Hire purchase agreement

 Contract for work and labour

6. In which of the following cases the agreement is void ab initio?

 Coercion 

 Fraud

 Bilateral Mistake

 Misrepresentation

7. A valid contract becomes a void contract due to

 Supervening impossibility

 Change of law 

 Repudiation of a voidable contract 

  All of these

8. A contract stands discharged by 

 Performance
 Substituted agreement 
 Impossibility of performance

 All of the above

9. A minor was facing a criminal prosecution for smuggling drugs. He borrowed '5000 to hire an advocate to defend
him in the court of law. What is the remedy available to the creditor if the minor does not return the money on his
own? 
 The creditor cannot recover the amount from the minor since a contract with a minor is void ab initio. 

 The amount of loan can be recovered from minor's property since it is a loan for necessaries.

 The creditor can recover his amount of loan from the minor on his (minor's) attaining the age of majority. 

 The creditor can recover his amount from the parent or guardian of the minor.

10. Which of the following is irrelevant in case of a contract of personal nature? 

 Damages 

 Rescission 

 Injunction 

 Specific performance

11. Which of the following rule does not apply to a valid offer
 The offer must be capable of creating legal relations

 The offer must be certain, definite, and not vague 

 The offer must be communicated 

 The offer must be unconditional

12. Which of the following is mistaken in respect of a contract of sale?

 There may be immediate delivery of goods

 The delivery of goods or payment of price or both may be made at some future date 

 There may be immediate delivery of goods but price to be paid at some future date 

 None of the above

13. The liability of a surety comes to an end by

 Novation

 Variance in terms of contract

 Invalidation of a contract

 All of these

14. who among the following can make a valid pledge

 All of these

15. The expression 'Nemo datquod non-habet' means

  Let the buyer become 

 only the owner of the goods can transfer a title thereto 

 one cannot give what one does not have 

 Condition as to little may be negative by express terms

16. A continuing guarantee may be revoked 

 By a notice of revocation by the surety 

 By death of the surety

 In the same manner in which the surety is discharged

 By any of the above-mentioned way

17. Dealings with commercial sex workers have already been regarded as 
 Immoral 

 Opposed to public policy

 Forbidden by law 

 Fraudulent
18. Which of the following contracts can be enforced against a minor
 Contract for the benefit of a minor
 contract for supply of necessary
 Both A & B
 None of the above
19. Objective impossibility renders a contract terminated in which of the following situations?
 Death or incapacity of one of the parties
 Specific subject matter of contract is destroyed
 Change in the law that render performance illegal
 All of these
20. For a contract of sale to be void on ground of destruction of subject matter. Which of the following conditions
must be satisfied?
 It must be a contract of sale for specific goods

 The goods must have perished before making the contract

 The seller must not be aware about the destruction of goods

 All of these

21. Implied agency includes

 Agency by estoppel 

 Agency by holding out 

 Agency by necessity

 All of the above

22. A minor can be

 A promisor 
 A promisee

 Both (a) or (b)

  None of the above

23. An illegal agreement taints and renders all the incidental transactions
 Void

 Illegal

 Void ab initio 

 Enforceable

24. A person is deemed to be in a position to dominate the will of another where

 He holds a real or apparent relation to the other
 He stands in a fiduciary relation to the other
 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
 All of these

25. An offer comes to an end

 All of these

26. The doctrine of 'Constructive consideration' implies: 

 As long as there is a consideration for a promise, it is immaterial who has finished it.

 Consideration must be real and not illusory.

 Consideration must be legal. 

 Consideration must move at the desire of the promisor

27. Against the principle debtor the surety has,

 Right of subrogation

 Right of indemnity

 Both(a) and (b)

 None

28. Which of the following contracts is based on execution ?

 Express Contract
 Implied Contract
 Unilateral Contract.
 Unenforceable Contract

29. A finder of lost goods has a right to sell the goods found by him 
 Where the owner cannot, with reasonable diligence, be found and if found, refuses to pay the lawful
charges of finder of goods 

 The goods are in danger of perishing or of losing the greater part of their value 

 When the lawful charges of the finder for preservation and finding out the owner amounts to two-thirds of
the value of the goods 

 In all the above cases

30. The expression 'quid pro quo' means adequacy of

 Consideration

 Something in return
 Damage or injury to one's interest

 None of these