Law of Contract II

MCQ

1. The indemnity-holder can recover all costs he has been compelled

to pay in suit to which the promise to indemnify relates if:

A. the promisor had authorised him to bring or to defend

the suit

B. in bringing or defending the suit he had not

contravened the orders of the promisor, and had acted
in a prudent manner

C. either (A) or (B)

D. None of these

2. In Gajanan Moreshwar Parelkar v Moreshwar Madan Mantri, it was

held :

a. S.124 does not deal with those classes of cases where the
indemnity arises from loss caused by events or accidents which
do not or may not depend upon the conduct of the indemnifier
or any other person, or by reason of liability incurred by
 something done by the indemnified at the request of the
indemnifier.

b. Indemnity holder was entitled either to get the indemnifier to

pay off the claim or to pay into Court sufficient money which
would constitute a fund for paying off the claim whenever it
was made.

A. Only a

B. Only b

C. Either a or b

D. Both

3. C contracts to lend B 5,000 rupees on the 1st March. A guarantees

repayment. C pays the 5,000 rupees to B on the 1st January.

i. A is discharged from his

liability

ii. A is not discharged from

his liability

iii. A is discharged from

his liability as terms are
varied.
4. A contracts with B for a fixed price to build a house for B within a
stipulated time, B supplying the necessary timber. C guarantees A‟s
performance of the contract. B omits to supply the timber.

i. C is not discharged from

his suretyship.

ii. C is discharged from his

suretyship.

iii. C is discharged from his

suretyship because of
omission by B

5. A hires a horse in Calcutta from B expressly to march to Benares. A

rides with due care, but marches to Cuttack instead. The horse
accidentally falls and is injured.

a. A is liable.

b. A is not liable.

c. A is liable to make compensation to B making unauthorized use of

goods bailed

d. A is liable to make compensation to B as due amount of care is not

taken.
6. If the bailee, without the consent of the bailor, mixes the goods of the
bailor with his own goods in such a manner that it is impossible to
separate the goods bailed from the other goods and deliver them back,
the bailor is entitled to be :

A) Compensated by the bailee for the loss of the goods

B) Compensated by the bailee for the 1/3 of loss

C) Compensated by the bailee for the 1/2 of loss

D) Compensated by the bailee for rupees 500

7. The delivery of goods by one person to another for some purpose, upon
a contract and that they shall, when the purpose is accomplished, be
returned or otherwise disposed of by accounting to the directions of the
person delivering them, then it is called :

A) Contingent contract

B) Bailment
 C) Pledge

D) Contract of indemnity

8. The position of the finder of lost goods is that of a :

a) Bailor

b) Bailee

c) Surety

d) Principal debtor

9. A gratuitous bailment is one which is :

a) supported by consideration

b) not supported by consideration

c) not enforceable by law

d) void

10. A delivers a rough diamond to B, a jeweller, to be cut and polished,

which is accordingly done.

A. B is not entitled to retain the stone till he is paid for the

services he has rendered
B. B is entitled to retain the stone till he is not paid for the
services he has rendered
 C. B is entitled to retain the stone till he is paid for the
services he has rendered
D. None of these
11. Any one can become an ____________ between the principal
and third party.

A. Agent

B. Principal

C. Contractor

D. Party to the contract

12. The consideration in case of Contract of Agency

______________

A. can be past, present, future

B. Need not be adequate

C. Need to be real

D. Not Mandatory

13. A sub-agent is a person -------

A) Who works under the main agent

B) Who carries out the order and direction of a person under

whom he works directly

C) Who works on behalf of the main agent

 D) Employed by and acting under the control of the original agent
in the business of agency

14. Substituted agent is -----------

A) Agent’s agent

B) Principal’s agent

C) None of the above

D) Both (A) and (B)

15. To start a partnership business, what should be the minimum number of

partners?

A) 2

B) 10

C) 4

D) 20

16. What type of agreement is used to form a partnership business?

A) Written agreement

B) Oral agreement

C) Written or oral agreement

D) None of them

17. In partnership, partners liabilities are

A) Unlimited

B) Limited to the capital of the business

C) Limited

D) Both A and C

18. Is a partnership firm examined as an individual a legal entity?

A) No

B) Yes

C) Partially Yes

19.What is the partnership written agreement known as?:

A) Partnership contract

B) Agreement

C) Partnership deed

D) Partnership Act

20. Which is not a feature of a partnership business?

A) Ease of formation

B) Limited liability

C) Limited life

D) Mutual agency
21. Which types of partnership have no agreement in terms of the duration of
partnership?

A) Partnership-at-will

B) Limited partnership

C) General partnership

D) Particular partnership

22. Match the following:

a. Coope v. Eyre a. sharing profit does not

make the person a
partner

b. Cox v. Hickman b. Buying for self

consumption does
amount to carrying on
business

c. Dharamvir v. Jaggan c. Partnership at will

Nath

d. Moss v. Elphick d. Minor incapable of

becoming a partner in
any partnership firm
23. Statement : A Burmese Buddhist husband and wife carrying on
business as such are not partners in such business

Reason : The relation of partnership arises from contract and not

from status

a. Statement and Reason are not correct.

b. Statement and Reason are correct.

c. Statement is correct and Reason is not correct.

d. Statement is not correct and Reason are correct.

24. In Which of the following cases a person can be called a partner

if profit is shared

(a) by a lender of money to persons engaged or about to engage in

any business,

(b) by a servant or agent as remuneration,

(c) by the widow or child of a deceased partner, as annuity, or

(d) by a previous owner or part owner of the business, as

consideration for the sale of the goodwill or share thereof,

i. Only a & b

ii. Only a & c

iii. None of above

iv. all of above

25.Which of the following is not applicable to negotiable

instruments?

a. It must be in writing

b.It must be transferable

c. It must be registered

d.It must be signed

26. Person who takes the instruments bonafide for value before
it is overdue, in good faith, is known as:

i. Holder in due course

ii. Holder

iii. Holder for value

iv. None of the above

27.An instrument containing a promise to __________ is valid

promissory note.
 i. Pay Rs. 10 lakhs

ii. Deliver certain goods

iii. Pay Rs. 10 lakh and deliver certain goods

iv.Both (a) and (c)

28.P obtains a cheque drawn by M by way of gift. Here P is a:

a.Holder in due course

b.Holder for value

c. Holder

d.None of the above

29.A negotiable instrument shall be payable to ____________ is an

order instrument

a. A particular person

b. A particular person or his order

c.The order of a particular person

 d.All of these

30.A negotiable instrument that is payable to order can be

transferred by:

a.Simple delivery

b.Endorsement and delivery

c.Endorsement

d.Registered post

31.‘A’ signs the instrument in the following manner. State the

instrument which cannot be considered as promissory

note.

a.I promise to pay B or order INR 500.

b. I acknowledge myself to be indebted to B for INR 1,000 to

be paid on demand for value received.

c.I promise to pay B INR 10,000 after three months.

d.I promise to pay B INR 500 seven days after my marriage

with C.
32. Which of the following case is related to post dated cheque?

a. Kallapa v Laxmibai

b. Pearson v. Rose

c. U. Ponnappa Moothan Sons v. Catholic

d. Ashok Badeve v Surender Madhavrao

33. Following are Essentials for dishonour of cheque :

a. Dishonour of cheque only &Payment in discharge of debt

b. Presentment of cheque within period of validity &Dishonour due

to insufficient fund or amount exceeds the agreed amount

c. Notice and demand &Written complaint to competent magistrate

d. All of above

34 Which of the following cases are related to Dishonour of cheque:

i. Punjab and Sind Bank v Vinkar Sahakari Bank

ii. Electronic Trade and Technology Development Corporation

Ltd. v Indian Technologists and Engineers (Electronics) Pvt.
Ltd

iii. NEPC Micon Ltd.& ors v Magma Leasing Ltd

 a. Only i

b. ii & iii

c. None

d. All of above

35.Section 2(1) of Sale of Goods Act defines ‘buyer’ as:

A. Person who buys goods and services

B. Person who agrees to buy goods

C. Person who buys or agrees to buy goods

D. Person who buys or agrees to buy goods and services

36.Before the enactment of Sale of Goods Act, the provisions

regarding Sale of Goods were contained in:

A. Indian Contract Act, 1872

B. Indian Registration Act, 1908

C. Transfer of Property Act, 1882

D. Indian Partnership Act, 1932

37.Which of the following cannot be said to be included in the term

“goods” defined under section 2(7) of the Sale of Goods Act, 1930:
 A. Stock

B. Shares

C. Growing crops

D. Actionable claims

38.Which of the following most appropriately describes the term

“sale” as per Sale of Goods Act, 1930:

A. A contract whereby seller transfers the property in goods

B. A contract whereby seller transfers or agrees to transfer

the property in goods to the buyer for a price

C. A contract where transfer of the property in goods is to

take place at a future time

D. A contract where transfer of the property in goods is to

take place subject to some condition thereafter to be fulfilled

39.When does an agreement to sell become a sale as per the

provisions of Sale of Goods Act, 1930:

A. When the seller transfers the property in goods

B. When the seller agrees to transfer the property in goods

 C. When the time elapses or the conditions subject to which
the property in the goods is to be transferred are fulfilled

D. Agreement to sell is deemed to be sale

40.What can be the subject matter of the contract of sale as per

section 6 of Sale of Goods Act:

A. Only existing goods owned or possessed by the owner

B. Only Future goods

C. Existing goods which are neither owned nor possessed by

the owner

D. either existing goods, owned or possessed by the owner or

future goods

41. Exceptions to maxim Nemo Dat Quod Non Habet are:

i. S.28 Sale by one of joint owners

ii. 29. Sale by person in possession under voidable

contract

iii. 30(1) Sale by Seller in possession after sale

iv. 30(2) Sale by buyer in possession after sale

a. i & iv
 b. ii & iii

c. None

d. All of above

42. the unpaid seller of goods who is in possession of them is entitled

to retain possession of them until payment in the following cases:

i. where the goods have been sold without any stipulation as

to credit

ii. where the goods have been sold on credit, but the term of credit
has expired

iii. where the buyer becomes insolvent.

a. i & iii

b. ii & iii

c. None

d. i, ii & iii

43. Where under a contract of sale the property in the goods has
passed to the buyer and the buyer wrongfully neglects or refuses to
pay for the goods according to the terms of the contract, the seller
may sue him for the price of the goods. This right is given under
section:
 a. S. 56

b. S. 57

c. S.66

d. S.55

44. Match the following:

a. Vishnu Agencies i. Goods

(Pvt.) Ltd. etc v
Commercial Tax Officer

b. Smt. Shantabai v State of ii. Sale under

Bombay & statutory
compulsion
R D Saxena v Balram Prasad
Sharma

c. Baldry v. Marshall iii. Sale by Mercantile

Dharamvir v. Jaggan agent
Nath & Richard Thorold
Grant v. Australian
Knitting Mills Ltd

d. Pearson v. Rose and iv. Implied condition

Young Ltd as to quality
 46. Bailment means ---------

a)The goods delivered to be returned by way of an equivalent in other commodities

b)The goods delivered to be returned by way of an equivalent in money
c)The goods is delivered by one person to another for some purpose to be specifically
returned or otherwise disposed of as per the order of the bailor
d)All of these
47. In all cases of bailment, the bailee is bound to take as much care of the goods bailed to
him as a man of ordinary prudence would under similar circumstances. The statement is
-----------
a) True
b) False
c) Partly correct
d) None of the above
48. A sub-agent is a person -------
a) Who works under the main agent
b) Who carries out the order and direction of a person under whom he works directly
c) Who works on behalf of the main agent
d) Employed by and acting under the control of the original agent in the business of agency
49. Ratification of authority means
a) Delegation of powers
b) Subrogation
c) Termination of agency
d) Confirmation to make valid or sanction an act which is already done.
50. Which of the following statements is correct?
a) when neither the Bailor nor the Bailee is entitled to any remuneration is called
gratuitous Bailment
b) Where either the Bailee or the Bailor is entitled to renumeration is called non-gratuitous
Bailment
c) Motor car let out for hire is a contract of non-gratuitous Bailment
d) All of the above
51. A breach of condition may be treated as a breach of warranty and not vice versa. The
statement is

a)True
b) False
c)Depends
d) None of the above
52. --------- is a mercantile agent who guarantees the performance of the contract by the
third person on the payment oof some extra commission.
a) Broker
b)Factor
c)Auctioneer
d) Del credere agent
53. A directs B, his agent, to pay certain money to C, A dies, and D takes out probate to his
will. B, after A’s death, but before hearing of it, pays the money to C.
a) The payment is not as against D, the executor
b) The payment is good as against D, the executor
c) either (A) or (B)
d) None of these
54. A directs B, his solicitor, to sell his estate by auction, and so employ an auctioneer for
the purpose. B names C, an auctioneer, to conduct the sale.
a) C is a sub-agent, and A’s sub-agent for the conduct of the sale
b) C is not a sub-agent, but B’s agent for the conduct of the sale
c) C is not a sub-agent, but A’s agent for the conduct of the sale
d) None of these

55. A employs B to beat C, and agrees to indemnify him against all consequence of the act.
B thereupon beats C, and to pay damages to C for so doing.
a) A is liable to indemnify B for those damages
b) A is partially liable to indemnify B for those damages
c) A is not liable to indemnify B for those damages
d) None of these
56. Where no provision is made by contract between the partners for the duration of their
partnership, or for the determination of their partnership, the partnership is called as:

a) Particular partnership
b) Partnership for a fixed term
c) partnership at will
d) None of the above
57. What are the right of partners after dissolution:

a) To have the surplus distributed among the partners or their

representatives according to their rights.
b) To have business wound up after dissolution
c) To have the property of the firm applied in payment of the debts
and liabilities of the firm.
d) All of the above
58. The dissolution of partnership means:

a) It means the dissolution of partnership between all the partners

of a firm
b) It means the change in the relations of the partners
c) It means the reconstitution of the firm.
d) None of the above.
59. In what circumstances a partner may retire:

a) In accordance with an express agreement by the partners

b) Where the partnership is at will, by giving notice in writing to all
the other partners of his intention to retire.
c) With the consent of all the other partners
d) All of the above.
60. What would be the position, where a minor elects not to become a partner:

a) He shall be entitled to sue the partners for his share of the

property and profits.
b) His rights and liabilities shall continue to be those of a minor
under this section up to the date on which he gives public notice.
c) His share shall not be liable for any acts of the firm done after
the date of the notice.
d) All of the above
61. Whether a notice given to a partner, who habitually acts in the business of the firm of
any matter relating to the affairs of the firm, will be deemed as notice to the firm:

a) It will deemed as personal information to that partner

b) Yes, it operates as notice to the firm, except in the case of a fraud
on the firm committed by or with the consent of that partner
c) It depends on the nature of the concerned partner whether he
inform so to other partners
d) No, it will not deemed as notice to the firm.
62. Where a partner wilfully or persistently commits breach of agreements relating to the
management of the affairs of the firm or the conduct of its business, or otherwise so
conducts himself in matters relating to the business that it is not reasonably practicable for
the other partners to carry on the business in partnership with him. The other partner(s)
may:
a) The partnership firm comes to an end automatically
b) The other partners may decide to leave the firm.
c) File a suit in the court for the dissolution of the firm.
d) The other partners may decide to expel the concerned partner
63. Who is not liable for the acts of the partners done after dissolution, if done before the
dissolution, until public notice is given of the dissolution

a) A partner who, not having been known to the person dealing

with the firm to be a partner, retires from the firm (sleeping or
dormant partner).
b) The estate of a partner who dies
c) Who is adjudicated an insolvent
d) All of the above
64. On attaining the majority, the minor partner has to decide and give a public notice
within the prescribed period, whether he will continue as partner in the firm or will quit.
What is that prescribed period:

a) Within twelve months of his attaining majority or of his

obtaining knowledge that he had been admitted to the benefits of
partnership, whichever date is later
b) Within three months of his attaining majority or of his obtaining
knowledge that he had been admitted to the benefits of
partnership, whichever date is later
c) Within six months of his attaining majority or of his obtaining
knowledge that he had been admitted to the benefits of
partnership, whichever date is later
d) Within nine month of his attaining majority or of his obtaining
knowledge that he had been admitted to the benefits of
partnership, whichever date is later
65. M/s XYZ is partnership firm and X, Y and Z are the partners. During the course of
business travel, partner X recovered a sum of Rs. 15000 in cash from the debtor of the firm
and credit in his personal bank account. The act of X will amounts to:

a) After utilising the amount for few days, he returned back the
money to the firm, so it will not come under the
mis-appropriation of the funds.
b) Nothing wrong in it, since he has personally made efforts in
realising the dues from the debtor.
c) Mis-appropriating the funds of the firm and utilisation of the
same for the personal gain.
d) None of the above.
66. Baldry V. Marshal is a leading case relating to
a) Fitness for buyer
b) Sale under a patent or trade name
c) Consent by fraud
d) None of the above

67. What is the purpose behind the enactment of Sale of Goods Act, 1930?
a) To define the laws relating to the sale of goods
b) To consolidate and amend the laws relating to the sale of goods
c) To consolidate, amend and define the laws relating to the sale of goods
d) To define and amend the laws relating to the sale of goods
68. When does the property in the goods pass to the buyer in case of a contract for the sale
of unascertained or future goods by description:
a) When the goods of that description and in a deliverable state are unconditionally
appropriated to the contract either by the seller or by the buyer with the assent of each
other
b) When the goods of that description and in a deliverable state are conditionally
appropriated to the contract either by the seller or by the buyer with the assent of each
other
c) When the goods of that description and in a non-deliverable state are conditionally
appropriated to the contract either by the seller or by the buyer with the assent of each
other
d) When the goods of that description and in a non-deliverable state are unconditionally
appropriated to the contract either by the seller or by the buyer with the assent of each
other

69. Choose the most appropriate option out of the following in respect to return of rejected
goods by the buyer:
a) Buyer is not bound to return any type of rejected goods, having right to do so, if he
intimates to the seller that he refuses to accept the same
b) Buyer is bound to return all types of rejected goods
c) Buyer is bound to return only those rejected goods which are perishable
d) Buyer is bound to return only those rejected goods which are sold by description.
70. A contract of sale can be:
a) Absolute only
b) Conditional only
c) Absolute or conditional
d) Conditional only with the consent of the buyer
71. X purchases a car from Y. After 6 months, Z, the true owner of the car, demanded it
from X. X had to return it to its true owner. X was entitled to recover the full price even
though several months have passed. This is an example of:
a) Condition as to description
b) Condition as to sample
c) Condition as to title
d) Condition as to fitness
72. A drug was sold by an auction and according to the usage of trade it was to disclose in
advance of any vast damage caused in the quality of the drug but such disclosure was not
made and the drug was found to be defective. This is an example of:
a) Warranty as to undisturbed possession
b) Warranty as to quality or fitness by usage of trade
c) Warranty as to non-existence of encumbrances
d) Disclosure of dangerous nature of goods
73. Before the enactment of Sale of Goods Act, the provisions regarding Sale of Goods were
contained in:
a) Indian Contract Act, 1872
b) Indian Registration Act, 1908
c) Transfer of Property Act, 1882
d) Indian Partnership Act, 1932
74. Which of the following cannot be said to be included in the term “goods” defined under
section 2(7) of the Sale of Goods Act, 1930:
a) Stock
b) Shares
c) Growing crops
d) Actionable claims
75. What can be the subject matter of the contract of sale as per section 6 of Sale of Goods
Act:
a) Only existing goods owned or possessed by the owner
b) Only Future goods
c) Existing goods which are neither owned nor possessed by the owner
d) Existing goods, owned or possessed by the owner or future goods
76. Person named in the instrument to whom money is directed to be paid is known as
_______________.
a) Drawer
b) Acceptor
c) Maker
d) Payee
77. Days of grace provided to the Instruments at maturity is _______________
a) 1 day
b) 2 days
c) 3 days
d) 5 days
78. Validity period for the presentment of cheque in bank is _______________
a) 3 months
b) 6 months
c) 1 year
d) 2 years
79. A negotiable instrument drawn in favour of minor is
a) Void
b) Void but enforceable
c) Valid
d) None of these
80. ‘A’ signs the instrument in the following manner. State the instrument which cannot be
considered as promissory note.
a) I promise to pay B or order INR 500.
b) I acknowledge myself to be indebted to B for INR 1,000 to be paid on demand for value
received.
c) I promise to pay B INR 10,000 after three months.
d) I promise to pay B INR 500 seven days after my marriage with C.
81. P obtains a cheque drawn by M by way of gift. Here P is a:
a) Holder in due course
b) Holder for value
c) Holder
d) None of the above
82. A draws a cheque in favour of M, a minor. M endorses the same in favour of X. The
cheque is dishonoured by the bank on grounds of inadequate funds. As per the provisions
of Negotiable Instruments Act, 1881:
a) M is liable to X
b) X can proceed against A
c) No one is liable in this case
d) M can proceed against A
83. A draws a bill on B. B accepts the bill without any consideration. The bill is transferred
to C without consideration. C transferred it to D for value. Decide as per provisions of
Negotiable Instruments Act, 1881-
a. D can sue only A
b. D can sue A or B only
c. D can sue any of the parties A, B or C
d. D cannot sue any of the parties A, B or C
84. Until the bill is accepted, the liability of drawee is __________.
a. Primary and unconditional
b. Primary and conditional
c. Secondary and conditional
d. None of these
85. Dishonour of Negotiable Instrument by Non Payment is covered under section in
Negotiable Instrument Act 1882…
a) Section 90
b) Section 91
c) Section 92
d) Section 93
86. Which case deals with vicarious liability of a principal?
a) Llyod v. Grace Smith & Co.
b) Mellors v. Shaw
c) Longman v. Ble
d) Rapp v. Latham
87. Which case deals with mutual agency under Partnership?
a) Walker v. Hirsch
b) R.R. Sarna v. Reuben
c) Abdul Badsha v. Century Wool Industry
d) Cox v. Hickman
88. Landmark judgment with respect to Partnership at Will?
a) Bhagat Ram Mohanlal v. Commr of P.E.T
b) Moss v. Elphick
c) Ram Laxman Sugar Mills v. CIT
d) Pratt v. Strick
89. In which case it was held A thing to be considered a good under section 171 of the Indian
Contract Act, should have marketability, and the person to whom it is bailed should be in a
position to dispose it of in consideration of money.
a) R.D. Saxena v. Balram Prasad Sharma
b) R.R. Sarna v. Reuben
c) Abdul Badsha v. Century Wool Industry
d) Longman v. Ble

90. With respect to multicity cheque dishonor the offence under section 138 shall be
inquired into and tried only by a court within whose local jurisdiction:

A. if the cheque is presented for payment by the payee or holder in due course, otherwise
through an account, the branch of the drawee bank where the drawer maintains the
account, is situated.
B. if the cheque is delivered for collection through an account, the branch of the bank where
the payee or holder in due course, as the case may be, maintains the account, is situated.
C. Both the options A and B are correct.
D. None of the above.

91. Who can make negotiation of a negotiable instrument:Which is not the right of a
holder:

A. All of several joint makers, drawers, payees or indorsees.

B. Sole maker, drawer, payee or indorsee.
C. Both A and B are correct.
D. None of the above.
 92. Match the following:

A. A-i, b-ii, c-iii, d-iv

B. A-ii, b-i, c-iii, d-iv
C. A-iv, b-iii, c-i, d-ii
D. A-ii, b-i, c-iv, d-iii
93. Which NI is said to be dishonoured by non-payment-
A. Bills of Exchange
B. Promissory Note
C. Cheque
D. All of the above
94. Registration of partnership firm is compulsory-
A. True, registration is required
B. False, registration is not required
C. Registration gives additional advantage to the partnership firm
D. False, registered and unregistered partnership firm have same advantage
95. “Two legal firms engaged in a particular legal case. This partnership is only for the
particular case.” Select the type of partnership:
A. PARTNERSHIP AT WILL
B. Partnership for a fixed period
C. PARTICULAR PARTNERSHIP
D. All of the above
96. The days of grace of maturity of promissory note or bill of exchange is:

A. The maturity day after the day on which it is expressed to be payable.

B. The second day after the day on which it is expressed to be payable.
C. The third day after the day on which it is expressed to be payable.
D. The fourth day after the day on which it is expressed to be payable.

97. Match the following:

A. A-i, b-ii, c-iii, d-iv

B. A-ii, b-i, c-iii, d-iv
C. A-ii, b-iv, c-i, d-iii
D. A-ii, b-i, c-iv, d-iii
98. In a contract for sale of specific goods, the goods, without the knowledge of seller
perished at the time when the contract was made, the contract is:
A. A voidable contract at the instance of seller
B. A voidable contract at the instance of buyer
C. A voidable contract subject to approval of the civil court
D. A void contract

99. A is a stipulation collateral to main purpose of the contract and the breach of which gives rise
to a right to claim for damages but not to a right to reject goods and treat the contract as
repudiated:
A. Condition
B. Warranty
C. Terms of contract
D. Disclaimer

100. How many parties are there in a contract of indemnity and guarantee respectively?

(a) 2 and 3
(b) 3 and 2
(c) 2 and 5
(d) 5 and 2

101. Which of the following statement is true?

(a) There are three parties in a contract of a guarantee

(b) The liability of the surety is co- extensive with that of the principal debtor
(c) A creditor is not bound to proceed against the principle debtor
(d) All of the above

102. An agent in not personally liable for -

(a) Contract entered with third parties on behalf of employer

(b) Signs the agreement in his own name
(c) Where the agent works for foreign principal
(d) Where the contract expressly provides for the personal liability

103. Statement I: In a contract of guarantee when a surety discharges a debt payable by the
principal debtor to creditor, he on such payment can proceed against the principal debtor in his
own right.
Statement II: In case of a contract of indemnity, the indemnifier can sue third parties in his own
name, but might bring the suit in the name of the indemnified.
 A. Statement I is correct but Statement II is incorrect
B. Statement II is correct but Statement I is incorrect
C. Both Statement I and II are correct
D. Both Statement I and II are incorrect

104. Statement I: Between co-sureties there is equity of burden and benefit

Statement II: The liability of a surety is secondary, it is co-extensive with that of the principal
debtor.

A. Statement I is correct but Statement II is incorrect

B. Statement II is correct but Statement I is incorrect
C. Both Statement I and II are correct
D. Both Statement I and II are incorrect

105. What is the minimum consideration required to create an agency?

A. Minimum of Rupees One Lakh
B. Minimum of Rupees One Thousand
C. No consideration at all is required
D. Minimum of Rupees Ten Thousand

106. What are the essentials for a person to employ an agent

A. The person should not be of sound mind
B. The person should be a major, according to the law to which the agent is subject
C. The person should be a major, according to the law to which he is subject and
should also be of sound mind
D. The person should have executed a contract of indemnity before employing an agent

107. Any guarantee which the creditor has obtained by means of keeping silence as to material
circumstances is:
A. valid
B. considered to be his approval
 C. invalid
D. considered to be his denial

108. A transfers possession or custody of the farmland to his son, S. S shall pay rent or a lease
fee in return. S only receives custody and control of the property, but A still owns it. A is thus
responsible for paying the property taxes and is liable for what happens on the land. This kind of
contract or arrangement is called:
A. Guarantee
B. Bailment
C. Pledge
D. Set off
109. Which of these contracts has three parties consisting of creditor, principle debtor and surety:
A. Contract of indemnity
B. Contract of surety
C. Contract of pledge
D. Contract of guarantee

110. What is the partnership written agreement known as?:

A) Partnership contract
B) Agreement
C) Partnership deed
D) Partnership Act

111. In absence of a partnership agreement, what will be the percentage of profit sharing ratio
between the partners?

A) Unequal
B) Equal
C) It will depend on the experience of a partner
D) It will depend on a partner’s capital
112. Which is not a feature of a partnership business?

A) Mutual agency
B) Limited liability of the partners
C) Limited life
D) Ease of formation

113. On the death of a partner, public notice of the death is not given and the firm continues the
business, then for the acts of the firm done after his death, the estate of the deceased partner is-
A. Liable
B. Not liable
C. Treated as security
D. Proportionately liable

114. A retiring partner has the right to carry on a business competing with that of the firm, but
cannot-
A. Use the name of the firm
B. Represent himself to be a partner
C. Solicit firm’s existing customer
D. All of the above
115.An incoming partner, who has been validly admitted in the firm, is-
A. Liable for the past debts of the firm
B. Not Liable for the past debts of the firm
C. Liable for the past debts of the firm incurred after his admission
D. Both a and c

116. The firm is bound by an act of a partner done without any express or implied authority if
such act is-
A. Done to protect the firm from loss
B. Done in emergency
C. Reasonable circumstances
 D. All of the above

117. Which of the following acts are within the implied authority of a partner?
A. To engage a lawyer and defend the action brought against the firm
B. To engage servants to perform the business of the firm
C. To purchase goods of the kind used in the firm’s business.
D. All of the above

118. Before attaining the age of majority, a minor admitted to the benefits of a firm has the right
to-
A. Receive agreed ahre of the property and of profits
B. Sue the firm for his share of property or profits
C. Accessand to inspect the account of the firm
D. All of the above

119. The presumptions in respect of negotiable instruments include:

i) Every negotiable instrument was made, drawn, accepted, endorsed or transferred for
consideration.
ii) Every negotiable instrument bearing a date was made or drawn on such date.
iii) Every transfer of a negotiable instrument was made before its maturity.
iv) The endorsements appearing upon a negotiable instrument were made in the order in which
they appear.
v) A lost negotiable instrument was duly stamped.
vi) Every bill of exchange was accepted within a reasonable time after its date and before its
maturity.
A. All of the above
B. (I) (III) and (V) only
C. (II) (III) and (IV) only
D. None
120. It is a ----------------- obligation of a banker to honour the cheques of the customer drawn
against
current
a) Mutual
b) Statutory
c) Non Statutory
d) All of the above

121.The Negotiable Instruments (Amendment) Bill, 2017 inserted a provision allowing a court
trying an offence related to cheque bouncing, to direct the drawer (person who writes the cheque)
to pay interim compensation to the complainant. The interim compensation will not exceed
___% of the cheque amount?
a) 15%
b) 25%
c) 30%
d) 20%

122.If a Minor draw, indorse, deliver and negotiate Negotiable Instruments, it binds __
a) All the parties except minor
b) All the parties including minor
c) Minor Only
d) Minor and Only Drawer
e) Minor and the Drawee

123. Cheque is payable on

a) Demand
b) Usage
c) Fixed future date
d) After sight

124. The term passing of property means?

 A. Transfer of ownership
B. Transfer of a thing
C. Transfer of price
D. One of the above

125. The goods identified and agreed upon at the time a contract of sale is made is called:
A. Goods
B. Future Goods
C. Specific Goods
D. None of the above

126. Consideration for a sale of goods must by:

A. Goods in return
B. Called agreement
C. Money called price
D. None of the above

127. Sales creates the right of …..

A Right in Rem.
B All of these
C Right in things
D Right in Personam

128. Goods includes ____

A. open plot
B. standing crop
C. building
D. Land

129. What is F.O.B. contract?

 A. on board with instalment.
B. on board with trolly.
C. free on board.
D. with value on board

130. The right of unpaid seller is …..

A. lien
B. mortgage
C. guarantee
D. bailment
131. In a contract of Indemnity there are-------?
A)3 parties and one contract
B) 2 parties and 2 contracts
C) 3 parties and 3 contracts
D)2 parties and one contract
132.A Contract of Indemnity is -------
A)Void Agreement
B)Quasi Contract
C)Contingent Contract
D)Wagering Contract
133.Surety is a person who ------------
A)Who gives the guarantee
B)To whom the guarantee is given
C)In respect of whose default the guarantee is given
D)None of the above
134. Liability of surety is ----------------------
A)Conditional on default
B)Independent of default
C)Can be conditional or independent
D)None of the above
135. Bailor in Pledge is known as ---------
A)Bailee
B)Pawnor
C)Pawnee
D)None of these
136. In a Pledge, the general property or ownership in goods
A)Transferred to the pawnee
B)Cannot be transferred to the pawnee
C)Continues in the pawnor
D)None of the above
137.A sub-agent is a person -------
A) Who works under the main agent
B) Who carries out the order and direction of a person under whom he works directly
C) Who works on behalf of the main agent
D) Employed by and acting under the control of the original agent in the business of agency
138. A gives some cloth to the tailor for making a suit of it. The tailor’s charges are fixed at Rs
1000. After the suit is ready, A tenders Rs 1000 for the charges but the tailor refuses to deliver
the suit till A pays an old debt of Rs200. Is the tailor entitled to do so?
A. Yes
B. No
C. Yes, because there is no particular lien
D. No, because there can be only particular lien as per section 170 of Indian Contract
Act, 1872
139. An agency is terminated -----------
A) By the principal revoking the authority
B) By the agent renouncing the business of agency
C) By either the principal or agent dying or becoming of unsound mind
D) All the above
140. Ratification of authority means
A) Delegation of powers
B) Subrogation
C) Termination of agency
D) Confirmation to make valid or sanction an act which is already done.
141. Voluntary transfer of possession from one person to another is called -----
A) Sale
B) Purchase
C) Delivery
D) Exchange
142. Which of the following Section of the Sale of Goods Act, 1930 defines the term “Goods”?
A) Section 2(7)
B) Section 2(4)
C) Section 2(5)
D) Section 2(9)
143. Goods to be manufactured or produced or acquired by the seller after making of the contract
of sale are -----
A) Contingent goods
B) Future goods
C) Unascertained goods
D) None of the above
144. Soda water was supplied by S to B in bottles. B was injured by bursting of one of the
bottles. Can B claim damages from S?
A. Yes because there was sale by description of goods
B. No
C. Yes because the bottle was not of merchantable quality
D. Both A and C
145. The definition of goods in the sale of goods act include ---
A) Stock and shares
B) Money
C) Actionable claims
D) All the above
146. Seller means a person -----
A) Who sells
B) Who agrees to sell
C) Both of the above
D) None of the above
147. A breach of condition may be treated as a breach of warranty and not vice versa. The
statement is
A) True
B) False
C) Depends
D) None of the above
148. A gives certain diamonds to B for sale or return basis. On the same date, B gives the
diamonds to C on sale or return and from C they are lost. Who will bear the loss?
A. B because by transferring the diamonds further B has adopted the transaction
B. B because property in diamonds passed to B
C. B because he did something inconsistent with the ownership of A
D. All of the above
149. Which of the following is an implied warranty?
A) As to undisturbed possession
B) As to non-existence of encumbrances
C) As to disclosure of dangerous nature of goods
D) All of the above
150.Conditions and Warranties in a contract may be -------
A) Express
B) Implied
C) Express or implied
D) None of the above
151. The term “Partnership” is defined in Section ------- of the Indian partnership act, 1932. A) 2
B) 3
C) 4
D) 5
152. Persons who have entered into partnership with one another are collectively called as --------
A) Partners
B) Directors
C) Firm
D) None of the above
153. Partnership is a subject in the ----------------
A) Union List
B) State List
C) Concurrent List
D) None of the above
154. An action for the indemnity can be brought against a partner
A) By the firm
B) By any partner on behalf of the firm
C) By a partner in his individual capacity
D) Either (A) or (B)
155. A property of a partner becomes the property of the firm
A) When it is used for the business of the partnership
B) When the property is owned by the partners
C) When there is an agreement express or implied that the property is to be treated as that
of the firm
D) None of the above
156. A minor admitted to the benefits of a firm has a right to -------
A) Such share of the property and of the profits of the firm as may be agreed upon
B) Have access to and inspect and copy any of the accounts of the firm
C) Both (A) and (B)
D) Any of the above.
157. A minor can
A) Inspect the books of accounts and other books
B) Inspect the book of accounts not other books and papers
C) Cannot inspect the book of accounts
D) None of the above
158. When a minor becomes a partner, his personal liability commences from ------
A) The date of his first admission
B) The date of majority
C) The date fixed by all the partners
D) Any one of the above
159. A partner may retire
A) With the consent of all the other partners
B) In accordance with an express agreement by the partners
C) Where the partnership is at will, by giving notice in writing to all the other partners of his
intention to retire
D) All of the above.
160. Which of the following is a ground for dissolution u/s 44 of the Indian Partnership Act,
1932?
A) Misconduct
B) Permanent incapacity
C) Unsoundness of mind
D) All of the above
161. The maker of a bill of exchange or cheque is called --------
A) Holder
B) Drawer
C) Drawee
D) Payee
162. The person who is directed to pay a bill of exchange is called --
A) Holder
B) Drawer
C) Drawee
D) Payee
163. When does the offence u/s 138 of the Negotiable Instruments Act, complete?
A) When the drawer fails to pay the cheque amount within 15 days of the notice by the holder
B) When information regarding dishonor is received by the holder from the bank
C) When notice of dishonour is received by the drawer
D) When the cheque is dishonoured.
164. A person committing an offence u/s 138 shall be punished with for a term of imprisonment
which may extend to
A) 6 months
B) 1 year
C) 2 years
D) 3 years
165. The drawee of a cheque is always a …..
A) Company
B) Payee
C) Debtor
D) Banker
166. ---------- cheque cannot be paid across the counter.
A) Stale
B) Mutilated
C) Crossed
D) Bearer
167.The offence u/s 138 of the Negotiable Instruments Act is ----
A) Cognizable and bailable
B) Non-cognizable and non-bailable
C) Cognizable and non-bailable
D) Non- cognizable and bailable
168.Which of the following courts has the jurisdiction for trying an offence punishable under
section138 of the Negotiable Instruments Act, 1881?
A) Judicial Magistrate of Second Class
B) Judicial Magistrate of First Class
C) Chief Judicial Magistrate
D) None of the above
169. Which of the following is/are true about the Bill of Exchange?
(I) A bill of exchange requires in its inception two parties.

(II) A bill of exchange or “draft” is a written order by the drawer to the drawee to pay money to
the payee.

(III) Bills of exchange are used primarily in international trade, and are written orders by one
person to his bank to pay the bearer a specific sum on a specific date.
(IV) Definition of ‘ Bill of Exchange’ is mentioned in Section 6 of the Negotiable Instrument
Act.

A. (I) and (IV)

B. (I), (II) and (IV)
C. (II) and (III)
D. (III) and (IV)
E. All of the Above

170. Which of the following is/are false about Dishonour of Cheque ?

(I) Section 138 defines Dishonour of cheque for insufficiency, etc., of funds in the account.

(II) Such cheque has been presented to the bank within a period of twelve months from the date
on which it is drawn or within the period of its validity, whichever is earlier

(III) Imprisonment for such offence may be extended for period of five year

(IV) Section 138 applies unless – the drawer of such cheque fails to make the payment of the
said amount of money to the payee or, as the case may be, to the holder in due course of the
cheque, within fifteen days of the receipt of the said notice.

A. (I) and (IV)

B. (II) and (III)
C. (II),(III) and (IV)
D. Only (IV)
E. Only (III)

Q. 171 Which of the following sections envisages provision for interim compensation in cases
where complaints are filed under section 138 of the Negotiable Instrument Act, 1881?

a) Section 143
b) Section 143-A
c) Section 144
d) Section 145
Q.172 Which of the following sections empowers the court to try the offence under Section 138
summarily?

a) Section 143
b) Section 143-A
c) Section 146
d) Section 147

Q.173 Which of the following provisions envisages the power of Appellate Court to order
payment pending appeal against conviction?

a) Section 148
b) Section 139
c) Section 146
d) Section 147

Q.174 According to Section 147 of the Negotiable Instruments Act, 1881 which of the
following statements is true:

a) every offence punishable under this Act shall be compoundable

b) every offence punishable under this Act shall be Non- compoundable
c) A or b
d) A and b

Q.175 Every trial under Section 143 of the Negotiable Instruments Act, 1881 shall be
conducted as expeditiously as possible and an endeavour shall be made to conclude the trial
within:

a) six months from the date of filing of the complaint

b) five months from the date of filing of the complaint,
c) six months from the date of sending the legal notice.
d) None of these
Q.176 A “bill of exchange” is an instrument in writing containing (Choose the inappropriate
option)

a) an unconditional order,
b) signed by the maker,
c) directing a certain person to pay a certain sum of money only to, or to the order of, a
certain person or to the bearer of the instrument.
d) An conditional order and signed by the drawee

Q. 177 The liability of holding out can be incurred by

a) Minor
b) Major
c) Either a or b
d) both a or b

Q. 178 The principle of holding out has been mentioned in which of the following
sections?

a) Sec 28 of the Indian Partnership Act 1932

b) Sec 26
c) Sec 27
d) Sec 25

Q. 179 Under section 14 of the Indian Partnership Act , 1932 goodwill of the firm
constitutes:

a) Property of the firm

b) Property of the managing partner
c) Property of the partner having the highest share in the profits
d) None of these
Q. 180 Section 16 of the Indian Partnership Act 1932 states:

a) Rights of the partners

b) Duties of the partners
c) Privileges of the partners
d) All of the above

Q. 181 The rules of the settlement of accounts of a firm after dissolution as provided
under section 48 of the Indian Partnership Act 1932:

a) Section 48
b) Section 50
c) Section 49
d) Section 47 \

Q.182 Dissolution of the firm has been defined under which section of the Indian
Partnership Act, 1932 :

a) Section 39
b) Section 40
c) Section 41
d) Section 42

Q. 183 Which of the following type of dissolution has been described under section 42
of the partnership act, 1932

a) Contingent dissolution
b) Compulsory dissolution
c) Dissolution by the court
d) Dissolution by notice

Q.184 . Goods that are identified at the time of contract of sale is called ________________
goods

a) Specific Goods
b) ascertained goods
c) unascertained Goods
d) both a & b
Q185 . _________________ is a Stipulation which is Collateral to purpose of contract
a) Condition
b) Warranty
c) Guaranty
d) Collateral Contract

Q. 186 . __________________________ is the concept of “LET THE BUYER BEWARE”.

a) Unfair Trade Practices
b) Caveat Emptor
c) Caveat vendor
d) None of these

Q.187 ___________________ and _______________ are the two parties involved in

Contract of sale
a) Seller & Buyer
b) Agent & Principal
c) Customer & Sales man
d) Customer and supplier

Q.188 The position of the finder of lost goods is that of:

a) Bailee
b) Bailor
c) Creditor
d) True owner

Q.189 Which of the following does not fall in the category of “goods”:

a) Stock and shares

b) Money and actionable claims
c) Growing crops and grass
d) Things attached to or forming the part of land which are agreed to be severed before sale
or under contract of sale

Q.190 which of the following section of the Sales of goods Act, 1930 defines unpaid seller:

a) Section 45
b) Section 46
c) Section 47
 d) Section 48

Q.191 Where there is a contract for the sale of specific or ascertained goods the property in them
is transferred to the buyer at the time when the:

a) Parties intend the property in goods to pass

b) Contract is entered into
c) Price is paid
d) Delivery of goods has been made

Q.192 A contract of sale can be:

a) Absolute only
b) Conditional only
c) Absolute or conditional
d) Conditional only with the consent of the buyer

Q.193 According to Sale of Goods Act, 1930, ‘seller’ means a person:

a) who only agrees to sell the goods

b) who only sells the goods
c) who sells or agrees to sell
d) who transfers the possession of the goods to the other party

Q.194 _____________ is termed as consideration in a contract of sale:

a) Exchange money
b) Barter money
c) Price
d) Reward

Q.195 In case of breach of condition, the breach gives rise to:

a) Claim for damages

b) Rejection of goods
c) A right to repudiate the contract
d) None of these

Q.196 Section 2(7) of the Sales of Goods Act, 1930

a) Goods
b) Future Goods
c) Both a and b
 d) None of these

Q.197. Section 55 of the Sales of Goods Act, 1930:

a) Suit for price
b) Suit for damages
c) None of these
d) Both of these

Q.198 Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the
buyer may sue for:

a) Damages for non-delivery

b) Damages for non-acceptance
c) Specific performance
d) Compensation

Q.199 Which of the following provisions effects of non registration of partnership firm has been
enunciated ?

a) Section 67
b) Section 69
c) Section 68
d) Section 65

Q.200 Rights of Indemnity holder have been mentioned in which of the following provisions of
the Indian Contract Act , 1872
a) Section 125
b) Section 135
c) Section 123
d) None of these