34

MULTIPLE CHOICE QUESTIONS

Chose the correct answer

1 When a person accepts a proposal, there is

a. proposal
b promise
c. agreement
2. An agreement is
a. offer
b offer and acceptance
c. contract
3 A proposal may be revoked any time
a before the communication of its acceptance
b. before rejection of its communication
c. both a and b
4, An agreement is a voidable contract when it is enforceable
a. if certain conditions are fulfilled
b by law at the option of the aggrieved party
c. by both parties
5 A contract made by words spoken is called
a. express
b implied
c. tacit
6. A contract in which nothing remains to be done by either party is called
a executed
b executory
c unilateral
7. A specific offer can be accepted by
a. any person
b friend of offeror
c. person to whom it is made
8. If acceptance is not according to the mode prescribed but the offeror does not
object, there is
a. contract

267
268 Multiple Choice Questions
b no contract
c. voidable contract
9 There is a counter offer when
a offeree gives conditional acceptance
b. offeror makes a fresh offer
c. offeree makes some inquiry
10. A makes an offer by letter on 10th which reaches B on 12th. B posts a letter
of acceptance on the 14th which reaches A on the 16th. The communication
of acceptance is complete as against A on
a. 12th
b. 14th
c. 16th
11 . Consideration must move at the desire of
a promisor
b. promise
c. both
12. Essential elements of a valid contract do not include
a. adequacy of consideration
b. capacity to contract
c. free consent
13. A promise to compensate a person who has voluntarily done something for
the promisor is
a. enforceable
b. not enforceable
c. voidable
14 Consideration may be
a. present, past or future
b. present or future
c. present
15 . On attaining the age of majority, the minor's agreement
a. can be ratified
b becomes valid
c cannot be ratified
16 If a minor borrows money by misrepresenting his age, he
a can be sued for fraud
b cannot be sued for fraud
c. is liable to return the money
17. A person of an unsound mind cannot become
Multiple Choice Questions 269
a. agent
b. principal
c. both a and b
18. When consent is obtained by fraud or misrepresentation, the agreement is
a. valid
b. void .
c. voidable at the option of the aggrieved party
19. A bilateral mistake of fact makes an agreement
a. voidable
b. valid
c. void
20. Fraud exists when a false representation is made
a. knowingly
b. unknowingly
c. unintentionally
21. A promise made without any intention of performing is
a. fraud
b. misrepresentation
c. coercion
22. Unlawful detention of the property of a person to obtain his consent is
a. fraud
b. coercion
c. misrepresentation
23. Moral pressure is involved in
a. undue influence
b. coercion
c. mistake
24. A contract is voidable when
a. induced by undue influence
b. one party under a mistake of fact
c. both parties under a mistake of fact
25. A contract to do or not to do something if some event collateral to such
contract does or does not happen is called
a. simple contract
b. complex contract
c. contingent contract
26. Agreements contingent on impossible events are
a. void
270 Multiple Choice Questions
b. voidable
c none of the above
27. An agreement whose meanipg is not certain is
a. valid
b. void
c. voidable
28. A voidable contract is
a. illegal agreement
b. partly valid agreement
c. none of the above
29. A contracts B to sell his horse by 2nd June. 2023. The horse dies on 1st
June. 2023. The contract is
a valid
b. void
c. illegal
30. A wagering agreement is
a. immoral
b. forbidden by law
c. opposed to public policy
31 An agreement with an alien enemy is
a. unlawful
b. voidable
c. valid
32. Regulations regarding the opening and closing of businesses in a market are
a. valid
b. unlawful
c. restraint of trade
33. An agreement in restraint of marriage of any person other than a minor is
a. valid
b invalid
c. void
34. A contract of insurance is
a. wagering agreement
b. contingent agreement
c. unilateral agreement
35. X agrees to pay a certain sum to Y, if Y brings a star from the sky. It is
a. valid contract
b. void contract
Multiple Choice Questions 271
c. voidable contract
36. A agrees to pay Rs. 50000 to B if his house gets burnt. It is
a. wagering agreement
b. contingent agreement
c. void agreement
37. A agrees to pay Rs. 10000 to B if a certain ship does not return to Karachi
port within a year. A s promise can be enforced when the ship
a. arrives at Karachi port in good condition during the year
b. arrives at Karachi port in damaged condition during the year
c gets sunk in the sea during the year
38 Promises forming considering for each other are called
a mutual
b reciprocal
c dependent
39 Each party is a promisor and promisee in case of
a reciprocal promise
b past consideration
c. present consideration
40 . When a party transfers his contractual rights to another party, it is called
. a. recession
b. waiver
c. assignment
41. When two or more persons make a joint promise, they must perform the
promise
a. jointly
b. jointly and severally
c. jointly or severally
42 A, who owes Rs. 10000 to B, dies leaving an estate worth Rs. 6000. The
legal representatives of A are
a. liable for Rs. 4000
b. not liable
c. liable for Rs. 6000
43 . Novation is the discharge of a contract by
a. cancellation of an existing contract
b. change in terms of the contract
c. substitution of an existing contract by a new contract
44 A lends Rs. 1000 to B but later asks him not to pay the amount The contract
is discharged by
272 Multiple Choice Questions
a. novation
b. performance
c. waiver
45. If performance becomes difficult due to an unexpected event, the contract is
a. discharged
b. not discharged
c. void
46. If a contract cannot be performed due to default by a third party on whom the
promisor relied, the contract is
a. discharged
b not discharged
c. void
47. A agreed to paint a picture for B but died before painting it. Contract is
a. discharged
b. voidable at the option of B
c. voidable at the option of legal representatives
48. A quasi-contract
a. is a contract
b. is an agreement
c. has only a legal obligation
49. A person who finds goods belonging to another person and takes them into
his custody has the same responsibilities as that of
a. trustee
b. owner
c. bailee
50. A finder of lost goods is
a bailor
b. bailee
c. owner
51 The court may order specific performance when
a contract is voidable
b damages are an adequate remedy
c. damages are not an adequate remedy
52 Anticipatory breach of contract takes place
a. during the performance of a contract
b. before performance is due
c. when performance is due
53 In case of wrongful dishonor of a cheque by a bank, the court may award
Multiple Choice Questions 273
a. ordinary damages
b. special damages
c. exemplary damages
54. The payment of a certain amount on breach of a contract is called
a. special damages
b. nominal damages
c. liquidated damages
55. A guarantee which extends to a series of transactions is called
a. special guarantee
b. continuing guarantee
c. specific guarantee
56. A contract of indemnity is
a. contingent contract
b. quasi-contract
c. wagering agreement
57. Any guarantee obtained by a creditor by keeping silent as to material
circumstances is
a. invalid
b. void
c. enforceable
58. Where there are co-sureties, a release of one of them by the creditor
a. discharges other co-sureties
b. does not discharge other co-sureties
c. makes a contract of guarantee void
59. The right of subrogation in a contract of guarantee is available to
a. creditor
b. principal debtor
c. surety

60. If the creditor does not sue within the period of limitation, it
a. discharges surety
b. does not discharge the surety
c. makes a contract of guarantee void
61 . The bailment of goods as security for payment of debt or performance of a
promise is called
a. pledge
b. special bailment
c. none of the above
274 Multiple Choice Questions
62. A gratuitous bailor is liable to the bailee for defects in the goods bailed
a in all cases of loss
b if he is aware of defects
c if he is not aware of defects
63. A purchases goods from B by misrepresentation, and pledges them with C.
The pledge is
a. valid
b. void
c. invalid
64. Gratuitous bailment is
a. supported by consideration'
b. not supported by consideration
c. not enforceable by law
65. A general lien is available to
a. bailee
b. bailor
c. banks
66. If there is no agreement, an agent is
a. not entitled to remuneration
b. entitled to any remuneration
c. entitled to reasonable remuneration
67 For his commission or remuneration, an agent has
a. general lien
b. particular lien
c. no lien
68. If an agent makes a secret profit out of business, he loses
a. profit
b. remuneration
c. profit and remuneration
69. Goods that are in existence at the time of contract are called
a. specific goods |
b. existing goods
c. present goods
70. Specific goods are identified
a. at the time of the contract of sale
b. by seller
c. by buyer
Multiple Choice Questions 275
71 If the price is not determined by parties in a contract of sale, the buyer is
bound to pay 4

a. price determined by the third party

b. price determined by the seller
c. reasonable price
72 Offer for sale of a car in a local newspaper is called
a. general offer
b. special offer
c cross offer
73. The doctrine of caveat emptor means
a. let the seller beware
b let the buyer beware
c. let the creditor beware
74. A guarantee is a contract in which a person performs the promise or
discharges the liability of
a. contractor
b. stranger
c. third person
75 A continuing guarantee may at any time be revoked by the surety as to future
transactions by giving notice to
a. creditor
b. principal debtor
c. none of the above
76. In case of a breach of warranty, the buyer can
a repudiate contract
b. claim damages only
c. return the goods
77. In a sale, there is an implied condition that the seller
a has the right to sell the goods
b. is in possession of goods
c will acquire the goods
78. A condition is a stipulation that is
a. essential to the main purpose of the contract of sale
b. collateral to the main purpose of the contract pf sale
c. not essential to the main purpose of the contract of sale
79 The main object of a contract of sale is
a. transfer of possession
b. transfer of property
276 Multiple Choice Questions
c. delivery of goods
80. In a contract of sale, unless goods are ascertained, there is
a. sale
b. agreement to sell
c. void agreement
81 . When there is a contract for sale of unascertained goods, property in goods
a. passes when the buyer pays the price
b. does not pass until goods are ascertained
c. when the buyer accepts the goods
82. If goods are delivered to the buyer and he rejects them, he must
a. intimate the seller
b. return to seller
c. keep with him
83. If the seller delivers goods in excess quantity, the buyer may
a. accept the whole
b. reject the whole
c. both a and b
84. Lien of unpaid seller depends on
a. possession
b. title
c. ownership
85. An unpaid seller can exercise the right of stoppage in transit when the carrier
holds
a. goods as seller's agent
b. goods as buyer's agent
c. goods in his own name
86. An unpaid seller can exercise his right of lien
a. for the price of goods
b. where the buyer has not become insolvent
c. for the price of goods and other charges
87. If goods are rejected by the buyer and the carrier continues to be in
possession of them, the transit
a. commences
b. ends
c. does not end
88. If an unpaid seller has not given notice of resale to the buyer and there is
profit on resale, the unpaid seller
a must give it to the buyer
Multiple Choice Questions 277
b. must not give it to buyer
c. may dispose of in any manner
89. If the seller uses pretended bidding to raise the price, the sale is
a. voidable at the option of the buyer
b. void
c. valid
90. A holder in due course gets an instrument
a. subject to defects
b. free from defects
c. subject to certain defenses
91 . A bill that is not expressed to be payable on demand is
a. entitled to 3 days of grace
b. not entitled to any days of grace
c. entitled to 2 days of grace
92 Addition of the words ‘non-negotiable’ to the crossing
a. restricts transferability of the cheque
b makes no difference
c. does not restrict transferability of the cheque
93 A promissory note, cheque or bill of exchange is an inland instrument if it is
a. drawn in Pakistan and payable outside
b. drawn upon any person resident in Pakistan
c. drawn and payable in Pakistan
94. Where a cheque bears across its face the name of the banker, the crossing is
a. general
b. special
c. non-negotiable
95. A bill of exchange cannot be
a endorsed
b. crossed
c. accepted
96. If the promissory note falls due on 14 August which is a public holiday, it is
deemed to be due on
a. 14 August
b. 15 August
c. 13 August
97 In a promissory note, a minor can be
a. maker
b payee
278 Multiple Choice Questions
c. drawer
98. For a promissory note made by a minor for necessaries supplied to him
a. his estate is liable
b. he is personally liable
c. he is not liable
99 If the signatures of the maker on a negotiable instrument are forged, a person
acquiring it in good faith
a. acquires good title
b. acquires better title
c. does not acquire a good title
100. A negotiable instrument payable to bearer is said to be negotiated to the
party when it is
a. delivered to that party
b. endorsed and delivered to that party
c. endorsed by that party
101 Where a bill is dishonored by non-acceptance, presentment for payment is
a. necessary
b. not necessary
c. optional
102 A promisor note and cheque are dishonored by
a non-payment only
b. non-acceptance only
c. non-payment and non-acceptance
103 In the case of an inland bill or promissory note, a notice of dishonor is
a. compulsory
b. non-compulsory
c optional
104. Notice of dishonor is to be given by
a. drawer of bill in all cases
b. acceptor of bill
c. holder of bill at the time of dishonor
105. When a person acquires a negotiable instrument after its dishonor, he
acquires
a. rights of a holder in due course
b. rights of his immediate transferor
c. no rights
106. Payment of a party who is secondarily liable
a. discharges instrument
Multiple Choice Questions 279
b does not discharge instrument
c. discharges parties prior to him
107. A person who is in the regular transportation business and undertakes to
transport the goods for hire is called
a common carrier
b. private carrier
c consignor
108. A common carrier can lawfully refuse to carry goods if
a. there is no space in the vehicle
b goods are of dangerous nature
c both a and b
109. A person who occasionally transports goods of a person of his own choice is
called
a. common carrier
b private carrier
c. consignor
110. Which lien is available to a common carrier
a. general lien
b. particular lien
c. none of the above
111 A common carrier is liable as an insurer but not liable for loss due to
a act of God
b. negligence of consignor
c. both a and b
112 Liability of common carrier comes to an end on
a. unloading of goods
b reaching destination
c delivering goods to an entitled person
113. Railway administration is not liable for losses due to
a act of God
b. war
c. both a and b
114 A person who hires a ship for the transportation of goods is called
a. charterer
b. shipper
c. both a and b
115 The charges for which the ship owner agrees to carry the goods of the
charterer are called
280 Multiple Choice Questions
a. freight
b. shipment charges
c. hire
116. A contract for the hiring of the whole ship or its substantial part is called
a. charter party
b. bill of lading
c. shipment contract
117. A contract for hiring the whole ship along with its possession and control, for
the time being, is called
a. bill of lading
b. charter without demise
c. charter by demise
118. Days that are allowed for free loading and unloading of the ship are called
a. days of grace
b. shipment days
c. lay days
119. The contract by which money is borrowed by the master of a sea-going ship
on the security of the ship or cargo is called
a. maritime bond
b shipper’s bond
c. bottomry bond
120. In partnership at will, a partner may leave the firm
a. with the consent of all partners
b. in accordance with an agreement
c. by giving notice to partners
121. A minor partner has a right to
a. take part in the management
b. inspect accounts of the firm
c. inspect books of the firm
122. A new partner can be inducted into an existing partnership by
a. consent of all partners
b. consent of majority partners
c. recommendation of any partner
123. Partner has no implied authority to
a. settle claims of the firm
b. defend any suit against the firm
c purchase goods on credit
124. The relation between partners arises from
Multiple Choice Questions 281
a. mutual understanding
b. agreement
c. legal provisions
125. Partnership business is carried on under
a. firm name
b. partnership firm
c. registered name
126. Which is not necessary for making a partnership
a. sharing of profits
b. written contract
c. mutual agency

1. b 2. b 3. a 4. b 5. a 6. a 7. c
8 a 9. a 10 c 11. a 12 a 13. a 14. a
15. c 16. b 17. c 18. c 19 c 20. a 21. a
22 b 23. a 24. a 25. c 26. a 27. b 28 c
29 b 30. b 31. a 32. a 33 c 34. b 35. b
36. b 37. c 38. b 39. a 40. c 41. a 42. c
43. c 44. c 45. b 46. b 47 a 48 c 49. c
50 b 51. c 52. b 53. c 54 c 55. b 56. a
57 a 58. b 59. c 60. b 61. a 62 b 63. a
64. b 65. c 66. c 67 b 68. c 69. b 70. a
71 c 72 a 73. b 74. c 75. a 76. b 77. a
78. a 79. b 80. b 81. b 82 a 83. c 84. a
85 c 86. a 87. c 88. a 89 a 90. b 91. a
92. c 93. c 94. b 95. b 96. c 97. b 98. a
99. c 100. a 101. b 102 a 103. a 104. c 105. c
106. b 107. a 108. c 109. b 110. b 111. c 112. c
113. c 114. c 115 a 116. a 117 c 118 c 119. c
120. c 121. b 122 a 123 a 124 b 125 a 126. b