Commercial Law mcq with answer

Q1. An —- may be implied in fact or implied in law. Contracts implied in fact and contracts implied in law are not really contracts at all.
Answer: implied contract

Q2. A —- is one which may be repudiated (i.e., avoided) at the will of one or more of the parties, but not by others.
Answer: voidable contract

Q3. An agreement which is not —- by either of the parties to it is void-ab-initio such an agreement is without any legal effect.
Answer: enforceable

Q4. An —- is one that the courts will not enforce because the purpose is to achieve an illegal end.
Answer: illegal agreement

Q5. According to Section 15 “All agreements are contracts if they are made by the free consent of the parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void”.
(a) True
(b) False
Answer: (b) False

Q6. The objective of the agreement must be lawful. Any act prohibited by law will not be valid and such agreements cannot be treated as a valid contract.
(a) True
(b) False
Answer: (a) True

Q7. Section 24 to 30 specify certain types of agreement which have been expressly declared void.
(a) True
(b) False
Answer: (a) True

Q8. An agreement must be supported by a consideration of something in return.
(a) True
(b) False
Answer: (a) True

Q9. An offer, —- from the conduct of the parties or from the circumstances of the case, is known as implied offer.
Answer: implied

Q10. A —- by filling up a share application form, usually attached to the prospectus, is making the offer.
Answer: prospective shareholder

Q11. —- is implied when it is said to be gathered from the surrounding circumstances or the conduct of the parties.
Answer: Acceptance

Q12. The acceptor may agree to all the terms of the offer and yet —- to be bound until formal agreement is drawn up.
Answer: decline

Q13. The principle underlying a quasi contract is that no one shall be allowed unjustly to enrich himself at the expense of another, and the —- based on a quasi-contract is generally for money.
Answer: claim

Q14. A person who is interested in the —- which another is bound by law to pay, and who, therefore, pays it, is entitled to be reimbursed by the other.
Answer: payment of money

Q15. Obligation of a person enjoying benefi ts of —- act.
Answer: non-gratuitous

Q16. A —- cannot be a partner in a partnership firm.
Answer: minor

Q17. —- provides that a minor’s estate is liable to a person who supplies necessaries of life to a minor, or to one whom the minor is legally bound to support, according to his station in life, not on the basis of any contract, but on the basis of an obligation resembling a contract.
Answer: Section 68

Q18. A minor’s estate is —- not only for the necessary goods but also for the necessary services rendered to him.
Answer: liable

Q19. A person adjudicated as —- is incompetent to contract until he obtains a certifi cate of discharge from the court.
Answer: insolvent

Q20. An —- made without consideration is valid if it is expressed in writing and is registered under the law relating to registration of documents and is made an account of natural love and affection between parties standing in a near relation to each other.
Answer: agreement

Q21. —- renders a contract void.
Answer: Illegal consideration

Q22. An agreement which —- with morals of the time and contravenes any established interest of society is void as being against public policy.
Answer: conflicts

Q23. —- provides that “every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind is, to that extent, void”.
Answer: Section 27

Q24. Every person has a right to have recourse to the usual —- .
Answer: legal proceedings

Q25. Section 28 renders void another kind of agreement, namely, whereby an attempt is made by the parties to restrict the time within which an action may be brought so as to make it shorter than that prescribed by the —-
Answer: Limitation Act, 1963

Q26. For a contract to be valid it is not only necessary that the parties —- but also that they consent freely.
Answer: consent

Q27. —- consists in the improper exercise of power over the mind of one of the contracting parties by the other.
Answer: undue infl uence

Q28. An —- caused by undue infl uence is voidable at the option of the party whose consent was obtained by undue infl uence.
Answer: agreement

Q29. In —-, the rate of interest being high, or that the borrower is in urgent need of money is not an evidence of undue infl uence.
Answer: money lending transactions

Q30. —- is also known as simple misrepresentation whereas fraud is known as fraudulent misrepresentation.
Answer: Misrepresentation

Q31. The directors of a company are liable in damages —- Act, 1956, even for misstatements, i.e., misrepresentation in the prospectus issued by the company inviting public for subscription.
Answer: under s.62 of the Companies

Q32. A contract creates obligations. —- of contract means the carrying out of obligations under it.
Answer: ‘Performance’

Q33. —- requires that when two or more persons have made a joint promise, then, unless a contrary intention appears from the contract, all such persons jointly must fulfil the promise.
Answer: Section 42

Q34. The —- of joint promisors is joint as well as several.
Answer: liability

Q35. —- means a promise in return for a promise.
Answer: Reciprocal promises

Q36. —- provides that where persons reciprocally promise, fi rstly, to do certain things which are legal and secondly, under specifi ed circumstances, to do certain things which are illegal, the fi rst set of promises is a contract but the second set is a void agreement.
Answer: Section 57

Q37. —- means application of payments.
Answer: Appropriation of payments

Q38. The obvious mode of —- is by performances that is where the parties have done whatever was contemplated under the contract, the contract comes to an end.
Answer: discharge of a contract

Q39. The performance of the contract must be executed personally by the —-, his death or physical disability to perform shall render the contract void and thus exonerate him from the obligation.
Answer: promisor

Q40. —- to perform a contract does not discharge the contract.
Answer: Commercial impossibility

Q41. The —- of contract occurs when a party repudiates it before the time fixed for performance has arrived or when a party by his own act disables himself from performing the contract.
Answer: anticipatory breach

Q42. When a —- is committed by one party, the other party may treat the contract as rescinded.
Answer: breach of contract

Q43. —- as general damages will be awarded only for those losses that directly and naturally result from the breach of the contract.
Answer: Compensation

Q44. —- provides that if the parties agree in their contract that whoever commits a breach shall pay an agreed amount as compensation, the court has the power to award a reasonable amount only, subject to such agreed amount.
Answer: Section 74

Q45. The —- of the special circumstances is a prerequisite to the claim for special damages.
Answer: communication

Q46. —- means an order of the court prohibiting a person to do something where a party is in breach of a negative term of contract (i.e., where he does something which he promised not to do), the court may by, issuing an order, prohibit him from doing so.
Answer: Injunction

Q47. The phrase —- means as much as is merited (earned).
Answer: ‘quantum meruit’

Q48. The —- differs from other branches of law in a very important aspect.
Answer: law of contract

Q49. The freedom of the parties is limited by —- .
Answer: two factors

Q50. The —- cannot be claimed for any remote or indirect loss or damages by reason of the breach.
Answer: ordinary damages

Q51. As per the Indian law, a contract of guarantee must be in writing.
(a) True
(b) False
Answer: (b) False

Q52. Specifi c guarantee is different from continuing guarantee.
(a) True
(b) False
Answer: (a) True

Q53. For a contract of guarantee, the primary liability is of the surety.
(a) True
(b) False
Answer: (b) False

Q54. In the event of principal debtor being a minor, creditor cannot recover his money from the surety.
(a) True
(b) False
Answer: (a) True

Q55. The liability of a surety is secondary.
(a) True
(b) False
Answer: (a) True

Q56. The surety is a favoured debtor.
(a) True
(b) False
Answer: (a) True

Q57. Between co-sureties there is equality of —- and benefit.
Answer: burden

Q58. —- is a contract of indemnity is a contract whereby one party promises to save the other from loss caused to him by the conduct of the promisor himself.
Answer: Contract of indemnity

Q59. —- is a guarantee which extends to a series of transactions.
Answer: Continuing guarantee

Q60. When a debt is guaranteed by two or more sureties, they are called —-
Answer: Co-sureties

Q61. Delivery of goods is essential for effecting bailment.
(a) True
(b) False
Answer: (a) True

Q62. Placing of ornaments in a bank locker is not a contract of bailment.
(a) True
(b) False
Answer: (a) True

Q63. Bailee need not return to the bailer any accretion to the goods on completion of the contract of bailment.
(a) True
(b) False
Answer: (b) False

Q64. A fi nder may sell goods when they are in danger of perishing or losing the greater part of their value.
(a) True
(b) False
Answer: (a) True

Q65. The ownership of goods bailed passes to the bailee.
(a) True
(b) False
Answer: (b) False

Q66. A pledgee has a right to recover any —- incurred for preservation of the goods pledged.
Answer: extraordinary expenditure

Q67. The —- is bound to return the goods on payment of the debt.
Answer: Pledgee

Q68. The right to retain goods not only for —- arising out of the goods retained but for a general balance of account in favour of certain persons.
Answer: Demands

Q69. A —- as the bailment of goods as security for payment of a debt or performance of a promise.
Answer: Pledge

Q70. —- is a right in one person to retain that which is in his possession, belonging to another, until some debt or claim is paid.
Answer: Lien

Q71. A substituted agent is as good agent of the agent as a sub-agent.
(a) True
(b) False
Answer: (b) False

Q72. An ostensible agency is as effective as an express agency.
(a) True
(b) False
Answer: (a) True

Q73. Ratifi cation tantamount to prior authority
(a) True
(b) False
Answer: (a) True

Q74. Agent being merely a connecting link is never personally liable.
(a) True
(b) False
Answer: (b) False

Q75. An agency coupled with interest is irrevocable.
(a) True
(b) False
Answer: (a) True

Q76. The principal is not liable for —- acts done by the agent at the instance of the principal.
Answer: criminal

Q77. The liability of an undisclosed principal is similar to that of a disclosed principal unless there is a —- making the agent liable.
Answer: trade custom

Q78. A —- is a mercantile agent engaged to buy and/or sell property.
Answer: broker

Q79. The person executing the deed is known as the —-.
Answer: Principal or donor

Q80. The power of attorney is required to be engrossed on —-.
Answer: Non-judicial stamp paper

Q81. No sale can take place without a price.
(a) True
(b) False
Answer: (a) True

Q82. The delivery of ascertained goods is essential for the completion of sale.
(a) True
(b) False
Answer: (b) False

Q83. Consideration in a contract of sale of goods can also be paid partly in money and partly in goods.
(a) True
(b) False
Answer: (a) True

Q84. The right of lien by an unpaid seller can be exercised for the non-payment of price of goods and other charges.
(a) True
(b) False
Answer: (b) False

Q85. The word lien means to retain possession of.
(a) True
(b) False
Answer: (a) True

Q86. The amount of damages is not to be determined in accordance with the provisions laid down in Sec.73 of the Indian Contract Act, 1872.
(a) True
(b) False
Answer: (b) False

Q87. Risk follows ownership.
(a) True
(b) False
Answer: (a) True

Q88. There are can be an ‘agreement to sell’ goods.
(a) True
(b) False
Answer: (a) True

Q89. A ‘Hire-purchase agreement’ is a bailment plus an agreement to sell.
(a) True
(b) False
Answer: (b) False

Q90. Conditions and warranties are said to the —- when the terms of the contract expressly, provide for them
Answer: Express

Q91. The —- is a fundamental principle of the law of sale of goods.
Answer: Doctrine of caveat emptor

Q92. The —- of goods refers to the custody of goods.
Answer: Possession

Q93. —- lay down the rules which determine when property passes from the seller to the buyer.
Answer: Delivery

Q94. —- lays down a general rule as to transfer of title.
Answer: Sec.27

Q95. —- is defi ned as a voluntary transfer of possession from one person to another.
Answer: Secs.31-44

Q96. —- provide for the duties of the seller and the buyer
Answer: Secs.18 to 25

Q97. If there is breach of condition, the aggrieved party can only claim damages and it has not the right to repudiate the contract.
(a) True
(b) False
Answer: (b) False

Q98. If a buyer once waives a condition, he cannot afterwards insist on its fulfillment.
(a) True
(b) False
Answer: (a) True

Q99. In a sale by sample as well as by description, the goods must correspond both with the sample and the description.
(a) True
(b) False
Answer: (a) True

Q100. In a contract of sale, there is no implied conditions as to quality or fi tness of the goods for a particular purpose.
(a) True
(b) False
Answer: (a) True

Q101. Packing of goods is not an important consideration in judging their ‘merchantability’.
(a) True
(b) False
Answer: (b) False

Q102. Where a person sells goods, knowing that the goods are dangerous to the buyer and that the buyer is ignorant of the danger, he need not warn the buyer of the probable danger.
(a) True
(b) False
Answer: (b) False

Q103. An article is sold under its patent name. There is no implied condition that the goods shall be reasonably fit for any particular purpose.
(a) True
(b) False
Answer: (a) True

Q104. In a contract of sale by sample, the bulk of goods supplied may not correspond with sample.
(a) True
(b) False
Answer: (b) False

Q105. An implied condition to quality may be annexed by the usage of trade.
(a) True
(b) False
Answer: (a) True

Q106. If the buyer has examined the goods there is no implied condition as regards defects which such examination ought to have disclosed.
(a) True
(b) False
Answer: (a) True

Q107. Consumer Protection Act, applies to
(a) All products and services
(b) Only physical products
(c) Only services
(d) Only certain products and service
Answer: (a) All products and services

Q108. Any of the following made a complaint EXCEPT
(a) A consumer
(b) The Central Government
(c) In case of death of consumer, his legal heir or representative
(d) None
Answer: (d) None

Q109. Consumer Protection Act, 1986 was amended in
(a) 1991, 1993 and 2001
(b) 1991, 1993 and 2002
(c) 1992, 1993 and 2002
(d) 1992, 1993 and 2001
Answer: (b) 1991, 1993 and 2002

Q110. Right to acquire the knowledge and skill to be an informed consumer is a:
(a) Right to be heard
(b) Right to be informed
(c) Right to consumer education
(d) Right to safety
Answer: (c) Right to consumer education

Q111. The expression ‘Manufacturer’ for the purpose of this Act, means any of the following, EXCEPT.
(a) A Hindu Undivided Family
(b) A person who makes are manufactures any goods
(c) A person who does not make or manufacture any good but assembles part thereof made.
(d) All of the above
Answer: (a) A Hindu Undivided Family

Q112. The complaint can be fi lled in the ‘District Forum’ if
(a) The value of goods or services and compensation, if any, claimed exceeds rupees twenty lakhs.
(b) The value of goods or services and compensation, if any, claimed exceeds rupees twenty lakhs but not exceed rupees 1 crore.
(c) Both (a) and (b)
(d) Only (a)
Answer: (a) The value of goods or services and compensation, if any, claimed exceeds rupees twenty lakhs.

Q113. Which amendment of Consumer Protection Act, permitted representative complaints.
(a) Consumer Protection Act, 1991
(b) Consumer Protection Act, 1992
(c) Consumer Protection Act, 1993
(d) Consumer Protection Act, 2002
Answer: (c) Consumer Protection Act, 1993

Q114. Transfer of cases comes under which section.
(a) Sec.22 B
(b) Sec.22 C
(c) Sec.22 D
(d) Sec.22 A
Answer: (a) Sec.22 B

Q115. Sec.28 A inserted in which amendment of Consumer Protection Act,
(a) Amendment Act, 1991
(b) Amendment Act, 1992
(c) Amendment Act, 1993
(d) Amendment Act, 2002
Answer: (d) Amendment Act, 2002

Q116. AGMARK stands for
(a) Agricultural Process and Grading and Marketing Act,
(b) Agricultural Products and Grading and Marketing Act,
(c) Agricultural Products and Graduate and Marketing Act,
(d) None
Answer: (b) Agricultural Products and Grading and Marketing Act,

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