Exam-preparation4u: TYBCOM SEM 5 || MCQS of Business Law Unit 1 &2

TYBCOM SEM 5 Business Law

Video: BUSINESS lAW MCQ THE INDIAN CONTRACT ACT, 1872

Unit 1 & 2

:- Nature of contact

1. An agreement enforceable by law is a

(a) Promise

(b) Contract

(d) Lawful promise

ANs: B

2. A void agreement is one which is -

(a) Valid but not enforceable

(b) Enforceable at the option of both the parties

(d) Not enforceable in a court of law

Ans: D

3. An agreement which is enforceable by law at the option of one or more of the parties thereon but not at

the option of the other or others is a

(a) Valid Contract

(b) Void contract

(d) Illegal contract

AnS: C

4. When the consent of a party is not free, the contract is

(a) Void (b) Voidable

ANs,: B

5. In case of illegal agreements, the collateral agreements are:

(a) Valid (b) Void

6. An offer may lapse by:

(a) Revocation

(b) Counter Offer

(d) All of these

7. A proposal when accepted becomes a

(a) Promise (b) Contract

8. If A says to B “I offer to sell my house to you for ` 10,00,000” and B accepts the offer by saying clearly

“I accept your offer”, it is a/an

(a) Implied offer

(b) Express offer

(d) None of the above

9. ‘A’ offered a reward of ` 10,000 for recovery of some valuable missing articles. ‘B’ who did not know of this offer, found the missing articles. Which one of the following is the correct solution to this problem?

(a) Giving delivery of articles to ‘A’ amounts to an acceptance and hence ‘B’ is entitled to get the reward of ` 10,000

(b) Giving delivery of articles to ‘A’ amounts to performance of a condition precedent to an offer and hence there is valid acceptance. So ‘B’ must get the reward of ` 10,000

(d) In the absence of any legal obligation on ‘A’, no claim for reward of ` 10,000 is maintainable by ‘B’.

10. Arun has two cars- one of white colour and another of red colour. He offers to sell one of the cars to Basu thinking that he is selling the car which has white colour. Basu agrees to buy the car thinking that Arun is selling the car which has red colour. Will this agreement becomes a valid contract?

(a) Yes (b) No

11. A dress is displayed in the showroom with a price tag attached to the dress. A buyer interested in the dress and ready to pay the price mentioned in the tag approached the shopkeeper for purchasing the dress.

(a) The shopkeeper can refuse to sell the dress as display of dress is just an invitation to offer.

(b) The shopkeeper cannot refuse to sell the dress as the buyer has accepted the offer

(d) The shopkeeper cannot refuse to sell the dress but may charge higher price

12. A agrees to pay ` 1,000 to B if a certain ship returns within a year. However, the ship sinks within the year. In this case, the contract becomes

(a) Valid (b) Void

13. A notice in the newspaper inviting tenders is

(a) a proposal

(b) An invitation to proposal

(d) An invitation for negotiation

14. A telephonic acceptance is complete when the offer is

(a) spoken into the telephone

(b) heard but not understood by the offeror

(d) is received, heard and understood by some person in the offeror’s house

15. A and B agree to deal in smuggled goods and share the profits. A refuses to give B’s share of profit. In this case:

(a) B can enforce the agreement in the court

(b) B can only claim damages

(d) B can enforce the contract and claim damages

16. Which one of the following statements is correct?

(a) Void agreements are always illegal

(b) Illegal agreements are voidable

(d) Illegal agreements are always void

17. A voidable contract is one which

(a) Can be enforced at the option of aggrieved party

(b) Can be enforced at the option of both the parties

(d) Courts prohibit

18. When offer is made to a definite person, it is known as

(a) General Offer

(b) Cross Offer

(d) Special offer

19. On the face of a ticket, it is mentioned that to look for the terms and conditions look behind. Mr. A bought the ticket but didn’t read the terms and conditions. He:

(a) is not bound by the terms and condition

(b) may decide to bound by certain terms and ignore others

(d) none of the above

Answers to MCQs

1. (b) 2. (d) 3. (c) 4. (b) 5. (b)

6. (d) 7. (a) 8. (b) 9. (c) 10. (b)

11. (a) 12. (b) 13. (b) 14. (c) 15. (c)

16. (d) 17. (a) 18. (d) 19. (c)

:- Consideration

1. Which of the following statement is false? Consideration:

(a) Must move at the desire of the promisor

(b) May move from any person

(d) Must be of some value

2. Consideration must move at the desire of

(a) Promisor

(b) Promisee

(d) Any of these

3. Consideration may be

(a) Past

(b) Present

(d) All of the above

4. Consideration in simple term means:

(a) Anything in return

(b) Something in return

(d) Nothing in return

5. Which of the following is not an exception to the rule - No consideration, No Contract

(a) Compensation for involuntary services

(b) Love & Affection

(d) Gift

6. Past consideration means

(a) Consideration and promise should move together

(b) Executed consideration

(d) Invalid consideration

7. A contract without consideration under Section 25 is:

(a) void (b) voidable

Answers to MCQs

1. (c) 2. (a) 3. (d) 4. (b) 5. (a)

6. (c) 7. (c)

Free consent, void agreement, legal obligation of consideration

1. Ordinarily, a minor’s agreement is

(a) Void ab initio (b) Voidable

2. Consent is not said to be free when it is caused by

(a) Coercion (b) Undue influence

3. When the consent of a party is obtained by fraud, the contract is;

(a) Void (b) Voidable

4. The threat to commit suicide amounts to

(a) Coercion (b) Undue influence

5. Moral pressure is involved in the case of

(a) Coercion (b) Undue Influence

6. A wrong representation when made without any intention to deceive the other party amounts to

(a) Coercion (b) Undue influence

7. Which of the following statement is true?

(a) A threat to commit suicide does not amount to coercion

(b) Undue influence involves use of physical pressure

(d) Silence always amounts to fraud

8. In case of illegal agreement, the collateral agreements are:

(a) Valid (b) Void

9. An agreement the object or consideration of which is unlawful, is

(a) Void (b) Valid

10. An agreement is void if it is opposed to public policy. Which of the following is not covered by heads of

public policy?

(a) Trading with an enemy (b) Trafficking in public offices

11. A paid ` 5000 to a Government servant to get him a contract for the canteen. The Government servant

could not get the contract. Can A recover ` 5000 paid by him to the Government servant?

(a) Yes, the agreement is opposed to public policy

(b) No, the agreement is opposed to public policy

(d) No, the agreement falls under section 23 and hence illegal

12. With regard to the contractual capacity of a person of unsound mind, which one of the following

statements is most appropriate?

(a) A person of unsound mind can never enter into a contract

(b) A person of unsound mind can enter into a contract

contract, of sound mind

(d) A person who is occasionally of unsound mind can contract although at the time of making the

contract, he is of unsound mind

13. An agreement made under mistake of fact, by both the parties, forming the essential subject matter of

the agreement is:

(a) Void (b) Voidable

14. A is in dire need of ` 1,00,000 but was unable to get any loan from banks as he had no security to offer.

A approached his friend B who knowing the helpless position of A lent money at a very high rate of

interest, saying that he had himself borrowed money from C. The contract is:

(a) Vitiated by undue influence that B had exercised over A due to his close friendship.

(b) Void as the rate of interest being very high was unconscionable.

(d) Valid as a friend could not be supposed to have wielded undue influence only because the

money lent carried higher rate of interest.

15. Which of the following is not an exception to the rule that the agreement in restraint of trade is void:

(a) A partner can be prevented for carrying on similar business

(b) An outgoing partner can be restrained on carrying similar business

(d) The seller of goodwill of business can be prevented for carrying any kind of business at any

place.

16. An agreement to pay money or money’s worth on the happening or non-happening of a specified

uncertain event, is a

(a) Wagering agreement (b) Contingent contract

17. A wagering agreement in India is declared by the Contract Act as

(a) Illegal and void (b) Void but not illegal

18. An agreement, the object of which is to procure a public post, is

(a) Void (b) Voidable

19. While obtaining the consent of the promise, keeping silence by the promisor when he has a duty to speak

about the material facts, amounts to consent obtained by:

(a) Coercion (b) Misrepresentation

20. A enters into an agreement with B who has robbed A of ` 10,000 to drop prosecution against him in

consideration of B’s returning ` 8,000. Afterwards B refused to pay. A can get from B

(a) ` 8,000 (b) ` 100

21. On attaining the age of majority, a minor’s agreement:

(a) cannot be ratified by him (b) becomes valid

22. A threat to kidnap one’s son in consideration of `5,00,000 is void because of:

(a) inadequacy of consideration

(b) incompetence of parties

(d) all of the above

23. In which of the following case, aggrieved part can sue for damages:

(a) Fraud (b) mistake

24. A mere attempt to deceive a party to a contract:

(a) is fraud even though the party is not deceived

(b) is not fraud unless the party is actually deceived

(d) amounts to misrepresentation

Answers to MCQs

1. (a) 2. (d) 3. (b) 4. (a) 5. (b)

6. (c) 7. (c) 8. (b) 9. (a) 10. (d)

11. (d) 12. (c) 13. (a) 14. (d) 15. (d)

16. (a) 17. (b) 18. (a) 19. (d) 20. (c)

21. (a) 22. (c) 23. (a) 24. (b)

PERFORMANCE OF CONTRACT

1. On the valid performance of the contractual obligations by the parties, the contract

(a) Is discharged (b) becomes enforceable

2. Which of the following person can perform the contract?

(a) Promisor alone (b) Legal representatives of promisor

3. A contract is discharged by novation which means the

(a) cancellation of the existing contract

(b) change in one or more terms of the contract

(d) none of these

4. A contract is discharged by rescission which means the

(a) change in one or more terms of the contract

(b) acceptance of lesser performance

(d) cancellation of the existing contract

5. If a person accepts a lesser sum of money than what was contracted for in discharge of the whole debt,

it is known as:

(a) Waiver (b) Rescission

6. Novation discharges a contract

(a) No, it means, no new contract comes to existence

(b) No, it means, new contract comes to existence, but old contract is not discharged

(d) Yes, but only if parties agreed to discharge.

7. Novation and alteration are same

(a) True, both result in discharging old contract.

(b) False, novation discharges old contract, in alteration, the obligation remains.

(d) None of the above

8. A, B and C jointly promised to pay ` 60,000 to D. before performance of the contract, C dies. Here, the

contract

(a) Becomes void on C’s death

(b) Should be performed by A and B along with C’s legal representatives

(d) Should be renewed between A, B and D.

9. Vivaan lives on rent in a house owned by Swasti. Later he purchases the house from Swasti. The rent

agreement is discharged due to:

(a) Waiver of rights (b) Novation of contract

10. When prior to the due date of performance, the promisor refuses to perform the contract, it is known as:

(a) Novation of the contract (b) Anticipatory breach of contract

11. A owes ` 15000 to B. A die leaving his estate of ` 12000. Legal representatives of A are:

(a) liable to pay ` 12000 to B (b) liable to pay ` 15000 to B

12. Rani contracted to teach dance to Shruti. Shruti paid an advance of ` 5000 for the same. Rani met with

an accident and will not be able to dance. She has a daughter as her legal representative. Shruti can

(a) force her daughter to teach her dance

(b) rescind the contract and ask for refund of money

(d) can sue Rani for non-performance of contract

Answers to MCQs

1. (a) 2. (d) 3. (c) 4. (d) 5. (d)

6. (c) 7. (c) 8. (b) 9. (c) 10. (b)

11. (a) 12. (b)

BREACH OF CONTRACT AND ITS REMEDIES

1. When prior to the due date of performance, the promisor absolutely refuses to perform the contract, it is

known as

(a) abandonment of contract (b) remission of contract

2. In case of anticipatory breach, the aggrieved party may treat the contract

(a) as discharged and bring an immediate action for damages

(b) as operative and wait till the time for performance arrives

(d) only option (a) is available

3. In case of breach of contract, which of the following remedy is available to the aggrieved party?

(a) Suit for rescission (b) Suit for damages

4. Sometimes, a party is entitled to claim compensation in proportion to the work done by him. It is possible

by a suit for

(a) damage (b) injunction

5. Generally, the following damages are not recoverable?

(a) Ordinary damages (b) Special damages

6. Damages which arise naturally in usual course of things from breach itself are called:

(a) Special damages (b) Liquidated damages

7. A contracted to supply 200 bags of rice to B on 30th December, 2019. After supplying 20 bags of rice.

A informed B that he will not supply remaining bags of rice to B. In this case,

(a) There is anticipatory breach of contract (b) There is actual breach of contract

8. Where the Court orders the defaulting party to carry out the promise according to the terms of the

contract, it is called

(a) Quantum Meruit (b) Rescission

9. Quantum Meruit means

(a) a non-gratuitous promise (b) as gratuitous promise

10. Wrongful dishonour of cheque by a banker having sufficient funds in the account of customer, the court

may award:

(a) Mitigation of damages (b) contemptuous damages

Answers to MCQs

1. (d) 2. (c) 3. (d) 4. (c) 5. (c)

6. (d) 7. (b) 8. (d) 9. (c) 10. (d)

CONTINGENT AND QUASI CONTRACTS

1. A contract dependent on the happening or non-happening of future uncertain event, is

(a) Uncertain contract (b) Contingent contract

2. A contingent contract is

(a) Void (b) Voidable

3. A contingent contract dependent on the happening of future uncertain even can be enforced when the

event

(a) happens (b) becomes impossible

4. A agrees to pay ` One lakh to B if he brings on earth a star from sky. This is a contingent contract and

(a) Illegal (b) Valid

5. Which of the following is not a contingent contract:

(a) A promise to pay B if he repairs his scooter.

(b) A promise to pay B ` 10,000 if B’s scooter is stolen.

(d) A promise to pay B ` 10,000 if it rains on first of the next month.

6. Which of the following statements regarding Quasi-contracts is incorrect:

(a) It resembles a contract

(b) It is imposed by law

(d) It is voluntarily created

7. For a contingent contract the event must be:

(a) Certain (b) Uncertain

8. Which one of the following is not a characteristic of a contingent contract?

(a) Performance depends upon a future event

(b) The event must be uncertain

(d) There must be reciprocal promises

9. Wagering contracts are:

(a) Void (b) Voidable

10. A contract of insurance is:

(a) Wagering contract (b) unilateral contract

11. Finder of goods should take care of goods as

(a) bailee (b) owner

12. A swiggy man wrongly delivered the food to Mr. Ishaan. Ishaan who took the delivery ate the food

immediately. The swiggy boy returned soon once he got information about wrong delivery. Ishaan should

make the payment as his case is deemed to be a quasi-contract under:

(a) Claim for necessaries supplied to persons incapable of contracting

(b) responsibility of finder of goods

(d) obligation of person enjoying benefits under non-gratuitous act

Answers to MCQs

1. (b) 2. (c) 3. (a) 4. (d) 5. (a)

6. (d) 7. (d) 8. (d) 9. (a) 10. (d)

11. (a) 12. (d)

Exam-preparation4u

TYBCOM SEM 5 || MCQS of Business Law Unit 1 &2

Video: BUSINESS lAW MCQ THE INDIAN CONTRACT ACT, 1872

Unit 1 & 2

:- Consideration

Free consent, void agreement, legal obligation of consideration

BREACH OF CONTRACT AND ITS REMEDIES

CONTINGENT AND QUASI CONTRACTS

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