MULTIPLE CHOICE QUESTIONS

FYBAF, SEM 2 (BUSINESS LAW)

1.An agreement with or by a minor is

 [A] void
 [B] Voidable at the option of the minor.
 [C] Voidable at the option of the other party.
 [D] valid

Answer: Option [A]

2. on attaining the age of majority a minor’s agreement.

 [A] can be ratified by him.

 [B] cannot be ratified by him.
 [C] becomes void.
 [D] becomes valid.

Answer: Option [B]

3. A, minor enters into a contract for the purchase of certain necessaries. In such a
case ________.

 [A] he is not personally liable to pay.

 [B] he is liable to pay.
 [C] his estate is liable to pay.
 [D] his guardian is liable to pay.

Answer c

4. the case of mohiri Bibi versus Dharmodas Ghose ,( 1903) 301 cal. 539 deals
with

A. communication of offer
B. communication of acceptance
C. a minor’s agreement
D. fraud

Answer C

5. flaw in capacity to contract may arise from

A. want of consideration
B. unsoundness of mind
C. illegality of object
D. uncertainly of object.
Answer b

6. consideration must move at the desire of

A. the promisor
 B. the promise
C. promisor or any third party
D. any third party

Answer A

7. consideration

A. Must move from the promise

B. May move from the promise or any other person
C. May move from the third party
a.

. An agreement enforceable at law is ______________

a.    Agreement
b.    Offer
c.    Promise
d.    Contract
ANS: D
 
2.    Contract which is made by words spoken or written or both is called
___________ contract
a.    Quasi
b.    Express
c.    Declaration
d.    Simple
ANS: B
  
3.    An offer made to public and where anyone can accept it is known as
________________
a.    Cross
b.    Counter
c.    General
d.    Specific
ANS: C
 
4.    _________________ is also called as proposal.
a.    Offer
b.    Consideration
c.    Indemnity
d.    Bailor
ANS: A
 
5.    Consideration to a contract moves at the desire of ______________
a.    Businessman
b.    Promisor
c.    Minister
d.    Valuer
ANS: B
 
6.    An agreement with a minor is ___________
a.    Valid
 b.    Void
c.    Desirable
d.    Difficult
ANS: B
 
7.    A minor is a person below ______________
a.    14 years
b.    16 years
c.    18 years
d.    22 years
ANS: C
 
8.    An intoxicated a person is _____________
a.    of sound mind
b.    of unsound mind
c.    smart mind
d.    No mind
ANS: B
 
9.    Consideration in a contract ____________________
a.    must be present only
b.    must be future only
c.    may be past, present or future
d.    may be past and future only
ANS: C
 
10. A finder of lost goods is a ______________
a.    Bailor
b.    bailee
c.    Thief
d.    True owner
ANS: B
 
11. E-contract is formed in ______________form.
a.    Simple
b.    Forged
c.    Electronic
d.    Binding
ANS: C
  
12. A contract of indemnity is a _______________-
a.    Contingent Contract
b.    Quasi Contract
c.    Substitute Contract
d.    Wagering Contract
ANS: A
 
13. The case of Moshiri Bibi v dharmodas ghose
 
a.    communication of offer
b.   communication of acceptance
c.    a minor’s agreement 
d.    fraud
 ANS: C
 
14. Ignorance of ___________ is no excuse
a.    Consent
b.    Law
c.    Misrepresentation
d.    Fraud
ANS: B
 
15. A' agrees to find treasure for 'B' by magic. The agreement is _____________
a.    Valid
b.    Void
c.    Voidable
d.    Nonsense
ANS: B
 
16. Discharge of Contract means ____________
a.    termination of contract
b.    postponing of contract
c.    temporary injunction
d.    discharge of parties
ANS: A
 
17. During Bailment, bailee is required to take _____________ care of the goods
bailed.
a.    monetary
b.    reasonable
c.    unreasonable
d.    sensible
ANS: B
 
18. The goods which have been identified and agreed by the parties are
_____________
a.    Specific
b.    Damaged
c.    Unascertained
d.    Deliverable
ANS: A
 
19. The Sale of Goods Act is of ______________
a.    1903
b.    1923
c.    1930
d.    2020
ANS: C
 
20. The doctrine of Caveat Emptor means ___________
a.    Seller has title
b.    Buyer Beware
c.    Breach of Trust
d.    Secondary Condition
ANS: B
21. Contract can be signed between
(A) Individuals
(B) Legal Entities
(C) Both (A) and (B)
(D) None of these
Ans c

22.A contract of indemnity is a

a. Contingent Contract
b. Wagering contract
c. Quasi Contract
d. Void agreement
Ans a

23. S and P go into a shop. S says to the shopkeeper, C, “Let P have the goods, and
if he does not pay you, I will. “This is a
a. Contract of Guarantee
b. Contract of Indemnity
c. Wagering agreement
d. Quasi-contract
And a

24. A guarantee obtained by a creditor by keeping silence as to material

circumstances is:
a. valid
b. voidable
c. unenforceable
d. invalid
 Ans d

25.There are _________ contracts in a contract of guarantee

a. 2
b. 3
c. Either 2 or 3
Ans b

26.The person in respect of whose default the guarantee is given is called as

_________
a. Guarantor
b. Debtor
c. Principal debtor
d. Security
And c

27. A contract of guarantee is a contract to ___________, of a third person in case

of a third person in case of his 
default.
a. Perform the Promise
b. Discharge the liability
c. Either (a) or (b)
d. (d)
Ans c
28: There are __________ parties in a contract of indemnity
a. 2
b. 3
c. either 2 or 3
d. None of these
Ans a

29The party who gives indemnity is called as _________

a. Indemnifier
b. Indemnity holder
c.Guarantor
d. Principal debtor
Ans a

30 The party to whom indemnity is given is called as __________

a. Indemnifier
b. Indemnity holder
c.Guarantor
d. Principal debtor
Ans b

31. A contract of indemnity shall be valid only if it is ___________

a. In writing
b. Signed and registered
c.Both (a) and (b)
d. None of these
Ans c

32. The indemnity holder has the right to __________

a. Right to recover damages
b. Right to recover cost of suit
c.Right to recover sums paid as a compromise of the suit
d. All of these
Ans d

33 In a contract of guarantee there are:

a. One contract 
b. Two contracts
c. Three contracts
d. Four contracts
Ans c

34.The delivery of goods by one person to another as security for the payment of a
debt is called 
a. bailment 
b. pledge 
c. mortgage 
d. hypothecation
Ans b

35 The delivery of goods by one person to another for some specific purpose and
time is known as
a. mortgage 
b. pledge 
c. bailment 
d. charge 
Ans c

36 Promises which form the consideration or part of the consideration for each
other are called as ------------------
1. Mutual promises
 2. Reciprocal promises
 3. Promises 
 4. Written Promises 
Ans 2

37.Performance of the conditions of a proposal, or the acceptance of any

consideration for a reciprocal promise which may be offered with a proposal, is an
------------------- of the proposal
1. Acceptance
2. Mutual Acceptance 
3. Written Acceptance 
4. Reciprocal Promise 
Ans 1

38. All agreements are ------------------ if they are made by the free consent of
parties competent to contract, for a lawful consideration and with a lawful object,
and are not hereby expressly declared to be void.
1. Standard forms of contracts 
2. Contracts
3. Enforceable Contracts 
4. Quasi contracts. 
Ans 2

39 When, at the desire of the promisor, the promisee or any other person has done
or abstained from doing, or does or abstains from doing, or promises to do or to
abstain from doing, something, such act or abstinence or promise is called a
consideration for the promiseis defined under ------------------
1. Section 2(e)
2. Section 2(f) 
3. Section 2 (a) 
4. Section 2(d) 
Ans 4

40.Every promise and every set of promises, ----------------------------------------- is

an agreement
1. In exchange for each another 
2. Forming the consideration for each other
3. Mutually agreed
4. Partially agreed 
Ans 2

41.When consent to an agreement is caused by coercion, fraud or

misrepresentation, the agreement is a contract ------------------------ whose consent
was so caused.
1. valid 
 2. void ab initio
3. Legally enforceable 
4. voidable at the option of the party. 
Ans 2
42 A ------------------ is a contract to do or not to do something, if some event,
collateral to such contract, does or does not happen.
1. Contingent contract
2. Quasi Contract 
3. Express of Implied Contract
4. Indemnity Contract 
Ans 1

43 A person who finds goods belonging to another, and takes them into his
custody, is subject to the same responsibility as a 
1. Bailor
2. Indemnifier 
3. Bailee
4. Guarantor 
Ans 3

44. If the parties to a contract agree to --------- a new contract for it, or to rescind
or alter it, the original contract, need not be performed.
1. Alter
2. Amend 
3. Substitute
4. Modify 
Ans 3

45.When an agreement is discovered to be void, or when a contract becomes void,

any person who has received any --------- under such agreement or contract is
bound to restore it, or to make compensation for it to the person from whom he
received it. 
1. Advantage
2. Benefit
3. Consideration
4. Favour 
Ans 2

46 The consent given will be considered to be valid consent if there is

a. Coercion
b. Undue influence
c. Free consent
d. Misrepresentation
Ans c

47 The rights concerning a contract are decided by

a. Parties to the contract.
b. Indian Contract Act
c. Both (a) and (b)
d. None of the above
Ans a
48. The remedy of compensation given in the case of breach of contract is given
under which section of The Indian Contract Act?
a. Section 73
b. Section 115
c Section 79
d Section 69
Ans a

49Which of the following maxims is not related to the law of Contract?

a. Consensus ad idem
b. Assentio mentum
c. Ex nudo pacto non oritur action
d. Actus Non Facit Reum Nisi Mens Sit Rea
Ans d

50.A void contract is a contract which

a. Is not enforceable by law
b. Does not have reasonable terms
c. Declared void by the Indian contract act
d. Both (a) and (c)
Ans d

51. 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
ANS D

52. 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
ANS C

53. 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
ANS A
54. 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
ANS D
55. 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
ANS B
56. 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
ANS C

57. 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
ANS D

58. Where in a contract of sale the seller purports to affect the present sale of the
future goods, the contract operates as:
a) A Contract of sale
b) An agreement to sell the goods
c) A Contact of sale or agreement to sell
d) It is not a valid contract
ANS B

59. 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
ANS D

60. Can the agreement be avoided when there is an agreement to sell specific
goods but subsequently the goods perish or become so damaged without any fault
of the seller or buyer:
A) It can be avoided by the parties
b) It can’t be avoided by the parties
c) It can be avoided only with the approval of Court
d) It can be avoided only if there is a contract in this regard between the parties
ANS A

61. A contract of sale may be made:

a) A in writing or by word of mouth
b) partly in writing of partly by word of mouth
c) by the implied conduct of parties
d) All of the above
ANS D

62. A is a stipulation essential to main purpose of the contract and the breach of
which gives rise to a right to treat the contract as repudiated:
a) Condition
b) Warranty
c) Disclaimer
d) Guarantee
ANS A

63. 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
ANS B

64. In the Contract of Sale, there is an implied warranty that

a) Seller has a right to sell the goods
b) The buyer has the right to have and enjoy the quiet possession of goods only.
c) The goods shall be free from any charge or encumbrance
d) The buyer has the right to have and enjoy the quiet possession of goods and that
the goods shall be free from any charge or encumbrance
ANS D
65. 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
ANS A

66. 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
ANS D

67. 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
ANS C

68. Where the transfer of the property in the goods is to take place at a future time
or subject to some condition, then such contract is called:
a) An agreement to sell
b) A contract to Sale
c) Future Contract
d) Conditional contract
ANS A
69. What are the requisites of contract of sale:
a) An Offer and delivery of goods
b) An Offer to buy or sell goods, for a price and its acceptance
c) An Offer, delivery, possession and acceptance
d) An Offer, price, delivery and acceptance
ANS C

70. 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
ANS C

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

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

72 When the buyer chooses to treat a breach of a condition as a breach of warranty,

then the buyer may:
a) Repudiate the contract
b) Reject the goods
c) Ask for indemnification
d)set up against the seller the breach of warranty in diminution or extinction of the
price or can sue the seller for damages
ANS D

73. When the price is not determined in the contract or agreed between the parties,
the buyer shall pay the seller:
a) a fair price
b) a reasonable price
c) market price
d) average price
ANS B

74. 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) A right of indemnification
ANS C

75. If the contract of sale is by sample as well as by description:

a) It is sufficient if the bulk of goods correspond to sample only
b) It is sufficient if the bulk of goods correspond to description only
c) It is not necessary to conform to the sample or description
d) It is not sufficient that the bulk of the goods correspond with the sample if the
goods do not correspond with the description
ANS D

76. The position of the finder of lost goods is that of:

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

77. 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
ANS A

79.The Negotiable Instruments Act 1881, section 4 covers _________.

 (a) Promissory note (b) Bills of Exchange
(c) Cheque (d) all of them
Ans A

80 Every instrument is presumed to made, drawn, endorsed or negotiated for

________.
a. Choice
b. Consideration
c. Debt
d. none of them
ANS B
81 Drawer and payee in a Bill of exchange may be same parties.
a. True
(b) False
(c)Partly true
(d) Partly false
ANS A

82The dishonour of cheque is punishable if it is dishonoured due to__________.

a Insufficient Balance in drawer’s account
b Account closed by drawer
c Stop payment by drawer
d All of these
ANS C

83 The case for dishonour of cheque is to be filled in the court of

_________.
a. Judicial Magistrate First Class
(b) Metropolitan Magistrate
(c) Both (a) & (b)
(d) none of them
ANS C

84 The Negotiation of instrument to any person receiving it by paying

consideration, before maturity & in good faith is termed as_______.
a. Holder
b. Holder In due course
c. (a) & (b)
d. None of them
ANS B

85 The notice of dishonour of cheque is to be given with in ______ of its

knowledge to receiver.
a 10 days (b) 30 days (c) (a) & (b) (d) 15 days.
ANS B

86 The criminal complaint for dishonour of cheque is to be filled in court

within______of the Drawer failing to pay.
a 30 days (b) 1 month (c) (a) & (b) (d) None of
them.
ANS B

87 By the notice for dishonour of cheque the Drawer is to be granted _____ time
for payment.
a 10 days (b) 30 days (c) 7 days (d) 15 days.
ANS D

88 The Negotiable Instruments Act, 1881 applies to

A The whole of India
B The whole of India except the State of Jammu and Kashmir
C Those states as notified by the Union Government from time to time in
the Official Gazette
D The whole of India except the State of Jammu and Kashmir and the
North- Eastern States.
ANS A

89 The undertaking contained in a promissory note, to pay a certain sum of

money
is
a. Conditional
b. Unconditional
c. May be conditional or unconditional depending upon the circumstances
(d) None of the above
ANS B

90 A bill of exchange contains a/an

a. Unconditional undertaking (b) Unconditional order (c) Conditional
undertaking (d) Conditional order.
ANS B

91 To whom of the following, payment of the amount due on a promissory

note, bill of exchange or cheque must be made in order to discharge the
maker or acceptor
a. holder of the instrument (b) endorser of the instrument
(c) Both (a) & (b) (d) none of the above
ANS A

92 The term 'negotiation' in section 14 of the Negotiable Instruments Act, 1881

refers to
a. The transfer of a bill of exchange, promissory note or cheque to any
person, so as to constitute the person the holder thereof
b. The payment by a bank on a negotiable instrument after due verification
of the instrument
c. The bargaining between the parties to a negotiable instrument (d) all of
the above.

ANS A

93 The case for dishonour of cheque is to be filled in the court of _________.

a. Judicial Magistrate First Class (b) Metropolitan Magistrate
(c) Both (a) & (b) (d) none of them
 ANS C
94 Offences committed under the Negotiable Instruments Act can be—
a. Compoundable
b. Non- compoundable
c. Non- compoundable and non-bailable
d. Bailable
ANS A
95 Consumer Protection Act is significant to
A) Immovable Goods
B) Movable Goods
C) Particular Goods and Services
D) All Goods and Services
Answer: D
96 How many rights does a consumer have under the Consumer Protection Act?
A) 8
B) 6
C) 4
D) 5
Answer: B

97 Under the Consumer Protection Act, the rights of a consumer do not include to
be
A) Safety
B) Choose
C) Presented
D) Informed
Answer: C

98 When the seller manipulates the price, it is known as

A) Caveat Emptor
B) Unfair trade practices
C) Restricted trade practices
D) None of the above
Answer: C

99Under this act, the minimum age of forum member of a district forum should be
A) 30
B) 40
C) 35
D) 65
Answer: C

100 The maximum age for a state commission member should be

A) 60
B) 35
C) 70
D) 67
Answer: D

101 The maximum age national commission member should be

A) 60
B) 35
C) 70
D) 65
Answer: C
102 Which of the following forum can reappoint the same person as to its
member?
A) National commission
B) State commission
C) District commission
D) None of the above
Answer: D

103 In which forum it is compulsory to have a female member

A) National commission
B) State commission
C) District commission
D) All of the above
Answer: D

104 Within how many days the opposite party has to answer after they are
informed about the complaint?
A) 30
B) 5
C) 20
D) 15
Answer: A
105 Consumer has the right to present before the appropriate forum or
authorities all those matters which effect his interests “ this right of
consumer is termed as right to be

A informed
B heard
C safety
D educated

Ans B

106 Appeal against the district forum can be done in _________________

A State forum
B high court
C national forum
D supreme court

ANS A

107 The rights of consumers as per consumer protection Act does not
include right to be

A informed
B heard
C safety
D presented

ANS D
108 When the seller manipulates the price then it is
A Restrictivetrade practices
B unfair trade practices
C caveat emptor
D none of the above

109. A minor by mis representing his age borrow some money

A he can sue for fraud

B he cannot be sued for fraud

C he is liable to return the money

D none of the above

ANSWER B

110 A person is usually of unsound mind but occasionally of sound mind

A. Himesh enter into a contract when he is of sound mind b

B. he may not make a contract even when he is of sound mind
C. he cannot enter into the contract at all
D. none of the above
ANSWER A

111 A contract by an idiot is

 A. voidable
B. enforceable
C. Invalid
D. void ab initio
ANSWER A

112 Contracts made before war with an alien enemy which are against public policy are

A. suspended and are revived after the war is over

B. dissolved
C. not affected at all
D. void ab initio
ANSWER B

113 The contractual capacity of a company is regulated by

A. its memorandum of association and the provision of the Companies Act 1956
B. its article of association
C. the terms of the contract entered into with third party
D. it prospectus

ANSWER A

114 Contract of sale is divided into to

A. sale and hire purchase

B. agreement agreement to sale and bailment
C. hire purchase agreement + bailment
D. sale and agreement to sale

115 sale create a

A. right in rem
B. right in personam
C. general right
D. All of the above

116 agreement to sale become sale

A. when time lapses

B. when delivery is made
C. when the prices paid
D. All of the above

117 The indemnity holder has the right to ____

a. Right to recover damages

b. Right to recover cost of suit

c.Right to recover sums paid as a compromise of the suit

d. All of these

Ans d

118 A contract of indemnity is a

a. Contingent Contract

b. Wagering contract

c. Quasi Contract

d. Void agreement

Ans a
119 S and P go into a shop. S says to the shopkeeper, C, “Let P have the goods, and if he does not pay
you, I will. “This is a

a. Contract of Guarantee

b. Contract of Indemnity

c. Wagering agreement

d. Quasi-contract

And a

120 A guarantee obtained by a creditor by keeping silence as to material circumstances is:

a. valid

b. voidable

c. unenforceable

d. invalid

Ans d