150+ Questions on Contract Law for CLAT

Introduction and Basic Concepts

1.  The Contract Act of 1872 was enacted on

A. 25th April, 1872                  

B. 25th March, 1872

C. 25th August, 1872          

D. None of the above

Ans: A            

2.  The Contract Act 1872 was enforced on

A. 1st July, 1873

B. 1st August, 1872

C. 1st September, 1872  

D. None of these

Ans: C

3.  How many sections does the Indian Contact Act, 1872 consist

A. 234

B. 256

C. 238

D. 200

Ans: C

4. An agreement not enforceable by law is called

A. Void agreement

B. Valid agreement

C. Voidable agreement   

D. None of the above

Ans: A

5.  An agreement enforceable by law is called

A. A Promise

B. Contract

C. Both (a) and (b)         

D. None of the above

Ans: B

6. An agreement which is enforceable by law at the option of one or more of the parties there to but not at the option of other or others is

A. A void contract

B. A voidable contract

C. A valid contract         

D. All of the above

Ans: B

7.  Name the type of contract that can be inferred from the conduct of a person or the circumstances of case

A.  Executed contract

B.  Express contract

C. Void contract

D. Implied contract

Ans: D

8.  An agreement to do an impossible act is

A. Valid

B. Void

C. Voidable

D. None of the above

Ans: B

9. Consent is said to be free when it is not affected by

A. Coercion

B.  Undue influence

C. Fraud

D. All of the above

Ans: D

10.  Sec 126-147 of the Contract Act deals with

A.  Sale of Goods

B. Contract of Agency

C.  Contract of Pledge

D. Contract of Guarantee

Ans: D

11. The Contract of Pledge is contained under which Sections of the Indian Contract Act, 1872?

A. 124-125

B. 126-147

C. 172-181

D. 148-171

Ans: C

12. The Sections of the Act dealing with agency are?

A. 124-125

B. 172-181

C. 126-147

D. 182-258

Ans: D

13. Sec. 124-125 of the Act deals with?

A. Partnership

B. Agency

C. Indemnity

D. Guarantee

Ans: C

14. Bailment has been dealt with in which Sec. of the Act?

A. 148-171

B. 172-181

C. 126-147

D. 182-258

Ans: A

15. Which Sec is the Interpretation clause of the Indian Contract Act, 1872?

A. Sec. 1

B. Sec. 3

C Sec. 2

D Sec. 4

Ans: C

Offer and Acceptance

16.  Sec 2(a) of The Indian Contract Act,1872 deals with?

A. Offer/Proposal         

B.  Acceptance

C. Consideration

D. Agency

Ans: A

 17. When one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other person to such act or abstinence he is said to make a

A. Proposal

B. Promise

C. Both (a) and (b) 

D. None of these

Ans: A

 18. The person making the proposal/offer is called

A. Promisor/ Offeror          

B. Promisee/ Offeree

C. Both of above

D. None of the above    

Ans:  A

 19. The person to whom proposal is made is called

A.  Promisor/ Offeror

B. Promisee/ Offeree

C.  Both of above  

D. None of the above

Ans: B

 20.  A proposes to sell a house to B. The Communication of the proposal is complete

A. When A makes such proposal   

B. When B accepts the proposal

C. Both (a) and (b)

D. None of the above

Ans: B

 21. An agreement consists of reciprocal promises between at least

A. Four parties.

B. Six parties.

C. Three parties.

D. Two parties.

Ans: D

 22. Promises which form the consideration or part of the consideration for each other are called

A. Reciprocal promises

B. Cross offers

C. Conditional offer

D. Conditional promises

Ans: B

 23.  The mere exchange of information is

A. Offer

B. Not an offer

C. Acceptance

D. None of the above

Ans: B

 24. Under section 2(c) promisor is the

A. person who makes the proposal

B. person who accepts the proposal

C. person who makes the promise

D. person to whom the proposal is made.

Ans: A

 25. Under section 2(c) promisee is the

A. person who makes the proposal

B. person who accepts the proposal

C. person who makes the promise

D. person to whom proposal is made

Ans: B

 26. An offer made to the world at large is known as

A. Specific offer

B. Counteroffer

C. General offer

D. Cross offer

Ans: C

 27. ‘A’ offers to sell his house to ‘B’ for some price. Is this a valid offer?

A. Yes

B. No

C. Maybe

D. All of the above

Ans: B

 28. Goods displayed in a shop with a price tag is an

A. offer

B. invitation to offer

C. counter offer

D. none of the above

Ans: B

 29. Tender is

A. an offer

B. an invitation to offer

C. a counter offer

D. a promise

Ans: B

 30. ________ nullifies the original offer and creates a new offer.

A. offer

B. invitation to offer

C. counter offer

D. none of the above

Ans: C

 31. Communication of a proposal is complete

A. when it is put in the course of transmission

B. when it comes to the knowledge of the person to whom it is made

C. when the proposal is communicated to the person to whom it is made

D. all the above

Ans: D

 32. Communication of acceptance is complete as against the proposer

A. when it comes to the knowledge of the proposer

B. when it is put in the course of transmission to him so as to be out of power of the acceptor

C. when the acceptance is communicated to the proposer

D. all the above

Ans: B

 33. Communication of acceptance is complete as against the acceptor

A. when it comes to the knowledge of the proposer

B. when it is put in the course of transmission

C. when it is communicated to the acceptor that the acceptance has reached the proposer

D. when the proposer conveys the acceptance to the acceptor

Ans: A

 34. Revocation of offer by letter or telegram can be complete

A. When it is despatched

B. When it is received by the offeree

C. When it reaches the offeree

D. Both (a) and (c).

Ans: D

 35. Revocation is complete as against the person who makes it when

A. it is put in the course of transmission

B. it is received by the other party

C. it reaches the other party

D. None of the above

Ans: A

Consideration

36.  Sec 2(d) of The Indian Contract Act,1872 deals with?

A. Offer/Proposal         

B.  Acceptance

C. Consideration

D. Agency

Ans: C

37. When at a desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, something, such act or abstinence or promise is called

A. Consideration  

B. Promise

C. Acceptance      

D. None of these

Ans: A

38. Consideration consists of

A. Act

B. Abstinence

C. Promise

D. All of the above    

Ans:  D

39. Consideration may be rendered in the

A. Past

B. Present

C. Future  

D. All of the above

Ans: D

40.  A proposes to sell a house to B for 10000 Rs. Is this valid consideration

A. Yes

B. No

C. Maybe

D. None of the above

Ans: A (Consideration need not be adequate)

41. Consideration must be

A. Legally impossible

B. Illusory

C. Physically impossible

D. Real and competent

Ans: D

42. An act done voluntarily by the promisee or at the desire of the third party will __________ a valid contract.

A. Constitute

B. Not constitute

C. Accept

D. None of the above

Ans: B

43. Sec. _______ of Indian Contract Act 1872, lays down few exceptions, where consideration is not essential for the formation of contract

A. 2(d)

B. 21

C. 25

D. None of the above

Ans: C

44. An older brother on account of natural love and affection promised to pay the debts of his younger brother. Will this be valid?

A. Yes

B. No

C. Maybe

D. None of the above

Ans: A

45. Considerations & objects are unlawful where it is

A. forbidden by law or defeat the provision of any law

B. which is fraudulent

C. which is immoral & against the public policy

D. all the above

Ans: D

46. Agreement without consideration is

A. Void    

B. Voidable

C. Valid

D. None of the above

Ans: A

47. A promises to pay Rs. 80000 to B, without any consideration. This agreement is

A. Void    

B. Voidable

C. Valid

D. None of the above

Ans: A

48. A, finds B’s horse and returns it to B. B promises to pay Rs.3000 as the reward. Is this valid?

A. Yes

B. No

C. Maybe

D. none of the above

Ans: A

49. If wants to sell his son for Rs. 2 will it be a valid consideration?

A. No

B. Yes

C. Maybe

D. None of the above

Ans: A

50. Consideration which is Illusory in nature is

A. Void    

B. Voidable

C. Valid

D. None of the above

Ans: A

Void Agreements

51.  There may be free consent, parties may be competent, consideration may also be lawful, but if the very purpose of agreement is unlawful or illegal, the agreement is

A. Valid

B.  Voidable

C. Void

D. None of the above

Ans: C

52. Consideration or object of an agreement is considered lawful unless

A. It is forbidden by law

B. It involves or implies injury to the person or property of another

 C. The court regards it as immoral or opposed to public policy

D. All of the above

Ans: D

53. Hakim gives a loan of Rs 2 lakhs to Mr Khan to celebrate his minor daughter’s marriage. Is this valid

A. Yes. Giving a loan is not unlawful

B. No. Giving loans is unlawful

C. No. Giving loans for the marriage of a minor is unlawful.

D. All of the above    

Ans:  C

54. Akash and Amrita decide to cheat on Mrs Maya and divide the gains equally.

A. Valid

B. Void

C.  Voidable           

D. None of the above

Ans: B

55.  An agreement whose object or consideration is immoral; is illegal and therefore void. True or False

A. True

B. False

C. Maybe

D. None of the above

Ans: A

56. Agreements against public policy are

A.  Agreement creating an interest opposed to duty

B. Agreements interfering with the course of justice

C.  Trading with an alien enemy

D. All of the above

Ans: D

57. Sec. 2(g) of The Indian Contract Act deals with

A. Acceptance

B. Consideration

C. Void Agreements

D. None of the above

Ans: C

58. Agreements in restraint of marriage are

A. Void      

B. Voidable

C. Valid

D. None of the above

Ans: A

59. An agreement between traders in the same locality not to sell their products below a particular price is

A. Void      

B. Voidable

C. Valid

D. None of the above

Ans: C

60. An agreement of service by which a person binds himself, during the term of the agreement, not to take service with anyone else, is not in restraint of lawful profession and is

A. Void      

B. Voidable

C. Valid

D. None of the above

Ans: C

61. An agreement by which a party is restricted absolutely from taking usual legal proceeding in respect of any rights arising from a contract is

A. Void      

B. Voidable

C. Valid

D. None of the above

Ans: A

62. An agreement which limits the time within which one may enforce his rights ignoring the provisions of the Limitation Act is

A. Void      

B. Voidable

C. Valid

D. None of the above

Ans: A

63. Prema agrees to put life into the body of a dead horse in return for Rs.5 lakhs. Is this valid?

A. No

B. Yes

C. Maybe

D. None of the above

Ans: A

64. Agreement the meaning of which is uncertain

A. Void      

B. Voidable

C. Valid

D. None of the above

Ans: A

65. A agrees to pay Rs 10,000 to B if India wins a cricket match. Is this valid?

A. No

B. Yes

C. Maybe

D. None of the above

Ans: A

Void Contract

66. A contract which was originally valid but becomes void due circumstances that are beyond the control of the parties is known as

A. Valid contract

B. Voidable contract

C. Void contract

D. None of the above

Ans: C

67. A provision in the legal system for the discharge of a contract where subsequent to its formation a charge of circumstances renders the contract legally or physically impossible, is known as

A. Doctrine of frustration

B. Supervening impossibility

 C. Both A. and B.

D. None of the above

Ans: C

68. Cases When A Valid Contract Turns Void:

A. Upon cancellation of a voidable contract

B. Upon a contract becoming subsequently void

C. Upon one of the parties becoming mentally unsound

 D. All of the above

Ans: D

69. Akash decides to buy a horse from Mrs Maya. The horse has died a month before making the contract. This is a

A. Valid contract

B. Void contract

C. Voidable contract

D. None of the above

Ans: B

70. Maya enters into a contract with Spiderman from Spider land. After a few months, Spider land is declared as an enemy country. This contract is

A. Void

B. Valid

C. Voidable

D. None of the above

Ans: A

71. Sunder enters into a contract with the Government to manufacture arms and ammunition. Subsequently, the Government passes an order that no private party can manufacture arms and ammunition. This is a

A. Valid contract

B. Void contract

C. Voidable contract

D. None of the above

Ans: B

72. ‘A’ owner of a marriage hall accepted booking for a marriage at his hall but a day before marriage the hall was destroyed by fire. Contract is

A. Void

B. Voidable

C. Valid

D. None of the above

Ans: A

73. One of the parties becoming mentally unsound makes the contract

A. Void

B. Voidable

C. Valid

D. None of the above

Ans: A

74. Tommy enters into a contract with Prem to sell ganja. This is a

A. Void contract

B. Voidable contract

C. Valid contract

D. None of the above

Ans: A

75. A shopkeeper sells cigarettes to Mr X who is above 18 years of age. This is

A. Void

B. Voidable

C. Valid

D. None of the above

Ans: C

Capacity of Parties

76.  Sec. 10 of The Indian Contracts Act deals with

A. Valid contract

B.  Capacity to contract

C. Void contract

D. None of the above

Ans: B

77. The following people are incompetent to contract

A. Minors

B. Persons of unsound mind

 C. Persons disqualified by law

D. All of the above

Ans: D

78. A person without a court-appointed legal guardian attains majority at

A. 16

B. 17

C. 21

 D. 18    

Ans: D

79. Akash has a guardian appointed by the court. He attains his majority at

A. 16

B. 18

C. 21

D. None of the above

Ans: C

80.  Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. Which Sec. of the Indian Contract Act has been mentioned above?

A. 10

B. 11

C. 12

D. None of the above

Ans: B

81. Agreement with a minor is

A. Valid

B. Void ab initio

C.  Voidable c

D. None of the above

Ans: B

82.  A minor borrowed a sum of money after mortgaging his property. This is

A. Void      

B. Voidable

C. Valid

D. None of the above

Ans: A

83. A contract, where the minor is a beneficiary is

A. Void      

B. Voidable

C. Valid

D. None of the above

Ans: C

84. Can a minor on attaining majority ratify the contract? 

A. No

B. Yes

C. Maybe

D. None of the above

Ans: A

85. A minor boy borrowed funds, falsely representing that he was of full age. Will the boy be held liable?

A. Yes        

B. No

C. Maybe

D. None of the above

Ans: B

86. Supplying necessities to a minor or lunatic would require them to reimburse the other party.

A. Yes        

B. No

C. Maybe

D. None of the above

Ans: A

87. Can a minor become a partner?

A. Maybe   

B. Yes

C. No

D. None of the above

Ans: C

88. If a minor, acts on behalf of the parents will they be held liable?

A. No

B. Yes

C. Maybe

D. None of the above

Ans: B

89. A minor can be appointed as an agent. Can the principal hold the minor liable for any wrongful acts?

A. No         

B. Yes

C. Maybe

D. None of the above

Ans: A

90. Will the parents be liable if they are acting for the minor?

A. No

B. Yes

C. Maybe

D. None of the above

Ans: B

Free Consent

91.  Sec. 13 of The Indian Contracts Act deals with

A. Valid contract

B.  Capacity to contract

C. Consent

D. Acceptance

Ans: C

92. What is the meaning of consensus ad idem

A. Meeting of the mind

B. Persons of unsound mind

 C. Persons disqualified by law

D. None of the above

Ans: A

93.  Free consent is_____ element for contract

A. Essential

B. Discretional

C. Exceptional       

D. None of the above    

Ans: A

 94. Free consent has been defined under which Sec.

A. 16

B. 18

C. 21

D. 14

Ans: D

 95.  Consent is free under section 14 if not caused by

A. Coercion & undue influence

B. Fraud and misrepresentation

C. Mistake

D. All the above.

Ans: D

 96. Consent under section 13 means

A. Agreeing on the same thing in the same sense

B. Agreeing on the same thing at the same time

C. Agreeing on the same thing at different time

D. Agreeing on different things at different times

Ans: A

 97.  The committing or threatening to commit any act forbidden by the Indian Penal Code, or the unlawful detaining or threatening to detain any property to the prejudice of any person whatever with intention of causing any person to enter into an agreement is called

A. Free consent      

B. Coercion

C. Both (a) and (b)

D. None of the above

Ans: B

 98. Coercion has been defined under which Sec.

A. 13          

B. 14

C. 15

D. 16

Ans: C

 99. Does threat to suicide fall under coercion? 

A. No

B. Yes

C. Maybe

D. None of the above

Ans: B

 100. Consent obtained through coercion is?

A. Void

B. Voidable

C. Valid

D. None of the above

Ans: B

101. If one party is in a position to influence the other and he uses this position to do so. It is known as

A. Fraud

B. Misrepresentation

C. Undue influence

D. Mistake

Ans: C

 102. Undue influence has been defined under which Sec. of The Indian Contract Act

A. 13          

B. 14

C. 15

D. 16

Ans: D

 103. A person is deemed to be in a position to dominate the will of another if

A. he holds a real or apparent authority over the other

B. he stands in a fiduciary relation to the other

C. he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress

D. All of the above

Ans: D

 104. A spiritual advisor told his disciple that if the latter gives away all his properties to the Guru, he would attain “Mukti”. This falls under Undue influence.

A. No         

B. Yes

C. Maybe

D. None of the above

Ans: B

 105. Consent obtained through undue influence is?

A. Void

B. Voidable

C. Valid

D. None of the above

Ans: B

Quasi Contracts

106.  The basis of quasi-contracts is

A. Existence of voidable contracts between the parties

B.  Existence of valid contracts between the parties

C. Consent

D. Prevent unjust enrichment at the expense of others

Ans: D

 107. A person enjoying the lawful non- gratuitous acts of another

A. Liable to compensate

B. Has to perform the same act on the other

 C. Has no liability

D. None of the above

Ans: A

 108.  Anand supplies necessities to Yamini, a mentally unsound person, which are suitable to her condition. Anand is

A. Entitled to be reimbursed from Yamini’s property

B. Not entitled to anything

C. Yamini has to perform the same act for Anand

D. None of the above    

Ans: A 

109. If A agrees to pay rent for B for the month of June. Is be liable to compensate A

A. Yes

B. No

C. Maybe

D. None of the above

Ans: A

 110.  A delivery from Amazon has been wrongly sent to Raju. Raju in spite of knowing that he is not the true owner of the goods uses them. Is Raju liable to compensate?

A. Yes

B. No

C. Maybe

D. None of the above

Ans: A

 111. Maya finds a bag on the seat next to her. She takes the bag with her. She

A. Is under a liability to return the bag to the owner

B. Is under no liability

C. Likes the bag so she can keep it

D. None of the above

Ans: A

 112.  If Ted finds a yellow umbrella at a club and decides to take it. He

A. has must restore it to the true owner     

B. finders, keepers

C. Both (a) and (b)

D. None of the above

Ans: A

 113.  Supply of necessities has been dealt with under which Sec. of The Indian Contract Act?

A. 13          

B. 63

C. 68

D. 16

Ans: C

 114. Reimbursement of payment of money due by another has been dealt with in

A. Sec.68

B. Sec. 69

C. Sec. 70

D. None of the above

Ans: B

 115. Obligation of person enjoying non-gratuitous act has been dealt with in

A. Sec. 69

B. Sec. 70

C. Sec. 71

D. None of the above

Ans: B

 116. The responsibility of finder of goods falls under which Sec of The Indian Contract Act?

A. 68

B. 70

C. 71

D. 73

Ans: C

 117. Liability of person to whom money is paid or goods are delivered by mistake falls under which Sec. of The Indian Contract Act

A. 73          

B. 74

C. 72

D. 76

Ans: C

 118. A mistook B to be C and paid his debt of Rs. 5000 to him. C is liable to either repay or return the money

A. Yes

B. No

C. Maybe

D. None of the above

Ans: A

 119. A and B jointly owe Rs 5000/- to C, A alone pays the amount to C, and B, not knowing this fact, pays Rs 5000/- over again to C. C is

A. Not liable          

B. Bound to repay the money to B

C. Rich

D. None of the above

Ans: B

 120. A leaves goods at B’s house by mistake. B starts using them as his own. Is B bound to pay A for them?

A. Yes

B. No

C. Maybe

D. None of the above

Ans: A

Remedies for Breach of Contract

121. When there is a breach contract the aggrieved party is entitled to

A. Damages

B. Loss

C. Damage

D. Nothing

Ans.A

122. The fundamental principle underlying damages

A. Compensation

B. Punishment

C. Consent

D. None of the above

Ans.A

123. Damages that are restricted to the direct and proximate consequences of the breach of contract are known as

A. Ordinary damages

B. Special damages

C. Exemplary damages

D. None of the above

Ans.A

124. Damages arising on account of the special/unusual circumstances affecting the plaintiff. They are such remote losses, which are not the natural and probable consequences of the breach of contract. They are

A. Special damages

B. Nominal damages

C. Ordinary damages

D. None of the above

Ans.A

125. The plaintiff consigned a parcel along with a consignment note which read as follows: “Must reach New Castle, Monday certain”. The train developed some technical problems and the consignment reached much later. Will the Railway Company be liable to compensate?

A. Yes

B. No

C. Maybe

D. None of the above

Ans.A

126. Damages that are awarded with a view to punish the erring party for the breach and not by way of compensation for the loss suffered by the aggrieved party are known as

A. Ordinary Damages

B. Nominal Damages

C. Exemplary Damages

D. None of the above

Ans.C

127. Exemplary damages are awarded when there is

A. Breach of Contract to marry

B. Dishonour of a cheque by a banker when there are sufficient funds to the credit of the

customer

C. All of the above

D. None of the above

Ans.C

128. Damages that are awarded only for the namesake are known as

A. Ordinary damages B. Nominal damages

C. Exemplary damages D. Special damages

Ans.B

Bailment

129. Bailment has been defined under which Sec. of The Indian Contract Act?

A. 148

B. 149

C. 150

D. 151

Ans.A

130. A _____________ is the delivery of goods by one person to another for same purpose, upon a n contract that they shall, when they purpose is accomplished, be returned to other wise disposed of according to the directions of the person delivering them

A. Bailment

B. Agency

C. Partnership

D. None of the above

Ans.A

131. The person delivering goods in called

A. Promisee

B. Bailor

C. Bailee

D. None of the above

Ans.B

132. The person to whom it is delivered is called

A. Promisee

B. Bailor

C. Bailee

D. None of the above

Ans.C

133. A hires a car for a trip from B who deals in renting car business. B is the

A. Promisee

B. Bailor

C. Bailee

D. None of the above

Ans.B

134. Maya gave her shirt to the tailor for stitching. He dropped coffee on the shirt. Will he be

liable?

A. Yes B. No

C. Maybe D. None of the above

Ans.A

135. Maya had given one of her sari for dry cleaning. She later finds out that the shop rented out

her sari to someone else. Will the dry cleaners be held liable?

A. Yes

B. No

C. Maybe

D. None of the above

Ans.A

136. Maya gives some of her jewellery to the goldsmith for polishing. He mixes her jewellery with

the other goods in his shop. Will be he held liable?

A. Yes

B. No

C. Maybe

D. None of the above

Ans.A

137. The plaintiff with his wife and children had to travel from Wimbledon to Hampton Court. They took a train from Wimbledon, which transported them to Esher. They had to walk several miles on a drizzling wet night to reach their destination. Will they be awarded damages?

A. Yes

B. No

C. Maybe

D. None of the above

Ans.A

138. A asked B to take care of A’s cow for few days as A was not available and A’s cow delivereda calf. Is A entitled to accretion?

A. Yes

B. No

C. Maybe

D. None of the above

Ans.A

Agency

139. An agent has been defined under which Sec. of The Indian Contract Act?

A. 148

B. 184

C. 174

D. 182

Ans.D

140. __________ is a person employed to do any act for another or represent another in dealings with third persons.

A. Bailor

B. Agent

C. Partner

D. None of the above

Ans.B

141. The person being represented is called the

A. Promisee

B. Principal

C. Bailee

D. None of the above

Ans.B

142. A person employed by and acting under the control of the original agent in the business of the agency

A. Principal

B. Substitute agent

C. Sub agent

D. None of the above

Ans.C

143. Stock brokers appoint clerks to transact business on behalf of their clients. This is the example of a

A. Principal

B. Substitute agent

C. Sub agent

D. None of the above

Ans.C

144. A directs B, his solicitor, to sell his estate by auction and to employ auctioneer for this purpose. B names C, an auctioneer, to conduct sale. Is C a sub agent?

A. Yes

B. No

C. Maybe

D. None of the above

145. The principal may ask the agent to name another person to act for the principal in carrying out a part of the business of agency. This person is known as

A. Principal

B. Substitute agent

C. Sub agent

D. None of the above

Ans.B

146. A sub-agent is the agent of the agent, whereas a substituted agent is an agent of the

A. Principal

B. Bailor

C. Sub agent

D. None of the above

Ans.B

147. Which of the following are salient features of an agency?

A. “He, who does through another, does by himself”.

B. The Principal should be competent to contract.

C. The agent may not be competent to contract

D. All of the above

Ans.D

148. A principal instructed his agent to lodge his goods in a particular warehouse. The agent however deviated from the instructions. The agent put the goods in another are house, where the goods perished due to fire. Will the agent be held liable?

A. Yes

B. No

C. Maybe

D. None of the above

Ans.A

The Indian Partnership Act 1932

149. _________________ defines and amends the law relating to Partnership

A. The Indian Partnership Act, 1932

B. Indian Contract Act, 1872

C. Code of Civil Procedure

D. None of the above

Ans.A

150. __________ is a medium between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

A. Bailment

B. Agency

C. Partnership

D. None of the above

Ans.C

151. Which of the following are essential elements to form a partnership?

A. An agreement between all the persons

B. Sharing of Profit

C. Carrying on of business by all or any of them acting for all

D. All of the above

Ans.D

152. What is partnership deed?

A. An oral agreement between the parties

B. A newspaper article

C. A formal and written agreement between the parties

D. None of above

Ans.C

153. What are the ways in which a partner can contribute?

A. Capital

B. Skill

C. Intellect

D. All of the above

Ans.D

154. Is capital contribution compulsory?

A. Yes

B. No

C. Maybe

D. None of the above

Ans.B

155. What is the effect of partner’s death on Partnership Business?

A. No effect

B. The Partnership firm dissolves on the death of partner

C. The other Partner’s have to enter a fresh agreement

D. Both B. and C.

Ans.D

156. Are partners entitled to share profits only? What if loss in incurred by the firm?

A. No effect

B. Only the one who made the mistake will be responsible for the loss

C. Profits or losses will be shared as per the profit sharing ratio

D. None of the above

Ans.D

157. A partner cannot

A. Submit a dispute relating to business of the firm to arbitration.

B. Compromise or relinquish any claim or portion of claim.

C. Withdraw a suit or proceeding on behalf of the firm.

D. All of the above

Ans.C

158. Does the principle of mutual agency exist between partners?

A. Yes

B. No

C. Maybe

D. None of the above

Ans.A