MCQ Question Bank on Indian Contract Act, 1872 [500+ Objective Questions with Answers]- Part 4

For Question No. 1 to 100, click here.

For Question No. 101 to 200, click here.

For Question No. 201 to 300, click here.

301. A consigns goods to B for sale, and gives him instructions not to sell under a fixed price. C, being ignorant of B’s instruction, enters into a contract with B to buy the goods at a price lower than the reserved price.

A. A is not bound by the contract

B. A is partially bound by the contract

C. A is bound by the contract

D. None of these

Ans. (C)

302. A consigns provisions to B at Calcutta, with directions to send them immediately to C, at Cuttack.

A. B may not sell the provisions at Calcutta, if they will not bear the journey to Cuttack without spoiling

B. B may partly sell the provisions at Calcutta, if they will not bear the journey to Cuttack without spoiling

C. B may sell the provisions at Calcutta, if they will not bear the journey to Cuttack without spoiling

D. None of these

Ans. (C)

303. A contract between a debtor and a creditor that the debtor should sell and the creditor should accept any property in satisfaction of the debt, may operate, in which of the following ways?

A. The contract by itself may operate as an absolute discharge of the debt, giving the creditor thereafter only the remedy by way of the specific performance of the contract

B. It may operate only as a conditional discharge of the debt giving the creditor in case of the debtor’s default a right to claim either performance of the contract or if he elects to put an end to it, the payment of the debt

C. The contract may be an independent transaction in the sense that it does not affect the rights of the creditors or the obligations of the debtor till the sale is actually completed

D. All of them

Ans. (D)

304. A contract of guarantee involves:

A. creditor

B. surety

C. principal debtor

D. All of them

Ans. (D)

305. A contract to sing for B at a concert for 1,000 rupees, which are paid in advance. A is too ill to sing.

A. A is not bound to make compensation to B for the loss of the profits which B would have made if A had been able to sing

B. A is not bound to make compensation or refund to B

C. A must refund to B the 1,000 rupees paid in advance

D. both (A) and (C)

Ans. (D)

306. A contract with B to pay B Rs.1,000 if he fails to pay B Rs.500 on that day.

A. B is entitled to recover form A such compensation, not exceeding Rs.1,000, as the Court considers reasonable

B. B is entitled to recover form A such compensation, not exceeding Rs.2,000, as the Court considers reasonable

C. B is entitled to recover form A such compensation, not exceeding Rs.3,000, as the Court considers reasonable

D. None of these

Ans. (A)

307. A contract would not be discharged by the impossibility, even though the supervening event makes performance impossible or unlawful if:

I. The contract is absolute in terms and can be held to cover the frustrating events

II. The contract makes full and complete provision for a given contingency

III. It can be reasonably supposed to be within the contemplation of the parties to the contract at the time they made the contract

IV. Where the event is such that any of the parties could foresee or could have foreseen with reasonable diligence

V. If only a portion of the contract becomes impossible or difficult to perform

VI. If despite the supervening events, the object and purpose of the contract is not rendered useless, and the contract can be performed substantially in accordance with the original intention of the parties, though not literally in accordance with the language of the agreement

A. II, III

B. IV, V

C. I, VI

D. All of them

Ans. (D)

308. A contracts to buy of B, at a stated price, 50 maunds of rice, no time being fixed for delivery. A afterwards informs B that he will not accept the rice if tendered to him.

A. B is not entitled to receive from A, by way of compensation, the amount, if any, by which the contract price exceeds that which B can obtain for the rice at the time when A informs B that he will not accept it

B. B is entitled to receive from A, by way of compensation, the amount, if any, by which the contract price does not exceed that which B can obtain for the rice at the time when A informs B that he will not accept it

C. B is entitled to receive from A, by way of compensation, the amount, if any, by which the contract price exceeds that which B can obtain for the rice at the time when A informs B that he will not accept it

D. None of these

Ans. (C)

309. A contracts to deliver to B at his warehouse, on the first March, 1873, 100 bales of cotton of a particular quality. In order to make an offer of performance with the effect stated in this section, under any such circumstances so that B may have a reasonable opportunity of satisfying himself that the thing offered is cotton of the quality contracted for, and that there are 100 bales

A. A can bring the cotton to B’s warehouse any day

B. A must bring the cotton to B’s warehouse on the appointed day

C. A need not bring the cotton to B’s warehouse at all

D. None of these

Ans. (B)

310. A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees.

A. This is contract of indemnity

B. This is not a valid contract of indemnity

C. This is contract of stipulation

D. None of these

Ans. (A)

311. _______ of the Indian Contract Act, 1872 prescribes that the acceptance must be made in a reasonable manner. If the proposer has prescribed a manner of acceptance, the acceptance must be made in that manner, if not so made, there is a contract only if the proposer ‘accepts the acceptance’

A. Section 7(2)

B. Section 7(3)

C. Section 7(4)

D. None of these

Ans: A

312. _______ describes a voidable contract as one which is enforceable by the law at the option of the parties, but not at the option of the others.

A. Section 2 (g) of the Indian Contract Act, 1872

B. Section 2 (h) of Indian Contract Act, 1872

C. Section 2 (i) of Indian Contract Act, 1872

D. None of these

Ans: C

313. A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bargain, though neither party was aware of the fact.

A. The agreement cannot be voided

B. The agreement is void

C. Either (A) or (B)

D. None of these

Ans: B

314. A agrees to pay B 1,000 rupees if B will marry A’s daughter C. C was dead at the time of the agreement.

A. The agreement is void

B. The agreement is not void

C. Either (A) or (B)

D. None of these

Ans: A

315. A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk.

A. The contract cannot be enforced when the ship sinks

B. The contract can be enforced when the ship sinks

C. Either (A) or (B)

D. None of these

Ans: B

316. A contracts to let his ship to B for a year, from the first of January, for a certain price. Freights rise, and, on the first of January, the hire obtainable for the ship is higher than the contract price. A breaks his promise. He must pay to B, by way of compensation, a sum equal to the difference between the contract price and the price for which B could hire a similar ship for a year on and form the first January.

A. He must pay to B, by way of compensation, twice the difference between the contract price and the price for which B could hire a similar ship for a year on and form the first January.

B. He must pay to B, by way of compensation, a sum equal to the difference between the contract price and the price for which B could hire a similar ship for a year on and form the first January

C. either (A) and (B)

D. None of these

Ans. (B)

317. ‘A’ agrees to let her daughter ‘B’ for hire to ‘C’ for concubinage, without the consent of ‘B’, the contract is:

(a) void as the consent of ‘B’ the daughter has not taken

(b) void being immoral

(c) voidable at the instance of ‘B’

(d) valid as ‘A’ & ‘C’ entered into contract with their free consent.

Ans. (b)

318. ‘X’ in consideration of Rs. 10,000 lent by Y & Z, provides Y & Z jointly to repay them that sum with interest on a specified day. Y dies. The right to claim the performance:

(a) is available to Y’s representatives alone

(b) is available to Z alone

(c) is available to Y’s representatives & Z both

(d) is available to Y’s representatives & after the death of Z, his representatives.

Ans. (c)

319. The doctrine of impossibility of performance rendering contracts void is based on:

(a) implied term

(b) just & reasonable solution

(c) supervening impossibility

(d) unjust enrichment.

Ans. (c)

320. The age of majority for the purpose of Contract Act is:

(a) 18 years

(b) 21 years

(c) 16 years for girls & 18 years for boys

(d) 18 years for girls & 21 years for boys.

Ans. (a)

321. A contract signed between two countries without specifying as to which country’s law shall govern in cases of dispute:

(a) it shall be governed by the law of the country where the proposal was made

(b) it shall be governed by the law of the country where the contract was concluded

(c) it shall be governed by the law of the country which the parties intended to apply, i.e., where the contract is localised

(d) it shall be governed by the law where the contract is performed.

Ans. (c)

322. The damages under section 73 of Indian Contract Act are:

(a) liquidated

(b) compensatory

(c) penal

(d) none of the above.

Ans. (b)

323. While determining damages which of the following are taken into account:

(a) motive of breach

(b) manner of breach

(c) inconvenience caused by non-performance

(d) all the above.

Ans. (c)

324. Which of the following is not relevant in determining of quantum of damage:

(a) motive

(b) manner

(c) loss suffered

(d) both (a) & (b).

Ans. (a)

325. Pre-contract expenditure may be recovered as damage:

(a) generally

(b) always

(c) only if it is within the contemplation of parties

(d) none of the above.

Ans. (c)

326. Duty to mitigate damages on the part of injured party arises:

(a) in cases of anticipatory breach

(b) in cases of breach at the time fixed for performance of the contract

(c) both (a) & (b)

(d) either (a) or (b).

Ans. (d)

327. A sum fixed before hand as amount of compensation payable in the event of breach of contract is called:

(a) liquidated damages

(b) penalty

(c) either (a) or (b)

(d) neither (a) nor (b)

Ans. (c)

328. The essense of liquidated damage is:

(a) genuine pre-estimate of damage

(b) less than probable damage

(c) more than probable damage

(d) payment of money in terrorem.

Ans. (a)

389. A contract of indemnity as a contract by which one party promises to save the other party from the loss caused to him by the conduct of the promisor himself or of any other person, has been defined:

(a) under section 124

(b) under section 123

(c) under section 125

(d) under section 126.

Ans. (a)

390. A contract of guarantee has been defined:

(a) under section 123

(b) under section 124

(c) under section 125

(d) under section 126.

Ans. (d)

391. Surety is a person:

(a) in respect of whose default the guarantee is given

(b) who gives the guarantee

(c) to whom the guarantee is given

(d) none of the above.

Ans. (b)

392. Creditor is a person:

(a) to whom the guarantee is given

(b) who gives the guarantee

(c) in respect of whose default the guarantee is given

(d) none of the above.

Ans. (a)

393. A guarantee:

(a) has to be in writing

(b) can be oral

(c) can be oral or in writing

(d) neither (a) or (b).

Ans. (c)

394. Liability of the surety is:

(a) conditional on default

(b) independent of default

(c) can be conditional and can be independent

(d) either (a) or (b).

Ans. (a)

395. A valid guarantee can be given:

(a) only if there is no principal debt

(b) only if there is a principal debt

(c) irrespective of any debt

(d) both (a) & (c).

Ans. (b)

396. A guarantee to be valid:

(a) can only be of a present debt

(b) can be of past debt if some further debt is incurred after the guarantee

(c) cab be of future debt if some debt is incurred after the guarantee

(d) all the above.

Ans. (d)

397. A guarantee obtained by misrepresentation or concealment is:

(a) invalid

(b) valid

(c) voidable

(d) illegal.

Ans. (a)

398. Which of the following is a valid guarantee:

(a) guarantee of a minor’s debt

(b) guarantee of a debt of a company acting ultra vires in obtaining the loan

(c) both (a) & (b)

(d) neither (a) nor (b).

Ans. (a)

399. The liability of the surety:

(a) is co-extensive with that of the principal debtor

(b) extends to the whole of the amount for which the principal debtor is liable

(c) both (a) & (b)

(d) neither (a) nor (b).

Ans. (a)

400. Under the contract of guarantee, the liability of the surety:

(a) can be limited

(b) cannot be limited & has to extend to the whole of the amount due from the principal debtor

(c) can be extended to penalties also

(d) both (b) & (c).

Ans. (b)

For Question No. 401 to 536, click here.