January 18, 2021

Quiz on Law of Agency- Indian Contract Act, 1872 (with Answers)

contract act

1. Principal is NOT liable for the agents act if
(a) Agent acts within the scope of his authority
(b) Agent exceeds his authority
(c) Fraud or misrepresentation committed for benefit of the principal
(d) Work done out of his authority but the principal accepts it

2. An agency comes to an end:-
(a) By performance of contract
(b) By agreement between the principal and the agent
(c) By renunciation of his authority by the agent
(d) All of the above

3. An agency is irrecoverable:
(a) Where the authority of agency is one coupled with interest
(b) Where the agent has incurred personal liability
(c) Both (a) and (b)
(d) None of the above

4. The termination of an agent’s authority terminates the authority of the sub-agent appointed by the agent.
(a) True
(b) Partly true
(c) False
(d) Partly false

5. In case the contract of agency has been terminated and a third party enters into a contract with the agent without knowing this fact, then
(a) The contract will be binding on the principal
(b) The contract will not be binding on the principle
(c) The contract will only be binding on the agent
(d) None of the above

6. An agreement for Lawful consideration with free consent, is:
(a) Void
(b) Valid
(c) Voidable
(d) Unlawful

7. When the consent of a party is obtained by coercion undue influence, fraud or misrepresentation, the contract is:
(a) Voidable
(b) Void
(c) Illegal
(d) Valid

8. Which of the following acts does not fall under the categories of fraud?
(a) Intentional false statement of facts
(b) Active concealment of facts
(c) False statement in good faith
(d) Promise made without intention to perform.

9. According to Indian law, a contract made by mistake is:
(a) Void
(b) Valid
(c) Voidable
(d) Illegal

10. A mistake as to a law not in force in India has the same effect as:
(a) Mistake of fact
(b) Mistake of Indian law
(c) Mistake of foreign law
(d) Misrepresentation

11. A, an agent engaged in carrying on for B a business, in which it is the custom to invest from time-to-time, at interest, the moneys which may be in hand, omits to make such investments.

A. A need not make good to B the interest usually obtained by such investments

B. A can partially make good to B the interest usually obtained by such investments

C. A must make good to B the interest usually obtained by such investments

D. None of these

12. A, an agent for the sale of goods, having authority to sell on credit, sells to B on credit, without making the proper and usual inquires as to the solvency of B. B at the time of such sale is insolvent.

A. A need not make compensation to his principal in respect of any loss thereby sustained

B. A can partially make compensation to his principal in respect of any loss thereby sustained

C. A must make compensation to his principal in respect of any loss thereby sustained

D. None of these

13. Termination of an agency with public authority or a public body may attract judicial intervention in writ petition:

A. If the termination be unreasonable

B. If the termination be arbitrary

C. If the termination be unconscionable

D. All of them

14. The agency extends to receiving notice on behalf of his principal of whatever is material to be stated in the course of the proceedings. For this rule to operate:

I. the agent must be under a duty to communicate

II. the information must be material

III. it must have been obtained in the course of business for which the agent has been engaged

IV. the agent is not privy to a fraud on the principal

A. I, II


C. Ill, IV

D. All of them

15. The agency type described in S. 202 of the Indian Contract Act, 1872:

A. cannot be revoked by the principal

B. it cannot be terminated by the death, unsoundness of mind or insolvency of the principal

C. either (A) or (B)

D. None of these

16. The agent may be disentitled to relief under S. 226 of the Indian Contract Act, 1872:

A. If the injury was due to his own contributory negligence

B. If the injury is on the ground of common employment

C. either (A) or (B)

D. None of these

17. The extent of an agent’s authority, whether express or implied, depends upon:

A. The nature of act or business for which he has been appointed

B. Things which are incidental to the business or are usually done in carrying it out

C. The usual customs and usages of the trade

D. All of them

18. The duty of the disclosure is limited to cases of:

A. unusual features of the transaction

B. unusual features of the risk

C. both (A) and (B)

D. None of these

19. The doctrine of apparent authority applies:

I. where a person allows another who is not his agent to appear as his agent

II. where a principal allows his agent to appear to possess more authority than he actually has

III. where the principal reserves or limits the authority of an agent which the agent would have in ordinary course of business, but does make this known to third parties

IV. where the principal allows it to appear that the agent has authority although his authority has been terminated

A. I, II


C. Ill, IV

D. All of them

20. The conditions which entitle an agent to exceed his authority under the doctrine of necessity are:

A. That he could not communicate with his principal

B. That the course he took was necessary in the sense that it was in the circumstances the only reasonable and prudent course to take

C. That he acted bona fide in the interest of the parties concerned

D. All of them

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