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Test: Consideration of Contract & Legality of Object - B Com MCQ


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20 Questions MCQ Test Business Law - Test: Consideration of Contract & Legality of Object

Test: Consideration of Contract & Legality of Object for B Com 2024 is part of Business Law preparation. The Test: Consideration of Contract & Legality of Object questions and answers have been prepared according to the B Com exam syllabus.The Test: Consideration of Contract & Legality of Object MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Consideration of Contract & Legality of Object below.
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Test: Consideration of Contract & Legality of Object - Question 1
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Which of the following is an essential element of a valid contract?

Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 1
In order for a contract to be valid, it must have certain essential elements. These elements include consideration, legal capacity, and offer and acceptance. Consideration is the price paid by the promisee for the obligation of the promisor. Legal capacity refers to the ability of the parties to understand the terms of the contract and to be legally competent to enter into it. Offer and acceptance are the mutual expressions of agreement between the parties. Therefore, all of the above options are correct.
Test: Consideration of Contract & Legality of Object - Question 2
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Consideration is an essential element of a valid contract because it:

Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 2
Consideration is a necessary element of a valid contract because it helps determine the legality of the contract, establishes the intention of the parties, and provides evidence of their legal relations. It acts as the price paid by the promisee for the obligation of the promisor. Therefore, option D is the correct answer.
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Test: Consideration of Contract & Legality of Object - Question 3
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Consideration must proceed at the desire of the:

Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 3
Consideration must proceed at the desire of the promisor. This means that the act or forbearance constituting consideration must have been done or given at the promisor's request or desire. If the act or forbearance is done voluntarily or at the request of a third party, it will not be considered as valid consideration. Therefore, option A is correct.
Test: Consideration of Contract & Legality of Object - Question 4
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Which of the following statements is true about consideration?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 4
Consideration can be provided by the promisee or any other person. It is not limited to monetary value and can include rights, interests, forbearance, detriment, loss, or responsibility. Therefore, option C is the correct answer.
Test: Consideration of Contract & Legality of Object - Question 5
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Which of the following is an exception to the rule of privity of contract?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 5
Beneficiaries in a trust are an exception to the rule of privity of contract. They can sue upon the agreement even though they are not parties to the contract. This is because they possess an actual beneficial right under the trust. Therefore, option A is the correct answer.
Test: Consideration of Contract & Legality of Object - Question 6
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Which of the following is not necessary for consideration to be valid?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 6
Consideration is the price paid by the promisee for the obligation of the promisor. While consideration must have some value in the eyes of law, it does not need to be adequate. In other words, the law does not require the consideration to be of equal value to the promise made. This means that a contract will still be valid even if the consideration is not sufficient in terms of monetary value. Therefore, option A is not necessary for consideration to be valid.
Test: Consideration of Contract & Legality of Object - Question 7
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Which of the following types of consideration is valid?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 7
Consideration can be categorized as past, present, or future. Past consideration refers to consideration that was given before the date of the promise. Present consideration refers to consideration that is given simultaneously with the promise. Future consideration refers to consideration that will be given in the future for the promise. All three types of consideration are valid and can support a contract. Therefore, all of the above options are correct.
Test: Consideration of Contract & Legality of Object - Question 8
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Which of the following agreements is considered to be against public policy?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 8
Agreements that are considered to be against public policy are deemed to be void. These agreements include trade with the enemy, agreements that interfere with the normal course of law and justice, and agreements that hinder parental duties. These agreements are considered to be contrary to the interests of the public and are therefore not enforceable. Therefore, all of the above options are correct.
Test: Consideration of Contract & Legality of Object - Question 9
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Which of the following statements is true regarding the legality of the object in a contract?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 9
According to Section 23 of the Indian Contract Act, the object or consideration of an agreement is lawful unless it is forbidden by law, defeats the provisions of any law, is fraudulent, involves injury to the person or property of another, or is regarded as immoral or opposed to public policy by the court. This means that the object of an agreement is presumed to be lawful unless it falls under one of these prohibited categories. Therefore, option D is correct.
Test: Consideration of Contract & Legality of Object - Question 10
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Which of the following is an example of an agreement without consideration?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 10
A promise made on account of natural love and affection is an example of an agreement without consideration. In such cases, the agreement must be in writing and registered. Therefore, option B is the correct answer.
Test: Consideration of Contract & Legality of Object - Question 11
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Which of the following is an example of a promise without consideration being valid?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 11
According to Section 25 of the Indian Contract Act, a promise without consideration can be valid and binding in certain circumstances. One example is when a contract is made on account of natural love and affection between the parties. In this case, the parties must be in a near relation to each other, and the contract must be in writing and registered. This means that a promise made out of love and affection, even without consideration, can be enforceable. Therefore, option A is correct.
Test: Consideration of Contract & Legality of Object - Question 12
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Which of the following exceptions to the rule of privity of contract allows a beneficiary under a trust to sue upon the agreement?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 12
One of the exceptions to the rule of privity of contract is when there are beneficiaries in the case of a trust. A beneficiary under an agreement to create a trust can sue upon the agreement, even though they are not a party to the contract between the settler and the trustees. This means that the beneficiary has the right to enforce the terms of the trust and claim any benefits that are available to them. Therefore, option A is correct.
Test: Consideration of Contract & Legality of Object - Question 13
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What is the effect of an agreement with an unlawful object?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 13
An agreement with an unlawful object is void and unenforceable. It is considered against the law and cannot be enforced by the parties involved. Therefore, option A is the correct answer.
Test: Consideration of Contract & Legality of Object - Question 14
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When can a stranger to a contract sue upon it?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 14
A stranger to a contract can sue upon it when they have a beneficial interest in the contract. This can occur in cases such as trusts or marriage settlements, where the stranger has a right or benefit under the agreement. Therefore, option B is the correct answer.
Test: Consideration of Contract & Legality of Object - Question 15
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Which of the following is true about the legality of consideration?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 15
The legality of consideration requires it to be real and not illusory or impossible. It should have some value in the eyes of the law, although it does not need to be of equal value to the promise made. Therefore, option C is the correct answer.
Test: Consideration of Contract & Legality of Object - Question 16
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Which of the following is not an exception to the rule that a stranger to a contract cannot sue upon it?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 16
The rule that a stranger to a contract cannot sue upon it is based on the doctrine of privity of contract. However, there are certain exceptions to this rule. Beneficiaries in the case of trust, assignees of a contract, and parties to an acknowledgment or estoppel can sue upon a contract even if they are not parties to it. A complete gift, on the other hand, is not an exception to the rule. A completed gift is not considered a contract and does not involve the mutual exchange of consideration. Therefore, option C is not an exception to the rule.
Test: Consideration of Contract & Legality of Object - Question 17
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Why is consideration considered an essential element of a valid contract?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 17
Consideration is considered an essential element of a valid contract because it determines the legality of the contract, establishes the intention of the parties, and provides evidence of their legal relations. It acts as the price paid by the promisee for the obligation of the promisor. Therefore, option D is the correct answer.
Test: Consideration of Contract & Legality of Object - Question 18
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Consideration is an essential element of a valid contract. True or False?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 18
Consideration is indeed an essential element of a valid contract. It refers to the price paid by the promisee for the obligation of the promisor. Without consideration, a promise cannot be enforced by law, except under certain circumstances. Therefore, the statement is true. Example: A offers to sell his car to B for $10,000. In this contract, the consideration for A's promise is the car, while the consideration for B's promise is $10,000.
Test: Consideration of Contract & Legality of Object - Question 19
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An agreement without consideration is always enforceable by law. True or False?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 19
An agreement without consideration cannot be enforced by law, except under certain circumstances. Consideration is an essential element of a valid contract, and without it, the agreement is considered a bare promise. There are exceptions to this rule, such as agreements based on natural love and affection or promises to compensate for voluntary services. However, in general, an agreement without consideration cannot be held binding on the parties. Therefore, the statement is false. Example: A promises to give B a gift without any expectation of anything in return. This agreement is not enforceable by law because it lacks consideration.
Test: Consideration of Contract & Legality of Object - Question 20
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Which of the following is an example of consideration?
Detailed Solution for Test: Consideration of Contract & Legality of Object - Question 20
A promise to compensate for voluntary services rendered is an example of consideration. In this case, the act of providing voluntary services is a valuable consideration for the promise made to compensate for those services.
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