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Test: Formation Of Contract Of Sale- 2 - CA Foundation MCQ


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30 Questions MCQ Test Business Laws for CA Foundation - Test: Formation Of Contract Of Sale- 2

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Test: Formation Of Contract Of Sale- 2 - Question 1

Which of the following is not an essential element of a contract to sale?

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 1
Explanation:
The correct answer is B: Payment of price at the time of contract.
Here is a detailed explanation of each option:
A. Existence of essential elements of a valid contract:
- This is an essential element of a contract to sale. For a contract to be valid, it must have certain elements such as offer, acceptance, consideration, capacity, and lawful object. The existence of these essential elements ensures that the contract is legally binding.
B. Payment of price at the time of contract:
- This option is incorrect because the payment of price at the time of contract is not an essential element of a contract to sale. Payment terms can vary and may be agreed upon by the parties involved. It is not necessary for the payment to be made at the time of contract formation. The payment terms can be negotiated and specified in the contract.
C. Subject matter of contract must be goods:
- This is an essential element of a contract to sale. A contract to sale involves the transfer of ownership of goods from the seller to the buyer. The subject matter of the contract must be goods, which can include tangible items such as products or commodities.
D. Two parties i.e. seller and buyer:
- This is an essential element of a contract to sale. A contract to sale requires the presence of two parties, the seller who transfers the ownership of the goods, and the buyer who acquires the ownership of the goods. Without these two parties, a contract to sale cannot exist.
In summary, the payment of price at the time of contract is not an essential element of a contract to sale. The correct answer is B.
Test: Formation Of Contract Of Sale- 2 - Question 2

Under the Sale of Goods Act, 1930 which of these are not considered as goods?

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 2
Under the Sale of Goods Act, 1930, the following are not considered as goods:
1. Immovable property:
- Immovable property refers to land, buildings, and any other fixed structures.
- These are not considered goods under the Sale of Goods Act, as they are not movable and have a different legal framework for their transfer and sale.
2. Money:
- Money, in the form of currency or digital transactions, is not considered goods under the Act.
- Money serves as a medium of exchange and does not fall under the definition of goods in this context.
3. Growing crops:
- Growing crops, such as agricultural produce that are still attached to the land, are not considered goods.
- They are treated differently under specific laws related to agriculture and land.
4. Stocks and shares:
- Stocks and shares, which represent ownership in a company or corporation, are not considered goods under this Act.
- They are regulated by separate laws and are considered as financial instruments rather than physical goods.
In summary, immovable property, money, growing crops, and stocks/shares are not considered goods under the Sale of Goods Act, 1930. The Act primarily focuses on the sale and transfer of movable goods.
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Test: Formation Of Contract Of Sale- 2 - Question 3

A contracts to sell to B all the oil to be produced from groundnut harvested from A’s farm. The crops having been harvested and oil made there from, A fills the oil in the cans supplied by B. Does the property in oil pass to B?

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 3

Issue:
The issue in this case is whether the property in oil passes to B.
Rule:
According to the Sale of Goods Act, the property in the goods passes from the seller to the buyer when the parties intend it to pass.
Analysis:
To determine whether the property in oil passes to B, we need to consider the following factors:
- Deliverable state: The goods must be in a deliverable state for the property to pass.
- Intention of the parties: The intention of the parties plays a crucial role in determining the passing of property.
Application:
In this case, we can analyze the situation as follows:
- Goods in a deliverable state: The oil has been made from the harvested groundnuts and filled in the cans supplied by B. Therefore, the goods are in a deliverable state.
- Intention of the parties: Since A has filled the oil in the cans supplied by B, it can be inferred that A has completed the necessary steps for delivery. However, it is unclear whether B has taken the delivery or not.
Conclusion:
Based on the analysis, it can be concluded that the property in oil does not pass to B because B has not taken the delivery of the goods. Therefore, option C "No, B has not taken the delivery" is the correct answer.
Test: Formation Of Contract Of Sale- 2 - Question 4

In case of an agreement to sell, subsequent loss or destruction of the goods is the liability of __________:

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 4
The liability for subsequent loss or destruction of goods in case of an agreement to sell:
- The seller is liable. According to the provisions of the Sale of Goods Act, the seller bears the responsibility for the goods until they are transferred to the buyer.
- The liability of the seller continues until the property in the goods is transferred to the buyer. Until the transfer of ownership takes place, the seller must take reasonable care of the goods and ensure their safekeeping.
- If the goods are lost or destroyed before the transfer of ownership, the seller will be held accountable for the loss. This includes situations where the goods are damaged, stolen, or destroyed due to unforeseen circumstances.
- The buyer, on the other hand, is not responsible for any loss or destruction of the goods until the ownership is transferred.
- It is important to note that the liability of the seller may be limited or excluded through specific contractual terms or insurance arrangements. However, in the absence of such agreements, the seller bears the responsibility for any subsequent loss or destruction of the goods.
- The insurance company is not directly liable for the loss or destruction of the goods unless there is a separate insurance policy in place that covers such risks. In that case, the insurance company may provide compensation to the seller or buyer depending on the terms of the policy.
Test: Formation Of Contract Of Sale- 2 - Question 5

A share certificate is a : 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 5

Share Certificate


A share certificate is a document that serves as evidence of ownership in a company. It is issued to shareholders who hold shares in a company. The share certificate contains important information about the shares and the shareholder. Here are some key points to understand:


Definition

  • A share certificate is a legal document that certifies ownership of shares in a company.

  • It is issued to the shareholders by the company.


Contents

  • The share certificate includes the name of the company, the shareholder's name, and the number and type of shares owned.

  • It also includes the unique identification number of the shares.

  • The certificate may have additional information such as the par value of the shares and any restrictions on transferability.


Purpose

  • A share certificate serves as proof of ownership in a company.

  • It provides legal protection to the shareholder by establishing their rights and ownership in the company.

  • The certificate can be used as evidence in legal proceedings, such as during the sale or transfer of shares.


Importance

  • A share certificate is important for shareholders as it allows them to participate in corporate decision-making processes, such as voting at shareholder meetings.

  • It also entitles the shareholder to receive dividends and other benefits that may be distributed by the company.

  • The certificate may be required by financial institutions or other entities as proof of ownership when dealing with the shares.


In conclusion, a share certificate is a document that establishes ownership in a company. It provides legal proof of ownership and is important for shareholders to exercise their rights and receive the benefits associated with their shares.

Test: Formation Of Contract Of Sale- 2 - Question 6

The position of the hire purchaser is that of (in sale): 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 6
The Position of the Hire Purchaser in a Sale:


The position of the hire purchaser in a sale refers to the role and legal status of the individual or entity who enters into a hire purchase agreement to acquire goods or assets. The hire purchaser is the party who is buying the goods or assets through the hire purchase agreement. Let's explore the different options and identify the correct position of the hire purchaser:
A. Bailee:
- A bailee is a person who temporarily possesses and controls someone else's property.
- In a hire purchase agreement, the hire purchaser does not possess or control the goods or assets until the final payment is made.
- Therefore, the hire purchaser is not considered a bailee.
B. Co-owner:
- A co-owner is someone who jointly owns a property or asset with another person or entity.
- In a hire purchase agreement, the hire purchaser does not own the goods or assets until the final payment is made.
- Therefore, the hire purchaser is not a co-owner.
C. Owner:
- The owner is the person or entity who has legal ownership and control over the goods or assets.
- In a hire purchase agreement, the owner retains ownership until the final payment is made.
- Therefore, the hire purchaser is not the owner.
D. Seller:
- The seller is the person or entity who sells the goods or assets to the hire purchaser.
- In a hire purchase agreement, the seller is the party who transfers the goods or assets to the hire purchaser.
- Therefore, the hire purchaser is not the seller.
Therefore, the correct position of the hire purchaser in a sale is A. Bailee. The hire purchaser is not the owner, co-owner, or seller but rather acts as a bailee until the final payment is made, at which point they gain ownership of the goods or assets.
Test: Formation Of Contract Of Sale- 2 - Question 7

When the seller causes a change in the possession of goods without any actual change in their actual and visible custody and without any movement from current location, it’s a case of : 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 7
Constructive Delivery:
Constructive delivery refers to a situation where the possession of goods is transferred without any physical movement or change in visible custody. Instead, it is a transfer of legal ownership or control over the goods. Here is a detailed explanation of constructive delivery:
Key Points:
- Constructive delivery does not involve the physical transfer of goods from one location to another.
- It is a legal concept that recognizes the transfer of ownership or control based on certain conditions being met.
- The goods remain in their current location, and there is no change in their visible custody.
- The seller is responsible for ensuring that the buyer has the legal right to possess and control the goods.
- It is often used in situations where the goods are too large or impractical to physically move, such as real estate or large machinery.
- Constructive delivery can be established through various means, such as the transfer of keys, documents, or control over digital assets.
- The buyer gains legal ownership and control over the goods once constructive delivery has occurred.
- It is important to have clear documentation and evidence of constructive delivery to avoid any disputes or misunderstandings.
Conclusion:
Constructive delivery is a legal concept that allows for the transfer of ownership or control over goods without any physical movement or change in visible custody. It is often used in situations where the goods are immovable or impractical to physically transfer. Clear documentation and evidence are essential to establish constructive delivery and avoid any disputes.
Test: Formation Of Contract Of Sale- 2 - Question 8

Under the Sale of Goods Act, 1930, the seller in a contract of sale transfers the ________in the goods to the buyer for the price.

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 8
The correct answer is D: Property.
Explanation:
Under the Sale of Goods Act, 1930, the seller in a contract of sale transfers the property in the goods to the buyer for the price. Let's break down the key points:
1. Sale of Goods Act, 1930: This is a legislation that governs the sale of goods in India. It provides rights and obligations for both buyers and sellers in a contract of sale.
2. Contract of Sale: It refers to an agreement between the buyer and seller where the seller agrees to transfer the ownership of goods to the buyer in exchange for a price.
3. Transfer of Property: The seller transfers the property in the goods to the buyer. This means that the ownership of the goods is transferred from the seller to the buyer.
4. Price: The buyer pays a price to the seller for acquiring the ownership of the goods.
In summary, under the Sale of Goods Act, 1930, the seller transfers the property in the goods to the buyer for the price. This means that the buyer becomes the owner of the goods once the property is transferred.
Test: Formation Of Contract Of Sale- 2 - Question 9

In case of sale of standing trees, the property passes to the buyer when trees are: 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 9
Explanation:
In case of the sale of standing trees, the property passes to the buyer when the trees are felled and ascertained. Let's break down the options to understand why:
A: Felled and ascertained
- When the trees are felled, meaning they are cut down.
- The buyer can physically inspect and ascertain the quality and quantity of the trees before purchasing.
- This is the point at which the property passes to the buyer.
B: Not felled but earmarked
- Earmarking refers to the process of marking or tagging trees for identification.
- This means that the trees have not yet been cut down.
- The property does not pass to the buyer at this stage because the trees have not been felled.
C: Counted and ascertained
- Counting and ascertaining refers to the process of determining the number and quality of the trees.
- While this provides information about the trees, it does not indicate ownership transfer.
- The property does not pass to the buyer at this stage.
D: Both (b) and (c)
- Option D is incorrect because the property does not pass to the buyer when the trees are earmarked or counted and ascertained.
- It only passes when the trees are felled and ascertained.
Therefore, the correct answer is A: Felled and ascertained.
Test: Formation Of Contract Of Sale- 2 - Question 10

The keys of warehouse where the goods are stored is handed over to the buyer it is called as________________delivery.

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 10
Explanation:
The correct answer is B: Symbolic.
Here is a detailed explanation:
1. When the keys of a warehouse where the goods are stored are handed over to the buyer, it is known as delivery.
2. Delivery can be categorized into different types based on the nature of the transfer.
3. In this case, the delivery is symbolic because the keys represent the ownership and control of the goods stored in the warehouse.
4. Symbolic delivery signifies the transfer of legal possession without the physical movement of the goods.
5. The buyer now has the authority to access the warehouse and take possession of the goods.
6. Symbolic delivery is commonly used in situations where the goods are too large or numerous to physically move at the time of the transfer.
7. It is important to note that symbolic delivery does not involve the actual physical handover of the goods but rather the transfer of control and ownership through the keys.
In conclusion, when the keys of a warehouse where the goods are stored are handed over to the buyer, it is called symbolic delivery.
Test: Formation Of Contract Of Sale- 2 - Question 11

Which of the following is not considered as goods ?

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 11
Explanation:
The question asks which of the following is not considered as goods. Let's analyze each option:
A: Antiques
- Antiques are considered as goods. They are objects of historical or cultural value that are collected and traded.
B: Jubilee coins
- Jubilee coins are also considered as goods. They are commemorative coins issued to celebrate a special event or anniversary.
C: Current coins
- Current coins are not considered as goods. They are legal tender used as a medium of exchange in a specific country.
D: None
- This option is incorrect because the question specifically asks for the option that is not considered as goods, and current coins fit that criteria.
Answer: C (Current coins)
To summarize, antiques and jubilee coins are considered as goods, but current coins are not.
Test: Formation Of Contract Of Sale- 2 - Question 12

Q sells 100 tons of rice to P @ Rs. 50,000 per ton. P makes the full payment & says that he will pick the goods next week. Before P could pick the goods, the goods got destroyed. The loss will be borne by 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 12

The loss will be borne by P.
- P made the full payment for the rice, indicating that the ownership of the goods has been transferred to P.
- Since the goods got destroyed before P could pick them up, it is considered as P's loss.
- Q fulfilled their part of the agreement by selling the rice and receiving the payment. They are not responsible for any damage or loss that occurs after the ownership has been transferred to P.
- Therefore, P is responsible for bearing the loss.
Test: Formation Of Contract Of Sale- 2 - Question 13

In a sale of specific or ascertained goods the property in the goods passes to the buyer:

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 13
Property in the goods passes to the buyer in a sale of specific or ascertained goods:
- The passing of property in goods is an important aspect of a sales transaction. It determines when the buyer becomes the owner of the goods and assumes the risk associated with them.
- In the case of specific or ascertained goods, which are goods that are identified and agreed upon by both the buyer and the seller, the property in the goods passes to the buyer in the following circumstances:
1. When the parties intend it to pass: The intention of the parties involved in the sale is a crucial factor in determining when the property in the goods passes. If the parties have clearly expressed their intention for the property to pass at a specific point in the transaction, such as upon the signing of the contract or upon the completion of certain conditions, then the property will pass accordingly.
2. When the price is paid: Another common trigger for the passing of property is the payment of the price. If the buyer has fulfilled their obligation to pay the agreed-upon price for the goods, then the property in the goods typically passes to them. This is often the case in cash sales or when payment is made prior to or at the time of delivery.
3. When the goods are delivered: Delivery of the goods is an essential element of a sales transaction. In many cases, the property in the goods passes to the buyer upon their physical receipt or taking possession of the goods. This is particularly relevant when the goods are in the possession of the seller and need to be physically transferred to the buyer.
- It is important to note that these circumstances are not mutually exclusive. Depending on the terms of the sale agreement and the intentions of the parties, the passing of property may occur at any of these stages or even at a different point specified in the contract.
- Understanding when the property in the goods passes is crucial for both buyers and sellers as it determines their rights and obligations regarding ownership, risk, and potential disputes that may arise in relation to the goods.
Test: Formation Of Contract Of Sale- 2 - Question 14

The law relating to sale of goods is contained in the Sale of Goods Act, 1930 which came into force on:

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 14
The Sale of Goods Act, 1930
The Sale of Goods Act, 1930 is a legislation that governs the sale of goods in India. It came into force on July 1, 1930. Here is a detailed explanation of the Act:
Purpose of the Act:
The Sale of Goods Act, 1930 aims to regulate the rights and obligations of buyers and sellers in the sale of goods. It provides a legal framework for transactions involving the transfer of ownership of goods from a seller to a buyer.
Key provisions of the Act:
The Act covers various aspects related to the sale of goods, including:
1. Definition of goods: The Act defines goods as every kind of moveable property, except actionable claims and money.
2. Formation of the contract: The Act lays down rules for the formation of a valid contract of sale, including the essential elements such as offer, acceptance, consideration, and intention to create legal relations.
3. Conditions and warranties: The Act distinguishes between conditions (essential terms of the contract) and warranties (minor terms of the contract). It provides remedies for breach of conditions and warranties.
4. Transfer of ownership: The Act establishes rules for the transfer of ownership of goods from the seller to the buyer, including the concept of delivery and the passing of property.
5. Performance of the contract: The Act sets out the obligations of the buyer and seller regarding the delivery, payment, and acceptance of goods.
6. Rights of an unpaid seller: The Act grants certain rights to an unpaid seller, such as the right to withhold delivery of goods, stoppage in transit, and resale of goods.
7. Remedies for breach of contract: The Act provides various remedies for the parties in case of breach of contract, including damages, specific performance, and repudiation of the contract.
8. Exclusion and limitation of liability: The Act allows the parties to exclude or limit their liability under the contract, subject to certain conditions.
Importance of the Act:
The Sale of Goods Act, 1930 is essential for ensuring fair and transparent transactions in the sale of goods. It protects the rights of both buyers and sellers and provides a legal framework for resolving disputes. The Act is applicable to all sale transactions, unless specifically excluded by the parties.
In conclusion, the Sale of Goods Act, 1930, which came into force on July 1, 1930, is a significant legislation that governs the sale of goods in India. It establishes the rights, obligations, and remedies of the parties involved in the sale of goods, ensuring a fair and regulated marketplace.
Test: Formation Of Contract Of Sale- 2 - Question 15

X agrees to buy goods from Y at a price to be fixed by C. The contract is:

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 15
Explanation:
To determine the validity of the contract, we need to analyze the given scenario:
- X agrees to buy goods from Y: This establishes the intention of both parties to enter into a contract.
- The price is to be fixed by C: The price is not determined at the time of agreement, but it will be determined by a third party, C.
Now, let's consider the options:
A: Valid when the price is determined - This option aligns with the given scenario because the contract will be valid once the price is fixed by C.
B: Void - There is no indication that the contract is void. Both parties have agreed to enter into the contract, and the price will be determined by a third party.
C: Valid when the price is fixed by X and Y - This option is not applicable because the price is not determined by X and Y but by a third party, C.
D: None of these - This option is also not applicable because option A is the correct answer.
In conclusion, the correct answer is A: Valid when the price is determined. The contract between X and Y will be valid once the price is fixed by C.
Test: Formation Of Contract Of Sale- 2 - Question 16

Movable property dose not include money but includes –

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 16
Movable Property and its Inclusions
Movable property refers to assets that can be physically moved or transferred from one location to another. While money is not considered movable property, there are several other items that fall under this category. The options provided in the question are as follows:
A: Stocks and shares
- Stocks and shares represent ownership in a company and can be easily transferred or sold.
B: Grass
- Grass is a natural resource that can be harvested or removed from a property.
C: Growing crops
- Growing crops, such as fruits, vegetables, or grains, are considered movable property until they are harvested.
D: All of the above
- The correct answer is D, as all of the options mentioned (stocks and shares, grass, and growing crops) are examples of movable property.
In summary, movable property includes various assets that can be physically moved or transferred. While money is not considered movable property, stocks and shares, grass, and growing crops are all examples of items that fall under this category.
Test: Formation Of Contract Of Sale- 2 - Question 17

In an agreement to sell: 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 17

  1. Explanation:

  2. In an agreement to sell, the transfer of property from the seller to the buyer is a crucial aspect. The options provided in the question are:



    1. A: Property passes to the buyer

    2. If this option were true, it would mean that the ownership of the property has been transferred to the buyer.


    3. B: Property does not pass to the buyer

    4. If this option is correct, it implies that the ownership of the property remains with the seller and has not been transferred to the buyer.


    5. C: Possession passes to the buyer

    6. This option refers to the physical possession of the property being transferred to the buyer, but not necessarily the legal ownership.


    7. D: None of the above

    8. If none of the options accurately describes the situation, this option would be chosen.




  3. Based on the given options, the correct answer is option B: Property does not pass to the buyer. This means that the ownership of the property remains with the seller and has not been transferred to the buyer.


Test: Formation Of Contract Of Sale- 2 - Question 18

 A contract for the sale f future goods is. 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 18

The correct answer is B: Agreement to sell.
Explanation:
A contract for the sale of future goods refers to a legal agreement in which a seller agrees to transfer ownership of goods that are not yet in existence or not yet identified to the buyer. This type of contract is commonly known as an agreement to sell. Here are the reasons why the other options are not correct:
A: Sale - A sale refers to a contract in which ownership of existing goods is transferred from the seller to the buyer. It does not involve future goods.
C: Void - Void means that the contract is null and has no legal effect. It does not apply to a contract for the sale of future goods if the essential elements of a contract are present.
D: Hire purchase contract - A hire purchase contract is a specific type of agreement where the buyer pays in installments and gains ownership of the goods after completing the payments. It is not applicable to the sale of future goods.
In conclusion, the correct answer is B: Agreement to sell, as it accurately describes a contract for the sale of future goods.
Test: Formation Of Contract Of Sale- 2 - Question 19

Ram agrees to sell Mohan all the mangoes which will be produced in his garden next year. This is an agreement of sale of:

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 19
Explanation:
The correct answer is B: Future goods.
Sale of future goods refers to a situation where the subject matter of the contract is goods to be manufactured or acquired by the seller after the making of the contract. In this case, Ram agrees to sell all the mangoes that will be produced in his garden next year to Mohan. This means that the goods (mangoes) are not yet in existence at the time of the agreement but will come into existence in the future.
Detailed solution:
- The agreement between Ram and Mohan involves the sale of mangoes that will be produced in Ram's garden next year. This indicates that the mangoes are yet to be grown and are considered future goods.
- Ram does not currently possess or have ownership of the mangoes, as they have not been produced yet.
- The agreement is based on the understanding that the mangoes will be produced in the garden in the future, and once they are produced, Ram will sell them to Mohan.
- As the goods are not yet in existence, they cannot be specifically identified or ascertained at the time of the agreement.
- The agreement falls under the category of future goods, where the subject matter of the contract is goods to be acquired or manufactured in the future.
Therefore, the agreement between Ram and Mohan is an example of the sale of future goods.
Test: Formation Of Contract Of Sale- 2 - Question 20

Which of the following is not recognised as Goods ?

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 20
Explanation:
The correct answer is C: Actionable claims.
Here is a detailed explanation of each option:
1. A: Grass
- Grass can be recognized as a good because it can be bought or sold as a commodity, such as for landscaping purposes or as animal feed.
2. B: Growing crops
- Growing crops are also recognized as goods because they are tangible and can be bought or sold. They are considered agricultural products.
3. C: Actionable claims
- Actionable claims are not recognized as goods because they are not physical or tangible items. Actionable claims refer to a legal right to demand payment or some other form of compensation from another party. While they have value, they are not considered goods in the traditional sense.
4. D: All of the above
- This option is incorrect because both A and B are recognized as goods. However, C (Actionable claims) is not recognized as a good.
In summary, out of the given options, "Actionable claims" is not recognized as a good.
Test: Formation Of Contract Of Sale- 2 - Question 21

 Which of the following are covered within the definition of goods under Sale of Goods Act, 1930?

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 21

The Sale of Goods Act, 1930 is a legislation that governs the sale and purchase of goods in India. The Act provides a definition of goods, which includes various types of tangible items. Let's examine each option to determine if it falls within the definition of goods:
A: Equity shares
Equity shares are not considered tangible items. They represent ownership in a company but do not have a physical existence. Therefore, equity shares are not covered within the definition of goods under the Sale of Goods Act, 1930.
B: Grass
Grass is a natural product that can be physically possessed. It can be bought and sold, and it falls within the definition of goods under the Sale of Goods Act, 1930.
C: Trees
Similarly to grass, trees are tangible items that can be bought and sold. They have a physical existence and are covered within the definition of goods under the Sale of Goods Act, 1930.
D: All of the above
Since equity shares are not covered within the definition of goods, option D is incorrect.
Therefore, the correct answer is option B and C, as grass and trees are covered within the definition of goods under the Sale of Goods Act, 1930.
Test: Formation Of Contract Of Sale- 2 - Question 22

When the goods are identified in a contract of sale, they are called _______.

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 22
Explanation:
When the goods are identified in a contract of sale, they are referred to as specific goods. This means that the goods are clearly identified and distinguished from other goods. Here is a detailed explanation:
Specific Goods:
- Specific goods are goods that are identified and agreed upon by both the buyer and the seller.
- These goods are described in the contract of sale with specific details such as quantity, quality, and any other relevant specifications.
- The buyer knows exactly what goods they are purchasing, and the seller knows exactly which goods they need to deliver.
- Examples of specific goods include a specific model of a car, a particular brand of clothing, or a unique piece of artwork.
Ascertained Goods:
- Ascertained goods are goods that have been identified and agreed upon by the parties involved in the contract of sale.
- These goods may not be described in great detail in the contract, but they are identifiable based on some characteristics or criteria.
- For example, if the contract states that the buyer is purchasing a specific quantity of wheat from a particular field, the goods are ascertained based on the quantity and the field.
Unascertained Goods:
- Unascertained goods are goods that have not yet been identified or agreed upon at the time of the contract.
- These goods are not specifically described or distinguished from other goods.
- The contract may specify a general category or type of goods, but the actual goods to be delivered are not yet determined.
- For example, if the contract states that the buyer is purchasing 100 kilograms of apples from the seller's orchard, but the specific apples have not been chosen or identified, the goods are unascertained.
In conclusion, when the goods are clearly identified and described in the contract of sale, they are called specific goods. Ascertained goods are identifiable based on certain characteristics, while unascertained goods have not yet been specifically identified.
Test: Formation Of Contract Of Sale- 2 - Question 23

A document of title of goods. 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 23
Document of Title of Goods
There are various documents that serve as proof of ownership or possession of goods during transportation. Some common documents of title of goods include:
1. Bill of Lading:
- A bill of lading is a document issued by a carrier (such as a shipping company) to acknowledge the receipt of goods for shipment.
- It serves as evidence of the contract of carriage between the shipper and the carrier.
- The bill of lading also acts as a receipt for the goods, a document of title, and a document of transfer.
2. Dock Warrant:
- A dock warrant is a document issued by a warehouse operator or dock company.
- It represents the ownership or possession of goods stored in a specific location or warehouse.
- The dock warrant can be transferred to another party, granting them the rights to claim and dispose of the goods.
3. Railway Receipt:
- A railway receipt is a document issued by a railway company as proof of receipt of goods for transportation by rail.
- It serves as evidence of the contract of carriage and ownership or possession of the goods.
- The railway receipt can be endorsed and transferred to another party, enabling them to claim the goods at the destination.
4. All of the Above:
- The correct answer to the question is option D, "All of the above."
- All three documents mentioned above, namely bill of lading, dock warrant, and railway receipt, are examples of documents of title of goods.
In summary, a document of title of goods is a legal document that proves ownership or possession of goods during transportation. Examples of such documents include the bill of lading, dock warrant, and railway receipt.
Test: Formation Of Contract Of Sale- 2 - Question 24

If the goods are in a deliverable state, the buyer: 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 24
If the goods are in a deliverable state, the buyer:
The correct answer is A: Is bound to take delivery.
Explanation:
When the goods are in a deliverable state, the buyer is obligated to take delivery of the goods. This means that the buyer is legally required to accept and receive the goods from the seller. This obligation arises because the goods are ready to be delivered and the buyer has already entered into a contractual agreement to purchase them.
Here are the reasons why the other options are not correct:
- B: Is not bound to take delivery - This option is incorrect because when the goods are in a deliverable state, the buyer is indeed bound to take delivery.
- C: Has the option to take or not to take the delivery - This option is incorrect because when the goods are in a deliverable state, the buyer does not have the option to refuse delivery. They are obligated to accept and receive the goods.
- D: All of the above - This option is incorrect because only option A is correct. The buyer is bound to take delivery when the goods are in a deliverable state. The other options are not applicable in this situation.
In conclusion, when the goods are in a deliverable state, the buyer is legally obligated to take delivery of the goods.
Test: Formation Of Contract Of Sale- 2 - Question 25

Which of the following modes of delivery of goods is considered effective for a valid contract of sale?

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 25
Effective Modes of Delivery of Goods for a Valid Contract of Sale:
There are three modes of delivery of goods that are considered effective for a valid contract of sale:
1. Actual Delivery:
- Actual delivery refers to the physical transfer of goods from the seller to the buyer.
- It involves the actual handover of possession of the goods to the buyer.
- This mode of delivery is most commonly used in the sale of tangible goods such as cars, furniture, or appliances.
2. Symbolic Delivery:
- Symbolic delivery is the transfer of possession of goods without their physical transfer.
- It involves the delivery of a symbol or representation of the goods, such as a key or document, that signifies ownership or control.
- This mode of delivery is often used for goods that are difficult to physically transport or when the parties agree to transfer ownership through symbolic means.
3. Constructive Delivery:
- Constructive delivery occurs when the seller does not physically or symbolically transfer the goods but does something that has the effect of transferring the goods.
- It refers to the transfer of control or legal possession of the goods, even though physical possession may remain with the seller.
- This mode of delivery is commonly used in cases where the goods are too large or impractical to be physically delivered, such as real estate or large machinery.
Conclusion:
In a valid contract of sale, all three modes of delivery - actual delivery, symbolic delivery, and constructive delivery - are considered effective. The choice of mode depends on the nature of the goods and the agreement between the parties involved in the contract.
Test: Formation Of Contract Of Sale- 2 - Question 26

The sale of Goods Act, 1930, deals with

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 26
The Sale of Goods Act, 1930
The Sale of Goods Act, 1930, is a legislation that governs the sale of goods in India. It outlines the rights, duties, and responsibilities of both buyers and sellers in a transaction involving the sale of goods. The Act covers various aspects related to the sale of goods, including:
1. Definition of Goods:
- The Act provides a definition of goods, which includes movable property, excluding actionable claims, money, and stocks and shares.
2. Formation of a Contract:
- The Act lays down the rules for the formation of a contract of sale, which includes offer, acceptance, consideration, and intention to create legal relations.
3. Conditions and Warranties:
- It distinguishes between conditions and warranties in a contract of sale. Conditions are essential terms that must be fulfilled, whereas warranties are secondary terms that are not integral to the contract.
4. Transfer of Ownership and Goods:
- The Act defines the rules for the transfer of ownership and goods, including when the ownership passes from the seller to the buyer and the rights and obligations of both parties in relation to the goods.
5. Performance of the Contract:
- It specifies the obligations of the seller and the buyer in fulfilling their respective duties under the contract, such as delivering the goods, paying the price, and accepting delivery.
6. Rights of an Unpaid Seller:
- The Act provides protection to an unpaid seller by granting them certain rights, such as the right to retain possession of the goods, stoppage in transit, and resale of the goods.
7. Remedies for Breach of Contract:
- It outlines the remedies available to the parties in case of a breach of contract, including damages, specific performance, and repudiation of the contract.
In conclusion, the Sale of Goods Act, 1930, deals with various aspects of the sale of goods, including the formation of a contract, transfer of ownership, performance of the contract, rights of an unpaid seller, and remedies for breach of contract. It is an important legislation that provides a legal framework for conducting business transactions involving the sale of goods in India.
Test: Formation Of Contract Of Sale- 2 - Question 27

Actionable claims are claims which are enforced only by.

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 27
Actionable claims are claims which are enforced only by:
- Action: Actionable claims can be enforced by the claimant taking some kind of action to enforce their claim. This can include filing a lawsuit, initiating legal proceedings, or pursuing other legal remedies.
- Suit: Actionable claims can also be enforced through a suit, which refers to a legal action or proceeding. This typically involves the claimant filing a lawsuit in court to seek a resolution or remedy for their claim.
- (a) or (b): Actionable claims can be enforced either by taking action or by pursuing a legal suit. Both options are valid methods for enforcing these claims.
- None of the above: This answer choice is incorrect because actionable claims are indeed enforced either through action or a suit.
Therefore, the correct answer is (C) (a) or (b), as both action and suit are valid means for enforcing actionable claims.
Test: Formation Of Contract Of Sale- 2 - Question 28

In case of hire-purchase, the hirer 

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 28

In the case of hire-purchase, the hirer has certain rights and responsibilities. One of the key aspects of hire-purchase is the option to buy the goods.


Explanation:


When it comes to hire-purchase, the hirer has the following rights and responsibilities:



  • Option to buy the goods: The hirer has the choice to purchase the goods at the end of the hire-purchase agreement.

  • Payment of installments: The hirer must make regular payments towards the hire-purchase agreement.

  • Ownership of goods: The hirer does not own the goods until the final payment is made.

  • Return of goods: If the hirer fails to make the payments as agreed, the owner may have the right to repossess the goods.


Therefore, in the case of hire-purchase, the hirer has the option to buy the goods at the end of the agreement. This gives the hirer the flexibility to decide whether to purchase the goods or not.

Test: Formation Of Contract Of Sale- 2 - Question 29

A contract for sale of goods where property would pass to buyer at a future date is:

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 29
Agreement to Sale:
An agreement to sale is a contract for the future sale of goods where the transfer of ownership or property will occur at a later date. This means that the buyer does not immediately acquire ownership of the goods but agrees to purchase them in the future. Here are the key features of an agreement to sale:
1. Future transfer of ownership: In an agreement to sale, the transfer of ownership or property will happen at a future date, usually upon the fulfillment of certain conditions or completion of specific tasks.
2. Intent to sell: Both the seller and the buyer enter into the agreement with the intention to sell and purchase the goods. The agreement outlines the terms and conditions of the sale, including the price, quantity, quality, and delivery terms.
3. Obligation to sell: The seller is obligated to sell the goods to the buyer once the agreed-upon conditions are met or the specified tasks are completed. Similarly, the buyer is obligated to purchase the goods as per the terms of the agreement.
4. Risk and rewards: Until the transfer of ownership occurs, the risk and rewards associated with the goods remain with the seller. This means that any damages, loss, or benefits related to the goods are the responsibility of the seller until the buyer becomes the owner.
5. Legal enforceability: An agreement to sale is legally binding and enforceable by law. If either party fails to fulfill their obligations under the agreement, the other party can seek legal remedies, such as specific performance or damages.
It is important to note that an agreement to sale is different from a completed sale. In a completed sale, the ownership of the goods is immediately transferred to the buyer upon payment, whereas in an agreement to sale, the transfer of ownership happens at a future date.
Test: Formation Of Contract Of Sale- 2 - Question 30

Which one of the following is not a document of title of goods ?

Detailed Solution for Test: Formation Of Contract Of Sale- 2 - Question 30

Introduction:
In this question, we are asked to identify the document that is not a document of title of goods.
Document of Title of Goods:
A document of title is a legal document that provides evidence of ownership or control over goods. It is used in commercial transactions to establish the transfer of ownership or to prove the existence of a certain quantity or type of goods. Some common examples of documents of title include bills of lading, warehouse receipts, and delivery orders.
Options:
A: Railway Receipt
B: Wharfingers certificate
C: Share certificate
D: Multi modal transport document
Analysis:
We need to analyze each option and determine whether it is a document of title of goods or not.
- A: Railway Receipt - This is a document issued by a railway company to acknowledge the receipt of goods for transportation. It serves as a document of title for the goods being transported by rail. This is a valid document of title of goods.
- B: Wharfingers certificate - This is a document issued by a wharfinger (person in charge of a wharf or dock) to acknowledge the receipt of goods for storage or shipment. It serves as a document of title for the goods stored or shipped from the wharf. This is a valid document of title of goods.
- C: Share certificate - This is a document issued by a company to its shareholders as evidence of their ownership of shares in the company. It does not represent ownership or control over goods and is not a document of title of goods. This is the correct answer.
- D: Multi modal transport document - This is a document used in international transportation to cover the movement of goods through different modes of transportation (e.g., rail, road, sea, air). It serves as a document of title for the goods being transported. This is a valid document of title of goods.
Conclusion:
The document that is not a document of title of goods is the Share certificate (Option C).
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