Test: Nature Of Contracts- 1


30 Questions MCQ Test Business Laws for CA Foundation | Test: Nature Of Contracts- 1


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QUESTION: 1

The juristic concept of contract consists of:

Solution:

The juristic concept of contract comprises two constituent elements—'obligation' and 'agreement'. Obligation means a legal tie, which imposes upon a determinate person or persons, the necessity of doing, or abstaining from doing, a definite act or acts.

QUESTION: 2

In case of illegal agreements the collateral agreements are?

Solution:

An agreement which loses its legal status is a void agreement. An illegal agreement is one which is not permissible under law. ... Conversely, collateral agreements of an illegal agreement cannot be enforceable by law as they are void ab initio.

QUESTION: 3

In an auction sale, X is the highest bidder. The auctioneer accepts the offer by not speaking but striking the hammer on the table. This amounts to:

Solution:

Implied offer is one in which parties to contract do not clearly speak to each other but duty is formed by circumstances e.g;- here striking the hammer on the table by auctioneer shows that he is ready to accept his offer. that is why it is called implied offer.

QUESTION: 4

An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other, is a:

Solution:
QUESTION: 5

An Executed Consideration is:

Solution:

A consideration which consists of the performnance, it is "executed" i.e. an act done in response to a positive promise. Where it consists only of a promise it is executory. For example where A pays Rs. 5,000 to B to deliver certain quantity of rice, to which B agrees, here consideration for B is executed by 'A' as he has already paid Rs 5,000 where as B's promise is executory as he is yet to deliver the rice.

QUESTION: 6

A contract in which, under the terms of a contract, nothing remains to be done by either party is known as

Solution:
QUESTION: 7

X offers to sell his house to Y for Rs. 10 Lacs and states in his letter that the offer would be considered as accepted if acceptance is not communicated within a certain time. Here, the letter of X would:

Solution:
QUESTION: 8

Which one of the following promises is enforceable?

Solution:

The promise by X to pay Y who saved him from drowning is enforceable as there is completion of "quid pro quo" i.e. something in return of. In this case X's life was saved hence he is held liable to pay the amount to Y.

QUESTION: 9

P agrees to pay a certain sum to Q, if Q brings on earth a star from sky. This is a:

Solution:
QUESTION: 10

S offered a reward to anyone who returns his lost dog. F bought the dog to S without having heard of the offer. Which of the following is correct?

Solution:

Answer is B because F was not knowing about the offer of reward for finding S's dog therefore he cant claim that.

QUESTION: 11

A agrees to sell to B a horse for Rs. 25,000 if he wins race and for Rs. 15,000 if he does not. The horse wins the race. The agreement is: 

Solution:

According to Section 2(g), "Agreement not enforceable by law is said to be void." Such agreement are void as initio which means that they are enforceable right from the time they are made. Similarly according to Section 30 of the Indian Contract Act, 1872, a wagering agreement is an agreement between two persons under which money or money's worth is payable, by one person to another on the happening or non- happening of a future uncertain event is called a wagering agreement. Hence, in this case where A agrees to sell to B a horse for Rs. 25,000 if it wins a race and for Rs. 15,000 if does not. The horse wins the race. the agreement between A and B is void and wagering as the agreement between them is unenforceable and wagering because money is payable on the horse winning the race.

QUESTION: 12

On the 5th of a month X makes an offer to Y, by a letter, which reaches Y on 6th.On the 7th, Y posts his letter of acceptance. Meanwhile, on the 6th X posts a letter to Y revoking the offer. On seeing it Y sends a telegram to X on 8th confirming the acceptance given through his letter of the 7th. Discuss the legal of three letters and telegram:

Solution:

Under Section 5, of the Indian Contract Act,1872, a proposal may be revoked at any time, before the communication of its acceptance is completed against the proposer/ offeror. So in this case on the 5th of a month X makes an offer to Y, by a letter which reaches Y on 6th and on the 7th, Y posts his letter of acceptance. Meanwhile on the 6th, X posts a letter to Y revoking the offer, so as a result of X's revocation on 6th, the offer made by him earlier is revoked and there is no contract between X and Y.

QUESTION: 13

X promises to pay Z Rs 5,00,000 if Z can make his dead wife alive. Such an agreement is:

Solution:

According to Section 56 of the Indian Contract Act, 1872, "An agreement to do an impossible Act is void". hence in this case X promises to pay Z Rs 5,00,000 if Z can make his dead wife alive, such a contract is also void as X makes a promise to pay money's worth of Rs 5,00,000 for a task which is impossible to perform.

QUESTION: 14

The person making a proposal is called....

Solution:

The person making the proposal is called the promisor, and the person accepting the proposal is called the 'promisee'

QUESTION: 15

X makes a proposal to Y, which Y accepts. But before the acceptance came to the knowledge of X, Y revokes his acceptance by telegram :When is the revocation complete?

Solution:

According to Section 5 of the Indian Contract Act, "An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards " As we know that communication of acceptance is complete as against the acceptor when the letter of acceptance is actually received by the proposer. Hence, in this case X makes a proposal to Y, which Y accepts. But before the acceptance came to the knowledge of X, Y revokes his acceptance by telegram. The revocation is complete when the telegram is received by X.

QUESTION: 16

When an offer is made to the world at large, it is ________ offer

Solution:
QUESTION: 17

In case of unenforceable contract having some technical defect, parties

Solution:
QUESTION: 18

An offer is made with an intention to have negotiation from other party. This type of offer is:

Solution:

 

 Invitation to offer is an attempt to induce offer and precedes a definite offer, example an advertisement given to sell something. Such advertisements are offers to negotiate offers to receive offers. Hence, an offer made with an intention to have negotiation from other party is an invitation to offer.

QUESTION: 19

--------- contracts are also called contracts with executed consideration.

Solution:

Completed contracts are also called contracts with executed consideration i.e. the consideration for the promise in a contract is given or executed.

QUESTION: 20

 _________ is a game of chance.

Solution:

Agreements entered into between parties under the condition that money is payable by the first party to the second party on the happening of a future uncertain event, and the second party to the first party when the event does not happen, are called Wagering Agreements or Wager. There should be mutual chance of profit and loss in a wagering agreement. Generally wagering agreements are void.

QUESTION: 21

Legal obligation means a duty enforceable by:

Solution:
QUESTION: 22

“Holiday Packages” announced as an advertisement are an example of _________:

Solution:

Invitation to an offer is only a circulation of an offer as distinguished from offer. It is an attempt to induce people and precede a definite offer. Eg:- an advertisement given to sell something.Similarly, an advertisement of holiday packages is an invitation to offer and not an offer.

QUESTION: 23

When a bookseller sells a book on cash payment then it is called as ______.

Solution:

Executed Contract means acontract that has been fully performed by both parties. In other words, acontract whose terms have been completely fulfilled. Here the bookseller sold his book and at the same time the other party has paid the amount and hence both parties had performed in the contract so option C is correct answer

QUESTION: 24

A contract is an agreement:-

Solution:
QUESTION: 25

There is no binding Contract in case of -------- as one’s offer cannot be construed as acceptance

Solution:
QUESTION: 26

A specific offer can be accepted by ______.

Solution:

When offer is made to a definite person, it is known as specific offer and such offer can be accepted by that specified persons only.

QUESTION: 27

A offers to sell his house to B, who agrees to purchase it subject to approval by B’s solicitors. Which one of the statements in correct?

Solution:
QUESTION: 28

Non-fulfillment by an offeree of a condition precedent to acceptance leads to _________:

Solution:

If an offer contains a condition that offeree has to perform that condition as a token of acceptance and the offeree fails to fulfill the condition then, it amounts to non- acceptance on the part of offeree. In such a case, offer is said to have been lapsed.

QUESTION: 29

The Contract Act of 1872 was enacted on

Solution:

The Indian Contract Act1872 prescribes the law relating to contracts in India and is the key act regulating Indian contract law. The Contract Act of 1872 was enacted on 25 April 1872.

QUESTION: 30

Which one of the following element is not necessary for a contract?

Solution:

 

As per Indian Contract Act 1872, section 10 contains option a,c and d except option b
Reasonable term and condition is not necessary to make a contract.

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