UNIT 1: LAW OF CONTRACT 1) The __________ forms the oldest branch of the law relating to business.

a) Negotiable Instruments Act, 1881 b) Sales of Goods Act, 1930 c) Companies Act, 1956 d) Law of Contract, 1872 2) Law is: a) A general rule of external human action b) Body of principles c) Both d) None 3) Law happens to be one of the most effective instruments of __________. a) Co-operation b) Control c) Service d) Regulation 4) __________ is the portion of law dealing with rights and obligations of transactions between mercantile persons. a) Commercial Law b) Mercantile Law c) Business Law d) All 5) An __________ enforceable by law is called a contract [u/s 2(h) of Indian Contract Act, 1872]. a) Tie-up b) Pact c) Agreement d) Treaty 6) __________ is every promise and every set of promises forming __________ for each other. a) Consideration & Agreement b) Agreement & Consideration c) Acceptance & Contract d) Contract & Consideration 7) A __________ is an accepted __________. a) Promise & Proposal b) Proposal & Promise c) Promise & Acceptance d) Acceptance, Proposal 8) An agreement becomes enforceable only when it is couples with __________. a) Acceptance b) Obligation c) Proposal d) Promise 9) __________ is the legal __________ which binds the parties to a contract. a) Obligation & Agreement b) Agreement & Contract c) Obligation & Bond d) Promise & Bond 10) Obligations from agreements should be legal, and not, __________ obligations. a) Social b) Moral c) Religious d) All 11) All contracts are agreements, but all agreements need not be contracts. a) True b) False 12) Agreements that create __________ obligations are contracts. a) Social b) Moral

c) Legal d) Religious 13) Free consent is one that is free from all sorts of __________. a) Agreements b) Promise c) Pressure d) Consideration 14) Contractual capacity of a person means that he/she should be: a) Major b) Of sound mind c) Qualified under law of the land d) all 15) __________ is the price of a __________. a) Consideration & Promise b) Promise & Consideration c) Agreement & Contract d) Contract & Agreement 16) Agreements in India may be __________ or __________. a) Oral, Written b) Implicit, Explicit c) Verbal, Gestural d) Oral, Verbal 17) An agreement not enforceable by law [u/s. 2(g)] is _________. a) Valid contract b) Void contract c) Voidable contract d) Illegal contract 18) An agreement enforceable by law at the option of one or more of the parties thereto but not at the option of the other or others is __________. a) Valid contract b) Void contract c) Voidable contract d) Illegal contract 19) All illegal agreements are void but, all void agreements are not illegal. a) True b) False 20) A contract becoming unenforceable due to some technical reason is __________. a) Valid contract b) Unenforceable contract c) Voidable contract d) Illegal contract 21) Promisor is a person making the __________ and promise is the one, accepting the __________. a) Offer b) Proposal c) Both d) None 22) An offer may be __________ or __________. a) Verbal, Written b) General, Specific c) Explicit, Implicit d) Simple, Complex 23) The test of contractual intention is __________ and not __________. a) Objective & Subjective b) Subjective & Objective c) Supplementary & Complementary d) Complimentary & Supplimentary 24) An offer must be __________ and __________. a) Ambiguous & Uncertain b) Definite & Certain

c) Indefinite & Certain d) Indefinite & Uncertain 25) Are all terms of an offer be expressed? a) Yes b) No 26) __________ is not an offer. a) Statement of intention b) Invitation to offer c) Both d) None 27) __________ is necessary to complete the operation of an offer. a) Agreement b) Communication c) Consideration d) Contract 28) __________ is a two-sided bargain based on the freedom of contract. a) Proposal b) Agreement c) Offer d) Consideration 29) Two __________ offers do not make a contract. a) Different b) Identical c) Conflicting d) Opposite 30) A proposal, when accepted, becomes a __________. a) Offer b) Acceptance c) Promise d) None 31) __________ turns the offer into a __________ obligation. a) Acceptance & Social b) Acceptance & Binding c) Proposal & Legal d) Proposal & Legal 32) Should be from the person to whom it is made | Unconditional & absolute | To be communicated | Should be according to the prescribed form | Must be provoked by offer | Must be given before the offer lapses or is revoked| Should not be provisional | Which of the above is true for acceptance? a) First three b) First five c) All d) None 33) A qualified or conditional acceptance is a __________. a) Valid acceptance b) Invalid acceptance c) Counter-offer d) Deviated acceptance 34) Acceptance is not a mental resolve, but some __________ manifestation. a) Internal b) External c) Implied d) Explicit 35) If the offeree does not signify his assent to the offeror according to the mode prescribed, it becomes __________. a) Valid acceptance b) Invalid acceptance c) Counter acceptance d) Deviated acceptance 36) __________ is not a binding agreement unless final approval is given.

a) Provisional acceptance b) Deviated acceptance c) Counter acceptance d) Conditional acceptance 37) Under Indian Law, the communication of acceptance is complete as against the acceptor only when it comes to the Knowledge of the __________. a) Acceptor b) Proposer c) Promisee d) Offeree 38) An offer can be terminated by: a) Lapse b) Rejection & destruction of the subject matter c) Revocation d) All 39) A __________ has the same effect as rejection. a) Counter offer b) Deviated acceptance c) Conditional offer d) Provisional acceptance 40) The withdrawal of an offer by the offeror is called __________. a) Revocation b) Rejection c) Cancellation d) Lapse 41) A proposal may be revoked by the proposer before the __________ of its acceptance is complete. a) Offer b) Communication c) Registration d) Promise 42) The majority age of a minor, whose guardian is appointed by a court is __________. a) 21 years b) 18 years c) 15 years d) 23 years 43) As per the principles governing a minors contract: a) Judges are counselors b) Jury are servants c) Law is guardian d) All 44) A minors agreement is __________. a) Invalid b) Valid c) Void-ab-initio d) Unenforceable 45) A minor, in law, is incapable of giving __________. a) Consent b) Approval c) Acceptance d) Promise 46) A minor can be __________ under law. a) Payee b) Endorsee c) Promisee d) All 47) __________ relates back to the date of making the contract. a) Acceptance b) Promise c) Ratification d) Consideration

48) A contract which was __________ originally cannot be made valid by subsequent __________. a) Void, Amendment b) Void, Ratification c) Invalid, Ratification d) Void-ab-initio, Ratification 49) In a free consent, there should be a) Consensus ad idem b) Identity of minds c) Both d) None 50) __________ is the committing or threatening to commit any act forbidden by the Indian Penal Code (IPC). a) Fraud b) Coercion c) Undue influence d) Mistake 51) Threat to file a false suit is __________ under Indian Penal Code. a) Fraud b) Coercion c) Undue influence d) Mistake 52) Elements of undue influence include: a) Dominating the will of a person b) Obtaining unfair advantage over another c) Both (a) and (b) d) None 53) Unlike __________, __________ must come from a party to the contract and not a stranger to it. a) Undue influence, Coercion b) Coercion, Undue influence c) Fraud, Coercion d) Fraud, Mistake 54) Undue influence involves __________. a) Physical force b) Moral force c) Emotional force d) Social force 55) Coercion involves __________. a) Physical force b) Moral force c) Emotional force d) Social force 56) In a suit, the party __________ the contract must prove the existence of undue influence. a) Making b) Accepting c) Avoiding d) Offering 57) A contract made by a dominant party with a weaker party is called __________. a) Provisional contract b) Unconscionable contract c) Enforceable contract d) Invalid contract 58) Does undue influence involve any criminal liability? a) Yes b) No 59) A fraud is a statement: a) Made knowingly b) Without belief in its truth c) Being recklessly careless d) All

60) In a fraud, the representation made must be a __________. a) Fact b) Opinion c) Intention d) All 61) __________ of material facts amounts to fraud. a) Revealing b) Active concealment c) Exposing d) None 62) A __________ is merely irrelevant if it has not induced the party to whom it was made to act upon. a) Coercion b) Fraud c) False misrepresentation d) Undue influence 63) Silence is not fraud except under __________ circumstances. a) Three b) Two c) Four d) Five 64) Silence amounts to fraud when: a) It is the duty to speak b) Silence is equivalent to speech c) Both (a) and (c) d) None 65) Statement of fact made by one party to another at the time of entering into contract with an intention to induce the other party to enter into the contract is called __________. a) Proposal b) Representation c) Offer d) Promise 66) A misrepresentation may be __________ or __________. a) External, Internal b) Direct, Indirect c) Innocent, Intentional d) Explicit, Implicit 67) __________ misrepresentation is called __________. a) External & Fraud b) Innocent & Mistake c) Direct & Mistake d) Intentional & Fraud 68) Section 18 of the Indian Contract Act, 1872, deals with __________ misrepresentation. a) External b) Innocent c) Intentional d) Internal 69) Misrepresentation includes: a) Positive assertion of a fact b) Breach of duty c) Mistake about subject matter d) All 70) A false statement need not be made direct to the plaintiff. True or False? a) True b) False 71) If a misrepresentation has not been embodied in the contract, it creates no contractual obligation unless it is ______. a) False b) Fraudulent c) True d) Binding

72) When a party to the contract has a duty to disclose all material facts regarding the subject matter of the contract, but does not do so, he is said to be guilty of __________. a) Fraud b) Mistake c) Misrepresentation d) Undue influence 73) Usually, mistake refers to: a) Misunderstanding b) Wrong thinking c) Wrong belief d) All 74) Courts only recognize mistakes that __________ the contract. a) Misrepresent b) Invalidate c) Validate d) Stops 75) Mistake may be: a) Mistake of fact b) Mistake of law c) Both (a) and (b) d) None 76) Bilateral mistake is one where there is no real correspondence of __________ and __________. a) Offer & Proposal b) Offer & Acceptance c) Promise & Acceptance d) Promisor & Promisee 77) A mutual mistake as to the identity of the subject matter renders the contract __________. a) Void b) Voidable c) Null and void d) Unenforceable 78) A mistake as to the quality of the subject matter will not render the agreement __________ owing to the principle of __________, unless there is a misrepresentation or guarantee by the seller. a) Void & Consensus ad idem b) Voidable & Equitable justice c) Void & Caveat Emptor d) Void & Estoppel 79) Where the mistake is __________ and the parties enter into the contract with false assumption and mistake regarding the value of the subject matter, there cannot be an enforceable contract between them. a) Mutual b) Unilateral b) Bilateral d) Intentional 80) Section 22 of the Indian Contract Act provides that a contract is not __________ because it was caused by __________ mistake. a) Void, Bilateral b) Voidable, Unilateral c) Voidable, Bilateral d) Void, Unilateral 81) Mistake as to the law of the land does not render the contract __________. a) Void b) Voidable

c) Null and void d) Unenforceable 82) Consideration should be furnished at the desire of the __________. a) Promisor b) Promisee c) Proposer d) Offeree 83) Consideration should be the outcome at the desire of the __________. a) Promisor b) Promisee c) Proposer d) Offeree 84) Consideration may be __________. a) Past b) Present c) Future d) All 85) Present consideration is also known as __________ consideration. a) Executed b) Executory c) Both (a) and (b) d) None 86) Future consideration is also known as __________ consideration. a) Executed b) Executory c) Both (a) and (b) d) None 87) Consideration should be: a) Valuable b) Certain and lawful c) Adequate or inadequate d) All 88) The discharging of a __________ obligation is not consideration. a) Unlawful b) Future c) Preexisting d) Implied 89) Nearness of relationship includes __________. a) Blood relationship b) Mental relationship c) Both (a) and (b) d) None 90) Voluntary act should be __________ so as to become an exception to the rule of consideration. a) Must not be immoral and done for the promisor b) Promisor must be existing and competent to contract c) Intention should be to compensate promise d) All 91) No consideration is necessary to create an __________. a) Educational institution b) Agency c) Export business d) Indian NGO 92) An agreement to extend time for __________ of a contract, need not ne supported by consideration. a) Execution b) Validity c) Performance d) Continuation 93) Any person not a party to a contract, unable to claim rights under it, although being a beneficiary, is called a __________ to the contract.

a) Third party b) Stranger c) Outsider d) Nonentity 94) When rights under a contract are assigned, the ________ can sue upon the contract for the enforcement of his rights. a) Assignor b) Proposor c) Assignee d) Offeror 95) A contract entered into by the agent acting within the scope of his authority can be enforced by __________. a) Agent b) Suppliers c) Principal d) Government 96) An illegal agreement is necessarily unlawful whereas, an unlawful agreement need not be illegal. True or False? a) True b) False 97) The word Law u/s 23 of the Indian Contract Act means enactment of the __________. a) Legislature b) Subordinate legislation c) Hindu & Mohammadan law d) All 98) A legal object aiming at circumventing the provisions of any law becomes _________ u/s 23 of Indian Contract Act. a) Void b) Voidable c) Unlawful d) Unenforceable 99) An agreement entered with a __________ purpose or to perpetuate fraud on others is void. a) Unlawful b) Immoral c) Fraudulent d) Illegal 100) Agreements interfering marital relations are considered __________. a) Illegal b) Immoral c) Oppose to public policy d) None 101) __________ is an elastic term and its connotations may vary with the social structure of the state. a) Public policy b) Immoral c) Illegal d) Unlawful 102) The term enemy u/s 23 of Indian Contract Act, 1872 includes residents (permanent or temporary) in __________. a) Enemys country b) Enemy occupied territory c) Both (a) and (b) d) None 103) __________ refers to an agreement for sharing the benefit to be derived from the lawsuit. a) Maintenance b) Champerty c) Concubine d) Stifle prosecution

104) _________ refers to an agreement seeking to provide assistance financial or otherwise to bring or defend a lawsuit. a) Maintenance b) Champerty c) Concubine d) Stifle prosecution 105) An agreement which unduly restrains the __________ of an individual is void. a) Integrity b) Liberty c) Honesty d) Independence 106) Agreements in restraint of trade, marriage, tending to create an interest against duty, interfering with parental duties, restraining personal liberty are examples of __________. a) Oppose to public policy b) Illegal c) Immoral d) None 107) When the rights and obligations arising out of contract are extinguished, the contract is said to be __________. a) Discharged b) Termimated c) Both (a) and (b) d) Cancelled 108) Contract may be discharged in __________ ways. a) Five b) Six c) Seven d) Ten 109) When a contract is duly performed by both the parties, it is discharged by__________. a) Performance b) Mutual consent c) Lapse of time d) Operation of law 110) Discharge of a contract by performance may be by __________. a) Actual performance b) Attempted performance c) Tender d) All 111) A performance becomes attempted performance because of the nonacceptance of the performance by _________. a) Promisee b) Promisor c) Both (a) and (b) d) None 112) Is a conditional tender a valid tender? a) Yes b) No 113) Is a tender made to a stranger valid? a) Yes b) No 114) Tender by __________ is invalid as it is not a __________ tender. a) Cash, Legal b) Cash, Valid c) Cheque, Legal d) Cheque, Valid 115) When a new contract is substituted for an existing contract between the same or different parties, the consideration

Mutually being the discharge of the old contract __________ occurs. a) Alteration b) Novation c) Rescission d) Remission 116) __________ means change in one or more of the material terms of a contract. a) Alteration b) Novation c) Rescission d) Remission 117) A contract discharged by an agreement between the parties, before the date of performance, so as to make the contract non-binding is called __________ of the contract. a) Recission b) Cancellation c) Both (a) and (b) d) Termination 118) Non-performance of a contract by both the parties for a long period without complaint amounts to __________. a) Remission b) Implied recission c) Recission d) Waiver 119) Acceptance of a lesser sum than what was contracted for or a lesser fulfillment of the promise made is __________. a) Alteration b) Novation c) Rescission d) Remission 120) __________ is the deliberate abandonment or giving up of a right which a party is entitled to under a contract. a) Remission b) Novation c) Recission d) Waiver 121) According to section 56 of the Indian Contract Act, 1872, an agreement to do an act __________ is itself void. a) Illegal b) Immoral c) Impossible d) Oppose to public policy 122) In __________, the dissolution of the contract occurs automatically, not depending on the choice of the parties. a) Doctrine of supervening impossibility/illegality b) Doctrine of frustration c) Both (a) and (b) d) All 123) Destruction of the subject matter, failure of the ultimate purpose, death or personal incapacity of promisor, change of law are instances where the contract is discharged on the ground of __________. a) Operation of law b) Doctrine of supervening impossibility c) Mutual consent d) Lapse of time 124) __________ of a contract cannot be discharged on the ground of supervening impossibility. a) Commercial impossibility b) Difficulty of performance

c) Failure of one of the objects d) All 125) Doctrine of supervening impossibility applies when the impossible act is __________. a) Beyond the control of promisor b) Not due to the negligence of the promisor c) Not self-induced by the promisor d) All 126) The specified period within which legal action should be taken by the aggrieved party for breach of contract is __________. a) Period of limitation b) Period of payment c) Period of action d) Period of suit 127) Death of the promisor, insolvency of one of the parties, merger of an inferior right contract with a superior right contract, unauthorized material alteration renders a contract discharge by __________. a) Mutual consent b) Lapse of time c) Operation of law d) Breach of contract 128) Where the contract is of a personal nature, death of the __________ discharges the contract. a) Promisee b) Promisor c) Both (a) and (b) d) None 129) Breach of contract may be: a) Anticipatory breach b) Actual breach c) Both (a) and (b) d) Attempted breach 130) Anticipatory breach of contract occurs __________ the time for fixed performance. a) After b) Before c) On d) All 131) Actual breach of contract occurs __________ the time for fixed performance. a) After b) Before c) On d) All 132) The fundamental principle underlying damages is not __________ but __________. a) Compensation, Punishment b) Punishment, Compensation c) Punishment, Demurrage d) Compensation, Penalty 133) Damages in a contract are of __________ types. a) Three b) Five c) Four d) Six 134) Damage arising naturally from the breach is called __________. a) Ordinary damage b) General damage c) Compensatory damage d) All

135) Ordinary damages are restricted to the __________ consequences of the breach of contract. a) Direct b) Proximate c) Both (a) and (b) d) Remote 136) __________ loses which are not naturally and probable consequence of the breach of contract are not regarded as ordinary damages. a) Remote b) Indirect c) Both (a) and (b) d) Proximate