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Contract Act-II MCQs Set-2
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There are 2 Sets of MCQs available for The Indian Contract Act-I, you are advised to explore all the sets :
Liability arises when:
a. Goods are used properly
b. Goods are not used
c. Goods are used unauthorized and damage occurs
d. Contract is written
2. Section 155 of the Indian Contract Act, 1872 deals with:
a. Mixing of goods without consent
b. Mixing of goods with consent
c. Duties of bailee
d. Finder’s rights
3. When goods are mixed with the bailor’s consent:
a. Goods must be separated
b. Bailor loses ownership
c. Both bailor and bailee share interest proportionately
d. Bailee becomes owner
4. The ownership in mixed goods is:
a. Fully of bailee
b. Fully of bailor
c. Shared according to respective shares
d. Given to court
5. Section 156 of the Indian Contract Act, 1872 deals with:
a. Mixing of goods without consent (separable)
b. Mixing of goods with consent
c. Duties of bailor
d. Finder’s rights
6. If goods are mixed without bailor’s consent and can be separated:
a. Bailee becomes owner
b. Bailor loses ownership
c. Ownership remains with respective parties
d. Goods are destroyed
7. In such case, the bailee must:
a. Do nothing
b. Bear expenses of separation and damage
c. Pay only damage
d. Transfer goods
8. Section 157 of the Indian Contract Act, 1872 deals with:
a. Mixing of goods with consent
b. Mixing of goods without consent (inseparable)
c. Duties of bailee
d. Finder’s rights
9. If goods are mixed without consent and cannot be separated:
a. Bailee becomes owner
b. Bailor loses all rights
c. Bailor is entitled to compensation
d. Goods must be divided
10. In such case, the bailee:
a. Has no liability
b. Must compensate the bailor for loss
c. Shares ownership
d. Transfers goods
11. Section 162 of the Indian Contract Act, 1872 deals with:
a. Termination of bailment by use
b. Termination of gratuitous bailment by death
c. Duties of bailee
d. Delivery of goods
12. A gratuitous bailment is terminated when:
a. Goods are used
b. Contract is written
c. Either bailor or bailee dies
d. Court orders
13. The termination of gratuitous bailment occurs:
a. Only on death of bailor
b. Only on death of bailee
c. On death of either bailor or bailee
d. Only after notice
14. Section 165 of the Indian Contract Act, 1872 deals with:
a. Duties of bailee
b. Bailment by several joint owners
c. Termination of bailment
d. Finder of goods
15. When goods are bailed by several joint owners, the bailee may return them:
a. Only with consent of all owners
b. To any one joint owner
c. Only to court
d. To creditor
16. Delivery to one joint owner is valid:
a. Always
b. Only with court order
c. In absence of any agreement to the contrary
d. Only with written consent
17. Section 169 of the Indian Contract Act, 1872 deals with:
a. Rights of bailee
b. Finder’s right to sell goods
c. Duties of bailor
d. Contract of guarantee
18. Finder of a lost thing which is commonly the subject of sale, may sell it when the lawful charges of the finder, in respect of the thing found amount to-
a. One-fourth
b. Half
c. One-third
d. Two-thirds of its value.
19. A finder may sell the goods when:
a. Owner is present
b. Owner pays charges
c. Owner cannot be found or refuses to pay lawful charges
d. Goods are new
20. The finder can sell the goods if:
a. Goods are expensive only
b. Goods are in danger of perishing or charges amount to two-thirds of value
c. Goods are old
d. Goods are gifted
21. Section 170 of the Indian Contract Act, 1872 deals with:
a. General lien
b. Bailee’s particular lien
c. Finder’s rights
d. Contract of indemnity
22. A bailee can retain the goods when:
a. He has not done any work
b. He has rendered services involving labour or skill
c. He refuses to return goods
d. Owner demands goods
23. The right of lien allows the bailee to:
a. Sell the goods
b. Destroy the goods
c. Retain the goods until payment for services is made
d. Transfer ownership
24. Section 171 of the Indian Contract Act, 1872 deals with:
a. Particular lien
b. General lien of certain persons
c. Bailment termination
d. Finder’s rights
25. Which of the following persons have a right of general lien?
a. All bailees
b. Only creditors
c. Bankers, factors, wharfingers, attorneys and policy-brokers
d. Only agents
26. General lien allows retention of goods:
a. For a specific debt only
b. For any general balance of account
c. Only with court permission
d. Only for future debts
27. In law of contract, Bailor in pledge is called:
a. Pawnor
b. Pawnee
c. Agent
d. Bailee
28. Section 172 of the Indian Contract Act, 1872 deals with:
a. Bailment
b. Pledge, pawnor and pawnee
c. Contract of guarantee
d. Finder of goods
29. A pledge is:
a. Sale of goods
b. Bailment of goods as security for debt or performance of promise
c. Gift of goods
d. Transfer of ownership
30. The person who delivers goods in pledge is called:
a. Pawnee
b. Pawnor
c. Bailee
d. Creditor
31. A ‘contract of pledge’ is a contract of
a. indemnity
b. guarantee
c. bailment
d. agency
32. The bailment of goods as security for payment of a debt or performance of a promise is called
a. bailment
b. mortgage
c. pledge
d. charge
33. The pawnee has a right to retain the goods pledged:
a. for payment of debt interest & all necessary expenses in respect of goods pledged'
b. for payment of debt other than the debt in respect of goods pledged
c. for payment of interest & necessary expenses in respect of goods other than the one pledged
d. all the above
34. Section 173 of the Indian Contract Act, 1872 deals with:
a. Rights of pawnor
b. Pawnee’s right of retainer
c. General lien
d. Bailment
35. The pawnee can retain the goods for:
a. Debt only
b. Debt and interest only
c. Debt, interest, and necessary expenses
d. Expenses only
36. Necessary expenses include:
a. Personal expenses
b. Expenses for preservation and possession of goods
c. Travel expenses
d. Court fees only
37. Section 177 of the Indian Contract Act, 1872 deals with:
a. Rights of pawnee
b. Defaulting pawnor’s right to redeem
c. Bailment
d. Contract of guarantee
38. A pawnor who defaults can redeem the goods:
a. After sale only
b. Before actual sale of goods
c. Never
d. Only with court permission
39. To redeem after default, the pawnor must:
a. Pay only the debt
b. Pay nothing
c. Pay debt plus expenses arising from default
d. Pay interest only
40. Section 178 of the Indian Contract Act, 1872 deals with:
a. Bailment
b. Pledge by mercantile agent
c. Rights of pawnor
d. Contract of guarantee
41. A pledge by a mercantile agent is valid when:
a. He has no possession of goods
b. He acts outside business
c. He acts in ordinary course of business with owner’s consent and pawnee acts in good faith
d. Owner objects later
42. The pledge is invalid if:
a. Pawnee acts in good faith
b. Pawnee has notice that agent has no authority
c. Agent is in possession
d. Goods are sold
43. Section 178A of the Indian Contract Act, 1872 deals with:
a. Pledge by mercantile agent
b. Pledge by person under voidable contract
c. Rights of pawnor
d. Bailment
44. A pledge by a person in possession under a voidable contract is valid when:
a. Contract is rescinded
b. Pawnee acts in bad faith
c. Contract is not rescinded and pawnee acts in good faith without notice
d. Owner objects
45. The pawnee gets:
a. No rights
b. Limited rights
c. Good title to the goods
d. Temporary possession only
46. A person employed to do any act for another or to represent another in dealings with the third person is:
a. A principal
b. A pawnor
c. An agent
d. A bailor
47. An agent can be appointed by:
a. a minor of sound mind
b. a major of sound mind
c. any person of sound mind
d. any major of sound or unsound mind
48. Section 182 of the Indian Contract Act, 1872 deals with:
a. Bailment
b. Agent and principal
c. Contract of guarantee
d. Finder of goods
49. Under Section 182 of the Contract Act 1872, National Textile Corporation Ltd. is:
a. a Government department
b. an agent of the Central Government
c. not an agent of the Central Government
d. an agent of the Central Government if the President consents
50. Del credere agent is a kind of:
a. Substituted Agent
b. Mercantile Agent
c. Universal Agent
d. Agent by necessity
51. Which statement is wrong regarding “agency” under the Indian law of contract?
a. Principal should be competent to contract
b. The authority of agent may be expressed or implied
c. Consideration is necessary to create an agency
d. Guardian of a minor can appoint an agent for him
52. An agent is a person who:
a. Buys goods for himself
b. Does any act for another or represents him in dealings with third persons
c. Only gives advice
d. Lends money
53. The person for whom the act is done is called:
a. Agent
b. Creditor
c. Principal
d. Bailee
54. Section 183 of the Indian Contract Act, 1872 deals with:
a. Who may be an agent
b. Who may employ an agent
c. Duties of agent
d. Rights of principal
55. A person can employ an agent if he:
a. Is a minor
b. Is of unsound mind
c. Is of majority age and sound mind
d. Is illiterate
56. Which of the following is correct?
a. Only companies can employ agents
b. Any person of majority and sound mind can employ an agent
c. Only courts can appoint agents
d. Only written contracts allow agency
57. Section 184 of the Indian Contract Act, 1872 deals with:
a. Who may employ an agent
b. Who may be an agent
c. Duties of agent
d. Rights of principal
58. As between the principal and third persons, an agent can be:
a. Only a major
b. Only a person of sound mind
c. Any person
d. Only a registered person
59. A person who is not of majority age and sound mind:
a. Can be held responsible to the principal
b. Cannot be held responsible to the principal
c. Becomes principal
d. Cannot act as agent at all
60. Section 185 of the Indian Contract Act, 1872 deals with:
a. Consideration in contract
b. Consideration not necessary for agency
c. Duties of agent
d. Bailment
61. To create an agency:
a. Consideration is always required
b. Consideration is not necessary
c. Written agreement is compulsory
d. Court approval is needed
62. Section 190 of the Indian Contract Act, 1872 deals with:
a. Delegation of authority by agent
b. When agent cannot delegate
c. Duties of principal
d. Termination of agency
63. An agent cannot delegate his authority:
a. Always
b. When he is busy
c. When he is required to perform acts personally
d. When principal allows
64. Delegation is allowed when:
a. It is prohibited
b. Custom of trade permits or nature of agency requires it
c. Agent refuses to act
d. Court orders only
65. Section 191 of the Indian Contract Act, 1872 deals with:
a. Agent
b. Sub-agent
c. Principal
d. Bailment
66. A sub-agent is a person who:
a. Works independently
b. Is employed by the principal
c. Is employed by and acts under the control of the original agent
d. Acts as creditor
67. A sub-agent acts under the control of:
a. Principal
b. Creditor
c. Original agent
d. Court
68. A person appointed by an agent under the authority of Principal is known as :
a. Sub Agent
b. Substituted Agent
c. Mercantile Agent
d. Special Agent
69. Which of the following statement is correct in relation to sub-agent?
a. He is employed by the principal in the business of the agency
b. He is employed by the original agent in the business of the agency
c. He acts under the control of the principal
d. The agent is not responsible to the principal for acts of the sub-agent
70. The effect of ratification under the law of agency is;
a. Prospective
b. Retrospective
c. Prospective or retrospective depending on the facts and circumstances of the case
d. Prospective or retrospective depending on the agreement between the parties
71. Section 201 of the Indian Contract Act, 1872 deals with:
a. Duties of agent
b. Termination of agency
c. Creation of agency
d. Bailment
72. An agency is terminated by:
a. Completion of business
b. Death or unsoundness of mind of principal or agent
c. Insolvency of principal
d. All of the above
73. Which of the following is NOT a mode of termination of agency?
a. Revocation by principal
b. Renunciation by agent
c. Increase in profit
d. Completion of business
74. An agency under the Contract Act is terminated by:
a. principal revoking his authority
b. the death of either principal or agent
c. principal being adjudicated an insolvent
d. All of the above
75. “A” gives authority to “B” to sell ‘A’s land and to pay himself out of the proceeds. The debts due to him from A. In the absence of an express contract-
a. “A” can revoke this authority
b. Authority can be terminated by the insanity of “A”
c. Authority can be terminated by the death of “A”
d. “A “ cannot revoke this authority nor can it be terminated by his death or insanity
76. A person employed by, and acting under the control of, the original agent, in the business of the agency is a:
a. sub-agent
b. substituted agent
c. pretended agent
d. None of the above
77. Section 202 of the Indian Contract Act, 1872 deals with:
a. Termination of agency
b. Agency coupled with interest
c. Duties of agent
d. Bailment
78. An agency cannot be terminated when:
a. Principal wishes to revoke
b. Agent has no role
c. Agent has an interest in the subject-matter
d. Contract is oral
79. Such agency can be terminated:
a. At any time
b. Only by court
c. Only by express contract without harming agent’s interest
d. Automatically
80. Section 206 of the Indian Contract Act, 1872 deals with:
a. Termination of agency
b. Notice of revocation or renunciation
c. Duties of agent
d. Creation of agency
81. Reasonable notice must be given for:
a. Formation of contract
b. Revocation or renunciation of agency
c. Bailment
d. Guarantee
82. If reasonable notice is not given:
a. Contract becomes void
b. No consequence
c. Loss must be compensated by the party at fault
d. Court cancels agency
83. Section 209 of the Indian Contract Act, 1872 deals with:
a. Duties of agent during contract
b. Agent’s duty on termination of agency by death or insanity
c. Creation of agency
d. Bailment
84. When the principal dies or becomes of unsound mind, the agent must:
a. Stop all work immediately
b. Take reasonable steps to protect the interests of the principal
c. Transfer property to himself
d. Inform court only
85. The agent acts on behalf of:
a. Himself
b. Creditor
c. Representatives of the principal
d. Court
86. Section 211 of the Indian Contract Act, 1872 deals with:
a. Rights of agent
b. Agent’s duty in conducting principal’s business
c. Termination of agency
d. Bailment
87. An agent must conduct business:
a. According to his own wishes
b. According to directions of principal or prevailing custom
c. Only according to law
d. According to third party instructions
88. If the agent acts against instructions:
a. No consequence
b. He must compensate for loss and account for profit
c. Contract becomes void
d. Principal is liable
89. Section 213 of the Indian Contract Act, 1872 deals with:
a. Skill and diligence required from agent
b. Agent’s accounts
c. Duties of principal
d. Bailment
90. Section 219 of the Indian Contract Act, 1872 deals with:
a. Duties of agent
b. Agent’s remuneration
c. Termination of agency
d. Bailment
91. An agent is entitled to remuneration:
a. Before starting work
b. After completion of the act, unless otherwise agreed
c. Only after court order
d. Never
92. An agent may retain money received from sale:
a. Only after full completion
b. Even if all goods are not sold or sale is not complete
c. Only with court permission
d. Never
93. Section 220 of the Indian Contract Act, 1872 deals with:
a. Agent’s remuneration
b. Agent not entitled to remuneration for misconduct
c. Duties of principal
d. Bailment
94. An agent guilty of misconduct:
a. Gets full remuneration
b. Gets partial remuneration
c. Is not entitled to remuneration for that part of business
d. Gets bonus
95. Misconduct affects:
a. Entire contract
b. Only that part of business which is misconducted
c. Only principal
d. Third party
96. Section 221 of the Indian Contract Act, 1872 deals with:
a. Agent’s duties
b. Agent’s lien on principal’s property
c. Termination of agency
d. Bailment
97. Under the Indian Contract Act, 1872, the following right is not available to an agent:
a. Right to retain
b. Right to sell
c. Right to claim compensation
d. All of the above
98. An agent can retain the principal’s property:
a. Without any reason
b. Until his dues for commission, disbursements, and services are paid
c. Only with court permission
d. Only after termination
99. The lien applies to:
a. Only movable property
b. Only immovable property
c. Goods, papers, and other property of the principal
d. Personal belongings only
100. Section 222 of the Indian Contract Act, 1872 deals with:
a. Duties of agent
b. Indemnity to agent for lawful acts
c. Termination of agency
d. Bailment
101. The principal is bound to indemnify the agent for:
a. Illegal acts
b. Personal acts
c. Lawful acts done within authority
d. Unauthorized acts
102. Indemnity is provided when the agent:
a. Acts beyond authority
b. Acts unlawfully
c. Acts within authority and lawfully
d. Refuses to act
103. Section 223 of the Indian Contract Act, 1872 deals with:
a. Indemnity for unlawful acts
b. Indemnity for acts done in good faith
c. Termination of agency
d. Bailment
104. The principal must indemnify the agent when:
a. Agent acts negligently
b. Agent acts in good faith under authority
c. Agent acts beyond authority
d. Agent refuses to act
105. B, the proprietor of a newspaper, publishes, at A’s request, a libel upon C in the paper, and A agrees to indemnify B against the consequences of the publication, and all costs and damages of the action in respect thereof. B is sued by C and has to pay damages and also incurs expenses. Decide in the light of Section 224 of the Indian Contract Act, 1872.
a. A is not liable to B upon indemnity
b. A is liable to B upon indemnity
c. A is not liable to C upon indemnity
d. None of the above
106. Section 226 of the Indian Contract Act, 1872 deals with:
a. Duties of agent
b. Enforcement and consequences of agent’s contracts
c. Termination of agency
d. Bailment
107. Contracts entered into through an agent:
a. Are not enforceable
b. Are enforceable only against agent
c. Are enforceable as if made by the principal himself
d. Are void
108. Acts done by an agent:
a. Have no legal effect
b. Bind only the agent
c. Have the same legal consequences as if done by the principal
d. Require court approval
109. Section 227 of the Indian Contract Act, 1872 deals with:
a. Duties of agent
b. Agent exceeding authority
c. Termination of agency
d. Bailment
110. When an agent exceeds his authority:
a. Entire act is void
b. Entire act is binding
c. Only the authorized part is binding if separable
d. Principal is never bound
111. The principal is bound:
a. For all acts of agent
b. Only for unauthorized acts
c. Only for the part within agent’s authority if it can be separated
d. Never bound
112. Section 231 of the Indian Contract Act, 1872 deals with:
a. Duties of agent
b. Undisclosed principal
c. Termination of agency
d. Bailment
113. If the principal discloses himself before completion of contract:
a. Other party must perform
b. Contract becomes void automatically
c. Other party may refuse if he would not have contracted knowing the principal
d. Agent becomes principal
114. When an agent contracts without disclosing he is an agent:
a. Principal cannot enforce the contract
b. Principal may require performance of the contract
c. Contract becomes void
d. Agent is not liable
115. An agent, at the time of making the contract does not disclose the name and address of his principal but it comes known to the second party afterwards. In case of any default the second party may file a suit against:
a. Principal
b. Agent
c. Either agent or principal or both
d. None of the above
116. ……………………………………………….A consigns goods to B for sale and gives him instructions not to sell under a fixed price. C, being ignorant of instructions, given to B, enters into a contract with B to buy the goods at a price lower than the reserved price :…………………..
a. A is not bound by that contract
b. A is bound by that contract
c. A has the right to honor the contract or not.
d. The contract is void for A
117. Section 238 of the Indian Contract Act, 1872 deals with:
a. Duties of agent
b. Effect of misrepresentation or fraud by agent
c. Termination of agency
d. Bailment
118. Misrepresentation or fraud by an agent:
a. Has no effect on principal
b. Affects the agreement as if done by the principal when within authority
c. Makes contract always void
d. Is ignored by law
119. If fraud is committed by agent outside his authority:
a. Principal is liable
b. Principal is not affected
c. Contract is always valid
d. Agent becomes principal
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