Test – 2

1. A valid contract requires:

a) Offer and acceptance
b) Lawful consideration
c) Free consent
d) All of the above

2. An agreement not enforceable by law is:

a) Contract
b) Proposal
c) Void agreement
d) Voidable agreement

3. Electronic contracts are governed primarily under:

a) Partnership Act
b) Information Technology Act, 2000
c) Companies Act, 2013
d) N.I. Act

4. Breach of contract means:

a) Performance
b) Failure to perform contractual obligations
c) Acceptance of terms
d) Revocation of offer

5. A contract becomes impossible to perform due to supervening events. This is called:

a) Breach
b) Frustration
c) Revocation
d) Consideration

6. A voidable contract is:

a) Valid until avoided
b) Void from the beginning
c) Enforceable by all
d) Illegal

7. A standard form contract is also known as:

a) Adhesion contract
b) Gratuitous contract
c) Sale contract
d) Quasi-contract

8. A quasi-contract is based on:

a) Agreement
b) Statutory obligations
c) Implied obligations in equity
d) Consideration

9. Bailment involves:

a) Transfer of ownership
b) Transfer of possession
c) Transfer of title
d) Transfer of property

10. A pledge is a:

a) Contract of sale
b) Bailment of goods as security
c) Gratuitous contract
d) Quasi-contract

11. In a contract of indemnity, the liability of the indemnifier is:

a) Primary
b) Secondary
c) Contingent
d) Absolute

12. Contract of guarantee involves:

a) Two parties
b) Three parties
c) Four parties
d) No parties

13. An agent acts on behalf of:

a) Hirer
b) Bailor
c) Principal
d) Endorser

14. Property in goods under the Sale of Goods Act passes when:

a) Delivery is made
b) Payment is made
c) Parties intend it to pass
d) Invoice is issued

15. Goods not yet manufactured are:

a) Existing goods
b) Future goods
c) Specific goods
d) Ascertained goods

16. The unpaid seller has:

a) Only right of resale
b) No rights
c) Right of lien and stoppage in transit
d) Right to terminate contract only

17. Partnership arises through:

a) Contract
b) Inheritance
c) Gift
d) Court order

18. Minimum number of partners in a partnership firm:

a) One
b) Two
c) Three
d) Seven

19. LLP stands for:

a) Limited Legal Partnership
b) Limited Liability Partnership
c) Licensed Liability Partner
d) Legitimate Legal Partner

20. Negotiable instruments are transferable by:

a) Delivery
b) Endorsement and delivery
c) Registration
d) Notice

21. A promissory note contains:

a) A conditional promise
b) An unconditional promise to pay
c) Information about goods
d) Transfer of property

22. Cheque is drawn on a:

a) Customer
b) Bank
c) Creditor
d) Seller

23. The dishonour of a cheque occurs when:

a) Cheque is paid
b) Cheque is delayed
c) Bank refuses payment
d) Customer accepts goods

24. A company comes into existence after:

a) Filing MOA
b) Certificate of incorporation
c) Drafting AOA
d) Holding AGM

25. A prospectus is issued to:

a) Existing members
b) Public
c) Government
d) Directors

26. Shares represent:

a) Ownership in a company
b) Debts owed by the company
c) Security for a loan
d) None

27. Debentures represent:

a) Share capital
b) Loan capital
c) Reserve capital
d) Venture capital

28. A director is an agent of the company because:

a) He buys shares
b) He represents shareholders
c) He acts on behalf of the company
d) He audits accounts

29. Board meetings must be held at least:

a) Once a year
b) Twice a year
c) Four times a year
d) Monthly

30. CSR stands for:

a) Corporate Social Reform
b) Corporate Social Responsibility
c) Company Social Rights
d) None

31. Free consent is affected by:

a) Coercion
b) Undue influence
c) Fraud
d) All of the above

32. A contingent contract depends on:

a) Fixed time
b) Uncertain future event
c) Past event
d) None

33. A contract without consideration is:

a) Valid
b) Void (subject to exceptions)
c) Illegal
d) Enforceable

34. A contract of agency can be created by:

a) Express agreement
b) Implied agreement
c) Necessity
d) All of the above

35. “Goods” under Sale of Goods Act means:

a) Movable property
b) Immovable property
c) Both
d) None

36. LLP is governed by:

a) Partnership Act, 1932
b) LLP Act, 2008
c) Companies Act, 2013
d) Contract Act

37. Dishonour of  bill of exchange requires:

a) Protest
b) Acceptance
c) Delivery
d) Title transfer

38. Discharge of contract occurs by:

a) Performance
b) Agreement
c) Frustration
d) All of the above

39. Consideration must be:

a) Past
b) Present
c) Future
d) Any of the above

40. Voluntary transfer of possession for service is:

a) Pledge
b) Bailment
c) Sale
d) Agency

41. Implied warranty in sale of goods includes:

a) Quiet possession
b) Fitness for purpose
c) Merchantability
d) All

42. A negotiable instrument must be:

a) In writing
b) Oral
c) Digital only
d) Verbal

43. Director’s qualification shares are:

a) Mandatory
b) Optional
c) Illegal
d) Fixed by the government

44. AGM must be held once in:

a) Six months
b) A year
c) Two years
d) Three months

45. CSR under the Companies Act is covered under:

a) Section 35
b) Section 135
c) Section 430
d) Section 12

46. CSR obligations apply to:

a) All companies
b) Eligible large companies based on net worth, turnover, or profit
c) Only foreign companies
d) Small companies only

47. A void contract is void:

a) From the beginning
b) When the court declares
c) After breach
d) When accepted

48. A guarantee becomes invalid if:

a) Consideration is absent
b) Misrepresentation
c) Concealment of facts
d) All

49. Endorsement in blank makes the instrument:

a) Bearer instrument
b) Order instrument
c) Void instrument
d) Illegal

50. A company is a:

a) Natural person
b) Artificial legal person
c) Illegal association
d) Partnership

ANSWER KEY 

1-d, 2-c, 3-b, 4-b, 5-b, 6-a, 7-a, 8-c, 9-b, 10-b,
11-c, 12-b, 13-c, 14-c, 15-b, 16-c, 17-a, 18-b, 19-b, 20-b,
21-b, 22-b, 23-c, 24-b, 25-b, 26-a, 27-b, 28-c, 29-c, 30-b,
31-d, 32-b, 33-b, 34-d, 35-a, 36-b, 37-a, 38-d, 39-d, 40-b,
41-d, 42-a, 43-b, 44-b, 45-b, 46-b, 47-a, 48-d, 49-a, 50-b.