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Chapter 1 : The Indian Contract Act, 1872

Unit 1 : Nature of Contracts

[1] A invited B for a dinner at his house. B did not come on theappointed day. A cannot sue B as

(a) There was no intention to create legal relationship.

(b) There was no promise.

(c) There was no acceptance(d) There was no offer

[2] A promises is a :

(a) Consideration

(b) Contract

(c) An accepted proposal

(d) Proposal

[3] Is the statement true or false :

All contracts are agreements but all agreements are not contract

(a) True

(b) False

(c) Partly true

(d) Cant say[4] The Law of Contract extends to______

(a) Whole of India

(b) Whole of India except the State of Jammu and Kashmir.

(c) North India only.

(d) South India only.

[5] If the transaction is illegal, collateral transactions are :

(a) Void

(b) Illegal

(c) Unenforceable

(d) None of these

[6] An agreement enforceable by law is :

(a) Obligation

(b) Promise

Appendix2009 - June

Paper - 2 : Mercantile Laws

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8 CPT Appendix 2009 - June

(c) Proposal

(d) Contract

[7] X invites Y for his sons wedding. Y accepts the invitation. In this

case there is an agreement but no contract, since -

(a) There is no consideration

(b) There is no intention to create legal relationship.

(c) There is no written document.

(d) There is no formal acceptance of the offer.

[8] Bs son is lost. A goes in search of Bs son. Meanwhile, B makes

an offer to pay Rs. 1,000 to the finder of his son. A finds Bs son.

Can A claim Rs. 1,000 from B ?

(a) Yes, A has found Bs son.

(b) No, A had no knowledge of the offer.

(c) No, A is hired by B.(d) None of these.

[9] A sent a proposal for sale of goods to B through a letter. However,

letter was still in transit, B sent the letter of revocation of offer to B

which was received by B before the first letter reached B.

(a) The contract is valid

(b) The revocation is valid as it reached B before the first letters

reached B.

(c) The contract is void.

(d) None of these.

Unit 2 : Consideration

[10] Consideration in India may be :

(a) Past, present or future(b) Present only

(c) Past only

(d) Future only

[11] Contracts of love and affection are valid under which head.

(a) Contract without consideration

(b) Contract with consideration

(c) Stranger to a consideration

(d) None of these

Unit 3 : Other Essential Elements of a Valid Contract

[12] If mistake is unilateral then the contract is :

(a) Void

(b) Voidable




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CPT Appendix : (Paper 2) Mercantile Laws 9

(c) Valid

(d) Illegal[13] Undue influence involves______pressure.

(a) Physical

(b) Financial

(c) Moral

(d) Both (a) & (b)

[14] Mistake as to a law not in force in India is______

(a) Void

(b) Valid

(c) Voidable

(d) Illegal

[15] Which of the following is not expressly declared void ?

(a) Wagering agreement(b) Agreement to pay time barred debt.

(c) Agreement the meaning of which is certain

(d) Consideration unlawful in part.

[16]When parties enters into a contract under a mutual mistake of fact

the contract is______:

(a) Valid

(b) Voidable

(c) Void

(d) None of these

Unit 4 : Performance of Contract

[17]If a new contract is substituted in place of an existing contract is

called:

(a) Waiver

(b) Rescission

(c) Novation

(d) Alteration

Unit 6 : Contingent and Quasi Contracts

[18] A promised to give Rs. 50,000 to B, if B is selected as thePresident of Co-operative society. It is______

(a) Void contract

(b) Contingent contract

(c) Wagering contract

(d) Illegal contract




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[19] A supplies necessaries of life to B who is a son of a mental

retarded person. A is entitled to be reimbursed out of Bs property .

This is :

(a) An agreement with contract

(b) An agreement without contract

(c) A gratuitous agreement

(d) A Quasi contract

Chapter 2 : The Sale of Goods Act, 1930

Unit 1 : Formation of Contract of Sale

[20] If goods are unacertained then the contract is :

(a) Sale

(b) An agreement to sell.

(c) Contingent contract

(d) A wagering contract.

[21] Which one of the following is not a document of title to goods ?

(a) Railway Receipt

(b) Wharfingers certificate

(c) Share certificate

(d) Multi modal transport document.

[22] A agrees B to sell 10 tonnes of wheat when the crop is harvested. It

is...

(a) A sale

(b) An agreement to sell

(c) Either (a) or (b)

(d) Both (a) and (b)[23] Movable property does not include money but includes -

(a) Stocks and shares

(b) Grass

(c) Growing crops

(d) All of the above

[24] The Sale of Goods Act, 1930 came into force on

(a) September 1, 1930

(b) October 1, 1930

(c) June 1, 1930

(d) July 1, 1930




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Unit 2 : Conditions and Warranties

[25] Doctrine of Caveat Emptor requires the buyer :(a) To be careful while making a purchase.

(b) To depend on representation made by seller.

(c) To warn a seller not to sell any fake goods.

(d) Not to make any advance payment.

[26] A______is a stipulation collateral to the main purpose of the

contract.

(a) Warranty

(b) Condition

(c) Both

(d) None

[27]In case where goods are purchased under its patent or brand name,

there is no implied______that goods shall be fit for particularpurpose.

(a) Condition

(b) Warranty

(c) Any of the above.

(d) None of the above.

Unit 3 : Transfer of Ownership and Delivery of Goods

[28] In case of part delivery in lieu of whole, the buyer may ______ the

goods.

(a) Reject

(b) Accept

(c) Demand for the balance amount of goods.

(d) Either (a) or (b)[29] Reservation of Right to disposal is available for which kind of

goods ?

(a) Specific goods

(b) Existing goods

(c) Unascertained goods

(d) All of these

Unit 4 : Unpaid Seller

[30] The unpaid seller is not required to inform the buyer in case he

resells the goods but the goods must be:

(a) Perishable goods

(b) Non-perishable goods

(c) Durable goods

(d) Consumer goods




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Chapter 3 The Indian Partnership Act, 1932 Unit 1 : General Nature of a Partnership

[31] A minor should give public notice within ______months of

attaining majority, to elect whether to become a partner or not to

become a partner.

(a) Five

(b) Six

(c) Twelve

(d) None of these

[32] D and J purchased 100 bales of cotton to be sold on Joint Account.

They agreed to share profit and losses equally. They are :

(a) Partners

(b) Joint owners

(c) Co-venturers

(d) None.

[33] True test of partnership is :

(a) Share of profits only

(b) Share of profits & losses(c) Mutual agency

(d) None of these

[34] Partnership agreement can be :

(a) Oral(b) Written

(c) Oral or written

(d) Written on stamp paper

Unit 2 : Relations of Partners[35] If profit sharing ratio is not specified in the partnership deed, then

the profit is shared ______

(a) Equally

(b) According to the seniority of age.

(c) According to capital contribution

(d) According to qualification.

[36] Reconstitution of firm takes place in case of :

(a) Admission of partner

(b) Retirement of partner

(c) Expulsion of partner

(d) All of the above.




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[37] The partner of the firm can be expelled from the firm with the

consent of :(a) All the partners

(b) Majority of the partners

(c) Any working partner of the firm


Unit 3 : Registration & Dissolution of a Firm

[38] The conclusive evidence of registration of firm is :

(a) The certified copy of register of firm

(b) The register of Central Government.

(c) The certificate of registration of firms.

(d) None of these.

[40] X, Y and Z are partners in a firm. Y and Z died in an accident. X

continues the business in the name of the firm ?(a) Z cannot continue the business of the firm.

(b) Z can continue the business of the firm.

(c) Z alone cannot run a firm.

(d) Z and legal representative of x and y will have to run the

business of the firm.

[41] A registered firm is a :

(a) legal person

(b) Illegal person

(c) Corporate body

(d) Co-operative organisations

Answer

1. (a) 2. (c) 3. (a) 4. (a) 5. (b)6. (b) 7. (b) 8. (b) 9. (b) 10. (a)

11. (a) 12. (c) 13. (c) 14. (a) 15. (a)

16. (c) 17. (c) 18. (b) 19. (b) 20. (c)

21. (c) 22. (b) 23. (d) 24. (d) 25. (a)

26. (a) 27. (a) 28. (d) 29. (a) 30. (a)31. (b) 32. (a) 33. (c) 34. (c) 35. (c)

36. (d) 37. (b) 38. (c) 39. (a) 40. (a)




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Chapter 1 : The Indian Contract Act, 1872

Unit 1 : Nature of Contracts

2009 December[1] Voidable Contracts are:

(a) Not enforceable by Law(b) Enforceable at the option of both the parties(c) Enforceable at the option of one party only(d) Enforceable at the option of one or more

parties but not at the option of other or others.[2] B sends acceptance through telegram to A and it

was lost in transit due to mishandling of postman.The contract is:(a) Voidable(b) Valid(c) Void(d) Illegal

[3] The essential element of a valid contract is(a) Consideration(b) Free consent(c) Consensus- ad- idem

(d) All of these

Unit 2 : Consideration

2009 December

[4] In case of completed gifts, consideration is

(a) Not required.

(b) Equal to the amount of gift.

(c) Less than the amount of gift.

(d) More than the amount of gift.

Unit 3 : Other essential elements of a ValidContract

2009 December

[5] When one party is in a position to dominate the

will of another and uses his superior position to

obtain the consent of weaker party, the contract is

said to be obtained by(a) Fraud

(b) Undue Influence

(c) Coercion(d) Misrepresentation

[6] In Coercion _______pressure is applied.

(a) Physical

(b) Mental(c) Both (a) & (b)

(d) None of these[7] Marriage brokerage contracts are:

(a) Void

(b) Valid(c) Legal

(d) Illegal

[8] When parties do not intend to perform the contract

they made, then it amounts to:

(a) Fraud

(b) Misrepresentation

(c) Mistake

(d) None of these

[9] A contract caused by coercion is(a) Void

(b) Voidable

(c) Valid(d) Illegal

[10] A, B and C are partners in a firm. When C retires,

A and B restrict C not to do the same business for 3

years. The contract is:(a) Valid

(b) Voidable

(c) Void

(d) None

Unit 4 : Performance of Contract

2009 December[11] Novation requires:

(a) Mutual consent

(b) Mutual agreement

(c) Free consent

(d) None[12] Commercial Impossibility does not make the

contract ______ .

(a) Valid

(b) Void(c) Illegal

(d) Voidable

Unit 5 : Breach of Contract

2009 December

[13] ________ damages are awarded to establish a right

of decree for the breach of contract.

(a) Ordinary damages

(b) Nominal damages

(c) Special damages

(d) Liquidated damages

Unit 6 : Contingent and Quasi - Contracts

2009 December

[14] Events in case of contingent contracts are:

(a) Collateral and Uncertain(b) Certain and Collateral

(c) Collateral(d) None of the above.

Chapter 2 : The Sale of Goods Act, 1930

Unit 1 : Formation of contract of Sale

2009 December

[15] Which of the following is not recognised as

Goods?

(a) Grass

(b) Growing crops

Paper - 2

Mercantile Laws




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CPT Abridged Scanner : (Paper 2) Mercantile Laws 7

(c) Actionable claims

(d) All of the above[16] Can a hirer pass a good title to a bonafide

purchaser?

(a) Yes, hirer can pass a good title to a bonafidepurchaser

(b) Yes, provided the vendor agrees to it.(c) Yes, if he receives full consideration.

(d) No, hirer cannot pass a good title even to a

bonafide purchaser.

[17] In an agreement to sell:(a) Property passes to the buyer

(b) Property does not pass to the buyer

(c) Possession passes to the buyer(d) None of the above

[18] The object of Sale is:

(a) To pass the possession of the goods.

(b) To pass the property of the goods.

(c) Both (a) & (b)

(d) None of the above[19] In case of hire-purchase, the hirer

(a) Must return back the goods.(b) Has an option to buy the goods.

(c) Must buy the goods.

(d) Does not have the possession of goods.

[20] The essential element of Sales of Goods is:

(a) Promise to produce

(b) Price(c) Transfer of possession

(d) None of these.

Unit 2 : Conditions and Warranties

2009 December

[21] A condition is:(a) Not essential to the main purpose of the

contract

(b) Essential to the main purpose of the contract(c) A stipulation collateral to the main purpose of

the contract

(d) None of these.

Unit 3 : Transfer of Onership and delivery of

Goods

2009 December

[22] When does the property of the specific goods in adeliverable state, passes?

(a) When payment is made

(b) When possession is transferred.(c) When contract is made

(d) When the notice is given to the buyer

[23] If the buyer has received lesser quantity of goods

than agreed, then he may:

(a) Accept the goods & pay at contract rate.(b) Reject the goods.

(c) Accept the goods but pay the whole price.

(d) Either (a) or (b).[24] A sells certain goods to B. After the contract of

sale but before the goods were delivered to B, the

goods were taken by the Government for its own

use. Here the seller is:(a) A

(b) B

(c) Both

(d) None

[25] When the buyer and seller both reject the goodsand the goods are in transit, then(a) It is deemed that the goods are still in transit.

(b) Transit is deemed to be ended.

(c) Carrier becomes the owner of the goods.(d) None of these.

[26] Finder of Goods can sue the true owner of the

goods for the:

(a) Expenses incurred in finding the true owner.

(b) Expenses incurred in preserving the goods.

(c) Reward announced by the owner if he had theknowledge of the reward.

(d) All of the above.

Unit 4 : Unpaid Seller

2009 December

[27] Unpaid Seller has a right of _________ when the

goods have not been delivered to the buyer or his

agent.(a) Lien

(b) Stoppage in transit

(c) Resale(d) None of the above

[28] Which of the following is a right of an unpaid

seller?

(a) Right of Lien

(b) Right of Stoppage in transit

(c) Both (a) & (b)(d) None of these

[29] If in an Auction Sale, Auctioneer mistakenly falls

the hammer for price less than the Reserve price,Auctioneer is:

(a) Bound by auction

(b) Not bound by auction

(c) Both (a) & (b)

(d) Liable for damages

Chapter 3 : The Indian Partnership Act, 1932

Unit 1 : General Nature of a Partnership

2009 December

[30] Partnership cannot be formed between

(a) Two artificial persons

(b) Naturally born and artificial persons

(c) Between two naturally born persons(d) None of the above.

[31] A partner who contributes capital in the firm but

does not actively participates in the working of the

business is called:

(a) Active Partner(b) Dormant Partner




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8 CPT Abridged Scanner : (Paper 2) Mercantile Laws

(c) Sub-Partner

(d) Nominal Partner[32] Interest on capital will be allowed only when:

(a) There are heavy losses in the firm

(b) There are no profits and no losses(c) There are profits

(d) Always[33] What is a Partnership?

(a) An agreement between persons

(b) An association of persons

(c) A body of Individuals(d) All of the above

[34] If profit sharing ratio is not specified in the

partnership deed, then the profit is shared:(a) Equally

(b) According to the seniority of partners

(c) According to the capital contribution

(d) According to qualification.

Unit 2 : The Indian Partnership Act, 1932

2009 December[35] Share in Partnership can be transferred by consent

of ______the partners.(a) All(b) Majority(c) No consent required(d) None of these

[36] Partnership property vests in the:(a) Partners of the firm

(b) Firm itself

(c) Senior partner of the firm

(d) Solicitor General of India.

Unit 3 : Registration & Dissolution of a Firm

2009 December

[37] A non-registered firm can claim a set off of an

amount not exceeding:

(a) Rs. 100

(b) Rs. 1,000

(c) Rs. 10,000(c) Any amount

[38] A partnership firm is compulsorily dissolved

where:(a) All Partners have become Insolvent

(b) Firms business has become unlawful

(c) The fixed term has expired

(d) In case (a) & (b) only

[39] ABC is a registered firm. C died on 30th June. A

and B sue X in the name of ABC. What is theconsequence?

(a) The suit cannot be maintained.

(b) The suit can be maintained.

(c) The suit can be maintained when the firm isfreshly registered


[40] If any mistake has been done in the Register of

firms then application for rectification can begiven:

(a) By active partner

(b) By majority of the partners(c) By consent of one partner

(d) By consent of all the partners

Answer

1. (d) 2. (b) 3. (d) 4. (a)

5. (b) 6. (a) 7. (a) 8. (a)9. (b) 10. (a) 11. (b) 12. (b)

13. (b) 14. (a) 15. (c) 16. (d)

17. (b) 18. (b) 19. (b) 20. (b)

21. (b) 22. (c) 23. (d) 24. (b)25. (a) 26. (d) 27. (a) 28. (c)

29. (b) 30. (d) 31. (b) 32. (c)

33. (a) 34. (a) 35. (a) 36. (b)

37. (a) 38. (d) 39. (b) 40. (d)


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