CBSE Questions for Class 11 Commerce Legal Studies Classification Of Law Quiz 2 - MCQExams.com

Legal Principle: An agreement becomes a contract when it is entered into between two or more persons with each other's free consent. Two or more persons are said to consent
when they agree to the same thing in the same sense. Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake.
Factual Situation: State whether there is any contract in the following cases: (a) A and B agree to go for hunting. (b) A and B agree to marry each other. (c) A agrees to sell some goods to B at a price to be fixed by C. (d) A takes food in a restaurant. (e) A takes a seat in a local bus.
Issue: What is the nature of the contracts?
  • All the said contracts are void contracts.
  • There is a valid contract in all cases except (a) because agreement to go for hunting is a purely social agreement not intending to create legal relations. In (b) and (c), there is intention to create legal relationship,whereas (d) and (e) amount to implied contracts.
  • In all the above statements,there is no contract because the offers and acceptances are very vague.
  • None of these
Legal Principle: When, at the desire of the promisor, the promisee or, any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing,something,such act or abstinence or promise, is called a consideration for the promise.
Factual Situation: When A is out of station on holiday, storm damages the roof of his house. B his neighbour and friend carries out the necessary repairs. On coming back, A promises to pay Rs.10,000 for the expenss incurred and time spent by B.
Issue : Cab B recover the amount if A does not pay it later on?
  • B cannot recover because there is no valid contract.
  • It will be the discretion of the court.
  • Yes, B can recover the amount from A as per the conditions being fulfilled under Section 25 (2).
  • No,it will be not the discretion of the court.
Legal Principle : A contract requires a proposal and an acceptance of the proposal.It is necessary to make a binding contract, not only that the proposal be accepted, but also that the acceptance is notified to the proposer.
Factual Situation: A, promise to contribute Rs.5,000 for repairs of temple. The trustee of temple, relying on A's promise incurred certain liabilities. A latter on does not pay the amount.
Issue: Can the trustee take action against A? 
  • The trustee cannot take action against A because the mere promise by A does not bind him.
  • Yes, the trustee can take action because the promise by A dose not bind him.
  • Neither (a) nor (b).
  • No,the trustee can not take action because the promise by A dose bind him.
Legal Principle: An offer made and accepted with an intention to enter into legal contract is enforceable.
Factual Situation: X promises to pay Y, his wife,pocket money Rs.500 per month. After two months, he stops the pocket money.
Issue: Can Y sue X?
  • No, because agreement between X and Y is domestic agreement which is not intended to be enforceable at law.
  • Y can sue X because the matrimonial relation is purely and technically a legal relationship.The breach of any condition/ promise results into breach of contract and hence amounts to liability.
  • It will be the duty of the court to deduce the relevant facts and give judgement.
  • Both (a) and (b).
Legal Principle: An offer made and accepted with an intention to enter into legal contract is enforceable.
Factual Situation: Romeo promised a gold necklace to Juliet at the time of their marriage.Romeo fails to brings the necklace.
Issue: Can Juliet claim the necklace? 
  • Juliet cannot claim the necklace as there is no consideration from Juliet.
  • Juliet can claim the necklace.
  • Neither (a) nor (b).
  • None of these.
Legal Principle: Agreements purely social and domestic in nature are not enforceable at law.
Factual Situation: A invites B to dinner. B accepts the invitation but does not turn up at the dinner.
Issue: Can A sue B for the loss he has suffered? 
  • A can sue because once A has offered and B has accepted, then B is legally bound, if he doesn't turn up it amounts to breach of contract.
  • It is a contract voidable at the option of A. It will be option available to A to sue B or not to sue B.
  • No, A cannot sue B because the agreement was purely social in nature and there was no intention to create a legal relationship.
  • None of these
Legal Principle: The act of using influence on another and taking undue advantage of that person is called undue influence.
Factual Situation: A, is in dire need of money,so sells his newly purchased car worth Rs.3 lakhs for Rs.50,Later on, he wants to set aside the contract on the ground of inadequacy of consideration?
Issue Can he do so?
  • Yes, he can do so on the ground of inadequacy of consideration.
  • No, he cannot do so because there was no undue influence and consideration was valid.
  • It is a contract voidable at the option of A.
  • None of these
Legal Principle: Once the letter for offer and letter for acceptance are posted, the contract is complete and the parties are bound and liable.
Factual Situation: A offers, by a letter, to sell certain article to B who receives the letter the next day. B immediately posts his letter of acceptance. The same evening, A posts another letter revoking his offer. A's letter revocation and B's letter of acceptance cross in the post.
Issue: Is there any contract between A and B?  
  • No, B cannot sue A because there is no contract as there is no receipt of offer and acceptance by A and B.
  • It is an agreement voidable at the option of B
  • Yes, a contract comes into existence.
  • No,it is not an agreement voidable at the option of A.
Legal Principle: When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstain from doing, or promises to do or to abstain from doing, something,such act or abstinence or promise, is called a consideration for the promise.
Factual Situation: Mr A tells B during a conversion, that he will give Rs.10,000 to anyone who marries his daughter with his consent. B marries A's daughter with A's consent.
Issue: Is B entitled to recover the money from A? 
  • B cannot recover the money from A because what A says is only a statement of intention and not an offer.
  • Yes, B can recover the money because once the offer was made and accepted, it had resulted into a valid contract and liability arises.
  • Neither (a) nor (b)
  • None of these.
Legal Principle: An auction/ bid is an invitation to offer and not an offer.It does not bind the auctioneer.
Factual Situation: A, an auctioneer gives advertisement in the newspaper wherein he mentions that certain furniture would be sold at Jaipur on a certain day. Mr B, a prospective buyer of Delhi, on reading the advertisement,reaches Jaipur on the fixed date. But the auctioneer cancels the auction sale.
Issue: Can B sue A, for not conducting the auction sale and can he claim damages for loss his of his time and expenses?
  • Yes, he can because once the auctioneer gave an advertisement and B read it, the contract is complete.
  • No, because advertisement was only an invitation to offer and not an offer.
  • Neither (a) nor (b)
  • Both (a) and (b).
Legal Principle: A minor is a person who is below the age of 18.However, where a guardian administers the minors property, the age of majority is 21. 
Factual Situation: M, a guardian, on behalf of a minor, L entered into a contract with S for purpose of certain property for the benefit of L.
Issue: Is the contract valid?
  • No, it is not a valid contract because any contract with the minor or on the behalf is void.
  • Yes, provided it is within the scope of the guardian's authority.
  • Neither (a) nor (b)
  • Both (a) and (b)
Legal Principle: A minor is not competent to enter into a contract and the law will assume that the contract never happened and everything is returned to as it was.
Factual Situation: S, a minor by fraudulently representing himself to be full age, enters in to an agreement with L, for selling his (S's) property.Under the agreement, S receives the full amount of Rs.5 lakhs in advance from L and uses it for purchasing a new car worth Rs.3 lakhs and spends the balance on world tour. Later on, S tries to avoid the contract on the plea of his minority.Can he do so?
Issue: What are the options available to L?
  • An agreement with minor is void.But a minor cannot defraud a person on the pretext of his minority. In this case, the court may direct the minor to restore the car to L.
  • An agreement with a minor is void so the minor does not have any liablity.
  • An agreement is voidable.
  • None of these
Legal Principle: A contract obtained by misrepresentation is voidable at the option of the buyer.
Factual Situation: A, purchased a machine from dealer, relying on the dealer's representation that it was a new model.After paying the purchase price, A came to know that the machine was not new but an old one.
Issue: What are the legal rights of A? 
  • A cannot sue the dealer because the maxim of caveat emptor applies on him and it debars him to sue the dealer.
  • A, can avoid the contract on the ground of fraud and get t he damages from the dealer.
  • Neither (a) nor (b)
  • Both (a) and (b).
Legal Principle: Where both parties to an agreement are under a mistake as to matter of fact essential to the agreement , the agreement is void.
Factual Situation: A, contracts with B to buy a necklace, believing it to be made of very costly rare pearls, while in reality, the pearls are only an imitation having very little value. B knows that A is mistaken but does not disclose the facts.
Issue: Is A bound by the contract?
  • No, A is not bound by the contract because it is not a unilateral mistake.
  • Yes, because the rule of caveat emptor will apply.
  • No, A is not bound by the contract because the rile of caveat venditor applies on B.
  • None of these.
Legal Principle : When , at the desire of the promisor, the promisee or, any other person has done or abstained from doing, or does or abstains from doing, or promises to do a to abstain from doling, something,such as or antiscience or promise, is called a consideration for the promise.
Factual Situation: A promises B his nephew, a reward of Rs.500 if he refrained from smoking for 2 years. B does so.
Issue: Is he entitled to the reward? 
  • Yes, B is entitled to the reward because he has at the desire of uncle refrained from smoking for two years.This is a valid consideration as per definition in Section 2(d) in the form of abstinence.
  • No, he is not entitled because the promise by the uncle is just an invitation to offer and does not amount to any valid contract and there was no valid consideration.
  • It is a contract voidable at the option of the uncle.
  • None of these
Legal Principle; A contract requires a proposal and an acceptance of the proposal.It is necessary to make a binding contract, not only that the proposal be accepted, but also that the acceptance is notified to the proposer.
Factual Situation: X gives to Y Rs.300 to be given to Z. Y informs Z that he is holding the money for him. But afterwards Y refuses to pay the money. Z sues Y for the money. Y contends that Z cannot sue as he was not a party to the contract.
Issue: Will the contention of Y be upheld? 
  • Y's contention will not be upheld because X has created privity of contract by his conduct.
  • Y's contention will be upheld because he was not party to the contract.
  • Neither (a) nor (b)
  • Both (a) and (b)
Legal Principle: When, at the desire of the promisee or, any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something,such act or abstinence or promise, is called a consideration   for the promise.
Factual Situation: A and B are friends. B treats A during A's illness. B does not accept payment from A for the treatment and A promises B's son X to pay him Rs.1,A, being in poor financial circumstances is unable to pay. X sues A for money.
Issue: Can X recover?
  • Yes, X can recover as his father B has already performed the conditions of contract for which the payment is to be made.
  • X cannot recover amount from A because there is no agreement between X and A and thus there is no consideration. Hence no consideration, no contract.
  • Neither (a) nor (c)
  • Both (a) and (b)
Legal Principle: The mere promise of birthday present out of love and affection does not result into any legal agreement and hence no liability.
Factual Situation: A promises to give Mr B Rs. 500 as birthday present on B's birthday. A fails to fulfil this promise. Mr B wants file a suit against A for the realization of the said amount.
Issue: Can B sue A?
  • B cannot sue A because there is a contract, the mere promise of birthday present out of love and affection does not result into any legal agreement and hence no liability.
  • B can sue A because once the promise is made, a valid contract arises.
  • Neither (a) nor (b).
  • Both (a) and (b)
Legal Principle: Law does not prevent a minor from becoming a promise or beneficiary.
Factual Situation: M, a minor, a under contract of sale delivered goods to a buyer.The buyer later on said,'I will not pay you the price. You are a minor and you cannot sue me'.
Issue: Is the buyer right in saying so?
  • No, because although an agreement with or by minor is void but a minor can be a promisee or beneficiary.
  • Yes, because the agreement of the minor is void hence there is no agreement, no liability,.
  • Neither (a) nor (b)
  • Both of above
Legal Principle: In a contract with a minor, if the other party hands over any money or confers any other benefit on the minor, the same shall not be recoverable from the minor unless the other party was deceived by the minor to hand over money or any other benefit.The other party will have to show that the minor misrepresented her age, he was ignorant about the age of the minor and that he handed over the benefit on the basis of such representation.
Factual Situation: A, aged 16, agreed to purchase a second-hand motocycle from B for Rs.12,He paid Rs.2,000 as advance and agreed to pay the balance the next day and collect the motocycle. When A came with the money the next day, B says that he has changed his mind and offered to return the advance.
Issue: Can B do so?
  • yes, because the agreement with a minor is void.
  • No, B cannot avoid the agreement simply because A is a minor and an agreement with minor is void although A is a minor but law does not prevent him from becoming a promisee or beneficiary.
  • Neither (a) nor (b)
  • Both (a) and (b)
Legal Principle: 
The act of using the influence on another and taking undue advantage of that person is called undue influence.
In order to prove a undue influence, there has to be a pre-existing relationship between the parties to a contract. The relationship has to be of such a nature that one is in a position to influence the other.If it is proven that there has been undue influence, the party who has been so influenced need not enforce the contract or perform his obligations under the contract.
Factual Situation: A, is an illiterate old man of about 90 years, physically infirm and mentally in distress. he made a gift of his entire property in favour of B, his nearest relative who was looking after him (A) and his business.
Issue: Can A subsequently avoid the contract of gift? If so, on what ground?
  • No, A cannot avoid the contract of gift because the gift has been made voluntarily.
  • Neither (a) nor (c)
  • Yes, A can avoid the contract of gift on the plea of undue influence under Section 16(2).
  • None of these.
Legal principle: An agreement becomes a contract when it is entered int between two or more parties with each other's free consent. Two or more parties are said to consent when they agree to the same thing in the same sense. Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake. 
Factual Situation: A's son had B's name on a promissory note. B under threat of prosecuting A's son obtains a bond from A for the amount of the forged note. B sues on this bond.
Issue: Will he succeed?
  • No, the court will set aside the bond obtained by B from A under Section 19 A. When consent of one party has been obtained by coercion, fraud or misrepresentation, the contract is voidable at the option of the aggrieved party.
  • Yes, B will win the case.
  • Neither (a) nor (b)
  • No, B will not win the case.
Legal Principle: Where both parties to an agreement are under a mistake as to matter of fact essential to the agreement, the agreement is void.
Factual Situation: A agrees to buy certain horse from B for Rs.10,000 and pays Rs.5,000 as an advance.It turns out  that the horse was dead at the time of bargain, though neither party knew this fact.
Issue: Can A recover the advance money given?
  • No, A cannot get the money back because money advanced is not returnable
  • A cannot get the money back because the rule of caveat emptor applies on him
  • Yes, A can get the money paid in advance because in this case there is bilateral mistake as to the subject matter.
  • Neither (a) nor b).
Legal Principle: A contract obtained by misrepresentation is voidable at the option of the buyer.
Factual Situation: B, A's daughter has just come to age. A sells to B a horse which A knows to be unsound.A says nothing to B about the horse's unsoundness.
Issue: Dies A'a silence amount to fraud? 
  • No, mere silence is not fraud.
  • As a rule, mere silence is not fraud.However, if the circumstances of the case are such that, it is the duty of the person keeping silence to speak, the silence is 'constructive fraud', e.g. in contracts of 'utmost good faith'. Since the relationship between A and B is fiduciary in nature. A is under duty to disclose all facts to B.
  • A cannot be held liable because the rule of caveat emptor applies on B.
  • Yes,mere silence is fraud.
Legal Principle: A contract obtained by misrepresentation is voidable at the option of the buyer.
Factual Situation: A sells a horse to B knowing fully well that the horse is vicious. A does not disclose the nature of horse to B.
Issue: Is the sale valid?
  • Yes, the sale is valid because A is under no obligation to disclose the nature of the horse to B, the rule of 'caveat emptor' being applicable.
  • Neither (a) nor (c)
  • No, sale is not valid because there has been misrepresentation.
  • Both (a) and (b).
A nominal sum given as a token for striking a sale is called ___________.
  • token money
  • advance
  • interest
  • solatium
Conspiracy needs, at least ________ person/people.
  • One
  • Two
  • Three
  • Five
An 'encumbrance' in legal parlance is a _____________.
  • liability on property
  • grant of property
  • gift of property
  • restriction on property
Which of the following refers to a contract by which one party promises to save the other from loss caused to him by the conduct of the Promisor himself, or by the conduct of any other person'?
  • Contract of guarantee
  • Contract of surety
  • Contract of indemnity
  • Contract of liability
A previous judgement cited by the court to decide on a similar set of facts:
  • Precedent
  • Case
  • Obiter dicta
  • Judicial dicta
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