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CBSE Questions for Class 12 Commerce Legal Studies Topics Of Law Quiz 11 - MCQExams.com
CBSE
Class 12 Commerce Legal Studies
Topics Of Law
Quiz 11
Finder of goods can sell the goods found, if _____.
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Owner can be found with reasonable diligence
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Owner, if found, pays the lawful charges of the finder
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Goods are in danger of perishing
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All of the above
A specific guarantee is ______.
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Irrrevocable
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Revocable
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Transferable
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Not a guarantee at all
Which of the following can be revoked?
A continuing guarantee
Specific guarantee
Select the correct answer from the options given below -
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Both 1 and 2
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Neither 1 or 2
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l but not 2
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2 but not l
Explanation
Section 130 of the Indian Contract Law,1872 talks about Revocation of continuing guarantee. "A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor."
It is the duty of finder of goods to return the goods to true owner, otherwise finder is guilty of ______
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Criminal misappropriation of goods
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Theft
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Extortion
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None of the above
Explanation
According to Section 71, Indian Contract Law, 1872, "Responsibility of finder of goods.—A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee. and Section 154, Indian Contract Law, 1872, "
Liability of bailee making unauthorised use of goods bailed.—If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them. —If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them.", the finder will be guilty to break the law due to criminal misappropriation of goods.
Identify which of the following statement is true and which is false?
P. A surety is favoured creditor.
Q. The liability of the principal debtor is co-extensive with that of surety unless the contract otherwise provides.
Select the correct answer from the options given below -
P Q
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True False
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False False
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True True
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False True
Explanation
Sector 133 states "Discharge of surety by variance in terms of contract.—Any variance, made without the surety’s consent, in the terms of the contract between the principal and the creditor, discharges the surety as to transactions subsequent to the variance and Section 126 talks about ‘Contract of guarantee’, ‘surety’, ‘principal debtor’ and ‘creditor’—A ‘contract of guarantee’ is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the ‘surety’; the person in respect of whose default the guarantee is given is called the ‘principal debtor’, and the person to whom the guarantee is given is called the ‘creditor’.
The liability of surety is ______.
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Primary
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Collateral
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Secondary
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(B) or (C)
There are _____ to the contract of indemnity while there are _______ to the contract of guarantee.
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Three parties, Two parties
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Two parties, Three parties
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Two parties, Four parties
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Four parties, Two parties
Explanation
Section 126 of the Indian Contract Act talks about Contract of Guarantee. It states A ‘contract of guarantee’ is a contract to perform the promise, or discharge the liability, of a third person in case of his default. It involves three parties.
Section
124
of the Indian Contract Act defines the
“Contract of indemnity” —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, is called a “contract of indemnity.” It involves two parties.
The person who promises to make the loss good is called as _____.
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Indemnified
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Indemnity holder
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Indemnifier
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Surety
In which of the following circumstances a continuing guarantee can be revoked?
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By notice of revocation by the surety
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By the death of the surety
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Both (A) & (B)
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None of the above
Explanation
Section 130 of the Indian Contract Law,1872 talks about Revocation of continuing guarantee.—A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor." and Section
131 of Indian Contract Act, 1872 talks about "Revocation of continuing guarantee by surety’s death.—The death of the surety operates, in the absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future transactions."
The liability of indemnifier is _______.
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Primary
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Collateral
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Secondary
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(B) or (C)
The person who's loss is to be made good is called as _____.
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Indemnified
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Indemnity holder
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Indemnifier
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(A) or (B)
Explanation
Under Section 124 of Indian Contract Act Contract of indemnity means that one party promises to save the other from loss caused to him by conduct of the promiser or any other person. But the indemnifier will not compensate if the loss to indemnity holder is caused by his own act then. In a contract there are two parties to contract the promiser and promisee. In contract of indemnity the parties are called as indemnifier and indemnity holder.
When a surety has paid more than his share of debt to the creditor, he has a right of contribution from the co-securities who are equally bound to pay with him.
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False
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True
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Partly true
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None of the above
Explanation
Rights of Surety against Co-sureties:
When two or more persons give a guarantee for the same debt, they are called as co-sureties. All of them are equally liable to the creditor for the payment of the debt to the creditor. The rights of one co-surety against the other co-sureties are as follows:
1. Right to Contribute Equally
If two or more persons are co-sureties for the same debt either jointly or severally, or whether under the same or different contracts and whether with or without the knowledge of each other, the co-sureties in the absence of any contract to the contrary, are liable as between themselves, to pay each, an equal shares of the whole debt, or that part of it which remains unpaid by the principal debtor.
Sometimes, one co-surety discharges the entire obligations. In such cases, he can obtain equal contribution from the other co-sureties.
2. Liability of Co-sureties bound in Different Sums
If the co-sureties are bound in different sums, they are liable to pay equally but not more than the maximum amount guaranteed by each one of them.
After discharging the debt, the surety ________.
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Steps into the shoes of the creditor
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Is subrogated to all the rights of the creditor against the principal debtor
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(A) or (B)
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None of the above
Explanation
Right of Subrogation: (Sec 140) – Right of a surety against principal debtor: Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all he is liable for, is invested with all the rights which the creditor had against the principal debtor. A surety is thus, upon the payment of the guaranteed sum or on performance of a guaranteed duty, subrogated or invested with all the rights which the creditor had against the principal debtor.
This arises on payment of the whole sum due or performance of the entire duty. Surety steps into the shoes of the creditor. Surety may now sue the principal debtor in as much as the creditor had the right to sue the principal debtor.
In contract of bailment, delivery may be_______.
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Actual
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Constructive
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(A) or (B)
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None of the above
On payment of a guaranteed debt, surety is subrogated to all the rights of _______.
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Creditor
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Principal debtor
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Other co-surety
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None of the above
Explanation
After the payment of the debt to the creditor, the surety is subrogated to the rights of the creditor i.e., he has the same rights as those of the creditors. Therefore, he can sue the principal debtor to exercise those rights. Thus if the surety has performed his promise towards the creditor, all the rights of the principal debtor against the creditor devolve upon him.
In contract of bailment, person who delivers the goods is called as _____.
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Bailee
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Bailor
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Pledger
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Pledgee
Explanation
In Sector 148, Indian Contract Law, 1872, ‘Bailment’, ‘bailor’ and ‘bailee’ are defined.—A ‘bailment’ is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the ‘bailor’. The person to whom they are delivered is called the ‘bailee’.
The contract of bailment may be _______.
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Expressed
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Implied
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Deemed
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(A) or (B)
Explanation
Bailment is the transfer of personal property by one party (the bailor) in the possession, but not ownership, of another party (the bailee) for a particular purpose. Such transfer is made under an express or implied contract (called bailment contract or contract of bailment) that the property will be redelivered to the bailor on completion of that purpose, provided the bailee has no lien on the goods (such as for non-payment of its charges).
In which of the following cases, a surety may be discharged from liability?
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By notice of revocation in case of a continuing guarantee as regards to past transaction
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By the death of the surety as regards to past transactions, in a continuing guarantee
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Any variation in the terms of the contract between the creditor and the principal debtor, with the consent of the surety
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If the creditor releases the principal debtor, or acts or makes an omission which results in the discharge of the principal debtor
Explanation
Section 139 of the Indian Contract Law states "Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy.—If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged."
In contract of bailment, there is transfer of _____ in goods.
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Ownership
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Title
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Possession
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Deemed ownership
When consent to an agreement is caused by undue influence, the contract is _____________.
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voidable at the option of any party
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voidable at the option of the promisee
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voidable at the option of the promisor
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voidable at the option of the party whose consent was so caused
Explanation
A contract is said to be induced by undue influence where the relations between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other. Such a contract is voidable at the option of the promisee through whom such an consent was obtained.
A letter of acceptance sent by post is lost transit __________________.
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there is a concluded contract as the letter of acceptance is put in the course of transmission
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there is no concluded contract as the acceptance has not come to the knowledge of the proposer.
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there is no concluded contract as the acceptance has not be communicated to the proposer
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all the above
In contract of bailment, the person to whom the goods are delivered is called as _____.
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Bailee
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Bailor
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Pledger
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Pledgee
Explanation
In Sector 148, Indian Contract Law, 1872, ‘Bailment’, ‘bailor’ and ‘bailee’ are defined.—A ‘bailment’ is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the ‘bailor’. The person to whom they are delivered is called the ‘bailee’.
On being sued by the creditor, the surety can rely on any _____ which the debtor has against the creditor.
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Set-off
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Counter claim
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Set-off or counter claim
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None of the above
Explanation
Sometimes, the principal debtor is entitled to certain counter claim or deductions from the loan obtained from the creditor. In such cases, the surety is entitled to the benefit of such counter claim or deductions, if the creditor files a suit against the surety.
________ is one in which neither the bailor nor the bailee is entitled to any remuneration.
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Gratuitous bailment
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Non-gratuitous bailment
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Deemed bailment
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Actual bailment
Explanation
A bailment with no considerations is called a gratuitous bailment. In this kind of bailment neither the bailor, nor the bailee is entitled to any remuneration or reward. Such a bailment may be for the exclusive benefit of either party, i.e., the bailor or the bailee.
Finder of goods can sell the goods found, if the lawful charges of finder, amount to ______ of the value of goods.
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2/3rd
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1/3rd
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1/4th
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2/5th
Explanation
Section 169, Indian Contract Law, 1872, states, "When finder of thing commonly on sale may sell it.—When a thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses upon demand, to pay the lawful charges of the finder, the finder may sell it— "
(1) when the thing is in danger of perishing or of losing the greater part of its value, or
(2) when the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value.
A hires a car in Delhi from B for going to Varanasi. A drives with care but meets with accident while going to Haridwar. Advise B.
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A is liable for the damage to B's car.
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A is not liable for the damage to B's car.
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A should pay extra charges for going to Haridwar.
0%
None of the above
Explanation
Section 154, Indian Contract Law, 1872, states "Liability of bailee making unauthorised use of goods bailed.—If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them." A hired a car so he will be liable for the damages to B's car.
The position of a finder of lost goods is exactly that of _____.
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Bailee
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Surety
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Consignee
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Consignor
In contract of bailment, ______ is made by physically handing over the goods.
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Constructive delivery
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Actual delivery
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Symbolic delivery
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Deemed delivery
Explanation
In contract of bailment, actual delivery is made by physically handing over the goods. Actual Delivery also known as physical delivery, takes place when the goods are physically handed over by the seller or his authorised agent to the buyer or his agent authorised to take possession of the goods.
If bailee uses the goods in an unauthorized manner or for unauthorized purpose, the bailor can ____.
(i) Terminate the bailment
(ii)
Claim damages for any loss
Select correct answer from the options given below -
Report Question
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(ii) but not (i)
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(i) but not (ii)
0%
Both (i) and (ii)
0%
Neither (i) nor (ii)
Explanation
According to Section 153, Indian Contract Law, 1872, "Termination of bailment by bailee’s act inconsistent with conditions.—A contract of bailment is voidable at the option of the bailor, if the bailee does any act with regard to the goods bailed, inconsistent with the conditions of the bailment" and Section
154, Indian Contract Act, 1872, "Liability of bailee making unauthorised use of goods bailed.—If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them.", the bailor can terminate the bailment as well as claim damages for the loss if bailee uses the goods in an unauthorized manner or purpose.
A common carrier includes ______.
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Railways
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Carriers by inland navigation
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Carriers by sea
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(A) & (B)
State the responsibility of finder of goods.
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He need not to take care of goods as man of ordinary prudence.
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He must not appropriate goods for his own use.
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He can mix the goods with his own goods.
0%
All of the above
Explanation
Section 154 of Indian Contract Law, 1872 states "Liability of bailee making unauthorised use of goods bailed.—If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them." SInce we know from Section 71, Indian Contract Law, 1872 that the finder of goods has the same responsibility as a bailee, hence he should not appropriate goods for his own use.
Duty of bailor is/are ______.
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To return accretion to the goods
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To return the goods
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To receive back goods on termination of bailment
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All of the above
If no consideration passes from bailor to bailee, it is known as ________.
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Gratuitous bailment
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Non-gratuitous bailment
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Deemed bailment
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Bailment with consideration
Explanation
Gratuitous bailment is a type of bailment in which the bailee receives no compensation. For example, borrowing a friend’s car. A gratuitous bailee is liable for loss of the property only if the loss is caused by the bailee's gross negligence. Therefore a lower standard of care is imposed upon the bailee in a gratuitous bailment. Gratuitous bailment is also referred to as naked bailment or bailment for sole benefit of bailor.
An agent is personally liable _______.
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Where the agent has agreed to be personally liable to the third-party
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Where an agent acts for a principal residing abroad
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When the agent signs a negotiable instrument in his own name without making it clear that he is signing it only as agent
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All of the above
Explanation
The circumstances under which an agent is personally liable to his principal acts are as follows:-
1. When he agrees with the concerned parties (Sec. 230).
2. An agent who is not having any authority to act as an agent or who has exceeded the authority and the same has not been ratified by the principal, is personally liable for any loss bearded by a third party (Sec. 235).
3. A person with whom a contract has been entered into in the character of agent is not entitled to require the performance of it, if in reality he was acting not as agent, but as principal (Sec. 236).
4. When he is acting for a foreign principal.
5. Where the agency is coupled with interest that is the agent has interest in the subject matter of the agency.
6. When the agent signs a negotiable instrument in his own name without making it clear that he is signing as an agent.
7. Where trade, usage or customs holds him liable in certain kinds of business.
8. Where the agent acts for a principal who cannot be sued an account of his being a foreign sovereign Ambassador Etc.
9. Where the agents acts for an undisclosed principal.
Under Indian contact Act promisee is the
Report Question
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Person who makes the proposal
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Person who accepts the proposal
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Person who makes the promise
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Person to whom proposal
Under section 2(a) if the person to whom the proposal is made signifies this assent the proposal is said to have been
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Promise
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Agreed
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Provisionally agreed
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Tentatively accepted
Offer as defined under section 2(a) of Indian contract Act
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Communication from one person to another
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Suggestion by one person to another
0%
Willingness to do or abstain from doing an act in order to obtain assent of other thereto
0%
None of the above.
Which of the following is not in harmony with the system of Rule of Law?
1
. Independent judiciary
2
. Administrative courts
3
. Administrative law
4
. Discretionary powers of officers
5
. Supremacy of law
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1
,
3
and
5
0%
2
,
3
and
4
0%
3
,
4
and
5
0%
2
,
4
and
5
Explanation
2, 3 and 4 are not in the harmony of Rule of Law.
The principle of Rule of Law was proposed in England by Dicey. This concept state that no one is superior to law, there should be the rule of law. It also tells about the supremacy of law that is the status and richness of the person doesn't matter in front of the law . And, also there's an independent judiciary which means judges are free and independent to take decisions.
A horse sent by rail was not taken delivery at the destination. The Station Master had to feed the horse. The Station Master becomes an _____ and hence the owner shall compensate him.
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Agent by necessity
0%
Agent by operation of law
0%
Agent by holding out
0%
Agent by ratification
Explanation
Agency by necessity is an agency created by an emergency arising from a situation making it necessary or proper for the agent to act without receiving the sanction or authorization of the principal, in order to prevent harm to the principal.
A Contract of agency may be _______.
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Express
0%
Implied
0%
(A) or (B)
0%
None of the above
Agency may also arise by _____.
Report Question
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Estoppel
0%
Necessity
0%
Ratification
0%
All of the above
In case of unnamed principal, if agent refuses to name the principal, the agent shall be personally liable.
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True
0%
False
0%
Partly true
0%
None of the above
A contract of agency may be made ______.
Report Question
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Orally
0%
In writing
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(A) or (B)
0%
None of the above
Consideration is necessary to create an agency.
Report Question
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True
0%
False
0%
Partly true
0%
None of the above
A common carrier includes _____ and they can limit their liability.
Report Question
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Railways
0%
Carriers by inland navigation
0%
Carriers by sea
0%
(A) & (B)
Explanation
Common carriers cannot exclude their liability for damaged goods, but they can limit their maximum liability to an amount stated on the shipment contract.
A pledge is bailment for security.
Report Question
0%
False
0%
True
0%
Partly true
0%
None of the above
The administrators of union territories are designated as _________________.
Report Question
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Administrators
0%
Lieutenant Governor
0%
Chief Commissioners
0%
all these
Explanation
Administration of the Union Territories (Article 239)
The Union Territories are administered by the President through an administrator, who is appointed by him with a suitable designation. This designation is called Lieutenant Governor or Chief Commissioner or Administrator. In Andaman and Nicobar Islands, Puducherry and Delhi, administrator is called Lieutenant Governor, while in Chandigarh, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep he / she is known as Administrator. The President may appoint a Governor of an adjoining state as Administrator of a Union Territory. In such case the Governor works independently with regard to the administration of the Union Territory.
A instigates B to murder D. B refuses to do so. The murder did not take place. What offence is A guilty of ___________________.
Report Question
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no offence.
0%
murder
0%
abetting B to commit murder
0%
conspiracy
Homicide literally means ____________________.
Report Question
0%
the punishment of death.
0%
killing of animals
0%
murder
0%
killing of a human being by another human being
The involvement of five or more persons is essential for __________________.
Report Question
0%
robbery
0%
dacoity
0%
extortion
0%
theft.
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Practice Class 12 Commerce Legal Studies Quiz Questions and Answers
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