0

Mercantile Laws

Description: Practice questions on mercantile law.
Number of Questions: 25
Created by:
Tags: Mercantile Law The Indian Contract Act , 1872 The Sale of Goods Act, 1930 The India Partnership Act, 1932
Attempted 0/25 Correct 0 Score 0

Which of the following agreements is not void?

  1. A agrees to sell fifty tons of oil to B.

  2. A agrees to sell his white elephant for Rs 10,000 or 12,000 to B.

  3. A agrees to sell one hundred tons of wheat at Rs 15 per kg to B.

  4. None of these


Correct Option: C
Explanation:

 This agreement is not void as it is not uncertain. It is certain that A intends to sell wheat to B, the quantity is also certain ( 100 tons ). The price is also certain ( Rs 15 per kg ) so it is the right answer.

Which of the following is not an example of contingent contract?

  1. A contracts to pay a sum of Rs 1,00,000 to B, if B's factory is burnt.

  2. P agrees to purchase furniture from Q at Rs. 4,000.

  3. R agrees to pay a sum of Rs 2,50,000 to S, if S adopts a child.

  4. None of these


Correct Option: B
Explanation:

Right answer because this is not a contingent contract. It is not dependant on hapening of  an event. P would purchase furniture from Q at Rs 4,000 and there is no condition that P would purchase furniture from Q on happening of an event only.

Which of the following agreements is without consideration?

  1. A finds B's cell phone and gives it to him. B promises to give A Rs 200.

  2. S, for natural love and affection, promises to pay Rs 2,000 to his son T.

  3. A is paid Rs 2,500 by B for looking after his son.

  4. None of these


Correct Option: B
Explanation:

 This agreement is without consideration as in this S has promised to pay Rs 2,000 to his son T without any consideration ( nothing in return ). It is void agreement.

Which of the following agreements is void due to impossible events?

  1. A agrees to pay B a sum of Rs 4,000, if B could lift a train.

  2. A promises to pay B a sum of Rs 5,000, if a certain ship returns in a year.

  3. A agrees to pay B a sum of Rs 3,00,000, if B marries C.

  4. None of these


Correct Option: A
Explanation:

Right answer because this agreement is totally void as B cannot lift Rajdhani Express train in any case.It is           ,too, heavy .So B cannot lift it.

E, a dancer, contracts with F, the manager of a night club, to dance in his night club for the next one month in the night. On the thirteenth night, E wilfully absents herself from the night club. In this case,

  1. F is not entltled to claim the compensation from E

  2. the contract becomes void

  3. E is entitled to receive compensation from F

  4. none of these


Correct Option: C
Explanation:

 E has the right to claim compensation from F as he has sustained loss due to non-performance of contract by F.

When the seller delivers the possession of goods to the buyer and not the ownership of goods and charges rent for the same, it is known as

  1. sale

  2. barter

  3. hire-purchase agreement

  4. none of these


Correct Option: C
Explanation:

 It is known as hire-purchase agreement because in this case, the seller delivers the possession of goods to the other person but not the ownership and charges rent for the goods. After receiving the price the ownership is transferred. For instance A transfers the possession of machinery to B and B pays rent for it to A. The ownership of machinery remains with  A ,so it is right answer here.

Which of the following is not an implied condition in contract to sale by sample?

  1. The bulk shall correspond with the sample in quality.

  2. A reasonable opportunity of comparing the bulk with the sample must be there.

  3. The goods shall not be free from any defect .

  4. None of these


Correct Option: C
Explanation:

Right answer because It is not an implied condition that the there can be any defect in the goods. The goods must be free from any defects.

According to the Sale of Goods Act, sale is

  1. the transfer of ownership as well as possession of goods from seller to buyer for a price

  2. only the transfer of possession of goods from seller to buyer for a price

  3. only the transfer of ownership of goods from seller to buyer without a price

  4. none of these


Correct Option: A
Explanation:

The sale is transfer of ownership as well as possession of goods from the seller to buyer for a price. The buyer has to pay a price to the seller for the goods received by him.

Which of the following is an example of reciprocal contract?

  1. S promises to pay a sum of Rs 3,000 to T, if T discovers his treasure by magic.

  2. A and B contract that A shall complete a project for B at a fixed price.

  3. C promises to pay a sum of Rs 30,000 to D, if he wins the cricket match.

  4. None of these


Correct Option: B
Explanation:

Right answer because it is an example of reciprocal contract, as it consists of reciprocal promise to be simultaneously performed. A's promise to complete the project must be performed before B's promise to pay for it.

Risk Prima Facie with property means

  1. the goods remain at the seller's risk until the property is transferred to buyer

  2. the goods are at buyer's risk whether or not the property is transferred to buyer

  3. the goods are at buyer's risk when the possession is transferred to buyer

  4. none of these


Correct Option: A
Explanation:

 Risk Prima Facie means that the goods are at seller's risk until the property is transferred to buyer. Any damage to the goods like loss by fire, theft etc. is to be borne by the seller untit the property of goods is transferred to buyer, so it is  the right answer.

When the seller delivers to the buyer the goods he contracted to sell, mixed with goods of a different description not included in the contract, the buyer

  1. has to accept the whole

  2. has the option of accepting the goods which are in accordance with the contract and rejecting the rest of the goods only

  3. may accept the goods which are in accordance with the contract and reject the rest or may reject the whole

  4. none of these


Correct Option: C
Explanation:

 The buyer has both the options. He may accept only those goods, which are according to the contract and reject the rest, or he can reject the whole goods, so it is the right answer.

When the seller delivers to the buyer a quantity of goods larger than he contracts to sell, the buyer

  1. has to accept the whole goods

  2. has to pay for the goods at the contract rate, if he accepts the whole goods

  3. can accept the goods included in the contract and reject the rest

  4. none of these


Correct Option: B
Explanation:

 The buyer is not bound to accept the whole quantity of goods. But if he accepts the whole quantity of goods he has to pay at the rate accepted in the contract for the goods, so it is right answer.

Which one of the following is an example of an unpaid seller?

  1. Z sells goods of Rs 4,000 to X on credit of four months. After four months X pays Rs 4,000 to Z in cash.

  2. A sells goods of Rs 2,000 to B and B accepts a bill for three months. On due date, the bill is dishonoured.

  3. P sells goods of Rs 2,400 to Q and Q pays the amount by cheque.

  4. None of these


Correct Option: B
Explanation:

 It is a case of an unpaid seller. A has not been paid as the bill is dishonoured on due date, so he is an unpaid seller. B has not been able to pay the bill ( dishonoured ).

According to the Sale of Goods Act, delivery is a

  1. voluntary possession from one person to another

  2. voluntary transfer of possession as well as ownership of goods

  3. transfer of possession forcefully from one person to another

  4. none of these


Correct Option: A
Explanation:

 According to Sale of Goods Act delivery is voluntary possession of transfer of goods from one person to another. It is not forceful so it is the right answer here.

The sub-agent is responsible to

  1. the principal

  2. the agent

  3. both the principal and the agent

  4. none of these


Correct Option: B
Explanation:

 The sub-agent is responsible to the agent for his acts as he is appointed by the agent so it is right answer here.

When goods are delivered to the buyer on approval or sale or return basis, the property does not pass to buyer when

  1. he signifies his approval or acceptance to the seller

  2. he returns the goods before the expiry of fixed time

  3. he retains the goods without giving notice of rejection, if time has been fixed for return of goods

  4. he retains the goods even after expiration of a reasonable time, if time is not fixed


Correct Option: B
Explanation:

 When the buyer returns the goods before expiry of fixed time, the property of goods does not pass to the buyer, but it remains with the seller. In this case the goods are not approved by the buyer so it is right answer here.

A, B and C promise to pay D jointly the sum of Rs. 6,000. C is compelled to pay as A is insolvent, but his assets are suficient to pay 1/2 of his debts. C is entitled to receive

  1. Rs. 1,000 from A and Rs. 2,000 from B

  2. Rs. 1,000 from A and Rs. 2,500 from B

  3. Rs. 500 from A and Rs. 2,500 from B

  4. none of these


Correct Option: B
Explanation:

 C is entitled to get Rs 1,000 from A and Rs 2,500 from B.  A , B and C are entitled to pay Rs 2,000 each to D. ( 1/3 X 6,000 )But A can pay only half of Rs 2,000 as he is insolvent - 1/2 X 2,000 =  1,000 Rs.  Amount left to be paid ( 6,000 - 1,000 = Rs 5,000 )B would bear half of Rs 5,000 ( 1/2 X 5,000 ) = Rs 2,500. B would pay it to C. As C has paid the whole amount he would get Rs 1,000 from A  ( insolvent )and Rs 2,500 from B. 

Which of the following is not a right of an unpaid seller?

  1. Right of stoppage of goods in transit

  2. Right to re-sale

  3. Right to sue the buyer even after he gets the goods back

  4. None of these


Correct Option: C
Explanation:

 It is not the right of seller to sue the buyer even after he gets the goods back from the buyer. It is not a right of an unpaid seller so it is right answer here.

S appoints T as his agent and authorizes him to buy 10 cows for him. T buys 10 cows and 2 buffaloes for the sum of Rs 15,000. In this case, S

  1. has to accept the whole transaction

  2. can repudiate the whole transaction

  3. can accept the transaction of cows only

  4. none of these


Correct Option: B
Explanation:

 S can repudiate the whole transaction as he authorized T to buy 10 cows only. The transaction of cows cannot be separated from that of buffaloes. Therefore, S can reject the whole transaction if he wishes so. It is right answer here.

A contracts with B to deliver him 300 tons of grains before 31st March. A delivers 220 tons of grains before that day and none after that. B retains the 220 tons after 31st March. B is

  1. bound to pay A for 300 tons

  2. not bound to pay A anything

  3. bound to pay A for 220 tons

  4. none of these


Correct Option: C
Explanation:

 B is bound to pay A for 220 tons of grains as he has received that  much quantity and obtained advantage even if agreement has become void,so it is right answer here.

According to the Indian Partnership Act 1932, which of the following is an essential condition to become a partner in a partnership firm?

  1. Getting fixed remuneration

  2. Sharing profit

  3. Earning interest only

  4. None of these


Correct Option: B
Explanation:

Right answer because  it is an essential condition to be called as partner of firm that he must share profits, whether he gets the salary and interest or not, according to Indian Partnership Act 1932.

A appoints B as his agent and authorizes him to procure an insurance policy for Rs 15,000 on the factory. B procures a policy for Rs 15,000 on the factory and another for the same amount on the house. A is

  1. bound to pay the premium for the policy on factory only

  2. bound to pay premium on policies of factory as well as house

  3. bound to reject the whole transaction

  4. none of these


Correct Option: A
Explanation:

 A is bound to pay the premium on factory only, as a separate policy is taken by B on the house. But he did not authorize B to take policy on house and the transaction of factory can be separated from that of house. A is bound to pay the premium on policy of factory, so it is right answer here.

If a partner derives profit from the use of property of the firm, he is

  1. entitled to keep the whole profit himself

  2. entitled to account for that profit and pay it to the firm

  3. entitled to do as he wishes

  4. none of these


Correct Option: B
Explanation:

  If a partner has earned any profit from the use of property of the firm, the partner is entitled to account for that profit and pay it to the firm, and not keep it himself, subject to contract between partners. As all the partners are agents and principal and for the act of a partner, all the partners are responsible. The profit earned by a partner from the property of firm must be accounted for and distributed in the partners in the agreed ratio that is the main reason that it is right answer here.

The Partnership Act is administered by the

  1. Central Government

  2. Central and State Government both

  3. State Governments

  4. None of these


Correct Option: C
Explanation:

 Partnership Act is administered and regulated by State Government. For instance there are four partners A, B, C and D living in Noida ( U.P.) then they have to register their firm in Uttar Pradesh ( State Government ).

B, a broker at Delhi, on the order of A contracts with C for the purchase of 20 kg of iron-ore. Afterwards A refuses to receive the iron-ore, and C sues B. B informs A who rejects the contract altogether. B defends, but unsuccessfully, and has to pay damages and costs and incurs expenses. A is liable to B for

  1. damages only

  2. costs only

  3. damages, costs and expenses

  4. none of these


Correct Option: C
Explanation:

 A is liable to pay to B the damages suffered due to rejection of contract, costs incurred on contract for purchase of iron-ore and expenses incurred by B to defend himself when sued by C. It is total error on part of A and B is sued by C, because of rejection of contract by A.

- Hide questions