1. In case of wrongful termination of agency by the principal, the agent is entitled to:
A. File a criminal case
B. Demand reinstatement
C. Compensation for premature termination
D. Seize the principal’s property
Correct Answer: C. Compensation for premature termination
Explanation: If the agency is terminated without sufficient cause, especially if for a fixed term, the agent may claim compensation as per Section 205 of the Indian Contract Act.
2. A contract induced by misrepresentation is:
A. Void
B. Voidable at the option of the aggrieved party
C. Valid and enforceable
D. Illegal
Correct Answer: B. Voidable at the option of the aggrieved party
Explanation: Misrepresentation makes the contract voidable, not void, unless the misrepresentation becomes fraudulent.
3. Which of the following is not a kind of agent?
A. Factor
B. Broker
C. Auctioneer
D. Lessor
Correct Answer: D. Lessor
Explanation: Lessor is a party in a lease, not an agent. The others are recognized types of mercantile agents.
4. Which of the following agreements is expressly declared void by the Indian Contract Act?
A. Agreement with free consent
B. Agreement with a minor
C. Agreement with consideration
D. Agreement to pay for services
Correct Answer: B. Agreement with a minor
Explanation: A minor is not competent to contract; any agreement with them is void ab initio.
5. Revocation of a proposal is effective only when:
A. It is posted
B. It is communicated to the offeree
C. It is written down
D. It is signed by the offeror
Correct Answer: B. It is communicated to the offeree
Explanation: Section 5 of the Indian Contract Act states that revocation must be communicated to be effective.
6. In a lease, which of the following rights is granted to the lessee?
A. Ownership
B. Right to use and enjoy the property
C. Right to sell the property
D. Right to demolish the property
Correct Answer: B. Right to use and enjoy the property
Explanation: A lease grants the lessee the right to use the property as per the lease terms, not ownership.
7. In a contract of indemnity, the indemnifier promises to:
A. Repay a debt
B. Compensate for loss caused to another
C. Deliver goods
D. Transfer property
Correct Answer: B. Compensate for loss caused to another
Explanation: As per Section 124, a contract of indemnity is one where a party promises to save the other from loss.
8. Agency can be created by all of the following methods, except:
A. Express appointment
B. Operation of law
C. Estoppel
D. Coercion
Correct Answer: D. Coercion
Explanation: Coercion cannot create a valid agency; consent is essential.
9. In a gratuitous bailment, who bears the risk of loss if bailee takes reasonable care?
A. Bailor
B. Bailee
C. Both equally
D. Government
Correct Answer: A. Bailor
Explanation: If the bailee takes due care, the bailor bears the loss, especially in gratuitous bailment.
10. The rule of estoppel applies only when:
A. There is a written contract
B. There is a fiduciary relationship
C. A person has acted upon a representation
D. A contract is terminated
Correct Answer: C. A person has acted upon a representation
Explanation: Estoppel applies when a person acts on another’s representation, and the maker of the representation is then prevented from denying it.