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Contract Law

1,453 Questions

Contract Law encompasses the rules and statutes governing legally binding agreements between parties. This hub provides practice questions on essential topics like legal obligations, breach of contract, and termination clauses. These concepts are frequently tested in law entrance tests and various other competitive government examinations.

Legal obligationsVoid contractsBreach of contractCommunication of acceptanceStatute of FraudsContract clauses

Contract Law Questions

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

The time of payment of a negotiable instrument need not be certain.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Time of Payment must be Certain: If the order is to pay when convenient then such an order is not a negotiable instrument. Payee also must be certain: The person to whom the payment is to be made must be a specific person or persons. Also, there can be more than one payee for a negotiable instrument.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

__________ is not required in Promissory Note.

  1. Acceptance

  2. Noting

  3. Discounting

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A promissory note is an instrument signed by the maker to pay a certain sum. It does not require acceptance by the payee, unlike a bill of exchange.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

________ is not an essential requirement of a valid promissory note?

  1. Acceptance

  2. Unconditonality

  3. Maker and payee

  4. All the three
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to the Negotiable Instruments Act, 1881, a promissory note is defined as an instrument in writing, containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. The following are the features of a promissory note:

1. It must be in writing.
2. It must contain an unconditional promise to pay.
3. The sum payable must be certain.
4. It must be signed by the maker.
Acceptance is not an essential requirement of a valid promissory note.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

A promissory note is a/ an ________.

  1. unconditional order to pay

  2. unconditional undertaking to pay

  3. conditional order to pay

  4. conditional undertaking to pay
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to the Negotiable Instruments Act, 1881, a promissory note is defined as an instrument in writing (not being a bank note or a currency note), containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. However, according to the Reserve Bank of India Act, a promissory note payable to bearer is illegal. Therefore, a promissory note cannot be made payable to the bearer.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

The term Promissory notes is defined in section _______ of the Negotiable Instruments Act.

  1. $3$
  2. $4$
  3. $6$
  4. $8$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

According to section 4 of the Negotiable Instruments Act, 1881, a promissory note is defined as an instrument in writing, containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. However, according to the Reserve Bank of India Act, a promissory note payable to bearer is illegal. 

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

A promissory note cannot be made payable to bearer.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 There are only two parties to a Promissory Note, one is the maker or the payer and another one is the payee.The sum should be payable to a certain person. It is not transferable and thus, the amount is not payable to the bearer.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

A promissory note can be made payable to bearer.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 The sum should be payable to a certain person. There are only two parties to a Promissory Note, one is the maker or the payer and another one is the payee. It is not transferable and thus, the amount is not payable to the bearer.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

The undertaking contained in a promissory note, to pay a certain sum of money is _________________.

  1. Conditional

  2. Unconditional

  3. May be conditional or unconditional depending upon the circumstances

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A core requirement of a valid promissory note is that the promise to pay must be unconditional.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

Mr. Amit signs on instrument in the following terms.
(i) " I promise to pay B or order Rs $500$"
(ii) " I promise to pay B Rs$500$, first deducting all other sums which shall be due to him."
(iii) " I promise to pay B Rs$500$ on D's death, provided D leaves one enough to pay that sum"
Which of the following are promissory notes?

  1. Only (i)

  2. Both (i) & (ii)

  3. Both (ii) & (iii)

  4. All of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Only (i) is unconditional and for a certain amount. (ii) involves a deduction (uncertainty), and (iii) is conditional on D's death and D's estate value.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

The expression "after sight" in a promissory note means that ____________.

  1. The payment can be demanded without it has been shown to the maker.

  2. The payment cannot be demanded on it unless it has been shown to the maker.

  3. The holder may treat the instrument, at his option, either as a bill of exchange or as a promissory note.

  4. The payment cannot be demanded
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In negotiable instruments law, the expression after sight means that a promissory note or bill of exchange must be presented to the maker or drawee for sight or acceptance before payment can be demanded and the maturity period begins.

Multiple choice organisation of commerce and management public sector undertakings & global enterprises characteristics, objectives and growth of public sector enterprises public, private and joint sector cooperatives

Mr. Y a member of Company XYZ makes a contract with his company XYZ _______________.

  1. it is illegal.

  2. it is legal.

  3. depend in the situation of case.

  4. none of the above.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

XYZ parties must be in agreement (after an offer has been made by one party and accepted by the other). Something of value must be exchanged -- such as cash, services, or goods (or a promise to exchange such an item) for something else of value.

Multiple choice organization of commerce and management ownership structures - cooperative society features, merits and demerits, formation and management of a cooperative society meaning and features of cooperative society cooperative organisation

A co-parcener __________ ask for accounts.

  1. Cannot

  2. Can

  3. Both (A) & (B)

  4. (A) or (B)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A co-parcener is any partner who just has share in the firm's profit and loss and does not have any right in the firm's business. Such a partner can not ask for the accounts of the firm under any circumstances. 

Multiple choice organization of commerce and management markets and marketing meaning, nature and importance of services introduction to services nature and types of services

In order for promissory estoppel to arise, a number of requirements exist. Which of the following is NOT a requirement for promissory estoppel?

  1. The promise must be made by clear words.

  2. It must be inequitable for the promisor to go back on his promise.

  3. The promisee must rely on the promise.

  4. There must be a clear promise that legal rights will not be enforced.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In order for promissory estoppel to arise, a number of requirements exist. The promise must be made in clear words is not a requirement for promissory estoppel. Promissory estoppel can be defined as legal principle which is enforceable y law even if the promise is made without formal consideration.