Contract Act 1872 Part 3 Indemnity | Guarantee | Bailment MCQs

1. Question 1 of 59

   Under Section 148, how is 'bailment' defined?

   A 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 bailor's directions B The permanent transfer of ownership of goods for a price C A contract to perform the promise of a third person in case of default D A contract to save another from loss caused by the promisor's conduct
2. Question 2 of 59

   Under Section 134, what is the effect on the surety of a contract between the creditor and principal debtor by which the principal debtor is released?

   A The surety becomes the new principal debtor B The surety's liability is unaffected C The surety is discharged D The surety's liability is merely reduced by half
3. Question 3 of 59

   Under Section 126, what is the person in respect of whose default a guarantee is given called?

   A The surety B The principal debtor C The creditor D The bailee
4. Question 4 of 59

   Under Section 157, what is the effect if a bailee, without the bailor's consent, mixes the bailor's goods with his own in a way that the goods cannot be separated?

   A The bailor bears the entire loss with no compensation B The bailee is entitled to keep the entire mixture without compensating anyone C The bailment is deemed never to have existed D The bailee must compensate the bailor for the loss of the goods
5. Question 5 of 59

   Under Section 125, what may the promisee in a contract of indemnity, acting within his authority, recover from the promisor?

   A Only damages, never costs or compromise sums B Only amounts specifically pre-approved in writing by the promisor C All damages, costs, and sums paid under a compromise, in respect of any matter to which the promise to indemnify applies D Nothing until the underlying suit is finally decided by the Supreme Court
6. Question 6 of 59

   Under Section 138, does the release of one co-surety by the creditor discharge the other co-sureties?

   A Yes, but only if there are fewer than three co-sureties B Yes, releasing one releases all co-sureties C No D Yes, unless the released co-surety objects
7. Question 7 of 59

   Which section of the Contract Act defines a 'contract of indemnity'?

   A Section 148 B Section 124 C Section 172 D Section 126
8. Question 8 of 59

   Under Section 180, who may bring a suit against a person who has wrongfully deprived a bailee of the use or possession of goods bailed, or has caused injury to them?

   A Either the bailor or the bailee B Only the bailee, never the bailor C Only the bailor, never the bailee D Neither; only the true owner of the goods, if different from both
9. Question 9 of 59

   Under Section 137, does mere forbearance by the creditor to sue the principal debtor, absent a contrary provision in the guarantee, discharge the surety?

   A Yes, but only after six months of forbearance B No C Yes, forbearance always discharges the surety D Yes, unless the creditor notifies the surety within 30 days
10. Question 10 of 59

    Under Section 174, in the absence of a contract to the contrary, may a pawnee retain goods pledged for a debt or promise other than the one for which they were pledged?

    A Yes, but only if the pawnor is a registered business entity B Yes, but only with a court's prior authorization C No — except that such a contract is presumed in regard to subsequent advances made by the pawnee D Yes, a pawnee may always retain goods for any unrelated debt
11. Question 11 of 59

    Under Section 171, which classes of bailees are recognized as having a general lien (as opposed to merely a particular lien)?

    A All bailees, without distinction B No bailee has a general lien under the Act C Only bankers and attorneys D Bankers, factors, wharfingers, attorneys, and policy-brokers
12. Question 12 of 59

    Under Section 133, what is the effect of a variance made without the surety's consent in the terms of the contract between the principal debtor and creditor?

    A The surety is discharged as to transactions subsequent to the variance B The surety's liability is automatically doubled C The principal debtor alone is discharged, not the surety D The variance has no effect on the surety's liability
13. Question 13 of 59

    Under Section 148, what is the person to whom goods are delivered in a bailment called?

    A The pawnee B The bailee C The agent D The bailor
14. Question 14 of 59

    Under Section 153, what is the effect if a bailee does an act with the goods bailed which is inconsistent with the conditions of the bailment?

    A Nothing; only the bailor's consent can end a bailment B The bailment automatically becomes permanent C The bailor may terminate the bailment D The bailee acquires ownership of the goods
15. Question 15 of 59

    Under Section 170, what type of lien does a bailee generally have over goods bailed, for services rendered involving skill or labour?

    A A particular lien — that is, a right to retain those specific goods until his charges for that service are paid B A general lien over all property of the bailor, whatever its source C No lien at all, unless expressly agreed in writing D A lien enforceable only through court proceedings, never by simple retention
16. Question 16 of 59

    Which section of the Contract Act addresses termination of a gratuitous bailment by the bailee's death?

    A Section 162 B Section 160 C Section 161 D Section 163
17. Question 17 of 59

    Under Section 152, is a bailee liable for loss of goods bailed if he has taken the care described in Section 151?

    A No, in the absence of a special contract B Yes, unless the loss occurs due to theft specifically C Yes, a bailee is always liable regardless of the care taken D Yes, but only for goods bailed for reward, not gratuitously
18. Question 18 of 59

    Under Section 140, upon payment or performance of all he is liable for, with what rights is the surety invested?

    A Only a right of set-off against future guarantees B No further rights; his liability simply ends C Only the right to sue the creditor for reimbursement D All the rights which the creditor had against the principal debtor
19. Question 19 of 59

    Under Section 172, how is 'pledge' defined?

    A The outright sale of goods for immediate payment B A guarantee given for the debt of a third person C An agreement to compensate for loss caused by the promisor's own conduct D The bailment of goods as security for payment of a debt or performance of a promise
20. Question 20 of 59

    Under Section 148, what is the person who delivers the goods in a bailment called?

    A The principal B The bailor C The bailee D The pawnor
21. Question 21 of 59

    Under Section 150, what must a bailor disclose to the bailee regarding the goods bailed?

    A Only faults relevant to gratuitous bailments, not those for reward B Only faults that the bailor discovers after delivery C Nothing; disclosure is entirely the bailee's own responsibility D Faults in the goods known to the bailor which materially interfere with their use or expose the bailee to extraordinary risk
22. Question 22 of 59

    Which section of the Contract Act deals with a surety's right to the benefit of the creditor's securities?

    A Section 142 B Section 145 C Section 141 D Section 140
23. Question 23 of 59

    Which section of the Contract Act addresses the right of a finder of goods to sue for a specific reward offered?

    A Section 170 B Section 169 C Section 168 D Section 167
24. Question 24 of 59

    Under Section 160, when goods are bailed for a specific time or purpose, what must the bailee do upon expiration of the time or accomplishment of the purpose?

    A Sell the goods and remit the proceeds to the bailor B Retain the goods until formally requested in writing C Nothing further is required once the purpose is accomplished D Return or deliver the goods according to the bailor's directions
25. Question 25 of 59

    Under Section 146, absent a contrary agreement, how are co-sureties for the same debt liable as between themselves?

    A Liability is determined solely by seniority among the co-sureties B Each is liable for the entire debt independently C Only the first co-surety named in the contract is liable D Each is liable to pay an equal share of the whole debt (or the unpaid part of it)
26. Question 26 of 59

    Under Section 178, may a mercantile agent, who is in possession of goods with the owner's consent, validly pledge those goods?

    A Only if the true owner personally countersigns the pledge B Only if the pledge is registered with a court beforehand C No, a mercantile agent can never validly pledge goods not owned by him D Yes, in certain circumstances, such pledges made in the ordinary course of business are as valid as if expressly authorized
27. Question 27 of 59

    Under Section 126, may a guarantee be given orally?

    A No, a guarantee requires two witnesses B No, a guarantee must be registered C No, a guarantee must always be in writing D Yes, a guarantee may be either oral or written
28. Question 28 of 59

    Under Section 143, what is the effect of a guarantee obtained by the creditor keeping silence as to material circumstances?

    A Nothing; silence is never relevant to guarantees B The guarantee is valid but unenforceable against the principal debtor C The guarantee is invalid D The guarantee remains fully valid
29. Question 29 of 59

    Under Section 128, what is the general rule on the extent of a surety's liability?

    A It is always limited to half the principal debtor's liability B It can never exceed a fixed statutory cap C It ends automatically after one year D It is co-extensive with that of the principal debtor, unless otherwise provided by the contract
30. Question 30 of 59

    Which section of the Contract Act deals with delivery to a bailee?

    A Section 151 B Section 149 C Section 150 D Section 148
31. Question 31 of 59

    Under Section 167, if a person other than the bailor claims goods bailed, what may the bailee do?

    A Apply to the Court to stop delivery to the bailor and to decide the title to the goods B Nothing; he must deliver to the bailor regardless of any third-party claim C Destroy the goods to avoid liability to either party D Immediately hand the goods to whichever claimant asks first
32. Question 32 of 59

    Under Section 145, is there an implied promise by the principal debtor to indemnify the surety in every contract of guarantee?

    A Yes B Only if the guarantee explicitly says so C No, such a promise must be express and in writing D No, indemnification of a surety is never available
33. Question 33 of 59

    Under Section 130, may a continuing guarantee be revoked by the surety as to future transactions?

    A No, a continuing guarantee can never be revoked B Yes, at any time, by notice to the creditor C Only with the principal debtor's consent D Only after the guarantee has run for at least one year
34. Question 34 of 59

    Under Section 165, how is a bailment by several joint owners of goods generally governed regarding delivery to one of them?

    A Delivery is never valid unless every joint owner consents B The bailee may deliver the goods to, or according to the directions of, one joint owner without the consent of all, unless otherwise agreed C Joint ownership automatically voids any bailment D The bailee must always seek a court order before returning jointly-owned goods
35. Question 35 of 59

    Which section of the Contract Act addresses a bailor's right to any increase or profit from goods bailed?

    A Section 164 B Section 162 C Section 163 D Section 165
36. Question 36 of 59

    Under Section 173, for what may a pawnee retain the goods pledged?

    A Only the original debt amount, with no allowance for interest or expenses B Any unrelated debt owed by the pawnor to the pawnee C Payment of the debt or performance of the promise, interest on the debt, and necessary expenses incurred for possession or preservation of the goods D Nothing; a pawnee has no right of retention under the Act
37. Question 37 of 59

    Under Section 161, what is a bailee's responsibility if he fails to return or deliver goods at the proper time, as required by Section 160?

    A He bears no additional responsibility beyond ordinary care B He is responsible for any loss, destruction, or deterioration of the goods from that time, even if it occurs without fault on his part C The bailee automatically becomes the owner of the goods D The bailor forfeits any claim to the goods
38. Question 38 of 59

    Under Section 129, what is a guarantee extending to a series of transactions called?

    A A continuing guarantee B A conditional guarantee C A contingent guarantee D A collateral guarantee
39. Question 39 of 59

    Under Section 124, how is a 'contract of indemnity' defined?

    A A contract by which one party promises to save the other from loss caused by the conduct of the promisor himself, or by any other person B A contract to deliver goods on credit C A contract guaranteeing the debt of a third person D A contract to insure goods against fire only
40. Question 40 of 59

    Under Section 142, what is the effect of a guarantee obtained by the creditor's misrepresentation concerning a material part of the transaction?

    A The guarantee is invalid B Only the surety's liability is reduced by half C The guarantee remains fully valid D The guarantee converts into an ordinary indemnity
41. Question 41 of 59

    Under Section 156, what is the effect if a bailee, without the bailor's consent, mixes the bailor's goods with his own, and the goods can be separated?

    A The bailee automatically becomes the owner of the entire mixture B The mixture must be destroyed by court order C The property in the goods remains with the parties respectively, but the bailee bears the expense of separation and any damage arising from the mixture D The bailor loses all rights to his goods
42. Question 42 of 59

    Which section of the Contract Act sets out the rights of an indemnity-holder when sued?

    A Section 125 B Section 145 C Section 127 D Section 124
43. Question 43 of 59

    Under Section 155, what is the effect of a bailee mixing his own goods with the bailor's, with the bailor's consent?

    A The bailment is automatically terminated by the mixture B The bailor and bailee have an interest, in proportion to their respective shares, in the resulting mixture C The entire mixture automatically belongs to the bailee D The entire mixture automatically belongs to the bailor
44. Question 44 of 59

    Under Section 164, what is a bailor's responsibility to a bailee, regarding known but undisclosed defects in his title to the goods bailed?

    A Only the bailee bears responsibility for any title defects B Such responsibility exists only if the bailment is for reward C The bailor is responsible to the bailee for any loss the bailee sustains because the bailor was not entitled to make the bailment, or to receive back or give directions respecting the goods D The bailor bears no responsibility once goods are delivered
45. Question 45 of 59

    Under Section 126, what is the person who gives a guarantee called?

    A The creditor B The indemnity-holder C The principal debtor D The surety
46. Question 46 of 59

    Under Section 172, what is the bailor in a pledge called?

    A The bailee B The principal C The pawnee D The pawnor
47. Question 47 of 59

    Under Section 159, when goods are lent gratuitously, may the lender (bailor) demand their return even before the time agreed, if he needs them?

    A Yes, but only with a court order B No, gratuitous loans can never be recalled before the agreed time C No, unless the bailee has breached the terms of the loan D Yes, though if the loan was for a specified time or purpose and the bailee suffers a loss exceeding the benefit gained, the lender must indemnify him
48. Question 48 of 59

    Under Section 154, what is the effect if a bailee makes unauthorized use of goods bailed?

    A The bailment automatically converts into a sale B He is liable to make compensation to the bailor for any damage arising from such use C The bailee forfeits his right to any lien on the goods D No liability arises unless the goods are completely destroyed
49. Question 49 of 59

    Under Section 126, what is a 'contract of guarantee'?

    A A contract for the bailment of goods B A contract of agency C A contract to perform the promise, or discharge the liability, of a third person in case of his default D A contract to save a party from loss caused by the promisor's own conduct
50. Question 50 of 59

    Under Section 151, what standard of care must a bailee take of goods bailed to him?

    A No particular standard; bailees bear no responsibility for loss B Only the standard specified in a written bailment contract, and none otherwise C The highest possible standard of care regardless of circumstances D As much care as a person of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality, and value
51. Question 51 of 59

    Which section of the Contract Act addresses apportionment of relief obtained in a suit by a bailor or bailee against a wrongdoer?

    A Section 178 B Section 179 C Section 180 D Section 181
52. Question 52 of 59

    Under Section 166, is a bailee who, in good faith, redelivers goods to the bailor without title responsible to the true owner?

    A No, the bailee is not responsible to the true owner in that circumstance B Yes, but only for half the value of the goods C Yes, the bailee is always liable to the true owner regardless of good faith D Yes, unless the bailor personally indemnifies the bailee first
53. Question 53 of 59

    Which section of the Contract Act addresses discharge of a surety by variance in the terms of contract?

    A Section 135 B Section 133 C Section 134 D Section 137
54. Question 54 of 59

    Under Section 141, is a surety entitled to the benefit of every security the creditor holds against the principal debtor at the time the guarantee was made?

    A Only if the security was created after the guarantee B Yes, whether or not the surety knew of the security's existence C No, sureties have no right to any of the creditor's securities D No, only securities the surety was specifically aware of
55. Question 55 of 59

    Under Section 135, what is the effect of a contract between the creditor and principal debtor by which the creditor agrees to give time to the principal debtor, without the surety's assent?

    A The creditor forfeits the right to sue anyone B The time extension automatically applies to the surety too C The surety remains fully liable regardless D The surety is discharged
56. Question 56 of 59

    Under Section 172, what is the bailee in a pledge called?

    A The pawnee B The agent C The pawnor D The bailor
57. Question 57 of 59

    Under Section 131, what is the effect of the surety's death on a continuing guarantee, absent a contrary agreement?

    A It has no effect; the estate remains liable for all future transactions B It operates as a revocation as to future transactions C It automatically transfers the guarantee to the surety's heirs D It converts the guarantee into an indemnity
58. Question 58 of 59

    Under Section 176, what right does a pawnee have where the pawnor makes default in payment of the debt?

    A The right to sell the goods without any notice whatsoever to the pawnor B No remedy beyond an ordinary civil suit for the debt C To sue the pawnor, or to sell the pledged goods after giving the pawnor reasonable notice of the sale D The right to immediately and permanently keep the goods without any sale or accounting
59. Question 59 of 59

    Under Section 127, what may serve as sufficient consideration to the surety for giving a guarantee?

    A Anything done, or any promise made, for the benefit of the principal debtor B Nothing; guarantees require no consideration C Only direct payment made to the surety personally D Only a written acknowledgment signed by the creditor

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