Discharge of a Contract – MCQ on Business Law with Answers

Students should practice Discharge of a Contract – CA Foundation Business Law MCQ Questions with Answers based on the latest syllabus.

Discharge of a Contract – Business Law MCQ Questions with Answers

1. Ordinary damages will be awarded in cases where _________.
(a) The loss naturally flows from the breach of contract
(b) The loss is remotely connected with the breach of contract
(c) The loss is unusual and arises out of special circumstances peculiar to the contract
(d) None of these
Answer:
(a) The loss naturally flows from the breach of contract

2. Where the parties to a contract have agreed that a certain sum of money would be paid in case of breach of contract, the Court will ensure that _________.
(a) The exact amount mentioned in the contract is paid to the injured party
(b) An amount not exceeding the stipulated amount is awarded
(c) Reasonable compensation not exceeding the amount stipulated is awarded
(d) A sum exceeding the amount stipulated is awarded
Answer:
(c) Reasonable compensation not exceeding the amount stipulated is awarded

3. The word ‘impossible’ in section 56 connotes _________.
(a) Physical impossibility
(b) Literal impossibility
(c) Commercial impossibility
(d) Impracticability of performance
Answer:
(d) Impracticability of performance

4. In the case of wrongful dishonour of a cheque by a banker the damages awarded will be _________.
(a) Nominal
(b) Special
(c) Exemplary
(d) Ordinary
Answer:
(c) Exemplary

Discharge of a Contract – MCQ on Business Law with Answers

5. If loss or damage arose naturally and directly in the usual course of things from a breach of contract, the aggrieved party would be eligible for _________.
(a) Special damages
(b) Nominal damages
(c) Ordinary damages
(d) Exemplary damages
Answer:
(c) Ordinary damages

6. Anticipatory breach of contract takes place when there is _________.
(a) Breach of contract when performance is actually due
(b) Breach of contract in the course of perfor-mance of the contract
(c) Breach of contract prior to the date of performance
(d) None of the above
Answer:
(c) Breach of contract prior to the date of performance

7. Impossibility of performance occurs due to:
(a) Strike
(b) Lock-out
(c) Partial failure of object
(d) Destruction of subject-matter.
Answer:
(d) Destruction of subject-matter.

8. Object of granting damages is:
(a) to penalize the party,
(b) to monetarily compensate the party,
(c) to set an example before the society,
(d) none of the above.
Answer:
(b) to monetarily compensate the party,

9. Specific performance is ordered where:
(a) the contract is of personal nature,
(b) monetary compensation is an adequate remedy,
(c) monetary compensation is not an adequate remedy,
(d) performance is illegal.
Answer:
(c) monetary compensation is not an adequate remedy,

10. An injunction order is granted by the Court in case:
(a) specific performance of the contract is possible.
(b) specific performance of the contract is impossible.
(c) the Court wants to restrain a party from committing a breach of contract.
(d) the contract is against public interest.
Answer:
(c) the Court wants to restrain a party from committing a breach of contract.

11. In the Indian Contract Act, Novation means _________.
(a) Substitution of an existing contract with a new one
(b) No frustration of executed contracts
(c) Frustration due to change of circumstances
(d) Impossibility does not mean mere commercial difficulty
Answer:
(a) Substitution of an existing contract with a new one

12. Hadley v. Baxendale case is a leading case on _________.
(a) Breach of implied term
(b) Anticipatory breach
(c) Law of damages
(d) None of these
Answer:
(c) Law of damages

13. The remedies open to a person, suffering from breach of contract are _________.
(a) Damages
(b) Injunction
(c) Quantum Meruit
(d) All of the above
Answer:
(d) All of the above

Discharge of a Contract – MCQ on Business Law with Answers

14. Where the parties to a contract agree to substitute a new contract for it, it is known as _________.
(a) Injunction
(b) Novation
(c) Rescission
(d) Alteration
Answer:
(b) Novation

15. A party to a contract committing breach, is liable to pay compensation in respect of _________.
(a) The direct consequences flowing from the breach
(b) Loss or damage caused indirectly
(c) Losses caused whether directly or indirectly
(d) Losses caused remotely
Answer:
(a) The direct consequences flowing from the breach

16. A borrows ₹ 10,000 from B with interest at 12 per cent per annum, with a stipulation that in case of default A shall be liable to pay interest at 75 per cent from the date of default. A commits the default. B is entitled to recover from A _________.
(a) 12% interest
(b) 75% interest
(c) 8796 interest
(d) Such compensation as the Court considers reasonable
Answer:
(d) Such compensation as the Court considers reasonable

Discharge of a Contract – MCQ on Business Law with Answers

State Whether The Following are True or False:

  1. A claim for Quantum Meruit cannot succeed when an indivisible contract for a lump sum is partly performed.
  2. Nominal damages are never granted by way of compensation for loss.
  3. Penalty can be recovered under the Indian Contract Act.
  4. A person who himself is guilty of breach of contract cannot get compensation under the doctrine of quantum meruit.
  5. The order for injunction and specific performances are simultaneously issued by the court.
  6. The aggrieved party is always entitled to compensation no matter whether he has suffered some loss or not.
  7. Special damages are recoverable only when the parties knew about them.
  8. The aggrieved party is not responsible to mitigate the loss caused by the breach.
  9. The measure of ordinary damages is the difference between the contract price and the market price.
  10. The claim for quantum meruit can be made only when the original contract has been discharged.
  11. Commercial impossibility is not a valid excuse for the non performance of a contract.
  12. For the default in the repayment of loan on the agreed date, interest can be increased retrospectively from the date of lending.
  13. Commercial impossibility does not make the contract void.
  14. Cancellation of a contract by mutual consent of the parties is called waiver.

Answer:

  1. True
  2. True
  3. False
  4. True
  5. False
  6. False
  7. True
  8. False
  9. True
  10. True
  11. True
  12. False
  13. True
  14. False

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