Rights of Buyer & Rights of Unpaid Seller – MCQ on Business Law with Answers

Students should practice Rights of Buyer & Rights of Unpaid Seller – CA Foundation Business Law MCQ Questions with Answers based on the latest syllabus.

Rights of Buyer & Rights of Unpaid Seller – Business Law MCQ Questions with Answers

1. The Seller of Goods is deemed to be an Unpaid Seller _________.
(a) when the whole of the price has not been paid or tendered.
(b) when a bill of exchange or other negotiable instrument has been received as conditional payment and the condition has not been fulfilled by reason of the dishonour of the instrument or otherwise.
(c) both (a) and (b).
(d) either (a) or (b).
Answer:
(d) either (a) or (b).

2. The term “Unpaid Seller” includes _________.
(a) Agent of the Buyer
(b) Agent of the Seller
(c) Agent of the Carrier/Transporter
(d) All of the above
Answer:
(b) Agent of the Seller

3. The right of lien is available to the Unpaid Seller, only when _________.
(a) he is not in possession of the goods
(b) he is in possession of the goods
(c) he has delivered the goods to the Carrier/ Transporter
(d) he has delivered the goods to the Buyer
Answer:
(b) he is in possession of the goods

4. The right of lien is available to the Unpaid Seller, u/s 47 of the Sale of Goods Act, when he is in possession of goods _________.
(a) as an agent of the Buyer
(b) as a Bailee for the buyer
(c) in his own right.
(d) all of the above
Answer:
(d) all of the above

Rights of Buyer & Rights of Unpaid Seller – MCQ on Business Law with Answers

5. In which of the following situations, the right of lien available to the Unpaid Seller is lost?
(a) Where the Goods have been sold without any stipulation as to credit
(b) Where the Goods have been sold on credit, but the credit period has expired
(c) Where the Buyer becomes insolvent
(d) Where the Unpaid Seller has parted with the possession of the goods.
Answer:
(d) Where the Unpaid Seller has parted with the possession of the goods.

6. Where the goods have been delivered to Railways for carriage and the R/R is taken in the name of the seller or his agent:
(a) the seller is prima facie deemed to reserve the right of disposal
(b) the seller did not retain the right of disposal
(c) the seller cannot retain right of disposal
(d) none of the above.
Answer:
(a) the seller is prima facie deemed to reserve the right of disposal

7. When the goods have been sold on credit and the credit period _________ lien can he exercised.
(a) has not expired
(b) has expired
(c) has not been extended
(d) has been extended
Answer:
(b) has expired

8. The right of lien can be exercised by the Unpaid Seller in respect of _________.
(a) Price
(b) Any other expenses, e.g. Godown Charges, Interest, etc.
(c) Both (a) and (b)
(d) Either (a) or (b)
Answer:
(a) Price

9. The Unpaid Seller _________ to deliver a part of the Goods on payment of a proportionate part of the price by the Buyer.
(a) shall be bound
(b) may refuse
(c) must honour his commitment
(d) shall request the carrier
Answer:
(b) may refuse

10. Generally, where an Unpaid Seller has made part delivery of the Goods, he _________.
(a) may exercise his right of lien on the remainder
(b) has to honour the entire contract
(c) loses his lien on the remainder of the goods
(d) can supply defective goods in respect of the remainder
Answer:
(a) may exercise his right of lien on the remainder

Rights of Buyer & Rights of Unpaid Seller – MCQ on Business Law with Answers

11. Where the Unpaid Seller has parted with the goods by handing it over to a carrier for transmission, and the goods are in transit, he can reclaim possession thereof. This right is called _________.
(a) Right of Lien
(b) Right of Stoppage of goods in transit
(c) Right of withholding delivery of goods
(d) Right of Re-sale
Answer:
(b) Right of Stoppage of goods in transit

12. Right of Stoppage in transit can be exercised by the Unpaid Seller, where he _________.
(a) has lost his right of lien
(b) still enjoys his right of lien
(c) either (a) or (b)
(d) neither (a) nor (b)
Answer:
(a) has lost his right of lien

13. Right of Stoppage in transit can be exercised by the Unpaid Seller, where the Buyer _________.
(a) is solvent
(b) becomes insolvent
(c) acts fraudulently
(d) acts smartly
Answer:
(b) becomes insolvent

14. The right of stoppage in transit may be exercised by the Unpaid Seller till _________.
(a) payment or tender of the price
(b) Buyer becomes solvent
(c) such time as the Carrier may think fit
(d) such time as the Court may think fit
Answer:
(a) payment or tender of the price

15. Goods are deemed to be in transit from the time they are delivered to the Carrier or other bailee for transmission to the buyer, until _________.
(a) Buyer becomes solvent
(b) Buyer or his agent takes delivery of the goods
(c) Seller becomes solvent
(d) Seller or his agent takes delivery of the goods
Answer:
(b) Buyer or his agent takes delivery of the goods

16. If, after the arrival of goods at their destination, Carrier or other Bailee acknowledges to Buyer or his agent that he holds goods on his behalf, and continues possession of the goods, the transit _________.
(a) is at an end
(b) is deemed to continue
(c) is not at an end
(d) is not affected at all
Answer:
(a) is at an end

17. If goods are rejected by the buyer and the Carrier or other Bailee continues in possession of them, and the seller has refused to receive them back, then transit _________.
(a) is at an end
(b) is deemed to be at an end
(c) is not deemed to be at an end
(d) is dependent on the Court’s decision.
Answer:
(c) is not deemed to be at an end

18. If the Carrier/Bailee wrongfully refuses to deliver the goods to the buyer or his agent, the transit _________.
(a) is at an end
(b) is deemed to be at an end
(c) is not deemed to be at an end
(d) is dependent on the Court’s decision
Answer:
(a) is at an end

19. Right of Stoppage in Transit may be exercised by the Unpaid Seller, by _________.
(a) taking actual possession of Goods
(b) giving notice of his claim to the Carrier/ Bailee who holds the Goods.
(c) either (a) or (b)
(d) Both (a) and (b)
Answer:
(c) either (a) or (b)

Rights of Buyer & Rights of Unpaid Seller – MCQ on Business Law with Answers

20. The Unpaid Seller’s right of lien is to _________.
(a) re-organize possession of goods
(b) re-sell the goods
(c) regain possession of goods
(d) retain possession of goods
Answer:
(d) retain possession of goods

21. The word “perishable” in respect of goods, u/s 54 of the Sale of Goods Act, means _________.
(a) physically perishable
(b) commercially perishable
(c) both (a) and (b)
(d) either (a) or (b)
Answer:
(d) either (a) or (b)

22. Where under a contract of sale, the price is payable on a certain day irrespective of delivery and Buyer wrongfully neglects or refuses to pay the price, the Seller can sue the Buyer for the price of goods. For this purpose, goods _________.
(a) should be appropriated to the contract
(b) need not be appropriated to the contract
(c) should be delivered to the buyer
(d) need not be delivered to the buyer
Answer:
(b) need not be appropriated to the contract

23. The unpaid seller who has retained possession of the goods in exercise of his right of lien or who has resumed possession from the carrier upon insolvency of the buyer, can resell the goods :
(a) If the goods are of perishable nature, without any notice to the buyer
(b) If the goods are non-perishable, by giving notice to the buyer
(c) Either ‘a’ or ‘b’
(d) Neither ‘a’ nor ‘b’
Answer:
(c) Either ‘a’ or ‘b’

24. In case of interest by way of damages and special damages in a suit by the seller u/s 61, the interest may be calculated from _________.
(a) date of tender of goods
(b) date on which the price was payable
(c) either (a) or (b)
(d) both (a) and (b)
Answer:
(b) date on which the price was payable

25. When under a contract of sale, buyer has paid the price, but seller neglects to deliver goods, buyer has a right to claim interest on the amount of price. The buyer can claim interest _________.
(a) only when he can recover the price
(b) only when he is entitled to claim damages
(c) either (a) or (b)
(d) both (a) and (b)
Answer:
(d) both (a) and (b)

Rights of Buyer & Rights of Unpaid Seller – MCQ on Business Law with Answers

State Whether The Following are True or False:

  1. The term unpaid seller includes buyer’s agent to whom bill of lading is endorsed.
  2. Unpaid seller can exercise his right of lien even when property in goods has been passed to the buyer.
  3. Once possession is lost, right of lien of the unpaid seller is also lost.
  4. Unpaid seller can exercise his right of resale of goods only when property in goods has not passed to the buyer.
  5. Where the unpaid seller has obtained a decree for the price of the goods the right of lien cannot be exercised.
  6. Nemo dat quad non habet means let the buyer beware.
  7. Sub-sale by the buyer with seller’s consent leads to loss of right of stoppage in transit.
  8. Unpaid seller’s right of stoppage in transit can be exercised only when the buyer is insolvent.

Answer:

  1. False
  2. True
  3. True
  4. False
  5. False
  6. False
  7. True
  8. True

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