Contract of Sale – MCQ
1. The Sale of Goods Act, 1930 containing the law relating to sale of goods came into force on
(a) May 1, 1930
(b) July 1, 1930
(c) April 1, 1930
(d) November 1, 1930.
The Sale of Goods Act came into force from 1st July, 1930.
Hence, option (b) is the correct answer.
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2. The Sale of Goods Act applies only to
(a) Sale of goods
(b) Sale of services
(c) Both sale of goods and sale of services
(d) Mortgage of property or barter of goods.
The Sale of Goods Act applies only to sale of goods. It does not deal with contract of sale of service or pledge of goods, mortgage of property or barter of goods.
Hence, option (a) is the correct answer.
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3. The Sale of Goods Act applies to
(a) Whole of India
(b) Whole of India except Jammu & Kashmir
(c) Whole of India except Dadra and Nagar Haveli
(d) Whole of India except Lakshadweep.
The Sale of Goods Act extends to whole of India except the state of Jammu and Kashmir.
Hence, option (b) is the correct answer.
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4. X agrees to deliver his old refrigerator valued at Rs.2,000 to Y, a dealer of refrigerator, in exchange for a new refrigerator and agrees to pay the difference in cash. It is /1
(a) Contract of Sale
(b) Barter
(c) Exchange
(d) Hire Purchase Agreement.
A contract of sale of goods is a contract where the seller transfers or agrees to transfer the property in goods to the buyer for a price. The consideration for contract of sale may be in money or partly in money and partly in goods. In this case, the seller has agreed to transfer the property in goods in consideration of partly in money and partly in goods. So, it is a contract of sale.
Hence, option (a) is the correct answer.
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5. Goods means every kind of movable property including
(a) Actionable claims and currency money
(b) Old currency notes
(c) Growing crops and grass severed from land
(d) Both (b) and (c).
Goods means every kind of movable property including stock, shares, growing crops, grass, things attached to or forming part of the land which are agreed to be severed before sale. It does not include actionable claims and money. But old coins and notes which are out of circulation (not considered as Money) are considered as ‘Goods’.
Hence, option (d) is the correct answer.
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6. In case of sale of standing trees, the property passes to the buyer when trees are /2
(a) Felled and ascertained
(b) Earmarked to be felled
(c) When the contract is made
(d) standing trees cannot be sold as they are not moveable goods
Growing crops, grass and things attached to or forming part of the land are considered as goods only if they are agreed to be removed from the earth. So, in case of sale of standing trees, the property passes to the buyer when trees are cut and ascertained.
Hence, option (a) is the correct answer.
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7. Which of the following is not considered as Goods?
(a) Antiques
(b) Old coins which are out of circulation
(c) Current coins
(d) All of these.
Goods means every kind of movable property. However, it does not include actionable claims and money. But, old coins and notes which are out of circulation (hence, cannot be considered as Money) are considered as ‘Goods’. Current coins are money and so cannot be considered as Goods.
Hence, option (c) is the correct answer.
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8. Under the Sale of Goods Act, 1930 which of these are not considered as goods?
(a) Immovable property
(b) Shares
(c) Growing crops which are to be severed from land
(d) Stocks.
According to Sale of Goods Act, 1930, Goods means every kind of movable property including stock, shares, grass, growing crops and things attached to or forming part of the land which are to be severed from land. But it does not include any immovable property.
Hence, option (a) is the correct answer.
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9. Price Consideration in a Contract of Sale may be
(a) Only in money
(b) Only in goods bartered
(c) Partly in money and partly in goods
(d) No consideration is required at all.
Price consideration for a Contract of Sale can be partly in money and partly in goods.
Hence, option (c) is the correct answer.
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10. Which of these is NOT a valid sale?
(a) Sale by one part owner of a property to another part owner
(b) Sale made by the Firm to any of its partners
(c) Sale made by a Partner to the firm
(d) Distribution of goods amongst Partners upon dissolution of firm.
A person cannot buy his own goods. So, distribution of goods amongst the partners on account of dissolution of a firm does not amount to a sale of goods because the partners are joint owners and they cannot be both buyers and sellers.
Hence, option (d) is the correct answer.
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11. In case of an agreement to sell, subsequent loss or destruction of the goods until sale, is the liability of
(a) The buyer
(b) The seller
(c) Both the buyer and seller equally
(d) None of the above
In case of an agreement to sell, the goods are at the risk of seller, until the agreement to sale becomes a sale. So, subsequent loss or destruction of the goods is the liability of the seller.
Hence, option (b) is the correct answer.
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12. Mr. Raj agrees to deliver in future 100 computer sets for Rs. 30 lakhs in exchange of 200 fridge sets worth Rs. 40 lakhs and Rs. 60,000 in cash. This is a
(a) Barter
(b) Agreement to sell
(c) Hire-purchase Agreement
(d) Pledge.
Where the transfer of property in goods is to take place at a future date or some conditions to be fulfilled thereafter, the contract is called an Agreement to Sell. In this case, X agrees to sell in future. So, it is a case of Agreement to Sell. Since the consideration is partly in Cash and Partly in kind, it is not Barter. It is also not Hire Purchase Agreement or Pledge.
Hence, option (b) is the correct answer
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13. In case of a hire- purchase, the hirer
(a) passes a good title to a bonafide purchaser after payment of first instalment
(b) does not pass a good title to a bonafide purchaser until the payment of last instalment
(c) can never pass a good title to the bonafide purchaser
(d) Passes a good title to a bonafide purchaser after payment amounting to cash sale value of the goods
In a hire purchase agreement, the owner delivers his goods on hire basis to a hirer for use under which the hirer has the option to purchase the goods by paying the agreed amount in specified instalment. So, the title of the goods cannot be passed to a bonafide purchaser under hire purchase system until he has paid the last instalment.
Hence, option (b) is the correct answer.
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14. The position of the hire purchaser (in sale) is that of
(a) Bailee
(b) Joint owner
(c) Pawnee
(d) Bailor.
The ownership of goods is transferred to the hire purchaser only when he has paid all instalments. So, the hire purchaser does not become an owner, but becomes a bailee only.
Hence, option (a) is the correct answer
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15. An agreement of hire purchase includes the agreement of
(a) Sale and agreement to sell
(b) bailment of goods for hire and agreement to sell
(c) Sale and bailment for hire
(d) Sale and pledge of goods.
A hire-purchase agreement contains an element of bailment of goods for hire at the time of delivery and an element of sale which is satisfied when the option to purchase is exercised by the intending purchaser. Option a is not correct because in Hire Purchase, there is an element of Bailment also. Option (c) is not correct because bailment is not for hire. Option (d) is not correct because there is no Pledge. Pledge means delivery against security of debt
Hence, option (b) is the correct answer.
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16. K sells his motor car to P for Rs.90,000 with the condition that Rs.40,000 is to be paid there and the balance in 10 equal instalments and can own the car only after final payment. What is the nature of the contract?
(a) Sale
(b) Agreement to sell
(c) Sale by instalment payment
(d) Hire purchase.
In a Hire Purchase Agreement, the owner delivers his goods on hire basis in consideration of a down payment to a hirer for use under. The hirer has the option to purchase the goods by paying the agreed amount in specified instalment. In this case, K sells his motor car to P in consideration of a down payment of Rs.40,000 and the balance in 10 equal instalments. So, it is a hire purchase agreement. The property passes to the buyer when he exercises his option upon final payment of all instalments. It is not Sale, agreement to sell, or sale by instalment, because the buyer has option to buy after specified period. Hence option a, b & c are not correct.
Hence, option (d) is the correct answer.
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17. Existing goods which have not been identified and agreed upon at the time of contract of sale are … ……Goods.
(a) Contingent
(b) Future
(c) Unascertained
(d) None of the above.
The goods which are not specifically identified at the time of contract of sales are known as unascertained goods. They are not Future or Contingent Goods.
Hence, option (c) is the correct answer.
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18. A agrees to sell B, all crops to be grown in Y’s farm in Patiala during 2021 season, for Rs.2,00,000. In this case, the goods are
(a) Future goods
(b) Specific goods
(c) Ascertained goods
(d) Contingent goods.
Future Goods means goods to be manufactured or produced or acquired by the seller after making the contract of sale.
In this case, X agrees to sell Y the crops which are to be grown in his (X) firm. So, the goods are yet to be produced. So, they are Future Goods. The goods which would be grown are not specific goods, ascertained goods or Contingent Goods. So, option (b), (c) or (d) are not correct
Hence, option (a) is the correct answer.
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19. The term Contingent Goods refers to
(a) Goods, the acquisition of which by the seller depends upon a contingency
(b) Goods identified at the time of making of contract of sales
(c) Goods which are not specifically identified.
(d) None of the above
Contingent goods are the goods the acquisition of which is subject to some uncertain event which may or may not happen.
Hence, option (a) is the correct answer.
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20. Where the specific goods, without the knowledge of the seller have, at the time when the contract perished, contract is to be treated as
(a) Valid
(b) Voidable at the option of the seller
(c) Voidable at the option of the Buyer
(d) Void.
Without the knowledge of seller at the time of formation of contract, if the contracted specific goods are damaged or perished to such an extent that such damaged goods cannot be said to be the same goods for which the contract was made, the contract of sale shall be void,
Hence, option (d) is the correct answer
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21. X agrees to sell to Y 1,000 bags of salt which are in godown. Before the date of delivery, the godown gets flooded with water. As a result 1,000 bags of salt were destroyed. Does Y has any rights against X?
(a) No
(b) Y can claim the amount paid in advance
(c) Y has the right to claim the goods
(d) Y can claim the price paid with interest thereof.
As the goods perish / destroyed, without any fault on the part of the seller or buyer, the agreement to sell becomes void. So, Y has no right against X. Options (b), (c) & (d) are incorrect.
Hence, option (a) is the correct answer.
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22. P agrees to deliver 50 Scooty to Q in exchange of 50 Bajaj Pulsar. This is a
(a) Sale
(b) Gift
(c) Barter Agreement
(d) Agreement to Sale.
Agreement to exchange only goods, without any money transaction is Barter Agreement
Hence, option (c) is the correct answer.
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23. A shop sells a packet of Local rice to a customer. The customer having bought the local rice, later on comes back with the packet and asks for a packet of basmati rice, in exchange of the local packet for the Basmati packet and paying the difference in price.
a Transaction of Local rice is sale but transaction of Basmati Rice is exchange of goods (barter)
b Both the Transactions of Local rice and Basmati Rice is exchange are considered as sale
c Transactions of Local rice is not sale (as rice was not sold) and transaction of Basmati Rice is exchange of goods. So, no Sale effected.
d None of the above
Transaction of Local rice is sale as goods were sold and price paid. Transaction of Basmati Rice is instance of another sale, independent of fist sale, as money was transacted again. Option (a) & (c) are incorrect.
Hence option (b) is correct.
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24. A agrees to sell certain goods to B at a price which is to be fixed by C. If C refuses to value the goods and fix the price of such goods, the agreement is
(a) Illegal
(b) Void
(c) Valid
(d) Voidable at the option of A.
In contract of sale the price can be fixed by a third party named in the contract of sale. If he fails to fix the price, the contract of sale shall become void. In this case, if C refuses to value the goods and fix the price of such goods, the agreement shall be void.
Hence, option (b) is the correct answer.
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25. X agrees to buy goods from Y at a price to be fixed by C. The contract is
(a) Valid when price is determined
(b) Void
(c) Valid when price is fixed only by X
(d) Voidable.
The contract of sale may provide that the price shall be fixed by a third party named in the contract of sale. In such a case, the price shall be fixed by the third party to make it valid.
Hence, option (a) is the correct answer
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26. Where the third party is prevented from making valuation of goods as to their price by a party to the contract, the other party
(a) has a right to sue for specific performance
(b) has a right to sue for damages
(c) cannot claim any compensation
(d) can make valuation of the goods.
If the third party is prevented from fixing price by the buyer or seller, the defaulting party shall be liable for damages to the other party.
Hence, option (b) is the correct answer.
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27. Which of the following is a Document of Title of Goods?
(a) Bill of lading
(b) Wharfingers Certificate
(c) Railway Receipt
(d) All the above.
Document of title to goods includes Bill of lading, Dock warrant, Railway Receipt, Wharfingers Certificate etc. which serves the purpose of proof of possession or control of the goods.
Hence, option (d) is the correct answer
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28. In contract of Sale, price may be fixed by…..
(a) Fixed by the contract
(b) Agreed to be fixed in a manner thereby agreed
(c) Determined by course of dealings between the parties
(d) All of the above.
In a contract of sale, (i) the price may be fixed by specifying the price in the contract of sale, (ii) or the parties may decide that the price shall be fixed in future on some basis specified in the contract, (iii) or it can be determined by manner of fixing price between the parties in the past transaction. So, through all these manners the price can be determined in a contract of sale. Hence the statements in the options (a), (b) & (c) are true.
Hence, option (d) is the correct answer.
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