1. There was a contract to supply ‘waste coal and ash for the next 3 months, as and when the waste is generated by the seller’s factory’. The buyer paid the lump sum price for the next six months in advance. When does the property in the goods pass to the buyer?
(a) After the lapse of three months period
(b) On formation of the contract
(c) During payment of advance money
(d) As and when factory discharges waste.
Where goods are not possessed by the seller at the time of the contract but which will be manufactured or produced or acquired by him after the making of the contract of sale is called the ‘Future Goods’. The property in future goods passes to the buyeras and when factory discharges waste. So, option (a), (b) & (c) are incorrect
Hence, option (d) is the correct answer
2. Goods are at the risk of the party who is
(a) Carrier of goods
(b) Owner of goods
(c) Possessor of goods
(d) Dealer of goods.
The right of ownership and risk go together i.e., the goods are at the risk of the owner. So, option (a), (c) & (d) are incorrect
Hence, option (b) is the correct answer.
3. In case of an agreement to sell, if the seller becomes insolvent after the buyer has paid the price, the buyer can claim
(a) The goods from Official Receiver or Assignee of the seller
(b) A rateable dividend for price paid
(c) Sue the Official Receiver or Assignee for refund of entire price paid
(d) The buyer cannot claim any compensation.
In an agreement to sell, if the buyer having paid the price, finds that the seller has become insolvent, he can only claim a rateable dividend and not the goods because the property in goods has not yet passed to him. So, option (a), (c) & (d) are incorrect
Hence, option (b) is the correct answer.
4. In an Agreement to Sale, if the buyer becomes insolvent before payment of price, the seller
(a) Has to deliver goods and sue the Official Receiver for payment of entire price
(b) Has to deliver goods and claim a rateable dividend for price consideration
(c) Can refuse to hand over the goods to the Official Receiver unless full price is paid
(d) Has to deliver the goods to the Official Receiver without any consideration.
In an agreement to sell, if the buyer becomes insolvent and has not yet paid the price, the seller is not bound to part with the goods until he is paid for. So, he can refuse to hand over the goods to the Official Receiver until full price is paid. So, option (a), (b) & (d) are incorrect
Hence, option (c) is the correct answer.
5. A sold a bicycle costing Rs.2,000 to B. B paid Rs.700 and assured to take delivery after few days. In the meantime bicycle is lost. Who bears the loss?
(a) A
(b) B
(c) Both A & B equally
(d) Neither A nor B.
When the ownership of the goods has been transferred to the buyer, any loss of goods shall be borne by the buyer, even though the goods are in the possession of the seller. In this case, the property in the bicycle passes to B when A (the seller) insisted B to take delivery of the bicycle. So, by refusing to take delivery of the bicycle, B has to bear the risk for loss of the goods. So, option (a), (c) & (d) are incorrect
Hence, option (b) is the correct answer
6. Under an unconditional contract for sale of specific goods in a deliverable state, the property passes to the buyer, when the
(a) payment is made
(b) Goods are delivered
(c) Contract is made
(d) Buyer accepts the delivery of goods.
When there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes on to the buyer when the contract is made. So, option (a), (b) & (d) are incorrect
Hence, option (c) is the correct answer.
7. In case of contract of sale of specific goods which are yet to be put into deliverable state, the property in the goods passes to the buyer.
(a) When the buyer makes the full payment to seller
(b) When the contract is signed
(c) When goods are put in a deliverable state by the seller
(d) When goods are brought to deliverable state and buyer has the notice of it.
In contract for sale of specific goods, where the seller is yet to do something to bring the goods in deliverable condition, the property does not pass until such thing is done and the buyer has notice of it. So, option (a), (b) & (c) are incorrect
Hence, option (d) is the correct answer
8. M of Mumbai writes to N of Delhi to send him a book by post parcel. The parcel is lost on the way. Can N recover the price from M ?
(a) No, delivery to post office is not a delivery to buyer
(b) Yes, as delivery to post office is delivery to buyer
(c) No, M has not got the book
(d) N must recover the price from postal authorities.
Under a contract of sale, when goods are delivered to a carrier for the purpose of transmission to buyer, such delivery of goods to them is prima facie deemed to be a delivery of the goods to the buyer. In this case, when N has posted the parcel, it is deemed to be delivered to M. So, N is entitled to recover the price from M. So, option (a), (c) & (d) are incorrect.
Hence, option (b) is correct.
9. Ram of Mumbai orders Bill of Delhi for the supply of goods. Bill books the goods by Railway. In Mumbai railway station, the goods are destroyed before Ram could take delivery. Can Bill get the money of goods from Ram?
(a) No, Ram has not taken the delivery
(b) No, Property in goods has not transferred to Ram
(c) Yes, Property in goods has transferred to Ram
(d) No, Bill can only claim money from Railway Authority.
As a general rule, the delivery of goods to the carrier shall amount to delivery of goods to the buyer. Hence, any loss of goods shall be borne by the buyer. In this case, property in goods has transferred to Ram. So, the loss relating to goods should be borne by Ram. So, Bill can get the money of goods. So, option (a), (b) & (d) are incorrect.
Hence, option (c) is the correct answer.
10. X purchased a DVD player at a public auction. Neither the Auctioneer nor X knew that DVD player was a stolen property. Now, true owner can
(a) Recover the goods from X
(b) Sue the Auctioneer for fraud
(c) Not recover the goods from X
(d) ‘X’ becomes owner of the DVD.
In case of sale of goods by auctioneer, if afterwards it is found that seller had no title to the goods (e.g. where stolen goods were handed over by the seller to the auctioneer), the auctioneer may hold the seller liable and the true owner can recover the goods from purchaser. So, in this case, the true owner can recover the goods from X. So, option (b), (c) & (d) are incorrect.
Hence, option (a) is the correct answer.
11. Ajay chose a costly ring at a Jeweller shop and tendered payment by a cheque, which he signed in the name of Bijay, a person of credit. He took the ring and pledged it to Suresh, who had no notice of fraud. Can the Jeweller recover the ring from Suresh?
(a) Yes the jeweller can recover from Suresh
(b) The jeweller can recover either from Ajay or Suresh
(c) No, the jeweller cannot recover from Suresh
(d) None of the above
When the pawnor has obtained possession of the goods pledged by him under a voidable contract (by fraud, undue influence, coercion etc.) the pawnee acquires a good title to the goods, if he acted in good faith and without knowledge of the pawnor’s defective title. In this case, the ring was pledged to Suresh without any notice of fraud. So, Suresh, the pawnee, acquires a good title to the goods and the Jeweller cannot recover the ring from him. So, option (a), (b) & (d) are incorrect.
Hence, option (c) is the correct answer.
12. A mercantile agent is an agent who, in the customary course of business
(a) Has authority to sell the goods
(b) Has the authority to consign goods for sale
(c) Has the authority to raise money on the security of goods
(d) All of the above.
A mercantile agent is one, who, in the customary course of his business, has the authority to sell goods, to consign goods for the purpose of sale, to buy goods, to raise money on the security of goods. So, options (a), (b) & (c) are correct statements
Hence, option (d) is correct.
