Breach Of Contract
No. Of Questions to be Answered : Random 20 out of 55
Questions and Answers
- 1.
The breach of contract means the
- A.
Performance of contract by both the parses.
- B.
Failure of party to perform his obligations.
- C.
Payment of compensation due to non - performance.
- D.
Postponement of the performance of contract.
Correct Answer
B. Failure of party to perform his obligations.Explanation
The correct answer is "Failure of party to perform his obligations." This means that when one party fails to fulfill their responsibilities or obligations as stated in the contract, it is considered a breach of contract. This can lead to legal consequences and the party at fault may be required to pay compensation for their non-performance.Rate this question:
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- 2.
The breach of contact occurs when a party
- A.
Fails to perform his obligations on due date.
- B.
Dedares not to perform his obligation on due date.
- C.
Both (a) and (b).
- D.
None of these.
Correct Answer
C. Both (a) and (b).Explanation
The correct answer is "Both (a) and (b)." This means that the breach of contract can occur when a party fails to perform their obligations on the due date or when they declare that they will not perform their obligations on the due date. In other words, the breach of contract can happen either through non-performance or through a clear declaration of non-performance.Rate this question:
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- 3.
The breach of contract may be
- A.
Actual breach only
- B.
Anticipatory breach only
- C.
Either (a) or (b)
- D.
None of these
Correct Answer
C. Either (a) or (b)Explanation
The correct answer is "Either (a) or (b)". This means that a breach of contract can be either an actual breach or an anticipatory breach. An actual breach occurs when one party fails to fulfill their obligations as stated in the contract. An anticipatory breach, on the other hand, occurs when one party indicates that they will not be able to fulfill their obligations in the future. Both types of breaches can result in legal consequences for the party at fault.Rate this question:
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- 4.
When on the due date of performance or during the performance, a party fails to perform his obligation, it is known as
- A.
Actual breach of contract
- B.
Anticipatory breach of contract
- C.
Abandonment of contract
- D.
Cancellation of contract.
Correct Answer
A. Actual breach of contractExplanation
Actual breach of contract refers to a situation where one party fails to fulfill their obligations under the contract on the due date or during the performance. This means that they have not performed as agreed upon in the contract, leading to a breach of the contractual terms. This is different from anticipatory breach of contract, which occurs when one party anticipates that the other will not fulfill their obligations in the future. Abandonment of contract and cancellation of contract are not the correct terms to describe this situation.Rate this question:
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- 5.
When prior to the due date of performance, the promisor absolutely refuses to perform the contract, it is known as
- A.
Actual breach of contract
- B.
Cancellation of contract.
- C.
Anticipatory breach of contract
- D.
Abandonment of contract.
Correct Answer
C. Anticipatory breach of contractExplanation
Anticipatory breach of contract refers to a situation where the promisor, before the due date of performance, clearly and unequivocally states that they will not fulfill their obligations under the contract. This refusal to perform the contract is considered a breach, even though the actual performance date has not yet arrived. It allows the innocent party to treat the contract as terminated and pursue legal remedies for damages caused by the breach.Rate this question:
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- 6.
A breach of contract
- A.
Discharges the other party form performing his obligations.
- B.
Does not discharge the other party form performance.
- C.
Gives one more chance to defaulting party to perform the contract.
- D.
Is not recongnised under the India Law.
Correct Answer
A. Discharges the other party form performing his obligations.Explanation
A breach of contract occurs when one party fails to fulfill their obligations as outlined in the contract. This breach releases the other party from their own obligations, meaning they are no longer required to perform their part of the contract. In other words, the breach discharges the other party from performing their obligations.Rate this question:
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- 7.
Anticipatory breach is the repudiation of the contract
- A.
On due date of performance.
- B.
During the performance.
- C.
Before the due date of performance.
- D.
Both (a) and (b).
Correct Answer
C. Before the due date of performance.Explanation
The correct answer is "Before the due date of performance." Anticipatory breach refers to a situation where one party to a contract indicates, through words or actions, that they will not fulfill their obligations under the contract before the agreed-upon due date of performance. This can occur when a party explicitly states that they will not perform or when their actions make it clear that they are unable or unwilling to fulfill their obligations. In such cases, the innocent party may choose to treat the contract as breached and seek remedies.Rate this question:
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- 8.
A contracted to supply 100 bags of rice to B on 30.12.06. Before the due date of performance (i.e., 30th December,2006), A informed B that he will not supply any rice to B as contracted. In this case,
- A.
There is anticipatory breach of contract.
- B.
B may immediately treat the contract cancelled
- C.
Both of these.
- D.
None of these.
Correct Answer
C. Both of these.Explanation
The correct answer is "Both of these." This means that in this case, there is an anticipatory breach of contract and B may immediately treat the contract as cancelled. This is because A informed B before the due date that he will not supply any rice as contracted, which constitutes an anticipatory breach. As a result, B has the right to treat the contract as cancelled and seek remedies for the breach.Rate this question:
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- 9.
The doctrine of anticipatory breach has been incorporated in
- A.
Section 37
- B.
Section 39
- C.
Section 41
- D.
Section 43
Correct Answer
B. Section 39 -
- 10.
In case of anticipatory breach of contract, the aggrieved party (i.e., party not a fault). May treat the contact as
- A.
Discharged and bring an immediate action for damages.
- B.
Operative and wait till the time for performance arrives.
- C.
Exercise either option (a) or (b).
- D.
Only option (a) is available.
Correct Answer
C. Exercise either option (a) or (b).Explanation
In case of anticipatory breach of contract, the aggrieved party has the option to either treat the contract as discharged and bring an immediate action for damages (option a) or to consider the contract as operative and wait until the time for performance arrives (option b). Therefore, the correct answer is that the aggrieved party can exercise either option a or b.Rate this question:
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- 11.
An anticipatory breach of contract does not give any right to claim compensation.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
An anticipatory breach of contract occurs when one party to a contract informs the other party that they will not be able to fulfill their obligations under the contract before the performance is due. In such cases, the innocent party can treat the contract as repudiated and claim compensation for any losses suffered as a result of the breach. Therefore, the given statement is incorrect, and an anticipatory breach of contract does give the right to claim compensation.Rate this question:
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- 12.
In case of- breach of contract, which of the following remedy'is available to the aggrieved party?
- A.
Suit for rescission
- B.
Suit for damages
- C.
Suit for specific performance
- D.
All of these
Correct Answer
D. All of theseExplanation
In case of breach of contract, the aggrieved party has multiple remedies available to them. They can file a suit for rescission, which means they can ask the court to cancel or terminate the contract. They can also file a suit for damages, where they can seek financial compensation for any losses or harm caused by the breach. Additionally, they can file a suit for specific performance, which means they can ask the court to enforce the terms of the contract and require the breaching party to fulfill their obligations. Therefore, all of these options are available to the aggrieved party.Rate this question:
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- 13.
When a party rightfully rescind (i.e., cancel) the contract, he is
- A.
Discharged form all obligations under the contract.
- B.
Entitled to receive compensation, form the defaulting party, for damages due to non¬performance .ss
- C.
Only (a) as there is no provision for compensation.
- D.
Both(a) and (b) as Section 75 makes provision for damages.
Correct Answer
D. Both(a) and (b) as Section 75 makes provision for damages.Explanation
When a party rightfully rescinds (i.e., cancels) a contract, they are discharged from all obligations under the contract. Additionally, they are entitled to receive compensation from the defaulting party for damages due to non-performance. This is because Section 75 of the law makes provision for damages in such cases. Therefore, both options (a) and (b) are correct.Rate this question:
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- 14.
A party entitled to rescind the contract, loses the remedy. Where
- A.
He has ratified the contract.
- B.
Third party has acquired right in good faith.
- C.
Contract is not separable and rescission is sought of a part only.
- D.
All of these.
Correct Answer
D. All of these.Explanation
If a party entitled to rescind a contract has ratified the contract, it means they have accepted and confirmed the terms of the contract, thereby losing their right to rescind it. Similarly, if a third party has acquired rights in good faith, they have obtained legal rights in the contract and the party entitled to rescind cannot rescind it. Additionally, if the contract is not separable and rescission is sought for only a part of it, the party entitled to rescind cannot rescind the contract as a whole. Therefore, all of these factors can result in the loss of the remedy to rescind the contract.Rate this question:
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- 15.
The court may grant rescission where the contract is
- A.
Void
- B.
Uncertain
- C.
Voidable at he option o plaintiff
- D.
Voidable at the option of defendant.
Correct Answer
C. Voidable at he option o plaintiffExplanation
Rescission is the act of canceling or terminating a contract. In this case, the court may grant rescission if the contract is voidable at the option of the plaintiff. This means that the plaintiff has the right to choose whether or not to cancel the contract. Voidable contracts are those that are initially valid but can be voided by one party due to certain circumstances, such as fraud or misrepresentation. Therefore, if the contract is voidable at the option of the plaintiff, the court may grant rescission based on the plaintiff's decision.Rate this question:
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- 16.
In case of breach of contract, how an aggrieved party can recover compensation form defaulting party?
- A.
By suit for injunction
- B.
By suit for damages
- C.
By suit for specific performance
- D.
None of these.
Correct Answer
B. By suit for damagesExplanation
When a breach of contract occurs, the aggrieved party has the option to file a lawsuit to recover compensation from the defaulting party. This can be done by filing a suit for damages, where the aggrieved party seeks monetary compensation for the losses suffered as a result of the breach. This allows the aggrieved party to recover the financial damages caused by the defaulting party's failure to fulfill their contractual obligations. Filing a suit for damages is a common recourse in breach of contract cases, as it provides a legal avenue for the aggrieved party to seek compensation.Rate this question:
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- 17.
In case of breach of contract, the remedies by way of suit for quantum meruit and suit for injunction are also available to the aggrieved party .
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
In case of breach of contract, the aggrieved party has the option to seek remedies through a suit for quantum meruit and a suit for injunction. A suit for quantum meruit allows the party to claim reasonable compensation for the work or services already performed under the contract. On the other hand, a suit for injunction enables the party to seek a court order to prevent the breaching party from continuing with their actions that violate the terms of the contract. Therefore, both remedies are available to the aggrieved party in the event of a breach of contract.Rate this question:
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- 18.
Damages for breach of contract are awarded by the courts to
- A.
Prevent the breach of contract.
- B.
Punish the liable party.
- C.
Compensate the aggrieved party.
- D.
Discourage private contract.
Correct Answer
C. Compensate the aggrieved party.Explanation
The courts award damages for breach of contract in order to compensate the aggrieved party. When a breach of contract occurs, the party who has suffered harm or loss as a result of the breach is entitled to be compensated for their losses. This compensation is intended to put the aggrieved party in the position they would have been in if the breach had not occurred. It is a way to provide financial relief and remedy the harm caused by the breach.Rate this question:
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- 19.
Quantum meruit means
- A.
As much as is earned
- B.
As much as is paid
- C.
Non-gratuitous promise
- D.
Liquidated damages.
Correct Answer
A. As much as is earnedExplanation
Quantum meruit is a Latin term that translates to "as much as is earned." It is a legal principle that allows for the recovery of a reasonable amount of compensation for goods or services rendered, even if there was no formal agreement or contract in place. It is often used in situations where one party has provided a benefit to another party and is seeking fair compensation for their efforts.Rate this question:
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- 20.
Where a party is entitled to claim compensation in proportion to the work done by him, it is possible by way of
- A.
Suit for damages
- B.
Suit for injunction
- C.
Suit for quantum meruit
- D.
None of these.
Correct Answer
C. Suit for quantum meruitExplanation
In this scenario, the party is entitled to claim compensation in proportion to the work they have done. A suit for damages typically involves seeking compensation for harm or loss caused by another party's actions, which is not applicable here. A suit for injunction involves seeking a court order to stop a particular action, which is also not relevant to the situation. However, a suit for quantum meruit allows a party to claim payment for the value of the work they have performed, which aligns with the given scenario. Therefore, the correct answer is a suit for quantum meruit.Rate this question:
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- 21.
The right to claim on quantum meruit is available to the party in addition to the right to claim damages in case of breach of contract,
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The right to claim on quantum meruit allows a party to seek payment for the value of the work or services they have provided, even if there has been a breach of contract. This right is available in addition to the right to claim damages. In other words, if one party fails to fulfill their contractual obligations, the other party can choose to either claim damages or seek payment for the work done based on its value.Rate this question:
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- 22.
A was engaged by B to write some material to published in installments in a weekly magazine of B, After a few issues of the magazine, it was discontinued by B. In this case, can A recover compensation form B for the work done?
- A.
Yes
- B.
No
Correct Answer
A. YesExplanation
A can recover compensation from B for the work done because they were engaged by B to write material for the magazine. Even though the magazine was discontinued, A still performed the work as agreed upon and should be compensated for their efforts.Rate this question:
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- 23.
The claim on quantum meruit can always be filed by a party who is not at fault.
- A.
True,as the defaulting party has no claim on quantum meruit.
- B.
False,as the defaulting may also use on quantum meruit for work done if contract is divisible and the other party has accepted work done.
Correct Answer
B. False,as the defaulting may also use on quantum meruit for work done if contract is divisible and the other party has accepted work done.Explanation
The correct answer is false because the claim on quantum meruit can be filed by both the party who is not at fault and the defaulting party. The defaulting party may also use quantum meruit for work done if the contract is divisible and the other party has accepted the work done. Therefore, it is not true that only the party who is not at fault can file a claim on quantum meruit.Rate this question:
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- 24.
The specific performance of a contract may be ordered by the court where the damages.
- A.
Are nominal only
- B.
Are adequate remedy
- C.
Can be ascertained
- D.
Are not adequate remedy
Correct Answer
D. Are not adequate remedyExplanation
When the damages resulting from a breach of contract are not considered adequate as a remedy, the court may order specific performance. This means that the court can require the breaching party to fulfill their obligations under the contract as originally agreed upon. This is typically done when the subject matter of the contract is unique or rare, making it difficult to compensate the non-breaching party adequately through monetary damages alone.Rate this question:
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- 25.
Ordering the relief by way of specific performance of contract, is
- A.
At the discretion of the court.
- B.
Right of a person and the court must give it.
- C.
Provided in the Indian Contract Act.
- D.
Both (b) and (c).
Correct Answer
A. At the discretion of the court.Explanation
The correct answer is "At the discretion of the court." This means that the court has the authority to decide whether or not to order specific performance of a contract. It is not an automatic right of a person, and it is not solely provided in the Indian Contract Act. The court will consider various factors such as the nature of the contract, the availability of alternative remedies, and the practicality of enforcing specific performance before making a decision.Rate this question:
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- 26.
In which of the following cases, specific performance of contracts is not allowed by courts?
- A.
Where compensation in terms of money is an adequate relief.
- B.
Where contract is of personal nature i.e., depends upon personal skill or qualifications of parties
- C.
Where the contract is not fair and just
- D.
All of these.
Correct Answer
D. All of these.Explanation
In cases where compensation in terms of money is an adequate relief, specific performance of contracts is not allowed by courts. This means that if the party can be adequately compensated through monetary means, the court will not enforce the specific performance of the contract. Additionally, if the contract is of a personal nature, meaning it depends upon the personal skill or qualifications of the parties involved, specific performance may not be allowed. Lastly, if the contract is deemed unfair and unjust, the court may also not enforce specific performance. Therefore, all of these reasons can lead to specific performance of contracts not being allowed by courts.Rate this question:
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- 27.
In which of the following cases, specific performance can be allowed?
- A.
Contract to sing a song
- B.
Contract to paint a picture
- C.
Contract to enter into partnership at will
- D.
None of these.
Correct Answer
D. None of these.Explanation
Specific performance is a remedy in contract law where a court orders a party to perform their contractual obligations as agreed. However, specific performance is not allowed in cases where the performance involves personal skills or talents, such as singing a song or painting a picture. Additionally, specific performance is not allowed in cases where the contract involves a partnership at will, as partnerships are generally voluntary and cannot be forced. Therefore, in all the given cases, specific performance cannot be allowed.Rate this question:
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- 28.
A court order for restraining a person form doing something which the he promised not to do. Can be obtained by filing a suit for
- A.
Injunction
- B.
Specific performance
- C.
Quantum meruit
- D.
None of these.
Correct Answer
A. InjunctionExplanation
An injunction is a court order that restrains a person from doing something that they have promised not to do. It can be obtained by filing a suit for an injunction. This legal remedy is used when someone needs to prevent another person from taking certain actions that would cause harm or violate a legal agreement. Injunctions are commonly used in cases involving breach of contract, property disputes, or to stop harassment or infringement of rights.Rate this question:
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- 29.
The damages for breach of contract are awarded by the courts in order to
- A.
Punish the liable party.
- B.
Compensate the aggrieved party.
- C.
Prevent breach of contract.
- D.
Discourage private contracts.
Correct Answer
B. Compensate the aggrieved party.Explanation
The damages for breach of contract are awarded by the courts to compensate the aggrieved party. When one party fails to fulfill their contractual obligations, the other party may suffer financial losses or damages as a result. The purpose of awarding damages is to provide compensation to the party who has been harmed by the breach, ensuring that they are not left at a disadvantage due to the other party's failure to perform. This helps to restore the aggrieved party to the position they would have been in if the contract had been fulfilled as agreed.Rate this question:
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- 30.
It is the right of an aggrieved party to claim damages form the defaulting party for the breach of contract.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because when a party breaches a contract, the aggrieved party has the right to claim damages. This means that they can seek compensation for any losses or harm they have suffered as a result of the breach. This is a fundamental principle of contract law, as it ensures that parties are held accountable for their actions and that the non-breaching party is not unfairly disadvantaged.Rate this question:
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- 31.
Ordinary damages are those damages which are
- A.
Agreed at the time of contract.
- B.
Awarded by way of punishment.
- C.
Natural and probable consequence of the breach.
- D.
Deposited in the court immediately on breach.
Correct Answer
C. Natural and probable consequence of the breach.Explanation
Ordinary damages refer to the damages that naturally and probably result from a breach of contract. These damages are not agreed upon at the time of contract or awarded as a punishment. Instead, they are the foreseeable consequences of the breach. This means that they are the damages that a reasonable person would expect to occur as a result of the breach. These damages are typically compensatory in nature and aim to put the non-breaching party in the position they would have been in if the breach had not occurred.Rate this question:
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- 32.
Law governing the payment of damages is based on the leading English case,
- A.
Handley v. Sullivan .
- B.
Hobbs v. London Rail Co
- C.
Hadley v. Baxandale
- D.
None of these.
Correct Answer
C. Hadley v. BaxandaleExplanation
The correct answer is "Hadley v. Baxandale". This case is significant in the law governing the payment of damages. It established the rule that damages can only be claimed if they arise naturally from the breach of contract or if they were within the contemplation of both parties at the time the contract was made. This principle is known as the "Hadley rule" and continues to be influential in contract law.Rate this question:
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- 33.
Which of the following statement is correct?
- A.
Ordinary damages are recoverable.
- B.
Special damages are recoverable only it the parties know about them.
- C.
Remote or indirect damages are not recoverable.
- D.
All of these.
Correct Answer
D. All of these.Explanation
The correct answer is "All of these." This means that all of the statements provided are correct. Ordinary damages are recoverable, special damages are recoverable only if the parties know about them, and remote or indirect damages are not recoverable.Rate this question:
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- 34.
Special damages i.e., the damages which arise due to some special or unusual circumstances
- A.
Are not recoverable altogether.
- B.
Are illegal being punitive in nature.
- C.
Cannot be claimed as a matter of right.
- D.
Can be claimed as a matter of right.
Correct Answer
C. Cannot be claimed as a matter of right.Explanation
Special damages cannot be claimed as a matter of right. These damages are only recoverable if they arise due to some special or unusual circumstances. Unlike general damages, which are typically awarded in personal injury cases, special damages are specific and quantifiable losses that the plaintiff has incurred as a direct result of the defendant's actions. Therefore, the plaintiff must prove that these damages were caused by the defendant's negligence or wrongdoing in order to claim them.Rate this question:
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- 35.
Nominal damages are very small in amount and are awarded.
- A.
To punish the defaulting party.
- B.
Simply to establish party's right to claim damages.
- C.
To discourage breach of contract
- D.
Only to influential parties.
Correct Answer
B. Simply to establish party's right to claim damages.Explanation
Nominal damages are awarded in order to establish a party's right to claim damages. They are typically very small in amount and are not meant to compensate for any actual loss or harm suffered. Instead, they serve as a symbolic recognition that a breach of contract has occurred and that the injured party has a legal right to seek further damages if necessary. Nominal damages can be seen as a way to affirm and protect the injured party's rights without necessarily punishing the defaulting party or discouraging breach of contract.Rate this question:
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- 36.
Law governing the damages is based on the leading English case Hadley v. Baxandale (1854) 9 Ex. 431. and is incorporated in
- A.
Section 73
- B.
Section 74
- C.
Section 75
- D.
None of these.
Correct Answer
A. Section 73Explanation
The correct answer is Section 73. The law governing damages is based on the case of Hadley v. Baxandale (1854) 9 Ex. 431. Section 73 of the law incorporates the principles established in this case regarding the recoverability of damages for breach of contract.Rate this question:
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- 37.
Remote or indirect damages are not due to natural and probable consequence of the breach. There are
- A.
Recoverable
- B.
Not recoverable
- C.
Illegal
- D.
Both (b) and (c).
Correct Answer
B. Not recoverableExplanation
The correct answer is "Not recoverable". This is because remote or indirect damages are not considered to be a natural and probable consequence of a breach. Therefore, they are not recoverable in legal terms.Rate this question:
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- 38.
Generally, which of the following damages are not recoverable ?
- A.
Ordinary damages
- B.
Special damages
- C.
Remote damages
- D.
Nominal damages
Correct Answer
C. Remote damagesExplanation
Remote damages are not recoverable because they are too far removed from the defendant's actions and are not directly caused by the defendant's conduct. These damages are considered too speculative or unforeseeable and therefore cannot be claimed in a legal case.Rate this question:
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- 39.
Exemplary or vindictive damages are punitive in nature and as a rule these are a not awarded by the courts,
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Exemplary or vindictive damages are indeed punitive in nature and are typically not awarded by the courts. These damages are meant to punish the defendant for their misconduct and deter others from engaging in similar behavior. Instead, the courts usually award compensatory damages, which aim to compensate the plaintiff for their losses. Therefore, it is true that exemplary or vindictive damages are not commonly awarded by the courts.Rate this question:
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- 40.
The damages to be payable are determined keeping in view the loss suffered on the date of
- A.
Making the contract
- B.
Breach
- C.
Enforcement of right
- D.
None of these
Correct Answer
B. BreachExplanation
The correct answer is "Breach" because damages are typically awarded in cases where there has been a breach of contract. In this context, the damages payable would be determined based on the loss suffered as a result of the breach.Rate this question:
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- 41.
In case of breach of a contract for the sale of goods, the measure of damages is the difference between the contract price and market price on the date of
- A.
Enforcement of contract
- B.
Breach
- C.
Making of contract
- D.
None.
Correct Answer
B. BreachExplanation
When there is a breach of a contract for the sale of goods, the measure of damages refers to the amount of financial compensation that the injured party is entitled to receive. In this case, the correct answer is "Breach" because the damages are calculated based on the difference between the contract price (the agreed-upon price in the contract) and the market price (the price of similar goods in the market) at the time of the breach. This means that the injured party can claim the amount that they would have gained if the contract had been fulfilled, but they can no longer obtain due to the breach.Rate this question:
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- 42.
As a general rule, the exemplary damages are not allowed. However, the court may award these damages, in case of
- A.
Breach of promise of marry.
- B.
Wrongful dishonour of customer's cheque by banker.
- C.
Breach of contract to sell superior quality goods.
- D.
Both (a) and (b).
Correct Answer
D. Both (a) and (b).Explanation
Exemplary damages are generally not allowed, but they can be awarded in certain cases. In this case, both option (a) breach of promise of marry and option (b) wrongful dishonour of customer's cheque by banker can be considered as situations where exemplary damages may be awarded by the court. Therefore, the correct answer is both (a) and (b).Rate this question:
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- 43.
Where a banker wrongfully dishonours a customer's cheque, the court may award
- A.
Ordinary damages
- B.
Special damages
- C.
Exemplary damages
- D.
None of these
Correct Answer
C. Exemplary damagesExplanation
Exemplary damages may be awarded by the court when a banker wrongfully dishonours a customer's cheque. Exemplary damages, also known as punitive damages, are awarded to punish the wrongdoer and deter others from engaging in similar behavior. These damages are typically awarded in cases where the defendant's actions were willful, malicious, or grossly negligent. In this case, the court may award exemplary damages to the customer as a way of punishing the banker for wrongfully dishonouring the cheque and sending a message to other bankers to act responsibly in similar situations.Rate this question:
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- 44.
An amount of compensation fixed payable in case of breach and which is fair and genuine pre-estimate of probable damages, is known as
- A.
Liquidated damages
- B.
Nominal damages
- C.
Special damages
- D.
Penalty.
Correct Answer
A. Liquidated damagesExplanation
Liquidated damages refer to a predetermined amount of compensation that is agreed upon by parties in a contract, to be paid in case of a breach. This amount is considered fair and genuine, as it is a reasonable estimate of the probable damages that may occur due to the breach. It serves as a form of protection for the non-breaching party, ensuring that they receive compensation without having to go through the process of proving their actual losses. Unlike a penalty, which is designed to punish the breaching party, liquidated damages are meant to compensate the non-breaching party for their losses.Rate this question:
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- 45.
An amount of compensation fixed for breach, which is disproportionate to the damages which may result on breach, is known as
- A.
Exemplary damages
- B.
Special damages
- C.
Liquidated damages
- D.
Penalty
Correct Answer
D. PenaltyExplanation
A penalty is an amount of compensation that is fixed for breach and is disproportionate to the damages that may result from the breach. It is often imposed as a deterrent or punishment for the breaching party. Unlike liquidated damages, which are a genuine pre-estimate of the potential loss, a penalty is excessive and not based on actual damages. Exemplary damages, on the other hand, are awarded to punish the breaching party for their wrongful conduct, while special damages are awarded to compensate for specific, quantifiable losses.Rate this question:
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- 46.
A stipulation which provides that an increased rate of interest will be paid form the date of default, is regarded as
- A.
Remote damages
- B.
Increased damages
- C.
Penalty
- D.
None of these.
Correct Answer
C. PenaltyExplanation
When a stipulation provides that an increased rate of interest will be paid from the date of default, it is considered a penalty. This is because it imposes an additional financial burden on the party in default, serving as a deterrent for non-performance or breach of contract. The purpose of a penalty clause is to punish the defaulting party rather than compensating the innocent party for any actual loss suffered. Therefore, the correct answer is penalty.Rate this question:
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- 47.
A stipulation which provides that in case of default, the money repaid shall be double the amount borrowed, is regarded
- A.
Liquidated damages
- B.
Penalty
- C.
Increased liability
- D.
None of these.
Correct Answer
B. PenaltyExplanation
The stipulation mentioned in the question states that in case of default, the money repaid shall be double the amount borrowed. This indicates that there is a punishment or penalty imposed on the borrower for defaulting on the loan. Therefore, the correct answer is penalty.Rate this question:
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- 48.
A stipulation which provides that in case of default the whole of the borrowed money become due is
- A.
Penalty
- B.
Not penalty
- C.
Punitive damages
- D.
None of these.
Correct Answer
B. Not penaltyExplanation
The correct answer is "Not penalty" because a stipulation that states that in case of default, the entire borrowed amount becomes due is not considered a penalty. Instead, it is a provision that allows the lender to demand full repayment of the loan in the event of default by the borrower. This provision is commonly referred to as an acceleration clause.Rate this question:
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- 49.
Which of the following statement is incorrect?
- A.
In both the cases of 'liquidated damages' and 'penalty' reasonable compensation is allowed by the courts.
- B.
The amount fixed whether named liquidated damages or penalty, determines the maximum liability in case of breach.
- C.
The courts generally reduce the amount if it appears by way of penalty.
- D.
Where the amount appears to be penalty, nothing is allowed by the courts as penalty is not enforceable.
Correct Answer
D. Where the amount appears to be penalty, nothing is allowed by the courts as penalty is not enforceable.Explanation
In both the cases of 'liquidated damages' and 'penalty' reasonable compensation is allowed by the courts. The amount fixed whether named liquidated damages or penalty, determines the maximum liability in case of breach. The courts generally reduce the amount if it appears by way of penalty. However, where the amount appears to be penalty, nothing is allowed by the courts as penalty is not enforceable.Rate this question:
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- 50.
There occurs an when prior to the due date of performance, promisor absolutely refuses to perform the contract.
- A.
Actual
- B.
Anticipatory
- C.
Active
- D.
Absolute.
Correct Answer
B. AnticipatoryExplanation
An anticipatory breach of contract occurs when the promisor refuses to perform the contract before the due date of performance. This means that the promisor has communicated their intention to not fulfill their obligations under the contract. This type of breach allows the promisee to treat the contract as terminated and seek damages for the breach.Rate this question:
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Oct 26, 2023Quiz Edited by
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Aug 23, 2011Quiz Created by
Sweetsalman123
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