Consideration In Business Law Quiz

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  • 1/25 Questions

    Consideration for an agreement may be:

    • May be present, past, or future.
    • May be present or future only.
    • May be past or present only.
    • Must be present only.
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About This Quiz


Grasping the concept of consideration is essential for anyone involved in business law, particularly when forming valid contracts. Our Consideration in Business Law Quiz is designed to test your knowledge and deepen your understanding of this crucial legal concept. The quiz covers various aspects of consideration, including its definition, types, and the legal requirements for a valid contract. It also explores exceptions and unique scenarios where consideration might not be necessary.

Each question is crafted to challenge your grasp of these concepts and provide insights into their application in real-world legal situations. By taking this quiz, you'll be better equipped to navigate the complexities of business law and contract formation. Start the Consideration in Business Law Quiz today and solidify your legal expertise!

Consideration In Business Law Quiz - Quiz

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  • 2. 

    The consideration for an agreement may be:

    • Past.

    • Present.

    • Future.

    • All of these.

    Correct Answer
    A. All of these.
    Explanation
    The consideration for an agreement can be based on past actions, present circumstances, or future promises. In other words, it can include any of these factors. This means that the parties involved in the agreement can consider what has already been done, what is currently happening, or what will be done in the future when determining the terms of the agreement. Therefore, the correct answer is "All of these."

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  • 3. 

    As a general rule, an agreement made without consideration is:

    • Void.

    • Voidable.

    • Valid.

    • Unlawful.

    Correct Answer
    A. Void.
    Explanation
    An agreement made without consideration is considered void because consideration is an essential element of a valid contract. Consideration refers to something of value that is exchanged between the parties involved in the agreement. Without consideration, the contract lacks the necessary element to make it legally binding, and therefore it is void.

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  • 4. 

    All agreements made without consideration are void.

    • True, as there are no exceptions to this rule.

    • False, as there are certain exceptions to this general rule.

    Correct Answer
    A. False, as there are certain exceptions to this general rule.
    Explanation
    The statement is false because there are certain exceptions to the rule that all agreements made without consideration are void. For example, agreements made out of natural love and affection, agreements made with a promise to compensate past voluntary services, and agreements made to pay a time-barred debt are some of the exceptions where consideration is not required for the agreement to be valid. Therefore, the statement is incorrect.

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  • 5. 

    The absence of consideration shall not affect the validity of the gift actually made.

    • True, as it is recognized, under Section 25 of the Indian Contract Act.

    • False, as the gift is always made of some consideration.

    Correct Answer
    A. True, as it is recognized, under Section 25 of the Indian Contract Act.
    Explanation
    According to Section 25 of the Indian Contract Act, 1872, an agreement without consideration is generally void unless it falls under certain exceptions. One of these exceptions is the case of a gift actually made. If a gift has been voluntarily made by one person to another without any consideration, the absence of consideration does not affect its validity. This means that once a gift is given, it is legally binding and enforceable, even if no consideration was provided in return.

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  • 6. 

    All agreements made without consideration are void.

    • True, as there is no exception to this rule.

    • False, as there are certain exceptions to this rule.

    Correct Answer
    A. False, as there are certain exceptions to this rule.
    Explanation
    The statement "All agreements made without consideration are void" is false because there are certain exceptions to this rule. Consideration refers to something of value that is exchanged between parties in a contract. While it is generally true that agreements without consideration are void, there are some exceptions such as contracts made on account of natural love and affection, contracts with minors, and contracts made under statutory provisions. Therefore, not all agreements made without consideration are void.

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  • 7. 

    A stranger to contract (I,e., a person who is not a party to the contract ) cannot enforce the contract because of the applicability of the doctrine of:

    • Privity of Consideration.

    • Privity of Contract.

    • No Consideration, No Contract.

    • Section 25, Explanation II.

    Correct Answer
    A. Privity of Contract.
    Explanation
    The correct answer is "Privity of Contract." The doctrine of privity of contract states that only the parties to a contract have the right to enforce it or be bound by its terms. This means that a stranger to the contract, someone who is not a party to it, does not have the legal standing to enforce the contract. This doctrine is based on the principle that contracts are agreements between the parties involved and should not be enforceable by those who are not directly involved in the contract. Therefore, a stranger to contract cannot enforce the contract due to the applicability of the doctrine of privity of contract.

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  • 8. 

    If the consideration to an agreement is furnished by a stranger and not by the promisee himself, the agreement will be void.

    • True, as the consideration must be furnished by the promisee.

    • False, as the law requires that there must be some consideration, who furnished it is immaterial.

    Correct Answer
    A. False, as the law requires that there must be some consideration, who furnished it is immaterial.
    Explanation
    The correct answer is false because the law requires that there must be some consideration for an agreement to be valid, regardless of whether it is furnished by the promisee or a stranger.

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  • 9. 

    Under English Law, the consideration must move from the promisee and promisee alone. The consideration furnished a stranger is no consideration.

    • True.

    • False.

    Correct Answer
    A. True.
    Explanation
    Under English Law, the principle of consideration states that for a contract to be valid, there must be a benefit or detriment exchanged between the parties involved. In this case, the consideration must come from the promisee, the person to whom the promise is made. If the consideration is provided by a third party or a stranger to the contract, it is not considered valid or enforceable. Therefore, the statement that "the consideration furnished by a stranger is no consideration" is true, as it aligns with the principle of consideration under English Law.

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  • 10. 

    "Consideration is the price for which the promise of other is bought, and the promise thus given for value is enforceable." This definition is given by:

    • Salmond

    • Pollock

    • Anson

    • None

    Correct Answer
    A. Pollock
    Explanation
    Pollock is the correct answer because he is the one who provided the definition of consideration as "the price for which the promise of another is bought, and the promise thus given for value is enforceable." Salmond, Anson, and None are not associated with this specific definition of consideration.

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  • 11. 

    The term 'consideration' in legal terms is defined in:

    • Sec 2(a).

    • Sec 2(b)

    • Sec 2(c)

    • Sec 2(d)

    Correct Answer
    A. Sec 2(d)
    Explanation
    In legal terms, 'consideration' is defined in Section 2(d) of the Indian Contract Act, 1872. Consideration refers to something of value that is given by both parties to a contract, making the agreement legally binding. It can be in the form of money, an act, or a promise to do or refrain from doing something. Consideration is a crucial element in a contract because it signifies that both parties are willing to enter into the agreement for something of value.

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  • 12. 

    The forbearance to sue is regarded as:

    • Invalid Consideration.

    • No Consideration.

    • Valid Consideration.

    • None of these.

    Correct Answer
    A. Valid Consideration.
    Explanation
    The forbearance to sue is considered as valid consideration because it involves one party agreeing to refrain from taking legal action against another party. In a contract, consideration is the exchange of something of value between the parties involved. In this case, the forbearance to sue is seen as a valuable act or promise that one party is giving up, which meets the requirement of consideration. Therefore, it is considered as valid consideration.

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  • 13. 

    For the enforcement of an agreement without consideration based on natural love and affection, which of the following condition is not required?

    • It must be between near relatives.

    • It must be ratified by the Court of Law.

    • It must be in writing.

    • It must be in registered.

    Correct Answer
    A. It must be ratified by the Court of Law.
    Explanation
    In order to enforce an agreement without consideration based on natural love and affection, it must be between near relatives, it must be in writing, and it must be registered. However, it does not need to be ratified by the Court of Law.

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  • 14. 

    Compromise of disputed claims is:

    • Valid Consideration.

    • Invalid Consideration.

    • Forbidden by Law.

    • Unlawful Consideration.

    Correct Answer
    A. Valid Consideration.
    Explanation
    Compromise of disputed claims refers to a situation where parties involved in a dispute agree to settle their differences by reaching a mutual agreement. In this context, valid consideration means that there is a legal exchange of something of value between the parties involved. By compromising their disputed claims, the parties are providing valid consideration to each other, which makes it a legally binding agreement.

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  • 15. 

    As per the rule of privity of contract:

    • A stranger to a contract cannot sue

    • A stranger to consideration cannot sue

    • A stranger to a contract can sue

    • A stranger to consideration can use

    Correct Answer
    A. A stranger to a contract cannot sue
    Explanation
    The rule of privity of contract states that only parties who are directly involved in a contract can sue or be sued for any breaches or disputes related to that contract. This means that a person who is not a party to the contract, or a "stranger," does not have the legal standing to bring a lawsuit against any of the parties involved. Therefore, the correct answer is that a stranger to a contract cannot sue.

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  • 16. 

    Consideration must move at the desire of ____.

    • Promisor

    • Promisee

    • Promisor or any Third-Party

    • Both (a) and (b)

    Correct Answer
    A. Promisor
    Explanation
    In a contract, consideration refers to something of value that is exchanged between the parties involved. The promisor is the one who makes a promise or offers something in the contract, while the promisee is the one who receives the promise or accepts the offer. Therefore, consideration must move at the desire of the promisor, as they are the one initiating the promise or offer.

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  • 17. 

    A promised to obtain for B employment in the public service, and B promised to pay Rs.5 lakhs to A. In this case, the agreement is:

    • Void.

    • Voidable.

    • Valid.

    • None.

    Correct Answer
    A. Void.
    Explanation
    The agreement between A and B is void because it involves an illegal consideration. A promised to obtain employment for B in the public service, which is against the law as it involves using influence or bribery to secure a job. Therefore, the agreement is considered void and unenforceable by law.

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  • 18. 

    A promises to give his car to B provided he fetches it from the garage. The agreement between A and B is:

    • Valid

    • Voidable

    • Void

    • Illegal

    Correct Answer
    A. Void
    Explanation
    The agreement between A and B is void because it is based on an unlawful consideration. A is essentially making a promise to give his car to B in exchange for an illegal act, which is fetching the car from the garage. Contracts that involve illegal activities or consideration are considered void and unenforceable by law.

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  • 19. 

    An agreement made with free consent to which the lawful consideration is inadequate is:

    • Void

    • Valid

    • Voidable

    • Unlawful

    Correct Answer
    A. Valid
    Explanation
    An agreement made with free consent means that both parties willingly and voluntarily entered into the agreement without any coercion or undue influence. Lawful consideration refers to something of value that is exchanged between the parties as part of the agreement. In this case, the agreement is valid because it meets the requirements of free consent and lawful consideration. The adequacy of the consideration is not relevant in determining the validity of the agreement.

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  • 20. 

    A promises to give his car to B provided he fetches it from the garage. In this case, B's act of fetching the car from the garage:

    • Is valid consideration as it satisfies the requirement of the act being done at the desire of the promisor.

    • Is not a valid consideration as such an act cannot be regarded as valuable consideration.

    • Entitles him to seek the intervention of the court for enforcement of the contract.

    • Binds the promisor (A) to perform the promise by delivering the car to B.

    Correct Answer
    A. Is not a valid consideration as such an act cannot be regarded as valuable consideration.
    Explanation
    In a contract, consideration refers to something of value that is exchanged between the parties involved. In this case, B's act of fetching the car from the garage is not a valid consideration because it does not have any economic value. Consideration must have some value or benefit to the promisor, but fetching the car does not fulfill this requirement. Therefore, it cannot be regarded as valuable consideration.

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  • 21. 

    Where an act forming consideration is the performance of existing obligations between the parties, it is regarded that there is:

    • No Consideration.

    • Inadequate Consideration.

    • Past consideration.

    • None of these.

    Correct Answer
    A. No Consideration.
    Explanation
    When the performance of existing obligations between the parties forms the consideration for an act, it is considered that there is no consideration. This means that the act does not involve any new or additional obligation or benefit, but rather is based on obligations that already exist between the parties. Therefore, there is no new consideration being provided in this situation.

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  • 22. 

    A agrees to sell his car wroth Rs. 10,000. to B for Rs.20,000 only because A's consent is obtained by coercion. In this case, the agreement is:

    • Void

    • Valid

    • Voidable

    • Unlawful

    Correct Answer
    A. Voidable
    Explanation
    The agreement is voidable because A's consent was obtained by coercion. Coercion is a type of unlawful pressure or threat that forces someone to enter into an agreement against their will. In this case, A agreed to sell his car for Rs. 20,000 even though it was worth only Rs. 10,000 because of coercion. As a result, A has the option to either affirm the agreement or reject it. If A chooses to reject the agreement, it will be considered void and both parties will be released from their obligations.

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  • 23. 

    An agreement without consideration is void. This general rule is recognized under:

    • Sec 2(d)

    • Sec 10

    • Sec 25

    • None.

    Correct Answer
    A. Sec 25
    Explanation
    Section 25 of the Indian Contract Act states that an agreement without consideration is void. This means that for a contract to be valid, there must be some form of consideration, which refers to something of value exchanged between the parties involved. Without consideration, the agreement lacks the necessary element to make it legally enforceable. Therefore, the correct answer is Section 25.

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  • 24. 

    The rule of privity of contract is provided in:

    • Section 2(d).

    • Section 25.

    • Section 25, Explanation 1

    • Judicial Precedents.

    Correct Answer
    A. Judicial Precedents.
    Explanation
    The correct answer is Judicial Precedents. This means that the rule of privity of contract is not explicitly provided in any specific section of the law, but has been established through previous court decisions and rulings. Judicial precedents refer to the legal principle that previous court decisions should be followed in similar cases. In this case, the rule of privity of contract has been recognized and developed through the interpretation and application of the law by the courts over time.

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  • 25. 

    A contract of the agency made without consideration is valid. It is recognized under:

    • Section 25.

    • Section 185.

    • Section 25, Explanation 1

    • Judicial Precedents.

    Correct Answer
    A. Section 185.
    Explanation
    Under Section 185 of the Indian Contract Act, 1872, a contract of agency does not require consideration to be valid. This means that the principal-agent relationship can be established without the agent receiving any form of consideration or payment. The section recognizes the validity of agency contracts even when no consideration is exchanged between the parties. This is an exception to the general rule that consideration is required for a contract to be valid.

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  • Current Version
  • Aug 27, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Jul 03, 2011
    Quiz Created by
    Sweetsalman123
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