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Legal Aspects of Infrastructure Business I

PGDM (IM), Batch-2
Marks: 15
Date of Exam: 06/08/2016 Duration: 30 minutes

Name of the Student:

Roll No:

Note: Reading material, text book and lecture slides are not allowed.

Questions 1-7: Each question carries 01 mark.

1. A contract is:
(A) An obligation enforceable by law.
(B) A promise enforceable by law.
(C) An acceptance enforceable by law.
(D) An agreement enforceable by law.

Ans: (D) An agreement enforceable by law, s 2 (h), ICA.

2. An offer may lapse by

(A) Rejection of offer by offeree.
(B) Counter offer.
(C) Revocation.
(D) All the above.

Answer: (D) All the above.

3. Goods displayed in a shop window with a price label will normally amount to:
(A) Offer.
(B) Acceptance to offer.
(C) Invitation to treat.
(D) Counter offer.

Ans: (C) Invitation to treat.

4. An agreement which is enforceable by law at the option of one or more of the

parties thereto, but not at the option of the other or others, is a/an
(A) Voidable contract.
(B) Unenforceable contract.
(C) Void contract.
(D) Void agreement.

Ans: (A) Voidable contract.

5. X takes an insurance policy on his life making a false statement about his
health and does not disclose the fact that he has been treated for a serious
illness. In this case, which one of the following statements is correct
(A) The contract is void.
(B) The contract is voidable.
(C) The contract is valid.
(D) The contract is unlawful.

Answer: (B). The contract is voidable.

6. Two statements are given below. One is labelled as Assertion (A) and the
other is labelled as Reason (R). Examine these statements and select the
correct combination of the codes.
Assertion (A): Partial acceptance is no acceptance.
Reason (R): Acceptance must be absolute and unconditional.


(A) Both (A) and (R) are correct.

(B) Both (A) and (R) are wrong.
(C) (A) is correct, but (R) is wrong.
(D) (A) is wrong, but (R) is correct.

Answer: (A) Both (A) and (R) are correct.

7. A agrees to sell to B a specific cargo of goods supposed to be on its way

from London to Mumbai. It turns out that, before the day of the bargain, the
ship conveying the cargo had been cast away and the goods lost. Neither
party was aware of the facts. The agreement is
(A) Voidable.
(B) Valid.
(C) Unlawful.
(D) Void.

Answer: (D) void.

Questions 8-11: Each question carries 02 marks.

8. Arrange the following concepts in a sequence in which they occur, using

codes given below :
(i) Offer is communicated.
(ii) Counter offer is made.
(iii) Offer is rejected.
(iv) Counter offer is accepted.

(A) (ii), (iv), (iii), (i)
(B) (i), (iii), (ii), (iv)
(C) (i), (iv), (ii), (iii)
(D) (ii), (i), (iii), (iv).

Answer: (B) (i), (iii), (ii), (iv)

9. The principle of promissory estoppel can be applied against:

(A) Public policy.
(B) The government in its executive action.
(C) In violation of law (statutory provisions)
(D) To prevent the government from discharging its functions under the law

Ans (B) The government in its executive action.

10. By sending a letter, X offers to sell his factory to Y for Rs 20 lakh. At the
same time, Y by a letter, which crosses the above letter while in post, offers
to buy the said factory for Rs 20 lakh. In this context, which one of the
following propositions is correct?
(A) A contract is concluded when these two letters cross each other in post.
(B) A contract is concluded when the letter posted by X reaches Y.
(C) No contract is concluded.
(D) A contract is concluded only when the letter posted by Y reaches X.

Answer: (C) No contract is concluded.

11. M offers to sell his vehicle to N for Rs 10 lakh. N replies: Can I pick it up
tomorrow by any chance? M responds: If you pay by cheque, then it must
be cleared by my bank before you can drive the vehicle away; but if you pay
by cash, you can pick up the vehicle immediately if you wish. N replies: I
accept your very generous offer. Ill pay by cheque but I need to collect the
vehicle immediately. The next morning, N sends another message to M:
Okay. I can pay by cash. N turns up to pay that afternoon, but M then
refuses to sell his car to N because he has received a better offer from O.

Which one of the following statements most accurately describes the legal
position between M and N?

(A) Ns first response is a counter-offer, which destroys Ms original offer.

No contract can therefore take place.
(B) Both of Ns first two responses are requests for information and a
contract is made when Ns third response is communicated to M
accepting Ms offer.
(C) There is a contract between M and N because M has failed to
respond to Ns last message expeditiously and N has relied upon Ms
silence by turning up to pay.
(D) Ns first response is a request for information but no contract can take
place because Ns second response is a counter-offer, which destroys
Ms original offer, and this counter-offer is never accepted by M.

Ans: (D) Ns first response is no more than a request for further

information: Stevenson Jacques & Co v Maclean (1880) 5 QBD 346. Ns second
response is a counter-offer because it attempts to accept Ms offer but, at the same
time, alter its terms. (Ms original offer is supplemented by Ms subsequent
response.) A counter-offer destroys the original offer and N cannot later change his
mind and try to accept the offer: Hyde v Wrench (1840) 3 Beav 334.