Indian Contract Act, 1872: Bailment and Pledge ​

Question 1.
State with reasons whether the foLlowing statement is correct or incorrect: Placing of ornaments in a bank locker is a contract of bailment. (May 1998, 2 marks)
OR
State whether the following statement is correct or incorrect: Depositing of ornaments In a bank locker is a bailment. (May 2015, 1 mark)
Answer:
Incorrect : Placing of ornament in a bank locker is not a contract of bailment. It is simply a contract of hiring in which the bank locker is hired. The ornaments are never delivered to the bank. The lockers keys are always with the hirer in bailment under section 148 only the possession of goods are changed. The ownership of the ornament remain with the owner not with the bank is Which it is kept.

Question 2.
Distinguish between:
Gratuitous and non-gratuitous bailment. (Nov 1998, 5 marks)
Answer:
Difference between Gratuitous Bailment and Non- Gratuitous Bailment

Question 3.
State with reasons whether the following statement is correct or incorrect:-
A bailment is the delivery of goods by one person to another for some purpose. (Nov 1999, 2 marks)
Answer:
Correct: The first important feature of bailment is that the goods must be given to the bailee for whatever is the purpose of bailment. Once this done, bailment take, place irrespective of the way in which it happens. The second important feature of the bailment is that the good must be returned in reference with the direction of persons delivering them. 

Question 4.
Each subdivision carries one mark. Pick up the correct answer from the following:
Deposit of money in a Bank Amounts to ailment. (May 2007, 1 mark)
Answer:
(v) No.

Question 5.
Choose the correct answer from the following:
The delivery of goods by one person to another for some specific purpose and time is known as:
(a) Mortgage
(b) Pleiige
(c) Bailment
(d) Charge (May 2011, 1 mark)
Answer:
(c) Bailment

Question 6.
Analyse the following issues and identify whether there is a Valid Contract of Bailment:
(a) V parks his car at a Parking Lot, locks it, and keeps the keys with himself.
(b) Seizure of goods by Customs Authorities.
Answer:
Provision: A bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished be returned or otherwise disposed of according to the direction of tht person delivering them (Section 148 of the Indian Contract Act).

Present Case:
(a) There is no effective delivery as V keeps the keys with himself. Hence, no bailment.
(b) After seizure of goods Customs Authority are in the position of Bailee. Hence, here is bailment. (State of Gujarat Vs M. M. Haji Hasan).

Question 7.
Answer the following:
Who is a bailor? What are the duties of a bailor? (May 1998, 5 marks)
Answer:
A bailment is the delivery of goods by one person o another for some purpose, upon a contract that they shall, when the purpose is accomplished be returned or otherwise disposed of according to the direction of the person delivering them (Section 148 of the Indian Contract Act) The person who delivers the goods Is called bailor. For example A deposited good in a cloakroom at a railway station. The railways is liable for the goods as a bailee and A is the bailor.

Duties of Bailor:
1. Deliver the goods [Sec. 149]: The first duty of the bailor is to deliver the goods to be bailed to the bailee.

2. Disclose the defects In goods [Sec. 150]: The bailor is hounded to disclose the defects in goods to the badge of which he has knowledge.

Bailor’s liability for defect in goods:
(i) In case of Gratuitous Bailment. Bailor is liable for loss due to known but non-disclosed defect.
(ii) In case of Non-Gratuitous bailment Bailor is liable for all losses due to disclosed as well as non-disclosed defects.

3. Bear expenses [Sec. 158]:
(i) In case t Gratuitous Bailment necessary expenses (both ordinary and extraordinary) shall be borne by the bailor.
(ii) In case of Non-Gratuitous Bailment, the ordinary expenses aro to be borne by the bailee and extraordinary by the bailor.

4. IndemnIfy the Bailee:
(i) In case of Gratuitous bailment: The bailor shall indemnify the bailee in case, he terminates the bailment before due date. [Sec. 159]

(ii) In case of defective title: The hailor is fiable to ndemnity the bailee in case of loss suffered by bailee due to his defectivo title. [Sec. 164]

5. Receive the goods: The bailor is bound to receive back the goods from the bailee when the term of bailment is over.

Question 8.
Answer the following:
When does a Bailment’ come to an end? (Nov 2000, 5 marks)
Answer:
Termination of Bailment: A contract of bailment comes to an end under the following circumstances:

1. If the contract of bailment is for a fixed period the bailment comes to an end as soon as the period is over.
2. If the bailment is for some purpose, it terminates as soon as purpose is fulfilled.
3. A gratuitous bailment terminator on the death of a bailor or bailee. [Sec. 162]
4. The bailment gets terminated, if bailee does something which is inconsistent with the terms of contract. [Sec. 153]
5. In case the bailment is gratuitous, the bailor may terminate the bailment even before the specified time.

Question 9.
State with reasons whether the following statement is correct or incorrect:-
A contract of bailment becomes void, if the bailee does any act with regard to the goods bailed, which is inconsistent with the conditions of bailment. (Nov 2001, 2 marks)
Answer:
Incorrect: If the bailee does any act with regard to the goods bailed, Inconsistent with the condition of bailm9nt the contract of bailment becomes voidable at the consent of the bailor (Section 153 0f the Indian Contract Act) Thus, when an option is given to the bailor, the contract of bailment is not said to be void. It becomes voidable.

Question 10.
A hires a carriage of B and agrees to pay ₹ 500 as hire charges. The carriage is unsafe, though s unaware of it. A is injured and claims compensation for injuries suffered by him. B refuses to pay. Discuss the liability of B. (May 2005, 4 marks)
Answer:
Provision:
The problem asked in the question is based on Section 150, of the Indian Contract Act, 1872. According to this Section. if the goods are bailed for hire, the bad or is responsible for damages, whether he was or was not aware of the existence of such types of faults in the goods, bailed.

Present Case: Hence, by applying the above provision in the case stated above, B is liable to compensate A for the injuries suffered even if he has no knowledge of the defect in the carriage.

Question 11.
Amar baited 50 kg of high-quality sugar to Srijith, who owned a kirana shop, promising to give 200 at the time of taking back the bailed goods. Srijith’s employee, unaware of this, mixed the 50 kg of sugar belonging to Amar with the sujar in the shop and packaged it for sale when Srijith was away. This came to light only when Amar came asking for the sugar he had bailed with srijith, as the price of the specific quality of sugar had trebled. What is the remedy available to Amar? (Nov 2018, 3 marks)
Answer:
Provision:
As per Sec. 157 of the Indian Contract Act, 1872, If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, in such a manner that it Is impossible to separate the goods bailed from the other goods and deliver them back, the bailor is entitled to be compensated by bailee for he loss of goods.

Present Case:
In this case, high-quality Sugar has been mixed by Srijitli’s employees and it is not possible to separate from own goods. So as per above provisions, Amar is entitled to recover the loss of goods by way of compensation In money from Srijith.

Question 12.
A, a watch-repairer, repaired B’s watch for a total charge of ₹ 20. Before B took delivery of the watch, the shop caught fire through no fault of A, and B’s watch was destroyed.
Answer:
Provision:
As per Sec. 151, in all cases of bailment, the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods.

As per Sec. 152. the balee in the absence of any special contract, is not responsible for loss, destruction or deterioration of the things bailed if he has taken the amount of care of it.

Also as a rule, if, through no fault of the Bailee, the goods are destroyed or stolen, then the Bailee is entitled to be paid for services performed on the goods before they were destroyed or stolen.

Present Case:
In the given case A’ is entitled to get his repair charges for the work he has rendered before the shop caught fire.

Question 13.
Answer the following:
What are the rights of a bailee? (Nov 1998, 5 marks)
Answer:
1. Right of a bailee:
Enforcement of right: The bailee can, by suit, enforce the duties of the bailor.

2. according to (Section 165): If several joint owners of goods bail them, the bailee may deliver them back to, or according to direction of, one joint owner, without the consent of all, in the absence of any agreement to the contrary.

3. RIght to compensation (Section 166): If the bailor has no title to the goods and the bailee in goods faith delivers them as per the direction of the bailor, the bailee will not be liable for such delivery.

4. Right of Third person, claiming good balled (Section 167): If the person other than the bailor, claim the goods ‘ailed, the bailee has the right to apply to the court for stopping the delivery of goods to the bailor and to decide title to the goods.

5. Right of lien: Right of lien is also enjoyed by the bailee.

6. Right to sue: A bailee can sue the person who has wrongfully deprived him of the use or possession of the goods bailed.

Question 14.
State with reasons whether the following statement is correct or incorrect:-
A bailee need not return accretion to the goods to the bailor on the completion of the Contract of Bailment. (Nov 2000, 2 marks)
Answer:
Incorrect: It is the responsibility of the bailee to deliver to the bailor any accretion or profit accruing for the goods bailed.

Question 15.
Descriptive
Write brief answers the following:
(b) Duties of a bailee. (Nov 2001, 5 marks)
Answer:
Duties of a Bailee:

1. To take care of the goods baited (Sec. 151) (care means care taken by man of ordinary prudence under similar circumstances as he would take care of his own goods).
2. To compensate for the loss due to his negligence (Sec. 152).
3. Not to act against the terms of contract [Sec. 153].
4. Not to make any unauthorized use of goods.
5. Not to mix the goods bailed with his own goods.
6. To return any extra profit accruing from goods bailed.

Question 16.
Sunil delivered his car to Mahesh for repairs. Mahesh Completed the work, but did not return the car to Sunil within reasonable time, though Sunil repeatedly reminded Mahesh for the return of car. In the meantime a big fire occurred in the neighborhood and the car was destroyed. Decide whether Mahesh can be held liable under the provisions of the Indian Contract Act, 1872. (Nov 2003, 6 marks)
Answer:
Provision:
The question asked above is based on the provisions of Sections 160 and 161 of the Indian Contract Act, 1872. As per Sec. 160, it is the duly of the bailee to return or deliver the goods bailed according to the bailor’s direction, without demand as soon as the time for which they were bailed has expired. If the bailee fails to do so, he is responsible to the bailor for the loss or destruction of the goods for that time (Sec. 161).

Present Case:
Thus, by utilizing the above provisions in the given case. Mahesh is liable for the loss, although he was not negligent but because of his failure to deliver the car within a reasonable time (Shaw & Co. V. Symmons & Sons.)

Question 17.
What is the liability of a bailee making unauthorized use of goods bailed? (May 2019, 2 marks)
Answer:
As per Section 154 of the Indian Contract Act, 1881, if the bailee makes any use of the goods bailed, which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for Eny damage arising to the goods from or during such use of them.

Question 18.
Explain briefly the following:
The duties and liabilities of a tinder of goods are treated at par with bailee. (Nov 1999,5 marks)
Answer:
The duties and liabilities of the finder of goods are treated at par with bailee. According to Section 71 of the Indian Contract Act, 1872, a person who finds goods belon1g to another and takes them into his custody, is subject to same responsibility as a balee. He is forced to take as much care of the goods as a man of normal produce would do under similar circumstances, take of his own goods of the same qualifty, quantity and value.

He must also take all the necessary steps in finding Out its true owner. if he does not finds out the true owner and converts the property, then he will be guilty of wrongful conversion. The goods will remain with the Tinder till the true owner is found out. In the following circumstances, he can sell the goods or the Right of the finder of goods:
(i) Where the owner is not trace with reasonable diligence.
(ii) Where the owner is traced and he refuses to pay the lawful charges to the finder.
(iii) If the lawful charged amount to two-thirds value of the thing.
(iv) If the thing is in danger of perishing or loosing greater part of the value.

Question 19.
What are the rights available to the finder of lost goods under Section 168 and Section 169 of the Indian Contract Act, 1872? (Nov 2018, 3 marks)
Answer:
The finding is not keeping. The finder must make reasonable efforts to locate the real owner and may also spend reasonable money In taking care of the goods found. However, he earns certain rights also as against the goods found as well as the owner of those goods. His rights are:
1. He has a right of lien over the goods for his expenses. But he has no right to sue the owner for any such compensation (Section 168).
2. He can sue for any specific reward, which the owner has offered for the return of goods [Section 168]
3. He can however sell the goods under the following circumstances

• If the owner cannot with reasonable diligence be found;
• If found, he refuses to pay the lawful charges of the finder;
• If the goods are in the danger of perishing or of losing the greater part of their value;
• If the lawful charges of the finder, in respect of the goods found, amount to more than two-thirds of their value [Section 169].

Question 20.
Distinguish between:
Bailee’s Particular lien and General lien. (May 1998, May 2001, 5 marks each)
Answer:
Difference between Ballees Particular and General Lien

Question 21.
State with reasons whether the following statement is correct or incorrect: Bailee can retain the goods bailed until he has been paid lawful charges. (May 2000, 2 marks)
Answer:
Correct: According to Section 170. of Indian Contract Act, 1872, if bailee has used labour or skill in respect of goods bailed he becomes liable to receive remuneration in the absence of a contract to the contrary. If the bailor is unwilling to pay for the services, the bailee posses the right to retain the goods bailed until he receives his remuneration. This is called particular lien of the bailee.

Question 22.
Briefly answer the following:
Who can exercise the right of General lien? (Nov 2001, 5 marks)
Answer:
General lien may be exercised by the following persons:
1. Banker: A banker can exercise the general lien on all goods and securities deposited with him in his capacity as a banker.

2. Attorney of High Court: An attorney is a person who acts legally for another i.e. a solicitor. He can use his powers on all paper and documents of his client until his professional fee and other costs incurred by him are paid.

3. Wharfinger: A wharfinger can exercise general lien as the goods bailed to him till his wharfarage charged are paid.

4. Policy broker: General lien can be excised by the policy broker for any balance on any insurance amount due to him from the person who employed him to effect the insurance policy.

5. Factor: An agent hired with the possession of goods for the purpose of selling on behalf of his principal is a factor. General lien can be exercised on the goods of his principal for his balance of account against the principal.

Question 23.
Radheshyam borrowed a sum of ₹ 50,000 from a Bank on the security of gold on 1.07.2019 under an agreement which contains a clause that the bank shall have a right of particular lien on the gold pledged with it. Radheshyam thereafter took an unsecured loan of ₹ 20,000 from the same bank on 1.08.2019 for three months. On 30.09.2019 he repaid entire secured loan of ₹ 50,000 and requested the bank to release the gold pledged with it. The Bank decided to continue the lien on the gold until the unsecured loan is fully repaid by Radheshyam. Decide whether the decision of the Bank is valid within the provisions of the Indian Contract Act, 1872? (Jan 2021, 4 marks)

Question 24.
Briefly answer the following:
Pledge is a specie of a contract of bailment. (May 2001, 5 marks)
Answer:
Pledge is a type of bailment. It is a transfer of goods as a security for a payment of a debt or performance of promise. A contract by which the possession of goods is transferred as security is called to pledge. The balior, in this case, is called the ‘pledge or ‘pawnor and the bailee is called the ‘pledge’ or ‘pawnee’.

The essential element of pledge according to Section 172 are:
1. Delivery of goods: To constitute a pledge, delivery of goods to a pledge is important. The delivery to the pawnee may be actual or constructive. A pledge involves a transfer of possession of goods pledged and not of title. The ownership remains with the pawnor.

2. The delivery of goods should be: There must be a valid consideration in the contract of pledge. The pawnor must give some property of goods by way of security for securing a low from the pawnee.

3. Purpose of pledge is security for payment of debt: A pledge is made to secure debts and obligations by delivery of some security. Debts may be present, past or future The pawnee becomes secured creditor in respect of such goods.

Question 25.
Each subdivision carries one mark. Pick up the correct answer from the following:
The Delivery of goods by one person to another as security for the payment of a debt is called
(a) Bailment
(b) Pledge
(d) Mortgage
(e) Hypothecation. (May 2007, 1 mark)
Answer:
(ii) Pledge

Question 26.
State with reasons whether the following statements are correct or incorrect:
A pledge of documents of title to goods by a mercantile agent is a valid pledge. (May 2008, 1 mark)
Answer:
Correct: As per Sec. 178 of the Indian Contract Act, 1872, a pledge by mercantile agent will be valid il the agent is in possession of goods or documents of title to the goods and it such possession is with the opinion of the owner.

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Question 27.A, the bailor, pledges cinema projector and other accessories with Cine Association Co-operative Bank Limited, the bailee, for loan. A requests the bank to allow the pledged goods to remain in his possession and promises to hold the same in trust for the bailee and also further promises to hand over the possession of the same to the bank whenever demanded. Examining the provisions of Indian Contract Act, 1872 decide, whether a valid contract of pledge has been made between A, the bailor and Bank, the bailee? (May 2009, 5 marks)

OR
Ram, the bailor, pledges a cinema projector and other accessories with Movie Association Co-operative Bank Limited, the bailee, for a loan. Ram requests the bank to allow the pledged goods to remain in his possession and promises t hold the same in trust for the bailee and also further promises to hand over the possession of the same to the bank whenever demanded. Examining the provisions of the Indian Contract Act, 1872 decide, whether a valid contract of pledge has been made between Ram, the bailor, and Bank, the bailee? (May 2017, 4 marks)
Answer:
Provision:
Contract of Pledge between Bailor and Bailee.
The problem is based on the provisions as contained ¡n Sec. 149 of Indian Contract Act, 1872. As per this section, the modes of delivery of goods are as follows:
(i) Actual
(ii) Symbolic
(iii) Constructive
Constructive delivery means doing of any act which has the effect of putting the goods in the possession of a person who agrees to hold them as a bailee for some other person although transfer of possession of goods does not actually take place.

Present Case:
In the given problem, delivery is made by attornment to the bailee (bank) while goods remain in custody of A shows that the delivery is constructive. The transaction was therefore a valid pledge.

Question 28.
State with reasons whether the following statements are correct or incorrect:
If the pawnor makes a default in the payment of debt, or performance of duty, as agreed, the pawnee has a right to sell the thing pledged for which no reasonable notice of the sale is required. (Nov 2009, 1 mark)
Answer:
Incorrect: As per Sec. 176 of the Indian Contract Act, 1872 lIthe pawnor makes any default in payment of the debt or performance of duty as agreed, the pawnee has a right to sell the thing pledged on giving the pawnor reasonable notice of the sale. A sale made by the pawnee without giving a reasonable notice will be void.

Question 29.
Whether a Pawnee has a right to retain the goods pledged. (Nov 2019, 2 marks)
Answer:
As per Sec. 173 of the Indian Contract Act, 1872, the Pawnee may retain the good pledged, not only for the payment of the debt or performances of the promise, but for the interest, of the debt, and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged. As per Section 174 Pawnee has a right to retain goods pledged towards subsequent advances as well, however subject to such right being specifically contemplated in the contract.

Question 30.
Srushti acquired valuable diamond at a very low price by a voidable contract under the provisions of the Indian Contract Act, 1872. The voidable contract was not rescinded. Srushti pledged the diamond with Mr. VK. Is this a valid pledge under the Indian Contract Act, 1872? (Nov 2019,2 Marks)
Answer:
As per Section 178 A of the Indian Contract Act, 1872, when the Pawnor has obtained possession of the goods pledged by him under a contract voidable under Section 19 or Section 19A. but the contract has not been rescinded at the time of the pledge, the Pawnee acquires a good title to the goods. provided he acts in good faith and without notice of the Pawnor’s defect of title.

Present Case:
In this case, Srushti acquired valuable diamond at a very low price by a voidable contract under the provisions of the Indian Contract Act, 1872. The voidable contract was not rescinded. Srushti pledged the diamond with Mr. VK. As per above provision, this is a valid pledge if Mr. VK acted in good faith and without notice of Srushti’s defect of title.

Question 31.
Mr. Avinash wanted a loan for expanding his business, from ABC Bank. Mr. Avinash has pledged the stock of his business to obtain the loan from bank. However, the expansion of business did not reap the desired results and Mr. Avinash was not able to repay the loan. Now. ABC bank wants to retain the stock for adjustment of their loan. Advise, ABC Bank whether they can retain the stock for the adjustment of their loan and also for payment o interest. Give your answer as per the provisions of the Contract Act, 1872.
Answer:
According to Section 173 of the Indian Contract Act, 1872, the pawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise, but for the interest, of the debt, and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged. Hence, ABC Bank can retain the stock of business of Mr. Avinash, not only for adjustment of the loan but also for payment of interest.

Question 32.
Distinguish between:
Bailment and Pledge. (Nov 2000, 5 marks)
OR
State the essential elements of a contract of bailment. Distinguish between the ‘contract of bailment’ and ‘contract of pledge’. (Nov 2012, 8 marks)
OR
Give four differences between Bailment and Pledge. (May 2018, 4 marks)
Answer:
Difference between Contract Bailment and Pledge

Multiple Choice Question

Question 1.
Bad moni involves
(a) change of custody
(b) change of possession
(c) change of custody and possession both
(d) neither change to custody nor possession.
Answer:
(b) change of possession

Question 2.
Bailment means
(a) the goods is delivered by one person to another for some purpose to be specifically returned or otherwise disposed of as per the order of bailor
(b) the goods delivered to be returned by way of an equivalent in money
(c) the goods delivered to be returned by way of an equivalent in other commodities
(d) all the above.
Answer:
(a) the goods is delivered by one person to another for some purpose to be specifically returned or otherwise disposed of as per the order of bailor

Question 3.
‘Bailee’ is a person
(a) who delivers the goods
(b) to whom the goods are delivered
(c) through whom the goods are delivered
(d) any of the above depending on the circumstances.
Answer:
(b) to whom the goods are delivered

Question 4.
‘Bailor’ is a person
(a) who delivers the goods
(b) to whom the goods are delivered
(c) through whom the goods are delivered
(d) who carries the goods.
Answer:
(a) who delivers the goods

Question 5.
………………………. is the delivery of goods, by one person to another, for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of, according to the instructions of the person delivering them.
(a) Indemnity
(b) Bailment
(c) Guarantee
(d) Sale
Answer:
(b) Bailment

Question 6.
In contract of bailment, person who delivers the goods is called as …………………… .
(a) Bailee
(b) Bailor
(c) Pledger
(d) Pledgee
Answer:
(b) Bailor

Question 7.
In contract of bailment, the person to whom the goods are delivered is called as …………….. …………………. .
(a) Bailee
(b) Bailor
(c) (a) or (b)
(d) All of the above
Answer:
(a) Bailee

Question 8.
The contract of bailment may be …………………. .
(a) Express
(b) Implied
(c) Deemed
(d) (a) or (b)
Answer:
(d) (a) or (b)

Question 9.
In contract of bailment, there is transfer of in goods ………………… .
(a) Ownership
(b) Possession
(c) Deemed ownership
(d) None of above
Answer:
(b) Possession

Question 1o.
In contract of bailment, delivery may be
(a) Actual
(b) Constructive
(c) (a) or (b)
(d) None of above
Answer:
(c) (a) or (b)

Question 11.
In contract of bailment ………………… is made by physically handing over the goods.
(a) Constructive delivery
(b) Actual delivery
(c) Symbolic delivery
(d) Deemed delivery
Answer:
(b) Actual delivery

Question 12.
If no consideration passes from bailor to bailee it is known as …………………. .
(a) Gratuitous bailment
(b) Non-gratuitous bailment
(c) Deemed bailment
(d) Actual bailment
Answer:
(a) Gratuitous bailment

Question 13.
If some consideration passes from bailor to bailee it is known as
(a) Gratuitous bailment
(b) Non-gratuitous bailment
(c) Deemed bailment
(d) Actual bailment
Answer:
(b) Non-gratuitous bailment

Question 14.
………………. is one in which neither the bailor nor the bailee is entitled to any remuneration.
(a) Gratuitous bailment
(b) Non-gratuitous bailment
(c) Deemed bailment
(d) Actual bailment
Answer:
(a) Gratuitous bailme

Question 15.
Duties of bailor are …………………… .
(a) In case of gratuitous bailment – to disclose known faults to bailee.
(b) In case of non-gratuitous bailment – liable for damages whether or not he was aware of the existence of faults.
(c) To indemnity bailee for ‘oss when bailor’s title is defective
(d) All of above
Answer:
(d) All of above

Question 16.
Duties of bailor are …………………….. .
(a) To receive back goods on termination of bailment.
(b) In case of gratuitous bailment – not to disclose known fault to bailee.
(c) In case of non-gratuitous bailment – no liability for damages whether or not he was aware of the existence fo faults.
(d) All of above
Answer:
(d) All of above

Question 17.
Duties of bailor are …………………… .
(a) In case of gratuitous bailment – bailor shall repay all necessary expenses incurred by bailee for the purpose of bailment.
(b) In case of non gratuitous bailment – bailor is liable only extra ordinary expenses.
(c) in case of gratuitous bailment – to disclose known faults to bailee.
(d) All of above
Answer:
(a) In case of gratuitous bailment – bailor shall repay all necessary expenses incurred by bailee for the purpose of bailment.

Question 18.
A hires a carriage of B. The carnage is unsafe though B does not know this. A is injured. Is B is liable to A for the injury?
(a) Yes. B is liable to A for the injury.
(b) No, B is not liable to A for the injury.
(c) Partly yes
(d) None of above
Answer:
(a) Yes. B is liable to A for the injury.

Question 19.
If the bailee does any act inconsistent with the conditions of bailment, with regard to goods
(a) the contract becomes void
(b) the contract becomes voidable at the option of the bailee
(c) the contract becomes voidable at the option of the bailor
(d) the contract r’mains valid.
Answer:
(c) the contract becomes voidable at the option of the bailor

Question 20.
If the bailee mixes the goods of the bailor with his own goods, without the consent of the baiior
(a) the bailoe is liable to bear the expenses of separation of goods & damages arising therefrom, if tne goods can be separated or divided
(b) the bailee is Iable to compensate the bailor for the loss of goods, if the goods can not be separated
(c) both (a) & (b)
(d) neither (a) nor (b)
Answer:
(c) both (a) & (b)

Question 21.
In case of a gratuitous bailment, the bailee is
(a) entitled to necessary expenses incurred by him for the purpose of bailment
(b) not entitled to any expenses
(c) entitled to necessary expenses and additional charges
(d) either (b) or (c).
Answer:
(c) entitled to necessary expenses and additional charges

Question 22.
Where the bailee, mixes the goods, bailed with his own goods, with the bailor’s consent, both of them shall have interest in …………………. .
(a) Proportion to their shares in the mixture produced
(b) Proportion to 40:60 in the mixture produced
(c) Proportion to 60:40 in the mixture produced
(d) None of above
Answer:
(a) Proportion to their shares in the mixture produced

Question 23.
Where the bailee, mixes the goods bailed with his own goods, without the bailor’s consent, …………………… bound to bear the expenses of separation or division, and also of any damage aflsing from the mixture.
(a) Bailor
(b) Bailee
(c) Third person
(d) Person separating the mixture
Answer:
(b) Bailee

Question 24.
The bailee must take as much care of the goods bailed to him as a would take under similar circumstances of his own goods of the same bulk, quality and value as the goods bailed
(a) Man of extra-ordinary prudence
(b) Man of ordinary prudence
(c) Man of ordinary economics condition
(d) None of above
Answer:
(b) Man of ordinary prudence

Question 25.
The bailee is under a duty not to use the goods in an unauthorised manner or for unauthorised purpose.
(a) True
(b) False
(c) Partly true
(d) None of above
Answer:
(a) True

Question 26.
The bailee uses the goods in an unauthorised manner or for unauthorised purpose, the bailor can ……………….. .
(a) Terminate the bailment
(b) Claim damages for any loss
(c) (a) & (b)
(d) None of above
Answer:
(c) (a) & (b)

Question 27.
A lends his car to B for a drive by him only. B allows C, an expert driver, to drive the car. C drives the car with care but hits with an electronic pole. The car is damaged. A file Suits against B claiming damages. Will he succeed?
(a) Yes. B is liable for the damage A’s car.
(b) No. B is not liable for the damage to A’s car.
(c) Yes. C is a liable for the damage to A’s car.
(d) None of above
Answer:
(a) Yes. B is liable for the damage A’s car.

Question 28.
A hires a car in Delhi from B for going to Varanasi. A drives with care but meets with an accident while going to Haridwar. Advise B.
(a) Yes. A is liable for the damage B is car.
(b) No. A is not liable for the damage to Bs car.
(c) A should pay extra charges for going to Haridwar.
(d) None of above
Answer:
(a) Yes. A is liable for the damage B is car.

Question 29.
Bailee must not set up to the goods
(a) Perfect title
(b) An adverse title
(c) Defective title
(d) Deemed title
Answer:
(b) An adverse title

Question 30.
It is the duty of the bailee to return the goods without demand …………… .
(a) On the expiry of the time fixed
(b) When the purpose is accomplished
(c) (a) or (b)
(d) All of the above
Answer:
(c) (a) or (b)

Question 31.
Bailee is bound to take care of goods
(a) as an expert
(b) as a layman
(c) as a man of ordinary prudence
(d) both (b) & (c)
Answer:
(c) as a man of ordinary prudence

Question 32.
The liability of bailee, as regards the goods is equivalent to that of
(a) of a common carrier
(b) an innkeeper
(c) both of common carrier and in keeper.
(d) neither of common carrier nor innkeeper.
Answer:
(c) both of common carrier and in keeper.

Question 33.
An agreement by a bailee purportive to exempt him wholly from liability for negligence is
(a) valid
(b) invalid
(c) avoidable
(d) void.
Answer:
(d) void.

Question 34.
After the expiry of time or accomplishment of purpose of bailment
(a) the bailee is to return the goods without demand
(b) the bailee is to return the goods only on demand
(c) the bailee is to pay the money equivalent
(d) the bailee is to pay the equivalent in other commodity.
Answer:
(a) the bailee is to return the goods without demand

Question 35.
In case of bailment by joint owners
(a) the bailee has to deliver the goods to all the joint owners.
(b) the bailee has to deliver the goods to any one of the joint owners with the consent of other joint owners
(c) the bailee can deliver the goods to one of the joint owners even without the consent of other joint owners
(d) ether (a) or (c).
Answer:
(c) the bailee can deliver the goods to one of the joint owners even without the consent of other joint owners

Question 36.
If Bailee fails to return the goods, he shall be liable for any ………………….. of the goods even without negligence on his part.
(a) Loss
(b) Destruction
(c) Deterioration
(d) Loss, destruction of deterioration
Answer:
(d) Loss, destruction of deterioration

Question 37.
In the absence of any contract to the contrary, the bailee is not required to return to the bailor any increase, or profits which may have accrued from the goods bailed.
(a) False
(b) True
(c) Partly true
(d) None of above
Answer:
(a) False

Question 38.
If Ram leaves a cow in the custody of Shyam be taken care of and the cow gets a calf, Shyam is bound is deliver ………………. to Ram
(a) The cow
(b) The calf
(c) The cow as well as the calf
(d) Nothing
Answer:
(c) The cow as well as the calf

Question 39.
………………………. is a right to retain the property of another for a general balance of accounts.
(a) Particular lien
(b) General lien
(c) Deemed lien
(d) Tangible lien
Answer:
(b) General lien

Question 40.
………………….. is a right to retain those goods in respect of which bailee have rendered some service involving the exercise of labour or skill.
(a) Particular lien
(b) General lien
(c) Deemed lien
(d) Tangible lien
Answer:
(a) Particular lien

Question 41.
Right of general lien can be exercised by …………………… .
(a) Bankers
(b) Factor
(c) Wharfingers
(d) All of above
Answer:
(d) All of above

Question 42.
Right of general lien can be exercised by ……………………. .
(a) Attorneys of High Court
(b) Policy brokers.
(c) Bankers
(d) All of above
Answer:
(d) All of above

Question 43.
A finder of goods is
(a) entitled to daim compensation
(b) entitled to retain the goods
(c) Not entitled to claim compensation and thus not entitled to retain the goods
(d) Both (a) & (b)
Answer:
(d) Both (a) & (b)

Question 44.
A finder of goods is
(a) entitled to the specific reward offered by the owner for the return of goods
(b) can retain the goods so long as the specific reward is not givel by the owner
(c) both (a) and (b)
(d) either (a) or (b).
Answer:
(c) both (a) and (b)

Question 45.
The position of a finder of lost goods is exactly that of a …………………. .
(a) Bailee
(b) Surety
(c) Consignee
(d) Consignor
Answer:
(a) Bailee

Question 46.
Responsibility of finder of goods …………………….. .
(a) He need not to take care of goods as man of ordinary prudence.
(b) He must not to appropriate goods for his own use.
(c) He can mix the goods with his own goods.
(d) All of above
Answer:
(b) He must not to appropriate goods for his own use.

Question 47.
Responsibility of finder of goods ………………………. .
(a) He must try to find out true owner and to restore goods to the owner when the owner is traced.
(b) He must not to appropriate goods for his own use.
(c) He must not mix the goods with his own goods.
(d) All of above.
Answer:
(d) All of above.

Question 48.
Rights of finder of goods: ……………………… .
(a) He has a right to retain the goods until he receives compensation for trouble and expenses incurred in preserving the goods and finding out the owner.
(b) He cannot sue the owner for payment of any specific reward offered by the owner.
(c) He cannot sell the goods founds at all.
(d) All of above.
Answer:
(a) He has a right to retain the goods until he receives compensation for trouble and expenses incurred in preserving the goods and finding out the owner.

Question 49.
Finder of goods can sell the goods found, if ………………………………. .
(a) Owner cannot be found with reasonable diligence
(b) Owner, it found, does not pay the lawful expenses ………………….. ?
(c) Both (a) & (b)
(d) None of the above
Answer:
(c) Both (a) & (b)

Question 50.
Finder of goods can sell the goods found, ¡f the lawful charges of finder, amount to …………………. of the value of goods
(a) 2/3rd
(b) 1/3rd
(c) 1/4th
(d) 2/5th
Answer:
(a) 2/3rd

Question 51.
Ravi touna a purse in a computer education centre. He deposited the purse with proprietor of the centre so that the real owner can claim. However, no one claimed the purse. Ravi wants the purse back. Can he succeed?
(a) Yes
(b) No
(c) Partly yes
(d) None of above.
Answer:
(a) Yes

Question 52.
Pledge under Section 172 of Indian Contract Act has been defined as
(a) a licence to take possession of goods
(b) an agreement to give possession of goods
(c) bailment of goods as a security for payment performance of a promise
(d) both (a) & (b).
Answer:
(c) bailment of goods as a security for payment performance of a promise

Question 53.
For the purpose of pledge, delivery of possession of goods
(a) has to be actual
(b) may be constructive
(c) either actual or constructive
(d) may be symbolic.
Answer:
(c) either actual or constructive

Question 54.
In a pledge, the general property or ownership in goods’
(a) continues in pledgor.
(b) transferred to the pledgee
(c) can not be transferred to the pledgee
(d) either (a) or (b)
Answer:
(c) can not be transferred to the pledgee

Question 55.
A pawnee, in the event of default in payment of debt by the pawner, has a right
(a) to retain the goods pledged as collateral security
(b) to sue the pawner
(c) to sell the goods pledged
(d) all of above
Answer:
(d) all of above

Question 56.
The pawnee has a right to retain the goods pledged
(a) for payment of debt interest & all necessary expenses in respect of goods pledged
(b) for payment of debt other than the debt in respect of goods pledged
(c) for payment of interest & necessary expenses in respect of goods other than the one-pledged
(d) all the above
Answer:
(a) for payment of debt interest & all necessary expenses in respect of goods pledged

Question 57.
The pawnee has no right to retain the goods
(a) for payment of necessary expenses in respect of goods pledged
(b) for payrient of extraordinary expenses incurred in the preservation of goods
(c) for payment of debt or interest in respect of goods pledged
(d) none of the above.
Answer:
(d) none of the above.

Question 58.
If the pawner makes a default in payment of debt, at the stipulated time
(a) the pawnee has a right to sell the goods pledged without notice to the pawner
(b) the pawriee has a right to sell the goods pledged after giving a reasonable notice of sale to the pawner
(c) has no right to sell the goods pledged but has a right to retain the goods as collateral security for the debt
(d) neither has a right to sell the goods nor retain the goods as collateral security but has a right to sue for pawner upon the debt.
Answer:
(b) the pawnee has a right to sell the goods pledged after giving a reasonable notice of sale to the pawner

Question 59.
Goods may be pledged
(a) by the owner of goods
(b) by the co-owner in possession
(c) by the person who is let; with the goods for some special purpose
(d) all the above.
Answer:
(d) all the above.

Question 60.
Which of the following is correct
(a) pledge made by a mercantile agent is valid
(b) pledge made by a person in possession under voidable contract is valid
(c) pledge by a person having a limited interest is valid to the extent of that interest
(d) all the above
Answer:
(d) all the above

Question 61.
Pledge s a bailment of goods as security for payment of a
(a) Debt
(b) Performance of a promise
(c) (a) or (b)
(d) None of above
Answer:
(c) (a) or (b)

Question 62.
A pledge is bailment for security.
(a) False
(b) True
(c) Partly true
(d) None of above
Answer:
(b) True

Question 63.
Person who pledges the goods is known as ………………….. .
(a) Pledger
(b) Pawnor
(c) (a) or (b)
(d) Bailor
Answer:
(c) (a) or (b)

Question 64.
Person to whom goods are pledged is known as …………………….. .
(a) Pledgee
(b) Pawnee
(c) (a) or (b)
(d) Bailee
Answer:
(c) (a) or (b)

Question 65.
The essential ingredients of a pledge ………………………… .
(a) The property pledged should be delivered to the Pawnee
(b) Delivery should be in pursuance of a contract.
(c) Delivery should be for the purpose of security.
(d) All of above
Answer:
(d) All of above

Question 66.
Pawnee may retain the goods pledged for ……………………… .
(a) Payment of the debt or the performance of promise
(b) Interest due on the debt
(c) All necessary expenses incurred by him with respect to possession or for preservation of goods pledged.
(d) All of above.
Answer:
(d) All of above.

Question 67.
Whore the Pawnee incurs necessary expenses to preserve the goods pledged with him, he is not entitled to receive such amount from the Pawnor…………… .
(a) False
(b) True
(c) Partly true
(d) None of above
Answer:
(a) False

Question 68.
Pawnec may be retain the goods pledged as collateral security, or sell the goods pledged by giving a reasonable notice to the pawnor.,
(a) False
(b) True
(c) Partly true
(d) None of above
Answer:
(b) True

Question 69.
When there is a surplus on sale after due notice to the pawnor, the pawnee shall pay the excess to the pawnor. In case of deficit, pawnor shall be liable for the balance amount.
(a) False
(b) True
(c) Partly true
(d) None of above
Answer:
(a) False

Question 70.
Where the pawnee does not give a reasonable notice ¡o the pawnor, the sale is valid, but pawnee is liable to pay damages to pawnor.
(a) True
(b) False
(c) Partly true
(d) None of above
Answer:
(a) True

Question 71.
The general rule is that only owner can create valid pledge. However, even non-owner can create a valid pledge
(a) A mercantile agent who is in possession of goods or ot document of title to goods. with the consent of owner
(b) When the pawnor has obtained possession of goods under a voidable contract by way of fraud. coercion, etc.
(c) co-owner is in possession of goods with the consent of other co-owner.
(d) All of above
Answer:
(d) All of above