Special contracts: indemnity, guarantee, bailment, pledge, agency - One Line Questions

1. What is an agency relationship? — The relationship where one person (the agent) is authorized to act on behalf of another person (the principal) in dealing with third parties.
2. In an agency, the person who is represented is called the: — Principal
3. In a contract of bailment, the person who delivers the goods is called the: — Bailor
4. What is the main difference between bailment and pledge? — Pledge is for security of a debt, while bailment is for any purpose.
5. The person to whom the goods are delivered in a bailment is known as the: — Bailee
6. The rights of a finder of goods are similar to those of a: — Bailee
7. If goods bailed are returned in a damaged condition due to the bailee's negligence, the bailor has the right to: — Claim compensation for the damage.
8. Which of the following is NOT a necessary element of a valid contract of guarantee? — The guarantee must be in writing.
9. A person who finds goods belonging to another and takes them into his custody is known as a: — Finder of goods
10. If the pledgor defaults in payment, the pledgee can sell the pledged goods after: — Giving reasonable notice to the pledgor.
11. In a contract of guarantee, when does the liability of the surety arise? — Only upon the default of the principal debtor.
12. In a contract of indemnity, the party who promises to save the other from loss is called the: — Indemnifier
13. What is the primary characteristic of a contract of indemnity? — It is a contingent contract where one party promises to save the other from loss.
14. In the case of indemnity, the indemnified party can sue for damages: — Even before paying the third party, if liability has accrued.
15. How can an agency be created? — By express or implied agreement, ratification, or necessity.
16. Under Section 125 of the Indian Contract Act, 1872, the indemnified person can recover from the indemnifier the costs which he may be compelled to pay concerning any suit. — If he acted as authorized by the indemnifier, or in the absence of the indemnifier, acted prudently.
17. An agent is bound to render proper accounts to his principal. — At reasonable intervals, or when required by the principal.
18. Which of the following is a form of termination of agency? — All of the above.
19. In a contract of pledge, the owner of the goods who delivers them as security is called the: — Pledgor
20. The person who receives the goods as security in a pledge is known as the: — Pledgee
21. The person who acts on behalf of another in an agency is known as the: — Agent
22. In a contract of guarantee, the person who gives the guarantee is known as the: — Surety
23. The person for whom the guarantee is given is called the: — Principal Debtor
24. The liability of the principal for the acts of the agent is based on the principle: — Respondeat superior
25. The liability of the principal debtor is primary, whereas the liability of the surety is: — Secondary and absolute
26. Which section of the Indian Contract Act, 1872 deals with the definition of a contract of indemnity? — Section 124
27. A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default. This is stated in which section of the Indian Contract Act, 1872? — Section 126
28. A contract of bailment is defined under which section of the Indian Contract Act, 1872? — Section 148
29. The relationship of agency is created by which section of the Indian Contract Act, 1872? — Section 182
30. A pledge created by a mercantile agent in possession of goods with the owner's consent is valid even if the agent exceeds his authority, provided the pledgee acts in good faith. This is an exception to the rule of 'nemo dat quod non habet' and is covered under: — The Sale of Goods Act, 1930
31. Which of the following types of indemnity is recognized by Indian law? — Both specific and general indemnity
32. What is bailment? — 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 directions of the person delivering them.
33. What is 'ratification' in the context of agency? — The agent acting without authority and the principal later approving the act.
34. The principal is not bound by the acts of an agent done outside the scope of his authority, unless: — The principal subsequently ratifies the acts.
35. If a bailee makes an unauthorized use of the goods bailed, resulting in their damage, what is the consequence? — The bailee is liable to the bailor for any damage arising from such use.
36. A gratuitous bailment is a bailment where: — No consideration is given by either party.
37. An agency by necessity arises when: — The agent acts in the principal's best interest due to an emergency.
38. What right does a pledgee have over the pledged goods? — The right to sell the goods only if the pledgor defaults.
39. The right of subrogation in a contract of guarantee means: — Upon payment of the guaranteed debt, the surety steps into the shoes of the creditor and acquires all rights against the principal debtor.
40. Which of the following statements best describes the duty of a surety to the creditor? — The surety's liability is co-extensive with that of the principal debtor.
41. What is the effect of a material alteration in the terms of the contract between the principal debtor and the creditor, without the surety's consent? — The surety is discharged from liability.
42. In a contract of guarantee, the concept of 'co-extensive liability' means: — The surety's liability is equal to the principal debtor's liability, unless otherwise agreed.
43. Which of the following statements about the rights of an indemnified person is correct? — They can recover costs incurred in defending suits, if the indemnifier has authorized them to do so.
44. What is the duty of an agent towards the principal? — To conduct the business of the agency with reasonable diligence and skill.
45. A contract of pledge is a special type of bailment. What is the primary purpose of a pledge? — To deliver goods as security for a debt or a promise.
46. Which of the following is a right of the agent? — To receive remuneration agreed upon.
47. What is the primary purpose of a contract of guarantee? — To provide security to a creditor against the default of a debtor.
48. Which of the following is a duty of the bailee? — To use the goods only for the purpose for which they were bailed.
49. Which of the following is a key characteristic of bailment? — Transfer of possession only.
50. When goods are bailed for a specific purpose, the bailee must: — Use the goods strictly according to the purpose for which they were bailed.
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