CAF-4 · Chapter 2
Offer, Acceptance and Revocation MCQs with Answers
15 multiple-choice questions on Offer, Acceptance and Revocation for CAF-4 Business Law Dynamics. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
When does the communication of a proposal become legally complete?
- A) When the proposer puts it in the course of transmission.
- B) When it is drafted and signed by the proposer.
- C) When it comes to the knowledge of the person to whom it is made.
- D) When the offeree sends an acknowledgment receipt.
Show answer & explanation
Answer: C) When it comes to the knowledge of the person to whom it is made.
The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
Question 2
Ameer posts a letter offering to sell his car to Ghalib. Ghalib posts his letter of acceptance on Tuesday. On Wednesday, before Ghalib's letter arrives, Ameer changes his mind. Can Ameer legally revoke his offer on Wednesday?
- A) Yes, because he has not yet read the acceptance letter.
- B) Yes, because the acceptance is not complete against Ghalib yet.
- C) No, because an offer cannot be revoked once it is put in the mail.
- D) No, because communication of acceptance is complete as against Ameer once Ghalib posted the letter.
Show answer & explanation
Answer: D) No, because communication of acceptance is complete as against Ameer once Ghalib posted the letter.
A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer (i.e., when the offeree puts the acceptance in the course of transmission), but not afterwards.
Question 3
If an offer prescribes a specific manner of acceptance, but the offeree accepts it in a different manner, what happens if the offeror fails to object?
- A) The acceptance is void automatically.
- B) The offeror is deemed to have accepted the varying manner of acceptance.
- C) The offeree must resend the acceptance in the correct manner.
- D) The contract becomes voidable at the option of the offeree.
Show answer & explanation
Answer: B) The offeror is deemed to have accepted the varying manner of acceptance.
If acceptance is not made in the prescribed manner, the proposer must insist on the prescribed manner. If he fails to do so, he is deemed to have accepted the acceptance.
Question 4
Laila offered her scooter to Maria for Rs. 40,000. Maria accepted but said she would pay Rs. 39,000 cash down and Rs. 1,000 later. What is the status of this acceptance?
- A) It is a valid acceptance because the total equals Rs. 40,000.
- B) It is a valid acceptance because Maria agreed to the purchase.
- C) It is invalid because a valid acceptance must be absolute and unqualified.
- D) It is a voidable acceptance at Laila's discretion.
Show answer & explanation
Answer: C) It is invalid because a valid acceptance must be absolute and unqualified.
To convert a proposal into a promise, the acceptance must be absolute and unqualified (unconditional). Maria introduced new payment terms, acting as a counter-offer.
Question 5
Which of the following events will NOT result in the revocation of a proposal?
- A) The death of the acceptor before acceptance.
- B) The offeree makes a counter offer.
- C) The offeree fails to fulfill a condition precedent to acceptance.
- D) The proposer dies, but the acceptor accepts in ignorance of the death.
Show answer & explanation
Answer: D) The proposer dies, but the acceptor accepts in ignorance of the death.
Death of the proposer revokes the offer ONLY IF the fact of death comes to the knowledge of the acceptor before acceptance.
Question 6
How is an implied acceptance generally inferred in legal terms?
- A) Through a written email
- B) Through the silence of the offeree
- C) From the conduct of the offeree or circumstances of the case
- D) By a verbal confirmation over the phone
Show answer & explanation
Answer: C) From the conduct of the offeree or circumstances of the case
An implied acceptance (or proposal) is one that is not made in words but is inferred from the conduct of the parties or the circumstances of the case.
Question 7
According to the Contract Act, 1872, what is the exact definition of an 'agreement'?
- A) Every promise and every set of promises, forming the consideration for each other.
- B) A proposal that has been communicated and accepted in writing.
- C) Any contract that is enforceable by law.
- D) A mutual understanding between two parties to exchange goods.
Show answer & explanation
Answer: A) Every promise and every set of promises, forming the consideration for each other.
Section 2(e) defines an agreement as 'Every promise and every set of promises, forming the consideration for each other'.
Question 8
When is the communication of an acceptance complete as against the acceptor?
- A) When the acceptor puts it in the course of transmission.
- B) When it comes to the knowledge of the proposer.
- C) As soon as the acceptor makes the decision in his mind.
- D) When the proposer sends a confirmation of receipt.
Show answer & explanation
Answer: B) When it comes to the knowledge of the proposer.
The communication of acceptance is complete as against the acceptor only when it comes to the knowledge of the proposer.
Question 9
An offeree posts a letter of acceptance on Monday. On Tuesday, the offeree changes his mind and posts a letter revoking his acceptance. Which letter prevails?
- A) The acceptance, because it was posted first.
- B) The revocation, because the offeree has the final say.
- C) Whichever letter reaches the proposer first.
- D) Neither, the contract is automatically voided due to confusion.
Show answer & explanation
Answer: C) Whichever letter reaches the proposer first.
An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor (i.e., before the acceptance reaches the proposer). Therefore, if the revocation reaches first or at the same time, it is valid.
Question 10
Azam, at an auction, gives the highest bid to buy Babar's goods but withdraws the bid before the fall of the auctioneer's hammer. What is the legal outcome?
- A) Azam is legally bound to purchase the goods because he made the highest bid.
- B) The offer is revoked and cannot be accepted by the auctioneer.
- C) The auctioneer can sue Azam for breach of implied contract.
- D) Azam must pay a penalty for withdrawing the bid late.
Show answer & explanation
Answer: B) The offer is revoked and cannot be accepted by the auctioneer.
A bid at an auction is merely an offer. It can be revoked at any time before it is accepted (which is typically signified by the fall of the hammer).
Question 11
What happens if a proposal does not prescribe any specific time for its acceptance?
- A) The offer remains open indefinitely.
- B) The offer lapses after a reasonable time.
- C) The offer must be accepted within 30 days by default.
- D) The offer is invalid from the beginning.
Show answer & explanation
Answer: B) The offer lapses after a reasonable time.
A proposal is revoked by the lapse of the time prescribed, or, if no time is prescribed, by the lapse of a reasonable time without communication of the acceptance.
Question 12
Which of the following constitutes a valid offer?
- A) An advertisement offering a reward to anyone who finds a lost dog.
- B) A price tag attached to a shirt in a retail store.
- C) A letter merely asking for information about property prices.
- D) An offer made strictly as a joke among friends.
Show answer & explanation
Answer: A) An advertisement offering a reward to anyone who finds a lost dog.
Advertisements for rewards are general offers. Price tags are invitations to offer. A joke lacks intention to create legal relations, and asking for info is not a firm proposal.
Question 13
When one person signifies his willingness to do or abstain from doing something with a view to obtaining the assent of the other, he is said to make a:
- A) Contract
- B) Proposal
- C) Consideration
- D) Guarantee
Show answer & explanation
Answer: B) Proposal
This is the exact definition of a 'proposal' (or offer) under Section 2(a) of the Contract Act, 1872.
Question 14
Azam offers to sell his cycle to Babar and keeps the offer open for ten days. Babar outright refuses on the third day. Can Babar legally accept the offer on the eighth day?
- A) Yes, because the ten-day period has not yet expired.
- B) Yes, provided Azam has not sold the cycle to anyone else.
- C) No, because the offer terminated upon his initial rejection.
- D) No, because cycle offers are only valid for 48 hours.
Show answer & explanation
Answer: C) No, because the offer terminated upon his initial rejection.
An offer is terminated by non-acceptance or rejection by the offeree. Once rejected, it cannot be subsequently accepted even if the original time limit has not expired.
Question 15
The person making the proposal is legally referred to as the __________, and the person accepting is the __________.
- A) Promisor; Promisee
- B) Plaintiff; Defendant
- C) Guarantor; Creditor
- D) Acceptor; Offeror
Show answer & explanation
Answer: A) Promisor; Promisee
According to the Contract Act, the person making the proposal is called the 'promisor' (or offeror), and the person accepting the proposal is called the 'promisee' (or acceptor/offeree).