CAF-4 · Chapter 4
Free consent MCQs with Answers
15 multiple-choice questions on Free consent for CAF-4 Business Law Dynamics. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
What happens to a contract when the consent of a party is obtained by 'coercion'?
- A) It is void from the beginning.
- B) It is voidable at the option of the party whose consent was so caused.
- C) It remains valid but the other party is fined.
- D) It is illegal and not enforceable.
Show answer & explanation
Answer: B) It is voidable at the option of the party whose consent was so caused.
Section 19 states that when consent is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
Question 2
Under which of the following circumstances is 'undue influence' presumed to exist?
- A) Between two business competitors.
- B) Between a doctor and their patient.
- C) Between two strangers in a marketplace.
- D) Between a buyer and a seller through an online portal.
Show answer & explanation
Answer: B) Between a doctor and their patient.
A person is deemed to be in a position to dominate the will of another where he stands in a fiduciary relation to the other (like doctor-patient, lawyer-client, or parent-child).
Question 3
Does 'mere silence' as to facts likely to affect the willingness of a person to enter into a contract constitute fraud?
- A) Yes, silence is always fraud.
- B) No, unless there is a duty to speak or silence is equivalent to speech.
- C) Yes, if the buyer is uneducated.
- D) No, silence is never considered fraud in any situation.
Show answer & explanation
Answer: B) No, unless there is a duty to speak or silence is equivalent to speech.
According to the explanation to Section 17, mere silence is NOT fraud unless the circumstances are such that it is the duty of the person keeping silence to speak, or his silence is equivalent to speech.
Question 4
If both parties to an agreement are under a 'mistake as to a matter of fact' essential to the agreement, the agreement is:
- A) Voidable.
- B) Valid.
- C) Void.
- D) Illegal.
Show answer & explanation
Answer: C) Void.
Section 20 states that where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void (Bilateral Mistake).
Question 5
Azam, a moneylender, advances Rs. 100,000 to a distressed farmer, Babar, and by using his influence, makes Babar sign a bond for Rs. 200,000 with 50% interest. This is a case of:
- A) Coercion
- B) Fraud
- C) Undue Influence
- D) Misrepresentation
Show answer & explanation
Answer: C) Undue Influence
Undue influence occurs when one party dominates the will of the other to obtain an unfair advantage, especially when the other party is in economic distress.
Question 6
What is the primary difference between 'fraud' and 'misrepresentation'?
- A) Fraud is void, misrepresentation is voidable.
- B) Fraud involves an intention to deceive, while misrepresentation is innocent.
- C) Fraud applies to goods, misrepresentation applies to services.
- D) There is no legal difference between the two.
Show answer & explanation
Answer: B) Fraud involves an intention to deceive, while misrepresentation is innocent.
Fraud is the deliberate and intentional statement of a false fact to deceive another, whereas misrepresentation is the unintentional or innocent statement of a false fact.
Question 7
A contract is not voidable on the ground of fraud if the party whose consent was so caused had the means of discovering the truth with:
- A) A private investigator.
- B) Ordinary diligence.
- C) Extraordinary effort.
- D) Legal counsel.
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Answer: B) Ordinary diligence.
The law provides that if a person could have discovered the truth via ordinary diligence (standard checking), they cannot set the contract aside on the basis of fraud or misrepresentation.
Question 8
According to the Contract Act, 1872, consent is said to be 'free' when it is NOT caused by coercion, undue influence, fraud, misrepresentation, or __________.
- A) Poverty
- B) Mistake
- C) Intoxication
- D) Urgency
Show answer & explanation
Answer: B) Mistake
Section 14 defines free consent as consent not caused by coercion, undue influence, fraud, misrepresentation, or mistake.
Question 9
If a party's consent was caused by a 'mistake of law' in force in Pakistan, what is the status of the contract?
- A) The contract is void.
- B) The contract is voidable.
- C) The contract is NOT voidable.
- D) The contract is illegal.
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Answer: C) The contract is NOT voidable.
Section 21 states that a contract is not voidable because it was caused by a mistake as to any law in force in Pakistan, as ignorance of the law (ignorantia juris non excusat) is no excuse.
Question 10
A unilateral mistake by one party as to a matter of fact generally makes the contract:
- A) Void
- B) Illegal
- C) NOT voidable
- D) Automatically voidable
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Answer: C) NOT voidable
According to Section 22, a contract is NOT voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.
Question 11
Which of the following acts constitutes 'coercion'?
- A) Threatening to file a legitimate lawsuit.
- B) Threatening to commit suicide to pressure a party to sign.
- C) Using a position of authority to advise a party.
- D) Crying to gain sympathy during a negotiation.
Show answer & explanation
Answer: B) Threatening to commit suicide to pressure a party to sign.
Coercion includes the committing or THREATENING to commit any act forbidden by the Pakistan Penal Code. Threatening to commit suicide is a prohibited act and thus constitutes coercion.
Question 12
In a contract of insurance (Uberrimae Fidei), what is the duty of the parties regarding the disclosure of facts?
- A) They may remain silent on all matters.
- B) They have a duty to speak and disclose all material facts.
- C) They only need to answer questions asked by the other party.
- D) They should only disclose facts that benefit them.
Show answer & explanation
Answer: B) They have a duty to speak and disclose all material facts.
In contracts of 'utmost good faith' (like insurance), the law imposes a positive duty on the parties to disclose all material facts, and silence in such cases can constitute fraud.
Question 13
Azam sells a horse to Babar by claiming 'the horse is sound', even though Azam knows the horse is ill. This is an example of:
- A) Innocent misrepresentation
- B) Fraud
- C) Undue Influence
- D) Bilateral mistake
Show answer & explanation
Answer: B) Fraud
Azam made a active suggestion of a fact which is not true, and he does not believe it to be true, with the intent to deceive Babar. This is fraud under Section 17.
Question 14
A contract is void on the grounds of mistake ONLY IF the mistake is about:
- A) The price of the goods.
- B) A matter of fact essential to the agreement.
- C) The quality of the products.
- D) A foreign law.
Show answer & explanation
Answer: B) A matter of fact essential to the agreement.
Under Section 20, the mistake must be bilateral (by both parties) and must relate to a fact that is essential to the heart of the agreement.
Question 15
If a party is in a position to dominate the will of another and uses that position to obtain an unfair advantage, the contract is voidable at the option of the party whose consent was so caused. The burden of proving that the contract was not induced by undue influence lies upon:
- A) The party whose consent was so caused (the victim).
- B) The party who was in a position to dominate the will of the other.
- C) Both parties equally.
- D) The court.
Show answer & explanation
Answer: B) The party who was in a position to dominate the will of the other.
In cases of undue influence, where a person is in a position to dominate the will, the burden of proof is shifted to them to show that they did NOT use that position unfairly.