CAF-4 · Chapter 5
Legality of object and consideration MCQs with Answers
15 multiple-choice questions on Legality of object and consideration for CAF-4 Business Law Dynamics. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
Which of the following agreements is considered void due to an unlawful object?
- A) An agreement to sell a car for a high price.
- B) An agreement to divide the profits of a legal business.
- C) An agreement to commit a crime for a reward.
- D) An agreement to work as a servant for a monthly salary.
Show answer & explanation
Answer: C) An agreement to commit a crime for a reward.
The consideration or object of an agreement is unlawful if it is forbidden by law, which includes committing a crime.
Question 2
If the consideration or object of an agreement is 'immoral' or 'against public policy', the agreement is:
- A) Voidable.
- B) Valid.
- C) Void.
- D) Enforceable by law.
Show answer & explanation
Answer: C) Void.
Under Section 23, every agreement of which the object or consideration is unlawful is void. Unlawful includes things the court regards as immoral or opposed to public policy.
Question 3
What is meant by 'Quid Pro Quo' in the context of consideration?
- A) Something for nothing.
- B) Something in return.
- C) A bad deal.
- D) An illegal request.
Show answer & explanation
Answer: B) Something in return.
Consideration is the price of the promise. 'Quid pro quo' is the Latin term for 'something in return' which forms the basis of consideration.
Question 4
As a general rule, an agreement made without consideration is:
- A) Voidable.
- B) Valid.
- C) Void.
- D) Illegal.
Show answer & explanation
Answer: C) Void.
According to Section 25, an agreement made without consideration is void, subject to certain specific exceptions.
Question 5
Which of the following is an exception to the rule 'No Consideration, No Contract'?
- A) An agreement made out of natural love and affection, in writing and registered.
- B) A verbal promise to give a gift to a stranger.
- C) An agreement to pay a high price for a low-value item.
- D) An agreement signed between two business competitors.
Show answer & explanation
Answer: A) An agreement made out of natural love and affection, in writing and registered.
Section 25(1) allows for contracts without consideration if they are based on natural love and affection between close relatives, expressed in writing and registered.
Question 6
Azam agrees to sell a horse worth Rs. 100,000 for only Rs. 1,000. Azam's consent was free. Is this a valid contract?
- A) No, because the consideration is inadequate.
- B) Yes, because adequacy of consideration is not required, provided consent is free.
- C) No, because it is an immoral agreement.
- D) Yes, but only if the horse is delivered immediately.
Show answer & explanation
Answer: B) Yes, because adequacy of consideration is not required, provided consent is free.
The law does not require consideration to be adequate or equal in value to the promise. As long as there is some value (no matter how small) and consent is free, the contract is valid.
Question 7
Can consideration be 'past' under Pakistani law (the Contract Act, 1872)?
- A) No, consideration must be present or future only.
- B) Yes, at the desire of the promisor, past services can constitute valid consideration.
- C) Only if the past consideration was documented in a bank statement.
- D) Only if the amount exceeds Rs. 10,000.
Show answer & explanation
Answer: B) Yes, at the desire of the promisor, past services can constitute valid consideration.
Section 2(d) defines consideration as an act done 'at the desire of the promisor'. This includes acts done in the past, which is a major difference from English law.
Question 8
A promise to pay, wholly or in part, a debt which is 'barred by the law of limitation' is valid if:
- A) It is made verbally in front of witnesses.
- B) It is made in writing and signed by the debtor.
- C) It is for a small amount only.
- D) The creditor forces the debtor to sign.
Show answer & explanation
Answer: B) It is made in writing and signed by the debtor.
According to Section 25(3), a promise to pay a time-barred debt is enforceable without fresh consideration if it is in writing and signed by the person to be charged therewith.
Question 9
Azam promises to pay Rs. 1,000 to Babar if Babar beats up Azam's enemy. Babar beats the enemy. Can Babar legally recover the money?
- A) Yes, because he performed his part of the contract.
- B) No, because the object of the agreement is unlawful.
- C) Yes, provided there were no witnesses.
- D) No, because the amount is too small.
Show answer & explanation
Answer: B) No, because the object of the agreement is unlawful.
The agreement is void because its object (committing physical harm) is unlawful and opposed to public policy.
Question 10
Who can provide consideration in a contract?
- A) Only the promisee.
- B) Only the promisor.
- C) The promisee or any other person (stranger to consideration).
- D) Only a court-appointed official.
Show answer & explanation
Answer: C) The promisee or any other person (stranger to consideration).
Under Section 2(d), consideration can move from the promisee 'or any other person'. This means a stranger to consideration can provide it for the promisee.
Question 11
An agreement to refer any future dispute to arbitration (instead of a court) is:
- A) Void as a restraint of legal proceedings.
- B) Valid and is an exception to the rule.
- C) Illegal and punishable.
- D) Only valid if the government is a party.
Show answer & explanation
Answer: B) Valid and is an exception to the rule.
While agreements in restraint of legal proceedings are generally void (Section 28), an agreement to refer future disputes to arbitration is a specifically recognized valid exception.
Question 12
Which of the following agreements is generally considered 'opposed to public policy'?
- A) Trading with an enemy nation.
- B) Marriage brokerage contracts (receiving money for arranging a marriage).
- C) Sale of public offices.
- D) All of the above.
Show answer & explanation
Answer: D) All of the above.
All listed items (trading with enemies, marriage brokerage, and selling public offices) are recognized by courts as being opposed to the interests of the public and are thus void.
Question 13
Consideration must be ____________ at the desire of the ____________.
- A) Real; Promisee
- B) Lawful; Promisor
- C) Past, present, or future; Promisor
- D) Excessive; Bank
Show answer & explanation
Answer: C) Past, present, or future; Promisor
The Act specifies that consideration (the act or abstinence) must be done at the desire of the promisor and can be in the past, present, or future.
Question 14
If an agreement consists of two parts, one legal and one illegal, and the two parts can be separated, what happens?
- A) The whole agreement is void.
- B) The whole agreement is valid.
- C) The legal part is enforceable, and the illegal part is void.
- D) The parties can choose which part they like.
Show answer & explanation
Answer: C) The legal part is enforceable, and the illegal part is void.
According to Section 57, if there are two sets of promises, the first which is legal and the second which is illegal, the first is a contract, but the second is a void agreement.
Question 15
Saad finds Fahad's lost wallet and returns it. Fahad then promises to give Saad Rs. 500. This promise is valid under which exception of Section 25?
- A) Natural love and affection.
- B) Promise to pay for past voluntary services.
- C) Promise to pay a time-barred debt.
- D) Completed gift.
Show answer & explanation
Answer: B) Promise to pay for past voluntary services.
Section 25(2) makes a promise to compensate a person who has already voluntarily done something for the promisor enforceable, even without new consideration.