CAF-4 · Chapter 6

Void agreements MCQs with Answers

15 multiple-choice questions on Void agreements for CAF-4 Business Law Dynamics. Try each one before revealing the answer and explanation.

1. Question 1

   Every agreement in restraint of the marriage of any person, other than a __________, is void.

   • A) Dependent
   • B) Minor
   • C) Foreigner
   • D) Employee
   Show answer & explanation

   Answer: B) Minor

   Section 26 explicitly states that every agreement in restraint of marriage is void, except in the case of a minor.

2. Question 2

   An agreement by which any person is restrained from exercising a lawful profession, trade or business of any kind, is to that extent:

   • A) Valid.
   • B) Voidable.
   • C) Void.
   • D) Illegal.
   Show answer & explanation

   Answer: C) Void.

   Section 27 states that every agreement by which any person is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.

3. Question 3

   Which of the following is a valid exception to the rule that agreements in restraint of trade are void?

   • A) Sale of Goodwill.
   • B) Agreement between partners not to carry on a competing business during the partnership.
   • C) Agreement by an employee not to serve anyone else during the period of service.
   • D) All of the above.
   Show answer & explanation

   Answer: D) All of the above.

   The law allows for reasonable restraints in cases of sale of goodwill, partnership agreements, and service contracts.

4. Question 4

   An agreement to refer any future dispute to arbitration is:

   • A) Void.
   • B) Valid.
   • C) Voidable.
   • D) Illegal.
   Show answer & explanation

   Answer: B) Valid.

   Agreements to refer disputes to arbitration are a recognized exception to the rule against restraint of legal proceedings (Section 28).

5. Question 5

   Agreements, the meaning of which is NOT certain, or capable of being made certain, are:

   • A) Valid.
   • B) Voidable.
   • C) Void.
   • D) Enforceable.
   Show answer & explanation

   Answer: C) Void.

   Section 29 states that agreements, the meaning of which is not certain, or capable of being made certain, are void.

6. Question 6

   Azam agrees to sell to Babar 'one hundred tons of oil'. There is nothing whatever to show what kind of oil was intended. The agreement is:

   • A) Valid.
   • B) Void for uncertainty.
   • C) Voidable at Babar's option.
   • D) Enforceable if the price is fair.
   Show answer & explanation

   Answer: B) Void for uncertainty.

   Since the type of oil is not specified, the agreement is void for uncertainty under Section 29.

7. Question 7

   An agreement to 'wager' (bet) is:

   • A) Valid.
   • B) Voidable.
   • C) Void.
   • D) Enforceable in some provinces.
   Show answer & explanation

   Answer: C) Void.

   Section 30 states that agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager.

8. Question 8

   Which of the following is an exception to the rule that wagering agreements are void?

   • A) Horse racing prizes of Rs. 500 or upwards.
   • B) Crossword competitions requiring skill.
   • C) Insurance contracts.
   • D) All of the above.
   Show answer & explanation

   Answer: D) All of the above.

   Prizes for horse racing (above 500), skill-based competitions, and insurance contracts (which are contingent) are not considered wagers.

9. Question 9

   What is the primary difference between a 'contingent contract' and a 'wagering agreement'?

   • A) Wagering is valid, contingent is void.
   • B) In a wager, parties have no interest in the event except the money; in a contingent contract, they often do.
   • C) Wagers depend on future events, contingent contracts do not.
   • D) There is no difference.
   Show answer & explanation

   Answer: B) In a wager, parties have no interest in the event except the money; in a contingent contract, they often do.

   A wagering agreement is purely a bet on an outcome, whereas a contingent contract is a contract to do something if an event happens (like insurance).

10. Question 10

    An agreement to do an act impossible in itself is:

    • A) Voidable.
    • B) Valid.
    • C) Void.
    • D) Illegal.
    Show answer & explanation

    Answer: C) Void.

    Section 56 (1st para) says an agreement to do an act impossible in itself is void.

11. Question 11

    Azam agrees with Babar to discover treasure by 'magic'. The agreement is:

    • A) Valid if magic is performed.
    • B) Void because the act is impossible.
    • C) Voidable at Babar's option.
    • D) Enforceable in a special court.
    Show answer & explanation

    Answer: B) Void because the act is impossible.

    Trying to discover treasure by magic is an impossible act, making the agreement void under Section 56.

12. Question 12

    If a contract contains a clause that NO party can EVER sue in a court, that clause is:

    • A) Valid.
    • B) Void to the extent it restricts legal proceedings.
    • C) Illegal.
    • D) Voidable.
    Show answer & explanation

    Answer: B) Void to the extent it restricts legal proceedings.

    Section 28 states that agreements by which a party is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, is void to that extent.

13. Question 13

    A contract for the sale of a house is made. Unknown to both, the house was destroyed by fire an hour before the contract. This contract is:

    • A) Valid.
    • B) Void due to bilateral mistake of fact.
    • C) Voidable.
    • D) Illegal.
    Show answer & explanation

    Answer: B) Void due to bilateral mistake of fact.

    Since the subject matter of the contract (the house) did not exist at the time of the agreement, and both were unaware, the agreement is void under Section 20.

14. Question 14

    An agreement which is enforceable by law at the option of one or more of the parties, but not at the option of the other, is a:

    • A) Void agreement.
    • B) Void contract.
    • C) Voidable contract.
    • D) Valid contract.
    Show answer & explanation

    Answer: C) Voidable contract.

    This is the definition of a voidable contract under Section 2(i).

15. Question 15

    A contract which ceases to be enforceable by law becomes void when it:

    • A) Is signed.
    • B) Is performed.
    • C) Ceases to be enforceable.
    • D) Is breached.
    Show answer & explanation

    Answer: C) Ceases to be enforceable.

    Section 2(j) states that a contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.