Bailment and Pledge MCQs
The bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished. Here on MCQs.club we have prepared Multiple-Choice Questions (MCQs) on bailment and pledge that fully cover difference between bailment and pledge, MCQs on contract of bailment and pledge, distinguish between pledge and bailment, MCQs on bailment of pledge, the define bailment and pledge. These MCQs on bailment and pledge in business law are useful for Competitive exams, Professional Accountancy exams and Business management exams.
- Bailment – The bailment is 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.
- The above definition is correct
- The above definition is incorrect
- Essential elements of bailment include:
- A bailment is usually created by agreement between the bailor and the bailee.
- A bailment involves delivery of goods by bailor to bailee.
- The delivery of goods from bailor to bailee must be for some purpose such as personal service
- All of the above
- Types of bailment are:
- Gratuitous bailment
- Non-gratuitous bailment
- Bailment for the exclusive benefit of bailor/bailee
- Bailment for the mutual benefit of bailor & bailee
- All of the above
- Gratuitous bailment –
- It is a contract of bailment where no consideration passes between the bailor and the bailee.
- It is a contract of bailment where some consideration passes between the bailor and the bailee.
- A contract of bailment which is executed only for the benefit of the bailor.
- A contract of bailment which is executed for the mutual benefit of the bailor and the bailee.
- Non-gratuitous bailment –
- It is a contract of bailment where no consideration passes between the bailor and the bailee.
- It is a contract of bailment where some consideration passes between the bailor and the bailee.
- A contract of bailment which is executed only for the benefit of the bailor.
- A contract of bailment which is executed for the mutual benefit of the bailor and the bailee.
- Bailment for the exclusive benefit of bailor –
- It is a contract of bailment where no consideration passes between the bailor and the bailee.
- It is a contract of bailment where some consideration passes between the bailor and the bailee.
- A contract of bailment which is executed only for the benefit of the bailor.
- A contract of bailment which is executed for the mutual benefit of the bailor and the bailee.
- Bailment for the mutual benefit of bailor & bailee –
- It is a contract of bailment where no consideration passes between the bailor and the bailee.
- It is a contract of bailment where some consideration passes between the bailor and the bailee.
- A contract of bailment which is executed only for the benefit of the bailor.
- A contract of bailment which is executed for the mutual benefit of the bailor and the bailee.
- Sub-bailment – A sub-bailee is a person to whom the actual possession of goods is transferred by someone who himself is not the owner of goods but has a present right to possession of them as bailee of the owner. Where the bailee sub-bails the goods with the authority of the owner, the relationship between the owner and the sub-bailee is that of bailor and bailee.
- The above is correct
- The above is incorrect
- Duties of bailor include:
- Duty to disclose faults
- Duty to bear expenses
- Duty to indemnify bailee for loss in case of early termination of gratuitous bailment
- Duty to receive back the goods
- Duty to bear the risk of loss
- (I) and (III) only
- (IV) and (V) only
- All of the above
- None
- In case of gratuitous bailment, the bailor can terminate bailment even if it is made for a fixed time or purpose. In such case bailor is liable to compensate bailee for any loss in excess of benefit due to early termination.
- True
- False
- If the bailee has taken reasonable steps to protect the goods then the bailor is bound to bear the risk of loss of goods bailed.
- True
- False
- Duties of bailee include:
- Duty to take care of the goods bailed
- Duty not to make any unauthorized use of goods
- Duty not to mix the goods bailed with his own goods
- Duty to return increase
- All of the above
- If the bailee uses the goods bailed in a manner which is not according to the terms of the contract, he shall be liable to compensate bailor for any loss arising due to inconsistent use of goods bailed.
- True
- False
- A bailee is bound to keep the goods bailed separately. He must take prior consent from bailor to mix with his own goods. If the bailee so mixes without the consent of the bailor and the goods can be separated or divided, the bailee is liable for the:
- Expenses of separation or division
- Any damage arising from the mixture.
- Both A&B
- None
- It is the duty of the bailee to return the goods bailed without demand as soon as the:
- Time for which they were bailed has expired
- Purpose for which they were bailed has been accomplished
- Both A&B
- None
- Rights of bailor include:
- Right to claim damages in case of negligence
- Right to terminate the contract in case of unauthorized use
- Right to claim compensation in case of unauthorized use
- All of the above
- If the bailee does not return or deliver the goods according to the bailor’s direction after the fulfilment of purpose or after the expiry of period of bailment, the bailor has a right to claim compensation for any loss, destruction or deterioration of the goods.
- True
- False
- Rights of bailee include:
- Right to be indemnified in case of early termination of gratuitous bailment
- Right to recover loss in case of bailor’s defective title
- Right to recover loss in case of bailor’s refusal to take the goods back
- All of the above
- A particular lien is available to a bailee only against those goods on which some skill and labour have been expended by him. But if the bailee does not complete the work within the agreed time, or a reasonable time, he cannot exercise his right of lien.
- True
- False
- Termination of all contract of bailment occurs by:
- Automatic termination
- Inconsistent use of goods
- Destruction of the subject-matter
- All of the above
- A bailment of goods is automatically terminated on:
- Expiry of the time for which goods were bailed
- Completion of purpose for which they are bailed.
- Both A&B
- None
- A bailment is terminated when the subject-matter of the bailment is:
- Destroyed
- by reason of a change if its nature becomes incapable of use for the purpose of the bailment.
- Both A&B
- None
- Rights of finder of goods include:
- Right to lien
- Right to sue for reward
- Right of sale
- All of the above
- A finder of goods may sell the goods:
- The owner cannot with reasonable diligence be found
- If found, he refuses to take the goods
- Goods will perish or lose the greater part of their value
- The lawful charges of the finder, in respect of the goods found, amount to two third of their value.
- All of the above
- Pledge – The bailment of goods as security for payment of a debt or performance of a promise is called a pledge.
- The above definition is correct
- The above definition is incorrect
- Parties to a Pledge:
- Pawnor or pledgor
- Pawnee or pledgee
- Both A&B
- None
- Rights of pawnee include:
- Right of retainer
- Right against true owner, when the pawnor’s title is defective
- Rights where pawnor makes default
- All of the above
- The pawnee may retain the goods pledged for:
- Payment of the debt or the performance of the promise
- For the interest of the debt
- All necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged.
- All of the above
- When the pawnor has obtained possession of the goods pledged by him under a voidable contract but the contract has not been rescinded at the time of the pledge, the pawnee acquires a good title to the goods, provided he acts in good faith and without notice of the pawnor’s defect of title.
- True
- False
- If the person makes default in payment of the debt or performance of the promise then the pawnee can exercise the:
- Right to sue
- Right to sell
- Both A&B
- None
- The general rule is that it is the owner who can ordinarily create a valid pledge. In which of the following cases even a non-owner can create a valid pledge?
- Pledge by mercantile agent
- Pledge by person in possession under voidable contract
- Pledge by co-owner in possession
- All of the above
- The pawnee of goods from a mercantile agent, who has no authority from the principal to pledge, gets a good title to the goods if:
- The agent is in possession of the goods or documents of title to the goods with the consent of the owner
- The agent pledges the goods while acting in the ordinary course of business of a mercantile agent
- The pawnee acts in good faith
- All of the above
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