Multiple Choice Questions:
1. The collateral transactions to an illegal agreement are —
(a) void. (b) illegal. (c) voidable. (d) not affected at all.
Ans: (b) illegal.
2. An agreement made with an alien enemy is —
(a) unlawful on the ground of public policy.
(b) unlawful because it becomes difficult to be performed.
(c) valid.
(d) voidable.
Ans: (a) unlawful on the ground of public policy.
3. A person enters into an agreement whereby he is bound to do something which is against his public or professional duty. The agreement is —
(a) void on the ground of public policy. (b) valid.
(c) voidable. (d) illegal.
Ans: (a) void on the ground of public policy.
4. Regulations as to the opening and closing of business in a market are —
(a) not unlawful even if they are in restraint of trade.
(b) unlawful because they are in restraint of trade.
(c) void.
(d) not valid.
Ans: (a) not unlawful even if they are in restraint of trade.
5. An employee, by the terms of his service agreement, is prevented from accepting a similar engagement after the termination of his service. The restraint is —
(a) valid. (b) void. (c) illegal. (d) unenforceable.
Ans: (b) void.
6. The Case of Nordenfelt v. Maxim Nordenfelt Gun Co., (1904) 29 B.L.R. 107 deals with —
(a) agreements in restraint of legal proceedings.
(b) minor’s agreements.
(c) agreements in restraint of trade.
(d) agreements in restraint of marriage.
Ans: (c) agreements in restraint of trade.
True or False Questions:
1. The words ‘objects’ and ‘consideration’ are used in Sec. 23 interchangeably. [False]
2. If the object or the consideration of an agreement is not directly forbidden by law, but it indirectly defeats the provisions of any statutory law, the agreement is not void. [True]~
3. Collateral transactions to an illegal agreement also become tainted with illegality. [True]
4. In cases of equal guilt, the defendant is in a better position. [True]
5. The collateral transactions to an illegal agreement are not affected. [False]
6. Agreements which curtail the period of limitation prescribed by the Law of Limitation are not void. [False]
7. An agreement in contemplation of divorce is valid. [False]
8. Every agreement, by which anyone is restrained from exercising a lawful trade or business of any kind, is to that extent void. [True]
9. An agreement to refer a dispute to arbitration is not enforceable. [False]
10. An outgoing partner who agrees with his partners not to carry on a business similar to that of the firm within specified local limits, may carry on that business. [False]
11. Even if a restraint is intended to protect an employer against an employee making use of trade secrets learned by him in the course of his employment, the restraint is not valid. [False]
12. An agreement in restraint of trade is not void. [False]