1. A guarantee that covers a succession of transactions as recognised under Section 129 of the Indian Contract Act is known as:
(a) A conditional undertaking
(b) An absolute assurance
(c) A continuing guarantee
(d) A void guarantee
2. In a contract of guarantee, the extent of the surety’s liability:
(a) May be restricted by agreement
(b) Must always cover the entire liability of the principal debtor
(c) Automatically includes penalties in every case
(d) Can neither be restricted nor expanded
3. As per the Indian Contract Act, the liability of a surety:
(a) Is always separate from that of the principal debtor
(b) Is limited only to part of the debt
(c) Is co-extensive and covers the entire liability of the principal debtor
(d) Ends before the liability of the principal debtor
4. Which of the following guarantees is legally valid?
(a) Guarantee for a loan taken by a company acting beyond its powers
(b) Guarantee for a minor’s debt
(c) Both of the above
(d) Neither of the above
5. A contract of guarantee obtained through concealment of material facts or misrepresentation is:
(a) Void
(b) Illegal
(c) Valid
(d) Voidable at the option of the surety
6. For a guarantee to be legally valid, it may relate to:
(a) A present debt only
(b) A past debt provided further liability is incurred
(c) A future debt upon creation of obligation
(d) All of the above
7. A contract of guarantee can be validly created only when:
(a) There is no principal obligation
(b) There exists a principal debt or obligation
(c) There is no debtor at all
(d) Debt is irrelevant
8. The liability of a surety under a contract of guarantee becomes enforceable:
(a) Independently of any default
(b) At the discretion of the creditor
(c) Upon default by the principal debtor
(d) Only after court intervention
9. In respect of form, a contract of guarantee:
(a) Must compulsorily be written
(b) Is invalid unless registered
(c) Cannot be oral
(d) May be oral or in writing
10. Under a contract of guarantee, the creditor is the person:
(a) Who undertakes to perform the promise
(b) Whose default is secured
(c) Who gives the guarantee
(d) In whose favour the guarantee is given