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Legal Aspects of Business MCQ - Legal Aspects of Business Section 1

51 A gives B a bond for the repayment of Rs. 1,000 with interest at 12 percent at the end of six months, with a stipulation that, in case of default, interest shall be payable at the rate of 75 percent from the date of default. This is a stipulation by way of penalty.

52 A gives to C a continuing guarantee to the extent of 3,000 rupees for any oil supplied by C to B on credit. Afterward, B becomes embarrassed, and, without the knowledge of A, B and C contract that C shall continue to supply B with oil for ready money, and that the payments shall be applied to the then, existing debts between B and C.

53 A guarantees C against the misconduct of B in an office to which B is appointed by C, and of which the duties are defined by an Act of the Legislature. By a subsequent Act, the nature of the office is materially altered. Afterward, B misconduct’s himself.

54 A guarantees payment to B, a tea-dealer, to the amount of Rs. 100, for any tea he may from time to time supply to C. B supplies C with tea to above the value of Rs. 100, and C pays B for it. Afterward B supplies C with tea to the value of Rs. 200. C fails to pay.

55 A guarantee to B, the extent of 10,000 rupees, that C shall pay all the bills that B shall draw upon him. B draws upon C, C accepts the bill. A gives notice of revocation. C dishonors the bill at maturity.

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Question:

A stipulation in a bond for payment of compound interest on failure to pay simple interest at the same rate as was payable upon the principal is not…

A. Section 74 of the Indian Contract Act, 1872
B. Section 75 of the Indian Contract Act, 1872
C. Section 76 of the Indian Contract Act, 1872
D. None of these

Correct answer: A

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