Commercial Law Questions Asked in UGC NET Exam | UGC NET (Law) #Special

The UGC NET Exam covers a comprehensive range of topics within Commercial Law, testing candidates on fundamental legal concepts, key case laws, and significant legislative provisions. Each exam cycle includes questions from this domain, making it a crucial part of the syllabus for law aspirants. This article compiles questions from previous UGC NET Law exams (2019–2023) focused on Commercial Law to provide candidates with a valuable study resource.

The official syllabus of UGC NET (Law) for Commercial Law includes the following:

1. Essential elements of contract and e-contract
2. Breach of contract, frustration of contract, void and voidable agreements
3. Standard form of contract and quasi-contract
4. Specific contracts - Bailment, pledge, indemnity, guarantee and agency
5. Sale of Goods Act, 1930
6. Partnership and limited liability partnership
7. Negotiable Instruments Act, 1881
8. Company law – Incorporation of a company, prospectus, shares and debentures
9. Company law – Directors and meetings
10. Corporate social responsibility 

UGC NET December 2023

1. Red Herring Prospectus is a prospectus issued :

[1] Prior to the issue of prospectus

[2] After the issue of main prospectus

[3] With the consent of shareholder

[4] On the behest of ROC (Register of Companies)

Answer: 1

2. The term "Contra Proferentem" means:

[1] Contradictory contract

[2] Standard form contract are to be interpreted legally

[3] Limited construction

[4] Ambiguity is to be resolved against the party who inserted limiting term

Answer: 4

3. As per the Partnership Act, 1932 “Partnership” is defined under:

[1] Section 8

[2] Section 7

[3] Section 5

[4] Section 4

Answer: 4

4. “Consideration is not necessary for the creation of agency”. This is provided in

[1] Section 185 of the Indian Contract Act, 1872

[2] Section 4 of Partnership Act, 1932

[3] Section 4 of the Indian Agency Act, 1950

[4] Section 2 of the Companies Act, 2013

Answer: 1

5. ‘A’ makes a contract with ‘B’ to buy B’s horse if ‘A’ survives ‘C’. This contract can be enforced by law only when:

[1] ‘C’ dies in lifetime of ‘A’

[2] ‘A’ dies in lifetime of ‘C’

[3] ‘A’ and ‘C’ both die

[4] ‘B’ dies in lifetime of ‘A’

Answer: 1

6. Which of the following are characteristics of government promissory note:

a) It is a Promise of President of India or Governor of the state

b) It is regulated by Indian Securities Act, 1886

c) They are not negotiable instruments

d) They can be assigned without endorsement

Choose the correct answer from the options given below:

1. (a), (b) only

2. (b), (c) only

3. (b), (d) only

4. (c), (d) only

Answer: 3

7. Non obstinate clause in section 145 of the Negotiable Instruments Act, 1881 provides for which of the following:

a) Dispenses with the procedure under section 200 of CrPC

b) Procedure of examination of complainant and witness on oath is done away

c) Affidavit of complainant and witness can be accepted

d) Sworn statement recording by the magistrate is dispensed with

Choose the correct answer from the options given below:

1. (A), (B) only

2. (a), (c) only

3. (b), (c), (d) only

4. (a), (b), (c), (d)

Answer: 3

8. Match List I with List II

Choose the correct answer from the options given below:

1. A-I, B-II, C-IV, D-III

2. A-III, B-I, C-II, D-IV

3. A-IV, B-III, C-I, D-II

4. A-II, B-IV, C-III, D-I

Answer: 2

9. Arrange the following cases in sequence of year they were decided:

(A) Ashbyry Rly Carriage Co. Ltd. v. Riche

(B) Royal British Bank v. Turquand

(C) Mohori Bibee v. Dharmodas Ghose

(D) State Trading Corporation of India Ltd. v. CTO, Vishakhapatnam

(E) Salomon v. Salomon Co. Ltd.

Choose the correct answer from the options given below:

1) (B), (A), (E), (C), (D)

2) (A), (B), (C), (E), (D)

3) (C), (D), (A), (B), (E)

4) (B), (C), (E), (A), (D)

Answer: 1

UGC NET December 2021 and June 2022 (Merged Cycles)

1. ______________ has to provide by making regulations for any class or class of companies which may file a shelf prospectus with the Registrar at the stage of first offer of securities

1. NCLT

2. SEBI

3. IBBI

4. Director of a company

Answer: 2

2. Every partner of a partnership firm is liable for all the acts of the firm done while he is a partner. This doctrine is called:

1. The doctrine of holding out

2. The doctrine of restitution

3. The doctrine of estoppel

4. The doctrine of proportionality

Answer: 1

3. Which of the following is incorrect?

1. An agreement not enforceable by law is said to be voidable

2. An agreement enforceable by law is a contract

3. Every promise and every set of promises forming the consideration for each other is an agreement

4. An agreement not enforceable by law is said to be void

Answer: 1

4. Which of the following is false?

1. A contract is frustrated where the actual and specific subject matter of the contract has ceased to exist

2. A contract will frustrate where circumstances arise which make the performance of the contract impossible in the manner contemplated

3. A contract which required personal performance by promisor is frustrated on the death of the promisor

4. Ceasing of subject matter of contract does not frustrate the contract

Answer: 4

5. Which one of the following is correct?

1. A public company can be formed with a minimum of nine persons

2. A private company can be formed with two or more persons

3. Memorandum of Association is not required for registration of a company

4. Articles of Association is not required for registration of a company

Answer: 2

6. Given below are two statements

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

Statement II: An agreement in restraint of trade is voidable In light of the above statements, choose the correct answer from the options given below

1. Both Statement and Statement II are true

2. Both Statement and Statement II are false

3. Statement is true but Statement II is false

4. Statement is false but Statement Il is true

Answer: 3

7.  A. An agreement without consideration is a void contract

B. An agreement in restraint of marriage is a voidable contract

C. An unmeaning agreement is a void contract

D. An agreement to do impossible acts is a voidable contract

E. An agreement in restraint of legal proceedings is a void contract

Choose the correct answer from the options given below.

1. A and C only

2. B and D only

3. A, C and E only

4. E only

Answer: 3

8. A car was sold on 'as is' basis and without any warranty or guarantee whatsoever. After 5 days of the contract, the engine of the car blew up. Discuss the liability of the seller.

1. He is liable for the damages due to the doctrine of fundamental breach of standard form of contract

2. The seller is not liable because the car was sold on 'as is' basis and without any warranty or guarantee

3. The buyer should take care if he buys a second-hand car

4. Under standard form contract, in this case, contributory negligence is applicable

Answer: 1

9. Given below are two statements

Statement I: A becomes surety to C for B's conduct as a manager in C's bank. Afterwards, B and C contract, without A's consent that B's salary shall be raised and that he shall become liable for one-fourth of the losses on overdrafts. B allows a customer to overdraw and the bank loses a sum of money.

Statement II: A is liable to make good the loss as he is a surety to C for B's conduct.

In light of the above statements, choose the most appropriate answer from the options given below

1. Both Statement I and Statement II are correct

2. Both Statement I and Statement II are incorrect

3. Statement I is correct but Statement II is incorrect

4. Statement I is incorrect but Statement II is correct

Answer: 3

UGC NET November 2021

1. In a contract of guarantee under the Indian Contract Act, 1872 there are:

[1] Two parties and two contract

[2] Three parties and three contract

[3] Three parties and one contract

[4] Two parties and one contract

Answer: 3

2. In case of unascertained goods, the property in good passes:

[1] When goods are ascertained

[2] When the parties intend the property in goods to pass

[3] As soon as the contract of sale is signed

[4] After the payment of goods is received by the seller

Answer: 1

3. Match List I with List II

Choose the correct answer from the options given below:

1. A-I, B-IV, C-III, D-II

2. A-II, B-I, C-IV, D-III

3. A-IV, B-II, C-I, D-III

4. A-III, B-I, C-IV, D-II

Answer: 4

4. Arrange the provisions of Indian Contract Act, 1872 in chronological order (section-wise)

[A] Who are competent to contract

[B] Effects of mistake as to law

[C] What agreements are contracts

[D] Agreement in restraint of marriage is void

Choose the correct answer from the options given below

1. c, a, d, b

2. a, c, b, d

3. c, a, b, d

4. a, c, d, b

Answer: 3

5. The main purpose of corporation sole is:‐

[1] To protect the property of the Government

[2] To make the property easily transferable

[3] To make the property easily inheritable

[4] To make continuity of an office

Answer: 4

6. Where the money received from a third party by the firm, in ordinary course of business, is misapplied by one of the partners to his own use, then:‐

[1] Defaulting partner alone is liable for the same

[2] Third-party has no remedy

[3] Firm is liable for the same

[4] Firm is not liable for the same

Answer: 3

7. Who among the following can remove the name of company from Register of Companies on suo moto basis in terms of Section 248(1) of Companies Act, 2013?

[1] Registrar of Companies

[2] Securities and exchange Board of India

[3] National Company Law Tribunal

[4] Ministry of Corporate Affair

Answer: 1

8. The validity of contracts formed through electronic means is contained under which section of the Information Technology Act, 2000?

[1] Section 3A

[2] Section 6A

[3] Section 7A

[4] Section 10A

Answer: 4

9. In which of the following cases the duties are not specifically enforced in respect of the act done?

[1] The liability of a borrower to repay a debt barred by statute of limitation

[2] The liability of a borrower to repay the money borrowed by him

[3] To refrain the wrong doer from publication when a libel has already been published

[4] To refrain the wrong doer to continue the commission of a nuisance

Answer: 1

10. Removal of members of the Company Law Appellate Tribunal can be carried out in consultation by:‐

[1] Central Government

[2] Chief Justice

[3] Chairperson of Appellate tribunal

[4] Auditor General

Answer: 2

11. Endorsement of Negotiable instrument followed by delivery

(A) Transfers the property in instrument to endorsee

(B) Transfers the right of further negotiation to the endorsee

(C) May exclude or restrict the right of further negotiation by endorsee

(D) May merely constitute the endorsee as an agent

Choose the correct answer from the options given below:

(1) (A) and (B) only

(2) (C) and (D) only

(3) (A), (B), (C) only

(4) (A), (B), (C) and (D)

Answer: (3)

12. Given below are two statements: One is labelled Assertion A and the other is labelled as Reasons R.

Assertion A: Under the Companies Act of 2013 Central Government is authorised to implement a facility to file documents in electronic form.

Reason R: Central Government is authorised to make rules to implement this facility and sections 398, 401 and 402 have been incorporated in the Act of 2013. In the light of the above statements, choose the correct answer from the options given below:

(1) Both A and R are true and R is the correct explanation of A

(2) Both A and R are true and R is NOT the correct explanation of A

(3) A is true but R is false

(4) A is false but R is true

Answer: 3

UGC NET September 2020

1. An offer cannot be accepted unless it was brought to the knowledge of the person to whom it is made. This was laid down in the case of

[1] Lalman Shukla v. Gauri Dutt

[2] Balfour v. Balfour

[3] Mcgregor v. Mcgregor

[4] Carlill v. Carbolic Snoke Ball Co.

Answer: 1

2. Frustration of a contract occurs in two conditions. Firstly, where the contract has become physically impossible and secondly, where the object has failed. The above was laid down in the case of

[1] Krell v. Henry

[2] Paradine v. Jane

[3] Taylor v. Caldwell

[4] Komal Rani v. Chandram

Answer: 1

3. A party who suffers loss as a result of breach of contract can in usual course claim

[1] Ordinary damages

[2] Special damages

[3] Exemplary damages

[4] Penal damages

Answer: 1

4. Under Section 5 of the Sale of Goods Act, 1930, a contract for the sale of goods can be made:

A. By writing and must be registered

B. By word of mouth

C. By partly in writing and partly word of mouth

D. By writing or partly in writing and partly by word of mouth

Choose the correct answer from the options given below:

1. A and C only

2. A and D only

3. A and B only

4. B and D only

Answer: 4

5. Which of the following is correct?

a) The doctrine of priority of consideration is applicable in India

b) The doctrine of priority of consideration is not applicable in India

c) The Rule of priority of contract is applicable in India

d) The rule of priority of contract is not applicable in India

Choose the correct answer from the options given below

1. A and C only

2. B and D only

3. B and C only

4. C only

Answer: 4

6. The main purpose of corporation sole is:‐

(1) Make the property easily inheritable

(2) Make the property easily transferable

(3) Maintain continuity of office

(4) Protect the property of the state

Answer: 3

7. What is a whistleblower?

1. A person who signals illegal or unethical practice to a prescribed body

2. Usually a disgruntled ex-employee

3. A subversive person spying on a company

4. An investigative journalist

Answer: 1

8. A company can convert into Limited Liability Partnership:

A. By complying to requirements of the third schedule of Limited Liability Partnership Act, 2008.

B. It can convert if there is no security interest in its assets subsisting at the time of application.

C. Partners of Limited Liability Partnership are the erstwhile shareholders of the company and no one else.

D. All the assets, interests, rights and privileges of the company are transferred to the firm.

Choose the correct answer from the options given below

1. A only

2. B only

3. C only

4. A, B, C, D-All

Answer: 4

10. Match List I with List II

Choose the correct answer from the options given below:

1. A- III, B-IV, C-I, D-II

2. A-II, B-III, C-IV, D-I

3. A-I, B-II, C-III, D-IV

4. A-IV, B-I, C-II, D-III

Answer: 1

11. Arrange the provisions of the Indian Partnership Act, 1932 in chronological order (section-wise)

a. Partnership at will

b. Mode of determining existence of partnership

c. Property of firm

d. Duties of a partner

Choose the correct answer from the options given below:

1. b, a, d, c

2. c, b, a, d

3. a, c, b, d

4. d, a, b, c

Answer: 1

UGC NET June 2019

1. The inadequacy of consideration will be taken into account by a court of law

[1] When the promisor expressed his desire to get maximum return for his promise

[2] When the promisor performs his promise

[3] When fraud, coercion or undue influence in the formation of contract is pleaded

[4] Always at the discretion of court

Answer: 3

2. The communication of acceptance is complete as against the proposer

[1] When it is posted to him

[2] When it comes to the knowledge of the proposer

[3] When the letter containing acceptance is received by the proposer

[4] When it is put in the course of transmission, so as to be out of the acceptor’s power

Answer: 2

3. The principle “Restitution stops where payment begins” can be applied against

[1] An alien enemy only

[2] Minors only

[3] Lunatics and idiots only

[4] An incapable person

Answer: 4

4. A wife has an implied authority of the husband to buy articles of household necessity

[1] if the wife is living with her husband in a domestic establishment of their own

[2] if the wife is living separately

[3] if the wife is living with her husband not in a domestic establishment

[4] if the wife is provided reasonable allowance by the husband for purchase of household needs

Answer: 1

5. Which of the following is incorrect regarding meaning of 'Merchantable quality of goods'?

[1] the goods are free from patent defects

[2] the goods are free from latent defects

[3] the goods can be used for the purpose for which they are bought

[4] that the goods are marketable at their full value

Answer: 1

6. In which section of the Partnership Act it is laid down that there can be a partnership in a single or particular business venture?

[1] Section 8

[2] Section 9

[3] Section 10

[4] Section 11

Answer: 1

7. Every offence punishable under Section 147 of the Negotiable Instruments Act, 1881 is

[1] compoundable

[2] non-compoundable

[3] cognizable

[4] Both (2) and (3) above

Answer: 1

8. Which of the following actions can be taken when an issue is made under the provisions of Section 42 of the Companies Act, 2013?

[1] An advertisement can be issued in a local newspaper having city coverage

[2] The money payable towards subscription can be received in cash

[3] The share can be allotted within sixty days of the date of offer

[4] The offer can be made to a maximum of fifty people

Answer: 3

9. Which section of the Companies Act, 2013 deals with corporate social responsibility?

[1] Section 133

[2] Section 134

[3] Section 135

[4] Section 136

Answer: 3

10. Which of the following activities cannot be considered as relating to social responsibility under Section 135 of the Companies Act, 2013?

[1] Amount spent on activities which only benefit the employees of the company

[2] Amount spent to benefit people who are not economically backward

[3] Amount spent on activities which only benefit the consumers of the organisation

[4] Amount spent on activities which only benefit the suppliers of the organization

Answer: Deleted

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