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Sri Lanka Notary's Preliminary Exam study materials
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Sri Lanka Notary's Preliminary Exam practice questions

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Question 1Law of Notaries and Notarial Practice and Procedure

Under the Notaries Ordinance, which authority is empowered to appoint a notary for a particular judicial district in Sri Lanka?

  1. The Minister of Justice, on the recommendation of the Judicial Service Commission Correct answer.
  2. The Registrar General of the Department of the Registrar General
  3. The Judge of the District Court having jurisdiction over the district
  4. The Court of Appeal, on the recommendation of the Attorney-General

Explanation

The Notaries Ordinance vests the power to appoint notaries in the Minister of Justice, acting on the recommendation of the Judicial Service Commission, and appointments are made for a specified district. The other bodies named have no appointing power over notaries under the Ordinance, although courts exercise disciplinary and supervisory functions.

Question 2Law of Notaries and Notarial Practice and Procedure

A notary who is authorised to practise within a named district executes an attestation outside that district without any lawful authority. What is the principal legal consequence?

  1. The instrument is valid only if later ratified by the Registrar General
  2. The instrument is treated as an unsworn private document
  3. The instrument is void ab initio and has no legal effect
  4. The instrument remains valid but the notary commits a disciplinary offence Correct answer.

Explanation

Practice outside the limits of the notary's appointment is a breach of the Ordinance exposing the notary to disciplinary action, but the instrument itself is not thereby rendered void. The defect affects the notary's authority to act, not the intrinsic validity of the transaction recorded.

Question 3Law of Notaries and Notarial Practice and Procedure

Which of the following is a fundamental duty of a notary before attesting an instrument presented for execution?

  1. To obtain the prior written consent of the Registrar General
  2. To satisfy himself that the parties are known to him or properly identified and that they appear voluntarily Correct answer.
  3. To register the instrument in the land registry on the same day
  4. To publish notice of the transaction in the Gazette

Explanation

A notary must ascertain the identity of the executants and ensure that they execute voluntarily and with understanding of the contents. This identification and voluntariness check is the core safeguard of the notarial act.

Question 4Law of Notaries and Notarial Practice and Procedure

In notarial practice, what is the purpose of the notary's protocol?

  1. To record the fees charged to each client for tax purposes
  2. To serve as the notary's private diary of appointments
  3. To list the names of persons disqualified from acting as witnesses
  4. To maintain a permanent record of instruments attested and acts performed by the notary Correct answer.

Explanation

The protocol is the notary's official register in which each instrument attested and each notarial act performed is entered in chronological order. It provides an authoritative record that can be inspected and used to prove the contents of a lost instrument.

Question 5Law of Notaries and Notarial Practice and Procedure

An executant signs a deed before a notary but the notary omits to affix his seal. What is the effect on the instrument as a notarial act?

  1. The omission is cured automatically if the executant later acknowledges the signature
  2. The instrument is defective as a notarial act because the seal is an essential solemnity Correct answer.
  3. The omission is immaterial because the signature of the notary alone suffices
  4. The instrument becomes a valid will notwithstanding the omission

Explanation

The affixing of the notary's seal is an essential element of the notarial act; without it the instrument lacks the required solemnity. The defect is not cured by mere later acknowledgment, though the document may be proved by other legal means in appropriate proceedings.

Question 6Law of Notaries and Notarial Practice and Procedure

Which of the following persons is competent to act as a witness to the execution of a notarial instrument?

  1. The notary's clerk who prepared the draft
  2. An executant's minor child aged twelve years
  3. An independent adult of sound mind who is not a party or beneficiary Correct answer.
  4. A beneficiary named in the instrument

Explanation

A witness must be competent, independent, and free from interest in the transaction. An adult of sound mind who is neither a party nor a beneficiary satisfies these requirements.

Question 7Law of Notaries and Notarial Practice and Procedure

A notary is requested to attest a deed of transfer where the vendor is unable to appear but sends a friend with the title deeds and a signed letter of authority. What should the notary do?

  1. Refer the matter to the Registrar General for directions
  2. Attest the deed and note the irregularity in the protocol
  3. Decline to attest until the vendor appears personally or is lawfully represented by a duly constituted attorney Correct answer.
  4. Attest the deed on the strength of the letter and the title deeds

Explanation

Execution must be by the party personally or by an attorney acting under a valid power of attorney. A mere letter of authority to a friend does not constitute lawful representation for the execution of a notarial deed.

Question 8Law of Notaries and Notarial Practice and Procedure

When must a notary attest a power of attorney intended for use in the execution of a deed of immovable property?

  1. Only after the principal has appeared before the notary and executed it in the notary's presence Correct answer.
  2. Only after the attorney has also signed before the same notary
  3. Only after the document has been stamped and registered
  4. Only after the principal's signature has been authenticated by the Registrar of Lands

Explanation

A power of attorney must be executed by the principal in the presence of the notary, who attests the principal's signature and capacity. The attorney's signature is not required for the instrument to be validly executed by the principal.

Question 9Law of Notaries and Notarial Practice and Procedure

A notary discovers that a deed already attested by him contains a clerical error in the description of the land. What is the proper course?

  1. Inform the Registrar of Lands and request an amendment of the register
  2. Alter the original instrument and initial the change in the margin
  3. Execute a separate deed of rectification or correction in accordance with law Correct answer.
  4. Cancel the original page and paste a corrected slip over it

Explanation

An attested instrument should not be tampered with; corrections are effected by a separate instrument executed with the same formalities. This preserves the integrity of the original record and the evidentiary value of the protocol.

Question 10Law of Notaries and Notarial Practice and Procedure

Which of the following best describes the notary's obligation regarding the reading over and explanation of an instrument to the executants?

  1. The notary must read or cause the instrument to be read and explained to the executants before signature Correct answer.
  2. The notary must have the instrument read by an independent attorney in all cases
  3. The notary may dispense with reading if the executants are literate and sign without objection
  4. The notary must read the instrument only when a party requests it

Explanation

The notary is required to read over or cause the instrument to be read and explained to the executants so that they understand its effect before signing. Literacy alone does not relieve the notary of this duty.

Question 11Law of Notaries and Notarial Practice and Procedure

A notary attests an instrument in which he himself is a beneficiary. What is the position?

  1. The attestation is voidable at the instance of the Registrar General
  2. The attestation is valid if the interest is disclosed in the protocol
  3. The attestation is valid provided a second notary also signs
  4. The notary is disqualified from attesting by reason of his interest in the transaction Correct answer.

Explanation

A notary may not attest an instrument in which he has a personal interest, because the conflict between interest and duty destroys the impartiality essential to the notarial act. Disclosure does not cure the disqualification.

Question 12Law of Notaries and Notarial Practice and Procedure

What is the prescribed consequence where a notary fails to maintain his protocol in the manner required by law?

  1. All instruments attested during the period become void
  2. The notary is liable to disciplinary action and the omission may affect the proof of instruments Correct answer.
  3. The notary's appointment lapses automatically without any order
  4. The notary is automatically prosecuted for forgery

Explanation

Failure to keep the protocol properly is a breach of professional duty attracting disciplinary sanctions, and it may make proof of instruments more difficult. It does not automatically void instruments or terminate the appointment.

Question 13Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed executed by a person who appears to be of unsound mind. What is the notary's proper duty?

  1. Attest the deed if a relative present confirms the party understands it
  2. Attest the deed and forward a report to the District Court
  3. Attest the deed and record the party's apparent condition in the attestation
  4. Refuse to attest unless satisfied that the executant has the capacity to understand the transaction Correct answer.

Explanation

The notary must be satisfied of the executant's capacity to understand the nature and effect of the transaction. Where capacity is doubtful, the notary should decline to attest rather than proceed on assurances.

Question 14Law of Notaries and Notarial Practice and Procedure

How should a notary deal with a deed presented for attestation that has been written in a language he does not understand?

  1. He must refuse to attest any deed not written in an official language
  2. He must have the instrument translated and explained to him and to the executants before attesting Correct answer.
  3. He may attest it and note that he did not understand the contents
  4. He may attest it if the executants confirm the contents are correct

Explanation

A notary cannot properly certify an instrument whose contents he does not understand. He must have it translated and explained so that both he and the executants comprehend its effect before attestation.

Question 15Law of Notaries and Notarial Practice and Procedure

Which statement correctly describes the notary's duty in relation to the attestation clause?

  1. The clause must state the facts of execution, identification, and the notary's satisfaction as required by law Correct answer.
  2. The clause may be omitted if the parties sign in the presence of witnesses
  3. The clause may be signed by the notary's clerk on his behalf
  4. The clause is optional and serves only as a formality

Explanation

The attestation clause is the notary's formal certification of the circumstances of execution, including identification and voluntariness. It must be signed by the notary himself and cannot be delegated.

Question 16Law of Notaries and Notarial Practice and Procedure

A notary is required to attest a will. Which formal requirement applies specifically to the notarial attestation of a will?

  1. The will must be attested by the notary and read only to the executor
  2. The will must be attested by the notary and by two or more witnesses present at the same time Correct answer.
  3. The will must be attested by the notary alone without witnesses
  4. The will must be attested by the notary and registered within seven days

Explanation

The notarial attestation of a will requires the notary together with the requisite number of witnesses present at the same time, so that the testator's execution is properly witnessed. The other options misstate the formalities.

Question 17Law of Notaries and Notarial Practice and Procedure

What is the effect of a notary accepting a gift of property from a client in consideration of attesting the client's deed?

  1. It is lawful if the value is below the prescribed fee
  2. It is improper and may amount to professional misconduct Correct answer.
  3. It is valid provided the notary discloses it to the Registrar General
  4. It is permissible if recorded in a separate agreement

Explanation

Accepting a benefit connected with the performance of a notarial act compromises the notary's independence and constitutes professional misconduct. The proper course is to refuse such benefits entirely.

Question 18Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed of mortgage over land. Which step is essential before attestation to protect the mortgagee?

  1. A valuation report by a government valuer
  2. A certificate of non-encumbrance from the Registrar General
  3. Publication of the mortgage in a newspaper
  4. A search of the land register to verify title and encumbrances Correct answer.

Explanation

A search of the land register enables the notary and the parties to verify the mortgagor's title and existing encumbrances before execution. It is a standard precaution in conveyancing practice, though it is not the only step.

Question 19Law of Notaries and Notarial Practice and Procedure

Which of the following is the correct mode of proving a notarial instrument where the original is lost?

  1. By a certified copy from the notary's protocol or other secondary evidence admissible in law Correct answer.
  2. By an affidavit of the notary's clerk alone
  3. By the oral testimony of any person who saw the deed
  4. By a fresh deed executed by the parties reciting the lost instrument

Explanation

Where an original notarial instrument is lost, a certified copy from the protocol or other admissible secondary evidence may be used to prove its contents. The protocol serves precisely this purpose.

Question 20Law of Notaries and Notarial Practice and Procedure

A notary is authorised to practise in one district but maintains an office in another district where he regularly drafts and attests deeds. What is the position?

  1. The practice is lawful if the instruments concern land in his district
  2. The practice is lawful if the notary informs the Registrar of Lands
  3. The practice is unlawful and exposes the notary to disciplinary action Correct answer.
  4. The practice is lawful because the office is merely administrative

Explanation

A notary's authority is confined to the district for which he is appointed, and practising outside it is a breach of the terms of his appointment. The location of the land or the character of the office does not extend his authority.

Question 21Law of Notaries and Notarial Practice and Procedure

Which body exercises disciplinary control over notaries in Sri Lanka?

  1. The Incorporated Council of Legal Education
  2. The Minister under the Notaries Ordinance Correct answer.
  3. The Department of the Registrar of Companies
  4. The Bar Association of Sri Lanka

Explanation

Under section 21 of the Notaries Ordinance, a High Court Judge investigates specified misconduct and reports to the Minister. The Minister may then suspend the notary or cancel the warrant. This statutory division of responsibility does not give the Judicial Service Commission disciplinary control over notaries.

Question 22Law of Notaries and Notarial Practice and Procedure

What is the significance of the notary's signature on an instrument in relation to its evidentiary value?

  1. It transfers title to immovable property immediately
  2. It removes the need for any stamp duty
  3. It raises a presumption of due execution that may be rebutted by evidence Correct answer.
  4. It converts the instrument into a public document conclusive against all persons

Explanation

The notary's signature and attestation raise a presumption that the instrument was duly executed, but the presumption is rebuttable. It does not make the instrument conclusive or transfer title by itself.

Question 23Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed executed by a company. What should the notary verify?

  1. That the company has paid its annual fees to the Registrar of Companies
  2. That the company's seal or authorised signatory acts in accordance with a valid board resolution Correct answer.
  3. That the company has published its accounts in the Gazette
  4. That the company's shares are fully paid up

Explanation

Where a company executes a deed, the notary should verify that the person signing is authorised by a valid board resolution and that the seal, if used, is affixed in accordance with the articles. Payment of annual fees or share capital status is not the notary's concern.

Question 24Law of Notaries and Notarial Practice and Procedure

Which statement best captures the notary's duty of confidentiality in respect of information learned in the course of his practice?

  1. The duty applies to confidential information but may yield to lawful compulsion of law Correct answer.
  2. The duty applies only to information marked confidential by the client
  3. The duty ends when the client dies
  4. The duty is absolute and admits of no exception whatsoever

Explanation

A notary must keep confidential the information entrusted to him, but the duty is subject to lawful disclosure required by statute or court order. It is neither limited to marked documents nor absolute in all circumstances.

Question 25Law of Notaries and Notarial Practice and Procedure

A notary attests a deed of gift and, at the donor's request, retains the original in his custody. What is the notary's obligation regarding custody?

  1. He must deposit it with the Registrar General within one month
  2. He may retain it indefinitely without any record
  3. He may destroy it after ten years without notice
  4. He must keep it safely and deliver it to the person lawfully entitled on demand Correct answer.

Explanation

Where a notary retains an instrument in custody, he holds it as a fiduciary for the person entitled and must deliver it on lawful demand. He must also maintain proper records of custody.

Question 26Law of Notaries and Notarial Practice and Procedure

Under the Notaries Ordinance, which requirement must a notary satisfy before he may lawfully attest an instrument relating to land situated in his district?

  1. He must publish notice of the attestation in the Government Gazette within seven days.
  2. He must be a registered attorney-at-law of the Supreme Court in addition to being a notary.
  3. He must hold a valid licence and be appointed for the district in which the land is situated. Correct answer.
  4. He must obtain the prior written consent of the Registrar-General for each instrument.

Explanation

A notary's authority is territorial and licence-based: he may attest instruments only within the district for which he is appointed and while his licence subsists. Registration as an attorney-at-law is not a precondition to notarial practice, and neither Gazette publication nor Registrar-General consent is required for ordinary attestation.

Question 27Law of Notaries and Notarial Practice and Procedure

A notary keeps a register in which he records the instruments he attests. What is this register called in notarial practice?

  1. The protocol Correct answer.
  2. The minute book
  3. The land register
  4. The attestation roll

Explanation

The protocol is the notary's official record in which each attested instrument is entered and preserved, and it forms the core of his official custody obligations. The land register is maintained by the land registry, not the notary, and the other terms have no standing in Sri Lankan notarial law.

Question 28Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed of sale of immovable property. Which party or parties must appear before him for the attestation to be valid?

  1. The executants of the deed, whose signatures he attests. Correct answer.
  2. The executants and the licensed surveyor who prepared the plan.
  3. The executants and the two attesting witnesses only.
  4. The executants and the Registrar of Lands of the district.

Explanation

The essential act of attestation is that the notary personally sees the executants sign, or hears them acknowledge their signatures, in his presence. Witnesses and other persons may be present but are not the persons whose execution the notary attests, and neither the surveyor nor the Registrar of Lands participates in attestation.

Question 29Law of Notaries and Notarial Practice and Procedure

Which statement correctly describes the notary's duty regarding the identity of a person appearing before him to execute a deed?

  1. He may attest if the executant states his name orally without any check.
  2. He may delegate identification to a clerk in his office.
  3. He must satisfy himself of the identity of the executant by proper means before attesting. Correct answer.
  4. He may rely solely on an introduction by a person known to him.

Explanation

A notary must ascertain, by proper means such as a national identity card or passport, that the person before him is the person named in the instrument, because his attestation certifies that execution. Reliance on a bare introduction, an unchecked oral statement, or a clerk's assessment does not discharge this personal duty.

Question 30Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed of declaration of trust where the settlor signs in his presence but the deed contains a blank space for the name of the trustee. What is the notary's proper course?

  1. Attest the deed and note the blank in the attestation clause as an irregularity.
  2. Attest the deed and permit the blank to be filled later by the settlor.
  3. Attest the deed and fill the blank himself as a matter of convenience.
  4. Decline to attest until the blank is completed, since a material blank renders the instrument defective. Correct answer.

Explanation

A notary should not attest an instrument containing material blanks, because the document he certifies must be complete as executed and later insertion of essential particulars invites fraud and uncertainty. Attesting with a blank, filling it himself, or merely noting it does not cure the defect.

Question 31Law of Notaries and Notarial Practice and Procedure

A notary is instructed to attest a deed of lease. Before attestation he notices that the deed recites a consideration that differs from what the parties tell him was actually agreed. What should he do?

  1. Ask the parties to reconcile the discrepancy and correct the deed before he attests it. Correct answer.
  2. Attest the deed but record the true consideration in his protocol only.
  3. Refuse to act further and report the parties to the police.
  4. Attest the deed as drafted and leave the parties to their remedies.

Explanation

The notary must ensure the instrument he attests reflects the true agreement of the parties, so a discrepancy in a material recital should be resolved and the deed corrected before attestation. Attesting a knowingly inaccurate recital, recording a private note, or making an unwarranted criminal report are not proper responses.

Question 32Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed of transfer executed by an executant who speaks only a language other than the one in which the deed is written. What is the notary's proper course?

  1. Attest the deed because the executant signed it voluntarily.
  2. Have the deed explained to the executant in a language he understands and satisfy himself that it is understood before attestation. Correct answer.
  3. Decline to attest in every case where languages differ.
  4. Require the executant to sign an English translation annexed to the deed.

Explanation

The notary must ensure the executant understands the nature and effect of the instrument, which requires explanation in a language the executant comprehends before attestation proceeds. Voluntary signature alone is insufficient, an annexed translation is not the required safeguard, and a difference of language does not by itself bar attestation.

Question 33Law of Notaries and Notarial Practice and Procedure

After attesting a deed, a notary is uncertain whether he has correctly complied with a procedural requirement. What is the appropriate professional step?

  1. Alter the deed to reflect what he believes the requirement to be.
  2. Ask the executant to sign a disclaimer of the notary's liability.
  3. Ignore the doubt because the deed has already been signed.
  4. Consult the relevant statutory provisions and, where necessary, seek guidance from the competent authority. Correct answer.

Explanation

A notary resolves doubts about procedure by reference to the governing law and, where needed, the authority that regulates notaries, so that the record is correct. Altering an executed deed, ignoring the issue, or obtaining a disclaimer from the client are improper ways of dealing with a procedural doubt.

Question 34Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed of gift by a donor who is elderly and appears confused about the nature of the transaction. What is the notary's proper course?

  1. Attest the deed and record that the donor appeared confused.
  2. Satisfy himself that the donor understands the transaction and, if not, decline to attest. Correct answer.
  3. Attest the deed if a relative present confirms the donor's intention.
  4. Attest the deed because the donor signed without protest.

Explanation

The notary must be satisfied that the executant has the capacity to understand and does understand the transaction; if that understanding is lacking, he should not attest. A relative's assurance, a note of confusion, or mere absence of protest does not substitute for the donor's own informed execution.

Question 35Law of Notaries and Notarial Practice and Procedure

A notary is served with a summons to produce his protocol in legal proceedings. What is his proper response?

  1. Hand the entire protocol to the party who requests it without any court order.
  2. Destroy the relevant pages to protect client confidentiality.
  3. Refuse to produce anything because the protocol is absolutely privileged.
  4. Produce the protocol or the relevant entries as directed by the court while safeguarding the record. Correct answer.

Explanation

The protocol is an official record that the notary holds subject to the law, and he must comply with a court's direction to produce it or the relevant entries while preserving its integrity. The protocol is not absolutely immune from production, cannot be released to a party at will, and must never be destroyed.

Question 36Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed of mortgage and to also act as the attorney who negotiates the loan for the mortgagee. What is the correct professional position?

  1. He should avoid acting in a dual role that creates a conflict with his impartial notarial function. Correct answer.
  2. He must act in both roles because the mortgage cannot be completed otherwise.
  3. He may act in both roles because the parties consent to it.
  4. He may act in both roles provided he charges separate fees.

Explanation

A notary's attestation must be independent and impartial, so he should not combine it with acting as a negotiating attorney for one party in the same transaction. Party consent, separate fees, or commercial convenience do not remove the conflict of interest.

Question 37Law of Notaries and Notarial Practice and Procedure

A notary attests a deed but later realises that one of the attesting witnesses was a minor at the time of execution. What is the effect on the attestation?

  1. The attestation is valid if the minor was accompanied by a guardian.
  2. The attestation becomes valid once the witness attains majority.
  3. The attestation is defective because a minor is not competent to witness the execution. Correct answer.
  4. The attestation remains valid because witnesses are merely formal.

Explanation

A person who lacks legal capacity cannot validly witness the execution of a notarial instrument, so the attestation is defective to that extent. Witnesses are not a mere formality, later majority cannot cure the defect retrospectively, and a guardian's presence does not make a minor a competent witness.

Question 38Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed of transfer where the land described lies partly in his district and partly in another district. What is the correct approach?

  1. He may attest and leave the territorial question to the Registrar of Lands.
  2. He may attest only if his authority extends to the transaction, and he should verify the position before acting. Correct answer.
  3. He may attest because the deed is signed in his office.
  4. He may attest freely because the executants reside in his district.

Explanation

Territorial authority depends on the district for which the notary is appointed and the property concerned, so a deed spanning districts requires him to verify that his authority covers the transaction before attesting. Residence of the parties, the place of signing, or later scrutiny by the Registrar of Lands does not enlarge his authority.

Question 39Law of Notaries and Notarial Practice and Procedure

A notary is asked to attest a deed of gift and to accept appointment as the donor's attorney to manage the gifted property after the gift. What is the correct professional response?

  1. He should accept because the donor has expressly requested it.
  2. He should accept if he reduces his notarial fee for the deed.
  3. He should decline the appointment because it compromises his independent notarial position. Correct answer.
  4. He should accept if he discloses the appointment to the donee.

Explanation

Accepting a continuing role over the very property he has attested creates a conflict with the notary's independent and impartial function, and the proper course is to decline. The donor's request, disclosure to the donee, or a reduced fee does not remove the conflict.

Question 40Law of Notaries and Notarial Practice and Procedure

A notary has attested an instrument and later discovers that the executant had used a forged identity document. What is the notary's most appropriate course of action?

  1. Conceal the matter to protect the reputation of his office.
  2. Alter the protocol to remove the executant's name.
  3. Report the matter to the appropriate authorities and make a proper record of the circumstances. Correct answer.
  4. Take no action because attestation is complete.

Explanation

Where a notary discovers that his attestation was obtained by fraud, he must act to protect the integrity of the record and the public interest, which means reporting the matter and accurately recording what occurred. Concealment, alteration of the protocol, or inaction would compound the wrongdoing and breach his custodial duties.

Question 41Law of Contracts and Commercial Transactions

Under the general law applicable in Sri Lanka, which element is essential to convert a mere invitation to treat into a binding offer capable of acceptance?

  1. Payment of consideration in advance
  2. Approval of the terms by a notary
  3. A written document signed by both parties
  4. An intention to be legally bound upon acceptance Correct answer.

Explanation

An offer requires a definite promise to be bound on stated terms, communicated with the intention that acceptance will create legal relations. Mere preliminary negotiation or supply of information is an invitation to treat. Writing, notarial approval and advance payment are not essential elements of an offer.

Question 42Law of Contracts and Commercial Transactions

A seller posts a letter of acceptance on 3 March. The buyer had stated in the offer that acceptance must reach the buyer by 10 March. The letter arrives on 12 March. What is the position at common law?

  1. The offer lapses automatically and cannot be accepted at all
  2. A contract was formed on 12 March when the letter arrived
  3. No contract exists because acceptance arrived after 10 March Correct answer.
  4. A contract was formed on 3 March when the letter was posted

Explanation

The postal rule is displaced where the offeror expressly requires actual communication of acceptance by a stated date. Since the acceptance reached the offeror only on 12 March, after the stipulated deadline, no contract is formed. The posting date is irrelevant once the offeror has excluded the postal rule.

Question 43Law of Contracts and Commercial Transactions

Which of the following best describes the doctrine of consideration in a simple contract?

  1. The moral duty owed by a promisor to a dependant
  2. A formal recital of the parties' intentions before a notary
  3. The registration of the contract with a public authority
  4. Something of value given in exchange for the promisor's promise Correct answer.

Explanation

Consideration is the price for which the promise of the other is bought, and it must be of some value in the eyes of the law. It distinguishes a binding bargain from a gratuitous promise. Moral obligation, notarial recital and registration are not substitutes for consideration.

Question 44Law of Contracts and Commercial Transactions

A creditor agrees in writing to accept LKR 500,000 from a debtor in full satisfaction of a debt of LKR 800,000, and the debtor pays that sum on the agreed date. Which statement best reflects the common law position?

  1. The creditor may still recover the balance because part payment of a debt is not good consideration Correct answer.
  2. The part payment is good consideration because the agreement was in writing
  3. The debtor must pay the balance because consideration must be adequate
  4. The agreement is void for uncertainty of the amount paid

Explanation

At common law, part payment of an existing debt is not good consideration for the creditor's promise to forgo the balance, because the debtor does no more than he was already bound to do. Writing does not cure the absence of consideration. Adequacy of consideration is not generally a matter for the court.

Question 45Law of Contracts and Commercial Transactions

A person who is not a party to a contract seeks to enforce a benefit conferred on him by that contract. What is the traditional common law position?

  1. He may enforce it only if he gave notice to the promisor
  2. He may enforce it because he is the beneficiary of the promise
  3. He cannot enforce it because of the doctrine of privity of contract Correct answer.
  4. He may enforce it only if the contract was notarised

Explanation

Privity of contract means that only the parties to a contract can acquire rights and be subject to obligations under it. A third party who benefits from a promise generally cannot sue on it at common law. Notice to the promisor and notarial attestation do not create a right of action for a stranger.

Question 46Law of Contracts and Commercial Transactions

A contract for the sale of immovable property is executed in Sri Lanka. Which formality is generally required for a valid transfer of title to the land?

  1. A written memorandum signed by the purchaser only
  2. A registered power of attorney in favour of the buyer
  3. A notarial instrument attested in the manner required by law Correct answer.
  4. An oral agreement witnessed by two persons

Explanation

Transfers of immovable property in Sri Lanka are effected by notarial instruments, and registration under the relevant land law provisions is necessary for the transfer to have effect against third parties. A private memorandum or oral agreement does not convey title. A power of attorney is a separate authority and does not itself transfer ownership.

Question 47Law of Contracts and Commercial Transactions

A party enters a contract on the basis of a false statement of fact made to him by the other party, which induced him to contract. Which remedy is available where the misrepresentation was innocent?

  1. Criminal prosecution for fraud
  2. Specific performance with damages
  3. Rescission of the contract Correct answer.
  4. Damages for the tort of deceit

Explanation

An innocent misrepresentation renders the contract voidable and entitles the representee to rescind, subject to bars such as affirmation, lapse of time and impossibility of restitution. Damages for deceit require a knowingly false statement. Specific performance is a discretionary equitable remedy not tied to innocent misrepresentation, and criminal liability requires fraud.

Question 48Law of Contracts and Commercial Transactions

Which of the following agreements is most likely to be unenforceable on the ground of restraint of trade?

  1. An agreement by a trader not to carry on any trade anywhere in the world for twenty years Correct answer.
  2. An agreement by a partner not to solicit former clients for one year within a defined district
  3. An agreement by an employee not to disclose confidential information after leaving employment
  4. An agreement by a seller of a business not to compete within a reasonable area for a reasonable period

Explanation

A restraint of trade is prima facie void unless it is reasonable in the interests of the parties and of the public. A worldwide restraint for twenty years is far beyond what is necessary to protect a legitimate interest and is therefore unenforceable. Limited restraints protecting goodwill, confidentiality or client connection may be upheld.

Question 49Law of Contracts and Commercial Transactions

A minor enters into a contract for the purchase of goods that are not necessaries. What is the effect of the contract at common law?

  1. The contract is void ab initio and cannot be ratified after majority
  2. The contract is voidable at the minor's option and binding unless repudiated
  3. The contract is fully enforceable against the minor
  4. The contract is voidable and may be ratified by the minor on attaining majority Correct answer.

Explanation

Contracts with minors for non-necessaries are generally voidable, and the minor may ratify them on attaining majority. This distinguishes them from contracts for necessaries, which are enforceable, and from contracts that are void from the outset. The right to ratify reflects the protective policy of the law towards minors.

Question 50Law of Contracts and Commercial Transactions

A contract is discharged by frustration. Which event is most likely to amount to frustration?

  1. A delay in performance caused by the default of the performing party
  2. The insolvency of one party after the contract was made
  3. The destruction of the specific subject matter of the contract without fault of either party Correct answer.
  4. A rise in the market price of the subject matter making performance more expensive

Explanation

Frustration occurs where, without fault of either party, an event renders performance impossible or radically different from what was undertaken. Destruction of the specific subject matter is a classic instance. Mere increased expense, insolvency or self-induced delay does not generally frustrate a contract.