TEST - CA - FOUNDATION - BUSINESS LAWS

Time – 3 Hours Marks – 100

Instruction: Question Number 1 is compulsory and any 4 questions from the reaming
questions.

1. (A)
Titu owes Guddu, the following debts as per the table given below:
Amount of the Position of Debt
Debt (in INR)
5,000 Time barred on 01st July, 2023 as per the provisions of the Limitation Act, 1963

3,000 Time barred on 01st July, 2023 as per the provisions of the Limitation Act, 1963

12,500 Due on 1st April, 2022

10,000 Due on 15th July, 2023
7,500 Due on 25th November, 2023

Guddu makes payment on 1st April, 2023 mentioned as below without any notice regarding how to
appropriate the amount/ payment.
i. A cheque of Rs 12,500
ii. A cheque of Rs 4,000.
In such a situation how the appropriation of the payment is done against the debts as per the provisions
of the Indian Contract Act, 1872 by assuming that Titu also has not appropriated the amount received
towards any particular debt.
(6 Marks)
1. (B)
A mobile phone was displayed in a shop with a price tag of Rs 10,000 attached to the
mobile display box. As the price displayed was very less as compared to M.R.P. of the
mobile phone, Biru, a customer rushed to the cash counter and asked the shopkeeper to
receive the payment and pack up the mobile phone. The shopkeeper refused to hand
over the mobile phone to Biru in consideration of the price indicated in the price tag
attached to the mobile phone. Biru seeks your advice whether he can sue to shopkeeper
for the above cause under the Indian Contract Act, 1872.
(4 Marks)
1. (C)
On 1st March 2023, T Readymade Dress Garments, Shimla enters into a contract with J
Readymade Garments, Jaipur for the supply of different sizes of shirts ‘S’ (Small), ‘M’
(Medium), and ‘L’ (Large). As per the terms of the contract, 300 pieces of each category
i.e. ‘S’ @ Rs 900; ‘M’@ 1,000 and ‘L’ @ Rs 1,100 per piece have to be supplied on or
before 31st May, 2023.
However, on 1st May, 2023, T Readymade Dress Garments, Shimla informed J
Readymade Garments, Jaipur that the firm is not willing to supply the shirts at the above
rate due to the rise of prices in the raw material cost. In the meantime, prices for similar

1 PANKAJ KUMAR FCS, Chartered SI(CISI – London), MBA (Finance)

 shirts have gone up in the market to the tune of Rs 1,000; Rs 1,100; and Rs 1,200 for ‘S’,
‘M’ and ‘L’ sizes respectively.
Examine the rights of J Readymade Garments, Jaipur in this regard as per the provisions
of the Indian Contract Act, of 1872.
(5 Marks)
1. (D)
“Mere silence does not amount to fraud”. Explain the statement as per the provisions
contained in the Indian Contract Act, 1872.
(5 Marks)
2. (A)
Radha invited her ten close friends to celebrate her 25th birthday party on 1st January,
2023 at 7.30 P.M. at a well-known "Hi-Fi Restaurant" at Tonk Road, Jaipur. All invited
friends accepted the invitation and promised to attend the said party. On request of the
hotel manager, Radha deposited Rs 5,000/- as non-refundable security for the said party.
On the scheduled date and time, three among ten invited friends did not turn up for the
birthday party and did not convey any prior communication to her. Radha, enraged with
the behaviour of the three friends, wanted to sue them for loss incurred in the said party.
Advise as per the provisions of the Indian Contract Act, 1872.

Would your answer differ if the said party had been a "Contributory 2023 New Year
celebration Party" organized by Radha?
(4 Marks)
2. (B)
As per the general rule, "Stranger to a contract cannot file a suit in case of breach of
contract". Comment and explain the exceptions to this rule as per the provisions of the
Indian Contract Act, 1872.
(6 Marks)
2. (C)
What is Law and what is the process of making a law?
(5 Marks)
2. (D)
What are Negotiable Instruments? Explain its essential characteristics under the Negotiable
Instruments Act, 1881.
(5 Marks)

3. (A)
Manoj purchased some goods from Sagar. He issued a cheque to Sagar for the sale price on
14th June, 2023. Sagar presented the cheque in his bank and his bank informed him on 19th
June, 2023 that cheque was returned unpaid due to insufficiency of funds in the account of
Manoj. Sagar sued against Manoj under section 138 of the Negotiable Instruments Act,
1881. State with reasons, whether this suit is maintainable?
(5 Marks)
3. (B)
HP Polytech Limited has a paid-up share capital divided into 6,00,000 equity shares of Rs
100 each. 2,00,000 equity shares of the company are held by the Central Government and
1,20,000 equity shares are held by the Government of Maharashtra. Explain with reference

2 PANKAJ KUMAR FCS, Chartered SI(CISI – London), MBA (Finance)

to relevant provisions of the Companies Act, 2013, whether HP Polytech Limited can be
treated as a Government Company.
(4 Marks)
3. (C)
State whether the following are partnerships under the Indian Partnership Act, 1932:
(i) A and B buy commodity X and agree to sell the commodity with sharing the profits
equally.
(ii) Two firms each having 12 partners combine by an agreement into one firm.
(iii) A and B, co-owners, agree to conduct the business in common for profit.
(iv) Some individuals form an association to which each individual contributes Rs 5000
annually. The objective of the association is to produce clothes and distribute the
clothes free to the war widows.
(v) A and B, co-owners share between themselves the rent derived from a piece of land.
(5 Marks)
3. (D)
Explain the type of contracts in the following agreements under the Indian Contract Act,
1872:
(i) Rahul contracts with Bhanu (owner of the factory) for the supply of 10 tons of sugar, but
before the supply is effected, the factory catches fire and everything is destroyed.
(ii) A coolie in uniform picks up the luggage of Rohan to be carried out of the railway station
without being asked by Rohan and Rohan allows him to do so.
(iii) Obligation of finder of lost goods to return them to the true owner.
(6 Marks)
4. (A)
Amit, a minor was studying in a college. On 1st July, 2023 he took a loan of Rs 1,00,000 from
Bhavesh for payment of his college fees and to purchase books and agreed to repay by 31st
December, 2023. Amit possesses assets worth Rs 9 lakhs. On due date, Amit fails to pay back
the loan to Bhavesh. Bhavesh now wants to recover the loan from Amit out of his (Amit’s)
assets. Referring to the provisions of Indian Contract Act, 1872 decide whether Bhavesh
would succeed.
(4 Marks)
4. (B)
Samuel purchased a Television set from Arun, the owner of Gada Electronics, on the
condition that for the first three days he will check its quality and if satisfied he will pay for
that otherwise he will return the Television set. On the second day, the Television set was
spoiled due to an earthquake. Arun demands the price of Television set from Samuel.
Whether Samuel is liable to pay the price under the Sale of Goods Act, 1930? Who will
ultimately bear the loss?
(6 Marks)
4. (C)
Suraj sold his car to Sohan for Rs 1,75,000. After inspection and satisfaction, Sohan paid Rs
75,000 and took possession of the car and promised to pay the remaining amount within a
month. Later on, Sohan refuses to give the remaining amount on the grounds that the car
was not in good condition. Advise Suraj as to what remedy is available to him against Sohan
under the Sale of Goods Act, 1930.

3 PANKAJ KUMAR FCS, Chartered SI(CISI – London), MBA (Finance)

 (7 Marks)
4. (D)
Akash purchased 100 Kgs of wheat from Bhaskar at Rs 80 per kg. Bhaskar says that wheat is
in his warehouse in the custody of Kishore, the warehouse keeper. Kishore confirmed to
Akash that he can take the delivery of wheat from him and till then he is holding wheat on
Akash’s behalf. Before Akash picks the goods from warehouse, the whole wheat in the
warehouse has flowed in flood. Now Akash wants his price on the contention that no
delivery has been done by seller. Whether Akash is right with his views under the Sale of
Goods Act, 1930.
(3 Marks)
5. (A)
Make any 5 comparisons between PROMISSORY NOTE and BILL OF EXCHANGE.
(5 Marks)
5. (B)
Mention the importance of delivery in negotiation under the provisions of Negotiable
Instruments Act, 1881.
(5 Marks)
5. (C)
Sahil, Amit and Kunal were partners in a firm. The firm is a dealer in office furniture. They
have regular dealings with M/s AB and Co. for the supply of furniture for their business. On
30th June 2023, one of the partners, Mr. Kunal died in a road accident. The firm ordered
M/s AB and Co. to supply the furniture for their business on 25th May 2023, when Kunal
was also alive.
Now Sahil and Amit continue the business in the firm’s name after Kunal’s death. The firm
did not give any notice about Kunal’s death to the public or the persons dealing with the
firm. M/s AB and Co. delivered the furniture to the firm on 25th July 2023. The fact about
Kunal’s death was known to them at the time of delivery of goods. Afterwards the firm
became insolvent and failed to pay the price of furniture to M/s AB and Co. Now M/s AB and
Co. has filed a case against the firm for recovery of the price of furniture. With reference to
the provisions of Indian Partnership Act, 1932, explain whether Kunal’s private estate is also
liable for the price of furniture purchased by the firm?
(4 Marks)
5.(D)
AB Cloth House, a firm dealing with the wholesale and retail buying and selling of various
kinds of clothes, customized as per the requirement of the customers. They dealt with Silk,
Organdie, cotton, khadi, chiffon and many other different varieties of cloth.
Mrs. Reema, a customer, came to the shop and asked for a specific type of cloth suitable for
making a suit for her daughter’s birthday. She specifically mentioned that she required
cotton silk cloth which is best suited for the purpose.
The Shop owner agreed and arranged the cloth pieces cut into as per the buyers’
requirements.
When Reema went to the tailor to get the suit stitched, she found that seller has supplied
her cotton organdie material, cloth was not suitable for the said purpose. It was heavily
starched and not suitable for making the suit that Reema desired for. The Tailor asked
Reema to return the cotton organdie cloth as it would not meet his requirements.

4 PANKAJ KUMAR FCS, Chartered SI(CISI – London), MBA (Finance)

The Shop owner refused to return the cloth on the plea that it was cut to specific
requirements of Mrs. Reema and hence could not be resold.
With reference to the doctrine of "Caveat Emptor' explain the duty of the buyer as well as
the seller. Also explain whether Mrs. Reema would be able to get the money back or the
right kind of cloth as per the requirement?
(6 Marks)
6. (A)
When does dissolution of a partnership firm take place under the provisions of the Indian
Partnership Act, 1932? Explain.
(7 Marks)
6. (B)
What do you mean by Dormant Company under Companies Act, 2013?
(3 Marks)
6. (C)
What are the advantages of Advantages of LLP?
(6 Marks)
6. (D)
What will be rights with the promisor in following cases under the Indian Contract Act,
1872? Explain with reasons:
(a) Sunil promised to bring back Jatin to life again.
(b) Aman agreed to sell 50 kgs of apples to Raman. The loaded truck left for delivery on
15th March but due to riots in between reached Raman on 19th March due to which
the apples were rotten.
(c) An artist promised to paint on the fixed date for a fixed amount of remuneration but
met with an accident and lost his both hands.
(d) Abhishek entered into contract of import of toys from China. But due to disturbance
in the relation of both the countries, the imports from China were banned.
(4 Marks)

5 PANKAJ KUMAR FCS, Chartered SI(CISI – London), MBA (Finance)