CA Foundation Course CSG MAXIMUM MARKS: 100 Date

07 January 2025
PAPER 2 : BUSINESS LAW

Question No. 1 is Compulsory.

Answer any four question from the remaining five questions.
Wherever necessary, suitable assumptions should be made and disclosed by way of note
forming part of the answer. Working Notes should from part of the answer.

Question 1:
(a) Anoop , a minor, falsely representing her age, enters into an agreement with an
authorised Laptop dealer Mr. Sharma, owner of SP Laptops, for purchase of Laptop on
credit amounting Rs. 60,000/- for purchasing a laptop, on 1st August 2021. he
promised to pay back the outstanding amount with interest @ 16% p.a. by 31st July
2022. he told him that in case she won’t be able to pay the outstanding amount, her
father Mr. Shyam will pay back on her behalf. After One year, when Jaya was asked to
pay the outstanding amount with interest she refused to pay the amount and told the
owner that she is minor and now he can't recover a single penny from her.
he will be adult on 1st January 2024, only after that agreement can be ratified. Explain by
which of the following way Mr. Sharma will succeed in recovering the outstanding
amount with reference to the Indian Contract Act, 1872.
(i) By filing a case against Anoop , a minor for recovery of outstanding amount
with interest?
(ii) By filing a case against Mr. Shyam, father of Anoop for recovery of outstanding
amount?
(iii) By filing a case against Anoop , a minor for recovery of outstanding amount
after she attains maturity?
(5 Marks)

(b) Mr. Shantam gupta , an assessee, was a wealthy man earning huge income by way of
dividend and interest. He formed three Private Companies and agreed with each to
hold a bloc of investment as an agent for them. The dividend and interest income
received by the companies was handed back to Mr. Shantam gupta as a pretended
loan. This way, Mr. Shantam gupta divided his income into three parts in a bid to
reduce his tax liability.
Decide, for what purpose the three companies were established? Whether the legal
personality of all the three companies may be disregarded.
(5 Marks)

(c) Give differences between Partnership and joint stock company

(5 Marks)
(D) Define partnership and name the essential elements for the existence of a partnership
as per the Indian Partnership Act, 1932. Explain any two such elements in detail.

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 (5 marks)

Question 2:
(a) Mr. Das, a general store owner went to purchase 200 kg of Basmati Rice of specific
length from a whole seller. He saw the samples of rice and agreed to buy the one for
which the price was quoted as Rs. 150 per kg. While examining the sample Mr. Das
failed to notice that the rice contained a mix of long and short grain of rice.
The whole seller supplied the required quantity exactly the same as shown in the sample.
However, when Mr. Das sold the rice to one of his regular customers she complained
that the rice contained two different qualities of rice and returned the rice.
With reference to the provisions of the Sales of Goods Act, 1930, discuss the options
open to Mr. Das for grievance redressal. What would be your answer in case Mr. Das
specified his exact requirement as to length of rice?
(5 Marks)

(b) Explain the doctrine of Ultra Vires and State its implications (consequences)? 5 marks

(c) Give Characteristic / Salient Features of LLP? (4 Marks)

(d) Distinguish between 'Sale' and 'Hire Purchase' under the Sale of Goods Act,
1930 (3 Marks)
Question 3:
(a) What is anticipatory breach of contract? Give its effects?
(6 Marks)

(b) Mahendra Motors Limited is a Government Company. Farukh Auto Private Limited have
share capital of Rs. 10 crore in the form of 10,00,000 shares of Rs. 100 each. Mahendra
Motors Limited is holding 5,05,000 shares in Farukh Auto Private Limited. Farukh Auto
Private Limited claimed the status of Government Company. Advise as legal advisor,
whether Farukh Auto Private Limited is government company under the provisions of
Companies Act, 2013?
(7 Marks)

(c) Mr. A. Mr. B and Mr. C were partners in a partnership firm M/s ABC & Co., which is
engaged in the business of trading of branded furniture. The name of the partners was
clearly written along with the firm name in front of the head office of the firm as well
as on letter-head of the firm. On 1st October, 2018, Mr. C passed away. His name was
neither removed from the list of partners as stated in front of the head office nor from
the letter-heads of the firm. As per the terms of partnership, the firm continued its
operations with Mr. A and Mr. B as partners. The accounts of the firm were settled
and the amount due to the legal heirs of Mr. C was also determined on 10th
October, 2018. But the same was not paid to the legal heirs of Mr. C. On 16th October,
2018, Mr. X, a supplier supplied furniture worth Rs. 20,00,000 to M/s ABC & Co. M/s
ABC & Co. could not repay the amount due to heavy losses. Mr. X wants to recover
the amount not only from M/s ABC & Co., but also from the legal heirs of Mr. C.

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Analyses the above situation in terms of the provisions of the Indian Partnership Act, 1932
and decide whether the legal heirs of Mr. C can also be held liable for the dues towards
Mr. X.
(7 Marks)

Question 4:
(a) Mr. P and Mr. Q made contract wherein Mr. P agreed to deliver paper cup manufacture
machine to Mr. Q and to receive payment on delivery. On the delivery date, Mr. Q didn't
pay the agreed price. Decide whether Mr. P is bound to fulfill his promise at the time
of delivery?
(3 Marks)

(b) Z rent out his house situated at Mumbai to W for a rent of Rs. 10,000 per month. A
sum of Rs. 5 lac, the house tax payable by Z to the Municipal Corporation being in
arrears, his house is advertised for sale by the corporation. W pays the corporation,
the sum due from Z to avoid legal consequences. Referring to the provisions of the
Indian Contract Act, 1872 decide whether W is entitled to get the reimbursement of
the said amount from Z.
(4 Marks)

(c) What do you mean by Inchoate and Ambiguous Instruments?

(7 Marks)

(d) Write short note on Reserve Bank of India (RBI)?

(6 Marks)

Question 5:
(a) Kuldeep has given his residential property on rent amounting to Rs. 25,000 per month
to Shashank. Sumit became the surety for payment of rent by Shashank. Subsequently,
without Sumit's consent, Shashank agreed to pay higher rent to Kuldeep. After a few
months of this, Shashank defaulted in paying the rent.
(i) Explain the meaning of contract of guarantee according to the provisions of the
Indian Contract Act, 1872.
(ii) State the position of Sumit in this regard.
(3 Marks)

(b) Mehul goes to super market to buy a washing machine. He selects a branded washing
machine having a price tag of Rs. 15000 after a discount of Rs. 3000. Mehul reaches at
cash counter for making the payment, but cashier says, “Sorry sir, the discount was upto
yesterday. There is no discount from today. Hence you have to pay Rs. 18000.” Mehul
got angry and insists for Rs. 15000. State with reasons whether under Indian Contract
Act, 1872, Mehul can enforce the cashier to sale at discounted price i.e. Rs.
15000.
(4 Marks)

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(c) Explain whether the agency shall be terminated in the following cases under the
provisions of the Indian Contract Act, 1872:
(i) A gives authority to B to sell A's land, and to pay himself, out of the proceeds,
the debts due to him from A. Afterwards, A becomes insane.
(ii) A appoints B as A's agent to sell A's land. B, under the authority of A, appoints
C as agent of B. Afterwards, A revokes the authority of B but not of C. What is
the status of agency of C ?
(7 Marks)

(d) Mr. Kamal visited M/s Makrana Marbles for the purchase of marble and tiles for his newly
built house. He asked the owner of the above shop Mr. Jai to visit his house prior to
supply so that he can clearly ascertain the correct mix and measurements of marble and
tiles. Mr. Jai agreed and visited the house on the next day. He inspected the rooms in the
first floor and the car parking space. Mr. Kamal insisted him to visit the second floor as
well because the construction pattern was different, Mr. Jai ignored the above suggestion.
Mr. Jai. supplied 146 blocks of marble as per the size for the rooms and 16 boxes of
tiles with a word of caution that the tiles can bear only a reasonable weight. Marble
and Tiles were successfully laid except on second floor due to different sizes of the
marble. The tiles fitted in the parking space also got damaged due to the weight of the
vehicle came for unloading cement bags. Mr. Kamal asked Mr. Jai for the replacement
of marble and tiles to which Mr. Jai refused, taking the plea that the marble were as
per the measurement and it was unsafe to fit tiles at the parking area as it cannot take
heavy load. Discuss in the light of provisions of Sale of Goods Act 1930:
(i) Can Mr. Jai refuse to replace the marble with reference to the doctrine of Caveat
Emptor? Enlist the duties of both Mr. Kamal. and Mr. Jai.
(ii) Whether the replacement of damaged tiles be imposed on M/ s Makrana
Marbles? Explain.
(6 Marks)

Question 6:
(a) Mr. C Muttu drew a cheque in favour of Manav who was sixteen years old. Manav settled
his rental due by endorsing the cheque in favour of Mrs. Anjali the owner of the house in
which he stayed. The cheque was dishonoured when Mrs. Anjali presented it for payment
on grounds of inadequacy of funds. Advise Mrs. Anjali how she can proceed to collect her
dues.
(6 Marks)

(b) A went to B’s shop and selected some jewellery. He falsely represented himself to be a
man of credit and thereby persuaded B to take the payment by cheque. He further
requested him to hand over the particular type of ring immediately. On the due date,
when the seller, B presented the cheque for payment, the cheque was found to be
dishonoured. Before B could avoid the contract on the ground of fraud by A, he had sold
the ring to C. C had taken the ring in good faith and without any notice of the fact that
the goods with A were under a voidable contract. Discuss if such a sale made by nonowner
is valid or not as per the provisions of Sale of Goods Act, 1930?
(7 Marks)

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(c) Mrs. Aarti delivered her old silver jewellery to Mr. Yash a Goldsmith, for the purpose of
making new a silver bowl out of it. Every evening she used to receive the unfinished good
(silver bowl) to put it into box kept at Mr. Yash’s Shop. She kept the key of that box with
herself. One night, the silver bowl was stolen from that box. Was there a contract of
bailment? Whether the possession of the goods (actual or constructive) delivered,
constitute contract of bailment or not?
(4 Marks)

(d) Mr. Ajeet Birla was a big businessman of city Pune having two sons and one married
daughter. He decided to gift his one house to his daughter. For this purpose, he called his
lawyer at his house and made a written document for such gift. The lawyer advised him
to get the transfer document properly registered. When they both were going for
registration of document, they met with an accident and both of them died. Later, his
daughter found the document and claimed the house on the basis of that document.
Explain, whether she can get the house as gift under the Indian Contract Act, 1872?
(3 Marks)

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CSG TEAM (ALL THE BEST )

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