BUSINESS LAWS QUESTION
PAPERS 2021 (Held in 2022)
Gauhati University Solved
Question Paper
Paper: COM – HC – 1026
(Honours)
Full Marks: 80 (Time: 3
hours)
The figures in the margin
indicate full marks for the questions
1. Choose the correct answer: 1x10=10
a) An expression of
interest to buy a showcase item from a shopkeeper is a / an
1. Offer.
2. Request.
3. Choice.
4. Acceptance.
Ans:
b) Who among the following
appoints a sub-agent?
1. Principal.
2. Third person.
3. Agent.
4. Both (1) and (3).
Ans: 3. Agent.
c) In a contract of sale,
if no price has been fixed by the parties, the buyer is required to pay
1. Lower market price.
2. Average price of the year.
3. Maximum market price.
4. Reasonable price.
Ans: 4. Reasonable price.
d) The provisions
regarding maximum number of members in a partnership are given in
1. The Partnership Act.
2. The Contract Act.
3. The Companies Act.
4. The Societies Registration Act.
Ans: 3. The Companies Act.
e) The Right to
Information Act, 2005 came into force on
1. 12th March, 2005.
2. 12th July, 2005.
3. 12th October, 2005.
4. 12th November, 2005.
Ans: 3. 12th October, 2005.
f) The Indian Contract Act
came into effect from 1st September, 1872. The statement is
1. Correct.
2. Incorrect.
Ans: 1. Correct.
g) An agent can work for
more than one principal. The statement is
1. Correct.
2. Incorrect.
Ans: 1. Correct
h) Sale is not an executed
contract. The statement is
1. Correct.
2. Incorrect.
Ans: 2. Incorrect.
i) A contract of
partnership should always be in writing. The statement is
1. Correct.
2. Incorrect.
Ans: 1. Correct
j) A promissory note needs
acceptance. The statement is
1. Correct.
2. Incorrect.
Ans: 2. Incorrect.
2. Answer the following questions in brief: 2x5=10
a) What is contract?
Ans: Section
2 (h) defines ‘Contract’ as an agreement enforceable by law. If we analyse the definition it has two
components viz.
1. An agreement
between two or more persons "To Do" or "Not to Do"
something.
2. An
enforceability of such an agreement at law i.e. personal rights and personal
obligations created and defined by agreement must be recognized by law.
b) Write two elements of a contract of guarantee.
Ans: Offer and acceptance are two elements of a contract of
guarantee. There must be two parties to an agreement i.e.
one making the offer & other party accepting it. Acceptance of must be
unconditional & absolute. A part of an offer cannot be accepted. The terms
of an offer must be definite. The acceptance must be in the mode as prescribed
& must be communicated. The acceptor of an offer must accept it in the same
way & same sense & at the same time as offered by the offeror i.e.
there must be consensus ad idem.
c) Who is an unpaid seller?
Ans:
Section 45 define an unpaid seller as “One who has not been paid or tendered
the whole of the price or one who receives a bill of exchange or other
negotiable instrument as conditional payment and the condition on which it was
received has not been fulfilled by reason of dishonour of the instrument or
otherwise.” The following conditions must be fulfilled before a seller can be
deemed to be an unpaid seller:
(i) He must be unpaid and the price must be due.
(ii) He must have an immediate right of action for the price.
(iii) A bill of exchange or other negotiable instrument was
received but the same has been dishonoured.
d) Write two differences between partnership and
co-ownership.
Ans:
Difference between Partnership and Co-ownership
|
Basis |
Partnership |
Co-ownership |
|
1. Basis of creation |
Partnership is arises from contract not from
status. |
Co-ownership may be arises from contract or from
status. |
|
2. Covered by |
Partnership is covered under the Indian
Partnership Act’ 1932. |
Co-ownership is not covered under the Indian
Partnership Act’ 1932. |
e) Who are the parties to a bill of exchange?
Ans: A bill of exchange has 3 parties:
a)
the drawer, who draws the bill
of exchange
b)
the drawee, who has to make the
payment
c)
the payee, who is entitled to
the payment.
Also Read:
Business Laws Solved Question Papers' 2019, Gauhati University
Business Laws Solved Question Papers' 2020 (Held in 2021), Gauhati University
Business Laws Solved Question Papers' 2021 (Held in 2022), Gauhati University
3.
Answer any four of the following questions: 5x4=20
a) Briefly state various kinds
of contract.
Ans: Types of Contracts
|
On the basis of validity |
On the basis of performance |
On the basis of obligations to perform |
On the basis of formation |
|
1. Valid
Contract 2. Void
Contract 3. Void
contract 4.
Illegal contract 5.
Unenforceable contract |
1.
Executed contract 2.
Executory contract |
1.
Unilateral contract 2.
Bilateral contract |
1.
Expressed contract 2.
Implied contract 3. Quasi
contract 4.
Standard Form |
The
above various types of contract are mentioned below:
a) VALID CONTRACT:
Valid contract is that which is enforceable at
law. It creates legal obligations between the parties. It enables one party to
compel another party to do something or not to do something. In case of valid
contract all the parties to the contract are legally responsible for the
performance of a contract. If one party breaks the contract other has right to
be enforced through the court.
b) VOID CONTRACT: "An agreement not enforceable at law is a void
contract". Originally it is a valid contract but due to certain reasons it
becomes void after its formation. A void contract cannot be enforced by either party. In this case the
parties are not legally responsible to fulfill the contract. If any party has
received any benefit is bound to return. This contract takes place when consent
of one of the parties is not free.
c)
VOIDABLE CONTRACT: An
agreement, which is enforceable by law at the option of one more of the
parties, but not at the option of the other (s), is a voidable contract.
d) Unenforceable
Contract: An unenforceable contract is that contract which cannot be
enforced in courts due to some technical defect, such as absence of
writing, payment of inadequate stamp duty etc.
e) Illegal
Contract: An illegal agreement is one the object of which is: a)
Fraudulent b) against the provisions of any law c) causes an injury or damage
to any person or his property d) immoral or opposed to public policy.
f) Express
Contract: In express contracts, the terms are stated in writing expressly.
g) Implied
Contract: An implied contract is one which is the result of the conduct of
the parties. For example when a person boards a public bus or drinks a cup of tea
in a restaurant there is an implied contract and he has to pay the charges for
it.
h) Executed
Contract: An executed contract is that contract in which both the parties
to the contract have performed their respective promises.
i) Executory
Contract: An Executory contract is that contract in which both the parties
to it have yet to perform their promises.
j) Unilateral
Contract: A unilateral contract is that contract in which only one party
is required to perform his obligation.
k) Bilateral
Contract: A bilateral contract is one in which both the parties are
required to perform their obligations.
l) Quasi contract: In
quasi contract, all the essentials of a contract are absent but the law imposes
a contract on the basis of doctrine of unjust enrichment.
m) Standard form
contract: Those contracts, in which one party proposes to other party with
pre-determined fixed conditions or terms for contract and other party has to
accept or refuse but cannot alter any term or condition, are called standard
form contract.
b) Explain the duties of bailee.
Ans:
Duties/Responsibilities of a Bailee
1.
Duty to take reasonable care (151): The
bailee is bound to take as much care of the goods bailed to him as a man of
ordinary prudence would, under similar circumstances take, of his own goods of
the same bulk, quality, and value as the goods bailed. The bailee must treat
the goods as his own in terms of care. However, this does not mean that if the
bailer is generally careless about his own goods, he can be careless about the bailed
goods as well. He must take care of the goods as any person of ordinary
prudence would of his things.
2.
Duty not to make unauthorized use (Section 154): Section 154 says that if the bailee makes any use of the
goods bailed which is not according to the conditions of the bailment; he is
liable to make compensation to the bailer for any damage arising to the goods
from or during such use of them.
3.
Duty not to mix (Section 155-157): The
bailee should maintain the separate identity of the bailer’s goods. He should
not mix his goods with bailer’s good without bailer’s consent. If he does so,
and if the goods are separable, he is responsible for separating them and if
they are not separable, he will be liable to compensate the bailer for his
loss.
4.
Duty to return (Section 160): Section
160 - It is the duty of the bailee to return or deliver according to the
bailer’s directions, the goods bailed, without demand, as soon as the time for
which they were bailed has expired or the purpose for which they were bailed has
been accomplished.
5.
If the bailee keeps the goods
after the expiry of the time for which they were bailed or after the purpose
for which they were bailed has been accomplished, it will be at bailee's risk
and he will be responsible for any loss or damage to the goods arising
howsoever.
c) Explain different types of
goods under the Sale of Goods Act, 1930.
Ans: Goods may be classified into
various types as under:
1. Existing goods: These are goods which are owned and possessed
by the seller at the time of sale. Only existing goods can be the
subject-matter of a sale. The existing goods may be –
Specific goods: These are goods which are identified and agreed
upon at the time of contract of sale is made. For e.g. a person visit s a Titan
showroom and identifies a watch for purchase.
Ascertained goods: Though commonly used as similar in meaning to
specific goods, these are the goods which become ascertained subsequent to the
formation of contract of sale. For e.g. from say 10 Sony T.V. a person
identifies the particular T.V.
Unascertained goods: These are the goods which are not identified
and agreed upon at the time of the contract of sale. They are defined only by
description and may form part of a lot. For e.g. a shopkeeper has a bag
containing 50 kg of sugar. He agrees to sell 10 kg sugar to X out of that bag
The 10 kg of sugar is unascertained goods as they are yet to be identified from
the bag containing 50 kg.
2. Future Goods: These are goods which a seller does not possess
at the time of the contract but which will be manufactured, or produced, or
acquired by him after the making of the contract of sale. [Section 2(6)]. A
contract of present sale of future goods, though expresses as an actual sale,
purports to operate as an agreement to sell the goods and not a sale. This is
because the ownership of a thing cannot be transferred before that thing comes
into existence.
3. Contingent Goods: It is a type of future goods but these are
goods the acquisition of which by the seller depends upon a contingency which
may or may not happen.
d) State the salient features of
limited liability partnership.
Ans: Features of LLP:
a) An LLP is a
body corporate formed and incorporated under this Act and is legal entity
separate from its partners.
b) It is an alternative
corporate business from that gives the benefit of limited liability of a
company and the flexibility of the partnership;
c) An LLP shall have perpetual succession.
d) Minimum number
of members for a LLP is 2 and no limit for maximum numbers.
e) Individuals
and Corporate body can be partners in an LLP.
f) It can
continue its existence irrespective of changes in partners. Admission,
retirement or death of a partner does not affect the existence, rights or
liabilities of the LLP.
g)
It is capable of entering into contracts and holding property in its own name;
h) The provisions
of the Indian Partnership Act, 1932 shall not apply to an LLP.
e) Distinguish between bill of
exchange and promissory note.
Ans: Difference
between bill of exchange and Promissory Note
|
Basis |
Bill
of Exchange |
Promissory
Note |
|
Parties |
There
are 3 parties – drawee, drawer and payee. |
There
are 2 parties – maker or promisor and payee or promisee. |
|
Drawer |
It is drawn by the creditor |
It is drawn by the debtor |
|
Order or Promise |
It contains an order to make
payment. There can be three parties to it, viz. the drawer, the Drawee and
the payee. |
It contains a promise to make
payment. There are only two parties to it, viz. the drawer and the payee. |
|
Acceptance |
It requires acceptance by the Drawee
or someone else on his behalf. |
It does not require any acceptance. |
|
Payee |
Drawer and payee can be the same
party |
Drawer cannot be the payee of it |
|
Set |
A bill of
exchange can be drawn in sets. |
Promissory
note cannot be drawn in sets. |
|
Notice |
The
maker of the bill of exchange is secondarily and conditionally liable to
payee. He becomes liable to pay only when the drawee refuses to honour the
bill. Drawer stands in immediate relation to the drawee or acceptor and not
the payee. |
The
maker of the Promissory note is primarily and absolutely liable to payee.
Promisor stands in the immediate relation to the payee. |
f) Briefly state the remedies
available to an aggrieved party against breach of contract.
Ans: Remedies Available to the Buyer
for Breach of Conditions
(a) Affected party may claim refund of price and reject the goods;
(b) Elect to treat breach of condition as breach of warranty and
claim damages or compensation;
(c) When the affected party treat, breach of condition as breach
of warranty he cannot repudiate the contract but claim damages only;
(d) No remedy is available when the fulfillment of condition is
excused by law by means of impossibility or otherwise 13(3).
Consequences
of Breach of Warranty:
(a) The breach of warranty gives right to a claim for damages but
not to reject the goods and treat the contract as repudiated.
(b) Buyer may sue for damages.
(c) No remedy is available if the fulfillment of warranty becomes
impossible by law.
4.
How would you determine whether an agreement is a contract or not? Discuss. 10
Ans: Meaning of Contract and Its
essentials or (“All contracts are agreements, but all agreements are not
contracts.” [Essentials of a Valid Contract] or “A Contract is an agreement
enforceable by Law”)
Section 2 (h) defines ‘Contract’ as an agreement enforceable by
law. If we analyse the definition it has
two components viz.
1. An agreement
between two or more persons "To Do" or "Not to Do"
something.
2. An
enforceability of such an agreement at law i.e. personal rights and personal
obligations created and defined by agreement must be recognized by law.
Section 2 (e) defines ‘agreement’ as “every promise and set of
promises forming consideration for each other”. For a contract to be
enforceable by law there must be an agreement which should be enforceable by
law. To be enforceable, the agreement must be coupled with obligation.
Obligation is a legal duty to do or abstain from doing what one promised to do
or abstain from doing. All contracts are
agreements but for agreement to be a contract it has to be legally enforceable.
Section10 of the Act provide “All agreements are contracts if they
are made by the free consent of the parties competent to contract for lawful
object & are not hereby expressly declared void.”
An agreement in
order to become a contract must be enforceable by law. Agreements, which do not
fulfill the essential requirements of a contract, are not enforceable.
Thus when an
agreement enables a person to compel another to do something or not to do something
it is called a contract. Thus all contracts are agreements but all agreements
are not contracts. In
order to become a valid contract an agreement must possess the following
essential elements:
a)
Offer
& Acceptance: There must be two parties to an agreement
i.e. one making the offer & other party accepting it. Acceptance of must be
unconditional & absolute. A part of an offer cannot be accepted. The terms
of an offer must be definite. The acceptance must be in the mode as prescribed
& must be communicated. The acceptor of an offer must accept it in the same
way & same sense & at the same time as offered by the offeror i.e.
there must be consensus ad idem.
b)
Intention
to create legal relationship: When two parties enter into a
contract their intention must be to create legal relationship. If there is no
such intention between the parties, there is no contract between them.
Agreements of a social or domestic nature to do not constitute contracts.
c)
Lawful
consideration: An agreement to be enforceable by law must be
supported by consideration. “Consideration” means an advantage or benefit which
one party receives from another. It is the essence of bargain. The agreement is
legally enforceable only when both parties give something or get something in
return. An agreement to do something without getting anything in return is not
a contract. Contract must be in cash or kind.
d)
Capacity
to Contract-Competency: The parties competent to contract must
be capable of contracting i.e. they must be of the age of majority, they must
be of sound mind & they must not be disqualified from contracting by any
law to which they are subject to. An
agreement with minors, lunatics, drunkards, etc. is not contract & does not
get a legal title.
e)
Free
Consent: It is necessary between the contracting
parties to have a free & genuine consent to an agreement. The consent of
parties is said to be free when the contracting parties are of the same mind on
the materials of a contract. They must mean the same thing at the same time the
parties must not enter into a contract under undue influence, coercion,
misrepresentation etc. If these flaws are present in an agreement, it does not
become a contract.
f)
Lawful
object: The object of an agreement must be lawful. It
should not be illegal, immoral or it should not oppose public policy. If an
agreement suffers from a legal flaw with respect to object it is not
enforceable by law & so it is not a contract.
g)
Agreement
not declared void: For an agreement to be a contract it is
necessary for the agreement must not be expressly declared void by any law in
force in the country.
h)
Possibility
& Certainty of performance: The terms of an agreement must not be
vague or indefinite. It should be certain. The agreement must be to do a thing
which is possible. For e.g. an agreement to sell a car for Rs. 100/- if sun
does not rise tomorrow. This agreement is impossible & so not enforceable
by law.
Thus,
agreement is the genus of which contract is the specie.
Or
State
the grounds on the basis of which a contract is discharged under the provisions
of the Indian Contract Act, 1872. 10
Ans: Modes of
discharge of a contract: A Contract is said to be discharged
when the rights and obligations created by it come to an end. A contract may be
discharged in the following modes:
1.
Discharge
by performance: Discharge by performance takes place when the
parties to a contract fulfill their obligations arising under the contract
within the time and in the manner prescribed. Performance may be actual
performance or attempted performance.
2.
Discharge
by Agreement or Consent: A Contract comes into existence by an
agreement and it may be discharged also by an agreement. The following are
modes of discharge of a contract by an agreement:
a)
By
Waiver: Waiver takes place when the parties to a
contract agree that they shall no longer be bound by the contract. For e.g. A
an actor promised to make a guest performance in the film made by B. Later B
forbids A from making the guest appearance. B is discharged of his obligation.
b)
By
Novation: Novation occurs when a we contract is
substituted for an existing contract, either between the same parties or
between different parties, the consideration being the discharge of old
contract, mutually. E.g.: A is indebted to B & C to C. By mutual agreement
B’s debt to C & B’s loan to A are cancelled & C accepts as his debtor.
c)
By
Rescission: Rescission of a contract takes place when all
or some of the terms of the contract are cancelled. It may occur by mutual
consent or where one party fails in the performance of his obligations, the
other party may rescind the contract.
d)
By
alteration: Alteration of a contract may take place when
one or more of the terms of the contract is/are altered by mutual consent of
the parties to the contract.
e)
By
Remission: Remission means acceptance of a lesser
fulfillment of the promise made, E.g. Acceptance of a lesser sum than what was
contracted for, in discharge of the whole of the debt.
f)
By
Merger: Merger takes place when an inferior right
accruing to a party under a contract merges into a superior right accruing to
the same party under the same or some other contract. For e.g. P holds a
property under a lease. He later buys the property. His rights as a lessee
merge into his rights as an owner.
3.
Discharge
by impossibility of performance: If a contract contains an undertaking
to perform impossibility, it is void
ab initio. As per Section 56, impossibility of performance may fall into
either of the following categories –
(i)
Impossibility existing at the time formation of the contract: This
is known as pre-contractual impossibility. The fact of impossibility may be:
a) Known to the parties:
Both the parties are aware or know that the contract is to perform an
impossible act. For e.g. A agrees with B to put life into dead wife of B, the
agreement is void.
b) Unknown to the parties:
Both the parties are unaware of the impossibility. The contract could be on the
ground of mutual mistake of fact. For e.g. contract to sell his house at
Andaman to B. Both the parties are in Mumbai and are unknown to the fact that
the house is actually washed away due to Tsunami.
(ii) Impossibility arising
subsequent to the formation of the contract: Where impossibility of
performance of the contract is caused by circumstances beyond the control of
the parties, the parties are discharged from further performance of the
obligation arising under the contract.
4.
Discharge
by lapse of time: The
Limitation Act, 1963 lays down certain specified periods within which different
contracts are to be performed and be enforceable. If a party to a contract does
not perform, action can be taken only within the time specified by the Act.
Failing which the contract is terminated by lapse of time. For e.g. A sold a
gold chain to B on credit without any period of credit, the payment must be
made or the suit to recover it, must be instituted within three years from the
date of delivery of the instrument.
5.
Discharge
by Operation of Law: A contract may be discharged
independently of the wished of the parties i.e. by operation of law. This
includes discharge:
a)
By
death: In contract involving personal skill or
ability, the contract is terminated on the death of the promisor. In other
contracts the rights and liabilities of a deceased person pass on to the legal
representatives of the deceased person.
b)
By
insolvency: When a person is declared insolvent, he is discharged
from all liabilities incurred prior to such declaration.
c)
By
unauthorized material alteration of the terms of a written agreement:
Any material alteration made by a party to the contract, without the prior
permission of the other party, the innocent party is discharged.
d)
By
rights and liabilities becoming vested in the same person:
When the rights and liabilities under a contract vests in the same person.
6.
Discharge
by Breach of Contract: A breach of contract occurs when a
party thereto without lawful excuse does not fulfill his contractual obligation
or by his own act makes it impossible that he should perform his obligation
under it. A breach to a contract occurs in two ways:
a)
Actual
Breach: When a party fails, or neglects or refuses or
does not attempt to perform his obligation at the time fixed for performance,
it results in actual breach of contract. For e.g. A promises to deliver 100
packs of ice-cream to B on his wedding day. A does not deliver the packs on
that day. A has committed actual breach of the contract.
b)
Anticipatory
Breach: Anticipatory Breach is a breach before the
time of the performance of the contract has arrived. This may take place either
by the promisor doing an act which makes the performance of his promise
impossible or by the promisor, in way showing his intention not to perform it.
5.
(a) Briefly discuss the rights of an agent.
5
Ans: Rights of agent
a)
Right
to remuneration: Every agent has a right to receive remuneration
from his principal for performing his duties. But, if an agent is guilty of
misconduct in the business is not entitled to any remuneration in that part of
the business which he has mis-conducted.
b)
Right
of retaining cash: Agent has the right to retain cash, received
by selling goods of the principal, to the extent of amount spent and advances
given to the principal by him in carrying out his business.
c) Right of lien: In
the absence of any contract to the contrary, an agent is entitled to retain
goods, papers and other property, whether movable or immovable, of the
principal received by him, until the amount due to himself for commission,
disbursements and services in respect of the same has been paid or accounted
for to him.
d) Right to compensation: if
any loss or injury caused to agent due to negligence or lack of skill of
principal, then the agent has the right to claim compensation for the same.
e) Right to indemnity: The
employer of an agent is bound to indemnify him against the consequences of all
lawful acts done by such agent in exercise of the authority conferred upon him.
Further, where one person employs another to do an act, and the agent does the
act in good faith, the employer is liable to indemnify the agent against the
consequences of that act.
(b)
Distinguish between contract of guarantee and contract of indemnity. 5
Ans:
Distinction between a contract of Indemnity and a contract of guarantee
The contract of indemnity differs from the contract of guarantee
in the aspects shown in the following table:
|
Contract of Indemnity |
Contract of Guarantee |
|
1.
In a contract of indemnity the promisor undertakes an independent liability. |
1.
A contract of guarantee is a contract to discharge the liability of a third
person in case of default made by him. |
|
2.
A contract of indemnity involves two persons, viz., the indemnifier and the
indemnity-holder. |
2.
A contract of guarantee requires the concurrence of three person viz. the
principal debtor, the creditor and the surety. |
|
3.
The primary liability is on the indemnifier. |
3.
The principal liability is on the principal debtors. Secondary
liability is on the surety. |
|
4.
The loss to be indemnified in such contract is contingent. |
4.
There is an existing debt for which the surety gives guarantee. |
|
5.
The contract of indemnity is for the reimbursement of the loss. |
5.
The contract of guarantee is for the security of the creditor. |
Or
State
the essential elements of a contract of sale. Also distinguish between sale and
agreement to sell. 5+5=10
Ans: The
essentials of a contract of sale are:
1. Numbers
of parties: Since a contract of sale involves a change of
ownership, it follows that the buyer and the seller must be different persons.
A sale is a bilateral contract. A man cannot buy from or sell goods to himself.
To this rule there is one exception provided for in section 4(1) of the Sale of
Goods Act. A part-owner can sell goods to another part-owner. Therefore, a
partner may sell goods to his firm and the firm may sell goods to a partner.
2. Goods: The subject-matter of the
contract of sale must be ‘goods’. According to Section 2(7) “goods means every
kind of movable property other than actionable claims and money; and includes
stock and shares, growing crops, grass, and things attached to or forming part
of the land which are agreed to be severed before sale or under the contract of
sale.” Goodwill, trademarks, copyrights, patents right, water, gas,
electricity, decree of a court of law, are all regarded as goods. In the case
of land, the grass which forms part of land have to be separated from the land.
Thus where trees sold so that they could be cut out and separated from the land
and then taken away by the buyer, it was held that there was a contract for
sale of movable property or goods (Kursell vs Timber Operators &
Contractors Ltd.). But contracts for sale of things ‘forming part of the land
itself’ are not contracts for sale of goods.
3. Price:
The consideration for a contract of sale is price. Price means money
consideration. If it is anything other than money, it will not be sale. But if
the exchange is made partly for goods and partly for price, it will still
amount to sale. However, the price may be paid or promises to be paid.
4. Transfer of property:
'Property' here means ownership. Transfer of property in the goods is another
essential of a contract of sale of goods. A mere transfer of possession of the
goods cannot be termed as sale. To constitute a contract of sale the seller
must either transfer or agree to transfer the property in the goods to the buyer.
Further, the term 'property', as used in the Sale of Goods Act, means 'general
property' in goods as distinguished from 'special property' [Sec. 2(11)]. If P,
who owns certain goods, pledges them to R, he has general property in the
goods, whereas R (the Pawnee) has special property or interest in the goods to
the extent of the amount of advance he has made to the Pawnor. Similarly, in
the case of bailment of goods for the purpose of repair, the bailee has special
interest in goods bailed to the extent of his labour charges.
5. No formalities to be observed (Sec. 5):
The sale of Goods Act does not prescribe any particular form to constitute a
valid contract of sale. A contract of sale of goods can be made by mere offer
and acceptance. The offer may be made either by the seller or the buyer and the
same must be accepted by the other. Neither payment nor delivery is necessary
at the time of making the contract of sale. Further, such a contract may be
made either orally or in writing or partly orally and partly in writing or may
be even implied from the conduct of the parties. Where articles are exhibited
for sale and a customer picks up one and the sales assistant packs the same for
him, there has resulted a contract of sale of goods by the conduct of the parties.
6. Includes both a ‘sale’ and ‘an agreement to
sell’: The term ‘contract of sale’ is a generic term and includes both a ‘sale’
and an ‘agreement to sell’.
Sale: Where under a contract of sale, the
property in the goods is immediately transferred at the time of making the
contract from the seller to the buyer; the contract is called a 'sale' [Sec.
4(3)]. It refers to an absolute sale, e.g., an outright sale on a counter in a
shop. There is immediate conveyance of the ownership and mostly of the subject-matter
of the sale as well (delivery may also be given in future). It is an executed
contract.
An agreement to sell: Where
under a contract of sale, the transfer of property in the goods is to take
place at a future time or subject to some condition thereafter to be fulfilled,
the contract is called 'an agreement to sell' [Sec. 4(3)]. It is an Executory
contract and refers to a conditional sale.
7. Other
essential elements: A contract for the sale of goods must
satisfy all the essential elements necessary for the formation of a valid
contract, e.g., the parties must be component to contract, there must be free
consent, there must be consideration, the object must be lawful etc.
6.
(a) Explain the procedure of registration of partnership firm. 5
Ans: Procedure of Registration of partnership firms:
The
registration of a partnership is not compulsory but to avoid future problems it
is necessary for a firm to get itself registered under the Indian Partnership
Act, 1932. Sec. 58 of the Indian Partnership Act lays down the provisions
relating to the registration of a firm. If partners want to get their firm
registered, they have to file statement in the prescribed form. The statement
can be send by post or delivered to the registrar of the area in which the
place of business is situated. The following points must be stated in the
statement of registration:
a)
The firm’s name
b)
The principal place of business of the
firm
c)
The names of any other places of
business
d)
The date when each partner joined the
firm
e)
The name and address of the firm
f)
The duration of the firm
The statement of registration shall be signed by the partners or
their authorised agents. When the registrar is satisfied that the provisions of
Sec. 58 have been duly complied with, he shall record an entry of this statement
in the register of firms and shall file the statement.
(b)
Distinguish between limited liability partnership and company. 5
Difference
between LLP, Partnership and Company
|
Basis |
LLP |
Company |
|
1. Law |
It is created under LLP Act, 2008. |
It is created under Companies Act,
2013. |
|
2. Name |
The term “LLP” is added with the
name of an LLP. |
The word “Ltd.” is added with the
name of a public company and the word “Pvt Ltd.” is added with the name of a
private company. |
|
3. Separate legal entity |
It has a separate legal entity
distinct from its members. |
Company has a separate legal entity
distinct from its members. |
|
4. Liability |
Liability of partners is limited. |
Liability of members is limited. |
|
5. Charter document |
LLP agreement is a charter of the
LLP which denotes its scope of operation and rights and duties of the
partners. |
Memorandum and articles of
association is the charter of the company that defines it scope and area of
operations. |
Or
State
the duties and rights of a partner under the Indian Partnership Act, 1932. 10
Ans:
Rights and Duties of Partners of a Firm
The Rights
of a partner are as under:
(i) To take active part in the business: Every partner has
a right to take active part in the conduct and management of the business of
the firm.
(ii) To share Profits: Every partner has a right to share
profits earned and are liable to contribute to the losses incurred by the firm.
(iii) To be consulted: Every partner has a right to be
consulted in all matters affecting the business of the partnership firm before
any decision is been taken. In case of difference of opinion it may be settled
by decision of majority of the partners.
(iv) To have access to the accounts: Every partner has a
right to have access, inspect and copy the books of accounts of the firm.
(v) To be indemnified: Every partner has a right to be
indemnified for the expenses incurred or payments made in the ordinary course
of business.
(vi) To use the property of the firm: Every partner has a
right to use the property of the firm for the purposes of the business of the
firm. If the partner uses the firm’s property for private purpose, then he is
liable to compensate the firm for the same.
(vii) Interest on capital: Every partner has a right to
receive interest on capital at a certain rate as may be specified and agreed in
the partnership agreement. Such interest is payable only out of profits, in
any, earned by the firm.
(viii) Interest on loan: Every partner has a right to
receive interest on loan at the rate of 6% p.a. on any loans or advance
payments made by him beyond the capital. Such interest is payable not only out
of the profits but also from the assets of the firm.
The duties
of a partner are as under:
(i) To carry on the business to the common
advantage: Every partner is bound to:
(a) Carry on the business of the firm to the
greatest common advantage.
(b) To be just and faithful to each other in
the mutual dealings.
(c) To use reasonable care and skill in the
performance of his duties and
(d) Render true accounts and full information
of all things, affecting the firm, to any partner or his legal representative.
(ii) To indemnify: Every partner is
bound to indemnify the firm:
(a) For any loss cause to it by his fraud in
the conduct of business of the firm.
(b) For any loss incurred due to his willful
neglect in the conduct of the business of the firm.
(iii) To attend diligently to his duties: Every
partner is bound to attend diligently to his duties in the conduct of the
business of the firm. He must use his knowledge and skill for the benefit of
the firm.
(iv) To account for private profits: If
a partner derives any benefit, without the consent of the other partners from
any transactions of the firm or from any use of the partnership property, name
or business connection. He must account for it and compensate it to the firm.
There exists a fiduciary relationship between partners and therefore no partner
is entitled to make any personal profit.
(v) To account for profit in competing
business: A partner must not carry a business as of competing nature with
the firm. If he does that then he is bound to account for and compensate to the
firm all the profits made by him in that competing business.
7.
(a) Briefly state different types of endorsement. 5
Ans: Different kinds of endorsement
with their respective significance are explained below:
a)
Blank or General Endorsement: An
endorsement is said to be blank or general, if the endorser sings on the back
or on the face of the instrument without specifying the name of any endorsee.
The effect of his endorsement makes the instrument payment to bearer even
though originally it was payable to order. For example, a cheque payable to Mr.
X or order and Mr. X endorse the cheque to Mr. Y by simply affixing his
signature. The effect of this endorsement makes the instrument payable to
bearer even though originally it was payable to order.
b)
Full or Special Endorsement: If an
endorser signs his name and adds a direction to pay the amount mentioned in the
instrument to or to the order of a specified persons, such an endorsement is
said to be a full or special endorsement.
For example, “Pay to Mr. X or order” S/d Mr. Y is an example of full
endorsement. Here Mr. Y is the endorser and he has mentioned the name of the
endorsee – Mr. X.
c)
Conditional Endorsement: An
endorsement is conditional or qualified if it limits or neglects the liability
of the endorser. For example, “Pay to
Mr. X on his marriage” s/d Mr. Y is a conditional endorsement. In case of conditional
endorsement, the liability of the endorser and the rights of the endorsee
becomes conditional on the happening of a particular event.
d)
Restrictive Endorsement: An
endorsement is said to be Restrictive, when it prohibits or restrictive the
future negotiability of the instrument, it merely entitles the holder of the
instrument to receive the amount on the instrument for a specified purpose. For
example, “Pay to Mr. X only” s/d Mr. Y. This endorsement confers all the rights
of an endorser to the endorsee except the right of negotiation.
e)
San Recourse endorsement and San frais
endorsement: In San recourse endorsement, the endorser by his expressed words
excludes his own liability and in San frais endorsement, the holders have no
right against the endorser if the instrument is dishonoured. For example,” Pay
to Mr. X or order – Notice of dishonour waived.” These types of endorsement are
generally used to avoid personal liability.
f)
Facultative endorsement: In such type
of endorsement, the endorser by his express words increases his liability or
give up some of his rights under the negotiable instruments Act.
g)
Partial Endorsement: When the endorser
intends to transfer to the endorsee only a part of the amount of instrument by
endorsement, the endorsement is said to be partial. Such type of endorsement is
legally invalid. For example, when a cheque of Rs. 10,000 is endorsed for Rs.
5000 is an example of partial endorsement.
h)
Forged endorsement: When a negotiable
instrument is endorsed with the forged signature of the endorser, the
endorsement is called forged endorsement.
(b)
State the privileges of holder in due course. 5
Ans: Holder in Due Course enjoys the
following rights and privileges:
a)
He possesses better title free from
all defects: He always possesses better title than that of his transferor or any
of the previous parties and can give to the subsequent parties the good title
that he possesses. The holder in due course is entitled to recover the amount
of the instrument from any or all of the previous parties.
b)
All prior parties liable: All prior parties
to the instrument i.e. its maker or drawer, acceptor or endorser, is liable
thereon to a holder in due course until the instrument is duly satisfied. The
holder in due course can file a suit against the parties liable to pay in his
own name.
c)
No effect of conditional delivery:
Where a negotiable instrument delivered conditionally or for a special purpose
and is negotiated to a holder in due course, a valid delivery of it is
conclusively presumed and he acquires good title to it.
d)
Right in case of fictitious bills:
Where both drawer and payee of a bill are fictitious persons, the acceptor is
liable on the bill to a holder in due course.
e)
Right of the holder in due course in
case of inchoate instrument: If a negotiable instrument was originally an
inchoate (incomplete) instrument and subsequent transferor completed the
instrument for a sum greater than what was the intention of the market, the
right of a holder in due course to recover the money of the instrument is not
at all affected.
Or
What are ‘Information’ and ‘Right to Information’ under the Right to
Information Act, 2005? Discuss the formalities of making a request for
obtaining information under the Act. 4+6=10
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