Business Laws Sample Paper Series - II | Mock Tests & Past Year Papers for CA Foundation PDF Download

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MOCK TEST PAPER 
FOUNDATION COURSE 
PAPER 2: SECTION A: BUSINESS LAWS  
Question No. 1  is compulsory. 
Answer any four questions 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 form part of the answer. 
     Total Marks: 60 
QUESTIONS 
1. (a) Krish, Kamya and Ketan are partners in a firm. They jointly promised to pay Rs. 6,00,000 to Dia. 
Kamya become insolvent and her private assets are sufficient to pay 1/5 of her share of debts. 
Krish is compelled to pay the whole amount to Dia. Examining the provisions of the Indian Contract 
Act, 1872, decide the extent to which Krish can recover the amount from Ketan.  (4 Marks) 
(b) Akbar, 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 Akbar as 
a pretended loan. This way, Akbar 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. (4 Marks) 
(c) Explain the difference between Sale and Agreement to sell under the Sale of Goods Act, 1930.  
 (4 Marks) 
2. (a) State the grounds upon which a contract may be discharged under the provisions of the Indian 
Contract Act, 1872.  (7 Marks) 
(b) State the meaning of Limited Liability Partnership (LLP). What are the relevant steps to incorporate 
LLP? (5 Marks) 
3. (a) State the modes by which a partner may transfer his interest in the firm in favour of another person 
under the Indian Partnership Act, 1932. What are the rights of such a transferee?  (6 Marks) 
(b) ‘X’ entered into a contract with ‘Y’ to supply him 1,000 water bottles @ Rs. 5.00 per water bottle, 
to be delivered at a specified time.  Thereafter, ‘X’ contracts with ‘Z’ for the purchase of 1,000 water 
bottles @ Rs. 4.50 per water bottle, and at the same time told ‘Z’ that he did so for the purpose of 
performing his contract entered into with ‘Y’.  ‘Z’ failed to perform his contract in due course and 
market price of each water bottle on that day was Rs. 5.25 per water bottle.  Consequently, ‘X’ 
could not procure any water bottle and ‘Y’ rescinded the contract.  Calculate the amount of 
damages which ‘X’ could claim from ‘Z’ in the circumstances?  What would be your answer if ‘Z’ 
had not informed about the ‘Y’s contract? Explain with reference to the provisions of the Indian 
Contract Act, 1872.  (6 Marks) 
 
© The Institute of Chartered Accountants of India
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1 
 
MOCK TEST PAPER 
FOUNDATION COURSE 
PAPER 2: SECTION A: BUSINESS LAWS  
Question No. 1  is compulsory. 
Answer any four questions 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 form part of the answer. 
     Total Marks: 60 
QUESTIONS 
1. (a) Krish, Kamya and Ketan are partners in a firm. They jointly promised to pay Rs. 6,00,000 to Dia. 
Kamya become insolvent and her private assets are sufficient to pay 1/5 of her share of debts. 
Krish is compelled to pay the whole amount to Dia. Examining the provisions of the Indian Contract 
Act, 1872, decide the extent to which Krish can recover the amount from Ketan.  (4 Marks) 
(b) Akbar, 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 Akbar as 
a pretended loan. This way, Akbar 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. (4 Marks) 
(c) Explain the difference between Sale and Agreement to sell under the Sale of Goods Act, 1930.  
 (4 Marks) 
2. (a) State the grounds upon which a contract may be discharged under the provisions of the Indian 
Contract Act, 1872.  (7 Marks) 
(b) State the meaning of Limited Liability Partnership (LLP). What are the relevant steps to incorporate 
LLP? (5 Marks) 
3. (a) State the modes by which a partner may transfer his interest in the firm in favour of another person 
under the Indian Partnership Act, 1932. What are the rights of such a transferee?  (6 Marks) 
(b) ‘X’ entered into a contract with ‘Y’ to supply him 1,000 water bottles @ Rs. 5.00 per water bottle, 
to be delivered at a specified time.  Thereafter, ‘X’ contracts with ‘Z’ for the purchase of 1,000 water 
bottles @ Rs. 4.50 per water bottle, and at the same time told ‘Z’ that he did so for the purpose of 
performing his contract entered into with ‘Y’.  ‘Z’ failed to perform his contract in due course and 
market price of each water bottle on that day was Rs. 5.25 per water bottle.  Consequently, ‘X’ 
could not procure any water bottle and ‘Y’ rescinded the contract.  Calculate the amount of 
damages which ‘X’ could claim from ‘Z’ in the circumstances?  What would be your answer if ‘Z’ 
had not informed about the ‘Y’s contract? Explain with reference to the provisions of the Indian 
Contract Act, 1872.  (6 Marks) 
 
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4. (a) What are the implied conditions in a contract of ‘Sale by sample’ under the Sale of Goods Act, 
1930? State also the implied warranties operatives under the said Act.  (6 Marks) 
(b)  X, Y and Z are partners in a Partnership Firm. They were carrying their business successfully for 
the past several years. Spouses of X and Y fought in ladies club on their personal issue and X's 
wife was hurt badly. X got angry on the incident and he convinced Z to expel Y from their 
partnership firm. Y was expelled from partnership without any notice from X and Z. Considering 
the provisions of the Indian Partnership Act, 1932, state whether they can expel a partner from the 
firm. What are the criteria for test of good faith in such circumstances?  (6 Marks) 
5. (a) Mr. D sold some goods to Mr. E for Rs. 5,00,000 on 15 days credit. Mr. D delivered the goods. On 
due date Mr. E refused to pay for it. State the position and rights of Mr. D as per the Sale of Goods 
Act, 1930.         (6 Marks) 
(b) Explain the meaning of Guarantee Company? State the similarities and dissimilarities between a 
‘Guarantee Company’ and ‘Company Limited by Shares’.  (6 Marks) 
6. (a) “No consideration, no contract”. Discuss. 
   Or 
“Mere silence does not amount to fraud”. Discuss.   (5 Marks) 
(b) What is Partnership Deed and state the information contained therein?  (4 Marks) 
(c) Examine with reasons whether the following statement is correct or incorrect: 
(i) A private limited company must have a minimum of two members, while a public limited 
company must have at least seven members.  
(ii) Affixing of Common seal on company’s documents is compulsory.      (3 Marks) 
 
 
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