Business Laws Model Test Paper - 6 (Qestions) | Mock Tests & Past Year Papers for CA Foundation PDF Download

 Page 1


FOUNDATION COURSE 
PAPER 2: BUSINESS LAWS  
Question No. 1 is compulsory. 
Answer any four questions from the remaining five questions. 
QUESTIONS 
Time Allowed: 3 Hours Maximum Marks: 100 
1. (a)  (i)  Ashok goes to super market to buy a Air Conditioner. He selects a
branded Air Conditioner having a price tag of ` 40,000 after a 
discount of ` 3000. Ashok 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 
` 43,000.” Ashok got angry and insists for ` 40,000. State with 
reasons whether under Indian Contract Act, 1872, Ashok can 
enforce the cashier to sell at discounted price i.e. ` 40,000. 
(4 Marks) 
(ii) Rahul, a transporter was entrusted with the duty of transporting
tomatoes from a rural farm to a city by Aswin. Due to heavy rains,
Rahul was stranded for more than two days. Rahul sold the
tomatoes below the market rate in the nearby market where he
was stranded fearing that the tomatoes may perish. Can Aswin
recover the loss from Rahul on the ground that Rahul had acted
beyond his authority?  (3 Marks)
(b) (i)  Mr. Mohan had purchased some goods from Sunflower Limited on
credit. A credit period of one month was allowed to Mr. Mohan. 
Before the due date, Mr. Mohan went to the company and wanted to 
repay the amount due from him. He found only Mr. Ramesh there, 
who was the factory supervisor of the company. Mr. Ramesh told 
Mr. Mohan that the Accountant and the cashier are on leave, he is 
in-charge of receiving money and he may pay the amount to him. 
Mr. Ramesh issued a money receipt under his signature. After two 
months, Sunflower limited issued a notice to Mr. Mohan for 
non-payment of the dues within the stipulated period. Mr. Mohan 
informed the company that he had already cleared the dues and he 
is no more responsible for the same. He also contended that 
Mr. Ramesh is an employee of the company whom he had made the 
payment and being an outsider, he trusted the words of Mr. Ramesh 
as duty distribution is a job of the internal management of the 
company. Analyse the situation and decide whether Mr. Mohan is 
free from his liability.   (4 Marks) 
MODEL TEST PAPER 6
102
Page 2


FOUNDATION COURSE 
PAPER 2: BUSINESS LAWS  
Question No. 1 is compulsory. 
Answer any four questions from the remaining five questions. 
QUESTIONS 
Time Allowed: 3 Hours Maximum Marks: 100 
1. (a)  (i)  Ashok goes to super market to buy a Air Conditioner. He selects a
branded Air Conditioner having a price tag of ` 40,000 after a 
discount of ` 3000. Ashok 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 
` 43,000.” Ashok got angry and insists for ` 40,000. State with 
reasons whether under Indian Contract Act, 1872, Ashok can 
enforce the cashier to sell at discounted price i.e. ` 40,000. 
(4 Marks) 
(ii) Rahul, a transporter was entrusted with the duty of transporting
tomatoes from a rural farm to a city by Aswin. Due to heavy rains,
Rahul was stranded for more than two days. Rahul sold the
tomatoes below the market rate in the nearby market where he
was stranded fearing that the tomatoes may perish. Can Aswin
recover the loss from Rahul on the ground that Rahul had acted
beyond his authority?  (3 Marks)
(b) (i)  Mr. Mohan had purchased some goods from Sunflower Limited on
credit. A credit period of one month was allowed to Mr. Mohan. 
Before the due date, Mr. Mohan went to the company and wanted to 
repay the amount due from him. He found only Mr. Ramesh there, 
who was the factory supervisor of the company. Mr. Ramesh told 
Mr. Mohan that the Accountant and the cashier are on leave, he is 
in-charge of receiving money and he may pay the amount to him. 
Mr. Ramesh issued a money receipt under his signature. After two 
months, Sunflower limited issued a notice to Mr. Mohan for 
non-payment of the dues within the stipulated period. Mr. Mohan 
informed the company that he had already cleared the dues and he 
is no more responsible for the same. He also contended that 
Mr. Ramesh is an employee of the company whom he had made the 
payment and being an outsider, he trusted the words of Mr. Ramesh 
as duty distribution is a job of the internal management of the 
company. Analyse the situation and decide whether Mr. Mohan is 
free from his liability.   (4 Marks) 
MODEL TEST PAPER 6
102
(ii) Mike Limited is incorporated in India having Liaison office at
Singapore. Explain in detail meaning of Foreign Company and
analysis on whether Mike Limited would be called as Foreign
Company as it established a Liaison office at Singapore as per
the provisions of the Companies Act, 2013?  (3 Marks)
(c) Whether a minor may be admitted in the business of a partnership
firm? Also, explain the rights of a minor in the partnership firm under
the Indian Partnership Act, 1932.  (6 Marks)
2. (a)  (i)  An auction sale of the certain goods was held on 7
th
 March, 2024 by
the fall of hammer in favour of the highest bidder X. The payment of 
auction price was made on 8
th
 March, 2024 followed by the delivery 
of goods on 10
th
 March, 2024. Based upon on the provisions of the 
Sale of Goods Act, 1930, decide when the auction sale is complete.
(3 Marks) 
(ii) Certain goods were sold by sample by J to K, who in turn sold the
same goods by sample to L and L by sample sold the same goods
to M. M found that the goods were not according to the sample
and rejected the goods and gave a notice to L. L sued K and K
sued J. Can M reject the goods? Also advise K and L as per the
provisions of the Sale of Goods Act, 1930.  (4 Marks)
(b) Mr. Rajeev, 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. Rajeev as a pretended loan. This way, Mr. Rajeev
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.  (7 Marks)
(c) “LLP is an alternative corporate business form that gives the benefits of
limited liability of a company and the flexibility of a partnership”.
Explain. (6 Marks)
3. (a)  State giving reasons whether the following are partnerships as per the
provisions under the Indian Partnership Act, 1932. 
(i) X, Y, and Z agree to divide the profits equally, but the loss, if any,
is to be borne by X alone. Is it case of partnership? (3 Marks)
(ii) X, a publisher, agrees to publish a book at his own expense
written by Y and to pay Y, half of the net profit. Does this create a
relationship of partnership between X and Y? Can paper dealer
i.e. third party make Y liable for paper supplied to X? (2 Marks)
(iii) A and B purchase a tea shop and incur additional expenses for
purchasing utensils etc. each contributing half of the total
103
Page 3


FOUNDATION COURSE 
PAPER 2: BUSINESS LAWS  
Question No. 1 is compulsory. 
Answer any four questions from the remaining five questions. 
QUESTIONS 
Time Allowed: 3 Hours Maximum Marks: 100 
1. (a)  (i)  Ashok goes to super market to buy a Air Conditioner. He selects a
branded Air Conditioner having a price tag of ` 40,000 after a 
discount of ` 3000. Ashok 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 
` 43,000.” Ashok got angry and insists for ` 40,000. State with 
reasons whether under Indian Contract Act, 1872, Ashok can 
enforce the cashier to sell at discounted price i.e. ` 40,000. 
(4 Marks) 
(ii) Rahul, a transporter was entrusted with the duty of transporting
tomatoes from a rural farm to a city by Aswin. Due to heavy rains,
Rahul was stranded for more than two days. Rahul sold the
tomatoes below the market rate in the nearby market where he
was stranded fearing that the tomatoes may perish. Can Aswin
recover the loss from Rahul on the ground that Rahul had acted
beyond his authority?  (3 Marks)
(b) (i)  Mr. Mohan had purchased some goods from Sunflower Limited on
credit. A credit period of one month was allowed to Mr. Mohan. 
Before the due date, Mr. Mohan went to the company and wanted to 
repay the amount due from him. He found only Mr. Ramesh there, 
who was the factory supervisor of the company. Mr. Ramesh told 
Mr. Mohan that the Accountant and the cashier are on leave, he is 
in-charge of receiving money and he may pay the amount to him. 
Mr. Ramesh issued a money receipt under his signature. After two 
months, Sunflower limited issued a notice to Mr. Mohan for 
non-payment of the dues within the stipulated period. Mr. Mohan 
informed the company that he had already cleared the dues and he 
is no more responsible for the same. He also contended that 
Mr. Ramesh is an employee of the company whom he had made the 
payment and being an outsider, he trusted the words of Mr. Ramesh 
as duty distribution is a job of the internal management of the 
company. Analyse the situation and decide whether Mr. Mohan is 
free from his liability.   (4 Marks) 
MODEL TEST PAPER 6
102
(ii) Mike Limited is incorporated in India having Liaison office at
Singapore. Explain in detail meaning of Foreign Company and
analysis on whether Mike Limited would be called as Foreign
Company as it established a Liaison office at Singapore as per
the provisions of the Companies Act, 2013?  (3 Marks)
(c) Whether a minor may be admitted in the business of a partnership
firm? Also, explain the rights of a minor in the partnership firm under
the Indian Partnership Act, 1932.  (6 Marks)
2. (a)  (i)  An auction sale of the certain goods was held on 7
th
 March, 2024 by
the fall of hammer in favour of the highest bidder X. The payment of 
auction price was made on 8
th
 March, 2024 followed by the delivery 
of goods on 10
th
 March, 2024. Based upon on the provisions of the 
Sale of Goods Act, 1930, decide when the auction sale is complete.
(3 Marks) 
(ii) Certain goods were sold by sample by J to K, who in turn sold the
same goods by sample to L and L by sample sold the same goods
to M. M found that the goods were not according to the sample
and rejected the goods and gave a notice to L. L sued K and K
sued J. Can M reject the goods? Also advise K and L as per the
provisions of the Sale of Goods Act, 1930.  (4 Marks)
(b) Mr. Rajeev, 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. Rajeev as a pretended loan. This way, Mr. Rajeev
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.  (7 Marks)
(c) “LLP is an alternative corporate business form that gives the benefits of
limited liability of a company and the flexibility of a partnership”.
Explain. (6 Marks)
3. (a)  State giving reasons whether the following are partnerships as per the
provisions under the Indian Partnership Act, 1932. 
(i) X, Y, and Z agree to divide the profits equally, but the loss, if any,
is to be borne by X alone. Is it case of partnership? (3 Marks)
(ii) X, a publisher, agrees to publish a book at his own expense
written by Y and to pay Y, half of the net profit. Does this create a
relationship of partnership between X and Y? Can paper dealer
i.e. third party make Y liable for paper supplied to X? (2 Marks)
(iii) A and B purchase a tea shop and incur additional expenses for
purchasing utensils etc. each contributing half of the total
103
expense. The shop is leased out on daily rent which is divided 
between both. Does this arrangement constitute a partnership 
between A and B? (2 Marks) 
(b) The State Government of X, a state in the country is holding 48 lakh
shares of Y Limited. The paid up capital of Y Limited is ` 9.5 crore (95
lakh shares of ` 10 each). Y Limited directly holds 2,50,600 shares of Z
Private Limited which is having share capital of ` 5 crore in the form of
5 lakh shares of ` 100 each. Z Private Limited claimed the status of a
subsidiary company of Y Limited as well as a Government company.
Advise as a legal advisor, whether Z Private Limited is a subsidiary
company of Y Limited as well as a Government company under the
provisions of the Companies Act, 2013?  (7 Marks)
(c) “An anticipatory breach of contract is a breach of contract occurring
before the time fixed for performance has arrived”. Also, discuss the
effect of anticipatory breach of contracts under the Indian Contract Act,
1872. (6 Marks)
4. (a)  (i)  Mr. Gaurav and Mr. Vikas entered into a contract on 1
st
 July, 2024,
according to which Mr. Gaurav had to supply 100 tons of sugar to 
Mr. Vikas at a certain price strictly within a period of 10 days of the 
contract. Mr. Vikas also paid an amount of ` 70,000 towards 
advance as per the terms of the above contract. The mode of 
transportation available between their places is roadway only. 
Severe flood came on 2
nd
 July, 2024 and the only road connecting 
their places was damaged and could not be repaired within fifteen 
days. Mr. Gaurav offered to supply sugar on 20
th
 July, 2024 for 
which Mr. Vikas did not agree. On 1
st
 August, 2024, Mr. Gaurav 
claimed compensation of ` 20,000 from Mr. Vikas for refusing to 
accept the supply of sugar, which was not there within the purview of 
the contract. On the other hand, Mr. Vikas claimed for refund of 
` 70,000, which he had paid as advance in terms of the contract. 
Analyse the above situation in terms of the provisions of the Indian 
Contract Act, 1872 and decide on Mr. Vikas contention.  (4 Marks) 
(ii) R gives his umbrella to M during raining season to be used for two
days during Examinations. M keeps the umbrella for a week.
While going to R’s house to return the umbrella, M accidently slips
and the umbrella is badly damaged. Who bear the loss and why
under the provisions of the Indian Contract Act, 1872? (3 Marks)
(b) What is a cheque under the Negotiable Instruments Act, 1881, and who
are the parties involved? What are the essential elements of a cheque?
(7 Marks) 
(c) What is the structure of the Indian Judicial System, and what is the
hierarchy of courts in India?  (6 Marks)
5. (a)  (i)   Avyukt purchased 100 Kgs of wheat from Bhaskar at `30 per kg.
Bhaskar says that wheat is in his warehouse in the custody of 
Kishore, the warehouse keeper. Kishore confirmed Avyukt that he 
104
Page 4


FOUNDATION COURSE 
PAPER 2: BUSINESS LAWS  
Question No. 1 is compulsory. 
Answer any four questions from the remaining five questions. 
QUESTIONS 
Time Allowed: 3 Hours Maximum Marks: 100 
1. (a)  (i)  Ashok goes to super market to buy a Air Conditioner. He selects a
branded Air Conditioner having a price tag of ` 40,000 after a 
discount of ` 3000. Ashok 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 
` 43,000.” Ashok got angry and insists for ` 40,000. State with 
reasons whether under Indian Contract Act, 1872, Ashok can 
enforce the cashier to sell at discounted price i.e. ` 40,000. 
(4 Marks) 
(ii) Rahul, a transporter was entrusted with the duty of transporting
tomatoes from a rural farm to a city by Aswin. Due to heavy rains,
Rahul was stranded for more than two days. Rahul sold the
tomatoes below the market rate in the nearby market where he
was stranded fearing that the tomatoes may perish. Can Aswin
recover the loss from Rahul on the ground that Rahul had acted
beyond his authority?  (3 Marks)
(b) (i)  Mr. Mohan had purchased some goods from Sunflower Limited on
credit. A credit period of one month was allowed to Mr. Mohan. 
Before the due date, Mr. Mohan went to the company and wanted to 
repay the amount due from him. He found only Mr. Ramesh there, 
who was the factory supervisor of the company. Mr. Ramesh told 
Mr. Mohan that the Accountant and the cashier are on leave, he is 
in-charge of receiving money and he may pay the amount to him. 
Mr. Ramesh issued a money receipt under his signature. After two 
months, Sunflower limited issued a notice to Mr. Mohan for 
non-payment of the dues within the stipulated period. Mr. Mohan 
informed the company that he had already cleared the dues and he 
is no more responsible for the same. He also contended that 
Mr. Ramesh is an employee of the company whom he had made the 
payment and being an outsider, he trusted the words of Mr. Ramesh 
as duty distribution is a job of the internal management of the 
company. Analyse the situation and decide whether Mr. Mohan is 
free from his liability.   (4 Marks) 
MODEL TEST PAPER 6
102
(ii) Mike Limited is incorporated in India having Liaison office at
Singapore. Explain in detail meaning of Foreign Company and
analysis on whether Mike Limited would be called as Foreign
Company as it established a Liaison office at Singapore as per
the provisions of the Companies Act, 2013?  (3 Marks)
(c) Whether a minor may be admitted in the business of a partnership
firm? Also, explain the rights of a minor in the partnership firm under
the Indian Partnership Act, 1932.  (6 Marks)
2. (a)  (i)  An auction sale of the certain goods was held on 7
th
 March, 2024 by
the fall of hammer in favour of the highest bidder X. The payment of 
auction price was made on 8
th
 March, 2024 followed by the delivery 
of goods on 10
th
 March, 2024. Based upon on the provisions of the 
Sale of Goods Act, 1930, decide when the auction sale is complete.
(3 Marks) 
(ii) Certain goods were sold by sample by J to K, who in turn sold the
same goods by sample to L and L by sample sold the same goods
to M. M found that the goods were not according to the sample
and rejected the goods and gave a notice to L. L sued K and K
sued J. Can M reject the goods? Also advise K and L as per the
provisions of the Sale of Goods Act, 1930.  (4 Marks)
(b) Mr. Rajeev, 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. Rajeev as a pretended loan. This way, Mr. Rajeev
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.  (7 Marks)
(c) “LLP is an alternative corporate business form that gives the benefits of
limited liability of a company and the flexibility of a partnership”.
Explain. (6 Marks)
3. (a)  State giving reasons whether the following are partnerships as per the
provisions under the Indian Partnership Act, 1932. 
(i) X, Y, and Z agree to divide the profits equally, but the loss, if any,
is to be borne by X alone. Is it case of partnership? (3 Marks)
(ii) X, a publisher, agrees to publish a book at his own expense
written by Y and to pay Y, half of the net profit. Does this create a
relationship of partnership between X and Y? Can paper dealer
i.e. third party make Y liable for paper supplied to X? (2 Marks)
(iii) A and B purchase a tea shop and incur additional expenses for
purchasing utensils etc. each contributing half of the total
103
expense. The shop is leased out on daily rent which is divided 
between both. Does this arrangement constitute a partnership 
between A and B? (2 Marks) 
(b) The State Government of X, a state in the country is holding 48 lakh
shares of Y Limited. The paid up capital of Y Limited is ` 9.5 crore (95
lakh shares of ` 10 each). Y Limited directly holds 2,50,600 shares of Z
Private Limited which is having share capital of ` 5 crore in the form of
5 lakh shares of ` 100 each. Z Private Limited claimed the status of a
subsidiary company of Y Limited as well as a Government company.
Advise as a legal advisor, whether Z Private Limited is a subsidiary
company of Y Limited as well as a Government company under the
provisions of the Companies Act, 2013?  (7 Marks)
(c) “An anticipatory breach of contract is a breach of contract occurring
before the time fixed for performance has arrived”. Also, discuss the
effect of anticipatory breach of contracts under the Indian Contract Act,
1872. (6 Marks)
4. (a)  (i)  Mr. Gaurav and Mr. Vikas entered into a contract on 1
st
 July, 2024,
according to which Mr. Gaurav had to supply 100 tons of sugar to 
Mr. Vikas at a certain price strictly within a period of 10 days of the 
contract. Mr. Vikas also paid an amount of ` 70,000 towards 
advance as per the terms of the above contract. The mode of 
transportation available between their places is roadway only. 
Severe flood came on 2
nd
 July, 2024 and the only road connecting 
their places was damaged and could not be repaired within fifteen 
days. Mr. Gaurav offered to supply sugar on 20
th
 July, 2024 for 
which Mr. Vikas did not agree. On 1
st
 August, 2024, Mr. Gaurav 
claimed compensation of ` 20,000 from Mr. Vikas for refusing to 
accept the supply of sugar, which was not there within the purview of 
the contract. On the other hand, Mr. Vikas claimed for refund of 
` 70,000, which he had paid as advance in terms of the contract. 
Analyse the above situation in terms of the provisions of the Indian 
Contract Act, 1872 and decide on Mr. Vikas contention.  (4 Marks) 
(ii) R gives his umbrella to M during raining season to be used for two
days during Examinations. M keeps the umbrella for a week.
While going to R’s house to return the umbrella, M accidently slips
and the umbrella is badly damaged. Who bear the loss and why
under the provisions of the Indian Contract Act, 1872? (3 Marks)
(b) What is a cheque under the Negotiable Instruments Act, 1881, and who
are the parties involved? What are the essential elements of a cheque?
(7 Marks) 
(c) What is the structure of the Indian Judicial System, and what is the
hierarchy of courts in India?  (6 Marks)
5. (a)  (i)   Avyukt purchased 100 Kgs of wheat from Bhaskar at `30 per kg.
Bhaskar says that wheat is in his warehouse in the custody of 
Kishore, the warehouse keeper. Kishore confirmed Avyukt that he 
104
can take the delivery of wheat from him and till then he is holding 
wheat on Avyukt’s behalf. Before Avyukt picks the goods from 
warehouse, the whole wheat in the warehouse has flowed in flood. 
Now Avyukt wants his price on the contention that no delivery has 
been done by seller. Whether Avyukt is right with his views under 
the Sale of Goods Act, 1930.  (4 Marks)  
(ii) Classify the following transactions under the Sale of Goods Act,
1930 according to the types of goods they are:
(A) A wholesaler of cotton has 100 bales in his godown. He
agrees to sell 50 bales and these bales were selected and
set aside.
(B) A agrees to sell to B one packet of sugar out of the lot of one
hundred packets lying in his shop.
(C) T agrees to sell to S all the apples which will be produced in
his garden this year.   (3 Marks)
(b) When does dissolution of a partnership firm take place under the
provisions of the Indian Partnership Act, 1932?  Explain.    (7 Marks)
(c) Define consideration. State the characteristics of a valid consideration
under the Indian Contract Act, 1872.   (6 Marks)
6. (a) (i) ‘Nakul’ made promissory note in favour of ‘Sahdev’ of `10,000 and
delivered to him. ‘Sahdev’ indorsed the promissory note in favour of 
‘Arjun’ but delivered to Arjun’s agent. Subsequently, Arjun’s agent 
died, and promissory note was found by ‘Arjun’ in his agent’s table 
drawer. ‘Arjun’ sued ‘Nakul’ for the recovery of promissory note. 
Whether ‘Arjun’ can recover amount under the provisions of the 
Negotiable Instrument Act 1881?   (4 Marks)  
(ii) Utkarsh purchased some goods from Saksham for ` 50,000 on
14
th
 August.  Saksham drawn a bill of exchange on Utkarsh and
sent to him for acceptance on the same day at 3:00 pm Utkarsh
requested Saksham to allow him some time for acceptance.
Saksham allowed him 48 hours for acceptance. Utkarsh could not
accept till 16
th
 August (3:00 pm). Saksham treated the bill as
dishonoured for non-acceptance. Referring the provisions of the
Negotiable Instruments Act, 1881, whether bill of exchange was
dishonoured due to non-acceptance?     (3 Marks)
(b) Explain the terms “Trafficking relating to public offices and titles” and
“Stifling prosecution” as per the Indian Contract Act, 1872. (6 Marks)
(c) Explain any six circumstances in detail in which a non-owner can
convey better title to the bona fide purchaser of goods for value under
the Sale of Goods Act, 1930. (7 Marks)
105