Business Laws Sample Paper Series - I | Business Laws for CA Foundation PDF Download

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MOCK TEST PAPER 
FOUNDATION COURSE 
PAPER 2A: 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)  Shambhu Dayal started “self service” system in his shop. Smt. Prakash entered the shop, took a 
basket and after taking articles of her choice into the basket reached the cashier for payments. 
The cashier refuses to accept the price. Can Shambhu Dayal be compelled to sell the said articles 
to Smt. Prakash? Decide as per the provisions of the Indian Contract Act, 1872. (4 Marks) 
(b) Mr. X had purchased some goods from M/s ABC Limited on credit. A credit period of one month 
was allowed to Mr. X. Before the due date Mr. X went to the company and wanted to repay the 
amount due from him. He found only Mr. Z there, who was the factory supervisor of the company. 
Mr. Z told Mr. X that the accountant and the cashier were on leave, he is in-charge of receiving 
money and he may pay the amount to him. Mr. Z issued a money receipt under his signature. After 
two months M/s ABC Limited issued a notice to Mr. X for non-payment of the dues within the 
stipulated period. Mr. X informed the company that he had already cleared the dues and he is no 
more responsible for the same. He also contended that Mr. Z is an employee of the company  whom 
he had made the payment and being an outsider, he trusted the words of Mr. Z as duty distribution 
is a job of the internal management of the company.  
 Analyse the situation and decide whether Mr. X is free from his liability.  (4 Marks) 
(c) Explain the term “Delivery and its forms” under the Sale of Goods Act, 1930.  (4 Marks) 
2. (a)  “An anticipatory breach of contract is a breach of contract occurring before the time fixed for 
performance has arrived ”. Discuss stating also the effect of anticipatory breach on contracts.  
 (7 Marks) 
(b)  Differentiate between the Limited Liability Partnership (LLP) and Limited Liability Company. 
 (5 Marks) 
3. (a)  “Though a minor cannot be a partner in a firm, he can nonetheless be admitted to the benefits of 
partnership.” 
(i) Referring to the provisions of the Indian Partnership Act, 1932, state the rights which can be 
enjoyed by a minor partner.  
(ii) State the liabilities of a minor partner both: 
1. Before attaining majority and  
2. After attaining majority. 
 
© The Institute of Chartered Accountants of India
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1 
 
MOCK TEST PAPER 
FOUNDATION COURSE 
PAPER 2A: 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)  Shambhu Dayal started “self service” system in his shop. Smt. Prakash entered the shop, took a 
basket and after taking articles of her choice into the basket reached the cashier for payments. 
The cashier refuses to accept the price. Can Shambhu Dayal be compelled to sell the said articles 
to Smt. Prakash? Decide as per the provisions of the Indian Contract Act, 1872. (4 Marks) 
(b) Mr. X had purchased some goods from M/s ABC Limited on credit. A credit period of one month 
was allowed to Mr. X. Before the due date Mr. X went to the company and wanted to repay the 
amount due from him. He found only Mr. Z there, who was the factory supervisor of the company. 
Mr. Z told Mr. X that the accountant and the cashier were on leave, he is in-charge of receiving 
money and he may pay the amount to him. Mr. Z issued a money receipt under his signature. After 
two months M/s ABC Limited issued a notice to Mr. X for non-payment of the dues within the 
stipulated period. Mr. X informed the company that he had already cleared the dues and he is no 
more responsible for the same. He also contended that Mr. Z is an employee of the company  whom 
he had made the payment and being an outsider, he trusted the words of Mr. Z as duty distribution 
is a job of the internal management of the company.  
 Analyse the situation and decide whether Mr. X is free from his liability.  (4 Marks) 
(c) Explain the term “Delivery and its forms” under the Sale of Goods Act, 1930.  (4 Marks) 
2. (a)  “An anticipatory breach of contract is a breach of contract occurring before the time fixed for 
performance has arrived ”. Discuss stating also the effect of anticipatory breach on contracts.  
 (7 Marks) 
(b)  Differentiate between the Limited Liability Partnership (LLP) and Limited Liability Company. 
 (5 Marks) 
3. (a)  “Though a minor cannot be a partner in a firm, he can nonetheless be admitted to the benefits of 
partnership.” 
(i) Referring to the provisions of the Indian Partnership Act, 1932, state the rights which can be 
enjoyed by a minor partner.  
(ii) State the liabilities of a minor partner both: 
1. Before attaining majority and  
2. After attaining majority. 
 
© The Institute of Chartered Accountants of India
 
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(b) Mr. X and Mr. Y entered into a contract on 1
st
 August, 2018, by which Mr. X had to supply 50 tons 
of sugar to Mr. Y at a certain price strictly within a period of 10 days of the contract. Mr. Y also paid 
an amount of Rs. 50,000 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
 August, 
2018 and the only road connecting their places was damaged and could not be repaired within 
fifteen days. Mr. X offered to supply sugar on 20
th
 August, 2018 for which Mr. Y did not agree. On 
1
st
 September, 2018, Mr. X claimed compensation of Rs. 10,000 from Mr. Y for refusing to accept 
the supply of sugar, which was not there within the purview of the contract. On the other hand, Mr. 
Y claimed for refund of Rs. 50,000, 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 Y’s 
contention.  (6 Marks) 
4. (a)  What do you understand by the term “unpaid seller” under the Sale of Goods Act, 1930?  When 
can an unpaid seller exercise the right of stoppage of goods in transit? (6 Marks) 
(b)  A, B, and C are partners of a partnership firm ABC & Co. The firm is a dealer in office furniture. A 
was in charge of purchase and sale, B was in charge of maintenance of accounts of the firm and 
C was in charge of handling all legal matters. Recently through an agreement among them, it was 
decided that A will be in charge of maintenance of accounts and B will be in charge of purchase 
and sale. Being ignorant about such agreement, M, a supplier supplied some furniture to A, who 
ultimately sold them to a third party. Referring to the provisions of the Partnership Act, 1932, advise 
whether M can recover money from the firm. 
What will be your advice in case M was having knowledge about the agreement?  (6 Marks) 
5. (a)  Mr. Samuel agreed to purchase 100 bales of cotton from Mr. Varun, out of his large stock and sent 
his men to take delivery of the goods. They could pack only 60 bales. Later on, there was an 
accidental fire and the entire stock was destroyed including 60 bales that were already packed. 
Referring to the provisions of the Sale of Goods Act, 1930 explain as to who will bear the loss and 
to what extent?  (6 Marks) 
(b)  F, 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 F as a 
pretended loan. This way, F 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. (6 Marks) 
6. (a)  Define consideration. State the characteristics of a valid consideration.  (5 Marks)  
(b)  When does dissolution of a partnership firm take place under the provisions of the Indian 
Partnership Act, 1932?  Explain.    (4 Marks) 
(c)  Flora Fauna Limited was registered as a public company. There are 230 members in the company 
as noted below: 
(a) Directors and their relatives 190 
(b) Employees 15 
(c) Ex-Employees (Shares were allotted when they were employees 10 
(d) 5 couples holding shares jointly in the name of husband and wife (5*2)  10 
(e) Others 5 
 The Board of Directors of the company propose to convert it into a private company. Also advise 
whether reduction in the number of members is necessary.  (3 Marks) 
© The Institute of Chartered Accountants of India