Business Laws

PART A (Descriptive Type) = 46 PART B (Case Study) = 6 PART C (True/False) = 82 PART C (Multiple Choice) = 154
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PART A Descriptive Type Question

Question 1: What is business environment? What are the benefits & limitations of environmental analysis? Question 2: The fundamental attribute of corporate personality is that company is a legal entity distinct from the members."Elucidate the statement. Also specify the important features of a company. Question 3: Discuss the essential elements of a valid contract. Question 4: Define contract. Explain any four element of a contract. Question 5: Define 'Contract' and state its characteristics. Question 6: Explain the essential elements of a valid contract. Question 7: What are the rights of a finder of a good under the Indian contract Act? Question 8: For every valid agreement there should be a consideration. Comment Question 9: Explain the rights of an unpaid seller under Indian sales of goods Act. Question 10: What is a negotiable instrument, explain its characteristics. Question 11: Explain various types of companies. Question 12: What relief is/are available to the consumer under Consumer Protection Act. Question 13: What do you understand by the 'doctrine of caveat emptor'? Explain Question 14: Explain in detail the 'doctrines of Indoor Management' and 'doctrines of constructive notice" Question 15: Describe the kinds of Resolution passed by the Board Directors under the companies Act. 1956. Question 16: Define "goods". Explain the conditions and warranties implied by law in a contract for sale of goods. Question 17: Enumerate the duties of an Arbitrator: Differentiate domestic and foreign awards. Question 18: Nagendra issued a cheque in favour of Happy-home, a charitable institution, as his share of charitable subscription. The banker returned the cheque for the reason of insufficiency of funds in the drawer's account. The demand for payment by way of written notice to Nagendra by Happy-home should be made within how many days from the date of receipt of information of the dishounour to initiate an action under section 138 of the Negotiable Instruments Act, 1881? Question 19: Baiju, a singer, enters into a contract with Alok, the manager of a theatre, to sing at his theatre three nights in every week during the next three months, and Alok promises to pay him Rs.5,000 for each night's performance. On

the seventh night, Baiju willfully absents himself from the theatre. Can Alok put an end to the contract? Question 20: What do you mean by 'goods'? State its kinds as given in Sale of Goods Act, 1930 Question 21: State the procedure of incorporation of a company. What are the advantages of Incorporation? Question 22: Define Promissory Note and distinguish it with Bills of Exchange. Question 22: Who is 'consumer' under Consumer Protection Act, 1986? What is pecuniary jurisdiction of District Forum, State Commission and National Commission? Question 24: Define 'Arbitration'. What are requirements of Arbitration Agreement? Question 25: State characteristics of Life Insurance contract and Marine Insurance contract Question 26: State the provisions of Negotiable Instrument Act, 1881 on "Consequences of dishonor of cheque on ground of 'Insufficiency of fund". Question 27: Enumerate the different remedies for breach of a contract. Explain one of the remedies. Question 28: Describe the procedure of incorporation of a public company limited by shares. Question 29: Describe the different methods by which a company may be dissolved. Question 30: Explained the implied conditions and warrantee in a contract for sale of goods. Question 31: Define a bill of exchange. Explain the salient features of a bill of exchange. Question 32: Explain some of the more important general principles of insurance. Question 33: Describe the rights and duties of an arbitrator. Question 34: Define Contract. Give essential elements of a valid contract. Question 35: What are the remedies for breach of Contract. Question 36: Explain and illustrate the doctrines of: Lifting/ Piercing the corporate veil. Ultra vires. Question 37: Describe the kinds of resolutions passed by the Board Directors under the Companies Act (1956). Question 38: Define 'goods'. Explain the conditions and warranties implied by law in a contract for sales of goods. Question 39: Explain the consequences and remedies for dishonor of a cheque. Question 40: Give the kinds and characteristics of different insurance contracts. Question 41: Corporate veil can't lifted by a Court of law under the Companies Act, 1956. Explain Question 42: What are the characteristics of negotiable Instrument? Discuss the 'privileges' of holder in due course as per the provisions of the Negotiable Instruments Act, 1881? Also state the important amendment to be incorporated under sec 138 of the act. Question 43: Elaborately explain the essential features of the consumer protection act 1986. Also briefly discuss unfair trade practice and restrictive trade practice as discussed under consumer protection Act? Question 44: Write short notes:

(a) "A stranger to the consideration can enforce the contract". Explain the exceptions in the following. iSupervening Impossibility iiNovation (b)Anticipatory breach of Contract (c) A private company has only 2 shareholders who are also the directors with equal rights of management and voting power. The company has made large profits, but there is a complete deadlock in the management of the company. One of the shareholders applied for the winding up of the company. Decide at what moment does a winding up by the court commence? (d) (e) What is a Prospectus? Is it obligatory for a company to file a prospectus or a What is meant by the rule of Caveat Emptor and what are its exceptions? statement in lieu of prospectus with the Registrar of Companies? Question 45: "A company is a legal person distinct from its members taken individually or collectively". Comment. Also detail the important features of a company. Question 46: Discuss consumer dispute redressal forums & consumer councils with respect to its pecuniary (Financial) jurisdictions. Question 47: Explain - different modes of crossing of a cheque and section 138 as per the provisions of the Negotiable Instrument Act, 1881.

PART B Case Study 1

"Twenty Four year old Vijay Kumar suddenly complained one morning in June 1992 at 4.30 a.m. of pain of legs and his inability to move them. His father called a local doctor, and on his advice took him to a private hospital at about 6.30 a.m. By then the patient was complaining of extreme weakness and decreased power in the upper limbs. Even as he was being examined by a cardiologist and neurologist, he complained of difficulty in breathing, following which he was moved to intensive Care Unit (ICU) and then to the Intensive Cardiac Care Unit (ICCU). Subsequently, a senior consultant neurologist who examined him at about 9 a.m. said the probable diagnosis was Acute Infective Polyneuritis or Hypopotassemic paralysis or Acute Myasthenia Gravis. He suggested

Aurther Tests, immediate line of treatment including intubation and also informed the parents that since a new mode of treatment, plasmapherasis was not available at the hospital, it was advisable to move him to a 'Speciality' Hospital. He also gave a letter to the concerned doctor at the 'Speciality' Hospital, but the young man died at 12.10 hours before he could be moved there. The nurse on duty also failed to notice that the oxygen tube had been pulled out by the patient, who was extremely restless, till it was brought to her notice by the 'Patient's mother'. Question 1. What is the appropriate law for handling the case? Question 2. Where does Mr. Vijay Kumar's remedy lie? Question 3. Is there any negligence on the part of the doctors? Question 4. Was the Hospital Staff that was required to carry out the directions of the doctors, negligent? Question 5. Was the delay of two hours in intubating the patient an act of negligence? Question 6. What, if any, was the nature of lapse on the part of Hospital staff in respect of the oxygen tube pulled out by the patient? Question 7. By whom should Mr. Vijay Kumar's parents be compensated? Question 8. What was the nature of Mr. V ijay Kumar's condition in this case? Question 9. Is the private hospital liable for lapses in the case? Question 10. Name the major lapses. Question 11. What, if any, is the limitation period for filing the case by Mr. Vijay Kumar's parents?

Case Study 2
A proposed to B for purchase of a particular machinery at a price of Rs. 1 crore under the scheme of self-employment. B was willing to sale the item @ cost of Rs. 1.10 crore but not 1 crore. A agreed to buy @ Rs. 1.10 crore. But the machinery supplied by B was not as per the agreed description and was defected also. A refused to accept delivery of the machinery. A suffered a loss of Rs. 21 lakh due to breach of contract by B. Question 1. In this case who is proposer and who is acceptor? Question 2. Who is Promisor and who is Promisee?

Question 3. Under Consumer Protection Act, 1986 where should A make complaint against B for claiming Rs. 21 lakh - District Forum, State Commission or National Commission? Question 4. What is limitation period under C. P. Act for filing complaint? Question 5. What remedy is available to A under Indian Contract Act, 1872? Question 6. What remedy is available to A under Sale of Goods Act, 1930?

Case Study 3
Shyam Sunder admitted his only infant son in a private nursing home. As a result of a strong dose of medicine administered by the nursing attendant, the child became mentally retarded. Shyam Sunder made a complaint to the district forum seeking relief by way of compensation to the extent of 21 lakhs on the ground that there was a deficiency in service by the nursing home. Question 1. What is the applicable law for handling the case? Question 2. Is the district forum the proper competent authority to whom the complaint should be made? Question 3. Does Shyam Sunder's complaint give rise to a consumer dispute? Question 4. Who is the consumer in this case; Shyam Sunder or his infant son? Question 5. Is a private nursing home liable in such type of case under the consumer protection Act? Question 6. What, if any, is the limitation period for filing the complaint by a consumer?

Case Study 4
A dealer in radios gives a 'Murphy' radio to a customer on the terms that Rs. 100 should be paid by him immediately and Rs 200 more in two monthly equal installments. It was further agreed that if the radio is found defective the customer may return it within a week but not later. The customer makes default in paying the last installment. Can the radio dealer take back the radio on his default?

Case Study 5
X sees a book displayed in a shelf of a book shop with a price tag of Rs. 85. X tenders Rs. 85 on the counter and asks for the book. The bookseller refuses to sell saying that the book has already been sold to someone else and he does not have another copy of that book in the stock.Is the bookseller bound to sell the book toX?

Case Study 6
Aditya Mass Communication Private Limited Vs A.P. state Road Transport Corporation A.P. State Road Transport Corporation, Hyderabad advertised tender notice on calling for tenders for display of advertisements on the buses owned by it. According to the condition of the Tender Notice, each tender form had to be accompanied by a demand draft for Rs 20 lakhs and tender forms completed in all respects had to be put in the tender box. The accompanying sum of money was the Earnest Money Deposit (E.M.D). Clause (10) of the terms provided that the tender will be opened at 3:00 p.m. on October 31, 1996, in presence of the tenderers or their authorized agents. Clause (14) provided that tenderers will not be permitted to withdraw their tender after the tenders were opened .Clause (15) provided that if the highest tenderer backs out from taking up the agency , for whatsoever reason, the E.M.D. paid by him will be forfeited. Aditya mass Communication Private Limited submitted its duly filled tender along with demand draft of Rs. 20 lakhs. In relation to this tender, another person approached the High Court and got an order restraining the Transport Corporation from proceeding further with the tender. Following the order, the A.P. State Road Transport Corporation opened the tender box at 3 p.m. and found six sealed covers. In view of the directions of the High Court, the covers were again placed back in the tender box without opening the seals. The signature of the tenderers and their agents was taken to this effect .The tenders were not opened to find out the highest bidder. Aditya Mass Communication Private Limited wrote a letter on November 11, 1996 stating that no reasons were given to him for non-opening of the tenders and that he could not keep the huge amount of Rs 20 lakhs locked in with all the uncertainty associated with the tender. It, thus, requested for return of the Earnest Money Deposit. A.P. State Road Transport Corporation replied on November 14, 1996 that the Aditya Mass communication had signed on the note recording the proceedings of opening the tender box and putting back sealed

covers. Thus, it could not put up the argument that no reasons for non-opening of the tender was given on it. The letter notified that the tenders would be opened on November 16, 1996 at 11:30 hrs. Aditya Mass Communication once again wrote a letter on November 15, 1996 that the question of their participation in the opening of tenders did not arise as they asked for the return of E.M.D. The A.P. State Road Transport Corporation went ahead with the opening of the tender, found Aditya Mass Communication to be the highest bidder and awarded the tender to it. Aditya Mass Communication was informed of this but it demanded refund of Earnest Money Deposit. The A.P. State Road Transport Corporation following the terms of tender forfeited the earnest money deposit of Aditya Mass Communication. Question: 1. Elaborately state the important legal issue/s covered under this case. 2. What are the essential features of a tender?

3. Give your reasons in support of your decision for the issue discussed in this case.

PART C
Objective Type - 1
Answer True or False:
1. An agreement not enforceable by law is said to be void. 2. An agreement enforceable by law is contract. 3. The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. 4. In order to convert proposal into a promise the acceptance must be conditional and qualified. 5. All agreements are contracts. 6. A company is a voluntary association of persons. 7. A company is an artificial person having no body or soul. 8. A company the only limited shares. 9. A company may be with unlimited liability. 10. On registration a company becomes a distinct legal entity, has perpetual succession and its property is not the property of shareholders. 11. The Memorandum of Association of a company must be printed, divided into paragraphs numbered consecutively and signed by the subscribers. 12. A company can have any name 13. 'Goods' means every kind of movable property including action able claims and money. 14. The doctrine of Caveat Emptor has been modified by consumer protection legislation. 15. A lien is the right to hold the property of another as security for the performance of obligation. 16. Lien is not a possessory right. 17. A contract for sale of goods may be made in writing or by word of mouth bet cannot be implied from the conduct of the parties. 18. A contract of sale of goods is through immediate delivery only.

19. A negotiable instrument is a document of title. 20. A particular form is necessary for delivery of a negotiable instrument. 21. A person taking a bill of exchange can take a better title than the person from whom he took it. 22. A bill of exchange with the words written 'Not negotiable' across it is still negotiable. 23. 'Choser - in - action' is a term used in Negotiable Instruments. 24. A drawer of a dishonoured cheque shall be deemed to have committed an offence. 25. A blank signed paper give to another party cannot be made a bill of excha nge. 26. A life insurance policy in India can be avoided on the ground of suicide. 27. An LIC life insurance policy contains 'Suicide Clause' for the entire currency of the policy. 28. There is no difference between Assignment - and Nomination in so far as insurance is concerned. 29. All Insurance policies have a surrender value. 30. An Insurance Policy is with nature of a contract. 31. An arbitration agreement need nor be in writing. 32. Matrimonial matters can be referred to arbitration in India. 33. Parties are free to agree on the place of arbitration. 34. An award is in the nature of Individual verdict. 35. Indian Arbitration law does not comprehensively cover international commercial arbitration. 36. Consumers Protection Act 1986 is the judicial machinery for speedy redressal of consumer disputes. 37. Consumer Protection Act 1986 deals only with defects in relation to goods. 38. Any affiliation by a consumer in any form is a complaint. 39. The provisions in Consumer Protection Act, 1986 are in addition to and not in derogation of any other law for the time being in force.

40. There is no provision for the right to consumer education in the Consumer Protection Act, 1986.

Objective Type - 2
Answer True or False 1. An invitation to offer is a good offer 2. A quasi contract is not a contract at all 3. An agreement to agree is a valid contract. 4. An attempt at deceit which does not deceive is not fraud. 5. A stranger to a consideration cannot maintain a suit. 6. A married woman cannot enter into a contract. 7. A minor girl can enter into a contract. 8. For breach of a contract a party cannot claim compensation for loss or damage. 9. A contract for fire insurance is not valid. 10. A seller cannot convey a better title to the buyer than he himself has. 11. The ownership in goods passes only on delivery. 12. The present sale of future goods is an agreement to sell. 13. Risk follows ownership. 14. An agreement to sell is not a contract of sale. 15. Not negotiable crossing of a cheque stops its transferability. 16. A bill of exchange cannot be crossed. 17. A cheque is a promise to pay. 18. A cheque is always payable on demand. 19. A promissory note can be made payable to bearer on demand. 20. A crossed cheque can be encashed at a counter of the bank. 21. The first directors of a company are appointed at its statutory meeting.

22. A person applying for shares in a company in fictitious name is liable to be punished with imprisonment. 23. A public company can never be converted into a private company. 24. A public company can have two or more managing directors. 25. A person can be a director of not more than 15 companies. 26. Insurable interest is not necessary in all types of insurance contracts. 27. Insurance contracts are based on utmost good faith. 28. A contract of life insurance is a contract of indemnity. 29. The consent of the insurer is necessary for an assignment of a life policy. 30. There must be at least three directors in a private company. 31. A person of 68 years cannot be appointed a director of a company. 32. A company can issue debentures with rights. 33. A company can issue shares without voting rights. 34. A private company can commence business without obtaining a certificate to commence business. 35. A share certificate is conclusive evidence of the holder's title to shares. 36. There cannot be more than one District Consumer Forum in a District. 37. There are consumer protection councils at National, State and District levels. 38. Deficiency of service is not covered under the Consumer Protection Act. 39. The term 'consumer' does not include a person who obtains goods for resale. 40. There can be a settlement between the parties to the arbitration agreement during arbitral proceedings. 41. The arbitral award can be set aside. 42. The Arbitral Tribunal can make interim award during the course of arbitration proceedings.

Objective Type - 3

1. (a) Agreement enforceable by law is avoid. (b) Agreement enforceable by law is contract. (c) Agreement enforceable by law is voidable contract. (d) Every agreement is a contract. 2. When proposal is accepted what becomes promise: (a) Contract (b) Acceptance (c) Proposal (d) Consideration 3. (a) Proposer is Promisee. (b) Acceptor is neither promisor nor promise. (c) Acceptor is promisor. (d) Proposer is promisor. 4. What amounts to acceptance: (a) When the person to whom proposal is made signifies assent (b) Signifies objection (c) Signifies rejection (d) Signifies modification 5. Who is not competent to contract? (a) Major (b) Person of sound mind (c) Not lunatic (d) Minor 6. Consent is free if obtained by: (a) Fraud (b) Coercion (c) Misrepresentation (d) Mistake of law 7. If a party to contract commits breach, other is entitled to: (a) damages (b) goods (c) no damages (d) no compensation 8. (a) Agreement without consideration is valid. (b) Agreement without consideration is void. (c) Agreement without consideration is voidable contract. (d) Agreement without consideration is contract. 9. (a) All agreements are contracts. (b) All agreements are voidable contracts. (c) All agreements are void. (d) All contracts are agreements.

10. (a) For contract acceptance may be conditional. (b) For contract acceptance may be provisional. (c) For contract acceptance may be contingent. (d) For contract acceptance must be absolute. 11. Goods means: (a) Movable and immovable property both. (b) Immovable property only. (c) Movable property only. (d) Actionable claim. 12. What is goods? (a) Money (b) Building (c) Theatre (d) Share 13. Which is not goods? (a) Land (b) Share stocks (c) Trees separated from land (d) Ball 14. Sale means: (a) transfer of ownership (b) transfer of ownership in future (c) transfer of possession (d) payment of price 15. Stipulation with reference to goods may be: (a) condition only (b) warranty only (c) condition and warranty (d) none of the above 16. Which is not kinds of goods under Sale of Goods Act? (a) existing goods (b) hazardous goods (c) specific goods (d) future goods 17. Unpaid seller can not: (a) claim price (b) exercise right of lien (c) stop his goods in transit (d) ask arrest of buyer 18. 'One cannot transfer to other a title better than he has'. This rule is provided in: (a) Section 23 of Sale of Goods Act

(b) Section 25 of Sale of Goods Act (c) Section 27 of Sale of Goods Act (d) Section 31 of Sale of Goods Act 19. Ownership may pass immediately to buyer if goods are: (a) specific (b) unascertained (c) future (d) non existing goods 20. (a) P/N is an order to pay money. (b) P/N is a request to pay money. (c) P/N is a promise to pay money. (d) P/N is a promise and an order both to pay money. 21. The pecuniary jurisdiction of the District forum is: (a) Rs. 5 lakh (b) Rs. 10 lakh (c) Rs. 20 lakh (d) Rs. 50 lakh 22. The pecuniary jurisdiction of National Commission is: (a) above Rs. 50 lakh (b) above Rs. 20 lakh (c) above Rs. 2 crore (d) above Rs. 1 crore 23. Appeal from District Forum will lie to: (a) State Commission (b) National Commission (c) Supreme Court (d) High Court 24. Appeal from National Commission will lie to: (a) High Court (b) Supreme Court (c) District Court (d) Local Court 25. Limitation period for filing complaint to Consumer Forum is: (a) 1 year (b) 2 years (c) 30 days (d) 60 days 26. Who is not a consumer? (a) Person purchasing goods for his own use (b) Person purchasing goods for using in self-employment

(c) Person purchasing goods for commercial purpose (d) None of the above 27. Who is a consumer? (a) Person receiving goods in free (b) Person getting services without charges (c) Person hiring services (d) Person accepting gifts 28. Arbitration agreement: (a) must be oral (b) must be in writing (c) can be oral or writing (d) need not be in writing 29. Arbitration and Conciliation Act 1996 deals with: (a) only domestic arbitration (b) only international arbitration (c) both domestic as well as international arbitration (d) none of the above 30. Arbitration Award is: (a) decree (b) not a decree (c) required to be converted into decree (d) a decree or not, it depends on the parties 31. Conciliator: (a) decides a dispute (b) helps the arbitration to decide the dispute (c) assists the parties to reach settlement (d) helps the court 32. An agent: (a) can never appoint sub-agent (b) can appoint sub-agent whenever he likes (c) can not appoint sub-agent without the permission of Principal (d) can appoint sub-agent in nature of business so allows 33. In Insurance contract, insurable interest: (a) is must (b) is not must (c) may be or may not be (d) should be there if parties require so 34. (a) A promissory note can be payable to bearer on demand. (b) A Bills of Exchange can be payable to bearer or demand. (c) A cheque can be payable to bearer on demand (d) None can be payable to bearer or demand.

35. 'Acceptor' is a party: (a) only in case of promissory note (b) only in case of cheque (c) only in case of Hundi (d) only in case of bills of exchange 36. Cheque payable to bearer can be negotiated by: (a) mere delivery (b) mere endorsement (c) by delivery and endorsement (d) oral agreement 37. A negotiable instrument payable to order can be negotiated by: (a) mere delivery (b) mere endorsement (c) endorsement and delivery (d) only by endorsement in full 38. What can be 'crossed'? (a) Promissory note (b) Hundi (c) Bills of Exchange (d) Cheque 39. A company is a: (a) Legal person (b) Not a legal person (c) A natural person (d) Both legal and natural person 40. A Company becomes legal person: (a) without incorporation (b) when incorporated according to provisions of Companies Act (c) when incorporated according to provisions of Cooperative Societies Act (d) by or without incorporation

Objective Type - 4
1. Which of the following contracts, in order to be valid under the Indian Contract Act, 1872, must be in writing, stamped and registered? (a) Creation of a trust under the Indian Trust Act (b) A promise to pay a time barred debt (c) Cheque (d) Contracts for sale of immoveable property (e) Bill of exchange. 2. Under the Indian Contract Act, 1872, "every promise or set of promises forming the consideration for each other" is known as

(a) Offer (b) Contract (c) Agreement (d) Consideration (e) Acceptance. 3. Under the Indian Contract Act, 1872, if all the parties to a contract substitute a new contract for an existing contract, it is known as (a) Rescission (b) Restitution (c) Novation (d) Remission (e) Waiver. 4. Which of the following agreements is voidable under the Indian Contract Act, 1872? (a) Agreements by incompetent parties (b) Agreements where consent is obtained by way of coercion (c) Agreements under mutual mistake of fact material to the agreement (d) Agreements in restraint of marriage (e) Agreements with unlawful consideration. 5. Under the Indian Contract Act, 1872, which of the following agreements is Not considered to be opposed to public policy? (a) Agreements restricting the enforcement of rights (b) Agreements curtailing the period of limitation (c) Agreement to refer to arbitration any disputes which have arisen or which may arise in future (d) Agreements in restraint of marriage (e) Agreements in restraint of trade. 6. Under the Indian Contract Act, 1872, the damages which are usually assessed on the basis of the actual loss suffered by the plaintiff are known as (a) General damages (b) Special damages (c) Vindictive damages (d) Nominal damages (e) Exemplary damages. 7. Under the Indian Contract Act, 1872, in which of the following circumstances a continuing guarantee May not be revoked? (a) By Novation (b) By death of surety in respect of transactions prior to the date of death (c) Release or discharge of principal debtor (d) Compounding by the creditor with the principal debtor (e) Loss of security by the creditor. 8. Abhimanyu purchased a Ford Ikon car and obtained a comprehensive insurance policy from Continental Insurance

Company. This type of contract is known as (a) A wagering contract (b) A contract of guarantee (c) A voidable contract (d) A contract of indemnity (e) A contingent contract. 9. Under the Indian Contract Act, 1872 , the bailment of goods as security for payment of a debt is known as (a) Lien (b) Mortgage (c) Charge (d) Pledge (e) Assignment. 10. Under normal circumstances which of the following statements is False regarding contract of agency? (a) An agent should not set up an adverse title to the goods which he receives from the principal as an agent (b) An agent is duty bound to pay sums received to the principal on his account (c) An agent is bound to render proper accounts to his principal on demand (d) An agent should protect and preserve there in the rests of the principal in case of his death or insolvency (e) An agent can delegate his authority to a sub-agent. 11. Which of the following agents is considered as a non-mercantile agent under the Indian Contract Act, 1872? (a) Auctioneer (b) Broker (c) Banker (d) Factor (e) Insurance agent. 12. Which of the following is considered as a payment in due course under the Negotiable Instruments? Not Act, 1881? (a) Payment made in accordance with the apparent tenor of the instrument (b) Payment made on an instrument before the date of maturity (c) Payment made to a person who is in possession of the instrument as a holder (d) Payment made in good faith and without negligence (e) Payment made to a person in possession of an instrument 'payable to bearer'. 13. Which of the following statements is false in respect of presumptions of a negotiable instrument under the Negotiable Instruments Act, 1881? (a) Every negotiable instrument is drawn for consideration irrespective of the consideration mentioned in the document (b) Every bill is accepted within reasonable time before maturity (c) Every accepted bill is transferred before its maturity

(d) The instruments were not endorsed in the order in which they appear on the instrument (e) The holder of the instrument is holder in due course. 14. The pecuniary jurisdiction of State forum and National forum are: (a) Rs 5 Lakh to10 lakh and 10-20 lakh (b) Rs 20Lakhs -1 crore and 1crore and above (c) Below Rs 20Lakhs and 20 lakh to 1 crore (d) Rs 20 Lakh -50 Lakh and 75 Lakh &above (e) None of these 15. Veedol Ltd. was incorporated on May 3, 2007. However, the company could obtain its certificate to commence business only on September 25, 2007. The company, in the meanwhile had entered into contracts with suppliers for import of machinery. Such contracts entered into after in corporation but before obtaining certificate of commencement of business are considered as (a) Voidable contracts (b) Provisional contracts (c) Pre-incorporation contracts (d) Illegal contracts (e) Void contracts. 16. Which of the following instances is not treated as 'crossing' under the Negotiable Instruments Act, 1881? (a) A cheque bearing across its face the words 'account payee' without two transverse parallel lines (b) A cheque bearing across its face the words 'not negotiable' with two transverse parallel lines (c) A cheque bearing across its face the words 'not exceeding rupees two hundred within two transverse parallel lines (d) A cheque bearing across its face the words 'State Bank of India, Karol Bagh Branch, New Delhi' within two transverse parallel lines (e) A cheque bearing across its face the words 'Andhra Bank, Daryaganj Branch, New Delhi' Without two transverse parallel lines. 17. The term 'goods' under the Sale of Goods Act, 1930, does not include (a) Stocks and shares (b) Actionable claims (c) Growing crops (d) Grass (e) Every kind of movable property. 18. Under the Sale of Goods Act, 1930, in case of breach of a warranty in a contract of sale, the buyer can (a) Repudiate the contract (b) Claim damages only (c) Reject the goods

(d) Refuse to pay the price (e) Not only reject the goods but also claim damages. 19. The right of lien available to an unpaid seller by implication of law under the Sale of Goods Act, 1930 is to (a) Retain the possession of goods for the price (b) Recover the possession of goods (c) Recover the price (d) Recover the damages (e) Make use of the goods. 20. With reference to the Sale of Goods Act, 1930 which of the following statements is false? (a) A breach of warranty can give rise only to a claim for damages (b) Warranties are obligations which need to be performed (c) A breach of a condition can be treated as a breach of warranty (d) A breach of warranty can be treated as a breach of condition (e) A particular stipulation is a condition or a warranty will depend upon the facts and circumstances of each case. 21. In which of the following cases corporate veil need not be lifted by a Court of law under the Companies Act, 1956? (a) Where a company has been formed for defrauding the creditors (b) Where a company is used to evade taxes and other legal obligations (c) Where a company is used for the furtherance of welfare legislation (d) Where there is a complaint of oppression by the shareholders (e) Where there is a need to determine the enemy character of the company. 22. As per section 591 of the Companies Act, 1956, a foreign company means (a) A comp any incorporated outside India and having place of business in India (b) A comp any incorporated in India and having place of business outside India (c) A comp any incorporated outside India and having place of business outside India (d) A comp any incorporated in India and having place of business in India (e) A comp any incorporated in India but not commenced its business. 23. Under the Companies Act, 1956, a public company which never commenced business is known as a/an (a) Private company (b) Closely held public company (c) Unlimited company (d) Widely held company (e) Defunct company. 24. The Doctrine of Constructive Notice' is used to protect (a) Company against outsiders (b) Outsiders against company (c) Directors against outsiders

(d) Directors against company (e) Outsiders against directors. 25. The directors of a newly floated company want to name it as Zeneca Finance Corporation. Under Companies Act, 1956, in order to use the keyword 'Corporation' in its name the company must have a minimum authorized capital of (a) Rs. 1 crore (b) Rs. 2 crore (c) Rs. 5 crore (d) Rs.10 crore (e) Rs.25 crore. 26. The lock in period of minimum promoter's contribution in case of a public issue is (a) 1 year (b) 2 years (c) 3 years (d) 4 years (e) 5 years. 27. Under the Companies Act, 1956, if a public company does not register its own set of articles, then (a) The regulations contained in Table A of Schedule I to the Act automatically apply (b) The regulations contained in Table C of Schedule I to the Act automatically apply (c) The regulations contained in Table D of Schedule I to the Act automatically apply (d) The regulations contained in Table E of Schedule I to the Act automatically apply (e) The company cannot be incorporated under the Companies Act, 1956. 28. The maximum number of public companies to which an individual can be appointed as a director at a time under section 276 of the Companies Act, 1956, is (a) 10 companies (b) 15 companies (c) 20 companies (d) 25 companies (e) 50 companies. 29. Which of the following statements is false under the Companies Act, 1956? (a) A director must be a member of the company (b) Minimum seven persons are required for incorporation of a public company (c) Proxy has no right to speak in the general meeting (d) Company having profits need not declare dividends (e) A private company cannot issue prospectus. 30. Section 292A of Companies Act, 1956 lays down compulsory constitution of 'Audit Committee' by certain public companies. Which of the following companies

are required to constitute such committees? (a) A public company having a paid-up capital of not less than Rs.1 crore (b) A public company having a authorized capital of not less than Rs.1 crore (c) A private company having a paid-up capital of not less than Rs.1 crore (d) A foreign company having a p aid-up capital of not less than Rs.3 crore (e) A public company having a paid-up capital of not less than Rs.5 crore. 31. Under the Companies Act, 1956, a public financial institution whose main object is financing shall file which of the following with the Registrar of Companies for issue of its securities? (a) Statement in lieu of prospectus (b) Information memorandum (c) Red-herring prospectus (d) Abridged prospectus (e) Shelf prospectus. 32 Which of the following statements is false in respect of a proxy under the Companies Act, 1956? (a) Proxy need not be a member of a company (b) A member of a private company cannot appoint more than one proxy to attend the same meeting (c) A proxy can vote only on poll (d) Where the NCLT directs under Section 167 or 186 of the Companies Act, 1956 one member present in person or by proxy can constitute a quorum in a meeting (e) he period fixed for depositing proxies cannot be extended beyond 72 hours before the meeting 33. The maximum maturity period for deposits accepted by a public company under the Companies (Acceptance of Deposits) Rules, 1975, cannot exceed (a) 12 months (b) 24 months (c) 36 months (d) 48 months (e) 60 months. 34. Where more than one companies are merged together, it is known as (a) Arrangement (b) Compromise (c) Reorganization (d) Reconstruction (e) Amalgamation. 35. The debentures, which are similar to share warrants are known as (a) Registered debentures (b) Secured debentures (c) Bearer debentures (d) Naked debentures (e) Irredeemable debentures.

36. Which of the following is not a ground for winding up of a company by National Company Law Tribunal under section 433 of the Companies Act, 1956? (a) Default in holding statutory meeting by a public company limited by shares (b) Default in holding annual general meeting (c) Failure to commence business within a year of its incorporation (d) Inability to pay its debts (e) Reduction of number of members below statutory minimum. 37. As per the provisions the Companies Act, 1956, an alternate director can be appointed, in place of the original director during his absence for a period not less than 3 months, by (a) Securities Exchange Board of India (b) Board of directors (c) Financial Institutions (d) The Central Government (e) Share holders of the company. 38. Under the Companies Act, 1956, the amount held under unpaid dividend account of a company which remains unpaid or unclaimed for a period of 7 years from the date of such transfer must be transferred by the company to (a) Securities premium account (b) General reserve (c) Revaluation reserve (d) Investor education and protection fund (e) Debenture redemption reserve. 39. Which of the following statements is true with respect to the requirement of quorum for a general meeting of a company under the Companies Act, 1956? (a) Quorum is required at the end of the meeting of the company (b) Quorum is required only at the beginning of the meeting of the company (c) Quorum is required throughout the meeting of the company (d) Quorum is not required for the meeting of the company (e) Quorum is required only for the listed companies. 40. Which of the following category of directors cannot be removed by the members of the company in general meeting under section 284 of the Companies Act, 195 6? (a) The director appointed in casual vacancy (b) The director appointed as additional director (c) The director appointed as alternate director (d) The director appointed by the Central Government (e) Director appointed as regular director in a general meeting.

Objective Type - 5
Q1. Any person is a holder in due course if he has obtained the negotiable instrument

a) For consideration b) By gift c) Before its maturity d) Both (a) & (c) above Q2 Michael Porte's Five Forces Model includes: a) Threat of Substitutes b) Bargain Power of supplier c) Bargain Power of Government d) Both(a)&(b) Q3 I had applied for subscription in Rajlakshmi scheme of UTI. The essence of the scheme was that the sum of money deposited with the UTI would grow 21 times in 28 years. However subsequently, the UTI extended the maturity date by two years. Can I approach a Consumer Court? a) Yes you can seek relief in a consumer court b) No you can't seek relief in a consumer court Q4 Can Consumer Forums adjudicate disputes involving scale of pay? a) Yes, Consumer Forums do adjudicate dispute-involving scale of pay b) No, Consumer Forums do adjudicate dispute-involving scale of pay Q5 In which of the following instances, the collecting banker shall not be liable for conversion to the true owner under the Negotiable Instruments Act, 1881? a) The collecting bank advances money to the customer against the cheque even before the cheque is realized b) The uncrossed cheque given to the collecting bank for collection is crossed by the banker c) The payment is received by the collecting bank on behalf of a person who is not a customer of the bank d) The collecting bank is a holder for value e) The collecting bank is acting as an agent for receiving the payment.

Q6 Which of the following amounts to reduction of share capital under section 100 of the Companies Act, 1956? a) Redemption of redeemable preference shares under the provisions of Section 80 and 81 of the Companies Act, 1956 b) Forfeiture of shares for non-payment of calls c) Payment of dividend out of share premium d) Surrender of shares to a company e) Reduction of nominal share capital of a company by canceling any shares which have not been taken by any person. Q7 Which of the following statements is false in respect of offer and it's acceptance under the Indian Contract Act, 1872? a) An offer will be valid only if it is communicated to the offeree b) A person who acts according to the terms of an offer which has not been communicated to him will not be deemed to have accepted the offer c) The communication of the offer must be made with an intention to obtain the assent of the offeree d) A mere intent of acceptance will not suffice, the acceptance must be communicated to the offeror e) The mode of rejection of an offer must be specified in order to constitute a valid offer. Q8 Mr. Dheeraj is a director of Laxmi Ltd., which failed to file its annual returns from the year 2003-04. The maximum period for which Mr. Dheeraj will be disqualified from becoming a director in any public limited company is a) 3 years b) 5 years c) 7 years d) 8 years e) 10 years. Q9 Which of the following statements is false in respect of a contract of guarantee under the Indian Contract Act, 1872? a) Guarantee given for a time barred debt is valid

b) A guarantee may be given retrospectively for an existing debt c) A contract of guarantee presupposes the existence of a debt, therefore, if there is no existing liability, there cannot be a guarantee d) There are always three parties in a contract of guarantee e) Where the principal debtor's liability becomes unenforceable because of illegality, the surety cannot be made liable on the said debt. Q10 Which of the following statements is false in respect of a contract of sale under the Sale of Goods Act, 1930? a) Title to goods is immediately transferred to the buyer b) A contract of sale is an executed contract c) In case of default by the seller, the buyer may rescind the contract d) In a sale, a breach of condition can only be treated as a breach of warranty e) In a contract of sale the goods are specified and ascertained. Q11 The articles of association of Rathi Informatics Ltd. provided for a maximum of 18 directors on the Board. Presently there are 12 directors on the Board of the company. The company wishes to increase the strength of its Board to 15. Which of the following statements is correct in respect of these circumstances under the Companies Act, 1956? a) As the proposed increase is within the maximum permissible number fixed by the articles only an ordinary resolution is required b) As the proposed increase is beyond 12, a special resolution is required c) As the proposed increase is within the maximum permissible number fixed by the articles only an ordinary resolution as well as approval of the Central Government is required d) As the proposed increase is beyond 12, a special resolution as well as approval of the Central Government is required e) As the proposed increase is beyond 12, a special resolution as well as approval of the National Company Law Tribunal (NCLT) is required. Q12 Which of the following statements is false in respect of dividend on preference shares? a) Where there are two or more types of preference shares, the shareholders of the class which has priority are entitled to their preferential dividend before any dividend is paid to other shareholders

b) Cumulative preference shareholders are entitled to receive all dividends which are in arrears before any dividend is paid on equity shares c) Where cumulative preference shares have been issued at different times, the arrears of dividend will have to be paid to all the preference shareholders equally d) In case of non-cumulative preference shares, only the amount of dividend which is due in the current year will have to be paid to the holders e) The preference shareholder cannot sue the company for dividends, unless the company has declared the same and did not pay the amount. Q13 Which of the following statements is false in respect of consideration under the Indian Contract Act, 1872? a) Consideration given at the behest of third parties will not be valid consideration b) Inadequacy of consideration invalidates a contract c) Consideration must be real and not illusory d) Performance of an existing legal duty will not constitute valid consideration e) Forbearance or abstinence amounts to valid consideration. Q14 Which of the following statements in respect of bailment is false under the Indian Contract Act, 1872? a) The bailor is bound to disclose, all the faults in the goods bailed to the bailee, of which the bailor is aware b) The bailee will have to bear all the ordinary expenses incurred by vitue of the bailment c) The bailor is responsible to the bailee for any loss sustained by him in case the bailor is not entitled to make the bailment or to receive back the goods d) The bailor is not responsible to the bailee for any loss sustained by him in case of premature termination of a gratuitous bailment e) It is the duty of the bailor to receive back the goods after the purpose is achieved. Q15 Which of the following statements is false in respect of dividend under the Companies Act, 1956? a) Dividend is to be paid only in cash

b) Before payment of interim dividend a company must transfer to reserves the prescribed percentage of estimated profits arrived at after providing for current year's depreciation and arrears of depreciation/loss c) A final dividend for any financial year can be declared and paid only when the balance sheet and profit and loss account are presented to the shareholders at the AGM d) The shareholders can approve the recommended rate of dividend or lower the same, but cannot increase the amount of dividend e) A dividend once declared cannot be revoked even with the consent of all the shareholders. Q16 Which of the following powers may be exercised by the board of directors without obtaining consent of the company at a general meeting? a) Power to contribute to the welfare of its employees any amount less than Rs. 50,000 b) Power to borrow in excess of capital and reserves of the company c) Power to remit debt due by a director d) Power to invest compensation amounts received on compulsory acquisition of any of the company's properties e) Power to appoint sole selling agents. Q17 Which of the following agreements is not valid under the Contract Act, 1872? a) An agreement for training a minor in a particular trade b) An agreement between a minor agent and his major principal c) An agreement made by the certified guardian of a minor with authority for benefit of minor d) An agreement made by a minor agent on behalf of his principal e) An agreement by a minor to repay a loan taken for supply of necessaries to him during his minority. Q18 As per section 166 of the Companies Act, 1956, the first annual general meeting of a company should be held within a) 6 months of its incorporation b) 12 months of its incorporation

c) 15 months of its incorporation d) 18 months of its incorporation e) 24 months of its incorporation. Q19 Which of the following is not excluded for the purpose of counting maximum number of directorships under section 275 of the Companies Act, 1956? a) Directorship in a private company b) Directorship in a private company which is the holding company of a public company c) Directorship in a unlimited company d) Directorship as an alternate director e) Directorship in an association not carrying on business for profit. Q20 Which of the following is not a foreign bill under the Negotiable Instruments Act, 1881? a) A bill drawn in Singapore upon a resident of India, payable in Kuala Lumpur b) A bill drawn in Kuala Lumpur upon a resident of Singapore, payable in India c) A bill drawn in India upon a resident of Kuala Lumpur, payable in Singapore d) A bill drawn in India upon a resident of India, payable in Kuala Lumpur e) A bill drawn in Singapore upon a resident of Singapore, payable in Kuala Lumpur. Q21 A prospectus once registered with the Registrar Of Companies (ROC) should be issued within a) 14 days from the date of registration with ROC b) 21 days from the date of registration with ROC c) 30 days from the date of registration with ROC d) 60 days from the date of registration with ROC e) 90 days from the date of registration with ROC. Q22 Which of the following statements is false in respect of a pawnee under the Indian Contract Act, 1872?

a) When the pawnor defaults in payment of the principal debt, the pawnee can retain the pledged goods as collateral security b) When the pawnor fails to perform his part of the promise, the pawnee may sell the pledged goods after giving the pawnor a reasonable notice of sale c) When the pawnor defaults in payment of the principal debt the pawnee cannot recover from the pawnor any deficit between the debt due and sale price d) When the pawnor defaults in payment of the principal debt, the pawnee can file a suit for breach of contract against the pawnor e) The pawnee can sue the pawnor for any extraordinary expenses incurred by him for the preservation of the goods pledged. Q23 Mr. Pankaj who was appointed as an additional director at the Board meeting held on December 31, 2005 continues to be in his office on the ground that the annual general meeting of the company for the year 2006 was not held as required under the Act. Mr. Pankaj was also appointed as a managing director for a period of five years with effect from January 01, 2006 at the same Board meeting. Which of the following statements is true in respect of an additional director under the Companies Act, 1956? a) Mr. Pankaj shall hold the office as an additional director till the completion of five years b) Mr. Pankaj shall hold the office as an additional director upto the conclusion of any general meeting c) Mr. Pankaj shall hold the office as an additional director as long as he intends to d) Mr. Pankaj shall vacate the office of the managing director e) Mr. Pankaj shall hold the office of the managing director till the completion of five years. Q24 Which of the following statements is false under the Companies Act, 1956? a) A director must be a member of the company b) Minimum seven persons are required for incorporation of a public company c) Proxy has no right to speak in the general meeting d) Company having profits need not declare dividends e) A private company cannot issue prospectus. Q25 Which of the following statements is false in respect of rights of a bailee under the Indian Contract Act, 1872?

a) Where the bailee has rendered any service or exercised his skill in respect of the goods bailed, then he can retain the bailed goods until his dues are paid b) If the bailee has agreed to refrain from exercising the right of lien or has waived his right, then he cannot exercise the same c) The right of particular lien will be revived, if the bailee gets possession of the bailed goods after parting with the same in the first place d) The right of lien can be exercised so long as the bailee has the possession of the goods e) The bailee may retain not only those goods of the bailor in respect of which some particular service has been rendered, but also other goods in the possession of the bailee belonging to the bailor. Q26 Section 165 of the Companies Act, 1956, in respect of conduct of statutory meeting is applicable to a) A private company converted into a Public Company within 6 months of its incorporation b) A private company, which is a subsidiary of a public company c) A public company having liability of it's members unlimited d) An independent private company e) A government company registered as a private company. Q27 Hiten Desai picked up a diamond ring from the floor of Divya Jewellers, Surat and handed it over to Premchand Bhatia, the manager of Divya Jewellers, with a request to hand it over to the true owner. The true owner could not be traced in spite of best efforts of Premchand. Hiten Desai paid the expenses incurred by Premchand and asked him to return the diamond ring to him. Which of the following statements is true under the Indian Contract Act, 1872? a) Premchand is under no obligation to return the ring to Hiten Desai as the ring was found on the floor of his shop b) Premchand is under an obligation to return the diamond ring only to the true owner c) Premchand and Hiten Desai can share the value of the diamond ring equally d) Hiten Desai being the finder of lost goods can retain the diamond ring against everyone except the true owner e) Premchand can retain the diamond ring against everyone including the true owner.

Q28 Under the Companies Act, 1956, up to what date a director appointed to fill casual vacancy shall hold office? a) The last day on which the annual general meeting should have been held b) Until the original director, in whose place he is appointed, returns back c) Till the date up to which the director in whose place he is appointed would have held office d) Up to the next extraordinary general meeting e) Up to the conclusion of the annual general meeting. Q29 At a public auction a car was put up for sale and as Mr. Ramlal was the highest bidder, he got the car. Later, it was discovered that the car was a stolen one. This fact was also not known to the auctioneer. The true owner wishes to obtain possession of the car. Under these circumstances which of the following statements is true under the Sale of Goods Act, 1930? a) Mr. Ramlal did not get any title against the true owner b) The true owner cannot recover any possession as Mr. Ramlal had bought at a public auction c) As Mr. Ramlal had purchased the car in good faith, Mr. Ramlal can enjoy possession of the car d) The true owner can file a suit against the auctioneer for fraudulently selling a stolen car e) The auctioneer is personally liable to the true owner for damages only and the true owner has no right to obtain possession of the car. Q30 Which of the following statements is false under the Companies Act, 1956? a) The Board of directors should authenticate the accounts before submission to auditors b) The Profit and Loss account should reveal the details of auditor's remuneration c) The provision of depreciation is necessary to show true and fair picture of the accounts d) Company with a paid up capital of Rs.2 crores is required to form an 'audit committee' e) The first auditor usually holds office till the conclusion of the first annual general meeting. Q31 Which of the following instances is not treated as 'crossing' under the Negotiable Instruments Act, 1881?

a) A cheque bearing across its face the words 'account payee' without two transverse parallel lines b) A cheque bearing across its face the words 'not negotiable' with two transverse parallel lines c) A cheque bearing across its face the words 'not exceeding rupees two hundred' within two transverse parallel lines d) A cheque bearing across its face the words 'HDFC Bank, Karol Bagh Branch, New Delhi' within two transverse parallel lines e) A cheque bearing across its face the words 'Citi Bank, Daryaganj Branch, New Delhi' without two transverse parallel lines. Q32 Which of the following persons is incompetent to enter into a valid contract under the Indian Contract Act, 1872? a) The official assignee of an adjudged insolvent b) A person of the age of twenty years for whose estate a guardian has been appointed by the Court c) A person who is a foreign diplomat d) A convict after the expiry of his sentence e) An Indian, voluntarily residing in a foreign country. Q33 Which of the following statements is false in respect of qualification shares to be held by a director of a company under the Companies Act, 1956? a) A director will have to take up qualification shares only if required by the articles of association b) The nominal value of the qualification shares shall not exceed Rs. 5,000 or the nominal value of one share where it exceeds Rs.5,000 c) The qualification shares required to be taken up by a director must be purchased from the company d) Share warrants will not count for the purpose of share qualification e) Any provision in the articles requiring a person to obtain qualification shares before his appointment as director or within a period shorter than two months of his appointment shall be void. Q34 Mr. Ankit, a creditor of Silktech Ltd. issued a demand notice by registered post at the company's registered office to payback his loan amount worth Rs. 1,50,000 (along with interest). But the company neglected to reply/ respond for a period of

two months. Which of the following statements is true in respect of consequences of failure of Silktech Ltd. to reply under the provisions of the Companies Act, 1956? a) Mr. Ankit has no remedy for the negligent conduct of the c

Objective Type - 6
Question 1: After exercising the right of lien, the seller can resell the goods of perishable nature--(a) After giving 7 days notice of resale to buyer (b) After giving one week's Notice (c) Without giving any notice (d) None of these Question 2: Annual - general Meeting is required to be held--(a) By a private company only (b) By a public company only (c) By a company limited by guarantee only (d) By all kinds of companies Question 3: An acceptance is complete and effective only when it has been--(a) Communicated to the offerer (b) Merely mentally accepted (c) Externally manifested (d) Kept in the drawer Question 4: Name of a company can be changed by passing a special resolution and with the approval of-(a) The company law tribunal (b) The Central Government (c) The Registrar of Companies (d) none of the above Question 5: A contract becomes voidable if it has been caused by--(a) Coercion (b) Fraud

(c) Undue Influence (d) All of them Question 6: If the goods have perished, the contract of sale of such specific goods, will become--(a) voidable (b) void (c) illegal (d) None of these Question 7: Articles can be altered by--(a) Ordinary resolution (b) Special Resolution (c) Resolution requiring special notice (d) Unanimous resolution Question 8: A contract entered into between the parties by words is called--(a) An express contract (b) An implied contract (c) A quasi Contract (d) An excited contract Question 9: A prospectus is issued--(a) By a Private Limited Company (b) By a Public Limited Company (c) By a Company limited by Guarantee (d) None of these Question 10: When, before the contract becomes due for performance, the promisor declares his intention of not performing his promise, it is called--(a) Remission (b) Waiver (c) Alteration (d) Anticipatory breach Question 11: A bailment cannot be made about---

(a) Car (b) Furniture (c) Money (d) Television Question 12: The damages which arise in the usual course of things happening from the breach of contract, are called--(a) Remote Damages (b) Ordinary damages (c) Special damages (d) Nominal Damages Question 13: When a person is employed to represent another in dealings with third person, it is a contract of--(a) Bailment (b) Guarantee (c) Agency (d) Pledge Question 14: Which of the following is not an essential element of a contract of sale--(a) Goods as subject matter (b) Transfer of property in goods (c) Price (d) Railway receipts Question 15: Which of the following does not relate to 'termination of agency by operation of law'--(a) Death of principal (b) Insolvency of principal (c) Destruction of subject-matter (d) Revocation of authority by the principal Question 16: Limited liability means liability of its--(a) Debtors is limited (b) Creditors is limited (c) Members is limited

(d) Debenture holders is limited Question 17: In a contract of sale, property means--(a) Raw Materials (b) Movable goods (c) Ownership (d) Immovable property Question 18: The goods which are yet to be acquired by the seller, are called--(a) Existing Goods (b) Contingent Goods (c) Unascertained goods (d) Future goods Question 19: -Acceptance of an offer is complete as against the offeror as soon as-

(a) The offerer knows about it (b) The letter of acceptance is posted (c) The letter of acceptance is signed by offeree (d) The letter is handed over to a delivery person Question 20: If a company fails to pay its debts suit can be filed against the--(a) Directors (b) Members (c) Officers (d) Company Question 21: A contract with a minor is--(a) Illegal (b) Valid (c) Void (d) Voidable Question 22: Who is liable for the supply of necessaries to a minor--(a) His guardian (b) His Manager

(c) His property (d) He himself Question 23: In return for a new television, Raju agrees to give his old television valued at Rs. 3,000 and an amount of cash worth Rs. 5,000 to Ganesh. This is a--(a) Barter (b) Exchange (c) Contract of sale of goods (d) Sale of approval Question 24: Which of the following rights is held by an unpaid seller--(a) Right of lien (b) Right of stoppage in transit (c) Right of resale (d) All of these Question 25: Which of the following is not a remedy for breach of contract--(a) Rescission of the contract (b) Restitution of benefit (c) Suit for damages (d) Alteration of the contract Question 26: A contract by which one party promises to save the other from loss is called--(a) Contract of guarantee (b) Contract of indemnity (c) Quasi contract (d) None of these Question 27: Surety's liability is--(a) Primary (b) Secondary (c) Absolute (d) None of these Question 28: Crossed cheques payable to bearer are negotiated by---

(a) Endorsement & delivery (b) Delivery (c) Assignment (d) None of these Question 29: In a contract of sale, which of the following is treated as implied condition--(a) That the seller has title to goods (b) That goods are similar to description (c) That goods are according to sample shown (d) All of these Question 30: Consideration must move at the desire of--(a) The Promisor (b) The Promisee (c) A third party (d) None of them Question 31: Which of the following sentence is a valid promissory note--(a) I promise to pay Mohan or order Rs. 1,000. (b) I promise to pay Hari Rs. 2,000 worth of shares.. (c) I promise to pay Naraynan in East India Bonds (d) I promise to pay Rakesh Rs. 5,000 and to deliver 50 kg of sugar. Question 32: A stipulation collateral to the main purpose of the contract, is called a-(a) Condition (b) Warranty (c) Guarantee (d) None of these Question 33: A person who receives a negotiable instrument for consideration, before maturity, and in good faith, is called--(a) Holder for value (b) Holder (c) Holder in due course (d) None of these

Question 34: A director must vacate his office if he fails to obtain qualification shares within--(a) 1 week (b) two weeks (c) One month (d) two months Question 35: A private company has at least--(a) 7 members (b) 3 members (c) 3 directors (d) 2 Members Question 36: A cheque payable to order may be negotiated--(a) by delivery (b) By endorsement (c) By endorsement & delivery (d) None of these Question 37: Which of the following endorsements is invalid--(a) Restrictive endorsement (b) Conditional endorsement (c) Special endorsement (d) Partial endorsement Q39: When a cheque bears across its face an addition of the words "&" between two parallel transverse lines, it is called--(a) Special crossing (b) Restrictive crossing (c) General crossing (d) Double crossing Question 39: Which of the following is a mode of discharge of contract--(a) By impossibility of performance (b) By lapse of time (c) By breach of contract

(d) All of the above Question 40: Which of the following rights are available to a finder of goods--(a) Right of lien (b) Right to file a suit for reward (c) Right of sale of goods (d) All of these

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