CA-CPT – Paper No.

2 (Mercantile Law)



Paper No. 2 (Mercantile Law)
Time Allowed: 60 Minutes Maximum Marks: 50

General: (i) (ii) (iii) (iv) (v) (vi) Marking: +1 for correct answer & -0.25 for incorrect. Mark only one correct answer out of four alternatives. Use Pencil or Blue/Black Ball Point Pen only for writing particulars for any marking. Use of calculator is not allowed. Darken the circles in the space provided only. Use of white fluid or any other material which damages the answer sheet, is not permitted.





Which one of the following is the best statement about the Indian Contract Act? (a) It is an exhaustive code containing the entire law of contract. (b) It is an act to amend certain parts of the law relating to contracts. (c) It is an Act to define certain parts of the law relating to contracts and contains only the general principles of contract. (d) It is not an exhaustive code containing the entire law of contract being an Act to define and amend certain parts of law relating to contract. In case of conflict of jurisdiction of the courts, the incidence of a contract shall be governed by the law of the place where the : (a) Acceptor reside (b) Proposer reside (c) Contract is made (d) Contract is performed Q lived as paying boarder with a family. He agreed with the members of the family to share prize money of a newspaper competition. The entry sent by Q won a prize of Rs.5,000. He refused to share the amount won. What option is available with the members of the family? (a) The members of the family can recover their share, as there was a mutual agreement between the parties. (b) The members of the family cannot recover their share, as there was no written agreement. (c) The members of the family can claim damages. (d) None of the above. A dress is displayed in the showroom of a shop with a price tag attached to the dress. A buyer interested in the dress and ready to pay the price mentioned in the tag approached the shopkeeper for purchasing the dress. Which one of the following is correct? (a) The shopkeeper can refuse to sell the dress. (b) The shopkeeper cannot refuse to sell the dress as the buyer has accepted the offer. (c) In case of refusal, the shopkeeper will be liable for breach of contract. (d) The shopkeeper cannot refuse to sell the dress but may charge higher price.

11. ‘Offers at large’ 3. Acknowledgement Receipt given to him carried.100.2. (a) Ali only stated his intention to Jack. Indian Contract Act received to assent on: (a) 25th April. 1872. (c) 1st September. 1872. 1872 (d) 25th September. Standing offer D. on the face of it. (a) 2 (c) (b) 2 (e) (c) 2 (g) (d) 2 (i) Drawing cash from ATM. 9. (d) None of these.400 being its value. Can the passenger win the case? (a) Yes. Offer to invite offers 2. the words “See back”.5. (b) There is no contract between Ali and Ben. (d) Both (a) and (b) Match List-I with List-II and select the correct answer using the codes given below the Lists : List-I A. Invitation to treat C. Identical offers crossing each other 4. One condition limited the liability of Railways for any package to Rs. . 1872 2 List-II 1.000 is not permissible in law (d) No. S immediately posts his letters of acceptance. sale by fall of hammer at an auction sale. etc. 7. are examples of (a) Express Contract (b) Implied Contract (c) Tacit Contract (d) Unlawful Contract A passenger deposited a bag in the cloakroom at a Railway Station. by a letter. (c) There is contract between Ali and Ben. 2 (Mercantile Law) 5. and passenger claimed Rs. suit for value below Rs. General offer B. 6. The same evening T posts a letter revoking the offer T’s letter of revocation and S’s letter of acceptance cross in the post.CA-CPT – Paper No. (a) There is a contract between T and S (b) There is no a contract between T and S (c) There is only invitation to offer. pleading that he had not read conditions. T offers. Tender 8. 1872 (b) 1st January. Cross offer Code : A B C D (a) 2 1 4 3 (b) 3 4 1 2 (c) 2 4 1 3 (d) 3 1 4 2 Agreement is defined in Section ___________ of the Indian Contract Act. to sell a certain article to S who receives the letters the next day. Ben accepts the offer and informs Ali about the acceptance. The bag was lost. Jack informs Ben of the contemplated offer but Ali himself does not communicates the offer to Ben. Ali intends to make an offer to Ben and tells Jack about it. (b)Yes. 10. damages are payable for loss of property (c) No. Railway Company cannot take undue advantage. the passenger had constructive notice of conditions whether he read them or not.

On 3rd August F completes the return swim to England.000 (c) Giving delivery of articles to ‘A’ amounts to performance of a condition precedent to an offer an hence there is valid acceptance ‘B’ must gets the reward of Rs. as the second advertisement is ineffective so far as F is concerned. (c) Both (d) None of the above In case of Illegal agreements. no claim for reward Rs. (d) None of the above. a further advertisement appear in the same newspaper stating that the offer of the prize has been withdrawn. (b) He should be capable of forming a rational judgment about the effect of the contract on his interest. 16. found the articles and gave the same to ‘A’: (a) As there is no acceptance of an offer due to want of knowledge. the collateral agreements are: (a) Valid (b) Voidable (c) Void (d) None of the above A minor’s estate is liable for the ____________ supplied to him (a) Necessaries (b) Luxuries (c) Necessities (d) All the things 3 .00 (d) In the absence of any legal obligation on ‘a’. 2 and 3 are correct (b) 2 and 3 correct (c) 1 and 3 correct (d) 3 alone is correct P advertises in a daily newspaper that he will give a prize of Rs. who has read the advertisement .000 for recovery of some valuable missing article. Can F recover the prize ? (a) Yes. “Acceptance to an offer is like a lighted match to a train of gun powder. 19. sets off from Dover on 1st August and reaches the coast of France on 2nd August. 14. On that day. as the offer was revocated (c) F can only claim for damages. ‘B’ is not entitled to get the reward of Rs.1. 20. 13. A counter offer terminates the original offer 2.1.1. An agreement entered into with free consent and lawful but inadequate consideration is: (a) Void (b) Voidable (c) Illegal (d) Valid No consideration is required to create a contract of agency (a) True (b) Partly True (c) False (d) None of the above A person is of unsound mind if he satisfies which of the following cases: (a) He should be capable of understanding the nature & contents of the contract. of these statement (a) 1. ‘B’. An acceptance containing additions. 17. limitations or other modifications shall amount to (a) a counter offer (b) rejection of the offer (c) a valid acceptance (d) (a) & (b) ‘A’ offered a reward of Rs.000 to the first person to swim the English Channel and back during the month of August.1. 2 (Mercantile Law) 12. 18.000 (b) Giving delivery of articles to ‘A’ amounts to an acceptance and hence ‘B’ is entitled to get the reward of Rs.000 is maintainable by ‘B’.1. Quotation of Price is an offer 3.1. (b) No. F.CA-CPT – Paper No. Consider the following statement about an offer: 1. 15. who did not know of this offer.

23. (2) Both under the English law and the Indian law a contract is conclude when the letter of acceptance is posted. (d) All of the above “Consensus – ad – idem” means (a) general consensus (b) reaching of contract (c) reaching of agreement (d) meeting of minds upon the same thing in the same sense An alteration in contract can be of : (a) Bilateral & Unilateral (b) Unilateral & Multilateral (c) Only Bilateral (d) Only Unilateral If the terms of the settlement are reduced into writing. Which of the above statements is/are correct ? (a) 1 and 2 (b) 2 alone (c) 3 alone (d) None of these Which of the following is not an actionable claim ? (a) A decree (b) A right to recover price for breach of contract (c) A right to recover damages for breach of contract. 29. 2 (Mercantile Law) 21. the members of family who originally had not been parties to the settlement may : (a) Enforce the agreement (b) Revoke the agreement (c) Not enforce the contract (d) All of these The Law of Contract is nothing but (a) A child of commercial dealing (b) A child of religion (c) A child of day to day politics (d) A child of economics _________is an erroneous belief about something (a) Fraud (b) Representation (c) Mistake (d) Misrepresentation In order to understand the nature of transactions. 25. (3) Under the Indian law when the letter of acceptance is posted it is completed only as against the proposer. 22. 27. promises can be classified as : (a) Mutual & Independent (b) Conditional and Dependent (c) Mutual and Concurrent (d) All of the above X owes Rs.CA-CPT – Paper No. 24. This is called (a) Rights in Rem (b) Rights in Personam (c) Constitutional Right (d) None of the above The Concept of “DURESS” under English Contract Law is similar to: (a) Coercion (b) fraud (c) Undue Influence (d) Misrepresentation 4 .5 lakh to Y. 26. 28. Y is entitled to recover this amount from X. Consider the following statements : (1) There is no difference between the English law and Indian law with regard to acceptance through post. 30.

36. Within one month Amit sells the bike to Chandra.22. an auto mechanic. 38. he will succeed. who had no notice of the fraud. Will he succeed? (a) Yes. Is the agreement : (a) Valid (b) Express (c) Executed (d) All of these Amit contracts to supply a specific bike to Bunty for a month after the date of the contract. The decree was as a matter of fact against another person-of a similar name. C paid A Rs. (b) No. he will pay a further sum of Rs. (b) The jeweller can recover either from Sohan or from Bola Nath. (c) No.CA-CPT – Paper No. Is Amit’s contention valid? (a) No. a person of credit.000 to ‘B’. He took the ring and pledged it to Bola Nath. (d) Can’t say.000. A & B agree that B will sell a flat to A for Rs. he sued A for getting the amount back. (c) He may succeed (d) None of these A man. 32. the jeweler can recover from Bola Nath. which C was about to purchase from D. to enable her to obtain a divorce from her husband. (d) None of the above. Non-fulfllment of this condition renders it : (a) Void (b) Invalid (c) Unenforceable (d) Voidable 5 . as the agreement was in restraint of marriage. called at a jeweller’s shop and chose a costly ring. (b) No. ‘B’ obtains the divorce but refuses to marry ‘A’. (d) Both (b) and (c) A got property of B attached in execution of a money decree.50 for testing a used car. Thereupon Bunty sues Amit for the breach of contract. he will not succeed. (c) Yes. Amit’s contention is valid. Can the jeweller recover the ring from Bola Nath ? (a) Yes. ‘A’ advances Rs. as the consideration is lawful. the sale of the bike by Amit amounts to an actual breach of contract. it is necessary that it must be in writing. 34. Subsequently. (b) No. ‘B’ agrees to marry ‘A’ as soon as she obtained a divorce. as the agreement was immoral. 33. a married woman. A agreed and tested the car. the sale of the bike by Amit amounts to an anticipatory breach of contract by implied repudiation. 35. The contract is : (a) Illegal (b) Void (c) Voidable (d) Valid Mistake as to foreign law is treated in the same manner as: (a) Fraud (b) Mistake of Indian Law (c) Mistake of fact (d) Misrepresentation C orally offered to pay A. (c) No. by the name of Sohan. Can ‘A’ recover the amount ? (a) Yes. which he signed in the name of Girish. the jeweler cannot recover from Bola Nath. He tendered in payment a cheque. Amit contends that he could still perform the contract by repurchasing the bike from Chandra. 37.15. B paid the amount of the decree. 2 (Mercantile Law) 31.000 & also that if A uses it as a gambling flat. In order to save his property from being sold away.90. Rs.50 in cash for his services. Where law prescribes that a contract must be in writing.

(b) J cannot take any action.000. T buys a quantity of the bulbs from X. a physician practicing in New Delhi. A husband executed a registered document in favour of his wife. Discuss the legal effects of three letters and the telegram. 43. by a letter.1lakh provided he used it for residential purposes and would charge Rs. as there is no privity of contract between J and T (c) Either (a) or (b) (d) None of the above On the 5th of a month X makes an offer to Y.CA-CPT – Paper No. Advise J. Has X any legal remedy against Y ? (a) X can get an injunction from the Court restraining Y from practicing. 45. Advise her. On seeing it Y sends a telegram to X on 8th confirming the acceptance given through his letter of the 7th. a wholesaler. Meanwhile. After referring to quarrels and disagreement between them. On the 7th.1lakh (c) A can recover nothing (d) A can recover Rs. He advertises in the trade press. which reaches Y on 6th. (a) She can recover (b) She cannot recover (c) Either (a) or (b) (d) None of these All innocent promises collateral to the main illegal promise contained in a contract will be regarded as : (a) Valid (b) Void (c) Illegal (d) Voidable A and B agree that A shall sell his house to B for a sum of Rs. (d) None of the above J is a manufacture of light bulbs. (c) Either (a) or (b) (d) None of the above ‘A’ offers to sell his car to ‘B’ for Rs. (a) J can take a serious action against T.000.2lakhs (b) A ca recover only Rs. An Executed Consideration is (a) An act of mutual exchange of promises (b) An act done in the expectation of a proposal (c) An act done in response to a positive promise (d) All of the above X. Y began his own independent practice. After six months. ‘B’ agrees to buy the car offering Rs. 42. (a) A can recover Rs.2 lakhs if he were to use the house for gambling. 44.50.5 and that proceedings will be taken against any dealer not observing this price. took Y as his assistant for three years during which Y agreed not to practice of his own in New Delhi. (c) X does not have any legal remedy against Y. On his failure to pay. Discuss the rights of A. the wife seeks your advice.1lakh as well as damages. he forgot its contents and retails the bulbs at Rs. 41. on the 6th X posts a letter to Y revoking the offer. 46. (b) The contract is concluded between X and Y on 7th when B posts the letter of acceptance. It is further agreed between them that the consideration shall be paid after a year of registration of the house in the name of B. B uses the house for gambling purposes.45. The reply of B amounts to : 6 . 40. he promised to pay for her separate maintenance and residence. Y posts his letter of acceptance. (a) There is no contract between X and Y. At the end of a year from the adte of the agreement with X.6. 2 (Mercantile Law) 39. Although T had originally read the advertisement. (b) The agreement of X and Y is invalid. that in future the retail price of his bulbs will be Rs. as it is in restraint of trade.50.

(a) X can enforce this promise because they have mutually agreed. M believes D and accepts the blue colour to be black colour. X can’t enforce because it would defeat the very provisions of law. (a) Offer (b) Counter Offer (c) Invitation to an offer (d) Standing Offer An agreement. M knows nothing about colours. It is a clear case of : (a) Misrepresentation (b) Fraud (c) Unintentional fraud (d) Cheating X promises to drop prosecution which he has instituted against R for robbery and R promises to restore the value of things taken. which prevents a person from carrying a lawful business... Later on M’s mother explains M that the colour of the shirt is actually blue and not black. (b) No. representing it to be black colour.CA-CPT – Paper No.. He has a garment shop. 48.. He sells one blue colour shirt to M. is. 50. 49. (c) No. he is said to have : (a) Special Offer (b) Counter Offer (c) Continuing Offer (d) Cross Offer D believes blue colour to be black colour. it can not be enforced because both parties comes to the original position (d) Yes. (a) Valid (b) Void (c) Voidable (d) Contingent If the offeree offers to qualified acceptance of the offer subject to modifications and variations in the terms of original offer..... for any reason whatsoever. 2 (Mercantile Law) 47. X can enforce the promise to over take to the original position *** 7 .