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PROBLEM ON ECONOMIC & COMMERCIAL LEGISLATION

1) A sold some land to B. At the time of sale both the parties believed in good faith that the area of
the land sold was 10 hectares. It, however, turned out that the area was 7 hectares only. How
the contract of sale is affected? Give reasons
Ans; both parties to an agreement are under a mistake as to a matter of fact essential to
agreement, the agreement is void.

2) A, a jeweler, was entrusted with a diamond by P with the instructions that A should obtain offer
absconded with the price money. Can P Recover the diamond from S
3) Ans. No. Although the Jeweler is not the owner yet he is a mercantile agent and sale by him is
for it, and if any such offer was approved by P, then A should Sell it to the offeror. Acting
contrary to Ps instructions A sold the diamond to S who bought it in good faith. Thereafter, A
account of exception to the general principle no one can give that which one has not got

4) A cheque is drawn payable to B or order. It is stolen and Bs endorsement is forged. The
banker pays the cheque in due course .Is the banker discharged from liability. Would it make
any difference if the drawers signatures were forged?
Ans; Here banker is not held liable since the specimens of the endorser is not available with the
banker, and banker acted in good faith.
However if the Drawer Signatures are forged & the banker pays the cheque, then banker will be
held liable since banker acted negligently, and he had the specimen signatures of the Drawer.

5) A branch manager of a company drew and endorsed a bill of exchange on behalf of the
company. He had no authority from the company to do so. Was the company bound by the
instrument?
Ans; No, the company is not bound by the Instrument.
However, if the instrument is within the scope of company & the instrument is ratified by the
competent authority, then only the company is bound by the instrument.

6) A car was advertised & sold as Hearld Convertible -2001 The buyer Saw the car before
purchasing. After wards, he found that rear part of the car was of 2001 but the remaining parts
were of earlier models. What are the rights of the buyer?
Ans; Good supplied by description but not of merchantable quality
- defect could not be discovered by ordinary examination

7) . Decide unless paid for the quantity supplied. There is a contract for sale of 25 quintals of ghee
within a specified period by A TO B. A delivers 20 quintals but does not deliver the residue. A
claim the price of the ghee, and refuses to Supply the residue
Ans. The contract is voidable at the option of B. He can accept the quantity supplied ;,can reject
the lot and claim the damages from A. B is not bound to make part payment unless the terms of
the contract provide it.


8) sA agreed to construct a plant for B by 31 January 2010.
The provided that B should pay Rs. 500 per month for every month that A Took beyond the
agreed date. A was late by 6 months. B sued A for Rs. 6500 the actual loss caused to him as a
result of delay. To what damages, if any, is B entitle?
Ans; B suffered the loss because of A had made delay of 6 months. B is entitled for the recovery
of price paid by the B to A. i.e. Rs 500/- per month, totaling to Rs 3000/-.

9) A sells a TV to M, a minor, who pays for it by his cheque. A endorsed the Cheju to B , who takes
it in good faith and for value. The cheque is dishonoured on presentation. Can B enforced
payment of the cheque against A or M ?
Ans; Since, A is minor hence B cant force him for the payment of cheque, however if the TV is
considered as necessity as per his life style then his property can be made liable.
Now M, If he knows at the time of making the endorsement that A is minor, then he can be held
liable and B can enforce payment on M.

10) A applies for 200 shares on the basis of a prospectus which contains some mis-statement . The
shares are allotted to him by the company. A sold and transfers the shares to B after 6 months .
Can B bring action for recession of contract of sale of shares on the ground of mis-statement?
Ans; No, B cant bring action for recession of contract on the basis of sale of shares on the
ground of misstatement in prospectus, Since he had not purchased the shares on the basis of
prospectus.

11) A sees an article marked in the display window In Bs shop. B refuses to sell saying the article is
not for sale . Advise A.
Ans; This is not an offer, it is considered as invitation to offer. Hence sales cant be enforced

12) A borrowed Rs. 10 000/ from B for starting a gambling house. Afterward he refused to return
the money. What is the remedy Available to B.
Ans; This is an illegal contact as the object of the contract is Illegal.
If A knows this in advance that B has taken money to start Gambling House, then he has no
remedy available.
If A does not know the intentions of B, then he can file a suit in the court of law

13) A promised to make a gift of Rs. 5000/ toward the repair of a Temple. The trustees of the
temple on the faith of his promise Incur liability. A does not pay, can the trustees recover the
promised Amount from A ?
Ans; Yes, trustee can recover the amount from A, since there is intention to create legal
relationship. And trustees made the repair of the Temple on the faith of As promise.
14) As uncle in a sudden display of generosity promises him a watch, as a gift on his birthday. If the
uncle fails to give the watch, can A do anything about it legally?
Ans; No, A cant do anything legally, since there is no intention to create legal relationship

15) X promises to drop prosecution which he has instituted against R for robbery and R promises to
restore the value of things taken. Can X enforce this promise? If so, give reasons.
Ans. No. The object of the contract is not legal and it is again the public policy.
16) As car break down on G.Y. road. He asks B, a passing motorist, to how the car to the nearest
garage. B tows the car and in returns A promises to pay B at the garage Rs. 200 as payment for
his trouble. Is A bound by his promise?
Ans; Yes, as this is considered to be an agreement, and there is intention of both the parties to
enter in to legal relationship

17) S agreed to act as a sales manager for company X for a period of three years at a monthly salary
of Rs. 1000. S worked for six months and then left and joined another company at a higher
salary. What are the rights of company X?
Ans. Company X can obtain an injunction from the court to restrain S from joining any
other organization during the period of three years.

18) Amar buys from Rajat Furniture Mart a cabinet for Rs.20,000 and paid the full price in cash. He
informs the furniture maker that he will take the cabinet away in a fortnight. The Furniture Mart
sells the cabinet to Ashok and receives payment In cash. Examine the nature of Ashoks title to
the cabinet.
Ans; Ashok has better title on Cabinet, since he had the ownership of the cabinet. He can sue
Rajat Furniture Mart for recovery of Goods.

19) A minor mortgaged his house in favour of a money lender to secure a Loan of Rs. 2,50,000 for
purchase of a car. The loan was to be repaid after two years on his attaining age of 18.
Subsequently after becoming Major he filed a suit for setting aside the mortgage , stating that
he was underage when he executed the mortgage. The court held that the mortgage was void
and therefore it was cancelled. Money-lender filed an appeal in the higher court giving the
following grounds;
1.) that the minor represented at the time of taking loan that
he was a major.
2.) That the loan was given to him for the necessities in life .
3.) That on equity he should at least return the money he had
taken for loan.
How will you decide the case?

20) M/S Dubious Textile enter into a contract with Retail Garment Show Room for supply of 1000
pieces of cotton shirts at Rs. 300/ per shirt on or before 31
st
December, 2011. However on 4-11-
11 Dubious Textile informs the purchaser that they are not willing to supply the goods as the
price of cotton shirts in the meanwhile has gone up to Rs. 350/ per shirts. Examine the rights &
remedies available to Retail Garment Show Room in this regard.
Ans. Seller has to supply the contracted supply at the fixed rate. However if he refuse s to fullfil
his commitment the buyer can file a suit for anticipatory breach or wait till the scheduled date &
then file the suit for damages for breach of contract.
22) A contracted to sell his house to B after 4 months at a price of Rs. 15 Lakhs. Subsequently the
house was destroyed by fire. B files a suit for breach of contract and damages. How you will
decide the case?
Ans. The contract is void in view of supervening impossibility.

23) X promises to drop prosecution which he has instituted against R for robbery and R promises to
restore the value of things taken Can X enforce this promise ? If so, give reasons.

24) As car break down on G.Y. road. He asks B, a passing motorist, To tow the car to the nearest
garage. B tows the car and in returns A promises to pay B at the garage Rs. 200 as payment for his
trouble. Is A bound by his promise?

25) A applies for 200 shares on the basis of a prospectus which contains some mis-statement . The
shares are allotted to him by the company. A sold and transfers the shares to B after 6 months . Can B
bring action for recession of contract of sale of shares on the ground of mis-statement?

Ans. B is not legally permitted for recession of the contract as he has not purchased shares on the belief
of facts of misstatement in the prospectus.

26) A manufacturer supplied 6000 horns under a contract of sale. The horns were found to be dented,
scratched and otherwise of faulty manufacture. Buyer refused to pay the price.The seller files a suit for
price. What are the legal rights of the parties ,and why?
27) A cheque is drawn payable to B or order. It is stolen and Bs endorsement is forged. The banker
pays the cheque in due course .Is the banker discharged from liability. Would it make any difference if
the drawers signatures were forged?
29) In a contract for the purchase of 3000 tins of canned fruits to be packed in cases each containing 30
tins, a substantial part was tendered in cases containing 24 tins. What are the rights of the buyer in this
case?
30)) A, a tradesman, send some goods ordered by B. As servant deliver the goods by mistake at Cs
house. C uses the goods. Can A recover the cost of goods from C?
31) Ramesh sold a plot in Noida to Sita Ram for Rs. 25 Lakhs. At the time of sale both the parties
believed in good faith that the area of the plot sold was 200 yards. It, however , turned out that the area
was 185 yards. How is the contract of sale affected?

32) A offer to sell his car to B for Rs. 2 lakhs. B accepted the offer and send a cheque for Rs. 1.5 lakhs
along with a Promissory Note of Rs. 50,000/for the balance payable after 60 days. Did a contract result?

33) A sold sulphuric acid to B as commercially free from arsenic. B used it for making glucose which he
sold to brewers who used it in brewing beer. The persons who drank the beer were poisoned. A was not
aware of the purpose for which B had bought the acid. B claimed damages from A for:
1) The price paid for the acid
2) The value of the material used in making glucose which was
spoiled , being mixed up with the acid.
3) Compensation for the loss of goodwill of his business
4) Damages which B was liable to pay to the brewers who was
supplied glucose made out of acid.
How would you decide the case.?

34) A who was badly in need of money offered to sell his piano worth Rs. 10,000 to C for Rs.8,000. C
refused to buy. A gradually lowered his price until Rs.3,000 was reached , which C accepted. Before the
piano was delivered, A received an offer of a larger amount from H and refused to carry out the contract
with C, claiming that the consideration was inadequate. Is A liable to pay damages to C for failure to
carry out his part of the contract?

35) A offered to sell to B a machine for Rs. 1,00,000. B refuse to buy unless certain work was done on it
to put it in running condition. A replied that B might take it to a repair shop and have the work done,
and when the cost of repair was known might pay A after deduction of the cost of repair. B agreed to
this and took the machine to a repair shop. While being repaired the machine was destroyed without
any fault of the repairman. Can A recover the price of machine from B?

36) A crossed cheque for Rs. 50,000 drawn by a firm on their account with Y bank were from time to
time delivered to B a clerk of the firm for payment to their creditors . B forged the endorsement of the
payee and deposited the cheques in his personal account with the same bank and withdrew the money.
Can the Y bank debit the account of the firm?

37) Five persons are the only members of a private company. All of them go in a boat on a pleasure trip
into the open sea. The boat capsizes all the five die being drowned. Is the private company no longer in
existence?

38)Three of the signatures to the Memorandum of Association are forged. The Memorandum is
Duly presented, registered and a certificate of incorporation is issued. Can the existence of 4the
company be subsequently questioned on the ground that the registration is void? Give reason for your
decision.










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AMITY UNIVERSITY UP
INT3RNAL TEST11
TIME 40 Minutes
M.M. 10
Attempt any 5 problems from the followings,
First problem is compulsory.
1) A sold sulphuric acid to B as commercially free from arsenic. B used it for
making glucose which he sold to brewers who used it in brewing beer. The
persons who drank the beer were poisoned. A was not aware of the purpose for
which B had bought the acid. B claimed damages from A for:
1) The price paid for the acid
2) The value of the material used in making glucose
which was spoiled , being mixed up with the acid.
3) Compensation for the loss of goodwill of his business
4) Damages which B was liable to pay to the brewers
who was supplied glucose made out of acid.
How would you decide the case.
2) A offered to sell to B a machine for Rs. 1,00,000. B refuse to buy unless
certain work was done on it to put it in running condition. A replied that B might
take it to a repair shop and have the work done, and when the cost of repair was
known might pay A after deduction of the cost of repair. B agreed to this and
took the machine to a repair shop. While being repaired the machine was
destroyed without any fault of the repairman. Can A recover the price of machine
from B?
3) Ramesh sold a plot in Noida to Sita Ram for Rs. 25 Lakhs. At the time of sale
both the parties believed in good faith that the area of the plot sold was 200
yards. It, however , turned out that the area was 185 yards. How is the contract of
sale affected?

4) A offer to sell his car to B for Rs. 2 lakhs. B accepted the offer and send a
cheque for Rs. 1.5 lakhs along with a Promissory Note of Rs. 50,000/for the
balance payable after 60 days. Did a contract result?

5)A, a jeweler, was entrusted with a diamond by Sita Davi with instructions that A
should obtain Offer for it, and if the offer is approved by her , then A should sell it
to the offeror. Acting contrary to her instructions A sold the diamond to S who
bought it in good faith. Thereafter, A absconded with the price money Can Sita
Davi recover the diamond from S?

6) A cheque was drawn payable to B or order. It is stolen and Bs
endorsement is forged. The Banker pays the cheque in due course . Is the
banker discharged from his liability? Would it make any difference if the drawers
signatures were forged?

7) Five persons are the only members of a private company. All of them go in a
boat on a pleasure trip into the open sea. The boat capsizes all the five die being
drowned . Is the private company no longer in existence?















IMPORTANT QUESTIONS OF LAW

Explain briefly the essentials of a valid contract. ARE THEY NECESSARY IN
INSURANCE CONTRACTS ALSO.
01. Two or more persons are said to consent when they agree upon the some thing in the
some sense. Explain this statement with suitable illustrations
02. What are the various ways in which a contract may be discharged? Explain any two in
details.
03. What remedies are available to an aggrieved party on the breach of a cont
04. What is the Contract of Agency? What are essentials of relationship of agency?
05. What are the rights & obligations of an agent under contract act.
06. Briefly explain the condition and warranties implied by law in a contract for sale of
goods?
07. State the principal of caveat Emptor and exceptions to IT.
08. Risk prima facie passes with ownership. Explain with examples?
09. Delivery does not amount to acceptance of goods Discuss, when a buyer can be said to
have accepted the goods?
10. When a seller of goods deemed to be an unpaid seller? What are his right against 1) the
goods and (II) the buyer personally?
11. Define a negotiable instrument and explain its special characteristics.
12. Who is a holder in due course of a negotiable instrument? Can the defense that one of
the endorsement is forged be raised against him by the (i) acceptor (ii ) endorser.
13. What is the liability of prior parties of a negotiable instrument to a subsequent holder
and among themselves in case of its dishonor?
14. When is a negotiable instrument said to be discharged? What is difference between
discharge of an instrument & discharge a party to an instrument?

15. What are remedies open to an allotee of shares who had applied for them on the faith of
a false and misleading prospectus, and explain the liability of the directors with
exceptions If any to it. What are the defenses available to the directors of the company
who have issued such a prospectus.
16. All contracts are agreements but all agreements are not contracts. Discuss
17. Define Negligence under Law of Torts giving essentials requisites necessary to
constitute an action for it.
18. Directors are not only agents, but are also in some sense trustees of the company.
Discuss?
19. What are the different types of meetings of shareholders of a company? Explain
statutory meeting & statutory report of a company?
20. CONTRACTS WITH MINORS ARE VOID-EB-INITIO. Analyse the implications of
such contracts . Are there any exceptions to this principles.
21. Distinguish between:
1) Coercion & Undue influence
2) Memorandum & Articles of Association
3) Transmission & Transfer of share
4) Bill of Exchange & Cheque
5)Sale & Hire purchase,
6)Condition & Warranties
7)Wagering Contract & Contingent contracts
22. Write short notes :Quasi Contract
01. Indemnity & Guarantee
02. Agency by estoppels , Agency by holding out
03. Interim dividend / Final Dividend
04. Impact of Not Negotiable crossing
05. Caveat Emptor
06. Salient features of a promissory note.
07. Holder in due course
08. Negligence in Torts
09. Rights of a finder of goods
10. Special Crossing / Crossing