Legal Environment of Business

EXERCISE QUESTIONS

1. How would you test and determine whether a particular business enterprise is a
partnership firm or not? Can a partner be called an agent of other partners?

2. What are the essential elements of a partnership business? “Sharing of profits is an

element of partnership, but it is not the sole test.” Discuss? Mention any three reasons
on which a partnership firm has to be dissolved under compulsion?

3. Can every ‘person’ be a partner? What are the different classes of partners and how
they are liable in law?

4. Discuss different kinds of partnership business? What are the legal obligations of a
minor who has been admitted to the benefit of the partnership? Can a new Partner be
inducted in a partnership firm? Why “Expulsion” of a partner in not possible in law, if
not permitted by the agreement of partnership.

5. Why a minor cannot be a partner? Can a new Partner be inducted in a partnership

firm? How partners may retire and what a retiring partner must do? Why “Expulsion”
of a partner is not possible in law, if not permitted by the agreement of partnership.

6. Discuss the nature of ‘implied authority’ of a partner in a Partnership Firm with

specific references to what the implied authority does not empower him to do? Is
registration of Partnership Firm is compulsory in law? If not, then why registration of
partnership takes place?

7. When a partnership firm has to be dissolved under compulsion? Registration of

partnership firm is not compulsory in law, but then why it is wise to register the
partnership firm?

8. Although registration of partnership firm is not compulsory in law, but then why it is
wise to register the partnership firm?
9. (a) Characterize an ‘Agent’ on the basis of the legal maxim - ‘Quit facit par alium
facit par se’. Who is an Agent and what he does? Why you can even appoint a lunatic
as your agent?

(b) In terms of usages and custom of trade, distinguish between different classes
of mercantile agents. Can a person act as an agent for both the seller and the buyer? If
so, when?
10. In short, explain the ‘degree of care’ that is to be taken by a Bailee. When a contract
of bailment would be called ‘Pledge’ and why? If a finder of goods takes charge of
 the goods (he finds), would he be treated as a bailee? What would be his legal
obligations and entitlements, if any?
11. Argue and support with historical perspective that -“Laws of bankruptcy are founded
on the principles of humanity”. What constitute an act of bankruptcy in terms of Sec.
9 of the Bankruptcy Act 1999.

12. What is a contract of bailment? When a contract of bailment would be called a

pledge? In short, explain bailors’ duty of disclosure and general duties of bailee in
law.

13. When a finder of goods would be treated as bailee and what are his rights in law?
14. In terms of Section 9 of the Bankruptcy Act, 1997, what constitutes - ‘an act of
Bankruptcy’?
a. Can a secured creditor participate in bankruptcy proceedings? If so, when?

15. What are the basic requirements/conditions that ‘Creditor’ or ‘Debtor’ must fulfill (in
terms of Sec. 12 & 13 of the Bankruptcy Act, 1997) in order to succeed in a
bankruptcy proceeding before the bankruptcy Court?