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%

NEW SCHEME – MAY 2024

CA FOUNDATION

PAPER 2 - BUSINESS LAW

QUESTION PAPER
Roll No. ………………………
Total No. of Questions- 7 Total No. of Printed Pages – 7
Time Allowed –3 hours Maximum Marks – 100 marks

GENERAL INSTRUCTIONS TO CANDIDATES

1. Question No. 1 is compulsory

2. Answer any five questions from the remaining six questions.

PREPCA sets papers as per ICAI Paper Pattern.

However, we do make changes necessitated by our experts since there is no fixed pattern that
ICAI follows.

Business Laws—30% Syllabus

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1 (a) Mars Ltd., contracts with Jupiter Traders to make and deliver certain 6
machinery to them by 30.6.2024 for Rs 10.50 lakhs. Due to labour strike,
Mars Ltd. could not manufacture and deliver the machinery to Jupiter
Traders. Later, Jupiter Traders procured the machinery from another
manufacturer for Rs 13.75 lakhs. Jupiter Traders was also prevented from
performing a contract which it had made with Universe Traders at the time
of their contract with Mars Ltd. and were compelled to pay compensation
for breach of contract. Advise Jupiter Traders the amount of compensation
which it can claim from Mars Ltd., referring to the legal provisions of the
Indian Contract Act, 1872.

(b) Mr. Pawan promised to Carry out repairs to Mr. Jay’s house at a cost of 5
Rs.15,000, the repairs were to be carried out before 15th April 2020 as Mr.
Pawan was getting married on that day, all of sudden Mr. Narendra Modi
announced nationwide lockdown to stop spread of COVID 19, Mr. Pawan
could not carry out the repairs due to the lockdown, Mr. Pawan has already
received advance of Rs.5,000 from Mr. Jay,

(c) Mr. X sold goods worth Rs.250,000 to Mr. Y on sale or return basis, as per 5
the terms of the contract Mr. Y is allowed two weeks time to return the
goods and if he fails to to return it will be deemed that he has bought the
goods, but before expiry of two weeks Mr. Y pledged those goods with Mr.
Z and borrowed Rs.150,000 from Z on the security of the goods. State rights
and obligations of all the parties and state as to who is the owner of the
goods in these circumstances?

(d) Mr. Bharat was employed as financer in "Ayodhya Ltd" on the surety of his 4
good conduct, given by Mr. Laxman, a good friend of the director of the
company. Mr. Bharat was kept on the salary of Rs. 45,000 per month. After 3
years , the company went into losses and so company decided for the cost
cutting by retrenching of many employees and reducing the salaries of the
employees.
Mr. Bharat was also proposed either to quit the job or continued with the

Business Laws—30% Syllabus

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lower salary of Rs. 35,000 per month . He accepted and continued with the
job . After few months, it was reported by accounts department of the
company that Mr. Bharat manipulated with the funds of the company.
As per the provisions of the Indian Contract Act, 1872, analyse the legal
positions of Mr. Laxman, in the given situations:
(i) Mr. Bharat has manipulated the funds of the company since the time of his
appointment.
(ii) Mr. Bharat has manipulated the funds of the company since from few
months before when he accepted to continue the job on lower salary

2 (a) Mr. Ganpant sold some goods to Mr. Henry for certain price by issue of an 6
invoice, but payment in respect of the same was not received on that day. The
goods were packed and lying in the godown of Mr. Ganpant.
The goods were inspected by H's agent and were found to be in order. Later
on, the dues of the goods were settled in cash. Just after receiving cash, Mr.
Ganpant asked Mr. Henry that goods should be taken away from his godown
to enable him to store other goods purchased by him. After one day, since
Mr. Henry did not take delivery of the goods, Mr. Ganpant kept the goods out
of the godown in an open space. Due to rain, some goods were damaged.
Referring to the provisions of the Sale of Goods Act, 1930, analyse the above
situation and decide who will be held responsible for the above damage. Will
your answer be different, if the dues were not settled in cash and are still
pending?

(b) Kevin went to a departmental store to purchase a steel pan. He asked the 4
salesman about the area in departmental store where steel pans are kept. The
salesman indicated him the area with instructions that with steel pans, other
metal’s pans were also kept. Kevin wrongfully picked an aluminium pan in
place of steel pan. The salesman watched but said nothing to Kevin. Kevin
reached his house and found that pan was not a steel pan but actually an
aluminium pan. Kevin filed a suit against departmental store for fraud.
Discuss, whether Kevin was eligible to file suit for fraud against
departmental store under Indian Contract Act, 1872?

Business Laws—30% Syllabus

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(c) “Though a minor is not competent to contract, nothing in the Contract Act 3
prevents him from making the other party bound to the minor ”. Discuss.

(d) Aman bails his jewellery with Baban on the condition to safeguard in bank’s 3
safe locker. However, Baban kept it in safe locker at his residence, where he
usually keeps his own jewelry. After a month all jewelry was lost in a
religious riot. Aman filed a suit against Baban for recovery. Referring to
provisions of the Indian Contract Act, 1872, state whether Ashely will
succeed

3 (a) Mr. Samuel agreed to purchase 100 bales of cotton from Mr. Varun, out of 6
his large stock and sent his men to take delivery of the goods. They could
pack only 60 bales. Later on, there was an accidental fire and the entire stock
was destroyed including 60 bales that were already packed.
Referring to the provisions of the Sale of Goods Act, 1930 explain as to who
will bear the loss and to what extent?

(b) “To form a valid contract, consideration must be adequate”. Comment. 4

(c) Mr. Hemal booked an air ticket for travelling from Delhi to Mumbai on the 3
back of the ticket there were some printed conditions one of the conditions
was that the airlines company would not be liable for any loss of luggage
over and above Rs.5,000
Mr. Hemal did not read the conditions, during the transit his luggage was lost
The luggage carried valuable worth Rs.60,000 State liability of airlines
company in such circumstances

(d) A hires a carriage of B and agrees to pay Rs. 500 as hire charges. The 3
carriage is unsafe, though B is unaware of it. A is injured and claims
compensation for injuries suffered by him. B refuses to pay. Decide the
liability of B in reference to the provisions of the Indian Contract Act, 1872

Business Laws—30% Syllabus

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4 (a) What are the implied conditions in a contract of ‘Sale by sample’ under the 6
Sale of Goods Act, 1930? State also the implied warranties operatives under
the said Act.

(b) Rohan induced Raj to buy his motorcycle saying that it was in a very good 4
condition. After taking the motorcycle, Raj complained that there were many
defects in the motorcycle. Rohan proposed to get it repaired and promised to
pay 40% cost of repairs. After a few days, the motorcycle did not work at all.
Now Raj wants to rescind the contract. Decide giving reasons.

(c) Examine the validity of the following contracts as per the Indian Contract 3
Act, 1872 giving reasons.
Jayesh contracts to take in cargo for Kate at a foreign port. Jayesh's
government afterwards declares war against the country in which the port is
situated and therefore the contract could not be fulfilled. Kate wants to file a
suit against Jayesh.

(d) What is meant by delivery of goods under the Sale of Goods Act, 1930? State 3
various modes of delivery.

5 (a) “An anticipatory breach of contract is a breach of contract occurring before 6

the time fixed for performance has arrived”. Explain the statement and also
the effect of anticipatory breach on contracts

(b) What is meant by 'Quasi-Contract'? State any three salient features of a quasi- 4
contract as per the Indian Contract Act, 1872.

(c) Akshay sold 500 bags of wheat to Chintan. Each bag contains 50 Kilograms 3
of wheat. Akshay sent 450 bags by road transport and Chintan himself took
remaining 50 bags. Before Chintan receives delivery of 450 bags sent by road
transport, he becomes bankrupt. Akshay being still unpaid, stops the bags in
transit. The official receiver, on Chintan's insolvency claims the bags. Decide
the case with reference to the provisions of the Sale of Goods Act, 1930

Business Laws—30% Syllabus

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(d) Anuj lends a horse to Bimal for his own riding only. However, Bimal allows 3
Chinku, a member of his family to ride the horse. Chinku rides the horse with
care, but the horse falls and is injured.

(6) (a) State the exceptions to the rule "An agreement without consideration is void". 6

(b) Abhishek bailed 50 kg of high quality sugar to Salman, who owned a kirana 4
shop, promising to give Rs 200 at the time of taking back the bailed goods.
Salman's employee, unaware of this, mixed the 50 kg of sugar belonging to
Abhishek with the sugar in the shop and packaged it for sale when Salman
was away. This came to light only when Abhishek came asking for the sugar
he had bailed with Salman, as the price of the specific quality of sugar had
trebled. What is the remedy available to Abhishek under the Indian Contract
Act, 1872?

(c) Comment on the following: 3

‘Principal is not always bound by the acts of a sub-agent’.

(d) Mr. Ram promised to pay Rs 50,000 to his wife Mrs. Sita so that she can 3
spend the sum on her 30th birthday. Mrs. Sita insisted her husband to make a
written agreement if he really loved her. Mr. Ram made a written agreement
and the agreement was registered under the law. Mr. Ram failed to pay the
specified amount to his wife Mrs. Sita. Mrs. Sita wants to file a suit against
Mr. Ram and recover the promised amount. Referring to the applicable
provisions of the Contract Act, 1872, advise whether Mrs. Sita will succeed.

(7) (a) Ricky is the owner of electronics shop. Prisha reached the shop to purchase 6
an air conditioner whose compressor should be of copper. As Prisha wanted
to purchase the air conditioner on credit, Ricky demand a guarantor for such
transaction. Mr. Shiv (a friend of Prisha) came forward and gave the
guarantee for payment of air conditioner. Ricky sold the air conditioner of a
particular brand, misrepresenting that it is made of copper while it is made of

Business Laws—30% Syllabus

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aluminium. Neither Prisha nor Mr. Shiv had the knowledge of fact that it is
made of aluminium. On being aware of the facts, Prisha denied for payment
of price. Ricky filed the suit against Mr. Shiv. Explain with reference to the
Indian Contract Act 1872, whether Mr. Shiv is liable to pay the price of air
conditioner?

(b) What is Contingent Contract? Discuss the essentials of Contingent Contract 4

as per the Indian Contract Act, 1872.

(c) What is appropriation of goods under the Sale of Goods Act, 1930? State the 3
essentials regarding appropriation of unascertained goods.

(d) Rakesh ordered over telephone certain goods (grocery items) from a shop. 3
Rakesh asked them to deliver the goods at his address to which the
shopkeeper also agreed but nothing was decided as to who will bear the
freight for delivery when the goods were delivered the delivery, person
demanded Rs.50 towards auto rickshaw charges for delivery. Is Rakesh liable
to pay the charges?

Business Laws—30% Syllabus

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