Go Back   2023 2024 MBA > MBA > Main Forum

  #1  
Old 8th October 2014, 10:10 AM
Unregistered
Guest
 
Default Commercial Law exam Model Paper

Will you please provide me the ICWA Commercial Law exam Model Paper????????
Reply With Quote Quick reply to this message
  #2  
Old 11th October 2014, 01:20 PM
Super Moderator
 
Join Date: May 2012
Default Re: Commercial Law exam Model Paper

This is the ICWA Commercial Law exam Model Paper:
Q. 1. Comment on the following statements based on legal provisions :
(a) A lost his dog. He sent his servant to search the dog. When he did not hear about the lost dog, he
advertised a reward of ` 500 to any person who found the lost dog and returned it to A. The
servant found the lost dog and returned the dog to A. When the servant came to know about the
reward, he claimed the reward from A. Can he claim the reward? Give reasons.
(b) A is sixteen years of age. He lends ` 1 lac to B on the strength of a mortgage executed in his favour.
Is the borrower liable to repay the money? Give reasons.
(c) Can a minor appoint an agent?
(d) Does the endorsement of a Railway Receipt amount to Transfer of Ownership?
(e) What is ‘Caveat Emptor’?
(f) Gratuity can be attached by an order of the court.
(g) Eligibility to Bonus depends on the period of actual service.
(h) It is illegal to pay gratuity in excess of the limits prescribed in the Payment of Gratuity Act.
(i) As per Industrial Disputes Act, 1947, the Charitable Institutions are not industry.
(j) Bonus is payable only if there is profit.
(k) A drew cheques in favour of B. A’s clerk forged B’s endorsement and negotiated the cheques to C
who took them in good faith and for value. C received payment of the cheques. A claims to
recover the amount from C. will he succeed?
Answers 1.
(a) No, the servant cannot claim the money. He acted without any information as to the offer. A person
cannot accept an offer unless he is aware of it. Therefore, the offer cannot be said to have been
accepted thereby resulting in a contract. Similar decision was given in Lalman Shukla v. Gauri
Dutt.
(b) Yes, A can recover the money from B. Though a contract with a minor is void ab initio, he is allowed
to be a beneficiary in a transaction and enforce his claim. The basic logic is that a contract with
a minor has been kept void only to protect his interest and not to prejudice his interest.
(c) Section 183 of the Indian Contract Act permits only persons of the age of majority to employ an
agent. Thus, a minor cannot appoint an agent.
Revisionary Test Paper (Revised Syllabus-2008) 62
DIRECTORATE OF STUDIES, THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
(d) The question was raised in a Bombay case of Shamji v. N . W. Rly.. The High Court, in the case,
ruled that endorsing a railway receipt in favour of another does not by itself, pass property in the
goods to the endorsee. It merely constitutes the endorsee the agent of the consignor, to receive the
goods. Such an endorsement by itself, does not constitute the endorsee either a bona fide pledge
or transferee for value of the goods represented by the railway receipt.
(e) Caveat Emptor is the fundamental principle of the law of sale of goods. It means ’buyers beware’
or ‘caution buyer’ (i.e. let the buyer beware). In the other words, it is no part of the seller’s duty to
point out defects of his own goods. The buyer must inspect the goods to find out if they will suit
his purpose. He must buy goods after satisfying himself about quality, suitability etc. If he makes
a bad choice, he cannot blame the seller.
(f) No gratuity payable under the Act and no gratuity payable to an employee in any establishment,
factory, mine, oilfield, plantation, port, railway company or shop exempted under Section 5 shall
be liable to attachment in execution of any decree or order of any Civil, Revenue or Criminal
Court.
(g) Eligibility to Bonus amount depends on the actual period of service of an employee provided he
has worked for a minimum number of 30 days in a year. Sanctioned leave is treated as actual
service.
(h) False, The Payment of Gratuity Act specifies the minimum amount of gratuity payable but the
right of an employee to receive better terms of gratuity under any award, or agreement or contract
with the employer is protected.
(i) As per Industrial Disputes Act institutions owned or managed by organisations wholly or
substantially engaged in any charitable, social or philanthropic service are not covered in the
definitions of “Industry”.
(j) False- The Payment of Bonus Act, 1965 provides for minimum bonus of 8.33% even if a unit makes
loss.
(k) In his claim to recover the amount from C, A will succeed if the cheque was an order cheque, but
fall if the cheque was payable to bearer.
Indian Contract Act, 1872 :
Q. 2. (a) An employee agrees not to institute any legal proceedings against his employer. Can the agreement
be enforced by the employer?
(b) “A mere mental acceptance not evidenced by words or conduct is, in the eyes of the law, no
acceptance.” Comment.
(c) Write a note on ‘Counter Offer’.
(d) Distinguish between an ‘agent’ and a ‘servant’.
Answer 2.
(a) No, such an agreement is void ab initio since it constitutes restraint of legal proceedings. Section
28 of the Indian Contract Act, in this regard, provides that every agreement by which any party
thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by
the usual legal proceedings in the ordinary tribunals or which limits the time within which he
may thus enforce his rights, is void to that extent.
Thus, the agreement is question shall be void as per Section 28 and hence the employer will not
be in a position to enforce the agreement.
(b) One of the rules of valid acceptance is that it must be communicated to the offeror. The
communication may, however, be express or implied. A mere, mental acceptance is no acceptance.
A mere mental acceptance means that the offeree is assenting to an offer in his mind only and has
not communicated it to the offeror.
Group-I : Paper-6 : Commercial and Industrial Law and Auditing 63
DIRECTORATE OF STUDIES, THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
(c) Where the offeree, instead of unconditionally assenting to the terms of the offer, accepts subject
to certain conditions, he is said to have made a counteroffer.
Thus, where A offers his car to B for ` 1,00,000 and B accepts to buy A’s car for ` 80,000, B has
made a counter offer.
A counter offer has the effect of terminating the original offer. If in the aforesaid illustration,
B later accepts to pay ` 1,00,000 for the car, it shall amount to a fresh offer by B which A may or
may not accept.
Similarly, where an offeree agreed to accept half the quantity of goods offered by the offeror on
the same terms and conditions as would have applied to the full contract, it was held that there
was no contract as there was a counter offer to the original offer.
(d) There is too much of similarity between an agent and a servant as both are employed to act for
and on behalf of principal. However, there is a lot of difference between the two. An agent has the
authority to create contractual relationship between the principal and a third party, but a servant
ordinarily has no such authority. A servant usually serves only one master but an agent may
work for several principals at the same time. A servant is generally paid salary or wages, whereas
an agent may be paid on commission basis. Thus, we find that an agent is not a servant though
a servant may be authorized to serve as an agent.
Q. 3. Write short notes on :
(a) Bailee’s Lien
(b) Essentials of a valid acceptance.
(c) Position of the finder of lost goods.
(d) Personal liability of agent.
Answer 3. (a)
Bailee’s right of lien is particular in certain cases whereas general in other cases.
Particular Lien is conferred upon a bailee by virtue of the provision of Section 170. It reads :
‘Where the bailee has, in accordance with the purpose of the bailment, rendered any service involving the
exercise of labour or skill in respect of the goods bailed, he has, in the absence of a contract to the
contrary, a right to retain such goods until he receives due remuneration for the service he has rendered
in respect of them.’
General Lien : The provisions of Section 171 empower certain categories of bailees to exercise a general
lien. These include : bankers, factors, wharfingers, attorneys of High Court and policy brokers. These
bailees can retain all goods of the bailor so long as anything is due to them, unless there is a contract to
the contrary.
Answer 3. (b)
Essentials of a valid acceptance :
(i) Acceptance must be absolute and unqualified.
(ii) It must be communicated.
(iii) It must be according to the mode prescribed.
(iv) It must be given within the time prescribed or within reasonable time.
(v) It must be in response to offer.
(vi) It must be made before the offer lapses.
(vii) It must be given by the person to whom the offer is made.
Revisionary Test Paper (Revised Syllabus-2008) 64
DIRECTORATE OF STUDIES, THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
Answer 3. (c)
Finding is not keeping. A finder of lost goods is treated as the bailee of the goods found and is, therefore,
charged with the responsibilities of a bailee, besides the responsibility of exercising reasonable efforts
in finding the real owner. However, he enjoys certain rights also. His rights may be summed up hereunder :
1. Right to retain the goods (Section 168). A finder of lost goods may retain the goods until he receives
the compensation for money spent in preserving the goods and/or amounr spent in finding the true
owner. A finder, however, cannot sue for such compensation. But, where a specific reward has been
offered by the owner for the return of lost goods, the finder may sue for such reward, and may retain
the goods until he receives it.
2. Right to sell (Section 169). When a thing which is commonly the subject of sale is lost, if the owner
cannot, with reasonable diligence, be found or if he refuses, upon demand, to pay the lawful charges
of the finder, the finder may sell it :
(a) When the thing is in danger of perishing or of losing the greater part of the value; and
(b) When the lawful charges of the finder in respect of the thing found, amount to 2/3 of its value.
Answer 3. (d)
The general rule is that only the principal can enforce, and can be held liable on a contract entered into
by the agent except when there is a contract to the contrary. Sec. 230 of the Contract Act clearly lays down
this rule: “In the absence of any contract to that effect, an agent cannot personally enforce contracts
entered into by him on behalf of his principal, nor is he personally bound by them.”
An agent is, however, personally liable in the following cases :
1. When the contract expressly provides. A person while entering Into a contract with an agent may
expressly stipulate that he would hold the agent personally liable in case of breach of contract, and
if the agent agrees to it, he is personally liable.
2. When the agent acts for a foreign principal (Sec. 230, para 2). When the contract is made by an agent
for the sale or purchase of goods for a merchant residing abroad, the agent is personally liable. He
can exclude his personal liability by express provision to this effect in the contract. If he does so, he
cannot be sued on the contract.
3. When he acts for an undisclosed principal (Sec. 230, para 2). Where an agent acts for an undisclosed
principal, he is personally liable though the principal, on being dlscovered by the third party, is also
liable.
4. When he acts for a principal who cannot be sued (Sec. 230, para 2). Where the principal is incompetent
to enter into a contract, e.g., where he is a minor or an idiot, the agent is personally liable as the
credit is presumed to have been given to the agent and not to the principal.
5. Where he signs a contract In his own name. An agent who signs a contract in his own name without
qualification (i.e., without disclosing that he is acting as an agent), though known to be an agent, is
understood to have contracted personally, unless a contrary intention appears from the body of the
instrument.
6. Where he acts for a principal not in existence. This is a rather peculiar case. The promoters of a
company, yet to be incorporated, sometimes enter Into contracts on behalf of the company, though
in such a case the alleged principal (i.e., the company) has no legal existence till the time of
incorporation. In such a case the promoters are held to have contracted on their own account and
are personally liable.
7. Where he is liable for breach of warranty of authority. Where a person professes to act as an agent
but has no authority from the alleged principal or exceeds his authority, he is personally liable for
breach of warranty of authority in a suit by the third party with whom he professed to make the
contract [Cohen v. Wright, (1857) 7 E. & B. 301].
Group-I : Paper-6 : Commercial and Industrial Law and Auditing 65
DIRECTORATE OF STUDIES, THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
8. Where he receives or pays money by mistake or fraud. Where an agent receives money from a third
party by mistake or fraud, he is personally liable to the third party. Likewise, he has the right to sue
the third party for the recovery of the money where he has paid it by by mistake or under fraud of the
third party.
9. Where his authority is coupled with interest. When an agent has an interest in the subject matter of
the contract entered into by him with a third party, his authority is coupled with interest. He has, in
such a case, the right to sue, or be sued, but only to the extent of his interest in the subject-matter.
10. Where the trade usage or custom makes him personally liable. Where there is a trade usage or a
custom making the agent personally liable, he is liable unless there is a contract to the contrary.
Q. 4. (a) A’s wife B paid ` 500 to C to be given as a bribe to a jailor for procuring release for her husband
from jail. The Jailor failed to procure the release. Can B recover the amount ?
(b) Mr. Pal of his own promised to subscribe to Indira Gandhi Memorial Fund by 30.04.2010, but did
not pay. Under the circumstances, he can be enforced – Comment.
(c) Mr. X forced Mr. Y to sale Y’s house to Mr. Ex at ` 5 lakhs, the market price of which was ` 15 lakhs.
(d) Distinguish between Indemnity and Guarantee.
Answer 4. (a)
An agreement will not be enforceable if its object or the consideration is unlawful. According to Section 23
of the Act, the consideration and the object of an agreement are unlawful if the court regards it as immoral
or opposed to public policy, an agreement whose object or consideration is immoral or is opposed to the
public policy, is void.
In the given case, as the agreement is unlawful, being opposed to public policy, is void. So, B cannot
recover the amount.
Answer 4. (b)
False. Consideration is essential element of contract without which no promise can be enforced. Therefore
a gratuitous promise to contribute to Indira Gandhi Memorial Fund can not be enforced. However if the
promisor knew the purpose and also knew that on the faith of such promise, certain obligations are
incurred, the promisor would be bound by the promise.
Answer 4. (c)
It is a case of voidabe contract. In this case Mr. Y at his option can avoid the contract. However if ‘Y’ wants
he can enforce it against Mr. ‘X’.
Answer 4. (d)
A contract by which one party promises to another to compensate him for loss is a contract of Indemnity.
A contract to perform the promises or discharge the liability is a contract of Guarantee.
Basic points of differences are
Indemnity Guarantee
There are two parties viz. the indemnifier and the
indemnified.
There are three parties viz. the creditor, the
principal debtor and the surety (or Guarantor)
Indemnifier’s liability is primary and independent. Surety’s liability is secondary i.e. it arises only on
default of principal debtor.
Indemnifier’s right is contingent. Surety’s liability is subsisting.
It is a simple contract i.e. one contract. It is composite in nature i.e. 3 contracts.
Revisionary Test Paper (Revised Syllabus-2008) 66
DIRECTORATE OF STUDIES, THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
Q. 5. (a) A sells his grocery business, including goodwill, to B for a sum of ` 50,000. It is agreed that A is not
to open another grocery store in the whole of India for the next ten years. A opens another store
in the same city two months later. What are the rights of A?
(b) A made a contract with B supplying to him certain goods at a place outside the State when there
was no prohibition against sending the goods outside the State. Subsequently prohibition was
imposed on the sending on those goods to that place and the railway booking was consequently
closed. A failed to supply the goods. B sued A for damages for non-supply of goods. A, inter alia,
pleaded that the contract becomes impossible of performance and so he was absolved from
performing it. Will A succeed in his said defense?
(c) A, B and C jointly promise to pay D ` 5,000. A and B are untraceable. Can D compel C to pay him in
full?
(d) A promises to sell and deliver on the 5th of January a lorry to B. The parties have stipulated that
time should be the essence of the contract. A delivers the lorry only on the 5th of February.
Explain what are the rights of B against A in this case. Suppose B desires to accept the belated
delivery and also to claim compensation for loss occasioned by the non-performance of promise at
the time agreed. Advise B as to whether he can achieve these two objectives.
Answer 5. (a)
As per Section 27 of The Indian Contract Act, every agreement, by which anyone is retained from exercising
a lawful profession, trade or business of any kind, is to that extent void. Exception to Section 27 provides
that the seller of the goodwill of a business may agree with the buyer to refrain from carrying on a similar
business, within local limits, so long as the buyer or any one deriving title to the goodwill from him
carries on alike business, provided that such limits are reasonable.
In the given case, as the limits agreed regarding place as well as time is not reasonable, the agreement is
void. So, B cannot take any legal action against A.
Answer 5. (b)
According to Section 56, impossibility of performance may fall into either at the time of agreement or
arising subsequent to the formation of contract. Impossibility which arises subsequent to the formation
of a contract (which could be performed at the time when the contract was entered into) is called postcontractual
or supervening impossibility. In such a case, the contract becomes void when the act becomes
impossible or unlawful. Impossibility of performance of a contract, as a general rule, is no excuse for the
non-performance of the contract, but where this impossibility is caused by the circumstances beyond the
control of the parties, the parties are discharged from further performance of the obligation under the
contract.
In the given case, the contract is void and A is absolved from performing it.
It is for the reimbursement of the loss if any on the
happening of a contingency.
Indemnity Guarantee
It is for the security of the creditor, Guaranteed by
the surety of an existing debt.
The indemnifier cannot sue the third party in his
own name unless there is an assignment in
indemnifier’s favour.
If there is no such assignment, the idemnifier must
bring the suit in the name of indemnified.
The surely can proceed against the principal debtor
in his own right.
Group-I : Paper-6 : Commercial and Industrial Law and Auditing 67
DIRECTORATE OF STUDIES, THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA
Answer 5. (c)
As per Section 43 of The Indian Contract Act when two or more persons make a joint promise and there is
no express agreement to the contrary, the promisee may compel any one or more of the joint promisors to
perform the whole of the promise. This means the liability of joint promisors is joint and several.
So, in the given case, D can compel C to pay him in full.
Answer 5. (d)
In a contract, in which time is of the essence of the contract, if there is a failure on the part of the promisor
to perform his obligation within the fixed time, the contract (or so much of it as remains unperformed)
becomes voidable at the option of the promisee (Sec. 55, para 1). If, in such a case, the promisee accepts
performance of the promise after the fixed time, he cannot claim compensation for any loss occasioned
by the non-performance of the promise at the agreed time. But if at the time of acepting the delayed
performance, he gives notice to the promisor of his intention to claim compensation, he can do so (Sec. 55,
para 3).
In the given case B can repudiate the contract. In the latter case, B may accept the delivery and also claim
compensation if he gives notice of his intention to do so.
Q. 6. (a) A agrees to sell to B a horse for ` 20,000 if it wins a race and for ` 500 if it does not. The horse wins
the race. Advise the parties if —
i. B refuses to pay ` 20,000 and buy the horse
ii. A refuses to sell the horse to B
iii. B agrees to buy the horse for ` 10,000
(b) A sold some land to B. At the time of sale both 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 is the
contract of sale affected? Given reasons.
(c) H who was badly in need of money offered to sell his piano worth ` 5,000 to C for ` 4,000. C
refused to buy. H gradually lowered his price until ` 1,000 was reached, which C accepted. Before
the piano was delivered, H received an offer of a larger sum from T, and he refused to carry out the
contract with C, claiming that the consideration was inadequate. Is H liable to pay damages to C for
failure to carry out his part of the contract?
(d) A offers, by a letter, to sell a certain articles to B who receives the letter the next day. B immediately
posts his letter of acceptance. The same evening A posts a letter revoking the offer. A’s letter of
revocation and B’s letter of acceptance cross in the post. Is there a contract between A and B?
Answer 6. (a)
A wager is an agreement between two parties by which one promises to pay money or money’s worth on the
happening of some uncertain event in consideration of the other party’s promise to pay if the event does
not happen. As per Section 30 no suit can be brought for recovering anything alleged to be won or any
wager, or entrusted to any person to abide by the result of any game or other uncertain event on which any
wager is made.
In the given case, as the agreement is a wager, the effect will be as follows :
i. A cannot compel B to buy the horse and pay ` 20,000
ii. B cannot compel A to sell the horse
iii. A is not bound to sell the horse.
Answer 6. (b)
Attached Files
File Type: pdf ICWA-Commercial-Law-exam-Model-Paper.pdf (334.9 KB, 289 views)
Reply With Quote Quick reply to this message
Reply

Similar Threads
Thread Thread Starter Forum Replies Last Post
Model Question Paper For ICMR JRF Exam Unregistered Main Forum 1 23rd January 2018 12:05 PM
Model Question Paper All India Bar Exam Unregistered Main Forum 1 11th November 2016 10:29 AM
Model Paper For Tax Assistant Exam Unregistered Main Forum 1 2nd November 2016 03:32 PM
IAS Entrance Exam Model Question Paper Unregistered Main Forum 2 24th October 2016 11:38 AM
CAT Exam Model Question Paper Unregistered Main Forum 1 22nd October 2016 09:08 AM
All India Bar Exam Model Question Paper In Hindi Unregistered Main Forum 1 30th September 2016 10:45 AM
DEET Exam Model Question Paper Unregistered Main Forum 0 18th July 2015 12:34 PM
LIC Development Officer Exam Model Paper Unregistered Main Forum 0 16th July 2015 11:25 AM
B Ed Entrance Exam Model Question Paper Unregistered Main Forum 0 15th July 2015 03:21 PM
SET Life Science Exam Model Paper Unregistered Main Forum 1 28th October 2014 10:12 AM
Model Paper for TRB Exam Unregistered Main Forum 1 21st October 2014 12:04 PM
KVS LDC Exam Model Question Paper Unregistered Main Forum 1 18th October 2014 09:54 AM
TET exam Urdu model question paper Unregistered Main Forum 1 17th October 2014 01:57 PM
Model Paper for Karnataka Diploma CET Exam Unregistered Main Forum 1 13th October 2014 04:22 PM
Fitter Trade Exam Solved Model Paper Unregistered Main Forum 1 13th October 2014 03:01 PM
Sub Inspector exam model Question paper Unregistered Main Forum 1 11th October 2014 02:21 PM
IMU entrance exam model question paper nhyre Main Forum 1 18th January 2013 01:55 PM
Sainik School Entrance Exam Model Paper Unregistered Main Forum 1 10th December 2012 10:37 AM
Model Question Paper for Medical Entrance Exam seema420 Main Forum 1 26th November 2012 10:06 AM
TET Exam In UP Model Paper Unregistered5 Main Forum 1 25th August 2012 02:33 PM


Quick Reply
Your Username: Click here to log in

Message:
Options

Thread Tools Search this Thread



All times are GMT +5.5. The time now is 06:09 PM.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2024, vBulletin Solutions, Inc.
Search Engine Friendly URLs by vBSEO 3.6.0 PL2

1 2