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BUSINESS LAW
Test Paper -2
Time: 3 Hours Marks : 100
Question. 1
(a) X agrees to pay Y Rs. 1,00,000/-, if Y kills Z. To pay Y, X borrows Rs. 1,00,000/- from W, who is also
aware of the purpose of the loan. Y kills Z but X refuses to pay. X also to repay the loan to W. Explain
the validity of the contract.
(i) Between X and Y.
(ii) Between X and W (4 Marks)

(b) Mr. R, a manufacturer of toys approached MNO Private Limited for supply of raw material worth Rs.
1,50,000/-. Mr. R was offered a credit period of one month. Mr. R went to the company prior to the
due date and met Mr. C, an employee at the billing counter, who convinced the former that the
payment can be made to him as the billing -cashier is on leave.
Mr. R paid the money and was issued a signed and sealed receipt by Mr. C. After the lapse of due date,
Mr. R received a recovery notice from the company for the payment of Rs. 1,50,000/-.
Mr. R informed the company that he has already paid the above amount and being an outsider had
genuine reasons to trust Mr. C who claimed to be an employee and had issued him a receipt.
The Company filed a suit against Mr. R for non-payment of dues. Discuss the fate of the suit and the
liability of Mr. R towards company as on current date in consonance with the provision of the
Companies Act 2013? Would your answer be different if a receipt under the company seal was not
issued by Mr. C after receiving payment? (4 Marks)

(c) Discuss the essential elements regarding the sale of unascertained goods and its appropriation as per
the Sale of Goods Act, 1930. (4 Marks)

(d) There is an LLP by the name Ram Infra Development LLP which has 4 partners namely Mr. Rahul, Mr.
Raheem, Mr. Kartar and Mr. Albert. Mr. Rahul and Mr. Albert are non – resident while other two are
resident. LLP wants to take Mr. Rahul and Mr. Raheem as Designated Partner. Explain in the light of
Limited Liability Partnership Act, 2008 whether LLP can do so? (4 Marks)

Question. 2
(a) Explain the following statements in the light of provisions of Indian Contract Act, 1872:
(i) "Agreements made out of love and affection are valid agreements."
(ii) "Promise to pay a time barred debt cannot be enforced." (7 Marks)
(b) "A LLP (Limited Liability Partnership) is a type of partnership in which participants' liability is fixed
to the amount of money they invest whereas a LLC (Limited Liability Private/Public Company) is a
tightly held business entity that incorporates the qualities of a corporation and a partnership".
In line of above statement clearly elaborate the difference between LLP and LLC. (5 Marks)

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Question. 3
(a) Can a partner be expelled? If so, how? Which factors should be kept in mind prior to expelling a
partner from the firm by the other partners according to the provision of Indian Partnership Act,
1932? (6 Marks)
(b) Mr. Y aged 21 years, lost his mental balance after the death of his parents in an accident. He was left
with his grandmother aged 85 years, incapable of walking and dependent upon him. Mr. M their
neighbour, out of pity, started supplying food and other necessaries to both of them. Mr. Y and his
grandmother used to live in the house built by his parents. Mr. M also provided grandmother some
financial assistance for her emergency medical treatment. After supplying necessaries to Mr. Y for
four years, Mr. M approached the former asking him to payback Rs. 15 Lakhs inclusive of Rs. 7 Lakhs
incurred for the medical treatment of the lady (grandmother). Mr. Y pleaded that he has got his
parent's jewellery to sell to a maximum value of Rs. 4 Lakhs, which may be adjusted against the dues.
Mr. M refused and threatened Mr. Y of legal suit to be brought against for recovering the money.
Now, you are to decide upon based on the provisions of the Indian Contract Act, 1872:
(i) Will Mr. M succeed in filing the suit to recover money? Elaborate the related provisions?
(ii) What is the maximum amount- of money that can be recovered by Mr. M?
(iii) Shall the provisions of the above act also apply to the medical treatment given to the
grandmother? (6 Marks)

Question. 4
(a) What are the rights of unpaid seller in context to re-sale the goods under Sale of Goods Act, 1930?
(6 Marks)
(b) "Indian Partnership Act does not make the registration of firm's compulsory nor does it impose any
penalty for non-registration." In light of the given statement, discuss the consequences of non-
registration of the partnership firms in India. Also, explain the rights unaffected due to non-
registration of firms. (6 Marks)

Question. 5
(a) Mr. K visited M/s Makrana Marbles for the purchase of marble and tiles for his newly built house. He
asked the owner of the above shop Mr. J to visit his house prior to supply so that he can clearly
ascertain the correct mix and measurements of marble and tiles. Mr. J agreed and visited the house
on the next day. He inspected the rooms in the first floor and the car parking space. Mr. K insisted
him to visit the second floor as well because the construction pattern was different, Mr. J ignored the
above suggestion.
Mr. J. supplied 146 blocks of marble as per the size for the rooms and 16 boxes of tiles with a word of
caution that the tiles can bear only a reasonable weight. Marble and Tiles were successfully laid
except on second floor due to different sizes of the marble. The tiles fitted in the parking space also
got damaged due to the weight of the vehicle came for unloading cement bags. Mr. K asked Mr. J for
the replacement of marble and tiles to which Mr. J refused, taking the plea that the marble were as
per the measurement and it was unsafe to fit tiles at the parking area as it cannot take heavy load.
Discuss in the light of provisions of Sale of Goods Act 1930:
(i) Can Mr. J refuse to replace the marble with reference to the doctrine of Caveat Emptor? Enlist
the duties of both Mr. K. and Mr. J.
(ii) Whether the replacement of damaged tiles be imposed on M/ s Makrana Marbles? Explain.
(6 Marks)
(b) (i) Mr. Anil formed a One Person Company (OPC) on 16 April, 2018 for manufacturing electric cars. The
turnover of the OPC for the financial year ended 31 March, 2019 was about Rs. 2.25 crores. His friend
Sunil wanted to invest in his One Person Company (OPC), so they decided to convert it voluntarily
into a private limited company. Can Anil do so, as per the provisions of the Companies Act, 2013?
(4 Marks)
(ii) Explain listed company and unlisted company as per the provisions of the Companies Act, 2013.
(2 Marks)

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Question. 6
(a) Differentiate between Novation and Alteration as per the Indian Contract Act, 1872. (5 Marks)
(b) What is the difference between partnership and co-ownership as per the Indian Partnership Act,
1932? (4 Marks)
(c) Mike LLC incorporated in Singapore having an office in Pune, India. Analyse whether Mike LLC would
be called as a foreign company as per the provisions of the Companies Act, 2013? Also explain the
meaning of foreign company. (3 Marks)

Question. 7
(a) M owes money to N. Therefore, he makes a promissory note for the amount in favor of N, for safety of
transmission he cuts the note in half and posts one half to N. He then changes his mind and calls upon
N to return the half of the note which he had sent. N requires M to send the other half of the
promissory note. Decide how rights of the parties are to be adjusted. (6 Marks)
(b) Mr. D was in urgent need of money amounting Rs.5,00,000. He asked Mr. K for the money. Mr. K lent
the money on the sureties of A, B and N without any contract between them in case of default in
repayment of money by D to K. D makes default in payment. B refused to contribute, examine
whether B can escape liability? (6 Marks)

Question. 8
(a) Srushti acquired valuable diamond at a very low price by a voidable contract under the provisions of
the Indian Contract Act, 1872. The voidable contract was not rescinded. Srushti pledged the diamond
with Mr. VK. Is this a valid pledge under the Indian Contract Act, 1872? (4 Marks)
(b) ABC Ltd. sells its products through some agents and it is not the custom in their business to sell the
products on credit. Mr. Pintu, one of the agents sold goods of ABC Ltd. to M/s. Parul Pvt. Ltd. (on
credit) which was insolvent at the time of such sale. ABC Ltd. sued Mr. Pintu for compensation
towards the loss caused due to sale of products to M/s. Parul Pvt. Ltd. Will ABC Ltd. succeed in its
claim? (4 Marks)
(c) Ministry of Corporate affairs administer which acts and by whom it is run? (4 marks)