Business Law 2A


SKU: AMSEQ-028 Category:

Assignment A

Answer any five of the questions below.

  1. At a meeting of a company, only 15 shareholders were present. 9 voted for a special resolution and 2 against and 4 did not vote at all. No poll was demanded and the chairman declared the resolution to be carried. Is this a valid resolution? Give reasons. Explain different kinds of Meetings and resolutions of a company?
  2. A company altered the objects clause of its Memorandum of Association according to the procedure laid down by law, i.e. by passing a special resolution. A copy of the resolution was filled with the Registrar 4 months after the passing of the resolution. Can the Registrar register the alteration? Give reasons. When and how MOA may be altered?
  3. Joseph promises to his wife Eva to give her pocket money of Rs 1,000 per month. After 6 months, he stops making the payment. Can Eva claim damages from Joseph? Give reasons in the light of essentials of a valid contract.
  4. “No seller can give to the buyer a better title to the goods than he himself has”. Comment on the statement and also discuss the exceptions to this rule as per the Sale of Goods Act, 1930.


  1. Write short notes on any three of the following.

(a) “A stranger to the consideration can enforce the contract”. Explain the exceptions in the following.

i- Supervening Impossibility

ii- Novation

(b)Anticipatory breach of Contract

(c) A private company has only 2 shareholders who are also the directors with equal rights of management and voting power. The company has made large profits, but there is a complete deadlock in the management of the company. One of the shareholders applied for the winding up of the company. Decide at what moment does a winding up by the court commence?

(d) What is a ‘Prospectus’? Is it obligatory for a company to file a prospectus or a statement in lieu of prospectus with the Registrar of Companies?

(e) What is meant by the rule of ‘Caveat Emptor’ and what are its exceptions?


  1. Every Holder in due course is a holder, but every holder may not be a holder in due course. Explain the term ‘Holder’ and ‘Holder in due course’ under the Negotiable Instrument Act, 1881.
  2. Explain the different types of Crossing of Cheque under the provisions of Negotiable Instrument Act, 1881. What are the penalties prescribed in the Negotiable Instrument Act, 1881 in case of dishonor of a cheque?
  3. (i). State with reasons whether the following statement is correct or Incorrect: (a) “Continuing guarantee is revoked by the death of the surety”. (b) “A principal is liable for frauds of his agent”. (ii). Explain the various modes of creation of Agency? Write note on agency be estoppel and holding out.


Assignment – B

Case Study

Bailor & Bailee

Sudarshan bails a certain quantity of “First Grade” petrol, to be stored safely till the end of March 2011. Raghman, without the consent of Sudarshan mixes the first grade petrol with his own “Second Grade” petrol on 1st April, 2011, when Sudarshan asked Raghman for his first grade petrol Raghman tells him to take the bailed quantity of petrol out of the mixed petrol. Sudarshan refused to take the mixed petrol and instead claims the prices of the “First Grade” petrol, which is higher than “Second Grade”. Raghman refuses to compensate Sudarshan for the above on the ground of impossibility of performance.

Question 1: (Whether Raghman is liable to compensate Sudarshan for the loss?

Question 2: Can Raghman be held liable for bearing the expenses which might be incurred for the separation of the two kinds of goods? If it was not petrol but the goods which is capable of being separated?

Question 3: With regard to the provisions of the act explain the duties of bailor and bailee.





Q1:  Annual – general Meeting is required to be held—

By a private company only

By a public company only

By a company limited by guarantee only

By all kinds of companies


Q2: An acceptance is complete and effective only when it has been—

Communicated to the offerer

Merely mentally accepted

Externally manifested

Kept in the drawer


Q3: Name of a company can be changed by passing a special resolution and with the approval of—

The company law tribunal

The Central Government

The Registrar of Companies

None of these


Q4: Which of the following is a mode of discharge of contract—

By impossibility of performance

By lapse of time

By breach of contract

All of these

Q5: Limited liability means liability of its—

Debtors is limited

Creditors is limited

Members is limited

Debenture holders is limited

Q6: In a contract of sale, property means—


Movable goods


Immovable property

Q7: The goods which are yet to be acquired by the seller, are called—

Existing goods

Contingent goods

Unascertained goods

Future goods

Q8: A contract becomes voidable if it has been caused by—



Undue Influence

All of them

Q9: If the goods have perished, the contract of sale of such specific goods, will become—




None of these

Q10: Articles can be altered by—

Ordinary resolution

Special resolution

Resolution requiring special notice

Unanimous resolution

Q11: A contract entered into between the parties by words is called—

An express contract

An implied contract

A quasi contract

An excited contract

Q12: Acceptance of an offer is complete as against the offeror as soon as—

The offerer knows about it

The letter of acceptance is posted

The letter of acceptance is signed by offeree

The letter is handed over to a delivery person

Q13: If a company fails to pay its debts suit can be filed against the—





Q14: A contract with a minor is—





Q15: Who is liable for the supply of necessaries to a minor—

His guardian

His manager

His property

He himself

Q16: A prospectus is issued—

By a private limited company

By a public limited company

By a company limited by guarantee

None of these

Q17: When, before the contract becomes due for performance, the promisor declares his intention of not performing his promise, it is called—




Anticipatory breach

Q18: A bailment cannot be made about—





Q19: The damages which arise in the usual course of things happening from the breach of contract, are called—

Remote damages

Ordinary damages

Special damages

Nominal damages

Q20: When a person is employed to represent another in dealings with third person, it is a contract of—





Q21: Which of the following is not an essential element of a contract of sale—

Goods as subject matter

Transfer of property in goods


Railway receipts

Q22: In return for a new television, Raju agrees to give his old television valued at Rs. 3,000 and an amount of cash worth Rs. 5,000 to Ganesh. This is a—



Contract of sale of goods

Sale of approval

Q23: Which of the following rights is held by an unpaid seller—

Right of lien

Right of stoppage in transit

Right of resale

All of these

Q24: After exercising the right of lien, the seller can resell the goods of perishable nature—

After giving 7 days notice of resale to buyer

After giving 1 week’s notice

Without giving any notice

None of these

Q25: Which of the following is not a remedy for breach of contract—

Rescission of the contract

Restitution of benefit

Suit for damages

Alteration of the contract

Q26: A contract by which one party promises to save the other from loss is called—

Contract of guarantee

Contract of indemnity

A quasi contract

None of these

Q27: Surety’s liability is—




None of these

Q28: Crossed cheques payable to bearer are negotiated by—

Endorsement and delivery



None of these

Q29: In a contract of sale, which of the following is treated as implied condition—

That the seller has title to goods

That goods are similar to description

That goods are according to sample shown

All of these

Q30: Consideration must move at the desire of—

The promisor

The promisee

A third party

None of them

Q31: Which of the following does not relate to ‘termination of agency by operation of law’—

Death of principal

Insolvency of principal

Destruction of subject-matter

Revocation of authority by the principal

Q32: Which of the following sentence is a valid promissory note—

I promise to pay Mohan or order Rs. 1,000.

I promise to pay Hari Rs. 2,000 worth of shares..

I promise to pay Naraynan in East India Bonds

I promise to pay Rakesh Rs. 5,000 and to deliver 50 kg of sugar.

Q33: A stipulation collateral to the main purpose of the contract, is called a—




None of these

Q34: A person who receives a negotiable instrument for consideration, before maturity, and in good faith, is called—

Holder for value


Holder in due course

None of these

Q35: A director must vacate his office if he fails to obtain qualification shares within—

1 week

2 weeks

One month

2 months

Q36: Which of the following rights are available to a finder of goods—

Right of lien

Right to file a suit for reward

Right of sale of goods

All of these

Q37: A private company has at least—

7 members

3 members

3 directors

2 members

Q38: A cheque payable to order may be negotiated—

By delivery

By endorsement

By endorsement and delivery

None of these

Q39: Which of the following endorsements is invalid—

Restrictive endorsement

Conditional endorsement

Special endorsement

Partial endorsement

Q40: When a cheque bears across its face an addition of the words “&” between two parallel transverse lines, it is called—

Special crossing

Restrictive crossing

General crossing

Double crossing


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