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Business Law Solved Question Paper 2022
Gauhati University B.Com 3rd Sem Hons.
Gauhati University Business Law Solved Question paper 2022 GU
Business Laws Solved Question Paper 2022
Gauhati University BCOM 3rd Sem FYUGP
Paper: COM-HC-2026 (Business Laws)
COMMERCE (Honours) Full Marks: 80
Figures in the margin indicate full mark for the Questions
1. Choose the correct answer of the following: (any ten) 1 x 10=10
(a) An expression of interest to buy a showcase item from a shopkeeper is a/an
(1) acceptance.
(2) request.
(3) choice.
(4) offer.
Answer: (4) offer
Explanation: Expressing interest to buy something is considered an "offer" as it shows the willingness to purchase under certain terms, which the shopkeeper can accept or reject.
(b) The Indian Contract Act, 1872 came into force on
(1) 1st January, 1872.
(2) 1st April, 1872.
(3) 1st July, 1872.
(4) 1st September, 1872.
Answer: 1st September, 1872
(c) An agreement to procure a government job is a/an
(1) illegal agreement.
(2) unenforceable agreement.
(3) void agreement.
(4) voidable agreement.
Answer: (3) void agreement
Explanation: Such agreements are against public policy and, therefore, are void and unenforceable under the law.
(d) A contract of indemnity is a
(1) future contract.
(2) wagering contract.
(3) contingent contract.
(4) quasi contract.
Answer: (3) contingent contract
Explanation: A contract of indemnity depends on a contingent event, as the liability arises only when a specified event occurs.
(e) In an agreement to sell, the property in goods is transferred
(1) at present.
(2) in future.
(3) both, at present and in future.
(4) None of the above.
Answer: (2) in future
Explanation: In an agreement to sell, the ownership of goods is not transferred immediately but is agreed to transfer in the future.
(f) The provisions regarding maximum number of members in a partnership are given in
(1) the Contract Act.
(2) the Companies Act.
(3) the Partnership Act.
(4) the Societies Registration Act.
Answer: (2) the Companies Act
Explanation: The Companies Act specifies the maximum number of partners in a partnership to avoid it being classified as an unregistered company.
(g) Reconstitution of partnership firm requires
(1) in case of admission of partners.
(2) in case of expulsion of partners.
(3) in case of retirement of partners.
(4) All of the above.
Answer: (4) All of the above
Explanation: Reconstitution occurs in any scenario that changes the composition of the partners, including admission, expulsion, or retirement.
(h) Who appoints the Central Information Commission?
(1) The President of India.
(2) The Prime Minister of India.
(3) The Chief Justice of Supreme Court.
(4) None of the above.
Answer: (1) The President of India
Explanation: The Central Information Commission is appointed by the President based on the recommendations of a committee comprising the Prime Minister, Leader of Opposition, and a Union Cabinet Minister.
(i) The Rights to Information Act, 2005 came into force on
(1) 12th July, 2005.
(2) 12th August, 2005.
(3) 12th September, 2005.
(4) 12th October, 2005.
Answer: (4) 12th October, 2005
Explanation: The RTI Act became fully operational on 12th October 2005, enabling citizens to request information from public authorities.
(j) All agreements are contracts.
(1) Correct.
(2) Incorrect.
Answer: (2) Incorrect
Explanation: Not all agreements are contracts; only agreements enforceable by law are considered contracts.
(k) An agent cannot work for more than one principal.
(1) Correct.
(2) Incorrect.
Answer: (2) Incorrect
Explanation: An agent can work for multiple principals as long as there is no conflict of interest and it complies with the terms of the agreement.
(l) A minor can appoint an agent.
(1) Correct.
(2) Incorrect.
Answer: (2) Incorrect
Explanation: A minor cannot appoint an agent as they lack the legal capacity to enter into contracts.
(m) Sale is not an executed contract.
(1) Correct.
(2) Incorrect.
Answer: (2) Incorrect
Explanation: A sale is an executed contract because ownership of the goods is transferred immediately.
(n) In case of defective delivery, the buyer can reject the goods.
(1) Correct.
(2) Incorrect.
Answer: (1) Correct
Explanation: The buyer has the right to reject goods if they do not conform to the contract terms.
(o) Registration of limited liability partnership shall be with the Registrar of Companies.
(1) Correct.
(2) Incorrect.
Answer: (1) Correct
Explanation: A limited liability partnership is registered with the Registrar of Companies under the LLP Act, 2008.
(p) A bill of exchange can be crossed.
(1) Correct.
(2) Incorrect.
Answer: (2) Incorrect
Explanation: Bills of exchange cannot be crossed; this feature is specific to cheques.
(q) A cheque needs acceptance.
(1) Correct.
(2) Incorrect.
Answer: (2) Incorrect
Explanation: A cheque does not need acceptance; it is payable on demand without requiring acceptance.
(r) Partial endorsement is valid.
(1) Correct.
(2) Incorrect.
Answer: (2) Incorrect
Explanation: Partial endorsement is invalid because it creates ambiguity regarding the ownership or rights over the negotiable instrument.
2. Answer any five of the following questions in brief: 2 x 5 = 10
(a) What is an offer?
Answer:- An offer is a proposal made by one party to another, expressing a willingness to enter into a legally binding agreement on certain terms.
(b) Write two differences between agreement and contract.
Answer:-
An agreement is a promise between two or more parties, whereas a contract is an agreement enforceable by law.
All contracts are agreements, but not all agreements are contracts.
(c) Write two elements of a contract of indemnity.
Answer:-
There must be a promise to compensate for loss or damage.
The loss must arise due to the actions or events specified in the contract.
(d) Write two liabilities of surety.
Answer:-
The surety is liable for the debt or obligation of the principal debtor in case of default.
The liability of the surety is co-extensive with that of the principal debtor unless otherwise stated.
(e) What is a contract of sale?
Answer:- A contract of sale is an agreement where the seller transfers or agrees to transfer the ownership of goods to the buyer for a price.
(f) Write two differences between sale and bailment.
Answer:-
In a sale, ownership of goods is transferred, while in bailment, possession is transferred without ownership.
In a sale, the buyer pays the price, while in bailment, payment may or may not be involved.
(g) Write two differences between partnership and company.
Answer:-
A partnership is formed by mutual agreement between partners, while a company is formed under the Companies Act.
A partnership does not have a separate legal entity, whereas a company is a separate legal entity.
(h) Who are the parties to a promissory note?
Answer:-
The maker: The person who promises to pay the amount.
The payee: The person to whom the payment is to be made.
(i) Write two differences between limited liability partnership and company.
Answer:-
An LLP has no minimum capital requirement, whereas a company has a prescribed minimum capital.
In an LLP, partners have flexibility in management, while a company operates under strict regulations.
(j) Write two essential features of negotiable instruments.
Answer:-
They are freely transferable by delivery or endorsement.
The holder in due course can claim payment in their own name.
3. Answer any four of the following questions: 5 x 4=20
(a) Briefly state the essential elements of a valid contract.
Answer:
Offer and Acceptance: There must be a lawful offer and acceptance by the parties.
Free Consent: Consent of the parties must be free from coercion, undue influence, fraud, or misrepresentation.
Lawful Consideration: The agreement must be supported by something of value.
Competency of Parties: Parties must be legally capable of entering into a contract.
Legal Objective: The purpose of the contract must not be illegal or against public policy.
(b) Explain the duties of bailee.
Answer:
Reasonable Care: The bailee must take proper care of the goods as a prudent person would.
No Unauthorized Use: The bailee must not use the goods for purposes other than agreed.
Return of Goods: The bailee must return the goods after the purpose is fulfilled.
Compensation for Loss: The bailee is liable for loss caused due to negligence.
Separation of Goods: The bailee must not mix the goods with their own without consent.
(c) Briefly discuss with examples the rules relating to contingent contract.
Answer:
Dependent on an Event: A contingent contract depends on the occurrence or non-occurrence of an uncertain future event (e.g., insurance contracts).
Event Must Be Collateral: The event must not be a direct part of the contract.
Uncertain Event: The occurrence of the event should be uncertain.
Performance on Event Happening: The contract becomes enforceable only when the event occurs (e.g., payment upon delivery of goods if shipment arrives).
(d) Distinguish between sale and agreement to sell.
Answer:
Transfer of Ownership: In a sale, ownership is transferred immediately, while in an agreement to sell, ownership is transferred in the future.
Risk: In a sale, risk passes to the buyer, while in an agreement to sell, the seller retains the risk.
Nature: A sale is an executed contract, whereas an agreement to sell is an executory contract.
Remedies: In a sale, the seller can sue for the price, while in an agreement to sell, the seller can sue for damages.
(e) State the features of limited liability partnership.
Answer:
Separate Legal Entity: An LLP is distinct from its partners.
Limited Liability: Partners are liable only to the extent of their contributions.
No Minimum Capital Requirement: No fixed capital requirement for incorporation.
Flexible Management: Partners manage the business based on their agreement.
Perpetual Succession: The LLP continues irrespective of changes in partners.
(f) State the essential elements of partnership.
Answer:
Agreement: Partnership arises from an agreement between the partners.
Profit Sharing: The partners must agree to share the profits of the business.
Business Activity: The partnership must involve a lawful business.
Mutual Agency: Each partner acts as an agent for others in the conduct of the business.
Voluntary Association: Partnership is based on mutual trust and consent.
(g) Distinguish between promissory note and cheque.
Answer:
Parties Involved: A promissory note has two parties (maker and payee), whereas a cheque involves three parties (drawer, drawee, and payee).
Payment: A promissory note promises payment, while a cheque orders payment.
Bank Involvement: A cheque is drawn on a bank, but a promissory note is not.
Maturity: A promissory note can be payable on a future date, while a cheque is always payable on demand.
(h) Briefly explain the different kinds of endorsements.
Answer:
Blank Endorsement: The endorser signs the instrument without specifying the endorsee.
Full Endorsement: The endorser specifies the name of the endorsee.
Restrictive Endorsement: Limits the usage of the instrument (e.g., "For deposit only").
Conditional Endorsement: The endorser makes payment conditional upon fulfillment of a requirement.
Partial Endorsement: Transfers only part of the amount (not valid under law).
4. Answer any four of the following questions in 600 words each: 10 x 4=40
(a) What is contract? State the various types of contract. 2+8=10
Answer:- A contract is a legally binding agreement between two or more parties that is enforceable by law. According to Section 2(h) of the Indian Contract Act, 1872, “An agreement enforceable by law is a contract.” A contract arises when there is an offer, acceptance, lawful consideration, capacity of parties, free consent, and lawful object.
Contracts are classified into various types based on their formation, execution, and enforceability. These types are:
Types of Contracts Based on Formation:
(i) Express Contract: A contract formed by explicit words, either spoken or written.
(ii) Implied Contract: A contract inferred from the conduct of the parties or circumstances.
(iii) Quasi-Contract: Not a formal contract, but obligations imposed by law to prevent unjust enrichment.Types of Contracts Based on Execution:
(i) Executed Contract: A contract where both parties have fulfilled their obligations.
(ii) Executory Contract: A contract where some or all obligations are yet to be performed.Types of Contracts Based on Enforceability:
(i) Valid Contract: A contract meeting all legal requirements.
(ii) Void Contract: A contract that ceases to be enforceable by law.
(iii) Voidable Contract: A contract that is valid but can be voided by one party due to factors like coercion or misrepresentation.
(iv) Illegal Contract: A contract with unlawful consideration or object.
In summary, contracts can take many forms, but their enforceability and classification depend on the nature of the agreement and compliance with legal principles.
(b) What is void agreement? Discuss the different types of void agreements under the Indian Contract Act, 1872. 2+8=10
Answer:- A void agreement is an agreement that is not enforceable by law. According to Section 2(g) of the Indian Contract Act, 1872, “An agreement not enforceable by law is said to be void.” Such agreements are considered invalid from the beginning and cannot create any legal obligations between the parties.
Under the Indian Contract Act, the following types of agreements are void:
Agreements Made Without Consideration (Section 25): An agreement without lawful consideration is void unless it meets specific exceptions such as natural love and affection or compensation for past services.
Agreements Restraining Marriage (Section 26): Any agreement that restricts a person’s right to marry is void, except for minors or under valid legal restrictions.
Agreements Restraining Trade (Section 27): An agreement that prevents someone from carrying on a lawful profession or trade is void, except in cases of reasonable restrictions like partnerships.
Agreements Restraining Legal Proceedings (Section 28): Agreements that limit a party’s right to approach the court for enforcement of rights are void.
Agreements with Uncertain Terms (Section 29): Agreements that are not clear or definite in their terms are void due to uncertainty.
Agreements Wagering (Section 30): Agreements that involve wagering or betting on uncertain events are void.
Agreements to Perform an Impossible Act (Section 56): Agreements requiring the performance of an act that is impossible from the beginning or becomes impossible later are void.
These provisions ensure fairness in commercial and personal transactions by invalidating agreements that could harm public policy or lack essential legal elements.
(c) Discuss the rights and duties of an agent. 6+4=10
Answer:-An agent is a person who is authorized to act on behalf of another person, known as the principal, in dealings with third parties. The relationship between the agent and the principal is governed by the principles of agency law, which are primarily set out in the Indian Contract Act, 1872.
Rights of an Agent:
Right to Remuneration (Section 219):
An agent has the right to be paid for the work or services performed on behalf of the principal, as agreed upon in the contract. If no amount has been specified, the agent can claim reasonable remuneration.Right to Retain Possession of Principal's Property (Section 222):
If the agent is owed remuneration or any other form of compensation for services rendered, they have the right to retain possession of the principal’s property until payment is made.Right to be Indemnified (Section 222):
An agent has the right to be indemnified by the principal against any losses or expenses incurred while acting within the scope of their authority. This includes being reimbursed for any actions taken that were legally required for the fulfillment of their duties.Right to Compensation for Non-Payment of Remuneration:
If a principal fails to pay the agent’s remuneration or compensation, the agent may refuse to perform further duties until payment is made.Right to Recover Amounts from Third Parties (Section 234):
In case of contracts with third parties, the agent may have the right to recover any amounts due to the principal on behalf of the principal.Right to a Lien (Section 221):
An agent can claim a lien over the goods or property of the principal in their possession for the recovery of dues like commission or expenses.
Duties of an Agent:
Duty to Follow Instructions (Section 211):
The agent must act in accordance with the instructions of the principal. If the agent deviates from the agreed-upon instructions, they may be held liable for any resulting damages or losses.Duty to Act in Good Faith (Section 213):
The agent is required to act in good faith and with loyalty towards the principal’s interests. They must not engage in any activity that may lead to a conflict of interest.Duty to Exercise Skill and Care (Section 212):
An agent must exercise the required level of skill and care while performing their duties. This means they should act with reasonable competence, as expected in the profession or business they are representing.Duty to Render Accounts (Section 213):
The agent is obligated to provide the principal with a proper account of all transactions carried out on behalf of the principal. This includes an accurate record of money received or spent, and any profits made.Duty to Act within the Scope of Authority (Section 215):
The agent must not exceed the authority granted by the principal. If they do so, they may be personally liable for any obligations that arise outside of the authority given.Duty to Not Disclose Principal's Secrets (Confidentiality):
The agent must maintain confidentiality regarding any information they acquire about the principal's business, and should not use this information for personal gain or to the detriment of the principal.Duty to Return Property (Section 221):
The agent must return any property or documents belonging to the principal once the agency relationship comes to an end or when the principal requests it.
(d) Discuss the rights of surety.
Answer:- A surety is a person who agrees to be responsible for the debt, default, or failure of another person (the principal debtor) in a contract. In simple terms, a surety guarantees that the principal debtor will fulfill their obligations, and if the debtor fails to do so, the surety will be liable to fulfill those obligations.
The rights of a surety are outlined in the Indian Contract Act, 1872, under Section 146 to Section 171. A surety enjoys several rights that help protect them from unfair obligations. These rights are as follows:
1. Right of Subrogation (Section 140):
The surety has the right of subrogation, which means that once they have paid the debt or fulfilled the obligation of the principal debtor, they are entitled to step into the shoes of the creditor and assume all the rights the creditor had against the debtor. The surety can then claim the amount paid from the principal debtor or exercise any legal remedy that the creditor had against the debtor.
For example, if the surety pays the debt of the principal debtor, they can seek to recover the amount from the debtor. This right allows the surety to protect their interests by asserting any legal claims the creditor had against the debtor.
2. Right to Demand to Be Discharged (Section 138):
A surety has the right to demand that their liability be discharged once the principal debtor fulfills their obligations or if the contract between the creditor and the debtor is terminated. The surety’s obligation is contingent on the debtor’s default, and once the debtor fulfills their responsibility, the surety is no longer liable.
For instance, if a loan agreement is paid off by the principal debtor, the surety can request that their guarantee be released.
3. Right to Contribution (Section 146):
If there are multiple sureties for the same debt, each surety has the right to seek contribution from the other sureties. If one surety pays the entire debt, they can seek a fair contribution from the other sureties, based on their respective share of the debt.
For example, if two sureties are liable for a debt of ₹10,000, and one surety pays the entire amount, they can demand ₹5,000 from the other surety. The contribution is based on the agreement between the sureties or the relative shares of liability.
4. Right to Be Indemnified by the Principal Debtor (Section 145):
A surety has the right to be indemnified by the principal debtor for any loss or cost incurred while fulfilling the obligations of the debtor. The indemnity means the surety can seek reimbursement from the debtor for any amounts paid to the creditor on their behalf.
For instance, if a surety pays the debt of the debtor, they have the right to recover that amount from the debtor along with any other costs or legal fees incurred in the process.
5. Right to Request for Notice of Default (Section 139):
The surety has the right to be notified if the principal debtor defaults on the obligation. This right helps the surety take timely actions, such as making arrangements to fulfill the obligation themselves, before the creditor demands payment.
However, this right can be waived if the surety explicitly agrees to assume the risk of non-performance without such notice.
6. Right to a Creditor’s Priority (Section 137):
In case the surety has paid the debt of the principal debtor and the debtor has assets, the surety has the right to claim those assets before the creditor can take any further action. This ensures that the surety has a priority in recovering the amounts paid on behalf of the debtor.
7. Right to Object to New Terms (Section 135):
A surety has the right to object to any modification of the original contract between the principal debtor and the creditor that would increase the surety's liability. If the terms of the contract are changed without the surety’s consent, the surety may not be bound by the new terms.
8. Right to Defend Against Creditor’s Claims (Section 145):
A surety has the right to defend themselves against any claims by the creditor if the creditor does not follow the proper legal procedure or fails to fulfill certain duties in relation to the suretyship. For example, if the creditor does not exhaust all remedies against the principal debtor before approaching the surety, the surety may have the right to defend against the claim.
Conclusion:
The rights of a surety are designed to balance the risk they undertake in guaranteeing the debt or performance of another. These rights allow the surety to protect their interests, including the right to seek indemnity, contribution, and subrogation. By ensuring that sureties are provided with reasonable legal protections, the law helps maintain fairness in agreements where third parties act as guarantors for others' obligations.
(e) Who is an unpaid seller? Discuss the rights of an unpaid seller. 2+8=10
Answer:- An unpaid seller is a seller who has not received the full payment or any part of the price for the goods sold. The term "unpaid seller" is defined under Section 45 of the Sale of Goods Act, 1930, which states that a seller is considered "unpaid" if the buyer has failed to pay the whole price, or any part of it, for the goods sold under the contract. Even if the buyer is in possession of the goods, the seller remains unpaid until the full price is paid or tendered.
In simpler terms, an unpaid seller is one who has transferred the possession of goods but has not yet received the agreed payment from the buyer.
Rights of an Unpaid Seller:
The Sale of Goods Act, 1930, confers several rights on an unpaid seller, which can be exercised under specific circumstances. These rights are as follows:
1. Right of Lien (Section 47):
The unpaid seller has the right to retain possession of the goods until the buyer pays the price of the goods. This right of lien can be exercised when:
The goods are in the seller's possession.
The price has not been paid.
The seller has not agreed to part with possession before payment.
The right of lien can be exercised in various ways, such as when the goods are not in transit or when the buyer is insolvent. The seller can hold the goods as security until payment is made, but this right is lost if the seller delivers the goods to the buyer or waives the lien.
2. Right of Stoppage in Transit (Section 50):
If the buyer becomes insolvent before the full payment for the goods is made, the unpaid seller has the right to stop the goods in transit. The seller may regain possession of the goods while they are being transported, provided the goods have not yet been delivered to the buyer or to a carrier. This right can be exercised when:
The buyer becomes insolvent.
The goods are in transit (i.e., not yet delivered to the buyer).
The seller must act quickly, as the right of stoppage in transit can only be exercised while the goods are still in the possession of the carrier or the warehouse.
3. Right of Rescission or Rejection of Goods (Section 48):
If the buyer fails to pay the price or is otherwise in breach of contract, the unpaid seller has the right to rescind the contract and reclaim the goods. If the buyer has not accepted the goods, the seller can reject them, and the contract can be canceled, allowing the seller to recover the goods.
Additionally, if the goods have been delivered but payment has not been made, the seller can sue for the price of the goods.
4. Right to Sue for the Price of Goods (Section 55):
If the buyer refuses or neglects to pay for the goods as per the agreement, the unpaid seller has the right to sue for the price of the goods. Even if the goods are in the possession of the buyer, the seller can file a lawsuit to recover the price. This right is available when the goods are:
Accepted by the buyer, or
The property in the goods has passed to the buyer, even if the buyer fails to make the payment.
5. Right to Claim Damages for Non-Performance (Section 56):
If the buyer fails to pay the price or accept the goods, the unpaid seller has the right to claim damages from the buyer for any loss caused by the buyer’s non-performance of the contract. The seller can claim compensation for losses suffered due to the buyer's refusal or failure to pay for the goods or to accept delivery.
6. Right of Action for the Recovery of Goods (Section 60):
If the property in the goods has not passed to the buyer, the unpaid seller has the right to take back the goods from the buyer. This right can be exercised under the following conditions:
If the contract is rescinded,
If the buyer has failed to pay the agreed price.
The unpaid seller may seek legal action to reclaim the goods, provided the conditions for the right of rescission are met.
7. Right to Withhold Delivery (Section 39):
An unpaid seller has the right to withhold delivery of goods if the buyer has not paid for them. This right may be exercised whether the goods are in transit or in possession of the seller. The seller is not obligated to deliver the goods if the buyer has failed to make the payment, even if the buyer is entitled to the goods under the contract.
Conclusion:
The rights of an unpaid seller are designed to protect their interests when the buyer fails to make payment for goods. These rights, such as the right of lien, stoppage in transit, and the right to sue for the price, provide sellers with legal remedies to recover their dues and ensure that they are not left without recourse in case of default. These provisions are vital for maintaining the integrity and fairness of trade, as they safeguard the seller's position in situations of non-payment or breach of contract by the buyer.
(f) State the essential elements of a contract of sale. Briefly discuss the rules regarding delivery of goods. 4+6=10
Answer:- A contract of sale is an agreement between a seller and a buyer, where the seller agrees to transfer the ownership of goods to the buyer in exchange for a price. According to the Sale of Goods Act, 1930, the essential elements of a contract of sale include the following:
Agreement to Transfer Ownership:
The fundamental element of a sale is the transfer of ownership of goods from the seller to the buyer. This transfer is made in exchange for a consideration, known as the price. It is important to note that the contract must involve a transfer of ownership, not just possession.Goods:
The subject matter of the sale must be goods, which are defined under the Sale of Goods Act as every kind of movable property except actionable claims and money. The goods must be identifiable, and their ownership can be transferred.Price:
The consideration in a sale contract is the price, which must be a money payment. The price can be fixed by the contract or determined by a manner agreed upon by the parties. It must be specific or capable of being made certain.Intention to Create Legal Relations:
Like any contract, the parties must intend to create legal obligations. The contract of sale is enforceable in a court of law, and both parties must be serious in their intent to bind themselves by the agreement.Competent Parties:
The parties entering into a sale contract must be legally competent to do so. They must have the capacity to contract, meaning they must be of sound mind, and of legal age (18 years or older), and not disqualified from contracting due to certain laws (e.g., bankruptcy).Free Consent:
The consent of the parties to the contract must be free from any coercion, undue influence, fraud, misrepresentation, or mistake. Free consent ensures that the contract is valid and enforceable.Legal Purpose:
The purpose of the contract must be lawful. A contract involving the sale of illegal goods or services is void and unenforceable.
Rules Regarding Delivery of Goods:
Delivery is a crucial element of a contract of sale, as it is the process through which possession of the goods is transferred from the seller to the buyer. The Sale of Goods Act, 1930 outlines several rules regarding delivery:
Delivery of Goods: Delivery refers to the transfer of possession of goods from the seller to the buyer. It may be actual or constructive:
Actual Delivery occurs when the goods are physically handed over to the buyer.
Constructive Delivery occurs when the buyer gains control over the goods without the goods physically being transferred, such as through symbolic means or access to goods in a warehouse.
Place of Delivery (Section 29): The place of delivery is the location where the goods are to be handed over from the seller to the buyer. If not specifically agreed upon in the contract, the goods are to be delivered at the seller’s place of business or, if none, at the seller’s residence. If the goods are in transit, they may be delivered at the location where they are situated.
Time of Delivery (Section 31): The contract may specify a particular time for delivery, or the delivery may be made within a reasonable time. If the time for delivery is not fixed, the delivery must take place within a reasonable period after the contract is made.
Mode of Delivery: The mode of delivery refers to how the goods will be delivered to the buyer. It could include physical delivery, handing over of the title or documents of ownership (such as a bill of lading for goods in transit), or delivery through the carrier.
Buyer’s Duty to Accept Delivery (Section 36): The buyer is bound to accept the goods and take delivery in accordance with the contract. If the buyer refuses to accept delivery, they may be held liable for damages or any loss suffered due to their refusal to accept delivery.
Delivery of Wrong Goods (Section 35): If the seller delivers goods that do not conform to the terms of the contract, the buyer has the right to reject the goods. The buyer is not obliged to accept goods that do not match the agreed specifications, quantity, or quality.
Delivery of Goods by Instalments (Section 39): If the contract allows delivery by instalments, each instalment must be delivered in accordance with the contract. If one instalment is not delivered, the buyer may reject that instalment. However, if the non-delivery of one instalment does not affect the overall contract, the buyer may still be required to accept the remaining instalments.
Risk of Loss and Delivery (Section 20): The risk of loss or damage to the goods passes from the seller to the buyer at the time of delivery, unless the contract specifies otherwise. If the goods are delivered to the carrier, the risk generally passes to the buyer, even though ownership may not pass until further conditions are met.
Delivery and the Passing of Ownership: The delivery of goods typically involves the transfer of ownership, but ownership may not pass at the time of delivery if the parties have agreed to specific terms or conditions (such as payment before transfer of ownership).
Conclusion:
The essential elements of a contract of sale involve the transfer of ownership of goods for a price, with the parties entering into the agreement having the capacity and free consent. Delivery, an essential part of a sale, refers to the transfer of possession of goods, and there are clear rules governing the place, time, and mode of delivery. The buyer’s duty to accept delivery and the seller’s obligation to ensure the proper goods are delivered are key factors in determining the successful execution of a sale contract.
(g) Explain the procedures of registration of partnership firm. Also state the benefits of registration of partnership firm. 6+4=10
Answer:-
Procedures of Registration of a Partnership Firm:
The registration of a partnership firm is a voluntary process under the Indian Partnership Act, 1932. A partnership firm can operate without registration, but registration provides several advantages to the firm. The procedure for registering a partnership firm is simple and involves the following steps:
Choosing a Name for the Firm:
The partners must first decide on a name for the partnership firm. The name should not be misleading or identical to any existing firm’s name. It should not violate any trademarks or copyright laws.Drafting the Partnership Deed:
A partnership deed is a written agreement between the partners, outlining the terms and conditions of the partnership. This deed typically includes:Name and address of the partnership firm.
Names and addresses of the partners.
Nature of the business.
Duration of the partnership (if fixed).
Capital contributions of each partner.
Profit-sharing ratio.
Rights and duties of the partners.
Terms of dissolution of the partnership.
Although a partnership deed is not mandatory for registration, it is highly recommended as it ensures clarity on the terms governing the partnership.
Filling the Registration Form (Form 1):
The partners must submit a registration application to the Registrar of Firms. The application is made using Form 1, which requires the following details:Name of the partnership firm.
Place of business.
Date of commencement of the business.
Names of the partners and their addresses.
A copy of the partnership deed, if any.
Filing the Form with the Registrar of Firms:
The completed Form 1 must be submitted to the Registrar of Firms in the respective jurisdiction where the partnership firm intends to operate. The application can be submitted in person or by post.Verification of Application:
The Registrar of Firms will verify the submitted documents, including the partnership deed and the details mentioned in Form 1. If all the necessary details are provided and the application is in order, the Registrar will proceed with the registration.Issuance of Registration Certificate:
Once the Registrar is satisfied with the application, the partnership firm is registered. The Registrar will then issue a Certificate of Registration which serves as proof that the firm has been officially registered.
Documents Required for Registration:
Partnership Deed: If available.
Form 1 (Registration Form).
Proof of business address (e.g., electricity bill, lease agreement).
Identity proof of partners (Aadhaar card, passport, etc.).
Photographs of the partners.
PAN card of the firm and partners.
Benefits of Registration of Partnership Firm:
Although registration of a partnership firm is not compulsory, it offers several advantages, including:
Legal Recognition:
A registered partnership firm enjoys legal recognition under the Indian Partnership Act, 1932. The firm can sue and be sued in its name, which provides a level of protection and legal standing in case of disputes.Enforceability of Partnership Deed:
A registered firm can enforce the terms of the partnership deed in a court of law. If the firm is unregistered, the partners cannot file a suit against each other or enforce any terms of the partnership deed in case of disputes.Claim of Set-Off:
A registered partnership firm has the right to claim a set-off (an offsetting claim) against the claims made by an unregistered firm. In other words, if the firm owes money to another firm, it can reduce its liability by making a claim for the amount the other firm owes it.Access to Credit and Loans:
A registered firm can approach financial institutions for loans or credit facilities more easily, as the firm has legal status and can show the registration certificate as proof of legitimacy. Unregistered firms may face difficulties in obtaining loans.Partnership in Good Faith:
Registration ensures that the business relationship between the partners is formalized and documented. This helps in preventing misunderstandings and provides clarity on the roles and responsibilities of each partner.Tax Benefits and Deductions:
Registered partnership firms are eligible for certain tax advantages under the Income Tax Act, such as deductions on business expenses. They can also file their income tax returns more effectively as registered entities.Protection in Case of Dissolution:
If the firm is registered, the partners can follow the prescribed legal procedures for dissolution. An unregistered firm faces difficulties in protecting the interests of its partners during dissolution.Credibility and Reputation:
A registered partnership firm is often viewed as more credible and trustworthy by customers, suppliers, and other business stakeholders. It enhances the firm’s business prospects and opportunities for growth.
Conclusion:
Registering a partnership firm under the Indian Partnership Act, 1932, is a simple process that provides the firm with several legal and practical benefits. These benefits include legal recognition, the ability to enforce the partnership agreement in court, easier access to loans, and tax advantages. While registration is not mandatory, it is highly advisable for the smooth functioning and protection of the firm’s interests.
(h) (1) Discuss the advantages of limited liability partnership. 5
Answer:- A Limited Liability Partnership (LLP) is a hybrid business structure that combines the features of both a partnership and a company. The advantages of an LLP include:
Limited Liability:
The most significant advantage of an LLP is that the liability of the partners is limited to their agreed contribution in the business. Unlike in a traditional partnership, where partners are personally liable for the debts and obligations of the firm, in an LLP, partners' personal assets are protected from business liabilities.Separate Legal Entity:
An LLP has a distinct legal identity, separate from that of its partners. This means that the LLP itself can own property, enter into contracts, and incur debts in its own name. The partners are not personally liable for the LLP's obligations beyond their contribution.Flexible Management Structure:
LLPs provide flexibility in management and operations. Partners in an LLP can directly manage the business or appoint designated partners to manage the firm. Unlike in a company, where a strict management hierarchy exists, LLPs have a less formal structure, allowing partners to manage the business in a way that suits their needs.Tax Benefits:
LLPs are taxed like a partnership firm, meaning they are not subject to the double taxation that applies to companies. The profits of the LLP are passed on to the partners, who then pay taxes on their individual share of the income. This results in a more favorable tax structure compared to a company.No Restriction on Number of Partners:
Unlike a private limited company, which is limited to 200 members, an LLP can have any number of partners. This makes it a flexible option for both small and large businesses, with the ability to grow without the need for restructuring.Ease of Compliance:
LLPs are subject to relatively fewer compliance requirements compared to companies. They do not need to hold annual general meetings (AGMs) or appoint a board of directors, making the regulatory requirements simpler and less burdensome for the partners.
(2) Distinguish between limited liability partnership and partnership. 5
Answer:- Distinguish between limited liability partnership and partnership:-
Note:- An LLP offers the benefits of limited liability, a separate legal identity, and easier compliance, which makes it a favorable option for businesses that want flexibility, protection from personal liability, and growth potential. In contrast, a partnership is simpler but exposes partners to unlimited liability, and its existence depends on the partners’ relationship and agreement.
(i) What is crossing of a cheque? Explain with examples the various types of crossing of a cheque. 2+8=10
Answer:- Crossing of a cheque: A cheque is said to be crossed when two parallel transverse line with or without any words are drawn on the left hand corner of the cheque. It is simply a direction to the paying banker that the cheque should be paid only to a banker. Crossing of cheque is very safe because the holder of the cheque is not allowed to encashed it across the counter of the bank. A crossed cheque provides protection not only to the holder of the cheque but also to the receiving and collecting bankers.
The following parties can cross a cheque:
a) The Drawer: The drawer of a cheque may cross a cheque before issuing it. He may cross it generally or specially.
b) The Holder: The holder of a cheque can cross in the following way:
Ø The holder may cross an open cheque generally or specially.
Ø The holder may specially cross a generally crossed cheque.
Ø The holder may add the words “Not-Negotiable” in a generally or specially crossed cheque.
c) The Banker: The banker to whom the cheque is crossed specially may again cross it especially to another banker's agent, for collection. This is called double special crossing.
The following are the various types of crossing of a cheque:-
General Crossing: When across the face of a cheque two transverse parallel lines are drawn at the top left corner, along with the words & Co., between the two lines, with or without using the words not negotiable. When a cheque is crossed in this way, it is called a general crossing.
Restrictive Crossing: When in between the two transverse parallel lines, the words ‘A/c payee’ is written across the face of the cheque, then such a crossing is called restrictive crossing or account payee crossing. In this case, the cheque can be credited to the account of the stated person only, making it a non-negotiable instrument.
Special Crossing: A cheque in which the name of the banker is written, across the face of the cheque in between the two transverse parallel lines, with or without using the word ‘not negotiable’. This type of crossing is called a special crossing. In a special crossing, the paying banker will pay the sum only to the banker whose name is stated in the cheque or to his agent. Hence, the cheque will be honoured only when the bank mentioned in the crossing orders the same.
Not Negotiable Crossing: When the words not negotiable is mentioned in between the two transverse parallel lines, indicating that the cheque can be transferred but the transferee will not be able to have a better title to the cheque.
Double Crossing: Double crossing is when a bank to whom the cheque crossed specially, further submits the same to another bank, for the purpose of collection as its agent, in this situation the second crossing should indicate that it is serving as an agent of the prior banker, to whom the cheque was specially crossed.
(j) State the obligations of public authorities under the Rights to Information Act, 2005.
Answer:-The Right to Information Act, 2005 (RTI Act) is a landmark legislation in India that empowers citizens to seek information from public authorities, promoting transparency, accountability, and good governance. Under the RTI Act, public authorities are required to fulfill certain obligations to ensure the effective implementation of the law. These obligations include proactive disclosure, provision of information, and facilitation of the process for citizens to access information. Below are the key obligations of public authorities under the RTI Act, 2005:
1. Appointment of Public Information Officers (PIOs):
Under Section 5 of the RTI Act, every public authority is required to appoint Public Information Officers (PIOs) and Assistant Public Information Officers (APIOs). PIOs are responsible for providing the requested information to applicants. APIOs assist the PIOs in their duties, particularly in large public authorities.
The PIO should be designated at different levels of the organization to facilitate smooth information dissemination.
2. Maintenance and Preservation of Records:
Public authorities are required to maintain and update records as per the RTI Act. This involves systematic organization, indexing, and storage of records in a manner that ensures easy access to information when needed.
The records should be maintained for a prescribed period in accordance with the public authority's policies and applicable legal requirements.
A well-organized record management system helps in efficient retrieval of information and enhances the transparency of the organization.
3. Proactive Disclosure of Information:
Under Section 4 of the RTI Act, every public authority is mandated to proactively disclose certain categories of information. This is to ensure that the information is available to the public without them having to make a request.
The categories of information that should be disclosed proactively include:
Organizational structure and functions of the public authority.
Powers and duties of employees.
Financial records, including the budget and expenditure details.
Plans, policies, and decisions taken by the authority.
Publicly available information like annual reports, working conditions, and rules governing the organization.
This proactive disclosure must be made available to the public through:
Websites of the public authorities,
Notices displayed in public offices,
Publications or printed materials.
4. Provision of Information upon Request:
When a request is made for information, public authorities are obligated to respond within 30 days (Section 7 of the RTI Act). The PIO must provide the information requested, subject to exemptions under the Act.
If the request pertains to life or liberty, the information must be provided within 48 hours.
If the request concerns a third party's information, the PIO must give them the opportunity to respond before releasing it.
The public authority can charge a nominal fee for providing information, but the fees should not be so high as to act as a barrier for the applicant.
5. Providing Assistance to the Information Seeker:
Public authorities are required to assist applicants in making their requests for information (Section 5(3) of the RTI Act). This assistance may include:
Helping the applicant frame the request in a proper manner,
Providing guidance on where to seek information if it is not available with the authority.
Additionally, if a person with disabilities or any other vulnerable section requests information, the public authority must ensure that they receive reasonable assistance to access the information.
6. Dealing with Exemptions:
Public authorities are required to ensure that information is provided unless it falls under the exemptions specified in the RTI Act. These exemptions are provided in Section 8 and include:
National security and sovereignty concerns,
Trade secrets and commercial confidentiality,
Personal information that has no relation to public interest or which would affect someone's privacy.
If information is denied based on exemptions, the PIO must provide reasons for the refusal in writing.
7. Appeal and Redressal Mechanism:
Public authorities must facilitate a mechanism for applicants to appeal in case they are dissatisfied with the information provided or if the information is refused. The Act mandates that every public authority must establish an Appellate Authority (Section 19) who will hear appeals if the applicant feels the response from the PIO is unsatisfactory.
If the appeal is not resolved satisfactorily, the applicant can approach the Central Information Commission (CIC) or the State Information Commission (SIC) for a final decision.
8. Transparency and Accountability:
Public authorities are obligated to promote transparency and accountability in their functioning. This includes ensuring that information is accessible, decisions are made in a transparent manner, and public concerns are addressed appropriately.
If the information requested is crucial to the functioning of public authorities or to the public interest, they must be forthcoming with the information even if the requester is unable to fully justify the need.
9. Safeguarding Confidential Information:
While public authorities are required to be transparent, they must also safeguard certain confidential or sensitive information that could be detrimental to public safety, national security, or the interests of an individual. The RTI Act recognizes this balance between transparency and confidentiality.
10. Training and Capacity Building:
Public authorities are responsible for training their staff, including PIOs, to ensure that they understand their obligations under the RTI Act and are equipped to process requests efficiently. This will help in the timely and proper handling of requests and the proactive disclosure of information.
Conclusion:
The obligations of public authorities under the Right to Information Act, 2005 are designed to ensure transparency, accountability, and effective governance. These obligations include appointing designated officers, maintaining records, disclosing information proactively, providing information upon request, and facilitating an appeals mechanism. The RTI Act, by imposing these obligations, seeks to empower citizens, curb corruption, and ensure that public authorities function in a manner that is responsive to public needs and concerns.
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