CS LLM Arjun Chhabra

(Law Maven)
Mo: 62 62 62 143 8
Business Laws (60 Marks)
Important Questions for CA Foundation June 2020
Marks distribution
Chapter Chapter Name Marks Total
No.
1 The Indian Contract Act, 1872
Q1. (a) Practical Question 4 Marks 10 Marks
Q3. (c) Practical Question 3+3 or 6 Marks
Q2. (a) Direct Question 7 Marks 12 Marks
Q6. (a) Direct Question 5 Marks
Total marks from The Indian Contract Act, 1872 22 Marks
2 The Sale of Goods Act, 1930
Q5. (a) Practical Question 6 Marks 6 marks
Q1. (c) Direct Question 4 Marks 10 Marks
Q4. (a) Direct Question 6 Marks
Total marks from The Sale of Goods Act, 1930 16 Marks
3 The Indian Partnership Act, 1932
Q4. (b) Practical Question 6 Marks 6 Marks
Q3. (a) Direct Question 2 10 Marks
Q3. (b) Direct Question 4 Marks
Q6. (b) Direct Question 4 Marks
Total marks from The Indian Partnership Act, 1932 16 Marks
4 The Limited Liability Partnership Act, 2008
Q2. (b) Direct Question 5 Marks 5 Marks
Total marks from The Limited Liability Partnership Act, 2008 5 Marks
5 The Companies Act, 2013
Q6. (c) Practical Question 3 Marks 7 Marks
Q1. (b) Practical Question 4 Marks
Q5. (b) Direct Question 6 Marks 6 Marks
Total marks from The Companies Act, 2013 13 Marks

Grand Total of all 5 Chapters 72

Total Marks of Practical Questions 29 72
Total Marks of Direct Questions 43
You have to attempt 60
Optional Questions 12

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Important Questions & Topics of The Indian Contract Act, 1872
Unit – I Nature of Contracts
Unit Overview ............................................................................................................... 1.2

1.1 What is a Contract? ....................................................................................................... 1.3

1.2 Essentials of a Valid Contract ......................................................................................... 1.4

1.3 Types of Contract .......................................................................................................... 1.8

1.4 Proposal/Offer [Section 2(a) of the Indian Contract Act, 1872] ..................................... 1.12

1.5 Acceptance ................................................................................................................. 1.18

1.6 Communication of Offer and Acceptance ..................................................................... 1.21

1.7 Communication of Performance .................................................................................. 1.24

1.8 Revocation of Offer and Acceptance ............................................................................ 1.24

Q.1 Mr. Ramesh promised to pay ` 50,000 to his wife Mrs. Lali so that she can spend the sum on her 30th birthday.
Mrs. Lali insisted her husband to make a written agreement if he really loved her. Mr. Ramesh made a written
agreement and the agreement was registered under the law. Mr. Ramesh failed to pay the specified amount to his
wife Mrs. Lali. Mrs. Lali wants to file a suit against Mr. Ramesh and recover the promised amount. Referring to the
applicable provisions of the Contract Act, 1872, advise whether Mrs. Lali will succeed.(3 Marks) [Nov 18] CS LLM
Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

Related Question: Shambhu Dayal started “self-service” system in his shop. Smt. Prakash entered the shop, took a
basket and after taking articles of her choice into the basket reached the cashier for payments. The cashier refuses
to accept the price. Can Shambhu Dayal be compelled to sell the said articles to Smt. Prakash? Decide as per the
provisions of the Indian Contract Act, 1872. [MTP March 19, 4 Marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62
62 62 143 8

Q.2 A shop-keeper displayed a pair of dress in the show-room and a price tag of Rs. 2,000 was attached to the
dress. Ms. Lovely looked to the tag and rushed to the cash counter. Then she asked the shop-keeper to receive the
payment and pack up the dress. The shop-keeper refused to hand-over the dress to Ms. Lovely in consideration of
the price stated in the price tag attached to the Ms. Lovely seeks your advice whether she can sue the shop-keeper

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
for the above cause under the Indian Contract Act, 1872. (3Marks) [Nov 18] CS LLM Arjun Chhabra (Law Maven)
Mo: 62 62 62 143 8

Q.3 Explain the modes of revocation of an offer as per the Indian Contract Act, 1872. (5 Marks) [Nov 18] [MTP Aug
18, 7 Marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

Q.4 Define an offer. Explain the essentials of a valid offer. How an offer is different from an invitation to offer? [RTP
Nov 19] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

Q.5 Define the term Acceptance. Discuss the legal provisions relating to communication of Acceptance. [Back
question of Module] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

Q.6 Ramaswamy proposed to sell his house to Ramanathan. Ramanathan sent his Acceptance by
Post. Next day, Ramanathan sends a telegram withdrawing his acceptance. Examine the validity of
the acceptance, in the light of the following -

A. The telegram of revocation of acceptance is received by Ramaswamy before the letter of

acceptance (by Post).

B. The telegram of revocation and letter of acceptance both reached together. [RTP Nov 18] CS
LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Unit– 2: Consideration
Very Important Unit
2.1 What is Consideration? ................................................................................................ 1.34

2.2 Legal Rules Regarding Consideration ............................................................................ 1.35

2.3 Suit by a Third Party to a Contract ............................................................................... 1.37

2.4 Validity of an Agreement without Consideration .......................................................... 1.38

Q.1 Define consideration. What are the legal rules regarding consideration under the Indian Contract Act, 1872?
(7 Marks) [Nov 19] [Last time] [RTP Nov, 2018] [MTP March 19, 5 Marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62
62 62 143 8
Q.2 “Only a person who is party to a contract can sue on it”. Explain this statement and describe its exceptions, if
any. [RTP May 20]
Or
Stranger to a contract cannot sue, However in some cases even a stranger to a contract may enforce a claim.
Explain [RTP May 18] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8
Related Question: Mr. Sohanlal sold 10 acres of his agricultural land to Mr. Mohanlal on 25th September 2018 for
` 25 Lakhs. The Property papers mentioned a condition, amongst other details, that whosoever purchases the
land is free to use 9 acres as per his choice but the remaining 1 acre has to be allowed to be used by Mr. Chotelal,
son of the seller for carrying out farming or other activity of his choice.
On 12th October, 2018, Mr. Sohanlal died leaving behind his son and life. On 15th October, 2018 purchaser started
construction of an auditorium on the whole 10 acres of land and denied any land to the son.
Now Mr. Chotelal wants to file a case against the purchaser and get a suitable redressed. Discuss the above in light
of provisions of Indian Contract Act, 1872 and decide upon Mr. Chotelal’s plan of action? (4 Marks) [May 2019] CS
LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8
Q.3 Mr. Balwant, an old man, by a registered deed of gift, granted certain landed property to Ms. Reema, his
daughter. By the terms of the deed, it was stipulated that an annuity of` 20, 000 should be paid every year to Mr.
Sawant, who was the brother of Mr. Balwant.
On the same day Ms. Reema made a promise to Mr. Sawant and executed in his favour an agreement to give effect
to the stipulation. Ms. Reema failed to pay the stipulated sum. In an action against her by Mr. Sawant, she
contended that since Mr. Sawant had not furnished any consideration, he has no right of action.

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Examining the provisions of the Indian Contract Act, 1872, decide, whether the contention of Ms. Reema is valid?
[RTP Nov 2018] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8
Q.3 State the exceptions to the rule "An agreement without consideration is void".
OR
No Consideration No Contract, Comment.
[May 2018, 5 Marks] [MTP April 19, 5 Marks] [MTP Oct 18, 5 Marks] [MTP March 18, 5 Marks] [RTP May 19] [RTP
Nov 19] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8
Q.4 “To form a valid contract, consideration must be adequate”. Comment. [Back Question of Module] [MTP Oct
19, 5 Marks] [MTP Aug 18, 5 Marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Unit – 3: Other Essential Elements of a Contract
3.1 Capacity to Contract .................................................................................................... 1.44

3.2 Free Consent ............................................................................................................... 1.48

3.3 Elements Vitiating Free Consent .................................................................................. 1.49

3.4 Legality of Object and Consideration............................................................................ 1.58

3.5 Void Agreements ......................................................................................................... 1.62

Q.1 Explain the term 'Coercion" and what are the effects of coercion under Indian Contract Act, 1872. [Nov
19, 5 Marks] [MTP Oct 18, 5 Marks] [RTP May 18] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8
Q.2 Discuss the essentials of Undue Influence as per the Indian Contract Act, 1872. [May 2019, 5 Marks]
Related Question: Explain the circumstances in which the person is deemed to be in a position to dominate
the will of the other person under the Indian Contract Act, 1872. [RTP May 20]
Related Question: A student was induced by his teacher to sell his brand new car to the latter at less than
the purchase price to secure more marks in the examination. Accordingly the car was sold. However, the father
of the student persuaded him to sue his teacher. State on what ground the student can sue the teacher? [RTP
May 18] [RTP Nov 19] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

Q.3 Define Fraud. Whether "mere silence will amount to fraud" as per the Indian Contract Act, 1872?
[May, 2018, 5 Marks) [MTP April 19, 5 Marks] [MTP March 18, 5 Marks] [RTP Nov 18]

Related Question: P sells by auction to Q a horse which P knows to be unsound. The horse appears to
be sound but P knows about the unsoundness of the horse. Is this contract valid in the following
circumstances:

(a) If P says nothing about the unsoundness of the horse to Q.

(b) If P says nothing about it to Q who is P’s daughter who has just come of age.

(c) If Q says to P “If you do not deny it, I shall assume that the horse is sound.” P says nothing.
[RTP May 19] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8
Q.4 (i) Distinguish between wagering agreement and contract of insurance. [May 2018, 2 Marks]

OR

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
(ii) Examine with reason that the given statement is correct or incorrect "Minor is liable to pay for
the necessaries supplied to him". [May 2018, 2 Marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62
143 8

Q.5 Ishaan, aged 16 years, was studying in an engineering college. On 1st March, 2016 he took a loan of `

2 lakhs from Vishal for the payment of his college fee and agreed to pay by 30th May, 2017. Ishaan possesses
assets worth ` 15 lakhs. On due date Ishaan fails to pay back the loan to Vishal. Vishal now wants to recover
the loan from Ishaan out of his assets. Decide whether Vishal would succeed referring to the provisions of
the Indian Contract Act, 1872. [MTP March 18, 4 Marks] [RTP May 2020] CS LLM Arjun Chhabra (Law Maven)
Mo: 62 62 62 143 8

Q.6 (a) Explain the concept of ‘misrepresentation’ in matters of contract.

(b) Sohan induced Suraj to buy his motorcycle saying that it was in a very good condition. After taking the
motorcycle, Suraj complained that there were many defects in the motorcycle. Sohan proposed to
get it repaired and promised to pay 40% cost of repairs. After a few days, the motorcycle did not work
at all. Now Suraj wants to rescind the contract. Decide giving reasons. [RTP May 19] [RTP May 20]

Related Question: Mr. SAMANT owned a motor car. He approached Mr. CHHOTU and offered to sale his
motor car for Rs. 3, 00,000. Mr. SAMANT told Mr. CHHOTU that the motor car is running at the rate of 30
KMs per litre of petrol. Both the fuel meter and the speed meter of the car were working perfectly. Mr.
CHHOTU agreed with the proposal of Mr. SAMANT and took delivery of the car by paying Rs. 3, 00,000/- to
Mr. SAMANT. After 10 days, Mr. CHHOTU came back with the car and stated that the claim made by Mr.
SAMANT regarding fuel efficiency was not correct and therefore there was a case of misrepresentation.
Referring to the provisions of the Indian Contract Act, 1872, decide and write whether Mr. CHHOTU can
rescind the contract in the above ground. [MTP Aug 18, 6 Marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62
62 62 143 8

Q.7 'X' agreed to become an assistant for 2 years to 'Y' who was practicing Chartered Accountant at
Jodhpur. It was also agreed that during the term of agreement 'X' will not practice as a Chartered
Accountant on his own account within 20 kms of the office of 'Y' at Jodhpur. At the end of one year,
'X' left the assistantship of 'Y' and started practice on his own account within the said area of 20
kms. [RTP May 18] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

Q.8 Contract of Insurance Vs Wagering [May 2018, 2 Marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
62 143 8

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Unit – 4: Performance of Contract
4.1 Obligations of parties to contracts (Section 37) ............................................................ 1.75

4.2 Effect of Refusal to Accept Offer of Performance .......................................................... 1.76

4.3 Effect of a Refusal of Party to Perform wholly .............................................................. 1.77

4.4 By Whom a Contract may be Performed (Section 40, 41 and 42).................................... 1.77

4.5 Distinction between Succession and Assignment .......................................................... 1.79

4.6 Liability of Joint Promisor & Promisee.......................................................................... 1.79

4.7 Time and Place for Performance of the Promise ........................................................... 1.81

4.8 Performance of Reciprocal Promise ............................................................................. 1.82

4.9 Appropriation of Payments .......................................................................................... 1.86

4.10 Contracts, Which Need not be Performed – with the consent of both the parties .......... 1.87

4.11 Discharge of a Contract ............................................................................................... 1.89

Q.1 Mr. Sonumal a wealthy individual provided a loan of Rs 80,000 to Mr. Datumal on 26.02.2019. The
borrower Mr. Datumal asked for a further loan of Rs 1,50,000. Mr. Sonumal agreed but provided
the loan in parts at different dates. He provided Rs. 1,00,000 on 28.02.2019 and remaining ` 50,000 on
03.03.2019.

On 10.03.2019 Mr. Datumal while paying off part Rs. 75,000 to Mr. Sonumal insisted that the lender
should adjusted Rs 50,000 towards the loan taken on·03.03.2019 and balance as against the loan on
26.02.2019.

Mr. Sonumal objected to this arrangement and asked the borrower to adjust in the order of date of
borrowal of funds.

Now you decide:

(i) Whether the contention of Mr. Datumal correct or otherwise as per the provisions of the
Indian Contract Act, 1872?

(ii) What would be the answer in case the borrower does not insist on such order of adjustment
of repayment?

(iii) What would the mode of adjustment/appropriation of such part payment in case neither

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Mr. Sonumal nor Mr. Datumal insist any order of adjustment on their part? [November 19,
6 Marks] [Last Time] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8
Q.2 Mr. Rich aspired to get a self-portrait made by an artist. He went to the workshop of Mr. C an artist and
asked whether he could sketch the former’s portrait on oil painting canvass. Mr. C agreed to the offer and
asked for Rs. 50,000 as full advance payment for the above creative work. Mr. C clarified that the painting
shall be completed in 10 sittings and shall take 3 months.

On reaching to the workshop for the 6th sitting, Mr. Rich was informed that Mr. C became paralyzed and
would not be able to paint for near future. Mr. C had a son Mr. K who was still pursuing his studies and
had not taken up his father’s profession yet?
Discuss in light of the Indian Contract Act, 1872?
(i) Can Mr. Rich ask Mr. K to complete the artistic work in lieu of his father?
(ii) Could Mr. Rich ask Mr. K for refund of money paid in advance to his f a t h e r ? [May 19, 6
marks]
Related Question: Enumerate the persons by whom a contract may be performed under the provisions of
the Indian Contract Act, 1872. [MTP Oct 18, 7 Marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143
8
Q.3 Mr. X and Mr. Y entered into a contract on 1st August, 2018, by which. Mr. X had to supply 50 tons of sugar
to Mr. Y at a certain price strictly within a period of 10 days of the contract. Mr. Y also paid an amount of
Rs. 50,000 towards advance as per the terms of the above contract. The mode of transportation available

between their places is roadway only. Severe flood came on 2nd A u g u s t , 2018 and the only road
connecting their places was damaged and could not be repaired within fifteen days. Mr. X offered to supply

sugar on 20th August, 2018 for which Mr. Y did not agree. On 1st September, 2018, Mr. X claimed
compensation of Rs. 10,000 from Mr. Y for refusing to accept the supply of sugar, which was not there within
the purview of the contract. On the other hand, Mr. Y claimed for refund of Rs. 50.000 which he had paid
as advance in terms of the contract. Analyse the above situation in terms of the provisions of the Indian
Contract Act, 1872 and decide on Y’s contention.[Nov 18, 4 Marks] [MTP March 19, 6 Marks] CS LLM Arjun
Chhabra (Law Maven) Mo: 62 62 62 143 8

Related Question: Mr. JHUTH entered into an agreement with Mr. SUCH to purchase his (Mr. SUCH’s) motor
car for Rs. 5,00,000/- within a period of three months. A security amount of Rs. 20,000/- was also paid by Mr.
JHUTH to Mr. SUCH in terms of the agreement. After completion of three months of entering into the
agreement, Mr. SUCH tried to contract Mr. JHUTH to purchase the car in terms of the agreement. Even after

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
lapse of another three month period, Mr. JHUTH neither responded to Mr. SUCH, nor to his phone calls.
After lapse of another period of six months. Mr. JHUTH contracted Mr. SUCH and denied to purchase the
motor car. He also demanded back the security amount of Rs. 20,000/- from Mr. SUCH. Referring to the
provisions of the Indian Contract Act, 1872, state whether Mr. SUCH is required to refund the security
amount to Mr. JHUTH.
Also examine the validity of the claim made by Mr. JHUTH, if the motor car would have destroyed by an
accident within the three month’s agreement period. [MTP Aug 18, 4 Marks] CS LLM Arjun Chhabra (Law
Maven) Mo: 62 62 62 143 8

Q.4 X, Y and Z are partners in a firm. They jointly promised to pay Rs. 3,00,000 to D. Y become insolvent and his
private assets are sufficient to pay 1/5 of his share of debts. X is compelled to pay the whole amount to
D. Examining the provisions of the Indian Contract Act, 1872, decide the extent to which X can recover the
amount from Z. [May 18, 4 Marks] [MTP April 19, 4 Marks] [RTP Nov 18] CS LLM Arjun Chhabra (Law Maven)
Mo: 62 62 62 143 8

Related Question: X, Y and Z jointly borrowed ` 50,000 from A. The whole amount was repaid to A by Y.
Decide in the light of the Indian Contract Act, 1872 whether:

(i) Y can recover the contribution from X and Z,

(ii) Legal representatives of X are liable in case of death of X,

(iii) Y can recover the contribution from the assets, in case Z becomes insolvent. [RTP Nov 19]

Q.5 Grounds to Discharge Contract. [MTP April 19, 7 Marks] [MTP March 18, 7 Marks] CS LLM Arjun Chhabra
(Law Maven) Mo: 62 62 62 143 8

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Unit– 5: Breach of Contract and its Remedies
Unit Overview
5.1 Anticipatory Breach of Contract
5.2 Actual Breach of Contract
5.3 Suit for Damages
5.4 Penalty and Liquidated Damages (Section 74)

Q.1 M Ltd., contract with Shanti Traders to make and deliver certain machinery to them by 30.6.2017 for
` 11.50 lakhs. Due to labour strike, M Ltd. Could not manufacture and deliver the machinery to Shanti
Traders. Later, Shanti Traders procured the machinery from another manufacturer for ` 12.75 lakhs. Due
to this Shanti Traders was also prevented from performing a contract which it had made with Zenith
Traders at the time of their contract with M Ltd. and were compelled to pay compensation for breach
of contract. Advise Shanti Traders the amount of compensation which it can claim from M Ltd., referring
to the legal provisions of the Indian Contract Act, 1872. [May 18, 6 Marks] [MTP April 19 , 6 marks] [MTP
Aug 18 Direct Question 5 marks] [RTP May 18] [MTP Oct 19, 6 Marks] [RTP Nov 19 Direct Question] [MTP
March 18, 6 Marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

Related Question: ‘X’ entered into a contract with ‘Y’ to supply him 1,000 water bottles @ ` 5.00 per
water bottle, to be delivered at a specified time. Thereafter, ‘X’ contracts with ‘Z’ for the purchase of
1,000 water bottles @ ` 4.50 per water bottle, and at the same time told ‘Z’ that he did so for the purpose
of performing his contract entered into with ‘Y’. ‘Z’ failed to perform his contract in due course and
market price of each water bottle on that day was ` 5.25 per water bottle. Consequently, ‘X’ could not
procure any water bottle and ‘Y’ rescinded the contract. Calculate the amount of damages which ‘X’ could
claim from ‘Z’ in the circumstances? What would be your answer if ‘Z’ had not informed about the ‘Y’s
contract? Explain with reference to the provisions of the Indian Contract Act, 1872. [MTP Oct 2018, 6
Marks - Based on Bottles] [MTP March 18, 6 Marks- Based on Bottles] [MTP April 19]

Related Direct Question: “When a contract has been broken, the party who suffers by such a breach is
entitled to receive compensation for any loss or damage caused to him”. Discuss. [Module Back Question]

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Related Direct Question: What is the law relating to determination of compensation, on breach of
contract, contained in section 73 of the Indian Contract Act, 1872 [RTP Nov 19] CS LLM Arjun Chhabra (Law
Maven) Mo: 62 62 62 143 8

Q.2 “Liquidated damage is a genuine pre-estimate of compensation of damages for certain anticipated
breach of contract whereas Penalty on the other hand is an extravagant amount stipulated and is clearly
unconscionable and has no comparison to the loss suffered by the parties”. Explain. [Module Back
question] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Unit – 6: Contingent and Quasi Contracts
Unit Overview
6.1 Contingent Contracts
6.2 Rules Relating to Enforcement
6.3 Quasi Contracts

Q.1 What is Contingent Contract? Discuss the essentials of Contingent Contract as per the Indian
Contract Act, 1872. [Nov 18, 7 Marks] [RTP May 19] [RTP May 20] CS LLM Arjun Chhabra (Law Maven)
Mo: 62 62 62 143 8

Q.2 X found a wallet in a restaurant. He enquired of all the customers present there but the true owner
could not be found. He handed over the same to the manager of the restaurant to keep till the true owner
is found. After a week he went back to the restaurant to enquire about the wallet. The manager refused
to return it back to X, saying that it did not belong to him.
In the light of the Indian Contract Act, 1872, can X recover it from the Manager? [Nov 19, 4 Marks]

Related Question: Explain the term ‘Quasi Contracts’ and state their Characteristics. [Back Question of
Module]

Related Question: Explain the meaning of ‘Quasi-Contracts’. State the circumstances which are identified as
quasi contracts by the Indian Contract Act, 1872. [RTP Nov 19] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62
62 143 8

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CS LLM Arjun Chhabra
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Mo: 62 62 62 143 8
Important Questions & Topics of The Sale Of Goods Act, 1930
Unit 1: Formation of the Contract of Sale
Unit Overview
1.1 Definitions
1.2 Sale and agreement to sell (Section 4)
1.3 Distinction between Sale and an Agreement to Sell
1.4 Sale Distinguished from other Similar Contracts
1.5 Contract of Sale how made (Section 5)
1.6 Subject Matter of Contract of Sale
1.7 Ascertainment of Price (Section 9 and 10)

Q.1 Differentiate between Ascertained and Unascertained Goods with example. [Nov 18, 4 Marks] CS
LLM Arjun Chhabra (Law Maven) CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8
Q.2 What is meant by delivery of goods under the Sale of Goods Act, 1930? State various modes/forms
of delivery. [May 18, 4 Marks] [RTP May 18] [MTP March 19, 4 Marks] [MTP Oct 19, 4 Marks] CS LLM
Arjun Chhabra (Law Maven)
Q.3 What are the consequences of “destruction of goods” under the Sale of Goods Act, 1930, where the
goods have been destroyed after the agreement to sell but before the sale is affected. [Back Question
of Module] [RTP May 18] CS LLM Arjun Chhabra (Law Maven)
Related Practical Question: With a view to boost the sales, Hanuman Automobiles sells a motorcar to
Mr. A on trial basis for a period of three days with a condition that if Mr. A is not satisfied with the
performance of the car, he can return back the car. However, the car was destroyed in a fire accident at
the place of Mr. A before the expiry of three days. Decide whether Mr. A is liable for the loss suffered.

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Unit– 2: Conditions & Warranties
Unit Overview
2.1 Stipulation as to Time (Section 11)
2.2 Introduction - Conditions and Warranties
2.3 When condition to be treated as warranty (Section 13)
2.4 Express and Implied Conditions and Warranties (Section 14-17)
2.5 Caveat Emptor

Q.1 Mrs. Geeta went to the local rice and wheat wholesale shop and asked for 100 kgs of Basmati rice. The
Shopkeeper quoted the price of the same as Rs. 125 per kg to which she agreed. Mrs. Geeta insisted that she
would like to see the sample of what will be provided to her by the shopkeeper before she agreed upon such
purchase.
The shopkeeper showed her a bowl of rice as sample. The sample exactly corresponded to the entire lot.
The buyer examined the sample casually without noticing the fact that even though the sample was that of
Basmati Rice but it contained a mix of long and short grains.
The cook on opening the bags complained that the dish if prepared with the rice would not taste the same
as the quality of rice was not as per requirement of the dish.
Now Mrs. Geeta wants to file a suit of fraud against the seller alleging him of selling mix of good and cheap
quality rice. Will she be successful?
Explain the basic law on sale by sample under Sale of Goods Act 1930?
Decide the fate of the case and options open to the buyer for grievance redressal as per the provisions of Sale
of Goods Act 1930?
What would be your answer in case Mrs. Geeta specified her exact requirement as to length of rice? [Nov 19,
6 marks] CS LLM Arjun Chhabra (Law Maven) Mo: 62 62 62 143 8

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
Q.2 M/s Woodworth & Associates, a firm dealing with the wholesale and retail buying and selling
of various kinds of wooden logs, customized as per the requirement of the customers. They dealt
with Rose wood, Mango wood, Teak wood, Burma wood etc.
Mr. Das, a customer came to the shop and asked for wooden logs measuring 4 inches broad and 8
feet long as required by the carpenter. Mr. Das specifically mentioned that he required the
wood which would be best suited for the purpose of making wooden doors and window frames.
The Shop owner agreed and arranged the wooden pieces cut into as per the buyers requirements.

The carpenter visited Mr. Das's house next day, and he found that the seller has supplied Mango
Tree wood which would most unsuitable for the purpose. The: carpenter asked Mr. Das
to return the wooden logs as it would not meet his requirements.

The Shop owner refused to return the wooden logs on the plea that logs were cut to specific
requirements of Mr. Das and hence could not be resold.

(i) Explain the duty of the buyer as well as the seller according to the doctrine of “Caveat Emptor”.
(ii) Whether Mr. Das would be able to get the money back or the right kind of wood as required
serving his purpose? [May 19,6 Marks] CS LLM Arjun Chhabra (Law Maven)

Related Question: For the purpose of making uniform for the employees, Mr. Yadav bought dark
blue coloured cloth from Vivek, but did not disclose to the seller the purpose of said purchase.
When uniforms were prepared and used by the employees, the cloth was found unfit. However,
there was evidence that the cloth was fit for caps, boots and carriage lining. Advise Mr. Yadav
whether he is entitled to have any remedy under the sale of Goods Act, 1930? [RTP May 19]

Related Question: “There is no implied warranty or condition as to quality or fitness for any
particular purpose of goods supplied under a contract of sale.” Discuss the significance and State
exceptions, if any. [RTP Nov 18]
Q.3 Discuss the various types of implied warranties as per the Sales of Goods Act, 1930? [May 19,
4 Marks] [RTP May 20]
Q.4 What is the Doctrine of "Caveat Emptor”? What are the exceptions to the Doctrine of "Caveat
Emptor”? [Nov 18, 6 Marks] [MTP Aug 18, 6 Marks] [RTP May 18]

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Q.5 What are the implied conditions in a contract of ‘Sale by sample’ under the Sale of Goods Act, 1930?
State also the implied warranties operatives under the said Act. [MTP March 18, 6 Marks] [RTP Nov 19]
[April 19, 6 Marks]

Related Question: Ram consults Shyam, a motor-car dealer for a car suitable for touring purposes to
promote the sale of his product. Shyam suggests ‘Maruti’ and Ram accordingly buys it from Shyam.
The car turns out to be unfit for touring purposes. What remedy Ram is having now under the Sale of
Goods Act, 1930? [RTP Nov 18]
Q.6 Explain the “condition as to Merchantability” and “condition as to wholesomeness” under the
Sale of Goods Act, 1930. [RTP May 18]

Related Question: Mr. Amit was shopping in a self-service Super market. He picked up a bottle of
cold drink from a shelf. While he was examining the bottle, it exploded in his hand and injured him.
He files a suit for damages against the owner of the market on the ground of breach of condition.
Decide under the Sale of Goods Act, 1930, whether Mr. Amit would succeed in his claim? [RTP May
20]

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Unit– 3: Transfer of Ownership and Delivery of Goods
3.1 Passing of Property (Sections 18 – 26) .......................................................................... 2.35

3.2 Risk prima facie passes with property (Sections 26) .................................................... 2.40

3.3 Transfer of Title by non owners (Sections 27 – 30) ........................................................ 2.41

3.4 Performance of the Contract of Sale (Sections 31 – 44)................................................ 2.43

Q.1 Referring to the provisions of the Sale of Goods Act, 1930, state the circumstances under which when
goods are delivered to the buyer “on approval” or “on sale or return” or other similar terms, the property
therein passes to the buyer.
M/s PREETI owned a motor car which she handed over to Mr. JOSHI on sale or return basis. After a week,
Mr. JOSHI pledged the motor car to Mr. GAJESH. Ms. PREETI now claims back the motor car from Mr.
GAJESH. Will she succeed” Referring to the provisions of the Sale of Goods Act, 1930, decide and examine
what recourse is available to Ms. PREETI. [MTP Aug 18, 6 Marks] [RTP Nov 18]
Q.2 Mr. Samuel agreed to purchase 100 bales of cotton from Mr. Varun, out of his large stock and sent his
men to take delivery of the goods. They could pack only 60 bales. Later on, there was an accidental fire and
the entire stock was destroyed including 60 bales that were already packed. Referring to the provisions of
the Sale of Goods Act, 1930 explain as to who will bear the loss and to what extent? [MTP Oct 18, 6 Marks]
[MTP March 18, 6 Marks] [RTP May 20] [MTP March 19, 6 Marks]
Q.3 J the owner of a Fiat car wants to sell his car. For this purpose he hand over the car to P, a mercantile
agent for sale at a price not less than ` 50, 000. The agent sells the car for ` 40, 000 to A, who buys the car
in good faith and without notice of any fraud. P misappropriated the money also. J sues A to recover the
Car. Decide given reasons whether J would succeed. [RTP May 18] [RTP Nov 19]
Q.4 “Nemo Dat Quod Non Habet” – “None can give or transfer goods what he does not himself own.”
Explain the rule and state the cases in which the rule does not apply under the provisions of the Sale of
Goods Act, 1930. [May 19, 6 Marks] [RTP May 20] [Back Question of Module]

Q.5 Mr. G sold some goods to Mr. H for certain price by issue of an invoice, but payment in respect of the same
was not received on that day. The goods were packed and lying in the godown of Mr. G. The goods were
inspected by H's agent and were found to be in order. Later on, the dues of the goods were settled in cash. Just
after receiving cash, Mr. G asked Mr. H that goods should be taken away from his godown to enable him to store
other goods purchased by him. After one day, since Mr. H did not take delivery of the goods, Mr. G kept the
goods out of the godown in an open space. Due to rain, some goods were damaged.

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Referring to the provisions of the Sale of Goods Act, 1930, analyse the above situation and decide who will be
held responsible for the above damage. Will your answer be different, if the dues were not settled in cash and
are still pending? [Nov 18, 6 Marks] [MTP Oct 19, 6 Marks]

Q.6 What is appropriation of goods under the Sale of Goods Act, 1930? State the essentials regarding
appropriation of unascertained goods. [May 18, 6 Marks] [Nov 19, 4 Marks]

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Unit– 4: Unpaid Seller
4.1 Unpaid Seller ............................................................................................................... 2.54

4.2 Rights of an Unpaid Seller ............................................................................................ 2.55

4.3 Right of unpaid seller against the goods .................................................................... 2.56

4.4 Rights of unpaid seller against the buyer (Section 55-61) ............................................ 2.61

4.5 Remedies of Buyer against the Seller............................................................................ 2.62

4.6 Auction Sale (Section 64) ............................................................................................. 2.64

4.7 Inclusion of increased or decreased Taxes in contract of sale (Section 64A) ................... 2.65

Q.1 Mr. D sold some goods to Mr. E for ` 5, 00,000 on 15 days credit. Mr. D delivered the goods. On due date
Mr. E refused to pay for it. State the position and rights of Mr. D as per the Sale of Goods Act, 1930. [May
18, 6 Marks] [MTP April 19, 6 marks]
Q.2 What are the rights of an unpaid seller against goods under the Sale of Goods Act, 1930? [Nov 19, 6 Marks]
Q.3 Explain the provisions of law relating to unpaid seller’s ‘right of lien’ and distinguish it from the “right of
stoppage the goods in transit”. [MTP Oct 18, 6 marks] [RTP Nov 18] [MTP Macrh 19, 6 Marks]
Q.4 Describe the term “unpaid seller” under the Sale of Goods Act, 1930? When can an unpaid seller exercise
the right of stoppage of goods in transit? [RTP May 18] [MTP March 19, 6 marks] [MTO Oct 19, 6 Marks]

Related Question: Ram sells 200 bales of cloth to Shyam and sends 100 bales by lorry and 100 bales by Railway.
Shyam receives delivery of 100 bales sent by lorry, but before he receives the delivery of the bales sent by
railway, he becomes bankrupt. Ram being still unpaid, stops the goods in transit. The official receiver, on
Shyam’s insolvency claims the goods. Decide the case with reference to the provisions of the Sale of Goods
Act, 1930. [RTP May 19]
Q.5 Suraj sold his car to Sohan for ` 75,000. After inspection and satisfaction, Sohan paid ` 25,000 and took
possession of the car and promised to pay the remaining amount within a month. Later on Sohan refuses to
give the remaining amount on the ground that the car was not in a good condition. Advice Suraj as to what
remedy is available to him against Sohan. [RTP Nov 19]
Q.6 What are the rights of buyer against the seller, if the seller commits a breach of contract under the Sale of
Goods Act, 1930? [RTP May 20]

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Important Questions & Topics of The Indian Partnership Act, 1932
Unit– 1: General Nature of a Partnership
1.1 Definition of ‘Partnership’, ‘Partner’, ‘firm’ and ‘firm name’ (Section 4) ........................ 3.2

1.2 Elements of Partnership ................................................................................................. 3.2

1.3 True Test of Partnership ................................................................................................ 3.4

1.4 Partnership Distinguished From other Forms of Organisation .......................................... 3.5

1.5 Kinds of Partnerships ..................................................................................................... 3.9

1.6 Types of Partners ......................................................................................................... 3.11

Q.1 "Whether a group of persons is or is not a firm, or whether a person is or not a partner in a firm." Explain
the mode of determining existence of partnership as per the Indian Partnership Act, 1932? [May 19, 4 Marks]
Q.2 Mr. M, Mr. N and Mr. P were partners in a firm, which was dealing in refrigerators. On 1st October,
2018, Mr. P retired from partnership, but failed to give public notice of his retirement. After his retirement,
Mr. M, Mr. N and Mr. P visited a trade fair and enquired about some refrigerators with latest techniques.
Mr. X, who was exhibiting his refrigerators with the new techniques was impressed with the interactions
of Mr. P and requested for the visiting card of the firm. The visiting card also included the name of Mr. P
as a partner even though he had already retired. Mr. X. supplied some refrigerators to the firm and could
not recover his dues from the firm. Now, Mr. X wants to recover the dues not only from the firm, but also
from Mr. P.
Analyse the above case in terms of the provisions of the Indian Partnership Act, 1932 and decide whether
Mr. P is liable in this situation. [Nov 18, 3 Marks]
Q.3 What is the conclusive evidence of partnership? State the circumstances when partnership is
not considered between two or more parties. [May 18, 4 Marks] [MTP Oct 19, 4 Marks]

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Unit– 2
2.1 Relation of Partners to one another ............................................................................. 3.19

2.2 Partnership Property (Section 14) ................................................................................ 3.22

2.3 Personal Profit Earned by Partners (Section 16) ............................................................ 3.23

2.4 Rights and Duties of Partners after a change in the Firm (Section 17) ............................ 3.24

2.5 Relation of Partners to Third Parties ............................................................................ 3.25

2.6 Effect of admissions by a partner (Section 23) .............................................................. 3.27

2.7 Effect of notice to acting partner (Section 24) ............................................................... 3.28

2.8 Liability to Third Parties (Section 25 to 27) ................................................................... 3.28

2.9 Rights of Transferee of a Partner’s interest (Section 29) .............................................. 3.30

2.10 Minors admitted to the benefits of partnership (Section 30) ......................................... 3.31

2.11 Legal Consequences of Partner coming in and going out ............................................... 3.33

2.12 Rights of outgoing partner to carry on competing business (Section 36) ......................... 3.38

2.13 Right of outgoing partner in certain cases to share subsequent profits (Section 37) ....... 3.38

2.14 Revocation of continuing guarantee by change in firm (Section 38) ............................... 3.39

Q.1 When the continuing guarantee can be revoked under the Indian Partnership Act, 1932? [Nov 19, 2 Marks]

OR

What do you mean by Goodwill as per the provisions of Indi an P a r t n e r s h i p Act, 1932? [Nov 19, 2 Marks]

Q.2 With reference to the provisions of Indian partnership Act, 1932 explain the various effects of insolvency
of a partner. [Nov 19, 4 Marks]

Related Question: State the legal consequences of the following as per the provisions of the Indian Partnership
Act, 1932:

(i) Retirement of a partner

(ii) Insolvency of a partner [RTP Nov 19]

Q.3 Master X was introduced to the benefits of partnership of M/s ABC & Co. With the consent of all partners.
After attaining majority, more than six months elapsed and he failed to give a public notice as to whether he

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elected to become or not to become a partner in the firm. Later on, Mr. L, a supplier of material to M/s ABC &
Co., filed a suit against M/s ABC & Co. for recovery of the debt due.

In the light of the Indian Partnership Act, 1932, explain:

(i) To what extent X will be liable if he failed to give public notice after attaining majority?

(ii) Can Mr. L recover his debt from X? [Nov 19, 6 Marks]

(i) Q.4 What is the provision related to the effect of notice to an acting partner of the firm as per the Indian
Partnership Act, 1932? [May 19, 2 Marks]

OR

Discuss the provisions regarding personal profits earned by a partner under the Indian Partnership Act, 1932?
[May 19, 2 Marks]

Q.5 M/s XYZ & Associates, a partnership firm with X, Y, Z as senior partners were engaged in the business
of carpet manufacturing and exporting to foreign countries. On 25th August, 2016, they inducted Mr. G, an
expert in the field of carpet manufacturing as their partner. On 10th January 2018, Mr. G was blamed for
unauthorized activities and thus expelled from the partnership by united approval of rest of the partners.

(i) Examine whether action by the partners was justified or not?

(ii) What should have the factors to be kept in mind prior expelling a partner from the firm by other partners
according to the provisions of the Indian Partnership Act, 1932? [May 19 ,6 Marks]

Related Question: X, Y and Z are partners in a Partnership Firm. They were carrying their business successfully for
the past several years. Spouses of X and Y fought in ladies club on their personal issue and X’s wife was hurt badly.
X got angry on the incident and he convinced Z to expel Y from their partnership firm. Y was expelled from
partnership without any notice from X and Z. Considering the provisions of the Indian Partnership Act, 1932, state
whether they can expel a partner from the firm. What are the criteria for test of good faith in such circumstances?
[May 18, 6 Marks] [MTP April 19]

Related Question: Ram & Co., a firm consists of three partners A, B and C having one third share each in the firm.
According to A and B, the activities of C are not in the interest of the partnership and thus want to expel C from
the firm. Advise A and B whether they can do so quoting the relevant provisions of the Indian Partnership Act,
1932. [RTP Nov 18]

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Q.6 “Though a minor cannot be a partner in a firm, he can nonetheless be admitted to the benefits of
partnership."

(I) Referring to the previsions of the Indian Partnership Act, 1932, state the rights which can be enjoyed by
a minor partner. [Nov 18, 4 Marks]

(II) A. State the liabilities of a minor partner both:

(i) Before attaining majority and

(ii) After attaining majority. [Nov 18, 2 Marks] [MTP March 19, 6 Marks]

OR

B. State the legal position of a minor partner after attaining majority:

(i) When he opts to become a partner of the same firm.

(ii) When he decide not to become a partner. [Nov 18, 2 Marks]

Related Question: Whether a minor may be admitted in the business of a partnership firm? Explain the rights
of a minor in the partnership firm. [RTP May 18] [MTP Oct 18, 6 Marks]

Q.7 Mr. A. Mr. B and Mr. C were partners in a partnership firm M/s ABC & Co., which is engaged in the business
of trading of branded furniture. The name of the partners was clearly written along with the firm name in front
of the head office of the firm as well as on letter-head of the firm. On 1st October, 2018, Mr. C passed away. His
name was neither removed from the list of partners as stated in front of the head office nor from the letter-
heads of the firm. As per the terms of partnership, the firm continued its operations with Mr. A and Mr. B as
partners. The accounts of the firm were settled and the amount due to the legal heirs of Mr. C was also
determined on 10th October, 2018. But the same was not paid to the legal heirs of Mr. C. On 16th October,
2018, Mr. X, a supplier supplied furniture worth ` 20, 00,000 to M/s ABC & Co. M/s ABC & Co. Could not repay
the amount due to heavy losses. Mr. X wants to recover the amount not only from M/s ABC & Co., but also from
the legal heirs of Mr. C.

Analyses the above situation in terms of the provisions of the Indian Partnership Act, 1932 and decide whether
the legal heirs of Mr. C can also be held liable for the dues towards Mr. X. [Nov 18, 3 Marks]

Related Question: Ram, Mohan and Gopal were partners in a firm. During the course of partnership, the firm
ordered Sunrise Ltd. to supply a machine to the firm. Before the machine was delivered, Ram expired. The

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machine, however, was later delivered to the firm. Thereafter, the remaining partners became insolvent and the
firm failed to pay the price of machine to Sunrise Ltd.

Explain with reasons:

(i) Whether Ram’s private estate is liable for the price of the machine purchased by the firm?

(ii) Against whom can the creditor obtain a decree for the recovery of the price? [RTP May 20]

Q.8 A, B and C are partners in a firm. As per terms of the partnership deed, A is entitled to 20 percent of the
partnership property and profits. A retires from the firm and dies after 15 days. B and C continue business of
the firm without settling accounts. Explain the rights of A’s legal representatives against the firm under the
Indian Partnership Act, 1932? [RTP May 18] [RTP May 20]

Q.9 A, B and C are partners in a firm called ABC Firm. A, with the intention of deceiving D, a supplier of office
stationery, buys certain stationery on behalf of the ABC Firm. The stationery is of use in the ordinary course of
the firm’s business. A does not give the stationery to the firm, instead brings it to his own use. The supplier D,
who is unaware of the private use of stationery by A, claims the price from the firm. The firm refuses to pay for
the price, on the ground that the stationery was never received by it (firm). Referring to the provisions of the
Indian Partnership Act, 1932 decide:

(i) Whether the Firm’s contention shall be tenable?

(ii) What would be your answer if a part of the stationery so purchased by A was delivered to the firm by
him, and the rest of the stationery was used by him for private use, about which neither the firm nor the
supplier D was aware? [MTP March 18, 6 Marks] [MTP Oct 18, 6 Marks]

Q.10 In the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not
empower him to do certain acts. State the acts which are beyond the implied authority of a partner under the
provisions of the Indian Partnership Act, 1932? [MTP Aug 18, 6 Marks]

Q.11 A, B, and C are partners of a partnership firm ABC & Co. The firm is a dealer in office furniture. A was in
charge of purchase and sale, B was in charge of maintenance of accounts of the firm and C was in charge of
handling all legal matters. Recently through an agreement among them, it was decided that A will be in charge of
maintenance of accounts and B will be in charge of purchase and sale. Being ignorant about such agreement, M,
a supplier supplied some furniture to A, who ultimately sold them to a third party. Referring to the provisions of
the Partnership Act, 1932, advise whether M can recover money from the firm.

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Mo: 62 62 62 143 8
What will be your advice in case M was having knowledge about the agreement? [MTP Aug 18, 6 Marks] [MTP
March 19, 6 Marks]

Q.12 What do you mean by “implied authority” of the partners in a firm? Point out the extent of partner’s implied
authority in case of emergency, referring to the provisions of the Indian Partnership Act, 1932. [RTP May 19]

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Unit– 3
3.1 Registration of Firms.................................................................................................... 3.46

3.2 Consequences of Non-Registration (Section 69) ............................................................ 3.48

3.3 Dissolution of Firm (Sections 39 - 47) ........................................................................... 3.49

3.4 Consequences of Dissolution (Sections 45 - 55) ............................................................. 3.53

Q.1 "Dissolution of a firm is different from dissolution of Partnership". Discuss. [Nov 19, 4 Marks]
Q.2 “Indian Partnership Act does not make the registration of firms compulsory nor does it impose any penalty
for non-registration." Explain. Discuss the various disabilities or disadvantages that a non-registered
partnership firm can face in brief? [May 19, 4 Marks]
Q.3 State any four grounds on which Court may dissolve a partnership firm in case any partner files a suit for
the same. [Nov 18, 4 Marks]
Q.4 Distinguish between dissolution of firm and dissolution of partnership. [May 18, 2 Marks]
Q.5 What are the consequences of Non-Registration of a Partnership Firm? Discuss. [May 18, 4 Marks] [MTP
Oct 19, 4 Marks]
Q.6 A & Co. is registered as a partnership firm in 2015 with A, B and C partners. In 2016, A dies. In 2017, B
and C sue X in the name and on behalf of A & Co., without fresh registration. Decide whether the suit is
maintainable. Whether your answer would be same if in 2017 B and C had taken a new partner D and then
filed a suit against X without fresh registration? [RTP May 18]

Related Question: P, X, Y and Z are partners in a registered firm A & Co. X died and P retired. Y and Z filed a
suit against W in the name and on behalf of firm without notifying to the Registrar of firms about the changes
in the constitution of the firm. Is the suit maintainable? [RTP May 19]

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CHAPTER – 4: THE LIMITED LIABILITY PARTNERSHIP
1. Limited Liability Partnership- Meaning and Concept .............................................................. 4.3

2. Incorporation of LLP................................................................................................................ 4.7

3. Partners and their relations .................................................................................................. 4.10

4. Extent and limitation of liability of LLP and partner ............................................................. 4.12

5. Financial Disclosures ............................................................................................................. 4.14

6. Conversion into LLP .......................................................................................................... 4.15

7. Foreign LLP ....................................................................................................................... 4.16

8. Winding up and dissolution .................................................................................................. 4.17

9. Miscellaneous ....................................................................................................................... 4.17

10. Differences with other forms of organisation ...................................................................... 4.18

Q.1 Discuss the conditions under which LLP will be liable and not liable for the acts of the partner. [Nov 19,
5 Marks]
Q.2 "LLP is an alternative corporate business form that gives the benefits of limited liability of a company
and the flexibility of a partnership". Explain. [May 19, 5 Marks]
Q.3 Explain the essential elements to incorporate a Limited Liability Partnership and the steps involved
therein under the LLP Act, 2008.[Nov 18, 5 Marks]
Related Question: What are the essential elements to form a LLP in India as per the LLP Act, 2008? [May 18,
5 Marks] [RTP Nov 18]
Related Question: State the meaning of Limited Liability Partnership (LLP). What are the relevant steps to
incorporate LLP? [MTP March 18, 5 Marks] [MTP Oct 18, 5 marks] [MTP April 19, 5 Marks]
Q.4 What do you mean by Limited Liability Partnership (LLP)? What are the advantages for forming a LLP
for doing business? [RTP May 18] [RTP May 19]

Q.5 What are the effects of registration of LLP? [RTP Nov 19]
Q.6 What is the procedure for changing the name of Limited Liability Partnership (LLP) under the LLP Act,
2008? [RTP May 20]
Q.7 Explain the circumstances in which LLP may be wound up by Tribunal under the LLP Act, 2008. [RTP
May 20]

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CHAPTER – 5: THE COMPANIES ACT, 2013
1. Company: Meaning and its features ........................................................................... 5.2

2. Corporate Veil Theory .................................................................................................... 5.5

3. Classes of Companies under the Act ............................................................................... 5.7

4. Mode of Registration/ Incorporation of Company ......................................................... 5.18

5. Classification of Capital ................................................................................................ 5.21

6. Shares ......................................................................................................................... 5.22

7. Memorandum of Association ....................................................................................... 5.24

8. Doctrine of Ultra Vires ................................................................................................. 5.26

9. Articles of Association ................................................................................................. 5.28

10. Doctrine of Indoor Management .................................................................................. 5.29

Q.1 Mr. Anil formed a One Person Company (OPC) on 16th April, 2018 for manufacturing electric cars. The
turnover of the OPC for the financial year ended 31st March, 2019 was about ` 2.25 Crores. His friend Sunil
wanted to invest in his OPC, so they decided to convert it voluntarily into a private limited company. Can
Anil do so? [Nov 19, 4 Marks]
Related Question: Define OPC (One Person Company) and state the rules regarding its membership. Can it
be converted into a non-profit company under Section 8 or a private company? [May 18, 6 Marks] [MTP Oct
19, 6 Marks] [RTP Nov 18]
Q.2 "The Memorandum of Association is a charter of a company". Discuss. Also explain in brief the contents
of Memorandum of Association. [Nov 19, 6 Marks]
Q.3 A, an assessee, had large income in the form of dividend and interest. In order to reduce his tax liability,
he formed four private limited company and transferred his investments to them in exchange of their shares.
The income earned by the companies was taken back by him as pretended loan. Can A be regarded as
separate from the private limited company he formed? [Nov19, 3 Marks]

Related Question: Krishna, an assessee, was a wealthy man earning huge income by way of dividend and
interest. He formed three Private Companies and agreed with each to hold a bloc of investment as an agent
for them. The dividend and interest income received by the companies was handed back to Krishna as a
pretended loan. This way, Krishna divided his income into three parts in a bid to reduce his tax liability.

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Decide, for what purpose the three companies were established? Whether the legal personality of all the
three companies may b e disregarded. [March 18, 4 Marks] [MTP October 18, 4 Marks] [MTP March 19, 6
Marks] [MTP April 19, 4 Marks] [RTP May 19]
Related Question: Mr. X had purchased some goods from M/s ABC Limited on credit. A credit period of one
month was allowed to Mr. X. Before the due date Mr. X went to the company and wanted to repay the
amount due from him. He found only Mr. Z there, who was the factory supervisor of the company. Mr. Z
told Mr. X that the accountant and the cashier were on leave, he is in-charge of receiving money and he may
pay the amount to him. Mr. Z issued a money receipt under his signature. After two months M/s ABC Limited
issued a notice to Mr. X for non-payment of the dues within the stipulated period. Mr. X informed the
company that he had already cleared the dues and he is no more responsible for the same. He also
contended that Mr. Z is an employee of the company to whom he had made the payment and being an
outsider, he trusted the words of Mr. Z as duty distribution is a job of the internal management of the
company.
Analyse the situation and decide whether Mr. X is free from his liability. [Nov 18, 3 Marks]
Q.5 What do you mean by "Companies with charitable purpose" (section 8) under the Companies Act, 2013?
Mention the conditions of the issue and revocation of the licence of such company by the government. [May
19, 6 Marks]
Related Question: State whether a non-profit organization be registered as a company under the Companies
Act, 2013? If so, what procedure does it have to adopt? [RTP May 18] [RTP May 19]
Q.6 Popular Products Ltd. is company incorporated in India, having a total Share Capital of` 20 Crores. The
Share capital comprises of 12 Lakh equity shares of ` 100 each and 8 Lakhs Preference Shares of ` 100 each.
Delight Products Ltd. and Happy Products Ltd. hold 12.5 % and 17.5% voting power respectively in Popular
Products Ltd. Another company Cheerful Products Ltd. Holds 12.5% shares in Popular Products Ltd. Jovial
Ltd. is the holding company for all above three companies namely Delight Products Ltd; Happy Products Ltd.;
Cheerful Products Ltd. Can Jovial Ltd. be termed as holding company of Popular products. Ltd., if it. Controls
composition of directors of Popular Products Ltd. State the related provision in the favour of your answer.
[May 19, 3 Marks]
Q.7 A company registered under section 8 of the Companies Act, 2013, earned huge profit during the
financial year ended on 31st March, 2018 due to some favorable policies declared by the Government of
India and implemented by the company. Considering the development, some members of the company
wanted the company to distribute dividends to the members of the company. They approached you to

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CS LLM Arjun Chhabra
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advise them about the maximum amount of dividend that can be declared by the company as per the
provisions of the Companies Act, 2013. Examine the relevant provisions of the Companies Act, 2013 and
advise the members accordingly.[Nov 18, 4 Marks] [MTP Oct 19, 4 Marks]
Q.8 There are cases where company law disregards the principle of corporate personality or the principle that the
company is a legal entity distinct from its shareholders or members. Elucidate. [Nov 18, 6 Marks]
Q.9 Ravi Private Limited has borrowed ` 5 crores from Mudra Finance Ltd. This debt is ultra vires to the
company. Examine, whether the company is liable to pay this debt? State the remedy if any available to
Mudra Finance Ltd.? [May 18, 4 Marks]
Q.12 State the limitations of the doctrine of indoor management under the Companies Act, 2013. [May 18,
3 Marks]
Q.13 Briefly explain the doctrine of “ultravires” under the Companies Act, 2013. What are the consequences
of ultravires acts of the company? [RTP Nov 18] [MTP Oct 18, 6 Marks] [RTP May 20]
Related Question: The Object Clause of Memorandum of Association of ABC Pvt. Ltd. authorized the
company to carry on the business of trading in Fruits and Vegetables. The Directors of the company in
recently concluded Board Meeting decided and accordingly, the company ordered for fish for the purpose
of trading. FSH Limited supplied fish to ABC Pvt. Ltd. worth Rs. 36 Lakhs. The members of the company
convened an extraordinary general meeting and negated the proposal of the Board of Directors on the
ground of ultra vires acts. FSH Limited being aggrieved of the said decision of ABC Pvt Ltd. seeks your advice.
Advise them. [MTP Aug 18, 4 Marks]
Q.14 FAREB Limited was incorporated by acquisition of FAREB & Co., a partnership firm, which was earlier
involved in many illegal activities. The promoters furnished some false information and also suppressed
some material facts at the time of incorporation of the company. Some members of the public (not being
directors or promoters of the company) approached the National Company Law Tribunal (NCLT) against the
incorporation status of FAREB Limited. NCLT is about to pass the order by directing that the liability of the
members of the company shall be unlimited.
Given the above, advice on whether the above order will be legal and mention the precaution to be taken
by NCLT before passing order in respect of the above as per the provisions of the Companies Act, 2013.
[MTP Aug 18, 3 Marks]

Q.15 Flora Fauna Limited was registered as a public company. There are 230 members in the company as noted
below:
(a) Directors and their relatives 190
(b) Employees 15

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CS LLM Arjun Chhabra
(Law Maven)
Mo: 62 62 62 143 8
(c) Ex-Employees (Shares were allotted when they were employees 10
(d) 5 couples holding shares jointly in the name of husband and wife 10
(5*2)
(e) Others 5
The Board of Directors of the company propose to convert it into a private company. Also advise whether
reduction in the number of members is necessary. [MTP March 19, 3 Marks] [RTP May 19]
Q.16 Naveen incorporated a “One Person Company” making his sister Navita as the nominee. Navita is
leaving India permanently due to her marriage abroad. Due to this fact, she is withdrawing her consent of
nomination in the said One Person Company. Taking into considerations the provisions of the Companies
Act, 2013 answer the questions given below.
(a) If Navita is leaving India permanently, is it mandatory for her to withdraw her nomination in the
said One Person Company?
(b) If Navita maintained the status of Resident of India after her marriage, then can she continue her
nomination in the said One Person Company? [RTP May 20]

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