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PAPER – 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

PART – I: RELEVANT AMENDMENTS APPLICABLE FOR MAY 2018 EXAMINATION

Applicability of Relevant Amendments/ Circulars/ Notifications/ Regulations etc.

For May 2018 examinations for Paper 2, Section A: Business Laws, the significant amendments
made in the respective subject for the period 1st May 2017 to 31st October, 2017 are relevant
and applicable for said examinations.
This RTP of May 2018 examination is very important to the students to update themselves with
the relevant amendments pertaining to the Business Laws.
Students are advised to refer the following publications -
1. Study Material (Edition July 2017) containing Legislative amendments issued
upto 30th April, 2017.
2. RTP of May 2018 examination containing a gist of all the significant notified
legislative amendments from 1st May 2017 to 31st October, 2017 along with the
suggested sample questions and answers for understanding and practice.

Following is the relevant amendment:

PART II: QUESTIONS AND ANSWERS

QUESTIONS
The Indian Contract Act, 1872
1. (i) '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.

© The Institute of Chartered Accountants of India

2 FOUNDATION EXAMINATION: MAY, 2018

Referring to the provisions of the Indian Contract Act, 1872, decide whether 'X' could
be restrained from doing so?
(ii) A stranger to a contract cannot sue, however in some cases even a stranger to
contract may enforce a claim. Explain.
2. (i) PM Ltd., contracts with Gupta Traders to make and deliver certain machinery to them
by 30th June 2017 for ` 21.50 Lakhs. Due to labour strike, PM Ltd. could not
manufacture and deliver the machinery to Gupta Traders. Later Gupta Traders
procured the machinery from another manufacturer for ` 22.75 lakhs. Gupta Traders
was also prevented from performing a contract which it had made with Zenith Traders
at the time of their contract with PM Ltd. and were compelled to pay compensation
for breach of contract. Calculate the amount of compensation which Gupta Traders
can claim from PM Ltd., referring to the legal provisions of the Indian Contract Act,
1872.
(ii) 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?
3. (i) Explain the term "coercion" and describe its effect on the validity of a contract?
(ii) “Though a minor is not competent to contract, nothing in the Contract Act prevents
him from making the other party bound to the minor”. Discuss.
(iii) A received certain goods from B promising to pay ` 1,00,000. Later on, A expressed
his inability to make payment. C, who is known to A, pays ` 60,000 to B on behalf of
A. However, A was not aware of the payment. Now B is intending to sue A for the
amount of ` 1,00,000. Discuss whether the contention of B is right?
4. Decide with reasons whether the following agreements are valid or void under the
provisions of the Indian Contract Act, 1872:
(i) Vijay agrees with Saini to sell his black horse for ` 3,00,000. Unknown to both the
Parties, the horse was dead at the time of the agreement.
(ii) Sarvesh sells the goodwill of his shop to Vikas for ` 10,00,000 and promises not to
carry on such business forever and anywhere in India.
(iii) Mr. X agrees to write a book with a publisher. After few days, X dies in an accident.
The Sale of Goods Act, 1930
5. (i) Explain the term “Delivery and its form” under the Sale of Goods Act, 1930.
(ii) Describe 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.

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 3

6. (i) 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?
(ii) Explain the “condition as to Merchantability” and “condition as to wholesomeness”
under the Sale of Goods Act, 1930.
7. (i) 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.
(ii) Explain the term “Caveat-Emptor” under the Sale of Goods Act, 1930? What are the
exceptions to this rule?
The Indian Partnership Act, 1932
8. (i) Whether a minor may be admitted in the business of a partnership firm? Explain the
rights of a minor in the partnership firm.
(ii) 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?
9. (i) 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?
(ii) State the differences between Partnership and Hindu Undivided Family.
The Limited Liability Partnership Act, 2008
10. (i) What do you mean by Limited Liability Partnership (LLP)? What are the advantages
for forming a LLP for doing business?
(ii) List the differences between the Limited Liability Partnership and the Limited Liability
Company.
The Companies Act, 2013
11. (i) Explain the concept of "Dormant Company" as envisaged in the Companies Act,
2013.
(ii) The Articles of Association of XYZ Ltd. provides that Board of Directors has authority
to issue bonds provided such issue is authorized by the shareholders by a necessary
resolution in the general meeting of the company. The company was in dire need of

© The Institute of Chartered Accountants of India

4 FOUNDATION EXAMINATION: MAY, 2018

funds and therefore, it issued the bonds to Mr. X without passing any such resolution
in general meeting. Can Mr. X recover the money from the company? Decide referring
the relevant provisions of the Companies Act, 2013.
12. (i) 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?
(ii) When a company is registered, it is clothed with a legal personality. Explain.

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 5

(6) In the case of covenant running with the land, the person who purchases
land with notice that the owner of land is bound by certain duties affecting land,
the covenant affecting the land may be enforced by the successor of the seller.
(7) Contracts entered into through an agent: The principal can enforce the
contracts entered by his agent where the agent has acted within the scope of
his authority and in the name of the principal.
2. (i) Section 73 of the Indian Contract Act, 1872 provides for compensation for loss or
damage caused by breach of contract. According to it, when a contract has been
broken, the party who suffers by such a breach is entitled to receive from the party
who has broken the contract, compensation for any loss or damage caused to him
thereby which naturally arose in the usual course of things from such breach or which
the parties knew when they made the contract, to be likely to result from the breach
of it.
Such compensation is not to be given for any remote and indirect loss or damage
sustained by reason of the breach.
It is further provided in the explanation to the section that in estimating the loss or
damage from a breach of contract, the means which existed of remedying the
inconvenience caused by the non-performance of the contract must be taken into
account.
Applying the above principle of law to the given case, PM Ltd. is obliged to
compensate for the loss of ` 1.25 lakhs (i.e. ` 22.75 lakhs – ` 21.50 lakhs) which
had naturally arisen due to default in performing the contract by the specified date.
Regarding the amount of compensation which Gupta Traders were compelled to
make to Zenith Traders, it depends upon the fact whether PM Ltd. knew about the
contract of Gupta Traders for supply of the contracted machinery to Zenith Traders
on the specified date. If so, PM Ltd. is also obliged to reimburse the compensation
which Gupta Traders had to pay to Zenith Traders for breach of contract. Otherwise
PM Ltd. is not liable for that.
(ii) Yes, the student can sue his teacher on the ground of undue influence under the
provisions of Indian Contract Act, 1872. A contract brought as a result of coercion,
undue influence, fraud or misrepresentation would be voidable at the option of the
person whose consent was caused.
3. (i) “Coercion” is the committing or threatening to commit any act forbidden by the Indian
Penal Code 1860, or the unlawful detaining or threatening to detain any property, to
the prejudice of any person whatever, with the intention of causing any person to
enter into an agreement. (Section 15 of the Indian Contract Act, 1872).
It is also important to note that it is immaterial whether the Indian Penal Code, 186 0
is or is not in force at the place where the coercion is employed.

© The Institute of Chartered Accountants of India

6 FOUNDATION EXAMINATION: MAY, 2018

Effects on validity: According to section 19 of the Act, when consent to an

agreement is caused by coercion, the contract is voidable at the option of the party,
whose consent was so caused. The aggrieved party, whose consent was so caused
can enforce the agreement or treat it as void and rescind it. It is seen that in all these
cases though the agreement amounts to a contract, it is voidable. The injured party
might insist on being placed in the same position in which he might have been had
the vitiating circumstances not been present.
Where a contract is voidable and the party entitled to avoid it decides to do so by
rescinding it, he must restore any benefit which he might have received from the other
party. He cannot avoid the contract and at the same time enjoy the benefit under the
rescinded/avoided contract. (Section 64)
(ii) Minor can be a beneficiary or can take benefit out of a contract: Though a minor
is not competent to contract, nothing in the Contract Act prevents him from making
the other party bound to the minor.
For example: A promissory note duly executed in favour of a minor is not void and
can be sued upon by him, because he though incompetent to contract, may yet accept
a benefit.
A minor cannot become partner in a partnership firm. However, he may with the
consent of all the partners, be admitted to the benefits of partnership (Section 30 of
the Indian Partnership Act, 1932).
(iii) As per Section 41 of the Indian Contract Act, 1872, when a promisee accepts
performance of the promise from a third person, he cannot afterwards enforce it
against the promisor. That is, performance by a stranger, accepted by the promise e,
produces the result of discharging the promisor, although the latter has neither
authorized nor ratified the act of the third party. Therefore, in the present instance,
B can sue only for the balance amount i.e. ` 40,000 and not for the whole amount.
4. (i) As per Section 20 of the Indian Contract Act, 1872, an agreement under by mistake
of fact are void. In this case, there is mistake of fact as to the existence of the subject-
matter, i.e., with respect to the selling of horse which was dead at the time of t he
agreement. It is unknown to both the parties. Therefore, it is a void agreement.
(ii) As per Section 27 of the Indian Contract Act, 1872, an agreement in restraint of trade
is void. However, a buyer can put such a condition on the seller of goodwill, no t to
carry on same business, provided that the conditions must be reasonable regarding
the duration and place of the business. Since in the given case, restraint to carry on
business was forever and anywhere in India, so the agreement in question is void.
(iii) As per section 2(j) of the Contract Act, “A contract which ceases to be enforceable by
law becomes void when it ceases to be enforceable”. In the present case, Mr. X
agrees to write a book with a publisher. After few days, X dies in an accident. Her e
the contract becomes void due to the impossibility of performance of the contract.

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 7

5. (i) Delivery and its forms: Delivery means voluntary transfer of possession from one
person to another [Section 2(2)]. As a general rule, delivery of goods may be made
by doing anything, which has the effect of putting the goods in the possession of the
buyer, or any person authorized to hold them on his behalf.
Forms of delivery: Following are the kinds of delivery for transfer of possession:
(a) Actual delivery: When the goods are physically delivered to the buyer.
(b) Constructive delivery: When it is effected without any change in the custody
or actual possession of the thing as in the case of delivery by attornment
(acknowledgement) e.g., where a warehouseman holding the goods of A agrees
to hold them on behalf of B, at A’s request.
(c) Symbolic delivery: When there is a delivery of a thing in token of a transfer of
something else, i.e., delivery of goods in the course of transit may be made by
handing over documents of title to goods, like bill of lading or railway receipt or
delivery orders or the key of a warehouse containing the goods is handed over
to buyer.
(ii) Destruction of Goods-Consequences: In accordance with the provisions of the
Sale of Goods Act, 1930 as contained in Section 7, a contract for the sale of specific
goods is void if at the time when the contract was made; the goods without the
knowledge of the seller, perished or become so damaged as no longer to answer to
their description in the contract, then the contract is void ab initio. This section is
based on the rule that where both the parties to a contract are under a mistake as to
a matter of fact essential to a contract, the contract is void.
In a similar way Section 8 provides that an agreement to sell specific goods becomes
void if subsequently the goods, without any fault on the part of the seller or buyer,
perish or become so damaged as no longer to answer to their description in
agreement before the risk passes to the buyer. This rule is also based on the ground
of impossibility of performance as stated above.
It may, however, be noted that section 7 and 8 apply only to specific goods and not
to unascertained goods. If the agreement is to sell a certain quantity of unascertained
goods, the perishing of even the whole quantity of such goods in the possession of
the seller will not relieve him of his obligation to deliver the goods.
6. (i) Unpaid Seller : According to Section 45 of the Sale of Goods Act, 1930 the seller of
goods is deemed to be an ‘Unpaid Seller’ when-
(a) the whole of the price has not been paid or tendered.
(b) a bill of exchange or other negotiable instrument has been received as
conditional payment, and it has been dishonoured.

© The Institute of Chartered Accountants of India

8 FOUNDATION EXAMINATION: MAY, 2018

Right of stoppage of goods in transit

When the unpaid seller has parted with the goods to a carrier and the buyer has
become insolvent, he can exercise this right by asking the carrier to return the goods
back, or not to deliver the goods to the buyer.
However, the right of stoppage in transit is exercised only when the following
conditions are fulfilled:
(a) The seller must be unpaid.
(b) The seller must have parted with the possession of goods.
(c) The goods must be in the course of transit.
(d) The buyer must have become insolvent.
(e) The right is subject to provisions of the Act.
(ii) Condition as to Merchantability [Section 16(2) of the Sale of Goods Act, 1930]:
Where goods are bought by description from a seller who deals in goods of that
description (whether he is the manufacturer or producer or not), there is an implied
condition that the goods shall be of merchantable quality.
Provided that, if the buyer has examined the goods, there shall be no implied
condition as regards defects which such examination ought to have revealed .
The expression “merchantable quality”, though not defined, nevertheless connotes
goods of such a quality and in such a condition a man of ordinary prudence would
accept them as goods of that description. It does not imply any legal right or legal title
to sell.
Example: If a person orders motor horns from a manufacturer of horns, and the horns
supplied are scratched and damaged owing to bad packing, he is entitled to reject
them as unmerchantable.
Condition as to wholesomeness: In the case of eatables and provisions, in addition
to the implied condition as to merchantability, there is another implied condition that
the goods shall be wholesome.
Example: A supplied F with milk. The milk contained typhoid germs. F’s wife
consumed the milk and was infected and died. Held, there was a breach of condition
as to fitness and A was liable to pay damages.
7. (i) The problem in this case is based on the provisions of the Sale of Goods Act, 1930
contained in the proviso to Section 27. The proviso provides that a mercantile agent
is one who in the customary course of his business, has, as such agent, authority
either to sell goods, or to consign goods, for the purpose of sale, or to buy goods, or
to raise money on the security of goods [Section 2(9)]. The buyer of goods from a
mercantile agent, who has no authority from the principal to sell, gets a good title to
the goods if the following conditions are satisfied:

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 9

(1) The agent should be in possession of the goods or documents of title to the
goods with the consent of the owner.
(2) The agent should sell the goods while acting in the ordinary course of business
of a mercantile agent.
(3) The buyer should act in good faith.
(4) The buyer should not have at the time of the contract of sale notice that the
agent has no authority to sell.
In the instant case, P, the agent, was in the possession of the car with J’s consent for
the purpose of sale. A, the buyer, therefore obtained a good title to the car. Hence,
J in this case, cannot recover the car from A.
(ii) Caveat emptor’ means “let the buyer beware”, i.e. in sale of goods the seller is under
no duty to reveal unflattering truths about the goods sold. Therefore, when a person
buys some goods, he must examine them thoroughly. If the goods turn out to be
defective or do not suit his purpose, or if he depends upon his skill and judgment and
makes a bad selection, he cannot blame any body excepting himself.
The rule is enunciated in the opening words of section 16 of the Sale of Goods Act,
1930 which runs thus: “Subject to the provisions of this Act and of any other law for
the time being in force, there is no implied warranty or condition as to the quality or
fitness for any particular purpose of goods supplied under a contract of sale”
The rule of caveat emptor does not apply in the following cases:
(a) Fitness for buyer’s purpose: Where the buyer, expressly or by implication,
makes known to the seller the particular purpose for which he requires the goods
and relies on the seller’s skill or judgment and the goods are of a description
which it is in the course of the seller’s business to supply, the seller must supply
the goods which shall be fit for the buyer’s purpose. [Section16(1)].
(b) Sale under a patent or trade name: In the case of a contract for the sale of a
specified article under its patent or other trade name, there is no implied
condition that the goods shall be reasonably fit for any particular purpose
[Section 16(1)].
(c) Merchantable quality: Where goods are bought by description from a seller
who deals in goods of that description (whether he is in the manufacturer or
producer or not), there is an implied condition that the goods shall be of
merchantable quality. But if the buyer has examined the goods, there is no
implied condition as regards defects which such examination ought to have
revealed. [Section 16(2)].
(d) Usage of trade: An implied warranty or condition as to qualify or fitness for a
particular purpose may be annexed by the usage of trade. [Section 16(3)].

© The Institute of Chartered Accountants of India

10 FOUNDATION EXAMINATION: MAY, 2018

(e) Consent by fraud: Where the consent of the buyer, in a contract of sale, is
obtained by the seller by fraud or where the seller knowingly conceals a defect
which could not be discovered on a reasonable examination, the doctrine of
caveat emptor does not apply.
8. (i) Minor as a partner: A minor is incompetent to do the contract and such contract is
void-ab-initio. Therefore, a minor cannot be admitted in the business of the
partnership firm because the partnership is formed on a contract. Though a minor
cannot be a partner in a firm, he can nevertheless be admitted to the benefits of
partnership under section 30 of the Indian Partnership Act, 1932. He may be validly
have a share in the profit of the firm but this can be done with the consent of all the
partners of the firm.
Rights of the minor in the firm:
(a) a minor has a right to his agreed share of the profits and of the firm.
(b) he can have access to, inspect and copy the accounts of the firm.
(c) he can sue the partners for accounts or for payments of his share but only, when
severing his connection with the firm, and not otherwise. The amount of share
shall be determined by a valuation made in accordance with the rules upon a
dissolution.
(d) on attaining majority he may within 6 months elect to become a partner or not to
become a partner. If he elects to become a partner, then he is entitled to the
share to which he was entitled as a minor. If he does not, then his share is not
liable for any acts of the firm after the date of the public notice served to that
effect.
(ii) As regards the question whether in the case of a registered firm (whose business
was carried on after its dissolution by death of one of the partners), a suit can be filed
by the remaining partners in respect of any subsequent dealings or transactions
without notifying to the Registrar of Firms, the changes in the constitution of the firm,
it was decided that the remaining partners should sue in respect of such subsequent
dealings or transactions even though the firm was not registered again after such
dissolution and no notice of the partner was given to the Registrar.
The test applied in these cases was whether the plaintiff satisfied the only two
requirements of Section 69 (2) of the Act namely,
(a) the suit must be instituted by or on behalf of the firm which had been registered;
(b) the person suing had been shown as partner in the register of firms. In view of
this position of law, the suit is in the case by B and C against X in the name and on
behalf of A & Co. is maintainable.
Now, in 2017, B and C had taken a new partner, D, and then filed a suit against X
without fresh registration. Where a new partner is introduced, the fact is to be notified

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 11

to Registrar who shall make a record of the notice in the entry relating to the firm in
the Register of firms. Therefore, the firm cannot sue as D’s (new partner’s) name has
not been entered in the register of firms. It was pointed out that in the second
requirement, the phrase “person suing” means persons in the sense of individuals
whose names appear in the register as partners and who must be all partners in the
firm at the date of the suit.
9. (i) Section 37 of the Indian Partnership Act, 1932 provides that where a partner dies or
otherwise ceases to be a partner and there is no final settlement of account between
the legal representatives of the deceased partner or the firms with the property of the
firm, then, in the absence of a contract to the contrary, the legal representatives of
the deceased partner or the retired partner are entitled to claim either.
(1) Such shares of the profits earned after the death or retirement of the partner
which is attributable to the use of his share in the property of the firm; or
(2) Interest at the rate of 6 per cent annum on the amount of his share in the
property.
Based on the aforesaid provisions of Section 37 of the Indian Partnership Act, 1932,
in the given problem, A’s Legal representatives shall be entitled, at their option to:
(a) the 20% shares of profits (as per the partnership deed); or
(b) interest at the rate of 6 per cent per annum on the amount of A’s share in the
property.
(ii) Differences between the Partnership & Joint Hindus Family.
Basis of Partnership Joint Hindu family
difference
Mode of creation Partnership is created The right in the joint family is
necessarily by an agreement. created by status means its
creation by birth in the family.
Death of a Death of a partner ordinarily The death of a member in the
member leads to the dissolution of Hindu undivided family does
partnership. not give rise to dissolution of
the family business.
Management All the partners are equally The right of management of
entitled to take part in the joint family business generally
partnership business. vests in the Karta, the

© The Institute of Chartered Accountants of India

12 FOUNDATION EXAMINATION: MAY, 2018

governing male member or

female member of the family.1
Authority to bind Every partner can, by his act, The Karta or the manager, has
bind the firm. the authority to contract for the
family business and the other
members in the family.
Liability In a partnership, the liability of In a Hindu undivided family,
a partner is unlimited. only the liability of the Karta is
unlimited, and the other co-
partners are liable only to the
extent of their share in the
profits of the family business.
Calling for A partner can bring a suit On the separation of the joint
accounts on against the firm for accounts, family, a member is not
closure provided he also seeks the entitled to ask for account of
dissolution of the firm. the family business.
Governing Law A partnership is governed by A Joint Hindu Family business
the Indian Partnership Act, is governed by the Hindu Law.
1932.
Minor’s capacity In a partnership, a minor In Hindu undivided family
cannot become a partner, business, a minor becomes a
though he can be admitted to member of the ancestral
the benefits of partnership, business by the incidence of
only with the consent of all birth. He does not have to wait
the partners. for attaining majority.
Continuity A firm subject to a contract A Joint Hindu family has the
between the partners gets continuity till it is divided. The
dissolved by death or status of Joint Hindu family is
insolvency of a partner. not thereby affected by the
death of a member.
Number of In case of Partnership Members of HUF who carry on
Members number of members should a business may be unlimited
not exceed 50 in number.

1 Joint Hindu Family: The amendment in the Hindu Succession Act, 2005, entitled all adult members – Hindu
males and females to become coparceners in a HUF. They now enjoy equal rights of inheritance due to this
amendment. On 1st February 2016, Justice Najmi Waziri gave a landmark judgement which allowed the eldest
female coparceners of an HUF to become its Karta.

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 13

Share in the In a partnership each partner In a HUF, no coparceners has

business has a defined share by virtue a definite share. His interest is
of an agreement between the a fluctuating one. It is capable
partners. of being enlarged by deaths in
the family diminished by births
in the family.

10. (i) LLP: A LLP is a new form of legal business entity with limited liability. It is an
alternative corporate business vehicle that not only gives the benefits of limited
liability at low compliance cost but allows its partners the flexibility of organising their
internal structure as a traditional partnership. The LLP is a separate legal entity and,
while the LLP itself will be liable for the full extent of its assets, the liability of the
partners will be limited.
LLP is an alternative corporate business form that gives the benefits of limited liability
of a company and the flexibility of a partnership.
Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership
firm structure’ LLP is called a hybrid between a company and a partnership.
Advantages of LLP form:
(a) LLP is organized and operates on the basis of an agreement.
(b) It provides flexibility without imposing detailed legal and procedural
requirements
(c ) It enables professional/technical expertise and initiative to combine with
financial risk taking capacity in an innovative and efficient manner.
(d) It is easy to form
(e) In LLP form, all partners enjoy limited liability
(f) Flexible capital structure is there in this form
(g) It is easy to dissolve
(ii) Distinction between LLP and Limited Liability Company: The points of distinction
between a limited liability partnership and Limited Liability Company are tabulated as
follows:
Basis LLP Limited Liability
Company
1. Regulating Act The LLP Act, 2008. The Companies Act, 2013.
2. Members/Partners The persons who The persons who invest the
contribute to LLP are money in the shares are
known as partners of the known as members of the
LLP. company.

© The Institute of Chartered Accountants of India

14 FOUNDATION EXAMINATION: MAY, 2018

3. Internal governance The internal governance The internal governance

structure structure of a LLP is structure of a company is
governed by contract regulated by statute (i.e.,
agreement between the Companies Act, 2013).
partners.
4. Name Name of the LLP to Name of the public
contain the word “Limited company to contain the
Liability partnership” or word “limited” and Pvt. Co.
“LLP” as suffix. to contain the word “Private
limited” as suffix.
5. No. of Minimum – 2 members Private company:
members/partners Maximum – No such limit Minimum – 2 members
on the members in the Maximum 200 members
Act. The members of the Public company:
LLP can be individuals/or
Minimum – 7 members
body corporate through
the nominees. Maximum – No such limit
on the members.
Members can be
organizations, trusts,
another business form or
individuals.
6. Liability of Liability of a partners is Liability of a member is
members/partners limited to the extent of limited to the amount
agreed contribution in unpaid on the shares held
case of intention is fraud. by them.
7. Management The business of the The affairs of the company
company managed by are managed by board of
the partners including the directors elected by the
designated partners shareholders.
authorized in the
agreement.
8. Minimum number of Minimum 2 designated Pvt. Co. – 2 directors
directors/designated partners. Public co. – 3 directors
partners
11. (i) Dormant Company (Section 455 of the Companies Act, 2013)
Where a company is formed and registered under this Act for a future project or to
hold an asset or intellectual property and has no significant accounting transaction,
such a company or an inactive company may make an application to the Registrar in
such manner as may be prescribed for obtaining the status of dormant company.

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PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 15

“Inactive company” means a company which has not been carrying on any business
or operation, or has not made any significant accounting transaction during the last
two financial years, or has not filed financial statements and annual returns during
the last two financial years.
“Significant accounting transaction” means any transaction other than –
(a) payment of fees by a company to the Registrar;
(b) payments made by it to fulfil the requirements of this Act or any other law;
(c) allotment of shares to fulfil the requirements of this Act; and
(d) payments for maintenance of its office and records.
(ii) According to the Doctrine of Indoor Management, if an act is authorised by the articles
or memorandum, an outsider is entitled to assume that all the detailed formalities for
doing that act have been observed. As per the case of the Royal British Bank vs.
Turquand [1856] 6E & B 327, the directors of R.B.B. Ltd. gave a bond to T. The
articles empowered the directors to issue such bonds under the authority of a proper
resolution. In fact, no such resolution was passed. Notwithstanding that, it was held
that T could sue on the bonds on the ground that he was entitled to assume that the
resolution had been duly passed. This is the doctrine of indoor management,
popularly known as Turquand Rule.
Since, the given question is based on the above facts, accordingly here in this case
Mr. X can recover the money from the company considering that all required
formalities for the passing of the resolution have been duly complied.
12. (i) Yes, a non-profit organization be registered as a company under the Companies Act,
2013 by following the provisions of section 8 of the Companies Act, 2013. Section 8
of the Companies Act, 2013 deals with the formation of companies which are formed
to
 promote the charitable objects of commerce, art, science, sports, education,
research, social welfare, religion, charity, protection of environment etc.
Such company intends to apply its profit in
 promoting its objects and
 prohibiting the payment of any dividend to its members.
The Central Government has the power to issue license for registering a section 8
company.
(a) Section 8 allows the Central Government to register such person or association
of persons as a company with limited liability without the addition of words
‘Limited’ or ‘Private limited’ to its name, by issuing licence on such conditions as
it deems fit.

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16 FOUNDATION EXAMINATION: MAY, 2018

(b) The registrar shall on application register such person or association of persons
as a company under this section.
(c) On registration the company shall enjoy same privileges and obligations as of a
limited company.
(ii) When a company is registered, it is clothed with a legal personality. It comes to have
almost the same rights and powers as a human being. Its existence is distinct and
separate from that of its members. A company can own property, have bank account,
raise loans, incur liabilities and enter into contracts.
(a) It is at law, a person different altogether from the subscribers to the
memorandum of association. Its personality is distinct and separate from the
personality of those who compose it.
(b) Even members can contract with company, acquire right against it or incur
liability to it. For the debts of the company, only its creditors can sue it and not
its members.
A company is capable of owning, enjoying and disposing of property in its own name.
Although the capital and assets are contributed by the shareholders, the company
becomes the owner of its capital and assets. The shareholders are not the private or
joint owners of the company’s property.

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PAPER – 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING

SECTION B: BUSINESS CORRESPONDENCE AND REPORTING
QUESTIONS
Note: Chapter 6 is meant for reading only therefore, questions from the chapter are not included
here.
Chapter-1
Communication
1. List at least 5 barriers of communication. Explain any two of them in your own words.
2. Differentiate between the Vertical Network and the Wheel and spoke method of
communication.
Chapter 2
Sentence Types: Active Passive Voice, Direct Indirect Speech
(A) Change the following sentences into passive voice.
(1) Raj uses a pen to sketch figures
(2) Anita will perform a solo dance at the annual day.
(3) Prof Johnson teaches Psychology
(4) The public threw stones on the thief.
(5) Who wrote this essay?
(B) Change the following Direct speech into Indirect speech.
(1) He said, ‘I have lost all games’
(2) Teacher said, ‘Please use a blue pen for your homework’
(3) Children said, ‘Good morning Ma’am’.
(4) Serena said, ‘How intelligent Clara is’
(5) My father said, ‘Where are you going’?
Chapter -3 Vocabulary
(A) Select the suitable synonym for the given words:
(1) Annotate
(a) Verify (b) Footnotes (c) Announce (d) Cut off
(2) Fraught
(b) Scam (b) Smelly (c) Rare (d) Full of

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18 FOUNDATION EXAMINATION: MAY, 2018

(3) Divulge
(a) Dig into (b) Varied (c) Reveal (d) Deep
(4) Peroration
(a) Conclusion (b) Audience (c) Cheating (d) Priority
(5) Embezzle
(a) Shine (b) Pilfer (c) Busy (d) Shocked
(B) Select the suitable antonym for the given word:
(1) Concealed
(a) To hide (b) Uninteresting (c) Known (d) Related
(2) Supremacy
(a) Primarily (b) Inferiority (c) Dominance (d) Leadership
(3) Applaud
(a) Organize (b) Compose (c) About (d) Condemn
(4) Acquisition
(a) Forfeit (b) Revival (c) permission (d) Fulfilment
(5) Adamant
(a) Resolute (b) Steadfast (c) Flexible (d) Extinct
(C) Select the correct meaning of the given idioms:
(1) Man of action
(a) Full of aggression
(b) One who performs
(c) Insubstantial person
(d) More talks than action
(2) Acid test
(a) Difficult job
(b) Useless task
(c) Decisive test
(d) Unknown work
(D) Fill in the blanks with the most suitable choice:
(1) With the economy going down, people who are rich might become _____________
(a) Endemic (b) Healthy (c) Destitute (d) Considerable

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PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 19

(2) Religion teaches us to respect all ______________________ rights of a human

being.
(a) Business (b) Fundamental (c) Behavioural (d) Conceptual
Chapter 4
Comprehension Passages
Read the following comprehension passages and answer the following questions
Passage 1
Nearly 3 lakh Indian- Americans are likely to be impacted by the Trump administration’s
sweeping plans that put the nation‘s 11 million undocumented immigrants at risk of deportation.
President Donald Trump has laid the groundwork for potentially deporting millions of undocumented
immigrants by issuing new guidance that drastically broadens the ways in which federal immigration
laws should be enforced. According to the Department of homeland Security (DHS), it will no longer
exempt classes or categories of removable aliens from potential enforcement. The Department
personnel would have full authority to arrest or apprehend an alien whom an immigration officer has
probable cause to believe is in violation of the immigration laws.
The DHS has issued two memos, which among other things, tightens deportation of illegal
immigrants. The emphasis is on criminal aliens, though, but opens up the door for others too. Indian
Americans as per unofficial figures account for nearly 3 lakh illegal aliens.
(1) What is the risk discussed in the passage?
(a) Trump’s winning the election
(b) President Trump does not like Asians
(c) President Trump plans to deport many immigrants, especially those that do not have
proper documents.
(d) Population explosion in USA
(2) What new authority has been granted to the DHS ?
(a) The President will intervene in DHS matters directly.
(b) The DHS personnel can arrest someone he/she believes is violating laws of
immigration.
(c) The DHS can directly intervene in population matters
(d) No new authority has been granted.
(3) According to approximation how many India Americans account for illegal aliens?
(a) Above 3 lakhs
(b) Below 3 lakhs

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20 FOUNDATION EXAMINATION: MAY, 2018

(c) Nearly 11 million

(d) Around 3 lakhs.
(4) What does the word ‘apprehend’ mean in the second paragraph?
(a) Capture
(b) Concern
(c) Allow
(d) Intimate
(5) Select a suitable antonym for the word ‘exempt’ as used in the passage.
(a) accountable
(b) released
(c) free
(d) preventive
Passage 2
It is not the brain that determines whether a person is a lefty or a righty, but the spinal cord. Until
now, it had been assumed that differences in gene activity of the right and left hemisphere might be
responsible for a person’s handedness--------people’s tendency to naturally favour the use of one
hand over the other.
But a recent study demonstrated that gene activity in the spinal cord is asymmetrical already in the
womb and could be linked to the handedness of a person. According to the ultrasounds carried out
in the 1980’s, a preference for moving the left or right hand develops in the womb from the eighth
week of pregnancy. From the 13th week of pregnancy, unborn children prefer to suck their right or
left thumb. Arm and hand movement are initiated via the motor cortex in the brain. It sends a
corresponding signal to the spinal cord, which in turn translates the command into a motion.
However, the motor cortex is not connected to the spinal cord from the beginning. In fact, even before
the earliest indication of hand preference appear, the spinal cord has not yet formed a connection
with the brain. In addition, environmental factors were found to be controlling whether spinal cord
activity was greater on the left or right side.
(1) Give the passage a suitable title
(a) Right or Left: functioning of the brain
(b) Righty or a Lefty……..who decides?
(c) Environmental factors controlling us
(d) Right handedness/ Left handedness
(2) Arm and hand movement are started via _____________
(a) Spinal cord

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PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 21

(b) Thumb movement

(c) Motor cortex in the brain
(d) Not specified.
(3) Which of the following statement is false?
(a) Environmental factors do not control spinal cord activity
(b) Motor cortex is not connected to the spinal cord in the beginning
(c) Preference for moving right/left thumb starts in the eighth week of pregnancy
(d) Parents have no say in making a child lefty or righty.
(4) What sends a corresponding signal to the spinal cord, which in turn translates th e
command into a motion?
(a) Brain
(b) Spinal cord
(c) Motor cortex
(d) Arms
(5) Select a suitable synonym for the word ‘asymmetrical’ as used in the passage.
(a) antonymous
(b) intentional
(c) disproportional
(d) composed
Chapter 5 Note Making
Read the following passage/news story and make proper notes following the guidelines of Note
making. (Source: internet, newspaper articles)
(1) Tsunamis are monster waves that can grow to be more than 100 feet (30 meters) high.
They are typically caused by earthquakes; identifying other seismic zones — a region high
in seismic activity such as tremors and earthquakes — with these features could help
researchers identify areas that could produce catastrophic waves, th e scientists added.
Major tsunamis often result at the shallow portions of sub-duction zones, the areas where
one of the tectonic plates that make up Earth's surface dives below another. These crash
zones are dangerously active, and these tectonic interactions can cause the world's
biggest earthquakes and worst tsunamis.
In the past 20 years or so, researchers have discovered that the seismic zones that lead
to tsunamis often have three key features. First, the boundary where the tectonic
plates meet is often rough instead of smooth. This keeps the plates from easily slipping

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22 FOUNDATION EXAMINATION: MAY, 2018

past each other, allowing energy to build up between the plates. When this built-up energy
finally gets released, it can trigger a major earthquake, according to the researchers.
Second, these danger zones may also possess hard rock rather than sediment near the
seafloor and on both sides of the plate boundary. This can permit more motion from an
earthquake to occur near the seafloor, for more powerful tsunamis, the researchers said.
A third key feature seen with the 2011 Tohoku earthquake is a series of cracks or faults
rooted in the plate boundary. These faults may suggest that the plate boundary is
especially active in its shallow portions and more prone to generating tsunamis.
(2) On June 23, registered voters of the United Kingdom will voice their opinion whether the
nation should 'Remain' in or 'Leave' the European Union.
Though he managed to get the EU's nod for restrictions on certain welfare benefits for new
migrants, British Prime Minister David Cameron was unable to bring unity within his
Conservative Party, and thus decided to seek public opinion on the issue.
While Mr. Cameron wishes his country remain in the EU, former London Mayor and MP
Boris Johnson campaigns for Britain's exit, or Brexit as it is being referred to.
The Labour Party too is divided. While the Labour chief Jeremy Corbyn supports staying
with the EU, a group calling itself Lexit (Left for Exit) is campaigning for leaving the bloc
citing the EU's Cold War origins and pro-market stand.
While the Scottish National Party (SNP) bats for 'Remain', hardline U.K. Independence
Party (UKIP) wants exit from the EU.
Chapter 7
Précis Writing
Read the following passages and write a précis for the same. Follow the basic rules of précis writing
while writing.
(1) At some point in our lives, we tend to turn to prayer, seeking divine blessings, to overcome
problems. When the problems don’t go away, we attribute these problems to our destiny
and look for solutions from external sources of power. According to Lord Krishna, out of
the four categories of people, Aarta (the sufferers), Jignyanshu, seeker of the truth;
Arthaarthi, seeker of materialistic benefits and finally, Jnani, the wise; it is the wise whose
quality of prayer is pure as it happens in a higher realm of consciousness.
Prayer is a dynamic phenomenon and its complexities need to be understood properly. It
is a process to connect with the Universal source of energy, which is our life force. People
sometimes complain that their prayers are not always answered. So they resort to other
sources of power to get blessings and protection.
(2) The issue of war and peace has always been a focal issue in all periods of history and at
all levels and relations among nations. The concern of the humankind f or peace can be
assessed by taking into account the fact that all religions, all religious scriptures and

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several religious ceremonies are committed to the cause of peace and all these advocate
an elimination of war. The Shanti Path recited by the Hindus, the sermons of Pope and the
commands of all the holy scriptures of the Christians, Muslims, Hindus, Sikhs and all other
communities hold out a sacred commitment to peace.
Yet the international community fully realized the supreme importance of the virtue o f
peace against the evil of war only after having suffered the most unfortunate and highly
destructive two World Wars in the first half of the 20th century. The blood soaked shreds
of humanity that lay scattered in several hundred battle grounds, particula rly on the soils
of Hiroshima and Nagasaki, cried for peace, peace and peace on the earth.
Chapter 8
Article Writing
Write an article on the following topics. (Word limit: 350-400 words)
(1) Discuss the pros and cons of the Demonetisation policy.
(2) Do we need a dress code in offices?
Chapter 9
Report Writing
(1) Your college organised a seminar on ‘Digital Marketing: an upcoming field in Business’.
Write a report for the college magazine, stating the details of the event (250 -300 words)
(2) Write a report for a local daily newspaper on Republic Day Celebrations held in ABC
school. (250-300 words)
Chapter 10
Formal Letters and Official Communication
Part 1 Formal Letters
As the Manager, HR of Net Solutions Ltd, Mumbai, draft a complaint letter to the Administration
Head of Food for you Solutions, Mumbai, stating your concern about the bad quality of food
being supplied to your company’s cafeteria.
Part 2 Official Communication
As the HR Manager of your organization, draft a circular for all the employees of your company,
informing them about a charity cultural event being organized over the weekend in the office
campus. Mention a few events and request for active participation.
Chapter 11
Formal Mails
(1) You are Ms. Rakhi Singhvi, Head Sales and Marketing, OCB international Pvt. Ltd, a
hardware product company. Write a formal mail to Mr. Mukesh Tiwari of Candid Sweets,

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24 FOUNDATION EXAMINATION: MAY, 2018

apologising for the delay in the delivery of the order placed by them. State genuine reasons
and commit a suitable date for the final delivery.
(2) As the HR head of Axis Telecom Pvt. Ltd, write an appointment mail to Mr. Anshul Malik,
informing him about his selection for ‘Team Lead’, Sales and Marketing division. Write a
job appointment mail, stating salary, joining date, joining location and other required
information.
Chapter 12
Resume Writing
(1) Prepare a detailed resume in the functional format for a candidate applying for the post of
a sales manager in an FMCG company. Include past experiences, with emphasis on the
sales background.
Other inputs: Name: Manish Reddy
Experience: over 10 years, (divide it into two jobs)
Current designation: Senior Sales Executive
(2) Prepare a chronological resume of commerce background student, having worked in a firm
for 1 year, and gained experience in general management skills. The candidate has cleared
IPCC, Group 1.
Chapter 13
Meetings
(1) Prepare the Minutes of a Meeting, presided by the Chairman of HKU Pvt Ltd, an FMCG
company. The main agenda of the meeting was introducing a new product, fixing a cost,
discussing the Sales and Marketing and the advertising strategies. Speakers involved
were: the chairperson, the Product Head, the Sales Head and the Creative Director.
(2) Submit an Action Taken Report, based on a meeting held to discuss the failure of long
pending dues by an old client. Mention clearly what decision was taken.

ANSWERS

Chapter-1
Communication
1. Barriers in communication:
 Physical Barriers
 Cultural Barriers
 Language Barriers

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 Technology Barriers
 Emotional Barriers
Technology Barriers: Being a technology driven world, all communication is dependent
on good and extensive use of technology. However, there might arise technical issues, like
server crash, overload of information etc which lead to miscommunication or no
communication at all.
Language Barriers: It’s a cosmopolitan set up, where people of different nationalities
move from their home to other countries for work. As a result, it is difficult to have a
common language for communication. Hence, diversity gives rise to many languages and
it acts as a barrier at times.
2. Vertical Network and Wheel & Spoke Network
Vertical Network Wheel and Spoke Network
A formal network. It is usually between A network with a single controlling authority
a higher ranking employee and a who gives instructions and orders to all
subordinate. employees working under him/her.
A two way communication happens Two way communication happens but useful
only in small organizations.
Chapter 2 Sentence Types
(A) Active to Passive
(1) A pen is used by Raj to sketch figures
(2) A solo dance will be performed by Anita at the annual day.
(3) Psychology is taught by Prof. Johnson
(4) Stones were thrown by the public on the thief.
(5) By whom was this essay written?
(B) Direct to Indirect Speech.
(1) He said that he had lost all games.
(2) Teacher requested the children to use a blue pen for their homework.
(3) Children wished Ma’am a good morning.
(4) Serena exclaimed how intelligent Clara was.
(5) My father asked me where was I going?
Chapter 3 Vocabulary
A: Synonyms
(1) Annotate means to make notes. Correct answer is b) Footnotes

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26 FOUNDATION EXAMINATION: MAY, 2018

(2) Fraught means in abundance. Correct answer is d) Full of

(3) Divulge means to let out. Correct answer is c) Reveal
(4) Peroration means the end. Correct answer is a) Conclusion
(5) Embezzle means wrong use, especially used for funds. Correct answer is b) Pilfer
B: Antonyms
(1) Conceal means to hide. Correct answer is c) Known.
(2) Supremacy means dominance/ Correct answer is b) Inferiority
(3) Applaud means to appreciate. Correct answer is d) Condemn
(4) Acquisition means to get/possess. Correct answer is a) forfeit
(5) Adamant means steadfast, unbending. Correct answer is c) Flexible
C: Idioms
(1) Correct answer is b; One who performs and not just talks.
(2) Correct answer is c; Decisive test. A test/task which will make things clear
D: Fill in the blanks
(1) Correct answer is c) Destitute. It means poor.
(2) Correct answer is b) Fundamental. It means basic.
Chapter: 4 Reading Comprehension
Passage 1
(1) Option c
(2) Option b
(3) Option d
(4) Option a
(5) Option a
Passage 2
(1) Option b
(2) Option c
(3) Option a
(4) Option c
(5) Option c

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PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 27

Chapter 5 Note Making

Note 1
Tsunami (Heading)
(I) What is a Tsunami? (Sub heading)
(a) Monster waves
(b) Go to a hght of 30 m
(II) Causes and occrnc of a Tsunami
(a) Earthquakes undr the sea
(b) Occur in high seismic zones
(c) Also occur in shallow areas with tectonic plate movmnt.
(III) Key ftrs of Seismic Zones
(a) Bndry of tectonic plates rough
(b) Prsnc of hard rock than sediment nr sea bed
(c) Series of cracks in the plate bndry
Key Used
(1) Hght= height
(2) Occrnc= occurrence
(3) Undr= under
(4) Movmnt=movement
(5) Ftrs= features
(6) Bndry= boundary
(7) Prsnc= presence
Note 2
(I) Agenda for Br. Natnls
(a) Remain with or exit Europe
(b) To be dcd by voting
(II) Who supports/ remain with EU
(a) British PM
(b) Labour chief
(c) SNP

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28 FOUNDATION EXAMINATION: MAY, 2018

(III) Who wants to exit?

(a) Former London Mayor
(b) A group termed Lexit
(c) UKIP
Key Used
(1) Br= British
(2) Natnls= nationals
(3) Dcd= decided
(4) SNP= Scottish National Party
(5) UKIP= United Kingdom Independent Party
Chapter 7 Précis Writing
(1) What is a Prayer? (Title)
A prayer is a complex phenomenon, which is primarily made use of in times of need.
According to the Lord himself, those that are wise make the purest form of prayers. People
resort to external help when they feel their prayers are not being answered; the reason
unknown to them.
(2) All religions preach Peace on Earth (Title)
All religions across the globe have one common teaching, Peace on Earth. The religious
scriptures and ceremonies aim towards eliminating war and spreading the cause of
humanity. The realization happened little too late, only after the occurrence of major
destructive events like world war and nuclear bombings.
Chapter 8 Article Writing
(1) Hints:
 What is demonetisation?
 What was the aim behind implementing it?
 What were the immediate causes?
 What are the expected long term effects of this new policy?
 How well has it been accepted in the public?
 Expected pros and cons, in the student’s personal opinion.
(2) Hints:
 Need for a discipline
 Need to follow a protocol

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PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 29

 Need to be independent
 Moral policing
 Relates to the work profile
 Free society, 21 st century
Chapter-9
Report Writing
(1) Report for College magazine
Hints:
The Computer Science Department organized a seminar on “Digital Marketing: An
upcoming field in business” on (date) at the (venue)
 Chief Guest for the event
 Speakers invited
 Who presided over the event from the college( HOD /Principal)
 Details of the event in chronological sequence
 Key points of the speech delivered by the Chief Guest
 Key points as stated by each speaker
 Valedictory Session
 Vote of thanks
(2) Report for The Newspaper
Hints:
From the local correspondent, B. Nagar,
ABC Senior Secondary School celebrated the Republic Day on Jan 25, 2018 with great
fanfare amid colorful display of culture and heritage from across the nation.
 Chief Guest for the event
 Speakers invited
 Who presided over the event from the college (HOD /Principal)
 Details of the event in chronological sequence
 March past by all the houses the senior school
 Group Dance performance by Junior school
 Group Song by the senior school choir group
 Group Dance performance by senior school

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30 FOUNDATION EXAMINATION: MAY, 2018

 Prize Distribution
 Key points of the speech delivered by the Chief Guest
 Valedictory Session
 Vote of thanks
Chapter 10 Formal Mails and Official Communication
Part 1 Formal Letters
(1) Manager Operations and Admin
Net Solutions
Mumbai

13th Feb, 2018

Administration Head
Food for you Solutions
Mumbai

Dear Sir/Madam

Sub: Complaint against food quality

This with reference to the food supplied to our cafeteria by your company’s kitchen.
Unfortunately, for the past few weeks, we have observed a degradation in the quality of
food items, especially rice, wheat flour and pulses.
A few of our employees complained of ill health after having consumed your food. I
presume stale food is not being sent to us.
Kindly assure that the raw material you use is of high quality standards and is ISI approved.
I sincerely request you to look into this matter as it involves the health of people working
for us, for which we are solely responsible.
Thanks and Regards,
Name
Manager, Ops and Admin

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Net Solutions
(1) Circular
Circular No. XXXIV 3rd Jan, 2018
Cultural Event for Charity
For all employees
This is an official communication informing about a cultural event being organized in the
office premises on the coming weekend (6 th and 7th Jan, 2018).
The events would be as follows:
 Singing competition
 Dance competition
 Stand up Comedy
 Dumb charades
 Food stalls
Participation fees is Rs 50/ per member. Family and friends are cordially invited.
The proceeds of the event will be given to Aaroyga NGO, working for the benefit of old
citizens.
Please get in touch with the HR team for more registration and details. Loo king forward to
an active participation.
Sheela Mishra
Manager, HR
Chapter 11 Writing Formal Mails
(1) Formal mail
To: mukeshtiwari@candidsweets.com
CC/BCC: hr@candidsweets.com
Subject: Apologies for in delivery
Dear Mr. Mukesh Tiwari,
This is wrt Order No. 365, placed on 17 th January, 2018. I sincerely apologise for the timely
delivery of the aforesaid order.
We have been facing some manufacturing issues over the last two months. Efforts are
being to resolve the issues. I assure you delivery of your products by the 10th of next month.

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32 FOUNDATION EXAMINATION: MAY, 2018

Regret the inconvenience caused.

For any discussion, please feel free to write back.
Regards,

Ms. Rekha Sanghvi,

Head Sales & Marketing
OCB International Pvt. Ltd.
Tel: -----
(2) To: anshulmalik@ccc.com
Subject: appointment letter
Dear Mr Anshul,
We are pleased to offer you the role of ‘Team Lead’, Sales and Marketing Division at our
organization.
Regarding the joining details, please read as follows:

Joining date: 22nd Feb, 2018

Location: Mumbai
Salary: 25 lacs per annum (refer to attachment for details)
We will reimburse your relocation expenses against bills provided by the Logistic services
used by. We would station you at our guest house for the first 15 days, from the date of
joining.
Please consider this as an official appointment letter. Feel free to contact us for any further
queries.
Two attachments with Salary and Accommodation details.
Thanks and Regards,
XYZ,
HR Head,
Axis Telecom
Tel: -----

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PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 33

Chapter 12
Resume Writing
(1) Functional format Resume
Name: Manish Reddy
Phone: 040-123456
Email:-mreddy@gmail.com
Address: 123, Chennai Road, Chennai
Birthday: 1st January
CAREER OBJECTIVE: Seeking a challenging career with a progressive organization that
provides an opportunity to utilize my sales and marketing l skills & abilities in the FMCG
sector.
PERSONAL SKILLS
Excellent convincing skills
Highly sales driven
Ability to work independently or as part of a team
Proven leadership skills and ability to motivate
EDUCATION
B.com from Hindu College, Delhi University
PGDIM from Symbiosis University, Pune
ACHIEVEMENTS
Ÿ Awarded the ‘Best Sales person’ Award in the company
Awarded a cash prize for two consecutive months for over achieving sales target.
PROFESSIONAL EXPERIENCE
XYZ Pvt. Ltd, Chennai
Worked as a Junior Sales Executive
Responsible for daily sales with a predicted target
Experience: 5 years
Auromatic Brothers
Worked as Senior Sales Executive
Responsible for monthly sales target
Led a team of twenty members.

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34 FOUNDATION EXAMINATION: MAY, 2018

Experience: 5 years.
REFERENCES: Will be provided upon request.
DECLARATION I solemnly declare that all the above information is correct to the best of
my knowledge and belief.
Date: Place: (Manish Reddy)
(2) Chronological Resume
Name
Address
Phone Number
Email
OBJECTIVE: To be associated with an organisation that will offer to me tremendous
opportunities for growth in career and provide a challenging environment that will utilise
my accounting skills and abilities to the maximum.
SUMMARY:
 Have cleared IPCC, Group 1
 Have an years experience of working in an office
 Possess good management skills
 Can work under pressure situations
 Willingness to learn more is the driving factor.
EXPERIENCE:
2017 to present day Junior Manager
Name the company, address
EDUCATION:
Begin from recent education moving back to college and then lastly school.
2017: CA IPCC, Group 1
2016: B. com (h), Kirori Mal College, DU
2014: class XII th, DAV Model School, Pitam Pura, New Delhi
2012: class Xth, DAV Model School, Pitam pura, New Delhi
SKILLS: Well versed with MS OfficeŸ
Working knowledge of Tally

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PAPER – 2 : BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING 35

Ÿ Completed compulsory 250 hrs. of Computer Training as per ICAI curriculum

schedule.
Ÿ Updated with all the latest computer applications and softwares.
PERSONAL DETAILS:
Date of Birth: 15 July, 1982
Marital Status: Unmarried
Languages Known: English, Hindi, French
Permanent Address: 822, SFS Flats, Pitam Pura New Delhi 110034
DECLARATION: I solemnly declare that all the above information is correct to the best of my
knowledge and belief.
Date: Place: (Name)
Chapter 13
Meetings
(1) Minutes of Meeting
Speakers involved were: the chairperson, the Product Head, the Sales Head and the
Creative Director. FMCG, new product new product, fixing a cost, discussing the Sales and
Marketing and the advertising strategies.
Date: 14th Feb, 2018
Meeting started at 4: 00pm.
Mrs. Kamla Murthy, Chairperson, gave an introductory speech
Mr. Raju D, Product Head spoke about the new product
Mrs. Usha Krishnan, Sales Head gave a detailed analysis of costing, overheads and other
miscellaneous finances.
Ms. Jennie Matthew, Creative director, PR, spoke about advertising campaign. Also
mentioned the cost involved.
Her team including Mr. X, Mr. Y, Mr. Z elaborated on the advertising strategies.
All the participants approved of the plan and appreciated it.
Madam Chairperson declared an open house for participants to put up their concerns, and
finally gave a vote of thanks.
Conclusions stated. Proposal for more funds put forward
ATR will be submitted by 18th Feb, 2018

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36 FOUNDATION EXAMINATION: MAY, 2018

(2) Action Taken Report (ATR)

As per the meeting held on 12 th Jan, 2018 at the Southern Region branch office of CP
finance Ltd, following actions have been reported:
 The client had complied to clear the pending dues by 10th Jan, 2018.
 The client has asked for more time. Reason mentioned: losses incurred in business.
 On the basis of being an old client, with no such bad record, order passed to provide
more time for payment.
 Expected payment till 31 st January, 2018.
Undersigned
Director, Sales & Marketing
Director, Business

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PAPER – 2: BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

PART – I: RELEVANT AMENDMENTS APPLICABLE FOR NOVEMBER 2018 EXAMINATION
Applicability of Relevant Amendments/ Circulars/ Notifications/ Regulations etc.
For November 2018 examinations for Paper 2, Section A: Business Laws, the significant
amendments made in the respective subject for the period 1st November, 2017 to 30th April, 2018
are relevant and applicable for said examinations.
This RTP of November 2018 examination is very important to the students to update themselves
with the relevant amendments pertaining to the Business Laws.
Students are advised to refer the following publications –
1. Study Material (Edition July 2017) containing Legislative amendments issued u pto
30th April, 2017.
2. RTP of November 2018 examination containing a gist of all the significant legislative
amendments from 1st May 2017 to 30th April, 2018 along with the suggested sample
questions and answers for understanding and practice.
Following are the relevant amendments/ Chapters of the Study material:
S. No. Subject Matter
1. The Ministry of Corporate Affairs vide Notification S.O. 3086(E) dated 20th
September, 2017 has notified the proviso to clause (87) of section 2 of the
Companies Act, 2013 w.e.f. 20th September, 2017. [Proviso to clause (87) of
Section 2 of the Companies Act, 2013 is covered on Page No. 5.12, Chapter 5 of
the study material]
2. The Ministry of Corporate Affairs vide the Companies (Amendment) Act, 2017 dated
9th February, 2018 has inserted the word “and” in clause (71) of section 2, in sub-
clause (a), after the word "company”. [Section 2(71) of the Companies Act, 2013 is
covered on Page No. 5.12, chapter 5 of the study material]
3. The Ministry of Corporate Affairs vide the Companies (Amendment) Act, 2017 dated 9th
February, 2018 has inserted the following Explanation in clause (46) of section 2:
‘Explanation- For the purposes of this clause, the expression “company” includes any
body corporate.’
[Section 2(46) of the Companies Act, 2013 is covered on Page No. 5.12, chapter 5 of
the study material]

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2 FOUNDATION EXAMINATION: NOVEMBER, 2018

4. The Ministry of Corporate Affairs vide the Companies (Amendment) Act, 2017 dated 9th
February, 2018 has inserted the words “other than this Act or the previous company
law” after the words “State Act” in clause (A) in proviso to clause (72) of section 2.
[Section 2(72) of the Companies Act, 2013 is covered on Page No. 5.17, chapter 5 of
the study material]

PART II: QUESTIONS AND ANSWERS

QUESTIONS

The Indian Contract Act, 1872

1. (i) Ramaswami 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 according to the Indian Contract Act, 1872 in the light of the
following:
(a) The telegram of revocation of acceptance was received by Ramaswami before the
letter of acceptance.
(b) The telegram of revocation and letter of acceptance both reached together.
(ii) “An anticipatory breach of contract is a breach of contract occurring before the time fixed
for performance has arrived”. Discuss stating also the effect of anticipatory breach on
contracts.
2. (i) 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.
Examining the provisions of the Indian Contract Act, 1872, decide, whether the contention
of Ms. Reema is valid?
(ii) A coolie in uniform picks up the luggage of R to be carried out of the railway station
without being asked by R and R allows him to do so. Examine whether the coolie is
entitled to receive money from R under the Indian Contact Act, 1872<

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PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 3

3. (i) Point out with reason whether the following agreements are valid or void:
(a) Kamala promises Ramesh to lend ` 500,000 in lieu of consideration that Ramesh
gets Kamala’s marriage dissolved and he himself marries her.
(b) Sohan agrees with Mohan to sell his black horse. Unknown to both the parties, the
horse was dead at the time of agreement.
(c) Ram sells the goodwill of his shop to Shyam for ` 4,00,000 and promises not to
carry on such business forever and anywhere in India.
(d) In an agreement between Prakash and Girish, there is a condition that they will not
institute legal proceedings against each other without consent.
(e) Ramamurthy, who is a citizen of India, enters into an agreement with an alien friend.
(ii) Ajay, Vijay and Sanjay are partners of software business and jointly promises to pay
` 6,00, 000 to Kartik. Over a period of time Vijay became insolvent, but his assets are
sufficient to pay one-fourth of his debts. Sanjay is compelled to pay the whole. Decide
whether Sanjay is required to pay whole amount himself to Kartik in discharging joint
promise under the Indian Contract Act, 1872.
4. (i) Define consideration. State the characteristics of a valid consideration.
(ii) “Mere silence does not amount to fraud”. Discuss.
The Sale of Goods Act, 1930
5. (i) 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?
(ii) Referring to the provisions of the Sale of Goods Act, 1930, state the rules provided to
regulate the “Sale by Auction.”
6. (i) 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.
Ms. 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. Ganesh. Ms. Preeti now claims back
the motor car from Mr. Ganesh. Will she succeed? Referring to the provisions of the Sale
of Goods Act, 1930, decide and examine what recourse is available to Ms. Preeti.
(ii) State briefly the essential element of a contract of sale under the Sale of Goods Act, 1930.

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4 FOUNDATION EXAMINATION: NOVEMBER, 2018

7. (i) “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.
(ii) 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”.
The Indian Partnership Act, 1932
8. (i) 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.
(ii) What is Partnership Deed? What are the particulars that the partnership deed may contain?
9. (i) State the modes by which a partner may transfer his interest in the firm in favour of
another person under the Indian Partnership Act, 1932. What are the rights of such a
transferee?
(ii) State the grounds on which a firm may be dissolved by the Court under the Indian
Partnership Act, 1932?
The Limited Liability Partnership Act, 2008
10. (i) State the essential elements to incorporate a LLP?
(ii) Differentiate between a LLP and a partnership firm?
The Companies Act, 2013
11. (i) ABC Pvt. Ltd., is a Private Company having five members only. All the members of the
company were going by car to Mumbai in relation to some business. An accident took
place and all of them died. Answer with reasons, under the Companies Act, 2013 whether
existence of the company has also come to the end?
(ii) 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?
12. (i) Briefly explain the doctrine of “ultravires” under the Companies Act, 2013. What are the
consequences of ultravires acts of the company?
(ii) Examine the following whether they are correct or incorrect along with reasons:
(a) A company being an artificial person cannot own property and cannot sue or be sued.
(b) A private limited company must have a minimum of two members, while a public
limited company must have at least seven members.

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PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 5

ANSWERS

1. (i) The problem is related with the communication and time of acceptance and its revocation.
As per Section 4 of the Indian Contract Act, 1872, the communication of an acceptance
is complete as against the acceptor when it comes to the knowledge of the proposer.
An acceptance may be revoked at any time before the communication of the acceptance
is complete as against the acceptor, but not afterwards.
Referring to the above provisions:
(a) Yes, the revocation of acceptance by Ramanathan (the acceptor) is valid.
(b) If Ramaswami opens the telegram first (and this would be normally so in case of a
rational person) and reads it, the acceptance stands revoked. If he opens the letter
first and reads it, revocation of acceptance is not possible as the contract has
already been concluded.
(ii) An anticipatory breach of contract is a breach of contract occurring before the time fixed
for performance has arrived. When the promisor refuses altogether to perform his promise
and signifies his unwillingness even before the time for performance has arrived, it is
called Anticipatory Breach.
Section 39 of the Indian Contract Act, 1872 deals with anticipatory breach of contract
and provides as follows: "When a party to a contract has refused to perform or disa ble
himself from performing, his promise in its entirety, the promisee may put an end to the
contract, unless he has signified, but words or conduct, his acquiescence in its
continuance."
Effect of anticipatory breach: The promisee is excused from performance or from
further performance. Further he gets an option:
(1) To either treat the contract as “rescinded and sue the other party for damages from
breach of contract immediately without waiting until the due date of performance; or
(2) He may elect not to rescind but to treat the contract as still operative, and wait for
the time of performance and then hold the other party responsible for the
consequences of non-performance. But in this case, he will keep the contract alive
for the benefit of the other party as well as his own, and the guilty party, if he so
decides on re-consideration, may still perform his part of the contract and can also
take advantage of any supervening impossibility which may have the effect of
discharging the contract.

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6 FOUNDATION EXAMINATION: NOVEMBER, 2018

2. (i) In India, consideration may proceed from the promise or any other person who is not a
party to the contract. The definition of consideration as given in section 2(d) makes that
proposition clear. According to the definition, when at the desire of the promiso r, the
promisee or any other person does something such an act is consideration. In other
words, there can be a stranger to a consideration but not stranger to a contract.
In the given problem, Mr. Balwant has entered into a contract with Ms. Reema, but Mr.
Sawant has not given any consideration to Ms. Reema but the consideration did flow from
Mr. Balwant to Ms. Reema and such consideration from third party is sufficient to the
enforce the promise of Ms. Reema, the daughter, to pay an annuity to Mr. Sawant. Further
the deed of gift and the promise made by Ms. Reema to Mr. Sawant to pay the annuity
were executed simultaneously and therefore they should be regarded as one transaction
and there was sufficient consideration for it.
Thus, a stranger to the contract cannot enforce the contract but a stranger to the
consideration may enforce it. Hence, the contention of Ms. Reema is not valid.
(ii) Implied Contracts: Implied contracts come into existence by implication. Most often the
implication is by law and or by action. Section 9 of the Indian Contract Act, 1872
contemplates such implied contracts when it lays down that in so far as such proposal or
acceptance is made otherwise than in words, the promise is said to be implied.
In the present case, it is an implied contract and R must pay for the services of the coolie.
3. (i) Validity of agreements
(a) Void Agreement: As per Section 23 of the Indian Contract Act, 1872, an agreement
is void if the object or consideration is against the public policy.
(b) Void Agreement: As per Section 20 of the Indian Contract Act, 1872 the contracts
caused by mistake of fact are void. There is mistake of fact as to the existence of
subject-matter.
(c) Void Agreement: As per Section 27 of the Indian Contract Act, 1872 an agreement
in restraint of trade is void. However, a buyer can put such a condition on the seller
of good will, not to carry on same business. However, the conditions must be
reasonable regarding the duration and the place of the business.
(d) Void Agreement: An agreement in restraint of legal proceedings is void as per
Section 28 of the Indian Contract Act, 1872.
(e) Valid Agreement: An agreement with alien friend is valid, but an agreement with
alien enemy is void.

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PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 7

(ii) As per section 43 of the Indian Contract Act, 1872, when two or more persons m ake a
joint promise, the promisee may, in the absence of express agreement to the contrary,
compel any one or more of such joint promisors to perform the whole of the promise.
Each of two or more joint promisors may compel every other joint promisor to con tribute
equally with himself to the performance of the promise, unless a contrary intention
appears from the contract.
If any one of two or more joint promisors makes default in such contribution, the remaining
joint promisors must bear the loss arising from such default in equal shares.
Therefore, in the instant case, Sanjay is entitled to receive ` 50,000 from Vijay’s assets
and ` 2,75,000 from Ajay.
4. (i) Definition of Consideration- Section 2(d) of the Indian Contract Act, 1872
“When at the desire of the promisor, the promisee or any other person has done, or
abstained from doing, or does or abstains from doing or promises to do or abstain from
doing something, such an act or abstinence or promise is called consideration for the
promise.”
The essential characteristics of a valid consideration are as follows:
(1) Consideration must move at the desire of the promisor (Durga Prasad v. Baldeo)
(2) It may proceed from the promisee or any other person on his behalf.
(3) It may be executed or executory.
(4) It may be past, present or future.
(5) Consideration need not be adequate
(6) Performance of what one is legally bound to perform
(7) Consideration must be real and not illusory
(ii) Mere silence not amounting to fraud: Mere silence as to facts likely to affect the
willingness of a person to enter into a contract is no fraud; but where it is the duty of a
person to speak, or his silence is equivalent to speech, silence amounts to fraud.
It is a rule of law that mere silence does not amount to fraud. A contracting party is not
duty bound to disclose the whole truth to the other party or to give him the whole
information in his possession affecting the subject matter of the contract.
The rule is contained in explanation to Section 17 of the Indian Contract Act, 1872 which
clearly states the position that mere silence as to facts likely to affect the willingness of a
person to enter into a contract is not fraud.

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8 FOUNDATION EXAMINATION: NOVEMBER, 2018

Exceptions to this rule:

(i) Where the circumstances of the case are such that, regard being had to them, it is
the duty of the person keeping silence to speak. Duty to speak arises when one
contracting party reposes trust and confidence in the other or where one party has
to depend upon the good sense of the other (e.g. Insurance Contract).
(ii) Where the silence is, in itself, equivalent to speech.
5. (i) Condition and warranty (Section 12): A stipulation in a contract of sale with reference
to goods which are the subject thereof may be a condition or a warranty.
[Sub-section (1)]
“A condition is a stipulation essential to the main purpose of the contract, the breach of
which gives rise to a right to treat the contract as repudiated”. [Sub-section (2)]
“A warranty is a stipulation collateral to the main purpose of the contract , the breach of
which gives rise to a claim for damages but not to a right to reject the goods and treat the
contract as repudiated”. [Sub-section (3)]
Whether a stipulation in a contract of sale is a condition or a warranty depends in each
case on the construction of the contract. A stipulation may be a condition, though called
a warranty in the contract. [Sub-section (4)]
In the instant case, the term that the ‘car should be suitable for touring purposes’ is a
condition of the contract. It is so vital that its non-fulfilment defeats the very purpose for
which Ram purchases the car.
Ram is therefore entitled to reject the car and have refund of the price.
(ii) Rules of Auction sale: Section 64 of the Sale of Goods Act, 1930 provides following
rules to regulate the sale by auction:
(a) Where goods are sold in lots: Where goods are put up for sale in lots, each lot is
prima facie deemed to be subject of a separate contract of sale.
(b) Completion of the contract of sale: The sale is complete when the auctioneer
announces its completion by the fall of hammer or in any other customary manner
and until such announcement is made, any bidder may retract from his bid.
(c) Right to bid may be reserved: Right to bid may be reserved expressly by or on
behalf of the seller and where such a right is expressly reserved, but not otherwise,
the seller or any one person on his behalf may bid at the auction.
(d) Where the sale is not notified by the seller: Where the sale is not notified to be
subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to

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PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 9

bid himself or to employ any person to bid at such sale, or for the auctioneer
knowingly to take any bid from the seller or any such person; and any sale
contravening this rule may be treated as fraudulent by the buyer.
(e) Reserved price: The sale may be notified to be subject to a reserve or upset price;
and
(f) Pretended bidding: If the seller makes use of pretended bidding to raise the price,
the sale is voidable at the option of the buyer.
6. (i) As per the provisions of section 24 of the Sale of Goods Act, 1930, 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-
(a) when the buyer signifies his approval or acceptance to the seller or does any other
act adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods
without giving notice of rejection, then, if a time has been fixed for the return of the
goods, on the expiration of such time, and, if no time has been fixed, on the
expiration of a reasonable time; or
(c) he does something to the good which is equivalent to accepting the goods e.g. he
pledges or sells the goods.
Referring to the above provisions, we can analyse the situation given in the question.
Since, Mr. Joshi, who had taken delivery of the Motor car on Sale or Return basis
and pledged the motor car to Mr. Ganesh, has attracted the third condition that he
has done something to the good which is equivalent to accepting the goods e.g. he
pledges or sells the goods. Therefore, the property therein (Motor car) passes to Mr.
Joshi. Now in this situation, Ms. Preeti cannot claim back her Motor Car from Mr.
Ganesh, but she can claim the price of the motor car from Mr. Joshi only.
(ii) Essentials of Contract of Sale
The following elements must co-exist so as to constitute a contract of sale of goods under
the Sale of Goods Act, 1930:
(i) There must be at least two parties.
(ii) The subject matter of the contract must necessarily be goods covering only movable
property. It may be either existing goods, owned or possessed by the seller or future
goods.

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10 FOUNDATION EXAMINATION: NOVEMBER, 2018

(iii) A price in money (not in kind) should be paid or promised. But there is nothing to
prevent the consideration from being partly in money and partly in kind.
(iv) A transfer of property in goods from seller to the buyer must take place. The contract
of sale is made by an offer to buy or sell goods for a price by one party and the
acceptance of such offer by other.
(v) A contract of sale must be absolute or conditional [section 4(2)].
(vi) All other essential elements of a valid contract must be present in the contract o f
sale, e.g. competency of parties, legality of object and consideration etc.
7. (i) The statement given in the question is the fundamental principle of law of sale of goods,
sometime expressed by the maxim ‘Caveat Emptor’ meaning thereby ‘Let the buyer be
aware’. In other words, it is no part of the seller’s duty in a contract of sale of goods t o
give the buyer an article suitable for a particular purpose, or of particular quality, unless
the quality or fitness is made an express terms of the contract. The person who buys
goods must keep his eyes open, his mind active and should be cautious while buying the
goods. If he makes a bad choice, he must suffer the consequences of lack of skill and
judgement in the absence of any misrepresentation or guarantee by the seller.
There are, however, certain exceptions to the rule which are stated as under:
1. Fitness as to quality or use: Where the buyer makes known to the seller the
particular purpose for which the goods are required, so as to show that he relies on
the seller’s skill or judgment and the goods are of a description which is in the course
of seller’s business to supply, it is the duty of the seller to supply such goods as are
reasonably fit for that purpose.
2. Goods purchased under patent or brand name: In case where the goods are
purchased under its patent name or brand name, there is no implied condition that
the goods shall be fit for any particular purpose.
3. Goods sold by description: Where the goods are sold by description there is an
implied condition that the goods shall correspond with the description. If it is not so
then seller is responsible.
4. Goods of Merchantable Quality: Where the goods are bought by description from
a seller who deals in goods of that description there is an implied condition that the
goods shall be of merchantable quality. The rule of Caveat Emptor is not applicable.
But where the buyer has examined the goods this rule shall apply if the defects were
such which ought to have not been revealed by ordinary examination.

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PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 11

5. Sale by sample: Where the goods are bought by sample, this rule of Caveat
Emptor does not apply if the bulk does not correspond with the sample.
6. Goods by sample as well as description: Where the goods are bought by sample
as well as description, the rule of Caveat Emptor is not applicable in case the goods
do not correspond with both the sample and description or either of the condition.
7. Trade Usage: An implied warranty or condition as to quality or fitness for a particular
purpose may be annexed by the usage of trade and if the seller deviates from that, this
rule of Caveat Emptor is not applicable.
8. Seller actively conceals a defect or is guilty of fraud: Where the seller sells the
goods by making some misrepresentation or fraud and the buyer relies on it or when
the seller actively conceals some defect in the goods so that the same could not be
discovered by the buyer on a reasonable examination, then the rule of Caveat Emptor
will not apply. In such a case, the buyer has a right to avoid the contract and claim
damages.
(ii) Right of lien of an unpaid seller
The legal provisions regarding the right of lien of an unpaid seller has been stated from
Sections 47 to 49 of the Sale of Goods Act, 1930 which may be enumerated as follows:
(i) According to Section 47, the unpaid seller of the goods who is in possession of them
is entitled to retain possession of them until payment or tender of the price in the
following cases namely:
(a) where the goods have been sold without any stipulation as to credit.
(b) where the goods have been sold on credit, but the term of credit has expired;
or
(c) where the buyer becomes insolvent.
The seller may exercise his right of lien not withstanding that he is in possession of
the goods as agent or bailee for the buyer.
(ii) Section 48 states that where an unpaid seller has made part delivery of the goods,
he may exercise his right of lien on the remainder, unless such part delivery has
been made under such circumstances as to show an agreement to waive the lien.
(iii) According to Section 49 the unpaid seller loses his lien on goods:
(a) when he delivers the goods to a carrier or other bailee for the purpose of
transmission to the buyer without reserving the right of disposal of the goods.
(b) when the buyer or his agent lawfully obtains possession of the goods;

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12 FOUNDATION EXAMINATION: NOVEMBER, 2018

(c) by waiver thereof.

The unpaid seller of the goods, having a lien thereon, does not lose his lien by reason
only that he has obtained a decree to the price of the goods.
Right of lien and Right to stoppage the goods in transit; distinction:
(i) The essence of a right of lien is to retain possession whereas the right of stoppage
in transit is right to regain possession.
(ii) Seller should be in possession of goods under lien while in stoppage in transit (i)
Seller should have parted with the possession (ii) possession should be with a
carrier and (iii) Buyer has not acquired the possession.
(iii) Right of lien can be exercised even when the buyer is not insolvent, but it is not the
case with right of stoppage in transit.
(iv) Right of stoppage in transit begins when the right of lien ends. Thus, the end of the
right of lien is the starting point of the right of stoppage the goods in transit.
8. (i) It is not possible for the majority of partners to expel a partner from the firm without
satisfying the conditions as laid down in Section 33 of the Indian Partnership Act, 1932.
The essential conditions before expulsion can be done are:
(i) the power of expulsion must have existed in a contract between the partners;
(ii) the power has been exercised by a majority of the partners; and
(iii) It has been exercised in good faith.
The test of good faith includes:
(a) that the expulsion must be in the interest of the partnership;
(b) that the partner to be expelled is served with a notice; and
(c) that the partner has been given an opportunity of being heard.
Thus, in the given case A and B the majority partners can expel the partner only if the
above conditions are satisfied and procedure as stated above has been followed.
(ii) Partnership Deed: Partnership is the result of an agreement. No particular formalities
are required for an agreement of partnership. It may be in writing or formed verbally. But
it is desirable to have the partnership agreement in writing to avoid future disputes. The
document in writing containing the various terms and conditions as to the relationship of
the partners to each other is called the ‘partnership deed’. It should be drafted with care
and be stamped according to the provisions of the Stamp Act, 1899. Where the

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partnership comprises immovable property, the instrument of partnership must be in

writing, stamped and registered under the Registration Act.
Partnership deed may contain the following information:
1. Name of the partnership firm.
2. Names of all the partners.
3. Nature and place of the business of the firm.
4. Date of commencement of partnership.
5. Duration of the partnership firm.
6. Capital contribution of each partner.
7. Profit Sharing ratio of the partners.
8. Admission and Retirement of a partner.
9. Rates of interest on Capital, Drawings and loans.
10. Provisions for settlement of accounts in the case of dissolution of the firm.
11. Provisions for Salaries or commissions, payable to the partners, if any.
12. Provisions for expulsion of a partner in case of gross breach of duty or fraud.
A partnership firm may add or delete any provision according to the needs of the firm.
9. (i) Section 29 of the Indian Partnership Act, 1932 provides that a share in a partnership is
transferable like any other property, but as the partnership relationship is based on mutual
confidence, the assignee of a partner’s interest by sale, mortgage or otherwise cannot
enjoy the same rights and privileges as the original partner.
The rights of such a transferee are as follows:
(1) During the continuance of partnership, such transferee is not entitled
(a) to interfere with the conduct of the business,
(b) to require accounts, or
(c) to inspect books of the firm.
He is only entitled to receive the share of the profits of the transferring partner and
he is bound to accept the profits as agreed to by the partners, i.e., he cannot
challenge the accounts.
(2) On the dissolution of the firm or on the retirement of the transferring partner, the
transferee will be entitled, against the remaining partners:

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14 FOUNDATION EXAMINATION: NOVEMBER, 2018

(a) to receive the share of the assets of the firm to which the transferring partner
was entitled, and
(b) for the purpose of ascertaining the share,
he is entitled to an account as from the date of the dissolution.
By virtue of Section 31, no person can be introduced as a partner in a firm without
the consent of all the partners. A partner cannot by transferring his own interest, make
anybody else a partner in his place, unless the other partners agree to accept that
person as a partner. At the same time, a partner is not debarred from transferring his
interest. A partner’s interest in the partnership can be regarded as an existing interest
and tangible property which can be assigned.
(ii) DISSOLUTION BY THE COURT (SECTION 44): Court may, at the suit of the partner,
dissolve a firm on any of the following ground:
(a) Insanity/unsound mind: Where a partner (not a sleeping partner) has become of
unsound mind, the court may dissolve the firm on a suit of the other partners or by
the next friend of the insane partner. Temporary sickness is no ground for dissolution
of firm.
(b) Permanent incapacity: When a partner, other than the partner suing, has become in
any way permanently incapable of performing his duties as partner, then the court
may dissolve the firm. Such permanent incapacity may result from physical disability
or illness etc.
(c) Misconduct: Where a partner, other than the partner suing, is guilty of conduct which
is likely to affect prejudicially the carrying on of business, the court may order for
dissolution of the firm, by giving regard to the nature of business. It is not necessary
that misconduct must relate to the conduct of the business. The important point is
the adverse effect of misconduct on the business. In each case nature of business
will decide whether an act is misconduct or not.
(d) Persistent breach of agreement: Where a partner other than the partner suing,
wilfully or persistently commits breach of agreements relating to the management of
the affairs of the firm or the conduct of its business, or otherwise so conduct himself
in matters relating to the business that it is not reasonably practicable for other
partners to carry on the business in partnership with him, then the court may dissolve
the firm at the instance of any of the partners. Following comes in to category of
breach of contract:
• Embezzlement,

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• Keeping erroneous accounts

• Holding more cash than allowed
• Refusal to show accounts despite repeated request etc.
(e) Transfer of interest: Where a partner other than the partner suing, has transferred the
whole of his interest in the firm to a third party or has allowed his share to be charged
or sold by the court, in the recovery of arrears of land revenue, the court may
dissolve the firm at the instance of any other partner.
(f) Continuous/Perpetual losses: Where the business of the firm cannot be carried on
except at a loss in future also, the court may order for its dissolution.
(g) Just and equitable grounds: Where the court considers any other ground to be just
and equitable for the dissolution of the firm, it may dissolve a firm. The following are
the cases for the just and equitable grounds-
(i) Deadlock in the management.
(ii) Where the partners are not in talking terms between them.
(iii) Loss of substratum.
(iv) Gambling by a partner on a stock exchange.
10. (i) Essential elements to incorporate LLP - Under the LLP Act, 2008, the following
elements are very essential to form a LLP in India:
(i) To complete and submit incorporation document in the form prescribed with the
Registrar electronically;
(ii) To have at least two partners for incorporation of LLP [Individual or body corporate];
(iii) To have registered office in India to which all communications will be made and
received;
(iv) To appoint minimum two individuals as designated partners who will be responsible
for number of duties including doing of all acts, matters and things as are required
to be done by the LLP. Atleast one of them should be resident in India.
(v) A person or nominee of body corporate intending to be appointed as designat ed
partner of LLP should hold a Designated Partner Identification Number (DPIN)
allotted by MCA.
(vi) To execute a partnership agreement between the partners inter se or between the
LLP and its partners. In the absence of any agreement the provisions as s et out in
First Schedule of LLP Act, 2008 will be applied.

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16 FOUNDATION EXAMINATION: NOVEMBER, 2018

(vii) LLP Name.

(ii) Distinction between LLP and Partnership Firm: The points of distinction between a
limited liability partnership and partnership firm are tabulated as follows:
Basis LLP Partnership firm
1. Regulating Act The Limited Liability The Indian Partnership Act,
Partnership Act, 2008. 1932.
2. Body corporate It is a body corporate. It is not a body corporate,
3. Separate legal It is a legal entity separate It is a group of persons with no
entity from its members. separate legal entity.
4. Creation It is created by a legal It is created by an agreement
process called registration between the partners.
under the LLP Act, 2008.
5. Registration Registration is mandatory. Registration is voluntary. Only
LLP can sue and be sued the registered partnership firm
in its own name. can sue the third parties.
6. Perpetual The death, insanity, The death, insanity, retirement
succession retirement or insolvency of or insolvency of the partner(s)
the partner(s) does not may affect its existence. It has
affect its existence of LLP. no perpetual succession.
Members may join or
leave but its existence
continues forever.
7. Name Name of the LLP to contain No guidelines. The partners
the word limited liability can have any name as per
partners (LLP) as suffix. their choice.
8. Liability Liability of each partner Liability of each partner is
limited to the extent to unlimited. It can be extended
agreed contribution except upto the personal assets of the
in case of willful fraud. partners.
9. Mutual agency Each partner can bind the Each partner can bind the firm
LLP by his own acts but as well as other partners by his
not the other partners. own acts.
10. Designated At least two designated There is no provision for such
partners partners and atleast one partners under the Indian
partnership Act, 1932.

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of them shall be resident

in India.
11. Common seal It may have its common There is no such concept in
seal as its official partnership
signatures.
12. Legal compliances Only designated partners All partners are responsible for
are responsible for all the all the compliances and
compliances and penalties under the Act.
penalties under this Act.
13. Annual filing of LLP is required to file: Partnership firm is not required
documents (i) Annual statement of to file any annual document
accounts with the registrar of firms.
(ii) Statement of
solvency
(iii) Annual return with
the registration of
LLP every year.
14. Foreign Foreign nationals can Foreign nationals cannot
partnership become a partner in a become a partner in a
LLP. partnership firm.
17. Minor as partner Minor cannot be admitted Minor can be admitted to the
to the benefits of LLP. benefits of the partnership with
the prior consent of the
existing partners.

11. (i) Death of all members of a Private Limited Company, Under the Companies Act,
2013: The most distinguishing feature of a company is its being a separate entity from
the shareholders and promoters who form it. This lends stability and perpetuity to the
company form of business organization. In short, a company is brought into existence by
a process of law and can be terminated or wound up or brought to an end only by a
process of law. Its life is not impacted by the death, insolvency or re tirement of any or all
shareholder(s) or director(s).
The provision for transferability or transmission of the shares helps to preserve the
perpetual existence of a company by allowing the constitution and identity of shareholders
to change.

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18 FOUNDATION EXAMINATION: NOVEMBER, 2018

In the present case, ABC Pvt. Ltd. does not cease to exist even by the death of all its
shareholders. The legal process will be for the successors of the deceased shareholders
to get the shares registered in their names by way of the process which is called
“transmission of shares”. The company will cease to exist only when it is wound up by a
due process of law.
Therefore, even with the death of all members (i.e. 5), ABC (Pvt.) Ltd. does not cease to exist.
(ii) One Person Company (OPC) [Section 2(62) of the Companies Act, 2013]: The Act
defines one person company (OPC) as a company which has only one person as a
member.
Rules regarding its membership:
• Only one person as member.
• The memorandum of OPC shall indicate the name of the other person, who shall, in
the event of the subscriber’s death or his incapacity to contract, become the member
of the company.
• The other person whose name is given in the memorandum shall give his prior
written consent in prescribed form and the same shall be filed with Registrar of
companies at the time of incorporation.
• Such other person may be given the right to withdraw his consent.
• The member of OPC may at any time change the name of such other person by
giving notice to the company and the company shall intimate the same to the
Registrar.
• Any such change in the name of the person shall not be deemed to be an alteration
of the memorandum.
• Only a natural person who is an Indian citizen and resident in India (person who has
stayed in India for a period of not less than 182 days during the immediately
preceding one calendar year)-
o shall be eligible to incorporate a OPC;
o shall be a nominee for the sole member of a OPC.
• No person shall be eligible to incorporate more than one OPC or become nominee
in more than one such company.

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• No minor shall become member or nominee of the OPC or can hold share with
beneficial interest.
OPC cannot be incorporated or converted into a company under section 8 of the Act.
Though it may be converted to private or public companies in certain cases. OPC cannot
convert voluntarily into any kind of company unless two years have expired from the date
of incorporation, except where the paid up share capital is increased beyond fifty lakh
rupees or its average annual turnover during the relevant period exceeds two crore rupees.
12. (i) Doctrine of ultra vires: The meaning of the term ultra vires is simply “beyond (their)
powers”. The legal phrase “ultra vires” is applicable only to acts done in excess of the
legal powers of the doers. This presupposes that the powers in their nature are limited.
It is a fundamental rule of Company Law that the objects of a company as stated in its
memorandum can be departed from only to the extent permitted by the Act, thus far and
no further. In consequence, any act done or a contract made by the company which
travels beyond the powers not only of the directors but also of the company is wholly void
and inoperative in law and is therefore not binding on the company. On this account, a
company can be restrained from employing its fund for purposes other than those
sanctioned by the memorandum. Likewise, it can be restrained from carrying on a trade
different from the one it is authorised to carry on.
The impact of the doctrine of ultra vires is that a company can neither be sued on an ultra
vires transaction, nor can it sue on it. Since the memorandum is a “public document”, it
is open to public inspection. Therefore, when one deals with a company one is deemed
to know about the powers of the company. If in spite of this you enter int o a transaction
which is ultra vires the company, you cannot enforce it against the company.
An act which is ultra vires the company being void, cannot be ratified by the shareholders
of the company. Sometimes, act which is ultra vires can be regularised by ratifying it
subsequently.
(ii) (a) A company being an artificial person cannot own property and cannot sue or
be sued
Incorrect: A company is an artificial person as it is created by a process other
than natural birth. It is legal or judicial as it is created by law. It is a person since
it is clothed with all the rights of an individual.

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Further, the company being a separate legal entity can own property, have banking
account, raise loans, incur liabilities and enter into contracts. Even members can
contract with company, acquire right against it or incur liability to it. It can sue and
be sued in its own name. It can do everything which any natural person can do
except be sent to jail, take an oath, marry or practice a learned profession. Hence,
it is a legal person in its own sense.
(b) A private limited company must have a minimum of two members, while a
public limited company must have at least seven members.
Correct: Section 3 of the Companies Act, 2013 deals with the basic requirement
with respect to the constitution of the company. In the case of a public company,
any 7 or more persons can form a company for any lawful purpose by subscribing
their names to memorandum and complying with the requirements of this Act in
respect of registration. In exactly the same way, 2 or more persons can form a
private company.

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SECTION - B: BUSINESS CORRESPONDENCE AND REPORTING

Chapter-1
Communication
1) Define the term ‘communication’. How is it relevant in daily life?
2) Explain the Star Network in the channel of communication.
3) Based on communication channels, what are the different kinds of communication methods?
Explain.
4) What is the ‘chain of command’ in communication? What are its drawbacks?
Chapter 2
Sentence Types: Active Passive Voice, Direct Indirect Speech
A) Change the following sentences into passive voice.
1) May God bless you with health and happiness.
2) Ravi sent the report on Monday.
3) Angela wore a pink frock for her birthday party.
4) Elizabeth will give all books to the orphans.
5) My aunt prepares delicious desserts.
B) Change the following Direct speech into Indirect speech.
1) The fans said, ‘We want India to win’
2) The Minister announced, ‘Our party introduces the GST from tomorrow’
3) The BCCI said, ‘We wish the Under 19 cricket team for the its world cup win’
4) The master yelled at the servant, ‘Get lost and don’t show your face’
5) Elders always say, ‘If you work hard, you will succeed’
Chapter -3 Vocabulary
A) Select the suitable synonym for the given words:
1) Concise
(a) Important (b) Better (c) Precise (d) Interesting
2) Ill will
(a) Sad (b) Lazy (c) Good will (d) Hatred

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3) Stimulate
(a) Effects (b) Activate (c) Irritate (d) Captivate
4) Recede
(a) Move back (b) Accept (c) Deviate (d) Agree
5) Exorbitant
(a) Light (b) Exclusive (c) Enormous (d) Easy
B) Select the suitable antonym for the given word:
1) Cyclical
(a) Recurrent (b) Unidirectional (c) Appearing (d) Vehicular
2) Inept
(a) Aptitude (b) long lasting (c) Inappropriate (d) Skilled
3) Cumbersome
(a) Manageable (b) Clumsy (c) Quantitative (d) Moderate
4) Drastic
(a) Severe (b) Useless (c) Forceless (d) Emergency
5) Tangible
(a) Limited (b) Impalpable (c) Thematic (d) Peaceful
C) Select the correct meaning of the given idioms:
1) Face the music
(a) Escape from the situation
(b) Act violently
(c) Enjoy the music
(d) Face the challenges/ consequences
2) Food for thought
(a) Incomplete information
(b) Good knowledge
(c) Uncensored words
(d) Baseless facts

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3) Sell like hotcakes

(a) A difficult campaign
(b) Controversial marketing
(c) Good baker
(d) Fast selling / in huge numbers
D) Fill in the blanks with the most suitable choice:
1) The judge ordered a death sentence when the accused was found _______________
(a) Transparent (b) Abusing (c) Culpable (d) Empirical
2) The scam was basically because of ______________________of funds by the senior
members of the organization.
(a) Misappropriation (b) credibility (c) Movement (d) Allotment
3) His first move was to ______________ the enemy team and then behead each one.
(a) Announce (b) Seize (c) Complete (d) Harvest
Chapter 4
Comprehension Passages
Read the following comprehension passages and answer the following questions
Passage 1
Some polar bears in the Arctic are shedding weight during the time they should be beefing up, a
study shows. It's the climate change diet and scientists say it's not good. They blame global warming
for the dwindling ice cover on the Arctic Ocean that bears need for hunting seals each spring. The
scientists spied on polar bears by equipping nine female white giants with tracking collars that had
video cameras and the bear equivalent of a Fitbit during three recent springs. The bears were also
weighed.
What the scientists found is that five of the bears lost weight and four lost 1.3 to 2.5kg per day. The
average polar bear studied weighed about 175kg. One bear lost 23kg in just nine days. "You're
talking a pretty amazing amount of mass to lose," said US Geological Survey (USGS) wildlife
biologist Anthony Pagano, lead author of the study. Researchers studied the bears for 10 days in
April, when they are supposed to begin putting on weight so they can later have cubs, feed them
and survive through the harsh winter. But because the ice is shrinking, the bears are having a harder
time catching seal pups even during prime hunting time, Pagano said. The US Fish and Wildlife
Service lists polar bears as a threatened species. Polar bears hunt from the ice. They often wait for
seals to pop out of holes to get air and at other times they swim after seals. If there is less sea ice

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and it is broken apart, bears have to travel more — often swimming — and that has serious
consequences, such as more energy use, hypothermia and risk of death, said University of Alberta
biology professor Andrew Derocher. It was found that on the ice, the polar bears burn up 60% more
energy than thought, based on these first real-life measurements done on the ice.
1) Give the passage a suitable title
a) Polar Bears in danger
b) Arctic ice melting
c) Seals, no more a prey!
d) Change in climate
2) Give a suitable antonym for the word ‘dwindling’ mean, as used in the passage.
a) Flourish
b) Cover up
c) Reduce
d) Amount
3) Which of the following sentences is true according to the passage?
a) Seals pop out of ice for fun.
b) Dwindling ice is a major concern for the polar bears
c) Global warming has nothing to do with the receding ice cover
d) Less ice means easy catch of seals for bears
4) Polar bears hunt for
a) Seals
b) Other bears
c) Ice glaciers
d) Both a and b
5) What is the primary aim of the study by scientists, in the passage?
a) Polar bears have stopped eating seals
b) Polar bears are losing weight in a season when they should be gaining it.
c) The dwindling ice cover on the Arctic Ocean.
d) Only a and b.

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Passage 2
Bitcoins and other cryptocurrencies will see increasing use in India, according to industry players,
who say that, right now, the sector is too small to be regulated by the Reserve Bank of India (RBI)
or Finance Ministry. Bitcoin companies also say that volatility in the cryptocurrency’s price is likely
to continue since it is still attracting new investors with inadequate knowledge about the market,
with speculation separately fuelling the price gyrations.
“The fluctuation has always been there, but suddenly there has been a surge because of a few
reasons,” said Vivek Steve Francis, CEO of Coinome. “One, things that are happening in the market.
Some countries have legalised cryptocurrencies like Japan and Korea, and in the U.S. they have
announced that there will be bitcoin futures trading. So, this not only gives a legal standing to it, it
also opens the door to speculation.”
“The second thing is that people are seeing others put in ₹1 lakh and making 10% the very next
day, so that is also bringing a lot of laymen into this, which may or may not be a good thing, ” Mr.
Francis added.
Another reason for the price volatility, something that will continue for some time, is the
disaggregated nature of the bitcoin market. “Since bitcoin is widely distributed and the majority of it
is not owned by a limited number of people, that makes it volatile,” Ashish Agarwal, founder of
Bitsachs, said. “As far as the future is concerned, I won’t want to comment on the price, but adoption
will increase. Now, the serious investors are eyeing bitcoin. No newspaper or serious person would
have mentioned bitcoin five years ago, but now all eyes are on it.”
While the RBI has cautioned against its use, informing users, holders, investors and traders dealing
with virtual currencies that they are doing so at their own risk, Securities and Exchange Board of
India Chairman Ajay Tyagi recently said the cryptocurrency had so far not posed any systemic risk.
He added that the government had formed a panel to examine it.
1) What does the word ‘volatile’ means (Since bitcoin is widely distributed and the majority of it is
not owned by a limited number of people, that makes it volatile……..)
a) Violent
b) Unstable
c) High
d) Irrational
2) Give a synonym for the word ‘gyrations’ as used in the first paragraph.
a) Evolution
b) Cyclone

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c) Spinning
d) Rising
3) What is the primary reason for laymen to start believing in bitcoin?
a) It’s easy to use nature
b) The fact that the value increases by 10% the very next day
c) There is no check on bitcoin transactions
d) Japan has legalized it
4) What are the reasons mentioned for the volatility in the crypto currency price?
a) Legalized in few countries.
b) Fast money
c) New investors
d) Inadequate market knowledge and new investors.
5) According to Mr. Ashish Agarwal, which of the following statements said by him are false?
a) The adoption of bitcoin will decrease as buyers are no more interested
b) He does not want to comment on the bitcoin price
c) Few years back, this concept was not discussed
d) People now seem to show interest in bitcoin.
Chapter 5 Note Making
Read the following passage/news story and make proper notes following the guidelines of Note making.
(Source: internet, newspaper articles)
1) Information technology clients are no more in the ‘business as usual’ mode. And, ‘less is more’ is
the new mantra for IT spending. These two philosophies now rule the thinking of clients spending
on technology. The IT services industry has also been facing challenges in getting retail and
banking clients to spend on technology. Mr. Subramaniam dwells on these headwinds and new
opportunities:
We can’t have teams that do only programming. We need more all-rounders. People should have
functional knowledge, the ability to co-relate and understand the experience being delivered to the
client. Coding is important. But you also have to ensure that we are coding for scale, that there are
vulnerabilities in your code; you should know how to test, how to document. More than anything
else, make sure that your code does not freeze other pieces of code. In a jigsaw puzzle, you can’t

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worry only about your piece. Earlier, it was possible. Now you have to understand big picture;
understand what you are trying to deliver in terms of experience.
2) The potential is enormous, and we have not lived up to it. Yes, trade is more than $2 billion, but
most of that comes from trade in a few items like potash and phosphate and we would like to
diversify. Jordan could be a market and would welcome investment from Indian companies,
including in ICT, infrastructure and energy. His Majesty is looking forward to his visit in early 2018,
as soon as possible, and we hope to create momentum to put us on a fast track of ties.
You spoke of opportunities, but equally Jordan is in a region in turmoil. Jordan itself houses millions
of refugees from Palestine and Syria. How will this change in 2018?
For us, the core issue remains the Palestinian-Israeli conflict and there cannot be peace and
stability in the region without a resolution to the conflict on the basis of a two-state solution that
would allow an independent sovereign Palestinian state with Occupied (East) Jerusalem as its
capital, on the lines of the 1967 situation, and that would allow a peaceful Israel as well. We want
every country to support this. India has always had a very clear position in favour of a just, lasting
peace, and we encourage India to be more engaged and would like to see more of an Indian role
[in the peace process.
Chapter 7
Précis Writing
Read the following passages and write a précis for the same. Follow the basic rules of précis writing
while writing.
1) The Goods and Services Tax (GST) is a vast concept that simplifies the giant tax structure by
supporting and enhancing the economic growth of a country. GST is a comprehensive tax levy on
manufacturing, sale and consumption of goods and services at a national level [1]The. Goods and
Services Tax Bill or GST Bill, also referred to as The Constitution (One Hundred and Twenty-
Second Amendment) Bill, 2014, initiates a Value added Tax to be implemented on a national level
in India. GST will be an indirect tax at all the stages of production to bring about uniformity in the
system.
On bringing GST into practice, there would be amalgamation of Central and State taxes into a single
tax payment. It would also enhance the position of India in both, domestic as well as international
market. At the consumer level, GST would reduce the overall tax burden, which is currently
estimated at 25-30%. Under this system, the consumer pays the final tax but an efficient input tax
credit system ensures that there is no cascading of taxes- tax on tax paid on inputs that go into
manufacture of goods
In order to avoid the payment of multiple taxes such as excise duty and service tax at Central level
and VAT at the State level, GST would unify these taxes and create a uniform market throughout

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28 FOUNDATION EXAMINATION: NOVEMBER, 2018

the country. Integration of various taxes into a GST system will bring about an effective cross-
utilization of credits. The current system taxes production, whereas the GST will aim to tax
consumption.
2) A code of business conduct, sometimes called a code of ethics, is a management tool for setting
out an organization's values, responsibilities and ethical obligations. The code of conduct provides
employees with guidance for handling difficult ethical situations related to the business. Businesses
develop their own codes, based on their core values, and no two codes are the same. To be truly
effective, the code of conduct must also be embedded in the business, so employees know how it
applies to them.
3) Virtual reality is an artificial environment that is created with software and presented to the user in
such a way that the user suspends belief and accepts it as a real environment. On a computer,
virtual reality is primarily experienced through two of the five senses: sight and sound. The simplest
form of virtual reality is a 3-Dimage that can be explored interactively at a personal computer,
usually by manipulating keys or the mouse so that the content of the image moves in some direction
or zooms in or out. More sophisticated efforts involve such approaches as wrap-around display
screens, actual rooms augmented with wearable computers, and haptics devices that let you feel
the display images.
Chapter 8
Article Writing
Write an article on the following topics. (Word limit: 300 words)
1) Growing health problems in the youth today: Causes and Consequences.
Include words: lifestyle, lethargy, physical work, internet, obsession
2) Discuss about the repercussions of allowing students in school to have a feedback system for their
teachers
3) Let’s change the environment by……..
Chapter 9
Report Writing
1) An NGO working for the cause of the underprivileged had set up a one day workshop in your
college. As member of the Organizing committee, write a report for your college magazine giving
details of the workshop.
(250-300 words)

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2) As the School Captain, write a report for your school magazine, about a cultural fest held in your
school last week. Mention the various schools that participated, the cultural programmes, the food
stalls et al. (250-300 words)
Chapter-10
1) As the Manager, Supply Chain Division, of an FMCG company write an enquiry letter to your
counterpart of an Oil Manufacturing company, stating your queries regarding oil prices at bulk rate.
2) As the HR Manager of your organization, draft a circular for all the employees of your company,
informing them about a charity cultural event being organized over the weekend in the office
campus. Mention a few events and request for active participation.
Chapter 11
Formal Mails
1) You have opened a new catering company supplying food and snacks. As the owner, write a mail
to an organization, telling about your services. You would be interested in supplying Food and
Beverage to their employees, as part of a regular tiffin system. Mention prices and other necessary
details.
2) On behalf of your CA firm, write a formal mail to all your clients requesting them to provide all the
necessary information, needed for e filling of IT returns. State that details should be sent well in
time, before the last date i.e. 31st July, 2018.
Chapter 12
Resume Writing
1) Draft a cover letter in reply to the below advt., published in The Hindustan Times, dated 13/2/18.
Applications are invited for the post of an Accountant in a private firm, Agro power Ltd, New Delhi.
The applicant must have an experience of about four years in a similar role with good knowledge of
Tally. Salary offered will be competitive with the industry. Please send your detailed CV’s with a cover
letter to the following address:
Agro Power Ltd,
Sukhdev Vihar
New Delhi 110025
For any queries, drop a mail to hr@agropower.com

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30 FOUNDATION EXAMINATION: NOVEMBER, 2018

2) Prepare a detailed resume in the functional format for a candidate applying for the post of a sales
manager in an FMCG company. Include past experiences, with emphasis on the sales background.
Other inputs: Name: Manish Reddy
Experience: over 10 years, (divide it into two jobs)
Current designation: Senior Sales Executive
Chapter 13
Meetings
1) Your company, primarily into FMCG has witnessed a gradual decline in a consumer product over
the last six months. Prepare the minutes of the meeting for the same. Members in the meeting:
Head of the Sales and Marketing, Product Head, Product lead and few team members.
2) As an employee of a CA firm, prepare the agenda of an upcoming Partner’s visit, in tabular form.
Include senior executives in the meeting, discuss the agenda for the meeting and how the one day
visit of the Partner needs to be planned.

ANSWERS

Chapter -1 Communication
1) Communication is a process of exchanging information, ideas, thoughts, feelings and emotions
through speech, signals, writing, or behavior.
Communication is relevant in daily life as we experience it in all walks of life. While talking to friends,
family and office colleagues, while passing on a piece of information, while starting a campaign or
a protest march; at every step we want to communicate a message. The audience differs and the
purpose differs; yet communication happens.
2) Star Network: has multiple channels of network in communication. This network allows a group
communication and is useful especially where teamwork is involved. The members communicate
and exchange information with each other freely, and without hindrance or hesitation. The
usefulness of all networks depends on the structure and size of the company, and the manner of
communication between the employees.
3) Based on Communication channels, there are three kinds of categories:
• Verbal: Verbal communication involves the use of words and language in delivering the
intended message

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• Non Verbal: Nonverbal communication is the process of communicating by sending and

receiving wordless messages. These messages can aid verbal communication, convey
thoughts and feelings contrary to the spoken words or express ideas and emotions on their
own.
• Visual: Visual communication through visual aids such as signs, typography, drawing, graphic
design, illustration, colour and other electronic resources usually reinforces written
communication. Visuals like graphs, pie charts and other diagrammatic presentations convey
clearly and concisely a great deal of information. They are an essential part of official
presentations these days.
4) Chain of Command: The communication pattern that follows the chain of command from the senior
to the junior is called the chain network. Communication starts at the top, like from a CEO, and
works its way down to the different levels of employees. It involves a lot of organizational hierarchy.
Drawbacks: The chain network often takes up time, and communication may not be clear. It creates
a lot of miscommunication as the message travels a long path.
Chapter-2 Sentence Types
A) Active to Passive
1) May you be blessed by God with health and happiness.
2) The report was sent by Ravi on Monday.
3) A pink frock was worn by Angela for her birthday party.
4) All books will be given to the orphans by Elizabeth.
5) Delicious desserts are prepared by my aunt.
B) Direct to Indirect Speech.
1) The fans cheered that they wanted India to win.
2) The Minister announced that their party would introduce GST from the next day.
3) The BCCI congratulated the U 19 cricket team for its World Cup win.
4) The master yelled at the servant to get lost and not show his face.
5) Elders always say that if you work hard, you will succeed. (Universal truth)
Chapter-3 Vocabulary
A) Synonyms
1) Option c
2) Option d

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32 FOUNDATION EXAMINATION: NOVEMBER, 2018

3) Option b
4) Option a
5) Option c
B) Antonyms
1) Option b
2) Option d
3) Option a
4) Option c
5) Option b
C) Idioms
1) Option d
2) Option b
3) Option d
D) Fill in the blanks:
1) Option c
2) Option a
3) Option b
Chapter -4 Comprehension Passages
Passage-1
1) Option a
2) Option a
3) Option b
4) Option a
5) Option b
Passage-2
1) Option b
2) Option c
3) Option b

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4) Option d
5) Option a
Chapter-5 Note Making
Passage -1
IT industry needs a big picture (Heading)
I) Major changes in IT business
a) No more usual stuff
b) Less signifies more
II) Maj. challenges: Retails and Banking sec.
III) What is now expctd?
a) Broader view
b) Feel the exprnc
c) Can’t be an individual task
d) Coding to be co-rltd.
Key Used:
1) IT= information technology
2) Maj= major
3) Sec= sector
4) Expctd= expected
5) Exprnc= experience
6) Rltd= related
Passage 2
Jordan as a potential market (Heading)
I) A good plc for bsnss.
a) Trade mr thn 2 mill.
b) Potash and phosphate: primarily
II) Need and appeal to diversify
III) Inviting Indian giants to invest in

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34 FOUNDATION EXAMINATION: NOVEMBER, 2018

a) ICT
b) Infrstrc
c) Energy
IV) Need to wrk on Palestine-Syria conflict
a) Build peaceful ties
b) Reslv the cnflt
c) Create indpndt Palest. State
d) Req. sprt from Ind.
Key Used:
1) Plc- place
2) Bsnss= business
3) Mr= more
4) Thn= than
5) Infrstrc= infrastructure
6) Wrk= work
7) Reslv= resolve
8) Cnflt= conflict
9) Indpndt= independent
10) Req= request
11) Sprt= support
Chapter -7 Précis Writing
1) One Tax for all: GST (Title)
Goods and Service Tax (GST) is a complete tax structure of an indirect form, levied on
manufacturing and sale of goods and services. It aims to combine all taxes into one, thus
reducing the burden of the consumer. GST unifies the market sector throughout the country
with the aim to tax consumption and not production.
2) Code of Ethics: in Business (Title)
Code of Ethics is a management tool that helps an employee understand the organization’s
values, responsibilities and moral obligations. Each organization is entitled to have its own
code and should teach its employees to implement the same.

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3) More on Virtual Reality (Title)

Virtual reality is a technology-based concept that allows the user to believe what is shown to
him and accept it as reality. Primarily based on the sense of sight and sound, virtual reality
builds a 3-D image or displays an augmented set up on screen to enable the user to get a real
time feel of the artificial environment thus created.
Chapter -8 Article Writing
1) Hints:
• Causes of health issues: a crisp list
• Office work
• Lifestyle
• Eating habits
• Growing economy
• Money splurge
• Effects: direct effects
• Diseases
• Physical health issues
• Strain on eyes
• Young deaths
2) Hints
• School children till class 8th not very mature
• Decision making skills are poor
• Not suitable for them to judge elders, especially teachers
• Lot of misunderstanding happens at that age
• Do not accept criticism easily
• Students of class 9th to 12th are better.
• They can have a feedback system.
• Have grown with certain values and understanding of life
• Hence capability of differentiating between right and wrong.

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36 FOUNDATION EXAMINATION: NOVEMBER, 2018

• Feedback gives a power which should not be misused, for personal grudge
3) Hints
• A very open ended topic.
• Environment needs a little more care and concern.
• The world can definitely be a better place to live
• Reduce, Reuse, Recycle
• A community effort is required
• Sincere efforts of keeping the surroundings clean
Chapter-9 Report Writing
Report-1
Hints:
• Mention a heading, name of the NGO
• Venue, Date
• The purpose of the workshop
• How many members came from the NGO; how did they go ahead with the workshop
• The audience and its reaction
• Games, pamphlets, information shared during the session.
• Motivational talks
• Conclusion
Report-2
Hints:
• Have a good heading
• Mention the time, date, venue
• Divide the report into three paragraphs:
• What/When/Where/ Who was invited

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• Purpose of the event (learn about the cultural diversity)

• Describe the event in details (name of schools that participated, the dances and other cultural
programmes performed, the food stalls, the game stalls)
• Enthusiasm in the student community
• Conclude with an optimistic view.
Chapter-10
Writing Formal Letters and Official Communication
1) XYZ Company
Chennai

Date: 10th Jan, 2018

Manager, Finance
Oil India Ltd
Chennai

Dear Sir/Ma’am

Sub: Enquiry for prices for bulk orders

This is regarding the requirement of oil, for our well known chips brand, Aunty Chips. We would like
to enquire the rates for bulk order of refined oil, produced by your company.
We are an established brand in the FMCG sector, hence we feel the association would be mutually
beneficial.
Kindly send the pricing details, also stating the mode of delivery.
Looking forward to your response.

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38 FOUNDATION EXAMINATION: NOVEMBER, 2018

Thanks and Regards,

Manager, Supply Chain Division

XYZ company

Circular

Circular No. XXXIV 3rd Jan, 2018

Cultural Event for Charity

For all employees
This is an official communication informing about a cultural event being organized in the office
premises on the coming weekend (6th and 7th Jan, 2018).
The events would be as follows:
• Singing competition
• Dance competition
• Stand up Comedy
• Dumb charades
• Food stalls
Participation fees is ` 50/ per member. Family and friends are cordially invited.
The proceeds of the event will be given to Aaroyga NGO, working for the benefit of old citizens.
Please get in touch with the HR team for more registration and details. Looking forward to an active
participation.

Sheela Mishra
Manager, HR

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Chapter-11 Writing Formal Mails

Mail-1
To: admin@simantechsystems.com
CC/BCC: hr@simanctechsystems.com
Subject: Introducing our tiffin supply plan
Dear Sir/Ma’am,
We are pleased to announce our entry into the Food and Beverage sector. We are a group of
entrepreneurs with a passion for food. We would like to associate with your organization, for supply of
tiffins at a regular basis, at various timings.
We prepare food in hygienic conditions following international standards. Please have a look at the
attachments with the details of menu and prices. Our food cost is competitive with no compromise in
quality.
We would like to visit your office with our food samples for tasting. Please suggest a possibility.
Looking forward to a positive response.
1 attachment enclosed.
Thanks and Regards,
Team Food Passion
Mail-2
To: lmn@candidsweets.com, abc @yahoo.com, jkl@gmail.com
CC/BCC: ca@gmail.com, ca@kp.com
Subject: submit details for e-filing of returns

Dear Clients,

You would know, 31st July, 2018 is the last date for filing e-returns. As your responsible chartered
accountant, I request you all on behalf of my team to provide the necessary details i.e. Form-16 and
other related information required for the same. This will enable us work better and avoid last minute
troubles and delays.
Hope to get cooperation from you all.

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40 FOUNDATION EXAMINATION: NOVEMBER, 2018

Thanks and Regards,

ABCD Kumar
(Chartered Accountant)

Chapter-14 Resume Writing

1) Cover letter
Your address
Date

Manager
Agro Power Ltd,
Sukhdev Vihar
New Delhi 110025

Dear Sir,
Subject: Application for the post of Accountant
This is with reference to your advertisement in Hindustan Times dated 13/2/18 for the post of
Accountant in your esteemed organization.
My abilities and experience in Accounts makes me a suitable candidate for the job. I have worked
for over 6 years as a Junior Accountant in the leading MNC XYZ Ltd. I am proficient in Tally as
well as MS-Excel and good knowledge of other software tools in Accounts.
I am task oriented, self motivated and can assure utmost sincerity and dedication towards the role
assigned to me. Given a chance, I hope to be an asset to your organization.
Thanks for considering my candidature.
Sincerely,
Your signature
(Name)

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2) Functional format Resume

Name: Manish Reddy
Phone: 040-123456
Email:-mreddy@gmail.com
Address: 123, Chennai Road, Chennai
Date of Birth: 1st January 1985
CAREER OBJECTIVE: Seeking a challenging career with a progressive organization that provides
an opportunity to utilize my sales and marketing skills & experience in the FMCG sector.
PERSONAL SKILLS
Excellent convincing skills
Highly sales driven
Ability to work independently or as part of a team
Proven leadership skills and ability to motivate
EDUCATION
B.com from Hindu College, Delhi University
PGDIM from Symbiosis University, Pune
ACHIEVEMENTS
Ÿ Awarded the ‘Best Sales person’ Award in the company
Awarded a cash prize for two consecutive months for over achieving sales target.
PROFESSIONAL EXPERIENCE
XYZ Pvt Ltd, Chennai
Worked as a Junior Sales Executive
Responsible for daily sales with a predicted target
Experience: 5 years

Auromatic Brothers
Worked as Senior Sales Executive

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42 FOUNDATION EXAMINATION: NOVEMBER, 2018

Responsible for monthly sales target

Led a team of twenty members.
Experience: 5 years.
REFERENCES: Can be provided on request.
DECLARATION: I solemnly declare that all the above information is correct to the best of my
knowledge and belief.
Date:
Place: (Manish Reddy)

Chapter-13 Meetings

Date: 21st July, 2018

Venue: Conference Hall, 3rd Floor
Meeting started at 12 : 00 AM.

In attendance : Mr. Raju Murthy Head , Sales and Marketing, Mr. Kishore Sandhu, Product Head,
Product lead, three members of the Sales team
Mr. Raju Murthy, Head of Sales and Marketing informed the agenda of the meeting i.e the sales
decline in the product
Ms. Seema Thakur, Sales Lead gave a detailed analysis of the sales figures for the last six months.
Her team including Mr. X, Mr. Y and Mr. Z elaborated on the market trends, target customers and
their needs.
Mr. Kishore Sandhu, Product Head expressed concern over the matter; discussed a few changes
in the sales strategy.
All the participants consented to the concerns raised and decided to submit their reports.
The Head of Sales and Marketing proposed a vote of thanks and declared the next meeting to
discuss reports to be held on Aug 2, 2018.
ATR to be submitted by 24th July, 2018 to the Head of Sales and Marketing.

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2) Tabular Agenda:
Time Topic Attendees Speaker Duration
8:30 am Introduction and Name of the Director, 10 minutes
Welcome note participants Finance
8:40 am Speech Name of the Honourable Mr. 25 mins.
participants Partner
9:05 am Discussion on Name of the Sr. Manager, 25 mins
new audit trends participants Audit
9:30 am Tea/Breakfast Tea/Breakfast 30 mins

10:00 am Discussion on Name of the Sr. Manager, 20 mins

adapting new participants Technology
technology
10: 20 am Open House All participants All members 20 mins
10:40 am Vote of Thanks All participants Director 10 mins.

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PAPER – 2: BUSINESS LAWS& BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

PART – I: RELEVANT AMENDMENTS APPLICABLE FOR MAY 2019 EXAMINATION
Applicability of Relevant Amendments/ Circulars/ Notifications/ Regulations etc.
For May 2019 examinations for Paper 2, Section A: Business Laws, the significant
amendments made in the respective subject for the period 1 st May, 2018 to 31st October, 2018
are relevant and applicable for said examinations.
This RTP of May 2019 examination is very important to the students to update themselves
with the relevant amendments pertaining to the Business Laws.
Students are advised to refer the following publications –
1. Study Material (Edition July 2017) containing Legislative amendments issued
upto 30th April, 2017.
2. RTP of May 2019 examination containing a gist of all the significant legislative
amendments from 1st May, 2017 to 31 st October, 2018 along with the suggested
sample questions and answers for understanding and practice.

Following are the relevant amendments/ Chapters of the Study material:

S. No. Subject Matter
1. The Ministry of Corporate Affairs vide Notification S.O. 3086(E) dated 20th
September, 2017 has notified the proviso to clause (87) of section 2 of the
Companies Act, 2013 w.e.f. 20th September, 2017. [Proviso to clause (87) of
Section 2 of the Companies Act, 2013 is covered on Page No. 5.12, Chapter 5
of the study material]
2. The Ministry of Corporate Affairs vide the Companies (Amendment) Act, 2017
dated 9thFebruary, 2018 has inserted the word “and” in clause (71) of section
2, in sub-clause (a), after the word "company”. [Section 2(71) of the
Companies Act, 2013 is covered on Page No. 5.12, chapter 5 of the study
material]
3. The Ministry of Corporate Affairs vide the Companies (Amendment) Act, 2017
dated 9thFebruary, 2018 has inserted the following Explanation in clause (46)
of section 2:
‘Explanation- For the purposes of this clause, the expression “company”
includes any body corporate.’
[Section 2(46) of the Companies Act, 2013 is covered on Page No. 5.12,
chapter 5 of the study material]
4. The Ministry of Corporate Affairs vide the Companies (Amendment) Act, 2017
dated 9thFebruary, 2018 has inserted the words “other than this Act or the

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2 FOUNDATION EXAMINATION: MAY, 2019

previous company law” after the words “State Act” in clause (A) in proviso to
clause (72) of section 2.
[Section 2(72) of the Companies Act, 2013 is covered on Page No. 5.17,
chapter 5 of the study material]
5. The MCA vide the Companies (Amendment) Act, 2017 has made the following
change in section 2(6) (effective from 7th May 2018)
“for the Explanation:-
For the purposes of this clause, "significant influence" means control of at
least twenty per cent of total share capital, or of business decisions under an
agreement
the following Explanation shall be substituted, namely:-
Explanation.—For the purpose of this clause,—
(a) the expression "significant influence" means control of at least twenty per
cent. of total voting power, or control of or participation in business decisions
under an agreement;
(b) the expression "joint venture" means a joint arrangement whereby the
parties that have joint control of the arrangement have rights to the net assets
of the arrangement”
[Section 2(6) of the Companies Act, 2013 is covered on page no. 5.13,
chapter 5 of the study material]
6. The MCA vide the Companies (Amendment) Act, 2017 has made the following
change in section 7(1)(c) (effective from 27 thJuly, 2018)

In section 7 in sub-section (1), in item (c):

for the words "an affidavit", the words "a declaration" shall be substituted.
[Section 7(1)(c) of the Companies Act, 2013 is covered on page no. 5.19,
chapter 5 of the study material]

Part II: Questions and Answers

Questions
The Indian Contract Act, 1872
1. (i) 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.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 3

(c) If Q says to P “If you do not deny it, I shall assume that the horse is sound.” P
says nothing.
(ii) Comment on the following statements:
(a) Acceptance must be absolute and unqualified.
(b) Acceptance must be in the prescribed mode.
2. (i) (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.
(ii) X received certain goods from Y and promised to pay ` 60,000. Later on, X
expressed his inability to make payment. Z, who is known to X, pays ` 40,000 to Y
on behalf of X. however, X was not aware of the payment. Now Y is intending to sue
X for the amount of` 60,000. Can Y do so? Advise.
3. (i) “No consideration, no contract” Comment.
(ii) Explain the meaning of ‘Contingent Contracts’ and state the rules relating to such
contracts.
The Sale of Goods Act, 1930
4. (i) 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?
(ii) 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.
5. (i) State briefly the essential element of a contract of sale under the Sale of Goods Act,
1930.
(ii) Distinguish between a ‘Condition’ and a ‘Warranty’ in a c ontract of sale. When shall
a ‘breach of condition’ be treated as ‘breach of warranty’ under the provisions of the
Sale of Goods Act, 1930? Explain.
6. What are the rules related to Acceptance of Delivery of Goods?

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4 FOUNDATION EXAMINATION: MAY, 2019

The Indian Partnership Act, 1932

7. (i) 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?
(ii) 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 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?
8. (i) What is the procedure of registration of a partnership firm under the Indian
Partnership Act, 1932?
(ii) 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.
The Limited Liability Partnership Act, 2008
9. What is the meaning of the Limited Liability Partnership? State the various characteristics
of it?
The Companies Act, 2013
10. 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
(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.
11. (i) F, 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

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 5

investment as an agent for them. The dividend and interest income received by the
companies was handed back to F as a pretended loan. This way, F divided his
income into three parts in a bid to reduce his tax liability.
Decide, for what purpose the three companies were established? Whether
the legal personality of all the three companies may be disregarded.
(ii) Can a non-profit organization be registered as a company under the Companies
Act, 2013? If so, what procedure does it have to adopt?

SUGGESTED ANSWERS/HINTS

1. (i) According to section 17 of the Indian Contrac t Act, 1872, mere silence as to facts
likely to affect the willingness of a person to enter into a contract is not fraud, unless
the circumstances of the case are such that, regard being had to them, it is the duty
of the person keeping silence to speak, or unless his silence is, in itself, equivalent
to speech. Hence, in the instant case,
(a) This contract is valid since as per section 17 mere silence as to the facts likely
to affect the willingness of a person to enter into a contract is not fraud. Here,
it is not the duty of the seller to disclose defects.
(b) This contract is not valid since as per section 17 it becomes P’s duty to tell Q
about the unsoundness of the horse because a fiduciary relationship exists
between P and his daughter Q. Here, P’s silence is equivalent to speech and
hence amounts to fraud.
(c) This contract is not valid since as per section 17, P’s silence is equivalent to
speech and hence amounts to fraud.
(ii) (a) Acceptance must be absolute and unqualified: As per section 7 of the
Indian Contract Act, 1872 acceptance is valid only when it is absolute and
unqualified and is also expressed in some usual and reasonable manner
unless the proposal prescribes the manner in which it must be accepted. If the
proposal prescribes the manner in which it must be accepted, then it must be
accepted accordingly.
Example: ‘A’ enquires from ‘B’, “Will you purchase my car for ` 2 lakhs?” If ‘B’
replies “I shall purchase your car for ` 2 lakhs, if you buy my motorcycle for `
50000/-, here ‘B’ cannot be considered to have accepted the proposal. If on
the other hand ‘B’ agrees to purchase the car from ‘A’ as per his proposal
subject to availability of valid Registration Certificate / book for the car, then
the acceptance is in place though the offer contained no mention of R.C. book.
This is because expecting a valid title for the car is not a condition. Therefore,
the acceptance in this case is unconditional.

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6 FOUNDATION EXAMINATION: MAY, 2019

(b) Acceptance must be in the prescribed mode:Where the mode of

acceptance is prescribed in the proposal, it must be accepted in that manner.
But if the proposer does not insist on the proposal being accepted in the
manner prescribed after it has been accepted otherwise, i.e., not in the
prescribed manner, the proposer is presumed to have consented to the
acceptance.
Example: If the offeror prescribes acceptance through messenger and offeree
sends acceptance by email, there is no acceptance of the offer if the offeror
informs the offeree that the acceptance is not according to the mode
prescribed. But if the offeror fails to do so, it will be presumed that he has
accepted the acceptance and a valid contract will arise.
2. (i) (a) Misrepresentation: According to Section 18 of the Indian Contract Act, 1872,
misrepresentation means and includes-
(1) the positive assertion, in a manner not warranted by the information of the
person making it, of that which is not true, though he believes it to be
true;
(2) any breach of duty which, without an intent to deceive, gains an
advantage to the person committing it, or any one claiming under him; by
misleading another to his prejudice or to the prejudice of any one claiming
under him;
(3) causing, however, innocently, a party to an agreement to make a mistake
as to the substance of the thing which is the subject of the agreement.
(b) In the instant case, the aggrieved party, in case of misrepresentation by the
other party, can avoid or rescind the contract [Section 19, Indian Contract Act,
1872]. The aggrieved party loses the right to rescind the contract if he, after
becoming aware of the misrepresentation, takes a benefit under the contract or
in some way affirms it. Accordingly, in the given case, Suraj could not rescind
the contract, as his acceptance to the offer of Sohan to bear 40% of the cost of
repairs impliedly amount to final acceptance of the sale.
(ii) As per section 41 of the Indian Contract Act, 1872, when a promisee accepts
performance of the promise from a third person, he cannot afterwards enforce it
against the promisor. That is, performance by a stranger, accepted by the promisee,
produces the result of discharging the promisor, although the latter has neither
authorised nor ratified the act of the third party. Therefore, in the instant case, Y can
sue X only for the balance amount i.e. ` 20,000 and not for the whole amount.
3. (i) No consideration, no contract: Every agreement, to be enforceable by law must
be supported by valid consideration. An agreement made without any consideration
is void. A gratuitous promise may form a subject of a moral obligation and may be
binding in honour but it does not cause a legal responsibility. No consideration, no

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contract is a general rule. However, Section 25 of the Indian Contract Act, 1872
provides some exceptions to this rule, where an agreement without considerati on
will be valid and binding. These exceptions are as follows:
(a) Agreement made on account of natural love and affection : Section 25 (1)
provides that if an agreement is (i) in writing (ii) registered under the law and
(iii) made on account of natural love and affection (iv) between the parties
standing in a near relation to each other, it will be enforceable at law even if
there is no consideration. Thus, where A, for natural love and affection,
promises to give his son, B, ` 10,000 in writing and registers it. This is a valid
contract.
(b) Compensation for services voluntarily rendered: Section 25(2) provides
that something which the promisor was legally compelled to do; (iii) and the
promisor was in existence at the time when the act was done whether he was
competent to contract or not (iv) the promisor must agree now to compensate
the promise. Thus when A finds B's purse and gives it to him and B promises
to give A ` 50, this is a valid contract.
(c) Promise to pay time-barred debts [Section 25 (3)]: Where there is an
agreement, made in writing and signed by the debtor or by his agent, to pay
wholly or in part a time barred debt, the agreement is valid and binding even
though there is no consideration. If A owes B ` 1,000 but the debt is lapsed
due to time-bar and A further makes a written promise to pay ` 500 on account
of this debt, it constitutes a valid contract.
(d) Contract of agency (Section 185): No consideration is necessary to create
an agency.
(e) Completed gift (Explanation 1 to Section 25): A completed gift needs no
consideration. Thus, if a person transfers some property by a duly written and
registered deed as a gift he cannot claim back the properly subsequently on
the ground of lack of consideration.
(ii) Essential characteristics of a contingent contract:A contract may be absolute or
contingent. A contract is said to be absolute when the promisor undertakes to
perform the contract in all events. A contingent contract, on the other hand "is a
contract to do or not to do something, if some event, collateral to such contract does
or does not happened (Section 31). It is a contract in which the performance
becomes due only upon the happening of some event which may or may not
happen. For example, A contracts to pay B `10,000 if he is elected President of a
particular association. This is a contingent contract. The essential characteristics of
a contingent contract may be listed as follows:
(i) There must be a contract to do or not to do something,

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8 FOUNDATION EXAMINATION: MAY, 2019

(ii) The performance of the contract must depend upon the happening or non-
happening of some event.
(iii) The happening of the event is uncertain.
(iv) The event on which the performance is made to depend upon is an event
collateral to the contract i.e. it does not form part of the reciproc al promises
which constitute the contract. The event should neither be a performance
promised, nor the consideration for the promise.
(v) The contingent event should not be the mere will of the promisor. However,
where the event is within the promisor’s will, but not merely his will, it may be a
contingent contract.
The rules regarding the contingent contract are as follows:
(1) Contingent contract dependent on the happening of an uncertain future cannot
be enforced until the event has happened. If the event becomes impossible,
such contracts become void. (Section 32).
(2) Where a contingent contract is to be performed if a particular event does not
happening performance can be enforced only when happening of that event
becomes impossible (Section 33).
(3) If a contract is contingent upon, how a person will act at an unspecified time
the event shall be considered to become impossible; when such person does
anything which renders it impossible that he should so act within any definite
time or otherwise than under further contingencies. (Section 34, 35).
(4) The contingent contracts to do or not to do anything if an impossible event
happens, are void whether or not the fact is known to the parties (Section 36).
4. (i) Fitness of Cloth: As per the provision of Section 16(1) of the Sale of Goods Act,
1930, an implied condition in a contract of sale that an article is fit for a particular
purpose only arises when the purpose for which the goods are supplied is known to
the seller, the buyer relied on the seller’s skills or judgement and seller deals in the
goods in his usual course of business. In this case, the cloth supplied is capable of
being applied to a variety of purposes, the buyer should have told the seller the
specific purpose for which he required the goods. But he did not do so. Therefore,
the implied condition as to the fitness for the purpose does not apply. Hence, the
buyer will not succeed in getting any remedy from the seller under the Sale of
Goods Act, 1930.
(ii) Right of stoppage of goods in transit: The problem is based on section 50 of the
Sale of Goods Act,1930 dealing with the right of stoppage of the goods in transit
available to an unpaid seller. The section states that the right is exercisable by the
seller only if the following conditions are fulfilled.
(i) The seller must be unpaid

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(ii) He must have parted with the possession of goods

(iii) The goods must be in transit
(iv) The buyer must have become insolvent
(v) The right is subject to the provisions of the Act.
Applying the provisions to the given case, Ram being still unpaid, can stop
the 100 bales of cloth sent by railway as these goods are still in transit.
5. (i) Essentials of Contract of Sale: The following elements must co-exist so as to
constitute a contract of sale of goods under the Sale of Goods Act, 1930.
(i) There must be at least two parties
(ii) The subject matter of the contract must necessarily be goods
(iii) A price in money (not in kind) should be paid or promised.
(iv) A transfer of property in goods from seller to the buyer must take place.
(v) A contract of sale must be absolute or conditional [section 4(2)].
(vi) All other essential elements of a valid contract must be present in the contract
of sale.
(ii) Difference between Condition and Warranty
(i) A condition is a stipulation essential to the main purpose of the contract
whereas a warranty is a stipulation collateral to the main purpose of the
contract.
(ii) Breach of condition gives rise to a right to treat the contract as repudiated
whereas in case of breach of warranty, the aggrieved party can claim damage
only.
(iii) Breach of condition may be treated as breach of warranty whereas a breach of
warranty cannot be treated as breach of condition.
According to Section 13 of the Sale of Goods Act, 1930 a breach of condition
may be treated as breach of warranty in following circumstances:
(i) Where a contract of sale is subject to any condition to be fulfilled by the seller,
the buyer may waive the condition,
(ii) Where the buyer elects to treat the breach of c ondition as breach of a
warranty.
(iii) Where the contract of sale is non-severable and the buyer has accepted the
whole goods or any part thereof.
(iv) Where the fulfillment of any condition or warranty is excused by law by reason
of impossibility or otherwise.

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6. Rules related to acceptance of delivery: Acceptance is deemed to take place when

the buyer-
(a) intimates to the seller that he had accepted the goods; or
(b) does any act to the goods, which is inconsistent with the ownership of the seller; or
(c) retains the goods after the lapse of a reasonable time, without intimating to the
seller that he has rejected them (Section 42).
Ordinarily, a seller cannot compel the buyer to return the rejected goods; but the seller is
entitled to a notice of the rejection. Where the seller is ready and willing to deliver the
goods and requests the buyer to take delivery, and the buyer does not take delivery
within a reasonable time, he is liable to the seller for any loss occasioned by the neglect
or refusal to take delivery, and also reasonable charge for the care and custody of the
goods (Sections 43 and 44).
7. (i) As regards the question whether in the case of a registered firm (whose business
was carried on after its dissolution by death of one of the partners), a suit can be
filed by the remaining partners in respect of any subsequent dealings or
transactions without notifying to the Registrar of Firms, the changes in the
constitution of the firm, it was decided that the remaining partners should sue in
respect of such subsequent dealings or transactions even though the firm was not
registered again after such dissolution and no notice of the partner was given to the
Registrar.
(i) The test applied in these cases was whether the plaintiff satisfied the only two
requirements of Section 69 (2) of the Act namely,
(ii) the suit must be instituted by or on behalf of the firm which had been
registered.
(ii) Partnership Liability: The problem in question is based on the provisions of the
Indian Partnership Act, 1932 contained in Section 35. The Section provides that
where under a contract between the partners the firm is not dissolved by the death
of a partner, the estate of a deceased partner is not liable for any act of the firm
done after his death. Therefore, considering the above provisions, the problem may
be answered as follows:
(i) Ram’s estate in this case will not be liable for the price of the Machinery
purchased.
(ii) The creditors in this case can have only a personal decree against the
surviving partners and decree against the partnership assets in the hands of
those partners. However, since the surviving partners are already insolvent,
no suit for recovery of the debt would lie against them. A suit for goods sold
and delivered would not lie against the representative of the deceased partner.

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This is because there was not debt due in respect of the goods in Ram’s life
time.
8. (i) APPLICATION FOR REGISTRATION (SECTION 58): (1) The registration of a firm
may be effected at any time by sending by post or delivering to the Registrar of the
area in which any place of business of the firm is situated or proposed to be
situated, a statement in the prescribed form and accompanied by the prescribed
fee, stating-
(a) The firm’s name
(b) The place or principal place of business of the firm,
(c) The names of any other places where the firm carries on business,
(d) the date when each partner joined the firm,
(e) the names in full and permanent addresses of the partners, and
(f) the duration of the firm.
The statement shall be signed by all the partners, or by their agents specially
authorised in this behalf.
(2) Each person signing the statement shall also verify it in the manner prescribed.
(3) A firm name shall not contain any of the following words, namely:-
‘Crown’, Emperor’, ‘Empress’, ‘Empire’, ‘Imperial’, ‘King’, ‘Queen’, ‘Royal’, or
words expressing or implying the sanction, approval or patronage of Government
except when the State Government signifies its consent to the use of such words as
part of the firm-name by order in writing.
(ii) Implied Authority of Partner as Agent of the Firm (Section 19): Subject to the
provisions of section 22, the act of a partner which is done to carry on, in the usual
way, business of the kind carried on by the firm, binds the firm.
(1) The authority of a partner to bind the firm conferred by this section is called his
“implied authority”.
(2) In the absence of any usage or custom of trade to the contrary, the implied
authority of a partner does not empower him to-
(a) Submit a dispute relating to the business of the firm to arbitration;
(b) open a banking account on behalf of the firm in his own name;
(c) compromise or relinquish any claim or portion of a claim by the firm;
(d) withdraw a suit or proceedings filed on behalf of the firm;
(e) admit any liability in a suit or proceedings against the firm;
(f) acquire immovable property on behalf of the firm;

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12 FOUNDATION EXAMINATION: MAY, 2019

(g) transfer immovable property belonging to the firm; and

(h) enter into partnership on behalf of the firm.
Mode Of Doing Act To Bind Firm (Section 22): In order to bind a firm, an act or
instrument done or executed by a partner or other person on behalf of the firm shall
be done or executed in the firm name, or in any other manner expressing or
implying an intention to bind the firm.
9. Meaning of Limited Liability Partnership (LLP): A LLP is a new form of legal business
entity with limited liability. It is an alternative corporate business vehicle that not only
gives the benefits of limited liability at low compliance cost but allows its partners the
flexibility of organising their internal structure as a traditional partnership. The LLP is a
separate legal entity and, while the LLP itself will be liable for the full extent of its assets,
the liability of the partners will be limited.
LLP is an alternative corporate business form that gives the benefits of limited liability of
a company and the flexibility of a partnership.
Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm
structure’ LLP is called a hybrid between a company and a partnership.
Characteristic/Salient Features of LLP
1. LLP is a body corporate: Section 2(1)(d) of the LLP Act, 2008 provides that a LLP
is a body corporate formed and incorporated under this Act and is a legal entity
separate from that of its partners and shall have perpetual succession. Therefore,
any change in the partners of a LLP shall not affect the existence, rights or liabilities
of the LLP.
Section 3 of LLP Act provides that a LLP is a body corporate formed and
incorporated under this Act and is a legal entity separate from that of its partners.
2. Perpetual Succession:The LLP can continue its existence irrespective of changes
in partners. Death, insanity, retirement or insolvency of partners has no impact on
the existence of LLP. It is capable of entering into contracts and holding property in
its own name.
3. Separate Legal Entity: The LLP is a separate legal entity, is liable to the full extent
of its assets but liability of the partners is limited to their agreed contribution in the
LLP. In other words, creditors of LLP shall be the creditors of LLP alone.
4. Mutual Agency: Further, no partner is liable on account of the independent or un-
authorized actions of other partners, thus individual partners are shielded from joint
liability created by another partner’s wrongful business decisions or misconduct. In
other words, all partners will be the agents of the LLP alone. No one partner can
bind the other partner by his acts.

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5. LLP Agreement: Mutual rights and duties of the partners within a LLP are governed
by an agreement between the partners. The LLP Act, 2008 provides flexibility to
partner to devise the agreement as per their choice. In the absence of any such
agreement, the mutual rights and duties shall be governed by the provisions of the
LLP Act, 2008.
6. Artificial Legal Person: A LLP is an artificial legal person because it is created by
a legal process and is clothed with all rights of an individual. It can do everything
which any natural person can do, except of course that, it cannot be sent to jail,
cannot take an oath, cannot marry or get divorce nor can it practice a learned
profession like CA or Medicine. A LLP is invisible, intangible, immortal (it can be
dissolved by law alone) but not fictitious because it really exists.
7. Common Seal: A LLP being an artificial person can act through its partners and
designated partners. LLP may have a common seal, if it decides to have one
[Section 14(c)]. Thus, it is not mandatory for a LLP to have a common seal. It shall
remain under the custody of some responsible official and it shall be affixed in the
presence of at least 2 designated partners of the LLP.
8. Limited Liability: Every partner of a LLP is, for the purpose of the business of LLP,
the agent of the LLP, but not of other partners (Section 26). The liability of the
partners will be limited to their agreed contribution in the LLP. Such contribution
may be of tangible or intangible nature or both.
9. Management of Business: The partners in the LLP are entitled to manage the
business of LLP. But only the designated partners are responsible for legal
compliances.
10. Minimum and Maximum number of Partners: Every LLP shall have least two
partners and shall also have at least 2 individuals as designated partners, of whom
at least one shall be resident in India. There is no maximum limit on the partners in
LLP.
11. Business for Profit Only: The essential requirement for forming LLP is carrying on a
lawful business with a view to earn profit. Thus, LLP cannot be formed for
charitable or non-economic purpose.
12. Investigation: The Central Government shall have powers to investigate the affairs
of an LLP by appointment of competence authority for the purpose.
13. Compromise or Arrangement: Any compromise or agreements including merger
and amalgamation of LLPs shall be in accordance with the provisions of the LLP
|Act, 2008.
14. Conversion into LLP: A firm, private company or an unlisted public company would
be allowed to be converted into LLP in accordance with the provisions of LLP Act,
2008.

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15. E-Filling of Documents: Every form or application of document required to be filed

or delivered under the act and rules made thereunder, shall be filed in computer
readable electronic form on its website www.mca.gov.in and authenticated by a
partner or designated partner of LLP by the use of electronic or digital signature.
16. Foreign LLPs: Section 2(1)(m) defines foreign limited liability partnership “as a
limited liability partnership formed, incorporated, or registered outside India which
established as place of business within India”. Foreign LLP can become a partner in
an Indian LLP.
10. According to section 2(68) of the Companies Act, 2013, "Private company" means
acompany having a minimum paid-up share capital as may be prescribed, and which by
its articles, except in case of One Person Company, limits the number of its members to
two hundred.
However, where two or more persons hold one or more shares in a company jointly, they
shall, for the purposes of this clause, be treated as a single member.
It is further provided that -
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were
members of the company while in that employment and have continued to be
members after the employment ceased,
shall not be included in the number of members.
In the instant case, Flora Fauna Limited may be converted into a private company only if
the total members of the company are limited to 200.
Total Number of members
(i) Directors and their relatives 190
(ii) 5 Couples (5*1) 5
(iii) Others 5
Total 200
Therefore, there is no need for reduction in the number of members since existing
number of members are 200 which does not exceed maximum limit of 200.
11. (i) The House of Lords in Salomon Vs Salomon & Co. Ltd. laid down that a company is
a person distinct and separate from its members, and therefore, has an independent
separate legal existence from its members who have constituted the company. But
under certain circumstances the separate entity of the company may be ignored by
the courts. When that happens, the courts ignore the corporate entity of the
company and look behind the corporate façade and hold the persons in control of
the management of its affairs liable for the acts of the company. Where a company

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is incorporated and formed by certain persons only for the purpose of evading
taxes, the courts have discretion to disregard the corporate entity and tax the
income in the hands of the appropriate assessee.
(1) The problem asked in the question is based upon the aforesaid facts. The
three companies were formed by the assessee purely and simply as a means
of avoiding tax and the companies were nothing more than the façade of the
assessee himself. Therefore the whole idea of Mr. F was simply to split his
income into three parts with a view to evade tax. No other business was done
by the company.
(2) The legal personality of the three private companies may be disregarded
because the companies were formed only to avoid tax liability. It carried on no
other business, but was created simply as a legal entity to ostensibly receive
the dividend and interest and to hand them over to the assessee as pretended
loans. The same was upheld in Re Sir DinshawManeckji Petit AIR 1927
Bom.371 and Juggilal vs. Commissioner of Income Tax AIR (1969) SC (932).
(ii) Yes, a non-profit organization be registered as a company under the Companies
Act, 2013 by following the provisions of section 8 of the Companies Act, 2013.
Section 8 of the Companies Act, 2013 deals with the formation of companies which
are formed to
• promote the charitable objects of commerce, art, science, sports, education,
research, social welfare, religion, charity, protection of environment etc.
Such company intends to apply its profit in
• promoting its objects and
• prohibiting the payment of any dividend to its members.
The Central Government has the power to issue license for registering a section 8
company.
(i) Section 8 allows the Central Government to register such person or
association of persons as a company with limited liability without the addition
of words ‘Limited’ or ‘Private limited’ to its name, by issuing licence on such
conditions as it deems fit.
(ii) The registrar shall on application register such person or association of
persons as a company under this section.
(iii) On registration the company shall enjoy same privileges and obligations as of
a limited company.

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SECTION - B: BUSINESS CORRESPONDENCE AND REPORTING

Chapter-1
Communication
(1) List at least 5 barriers of communication. Explain any two of them in your own words.
(2) Differentiate between the Vertical Network and the Wheel and spoke method of
communication.
Chapter 2
Sentence Types: Active Passive Voice, Direct Indirect Speech
(A) Change the following sentences into passive voice.
(1) Rana Pratap fought many battles.
(2) People watch football matches late night.
(3) The students approached the Principal for their rights.
(4) Give first priority to studies.
(5) Abhishek speaks a lot on politics.
(B) Change the following Direct speech into Indirect speech.
(1) She said, ‘My mother cooks well’
(2) The athlete said, ‘I can break old records’
(3) Brother said, ‘I have finished my studies’
(4) The teacher praised the girl, ‘You have been working hard’
(5) Uncle said, ‘I am unwell’
(C) Change the following to Active voice
(1) Results had to be declared by the school authorities.
(2) The test must be completed by you in one hour.
(3) The factory was destroyed by fire.
(4) Cake is being eaten by Rajat.
(5) A conservative lifestyle was led by women in olden days.
Chapter -3 Vocabulary
(A) Select the suitable synonym for the given words:
(1) Distort
(a) Save (b) Abundant (c) Deform (d) Overwhelm (e) Move

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(2) Alliance
(a) Associate (b) Estranged (c) Revert (d) Unwillingness (e) Possibility
(3) Contingency
(a) Existence (b) Evidence (c) Rebel (d) Emergency (e) Announce
(4) Rife
(a) Unknown(b) Widespread (c) Accountable (d) General (e) Survive
(5) Oppressive
(a) Grand (b) Publish (c) Tolerance (d) Proactive (e) Distressful
(B) Select the suitable antonym for the given word:
(1) Contend
(a) Compete (b) Eradicate (c) Expel (d) Give up
(2) Proximity
(a) Approximation (b) Assumingly (c) Remoteness (d) Cure
(3) Vigilant
(a) Inattentive (b) Curious (c) Concerned (d) Careful
(4) Proficient
(a) Probable (b) Incompetent (c) Skilled (d) Available
(5) Adhere
(a) Rules (b) Stick (c) Disobey (d) Linked
(C) Select the correct meaning of the given idioms:
(1) Clouds on the horizon
(a) A ray of hope
(b) Hopelessness
(c) A problem can be seen in future
(d) Problems are unlimited
(2) Well begun is half done
(a) Good start is important
(b) Good ending is important
(c) Half job is easier
(d) Easier said than done

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(3) Save for the rainy day

(a) Use an umbrella
(b) Prevention is better than cure
(c) Life is full of problems
(d) Save for difficult times
(4) It’s piece of cake
(a) Something too sweet
(b) Easy job
(c) A small bite
(d) Little to eat
(D) Fill in the blanks with the most suitable choice:
(1) With the economy going down, people who are rich might become _____________
(a) Endemic (b) Healthy (c) Destitute (d) Considerable
(2) Religion teaches us to respect all ____________________ rights of a human being.
(a) Business (b) Fundamental (c) Behavioural (d) Conceptual
(3) She is _____ of lizards.
(a) Afraid (b) Frightened (c) Fearful (d) Terrified
(4) This area suffers from __________.
(a) draughts (b) drafts (c) dwarfs (d) droughts
Chapter 4
Comprehension Passages
Read the following comprehension passages and answer the following questions
Passage 1
The great Acharyas have said that having discovered a great goal, surrender yourself to that
goal and act towards it drawing your inspiration from that goal whereby you will get a new
column of energy. Do not allow this energy to be dissipated in the futile memories of past
regrets or failures nor in the imagined sorrow of the future or the present and thus bring the
entire energy focussed into activity. That is the highest creative action in the world outside.
Thereby the individual who is till now considered most inefficient finds his way to the highest
achievement and success.
This is said very easily in a second. But in order to train our mind to this attitude it
needs considerable training because we have already trained the mind wrongly to such an

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extent that we have become perfect in imperfection. Not knowing the art of action, we have
been master artists in doing the wrong thing. The totality of activity will bring the country to a
wrong end indeed.
If each one is given a car, to achieve an ideal socialistic pattern, and nobody knows driving
but everybody starts driving, what would be the condition on the road ? Everybody has equal
right on the public road. Then each car must necessarily dash against the other, and there is
bound to be a jumble. This seems to be the very apt pattern of life that we are heading to.
Everyone of us is a vehicle. We know how to go forward. The point is that intellect is very
powerful and everyone is driving but nobody seems to know how to control the mental energy
and direct it properly or guide it to a proper destination.
(1) Which of the following will cause the country to perish?
(a) Driving cars without proper driving knowledge and skill
(b) Directing mental energy to the right destination
(c) Wrong deeds performed without proper knowledge
(d) Memories of past regrets and failures
(2) What is the effect of the wrong training of the mind ?
(a) The art of action is too much emphasised.
(b) We have become perfect in all aspects.
(c) Each of us could become a master artist.
(d) We have become perfect in imperfections.
(3) The author’s chief concern is
(a) The car accidents resulting from lack of driving skill.
(b) Regulation of energy in a proper direction
(c) Discovery of a great goal in life
(d) Establishment of socialistic pattern
(4) Which of the following is the source of energy ?
(a) Stimulation obtained from a set aim
(b) Highest creative action
(c) A column that supports a building
(d) Proper training of the mind to achieve perfection
(5) Which of the following could lead to success ?
(a) Preparing oneself to face the probable sorrows of the future
(b) Cherishing the memories of the past

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20 FOUNDATION EXAMINATION: MAY, 2019

(c) Bringing all the energy into activity

(d) Being alert about the excitement of present
Passage 2
Marie Curie was one of the most accomplished scientists in history. Together with her
husband, Pierre, she discovered radium, an element widely used for treating cancer, and
studied uranium and other radioactive substances. Pierre and Marie’s amicable collaboration
later helped to unlock the secrets of the atom.
Marie was born in 1867 in Warsaw, Poland, where her father was a professor of physics. At an
early age, she displayed a brilliant mind and a blithe personality. Her great exuberance for
learning prompted her to continue with her studies after high school. She became disgruntled,
however, when she learned that the university in Warsaw was closed to women. Determined
to receive a higher education, she defiantly left Poland and in 1891 entered the Sorbonne, a
French university, where she earned her master’s degree and doctorate in physics.
Marie was fortunate to have studied at the Sorbonne with some of the greatest scientists of
her day, one of whom was Pierre Curie. Marie and Pierre were married in 1895 and spent
many productive years working together in the physics laboratory. A short time after they
discovered radium, Pierre was killed by a horse-drawn wagon in 1906. Marie was stunned by
this horrible misfortune and endured heartbreaking anguish. Despondently she recalled their
close relationship and the joy that they had shared in scientific research. The fact that she had
two young daughters to raise by herself greatly increased her distress.
Curie’s feeling of desolation finally began to fade when she was asked to succeed her
husband as a physics professor at the Sorbonne. She was the first woman to be given a
professorship at the world-famous university. In 1911 she received the Nobel Prize in
chemistry for isolating radium. Although Marie Curie eventually suffered a fatal illness from her
long exposure to radium, she never became disillusioned about her work. Regardless of the
consequences, she had dedicated herself to science and to revealing the mysteries of the
physical world. (Source: internet)
(1) A word in the passage which is a synonym of ‘friendly’ is:
(a) revealing
(b) distress
(c) amicable
(d) stunned
(2) What increased the distress of Marie Curie?
(a) The sudden death of her husband.
(b) She would have to raise her daughters all alone
(c) She could not continue with her radium discovery

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(d) The knowledge of her fatal illness.

(3) Which of the following statements is false acc ording to the passage?
(a) Marie Curie did not attend any University because women were not allowed to do
so.
(b) Pierre was killed in accident involving horse wagons.
(c) Curie also worked on the element Uranium.
(d) Curie got a chance to teach Physics at Sorbonne.
(4) Give the passage a suitable title
(a) Madam Curie and Pierre Curie
(b) Discovery of Radium and Uranium
(c) Mysteries of the physical world
(d) Madam Curie: struggles turn to achievements!
(5) Choose an option than describes Madam Curie, based on the information given in the
passage:
(a) heartbroken, coward, weak
(b) bold, dedicated, confident
(c) complaining, disgruntled, arrogant
(d) despondent, tired, ruthless
Chapter 5 Note Making
Read the following passage/news story and make proper notes following the guidelines of
Note making. (Source: internet, newspaper articles)
(1) The decision of the Ministry of Environment and Forests to revalidate the environmental
clearance issued to South Korean steelmaker Posco for the proposed steel plant in
Odisha is based on a piecemeal approach, rather than a comprehensive and cumulative
assessment of all parts of the project. It cannot claim to rely on sound judgment. What
distinguishes the proposal from the welter of projects before the Ministry is its major
Foreign Direct Investment potential, estimated at more than `50,000 crore. There is little
doubt that it will take massive investments to pull the masses out of deep poverty, and
new industries are vital to achieving this goal. Significant expansion of the economy has
taken place over the past two decades, creating much wealth. Unfortunately, this has
also coincided with grossly uneven distribution of negative externalities. In the case of
Posco, the acquisition of land has been a contentious issue, evoking strong protest from
local communities which remain unconvinced about the benefits. Evidently, neither the
project proponent nor the Odisha government has come up with persuasive arguments
over the past eight years on why villagers should part with their land when their livelihood

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22 FOUNDATION EXAMINATION: MAY, 2019

is linked to it. Moreover, there is no effort to reach a consensus on the renewal of

environmental clearance, now for a production capacity of eight million tonnes per
annum, even with conditionalities that include spending on ‘social commitments’ by
Posco.
(2) By making it optional for cinema halls to play the national anthem before every show, the
Supreme Court has at last removed the coercive element it had unfortunately introduced
by an interim order in November 2016. Laying down a judicial rule that the anthem must
be played on certain occasions in specific places, in the absence of any statutory
provision to this effect, was unnecessary and opened the court to charges of over-reach.
With the Centre saying this directive could be placed on hold, and that it would set up an
inter-ministerial committee to recommend regulations for the presentation of the national
anthem, the court has said it is not mandatory to play it in cinema halls. The panel will
also suggest changes in the Prevention of Insults to National Honour Act, 1971, or in the
Orders relating to the anthem issued from time to time. Justice D.Y. Chandrachud, one of
the three judges on the Bench, had at an earlier hearing doubted the wisdom of asking
patrons of cinema to visibly demonstrate their patriotism each time they entered a theatre
to watch a film, remarking that there was no need for an Indian to “wear his patriotism on
his sleeve”. He had asked at what point would such “moral policing” stop if it were to be
prescribed that some kinds of apparel should not be worn at the movies as they could
amount to showing disrespect to the national anthem. The court’s order also had some
unintended, but not unforeseen, consequences. The audience began looking for signs of
‘disrespect’ and there were reports of vigilantism, with people beaten up or harangued for
not standing up.
Chapter 7
Précis Writing
Read the following passages and write a précis for the same. Follow the basic rules of précis
writing while writing.
(1) How does television affect our lives. It can be very helpful to people who carefully choose
the shows that they watch. Television can increase our knowledge of the outside world,
there are high quality programmes that helps us to understand many fields of study,
science, medicine, the arts and so on. Moreover, television benefits very old people, who
can't often leave the house as well as patients in hospitals. It also offers non native
speakers the advantage of daily informal language practice. They can increase their
vocabulary and practice listening.
On the other hand, there are several serious disadvantages of television. Of course, it
provides us with a pleasant way to relax and spend our free time, but in some countries,
people watch the 'blood tube' for an average of six hours or more a day. Many children
stare at a television screen for more hours each day than they do anything else including
studying & sleeping. It's clear that the tube has a powerful influence on their lives and
that its influence if often negative.

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(2) Occasional self-medication has always been part of normal living. The making and selling
of drugs has a long history and is closely linked, like medical practice itself, with belief in
magic. Only during the last hundred years or so, as the development of scientific
techniques made it possible diagnosis has become possible. The doctor is now able to
follow up the correct diagnosis of many illnesses-with specific treatment of their causes.
In many other illnesses of which the causes remain unknown, he is still limited, like the
unqualified prescriber, to the treatment of symptoms. The doctor is trained to decide
when to treat symptoms only and when to attack the cause. This is the essential
difference between medical prescribing and self-medication.
The advance of technology has brought about much progress in some fields of medicine,
including the development of scientific drug therapy. In many countries public health
organization is improving and people’s nutritional standards have risen. Parallel with
such beneficial trends are two which have an adverse effect. One is the use of high
pressure advertising by the pharmaceutical industry which has tended to influence both
patients and doctors and has led to the overuse of drugs generally. The other
is emergence of eating, insufficient sleep, excessive smoking and drinking. People with
disorders arising from faulty habits such as these, as well as well from unhappy human
relationships, often resort to self-medication and so add the taking of pharmaceuticals to
the list. Advertisers go to great lengths to catch this market.
Clever advertising, aimed at chronic suffers who will try anything because doctors have
not been able to cure them, can induce such faith in a preparation, particularly if steeply
priced, that it will produce-by suggestion-a very real effect in some people.
Advertisements are also aimed at people suffering from mild complaints such as
simple cold and coughs, which clear up, by themselves within a short time.
These are the main reasons, why laxatives, indigestion-remedies, painkillers, cough-
mixtures, tonics, vitamin and iron tablets, nose drops, ointments and many other
preparations are found in quantity in many households. It is doubtful whether taking
these things ever improves a person’s health, it may even make it worse. Worse,
because the preparation may contain unsuitable ingredients; worse because the taker
may become dependent on them; worse because they might be taken excess; worse
because they may cause poisoning, and worst of all because symptoms of some serious
underlying cause may be asked and therefore medical help may not be sought. Self-
diagnosis is a greater danger than self-medication.
Chapter 8
Article Writing
Write an article on the following topics. (Word limit: 300 words)
(1) Importance of Trees
(2) Obesity: A growing health hazard amongst youth

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Chapter 9
Report Writing
Write an report on the following topics. (Word limit: 250-300 words)
(1) Your college organized a visit to SOS family villages for the orphaned. Write a report for
your college magazine giving details of the visit.
(2) As the School Captain, write a report for your school magazine, about a career fest held
in your school last week. Mention the various universities/institutions that participated,
orientation sessions conducted.
Chapter-10
Letter Writing
(1) You bought a printer a few days back from a leading chain of electronic stores. Now you
found a few defects in its working. Write a letter to the dealer complaining about the
problem and requesting him to rectify the problem or replace the printer.
(2) As the HR Manager of your organization, draft a circular for all the employees of your
company, informing them about New Year party being organized over the weekend in the
office campus. Mention a few events and request for active participation.
Chapter 11
Formal Mails
(1) Your company Axion Electronics has developed a Digital notice Board. Draft a formal
mail to advertise the product, conveying all the necessary features of the product and
attractive offers on bulk orders.
(2) On behalf of your CA firm, write a formal mail to all your clients requesting them to
provide all the necessary information, needed for advance tax. State that details should
be sent well in time, before Jan 31, 2019.
Chapter 12
Resume Writing
(1) Draft a resume for Aditya Narula, who has passed class XIIth, has completed his B.com
with distinction and is currently pursuing M.com (final year). Aditya wishes to apply fo r a
job in a small start up which deals with stocks.
(2) Draft a resume for Ms Seema Solanki, a resident of Mumbai, a qualified CA with an
experience of over 15 years in two organizations. Seema now plans to switch her job and
is applying to one of the Big fours.

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Chapter 13
Meetings
(1) Your company, is launching a new product. Prepare minutes of the meeting for the
same. Members in the meeting: MD, Head of the Sales and Marketing, Product Head,
Consultants and few team members.
(2) As a HR manager, prepare the agenda of an upcoming meeting regarding staff matters.

SUGGESTED ANSWERS/HINTS

Chapter -1 Communication
(1) Barriers in communication:
• Physical Barriers
• Cultural Barriers
• Language Barriers
• Technology Barriers
• Emotional Barriers
Technology Barriers: Being a technology driven world, all communication is dependent
on good and extensive use of technology. However, there might arise technical issues,
like server crash, overload of information etc which lead to miscommunication or no
communication at all.
Language Barriers: It’s a cosmopolitan set up, where people of different nationalities
move from their home to other countries for work. As a result, it is difficult to have a
common language for communication. Hence, diversity gives rise to many languages and
it acts as a barrier at times.
(2) Vertical Network and Wheel & Spoke Network
Vertical Network Wheel and Spoke Network
A formal network. It is usually between a A network with a single controlling
higher ranking employee and a authority who gives instructions and
subordinate. orders to all employees working under
him/her.
A two way communication happens Two way communication happens but
useful only in small organizations.

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Chapter-2 Sentence Types

(A) Active to Passive
(1) Many battles were fought by Rana Pratap
(2) Football matches are watched by people late night.
(3) The Principal was approached by the students for their rights.
(4) Studies should be given first priority.
(5) A lot is spoken on politics by Abhishek.
(B) Direct to Indirect Speech.
(1) She said that her mother cooked well.
(2) The athlete said that he could break all records
(3) Brother said that he had finished his studies.
(4) Teacher appreciated the girl that she had been working hard
(5) Uncle complained that he was unwell.
(C) Passive to Active
(1) The school authorities declared the results
(2) You must complete the test in one hour.
(3) Fire destroyed the factory
(4) Rajat is eating the cake.
(5) Women led a conservative lifestyle in olden days
Chapter-3 Vocabulary
(A) Synonyms
(1) Option c
(2) Option a
(3) Option d
(4) Option b
(5) Option e
(B) Antonyms
(1) Option d
(2) Option c
(3) Option a
(4) Option b

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(5) Option c
(C) Idioms
(1) Option c
(2) Option a
(3) Option d
(4) Option b
(D) Fill in the blanks:
(1) Option c
(2) Option b
(3) Option a
(4) Option d
Chapter -4 Comprehension Passages
Passage-1
(1) Option c
(2) Option d
(3) Option b
(4) Option a
(5) Option c
Passage-2
(1) Option c
(2) Option b
(3) Option a
(4) Option d
(5) Option b
Chapter-5 Note Making
Passage -1
Ministry’s Decision Revoked (Heading)
(I) S. Korean steel maker Posco under attack
(II) Prpsl for steel plant in Odisha rcnsdrd
(III) Need to rethink the descn

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28 FOUNDATION EXAMINATION: MAY, 2019

(a) Not based on solid grounds

(b) FDI’s
(c) Land aqstn from natives nt easy
(d) Protests frm land holders
(IV) No concrete result
(a) 8 years past; standstill
(b) Neither prpnt nor govt. able to justify its moves
(c) Leaves the matter open ended.
Key Used:
(1) S= south
(2) Prpsl= proposal
(3) Rcnsdrd=reconsidered
(4) Descn= decision
(5) Aqstn- acquisition
(6) Nt= not
(7) Frm= from
(8) Prpnt=proponent
(9) Govt= government.
(10) FDI= foreign direct investment
Passage-2
Playing of National anthem in movie halls (Heading)
(I) The Court’s ordr wdrwn
(II) Court mks it optional; cnnt have a mandate on the issue
(III) Consequences
(a) Govt intervenes; calls for a mnstrl dscsn
(b) Prps a hold on the court’s jdcl rule
(c) Suggest chngs in the Prvntn of Insults and Ntnl honour Act
(IV) Justice Chadrachud suggests, no end to ‘moral policing’
(V) Cnseqncs
(a) Vlnce amngst ppl.

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(b) Hrsmnt of pub.

(c) Dsrspct in the scty.
Key Used:
(1) Ordr= order
(2) Wdrwn= withdrawn
(3) Mks= makes
(4) Cnnt= cannot
(5) Govt= government
(6) Mnstrl=ministerial
(7) Dscsn=discussion
(8) Prps=proposes
(9) Jdcl=judicial
(10) Chngs= changes
(11) Prvntn=prevention
(12) Ntnl= national
(13) Cnseqncs= consequences
(14) Vlnce=violence
(15) Amngst= amongst
(16) Ppl= people
(17) Hrsmnt=harassment
(18) Pub=public
(19) Dsrspct=disrespect
(20) Scty= society
Chapter -7 Précis Writing
(1) Television: Bane or Boon (Title)
Television affects our lives in several ways. We should choose the shows carefully.
Television increases our knowledge It helps us to understand many fields of study. It
benefits and people and patients. There are some disadvantages too some people
devote a long time to it. Students leave their studies and it distracts their attention.
(2) Self Medication (Title)
Self medication is part of normal living. Medicinal experts are required for diagnosis and
treatment of disease according to symptoms and cause.

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The development of drug therapy and improvement in public health organizations and
nutritional standards have helped progress in medicinal science. Excessive advertising
by pharmaceutical companies and emergence of the sedentary society are two counter
trends. Self medication is dangerous as the preparation may be toxic or contain
unsuitable ingredients, the user becomes dependent and c onsumes medicine in excess.
Self-diagnosis is worse than self medication.
Chapter -8 Article Writing
(1) Hints:
• Cleanse the environment
• Trees provide oxygen
• Prevent soil erosion
• Preserve the ecosystem
• Important part of the food chain
• Provide home remedies for certain ailments (trees like neem, eucalyptus,)
• Provide food and habitation for birds and small animals
• Commercial use of trees: timber, rubber, resins, oils etc.
• Environmental hazards caused by cutting of trees
➢ Disturbs the ecological balance
➢ Global warming
➢ Threatens biodiversity
(2) Hints:
• Causes of obesity
➢ Erratic eating habits
➢ Erratic sleeping pattern
➢ Stress due to competition in studies
➢ Junk food consumption
➢ Not having balanced diet
➢ Sedentary lifestyles
➢ Lack of proper exercise
• Remedies
➢ Follow proper regimen
➢ Having home cooked food at regular intervals

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➢ Avoiding fatty foods and sugar rich drinks

➢ Including fruits and vegetables in diet
➢ Play a sport
➢ Regular walks
Chapter-9 Report Writing
Report-1
Hints:
• Mention a heading, name of the SOS village
• Date of the visit
• Purpose of the visit
➢ Donate rugs and warm clothing for winters
➢ Familiarising with the working of an NGO
➢ Offering voluntary services like adult education
• Brief description of the family met
• Management officials you met
• Challenges and Hazards of running such a set up
• How to contribute
• Conclusion
Report-2
Hints:
• Have a good heading
• Mention the time, date, venue
• Divide the report into three paragraphs:
• What/When/Where/ Who was invited
• Purpose of the event (learn about the career options after school)
• Describe the event in details (name of institutions that participated, orientation sessions
organized)
• Enthusiasm in the student community about careers in creative and performing arts
• Conclude with an optimistic view.

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Chapter-10
Writing Formal Letters and Official Communication
(1) XYZ Electronics
New Delhi.
Date: 20thDec, 2018

Manager, Customer Care

XYZ Electronics
New Delhi.
Dear Sir/Ma’am
Sub: Complaint regarding the printer model CanXR 0987, Invoice No: Prin/CanXR/6 -12-
2018
This is regarding the printer that I bought on Dec 6, 2018. After installation, it worked fine
for a few days. But lately every time a print command is given, it paper gets stuck and the
scanning/photocopying option is not working at all. Please send your executive to
examine the problem and rectify it at the earliest or get it replaced. I had bought the
equipment to take print-outs at home for an urgent project work submission.
I request you to look into the problem urgently and send the expert tomorrow evening by
7PM. You can send the name and mobile number of the executive at my number
XXXXXXXXXX. Looking forward to a prompt response.
(Signed)
ABC
Circular
Circular No. XXXIV Dec 31, 2018
New Year Party
For all employees
Wishing All a very Happy, prosperous and productive New Year 2019. A New Year party
is being organized in the office premises on the coming weekend (Jan 5, 2019) at 7 PM.
Everyone is cordially invited with their families.
The events would be as follows:
• Live performance by the pop band ‘ASD’
• Couple Dance competition

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• Stand up Comedy
• Surprise Gifts for kids
• Lucky Draw
• Buffet Dinner with special buffet for the kids
Looking forward to an active participation.
Romi Mistry
Manager, HR
Chapter-11 Writing Formal Mails
Mail-1
To: admin@simantechsystems.com
CC/BCC: hr@simanctechsystems.com
Subject: Introducing our tiffin supply plan
Dear Sir/Ma’am,
Greetings for the day. I would like to introduce our new product Digital Notice Board. The
product will improve internal communications, increase workforce awareness about the
company policies, goals and key initiatives, enhance visitor communication and engagement
and can also be used to convey emergency alert messages thus preventing systems.
The Interactive Display can be fixed at strategic locations such as the Reception, Lobby,
Cabin, Meeting Rooms.
Benefits:
• Display your Notices, News, Achievements, Images, Videos, Weather updates etc.
• Convey any message to visitors/Employees/customers.
• Common platform to Inspire & motivate the Workforce.
• Can be managed from any location and can be updated remotely.
• Return On Investment by Advertisements.
We are offering attractive discounts on bulk orders (at least 3 units)
For more information / demonstration about the product, please write to us. Looking forward
to your kind response.
Warm Regards,
Team Axion Electronics

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Mail-2
To: lmn@candidsweets.com, abc @yahoo.com, jkl@gmail.com
CC/BCC: ca@gmail.com, ca@kp.com
Subject: Submit details for advance tax
Dear Clients,
Wishing you and your family a Very Happy and Prosperous New Year 2019. You are
requested to submit details of your income, profit, current investments and assets to enable
our team to calculate your tax payable for the year 2018-19. Kindly provide the necessary
details by Jan 31, 2019 so that our team can guide you to plan your future investments. Kindly
contact the undersigned for any clarification/information or a prior appointment for a personal
meeting.
Hope to get cooperation from you all.
Thanks and Regards,
ABCD Kumar
(Chartered Accountant)
Chapter-12 Resume Writing
(1) Aditya Narula Resume hints
Following is a standard format, with subheadings for fresher like Aditya:
• Name and contact details
• Objective Summary
• Academic Qualifications and Achievements
• Co-curricular Achievements
• Training Programs attended/completed
• Strengths
• Interests/Hobbies
• Declaration
• Signature
(2) Seema Solanki
Format for a Resume showing years of experience
• Name and contact details
• Objective Summary:
• Career Summary

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• Experience
• Company 1
Job title
▪ Responsibilities/Achievements
• Company 2
Job title
▪ Responsibilities/Achievements
• Educational Details
• Hobbies and Interests
• Signature
• References with their phone numbers
Objective Summary: seeking leadership roles and making a meaningful impact on the growth
of the organization.
Career Summary: Have been associated with firms with an employee size of around 1200. I
have a rich experience in costing and finance operations. My expertise lies in handling cash
flow and pay rolls process.
Company Name 1
Job title: Analyst
Job Responsibilities:
• Handling finance operations and determining major financial objectives.
• Supervising monthly financials
• Deducing cost feasibility of cost based projects
Company Name 2
Job title: Manager/Sr. Consultant
Job Responsibilities:
• Designing and implementing cost effectives techniques, policies and procedures to
enhance financial growth.
• Managing pay rolls: computations of salaries, TDS, PPF
• Heading a six member team, handling daily basis output and ACR’s.

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Educational details
(Pointers as follows)
School, class Xth and XIIth marks/grades
College/University: B.Com
ICAI, Mumbai : CA
Chapter-13 Meetings
Date: Jan 2, 2019
Venue: Conference Hall, 3 rd Floor
Meeting started at 11 : 00 AM.
In attendance : Mr. BNM Managing Director, Mr. ASD Head , Sales and Marketing, Mr. FGH,
Product Head, Mr. JKL Plant Head, two Senior Consultants from QWE Consulting and
Market Research , three members of the Sales team
Mr. FGH, Product Head
• Introduced the agenda
• Demonstrated the prototype of the new product
• Explained the utility and target customers
• Existing Variants in the market vs variants to be introduced by the company in 6 months
time
Mr. JKL, Plant Head
• Discussed preparedness for mass manufacturing of the new product
• Discussed potential vendors to manufacture the variants
Mr. VBN Senior Consultant, QWE Consulting and Market Research
• Discussed marketing strategy for product launch
• Discussed media advertising for product promotion
Mr. ASD Head, Sales and Marketing, Mr. RTY Executive, Sales Team
• Presented the estimated demand and sales figures for first quarter (initial 3 months after
launch)
• Discussed feedback received from the sample customers
All the participants consented to submit their observations and reports to Mr. BNM Managing
Director, Mr. ASD Head, Sales and Marketing,
The Head of Sales and Marketing proposed a vote of thanks and declared the next meeting to
discuss reports to be held on Feb 4, 2019.

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ATR to be submitted by Jan 25, 2019 to the Head of Sales and Marketing.
(2) Tabular Agenda:
Time Topic Attendees Speaker Duration
9:30 am Introduction and • MD Head HR 5 minutes
Welcome note • Chief Operating
Officer
• Head (Admin)
• Sr. Manager HR
• Manager HR
• Executives
9:35 am • Staff Matters -do- Sr. Manager 30 mins
• Fresh HR
Appointments and
interns in
• Sales & Marketing
• Transfers
• Promotions
• Training Approvals
• Study Leave
Approvals
• Cash Rewards
10:05 am Presentation/Discussio -do- Chief 15 mins
n on Staff Motivation Operating
Programmes Officer
10:20 am Tea/Breakfast Tea/Breakfast 40 mins
11:00 am Circulation roster for • Chief Operating Head(Admin 15 mins
housekeeping staff/ Officer )
peons • Head (Admin)
• Sr. Manager HR
• Manager HR
• Executives
11:15 am Open House -do- All members 20 mins
11:35 am Vote of Thanks All participants Chief 5 mins
Operating
Officer

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PAPER – 2: BUSINESS LAWS& BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

QUESTIONS

The Indian Contract Act, 1872

1. Define an offer. Explain the essentials of a valid offer. How an offer is different from an
invitation to offer?
2. What do you understand by the term 'Consideration'? Are there any circumstances under
which a contract, under the provisions of the Indian Contract Act, 1872, without
consideration is valid? Explain.
3. A sends an offer to B to sell his second-car for ` 1,40,000 with a condition that if B does
not reply within a week, he (A) shall treat the offer as accepted. Is A correct in his
proposition? What shall be the position if B communicates his acceptance after one
week?
4. 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.
5. A student was induced by his teacher to sell his brand new car to the later 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 whether
the student can sue the teacher?
6. Explain the meaning of ‘Quasi-Contracts’. State the circumstances which are identified
as quasi contracts by the Indian Contract Act, 1872.
7. What is the law relating to determination of compensation, on breach of contract,
contained in section 73 of the Indian Contract Act, 1872?
The Sale of Goods Act, 1930
8. Classify the following transactions according to the types of goods they are:
(i) A wholesaler of cotton has 100 bales in his godown. He agrees to sell 50 bales and
these bales were selected and set aside.
(ii) A agrees to sell to B one packet of salt out of the lot of one hundred packets lying in
his shop.
(iii) T agrees to sell to S all the oranges which will be produced in his garden this year.

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2 FOUNDATION EXAMINATION: NOVEMBER, 2019

9. 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. Advise Suraj as to what remedy is available to him
against Sohan.
10. J the owner of a 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.
11. 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.
The Indian Partnership Act, 1932
12. 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
13. X and Y are partners in a partnership firm. X introduced A, a manager, as his partner to
Z. A remained silent. Z, a trader believing A as partner supplied 100 T.V sets to the firm
on credit. After expiry of credit period, Z did not get amount of T.V sets sold to the
partnership firm. Z filed a suit against X and A for the recovery of price. Advice Z whether
he can recover the amount from X and A under the Indian Partnership Act, 1932.
14. When does dissolution of a partnership firm take place under the provisions of the Indian
Partnership Act, 1932? Explain.
The Limited Liability Partnership Act, 2008
15. Who are the individuals which shall not be capable of becoming a partner of a Limited
Liability Partnership?
16. What are the effects of registration of LLP?
The Companies Act, 2013
17. Some of the creditors of Pharmaceutical Appliances Ltd. have complained that the
company was formed by the promoters only to defraud the creditors and circumvent the
compliance of legal provisions of the Companies Act, 2013. In this context they seek your
advice as to the meaning of corporate veil and when the promoters can be made
personally liable for the debts of the company.
18. Explain clearly the doctrine of ‘Indoor Management’ as applicable in cases of companies
registered under the Companies Act, 1956. Explain the circumstances in which an

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 3

outsider dealing with the company cannot claim any relief on the ground of ‘Indoor
Management’.

SUGGESTED ANSWERS/HINTS

1. Definition: The word Proposal and offer are used interchangeably and it is defined under
Section 2(a) of the Indian Contract Act, 1872 as when one person signifies to another his
willingness to do or to abstain from doing anything with a view to obtaining the assent of
that other to such act or abstinence, he is said to make a proposal.
Essentials: The following are important essentials of an offer: -
 Must be capable of creating legal relation.
 Must be certain, definite and not vague.
 Must be communicated.
 Must be made with a view to obtaining the assent of the other party
 May be conditional
 Offer should not contain a term the non compliance of which would amount to
acceptance
 May be general or specific
 May be expressed or implied
 A statement of price is not an offer
Offer and an Invitation to an offer: In terms of Section 2(a) of the Act, an offer is the
final expression of willingness by the offeror to be bound by the offer should the other
party chooses to accept it. On the other hand, offers made with the intention to negotiate
or offers to receive offers are known as invitation to offer. Thus, where a party without
expressing his final willingness proposes certain terms on which he is willing to negotiate
he does not make an offer, but only invites the other party to make an offer on those
terms. Hence, the only thing that is required is the willingness of the offeree to abide by
the terms of offer.
2. Meaning of consideration: The expression ‘consideration’ in general means price paid
for an obligation. According to Section 2 (d) of the Indian Contract Act, 1872 when at the
desire of the promisor, the promisee or any other person has done or abstained from
doing, or does or abstains from doing or promises to do or abstain from doing something,
such an act or abstinence or promise is called consideration for the promise. Thus, on
analyzing the above definition, the following ingredients are essential in understanding
the meaning of the term consideration:-
(i) An act i.e. doing something

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4 FOUNDATION EXAMINATION: NOVEMBER, 2019

(ii) An abstinence or forbearance i.e. abstaining or refraining from doing something,

and
(iii) A return promise.
The general rule is that an agreement made without consideration is void. Sections 25 of
the Indian Contract Act, 1872, provides for exceptions to this rule where an agreement
without consideration is valid. These are:
(1) Natural Love & Affection [Section 25 (1)]
Where an agreement is expressed in writing and registered under the law for the
time being in force for the registration of documents and is made on account of
natural love and affection between the parties standing in near relation to each
other, the agreement is enforceable, even through, the consideration is absent.
(2) Compensation for past voluntary service [Section 25 (2)]
A promise to compensate, wholly or in part, a person who has already voluntarily
done something for the promisor, is enforceable even without consideration.
(3) Promise to pay time barred Debt [Section 25 (3)]
The agreement is valid provided it is made in writing and is signed by the debtor or
by his agent authorized in that behalf.
(4) Completed Gift – [Explanation 1 to Section 25]
As per explanation 1 to section 25, nothing in section 25 shall affect the validity as
between donor and donee, on any gift actually made. Thus, gifts do not require any
consideration.
(5) Agency (Section 185)
No consideration is necessary to create an agency.
(6) Bailment (Section 148)
No consideration is required to effect the contract of bailment.
(7) Charity
If a promise undertakes the liability on the promise of the person to contribute to
charity, there the contract shall be valid.
3. Acceptance to an offer cannot be implied merely from the silence of the offeree, even if it
is expressly stated in the offer itself. Unless the offeree has by his previous conduct
indicated that his silence amount to acceptance, it cannot be taken as valid acceptance.
So in the given problem, if B remains silent, it does not amount to acceptance.
The acceptance must be made within the time limit prescribed by the offer. The
acceptance of an offer after the time prescribed by the offeror has elapsed will not avail
to turn the offer into a contract.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 5

4. Section 42 of the Indian Contract Act, 1872 requires that when two or more persons have
made a joint promise, then, unless a contrary intention appears from the contract, all
such persons jointly must fulfill the promise. In the event of the death of any of them, his
representative jointly with the survivors and in case of the death of all promisors, the
representatives of all jointly must fulfill the promise.
Section 43 allows the promisee to seek performance from any of the joint promisors. The
liability of the joint promisors has thus been made not only joint but "joint and several".
Section 43 provides that in the absence of express agreement to the contrary, the
promisee may compel any one or more of the joint promisors to perform the whole of the
promise.
Section 43 deals with the contribution among joint promisors. The promisors, may
compel every joint promisor to contribute equally to the performance of the promise
(unless a contrary intention appears from the contract). If any one of the joint promisors
makes default in such contribution the remaining joint promisors must bear the loss
arising from such default in equal shares.
As per the provisions of above sections,
(i) Y can recover the contribution from X and Z because X,Y and Z are joint promisors.
(ii) Legal representative of X are liable to pay the contribution to Y. However, a legal
representative is liable only to the extent of property of the deceased received by
him.
(iii) Y also can recover the contribution from Z's assets.
5. Yes, A can sue his teacher on the ground of undue influence under the provisions of
Indian Contract Act, 1872.
According to section 16 of the Indian Contract Act, 1872, “A contract is said to be
induced by ‘undue influence’ where the relations subsisting between the parties are such
that one of the parties is in a position to dominate the will of the other and he uses that
position to obtain an unfair advantage over the other”.
A person is deemed to be in position to dominate the will of another:
(a) Where he holds a real or apparent authority over the other; or
(b) Where he stands in a fiduciary relationship to the other; or
(c) Where he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness or mental or bodily distress for
example, an old illiterate person.
A contract brought as a result of coercion, undue influence, fraud or misrepresentation
would be voidable at the option of the person whose consent was caused.

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6 FOUNDATION EXAMINATION: NOVEMBER, 2019

6. Quasi-Contracts: Even in the absence of a contract, certain social relationships give

rise to certain specific obligations to be performed by certain persons. These are known
as “quasi-contracts” as they create some obligations as in the case of regular contracts.
Quasi-contracts are based on the principles of equity, justice and good conscience.
The salient features of quasi-contracts are:
(i) such a right is always a right to money and generally, though not always, to a
liquidated sum of money;
(ii) does not arise from any agreement between the parties concerned but the
obligation is imposed by law and;
(iii) the rights available are not against all the world but against a particular person or
persons only, so in this respect it resembles to a contractual right.
Circumstances Identified as Quasi-Contracts:
1. Claim for necessaries supplied to persons incapable of contracting: Any
person supplying necessaries of life to persons who are incapable of contracting is
entitled to claim the price from the other person’s property. Similarly, where money
is paid to such persons for purchase of necessaries, reimbursement can be
claimed.
2. Payment by an interested person: A person who has paid a sum of money which
another person is obliged to pay, is entitled to be reimbursed by that other person
provided that the payment has been made by him to protect his own interest.
3. Obligation of person enjoying benefits of non-gratuitous act: Where a person
lawfully does anything for another person, or delivers anything to him not intending
to do so gratuitously and such other person enjoys the benefit thereof, the latter is
bound to pay compensation to the former in respect of, or to restore, the thing so
done or delivered.
4. Responsibility of finder of goods: A person who finds goods belonging to
another person and takes them into his custody is subject to same responsibility as
if he were a bailee.
5. Liability for money paid or thing delivered by mistake or by coercion : A
person to whom money has been paid or anything delivered by mistake or under
coercion, must repay or return it.
In all the above cases contractual liability arises without any agreement between the
parties.
7. Compensation on Breach of Contract: Section 73 of the Indian Contract Act, 1872
provides that when a contract has been broken, the party who suffers by such breach is
entitled to receive from the party who has broken the contract, compensation for any loss
or damage caused to him thereby which naturally arose in the usual course of things

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 7

from such breach or which the parties knew when they made the contract, to be likely to
result from the breach of it. Such compensation is not given for any remote and indirect
loss or damage sustained by reason of the breach. The explanation to the section further
provides that in estimating the loss or damage from a breach of contract, the means
which existed of remedying the inconvenience caused by the non-performance of the
contract must be taken into account.
8. (i) A wholesaler of cotton has 100 bales in his godown. He agrees to sell 50 bales and
these bales were selected and set aside. On selection the goods becomes
ascertained. In this case, the contract is for the sale of ascertained goods, as the
cotton bales to be sold are identified and agreed after the formation of the contract.
(ii) If A agrees to sell to B one packet of salt out of the lot of one hundred packets lying
in his shop, it is a sale of unascertained goods because it is not known which packet
is to be delivered.
(iii) T agrees to sell to S all the oranges which will be produced in his garden this year.
It is contract of sale of future goods, amounting to 'an agreement to sell.'
9. As per the section 55 of the Sale of Goods Act, 1930 an unpaid seller has a right to
institute a suit for price against the buyer personally. The said Section lays down that
(i) Where under a contract of sale the property in the goods has passed to buyer and
the buyer wrongfully neglects or refuses to pay for the goods, the seller may sue
him for the price of the goods [Section 55(1)].
(ii) Where under a contract of sale the price is payable on a certain day irrespective of
delivery and the buyer wrongfully neglects or refuses to pay such price, the seller
may sue him for the price. It makes no difference even if the property in the goods
has not passed and the goods have not been appropriated to the contract [Section
55(2)].
This problem is based on above provisions. Hence, Suraj will succeed against Sohan for
recovery of the remaining amount. Apart from this Suraj is also entitled to:-
(1) Interest on the remaining amount
(2) Interest during the pendency of the suit.
(3) Costs of the proceedings.
10. The problem in this case is based on the provisions of the Sale of Goods Act, 1930
contained in the proviso to Section 27. The proviso provides that a mercantile agent is
one who in the customary course of his business, has, as such agent, authority ei ther to
sell goods, or to consign goods, for the purpose of sale, or to buy goods, or to raise
money on the security of goods [Section 2(9)]. The buyer of goods form a mercantile
agent, who has no authority from the principal to sell, gets a good title to the goods if the
following conditions are satisfied:

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8 FOUNDATION EXAMINATION: NOVEMBER, 2019

(1) The agent should be in possession of the goods or documents of title to the goods
with the consent of the owner.
(2) The agent should sell the goods while acting in the ordinary course of business of a
mercantile agent.
(3) The buyer should act in good faith.
(4) The buyer should not have at the time of the contract of sale notice that the agent
has no authority to sell.
In the instant case, P, the agent, was in the possession of the car with J’s consent for the
purpose of sale. A, the buyer, therefore obtained a good title to the car. Hence, J in this
case, cannot recover the car from A.
11. The-following are implied conditions in a contract of sale by sample in accordance with
Section 17 of the Sale of Goods Act, 1930;
(a) that the bulk shall correspond with the sample in quality;
(b) that the buyer shall have a reasonable opportunity of comparing the bulk with the
sample.
(c) that the goods shall be free from any defect, rendering them unmerchantable, which
would not be apparent on a reasonable examination of the sample [Section 17(2)].
Implied Warrants:
1. Warranty of quiet possession [Section 14(b)]: In a contract of sale, unless there is a
contrary intention, there is an implied warranty that the buyer shall have and enjoy
quiet possession of the goods. If the buyer is in any way distributed in the
enjoyment of the goods in consequence of the seller’s defective title to sell, he can
claim damages from the seller.
2. Warranty as to non-existence of encumbrances [Section 14(c)]: The buyer is entitled
to a further warranty that the goods are not subject to any charge or encumbrance
in favour of a third party. If his possession is in any way disturbed by reason of the
existence of any charge or encumbrances on the goods in favour of any third party,
he shall have a right to claim damages for breach of this warranty.
3. Warranty as to quality or fitness by usage of trade [Section 16(3)]. An implied
warranty as to quality or fitness for a particular purpose may be annexed by the
usage of trade.
4. Warranty to disclose dangerous nature of goods: Where a person sells goods,
knowing that the goods are inherently dangerous or they are likely to be dangerous
to the buyer and that the buyer is ignorant of the danger, he must warn the buyer of
the probable danger, otherwise he will be liable in damages.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 9

12. (i) RETIREMENT OF A PARTNER (SECTION 32):

(1) A partner may retire:
(a) with the consent of all the other partners;
(b) in accordance with an express agreement by the partners; or
(c) where the partnership is at will, by giving notice in writing to all the other
partners of his intention to retire.
(2) A retiring partner may be discharged from any liability to any third party for
acts of the firm done before his retirement by an agreement made by him with
such third party and the partners of the reconstituted firm, and such agreement
may be implied by a course of dealing between the third party and the
reconstituted firm after he had knowledge of the retirement.
(3) Notwithstanding the retirement of a partner from a firm, he and the partners
continue to be liable as partners to third parties for any act done by any of
them which would have been an act of the firm if done before the retirement,
until public notice is given of the retirement:
Provided that a retired partner is not liable to any third party who deals with the
firm without knowing that he was a partner.
(4) Notices under sub-section (3) may be given by the retired partner or by any
partner of the reconstituted firm.
(ii) Insolvency of a partner (Section 34)
(1) The insolvent partner cannot be continued as a partner.
(2) He will be ceased to be a partner from the very date on which the order of
adjudication is made.
(3) The estate of the insolvent partner is not liable for the acts of the firm done
after the date of order of adjudication.
(4) The firm is also not liable for any act of the insolvent partner after the date of
the order of adjudication,
(5) Ordinarily but not invariably, the insolvency of a partner results in dissolution of
a firm; but the partners are competent to agree among themselves that the
adjudication of a partner as an insolvent will not give rise to dissolution of the
firm
13. In the given case, along with X, the Manager (A) is also liable for the price because he
becomes a partner by holding out (Section 28, Indian Partnership Act, 1932).
Partner by holding out (Section 28): Partnership by holding out is also known as
partnership by estoppel. Where a man holds himself out as a partner, or allows others to

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10 FOUNDATION EXAMINATION: NOVEMBER, 2019

do it, he is then stopped from denying the character he has assumed and upon the faith
of which creditors may be presumed to have acted.
It is only the person to whom the representation has been made and who has acted
thereon that has right to enforce liability arising out of ‘holding out’.
You must also note that for the purpose of fixing liability on a person who has, by
representation, led another to act, it is not necessary to show that he was actuated by a
fraudulent intention.
The rule given in Section 28 is also applicable to a former partner who has retired from
the firm without giving proper public notice of his retirement. In such cases, a person
who, even subsequent to the retirement, give credit to the firm on the belief that he was a
partner, will be entitled to hold him liable.
14. Dissolution of Firm: The Dissolution of Firm means the discontinuation of the jural
relation existing between all the partners of the Firm. But when only one of the partners
retires or becomes in capacitated from acting as a partner due to death, insolvency or
insanity, the partnership, i.e., the relationship between such a partner and other is
dissolved, but the rest may decide to continue. In such cases, there is in practice, no
dissolution of the firm. The particular partner goes out, but the remaining partners carry
on the business of the Firm. In the case of dissolution of the firm , on the other hand, the
whole firm is dissolved. The partnership terminates as between each and every partner
of the firm.
Dissolution of a Firm may take place (Section 39 - 44)
(a) as a result of any agreement between all the partners (i.e., dissolution by
agreement);
(b) by the adjudication of all the partners, or of all the partners but one, as insolvent
(i.e., compulsory dissolution);
(c) by the business of the Firm becoming unlawful (i.e., compulsory dissolution);
(d) subject to agreement between the parties, on the happening of certain
contingencies, such as: (i) effluence of time; (ii) completion of the venture for which
it was entered into; (iii) death of a partner; (iv) insolvency of a partner.
(e) by a partner giving notice of his intention to dissolve the firm, in case of partnership
at will and the firm being dissolved as from the date mentioned in the notice, or if no
date is mentioned, as from the date of the communication of the notice; and
(f) by intervention of court in case of: (i) a partner becoming the unsound mind; (ii)
permanent incapacity of a partner to perform his duties as such; (iii) Misconduct of a
partner affecting the business; (iv) willful or persistent branches of agreement by a
partner; (v) transfer or sale of the whole interest of a partner; (vi) improbability of the
business being carried on save at a loss; (vii) the court being satisfied on other
equitable grounds that the firm should be dissolved.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 11

15. Partners (Section 5 of Limited Liability Partnership Act, 2008): Any individual or body
corporate may be a partner in a LLP.
However, an individual shall not be capable of becoming a partner of a LLP, if—
(a) he has been found to be of unsound mind by a Court of competent jurisdiction and
the finding is in force;
(b) he is an undischarged insolvent; or
(c) he has applied to be adjudicated as an insolvent and his application is pending.
16. Effect of registration (Section 14 of Limited Liability Partnership Act, 2008):
On registration, a LLP shall, by its name, be capable of—
(a) suing and being sued;
(b) acquiring, owning, holding and developing or disposing of property, whether
movable or immovable, tangible or intangible;
(c) having a common seal, if it decides to have one; and
(d) doing and suffering such other acts and things as bodies corporate may lawfully do
and suffer.
17. Corporate Veil: Corporate Veil refers to a legal concept whereby the company is
identified separately from the members of the company.
The term Corporate Veil refers to the concept that members of a company are shielded
from liability connected to the company’s actions. If the company incurs any debts or
contravenes any laws, the corporate veil concept implies that members should not be
liable for those errors. In other words, they enjoy corporate insulation.
Thus, the shareholders are protected from the acts of the company.
However, under certain exceptional circumstances the courts lift or pierce the corporate
veil by ignoring the separate entity of the company and the promoters and other persons
who have managed and controlled the affairs of the company. Thus, when the corporate
veil is lifted by the courts, the promoters and persons exercising control over the affairs
of the company are held personally liable for the acts and debts of the company.
The following are the cases where company law disregards the principle of corporate
personality or the principle that the company is a legal entity distinct and separate from
its shareholders or members:
(i) To determine the character of the company i.e. to find out whether co-enemy or
friend
(ii) To protect revenue/tax
(iii) To avoid a legal obligation
(iv) Formation of subsidiaries to act as agents

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12 FOUNDATION EXAMINATION: NOVEMBER, 2019

(v) Company formed for fraud/improper conduct or to defeat law

18. Doctrine of Indoor Management (Companies Act, 2013): According to the “doctrine of
indoor management” the outsiders, dealing with the company though are supposed to
have satisfied themselves regarding the competence of the company to enter into the
proposed contracts are also entitled to assume that as far as the internal compliance to
procedures and regulations by the company is concerned, everything has been done
properly. They are bound to examine the registered documents of the company and
ensure that the proposed dealing is not inconsistent therewith, but they are not bound to
do more. They are fully entitled to presume regularity and compliance by the company
with the internal procedures as required by the Memorandum and the Articles. This
doctrine is a limitation of the doctrine of “constructive notice” and popularly known as the
rule laid down in the celebrated case of Royal British Bank v. Turquand. Thus, the
doctrine of indoor management aims to protect outsiders against the company.
The above mentioned doctrine of Indoor Management or Turquand Rule has limitations
of its own. That is to say, it is inapplicable to the following cases, namely:
(a) Actual or constructive knowledge of irregularity: The rule does not protect any
person when the person dealing with the company has notice, whether actual or
constructive, of the irregularity.
In Howard vs. Patent Ivory Manufacturing Co. where the directors could not
defend the issue of debentures to themselves because they should have known that
the extent to which they were lending money to the company required the assent of
the general meeting which they had not obtained.
Likewise, in Morris v Kansseen, a director could not defend an allotment of shares
to him as he participated in the meeting, which made the allotment. His
appointment as a director also fell through because none of the directors appointed
him was validly in office.
(b) Suspicion of Irregularity: The doctrine in no way, rewards those who behave
negligently. Where the person dealing with the company is put upon an inquiry, for
example, where the transaction is unusual or not in the ordinary course of business,
it is the duty of the outsider to make the necessary enquiry.
The protection of the “Turquand Rule” is also not available where the circumstances
surrounding the contract are suspicious and therefore invite inquiry. Suspicion
should arise, for example, from the fact that an officer is purporting to act in matter,
which is apparently outside the scope of his authority. Where, for example, as in
the case of Anand Bihari Lal vs. Dinshaw & Co. the plaintiff accepted a transfer of
a company’s property from its accountant, the transfer was held void. The plaintiff
could not have supposed, in absence of a power of attorney that the accountant had
authority to effect transfer of the company’s property.

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Similarly, in the case of Haughton & Co. v. Nothard, Lowe & Wills Ltd. where a
person holding directorship in two companies agreed to apply the money of one
company in payment of the debt to other, the court said that it was something so
unusual “that the plaintiff were put upon inquiry to ascertain whether the persons
making the contract had any authority in fact to make it.” Any other rule would
“place limited companies without any sufficient reasons for so doing, at the mercy of
any servant or agent who should purport to contract on their behalf.”
(c) Forgery: The doctrine of indoor management applies only to irregularities which
might otherwise affect a transaction but it cannot apply to forgery which must be
regarded as nullity.
Forgery may in circumstances exclude the ‘Turquand Rule’. The only clear
illustration is found in the Ruben v Great Fingall Consolidated. In this case the
plaintiff was the transferee of a share certificate issued under the seal of the
defendant’s company. The company’s secretary, who had affixed the seal of the
company and forged the signature of the two directors, issued the certificate.
The plaintiff contended that whether the signature were genuine or forged was apart
of the internal management, and therefore, the company should be estopped from
denying genuineness of the document. But it was held, that the rule has never been
extended to cover such a complete forgery.

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SECTION B: BUSINESS CORRESPONDENCE AND REPORTING

QUESTIONS
Chapter-1

Communication

(1) What is network in communication?

(2) Describe various characteristics of effective communication?
Chapter 2
Sentence Types: Active Passive Voice, Direct Indirect Speech
(A) Change the following sentences into passive voice.
1. John helps William.
2. Who did this?
3. Some students were helping the layman.
4. Ram will finish the work by tomorrow.
5. The Peon opened the gate.
(B) Change the following Direct speech into Indirect speech.
1. He said, ‘I have passed the examination.’
2. Ram said to him, ‘I don’t believe you.’
3. Where do you live?’ asked the stranger.
4. Call the second witness,’ said the judge.
5. He said, ‘Well-done! You have done well.’
Chapter -3 Vocabulary
(A) Select the suitable synonym for the given words:
1. Inchoate
a- Contextual b- notified c- rudimentary d-disseminate
2. Hone
a- Grind b- jumble c-heuristic d- chroneme
3. Dilatory
a- Using time b-wasting time c- about to complete d-proximity

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4. Sturdy
a- Stealth b-very small c- peculiar d-indomitable
5. Oblivious
a- Refuel b- problematic c- digress d-heedless
(B) Select the suitable antonym for the given word:
1. Frivolus
a- Resolute b-gleeful c-fragile d- advantageous
2. Prerogative
a- Positive b- embargo c- invincible d-grapple
3. Vituperate
a- Dignity b- relevance c- exculpate d-perturb
4. Turmoil
a- Kindness b- compliment c-adjustor d- serenity
5. Sane
a- ego b-frantic c- composer d-gleaner
Chapter 4
Comprehension Passages
Read the following comprehension passages and answer the following questions
Passage 1
(1) All languages are systematic and rule bound. Children across the world acquire their natural
language in same manner. In this context, linguistics is not simply the study of foreign languages.
It is the scientific, organized and systematic study of a language. Linguists examine and evaluate
language one the basis of words, sentence, word order, pronunciation to discuss the internal
language mechanism. Generally people understand that a linguist can speak many languages.
However there is big difference between a linguist and a polyglot. India as a case in example has
six distinct language families. It is estimated that approx. seventeen hundred languages are
spoken in India only. Hindi is a rich language but does not still have a national language status in
terms of official usage although it is official language for some states. English is official language
for most other states.
Most countries have only one language besides Canada where French and English both are official
languages. In the western world, countries are strongly associated with single languages and vic e
versa. Linguists see this due to the rise of nation states in the past few centuries where single
languages attained official status in individual countries, English in the United Kingdom , Frenc h in
France, Italian in Italy, etc. However beneficial the official status of one language may be for a

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16 FOUNDATION EXAMINATION: NOVEMBER, 2019

modern country in terms of government, public discourse, higher education, etc., it is not helpful to
other languages which may be found within the borders of a particular country. In many aspects
language represents our identity and culture. Furthermore, even in countries where only one
language is spoken, say Dutch in the Netherlands, there may well be different dialects of this
language closely related to the national language. Even within Europe, and most certainly outside
of it, the equation of one country with one language breaks down. Switzerland is a good example of
a country where a single national identity exists across three major and one minor speech
community: Swiss German, French, Italian and Rhaeto-Romance. Beyond Europe it is more the
rule than the exception for countries to have several languages within their borders. One need only
think of such countries as India and China or Siberian Russia to see how many languages c an be
integrated into a single state. In such instances, there is of course an official language which
serves the function of a lingua franca, that is, a language which is used as a means of
communication among those groups who do not speak each others language.
1. A linguist is one who
a- knows many languages
b- make a language
c- speak many languages
d- master in programming language
2. India as a linguistic area has-
a- a single language
b- six languages
c- only one official language
d- many languages
3. Language represents-
a- Population
b- Identity
c- Boundary
d- civilization
4. Switzerland is famous for –
a- Natural diversity
b- Language identity
c- Cultural identity
d- National identity
5. Lingua franca means-

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a- Any language used for speech and writing between business purpose
b- Language for business
c- Any language used for communication between groups who have no other language
in common.
d- Any language used for communication between the particular speech community
Passage 2
The word ‘Ethics’ is derived from the Greek word “ethos” meaning character. It refers to
conventional standard of right and wrong, good and bad that means what people should do or
should not. It includes fairness, loyalty and honesty for others. In the context of an organization,
ethics can be viewed as a frank conversation about those values and issues most important to
stakeholders and to business. Ethical behaviour in organizational context has been most frequently
described in terms of ethical standards of senior leaders and the culture to which they substantially
contribute (DeGeorge, 1986). We define leadership as the art of persuading a follower to want to
do the things, activities, that the leader sets as goals. The role of leaders is that of directing an
individual’s behaviour towards a desired goal. There are several kinds of Leaders that having
different leadership styles that stem from unique characteristics of their personality. Leaders have
different values, attitudes, beliefs, conduct, habits and practices. It largely depends upon the
organizational, professional or institutional culture. Leadership signifies a relation between a leader
and his followers within a situational and organizational context. Leadership in the context of
normative organizational ethics can be defined with regard to how individuals should or ought to
behave in an organization. This includes speculations about criteria that define ethical decisions
and personality characteristics.
Many business organizations are implementing policies and procedures to encourage an ethical
work culture. Companies are establishing codes of ethics, appointing ethics compliance offic ers,
and instituting ethics training programs. Ethics comprise five elements: responsibility, respect,
fairness, honesty, and compassion. Companies are also developing Web-based programs and
workshops that teach employees how to relate to each other, to the company, to customers, and to
business partners. These trainings sometimes include ethical decision-making m odels and role -
playing scenarios that help employees respond appropriately to dilemmas. Typical ethical topics
include workplace romance, e-mail appropriateness, Internet use, integrity, confidentiality, security,
and harassment.
1. Write title of the passage-
a- Ethics in business
b- Ethical Leadership
c- Ethics and Marketing
d- Leading as a leader
2. Ethics include-

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18 FOUNDATION EXAMINATION: NOVEMBER, 2019

a- Beyond loyal
b- Need and importance
c- Truthiness
d- Knowing right and wrong
3. Most leaders have-
a- Social mutual relation
b- Effective speech
c- Individual leadership style
d- Intrapersonal behavior
4. ------------ is organized by organizations for inculcating ethics amongst employees
a- Seminar
b- Conference
c- Moral value discussion
d- Ethics training programme
5. Objective of organizing training programme on ethics to inculcate
a- Ethical decision making
b- Ethical based value system
c- Ethical work culture
d- harmony
Chapter 5 Note Making
Read the following passage/news story and make proper notes following the guidelines of Note
making. (Source: internet, newspaper articles)
Market risk is inevitable part of capital market. Broadly, ‘MR’ means changes in the market prices
of underlying. In commercial business the market risk may be a consequence but in capital market
it forms organization’s core business. MR can arise in different stages of services or different
timing say during an hour, a day or a week. Generally, the primary concern in assessing the market
risk is to assess it in absolute term or relative changes in comparison of any benchmark say
interest rates etc. The market risk can be broken down into different classes: such as internet risk,
foreign exchange risk, commodity risk and equity risk. Internet rate risk arises due to change in the
yield curve. It affects not only current value of items of Balance Sheet of a financial institutions but
also the off the Balance Sheet items. Foreign exchange risk arises on account of change in the
price of foreign currency. Commodity risk arises due to change in price of commodities, commodity
price index etc. and Equity risk occurs when there is a fall in equity indices or most of the shares.
Equity risk normally results from any unprecedented events say sovereign default etc.

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Chapter 7
Précis Writing
Read the following passages and write a précis for the same.
1) The word ‘gender’, originally a grammatical term, has come to refer to the social roles and
behaviour of individuals arising from their classification as biologically male or fem ale. In
other words, Gender is general terms is imported from the social sciences for the sex or
sexuality of human beings. Hence ‘gender difference’, of a difference in speech between
men and women; language and gender, as a branch of sociolinguistics dealing with suc h
differences.This is a huge complex embracing virtually all aspects of social beh aviour of
which language is only one. Recently, intensive research has been carried out about the
relationship of language and gender, largely by female scholars who have felt drawn to
the topic because of the obvious discrimination against women that has taken place in the
past and which can still be observed today. The initial impulse was the work of the
American linguist Robin Lakoff, who in the early 1970s focussed her attention on certain
themes with the language and gender complex above those that she rightly felt required
rectification. Her work stimulated other scholars to engage in this study and soon
language and gender was a burgeoning research area in universities across the western
world. Various opinions emerged on this relationship with two gaining particular focus.
One is the difference approach which established that male and female language is
dissimilar in spoken as well as written without attributing this to the nature of the social
relationship between men and women. The other is the dom inance approach which saw
language usage by females and males as reflecting established relationship of social
control of the latter over the former. With the maturation of research on language and
gender the simple ‘difference – dominance’ dichotomy was increasingly regarded as
unsatisfactory and insufficiently nuanced. For example, to maintain that men have a
competitive style of social behaviour in western countries is a generalisation that everyone
would agree. However, there are men who are not competitive in this respect. There are
common tendencies that one comes across such as men interrupt women more, wom en
are more communicative than men, women gossip more than men, men speak more
comfortably in public and are good in calculation than women.
2) There are approx. 6000 languages spoken worldwide. Out of them only some languages
have script while others exist only in spoken form. Language diversity is common
phenomena to the human. But Language death is equal to human death. In this regard,
we need to work for language documentation, making new language policy, and new
application to enhance the vitality of languages. A language is endangered when it is on a
path toward extinction. Indeed, without proper documentation, a language that is extinct
can never be revived. A language is in danger when its speakers cease to use it, use it in
an increasingly reduced number of communicative domains, and cease to pass it on from
one generation to the next. That is, there are no new speakers, adults or children. About
97% of the world’s people speak about 4% of the world’s languages; and conversely,
about 96% of the world’s languages are spoken by about 3% of the world’s people

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20 FOUNDATION EXAMINATION: NOVEMBER, 2019

(Bernard 1996: 142). Many indigenous peoples, associating their disadvantaged social
position with their culture, have come to believe that their languages are not worth
retaining. For linguist, each language is unique and each language is a unique expression
of the human experience of the world. Thus, the knowledge of any single language may
be the key to answering fundamental questions of the future. Every time a language dies,
we have less evidence for understanding patterns in the structure and function of human
language, human prehistory, and the maintenance of the world’s diverse ecosystems.
Raising awareness about language loss and language diversity will only be successful
when meaningful contemporary roles for minority languages can be established, for the
requirements of modern life within the community as well as in national and inter national
contexts. External Specialists and Speech Communities External language specialists,
primarily linguists, educators, and activists see their first task as documentation.
Chapter 8
Article Writing
1) Online Payment on a high after demonetisation
2) Unemployment: A blot to Indian economy
Chapter-10
Letter Writing
1) Write a letter from xyz pvt ltd confirming the order placed and other details.
2) Write a complaint letter to the supplier about a defective consignment received.
Chapter 11
Formal Mails
1) Write a mail to Suraj Gupta responding to his query about the availability of cosmetics and
toiletries in your manufacturing unit ‘Shimmer and Shine’. You are Mr. Vishnu Verma,
marketing head of the company. (word limit: 150-200 words)
2) You are Arvindkumar, a team leader in project implementations department of Cellular
Telecommunications. Write a mail to all members of your team asking them to attend a
meeting after two days, seeking their suggestions on ways and means to speed up the
implementation of the project of improving connectivity in X,Y,Z areas in the city . (word
limit: 150-200 words)
Chapter 12
Resume Writing
1) You are Abhinav/RakhiGoel, a resident of Tagore Garden, New Delhi. You have recently
come across an advertisement in the Times of India post of a Jr. Accountant at HCL. Draft
a résumé along with a cover letter in response to the advertisement.

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2) You are Anil/Snjukta. You come across the following advertisement for the post of
Chartered Accountant in the Employment News at ROCA. You consider yourself suitable
and eligible for the post. Write an application in response to the advertisement. Attach
your curriculum vitae.
Chapter 13
Meetings
(1) Your company, has witnessed a gradual decline in a consumer product over the one year.
Prepare the minutes of the meeting for the same. Members in the meeting; Head of the
Sales and Marketing, Product head, Product lead and concerned team members.
(2) As an employee of a CA firm, Prepare the agenda of an upcoming partners’ visit in tabular
format. Include senior executive in the meeting discuss the agenda for the meeting and
how the one day visit of the partner needs to be planned.
Answers
Chapter -1 Communication
1) A communication network refers to the method and pattern used by members of an
organisation to pass on information to other employees in the organization. Network helps
managers create various types of communication flow according to requirement of the
task at hand. Some companies have established and predefined networks of
communication for specified venture.
2) The Characteristics of Effective Communication:
Communication for humans is akin to breathing. From the first cry of the baby to the last
breath of a person, communication is an essential part of life. However, good communication
is an art that has be developed and honed. Effective communicators practice every aspect of
the skill frequently.
It is a fact that our everyday communication is often marred by confusion, misunderstandings,
misconceptions, partial understanding and obscurity. Thus, several aspects must keep in mind
while interacting with others for our communication to convey the intended message.
1. Clear: Any spoken or written communication should state the purpose of message clearly.
The language should be simple. Sentences ought to be short as the core message is lost
in long, convoluted sentences. Each idea or point must be explained in a separate
bulleted points or paragraphs. Make it easy for the reader to grasp the intent of the
communiqué.
2. Concise: Brevity is the essence of business communication. No one has the time to read
long drawn out essays. Besides, the core content is lost in elaborate details. Avoid using
too many irrelevant words or adjectives, for example, ‘you see’, ‘I mean to say’, etc.
Ensure that there are no repetitions

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3. Concrete: The content of your communiqué should be tangible. Base it on facts and
figures. Abstract ideas and thoughts are liable to misinterpretation. Make sure that there is
just sufficient detail to support your case/ argument and bring focus to the main message
4. Coherent: Coherence in writing and speech refers to the logical bridge between words,
sentences, and paragraphs. Main ideas and meaning can be difficult for the reader to
follow if the writer jumps from one idea to another and uses contradictory words to
express himself. The key to coherence is sequentially organized and logically presented
information which is easily understood. All content under the topic should be relevant,
interconnected and present information in a flow.
5. Complete: A complete communication conveys all facts and information required by the
recipient. It keeps in mind the receiver’s intellect and attitude and conveys the message
accordingly. A complete communication helps in building the company’s reputation, aids
in better decision making as all relevant and required information is available with the
receiver.
6. Courteous: Courtesy implies that the sender is polite, considerate, respectful, open and
honest with the receiver. The sender of the message takes into consideration the
viewpoints and feelings of the receiver of the message. Make sure nothing offensive or
with hidden negative tone is included.
7. Listening for Understanding: We are bombarded by noise and sound in all our waking
hours. We ‘hear’ conversations, news, gossip and many other forms of speech all the
time. However, most of it is not listened to carefully and therefore, not understood,
partially understood or misunderstood. A good listener does not only listen to the
spoken words, but observes carefully the nonverbal cues to understand the complete
message. He absorbs the given information, processes it, understands its context and
meaning and to form an accurate, reasoned, intelligent response.
The listener has to be objective, practical and in control of his emotions. Often the
understanding of a listener is coloured by his own emotions, judgments, opinions, and
reactions to what is being said. While listening for understanding, we focus on the
individual and his agenda. A perceptive listener is able to satisfy a customer and suggest
solutions as per the needs of the client
8. Focus and Attention: Everyday work environment has multiple activities going on
simultaneously. The ringing of the phone, an incoming email, or a number of tasks
requiring your attention, anxiety related to work, emotional distress etc. can distract you.
Such distractions are detrimental to the communication process with an individual or a
group of people. You may overlook or completely miss important points or cues in the
interaction. Thus, keeping your focus and attention during the communiqué is
imperative for effective communication.

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9. Emotional Awareness and Control: “Human behavior is not under the sole control of
emotion or deliberation but results from the interaction of these two processes,”
Loewenstein said.
However, emotions play a major role in our interactions with other people. They are a
powerful force that affect our perception of reality regardless of how hard we try to be
unbiased. In fact, intense emotions can undermine a person’s capacity for rational
decision-making, even when the individual is aware of the need to make careful decisions.
Consequently, emotional awareness is a necessary element of good communication.
While interacting with another person or a group, it is important to understand the
emotions you and he/ she/ they are bringing to the discussion. Managing your own and
others emotions and communicating keeping in mind the emotional state of others helps
in smooth interaction and breakdown of the communication process.
Chapter-2 Sentence Types
(A) Active to Passive
1. William is helped by John.
2. By whom was this done?
3. The layman was being helped by some students.
4. The work will be finished by Ram tomorrow.
5. The gate was opened by the peon.
(B) Direct to Indirect Speech.
1. He said that he had passed the examination.
2. Ram said he didn’t believe him.
3. The stranger required where I lived.
4. The judge commanded them to call the second witness.
5. He applauded him, saying that he had done well.
Chapter-3 Vocabulary
(A) Synonyms
1. C
2. A
3. B
4. D
5. D

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24 FOUNDATION EXAMINATION: NOVEMBER, 2019

(B) Antonyms
1. A
2. B
3. C
4. D
5. B
Chapter -4 Comprehension Passages
Passage-1
1. A 2. d 3. b 4.b 5.c
Passage-2
1. b, 2. d, 3.c, 4. d, 5. a
Chapter-5 Note Making
1) Risk Management
1) Wht is risk mngmnt
2) Relvncy of MR in comrcialbsines
a- Fluctuation-
b- Primary concern
2) How many kinds of MR
a) Intrnt rate rsk
b) Fornexchngrsk
c) Commdtyrsk
d) Equtyrsk
3) Equtyrsk occurs when
4) D prmry concern of MR
Key:
Wht-What
Mngmnt- management
Relvncy- Relevancy

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MR- Market Risk

Comrcial- Commercial
Bsness- business
Intrnt- Intenet
Rsk-risk
Forn-foreign
Exchng-exchange
Commdty-commodity
Equty- equity
d-the
prmry- primary
Chapter -7 Précis Writing
1) Language and Gender
The word ‘gender’ used in two contexts, first for grammatical gender and second biological
gender. Language is influenced by gender. Women tend to use more standard language than
men (perhaps due to their position in western societies). On the other hand they also tend to
be at the forefront of linguistic innovations. A woman tends to good in verbalization.
Language Vitality and Endangerment
2) Language endangerment is an alarming situation worldwide. Language teachers should
be well trained linguistically and language documentation should be encouraged by state
authorities. Similarly, linguists, language activists, and language policy makers have a
long-term task to compile and disseminate the most effective and viable mechanisms for
sustaining and revitalizing the endangered languages.
Chapter -8 Article Writing
1) Hints:
.On Nov.8, 2016- govt. announced discontinuation of Rs. 500 and Rs. 1000 notes.
➢ The move forced people to use options such Internet banking, mobile banking, credit and
debit cards, mobile wallets and other prepaid payment instrument.
➢ Digital transactions have grown by 400 to 1000%.
➢ This figure does not include transactions done through Master and Visa cards.

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26 FOUNDATION EXAMINATION: NOVEMBER, 2019

➢ People to be educated about digital payments through websites and television.

➢ Increased transactions on e-wallet.
➢ Volume of transcations using Rupay card has increased from 3.85 lakh per day to 16
lakh per day.
➢ These digital transactions will ensure money comes into the system.
➢ All money/transactions will be accountable. They will generate tax, thus developing the
country’s economy.
➢ The government will develop better welfare plans when money will be deposited in
banks.
Q.12.-Topic- Unemployment: No longer India’s economy capital
2) Hints:.
➢ The world economy is facing 2 major challenges- unemployment and poverty.
➢ Financial crisis caused by unemployment leads to an overall purchasing power resulting
in poverty followed by an increasing burden of debt.
➢ In India, the problems of underemployment, unemployment and poverty have always
been the main hindrances to economic development.
➢ Another colossal problem is the large population.
➢ A critical aspect is the regional disparity.
➢ Mass migration from rural to urban regions is adding to the problems of unemployment
and poverty.
➢ Economic reforms, changes in the industrial policy and better utilization of available
resources will reduce the problem.
➢ The government must initiate long term measures for poverty alleviation.
Chapter-10
Writing Formal Letters and Official Communication
KaluSarai,
New Delhi

August 09, 2019

MR. Ramesh

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Director, Sales and Marketing

XYZ Pvt. Limited

Dear Sir/Ma’am,
Sub: Order Confirmation (No: XYZ/0012/Jun 2019)
I would like to take the opportunity to thank you for giving us a business opportunity. It is an
honour for us to be serving your esteemed organization that enjoys a formidable reputation.
I would like to inform you that the 1800 units of machinery ordered vide Order no. XYZ/0012/Jun
2019, will be delivered as per the mutually decided date. In addition, our experts would come to
install the machinery and give a detailed demo of its working. We would also provide a free for the
next two years, taking care of any wear and tear or products damage. The products has two year
warranty period.
For any other query regarding the machinery ordered and its functioning, please feel free to contact
us. We would be happy to serve you at the earliest.

Thanks and Regards,

Mr.Khan
Sr. Manager, Sales and Marketing, Drive Pvt. Ltd.
2) XYZ Corporation
Rajeev chowk
New Delhi
August 09, 2019

The General Manager

Sales and Purchase Division
XYZ Pvt. Limited
Gurugram
Dear Sir/Ma’am,
Sub: Complaint against the order no. S/N-116
This is with reference to order no S/N-116 made on December 1, 20XX. The order
comprised six 2 tonne split air-conditioners of XXX brand and four 1.5 tonne window air-
conditioners of XYZ brand. As per the agreement, the products were to be delivered within ten

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28 FOUNDATION EXAMINATION: NOVEMBER, 2019

days of order and a representative was to be sent for installation and demo. Unfortunately, only
half the order has been delivered and no representative has visited of installation or demo.
The fact that you have taken undue time and have not yet delivered the order, has caused us great
embarrassment and inconvenienced our clients. In addition we have received no correspondence
from your side explaining the delay.
Kindly ensure that the remaining items of the order are delivered to us before September 12, 20XX
failing which payment will be stopped or the order cancelled.
I sincerely request you to look into the matter and the needful as soon as possible.
Thanks & Regards!

Ashita Bhargava
Sr. Manager
Operations and Admin Department
Chapter-11 Writing Formal Mails
Mail-1
(Value points)
a) Correct receiver E-mail Id.
b) Subject should be catchy/highlighted and relevant.
c) Salutation, mention both –Dear Sir/Ma’am,.
d) Opening paragraph state the offer.
e) Offer special discount to an old valued customer.
f) Detail you trendy, stylish and durable products and affirm that you are the first in the
industry to introduce these state of art products.
g) Be persuasive in convincing customer to be the first to use the products and and thus
attract clientele.
h) Mention your website where the wide range of products can be viewed.
i) Request to place order at the earliest.
Mail-2
value points.
a) Correct receiver E-mail Id.
b) Subject should be catchy/highlighted and relevant.
c) Address should be to group- ‘Hi All’

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d) Specify date and place of meeting.

e) Mention time frame of completion of project.
f) State problems being faced-procuring equipment, legal problems, local people
protesting against radiation threat, getting required permission form local government
bodies etc.
g) Ask for viable suggestions-more resources, better software, longer working hours.
Chapter-14 Resume Writing
1) Cover letter
Date: August 09, 2019
To,
The HR
HCL,
206, State Street
Mumbai-201006
Dear Sir/Ma’am,
Sub: Application for the post of Jr. Accountant
The ‘Jr. Accountant’ position described in the recent ‘Times of India’ advertisement
immediately caught my attention. I have enclosed my résumé for your consideration. I am
confident you will find that my qualifications more than meet your requirements. I am a skilled team
player with proficient in accountancy.
I will communicate you next week to confirm your receipt of my résumé and answer any
preliminary questions. I look forward to a positive response.

Yours Sincerely,
Abhinav Goel
Tagore Garden,

Résumé
RakhiGoel
Jr. Accountant
Mob: +91-xxxxx xxxxx
Email: xyz@gmail.com

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30 FOUNDATION EXAMINATION: NOVEMBER, 2019

Date of Birth: 16 June 1986

Permanent Address: xyz nagar, Varanasi
Nationality: Indian
Marital Status: Unmarried

Academic Qualification:
S Qualification Subject/Stream Institute Board/University Year of %/Division
No. Passing
1 CA CA ICAI ICAI 2015 80%/I
2 Higher Humanities BKY CBSE 2012 76%/I
Secondary New
Delhi
3 Secondary Humanities KVS, CBSE 2010 68%/I
Saket,
New
Delhi

Internship:
➢ One year internship at IBM, Noida, form 2015-16.
Professional Skills:
➢ Accountancy, Auditing, Forensic Auditing, Corporate Law
Language Known:
➢ English, Japanese, Hindi (Comm.)
Hobbies:
Reading Books, Playing Chess, Travelling
References:
➢ TarunaKohili Dr. Raj Nath Bhatt
Assistant Secretory Professor
ICAI, New Delhi Department of Linguistics, B.H.U.
Cont.: +91-xxxxx xxxxx Cont.: +91-xxxxx xxxxx
E-mail: xyz@gmail.com E-mail: xyz@gmail.com

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 31

Place: New Delhi

Date: 09.08.2019 (Rakhi Goel)

Date: August 09, 2019

To,
The HR
ROCA
Bhiwadi, Rajasthan-243466

Subject: Application for the Post of Chartered Accountant

Dear Sir/Ma’am,
I am very interested in the ‘Chartered Accountant’ position at ROCA, advertised in
the employment news on Monday, August 06, 2019. I have more three years teaching experience
in different reputed organisations. I feel that I would be an excellent candidate.
My CV is enclosed summarising where my skills and abilities have been developed. I would
welcome the opportunity to discuss my background with you further. May I have an interview with
you at your earliest convenience? Please contact me at xxxxxxxxxx or at xyz@gmail.com.
I look forward to hearing from you.

Thanks & Regards!!

Sincerely,

Anil Mishra
CA

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32 FOUNDATION EXAMINATION: NOVEMBER, 2019

Curriculum Vitae
Anil Mishra
Chartered Accountant
XYZ Company
NCR
Phone: +91- xxxxxxxxxx
E-mail: xyz@gmail.com

Profile/ Objective:
➢ Hardworking, punctual and dedicated individual seeking in accounting. Possesses strong
leadership and team management skills. A problem solver who is able to calmly
deescalate situations and work towards favourable outcomes for all involved. Passionate,
knowledgeable and giving.
Educational Qualifications:
➢ Completed CA in the batch 2013-17
➢ 10+2, from CBCE, New Delhi, 2012, with 1 st Division.
➢ 10th from CBCE, New Delhi, 2010, with 1 st Division.
Award/Achievements:
➢ Got prize for standing first in Linguistics, B.A. at B.H.U.
Administrative Experience:
➢ Administrative Warden at Rajshree Institute of Management & Technology, Bareilly,
U.P.
➢ Chief Proctor at NavyugMahavidyalaya, Badshahpur, Jaunpur, U.P.
➢ Venue Coordinator in the 11 thICOSAL-11 organized by Department of Linguistics,
Banaras Hindu University from 23, Jan.-25, Jan. 2014.
Professional Skills:
Accountancy, Auditing, Proficient in MS-Office & Web Browsing, English typing 40 w/m
Cultural/ Social Activities:
➢ Participated as Volunteer in Durgotsav Puja at DKY Public School, from 2004-09, 2013-
16.
➢ Venue Coordinator of ‘Sanskriti’ Cultural Event at DKY Public School in 2008.
➢ Actively Participated in all the major social & cultural events organized by School.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 33

Language Known:
➢ English, Hindi, Punjabi, Marathi, (Comm.)
Workshop/Training Programme/Academic Participation:
➢ Participated in Short Term Programme (STP), on ‘Forensic Auditing’ at regional centre,
Kolkata, from 01-06 Oct., 2018.
➢ Participated in National on xyz at xyz from ……
➢ Participated in International Lecture on “LEARN TO FIND YOUR HIDDEN TALENT”
delivered by Geshe Michael Roach, at Bharat Adhyayan Kendra, B.H.U. Varanasi,
(INDIA), on 13 Feb. 2017.
➢ Participated in Human Value “Harmony” workshop organized by IIT, B.H.U., Varanasi
from 31 Jan.-03 Feb. 2016.
➢ Participated in One-week workshop on Accounting at regional centre, Mumbai, from 12
Jan.-21 Jan. 2016.
REFERENCES: Can be provided on request.
DECLARATION: I solemnly declare that all the above information is correct to the best of my
knowledge and belief.
Date:
Place: (Manish Reddy)

Chapter-13 Meetings
1)

Date: July 09, 2019

Venue: Conference Hall, 2 nd Floor,
Meeting Started at 02:00 PM

In attendance: Mr. Ram Swaminathan, Head, Sales and Marketing, Mr.Prabhu Das, Product Head,
Product lead, four members of the sales team.
Mr. Ram Swaminathan, Head of Sales and Marketing informed the agenda of the meeting i.e., the
sales decline in the product.
Ms. Reena Mathur, Sales lead gave a detailed analysis of the sales figures for the one year.

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34 FOUNDATION EXAMINATION: NOVEMBER, 2019

Her team including Mr. A. Mr. B, Ms. C, Ms. D elaborated on the market trend target customers
and their needs.
Mr. Prabhu Das, Product Head expressed concern over the matter, discussed a few changes in the
sales strategy.
All the participants contented to the concerns raised and decided to submit their reports.
The Head of Sales and Marketing proposed a vote of thanks and declared the next meeting to
discuss reports to be held on August 02, 2019.
ATR to be submitted by July 26, 2019 to the Head Sales and Marketing.
2) Tabular Agenda
Time Topic Attendees Speaker Duration
08:30 Introduction and Name of the Director, Finance 10 Minutes
AM Welcome note participants
08:40 Speech Name of the Hon’bleMr. Partner 25 Minutes
AM participants
09:05 Discussion on new audit Name of the Sr. Manager Audit 25 Minutes
AM trends participants
09:30 Tea/Breakfast Tea/Breakfast 30 Minutes
AM
10:00 Discussion on new Name of the Sr. Manager 20 Minutes
AM adapting participants Technology/Application
technology/application
10:20 Open house Name of the All members 20 Minutes
AM participants
10:40 Vote of thanks Name of the Director 10 Minutes
AM participants

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PAPER – 2: BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

PART – I: RELEVANT AMENDMENTS APPLICABLE FOR MAY 2020 EXAMINATION

1. Meaning of Resident Director as per Companies (Incorporation) Third Amendment

Rules, 2018, w.e.f. 27-7-2018: For the purposes of this rule, the term "resident in India"
means a person who has stayed in India for a period of not less than one hundred and
eighty two days during the immediately preceding financial year.
[This is covered under OPC (One Person Company) - Significant Points, Page No.
5.10]
2. Revised definition of Small company [Section 2(85)]: "Small company" means a
company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher
amount as may be prescribed which shall not be more than ten crore rupees; and
(ii) turnover of which as per profit and loss account for the immediately preceding
financial year does not exceed two crore rupees or such higher amount as may be
prescribed which shall not be more than one hundred crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
[Covered on Page No. 5.11]
3. Revised definition of "subsidiary company" or "subsidiary [Section 2(87)]: In
relation to any other company (that is to say the holding company), means a company in
which the holding company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total voting power either at its own
or together with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall not
have layers of subsidiaries beyond such numbers as may be prescribed.
Explanation.—For the purposes of this clause,—

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(a) a company shall be deemed to be a subsidiary company of the holding company

even if the control referred to in sub-clause (i) or sub-clause (ii) is of another
subsidiary company of the holding company;
(b) the composition of a company's Board of Directors shall be deemed to be controlled
by another company if that other company by exercise of some power exercisable
by it at its discretion can appoint or remove all or a majority of the directors;
(c) the expression "company" includes any body corporate;
(d) "layer" in relation to a holding company means its subsidiary or subsidiaries;
[Covered on Page No. 5.12]
4. Meaning of Nidhi Companies [Section 406(1) of the Companies Act, 2013]: In this
section, "Nidhi" or "Mutual Benefit Society" means a company which the Central
Government may, by notification in the Official Gazette, declare to be a Nidhi or Mutual
Benefit Society, as the case may be. [Substituted by the Companies (Amendment)
Act, 2017, with effect from 15-8-2019.]
[Covered on Page No. 5.16]

PART – II : QUESTIONS AND ANSWERS

SECTION A: BUSINESS LAWS

QUESTIONS

The Indian Contract Act, 1872

1. Explain the type of contracts in the following agreements under the Indian Contract Act,
1872:
(i) A coolie in uniform picks up the luggage of A to be carried out of the railway station
without being asked by A and A allows him to do so.
(ii) Obligation of finder of lost goods to return them to the true owner
(iii) A contracts with B (owner of the factory) for the supply of 10 tons of sugar, but
before the supply is effected, the fire caught in the factory and everything was
destroyed.
2. “Only a person who is party to a contract can sue on it”. Explain this statement and
describe its exceptions, if any.
3. 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.

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34 FOUNDATION EXAMINATION: MAY, 2020

4. What is a wagering agreement? Describe the transactions which resembles with

wagering transactions but are not void.
5. “The basic rule is that the promisor must perform exactly what he has promised to
perform.” Explain stating the obligation of parties to contracts.
6. What do you mean by Quantum Meruit and state the cases where the claim for Quantum
Meruit arises?
7. Explain the meaning of ‘Contingent Contracts’ and state the rules relating to s uch
contracts.
8. Explain the concept of ‘misrepresentation’ in matters of contract. 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 whether Suraj can rescind the contract?
9. X, a minor was studying in M.Com. in a college. On 1st July, 2019 he took a loan of
` 1,00,000 from B for payment of his college fees and to purchase books and agreed to
repay by 31st December, 2019. X possesses assets worth ` 9 lakhs. On due date, X
fails to pay back the loan to B. B now wants to recover the loan from X out of his (X’s)
assets. Referring to the provisions of Indian Contract Act, 1872 decide whether B would
succeed.
The Sale of Goods Act, 1930
10. State briefly the essential element of a contract of sale under the Sale of Goods Act,
1930.
11. What is an Implied Warranty and state the various types of Implied Warranties.
12. “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.
13. What are the rights of buyer against the seller, if the seller commits a breach of contract
under the Sale of Goods Act, 1930?
14. Mr. S agreed to purchase 100 bales of cotton from V, 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?
15. 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

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of condition. Decide under the Sale of Goods Act, 1930, whether Mr. Amit would
succeed in his claim?
The Indian Partnership Act, 1932
16. Explain the following kinds of partnership under the Indian Partnership Act, 1932:
(i) Partnership at will
(ii) Particular partnership
17. “Partner indeed virtually embraces the character of both a principal and an agent”.
Describe the said statement keeping in view of the provisions of the Indian Partnership
Act, 1932.
18. What are the various grounds under the Indian Partnership Act, 1932, on which the Court
may, at the suit of the partner, dissolve a firm?
19. 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. What are the
rights of A’s legal representatives against the firm under the Indian Partnership Act,
1932?
The Limited Liability Partnership Act, 2008
20. What is the procedure for changing the name of Limited Liability Partnership (LLP) under
the LLP Act, 2008?
21. Explain the circumstances in which LLP may be wound up by Tribunal under the LLP Act,
2008.
The Companies Act, 2013
22. 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?
23. Examine the following whether they are correct or incorrect along with reasons:
(a) A company being an artificial person cannot own property and cannot sue or be
sued.

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36 FOUNDATION EXAMINATION: MAY, 2020

(b) A private limited company must have a minimum of two members, while a public
limited company must have at least seven members.
24. Briefly explain the doctrine of “ultravires” under the Companies Act, 2013. What are the
consequences of ultravires acts of the company?

SUGGESTED ANSWERS/HINTS

1. (i) It is an implied contract and A must pay for the services of the coolie.
Implied Contracts: Implied contracts come into existence by implication. Most
often the implication is by law and or by action. Section 9 of the Indian Contract Act,
1872 contemplates such implied contracts when it lays down that in so far as such
proposal or acceptance is made otherwise than in words, the promise is said to be
implied.
(ii) Obligation of finder of lost goods to return them to the true owner cannot be said to
arise out of a contract even in its remotest sense, as there is neither offer and
acceptance nor consent. These are said to be quasi-contracts.
Quasi-Contract: A quasi-contract is not an actual contract but it resembles a
contract. It is created by law under certain circumstances. The law creates and
enforces legal rights and obligations when no real contract exists. Such obligations
are known as quasi-contracts. In other words, it is a contract in which there is no
intention on part of either party to make a contract but law imposes a contract upon
the parties.
(iii) The above contract is a void contract.
Void Contract: Section 2 (j) of the Act states as follows: “A contract which ceases
to be enforceable by law becomes void when it ceases to be enforceable”. Thus, a
void contract is one which cannot be enforced by a court of law.
2. Though under the Indian Contract Act, 1872, the consideration for an agreement may
proceed from a third party, the third party cannot sue on contract. Only a person w ho is
party to a contract can sue on it.
Thus, the concept of stranger to consideration is valid and is different from stranger to a
contract.
The aforesaid rule, that stranger to a contract cannot sue is known as a “doctrine of
privity of contract”, is however, subject to certain exceptions. In other words, even a
stranger to a contract may enforce a claim in the following cases:
(1) In the case of trust, a beneficiary can enforce his right under the trust, though he
was not a party to the contract between the settler and the trustee.

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(2) In the case of a family settlement, if the terms of the settlement are reduced into
writing, the members of family who originally had not been parties to the settlement
may enforce the agreement.
(3) In the case of certain marriage contracts, a female member can enforce a
provision for marriage expenses made on the partition of the Hindu Undivided
Family.
(4) In the case of assignment of a contract, when the benefit under a contract has
been assigned, the assignee can enforce the contract.
(5) Acknowledgement or estoppel – where the promisor by his conduct
acknowledges himself as an agent of the third party, it would result into a binding
obligation towards third party.
(6) In the case of covenant running with the land, the person who purchases land
with notice that the owner of land is bound by certain duties affecting land, the
covenant affecting the land may be enforced by the successor of the seller.
(7) Contracts entered into through an agent: The principal can enforce the contracts
entered by his agent where the agent has acted within the scope of his authority
and in the name of the principal.
3. Position to dominate the will: A person is deemed to be in such position in the
following circumstances:
(a) Real and apparent authority: Where a person holds a real authority over the other
as in the case of master and servant, doctor and patient and etc.
(b) Fiduciary relationship: where relation of trust and confidence exists between the
parties to a contract. Such type of relationship exists between father and son,
solicitor and client, husband and wife, creditor and debtor, etc.
(c) Mental distress: An undue influence can be used against a person to get his
consent on a contract where the mental capacity of the person is temporarily or
permanently affected by the reason of mental or bodily distress, illness or of old
age.
(d) Unconscionable bargains: Where one of the parties to a contract is in a position to
dominate the will of the other and the contract is apparently unconscionable i.e.,
unfair, it is presumed by law that consent must have been obtained by undue
influence. Unconscionable bargains are witnessed mostly in money-lending
transactions and in gifts.
4. Wagering agreement (Section 30 of the Indian Contract Act, 1872): An agreement by
way of a wager is void. It is an agreement involving payment of a sum of money upon the
determination of an uncertain event. The essence of a wager is that each side should

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38 FOUNDATION EXAMINATION: MAY, 2020

stand to win or lose, depending on the way an uncertain event takes place in reference to
which the chance is taken and in the occurrence of which neither of the parties has
legitimate interest.
For example, A agrees to pay ` 50,000 to B if it rains, and B promises to pay a like
amount to A if it does not rain, the agreement will be by way of wager. But if one of the
parties has control over the event, agreement is not a wager.
Transactions resembling with wagering transaction but are not void
(i) Chit fund: Chit fund does not come within the scope of wager (Section 30). In case
of a chit fund, a certain number of persons decide to contribute a fixed sum for a
specified period and at the end of a month, the amount so contributed is paid to the
lucky winner of the lucky draw.
(ii) Commercial transactions or share market transactions: In these transactions in
which delivery of goods or shares is intended to be given or taken, do not amount to
wagers.
(iii) Games of skill and Athletic Competition: Crossword puzzles, picture
competitions and athletic competitions where prizes are awarded on the basis of
skill and intelligence are the games of skill and hence such competition are valid.
According to the Prize Competition Act, 1955 prize competition in games of skill are
not wagers provided the prize money does not exceed ` 1,000.
(iv) A contract of insurance: A contract of insurance is a type of contingent contract
and is valid under law and these contracts are different from wagering agreements.
5. Obligations of parties to contracts (Section 37 of the Indian Contract Act, 1872)
The parties to a contract must either perform, or offer to perform, their respective
promises unless such performance is dispensed with or excused under the provisions of
the Contract Act or of any other law.
Promises bind the representatives of the promisor in case of death of such promisor
before performance, unless a contrary intention appears from the contract.
Example 1: A promises to deliver goods to B on a certain day on payment of ` 1,00,000.
A dies before that day. A’s representatives are bound to deliver the goods to B, and B is
bound to pay ` 1,00,000 to A’s representatives.
Example 2
A promises to paint a picture for B by a certain day, at a certain price. A dies before the
day. The contract cannot be enforced either by A’s representatives or by B because it
involves use of personal skill.

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Analysis of Section 37
A contract being an agreement enforceable by law, creates a legal obligation, wh ich
subsists until discharged. Performance of the promise or promises remaining to be
performed is the principal and most usual mode of discharge.
The basic rule is that the promisor must perform exactly what he has promised to
perform. The obligation to perform is absolute. Thus, it may be noted that it is necessary
for a party who wants to enforce the promise made to him, to perform his promise for
himself or offer to perform his promise. Only after that he can ask the other party to carry
out his promise. This is the principle which is enshrined in Section 37. Thus, it is the
primary duty of each party to a contract to either perform or offer to perform his promise.
He is absolved from such a responsibility only when under a provision of law or an act of
the other party to the contract, the performance can be dispensed with or excused.
Thus, from above it can be drawn that performance may be actual or offer to perform.
6. Quantum Meruit: Where one person has rendered service to another in circumstances
which indicate an understanding between them that it is to be paid for although no
particular remuneration has been fixed, the law will infer a promise to pay. Quantum
Meruit i.e. as much as the party doing the service has deserved. It covers a case where
the party injured by the breach had at time of breach done part but not all of the work
which he is bound to do under the contract and seeks to be compensated for the value of
the work done. For the application of this doctrine, two conditions must be fulfill ed:
(1) It is only available if the original contract has been discharged.
(2) The claim must be brought by a party not in default.
The object of allowing a claim on quantum meruit is to recompensate the party or person
for value of work which he has done. Damages are compensatory in nature while
quantum meruit is restitutory. It is but reasonable compensation awarded on implication
of a contract to remunerate.
The claim for quantum meruit arises in the following cases:
(a) when an agreement is discovered to be void or when a contract becomes void.
(b) When something is done without any intention to do so gratuitously.
(c) Where there is an express or implied contract to render services but there is no
agreement as to remuneration.
(d) When one party abandons or refuses to perform the contract.
(e) Where a contract is divisible and the party not in default has enjoyed the benefit of
part performance.

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40 FOUNDATION EXAMINATION: MAY, 2020

(f) When an indivisible contract for a lump sum is completely performed but badly the
person who has performed the contract can claim the lump sum, but the other party
can make a deduction for bad work.
7. Essential characteristics of a contingent contract: A contract may be absolute or
contingent. A contract is said to be absolute when the promisor undertakes to perform
the contract in all events. A contingent contract, on the other hand "is a contract to do or
not to do something, if some event, collateral to such contract does or does not
happening (Section 31). It is a contract in which the performance becomes due only upon
the happening of some event which may or may not happen.
For example, A contracts to pay B ` 10,000 if he is elected President of a particular
association. This is a contingent contract. The essential characteristics of a contingent
contract may be listed as follows:
(i) There must be a contract to do or not to do something,
(ii) The performance of the contract must depend upon the happening or non-
happening of some event.
(iii) The happening of the event is uncertain.
(iv) The event on which the performance is made to depend upon is an event collateral
to the contract i.e. it does not form part of the reciprocal promises which constitute
the contract. The event should neither be a performance promised, nor the
consideration for the promise.
(v) The contingent event should not be the mere will of the promisor. However, where
the event is within the promisor’s will, but not merely his will, it may be a contingent
contract.
The rules regarding the contingent contract are as follows:
(1) Contingent contract dependent on the happening of an uncertain future cannot be
enforced until the event has happened. If the event becomes impossible, such
contracts become void. (Section 32).
(2) Where a contingent contract is to be performed if a particular event does not
happening performance can be enforced only when happening of that event
becomes impossible (Section 33).
(3) If a contract is contingent upon, how a person will act at an unspecified time, the
event shall be considered to become impossible; when such person does anything
which renders it impossible that he should so act within any definite time or
otherwise than under further contingencies. (Section 34 and 35).
(4) The contingent contracts to do or not to do anything if an impossible ev ent happens,
are void whether or not the fact is known to the parties (Section 36).

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8. Misrepresentation: According to Section 18 of the Indian Contract Act, 1872,

misrepresentation is:
1. When a person positively asserts that a fact is true when his information does not
warrant it to be so, though he believes it to be true.
2. When there is any breach of duty by a person, which brings an advantage to the
person committing it by misleading another to his prejudice.
3. When a party causes, however, innocently, the other party to the agreement to
make a mistake as to the substance of the thing which is the subject of the
agreement.
The aggrieved party, in case of misrepresentation by the other party, can avoid or
rescind the contract [Section 19, Indian Contract Act, 1872]. The aggrieved party
loses the right to rescind the contract if he, after becoming aware of the
misrepresentation, takes a benefit under the contract or in some way affirms it.
Accordingly, in the given case Suraj could not rescind the contract, as his
acceptance to the offer of Sohan to bear 40% of the cost of repairs impliedly
amount to final acceptance of the sale.
9. Yes, B can proceed against the assets of X. According to section 68 of Indian Contract
Act, 1872, if a person, incapable of entering into a contract, or any one whom he is
legally bound to support, is supplied by another person with necessaries suited to his
condition in life, the person who has furnished such supplies is entitled to be reimbursed
from the property of such incapable person.
Since the loan given to X is for the necessaries suited to the conditions in life of the
minor, his assets can be sued to reimburse B.
10. Essentials of Contract of Sale
The following elements must co-exist so as to constitute a contract of sale of goods
under the Sale of Goods Act, 1930.
(i) There must be at least two parties
(ii) The subject matter of the contract must necessarily be goods
(iii) A price in money (not in kind) should be paid or promised.
(iv) A transfer of property in goods from seller to the buyer must take place.
(v) A contract of sale must be absolute or conditional [section 4(2)].
(vi) All other essential elements of a valid contract must be present in the c ontract of
sale.

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42 FOUNDATION EXAMINATION: MAY, 2020

11. Implied Warranties: It is a warranty which the law implies into the contract of sale. In
other words, it is the stipulation which has not been included in the contract of sale in
express words. But the law presumes that the parties have incorporated it into their
contract. It will be interesting to know that implied warranties are read into every contract
of sale unless they are expressly excluded by the express agreement of the parties.
These may also be excluded by the course of dealings between the parties or by usage
of trade (Section 62).
The examination of Sections 14 and 16 of the Sale of Goods Act, 1930 discloses the
following implied warranties:
1. Warranty as to undisturbed possession [Section 14(b)]: An implied warranty
that the buyer shall have and enjoy quiet possession of the goods. That is to say, if
the buyer having got possession of the goods, is later on disturbed in his
possession, he is entitled to sue the seller for the breach of the warranty.
2. Warranty as to non-existence of encumbrances [Section 14(c)]: An implied
warranty that the goods shall be free from any charge or encumbrance in favour of
any third party not declared or known to the buyer before or at the time the contract
is entered into.
3. Warranty as to quality or fitness by usage of trade [Section 16(3)]: An implied warranty
as to quality or fitness for a particular purpose may be annexed or attached by the
usage of trade.
Regarding implied condition or warranty as to the quality or fitness for any particular
purpose of goods supplied, the rule is ‘let the buyer beware’ i.e., the seller is under no
duty to reveal unflattering truths about the goods sold, but this rule has certain
exceptions.
4. Disclosure of dangerous nature of goods: Where the goods are dangerous in
nature and the buyer is ignorant of the danger, the seller must warn the buyer of the
probable danger. If there is a breach of warranty, the seller may be liable in
damages.
12. Exceptions to the Rule “Nemo dat Quod Non Habet”: The term means, “none can
give or transfer goods what he does not himself own”. Exceptions to the rule and the
cases in which the Rule does not apply under the provisions of the Sale of Goods Act,
1930 are enumerated below:
(i) Effect of Estoppel (Section 27): Where the owner is stopped by the conduct from
denying the seller’s authority to sell, the transferee will get a good title as against
the true owner. But before a good title by estoppel can be made, it must be shown
that the true owner had actively suffered or held out the other person in question as
the true owner or as a person authorized to sell the goods.

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(ii) Sale by a Mercantile Agent: A sale made by a mercantile agent of the goods or
document of title to goods would pass a good title to the buyer in the following
circumstances, namely;
(a) if he was in possession of the goods or documents with the consent of the
owner;
(b) if the sale was made by him when acting in the ordinary course of business as
a mercantile agent; and
(c) if the buyer had acted in good faith and has at the time of the contract of sale,
no notice of the fact that the seller had no authority to sell. (Proviso to Section
27).
(iii) Sale by one of the joint owners: If one of the several joint owners of goods has
the sole possession of them with the permission of the others, the property in the
goods may be transferred to any person who buys them from such a joint owner in
good faith and does not at the time of the contract of sale have notice that the seller
has no authority to sell. (Section 28)
(iv) Sale by a person in possession under voidable contract: A buyer would acquire
a good title to the goods sold to him by seller who had obtained possession of the
goods under a contract voidable on the ground of coercion, fraud, misrepresentation
or undue influence provided that the contract had not been rescinded until the time
of the sale (Section 29).
(v) Sale by one who has already sold the goods but continues in possession
thereof: If a person has sold goods but continues to be in possession of them or of
the documents of title to them, he may sell them to a third person, and if such
person obtains the delivery thereof in good faith without notice of the previous sale,
he would have good title to them, although the property in the goods had passed to
the first buyer earlier. A pledge or other deposition of the goods or documents of
title by the seller in possession are equally valid. [Section 30(1)]
(vi) Sale by buyer obtaining possession before the property in the goods has
vested in him: Where a buyer with the consent of seller obtains possession of the
goods before the property in them has passed to him, he may sell, pledge or
otherwise dispose of the goods to a third person, and if such person obtains
delivery of the goods in good faith and without notice of the lien or other right of the
original seller in respect of the goods in good faith and without notice of the lien or
other right of the original seller in respect of the goods, he would get a good title to
them. [Section 30(2)]
(vii) Sale by an unpaid seller: Where an unpaid seller who had exercised his right of
lien or stoppage in transit resells the goods, the buyer acquires a good title to the
goods as against the original buyer [Section 54(3)]

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(viii) Sale under the provisions of other Acts:

(i) Sale by an official Receiver or liquidator of the company will give the purchaser
a valid title.
(ii) Purchase of goods from a finder of goods will get a valid title under
circumstances.
(iii) Sale by a pawnee under default of pawnor will give valid title to the purchaser.
13. If the seller commits a breach of contract, the buyer gets the following rights against the
seller:
1. Damages for non-delivery [Section 57]: Where the seller wrongfully neglects or
refuses to deliver the goods to the buyer, the buyer may sue the seller for damages
for non-delivery.
2. Suit for specific performance (Section 58): Where the seller commits of breach
of the contract of sale, the buyer can appeal to the court for specific performance.
The court can order for specific performance only when the goods are ascertained
or specific.
3. Suit for breach of warranty (section 59): Where there is breach of warranty on the
part of the seller, or where the buyer elects to treat breach of condition as breach of
warranty, the buyer is not entitled to reject the goods only on the basis of such
breach of warranty. But he may –
(i) set up against the seller the breach of warranty in diminution or extinction of the
price; or
(ii) sue the seller for damages for breach of warranty.
4. Repudiation of contract before due date (Section 60): Where either party to a
contract of sale repudiates the contract before the date of delivery, the other may
either treat the contract as subsisting and wait till the date of delivery, or he may
treat the contract as rescinded and sue for damages for the breach.
5. Suit for interest: Nothing in this Act shall affect the right of the seller or the buyer
to recover interest or special damages, in any case where by law interest or special
damages may be recoverable, or to recover the money paid where the
consideration for the payment of it has failed.
In the absence of a contract to the contrary, the court may award interest at such
rate as it thinks fit on the amount of the price to the buyer in a suit by him for the
refund of the price in a case of a breach of the contract on the part of the seller from
the date on which the payment was made.
14. Section 26 of the Sale of Goods Act, 1930 provides that unless otherwise agreed, the
goods remain at the seller’s risk until the property therein is transferred to the buyer, but
when the property therein is transferred to the buyer, the goods are at buyer’s risk

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whether delivery has been made or not. Further Section 18 read with Section 23 of the
Act provide that in a contract for the sale of unascertained goods, no property in the
goods is transferred to the buyer, unless and until the goods are ascertained and where
there is contract for the sale of unascertained or future goods by description, and goods
of that description and in a deliverable state are unconditionally appropriated to the
contract, either by the seller with the assent of the buyer or by the buyer with the assent
of the seller, the property in the goods thereupon passes to the buyer. Such assent may
be express or implied.
Applying the aforesaid law to the facts of the case in hand, it is clear that Mr. S has the
right to select the good out of the bulk and he has sent his men for same purpose.
Hence the problem can be answered based on the following two assumptions and the
answer will vary accordingly.
(i) Where the bales have been selected with the consent of the buyer’s
representatives:
In this case the 60 bales has been transferred to the buyer and goods have been
appropriated to the contract. Thus, loss arising due to fire in case of 60 bales would
be borne by Mr. S. As regards 40 bales, the loss would be borne by Mr. V, since the
goods have not been identified and appropriated.
(ii) Where the bales have not been selected with the consent of buyer’s
representatives:
In this case, the goods has not been transferred at all and hence the loss of 100
bales would be borne by Mr. V completely.
15. Essentials of Sale: The problem as given in the question is based on Section 16(2) of
the Sale of Goods Act, 1930, which states that where goods are bought by description
from a seller who deals in goods of that description (whether he is the manufacturer or
producer or not), there is an implied condition that the goods shall be of merchantable
quality. Though the term ‘merchantable quality’ is not defined in the Act, it means that in
the present case, the bottle must be properly sealed. In other words, if the goods are
purchased for self-use, they should be reasonably fit for the purpose for which it is being
used.
In the instant case, on an examination of the bottle of cold drink, it exploded and injured
the buyer. Applying the provision of Section 16(2), Mr. Amit would succeed in claim for
damages from the owner of the shop.
16. (i) Partnership at will: According to Section 7 of the Indian Partnership Act, 1932,
partnership at will is a partnership when:
1. no fixed period has been agreed upon for the duration of the partnership; and
2. there is no provision made as to the determination of the partnership.

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These two conditions must be satisfied before a partnership can be regarded as a

partnership at will. But, where there is an agreement between the partners either
for the duration of the partnership or for the determination of the partnership, the
partnership is not partnership at will.
Where a partnership entered into for a fixed term is continued after the expiry of
such term, it is to be treated as having become a partnership at will.
A partnership at will may be dissolved by any partner by giving notice in writing to
all the other partners of his intention to dissolve the same.
(ii) Particular partnership: A partnership may be organized for the prosecution of a
single adventure as well as for the conduct of a continuous business. Where a
person becomes a partner with another person in any particular adventure or
undertaking the partnership is called ‘particular partnership’.
A partnership, constituted for a single adventure or undertaking is, subject to any
agreement, dissolved by the completion of the adventure or undertaking.
17. “Partner indeed virtually embraces the character of both a principal and an agent” :
Subject to the provisions of section 18 of the Indian Partnership Act, 1932, a partner is
the agent of the firm for the purposes of the business of the firm.
A partnership is the relationship between the partners who have agreed to share the
profits of the business carried on by all or any of them acting for all (Section 4). This
definition suggests that any of the partners can be the agent of the others.
Section 18 clarifies this position by providing that, subject to the provisions of the Act, a
partner is the agent of the firm for the purpose of the business of the firm. The partner
indeed virtually embraces the character of both a principal and an agent. So far as
he acts for himself and in his own interest in the common concern of the partnership, he
may properly be deemed as a principal and so far as he acts for his partners, he may
properly be deemed as an agent.
The principal distinction between him and a mere agent is that he has a community of
interest with other partners in the whole property and business and liabilities of partnership,
whereas an agent as such has no interest in either.
The rule that a partner is the agent of the firm for the purpose of the business of the firm
cannot be applied to all transactions and dealings between the partners themselves. It is
applicable only to the act done by partners for the purpose of the business of the firm.
18. DISSOLUTION BY THE COURT (Section 44 of the Indian Partnership Act, 1932):
Court may, at the suit of the partner, dissolve a firm on any of the following ground:
(a) Insanity/unsound mind: Where a partner (not a sleeping partner) has become of
unsound mind, the court may dissolve the firm on a suit of the other partners or by

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the next friend of the insane partner. Temporary sickness is no ground for
dissolution of firm.
(b) Permanent incapacity: When a partner, other than the partner suing, has become in
any way permanently incapable of performing his duties as partner, then the court
may dissolve the firm. Such permanent incapacity may result from physical disability
or illness etc.
(c) Misconduct: Where a partner, other than the partner suing, is guilty of conduct which is
likely to affect prejudicially the carrying on of business, the court may order for
dissolution of the firm, by giving regard to the nature of business. It is not necessary
that misconduct must relate to the conduct of the business. The important point is
the adverse effect of misconduct on the business. In each case, nature of business
will decide whether an act is misconduct or not.
(d) Persistent breach of agreement: Where a partner other than the partner suing, wilfully
or persistently commits breach of agreements relating to the management of the
affairs of the firm or the conduct of its business, or otherwise so conduct himself in
matters relating to the business that it is not reasonably practicable for other partners
to carry on the business in partnership with him, then the court may dissolve the
firm at the instance of any of the partners. Following comes in to category of breach
of contract:
• Embezzlement,
• Keeping erroneous accounts
• Holding more cash than allowed
• Refusal to show accounts despite repeated request etc.
(e) Transfer of interest: Where a partner other than the partner suing, has transferred
the whole of his interest in the firm to a third party or has allowed his share to be
charged or sold by the court, in the recovery of arrears of land revenue, the court
may dissolve the firm at the instance of any other partner.
(f) Continuous/Perpetual losses: Where the business of the firm cannot be carried on
except at a loss in future also, the court may order for its dissolution.
(g) Just and equitable grounds: Where the court considers any other ground to be just
and equitable for the dissolution of the firm, it may dissolve a firm. The following are
the cases for the just and equitable grounds-
(i) Deadlock in the management.
(ii) Where the partners are not in talking terms between them.
(iii) Loss of substratum.
(iv) Gambling by a partner on a stock exchange.

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19. Retirement / Death of Partner: Section 37 of the Indian Partnership Act, 1932 provides
that where a partner dies or otherwise ceases to be a partner and there is no final
settlement of account between the legal representatives of the deceased partner or the
firms with the property of the firm, then, in the absence of a contract to the contrary, the
legal representatives of the deceased partner or the retired partner are entitled to claim
either.
(i) Such shares of the profits earned after the death or retirement of the partner w hich
is attributable to the use of his share in the property of the firm; or
(ii) Interest at the rate of 6 per cent annum on the amount of his share in the property.
Based on the aforesaid provisions of Section 37 of the Indian Partnership Act, 1932, in
the given problem, A shall be entitled, at his option to:
(i) the 20% shares of profits (as per the partnership deed); or
(ii) interest at the rate of 6 per cent per annum on the amount of A’s share in the
property.
20. Change of name of LLP (Section 17 of LLP Act, 2008):
(1) Notwithstanding anything contained in sections 15 and 16, where the Central
Government is satisfied that a LLP has been registered (whether through
inadvertence or otherwise and whether originally or by a change of name) under a
name which —
(a) is a name referred to in sub-section (2) of section 15; or
(b) is identical with or too nearly resembles the name of any other LLP or body
corporate or other name as to be likely to be mistaken for it,
the Central Government may direct such LLP to change its name, and the LLP shall
comply with the said direction within 3 months after the date of the direction or such
longer period as the Central Government may allow.
(2) (i) Any LLP which fails to comply with a direction given under sub-section (1) shall
be punishable with fine which shall not be less than ` 10,000 but which may
extend to ` 5 Lakhs.
(ii) The designated partner of such LLP shall be punishable with fine which shall
not be less than ` 10,000 but which may extend to ` 1 Lakh.
21. Circumstances in which LLP may be wound up by Tribunal (Section 64 of the LLP
Act, 2008): A LLP may be wound up by the Tribunal:
(a) if the LLP decides that LLP be wound up by the Tribunal;
(b) if, for a period of more than six months, the number of partners of the LLP is
reduced below two;
(c) if the LLP is unable to pay its debts;

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(d) if the LLP has acted against the interests of the sovereignty and integrity of India,
the security of the State or public order;
(e) if the LLP has made a default in filing with the Registrar the Statement of Account
and Solvency or annual return for any five consecutive financial years; or
(f) if the Tribunal is of the opinion that it is just and equitable that the LLP be wo und
up.
22. (A) Yes, it is mandatory for Navita to withdraw her nomination in the said OPC as she is
leaving India permanently as only a natural person who is an Indian citizen and
resident in India shall be a nominee in OPC.
(B) Yes, Navita can continue her nomination in the said OPC, if she maintained the
status of Resident of India after her marriage by staying in India for a period of not
less than 182 days during the immediately preceding financial year.
23. (a) A company being an artificial person cannot own property and cannot sue or be
sued
Incorrect: A company is an artificial person as it is created by a process other than
natural birth. It is legal or judicial as it is created by law. It is a person since it is
clothed with all the rights of an individual.
Further, the company being a separate legal entity can own property, have banking
account, raise loans, incur liabilities and enter into contracts. Even members can
contract with company, acquire right against it or incur liability to it. It can sue and
be sued in its own name. It can do everything which any natural person can do
except be sent to jail, take an oath, marry or practice a learned profession. Hence,
it is a legal person in its own sense.
(b) A private limited company must have a minimum of two members, while a
public limited company must have at least seven members.
Correct: Section 3 of the Companies Act, 2013 deals with the basic requirement
with respect to the constitution of the company. In the case of a pu blic company,
any 7 or more persons can form a company for any lawful purpose by subscribing
their names to memorandum and complying with the requirements of this Act in
respect of registration. In exactly the same way, 2 or more persons can form a
private company.
24. Doctrine of ultra vires: The meaning of the term ultra vires is simply “beyond (their)
powers”. The legal phrase “ultra vires” is applicable only to acts done in excess of the
legal powers of the doers. This presupposes that the powers in their nature are limited.
It is a fundamental rule of Company Law that the objects of a company as stated in its
memorandum can be departed from only to the extent permitted by the Act, thus far and
no further. In consequence, any act done or a contract made by the company which
travels beyond the powers not only of the directors but also of the company is wholly void

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and inoperative in law and is therefore not binding on the company. On this account, a
company can be restrained from employing its fund for purposes other than those
sanctioned by the memorandum. Likewise, it can be restrained from carrying on a trade
different from the one it is authorised to carry on.
The impact of the doctrine of ultra vires is that a company can neither be sued on an ultra
vires transaction, nor can it sue on it. Since the memorandum is a “public document”, it is
open to public inspection. Therefore, when one deals with a company one is deemed to
know about the powers of the company. If in spite of this you enter into a transaction
which is ultra vires the company, you cannot enforce it against the company.
An act which is ultra vires the company being void, cannot be ratified by the shareholders
of the company. Sometimes, act which is ultra vires can be regularised by ratifying it
subsequently.

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SECTION B: BUSINESS CORRESPONDENCE AND REPORTING

QUESTIONS
Chapter 1: Communication
(1) What are the language barriers in communication?
(2) How non-verbal communication is impactful in communication?
Chapter 2 :Sentence Types: Active-Passive Voice, Direct-Indirect Speech
(A) Change the following sentences into passive voice.
1. Ram loves Sita.
2. They will finish the work in a fortnight.
3. Why did your friend write such a message?
4. Who taught you Commerce?
5. The examiner will give you instructions.
(B) Change the following Direct Speech into Indirect Speech.
1. The principal said, ‘you can go’.
2. Ravi said, ‘The lion died in the garden.’
3. Mentor said to me, ‘you are a good player.’
4. She said, ‘Alas! I am undone.’
5. ‘Where do you live? Asked the administrator.
Chapter 3: Vocabulary
(A) Select the suitable synonym for the given words.
1. Indispensable
a. Decisive b. Crunchy c. Responsible d. Momentary

2. Hypocrisy
a. Signifier b. Cant c. Sauna d. Gunky

3. Trudge
a. Skip b. Expel c. Review d. Slog

4. Conservatism
a. Behaviourism b. Cognitivism c. Toryism d. Innateness

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5. Besmirch
a. Tolley b. Sully c. Honour d. Enhance
(B) Select the suitable antonym for the given words.
1. Abstention
a. Orgy b. Binge c. Spree d. Obscure
2. Harmony
a. Hilarious b. Imbroglio c. Complexity d. Separation

3. Vague
a. Disgrace b. Distribution c. Cogent d. Credit

4. Shoddy
a. Careful b. Poor quality c. Former d. Stimulus

5. Pliant
a. Ditch b. Biddable c. Docile d. Inflexible

Chapter 4: Comprehension Passages

Read the following comprehension passages and answer the following questions.
Passage 1
In the present era of globalisation and liberalisation, the world has become an economic
village. The globalization of the business world, the attendant structure and the regulations,
which support it, as well as the development of e-commerce make it imperative to have a
single globally accepted financial reporting system. Several multi-national companies are
establishing their businesses in various countries with emerging economic and vice versa. The
entities in emerging economies are increasingly accessing the global markets to fulfill their
capital needs by getting their securities listed on the stock exchanges outside the country.
Capital markets are, thus, becoming integrated consistent with this world -wide trend. More and
more Indian companies are being listed on overseas stock exchanges. The use of different
accounting frameworks in different countries, which requires inconsistent treatment and
presentation of the same underlying economic transactions, creates confusion for users of
financial statements. This confusion leads to inefficiency in capital markets across the world.
Therefore, increasing complexity of business transactions and globalization of capital markets
call for a single set of high-quality accounting standards.
High standards of financial reporting underpin the trust investors place in financial and non -
financial information. Thus, the case for a single set of globally accepted accounting standards
has prompted many countries to pursue either adoption or convergence of national accounting
standards with IFRS.

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International Financial Reporting Standards (IFRC) are considered a “principles-based” set of

standards. In fact, they establish broad rules rather than dictating specific treatments. Every
major nation is moving toward adopting them to some extent. Large number of authorities
requires public companies to sue IFRS for stock-exchange listing purposes, and in addition,
banks, insurance companies and stock exchanges may use them for their statutorily required
reports. So ever the next few years, thousands of companies will adopt the international
financial reporting standards while preparing their financial statements.
Q.1. What trends are forcing capital markets across the world for integration?
Q.2. Which creates confusion for users in financial statements?
a. Different accounting framework
b. Different capital market framework
c. Globalisation and business regulations
d. Development of e-commerce
Q.3. Which is not considered as a ‘principle-based set of standards for preparation of financial
reporting?
a. Indian Accounting Standards
b. International Accounting Standards
c. International Financial Reporting Standards
d. International Economic Standards
Q.4. Which standards aretaken as basis for preparing financial statements?
a. International Economic Standards
b. International Financial Reporting Standards
c. Standard Stock Exchange
d. Business structures and regulations standards
Q.5. Why there is need for single set of global financial reporting standards?
Passage 2
In today’s IT-driven society, the success of an enterprise is heavily influence by business
intelligence. Corporate giants are becoming more dependent on business intelligence (BI)
software to increase the amount of knowledge they can apply in real time and reduce the cost
of managing their business processes. As globalisation and ICT (Information and
Communication Technology) become more intertwined, the volume of data transfers among
enterprises is exponentially growing. In this perspective we can define the BI is essentially
timely, accurate, high-value, and actionable business insights, and the work processes and
technologies used to obtain them. It comprised of information that contains patterns,

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relationships, and trends about customers, suppliers, business partners and employees. In
simple words BI refers to the process of collecting and refining information from many
sources, analyzing and presenting the information in useful ways so that users can make
better business decisions.
BI has been made possible because of advances in a number of technologies, such as
computing power, data storage, computational analytics, reporting and networking. IT provides
an approach for solving business problems with a framework for managing tactical and
strategic operations performance. From the perspective of decision-making, BI uses data
about yesterday and today to facilitate making better decisions about tomorrow. This is done
through various means such as selecting the right criteria to judge success, locating and
transforming the appropriate data to draw conclusions, or arranging information in a manner
that best provides insights into the future thus making enterprises to work smarter. BI enables
managers to see things with more clarity and empowers them to peek into the possible future.
Q.1. To sustain in the business world for decision making and selecting the criteria of
succeed, corporate giants are more depended on ____________
a. IT-driven society
b. Business Intelligence software
c. Strategic Operation Performance
d. Reporting and Networking
Q.2. The write uses the term BI to define –
a. Increasing the amount of knowledge in business world
b. Empowers business for future perspective
c. Particularly arranging information in business manner
d. Appropriate work processes and technology-based business
Q.3. What are the basic requirements of BI?
Q.4. What is the process of BI?
Q.5. BI is used for _______
Chapter 5: Note Making
Read the following passage/news story and make proper notes followi ng the guidelines of
Note making. (Source: internet/newspaper article)
Money is the centre of every economic transaction and plays a significant role in all
economies. It refers to assets which are commonly used and accepted as a means of
payments or as a medium or exchange or of transferring purchasing power. For policy
purposes, money may be defined as the set of liquid financial assets, the variation in the stock
of which will have impact on aggregate economic activity. Money has generalised purchasing

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power and is generally acceptable in settlement of all transactions and in discharge of other
kinds of business obligations including future payments. Anything that would act as a medium
of exchange is not necessarily money. For example, a bill of exchange may also be a medium
of exchange, but it is not money since it is not generally accepted as a means of payment.
Money is totally liquid asset as it can be used directly, instantly, conveniently and without any
costs or restrictions to make payments. At the fundamental level, money provides us with a
convenient means to access goods and services.
As we know, money performs many functions in an economy. As such as, money is a
convenient medium of exchange or it is an instrument that facilitates easy exchang e of goods
and services. Money, though not having any inherent power to directly satisfy human wants,
by acting as a medium of exchange, it commands purchasing power and its possession
enables us to purchase goods and services to satisfy our wants. It is an explicitly defined unit
of value or unit of account because money is a ‘common measure of value’ or ‘common
dominator of value’ or money functions as a numeraire. We know, Rupee is the unit of account
in India in which the entire money is dominated. The monetary unit is the unit of measurement
in terms of which the value of all goods and services is measured and expressed. Money
serves as a unit of standard of deferred of payment i.e., money facilitates recording of
deferred promises to pay. Money is the unit in terms of which future payments are contracted
or stated. However, variations in the purchasing power of money due to inflation or deflation,
reduce the efficacy of money in this function.
So, we can say, money also functions as a permanent store of value. There are many other
assets government bonds, despite of other securities, land, houses, etc. which also store
value. Despite having the advantages of potential income yield and appreciation in value over
time, these other assets are subject to limitations such as storage costs, lack of liquidity and
possibility of depreciation in value. The effectiveness of an asset as a store of value depends
on the degree and certainty with which the asset maintains its value over time. Hence, in order
to serve as a permanent store of value in the economy, the purchasing power or the value of
money should either remain stable or should monotonically rise over time.
Or
Note making (2)
The meaning of the term ultra vires is simply “beyond (their) powers.” The l egal phrase “ultra
vires” is applicable only to acts done in excess of the legal powers of the doers. The
presupposes that the powers in their nature are limited.
It is a fundamental rule of a Company Law that the objects of a company as stated in its
memorandum can be departed from only to the extent permitted by the act, thus far and no
further. In consequence, any act done, or a contract made by the company which travels
beyond the powers not only of the directors but also of the company is wholly void a nd
inoperative in law and is therefore not binding on the company. On this account, a company
can be restrained from employing its fund for purposes other than those sanctioned by the
memorandum. Likewise, it can be restrained from carrying on a trade different from the one it

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is authorized to carry on.

The impact of the doctrine of ultra vires is that a company can neither be sued on an ultra
vires transaction, nor can it sue on it. Since the memorandum is a “public document”, it is
open to public inspection. Therefore, when one deals with a company one is deemed to know
about the powers of the company. If in spite of this you enter into a transaction which is ultra
vires the company, you cannot enforce it against the company.
If you have supplied goods or performed service on such a contract or lent money, you cannot
obtain payment or recover the money rent. But if the money advanced to the company has not
been expended, the lender may stop the company from parting with it by m eans of an
injunction; this is because the company does not become the owner of the money, which is
ultra vires the company. As the lender remains the owner, he can take back the property in
specie. If the ultra vires loan has been utilised in meeting lawful debt of the company, then the
lender steps into the shoes of the debtor paid off and consequently he would be entitled to
recover his loan to that extent from the company.
An act which is ultra vires the company being void, cannot be ratified by the shareholders of
the company. Sometimes, act which is ultra vires can be regularised by ratifying it
subsequently. For instance, if the act is ultra vires the power of the directors, the shareholders
can ratify it; if it is vires the articles of the company, the company can alter the articles; if the
act is within the power of the company but is done irregularly, shareholder can validate it.
Chapter 7: Précis Writing
(1) Read the following passages and write a précis for the same.
A mere 14 per cent of the 58.3 million business in operations in India when the Sixth
Economic Census was carried out in 2013-14 were owned by women, across formal and
informal sectors in both rural and urban India. This is not a flattering statistic. A sizable
number of the 8.05 million women-owned business -over 83 per cent- did not have any hired
workers; the corresponding number for male-owned business was about 70 per cent. Also, on
average, women-run businesses are smaller than those run by men. However, there are many
shining examples of women entrepreneurs who have not only set up successful ventures but
have also carved out a niche for themselves. Kiran Mazumdar Shaw is one such women
entrepreneur. There are also some who gave up very successful corporate careers to turn
entrepreneurs such as Falguni Nayar, a well-regarded investment banker who set up an e-
commerce venture as she was turning 50 years of age. There are also the likes of Ritu
Dalmia, who broke out of conservative industrialist families, to venture into the wor ld of
gourmet food and fine dining with a chain of restaurants. Each of them is trailblazer and an
inspiration for others. More recently, the start-up boom in India has seen many young,
professionally qualified women taking the plunge. Self-help groups and non-profit focusing on
skill development in rural areas have helped women entrepreneurs bloom. Setting up a
business is not easy in India. It is even tougher for a woman. A would-be woman entrepreneur
has to overcome socio-cultural biases, which requires her to prioritize home and family above
all else and sacrifice her own aspirations. Access to finance is that much more difficult,

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whether from formal banking channels or from venture capitalists. Managing a male workforce
entrenched in a patriarchal society poses its own challenges. Many men are not supportive of
womens’ ambitions and even attempt to break their confidence. Another problem unique to
women is their failure to network with business associates as easily as men. Policy
interventions have tended to be sporadic, superficial or poorly thought through, like the
Centre’s failed experiment with a women-only bank.
However, these issues are addressable. Mentoring of women entrepreneurs by specialist in
various fields can encourage women who are tentative about taking that first step. Networking
platforms for women entrepreneurs can provide some support. Most of all, socio -cultural
changes need to be engineered to encourage women to set up business ventures.
(Source: Business Line)
Précis Writing- 2
Several spiritual philosophies contain the notion of an inner ‘third eye’, related to the pineal
gland, to which is attributed significance in mystical awakening or enlightenment, higher states
of consciousness and extrasensory perception (ESP). Mention of this is found historically in
ancient Central and East Asia and also in contemporary metaphysical theories relating to
yoga.A neurologist in Jaipur claims to have found new evidence throwing light on interactions
between a physical brain and a non-physical consciousness which leave an impact on human
thought, emotion and behaviour. These psychic phenomena are linked with the ‘third eye’, he
says.Dr. Ashok Panagariya, recipient of the prestigious B.C. Roy Award, says that the studies
on the two functional units of brain and consciousness and new understanding of psychic
phenomena may lead humankind to the ability to induce ESP at will. Pineal gland studies hold
a great futuristic link between human and superhuman experiences.
Pineal gland, being the only singular structure in the brain and having a strategic position
between the two halves, is believed to connect between intellect and the body. This ‘third eye’
could be activated to spiritual world frequencies, enabling a person to have the sense of all
knowing, godlike euphoria and oneness all around him, says Dr. Panagariya.Once tuned into
proper frequencies with the help of meditation, yoga or various esoteric and occult methods,
pineal gland can also enable a person to travel into other dimensions, popul arly known as
astral travel, cosmological projection or remote viewing.Dr. Panagariya, formerly the Principal
of Sawai Man Singh Government Medical College in Jaipur, has pointed out that the recent
developments in parapsychology and neuroscience have revealed new clues about the way
ESP and other psychic abilities are processed by the brain. “Science is providing some
answers about the structure or physiology of brain which makes parapsychological reception
possible.”
“The most astounding discovery of all is that the brain produces a parapsychology enhancing
neurotransmitter,” says Dr. Panagariya while referring to a class of substances known as beta -
carbolines which are secreted from the pineal gland. He says this neurochemical is only
produced at night and breaks down into melatonin, another substance which has been
associated with psychic experiences.

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Dr. Panagariya, presently a member of the Rajasthan State Planning Board, has in his study
referred to another recent discovery of interest to psychic researchers proving that the human
brain contains magnetite (ferrous oxide), which renders the brain sensitive to the Earth’s
magnetic fields.
“It has long been known that birds and other animals use magnetite in their brains to aid in
navigation. Magnetite is especially concentrated in the pineal gland and the temporal lobes,”
says Dr. Panagariya, offering scientific explanation to the spiritual, mystical and paranormal
experiences. (Source: The Hindu)
Chapter 8: Article Writing
(1) Scheme of Indian Government for Women empowerment
(2) Language is species specific
Chapter 10: Letter Writing
(1) Write a letter from XYZ Group for enquiry about the catering services.
(2) Write a letter of promotion for opening new branch of the XYZ Bank.
Chapter 11: Formal Mails
(1) Write a mail to Abhishek Mittal, congratulating him for the promotion as a marketing
manager in the organisation. You are Mr. Alok Prakash, manager of the IT department.
(word limit: 150-200)
(2) Write a mail to Ms. Rakhi Mandal, reminding her of a business contract you have sent to
her regarding providing infrastructure maintenance services to her company ‘Manet
Solutions’. You are Mr. Santosh Gupta, Business Head of JP Infrastructures. (word limit:
150-200)
Chapter 12: Résumé Writing
1. You are Prashant Kumar/Laxmi Ahuja, a resident of Juinagar, Mumbai. You have
recently come across an advertisement in Hindustan Times (News Paper) for Trainee
Article in Finance at S.R. Pvt Ltd. Draft a cover letter in response to the advertisement
and enclose your Curriculum Vitae.
2. You are Shikha/Ashutosh. You are applying for Industrial Trainee Articles at GAIL Ltd.
Write a Cover Letter and attach your curriculum vitae (CV).
Chapter 13: Meetings
1. Your Company is launching a new product in the next year. Prepare the minutes of the
meeting for the same. Members in the meeting; Head of the Sales and Marketing,
Product head, and concerned Team Member.
2. As an employee of an academic institute, prepare the agenda of an upcoming partner’s
visit in tabular format.

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SUGGESTED ANSWERS/HINTS

Chapter 1: Communication
Answer
(1) As we know, lacking language knowledge can create impediment in communication.
Language varies individual to individual, place to place, region to region, and country
wise. Same words may have different meaning in other language. Even jargon, unfamiliar
expressions, and ambiguous words create hurdles in communication. This is fact that no
two people speak or write alike. Some people use well-formed words while some of them
is used ill-formed words.
(2) Non-verbal communication is more impact in communication. Meanwhile, the primary
function of language is communication, but we can communicate without language. Some
of the functions of nonverbal communication in humans are to complement and illu strate,
to reinforce and emphasize, to replace and substitute, to control and regulate, and to
contradict the denoted message. These are the following non-verbal cues:
Physical: It includes facial expressions, stance, gestures, tone, distance in communication,
time dimension, haptics etc. For example, leaning forward may mean friendliness, acceptance
and interest, while crossing arms can be interpreted as antagonistic or defensive posture.
Smiles, frowns, pursing of lips, clenching of hands etc. transmit emotions which are not
expressed through verbal communication.
Paralanguage: It contains the how of the sender’s voice or the way he/she speaks. In other
words, The way we say something, more than the actual words use, reveal the intent of the
message, the voice quality, volume, intonation, pitch, stress (e.g., primary stress ˈ, secondary
stress ˌ, long stress ː, half long ˑ , extra short) tone (e.g., extra high §“, high é, mid ē, low è,
extra low ȅ, down step ↓, upstep↑) and way of speaking, communicates approval, interest or
lack of it. It changes the meaning of words.
For example-
Stress on d- Proˈduction become Noun
Stress on p- ˈProduction become Verb
Aesthetic: Art forms such as dancing, paintings, sculptors, music are also means of
communication. It conveys the ideas and thoughts of the artist.
Appearance: It is usually the first thing noticed about the person. A well dressed and groomed
person is presumed to be organised and methodical, whereas a sloppy or shabby person fails
to make a favourable impression.
Hence, through non-verbal communication, we send and responds to thousands of messages
daily in personal and work lives.

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60 FOUNDATION EXAMINATION: MAY, 2020

Chapter 2 Sentence Types: Active-Passive Voice, Direct-Indirect Speech

Answer
(A) Active-Passive Voice
1. Sita is loved by Ram.
2. The work will be finished by them in a fortnight.
3. Why was such a message written by your friend?
4. By whom were you taught Commerce?
5. Instructions will be given to you by the examiner.
(B) Direct - Indirect
1. The principal said that we could go.
2. Ravi said that the lion had died in the garden.
3. Mentor told me that I was a good player.
4. She exclaimed sadly that she was undone.
5. The administrator required where I lived.
Chapter 3: Vocabulary
Answer
(A) Select the suitable synonym for the given words.
1- (a)
2- (b)
3- (d)
4- (c)
5- (b)
(B) Select the suitable antonym for the given words.
1. (c)
2. (b)
3. (c)
4. (a)
5. (d)

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Chapter 4: Comprehension Passage

Answer: Passage 1
1. Globalisation, liberalisation, development of e-commerce and emerging global markets
are forcing capital markets across the worldwide for integration.
2. (a)
3. (b)
4. (b)
5. Increasing complexity of business transactions and globalisation of capital markets call
for a single set of high-quality accounting standards.
Answer: Passage 2
1. (b)
2. (d)
3. The basic requirements of BI is timely, accurately, high-value, and actionable business
insights, and the work processes and technologies used to obtain success.
4. BI refers to the process of collecting, refining, analyzing, and presenting the information
for making better business decisions.
5. (c)
Chapter 5: Note Making
Answer
Money Market
1. Wht is Mny?
1. a. Rfrs to Ast
1. b. Lqd Ast
1. c. Elctrnc Rcd
2. Fncns of Mny
2. a. Mdm of Excng
2. b. Unt of Vlu
2. c. Unt of Stndrd
3. Types of Ast
4. Vlu of Ast

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62 FOUNDATION EXAMINATION: MAY, 2020

Key:
Wht- What
Mny- money
Rfrs- refers
Ast- assets
Lqd- Liquid
Elctrnc- Electronic
Rcd- Record
Fncns- Functions
Mdm- Medium
Excng- Exchange
Unt- Unit
Vlu- Value
Stndrd- Standard

Note Making-2
Title: Doctrine of Ultra Vires
1. Ntr of Ult Vrs
1. a. Mng of Ult Vrs
1. b. Lmt of Ult Vrs
2. Comp Law
2. a. Fnd Rule
2. b. Comp Act
2. c. Cont of trade
3. Impact of the doctrine of Ult Vrs
3. a. Use of Mrdm
3. b. Use of Trns
4. Utl of Ult Vrs Loan
5. Act of Ult Vrs

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Key:
Ntr- Nature
Ult- Ultra
Vrs- Vires
Mng- Meaning
Lmt- Limitation
Comp- Company
Fnd- Fundamental
Cont- Controlling
Mrdm- Memorandum
Trns- Transaction
Utl- Utilisation
Chapter 7: Précis Writing
(1) Answer: Women in entrepreneurship
According to the sixth Economic Census 2013-14, only 14% of the businesses in India are
owned by women and are smaller as compared to men owned businesses. Out of these, 83%
do not have any hired workforce. However, many women entrepreneurs have carved a niche
for themselves these are Kiran Mazumdar Shaw, Falguni Nayar and Ritu Dalmia. Self help
groups and NGOs have helped women entrepreneurs in the rural sector. Still due to socio -
cultural biases, it is onerous for married women in India to be an entrepreneur. Managing a
male workforce and accessing financial support are even bigger challenges. Policy
interventions, mentoring women entrepreneurs by specialists can encourage women who
intend to foray into entrpreneurship and specialized networking platforms for women can
provide the much-needed support.
(2) Answer: The ‘third eye’ connection
The notion of the third eye or heightened consciousness, Extra Sensory Perception(ESP), or
enlightenment is attributed to pineal gland. It is located between the two halves of the brain
and connects the intellect and the body. Acording to Dr. Panagariya a neurologist based in
Jaipur, this third eye can be activated to spiritual world frequencies with the help of Yoga and
meditation to enable a person experience astral travel, remote viewing and cosmological
projection. He said that the pineal gland contains magnetite and secretes Beta Carbolines that
breaks down into melatonin which are associated with spiritual, psychic and paranormal
experiences.

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64 FOUNDATION EXAMINATION: MAY, 2020

Chapter 8: Answer
1) Hints:
➢ The government has initiated many schemes for safety of women.
➢ BetiBachaoBetiPadhao Yojana: This scheme was launched in Panipat, Haryana on
January 22, 2015.
➢ Mahila-E-Haat: It is a bilingual online marketing platform which is launched by the
Ministry of Women and Child Development in 2016.
➢ Mahila Shakti Kendra: It was launched to empower rural women with opportunities
for skill development, employment, digital literacy, health and nutrition.
➢ Working Women Hostel: It was launched to ensure availability of safe, convenient
for working women who has less than 50K/month income in metropolitan and 35K/m
in any other place.
➢ Support to Training and Employment Programme (STEP): It was set up to p rovide
skills, competencies and training to become entrepreneurs.
➢ Sukanya Samriddhi Yojana: It is a government-backed saving scheme for girl
children.
2) Hints:
➢ Only human beings possess language.
➢ Non-human has various degrees of the communication system.
➢ Language is a biological gift to human beings.
➢ Animals may have few words or a limited range of domains.
➢ Human language is creative and unpredictable.
➢ Human being has a phonological and grammatical system.
➢ A human being can create and understand new utterances.
➢ A human being can refer to the past.
➢ A human being can teach or learn a language.
➢ Some non-human species have a system of sounds.
➢ Chimpanzees are able to learn human sign language.

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Chapter 10: Letter Writing

Answer-1
XYZ Ltd
A-78, AH-Block
Tagore Garden
New Delhi- 27
11 December, 20XX

Proprietor
Jashn Catering
60, Karole Bagh
New Delhi-05

Dear Mr. Sunil

Subject: Regarding Enquiry about Catering Services
With reference to your advertisement in the Times of India, dated November 26, 20XX, we
wish to enquire about your catering services. Our company is celebrating its golden jubilee in
the month of January 2020. In this regard, we are looking for somebody wh o would cater for
our celebrating dinner.
We are expecting around 600 guests and employees during the event. It will be a formal meet
and we will need full catering services that includes several courses, desserts, ten waiters and
five helpers.
Kindly provide us the details of the following:
➢ Whether you provide for waiters and hosts
➢ Offers and discounts available
➢ The menu options and charges
➢ If there are any additional charges levied for linens, centerpiece, etc.
Kindly provide the complete details with rates by Oct 15 XXXX.
Thanks & Regards!
Mr. Vivek Goyal
Administration
XYX Ltd

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66 FOUNDATION EXAMINATION: MAY, 2020

Answer-2
XYZ Bank
Sector-19
Nerul
Navi Mumbai-06
10 December, 20XX

Chief Finance Officer

XP Ltd
Dadar
Mumbai-14

Dear Sir/Ma’am,
Subject: Opening of our New Branch at Nerul, Navi Mumbai
We are happy to announce the grand opening of our bank’s 150 branch in the Nerul, Navi
Mumbai.
As a privileged customer, we are pleased to offer you extra benefits for an account opening in
the new branch.
The new branch has locker facility and six ATM machines in your area. In view of our long-
term association, we would not charge you any fees for locker facility.
Kindly visit the new branch. Contact details are given below:

88, Jame Jamshed Road

Dadar
Ph.: 011-255-90000
Mumbai-14

Yours
R.P. Aneja
(Brach Manager)

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Chapter-11: Formal Mails

Answer-1
To: Abhishek Mittal
CC/BCC
Subject: Congratulations on Your Promotion

Dear Abhishek
I just got to hear of your promotion to the post of Marketing Manager. Please accept my
heartiest congratulations.
You truly deserve the recognition and responsibility of the position. Your dedication and hard
work have been rewarded. All your team members are elated at your selection. As you would
know, promotion comes along with new target, tasks and challenges. I hope that you shall
exceed all expectations.
We are all looking forward to a grand party from you at your earliest convenience.
Regards,

Alok Prakash
Head
Department of the Information Technology

Or-
Answer-1
Value Hints:
a. Subject: Regarding Congratulating on Your Promotion
b. Greetings
c. Opening paragraph on congratulations
d. Appreciate for promotion
e. Appreciate for dedication and hard work
f. Motivation for new challenges
g. Closing with demanding party and polite words

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68 FOUNDATION EXAMINATION: MAY, 2020

Answer-2
Value Hints:
a. Subject: Regarding the Providing Infrastructure Maintenance
b. Greetings
c. Remind that you had sent the contract on x date and no reply has been received till date.
d. Mention date of meeting and discussion of details of contract
e. Ask if any further details/clarifications required from your side.
f. Seek meeting to discuss any issues that have come up.
g. In case, all is well you would appreciate it if the contract is signed and mailed to you.
Chapter: 12- Résumé Writing
Answer: 1
A-12F-Block,
C-16/A, Sector-04
Juinagar
Navi Mumbai- 400705
prashantkr.@gmail.com
09 December, 20XX

The HRD
S.R. Pvt Ltd.
Andheri East
Mumbai- 400069

Dear Sir/Ma’am,
Subject: Application for the Post of Trainee Finance
This is with reference to your advertisement in ‘Hindustan Times’ dated 06 December, 20XX,
for the post of Trainee Finance in your organization. I wish to apply for the same.
I am conscientious, punctual and open to learning. I have just completed CA Intermediate from
ICAI. I am looking for positions as Trainee (Finance/Tax/Audit) for articleship. If given the
opportunity, I am open to learning and prepared to work hard to enrich my knowledge.

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I am enclosing my résumé herewith for your reference. I shall be available for an interview
through online or face to face on any day of your convenience.
I look forward to a positive response!

Your Sincerely,
Prashant Kumar

Enclosure:
1. Résumé
Curriculum Vitae
RAVI PRAKASH GOEL
A-12F-Block,
C-16/A, Sector-04
Juinagar
Navi Mumbai- 400705
Mob.: +91-XXXXX XXXXX
Email: prashantkr.@gmail.com
Profile:
➢ Hardworking, punctual, strong team player
➢ Confident working with computers and technology
Educational Qualifications:
S. Examination / Subject / Institute / Board / Year of Percentage/
No. Degree/Course Stream College University Passing Division
1 CA Intermediate Finance, ICAI, New ICAI, New Nov 2019 65%
Taxation, Delhi Delhi
Auditing
2 Higher Secondary Commerce St. Holly CBSE 2014 87%
Public School,
Mumbai
3 Secondary Commerce St. Marry CBSE 2012 85%
Public School,
Mumbai

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70 FOUNDATION EXAMINATION: MAY, 2020

Professional Skills:
➢ Finance, Taxation, Auditing
Intrapersonal Skills:
➢ Excellent Communication Skills
➢ Highly organized and efficient
➢ Ability to work independently
➢ Ability to work in team
➢ Proven leadership skills and ability to motivate
Language Known:
➢ English, Hindi, Marathi (Comm.)
Hobbies:
➢ Reading Novels, Travelling, Interacting with people
Personal Details:
➢ Father’s Name: XYZ
Mother’s Name: XYX
DoB: XYZ
Gender: Male
Nationality: XYZ
Marital Status: Single/Married
References:
Tripti Sharma CA. Sanjay Mishra
Assistant Professor XYZ Associates,
ABC College of Commerce
XYZ University
Email:xyz@gmail.com Email: ******@gmail.com

Declaration: I solemnly declare that the above information is correct to the best of my
knowledge and belief.

Date: XX December, 20XX

Place: Mumbai (PRASHANT KUMAR)

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Answer: 2
F-26 E, Sector-11
Kavi Nagar
Ghaziabad- 02
Email: shikhakr.@gmail.com
16 December, 2019

The HRD
Natural Gas Transmission Company (GAIL)
New Delhi-01

Dear Sir/Ma’am,
Subject: Application for the Post of Industrial Trainee(Articles)
This is with reference to your advertisement on the website in career column for the post of
Article Trainee at GAIL. I have just completed second year of my articleship from ABC
associates, a reputed firm and completed CA Intermediate in November 2017 in the first
attempt.
I am keen to learn, focused and target oriented.
I will be ready available for a personal interaction any time as per your convenience.
I look forward to a positive reply.

Your Sincerely,
Shikha Kumari

Enclosure:
1. Curriculum Vitae
Shikha Kumari
XYZ Company
Ghaziabad-06
Phone: +91- XXXXX XXXXX
E-mail: shikhakr.@gmail.com

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72 FOUNDATION EXAMINATION: MAY, 2020

Profile/ Objective:
➢ Sincere, honest, punctual and devoted professional with a zest of learning. Seeking a
position that provides substantial learning opportunities and exhorts me to take up
challenges/initiatives and learn from them thereby creating and adding value to the te am
as well as the organization
Educational Qualifications:
➢ Completed 2 years of articleship from XYZ company in December 2019.
➢ Completed CA Intermediate in Nov 2017.
➢ 10+2, from CBCE, New Delhi, 2012, with higher 1st Division.
➢ 10th from CBCE, New Delhi, 2010, with higher 1st Division.
Achievements:
➢ Got prize for standing first in National Quiz at XW Org in 2015.
Language Known:
➢ English, Hindi, Punjabi, Marathi, (Comm.)
Workshop/Training Programme/Academic Participation:
➢ Participated in International Conference at Pune in December 2019.
➢ Participated in International Lecture on “LEARN TO FIND YOUR HIDDEN TALENT”
delivered by Geshe Michael Roach, at Presidency College, Kolkata, (INDIA), on 13 Feb.
2017.
➢ Participated in Human Value “Harmony” workshop organized by IIT, Delhi, Varanasi from
31 Jan.-03 Feb. 2016.
➢ Participated in One-week workshop on Accounting at regional centre, Mumbai, from 12
Jan.-21 Jan. 2016.
➢ Participated in one-week training programme on Accountancy, Mumbai from 4 Dec.-23
Dec. 2014.
Declaration: I solemnly declare that all the above information is correct to the best of my
knowledge and belief.

Place: New Delhi

Date: 12.12.20XX (SHIKHA KUMARI)

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Chapter-13: Meetings
Answer-1
Date: 16 December 20XX
Venue: Conference Room, II Floor
Meeting Started at 04:00 P.M.
Mr. A, Head of the Sales and Marketing, gave an introduction and purpose of the meeting.
Mr. B, Product head spoke about the new product.
Ms. C, Regional Manager, Business, gave a detailed project report. (market surveys, future
aspects challenges included).
Participants approved of Ms. C’s report. Appreciated he meticulous detailing.
Mr. D, Marketing Head discussed the market scenario, demand and supply and customer
interest.
Mr. E, Head Finance, gave details of costing, Finance team led by Mr. F, Mr. G, and Ms. H were
part of the presentation.
The Head, Sales and Marketing declared an open house for participants to put up their
concerns, and finally gave a vote of thanks.
Proposals for more funds put forward.
Tender to be released.
ATR will be submitted by 22 December, 20XX.
Answer-2
Tabular Agenda

Time Topic Attendees Speaker Duration

10:30 AM Introductory Director, Registrar, Director of the 10 Minutes
meeting and Exam In-charge, Institute
Welcome Note Senior Faculty (all
depts.)
10:40 AM Speech Director, Registrar, Hon’ble Mr. Partner 25 Minutes
Exam In-charge,
Senior Faculty (all
depts.)
11:05 AM Discussion on Director, Senior Head, Department 25 Minutes
new courses and Faculty of the (subject)
departments

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74 FOUNDATION EXAMINATION: MAY, 2020

11:30 AM Brunch Brunch Bruch 30 Minutes

12:00 Noon Need to the Director, Registrar Prof. X, Subject 20 Minutes
Course/scope Senior Faculty Expert
12:20 PM Open House Director, Registrar All members 20 Minutes
Senior Faculty
12:40 PM Vote of thanks Director, Registrar Director of the 10 Minutes
Senior Faculty, Institute
Partner(Mgmt)

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PAPER – 2: BUSINESS LASW AND BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

PART – I: RELEVANT AMENDMENTS APPLICABLE FOR NOVEMBER 2020

EXAMINATION

For November 2020 examinations for Paper 2A: Business Laws, the significant amendments
made in the respective subject upto 30th April, 2020 are relevant and applicable.
Students are advised to refer study material of March 2019 edition with these applicable
amendments.
Relevant amendments: Here are given relevant amendments:
1. Meaning of Resident Director as per Companies (Incorporation) Third Amendment
Rules, 2018, w.e.f. 27-7-2018: For the purposes of this rule, the term "resident in India"
means a person who has stayed in India for a period of not less than one hundred and
eighty two days during the immediately preceding financial year.
[This is covered under OPC (One Person Company) - Significant Points, Page No.
5.10]
2. Revised definition of Small company [Section 2(85)]:
"Small company" means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher
amount as may be prescribed which shall not be more than ten crore rupees; and
(ii) turnover of which as per profit and loss account for the immediately preceding
financial year does not exceed two crore rupees or such higher amount as may be
prescribed which shall not be more than one hundred crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
[Covered on Page No. 5.11]
3. Revised definition of "subsidiary company" or "subsidiary [Section 2(87)]:
“subsidiary company" In relation to any other company (that is to say the holding
company), means a company in which the holding company—
(i) controls the composition of the Board of Directors; or

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2 FOUNDATION EXAMINATION: NOVEMBER, 2020

(ii) exercises or controls more than one-half of the total voting power either at its own
or together with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall not
have layers of subsidiaries beyond such numbers as may be prescribed.
Explanation.—For the purposes of this clause,—
(a) a company shall be deemed to be a subsidiary company of the holding company
even if the control referred to in sub-clause (i) or sub-clause (ii) is of another
subsidiary company of the holding company;
(b) the composition of a company's Board of Directors shall be deemed to be controlled
by another company if that other company by exercise of some power exerc isable
by it at its discretion can appoint or remove all or a majority of the directors;
(c) the expression "company" includes any body corporate;
(d) "layer" in relation to a holding company means its subsidiary or subsidiaries;
[Covered on Page No. 5.12]
4. Explanation added in the definition of "Government company" [Section 2(45)]:
In this section, the following explanation has been inserted in the definition [inserted by
notification dated 2-3-2020 by way of Exemptions to Government Companies under
section 462 with effect from 3-3-2020]
“Explanation.- For the purposes of this clause, the "paid up share capital" shall be
construed as "total voting power", where shares with differential voting rights have been
issued.”
[Covered on Page No. 5.14]
5. Meaning of Nidhi Companies [Section 406(1) of the Companies Act, 2013]:
In this section, "Nidhi" or "Mutual Benefit Society" means a company which the Central
Government may, by notification in the Official Gazette, declare to be a Nidhi or Mutual
Benefit Society, as the case may be. [Substituted by the Companies (Amendment)
Act, 2017, with effect from 15-8-2019.]
[Covered on Page No. 5.16]

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 3

PART – II: QUESTIONS AND ANSWERS

QUESTIONS

The Indian Contract Act, 1872

1. ‘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.
2. Mr. SHYAM owned a motor car. He approached Mr. VIKAS and offered to sell his motor
car for ` 3,00,000. Mr. SHYAM told Mr. VIKAS 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. VIKAS agreed with the proposal of Mr. SHYAM and took delivery of the car by paying
` 3,00,000/- to Mr. SHYAM. After 10 days, Mr. VIKAS came back with the car and stated
that the claim made by Mr. SHYAM 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. VIKAS can rescind the contract in the
above ground.
3. Define the term “Acceptance’. Discuss the legal provisions relating to communication of
acceptance.
4. “To form a valid contract, consideration must be adequate”. Comment.
5. Explain the-term ‘Quasi Contracts’ and state their characteristics.
The Sale of Goods Act, 1930
6. 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.
7. 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

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4 FOUNDATION EXAMINATION: NOVEMBER, 2020

the car was not in a good condition. Advise Suraj as to what remedy is available to him
against Sohan.
8. 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.
9. Distinguish between a ‘Condition’ and a ‘Warranty’ in a contract of sale. When shall a
‘breach of condition’ be treated as ‘breach of warranty’ under the provisions of the Sale
of Goods Act, 1930? Explain.
The Indian Partnership Act, 1932
10. Explain the provisions of the Indian Partnership Act, 1932 relating to the creation of
Partnership by holding out.
11. 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 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?
The Limited Liability Partnership Act, 2008
12. What do you mean by Designated Partner? Whether it is mandatory to appoint
Designated partner in a LLP?
The Companies Act, 2013
13. 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?
14. Explain clearly the doctrine of ‘Indoor Management’ as applicable in cases of companies
registered under the Companies Act, 2013. Explain the circumstances in which an
outsider dealing with the company cannot claim any relief on the ground of ‘Indoor
Management’.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 5

SUGGESTED ANSWERS/HINTS

1. BREACH OF CONTRACT- DAMAGES: Section 73 of the Indian Contract Act, 1872 lays
down that when a contract has been broken, the party who suffers by such breach is
entitled to receive from the party who has broken the contract compensation for any loss
or damage caused to him thereby which naturally arose in the usual course of things
from such breach or which the parties knew when they made the contract to be likely to
result from the breach of it.
The leading case on this point is “Hadley v. Baxendale” in which it was decided by the
Court that the special circumstances under which the contract was actually made were
communicated by the plaintiff to the defendant, and thus known to both the parties to the
contract, the damages resulting from the breach of such contract which they would
reasonably contemplate, would be the amount of injury which would ordinarily follow from
the breach of contract under these special circumstances so known and communicated.
The problem asked in this question is based on the provisions of Section 73 of the Indian
Contract Act, 1872. In the instant case ‘X’ had intimated to ‘Z’ that he was purchasing
water bottles from him for the purpose of performing his contract with ‘Y’. Thus, ‘Z’ had
the knowledge of the special circumstances. Therefore, ‘X’ is entitled to claim from ‘Z’ `
500/- at the rate of 0.50 paise i.e. 1000 water bottles x 0.50 paise (difference between
the procuring price of water bottles and contracted selling price to ‘Y’) being the amount
of profit ‘X’ would have made by the performance of his contract with ‘Y’.
If ‘X’ had not informed ‘Z’ of ‘Y’s contract, then the amount of damages would have been
the difference between the contract price and the market price on the day of default. In
other words, the amount of damages would be ` 750/- (i.e. 1000 water bottles x 0.75
paise).
2. As per the provisions of Section 19 of the Indian Contract Act, 1872, when consent to an
agreement is caused by coercion, fraud or misrepresentation, the agreement is a
contract voidable at the option of the party whose consent was so caused.
A party to contract, whose consent was caused by fraud or misrepresentation, may, if he
think fit, insist that the contract shall be performed, and that he shall be put in the
position in which he would have been if the representations made had been true.
Exception- If such consent was caused by misrepresentation or by silence, fraudulent
within the meaning of section 17, the contract, nevertheless, is not voidable if the party
whose consent was so caused had the means of discovering the truth with ordinary
diligence.
In the situation given in the question, both the fuel meter and the speed meter of the car
were working perfectly, Mr. VIKAS had the means of discovering the truth with ordinary

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6 FOUNDATION EXAMINATION: NOVEMBER, 2020

diligence. Therefore, the contract is not voidable. Hence, Mr. VIKAS cannot rescind the
contract on the above ground.
3. According to Section 2(b), the term ‘acceptance’ is defined as follows:
“When the person to whom the proposal is made signifies his assent thereto, the proposal
is said to be accepted. A proposal, when accepted, becomes a promise. “
An acceptance in order to be valid must be absolute, unqualified, accepted according to
the mode if any prescribed within the reasonable time and communicated to offeror.
Acceptance can also be made by way of conduct.
The legal provisions relating to communication of acceptance are contained in Section 4.
The communication of an acceptance is complete:
(a) as against the proposer, when it is put in a course of transmission to him, so as to
be out of power of the acceptor;
(b) as against the acceptor, when it comes to the knowledge of the proposer.
Section 3 of the Act prescribes, in general terms, two modes of communication, namely:
(1) by any act or
(2) by omission intending thereby communicate to the other or which has the
effect of communicating it to the other.
The first method would include any conduct and words whether written or oral.
Written words would include letters, telegrams, advertisements, etc. Oral words
would include telephone messages. Any conduct would include positive acts or
signs so that the other person understands what the person acting or making signs
means to say or convey. Omission would exclude silence but include such conduct
or forbearance on one’s part that the other person takes it as his willingness or
assent. These are not the only modes of communication of the intention of the
parties. There are other means as well, e.g., if you as the owner, deliver the goods
to me as the buyer thereof at a certain price, this transaction will be understood by
everyone, as acceptance by act or conduct, unless there is an indication to the
contrary.
The phrase appearing in Section 3 “which has the effect of communicating it”,
clearly refers to an act or omission or conduct which may be indirect but which
results in communicating an acceptance or non-acceptance. However, a mere
mental but unilateral act of assent in one’s own mind does not tantamount to
communication, since it cannot have the effect of communicating it to the other.
4. The law provides that a contract should be supported by consideration. So long as
consideration exists, the Courts are not concerned to its adequacy, provided it is of some
value. The adequacy of the consideration is for the parties to consider at the time of

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making the agreement, not for the Court when it is sought to be enforced (Bolton v.
Modden). Consideration must however, be something to which the law attaches value
though it need not be equivalent in value to the promise made.
According to Explanation 2 to Section 25 of the Indian Contract Act, 1872, an agreement
to which the consent of the promisor is freely given is not void merely because the
consideration is inadequate but the inadequacy of the consideration may be taken into
account by the Court in determining the question whether the consent of the promisor
was freely given.
5. Quasi Contracts: Under certain special circumstances obligation resembling those
created by a contract are imposed by law although the parties have never entered into a
contract. Such obligations imposed by law are referred to as ‘Quasi -contracts’. Such a
contract resembles with a contract so far as result or effect is concerned but it has little
or no affinity with a contract in respect of mode of creation. These contracts are based on
the doctrine that a person shall not be allowed to enrich himself unjustly at the expense
of another. The salient features of a quasi-contract are:
1. It does not arise from any agreement of the parties concerned but is imposed by
law.
2. Duty and not promise is the basis of such contract.
3. The right under it is always a right to money and generally though not always to a
liquidated sum of money.
4. Such a right is available against specific person(s) and not against the whole world.
5. A suit for its breach may be filed in the same way as in case of a complete contract.
6. The problem in this case is based on the provisions of the Sale of Goods Act, 1930
contained in the proviso to Section 27. The proviso provides that a mercantile agent is
one who in the customary course of his business, has, as such agent, authority eith er to
sell goods, or to consign goods, for the purpose of sale, or to buy goods, or to raise
money on the security of goods [Section 2(9)]. The buyer of goods from a mercantile
agent, who has no authority from the principal to sell, gets a good title to t he goods if the
following conditions are satisfied:
(1) The agent should be in possession of the goods or documents of title to the goods
with the consent of the owner.
(2) The agent should sell the goods while acting in the ordinary course of business of a
mercantile agent.
(3) The buyer should act in good faith.
(4) The buyer should not have at the time of the contract of sale notice that the agent
has no authority to sell.

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8 FOUNDATION EXAMINATION: NOVEMBER, 2020

In the instant case, P, the agent, was in the possession of the car with J’s consent for the
purpose of sale. A, the buyer, therefore obtained a good title to the car. Hence, J in this
case, cannot recover the car from A.
7. As per the section 55 of the Sale of Goods Act, 1930 an unpaid seller has a right to
institute a suit for price against the buyer personally. The said Section lays down that
(i) Where under a contract of sale the property in the goods has passed to buyer and
the buyer wrongfully neglects or refuses to pay for the goods, the seller may sue
him for the price of the goods [Section 55(1)].
(ii) Where under a contract of sale the price is payable on a certain day irrespective of
delivery and the buyer wrongfully neglects or refuses to pay such price, the seller
may sue him for the price. It makes no difference even if the property in the goods
has not passed and the goods have not been appropriated to the contract [Section
55(2)].
This problem is based on above provisions. Hence, Suraj will succeed against Sohan for
recovery of the remaining amount. Apart from this, Suraj is also entitled to: -
(1) Interest on the remaining amount
(2) Interest during the pendency of the suit.
(3) Costs of the proceedings.
8. Destruction of Goods-Consequences:
(i) In accordance with the provisions of the Sale of Goods Act, 1930 as contained in
Section 7, a contract for the sale of specific goods is void if at the time when the
contract was made; the goods without the knowledge of the seller, perished or
become so damaged as no longer to answer to their description in the contract, then
the contract is void ab initio. This section is based on the rule that where both the
parties to a contract are under a mistake as to a matter of fact essential to a
contract, the contract is void.
(ii) In a similar way Section 8 provides that an agreement to sell specific go ods
becomes void if subsequently the goods, without any fault on the part of the seller
or buyer, perish or become so damaged as no longer to answer to their description
in agreement before the risk passes to the buyer.
It may, however, be noted that section 7 & 8 apply only to specific goods and not to
unascertained goods. If the agreement is to sell a certain quantity of unascertained
goods, the perishing of even the whole quantity of such goods in the possession of the
seller will not relieve him of his obligation to deliver the goods.

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9. Difference between Condition and Warranty

(i) A condition is a stipulation essential to the main purpose of the contract whereas a
warranty is a stipulation collateral to the main purpose of the contract.
(ii) Breach of condition gives rise to a right to treat the contract as repudiated whereas
in case of breach of warranty, the aggrieved party can claim damage only.
(iii) Breach of condition may be treated as breach of warranty whereas a breach of
warranty cannot be treated as breach of condition.
According to Section 13 of the Sale of Goods Act, 1930 a breach of condition may be
treated as breach of warranty in following circumstances:
(i) Where a contract of sale is subject to any condition to be fulfilled by the seller, the
buyer may waive the condition.
(ii) Where the buyer elects to treat the breach of condition as breach of a warranty.
(iii) Where the contract of sale is non-severable and the buyer has accepted the whole
goods or any part thereof.
(iv) Where the fulfillment of any condition or warranty is excused by law by reason of
impossibility or otherwise.
10. Partnership by holding out is also known as partnership by estoppel. Where a man holds
himself out as a partner, or allows others to do it, he is then stopped from denying the
character he has assumed and upon the faith of which creditors may be presumed to
have acted.
A person may himself, by his words or conduct have induced others to believe that he is
a partner or he may have allowed others to represent him as a partner. The result in both
the cases is identical.
Example: X and Y are partners in a partnership firm. X introduced A, a manager, as his
partner to Z. A remained silent. Z, a trader believing A as partner supplied 100 T.V sets
to the firm on credit. After expiry of credit period, Z did not get amount of T.V sets sold to
the partnership firm. Z filed a suit against X and A for the recovery of price . Here, in the
given case, A, the Manager is also liable for the price because he becomes a partner by
holding out (Section 28, Indian Partnership Act, 1932).
It is only the person to whom the representation has been made and who has acted
thereon that has right to enforce liability arising out of ‘holding out’.
11. As per the provisions of Section 30(5) of the Indian Partnership Act, 1932, at any time
within six months of his attaining majority, or of his obtaining knowledge that he had been
admitted to the benefits of partnership, whichever date is later, such person may give
public notice that he has elected to become or that he has elected not to become a
partner in the firm, and such notice shall determine his position as regards the firm.

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10 FOUNDATION EXAMINATION: NOVEMBER, 2020

However, if he fails to give such notice, he shall become a partner in the firm on the
expiry of the said six months.
If the minor becomes a partner by his failure to give the public notice within specified
time, his rights and liabilities as given in Section 30(7) are as follows:
(A) He becomes personally liable to third parties for all acts of the firm done since he
was admitted to the benefits of partnership.
(B) His share in the property and the profits of the firm remains the same to which he
was entitled as a minor.
(i) In the instant case, since, X has failed to give a public notice, he shall become
a partner in the M/s ABC & Co. and becomes personally liable to Mr. L, a third
party.
(ii) In the light of the provisions of Section 30(7) read with Section 30(5) of the
Indian Partnership Act, 1932, since X has failed to give public notice that he
has not elected to not to become a partner within six months, he will be
deemed to be a partner after the period of the above six months and therefore,
Mr. L can recover his debt from him also in the same way as he can recover
from any other partner.
12. Designated Partner [Section 2(j)]: “Designated partner” means any partner designated
as such pursuant to section 7.
According to section 7 of the LLP Act, 2008:
(i) Every LLP shall have at least two designated partners who are individuals and at
least one of them shall be a resident in India.
(ii) If in LLP, all the partners are bodies corporate or in which one or more partners are
individuals and bodies corporate, at least two individuals who are partners of such
LLP or nominees of such bodies corporate shall act as designated partners.
(iii) Resident in India: For the purposes of this section, the term “resident in India”
means a person who has stayed in India for a period of not less than 182 days
during the immediately preceding one year.
13. As per the provisions of Sub-Rule (7) of Rule 3 of the Companies (Incorporation) Rules,
2014, an OPC cannot convert voluntarily into any kind of company unless two years have
expired from the date of its incorporation, except threshold limit (paid up share capital) is
increased beyond fifty lakh rupees or its average annual turnover during the relevant
period exceeds two crore rupees.
In the instant case, Mr. Anil formed an OPC on 16th April, 2018 and its turnover for the
financial year ended 31st March, 2019 was ` 2.25 Crores. Even though two years have
not expired from the date of its incorporation, since its average annual turnover during

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the period starting from 16th April, 2018 to 31st March, 2019 has exceeded ` 2 Crores,
Mr. Anil can convert the OPC into a private limited company along with Sunil.
14. Doctrine of Indoor Management (the Companies Act, 2013): According to the
“doctrine of indoor management” the outsiders, dealing with the company though are
supposed to have satisfied themselves regarding the competence of the company to
enter into the proposed contracts are also entitled to assume that as far as the internal
compliance to procedures and regulations by the company is concerned, everything has
been done properly. They are bound to examine the registered documents of the
company and ensure that the proposed dealing is not inconsistent therewith, but they are
not bound to do more. They are fully entitled to presume regularity and compliance by the
company with the internal procedures as required by the Memorandum and the Articles.
This doctrine is a limitation of the doctrine of “constructive notice” and popularly known
as the rule laid down in the case of Royal British Bank v. Turquand. Thus, the doctrine
of indoor management aims to protect outsiders against the company.
The above mentioned doctrine of Indoor Management or Turquand Rule has limitations
of its own. That is to say, it is inapplicable to the following cases, namely:
(a) Actual or constructive knowledge of irregularity: The rule does not protect any
person when the person dealing with the company has notice, whether actual or
constructive, of the irregularity.
(b) Suspicion of Irregularity: The doctrine in no way, rewards those who behave
negligently. Where the person dealing with the company is put upon an inquiry, for
example, where the transaction is unusual or not in the ordinary course of business,
it is the duty of the outsider to make the necessary enquiry.
(c) Forgery: The doctrine of indoor management applies only to irregularities which
might otherwise affect a transaction but it cannot apply to forgery which must be
regarded as nullity.

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12 FOUNDATION EXAMINATION: NOVEMBER, 2020

SECTION -B: BUSINESS CORRESPONDENCE AND REPORTING

Chapter-1 Communication
1. How do technology barriers affect communication? Explain.
2. Describe the term "paralanguage', a mode of communication.
3. Non-verbal is also one of the Broad Categories of Communication? Explain.
4. Define the areas where chain network of communication is found in an organisation.
Chapter-2 Sentence Types, Direct/Indirect, Active /Passive
1. Change the following sentences from active to passive.
a. Miraya paid the bills.
b. Have they left the apartment?
c. She is disturbing Dinesh.
d. Will you mop the floor?
e. Vidhi had not received the parcel.
2. Change the following sentences from passive to active.
a. An article has not been written by Radhika.
b. I was being watched by her.
c. Fifty thousand had been paid by me.
d. Were you recognised by her?
3. Change the following sentences into indirect speech.
a. Rahul asked me, ‘Did you see the cricket match on TV last night?’
b. James said to his mother, ‘I am leaving for New York tomorrow.’
c. I said to him, ‘Why don’t you work hard?’
d. He said to her, ‘What a hot day!’
e. The priest said, ‘Be quiet and listen to my words.’
4. Change the following sentences into direct speech.
a. His father says that honesty is the best policy.

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b. He inquired whether his name was Khalid.

c. Raj said he was teaching English online.
d. The father warned his son that he should be beware of him.
Chapter-3 Vocabulary
1. In the following question, out of the four alternatives, select the one which best expresses
the best meaning of the given word.
1. Valour
(a) Nervousness (b) Cowardice (c) Fearlessness (d) Energetic
2. Enigmatic
(a) Respectable (b) Mysterious (c) Widespread (d) Clever
3. Inconclusive
a) Conclusive (b) Indecisive (c) Conclusion (d) Decision
4. Consternation
(a) Alert (b) Celebration (c) Attraction (d) Dismay
5. Ignominy
(a) Attraction (b) Enmity (c) Assistance (d) Disgrace
2 In the following question, out of the given four alternatives, select the one which is opposite
in meaning of the given word.
1. Heckle
(a) Embarrass (b) Highlight (c) Cheer (d) Harass
2. Adamant
(a) Glittering (b) Unique (c) Unwilling (d) Flexible
3. Lackadaisical
(a) Enthusiastic (b) Slothful (c) Enervated (d) Apathetic
4. Obscene
(a) Indecent (b) Derogatory (c) Offensive (d) Complimentary
5. Obdurate
(a) Empathetic (b) Inconsiderate (c) Heedless (d) Virulent

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Chapter 4 Reading Comprehension

Passage 1
My father Janab Avul Pakir Jainulabdeen gave me a lesson when I was a young boy. What was
that lesson? My father was elected the President of Rameshwaram Panchayat Board. I was at
that time studying in school. Those days we did not have electricity and we used to study under
ration kerosene lamps. I was reading a lesson loudly when I heard a loud knock on the door.
Someone then came in and asked me where my father was. I told him, my father had gone for
evening prayers. He said, ‘I have brought something for your father, can I keep it here?’ I a sked
him to keep it on the cot. He placed a tombalum (gift box) on the cot and left.
When my father came back and saw the tombalum (gift box), he asked, ‘what is this? Who has
left this?’ I told him that in his absence someone had come and left it for him. My father opened
the cover of the tombalum and found there was costly dhoti, angvastram, some fruits, some
sweets and a note that the person had left behind. My father was furious. That was the first time
I saw his anger and also the first time that he beat me. I was the youngest in the family and he
loved me very much. I got frightened and started weeping. Then he came and touched my
shoulder lovingly with affection and advised me not to receive any gift without his permission.
He quoted an Islamic Hadith that states, “When the Almighty appoints a person to a position he
can take care of his provision. If a person takes anything beyond that it is an illegal gain”. Then
he told me that it is not a good habit. Gift that is accompanied by some other purpose i s a
dangerous thing. It is like touching a snake and getting poison in return.
1. Why did the boy’s father get angry over him?
a) The boy was disobedient
b) The boy answered back
c) The boy agreed to keep gifts without father’s permission
d) All of the above
2. What according to the passage is ‘like touching a snake and getting poison in return’
a) Accepting gifts
b) Accepting orders
c) Accepting God’s way of doing things
d) Accepting gifts offered with some hidden purpose
3. Which line in the passage shows that the boy and his family belong to an era where basic
facilities were not available
a) He was studying in ration kerosene lamps as there was no electricity

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b) He was studying loudly

c) His father used to wear Dhotis
d) The family used to receive costly gifts
4. Select the option that can be a suitable title for the passage
a) The Divine Gift
b) The gift of Gab
c) Accept gifts in good spirit
d) Never take gifts
5. What is the main theme of the passage?
a) A lesson learnt by the author as a boy, by his father
b) We should study loudly for better understanding
c) Accepting gifts is fun
d) Fathers always love their children
Passage 2
In Super bazaars in Delhi, the prospective buyer expects to find the price of an article displayed
or to be told definitely what the price is. He assumes that this is the low est price that will be
accepted and if he thinks the price excessive or beyond his means, he shrugs his shoulders and
walks away, dissatisfied or disappointed. He does not attempt to bargain unless he is usually
brazen faced or thick skinned-for his efforts would be met by an incredulous stare or by a cold
and possibly rude reply. Even, if his features showed mild annoyance or surprise he would
expect to be told that if the price was unacceptable, he could try elsewhere- a course offering
slight chances of success. The manager in a Super bazaar does not make the goods himself:
he is supplied by manufacturers or wholesale dealers on terms that allow little variation from
shop to shop; and for most articles in regular demand there is a ‘ market price’ over which the
seller has little control.
There are many other towns where the shopkeeper himself may be and often is importer and
producer, wholesale dealer and retailer. There is no standard ‘market price’ for the merchandise
which he has to offer. He cannot know how keen the demand is, how abundant the supply or
what his goods will fetch except by the offers made to him by prospective customers. He can
assess the fair market value of what he has to sell only by actual experiment. Therefore, he
begins by demanding an exorbitant price immensely above that for which he will eventually sell;
and the bargain is not concluded until he and his customer have spent much time on eloquent
gestures and arguments. The shop keeper gradually reduces his original price until he a nd his

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16 FOUNDATION EXAMINATION: NOVEMBER, 2020

customer arrive at a compromise agreeable to them both. The price thus agreed on , may or
may not represent the intrinsic worth of the article sold but does reflect its market value in
relation to the existing condition of supply and demand.
1. Find the word from the passage that means ‘inflated’ -
a) Abundant
b) Exorbitant
c) Intrinsic
d) Unacceptable
2. What does the phrase ‘incredulous stare’ mean?
a) Insulting words
b) Feeling of jealousy
c) Praising comments
d) Unbelievable look
3. Which of the following is true according to the passage?
a) The manager of the Super bazaar makes the goods, with his team members.
b) The manager is supplied the goods by the manufacturers.
c) The manager is supplied the goods by the wholesale dealers.
d) Both b and c
4. The final price at which a product is sold depends on -
a) The raw material
b) The existing condition of supply and demand
c) The abundance of the wholesalers
d) None of the above
5. What does the buyer do in case he finds the price of a product higher?
a) He shrugs his shoulders and leaves.
b) He insults the shopkeeper.
c) He tries to buy two products.
d) He respects the shopkeeper and gets ready to purchase at the earlier quoted price.

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Chapter-5 Note Making

For the following passages 1 and 2:
(i) Prepare notes with headings, sub-headings and abbreviations/contractions where ever
necessary.
(ii) Write a summary.
Passage-1
Diabetes Mellitus (DM), commonly referred to as diabetes, is a group of metabolic disorders in
which there are high blood sugar levels over a prolonged period. There are three main types of
diabetes mellitus. Type - 1 Diabetes — the body does not produce enough Insulin.
Approximately 10% of all diabetes cases are type 1. Type 2 Diabetes -begins with insulin
resistance, a condition in which cells fail to respond to Insulin properly. As the disease
progresses a lack of Insulin may also develop. Approximately 90% of all cases of diabetes
worldwide are of this type. Gestational Diabetes — this occurs when pregnant women without a
previous history of diabetes develop high blood sugar levels.
Sometimes a person finds that he has been going to the bathroom to urinate more often. When
there is too much glucose (sugar) in your blood one will urinate more often. If a person's Insulin
is ineffective, or not there at all, his kidneys cannot filter the glucose back into blood. The kidneys
will take water from his blood in order to dilute the glucose, which in turn fills up your bladder.
If you are urinating more than usual, you will need to replace that lost liquid. You will be drinking
more than usual. As the Insulin in your blood is not working properly, or is not there at all,
and your cells are not getting their energy, your body may reac t by trying to find more
energy — food. You will become hungry. This in turn will result in weight gain.
Unusual weight loss is found in some cases of type-1 diabetes. As your body is not making
Insulin it will seek out another energy source (the cells aren’t getting glucose). Muscle tissue
will be broken down for energy. If your Insulin is not working properly or not there at all, glucose
will not be entering into your cells and providing them with energy. This will make you feel tired
and listless.
Blurred vision can be caused due to tissue being pulled from your eye lenses. This affects your
eyes’ ability to focus. With proper treatment, this can be treated. There are severe cases where
blindness or prolonged vision problems can occur.
Passage-2
People do not always do the things we want them to do. No matter how reasonable or minimal
our expectations may be, there are times when we are let down. Naturally, we feel upset and
hurt when our expectations are not met. We dread confrontations because they are unpleasant

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18 FOUNDATION EXAMINATION: NOVEMBER, 2020

and can damage relationships.

Yet not confronting a person does not solve the problem because unresolved issues also affect
relationships in an adverse way. Actually, the real problem lies in our style of confrontation, not
in the issue.
Typically, we use character-based confrontations. They help in venting our anger and hurt, but
that is the only thing they do. They lead to angry show downs and bring all discussions to a
grinding halt. It is important to remember that self-image is the most important possession of all
human beings.
It is the way we view and regard ourselves in our own eyes and in the eyes of others. As self -
conscious beings, we are actually aware of our· image and constantly work towards protecting
it from any damage.
We also seek approval from others about our own self-image. We feel distraught if we sense
that there is even a slight threat to our self-image, because our character is the essence of our
lives. To ensure a rational dialogue over dashed expectations, we need to deploy issued based
confrontations. They involve an explanation of which actions have bothered us, in what manner
and what changes we would like from the other person.
Chapter 7 Précis Writing
For the passages 1 and 2, write a précis
Passage-1
When we survey our lives and efforts we soon observe that almost the whole of our actions and
desires are bound up with the existence of other human beings. We notice that whole nature
resembles that of the social animals. We eat food that others have produced, we ar clothes that
others have made, live in houses that others have built. The greater part of our knowledge and
beliefs has been passed on to us by other people though the medium of a language which others
have created. Without language and mental capacities, we would have been poor indeed
comparable to higher animals. We have, therefore, to admit that we owe our principal knowledge
over the least to the fact of living in human society. The individual if left alone from birth would
remain primitive and beast like in his thoughts and feelings to a degree that we can hardly
imagine. The individual is what he is and has the significance that he has, not much in virtue of
the individuality, but rather as a member of a great human community, which directs his material
and spiritual existence from the cradle to grave.
Passage-2
Digital marketing is the very innovative and novel concept in the 21st century. Through this form
of media, products and services are promoted with the use of database-driven online distribution
channels to reach consumers in an appropriate, significant, individual, and lucrative manner.

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The term digital marketing does not have any specific definition or meaning but it can be well
explained with the examples such as emails, online advertisements, pay per clicks, wireless text
messages, instant messages, RSS, blogging, fax, video streams, podcasting, broadcast, etc.
All these comprise digital marketing.
Apart from its inclusive list, there are few traditional forms of marketing which are not included
in the term of digital marketing. They are TV, radio, print and billboard as they are not the instant
or quick forms of marketing. It means with these forms of marketing the advertiser could not get
the immediate response from the end consumers. The traditional forms of marketing could not
give the accurate number of responders. Perhaps, there is a little improvement achieved with
the devices such as TiVo which records the statistics like website but, still the desirable result
has not been gained. Nevertheless, this became possible with the introduction of digital
marketing.
Digital marketing has become so powerful a network of advertising, that with the introduction of
“Double click” strategy of Google for internet, the world has become very close linking each and
every place conveniently. With the help of digital marketing, campaigns for promoting any
product through internet has become very cost-effective and convenient.
Chapter-8 Article Writing
Write article on the following topics.
a. Impact of Advertisements on The Younger Generation
b. The Role of Students in Removing Illiteracy
Chapter-9 Report Writing
1. As the School Co-curricular activities In-charge, your Principal has advised you to prepare
a report on how to start online classes for activities besides academics. Discuss the plans,
proposal and benefits. (200-300 words)
2. Your CA firm held a webinar on ‘Communication Skills: Need of the hour’. As the Head of
Communication division, prepare a report.
Chapter-10 Writing Formal Letters and Official Communication
1. You are the manager of Old World Tower and you received order of letterhead and
business cards from ABC Stationary King. The order was completed on time and the quality
of paper used was not upto the mark. Write a formal letter complaining about the same.
2. Write a circular addressing to the employees regarding re-organisation of manpower and
their responsibility in finance department of the company.
Chapter-11 Writing Formal Mails
1. Write a formal email to apply for a job position as web content editor.

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20 FOUNDATION EXAMINATION: NOVEMBER, 2020

2. Write a reply back in a formal email to an inquiry about your product.

Chapter-12 Résumé Writing
1. Mr. Mohit Agarwal, a resident of Meerut, have recently come across an advertisement, for
a job vacancy in a leading TV Channel for the post of journalist, in The Times of India.
Draft a Résumé along with a cover letter in response to the advertisement.
2. You have recently qualified CA Intermediate and willing to join pract ical training. Draft a
résumé, highlighting your education, technical skills and achievements.
Chapter-13 Minutes of Meetings
1. You are the CEO of a pharmaceutical company. In light of the Corona virus pandemic, your
company has witnessed a high demand of Paracetamol drugs. However, the company
infrastructure and employee strength does not allow you to cater to the demand. Prepare
the minutes of the meeting, discussing this concern. Members involved in the meeting are,
CEO, Product Head, Pharmacy experts, Business Lead, Head of sales .
2. You are a senior personnel of a food chain which has suffered severe losses due to the
lockdown imposed in the country as a result of the virus pandemic. Discuss the future plans
regards to uplifting the business. Include Director, Sales and Marketing, Retail head,
Supply Chain Head, Procurement Personnel and other senior members. Details to be
tabulated.

SUGGESTED ANSWERS/HINTS

Chapter-1 Communication
1. In the present world, communication modes are primarily technology driven. The
communication technology is being constantly upgraded or new formats emerge ever so
frequently. Anyone who is not abreast with these struggles to communicate effectively via
the medium.
An individual is swamped with huge amount of information every day in the form of emails,
texts and social updates. Multitasking is the norm these days. The information overload
and trying to accomplish too many things together can result in gaps in communication and
miscommunications.
2. Paralanguage refers to the way you say something rather than the actual words used, the
voice quality, intonation, pitch, stress, emotion and style of speaking communicates
approval, interest or lack of it. Research estimates that tone accounts for 38 percent of
communication.
3. Nonverbal Communication: Nonverbal communication is the process of communicating
by sending and receiving wordless messages. These messages can aid verbal
communication, convey thoughts and feelings contrary to the spoken words or express

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ideas and emotions on their own. Some of the functions of nonverbal communicat ion in
humans are to complement and illustrate, to reinforce and emphasize, to replace and
substitute, to control and regulate, and to contradict the denoted message .
Physical nonverbal communication: An individual’s body language that is, facial
expressions, stance, gestures, tone of voice, touch, and other physical signals constitute
this type of communication. For example, leaning forward may mean friendliness,
acceptance and interest, while crossing arms can be interpreted as antagonistic or
defensive posture.
Research estimates that physical, non-verbal communication accounts for 55 percent of
all communication. Smiles, frowns, pursing of lips, clenching of hands etc. transmit
emotions which are not expressed through verbal communication.
Paralanguage: The way you say something, more than the actual words used, reveal the
intent of the message. The voice quality, intonation, pitch, stress, emotion, tone, and style
of speaking, communicates approval, interest or the lack of it. Research estimates that
tone of the voice accounts for 38 percent of all communications.
Aesthetic communication: Art forms such as dancing, painting, sculptor, music are also
means of communication. They distinctly convey the ideas and thoughts of the artist.
Appearance: Appearance is usually the first thing noticed about a person. A well dressed
and groomed person is presumed to be organised and methodical, whereas a sloppy or
shabby person fails to make a favourable impression. Therefore, dressing appropriately in
all formal interactions is emphasized.
The dress code in office is generally formal. It constitutes of formal suits, trousers wit h
plain white or light coloured shirts and leather shoes. Bright colours, jeans, T - shirts,
especially with slogans and other informal wear are frowned upon. For women formal two -
piece trouser or skirt sets or formal ethnic wear like sarees, is permissible.
Symbols such as religious, status, or ego-building symbols.
4. Communication pattern that follows the chain of command from the senior to the junior is
called the chain network. Communication starts at the top, like from a CEO, and works its
way down to the different levels of employees. The supervisor/ manager/ CEO gives
commands or instructions to those working under him/her in the organisation.
B, C, D and E, F, G are the subordinates to A in the organisational hierarchy and receive
commands from ‘A’ as shown in the diagram. The chain network often takes up time, and
communication may not be clear.

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22 FOUNDATION EXAMINATION: NOVEMBER, 2020

E B

F C

G D

Chain of Command

Chapter- 2 Sentence Types, Direct/Indirect, Active /Passive

Ans-1
a. The bills were paid by Miraya.
b. Has the apartment been left by them?
c. Dinesh was being disturbed by Dinesh.
d. Will the floor be mopped by you?
e. The parcel had not been received by Vidhi.
Ans-2
a. Radhika has written an article.
b. She was watching me.
c. I had paid fifty thousand.
d. Did she recognise you?
Ans-3
a. Rahul asked me if I had seen the cricket match on TV the previous night.

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b. James told his mother that he was leaving for New York the next day.
c. I asked him why he didn’t work hard.
d. He exclaimed that it was a hot day.
e. The priest urged them to be quiet and to listen to his words.
Ans-4
a. His father says, “Honesty is the best policy.”
b. He asked him, ‘Is your name Khalid?
c. Raj said, ‘I am teaching English online.’
d. The father warned his son, ‘Beware of me.’
Chapter-3 Vocabulary
Ans-1
1. C 2. B. 3. B. 4. D. 5. D.
Ans-2
1. C. 2. D 3. A. 4. D. 5. A
Chapter-4 Comprehension Passages
Passage 1
1. c
2. d
3. a
4. c
5. a
Passage 2
1. b
2. d
3. d
4. b
5. a
Chapter-5 Note Making
1) 1. Diabetes Mellitus(DM)

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24 FOUNDATION EXAMINATION: NOVEMBER, 2020

1.1 Types
1.1.1 Type-1 inadqt prodtn of insulin
1.1.2 Type-2 insulin rstnt cells most common (90% cases)
1.1.3 Type-3 gstnl in prgnt women
1.2 Symptoms
1.2.1 Frqnt urnatn
1.2.1.1 Cause
1.2.1.1.1 Kidney tkg water frm blood
1.2.1.1.1 Bladder flng up
1.2.2 Unusual thirst
1.2.2.1 Cause
1.2.2.1.1 Water loss
1.2.3 Wght gain
1.2.3.1 Cause
1.2.3.1.1 Constant hunger
1.2.3.1.2 Excsv eating
1.2.4 Wght loss ( in type-1)
1.2.4.1 Cause
1.2.4.1.1 Break down of fat & msclr tissue
1.2.5 Physcl fatigue
1.2.5.1 Cause
1.2.5.1.1 Lack of glcse in cells
1.2.6 Blurred vision
1.2.6.1 Cause
1.2.6.1.1 Tissue pulled frm eye
1.2.6.1.2 Inability to focus
1.2.7 Blndns or prlgd vision prblms (in severe cases)

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Key
1. inadqt- inadequate
2. prodtn-production
3. rstnt-resistant
4. gstnl-gestational
5. frqnt-frequent
6. urntn-urination
7. prgnt-pregnant
8. tkg-taking
9. frm-from
10. flng-filling
11. wght-weight
12. excsv-excessive
13. msclr-muscular
14. physcl-physical
15. glcse-glucose
16. blndns-blindness
17. prlgd-prolonged
18. prblms-problems
Summary
Diabetes Mellitus is a metabolic disorder characterised by high blood sugar levels over a long
period. There are three types of Diabetes. Type-1, where body does not produce enough Insulin,
Type-2 where cells are Insulin resistant is the most common with 90% cases and Type-3
gestational diabetes in pregnant women. Symptoms are frequent urination caused due to water
being taken from blood by kidneys to dilute glucose, filling up the bladder; Unusual thirst due to
water loss; Weight gain due to constant hunger and excessive eating; Weight loss in Type -1,
due to break down of fat and muscular tissue; Physical fatigue due to lack of glucose/energy in
cells; Blurred vision due to inability to focus and blindness in severe cases.
2) Human Nature
1. Hmn Ntr

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26 FOUNDATION EXAMINATION: NOVEMBER, 2020

1.1 Expctns
1.1.1 hurt when not met
1.2 Cnfrntns
1.2.1 are avoided by hmns
1.2.2 are unplsnt
1.2.3 dmg rlstnsps
1.2.4 Styles of cnfrntns:
1.2.4.1 Chrctr bsd
1.2.4.1.1 Help vent anger
1.2.4.1.2 Cse angry shwdns
1.2.4.1.3 Halt dscssns
1.2.4.1.4 Dtrmntl to slf- img
1.2.4.2 Issue bsd
1.2.4.2.1 Lead to rtnl dlg
1.2.4.2.2 Help anls:
1.2.4.2.2.1 Prblm
1.2.4.2.2.2 Cses
1.2.4.2.2.3 Chng rqd in othr prsn
1.3 Slf-img
1.3.1 Is how we prcv ourselves
1.3.2 How othrs prcv us
1.3.3 We try avdng dmg
1.3.4 Seek aprvl frm othrs
1.3.5 Blds chrctr
Key:
Hmn: Human/s
Ntr: Nature

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Expctns: Expectations
cnfrntns: confrontations
unplsnt: unpleasant
dmg: damage
rlstnsps: relationships
chrctr: character
bsd: based
cse: cause
shwdns: showdowns
dscssns: discussions
dtrmntl: detrimental
slf-img: self-image
rtnl:rational
dlg: dialogue
anls: analyse
prblm:problem
chng:change
rqd: required
othr:other
prsn:person
prcv: perceive
othr: other/s
avdng: avoiding
aprvl: approval
blds: builds
Summary
We feel hurt when our expectations from others are not met. We avoid confrontations, as they
are displeasing and can affect relations. More often, it is the style of confrontation that causes

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problems rather than the underlying issue. We generally indulge in character -based
confrontations, letting out our anger at people causing conflicts in relationships, stopping
constructive discussions and end up harming our image. Our image is important as it builds our
character. Therefore, we must indulge in issue-based confrontations where we analyse our
disagreements and identify the actions/attitudes in others that bother us and how these can be
changed to resolve the issue.
Chapter-7 Précis Writing
1) Respect Humanity: It serves you! (Title)
Our life is a part of the humanity, dependent on other human beings for various basic needs
like food, clothing and shelter etc. Language that makes humans different on animals is
also a gift from other humans which leads us to being wise and knowledgeable. A lonely
man would be like a beast with no social activities and feelings. Let us respect humanity
and other existence of fellow beings.
2) Digital Marketing: The new trend (Title)
We hear a lot about online wallets, e-mails, blogs, and podcasts: these are few platforms
that constitute Digital Marketing. This new technology enables immediate response from
the consumers and is seen to yield better consumer satisfaction results, as opposed to the
traditional means of marketing that included TV, radio. Etc. Moreover, digital marketing
has brought the world closer just at the click of a mouse/button.
Chapter-8 Article Writing
Hints:
a.
• Advertisements have become a big business.
• They are promoted by celebrities drawn from various fields like films, sports, etc.,
leaving their influence on all people specially the young.
• The advertisement industry has a tremendous impact on the younger generation.
• Advertisements have become a part of the daily lives of youngsters.
• Young people often do not even realise that they are hearing or viewing them.
• They have a persuasive influence on the youth.
• In the ever-expanding world of consumerism and advertising, companies are
constantly looking for new ways to sell their products to the youngsters.
• By making their commercials and campaigns more memorable, to leave an impact on
their minds.

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• The younger generation has become their prime target.

• They have been spending more efforts than ever before and increased avenues at
their disposal.
• Therefore, companies spend enormous amounts of money to rope in popular film
stars, cricketers, and musicians etc. to endorse their products.
b.
• India is standing at the threshold of joining the developed nations but that is not
possible till we achieve complete literacy in the country.
• Illiteracy is still a major blot on India, after more than sixty years of its achieving
independence.
• To an extent it exemplifies India’s failure to reach out to its masses.
• Students can play an important role in achieving this goal of removing illiteracy.
• Students should be encouraged to carry the lamp of knowledge by organising events
such as, ‘Each One, Teach One’.
• The government should also render full support to students in terms of infrastructure
in their contribution to the Indian Literacy Campaign.
• Students can also play a vital role in the programme of Adult Literacy.
• If all our students get together and try to work towards achieving literacy among the
masses.
Chapter-9 Report Writing
1) Formal Report
To: The Principal,
XYZ School, New Delhi
From: In-charge, co-curricular activities
Date: Sept 14, 20XX
Subject: Online classes for co-curricular activities (Specific grade if any)
Contents:
• Need for online classes for co-curricular activities
• Subjects that can be included
• Time duration
• Teacher assigned

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• Benefits to the students

• How to have audience engagement
Note: Write a brief summary of the complete report. Not more than 5-6 lines. It gives an
overall view of the report highlighting the main points proposed.
2) Report
Hints:
Webinar held on ‘Communication Skills’
• Welcome address by Head HR describing:
o Need for the webinar
o Agenda of the webinar
• Presentation by CA. X on Role of Communication (may include a comment)
• Presentation by CA. Y on Impact on CAs due to changing work environment (Work
From Home)
• Presentation by Participant-2 on Current scenario and digitalisation
• Presentation by Participant-3 on Diversity in work force affecting Communication
(Barriers)
• Vote of Thanks by Senior Manager HR inviting feedback and suggestions from all
participants
Chapter-10 Writing Formal Letters and Official Communication
Ans-1. Letter
Old World Tower
16 Ring Road
Delhi – 01
October 30, 20xx
The Manager
ABC Stationary King
35 Patel Street
Delhi − 18
Dear Sir/Madam,

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Sub: Complaint against Order No. S/24-201S-1150.

This is with reference to the Order No. S/24-201S-1147 place on xx/xx/20xx comprising two
items viz. letterheads and business cards sizes mentioned in the order details.
We were assured of receiving the order latest by xx/xx/20xx. Firstly, the order was r eceived
much past the promised delivery date. Also, the quality of the paper and design selected for
business cards does not match with the selected sample.
Kindly ensure that the order is replaced latest by xx/xx/20xx, failing which payment will be
stopped and the order will be cancelled. I sincerely request you to look into the matter and do
the needful as soon as possible.
Thanking you!
Yours truly
XYZ
General Manager
Ans-2.Circular
Circular No. XV 13th Nov, 2018
Office Circular
Due to urgent work requirements in the Finance department, the following employees are
temporarily shifted to the department for a period of 2 months (60 days) w.e.f. Nov. 14, 2018.
Name Designation Department Current Responsibility
(Finance Department)
Mr. WER Upper Division Clerk Accounts Clerk
Mr. XYZ Junior Accountant Accounts Accounts Assistant
Ms. PRT Senior Accountant Accounts Accounts Officer
Ms. SDF Project Manager Information Technology Technical Support Manager
Mr. LMN Network Engineer Information Technology Engineer
Mr. RST Office Assistant Sales and Marketing Office Assistant
The above employees are directed to report to Mr. X (Head Finance) at 10 AM tomorrow, Nov
14, 2018.
Office timings will be from 10 AM till 7PM
Saturday will be a working day; Sunday is a holiday.
JKL
Manager, HR

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Chapter-11 Writing Formal Mails

Ans-1.
To: Editorinchief@eyzmail.com
Cc/bcc:
Subject: Web Content Editor Position
Dear Sir/Madam,
With reference to your job ad in xxx, I would like to submit my application for the position of Web
Content Editor in your company.
I graduated in Communication Sciences from the University of xxx in xxxx. I have more than 5
years of experience as a Content Specialist with a leading agency. I will be glad to introduce
myself in an interview that will allow you to better evaluate my possible recruitment.
Kindly find enclosed a copy of my résumé. I look forward to hearing from you.
Yours faithfully,
ABC
Ans-2
To: dc@ghf.com
Cc/bcc:
Subject: New product Catalogue
Dear Ms. DC,
Greetings! In response to your request, we have recently sent you our latest catalogue 2020-
21. We have added various products/services that will surely evince your interest. Our local
agent will contact you soon to arrange a formal presentation/meeting to discuss how our
products/services can benefit your company.
For further information, contact the undersigned.
Yours sincerely,
ABC
abc@efg.com

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Chapter-12 Résumé Writing

(a) Cover Letter
To Date: Sep 10, 20XX
Manager (HR) ABC TV
FGH Media Pvt Ltd Mandi House
New Delhi.
Dear Sir/Madam,
Subject: Application for the post of Journalist
Greetings for the day!
I am writing this letter to express my interest in the position of Journalist as advertised in
the SDF national daily, Careers section dated, Sep 1, 2020.
I fulfill all the educational and professional requirements as specified in the advert. I am a
post graduate in Media Studies from ASD University and interned at renowned media
houses (print and TV). I have two years of relevant experience. Currently, I am heading
the regional news section at XYZ TV at their Meerut office.
My detailed résumé is appended herewith for your perusal. Looking forward for a positive
response.
Best Regards,
Mohit Agarwal
36, Civil Lines, Meerut, U.P.
Résumé
OBJECTIVE:
Mohit Agarwal
36, Civil Lines Meerut, U.P.
Phone: 98XXXXXXXX
Email: abc@xyz.com
To be associated with an organisation that offers tremendous opportunities for growth and
autonomy, providing a challenging environment to harness my creative streak, innovative
ideas and utilise my experience as a media correspondent to the maximum.

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34 FOUNDATION EXAMINATION: NOVEMBER, 2020

SUMMARY
• One year of experience as a staff correspondent in CVB TV.
• Two years of experience as Head Regional News XYZ TV
• Proven skills in content planning, selection and presentation.
• Excellent Reporting skills in English and Hindi.
EXPERIENCE
2016 – PRESENT Head Regional News XYZ TV Meerut
• Planning and deployment of staff correspondents
• Sponsorship Planning from corporate and medias houses
• Staff selection and Training
• Media Planning for regional corporate houses
2015– 2016 Staff Correspondent CVB TV
• Capturing Events
• Conceptualising stories
• Presenter for “Khufia” section of Daily News
EDUCATION
2014, Masters in Mass Comm, ASD University, New Delhi
2012, English (Hons), ASD University, New Delhi
INTERNSHIPS
2014 , 2 months at World Journalists Association (Articles Section)
2013, 4 months at CNN TV in News production and planning
SKILLS
• Well versed with Media Software
• Meticulous Planning and Execution skills with an eye for detail

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PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 35

PERSONAL DETAILS
Date of Birth 15 June, 1992
Marital Status Unmarried
Languages Known English, Hindi
DECLARATION
I solemnly declare that all the above information is correct to the best of my knowledge and
belief.
Ans-2
Résumé
Name
Address
New Delhi-110044
Email ID: youreail@gmail.com
Mobile No.- +91-XXXXX XXXXX
Objective
• I seek to join a firm where I can learn various aspects of profession and use my skills and
knowledge of MS Excel, MIS, Tally, and Taxation with GST.
• I wish to contribute towards organisational goal through my technical skills, hard work and
creativity.
Academics
Qualification University/Board Year of Passing Score/Marks
B.Com DU Pursuing
CA Intermediate ICAI 2018-19 67%
CA Foundation ICAI 2017 75%
XII CBSE 2016-17 90%
X CBSE 2014-15 93%
Skills
MS-Office, Tally, Advance Excel, Payroll, MIS
Good analytical and decision making skills

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36 FOUNDATION EXAMINATION: NOVEMBER, 2020

Achievements
• As captain of the school cricket team won 3 consecutive zonal inter- school championship
matches
• Stood first in school in Maths Olympiad
• Stood second at the state level ‘Sudoku’ championship
Personal Details
Father’s Name:
Date of Birth:
Nationality:
Declaration
I solemnly declare that all the above information is correct to the best of my knowledge and
belief.
Signature
Chapter-13 Meetings
1) Minutes of Meeting
Participants in attendance: CEO, Head of Sales and Marketing, the Product Head,
Business lead, Pharmacy experts
Date: 7th August, 2020
Meeting started at 11: 00 am.
Mr. SS, Head of Sales and Marketing informed the agenda of the meeting i.e., incapability
in meeting business demands
Mr. RV, Product Head expressed concern over the matter; discussed ways of increasing
production.
Mr. AP, Business lead gave a detailed analysis of the figures observed in the last six
months and also suggested few changes in business strategies
Pharmacy lead and team: Proposed ways of aligning with the increased production.
Patent laws also discussed.
Mr. AB, CEO Gave a vote of thanks and appreciated the views and suggestions of
members present.
All the participants agreed to the concern and come back with a detailed report.

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PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 37

ATR to be submitted by 20 th Aug, 2020 to the Head of Sales and Marketing and CEO.
2) Minutes in tabular form
Time Topic Attendees Speaker Duration
8:15am Introduction and Name of the Director, 15 minutes
Welcome note participants Sales
8:30 am Discussion on Name of the Retail head 30 mins.
flexible business participants
plans
9:00 am New trends Name of the Supply chain 30 mins
discussed participants Head
9:30 am Tea/Breakfast Tea/Breakfast 30 mins

10:00 am Suggestions made Name of the Procurement 20 mins

for better participants Head
procurement means
10: 20 am Open House All participants All members 20 mins
10:40 am Vote of Thanks All participants Director 10 mins.

Answer 2
Acknowledgements: The Communication Division is extremely thankful to all people who
extended their help and provided valuable inputs in preparing this report. A special thanks to
our Mr. A, Ms. B and Ms. C for their knowledge sharing
Contents: List the topics in bullet form in serial order.
• Inaugural address by Head HR describing
• Need for the webinar
• Agenda of the webinar
• Role of communication
• Impact on CA’s
• Current scenario and digitalisation
Summary: Write a brief summary of the complete report. Not more than 5-6 lines. It gives an
overall view of the report. Include graphs/illustrations if needed.

© The Institute of Chartered Accountants of India

PAPER – 2: BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING
PAPER 2A: BUSINESS LAWS
Part I
For May 2021 examinations for Paper 2A: Business Laws, the significant amendments made in
the respective subject upto 31st October, 2020 are relevant and applicable.
Students are advised to refer study material of October, 2020 edition which contains all the
amendments upto 31 st October, 2020.
Part II: Questions and Answers
Questions
The Indian Contract Act, 1872
1. Explain the type of contracts in the following agreements under the Indian Contract Act,
1872:
(i) X promise to sell his scooter to Y for ` 1 Lac. However, the consent of X has been
procured by Y at a gun point.
(ii) A bought goods from B in 2015. But no payment was made till 2019.
(iii) G agrees to give tuitions to H, a pre-engineering student, from the next month and H
in consideration promises to pay G ` 5,000 per month.
2. “To form a valid contract, consideration must be adequate”. Comment.
3. Mr. SHYAM owned a motor car. He approached Mr. HARISH and offered to sell his motor
car for ` 3,00,000. Mr. SHYAM told Mr. HARISH that the motor car is running at the rate
of 20 KMs per litre of petrol. Both the fuel meter and the speed meter of the car were
working perfectly. Mr. HARISH agreed with the proposal of Mr. SHYAM and took delivery
of the car by paying ` 3,00,000/- to Mr. SHYAM. After 10 days, Mr. HARISH came back
with the car and stated that the claim made by Mr. SHYAM 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. HARISH can rescind the
contract on the above ground.
4. Mr. S, aged 58 years was employed in a Government department. He was going to retire
after two years. Mr. D made a proposal to Mr. S, to apply for voluntary retirement from his
post so that Mr. D can be appointed in his place. Mr. D offered a sum of ` 10 Lakhs as
consideration to Mr. S in order to induce him to retire.
Mr. S refused at first instance but when he evaluated the amount offered as consideration
is just double of his cumulative remuneration to be received during the tenure of two years

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2 FOUNDATION EXAMINATION: MAY, 2021

of employment, he agreed to receive the consideration and accepted the above agreement
to receive money to retire from his office.
Whether the above agreement is valid? Explain with reference to provision of the Indian
Contract Act, 1872?
5. What will be rights with the promisor in following cases? Explain with reasons:
(a) Mr. X promised to bring back Mr. Y to life again.
(b) A agreed to sell 50 kgs of apple to B. The loaded truck left for delivery on 15 th March
but due to riots in between reached B on 19th March.
(c) An artist promised to paint on the fixed date for a fixed amount of remuneration but
met with an accident and lost his both hands.
(d) Abhishek entered into contract of import of toys from China. But due to disturbance
in the relation of both the countries, the imports from China were banned.
6. “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.
7. In light of provisions of the Indian Contract Act, 1872 answer the following:
(i) Mr. S and Mr. R made contract wherein Mr. S agreed to deliver paper cup
manufacture machine to Mr. R and to receive payment on delivery. On the delivery
date, Mr. R didn’t pay the agreed price. Decide whether Mr. S is bound to fulfil his
promise at the time of delivery?
(ii) Mr. Y has given loan to Mr. G of ` 30,00,000. Mr. G defaulted the loan on due date
and debt became time barred. After the time barred debt, Mr. G agreed to settle the
full amount to Mr. Y. Whether acceptance of time barred debt contract is enforceable
in law?
(iii) A & B entered into a contract to supply unique item, alternate of which is not available
in the market. A refused to supply the agreed unique item to B. What directions could
be given by the court for breach of such contract?
The Sale of Goods Act, 1930
8. Mrs. G bought a tweed coat from P. When she used the coat, she got rashes on her skin
as her skin was abnormally sensitive. But she did not make this fact known to the seller
i.e. P. Mrs. G filled a case against the seller to recover damages. Can she recover damages
under the Sale of Goods Act, 1930?

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9. What are the differences between a ‘Condition’ and ‘Warranty’ in a contract of sale? Also
explain, when shall a ‘breach of condition’ be treated as ‘breach of warranty’ under the
provisions of the Sale of Goods Act, 1930?
10. Ms. R owns a two Wheeler which she handed over to her friend Ms. K on sale or return
basis. Even after a week, Ms. K neither returned the vehicle nor made payment for it. She
instead pledged the vehicle to Mr. A to obtain a loan. Ms. R now wants to claim the two
Wheeler from Mr. A. Will she succeed?
(i) Examine with reference to the provisions of the Sale of Goods Act, 1930, what
recourse is available to Ms. R?
(ii) Would your answer be different if it had been expressly provided that the vehicle
would remain the property of Ms. R until the price has been paid?
11. Mr. T was a retailer trader of fans of various kinds. Mr. M came to his shop and asked for
an exhaust fan for kitchen. Mr. T showed him different brands and Mr. M approved of a
particular brand and paid for it. Fan was delivered at Mr. M’s house; at the time of opening
the packet he found that it was a table fan. He informed Mr. T about the delivery of the
wrong fan. Mr. T refused to exchange the same, saying that the contract was complete
after the delivery of the fan and payment of price.
(i) Discuss whether Mr. T is right in refusing to exchange as per provisions of th e Sale
of Goods Act, 1930?
(ii) What is the remedy available to Mr. M?
12. State briefly the essential element of a contract of sale under the Sale of Goods Act, 1930.
The Indian Partnership Act, 1932
13. Explain in detail the circumstances which lead to liability of firm for misapplication by
partners as per provisions of the Indian Partnership Act, 1932.
14. M, N and P were partners in a firm. The firm ordered JR Limited to supply the furniture. P
dies, and M and N continues the business in the firm’s name. the firm did not give any
notice about P’s death to the public or the persons dealing with the firm. The furniture was
delivered to the firm after P’s death, fact about his death was known to them at the time of
delivery. Afterwards the firm became insolvent and failed to pay the price of furniture to JR
Limited.
Explain with reasons:
(i) Whether P’s private estate is liable for the price of furniture purchased by the firm?

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4 FOUNDATION EXAMINATION: MAY, 2021

(ii) Whether does it make any difference if JR Limited supplied the furniture to the firm
believing that all the three partners are alive?
15. Mr. A (transferor) transfer his share in a partnership firm to Mr. B (transferee). Mr. B is not
entitled for few rights and privileges as Mr. A (transferor) is entitled therefor. Discuss in
brief the points for which Mr. B is not entitled during continuance of partnership?
16. “Indian Partnership Act does not make the registration of firms compulsory nor does it
impose any penalty for non-registration.” In light of the given statement, discuss the
consequences of non-registration of the partnership firms in India?
The Limited Liability Partnership Act, 2008
17. What do you mean by Designated Partner? Whether it is mandatory to appoint Designated
partner in a LLP?
The Companies Act, 2013
18. ABC Limited has allotted equity shares with voting rights to XYZ Limited worth ` 15 Crores
and issued Non-Convertible Debentures worth ` 40 Crores during the Financial Year
2019-20. After that total Paid-up Equity Share Capital of the company is ` 100 Crores and
Non-Convertible Debentures stands at ` 120 Crores.
Define the Meaning of Associate Company and comment on whether ABC Limited and
XYZ Limited would be called Associate Company as per the provisions of the Companies
Act, 2013?
19. SK Infrastructure Limited has a paid up share capital divided into 6,00,000 equity shares
of ` 100 each. 2,00,000 equity shares of the company are held by Central Government
and 1,20,000 equity shares are held by Government of Maharashtra. Explain with
reference to relevant provisions of the Companies Act, 2013, whether SK Infrastructure
Limited can be treated as Government Company.
20. 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?

SUGGESTED ANSWERS/HINTS

1. (i) In the instant case, X is an aggrieved party and the contract is voidable at his option
but not at the option of Y. It means if X accepts the contract, the contract becomes a
valid contract then Y has no option of rescinding the contract.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 5

(ii) B cannot sue A for the payment in 2019 as it has crossed three years and barred by
Limitation Act. A good debt becomes unenforceable after the period of three years as
barred by Limitation Act.
(iii) Where, G agrees to give tuitions to H, a pre-engineering student, from the next month
and H in consideration promises to pay G ` 5,000 per month, the contract is executory
because it is yet to be carried out.
2. The law provides that a contract should be supported by consideration. So long as
consideration exists, the Courts are not concerned to its adequacy, provided it is of some
value. The adequacy of the consideration is for the parties to consider at the time of
making the agreement, not for the Court when it is sought to be enforced (Bolton v.
Modden). Consideration must however, be something to which the law attaches value
though it need not be equivalent in value to the promise made.
According to Explanation 2 to Section 25 of the Indian Contract Act, 1872, an agreement
to which the consent of the promisor is freely given is not void merely because the
consideration is inadequate but the inadequacy of the consideration may be taken into
account by the Court in determining the question whether the consent of the promisor was
freely given.
3. As per the provisions of Section 19 of the Indian Contract Act, 1872, when consent to an
agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract
voidable at the option of the party whose consent was so caused.
A party to contract, whose consent was caused by fraud or misrepresentation, may, if he
thinks fit, insist that the contract shall be performed, and that he shall be put in the position
in which he would have been if the representations made had been true.
Exception: If such consent was caused by misrepresentation or by silence, fraudulent
within the meaning of section 17, the contract, nevertheless, is not voidable if the party
whose consent was so caused had the means of discovering the truth with ordinary
diligence.
In the situation given in the question, both the fuel meter and the speed meter of the car
were working perfectly, Mr. HARISH had the means of discovering the truth with ordinary
diligence. Therefore, the contract is not voidable. Hence, Mr. HARISH cannot rescind the
contract on the above ground.
4. Section 10 of the Indian Contract Act, 1872 provides for the legality of consideration and
objects thereto. Section 23 of the said Act also states that every agreement of which the
object or consideration is unlawful is void.

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6 FOUNDATION EXAMINATION: MAY, 2021

The given problem talks about entering into an agreement for sale of public office, which
is opposed to public policy. Public policy requires that there should be no money
consideration for the appointment to an office in which the public is interested. Such
consideration paid, being opposed to public policy, is unlawful.
In the given case, Mr. S, who was going to be retired after two years was proposed by Mr.
D, to apply for voluntary retirement from his post, in order that he can be appointed in his
place. In lieu of that, Mr. D offered Mr. S a sum of ` 10 lakh as consideration. Mr. S refused
initially but later accepted the said agreement to receive money to retire from his office.
Here, Mr. S’s promise to sale for Mr. D, an employment in the public services i s the
consideration for Mr. D’s promise to pay `10 lakh. Therefore, in terms of the above
provisions of the Indian Contract Act, the said agreement is not valid. It is void, as the
consideration being opposed to public policy, is unlawful.
5. (a) The contract is void because of its initial impossibility of performance.
(b) Time is essence of this contract. As by the time apples reached B, they were already
rotten. The contract is discharged due to destruction of subject matter of contract.
(c) Such contract is of personal nature and hence cannot be performed due to occurrence
of an event resulting in impossibility of performance of contract.
(d) Such contract is discharged without performance because of subsequent illegality
nature of the contract.
6. Liquidated damage is a genuine pre-estimate of compensation of damages for certain
anticipated breach of contract. This estimate is agreed to between parties to avoid at a
later date detailed calculation and the necessity to convince outside parties.
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.
In terms of Section 74 of the Act “where a contract has been broken, if a sum is named in
the contract as the amount to be paid in case of such breach, or if the contract contains
any other stipulation by way of penalty, the party complaining of the breach is entitled,
whether or not actual damages or loss is proved to have been caused thereby, to receive
from the other party who has broken the contract, a reasonable compensation not
exceeding the amount so named, or as the case may be the penalty stipulated for.
Explanation to Section 74
A stipulation for increased interest from the date of default may be a stipulation by way of
penalty.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 7

In terms of Section 74, courts are empowered to reduce the sum payable on breach
whether it is ‘penalty’ or “liquidated damages” provided the sum appears to be
unreasonably high.
Sri ChunniLal vs. Mehta & Sons Ltd (Supreme Court)
Supreme Court laid down the ratio that the aggrieved party should not be allowed to claim
a sum greater than what is specific in the written agreement. But even then, the court has
powers to reduce the amount if it considers it reasonable to reduc e.
7. (i) As per Section 51 of the Indian Contract Act, 1872, when a contract consists of
reciprocal promises to be simultaneously performed, no promisor needs to perform
his promise unless the promisee is ready and willing to perform his reciprocal
promise. Such promises constitute concurrent conditions and the performance of one
of the promise is conditional on the performance of the other. If one of the promises
is not performed, the other too need not be performed.
Referring to the above provisions, in the given case, Mr. S is not bound to deliver
goods to Mr. R since payment was not made by him at the time of delivery of goods.
(ii) Promise to pay time-barred debts - Section 25 (3): Where there is an agreement,
made in writing and signed by the debtor or by his agent, to pay wholly or in part a
time barred debt, the agreement is valid and binding even though there is no
consideration.
In the given case, the loan given by Mr. Y to Mr. G has become time barred.
Thereafter, G agreed to make payment of full amount to Mr. Y.
Referring to above provisions of the Indian Contract Act, 1872 contract entered
between parties post time barred debt is valid so, Mr. G is bound to pay the agreed
amount to Mr. Y provided the above mentioned conditions of section 25 (3) are
fulfilled.
(iii) Where there is a breach of contract for supply of a unique item, mere monetary
damages may not be an adequate remedy for the other party. In such a case the court
may give order for specific performance and direct the party in breach to carry out his
promise according to the terms of contract. Here, in this case, the court may direct A
to supply the item to B because the refusal to supply the agreed unique item cannot
be compensated through money.
8. According to Section 16(1) of Sales of Goods Act, 1930, normally in a contract of sale there
is no implied condition or warranty as to quality or fitness for any particular purpose of
goods supplied. The general rule is that of “Caveat Emptor” that is “let the buyer beware”.
But where the buyer expressly or impliedly makes known to the seller the particular

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8 FOUNDATION EXAMINATION: MAY, 2021

purpose for which the goods are required and also relies on the seller’s skill and judgement
and that this is the business of the seller to sell such goods in the ordinary course of his
business, the buyer can make the seller responsible.
In the given case, Mrs. G purchased the tweed coat without informing the seller i.e. P about
the sensitive nature of her skin. Therefore, she cannot make the seller responsible on the
ground that the tweed coat was not suitable for her skin. Mrs. G cannot treat it as a breach
of implied condition as to fitness and quality and has no right to recover damages from the
seller.
9. Difference between conditions and warranties:
The following are important differences between conditions and warranties.
Point of differences Condition Warranty
Meaning A condition is essential to It is only collateral to the
the main purpose of the main purpose of the
contract. contract.
Right in case of The aggrieved party can The aggrieved party can
breach repudiate the contract or claim only damages in case
claim damages or both in the of breach of warranty.
case of breach of condition.
Conversion of A breach of condition may A breach of warranty
stipulations be treated as a breach of cannot be treated as a
warranty. breach of condition.

Breach of condition be treated as a breach of warranty

Section 13 of the Sales of Goods Act, 1930, specifies cases where a breach of condition
be treated as a breach of warranty. As a result of which the buyer loses his right to rescind
the contract and can claim for damages only.
In the following cases, a contract is not avoided even on account of a breach of a condition:
(i) Where the buyer altogether waives the performance of the condition. A party may for
his own benefit, waive a stipulation.
(ii) Where the buyer elects to treat the breach of the conditions, as one of a warranty.
That is to say, he may claim only damages instead of repudiating the contract.
(iii) Where the contract is non-severable and the buyer has accepted either the whole
goods or any part thereof.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 9

(iv) Where the fulfilment of any condition or warranty is excused by law by reason of
impossibility or otherwise.
10. As per the provisions of Section 24 of the Sale of Goods Act, 1930, 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-
(a) when the buyer signifies his approval or acceptance to the seller or does any other
act adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods
without giving notice of rejection, then, if a time has been fixed for the return of th e
goods, on the expiration of such time, and, if no time has been fixed, on the expiration
of a reasonable time; or
(c) he does something to the good which is equivalent to accepting the goods e.g. he
pledges or sells the goods.
Referring to the above provisions, we can analyse the situation given in the question:
(i) In the instant case, Ms. K, who had taken delivery of the two wheeler on Sale or
Return basis pledged the two wheeler to Mr. A, has attracted the third condition that
she has done something to the good which is equivalent to accepting the goods e.g.
she pledges or sells the goods. Therefore, the property therein (two wheeler) passes
to Mr. A. Now in this situation, Ms. R cannot claim back her two wheeler from Mr. A,
but she can claim the price of the two wheeler from Ms. K only.
(ii) It may be noted that where the goods have been delivered by a person on “sale or
return” on the terms that the goods were to remain the property of the seller till they
are paid for, the property therein does not pass to the buyer until the terms are
complied with, i.e., price is paid for.
Hence, in this case, it is held that at the time of pledge, the ownership was not
transferred to Ms. K. Thus, the pledge was not valid and Ms. R could recover the two
wheeler from Mr. A.
11. According to Section 15 of the Sale of Goods Act, 1930, where the goods are sold by
sample as well as by description, the implied condition is that the goods supplied shall
correspond to both with the sample and the description. In case, the goods do not
correspond with the sample or with description or vice versa or both, the buyer can
repudiate the contract.
Further, as per Section 16(1) of the Sales of Goods Act, 1930, when the buyer makes
known to the seller the particular purpose for which the goods are required and he relies

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10 FOUNDATION EXAMINATION: MAY, 2021

on the judgment or skill of the seller, it is the duty of the seller to supply such goods as are
reasonably fit for that purpose.
(i) In the given case, Mr. M had revealed Mr. T that he wanted the exhaust fan for th e
kitchen. Since the table fan delivered by Mr. T was unfit for the purpose for which Mr.
M wanted the fan, therefore, T cannot refuse to exchange the fan.
(ii) When one party does not fulfill his obligation according to the agreed terms, the other
party may treat the contract as repudiated or can insist for performance as per the
original contract. Accordingly, the remedy available to Mr. M is that he can either
rescind the contract or claim refund of the price paid by him or he may require Mr. T
to replace it with the fan he wanted.
12. Essentials of Contract of Sale
The following elements must co-exist so as to constitute a contract of sale of goods under
the Sale of Goods Act, 1930.
(i) There must be at least two parties.
(ii) The subject matter of the contract must necessarily be goods.
(iii) A price in money (not in kind) should be paid or promised.
(iv) A transfer of property in goods from seller to the buyer must take place.
(v) A contract of sale must be absolute or conditional [section 4(2)].
(vi) All other essential elements of a valid contract must be present in the contract of sale.
13. Liability of Firm for Misapplication by Partners (Section 27 of Indian Partnership Act,
1932): Where-
(a) a partner acting within his apparent authority receives money or property from a third
party and misapplies it, or
(b) a firm in the course of its business receives money or property from a third party, and
the money or property is misapplied by any of the partners while it is in the custody
of the firm, the firm is liable to make good the loss.
Analysis of section 27:
It may be observed that the workings of the two clauses of Section 27 are designed to
bring out clearly an important point of distinction between the two categories of cases of
misapplication of money by partners.
Clause (a) covers the case where a partner acts within his authority and due to his authority
as a partner, he receives money or property belonging to a third party and misapplies that

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 11

money or property. For this provision to be attracted, it is not necessary that the money
should have actually come into the custody of the firm.
On the other hand, the provision of clause (b) would be attracted when such money or
property has come into the custody of the firm and it is misapplied by any of the partners.
The firm would be liable in both the cases.
14. According to section 35 of the Indian Partnership Act, 1932, where under a contract
between the partners the firm is not dissolved by the death of a partner, the estate of a
deceased partner is not liable for any act of the firm done after his death.
Further, in order that the estate of the deceased partner may be absolved from liability for
the future obligations of the firm, it is not necessary to give any notice either to the public
or the persons having dealings with the firm.
In the given question, JR Limited has supplied furniture to the partnership firm, after P’s
death. The firm did not give notice about P’s death to public or people dealing with the firm.
Afterwards, the firm became insolvent and could not pay JR Limited.
In the light of the facts of the case and provisions of law:
(i) Since the delivery of furniture was made after P’s death, his estate would not be liable
for the debt of the firm. A suit for goods sold and delivered would not lie against the
representatives of the deceased partner. This is because there was no debt due in
respect of the goods in P’s lifetime.
(ii) It will not make any difference even if JR Limited supplied furniture to the firm
believing that all the three partners are alive, as it is not necessary to give any notice
either to the public or the persons having dealings with the firm, so the estate of the
deceased partner may be absolved from liability for the future obligations of the firm.
15. As per Section 29 of Indian Partnership Act, 1932, a transfer by a partner of his interest in
the firm, either absolute or by mortgage, or by the creation by him of a charge on such
interest, does not entitle the transferee, during the continuance of th e firm, to interfere in
the conduct of business, or to require accounts, or to inspect the books of the firm, but
entitles the transferee only to receive the share of profits of the transferring partner, and
the transferee shall accept the account of profits agreed to by the partners.
In the given case during the continuance of partnership, such transferee Mr. B is not
entitled:
• to interfere with the conduct of the business.
• to require accounts.

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12 FOUNDATION EXAMINATION: MAY, 2021

• to inspect books of the firm.

However, Mr. B is only entitled to receive the share of the profits of the transferring
partner and he is bound to accept the profits as agreed to by the partners, i.e. he
cannot challenge the accounts.
16. It is true to say that Indian Partnership Act, 1932 does not make the registra tion of firms
compulsory nor does it impose any penalty for non-registration.
Following are consequences of Non-registration of Partnership Firms in India:
The Indian Partnership Act, 1932 does not make the registration of firms compulsory nor
does it impose any penalty for non-registration. However, under Section 69, non-
registration of partnership gives rise to a number of disabilities which we shall presently
discuss. Although registration of firms is not compulsory, yet the consequences or
disabilities of non-registration have a persuasive pressure for their registration. These
disabilities briefly are as follows:
(i) No suit in a civil court by firm or other co-partners against third party: The firm
or any other person on its behalf cannot bring an action against the third party for
breach of contract entered into by the firm, unless the firm is registered and the
persons suing are or have been shown in the register of firms as partners in the firm.
In other words, a registered firm can only file a suit against a third party and the
persons suing have been in the register of firms as partners in the firm.
(ii) No relief to partners for set-off of claim: If an action is brought against the firm by
a third party, then neither the firm nor the partner can claim any set-off, if the suit be
valued for more than ` 100 or pursue other proceedings to enforce the rights arising
from any contract.
(iii) Aggrieved partner cannot bring legal action against other partner or the firm: A
partner of an unregistered firm (or any other person on his behalf) is precluded from
bringing legal action against the firm or any person alleged to be or to have been a
partner in the firm. But, such a person may sue for dissolution of the firm or for
accounts and realization of his share in the firm’s property where the firm is dissolved.
(iv) Third party can sue the firm: In case of an unregistered firm, an action can be
brought against the firm by a third party.
17. Designated Partner [Section 2(j) of the LLP Act, 2008]: “Designated partner” means
any partner designated as such pursuant to section 7.
According to section 7 of the LLP Act, 2008:

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(i) Every LLP shall have at least two designated partners who are individuals and at
least one of them shall be a resident in India.
(ii) If in LLP, all the partners are bodies corporate or in which one or more partners are
individuals and bodies corporate, at least two individuals who are partners of such
LLP or nominees of such bodies corporate shall act as designated partners.
(iii) Resident in India: For the purposes of this section, the term “resident in India” means
a person who has stayed in India for a period of not less than 182 days during the
immediately preceding one year.
18. As per Section 2(6) of the Companies Act, 2013, an Associate Company in relation to
another company, means a company in which that other company has a significant
influence, but which is not a subsidiary company of the company having such influence
and includes a joint venture company.
The term “significant influence” means control of at least 20% of total share capital, or
control of business decisions under an agreement.
The term “Total Share Capital”, means the aggregate of the -
(a) Paid-up equity share capital; and
(b) Convertible preference share capital.
In the given case, as ABC Ltd. has allotted equity shares with voting rights to XYZ Limited
of ` 15 cr, which is less than requisite control of 20% of total share capital (i.e 100 cr) to
have a significant influence of XYZ Ltd. Since the said requirement is not complied,
therefore ABC Ltd. and XYZ Ltd. are not associate companies as per the Companies Act,
2013. Holding/allotment of non-convertible debentures has no relevance for ascertaining
significant influence.
19. Government Company [Section 2(45) of the Companies Act, 2013]: Government
Company means any company in which not less than 51% of the paid-up share capital is
held by-
(i) the Central Government, or
(ii) by any State Government or Governments, or
(iii) partly by the Central Government and partly by one or more State Governments,
and the section includes a company which is a subsidiary company of such a Government
company.
In the instant case, paid up share capital of SK Infrastructure Limited is 6,00,000 equity
shares of ` 100 each. 200,000 equity shares are held by Central government and 1,20,000

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14 FOUNDATION EXAMINATION: MAY, 2021

equity shares are held by Government of Maharashtra. The holding of equity shares by
both government is 3,20,000 which is more than 51% of total paid up equity shares.
Hence, SK Infrastructure Limited is a Government company.
20. As per the provisions of Sub-Rule (7) of Rule 3 of the Companies (Incorporation) Rules,
2014, an OPC cannot convert voluntarily into any kind of company unless two years have
expired from the date of its incorporation, except threshold limit (paid up share capital) is
increased beyond fifty lakh rupees or its average annual turnover during the relevant period
exceeds two crore rupees.
In the instant case, Mr. Anil formed an OPC on 16th April, 2018 and its turnover for the
financial year ended 31st March, 2019 was ` 2.25 Crores. Even though two years have
not expired from the date of its incorporation, since its average annual turnover durin g the
period starting from 16th April, 2018 to 31st March, 2019 has exceeded ` 2 Crores,
Mr. Anil can convert the OPC into a private limited company along with Sunil.

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PART - 2B: BUSINESS CORRESPONDENCE AND REPORTING
Part II: Questions and Answers
Questions
Part-A
Chapter-1 Communication
1 How is wheel and spoke network different from star network in communication?
2 Listening is important for effective Communication. Comment.
3 Briefly explain different types of non-verbal communication.
Part-B
Chapter-2 Sentence Types, Active/Passive Voice; Direct/Indirect Speech
1. Change the following sentences into passive voice.
1. Do you buy books from the market?
2. The goldsmith makes the ring.
3. The father does not close the shop.
4. Who teaches you English?
5. Does he finish the work in a month?
2. Change the following sentences into active voice.
1. Why is a letter read by Mohan?
2. The old man is not helped by the soldier.
3. By whom is he praised?
4. A letter is read by John.
5. The crystal vase has been broken by somebody.
3. Change the following sentences into indirect speech.
1. Clinton said, “I am very busy now."
2. “I know her address", said John.
3. Ravi said, “What is Heena doing?”
4. Vidisha said, “Ananya took pasta.”
5. She said, “Water boils at 100 degree.”

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Chapter-3 Vocabulary
1 In the following question, out of the four alternatives, select the one which best expresses
the best meaning of the given word.
1. Abate
a. Improve b. decrease c. subvert d. sharpen
2. Renounce
a. Relinquish b. withdraw c. forgive d. punish
3. Altruism
a. Misery b. indifference c. veracity d. generosity
4. Cryptic
a. Spurious b. obscure c. imposing d. superficial
5. Aggrandize
a. Enhance b. develop c. captivate d. flaunt
2 In the following question, out of the given four alternatives, select the one which is opposite
in meaning of the given word.
1. Approbate
a. Ingratitude b. condemn c. dissatisfaction d. master
2. Sapient
a. Hunched b. strong c. simple d. simian
3. Impecunious
a. Wealthy b. cautious c. hungry d. tardy
4. Dissuade
a. Encourage b. intrigue c. trigger d. tarnish
5. Squander
a. Waste b. liberate c. economize d. presume
3 Read the following sentences and choose the meanings of highlighted idioms from the 4
options given with each sentence.
1. The chairman pulled a long face when the house did not accept the suggestions
put forth by him.
A. To look disappointed

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B. To get annoyed
C. To be agitated
D. To make a quarrel.
2. Due his bad habit of borrowing money from others, he will be in the mire one day.
A. to be punished
B. To be imprisoned
C. To be insulted
D. to be in trouble.
3. The chairman of the corporation plays a second fiddle to the minister.
A. To extend a helping hand
B. To play a secondary role.
C. To be guiding person.
D. To be facilitator.
4. He had to go through the motion of starting with this new project as he was least
interested to take up it.
A. To complete quickly.
B. To do a work without enthusiasm
C. To do without any interest.
D. To work at a slow speed.
5. A fair weather friend always tries to fish in troubled waters of his friends and
benefactors.
A. To borrow money
B. To steal belongings of
C. To get benefit in bad situation.
D. To extend a helping hand.
Part-C
Chapter-4 Comprehension
1 Read the following passages and answer the questions at the end of each passage.
Passage 1
The Mars Orbiter Mission (MOM) or Mangalyaan, is a space probe launched by the Indian Space
Research Organization on November 5, 2013.

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18 FOUNDATION EXAMINATION: MAY, 2021

Mangalyaan was India's first interplanetary mission. The indigenously-built space probe has
been in the Martian orbit since September 24, 2014. The mission made India the first Asian
country, and the fourth in the world after Roscosmos, NASA, and the European Space Agency,
to get to the planet. China referred to India's successful Mangalyaan as the "Pride of Asia".
India's Mangalyaan mission is aimed at studying Martian atmosphere. Its objective is to explore
Martian surface features, mineralogy, morphology and atmosphere using indigenous scientific
instruments. A crucial objective of MOM was to develop technologies required in planning,
designing, management and operations of an interplanetary mission.
MOM was launched aboard PSLV C-25 (an XL version of the PSLV). It carried 850 kg of fuel
and 5 science payloads including a Mars Color Camera (MCC) which it has been using to study
the Martian surface and atmosphere since entering the orbit successfully. The spacecraft is
tracked by the Indian Deep Space Network (IDSN), located near Bengaluru and complemented
by NASA-JPL's Deep Space Network. ISRO spent $75 million to launch the mission, making it
the least-expensive Mars mission to date.
On September 24, 2018, MOM completed four years in its orbit around Mars, although the
designed mission life was only six months. ISRO now plans to develop and launch a follow -up
mission called Mars Orbiter Mission 2 (MOM-2 or Mangalyaan-2) in 2024.
(1) Select a suitable synonym for the word ‘indigenously’:
(a) Well built
(b) Built natively
(c) Built for the first time
(d) Forcibly built
(2) How much more time did MOM space probe spend as compared to the actual designed
mission life?
(a) 4 years
(b) 6 months
(c) 3 years 6 months
(d) 2. 5 years
(3) ‘Pivotal means the same as which word used in the passage____________________
(4) Study of minerals is known as _____________________ (as given in the text)
(5) Which of the following is/are true according to the passage?
(A) The Mangalyan carried 850 kilo calorie of fuel.
(B) India became the first Asian country to reach Mars
(C) The space craft has been in the Martian orbit since 5 th November, 2013

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(D) MOM was one of the least expensive missions to Mars till date.
(a) Only A
(b) Both A and B
(c) Both B and D
(d) All of the above
Passage 2
Bitcoin has grabbed headlines over the past year for its massive spike in value and the ensuing
rush to regulate it, followed by a nasty crash. However, the real story is the degree to which
Bitcoin democratizes global financial systems.
While Bitcoin may often be referred to as anonymous money, its blockchain is also perfectly
transparent and may be inspected by anybody at will. That apparent contradiction makes it a
revolutionary way for people around the world to realize greater financial freedom: Bitcoin does
to money what the internet did to information by providing indiscriminate access to a
decentralized financial system.
Bitcoin is not just a cryptocurrency, but also a new financial system comprised of many
components. It was invented in 2008 by the mysterious Satoshi Nakamoto and released shortly
after to the public. Most importantly, Bitcoin is not controlled or owned by any individual,
corporation, or government. It extensively uses cryptography and relies on a peer-to-peer
network. The Bitcoin protocol lays out the rules of this financial system, including how many
Bitcoins can exist, and how they are created and transferred between participants. This protocol
is incredibly difficult to change, as any change requires overwhelming consensus from its
participants.
While Bitcoin had existed for some time, one of the first spikes had been largely attributed to
the economic crisis in Cyprus. Crypto-currency suddenly offered a more appealing way of
housing money with promise of constant access. But while the extent of that relationship was
debated, it was just the spark that lit the fuse.
The irony doesn't escape us here, but it's still an important point to make. The limited number
of Bitcoins means that inflation just doesn't happen. So intrigue leads to demand, and the only
way is up.
1) Bitcoin extensively uses:
(a) Overwhelming consensus
(b) Cryptography
(c) Control by an individual

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20 FOUNDATION EXAMINATION: MAY, 2021

(d) None of these

2) State one ironical fact mentioned about bitcoin in the passage.
3) The phrase ‘indiscriminate access’ can mean:
(a) A thoughtful control
(b) Controlled by all
(c) Secret control
(d) Aimless control
4) Choose an appropriate synonyms for the word ‘overwhelming’ as used in the passage:
(a) Astounding
(b) Reality
(c) Unknown
(d) Reactive
5) Why are Bitcoin protocols difficult to change?
(a) There are no protocols at all
(b) Bitcoin currency is limited
(c) Change is the only constant
(d) All participants need to give their consensus
Passage 3
Sportsmanship can be conceptualized as an enduring and relatively stable characteristic or
disposition such that individuals differ in the way they are generally expected to behave in sports
situations. In general, sportsmanship refers to virtues such as fairness, self -control, courage,
and persistence, and has been associated with interpersonal concepts of treating others and
being treated fairly, maintaining self-control if dealing with others, and respect for both authority
and opponents. Sportsmanship is also looked at as being the way one reacts to a
sport/game/player.
The four elements of sportsmanship are often shown being good form, the will to win, equity
and fairness. All four elements are critical and a balance must be found among all four for true
sportsmanship to be illustrated. These elements may also cause conflict, as a person may de sire
to win more than play in equity and fairness and thus resulting in a clash within the aspects of
sportsmanship. This will cause problems as the person believes they are being a good
sportsman, but they are defeating the purpose of this idea as they are ignoring two key

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components of being sportsman like. When athletes become too self-centred, the idea of
sportsmanship is dismissed.
Today's sporting culture, in particular the base of elite sport, places great importance on the
idea of competition and winning and thus sportsmanship takes a back seat as a result. In most,
if not all sports, sportsmen at the elite level make the standards on sportsmanship and no matter
whether they like it or not, they are seen as leaders and role models in society.
1) Sportsmanship take a back seat in the current sports culture because:
(a) Leaders have become superstars
(b) There is more emphasis on winning
(c) It requires self- control and fairness
(d) Both a and b
2) Sportsmanship refers to virtues such as:
(a) Ignorance
(b) Fairness
(c) Persistence
(d) Both b and c
3) Select an antonym for the word self centred
(a) Giving
(b) Narcissist
(c) Ideal
(d) Selfish
4) What is the Main idea of the passage:
(a) Sportsmanship is a challenge, which not everyone can take
(b) Sportsmanship is not just about playing but about being a team player and disciplined
(c) Sportsman become super stars and forget their duties
(d) Life without sports is dull and mundane
5) ‘Sportsmanship is also looked at as being the way one reacts to a sport/game/player’. What
does the author mean by saying this?
(a) To play a sport is not an easy task

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22 FOUNDATION EXAMINATION: MAY, 2021

(b) One needs to learn the game and play it as well

(c) Do not disrespect any sport or player
(d) The attitude towards the game and the players makes you a sportsman
Chapter-5 Note Making
1 Read the following passages and
(i) Prepare notes with appropriate abbreviations wherever necessary.
(ii) Write summary
Passage-1
There is nothing more frustrating than when you sit down at your table to study with the most
sincere of intentions and instead of being able to finish the task at hand, you find your thoughts
wandering. However, there are certain techniques that you can use to enhance your
concentration. “Your concentration level depends on a number of factors,” says Samuel Ghosh,
a social counsellor. “In order to develop your concentration span, it is necessary to examine
various 2 facets of your physical and internal environment,” she adds.
To begin with one should attempt to create the physical environment that is conducive to
focussed thought. Whether it is the radio, TV or your noisy neighbours, identify the factors that
make it difficult for you to focus. For instance, if you live in a very noisy neighbourhood, you
could try to plan your study hours in a nearby library.
She disagrees with the notion that people can concentrate or study in an environment with
distractions like a loud television, blaring music etc. “If you are distracted when you are
attempting to focus, your attention and retention powers do not work at optimum levels,”
cautions Ghosh. “Not more than two of your senses should be activated at the same time,” she
adds. What that means is that music that sets your feet tapping is not the ideal accompaniment
to your books.
Also do not place your study table or desk in front of a window. “While there is no cure for a
mind that wants to wander, one should try and provide as little stimulus as possible. Looking
out of a window when you are trying to concentrate will invariably send your mind on a tangent,”
says Ghosh.
The second important thing, she says, is to establish goals for oneself instead of setting a
general target and then trying to accomplish what you can in a haphazard fashion. It is very
important to decide what you have to finish in a given span of time. The human mind recognizes
fixed goals and targets and appreciates schedules more than random thoughts. Once your
thoughts and goals are in line, a focussed system will follow.
She recommends that you divide your schedule into study and recreation hours. When you
study, choose a mix of subjects that you enjoy and dislike and save the former for the last so
that you have something to look forward to. For instance, if you enjoy verbal skill tests more

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than mathematical problems, then finish Maths first. Not only will you find yourself working
harder, you will have a sense of achievement when you wind up.
Try not to sit for more than 40 minutes at a stretch. Take a very short break to make a cup of
tea or listen to a song and sit down again. Under no circumstances, should one sit for more than
one and a half hours. Short breaks build your concentration and refresh your mind. However,
be careful not to overdo the relaxation. It may have undesired effects.
More than anything else, do not get disheartened. Concentration is merely a matter of
disciplining the mind. It comes with practice and patience and does not take very long to become
a habit for life.
Passage-2
Research has shown that the human mind can process words at the rate of about 500 per
minute, whereas a speaker speaks at the rate of about 150 words a minute. The difference
between the two at 350 is quite large.
So a speaker must make every effort to retain the attention of the audience and the listener
should also be careful not to let his mind wander. Good communication calls for good listening
skills. A good speaker must necessarily be a good listener.
Listening starts with hearing but goes beyond. Hearing, in other words is necessary but is not a
sufficient condition for listening. Listening involves hearing with attention. Listening is a process
that calls for concentration. While, listening, one should also be observant. In other words,
listening has to do with the ears, as well as with the eyes and the mind. Listening is to be
understood as the total process that involves hearing with attention, being observant and making
interpretations. Good communication is essentially an interactive process. It calls for
participation and involvement. It is quite often a dialogue rather than a monologue. It is
necessary to be interested and also show or make it abundantly clear that one is interested in
knowing what the other person has to say.
Good listening is an art that can be cultivated. It relates to skills that can be developed. A good
listener knows the art of getting much more than what the speaker is trying to convey. He knows
how to prompt, persuade but not to cut off or interrupt what the other person has to say. At times
the speaker may or may not be coherent, articulate and well organised in his thoughts and
expressions. He may have it in his mind and yet he may fail to marshal the right words while
communicating his thought.
Nevertheless, a good listener puts him at ease, helps him articulate and facilitates him to get
across the message that he wants to convey. For listening to be effective, it is also necessary
that barriers to listening are removed. Such barriers can be both physical and psychol ogical.
Physical barriers generally relate to hindrances to proper hearing whereas psychological
barriers are more fundamental and relate to the interpretation and evaluation of the speaker and
the message.

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Passage-3
The Great Wall of China was built to link existing fortifications into a united defence system and
better keep invading Mongol tribes out of China. It is the largest man -made monument ever to
have been built . and it is said that it is the only one visible from space. Many thousands of
people must have given their lives to build this huge construction.
The Great Wall of China is a series of towers made of stone, brick, earth, wood and other
materials, generally built along an east-to-west line across the historical northern borders of
China to protect the Chinese states and empires against the raids and invasions of the various
nomadic groups of the Eurasian Steppe. Several walls were being built as early as the 7th
century BCE; these, later joined together and made bigger and stronger, are now collectively
referred to as the Great Wall. Especially famous is the wall built (220-206 BCE) by Qin Shi
Huang, the first Emperor of China. Little of that wall remains. Since then, the Great Wall has on
and off been rebuilt, maintained and enhanced; the majority of the existing wall is from the Ming
Dynasty (1368-1644).
Other purposes of the Great Wall have included border controls, allowing the imposition of duties
on goods transported along the Silk Road, regulation or encouragement of trade and the control
of immigration and emigration. Furthermore, the defensive characteristics of the Great Wall were
enhanced by the construction of watchtowers, troop barracks, garrison stations, signalling
capabilities through the means of smoke or fire and the fact that the path of the Great Wall also
served as a transportation corridor.
The Great Wall stretches from Dandong in the east to Lop Lake in the west, along an arc that
roughly delineates the southern edge of Inner Mongolia. A comprehensive archaeological
survey, using advanced technologies, has concluded that the Ming walls measure 8,850 km.
This is made up of 6,259 km sections of actual wall, 359 km of trenches and 2,232 km of natural
defensive barriers such as hills and rivers. Another archaeological surv ey found that the entire
wall with all of its branches measures out to be 21,196 km.
King Zheng of Qin conquered the last of his opponents and unified China as the First Emperor
of the Qin dynasty (“Qin Shi Huang”) in 221 BCE. Intending to impose centralized rule and
prevent the resurgence of feudal lords, he ordered the destruction of some sections of the walls,
however, he ordered a building of new walls to connect the remaining fortifications along the
empire’s northern frontier. Transporting a large number of materials required for construction
was difficult, so builders always tried to use local resources. Stones from the mountains were
used over mountain ranges, while earth was used for construction in the plains. The Great Wall
concept was revived under the Ming dynasty in the 14th century, to gain a clear upper hand
over the Mongolian tribes.

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Chapter- 7 Precis Writing

Read the following passages and a write a suitable precis:
Passage-1
When we survey our lives and efforts we soon observe that almost the whole of our actions and
desires are bound up with the existence of other human beings. We notice that whole nature
resembles that of the social animals. We eat food that others have produced, wear clothes that
others have made, live in houses that others have built. The greater part of our knowledge and
beliefs has been passed on to us by other people though the medium of a language which others
have created. Without language and mental capacities, we would have been poor indeed
comparable to higher animals.
We have, therefore, to admit that we owe our principal knowledge over the least to the fact of
living in human society. The individual if left alone from birth would remain primitive and beast
like in his thoughts and feelings to a degree that we can hardly imagine. The individual is what
he is and has the significance that he has, not much in virtue of the individuality, but rather as
a member of a great human community, which directs his material and spiritual existence from
the cradle to grave.
Passage-2
Every year it seems like there’s another disastrous wildfire in the American West. In 2018, nearly
9 million acres were burned in the US alone. Uncontrolled fires often started accidentally by
people, rampage and decimate forests. For most people, forest fire is synonymous with disaster.
But there are some kinds of forest fires that actually benefit the environment. A controlled burn
is a wildfire that people set intentionally for a specific purpose. Well -thought out and well-
managed controlled burns can be incredibly beneficial for forest management—in part because
they can help stop an out-of-control wildfire. The technique is called back-burning, and it
involves setting a controlled fire in the path of the approaching wildfire. All the flammable
material is burnt up and extinguished. When the wildfire approaches, there’s no more fuel left
for it to keep going, and it dies out. Controlled burns are also used to prevent forest fires. Even
before human involvement, natural, low-intensity wildfires occurred every few years to burn up
fuel, plant debris, and dead trees, making way for young, healthy trees and vegetation to thrive.
That new growth in turn supports forest wildlife. Forest managers are now replicating this natural
strategy when appropriate, starting manageable, slow-burning fires to make room for new life
that will help keep the forest healthy in the long term.
Passage-3
Buddhism is a major global religion with a complex history and system of beliefs. Historians
estimate that the founder of Buddhism, Siddhartha Gautama, lived from around 566 to 480 B.C.
The son of an Indian warrior-king, Gautama led an extravagant life through early adulthood,
reveling in the privileges of his social caste.
After encountering an old man, an ill man, a corpse and an ascetic, Gautama was convinced
that suffering lay at the end of all existence. He renounced his princely title and became a monk,

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26 FOUNDATION EXAMINATION: MAY, 2021

depriving himself of worldly possessions in the hope of comprehending the truth of the world
around him. The culmination of his search came while meditating beneath a tree, where he
finally understood how to be free from suffering, and ultimately, to achieve salvation. The Four
Noble Truths comprise the essence of Buddha's teachings, though they leave much left
unexplained. They are the truth of suffering, the truth of the cause of suffering, the truth of the
end of suffering, and the truth of the path that leads to the end of suffering. More simply put,
suffering exists; it has a cause; it has an end; and it has a cause to bring about its end. The
notion of suffering is not intended to convey a negative world view, but rather, a pragmatic
perspective that deals with the world as it is, and attempts to rectify it. The concept of pleasure
is not denied, but acknowledged as fleeting. Pursuit of pleasure can only con tinue what is
ultimately an unquenchable thirst. The same logic belies an understanding of happiness. In the
end, only aging, sickness, and death are certain and unavoidable.
Chapter-8 Article Writing
1 Write an article on the following topics:
(i) Social Media bad for Youth
(ii) Building Trust at Place of Work
Chapter-9 Report Writing
1 You are the branch manager of a bank XYZ. Write a report showing the decline in the
number of new customers and new accounts. Give reasons.
2 As a member of the finance team of a Pharma company, you have been asked to compile
a report justifying the downfall in the turnover/sales target in the last quarter for certain
drugs/medicines. The report needs to be submitted to higher authorities with details, data
and figures.
3 As the Manager, Sales and Marketing of a multi cuisine restaurant chain, compile a report
discussing ways of attracting customers, after the covid-19 and the lockdown.
Chapter-10 Letter Writing
1 Write a letter to your Manager telling him that the office equipment you have ordered will
arrive a week later than planned.
2. Write a letter to Mr. Shyam accepting the invitation as a guest speaker for a Talk.
3 Write a letter to the Rotary Club manager for enquiring about the availability of the
conference hall and other booking details.
Chapter-11 Writing Mails
1. Write an email to your colleague from IT Department inviting them for the meeting
regarding the discussion of current problems with the computer systems. You are ABC,
from the Legal team. Draft the email including the details of meeting.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 27

2. You are representative, Marketing at XXX Solutions that provides Corporate training. Write
a mail to prospective client explaining the services.
Chapter-12 Resume Writing
1. Write a chronological resume, applying for article ship in a firm.
2. Write a functional resume to apply for applications in the Accounts Department as an
accounts officer.
3. Write a chronological resume, applying for industrial training in an organization.
Chapter 13 Meetings
1. Your company, primarily into FMCG has witnessed a steep rise in a consumer product over
the last six months. You can mention the product as soaps, detergents, sanitizers etc.
Prepare the minutes of the meeting for the same. Members in the meeting: Head of the
Sales and Marketing, Product Head, Product lead and few team members.
2. As an employee of a medical firm, prepare the agenda of a meeting discussing t he pros
and cons of the new vaccine for Covid 19. And discuss how it is going to affect your
company sales. Use the tabular format and include senior executives in the meeting.

SUGGESTED ANSWERS

Part-A
Chapter-1 Communication
1. In an organisation with a wheel and spoke kind of communication network, there is a single
authority that issues instructions and orders to all employees. This works well in a small
set up with a few employees where there is only a single competent authority taking all
decisions. Whereas in a star communication network there are multiple channels of
communication open between all members. The members communicate and exchange
information with each other freely, without any hindrance or hesitation. This will work well
in a large organisation where there are multiple authorities at different levels managing
separate sections/departments.
2. Patient listening is critical for interpreting the message in the right perspective and context.
A good listener does not only listen to the spoken words, but observes carefully the
nonverbal cues to understand the complete message. He absorbs the given information,
processes it, understands its context and meaning and to form an accurate, reasoned,
intelligent response.
3. Nonverbal Communication: Nonverbal communication is the process of communicating
by sending and receiving wordless messages. These messages can aid verbal

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28 FOUNDATION EXAMINATION: MAY, 2021

communication, convey thoughts and feelings contrary to the spoken words or express
ideas and emotions on their own.
• Physical nonverbal communication: An individual’s body language that is, facial
expressions, stance, gestures, tone of voice, touch, and other physical signals
constitute this type of communication. For example, leaning forward may mean
friendliness, acceptance and interest, while crossing arms can be interpreted as
antagonistic or defensive posture.
• Paralanguage: The way you say something, more than the actual words used, reveal
the intent of the message, The voice quality, intonation, pitch, stress, emotion, ton e,
and style of speaking, communicates approval, interest or the lack of it.
Part-B
Chapter-2 Sentence Types, Active/Passive Voice ; Direct/Indirect Speech
1. 1. Are books bought from the market by you?
2. The ring is made by the goldsmith.
3. The shop is not closed by the father.
4. By whom are you taught English?
5. Is the work finished by him in a month?
2. 1. Why does Mohan read a letter?
2. The soldier does not help the old man.
3. Who praises him?
5. John reads a letter.
6. Someone has broken the crystal vase.
3. 1. Clinton said that he was very busy then.
2. John said that he knew her address.
3. Ravi asked me what Heena was doing.
4. Vidisha said that Ananya had taken pasta.
5. She told that water boils at 100 degree.
Chapter-3 Vocabulary
1. 1.b. 2.a. 3.d. 4. d 5.a.
2. 1.b. 2 c. 3 a. 4. a 5.c.
3. 1. A 2. D 3. B 4. B 5. C

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 29

Part-C
Chapter-4 Comprehension
1. Passage 1
1) b
2) c
3) Crucial
4) Mineralogy
5) c
Passage 2
1) b
2) It is called anonymous money but its blockchain is transparent to all
3) d
4) a
5) d
Passage 3
1) b
2) d
3) a
4) b
5) d
Chapter-5 Note Making
Passage-1
Title: Techniques to Enhance Concentration
1. Hurdles to Concen.
1.1 wandering thoughts
1.2 radio or TV
1.3 noisy environ.
1.4 distracting environ.

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30 FOUNDATION EXAMINATION: MAY, 2021

2. Techniques to enhance Conc.

2.1 examine environmental factors- both phys. & internal
2.2 identify the distracting factors
2.3 activate one sense at a time
2.4 keep study table away from the window
3. Managing conc.
3.1 estab. specific goals rather than gen. targets
3.2 set your thoughts & goals in line
3.3 time mgmt.
4. Recommendations
4.1 estab. your goals & schedules
4.2 plan your study and recrat.nl hrs.
4.3 make conc. a habit for life
5. Ultimate help
5.1 don’t get disheartened
5.2 discipline the mind
5.3 practice & develop patience
Key
conc. – concentration
environ. – environment
phys. – physical
& – and
mgmt – management
estab – establish
gen. – general
recreat.nl – recreational
hrs. – hours
Summary: There can be many hurdles to concentration. Your wandering thoughts, radio, TV
and a noisy or distractive environment. But one can overcome these hurdles by following certain
techniques to enhance concentration.The environmental facets-both physical and internal need
to be identified and dealt with separately, one at a time. Concentration can also be managed by
establishing specific goals instead of setting general targets. Our goals and thoughts should be
set in line and we also need to manage time. The recommendations for improving concentration

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 31

are that one should establish goals and schedules and plan his study and recreational hours.
This will make concentration a habit for life.
Title: The Art of Good Listening and Speaking
1. Research has shown:
1.1 human mind processes words @ 500/ min.
1.2 spkr. speaks @ 150 words/min.
1.3 large diff. b/ w the two – at 350.
2. Essentials to being a good spkr. & listener:
2.1 spkr. should be able to retain aud. attention.
2.2 listener should not let his mind wander.
2.3 a good spkr. must be a good listener also.
3. Listening skills:
3.1 start with hearing – tho’ it is not a sufficient condition
3.2 involve hearing with attention
3.2.1 being observant
3.2.2 using one’s ears, eyes & mind
3.2.3 calls for participation & involvement
3.2.3 It is dial, rather than monologue.
4. Good listening is an art:
4.1 can be cultivated & its skills can be developed
4.2 A good listener knows
4.2.1 how to get much more than what spkr. wants to convey
4.2.2 to be prompt, persuade without interruption
4.3 A good listener
4.3.1 puts spkr. at ease
4.3.2 helps him articulate
4.3.3 facilitates him to get across msg. he wants to convey
5. Barriers to listening
5.1 phys.
5.1.1 relating to hindrances to proper listening

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32 FOUNDATION EXAMINATION: MAY, 2021

5.2 Psycho.
5.2.1 more fundamental
5.2.2 related to interpretation & evaluation of spkr. and msg.
Key: List of Abbreviations
@ – at the rate of
/ – per
min. – minute
spkr. – speaker
diff. – difference
b/w – between
aud. – audience
tho’ – though
& – and
dial. – dialogue
msg. – message
phys. – physical
psycho. – psychological
Summary: There is a vast difference between words the human mind can process and speak.
The speaker must be able to retain audience attention and also be a good listene r. Listening
goes beyond hearing, it is hearing with attention and calls for concentration. One also needs to
be observant, using not only one’s ears but also one’s eyes and mind. Good listening needs
participation and involvement and involves dialogue more than monologue. It is an art that needs
to be cultivated. A good listener must know how to be prompt and persuade but not interrupt the
other person. He puts the speaker at ease, helps him to articulate and get across the message
he wants to convey. For effective listening physical and psychological barriers need to be
removed.
Passage-3
Title: The Great Wall of China
1. Introduction:
1.1 largest man-made monument
1.2 only one visible from space
1.3 many gave their lives to build it
1.4 series of towers made of stone, brick, earth, wood etc.

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2. Purpose of building The Great Wall of China:

2.1 to link existing fort, into a united defence sys.
2.2 keep invading Mongol tribes out of China
2.3 have border control
2.4 allow the imposition of duties on goods transp. along Silk Road
2.5 regulation or encouragement of trade
2.6 control of immigration &. emigration.
3. Geog. facts:
3.1 built along an east-to-west line across Northern China border
3.2 protects Chinese states and empire against raids and invasions
3.3 several walls built-in 7th cent. BCE
3.4 later joined & made bigger & stronger
3.5 stretches from Dandong in east to Lop Lake in west
4. Historical facts:
4.1 built by Qin Shi Huang esp. famous
4.2 little remains
4.3 since then Great Wall has been rebuilt, maintained & enhanced
4.4 Maj. of existing wall is from Ming dynasty
5. Ming Wall-Archaeological survey concludes:
5.1 measures 8,850 km.
5.2 includes natural defence barriers like hills & rivers
5.3 wall & branches measure 21,196 km
List of abbreviations used:
fort. – fortifications
sys. – system
Geog. – Geographical
esp. – especially
7th – Seventh
km – Kilometer
transp. – transported
cent. – century
Maj. – Majority

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34 FOUNDATION EXAMINATION: MAY, 2021

&. – and
(B) Summary: The Great Wall of China, the largest man-made monument and the only one
visible from space, is a series of towers built along an east-to-west line across northern China
border to protect Chinese states from invasions. Several walls which were built earlier were
joined and made bigger and stronger are collectively referred to as the Great Wall. The wall
built by the first emperor of China, Qin Shi Huang is especially famous, though little of t hat
wall remains. Since then the Great wall has been rebuilt and enhanced. The majority of the
existing wall is from the Ming Dynasty.
Chapter-7 Precis Writing
Passage-1 Title: Humans : The Social Beings
Human beings are social animals with actions and desires that are connected to society. In
almost all matters of life, like clothes, food, knowledge and beliefs, humans have been
dependent on the society, past or present. A lonely man would be as good as a beast with no
social life and no learning. Every aspect of man’s existence can be owed to the society and
surroundings he lives in.
Passage-2 Title: Preventing Wild Fires
Uncontrolled wild forest fires have been common in the American west. It leads to massive
destruction of forest life and has many after effects. Intentional burning called back burning is a
new technique developed to control and prevent the spread of natural wild fires. Forest
managers are trying to use the technique to remove old plant and animal debris and give way
to new and healthy life.
Passage-3 Title: Buddhism
Siddharth Gautama, popularly known as Gautam Buddha was the founder of the Buddhist
religion. Although the son of a warrior prince, he left his princely luxuries in search of ‘the truth’
and finally received ‘enlightenment’ under a tree. The four noble truths are the main principles
of Buddhism. They preach about suffering, the cause of suffering, the end of suffering and the
path that leads to the end of suffering. Pleasure and happiness continue to be an unquenchable
thirst whereas aging, sickness and death are realities of life.
Chapter-8 Article Writing
1. (i) Three billion people, around 40% of the world’s population, use online social media
– and we’re spending an average of two hours every day sharing, liking, tweeting and
updating on these platforms, according to some reports. That breaks down to around
half a million tweets and Snapchat photos shared every minute. With social media
playing such a big part in our lives, could we be sacrificing our mental health and well -
being as well as our time?
People use social media to vent about everything from customer service to politics,
but the downside to this is that our feeds often resemble an endless stream of stress.

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In 2015, researchers at the Pew Research Center based in Washington DC sought

to find out if social media induces more stress than it relieves. In the survey of 1,800
people, women reported being more stressed than men. Twitter was found to be a
“significant contributor” because it increased their awareness of other people’s stress.
But Twitter also acted as a coping mechanism – and the more women used it, the
less stressed they were. The same effect wasn’t found for men, whom the researchers
said had a more distant relationship with social media. Overall, the researchers
concluded that social media use was linked to “modestly lower levels” of stress.
Anxiety, depression, sleep are concerns youngsters should be careful about..
All the same self-esteem and wellbeing are also social media effects according to a
study . But there are varied opinions and therefore still ambiguous. Social media used
for educational purposes is a blessing. Facebook had a positive effect on self-esteem
compared to other activities that boost self-awareness. Mirrors and photos, the
researchers explained, make us compare ourselves to social standards, whereas
looking at our own Facebook profiles might boost self-esteem because it is easier to
control how we’re presented to the world.
(ii) Successful business requires collaboration and teamwork. For team relationships to
work well, we need high levels of trust. But how we build trust can differ from person
to person, culture to culture.
There are many aspects of building trust. One aspect is to demonstrate that we are
caring, fair, open and honest human beings. In other words, we can build trust by
showing our character. This is how we can adapt in a new work environment by being
acceptable of people and receptive towards them. Understanding predicaments of
others and empathising with them or suggesting possible solutions also works as
others perceive you as a friend and well-wisher. The other aspect is by letting others
know that we are capable, experienced and have achieved excellent results. This way
of building trust emphasises our competence, commitment and allegiance towards
our employer/organization. Being a dependable team member who can deliver under
pressure and stringent timelines will gradually prove that we have a strong work ethic
and for us the interest of the organization comes first. Even in times of crises, if we
put in our best efforts regardless of the outcome, we will still establish ourselves as
trustworthy, honest and sincere employee.
At the same time we need to be wary of how we are perceived by others. We should
be firm and polite rather being aggressive and rude towards others thus avoiding
conflicts. Even if conflict arises, we should be able to resolve it amicably. By closely
observing the context and how our team mates or bosses are responding to ou r trust-
building efforts, we can adapt the way we build trust to in the best interest of the
organization.

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36 FOUNDATION EXAMINATION: MAY, 2021

Chapter-9 Report Writing

Hints:
1.

• Objective of the report

• Concerns
• Research study
• Observation and Reasons
• Conclusion
• Steps that can be taken to increase the client base
• Mention the date, location and name of the bank branch. A small data comparing the
last year’s new customers versus this years’.
• Mention the designation of the undersigned.
2.
• Name of the organization (Pharmacy company)
• Title of the report (mention the quarter/year)
• Financial results (Quarterly basis)
• Expected reasons for downfall in sales
➢ High Attrition due to pandemic
➢ Low penetration
➢ Emerging new markets
• Suggestions/Measures
➢ Inducting more people in the Sales team
➢ Competitive Pricing
➢ Introducing generic medicines/drugs
➢ Home Delivery of medicines
3.
• Name and address of the multi cuisine restaurant
• New attractions for customers (Practical measures adopted)

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 37

➢ New Menu complete with immunity boosting dishes

➢ Free Welcome drink(Kadha)
➢ Change set-up to ensure social distancing
➢ Discounts offered at weekends/happy hours during week-days
➢ Discount coupons for regular customers
➢ Live music
➢ Home Delivery
Chapter-10 Letter Writing
1. From Address
Date in full
To Address
Subject : Office equipment delayed.

Dear Sir
I have ordered some new PC’S and Monitors. Unfortunately, the Monitors will arrive in the
second week of March. I apologise for the delay caused by the lockdown.
I shall follow up with the vendor for an early delivery.
Regards,
Shyam
Purchase officer.
(Name and Signature)
2. From Address
Date in full
To
Address
Subject : With reference to your invitation.
Dear Mr. Shyam,

I am pleased to accept your invitation. Kindly provide the details about the duration of the
talk and the participants.

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38 FOUNDATION EXAMINATION: MAY, 2021

Since I shall be travelling from Chandigarh, I request you to arrange for my accommodation
for a day.
Thank you for your invitation.
I look forward to meeting you .

Regards,

Ram
3. From Address
Date in full
To Address
Subject: Details of the conference on April 1 st.
Dear Sir,
I on behalf of my team at XXX Ltd. would like to book the conference hall from April 1 to
3, 2021 at your club. Please provide the complete booking details during the aforesaid
time. The programme schedule is appended herewith.
There will be 15 participants and 5 support staff. We would require tea and snacks during
the pre and post lunch sessions and lunch to be served each day. Besides, I would like to
book 10 single rooms for our outstation participants from March 31 till April 4, 2021 with
bathroom accommodation. You are also requested to arrange for a projector and a white
screen. Please send the complete estimate by March 10, 2021. Other details can be
finalized later.
Programme
Pre-lunch session: 10 AM till 1 PM
Lunch: 1till 2 PM
Post Lunch session: 2 PM till 5 PM
Please let me know the cost of the weekend.
I look forward to your earliest response.
Yours faithfully,
Raghav
Manager , XXX Ltd.
Contact Number: xxxxxxxxx

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 39

Chapter-11 Writing Mails

1. Dear XYZ,
We are holding a meeting on the current problems with the computer systems with our
vendor and I would appreciate it if you could come. Having an expert like yourself there
from the IT department is important because of the problems we have had with the loss
of customer data.
The meeting will take place next Thursday at 2pm in meeting Conference Room 3 on the
2nd floor in the Main Building.
If there is anything you would like to discuss in the meeting, send it to me by email and I
will include it in the meeting's agenda.
Regards,
ABC
Legal Team
2. Dear XXXi,
Subject: Corporate Training
To introduce ourselves, XXX Solutions is a Corporate Training Organization which offers
IT and Non IT Domain Training's and support customers around the world in IT Training
(from Low-end to High-end Training's comprising
• Microsoft Technologies - Advanced Excel, MS Office Suite, SharePoint, Exchange
Server, Biz Talk, etc.
• Certification Programs - ITIL Certification, PMP, Certified Scrum Master
• BI Tools - Power BI, Tableau, SAS, R Programming
• Cloud Computing, Big Data & Hadoop, Devops
• Trending Technology - Machine Learning, Deep Learning, RPA, IoT
• Soft Skill Management Programs which including 41 various sub programs
We are very keen to be associated with you as a trusted vendor and provide quality
services to your employees.
For discussion/meeting, please contact the undersigned.
Best Regards,
CCC
Senior Executive, Marketing
XXX Solutions

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40 FOUNDATION EXAMINATION: MAY, 2021

Chapter-12 Resume Writing

Keshav
822, Adithya flats
RA Puram, Chennai -28.
Xxxxxxxx
Email keshavram @gmail.com
Objective: To be part of a reputed Firm for articleship training where I ca n learn and
practise the nuances of auditing ,accounts and taxation.
Academics:
CA Intermediate 2020 62%
CA Foundation 2019 85%
Class X II 2019 Commerce with Mathematics 98%
Class X 2017 96%
Achievements:
Have been an outstanding student throughout my student career.
Won the All-India School business quiz and won a cash award of Rs. 25,000
Skills:
Exceptionally good at debating and oratory.
Excellent communication and comprehension skills.
Personal Details:
DOB – June 21, 2002
Languages known Hindi, Tamil, English and Marathi
Permanent Address 822 , Adithya flats
RA Puram , Chennai -28.
Declaration
I solemnly declare that all the above information is correct to the best of my knowledge
and belief.
Date 26th Feb 2021. Keshav Ram
Place Chennai

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 41

2. Abhinav
9178654321
Mail: Abhinav@gmail.com
Birthday February 21, 2018.
Career objective
Seeking an Accounts Officer’s post in a progressive organisation to hone my accounting
skills and technical abilities .
Technical skills
Tally
Accounting standards
GST Standards
Personal Skills
Excellent written and verbal communication skills.
Highly organised and efficient
Ability to work independently and as part of a team .
Education
M.Com 2018 XYZ University 69%
B.Com 2016 XYZ University 72%
Experience
Two years of experience from 2018-2020 as Accounts Officer at BBB Electronics Retail
Chain
Skills
Taxation (GST), Auditing and Accounts
References
Can be provided upon request.
Declaration
I solemnly declare that all the above information is correct to the best of my knowledge
and belief.
Date 26-2- 21
Place Chennai Abhinav

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42 FOUNDATION EXAMINATION: MAY, 2021

3. Ananya
123, Aditi Apartments
T. Nagar, Hyderabad .
Xxxxxxxx
Email ananya12 @ict.com
Objective: To be part of a reputed organisation for industrial training where I can enrich
my soft skills and hone my technical skills in auditing, accounts and taxation.
Academics:
CA Intermediate 2019 60%
CA Foundation 2017 84%
Class X II 017 Commerce with Mathematics 96%
Class X 2015 95%
Articleship Training
Completed 1.5 years at ABC Pvt. Ltd. Firm top tax consulting firm in Hyderabad
Achievements:
Stood fist in Accounts in class XII with 99%
Won first prize in inter school debating competition in class XII
Part of the School Cricket team
Skills:
Exceptionally good at debating and oratory.
Excellent communication and comprehension skills.
Personal Details:
DOB – Nov 12, 2000
Languages known Hindi, Telugu , English
Declaration
I solemnly declare that all the above information is correct to the best of my knowledge
and belief.
Date 26th Feb 2021. Ananya
Place Hyderabad

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 43

Chapter -13 Meetings

1. Minutes of the Meeting
Speakers involved were: Head of Sales and Marketing, the Product Head, Product lead,
three members of the Sales team.
Date: 1st March, 2021
Meeting started at 10: 00 am.
Mrs. Rama Desai, Head of Sales and Marketing informed the agenda of the meeting i.e
the steep rise in the sale of Hand wash (liquid) form.
Mr. Rahul Sharma, Product Head discussed the matter, appreciating the Sales and
Marketing team. Suggested to come up with a new variant of the product in different
fragrances and volumes.
Ms. Garima Thakur, Costing Head gave a detailed analysis of the figures observed in the
last six months.
Her team including Mr. X, Mr. Y and Mr. Z elaborated on the market trends based on the
usage of the particular product
All the participants agreed to the decision of introducing a new variant of the product and
come back with a detailed report.
Conclusion Stated: ATR to be submitted by 7th March, 2021 to the Head of Sales and Marketing.
2.
Time Topic Attendees Speaker Duration
9:30 am Introduction and Name of the Director, Product 10
Welcome note participants Division minutes
(Pharmacy)
9:40 am Speech Name of the Pharmacy Head 25 mins.
participants
10:05 am Discussion on effect Name of the Sr. Manager, 25 mins
on sales figures participants Sales
10:30 am Tea/Breakfast Tea/Breakfast 30 mins
11:00 am Discussion on Name of the Sr. Manager, 20 mins
adopting and participants Pharmacy
improvising new
patents
11: 20 am Open House All participants All members 20 mins
11:40 am Vote of Thanks All participants Director 10 mins.

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PAPER – 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

PART – I: RELEVANT AMENDMENTS APPLICABLE FOR NOVEMBER 2021

EXAMINATION

For November 2021 examinations for Paper 2A: Business Laws, the significant amendments
made in the respective subject upto 30 th April, 2021 are relevant and applicable.
Students are advised to refer study material of October 2020 edition with these applica ble
amendments.
Relevant amendments: Here are given relevant amendments:
Amendment in Earlier provision New provision Page
Companies Act, 2013 No.
Resident in India in Only a natural person who is Only a natural person Page
One Person an Indian citizen and resident who is an Indian No. 5.10
Company: in India (person who has citizen whether
Substituted by stayed in India for a period of resident in India or
Companies not less than 182 days during otherwise and has
(Incorporation) the immediately preceding stayed in India for a
Second Amendment financial year)- period of not less
Rules, 2021, w.e.f. 1- • shall be eligible to than 120 days during
4-2021. incorporate a OPC; the immediately
• shall be a nominee for preceding financial
the sole member of a year)-
OPC. • shall be eligible
to incorporate a
OPC;
• shall be a
nominee for the
sole member of
a OPC.
Conversion of OPC OPC cannot convert Omitted Page
to other company: voluntarily into any kind of No. 5.10
Omitted by Companies company unless two years
(Incorporation) have expired from the date of
Second Amendment incorporation, except where
Rules, 2021, w.e.f. 1- the paid up share capital is
4-2021.] increased beyond fifty lakh
rupees or its average annual
2 FOUNDATION EXAMINATION: NOVEMBER, 2021

turnover during the relevant

period exceeds two crore
rupees.
Small Company - For the purpose of Page
[Section 2(85)]: sub-clause (i) and No. 5.11
Inserted by sub-clause (ii) of
Companies clause (85) of section
(Specification of 2 of the Act, paid up
Definitions Details) capital and turnover
Amendment Rule, of the small company
2021, w.e.f. 1-4-2021. shall not exceed
rupees two crores
and rupees twenty
crores respectively.
Definition of Listed Listed company" means a Listed company" Page
Company [Section company which has any of its means a company No. 5.14
2(52)]: securities listed on any which has any of its
Inserted by the recognised stock exchange. securities listed on
Companies any recognised stock
(Amendment) Act, exchange:
2020, w.e.f. 22-1- Provided that such
2021. class of companies,
which have listed or
intend to list such
class of securities,
as may be
prescribed in
consultation with
the Securities and
Exchange Board,
shall not be
considered as
listed companies.
Section 8(11) Penalty/punishment in Penalty/punishment Page
Substituted by the contravention: If a company in contravention: If No. 5.15
Companies makes any default in a company makes
(Amendment) Act, complying with any of the any default in
2020, w.e.f. 21-12- requirements laid down in this complying with any of
2020. section, the company shall, be the requirements laid
punishable with fine varying down in this section,
from ten lakh rupees to one the company shall,
crore rupees and the directors without prejudice to
PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 3

and every officer of the any other action

company who is in default under the provisions
shall be punishable with of this section, be
imprisonment for a term punishable with fine
which may extend to three which shall not be
years or with fine varying less than ten lakh
from twenty-five thousand rupees but which
rupees to twenty-five lakh may extend to one
rupees, or with both and crore rupees and the
where it is proved that the directors and every
affairs of the company were officer of the
conducted fraudulently, every company who is in
officer in default shall be liable default shall be
for action under section 447 punishable with fine
which deals with Fraud. which shall not be
less than twenty-five
thousand rupees but
which may extend
to twenty-five lakh
rupees:
Provided that when it
is proved that the
affairs of the
company were
conducted
fraudulently, every
officer in default shall
be liable for action
under section 447.

PART – II: QUESTIONS AND ANSWERS

QUESTIONS

The Indian Contract Act, 1872

1. Mr. Pratham applied for a job as principal of a school. The school management decided to
appoint him. One member of the school management committee privately informed Mr.
Pratham that he was appointed but official communication was not given from the schoo l.
Later, the management of the school decided to appoint someone else as a principal.
Mr. Pratham filed a suit against the school for cancellation of his appointment and claimed
4 FOUNDATION EXAMINATION: NOVEMBER, 2021

damages for loss of salary. State with reasons, will Mr. Pratham be successful in suit filed
against school under the Indian Contract Act, 1872?
2. Rahul, a minor, falsely representing his age, enters into an agreement with a shopkeeper
for a loan amount for purchasing a laptop. He gave his expensive watch as a security and
took a loan of ` 40,000. He was very happy to get ` 40,000 and quickly went to the market
and purchased a laptop worth ` 30,000. He happily spent the rest of the amount with his
friends on a pleasure trip.
Later on, Rahul realized that his watch was an expensive watch and he should not have
given like this to the shopkeeper. So, he went back to the shopkeeper and asked for his
watch back. Also, he refused to repay the loan amount. The shopkeeper disagrees to this
and files a case against minor for recovery of the loan amount. Can the shopkeeper
succeed in recovering the loan amount under the Indian Contract Act, 1872?
3. Mr. X was a Disk Jockey at a five star hotel bar. As per the contract, he is supposed to
perform every weekend (i.e. twice a week). Mr. X will be paid ` 1500 per day. However,
after a month, Mr. X willfully absents himself from the performance.
(i) Does the hotel have the right to end the contract?
(ii) If the hotel sends out a mail to X that they are interested to continue the contract and
X accepts, can the hotel rescind the contract after a month on this ground
subsequently?
(iii) In which of the cases – (termination of contract or continuance of contract) can the
hotel claim damages that it has suffered as a result of this breach?
4. Mr. Ram Lal Birla was a big businessman of city Pune having two sons and one married
daughter. He decided to gift his one house to his daughter. For this purpose, he called his
lawyer at his house and made a written document for such gift. The lawyer advised him to
get the transfer document properly registered. When they both were going for registratio n
of document, they met with an accident and both of them died. Later, his daughter found
the document and claimed the house on the basis of that document. Explain, whether she
can get the house as gift under the Indian Contract Act, 1872?
5. PQR, a hospital in Delhi, recruits Dr. A, on contract basis for a period of 3 months. The
hospital management promises to pay Dr. A, a lumpsum amount of ` 1,00,000 if Dr. A test
positive for noval corona virus (Covid 19) during the contract period of 3 months.
Identify the type of contract and highlight the rule of enforcement. Also , what will happen
if Dr. A does not contract Covid 19.
6. “An agreement, the meaning of which is not certain, is void”. Discuss.
The Sale of Goods Act, 1930
7. Archika went to a jewellery shop and asked the shopkeeper to show the gold bangles with
white polish. The shopkeeper informed that he has gold bangles with lots of designs but
PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 5

not in white polish rather if Archika select gold bangles in his shop, he will arrange white
polish on those gold bangles without any extra cost. Archika select a set of designer
bangles and pay for that. The shopkeeper requested Archika to come after two days for
delivery of those bangles so that white polish can be done on those bangles. When Archika
comes after two days to take delivery of bangles, she noticed that due to white polishing ,
the design of bangles has been disturbed. Now, she wants to avoid the contract and asked
the shopkeeper to give her money back but shopkeeper has denied for the same.
(a) State with reasons whether Archika can recover the amount under the Sale of Goods
Act, 1930.
(b) What would be your answer if shopkeeper says that he can repair those bangles but
he will charge extra cost for same?
8. Prashant reaches a sweet shop and ask for 1 Kg of ‘Burfi’ if the sweets are fresh. Seller
replies’ “Sir, my all sweets are fresh and of good quality.” Prashant agrees to buy on the
condition that first he tastes one piece of ‘Burfi’ to check the quality. Seller gives him one
piece to taste. Prashant, on finding the quality is good, ask the seller to pack. On reaching
the house, Prashant finds that ‘Burfi’ is stale not fresh while the piece tasted was fresh.
Now, Prashant wants to avoid the contract and return the ‘Burfi’ to seller.
(a) State with reason whether Prashant can avoid the contract under the Sale of Goods
Act, 1930?
(b) Will your answer be different if Prashant does not taste the sweet?
9. Akansh purchased a Television set from Jethalal, the owner of Gada Electronics on the
condition that first three days he will check its quality and if satisfied he will pay for that
otherwise he will return the Television set. On the second day, the Television set was
spoiled due to an earthquake. Jethalal demands the price of Television set from Akansh.
Whether Akansh is liable to pay the price under the Sale of Goods Act,1930? If not, who
will ultimately bear the loss?
10. Rachit arranges an auction to sale an antic wall clock. Megha, being one of the bidders,
gives highest bid. For announcing the completion of sale, the auctioneer fall the hammer
on table but suddenly hammer brakes and damages the watch. Megha wants to avoid the
contract. Can she do so under the provisions of the Sale of Goods Act, 1930?
11. X contracted to sell his car to Y. They did not discuss the price of the car at all. X later
refused to sell his car to Y on the ground that the agreement was void being uncertain
about price. Can Y demand the car under the Sale of Goods Act, 1930?
12. “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.
6 FOUNDATION EXAMINATION: NOVEMBER, 2021

The Indian Partnership Act, 1932

13. A, B and C are partners of a partnership firm carrying on the business of construction of
apartments. B who himself was a wholesale dealer of iron bars was entrusted with the work
of selection of iron bars after examining its quality. As a wholesaler, B is well aware of the
market conditions. Current market price of iron bar for construction is ` 350 per Kilogram.
B already had 1000 Kg of iron bars in stock which he had purchased before price hike in
the market for ` 200 per Kg. He supplied iron bars to the firm without the firm realising the
purchase cost. Is B liable to pay the firm the extra money he made, or he doesn’t have to
inform the firm as it is his own business and he has not taken any amount more than the
current prevailing market price of ` 350? Assume there is no contract between the partners
regarding the above.
14. Mr. A (transferor) transfers his share in a partnership firm to Mr. B (transferee). Mr. B felt
that the book of accounts was displaying only a small amount as profit inspite of a huge
turnover. He wanted to inspect the book of accounts of the firm arguing that it is his
entitlement as a transferee. However, the other partners were of the opinion that Mr. B
cannot challenge the books of accounts. As an advisor, help them solve the issue applying
the necessary provisions from the Indian Partnership Act, 1932.
15. MN partnership firm has two different lines of manufacturing business. One line of business
is the manufacturing of Ajinomoto, a popular seasoning & taste enhancer for food. Another
line of business is the manufacture of paper plates & cups. One fine day, a law is passed
by the Government banning Ajinomoto’ use in food and to stop its manufacturing making
it an unlawful business because it is injurious to health. Should the firm compulsoril y
dissolve under the Indian Partnership Act, 1932? How will its other line of business (paper
plates & cups) be affected?
16. Whether a minor may be admitted in the business of a partnership firm? Explain the rights
of a minor in the partnership firm.
The Limited Liability Partnership Act, 2008
17. A and B were friends. Now they have plans of setting up a supermarket in their locality.
They are confused as to whether to register as a traditional partnership or as a Limited
Liability Partnership. As an advisor, enumerate the differences between the two fo rms of
business highlighting the compliances and other legal formalities.
The Companies Act, 2013
18. Mr. Dhruv was appointed as an employee in Sunmoon Timber Private Limited on the
condition that if he was to leave his employment, he will not solicit customers of the
company. After some time, he was fired from company. He set up his own business under
proprietorship and undercut Sunmoon Timber Private Limited’s prices. On the legal advice
from his legal consultant and to refrain from the provisions of breach of contract, he formed
a new company under the name Seven Stars Timbers Private Limited. In this company,
PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 7

his wife and a friend of Mr. Dhruv were the sole shareholders and directors. They took over
Dhruv’s business and continued it. Sunmoon Timber Private Limited files a suit against
Seven Stars Timbers Private Limited for violation of contract. Seven Stars Timbers Private
Limited argued that the contract was entered between Mr. Dhruv and Sunmoon Timber
Private Limited and as company has separate legal entity, Seven Stars Timbers Private
Limited has not violated the terms of agreement. Explain with reasons, whether separate
legal entity between Mr. Dhruv and Seven Stars Timbers Private Limited will be
disregarded?
19. Narendra Motors Limited is a government company. Shah Auto Private Limited is a private
company having share capital of ten crores in the form of ten lacs shares of ` 100 each.
Narendra Motors Limited is holding five lacs five thousand shares in Shah Auto Private
Limited. Shah Auto Private Limited claimed the status of Government Company. Advise as
legal advisor, whether Shah Auto Private Limited is government company under the
provisions of Companies Act, 2013?
20. Mr. A is an Indian citizen and his stay in India during immediately preceding financial year
is for 115 days. He appoints Mr. B as his nominee who is a foreign citizen but has stayed
in India for 130 days during immediately preceding financial year.
(i) Is Mr. A eligible to be incorporated as a One Person Company (OPC). If yes, can he
give the name of Mr. B in the memorandum of Association as his nominee to become
the member after Mr. A’s incapacity to become a member.
(ii) If Mr. A has contravened any of the provisions of the Act, what are the consequences?

SUGGESTED ANSWERS

1. As per the rules of acceptance, the acceptance should be communicated to offeror by

offeree himself or his authorized agent. Communication of acceptance by third person
cannot be concluded in valid acceptance.
In the instant case, Mr. Pratham applied for a job as principal of a school and one member
of the school management committee privately informed Mr. Pratham that he was
appointed. Later, the management of the school appointed someone else as a principal.
On the basis of above provisions and facts, communication of appointment of Mr. Pratham
should be made by school management committee or any authorised agent. The
communication by third person cannot be termed as communication of acceptance.
Therefore, no valid contract was formed between Mr. Pratham and school and Mr. Pratham
cannot file a suit against the school for cancellation of his appointment.
2. As per Section 11 of Indian Contract Act, 1872, a minor is not competent to enter into any
contract. Any agreement with minor is void-ab-initio means void from the very beginning.
When a person forms an agreement with minor, such an agreement is devoid of any legal
8 FOUNDATION EXAMINATION: NOVEMBER, 2021

consequences for the person because minor cannot be enforced by law to perform his part
of performance in an agreement.
However, if minor obtains any property by fraudulently misrepresenting his age, he can be
ordered to restore the property or goods thus obtained. Although no action can be taken
against the minor, but if has any property (of other party) in his possession, court can order
him to return the same.
Hence, in the present case, Rahul is not liable to repay ` 40,000 that he has borrowed
from the shopkeeper, but he can be ordered by the court to return the laptop (which was
in his possession) to the shopkeeper.
3. By analyzing Section 39 of the Indian Contract Act 1872, it is understood that when a party
to a contract has refused to perform or disabled himself from performing his promise
entirely, the following two rights accrue to the aggrieved party (promisee)
(a) To terminate the contract
(b) To indicate by words or by conduct that he is interested in its continuance.

In either of the two cases, the promisee would be able to claim damages that he suffers.
In the given case,
(i) Yes, the hotel has the right to end the contract with Mr. X, the DJ.
(ii) The hotel has the right to continue the contract with X. But once this right is exercised,
they cannot subsequently rescind the contract on this ground subsequently.
(iii) In both the cases, the hotel (promisee) is entitled to claim damages that has been
suffered as a result of breach.
4. Section 25 of Indian Contract Act, 1872 provides that an agreement made without
consideration is valid if it is expressed in writing and registered under the law for the time
being in force for the registration of documents and is made on account of natural love and
affection between parties standing in a near relation to each other.
In the instant case, the transfer of house made by Mr. Ram Lal Birla on account of natural
love and affection between the parties standing in near relation to each other is written but
not registered. Hence, this transfer is not enforceable and his daughter cannot get the
house as gift under the Indian Contract Act, 1872.
5. Section 31 of the Indian Contract Act, 1872 provides that “A contract to do or not to do
something, if some event, collateral to such contract, does or does not happen” is a
Contingent Contract.
Section 35 says that Contingent contracts to do or not to do anything, if a specified
uncertain event happens within a fixed time, becomes void if, at the expiration of time fixed,
such event has not happened, or if, before the time fixed, such event becomes impossible.
PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 9

In the instant case, the contract between PQR hospital & Dr. A is a Contingent Contract
because the promisor, PQR hospital need to perform his obligation of paying
Dr. A, the lumpsum amount of ` 1,00,000, only if he contracts with Covid 19 within a span
of 3 months.
In Case, if Dr. A does not contract Covid 19, then the contract stands void automatically.
6. Agreement - the meaning of which is uncertain (Section 29 of the Indian Contract
Act, 1872): An agreement, the meaning of which is not certain, is void, but where the
meaning thereof is capable of being made certain, the agreement is valid.
For example, A agrees to sell B “a hundred tons of oil”. There is nothing whatever to show
what kind of oil was intended. The agreement is void for uncertainty. But the agreement
would be valid if A was dealer only in coconut oil because in such a case its meaning would
be capable of being made certain.
7. As per Section 4(3) of the Sale of Goods Act, 1930, where under a contract of sale , the
property in the goods is transferred from the seller to the buyer, the contract is called a
sale, but where the transfer of the property in the goods is to take place at a future time or
subject to some condition thereafter to be fulfilled, the contract is called an agreement to
sell and as per Section 4(4), an agreement to sell becomes a sale when the time elapses
or the conditions are fulfilled subject to which the property in the goods is to be transferred.
(a) On the basis of above provisions and facts given in the question, it can be said that
there is an agreement to sell between Archika and shopkeeper and not a sale. Even
the payment was made by Archika, the property in goods can be transferred only after
the fulfilment of conditions fixed between buyer and seller. As the white polish was
done but original design is disturbed due to polishing, bangles are not in original
position. Hence, Archika has right to avoid the agreement to sell and can recover the
price paid.
(b) On the other hand, if shopkeeper offers to bring the bangles in original position by
repairing, he cannot charge extra cost from Archika. Even he has to bear some
expenses for repair; he cannot charge it from Archika.
8. By virtue of provisions of Section 17 of the Sale of Goods Act, 1930, in the case of a
contract for sale by sample there is an implied condition that the bulk shall correspond with
the sample in quality and the buyer shall have a reasonable opportunity of comparing the
bulk with the sample. According to Section 15, where there is a contract for the sale of
goods by description, there is an implied condition that the goods shall correspond with
the description. If the goods do not correspond with implied condition, the buyer can avoid
the contract and reject the goods purchased.
(a) In the instant case, the sale of sweet is sale by sample and the quality of bulk does
not correspond with quality of sample. Hence, Prashant can return the sweet and
avoid the contract.
10 FOUNDATION EXAMINATION: NOVEMBER, 2021

(b) In the other case, the sale of sweet is the case of sale by description and the quality
of goods does not correspond with description made by seller. Hence, answer will be
same. Prashant can return the sweet and avoid the contract.
9. According to Section 24 of the Sale of Goods Act, 1930, "When the goods are delivered to
the buyer on approval or on sale or return or other similar terms the property passes to the
buyer:
(i) when he signifies his approval or acceptance to the seller,
(ii) when he does any other act adopting the transaction, and
(iii) if he does not signify his approval or acceptance to the seller but retains goods
beyond a reasonable time".
Further, as per Section 8, where there is an agreement to sell specific goods, and
subsequently the goods without any fault on the part of the seller or buyer perish or become
so damaged as no longer to answer to their description in the agreement before the risk
passes to the buyer, the agreement is thereby avoided.
According to above provisions and fact, the property is not passes to Akansh i.e. buyer as
no condition of Section 24 is satisfied. Hence, risk has not passed to buyer and the
agreement is thereby avoided. Akansh is not liable to pay the price. The loss finally should
be borne by Seller, Mr. Jethalal.
10. By virtue of provisions of Section 64 of the Sale of Goods Act, 1930, in case of auction
sale, the sale is complete when the auctioneer announces its completion by the fall of the
hammer or in some other customary manner.
In the instant case, Megha gives the highest bid in the auction for the sale of antic wall
clock arranged by Rachit. While announcing the completion of sale by fall of hammer on
the table, hammer brakes and damages the clock.
On the basis of above provisions, it can be concluded that the sale by auction cannot be
completed until hammer comes in its normal position after falling on table. Hence, in the
given problem, sale is not completed. Megha will not be liable for loss and can avoid the
contract.
11. Payment of the price by the buyer is an important ingredient of a contract of sale. If the
parties totally ignore the question of price while making the contract, it would not become
an uncertain and invalid agreement. It will rather be a valid contract and the buyer shall
pay a reasonable price. (Section 9 of the Sale of Goods Act, 1930)
In the give case, X and Y have entered into a contract for sale of car but they did not fix
the price of the car. X refused to sell the car to Y on this ground. Y can legally demand the
car from X and X can recover a reasonable price of the car from Y.
PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 11

12. Exceptions to the Rule Nemo dat Quod Non Habet: The term means, “none can give or
transfer goods what he does not himself own”. Exceptions to the rule and the cases in
which the Rule does not apply under the provisions of the Sale of Goods Act, 1930 are
enumerated below:
(i) Sale by a Mercantile Agent: A sale made by a mercantile agent of the goods or
document of title to goods would pass a good title to the buyer in the following
circumstances, namely;
(a) if he was in possession of the goods or documents with the consent of the owner;
(b) if the sale was made by him when acting in the ordinary course of business as
a mercantile agent; and
(c) if the buyer had acted in good faith and has at the time of the contract of sale,
no notice of the fact that the seller had no authority to sell. (Proviso to Section
27).
Mercantile agent means an agent having in the customary course of business as such
agent’s authority either to sell goods, or to consign goods for the purposes of sale, or
to buy goods, or to raise money on the security of goods. [section 2(9)]
(ii) Sale by one of the joint owners: If one of the several joint owners of goods has the
sole possession of them with the permission of the others, the property in the goods
may be transferred to any person who buys them from such a joint owner in good
faith and does not at the time of the contract of sale have notice that the seller has
no authority to sell. (Section 28)
(iii) Sale by a person in possession under voidable contract: A buyer would acquire
a good title to the goods sold to him by seller who had obtained possession of the
goods under a contract voidable on the ground of coercion, fraud, misrepresentation
or undue influence provided that the contract had not been rescinded until the time of
the sale (Section 29).
(iv) Sale by one who has already sold the goods but continues in possession
thereof: If a person has sold goods but continues to be in possession of them or of
the documents of title to them, he may sell them to a third person, and if such person
obtains the delivery thereof in good faith without notice of the previous sale, he would
have good title to them, although the property in the goods had passed to the first
buyer earlier. A pledge or other deposition of the goods or documents of title by the
seller in possession are equally valid. [Section 30(1)]
(v) Sale by buyer obtaining possession before the property in the goods has vested
in him: Where a buyer with the consent of seller obtains possession of the goods
before the property in them has passed to him, he may sell, pledge or otherwise
12 FOUNDATION EXAMINATION: NOVEMBER, 2021

dispose of the goods to a third person, and if such person obtains delivery of the
goods in good faith and without notice of the lien or other right of the original seller in
respect of the goods in good faith and without notice of the lien or other right of the
original seller in respect of the goods, he would get a good title to them. [Section
30(2)].
(vi) Sale by an unpaid seller: Where an unpaid seller who had exercised his right of lien
or stoppage in transit resells the goods, the buyer acquires a good title to the goods
as against the original buyer [Section 54(3)].
(vii) Sale under the provisions of other Acts:
(a) Sale by an official Receiver or liquidator of the company will give the purchaser
a valid title.
(b) Purchase of goods from a finder of goods will get a valid title under
circumstances.
(c) Sale by a pawnee under default of pawnor will give valid title to the purchaser.
13. According to section 16 of the Indian Partnership Act, 1932, subject to contract between
partners –
(a) if a partner derives any profit for himself from any transaction of the firm, or from the
use of the property or business connection of the firm or the firm name, he shall
account for that profit and pay it to the firm;
(b) if a partner carries on any business of the same nature as and competing with that of
the firm, he shall account for and pay to the firm all profits made by him in that
business.
In the given scenario, Mr. B had sold iron bar to the firm at the current prevailing market
rate of ` 350 per Kg though he had stock with him which he bought for ` 200 per Kg.
Hence, he made an extra profit of ` 150 per Kg. This is arising purely out of transactions
with the firm. Hence, Mr. B is accountable to the firm for the extra profit earned thereby.
14. As per Section 29 of the Indian Partnership Act, 1932, during the continuance of the
business, a transferee is not entitled
- To interfere with the conduct of the business
- To require the accounts
- To inspect the books of the firm
He is only entitled to his share of profit.
Keeping the above points, in the given case, since the partnership business is in
continuance, Mr. B is bound to accept the profits as agreed to by the partners. He cannot
PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 13

challenge the accounts. He is only entitled to receive the share of profits of Mr. A
(transferring partner).
15. According to Section 41 of the Indian Partnership Act, 1932, a firm is compulsorily
dissolved;
(a) by the adjudication of all the partners or of all the partners but one as insolvent, or
(b) by the happening of any event which makes it unlawful for the business of the firm to
be carried on or for the partners to carry it on in partnership.
However, where more than one separate adventure or undertaking is carried on by the
firm, the illegality of one or more shall not of itself cause the dissolution of the firm in
respect of its lawful adventures and undertakings.
Here, MN has to compulsorily dissolve due to happening of law which bans the usage of
ajinomoto. Else the business of the firm shall be treated as unlawful.
However, the illegality of ajinomoto business will in no way affect the legality o r dissolution
of the other line of business (paper plates & cups). MN can continue with paper plates and
cup manufacture.
16. A minor cannot be bound by a contract because a minor’s contract is void and not merely
voidable. Therefore, a minor cannot become a partner in a firm because partnership is
founded on a contract. Though a minor cannot be a partner in a firm, he can nonetheless
be admitted to the benefits of partnership under Section 30 of the Indian Partnership Act,
1932. In other words, he can be validly given a share in the partnership profits. When this
has been done and it can be done with the consent of all the partners then the rights and
liabilities of such a partner will be governed under Section 30 as follows:
Rights:
(i) A minor partner has a right to his agreed share of the profits and of the firm.
(ii) He can have access to, inspect and copy the accounts of the firm.
(iii) He can sue the partners for accounts or for payment of his share but only when
severing his connection with the firm, and not otherwise.
(iv) On attaining majority, he may within 6 months elect to become a partner or not to
become a partner. If he elects to become a partner, then he is entitled to the share to
which he was entitled as a minor. If he does not, then his share is not liable for any
acts of the firm after the date of the public notice served to that effect.
14 FOUNDATION EXAMINATION: NOVEMBER, 2021

17. Comparison between an LLP and partnership can be analysed on the below tabulated
parameters.
Basis LLP Partnership firm
1. Regulating Act The Limited Liability The Indian Partnership Act,
Partnership Act, 2008. 1932.
2. Body corporate It is a body corporate. It is not a body corporate,
3. Separate legal It is a legal entity separate It is a group of persons with
entity from its members. no separate legal entity.
4. Creation It is created by a legal It is created by an
process called registration agreement between the
under the LLP Act, 2008. partners.
5. Registration Registration is mandatory. Registration is voluntary.
LLP can sue and be sued Only the registered
in its own name. partnership firm can sue
the third parties.
6. Perpetual The death, insanity, The death, insanity,
succession retirement or insolvency of retirement or insolvency of
the partner(s) does not the partner(s) may affect its
affect its existence of LLP. existence. It has no
Members may join or leave perpetual succession.
but its existence continues
forever.
7. Name Name of the LLP to No guidelines. The partners
contain the word limited can have any name as per
liability partners (LLP) as their choice.
suffix.
8. Liability Liability of each partner Liability of each partner is
limited to the extent to unlimited. It can be
agreed contribution except extended upto the personal
in case of willful fraud. assets of the partners.
9. Mutual agency Each partner can bind the Each partner can bind the
LLP by his own acts but firm as well as other
not the other partners. partners by his own acts.
10. Designated At least two designated There is no provision for
partners partners and atleast one of such partners under the
them shall be resident in Partnership Act, 1932.
India.
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11. Common seal It may have its common There is no such concept in
seal as its official partnership
signatures.
12. Legal Only designated partners All partners are responsible
compliances are responsible for all the for all the compliances and
compliances and penalties penalties under the Act.
under this Act.
13. Annual filing of LLP is required to file: Partnership firm is not
documents (i) Annual statement of required to file any annual
accounts document with the registrar
(ii) Statement of of firms.
solvency
(iii) Annual return with
the registration of
LLP every year.
14. Foreign Foreign nationals can Foreign nationals cannot
partnership become a partner in a LLP. become a partner in a
partnership firm.
15. Minor as partner Minor cannot be admitted Minor can be admitted to
to the benefits of LLP. the benefits of the
partnership with the prior
consent of the existing
partners.
18. It was decided by the court in the case of Gilford Motor Co. Vs. Horne, that if the company
is formed simply as a mere device to evade legal obligations, though this is only in limited
and discrete circumstances, courts can pierce the corporate veil. In other words, if the
company is mere sham or cloak, the separate legal entity can be disregarded.
On considering the decision taken in Gilford Motor Co. Vs. Horne and facts of the problem
given, it is very much clear that Seven Stars Timbers Private Limited was formed just to
evade legal obligations of the agreement between Mr. Dhruv and Sunmoon Timber Priva te
Limited. Hence, Seven Stars Timbers Private Limited is just a sham or cloak and separate
legal entity between Mr. Dhruv and Seven Stars Timbers Private Limited should be
disregarded.
19. According to the provisions of Section 2(45) of Companies Act, 201 3, Government
Company means any company in which not less than 51% of the paid-up share capital is
held by-
(i) the Central Government, or
(ii) by any State Government or Governments, or
16 FOUNDATION EXAMINATION: NOVEMBER, 2021

(iii) partly by the Central Government and partly by one or more State Governments, and
the section includes a company which is a subsidiary company of such a Government
company.
According to Section 2(87), “subsidiary company” in relation to any other company (that is
to say the holding company), means a company in which the holding exercises or controls
more than one-half of the total voting power either at its own or together with one or more
of its subsidiary companies.
By virtue of provisions of Section 2(87) of Companies Act, 2013, Shah Auto Private Limited
is a subsidiary company of Narendra Motors Limited because Narendra Motors Limited is
holding more than one-half of the total voting power in Shah Auto Private Limited. Further
as per Section 2(45), a subsidiary company of Government Company is also termed as
Government Company. Hence, Shah Auto Private Limited being subsidiary of Narendra
Motors Limited will also be considered as Government Company.
20. As per the provisions of the Companies Act, 2013, only a natural person who is an Indian
citizen and resident in India (person who stayed in India for a period of not less than 120
days during immediately preceding financial year) –
- Shall be eligible to incorporate an OPC
- Shall be a nominee for the sole member.
(i) In the given case, though Mr. A is an Indian citizen, his stay in India during the
immediately preceding previous year is only 115 days which is below the requirement
of 120 days. Hence Mr. A is not eligible to incorporate an OPC.
Also, even though Mr. B’s name is mentioned in the memorandum of Association as
nominee and his stay in India during the immediately preceding financial year is more
than 120 days, he is a foreign citizen and not an Indian citizen. Hence B’s name
cannot be given as nominee in the memorandum.
(ii) Since Mr. A is not eligible to incorporate a One Person Company (OPC), he will be
contravening the provisions, if he incorporates one. He shall be punishable with fine
which may extent to ten thousand rupees and with a further fine which may extent to
One thousand rupees every day after the first during which such contravention
occurs.
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 17

SECTION -B: BUSINESS CORRESPONDENCE AND REPORTING

QUESTIONS
Part-A
Chapter-1 Communication
1. What are the different types of Formal Communication?
2. How do cultural barriers affect communication? Discuss.
Part-B
Chapter-2 Sentence Types, Active-Passive Voice and Direct-Indirect Speech
1. Change the following sentences into passive voice.
1. Did she do her duty?
2. The tiger was chasing the deer.
3. She has learned her lessons.
4. Have you finished the report?
5. The police have caught the thief.
2. Change the following sentences into active voice.
1. The jackpot will be won by her.
2. Yam is eaten by people in my country
3. The mother tongue would be taught to him by her.
4. A stone was being thrown by the kid.
5. The door had been knocked at by someone
3. Change the following sentences into indirect speech.
1. She said, "He works in a bank."
2. He said, "I'm coming!"
3. She said, "We went out last night."
4. Neeraj said, "I was waiting for the bus when he arrived."
5. Mother said, "You should go to bed early."
Chapter-3 Vocabulary
1. Select a suitable synonym that best expresses the meaning of the words
1. Acumen
(a) Abundance (b) Bitterness (c) Deficit (d) Quickness of insight
18 FOUNDATION EXAMINATION: NOVEMBER, 2021

2. Nascent
(a) Initial (b) Unpleasant (c) Latest (d) Crude
3. Interim
(a) Temporary (b) Internal (c) Timely (d) Interval
4. Perspicacious
(a) Bad (b) Clear (c) Hazy (d) Shrewd
5. Incensed
(a) Affected (b) Incited (c) Encouraged (d) Inspired

2. Select a suitable antonym that best expresses the opposite meaning of the words
1. Anomalous
(a) Usual (b) Connected (c) Vicious (d) Capacious
2. Preposterous
(a) Apologetic (b) Credible (c) Conceited (d) Complacent
3. Puissance
(a) Repudiation (b) Impotence (c) Approbation (d) Ignorance
4. Deleterious
(a) Inclusive (b) Impulsive (c) Pathetic (d) Salubrious
5. Jocose
(a) Diseased (b) Playful (c) Dull (d) Humorous

3. Choose the option that best expresses the meaning of each of these idioms
1. With open arms
(a) Warmly (b) Cold blooded (c) Resemble (d) Coldly
2. By leaps and bounds
(a) very slow (b) very fast (c) in details (d) aimlessly
3. Lions share
(a) look angrily (b) major par (c) lions food (d) heart of the prey
4. To cry wolf
(a) To refer to (b) To emphasise (c) To have no result (d) To give false alarm
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 19

5. A turn coat
(a) One who (b) A wet coat (c) A poor man (d) Man of principal
changes one's
opinion or party
Part-C
Chapter-4
1. Read the passage carefully and answer the questions that follow:
There are two ways of carrying out most of the operations we perform in the course of our
daily life and work. We may learn by trial and error to perform the operation and afterwards
repeat it mechanically, as when a man learns to drive a car without knowing what goes on
under the bonnet. Or we may study the true nature of the operation and see why we may
study the true nature of the operation and see why we use the methods we do, as when a
motorist studies and understands the mechanism of his car. Both men may succeed in
conveying their families to and from a Sunday picnic, but there is no doubt as to who will
be potentially the better driver and the one more capable of dealing with a breakdown
should it occur.
Selling is another such operation. The mechanism of a sales transaction is infinitely more
complicated than that of the most expensive motorcar since selling involves the inter -play
of human motives and reactions rather than of mechanical principles. Yet it is possible for
a salesman to sell mechanically – and all too many of them do! But for true success in
selling an appreciation of those human motives and reactions is indispensable.
When we look at the chain of processes by which goods and services of all kinds are
placed at the disposal of the final consumer, we find one kind of link which is common to
all types of merchandise and all kinds of service. That link is the sale. It may appear several
times in one chain – as where raw wool is sold to the spinner, who sells the resultant yarn
to the weaver, the latter selling the cloth made from the yarn to the maker -up, who in turn
sells the garment made from the cloth to the retailer to be re-sold to the ultimate wearer.
Or it may appear only once, as it does when a smallholder picks the fruit from his orchard
and sells it by the roadside. Wherever man produces, other than for his own personal
consumption, there is the raw material of a sale – that link which joins together the producer
and consumer; a link, therefore, every bit as important as the manufacturing processes
which change the shape of raw materials to the finished article, and transportation which
changes the location of raw materials and the finished products.
The first thing we notice in examining this link is that it brings about an exchange between
two parties. Now if each of two parties has something that the other wants, and if the two
units can be equated, it is clear that an exchange could take place. A hungry tailor and a
thread-bare baker could obviously ‘do business’. The difficulty of expressing the want for
20 FOUNDATION EXAMINATION: NOVEMBER, 2021

a suit of clothes in terms of loaves of bread is overcome, in all but the most primitive
economies; by the use of a medium in terms of which both wants can be measured.
This medium of exchange, or ‘money’, is also used to facilitate, by remote control as it
were, the exchange itself. Wants, in our modern civilization, are complex and varied. These
wants are satisfied by individuals and organizations each performing a part only of the
process which produces the finished article. The marrying of wants and satisfactions
directly would be an impossible task – the hungry tailor might search along while with a
suit of clothes over his arm before he found a threadbare baker willing to make the
necessary exchange. And even this picture is an over-simplification of the problem in these
days of the minute subdivision of labour, when the ‘tailor’ might be the operator of a button-
hole stitching machine and the ‘baker’ a maintenanc ce mechanic or a backhouse oven.
As we know, each exchanges his ‘product’ for a common medium in the shape of money,
which he then uses to procure the satisfaction he desires.
1. According to the passage what is/are the way(s) to perform operations of life are?
1. Learning by trial and error
2. Repeating it mechanically
3. Studying the true nature of the operation
4. Driving a car without knowing what goes on under the bonnet
a. 1&3
b. 1, 2 & 3
c. 3&4
d. Only 1
2. Why selling operation is more complicated than that of the most expensive motor car?
a. The true success in selling is an appreciation of human motives and
reactions
b. Selling involves the inter-play of human motives and reactions rather than of
mechanical principles.
c. One can learn driving a car without knowing what goes on under the bonnet.
d. We can study the nature of the operations in selling process.
3. The link that is common to all kinds of merchandise and all kinds of services is
a. The chain of processes
b. Sale
c. The producer and consumer
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 21

d. Manufacturing process
4. A hungry tailor and a thread-bare baker could obviously ‘do business’ because
a. They want ‘money’ in exchange.
b. Their units can be equated.
c. Each of the two parties has something that the other wants
d. They are just performing their part/role.
5. Which is the most suitable one-line central idea of the passage?
a. Business between a tailor and a baker.
b. Process by which goods and services of all kinds are placed at the disposal
of the final consumer.
c. Selling as a link which is common to all types of merchandise and all kinds
of services
d. Concept of business in modern world.
2. Read the passage carefully and answer the questions that follow:
Raising funds for elections has been a unique feature of Indian politics from the very
beginning and it will not be wrong to say that it is one of the most dominant motive forces
behind political corruption. A strange hawala scandal came to light in January 1996, which
was then the chief vehicle exclusively for politicians to raise election funds for their parties
and themselves via illegal foreign exchange transactions. This raised huge public attention
on both corruption and its linkage with our great democratic festival of elections. The
explosion of the corrupt fund-raising incidents in connection with arms deals by
Tehelka.com in March 2001 was the next mind-blowing eye-opener for all. The notorious
incidents highlighted the requirement for reform of party and election finance, including the
possible option of state funding of elections. To have a clear blotless democracy the need
of Political finance reform is a must as elections are the foundation. What will happen to
our great building of democratic India if its foundation stones have been sunk in the waters
of corruption before using?
There are a lot of working systems managing political, including election, finance around
the world. The funds are needed for various operations of Political parties: election
campaigns, inter-election maintenance of their organizations and political activities, and
support of research and information infrastructure for the parties. Election campaigns are
always the primary visible activity requiring funds. Unfortunately, this has made political
parties (of the right and centre) unduly dependent on big business houses and wealthy
individuals. On the other hand Parties of the left became dependent on the collective
contributions of workers, often channelled through affiliated trade unions. Such interests,
typically, seek rents as a quid pro quo for political donations.
22 FOUNDATION EXAMINATION: NOVEMBER, 2021

We have to get to the roots of the problem to bring election finance reform. We need to
have a focused spotlight and restructuring management related to the election campaign
costs, laws to maintain transparency in the election-related fundraising and checks for
correction scandals. It was widely felt worldwide that a free-for-all system of election fund-
raising gave excessive power to the rich business organizations and individuals, not only
over left-of-centre parties but even pro-business parties and politicians.
If we study the fundamentals of political finance reform in democracies worldwide, we
would have certain characteristics conspicuous to us: limits on expenditure including sub -
limits on particular expenditure; limits on contributions from individuals and organizations;
public funding, full or partial, of elections and/or parties; and reporting and disclosure of
election, party and candidate finances in some form as an administrative pre -requisite for
implementation of any or all of the above.
It is a fact that some democracies have more frequently applied limits on expenditures than
limits on contributions to parties/candidates. The point that they missed is that their
limitation laws applied only to election campaigns, usually limited to the format period of
the campaigns, rather than to general party expenditures. They aimed to reduce costs for
all contestants, thus indirectly addressing the issue of equality of political opportunity.
Usually, the limits apply to the amounts that candidates and/or parties may spend on
election campaigns. Within these overall maxima, there are often limits on the amounts
that may be spent on particular items, for example, broadcasting, advertising, wall posters
and billboards.
1. According to the passage what is/are the reason(s) for warranting a discussion on
political finance reform?
1. Increasing costs attached to political campaigns.
2. The polity’s concern for equal opportunity for political participation.
3. Instances of corruption.
4. Political parties’ excessive dependence on big business and wealthy
individuals.
a. 2 and 4
b. 1, 2 and 3
c. 1 and 3
d. 2, 4 and 3
2. What according to the passage is the difference between parties of the left and right
in the dependence on funds for election campaign?
a. Political parties of the left depend on the collective wealth of the unions
whereas those of the right depend on big business and wealthy individuals
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 23

b. Political parties of the right depend on large business organizati ons and
affluent individuals whereas those of the left depend on the collective
contribution of workers.
c. Political parties of the right depend on large MNCs and corporate houses
whereas those of the left depend on contributions from the common man.
d. Political parties of the right depend on their networks of influential individuals
whereas those of the left depend on contributions from the trade unions.
3. Political funds are used for which of the following purpose (s)?
1. To influence the electorate.
2. To ensure inter-election maintenance of the political organization and
political activities.
3. To allow for sustenance of research infrastructure for the political parties.
4. To introduce an understanding of political issues amongst the electora te.
a. Both 1 and 4
b. Only 2, 3 and 4
c. Both 3 and 4
d. Both 2 and 3
4. What is the primary purpose of the passage?
a. Discuss the need for reform of political finance.
b. Discuss the methodology to ensure political finance reform.
c. Discuss the ways and means to bring about stability of democracy.
d. Discuss the need for reducing widespread cynicism about parties and
politicians
5. According to the passage, democracies worldwide focus on which main
characteristics of political finance reform?
Chapter-5
1. Read the following passages carefully. (i) Make notes, using headings, sub-headings and
using abbreviations wherever necessary. (ii) Write summary.
Life began to change in England in the middle of the eighteenth century, when machines
began to appear. Driven by waterwheels, James Hargreaves’s spinning jenny carded wool
or cotton. Carding means to comb the tangled fibers so that they could be spun into yarn
or thread.(Jenny is short for “engine.”). Sir Richard Arkwright invented a machine that did
the spinning. It twisted wool or cotton into yarn and thread many times faster than the most
24 FOUNDATION EXAMINATION: NOVEMBER, 2021

skilful person with a hand-turned spinning wheel could do it. Edmund Cartwright also
helped to found another industry by inventing a rope-making machine. Machines to
produce other goods followed at a dizzying rate.
When cloth-making and other crafts were done by hand and depended on human muscle
for power, they were done at home. It would have made no sense to have 50 women
working at hand-turned spinning wheels under one roof. Dozens of the new machines,
however, could be turned by a fast-running river or by a stream engine, which had also
been invented in English. Workers, mostly girls and women at first, had to be brought to
the riverside factory or mill, with its whirring belts and pulleys. Because they worked 14 or
16 hours a day and walked to work, they could not live too far from the mill. Among its
many effects, the Industrial Revolution caused the rapid growth of cities and towns.
The Industrial Revolution made Great Britain the world’s richest nation and, in time, the
most powerful. The textiles that English mills turned out by the ton were better and cheaper
than handmade cloth. Every country in the world wanted to buy them.
Understandably, the British placed a high value on their machinery. The cloth was for sale,
but not the spinning jennies and power looms that made it. In fact, it was illegal for anyone
who worked in a textile mill to leave the country, because with them would go their
knowledge of the machines.
In 1789, Samuel Slater, a 23-year-old English machinist, heard that American state
legislatures had offered large sums of money to machine experts who would defy the
British law and come to the United States. He managed to slip out of Great Britain and get
to New York. There he announced that he had memorized the plans for an entire spinning
factory and was prepared to build one. Moses Brown, a wealthy Quaker merchant, was
quicker than anyone else. He wrote to Slater, “If thou canst do this thing, I invite thee to
come to Rhode Island and have the credit of introducing cotton-manufacturing into
America.”
2. The myth of modern man does not do away with the truth that man always remains
essentially the same with regard to his moral obligation, his need of redemption and the
true sources of happiness. Man, as such, always lacks of some positive good. He always
lacks of something required for an adequate adjustment and efficiency. Man is complex
and needs many things.
Psychologists speak of different basic needs. Freud said that man wants most of all to be
loved. Adler, that he wants most of all to be significant. Jang, that he wants security. A
need is the lack of some good. If we consider it in the philosophical sense, good is
something that fits to one’s nature, either because it is necessary – something which
completes or perfects a person. The need may be physiological, psychological, social or
religious. The satisfaction of material needs is more of an economic and political problem
than the psychological. While it is not always in our power and ability to satisfy the former,
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 25

much depends upon our efficiency, maturity and inner growth to satisfy, possess and enjoy
the latter- psychological, social and religious needs.
Man for the development of his personality needs adequate food, adequate housing,
adequate rest and recreation, economic autonomy and security and physical health. These
are basic necessities without which we can hardly say that man lives a human life and their
satisfaction is a matter of daily concern to each of us. Failure to satisfy some of the material
needs may affect our health – bodily and mental, even result in death. Of course, the
solution to many of these problems depends also on man’s mental moral and spiritual
outlook.
Many people are unaware of the emotions that might be responsible for their inefficiency.
They frequently have emotions of a wrong variety because the basic psychol ogical needs
are neglected. Psychological needs are many and diverse. Generally they are numbered
up to 13, but they can be reduced to six basic needs. Perhaps they are more important
than material needs for the proper adjustment and efficiency of a person. Failure to satisfy
any of these needs may disturb mental health and affect efficiency both at home and at
work.
Man is an animal both social and cooperating. He does not live and play alone. He needs
the family, the group and society. He depends on his fellowmen if he is to survive.
Cooperation enables him to become a specialist and to do his work well. In this
specialisation he finds a sense of accomplishment and fulfilment. Man’s efficiency depends
on his relationship with his fellowman, on his communion with another person, which leads
him to experience him as another self, and therefore makes him willing to protect him,
perfect him, develop him and make him become something.
Chapter-7 Précis Writing
1. Write précis and give appropriate titles for the passages given below.
1. Retailers are generally inclined to saying that the only thing that matters most is the
location. No doubt it is a traditional view that real estate plays a vital role and good
location does give a good launch. While more and more talented people today have
taken on the reins to deliver growth across organisations, a key enabler has been the
real estate space that we have at our disposal.
It is a fact that our organization does not own most of the real estate spaces that we
operate on. We have a clear, strong and vibrant model of establishing shopping malls
based on renting them out from developers and real estate owners on long -term
contracts. While during the initial years of our business, there were hardly any
shopping malls in the country, the scenario is clearly quite different today. It is a fact
that a lot of business organizations and critics were not convinced about the latent
potential of modern retail in the country even till a few years back. But we were
optimistic, well planned and super energetic and were ready to place a bet on the
26 FOUNDATION EXAMINATION: NOVEMBER, 2021

future based on our direct experience of the growing consumerism in the country.
Anyhow we booked a substantial amount of retail space.
Rising real estate costs, especially in the metros, seem to be the single biggest
impediment to the growth of this sector now. On the one hand, consumers have a
lower disposable income to spend on shopping, since a large chunk of their income
goes into servicing mortgages and home loans. On the other hand, high real estate
prices increase cost should be less than five percent of the total sales of a store in
order to provide maximum benefit to customers. At the current rates, it can be as high
as fifteen to twenty percent.
Fortunately, we do not pay such high rents because we secured our spaces much
before other retailers joined in and before the prices shot through the roof. This
foresight is now helping us deliver more value at a reasonable cost to our customers .
Though our study in the field we were convinced that a retailer doesn’t need to choose
the most posh part of a city in order to be a successful. We are in the opinion to look
at the future potential of a locality rather than the current profile. When it comes to
choosing the right location we mostly bank on a lot of soft data and general
observations. We visit neighbouring markets attempt to understand the kind of
products that are accessible at the nearest shops, speak to individuals in that
particular zone and try to perceive their shopping pattern. It has come to our
experience that often extremely unconventional tools have proved to be the best way
to judge the potential of a particular city or locality, rather the catchment analyses or
consultant reports.
2. India has progressed in leaps and bound in the nineties. The country has not only
attempted sustained efforts to improve equity but attained the second highest rate of
economic development globally also. There are numerous indications of uplifting trends in
the deepening of Democratic roots along with a win-win situation on social fronts. Social
transition has moved further along with leaders from the lower castes now occupying the
highest political offices in several provinces. In harmony with the strong-stream of growth,
Indian companies have materialized as ambitious multinationals with major acquisitions
abroad and ready to take on bigger challenges. The world, having recognized these
accomplishments, has apparently decided that despite some ostensible weaknesses in
public governance – headstrong poverty, low levels of human development indicators and
mounting left-wing extremism – India deserves to have a place at the global high table.
The beginning of India’s appearance as a global leader can be traced back to the BRICS
report by Goldman Sachs. His reports simply projected that the Indian economy will be the
third largest in the world by 2050 as per its prevailing GDP growth rates. Higher rates of
growth sustained over the present decade, despite internal political upheavals, external
shocks and global crisis, have further reinforce India’s claim to be included in any new
architecture of global governance. This was reflected by India’s inclusion initially as
member of the O-5 group that along with the G-8 made up the HAP process, which
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 27

unfortunately met an early demise. India was then given a prominent role in the G -20
grouping and its working groups and in the in constituted financial Stability Board.
The rising Sun of India’s global growth is best captured in that heads of state of all five
permanent members of the UN Security Council visited Delhi between July and December
2021. President Obama was very much in tune with Indian claim; he stated that India was
not just an emerging but an emerged power. And to further strengthen the sentiment, both
President Obama and subsequently President Sarkozy, during their visits endorsed India’s
bid to secure a permanent seat in the UN Security Council to which it has already been
elected as a temporary member for two years starting 2021.
This great acknowledgment by the existing world leaders justifies a long -standing
aspiration of the great nation of being treated as a global player and not being consigned
to a mere regional power, being linked with a rogue state like Pakistan. The Indian political
leadership, its diplomats and civil servants, in pursuit of this genuine recognition, have in
the past persistently tried to highlight its potential in numerous ways.
Chapter-8 Article Writing
1. Write an article in 250-300 words on the following topics:
(i) ‘Environmental Pollution – A Global Problem’
(ii) Problems of Youth
Chapter-9 Report Writing
1. An NGO, ‘Healthy India’ organized a health check-up camp in a slum at Mumbai. You
visited the camp. Write a report in 250-300 words covering advertisement, arrangements
etc.
2. You are an active member of ‘Love Animals Save Animals’ Club which works for the welfare
of animals by preventing cruelty to them. Recently, you visited Indian Animal Care Home.
You were pleasantly surprised to see the good treatment given to animals. Write a report
in 250-300 words on your visit.
Chapter-10 Formal letters and Official Communication
1. Write a letter as a reply to an inquiry about ‘Flora’ Silk Sarees of your manufacturing unit.
Give details about price and other important information regarding your products.
2. You are purchase manager of a company. You had ordered a 100 units of a product from
a company in Mumbai. While checking, the consignment was found to be poor in quality.
Write a complaint letter to the Sales Manager to replace the order.
Chapter-11 Writing formal mails
1. Write a mail to one of the customer of your company’s product ‘Tummy Trimmer’ to write
a review about the product.
28 FOUNDATION EXAMINATION: NOVEMBER, 2021

2. Write a mail to prospective clients, introducing your organization and informing about the
products/services offered by your company.
Chapter-12 Resume Writing
1. Prepare a Cover Letter and detailed resume for a candidate applying for the post of Article
Assistant in a CA Firm.
2. There is an urgent job opportunity in An Established Chartered Accountancy (CA) Firm for
the job of qualified / competent Chartered Accountant. Prepare a Cover Letter and detailed
resume for a candidate applying for the post.
Chapter-13 Meetings
1. The Marketing Head of ABC Co – Northern Region, a car manufacturing company, plans
to conduct a Monthly Sales Meeting. Set an agenda for the meeting (introducing new
starters; health & safety update; product revision update; Sales results & fo recasts; New
product launch; upcoming initiatives)
2. An organization ABC Co., had a quarterly sales meeting of Zone A, B, C & D. The senior
management along with managers from all zones, Manager Sales & Marketing, Production
Manager, Senior Manager Accounts and Tech-range Chief Engineer discussed various
issues like health & safety update, product revision update, sales results & forecasts;
Prepare minutes of the meeting with participants in discussion.

SUGGESTED ANSWERS

Revisionary Test Paper December 2021

CA Foundation Paper 2B Business Correspondence and Reporting
Answers
Chapter-1 Communication
1. Formal communication: Formal communication, both oral and written, follows certain
rules, principles and conventions in conveying the message. The hierarchy in the
organisation has to be followed. Formal format, style and language have to be used. The
communication pattern can be vertical, horizontal or diagonal.
• Vertical: Information can flow upwards or downwards in the organisation. Data that
is collected flows up to the top levels of management for review and decision making,
while instructions and orders are passed down from the managements/ seniors to the
subordinates for implementation.
• Horizontal: Horizontal communication that involves communication between two
parts of the organisation at the same level. For example, the managers of a project
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 29

in a company may hold a regular daily, weekly or monthly meeting to discuss the
progress of the project.
• Diagonal: Cross-functional communication between employees at different levels of
the organisational hierarchy is described as diagonal communication. Diagonal
communication is increasingly common in larger organisations. It reduces the
chances of distortion or misinterpretation by encouraging direct communication
between the relevant parties. For example, a junior engineer reports directly to the
General Manager regarding the progress on the project.
2. Cultural differences between people from various countries, regions tribes and, religions,
where words and symbols may be interpreted differently can result in communication
barriers and miscommunications. Multinational companies offer special courses and
documents to familiarise their staff with the culture of the country where they are based for
work.
Chapter-2 Sentence Types Active-Passive Voice and Direct-Indirect Speech
Ans. 1.
1. Was her duty done by her?
2. The deer was being chased by the tiger.
3. Her lessons have been learnt by her.
4. Has the report been finished by you.
5. The thief has been caught by the police.
Ans. 2
1. She will win the jackpot.
2. People eat yam in my country.
3. She would teach him the mother tongue.
4. The kid was throwing a stone.
5. Someone had knocked at the door.
Ans. 3
1. She said that he worked in a bank.
2. He said that he was coming.
3. She said that they had gone out last night.
4. Neeraj said that he had been waiting for the bus when he arrived.
5. Mother instructed that I should go to bed early.
30 FOUNDATION EXAMINATION: NOVEMBER, 2021

Chapter-3
Ans.1
1. d, 2. a, 3. a, 4. d, 5. b
Ans. 2
1. a, 2. b, 3. b, 4. d, 5. c
Chapter-4
Ans. 1
1. a 2. b 3. b 4. c 5. c
Ans. 2
1. c 2. b 3. d 4 a 5. a
Ans.3
1. a, 2. b, 3. b, 4. d, 5. a
Chapter-5
Ans.1
INDUSTRIAL REVOLUTION & ENGLAND
I. Changed life in England
I. (i) Mddl of 18 th century
(ii) Mchns appear
I.(ii) a. Spngjenny by JH
I.(i) b. SpngMchn by SRA
I.(i) c. Rope-makgMchn by EC
I.(iii) Mchnsprdc other goods
II. Riverside Factories or Mills
II. (i) No dpndncy on human msl
(ii) Less workers on spngwhls
(iii) Riverside factory or mill rplcd Homes
(iv) Rpd growth of cities
III. Monopoly
III. (i) GB
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 31

III. (i) a. Richest nation

III. (i) b. Most powerful
III. (ii) English Textiles
III. (ii) a. b & c
III. (ii) b. In Dmnd
IV. Secrecy
(i) Mchns not on sale
(ii) Mill wrkrs can’t leave cntry
V. Experts Reach America
(i) SS Defy British Law
V. (i) a. Slip to NY, US
V. (i) b. Memorised plan for spngfctry
(ii) Wealthy Quaker Mrchnt invitation for cotton-mnfctrng
KEY:-
1. Mddl - Middle
2. mchn – machine
3. mchns – machines
4. spng – spinning
5. makg – making
6. prdc – product
7. dpndncy – dependency
8. msl – Muscle
9. whls – wheels
10. rplcd – replaced
11. rpd– rapid
12. dmnd – demand
13. wrkrs – workers
14. cntry – country
15. fctry – factory
32 FOUNDATION EXAMINATION: NOVEMBER, 2021

Abbreviations:
1. JH – James Hargreaves
2. SRA – Sir Richard Arkwright
3. EC – Edmund Cartwright
4. GB – Great Britain
5. b & c – better & cheaper
6. SS – Samuel Slater
7. NY – New York
8. US – United States
9. Mrchnt - Merchant
10. Mnfctrng – manufacturing
SUMMARY
Inventions of machine brought a great change in England in the middle of the eighteenth
century. It ended the era of dependency on human power in cloth-making and other craft
industry. Fast-running rivers and especially stream engine played a very important role in
the process of establishing riverside factories or mills. This caused a rapid growth of cities
and towns in the Great Britain. The raising demand of textiles of English mills made Britain
the world’s richest and most power nation. It became illegal for a mill worker to leave the
country or leak the knowledge of machines. Nevertheless, the expertise researched
America.
I. The myth of modern man
I. (i) Same with rgrd
I. (i) a. Moral oblgtn
I. (i) b. Nd of rdmptn
I. (i) c. True sources of hppnss
I. (ii) Lacks
I. (ii) a. some +ive good
I. (ii) b. adequate adjtmnt&effcncy
I. (iii) Complex &nds many thngs
II. Psychologists on Man
II (i) Dffrnt basic nds
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 33

II. (i) a. Freud - to be loved

II. (i) b. Adler - to be sgnfcnt
II. (i) c. Jang -scrty
II (ii) Ndsdscrbd
II.(ii) a. lack of some good
II.(ii) b. physlgcl, psychlgcl, social or religious
II (iii) Good dscrbd
II (iii) a.completes or perfects prsn
II (iv) Psychlgclnds
II (iv) a. not always stsfd
III. To Develop personality
III. (i) Man nds
III. (i) a. adqt food
III. (i) b. adqt housing
III. (i) c.adqt rest &rcrtn
III. (i) d.EA
III.(i) e. security &PH
III. (ii) If not satisfied
III. (ii) a. may affect health
III. (iii) Solution – MMS Outlook
IV. Emotions & Inefficiency
IV. (i) Nglctdpsyclgclnds
IV. (i) a. Emotions of wrong variety
IV. (ii) Psychlgclnds
IV. (ii) a. 13 in nmbr
IV. (ii) b. 6 basic nds
IV. (ii) c. imprtnt than material nds
IV. (iii) Failure to stsfy emotional nds
IV. (iii) a. dstrb mental health
34 FOUNDATION EXAMINATION: NOVEMBER, 2021

IV. (iii) b. affect effcncy

V. Social Nds
V. (i) Man social animal
V. (i) a. not live alone
V. (i) b. work well when cprt
V. (i) c. finds acplsmt& fulfilment
V. (ii) Man’s effcncy
V. (ii) a.dpnds on rltnshp
V. (ii) b. Experience as another self
V.(iii) Willing to bcmsmthg
Key:-
1. rgrd – regard
2. oblgtn - oblication
3. rdmptn – redemption
4. hppnss – happiness
5. +ive – positive
6. Adjtmnt – adjustment
7. Effcncy – efficiency
8. Nd – need
9. Nds - needs
10. Thngs – things
11. Dffrnt – different
12. Sgnfcnt – significant
13. Scrty – security
14. Dscrbd – described
15. Physlgcl – physiological
16. Psychlgcl – psychological
17. Prsn – person
18. Stsfd – satisfied
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 35

19. Adqt – adequate

20. Rcrtn - recreation
21. Nglctd – neglected
22. Nmbr – number
23. Imprtnt – important
24. Stsfy – satisfy
25. Dstrb– disturbed
26. Cprt - cooperate
27. Acplsmt – accomplishment
28. Dpnds – depends
29. Rltnshp – relationship
30. Bcm – become
31. Smthg
32. EA – Economic Autonomy
33. PH – Physical Health
34. MMS – Mental, moral & spiritual
SUMMARY
Moral obligations, need of redemption and the true sources of happiness are always
important for a man. There always exists something that he lacks. According to
psychologists like Freud, Adler and Jung he wants love, significance and security
respectively. In the philosophical sense something good completes him. Psychological,
social and religious needs are linked with efficiency, maturity and inner growth. The
dissatisfaction related to basic necessities leads to physical as well as mental hazards and
can effect on efficiency level. Psychological needs are more important that material needs.
Man, being a social animal, can find satisfaction, efficiency and fulfilment through
cooperation and good relationship with his fellowmen.
Chapter-7
Strategies in retail
In retail sector, space and location are important. A good location lends a good launch. Real
estate spaces should be rented on long-term contracts from owners and developers rather than
owned by retailers for the establishment of shopping malls. Author’s team could manage to get
spaces for his stores at comfortable prices. His malls could deliver more value to the customers,
who generally allocate a very small part of their income for shopping. This could only happen
36 FOUNDATION EXAMINATION: NOVEMBER, 2021

as they focused on future potential of a locality rather than the current posh area of a city. The
strategy to study the market and perceive shopping pattern in an area through extremely
unconventional methods paved a clear path for their success.
India: A growing Power
India has raised its status in almost all facets in the nineties. It has exhibited growth on not only
economic front globally but has strengthened its democratic roots also. The world has
recognized its harmony on social grounds as well as its empowering status in the field of
international business. Being the third largest economy in the world India has all the ingredients
of a world leader. Report by Goldman Sachs clearly states India’s role in G-20 and the visit by
the heads of states of all five permanent members of the UN Security Council are clear indicators
of its emerging as a new global leader. The strong support of President Obama and President
Sarkozy have clearly justified India’s claim to be treated as a great global player.
Chapter-8
Answer Hints:
Environmental Pollution
• a matter of great concern
• self-created problem of man, a menace
• disturbs ecological balance
• need of the hour to protect and preserve the environment
• Causes:
o rapid deforestation
o depletion of the ozone layer
o global warming
o rapid urbanization
o industrial wastes, garbage and dirt
• Effects:
o melting of the polar glaciers
o swallowed forests
o famines, floods, landslides, soil erosions
o polluted cities
• Solution
o Afforestation
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 37

o Vertical gardening
o Awareness about green spaces
o Recycle waste
o Reuse articles
o Shifting to renewal energy
Problems of Youth
1. Causes
o Over ambitions parents
o Pressure of society
o Bullying taunting & teasing by fellow students
o Peer pressure
o Ragging
o Cyber bullying
o Substance Abuse
o Cut throat competition
o Forced career choices
2. Effects
o Succumb to very high amount of pressure
o Mental Health deteriorates
o Commit suicide
o Commit crimes
3. Solutions
o Inculcating Habit of Good reading
o Developing empathy
o Being informed about the child’s academic progress
o Soft skills and personality development classes
o Developing hobbies
o Active engagement in outdoor games
o Becoming friends to your children
38 FOUNDATION EXAMINATION: NOVEMBER, 2021

o Lending a patient ear

o Have meals together
o Spending quality time
o Consulting a professional Counselor
Chapter-8
Ans-1
1. Organizing under the guidance of
2. Collaboration with hospital
3. Advertisement through banners, posters etc.,
4. Registration for
o Free full body checkup
o Free pathological test
o General health checkup
o A voluntary blood donation camp
o Eye check-up stall
o Skin Care stall
o Kids Care
o Blood Pressure & sugar checkup
5. Team of physicians, dentists, gynecologists
6. Free consultation for:
o Chronic back pain
o Osteoporosis in females
o Malnutrition and deficiencies in children
o Inoculation derive for infants
7. Free medicine
8. Wellness programmes (special stall)
9. Simple Exercises & yoga
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 39

2. Visit to Animal Care Home Answer hints:

1. Importance of Animal Care
2. Magnanimity of human heart
3. A natural feeling of contentment
4. Abandoned pets are well taken care of
5. A wonderful shelter
6. Treatment provided to injured animals
o Well-equipped medical room
o Veterinary surgeon
7. Given for adoption
8. Clean enclosures
9. Helpline for animal ambulance
10. How to donate
o Process of donation
o Tax exemption, if any
Chapter-10 Formal Letters and Official Communication
Production Manager 27th July 20XX
ABC Silk Sarees,
Surat, Gujrat
Mr Vikram Kumar
Purchase Officer
Saree Bazar, New Delhi
Subject: Regarding your inquiry about ‘Flora’ Silk Sarees
Dear Sir
We thank you for your inquiry of 19th July, 20XX for assorted ‘Flora’ Silk Sarees. We appreciate
the interest that you have shown in our products. You might, perhaps be aware of that ours is
an established silk manufacturing unit with over fifty years of reputation. Recently we have
introduced three new varieties of Silk Sarees namely ‘Flora’, ‘Radha’ and ‘Ramayana’ in rainbow
colours and attractive designs.
40 FOUNDATION EXAMINATION: NOVEMBER, 2021

Since we earnestly desire to secure larger orders, we have quoted very low prices on attractive
terms. No shipping charges will be levied on orders amounting to Rs. 30,000 or more. As there
are indications of rise in silk prices, we shall be unable to repeat these prices and terms after
our present stock is exhausted. We recommend you to place your order before 20th August
20XX. Your order will receive our prompt attention.
Yours faithfully,
Mr. DFG
Production Manager
Encl: Catalogue.
Answer 2
VJ Dealers Date: Feb. 7, 20XX
21, Station Road
New Delhi – 22

The Sales Manager,

SDF Traders,
15, Industrial Road
Ramnagar, Mumbai
Subject: Complaint for Order No. XXXX dispatched on 3rd Feb. 20xx
Mr. BNM,
With reference to the subject, Order No. XXXX for 100 units of product id xxxxx was placed
dated 22th Jan 20xx. The consignment received on 3 rd Feb, 20xx has been found to be of poor
quality and much higher in price as compared to the previously supplied units.
You are hereby requested to replace the order within 5 working days, failing which the order will
be summarily cancelled.
We look forward to swift action at your end.
Yours Faithfully,
Mr. CVB
Purchase Head
VJ Dealers
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 41

Chapter-11 Writing formal mails

Ans.1
Dear Ms. ABC
Greetings!
I am glad to receive your encouraging mail regarding our product “Tummy Trimmer”. Thanks for
expressing your satisfaction.
I am in the process of putting together a list of testimonials about our product “Tummy Trimmer”
from satisfied customers like you.
You are requested to take a few minutes to submit your comments/suggestio ns as part of
Product Review at the link: XXXXXXXX by 5 PM tomorrow.
You may also send a brief video using the product that will be featured in our commercial TV
campaign for the product.
Looking forward to your earliest response.
Thanks and Regards,
Ans.2
Ms. XYZ

Dear Sir,
Greetings from QWE Teleservices Pvt. Ltd.!
I would like to take this opportunity to introduce you to our organization that provides a host
of connectivity solutions with collaboration with Tata Tele Business Services – India’s largest
optic fibre network service provider.
Our entire range of products/services is enclosed herewith for your reference.
Kindly drop a call at our customer care helpline xxxxxxxxxx or the undersigned, should you
require any guidance/services for your esteemed organization.
Regards,
Mr. SDF
Sales Deptt
QWE Teleservices
(Mob) xxxxxxxxxx
42 FOUNDATION EXAMINATION: NOVEMBER, 2021

Chapter-12 Resume Writing

Ans. 1
To
Manager (HR)
ABC Consultants
B-19/444, Raj Vihar
New Delhi 1100xxx
Dated: 24th July 20XX
Subject: Application for the post of Article Assistant
Dear Sir,
Greetings! I am writing to express my interest in the above position in your esteemed firm.
I have just passed CA Intermediate Group-1 Exams in February 20XX. I would like to learn vital
aspects of the profession. Having a keen interest in international trade laws and taxation , I am
an avid reader of international accounting journals and remain abreast with the developments
in accounting worldwide.
I look forward to the opportunity for a personal interaction. Please find my resume at tached
herewith for your perusal. I assure you that I shall work with utmost commitment to your firm.
Thanking you for your consideration.
Sincerely yours
XXX
Address: XXX
RESUME:
Name: XYZ
Address: A-29, Radha Krishna Garden
New Delhi, 1100xx Email Id: xxx@gmail.com
Mobile No.- +91xxxxxxxxxx
CAREER OBJECTIVE:
I seek to join a firm where I can learn various aspects of profession and use my skills and
knowledge of MS Excel, MIS, Tally, and Taxation with GST.
I wish to contribute towards organizational goal through my technical skills, hard work and
initiative.
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 43

PROFESSIONAL QUALIFICATION:
1. Qualification: CA Intermediate Group 1
Year of Passing: Feb 2021
University/Board: Institute of Chartered Accountants of India, New Delhi
2. Qualification: CA Foundation
Year of Passing: Feb 2020
University/Board: Institute of Chartered Accountants of India, New Delhi
ACADEMIC QUALIFICATION:
1. Qualification: Bachelor of Commerce
Year of Passing: Pursuing
University/Board: C.C.S University, Meerut
2. Qualification: Intermediate
Year of Passing: 2019
University/Board: CBSE
Score/Marks: 78%
3. Qualification: High School
Year of Passing: 2017
University/Board: CBSE
Score/Marks: 80%
ACHIEVEMENTS:
§ Represented school as a part of the student delegation from the NCR region for the Event
“CONFLUENCE-2000”, held at HYDERABAD.
§ As Captain of the school cricket team. State-level cricket player.
§ Won First prize in Inter-school Quiz Competition
HONOURS AND AWARDS:
§ A consistent scholarship holder school.
§ Won 2nd Prize in the Inter-school Debate Competition.
44 FOUNDATION EXAMINATION: NOVEMBER, 2021

SKILLS:
MS- Office, Tally, Advance Excel, Payroll, MIS
Good Communication Skills, Analytical Skills and Decision Making Skills
PERSONAL DETAILS
Father’s Name : Mr. V.P. Singh
Date of birth : 17th June, 19xx
Gender : Female
Language Known : English, Hindi
DATE: 24th July 20XX
PLACE: XXX (NAME) XXX
To
Manager (HR)
XYZ
28, Jawahar Park
New Delhi 1100xxx
Dated: 24th July 20XX
Subject: Application for the post of Chartered Accountant
Dear Sir,
Greetings! I am writing to express my interest in the above position in your esteemed firm. I
have the requisite education and skills mentioned for the position. Kindly find my detailed
resume for your perusal/reference.
I did my articleship with M&M consultants, highly reputed firm having large client base ranging
from small, medium to large scale organizations. Owing to rich experience in diverse areas such
as accounts, auditing, taxation and compliance, I gained a lot of knowledge that would come
handy in my professional journey ahead. I would much appreciate the opportunity to contribute
to your ongoing growth and continued success.
I look forward to present myself for a personal interaction as per your convenience. I assure you
that I shall work with utmost commitment to your firm.
Thanks you for your consideration.
Sincerely yours
XXX
Address: XXX
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 45

RESUME:
Name: XYZ
Address: A-29, Radha Krishna Garden
New Delhi, 1100xx Email Id: xxx@gmail.com
Mobil No.- _+91xxxxxxxxxx
CAREER OBJECTIVE:
I seek to join a firm where I can learn various aspects of profession and use my skills and
knowledge of MS Excel, MIS, Tally, and Taxation with GST.
I wish to contribute towards organizational goal through my technical skills, hard work and
initiative.
PROFESSIONAL QUALIFICATION:
1. Qualification: CA Final
Year of Passing: Jan 2021
University/Board: Institute of Chartered Accountants of India, New Delhi
2. Qualification: CA Foundation
Year of Passing: XX 2016
University/Board: Institute of Chartered Accountants of India, New Delhi
ACADEMIC QUALIFICATION:
3. Qualification: Bachelor of Commerce
Year of Passing: XX 2019
University/Board: Delhi University
4. Qualification: Intermediate
Year of Passing: XX 2016
University/Board: CBSE
Score/Marks: 78%
5. Qualification: High School
Year of Passing: 2014
University/Board: CBSE
Score/Marks: 80%
46 FOUNDATION EXAMINATION: NOVEMBER, 2021

WORKING EXPOSURE
As an Article Assistant in M&M Consultants
Responsibilities: Efficiently worked as Audit Assistant, and worked as an effective te am member
for handling the Statutory Audits & Tax Audit assignments
ACHIEVEMENTS:

§ Represented school as a part of the student delegation from the NCR region for the Event
“CONFLUENCE-2000”, held at HYDERABAD.
§ As Captain of the school cricket team. State-level cricket player.

§ Won First prize in Inter-school Quiz Competition

HONOURS AND AWARDS:
§ A consistent scholarship holder school.
§ Won 2nd Prize in the Inter-school Debate Competition.
SKILLS:
MS- Office, Tally, Advance Excel, Payroll, MIS
Good Communication Skills, Analytical Skills and Decision Making Skills
PERSONAL DETAILS
Father’s name : Mr. XXXX
Date of birth : xxx, 19xx
Gender : Female
Language Known : English, Hindi

DATE: 24th August 20XX

PLACE: XXX (NAME) XXX
PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 47

Chapter-13 Meetings
Ans. 1.
(Meeting Title) Monthly Sales Meeting – ABC Co – Northern Region
(Venue, Time, Date)

Conference Room,
ABC Co., New Delhi

0900 hrs

Monday xx/xx/xxxx
Agenda Topic Details Speaker Duration
Light Refreshment
0830 hrs –
09:00 Introduction / New starters Mr. RS and Mr PJ, Meeting Co- 15 Mts
Overview Mr.MG ordinator
Guests: Ms. AB, Zonal
Manager; Mr. SC Off-shore
Product Manager; and Mr. S
V Tech-range Chief
Engineer.
09:15 Health and Revised procedures for Mr. RL Production 15 mts
safety update. hazardous chemicals near Manager
Sunder Van Production
facility.
09:30 Product revision Discussion on Model 4. New Mr. RL Production 30 mts
update. Product to be demonstrated Manager
10:00 Coffee break 15 mts
10:15 Sales results & Presentation on forecast Mr. AK, Zone A; 60 mts
forecasts. followed by discussion Ms., Zone B; Ms. R
G, Zone C;
Mr. TR, Zone D
11:15 Upcoming Brainstorm session – How Mr. RL Production 45 mts
initiatives. can we accelerate R&D w.r.t Manager with team
the offshore sector?
12:00 Meeting review, Mr. PJ Meeting Co- 30 mts
questions. ordinator
12:30 Thank you note Mr. RJ Chairperson 10 mts
12:40 Lunch
48 FOUNDATION EXAMINATION: NOVEMBER, 2021

Ans. 2
Participants in attendance: Managing Director, Zonal Managers, Manager Sales & Marketing,
Product Manager, Senior Manager Accounts and Tech-range Chief Engineer.
Date: July 8, 20xx
Meeting started at 10:00 am.
Participants: Ms. HT, MD, Mr. RK, Managing Director, Mr. PL, Production Manager, Mr. A K,
Sales & Marketing Manager, Mr. AS (North Zone) and Ms. DS (West Zone), Zonal Heads,
Marketing
Mr RK, Managing Director briefly introduced the agenda of the meeting i.e., update on health
& safety issues, product revision, sales results & forecasts; new product laun ch, major accounts
initiatives; new company car scheme, awards and incentive.
Mr PL, Production Manager
• Presented revised procedures for hazardous chemicals at New Delhi production plant.
Same procedure will be followed in all production plants.
• Presented Product revision update about Tech-range Model 4 now has stand-by mode
control.
• The product will be demonstrated next month.
Mr A K, Sales & Marketing Manager presented details about Sales in the previous quarter &
gave targets to the Zonal Heads to be circulated to the Sales and Marketing Departments.
Zonal Heads, Marketing
• Mr. AS and Ms DS presented Sales forecast and Advertising/Marketing ideas and
strategies.
• They presented the list of prospective clients and upcoming marketing activities.
Ms S S, Production Manager along with Tech-range Chief Engineer
• Presented details about new product range to be launched next month.
• Demonstrated the product performance data, USPs, benefits for key sectors, and details
of launch promotion.
Ms. HS Senior Manager Accounts
• Budget Allocation
• Proposed session on cost cutting ideas across all sections in the organization
• With the permission of MD fixed it as chief agenda for next meeting
MD delivered vote of thanks
Group to again meet on August 8, 20xx at same time.
Test Series: April, 2023
MOCK TEST PAPER 1
FOUNDATION COURSE
PAPER – 1: PRINCIPLES AND PRACTICE OF ACCOUNTING
Question No. 1 is compulsory.
Attempt any four questions from the remaining five questions.
Wherever necessary, suitable assumptions should be made and disclosed by way of note forming part of
the answer.
Working Notes should form part of the answer.
Time Allowed: 3 Hours Maximum Marks: 100
1. (a) State with reasons, whether the following statements are true or false:
(i) The concepts of conservatism when applied to the Balance Sheet results in understatement
of assets.
(ii) Amount spent for the construction of temporary huts, which were necessary for construction
of the Cinema House and were demolished when the Cinema House was ready, is capital
expenditure.
(iii) Current Account and Account Current are one and the same.
(iv) In case the due date of a bill falls after the date of closing the account, the interest from the
date of closing to such due date is known as Red-Ink interest.
(v) On death of a partner, the firm gets surrender value of the joint life policy .
(vi) Company A is incurring huge losses, the Board of Directors are of the opinion that incase of
losses, there is no need to pay interest on debenture holders.
(6 Statements x 2 Marks = 12 Marks)
(b) Explain the objective of “Accounting Standards” in brief. (4 Marks)
(c) From the following transactions, prepare the Purchases Returns Book of Sampat & Co., a furniture
dealer and post them to ledger :
Date Debit Particulars
Note No.
04.01.2023 501 Returned to Duggal Furniture’s, Jaipur – 5 Tables @ ` 5,000.
09.01.2023 Chopra Furniture’s, Kota – accepted the return of Centre Tables
(which were purchased for cash) – 5 Centre Tables @ ` 4,400.
16.01.2023 502 Returned to Khanna Furniture’s, Bangalore –5 Dining Table @
` 4,500.
30.01.2023 Returned one Printer (being defective) @ ` 10,000 to B & Co.
(4 Marks)
2. (a) Mangalam group had Property, Plant and Machinery with a book value of ` 1,00,00,000/- on 31st
December, 2022. The balance in Revaluation Surplus on that date was ` 10,00,000/-. As part of
regular practice of revaluing the assets on yearly basis, another valuation was carried out on 31st
December, 2022. Evaluate the impact of Revaluation, if the fair market value as a result of
Revaluation done on 31st December, 2022 was (a) ` 1,05,00,000/- and (b) 85,00,000/-.You are
required to explain with reason the accounting treatment with Journal Entries.
1
(b) Prepare a Bank Reconciliation statement for Krishna Traders as on 31 st March,2023.
The cash book of Krishna Traders shows a debit balance of ` 8,24,400 at bank as on
31st March,2023, but you find that it does not agree with the balance as per Pass Book. After
checking you find the following:
1. On 12th March, 2023 the payment side of the Cash Book was under cast by ` 24,000/-
2. A cheque of ` 1,70,000 issued on 20th March, 2023 was not taken in the bank column.
3. On 22nd March, 2023 the debit balance of ` 37,000 as on the previous day, was brought
forwards as credit balance.
4. Out of the total cheques amounting to ` 84,000 issued in, the last week of March, 2023,
cheques aggregating ` 57,000 were encashed in March, 2023.
5. Dividends of ` 70,000 collected by the Bank and Fire insurance premium of ` 40,000 paid by
it were not recorded in the cash book.
6. One cheque issued to a Creditor of ` 2,58,000 was recorded twice in the Cash book.
7. A debtor Mr. A has deposited the Cheque for ` 64,000 into the bank directly in the month of
March, 2023 without intimating to Krishna Traders and the same cheque was dishonored by
the bank due to insufficient funds in the month of March itself.
8. A cheque from customer for ` 10,000 was deposited in bank on 28th March,2023 but was
dishonored and advice received from bank on 3rd April, 2023.
9. Bank paid credit card bill of ` 5,000 which is not recorded in cash book.
10. Bank wrongly credited cheque of ` 50,000 of other customer in our account.
11. Bank credited cheque of ` 4,000 in savings account of proprietor of Krishna Traders instead
of crediting cheque in current account of Krishna Traders.
12. ` 1,000 discount received wrongly entered in bank column in cash book.
13. Bank debited charges ` 400 on 25 th March for which no intimation received till 31 st March.
(5 + 15 = 20 Marks)
3. (a) Kamal of Gwalior consigned 15,000 kgs of Sugar at ` 30 per kg to his agent Vimal at Delhi. He
spent ` 5 per kg as freight and insurance for sending the Sugar at Delhi. On the way 100 kgs. of
sugar was lost due to the leakage (which is to be treated as normal loss) and 400 kgs. of sugar
was destroyed in transit. ` 9,000 was paid to consignor directly by the Insurance company as
Insurance claim. Vimal sold 7,500 kgs. at ` 60 per kg. He spent ` 33,000 on advertisement and
recurring expenses.
You are required to calculate:
(i) The amount of abnormal loss
(ii) Value of stock at the end and
(iii) Prepare Consignment account showing profit or loss on consignment, if Vimal is entitled to
5% commission on sales.
(b) Mr. Aryan owed ` 4,000 on 1st January, 2023 to Mr. Abram. The following transactions took place
between them. It is agreed between the parties that interest @ 10% p.a. is to be calculated on all
transactions.
`
15 January, 2023 Mr. Abram sold goods to Mr. Aryan 2,230
29 January, 2023 Mr. Abram bought goods from Mr. Aryan 1,200

2
10 February, 2023 Mr. Aryan paid cash to Mr. Abram 1,000
13 March, 2023 Mr. Aryan accepted a bill drawn by Mr. Abram for one 2,000
month
They agree to settle their complete accounts by one single payment on 15th March, 2023.
Prepare Mr. Aryan in Account Current with Mr. Abram and ascertain the amount to be paid. Ignore
days of grace.
(c) Mr. Gupta sends goods to his customers on Sale or Return. The following transactions took place
during the month of December 2022.
December 2 nd - Sent goods to customers on sale or return basis at cost plus 25% - ` 2,40,000
December 10 th - Goods returned by customers ` 1,05,000
December 17 th - Received letters from customers for approval ` 1,05,000
December 23rd - Goods with customers awaiting approval ` 45,000
Mr. Gupta records sale or return transactions as ordinary sales. You are required to pass the
necessary Journal Entries in the books of Mr. Gupta assuming that the accounting year closes on
31st Dec. 2022. Considered that the transaction values are at involve price (including profit margin).
(10 + 5 + 5 = 20 Marks)
4. (a) Planting & Associates. is a partnership firm with partners Seed, Plant and Flower, sharing profits
and losses in the ratio of 10:6:4. The balance sheet of the firm as at 31st March, 20 23 is as under:
Liabilities ` Assets `
Capitals: Land 30,000
Seed 2,40,000 Buildings 6,00,000
Plant 60,000 Machinery 3,90,000
Flower 90,000 3,90,000 Furniture 1,29,000
Reserves Investments 36,000
(un-appropriated profit) 60,000 Inventories 3,90,000
Long Term Debt 9,00,000 Trade receivables 4,17,000
Bank Overdraft 1,32,000
Trade payables 5,10,000
19,92,000 19,92,000
It was mutually agreed that Plant will retire from partnership and in his place Leaf will be admitted
as a partner with effect from 1 st April, 2023. For this purpose, the following adjustments are to be
made:
(a) Goodwill is to be valued at `3 lakh but the same will not appear as an asset in the books of
the reconstituted firm.
(b) Buildings and Machinery are to be depreciated by 5% and 20% respectively. Investments are
to be taken over by the retiring partner at `45,000. Provision of 20% is to be made on Trade
receivables to cover doubtful debts.
(c) In the reconstituted firm, the total capital will be ` 6 lakhs which will be contributed by Seed
Flower and Leaf in their new profit sharing ratio, which is 2:2:1.
(i) The surplus funds, if any, will be used for repaying bank overdraft.
(ii) The amount due to retiring partner shall be transferred to his loan account.

3
You are required to prepare
(a) Revaluation account;
(b) Partners’ capital accounts; and
(c) Bank account;
(b) The following are the balances as at 31 st March, 2023 extracted from the books of Mr. Shyam.
` `
Plant and Machinery 39,100 Bad debts recovered 900
Furniture and Fittings 20,500 Salaries 45,100
Bank Overdraft 1,60,000 Salaries payable 4,900
Capital Account 1,30,000 Prepaid rent 600
Drawings 16,000 Rent 8,600
Purchases 3,20,000 Carriage inward 2,250
Opening Stock 64,500 Carriage outward 2,700
Wages 24,330 Sales 4,30,600
Provision for doubtful debts 6,400 Advertisement Expenses 6,700
Provision for Discount on Printing and Stationery 2,500
debtors 2,750 Cash in hand 2,900
Sundry Debtors 2,40,000 Cash at bank 6,250
Sundry Creditors 95,000 Office Expenses 20,320
Bad debts 2,200 Interest paid on loan 6,000
Additional Information:
1. Purchases include sales return of `5,150 and sales include purchases return of ` 3,450.
2. Goods withdrawn by Mr. Shyam for own consumption ` 7,000 included in purchases.
3. Create a provision for doubtful debts @ 5% and provision for discount on debtors @ 2.5%.
4. Free samples distributed for publicity costing ` 1,650.
5. Wages paid in the month of April for installation of plant and machinery amounting to ` 900
were included in wages account.
6. Bank overdraft is secured against hypothecation of stock. Bank overdraft outstanding as on
31.3.2023 has been considered as 80% of real value of stock (deducting 20% as margin) and
after adjusting the marginal value 80% of the same has been allowed to draw as an overdraft.
7. Depreciation is to be provided on plant and machinery @ 15% p.a. and on furniture and fittings
@ 10% p.a.
Prepare a Trading and Profit and Loss Account for the year ended 31 st March, 2023 and a Balance
Sheet as on that date. Also show the rectification entries. (8 + 12 = 20 Marks)
5. (a) Roxy Library Society showed the following position on 31 st March, 2022:
Balance Sheet as on 31 st March, 2022

Liabilities ` Assets `
Capital fund 31,72,000 Electrical fittings 6,00,000
Expenses payable 28,000 Furniture 2,00,000

4
Books 16,00,000
Investment in securities 6,00,000
Cash at bank 1,00,000
Cash in hand 1,00,000
32,00,000 32,00,000
The receipts and payment account for the year ended on 31 st March, 2023 is given below:
` `
To Balance b/d By Electric charges 28,800
Cash at bank 1,00,000 By Postage and stationary 20,000
Cash in hand 1,00,000 2,00,000 By Telephone charges 20,000
To Entrance fee 1,20,000 By Books purchased 2,40,000
To Membership subscription 8,00,000 By Outstanding expenses paid 28,000
To Sale proceeds of old papers 6,000 By Rent 3,52,000
To Hire of lecture hall 80,000 By Investment in securities 1,60,000
To Interest on securities 32,000 By Salaries 2,64,000
By Balance c/d
Cash at bank 80,000
Cash in hand 45,200
12,38,000 12,38,000

You are required to prepare Income and Expenditure account for the year ended 31 st March, 2023
after making the following adjustments:
Membership subscription included ` 40,000 received in advance.
Provide for outstanding rent ` 16,000 and salaries ` 12,000.
Books to be depreciated @ 10% including additions. Electrical fittings and furniture ar e also to be
depreciated at the same rate.
75% of the entrance fees is to be capitalized.
Interest on securities is to be calculated @ 5% p.a. including purchases made on 1.10.20 22 for
` 1,60,000.
(b) A trader prepared his accounts on 31st March, each year. Due to some unavoidable reasons, no
stock taking could be possible till 15 th April, 2023 on which date the total cost of goods in his
godown came to ` 50,000. The following facts were established between 31 st March and
15th April, 2023.
(i) Sales ` 41,000 (including cash sales ` 10,000)
(ii) Purchases ` 5,034 (including cash purchases ` 1,990)
(iii) Sales Return ` 1,000.

5
(iv) On 15th March, goods of the sale value of ` 10,000 were sent on sale or return basis to a
customer, the period of approval being four weeks. He returned 40% of the goods on
10th April, approving the rest; the customer was billed on 16 th April.
(v) The trader had also received goods costing ` 8,000 in March, for sale on consignment basis;
20% of the goods had been sold by 31st March, and another 50% by 15 th April. These sales
are not included in above sales.
Goods are sold by the trader at a profit of 20% on sales.
You are required to ascertain the value of Inventory as on 31 st March, 2023. (15 + 5 = 20 Marks)
6. (a) Ashish applies for 2,000 shares of ` 10 each at a premium of ` 2.50 per share. He was allotted
1,000 shares. After having paid ` 3 per share on application, he did not pay the allotment money
of ` 4.50 per share (including premium) and on his subsequent failure to pay the first call of ` 2
per share, his share were forfeited. These share were reissued at ` 8 per share, his shares were
forfeited.
At the time of re-issue of forfeited shares of Mr. Ashish, final call money amount all other
shareholders were duly called up.
You are required to pass journal entries to record forfeiture and reissue of shares.
(b) Perfect Ltd. issues 3,00,000 12% Debentures of ` 10 each at ` 9.40 on 1st January, 2023. Under
the terms of issue, the Debentures are redeemable at the end of 5 years from the date of issue.
Calculate the amount of discount to be written-off in each of the 5 years.
(c) Explain in brief objectives of preparing Trial Balance.
Or
What are the rules of posting of journal entries into the Ledger? Explain in brief.
(10 + 5 + 5 = 20 Marks)

6
PAPER – 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

1. A enters into a contract with B that he (A) sells his house for ` 10,00,000 to B. Further they
both signed an agreement that if B uses the house for gambling purposes, then B shall pay
A ` 50,000 for it. B agreed to this, however after a year of sale, B started gambling business
in that house. Can A claim ` 50,000 from B? Discuss with reference to the provisions of
Indian Contract Act, 1872.
2. Seema was running a boutique in New Delhi. She has to deliver some cloth to her friend
Kiran who was putting up an exhibition at Mumbai. Seema delivered the sewing machine
and some cloth to a railway company to be delivered at a place where the exhibition was
to be held. Seema expected to earn an exceptional profit from the sales made at this
exhibition however she did not bring this fact to the notice of the railway’s authorities. The
goods were delivered at the place after the conclusion of the exhibition. On account of
such breach of contract by railways authorities, can Seema recover the loss of profits under
the Indian Contract Act, 1872?
3. Chandan was suffering from some disease and was in great pain. He went to Dr.
Jhunjhunwala whose consultation fee was ` 300. The doctor agreed to treat him but on
the condition that Chandan had to sign a promissory note of ` 5000 payable to doctor.
Chandan signed the promissory note and gave it to doctor. On recovering from the disease,
Chandan refused to honour the promissory note. State with reasons, can doctor recov er
the amount of promissory note under the provisions of the Indian Contract Act, 1872?
4. Mr. Aseem is a learned advocate. His car was stolen from his house. He gave an
advertisement in newspaper that he will give the reward of ` 10,000 who will give the
information about his car. Mr. Vikram reads the advertisement and on making some efforts
got the stolen car and informed Mr. Aseem. Mr. Aseem found his car but denied giving
reward of ` 10,000 to Mr. Vikram with the words, “An advertisement in newspaper is just
an invitation to make offer and not an offer. Hence, he is not liable to make the rew ard.”
State with reasons whether under Indian Contract Act, 1872, Mr. Vikram can claim the
reward of ` 10,000.
5. Mr. Singhania entered into a contract with Mr. Sonu to sing in his hotel for six weeks on
every Saturday and Sunday. Mr. Singhania promised to pay ` 20,000 for every
performance. Mr. Sonu performed for two weeks but on third week his health condition was
very bad, so he did not come to sing. Mr. Singhania terminated the contract. State in the
light of provisions of the Indian Contract Act, 1872:-

© The Institute of Chartered Accountants of India

2 FOUNDATION EXAMINATION: MAY, 2022

(a) Can Mr. Singhania terminate the contract with Mr. Sonu?
(b) What would be your answer in case Mr. Sonu turns up in fourth week and
Mr. Singhania allows him to perform without saying anything?
(c) What would be your answer in case Mr. Sonu sends Mr. Mika on his place in third
week and Mr. Singhania allows him to perform without saying anything?
6. “An anticipatory breach of contract is a breach of contract occurring before the time fixed
for performance has arrived”. Discuss stating also the effect of anticipatory breach on
contracts.
7. AB Cloth House, a firm dealing with the wholesale and retail buying and selling of various
kinds of clothes, customized as per the requirement of the customers. They dealt with Silk,
Organdie, cotton, khadi, chiffon and many other different varieties of cloth.
Mrs. Reema, a customer came to the shop and asked for specific type of cloth suitable for
making a saree for her daughter’s wedding. She specifically mentioned that she required
cotton silk cloth which is best suited for the purpose.
The Shop owner agreed and arranged the cloth pieces cut into as per the buyers’
requirements.
When Reema went to the tailor for getting the saree stitched, she found that seller has
supplied her cotton organdie material, cloth was not suitable for the said purpose. It has
heavily starched and not suitable for making the saree that Reema desired for. The Tailor
asked Reema to return the cotton organdie cloth as it would not meet his requirements.
The Shop owner refused to return the cloth on the plea that it was cut to specific
requirements of Mrs. Reema and hence could not be resold.
With reference to the doctrine of "Caveat Emptor' explain the duty of the buyer as well as
the seller. Also explain whether Mrs. Reema would be able to get the money back or the
right kind of cloth as per the requirement?
8. A went to B’s shop and selected some jewellery. He falsely represented himself to be a
man of credit and thereby persuaded B to take the payment by cheque. He further
requested him to hand over the particular type of ring immediately. On the due date, when
the seller, B presented the cheque for payment, the cheque was found to be dishonoured.
Before B could avoid the contract on the ground of fraud by A, he had sold the ring to C.
C had taken the ring in good faith and without any notice of the fact that the goods with A
were under a voidable contract. Discuss if such a sale made by non-owner is valid or not
as per the provisions of Sale of Goods Act, 1930?

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 3

9. Classify the following transactions according to the types of goods they are:
(i) A wholesaler of cotton has 100 bales in his godown. He agrees to sell 50 bales and
these bales were selected and set aside.
(ii) A agrees to sell to B one packet of sugar out of the lot of one hundred packets lying
in his shop.
(iii) T agrees to sell to S all the apples which will be produced in his garden this year.
10. Certain goods were sold by sample by A to B, who in turn sold the same goods by sample
to C and C by sample sold the goods to D. The goods were not according to the sample.
Therefore, D who found the deviation of the goods from the sample rejected the goods and
gave a notice to C. C sued B and B sued A. Advise B and C under the Sale of Goods Act,
1930.
11. Sohan, Rohan and Jay were partners in a firm. The firm is dealer in office furniture. They
have regular dealings with M/s AB and Co. for the supply of furniture for their business. On
30th June 2018, one of the partners, Mr. Jay died in a road accident. The firm has ordered
M/s AB and Co. to supply the furniture for their business on 25 May 2018, when Jay was
also alive.
Now Sohan and Rohan continue the business in the firm’s name after Jay’s death. The
firm did not give any notice about Jay’s death to the public or the persons dealing with the
firm. M/s AB and Co. delivered the furniture to the firm on 25 July 2018. The fact about
Jay’s death was known to them at the time of delivery of goods. Afterwards the firm became
insolvent and failed to pay the price of furniture to M/s AB and Co. Now M/s AB and Co .
has filed a case against the firm for recovery of the price of furniture. With re ference to the
provisions of Indian Partnership Act, 1932, explain whether Jay’s private estate is also
liable for the price of furniture purchased by the firm?
12. Moni and Tony were partners in the firm M/s MOTO & Company. They admitted Sony as
partner in the firm and he is actively engaged in day-to-day activities of the firm. There is
a tradition in the firm that all active partners will get a monthly remuneration of ` 20,000
but no express agreement was there. After admission of Sony in the firm, Moni and Tony
were continuing getting salary from the firm but no salary was given to Sony from the firm.
Sony claimed his remuneration but denied by existing partners by sayin g that there was
no express agreement for that. Whether under the Indian Partnership Act, 1932, Sony can
claim remuneration from the firm?
13. M/s XYZ & Company is a partnership firm. The firm is an unregistered firm. The firm has
purchased some iron rods from another partnership firm M/s LMN & Company which is
also an unregistered firm. M/s XYZ & Company could not pay the price within the time as

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4 FOUNDATION EXAMINATION: MAY, 2022

decided. M/s LMN & Company has filed the suit against M/s XYZ & Company for recovery
of price. State under the provisions of the Indian Partnership Act, 1932;
(a) Whether M/s LMN & Company can file the suit against M/s XYZ & Company?
(b) What would be your answer, in case M/s XYZ & Company is a registered firm while
M/s LMN & Company is an unregistered firm?
(c) What would be your answer, in case M/s XYZ & Company is an unregistered firm
while M/s LMN & Company is a registered firm?
14. “LLP is an alternative corporate business form that gives the benefits of limited liability of
a company and the flexibility of a partnership”. Explain.
15. Jagannath Oils Limited is a public company and having 220 members. Of which 25
members were employee in the company during the period 1 st April 2006 to 28 th June 2016.
They were allotted shares in Jagannath Oils Limited first time on 1 st July 2007 which were
sold by them on 1st August 2016. After some time, on 1 st December 2016, each of those
25 members acquired shares in Jagannath Oils Limited which they are holding till date.
Now company wants to convert itself into a private company. State with reasons:
(a) Whether Jagannath Oils Limited is required to reduce the number of members.
(b) Would your answer be different if above 25 members were the employee in Jagannath
Oils Limited for the period from 1 st April 2006 to 28 th June 2017?
16. A, B and C has decided to set up a new club with name of ABC club having objects to
promote welfare of Christian society. They planned to do charitable work or social activity
for promoting the art work of economically weaker section of Christian society. The
company obtained the status of section 8 company and started operating from 1 st April,
2017 onwards.
However, on 30th September 2019, it was observed that ABC club was violating the objects
of its objective clause due to which it was granted the status of section 8 Company under
the Companies Act 2013.
Discuss what powers can be exercised by the central government against ABC club, in
such a case?
17. An employee Mr. Karan signed a contract with his employer company ABC Limited that he
will not solicit the customers after leaving the employment from the company.
But after Mr. Karan left ABC Limited, he started up his own company PQR Limited and he
started soliciting the customers of ABC Limited for his own business purposes.

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 5

ABC Limited filed a case against Mr. Karan for breach of the employment contract and for
soliciting their customers for own business. Mr. Karan contended that there is corporate
veil between him, and his company and he should not be personally held liable for this.
In this context, the company ABC Limited seek your advice as to the meaning of corporate
veil and when the veil can be lifted to make the owners liable for the acts done by a
company?

SUGGESTED ANSWERS

1. According to Section 24 of the Indian Contract Act, 1872, in an agreement, where some
part of the object is legal and the other part is illegal, the question arises about the validity
and enforceability of such agreements. Where the legal and illegal part can be severed
and divided, and separated, lawful part of object is enforceable, and the unlawful part of
the object is void.
In the given case, A sells the house to B, is a valid transaction as the sale of house and
consideration paid for the same i.e. `10,00,000 is valid and enforceable. However, the
agreement to pay ` 50,000 for gambling done in the house is illegal and thus void.
Hence, in the instant case, sale of house agreement is valid agreement and gambling
agreement is illegal and not enforceable by law.
2. As per Section 73 to 75 of Indian Contract Act, 1872, Damage means a sum of money
claimed or awarded in compensation for a loss or an injury. Whenever a party commits a
breach, the aggrieved party can claim the compensation for the loss so suffered by him.
General damages are those which arise naturally in the usual course of things from the
breach itself. (Hadley Vs Baxendale). Therefore, when breach is committed by a party, the
defendant shall be held liable for all such losses that naturally arise in the usual course of
business. Such damages are called ordinary damages. However, special damages are
those which arise in unusual circumstances affecting the aggrieved party and such
damages are recoverable only when the special circumstances were brought to the
knowledge of the defendant. If no special notice is given, then the aggrieved party can only
claim the ordinary damages.
In the given case, Seema was to earn an exceptional profit out of the sales made at the
exhibition, however she never informed about it to the railway authorities. Since the goods
were delivered after the conclusion of the exhibition, therefore Seema can recover only the
losses arising in the ordinary course of business. Since no notice about special
circumstances was given to railways authorities, she could not recover the loss of profits.

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6 FOUNDATION EXAMINATION: MAY, 2022

3. Section 16 of Indian Contract Act, 1872 provides that a contract is said to be induced by
“undue influence” where the relations subsisting between the parties are such that one of
the parties is in a position to dominate the will of the other and uses that position to obtain
an unfair advantage over the other.
Further, a person is deemed to be in a position to dominate the will of another —
(a) where he holds a real or apparent authority over the other, or
(b) where he stands in a fiduciary relation to the other; or
(c) where he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness, or mental or bodily distress.
Section 19A provides that when consent to an agreement is caused by undue influence,
the agreement is a contract voidable at the option of the party whose consent was so
caused. Any such contract may be set aside either absolutely or, if the party who was
entitled to avoid it has received any benefit thereunder, upon such terms and conditions
as to the Court may seem just.
From the facts of the case, Chandan signed the promissory note under undue influence
applied by doctor. Hence, Dr. Jhunjhunwala cannot recover the amount of promissory note
but can claim his normal consultation fee from Chandan.
4. An invitation to offer is different from offer. Quotations, menu cards, price tags,
advertisements in newspaper for sale are not offer. These are merely invitations to public
to make an offer. An invitation to offer is an act precedent to making an offer. Acceptance
of an invitation to an offer does not result in the contract and only an offer emerges in the
process of negotiation. But there is an exception to above provisions. When advertisement
in newspaper is made for reward, it is the general offer to public.
On the basis of above provisions and facts, it can be said that as advertisement made by
Mr. Aseem to find lost car is an offer, he is liable to pay ` 10,000 to Mr. Vikram.
5. According to Section 40 of the Indian Contract Act, 1872, if it appears from the nature of
the case that it was the intention of the parties to any contract that any promise contained
in it should be performed by the promisor himself, such promise must be performed by the
promisor. Section 41 provides that when a promisee accepts performance of the promise
from a third person, he cannot afterwards enforce it against the promisor.
Therefore, in the instant case,
(a) As Mr. Sonu could not perform as per the contract, Mr. Singhania can repudiate the
contract.

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 7

(b) In the second situation, as Mr. Singhania allowed Mr. Sonu to perform in the fourth
week without saying anything, by conduct, Mr. Singhania had given his assent to
continue the contract. Mr. Singhania cannot terminate the contract however he can
claim damages from Mr. Sonu.
(c) In case Mr. Singhania allows Mr. Mika to perform in the third week without saying
anything, by conduct, Mr. Singhania had given his assent for performance b y third
party. Now Mr. Singhania cannot terminate the contract nor can claim any damages
from Mr. Sonu.
6. An anticipatory breach of contract is a breach of contract occurring before the time fixed
for performance has arrived. When the promisor refuses altogether to perform his promise
and signifies his unwillingness even before the time for performance has arrived, it is called
Anticipatory Breach. The law in this regard has very well summed up in Frost v. Knight and
Hochster v. DelaTour:
Section 39 of the Indian Contract Act, 1872 deals with anticipatory breach of contract and
provides as follows: “When a party to a contract has refused to perform or disable himself
from performing, his promise in its entirety, the promisee may put an end to the contr act,
unless he has signified, but words or conduct, his acquiescence in its continuance.”
Effect of anticipatory breach: The promisee is excused from performance or from further
performance. Further he gets an option:
(1) To either treat the contract as “rescinded and sue the other party for damages from
breach of contract immediately without waiting until the due date of performance; or
(2) He may elect not to rescind but to treat the contract as still operative and wait for the
time of performance and then hold the other party responsible for the consequences
of non-performance. But in this case, he will keep the contract alive for the benef it of
the other party as well as his own, and the guilty party, if he so decides on re -
consideration, may still perform his part of the contract and can also take advantage
of any supervening impossibility which may have the effect of discharging the
contract.
7. Duty of the buyer according to the doctrine of “Caveat Emptor”: In case of sale of
goods, the doctrine ‘Caveat Emptor’ means ‘let the buyer beware’. When sellers display
their goods in the open market, it is for the buyers to make a proper selecti on or choice of
the goods. If the goods turn out to be defective, he cannot hold the seller liable. The seller
is in no way responsible for the bad selection of the buyer. The seller is not bound to
disclose the defects in the goods which he is selling.
Duty of the seller according to the doctrine of “Caveat Emptor”: The following
exceptions to the Caveat Emptor are the duties of the seller:

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8 FOUNDATION EXAMINATION: MAY, 2022

(i) Fitness as to quality or use

(ii) Goods purchased under patent or brand name
(iii) Goods sold by description
(iv) Goods of Merchantable Quality
(v) Sale by sample
(vi) Goods by sample as well as description
(vii) Trade usage
(viii) Seller actively conceals a defect or is guilty of fraud
Based on the above provision and facts given in the question, it can be co ncluded that
Mrs. Reema is entitled to get the money back or the right kind of cloth as required serving
her purpose. It is the duty of the seller to supply such goods as are reasonably fit for the
purpose mentioned by buyer. [Section 16(1) of the Sale of Goods Act, 1930].
8. Section 27 of Sale of Goods Act, 1930 states that no man can sell the goods and give a
good title unless he is the owner of the goods. However, there are certain exceptions to
this rule of transfer of title of goods.
One of the exceptions is sale by person in possession under a voidable contract (Section
29 of Sale of Goods Act, 1930)
1. If a person has possession of goods under a voidable contract.
2. The contract has not been rescinded or avoided so far
3. The person having possession sells it to a buyer
4. The buyer acts in good faith
5. The buyer has no knowledge that the seller has no right to sell.
Then, such a sale by a person who has possession of goods under a voidable contract
shall amount to a valid sale and the buyer gets the better title.
Based on the provisions, Mr. A is in possession of the ring under a voidable contract as
per provisions of Indian Contract Act, 1872. Also, B has not rescinded or avoided the
contract, Mr. A is in possession of the ring and he sells it new buyer Mr. C who acts in
good faith and has no knowledge that A is not the real owner. Since all the conditions of
Section 29 of Sale of Goods Act, 1930 are fulfilled, therefore sale of ring made by Mr. A to
Mr. C is a valid sale.

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 9

9. (i) A wholesaler of cotton has 100 bales in his godown. So, the goods are existing goods.
He agrees to sell 50 bales and these bales were selected and set aside. On selection,
the goods become ascertained. In this case, the contract is for the sale of ascertained
goods, as the cotton bales to be sold are identified and agreed after the formation of
the contract.
(ii) If A agrees to sell to B one packet of sugar out of the lot of one hundred packets lying
in his shop, it is a sale of existing but unascertained goods because it is not known
which packet is to be delivered.
(iii) T agrees to sell to S all the apples which will be produced in his garden this year. It
is contract of sale of future goods, amounting to 'an agreement to sell.'
10. In the instant case, D who noticed the deviation of goods from the sample can reject the
goods and treat it as a breach of implied condition as to sample which provides that when
the goods are sold by sample the goods must correspond to the sample in quality and the
buyer should be given reasonable time and opportunity of comparing the bulk with the
sample. Whereas C can recover only damages from B and B can recover damages from
A. For C and B it will not be treated as a breach of implied condition as to sample as they
have accepted and sold the goods according to Section 13(2) of the Sales of Goods Act,
1930.
11. According to Section 35 of the Indian Partnership Act, 1932, where under a contract
between the partners the firm is not dissolved by the death of a partner, the e state of a
deceased partner is not liable for any act of the firm done after his death.
Further, in order that the estate of the deceased partner may be absolved from liability for
the future obligations of the firm, it is not necessary to give any notice either to the public
or the persons having dealings with the firm.
In the light of the facts of the case and provisions of law, since the delivery of furniture was
made after Jay’s death, his estate would not be liable for the debt of the firm. A suit for
goods sold and delivered would not lie against the representatives of the deceased partner.
This is because there was no debt due in respect of the goods in Jay’s lifetime. He was
already dead when the delivery of goods was made to the firm and also it is not necessary
to give any notice either to the public or the persons having dealings with the firm on a
death of a partner (Section 35). So, the estate of the deceased partner may be absolved
from liability for the future obligations of the firm.
12. By virtue of provisions of Section 13(a) of the Indian Partnership Act, 1932 a partner is not
entitled to receive remuneration for taking part in the conduct of the business. But this rule
can always be varied by an express agreement, or by a course of dealings, in which event
the partner will be entitled to remuneration. Thus, a partner can claim remuneration even

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10 FOUNDATION EXAMINATION: MAY, 2022

in the absence of a contract, when such remuneration is payable under the continued
usage of the firm. In other words, where it is customary to pay remuneration to a partner
for conducting the business of the firm, he can claim it even in the absence of a contract
for the payment of the same.
In the given problem, existing partners are getting regularly a monthly remuneration from
firm customarily being working partners of the firm. As Sony also admitted as working
partner of the firm, he is entitled to get remuneration like other partners.
13. According to provisions of Section 69 of the Indian Partnership Act, 1932 an unregistered
firm cannot file a suit against a third party to enforce any right arising from contract, e.g.,
for the recovery of the price of goods supplied. But this section does not prohibit a third
party to file suit against the unregistered firm or its partners.
(a) On the basis of above, M/s LMN & Company cannot file the suit against M/s XYZ &
Company as M/s LMN & Company is an unregistered firm.
(b) In case M/s XYZ & Company is a registered firm while M/s LMN & Company is an
unregistered firm, the answer would remain same as in point a) above.
(c) In case M/s LMN & Company is a registered firm, it can file the suit against M/s XYZ
& Company.
14. LLP is an alternative corporate business form that gives the benefits of limited liability of a
company and the flexibility of a partnership
Limited Liability: Every partner of a LLP is, for the purpose of the business of LLP, the
agent of the LLP, but not of other partners (Section 26 of the LLP Act, 2008). The liability
of the partners will be limited to their agreed contribution in the LLP, while the LLP it self
will be liable for the full extent of its assets.
Flexibility of a partnership: The LLP allows its members the flexibility of organizing their
internal structure as a partnership based on a mutually arrived agreement. The LLP form
enables entrepreneurs, professionals and enterprises providing services of any kind or
engaged in scientific and technical disciplines, to form commercially efficient vehicles
suited to their requirements. Owing to flexibility in its structure and operation, the LLP is a
suitable vehicle for small enterprises and for investment by venture capital.
15. According to Section 2(68) of Companies Act, 2013, “Private company” means a company
having a minimum paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two
hundred:

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Provided that where two or more persons hold one or more shares in a company
jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were
members of the company while in that employment and have continued to be
members after the employment ceased,
shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company;
(a) Following the provisions of Section 2(68), 25 members were employees of the
company but not during present membership which was started from 1st
December 2016 i.e. after the date on which these 25 members were ceased to
the employee in Jagannath Oils Limited. Hence, they will be considered as
members for the purpose of the limit of 200 members. The company is required
to reduce the number of members before converting it into a private company.
(b) On the other hand, if those 25 members were ceased to be employee on
28th June 2017, they were employee at the time of getting present membership.
Hence, they will not be counted as members for the purpose of the limit of 200
members and the total number of members for the purpose of this sub-section
will be 195. Therefore, Jagannath Oils Limited is not required to reduce the
number of members before converting it into a private company.
16. Section 8 of the Companies Act, 2013 deals with the formation of companies which are
formed to promote the charitable objects of commerce, art, science, education, sports etc.
Such company intends to apply its profit in promoting its objects. Section 8 companies are
registered by the Registrar only when a license is issued by the Central Government to
them.
Since ABC Club was a Section 8 company and it was observed on 30 th September, 2019
that it had started violating the objects of its objective clause. Hence in such a situation
the following powers can be exercised by the Central Government:
(i) The Central Government may by order revoke the licence of the company where the
company contravenes any of the requirements or the conditions of this sections
subject to which a licence is issued or where the affairs of the company are conducted
fraudulently, or violative of the objects of the company or prejudicial to public interest,
and on revocation the Registrar shall put ‘Limited’ or ‘Private Limited’ against the
company’s name in the register. But before such revocation, the Central Government

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must give it a written notice of its intention to revoke the licence and opportunity to
be heard in the matter.
(ii) Where a licence is revoked, the Central Government may, by order, if it is satisfied
that it is essential in the public interest, direct that the company be wound up under
this Act or amalgamated with another company registered under this section.
However, no such order shall be made unless the company is given a reasonable
opportunity of being heard.
(iii) Where a licence is revoked and where the Central Government is satisfied that it is
essential in the public interest that the company registered under this section should
be amalgamated with another company registered under this section and having
similar objects, then, notwithstanding anything to the contrary contained in this Act,
the Central Government may, by order, provide for such amalgamation to form a
single company with such constitution, properties, powers, rights, interest, authorities
and privileges and with such liabilities, duties and obligations as may be specified in
the order.
17. Corporate Veil: Corporate Veil refers to a legal concept whereby the company is identified
separately from the members of the company.
The term Corporate Veil refers to the concept that members of a c ompany are shielded
from liability connected to the company’s actions. If the company incurs any debts or
contravenes any laws, the corporate veil concept implies that members should not be liable
for those errors. In other words, they enjoy corporate insulation.
Thus, the shareholders are protected from the acts of the company.
However, under certain exceptional circumstances the courts lift or pierce the corporate
veil by ignoring the separate entity of the company and the promoters and other persons
who have managed and controlled the affairs of the company. Thus, when the corporate
veil is lifted by the courts, the promoters and persons exercising control over the affairs of
the company are held personally liable for the acts and debts of the company.
The following are the cases where company law disregards the principle of corporate
personality or the principle that the company is a legal entity distinct and separate from its
shareholders or members:
(i) To determine the character of the company i.e. to find out whether co-enemy or friend.
(ii) To protect revenue/tax
(iii) To avoid a legal obligation
(iv) Formation of subsidiaries to act as agents

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(v) Company formed for fraud/improper conduct or to defeat law

Based on the above provisions and leading case law of Gilford Motor Co. Vs Horne, the
company PQR Limited was created to avoid the legal obligation arising out of the contract,
therefore that employee Mr. Karan and the company PQR Limited created by him sh ould
be treated as one and thus veil between the company and that person shall be lifted. Karan
has formed the only for fraud/improper conduct or to defeat the law. Hence, he shall be
personally held liable for the acts of the company.

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SECTION -B: BUSINESS CORRESPONDENCE AND REPORTING

QUESTIONS

Part A
Chapter-1 Communication
1. Explain any two characteristics of effective communication.
2. Write a short note on Cultural barriers in effective communication.
Part-B
Chapter-2 Sentence Types, Active-Passive Voice and Direct-Indirect Speech
1. Change the following sentences from passive voice to active voice.
a. President Kennedy was killed by Lee Harvey Oswald.
b. My wallet has been stolen.
c. A story is being written by me.
2. Change the following sentences from indirect to direct speech.
a. Father told Pankaj that he would not give him pocket money.
b. My friend said that he had been to England thrice.
c. Ankit said that he would be using the bike next Monday.
d. The teacher instructed Rehman to stand up right then.
Chapter-3 Vocabulary
1. Choose the similar meaning of the words given. (Synonyms)
1. FOSTERING
a. Safeguarding
b. Neglecting
c. Ignoring
d. Nurturing
2. EMPIRICAL
a. Spiritual
b. Royal

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c. Practical
d. Theoretical
3. DELIGHTFUL
a. Colourful
b. Funny
c. Hidden
d. Charming
4. CREDENTIALS
a. unreliable
b. trustworthiness
c principles
d. capacity
2. Choose the correct meaning of the idioms given below.
a. To cry wolf
(i) To refer to
(ii) To emphasize
(iii) To have no result
(iv) To give false alarm
b. To end in smoke
(i) To come to nothing
(ii) To gain importance
(iii) To praise oneself
(iv) To reach target
c. Come rain or sunshine
(i) No matter what
(ii) Let it rain
(iii) In happy times

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(iv) Forbidden area

d. To come clean
(i) Cleaning a place
(ii) No idea about an incident
(iii) To make an honest disclosure
(iv) To deny the crime
Part-C
Chapter-4
1. Read the following passage carefully and answer the questions that follow.
The Indian youth is accused of being impatient, indisciplined, disrespectful to the elders
and irresponsible towards society and authority. It was felt that to curb these tendencie s
the youth required to be motivated in nation-building activities and made responsive to the
social concerns.
For this purpose, National Service Scheme (NSS) was introduced in 1969. Its main aim
was to involve the students of the colleges and +2 level on voluntary and selective basis
in programmes of social services and developmental activities. Gradually it was adopted
by all the states and union territories. Today it covers more than 5000 colleges all over the
country. Under this scheme, rural and slum reconstruction, repair of roads, school
buildings, ponds, tanks, plantation of trees, environment protection, health and family
planning and education of adults and women are undertaken. The NSS students aid local
authorities in implementing various relief and rehabilitation schemes. In the times of natural
calamities like famines, floods, droughts, epidemics and earthquakes volunteers helped by
NSS students play a very positive and constructive role. It instills in them the spirit of social
service and the sense of responsibility.
The tribal youth are given vocational training under a special scheme to enable them to
become self-employed. Then, there are youth hostels set up all over the country to provide
cheap accommodation to the youth to inspire them into undertaking educational tours and
excursions to visit the cultural and historic sites to revisit our glorious past. 446 Nehru
Yuvak Kendras strewn around the country provide vocational training to non -student rural
youth and improve their personality. ‘Bharat Scouts and Guides’ and ‘All India Boy Scouts
Association’ are teaching Indian youth the importance of loyalty and goodwill for others
under International scouting and guiding movement.

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Questions
1. What is Indian youth accused of?
2. What scheme was introduced to involve students in social service and developmental
activities?
3. What works are undertaken under the NSS?
4. For what purpose are youth hostels with cheap accommodation are set up?
5. What is the tone of the author? A) Callous B) Informative C) Derogatory D) Ironic
6. What is being done for the tribal youth of the country?
2. Read the given passage carefully and answer the questions that follow.
U.N.O.
In the year of 1945, United Nations Organization (UNO) came into being as the successor
of League of Nations. It began with fifty nations as its members but now it has 193 member
nations accounting for almost all the countries of entire earth except Switzerland. The
nations are the members of the UN General Assembly, the world body’s chief deliberate
organ. All the other wings are answerable to it through annual and special periodical
reports submitted for its consideration. The General Assembly, discusses the reports and
gives its approvals, elects General Secretary and the judges of the International Court of
Justice, admits new members to the Assembly, and also elects the non -permanent
members of various councils. There are Economic and Social Council, The Trusteeship
Council besides the International Court, General Assembly and the Security Council. The
General Secretary is the Chief Administrative Office of the world body who heads the UN
Secretariat. He presides over the General Assembly meetings and those of other organs
of U.N.
In addition to the above main organs, the UNO has several other specialized agencies like
ILO (International Labour Organization), UNESCO (United Nations Educational, Scientific
and Cultural Organization), UNCTAD (United Nations Council for Trade And Development),
WHO (World Health Organization), etc. These agencies help the parent body in working
out agreements on various- related matters to them and in achieving different objectives
and goals. WHO, for example, plans steps to achieve the highest possible level of good
health of the entire human population of the Earth.
Questions
1. How many members the General Assembly of UNO has at present?
2. Which country is not the member of the UNO?

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18 FOUNDATION EXAMINATION: MAY, 2022

3. How are other wings answerable to General Assembly?

4. What is the function of General Secretary?
5. State the plan of WHO.
6. List three functions/responsibilities of the General Assembly.
Chapter-5
1. Read the following passage carefully. (i) Make notes, using headings, sub -headings and
using abbreviations wherever necessary. (ii) Give a suitable tittle (ii) Write summary.
Good decoration reflects the personality of the people who live in the home. It should, first
of all, be distinctive, just as each person is distinctive. A home should have unity not only
within each room but also throughout the house. Rooms should, to some degree,
harmonize with each other. The colour and styling of each room, particularly, should fit into
the colour and styling of the rooms which run out of it.
Attractive home furnishings set the stage for pleasant living. If they are an expression of
yourself, you will have a feeling of satisfaction every time you enter your home, and friends
will share your enjoyment.
However, furnishings and surroundings expressive of just the right note of restfulness, gay
informality, or elegant simplicity are not often assembled by accident. Even enthusiasm
alone is not enough. For most home decorators, it takes poring over plans, trying colour
schemes, finding ingenious ways to make the best of what you have, and shopping around
to search out just the right purchases at prices you can afford to pay. But there is keen
pleasure in striving for the perfect result, and great satisfaction in achieving it.
A successful house and successful rooms will depend upon the proper relationship of each
element in it to the others and to the whole. Therefore, in selecting each piece it is well to
consider the background, the usage, the draperies, the floor covering, the upholstering
materials, the woods, shapes, colour scheme, and the “feeling” you prefer for the room.
Work and plan to enjoy your house. Limit the expenditures of time, effort and money to the
extent of your abilities, so that just running the house doesn’t dominate your life. Elegance
and delicate things may be a drain you can afford only in a limited way. If you can’t afford
outside help, select a house and furnishings that require less care. Plan your activities so
that tumult and upset are limited to a few rooms—an activity room or a bedroom, or a
comer of the dining room.
You’ll get more pleasure out of a house if you have a hobby connected with it —collecting
glass or antiques, gardening or indoor flower growing ceramics, art, cooking, decorating,
flower arrangements, etc. And you’ll get more satisfaction and a great deal of hel p from
studying household activities.

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You can select a pleasing combination of colours from a wallpaper, a fabric, an oriental
mg, a flower or scene, or even a picture in a magazine. If you don’t already have the
furniture or mgs, it is a good idea to make up a colour scheme in this way. Let one colour
predominate. Limit a colour scheme to two or three colours, with white or grey tones.
Chapter-7 Précis Writing
Write a précis and give an appropriate title to the passage given below.
1. Home is for the young, who knows nothing of the world and who would be forlorn and sad,
if thrown upon it. It is a providential, shelter of the weak and inexperienced, who must l earn
yet to cope with the temptations which lies outside of it. It is the place of training of those
who are not only ignorant, but have not yet learnt how to learn, and who must be taught by
careful individual trail, how to set about profiting by the lessons of teacher. And it is the
school of elementary studies—not of advances, for such studies alone can make master
minds. Moreover, it is the shrine of our best affections, the bosom of our fondest
recollections, at spell upon us after life, a stay for world weary mind and soul; wherever we
are, till the end comes. Such are attributes or offices of home, and like to these, in one or
other sense or measure, are the attributes and offices of a college in a university.
2. When we survey our lives and efforts, we soon observe that almost the whole of our actions
and desires are bound up with the existence of other human beings. We notice that whole
nature resembles that of the social animals. We eat food that others have produced, wear
clothes that others have made, live in houses that others have built. The greater part of
our knowledge and beliefs has been passed on to us by other people though the medium
of a language which others have created. Without language and mental capacities, we
would have been poor indeed comparable to higher animals. We have, therefore, to admit
that we owe our principal knowledge over the least to the fact of living in human society.
The individual if left alone from birth would remain primitive and beast like in his thoughts
and feelings to a degree that we can hardly imagine. The individual is what he is and has
the significance that he has, not much in virtue of the individuality, but rather as a member
of a great human community, which directs his material and spiritual existence from the
cradle to grave.
Chapter-8 Article Writing
1. Write an article on the following topics in not more than 200-250 words.
a. Should board exams be online in India?
b. Impact of election campaigns on public

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Chapter-9 Report Writing

1. Write a report on the following topics.
a. A newspaper report about a demolition drive by the city municipal corporation against
illegal constructions.
b. You are the Finance head of a sports academy. Write a formal report stating details
of expenditure made in the last financial year towards purchase of sports equipment.
Chapter-10 Formal letters and Official Communication
1. Lalit/Lalita Dubey manage the supply of books in the school library. Write a letter for placing
the order for the books to the Vikas Publishing House Ltd. Prepare a list of at least 5 books.
2. Write a letter to the customer service manager of Ganesh Electronics Pvt. Ltd. complaining
about a defect in the music system purchased from the store. Sign yourself as
Gauri/Gaurav.
Chapter-11 Writing formal mails
1. On behalf of your CA firm, write a formal mail to all your clients requesting them to provide
all the necessary information, needed for filling of IT returns. State that details should be
sent well in time, before the last date i.e 31st July, 2021. Sign yourself as partner of the
firm.
Chapter-12 Resume Writing
1. You are Radhika/Ramesh Jaiswal, English teacher. Draft your resume to apply for job in
school along with a cover letter.
2. You are Sagar Gupta, HR Head of ABC Limited. Draft a formal e-mail offering a job to the
candidate, Mr. Shivan Sethi who has been selected for the position of Associate Consultant
in your office.
Chapter-13 Meetings
1. Write ‘Minutes of the Meeting’ for a meeting conducted to discuss the launch of a
toothpaste.
2. Write the ‘Minutes of the Meeting’ for a meeting organized to discuss the problems faced
by the Washing Machine in the market that requires change now.

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ANSWERS

Part A
Chapter-1 Communication
1. The two characteristics of effective communication are as follows-
a. Coherence: Coherence in writing and speech refers to the logical bridge between
words, sentences, and paragraphs. The key to coherence is sequentially organised
and logically presented information, which is easily understood.
b. Completeness: A complete communication coveys all facts and information required
by the recipient. It keeps in mind the receiver’s intellect and attitude and conveys the
message accordingly.
2. Cultural barriers: Cultural barriers refer to obstacles one faces with respect to diversity in
culture. These arise from language, religion, community, ethnicity etc. Due to cultural
differences, words, signs, symbols may be interpreted in a different way and may lead to
miscommunication.
Within an organization also, cultural ideologies can be different across verticals and
divisions which might lead to a wrong message being conveyed. Moreover, gestures,
protocols within family groups and friends also might be mistaken.
Part-B
Chapter-2 Sentence Types, Active-Passive Voice and Direct-Indirect Speech
1. a. Lee Harvey Oswald killed President Kennedy.
b. Someone has stolen my wallet.
c. I am writing a story.
2. a. Father said to Pankaj, ‘I will not give you pocket money.’
b. My friend said, ‘I have been to England thrice.’
c. Ankit said, ‘I’ll be using the bike next Monday.’
d. The teacher said to Rehman, ‘Stand up right now.’
Chapter-3 Vocabulary
1. 1. d 2. c 3. d 4. b
2. a. iv b. i. c. i d. iii

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Part-C
Chapter-4
1. 1. The Indian youth are blamed for impatience, indiscipline, disrespectful to the elders and
irresponsible towards society and authorities.
2. National Service Scheme (NSS) was introduced to involve students in social service
and development activities.
3. Under this scheme, reconstruction in rural and slum areas, repair of roads, school
buildings, tanks, village ponds, tree plantation, environment protection, health and
family planning, adult education and rendering help during natural calamities are
undertaken.
4. Youth hostels are set up to provide cheap accommodation and to encourage students
to set out on educational tours and visit the places of historic or cultural importance.
5. (B) Informative
6. The tribal youth are given vocational training under a special scheme to enable them
to become self-employed
2. 1. The General Assembly of UNO has 193 members at present.
2. Switzerland is not the member of the UNO.
3. All other wings area answerable to General assembly through annual and special
periodical reports submitted for its consideration.
4. The General Secretary is the Chief Administrative Office of the world body who heads
the UN Secretariat.
5. WHO plans steps to achieve the highest possible level of good health of the entire
human population of the Earth.
6. Functions of General Assembly:
(a) discusses the reports and gives its approvals,
(b) elects General Secretary and the judges of the International court of Justice,
(c) admits new members to the Assembly, and also elects the non-permanent
members of various councils.
Chapter-5
1. Decorating One’s Home Notes:
1. Home reflects personality of home-owner
1.1 Unity& harmony bet. rooms

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1.2 Colour & styling sh’d match

2. Elements of decoration
2.1 Colour schemes
2.2 Draperies, rugs, upholstery, woods, shape
3. Plan to enjoy the House
3.1 Limit time, effort & money
3.2 Select furnish’gs which require little care
3.3 Confine hectic activities to a few rooms
3.4 Hobby connected with house—great pleasure.
4. Choice of Colours
4.1 One colour sh’d predominate
4.2 One can expt with colours
4.3 Calm colours for restfulness; intense for liveliness
4.4 Colours sh’d harmonise with furniture, draperies, carpets
Key Words:
Furnigh’gs: furnishings
Expt.: expect
Sh’d: should
Bet.; between
Summary:
The maintenance of the house reflects the personality of the people who live in it. So,
the distinctive decoration is as important as one attire in good clothes. A unity in the
home can only be seen if the rooms in the house have a degree of harmony, colour
and styling. Furniture is a working strategy for the pleasant living. If there is an
expression of oneself then one will have a mental satisfaction every time one enters
one’s home. To attain such satisfaction, one need to pore over plants, try colour
schemes, window shopping to search the best thing for one’s home.

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Chapter-7 Précis Writing

1. Learning begins from Home
Home shelters the young who are weak and unexperienced and unable to face the
temptations in life. It is a centre of their elementary education and a nursery of sweet
affections and pleasant memories. Its magic lasts forever. A weary mind turns to it for res t.
Such is the function of a home and in some measure of the university.
2. ‘Man: A social animal’
Being social animals, human beings have their actions and desires bound up with society.
In matter of food, clothes, knowledge and belief they are interdependent. They use
language created by others. Without language their mental power would not grow. They
are superior to beast because they live in human society. An individual life left alone from
birth would grow utterly beast like. So human society and not individuality guides man's
material and spiritual existence.
Chapter-8 Article Writing
1. Hints:
a.
• Give appropriate title
• Difference between offline and online exams
• Pros and cons of offline as well as online exams
• Online exams can be blessings for some students
o Less travelling
o Cost effective
• Technical issues faced by students while online exams
o Availability of internet
o Availability of mobiles, laptops and computers
• Offline exams can be comfortable for everyone
• Offline exams are traditional method of examination
• Conclude with a vision – offline or online?

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b.
• What are election campaigns?
• Importance of campaigning and how it is part of the process.
• Campaigns are strategized for more vote banks.
o Thought process and team involved while planning
o Strategies are constructed after a research and data analysis
o Implementation of campaigns – efforts and vision
o Involvement of media while campaigning
• Influence of campaigns on public
o Focus is vote
o Promised are made
o Vision of development is talked about
o Impact is on masses
o Attitude/Belief/thoughts moulded
Chapter-9 Report Writing
1. Hints:
a.
• Newspaper report writing format (Timeline, name of reporter) Heading to the
news brief.
• Why is the demolition drive happening?
• Who has started it? What is the agenda? What are the consequences?
• What is the public reaction?
b.
• Formal report format
• To, From Date, Subject
• Summary
• Table of contents
• Discuss the details
• Conclusion

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b) Formal Report
To: The Director, finance
From: Secretary , finance
Date: 9th March, 2022
Subject: Expenditure made towards sports equipment in the last financial year
Acknowledgements: I am deeply grateful to all my team members who helped me in
formulating this detailed report. The expenditure and other related details have been
recorded with precision.
Contents:
2) Need to buy new equipment
3) List of items purchased with cost
4) List of old items discarded
5) Current budget versus amount spent
6) Conclusion
Summary: With the advancement in sports and technology, we decided to allow our players
to benefit from the new equipment bought and hence make a mark for themselves. This
would not only bring a good name to our sports organization, but also make our country
proud. In the light of this, few sports equipment have been purchased to keep our players
abreast with new modern versions and enable them hone their skills.
Can be continued with a few tables mentioned and then the conclusion.
Chapter-10 Formal letters and Official Communication
1. Army Public School
Sector 12, AK Puram
New Delhi- 110022
21 February 2021
Vikas Publishing House Ltd.
Darya Ganj, Central Delhi
New Delhi- 110002
Subject: Placing an order for books for the school library

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Dear Sir,
As discussed over telephone, OR As per our telecon we would like to place an order for
the following books for our school library.
English Grammar Class 8th 20 Copies
English Grammar Class 9th 30 Copies
Higher Mathematics Class 11th 10 Copies
Mathematics Class 12th 20 Copies
Diary of Anne Frank Novel 15 Copies
Kindly ensure that the books are of the latest edition and in proper state. It is a request to
deliver these books latest by 5th April, 2022. Bills for the same shall be cleared at the time
of delivery. Please offer a suitable discount on the purchase.
An early delivery would be appreciated.
Thanking you
Yours faithfully
Lalit/Lalita Dubey
Library Manager

2. H.No.78 Block-A
ABC colony, Janakpuri
New Delhi- 110085

11 February, 2022
Customer Service Manager
Ganesh Electronics Pvt. Ltd.
Rohini, New Delhi- 110085

Subject- Filing complaint for a defect in purchase no. MS-845/07/2020

Dear Sir,
I hereby write to complain regarding the defect in the music system with respect to bill no.
MS-845/07/2020 purchased on 11 January 2021 from your store.

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28 FOUNDATION EXAMINATION: MAY, 2022

The music system worked properly for one month, but there seems to be some trouble for
the last three days. The sound breaks whilst the songs are being played and the system
hangs multiple times. Coupled with this, the songs stop playing abruptly and require the
system to be restarted. Since the music system is still in the warranty period of six months,
I wish to get it replaced at the earliest.
I request you to look into this matter without any delay and provide a new working music
system of the same brand. I have enclosed a copy of the bill of purchase for your reference.
Looking forward to your early response.
Thanking you

Yours truly,
Gauri
ABC Block,
Paschim Vihar,
New Delhi.
Chapter-11 Writing formal mails
1. Dear employees,
Greetings!
This is with respect to the filing of IT returns for which we request you to submit your details
well in time. The last date for submission is 31st July, 2021. For the ease and benefit of our
employees, we have made this announcement well in advance.
This is a mandatory process and we request our employees to kindly follow the guidelines
and do the needful. Defaulters will face unpleasant consequences.
For any help regarding the matter, a help desk counter has been set up at the Reception
area. You can also write to helpdesk@itfilingxyz.com for clarifications.
Looking forward to your kind cooperation.
With warm regards
Mr. ABC,
Partner
Sunshine and Bros.

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PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 29

Chapter-12 Resume Writing

1. Cover Letter:
H- 20, 1st Floor,
Janakpuri, Delhi
25 February 2022
The Principal
RST International School
Rajouri Garden,
New Delhi

Dear Ma'am/Sir,
Subject: Application for the post of PRT/TGT English Teacher
It gives me immense pleasure to share my resume with you for position of PRT/TGT
English at your esteemed organization/school.
I hold a Master's degree in English and have more than three years of experience in
teaching. My strong interest of working has motivated me to apply for your organization. I
have a versatile experience of working with an International school and a branch of one of
the top schools of Delhi NCR. I have not only taken care of academics, but I have efficiently
taken care of co-curricular activities as well, along with my definite job roles.
Please find my resume for the details of my credentials.
Looking forward to hearing from you soon!
Yours sincerely,
Radhika Jaiswal
11111-11111
Resume:
Ramesh/ Radhika Jaiswal
ABC, XYZ Colony, New Delhi- 110048 | +91- 11111 1111 l radhika@gmail.com,
rameshjaiswal@yahoo.com

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30 FOUNDATION EXAMINATION: MAY, 2022

Objective
To impart meaningful knowledge through teaching, with a focus to prioritize student’s
individualistic needs and work for the larger cause of improving the society and social
conditions.
Educational Qualification
Qualification Year Board/University Institution's Name
B.Ed 2015 Maharishi Dayanand Sunrise College of
University, Rohtak Education,
Ambedkar University, Ambedkar University,
Masters of Arts (English) 2013
Delhi Delhi
Bachelor of arts (English) 2011 University of Delhi Bharati College
Class 12th 2008 CBSE Happy Model School
Meera Bagh
Class 10th 2006 CBSE Happy Model School

Professional Experience
ABC School, PRT/TGT English April’17 - December’17
• Experience of teaching grade 4, 6 and 7 as per CBSE curriculum
• Prepared lesson plans to achieve learning objectives
• Developed and implemented class engaging activities
• Trained students for various Inter-School competition such as English recitation,
debate and plays
• Conducted a workshop for teachers on the topic ‘Common errors in English
language’
• Attended professional development workshops organized by CBSE, ICTRC and
school
XYZ School, PRT/TGT English April’15 - March’17
• Experience of teaching Grade 3, 4, 5 and 6 as per CIE curriculum
• Certified to teach according to Cambridge International Examinations curriculum
• Attended workshop, Cambridge Secondary 1 organized by Cambridge University
Press for teacher’s development

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• Experience in formulating lesson plans according to CIE curriculum

• Designing and implementation of creative worksheets and class engaging activities
• Experience of training students for various competitions (Debate, poetry recitation &
role plays)
• Had an experience of directing a successful play for School’s Annual Day
Social Work
Volunteer for the Non-Profit Organization, Deepalaya December 2013 - March 2014
• Project: Education on Wheels
• Job Role: Helping children with their education; majorly working over their language
skills
Volunteer for the Non-Profit Organization, Magic Bus October 2012 - November 2012
• Volunteered for their event, Maidan Summit 2012 (Ranchi)
• Job role: To invite founders/top officials of other NGOs across India
Volunteer for the Non-Profit Organization, Teach India October 2009 - March 2011
• Job Role: Helped children of slum area with their education
2. Shivan Sethi,
R-52, New Rajendra Nagar,
New Delhi-110060
Subject: Offer for appointment for the post of Associate in XYZ Pvt Ltd.
Dear Shivan,
As discussed, we are happy to offer you the position of an ‘Associate’ at the Delhi office of
ABC Limited. (the Firm). Congratulations!
Your annual retainership fee will be INR 2,40,000 /- per annum. You might be entitled to a
bonus which shall be discretionary and calculated based on the evaluation of your
performance post completion of one year with the Firm.
All payments are subject to tax deduction, if applicable. For the first 3 months of the joining
date, you will be on probation.
We would request you to kindly send across your acknowledgment towards the offer and
date of joining at the earliest.

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32 FOUNDATION EXAMINATION: MAY, 2022

We’ll get back to you with the joining formalities and other requirements subsequently. Feel
free to get in touch with us for any clarifications or query.
I take this opportunity to welcome you and to wish you a long and rewarding association
with ABC Limited.
Kind regards,
Sagar Gupta
Head – HR
+91- 33333 3333
Chapter-13 Meetings
1. Hint: Mention the product and product specifications
Participants in the meeting: Mr. XY, Vice-President; Mr. A, Marketing Manager; Mr. B.
Brand Manager; Mr. C, Sales Manager and Mr. XY’s Secretary
Date: November 18, 2021
Meeting started at 12.00pm
Mr. B started the meeting and discussed the agenda.
Mr. XY intervenes and mentions how important is the product for the company.
Mr. A and Mr. B together presented a presentation on the USPs of the product.
Mr. B gave the ideas of marketing and how the launch should be.
Mr. XY gave his valuable inputs on how he wants everything should be.
Mr. C gives his prediction of sales figures and tells about some achievable goals.
The launch date is not decided yet and the next meeting was schedule for next week.
2. Hint: Mention the product specifications
Participants in the meeting: Mr. B, Vice-President; Mr. A, Mr. C, Sales Manager and their
Associates
Date: November 1, 2022
Meeting started at 2.00pm
Mr. C explains about the agenda of the meeting, and he talks about how people are facing
issues using their product.

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The associates have brainstormed few ideas about how the product can be changed
according to the market requirements.
Mr. B listens to everyone carefully and shares his thoughts about changing the packaging
too.
Mr. C agrees and informs that he will discuss with design team and share the appropriate
designs with everyone soon.
The meeting concluded with few ideas that everyone is ready to explore and implement.

© The Institute of Chartered Accountants of India

PAPER – 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

PART – I: The Limited Liability Act, 2008 has been amended through the Limited
Liability Partnership (Amendment) Act, 2021 dated 13 th August, 2021. The following are
the amendments w.e.f. 1st April, 2022.
Earlier provision New provision
- Throughout the Limited Liability Partnership
Act, 2008, for the words and figures “the
Companies Act, 1956” wherever they occur,
the words and figures “the Companies Act,
2013” shall be substituted.
Body Corporate [(Section 2(d)]: It means Body Corporate [(Section 2(d)]: It means a
a company as defined in section 3 of the company as defined in clause (20) of section
Companies Act, 1956 and includes— 2 of the Companies Act, 2013 and includes
(i) a LLP registered under this Act; (i) a limited liability partnership registered
(ii) a LLP incorporated outside India; and under this Act;
(iii) a company incorporated outside (ii) a limited liability partnership incorporated
India, outside India; and
but does not include— (iii) a company incorporated outside India,
(i) a corporation sole; but does not include
(ii) a co-operative society registered (i) a corporation sole;
under any law for the time being in (ii) a co-operative society registered under
force; and any law for the time being in force; and
(iii) any other body corporate (not being a (iii) any other body corporate (not being a
company as defined in section 3 of company as defined in clause (20) of
the Companies Act, 1956 or a limited section 2 of the Companies Act, 2013
liability partnership as defined in this or a limited liability partnership as
Act), which the Central Government defined in this Act), which the Central
may, by notification in the Official Government may, by notification in the
Gazette, specify in this behalf. Official Gazette, specify in this behalf.
Business [Section 2(e)]: “Business” Business [Section 2(e)]: “Business” includes
includes every trade, profession, service every trade, profession, service and
and occupation. occupation except any activity which the
Central Government may, by notification,
exclude.

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2 FOUNDATION EXAMINATION: NOVEMBER, 2022

Newly inserted “Small limited liability partnership [Section

2(ta)]: It means a limited liability
partnership—
(i) the contribution of which, does not
exceed twenty-five lakh rupees or
such higher amount, not exceeding
five crore rupees, as may be
prescribed; and
(ii) the turnover of which, as per the
Statement of Accounts and Solvency
for the immediately preceding
financial year, does not exceed forty
lakh rupees or such higher amount,
not exceeding fifty crore rupees, as
may be prescribed; or
(iii) which meets such other requirements
as may be prescribed, and fulfils such
terms and conditions as may be
prescribed;
Designated partners (Section 7): Designated partners (Section 7)
(i) Every LLP shall have at least two (1) Every limited liability partnership shall
designated partners who are have at least two designated partners
individuals and at least one of them who are individuals and at least one of
shall be a resident in India. them shall be a resident in India:
(ii) If in LLP, all the partners are bodies Provided that in case of a limited liability
corporate or in which one or more partnership in which all the partners are
partners are individuals and bodies bodies corporate or in which one or more
corporate, at least two individuals partners are individuals and bodies
who are partners of such LLP or corporate, at least two individuals who
nominees of such bodies corporate are partners of such limited liability
shall act as designated partners. partnership or nominees of such bodies
(iii) Resident in India: For the purposes of corporate shall act as designated
this section, the term “resident in partners.
India” means a person who has Explanation. For the purposes of this
stayed in India for a period of not less section, the term resident in India means
than 182 days during the immediately a person who has stayed in India for a
preceding one year. period of not less than one hundred and
twenty days during the financial year.
(2) Subject to the provisions of sub-section
(1),
(i) if the incorporation document

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 3

(a) specifies who are to be

designated partners, such
persons shall be designated
partners on incorporation; or
(b) states that each of the
partners from time to time of
limited liability partnership is to
be designated partner, every
partner shall be a designated
partner;
(ii) any partner may become a
designated partner by and in
accordance with the limited liability
partnership agreement and a
partner may cease to be a
designated partner in accordance
with limited liability partnership
agreement.
(3) An individual shall not become
a designated partner in any limited
liability partnership unless he has given
his prior consent to act as such to the
limited liability partnership in such form
and manner as may be prescribed.
(4) Every limited liability partnership shall file
with the Registrar the particulars of every
individual who has given his consent to
act as designated partner in such form
and manner as may be prescribed within
thirty days of his appointment.
(5) An individual eligible to be a designated
partner shall satisfy such conditions and
requirements as may be prescribed.
(6) Every designated partner of a limited
liability partnership shall obtain a
Designated Partners Identification
Number (DPIN) from the Central
Government and the provisions of
sections 153 to 159 (both inclusive) of
the Companies Act, 2013 shall apply
mutatis mutandis for the said purpose.

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4 FOUNDATION EXAMINATION: NOVEMBER, 2022

Registered office of LLP and change Registered office of LLP and change
therein (Section 13): therein (Section 13):
(1) Every LLP shall have a registered (1) Every limited liability partnership shall
office to which all communications have a registered office to which all
and notices may be addressed and communications and notices may be
where they shall be received. addressed and where they shall be
(2) A document may be served on a LLP received.
or a partner or designated partner (2) A document may be served on a limited
thereof by sending it by post under a liability partnership or a partner or
certificate of posting or by registered designated partner thereof by sending it
post or by any other manner, as may by post under a certificate of posting or
be prescribed, at the registered office by registered post or by any other
and any other address specifically manner, as may be prescribed, at the
declared by the LLP for the purpose registered office and any other address
in such form and manner as may be specifically declared by the limited
prescribed. liability partnership for the purpose in
(3) A LLP may change the place of its such form and manner as may be
registered office and file the notice of prescribed.
such change with the Registrar in (3) A limited liability partnership may change
such form and manner and subject to the place of its registered office and file
such conditions as may be prescribed the notice of such change with the
and any such change shall take effect Registrar in such form and manner and
only upon such filing. subject to such conditions as may be
(4) If the LLP contravenes any provisions prescribed and any such change shall
of this section, the LLP and its every take effect only upon such filing.
partner shall be punishable with fine (4) If any default is made in complying
which shall not be less than ` 2,000 with the requirements of this section,
but which may extend to ` 25,000. the limited liability partnership and its
every partner shall be liable to a
penalty of five hundred rupees for
each day during which the default
continues, subject to a maximum of
fifty thousand rupees for the limited
liability partnership and its every
partner.
Name (Section 15): Name (Section 15):
(1) Every limited liability partnership shall (1) Every limited liability partnership shall
have either the words “limited liability have either the words limited liability
partnership” or the acronym “LLP” as partnership or the acronym LLP as the
the last words of its name. last words of its name.

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 5

(2) No LLP shall be registered by a name (2) No limited liability partnership shall be
which, in the opinion of the Central registered by a name which, in the
Government is— opinion of the Central Government is
(a) undesirable; or (a) undesirable; or
(b) identical or too nearly resembles (b) identical or too nearly resembles
to that of any other partnership to that of any other limited
firm or LLP or body corporate or liability partnership or a company
a registered trade mark, or a or a registered trade mark of any
trade mark which is the subject other person under the Trade
matter of an application for Marks Act, 1999.
registration of any other person
under the Trade Marks Act,
1999.
Change of name of LLP (Section 17): Change of name of LLP (Section 17):
(1) Notwithstanding anything contained (1) Notwithstanding anything contained
in sections 15 and 16, where the in sections 15 and 16, if through
Central Government is satisfied that a inadvertence or otherwise, a limited
LLP has been registered (whether liability partnership, on its first
through inadvertence or otherwise registration or on its registration by a
and whether originally or by a change new body corporate, its registered
of name) under a name which — name;">name, is registered by a name
(a) is a name referred to in sub- which is identical with or too nearly
section (2) of section 15; or resembles to—
(b) is identical with or too nearly (a) that of any other limited liability
resembles the name of any other partnership or a company; or
LLP or body corporate or other (b) a registered trade mark of a
name as to be likely to be proprietor under the Trade Marks
mistaken for it, Act, 1999, as is likely to be
the Central Government may mistaken for it, then on an
direct such LLP to change its application of such limited
name, and the LLP shall comply liability partnership or proprietor
with the said direction within 3 referred to in clauses (a) and (b)
months after the date of the respectively or a company, the
direction or such longer period Central Government may direct
as the Central Government may that such limited liability
allow. partnership to change its name
or new name within a period of
(2) (i) Any LLP which fails to comply
three months from the date of
with a direction given under sub-
issue of such direction:
section (1) shall be punishable
Provided that an application of the
with fine which shall not be less proprietor of the registered trade
marks shall be maintainable within a

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6 FOUNDATION EXAMINATION: NOVEMBER, 2022

than ` 10,000 but which may period of three years from the date of
extend to ` 5 Lakhs. incorporation or registration or
change of name of the limited liability
(ii) The designated partner of such partnership under this Act.
LLP shall be punishable with fine
(2) Where a limited liability partnership
which shall not be less than
changes its name or obtains a new
` 10,000 but which may extend
name under sub-section (1), it shall
to ` 1 Lakh. within a period of fifteen days from the
date of such change, give notice of the
change to Registrar along with the
order of the Central Government, who
shall carry out necessary changes in
the certificate of incorporation and
within thirty days of such change in
the certificate of incorporation, such
limited liability partnership shall
change its name in the limited liability
partnership agreement.
(3) If the limited liability partnership is in
default in complying with any
direction given under sub-section (1),
the Central Government shall allot a
new name to the limited liability
partnership in such manner as may be
prescribed and the Registrar shall
enter the new name in the register of
limited liability partnerships in place
of the old name and issue a fresh
certificate of incorporation with new
name, which the limited liability
partnership shall use thereafter:
Provided that nothing contained in
this sub-section shall prevent a
limited liability partnership from
subsequently changing its name in
accordance with the provisions of
section 16.
Registration of changes in partners Registration of changes in partners
(Section 25): (Section 25):
(1) Every partner shall inform the LLP of (1) Every partner shall inform the limited
any change in his name or address liability partnership of any change in his

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 7

within a period of 15 days of such name or address within a period of fifteen

change. days of such change.
(2) A LLP shall— (2) A limited liability partnership shall
(a) where a person becomes or (a) where a person becomes or ceases
ceases to be a partner, file a to be a partner, file a notice with the
notice with the Registrar within Registrar within thirty days from the
30 days from the date he date he becomes or ceases to be a
becomes or ceases to be a partner; and
partner; and (b) where there is any change in the
(b) where there is any change in the name or address of a partner, file a
name or address of a partner, notice with the Registrar within
file a notice with the Registrar thirty days of such change.
within 30 days of such change. (3) A notice filed with the Registrar under
(3) A notice filed with the Registrar under sub-section (2)
sub-section (2)— (a) shall be in such form and
(a) shall be in such form and accompanied by such fees as may
accompanied by such fees as be prescribed;
may be prescribed; (b) shall be signed by the designated
(b) shall be signed by the partner of the limited liability
designated partner of the LLP partnership and authenticated in a
and authenticated in a manner manner as may be prescribed; and
as may be prescribed; and (c) if it relates to an incoming partner,
(c) if it relates to an incoming shall contain a statement by such
partner, shall contain a partner that he consents to
statement by such partner that becoming a partner, signed by him
he consents to becoming a and authenticated in the manner as
partner, signed by him and may be prescribed.
authenticated in the manner as (4) If the limited liability partnership
may be prescribed. contravenes the provisions of sub-
(4) If the LLP contravenes the provisions section (2), the limited liability
of sub-section (2), the LLP and every partnership and its every designated
designated partner of the LLP shall be partner shall be liable to a penalty of
punishable with fine which shall not ten thousand rupees.
be less than ` 2,000 but which may (5) If the contravention referred to in sub-
extend to ` 25,000. section (1) is made by any partner of
(5) If any partner contravenes the the limited liability partnership, such
provisions of sub-section (1), such partner shall be liable to a penalty of
partner shall be punishable with fine ten thousand rupees.
which shall not be less than ` 2,000 (6) Any person who ceases to be a partner
but which may extend to ` 25,000. of a limited liability partnership may
(6) Any person who ceases to be a himself file with the Registrar the notice
partner of a LLP may himself file with referred to in sub-section (3) if he has

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8 FOUNDATION EXAMINATION: NOVEMBER, 2022

the Registrar the notice referred to in reasonable cause to believe that the
sub-section (3) if he has reasonable limited liability partnership may not file
cause to believe that the LLP may not the notice with the Registrar and in case
file the notice with the Registrar and of any such notice filed by a partner, the
in case of any such notice filed by a Registrar shall obtain a confirmation to
partner, the Registrar shall obtain a this effect from the limited liability
confirmation to this effect from the partnership unless the limited liability
LLP unless the LLP has also filed partnership has also filed such notice:
such notice. Provided that where no confirmation is
However, where no confirmation is given by the limited liability partnership
given by the LLP within 15 days, the within fifteen days, the Registrar shall
registrar shall register the notice register the notice made by a person
made by a person ceasing to be a ceasing to be a partner under this
partner under this section. section.
Unlimited liability in case of fraud Unlimited liability in case of fraud (Section
(Section 30): 30):
(1) In case of fraud: (1) In the event of an act carried out by
• In the event of an act carried out a limited liability partnership, or any of its
by a LLP, or any of its partners, partners, with intent to defraud creditors
• with intent to defraud creditors of of the limited liability partnership or any
the LLP or any other person, or other person, or for any fraudulent
for any fraudulent purpose, purpose, the liability of the limited liability
partnership and partners who acted with
• the liability of the LLP and intent to defraud creditors or for any
partners who acted with intent to fraudulent purpose shall be unlimited for
defraud creditors or for any all or any of the debts or other liabilities
fraudulent purpose
of the limited liability partnership:
• shall be unlimited for all or any Provided that in case any such act is
of the debts or other liabilities of carried out by a partner, the limited
the LLP. liability partnership is liable to the same
However, in case any such act is extent as the partner unless it is
carried out by a partner, the LLP is established by the limited liability
liable to the same extent as the partnership that such act was without the
partner unless it is established by the knowledge or the authority of the limited
LLP that such act was without the liability partnership.
knowledge or the authority of the LLP. (2) Where any business is carried on with
(2) Where any business is carried on with such intent or for such purpose as
such intent or for such purpose as mentioned in sub-section (1), every
mentioned in sub-section (1), every person who was knowingly a party to the
person who was knowingly a party to carrying on of the business in the manner
the carrying on of the business in the aforesaid shall be punishable with
imprisonment for a term which may

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PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 9

manner aforesaid shall be punishable extend to five years and with fine which
with shall not be less than fifty thousand
• imprisonment for a term which rupees but which may extend to five lakh
may extend to 2 years and rupees.
• with fine which shall not be less (3) Where a limited liability partnership or
than ` 50,000 but which may any partner or designated partner or
extend to ` 5 Lakhs. employee of such limited liability
partnership has conducted the affairs of
(3) Where a LLP or any partner or
the limited liability partnership in a
designated partner or employee of
fraudulent manner, then without
such LLP has conducted the affairs of
prejudice to any criminal proceedings
the LLP in a fraudulent manner, then
which may arise under any law for the
without prejudice to any criminal
time being in force, the limited liability
proceedings which may arise under
partnership and any such partner or
any law for the time being in force, the
designated partner or employee shall be
LLP and any such partner or
liable to pay compensation to any person
designated partner or employee shall
who has suffered any loss or damage by
be liable to pay compensation to any
reason of such conduct:
person who has suffered any loss or
damage by reason of such conduct. Provided that such limited liability
partnership shall not be liable if any such
However, such LLP shall not be liable
partner or designated partner or
if any such partner or designated
employee has acted fraudulently without
partner or employee has acted
knowledge of the limited liability
fraudulently without knowledge of the
partnership.
LLP.
Maintenance of books of account, other Maintenance of books of account, other
records and audit, etc. (Section 34): records and audit, etc. (Section 34):
(1) Proper Books of account: (1) The limited liability partnership shall
• The LLP shall maintain such maintain such proper books of account
proper books of account as may as may be prescribed relating to its
be prescribed affairs for each year of its existence on
• relating to its affairs for each cash basis or accrual basis and
year of its existence according to double entry system of
accounting and shall maintain the same
• on cash basis or accrual basis at its registered office for such period as
and may be prescribed.
• according to double entry (2) Every limited liability partnership shall,
system of accounting and within a period of six months from the end
• shall maintain the same at its of each financial year, prepare a
registered office Statement of Account and Solvency for
• for such period as may be the said financial year as at the last day
prescribed. of the said financial year in such form as
may be prescribed, and such statement

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10 FOUNDATION EXAMINATION: NOVEMBER, 2022

(2) Statement of Account and shall be signed by the designated

Solvency: partners of the limited liability
• Every LLP shall, partnership.
• within a period of 6 months from (3) Every limited liability partnership shall file
the end of each financial year, within the prescribed time, the Statement
• prepare a Statement of Account of Account and Solvency prepared
and Solvency pursuant to sub-section (2) with the
Registrar every year in such form and
• for the said financial year as at manner and accompanied by such fees
the last day of the said financial as may be prescribed.
year
(4) The accounts of limited liability
• in such form as may be partnerships shall be audited in
prescribed, and accordance with such rules as may be
• such statement shall be signed prescribed:
by the designated partners of Provided that the Central Government
the LLP. may, by notification in the Official
(3) Every LLP shall file within the Gazette, exempt any class or classes of
prescribed time, the Statement of limited liability partnerships from the
Account and Solvency prepared requirements of this sub-section.
pursuant to sub-section (2) with the (5) Any limited liability partnership which
Registrar every year in such form and fails to comply with the provisions of
manner and accompanied by such sub-section (3), such limited liability
fees as may be prescribed. partnership and its designated
(4) The accounts of LLP shall be audited partners shall be liable to a penalty of
in accordance with such rules as may one hundred rupees for each day
be prescribed. However, the Central during which such failure continues,
Government may, by notification in subject to a maximum of one lakh
the Official Gazette, exempt any class rupees for the limited liability
or classes of LLP from the partnership and fifty thousand rupees
requirements of this sub-section. for every designated partner.
(5) Any LLP which fails to comply with the (6) Any limited liability partnership which
provisions of this section shall be fails to comply with the provisions of
punishable sub-section (1), sub-section (2) and
• with fine which shall not be less sub-section (4), such limited liability
than ` 25,000 partnership shall be punishable with
• but which may extend to ` 5 fine which shall not be less than
Lakhs twenty-five thousand rupees, but may
Every designated partner of such LLP extend to five lakh rupees and every
shall be punishable designated partner of such limited
liability partnership shall be
• with fine which shall not be less punishable with fine which shall not
than ` 10,000

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• but which may extend to ` 1 be less than ten thousand rupees, but
Lakh. may extend to one lakh rupees.
Newly inserted [34A. Accounting and auditing standards.
The Central Government may, in
consultation with the National Financial
Reporting Authority constituted under
section 132 of the Companies Act, 2013,—
(a) prescribe the standards of
accounting; and
(b) prescribe the standards of auditing,
as recommended by the Institute of
Chartered Accountants of India
constituted under section 3 of the
Chartered Accountants Act, 1949, for
a class or classes of limited liability
partnerships.]
Annual return (Section 35): Annual return (Section 35):
(1) Every LLP shall file an annual return (1) Every limited liability partnership shall
duly authenticated with the Registrar file an annual return duly authenticated
within 60 days of closure of its with the Registrar within sixty days of
financial year in such form and closure of its financial year in such form
manner and accompanied by such and manner and accompanied by such
fee as may be prescribed. fee as may be prescribed.
(2) Any LLP which fails to comply with the (2) If any limited liability partnership fails
provisions of this section shall be to file its annual return under sub-
punishable with fine which shall not section (1) before the expiry of the
be less than ` 25,000 but which may period specified therein, such limited
extend to ` 5 Lakhs. liability partnership and its
(3) If the LLP contravenes the provisions designated partners shall be liable to
of this section, the designated partner a penalty of one hundred rupees for
of such LLP shall be punishable with each day during which such failure
fine which shall not be less than continues, subject to a maximum of
` 10,000 but which may extend to ` 1 one lakh rupees for the limited liability
Lakh. partnership and fifty thousand rupees
for designated partners.
Newly inserted 67A. Establishment of Special Courts.
(1) The Central Government may, for the
purpose of providing speedy trial of
offences under this Act, by
notification, establish or designate as
many Special Courts as may be

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necessary for such area or areas, as

may be specified in the notification.
(2) The Special Court shall consist of—
(a) a single Judge holding office as
Sessions Judge or Additional
Sessions Judge, in case of
offences punishable under this
Act with imprisonment of three
years or more; and
(b) a Metropolitan Magistrate or a
Judicial Magistrate of the first
class, in the case of other
offences, who shall be appointed
by the Central Government with
the concurrence of the Chief
Justice of the High Court:
Provided that until Special Courts are
designated or established under sub-
section (1), the Courts designated as
Special Courts in terms of section 435
of the Companies Act, 2013 shall be
deemed to be Special Courts for the
purpose of trial of offences punishable
under this Act:
Provided further that notwithstanding
anything contained in the Code of
Criminal Procedure, 1973, any offence
committed under this Act, which is
triable by a Special Court shall, until a
Special Court is established under this
Act or the Companies Act, 2013, be
tried by a Court of Sessions or the
Court of Metropolitan Magistrate or a
Judicial Magistrate of the first class, as
the case may be, exercising
jurisdiction over the area.]
67B. Procedure and powers of Special
Court.
(1) Notwithstanding anything contained
in the Code of Criminal Procedure,
1973, all offences specified under sub-
section (1) of section 67A shall be

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triable only by the Special Court

established or designated for the area
in which the registered office of
the limited liability partnership is
situated in relation to which the
offence is committed or where there
are more than one Special Courts for
such area, by such one of them as may
be specified in this behalf by the High
Court concerned.
(2) While trying an offence under this Act,
a Special Court may also try an
offence other than an offence under
this Act with which the accused may,
under the Code of Criminal Procedure,
1973 be charged at the same trial.
(3) Notwithstanding anything contained
in the Code of Criminal Procedure,
1973, the Special Court may, if it
thinks fit, try in a summary way any
offence under this Act which is
punishable with imprisonment for a
term not exceeding three years:
Provided that in the case of any
conviction in a summary trial, no
sentence of imprisonment for a term
exceeding one year shall be passed:
Provided further that, when at the
commencement of or in the course of
a summary trial, it appears to the
Special Court that the nature of the
case is such that the sentence of
imprisonment for a term exceeding
one year may have to be passed or
that it is, for any other reason,
undesirable to try the case summarily,
the Special Court shall, after hearing
the parties, record an order to that
effect and thereafter recall any
witnesses who may have been
examined and proceed to hear or re-

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14 FOUNDATION EXAMINATION: NOVEMBER, 2022

hear the case in accordance with the

procedure for the regular trial.
Newly inserted 67C. Appeal and revision.
The High Court may exercise, so far as may
be applicable, all the powers conferred by
Chapters XXIX and XXX of the Code of
Criminal Procedure, 1973 on a High Court,
as if a Special Court within the local limits
of the jurisdiction of the High Court were a
Court of Sessions trying cases within the
local limits of the jurisdiction of the High
Court.]
Newly inserted 68A. Registration offices.
(1) For the purpose of exercising such
powers and discharging such
functions as are conferred on the
Central Government by or under this
Act or under rules made thereunder
and for the purpose of registration of
limited liability partnerships under
this Act, the Central Government
shall, by notification, establish such
number of registration offices at such
places as it thinks fit, specifying their
jurisdiction.
(2) The Central Government may appoint
such Registrars, Additional Registrars,
Joint Registrars, Deputy Registrars
and Assistant Registrars as it
considers necessary, for the
registration of limited liability
partnerships and discharge of various
functions under this Act.
(3) The powers and duties of the
Registrars referred to in sub-section
(2) and the terms and conditions of
their service shall be such as may be
prescribed.
(4) The Central Government may direct the
Registrar to prepare a seal or seals for
the authentication of documents
required for, or connected with the

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registration of limited liability

partnerships.]
Payment of additional fee (Section 69): Payment of additional fee (Section 69):
Any document or return required to be filed Any document or return required to be
or registered under this Act with the registered or filed under this Act with
Registrar, if, is not filed or registered in Registrar, if, is not registered or filed in
time provided therein, may be filed or time provided therein, may be registered or
registered after that time upto a period of filed after that time, on payment of such
300 days from the date within which it additional fee as may be prescribed in
should have been filed, on payment of addition to any fee as is payable for filing
additional fee of ` 100 for every day of of such document or return:
such delay in addition to any fee as is Provided that such document or return
payable for filing of such document or shall be filed after the due date of filing,
return. without prejudice to any other action or
However, such document or return may, liability under this Act:
without prejudice to any other action or Provided further that a different fee or
liability under this Act, also be filed after additional fee may be prescribed for
such period of 300 days on payment of fee different classes of limited liability
and additional fee specified in this section. partnerships or for different documents or
returns required to be filed under this Act
or rules made thereunder.

PART – II QUESTION AND ANSWER

QUESTIONS

1. Mr. Y is a devotee and wants to donate an elephant to the temple as a core part of ritual
worship. He contacted Mr. X who wanted to sell his elephant. Mr. X contracted with Mr. Y
to sell his elephant for ` 20 Lakhs. Both were unaware that the elephant was dead a day
before the agreement. Referring to the provisions of the Indian Contract Act, 1872, explain
whether it is a void, voidable or a valid contract.
2. In the light of the provisions of the Indian Contract Act, 1872, answer the following:
(i) A student was induced by his teacher to sell his brand-new bike to the latter at a price
less than the purchase price to secure more marks in the examination. Accordingly,
the bike was sold. However, the father of the student persuaded him to sue his
teacher. Whether the student can sue the teacher? If yes, on what grounds?
(ii) Give the circumstances as to when “Vindictive or Exemplary Damages” may be
awarded for breach of a contract.

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3. Karan agreed to purchase wooden table for his study room from Mr. X. Table was in good
condition and was examined by Karan before purchasing. He found no defects in it and
paid ` 20,000 for that table. Later on, it was found that one leg of table is broken, and
Mr. X has pasted the wood and tried to hide the defects in the table. Can Karan return the
table and claim the amount back? Discuss the same with reference to Indian Contract Act,
1872.
4. What will be rights with the promisor in following cases? Explain with reasons:
(a) Mr. X promised to bring back Mr. Y to life again.
(b) A agreed to sell 50 kgs of apple to B. The loaded truck left for delivery on 15 th March
but due to riots in between reached A on 19 th March.
(c) An artist promised to paint on the fixed date for a fixed amount of remuneration but
met with an accident and lost his both hands.
(d) Abhishek entered into contract of import of toys from China. But due to disturbance
in the relation of both the countries, the imports from China were banned.
5. “Though a minor is not competent to contract, nothing in the Contra ct Act prevents him
from making the other party bound to the minor”. Discuss.
6. (i) C bought a bun from a baker’s shop. The piece of bun contained a stone in it which
broke C’s tooth while eating. What are the rights available to the buyer against the
seller under the Sale of Goods Act, 1930?
(ii) A contract with B to buy 50 chairs of a certain quality. B delivers 25 chairs of the type
agreed upon and 25 chairs of some other type. Under the circumstances, what are
the rights of A against B under the Sale of Goods Act, 1930?
7. Ankit needs a black pen for his exams. He went to a nearby stationery shop and told the
seller for a black pen. Seller gives him a pen saying that it is a black pen but it was clearly
mentioned on the packet of pen that “Blue Ink Pen”. Ankit ignore that and takes the pen.
After reaching his house, Ankit finds that the pen is actually a blue pen. Now Ankit wants
to return the pen with the words that the seller has violated the implied conditions of sale
by description. Whether Ankit can do what he wants as per the Sale of Goods Act, 1930.
8. Akansh purchased a Television set from Jethalal, the owner of Gada Electronics on the
condition that first three days he will check it’s quality and if satisfied he will pay for that
otherwise he will return the Television set. On the second day, the Television set was
spoiled due to an earthquake. Jethalal demand the price of Television set from Akansh.
Whether Akansh is liable to pay the price under the Sale of Goods Act, 1930? Who will
ultimately bear the loss?

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9. When can an unpaid seller of goods exercise his right of lien over the goods under the
Sale of Goods Act? Can he exercise his right of lien even if the property in goods has
passed to the buyer? When such a right is terminated? Can he e xercise his right even
after he has obtained a decree for the price of goods from the court?
10. Mohan, Sohan and Rohan are partners in the firm M/s Mosoro & Company. They admitted
Bohan as nominal partner and on agreement between all the partners, Bohan is not entitled
to share profit in the firm. After some time, a creditor Karan filed a suit to Bohan for recovery
of his debt. Bohan denied for same as he is just a nominal partner and he is not liable for
the debts of the firm and Karan should claim his dues from the other partners. Taking into
account the provisions of the Indian Partnership Act, 1932
(a) Whether Bohan is liable for the dues of Karan against the firm.
(b) In case, Karan has filed the suit against firm, whether Bohan would be liable?
11. A, B and C are partners in M/s ABC & Company. The firm has decided to purchase a
machine from M/s LMN & Company. Before A & B purchase the machine, C died. The
machine was purchased but thereafter A and B became insolvent and the firm was unable
to pay for machine. Explain, would the estate of C liable for the dues of M/s LMN &
Company?
12. G, I and S were friends and they decided to form a partnership firm and trade in a particular
type of chemicals. After three years of partnership, a law was passed which banned the
trading of such chemicals. As per the provisions of the Indian Partnership Act, 1932 can
G, I and S continue the partnership or will their partnership firm get dissolved?
13. What is the procedure for maintenance of books of account, other records and audit of
Limited Liability Partnership under LLP Act, 2008?
14. A transport company wanted to obtain licences for its vehicles but could not obtain licences
if applied in its own name. It, therefore, formed a subsidiary company and the application
for licence was made in the name of the subsidiary company. The vehicles were to be
transferred to the subsidiary company. Will the parent and the subsidia ry company be
treated as separate commercial units? Explain in the light of the provisions of the
Companies Act, 2013.
15. ABC Pvt Ltd, has been overstating expenditures in their Profit & Loss account for the past
few years. On Inquiry, it was found that the mere purpose was to avoid tax. However, there
was no fraudulent intentions. Should the corporate veil of the company be lifted? Kindly
justify.
16. A Company registered under Section 8 of the Companies Act, 2013, has been consistently
making profits for the past 5 years after a major change in the management structure. Few
members contented that they are entitled to receive dividends. Can the company distribute
dividend? If yes, what is the maximum percentage of dividend that can be distributed as

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18 FOUNDATION EXAMINATION: NOVEMBER, 2022

per provisions of the Companies Act, 2013? Also, to discuss this along with other regular
matters, the company kept a general meeting by giving only 14 days’ notice. Is this valid?
17. Nolimit Private Company is incorporated as unlimited company having share capital of
` 10,00,000. One of its creditors, Mr. Samuel filed a suit against a shareholder Mr. Innocent
for recovery of his debt against Nolimit Private Company. Mr. Innocent has given his plea
in the court that he is not liable as he is just a shareholder. Explain, whether Mr. Samuel
will be successful in recovering his dues from Mr. Innocent?

ANSWERS

1. As per Section 2(j) of the Indian Contract Act, 1872 a contract which ceases to be
enforceable by law becomes void when it ceases to be enforceable. The fact of
impossibility may be known or unknown to the promisor or promisee.
It may be added by clarification here that the term “contract” shall be understood as an
“agreement”.
Thus, when the parties agree on doing something which is obviously impossib le in itself
the agreement would be void.
In this case, Mr. X and Mr. Y were ignorant of the fact that the elephant was dead and
therefore the performance of the contract was impossible from the very start (impossibility
ab initio).
Hence, this contract is void being not enforceable by law.
2. (i) A contract brought as a result of coercion, undue influence, fraud or misrepresentation
would be voidable at the option of the person whose consent was caused. The relation
of teacher and student is as such that the teacher is in a position to dominate the will
of the student. As a result, the consent of the student is caused by an undue influence.
Hence, the contract between them is voidable at the option of the student, and
therefore, he can sue the teacher.
(ii) Vindicative or Exemplary damages
These damages may be awarded only in two cases:
(a) for breach of promise to marry because it causes injury to his or her feelings;
and
(b) for wrongful dishonour by a banker of his customer’s cheque because in this
case the injury due to wrongful dishonour to the drawer of cheque is so heavy
that it causes loss of credit and reputation to him.

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A business man whose credit has suffered will get exemplary damages even if he has
sustained no pecuniary loss. But a non-trader cannot get heavy damages in the like
circumstances, unless the damages are alleged and proved as special damages.
(Gibbons v West Minister Bank)
3. As per Section 17 of Indian Contract Act, 1872, “A false representation of material facts
when made intentionally to deceive the other party to induce him to enter into a contract is
termed as a fraud.” Section 17(2) further states about active concealment. When a party
intentionally conceals or hides some material facts from the other party and makes sure
that the other party is not able to know the truth, in fact makes the other part y believe
something which is false, then a fraud is committed.
In case a fraud is committed, the aggrieved party gets the right to rescind the contract.
(Section 19).
In the present case, Karan has examined the study table before purchasing it from Mr. X
and could not find any defect in the table as it was concealed by Mr. X.
On the basis of above provisions and facts of the case, Karan can rescind the contract and
claim compensation for the loss suffered due to fraud done by Mr. X.
4. (a) The contract is void because of its initial impossibility of performance.
(b) Time is essence of this contract. As by the time apples reached B, they were already
rotten. The contract is discharged due to destruction of subject matter of contract.
(c) Such contract is of personal nature and hence cannot be performed due to occurrence
of an event resulting in impossibility of performance of contract.
(d) Such contract is discharged without performance because of subsequent illegality
nature of the contract.
5. Minor can be a beneficiary or can take benefit out of a contract. Though a minor is not
competent to contract, nothing in the Contract Act prevents him from making the other
party bound to the minor. Thus, a promissory note duly executed in favour of a minor is not
void and can be sued upon by him, because he though incompetent to contract, may yet
accept a benefit.
A minor cannot become partner in a partnership firm. However, he may with the consent
of all the partners, be admitted to the benefits of partnership (Section 30 of the Indian
Partnership Act, 1932).
6. (i) Condition as to wholesomeness: In the case of eatables and provisions, in addition
to the implied condition as to merchantability, there is another implied condition that
the goods shall be wholesome.

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Hence, C could recover damages in light of the violation of said condition as regards
to the consumption of goods i.e. the bun from the baker which is not of merchantable
quality.
(ii) Delivery of different description:
As per Section 37(3) of the Sale of Goods Act, 1930 where the seller delivers to the
buyer the goods, he contracted to sell mixed with goods of a different description not
included in the contract, the buyer may accept the goods which are in accordance
with the contract and reject the rest or may reject the whole.
Hence, A may accept 25 chairs of the type agreed upon and may reject the other 25
chairs of some other type not agreed upon or may reject all 50 chairs.
7. According to Section 16(2) of the Sale of Goods Act, 1930, where the goods are bought by
description from a seller who deals in goods of that description there is an implied condition
that the goods shall be correspond with that quality. But where the buyer could find the
defect of the goods by ordinary examination, this rule shall not apply. The rule of Caveat
Emptor is not applicable.
In the instant case, Ankit orders a black pen to a stationery shop. Seller gives him a pen
saying that it is a black pen. But on the pack of pen, it was clearly mentioned that it is Blue
Ink Pen. Ankit ignores the instruction mention on the pack and bought it. On reaching at
his house, he finds that actually the pen is blue ink pen. Now he wants to return the pen.
On the basis of above provisions and facts, it is clear that undoubtedly is case of sale by
description but Ankit can find the defect using his ordinary diligence as instructions of blue
ink pen was clearly mentioned on the pack of pen. Hence, the rule of Caveat Emptor will
be applicable here and Ankit cannot return the pen.
8. According to Section 24 of the Sale of Goods Act, 1930, "When the goods are delivered to
the buyer on approval or on sale or return or other similar terms the property passes to the
buyer:
(i) when he signifies his approval or acceptance to the seller,
(ii) when he does any other act adopting the transaction, and
(iii) if he does not signify his approval or acceptance to the seller but retains goods
beyond a reasonable time".
Further, as per Section 8, where there is an agreement to sell specific goods, and
subsequently the goods without any fault on the part of the seller or buyer perish or become
so damaged as no longer to answer to their description in the agreement before the risk
passes to the buyer, the agreement is thereby avoided.

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Akansh purchases a Television set from Jethalal, the owner of Gada Electronics on sale
or approval for three days. Before Akansh could take any decision, the Television set
spoiled due to earth quake.
According to above provisions and fact, the property has not passed to Akansh i.e. buyer
as no condition of Section 24 is satisfied. Hence, risk is not passes to the buyer and the
agreement is thereby avoided. Akansh is not liable to pay the price. The loss finally should
be borne by Seller, Mr. Jethalal.
9. A lien is a right to retain possession of goods until the payment of the price. It is available
to the unpaid seller of the goods who is in possession of them where -
(i) the goods have been sold without any stipulation as to credit;
(ii) the goods have been sold on credit, but the term of credit has expired;
(iii) the buyer becomes insolvent.
The unpaid seller can exercise ‘his right of lien even if the property in goods has passed
on to the buyer. He can exercise his right even if he is in possession of the goods as agent
or bailee for the buyer.
Termination of lien: An unpaid seller loss his right of lien thereon-
(i) When he delivers the goods to a carrier or other bailee for the purpose of transmission
to the buyer without reserving the right of disposal of the goods;
(ii) When the buyer or his agent lawfully obtains possession of the goods;
Yes, he can exercise his right of lien even after he has obtained a decree for the price of
goods from the court.
10. Nominal Partner is a partner only in name. The person’s name is used as if he were a
partner of the firm, though actually he is not. He is not entitled to share the profits of the
firm but is liable for all acts of the firm as if he were a real partner. A nominal partner must
give public notice of his retirement and his insanity is not a ground for dissolving the firm.
In the instant case, Bohan was admitted as nominal partner in the firm. A creditor of the
firm, Karan has claimed his dues from Bohan as he is the partner in the firm. Bohan has
denied for the claim by replying that he is merely a nominal partner.
(a) Bohan is a nominal partner. Even he is not entitled to share the profits of the firm but
is liable for all acts of the firm as if he were a real partner. Therefore, he is liable to
Karan like other partners.
(b) In case, Karan has filed the suit against firm, answer would remain same.

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11. Liability of Partner in case of death

According to Section 35 of Indian Partnership Act, 1932, the estate of a deceased partner
is not liable for any act of the firm done after his death. The estate of the deceased partner
may be absolved from liability for the future obligations of the firm, it is not necessary to
give any notice either to the public or the persons having dealings with the firm.
In the instant case, M/s ABC & Company was having three partners A, B and C. The firm
was going to purchase a machine from M/s LMN & Company. Before A & B purchase the
machine, C died. Machine was purchased but after that A and B become insolvent and the
firm was unable to pay for machine.
On the basis of above provisions and facts of the problem given, the machine was
purchased after the death of C. Hence, the estate of C would not be liable for the dues of
M/s LMN & Company.
12. Compulsory dissolution of a firm (Section 41)
A firm is compulsorily dissolved by the happening of any event which makes it unlawful for
the business of the firm to be carried on or for the partners to carry it on in partnership.
In this case, the firm is carrying on the business of trading in a particular chemical and a
law is passed which bans the trading of such a particular chemical.
The business of the firm becomes unlawful and so the firm will have to be compulsorily
dissolved in the light of Section 41 of the Indian Partnership Act, 1932.
13. Maintenance of books of account, other records and audit, etc. (Section 34 of LLP
Act, 2008):
The LLP shall maintain such proper books of account as may be prescribed relating to its
affairs for each year of its existence on cash basis or accrual basis and according to double
entry system of accounting and shall maintain the same at its registered office for such
period as may be prescribed.
Every LLP shall, within a period of six months from the end of each financial year, prepare
a Statement of Account and Solvency for the said financial year as at the last day of the
said financial year in such form as may be prescribed, and such statement shall be signed
by the designated partners of the LLP.
Every LLP shall file within the prescribed time, the Statement of Account and Solvency
prepared with the Registrar every year in such form and manner and accompanied by such
fees as may be prescribed.
The accounts of LLP shall be audited in accordance with such rules as may be prescribed.

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14. If the subsidiary is formed to act as agent of the Principal Company, it may be deemed to
have lost its individuality in favour of its principal. The veil of Corporate Personality is lifted
and the principal will be held liable for the acts of subsidiary company.
The facts of the case are similar to the case of Merchandise Transport Limited vs. British
Transport Commission (1982), wherein a transport company wanted to obtain licences for
its vehicles but could not do so, if applied in its own name. It, therefore, formed a subsidiary
company, and the application for the licence was made in the name of the subsidiary. The
vehicles were to be transferred to the subsidiary company. Held, the parent and the
subsidiary were held to be one commercial unit and the application for licences was
rejected.
Hence, in this case the parent and the subsidiary company shall not be treated as separat e
commercial units.
15. Corporate veil refers to the concept that members of a company are shielded from liability
connected to the company’s action. It is the legal concept whereby the company is
identified separately from the members of the company. However, under the below
circumstances, the company law disregards the principle of corporate personality.
- To determine the character of the company
- To protect revenue/tax
- To avoid a legal obligation
- Formation of subsidiaries to act as agents
- Company formed for fraud/improper conduct.
In the given scenario, though the intention of the company was not fraudulent to defeat
law, it had the intention of avoiding taxes and protecting revenue.
Hence, corporate veil should be lifted and the principles of corporate personality will be
disregarded.
16. A company registered under Section 8 of the Companies Act, 2013 is prohibited from the
payment of any dividends to its members.
Hence in the given case, the contention of the members to distribute dividend from the
profits earned is wrong.
Also, Section 8 company is allowed to call a general meeting by giving 14 days instead of
21 days.

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17. Section 2(92) of Companies Act, 2013, provides that an unlimited company means a
company not having any limit on the liability of its members. The liability of each member
extends to the whole amount of the company’s debts and liabilities, but he will be entitled
to claim contribution from other members. In case the company has share capital, the
Articles of Association must state the amount of share capital and the amount of each
share. So long as the company is a going concern the liability on the shares is the only
liability which can be enforced by the company. The creditors can institute proceedings for
winding up of the company for their claims. The official liquidator may call the members for
their contribution towards the liabilities and debts of the company, which can be unlimited.
On the basis of above, it can be said that Mr. Samuel cannot directly claim his dues against
the company from Mr. Innocent, the shareholder of the company even the company is an
unlimited company. Mr. Innocent is liable upto his share capital. His unlimited liability wil l
arise when official liquidator calls the members for their contribution towards the liabilities
and debts of the company at the time of winding up of company.

© The Institute of Chartered Accountants of India

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 25

SECTION -B: BUSINESS CORRESPONDENCE AND REPORTING

QUESTIONS
Part A
Chapter-1 Communication
1. Explain any two characteristics of nonverbal communication.
2. Briefly describe the process of communication.
Part-B
Chapter-2 Sentence Types, Active-Passive Voice and Direct-Indirect Speech
1. Change the following sentences from passive voice to active voice.
a. The new blue car was stolen by a noted gangster.
b. A bill was passed by the Parliament this year.
c. Accounts is being taught by Mr. Sharma.
d. The cookies were stolen by the little kid.
e. A type of air pollution is caused by hydrocarbons.
2. Change the following sentences from active voice to passive voice.
a. Jack is building a house.
b. A burglar broke the window.
c. I was watering the plants.
d. The teacher wrote an essay on the blackboard.
e. Star channel will telecast a new show soon.
3. Change the following sentences from indirect to direct speech.
a. Radha asked me to wait there until she returned.
b. John said that German was easy to learn.
c. The speaker asked to be quiet and listen to him.
d. The helper urged to call the ambulance.
e. The Guru ordered his student to shoot the arrow.

26 FOUNDATION EXAMINATION: NOVEMBER, 2022

Chapter-3 Vocabulary
1. Choose the similar meaning of the words given. (Synonyms)
1. INNUNDATE
a. Overcome
b. Original
c. Overload
d. Outside
2. PETITION
a. Appeal
b. Protest
c. Revolt
d. Believe
3. REJOICE
a. Rework
b. Ghostly
c. Intelligent
d. Pleasure
4. CALLOUS
a. Heartless
b. Concerned
c Primary
d. Very old
2. Choose the correct meaning of the idioms given below.
a. The best of both worlds
(i) To travel around the world
(ii) An ideal situation
(iii) A good sign
(iv) To have a strong memory

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 27

b. Add fuel to the fire

(i) To burn something
(ii) To discuss fuel prices
(iii) To do risky things
(iv) To add more to an existing problem
c. A piece of cake
(i) Like to have cake
(ii) Anything sweet
(iii) To remain happy always
(iv) An easy thing to do
d. Bed of roses
(i) A garden with roses
(ii) Being comfortable
(iii) To keep dreaming
(iv) To count the advantages
e. Go the extra mile
(i) To walk a lot
(ii) To get tired easily
(iii) Make an extra effort
(iv) To get distracted
f. Put your foot in your mouth
(i) Say something you shouldn’t be saying
(ii) To be good at aerobics
(iii) To take criticism
(iv) Easy going attitude
g. Step up your game
(i) To quit
(ii) To take things easily

28 FOUNDATION EXAMINATION: NOVEMBER, 2022

(iii) Start accepting faults

(iv) Start performing better
Part-C
Chapter-4
1. Read the following passage carefully and answer the questions at the end of each
passage.
Passage 1
A stout old lady was walking with her basket down the middle of a street in Petrograd to
the great perplexity of the traffic and with no small peril to herself. It was pointed out to her
that the pavement was the place for pedestrians, but she replied: ‘I’m going to walk where
I like. We’ve got liberty now.’ It did not occur to the dear old lady that if liberty entitled the
pedestrian to walk down the middle of the road, then the end of such liberty would be
universal chaos. Everybody would be getting in everybody else’s way and nobody would
get anywhere. Individual liberty would have become social anarchy.
There is a danger of the world getting liberty-drunk these days like the old lady with the
basket, and it is just as well to remind ourselves of what the rule of the road means. It
means that in order that the liberties of all may be preserved, the liberties of everybody
must be curtailed. When the policeman, at Piccadilly Circus steps into the middle of the
road and puts out his hand, he is the symbol not of tyranny but of liberty. You may not think
so. You may, being in a hurry, and seeing your car pulled up by this insolence of office,
feel that your liberty has been outraged. How dare this fellow interfere with your free use
of the public highway? Then if you are a reasonable person, you will reflect that if he did
not interfere with you, he would interfere with no one, and the result would be that Piccad illy
Circus would be a maelstrom that you would never cross at all. You have submitted to a
curtailment of private liberty in order that you may enjoy a social order which makes your
liberty a reality.
Liberty is not a personal affair only but a social contract. It is an accommodation of
interests. In matters which do not touch anybody else’s liberty, of course, I may be as free
as I like. If I choose to go down the road in a dressing-gown, who shall stop me? You have
the liberty to laugh at me, but I have the liberty to be indifferent to you. And if I have a
fancy for dyeing my hair, or wearing an overcoat and sandals, or going to bed late or getting
up early, I shall follow my fancy and ask no man’s permission.
Questions
1. In the phrase ‘symbol not of tyranny but liberty’, what does the word tyranny mean?
(para 2)
2. What is the narrator trying to preach by means of this passage? State in two
sentences.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 29

3. What reason did the lady give for her walking in the middle of the road?
4. Select the suitable synonym for the word ‘perplexity’ as used in the passage:
(a) Morality (b) Pleasure (c) Confusion (d) Horror
5. According to the author, what is liberty?
Passage 2
The sage of science, Einstein, was sitting in a depressive and pensive mood one evening.
His eyes were brimming with tears. The pain was evident on his face. He peeped out of
the window of his room. The sun had set a few minutes back. The sky was filled with a
reddish glow. At this sunset, he felt that it was humanity that had sunk into devilish
darkness and the reddish glow in the sky was the blood of humanity spilling all over the
sky from earth. With tired steps, he walked back to his chair and settled down. It was the
9th of August 1945. Three days back, he had felt the same agony as if someone had torn
him apart. He was deeply hurt and depressed when he heard on the radio that America
had dropped an atom bomb on the Japanese city, Hiroshima. Today, within three days
another bomb was dropped on another city, Nagasaki and lakhs of people had been killed.
He had heard that the blast released so much energy that it had paled all past destructions
in comparison and death had played out a pitiable dance of destruction. The flames that
broke out of the bomb were burning, melting and exploding buildings. Scared of the heat
of the bomb, people had jumped into lakes and rivers, but the water was boiling, and the
people too were burnt and killed. The animals in the water were already boiled to death.
Animals, trees, herbs, fragrant flowering plants were all turned into ashes. The atomic
energy destruction had just not stopped there. It had entered the atmosphere there and
had spread radiation that would affect people for generations to come and would also ring
about destructive irreversible biological changes in animals and plants. As the news of the
atomic attack reached Einstein, and he became aware of the glaring horror of the abuse
of atomic energy, his distress and restlessness knew no bounds. He could not control
himself and picked up his violin to turn his mind on to other things. While playing the violin,
he tried to dissolve his distress in its sad notes but couldn’t. He was burning on the embers
of destruction; his heart was filled with an ocean of agony and tears just continued
streaming uncontrollably out of his eyes. Night had fallen. His daughter came up and asked
him to eat something as he had not taken anything for the last four days. His voice was
restrained, and he said, “I don’t feel like eating.”
He could not sleep that night. Lying down, he was thinking how he had drawn the attention
of the then American President Roosevelt towards the destructive powers of an atomic
bomb. He had thought that this would be used to scare Hitler and put an end to the
barbarism that Hitler was up to. However, Roosevelt kept him in the dark and made false
promises. Eventually, he had abused Einstein’s equation of E=MC2 that resulted in
destructive experiments. His actions had made science and scientists as murderers.

30 FOUNDATION EXAMINATION: NOVEMBER, 2022

Einstein kept on thinking for a long time. Eventually, he slipped into sleep. When he woke
up at dawn, there was a new dawn in him too. The atomic threat had transformed his heart.
1. Why was Einstein upset on 9 th August, 1945?
2. What did Einstein do to distract himself when the news of the atomic attack reached
him?
3. Select a suitable antonym for the word ‘barbarism’ as used in the passage?
(a) Chaos (b) Mundane (c) Brutality (d) Gentleness
4. Why were animals in water boiled to death after the nuclear bomb attack?
5. Why was Einstein sitting in a depressive and pensive mood?
6. What could be the long terms effects of the nuclear attack?
Passage 3
The first survey in Japan on ‘gaming disorder’ found that 18.3% of young people aged
between 10 and 29 play video games for an average of three or more hours a day. Those
who spend extended and long hours playing these games are more likely to become
addicted, which can interfere with their lives and negatively affect their health.
Among those surveyed 85% (92.6% male and 77.4% female) had played video games
within the past 12 months. A survey question that allowed multiple answers found that the
most popular gaming format, used by 80% of those surveyed was the smartphone, followed
by home video game consoles at 48 % approximately and hand held game consoles at
33.5 approximately. About 97.6% persons responded that they played games at homes. It
gives them a comfort zone and makes them feel easy and relaxed.
Around 40% of those playing six or more hours of video games a day also reported that
they continue despite physical problems like backaches, sore eyes, and headaches or
mental stress, even sleep disorders or depression. About half of the pre-school kids and
elementary students have already begun to play online games. Adult should set a good
example by demonstrating proper self-control themselves.
1. What problems can happen when you play video games for more extended hours?
2. Select a suitable antonym for the word ‘relaxed’
a) Rigorous (b) Comfortable (c) Simple (d) Volcanic
3. On a general, who is more likely to get addicted to video games?
4. What is the order of preference (according to the survey) for playing video games.
Mention the devices in order of usage (highest usage mentioned first)

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 31

5. Give the passage a suitable title.

Chapter-5 Note Making
1. Read the following passage carefully.
(i) Make notes, using headings, sub-headings and using abbreviations wherever
necessary. (ii) Give a suitable tittle (ii) Write summary.
We have but one method of acquiring knowledge. From the lowest man to the highes t yogi,
all have to use the same method, and that method, is called concentration. The chemist
who works in his laboratory concentrates all the powers of his mind, brings them into one
focus and throws them on the elements, and the elements stand analysed, and thus his
knowledge comes. The astronomer also concentrates the powers of his mind and brings
them into one focus and then throws them on to objects through his telescope and stars
and systems roll forward and give up their secrets to him. So it is in every case—with the
professor in his chair, the students and his books—with every man who is working to know.
The more this power of concentration is, the more is the knowledge acquired, because this
is the one and the only method of acquiring it. Even the lowest shoeblack, if he pays more
concentration, will polish shoes better, the cook with his concentration will focus all his
attention on the work in hand and will cook a better meal. In making money or in
worshipping God, or in doing anything, the stronger the power of concentration, the better
will be that work done.
Even though concentration is the key to acquiring knowledge—Concentration itself is not
easy to attain. It is a skill that can be developed only through a lot of patience and practice.
He who masters it is real ‘yogi’. To control our senses and to gather all our awareness into
one focus is by no means an easy task. Life itself is complex and there are invariably
several issues vying for our attention which makes it even more difficult to foc us on only
one thing. Even if we try to concentrate fully on the work in hand, our subconscious mind
is scattered in varied directions and soon drags our conscious mind along, without even
our realizing it. It therefore requires a lot of discipline, will power and self-control to focus
or concentrate.
However, the effort is worth it and pays rich dividends in the form of accomplishment of
our goals. This is the one call, the one knock which opens the gate of nature, and lets out
floods of light.
Chapter-7 Précis Writing
Write a précis and give an appropriate title to the passages given below.
1. Falling down or failing is one of the most agonizing, embarrassing, and scariest human
experiences. But it is also one of the most educational, empowering, and ess ential parts
of living a successful and fulfilling life. Did you know that perseverance (grit) is one of the
seven qualities that have been described as the keys to personal success and betterment

32 FOUNDATION EXAMINATION: NOVEMBER, 2022

in society? The other six are curiosity, gratitude, optimism, self-control, social intelligence,
and zest. Thomas Edison is a model for grit for trying 1,000 plus times to invent the light
bulb. If you are reading this with the lights on in your room, you know well he succeeded.
When asked why he kept going despite his hundreds of failures, he merely stated that what
he had been were not failures. They were hundreds of ways not to create a light bulb. This
statement not only revealed his grit but also his optimism for looking at the bright side.
Grit can be learned to help you become more successful. One of the techniques that helps
is mindfulness. Mindfulness is a practice that helps the individual stay in the moment by
bringing awareness of his or her experience without judgement. This practice has been
used to quiet the noise of their fears and doubts. Through this simple practice of
mindfulness, individuals have the ability to stop the self-sabotaging downward spiral of
hopelessness, despair, and frustration.
2. Artificial intelligence helps us manage highly complex systems such as global shipping
networks. For example, the system at the heart of the Port Botany container terminal in
Sydney manages the movement of thousands of shipping containers in and out of the port,
controlling a fleet of automated, driverless straddle-carriers in a completely human-free
zone. Similarly, in the mining industry, optimisation engines are increasingly being used to
plan and coordinate the movement of a resource, such as iron ore, from initial transport on
huge driverless mine trucks, to the freight trains that take the ore to port.
AI’s are at work wherever you look, in industries from finance to transportation, monitoring
the share market for suspicious trading activity or assisting with ground and air traffic
control. They even help to keep spam out of your inbox. And this is just the beginning for
artificial intelligence. As the technology advances, so too does the number of applications.
So what's the problem? Rather than worrying about a future AI takeover, the real risk is
that we can put too much trust in the smart systems we are building. Recall that machine
learning works by training software to spot patterns in data. Once trained, it is then put to
work analysing fresh, unseen data. But when the computer spits out an answe r, we are
typically unable to see how it got there.
3. As India is an agricultural country, the most important crops of India are rice, wheat and
sugarcane. Significantly, these crops are the most water consuming crops. Rice, a major
crop export, consumes about 3500 litres of water for a kilogram of grain produced. Punjab
which is the third largest producer of rice in India is completely dependent on groundwater
for the production of its rice and consumes two to three times more water than Bihar and
West Bengal to produce a kilogram of rice.
Sugarcane is another water guzzling crop in India, which is a very popular crop among
farmers in Maharashtra because they are assured of marketing by sugar mills. The primary
source of water for growing sugarcane is groundwater, whereas state like Bihar which are
more suitable for the production of sugarcane produce only 4% of India’s sugar cane
output.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 33

Thus, measures need to be taken to ensure that crop production patterns within the country
and across states are aligned to regional water availability. Emphasis should be placed on
the adoption of water- better technologies, latest management systems, awareness
amongst farmers, and advisory services to improve water consumption in agriculture.
Chapter-8 Article Writing
1. Write an article on the following topics in not more than 200-250 words.
a. Should Physical Education be a compulsory subject for students till grade 12?
b. Importance of reading a newspaper every day.
Chapter-9 Report Writing
1. Write a newspaper report about a cultural/yoga held on 21st June, 2022 at Talkatora
stadium, New Delhi on the occasion of International Yoga day.
2. You are the Secretary of an RWA (Resident Welfare Association). Write a formal report
stating details of expenditure to be made in the next financial year towards purchase of
items for the society. (Things like gardening tools, table fans for guards, plastic chairs, lock
and key for the office room etc)
Chapter-10 Formal letters and Official Communication
1. You manage the supply of raw material for a local restaurant serving vegetarian food. Wri te
a letter for placing the order of grocery items needed in the next one month. Address the
letter to M/S Khurana and Sons Grocery Pvt ltd. Prepare a list of at least 5 items.
2. You are Arun/Anita. Write a letter to the Fastnet Private Ltd, the local internet service
provider in your locality complaining about the slow bandwidth and poor signal strength in
your internet connection.
Chapter-11 Writing formal mails
1. On behalf of your Technology based organization, write a formal mail to all your employees
requesting them to log their entry and exit time details in the company’s new mobile based
application. State that details should be sent to the HR department weekly. Sign yourself
as a senior HR personnel of the firm.
2. Write a formal email on behalf of an educational institute addressing the parents to
encourage students to attend offline classes regularly. Frequent leaves for reasons
unstated is becoming a concern among the student community. Sign yourself as the
college Principal.
Chapter-12 Resume Writing
1. You are Feroz/Fatima, holding a Master’s degree in library Science. Draft your resume to
apply for jobs in school as a senior librarian.

34 FOUNDATION EXAMINATION: NOVEMBER, 2022

2. You are Krish/Kavita Sethi, HR Head of Team Toppers Private Limited. Draft a formal e -
mail stating the cause for rejecting a candidate named Sameer, who had applied for the
post of the position of Accountant in your company
Chapter-13 Meetings
1. Write ‘Minutes of the Meeting’ for a meeting conducted to discuss the issue of an extended
work from home and the need to call back employees to work.
2. Write the ‘Minutes of the Meeting’ for a meeting organized to discuss the need to
refurbish/renovate the office space to create a better working environment. Mention few
specific things to be changed/added.

ANSWERS

Part A
Chapter-1 Communication
(1) The two characteristics of nonverbal communication are:
(i) Physical nonverbal communication which includes an individual’s facial expressions,
gestures, stances and other physical signals.
(ii) Paralanguage refers to voice quality, intonation, pitch, stress, tone and style of speaking.
(2) In communication process, a sender (encoder) encodes a message and then using a
medium/channel sends it to the receiver (decoder) who decodes the message and after
processing information sends back appropriate feedback/reply using a medium/channel.
Part-B
Chapter-2 Sentence Types, Active-Passive Voice and Direct-Indirect Speech
1. a. A noted gangster stole the new blue car.
b. The Parliament passed a bill this year.
c. Mr. Sharma is teaching Accounts.
d. The little kids stole the cookies
e. Hydrocarbons cause a type of air pollution
2. a. A house is being built by Jack
b. The window was broken by a burglar.
c. The plants were being watered by me.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 35

d. An essay was written by the teacher on the blackboard.

e. A new show will be telecasted by Star channel soon.
3. a. Radha said, ‘Wait for me here until I return’.
b. John said, ‘German is easy to learn’.
c. The speaker said, ‘Be quiet and listen to me’.
d. The helper said, ‘Call the ambulance’.
e. The Guru said to the student, ‘Shoot the arrow’.
Chapter-3 Vocabulary
1. 1 c
2 a
3 d
4 a
2. (a) ii
(b) iv
(c) iv
(d) ii
(e) iii
(f) i
(g) iv
Part-C
Chapter-4
Passage 1
1. The word tyranny means a harsh rule or brutality.
2. The narrator is trying to preach the fact that liberty should be exercised to the extent that
it doesn’t harm anyone else. No citizen should take undue advantage of liberty and do
whatever he wishes to.
3. The lady said that they had liberty, so she could walk anywhere, even in the middle of the
road.
4. C. Confusion

36 FOUNDATION EXAMINATION: NOVEMBER, 2022

5. Liberty according to the author is not a personal affair only but a social contract. It is an
accommodation of interests. One must exercise it within guaranteed limits and not misuse it.
Passage 2
1. Einstein was upset on 9 th august because today within three another bomb was dropped
at Nagasaki.
2. He picked up his violin to turn his mind on to other things.
3. d. Gentleness
4. The water was boiling due to the heat of bomb. As a result animals were boiled to death in
water.
5. Einstein was sitting in a pensive mood because two nuclear bomb attacks had taken place.
He was very well aware of the harmful consequences that had happened and would
happen in the future that would badly effect life.
The attack had spread radiation that would affect people for generations to come and would
also ring about destructive irreversible biological changes in animals and plants.
Passage 3
1. Extended hours of play can lead to backaches, sore eyes, and headaches or mental stress,
even sleep disorders or depression
2. A. Rigorous
3. Those who spend extended and long hours playing these games are more likely to become
addicted to video games.
4. Devices used by 80% of those surveyed was the smartphone, followed by home video
game consoles at 48 % approximately and hand held game consoles at 33.5
approximately.
5. Video games: Fun or addiction -- The choice is yours!!
Chapter-5 Note Making
Title: Power of Concentration
(1) One method of acqrng knldg: Conc
1.1 chmst shows knldg of elmnts
1.2 The chmst does analysis
1.3 Astrmr shows knldg of object in sky
1.31 Uses telscps, stars and systm
1.4 All profns need conc.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 37

(2) More conc. pwr leads to more knldg

2.1 Whthr it is polshng shoes, ckng meals or wrshpng God
(3) Conc. cn b devlpd thru patience and prac.
3.1 Real yogi is one who masters conc.
3.2 To master it, one needs to gthr awrnss and ctrl senses.
3.3 With the no. of distrcns in life, the abv is nt an easy tsk
3.4 The sub conscious mind gets divtrd and we dnt even realize.
3.5 One needs to hv displn, will pwr and self ctrl to focus on conc.
Key words
• Acqrng: acquiring
• Knldg: knowledge
• Chmst: chemist
• Elmnts: elements
• Astrmr: astronomer
• Telscps: telescope
• Systm: system
• Profns: professions
• Conc: concentration
• Pwr: power
• Whthr: whether
• Polshng: polishing
• Ckng: cooking
• Wrshpng: worshipping
• Cn: can
• Devlpd: developed
• Thru: through
• Prac: practice
• Gthr: gather

38 FOUNDATION EXAMINATION: NOVEMBER, 2022

• Awrnss: awareness
• Ctrl: control
• No: number
• Distrcn: distractions
• Abv: above
• Nt: not
• Divtrd: Diverted
• Dnt: don’t
• Hv: have
• Displn: discipline
• Pwr: power
• Ctrl: control
Summary
Key to knowledge: Concentration?
One way of gaining knowledge is to have concentration. Whether it is a yogi, an astronomer, a
shoe polisher, a cook, a professor or a student- with concentration he can perform better. The
sub conscious mind gets swayed away without our knowledge; the distractions can be controlled
through practice and patience. One who does that becomes a ‘yogi’ and attains success and
achieves his goals.
Chapter 7: Precis Writing
Passage -1 To fail is ok!
Failing is not about feeling embarrassed or facing agony. It is a learning in itself that increases
one’s perseverance and is a key to personal success. The other keys are curiosity, gratitude,
optimism, self-control, social intelligence and zest. Thomas Edison described his unsuccessful
attempts as ways of not creating a light bulb; thus showing his optimism. Being aware of your
experience brings mindfulness which as a result brings grit. Being mindful avoids a person’s
downfall and helps overcome helplessness, despair and frustration.
Passage 2- Artificial Intelligence; Boon or a bane?
Artificial Intelligence (AI) is a subject that is being used in various fields like global shipping and
mining. A good example is the Port Botany container terminal in Sydney where AI helps to
manage movement of ships, and runs driverless carriers. In mining, optimization engines help
in transportation of the iron ore end to end on driverless mine trucks. With the advancement of
technology, AI is part of monitoring the share market and assisting with air traffic. The risk of AI

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 39

taking over and our over dependence is a cause of concern. However, machine learning works
when we feed the system, with a software and let it operate on its own!
Passage 3 - Water: An important requirement for our primary crops
In the agrarian India, wheat, rice and sugarcane are the most important crops and co incidentally
all three of them have a heavy water dependency.
Rice, which is an export crop needs about 3500 litres of water per kilogram of the rain and states
like Punjab, with their dependency on groundwater consume way more water than Bihar and
West Bengal, also big producers of the grain. Sugarcane also depends on groundwater for its
water needs. A crop famous amongst the farmers of Maharashtra for its sugar value, gives a
very low output in Bihar of about 4%. Suitable measures if taken at the right time with emphasis
on good technology, management systems, awareness amongst farmers and proper advice
would enable the country for better production and efficient usage of water resources.
Chapter-8 Article Writing
1. (a) Hints : Exercise is the key- to physical health and mental peace (title)
(i) A sound mind resides in a healthy body.
(ii) Mental and physical health go hand in hand; to be physically fit, the mind should
be stable and sound; also a stable mind shows energy and active strength .
(iii) Physical Education can help a child distress, especially after times of the
pandemic.
(iv) In the present scenario, for the ongoing health issues and disorders in the
students, physical exercise and activity can act as a saviour.
(v) Considering the need of hour, Physical Education can be made compulsory. Life
these days in view of the pandemic has become a little dull and in the comfort
zone. Children should indulge in outdoor activities more than sit at home and
play video/phone games. It has been observed that children are becoming more
obese and developing other health issues due to lack of physical exercise.
(b) Hints: Newspaper Reading- the Treasure of knowledge (title)
(i) Newspapers helps you to stay aware about what is happening around the world.
(ii) They help in keeping you up to date in current affairs and other activities
happening around the world.
(iii) Reading a newspaper helps to build vocabulary and enhance concentration.
(iv) Reading a newspaper is a good habit and keeps one active and dedicated
towards knowing more. It creates a greed for knowledge and news.
(v) It also helps in clearing various competitive exams in different fields.

40 FOUNDATION EXAMINATION: NOVEMBER, 2022

Chapter-9 Report Writing

(1) Hints:
‘International Yoga Day celebrated with fun and activities’
22nd June, 2022, New Delhi Arvind Khanna
• The International Yoga Day was celebrated on 21 st June, 2022 with a great pomp and
show. The event included, speeches, skits, presentations and cultural programmes
performed by kids. The event was inaugurated by Maha Yogi Ramchandra from
Haridwar and was attended by noted celebrities from the field of yoga, education and
entertainment.
• The celebrations started with a small introduction to ‘what is yoga’, explained by
Mahayogi Ramchandra. He spoke about the benefits about yoga and also showed a
few ‘asanas’ that would be helpful in general.
• This was followed by a speech by the state health minister Mr. XYZ. A short movie
on the benefits of yoga was shown to the audience followed by cultural dances by
children of different age groups.
• Towards the end of the programme, books and pamphlets were distributed to the
audience.
• The session ended with a thank you note given by a team member of Maha Yogi. The
celebrations were applauded and praised by one and all.
2. To: The Treasurer, Hind Apartments, RWA
From: Secretary, Hind Apartments, RWA
Date: 29th July, 2022
Subject: Expenditure to be made towards miscellaneous items purchased for the society.
Acknowledgements: I am deeply grateful to all my team members who helped me in
formulating this detailed report. The expenditure and other related details have been
recorded with precision.
Contents:
▪ Stating the need to buy new equipment
▪ List of items to be purchased, listed category wise
▪ Current budget versus last financial year’s budget
▪ Conclusion
Summary: With the pandemic having caused havoc in the last two years, many society
works have been pending. Things seem to be improving now, so we plan to upgrade the

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 41

society garden, club house, install security cameras and place swings for children. To
boost sports and other outdoor activities, we decided to allow our players to reap maximum
benefit from the new equipment to be purchased and hence make a mark for themselves.
All these suggestions have been stated keeping in the mind the welfare of the resi dents
and their families.
Can be continued with a few tables mentioned (list of items to be purchased, cost of each
time).
The RWA shall ensure that all residents benefit from the changes made in the society. We
hope to receive the funds well in time to start the needful task.
Chapter-10 Formal letters and Official Communication
1. Eat Well Restaurant
Sector 12, Dwarka
New Delhi- 110075

28th July 2022

M/s Khuarana and Sons Grocery Pvt. Ltd.
Khari Baoli, Central Delhi
New Delhi- 110002

Subject: Placing an order for grocery items

Dear Sir,
As discussed over telephone, we would like to place an order for the following grocery
items for our vegetarian restaurant in Dwarka.
Salt 5 kg
Turmeric 5 kg
Red chilli 2 kg
Coriander powder 4 kg
Rice 20 kg
Wheat flour refined 10 kg
Chick peas 5 kg

42 FOUNDATION EXAMINATION: NOVEMBER, 2022

Kindly ensure that the items are fresh and of best quality when packed. We would
appreciate if the above items are packed in separate bags and as per the required quantity.
It is a request to deliver these grocery items latest by 5th September, 2022. Bills for the
same shall be cleared at the time of delivery. Please offer a suitable discount on the
purchase.
An early delivery would be appreciated.
Thanking you,
Yours Sincerely,
Arjun Bhatt
Eat Well Restaurant, Dwarka
Manager

2. H.No.34/12,
East Patel Nagar,
New Delhi- 110008

30th July, 2022

Customer Service Manager,
Fast Net India Pvt. Ltd.,
Karol Bagh, New Delhi- 110005
Subject- Filing complaint for a defect in poor bandwidth and low signal strength in the
internet (wifi) connection) Portfolio no. 123/EPN/202021
Dear Sir,
I hereby write to complain regarding the poor internet connection and low signal strength
in the Wifi provided. The portfolio number is 123/EPN/20201, dated 20th June, 2021
The wires were laid on 20 th June, 2021 and there seemed to be no problem initially.
However, with one season of heavy rain, the internet connection has got disturbed. The
band width is very low and the internet keeps going off multiple times in a day. As I am
working from home, this kind of a lag is causing me lot of trouble.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 43

I request you to look into this matter without any delay and send a technician to check the
wires and any other connection source. I have enclosed a copy of the bill for your
reference. Looking forward to your early response.
Thanking you!

Yours truly,
Arun/Anita,
East Patel Nagar,
New Delhi.
Chapter-11 Writing formal mails
1. Dear employees,
Greetings!
We request all our employees to use the company’s new mobile application for logging in
their entry and exit details. These details should be sent weekly to the concerned
authorities in the HR department. For the ease and benefit of our employees, we have
shared the link to download the application directly.
This is a mandatory process and we request all our employees to kindly follow the
guidelines and do the needful. Defaulters will face unpleasant consequences.
For any help regarding the matter, a help desk counter has been set up at the reception
area for the next two days. You can also write to helpdesk.attendanceentry@email.com
for clarifications.
Looking forward to your kind cooperation.
With warm regards
Mr. ABC,
Director, HR
Global Technologies
Link for app: http//mobile attendanceapp/globaltech
2. Dear parents,
This is to inform you that we are witnessing a dwindling number in the attendance of
students for offline/physical classes. With the pandemic effect having reduced, we would

44 FOUNDATION EXAMINATION: NOVEMBER, 2022

like students to attend the classes regularly and diligently. Classroom teaching not only
ensures academic skills but also helps in co scholastic grooming.
We request you to encourage your ward to attend all classes and take maximum benefit
from them. Kindly note that leave shall be granted in case of a genuine reason only when
approved’ signed/authorized by parents.
Looking forward to your cooperation.
With warm regards,
Mr. A.K Sharma
Principal
Nav Darpan College
2nd Aug, 2022
Chapter-12 Resume Writing
1. Cover Letter:
KJ- 120, 2nd Floor,
Rajouri Garden, Delhi,
26th July, 2020

The Principal,
Queen Field International School,
Rajouri Garden,
New Delhi.
Subject: Application for the post of librarian
It gives me immense pleasure to share my resume with you for position of Senior Librarian
at your esteemed organization/school.
I hold a Master's degree in Library Sciences and have more than six years of ex perience
in this work. My strong interest of working has motivated me to apply for your organization.
I have a versatile experience of working with an International school and a branch of one
of the top schools of Delhi NCR. I have a widespread knowledge of foreign author books
also, which can be helpful in recommending good study material to senior students.
Please find my resume for the details of my credentials.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 45

Looking forward to hearing from you soon!

Yours Sincerely,
Feroz/Fatima

Resume:
Feroz/Fatima Sheikh
ABC, XYZ Colony, New Delhi- 110018 | +91- 11111 1111 l fatima@yahoo.com
feroz@yahoo.com
Objective
To offer meaningful suggestions through discussions , with a focus to prioritize student’s
individualistic needs in specific subjects.
Educational Qualification

Qualification Year Board/University Institution's Name

M.Lib.I.Sc 2010 Chatrapati Shivaji University, Shivaji Maharaj College
Sholapur of Education
Chatrapati Shivaji University, Shivaji Maharaj College
B.Lib.I.Sc. 2008
Sholapur of Education
Class 12th 2007 Maharshtra State Board Rainbow Public School,
Sholapur
Class 10th 2005 Maharstra State Board Rainbow Public School,
Sholapur

Professional Experience
ABC Private Library, Pune, Librarian April’11 - December’11
• Experience of handling students of various backgrounds.
• Conducted a workshop on ‘Need to Read’.
• Attended seminars on library management.
XYZ School, Librarian January’12 - March’18
• Experience of handling students of Grade 8, 9 and 10
• Attended workshop organized by Cambridge University Press for library sciences
and its future.

46 FOUNDATION EXAMINATION: NOVEMBER, 2022

• Awarded certificate for ‘Outstanding Performance in the Role Assigned’ for three
consecutive years (2013, 2014 and 2015)
• Invited for a talk show by city school to discuss the fading subject of Library sciences.
2. Sameer Sagar
H-12, New Friends Colony,
New Delhi-110025
Subject: Disapproval for the post of Accountant.
Dear Sameer,
We are sorry to inform you that you have not been shortlisted for the post of Accountant at
Team toppers Pvt Ltd.
We appreciate your efforts and credentials, however there are some concerns in your CV
which do not make you the best candidate. With the competition being neck to neck, we
suggest, you work on advanced accounting skills that would help you stand a better chance
next time.
We wish you luck in the future!

Kind regards,
Krish/Kavita Sethi,
HR Head of Team Toppers Private Limited
+91- 33333 3333
Chapter-13 Meetings
1. Hint: State the agenda for the meeting
Participants in the meeting: Mr. XY, Vice-President; Mr. A, HR Manager; Mr. B. HR
employee; Mr. C, Business Development Manager
Date: July18, 2022
Meeting started at 12.00pm
Mr. B started the meeting and discussed the agenda.
Mr. XY intervenes and mentions how important is for the employees to return to work.
Mr. A and Mr. B together presented a presentation on the statistics of productivity and late
attendance of employees while working from home.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 47

Mr. B gave suggestions/incentives to call the employees back.

Mr. XY gave his valuable inputs on how he wants everything should be.
Mr. C gives his opinion on how business can get effected if the work from home option
gets prolonged.
2. Hint: Focus on the agenda.
Participants in the meeting: Mr. B, Vice-President; Mr. A, Mr. C, Sales Manager and their
Associates
Date: July 15, 2022
Meeting started at 1.00pm.
Mr. C explains about the agenda of the meeting, and he talks about how people are facing
issues in the old set up.
The associates have brainstormed few ideas about how the new look of the office space
can bring in better productivity and encourage the employees too.
Mr. B listens to everyone carefully and shares his thoughts about changing specific
areas/infrastructure in the office.
Mr. C agrees and informs that he will discuss with design team and share the appropriate
designs with everyone soon.
The meeting concluded with few ideas that everyone is ready to explore and implement.

PAPER – 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING
SECTION A: BUSINESS LAWS
PART – I: Amendments for June, 2023 Examinations

1. Chapter 4: The Limited Liability Act, 2008

The Limited Liability Act, 2008 has been amended through the Limited Liability
Partnership (Amendment) Act, 2021 dated 13 th August, 2021. The following are the
amendments w.e.f. 1st April, 2022.
Earlier provision New provision
- Throughout the Limited Liability Partnership
Act, 2008, for the words and figures “the
Companies Act, 1956” wherever they occur,
the words and figures “the Companies Act,
2013” shall be substituted.
Body Corporate [(Section 2(d)]: It means Body Corporate [(Section 2(d)]: It means a
a company as defined in section 3 of the company as defined in clause (20) of section
Companies Act, 1956 and includes— 2 of the Companies Act, 2013 and includes
(i) a LLP registered under this Act; (i) a limited liability partnership registered
(ii) a LLP incorporated outside India; and under this Act;
(iii) a company incorporated outside (ii) a limited liability partnership incorporated
India, outside India; and
but does not include— (iii) a company incorporated outside India,
(i) a corporation sole; but does not include
(ii) a co-operative society registered (i) a corporation sole;
under any law for the time being in (ii) a co-operative society registered under
force; and any law for the time being in force; and
(iii) any other body corporate (not being a (iii) any other body corporate (not being a
company as defined in section 3 of company as defined in clause (20) of
the Companies Act, 1956 or a limited section 2 of the Companies Act, 2013
liability partnership as defined in this or a limited liability partnership as
Act), which the Central Government defined in this Act), which the Central
may, by notification in the Official Government may, by notification in the
Gazette, specify in this behalf. Official Gazette, specify in this behalf.
Business [Section 2(e)]: “Business” Business [Section 2(e)]: “Business” includes
includes every trade, profession, service every trade, profession, service and
and occupation. occupation except any activity which the
Central Government may, by notification,
exclude.

2 FOUNDATION EXAMINATION: JUNE, 2023

Newly inserted “Small limited liability partnership [Section

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 3

(a) specifies who are to be

4 FOUNDATION EXAMINATION: JUNE, 2023

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 5

(2) No LLP shall be registered by a name (2) No limited liability partnership shall be
which, in the opinion of the Central registered by a name which, in the
Government is— opinion of the Central Government is
(a) undesirable; or (a) undesirable; or
(b) identical or too nearly resembles (b) identical or too nearly resembles
to that of any other partnership to that of any other limited
firm or LLP or body corporate or liability partnership or a company
a registered trade mark, or a or a registered trade mark of any
trade mark which is the subject other person under the Trade
matter of an application for Marks Act, 1999.
registration of any other person
under the Trade Marks
Act, 1999.
Change of name of LLP (Section 17): Change of name of LLP (Section 17):
(1) Notwithstanding anything contained (1) Notwithstanding anything contained
in sections 15 and 16, where the in sections 15 and 16, if through
Central Government is satisfied that a inadvertence or otherwise, a limited
LLP has been registered (whether liability partnership, on its first
through inadvertence or otherwise registration or on its registration by a
and whether originally or by a change new body corporate, its registered
of name) under a name which — name; is registered by a name which
(a) is a name referred to in sub- is identical with or too nearly
section (2) of section 15; or resembles to—
(b) is identical with or too nearly (a) that of any other limited liability
resembles the name of any other partnership or a company; or
LLP or body corporate or other (b) a registered trade mark of a
name as to be likely to be proprietor under the Trade Marks
mistaken for it, Act, 1999, as is likely to be
the Central Government may mistaken for it, then on an
direct such LLP to change its application of such limited
name, and the LLP shall comply liability partnership or proprietor
with the said direction within 3 referred to in clauses (a) and (b)
months after the date of the respectively or a company, the
direction or such longer period Central Government may direct
as the Central Government may that such limited liability
allow. partnership to change its name
or new name within a period of
(2) (i) Any LLP which fails to comply
three months from the date of
with a direction given under sub-
issue of such direction:
section (1) shall be punishable
Provided that an application of the
with fine which shall not be less proprietor of the registered trade
marks shall be maintainable within a

6 FOUNDATION EXAMINATION: JUNE, 2023

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 7

within a period of 15 days of such name or address within a period of fifteen

8 FOUNDATION EXAMINATION: JUNE, 2023

the Registrar the notice referred to in reasonable cause to believe that the
sub-section (3) if he has reasonable limited liability partnership may not file
cause to believe that the LLP may not the notice with the Registrar and in case
file the notice with the Registrar and of any such notice filed by a partner, the
in case of any such notice filed by a Registrar shall obtain a confirmation to
partner, the Registrar shall obtain a this effect from the limited liability
confirmation to this effect from the partnership unless the limited liability
LLP unless the LLP has also filed partnership has also filed such notice:
such notice. Provided that where no confirmation is
However, where no confirmation is given by the limited liability partnership
given by the LLP within 15 days, the within fifteen days, the Registrar shall
registrar shall register the notice register the notice made by a person
made by a person ceasing to be a ceasing to be a partner under this
partner under this section. section.
Unlimited liability in case of fraud Unlimited liability in case of fraud
(Section 30): (Section 30):
(1) In case of fraud: (1) In the event of an act carried out by
• In the event of an act carried out a limited liability partnership, or any of its
by a LLP, or any of its partners, partners, with intent to defraud creditors
• with intent to defraud creditors of of the limited liability partnership or any
the LLP or any other person, or other person, or for any fraudulent
for any fraudulent purpose, purpose, the liability of the limited liability
partnership and partners who acted with
• the liability of the LLP and intent to defraud creditors or for any
partners who acted with intent to fraudulent purpose shall be unlimited for
defraud creditors or for any
all or any of the debts or other liabilities
fraudulent purpose
of the limited liability partnership:
• shall be unlimited for all or any Provided that in case any such act is
of the debts or other liabilities of carried out by a partner, the limited
the LLP. liability partnership is liable to the same
However, in case any such act is extent as the partner unless it is
carried out by a partner, the LLP is established by the limited liability
liable to the same extent as the partnership that such act was without the
partner unless it is established by the knowledge or the authority of the limited
LLP that such act was without the liability partnership.
knowledge or the authority of the LLP. (2) Where any business is carried on with
(2) Where any business is carried on with such intent or for such purpose as
such intent or for such purpose as mentioned in sub-section (1), every
mentioned in sub-section (1), every person who was knowingly a party to the
person who was knowingly a party to carrying on of the business in the manner
the carrying on of the business in the aforesaid shall be punishable with
imprisonment for a term which may

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 9

10 FOUNDATION EXAMINATION: JUNE, 2023

(2) Statement of Account and shall be signed by the designated

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 11

12 FOUNDATION EXAMINATION: JUNE, 2023

necessary for such area or areas, as

may be specified in the notification.
(2) The Special Court shall consist of—
(a) a single Judge holding office as
Sessions Judge or Additional
Sessions Judge, in case of
offences punishable under this
Act with imprisonment of three
years or more; and
(b) a Metropolitan Magistrate or a
Judicial Magistrate of the first
class, in the case of other
offences, who shall be appointed
by the Central Government with
the concurrence of the Chief
Justice of the High Court:
Provided that until Special Courts are
designated or established under sub-
section (1), the Courts designated as
Special Courts in terms of section 435
of the Companies Act, 2013 shall be
deemed to be Special Courts for the
purpose of trial of offences punishable
under this Act:
Provided further that notwithstanding
anything contained in the Code of
Criminal Procedure, 1973, any offence
committed under this Act, which is
triable by a Special Court shall, until a
Special Court is established under this
Act or the Companies Act, 2013, be
tried by a Court of Sessions or the
Court of Metropolitan Magistrate or a
Judicial Magistrate of the first class, as
the case may be, exercising
jurisdiction over the area.
67B. Procedure and powers of Special
Court.
(1) Notwithstanding anything contained
in the Code of Criminal Procedure,
1973, all offences specified under sub-
section (1) of section 67A shall be

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 13

triable only by the Special Court

14 FOUNDATION EXAMINATION: JUNE, 2023

Newly inserted 67C. Appeal and revision.

The High Court may exercise, so far as may
be applicable, all the powers conferred by
Chapters XXIX and XXX of the Code of
Criminal Procedure, 1973 on a High Court,
as if a Special Court within the local limits
of the jurisdiction of the High Court were a
Court of Sessions trying cases within the
local limits of the jurisdiction of the High
Court.
Newly inserted 68A. Registration offices.
(1) For the purpose of exercising such
powers and discharging such
functions as are conferred on the
Central Government by or under this
Act or under rules made thereunder
and for the purpose of registration of
limited liability partnerships under
this Act, the Central Government
shall, by notification, establish such
number of registration offices at such
places as it thinks fit, specifying their
jurisdiction.
(2) The Central Government may appoint
such Registrars, Additional Registrars,
Joint Registrars, Deputy Registrars
and Assistant Registrars as it
considers necessary, for the
registration of limited liability
partnerships and discharge of various
functions under this Act.
(3) The powers and duties of the
Registrars referred to in sub-section
(2) and the terms and conditions of
their service shall be such as may be
prescribed.
(4) The Central Government may direct the
Registrar to prepare a seal or seals for
the authentication of documents
required for, or connected with the
registration of limited liability
partnerships.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 15

Payment of additional fee (Section 69): Payment of additional fee (Section 69):
Any document or return required to be filed Any document or return required to be
or registered under this Act with the registered or filed under this Act with
Registrar, if, is not filed or registered in Registrar, if, is not registered or filed in
time provided therein, may be filed or time provided therein, may be registered or
registered after that time upto a period of filed after that time, on payment of such
300 days from the date within which it additional fee as may be prescribed in
should have been filed, on payment of addition to any fee as is payable for filing
additional fee of ` 100 for every day of of such document or return:
such delay in addition to any fee as is Provided that such document or return
payable for filing of such document or shall be filed after the due date of filing,
return. without prejudice to any other action or
However, such document or return may, liability under this Act:
without prejudice to any other action or Provided further that a different fee or
liability under this Act, also be filed after additional fee may be prescribed for
such period of 300 days on payment of fee different classes of limited liability
and additional fee specified in this section. partnerships or for different documents or
returns required to be filed under this Act
or rules made thereunder.

2. Chapter 5: The Companies Act, 2013

Notification G.S.R. 700(E) dated 15 th September, 2022
The Central Government has amended Companies (Specification of definition details) Rules,
2014, through the Companies (Specification of definition details) Amendment Rules, 2022.
Earlier provision New provision
As per the Companies (Specification of As per the Companies (Specification of
Definitions Details) Rules, 2014, for the Definitions Details) Rules, 2014, for the
purposes of sub-clause (i) and sub-clause purposes of sub-clause (i) and sub-clause (ii)
(ii) of clause (85) of section 2 of the Act, of clause (85) of section 2 of the Act, paid up
paid up capital and turnover of the small capital and turnover of the small company
company shall not exceed rupees two shall not exceed rupees four crores and
crores and rupees twenty crores rupees forty crores respectively.
respectively.
(Page No. 5.11)

16 FOUNDATION EXAMINATION: JUNE, 2023

PART – II
QUESTION AND ANSWER
1. State which of the following agreements are valid contract under the Indian Contract Act,
1872?
(a) A, who owns two cars is selling red car to B. B thinks he is purchasing the black car.
(b) A threatened to shoot B if he (B) does not lend him `2,00,000 and B agreed to it.
(c) A agrees to sell his house to B against 100 kgs of cocaine (drugs).
(d) A ask B if he wants to buy his bike for ` 50,000. B agrees to buy bike.
(e) Mr. X agrees to write a book with a publisher. But after few days, X dies in an accident.
2. Mr. Harish owes payment of 3 bills to Mr. Ashish as on 31 st March, 2022. (i) ` 12,120 which
was due in May 2018. (ii) ` 5,650 which was due in August 2020 (iii) ` 9,680 which was
due in May 2021. Mr. Harish made payment on 1 st April 2022 as below without any notice
of how to appropriate them:
(i) A cheque of ` 9,680
(ii) A cheque of ` 15,000
Advice under the provisions of the Indian Contract Act, 1872.
3. Mr. Shyam Mundra was a big businessman having one son and one married daughter. He
decided to gift his house to his daughter. For this purpose, he called his lawyer at his house
and made a written document for such gift. The lawyer advised him to get the transfer
document properly registered. When they both were going for registration of document,
they met with an accident and both died. Later, the daughter found the document and
claimed the house on the basis of that document. Explain, whether she can get the house
as gift under the Indian Contract Act, 1872?
4. Mr. Mukund wants to sell his car. For this purpose, he appoints Mr. Parth, a minor as his
agent. Mr. Mukund instructs Mr. Parth that car should not be sold at price less than
` 2,00,000. Mr. Parth ignores the instruction of Mr. Mukund and sells the car to
Mr. Naman for ` 1,50,000. Explain the legal position of contract under Indian Contract Act,
1872 whether:
(a) Mr. Mukund can recover the loss of ` 50,000 from Mr. Parth?
(b) Mr. Mukund can recover his car from Mr. Naman?
5. Mukesh is running a grocery store in Delhi. He sells his grocery business, including
goodwill worth `1,00,000 to Rohit for a sum of ` 5,00,000. After the sale of goodwill, Rohit
made an agreement with Mukesh. As per this agreement, Mukesh cannot open another

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 17

grocery store (similar kind of business) in the whole of India for next ten years. However,
Mukesh opens another store in the same city two months later. What are the rights
available with Rohit regarding the restriction imposed on Mukesh with reference to Indian
Contract Act, 1872?
6. P left his carriage on D’s premises. Landlord of D seized the carriage against the rent due
from D. P paid the rent and got his carriage released. Can P recover the amount from D?
7. Avyukt purchased 100 Kgs of wheat from Bhaskar at `30 per kg. Bhaskar says that wheat
is in his warehouse in the custody of Kishore, the warehouse keeper. Kishore confirmed
Avyukt that he can take the delivery of wheat from him and till then he is holding wheat on
Avyukt’s behalf. Before Avyukt picks the goods from warehouse, the whole wheat in the
warehouse has flowed in flood. Now Avyukt wants his price on the contention that no
delivery has been done by seller. Whether Avyukt is right with his views under the Sale of
Goods Act, 1930.
8. Priyansh orders an iron window to an Iron Merchant for his new house. Iron merchant
sends his technician to take the size of windows. The technician comes at the site and
takes size of area where window to be fitted. Afterwards, Iron merchant on discussion with
his technician intimates Priyansh that cost of the window will be ` 5,000 and he will take `
1,000 as advance. Priyansh gives ` 1,000 as advance and rest after fitting of window. After
three days when technician try to fit the window made by him at the site of Priyansh, it was
noticed that the size of window was not proper. Priyansh requests the Iron merchant either
to remove the defect or return his advance. Iron merchant replies that the window was
specifically made for his site and the defect cannot be removed nor can it be of other use.
So, he will not refund the advance money rather Priyansh should give him the balance of
` 4,000. State with reason under the provisions of the Sale of Goods Act, 1930, whether
Priyansh can take his advance back?
9. Ayushman is the owner of a residential property situated at Indraprastha Marg, New Delhi.
He wants to sell this property and for this purpose he appoints Ravi, a mercantile agent
with a condition that Ravi will not sell the house at a price not less than ` 5 crores. Ravi
sells the house for ` 4 crores to Mudit, who buys in good faith. Ravi misappropriated the
money received from Mudit. Ayushman files a suit against Mudit to recover his property.
Decide with reasons, can Ayushman do so under the Sale of Goods Act, 1930?
10. A agrees to sell certain goods to B on a certain date on 10 days credit. The period of 10
days expired and goods were still in the possession of A. B has also not paid the price of
the goods. B becomes insolvent. A refuses to deliver the goods to exercise his right of lien
on the goods. Can he do so under the Sale of Goods Act, 1930?
11. State the difference between Sale and Agreement to sell.

18 FOUNDATION EXAMINATION: JUNE, 2023

12. Mr. Ram and Mr. Raheem are working as teacher in Ishwarchand Vidhyasagar Higher
Secondary School and also are very good friends. They jointly purchased a flat which was
given on rent to Mr. John. It was decided between landlords and tenant that the rent would
be ` 10,000 per month inclusive of electricity bill. It means electricity bill will be paid b y
landlords. The landlords, by mistake, did not pay the electricity bill for the month of March
2021. Due to this, the electricity department cut the connection. Mr. John has to pay the
electricity bill of ` 2800 and ` 200 as penalty to resume the electricity connection. Mr. John
claimed ` 3000 from Mr. Ram but Mr. Ram replied that he is liable only for ` 1500.
Mr. John said that Mr. Ram and Mr. Raheem are partners therefore he can claim the full
amount from any of the partner. Explain, whether under the provision of Indian Partnership
Act, 1932, Mr. Ram is liable to pay whole amount of ` 3000 to Mr. John?
13. Shyam, Mohan and Keshav were partners in M/s Nandlal Gokulwale and Company. They
mutually decided that Shyam will take the responsibility to sell the goods, Mohan will do
the purchase of goods for firm and Keshav will look after the accounts and banking
department. No one will interfere in other’s department. Once, when Shyam and Keshav
were out of town, Mohan got the information that the price of their good is going down
sharply due to some government policy which would result in heavy loss to firm if goods
not sold immediately. He tried to contact Shyam who has authority to sell the goods. When
Mohan couldn’t contact to Shyam, he sold all goods at some reduced price to save the firm
from heavy loss. Thereafter, Shyam and Keshav denied accepting the loss due to sale of
goods at reduced price as it’s only Shyam who has express authority to sell the goods.
Discuss the consequences under the provisions of the Indian Partnership Act, 1932.
14. X and Y were partners in a firm. The firm was dissolved on 12 th June, 2022 but no public
notice was given. Thereafter, X purchased some goods in the firm’s name from Z. Z was
ignorant of the fact of dissolution of firm. X became insolvent and Z filed a suit against Y
for recovery of his amount. State with reasons whether Y would be liable under the
provisions of the Indian Partnership Act, 1932?
15. State the modes by which a partner may transfer his interest in the firm in favour of another
person under the Indian Partnership Act, 1932. What are the rights of such a transferee?
16. Explain the Small Limited Liability Partnership under the LLP Act, 2008.
17. In the Flower Fans Private Limited, there are only 5 members. All of them go in a boat on
a pleasure trip into an open sea. The boat capsizes and all of them died being drowned.
Explain with reference to the provisions of Companies Act, 2013:
(i) Is Flower Fans Private Limited no longer in existence?
(ii) Further is it correct to say that a company being an artificial person cannot own
property and cannot sue or be sued?

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 19

18. ABC Limited was into sale and purchase of iron rods. This was the main object of the
company mentioned in the Memorandum of Association. The company entered into a
contract with Mr. John for some finance related work. Later on, the company repudiated
the contract as being ultra vires.
With reference to the same, briefly explain the doctrine of “ultravires” under the Companies
Act, 2013. What are the consequences of ultravires acts of the company?
19. Articles of Association of XYZ Private Limited provides that Board of Directors (BOD) can
take the loan upto ` 5,00,000 for Company by passing the board resolution. In that case,
the loan amount is in excess of the limit, special resolution is required to be passed in
general meeting. Due to urgent needs of funds, BOD applied for loan in a reputed bank for
` 10,00,000 without passing the resolution in the general meeting. BOD gave an
undertaking to bank that Special Resolution has been passed for such loan. The bank on
believing on such undertaking lend the money. On demanding the repayment of loan,
company denied the payment as act was ultra vires to company. Kindly, advise.
20. Explain the classification of the companies on the basis of control as per the Companies
Act, 2013.

ANSWERS

1. (a) A, who owns two cars is selling red car to B. B thinks he is purchasing the black car.
There is no consensus ad idem and hence not a valid contract.
(b) A threatened to shoot B if he (B) does not lend him `2,00,000 and B agreed to it.
Here the agreement is entered into under coercion and hence not a valid contract.
(c) A agrees to sell his house to B against 100 kgs of cocaine (drugs). Such agree ment
is illegal as the consideration is unlawful.
(d) A ask B if he wants to buy his bike for ` 50,000. B agrees to buy bike. It is agreement
which is enforceable by law. Hence, it is a valid contract.
(e) Mr. X agrees to write a book with a publisher. But after few days, X dies in an accident.
Here the contract becomes void due to the impossibility of performance of the
contract.
2. If the performance consists of payment of money and there are several debts to be paid,
the payment shall be appropriated as per provisions of Sections 59, 60 and 61 of the Indian
Contract Act, 1872. The debtor has, at the time of payment, the right of appropriating the
payment. In default of debtor, the creditor has option of election and in default of either ,
the law will allow appropriation of debts in order of time.

20 FOUNDATION EXAMINATION: JUNE, 2023

In the present case, Mr. Harish had made two payments by way of two cheques. One
cheque was exactly the amount of the bill drawn. It would be understood even though not
specifically appropriated by Mr. Harish that it will be against the bill of exact amount. Hence
cheque of `9,680 will be appropriated against the bill of ` 9,680 which was due in May
2021.
Cheque of ` 15000 can be appropriated against any lawful debt which is due even though
the same is time-barred.
Hence, Mr. Ashish can appropriate the same against the debt of `12,120 which was due
in 2018 and balance against ` 5650 which was due in August 2020.
3. Section 25 of Indian Contract Act, 1872 provides that an agreement made without
consideration is valid if it is expressed in writing and registered under the law for the time
being in force for the registration of documents and is made on account of natural love and
affection between parties standing in a near relation to each other. In other words, a written
and registered agreement based on natural love and affection between the parties sta nding
in near relation to each other is enforceable even without consideration.
In the given problem, the transfer of house made by Mr. Shyam Mundra on account of
natural love and affection between the parties standing in near relation to each other is
written but not registered. Hence, this transfer is not enforceable.
4. According to the provisions of Section 11 of Indian Contract Act, 1872, a minor is
disqualified from contracting. A contract with minor is void-ab-initio but minor can act as
an agent. But he will not be liable to his principal for his acts.
In the instant case, Mr. Mukund appoints Mr. Parth, a minor as his agent to sale his car.
Mr. Mukund clearly instructed to Mr. Parth that the minimum sale price of the car should
be ` 2,00,000 yet Mr. Parth sold the car to Mr. Naman for ` 1,50,000.
(a) Considering the facts, although the contract between Mr. Mukund and Mr. Parth is
valid, Mr. Parth will not be liable to his principal for his acts. Hence, Mr. Mukund
cannot recover the loss of ` 50,000.
(b) Further, Mr. Naman purchased the car from agent of Mr. Mukund, he got good title.
Hence, Mr. Mukund cannot recover his car from Mr. Naman.
5. According to Section 27 of the Indian Contract Act, 1872, any agreement that restrains a
person from carrying on a lawful trade, profession or business is a void agreement.
However, there are certain exceptions to this rule. One of the statutory exceptions includes
sale of Goodwill. The restraint as to sale of goodwill would be a valid restraint provided -
(i) Where the restraint is to refrain from carrying on a similar business,
(ii) The restrain should be within the specified local limits,

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 21

(iii) The restraint should be not to carry on the similar business after sale of goodwill to
the buyer for a price,
(iv) The restriction should be reasonable. Reasonableness of restriction will depend upon
number of factors as considered by court.
In the given case, Mukesh has sold the goodwill and there is restraint for not carrying on
the same business of grocery store. However, the restriction imposed on Mukesh is
unreasonable as he cannot carry similar business in whole of India for next 10 years. The
restriction on restraint to similar kind of trade should be reasonable to make it a valid
agreement.
Hence, Rohit cannot take any legal action against Mukesh as the restriction is
unreasonable as per Section 27 of Indian Contract Act, 1872. Hence, the agreement made
between in restraint of trade between Mukesh and Rohit is void agreement.
6. Section 69 of the Indian Contract Act, 1872 states that a person who is interested in the
payment of money which another person is bound by law to pay, and who therefore pays
it, is entitled to get it reimbursed by the other.
In the present case, D was lawfully bound to pay rent. P was interested in making the
payment to D’s landlord as his carriage was seized by him. Hence being an interested
party, P made the payment and can recover the same from D.
7. As per the provisions of the Sale of Goods Act, 1930 there are three modes of delivery, i)
Actual delivery, ii) Constructive delivery and iii) Symbolic delivery. When delivery is
affected without any change in the custody or actual possession of the things, it is called
constructive delivery or delivery by acknowledgement. Constructive delivery takes place
when a person in possession of goods belonging to seller acknowledges to the buyer that
he is holding the goods on buyer’s behalf.
On the basis of above provisions and facts, it is clear that possession of the wheat has
been transferred through constructive delivery. Hence, Avyukt is not right. He cannot claim
the price back.
8. By virtue of provisions of Section 16 of the Sale of Goods Act, 1930, there is an implied
condition that the goods should be in merchantable position at the time of transfer of
property. Sometimes, the purpose for which the goods are required may be ascertained
from the facts and conduct of the parties to the sale, or from the nature of description of
the article purchased. In such a case, the buyer need not tell the seller the purpose for
which he buys the goods.

22 FOUNDATION EXAMINATION: JUNE, 2023

On the basis of above provisions and facts given in the question, it is clear that as window
size was not proper, window was not in merchantable condition. Hence, the implied
condition as to merchantability was not fulfilled and Priyansh has the right to avoid the
contract and recover his advance money back.
9. As per the Proviso to Section 27 of the Sale of Goods Act, 1930, a sale made by a
mercantile agent of the goods would pass a good title to the buyer in the following
circumstances; namely;
(a) If he was in possession of the goods or documents with the consent of the owner;
(b) If the sale was made by him when acting in the ordinary course of business as a
mercantile agent; and
(c) If the buyer had acted in good faith and has at the time of the contract of sale, no
notice of the fact that the seller had no authority to sell.
On the basis of above, it can be said that Ravi, the mercantile agent, sells property to Mudit
who bought in good faith. Mudit obtained a good title of that residential property. Hence,
Ayushman cannot recover his property from Mudit. Rather, Ayushman can recover his loss
from Ravi.
10. Lien is the right of a person to retain possession of the goods belon ging to another until
claim of the person in possession is satisfied. The unpaid seller has also right of lien over
the goods for the price of the goods sold.
Section 47(1) of the Sale of Goods Act, 1930 provides that the unpaid seller who is in the
possession of the goods is entitled to exercise right of lien in the following cases: -
1. Where the goods have been sold without any stipulation as to credit
2. Where the goods have been sold on credit but the term of credit has expired
3. Where the buyer has become insolvent even though the period of credit has not yet
expired.
In the given case, A has agreed to sell certain goods to B on a credit of 10 days. The period
of 10 days has expired. B has neither paid the price of goods nor taken the possession of
the goods. That means the goods are still physically in the possession of A, the seller. In
the meantime, B, the buyer has become insolvent. In this case, A is entitled to exercise
the right of lien on the goods because the buyer has become insolvent and t he term of
credit has expired without any payment of price by the buyer.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 23

11. The differences between Sale and Agreement to sell are as follows:
Basis of difference Sale Agreement to sell
Transfer of property The property in the goods Property in the goods
passes to the buyer passes to the buyer on future
immediately. date or on fulfilment of some
condition.
Nature of contract It is an executed contract It is an executory contract
i.e. contract for which i.e. contract for which
consideration has been consideration is to be paid at
paid. a future date.
Remedies for breach The seller can sue the The aggrieved party can sue
buyer for the price of the for damages only and not for
goods because of the the price, unless the price
passing of the property was payable at a stated
therein to the buyer. date.
Liability of parties A subsequent loss or Such loss or destruction is
destruction of the goods is the liability of the seller.
the liability of the buyer.
Burden of risk Risk of loss is that of buyer Risk of loss is that of seller.
since risk follows
ownership.
Nature of rights Creates Jus in rem means Creates Jus in personam
right against the whole means rights against a
world. particular party to the
contract.
Right of resale The seller cannot resell the The seller may sell the
goods. goods since ownership is
with the seller.
In case of insolvency The official assignee will The official assignee will
of seller not be able to take over the acquire control over the
goods but will recover the goods but the price will not
price from the buyer. be recoverable.
In case of insolvency The official assignee will The official assignee will not
of buyer have control over the have any control over the
goods. goods.

24 FOUNDATION EXAMINATION: JUNE, 2023

12. According to Section 4 of the Indian Partnership Act, 1932, "Partnership" is the relation
between persons who have agreed to share the profits of a business carried on by all or
any of them acting for all. Therefore, for determining the existence of partnership, it must
be proved.
1. There must be an agreement between all the persons concerned;
2. The agreement must be to carry on some business;
3. The agreement must be to share the profits of a business and
4. The business was carried on by all or any of them acting for all.
On the basis of above provisons and facts provided in the question, Mr. Ram and
Mr. Raheem cannot be said under partnership as they are teachers in a school and just
purchased a flat jointly. By merely giving the flat on rent, they are not doing business. They
are just earning the income from the property under their co-ownership. Hence, there is no
partnership between them. Therefore, Mr. Ram is liable to pay his share only i.e. ` 1500.
Mr. John has to claim rest ` 1500 from Mr. Raheem.
13. According to Section 20 of Indian Partnership Act, 1932, the partners in a firm may, by
contract between the partners, extend or restrict the implied authority of any partner.
Notwithstanding any such restriction, any act done by a partner on behalf of the firm which
falls within his implied authority binds the firm, unless the person with whom he is dealing
knows of the restriction or does not know or believe that partner to be a partner.
Further, according to Section 21, a partner has authority, in an emergency to do all such
acts for the purpose of protecting the firm from loss as would be done by a person of
ordinary prudence, in his own case, acting under similar circumstances, and such acts bind
the firm.
On the basis of provisions and facts provided in the question, though Shyam was expressly
authorised to sell the goods, Mohan sold the goods at some loss. It was very much clear
that Mohan has done what a person of ordinary prudence does in an emergency to protect
the firm from heavy loss. Hence, this sale will bind the firm.
14. By virtue of provisions of Section 45 of the Indian Partnership Act, 1932, notwithstanding
the dissolution of a firm, the partners continue to be liable as such to third parties for any
act done by any of them which would have been an act of the firm, if done before the
dissolution, until public notice is given of the dissolution.
In the instant case, X and Y were partners in a firm which was dissolved but no public
notice was given. After dissolution, X purchased some goods in the firm’s name from Z
who was ignorant of the fact of dissolution of firm. X became insolvent and Z filed a suit
against Y for recovery of his amount.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 25

Following the provisions of Section 45, X and Y are continuing liable against third party
even after dissolution of firm until public notice is given. As in the given problem, X became
insolvent, therefore, Y will be liable to Z.
15. Section 29 of the Indian Partnership Act, 1932 provides that a share in a partnership is
transferable like any other property, but as the partnership relationship is based on mutual
confidence, the assignee of a partner’s interest by sale, mortgage or otherwise cannot
enjoy the same rights and privileges as the original partner.
The rights of such a transferee are as follows:
(1) During the continuance of partnership, such transferee is not entitled
(a) to interfere with the conduct of the business,
(b) to require accounts, or
(c) to inspect books of the firm.
He is only entitled to receive the share of the profits of the transferring partner and
he is bound to accept the profits as agreed to by the partners, i.e., he cannot
challenge the accounts.
(2) On the dissolution of the firm or on the retirement of the transferring partner, the
transferee will be entitled, against the remaining partners:
(a) to receive the share of the assets of the firm to which the transferring partner
was entitled, and
(b) for the purpose of ascertaining the share,
he is entitled to an account as from the date of the dissolution.
By virtue of Section 31, no person can be introduced as a partner in a firm without
the consent of all the partners. A partner cannot by transferring his own interest, make
anybody else a partner in his place, unless the other partners agree to accept that
person as a partner. At the same time, a partner is not debarred from transferring his
interest. A partner’s interest in the partnership can be regarded as an existing interest
and tangible property which can be assigned.
16. Small Limited Liability Partnership [Section 2(ta) of the LLP Act, 2008]: It means a
limited liability partnership—
(i) the contribution of which, does not exceed twenty-five lakh rupees or such higher
amount, not exceeding five crore rupees, as may be prescribed; and
(ii) the turnover of which, as per the Statement of Accounts and Solvency for the
immediately preceding financial year, does not exceed forty lakh rupees or such
higher amount, not exceeding fifty crore rupees, as may be prescribed; or

26 FOUNDATION EXAMINATION: JUNE, 2023

(iii) which meets such other requirements as may be prescribed, and fulfils such terms
and conditions as may be prescribed.
17. (i) Perpetual Succession – A company on incorporation becomes a separate legal
entity. It is an artificial legal person and have perpetual succession which means even
if all the members of a company die, the company still continues to exist. It has
permanent existence.
The existence of a company is independent of the lives of its members. It has a
perpetual succession. In this problem, the company will continue as a legal entity.
The company's existence is in no way affected by the death of all its members.
(ii) The statement given is incorrect. A company is an artificial person as it is created by
a process other than natural birth. It is legal or judicial as it is created by law. It is a
person since it is clothed with all the rights of an individual. Further, the company
being a separate legal entity can own property, have banking account, raise loans,
incur liabilities and enter into contracts. Even members can contract with company,
acquire right against it or incur liability to it. It can sue and be sued in its own name.
It can do everything which any natural person can do except be sent to jail, take an
oath, marry or practice a learned profession. Hence, it is a legal person in its own
sense.
18. Doctrine of ultra vires: The meaning of the term ultra vires is simply “beyond (their)
powers”. The legal phrase “ultra vires” is applicable only to acts done in excess of the legal
powers of the doers. This presupposes that the powers in their nature are limited. It is a
fundamental rule of Company Law that the objects of a company as stated in its
memorandum can be departed from only to the extent permitted by the Act, thus far and
no further. In consequence, any act done or a contract made by the company which travels
beyond the powers not only of the directors but also of the company is wholly void and
inoperative in law and is therefore not binding on the company. On this account, a company
can be restrained from employing its fund for purposes other than those sanctioned by the
memorandum. Likewise, it can be restrained from carrying on a trade different from the
one it is authorised to carry on.
The impact of the doctrine of ultra vires is that a company can neither be sued on an ultra
vires transaction, nor can it sue on it. Since the memorandum is a “public document”, it is
open to public inspection. Therefore, when one deals with a company one is deemed to
know about the powers of the company. If in spite of this you enter into a transaction which
is ultra vires the company, you cannot enforce it against the company.
An act which is ultra vires the company being void, cannot be ratified even by the
unanimous consent of all the shareholders of the company.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 27

Hence in the given case, ABC Limited cannot enter into a contract outside the purview of
its object clause of Memorandum of Association as it becomes ultra vires and thus null and
void.
19. According to doctrine of Indoor Management, persons dealing with the Company are
presumed to have read the registered documents and to see that the proposed dealing is
not inconsistent therewith, but they are not bound to do more; they need not enquire into
the regularity of internal proceedings as required by Memorandum and Articles. This was
also decided in case of Royal British Bank Vs. Turquand.
In the instant case, XYZ Private Limited have taken loan from reputed bank for
` 10,00,000 by passing Board Resolution while Special Resolution was necessary for such
amount. BOD gave an undertaking to bank that Special Resolution has been passed for
such loan. The bank on believing on such undertaking lends the money. On demanding
the repayment of loan, company denied the payment as act was ultra vires to company.
On the basis of provisions of doctrine of indoor management, the bank can claim the
amount of his loan from the company. The bank can believe on the undertaking given by
board and no need to enquire further.
20. In line with the Companies Act, 2013, following are the classification of the
Companies on the basis of control:
(a) Holding and subsidiary companies: ‘Holding and subsidiary’ companies are
relative terms.
A company is a holding company in relation to one or more other companies, means
a company of which such companies are subsidiary companies. [Section 2(46)]
For the purposes of this clause, the expression “company" includes any body
corporate.
Whereas section 2(87) defines “subsidiary company” in relation to any other company
(that is to say the holding company), means a company in which the holding
company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total voting power either at its
own or together with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall
not have layers of subsidiaries beyond such numbers as may be prescribed.
(b) Associate company [Section 2(6)]: In relation to another company, means a
company in which that other company has a significant influence, but which is not a
subsidiary company of the company having such influence and includes a joint
venture company.

28 FOUNDATION EXAMINATION: JUNE, 2023

Explanation. — For the purpose of this clause —

(i) the expression “significant influence” means control of at least twenty per cent
of total voting power, or control of or participation in business decisions under
an agreement;
(ii) the expression “joint venture’’ means a joint arrangement whereby the parties
that have joint control of the arrangement have rights to the net assets of the
arrangement.
The term “Total Share Capital”, means the aggregate of the -
(1) Paid-up equity share capital; and
(2) Convertible preference share capital.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 29

SECTION 2B: BUSINESS CORRESPONDENCE AND REPORTING

Part A
Chapter-1 Communication
1. What is ‘Aesthetic Communication’? Explain briefly.
2. Visual Communication is a powerful medium. Justify.
Part-B
Chapter-2 Sentence Types, Active-Passive Voice and Direct-Indirect Speech
1. Change the following sentences into passive voice.
a. Savita had missed the last metro.
b. The course co-ordinator will give them instructions.
c. The two neighbouring countries are signing the treaty.
d. Shekhar received a cheque of rupees five thousand.
e. Aruna is baking a chocolate cake today.
2. Change the following sentences into active voice.
a. The dinner is being prepared by the Master Chef.
b. The assignments were submitted by class 10 students.
c. Holi was played by the young and the old.
d. The city was nearly destroyed by the hurricane.
e. The cookies were stolen by the kids.
3. Change the following sentences from direct to indirect speech.
a. Reena said, ‘I have been a studying a lot’.
b. Ajay asked, ‘Do they live nearby?’
c. Karthik said, ‘I can speak perfect Spanish’.
d. ‘Please help me to carry the bag’, exclaimed mother.
e. Kids shouted, ‘We saw a thief’.

30 FOUNDATION EXAMINATION: JUNE, 2023

Chapter-3 Vocabulary
1. In the following question, out of the four alternatives, select the one which best expresses
the meaning of the given word.
1. MESMERIZE
a. Control
b. Ignore
c. Achieve
d. Fascinate
2. EPITOME
a. Relatable
b. Tomb
c. Exemplar
d. Peculiar
3. FATHOM
a. Comprehend
b. Feelings
c. Over night
d. Untrue
4. PREVALENT
a. widespread
b. Cheap
c Summary
d. Judgement
2. In the following question, out of the given four alternatives, select the one which is opposite
in meaning of the given word.
1. Vital
a. Essential
b. Easy

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 31

c. Unimportant
d. Heavy
2. Dearth
a. Less
b. Insufficient
c. Shortage
d. Abundance
3. Lethargy
a. Energy
b. Enervate
c. Illegal
d. Remote
4. Arbitrary
a. Casual
b. Rational
c. Account for
d. Judgement
3. Choose the correct meaning of the idioms given below.
a. To shed light on
(i) To help someone
(ii) To work as an electrician
(iii) To interfere
(iv) To give further information
b. The lion’s share
(i) To get scared of big animals
(ii) Big amount
(iii) Feel proud

32 FOUNDATION EXAMINATION: JUNE, 2023

(iv) Act smart

c. To turn over a new leaf
(i) To turn pages quickly
(ii) To make a new start
(iii) To meditate
(iv) To hold anger
d. To work a miracle
(i) To know magic
(ii) To make the almost impossible happen
(iii) To regret
(iv) To leave it to God
e. Over the moon
(i) Bored
(ii) Arrogant
(iii) Delighted
(iv) Careless
Part-C
Chapter-4
1. Read the following passage carefully and answer the questions that follow.
Selfie is the latest fad among people, especially the younger generation. Whether you are
at a railway station, at a restaurant, in the park or just walking on a street, you would come
across youngsters clicking pictures of themselves, which are more commonly known as
selfies. Though these selfies are good for social media post’s but there have been several
instances where selfie obsessed youngsters have severely injured themselves or even met
with their death while taking a selfie. Oblivious of the surroundings, people have fallen to
their death or have been run over by vehicles while in the process of taking a selfie. Some
individuals have even gone a step ahead and attempted to take a selfie at a dangerous
place or in difficult positions, there by meeting a gory end.
Infact, such is the craze of selfies in India that it has been recorded as having one of the
highest number of selfie related deaths in the world. A study conducted in 2016, titled, ‘Me
Myself and my Killfie’, estimated that of the 127 selfie deaths across the globe in the same

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 33

year, 76 occurred in India alone. In contrast, Pakistan reported just 9 deaths while both the
US and Russia witnessed 8 and 6 deaths respectively. It is the youngsters, under the age
of 25, who are more prone to explore newer and more dangerous selfies. While in US,
most people had selfie related deaths by falling off high buildings and mountain cliffs, in
India most such deaths have been water related or near the railway tracks. The authors of
the study hope that their study will serve as a warning for the people and would inspire
new technology that would warn selfie takers when they are in risky zones.
Taking selfies is not wrong, but it is imperative to be aware of the surroundings. Selfies
should be avoided in dangerous places, for it is always better to be safe than sorry.
Questions
1. Why does the author feel that selfies have become a fad among the young
generation?
2. Which segment of the society is prone to explore newer and more dangerous selfies?
3. How can the study on selfies, according to the author be helpful?
4. Choose the synonym of the word ‘oblivious’ as used in the passage.
(a) Warning
(b) Scared
(c) Easy going
(d) Unaware
5. Choose the antonym of the word ‘imperative’ as used in the passage.
(a) Optional
(b) Important
(c) Difficult
(d) Unending
2. Read the given passage carefully and answer the questions that follow.
In the heart of the city of Kolkata, a man is singing his voice straining to be heard over the
roar of traffic that encircles the maidan. A veteran singer of kathas, he is past of a vast
gathering of entertainers, acrobats, palmists, and ‘sundry folk’, who meet at the Dharamtala
Mela every Sunday afternoon. Accompanied by his dholak, the singer punctuates his story
of blood and romance with pithy reverences to the state of the downtrodden. Listening to
him intently are labourers and vagrants who sit around him in a circle, responding to his
skillful interweaving of fact and fiction, myth and history.
Clearly, the singer knows how to tell a story as can be judged from the way he pitches his
voice, varies his rhythm, breaks the narrative, then picks it up unexpectedly, only to shift

34 FOUNDATION EXAMINATION: JUNE, 2023

the perspective of his story with a change in voice and transformation of character. The
performance ends after hours of non-stop delivery, whereupon 10 to 20 paise coins are
collected from the crowd who part with what they can spare. The entire collection adds up
to barely four to five rupees.
As the crowd disperses, I talk to the performer haltingly and express my appreciation with
a small donation. I learn that he is in his 70’s, he lives in Shyam bazar though his home
state is Bihar and that he has been singing all his life. Later, as he rushes to catch his bus,
I am left thinking about him and the possibilities of his representation. He is free to sing,
but he is also desperately poor. In spite of the state, he exists. But fo r how long? And at
what cost?
Questions
1. The singer is a native of which state?
(a) West Bengal
(b) Kolkata
(c) Bihar
(d) Cant say.
2. The passage is mainly about:
(a) An unrecognised singer
(b) Art and culture
(c) Life in Kolkata
(d) Life in Shyam bazar
3. The tone of the author in the passage is
(a) Energetic
(b) Informing
(c) Thoughtful
(d) Depressing
4. Select the suitable meaning of the word ‘vagrants’ as used in Para 1
(A) Elite people
(b) Wanderers
(c) Thieves
(d) Artists
5. What story does the singer sing about?

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 35

3. Read the given passage carefully and answer the questions that follow.
It is an indisputable fact that the world has gone too far with the innovation of new technologies
such as mobile phones, the internet and so on, due to which people are able to tour the cosmos
virtually sitting at one place using their smart devices or other technological gadgets. Though
mobile internet access is oftentimes hurried and short, it can still provide common interest
features like alerts, weather data, emails, search engines, instant messages, and game and
music downloading.
Due to the easy access of smart phones, communication has been very efficient and quick.
Messages get conveyed in an instant, even around the world, personal and professional talks/
meetings happen; even business deals of high valuation happen over the int ernet now a days.
Moreover, youngsters have been able to enhance their skills by the use of internet and these
gadgets. Many educational institutions have started offering online classes for various courses
for the easy and comfort of the students.
The mobile smart phone has acted as a life saver for many, especially in times of exigency.
Likewise, smart phones can be used to avoid/prevent and even detect crimes in the society.
Information can easily get tracked and the culprits can be traced by their locat ion.
Nonetheless, for the young the use of mobile phones can be like an addiction and they can
misuse it. Youngsters are prone to getting involved in undesirable and anti -social activities by
virtue of their inquisitiveness. This might not only effect their academic performance, but also
cause mental health issues. A number of depression and suicide cases have been observed in
adolescents due to over exposure to the internet and involvement in morally incorrect activities.
A major contributor to this problem is the prepaid or pay as you go service offered by a phone
shop or an online store. Without having understood the repercussions of such services,
youngsters get trapped and even end up sharing the PIN numbers of their parents’ debit and
credit cards. This further leads to misuse of money and related crimes.
The fact remains that technology has its own pros and cons. It depends on us whether we make
use of it judiciously or impetuously.
Questions
1. How has the mobile phone acted as a life saver?
2. How have mobile phones made communication easy and quick?
3. What negative effects has the author mentioned, youngsters can face while using mobiles?
4. The word ‘judiciously’ as used in the passage means:
a) Attractively
b) Carelessly

36 FOUNDATION EXAMINATION: JUNE, 2023

c) Wisely
d) Dedicatedly
5. Explain the main idea of the passage in about 20 to 30 words.
6. What common interest features does mobile internet provide?
Chapter-5
1. Read the following passages carefully.
(i) Make notes, using headings, sub-headings and using abbreviations wherever
necessary.
(ii) Give a suitable title and write summary.
Passage-1
The Indus Valley Civilization is one of the oldest civilizations in human history. It arose on
the Indian subcontinent nearly 5,000 years ago — roughly the same time as the emergence
of ancient Egypt and nearly 1,000 years after the earliest Sumerian cities of Mesopotamia.
The Indus Valley Civilization, in its mature phase, thrived for about 700 years, from around
2600 B.C. to 1900 B.C.
"The Indus Valley Civilization, also called the Saraswati or Harappan civilization, is one of
the 'pristine' civilizations on our planet," William Belcher, an anthropologist at the University
of Nebraska-Lincoln, told Live Science.
A pristine civilization is one that arose indigenously or independently of other civilizations.
More specifically, it is one that developed on its own, without conquest, and without the
benefit of cultural exchange or immigration with another established society. Generally, the
six pristine civilizations recognized by archaeologists and historians are in the following
areas: Egypt, Mesopotamia, China, Mesoamerica (which includes parts of Mexico and
Central America), the Andean region and the Indus Valley. These civilizations arose at
different times — the earliest of these, Mesopotamia, arose some 6,000 years ago, while
the earliest Andean civilization, the Chavin, (opens in new tab) developed in approximately
900 B.C.
The Indus Valley Civilization derives its name from the Indus River, one of the lo ngest
rivers in Asia. Many of the Indus Valley Civilization's large, well-planned cities, such as
Mohenjo-Daro, Kot Diji and Chanhu-Daro, were situated along the course of the Indus
river, which flows from the mountains of western Tibet, through the disputed region of
Kashmir and southwestward before emptying into the Arabian Sea near the modern city of
Karachi, Pakistan. Other Indus Valley Civilization cities were located next to different major
rivers, such as the Ghaggar-Hakra, Sutlej, Jhelum, Chenab and the Ravi rivers or on the
alluvial floodplains between rivers. Today, much of this area is part of the Punjab region,
which is translated as the "land of the five rivers" in what is now Pakistan. Other Indus

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 37

Valley Civilization cities are located in northwest India, and a few additional cities are in
northeastern Afghanistan, near archaeological sites where tin and lapis lazuli, a blue
metamorphic rock, were mined.
Passage -2
Ideas rule the world. You shape your fate and decide your destiny by your thoug hts. You
have to think high to rise. You have to believe and be sure of yourself to win a prize. Life’s
battles don’t always go stronger or the faster man. But sooner or later, the man who wins
is the man who thinks he can.
Success starts with your thoughts. Whatever your mind can conceive and believe, it can
achieve. And your mind is nothing more than a bundle of thoughts. Since you have the
power to shape your thoughts, you automatically have the power to fashion your fate and
decide your destiny. Thus, your thoughts are the most potent, powerful and prime source
of your success. For your thoughts to blossom into success, they should be combined with
definiteness of purpose, perseverance and a burning, pulsating strong desire to translate
them into action. Believe that you will success and believe it firmly. You will then do
whatever is necessary to bring success about.
Faith in yourself as well as the confidence that you can and will succeed are the key to
your success at any step in life. If you keep your mind and heart focused on your goal and
your thoughts have only the goal in them, you will do splendid in your life. You will find
yourself capturing all the opportunities that come your way. Your energy will be directed,
consciously or unconsciously towards your goal and you will be close to success.
Always, remember, thoughts are the most supreme, the most significant. Preserve the right
attitude, right courage, frankness and confidence. Think of success in your work and you
will do great. If your desire is weak, changing; your focus will be the same and the
percentage of achieving success will reduce. But if you pursue your goal, with single
minded attention, then nobody can stop you. A well- defined goal, a clear thought, a
planned path and the will to win, are the key ingredients to become successful.
Chapter-7 Précis Writing
Write a précis and give an appropriate title to the passage given below.
1. Logic is the study of the methods and principles used to distinguish good (correct)
reasoning from bad (incorrect) reasoning. This definition must not be taken to imply that
only the student of logic can reason well or correctly. To say so, would be mistak en as to
say that to run well requires studying the physics and physiology involved in that activity.
Some excellent athletes are quite ignorant of the complex processes that go inside their
bodies while they perform. And needless to say the somewhat elderly professors who know
most about such things would perform very poorly, were they to risk their dignity on the
athletic field. Even given the same basic muscular and nervous apparatus, the person who
knows might not surpass the ‘natural athlete’.

38 FOUNDATION EXAMINATION: JUNE, 2023

Logic has frequently been defined as the science of the laws of thought. But this definition,
although it gives a clue to the nature of logic, is not accurate. In the first place, thinking is
studied by psychologists. Logic cannot be ‘the’ science of the laws of thought, because
psychology is also a science that deals with the laws of thoughts.
2. When we survey our lives and efforts, we soon observe that almost the whole of our actions
and desires are bound up with the existence of other human beings. We notic e that whole
nature resembles that of the social animals. We eat food that others have produced, wear
clothes that others have made, live in houses that others have built. The greater part of
our knowledge and beliefs has been passed on to us by other people though the medium
of a language which others have created. Without language and mental capacities, we
would have been poor indeed comparable to higher animals. We have, therefore, to admit
that we owe our principal knowledge over the least to the fact of living in human society.
The individual if left alone from birth would remain primitive and beast like in his thoughts
and feelings to a degree that we can hardly imagine. The individual is what he is and has
the significance that he has, not much in virtue of the individuality, but rather as a member
of a great human community, which directs his material and spiritual existence from the
cradle to grave.
3. The tree is worshipped as the Earth mother in tribal India. It gives us food, air and work
and also housing material. Moreover, trees also sometimes give fodder for animals and
fuel for energy making. Without trees, there is no soil; nothing can prevent soil from getting
washed away. In the tribal areas of India, where we find the Bhils, Santhals, the N agas
and the Bishnois, whenever a child is born, a tree is planted in his/her name. This enables
a strong relationship between the child and the tree .As the child grows, the tree also grows
and starts bearing fruits. It starts its life a food giver to the tribal community and the tribal
become the guardian of the tree. This kind of a nature shows the true faith in nature. The
tribals worship nature and make sure no human intervenes. This is a learning lesson for
all those who tamper with nature in the name of urbanization. Every entity, small or big,
plant or animal has a place in life; with its due importance. If humans start intervening and
disturbing Nature, the fury is felt in the form of natural calamities like floods, and droughts.
It is an earnest request to all the mankind; Lets work together to make the world a better
place to love, not a bitter place.
Chapter-8 Article Writing
1. Write an article on the following topics in not more than 200-250 words.
a. Impact of advertisements on the young generations.
b. Easy and basic ways to contribute towards keeping the environment clean and
pollution free.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 39

Chapter-9 Report Writing

1. Write a report on the following topics.
a. A newspaper report about a health campaign organized by an NGO in a local area.
b. You are the Accounts head of a Call centre. Write a formal report stating details of
expenditure made in the last financial year towards purchase of systems and other
items needed in office.
Chapter-10 Formal letters and Official Communication
1. You manage the food supply in your organization. Write a letter to a nearby, famous
restaurant for a monthly tie up with it, to supply breakfast and lunch meals for the
employees of your organization.
2. Write a letter to the customer service manager of ‘Wooden Store’, complaining about the
bad quality of a study table unit and a chair purchased from it last week. Sign yourself as
Mitali/ Mahesh.
3. You plan to open a cyber café in your area, Arjun Nagar, New Delhi. Write a letter to M/S
PC electronics, giving an order of computers and related accessories needed in your café.
Mention the quantity of each item as required.
Chapter-11 Writing formal mails
1. On behalf of your private firm, write a formal mail to all your employees, requesting them
to provide the necessary KYC information, needed to be updated in a newly installed
employee software. State that details should be sent well in time, before the last date i.e
10th April, 2023. Sign yourself as Manager, HR of the firm.
2. You are Raj/Rani, Head, Advertising in Admad Technologies. Write a letter to your clients
stating the new terms and conditions that your organization has decided upon for future
projects with effect from 15 th March 2023.
Chapter-12 Resume Writing
1. You are Sumita/Sumit, MBA, marketing. Draft your resume to apply for jobs in private
companies (Any MNC) along with a cover letter.
2. You are Rani /Raj Mehta, HR Head of C and C Pvt. Limited, an investment firm. Draft a
formal e-mail stating the details of an interview scheduled with a candidate for the post of
Senior Accountant.
Chapter-13 Meetings
1. Write ‘Minutes of the Meeting’ for a meeting conducted to discuss the low attendance in
office after Covid. State reasons and discuss solutions.

40 FOUNDATION EXAMINATION: JUNE, 2023

2. Write the ‘Minutes of the Meeting’ for a meeting organized to discuss the bad customer
feedback about a product. Discuss future course of action. (Choose a food item like biscuit,
chips, snacks etc.)

ANSWERS

Part A
Chapter-1 Communication
1. Aesthetic Communication includes art forms like dancing, painting, sculpting and music.
These art forms convey the ideas and thoughts of the artists.
2. Visual Communications includes sign language, typography, graphics, illustrations etc.
These means re inforce the written communication. The print and audio visual media make
effective use of visuals to convey their message. Also, pie charts and other diagrammatic
representation are now widely used in office presentations and convey a lot more. Hence,
Visual communication is a powerful medium
Part-B
Chapter-2 Sentence Types, Active-Passive Voice and Direct-Indirect Speech
1. a. The last metro was missed by Savita.
b. The instructions will be given by the course coordinator.
c. The treaty is being signed by the two neighbouring countries.
d. A cheque of rupees five thousand was received by Shekhar.
e. A chocolate cake is being baked by Aruna today.
2. a. The Master Chef is preparing dinner.
b. Class 10 students submitted the assignments
c. The young and the old played Holi.
d. The hurricane nearly destroyed the city.
e. The kids stole the cookies.
3. a. Reena said that she had been studying a lot.
b. Ajay asked if they lived nearby.
c. Karthik said that he could speak perfect Spanish.
d. Mother requested to help her to carry the bag.
e. Kids shouted that they saw a thief.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 41

Chapter-3 Vocabulary
1. 1. d
2. c
3. a
4. a
2. 1. c
2. d
3. a
4. b
3. a. iv
b. ii
c. ii
d. ii
e. iii
Part-C
Chapter-4
1. 1. The author feels that selfies have become a fad because whether you are at a railway
station, at a restaurant, in the park or just walking on a street, you would come across
youngsters clicking pictures of themselves.
2. The youngsters, under the age of 25, who are more prone to explore newer and more
dangerous selfies.
3. The authors of the study hope that their study will serve as a warning for the people
and would inspire new technology, that would warn the selfie takers when they are in
risky zones.
4. (d) Unaware
5. (a) Optional
2. 1. (c) Bihar
2. (a) an unrecognized singer
3. (c) Thoughtful
4. (b) Wanderers.

42 FOUNDATION EXAMINATION: JUNE, 2023

5. The singer sings a story of blood and romance with pithy reverences to the state of
the downtrodden.
3. 1. The mobile phone has acted as life saver in times of exigency/emergency. Smart phones
can also be used to prevent and detect crimes in society. Tracking of information is
possible, when mobiles are used.
2. Mobile phones have made communication easy and quick as information can be
transferred around the world, personal and professional meetings can happen; even
business deals can happen through internet using mobiles.
3. Youngsters can addicted to the usage of the mobile phones. They might get involved
in undesirable and anti-social activities. The addiction can impact their mental and
physical health.
4. (c) Wisely
5. The main idea in the passage is to highlight the pros and cons of mobile phone usage.
The author preaches to make a wise use of internet and mobiles, to avoid getting
addicted to it and getting involved in undesirable activities.
6. A mobile internet offers features like alerts, weather data, emails, search engines,
instant messages, and game and music downloading.
Chapter-5
Passage 1
Indus Valley Civilization
1. Indus Valley Oldest cvlzn
1.1 started nrly 50,000 yrs ago
1.2 strtd some time as ancnt Egypt
1.3 Thrvd fr 700 yrs
2. Also known as Saraswati/Harappan Cvlzn
2.1 Called ‘pristine’ by William Belcher, anthropologist
2.2 devlpd on its own; indpdntly
2.3. Six Pristine cvlzns:
2.3.1 Egypt
2.3.2 Mesopotamia
2.3.3. China
2.3.4 Mesoamerica

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 43

2.3.4. Andean region

2.3.5. Indus valley
2.4 Erlst cvlzn was Mesopotamia came 6000 yrs ago
2.5 Andean cvlzn devlpd in 900 BC
3. Name Indus vly drvd from the rvr Indus
3.1 Indus rvr flows from mntns of western Tibet, Kashmir, Karachi
3.2 Indus vly cvlzn has cities nmly: Mohenjo daro, Kot Diji, Chanhu Daro
3.3 Other cities lctd near rvrs Ravi, Chenab, Sutlej, Ghaggar Hakra
4. The area of five rivers is now in Punjab, ‘land of five rivers’.
5. Other cities lctd in northwest India, north estrn Afghanistan
5.1 Archaeological sites whr tin and lapis lazuli were mined, another site of indus Valley
Key:
1. Cvlzn= civilization
2. Nrly= nearly
3. Yrs= years
4. Strtd= started
5. Ancnt= ancient
6. Thrvd= thrived
7. Fr=for
8. Devlpd= developed
9. Indpndtly= independently
10. Erlst=earliest
11. Vly=valley
12. Drvd= derived
13. Rvrs= rivers
14. Mntns= mountains
15. nmly= namely
16. Lctd= located
17. Estrn= eastern

44 FOUNDATION EXAMINATION: JUNE, 2023

18. Whr= where

Summary
Indus Valley Civlization is the oldest civilizations of the human race, which in its mature phase,
thrived for about 700 years, from 2600 BC to 1900 BC. Also known as Harappan /Saraswati
civilization, it developed indigenously without any conquest or cultural exchange. One of the
‘pristine’ civilization of our planet, it derives its name from the river Indus and has well planned
cities like Mohenjo daro, Kot diji and Chanhnu daro. Other cities of the civilization are located
in north western India and on the 5 rivers from which the state Punjab derives its name: Sutlej,
Chenab, Ravi, Jhelum and Ghagar Hakra.
Passage- 2
Think positive! Be positive!
1. Imprtnc of ideas
1.1. Thgts dcd fate and dstny
1.2. Thnkng high lds to a rise
1.3. Blv in yrslf
2. One who thinks he can win, aclly wins
3. Succs strts with ones thgts
3.1 Mnd is a bndl of thghts
3.2 Thgts are potnt, pwrfl and prime src of succs
3.3 Thgts be cmbnd with prpose, psrvrnc, dsr to fulfill
4. Blv firmly and you will succd.
5. Keys to succs
5.1 Fth, cnfdc, will to succd
5.2 Fcsd mind, fcsd heart
5.3 Opptnts get cptrd close to succs
6. Thgts are suprm and sigfcnt
7. Rght attd, rght courage, frankness, cnfdnc: elmnts needed
8. Well dfnd goal, clr thgts, plnnd path, will to win: gv you succs and you becm an exmpl
Key
1. Imprtnc= importance
2. Thgts= thoughts

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 45

3. Dct = decide
4. Dstny=destiny
5. Thnkng= thinking
6. Lds=leads
7. Blv=believe
8. Yrslf= yourself
9. Aclly= actually
10. Succs= success
11. Strts=starts
12. Mnd= mind
13. Bndl= bundle
14. Potnt= potent
15. Pwrfl= powerful
16. Src= source
17. Cmbnd= combined
18. Prpose= purpose
19. Psrvrnc= preservence
20. Dsr= desire
21. Blv= believe
22. Succd= succeed
23. Fth= faith
24. Cnfdc= confidence
25. Fcsd= focused
26. Opptnts= opportunities
27. Cptrd= captured
28. Suprm= supreme
29. Sigfcnt= significant
30. Rght= right
31. Attd= attitude

46 FOUNDATION EXAMINATION: JUNE, 2023

32. Elmnts= elements

33. Dfnd= defined
34. Clr=clear
35. Plnd= planned
36. Exmpl= example
Summary
Thoughts are the most important aspect of one’s success. A positive mind and a one track focus
on the goal are required to pursue success. Moreover, the belief that one can do it combined
with faith and confidence leads one on the path that will lead to being a winner. The path should
be planned with a clear focus. With this in hand, no one can stop and you set an example for
others.
Chapter-7 Précis Writing
1. What is logic?
Logic is the study of methods and principles that helps to differentiate between the
good/correct and the bad/incorrect. This does not hint towards only students studying logic
can apply the correct thoughts. A person can perform well in sports without knowing the
logic behind his body/physiological changes. However, it is a misconception to believe that
logic is a law of thoughts as Psychology is also a science that primarily studies the same.
2. Life is about interdependence
A survey on the lives and efforts of humans would show that all the actions and desires
are dependent on the existence of other human beings. From the food we eat, to the
clothes we wear, to the houses we stay in, to the passing of knowledge from generation to
generation; all this hints towards being social. The individual, thus becomes a member of
the great humanity and that is what takes him through the journey from cradle to grave.
3. Let’s worship mother Nature
The tribals in India have always worshipped mother Earth as the source of housing, food
and fuel, and also occupation. The tribal communities like namely, the Bhils, the Santhals,
the Nagas and the Bishnois plant a tree when a child is born, bringing an ownership to the
tree. The tribals become the guardian of the tree and ensure no unwanted human
intervention with nature. One needs to fear nature’s fury and work in harmony with the
environment. The idea is to promote peace and stay one with Nature as we are dependent
on it.
Chapter-8 Article Writing
1. a. Hints
• Advertisements and their Impact (Title)

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 47

• ‘Advertisement is the art of persuasion’, William Bernbach.

• Advertisements have become part and parcel of the visual and audio media.
Whether it is a cricket match on TV, or a top 10 Hindi music show on radio,
advertisements can be seen and heard often.
• While some ads are meaningful and lesson oriented, some others are irrelevant.
Social campaigns advertisements leave a deep impact on the young generation.
• Some good ads are those that have a creative angle to them. They show the
product with a catchy jingle, or some good humour which leaves an impact on
the audience, especially the youngsters who easily get influenced. Talk about
the other side of the coin.
• It has been noted that, good or bad, ads have a strong influence on the young
minds.
• Moreover, these days ads on social media have become a source of earning.
More the ads on one’s channel, more it gets popularity.
• It is request to all the young minds of the country. Believe by finding out the why
and the how. Do not accept things at their face value.
• The world of advertisement is a creative, innovative yet misleading one. Make
your choices wisely.
(The student may write other relevant points. Above mentioned are hints for a
better understanding)
b. Hints:
• Keep your environment green and clean! (Suitable title)
• Numerous discussions happen, several policies are made to keep the
environment clean and healthy.
• All this might be happening at a higher level. But what can we do as good citizens
of our country is the question?
• Start from our own house our own neighbourhood. Let’s make an effort to not
throw garbage on the road. Littering is one of the most difficult problem to tackle.
• State ways of preventing environmental pollution:
Less usage of fossil fuels
Control carbon footprints
Stop using old model vehicles that disrupt the AQI
Shift towards recycle, reduce and reuse (3 R’s)

48 FOUNDATION EXAMINATION: JUNE, 2023

• Another easy step is using public transport, or car pool for specific destinations.
This will ensure less traffic on the road and hence control air pollution.
• It is imperative for citizens of the country, young and old, to contribute to the
best of their ability to help to keep our surroundings clean. This will ensure a
greener and safer environment for the future generations.
(The student may write other relevant points. Above mentioned are hints for a
better understanding)
Chapter-9 Report Writing
1. Hints:
a.
• Newspaper report writing format (Timeline, name of reporter) Heading to the
news brief.
• Name the NGO that has organized the health campaign
• Location, venue, date/time details
• Few lines on the background of the NGO
• Details about the campaign: who inaugurated, how many people participated,
what is the purpose, how is the issue being addressed
b.
To: The Director, Finance
From: Secretary, Finance
Date: 27th Dec, 2022
Subject: Expenditure made towards systems and office stationery in the last financial year
Acknowledgements: I am deeply grateful to all my team members who helped me in
formulating this detailed report. The expenditure and other related details have been
recorded with precision.
(1) Contents
i. List of items purchased
ii. Segregation of systems, office stationery and other miscellaneous items
iii. Cost and invoice details
iv. Current budget versus amount spent
v. Conclusion

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 49

Summary: With the advancement in technology, we decided to enhance our working

conditions ensuring a comfortable and employee friendly work zone. The items purchased
will lead to better productivity and efficiency on the part of the work staff. It will add to the
revenues of the organization and bring a good name in the industry.
Can be continued with a few tables mentioned and then the conclusion.
Chapter-10 Formal letters and Official Communication
1. Creative Arts Pvt. Ltd.
Sarojini Nagar
New Delhi- 110023

27th December 2022

Kasturi Vegetarian Dhaba.
Sarojini Nagar Market
New Delhi- 110023

Subject: Placing an order for breakfast and lunch on monthly basis

Dear Sir,
As discussed over telephone, we would like to place an order for breakfast and lunch meals
supply on a monthly basis. This would be for around 25 employees. The meals would be
needed five days a week (Monday to Friday).
Breakfast delivery: 9:00-9:30 am
Lunch delivery: 1:30 to 2:00 pm
The food should be delivered hot, in a hygienic way. The delivery has to be at our office
premises and we would appreciate punctuality.
We wish to start the service from 1 st April, 2023. Kindly revert so that the needful can be
done.

Thanks and Regards

Rajesh
Assistant Manager (Admin)
Creative Arts

50 FOUNDATION EXAMINATION: JUNE, 2023

2.
Flat no. 508, tower 12
Green Valley apartments
Sector 6, Dwarka
New Delhi 110075

28th December, 2022

Customer Service Manager

Wooden Store
Shop No. 34,
Jail road, Tilak Nagar
New Delhi

Dear Sir,
Subject: Filing complaint for a broken item against Bill no. WS-60ST/2022
I hereby write to complain regarding the defect in the study table unit purchased on 22 nd
December, 2022 from your store, Jail road outlet.
The product when received at home was in a broken condition. One leg of the table was
broken, the table top had several scratches; the arm of the chair was also broken into two
pieces. The delivery man says, he got the product as given to him in the shop.
I request you to look into this matter without any delay and provide a new unit. I have
enclosed a copy of the bill of purchase for your reference. Looking forward to your early
response.
Thanking you

Yours truly,
Mitali/ Mahesh
Dwarka, New Delhi.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 51

3.
Future Cyber Cafe
Arjun Nagar
New Delhi- 110000

4th March 2023

PC Electronics.
Nehru Place
New Delhi- 110023

Subject: Placing an order for computer systems and accessories.

Dear Sir,
This is with respect to our newly opened cyber café, Future Cyber Café’ in Arjun Nagar. I
would like to place an order for some computer systems and related accessories for the
same. Below is a detailed table listing the requirements.
Product Name Quantity
Computers (Full units) 10
UPS 5
Speakers 5
Modem 10

We wish to start operations from 1st April 2023. Kindly ensure that all products are quality
checked and in a warranty period. Please send the items by next week to allow smooth
flow of business. We would also need your help for installation.
Thanks and Regards

Arpit/Arpita
Future Cyber Cafe (Owner)

52 FOUNDATION EXAMINATION: JUNE, 2023

Chapter-11 Writing formal mails

1. Dear employees,
Greetings!
This is with respect to your KYC details needed, to be updated in a newly installed software.
We request you to share your details in the given format (attached) by 10 th April, 2023 to
avoid any delay in work.
This is a mandatory process and we request our employees to kindly do the needful at the
earliest.
For any help regarding the matter, an executive has been assigned to every department.
The details of executives are enclosed with this mail. You can also write to
helpdesk@sittech.com for any further clarifications.
Looking forward to your kind cooperation.
With warm regards
Mr. Sushil
Manager, HR
Sitcom Technologies
2. Dear clients,
Greetings!
This is with respect to the new norms and policies our organization has decided upon for
future business. In the light of a mutually beneficial business relationship, the committee
members have decided to revise the fee for print and social media advertising. Also, we
request the clients to give us atleast two weeks for working on the requirements, to enable
us to deliver quality work.
We would expect 25% of the full payment to be paid, at the beginning of the project.
Balance amount can be paid, after the full completion of the project. This has been done
seeing our past bitter experiences with a few clients. We have full faith in you; however
business ethics cannot be over ruled
A team member will share with you all the necessary changes/additions made to our work
policies. For any help regarding the matter, please feel free to contact him through email
or phone call.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 53

Looking forward to your kind cooperation.

With warm regards
Mr. Raj/Rani
Head, Advertising
Admad Technologies
Chapter-12 Resume Writing
1. Cover Letter:
36/7
Old Rajinder Nagar,
Delhi 110060

29th December 2022

Manager, HR
Infra Technologies, USA Inc
Gurugram

Dear Ma'am/Sir,
Subject: Application for the Associate Consultant
This is with respect to the position of Associate Consultant in your esteemed organization.
I hold a Master's degree in Management (MBA) Finance from the premiere Management
Development Institute, Gurugram. I have a work experience of 5 years with a Fintech firm.
I am well aware of the developments in the finance sector and can contribute well with my
expertise and knowledge.
Please find my resume for the details of my credentials.
Looking forward to hearing from you soon!
Yours sincerely,
Sumita/Sumit
11111-11111

54 FOUNDATION EXAMINATION: JUNE, 2023

Resume:
Sumita/Sumit Khanna
36/7, Old Rajinder Nagar, Delhi | +91- 11111 1111 l sumita@gmail.com
Objective
To impart meaningful knowledge to the organization and help in better revenue and sales
with the parallel aim of working for the betterment of the economy/society.
Educational Qualification
Qualification Year Board/University Institution's Name
MBA 2015 MDI, Gurgaon MDI Gurgaon
BBA 2013 Delhi University College of Business Studies
Class 12 th 2010 CBSE Springdales, Dhaula Kuan,
New Delhi
Class 10 th 2008 CBSE Springdales, Dhaula Kuan,
New Delhi
Professional Experience
Consultant ABC Technologies (April’17 - December’17)
• Worked in association with the Finance team
• Delivered multiple projects within deadlines
• Handled Accounts of big clients
• Member of the Audit team, for learning purpose
• Attended professional development workshops organized by the organization
Project Associate XYZ Pvt. Ltd. (April’15 - March’17)
• Experience of working in a finance led team of seven members.
• Certified as ‘finance literate’, awarded as the best employee for a financial year.
• teaching Grade 3, 4, 5 and 6 as per CIE curriculum
• Worked in close association with senior finance executives of the firm,
• Built on the deck for client meetings and onsite projects.
Social Work
Volunteer for the Non-Profit Organization, education for all (December 2013-March 2014)
• Project: Each one teach one

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 55

• Job Role: Helping children with their education; majorly working over their
mathematics skills
Volunteer for the Non-Profit Organization, Teach India (October 2009-March 2011)
• Job Role: Organized campaigns to help spread literacy among the poor and
backward classes.
(The student may add more details if needed; the above are Hints)
2. Rajkumar Rao
Flat no. 78, Dream View hills,
Sector 57
NOIDA, UP

Subject: Interview Scheduled for 3 rd May, 2023 at office premises for the post of Associate
Offer for appointment for the post of Senior Accountant.

Dear Rajkumar,
We are pleased to inform you that your name has been shortlisted for an interview, for the
post of Senior Accountant at C and C Pvt Ltd. Please find the details below.
Date of interview: 3 rd Jan, 2023
Location: C and C Pvt Ltd, Sector 62, Noida
Time: 10:30 am
You requested to wear formals for the interview. Please carry all your credentials (Mark
sheets, certificates, work experience proofs etc) that you wish to show to the interview
panel. We also would like you to carry your Aadhar Card.
The interview would last for maximum 20 minutes. Kindly plan your day accordingly.
Kind regards,

Rani/Raj Mehta
Head – HR
+91- 33333000

56 FOUNDATION EXAMINATION: JUNE, 2023

Chapter-13 Meetings
1. Hint: Mention the agenda and the cause for the same.
Participants in the meeting: Mr. XY, Vice-President; Mr. A, HR Manager; Mr. AB.
Operations Head; Mr. ABC, Operations Manager and Mr. XY’s Secretary
Date: December 30th, 2022
Meeting started at 10:30 am
Mr. A started the meeting and discussed the agenda as to why there was a low percentage
of employees present in office.
Mr. AB intervenes and mentions how important it is for the company to have staff being
present in the office. It will ensure better facilities being offered and operations cost is
approved.
Mr. A and Mr. AB together presented a presentation with the statistics of absent versus
present in the last financial year.
Mr. ABC suggests ideas to have atleast 50 % attendance in every division, on a daily basis.
Mr. XY gave his valuable inputs on how the attendance of staff can be increased.
Mr. ABC gives his suggestions on having some bonus or incentive schemes for the
employees so as to attract them .
Mr. A concluded the meeting with vote of thanks to all the members who attended the
meeting.
2. Hint: Focus on one product. Mention the product and product specifications
Participants in the meeting: Mr. B, Vice-President; Mr. A Product Manager, Mr. C, Sales
Manager and their Associates
Date: December 29th, 2022
Meeting started at 12.00pm
Mr. C explains about the agenda of the meeting, and he talks about how people are facing
issues using their new product. Negative feedback discussed
The associates have brainstormed few ideas about how the product can be changed
according to the market requirements.
Mr. A listens to everyone carefully and shares his thoughts about changing the packaging
too. He also proposes to work on the ingredients, pricing and presentation of the product.
(We are taking the product to be edible)

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 57

Mr. A agrees and informs that he would like to discuss with the design team and finalize
the appropriate designs with everyone soon. Vice Chairman also exclaims the need to
bring down the price for a better and healthy competition in the market.
The meeting concluded with few ideas that everyone is ready to explore and implement.

PAPER – 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING
SECTION A: BUSINESS LAWS
Amendments for Paper 2A: Business Laws, Foundation November 2023 examinations
1. Chapter 4: The Limited Liability Act, 2008
The Limited Liability Act, 2008 has been amended through the Limited Liability
Partnership (Amendment) Act, 2021 dated 13 th August, 2021. The following are the
amendments w.e.f. 1st April, 2022.
Earlier provision New provision
- Throughout the Limited Liability Partnership
Act, 2008, for the words and figures “the
Companies Act, 1956” wherever they occur,
the words and figures “the Companies Act,
2013” shall be substituted.
Body Corporate [(Section 2(d)]: It means Body Corporate [(Section 2(d)]: It means a
a company as defined in section 3 of the company as defined in clause (20) of section
Companies Act, 1956 and includes— 2 of the Companies Act, 2013 and includes
(i) a LLP registered under this Act; (i) a limited liability partnership registered
(ii) a LLP incorporated outside India; and under this Act;
(iii) a company incorporated outside (ii) a limited liability partnership incorporated
India, outside India; and
but does not include— (iii) a company incorporated outside India,
(i) a corporation sole; but does not include
(ii) a co-operative society registered (i) a corporation sole;
under any law for the time being in (ii) a co-operative society registered under
force; and any law for the time being in force; and
(iii) any other body corporate (not being a (iii) any other body corporate (not being a
company as defined in section 3 of company as defined in clause (20) of
the Companies Act, 1956 or a limited section 2 of the Companies Act, 2013
liability partnership as defined in this or a limited liability partnership as
Act), which the Central Government defined in this Act), which the Central
may, by notification in the Official Government may, by notification in the
Gazette, specify in this behalf. Official Gazette, specify in this behalf.
Business [Section 2(e)]: “Business” Business [Section 2(e)]: “Business” includes
includes every trade, profession, service every trade, profession, service and
and occupation. occupation except any activity which the
Central Government may, by notification,
exclude.

2 FOUNDATION EXAMINATION: NOVEMBER, 2023

Newly inserted “Small limited liability partnership [Section

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 3

(a) specifies who are to be

designated partners, such
persons shall be designated
partners on incorporation; or
(b) states that each of the
partners from time to time of
limited liability partnership is to
be designated partner, every
partner shall be a designated
partner;
(ii) any partner may become a
designated partner by and in
accordance with the limited liability
partnership agreement and a
partner may cease to be a
designated partner in accordance
with limited liability partnership
agreement.
(3) An individual shall not become a
designated partner in any limited liability
partnership unless he has given his prior
consent to act as such to the limited
liability partnership in such form and
manner as may be prescribed.
(4) Every limited liability partnership shall file
with the Registrar the particulars of every
individual who has given his consent to
act as designated partner in such form
and manner as may be prescribed within
thirty days of his appointment.
(5) An individual eligible to be a designated
partner shall satisfy such conditions and
requirements as may be prescribed.
(6) Every designated partner of a limited
liability partnership shall obtain a
Designated Partners Identification
Number (DPIN) from the Central
Government and the provisions of
sections 153 to 159 (both inclusive) of
the Companies Act, 2013 shall apply
mutatis mutandis for the said purpose.

4 FOUNDATION EXAMINATION: NOVEMBER, 2023

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 5

(2) No LLP shall be registered by a name (2) No limited liability partnership shall be
which, in the opinion of the Central registered by a name which, in the
Government is— opinion of the Central Government is
(a) undesirable; or (a) undesirable; or
(b) identical or too nearly resembles (b) identical or too nearly resembles
to that of any other partnership to that of any other limited
firm or LLP or body corporate or liability partnership or a company
a registered trade mark, or a or a registered trade mark of any
trade mark which is the subject other person under the Trade
matter of an application for Marks Act, 1999.
registration of any other person
under the Trade Marks Act,
1999.
Change of name of LLP (Section 17): Change of name of LLP (Section 17):
(1) Notwithstanding anything contained (1) Notwithstanding anything contained
in sections 15 and 16, where the in sections 15 and 16, if through
Central Government is satisfied that a inadvertence or otherwise, a limited
LLP has been registered (whether liability partnership, on its first
through inadvertence or otherwise registration or on its registration by a
and whether originally or by a change new body corporate, its registered
of name) under a name which — name;" name, is registered by a name
(a) is a name referred to in sub- which is identical with or too nearly
section (2) of section 15; or resembles to—
(b) is identical with or too nearly (a) that of any other limited liability
resembles the name of any other partnership or a company; or
LLP or body corporate or other (b) a registered trade mark of a
name as to be likely to be proprietor under the Trade Marks
mistaken for it, Act, 1999, as is likely to be
the Central Government may mistaken for it, then on an
direct such LLP to change its application of such limited
name, and the LLP shall comply liability partnership or proprietor
with the said direction within 3 referred to in clauses (a) and (b)
months after the date of the respectively or a company, the
direction or such longer period Central Government may direct
as the Central Government may that such limited liability
allow. partnership to change its name
(2) (i) Any LLP which fails to comply or new name within a period of
with a direction given under sub- three months from the date of
section (1) shall be punishable issue of such direction:
with fine which shall not be less Provided that an application of the
than ` 10,000 but which may proprietor of the registered trade
extend to 5 Lakhs.
` marks shall be maintainable within a

6 FOUNDATION EXAMINATION: NOVEMBER, 2023

(ii) The designated partner of such period of three years from the date of
LLP shall be punishable with fine incorporation or registration or
which shall not be less than change of name of the limited liability
` 10,000 but which may extend partnership under this Act.
to ` 1 Lakh. (2) Where a limited liability partnership
changes its name or obtains a new
name under sub-section (1), it shall
within a period of fifteen days from the
date of such change, give notice of the
change to Registrar along with the
order of the Central Government, who
shall carry out necessary changes in
the certificate of incorporation and
within thirty days of such change in
the certificate of incorporation, such
limited liability partnership shall
change its name in the limited liability
partnership agreement.
(3) If the limited liability partnership is in
default in complying with any
direction given under sub-section (1),
the Central Government shall allot a
new name to the limited liability
partnership in such manner as may be
prescribed and the Registrar shall
enter the new name in the register of
limited liability partnerships in place
of the old name and issue a fresh
certificate of incorporation with new
name, which the limited liability
partnership shall use thereafter:
Provided that nothing contained in
this sub-section shall prevent a
limited liability partnership from
subsequently changing its name in
accordance with the provisions of
section 16.
Registration of changes in partners Registration of changes in partners
(Section 25): (Section 25):
(1) Every partner shall inform the LLP of (1) Every partner shall inform the limited
any change in his name or address liability partnership of any change in his

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 7

within a period of 15 days of such name or address within a period of fifteen

8 FOUNDATION EXAMINATION: NOVEMBER, 2023

the Registrar the notice referred to in reasonable cause to believe that the
sub-section (3) if he has reasonable limited liability partnership may not file
cause to believe that the LLP may not the notice with the Registrar and in case
file the notice with the Registrar and of any such notice filed by a partner, the
in case of any such notice filed by a Registrar shall obtain a confirmation to
partner, the Registrar shall obtain a this effect from the limited liability
confirmation to this effect from the partnership unless the limited liability
LLP unless the LLP has also filed partnership has also filed such notice:
such notice. Provided that where no confirmation is
However, where no confirmation is given by the limited liability partnership
given by the LLP within 15 days, the within fifteen days, the Registrar shall
registrar shall register the notice register the notice made by a person
made by a person ceasing to be a ceasing to be a partner under this
partner under this section. section.
Unlimited liability in case of fraud Unlimited liability in case of fraud (Section
(Section 30): 30):
(1) In case of fraud: (1) In the event of an act carried out by
• In the event of an act carried out a limited liability partnership, or any of its
by a LLP, or any of its partners, partners, with intent to defraud creditors
• with intent to defraud creditors of of the limited liability partnership or any
the LLP or any other person, or other person, or for any fraudulent
for any fraudulent purpose, purpose, the liability of the limited liability
partnership and partners who acted with
• the liability of the LLP and intent to defraud creditors or for any
partners who acted with intent to fraudulent purpose shall be unlimited for
defraud creditors or for any
all or any of the debts or other liabilities
fraudulent purpose
of the limited liability partnership:
• shall be unlimited for all or any Provided that in case any such act is
of the debts or other liabilities of carried out by a partner, the limited
the LLP. liability partnership is liable to the same
However, in case any such act is extent as the partner unless it is
carried out by a partner, the LLP is established by the limited liability
liable to the same extent as the partnership that such act was without the
partner unless it is established by the knowledge or the authority of the limited
LLP that such act was without the liability partnership.
knowledge or the authority of the LLP. (2) Where any business is carried on with
(2) Where any business is carried on with such intent or for such purpose as
such intent or for such purpose as mentioned in sub-section (1), every
mentioned in sub-section (1), every person who was knowingly a party to the
person who was knowingly a party to carrying on of the business in the manner
the carrying on of the business in the aforesaid shall be punishable with
imprisonment for a term which may

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 9

10 FOUNDATION EXAMINATION: NOVEMBER, 2023

(2) Statement of Account and shall be signed by the designated

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 11

12 FOUNDATION EXAMINATION: NOVEMBER, 2023

necessary for such area or areas, as

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 13

triable only by the Special Court

14 FOUNDATION EXAMINATION: NOVEMBER, 2023

Newly inserted 67C. Appeal and revision.

The High Court may exercise, so far as may
be applicable, all the powers conferred by
Chapters XXIX and XXX of the Code of
Criminal Procedure, 1973 on a High Court,
as if a Special Court within the local limits
of the jurisdiction of the High Court were a
Court of Sessions trying cases within the
local limits of the jurisdiction of the High
Court.]
Newly inserted 68A. Registration offices.
(1) For the purpose of exercising such
powers and discharging such
functions as are conferred on the
Central Government by or under this
Act or under rules made thereunder
and for the purpose of registration of
limited liability partnerships under
this Act, the Central Government
shall, by notification, establish such
number of registration offices at such
places as it thinks fit, specifying their
jurisdiction.
(2) The Central Government may appoint
such Registrars, Additional Registrars,
Joint Registrars, Deputy Registrars
and Assistant Registrars as it
considers necessary, for the
registration of limited liability
partnerships and discharge of various
functions under this Act.
(3) The powers and duties of the
Registrars referred to in sub-section
(2) and the terms and conditions of
their service shall be such as may be
prescribed.
(4) The Central Government may direct the
Registrar to prepare a seal or seals for
the authentication of documents
required for, or connected with the
registration of limited liability
partnerships.]

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 15

2. Chapter 5: The Companies Act, 2013

16 FOUNDATION EXAMINATION: NOVEMBER, 2023

Part II – QUESTIONS AND ANSWERS

QUESTIONS

1. Shital was a classical dancer. She entered into an agreement with Sharad Vidya Mandir
for 50 dance performances. As per the contract, she was supposed to perform every
weekend and she will be paid ` 8,000/- per performance. However, after a month, she was
absent without informing, due to her personal reasons. Answer the following questions as
per the Indian Contract Act, 1872.
(i) Whether the management of Sharad Vidya Mandir has right to terminate the contract?
(ii) If the management of Sharad Vidya Mandir informed Shital about its continuance, can
the management still rescind the contract after a month on this ground subsequently?
(iii) Can the Sharad Vidya Mandir claim damages that it has suffered because of this
breach in any of the above cases?
2. Paridhee, a minor, falsely representing her age, enters into an agreement with an
authorised Laptop dealer Mr. Mittal, owner of MP Laptops, for purchase of Laptop on credit
amounting ` 60,000/- on 1st August 2022. She promised to pay back the outstanding
amount with interest @ 16% p.a. by 31 st July 2023. She told him that in case she won’t be
able to pay the outstanding amount, her father Mr. Ram will pay back on her behalf. After
One year, when Paridhee was asked to pay the outstanding amount with interest she
refused to pay the amount and told the owner that she is minor and now he can't recover
a single penny from her.
She will be a major on 1st January 2025 and only after that agreement can be ratified.
Explain by which of the following ways, Mr. Mittal will succeed in recovering the outstanding
amount with reference to the Indian Contract Act, 1872.
(i) By filing a case against Paridhee, a minor for recovery of outstanding amount with
interest?
(ii) By filing a case against Mr. Ram, father of Paridhee for recovery of outstanding
amount?
(iii) By filing a case against Paridhee, a minor for recovery of outstanding amount after
she attains majority?
3. Rohan found a wallet in a restaurant. He enquired 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 the wallet till the true owner is found. After a week, Rohan went back to the
restaurant to enquire about the wallet. The manager refused to return it to Rohan, saying

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 17

that it did not belong to him. In the light of the Indian Contract Act, 1872, can Rohan recover
the wallet from the Manager?
4. Mr. Sohan, a wealthy individual provided a loan of ` 80,000 to Mr. Mukesh on
26th February, 2021. The borrower, Mr. Mukesh asked for a further loan of ` 1,50,000.
Mr. Sohan agreed but provided the loan in parts on different dates. He provided ` 1,00,000
on 28th February, 2021 and remaining ` 50,000 on 3rd March, 2021.
On 10th March, 2021 Mr. Mukesh while paying off part ` 75,000 to Mr. Sohan insisted that
the lender should adjusted ` 50,000 towards the loan taken on·3rd March, 2021 and
balance as against the loan on 26 th February, 2021.
Mr. Sohan 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. Mukesh 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 be the mode of adjustment/appropriation of such part payment in case
neither Mr. Sohan nor Mr. Mukesh insist any order of adjustment on their part?
5. State with reason(s) whether the following agreements are valid or void as per the Indian
Contract Act, 1872:
(i) Where two courts have jurisdiction to try a suit, an agreement between the parties
that the suit should be filed in one of those courts alone and not in the other.
(ii) X offers to sell his Maruti car to Y. Y believes that X has only Wagon R Car but agrees
to buy it.
(iii) X, a physician and surgeon, employs Y as an assistant on a salary of ` 75,000 per
month for a term of two years and Y agrees not to practice as a surgeon and physician
during these two years.
6. Mr. Seth (an industrialist) has been fighting a long-drawn litigation with Mr. Raman (another
industrialist). To support his legal campaign, Mr. Seth enlists the services of Mr. X, a legal
expert stating that an amount of ` 5 lakhs would be paid, if Mr. X does not take up the case
of Mr. Raman. Mr. X agrees, but at the end of the litigation, Mr. Seth refused to pay. Decide
whether Mr. X can recover the amount promised by Mr. Seth under the provisions of the
Indian Contract Act, 1872.
7. What are the consequences of the destruction of specified goods, before making of
contract and after the agreement to sell under the Sale of Goods Act, 1930.

18 FOUNDATION EXAMINATION: NOVEMBER, 2023

8. What are the implied conditions in a contract of 'Sale by sample' under the Sale of Goods
Act, 1930? Also state the implied warranties operative under the Act.
9. Shubhangi went to a Jewellery shop and asked the salesgirl to show her diamond necklace
with Sapphire stones. The Jeweller told her that we have a lot of designs of diamond
necklace but with blue stones. If she chooses for herself any special design of diamond
necklace with blue stones, they will replace blue stones with Sapphire stones. But for the
Sapphire stones they will charge some extra cost. Shubhangi selected a beautiful designer
necklace and paid for it. She also paid the extra cost of Sapphire stones. The Jeweller
requested her to come back a week later for delivery of that necklace. When she came
after a week to take delivery of necklace, she noticed that due to Sapphire stones, the
design of necklace had been completely disturbed. Now, she wants to terminate the
contract and thus, asked the manager to give her money back, but he denied for the same.
Answer the following questions as per the Sale of Goods Act, 1930.
(i) State with reasons whether Shubhangi can recover the amount from the Jeweller.
(ii) What would be your answer if Jeweller says that he can change the design, but he
will charge extra cost for the same?
10. State the various essential elements involved in the sale of unascertained goods an d its
appropriation as per the Sale of Goods Act, 1930.
11. Mrs. Kanchan 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 ` 125 per kg to which she
agreed. Mrs. Kanchan insisted that she would like to see the sample of what would 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.
Mrs. Kanchan 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. Kanchan wants to file a suit of fraud against the seller alleging him of selling a
mix of good and cheap quality rice. Will she be successful?
Decide the fate of the case and options open to Mrs. Kanchan for grievance redressal as
per the provisions of Sale of Goods Act 1930?
What would be your answer in case Mrs. Kanchan specified her exact requirement as to
length of rice?

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 19

12. Ravi sold 500 bags of wheat to Tushar. Each bag contains 50 Kilograms of wheat. Ravi
sent 450 bags by road transport and Tushar himself took remaining 50 bags. Before Tushar
receives delivery of 450 bags sent by road transport, he becomes bankrupt. Ravi being
still unpaid, stops the bags in transit. The official receiver, on Tushar's insolvency claims
the bags. Decide the case with reference to the provisions of the Sale of Goods Act, 1930.
13. (i) What do you mean by 'Partnership for a fixed period' as per the Indian Part nership
Act, 1932?
(ii) When the continuing guarantee can be revoked under the Indian Partnership Act,
1932?
(iii) What do you mean by Goodwill as per the provisions of Indian Partnership Act,1932?
14. M/s ABC Associates has been a partnership firm since 1990. Mr. A, Mr. B and Mr. C were
partners in the firm since beginning. Mr. A, being a very senior partner of aged 78 years
transfers his share in the firm to his son Mr. Vikas, a Chartered Accountant. Mr. B and Mr.
C were not interested that Mr. Vikas joining them as partner in M/s ABC Associates. After
some time, Mr. Vikas felt that the books of accounts were displaying only a small amount
as profit despite a huge turnover. He wanted to inspect the book of accounts of the firm
arguing that it is his entitlement as a transferee. However, the other partners believed that
he cannot challenge the books of accounts. Can Mr. Vikas be introduced as a partner if
his father wants to retire? As an advisor, help them resolve the issues applying the
necessary provisions from the Indian Partnership Act, 1932.
15. With reference to the provisions of Indian Partnership Act, 1932 explain the various effects
of insolvency of a partner.
16. 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 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?
17. State whether the following are partnerships under the Indian Partnership Act, 1932:
(i) Two firms each having 12 partners combined by an agreement into one firm.
(ii) A and B, co-owners, agree to conduct the business in common for profit.

20 FOUNDATION EXAMINATION: NOVEMBER, 2023

(iii) Some individuals form an association to which each individual contributes ` 500
annually. The objective of the association is to produce clothes and distribute the
clothes free to the war widows.
(iv) A and B, co-owners share between themselves the rent derived from a piece of land.
(v) A and B buy commodity X and agree to sell the commodity with sharing the profits
equally.
18. Discuss the conditions under which LLP will be liable and not liable for the acts of the
partner under Limited Liability Partnership Act, 2008.
19. BC Private Limited and its subsidiary KL Private Limited are holding 90,000 and 70,000
shares respectively in PQ Private Limited. The paid-up share capital of PQ Private Limited
is ` 30 Lakhs (3 Lakhs equity shares of ` 10 each fully paid). Analyse with reference to
provisions of the Companies Act, 2013 whether PQ Private Limited is a subsidiary of BC
Private Limited. What would be your answer if KL Private Limited is holding 1,60, 000
shares in PQ Private Limited and no shares are held by BC Private Limited in PQ Private
Limited?
20. Narendra Motors Limited is a Government Company. Shah Auto Private Limited have
share capital of ` 10 crore in the form of 10,00,000 shares of ` 100 each. Narendra Motors
Limited is holding 5,05,000 shares in Shah Auto Private Limited. Shah Auto Private Limited
claimed the status of Government Company. Advise as legal advisor, whether Shah Auto
Private Limited is government company under the provisions of Companies Act, 2013?

ANSWERS

1. Section 39 of the Indian Contract Act, 1872 provides that when a party to a contract has
refused to perform or disabled himself from performing his promise in its entirety , the
promisee may put an end to the contract unless he had signified, by words or conduct his
acquiesce in its continuance. Further, in terms of Section 40, the promisee shall be
required to perform personally, if there is such an apparent intention of the parties.
Also, as per Section 75 of the Act, a person who rightfully rescinds a contract is entitled to
compensation for any damage which he has sustained through non-fulfilment of the
contract.
Therefore, in the instant case,
(i) Since, Shital could not perform as per the terms of contract, Sharad Vidya Mandir can
terminate the contract.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 21

(ii) In the second situation, the management of Sharad Vidya Mandir informed Shital
about the continuance of the contract. Hence, the management cannot rescind the
contract after a month on this ground subsequently.
(iii) As per Section 75, Sharad Vidya Mandir can claim damages that it has s uffered
because of this breach in part (i).
2. A contract made with or by a minor is void ab-initio: Pursuant to Section 11 of the
Indian Contract Act, 1872, a minor is not competent to contract and any agreement with or
by a minor is void from the very beginning.
(i) By following the above provision, Mr. Mittal will not succeed in recovering the
outstanding amount by filing a case against Paridhee, a minor.
(ii) Minor cannot bind parent or guardian: In the absence of authority, express or
implied, a minor is not capable of binding his parent or guardian, even for necessaries.
The parents will be held liable only when the child is acting as an agent for parents.
In the instant case, Mr. Mittal will not succeed in recovering the outstanding amount
by filing a case against Mr. Ram, father of Paridhee.
(iii) No ratification after attaining majority: A minor cannot ratify the agreement on
attaining majority as the original agreement is void ab initio and a void agreement can
never be ratified.
Hence, in this case also, Mr. Mittal will not succeed in recovering the outstanding
amount by filing a case against Paridhee, after she attains majority.
3. Responsibility of finder of goods (Section 71 of the Indian Contract Act, 1872): A
person who find goods belonging to another and takes them into his custody is subject to
same responsibility as if he were a bailee.
Thus, a finder of lost goods has:
(i) to take proper care of the property as man of ordinary prudence would take
(ii) no right to appropriate the goods and
(iii) to restore the goods if the owner is found.
In the light of the above provisions, the manager must return the wallet to Rohan, since
Rohan is entitled to retain the wallet found against everybody except the true owner.
4. Appropriation of Payments: In case where a debtor owes several debts to the same
creditor and makes payment, which is not sufficient to discharge all the debts, the payment
shall be appropriated (i.e. adjusted against the debts) as per the provisions of Section 59
to 61 of the Indian Contract Act, 1872.

22 FOUNDATION EXAMINATION: NOVEMBER, 2023

(i) As per the provisions of 59 of the Act, where a debtor owing several distinct debts to
one person, makes a payment to him either with express intimation or under
circumstances implying that the payment is to be applied to the discharge of some
particular debt, the payment, if accepted, must be applied accordingly.
Therefore, the contention of Mr. Mukesh is correct, and he can specify the manner of
appropriation of repayment of debt.
(ii) As per the provisions of 60 of the Act, where the debtor has omitted to intimate and
there are no other circumstances indicating to which debt the payment is to be
applied, the creditor may apply it at his discretion to any lawful debt ac tually due and
payable to him from the debtor, where its recovery is or is not barred by the law in
force for the time being as to the limitation of suits.
Hence in case Mr. Mukesh fails to specify the manner of appropriation of debt on part
repayment, Mr. Sohan the creditor, can appropriate the payment as per his choice.
(iii) As per the provisions of 61 of the Act, where neither party makes any appropriation,
the payment shall be applied in discharge of the debts in order of time, whether they
are or are not barred by the law in force for the time being as to the limitation of suits.
If the debts are of equal standing, the payments shall be applied in discharge of each
proportionately.
Hence in case where neither Mr. Mukesh nor Mr. Sohan specifies the manner of
appropriation of debt on part repayment, the appropriation can be made in proportion
of debts.
5. (i) The given agreement is valid.
Reason: An agreement in restraint of legal proceeding is the one by which any party
thereto is restricted absolutely from enforcing his rights under a contract through a
Court (Section 28 of the Indian Contract Act, 1872). A contract of this nature is void.
However, in the given statement, no absolute restriction is marked on parties on filing
of suit. As per the agreement, suit may be filed in one of the courts having jurisdiction.
(ii) The said agreement is void.
Reason: This agreement is void as the two parties are thinking about different subject
matters so that there is no real consent, and the agreement may be treated as void
because of mistake of fact as well as absence of consensus.
(iii) The said agreement is valid.
Reason: An agreement by which any person is restrained from exercising a lawful
profession, trade or business of any kind, is to that extent void (Section 27). But, as
an exception, agreement of service by which an employee binds himself, during the
term of his agreement, not to compete with his employer is not in restraint of trade.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 23

6. According to Section 27 of Indian Contract Act, 1872 an agreement by which any person
is restrained from exercising a lawful profession, trade or business of any kind, is to that
extent void.
In the instant case, Mr. Seth is in litigation with Mr. Raman since long. Mr. Seth enlists the
services of Mr. X a legal expert stating that an amount of ` 5 lakhs would be paid, if Mr. X
does not take up the case of Mr. Raman. Mr. X agrees, but at the end of the litigation, Mr.
Seth refused to pay.
As section 27 makes the contracts in restraint of trade, void, the contract between Mr. Seth
and Mr. X is also void. Hence, Mr. X cannot recover the amount promised by Mr. Seth.
7. (i) Goods perishing before making of Contract (Section 7 of the Sale of Goods Act,
1930): In accordance with the provisions of the Sale of Goods Act, 1930 as contained in
Section 7, a contract for the sale of specific goods is void, if at the time when the contract
was made; the goods without the knowledge of the seller, perished or become so
damaged as no longer to answer to their description in the contract, then the contract is
void ab initio.
(ii) Goods perishing before sale but after agreement to sell (Section 8 of the Sale
of Goods Act, 1930): Where there is an agreement to sell specific goods, and
subsequently the goods without any fault on the part of the seller or buyer perish or
become so damaged as no longer to answer to their description in the agreement
before the risk passes to the buyer, the agreement is thereby avoided or becomes
void.
8. (i) Sale by sample [Section 17 of the Sale of Goods Act, 1930]: In a contract of sale by
sample, there is an implied condition that
(a) the bulk shall correspond with the sample in quality;
(b) the buyer shall have a reasonable opportunity of comparing the bulk with the
sample,
(c) the goods shall be free from any defect rendering them un-merchantable, which
would not be apparent on reasonable examination of the sample. This condition
is applicable only with regard to defects, which could not be discovered by an
ordinary examination of the goods. If the defects are latent, then the buyer can
avoid the contract. This simply means that the goods shall be free from any
latent defect i.e. a hidden defect.
(ii) The following are the implied warranties operative under the Act:
1. Warranty as to undisturbed possession [Section 14(b)]: An implied warranty
that the buyer shall have and enjoy quiet possession of the goods. That is to
say, if the buyer having got possession of the goods, is later on disturbed in his
possession, he is entitled to sue the seller for the breach of the warranty.

24 FOUNDATION EXAMINATION: NOVEMBER, 2023

2. Warranty as to non-existence of encumbrances [Section 14(c)]: An implied

warranty that the goods shall be free from any charge or encumbrance in favour
of any third party not declared or known to the buyer before or at the time the
contract is entered into.
3. Warranty as to quality or fitness by usage of trade [Section 16(3)]: An
implied warranty as to quality or fitness for a particular purpose may be annexed
or attached by the usage of trade.
Regarding implied condition or warranty as to the quality or fitness for any
particular purpose of goods supplied, the rule is ‘let the buyer beware’ i.e., the
seller is under no duty to reveal unflattering truths about the goods sold, but this
rule has certain exceptions.
4. Disclosure of dangerous nature of goods: Where the goods are dangerous
in nature and the buyer is ignorant of the danger, the seller must warn the buyer
of the probable danger. If there is a breach of warranty, the seller may be liable
in damages.
9. As per Section 4(3) of the Sale of Goods Act, 1930, where under a contract of sale, the
property in the goods is transferred from the seller to the buyer, the contract is called a
sale, but where the transfer of the property in the goods is to take place at a future time or
subject to some condition thereafter to be fulfilled, the contract is called an agreement to
sell and as per Section 4(4), an agreement to sell becomes a sale when the time elapses
or the conditions are fulfilled subject to which the property in the goods is to be transferred.
(i) On the basis of above provisions and facts given in the question, it can be said that
there is an agreement to sell between Shubhangi and Jeweller and not a sale. Even
though the payment was made by Shubhangi, the property in goods can be
transferred only after the fulfilment of conditions fixed between the buyer and the
seller. As due to Sapphire Stones, the original design is disturbed, necklace is not in
original position. Hence, Shubhangi has right to avoid the agreement to sell and can
recover the price paid.
(ii) If Jeweller offers to bring the necklace in original position by repairing, he cannot
charge extra cost from Shubhangi. Even though he has to bear some expenses for
repair; he cannot charge it from Shubhangi.
10. Sale of unascertained goods and Appropriation (Section 23 of the Sale of Goods Act,
1930): Appropriation of goods involves selection of goods with the intention of using them
in performance of the contract and with the mutual consent of the seller and the buyer.
The essentials are:
(a) There is a contract for the sale of unascertained or future goods.
(b) The goods should conform to the description and quality stated in the contract.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 25

(c) The goods must be in a deliverable state.

(d) The goods must be unconditionally appropriated to the contract either by delivery to
the buyer or his agent or the carrier.
(e) The appropriation must be made by:
(i) the seller with the assent of the buyer; or
(ii) the buyer with the assent of the seller.
(f) The assent may be express or implied.
(g) The assent may be given either before or after appropriation.
11. (i) As per the provisions of Sub-Section (2) of Section 17 of the Sale of Goods Act,
1930, in a contract of sale by sample, there is an implied condition that:
(a) the bulk shall correspond with the sample in quality;
(b) the buyer shall have a reasonable opportunity of comparing the bulk with the
sample.
In the instant case, in the light of the provisions of Sub-Clause (b) of Sub-Section (2)
of Section 17 of the Act, Mrs. Kanchan will not be successful as she casually
examined the sample of rice (which exactly corresponded to the entire lot) without
noticing the fact that even though the sample was that of Basmati Rice but it contained
a mix of long and short grains.
(ii) In the instant case, Mrs. Kanchan does not have any option available to her for
grievance redressal.
(iii) In case Mrs. Kanchan specified her exact requirement as to length of rice, then there
is an implied condition that the goods shall correspond with the description. If it is not
so, the seller will be held liable.
12. Right of stoppage in transit (Section 50 of the Sale of Goods Act, 1930):
Subject to the provisions of this Act, when the buyer of goods becomes insolvent, the
unpaid seller who has parted with the possession of the goods has the right of stopping
them in transit, that is to say, he may resume possession of the goods as long as they are
in the course of transit and may retain them until paid or tendered price of the goo ds.
When the unpaid seller has parted with the goods to a carrier and the buyer has become
insolvent, he can exercise this right of asking the carrier to return the goods back, or not
to deliver the goods to the buyer.
In the instant case, Tushar, the buyer becomes insolvent, and 450 bags are in transit. Ravi,
the seller, can stop the goods in transit by giving a notice of it to Tushar. The official
receiver, on Tushar’s insolvency cannot claim the bags.

26 FOUNDATION EXAMINATION: NOVEMBER, 2023

13. (i) Partnership for a fixed period (Indian Partnership Act, 1932): Where a provision is
made by a contract for the duration of the partnership, the partnership is called
‘partnership for a fixed period’. It is a partnership created for a particular period of time.
Such a partnership comes to an end on the expiry of the fixed period.
(ii) Revocation of continuing guarantee (Section 38 of the Indian Partnership Act,
1932): According to section 38, a continuing guarantee given to a firm or to third party
in respect of the transaction of a firm is, in the absence of an agreement to the
contrary, revoked as to future transactions from the date of any change in the
constitution of the firm. Such change may occur by the death, or retirement of a
partner, or by introduction of a new partner.
(iii) Goodwill: The term “Goodwill” has not been defined under the Indian Partnership
Act, 1932. Section 14 of the Act lays down that goodwill of a business is to be
regarded as a property of the firm.
Goodwill may be defined as the value of the reputation of a business in respect of
profits expected in future over and above the normal level of profits earned by
undertaking belonging to the same class of business.
14. (i) Introduction of a Partner (Section 31 of the Indian Partnership Act, 1932): Subject to
contract between the partners and to the provisions of Section 30, no person shall be
introduced as a partner into a firm without the consent of all the existing partners.
In the instant case, Mr. Vikas can be introduced as a partner with the consent of Mr.
B and Mr. C, the existing partners.
(ii) Rights of Transferee of a Partner’s interest (Section 29): A transfer by a partner
of his interest in the firm, either absolute or by mortgage, or by the creation by him of
a charge on such interest, does not entitle the transferee, during the continuance of
the firm, to interfere in the conduct of business, or to require accounts, or to inspect
the books of the firm, but entitles the transferee only to receive the share of profits of
the transferring partner, and the transferee shall accept the account of profits agreed
to by the partners.
Hence, here Mr. Vikas, the transferee in M/S ABC Associates, cannot inspect the
books of the firm and the contention of the other partners is right that Mr. Vikas cannot
challenge the books of accounts.
15. Effects of insolvency of a partner (Section 34 of the Indian Partnership Act, 1932):
(i) The insolvent partner cannot be continued as a partner.
(ii) He will be ceased to be a partner from the very date on which the order of adjudication
is made.
(iii) The estate of the insolvent partner is not liable for the acts of the firm done after the
date of order of adjudication.

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 27

(iv) The firm is also not liable for any act of the insolvent partner after the date of the
order of adjudication,
(v) Ordinarily, the insolvency of a partner results in dissolution of a firm; but the partners
are competent to agree among themselves that the adjudication of a partner as an
insolvent will not give rise to dissolution of the firm.
16. As per the provisions of Section 30(5) of the Indian Partnership Act, 1932, at any time
within six months of his attaining majority, or of his obtaining knowledge that he had been
admitted to the benefits of partnership, whichever date is later, such person may give public
notice that he has elected to become or that he has elected not to become a partner in the
firm, and such notice shall determine his position as regards the firm.
However, if he fails to give such notice, he shall become a partner in the firm on the expiry
of the said six months.
If the minor becomes a partner by his failure to give the public notice within specified time,
his rights and liabilities as given in Section 30(7) are as follows:
(A) He becomes personally liable to third parties for all acts of the firm done since he was
admitted to the benefits of partnership.
(B) His share in the property and the profits of the firm remains the same to which he was
entitled as a minor.
(i) In the instant case, since, X has failed to give a public notice, he shall become
a partner in the M/s ABC & Co. and becomes personally liable to Mr. L, a third
party.
(ii) In the light of the provisions of Section 30(7) read with Section 30(5) of the Indian
Partnership Act, 1932, since X has failed to give public notice that he has not
elected to not to become a partner within six months, he will be deemed to be a
partner after the period of the above six months and therefore, Mr. L can recover
his debt from him also in the same way as he can recover from any other partner.
17. (i) Yes, this is a case of partnership because there is an agreement between two firms to
combine into one firm.
(ii) Yes, this is a case of partnership because A & B, co-owners, have agreed to conduct
a business in common for profit.
(iii) No, this is not a case of partnership as no charitable association can be floated in
partnership.
(iv) No, this is not a case of partnership as they are co-owners and not the partners.
Further, there exist no business.
(v) Yes, this is a case of partnership as there exist the element of doing business and
sharing of profits equally.

28 FOUNDATION EXAMINATION: NOVEMBER, 2023

18. Conditions under which LLP will be liable [Section 27(2) of the LLP Act, 2008]
The LLP is liable if a partner of a LLP is liable to any person as a result of a wrongful act
or omission on his part in the course of the business of the LLP or with its authority.
Conditions under which LLP will not be liable [Section 27(1) of the LLP Act, 2008]
A LLP is not bound by anything done by a partner in dealing with a person if—
(a) the partner in fact has no authority to act for the LLP in doing a particular act; and
(b) the person knows that he has no authority or does not know or believe him to be a
partner of the LLP.
19. Section 2(87) of the Companies Act, 2013 defines “subsidiary company” in relation to any
other company (that is to say the holding company), means a company in which the holding
company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total voting power either at its own or
together with one or more of its subsidiary companies:
For the purposes of this section —
(I) a company shall be deemed to be a subsidiary company of the holding company
even if the control referred to in sub-clause (i) or sub-clause (ii) is of another
subsidiary company of the holding company;
(II) “layer” in relation to a holding company means its subsidiary or subsidiaries.
In the instant case, BC Private Limited together with its subsidiary KL Private Limited
is holding 1,60,000 shares (90,000+70,000 respectively) which is more than one half
in nominal value of the Equity Share Capital of PQ Private Limited. Hence, PQ Private
Limited is subsidiary of BC Private Limited.
(ii) In the second case, the answer will remain the same. KL Private Limited is a holding
1,60,000 shares i.e., more than one half in nominal value of the Equity Share Capital
of PQ Private Limited (i.e., holding more than one half of voting power). Hence, KL
Private Limited is holding company of PQ Private Company and BC Private Limited
is a holding company of KL Private Limited.
Hence, by virtue of Chain relationship, BC Private Limited becomes the holding
company of PQ Private Limited.
20. According to the provisions of Section 2(45) of Companies Act, 2013, Government
Company means any company in which not less than 51% of the paid-up share capital is
held by-
(i) the Central Government, or

PAPER – 2 : BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING 29

(ii) by any State Government or Governments, or

30 FOUNDATION EXAMINATION: NOVEMBER, 2023

SECTION 2B: BUSINESS CORRESPONDENCE AND REPORTING

Part A
Chapter-1 Communication
1. What is ‘Circuit Network’ in organizations? Explain briefly.
2. Communication modes today are primarily technology driven. Yet ‘technology’ acts a
barrier. Justify.
Part-B
Chapter-2 Sentence Types, Active-Passive Voice and Direct-Indirect Speech
1. Change the following sentences into passive voice.
a. Ravi has bought a new sports car.
b. Archana can do sky diving.
c. Karthik wrote a book on child psychology.
d. Rahman sang a Tamil song in the music concert.
e. Monica is cooking Chinese cuisine for dinner.
2. Change the following sentences into active voice.
a. The car is being repaired by the young mechanic.
b. Auditorium walls were painted by students of the Art School.
c. Chocolates are being distributed to the old age home residents by small children
d. The city was devastated by the rains and floods.
e. Herbs were planted by the gardener in our backyard.
3. Change the following sentences from direct to indirect speech.
a. Amit said, ‘I have been watching a lot of movies’.
b. Kiran asked, ‘Do they teach French?’
c. Pavan said, ‘I can finish the assignment in two hours.’
d. Samyak shouted, ‘ I am stuck in the elevator’
e. Children exclaimed, ‘We can see a rainbow’!

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Chapter-3 Vocabulary
1. In the following question, out of the four alternatives, select the one which best expresses
the best meaning of the given word.
1. RETICENT
a. Reserved
b. Happy
c. Willing
d. Freedom
2. FELICITATE
a. Provide
b. Condemn
c. Honour
d. Erase
3. AGILE
a. Short
b. Angry
c. Dependent
d. Acrobatic
4. TRIVIAL
a. Global
b. Memorable
c Related
d. Insignificant
2. In the following question, out of the given four alternatives, select the one which is opposite
in meaning of the given word.
1. Menial
a. Low grade
b. Elevated

32 FOUNDATION EXAMINATION: NOVEMBER, 2023

c. War like
d. Careful
2. Horrible
a. Attractive
b. Weird
c. Surplus
d. Bad
3. Inquisitive
a. Curious
b. Energetic
c. Victorious
d. Uninterested
4. Ambiguous
a. Far away
b. Remote
c. Certain
d. Judicious
3. Choose the correct meaning of the idioms given below.
a. Fair and square
(i) To be good at a skill
(ii) To be direct
(iii) To learn geometry
(iv) To be arrogant
b. Go that extra mile
(i) To do more effort
(ii) Big responsibility
(iii) Walk a long way

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 33

(iv) Willing to change

c. Face the music
(i) Often listen to music
(ii) Work very hard
(iii) Understand music
(iv) Face the reality
d. Take a rain check
(i) Find fault
(ii) Do continuous efforts
(iii) Postpone your plans
(iv) Use a raincoat
e. On cloud nine
(i) Feeling depressed
(ii) Excited
(iii) Not sure
(iv) Still in doubt
Part-C
Chapter-4 Comprehension Passages
Read the following passages carefully and answer the questions that follow:
Passage-1
When the bamboo flowers- famine, death and destruction will soon follow, goes a traditional
saying in Mizoram, the tiny hill state in North East India. Who better than the hardy inhabitants
would know this, considering that theirs is probably the only land on earth where history is
closely intertwined with the mysterious cycle of bamboo flowering. Back in 1959, bamboo
flowering in the state set off a chain of events in the rugged hilly state that ultimately led to one
of the most powerful insurgencies against the Indian union spanning over two decades.
Folklore apart, scientists say that the strange phenomena of bamboo flowering, is called
‘gregarious bamboo flowering’ because the bamboo flowers, all at the same time, only once in
the plant’s lifetime. It wreaks ecological havoc because the bamboo plants die aft er flowering.
It will be atleast some years before those plants take seed again, leaving bare exposed soil —
which could be disastrous in mountainous states and also leading to food scarcity, since animals

34 FOUNDATION EXAMINATION: NOVEMBER, 2023

depend on bamboo plants. The second factor is that rats feed on the flowers and seeds of the
dying bamboo tree. This activates a rapid birth rate among the rodents, which leads to the huge
rat population feeding on cultural crops in the fields and on granaries and causes famine.
Now the bamboo is going to flower again within the next four to five years, as per the experts.
And this time it is going to be not just in Mizoram, but in the huge bamboo forested areas across
the other North Eastern states of Tripura, Manipur and southern Assam, an occurrence that has
attracted national and international attention as well as the concern of the authorities. A thriving
economy revolves around bamboo. The pulp and paper industry, construction, cottage industry
and handloom, food, fuel, fodder and medicine annually consume about 22 million tons of
bamboo.
While there seems to be a consensus among the experts that the resources should be used
before they become worthless, the problem is how to do that. What would happen to common
rural north easterners who depend on bamboo for almost everything—from raw material to build
their homes to food and as one of the few sources of cash.
Questions
1. Why is bamboo flowering considered to be a strange phenomenon?
2. How do rodents act as a cause of famine?
3. Name the industries that depend on bamboo as a resource.
4. Find a word from the passage that means the same as ‘in abundance’
(a) Wreaks
(b) Thriving
(c) Gregarious
(d) Easterners
5. Choose the synonym of the word sturdy’ as used in the passage.
(a) Havoc
(b) Hardy
(c) Rugged
(d) insurgencies
Passage-2
Hiking is a great source of pleasure and happiness to humans besides being something helpful
and beneficial for health. Once we leave the crowded streets of a city and go out for walking or
somewhere away from the chaotic world, our mind feels free. The open air has a bracing effect
on the mind. The congestion of the city, the world, the uproar and the tumult, the daily and may

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 35

be monotonous routine are forgotten and our mind feels relaxed and calm. That moment is one
of happiness; laughter; jumping, dancing and embracing ourselves.
Hiking takes us in the midst of nature. The wonderful waterfalls, flowers, the brooks, the birds,
the bushes all appear to be enticing and pleasing. A connect is established between us and
nature. Various sounds of nature, like the sound of the gushing river, or the chirping of birds
acquires a new meaning and we start loving life. We enjoy the beauty of nature. We have no
fears, no worries, no stress and no anxieties. We have leisure to stand, to walk, to talk, to
observe nature. It is more thrilling and pleasurable to hike in the mountains than in plains. The
excitement of climbing up to the top of a hill, the adventure of coming down a slope, the grandeur
of sunset behind a mountain—all these add beauty and charm to our hiking journey.
Hiking is one the healthiest sports. It ensures a complete escape from the urgent and busy
activities of life and therefore gives solace to our mind and brain. It regains its lost energy and
s able to do twice as much work as before. Hence, it could be said that, if ou r mind is free, its
productivity increases. The nature and its elements make one’s mind and soul at peace. Hiking
is unique in that it can help patients meet guidelines for regular physical activity and concurrently
tap the significant health benefits that may be attained by spending time in natural settings.
Hiking can be considered accessible in terms of the limited skills and equipment needed, as
well as the ability for individuals to pick the terrain difficulty and the speed at which they walk .
Hiking is also an opportunity to hone new skills, or the nervous system’s ability to accommodate
new demands and information. On a hike, you can further exercise your brain by learning to use
a compass. Or, after you feel prepared fitness-wise, you could plan an overnight backpacking
trip, which requires you to hone a whole new set of skills, like pitching a tent, filtering water,
cooking on a camp stove, and mastering a bear bag hang, just to name a few . Hence, we all
must try to go for hiking once, atleast when our minds needs a break!
1. Why is it more thrilling to hike in the mountains than in the plains?
2. Why is Hiking considered to be unique sport by the author?
3. Select the option which means same as ‘monotonous’ as used in the passage;
(a) Important
(b) Rare
(c) Repetitive
4. What new skills can one learn while hiking?
5. Select the word that can appropriately replace the word ‘grandeur’ as used in the passage:
(a) Splendour
(b) Spendthrift
(c) Serene
(d) Serendipity

36 FOUNDATION EXAMINATION: NOVEMBER, 2023

Passage-3
The great Himalayas are one of the best gifts of nature to mankind. This mountainous range is
an earthly example of what heaven really looks and feels like. From thick woodlands to lavish
valleys, from tropical wildernesses to compelling slopes, from various types of verdures to the
sentimental climate, the Himalayan ranges have it all. If, by any chance, you get to visit the
Himalayas just once you will be able to deduce why it's known as the heaven on earth. We step
into Himalayan kingdom wonderstruck every time how boundlessly nature has gifted these
terrains with beauty and resources. Mile after mile of never-ending virgin greens, the clean air
full of oxygen, mineral-rich waters of mountain streams, wildflower carpet and strawberry
shrubs—suddenly it is inexhaustible life all around!
Relatively few places on this planet can engage you like the Himalayas. Only one out of every
odd place gives you the motivation to be there each season. Be that as it may, at that point only
one out of every odd place is the Himalayas. Tourist places in Himalayas are the home to the
extraordinary, compared to other enterprise sports zones on the planet. For thousands of years
the Himalayas have held a profound significance for the people of South Asia, as their literature,
mythologies, and religions reflect.
Since ancient times, the vast glaciated heights have attracted the attention of the pilgrim
mountaineers of India, who coined the Sanskrit name Himalaya—from hima (“snow”) and alaya
(“abode”)—for that great mountain system. In contemporary times the Himalayas have offered
the greatest attraction and the greatest challenge to mountaineers throughout the world.
Likewise enjoy adventurous thrill in the Himalayas like trekking, boating, skiing, mountaineering
and numerous others like this. For mountain lovers, the Himalayas are convincingly counted as
the delegated peak of nature's greatness.
Tourist places in Himalayas also include notable lakes include Shey -Phoksundo Lake in the
Shey Phoksundo National Park of Nepal, Gurudongmar Lake, in North Sikkim, Gokyo Lakes in
Solukhumbu district of Nepal and Lake Tsongmo
Questions
1. ‘Relatively few places on this planet can engage you like the Himalayas’ what does the author
mean when he says this.
2. Select the correct usage of the word ‘profound’
(a) The profound thoughts of the sage brought a change in my thoughts.
(b) It is not profound for us to get up late every morning
(c) He who offers help is not profound.
(d) Profound is a stronger currency than rupee.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 37

3. Describe the Himalayas in your own words, taking reference from the passage. 20 to 30
words.
4. Give the passage a suitable title.
5. What is the style of writing, the narrator uses?
(a) Descriptive
(b) Expository
(c) Persuasive
(d) None of these
Chapter-5 Note Making
1. Read the following passages carefully.
(i) Make notes, using headings, sub-headings and using abbreviations wherever
necessary.
(ii) Give a suitable title and write summary.
Passage-1
The Aztecs were the last group of native people whose civilization dominated the Valley of
Mexico. The Valley of Mexico is located in central Mexico where the country narrows as
the land between the Gulf of Mexico on the east and the Pacific Ocean on the west narrows.
The Valley of Mexico is a high plateau, around 7,000 feet above sea level, surrounded by
volcanic mountains. The first people to influence culture in the Valley of Mexico were the
Olmecs whose civilization began around 1200 BCE in the jungles of eastern Mexico. The
Olmecs are known for their finely crafted artwork, especially giant heads that are 10 feet
tall. The Olmecs invented a system of writing and were well-versed in astronomy and
mathematics. As their culture evolved, it spread to the Valley of Mexico even if they didn’t
officially rule the area.
Somewhere at the very beginning of the Common Era, native people built a city from stone
called Teotihuacan in the Valley of Mexico. The name Teotihuacan means “Place o f the
Gods” and the city contained religious pyramids that were constructed by 200 CE. Scholars
believe that Teotihuacan was the 6th largest city in the world when it was flourishing. After
about 200 years, the great city declined from famine and revolts.
The Toltecs, who also built pyramids, controlled the Valley of Mexico from about 1000 to
1200 CE. Their capital city was Tula which was attacked and destroyed around 1200 CE.
Meanwhile the Mesheeca or Mexica people, later called Aztecs by the Spanish, liv ed as
nomads throughout central Mexico, without a home territory, but seeking a land for
themselves. The Aztecs finally settled on swampy island in Lake Tecoco in the Valley of
Mexico around 1325 CE.

38 FOUNDATION EXAMINATION: NOVEMBER, 2023

The Aztec people named their settlement Tenochtitlan. The Aztecs converted their
swampland to fertile crop fields and the people developed skilled crafts. They began
trading food and goods with neighboring tribes. Over the years Tenochtitlan became a city
and the Aztecs spread to other islands. The nobles and rulers of Aztec society began to
intermarry with the royal families of neighboring tribes and eventually ruling their territory.
By 1500 CE the Aztec Empire controlled the entire Valley of Mexico, only to be destroyed
by Spanish conquerors under Cortez beginning in 1519.
Passage -2
Bharat is a contiguous land with a common civilization identity for many millennia. Pre-
independence India, on the other hand, consisted of territories that were administered by
more than 560 princely states and several colonial powers. The first half of 1947 was a
crucial period in India's history. The end of colonial rule was certain and so was India's
partition, but there was no clarity on the political integration of the territories under the
princely states. The partition of the country into the dominions of India and Pakistan raised
the important question of peacefully merging the princely states which were as diverse as
they could be it in size, population, terrain or economic situation.
Here comes the role of Sardar Vallabhai Patel. The full name of Vallabhbhai Patel was
Vallabhbhai Jhaverbhai Patel and very famously called Sardar Patel. Sardar was his name
in India and everywhere else, the word is popular in Hindi, Urdu and Persian languages
which also means ‘chief’. He is an Indian barrister who also contributed majorly to Indian
Independence as a senior leader of the Indian National Congress party. During the Indo -
Pak war in 1947, his role as Home Minister was vital as during the struggle, he guided the
independent nation to unity through integration. He truly was at the helm of integrating and
merging the British provinces that were allotted to India with the new Independent India,
leading the task of forging a united front. Therefore, the challenge in front of Sardar
Vallabhbhai Patel was not an easy one. As the architect of Ek Bharat, the Iron Man
understood the ground realities and took up the mammoth task of unifying the princely
states. This set the seeds for building a modern nation state - merging India's political
boundaries with our civilisational boundaries to the extent possible. Sardar Patel
understood the importance of uniting the country and highlighted the fact that without unity
it will be impossible to have a sustainable state.
Since 2014, India has been celebrating the birthday of Sardar Patel as National Unity Day,
i.e 31st October. This day not only recognises his monumental contribution and service to
the nation but also engages with his legacy.
Chapter-7 Précis Writing
Write a précis and give an appropriate title to the passage given below.
1. Global climate change due to excessive fossil fuel combustion, the fluctuating oil prices,
geopolitical tensions and growth in energy demand urges immediate measures to be taken
in order to limit global energy crisis and green house gas emission in the environment.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 39

Current and future markets in fossil fuels are subject to volatile price changes in oil and
natural gas. National and international energy and environmental crisis is motivating to
think about renewable energy resources, especially solar energy. Solar energy is the most
ancient source, and it is the root material for almost all fossil and renewable types. Special
devices have been used for benefiting from the solar energy since time immemorial and
such applications actually date back to before Christ. Energy is a continuous driving power
for the social and technological prospective developments. Energy sources are vital and
essential ingredients for all human transactions and without these sources, human
activities of all kinds will not be progressive at all. Since the energy crisis in 1973, air
pollution from combustion processes has caused serious damage and danger to the
forests, monuments, human health as has been documented by official studies and yearly
statistics. It has been recently realized that solar energy can have a beneficial impact on
the following essential technical, environmental, and political issues of the world like
major environmental problems such as acid rain, stratospheric ozone depletion,
greenhouse effect and smog; environmental degradation. It can be a good way to prevent
the depletion of the world’s non-renewable conventional sources such as coal, oil, natural
gas, and increasing energy use in developing countries.
2. The explosion of interest in artificial intelligence has drawn attention not only to the
astonishing capacity of algorithms to mimic humans but to the reality that these algorithms
could displace many humans in their jobs. The economic and societal consequences could
be nothing short of dramatic. A key metric for tracking the consequences of technology on
the economy is growth in worker productivity – defined as how much output of work an
employee can generate per hour. This seemingly dry statistic matters to every working
individual, because it ties directly to how much a worker can expect to earn for every hour
of work. Said another way, higher productivity is expected to lead to higher wages.
Generative AI products are capable of producing written, graphic and audio content or
software programs with minimal human involvement. Professions such as advertising,
entertainment and creative and analytical work could be among the first to feel the effects.
Individuals in those fields may worry that companies will use generative AI to do jobs they
once did, but economists see great potential to boost productivity of the workforce as a
whole.
3. Ozone (O 3) depletion does not cause global warming, but both of these environmental
problems have a common cause: human activities that release pollutants into the
atmosphere altering it. Global warming is caused primarily by putting too much carbon
dioxide into the atmosphere when coal, oil, and natural gas are burned to generat e
electricity or to run our cars. Carbon dioxide spreads around the planet like a blanket, and
is one of the main gases responsible for the absorption of infrared radiation (felt as heat),
which comprises the bulk of solar energy. Ozone depletion occurs when
chlorofluorocarbons (CFCs) and halons—gases formerly found in aerosol spray cans and
refrigerants—are released into the atmosphere. Ozone sits in the upper atmosphere and
absorbs ultraviolet radiation, another type of solar energy that's harmful to humans,

40 FOUNDATION EXAMINATION: NOVEMBER, 2023

animals and plants. CFCs and halons cause chemical reactions that break down ozone
molecules, reducing ozone's ultraviolet radiation-absorbing capacity.
Chapter-8 Article Writing
1. Write an article on the following topics in not more than 200-250 words.
a. Internet is the major cause of distraction in human life these days.
b. Materialistic things have gained more importance that emotional values.
Chapter-9 Report Writing
1. Write a report on the following topics.
a. A newspaper report about a classical dance event organized by an NGO that works
towards the cause of women empowerment.
b. You are the Accounts head of a Fast growing hotel chain. Write a formal report stating
details of expenditure made in the last financial year towards purchase of inventory
(tables, chairs, utensils etc), hiring staff and opening new outlets in different cities.
Chapter-10 Formal letters and Official Communication
1. You manage the stationery supply in a privately owned library. Write a letter to a stationery
vendor complaining about low quality supplies made to you. Also mention the order was
delayed.
2. Write a letter to the nearby Courier service provider stating your regular requirements to
send domestic couriers. Ask him for the rates and if any discount possible. Sign yourself
as Rashmi/Rajesh.
3. You plan to open a coffee shop in your area, Kondapur, Hyderabad. Write a letter to M/S
Wooden Mart, Kukatpally, Hyderabad giving an order of garden furniture and extra chairs
and tables needed in your café. Mention the quantity of each item as required.
Chapter-11 Writing formal mails
1. On behalf of your private firm, write a formal mail to all your employees, requesting them
to cooperate for the limited parking slots available in the office building. State a few
solutions possible and mention how the organization is being considerate towards the
employee. Sign yourself as Anisha Sharma, HR Head, Serendipity Solutions, Gurugram,
Haryana
2. You are Kishore/Kanika, Head, Admin in Spark Technologies, BPO. Write a letter to your
employees inviting applications and entries for the cultural program on 14 th August to
celebrate the Independence Day (15 th August). State a few events lined up and give a
reference email for further clarifications.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 41

Chapter-12 Resume Writing

1. You are Rani/Raja, B.Ed., English (honors). Draft your resume to apply for jobs in a school
for the post of a language teacher.
2. Draft a basic resume for a fresher with a Bachelors degree in commerce, applying for a job
in finance, with no experience .
Chapter-13 Meetings
1. Write ‘Minutes of the Meeting’ for a meeting conducted to discuss the visit plan of foreign
clients in your organization.
2. Write the ‘Minutes of the Meeting’ for a meeting organized to discuss the increase in
costing of your daily bath soaps (fmcg goods). Discuss the need to increase the price even
though the product is not selling well.

ANSWERS

Part A
Chapter-1 Communication
1. When two persons communicate with each other sending messages and feedback, they
form a communication circuit. This is the Circuit network. The two people interacting can
be colleagues placed at the same hierarchical level in the organisation.

Feedback Message

Circuit Network
2. Communication modes are primarily technology driven, however communication
technology is constantly upgraded and new formats emerge. Anyone who is not tech
friendly struggles to communicate effectively via the medium

42 FOUNDATION EXAMINATION: NOVEMBER, 2023

Moreover, an individual is swamped with a huge amount of information every day in

the form of emails, texts and social updates. Multitasking is the norm these days. The
information overload and trying to accomplish too many things together can result in
gaps resulting in miscommunication.
Part-B
Chapter-2 Sentence Types, Active-Passive Voice and Direct-Indirect Speech
1. a. A new sports car has been bought by Ravi.
b. Sky diving can be done by Archana.
c. A book on child psychology has been written by Karthik.
d. A Tamil song was sung by Rahman in the music concert.
e. Chinese cuisine is being cooked by Monica for dinner.
2. a The young mechanic is repairing the car.
b. Students of at the Art school painted the auditorium walls.
c. Small children are distributing chocolates to the residents of the old age home.
d. Rains and floods devastated the city.
e. Gardener planted herbs in our backyard.
3. a. Amit said that he had been watching a lot of movies.
b. Kiran asked if they taught French?
c. Pavan said that he could finish the assignment in two hours.
d. Samyak shouted he was stuck in the elevator.
e. Children exclaimed that they could see a rainbow.
Chapter-3 Vocabulary
1. 1. a
2. c
3. d
4. d
2. 1. b
2. a
3. d
4. c

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 43

3. a. ii
b. i
c. iv
d. iii
e. ii
Part-C
Chapter-4
1. 1. Bamboo flowering is a strange phenomena because the bamboo flowers, all at the same
time, only once in the plant’s lifetime. It wreaks ecological havoc because the bamboo
plants die after flowering.
2. Rats feed on the flowers and seeds of the dying bamboo tree. This activates a rapid
birth rate among the rodents, which leads to the huge rat population feeding on
cultural crops in the fields and on granaries and causes famine.
3. The pulp and paper industry, construction, cottage industry and handloom, food, fuel,
fodder and medicine annually consume about 22 million tons of bamboo and hence
depend on bamboo.
4. (c) Gregarious
5. (b) Hardy
2. 1. It is more thrilling to hike in the mountains than in the plains because the excitement of
climbing up to the top of a hill, the adventure of coming down a slope, the grandeur of
sunset behind a mountain—all these add beauty and charm to our hiking journey.
2. Hiking is considered a unique sport as it can help patients meet guidelines for regular
physical activity and concurrently tap the significant health benefits that may be
attained by spending time in natural settings.
3. Option c Repetitive
4. While hiking, one can learn pitching a tent, filtering water, cooking on a camp stove,
and mastering a bear bag hang.
5. Option a Splendour
3. 1. The author means there are very few places on Earth that have the splendour and
calmness like that of Himalayas and that can mesmerize our minds.
2. Option a.
3. Himalayas, the abode of snow are natures gift to mankind with their beauty, s erenity
and utility. They not only act as a tourist spot, but also a place that offers
mountaineering and trek as a sport. The valleys, the wilderness, the slopes are a

44 FOUNDATION EXAMINATION: NOVEMBER, 2023

perfect combination of a place that one can dare to visit every season; to see
something new each time!
4. Himalayas: A mix of emotions and a perfect blend of nature!
5. Option a Descriptive
Chapter-5
Passage 1
The Aztecs
1. Aztecs: Valley of Mexico
1.1 Valley of Mexico
1.11 lctd cntrl Mexico, bet gulf and Pac ocean
1.12 7000 ft above sea lvl; vlcnc mntns arnd
1.2 The Olmecs
1.21 Frst ppl to visit the vlly
1.22 Knwn fr crftd art wrk
1.23 invntd stm of wrtng
1.24 knew astrny and mthmtcs
2. Teotihuacan: Place of Gods
2.1 6th largest city
2.2 Had relgus pyramids
2.3. Dcln after 200yrs: famine and revolts
3. Toltecs: Capital city Tula
3.1 Also blt the pyramids; ctrld the valley of Mexico
3.2 Tula attckd arnd 1200 CE
4. Mesheeca ppl or Mexica ltr clld Aztecs.
4.1 Stld in Lake Tecoco
4.2 Named the stlmnt Tinochtitlan
4.3 Dvlpd crop and feritle lnds
4.4 Dvlpd skills
4.5 Inter cmmnty marriage started

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 45

5. Aztec empire dstryd by Spn cnqr under Cortez

Key
Lctd=located
Cntrl=control
Bet = Between
Pac-Pacific
Ft=feet
Lvl=level
Vlcn= volcanic
Mntns= mountains
Arnd=around
Frst= first
Ppl= people
Vlly= valley
Knwn= known
Fr= for
Crftd= crafted
Wrk= work
Invntd= invented
Stm= system
Wrtng= writing
Astrny= astronomy
Mths= mathematics
Relgus = religious
Dcln =Decline
Blt= built
Ctrld= controlled
Attckd= attacked
Ltr= later

46 FOUNDATION EXAMINATION: NOVEMBER, 2023

Cld= called
Stld= settled
Stlmnt= settlement
Dvlpd= developed
Lnds= Lands
Cmmnty= community
Dstryd= destroyed
Spn= Spanish
Conqr= conqueror
Lrgst= largest
Summary
The Aztech history
The Valley of Mexico was dominated by the Aztech who were the last native group, although
the Olmecs were the first people to influence the Valley with their culture. The Olmecs were a
talented group with knowledge of astronomy, mathemeatics and artwork. ‘ Teotihuacan, a city
from stone was built in the beginning of the common era. This city had religious Pyramids built
in 200 CE; however the city met a downfall and decline due to famine and revolts. The
Meesheca/ Mexican people later called Aztech by the Spanish led a nomadic life and finally
settled on an island in Lake Tecoco in the Valley of Mexico. ‘Tenochtitlan’, their civilization, was
known for their development of skilled crafts and the fact that they made fertile fields. Inter
community marriages led to ruling larger areas. They only to see a downfall after the Spanish
conquered them, beginning 1519.
2. Sardar Patel
1. Bharat: cmmn cvlnz
2. Pre-indpndc had trtrs
2a. prncly sts
2b. Clnl pwrs
3. Frst half of 1947 crucial
3a. End of clnl rule
3b. prtn certain
3c. no clrty on trts

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 47

4. Ques of mrgr of prncly sts: dvrs in size, ppln, trrn and eco stn
5. Sardar Vallabhai Patel: fmsly clld Sardar Patel
5a. Indian barrister
5b. Sr ldr of INC
5c. HM drng Indo Pak war
5d. plyd mjr role in intgt Btsh prvncs with new Independent India
6. Iron Man: Sardar vallabhai Patel
6a. Archt of ek Bharat
6b. Unfd the prncly sts
6c. He hgltd the impn of unity
6d. wtht unity; not pssbl to have a stnbl state
7. National Unity Day: Patel’s birthday, 31st October
Key
Cmmnly= commonly
Clvz= civilazation
Indpndc= independence
Trtrs- territories
Prncly= princely
Sts= states
Clnl= colonial
Pwrs= powers
Frts= first
Prtn= partition
Clrty= clarity
Ques= question
Mrgr= merger
Dvrs= diverse
Ppln= population
Trrn= terrain
Stn= situation
Fmsly= famously

48 FOUNDATION EXAMINATION: NOVEMBER, 2023

Clld= called
Sr= senior
Ldr= leader
Drng= during
Plyd= played
Mjr= major
Intgt= integrating
Btsh= British
Prvncs= pronvinces
Archt= architect
Unfd= unfied
Hgltd= highlighted
Impn= importance
Wtht= without
Pssbl= possible
Stnbl= sustainable
Summary
Sardar Vallabbhai Patel, fondly known as Sardar Patel played a major role in the
unification of the princely states and territories after the Indian independence. A
barrister by profession, he is the architect of unified India, which pre independence
had princely states, provinces etc ruled by different people. To end the colonial rule
and build the concept of ‘Ek Bharat’ on a sustainable lines, Patel is remembered for
his contribution. His birthday is celebrated as National Unity Day.
Chapter 7- Precis Writing
1. Solar energy: a long term and safe energy solution
Climate changes across the world have been noticed due to burning of fossil fuels and
other related activities. The need of the hour is to shift the focus to a renewable resource
of energy especially Solar energy. The energy crisis of 1973 has caused serious damage
to flora and fauna, buildings and human health. In view of this, solar energy comes to be
a wise choice and can be a good solution for environmental issues like acid rain, ozone
layer depletion, greenhouse effect, smog etc. Using solar energy can also be a solution to
prevent depletion of non -renewable resources of energy.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 49

2. Does AI pose a danger to workforce?

The boom of artificial intelligence has created a speculation on the demand for workers/
humans in job. AI and its effect on society and economy can be evaluated on the basis of
the productivity of a labour per hour; that eventually decides the wages. Although a lot of
advertisement, entertainment and content development work is done by AI, economists
feel that there can be still scope for human intervention to boost productivity.
3. Major factors for Ozone depletion
The main cause of ozone layer depletion and global warming is human activities interfering
with the atmosphere. Global warming is caused by putting too much carbon dioxide into
the atmosphere when coal, oil and natural gases are burned to generate electricity and run
cars. The release of carbon dioxide into the atmosphere leads to the absorption of infra-
red rays into the earth and hence high temperature felt as heat. Chlorofluorocarbons and
halons are the main two ingredients that lead to ozone depletion thus reducing the ultra
violet rays that protect the earth’s atmosphere.
Chapter-8 Article Writing
1. a. Hints: Internet is the major cause of distraction in human life these days.
• Internet: Boon or Bane for humans (Title)
• Parents have been constantly complaining about over exposure to internet.
• Especially during student life, where the primary focus should be studies.
• Internet is a tool; one must use is judiciously.
• A good way of enhancing knowledge, rather than taking it as an addiction.
• Social media platforms should be used for informing, influencing and learning.
• Once it becomes an addiction, it takes the form of distraction.
• Wise use is recommended.
b. Hints: Materialistic things have gained more importance than human values.
Money or emotions: what matters most? (title)
• Money is like a bubble, it comes and goes
• One should work hard in life for inner happiness.
• Materialistic things can be bought; they don’t remain with us forever
• Emotions build relationships which last forever
• Family bonding, friendship, all this dependent on emotions, not money or status
• In this fast paced world, where everything is getting ‘artificial’, getting a true
friend, a supporting family and a passionate mentor is what is most precious.

50 FOUNDATION EXAMINATION: NOVEMBER, 2023

(The student may write other relevant points. Above mentioned are hints for a better
understanding)
Chapter-9 Report Writing
1. Hints:
a.
• Newspaper report writing format (Timeline, name of reporter) Heading to the
news brief.
• Name the NGO that has organized the dance event.
• Location, venue, date/time details
• Few lines on the background of the NGO: specially that it works towards women
empowerment.
• Mention a few achievements of the NGO towards its cause.
• Details about the campaign: who inaugurated, how many people participated,
what is the purpose, why dance is being promoted. (Can mention names of few
dignitaries who attended the event)
• A few lines about why dance is being used a form to promote expression and
freedom of thought.
b. To: The Director, Accounts
From: Head, Accounts department
Date: 8 th Aug 2023
Subject: Expenditure made towards inventory, hiring staff and opening of new outlets
Acknowledgements: I am deeply grateful to all my team members who helped me in
formulating this detailed report. The expenditure and other related details have been
recorded with precision.
(1) Contents
i. List of items purchased (chairs, tables, utensils, serving utensils)
ii. Expenditure towards opening new outlets (Names of cities)
iii. Hiring new staff; campaign and cost details
iv. Cost and invoice details
v. Current budget versus amount spent
vi. Conclusion
Summary: As a means to progress and spread our presence, we decided to
open new outlets in four other Indian cities. In lieu of that, the organization

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 51

requires new inventories and more staff. Hence new inventories were
purchased, and recruits were hired to cater to the needs of new outlets. Our aim
is to establish our brand as a household name in the realm of family dining .
Can be continued with a few tables mentioned and then the conclusion.
Chapter-10 Formal letters and Official Communication
1. ‘Books for all’ Library.
Whitefields
Bengaluru
Karnataka- 560066

9th August 2023

The Stationery Suppliers

Koramangla
Benagaluru
Karnataka 560034
Subject: Delay of order and low quality supply
Dear Sir,
As discussed over the telephone, we would like to raise a concern about our last placed
order (No 654/15 th/7/23/100). The stationery supplies delivered were of poor quality; half
of the pens had dried ink and many rims of sheets were stained and old. Moreover, the
delivery of the order was delayed by 20 days.
We request you to look into the matter as this has caused a lot of damage to the reputation
of our organization. If this continues, we will discontinue our alliance with your organization.
Kindly revert so that the needful can be done.
Thanks and Regards,
Aradhana,
Assistant Manager (Admin)
Books for all library

52 FOUNDATION EXAMINATION: NOVEMBER, 2023

2. Shop No 37/9
Gomti Nagar
Lucknow- 226010
Uttar Pradesh
10th August 2023

Speed Courier Service

Shop No. 22, 2 nd floor
Valley Tower
Charbagh Metro station
Lucknow -226004
Uttar Pradesh

Dear Sir,
Subject: Request for quotation for domestic couriers
I hereby write to enquire about the rates for domestic courier using your services. We are
a retail firm dealing in apparel business and need to send frequent couriers to our
customers across the country. Here are a few queries, we would like you to resolve:
a) What is the standard rate per kilogram for a domestic courier?
b) Is there a relaxation, if the item is only a few grams more than a kg?
c) After booking a courier, how much time does it takes to dispatch a parcel?
d) Do you offer a pick up facility if there are bulk orders?
e) Is there any discount on bulk orders.
Kindly help us understand the process so that we can start our business association
smoothly.

Thanking you
Yours truly,
Rashmi/ Rajesh
Lucknow, UP.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 53

3. The Coffee Point

Kondapur
Hyderabad- 500084
Telangana
8th August 2023

Wooden Mart
Kukatpally
Hyderabad 500072
Subject: Placing an order for garden furniture and other items.
Dear Sir,
This is with respect to the opening of our new coffee shop in Kondapur. I would like to
place an order for some garden furniture and other furniture for the same. Below is a
detailed table listing the requirements.
Product Name Quantity
Garden furniture (1 round table and 4 chairs) 5
Rectangle tables 5
Cane chairs 25
High chairs 10
We wish to start operations from 1 st September, 2023. Kindly ensure that all products are
quality checked and in a warranty period. Please send the items by next week to allow
smooth flow of business. We will also need your help with installation so please send
someone to assist us in fixing the furniture.
Thanks and Regards
ABC
The Coffee Point (Owner)
Chapter-11 Writing formal mails
1. Dear employees,
Greetings!
This is with respect to the car parking rules of our organization. Since we share the building
with three other corporate firms, the number of slots available to our employees is 45 (total
divided by 3). This parking is in the basement and is free of cost, on first cum first basis.

54 FOUNDATION EXAMINATION: NOVEMBER, 2023

Due to the limited number of parking slots, we are unable to accommodate the vehicles of
all the employees in basement.
A provision has been made in the nearby field to park cars who cannot get space in the
basement. However, it will be on a payment basis. For convenience, there are minimal
charges for parking the vehicle in the nearby field. Please carry your office identity cards
to avail discount.
Looking forward to your kind cooperation.

With warm regards

Ms Anisha Sharma
Manager, HR
Serendipty Solutions
2. Dear employees,
Greetings!
This is with respect to the Independence Day celebrations to be held in the office premises.
The celebrations will done on 14 th August, Monday in the office seminar hall, 2 nd floor.
We have a planned a few activities like:
Ad mad challenges
Comedy skit
Vocal music performance
Instrumental music performance and cultural dances.
We request all the employees to participate and send their entries by 11 th August with their
personal details and the name of the division.
Program details will be shared via email. The entries can be sent to garima@sparktech.net
for any more details, you may visit the 1 st floor admin department and clarify your concerns.
Looking forward to your active and enthusiastic participation.

With warm regards

Kishore/Kanika
Head, Admin
Spark Technologies , BPO

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 55

Chapter 12 -Resume Writing

1. Sumita/Sumit Khanna
H no.234, Kavi Nagar, Ghaziabad,, UP | +91- 11111 1111 l akshay@gmail.com
Objective
To impart meaningful knowledge to the students and to make them fluent in English.
Educational Qualification
Qualification Year Board/University Institution's Name
B.Ed 2014 Rohtak University Maharishi Dayanand University
BA English 2011 Delhi University Shivaji College
Class 12 th 2008 CBSE Silver line Public School,
Ghaziabad
Class 10 th 2006 CBSE Silver line Public School,
Ghaziabad

Professional Experience
English teacher (April’15 - December’17) Uttam Girls School, Ghaziabad
• Have taught grades 3 to 5
• Handled inter school competitions
Have attended various seminars on Education of girl child.
Published research papers on women empowerment.
Personal Details
Name: Sumita/Sumit Khanna
Date of Birth: 17/05/1995
Marital Status: Unmarried
Address: H no.234, Kavi Nagar, Ghaziabad,
Ph No: 11111 1111
e-mail : akshay@gmail.com
(The student may add more details if needed; the above are hints. You may write about
your hobbies and interests.)

56 FOUNDATION EXAMINATION: NOVEMBER, 2023

2. Freshers resume
Address: H no.64/5, Jawaharpur Gwalior, MP
Phone:| +91- 11111 1111 l Email: abc@gmail.com
Objective
To work for a finance firm with the aim to learn and impart financial expertise to everyone
around.
Educational Qualification
Qualification Year Board/University Institution's Name
Class 12 th 2016 IGCSE Amity Public, Gwalior
Class 10 th 2018 IGCSE Amity Public, Gwalior
B.Com (H) 2018-2021 Gwalior University XYZ college

Participation in School
• Actively participated in school debates and declamations
• Inter school finance quiz and won the first prize (Individual and team)
• Avid badminton player; in school Sports team
Participation in college
• Represented the college in an inter college festival for ‘know your country’
• Committee member for cultural festival and ‘economics club’
• Worked as an intern in a finance start up
Hobbies and Interests
• Like to play badminton
• Avid reader of books on finance and economics
• Learning to play guitar
• Social service is a passion.
Personal Details
Name: Avantika Verma
Date of Birth: 28/10/1996
Marital Status: Unmarried
Address: H no.546, Ludhiana, Punjab
Ph No: 11111 111 e-mail : avant@gmail.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 57

(The student may add more details if needed; the above are hints. You may write about
your hobbies and interests.)
Chapter-13 Meetings
1. Hint: Mention the agenda and the cause for the same.
Participants in the meeting: Mr. XY, Vice-President; Mr. A, HR Manager; Mr. AB.
Operations Head; Mr. ABC, Operations Manager and Mr. XY’s Secretary
Date: August 2023
Meeting started at 10:00 am
Mr. A started the meeting and discussed the agenda with details of the visit of foreign
delegates.
Mr. ABC adds to the trip details and also emphasizes on their comfort and meetings to be
held.
Mr. A and Mr. ABC together presented a presentation with the travel plans, itinerary, and
meetings planned with vendors in the city.
Mr. XY gave his valuable inputs on how the attendance of staff should be maximum during
the visit of the foreign delegates.
Mr. ABC gives his suggestions on having some cultural night planned as part of a
recreation activity.
Mr. A concluded the meeting with vote of thanks to all the members who attended the
meeting.
2. Hint: Focus on one product. Mention the product and product specifications
Participants in the meeting: Mr. A, Vice-President; Mr. AB Product Manager, Mr. ABC,
Sales Manager and their Associates, Mrs. XY, Finance Manager
Date: August 20th, 2023
Meeting started at 11:00pm
Mr. AB explains about the agenda of the meeting, and he talks about the need to increase
the price of the specific product.
The associates have brainstormed few ideas about how the product can be changed
according to the market requirements.

58 FOUNDATION EXAMINATION: NOVEMBER, 2023

Mr. ABC listens to everyone carefully and shares his thoughts about changing the
packaging too. He also proposes to work on the ingredients, pricing and presentation of
the product. (We are taking the product to be a soap)
Mrs. XY expresses her concern over rising prices of similar competitive products.
Mr. A agrees and informs that he would like to discuss with the design team and finalize
the appropriate pricing with the team soon.
The meeting concluded with few ideas regarding packaging and pricing that everyone is
ready to explore and implement.

PAPER – 2:
BUSINESS LAWS

QUESTIONS

Indian Regulatory Framework

1. What do you understand by Indian Judicial System and what are its
various functions?
The Indian Contract Act, 1872
2. Mr. Parth applied for a job as principal of a school. The school
management decided to appoint him. One member of the school
management committee privately informed Mr. Parth that he was
appointed but official communication was not given by the school. Later,
the management of the school decided to appoint someone else as a
principal. Mr. Parth filed a suit against the school for cancellation of his
appointment and claimed damages for loss of salary. State with reasons,
will Mr. Parth be successful in suit filed against school under the Indian
Contract Act, 1872?
3. Sarthak is employed as a cashier on a monthly salary of ` 50,000 by ABC
bank for a period of three years. Mohit gave surety for Sarthak’s good
conduct. After nine months, the financial position of the bank
deteriorates. Then Sarthak agrees to accept a lower salary of ` 40,000
per month from the Bank. Two months later, it was found that Sarthak
had misappropriated cash from the time of his appointment. What is
the liability of Mohit taking into account the provisions of the Indian
Contract Act, 1872?
4. Rahul was a Disk Jockey at a five-star hotel. As per the contract, he is
supposed to perform every weekend. (i.e. twice a week). Rahul will be
paid ` 2,500 per day. However, after a month, Rahul willfully absents

REVISION TEST PAPER
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himself from the performance. Taking into account the provisions of the
Indian Contract Act, 1872, answer the following:
(i) Does the hotel have the right to end the contract?
(ii) If the hotel sends out a mail to Rahul that they are interested to
continue the contract and Rahul accepts, can the hotel rescind the
contract after a month on this ground subsequently?
(iii) In which of the case – (termination of contract or continuance of
contract) can the hotel claim damages that it had suffered as a
result of this breach?
5. Examine whether the following constitute a contract of ‘Bailment’ under
the provisions of the Indian Contract Act, 1872:
(i) Vikas parks his car at a parking lot, locks it, and keeps the keys
with himself.
(ii) Seizure of goods by customs authorities.
6. Mr. Sanjay Kothari was a big businessman having two sons and one
married daughter. He decided to gift his house to his daughter. For this
purpose, he called his lawyer at his house and made a written document
for such gift. The lawyer advised him to get the transfer document
properly registered. When they both were going for registration of
document, they met an accident, and both died. Later, the daughter
found the document and claimed the house on the basis of that
document. Explain, whether she can get the house as gift under the
Indian Contract Act, 1872?
7. (i) Mr. Ayush, the employer induced his employee Mr. Bobby to sell
his one room flat to him at less than the market value to secure
promotion. Mr. Bobby sold the flat to Mr. Ayush. Later on, Mr. Bobby
changed his mind and decided to sue Mr. Ayush. Examine the
validity of the contract as per the provisions of the Indian
Contract Act, 1872.
(ii) Mr. Sooraj promises Mr. Manoj to paint a family picture for
` 20,000 and assures to complete his assignment by 15 th March,
2023. Unfortunately, Mr. Sooraj died in a road accident on
1st March, 2023 and his assignment remains undone. Can

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Mr. Manoj bind the legal representative of Mr. Sooraj for the
promise made by Mr. Sooraj? Suppose Mr. Sooraj had promised to
deliver some photographs to Mr. Manoj on 15 th March, 2023
against a payment of ` 10,000 but he dies before that day. Will his
representative be bound to deliver the photographs in this
situation?
Decide as per the provisions of the Indian Contract Act, 1872.
8. Explain the term ‘Quasi Contracts’ and state their characteristics.
The Sale of Goods Act, 1930
9. Prakash reaches a sweet shop and asks for 1 Kg of ‘Burfi’ if the sweets
are fresh. Seller replies’ “Sir, my all sweets are fresh and of good quality.”
Prakash agrees to buy on the condition that first he tastes one piece of
‘Burfi’ to check the quality. The seller gives him one piece to taste.
Prakash, on finding the quality is good, ask the seller to pack. On
reaching the house, Prakash finds that ‘Burfi’ is stale not fresh while the
piece tasted was fresh. Now Prakash wants to avoid the contract and
return the ‘Burfi’ to the seller.
(a) State with reason whether Prakash can avoid the contract under
the Sale of Goods Act, 1930?
(b) Will your answer be different if Prakash does not taste the sweets?
10. Akansh purchased a Television set from Arvind, the owner of Gada
Electronics on the condition that first three days he check its quality and
if satisfied he will pay for that otherwise he will return the Television set.
On the second day, the Television set was spoiled due to an earthquake.
Arvind demands the price of a Television set from Akansh. Whether
Akansh is liable to pay the price under the Sale of Goods Act, 1930?
Who will ultimately bear the loss?
11. Mr. Arun contracted to sell his swift car to Mr. Nikhil. Both missed to
discuss the price of the said swift car. Later, Mr. Arun refused to sell his
swift car to Mr. Nikhil on the ground that the agreement was void, being
uncertain about the price. Does Mr. Nikhil have any right against
Mr. Arun under the Sale of Goods Act, 1930?

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12. Mr. Shankar sold 1000 Kgs wheat to Mr. Ganesh on credit of 3 months.
Wheat was to be delivered after 10 days of contract. After 5 days of
contract, a friend of Mr. Shankar secretly informed him that Mr. Ganesh
may default in payment. On the information of friend, Mr. Shankar
applied the right to lien and withheld the delivery. With referring to the
provisions of the Sale of Goods Act, 1930:
(i) State, whether Mr. Shankar was right in his decision?
(ii) What would be your answer if Mr. Ganesh became insolvent within
five days of contract?
The Indian Partnership Act, 1932
13. Moni and Tony were partners in the firm M/s MOTO & Company. They
admitted Sony as partner in the firm and he is actively engaged in day-
to-day activities of the firm. There is a tradition in the firm that all active
partners will get a monthly remuneration of ` 20,000 but no express
agreement was there. After admission of Sony in the firm, Moni and
Tony continued getting salary from the firm but no salary was given to
Sony from the firm. Sony claimed his remuneration but denied by
existing partners by saying that there was no express agreement for
that. Whether under the Indian Partnership Act, 1932, Sony can claim
remuneration from the firm?
14. Mr. Ram and Mr. Raheem are working as teachers in Ishwarchand
Vidhyasagar Higher Secondary School and also are very good friends.
They jointly purchased a flat which was given on rent to Mr. John. It was
decided between landlords and tenant that the rent would be ` 10,000
per month inclusive of electricity bill. It means electricity bill will be paid
by landlords. The landlords, by mistake, did not pay the electricity bill for
the month of March 2021. Due to this, the electricity department cut the
connection. Mr. John has to pay the electricity bill of ` 2800 and ` 200 as
a penalty to resume the electricity connection. Mr. John claimed ` 3000
from Mr. Ram but Mr. Ram replied that he is liable only for ` 1500.
Mr. John said that Mr. Ram and Mr. Raheem are partners therefore he
can claim the full amount from any of the partners. Explain, whether
under the provision of the Indian Partnership Act, 1932, Mr. Ram is liable
to pay whole amount of ` 3000 to Mr. John?

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15. X and Y were partners in a firm. The firm was dissolved on 12 th June,
2022 but no public notice was given. Thereafter, X purchased some
goods in the firm’s name from Z. Z was ignorant of the fact of
dissolution of firm. X became insolvent and Z filed a suit against Y for
recovery of his amount. State with reasons whether Y would be liable
under the provisions of the Indian Partnership Act, 1932?
16. A, B & C are partners of a partnership firm carrying on the business of
construction of apartments. B who himself was a wholesale dealer of
iron bars was entrusted with the work of selection of iron bars after
examining its quality. As a wholesaler, B is well aware of the market
conditions. Current market price of iron bar for construction is INR 350
per Kilogram. B already had 1000 kg of iron bars in stock which he had
purchased before price hike in the market for INR 200 per Kg. He
supplied iron bars to the firm without the firm realising the purchase
cost. Is B liable to pay the firm the extra money he made, or he doesn’t
have to inform the firm as it is his own business and he has not taken
any amount more than the current prevailing market price of INR 350?
Assume there is no contract between the partners regarding the above.
17. State the modes by which a partner may transfer his interest in the firm
in favour of another person under the Indian Partnership Act, 1932.
What are the rights of such a transferee?
The Limited Liability Partnership Act, 2008
18. A & B were friends. Now they have plans of setting up a supermarket in
their locality. They are confused as to whether to register as a traditional
partnership or as a Limited Liability Partnership. As an advisor,
enumerate the differences between the two forms of business
highlighting the compliances & other legal formalities.
The Companies Act, 2013
19. Mr. Dhruv was appointed as an employee of Sunmoon Timber Private
Limited on the condition that if he were to leave his employment, he will
not solicit customers of the company. After some time, he was fired from
company. He set up his own business under proprietorship and undercut
Sunmoon Timber Private Limited’s prices. On the legal advice from his
legal consultant and to refrain from the provisions of breach of contract,

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he formed a new company under the name Seven Stars Timbers Private
Limited. In this company, his wife and a friend of Mr. Dhruv were the
sole shareholders and directors. They took over Dhruv’s business and
continued it. Sunmoon Timber Private Limited filed a suit against Seven
Stars Timbers Private Limited for violation of contract. Seven Stars
Timbers Private Limited argued that the contract was entered into
between Mr. Dhruv and Sunmoon Timber Private Limited and as
company has separate legal entity, Seven Stars Timbers Private Limited
has not violated the terms of agreement. Explain with reasons, whether
separate legal entity between Mr. Dhruv and Seven Stars Timbers Private
Limited will be disregarded?
20. AK Private Limited has borrowed ` 36 crore from BK Finance Limited.
However, as per memorandum of AK Private Limited, the maximum
borrowing power of the company is ` 30 crore. Examine whether
AK Private Limited is liable to pay this debt? State the remedy, if any
available to BK Finance Limited.
21. Mike LLC incorporated in Singapore having an office in Pune, India.
Analyze whether Mike LLC would be called a foreign company as per the
provisions of the Companies Act, 2013? Also explain the meaning of
foreign company.
The Negotiable Instruments Act, 1881
22. Sachin bought 1000 Kg rice from Saurabh for ` 1,50,000 on three
months credit. For this purpose, Sachin issued a promissory note to
Saurabh on the same date payable after 3 months. On the date of
maturity, the promissory note was dishonoured. Saurabh filed suit for
the recovery of the amount plus fees of advocate paid by him for
defending the suit. Referring to the provisions of the Negotiable
Instruments Act, 1881, what amount could be recovered by Saurabh
from Sachin?
23. A purchased a watch from B. He issued a promissory note to B which was
payable on demand but no specific place for payment was mentioned on it.
On maturity, B did not present the promissory note for payment. As the
promissory note was not duly presented for payment, whether A would be
discharged from liability under the provisions of the Negotiable
Instruments Act, 1881?

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SUGGESTED ANSWERS/HINTS

1. Indian Judicial System is a branch which through the enforcement of

Law resolves dispute between citizens or between citizens and the
Government.
The functions of judiciary system of India are:
• Regulation of the interpretation of the Acts and Codes,
• Dispute Resolution,
• Promotion of fairness among the citizens of the land.
Indian Judicial System performs his functions through the hierarchy of
courts, the Supreme Court is at the top, followed by the High Courts,
District Courts and Metropolitan Courts. Decisions of a High Court are
binding in the respective state but are only persuasive in other states.
Decisions of the Supreme Court are binding on all High Courts under
Article 141 of the Indian Constitution. In fact, a Supreme Court decision
is the final word on the matter.
2. As per the rules of acceptance, the acceptance should be communicated
to offeror by offeree himself or by his authorized agent. Communication
of acceptance by third person cannot be concluded as valid acceptance.
In the instant case, Mr. Parth applied for a job as principal of a school
and one member of the school management committee privately
informed Mr. Parth that he was appointed. Later, the management of the
school appointed someone else as a principal.
On the basis of the above provisions and facts, communication of
appointment of Mr. Parth should be made by the school management
committee or by any authorised agent. Communication by third person
cannot be termed as communication of acceptance. Therefore, no valid
contract was formed between Mr. Parth and the school and Mr. Parth
cannot file a suit against the school for cancellation of his appointment.
3. According to section 133 of the Indian Contract Act, 1872, where there is
any variance in the terms of contract between the principal debtor and

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creditor without surety’s consent, it would discharge the surety in

respect of all transactions taking place subsequent to such variance.
In the instant case, the creditor has made a variance (i.e. change in
terms) without the consent of surety. Thus, surety is discharged as to the
transactions subsequent to the change.
Hence, Mohit is liable as surety for the loss suffered by the bank due to
misappropriation of cash by Sarthak during the first nine months but not
for misappropriations committed after the reduction in salary.
4. By analysing Section 39 of the Indian Contract Act, 1872, it is understood
that when a party to a contract has refused to perform or disabled
himself from performing his promise entirely, the following two rights
accrue to the aggrieved party (promisee):
(a) To terminate the contract
(b) To indicate by words or by conduct that he is interested in its
continuance.
In either of the two cases, the promisee would be able to claim damages
that he suffers.
In the given case,
(i) Yes, the hotel has the right to end the contract with Rahul, the DJ.
(ii) The hotel has the right to continue the contract with Rahul. But
once this right is exercised, it cannot subsequently rescind the
contract on this ground subsequently.
(iii) In both the cases, the hotel (promisee) is entitled to claim
damages that has been suffered as a result of breach.
5. As per Section 148 of the Indian Contract Act, 1872, bailment is the
delivery of goods by one person to another for some purpose, upon a
contract, that the goods shall, when the purpose is accomplished, be
returned or otherwise disposed of according to the directions of the
person delivering them.
For a bailment to exist, the bailor must give possession of the bailed
property and the bailee must accept it.

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(i) No. Mere custody of goods does not mean possession. In the
given case, since the keys of the car are with Vikas, Section 148, of
the Indian Contract Act, 1872 shall not be applicable.
(ii) Yes, the possession of the goods is transferred to the custom
authorities. Therefore, bailment exists, and section 148 is
applicable.
6. Section 25 of the Indian Contract Act, 1872 provides that an agreement
made without consideration is valid if it is expressed in writing and
registered under the law for the time being in force for the registration
of documents and is made on account of natural love and affection
between parties standing in a near relation to each other.
In the instant case, the transfer of house made by Mr. Sanjay Kothari on
account of natural love and affection between the parties standing in
near relation to each other is written but not registered. Hence, this
transfer is not enforceable, and his daughter cannot get the house as
gift under the Indian Contract Act, 1872.
7. (i) According to section 16 of the Indian Contract Act, 1872, a contract is
said to be induced by ‘undue influence’ where the relations subsisting
between the parties are such that one of the parties is in a position to
dominate the will of the other and he uses that position to obtain an
unfair advantage over the other.
When consent to an agreement is caused by undue influence, the
contract is voidable at the option of the party, whose consent was
so caused.
Hence, the contract between Mr. Ayush and Mr. Bobby is voidable
at the option of Mr. Bobby as it was induced by undue influence
by Mr. Ayush and therefore Mr. Bobby can sue Mr. Ayush.
(ii) The parties to a contract must either perform, or offer to perform,
their respective promises, unless such performance is dispensed
with or excused under the provisions of this Act, or of any other
law.
Promises bind the representatives of the promisors in case of the
death of such promisors before performance, unless a contrary

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intention appears from the contract. (Section 37 of the Indian

Contract Act, 1872).
As per the provisions of Section 40 of the Indian Contract Act,
1872, if it appears from the nature of the case that it was the
intention of the parties to any contract that any promise contained
in it should be performed by the promisor himself, such promise
must be performed by the promisor. In other cases, the promisor
or his representative may employ a competent person to perform
it.
In terms of the provisions of Section 40 stated above, in case
where Mr. Sooraj has to paint a family picture for Mr. Manoj, Mr.
Manoj cannot ask the legal representative of Mr. Sooraj to
complete the painting work on Mr. Sooraj’s death, since painting
involves the use of personal skill.
In terms of the provisions of Section 37 stated above, in case
where Mr. Sooraj had promised to deliver some photographs to
Mr. Manoj, the legal representatives of Mr. Sooraj shall be bound
to deliver the photographs in this situation.
8. Quasi Contracts: Under certain special circumstances, obligations
resembling those created by a contract are imposed by law although the
parties have never entered into a contract. Such obligations imposed by
law are referred to as ‘Quasi-contracts’. Such a contract resembles a
contract so far as result or effect is concerned but it has little or no
affinity with a contract in respect of mode of creation. These contracts
are based on the doctrine that a person shall not be allowed to enrich
himself unjustly at the expense of another. The salient features of a
quasi-contract are:
1. It does not arise from any agreement of the parties concerned but
is imposed by law.
2. Duty and not promise is the basis of such contract.
3. The right under it is always a right to money and generally though
not always to a liquidated sum of money.

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4. Such a right is available against specific person(s) and not against

the whole world.
5. A suit for its breach may be filed in the same way as in case of a
complete contract.
9. By virtue of provisions of Section 17 of the Sale of Goods Act, 1930, in
the case of a contract for sale by sample there is an implied condition
that the bulk shall correspond with the sample in quality and the buyer
shall have a reasonable opportunity of comparing the bulk with the
sample. According to Section 15, where there is a contract for the sale of
goods by description, there is an implied condition that the goods shall
correspond with the description. If the goods do not correspond with
implied condition, the buyer can avoid the contract and reject the goods
purchased.
(a) In the instant case, the sale of sweet is sale by sample and the
quality of bulk does not correspond with quality of sample. Hence,
Prakash can return the sweets and avoid the contract.
(b) In the other case, the sale of sweet is the case of sale by
description and the quality of goods does not correspond with
description made by seller. Hence, answer will be same. Prakash
can return the sweets and avoid the contract.
10. According to Section 24 of the Sale of Goods Act, 1930, "When the
goods are delivered to the buyer on approval or on sale or return or
other similar terms the property passes to the buyer:
(i) when he signifies his approval or acceptance to the seller,
(ii) when he does any other act adopting the transaction, and
(iii) if he does not signify his approval or acceptance to the seller but
retains goods beyond a reasonable time".
Further, as per Section 8, where there is an agreement to sell specific
goods, and subsequently the goods without any fault on the part of the
seller or buyer perish or become so damaged as no longer to answer to
their description in the agreement before the risk passes to the buyer,
the agreement is thereby avoided.

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According to the above provisions and fact, the property is not passed
to Akansh i.e. buyer as no condition of Section 24 is satisfied. Hence, risk
has not passed to buyer and the agreement is thereby avoided. Akansh
is not liable to pay the price. The loss finally should be borne by Seller,
Mr. Arvind.
11. As per the provisions of Section 2(10) of the Sale of Goods Act, 1930,
price is the consideration for sale of goods and therefore is a
requirement to make a contract of sale. Section 2(10) is to be read with
Section 9 of the Sale of Goods Act, 1930.
According to Section 9 of the Sale of Goods Act, 1930, the price in a
contract of sale may be fixed by the contract or may be left to be fixed
in a manner thereby agreed or may be determined by the course of
dealing between the parties.
Even though both the parties missed discussing the price of the car
while making the contract, it will be a valid contract, rather than being
uncertain and void; the buyer shall pay a reasonable price in this
situation.
In the given case, Mr. Arun and Mr. Nikhil have entered into a contract
for the sale of a swift car, but they did not fix the price of the same. Mr.
Arun refused to sell the car to Mr. Nikhil on this ground. Mr. Nikhil can
legally demand the car from Mr. Arun and Mr. Arun can recover a
reasonable price for the car from Mr. Nikhil.
12. According to Section 45(1) of the Sale of Goods Act, 1930 the seller of
goods is deemed to be an ‘Unpaid Seller’ when-
(a) The whole of the price has not been paid or tendered.
(b) A bill of exchange or other negotiable instrument was given as
payment, but the same has been dishonoured, unless this payment
was an absolute, and not a conditional payment.
Further, Section 47 provides about an unpaid seller’s right of lien.
Accordingly, an unpaid seller can retain the possession of the goods and
refusal to deliver them to the buyer until the price due in respect of
them is paid or tendered. This right can be exercised by him in the
following cases only:

12 JUNE 2024 EXAMINATION

REVISION TEST PAPER
BUSINESS LAWS

(a) where goods have been sold without any stipulation of credit; (i.e.,
on cash sale)
(b) where goods have been sold on credit, but the term of credit has
expired; or
(c) where the buyer becomes insolvent.
In the instant case, Mr. Ganesh purchased 1000 Kg wheat from Mr.
Shankar on 3 month’s credit which was to be delivered after 10 days of
contract. But, after 5 days of contract, one friend of Mr. Shankar secretly
informed him that Mr. Ganesh may default in payment. On the belief of
friend, Mr. Shankar applied the right to lien and withheld the delivery.
(i) On the basis of above provisions and facts, it can be said that even
Mr. Ganesh was an unpaid seller until the term of credit i.e. has
expired, Mr. Shankar had to perform his promise of supplying 1000
Kg of wheat.
(ii) In case Mr. Ganesh became insolvent before the delivery of wheat,
Mr. Shankar had the right to apply the lien and he could withhold
the delivery.
13. By virtue of provisions of Section 13(a) of the Indian Partnership Act,
1932 a partner is not entitled to receive remuneration for taking part in
the conduct of the business. But this rule can always be varied by an
express agreement, or by a course of dealings, in which event the
partner will be entitled to remuneration. Thus, a partner can claim
remuneration even in the absence of a contract, when such
remuneration is payable under the continued usage of the firm. In other
words, where it is customary to pay remuneration to a partner for
conducting the business of the firm, he can claim it even in the absence
of a contract for the payment of the same.
In the given problem, existing partners are getting regularly a monthly
remuneration from firm customarily being working partners of the firm.
As Sony also admitted as working partner of the firm, he is entitled to
get remuneration like other partners.
14. According to Section 4 of the Indian Partnership Act, 1932, "Partnership"
is the relation between persons who have agreed to share the profits of

13 JUNE 2024 EXAMINATION

REVISION TEST PAPER
FOUNDATION COURSE

a business carried on by all or any of them acting for all. Therefore, for
determining the existence of partnership, it must be proved:
1. There must be an agreement between all the persons concerned;
2. The agreement must be to carry on some business;
3. The agreement must be to share the profits of a business and
4. The business was carried on by all or any of them acting for all.
On the basis of above provisions and facts provided in the question,
Mr. Ram and Mr. Raheem cannot be said under partnership as they are
teachers in a school and just purchased a flat jointly. By merely giving
the flat on rent, they are not doing business. They are just earning the
income from the property under their co-ownership. Hence, there is no
partnership between them. Therefore, Mr. Ram is liable to pay his share
only i.e. ` 1500. Mr. John has to claim the rest of ` 1500 from Mr.
Raheem.
15. By virtue of provisions of Section 45 of the Indian Partnership Act, 1932,
notwithstanding the dissolution of a firm, the partners continue to be
liable as such to third parties for any act done by any of them which
would have been an act of the firm, if done before the dissolution, until
public notice is given of the dissolution.
In the instant case, X and Y were partners in a firm which was dissolved
but no public notice was given. After dissolution, X purchased some
goods in the firm’s name from Z who was ignorant of the fact of
dissolution of firm. X became insolvent and Z filed a suit against Y for
recovery of his amount.
Following the provisions of Section 45, X and Y are continuing liable
against third party even after dissolution of firm until public notice is
given. As in the given problem, X became insolvent, therefore, Y will be
liable to Z.
16. According to section 16 of the Indian Partnership Act, 1932, subject to
contract between partners –
(a) if a partner derives any profit for himself from any transaction of
the firm, or from the use of the property or business connection of

14 JUNE 2024 EXAMINATION

REVISION TEST PAPER
BUSINESS LAWS

the firm or the firm name, he shall account for that profit and pay
it to the firm;
(b) if a partner carries on any business of the same nature as and
competing with that of the firm, he shall account for and pay to
the firm all profits made by him in that business.
In the given scenario, B had sold iron bar to the firm at the current
prevailing market rate of 350 per Kg though he had stock with him
which he bought for INR 200 per Kg. Hence, he made an extra profit of
INR 150/Kg. This arises purely out of transactions with the firm. Hence, B
is accountable to the firm for the extra profit earned thereby.
17. Section 29 of the Indian Partnership Act, 1932 provides that a share in a
partnership is transferable like any other property, but as the partnership
relationship is based on mutual confidence, the assignee of a partner’s
interest by sale, mortgage or otherwise cannot enjoy the same rights
and privileges as the original partner.
The rights of such a transferee are as follows:
(1) During the continuance of partnership, such transferee is not
entitled
(a) to interfere with the conduct of the business,
(b) to require accounts, or
(c) to inspect books of the firm.
He is only entitled to receive the share of the profits of the
transferring partner, and he is bound to accept the profits as
agreed to by the partners, i.e., he cannot challenge the accounts.
(2) On the dissolution of the firm or on the retirement of the
transferring partner, the transferee will be entitled, against the
remaining partners:
(a) to receive the share of the assets of the firm to which the
transferring partner was entitled, and
(b) for the purpose of ascertaining the share,
he is entitled to an account as from the date of the dissolution.

15 JUNE 2024 EXAMINATION

REVISION TEST PAPER
FOUNDATION COURSE

By virtue of Section 31, no person can be introduced as a partner in a

firm without the consent of all the partners. A partner cannot by
transferring his own interest, make anybody else a partner in his place,
unless the other partners agree to accept that person as a partner. At
the same time, a partner is not debarred from transferring his interest. A
partner’s interest in the partnership can be regarded as an existing
interest and tangible property which can be assigned.
18. Comparison between a Limited Liability Partnership (LLP) and
partnership can be analysed on the below tabulated parameters.

Basis LLP Partnership firm

1. Regulating Act The Limited Liability The Indian Partnership
Partnership Act, Act, 1932.
2008.
2. Body corporate It is a body It is not a body
corporate. corporate.
3. Separate legal It is a legal entity It is a group of
entity separate from its persons with no
members. separate legal entity.
4. Creation It is created by a It is created by an
legal process called agreement between
registration under the partners.
the LLP Act, 2008.
5. Registration Registration is Registration is
mandatory. LLP can voluntary. Only the
sue and be sued in registered partnership
its own name. firm can sue the third
parties.
6. Perpetual The death, insanity, The death, insanity,
succession retirement or retirement or
insolvency of the insolvency of the
partner(s) does not partner(s) may affect
affect its existence its existence. It has no
of LLP. Members perpetual succession.
may join or leave

16 JUNE 2024 EXAMINATION

REVISION TEST PAPER
BUSINESS LAWS

but its existence

continues forever.
7. Name Name of the LLP to No guidelines. The
contain the word partners can have any
limited liability name as per their
partners (LLP) as choice.
suffix.
8. Liability Liability of each Liability of each
partner limited to partner is unlimited. It
the extent to can be extended upto
agreed contribution the personal assets of
except in case of the partners.
willful fraud.
9. Mutual agency Each partner can Each partner can bind
bind the LLP by his the firm as well as
own acts but not other partners by his
the other partners. own acts.
10. Designated At least two There is no provision
partners designated partners for such partners
and atleast one of under the Partnership
them shall be Act, 1932.
resident in India.
11. Common seal It may have its There is no such
common seal as its concept in partnership
official signatures.
12. Legal Only designated All partners are
compliances partners are responsible for all the
responsible for all compliances and
the compliances penalties under the
and penalties under Act.
this Act.
13. Annual filing LLP is required to Partnership firm is not
of documents file: required to file any
(i) Annual annual document with

17 JUNE 2024 EXAMINATION

REVISION TEST PAPER
FOUNDATION COURSE

statement of the registrar of firms.

accounts
(ii) Statement of
solvency
(iii) Annual return
with the
registration of LLP
every year.
14. Foreign Foreign nationals Foreign nationals
partnership can become a cannot become a
partner in a LLP. partner in a
partnership firm.
17. Minor as Minor cannot be Minor can be
partner admitted to the admitted to the
benefits of LLP. benefits of the
partnership with the
prior consent of the
existing partners.

19. It was decided by the court in the case of Gilford Motor Co. Vs. Horne, if
the company is formed simply as a mere device to evade legal
obligations, though this is only in limited and discrete circumstances,
courts can pierce the corporate veil. In other words, if the company is
mere sham or cloak, the separate legal entity can be disregarded.
On considering the decision taken in Gilford Motor Co. Vs. Horne and
facts of the problem given, it is very much clear that Seven Stars Timbers
Private Limited was formed just to evade legal obligations of the
agreement between Mr. Dhruv and Sunmoon Timber Private Limited.
Hence, Seven Stars Timbers Private Limited is just a sham or cloak and
the separate legal entity between Mr. Dhruv and Seven Stars Timbers
Private Limited should be disregarded.
20. This case is governed by the ‘Doctrine of Ultra Vires’. According to this
doctrine, any act done, or a contract made by the company which travels
beyond the powers of the company conferred upon it by its
Memorandum of Association is wholly void and inoperative in law and is

18 JUNE 2024 EXAMINATION

REVISION TEST PAPER
BUSINESS LAWS

therefore not binding on the company. This is because the

Memorandum of Association of the company is, in fact, its charter; it
defines its constitution and the scope of the powers of the company.
Hence, a company cannot depart from the provisions contained in the
memorandum however imperative may be the necessity for the
departure. Hence, any agreement ultra vires the company shall be null
and void.
(i) Whether AK Private Limited is liable to pay the debt?
As per the facts given, AK Private Limited borrowed ` 36 crore
from BK Finance Limited which is beyond its borrowing power of
` 30 crore.
Hence, contract for borrowing of ` 36 crore, being ultra vires the
Memorandum of Association and thereby is void. AK Private
Limited is not, therefore, liable to pay the debt.
(ii) Remedy available to BK Finance Limited:
In light of the legal position explained above, BK Finance Limited
cannot enforce the said transaction and thus has no remedy
against the company for recovery of the money lent. BK Finance
limited may take action against the directors of AK Private Limited
as it is the personal liability of its directors to restore the borrowed
funds. Besides, BK Finance Limited may take recourse to the
remedy by means of ‘Injunction’, if feasible.
21. Foreign Company [Section 2(42) of the Companies Act, 2013]: It
means any company or body corporate incorporated outside India
which—
(i) has a place of business in India whether by itself or through an
agent, physically or through electronic mode; and
(ii) conducts any business activity in India in any other manner.
As Mike LLC is incorporated in Singapore and having a place of business
in Pune, India, it is a foreign Company.
22. According to section 117 of the Negotiable Instruments Act, 1881, the
compensation payable in case of dishonour of promissory note, bill of

19 JUNE 2024 EXAMINATION

REVISION TEST PAPER
FOUNDATION COURSE

exchange or cheque, by any party liable to the holder or any endorsee,

shall be determined by the following rules:
(a) the holder is entitled to the amount due upon the instrument,
together with the expenses properly incurred in presenting, noting
and protesting it;
(b) when the person charged resides at a place different from that at
which the instrument was payable, the holder is entitled to receive
such sum at the current rate of exchange between the two places;
(c) an endorser who, being liable, has paid the amount due on the
same is entitled to the amount so paid with interest at 18% per
annum from the date of payment until tender or realisation
thereof, together with all expenses caused by the dishonour and
payment;
On the basis of the above provisions of law and facts of the case,
Saurabh has right to claim price of rice plus fees of advocate plus
interest @18% p.a. from the date of payment until tender or realisation
thereof.
23. Section 64 of the Negotiable Instruments Act, 1881 provides, Promissory
notes, bill of exchange and cheques must be presented for payment to
the maker, acceptor or drawee thereof respectively, by or on behalf of
the holder as hereinafter provided. In default of such presentment, the
other parties thereto are not liable thereon to such holder. Provided that
where a promissory note is payable on demand and is not payable at a
specified place, no presentment is necessary in order to charge the
maker thereof.
On the basis of the above law provisions and facts of the case, although
non-presentment of promissory note for payment results in discharge of
maker from liability but the given case is covered under the exception to
section 64. Hence, A would not be discharged from liability even if the
non-presentment by B as the promissory note was payable on demand
and no specific place for payment was mentioned.

20 JUNE 2024 EXAMINATION

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PAPER – 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING

SECTION A: BUSINESS LAWS

PART – I: RELEVANT AMENDMENTS APPLICABLE FOR MAY 2018 EXAMINATION

Applicability of Relevant Amendments/ Circulars/ Notifications/ Regulations etc.

Following is the relevant amendment:

PART II: QUESTIONS AND ANSWERS

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

SUGGESTED ANSWERS / HINTS

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

Effects on validity: According to section 19 of the Act, when consent to an

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

Right of stoppage of goods in transit

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

governing male member or

© The Institute of Chartered Accountants of India

Share in the In a partnership each partner In a HUF, no coparceners has

© The Institute of Chartered Accountants of India

3. Internal governance The internal governance The internal governance

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

PAPER – 2: BUSINESS LAWS AND BUSINESS CORRESPONDENCE AND REPORTING

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

(2) Religion teaches us to respect all ______________________ rights of a human

© The Institute of Chartered Accountants of India

(c) Nearly 11 million

© The Institute of Chartered Accountants of India

(b) Thumb movement

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

(2) Fraught means in abundance. Correct answer is d) Full of

© The Institute of Chartered Accountants of India

Chapter 5 Note Making

© The Institute of Chartered Accountants of India

(III) Who wants to exit?

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

13th Feb, 2018

Sub: Complaint against food quality

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

Regret the inconvenience caused.

Ms. Rekha Sanghvi,

Joining date: 22nd Feb, 2018

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

Ÿ Completed compulsory 250 hrs. of Computer Training as per ICAI curriculum

© The Institute of Chartered Accountants of India

(2) Action Taken Report (ATR)

© The Institute of Chartered Accountants of India

SECTION A: BUSINESS LAWS

© The Institute of Chartered Accountants of India

PART II: QUESTIONS AND ANSWERS

The Indian Contract Act, 1872

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

Exceptions to this rule:

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India

© The Institute of Chartered Accountants of India