Test 1 CA Foundation - Business Laws [30 Marks]
Test Paper 1
(Topic Covering – The Indian Contract Act, 1872 )
(Unit 1 – Nature of Contract & Unit 2 - Consideration)
Question 1 is Compulsory
Answer Any 2 questions from the remaining 3 questions
1)
a) Mr. Anil makes a proposal to Mr. Sunil by post to sell his house for ` 20 lakhs and posted the
letter on 8th June 2020 and the letter reaches to Mr. Sunil on 10th June 2020. He reads the
letter on 11th June 2020.
Mr. Sunil sends his letter of acceptance on 14th June 2020 and the letter reaches Mr. Anil on
18th June 2020. On 15th June Mr. Sunil changed his mind and sends a telegram withdrawing
his acceptance. Telegram reaches to Mr. Anil on 17th June 2020.
Examine with reference to the Indian Contract Act, 1872:
(i) On which date, the offer made by Mr. Anil will complete?
(ii) Discuss the validity of acceptance.
(iii) What would be validity of acceptance if letter of revocation and letter of acceptance
reached together? [5 marks]
b) Mr. Ravi sold 20 acres of his agricultural land to Mr. Pavan on 25th September 2018 for ` 25
Lakhs. The Property papers mentioned a condition, amongst other details, that whosoever
purchases the land is free to use 15 acres as per his choice but the remaining 5 acre has to be
allowed to be used by Mr. Shiv, son of the seller for carrying out farming or other activity of
his choice. On 12th October, 2018, Mr. Ravi died leaving behind his son and life. On 15th
October, 2018 purchaser started construction of an auditorium on the whole 20 acres of land
and denied any land to the son.
Now Mr. Shiv wants to file a case against the purchaser and get a suitable redressed. Discuss
the above in light of provisions of Indian Contract Act, 1872 and decide upon Mr. Shiv's plan of
action? [5 marks]
2)
a) Rohan started “self service” system in his shop. Dev entered the shop, took a basket and
after taking articles of his choice into the basket reached the cashier for payments. The
cashier refuses to accept the price. Can Rohan be compelled to sell the said articles to Dev?
Decide as per the provisions of the Indian Contract Act, 1872.
[ 4 marks]
b) What are the circumstances under which an offer gets revoked or lapses? [ 6 marks]
3)
a) Good girl shop company advertised that it would give a reward of Rs. 10000 who developed
skin disease after using Good girl soap of the company for a certain period according to the
printed direction. Miss Rakhi purchased the advertised Good girl soap and developed skin
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Test 1 CA Foundation - Business Laws [30 Marks]
disease in spite of using the Soap according to the printed instructions. she claimed reward of
Rs. 10000 The company refuse the reward on the ground that offer was not made to her and
that in any case she had not communicated her acceptance of the offer.
Decide whether Mishra ki can claim the reward or not refer the relevant case law if any
[5 marks]
b) Comment on ‘To form a valid contract, consideration must be adequate’’.
[2 marks]
c) Define an offer. Explain the essentials of a valid offer. How an offer is different from an
invitation tooffer? [3 marks]
4)
a) Examine what is the legal position, as to the following:
(i) M offered to sell his land to N for ` 28,000/-. N replied purporting to accept the offer and
enclosed a cheque for ` 8,000/-. He also promised to pay the balance of` 20,000/- in
monthly installments of ` 5,000/- each.
(ii) A offered to sell his house to B for ` 10000/-. B replied that he can accept the house for
only ` 8,000/-. A rejected B’s counter offer to buy the house for ` 8,000/-. B later changed
his mind and is now willing to buy the house for ` 10,000/-. [4 marks]
b) No consideration, no contract” Comment.
[4 marks]
c) 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) 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 marks]
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