MSM1 Sem 2 (2020-2021)

Legal Aspects of Business & Taxation

A] MCQs

1) Sports form a part of Entry ________ of the State List, Seventh Schedule of
Constitution of India.

a) 34
b) 32
c) 33
d) 35

2) Rule of Law means-

a) All persons are equal in the eyes of law

b) Treating all unequally as equals
c) Working according to law
d) Distributing state largesse to everyone in equal proportion

3) The Fundamental Duties are ____________ by the Court.

a) Not enforceable
b) Enforceable
c) Recommended
d) Declared

4) Every promise and every set of promises forming the consideration for each other
is

a) A Proposal
b) An Agreement
c) An Offer
d) Consent

5) The person to whom proposal is made is called

a) Promisor
b) Promisee
c) Proposer
d) Agent

6) An agreement which is enforceable by law at the option of one or more of the

parties there to but not at the option of other or others is
a) A void contract
b) Voidable contract
c) A valid contract
d) Invalid contract

7) The offeree introduces a fresh term in acceptance is

a) Valid Acceptance
b) Counter offer
c) A query
d) Offer

8) Coercion, Fraud and misrepresentation makes contract

a) Voidable on the option of the party whose consent so caused

b) Void at the option of the party who has committed so
c) Valid for both sides
d) Unenforceable

9) The following case law refers to intention to create legal relations:

a) Balfour v/s Balfour

b) Lalman Shukla v/s Gauri Dutt
c) Harvey v/s Facey
d) Ramsgate v/s Victoria Hotel Co.

10) A Contingent Contract to do or not to do anything on the happening of an

uncertain future event

a) is never enforceable
b) is enforceable since the time of making it
c) becomes enforceable only on the happening of that event
d) is partially enforceable

11) The Webpage is

a) Proposal
b) Advertisement
c) Invitation to offer
d) Acceptance

12) The case law of Lalman Shukla v/s Gauri Dutt refers to:

a) Communication of offer to the offeree

 b) Intention to create legal relations
c) Lapse of time
d) Statement of price

13) Boarding of a BEST Bus means

a) Express contract
b) Implied contract
c) Void contract
d) Voidable agreement

14) When the proposer specifies the mode in which acceptance is to be made:

a) Acceptance is valid only if in that mode

b) Offeree can accept in any mode
c) The proposer may accept even in a different mode
d) Proposer cannot insist on the mode of acceptance

15) The case law Brogden v/s Metropolitan Railways Co. related to:

a) Communication of offer
b) Lapse of time
c) Communication of acceptance
d) Legality of agreement

16) Consideration to be valid must be of

a) Illusory value
b) Market value
c) Reasonable value
d) No value

17) A father promising his daughter a scooter if she passes the degree exams with
distinction is:

a) Valid provided it in writing and registered

b) Valid provided it is in the interest of the daughter
c) Enforceable
d) Unenforceable

18) A minor borrows money representing himself as a major from a money lender.
The money lender:

a) Can sue for fraud

b) Cannot recover the money
 c) Can recover the money on the minor attaining the age of majority
d) Guardian is liable

19) A Minor's agreement is void. This was held in the case of

a) Mohiri Bibee Vs.Dharmodas Ghosh

b) Nihal Chand Vs. Jan Mohamad Khan
c) Chinnaiya Vs. Ramaiya
d) Lalman Shukla Vs Gauri Dutt

20) X owes Rs. 10,000 to Y under a contract it is agreed between X, Y & Z that Y
shall henceforth accept Z as his Debtor instead of X for the same amount. Old debt
of X is discharged, and a new debt from Z to Y is contracted. This is:
a) Alteration of contract
b) Rescission of contract
c) Novation of contract
d) Waiver of contract

21) The basis of 'quasi contractual' relation is the:

a) Existence of a valid contract between the parties

b) Prevention of unjust enrichment at the expense of others

c) Existence of a voidable contract between the parties

d) To make profit out of situation

22) An intoxicated person is:

a) Of sound mind
b) Of unsound mind
c) Capable of contracting
d) Partially eligible to contract

23) A minor is a person below:

a) 14 years
b) 16 years
c) 18 years
d) 21 years

24) Which of the following acts does not amount to fraud?

a) Knowingly making a false statement

 b) Promise made without intending to perform
c) Active concealment of facts
d) Innocent false statement

25) Moral pressure is exercised in case of:

a) Coercion
b) Undue influence
c) Fraud
d) Misrepresentation

26) Discharge of a contract means

a) Termination of a contract
b) Postponing the contract
c) Stalling of contract d) Continuing the contract

27) Which is not included in the discharge of contract?

a) Novation
b) Remission
c) Waiver
d) Anticipatory breach

28) Doctrine of supervening impossibility is also called as:

a) Novation
b) Frustration
c) Remission
d) Waiver

29) "Indemnity" means

a) Security from damage or loss

b) A mere assurance
c) An act for protection
d) A false assurance

30) In contract of guarantee the person who gives guarantee is called

a) Principal Debtor
b) Surety
c) Creditor
d) Stranger
31) The term Bailment means

a) A delivery of a thing entrusted for some special purpose or object upon

a contract

b) Delivery of goods free of cost

c) Transfer of ownership
d) Releasing the person

32) The bailment of goods as security for payment of debt or performance of a

promise is called

a) Special Bailment
b) Pledge
c) Mortgage
d) Guarantee

33) A person employed to do any act for another or to represent another in dealings
with third person is called

a) Servant
b) Labour
c) Agent
d) Middleman

34) Surety enjoys the right of ________against the principal debtor:

a) Subrogation
b) Ownership
c) Incentive
d) Reward

35) Wagering agreement is also called as:

a) Betting
b) Auction
c) Tender
d) Marketing

36) According to Sale of Goods Act, 1930, 'Seller' means a person

a) Who only agrees to sell goods

b) Who only sells goods
c) Who sells or agrees to sell goods
 d) Who transfer the possession of goods

37) The expression “Property in goods” means _______of goods.

a) Ownership
b) Possession
c) Sale
d) Detail

38) _________ is the right to retain possession of the goods until full price is paid.

a) Stoppage in transit
b) Lien
c) Resale
d) Discarding

39) Condition is a stipulation that is:

a) Primary
b) Secondary
c) Collateral
d) irrelevant

40) Doctrine of Caveat Emptor places the burden on the:

a) Buyer
b) Seller
c) Government
d) Third party

41) An unpaid seller has rights against:

a) Goods only
b) Buyer only
c) Carrier only
d) Goods and buyer

42) The undertaking contained in a promissory note, to pay a certain sum of money is

a) Conditional
b) Unconditional
c) Uncertain
d) Optional

43) A cheque is a bill of exchange drawn upon ___________

 a) A Specified Banker
b) Any Person
c) Any Associate
d) Any company

44) For a dishonoured cheque, notice shall be given within ____________ of the
receipt of information from the bank.

a) 15 days
b) 30 days
c) 45 days
d) 60 days

45) A negotiable instrument has to be in:

a) Writing
b) Oral
c) Writing or oral
d) Printed

46) Maturity of an instrument is:

a) Date on which the instrument is created

b) Date on which the instrument is payable
c) Date on which the instrument signed
d) Any date

47) For what term of imprisonment an offender under section 138 of the Negotiable
Instrument Act can be punished?

a) One Year
b) Three Years
c) Two Years
d) Five Years

48) Company is _____________________

a) An artificial Legal Person

b) Citizen
c) A natural person
d) Illusory Person

49) A company has perpetual succession, means

 a) Company exists forever
b) Company exists as long as the promoters
live c) Company exists so long as it is not
wound-up d) Company exists for unspecified
period

50) Which statement is not applicable to Public Company

a) Minimum 7 person
b) Maximum members unlimited
c) Does not require registration
d) Can issue prospectus

51) ________ are the persons who forms the company

a) Directors
b) Promoters
c) Professionals
d) Managers

52) Memorandum of Association is compared to

a) History
b) Preamble
c) Constitution
d) Register

53) Promoters have ____________relations with the company.

a) Social
b) Mere Contractual
c) Fiduciary
d) Economic

54) Which of the following does not fall within the AOA

a) Meeting
b) Transfer & Transmission
c) Call on Shares
d) Name Clause

55) In case of a conflict between MOA & AOA

a) AOA will prevail

 b) MOA will prevail
c) Directors shall decide
d) Debenture holder shall decide

56) A Private Company

a) Can always issue Prospectus

b) Can once issue Prospectus
c) Is prohibited from issuing prospectus
d) Sometimes issue Prospectus

57) Role of doctrine of ultra vires is

a) To fight virus of ultras

b) To protect indoor management
c) To protect directors for exercising their authority
d) To confine corporate action within fixed limit as per object

clause

58) Statutory meeting is not compulsory for

a) Public Company
b) Private Company
c) Public Limited Guarantee
d) Government Company

59) A Special Resolution requires majority of

a) 100%
b) 85%
c) 75%
d) 51%

60) The gap between 2 AGM cannot exceed

a) 12 months
b) 15 months
c) 24 months
d) 18 months

61) A member of a company means

a) Creditor
b) Employees
 c) A Subscriber to MOA
d) Staffs

62) Company is an independent legal entity as decided in the case of

a) Galloway v/s Galloway

b) Solomon v/s Solomon & Company
c) Balfour v/s Balfour
d) Royal British Bank v/s Turquand

63) Private Placement can be made to maximum

a) 50 persons
b) 1000 persons
c) 200 persons
d) Unlimited persons

64) Which one is false regarding Directors?

a) Agents of a company
b) Fiduciaries of a company
c) Servants of a company under a contract of employment with the
company d) Always Owner of a company

65) When the company assumes an enemy character

a) The government of the country of the place of incorporation

is liable b) The corporate veil will be pierced
c) Nothing can be done as the company is registered
d) Company never assumes enemy character

66) The doctrine of constructive notice can be invoked by

a) The Company Law Board

b) The Central Government
c) The Company
d) Shareholders

67) Reliance Industries Ltd. is a

a) Government Company
b) Public Limited Company
c) Private Limited Company
d) Company Limited by Guarantee
68) Which statement is not correct as regards the object clause:

a) Contains the Main Object

b) Contain incidental Object
c) Other objects
d) Only profit of the company

69) Which of the following does not fall within the Articles of Association

a) Borrowing powers
b) Meeting
c) Transfer & Transmission of shares
d) Object Clause

70) A person who acquires shares on the death of shareholder, has acquired shares
by:
a) Transfer
b) Transmission
c) Allotment
d) Estoppel

71) Where one company controls the composition of the directors of another
company is called a ________

a) Holding company
b) Dormant company
c) One person company
d) Associate company

72) Private Placement refers to

a) Only shares
b) Securities
c) Only Debentures
d) Only Preference Shares

73) Who is not liable for misstatement in the prospectus?

a) Directors
b) Experts
c) Promoter of the Issue
d) Employees
74) For alteration of the Object Clause:

a) Requires only special resolution

b) Requires only ordinary resolution
c) Requires special resolution and approval of Central Government
d) Requires approval of Company Law Tribunal

75) Articles of Association Deals with:

a) Aims and objectives of a company

b) Regulation regarding the administration of the company
c) Where the Registered office of the company to be situated
d) Name of the Company

76) The definition of Securities includes:

a) Shares only
b) Debentures only
c) Share, Debentures & Stocks
d) Stocks only

77) Prospectus can be issued by

a) Public Company
b) Private Company
c) One person Company
d) Partnership Firm

78) For Miss-statement in the prospectus remedy available is/are:

a) Civil liability only

b) Criminal liability only
c) Civil & Criminal liabilities
d) Just warning

79) A Director absent himself from ____ consecutive meetings of the Board
without valid reason, can be removed

a) 2
b) 3
c) 4
d) 8

80) A person cannot hold office of a director simultaneously in more than_____

 a) 20 companies
b) 10 companies
c) 2 companies
d) 7 companies

81) Additional directors holds office till:

a) Next AGM
b) As per wishes of Board of Directors
c) 2 years
d) As long as he wants

82) Number of Independent Director for a listed Company

a) 1
b) 2
c) At least 1/3rd the total number of directors
d) 3

83) Resident director is required to be in India for:

a) At least for 182 days in the previous calendar year

b) Permanently
c) At least for 182 days in his lifetime
d) At least for 240 days in the previous calendar year

84) Which company should have a director for small shareholders?

a) Private
b) Public
c) Listed
d) One Person Company

85) KMP full form is________

a) Key Man Power

b) Key Managerial Personnel
c) Know Managerial Personnel
d) Knowledge Management Personnel

86) A listed company should have at least ____ woman director

a) 10
b) 1
 c) 5
d) 2

87) The Firm has ___________

a) Partial legal existence

b) Perpetual existence
c) Legal existence
d) No legal existence apart from its partners

88) Registration of partnership in the state of Maharashtra is

a) Compulsory
b) Voluntary
c) Optional
d) Not Applicable

89) No public notice is to be given in case of

a) Minor attaining majority

b) Retirement of a partner
c) Death of a partner
d) Admission of a partner

90) New partner can be admitted in the firm

a) With the consent of existing partners

b) Without the consent of existing partners
c) With the consent of senior partner
d) With the consent of some partners

91) Where a partner has become unsound mind the court may

a) Dissolve the firm on petition of any partner

b) Not dissolve the firm
c) Order the firm to continue the business
d) Not interfere

92) Limited Liability Partnership is a

a) Body Corporate
b) Firm
c) Non-profit organisation
d) Unlimited Liability Company
93) Liability of partners in LLP is

a) Joint
b) Several
c) Unlimited
d) Limited to their agreed contribution in LLP

94) Minimum number of members required to start LLP

a) Two
b) Four
c) Seven
d) Five

95) Every LLP has to have at least

a) Two designated partners

b) One designated partner
c) Four designated partners
d) Three designated partners

96) Whistle-blowing means

a) Exposing illegal act or wrongdoing on only Government

Department b) Exposing illegal act or wrongdoing of public or
private organisations c) Alerting the wrongdoer
d) Conniving with wrongdoer

97) LLP is governed by:

a) Indian Partnership Act, 1932

b) Indian Contract Act, 1872
c) Companies Act, 1956
d) Limited Liability Partnership, 2008

98) Registration of LLP is granted by:

a) Collector of the district

b) Registrar of cooperative Societies
c) Registrar of Companies
d) Registrar of Firms
99) The consumer has the right to get compensation against unfair trade practices
under right to

a) Right to seek redressal

b) Right to choose
c) Right to safety
d) Right to security

100) Unfair Trade Practice is:

a) Giving Gift
b) Buy one take one free
c) Putting tag of 50% discount when the original price is not there
d) Special offer

101) What is the maximum time limit for filing of a complaint before the consumer
disputes redressal forum from the date when the cause of action arises?

a) One Year
b) Two Years
c) Three Years
d) Five Years

102) Which reason is not a valid reason for enacting the consumer protection act:

a) Existence of multiple laws

b) Problems on account of collect bargaining
c) To decrease the number of cases being filed in the regular courts
d) Hurdles in litigation

103) Appropriate laboratory means:

a) Lab/organization recognised by the Central Government

b) Lab/organization recognised by a Private Company
c) Private Testing Centre
d) An International Agency

104) Predatory price is selling _______the cost price.

a) Below
b) Above
c) Equal
d) Little over
105) Merger, acquisition and amalgamation is called _______

a) Combination
b) Division
c) Diversification
d) Specialisation

106) _________ Agreements are entered by a person in identical business.

a) Vertical
b) Horizontal
c) Voidable
d) Void

107) _________Agreements are entered by entities in different lines of production.

a) Contingent
b) Vertical
c) Horizontal
d) Lease

108) Competition Commission of India is set up:

a) By Local Authority
b) By State Government
c) By Central Government
d) By affected parties

109) Which does not amount to abuse of dominant position:

a) Grant free access to market

b) Imposes unfair or discriminatory condition in purchase or sale of goods
or services
c) Affects the price in purchase or sale of goods or services
d) Restricts production of goods or serves or markets

110) Invention means:

a) New product
b) New process
c) New product or process having inventive step and capable industrial
application
 d) New technique

111) A person has designed a new type of scissors for cutting clothes. Under which
act can he seek protection of his invention?

a) The Patents Act

b) The Copyrights Act
c) Consumer Protection Act
d) Arms Control Act

112) Which of the following statements is true?

a) Trademark registrations can be renewed for an unlimited number of

ten-year periods

b) Trademark law is intended to protect the owner’s original work

c) To qualify for federal protection, a mark must be distinctive and have a
"secondary meaning."
d) Surnames alone can be trademarked

113) A company wishes to ensure that no one else can use their logo.

a) Copyrights
b) Trade Mark
c) Patent
d) Industrial Design

114) A singer wishes to assign the rights to reproduce a video she has made of her
concert.

a) Patent
b) Trade Mark
c) Geographical Design
d) Copyrights

115) The term of copyright for an author lasts how long?

a) The life of the author plus 60 years

b) The life of the author
c) 95 years
d) 75 years

116) The owner of a patent can grant licenses:

 a) To registered companies only
b) To individuals only
c) To anyone
d) To business entity only

117) Intellectual Property Rights (IPR) protect the use of information and ideas that
are of

a) Ethical value
b) Moral value
c) Social value
d) Commercial value

118) The term “WIPO” stands for:

a) World Investment policy organization

b) World intellectual property organization
c) Wildlife Investigation and Policing organization
d) World institute for Prevention of organized crime

119) The rights of Patentee are

a) Sell or distribute
b) License
c) Assign to others
d) All the above

120) Trademark law protects…

a) Words, symbols or devices that differentiate goods or services from

one another

b) Only brand names

c) Names of specific people and places
d) Inventions that feature some sort of utility function

121) Year in which income is taxable is known as ___________ and year in

which income is earned is known as_________
 a) Previous year, Assessment year
b) Assessment year, Previous year
c) Assessment year, Assessment year
d) Previous year, Previous year

122) To qualify as a resident Indian, an individual should have spent _______ or

more of a financial year in India.

a) 82 days
b) 182 days
c) 60 days
d) 365 days

123) Under Income Tax Act the incidence of taxation depends on __________

a) Citizenship of the tax payer

b) Age of the tax payer
c) The residential status of the tax payer
d) Gender of the tax payer

124) What is the full form of GST?

a) Goods & Supply Tax

b) Goods & Sale Tax
c) Goods & Services Tax
d) Government Sales Tax

125) GST is a consumption of goods and service tax based on

a) Development
b) Process
c) Duration
d) Destination

B] Short Answer

a) Define a Contract.
b) What is an Agreement?
c) What is an Offer?
d) Define an Acceptance.
 e) Explain Free Consent.
f) What is Coercion?
g) What is Misrepresentation?
h) Explain Novation.
i) Explain the Competent parties to a Contract.
j) Describe Waiver.
k) Explain E-Contract.
l) Define Ultra Vires.
m) Define Director.
n) Contract of Indemnity
o) What is Bailment?
p) What is the contract of Guarantee?
q) Define an Agent.
r) Explain Sale.
s) What is the Bill of Exchange?
t) Watt is a Cheque?
u) Who is a Consumer?
v) Explain Promoter.
w) Explain the case law, Solomon V/s Solomon & Co. Ltd.
x) What is Memorandum of Association
y) Explain Prospectus.
z) What is the Document of Title?
aa) Define Patent.
bb) Define Trade Mark
cc) What is Copyright?
dd) Describe Designated Partner

C] Long Answer

a) What is a Contract? Explain the Essential elements of a Valid

Contract.

b) Write different types of contracts

c) What is Consideration? Explain the legal rules of valid Consideration.

Explain the exception to the rule "No Consideration, No Contract'.

d) Define an Offer. Explain the legal rules of valid Offer with case
laws.
e) Explain in detail the essentials of Free Consent.
f) Define an Agent. Explain the modes of creation of the Agency.

g) Explain the different modes of Discharge of a Contract.

h) What is Bailment? Explain the legal rules of Bailment.

i) What is Sale? Distinguish between Condition & Warranty.

j) Define a company. Explain the Characteristics of a Company.

k) Explain the contents of the Memorandum of Association.

l) Write different types of companies.

m) Explain the legal position of a Director.

n) What are the objectives of the Consumer Protection Act?

o) Explain Intellectual Property Rights. Summarize the legal rules of Patent,

Copyright & Trademark.