CA-CPT Paper No.

2 (Mercantile Law)

TEST ID

00035081

CA-CPT TEST
Paper No. 2 (Mercantile Law)
Time Allowed: 60 Minutes Maximum Marks: 50

INSTRUCTIONS
General: (i) (ii) (iii) (iv) (v) (vi) Marking: +1 for correct answer & -0.25 for incorrect. Mark only one correct answer out of four alternatives. Use Pencil or Blue/Black Ball Point Pen only for writing particulars for any marking. Use of calculator is not allowed. Darken the circles in the space provided only. Use of white fluid or any other material which damages the answer sheet, is not permitted.

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Which one of the following is the best statement about the Indian Contract Act? (a) It is an exhaustive code containing the entire law of contract. (b) It is an act to amend certain parts of the law relating to contracts. (c) It is an Act to define certain parts of the law relating to contracts and contains only the general principles of contract. (d) It is not an exhaustive code containing the entire law of contract being an Act to define and amend certain parts of law relating to contract. In case of conflict of jurisdiction of the courts, the incidence of a contract shall be governed by the law of the place where the : (a) Acceptor reside (b) Proposer reside (c) Contract is made (d) Contract is performed Q lived as paying boarder with a family. He agreed with the members of the family to share prize money of a newspaper competition. The entry sent by Q won a prize of Rs.5,000. He refused to share the amount won. What option is available with the members of the family? (a) The members of the family can recover their share, as there was a mutual agreement between the parties. (b) The members of the family cannot recover their share, as there was no written agreement. (c) The members of the family can claim damages. (d) None of the above. A dress is displayed in the showroom of a shop with a price tag attached to the dress. A buyer interested in the dress and ready to pay the price mentioned in the tag approached the shopkeeper for purchasing the dress. Which one of the following is correct? (a) The shopkeeper can refuse to sell the dress. (b) The shopkeeper cannot refuse to sell the dress as the buyer has accepted the offer. (c) In case of refusal, the shopkeeper will be liable for breach of contract. (d) The shopkeeper cannot refuse to sell the dress but may charge higher price.
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CA-CPT Paper No. 2 (Mercantile Law)

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T offers, by a letter, to sell a certain article to S who receives the letters the next day. S immediately posts his letters of acceptance. The same evening T posts a letter revoking the offer Ts letter of revocation and Ss letter of acceptance cross in the post. (a) There is a contract between T and S (b) There is no a contract between T and S (c) There is only invitation to offer. (d) None of these. Ali intends to make an offer to Ben and tells Jack about it. Jack informs Ben of the contemplated offer but Ali himself does not communicates the offer to Ben. Ben accepts the offer and informs Ali about the acceptance. (a) Ali only stated his intention to Jack. (b) There is no contract between Ali and Ben. (c) There is contract between Ali and Ben. (d) Both (a) and (b) Match List-I with List-II and select the correct answer using the codes given below the Lists : List-I A. General offer B. Invitation to treat C. Standing offer D. Cross offer Code : A B C D (a) 2 1 4 3 (b) 3 4 1 2 (c) 2 4 1 3 (d) 3 1 4 2 Agreement is defined in Section ___________ of the Indian Contract Act, 1872. (a) 2 (c) (b) 2 (e) (c) 2 (g) (d) 2 (i) Drawing cash from ATM, sale by fall of hammer at an auction sale, etc, are examples of (a) Express Contract (b) Implied Contract (c) Tacit Contract (d) Unlawful Contract A passenger deposited a bag in the cloakroom at a Railway Station. Acknowledgement Receipt given to him carried, on the face of it, the words See back. One condition limited the liability of Railways for any package to Rs.100. The bag was lost, and passenger claimed Rs.2,400 being its value, pleading that he had not read conditions. Can the passenger win the case? (a) Yes, Railway Company cannot take undue advantage. (b)Yes, damages are payable for loss of property (c) No, suit for value below Rs.5,000 is not permissible in law (d) No, the passenger had constructive notice of conditions whether he read them or not. Indian Contract Act received to assent on: (a) 25th April, 1872 (b) 1st January, 1872, (c) 1st September, 1872 (d) 25th September, 1872
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List-II 1. Offer to invite offers 2. Offers at large 3. Identical offers crossing each other 4. Tender

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CA-CPT Paper No. 2 (Mercantile Law)

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An acceptance containing additions, limitations or other modifications shall amount to (a) a counter offer (b) rejection of the offer (c) a valid acceptance (d) (a) & (b) A offered a reward of Rs.1,000 for recovery of some valuable missing article, B, who did not know of this offer, found the articles and gave the same to A: (a) As there is no acceptance of an offer due to want of knowledge, B is not entitled to get the reward of Rs.1,000 (b) Giving delivery of articles to A amounts to an acceptance and hence B is entitled to get the reward of Rs.1,000 (c) Giving delivery of articles to A amounts to performance of a condition precedent to an offer an hence there is valid acceptance B must gets the reward of Rs.1,00 (d) In the absence of any legal obligation on a, no claim for reward Rs.1,000 is maintainable by B. Consider the following statement about an offer: 1. A counter offer terminates the original offer 2. Quotation of Price is an offer 3. Acceptance to an offer is like a lighted match to a train of gun powder. of these statement (a) 1, 2 and 3 are correct (b) 2 and 3 correct (c) 1 and 3 correct (d) 3 alone is correct P advertises in a daily newspaper that he will give a prize of Rs.1,000 to the first person to swim the English Channel and back during the month of August. F, who has read the advertisement , sets off from Dover on 1st August and reaches the coast of France on 2nd August. On that day, a further advertisement appear in the same newspaper stating that the offer of the prize has been withdrawn. On 3rd August F completes the return swim to England, Can F recover the prize ? (a) Yes, as the second advertisement is ineffective so far as F is concerned. (b) No, as the offer was revocated (c) F can only claim for damages. (d) None of the above. An agreement entered into with free consent and lawful but inadequate consideration is: (a) Void (b) Voidable (c) Illegal (d) Valid No consideration is required to create a contract of agency (a) True (b) Partly True (c) False (d) None of the above A person is of unsound mind if he satisfies which of the following cases: (a) He should be capable of understanding the nature & contents of the contract. (b) He should be capable of forming a rational judgment about the effect of the contract on his interest. (c) Both (d) None of the above In case of Illegal agreements, the collateral agreements are: (a) Valid (b) Voidable (c) Void (d) None of the above A minors estate is liable for the ____________ supplied to him (a) Necessaries (b) Luxuries (c) Necessities (d) All the things
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CA-CPT Paper No. 2 (Mercantile Law)

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Consider the following statements : (1) There is no difference between the English law and Indian law with regard to acceptance through post. (2) Both under the English law and the Indian law a contract is conclude when the letter of acceptance is posted. (3) Under the Indian law when the letter of acceptance is posted it is completed only as against the proposer. Which of the above statements is/are correct ? (a) 1 and 2 (b) 2 alone (c) 3 alone (d) None of these Which of the following is not an actionable claim ? (a) A decree (b) A right to recover price for breach of contract (c) A right to recover damages for breach of contract. (d) All of the above Consensus ad idem means (a) general consensus (b) reaching of contract (c) reaching of agreement (d) meeting of minds upon the same thing in the same sense An alteration in contract can be of : (a) Bilateral & Unilateral (b) Unilateral & Multilateral (c) Only Bilateral (d) Only Unilateral If the terms of the settlement are reduced into writing, the members of family who originally had not been parties to the settlement may : (a) Enforce the agreement (b) Revoke the agreement (c) Not enforce the contract (d) All of these The Law of Contract is nothing but (a) A child of commercial dealing (b) A child of religion (c) A child of day to day politics (d) A child of economics _________is an erroneous belief about something (a) Fraud (b) Representation (c) Mistake (d) Misrepresentation In order to understand the nature of transactions, promises can be classified as : (a) Mutual & Independent (b) Conditional and Dependent (c) Mutual and Concurrent (d) All of the above X owes Rs.5 lakh to Y. Y is entitled to recover this amount from X. This is called (a) Rights in Rem (b) Rights in Personam (c) Constitutional Right (d) None of the above The Concept of DURESS under English Contract Law is similar to: (a) Coercion (b) fraud (c) Undue Influence (d) Misrepresentation
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CA-CPT Paper No. 2 (Mercantile Law)

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A & B agree that B will sell a flat to A for Rs.90,000 & also that if A uses it as a gambling flat, he will pay a further sum of Rs.15,000. The contract is : (a) Illegal (b) Void (c) Voidable (d) Valid Mistake as to foreign law is treated in the same manner as: (a) Fraud (b) Mistake of Indian Law (c) Mistake of fact (d) Misrepresentation C orally offered to pay A, an auto mechanic, Rs.50 for testing a used car, which C was about to purchase from D. A agreed and tested the car. C paid A Rs.50 in cash for his services. Is the agreement : (a) Valid (b) Express (c) Executed (d) All of these Amit contracts to supply a specific bike to Bunty for a month after the date of the contract. Within one month Amit sells the bike to Chandra. Thereupon Bunty sues Amit for the breach of contract. Amit contends that he could still perform the contract by repurchasing the bike from Chandra. Is Amits contention valid? (a) No, the sale of the bike by Amit amounts to an anticipatory breach of contract by implied repudiation. (b) No, the sale of the bike by Amit amounts to an actual breach of contract. (c) Yes, Amits contention is valid. (d) None of the above. A advances Rs.22,000 to B, a married woman, to enable her to obtain a divorce from her husband. B agrees to marry A as soon as she obtained a divorce. B obtains the divorce but refuses to marry A. Can A recover the amount ? (a) Yes, as the consideration is lawful. (b) No, as the agreement was immoral. (c) No, as the agreement was in restraint of marriage. (d) Both (b) and (c) A got property of B attached in execution of a money decree. The decree was as a matter of fact against another person-of a similar name. In order to save his property from being sold away, B paid the amount of the decree. Subsequently, he sued A for getting the amount back. Will he succeed? (a) Yes, he will succeed. (b) No, he will not succeed. (c) He may succeed (d) None of these A man, by the name of Sohan, called at a jewellers shop and chose a costly ring. He tendered in payment a cheque, which he signed in the name of Girish, a person of credit. He took the ring and pledged it to Bola Nath, who had no notice of the fraud. Can the jeweller recover the ring from Bola Nath ? (a) Yes, the jeweler can recover from Bola Nath. (b) The jeweller can recover either from Sohan or from Bola Nath. (c) No, the jeweler cannot recover from Bola Nath. (d) Cant say. Where law prescribes that a contract must be in writing, it is necessary that it must be in writing. Non-fulfllment of this condition renders it : (a) Void (b) Invalid (c) Unenforceable (d) Voidable
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CA-CPT Paper No. 2 (Mercantile Law)

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A husband executed a registered document in favour of his wife. After referring to quarrels and disagreement between them, he promised to pay for her separate maintenance and residence. On his failure to pay, the wife seeks your advice. Advise her. (a) She can recover (b) She cannot recover (c) Either (a) or (b) (d) None of these All innocent promises collateral to the main illegal promise contained in a contract will be regarded as : (a) Valid (b) Void (c) Illegal (d) Voidable A and B agree that A shall sell his house to B for a sum of Rs.1lakh provided he used it for residential purposes and would charge Rs.2 lakhs if he were to use the house for gambling. It is further agreed between them that the consideration shall be paid after a year of registration of the house in the name of B. After six months, B uses the house for gambling purposes. Discuss the rights of A. (a) A can recover Rs.2lakhs (b) A ca recover only Rs.1lakh (c) A can recover nothing (d) A can recover Rs.1lakh as well as damages. An Executed Consideration is (a) An act of mutual exchange of promises (b) An act done in the expectation of a proposal (c) An act done in response to a positive promise (d) All of the above X, a physician practicing in New Delhi, took Y as his assistant for three years during which Y agreed not to practice of his own in New Delhi. At the end of a year from the adte of the agreement with X, Y began his own independent practice. Has X any legal remedy against Y ? (a) X can get an injunction from the Court restraining Y from practicing. (b) The agreement of X and Y is invalid, as it is in restraint of trade. (c) X does not have any legal remedy against Y. (d) None of the above J is a manufacture of light bulbs. He advertises in the trade press, that in future the retail price of his bulbs will be Rs.5 and that proceedings will be taken against any dealer not observing this price. T buys a quantity of the bulbs from X, a wholesaler. Although T had originally read the advertisement, he forgot its contents and retails the bulbs at Rs.6.50. Advise J. (a) J can take a serious action against T. (b) J cannot take any action, as there is no privity of contract between J and T (c) Either (a) or (b) (d) None of the above On the 5th of a month X makes an offer to Y, by a letter, which reaches Y on 6th. On the 7th, Y posts his letter of acceptance. Meanwhile, on the 6th X posts a letter to Y revoking the offer. On seeing it Y sends a telegram to X on 8th confirming the acceptance given through his letter of the 7th. Discuss the legal effects of three letters and the telegram. (a) There is no contract between X and Y. (b) The contract is concluded between X and Y on 7th when B posts the letter of acceptance. (c) Either (a) or (b) (d) None of the above A offers to sell his car to B for Rs.50,000. B agrees to buy the car offering Rs.45,000. The reply of B amounts to :
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CA-CPT Paper No. 2 (Mercantile Law)

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(a) Offer (b) Counter Offer (c) Invitation to an offer (d) Standing Offer An agreement, which prevents a person from carrying a lawful business, is......... (a) Valid (b) Void (c) Voidable (d) Contingent If the offeree offers to qualified acceptance of the offer subject to modifications and variations in the terms of original offer, he is said to have : (a) Special Offer (b) Counter Offer (c) Continuing Offer (d) Cross Offer D believes blue colour to be black colour, for any reason whatsoever. He has a garment shop. He sells one blue colour shirt to M, representing it to be black colour. M knows nothing about colours. M believes D and accepts the blue colour to be black colour. Later on Ms mother explains M that the colour of the shirt is actually blue and not black. It is a clear case of : (a) Misrepresentation (b) Fraud (c) Unintentional fraud (d) Cheating X promises to drop prosecution which he has instituted against R for robbery and R promises to restore the value of things taken. (a) X can enforce this promise because they have mutually agreed. (b) No, X cant enforce because it would defeat the very provisions of law. (c) No, it can not be enforced because both parties comes to the original position (d) Yes, X can enforce the promise to over take to the original position

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