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Amity Campus Uttar Pradesh India 201303

ASSIGNMENTS PROGRAM: BFIA

SEMESTER-VI

Subject Name: BUSINESS ENVIRONMENT & LAW

Study COUNTRY: SOMALIA

Permanent Enrollment Number (PEN)

A40010214649

Roll Number (Reg. No.): MFC001512014-2016091

Student Name: MOHAMED ABDULLAHI KHALAF

INSTRUCTIONS

a) Students are required to submit all three assignment sets.

ASSIGNMENT DETAILS MARKS

Assignment A Five Subjective Questions 10

Assignment B Three Subjective Questions + Case Study 10

Assignment C Objective or one line Questions 10

b) Total weight-age given to these assignments is 30%. OR 30 Marks c) All assignments are to be completed as typed in word/pdf. d) All questions are required to be attempted. e) All the three assignments are to be completed by due dates and need to be submitted for evaluation by Amity University. f) The students have to attach a scanned signature in the form.

Signature : _________________________

Date: 26, December, 2014

( ) Tick mark in front of the assignments submitted

Assignment A Assignment B Assignment C

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BUSINESS ENVIRONMENT & LAW

ASSIGNMENT A

Q: 1). What is business environment? What are the benefits & limitations of environmental analysis?

Answer:

Environment literarily means the surroundings, external objects, influences or circumstances under which someone or something exists. The environment of any organization is the aggregate of all conditions, events and influences that surround and affect it Davis, K, The Challenge of Business, (New York: McGraw Hill, 1975), P43

Environment refers to all external forces that have a bearing on the functioning of a business. Jauch and Gluecke define environment thus: The environment includes factors outside the firm which can lead to opportunities or a threat to the firm. Although there are many factors, the most important of these sectors are socio-economic, technological, supplier, competitor and the government

Businesses do not operate in a vacuum; they operate in an environment, which is the combination of internal and external factors that influence a company's operating situation. The business environment can include factors such as: clients and suppliers; its competition and owners; improvements in technology; laws and government activities; and market, social and economic trends.

Business environment is the sum total of all external and internal factors that influence a business. You should keep in mind that external factors and internal factors can influence each other and work together to affect a business. For example, a health and safety regulation is an external factor that influences the internal environment of business operations. Additionally, some external factors are beyond your control. These factors are often called external constraints.

The relation between a business and an environment is not a one way affair. The business also equally influences the external environment and can bring about changes in It. Powerful business lobbies for instance, actively work towards changing government policies.

Benefits of Environmental Analysis

1) Environmental analysis gives an idea of organizations environment. 2) Environmental analysis gives a brief about competitors. 3) Environmental analysis tells us about opportunities to reap profits. 4) Environmental analysis gives details about threats in the environment. 5) Environmental analysis keeps the manager informed and alert.

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6) Business is all about making the right decision at the right time. Without proper environmental analysis the right decision cant be made.

7) Environmental analysis helps in predicting the future. 8) Environmental analysis helps in suitable modification of strategies, as and when

required.

Limitations of Environmental Analysis

1) Today the environment is turbulent and dynamic and it is difficult to forecast of predict the environment.

2) Business environment is global and any development in any part of the world can influence the business. Even a small political move can have a drastic impact, which in very difficult to scan and assess. A sudden disintegration of USSR had very adverse impact on many exporters in India. A sudden attack of Al Qaeda on the Twin Towers in the US resulted in the hike of global petroleum prices. After Signing the WTO, all of a sudden the toy market of India was captured by Chinese products. Today it is extremely difficult to predict the external environment.

3) The Effectiveness of environmental analysis depends upon how it is practiced, i.e., whether it is a systematic approach, ad hoc or processed. Under a systematic approach, information for environmental scanning is collected, scanned and monitored on a continuous basis and forecast and is assessed for the relevant factor. In an ad hoc approach, an organization conducts special surveys and studies to deal with specific environmental issues from time to time. In a processed form approach, an organization uses information in a processed form, available from different sources, both inside and outside the organization. For effectiveness, an organization should use the combination of these approaches instead of just following the tried formulas, because all have their importance according to requirement.

Too much reliance is often placed on the information collected through environmental scanning. When there is overloading of information, one is likely to get lost and become inactive-typical of paralysis through analysis syndrome.

Q: 2). Define contract. Explain any four elements of a contract.

Answer:

According to Section 2(h) of the Indian Contract Act 1872, A contract is an agreement enforceable by law.

It is an agreement enforceable at law, made between two or more persons, by which rights are acquired by one or more, to act on the part of the other. It creates and defines obligations between the parties.

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All agreements are not necessarily enforceable by law. An agreement to sell a house may be a contract enforceable by law. However, an agreement to attend a party being of a social nature is not enforceable.

It may be noted that a contract essentially contains two elements: agreement and enforceability by law.

An agreement is every promise and every set of promises, forming consideration for each other. This essentially means that there should be an offer and an acceptance to form an agreement.

The other element of contract, enforceability by law, emphasizes the importance of intention to create a legal obligation or duty to perform or abstain from performing certain act(s). These acts could relate to social or legal matters.

All contracts are agreements but all agreements are not contracts. In order to become a contract, an agreement must satisfy the essential elements of contract; Offer and acceptance, Consideration, Capacity of contract, Free Consent, Legal Relations, Writing and Registration, Certainty, Possibility of Performance and Not Expressly Declared Void.

Four of those elements are explained bellow:

1) Offer and Acceptance:

For any contract there must be at least two parties, one of them making the offer and the other one accepting it. The acceptance must be unconditional and absolute.

Conditions of Offer

The following conditions govern making an offer:

a) The offer must be definite and not vague. b) An offer should be differentiated from an invitation to make an offer.

There are occasions where a person may make some statements or give information with an intention of inviting others to make an offer. For example, a catalogue with prices indicated on it is not an offer to sell. On the contrary it is only an invitation to make an offer. A person interested in buying the product specified in the catalogue, may make an offer to buy and it is left to the discretion of the seller to either accept or reject the same.

Conditions of Acceptance

The following conditions govern accepting an offer:

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a) An offer should be accepted only by the person to whom it is put forth. b) Acceptance of an offer should be absolute and unqualified and should conform totally

to the offer made. c) The acceptance must be communicated to the offeror. The acceptance must be in the

form specified or in some perceptible form if not specified.

2) Consideration:

Consideration means "something in return". It is a benefit moving from one party to another. Consideration need not always be in cash or in kind. It may be an act or promise to do or not to do something. It may be past, present or future. Consideration must be real and lawful.

3) Capacity of the Parties to Contract:

For an agreement to be a contract, it must be formed between two parties who are competent to contract by having the capacity at law to enter into a valid contract. Section 11 of the Indian Contract Act 1872, states that every person is competent to contract if-

a) He is of the age of majority, b) He is of sound mind and c) He is not disqualified from entering into a contract by any law, to which he is subject.

The persons declared to be incompetent to contract are: Minors, Persons of Unsound Mind and Persons Disqualified by any Law to which they are Subject.

4) Free Consent:

The contract must have been made with free consent of the parties. The parties must be ad idem i.e. they must agree upon the same thing in the same sense at the same time. There is absence of free consent if the agreement is induced by:

a) Coercion b) Undue Influence c) Fraud d) Misrepresentation e) Mistake.

Q: 3). What are the rights of a finder of a good under the Indian contract Act?

Answer:

A person, who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as a bailee. He is bound to take as much care of the goods as a

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man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value. He must also take all necessary measures to trace its owner. If he does not, he will be guilty of wrongful conversion of the property. Till the owner is found out, the property in goods will vest with the finder and he can retain the goods as his own against the whole world (except the owner, of course).

A finder of goods has the following rights under the Indian Contract Act, 1872

1) Right of lien:

The finder of goods has a right of lien over the goods for his expenses. As such he can retain the goods against the owner until he receives compensation for trouble and expenses incurred in preserving the goods and finding out the owner. But he has no right to sue the owner for any such compensation (Section 168).

2) Right to sue for reward:

The finder can sue for any specific reward which the owner has offered for the return of the goods. He may also retain the goods until he receives the reward. (Section 168)

3) Right to resale:

The finder has a right to sell the goods in the following cases:

a) Where the goods found is in danger of perishing; b) Where the owner cannot, with reasonable diligence, be found out; c) Where the owner is found out, but he refuses to pay the lawful charges of the finder. d) Where the lawful charges of the finder, in respect of the goods found, amount to

2/3rd of its value.

Q: 4). For every valid agreement there should be a consideration. Comment

Answer:

The general rule is that an agreement made without consideration is void (Section 25). In every valid contract consideration is very important. A contract may only be enforceable when an adequate consideration is there. However, the Indian Contract Act, 1872 contains certain exceptions to this rule. In the following cases, the agreement though made without consideration, will be valid and enforceable.

1) Natural Love and Affection:

A written and registered agreement based on Natural Love and Affection between the parties standing in near relation (e.g., husband and wife) to each other is enforceable even

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without consideration. A contract in writing, registered on account of natural love and affection between parties standing near relation to each other are the essential requirements for valid contract though it is without consideration. (Rajlukhee Devee vs. Bhootnath).

2) Compensation for past voluntary services:

A promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, is enforceable under (Section 25(2). In order that a promise to pay for the past voluntary services is binding, the following essential factors must exist:

a) The services should have been rendered voluntarily. b) The services must have been rendered for the promisor. c) The promisor must be in existence at the time when services were rendered. d) The Promisor must have intended to compensate to the promisee.

3) Promise to pay time barred debt:

Where a promise in writing signed by the person making it or by his authorized agent, is made to pay a debt barred by limitation it is valid without consideration [Section 25(3)].

4) Agency:

According to Section 185 of the Indian Contract Act, 1872 no consideration is necessary to create an agency.

5) Completed gift:

In case of completed gifts, the rule of consideration of contract does not apply. Explanation (1) to Section 25 of the Act states Nothing in this section shall affect the validity as between the donor and donee, of any gift actually made. Thus, gifts do not require any consideration.

Q: 5). Explain the rights of an unpaid seller under Indian sales of goods Act.

Answer:

The term unpaid seller is defined by Section 45 of the Sale of Goods Act, 1930. As per this section, the seller of goods is deemed to be an unpaid seller within the meaning of the Act.

1) When the whole of the price has not been paid or tendered. 2) When a bill of exchange or other negotiable instrument has been received as

conditional payment and the condition on which it was received has not been fulfilled by reason of the dishonor of the instrument or otherwise.

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The unpaid sellers right depends upon the passing of the possession of the goods:

In case the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of law-

a) A lien on the goods for the price while he is in possession of them; b) In case of the insolvency of the buyer a right of stopping the goods in transit after he

has parted with the possession of them; c) A right of re-sale as limited by this Act. d) Where the property in goods has not passed to the buyer, the unpaid seller has, in

addition to his other remedies, a right of withholding delivery similar to and co-extensive with his rights of lien and stoppage in transit where the property has passed to the buyer.

Rights of an Unpaid Seller

I. Rights of an Unpaid Seller Against the Goods:

Right of Lien or right to retain goods.

Right of stoppage of goods in transit.

Right to resale.

Right to withhold the delivery of goods.

II. Rights of an Unpaid Seller Against the Buyer:

Right to sue for price.

Right to sue for damages for non-acceptance.

Right to repudiate the contract before due date.

Right to sue for special damages and interest.

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ASSIGNMENT B

Q: 1). What is a negotiable instrument, explain its characteristics.

Answer:

Negotiable means transferable by delivery, and Instrument is a written document which creates a right in favour of any person. Therefore, a negotiable instrument is a written document which creates a right in favour of any person and which is transferable by delivery.

According to Section 13 of the Negotiable Instrument Act 1881, Negotiable Instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer. This definition is not comprehensive as it is very limited in scope and many instruments such as hundi. Etc., will not qualify as negotiable instruments as per this definition.

According to Thomas, A negotiable instrument is one which is, by a legally recognised custom of trade or law, transferable by delivery or by endorsement and delivery in such circumstance that (a) the holder of it for the time being may sue on it in his own name, and (b) the property in it passes free from equities to a bonafide transferee for value, notwithstanding any defect in the title of the transferor.

According to Justice Willis in his book (The Law of Negotiable Securities), A negotiable instrument is one, the property and the title in which is acquired by anyone who takes its bonafide and for value notwithstanding any defect in the title of the person from whom he took it.

The characteristics of a Negotiable Instrument are:

1) Writing and Signature according to the rules:

A Negotiable Instrument must be in writing and signed by the parties according to the rules relating to (a) promissory notes, (b) Bills of Exchange and (c) Cheques.

2) Payable by Money:

Negotiable Instruments are payable by the legal tender money of India. The Liabilities of the parties are governed in terms of such money only.

3) Unconditional Promise:

If the instrument is a promissory note, it must contain an unconditional promise to pay. If the instrument is a bill or cheque, it must be an unconditional order to pay money.

4) Freely transferable:

Free transferability is one of the most important characteristics of a negotiable instrument. It is transferable from one person to another by delivery or by endorsement and delivery. The former is known as payable to bearer and the latter payable to order.

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5) Acquisition of Property:

The holder of the instrument is presumed to be the owner of the property contained therein. He is entitled to the sum of money, mentioned on the face of the instrument.

6) Acquisition of Good Title:

The holder in due course (one who acquires the instrument in good faith and for consideration) gets it free from all defects including fraud provided he was not party to it.

7) Right of the Holder in Due Course:

The holder in the due course remains unaffected by certain defects, which might be available against previous holders, as for example, fraud, to which he is not a party.

8) Recovery:

The holder in due course has the right to sue on the negotiable instrument in his own name for recovery of the amount. It is not necessary for him to give any notice of transfer to the party liable for payment on the instrument.

9) Certain Presumptions:

A negotiable instrument is always subject to certain presumptions that are enumerated under section 118 to 119 of the Act 1881. Those presumptions include: Consideration, date, time of acceptance, time of transfer, order of endorsements, stamps and signature of holder in due course.

10) Maturity:

The negotiable instrument is transferable till maturity and in case of cheque till it becomes stale (on the expiry of six months from the date of the issue).

Q: 2). Explain various types of companies.

Answer:

The term company is originally derived from two Latin words come (meaning, together) and panies (meaning, bread). In other words, company refers to an association of merchants coming together to discuss matters and partaking food together. Simply put, the term conveys that it is an association of a number of persons coming together for a common purpose.

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Section 3(1)(i) of The Companies Act 1956, defines a company as, A company formed and registered under this Act or an existing company. An existing company means one that is formed and registered under The Companies Act formulated earlier.

A company is an incorporated association which is an artificial person created by law, having a separate entity with a perpetual succession and a common seal. - Haney

According to Lord Justice Lindly, By a company is meant an association of many persons who contribute money or moneys worth to a common stock and employs it in some trade or business and who share the profit and loss arising there from. The common stock so contributed is denoted in money and is the capital of the company. The persons who contribute are its members. The proportion of capital to which each member is entitled is his share. Shares are always transferable although the right to transfer them is often more or less restricted.

A company can thus be defined as an artificial person, recognized by law, having a distinctive name, a common seal, a common capital comprised of freely transferable shares, carrying limited liability, and having a perpetual succession.

Types of Companies

There are various types of companies that can be formed in different jurisdictions, but the most common forms of companies are:-

1) A company limited by guarantee:

Commonly used where companies are formed for non-commercial purposes, such as clubs or charities. The members guarantee the payment of certain (usually nominal) amounts if the company goes into insolvent liquidation, but otherwise they have no economic rights in relation to the company. This type of company is common in England.

2) A company limited by shares:

The most common form of company used for business ventures. Specifically, a limited company is a "company in which the liability of each shareholder is limited to the amount individually invested" with corporations being "the most common example of a limited company." This type of company is common in England.

3) A company limited by guarantee with a share capital:

A hybrid entity, usually used where the company is formed for non-commercial purposes, but the activities of the company are partly funded by investors who expect a return. This type of company may no longer be formed in the UK, although provisions still exist in law for them to exist.

4) A limited-liability company:

"A companystatutorily authorized in certain statesthat is characterized by limited liability, management by members or managers, and limitations on ownership transfer", i.e., L.L.C.

5) An unlimited company with or without a share capital:

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A hybrid entity, a company where the liability of members or shareholders for the debts (if any) of the company are not limited.

6) Companies formed by letters patent:

Most corporations by letters patent are corporations sole and not companies as the term is commonly understood today.

7) Charter corporations:

Before the passing of modern companies legislation, these were the only types of companies. Now they are relatively rare, except for very old companies that still survive (of which there are still many, particularly many British banks), or modern societies that fulfill a quasi regulatory function (for example, the Bank of England is a corporation formed by a modern charter).

8) Statutory Companies:

Relatively rare today, certain companies have been formed by a private statute passed in the relevant jurisdiction. Note that Ltd. after the company's name signifies limited company, and PLC (public limited company) indicates that its shares are widely held.

9) Private Limited Company:

According to Section 3(1)(iii) of The Companies Act 1956, a private company means that a company which by its articles:-

a) Restricts the right to transfer its shares, if any; b) Limits the number of its members to 50; c) Prohibits any invitation to the public to subscribe for any shares in or debentures of

the company; and d) Prohibits any invitation or acceptance of deposits from persons other than its

members, directors or their relatives. e) All private company must always use the word private limited after its name.

A Private Limited Company is the most popular form of business entity used for Foreign Investors in India, including USA investors in India.

10) Public Company:

A public company is defined as a company which is not a private company. The following conditions apply only to a public company:-

a) Public Companies are those companies which have a minimum paid up capital of Rs. 5 lac, as per The Companies Amendment Act 2000.

b) It must have at least seven shareholders. c) A public company is not authorized to start business upon the grant of the certificate

of incorporation.

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d) In order to be eligible to commence business as a corporation, it must obtain another document called "trading certificate".

e) It must publish a prospectus or file a statement in lieu of a prospectus before it can start transacting business.

f) A public company is required to have at least three directors. g) It must hold statutory meetings and obtain government approval for the appointment

of the management. h) There are several other provisions contained in the Companies Act 1956 which are

applicable only to public companies and should be consulted.

11) Foreign company:

Any company incorporated outside India but which has set up a place of business in India. The business in India might have been set up before or after the commencement of The Companies Act 1956. However a foreign company may be treated as a company incorporated in India if 50 percent of its share capital (whether equity or preference or partly equity and partly preference) is held by one or more citizens in India or by one or more bodies incorporated in India and must comply with the provisions of the Act as may be prescribed with regard to the business carried on by it in India.

12) Government company:

According to section 617, a company of which not less than 51 percent of the paid up share capital held;

a) By the central government, b) By the state government, c) Partly by one or more state governments; d) Subsidiary of a government company is also called Government Company.

A public enterprise incorporated under the Indian Companies Act, 1956 is called a Government Company.

These companies are owned and managed by the central or the state government.

According to Indian Companies Act, 1956, a government company means "any company in which not less than 51 percent of the paid up share capital is held by the central or by state government and partly by the central government and includes a company which is a subsidiary of Government Company".

The following are some of the essential features of a government company:-

It is formed under the provisions of the Indian Companies Act, 1956.

The total share capital or 51 percent or more of share capital is held by the government.

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It enjoys the status of a legal entity and therefore it can use or be sued by others.

The finance of a government company is obtained from the government and from private share holders.

The employees are governed by the rules prescribed for the company by the board of directors.

It is not subject to budgeting, accounting, and audit rules applicable to a government department.

The directors are nominated by the government depending upon participation of private capital.

13) Holding Company:

When a public company acquires a minimum of 51 percent of the voting rights of another company i.e. the purchasing company is called a holding company. Such a company has the control over all the affairs of the company.

14) Subsidiary Company:

The company which has been purchased by a holding company is called a subsidiary company. The company which is controlled by another company is called so.

Q: 3). What relief is/are available to the consumer under Consumer Protection Act.

Answer:

Depending on the nature of relief sought by the consumer and facts, the Redressal Forums may give orders for one or more of the following reliefs:-

a) Removal of Defects:

If after proper testing the product proves to be defective, then the remove its defects order can be passed by the authority concerned.

b) Replacement of Goods:

Orders can be passed to replace the defective product by a new non-defective product of the same type.

c) Refund of Price:

Orders can be passed to refund the price paid by the complainant for the product.

d) Award of Compensation:

If because of the negligence of the seller a consumer suffers physical or any other loss, then compensation for that loss can be demanded for.

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e) Removal of Deficiency in Service:

If there is any deficiency in delivery of service, then orders can be passed to remove that deficiency. For instance, if an insurance company makes unnecessary delay in giving final touch to the claim, then under this Act orders can be passed to immediately finalise the claim.

f) Discontinuance of Unfair/Restrictive Trade Practice:

If a complaint is filed against unfair/restrictive trade practice, then under the Act that practice can be banned with immediate effect. For instance, if a gas company makes it compulsory for a consumer to buy gas stove with the gas connection, then this type of restrictive trade practice can be checked with immediate effect.

g) Stopping the Sale of Hazardous Goods:

Products which can prove hazardous for life, their sale can be stopped.

h) Withdrawal of Hazardous Goods from the Market:

On seeing the serious adverse effects of hazardous goods on the consumers, such goods can be withdrawn from the market. The objective of doing so that such products should not be offered for sale.

i) Payment of Adequate Cost:

In the end, there is a provision in this Act that the trader should pay adequate cost to the victim concerned.

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CASE STUDY:

Case1

A dealer in radios gives a Murphy radio to a customer on the terms that Rs. 100 should be paid by him immediately and Rs 200 more in two monthly equal installments. It was further agreed that if the radio is found defective the customer may return it within a week but not later. The customer makes default in paying the last installment. Can the radio dealer take back the radio on his default?

Answer:

No, the radio dealer cannot take back the radio on default by the customer, because it is a contract of sale and not of hire-purchase.

Case2

X sees a book displayed in a shelf of a book shop with a price tag of Rs. 85. X tenders Rs. 85 on the counter and asks for the book. The bookseller refuses to sell saying that the book has already been sold to someone else and he does not have another copy of that book in the stock. Is the bookseller bound to sell the book to X?

Answer:

No, the bookseller is not bound to sell the book to Mr. X. because the display of goods with prices marked thereon is only an invitation for offer, and not an offer itself. Hence, the bookseller is free to accept or not accept the offer of Mr. X.

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ASSIGNMENT C

Q: 1). Any person is a holder in due course if he has obtained the negotiable instrument

a) For consideration b) By gift c) Before its maturity d) Both (a) & (c) above ()

Q: 2). Michael Portes Five Forces Model includes:

a) Threat of Substitutes b) Bargain Power of supplier c) Bargain Power of Government d) Both (a) & (b) ()

Q: 3). I had applied for subscription in Rajlakshmi scheme of UTI. The essence of the scheme was that the sum of money deposited with the UTI would grow 21 times in 28 years. However subsequently, the UTI extended the maturity date by two years. Can I approach a Consumer Court?

a) Yes you can seek relief in a consumer court () b) No you cant seek relief in a consumer court

Q: 4). Can Consumer Forums adjudicate disputes involving scale of pay?

a) Yes, Consumer Forums do adjudicate dispute-involving scale of pay b) No, Consumer Forums do adjudicate dispute-involving scale of pay ()

Q: 5). In which of the following instances, the collecting banker shall not be liable for conversion to the true owner under the Negotiable Instruments Act, 1881?

a) The collecting bank advances money to the customer against the cheque even before the cheque is realized

b) The uncrossed cheque given to the collecting bank for collection is crossed by the banker

c) The payment is received by the collecting bank on behalf of a person who is not a customer of the bank

d) The collecting bank is a holder for value e) The collecting bank is acting as an agent for receiving the payment ()

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Q: 6). Which of the following amounts to reduction of share capital under section 100 of the Companies Act, 1956?

a) Redemption of redeemable preference shares under the provisions of Section 80 and 81 of the Companies Act, 1956

b) Forfeiture of shares for non-payment of calls c) Payment of dividend out of share premium () d) Surrender of shares to a company e) Reduction of nominal share capital of a company by canceling any shares

which have not been taken by any person.

Q: 7). Which of the following statements is false in respect of offer and its acceptance under the Indian Contract Act, 1872?

a) An offer will be valid only if it is communicated to the offeree b) A person who acts according to the terms of an offer which has not been

communicated to him will not be deemed to have accepted the offer c) The communication of the offer must be made with an intention to obtain the

assent of the offeree d) A mere intent of acceptance will not suffice, the acceptance must be

communicated to the offeror e) The mode of rejection of an offer must be specified in order to

constitute a valid offer ()

Q: 8). Mr. Dheeraj is a director of Laxmi Ltd., which failed to file its annual returns from the year 2003-04. The maximum period for which Mr. Dheeraj will be disqualified from becoming a director in any public limited company is

a) 3 years b) 5 years () c) 7 years d) 8 years e) 10 years.

Q: 9). Which of the following statements is false in respect of a contract of guarantee under the Indian Contract Act, 1872?

a) Guarantee given for a time barred debt is valid () b) A guarantee may be given retrospectively for an existing debt c) A contract of guarantee presupposes the existence of a debt, therefore, if there

is no existing liability, there cannot be a guarantee d) There are always three parties in a contract of guarantee e) Where the principal debtors liability becomes unenforceable because of

illegality, the surety cannot be made liable on the said debt.

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Q: 10). Which of the following statements is false in respect of a contract of sale under the Sale of Goods Act, 1930?

a) Title to goods is immediately transferred to the buyer b) A contract of sale is an executed contract c) In case of default by the seller, the buyer may rescind the contract () d) In a sale, a breach of condition can only be treated as a breach of warranty e) In a contract of sale the goods are specified and ascertained.

Q: 11). The articles of association of Rathi Informatics Ltd. provided for a maximum of 18 directors on the Board. Presently there are 12 directors on the Board of the company. The company wishes to increase the strength of its Board to 15. Which of the following statements is correct in respect of these circumstances under the Companies Act, 1956?

a) As the proposed increase is within the maximum permissible number fixed by the articles only an ordinary resolution is required ()

b) As the proposed increase is beyond 12, a special resolution is required c) As the proposed increase is within the maximum permissible number fixed by

the articles only an ordinary resolution as well as approval of the Central Government is required

d) As the proposed increase is beyond 12, a special resolution as well as approval of the Central Government is required

e) As the proposed increase is beyond 12, a special resolution as well as approval of the National Company Law Tribunal (NCLT) is required.

Q: 12). Which of the following statements is false in respect of dividend on preference shares?

a) Where there are two or more types of preference shares, the shareholders of the class which has priority are entitled to their preferential dividend before any dividend is paid to other shareholders

b) Cumulative preference shareholders are entitled to receive all dividends which are in arrears before any dividend is paid on equity shares

c) Where cumulative preference shares have been issued at different times, the arrears of dividend will have to be paid to all the preference

shareholders equally () d) In case of non-cumulative preference shares, only the amount of dividend

which is due in the current year will have to be paid to the holders e) The preference shareholder cannot sue the company for dividends, unless the

company has declared the same and did not pay the amount.

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Q: 13). Which of the following statements is false in respect of consideration under the Indian Contract Act, 1872?

a) Consideration given at the behest of third parties will not be valid consideration

b) Inadequacy of consideration invalidates a contract () c) Consideration must be real and not illusory d) Performance of an existing legal duty will not constitute valid consideration e) Forbearance or abstinence amounts to valid consideration.

Q: 14). Which of the following statements in respect of bailment is false under the Indian Contract Act, 1872?

a) The bailor is bound to disclose, all the faults in the goods bailed to the bailee, of which the bailor is aware

b) The bailee will have to bear all the ordinary expenses incurred by vitue of the bailment

c) The bailor is responsible to the bailee for any loss sustained by him in case the bailor is not entitled to make the bailment or to receive back the goods

d) The bailor is not responsible to the bailee for any loss sustained by him in case of premature termination of a gratuitous bailment ()

e) It is the duty of the bailor to receive back the goods after the purpose is achieved.

Q: 15). Which of the following statements is false in respect of dividend under the Companies Act, 1956?

a) Dividend is to be paid only in cash b) Before payment of interim dividend a company must transfer to reserves the

prescribed percentage of estimated profits arrived at after providing for current years depreciation and arrears of depreciation/loss

c) A final dividend for any financial year can be declared and paid only when the balance sheet and profit and loss account are presented to the shareholders at the AGM

d) The shareholders can approve the recommended rate of dividend or lower the same, but cannot increase the amount of dividend

e) A dividend once declared cannot be revoked even with the consent of all the shareholders ()

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Q: 16). Which of the following powers may be exercised by the board of directors without obtaining consent of the company at a general meeting?

a) Power to contribute to the welfare of its employees any amount less than Rs.50,000 ()

b) Power to borrow in excess of capital and reserves of the company c) Power to remit debt due by a director d) Power to invest compensation amounts received on compulsory acquisition of

any of the companys properties e) Power to appoint sole selling agents.

Q: 17). Which of the following agreements is not valid under the Contract Act, 1872?

a) An agreement for training a minor in a particular trade b) An agreement between a minor agent and his major principal () c) An agreement made by the certified guardian of a minor with authority for

benefit of minor d) An agreement made by a minor agent on behalf of his principal e) An agreement by a minor to repay a loan taken for supply of necessaries to

him during his minority.

Q: 18). As per section 166 of the Companies Act, 1956, the first annual general meeting of a company should be held within

a) 6 months of its incorporation b) 12 months of its incorporation c) 15 months of its incorporation d) 18 months of its incorporation () e) 24 months of its incorporation.

Q: 19). Which of the following is not excluded for the purpose of counting maximum number of directorships under section 275 of the Companies Act, 1956?

a) Directorship in a private company b) Directorship in a private company which is the holding company of a

public company () c) Directorship in a unlimited company d) Directorship as an alternate director e) Directorship in an association not carrying on business for profit.

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Q: 20). Which of the following is not a foreign bill under the Negotiable Instruments Act, 1881?

a) A bill drawn in Singapore upon a resident of India, payable in Kuala Lumpur b) A bill drawn in Kuala Lumpur upon a resident of Singapore, payable in India c) A bill drawn in India upon a resident of Kuala Lumpur, payable in Singapore d) A bill drawn in India upon a resident of India, payable in Kuala Lumpur

() e) A bill drawn in Singapore upon a resident of Singapore, payable in Kuala

Lumpur.

Q: 21). A prospectus once registered with the Registrar Of Companies (ROC) should be issued within

a) 14 days from the date of registration with ROC b) 21 days from the date of registration with ROC c) 30 days from the date of registration with ROC d) 60 days from the date of registration with ROC e) 90 days from the date of registration with ROC ()

Q: 22). Which of the following statements is false in respect of a pawnee under the Indian Contract Act, 1872?

a) When the pawnor defaults in payment of the principal debt , the pawnee can retain the pledged goods as collateral security

b) When the pawnor fails to perform his part of the promise, the pawnee may sell the pledged goods after giving the pawnor a reasonable notice of sale

c) When the pawnor defaults in payment of the principal debt the pawnee cannot recover from the pawnor any deficit between the debt due and

sale price () d) When the pawnor defaults in payment of the principal debt, the pawnee can

file a suit for breach of contract against the pawnor e) The pawnee can sue the pawnor for any extraordinary expenses incurred by

him for the preservation of the goods pledged.

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Q: 23). Mr. Pankaj who was appointed as an additional director at the Board meeting held on December 31, 2005 continues to be in his office on the ground that the annual general meeting of the company for the year 2006 was not held as required under the Act. Mr. Pankaj was also appointed as a managing director for a period of five years with effect from January 01, 2006 at the same Board meeting. Which of the following statements is true in respect of an additional director under the Companies Act, 1956?

a) Mr. Pankaj shall hold the office as an additional director till the completion of five years

b) Mr. Pankaj shall hold the office as an additional director upto the conclusion of any general meeting

c) Mr. Pankaj shall hold the office as an additional director as long as he intends to

d) Mr. Pankaj shall vacate the office of the managing director () e) Mr. Pankaj shall hold the office of the managing director till the completion of

five years.

Q: 24). Which of the following statements is false under the Companies Act, 1956?

a) A director must be a member of the company () b) Minimum seven persons are required for incorporation of a public company c) Proxy has no right to speak in the general meeting d) Company having profits need not declare dividends e) A private company cannot issue prospectus.

Q: 25). Which of the following statements is false in respect of rights of a bailee under the Indian Contract Act, 1872?

a) Where the bailee has rendered any service or exercised his skill in respect of the goods bailed, then he can retain the bailed goods until his dues are paid

b) If the bailee has agreed to refrain from exercising the right of lien or has waived his right, then he cannot exercise the same

c) The right of particular lien will be revived, if the bailee gets possession of the bailed goods after parting with the same in the first place ()

d) The right of lien can be exercised so long as the bailee has the possession of the goods

e) The bailee may retain not only those goods of the bailor in respect of which some particular service has been rendered, but also other goods in the possession of the bailee belonging to the bailor.

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Q: 26). Section 165 of the Companies Act, 1956, in respect of conduct of statutory meeting is applicable to

a) A private company converted into a Public Company within 6 months of its incorporation ()

b) A private company, which is a subsidiary of a public company c) A public company having liability of its members unlimited d) An independent private company e) A government company registered as a private company.

Q: 27). Hiten Desai picked up a diamond ring from the floor of Divya Jewellers, Surat and handed it over to Premchand Bhatia, the manager of Divya Jewellers, with a request to hand it over to the true owner. The true owner could not be traced in spite of best efforts of Premchand. Hiten Desai paid the expenses incurred by Premchand and asked him to return the diamond ring to him. Which of the following statements is true under the Indian Contract Act, 1872?

a) Premchand is under no obligation to return the ring to Hiten Desai as the ring was found on the floor of his shop

b) Premchand is under an obligation to return the diamond ring only to the true owner

c) Premchand and Hiten Desai can share the value of the diamond ring equally d) Hiten Desai being the finder of lost goods can retain the diamond ring

against everyone except the true owner () e) Premchand can retain the diamond ring against everyone including the true

owner.

Q: 28). Under the Companies Act, 1956, up to what date a director appointed to fill casual vacancy shall hold office?

a) The last day on which the annual general meeting should have been held b) Until the original director, in whose place he is appointed, returns back c) Till the date up to which the director in whose place he is appointed

would have held office () d) Up to the next extraordinary general meeting e) Up to the conclusion of the annual general meeting.

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Q: 29). At a public auction a car was put up for sale and as Mr. Ramlal was the highest bidder, he got the car. Later, it was discovered that the car was a stolen one. This fact was also not known to the auctioneer. The true owner wishes to obtain possession of the car. Under these circumstances which of the following statements is true under the Sale of Goods Act, 1930?

a) Mr. Ramlal did not get any title against the true owner () b) The true owner cannot recover any possession as Mr. Ramlal had bought at a

public auction c) As Mr. Ramlal had purchased the car in good faith, Mr. Ramlal can enjoy

possession of the car d) The true owner can file a suit against the auctioneer for fraudulently selling a

stolen car e) The auctioneer is personally liable to the true owner for damages only and the

true owner has no right to obtain possession of the car.

Q: 30). Which of the following statements is false under the Companies Act, 1956?

a) The Board of directors should authenticate the accounts before submission to auditors

b) The Profit and Loss account should reveal the details of auditors remuneration

c) The provision of depreciation is necessary to show true and fair picture of the accounts

d) Company with a paid up capital of Rs.2 crores is required to form an audit committee ()

e) The first auditor usually holds office till the conclusion of the first annual general meeting.

Q: 31). Which of the following instances is not treated as crossing under the Negotiable Instruments Act, 1881?

a) A cheque bearing across its face the words account payee without two transverse parallel lines ()

b) A cheque bearing across its face the words not negotiable with two transverse parallel lines

c) A cheque bearing across its face the words not exceeding rupees two hundred within two transverse parallel lines

d) A cheque bearing across its face the words HDFC Bank, Karol Bagh Branch, New Delhi within two transverse parallel lines

e) A cheque bearing across its face the words Citi Bank, Daryaganj Branch, New Delhi without two transverse parallel lines.

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Q: 32). Which of the following persons is incompetent to enter into a valid contract under the Indian Contract Act, 1872?

a) The official assignee of an adjudged insolvent b) A person of the age of twenty years for whose estate a guardian has

been appointed by the Court () c) A person who is a foreign diplomat d) A convict after the expiry of his sentence e) An Indian, voluntarily residing in a foreign country.

Q: 33). Which of the following statements is false in respect of qualification shares to be held by a director of a company under the Companies Act, 1956?

a) A director will have to take up qualification shares only if required by the articles of association

b) The nominal value of the qualification shares shall not exceed Rs.5,000 or the nominal value of one share where it exceeds Rs.5,000

c) The qualification shares required to be taken up by a director must be purchased from the company ()

d) Share warrants will not count for the purpose of share qualification e) Any provision in the articles requiring a person to obtain qualification shares

before his appointment as director or within a period shorter than two months of his appointment shall be void.

Q: 34). Mr. Ankit, a creditor of Silktech Ltd. issued a demand notice by registered post at the companys registered office to payback his loan amount worth Rs.1,50,000 (along with interest). But the company neglected to reply/ respond for a period of two months. Which of the following statements is true in respect of consequences of failure of Silktech Ltd. to reply under the provisions of the Companies Act, 1956?

a) Mr. Ankit has no remedy for the negligent conduct of the company b) Mr. Ankit can sell the assets of the company and take his money c) Mr. Ankit has to file a complaint to the Central Government d) Mr. Ankit can approach the National Company Law Tribunal (NCLT)

for winding up of the company () e) Mr. Ankit has to conduct the general meeting and pass resolutions for

changing the directors.

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Q: 35). Which of the following casual vacancies of directors cannot be filled by Board of directors under the Companies Act, 1956?

a) A vacancy caused by the death of a director b) A vacancy caused by the resignation of a director c) A vacancy caused by the resignation of nominee director of a financial

institution () d) A vacancy caused due to disqualification of a director e) A vacancy caused due to failure of an elected director to assume office.

Q: 36). Which of the following agreements is voidable under the Indian Contract Act, 1872?

a) Agreements by way of wager b) Agreements contingent on impossible events c) Agreements made under a mutual mistake of fact d) Agreement induced by fraud e) Agreements by incompetent parties ()

Q: 37). Which of the following statements is true under the Negotiable Instruments Act, 1881?

a) Every holder is a holder in due course b) Every holder in due course is a holder for value () c) Every holder for value is a holder in due course d) A holder in due course need not have taken the instrument in good faith e) Holder in due course may be party to the fraud.

Q: 38). Which of the following is an illegal agreement under the Indian Contract Act, 1872?

a) Agreement by way of wager b) Agreeing to sell a house for paying money lost in gambling c) Hire of a truck knowingly for bringing goods which are prohibited () d) Agreement not to enforce promise through legal means e) Agreements in restraint of trade.

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Q: 39). Under the Negotiable Instruments Act, 1881, when a negotiable instrument is delivered conditionally or for a special purpose as a collateral security or for safe custody only, and not for the purpose of transferring absolutely property therein, it is called an

a) Inchoate instrument b) Escrow () c) Accommodation bill d) Trade bill e) Ambiguous instrument.

Q: 40). Which of the following matters requires passing of special resolution and also the approval of the Central Government under the Companies Act, 1956?

a) Increase in the paid up capital b) Rectification of name of the company under section 22 of the Companies

Act,1956

c) Payment of interest out of capital () d) Sub-division of shares e) Appointment of company secretary.