QP Code: 22008034

B.COM DEGREE (CBCS) PRIVATE EXAMINATION, JULY 2022

Second Semester
B.COM CORE - CO2CRT05 - BUSINESS REGULATORY FRAMEWORK
2017-2019 ADMISSIONS
Time: 3 Hours Max. Marks: 80
Section I
Part A
Answer any ten questions. Each question carries 2 marks.
1. Can consideration move from a stranger?
Sec.2(d) provides that a consideration may move from “the promisee or any other
person”. It means that as long as there is a consideration for a promise, it is immaterial
who has furnished it. But according to English law consideration must move from the
promisee and the promisee only.
2. Who is a person of unsound mind? List out the different persons considered as
'persons of unsound mind'.
As per section 12, “a person is said to be of sound mind for the purpose of making the
contract, if at the time when he makes it, he is capable of understanding it and of forming
a rational judgement as to its effects upon his interests.” A person who is not of sound
mind is termed as a person of unsound mind. The persons who are considered as persons
of unsound mind are idiots, lunatics and drunken persons.
3. What do you mean by Champerty?
Champerty is an agreement whereby one party assists another to bring an action for
recovering money or property and is to share in the proceeds of the action. For example,
if A gives assistance to B to file a case against C on a promise that B would give 50% of
the proceeds of the litigation to A is a case of champerty.
4. Who is a bailee?
Bailment is the delivery of goods by one person to another for some purpose, upon the
contract that they shall, when the purpose is accomplished, be returned, or otherwise
disposed of according to the directions of the person delivering them. The person to
whom the goods are delivered is called the ‘bailee’.
5. What is special lien?
A particular or special lien is the right of a person to retain possession of those goods
in respect of which he has rendered some service involving the exercise of labour or skill.
For example, A delivers a rough diamond to B, a jeweller, to be cut and polished. B is
entitled to retain the finished diamond till he paid for services he has rendered.
6. Illustrate the contract of indemnity.
A contract by which one party promises to save the other from loss caused to him by
the conduct of the promisor himself or by the conduct of any other person is called a
contract of indemnity. For example, A promises to indemnify B, a banker for any loss that
 he may sustain by the reason of the dishonesty of C, who is the cashier appointed by B at
the request of A.
7. What is Agency by holding out?
This is a branch of agency by estoppel. Sometimes prior positive or affirmative act on
the part of the principal may lead another person to believe that there is an agent principal
relationship. For example, P regularly purchases goods for him through his servant on
credit from T. In such situations T is entitled to believe that P’s servant is the agent of P.
8. Who is a special agent?
A special agent is one who is appointed to perform a particular act or to represent his
principal in some particular transaction. For example, an agent appointed to sell a
property is a special agent. His authority comes to an end as soon as the act is performed.
9. What is the meaning of actual authority?
Actual or real authority is the authority conferred on agent by the principal. It may be
expressed or implied. For example, A owns a shop in Serampore, living himself in
Calcutta, and visiting the shop occasionally. The shop is managed by B, and he is in the
habit of ordering goods from C in the name of A for the purposes of the shop and of
paying for them out of A’s funds with A’s knowledge. B has implied authority from A to
order goods from C in the name of A for the purposes of the shop.
10. Define the term "condition" in Sale of Goods Act.
A condition is a stipulation essential to the main purpose of the contract, the breach of
which gives rise to a right to treat the contract as repudiated. Only when a stipulation goes
to the root of the contract, it is termed as a condition.
11. A mercantile agent may transfer a better title than what he himself has. Comment.
A mercantile agent can transfer a better title to the buyer if the following conditions
are satisfied:
a) The seller must be a mercantile agent
b) He must be in possession of the goods or any document of title to the goods with
the consent of the real owner.
c) The sale should be in the ordinary course of business
d) The buyer must act in good faith and
e) The buyer should not have, at the time of the contract, notice that the seller has no
authority to sell

12. What is meant by 'symbolic delivery'?

It is the doing of some act which has the effect of putting the goods in possession of
the buyer. For example, delivery of goods by transfer of documents of title is symbolic
delivery.
Part B
Answer any six questions. Each question carries 5 marks

13. Differentiate void agreement and illegal agreement.

a. All illegal agreements are void, but all void agreements are not illegal
 b. An agreement becomes void when any of the essential elements are absent, but an
agreement becomes illegal when it is criminal in nature, immoral or opposed to
public policy.
c. An agreement collateral to an illegal agreement is also void. But a collateral
agreement to a void agreement may or may not be void.

14. When does an offer come to an end?

a. By notice of revocation
b. By lapse of time
c. By failure to fulfil a condition precedent
d. By death or insanity of the proposer
e. Rejection by counter offer
f. By non-acceptance of the offer in the prescribed mode

15. When does a claim on quantum meruit arise?

The term quantum meruit means ‘as much as merited’ or ‘as much as earned’. A right
to sue on a quantum meruit arises where a contract, partly performed by one party, has
become discharged by breach of the contact by the other party. This right to claim the
remuneration for the service rendered is not found on the original contract. It arises on an
implied promise by the other party to pay for what has been done.

16. What are the responsibilities of a finder of goods?

a. He must take reasonable care of the goods
b. He must not use the goods for his own purpose
c. He must not mix the goods with his own goods
d. He must try to find out the true owner of the goods if he does not do that, he will
be liable as trespasser.

17. Describe the various kinds of guarantee.

a. Specific guarantee- guarantee for a single transaction
b. Continuing guarantee- guarantee for a series of transactions
c. Retrospective guarantee- guarantee for an existing debt
d. Prospective guarantee- guarantee for a future debt
e. Fidelity guarantee- guarantee for good conduct or honesty of person

18. Explain the duties of an agent.

a. Duty to work according to the directions given by the principal
b. To work with reasonable skill and diligence
c. Duty to render accounts
d. Duty to communicate in case of difficulty
e. Duty not to deal on his own account
f. Duty to pay money received
g. Duty not to use information obtained against the principal
h. Duty not to set up adverse title
i. Duty not to put himself in a position where interest and duty conflict
j. Duty to protect and preserve the interests of the principal in case of his death or
insolvency
 k. Duty not to delegate authority

19. Explain the rights of an agent.

a. Rights of retainer
b. Right to remuneration
c. Right of lien
d. Right to be indemnified against consequences of lawful acts
e. Right to be indemnified against consequences of acts done in good faith
f. Right of compensation

20. Explain the duties of principal.

a. To indemnify the agent against the consequences of all lawful acts
b. To indemnify the agent against the consequences of acts done in good faith
c. Duty to give compensation
d. To pay the remuneration to the agent

21. Distinguish between a sale and a hire-purchase agreement

a. In a sale, as the contract is entered into, ownership is transferred from the seller to
the buyer. In a hire purchase agreement ownership is transferred from the seller to
the hire purchaser only on the payment of fixed number of instalments
b. In a sale, the position of the buyer is that of the owner. In a hire purchase
agreement, the position of the hire purchaser is that of the hirer as well as a bailee
c. In a sale, the buyer is bound to pay the price of the goods and he cannot terminate
the contract. In a hire purchase agreement, an option is given to the hire purchaser
and he can terminate the contract at any time and after that he is not bound to pay
further instalments.
d. In a sale, when the buyer becomes insolvent, the seller has no right to seize and
take back the goods. In a hire purchase agreement, if a hire purchaser becomes
insolvent or fails to pay the instalment, the seller has the right to seize and take
back the goods
e. In a sale, if the payment is made on instalment basis, it is towards the price of the
goods. In a hire purchase agreement, the instalments paid by the hire purchaser
will be regarded as hire charges
f. Sale is an executed contract. Hire purchase agreement is only an executory
contract.

Part C

Answer any two questions. Each question carries 15 marks

22. What are the essentials and legal rules for a valid coercion?
a. Committing an act forbidden by the Indian Penal Code
b. Threatening to commit any act forbidden by the Indian Penal Code
c. Detention of property of another to enter into an agreement
d. Threatening to detain any property of another person
23. Discuss the similarities and dissimilarities between bailment and pledge with
suitable examples.
a. Similarities
i. In both cases, delivery of good is more important
ii. In both cases, possession of goods alone is transferred, and the ownership
is retained by the owner
iii. In both, movable properties alone are the subject matter of the contract
iv. Both are created by the agreement between parties.
v. In both goods are to be returned on the fulfilment of purpose for which
goods are bailed or on the expiry of the fixed time
b. Dissimilarities
i. Bailment and pledge differ in the nature of purpose. Pledge is the bailment
of goods for a specific purpose. Bailment is for any purpose
ii. In the case of non-payment, the bailee can retain the goods bailed, but he
cannot sell it. On the other hand the pledgee can sell the goods if the
amount due to him is not paid
iii. Bailment is genus, whereas pledge is a species of bailment
iv. In the case of gratuitous bailment, bailee is bound to return the goods on
demand by the bailor. But pledgee is not bound to return the goods
delivered as security on demand by the bailor unless and until the debt is
repaid or promise is performed
v. On a bailment, what passes to the bailee is a right of the possession of the
goods bailed whereas on a pledge, the pledgee obtains a special property in
the goods pledged
vi. In the case of bailment, the bailee may use the goods bailed as per the
terms of the contract. In a pledge, pawnee has no right of using the goods.

24. Who is a surety? Explain the circumstances of discharging the liabilities of the
surety.
The person who gives guarantee to the creditor in respect of the default by the
principal debtor is called surety. Surety is discharged in the following circumstances:
a) Discharge by revocation
a. Revocation by giving notice
b. Revocation by death of surety
b) Discharge by the conduct of the creditor
a. Variation in terms of contract
b. Release or discharge f principal debtor
c. Compounding with or giving time to the principal debtor
d. Creditors act or omission impairing surety’s eventual remedy
e. Loss of security
c) Discharge by invalidation of contract
a. Fraud, concealment etc.
b. Lack of essential elements of a valid contract

25. Explain the different modes in which agency can be terminated.

a. Termination by the act of the parties
 i. Agreement
ii. Revocation by the principal
iii. Revocation by the agent
b. Termination by operation of law
i. Performance of the contract
ii. Expiry of time
iii. Death or insanity
iv. Insolvency
v. Destruction of the subject matter
vi. Principal becoming an alien enemy
vii. Dissolution of a company
viii. Termination of sub agent’s authority

Section II
1. C - Section 2 (h)
2. B – Contract
3. D – An agreement enforceable by law
4. C - It is an Act to define certain parts of the law relating to contracts and contains only
the general principles of contract
5. A - A buys a book from a shop
6. A - Offer and acceptance are revocable
7. D - Section 2(g)
8. D - Can be claimed as a matter of right
9. B – Injunction
10. A – agreement
11. A - Personal affairs
12. D - All of the above
13. C- Lien
14. A -Principal
15. B - Revocation by the principal
16. C – Insolvency
17. A - movable goods only
18. D - both(a) and (b)
19. A -before fall on hammer
20. C - Indemnity holder