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ML_2
Time Allowed: 3 Hours Total Marks: 100
Important instruction to candidates:
QUESTION NO.1 is Compulsory. Answer any FOUR questions from the remaining FIVE questions.
Q. No. Questions Marks
1 (a) “The property of the company is not the property of shareholders; it is the 3
property of the company.” Explain.
(b) Explain the “condition as to merchantability” and “condition as to 4
wholesomeness” under the Sale of Goods Act, 1930.
(c) Whether a minor may be admitted in the business of a partnership firm? 3
Explain.
(d) Vikas borrowed a sum of ₹10 lakhs from Jyoti. Vikas appointed Jyoti as his 3
agent to sell his land and authorised him to appropriate the amount of loan
out of the sale proceeds. Afterwards, Vikas revoked the agency. Decide under
the provisions of the Indian Contract Act, 1872 whether the revocation
of the said agency by Vikas is lawful?
(e) What is Law and its sources? Also, explain the process of formation of law in 7
India.
2 (a) Mr. Rahul and Ms. Reena want to incorporate an LLP. As a corporate legal 7
advisor, advise Mr. Rahul & Ms. Reena on the essential elements needed
to incorporate an LLP.
(b) State the legal rules regarding consideration. (Any 5 points) 5
(c) A & B entered into a contract to supply unique items, alternate of which is not 3
available in the market. A refused to supply the agreed unique item to B. What
direction could be given by the Court for breach of such contract?
(d) (i) Mr. CB was invited to guarantee an employee Mr. BD who was previously 5
dismissed for dishonesty by the same employer. This fact was not told to
Mr. CB. Later on, the employee embezzled funds. Whether CB is liable
for the financial loss as surety under the provisions of the Indian
Contract Act, 1872?
(ii) Mr. X agreed to give a loan to Mr. Y on the security of four properties. Mr.
A gave a guarantee against the loan. Actually, Mr. X gave a loan of a smaller
amount on the security of three properties. Whether Mr. A is liable as
surety in case, Mr. Y failed to repay the loan?
3 (a) What is a partnership deed? State the information contained in a partnership 5
deed.
(b) When does the dissolution of a partnership firm take place? 4
(c) X Limited was registered as a public company. There are 220 members 5
in the company, as noted below:
(i) Directors and their relatives – 190
(ii) Employees – 10
(iii) Ex-employees (shares were allotted when they were employees) – 5
(iv) 5 couples holding shares jointly in the name of husband and wife (5×2) – 10
(v) Others – 5
The Board of Directors of the company propose to convert it into a
private company. Also, advise whether a reduction in the number of
members is necessary.
(d) Give differences between Bailment and Pledge. 6
4 (a) What do you understand by the term “unpaid seller”? When can an unpaid 5
seller exercise the right of stoppage of goods in transit?
(b) Explain the term “Delivery and its forms” under the Sale of Goods Act, 1930. 4
(c) What do you mean by “Goodwill” as per the provisions of the Indian 3
Partnership Act, 1932?

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(d) Sheena was a classical dancer. She entered into an agreement with Shital 6
Vidya Mandir for 60 dance performances. As per the contract, she was
supposed to perform every weekend and she will be paid ₹10,000 per
performance. However, after a month, she was absent without informing, due
to her personal reasons.
Answer the following questions as per the Indian Contract Act, 1872.
(i) Whether the management of Shital Vidya Mandir has right to terminate
the contract?
(ii) If the management of Shital Vidya Mandir informed Sheena about its
continuance, can the management still rescind the contract after a month
on this ground subsequently?
(iii) Can the Shital Vidya Mandir claim damages that it has suffered because
of this breach in any of the above cases?
(e) Differentiate between cheque and Bill of exchange. 2
5 (a) Define OPC and state the rules regarding its membership. Can it be converted 7
into a Section 8 or Private Company?
(b) At an auction sale, Ramesh made the highest bid for an article of Suresh. 5
State the legal position in each of the following alternative cases:
(i) If Ramesh withdrew the bid before the fall of the hammer, though, he
knew that one of the conditions of the sale was “bid once made cannot
be withdrawn”.
(ii) If Suresh refused to accept the highest bid. The sale was not notified,
subject to a reserve price.
(iii) If Suresh appointed two persons to bid on his behalf. The sale was
notified subject to a right to bid.
(iv) If Ramesh was allowed to take it away by giving a cheque for the price
and signing an agreement that ownership should not pass to him until
the cheque was cleared. The cheque was dishonoured, but, in the
meantime, Suresh sold the article to Vivek.
(v) If the sale was notified subject to a reserve price and the auctioneer by
mistake accepted Ramesh’s highest bid (which was lower than the
reserve price) by striking the hammer. Later on, the auctioneer refused
to deliver the goods.
(c) Explain different types of partners. 4
(d) Define: 4
(i) Mercantile agent
(ii) Corporate veil
6 (a) Explain the meaning of an agreement opposed to public policy. Discuss any six 7
circumstances where an agreement is said to be opposed to public policy.
(b) Krishna, Kamya and Ketan are partners in a firm. They jointly promised to pay 5
₹6 Lakhs to Dia. Kamya becomes insolvent and her private assets are sufficient
to pay 1/5th of her share of debts. Krishna is compelled to pay the whole
amount to Dia. Examining the provisions of the Indian Contract Act, 1872,
decide the extent to which Krishna can recover the amount from Ketan?
(c) Substantiate giving reasons, whether the following statements are 5
correct or incorrect:
(i) In a Promissory Note, the promise to pay must be conditional.
(ii) A Bill of Exchange may not be in writing.
(d) Explain the terms ‘Acceptance for Honour’ and ‘Drawee in case of need’ as per 3
the Negotiable Instruments Act, 1881.

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