Roll No.

_________

Integrated Academy of Management and Technology
Class Test, March - 2013
PGDM-3 Tri. Batch (2012-14)
Legal Aspects of Business

Marks-22.5 Time: 60 Minutes.

Note: Attempt all questions. All questions in Section A are given with some options with ONLY
single correct answer. More than one answer indicated against a question will be deemed as
incorrect. There will be NO negative marking. Double () marking will lead to cancellation and
award of zero marks. Tick Mark () Your Answers.
SECTION A (12 Marks)
Q1. Agreement with a minor is:
a) Void * b) Voidable c) Illegal d) Legal
Q2. A Voidable agreement is one which:
a) Has been broken by a party
b) Can be enforced
c) Can be rescinded at the opinion of one of the aggrieved parties*
d) Cannot be enforced in the court of law
Q3. Contract in which only one party has to perform his promise is known as:
a) Executed Contract b) Executory Contract
c) Unilateral Contract* d) Bilateral Contract
Q4. In which of the following cases, there is no communication of acceptance:
a) Fall of hammer in auction sale b) Keeping agreement in a drawer*
c) Cashing of a cheque d) all of these
Q5. Reciprocal means:
a) A promise in return for a promise * b) A promise in return for a agreement
c) A promise in return for a Contract d) Accepted promise
Q6. Which of the following is not an exception to the rule No Consideration, No Contract?
a) Compensation for Involuntary Services b) Love & affection
c) Contact of Agency d) Gift *
Q7. The minimum age for becoming a major is:
a) 15 Year b) 16 Year c) 18 Year * d) 21 Year
Q16. Who is liable for supplies of necessities to a minor?
a) The Minor b) The Guardian of the minor*
c) The Government
Q8. Which of the following elements do not affect the free consent of the parties?
a) Coercion b) Fraud c) Unsound Mind* d) Undue Influence
Q9. Moral pressure is involved in the case of:
a) Coercion b) Fraud c) Mispresentation d) Undue Influence*
Q10. A buys an article thinking it is worth Rs. 1000/- while it is actually worth Rs. 500/- only. Decide what
will be the remedy to A?
a) The agreement can be avoided on the ground of mistake
b) The agreement cannot be avoided on the ground of mistake*
c) A can sue for taking back Rs. 500/-
d) A can sue for recovery of Rs. 2000/-
Q11. A party agrees to pay five lakhs to another party if first party brings to earth a star from sky. This is
known as:
a) Contingent Contract b) Quasi Contract c) Wagering Contract d) None
of these*
Q12. A & B bet as to whether it would rain or not. If it rains A promise to pay Rs. 100 to B & if it did not
rain B pays an equal amount to A. Decide the type of agreement.
a) Contingent Contract * b) quasi Contract c) Wagering contract* d)
Implied Contract













Section B (10.5 Marks)
Answer the following questions within 20-30 words only.
Q1. A railway company invited proposals for a loan on debentures. The company was authorized
to issue debentures of the amount of Rs. 600000 by its constitution. At the time the
advertisement was published the company had issued debentures of the full amount it was
authorized to issue. Thus the company had exhausted its borrowing powers. W offered a loan of
Rs. 50000 on seeing the advertisement. The directors of the company accepted the loan &
issued him a debenture of the company. The question was whether the loan was ultra vires?
(2.5 Marks)
Solution 1. The loan was ultra vires the powers of the directors & void. It was held by the court
that the directors by inserting the advertisement had warranted that they had power to borrow
which they in fact did not possess. Directors were personally held liable as their warranty was
broken.
Q2. A Companys articles of association contained a clause to the effect that B should be the
director of the company & should not be removable till after 1988. However, he was removed
earlier & he brought an action to restrain the company from excluding him. The question was
can the company be restrained from removing him from directorship of the company?
(2 Marks)
Solution 2. It was held that there was no contract between B & the company. Thus company
could remove him from directorship. It was held by the court that no outsider can enforce
articles against the company even if they purport to give him certain rights. (Refer: Browne vs.
La Trinidad, (1887) 37 Ch D 1)
Q3. A company was prosecuted for failure to call an AGM. The company had called one AGM in
December, 1934. This was adjourned in March, 1935 and then it was held. After that,
subsequent meeting was held in February, 1936. The company was prosecuted for not holding
the meeting in the year 1935. It was contended on the behalf of the company that the meeting
was held in that year. The court held that the meeting of March, 1935 was the adjourned
meeting of 1934.
(2 Marks)
Solution 3. The company was convicted on the ground that there should be one meeting per
year and as many meetings as there are years.
Q4.X, a minor, was a professional boxer. He held a boxing license from the British Boxing Board.
Under the terms of license certain money was paid to him. The money was to be stopped, if he
was disqualified. In a boxing match he was disqualified and the money was withheld by the
board. X sued the board to recover it. The question was whether he can recover it.
(2 Marks)