Question 1

A contract is:

Accepted Answer

Contract = agreement enforceable by law.

Question 2

Endorsement means:

Accepted Answer

Endorsement transfers negotiable instrument.

Question 3

Business law is important mainly because it:

Accepted Answer

Law provides rules, certainty and dispute remedies.

Question 4

Breach of warranty gives right to:

Accepted Answer

Warranty breach usually leads to damages, not rejection.

Question 5

Effect of coercion on contract is:

Accepted Answer

Coercion makes contract voidable.

Question 6

A person competent to contract must be:

Accepted Answer

Competency requires majority, sound mind, no disqualification.

Question 7

Agreement without consideration is generally:

Accepted Answer

General rule: no consideration, no contract (exceptions exist).

Question 8

Undue influence occurs when:

Accepted Answer

Dominant position used to obtain unfair advantage is undue influence.

Question 9

An agent’s duty includes:

Accepted Answer

Agent must obey instructions and act with care.

Question 10

Promissory note contains:

Accepted Answer

PN is a promise by maker.

Question 11

An acceptance after expiry of time is:

Accepted Answer

Late acceptance is not valid unless accepted by offeror.

Question 12

Unpaid seller is one who:

Accepted Answer

Unpaid seller if price unpaid or conditional payment dishonoured.

Question 13

Holder in due course is one who takes instrument:

Accepted Answer

HDC takes for value, good faith, before maturity without notice of defects.

Question 14

An agreement to do an impossible act is:

Accepted Answer

Impossible agreements are void.

Question 15

Consumer responsibilities include:

Accepted Answer

Consumers should check details and keep proof.

Question 16

A contract of indemnity is to:

Accepted Answer

Indemnity protects against loss.

Question 17

A contract which becomes void later is called:

Accepted Answer

Void contract becomes void due to subsequent reasons (e.g., impossibility).

Question 18

General rule about risk is:

Accepted Answer

Risk generally passes with property unless agreed otherwise.

Question 19

A three-tier redressal structure generally includes:

Accepted Answer

Typical structure: district, state, national (exam level).

Question 20

Displaying goods with price in a shop is generally:

Accepted Answer

Display is usually invitation to offer.

Question 21

Define acceptance.

Accepted Answer

Acceptance is the expression of assent by the offeree to the offer; when accepted, the offer becomes a promise.

Question 22

What is a legal duty?

Accepted Answer

A legal duty is an obligation imposed by law that a person must perform.

Question 23

Define warranty (Sale of Goods).

Accepted Answer

A warranty is a stipulation collateral to the main purpose of the contract; breach gives right to damages but not rejection.

Question 24

Define bill of exchange.

Accepted Answer

A bill of exchange is a written and signed instrument containing an unconditional order by the drawer directing the drawee to pay a certain sum of money to a certain person or order or bearer.

Question 25

What is agreement to sell?

Accepted Answer

Agreement to sell is a contract where transfer of ownership is to take place at a future time or subject to a condition.

Question 26

State any one consumer right.

Accepted Answer

Right to safety.

Question 27

Define pledge.

Accepted Answer

Pledge is bailment of goods as security for payment of a debt or performance of a promise.

Question 28

Define discharge of contract.

Accepted Answer

Discharge of contract means termination of contractual obligations, releasing parties from further performance.

Question 29

Define agency.

Accepted Answer

Agency is the relationship where an agent is employed to act on behalf of a principal and represent him in dealings with third parties.

Question 30

Define agreement.

Accepted Answer

An agreement is every promise and every set of promises forming consideration for each other.

Question 31

Explain “opposed to public policy” in brief (any three points).

Accepted Answer

Public policy refers to agreements harmful to public welfare. Such agreements are void/unlawful.

Examples (any three):
1) Agreements interfering with administration of justice.
2) Agreements promoting corruption.
3) Agreements restraining lawful trade (general rule).

Question 32

Differentiate between coercion and undue influence (any three points).

Accepted Answer

Coercion vs undue influence:

| Point | Coercion | Undue influence |
|---|---|---|
| Nature | force/threat, unlawful detention | dominance of will/relationship |
| Method | fear and pressure | unfair advantage using position |
| Example | threat to harm/property detention | guardian influencing ward |

Question 33

Differentiate between bailment and pledge (any three points).

Accepted Answer

Bailment vs pledge:

| Basis | Bailment | Pledge |
|---|---|---|
| Purpose | some purpose (repair/storage) | security for debt/performance |
| Right to sell | no right to sell | pledgee can sell after notice on default |
| Relation to debt | not necessary | linked to debt/obligation |

Question 34

Explain revocation of offer and acceptance (brief, any three points).

Accepted Answer

Revocation means withdrawal.

1) Offer can be revoked any time before a valid acceptance becomes effective as per rules.
2) Acceptance can be revoked before it comes to knowledge of offeror (typical exam point).
3) Revocation must be communicated to be effective.

Question 35

Explain any three consumer responsibilities.

Accepted Answer

Consumer responsibilities (any three):

1) Check MRP/expiry date/quality marks.
2) Demand bills/receipts and keep records.
3) Read warranty/return/refund policy, especially in online purchases.

Question 36

Discuss communication and revocation of offer and acceptance with a flowchart and a short case scenario.

Accepted Answer

Communication is essential in offer and acceptance. An offer must be communicated to the offeree, and acceptance must be communicated to the offeror. Revocation means withdrawal and must also be communicated.

```mermaid
flowchart LR
  A[Offer made] --> B[Offer communicated]
  B --> C{Valid acceptance?}
  C -->|Yes| D[Acceptance communicated]
  C -->|No / counter-offer| E[No contract]
  B --> F[Offer revoked before valid acceptance?]
  F -->|Yes| E
  D --> G[Contract formed]
```

**Case:** A offers to sell a laptop to B for ₹30,000. Before B accepts, A informs B that the offer is withdrawn. After receiving the withdrawal, B says “I accept.” Here, acceptance after valid revocation is ineffective, so no contract is formed.

Thus, timing and communication of revocation and acceptance are crucial in contract formation.

Question 37

Explain acceptance and rules of valid acceptance. Use a table and examples.

Accepted Answer

Acceptance is the assent given by the offeree to the offer. When the offer is accepted, it becomes a promise and can result in a contract if other essentials are present.

**Rules of valid acceptance:**

| Rule | Meaning | Example |
|---|---|---|
| Absolute and unqualified | no change in terms | changing price becomes counter-offer |
| Must be communicated | silence is not acceptance | not replying generally is not acceptance |
| By the right person | only offeree can accept | stranger cannot accept specific offer |
| In prescribed manner & within time | follow required method and time | late acceptance invalid unless accepted by offeror |

Therefore, acceptance must match the offer completely and be properly communicated to create contractual obligation.

Question 38

Explain conditions and warranties and differentiate them using a table with suitable examples.

Accepted Answer

In a contract of sale, stipulations may be conditions or warranties.

A **condition** is a stipulation essential to the main purpose of the contract. Its breach gives the buyer the right to reject the goods and also claim damages.

A **warranty** is a stipulation collateral to the main purpose of the contract. Its breach gives only the right to claim damages and not the right to reject the goods.

| Basis | Condition | Warranty |
|---|---|---|
| Importance | essential to main purpose | collateral to main purpose |
| Remedy on breach | reject goods + damages | damages only |
| Effect | may treat contract repudiated | contract continues |

Example: If a buyer orders “new original” machine and receives old machine, it is breach of condition and buyer can reject. If a warranty about minor accessory is breached, buyer generally claims damages.

Thus, the difference mainly lies in importance and remedy.

Question 39

Explain e-contracts and online transactions: formation, types and precautions. Include a small flowchart.

Accepted Answer

E-contracts are contracts formed electronically through websites/apps/email. They are common in online purchases, subscriptions and digital services.

Formation (simple view):

```mermaid
flowchart LR
  A[Offer on website/app] --> B[User reviews terms]
  B --> C[Acceptance
(click "I agree" / place order)]
  C --> D[Online payment/confirmation]
  D --> E[Contract formed + electronic record]
```

Types:
- Click-wrap: acceptance by clicking “I agree”.
- Browse-wrap: using the site implies acceptance of posted terms.
- Shrink-wrap (in some cases): terms inside packaged software.

Precautions: verify seller and gateway, avoid sharing OTP, use strong passwords/2FA, read refund/return policy, and keep screenshots/invoices.

Therefore, understanding e-contract types and safe practices helps consumers avoid fraud and claim remedies if disputes arise.

Question 40

Explain promissory note, bill of exchange and cheque and differentiate them using a table.

Accepted Answer

Negotiable instruments are written documents used in business to make and settle payments. The main negotiable instruments are promissory note, bill of exchange and cheque.

| Basis | Promissory Note | Bill of Exchange | Cheque |
|---|---|---|---|
| Nature | unconditional promise to pay | unconditional order to pay | bill drawn on banker payable on demand |
| Parties | 2 (maker, payee) | 3 (drawer, drawee, payee) | 3 (drawer, bank, payee) |
| Acceptance | not required | required by drawee | not required |
| Payable | on demand or future date | on demand or future date | always on demand |

Thus, promissory note is a promise, while bill and cheque are orders, and cheque is a special type of bill drawn on a bank.

Business Law — Question Paper

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