CMA INTERMEDIATE LAW COMPLETE QUESTIONS AND ANSWERS.

This is all the questions and answers of the law subject of CMA Intermediate student, these answers have been taken from the CMA model only. If any mistake comes in any answer, then you can tell me through cmawalebhaiya@gmail.com or comment.

All these are taken from the cma intermediate model only, all the questions are with answers, some questions are not given in the answer model, so they have also been taken from the internet.

CMA INTERMEDIATE LAW

STUDY NOTE : 1 INDIAN CONTRACT ACT, 1872

 

QUESTION 1. What are the points to be taken into account for a valid offer?

SOLUTION : The offer must be a valid one. The following points are to be taken into account for a valid offer-

·         The offer must be in clear, definite, complete and final in terms. It should not be vague in terms;

·         The communication may be in writing or oral;

·         The communication may be in expressed terms or in implied terms;

·         Communication of offer is complete when it comes to the knowledge of the person to whom it is Made;

·         The offer must be communicated to the offeree. The offer becomes effective only when it has

·         been communicated to the offeree so as to give him an opportunity to accept or reject the offer;

·         The offer may be general or specific – if an offer is made to a specific person it is called specific

·         offer. Such offer can be accepted by such specific person; if an offer is made to the world at

·         large, it is a general offer. It can be accepted by any member of the general public by fulfilling the

·         condition laid down in the offer;

 

QUESTION 2 .  What are the requirements for a valid contract ?

 

SOLUTION :  Section 10 provides that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not otherwise expressly declared to be void.

 

The following are the requirements for a valid contract-

 

•      There shall be an offer or proposal by one party and acceptance of the proposal by the other party which results in an agreement;

•      There shall be an intention to create legal relations or an intent to legal consequences;

•      The agreement shall be supported by lawful consideration;

•      The parties to the contract shall be competent to contract;

•      There shall be free consent between the parties to the contract;

•      The object and consideration of the contract shall be legal and the same shall not be opposed to public policy;

•      The terms of the consent shall be certain;

•      The agreement is capable of being performed i.e., it is not impossible of being performed.

 

QUESTION 3 . When an offer may be lapsed?

SOLUTION :  An offer lapses if one or more conditions are not fulfilled. An offer to buy goods, for example, is made on the assumption that they will remain in the same condition until acceptance; it lapses if that ceases to be the case.

 

QUESTION 4 . What are two points to be taken into account in case of acceptance?

SOLUTION : Section 4 provides that the communication of an acceptance is complete-

 

·         as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor;

·       as against the acceptor, when it comes to the knowledge of the proposer.

 

QUESTION 5 . Describe the procedure to revoke offer and acceptance?

SOLUTION :  Revoke offer

Section 5 provides that a proposal may be revoked at any time before the communication of acceptance is complete as against the proposer but not afterwards.

As per Section 6, a proposal is revoked—

 

(1)  by the communication of notice of revocation by the proposer to the other party;

(2)  by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;

(3)  by the failure of the acceptor to fulfil a condition precedent to acceptance; or

(4)  by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.

  

Revocation of acceptance 

Section 5 provides that an acceptance may be revoked at any time before the communication of acceptance is complete as against the acceptor but not afterwards.

 

QUESTION 6 . Under what circumstances the agreement becomes void?

SOLUTION :  A contract may be deemed void if the agreement is not enforceable as it was originally written. In such instances, void contracts (also referred to as "void agreements"), involve agreements that are either illegal in nature or in violation of fairness or public policy.

QUESTION 7 . Write short notes on –

(a) e-contracts;

(b) Quasi Contracts;

(c) Contingent contracts.

SOLUTION :

1.    E-contracts

 

Electronic contracts are paperless contracts and are in electronic form. It is the change of technology and legal requirements lead the contract to be in electronic form. E-contract is a contract modeled, specified, executed and deployed by a software system. They are conceptually very similar to traditional commercial contracts. E-contract also requires the basic elements of a contract. The following are.

 

·         An offer is to be made;

·         Offer is to be accepted;

·         There shall be a lawful consideration.

 

2.    Quasi Contracts

 

Sometimes the law implies a promise imposing obligations on one party and conferring the right in favor of the other even when there is no offer, no acceptance, no consensus ad idem, and in fact, there is neither agreement nor promise. Such cases are not contracts but the court recognizes them as relations resembling those of contracts and enforces them as if they were contracts. Such is called

as a quasi contract.

 

This type of contract rests on the equitable principle that a person shall not be allowed to enrich himself unjustly in the experience of another. It is obligation which the law creates in the absence of any agreement, when any person is in the possession of one person’s money or its equivalent under such circumstances that in equity and good conscience, he ought not to retain it and which in justice and

fairness belongs to another. It is the duty and not an agreement or intention which defines it.

 

3.    Contingent contracts.

 

Section 31 defines ‘contingent contract’ as a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.

 

QUESTION  8. In which ways the contract may be discharged?

SOLUTION : A contract may be discharged by operation of law in the following cases.

 

•     Death 
•     Insolvency
•        Unauthorized material alteration.
•         Merger

a)    Death:

In contracts involving personal skill or ability, death terminates the contracts. In other cases, the rights and liabilities of the deceased person will pass on to his legal representatives.

 

b)    Insolvency:

 

The insolvency of the promisor discharges the contract. The promisor is discharged from all liabilities incurred prior to his adjudication.

 

c)     Unauthorized material alteration:

Material alteration in the terms of the contract without the consent of the other party discharges the contract. Change in the amount of money to be paid, date of payment, place of payment etc. are examples of material alteration.

 

d)   d. Merger:

When inferior rights of a person under a contract merge with superior rights under a new contract, the contract with inferior rights will come to an end.

Example: Where a part-time lecturer is made full-time lecturer, merger discharges the contract of parttime lecturership.

 

e)    Discharge by impossibility of performance:

Impossibility of performance results in the discharge of the contract. An agreement which is impossible is void, because law does not compel to do impossible things.

 

 

QUESTION  9. Differentiate between contract of indemnity and contract of guarantee?

SOLUTION : contract of indemnity and contract of guarantee.

S.no	Contract of Indemnity	Contract of guarantee
1.	In this contract there are two parties – the indemnifies and the indemnified	In this contract three parties are involved – principal debtors, surety and creditor
2.	The primary liability is on the indemnifier	The principal liability is on the principal debtors. Secondary liability is on the surety.
3	The indemnifier is not acting at the request of the debtor.	The surety gives contract at the request of the principal debtor.
4	The possibility of any loss happening is the only contingency against which the indemnifier undertakes to indemnify	There is an existing debt for which the surety gives guarantee to the creditor on behalf of the principal debtor.
5	The indemnifier cannot sue the third party in his own, unless there is an assignment.	The surety is entitled to proceed against the principal debtor when he is obliged to perform the guarantee
6	The contract is between the indemnifier and indemnified.	The contract is between the principal debtor creditor; surety – creditor; principal debtor- surety.

 

 

QUESTION  10 . Who is surety in a contract? What are his rights?

SOLUTION : The liability of surety arises only when the principal debtor fails to pay the debt to the creditor. Section 128 provides for the liability of surety. The said section provides that the liability of the surety is coextensive with that of the principal debtor, unless it is otherwise provided by the contract.

 

QUESTION  11 . What are the rights of the finder of goods?

SOLUTION : Section 168 provides that the finder of goods has no right to sue the owner for compensation for trouble and expense voluntarily incurred by him to preserve the goods and to find out the owner; but he may retain the goods against the owner until he receives such compensation; and, where the owner has offered a specific reward for the return of goods lost, the finder may sue for such reward, and may retain the goods until he receives it.

 

QUESTION  12 . Differentiate pledge from bailment.

SOLUTION : Section 172 of the Act define s a pledge to be the bailment of goods as security for payment of debt or performance of a promise whereas Section 148 provides that a bailment is the delivery of goods by one person to another person for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the persons delivering them.

 

QUESTION  13 . . Discuss the duties of agents.

SOLUTION : Section 195 provides that in selecting such agent for his principal, an agent is bound to exercise the same amount of discretion as a man of ordinary prudence would exercise in his own case; and if he does this, he is not responsible to the principal for the acts or negligence of the agent so selected.

 

QUESTION  14 . What are the obligations of the Principal to agent?

SOLUTION : Section 222 provides that the employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agents in exercise of the authority conferred upon him.

 

QUESTION  15 . How the agency can be terminated?

SOLUTION : Section 201 provides for the termination of agency. An agency is terminated by the principal-

 

•      revoking his authority; or

•      by the agent renouncing the business of the agency; or’

•      by the business of the agency being completed; or

•      by either the principal or agent dying or becoming of unsound mind; or

•      by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors.

 

Section 202 provides that where the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.

CMA INTERMEDIATE LAW

STUDY NOTE : 1 SALE OF GOODS ACT, 1930

 

QUESTION  1 . What are the differences between ‘contract of sale’ and ‘agreement to sale’ .

SOLUTION : the differences between ‘contract of sale’ and ‘agreement to sale’ .

BASIC	CONTRACT TO SALE	AGREEMENT TO SELL
Transfer of property	The property of the goods passes from the buyer to the seller.	The transfer of property takes place at a future time or subject to certain conditions to be fulfilled.
Type of contract	It is an executed contract	It is an executory contract.
Type of goods	Sales takes place only for existing and specific goods.	Future and contingent goods.
Risk of loss	If the goods are destroyed, the loss falls on the buyer despite the goods are in the possession of the seller.	If the goods are destroyed, the loss falls on the seller despite the goods are in the possession of the buyer
Breach of contract	The seller can sue the buyer for price and for damages in case of breach by the buyer	The seller can sue for damages only in case of breach by the buyer
General and particular	property It gives buyer to enjoy the goods as against the world at large including the seller	It gives a right to the buyer against the seller to sue for damages
Insolvency of the	buyer In the absence of lien over the goods the seller is to return the goods to the Official receiver or Assignee. He is entitled to get the dividend declared by the Official receiver which will be at The reduced rate.	The seller is not bound to part with the goods until the price is paid to him.

 

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