Jan 2021

Downloaded From www.castudynotes.
com
PAPER – 2: BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING
SECTION A – BUSINESS LAWS

Question No. 1 is compulsory.
Attempt any four questions from the remaining five questions.
Question 1
(a) Mr. S aged 58 years was employed in a Government Department. He was going to retire
after two years. Mr. D made a proposal to Mr. S to apply for voluntary retirement from
his post so that Mr. D can be appointed in his place. Mr. D offered a sum of `10 Lakhs as
consideration to Mr. S in order to induce him to retire.
Mr. S refused at first instance but when he evaluated the amount offered as
consideration is just double of his cumulative remuneration to be received during the
tenure of two years of employment, he agreed to receive the consideration and accepted
the above agreement to receive money to retire from his office.
Whether the above agreement is valid? Explain with reference to provision of Indian
Contract Act, 1872. (4 Marks)
(b) ABC Limited was registered as a public company. There were 245 members in the
company. Their details are as follows:
Directors and their relatives 190
Employees 15
Ex-employees
(shares were allotted when they were employees) 20
Others 20
(Including 10 joint holders holding shares jointly in the name of father and son)
The Board of directors of the company propose to convert it into a private company.
Advice whether reduction in the number of members is necessary for conversion.
(4 Marks)
(c) What are the rules which regulate the Sale by Auction under the Sale of Goods Act,
1930? (4 Marks)
Answer
(a) Section 10 of the Indian Contract Act, 1872 provides for the legality of consideration and
objects thereto. Section 23 of the said Act also states that every agreement of which the
object or consideration is unlawful is void.
Downloaded From www.castudynotes.com

© The Institute of Chartered Accountants of India
2 FOUNDATION EXAMINATION: JANUARY, 2021
The given problem talks about entering into an agreement for traffic relating to public
office, which is opposed to public policy. Public policy requires that there should be no
money consideration for the appointment to an office in which the public is interested.
Such consideration paid, being opposed to public policy, is unlawful.
In the given case, Mr. S, who was going to be retired after two years was proposed by
Mr. D, to apply for voluntary retirement from his post, in order that he can be appointed in
his place. In lieu of that Mr. D offered Mr. S a sum of ` 10 lakh as consideration. Mr. S
refused initially but later accepted the said offer to receive money to retire from his office.
Here, Mr. S’s promise of sale for Mr. D, an employment in the public services is the
consideration for Mr. D’s promise to pay `10 lakh. Therefore, in terms of the above
provisions of the Indian Contract Act, the said agreement is not valid. It is void, as the
consideration being opposed to public policy, is unlawful.
(b) In the given case, ABC Limited was having 245 members in the company. The Board of
Directors of said company proposes to convert it into private company. In lines with
Section 2 (68) of the Companies Act, 2013, a private company by its Articles, limits the
number of its members to 200.
Provided that, where two or more persons hold one or more shares in a company jointly,
they shall, for the purposes of this clause, be treated as a single member.
It is further provided that, following persons shall not be included in the number of
members-
(i) Persons who are in the employment of the company; and
(ii) Persons, who, having been formerly in the employment of the company, were
members of the company while in that employment and have continued to be
members after the employment ceased.
As per the facts, ABC Limited has members constituting of Directors & their relatives,
employees, Ex-employees and others including 10 joint holders. In line with the
requirement for being a private company, following shall be restricted to be as members
i.e., Directors & their relatives & joint holders holding shares jointly constituting 200
members (190+10).
Accordingly, ABC Limited when converted to private company shall not be required to
reduce the number of members as the number of members as per requirement of a
private company, is fulfilled that is of maximum 200 members.
(c) Rules of Auction sale: Section 64 of the Sale of Goods Act, 1930 provides following
rules to regulate the sale by auction:
(i) Where goods are sold in lots: Where goods are put up for sale in lots, each lot is
prima facie deemed to be subject of a separate contract of sale.

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 3
(ii) Completion of the contract of sale: The sale is complete when the auctioneer
announces its completion by the fall of hammer or in any other customary manner
and until such announcement is made, any bidder may retract from his bid.
(iii) Right to bid may be reserved: Right to bid may be reserved expressly by or on
behalf of the seller and where such a right is expressly reserved, but not otherwise,
the seller or any one person on his behalf may bid at the auction.
(iv) Where the sale is not notified by the seller: Where the sale is not notified to be
subject to a right to bid on behalf of the seller, it shall not be lawful for the se ller to
bid himself or to employ any person to bid at such sale, or for the auctioneer
knowingly to take any bid from the seller or any such person; and any sale
contravening this rule may be treated as fraudulent by the buyer.
(v) Reserved price: The reserved price is the lowest price at which a seller is willing to
sell an item. The auction sale may be notified to be subject to a reserve or upset
price; and
(vi) Pretended bidding: If the seller makes use of pretended bidding to raise the price,
the sale is voidable at the option of the buyer.
Question 2
(a) Define the term acceptance under the Indian Contract Act, 1872. Explain the legal rules
regarding a valid acceptance. (7 Marks)
(b) State the circumstances under which a LLP and its partners may face unlimited liability
under the Limited Liability Partnership Act, 2008. (5 Marks)
Answer
(a) Definition of Acceptance: In terms of Section 2(b) of the Indian Contract Act, 1872 the
term acceptance is defined as “When the person to whom the proposal is made signifies
his assent thereto, proposal is said to be accepted. The proposal, when accepted,
becomes a promise”.
Legal Rules regarding a valid acceptance
(1) Acceptance can be given only by the person to whom offer is made. In case of
a specific offer, it can be accepted only by the person to whom it is made. In case of
a general offer, it can be accepted by any person who has the knowledge of the
offer.
(2) Acceptance must be absolute and unqualified: As per section 7 of the Act,
acceptance is valid only when it is absolute and unqualified and is also expressed in
some usual and reasonable manner unless the proposal prescribes the manner in
which it must be accepted. If the proposal prescribes the manner in which it must be
accepted, then it must be accepted accordingly.

(3) The acceptance must be communicated: To conclude a contract between the

parties, the acceptance must be communicated in some perceptible form. Further
when a proposal is accepted, the offeree must have the knowledge of the offer
made to him. If he does not have the knowledge, there can be no acceptance. The
acceptance must relate specifically to the offer made. Then only it can materialize
into a contract.
(4) Acceptance must be in the prescribed mode: Where the mode of acceptance is
prescribed in the proposal, it must be accepted in that manner. But if the proposer
does not insist on the proposal being accepted in the manner prescribed after it has
been accepted otherwise, i.e., not in the prescribed manner, the proposer is
presumed to have consented to the acceptance.
(5) Time: Acceptance must be given within the specified time limit, if any, and if no time
is stipulated, acceptance must be given within the reasonable time and before the
offer lapses.
(6) Mere silence is not acceptance: The acceptance of an offer cannot be implied
from the silence of the offeree or his failure to answer, unless the offeree has in any
previous conduct indicated that his silence is the evidence of acceptance.
(7) Acceptance by conduct/ Implied Acceptance: Section 8 of the Act lays down that
“the performance of the conditions of a proposal, or the acceptance of any
consideration for a reciprocal promise which may be offered with a proposal,
constitutes an acceptance of the proposal. This section provides the acceptance of
the proposal by conduct as against other modes of acceptance i.e. verbal or written
communication.
Therefore, when a person performs the act intended by the proposer as the
consideration for the promise offered by him, the performance of the act constitutes
acceptance.
(b) As per Section 30 of the Limited Liability Partnership Act, 2008, LLP and its Par tners may
face unlimited liability in case of fraud. According to this section, the liability arises, in the
event of an act carried out by an LLP or any of its partners -
 with intent to defraud creditors of the LLP,
 or any other person, or
 for any fraudulent purpose.
The liability of the LLP and partners who acted with intent to defraud creditors or for any
fraudulent purpose shall be unlimited for all or any of the debts or other liabilities of the
LLP. However, in case any such act is carried out by a partner, the LLP is liable to the
same extent as the partner unless it is established by the LLP that such act was without
the knowledge or the authority of the LLP.

Where LLP, Partner or employee of LLP has conducted the affairs of the LLP in
fraudulent manner, then without prejudice to any criminal proceedings which may arise
under any law for the time being in force, the LLP and any such partner or employee
shall be liable to pay compensation to any such person who has suffered any loss by
reason of such conduct.
Question 3
(a) (i) What do you mean by "Particular Partnership" under the Indian Partnership Act, 1932?
(2 Marks)
OR
(ii) Who is a nominal partner under the Indian Partnership Act, 1932? What are his
liabilities? (2 Marks)
(b) "Business carried on by all or any of them acting for all." Discuss the statement under the
Indian Partnership Act, 1932. (4 Marks)
(c) Mr. B makes a proposal to Mr. S by post to sell his house for ` 10 lakhs and posted the
letter on 10th April 2020 and the letter reaches to Mr. S on 12th April 2020. He reads the
letter on 13th April 2020.
Mr. S sends his letter of acceptance on 16th April 2020 and the letter reaches Mr. B on
20th April 2020. On 17th April Mr. S changed his mind and sends a telegram withdrawing
his acceptance. Telegram reaches to Mr. B on 19th April 2020.
Examine with reference to the Indian Contract Act, 1872:
(i) On which date, the offer made by Mr. B will complete?
(ii) Discuss the validity of acceptance.
(iii) What would be validity of acceptance if letter of revocation and letter of acceptance
reached together? (6 Marks)
Answer
(a) (i) Particular partnership: A partnership may be organized for the prosecution of a single
adventure as well as for the conduct of a continuous business. Where a person
becomes a partner with another person in any particular adventure or undertaking, the
partnership is called ‘particular partnership’.
A partnership, constituted for a single adventure or undertaking is, subject to any
agreement, dissolved by the completion of the adventure or undertaking.
OR
(ii) Nominal Partner: A person who lends his name to the firm, without having any real
interest in it, is called a nominal partner.

Liabilities: He is not entitled to share the profits of the firm. Neither he invests in
the firm nor takes part in the conduct of the business. He is, however liable to third
parties for all acts of the firm.
(b) Business carried on by all or any of them acting for all: The business must be carried
on by all the partners or by anyone or more of the partners acting for all. In other words,
there should be a binding contract of mutual agency between the partners.
An act of one partner in the course of the business of the firm is in fact an act of all
partners. Each partner carrying on the business is the principal as well as the agent for
all the other partners. He is an agent in so far as he can bind the other partners by his
acts and he is a principal to the extent that he is bound by the act of other partners.
It may be noted that the true test of partnership is mutual agency. If the element of
mutual agency is absent, then there will be no partnership.
In KD Kamath & Co., the Supreme Court has held that the two essential conditions to be
satisfied are that:
(1) there should be an agreement to share the profits as well as the losses of business;
and
(2) the business must be carried on by all or any of them acting for all, within the
meaning of the definition of ‘partnership’ under section 4.
The fact that the exclusive power and control, by agreement of the parties, is vested in
one partner or the further circumstance that only one partner can operate the bank
accounts or borrow on behalf of the firm are not destructive of the theory of partnership
provided the two essential conditions, mentioned earlier, are satisfied.
(c) (i) According to Section 4 of the Indian Contract Act, 1872, “the communication of offer is
complete when it comes to the knowledge of the person to whom it is made”.
When a proposal is made by post, its communication will be complete when the
letter containing the proposal reaches the person to whom it is made. Further, m ere
receiving of the letter is not sufficient, he must receive or read the message
contained in the letter.
In the given question, Mr. B makes a proposal by post to Mr. S to sell his house.
The letter was posted on 10th April 2020 and the letter reaches to Mr. S on 12 th April
2020 but he reads the letter on 13 th April 2020.
Thus, the offer made by Mr. B will complete on the day when Mr. S reads the letter,
i.e. 13 th April 2020.
(ii) When communication of acceptance is complete: Where a proposal is accepted
by a letter sent by the post, in terms of Section 4 of the Act, the communication of
acceptance will be complete as against the proposer when the letter of acceptance
is posted and as against the acceptor when the letter reaches the proposer.

Revocation of Acceptance: The acceptor can revoke his acceptance any time
before the letter of acceptance reaches the offeror, if the revocation telegram
arrives before or at the same time with the letter of acceptance, the revocation is
absolute.
In the given question, when Mr. S accepts Mr. B’s proposal and sends his
acceptance by post on 16 th April 2020, the communication of acceptance as against
Mr. B is complete on 16th April 2020, when the letter is posted. As against Mr. S
acceptance will be complete, when the letter reaches Mr. B i.e. 20 th April 2020.
Whereas, acceptor, will be bound by his acceptance only when the letter of
acceptance has reached the proposer.
The telegram for revocation of acceptance reached Mr. B on 19 th April 2020 i.e.
before the letter of acceptance of offer (20 th April 2020). Hence, the revocation is
absolute. Therefore, acceptance to an offer is invalid.
(iii) It will not make any difference even if the telegram of revocation and letter of
acceptance would have reached on the same day, i.e. the revocation then also
would have been absolute. As per law, acceptance can be revoked anytime before
the communication of acceptance is complete. Since revocation was made before
the communication of acceptance was complete and communication can be
considered as complete only when the letter of acceptance reaches the proposer
i.e. Mr. B.
Question 4
(a) What are the differences between a 'Condition' and 'Warranty' in a contract of sale? Also
explain, when shall a 'breach of condition' be treated as 'breach of warranty' under
provisions of the Sale of Goods Act, 1930? (6 Marks)
(b) M, N and P were partners in a firm. The firm ordered JR Limited to supply the furniture. P
dies, and M and N continues the business in the firm's name. The firm did not give any
notice about P's death to the public or the persons dealing with the firm. The furn iture
was delivered to the firm after P's death, fact about his death was known to them at the
time of delivery. Afterwards the firm became insolvent and failed to pay the price of
furniture to JR Limited.
Explain with reasons:
(i) Whether P's private estate is liable for the price of furniture purchased by the firm?
(ii) Whether does it make any difference if JR Limited supplied the furniture to the firm
believing that all the three partners are alive? (6 Marks)

Answer
(a) Difference between conditions and warranties:
The following are important differences between conditions and warranties.
Point of differences Condition Warranty
Meaning A condition is essential to It is only collateral to the
the main purpose of the main purpose of the
contract. contract.
Right in case of breach The aggrieved party can The aggrieved party can
repudiate the contract or claim only damages in
claim damages or both in case of breach of
the case of breach of warranty.
condition.
Conversion of stipulations A breach of condition may A breach of warranty
be treated as a breach of cannot be treated as a
warranty. breach of condition.
Breach of condition be treated as a breach of warranty
Section 13 of the Sales of Goods Act, 1930, specifies cases where a breach of condition
be treated as a breach of warranty. As a result of which the buyer loses his right to
rescind the contract and can claim for damages only.
In the following cases, a contract is not avoided even on account of a breach of a
condition:
(i) Where the buyer altogether waives the performance of the condition. A party may
for his own benefit, waive a stipulation.
(ii) Where the buyer elects to treat the breach of the conditions, as one of a warranty.
That is to say, he may claim only damages instead of repudiating the contract.
(iii) Where the contract is non-severable and the buyer has accepted either the whole
goods or any part thereof.
(iv) Where the fulfilment of any condition or warranty is excused by law by reason of
impossibility or otherwise.
(b) According to Section 35 of the Indian Partnership Act, 1932, where under a contract
between the partners the firm is not dissolved by the death of a partner, the estate of a
deceased partner is not liable for any act of the firm done after his death.
Further, in order that the estate of the deceased partner may be absolved from liability
for the future obligations of the firm, it is not necessary to give any notice either to the
public or the persons having dealings with the firm.

In the given question, JR Limited has supplied furniture to the partnership firm, after P’s
death. The firm did not give notice about P’s death to public or people dealing with the
firm. Afterwards, the firm became insolvent and could not pay JR Limited.
In the light of the facts of the case and provisions of law:
(i) Since the delivery of furniture was made after P’s death, his estate would not be
liable for the debt of the firm. A suit for goods sold and delivered would not lie
against the representatives of the deceased partner. This is because there was no
debt due in respect of the goods in P’s lifetime.
(ii) It will not make any difference even if JR Limited supplied furniture to the firm
believing that all the three partners are alive, as it is not necessary to give any
notice either to the public or the persons having dealings with the firm, so the estate
of the deceased partner may be absolved from liability for the future obligations of
the firm.
Question 5
(a) Mr. T was a retail trader of fans of various kinds. Mr. M came to his shop and asked for
an exhaust fan for kitchen. Mr. T showed him different brands and Mr. M approved of a
particular brand and paid for it. Fan was delivered at Mr. M's house; at the time of
opening the packet he found that it was a table fan. He informed Mr. T about the delivery
of the wrong fan. Mr. T refused to exchange the same, saying that the contract was
complete after the delivery of the fan and payment of price.
(i) Discuss whether Mr. T is right in refusing to exchange as per provisions of Sale of
Goods Act, 1930?
(ii) What is the remedy available to Mr. M? (6 Marks)
(b) Explain Doctrine of 'Indoor Management' under the Companies Act, 2013. Also state the
circumstances where the outsider cannot claim relief on the ground of 'Indoor
Management'. (6 Marks)
Answer
(a) (i) According to Section 15 of the Sale of Goods Act, 1930, where the goods are sold
by sample as well as by description, the implied condition is that the goods supplied
shall correspond to both with the sample and the description. In case, the goods do not
correspond with the sample or with description or vice versa or both, the buyer can
repudiate the contract.
Further, as per Section 16(l) of the Sales of Goods Act, 1930, when the buyer
makes known to the seller the particular purpose for which the goods are required
and he relies on the judgment or skill of the seller, it is the duty of the seller to
supply such goods as are reasonably fit for that purpose.

In the given case, Mr. M had revealed Mr. T that he wanted the exhaust fan for the
kitchen. Since the table fan delivered by Mr. T was unfit for the purpose for which
Mr. M wanted the fan, therefore, T cannot refuse to exchange the fan.
(ii) When one party does not fulfill his obligation according to the agreed terms, the
other party may treat the contract as repudiated or can insist for performance as per
the original contract. Accordingly, the remedy available to Mr. M is that he can
either rescind the contract or claim refund of the price paid by him or he may require
Mr. T to replace it with the fan he wanted.
(b) Doctrine of Indoor Management (The Companies Act, 2013): According to the
“doctrine of indoor management” the outsiders, dealing with the company though are
supposed to have satisfied themselves regarding the competence of the company to
enter into the proposed contracts are also entitled to assume that as far as the internal
compliance to procedures and regulations by the company is concerned, everything has
been done properly. They are bound to examine the registered documents of the
company and ensure that the proposed dealing is not inconsistent therewith, but they are
not bound to do more. They are fully entitled to presume regularity and c ompliance by
the company with the internal procedures as required by the Memorandum and the
Articles. This doctrine is a limitation of the doctrine of “constructive notice” and popularly
known as the rule laid down in the celebrated case of Royal British Bank v. Turquand.
Thus, the doctrine of indoor management aims to protect outsiders against the company.
The above mentioned doctrine of Indoor Management or Turquand Rule has limitations
of its own. That is to say, it is inapplicable to the following cases, namely:
(a) Actual or constructive knowledge of irregularity: The rule does not protect any
person when the person dealing with the company has notice, whether actual or
constructive, of the irregularity.
(b) Suspicion of Irregularity: The doctrine in no way, rewards those who behave
negligently. Where the person dealing with the company is put upon an inquiry, for
example, where the transaction is unusual or not in the ordinary course of business,
it is the duty of the outsider to make the necessary enquiry.
(c) Forgery: The doctrine of indoor management applies only to irregularities which
might otherwise affect a transaction but it cannot apply to forgery which must be
regarded as nullity.
Question 6
(a) The general rule is that an agreement without consideration is void. Discuss the cases
where the agreement though made without consideration will be valid and enforceable as
per Indian Contract Act, 1872. (5 Marks)
(b) Discuss the liability of a partner for the act of the firm and liability of firm for act of a
partner to third parties as per Indian Partnership Act, 1932. (4 Marks)

(c) SK Infrastructure Limited has a paid-up share capital divided into 6,00,000 equity shares
of INR 100 each. 2,00,000 equity shares of the company are held by Central Government
and 1,20,000 equity shares are held by Government of Maharashtra. Explain with
reference to relevant provisions of the Companies Act, 2013, whether SK Infrastructure
Limited can be treated as Government Company. (3 Marks)
Answer
(a) The general rule is that an agreement made without consideration is void (Section 25 of
the Indian Contract Act, 1872). In every valid contract, consideration is very important. A
contract may only be enforceable when consideration is there. However, the Indian
Contract Act contains certain exceptions to this rule.
In the following cases, the agreement though made without consideration, will be valid
and enforceable.
1. Natural Love and Affection: Conditions to be fulfilled under section 25(1)
(i) It must be made out of natural love and affection between the parties.
(ii) Parties must stand in near relationship to each other.
(iii) It must be in writing.
(iv) It must also be registered under the law.
A written and registered agreement based on natural love and affection between the
parties standing in near relation (e.g., husband and wife) to each other is
enforceable even without consideration.
2. Compensation for past voluntary services: A promise to compensate, wholly or
in part, a person who has already voluntarily done something for the promisor, is
enforceable under Section 25(2). In order that a promise to pay for the past
voluntary services be binding, the following essential factors must exist:
(i) The services should have been rendered voluntarily.
(ii) The services must have been rendered for the promisor.
(iii) The promisor must be in existence at the time when services were rendered.
(iv) The promisor must have intended to compensate the promisee.
3. Promise to pay time barred debt: Where a promise in writing signed by the person
making it or by his authorised agent, is made to pay a debt barred by limitation it is
valid without consideration [Section 25(3)].
4. Agency: According to Section 185 of the Indian Contract Act, 1872, no
consideration is necessary to create an agency.
5. Completed gift: In case of completed gift i.e. when gift is made by a donor and
accepted by the donee, the rule, no consideration no contract does not apply.

6. Bailment: In case, the delivery of goods is made by one person to another for a
particular purpose, without transfer of ownership, no consideration is required.
7. Charity: If a promisee undertakes the liability on the promise of another person to
contribute to charity, the contract shall be valid without consideration.
(b) Liability of a partner for acts of the firm (Section 25 of the Indian Partnership Act,
1932): Every partner is liable, jointly with all the other partners and also severally, for all
acts of the firm done while he is a partner. The partners are jointly and severally
responsible to third parties for all acts which come under the scope of their express or
implied authority. This is because that all the acts done within the scope of authority are
the acts done towards the business of the firm.
The expression ‘act of firm’ connotes any act or omission by all the partners or by any
partner or agent of the firm, which gives rise to a right enforceable by or against the firm.
Again in order to bring a case under Section 25, it is necessary that the act of the firm, in
respect of which liability is brought to be enforced against a party, must have been done
while he was a partner.
Liability of the firm for wrongful acts of a partner and for misapplication by
partners (Sections 26 & 27 of the Indian Partnership Act, 1932): Where, -
by the wrongful act or omission of a partner in the ordinary course of the business of a
firm, or with the authority of his partners, loss or injury is caused to any third party, or any
penalty is incurred, the firm is liable therefor to the same extent as the partner.
a partner acting within his apparent authority receives money or property from a third
party and misapplies it, or a firm in the course of its business receives money or property
from a third party, and the money or property is misapplied by any of the partners while it
is in the custody of the firm, the firm is liable to make good the lo ss.
(c) Government Company [Section 2(45) of the Companies Act, 2013]: Government
Company means any company in which not less than 51% of the paid-up share capital is
held by-
(i) The Central Government, or
(ii) By any State Government or Governments, or
(iii) Partly by the Central Government and partly by one or more State Governments,
and the section includes a company which is a subsidiary company of such a
Government company.
In the instant case, paid up share capital of SK Infrastructure Limited is 6,00,000 equity
shares of ` 100 each. 200,000 equity shares are held by Central government and 1,20,000
equity shares are held by Government of Maharashtra. The holding of equity shares by
both government is 3,20,000 which is more than 51% of total paid up equity shares.
Hence, SK Infrastructure Limited is a Government company.

SECTION B – BUSINESS CORRESPONDENCE AND REPORTING

Question No. 7 is compulsory.
Attempt any three questions from the remaining four questions.
Question 7
(a) Read the passage carefully and answer the questions given below:
Success of any organization depends on offering quality products at competitive prices.
All over the world, it is being realized that quality control be ensured through inspection
and test alone. Every department and individual has a contribution to make in the
achievement of quality. Quality product at competitive prices is the most significant factor
in determining the long - run success of any organization. High quality of products can
give a competitive edge to an organization. On the other hand, good quality generates
satisfied customers who reward the organization with continued patronage and
favourable word of mouth advertising.
Growth in consumer quality awareness has put a greater strain on businesses.
Consumer demand and dynamic technological changes have opened up new and highly
competitive markets. The quality of goods and services can no longer be taken for
granted.
The rapid growth of the service sector has also introduced new perceptions of quality
management. Institutions, such as the Government, banks and hospitals do not produce
tangible goods. The interaction between employees and customers is much more critical
in such organizations. As a result, the skills, attitudes and training of service personnel
affect the quality of the services delivered. Information processing represents a large
component of the work done by service organizations and poses special quality
considerations. Errors in computer billing, or airline and hotel reservations are the results
of poor quality control of computer software and data input systems.
In View of globalization of markets, Governments have begun to realize that quality is
essential to international trade and the national economy. Therefore, public purchasing
authorities have been instructed to buy goods that conform to the quality standards.
(i) In what manner good quality products give rewards to organizations? (1 Mark)
(ii) Most significant factor which determines the long run success of an organization ?
(1 Mark)
(iii) Quality of goods and services cannot be compromised by organizations, give
reasons. (1 Mark)
(iv) Write the summary of the above passage. (2 Mark)

14 FOUNDATION EXAMINATION: NOVEMBER, 2020
(b) Read the Passage :

Whether one runs a large business, or is starting out with a new venture, or works as a
corporate professional, chances are that at some point, one would be required to make a
business presentation. Whether you are selling a product to a client, sharing your vision
with your employees, or looking for new investors for your business, your presentation
will always matter.
Making a good business presentation can be intimidating - you want to capture as much
information as possible to answer any prospective questions from your audience, yet you
want to keep your audience constantly engaged and interested. So, what makes a good
presentation?
It is important to connect with your audience with a story. And no, it doesn't mean your
presentation needs to be the most exciting work of fiction. Take your audience on a
journey. When trying to convince potential investors, make them see the success you are
striving for and what it will do for you and for them. To win over your employees with your
new staff policy, take them through the journey of why you are introducing a new policy
and how does it benefit them. Tell personal stories, give analogies and cite examples.
Get your audience emotionally involved and you will be more likely to get them to sid e
with you.
You want to keep your audience engaged at all times. Do not overwhelm them with a lot
of information. Settle on three to five key messages that you want them to absorb and
stick with them. You do not want to include everything. Instead, choose out powerful
points that you want to make. It is important to keep your presentation as straightforward
and concise as possible.
At the same time, you need to know your content extremely well. While you keep your
presentation short and to the point, it is no excuse for you to not have more detailed
information regarding the subject of your presentation. It is likely you would need to
answer questions from your audience at the end of the presentation. You must review all
pertinent information and key facts and figures before your presentation. Not only will it
help you answer questions later, but it will also give you more confidence during your
presentation, so you refer to your notes less and connect with your audience more.
In the end, a business presentation is about selling ideas. Do your researches well,
describe your ideas crisply, weave them into an interesting story and you are more likely
to succeed.
(i) Make notes, using headings, sub - headings and abbreviations whenever
necessary.
(ii) Write Summary.

Answer
(a) (i) Good quality products can give reward to organization in following ways:
It gives long term success to any organization.
It can give competitive edge i.e., higher profit and increased market share.
It leads to satisfied customers thus playing a significant role in increasing the
customer base.
(ii) Providing quality products at competitive prices is the most significant factor that
determines the success of the organization in the long run.
(iii) Increased awareness amongst customers regarding quality has led organizations to
constantly improve the quality of products and services by adopting new
technologies which satisfies the customer’s demands to remain competitive. Thus,
businesses cannot ignore this aspect, if they intend to sustain longer in the market.
(iv) Organizations across the world whether in the manufacturing or service sectors pin
their success on offering quality products and services at competitive prices. This is
the mantra for long-term sustainable growth of any business. With growing
consumer awareness about quality, markets have become highly competitive and
more and more businesses embracing new technologies. In critical service sectors
viz. healthcare, government and many online data/information process ing services,
quality relies on skilled and trained workforce. International trade and economy can
grow only if stringent quality standards are maintained.
(b) (i) Note Making
Business Presentation
1. Essen. for
1.1 Large Bsns, startups & prfs.to
1. sell product to clients
2. share vision
1.1.2.1 new staff policy and benefits
3. find new investors
1. discuss mutual benefits
2. Objectives
2.1 Engage the aud.
2.2 Tell a story
2.3 Give prsnlegs./anlgs.

3. Do’s and Don’ts

3.1 research well
1. cap. det. info.
2. Do not prt. excess info.
3. Prt. 3-5 pts.
4. Expln. Briefly &prcly.
5. Prep. Cont. well
1. Rvw. Imp. Info.
2. Facts & data
Key:
 Bsns.: businesses
 Prfs.: professionals
 Aud.: audience
 Prsnl.: personal
 Egs.: examples
 Anlgs.: analogies
 Cap.: capture
 Det.:detailed
 Info.: information
 Prt.: present
 Expln.: explain
 Prcly.: precisely
 Prep.: prepare
 Cont.: content
 Rvw.: review
 Imp.: important
(ii) Summary
Preparation and presentation of Business Presentations are essential skills for
owner of a large business, startup or a working professional alike. It is a useful tool
to provide product details to clients, to share your ideas and vision with employees

about new policies and their benefits or to find investors to expand or diversify. The
objective is to engage the target audience by spawning a story around your ideas by
narrating personal anecdotes. For a good presentation you must research the
subject in detail, do not swarm the audience with too much information. You must
stick to 3-5 points and explain them with brevity and precision. Prepare the subject
well and review important facts, figures and data.
Question 8
(a) Emotional barriers affect communication, discuss. (2 Marks)
(b) (i) Choose the word which best expresses the meaning of the given word:
Repulsive
(1) Attractive
(2) Normal
(3) Disgusting
(4) Confused
(1 Mark)
(ii) Select a suitable antonym for the word given under:
Gratify
(1) Frustrate
(2) Depress
(3) Discourage
(4) Distress
(1 Mark)
(iii) Change the following sentence to indirect speech:
He said, "The horse died in the night". (1 Mark)
(c) Write a precis and give appropriate title to the passage given below:
Gratitude implies thankfulness or an appreciation of benefits conferred together with a
desire, when practicable, to return those benefits. It should be distinguished from thanks,
which is too often a matter of words and not accompanied by a feeling of thankfulness or
by those actions which indicate a grateful mind. The grateful man feels joy at the
kindness of his benefactor and cultivates a respect that is akin to love.
In almost all the relations of ordinary life the feelings of gratitude should be aroused. The
child owes thanks to his parents for food, clothes, education and tender care; the scholar
to his teachers for the training of his intelligence; personal friends to one another for
mutual services.

The frequent use of the phrase, "Thank you," though often not more than a polite
convention, nevertheless shows the universal belief in the necessity for cultivating a
grateful attitude towards those who do something for us, however small that service be.
As Citizens, there are few who have no cause to be grateful. Great generals who have
given devoted service gratuitously, statesmen, poets and philosophers, all those who
have stood for right, justice and freedom of thought, have conferred inestimable benefits
upon their countrymen.
When deeds are impossible, the expression of thanks is the best that can be done. The
inscriptions on the tombs and monuments erected by a nation to its great men are an
expression of thanks in words. As for deeds, an old story will serve as an excellent
illustration. An old man was found planting fruit trees by a friend who came to him and
said, "Why do you plant trees, the fruit of which I enjoy. I now plant trees that those who
come after may enjoy fruit." '
In conclusion, no good man wishes to give pain, especially to those who have done him
good. The ungrateful man hurts the feelings of his benefactor and cannot, therefore, be a
good man. (5 Marks)
Answer
(a) One of the chief barriers to open and free communications is the emotional barrier.
Anger, fear of criticism or ridicule, mistrust of person, suspicion of intentions, jealousy,
anxiety and many more feelings and sentiments we carry within us, affect our
communication ability and quality. A person who is upset and disturbed cannot pass on
or receive information appropriately and objectively. His/her emotions will colour his
perception and assessment of the communication.
(b) (i) (3) Disgusting
(ii) (1) Frustrate
(iii) He said that the horse had died in the night.
(c) Precis
Title: Attitude of Gratitude
Gratitude means being genuinely thankful or showing heartfelt appreciation for those who
have helped you in need and readiness to reciprocate the kindness. Conventionally,
‘Thank You’ is used frequently to show politeness. Yet a grateful attitude should be
cultivated towards those who do even a small service for us. There are many army
Generals, statesmen, poets and philosophers who have selflessly contributed their
services. As a token of gratitude, monuments and inscriptions are erected to
commemorate their service. Practically, one can plant trees so that the later generations
can enjoy the benefits. A conscientious individual would always wish well for everyone
without any expectations.

NOTE: Precis should be one third of the given text.

Question 9
(a) (i) Define circuit and star network under network in communication. (2 Marks)
OR
(ii) Discuss the term "physical non-verbal communication" In communication. (2 Marks)
(b) (i) Choose the word which best expresses the meaning of the given word:
Nostalgic
(1) Sharp
(2) Painful
(3) Delighted
(4) Homesick (1 Marks)
(ii) Choose the word which best expresses the meaning of the given word:
Economise
(1) Reduce
(2) Save
(3) Minimise
(4) Accumulate (1 Marks)
(iii) Change the following sentence into indirect speech:
He said to him, "Please wait here till I return." (1 Marks)
(c) Draft a circular to warn the employees of Packing Department not to participate in strik e.
(5 Marks)
Answer
(a) Circuit Network:
When two persons communicate with each other sending messages and feedbacks, they
form a communication circuit. Therefore, it is known as circuit network. The two people
interacting can be colleagues placed at the same hierarchical level in the organizatio n.

Circuit Network
Star Network:
The star network communication has multiple channels of communication open between
all members. This network propagates group communication and is essential where
teamwork is involved. The members communicate and exchange information with each
other freely and without hindrance or hesitation.
A
A
G B
D C
Star Network

OR
Physical Non-verbal Communication
An individual’s body language that is, facial expressions, stances, gestures, touches,
and other physical signals constitute this type of communication. For example, leaning
forward may mean friendliness, acceptance and interest, while crossing arms can be
interpreted as antagonistic or defensive posture.
Research estimates that physical, non-verbal communication accounts for 55 percent of
all communication. Smiles, frowns, pursing of lips, clenching of hands etc. transmit
emotions which are not expressed through verbal communication.
(b) (i) (4) Homesick
(ii) (2) Save
(iii) He requested him to wait there till he returned.
(c) XXX Ltd
CIRCULAR
No.: xxx/xxx/xxx Date: xx-xx-xxxx
To: All Employees of Packing Department
It has been reported that a section of employees working in the Packing Department of
the Company are proposing to go on strike on xx-xx-xxxx (date) to fulfil some unusual
demands. It is hereby made known to all concerned employees that the proposed strike
is illegal and unlawful and employees whosoever participate in such a strike shall be
subjected to disciplinary action as per the company’s service rules and other applicable
laws.
Sd/-
XYZ
Manager, HR
Question 10
(a) How do organizational structure barriers affect communication? (2 Marks)
(b) (i) Change the sentence from Active to Passive Voice.
Rama was making a kite. (1 Marks)
(ii) Change the sentence from Passive to Active Voice.
The lion was shot by the hunter. (1 Marks)
(iii) Change the following sentence to indirect speech.
Father said to his son, "Work hard for success in life". (1 Marks)

(c) Write an article of about 250 words on the topic. "The Pleasures of reading". (5 Marks)
Answer
(a) Communication problems occur when the systems, structures and processes in the
organization are not clear or have gaps in them. If the chain of command is unclear, a
person may not know whom to contact for a particular issue. Inappropriate information
transmission systems, lack of supervision, and unclear role and responsibility
demarcations lead to confusion and inefficiency.
(b) (i) A kite was being made by Rama.
(ii) The hunter shot the lion.
(iii) Father advised/said to/told his son to work hard for success in life.
(c) The Pleasures of Reading
By: XYZ
Ever since humankind invented the printed word, reading has been a learning exercise
for some, pastime for many others. Undoubtedly, reading whets our quest for knowledge,
our imagination and evokes a spectrum of emotions, thus offering instant gratification
and pleasure.
Few can deny the joy of reading the daily newspaper while enjoying a cup of tea in the
mornings, an ultimate start to a great day. It’s a daily ritual we would not like to miss for
anything. Who doesn’t get glued to the highpoint or climax of a novel.It transcends us
into a surreal world, away from the harsh realities where we slip into our favorite
character etched out straight from the novel and become a part of the narrative, going
through the whole gamut of emotions from respect to affection, pain to joy, despair to
hope, failure to success and fulfillment. It induces heightened feelings of fear, suspense
and adventure raising the adrenaline rush. The sheer delight of reading a piece of poetry
laden with eloquence, rhythm and soul stirring emotions makes us feel high. While
reading informative articles, journals and technical books develop our intellectual
capability by enriching our knowledge and enhancing our analytical skills and critical
thinking, creative and descriptive pieces enhance our vocabulary, expression and
creative writing skills. On the lighter note, reading satire and comic pieces tickle our ribs
and relieves stress.
Reading makes us aware of our emotional self and sensitizes us to appreciate feelings of
others. It enlightens our mind and soul and makes us a better human being. We must
inculcate the habit of reading everyday.
Question 11
(a) What do you mean by diagonal communication? (2 Marks)

(b) Select the correct meaning of Idioms/Phrases given below:

(i) Pen and Ink
(1) Modern day technology
(2) Extensively
(3) Wastage
(4) In writing (1 Marks)
(ii) A snake in the grass
(1) Unforeseen happening
(2) Secret or hidden enemy
(3) Unreliable person
(4) Unrecognizable danger (1 Marks)
(iii) Change the sentence into Active Voice
Twenty runs were scored by him. (1 Marks)
(iv) Choose the word which best expresses the meaning of the given word.
Applaud
(1) Flatter
(2) Praise
(3) Pray
(4) Request (1 Marks)
(c) Mr. ABC is an IT manager in Quick Software Solutions Private
Limited. Write a mail on behalf of Mr. ABC to Mr. MNJ, dealer of HP Laptops seeking
quotation for 100 new laptops of model HP - 610. The laptops are required for new
branch of Quick Software Solutions Private Limited. (4 Marks)
Answer
(a) Cross-functional communication between employees at different levels of the
organizational hierarchy is described as diagonal communication. Diagonal
communication is increasingly common in larger organizations. It reduces the chances of
distortion or misinterpretation by encouraging direct communication between the relevant
parties. For example, a junior engineer reports directly to the General Manager regarding
the progress on the project.

(b) (i) (4) In writing

(ii) (2) Secret or hidden enemy/ (4) Unrecognizable danger
(iii) He scored twenty runs.
(iv) (2) Praise
(c) To [email protected]
Subject: Quotation for 100 new HP-60 laptops
Dear Mr. MNJ
Greetings! We at Quick Software Solutions Private Limited require the aforementioned
laptops for our new branch at Noida, UP. The machines must have the latest malware for
virus protection and anti-glare screens. Kindly send detailed quotation including:
Warranty
Insurance
Yearly Maintenance
After sales service charges
Looking forward to an earliest response.
Regards,
ABC
IT Manager,
Quick Software Solutions


Jan 2021

Uploaded by

Copyright:

Available Formats

Jan 2021

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Jan 2021

Uploaded by

Copyright:

Available Formats

Downloaded From www.castudynotes.

PAPER – 2: BUSINESS LAWS & BUSINESS CORRESPONDENCE AND REPORTING

SECTION A – BUSINESS LAWS

Downloaded From www.castudynotes.com

2 FOUNDATION EXAMINATION: JANUARY, 2021

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 3

Downloaded From www.castudynotes.com

4 FOUNDATION EXAMINATION: JANUARY, 2021

(3) The acceptance must be communicated: To conclude a contract between the

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 5

Downloaded From www.castudynotes.com

6 FOUNDATION EXAMINATION: JANUARY, 2021

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 7

Downloaded From www.castudynotes.com

8 FOUNDATION EXAMINATION: JANUARY, 2021

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 9

Downloaded From www.castudynotes.com

10 FOUNDATION EXAMINATION: JANUARY, 2021

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 11

Downloaded From www.castudynotes.com

12 FOUNDATION EXAMINATION: JANUARY, 2021

Downloaded From www.castudynotes.com

SECTION B – BUSINESS CORRESPONDENCE AND REPORTING

Downloaded From www.castudynotes.com

14 FOUNDATION EXAMINATION: NOVEMBER, 2020

(b) Read the Passage :

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 15

Downloaded From www.castudynotes.com

16 FOUNDATION EXAMINATION: NOVEMBER, 2020

3. Do’s and Don’ts

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 17

Downloaded From www.castudynotes.com

18 FOUNDATION EXAMINATION: NOVEMBER, 2020

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 19

NOTE: Precis should be one third of the given text.

Downloaded From www.castudynotes.com

20 FOUNDATION EXAMINATION: NOVEMBER, 2020

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 21

Downloaded From www.castudynotes.com

22 FOUNDATION EXAMINATION: NOVEMBER, 2020

Downloaded From www.castudynotes.com

PAPER – 2 : BUSINESS LAW & BUSINESS CORRESPONDENCE AND REPORTING 23

(b) Select the correct meaning of Idioms/Phrases given below:

Downloaded From www.castudynotes.com

24 FOUNDATION EXAMINATION: NOVEMBER, 2020

(b) (i) (4) In writing

Downloaded From www.castudynotes.com

You might also like