question solution business law

8/3/2019 Question Solution Business Law

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Year wise question solutionBusiness Law

Q1. What is contract / what is meant by contract? (May -02, Nov-03)

The word contract means that to be agreement on something. Generally whenan agreement comes in to existence, one or more person promise to one orothers to do or not to do some thing- is called contract. The agreement must be

enforceable by law. So, from the above discussion we find out that a contractbust be:

An agreement;

The agreement must be enforceable by law.According to contract Act 1872, sec 2 (h) an agreement enforceable by alaw is a contract.

Q2. Explain the essential elements of a contract? (May-02)Or

All agreement are not contract but all contract are not agreement-discuses the statement explaining elements of a valid contract?

OrWhat are the characteristics of valid contract?

The word contract means that to be agreement on some things. When anagreement comes in to existence one or more person promise to one another todo or not to do some things is called contract. The agreement must beenforceable by law.

The essential elements of valid contract are explain below:

1. Offers & Acceptance:

There must be lawful offer be one party and lawful acceptance of another party.

2. Intention to create legal relationship:There must be an intention that the agreement shall result in or create legalrelationship.

3. Lawful consideration:In a valid contract there must be a lawful consideration between the relatedparties.

4. Lawful object:The object for which the agreement has been entered into must not be illegal.

5. Capacity to control: The parties to an agreement must be legally capable of entering in to anagreement otherwise it cannot be enforceable by law.

6. Free consent:In order to be enforceable, an agreement must be based on the free consent ofall the parties.

7. Certainty:It must be possible to ascertain the meaning of the agreement, otherwise it

cannot be enforced.

8. Possibility of performance:An agreement must be capable to perform.

9. Written & registered:

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A valid contract should be written and registered.

The elements mentioned above must all be present in a contract. If any of themis absent, the agreement does not become a valid contract. An agreement whichfulfills all the essential elements is enforceable by law and is called a contract.

From this it follows that, every contract is an agreement but all agreement arenot contract.

Q3. The contract Acts specially declares certain agreements to be void.You are required to list such agreement? (May-02)

Void agreement:According to contract act 1872 section 2(g) an agreement which is notenforceable by law is called void agreement. A void agreement has no legal

effect.List of the void agreement:

1. An agreement with minor & mad.2. An agreement unlawful consideration.3. An agreement unlawful object.4. Except some exception on agreement with out consideration.5. An agreement of uncertain meanings.6. An agreement by the way of wager.7. Impossible Acts.

Q4. Distinguish between contract and an agreement? (May 01, May

05)

The distinguish between contract and an agreement are as follows:

Contract Subject Agreement An agreement enforceable bylaw is a contract.

Definition

Every promise and every setof promises, forming theconsideration for each otheris an agreement.

A legal contract must beenforceable by law.

Enforceable by

law

Agreement does notenforceable by law.

Each contract must havecertain lawful consideration.

Consideration

Consideration is notessential in all kind ofagreement.

A contract may be registered.Registered

There is no legal obligation sthat an agreement should beregistered.

Every contract is anagreement. Nature

All agreement are notcontract.

Q5. When the communication of proposal and acceptance complete?How and when can they be revoked? (May- 01)

Communication of proposal:

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The communication of proposal is competing when it comes to the knowledgeof the person to whom it is made. (Sec- 4).Illustration: Zahid proposed by a letter to sale a house to Tazmilur at Tk 15 lac.

The communication of proposal is complete when Tazmilur received & come toknow about this matter.

Communication of acceptance:Communication of acceptance is complete when acceptor, accept it & itcomes to the knowledge of the proposer/ offeror.Illustration: Rony accept Baris proposal by the post. The communication ofacceptance is complete when Bari knows that Rony accepted his proposal.

Revocation of communication proposal:1. If the offeror give the notice of revocation to the other party,2. If the offeror gives a fixed time to accept & if the time is over,3. If the acceptor fail to fulfill the condition of the offer.

4. If the acceptor give a counter offer.5. If the acceptor refuse the proposal.6. When acceptor refuses his duties before the time of performance is due.

Q6. Define offer and acceptance. (Nov 05) When are offer andacceptance deemed to be complete, if made through post?

Offer:An offer involves the making of proposal, when one person signifies to anotherhis willingness to do or not to do anything is called offer.

The people who give an offer is called offer or or promis or. Offer can be madeby specific person class or people at large, and may be conditional. But it mustbe intention to established lawful relationship.Illustration: Sami says to Sheri will you buy my house for TK.50,000? This is anoffer.

Acceptance:When one party give a lawful offer to another party and if another partyaccept itthen is called acceptance or promise.Illustration: Mr. Enam says to Mr. Sakil, will you buy my car at the price of Tk.100,000? This is an offer. If Mr. Sakli says yes, the offer is completed and acontract is formed.

Offer and acceptance by post:An offer may be made by post. An offer may also be accepted by post, if there isno other mode of acceptance specially prescribed by the proposer. The letter ofacceptance duly addressed and posted is sufficient acceptance even through theletter does not actually reach the proposer. Therefore the letter must be actuallyposted.

Q7. State how offer is made revoked and accepted .what are the ruleswhen offer is made through post office and over the telephone?

Offer:

When one person signifies to another his willingness to do or not to doanything is called offer. But the offer must be intention to established lawfulrelationship.Illustration: Sami says to Sheri will you buy my house for TK.50,000? This is anoffer.

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Revocation of an offer:An offer comes to an end, and is no longer open to acceptance under thefollowing circumstances:

1. If the offeror give notice of revocation to the other party.

2. If the offeror give a specific time to accept and if the time is over.3. If the acceptor fail to fulfill the condition of the offer.4. If the acceptor give a counter offer.5. If the acceptor refuse the proposal.

Acceptance:When one party gives a lawful offer to another party and if another party acceptit then is called acceptance or promise.Illustration: Mr. Enam says to Mr. Sakil, will you buy my car at the price of Tk.100,000? This is an offer. If Mr. Sakli says yes, the offer is completed and acontract is formed.

Rules regarding an offer is made through post office and over the telephone:

Q8. Define the term Acceptance? What are the essentials of a validacceptance?

Acceptance:When one party gives a lawful offer to another party and if another partyaccept itthen is called acceptance or promise.Illustration: Mr. Enam says to Mr. Sakil, will you buy my car at the price of Tk.100,000? This is an offer. If Mr. Sakli says yes, the offer is completed and acontract is formed.

Essential of a valid Acceptance:1. Acceptance must be unqualified and absolute,2. Conditional Acceptance,3. Acceptance must be communicated,4. Mental acceptance does not result in a contract,5. When acceptance is complete,6. Acceptance must be done within the prescribed time.

Q9. What do you understand by counter offer? (Nov-02)

CounterOffer:When one person signifies to another his willingness to do or not to do anythingis called offer. If the other party does not accept the offer, but give another offerto the offeror including one or more condition that is called counter offer.

Q10. What are the characteristics/essential factors of consideration?(May-03)

The characteristics or essential factors of consideration discuss in below:

1. Desire/ Request of the promisor is essential:

Consideration means when at the desire or request of the promisor, thepromisee or any other person has done from doing something. So, withoutrequest is a voluntary act and does not come within the definition ofconsideration.

2. Consideration must be real:

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The consideration must have some value in the eye of law. It must not be fraudor misleading.

3. Consideration needs not to be adequate:In a contract consideration need no to be adequate. For Illustration, Patu agrees

to sell a house worth tk.50,000 for tk.5,000. Patus consent to the agreementwas freely given. The agreement is a contract notwithstanding the inadequacy ofthe consideration.

4. Consider may be present, past or future:As per agreement of the contract consideration may be at present, past or infuture, i.e. as per prescribed terms.

5. Consideration must not be illegal, immortal or opposed topublic policy:

If the consideration of the object of the agreement is illegal, immoral or

opposed to public policy, the agreement cannot be enforce.

6. Consideration may be move from promise or from any otherperson.

Q11. Information of a contract, consideration must be real but neednot be adequate- Explain? (May-02, May05)

Information of a contract, consideration must he real. It must not fraud ormisleading. The impossible acts and illusory cannot support a contract.

Therefore, real consideration comes from good consideration.Illustration: Titu promise to Anu to supply of one tola fold from sun. Theconsideration is Shaw and illusory so, there is no contract. So, information of avalid contract the consideration must be real, but to make a real consideration itshould not be adequate. By inadequate consideration a contract also may beformed. But the inadequacy of the consideration may be grant when the consentto the promisor was freely given.Illustration: Rifu aggress to sell a horse worth tk.10,000 for tk.1,000 to Jafor.Rifus consent to the agreement was freely given. So, the agreement is acontract notwithstanding the inadequacy of the consideration.So, from the above discussion we know that Information of a contractconsideration must be real but need not to e adequate.

Q12. No consideration no contract- explain? (Nov03, Nov04)Or

A contract without consideration is void explain?Or

Importance of considerationOr

Insufficiency of consideration is immaterial but an agreement without

consideration is void explain?

Consideration is an essential element of valid contract. So, valid contract doesnot made without consideration. We know that by promise one party give orsacrifice something and other party take something. This type of give and takeor sacrifice is called consideration by the eye of law.

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If someone give promise without any consideration that is called gift. On theother hand give premise exchange of any consideration that is called contract.Illustration: Alim promise to give tk.5,000 to build mosque. It is not contractbecause there is no consideration.

Consideration may be paid in future and it is not sufficient but in a contract musthave consideration.So, it is clear that no consideration no contract.

Q13. Distinguish between void agreements and void able agreements?(May- 02)

Void Agreement Void able Agreement An agreement not enforceable by lawis said to be void agreement.

A void able agreement is one whichcan be avoided, i.e. set a side bysome of the parties to it.

A void agreement has no legal effect,no right and create no obligation onany person.

In the case of void able agreementthe rights and obligations of theparties concerned are present unlessit becomes void.

For a void agreement it is notnecessary for the effected party todeclare the agreement void.

In the case of void able agreementthe effected party needs to call theagreement void.

In case of void agreement the party isnot bound to refund the benefitreceived to the other party.

But in the case of void ableagreement the party may refund thebenefit to the other party, if theagreement void later on.

A void agreement originates by anagreement made by a minor,agreements without consideration,illegal objectives.

A void able agreement originates bycontracts brought about by endueinfluence, misrepresentation.

Q14. Distinguish between contingent contract and wagering contract?(May-03; Nov-03)

Contingent contract Wagering contract

Contingent contract is a validcontract. Wagering contract is a void contract.

Contingent contract is enforceable bylaw.

Wagering contract is not enforceableby law.

Contingent contract dependshappening or non happening of anevent,

Wagering contract depends successand failure of an event.

Q15. Explain the difference between a void and illegal transaction withreference to collateral transactions?

An illegal agreement is void, but a void agreement is not necessarily illegal. Anagreement, the terms of which are uncertain is void but such a contract is notillegal. When an agreement is illegal, other agreements which are incidental orcollateral to it are void. So, if the main agreement is void, (but not illegal)agreements which are incidental or collateral to it may be valid.

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Illustration:Rana enters into a wagering agreement and borrows tk.500 for the purpose. Themain agreement i.e. wagering is void but the loan transaction being merelycollateral to it is valid even though the creditor is aware of the purpose of theloan.

Q16. Void able agreement and unenforceable agreement?

Void able agreement:Under section 2 (i) an agreement which is enforceable by law at the option ofone or more of the parties thereto, but not at the option of the other or others, isa void able contract.

We can say it also in another way; a void able agreement is one, which can beavoided, i.e. set a side by some of the parties to it.

A void able agreement originates by contracts brought about by undueinfluence, misrepresentation or fraud.

Unenforceable Agreements:Sometimes an agreement is not enforceable by law for some lawful defect.

These agreements are called unenforceable contract or unenforceableagreement.Illustration:Zahid made a contract with Kanta to sell a house. But the contract was notregistered or written. It is an unenforceable contract.

Q17. What do you understand by supervening impossibility? How it mayoccur? (Nov-03, May-03, Nov-01, Nov02)

Supervening Impossibility:A contract after made becomes impossible to perform or by reason of someevent which the promisor could not prevent. Unlawful in these cases the contractbecomes void. This is called the supervening impossibility. Superveningimpossibility may occur many ways, some of which are explained below:

1. Destruction of an object:In the contract which performance depends on the existence of a given personor thing, and the supervening impossibility arise by the destruction of the person

or thing or object necessary for the performance of the contract.

2. Change of law:By a subsequent change of law the performance of a contract become unlawfuland it become void.Illustration: Moni sold to Nadia a specific parcel of wheat in a wear house.Before delivery the wheat was requisitioned by the Govt. under statutory power.

The delivery is now legally impossible, so the contract was discharged.

3. Failure of precondition:When a contract is entered in to on the basis of some conditions, the contract is

discharged if the conditions fail or changes.Illustrations: Zaman & Juli contract to marry each other, before the time fixedfor the marriage, Zaman goes mad. The contract becomes void.

4. Death or Incapacity for personal services:

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Where the personal qualification of a party is the basis of contract, the contractis discharged in cases of death or personal incapacity.Illustration: A seaman was entered owing to war; his contract of services wasdischarged.

5. War:A contract entered into during war with an alien enemy is void. A contractentered in to before the war start between citizens of countries, the contractremains suspended during the time of the war.

Q18. What do you understand by frustration of contract by superveningimpossibility? What are the legal consequences of a contract, which hasbeen frustrated due to supervening impossibility? (Nov-02)

Frustration of contract:

Frustration of contract may occur by the supervening impossibility of thecontract. When a contract offer made becomes impossible to perform or byreason of some event, which the promisor could not prevent, then the contractbecome void and unlawful and the court may declare the contract to be at anend.Legal consequences of a contract, which has been frustrated due to superveningimpossibility:

OrThe effect of frustration due to supervening impossibility: The legal consequences of a contract which has been frustrated due tosupervening impossibility are discussed in below:

1. When the performance of a contract becomes supervening impossible orfrustrated or illegal, the contract becomes void.

2. When the promisor of a contract know that the performance of thepromise is not possible or illegal, and which the promisee did not know tobe impossible or unlawful, such promisor is liable for any loss which suchpromisee effected through the non performance of the promise.

3. When a contract becomes void by the supervening impossibility anyperson who has received any advantages under it must restore to theperson who he received it.

Illustration: Enam pays Zahid tk.2,000 in consideration of Zahidspromising to marry Geet, Enams daughter Geet is dead at the time of thepromise. The agreement is void but Zahid must repay Enam tk. 2,000.

Q19. Distinguish between a contract of guarantee and a contract ofindemnity? (Nov-01)

Contract of guarantee:A contract of guarantee is a contract to perform the promise, or discharge theliability of a third person in case of his default.

Contract of indemnity:A contract by which one party promise to save other party from loss caused tohim by the conduct of any other person is called contract of indemnity.More distinguish discuss in below:

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Contract of guarantee Contract of indemnity In a contract of guarantee there arethree parties:

(1) The creditors(2) The principle debtors

(3) The surety

In a contract of indemnity there aretwo parties:(1) The indemnifier(2) Indemnity holder.

It is necessary to have three contractsbetween the parties; the creditors, theprinciple debtors and the surety.

It is necessary to have only onecontract between indemnifier andthe indemnity-holder.

The liability of the surety is secondary. The liability of the indemnifier isprimary.

According to cheating law of Englandthe guarantee is necessary to written.

According to general law of Englandthe contract of indemnity may bewritten or oral.

Q20. What is continuing guarantee? (May 03)

A guarantee, which extended to a series of transaction, is called a continuingguarantee.

Q21. Distinguish between bailment and pledge? (May-01)

Bailment:Bailment is the delivery of goods by one person to another for some purpose,upon a contract that they shall, when the purpose is accomplished be returnedor otherwise disposed of according to the direction of the person deliveringthem. So, the Bailment means act of delivering goods for a specific purpose ontrust.

Pledge:Pledge means, the bailment of goods as security for payment of a debt orperformance of a promise.More distinguish between the bailment and pledge shown in below:

Bailment Pledge The purpose of bailment are repair,safe custody etc.

The purpose of pledge is to providesecurity for a debt.

In the case of bailment, the ownershipdoes not handover to bailee.

In the case of pledge specialownership hand over to pledge/pawn.

Bailment must create by a certaincontract between bailee and bailor.

There may no contract betweenpladgee and pledgor.

Bailment can perform as an agent oncertain factors.

But pledge can not do that.

Q22. Discuss about the extent of authority of an agent? (May-02)

Authority of agent:The authority of an agent may be expressed or implied. The authority is said tobe expressed when it is given by words spoken or written. The authority isimplied when it is to be determined from the circumstances from the case.

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Extent of authority of an agent:The extent of authority of an agent discuss below:

1. An agent having an authority to do an act has authority to do everylawful thing which is necessary in order to do such act.

2. An agent having an authority to carry on a business has authority to

do every lawful thing necessary for the purpose of such business.3. An agent has authority, in an emergency to do all such acts for the

purpose of practicing his principal from any loss, in his own case,under similar circumstances.

Illustration: An agent for sale may have goods repaired if it be necessary.

Q23. Write down the Agent duty to the principal Vs principal duly tothe agent? (May-02)

Agent duty to the principal:

1. Duty to do act according principals direction:An agent is bound to conduct the business of his principal according to thedirections or in the absence of any such directions.

2. Maintaining proper books of accounts:An agent is bound to maintain the books of accounts of his principal properly.

3. Communicate with principal take direction:It is the duty of an agent in case of difficulty, communicate with his principal andtake direction.

4. Principals death or insanity:Agency may terminate by the principals dying or unsound mind, then agent isbound to take on behalf of the representative of his late principal.

5. Pay sums received for principal:The agent is bound to pay to his principals all sum received on behalf of theprincipal.More duties to the principals of an agent are:

Inform all information;

Agent not to deal on his own account, etc.

Principals duty to the agent:

1. Agent to be indemnified against consequences of lawful acts.2. Agents to be indemnified against consequences of acts done in goodfaith.3. Principals not bound to indemnify the agent for any criminal acts.4. Agent to be indemnified in respect of any injury by the principalsneglect or want of skill.

Q24. What are the limitations of a wife as an agent in binding her

husband? (May-01)

Limitations of a wife as agent in binding her husband:A wife could be an agent of her husband. If the husband gives her a sufficientallowance, she has no authority to pledge his credit and can never be the agentof necessity.

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This will be clearer to us from the following illustrations.

Illustration: (i)A shopkeeper supplied a cloth at the price of tk.200 to a wife. The shopkeeper

sued the husband to recover his amount. The court declared that the husbandwas not liable to pay the amount.Illustration: (ii)A shopkeeper supplied a cloth at the price of tk.200 to a wife. The shop keepersued the husband to recover it. The court declared that the husband is liable forthat money.

From the above two illustrations we saw that from illustration (i) the husband isnot liable to pay the money because it was investigated that the husband give tohis wife tk.500 yearly as allowance. So the husband is not liable to pay themoney to the shopkeeper.

But in illustration (ii) it is investigated that after the transaction between the wifeand the shopkeeper the husband divorced to his wife do not give any allowancesher. So for this case, the husband is liable to pay the shopkeepers money.

Q 25.What is agency necessity? (Nov-03)

Agency of necessity:An authority which act some work without declaration is called agency ofnecessity. When a person to act on behalf of another without any expressauthority from him, in such cases an agency of necessity created.

Illustration:The captain of a ship finds himself in a distant port without money.The owner cannot be communicated with. The captain pledged the ship forobtaining money. He will be considered the agent of the owner by necessity.

Q26. The general rule is that No seller of goods can give the buyer ofgoods a better title to the goods than he himself has-Explain? (Nov-02,03)

The general rule is that only the owner of goods can sale the goods. No oneconvey to a transfer to a better title than he himself has. If a person transferarticles not belonging to him, the transferee gets no title. The principal is

expressed by the Latin phrase Nemo quod qui non habet which means nonecan give who does not himself posses. This rule applies to both movable andimmovable property.

Q27. Distinguish between condition and warranty? (May02)

Distinguish between condition and warranty is given below:

Consideration WarrantyA condition is a stipulation essential tothe main purpose of the contract, thebreach of which gives rise to a right totreat the contract.

Warranty is a stipulation collateralto the main purpose of the contract,the breach of which gives rise toclaim for damage but not right toreject the goods and treat thecontract.

To perform a contract trend ofcondition is necessary.

Trend of warranty is not essentialbut is duty to perform all parties.

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Condition may be treated as warrantyunder certain circumstances.

Warranty can not becomes acondition.

Condition is treated as pillar in thecontract of goods sale.

Warranty is treated as a secondaryelement in the contract of sale ofgoods.

Q28. Distinguish between sale and agreement to sale. When does anagreement to sale become sale? (Nov-01)

Distinguish between sale and agreement to sale are narrated below in differentpoint of view:

Sale Subject Agreement to saleIn the case of sale ownershipof the goods transfer to buyeras soon as transaction iscomplete.

1) Ownershiptransfer

In the case of agreement tosale ownership of goods isnot transfer.

Sale is an existing good. 2) Goods Agreement is a future goods.Sales are an executedcontract.

3) Nature Agreement is an executorycontract.

In the case of sale, the unpaidseller can lien, stoppage intransit and re-sale the goods.

4) RemedyIn the case of agreement tosale, seller remedy forbreach of contract by thebuyer suit for damage.

An agreement to sale becomes sale:An agreement to sell becomes a sale when the prescribed time, conditions andterms of agreements are fulfilling properly.

Illustration: Zahid agrees to by some fruits after arrive a certain ship; this is anagreement to sale after arrival the ship Zahid bought some fruits. Here theagreement to sale becomes sale.

Q29. When does the property in goods sold pass from the seller to thebuyer? (Nov-02)

a) In the case of Ascertain goods:

1. Where the goods in a deliverable state as soon as the contract is made.

2. Whether the goods are not deliverable state the seller has to dosomething until such things are done and the buyer has notice thereof.

3. Where the goods are deliverable state but the seller is bound to weighmeasure that or do something for ascertaining price until such things aredone and the buyer has notice thereof.

4. Where goods are delivered to the buyer on terms i.e. sale on approval andsale on return:

When buyer signifies his approval.

After expiry of reasonable time.

b) In case of uncertain goods:Until and unless the goods are ascertained or made specific.

c) Future goods:Until and unless the time is determined.

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Q30. What are the features of a contract of a sale of goods? (May-02)

The features of a contract for the sale of goods are discuss below:1. Moveable Goods:

The sale of goods act deals only with movable goods, except actionable claimsand money.

2. Movable Goods for money:For a contract of sale of goods there must be money consideration. But it hasbeen held that if an exchange is made partly for goods and partly for money.

3. Two Parties:A contract of sale involves a change of ownership, that means the buyer and theseller must be different person. But there is an exception in law, that is a partowner can sell goods to another part owner.

4. Formation of the contract of sale:A contract of sale is made by an offer to buy or sell goods for a price and theacceptance of such offer.

5. Method of forming the contract:A contract of sale may be in writing, or by word of month, or may be implied.

6. The terms of contract:The parties may agree upon any term concerning the time, place and mode ofdelivery. The terms may be two type and these are (i) Essential (ii) Nonessential.

Q31. What do you understand by caveat emptor? (May-03, May04)

Caveat emptor:Caveat Emptor is a Latin expression which means buyers beware. The doctrineof caveat emptor means that, ordinarily a buyer must buy goods after satisfyinghimself of their quality and fitness. If he made a bad choice he can not balm theseller or recover damages from him.

Illustration: Kanta bought a television at the price of tk.10,000 from Zahid aftertesting its quality and fitness with his satisfaction, but when she took it to home

she saw that the television do not servicing well as her satisfactory, then shecould not liable Zahid for that.

Q32. What is an unpaid seller of goods? (Nov-03)

Unpaid seller:1. When price has not been received or tendered.2. When negotiable instrument has been received but the same has beendishonored.

On the above cases seller can be said as unpaid seller.

Illustration: Enam sold a good to Zahid at the price of tk.500. Zahid gave acheque of tk.500 to Enam for that purpose. But the cheque was dishonored. Inthe case Enam is an unpaid seller.

Q33. What is the right of a unpaid seller against the buyer? (May-03)

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The right of an unpaid seller against the buyer explained in below:

1. Right to sue for price:Where under a contract of sale the property has passed to the buyer and the

buyer wrongfully neglects or refuse to pay for the goods according to the termsof contract, the seller may sue him for the price of the goods.

2. Damage for non acceptance of goods:Where the buyer wrongfully neglects or refuse to accept and pay for the goods,the seller may sue him for damages for non- acceptance.

3. Claim for interest and special damages:The seller may recover interest or special damages in any case where by lawinterest or special damages may be recoverable.

Q34. What is the meaning of vendors lien? (May-03)

Vendors lien involves in the following terms:

Where the goods have been sold without any credit;

Where the goods have been sold on credit but the term of credit hasexpired; and

Where the buyers become insolvent.

Q35. What do you understand by partnership at will? (May-03)A partnership is called a partnership at will when:

1. The partnership is not for a fixed period of time; and

2. No provision is made as to when and how the partnership will come toan end.

Q36. What are the effects of non registration of a firm? (May-03)

The registration of a partnership is not compulsory. But an unregistered firmsuffers from certain disabilities and therefore registration is necessary forcarrying on business. An unregistered firm and the partners suffer from certaindisabilities:

1. A partner of an unregistered firm can not file a suit against the firm orany other partner.2. No suit can be filed against any third party.3. An unregistered firm can not claim a set off in suit.

Q37. What are the 10 important elements of a standard partnershipdeed? (Nov-02)

Important elements of a standard partnership deed are as follows:1. Name of the partnership firm;2. Address of the firm;3. Nature, object and scope of the firm;4. Permanency of the firm/duration of the firm;5. Name, address and occupation of the partners;6. Total capital of the firm;

7. Profit distribution method and ratio;8. Maintain and management procedure of the firm;9. Details of partners right, liabilities and duties;10. Admission procedure of a new partner;11. Good will valuation procedure of firm; and12. Dissolution procedure of firm.

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Q38. Can you spell act the procedure for registration of a firm? (Nov-02)

Procedure for registration of a firm:The registration of a firm may be affected at any time by sending by post or

delivering to the register of firms of the locality a statement in the prescribedform and accompanied by the prescribed fee, stating the following particulars:

1) The firms name;2) Head office address of the firm;3) Branch office address of the firm;4) Objectives of the firm;5) Date of commencement of the firm;6) Name, address and occupations of the partners;7) The date when each partner joined the firm; and8) The duration of the firm.

The statement shall be signed and verified by all the partners or their agents. On

receipt of the statement and fees the registration made registration of the firm.

Q39. What is registration of a partnership firm? Is it mandatory for afirm to register? (Nov-02)

Registration of partnership firm means the enlisted of firms name in registeredoffice.

The registration of partnership is not compulsory. Therefore an unregistered firmis not illegal association. But an unregistered firm suffers from certain disabilitiesand therefore registration is necessary for carrying on business.

Q40. What are the essential elements of partnership? (May-02)

Partnership is the relationship between persons who have agreed to share theprofits of a business carried on by all or any of them acting for all.

The essential element of partnership is as follows:1) There must be an agreement entered in to by two or more person. A

partnership can not be formed with more than ten persons in bankingbusiness and twenty persons in other business.

2) The agreement must be to share the profit of a business.3) The agreement must be carried on by all or any of them acting for all.

Q41. Happening of certain contingencies may lead to dissolution ofpartnership-what are those? (May-02)

A partnership may lead to discussion by happening of certain contingencies-those are as follows:

1) If constitute for fixed term, by the expiry of that term.2) If constitute to carry out one or more adventures or undertaking by the

completion thereof.3) By the death of partner.4) By the adjudication of the partner as an insolvent.

Q42. Spell out the grounds on which a court may dissolve a partnershipfirm on a suit filed by a partner? (May-02)

Grounds of dissolution:A firm may be dissolved on any of the following grounds:

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1) By agreement:A firm may dissolved any time with the consent of all the partners of thefirm.

2) Compulsory dissolution:

o By the adjudication of all the partners.o If all partners insolvent except one partner.

o By the happening of any event which makes the business of the firm

unlawful.

3) On the happening of certain contingencies:Subject to contract between the partners, a firm is dissolved:-

o If constitute for fixed term, by the expiry of that term.

o If constitute to carry out one or more adventures undertaking, by the

completion thereof.o By the death of partner.

o By the adjudication of the partner as an insolvent.

4) Dissolution by notice:Where the partnership at will, the firm may be dissolved by any partner givingnotice in writing to all another partners of his intentions to dissolve the firm.

5) Dissolution by the court:At the suit of a partner, the court may dissolve a firm on any one of the followinggrounds:

o Unsound mind: If a partner becomes unsound mind.o Permanent incapacity: If a partner becomes permanently incapable

of performing his duties as a partner.o Guilty conduct: If a partner is guilty of conduct.

o Persistent breach of agreement: If a partner persistently breach of

the partnership agreement.o Transfer of whole interest: If a partner has transferred whole of his

interest to an outsider.o Loss: If the business of the firm cannot be carried on except at a loss.

Q43. What is promissory note? How does it differ from bill of exchange?

(Nov-02, 03; May-03)

Promissory note:According to Negotiable Instrument Act 1881 u/s 4 A promissory note is aninstrument in writing containing an unconditional undertaking signed by maker,to pay certain sum of money only to, or to order of a certain person or to thebearer of the instrument.

There are two parties related in promissory note: (i) maker/ drawer, (ii) payee.We can differ it easily from bill of exchange by discuss the following terms:

Promissory note Bill of exchange

In a promissory note there are twoparties- the maker and the payee.

In a bill of exchange there are threeparties- the drawer, the drawee andthe payee.

In a promissory note there is apromise to pay.

In a bill of exchange there is anorder to pay.

Acceptance is not necessary for the Acceptance is necessary in a bill of

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promissory note. exchange.In the case of promissory note, noticeof dishonor to the maker is notnecessary.

In the case of non-payment or non-acceptance of a bill notice mist begive to all related parties.

In a promissory note protest is not

necessary.

In the bill of exchange protest is

necessary.

Q44. What is promissory note? Is the following a promissory note-Ipromise to pay B TK.50,000 and all other dues which shall be due tohim. (Nov-01,02;May-03)

I promise to pay TK 50,000 to B and all other dues which shall be due to him-is not a promissory note because to be a promissory note a negotiableinstrument must have contain the following elements, and it mist be fulfilledproperly:

1) The instrument must be in writing;

2) The instrument must be signed by the maker;3) The instrument must contain a promise to pay;4) The promise to pay must be unconditional;5) The maker of the instrument must be certain and definite;6) The promissory note must be stamped;7) The payment must be in legal tender money;8) Payable to definite person;9) The sum of money to be paid must be certain; and10) The promissory note may payable on demand or after certain definiteperiod of time.

The above instrument did not fulfill the condition to be a promissory note, so it isnot a promissory note.

Q45. What is the effect of crossing a cheque with the words notnegotiable written across its face? (May-01)

A checked marked with the words not negotiable can be transferred orassigned by the payee. The transferee will get the same rights, as regardspayment as the transferor had. But the transferee will not get the right of holderin due course.From the language of the section 130 it follows that the transferee of such

cheque takes it at his own risk.Q46. Who can accept a bill of exchange? (May-03, Nov04)

Only the following person can accept the bill of exchange:

The drawee of the bill.

The drawee in case of need.

The legal representative, when drawee is dead.

The official assignee or official receiver when the drawee has becomeinsolvent.

Q47. Define negotiable instruments as per negotiable instrument act1881. Also spell out 4 to 5 characteristics of the negotiable instrument.

(Nov-02; May-01)

Negotiable instrument:As per negotiable instrument act 1881a negotiable instrument means apromissory note, bill of exchange or cheque payable either to order or to bearer

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Characteristics of negotiable instrument:1) The instrument must be in writing and signed by the maker.2) Must certain a promise to pay.3) The sum of money to be paid must be certain.4) The money must be payable to a definite person or according to his order.

5) The transferee/receiver of a negotiable instrument, when he fulfils certainis called the holders in due course. The holder in due course gets a goodtitle to the instrument even the title of the transferor/sender is defective.

Q48. Distinguish between cheque and bill of exchange. (Nov-02, May-02)

Bill of exchange subject ChequeA bill of exchange can bedrawn any person including abank.

Drawer /maker

A cheque can be drawn onlyupon a bank.

A bill of exchange requiresacceptance.

Acceptance A cheque does not requireany acceptance.

A bill of exchange is notpayable on demand hereallowed a grace period of 3days.

Payable ondemand

A cheque is always payableon demand.

There is on crossing facility inbill of exchange.

CrossedA cheque may be crossed.

A bill of exchange must bestamped.

StampedA cheque does not requireany stamp.

Q49. Who can cross a cheque? (Nov-03)

A cheque can be crossed by the drawer, the holder and the Bank.

Q50. When a bill of exchange is said to be dishonored? (Nov-03)

When a drawee does not accept the bill of exchange in specific date and thedrawee fail to or show disability to pay the bill amount after the maturity date ofthat bill then it is said dishonored of bill of exchange.

A bill of exchange may be dishonored in two separate ways. These are:

Dishonored by non acceptance; and

Dishonored by non-payment.

Dishonored by non acceptance:When the drawee is incompetent to contract or the acceptance is qualified , thebill may be treated as dishonored.Illustration: Mr. X prepared a bill of tk.10,000 and present it to Mr. Y for itsacceptance, but Mr. Y does not accept it within 48 hours. So, it is calleddishonored by no acceptance.

Dishonored by non payment:

When the holder represent a bill for payment to its drawee or acceptor, and thedrawee fail to pay the amount of the bill then its called dishonored by nonpayment.Illustration: Mr. X makes a bill of tk.5,000 and Mr. Y accept the bill, but afterthe maturity date Mr. Y fail to pay the bill amount it is called dishonored by nonpayment.

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Q51. What is acceptance for honor? (May-03)

When a bill of exchange has been noted or protested for non acceptance or forbetter security, any person not already liable on the bill, may accept the bill for

the honor of any party thereto, this is called acceptance for honor.Q52. What is meant by payment for honor? (May-03, Nov04)

When a bill of exchange has been noted or protested for non-payment, anyperson may pay the same for the honor of any party liable to pay the same.Such payment is called payment for honor.

Q53. What are the acts of insolvency? (Nov-02, May-02)

An act of insolvency is some act of the debtor, which shows that he is financially

embarrassed, and the debtor performer any act which to be considered acts ofinsolvency.The acts of insolvency are as follows:

1) If he makes a transfer of all or substantially all his property to a thirdperson for the benefit of his creditors generally.

2) If he makes a transfer of his properly or any part thereof, with theintention to defraud or delay his creditors.

3) If he makes any transfer of his property or any part thereof it wouldunder this (insolvency) or any other enactment for the time being inforce, be void as a fraudulent performance if he were adjudged aninsolvent.

4) If with intent to defeat or delay his creditors:a) He departs from or remains out of the country.b) He departs from his dwelling house or usual place of business or

other wise absent himself.c) He secludes himself so as to deprive his creditors of the means

of communicating with him.5) If any of his property has been sold or attached for a period of not less

than 21 days in execution of the decree of any court for the paymentof the money.

6) If the petitions to be adjudged an insolvent.7) If he gives notice to any of his creditors that he has suspended or that

he is about to suspend, payment of his debt.

8) If he is imprisoned in execution of the decree of any court for thepayment of money.

9) If a creditor has served an insolvency notice in respect of any decreeor order for payment of money and if the debtor has not paid themoney within the period specified in notice.

Q 54. Discuss at length if the following can be insolvent: An infant,foreigner, a married women, joint debtor, company, lunatic (Nov-02)

Foreigner:A foreigner can be adjudicated insolvent if he commits an act of insolvent in

Bangladesh while resident here.

A married woman:In Bangladesh a married women does not suffer from any contractual incapacity.She can own property any contract debts. Therefore she can be declaredinsolvent under appropriate circumstances.

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Joint debtor:When money is borrowed by two or more person jointly, all of them can bedeclared insolvent on a single petition provided some act of insolvent iscommitted by each of them or jointly by all.

Company:A company cannot be declared insolvent. In case of insolvent companies theproper procedure is winding up.

Lunatic:A lunatic can be adjudged insolvent for debts incurred by him while he was sane.It must be noted that a lunatic cannot commit those acts of insolvent, whichinvolve enocious volition. Thus a lunatic cannot stay away from him place ofbusiness with intent to defeat & delay his creditors

Arbitration Act 1940

Q 55. What matter cannot be referred to arbitration? (May-01)

The following matter cannot be referred to arbitration:1) Matrimonial matters like divorce;2) Testamentary matter like the validity of a will;3) Insolvency matters;4) Matter relating to the guardianship of a minor; and5) Criminal matters.

Q 56. Discuss the grounds on which the court can- (May01)1. Set a side an award; and2. Remit an award for reconsideration under the arbitration act 1940

1. The court can set a side an award only in the following cases:1) When an award be comes void or has been set a side;2) When an award has been improperly procured or is other wise invalid;3) An award can not be set a side or remitted on the ground of error of law;4) When an arbitrator or umpire has misconduct himself.

2. The court can remit an award for reconsideration under the arbitration act1940 on the basis of following ground:

1) When the award has left undetermined any of the matters referred toarbitration;

2) Where the award is so indefinite as to be incapable of execution;3) Where an objection to the legality of the award is apparent;4) Where any new evidence has been found;5) Where the arbitrator admits his mistake & he asks that the award should

be remitted.

Q 57. State the essentials of an arbitration agreement?

The essentials of an arbitration agreement are as following:1) An arbitration agreement, to be valid & binding & if must be in written.2) It must be shown that the parties agreed to settlement of disputes by

arbitration.3) It is not necessary that the name of the person who will act as the

arbitrator.4) Arbitration agreement may be refer to the settlement of present

difference or possible future differences;5) The agreement must satisfy all the essential elements of valid contract.

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Q 58. Define legal misconduct by an arbitrator. What are theconsequences of misconduct?

Legal misconduct:

As per section 30(a) legal misconduct means bribery, undue partiality in favor ofone party, arbitrator secretly acquiring an interest in the subject matter of thearbitration, wrongfully refusing to hear a witness of a party etc.

Consequences of misconduct:The following consequences will be occurring against misconduct:If the arbitrator or umpire is guilty of misconduct the court will set a side theaward.

Q 59. Examine the circumstances when the court may modify or correctan award?

The court can by order, modify or correct an award in the following cases:1) Where the award has left undetermined any of the matters not referred to

the arbitration & does not effect the decision on the matter referred.2) Where the award is imperfect;3) Where the award contains a clerical mistake or an error arising from an

omission.

Q 60. State under what circumstances the court can remove anarbitrator validity appointed by the parties?

The court may on the application of a party, remove an arbitrator or umpire inthe following cases:Delay:If the arbitrator or umpire to start proceeding with the reference & making anaward.Misconduct:If the arbitrator or umpire has misconduct himself or the proceedings.

Q 61. When the court may appoint an arbitrator?

The court may appoint an arbitrator in the following cases:1) Where the agreement provides the arbitrator or arbitrators shall be

appointed by the consent of all parties & the all parties do not concur inthe appointments.

2) If any appointed arbitrator neglects or refuses to work or is incapable ofacting or dies & the arbitration agreement does not show any provision tofill the vacancy & the parties or the arbitrators as the case may be, doesnot supply the vacancy.

3) Where the parties or the arbitrators are required to appoint an umpire anddo not appoint him.

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