CA Foundation PAPER 2: BUSINESS LAWS Syllabus

PAPER 2: BUSINESS LAWS syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for PAPER 2: BUSINESS LAWS in CA Foundation, not a summary of it.

1. 1

   Indian Regulatory Framework

   1 topic

   • Major Regulatory Bodies
     • Ministry of Finance
     • Ministry of Corporate Affairs
     • SEBI
     • RBI
     • IBBI
     • Ministry of Law and Justice
2. 2

   The Indian Contract Act, 1872

   9 topics

   • General nature of contract
   • Consideration
   • Other essential elements of a valid contract
   • Performance of contract
   • Breach of contract
   • Contingent and Quasi Contract
   • Contract of Indemnity and Guarantee
   • Contract of Bailment and Pledge
   • Contract of Agency
3. 3

   The Sale of Goods Act, 1930

   4 topics

   • Formation of the contract of sale
   • Conditions and Warranties
   • Transfer of ownership and Delivery of goods
   • Unpaid seller and his rights
4. 4

   The Indian Partnership Act, 1932

   4 topics

   • General Nature of Partnership
   • Rights and Duties of partners
   • Reconstitution of firms
   • Registration and Dissolution of a firm
5. 5

   The Limited Liability Partnership Act, 2008

   4 topics

   • Introduction-covering nature and scope
   • Essential features
   • Characteristics of LLP
   • Incorporation and Differences with other forms of organizations
6. 6

   The Companies Act, 2013

   8 topics

   • Essential features of company
   • Corporate veil theory
   • Classes of companies
   • Types of share capital
   • Incorporation of company
   • Memorandum of Association
   • Articles of Association
   • Doctrine of Indoor Management
7. 7

   The Negotiable Instruments Act, 1881

   6 topics

   • Meaning of Negotiable Instruments
   • Characteristics
   • Classification of Instruments
   • Different provisions relating to Negotiation
   • Presentment of Instruments
   • Rules of Compensation

PAPER 2: BUSINESS LAWS flashcards for CA Foundation

23 of 79 cards from the PAPER 2: BUSINESS LAWS deck — real questions with worked answers.

1. Which body is the apex regulator of the securities market in India, and under which Act was it established?

   SEBI (Securities and Exchange Board of India), established as a statutory body under the SEBI Act, 1992.

2. Name the four key financial-sector regulatory bodies in India and what each regulates.

   RBI (banking & monetary policy), SEBI (securities market), IRDAI (insurance), and PFRDA (pension funds).

3. Define a 'contract' under Section 2(h) of the Indian Contract Act, 1872.

   A contract is an agreement enforceable by law. (Agreement = promise + consideration; enforceability comes from satisfying the essentials of a valid contract.)

4. State the basic equation linking agreement, offer and acceptance under the Indian Contract Act.

   Offer + Acceptance = Promise; Promise + Consideration = Agreement; Agreement + Enforceability by law = Contract.

5. Distinguish a void agreement from a voidable contract.

   A void agreement is not enforceable by law from the beginning (Sec 2(g)). A voidable contract is enforceable at the option of one party (e.g., consent obtained by coercion/fraud) but binding on the other (Sec 2(i)).

6. What are the essential elements of a valid contract under Section 10 of the Indian Contract Act?

   Offer & acceptance, intention to create legal relations, lawful consideration, capacity of parties, free consent, lawful object, certainty, possibility of performance, and not expressly declared void.

7. Define 'consideration' under Section 2(d) of the Indian Contract Act.

   When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, does or abstains from doing, or promises to do or abstain from doing something, such act/abstinence/promise is the consideration.

8. State the rule 'consideration may move from a stranger' and the main exception to the privity of contract doctrine.

   Consideration may be furnished by the promisee OR any other person (a stranger to consideration can sue), but a stranger to the contract generally cannot sue — exceptions include trust/beneficiary, family settlement, assignment, agency, and acknowledgement/estoppel.

9. State the general rule on past consideration in India versus England.

   In India, past consideration is valid consideration (the words 'has done or abstained' in Sec 2(d) include past acts). In English law, past consideration is generally no consideration.

10. Name three exceptions where an agreement without consideration is still valid under Section 25.

    (1) Written and registered agreement made on account of natural love and affection between near relations; (2) promise to compensate for past voluntary services; (3) promise in writing to pay a time-barred debt. Also: completed gifts and creation of agency need no consideration.

11. Who are persons NOT competent to contract under Section 11?

    A minor (under 18), a person of unsound mind, and a person disqualified from contracting by any law (e.g., insolvents, alien enemies, convicts). An agreement with a minor is void ab initio.

12. Define 'free consent' and list the elements that vitiate it.

    Consent is free when not caused by coercion (Sec 15), undue influence (Sec 16), fraud (Sec 17), misrepresentation (Sec 18), or mistake (Sec 20-22). The first four make a contract voidable; bilateral mistake of fact makes it void.

13. Differentiate fraud from misrepresentation under the Indian Contract Act.

    Fraud (Sec 17) involves intentional deception/false statement made knowingly or recklessly. Misrepresentation (Sec 18) is an innocent false statement made believing it true. Fraud also entitles damages; misrepresentation generally allows only rescission.

14. What is a 'contingent contract' under Section 31, and when does it become enforceable?

    A contract to do or not do something if some collateral, uncertain future event happens or does not happen. It is enforceable only when (and if) the contingent event occurs; if the event becomes impossible, it becomes void.

15. Define a 'quasi-contract' and give two examples from the Indian Contract Act.

    A quasi-contract is an obligation imposed by law (not by agreement) to prevent unjust enrichment (Sec 68-72). Examples: supply of necessaries to a minor (Sec 68), payment by an interested person (Sec 69), liability to pay for non-gratuitous act (Sec 70), responsibility of finder of goods (Sec 71), money paid by mistake/coercion (Sec 72).

16. Who is the proper person to perform a contract, and may a third party perform it?

    The promisor, his agent, legal representatives, or a third person may perform. If the promisee accepts performance from a third person, he cannot afterward enforce it against the promisor.

17. State the rules regarding time and place of performance under Sections 46-50.

    Where no time is specified, performance must be within a reasonable time. Where time is specified but no application by promisee required, the promisor must perform on that day during usual business hours at the proper place; where the promisee must apply, he must do so at a proper place and reasonable hour.

18. What is the effect of 'time being the essence of the contract'?

    If time is essence and a party fails to perform on time, the contract becomes voidable at the option of the other party. If time is not essence, delay does not void the contract but the aggrieved party may claim compensation for loss caused by delay.

19. Define 'breach of contract' and distinguish actual breach from anticipatory breach.

    Breach is failure of a party to perform its obligations. Actual breach occurs at the time performance is due or during performance. Anticipatory breach occurs when a party repudiates before performance is due, giving the other party the right to sue immediately or wait until the due date.

20. List the remedies available to an aggrieved party for breach of contract.

    Rescission of the contract, suit for damages (Sec 73), suit for specific performance, suit for injunction, and suit upon quantum meruit (payment for work actually done).

21. State the rule in Hadley v. Baxendale on damages, as adopted in Section 73.

    Damages recoverable are those that naturally arose in the usual course from the breach (ordinary/general damages), or those the parties knew at the time of contract were likely to result (special damages). Remote and indirect losses are not recoverable.

22. Distinguish liquidated damages from a penalty, and how Section 74 treats them.

    Liquidated damages are a genuine pre-estimate of loss; a penalty is a sum fixed to compel performance. Under Section 74 (Indian law), the court awards reasonable compensation not exceeding the named amount, whether the sum is liquidated damages or a penalty.

23. Define a 'contract of indemnity' under Section 124 of the Indian Contract Act.

    A contract by which one party (indemnifier) promises to save the other (indemnity-holder) from loss caused to him by the conduct of the promisor himself or of any other person.

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