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Law Questions and Answers
1. LAW Model Paper Answered
By Maxwell Ranasinghe
With special reference to Law Question
Paper of
Sri Lanka Institute of Marketing ( SLIM)
2. MCQs – You will get about 10 questions for the exam.
but I have answered 20 here questions for your benefit
• 1. A contract is a
• (a) A legally binding agreement
• (b) A mutual understanding between two parties
• ( c )A verbal understanding between any party
(d) A written agreement between two or more
parties
3. • 2. An essential part of a contract is that
• a)There should be a valid offer and valid
acceptance
• b)There should be a physical product to
transact
• c)Both parties should live in Sri Lanka
• d)The agreement entered should be certified
by an Attorney at Law
4. • 3. An agreement as to land to be valid
• a)It should be in writing
• b)It should be in writing and proper stamps
should be pasted
• c)Whether it is verbal or written but agreed in
front of a lawyer
• d) It should be in writing and notarialy executed.
5. •
• 4. Jayalath prepares a medication for Dengu and
advertises in the newspaper that compensation of
Rs. 50,000 will be paid to anybody who uses his
drug in the manner prescribed in the product and
still does not get cured of Dengu. He further says
that he has deposited Rs. 500,000 in the bank
towards this purpose. Geetha attracts Dengu fever
and uses Jayalath’s drug as prescribed but did not
get any cure. Now Geetha sues Jayalath for the
compensation.
6. • a)Jayalath says there is no contract with Geetha
to pay the compensation as Geetha did not
inform him about the acceptance of his offer
• b)Geetha can ask for the reward despite she has
not informed Jayalath as Jayalath’s offer is made
to the whole world.
• c)Jayalath has no obligation to pay Geetha as
advertisements should not be taken seriously and
it does not have any legal implications
• d)Jayalath can pay only the amount paid by
Geetha to buy the drug and not any more.
7. • 5. Somawansa advertises in newspapers that he would like
to sell his car for Rs. 5 million. After one week, Weerawansa
comes and offers Rs. 5 million, but Somawansa declines to
sell the car to Weerawansa
• a) Somawansa has to sell the car to Weerawansa as
Weerawansa has offered the correct money
• b) Somawansa says there is no offer to accept and the
advertisement is only an invitation for offers
• c) Weerawansa says that an advertisement is an offer for
the whole world and therefore any body can accept the
offer and therefore Somawansa has to sell the car to him
• d) Somawansa can decline the offer as Weerawansa is late
to offer.
8. • 6. Dallas offered to sell his house to Mangala for
Rs. 15 Million by way of posting a letter on 10th
March 2009 and asked Mangala to make the
acceptance by post. The letter was wrongly
addressed and it reached Mangala only on the
15th of March 2009. Mangala accepted the offer
and posted a letter on the same day. Meanwhile
since there was no reply from Mangala even on
16th, Dallas sells his property to Yapa. The letter
of acceptance by Mangala did not reach Dallas
until 18th of March.
9. • 1. Since there is no acceptance of offer is
communicated, Dallas can sell the property
• 2. If post is given the mode of acceptance, the
acceptance of the offer will take place as soon as the
letter is properly posted. Mangala can sue Dallas for
breach of contract.
• 3. There is no contract between Dallas and Mangala as
the contract did not take place in time
• 4. Dallas can say that he did not receive the letter of
acceptance within the expected period and therefore
he thought that Mangala has no interest in accepting
his offer.
10. • 7. Following are considered as no capacity to
contract
•
• a)Persons above 21 years of age
• b)Married women
• c)Persons of unsound mind
• d)Non citizens of this country
11. • 8. A contract for sale of goods includes
• a)Sale and an agreement to sell
• b)Sale only
• c)Agreement to sell only
• d)Sales, Leases and hire purchases
12. • 9. Karuna buys some paddy from Baskaran on Monday evening.
Pays 75% of the price. Baskaran keeps the paddy sold to Karuna
separately from other paddy and asks Karuna to take delivery and
he agrees. However, Karuna could not find a lorry to take delivery of
the paddy. When he came to take delivery on the next day,
Baskaran’s store was bombed, guttered by fire and paddy has burnt
and perished.
• a) Karuna can ask the money he paid from Baskaran
• b) Karuna can ask Baskaran to supply fresh paddy for him for the
price paid
• c) Baskaran can ask Karuna to pay the balance 25% as well.
• d) Baskaran can sue Karuna for not taking the delivery of the paddy
on the day he sold.
13. •
• 10.
• Consideration can be made for sale under the
sale of goods ordinance by way of
• a)Money and services
• b)Money only
• c)Money, service and goods
• d)Partly in money and partly in goods
•
14. • 11.
• One of the implied conditions as to Title in Sale of
Goods ordinance is
• a)The seller has the right to sell the goods if it is a sale
• b)The goods should be in merchantable condition
• c)The goods should match the sample
• d)The goods should match the sample as well as the
description
•
•
15. • 12.
• One of the statements is incorrect as to “Fit for purpose”
implied condition is considered. Underline that statement
• a)The buyer makes known to the seller the particular
purpose the goods are required
• b)The buyer has to show a sample of the product he wants
to buy
• c)The buyer relies on the seller’s skill or judgment
• d)The supplier ordinarily supplies such products in his
normal course of business
•
16. • 13. Rajitha bought a car from Randeniya and used it for 6
months. Randeniya had no title to the car. As a
consequence Rajitha had to surrender the motor car to the
true owner. Rajitha sued Randeniya to recover the money
paid.
• a) Rajitha has no right to sue Randeniya
• b) Rajitha cannot sue Randeniya for the total he paid as he
has used it for six months
• c) Rajitha can sue Randeniya for the total money paid
despite he has used it for six months
• d) Rajitha can ask the true owner to sue Randeniya as he
has no right to sue him
•
17. • 14.
• One of the statements is wrong as to the duties
of the buyer. Underline that statement
• a)To accept the delivery of goods when the seller
is willing to make the delivery as per the contract
• b)To pay the price in exchange for possession of
the goods
• c)To apply for the delivery of goods
• d)Demand delivery of the goods at any time
18. •
• 15.
• Every trader who sells any goods shall on demand
issues to the purchaser a receipt stating certain
information. Underline the statement that has
incorrect information
• a)The date of sale
• b)The quantity and quality of goods sold
• c)The price paid for such products
• d)Whether sale was wholesale or retail
•
19. • 16. Underline the correct answer
• As per the Intellectual property Act No 52 of 2003, a trade mark
means
•
• a). Name used by a trader to identify goods and services marketed
by him or her
• b) Any visible sign serving to distinguish the goods of one enterprise
from those of others
• c) A label, symbol of mixture of any of those used by a marketer to
inform the public about its brand name
• d) Any mark that appears in the package where customers can
identify the product.
•
•
20. • 17. When Consumer Affairs Authority makes a
determination as to anti competitive practices or
monopolies of a company or trader, it should
consider whether
• A) It is fair by the interest of the public
• b)It is unfair on the competitors
• C)It is a by a multinational or a locally owned
company
• D)It is about an essential service
21. • 18. Patent rights are given for
• (a) Authors of books
• (b) Trade marks
• ( C )Company names
• (d) Inventions
•
•
22. 19. Underline the statement which is incorrect
•
• A trade mark cannot be registered
• if it indicates a geographical name or a surname
• A brand name “ cow” can be registered as a
trade mark to sell milk products
• Misleading marks cannot be used as trade marks
• Immoral, scandalous and antisocial marks cannot
be used as trade marks
•
23. • 20. The important case as to legal entity of a
company is
• 1. Salomon Vs. Salomon Ltd
• 2. Balfour Vs. Balfour
• 3. Merit vs. Merit
• 4. Hyde Vs. Wrench
•
24. Part 2
You are required to answer only two questions. But I
have answered six questions for your benefit
• Question 2.1
•
• Under Law of agency, what is mean by apparent authority?
•
• Apparent authority ( agency by estoppel/ holding out)
• This happens when the principal allows another person to be believed as
his agent for third parties.
• When third parties act upon it and contracts with that person, the
principal is stopped from denying what he let believe.
• (E.g.. If Wimal makes Ranil believe that Basil is Wimal’s agent, Wimal will
be bound by the contract made by Basil on Wimal’s behalf.
• Wimal will be barred/ estopped from denying that Basil is not his agent
• not allowed) from denying the other as his agent.
•
25. • Question 2.2
•
• Ulra vires will not have affect under the new companies law. Explain briefly.
•
• In the older versions of company’s laws if the company has acted beyond the
powers given by the Memorandum of Association ( which contained the objects of
the company) such acts were considered void.
• The doctrine ultra vires ( beyond powers) has been removed from the new
company’s law. No memorandum is required to establish a company under the
new Act of 2007.
• Sec 17 of the companies Act states that even if the objects of a company are
stated in the Articles of Association, the capacity and power of the company shall
not be affected by such restriction. For existing companies by 2007, memorandum
is deemed to form part of the articles. Therefore the doctrine of ultra vires is
removed.
•
26. •
(05 marks)
• Question 2.3
•
• The general rule is that an agent is neither liable nor entitled under
contract which he makes on behalf of the principal. What are the
exemptions to this rule?
– If the agent acts within the scope of his actual or apparent authority, principal
is bound to 3rd parties for the contracts made on behalf of him
– Even if agent has acted on agency of necessity or the contract was later
ratified by the principal, then the principal is bound on the contracts
– ( However, if the 3rd party knows that the agent lacks authority, then the
principal is not bound. Then the 3rd party has to deal directly with Agent)
27. The undisclosed principal
• If the agent discloses the principal, but does
not disclose the name of the principal
• If the agent does not disclose the existence of
any agency
• The principal would be undisclosed principal.
• Then 3rd party can sue the agent or on
discovery of principal, the 3rd party can sue
either the agent or the principal
28. • Question 2.4
•
• Why should a marketer give priority to alternate dispute
resolution methods?
•
• Mainstream legal procedure often considered as expensive, time
consuming and cumbersome. Marketers prefer spending time in
substantive marketing activities than spending time in litigation
• Litigation is the final method that is used when all other methods
have failed.
• Mutual agreement should be the first approach.
• Mediation would be another approach
• Arbitration for high value matters
•
29. • Question 2.5
•
• What are the important aspects that you should check
when you receive a cheque from a customer ?
• Drawer should have signed the cheque.
• Have the amount stated in both words and figures which
must agree.
• Possess all necessary endorsements.
• Not be stale. Bank will not pay a cheque older than six
months from the date of the cheque.
• Have had any alteration signed by the drawer.
•
30. • Be dated. If a cheque is presented undated the
bank will return the cheque. However, a holder
may insert the date what he considers to be the
true date.
• State the payees name or just cash as payee.
• If the payee is indicated as “cash” such a cheque
cannot be crossed as “A/C payee”.
• Cheque is not mutilated. ( such as crushed,
stained or torn)
• Company rubber stamp or any other authorized
signatory’s stamp is placed.
31. • Question 2.6
• What are the works protected by copy rights and how
long a copyright will be valid ?
•
• The Law governing copyrights are now included in the
Intellectual Property Act
• Works of authors of Sri Lanka, works first published in
Sri Lanka and all works (even foreign) which by virtue
of treaties entered into by SL are to be protected.
• Even SL folklore are protected under the Act
•
32. – Economic rights
• Author’s lifetime plus 50 years after his death
• Joint work - during the life time of the surviving author
plus 50 years after his or her death
• Work published anonymous or pseudonym 50 years
from the date of publication
• Cinema, radio, TV 50 years from the date of
broadcasting or public presentation
• Photographic works – 25 years
•
33. – Moral rights
• Moral rights can be exercised by author and by heirs
after the authors death for 50 years
• Moral rights can be exercised even if the author or heirs
do not have economic rights ( E.g.. Even after
transferring of economic rights)
•
34. Part 3
You are required to answer only one question
But I have answered 6 questions for your benefit
•
• 3.1 Explain “Sale by Description” under the Sale of
Goods Ordinance
• Implied condition regarding description ( sec 14)
• Where there is a contract of sale of goods by
description, there is an implied condition that the
goods shall correspond with the description. Goods are
said to be sold by description when they are described
in the contract either by the buyer or by the seller and
the buyer contracts in reliance of the description.
•
35. • In Re Moore & Co. and Landauer Co ( 1921)
• M sold to L, 3100 cases of Australian Canned fruits, the
cases to contain 30 tins each. M delivered the total
quantity, but about half the cases contained 24 tins, and
the rest 30 tins. L rejected the goods. There was no
difference in market value between goods packed in 24 tins
and goods packed in 30 tins. However, the court held as the
goods delivered did not correspond with the description(
packing) of those ordered, L could reject the whole lot.
• Beal vs. Taylor – Buyer purchased a car described as 1961
model. The front part was pre 1961 model and it had
welded to an old car. Held that the goods did not comply
with the description
36. •
• Assume a person in Trincomalee says that he has 200o kgs
of kelawalla (Tuna) you agreed to buy it at Rs. 400 a kg.
However, when you received the fish in Colombo, you find
that they are not Kelawalla but Balaya which is lower in
demand and price. Then you can reject the goods under “
not supplied as per the description.
•
• A canteen manager says he can supply rice packets with red
rice. You order a lunch packet but you find white rice in it.
You can reject for the error in description
•
37. •
3.2 Explain “ Sale by sample and description” under the Sale
of Goods Ordinance
•
• If the sale by sample as well as description it should
correspond to both.
• Nichol vs. Godts ( 1854)
• N agreed to sell G some oil described as “foreign refined
rape oil” as per the sample. Although the goods were as
per the sample but it was not foreign refined rape oil.
Therefore buyer was entitled to reject the goods as it
should correspond not only with the sample but with the
description as well.
38. • You buy a Nokia phone by seen a sample and
the trader says that it is made in Finland. Then
you go and open the battery compartment
and finds a sticker “ Made in china” then you
can reject the product and ask for a full refund
although you have received the sample shown
because the description as to country of origin
does not correspond.
39. • 3.4 Write a short note on capacity of minors in
contract
• . Minors- Who are under the age of 18 years
• Minors cantracts can be classified as unassisted and assisted
contracts.
• Unassisted – minor enters into a contract on his own. Generally
they are unenforceable against the minor. However, it could be
ratified by the guardians assistance during his or her minority or by
the minor upon reaching the age of majority
• Assisted – minor enters into a contract with the assistance of
his or her natural guardian (parents) or person appointed by court.
These contracts can be enforced against the minor.
•
40. • Unassisted contracts by Minors
• This needs more explanation as some contracts can be
enforced against them.
• Generally contracts made by persons under the age of 18
years cannot be enforced against them. In other words
,they are voidable at the option of minor.
• However, a minor may enforce against the adult, if he or
she wishes to do so.
• ( limping contracts)
• On the other hand, there are some contracts that can be
enforced against even on minor by the other party. What
are they?
•
41. • 1.Contracts for necessities
• If the other party can prove that goods are suitable to his status in
life and it is required by him at the time of delivery of the product,
then a contract can be enforced against a minor.
• However, if the parents can prove that the minor is sufficiently
provided with the goods then even though this fact is not known to
the other party he may not be able to recover the price agreed.
• Nash Vs. Inman ( 12 waist coats ordered by a minor and father's
evidence showed- he was adequately provided with and trader
could not recover the price from minor)
• 2.If the minor has fraudulently shown he was an adult although in
fact he was a minor.
42. • 3.Beneficial Contract of Service – Costa Vs. AG. A
teacher when she was a minor entered into a contract
for teacher training. Then the contract of serving for a
specific period was breached and when sued she
claimed that she was not bound on the bond as she
was a minor at the time of signing the bond. But court
held even then, training was for her benefit and there
is a valid contract created by the Bond.
•
• (10 marks)
•
43. 3.5 Write a short note on termination offer
•
• Revocation and rejection of offer will terminate the offer
• An offer may be revoked at any time before it is accepted.
• However a revocation of an offer will not take place until it is
actually communicated to the offeree.
•
• Byrne Vs. Van Tienhoven ( 1880)
• B in Cardiff sends an offer to T in NewYork. T accepts in on 11th by
telegraph. B revokes in on 8th by posting a letter. T receives in on the
20th. Held revocation will not have effect until it reaches T and
therefore T ‘s acceptance is valid and there is a contract.
•
44. • b)Revocation is possible at any given time even if there has been a
promise to keep it open until a specific period. However, if it is
given by a deed or supported by consideration, then it cannot be
revoked until the date specified.
• c)Revocation can be communicated directly by the offeror or by
a third party
• Dickinson Vs. Dodds ( 1876)
– A offered to sell a property to B, through a document which stated that
this offer is valid until Friday 9.00 a.m. On Thursday A sold the house to
Y and B came to know about this sale through the brother in law of A.
B, before 9.00 a.m. of Friday delivered his letter of acceptance through
his Brother in law. Court held that there is no contract. By knowing that
the sale was concluded and having not paid any consideration to keep
for a period of time, B has no offer valid to accept. Offeree can reject
the offer at anytime saying that he has no interest in accepting the
offer.
45. • d) counter offer from offeree also makes the offer
rejected.
– Hyde Vs. Wrench ( 1840)
– Wrench offered a sell a property for pounds 1000.
Hyde then offered to buy it for pounds 950 but Wrench
did not accept the offer. Then he agreed to pay pound
1000.
– Court held; As soon as the counter offer of pound 950
was offered the original offer is rejected and therefore
there is no offer to accept in the second time.
–
46. • e) By accepting the offer with conditions
• Such as I accept the price of Rs. Five Million for
your House, but I will pay in three installments ,
• I will buy the car at the price quoted by you only
if you can do the repairs I mentioned in my visit.
• f) Lapse of time
• g) Lapse of reasonable time depending on the
mode of offer, nature of the product and also of
the nature of the trade practice.
47. 3.6 – A Describe the main elements of a sale of goods
transaction?
•
• There should be goods (movable property other than
money)
• There should be at least two parties called buyer and
seller
• There should be a consideration called money
• The title in goods should transfer now or on a future
date
•
48. • 3.6 B - What are the duties of the seller ?
•
– Deliver the goods in accordance with the terms of the contract
– Willingness to give possession of the goods to the buyer and make
arrangements for the transfer of property in goods to the buyer
– To ascertain and appropriate the goods to the contract of sale
•
– To pass absolute and effective title of the goods to the buyer
– To put the goods in a deliverable state and deliver goods as when
applied
– To deliver goods within the specified time in the contract or within a
reasonable time
•