1.
Which law deals with Contracts?
a) Indian contract Act 1972.
b) Transfer of goods Act.
c) Sales of Goods Act.
d) None of these.
Answer: a
2. Contract Act broadly divisible into?
a) Four parts b)
Two Parts
c) 3 parts d)
None of these
Answer: b
Explanation: Broadly divisible into General
principles of contract is part 1 & special types of contract in part 2. Special
types of contracts are
1) Contract of guarantee.
2) Contract of Indemnity.
3. A contract is a ……………?
a) Agreement.
b) Not to do/to do a performance.
c) To pay a loan as surety on default of
debtor.
d) Any of these.
e) None of these.
Answer: d
4. Two Major constituents of contract are :
Agreement
and .Enforceability under law
True/False
Answer: True
5. Some of the following are not a contract?
a) P Promised to give $10000 to Q on his
birthday out of love.
b) P promised in front of god to share his
profit with ‘A’ who is in USA.
c) P gave a loan of Rs.10000 to son of R aged
10.
d) P coerced / harassed / terrorized ‘A’ to
sell his property to ‘P’.
e) P & B (who is blind) agreed to buy a
house jointly.
f) P sold his car to ‘T’ over phone without
anything writing. T also accepted sale.
g) P asked R to attack and injure W. P agreed
for a payment of Rs.50000.
h) A B
D E
i) B C D and G
Ans: i
Explanation:
B: is
not a contract. Contract is between 2 or more people. Here. ‘P’ made a promise
in a temple. It cannot be contract.
C: Minor does not have power to contract. It
is void.
D: Contract must be on willingness/free
consent from all parties. Here, harassment is there. So, it is illegal.
G: Purpose of contract must be legal. Attack
is a criminal act.
6. Which is not a consideration? Consideration
means something in return.
a) Dividend, Voluntary
Social service and gift
b) Salary, Work done for money
e) Commission and job
f) a
g) b
and e
i)
Ans: f
Explanation:
We give a job to somebody; He asks for a fee.
Something in return! So, both of us have consideration from each other. Job and
fee!
7. Which are not enforceable in law?
a) Agreement by all parties by free consent.
b) Agreement without consideration.
c) Agreement for forming a co – op credit
society.
d) Minor selling his property on his own to
‘A’.
e) b & d
f) All of these
Answer: e.
Explanation: 1. There is no contract without
consideration
2. Nobody can contract
with minor.
8. A contract can be?
a) Oral b)
Written c) Oral (or) written
d) oral and written
Answer: c.
9. Who are not eligible to contract?
a) Two or more majors b) Blind person
c) Deaf and dumb person d) Half-conscious person due to
sickness
e) 17 years and 364 days old boy f) Insolvent person
Answer: D, E, F.
Explanation:
A minor
cannot contract; if somebody has a contract, say, of debt, minor on becoming
major can refuse repayment saying he was not mentally mature to ask for/ handle
debt at the time of contract. Law protects him till 18 years.
Person should be sound of mind to be a party
of contract. Half conscious people cannot have contracts.
Insolvency means that he has no money to pay
his debts. Law never recognizes insolvents to be a part of contract.
INDEMNITY
1. Meaning of indemnity is?
a) Insurance b)
Assurance
c) To save other from loss d) guarantee
Answer:
c
2. ‘A’ lost a draft sent by ‘B’. B, who purchased DD, called on his banker and
requested the bank to issue a duplicate DD. Banker asked for an indemnity.
Who is
the indemnifier?
a) Banker b)
A c) B d) A & B
e) Another third party who stands as surety.
Answer: C.
Explanation:
The purchaser of DD is indemnifier; banker,
who gets indemnity letter to protect it, is indemnified.
3. Which are not false?
a) Indemnity has only 2 people to contract.
b) Indemnifier is Bank.
c) Indemnified is Bank.
d) In an indemnity, Bank is beneficiary.
e) In an indemnity purchaser of DD promises
bank to make up the loss if any to Bank due to issue of Duplicate DD.
Answer: a, c, d & e.
Explanation: Which are ‘not false’ is the
question; So, it means which are true.Be careful when you have negatives in
your question.
The buyer/purchaser of the DD promises bank to
make up any loss if occur to bank because of issue of DD. So, naturally only
two people are here to contract with each other.
You can ask how loss may occur to bank by
issuing duplicate. Nowadays of technology it is not possible. However in olden
days, when ledger only were there, It was possible to en-cash original and
duplicate in two different branches on the same day or a little later; because
verification through correspondence might take 15 days.
4. Indemnity holder has the right to claim
damage, costs and all sums paid in compromise?
Yes / No.
Answer: Yes
5. A banker received a refund of bond from
Government and credited the account of endorsee who was the broker of original
owner. It was a forged endorsement. Original owner of the bond claimed the money
from government. Government paid the bond on maturity to original holder and
then, filed a case against bank to indemnify its loss due to wrong credit by
bank to the endorsee?
a) Bank not liable.
b) Bank liable under implied indemnity.
c) Broker is liable.
d) Broker & Original holder to indemnify
government.
Answer: B
Explanation:
Please note the words ‘original owner and
holder’. Owner’s signature is forged in endorsement. Then, Endorsee becomes
holder.
Banker credited the amount to the holder. Actually, broker forged the endorsement. So,
bank was asked to indemnify the government.
What is implied indemnity?
It is unwritten responsibility of the person
to take accountability and make up a loss caused by him to the loser.
In this case there was no contract of
indemnity between banker and government. But government as original issuer of
bond and having paid the money used the ‘doctrine of indirect/implied
indemnity’. Because of banker’s negligence ONLY government lost the money.
Banker had to make up the loss as per Court’s order.
Guarantee
1. One of this is not a contract of guarantee?
a) To perform a promise.
b) To discharge a liability.
c) To indemnify- save the other from loss.
d) To give assurance to the beneficiary /
creditor for repayment of liability in case failure by debtor.
Answer: C.
Explanation: Indemnity is to save/make up a
loss already happened; only two people are involved.
Guarantee: In a contract of guarantee three
people or more are involved; here, there is no loss, but failure to pay the
loan/to perform a duty only occurs. Surety is bound to pay on demand by
guaranteed/creditor/bank. These parties are 1.Creditor 2. Debtor and
3.surety/sureties
2. True or False?
B is assured by A: if C failed to pay the loan
to ‘B’, ‘A’ would pay the debt?
a) B is the guarantor;
b) C is the guaranteed
c) A is the Promised
d) B is Beneficiary
e) C is Debtor
f) ‘A’ is the promisor
Ans: a,
b, c –false; d,
e, f- true.
3. Guarantee is an agreement where?
a) Two persons involved.
b) More than 2 are involved.
c) Guarantor alone is involved.
d) Guarantor& Debtor are involved.
Answer: B
4. Which one is not true?
a) Guarantors liability is co – extensive with
that of Debtors.
b) Guarantors are primarily responsible for
repayment.
c) Guarantors liability is secondary.
d) After payment of loan by guarantor, he has
all the rights of creditor.
e) None of these
Answer: B
6. Bank obtained a guarantee from G for the
debtor D. D paid only 60% of the loan amount. Bank sued G for balance of amount.
Which one is true?
a) Can sue G.
b) Has to sue B & G.
c) Bank need not go to court.
d) Guarantor can refuse payment since his
liability is secondary.
Answer: a.
Explanation: Though guarantor’s liability is
treated as secondary, it does not mean that bank has to first file a case
against debtor only; bank can sue guarantor or debtor or both together.
7. A guarantor has paid the loan of the
borrower. Then, Guarantor goes in to the
shoes of banker and gets all the rights of a creditor/bank against Debtor. It is
called ______?
a) Continuing guarantee b) Implied guarantee
c) Implied promise d) implied indemnity
e) Explicit understanding
Answer: d
Explanation: It is called implied because
there is no open contract / agreement in writing or oral between borrower and
guarantor or guarantor and bank. But the right exists as per law.
8. G is the guarantor of a loan. But he died
on 10.11.2000. Bank issued a notice to guarantor claiming his estates for
Rupees 10, 12, 588 – which was the balance on 10.11.2001?
a) Bank has no right over his estates (assets)
after death of G.
b) G has no responsibility since he is dead.
c) Bank can claim the balance plus interest as
on date of death.
d) Bank can claim all balance up to date even
after the death since the liability is co – extensive.
Answer: C
Explanation: Bank has a right to claim any
asset/assets in the name of guarantor for outstanding balance as on the date of
death + interest till that date in case of death of a guarantor.
*For the transactions after the date of death,
guarantor is not liable. So, Banks fix the liability of guarantor as on the
date of death and usually open another account for the same loan with the same
balance. Then only credits after date of
death will not affect the liability of guarantor on the date of death due to
application of Clayton’s rule.
9. A continuing guarantee is?
a) Perpetuity.
b) Continuity even without renewal.
c) Continuity even after death of guarantor or
borrower.
D) All debit transactions on various dates in
the account considered as one loan.
Answer: D
Explanation: In a CC A/c, transactions occur
daily. Balance varies according to credit or debit or vice versa. All ‘debits
minus credits’ in the account makes a loan. Guarantees have this clause/point
and so, it is called continuing guarantee.
If
there is any credit balance on a particular day/days, it never releases the
Borrower / from liability.
10. Tick the correct answer. Which ones are
true?
a) Continuing guarantee can be revoked (Cancelled)
by banker.
b) Continuing guarantee can be revoked by
guarantor.
c) Notice of Revocation is necessary.
d) a and c
e) b and c
Answer:
e.
Revocation here means cancellation.
1. False
2. True
3. True
11. Bank has a right to claim Rs________ from
a guarantor who cancelled his guarantee by a letter / notice dated 19.2.2005?
a) 18.2.2005,
4,52,101 - + Interest
b) 19.2.2005, 5,01,578 - + interest
c) 20.2.2005, 5,02,158 - + interest
d) 19.2.2006, 6,00,729 - + interest
Answer: B.
Explanation:
Date of cancellation (called back) and date of death in case of death:
are the dates after which guarantor is not liable for any *future transactions.
That is the reason why a Banker always opens new account for those accounts
with same balance on the date of happening of these incidents.
12. B gave a loan to C on 5/12/2000. C gave a
security of two houses worth 5 lacs & 6 lacs. Loan is for 10 lacs. G was a
guarantor on 5.12.2000.When loan balance was 5 lakhs only, B released one of
the securities without the knowledge of guarantor. Later on in 2005 loan became
NPA. Balance With interest is Rs.8, 15,178. B sued (filed a case) guarantor and
borrower, after disposing the remaining 6 lacs security. Now There is a balance
of Rs.2, 15,178?
a) Guarantor can refuse the liability.
b) Borrower only liable.
c) Guarantor liable for whole amount.
d) Borrower and guarantor together liable.
Answer: A.
Explanation: All changes / variations done should
have the consent of Guarantor. Here, the banker released one of the securities
without informing and getting the consent of borrower. So, guarantor has a
right to refuse the liability.
13. Which of the following is true in
relationship to co-sureties?
a) Liability is not in equal proportion l.
b) liable
in equal proportion.
c) Release of one co-surety automatically
releases other from liability.
d) Release of one surety by creditor never
releases his responsibility of liability to other sureties.
e) b and d
f) none
Answer: e.
Explanation: If there is a loan of 1 lac and
there are 2 guarantors. The guarantors have equal liability of each RS.50,000.
If one of the guarantors is released, he is still responsible for his share to
another surety who is not released.
If one of the sureties is released with full
consent of another surety, then there is no liability for released.
14. B a creditor gave false rating and report
about F to G to obtain a guarantee for a loan to F. F failed to repay and also
he had another overdue at the time of this loan.
F- (Debtor)’s address was not known. Now which
is true?
a) G is liable to pay as guarantor
b) B cannot sue F whose address is not known.
c) G is not liable if he proves the
misrepresentation (false report).
d) None of these.
Answer: C
Explanation: B’s misrepresentation & false
news about borrower with an intention of getting guarantee from G-guarantor is
invalid/wrong.
15. B tells C not to give a complaint on A and
further assures he will compensate the loss if any caused by A. What are the considerations
here?
a) Consideration to C by A is compensation.
b) Consideration to C is loss caused by A.
c) Consideration to C is compensation by B.
d) Consideration to B is loss made by A.
e) Consideration to B is “C’s promise not to give
complaint”.
F) a and d
g) c and e
Answer: g
Explanation:
consideration is something in return. Here there are two parties B and
C. B’s promise to C ‘to compensate the
loss by A’ is consideration to C. C’s acceptance to ‘not to complain’ is
consideration to ‘B’.
B is promisor/guarantor. (is to give
compensation)
C is promisee/guaranteed/ receiverof
compensation .(who promises not to give any complaint on A)
Bailment
1. Which is not true about bailment?
a) Bailment is delivery of goods.
b) Specific purpose must be there.
c) It can be for specific period.
d) Generally possession is always with the bailee.
e) Bailor is one who gives.
f) Bailor has to inform any defect in goods
for bailment.
g) Otherwise the loss caused by Bailor’s
suppression of fact should be compensated by him.
h) Baillie has to take care of the article as
if it is his own. Otherwise he is liable.
i) None of the above is true.
j) A to h is true about bailment.
Answer: J
Explanation: A to H is true but bailment.
These are characteristics of bailment.
2. AliBaba was 17 years old. He needed money
to see ‘Tangal’ a film on first day of release. He pledged his ring in ‘Parekh
bankers’. Which one of these is wrong?
a) Bailment is invalid.
b) Minor cannot pledge.
c) Bailment is valid because it is not a pledge.
d) Pledge is not valid because minor cannot
contract.
Answer: C
Explanation: Bailment and pledge are almost
same. Only thing is minor cannot contract because he is not mature enough to
contract till his majority. In this case, Parekh will lose the ring and money
if Alibaba goes to court.
3. B kept his dog in C’s house for 6 months
;meanwhile B’s dog gave birth to 4 puppies which are sold @2000 by C. B came and
demanded dog and all money?
a) C need not give the 8000.
b) C is to give back the dog and 8000.
c) C is liable to give back the dog and the
value of money after deducting his expenses for taking care of the dogs.
d) C can refuse to give back all because
almost like the owner of the dog he took care of them affectionately.
Answer: C
Explanation: Bailee has to give back the
bailed article safely with all the additions / income after taking due
compensation or deducting expenses of maintenance.
4. In this case B forgets to tell that his dog
was not vaccinated. B’s dog bit C. ’C’ spent
7 days in a hospital and had an expenditure of
12000. B also retained the dog and its puppies as security till the
compensation is paid. Which of the following are true?
a) B cannot demand the compensation because
dogs have five Senses and they don’t bite intentionally.
b) A is liable for all cost.
c) Since dog is an animal, court will reject
the case.
d) B does have the right to retain dogs to extract money.
e) B & D
Answer:
e
Explanation: If charges / damages and cost are
not paid back by bailor, a bailee has a right to retain-called lien.
Explanation: Banker, high court advocates,
tailor etc. for their charges or for debt DUE can exercise right of lien.
5. Unknowingly, B mixed A’s puppies with his
own during these months. Which are not false in the following statements?
a) He has to separate B’s puppies while
returning.
b) Bailee has to bear the cost of separating
the right puppies from his own.
c) No need to separate; just give any 4
puppies.
d) a &b
e) None of these.
Answer: d
Explanation: If mixed with own-articles, Baillie
has to separate & give back bailor’s articles exactly and also bear the
expenses of separating them.
Pledge
1. One of these about pledge is not true?
a) Bailment and pledge are same.
b) In a pledge purpose of bailment is loan and
article bailed is security.
c) Possession only goes to Pawnee.
d) Pawnor transfers ownership.
e) Pawnee (Creditor / Banker) has to pay
damages if the article is damaged in his custody.
f) Pawnee/Bank has to give notice before sale
if loan becomes overdue. Then, only he can sell.
Answer: D
Explanation: Ownership is never transferred by
a bailor/pawner to bailee/pawnee.
2. Bank B bought customer-C‘s jewels after giving
a notice. After adjustment of loan there was excess cash and kept in suspense
account. Now, bank’s relationship with customer is that of ___________ ?
a) Debtor
b) Creditor
c) Trustee
d) Pawnee
Answer: c
Explanation: When jewel is auctioned, sale
price is received and kept in bank; from that minute onwards Bank becomes
trustee of customer’s money. So, it has to appropriate the money
A. to all costs related to auction.
B. Interest & principal.
C. credit the balance to customer is account.
3. There was a fire in Bank. All the jewels of bailor/Pawner were destroyed.
Which one is true in the following statements?
a) Bank is not liable because fire is a
natural cause.
b) Bank is liable to return the jewels or
compensate rightly.
C) Insurance company will settle all customers
directly.
D) None
Answer: B.
As a bailer it is his duty to return the
articles without any loss/damage.
Principal
and Agency
1. P appointed A for distribution of
newspapers in R.S.Nagar. No salary was
promised. ‘A’ started distributing the news papers. ‘P’ received a complaint from customer ‘C’ that
Newspaper was delivered by 11 am only. Who is liable?
a) P rejected the complaint since it was not
his duty.
b) A is liable for delay.
c) A & P both are liable.
d) There was no salary commission or any
consideration for A; so, he did not own the liability. He told contract was
invalid because there is no consideration.
Answer: C.
Explanation: Agent is to do all duties as per
the directions of principal. Consideration is not necessary for this contract. Contract
of agency without consideration is valid.
2. P is the principal and his agent is ‘A’. ‘A’
employed S for his help as a sub-agent.
Sub-agent made some errors in distribution.
There was a spate of complaints. Who is liable?
a) P is
answerable.
b) ‘A’ only is answerable for the acts of
sub-agent as agent.
c) P, A & S are responsible collectively.
D) None
Answer: B.
3. P, the principal, extended his business for
distribution of fruits and ‘A’ & ‘S’ as agent and sub-agent continued to
work in this business too. ‘A’ received 5% commission. There was an accident
and the fruit carrier was damaged. ‘A’, immediately, ordered sale of fruits in
a near by town because the fruits might perish. This is done without any
information to P. Whether this is right? Whether P can cancel the contract?
A) A is wrong since there was no such instruction
from P.
B) P can cancel the agency because of loss
caused by sudden diversion.
C) Commission can be stopped for this business
to A and P’s loss has to be indemnified by A.
D) A is right in this emergency situation; so,
contract cannot be cancelled or remuneration can not be stopped.
Answer: D
Explanation: Agent’s action in emergency *in
the interest of business* is valid.
4. Which ones are wrong here?
a) Sub agent is answerable to agent only.
b) Agent is responsible to principal.
c) Agent cannot appoint another agent.
d) Agent can do all things legal and in the
interest of business.
e) Subagent defrauded a customer. Principal
disowned the fraudulent action and refused to compensate the customer.
f) This contract can be oral or written.
g) If agent does anything without the authority
of principal; principal has power to ratify or reject.
h) c & e
i) a & g
Answer: h
Explanation:
Agent cannot appoint another agent but he can
appoint a sub-agent;
Generally P is not liable for any action of
subagent; But in the cases of frauds P is also responsible.
5. ‘Del Credere’ agent is one who?
a) Can do business on his own and give extra
credit to his customers at his risk.
b) Has additional powers to contract on his
own.
c) Has extra commission than other agents.
d) Should have proper contract with principal.
e) All of the above.
Answer: E
6. Suddenly, agent-A had an accident during
duty? Principal-P was also informed.
a) P has no responsibility to meet medical and
legal expenses.
b) P is to bear all medical, incidental and
legal expenses.
c) Agent was not on duty , so Agent is to bear
the cost.
d) None of these.
Answer: B
Explanation: P is the authority to appoint
agents. He is responsible for all actions of agent in the business and to
indemnify the loss to agent during the course of business.
7. ‘A’ detained a lorry of fruits because ‘P’
the principal did not pay previous commission of Rs.15000?
a) A cannot retain the fruits.
b) P can take legal action against agent.
c) A has power to retain .
d) None of these.
Answer: C
Explanation: Agent has a lien & can retain
goods, if his remuneration is due.
8. Which one is correct in agency &
principal?
A) If agent buys the fruits of principal and
sells it for a profit without the knowledge of principal, principal can accept or
reject or ratify the action.
B) Buying of principal’s goods on own/personal
account of agent is invalid.
C) If there is misconduct of agent, principal
can stop commission.
D) If there is loss due to agent’s misconduct,
principal can stop remuneration.
E) Agents lawful actions and actions in good
faith are valid.
F) All
Answer: F
9. Contract of agency does not come to an end
on… ….?
a) On death of principal / Agent.
b) On insolvency of principal.
c) On insolvency of Agent.
d) On resignation / renouncing from agency by
agent.
e) On dismissal of agent by principal.
f) On becoming lunatic / unconscious either
principal or agent.
Answer: C
Explanation: Insolvency of agent never matters. Insolvent
cannot buy or sell or own assets; but he can do other’s business in the
capacity of agent with or without consideration. (**Remember, in the contract
of Agency, consideration is not necessary; optional only.)
***Insolvency of principal compulsorily
ends all contracts involving him.
Sales
of Goods Act 1930
1. Goods are defined under sales of goods Act.
A list of goods is given below. Which of these are not goods under sales of
goods 1930 Act?
a) Stocks b)
Shares
c) Land d)
Machineries fixed on land
e) Crops f)
Grass
g) Buildings h)
all goods cut off from land (several from land)
1. A, G, B, F
2. C, G
3. B, C, E, F, G
4. D, H
Answer: 2
Explanation: Land &Buildings. All others in the list
except ‘land and buildings’ are goods defined under the Act.
2. Match the following.
a) Mercantile Agent
g) Bill of lading, RR, LR
b) Specific goods
h) No format, can be oral /written
c) Seller i) agreement between Buyer &
Seller
d) Delivery j) Goods already identified
e) Document to title to goods k) A person having authority to
sell
f) Bilateral Contract l) transfer of possession from
one
person to another person
n) Format of contract m) One who sells.
Answer: A-K, B-J, C-M, D-L, E-G, F-I, N-H.
Explanation:
Mercantile agent is person who is not owner
but sell goods on behalf of principal.
Specific goods are already identified and
fixed by buyer.
Delivery is ‘handing over a thing to another
person’; also it gives ‘authority of possession’ to the receiver. Remember it
does not give ownership rights.
3. Fill in the blanks:
a) When all the conditions and terms are
completed or performed as per sale contract and ownership of goods is passed,
it is called ______. (Agreement to sell, sale, understanding)
b) When terms are fixed and they are yet to be
completed, it is called _______ .
(Sale, Agreement to sell, contract)
a. Sale
b. MOU
c. Agreement to sell
d. Offer
e. a & c
Ans: e;
Exp: Sale and Agreement to sell.
4. In a sale?
a) Delivery of goods necessary.
b) Possession by buyer is a must.
c) Buyer has to pay full price.
d) None of these.
Answer: D
Explanation: Nothing is necessary. It all
depends up on the terms and conditions already agreed. Terms and conditions may
vary. In a sale all terms & conditions are to be completed, then only it
can be called ‘sale’.
Part
payment is also allowed for taking possession. Possession can be taken earlier/later.
A buyer can take delivery of the goods, say, : you order a fridge; pay an
advance and it can be taken delivery even after a week.
5. Condition is the __________?
a. Stipulation b. main stipulation c. warranty)
Ans: b.
6. Warranty is ________?
a. Main
b. collateral / secondary stipulation)
Ans: b
7. Implied condition is ……….?
a) Title of seller should be clear.
b) Buyer can sue if seller does not send goods
as per the sample or description.
c) Buyer can quietly enjoy the goods bought.
d) All of these.
e) a & b
Answer: e.
Explanation: A seller is expected to have true
title of goods/ownership. Think,we go and buy a TV on the belief the shop owner
owns it.
we go to a shop and identify TV of a
particular model and company. Seller has to send the same model. That is what
we expect and this is called IMPLIED CONDITION.
8. What is implied warranty?
a)”S” sold goods to B. But B could not take
possession of it because ‘O’ also claimed the goods.
b) P explained his purpose for that particular
make and asked for an appropriate article which he did not know.
Answer: B
Explanation: When you do not know how to
select the quality goods and express it to seller, it is seller’s duty to give a
suitable article / goods to the consumer who believes him. This is implied
warranty.
Note: If
a buyer without any specification just requires an article, buyer should not
expect any quality.
It is always *‘Buyer Beware’ in Latin *‘Caveat
Emptor’. It is the duty of buyer to look for quality and it is not the
responsibility of seller’s.
9. Which are not the rights of unpaid seller
below?
a) Unpaid seller can stop the goods from
delivery.
b) Unpaid seller can pledge the goods which
are already delivered.
c) Unpaid seller can resell the goods.
d) Unpaid seller has a lien and so can sue the
buyer.
Answer: B.
Explanation: Unpaid seller cannot pledge the
goods after sale because possession is now with buyer.
FEMA
1. Fill in the blanks. Foreign Exchange
________ Act 1973 was replaced by Foreign Exchange _________ Act 1999?
a) Management b)
Replacement
c) Regulation d)
a & c
e) Transfer
Answer: d
2. Which one is not a currency as per FEMA?
a) Postal Notes b) Currency notes
c) Money orders d) Letter of credits/Bill of
Exchange
e) Credit card f)
Invoice by a trader
Answer: F.
Explanation: Remember, all others, except
invoice, are treated as currency in FEMA. To a common man currency means money;
but as per FEMA Postal notes, Money orders, LCs and credit card are also
CURRENCY.
3. Who is not a ‘person resident in India’?
a) A person who is citizen of India works in
Ethiopia for more than 6 months.
b) A person from Nigeria studying in a 3 year
course at Bhopal.
c) A citizen from US staying indefinitely in an
ashram in Hardwar.
d) Your brother staying in New York for the
past 7 months enrolled in a one year course ending in the coming March .
e) a & d
f) none
Answer: e.
.
Explanation: First thing, do not get confused
between ‘CITIZEN and RESIDENT’. Both are different.
FEMA
deals with ‘RESIDENT’ only. As per FEMA, a resident is (Indian citizen or
foreign citizen does not matter) a person who must have stayed 182 days or more
in the preceding (previous) financial year. Purpose can be anything studies,
work, rest etc.) in India.
4. FEMA: Rules and regulations can be issued
under FEMA by?
a) SEBI.
b) Central government’s finance ministry.
c) RBI.
d) Foreign affairs department.
e) Commerce ministry.
Answer: C
Explanation:
FEMA the Act gives powers to RBI to frame
rules and regulations.
5. RBI has powers?
a) To arrest the person who contravenes RBI’s
authority.
b) To fine such person.
c) To appoint authorized persons and inspect
authorized persons.
d) All of these.
Answer: C only
Explanation: Arrest, fine, penalty etc. are
done by Directorate Enforcement under Central Government.
6. Match the following under FEMA
|
1.
|
RBI
|
1.
|
Is not a security under FEMA
|
|
2.
|
Current account transaction
|
2.
|
Special Director (appeals)
|
|
3.
|
Promissory note issued by a corporate(other
than government)
|
3.
|
No Jurisdiction under FEMA
|
|
4.
|
Capital Account in FEMA
|
4.
|
Fine maximum 2 lacs rupees and Rs.5000 per
day
|
|
5.
|
Directorate of Enforcement can
|
5.
|
Which affects foreign liabilities and assets
of any firm/ company
|
|
6.
|
Appeal can be made to
|
6.
|
Can cancel the permission / licensee to A.P.
|
|
7.
|
Civil courts have
|
7.
|
Payments/receipts due in foreign currency
like, trade, interest, foreign travel,
educational expense, medical expense etc.
|
Answer: 1-6; 2-7; 3-1; 4-5; 5-4; 6-2; 7-3.
Explanation:
|
1.
|
RBI.
|
|
Can cancel the permission / licensee to A.P
|
|
2.
|
Current account transactions are
|
|
Payments/receipts due in foreign currency
like, trade, interest, foreign travel,
educational expense, medical expense etc.
|
|
3.
|
Promissory note issued by a corporate(other
than government)
|
|
Is not a security under FEMA while any
government promissory note is a security under FEMA.
|
|
4.
|
Capital Account in FEMA
|
|
affects foreign liabilities and assets of
any firm/ company/government
|
|
5.
|
Directorate of Enforcement can
|
|
Fine maximum 2 lacs rupees and Rs.5000 per
day
|
|
6.
|
Appeal can be made to
|
|
Special Director (appeals)
|
|
7.
|
Civil courts have
|
|
No Jurisdiction under FEMA. But parties can
go to High court/supreme court.
|
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