Business Level - I
Business Law (BL3)
Mock examination
Instructions to candidates
1. Time allowed: 2 hours
2. Total: 100 marks
3. 50 questions:
... [Show More] All questions are compulsory. Every correct answer is entitled to 2
marks
4. The most appropriate answer (A, B, C or D) should be marked against the relevant
question number.
1. Which of the following statements is correct in relation to Negotiable Instruments?
A. All bills of exchange take the form of cheques.
B. An “acceptance for honor supra protest”, is always in relation to a cheque.
C. A bill of exchange to be accepted must be signed by the drawee.
D. A cheque is a bill of exchange drawn on a banker, but not payable on demand.
2. Which of the following is correct in relation to the remedies available to a buyer in a breach of a
sale of goods contract?
A. To file an action for damages, when the seller has not delivered the goods.
B. To file an action, for the recovery of the price of the goods sold on credit.
C. To file an action for damages, when the buyer has not accepted the goods.
D. Stoppage in transit.
3. The statements given below are in relation to either unenforceable contracts or illegal contracts.
(i) An unenforceable contract cannot be enforced, as it contains a technical defect.
(ii) A written contract for the sale of a land is an unenforceable contract.
(iii) A contract to promote corruption in public life is an illegal contract.
Which of the above statement/s is/are correct?
A. (i) only
B. (ii) only
C. (i) and (ii) only
D. (i) and (iii) only
4. An agent can be held personally liable on certain contracts entered into by the agent on behalf
of his principal.
Which of the following is such an instance?
A. The agent indicates that he is contracting as an agent for an unnamed principal.
B. The agent contracts on behalf of a non-existing principal.
C. The agent discloses that he is contracting on behalf of a named principal.
D. The agent indicates on a bill of exchange, that he is the agent of a named principal.
5. Under the Electronic Transaction Act, No. 19 of 2006, certain legal requirements are necessary
for a document to be accepted in law.
Which of the following is a legal requirement under the Act?
A. The document should be in writing, but need not be signed.
B. The document should be retained in its original form.
C. The document should be signed before a notary and two witnesses.
D. The document should be signed in front of five witnesses, in the absence of a notary.
6. Under the Finance Leasing Act No. 56 of 2000, the lessor should fulfill certain requirements,
prior to obtaining possession of the leased asset without a court order.
Which of the following is correct in relation to such requirements?
A. The lessor should notify the police about the breach of the agreement by the lessee, and the
lessor’s intention to recover possession of the asset.
B. The lessor should inform the registrar of the district court, of the lessor’s intention to recover
possession.
C. The lessor should inform the lessee, of the lessor’s intention to recover the asset, through a
parate execution.
D. The lessor should inform the guarantors, if any, of the lessor’s intention to recover possession.
7. Which of the following is correct in relation to hire purchase?
A. Hire purchase is a method of installment credit used in business.
B. The hirer can defraud the owner of the goods by fraudulently removing the goods.
C. The hire purchase agreement cannot be terminated by the hirer before the end of the hire
purchase term.
D. In Sri Lanka hire purchase is governed by the Mortgage Act, No. 06 of 1949
8. Which of the following is correct, in relation to the Prevention of Money Laundering Act, No. 05
of 2006?
A. A freezing order does not prohibit any transaction in relation to any account, property or
investment, which may be used in committing money laundering.
B. One of the main objectives of the Act is not to discourage money laundering in Sri Lanka.
C. Resident persons in Sri Lanka are exempt from the provisions of this Act.
D. A main defense for money laundering is when a disclosure has been made to the authorities
before the offence occurs.
9. Which of the following is correct in relation to a partnership?
A. A partnership deed must be in writing if the capital of the partnership is more than Rs. 100,000.
B. The general rule is that the maximum number of partners a partnership can have in Sri Lanka is
25 members.
C. A partnership can be sued in a court of law, in its own name.
D. The general rule is that a new partner is not liable for the debts incurred by the partnership,
before he became a partner.
10. Which of the following is correct in relation to the Shop and Office Employees (Special
Provisions) Act No. 19 of 1954?
A. The employer need not provide facilities for employees to take their meals in the premises.
B. The employer must provide seats behind the counter for female shop assistants.
C. Female employees working in hotels shall not work after 8 pm.
D. The maximum number of hours a female employee should work per day is restricted to 6 hours.
11. Which of the following is correct in relation to the law of contracts?
A. A breach of a warranty entitles the injured party to rescind the contract.
B. A negligent misrepresentation does not allow the innocent party to refuse to perform the
contract.
C. A breach of a warranty does not allow the injured party to claim damages.
D. An innocent misrepresentation allows the innocent party to rescind or affirm the contract.
12. For a court to grant relief under the principle of unjust enrichment, certain elements must be
satisfied.
The following elements are given in relation to the above.
(i) The aggrieved party must have provided the other party with something of value, expecting
compensation in return.
(ii) It should be inequitable for the defaulting party to enjoy the benefits of whatever the aggrieved
party provided him, without paying for it.
(iii) The defaulting party must have acknowledged, accepted and benefited from whatever the
aggrieved party provided.
Which of the above elements should be present to be eligible for such relief?
A. (i) and (ii) only
B. (ii) only
C. (iii) only
D. All of the above
13. Which of the following is correct in relation to a crossing on a cheque?
A. A crossed cheque is payable through the collecting banker or over the counter of the bank.
B. A person who takes a crossed cheque with the words ‘not-negotiable’ gets a better title to the
cheque than the person from whom he took it.
C. A crossed cheque with the words ‘Account Payee’ is payable only through the account of the
payee.
D. A special crossing is when a cheque bears across its face two transverse lines with or without the
words ‘not negotiable’.
14. Which of the following is correct in relation to a contract for the sale of goods?
A. In a sale by auction, the seller can at all times, bid for his own goods.
B. A buyer who purchases a stolen car gets a good title to the car if he was not aware that it was
stolen.
C. In a sale where the goods are delivered in instalments, if the seller breaches the contract, the
buyer can reject future deliveries.
D. In a sale by sample and description, the goods sold must tally with either the sample in quality
or with the description.
15. For the courts to recognise a custom as a source of law, certain conditions must be fulfilled.
Which of the following is correct in relation to such conditions?
A. The custom should oppose the existing legal principles.
B. The custom must be used only for commercial purposes.
C. The custom must be ancient and well established.
D. The custom must be passed by an Act of Parliament.
16. For a contract to be treated as a valid contract in law, certain elements must be present.
Which of the following elements is correct?
A. At least one party should have the capacity to contract.
B. The objective of the contract need not always be legal.
C. All the terms of the contract should be certain.
D. The consent of at least one of the parties should be there.
17. Subject to the partnership deed, there are general rights and duties that are applicable for
partners.
Which of the following is correct in relation to these rights and duties?
A. The consent of the majority of the partners is necessary to introduce a new partner.
B. Only the senior partners are entitled to take part in the management of the partnership
business.
C. No partner is entitled to interest on his capital, before the profits are ascerta [Show Less]