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100+ Free CMA Inter Paper 5: Business Laws and Ethics Practice Questions
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Under the Companies Act, 2013, the maximum number of members permitted in a private company (excluding employees and certain ex-employees) is:
A
B
C
D
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2026 Statistics
Key Facts: CMA Inter Paper 5: Business Laws and Ethics Exam
100
Total Marks
ICMAI CMA Syllabus 2022
3 hrs
Exam Duration
ICMAI
40%
Corporate Laws Weight
ICMAI Paper 5 Syllabus
30%
Commercial Laws Weight
ICMAI Paper 5 Syllabus
No
Negative Marking
ICMAI Exam Pattern
Group I
CMA Intermediate
ICMAI
CMA Inter Paper 5 (Business Laws and Ethics) is a 100-mark, 3-hour offline Group I paper under the ICMAI 2022 syllabus with no negative marking. Section weights are Commercial Laws 30%, Industrial Laws 15%, Corporate Laws (Companies Act 2013) 40% and Business Ethics 15%, so the Companies Act is the most heavily examined area. The real paper is part-objective (30 marks) and part-descriptive (70 marks); ICMAI also publishes an official MCQ Bank, so this 100-question set is structured purely as MCQ knowledge prep weighted to the official syllabus.
Sample CMA Inter Paper 5: Business Laws and Ethics Practice Questions
Try these sample questions to test your CMA Inter Paper 5: Business Laws and Ethics exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1Under Section 10 of the Indian Contract Act, 1872, which one of the following is NOT an essential element required to make an agreement a valid contract?
A.Free consent of the parties
B.Lawful consideration and lawful object
C.The agreement must be in writing and registered in every case
D.Competency of the parties to contract
Explanation: Section 10 requires free consent, competent parties, lawful consideration, lawful object and that the agreement is not expressly declared void. It does NOT require every contract to be written and registered; oral contracts are generally valid unless a specific statute mandates writing or registration.
2An offer that is communicated through an advertisement promising a reward to anyone who performs a specified act is best classified under the Indian Contract Act, 1872 as a:
A.Specific offer
B.Counter offer
C.General offer
D.Cross offer
Explanation: A general offer is made to the world at large and any person who fulfils the stated conditions can accept it by performance, as recognised in Carlill v. Carbolic Smoke Ball Co. and applied in Indian law. Performance of the conditions amounts to acceptance.
3Under Section 7 of the Indian Contract Act, 1872, to convert a proposal into a promise the acceptance must be:
A.Absolute and unqualified
B.Conditional upon further negotiation
C.Communicated only after performance is complete
D.Made by silence of the offeree
Explanation: Section 7 provides that acceptance must be absolute and unqualified and must be expressed in some usual and reasonable manner. A qualified or conditional acceptance operates as a counter offer and does not conclude the contract.
4A contract entered into by a minor under the Indian Contract Act, 1872, as settled in Mohori Bibee v. Dharmodas Ghose, is:
A.Voidable at the option of the minor
B.Void ab initio
C.Valid but unenforceable against the minor only
D.Enforceable once the minor attains majority
Explanation: An agreement with a minor is void ab initio because a minor is not competent to contract under Section 11. The Privy Council in Mohori Bibee held that such an agreement is wholly void from the beginning and cannot be ratified on attaining majority.
5Consideration that consists of an act or promise relating to the past, given before the promise was made, is treated under the Indian Contract Act, 1872 as:
A.Executory consideration
B.Unlawful consideration
C.Past consideration, which is valid in India
D.Inadequate consideration that is void
Explanation: Section 2(d) defines consideration to include an act done 'has done or abstained from doing', so past consideration is good consideration in India, unlike under English law. The act done at the promisor's desire before the promise supports the contract.
6Under Section 25 of the Indian Contract Act, 1872, an agreement made without consideration is valid when it is:
A.A promise to pay a time-barred debt made in writing and signed
B.An oral promise to make a gift in the future
C.A promise induced by undue influence
D.Any agreement between close relatives
Explanation: Section 25(3) makes a written and signed promise to pay a time-barred debt enforceable without fresh consideration. Other exceptions include natural love and affection between near relations in writing and registered, and compensation for past voluntary services.
7When consent to a contract is caused by coercion, fraud or misrepresentation under the Indian Contract Act, 1872, the contract is:
A.Void ab initio
B.Voidable at the option of the party whose consent was so caused
C.Valid and binding on both parties
D.Illegal and punishable
Explanation: Section 19 makes a contract voidable at the option of the party whose consent was obtained by coercion, fraud or misrepresentation. That party may choose to affirm or rescind the contract; it is not automatically void.
8A contract whose performance becomes impossible after it is made due to an event the parties could not prevent is discharged under the Indian Contract Act, 1872 by:
A.Novation
B.Supervening impossibility (frustration) under Section 56
C.Anticipatory breach
D.Remission under Section 63
Explanation: Section 56 provides that a contract to do an act which, after the contract is made, becomes impossible or unlawful by an event the promisor could not prevent, becomes void. This is the doctrine of supervening impossibility or frustration.
9The rule in Hadley v. Baxendale, recognised in Section 73 of the Indian Contract Act, 1872, limits damages for breach of contract to losses that:
A.Are remote and indirect
B.Arise naturally or were in the contemplation of the parties when contracting
C.Are punitive in nature
D.Always equal the full contract price
Explanation: Section 73 allows compensation for loss arising naturally in the usual course of things from the breach, or which the parties knew when making the contract to be likely to result. Remote and indirect losses are not recoverable.
10In a contract of indemnity under Section 124 of the Indian Contract Act, 1872, the person who promises to save the other from loss is called the:
A.Indemnity holder
B.Indemnifier
C.Surety
D.Principal debtor
Explanation: Under Section 124, the person who promises to make good the loss is the indemnifier (promisor), and the person whose loss is to be made good is the indemnity holder (promisee). A contract of indemnity protects one party against loss caused by the conduct of the promisor or any other person.
About the CMA Inter Paper 5: Business Laws and Ethics Practice Questions
Verified exam format metadata for CMA Intermediate Paper 5: Business Laws and Ethics is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.