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CMA Foundation Paper 1 (FBLC) study materials
CMA Foundation Paper 1 (FBLC) study resources

CMA Foundation Paper 1 (FBLC): Fundamentals of Business Laws: statutes, essentials and application

CMA Foundation Paper 1 (FBLC) · Work through your exam, one topic at a time.

All guide sections

Fundamentals of Business Laws: statutes, essentials and application

Fundamentals of Business Laws is the heavier domain of FBLC and tests statute recognition and application: contract, sale of goods, negotiable instruments, partnership/LLP, companies, consumer protection and insolvency.

Core rules

  • Contract (Indian Contract Act, 1872): Sec. 10 requires offer, acceptance, lawful consideration, capacity, free consent, lawful object and no express prohibition. Acceptance must be absolute and unqualified (Sec. 7).
  • Consideration (Sec. 2(d)): real but need not be adequate; Sec. 25 exceptions include natural love and affection and past voluntary service.
  • Capacity (Sec. 11): a minor's agreement is void ab initio, not voidable; it cannot be ratified on attaining majority.
  • Sale of Goods Act, 1930: Sec. 4 defines sale as transfer of property in goods for a price; Sec. 12 separates conditions and warranties; Sec. 16 codifies caveat emptor with exceptions.
  • Negotiable Instruments Act, 1881: Sec. 13 covers promissory note, bill of exchange and cheque; a holder in due course takes free of defects.
  • Partnership vs LLP: under the 1932 Act partners are agents and personally liable; an LLP (2008 Act) is a separate legal entity with limited liability.
  • Companies Act, 2013: separate legal personality and perpetual succession.
  • Consumer Protection Act, 2019: covers goods, services and e-commerce; District, State and National Commissions.
  • IBC, 2016: CIRP is creditor-in-control, with a 330-day outer limit.

Worked example

A, aged 17, contracts to buy a laptop on credit. The seller sues on default. Sec. 11 makes a minor incompetent to contract, so the agreement is void ab initio (Mohori Bibee v Dharmodas Ghose); A cannot ratify it after 18. The seller cannot enforce it.

Traps

Inadequate consideration does not invalidate a contract. Do not confuse void with voidable. Acceptance is complete against the proposer when posted, but against the acceptor only when the proposer learns of it. Do not give LLP partners unlimited liability or quote unamended thresholds.