Business Law: Certificate in Accounting and Finance Stage Examination

Certificate in Accounting and Finance Stage Examination
02 November 2021
60 minutes – 36 marks
Additional reading time – None
BUSINESS LAW
Instructions to examinees:
(i) Answer all EIGHT questions.
(ii) Answer in black pen only.
Test – 2
Q.1 Shafiq bought Abad’s motorcycle factory in Faisalabad on Abad’s representation that fifty
thousand motorcycles are assembled at his factory annually. Shafiq later found that the factory
has a capacity to manufacture thirty five thousand motorcycles only per annum. Shafiq now
wants to rescind the contract on the ground that his consent was obtained by misrepresentation.
Under the provisions of the Contract Act, 1872 list the circumstances under which Shafiq may
not be able to rescind the contract. (05)
Q.2 A fraudulently told B that 100,000 ready-made garments are exported from his factory each year
and thereby induced B to buy the factory. Actually A’s factory exports only 30,000 ready-made
garments each year.
Required:
(a) Can ‘B’ avoid the contract and if yes on what grounds? (02)
(b) Would your answer be different if .B. visited the factory and checked the accounts which
clearly showed that only 30,000/- ready-made garments are exported. After checking this ‘B’ still
purchased the factory. (02)
Q.3 Jannat Bibi is a wealthy old widow who owns 3 bungalows in Lahore. Until recently she suffered
from hallucination that she was pursued by demons.
About two months ago she enrolled herself for the treatment offered by a Spiritual Adviser.
Whilst she was receiving treatment as a resident at the Spiritual Adviser’s house, he told her that
he needed a bungalow to house the persons seeking his treatment and impressed upon her that
her assistance was required in this matter. This prompted Jannat Bibi to state that she would help
the Spiritual Adviser as soon as she recovered from her ailment.
She returned home last week. A day after she returned home she signed a contract prepared by
the Spiritual Adviser’s lawyer agreeing to sell one of her bungalows in Lahore to Spiritual
Adviser for Rs. 8 million. The market value of the bungalow’ is Rs.20 million.
Now she says that she regrets having signed the contract and seeks your advice whether she could
avoid the contract on any ground.
Advise Jannat Bibi. (05)

Business Law Page 2 of 3
Q.4 Explain in the following scenarios whether Party A has committed fraud with Party B or not.
(a) Mr. A sold a car by Auction to Mr. B which was damaged in an accident and repaired by Mr.
A. Mr. A did not disclose this fact to Mr. B
(b) Mr. A's car was damaged in an accident and repaired by him. Mr. B purchased car from Mr.
A on a condition that major repair was not carried out in Past. Mr. A said nothing. (04)
Q.5 Briefly explain whether there is valid agreement in following cases:
(a) A and B entered into an agreement whereby they agreed that neither of them would appeal
against the trial court’s decision in respect of dispute between them.
(b) A promised to buy a horse from B for Rs. 2,000 if the horse proved lucky.
(c) Two co-widows made an agreement that if any of them remarried, she should forfeit her right
to her share in the deceased husband’s property. (06)
Q.6 Qadeer and Javed sold their confectionery business along with goodwill, to Asad Sweets. They
also agreed not to carry on similar business for a period of three years. After one year of the sale,
Qadeer started a similar business on the ground that agreements in restraint of trade are void.
Describe the relevant provisions of Partnership Act, 1932 and explain whether Qadeer is justified
in his contention. (03)
Q.7 Shahid agreed to buy used printing machinery from Amir who confirmed that the machine was
in a good condition. After taking possession, Shahid complained that there were defects in the
machine. Amir and Shahid agreed to have it repaired and to share the repair charges equally.
Few days after the repairing, the machine again started malfunctioning. Shahid now wants to
rescind the contract. Can he do so? Discuss. (04)
Q.8 Select the most appropriate answer from the options available for each of the following Multiple
Choice Questions (MCQs). Each MCQ carries ONE mark.
(i) Fraud means:

(a) The suggestion, as a fact of that which is not true, by one who believes it to be true.
(b) Silence of a person as to facts likely to affect the willingness of another to enter into a contract.
(c) A promise made without any intention of performing it.
(d) Any act fitted to deceive where aggrieved party had the means of discovering the truth with
ordinary diligence.
(ii) Consensus-ad-idem is:

(a) When consent is free.
(b) When consideration is adequate.
(c) When one party promises to do an act at the desire of another party.
(d) When both the parties agree to the same thing in the same sense.
(iii) Jalil is indebted to Kamran but due to financial crisis, he is not able to pay him. At Jalil’s
request, Kamran agreed to sell further goods to Jalil on very stringent terms. Subsequently, Jalil
approaches the Court demanding relief from contractual obligations on grounds of undue
influence.
Which of the following statements is true?
(a) Kamran will have to prove that he did not exercise any undue influence
(b) Jalil will have to prove that the contract was induced by undue influence
(c) Both Jalil and Kamran will have to prove the presence or absence of undue influence
respectively
(d) The contract entered into between Kamran and Jalil is void ab-initio
Business Law Page 3 of 3
(iv) Saad agreed to pay Rs. 500,000 to Hafsa if she delivered a judgement in his favour in a suit.
Hafsa gives the judgement in Saad’s favour but he later refuses to pay any money. In this
situation, can Hafsa claim the amount?
(a) No, because the agreement was voidable at the option of Saad only
(b) Yes, because the agreement was valid and enforceable
(c) Yes, because the agreement was voidable at the option of Hafsa only
(d) No, because the agreement was void due to unlawful activity
(v) Haris has two horses, one of the horse is purebred. He agrees to sell one horse to Abdullah
who gives his consent believing that he will receive a purebred horse whereas Haris thinks that he
would sell the other horse. What is the status of the contract between Haris and Abdullah?
(a) Void on account of unilateral mistake regarding material fact
(b) Voidable on account of unilateral mistake regarding material fact
(c) Void on account of bilateral mistake regarding material fact
(d) Voidable on account of bilateral mistake regarding material fact
(05)
(THE END)

Business Law: Certificate in Accounting and Finance Stage Examination

Uploaded by

Copyright:

Available Formats

Business Law: Certificate in Accounting and Finance Stage Examination

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Business Law: Certificate in Accounting and Finance Stage Examination

Uploaded by

Copyright:

Available Formats

Certificate in Accounting and Finance Stage Examination

Advise Jannat Bibi. (05)

Q.5 Briefly explain whether there is valid agreement in following cases:

(i) Fraud means:

(ii) Consensus-ad-idem is:

You might also like