INSTITUTE OF BUSINESS MANAGEMENT

Final Examinations – 2020

Course Title: Corporate & Business Law

Faculty: Abdul Basit Total Marks: 40

Note: Please attempt all questions.

Descriptive Questions

Q1: Bader, who is the owner of Mashoor Associates, sent one of his employees Aftab in search of his pet
horse which had been missing for 5 days. Bader advertised a reward of Rs. 20,000 in a newspaper for
anyone who finds his missing horse. Aftab, unaware of the newspaper advertisement, traced the horse.
Subsequently, on knowing about the reward Aftab claimed it from Bader.
Under the provisions of the Contract Act, 1872 identify the type of offer which was made by Bader. Also
state whether Aftab would be able to claim the amount of reward under the circumstances.

Q2 (a): Explain whether or not the following statements are in accordance with the provisions of the
Companies Act, 2017. Support your answer with reasons.

A chief executive, other than the first chief executive of the company, is appointed by the shareholders
in the annual general meeting of the company, for a period up to the next annual general meeting.

(b) Mr. Kim from China want to establish a Public Limited Company in Pakistan kindly guide him as to how
he can incorporate a Public Limited Company in Pakistan under Companies Act 2017.

Q:3 Kaghan Resham Limited” (KRL) holds 60 percent shares out of total paid up capital of another public
company named “Narran Silk Limited” (NSL). NSL further owns 14 percent shares of “Thandiyani Icecreams
Limited” (TIL). NSL has also entered into an agreement with other shareholders of TIL to appoint four out of
seven directors on the board of directors of TIL.

Explain their relationships with each other under Companies Act 2017.

Q4 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.

Q5: Lalazar Limited, a pubic unlisted company has a paid up capital of Rs 100 million consisting of shares
having face value of Rs 10 each. Last election of its Board of Directors was held on April 15, 20X3 in which
eight directors were elected. Four of the directors belonged to the same family. The remaining directors
were Mr. Javed, Mr. Bader, Mr. Qasim and Mr. Dawood. They secured 600,000, 350,000,
480,000 and 220,000 votes respectively. The remaining votes were equally distributed among the four

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directors of the family. Mr. Javed died on May 30, 20X3 and Mr. Aslam was appointed as a director on
June 15, 20X3 to fill in the casual vacancy.

Explain the following in the light of the provisions of the Companies Act,2017:

(a) Is Lalazar Limited in compliance with the requirements of minimum number of directors? Who shall fix
the number of directors to be elected and by what time such number should be fixed? Is it possible for the
company to change the number of directors once fixed?

(b) Who is responsible to fill the casual vacancy in the Board and when would Mr. Aslam’s term of office be
completed?

(c) The conditions required to be fulfilled if a person desires to remove the following directors:
(i) Mr. Aslam
(ii) Mr. Bader

Q6: Mehboob, a promisor and Saulat, a promisee, entered into a valid contract. However, when Mehboob
made an offer of performance, Saulat refused to accept the same. Briefly state the rights and responsibility
of Mehboob against such refusal. Also state the essentials of a valid offer of performance under the
provisions of Contract Act, 1872.

Q7: Sohail and Afaq lent Rs. 2.0 million to Mohsin, Laila and Faizan jointly. On due date Laila became
insolvent. Without informing Sohail, Afaq wants Mohsin to repay the full amount to him.
Under the provisions of Contract Act, 1872 explain:

(a) whether Mohsin can be compelled to pay the full amount to Afaq; and
(b) what rights are available to Mohsin, if he repays the full amount.

Q8: Binyamin borrowed Rs. 1 million from Hatim and Tahir jointly and promised to repay the amount on
March 1, 2011. With reference to the Contract Act, 1872, state who can claim performance in the following
situations.

(a) Both Hatim and Tahir are alive on due date

(b) Hatim dies before due date
(c) Both Hatim and Tahir die before the due date

Q9: Maimar promised to manufacture and deliver to Nasir, remote-controlled toy helicopters of agreed
specifications in first week of March 2011. Nasir in turn promised to pay for them by second week of March
2011. Maimar did not deliver the toys according to his promise. Should Nasir keep his promise and what
remedy, if any, is available to him?

Q10: (a) Following is the statement on August 4, 2011 of sums payable by Ubaid on account of cloth
supplied by Bilal:
Date of transaction Rupees Remarks
01/01/2008 37,000 Time barred under Limitation Act.
02/03/2009 20,000

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30/08/2010 50,000 Guaranteed by Wasim.
28/04/2011 63,000
170,000
Ubaid sent a cheque for Rs. 70,000 on August 5, 2011. There being no instructions from Ubaid, Bilal
adjusted the payment against the following:

Date of transaction Rupees

01.1.2008 37,000
02.3.2009 20,000
28.4.2011 13,000
70,000
The guarantor (Wasim) objected to such appropriation and claimed that since the amount of Rs. 37,000 was
time barred, it should not be adjusted and the full amount guaranteed by him should be fully adjusted. Is
the objection of Wasim valid?

(b) Discuss how the above payment of Rs. 70,000 should be applied under each of the following
independent circumstances, according to the provisions of the Contract Act, 1872:

(i) The following words were written on the back of the cheque: (20,000 + 50,000 = 70,000)
(ii) No instructions about appropriation of payment were given by Ubaid. Bilal did not make any
appropriation either.
Q11:

(a) Two wrestlers Goga and Sheeda agreed to play a wrestling match on the condition that if any of them
would fail to appear for the match, he would have to pay Rs. 5,000 to the other party. The winner was to
receive Rs. 20,000 out of the sale proceeds of the tickets. Goga failed to appear in the match and Sheeda
sued him for Rs. 5,000. Goga however, refused to pay claiming that being wagering in nature, the
contract is not enforceable by law.
Under the provisions of the Contract Act, 1872 describe whether Sheeda can recover the amount from
Goga.

(b) Arif was running a meat shop in Islamabad. He wanted to attend the wedding of his sister in Peshawar
so he asked his friend, Moiz, to look after his shop during his absence. While managing the shop, Moiz
noticed that the deep-freezer in the shop was not working properly. In order to save the meat from being
spoilt, he sold it at a discount of 5% and had the freezer repaired the next morning. Looking at customer’s
positive response, Moiz continued to offer the meat at 5% discount. Upon his return from Peshawar, Arif,
being unhappy with the situation, immediately discontinued the discount and now wants to recover the
loss from Moiz.

In view of the provisions of the Contract Act, 1872, analyse the above situation and explain the rights and
liabilities of Arif against Moiz.

Q12: Kindly write in your own words Synopsis of ‘Corporate & Business Law’?

Q13: Explain the process of Incorporation of Companies?

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