Business Law

Quiz 2

1. Give brief reasons for each situation.

a Salim agrees to sell to Babar "a hundred ton of oil".
The agreement is void. Why
b Azam, being agent for a landed proprietor, agrees for
money, without the knowledge of his principal, to
obtain for Babar a lease of land belonging to his
principal. The agreement is void, as it implies a fraud of
concealment by Azam, on his principal.
c Why an agreement whereby one of the parties agrees
to close his business in consideration of the promise by
the other party to pay a certain amount of money is
void
d Anjum agrees with Sajid to discover treasure by magic.
The agreement is void. Why
Reason
This agreement is void because of absence
of certainty, as there are no details about
the oil. There is also a lack of information in
regards to consideration, as it is not
specified as to how much the hundred tons
of oil will be sold for.
As stated in the question, this implies a
fraud of concealment by Azam, as he did so
without the knowledge of Babar.
This agreement is void because it depends
upon an impossible act, so there is no
lawful object. There is also no
consideration, as to the benefit which will
be gained by Anjum in exchange for
discovering magic.

e Hamid was summoned to give evidence in a court
where Sajid was in litigation. Sajid promised to pay
certain amount to Hamid for giving the evidence. Later,
Sajid refused to pay. Hamid sued and failed. Held, the
consideration was not valid
Even though Sajid bailed on his promise to
pay for giving the evidence, the agreement
was void ab initio, as the consideration was
not lawful. It was the legal duty to provide
the evidence in any case.

f Anjum, who knows that Kanwar has stolen goods

amounting to Rs.500,000, receives Rs.100,000 from
Kanwar in consideration of not exposing him. Why is
this agreement illegal? .
g Adeel owes Rs. 1,000 to Kashif but the debt has
become time barred. Adeel verbally promise to pay
Kashif Rs. 900 of this time barred debt. It is a void
contract. Why
h Salim agrees to sell to Babar "my white horse for The issue here again is the lack of certainty
Rupees five hundred or Rupees one thousand." The present in this situation. It is not clear as to
agreement is void. Why what the final price for the horse is. Salim
needs to specify one price in order for the
contract to be valid.

i Ameer promises to obtain for Faqeer an employment Although consideration does exist in this
in the public service, and Faqeer promises to pay scenario, the consideration is unlawful as it
 Rs.1,000/- to Ameer. The agreement is void could be deemed as nepotism.
j An employer and employee agree that employee
cannot enter into any contract for five years whether
personal or professional in nature. The agreement is
void, Why?

k A intending to deceive B, falsely represents that five In this case, there is absence of free
hundred quintals of indigo are made annually at As consent. A is committing fraud by
factory and thereby induces B to buy the factory. Why intentionally misrepresenting facts to B so
is the contract is voidable? that he can sell his factory. It is true that in
some cases, not mentioning flaws is
allowed (for advertising purposes), but
fraud results in the contract becoming
voidable.
l Abid, Sajid and Amjad enter into an agreement of the
division among them of gains acquired by them by
fraud. Why is the agreement is void,
m Abid promised to pay Rs.100,000 to Sajid on agreeing
to publish a defamatory article against Arslan. Why is
the agreement void.
n Abid, who is guardian of Tanveer, promises to exercise
his influence, as such, with Tanveer in favour of
Farhan, and Farhan promises to pay Rs 1,000 to Abid.
Why is the agreement is void,

o Qadir fails to pay his loan and his house is auctioned

for recovery. According to law, the defaulter Qadir
appoints an agent to bid on his behalf so that he can
later transfer the house to himself. Why is the
agreement is void as the transaction
p Five nearby fuel stations agree to charge price above
the price fixed by regulatory authority. The agreement
is void. Why?

q A, offered to sell his motorcar for Rs 800,000. B said

that he accepted the offer if he would be appointed as
General Manager of As factory. There is no contract,
why?
r Azam promises to put life into Babar’s dead wife and
Babar promises to pay Rs. 1 million. This agreement is
void
s A and B make a contract grounded on erroneous belief
that a particular debt is barred by Pakistan Law of
Limitations. Why is the contract valid
t Abid, Sajid and Amjad agreed to divide the cash
obtained by tax refund on the basis of fake
documents. They also agreed to invest the amount in
the business of Abid for mutual benefit for a year. After
a year when Sajid and Amjad demanded their share,
Abid refused to pay. Both agreements are void
 u A agrees to sell cargo to B, a specific cargo of goods
supposed to be on its way from England to Karachi. It
turns out that, before the day of bargain, the ship
conveying the cargo had been cast away and the goods
lost. Neither party was aware of these facts. Why is the
agreement void?
v Why an agreement by a client to pay his lawyer
according to the result of the case may be considered
void?
w Azam engages Babar to work as an accountant in his
office and promises to make him happy. This promise is
not enforceable

2. What is consideration in these cases

Azam promises Babar to guarantee payment of
price of the goods which Babar sells on credit to
Misbah.

Adeel asks Habib not to sue Arslan for a year for

his debts and promises in case of default of
Arslan, Adeel would be liable.
Ameer promises to deliver iPhone to Burhan and
Burhan promises to pay Rs. 85,000 on delivery

3. A promise to pay debt is enforceable, if it is made in writing and It is signed by the debtor or his agent.
4. Inadequacy of consideration does not affect validity of contract, but whatever consideration is being given
it must be real.
5. An agreement is said to be unlawful if the court regards it as oppose to public policy. Which one of the
following is not against the public policy?
a. Stifling prosecution
b. Sale of public offices
c. Trading with alien friend
d. Marriage brokerage agreement
6. Mr. A, in consideration of Rs. 100,000/- from Mr. B agrees to publish defamatory material against Mr.
Talal, a famous lawyer, in order to damage his goodwill and reputation. This agreement is void because
a. It is fraudulent
b. It is immoral and against public policy
c. It involves an injury to a person
d. It defeats the provision of any law
7. Mr. T agrees to buy share at premium in a joint stock company through a broker Mr. S who has given the
false impression to the public that shares were useful of being purchased at a premium. Later on he found
that broker has sold his own shares to him and not purchased any shares from the market. What is the
status of this agreement?
 a. The agreement is valid as it is a business transaction
b. The agreement is void because the consent is obtained by coercion
c. The agreement is valid because it is in the favour of Mr. T
d. The agreement is void because it was aimed at cheating the public
8. An offer will come to an end within a reasonable time when no time is specified. “What is the reasonable
time?” is a question of fact depending upon the situation and circumstances.
9. The collateral transaction to an illegal agreement is
a. Valid
b. Not to be enforced
c. Voidable
d. Not affected at all
10. An agreement to create monopoly/cartel is void as this will impair consumer sovereignty and result in
high prices for low quality of goods and services.

11. Minor can be appointed as an agent, because

a. Creation of agency does not require any consideration
b. Agent makes agreement on behalf of principal
c. The minor has not attained the age of majority
d. Agreement made by minor is void, therefore principal is on safe side
12. Which of the following statement is true
a. Corporation or company can enter into a contract
b. Foreign Ambassador can be sued in by Pakistani citizen for enforcing rights of agreement
c. Married woman can make agreement regarding joint property of husband and wife
d. Lunatic has no contractual capacity at all
13. Which of the following statement is false
a. Minor cannot become partner in a firm
b. Education loan taken by the minor is recoverable from his property
c. Minor can be declared as an insolvent
d. An agreement with a minor is void
14. Undue influence implies
a. It involves moral pressure
b. Criminal liability is incurred
c. Pressure of money
d. Physical pressure on the party
15. Fraud exists, if it is shown that false statement has been made
a. Knowingly
b. Without belief in its truth
c. Recklessly without caring it be true and false
d. All of the above, if done, with an intention to deceive
16. Which of the following is not true
a. Undue influence must be exercised by or against the party to a contract
b. Coercion can be exercised by a stranger to the contract
c. A contract is not voidable if it was caused by a mistake as to any law in force in Pakistan
d. Duty to speak does not make silence as fraud
17. Wagering agreement is one in which money is to be paid by one to another party or vice versa on the
happening or non-happening of future uncertain event. In wagering agreement either of the party is to
win or to lose. The following constitutes the essential of wagering agreement.
a. Mutual gain or loss
b. Uncertain event
c. No control of the parties, on the happening of the event.
d. All of the above
18. Bilal is a manufacturer of colour television sets. He gives an advertisement that in his opinion television
sets manufactured by him is the best available in the market. Such statement
a. Will amount to misrepresentation
b. Will amount to active concealment
c. Will amount to fraud
d. Will not amount to fraud
19. Unlawful detaining or threatening to detain any property with an intention of causing any person to enter
into a contract is
a. Misrepresentation
b. Bilateral mistake of fact
c. Fraud
d. Coercion
20. Which one is not a fraud
a. Non-disclosure of material facts, known to the party
b. Silence maintained by the party where silence is equivalent to his speech
c. Active concealment of facts having knowledge
d. A promise made without any intention or performing it
21. The aggrieved party in case of fraud cannot rescind the contract, if he had the means of discovering the
truth by ordinary diligence
22. A promise made without the intention of performing it amounts to fraud.
23. In case of sale of goodwill, restraint to similar business for the seller of goodwill is valid if it is for
a. Specified local limits
b. Particular period of time
c. Restriction must be reasonable
d. All of the above
24. Which one of the following is not a restraint to trade (a)
a. Agreement to sell all produce to a certain party with a stipulation that buyer is bound to accept
whole quantity
b. Agreement to stop rival shop-keeper in particular locality from doing business in consideration of
money
c. Agreement to sell all produce to a certain party and the buyer is free to rejects the goods
d. Partial restraint in trade
25. In case of sale of goodwill of business, the vendor of goodwill may be lawfully restricted from doing
similar business
a. Anywhere in that particular area
b. Within specified local limits
c. Within that particular district
 d. Within that particular province
26. Which one of the following agreements is restraint to legal proceedings
a. Agreement for curtailing period of limitation prescribed by Limitation Act
b. Agreement to select one court from two courts having jurisdiction on that matter
c. Agreement whereby neither party shall appeal against the decision of trial court
d. Agreement to settle dispute out of the court
27. Which of the following agreements is valid
a. Agreement limiting the time allowed by the law of limitation
b. Agreement which contains vague or ambiguous terms which cannot be made certain
c. Agreement, meaning of which seems to be uncertain but is capable of being made certain
d. Agreement to agree in future

28. Parties of wagering agreement do not have

a. Any interest in the happening or non-happening of future uncertain event
b. Interest in the non-happening of the events
c. Some other interest in the happening of the event
d. Some other interest in the non-happening of the event
29. Agreements made with a primary objective of regulating business or conditions of a business are valid.
These agreements may take a form of trade association, chamber of commerce and business association
etc. which of the following arrangement is void in relation to trade combination
a. Firms voluntarily reducing competition by dividing market
b. To regulate the market of their product
c. To create monopoly in the market
d. Fixing prices and standardizing goods
30. In anticipation of huge sale of sweets during Eid festival all sweet makers of Islamabad make an
agreement that they will not sell sweets below Rs.1000/- per Kg. State the legal position of this agreement
a. This agreement is a valid agreement
b. This agreement is not creating monopoly in the market thus it is valid
c. This agreement tends to create monopoly in the market thus it is void
d. This agreement is voidable at the option of one party
31. Mr. Bilal agreed to work with Dr. Abdullah at ABC Hospital for a period of six months to treat the patients
of coronavirus. The contract provided that during the term of agreement Mr. Bilal will not practice in any
other hospital. However after one month of service, Mr. Bilal left the hospital and joined another hospital.
State the legal position.
a. Mr. Bilal can join any other hospital of his own choice any time
b. Mr. Bilal cannot join any other hospital of his own choice even after the end of agreement
c. Mr. Bilal can join any other hospital of his own choice before the end of agreement
d. Mr. Bilal cannot join any other hospital of his own choice before the end of agreement
32. A Contract
a. May be void as originally entered into
b. May become void subsequent to its formation
c. Cannot become void under any circumstances
d. May become void at the will of a party
33. Every contract is made for a lawful object or lawful purpose. The object of a contract is form on the basis
of promises made by the parties. The contract to be legally valid must contain lawful object which includes
a. If it is not forbidden by law
b. If it is not defeating the provisions of any law
c. If it is not fraudulent
d. All of the above