CAF-04 Business Law

Suggested Solution
Answer 1:

1. c 2. d 3. d
4. a 5. c 6. d
7. a 8. d 9. a
10. a 11. c 12. d
13. b 14. b 15. d

Answer 2:
The President if deems necessary to take immediate action, he has power to make an Ordinance
when the Senate or the National Assembly are not in session.
Such Ordinance promulgated thus, shall have the same force and effect as an Act of the Parliament.
The Ordinance shall stand repealed after one hundred and twenty days if it is not presented or
passed
 by the National Assembly in case of Money Bill and
 by both the Houses if it is other than Money Bill.
However, National Assembly may extend any Ordinance for another period of one hundred and
twenty days by passing a resolution. If National Assembly, before expiration of above one hundred
and twenty days, passes a resolution disapproving any Ordinance, it shall expire on the day of
passing of such resolution.
Answer 3:
(a). As per Contract Act, 1872, a minor is not competent to enter into any contract. Any agreement with
minor is void-ab-initio means void from the very beginning. When a person forms an agreement
with minor, such an agreement is devoid of any legal consequences for the person because minor
cannot be enforced by law to perform his part of performance in an agreement.
However, if minor obtains any property by fraudulently misrepresenting his age, he can be ordered
to restore the property or goods thus obtained. Although no action can be taken against the minor,
but if has any property (of other party) in his possession, court can order him to return the same.
Hence, in the present case, Rahul is not liable to repay Rs. 40,000 that he has borrowed from the
shopkeeper, but he can be ordered by the court to return the laptop (which was in his possession)
to the shopkeeper.
(b). As per Contract Act, 1872, an agreement made without consideration is valid if it is expressed in
writing and registered under the law for the time being in force for the registration of documents
and is made on account of natural love and affection between parties standing in a near relation to
each other.
In this case, the transfer of house made by Mr. Parizad on account of natural love and affection
between the parties standing in near relation to each other is written but not registered. Hence, this
transfer is not enforceable and his daughter cannot get the house as gift under the Contract Act,
1872.
(c). As per Contract Act, 1872 “A contract to do or not to do something, if some event, collateral to such
contract, does or does not happen” is a Contingent Contract.
 Moreover Contingent contracts to do or not to do anything, if a specified uncertain event happens
within a fixed time, becomes void if, at the expiration of time fixed, such event has not happened, or
if, before the time fixed, such event becomes impossible.
In the given case, the contract between Agha Khan hospital & Dr. Amir Liaqat is a Contingent
Contract because the promisor, Agha Khan hospital need to perform his obligation of paying Dr.
Amir Liaqat, the lumpsum amount of Rs.1,00,000, only if he contracts with Covid 19 within a span of
3 months. In Case, if Dr. Amir Liaqat does not contract Covid 19, then the contract stands void
automatically

Answer 4:
(a) As per Anti-Money Laundering Act 2010:
If a person acquires, converts, possesses, uses or transfers property, knowing or having reason to
believe that such property is proceeds of crime, the person shall be guilty of offence of money
laundering.
The knowledge, intent or purpose required as an element of an offence of money laundering may be
inferred from factual circumstances in accordance with the Qanun-e-Shahadat Order, 1984.
As Amir received the money from an unknown source and if it is proved that he failed to take
reasonable steps to ascertain whether or not the money was proceeds from any unlawful activity,
he has committed the offence of money laundering.
(b) As per Anti-Money Laundering Act 2010:
If a person participates in, associates, conspires to commit, attempts to commit, aids, abets,
facilitates, or counsels the commission of the acts specified above, the person shall be guilty of
offence of money laundering.
As Abdullah, the bank officer, has assisted Amir by having the money deposited into Amir’ account
with the knowledge that the money was from an unknown source, he has abetted the commission
of money laundering and has thus also committed an offence.
(c) Whoever commits the offence of money laundering shall be:
(a). punished with rigorous imprisonment for a term which shall not be less than one year but
may extend upto ten years; and
(b). liable to fine which may extend upto Rs. 25 million; and
(c). liable to forfeiture of property involved in money laundering or property of corresponding
value.
Answer 5:
(a). Under the Competition Act, 2010, no company shall enter into any agreement in respect of
the supply/distribution, which have the object or effect of restricting/reducing competition
within the relevant market unless exemption has been granted by the Competition
Commission.
Since the agreement between Fauji Fertilizers Limited and Fatima Fertilizers Limited will
restrict the competition because of sharing of market, this agreement would be void.
(b). Before launching the advertisement campaign, BPL shall ensure that its marketing
campaign shall not resort to:
i. the distribution of false or misleading information that is capable of harming the
business interests of another undertaking;
 ii. the distribution of false or misleading information to consumers, including
information lacking a reasonable basis, related to the price, character, method, or
place of production, properties, suitability for use, or quality of goods;
iii. false or misleading comparison of goods in the process of advertisement
Answer 6:
(a). In relation to the offer by Professor to grant a lease to Berlin, it is to be noted that one of the
requirements for a valid contract is that the subject matter of the contract must be certain.
Applying the law as explained above, it can be concluded that there is no valid contract
between Professor and Berlin for the lease, due to the uncertainty of the duration of the
lease.
(b). In relation to the offer to sell the pen collection, the issue is whether there has been a valid
acceptance by Berlin of Professor’s offer. The rule is that an offer must be unconditionally
accepted in order to constitute a valid agreement. An acceptance must be distinguished from
a counter-offer. A counter-offer has the effect of extinguishing the original offer.
This had the effect of rejecting and destroying the original offer. Thus there was no valid
acceptance of the original offer.
Applying the law to the given problem, Berlin’s offer to pay Rs. 15,000 amounted to a
counter-offer which destroyed Professor’s original offer. Thus there was no valid acceptance
of Professor’s offer by Berlin and therefore no valid contract between Professor and Berlin
for the sale and purchase of the pen collection.
Berlin will be unsuccessful if he sues Professor for breach of contract.
Answer 7:
(a). As employee records are unlikely to be critical infrastructure information system or data,
the interference with such system with dishonest intention would lead Miss. Zainab to
punishment of imprisonment of upto 2 years and fine upto Rs. 500,000
(b). Miss Zainab transmit/copy nor interfere with any data in this situation. Also her
unauthorized access was clearly by chance and not with dishonest intention, therefore she
will not be liable to any Punishment.
Answer 8:
(a). (i) As Jungle Book &Co. is a partnership firm, the partners have unlimited liability towards
the debts and liabilities of the firm. There may be instances where partners agree amongst
themselves on the participation rights in the management of the business. A partner who
does not actively participate in the management of the business is generally known as a
‘sleeping partner’. Nevertheless, this is an internal arrangement and insofar as sleeping
partners are known as a partner, they will be liable together with the other partners for the
partnership’s liabilities and obligations.
Therefore, Tapaki is liable together with the other partners for the debts and liabilities of
the partnership.
(ii) As per Partnership Act 1932, a partner retiring from a firm is not automatically released
from his liability for debts of the partnership whether incurred before or after his
retirement, the retiring partner is suppose to give public notice of his retirement otherwise
the principle of holding out also applies in case of retiring partner; and he will be liable as a
partner by holding out to creditors who have lent on the faith of his being partner.
Therefore, unless Balu has taken the measures mentioned above, he remains liable for the
debts and liabilities of the partnership.
 (b). As per the partnership Act 1932:
Partnership is created by a valid contract. Since a minor is not capable of entering into a contract, a
contract by or with a minor is void ab-initio. Accordingly, Deepika cannot be a partner in the firm.
However, Deepika can be admitted to the benefits of partnership with the consent of all the
partners and not only by Anjali alone.

Rights and liabilities of Deepika (minor):

The rights and liabilities of Deepika, who has been admitted to the benefits of partnership are
governed by the following rules:
 Right to share property and profits of the firm as agreed by the partners.
 Right of inspecting and taking copies of accounts of the firms ONLY.
 Right not to be adjudged insolvent.
 Personally not liable to third parties for the debts of the firm i.e. limited liability.
Her share is liable for the acts of the firm

Answer 9:
(a). Under the provisions of the Contract Act, 1872 if any one of two or more joint promisors
makes default in such contribution, the remaining joint promisors must bear the loss arising
form such default in equal shares.
i. In this case, all the joint promisors are solvent, so they will bear equal share. So, Mishra
can recover Rs. 3,000 each from Rakaish and Zuraish.
ii. In this case, Zuraish being insolvent is able to pay 60% of his debt. So, Mishra can
recover Rs. 1800 from Zuraish and 3,600 from Rakaish.
(b). i. Where a debt to be discharged is not indicated, the creditor has option to apply the
payment to any lawful debt even if it is a time barred debt. In this case, Andrew can
appropriate Rs. 1,000 towards Rs. 2,000.
iii. Where debtor has intimated about the payment of some debt, the payment must be
applied accordingly. In this case, Andrew cannot appropriate Rs. 1,000 towards Rs.
2,000. He must appropriate Rs. 1,000 towards Rs. 4,000 only because the creditor is
bound to follow the instruction of debtor regarding application of the payment.
(c). As per the rules of acceptance, the acceptance should be communicated to offeror by offeree
himself or his authorized agent. Communication of acceptance by third person cannot be
concluded in valid acceptance.
In this case, Mr. Sharukh Khan applied for a job as principal of a school and one member of the
school management committee privately informed Mr. Sharukh Khan that he was appointed.
Later, the management of the school appointed someone else as a principal. On the basis of
above provisions and facts, communication of appointment of Mr. Sharukh Khan should be
made by school management committee or any authorised agent. The communication by third
person cannot be termed as communication of acceptance.
Therefore, no valid contract was formed between Mr. Sharukh Khan and school and Mr.
Sharukh Khan cannot file a suit against the school for cancellation of his appointment.

Answer 10:
(a). Analysis of the situation:
 Arif has expressely given Moiz authority to manage his business. Therefore, Moiz is acting
as agent of Arif.
Liabilities of Arif towards Moiz:
 Agent has authority to do acts to protect his principal from loss in case of emergency.
Therefore, Arif should compensate Moiz with respect to repair charges of deep-freezer.
Arif should also bear the discount offered by Moiz as it was offered to protect principal
from loss during emergency situation.
 It is also right of agent to receive remuneration for his services. Therefore, Arif should
pay reasonable remuneration Moiz for his services in the business of agency.
Rights of Arif against Moiz:
Agent has duty to act in accordance with instructions of Principal. Selling of meat at
discounted rate was necessary when freezer was not working properly. However, Moiz
exceeded his authority when he continued to sell the meat at discounted rates. In this case,
if Arif does not ratify Moiz’s act, he has right to recover loss occurred from Moiz.
(b). Under the provisions of the Contract Act, 1872 when a contract has breached the party who
suffers any loss due to some breach he is entitled to receive damages arose in the usual
course of things. In this case, Maana is entitled to claim not only the loss of occasioned by
the death of the horse bought but the entire loss which occurred as a result of the breach of
warranty.
(c). It is a contingent contract as the condition i.e. certification of the construction in accordance
with the layout plan by a third party is collateral to the contract. Although it is a valid
contract, the performance can only be enforced by Ibrahim after happening of the collateral
event. i.e. certification by Muneeb.
Answer 11:
(a). Elizebeth cannot recover from Dela. Cathe cannot recover from Bisma. Bisma cannot
recover from Saira and Saira cannot recover from Laiba because a negotiable instrument
without consideration creates no obligation of payment between the parties to the
transaction.
Della and Elizebeth can recover from Laiba, Saira, Bisma and Cathie because any holder for
consideration (Della), and every subsequent holder deriving the title from her (Elizebeth)
may recover the amount due from the transferor for consideration or any prior party
thereto.
(b). i. Bearer instrument, it is expressed to be so payable.
ii. Bearer Instrument, the last endorsement is blank.
iii. Not a negotiable instrument at all, the use of the word 'only' prohibits or indicates an
intention that bill shall not be transferable.