Certificate in Accounting and Finance Stage Examination

Time: 1 Hour 25 Min Additional reading time – 10 Minutes

Marks: 45 marks Syllabus: Chapter 2 & 3
Fast Track Test 1

Business Law
Instructions to examinees:

Answer all seven questions.

Answer in black pen only.
Start new question on new page
Write page number on top of your answer scripts.

Question # 1
(a) Mr Sial offered Mr Kot to pay him Rs. 20,000 if he agree to give 5 Bags full of cotton (10KG per bag). The letter of
offer was received by Mr Kot on 2nd of June. Mr Kot agreed with the offer and sent the letter of acceptance to Mr
Sial on 3rd of June. Due to heavy rains in the country, the letter was delayed and received by Mr Sial on 10th of
June. Mr Sial upon not receiving the reply of Mr Kot entered into a contract with Mr Jahangir on 8th of June.

Mr Kot sued Mr Sial for not keeping his promise even when Mr Kot communicated his acceptance to Mr Sial on
a timely basis. Mr Sial gave the evidence to the court that the acceptance letter was received by him after 2 days of
contract with Mr Jahangir and hence he should not be held liable for not continuing with his previous offer to Mr
Kot.

Under the light of Contract Act 1872, please comment on the stance of Mr Sial and specify whether he can be held
liable or not. (05)

(b) Mr Sibbi wrote a letter to Mr Quetta and offered him in the following words

“I want to deliver you 4 Kg Mangoes if you are agreed to pay a price of Rs 80/- per Kg. As you know that by nature
Mango is a perishable item, therefore after waiting for your letter of acceptance for 3 days, I’ll supply mangoes even
if your letter is not received. As the rate offered by me is quite low and surely beneficial for you therefore I would
surely assume that you have no problem in paying that amount. However if you do want to reject my offer, do
communicate within 3 days”

As per the requirements of Contract Act 1872, please specify any deficiency in the above offer. Whether it can be
graded a correct offer? (04)

Question # 2
Enlist the points under which a proposal may stand revoked (07)

Question # 3
Respond to the following independent scenario, under the provisions of the Contract Act, 1872:
Baay offered to sell her car to Saay for Rs. 4,200,000. Saay accepted the offer and sent a cheque of Rs. 2,600,000 with
a stipulation to pay the balance in 8 equal monthly instalments of Rs. 200,000 each.
Explain whether it is a valid contract. (03)
Question # 4
Under the provisions of the Contract Act, 1872 ‘every person is competent to contract who is of the age of majority
according to the law to which he is subject and who is of sound mind.’ Describe the circumstances in which a person
may not be able to enter into a contract, despite meeting the above conditions. (06)

Question # 5
Mr Kacha Khoh and Mr Kukkar Hatta entered into a contract in the presence of Mr Khanewaal and Mr Kabirwala.
Mr.Kacha Khoh was partially at doubt, at the time of making the said contract, about the mental condition of Mr
Kukkar Hatta; so keeping himself safe enough, he asked Mr Khanewaal about the soundness of Mr Kukkar Hatta. Mr
Khanewaal assured Mr Kacha Khoh that nothing to be worried of. However after a couple of days Mr Kabirwala
questioned the validity of the contract by allegating that Mr Kukkar Hatta was not in a sound position at the time of
such contract.

Required: In the light of Contract Act 1872 please specify that who would be the person, among above 4 persons, that
would be carrying the burden of proof in this case. You may take any necessary assumptions to answer the question
(07)
Question # 6
List down the circumstances where object or consideration of a contract is unlawful? (05)

Question # 7
Mark the correct answer:- (08)

1. A makes an offer to B on 10th by a letter which reaches B on 12th. B posts letter of acceptance on 14th which reaches
A on 16th. The communication of acceptance is complete as against A on
(a) 12th
(b) 14th
(c) 16th
(d) 10th

2. An offer cannot be made

(a) By the words of mouth
(b) By the conduct of party
(c) By the circumstances
(d) To the offeror himself

3. Acceptance must be given in:

(a) Usual manner
(b) Prescribed manner
(c) Any manner suitable to the offeree
(d) More effective manner

4. When is the communication of a proposal complete?

(a) When it comes to the knowledge of the person to whom it is made
(b) Only when the proposal, acceptance or revocation of the proposal is recorded in writing
(c) When the other party gives his assent or dissent to the proposal
(d) Only when a clear verbal communication of such proposal is made

5. Which of the following statements is incorrect?

(a) There is no difference in law between an offer and an invitation to offer
(b) An offer is a set of terms by which the offeror is willing to be bound
(c) In bilateral contracts the parties exchange promises
(d) Acceptance in contract may take effect through conduct and need not be communicated through words.

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. An agreement by an idiot is
(a) Voidable
(b) Enforceable
(c) Invalid
(d) Void ab-initio

8. Which of the following is incorrect?

(a) All agreements are unlawful if court consider it as immoral
(b) All agreements are unlawful if court consider it opposed to the public policy
(c) Both of these
(d) Neither of these