Certificate in Accounting and Finance Stage Examination

24 July 2025
1 Hour and 30 Minutes – 50 marks
Sir Shakeel Tahir

Business Law

Section A - Multiple Choice Questions

Question-01: (08)
Choose the correct option(s) from each of the following Multiple-Choice Questions (MCQs).
1. Regarding the time of performance, which one of the following statements is untrue?
a) Where time is of the essence of a contract, a slight delay will not allow the non- breaching party
to terminate the contract.
b) Where a contract does not provide that performance must be completed by a certain date, the
parties to the contract must perform their obligations within a reasonable time.
c) Where the time of performance is not 'of the essence of the contract, then a party to the contract
can give notice that it has become of the essence of the contract if the other party also give
consent to it.
d) Time will be of the essence where the subject matter of the contract indicates that time shall be
of the essence.
2. When is the communication of proposals, the acceptance of proposals and the revocation of
proposals deemed to be made:
a) Only on clear verbal communication of such proposal, acceptance or revocation
b) By words or any act or omission of the party by which he intends to communicate such proposal,
acceptance or revocation or has the effect of communicating it
c) Only when the proposal, acceptance or revocation of the proposal is recorded in writing
d) Only when the proposal, acceptance or revocation of the proposal is received and understood by
the other party receiving the information
3. K, who is trying to sell an unsound horse, forges a Veterinary Surgeon's certificate stating the horse
to be sound and pins it on the stable door. P comes to examine the horse but the certificate goes
unnoticed by him. P buys the horse and finds later on the horse to be unsound. P wants to avoid the
agreement. Will he succeed?
a) Yes, P will succeed as P was influenced by it.
b) No, P will not succeed for though K attempted to defraud by putting up the surgeon's forged
certificate as to the soundness of the horse, P was not influenced by it.
c) Both (a) & (b)
d) None of above
4. A, a Minor, entered into a contract for borrowing a sum of Rs 40,000 out of which lender paidhim a
sum of Rs. 18,000 A executed mortgage of property in favor of the lender. The mortgage is
a) Valid for any amount
b) Valid to the extent of Rs. 40,000
c) Invalid
d) Validated on attaining majority
5. Lala contracts to Buy 100 quintal of rice from Bala at Rs.950 per quintal, no time being fixed for
delivery. Price to be paid of the time of delivery. Afterward Lala informs to Bala that he will not
accept the rice if supplied to him. Market price of rice when Lala informs Bala was Rs.920 per
quintal. How much compensation in the form of ordinary damages can be recovered from Lala:
a) 95,000
b) 92,000

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 c) 3,000
d) 98,000
6. Drugs Limited contracts with Supermarket Limited to manufacture and supply 50 cases of a drug
called Super X. Supermarket Limited pay the contract money, Rs.5.0 million to Drugs Limited but
before delivery takes place the Government introduces a law banning the manufacture and supply
of Super X. Can Supermarket Limited enforce the contract?
a) No, the contract is discharged
b) No, there is a breach of contract.
c) Yes, because Supermarket Ltd has already paid the contract price of Rs.5.0 million.
d) Yes, the contract was legal when it was made.
7. Naila being the wife of Munir has no implied authority to bind her husband if
a) does not like her
b) They are not living together and it is publically known
c) both of these
d) none of these
8. Which of the following is not a feature of a Wagering Agreement?
a) Chances of gain or loss
b) Uncertainty of future event
c) Neither party have control over future event
d) Neither parties should have an interest in the event

Section B - Subjective Questions

Question-02:
a) According to the contract act, 1872, comment on the validity of the following situations by giving
appropriate reasons.
i. An agent agreed to sell the goods of his principal at 7% commission. Later, the agent
demanded10% commission being the market rate and on account that his consent was
obtained by undue influence.
ii. Tinku applies to a bank for a loan at a time when the money market is very strict. The bank
refuses to make loan except at an unusually high rate of interest. Tinku accepts loan on
theseterms.
iii. A creditor advanced money to a debtor, a shopkeeper, in emergency situation and by undue
influence made him to execute a bond of double the amount with high interest rate. (03)
b) Explain the following:
i. Negative confirmation of a proposal.
ii. Rule of estoppel to a minor. (03)
c) What is meant by discharge of a contract? Briefly describe the modes of discharging a contract by
act of parties to the contract under the provisions of the Contract Act, 1872. (03)

Question-03
a) Mrs. Laila, a widow whose husband was killed in a suicide attack, is superintending her three minor
orphan children named respectively Bablu, Gonglo and Munni. Owing to the financial crisis, she is
unable to pay the credit card bill. Mr. Majnu, a very kind hearted man and a close relative of Mrs.
Laila, pays the credit card bill just to avoid any kind of inconvenience in the life as you stinged
of the widow and orphans. Three months later, Mr. Majnu badly needs money in order to meet his
domestic expenses asks Mrs. Laila to reimburse him. According to the Contract Act, 1872, is he
justified in his claim? (05)
b) Mr. Kangla, having been adjudged as insolvent by court, makes a contract with Mr. Dewana to serve
as a sales assistant at his general store at a salary of Rs. 20,000 per month. Mr. Kangla had purchased
some household articles from Mr. Dewana on credit before adjudication. One month after the

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 commencement of the job, Mr. Deawana refused to give the salary claiming that Mr. Kangla, being
insolvent, was not eligible to make a contract of employment. He further claims that Mr. Kangla is
liable to pay the unpaid amount.
You are required to analyze, according to the contract Act, 1872, whether the claims of Mr. Dewana
are justified? (02)
c) Miss Candi agreed to transfer her whole property to Mr. Sona if his field starts growing sugar.
Comment on the validity of the agreement between Sona and Candi. (02)

Question-04
a) Mr. Darzi promises to stich a very special Sherwani to be worn by Mr. Bhola on his Barat on 01-01-
2025. Due to some reasons, Mr. Darzi could not complete the sherwani till the due date.
Consequently, Mr. Bhola was forced to purchase a very common readymade sherwani from open
market in which he remained uncomfortable during the whole day of Barat. You are required to
determine, with the relevant provision only, the essence of the time of returning sherwani. Also
describe the options, if any, available to Mr. Bhola against Mr. Darzi if the stitched sherwani is
delivered after Walima. (03)
b) In case of joint promise, explain the following:
i. Who should perform the promise when there are more than one promisor?
ii. Who can demand performance of promise when there are more than one promisee? What is the
effect on the liability of other joint promisor if the promisee releases one of the joint promisor?
iii. A, lent 3 sums to B of Rs. 1,000, Rs. 2,000 and Rs. 5,000. B sent a cheque of Rs. 1,000 asking
A to appropriate this money towards the third debt of Rs. 5,000. A wants to appropriate the
money to the first loan. Can he do so?
(04)
c)
i. Zahid and Junaid are trading in electronics goods. Junaid entered into a contract with Zahid for
the purchase of 500 laptops. Junaid had private information of change in prices which would
have affected Zahid's willingness to enter into the contract. When Zahid, through his own
resources, came to know about the prices, he accused Junaid of fraud and repudiated the contract.
Under the provisions of the Contract act, 1872 explain whether Zahid is justified in repudiating
the contract. (02)
ii. "Where both the parties to an agreement are under a mistake as to matters of facts essentials to
the agreement, the agreement is void". Is there any case where a mistake of fact does not affect
the validity of the agreement? (02)

Question-05
a) Mr. Thakur, a film producer, agrees, in consideration of Rs.50 million, out of which Rs.5 million
has already been paid by Mr. Shareef to make a movie to damage the soft image of the Army. Later,
the Govt. banned the movie. Having kept in mind the situation, you are required to narrate the
answers of the following:
i. Status of the agreement between Mr. Thakur and Mr. Shareef.
ii. Mr. Shareef wants Rs. 5 million to be refunded.
What if Mr. Shareef has obtained the said amount as loan from Mr. Z, who was well aware of the whole
case? (03)
b)
i. Parents of Hadi, a minor, died in sudden accident. Hakim, Hadi's uncle, has started supervising
and incurring expenses on necessaries of Hadi. After few years, Hakim asks Hadi to reimburse.
Is his claim for reimbursement justified? (02)
ii. 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.
Comment on the validity of the agreement. (02)

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c)
i. Jhon, a jeweler, was entrusted with a diamond by Khan with instruction that Jhon should obtain
offers for it and if any such offer was approved by Khan, Jhon should sell it to that specific
offerer, acting on the contrary, Jhon sold the diamond to Maan who bought it in good faith.
Thereafter, Jhon absconded with the sales proceed. Khan filed a suit against Maan to recover the
diamond.
Comment on the claim of Khan against Maan. (03)
ii. Sandy, a specialist doctor is running a hospital in Lahore. She employed another lady doctor
Mandy, as a physician for a period of three years on a salary of Rs. 50,000 per month. The
agreement between Dr. Sandy and Dr. Mandy provided that after the termination of her
employment Dr. Mandy should not practice as a doctor in Lahore within a radius of 20 kilometers
of her hospital for a period of one year, and if Dr. Mandy did so, she should pay Rs. 600,000
(one-year salary) to Dr. Sandy's, hospital as "liquidated damages".
Immediately after the completion of her contract, Dr. Mandy begins to practice as a physician
next door to Dr. Sandy's hospital. Dr. Sandy sued Dr. Mandy for the recovery of Rs 600,000.
You are required to answer the relevant provisions of law along with reasons, whether Dr. Sandy
will be able to recover the liquidated damages from Dr. Mandy or not. (03)

(THE END)

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