Sir Rana Naveed Total Marks: 100

Subject: Business Law(CAF3)

Q1.
What do you understand by the term ‘Alternative Dispute Resolution’? Briefly explain different types of
alternative dispute resolution mechanisms. (04)

Q2.
a) Sufi from Lahore sends a letter by post to Habib of Karachi offering to sell his car for Rs. 1,000,000.
This letter is posted on 1st January and reaches Habib on 7th January, 2019. Habib sends his acceptance
by post on 10th January, 2019. But Sufi receives the letter of acceptance on 15th January, 2019. Answer
each of the following question:
i) When is communication of offer complete?
ii) When is the communication of acceptance complete as against the offeror?
iii) When is the communication of acceptance complete as against the acceptor?
iv) If Sufi sends a telegram on 8th January, 2019 revoking his offer, and his telegram reaches Habib
before the letter of acceptance is posted. Is revocation of offer is valid?
v) If Habib sends a telegram on 14th January, 2019 revoking his acceptance and his telegram reaches
Sufi before the letter of acceptance is received by Sufi. Is revocation of acceptance is valid? (04)

b) Imran, who is the owner of Sangdil Associates, sent one of his employees Buzdar in search of his pet
dog which had been missing for 2 days. Imran advertised a reward of Rs. 100,000 in a newspaper for
anyone who finds his missing dog. Buzdar, unaware of the newspaper advertisement, traced the dog.
Subsequently, on knowing about the reward Buzdar claimed it from Imran.
Under the provisions of the Contract Act, 1872 identify the type of offer which was made by Imran.
State whether Buzdar would be able to claim the amount of reward under the circumstances. (02)

c) Briefly describe the rules specified in the Contract Act, 1872 in respect of the following.
i) Time and place for performance where these have not been specified in the contract; (03)
ii) Order of performance of reciprocal promises; and (1.5)
iii) Effect of release by promisee of one of the joint promisors. (1.5)

Q3.
a) Discuss the legal position in each of the following cases under the provisions of the Contract Act, 1872;
i) A woman falsely misrepresenting herself to be wife of a well-known millionaire, obtained two
pearl necklaces on the pretext of showing them to her husband before buying. She pledged them
with a broker, who in good faith paid her Rs. 200,000. A suit was filed by the jeweler against her
broker. Discuss the legal position.
ii) Rasheed knew that on account of his crticisim of the plays in the past, he would not be allowed
entry to the performance of a play at that theatre. The managing director of the theatre gave
instructions that no ticket should be sold to Rasheed. Rasheed, however obtained a ticket through
one of his friends. On being refused admission to the theatre, he sued for damages for breach of
contract. Discuss the legal position.

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 iii) Gul Khan sold rice to Mishal Khan by sample and Mishal, thinking that they were old rice,
purchased them. In fact, the rice were new. Is Mishal Khan bound by the contract?
iv) Badshah Khan threatens to kill Wazir Khan’s son if he does not sell his house to Badshah Khan for
Rs. 500,000. Wazir Khan signs the necessary documents for the sale of house and receives the
payment. Later on, Wazir Khan wants to avoid contract and also retain money received from
Badshah Khan. Will he succeed? (06)
b) An agreement is said to be unlawful if the court regards it as opposed to public policy. List the
agreements which are held to be opposed to public policy. (2.5)
c) An agreement without consideration is void. List the circumstances under which an agreement made
without consideration is considered valid and binding under the Contract Act, 1872. (2.5)

Q4.
a) Imran, Asif and Nawaz have agreed to constitute a partnership for carrying on a business of student
academies in Lahore. Imran wants to specify the rights and duties of partners in the partnership
agreement so that these can be changed with mutual consent of all the partners whereas Zardari and
Nawaz do not consider it necessary and believe that the implied authority may be extended to bind
the firm whenever required. Further Imran wants to share his interest in profit with widow of his uncle
residing in Karachi. Asif and Nawaz refuse to accept that widow as partner in firm.
b) Under the provisions of the Partnership Act, 1932 list:
i) Under the provisions of the Partnership Act, 1932 list the restrictions imposed on the implied
authority of a partner in the absence of any usage or custom of trade. (03)
ii) ‘The sharing of profit is a prima facie evidence but not a conclusive test of partnership’. Under the
provisions of the Partnership Act, 1932 list the circumstances in which receipt by a person of a
share of profits of a business does not of itself make him a partner with the persons carrying on
the business. (03)
c) Hamza, Monis, Bilawal are partners in a partnership association engaged in the business of cloth
trading. Each of the partners has contributed Rs. 200,000 in capital of partnership business. Mr.
Bilawal has advanced Rs. 50,000 for repayment to a supplier by association. In the year 2018
association suffered loss of Rs. 100,000. Partners have agreement of 7% interest on capital. All the
partners are considering that even firm has suffered loss interest on capital should be paid to all
partners. Bilawal claim that he is entitled to interest on his advance and capital both. Discuss under
the provisins of Partnership Act, 1932 whether anyone of the partner can claim any amount for the
year 2018. (03)

Q5.
a) Identify whether presentment of a bill of exchange for acceptance is necessary in each of the following
alternative cases;
i) A bill payable on demand
ii) A bill payable 3 months after presentment.
iii) A bill payable 30 days after date.
iv) A bill in which there is an express provision that it shall be presented for acceptance before it
is presented for payment.
v) A bill payable on 1st January, 2019.
vi) A bill payable 3 months after sight. (02)

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b) Identify whether the following alterations are material or not:
i) A bill dated 1st January, 2019 is changed to a bill dated 1st February, 2019.
ii) A bill payable three months after date is changed to a bill payable three months after sight.
iii) A bill payable at Lahore is changed to a bill payable in Karachi.
iv) A bill for Rs. 50,000 is changed into a bill for Rs. 60,000.
v) A bill was dated 2079 instead of 2019 and subsequently the agent of the drawer corrected the
mistake.
vi) A cheque payable to bearer was converted into a cheque payable to order.
vii) Crossing a cheque. (02)

c) Under the provisions of the Negotiable Instruments Act, 1881 describe the following:
(i) Acceptor for honor
(ii) Drawee in case of need (03)

Q6.
Riaz is engaged in the business of buying and selling town houses in Lahore for the past many years and
Aleem is his agent. Due to the recent growth in construction business, Riaz has decided to buy a small
cement factory in the outskirts of Lahore and has asked Aleem to negotiate the deal with the seller. Aleem
who has no technical knowledge of the cement industry has employed Mansha for his assistance.
Under the provisions of the Contract Act, 1872 briefly describe:
a) The status of Mansha and whether Aleem is justified in employing Mansha to perform his work. (03)
b) Mansha’s responsibility towards Aleem and Riaz. (1.5)
c) Aleem’s responsibility for Mansha’s acts, if employed without Riaz’s authority. (1.5)

Q7.
a) Under the provisions of Contract Act, 1872, List the duties of the finder of lost goods? (02)
b) List when and how a continuing guarantee is revoked under the provisions of Contract Act, 1872? (02)
c) List the modes of discharging a contract by mutual agreement under the provisions of the Contract
Act, 1872. (02)

Company Law Section

Q8.
The trading business of Khanakhrab Limited (KL) has been growing significantly during the last few years.
On 1st January 2019, Khanakhrab Limited (KL) obtained a short term running finance facility from Faysal
Bank by creating a floating charge on its book debts and stock‐in‐trade.
Under the provisions of the Companies Act 2017 explain the following:
a) Who is primarily responsible to get the charge registered and within how many days? (02)
b) The consequences of non‐registration. (02)

Q9
A charge is security for the payment of a debt or other obligation that does not pass ‘title of the property’
or any right to its possession to the person to whom the charge is given.
You are required to differentiate between ‘Fixed Charge’ and ‘Floating Charge’. (04)

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Q10.
The Annual General Meeting of Buzdar Limited was held at 11:25 a.m. on 10 November 2018. Certain
shareholders have lodged following complaints with the company secretary:
a) Since the meeting could not commence at the scheduled time i.e. 11:00 a.m., it became invalid and
should be called again.
b) A resolution passed in the meeting was approved by a show of hands. However, a poll should have
been carried out.
c) Mr. Rana Sanaullah who voted for a resolution was represented through a proxy which was deposited
at 5:01 p.m. i.e. after office hours on 8 November 2018. Since 9 November 2018 was a public holiday,
the condition of depositing the proxy at least 48 hours before the commencement of the meeting, was
not met.
d) Mr. Aleem Khan who holds 100,000 shares was represented by two proxies i.e. Mr. Jahangeer Khan
(75,000 shares) & Mr. Shah Mehmood (25,000 shares). Only proxy with 75,000 shares was counted for
the purpose of voting.
In the light of the provisions of the Companies Act, 2017 you are required to Comment on the validity
of each of the above complaints. (05)

Q11.
Khushbakht Limited (KL) is a listed company. Advise the Board of Directors of KL on the following matters,
in the light of the provisions of the Companies Act, 2017:
a) A request has been made by a director for increase in remuneration of directors from Rs. 25,000 to
Rs. 40,000 for attending the Board and sub-committee meetings and performing extra services. (02)
b) Mr. Buzdar, who is a director, wants to appoint his brother in his place as he is going abroad on
vacations. (02)
c) Mr. Asad is a director but is not a member of the company. (02)
d) Mr. Safdar was elected as a director in its last annual general meeting. After a few months, it was
found that Safdar’s appointment was not valid as votes by certain members were counted twice due
to an error. Few directors have challenged the validity of all meetings attended by him and the
actions taken therein. (02)

Q12.
a) Samjhdar Limited (SL), registered with a paid‐up capital of Rs. 40,000,000 consisting of ordinary shares
of Rs. 1000 each, has decided to remove one of its elected directors Rambo due to poor performance.
Rambo was elected on the board by securing 3,600,000 votes in a general meeting held on 1 January
2019. The least number of votes casted for electing a director in the meeting was 2,400,000. SL has
seven directors on the board.
Under the provisions of the Companies Act 2017 enumerate:
(i) The number of votes required by Rambo to retain his directorship in SL.
(ii) What would be your answer in (i) above, if Rambo was elected to fill a casual vacancy on the board.
(03)
b) Zakoota Limited (ZL) is engaged in the business of leasing vehicles to corporate customers. The Board
of Directors of ZL is considering to authorize one of its directors, Mr. Hamoon, to enter into a contract
with Mrs. Bill Batori, the Managing Director of Nastoor Limited (NL), for the purchase of fifteen
delivery vans. Mrs. Bill Batori is also the wife of Mr. Hamoon.
Under the provisions of the Companies Act 2017 analyze the above situation and advise Mr. Hamoon
about his responsibilities towards the company with respect to the above transaction. (03)

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Q13.
CFE Limited is a newly incorporated public limited company. Prior to the issuance of certificate of
commencement of business, the directors have entered into a contract with a supplier for the supply of
materials for use in production.
Under the provisions of the Companies Act 2017 explain the following:
a) Status of the contract under the above circumstances. (02)
b) Requirements for obtaining the certificate of commencement of business. (04)

Q14.
a) Mahajar Limited (ML), a listed company, wants to increase its production capacity and is in the process
of acquiring a new plant for its textile project. The company is contemplating to finance the project by
issuing ordinary shares to the general public. In order to enhance the credibility of its expansion
project, ML’s management has decided to include a statement from Mr. Sadaqat Ali, a mechanical
engineer, in its prospectus.
Under the provisions of the Securities Act, 2015 describe the conditions which must be satisfied for
the inclusion of statement from Mr. Sadaqat Ali in ML’s prospectus. (03)

b) The Directors of Bewefa Limited are considering to re‐locate company’s registered office from Lahore
to Karachi to carry on business more economically. Advise Company Secretary about the steps which
must be taken to re‐locate the registered office under the provisions of the Companies Act 2017. (04)

Q15.
Under the provisions of the Companies Act 2017 briefly describe whether Nakema is eligible to be
appointed as an auditor of the company in each of the following independent situations:
a) Nakema, a partner in Top Ten and Company, Chartered Accountants, is also a director in AFC Limited
(AL). His firm has received an offer for appointment as auditors of CAF Limited (CL). Both AL and CL are
subsidiaries of CFAP Limited (CFL). (02)

b) Nakema is a sole proprietor in Khan and Company, Chartered Accountants. He has received an offer
for appointment as auditor of Butt Energy Limited (BEL), a power generation company in Gwadar.
Nakema has not paid his electricity bills to BEL for the last three months. (02)

c) Nakema is a partner in Sheikh & Company, Chartered Accountants (SCC). His firm has accepted an
offer for appointment as auditors of Samjdar Limited (SL). Waili, who is Nekama’s sister, is working as
an internal auditor in SL. She also owns 20% shares in SL. Waili disposed the shares to Nakama’s wife,
within 30 days of appointment of SCC but continues to remain employed in SL. (02)

*THE END*

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