F4- ACCA-Scenario Based Questions With Solution From the Book: 44 Exam Focused Lectures on Corporate & Business

Law (CL-English)--Rehan Aziz Shervani R & R Research & Publishing Company, Lahore, PakistanCell-0333-4324961-Email-rehanshervani@gmail.com
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Scenario Based Question with Solution:

(1) Scenario based question with solution: Andrew, a manufacturer of specialist engine filters, in January placed an advertisement in a car trading magazine containing an offer that he would supply filters at 60 Pounds per filter and also consider a reduction in the price for substantial orders. He received a letter from Bash Cars requesting him to provide terms of supply for 1000 filters. Andrew replied he would supply filter at 50 Pounds per filter. Bash cars replied it accepted its offer but they would pay only 45 Pounds per filter. Andrew wrote back stating that he would supply the filter but at the price of 50 Pounds. When Andrews letter reached the purchasing director of Bash cars he did not notice the change in price and ordered 1000 filters to Andrew, Andrew supplied the filter. Required: Analyse the situation from the perspective of contract law and in particular advise Andrew at what price he is entitled to claim from Bash cars. Solution: Formula = FOI+Qrl+Alfi+D Framing of issue between Andrew and Bash Cras At what stage the contract came in to existence? Quoting the relevant law In the course of negotiations a counter offer is a valid offer Bigg v Boyd Gibbons 1971 Applying the law on the framed issues The last counter offer was made to the Bash Cars when they received Andrews letter offering the filters with the changed price of 50 Pounds each and in return Bash cars ordered 1000 filters. At this stage the contract came in to existence.

Decision Andrew was entitled for the price of filters at 50 Pounds per filter. (2) Scenario based question with solution: Alan, a qualifies accountant, agreed with his father that he would prepare his business annual tax return against the fee of 500 Pounds. Alan filed the return and the father refused tio pay the fee saying it is not right of the son to charge fee from his father. Required: whether Alan can recover the fee from Ben. Solution: Formula: Foi + Qrl + Arlfi + D Framing of issue between Alan and Ben: Whether Alan can recover the fee of 500 Pounds from Ben. Quoting relevant law. The test of contractual intention is objective, not subjective. It means it is not important what the parties had in mind, but what a reasonable person would presume, in the circumstances, their intention to be. More over it is a It is a presumption that social, domestic and family arrangements are made without intention to create any legal relationship. Whereas it is a presumption that commercial agreements are made with intention to create legal relationship.
Reasonable (=rational; logical) Presumption (= a legal inference or assumption.)

Applying the relevant law on the framed issue By applying the law it is clear that there is a presumption that commercial agreements between the family are binding contracts. Decision Alan has legal right to recover, the fee of 500 Pounds, from Ben. (3) Scenario based question with solution: Two years ago Alan separated from his wife Cath. In a written agreement Alan agreed to pay Cath 1000 Pounds per month as maintenance allowance for her and their daughter Dawn and for paying of the mortgage debt a of jointly owned house. Alan promised that on discharging the mortgage debt he will transfer Caths share to her but he refused to do so. Required: Cath can require Alan to transfer his part of the house to her. Solution: Formula = FOI+Qrl+Alfi+D

Framing of issue between Alan and Cath: Whether Alan is under contractual obligation to transfer Cath her share in the house? Quoting relevant law: Presumption exists as to the intention to create legal relationship exists, where, husband and wife living apart do some promise with each other. (Merritt v Merritt 1970) Applying the relevant law of the framed issue: By applying the law on the rule it is clear that where a husband and wife living a part do some promise with each other a presumption exists that they had intention to create legal relationship. Decision: Cath has legal right to get the part of the house transferred in her name. (4) Scenario based question with solution Ami, in January 2010 got a ware house; planned to convert it in to an art gallery; wanted to open it for the first exhibition on the ist of May. He contracted Bry and Cis for plastering and painting of the premises respectively; one of the condition of the contract was that they would, by all means, complete their work by 31st March. At the end of February Bry told Ami that he would not be able to complete the work as per the scheduled time unless an additional payment promised. She promised the additional payment of 1000 Pounds for the both. After completion of the work she refused to pay them the additional amount. Required: Advise Bry and Cis whether they have any right in law to enforce Amis promise to pay them an extra 1000 Pounds. Solution: Formula = FOI+Qrl+Alfi+D Framing of issue between Alan and Cath: Whether Bry and Cis has any right to claim from Ami additional payment of 1000 Pounds? Quoting relevant law: Whether promise to pay additional reward for the performance of an existing contractual duty is a good consideration? Additional payment is a good consideration provided the promising party gets practical benefit.(Williams v Roffey Bros. & Nicholos Ltd. 1990,). Applying the relevant law of the framed issue: By applying the law it is clear that Ami did not get any practical benefit against the additional payment therefore she is not bound to pay them the amount. Decision: Bry and Cis are advised that they do not have any legal right to claim the additional amount from Ami.

For More Scenario based question see book- Book is available at Ilmi Book Depot Urdu Bazaar, Lahore PakistanWaheed Book Depot opposite Tamaseel Theater Mozang Chungi, Lahore, Pakistan.
http://www.scribd.com/doc/77779155/F4-Corporate-Business-Law-ACCA-FreeLectures-From-the-Book-44-Exam-Focused-Lectures-on-Corporate-Business-Law-byRehan-Aziz-Shervani