Certificate in Accounting and Finance Stage

Examination

27 August, 2022
3 hours – 100 marks
Additional reading time – 15 minutes

BUSINESS LAW SOLUTION

Question No.1 Solution

(i) B

(ii) C

(iii) C

(iv) D

(v) A

(vi) D

(vii) A

(viii) C

(ix) C

(x) D

(xi) C

(xii) B

(xiii) C

(xiv) C

(xv) B

BLAW | CAF4 | RANA NAVEED KHAN PTO

Question# 2 Solution
(i) It is an implied contract and A must pay for the services of the coolie detailed by him. Implied
contracts come into existence by implication. Most often the implication is by law and or by action.
(ii) Obligation of finder of lost goods to return them to the true owner cannot be said to arise out of a
contract even in its remotest sense, as there is neither offer and acceptance nor consent. These are
said to be quasi-contracts.
(iii) The contract is a void contract.
“A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable”.
Thus, a void contract is one which cannot be enforced by a court of law.

Question# 3 Solution
a) The contract is void because of its initial impossibility of performance.
b) Time is essence of this contract. As by the time apples reached B they were already rotten. The
contract is discharged due to destruction of subject matter of contract.
c) Such contract is of personal nature and hence cannot be performed due to occurrence of an event
resulting in impossibility of performance of contract.
d) Such contract is discharged without performance because of subsequent illegality nature of the
contract

Question# 4 Solution
a) As per Partnership Act, 1932, at any time within six months of his attaining majority, or of his
obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is
later, such person may give public notice that he has elected to become or that he has elected not
to become a partner in the firm, and such notice shall determine his position as regards the firm.
However, if Moeed fails to give such notice, he shall become a partner in the firm on the expiry of
the said six months.
Moeed becomes personally liable to third parties for all acts of the firm done since he was admitted
to the benefits of partnership.

b) Moeed’s share in the property and the profits of the firm remains the same to which he was entitled
as a minor. In the instant case, since, Moeed has failed to give a public notice, he shall become a
partner in the M/s ABC & Co. and becomes personally liable to Mr. Luqman, a third party.

Question# 5 Solution
a) As per Partnership Act, 1932, where a man holds himself out as a partner, or allows others to do it,
he is then stopped from denying the character he has assumed and upon the faith of which creditors
may be presumed to have acted. A person may himself, by his words or conduct have induced
others to believe that he is a partner or he may have allowed others to represent him as a partner.
In the given case, Majid (the Manager) is also liable for the price because he becomes a partner by
estoppel or holding out as per Partnership Act, 1932.
b) A partnership deed usually sets out the following:

BLAW | CAF4 | RANA NAVEED KHAN PTO

  Firm name
 Place or principal place of business of the firm
 Names of any other places where the firm carries on business
 The date when each partner joined the firm
 Number of partners
 Names in full and permanent addresses of partners
 Duration of partnership (if any)
 Purpose of the partnership
 Rights and duties of the partners.
 Amount of capital that each partner should put into the business, and keep in the business until
the partner retires or the partnership is dissolved

Question# 6 Solution
a) The State Bank may revoke the designation of a DPS if it is satisfied that:
(i) the DPS has ceased to operate effectively as a PS;
(ii) the operator of the designated system has knowingly furnished information or documents to
the State Bank in connection with the designation of the PS which is or are false or misleading
in any material particular;
(iii) the operator or settlement institution of the DPS is in the course of being wound up or
otherwise dissolved, whether in Pakistan or elsewhere;
(iv) any of the terms and conditions of the designation or requirements of the Act has been
contravened; or
(v) the State Bank considers that it is in the public interest to revoke the designation.
(vi) The State Bank shall not revoke a designation without giving the operator of the DPS an
opportunity to be heard. However, the State Bank may suspend the designation of a PS without
notice pending the final order, if an immediate systemic risk is involved

b) An arbitration agreement, unless a different intention is expressed therein, shall be deemed to

include the following provisions (set out in First Schedule of the Act):
(i) Unless otherwise expressly provided, the reference shall be to a sole arbitrator.
(ii) If the reference is to an even number of arbitrators, the arbitrators shall appoint an umpire not
later than one month from the latest date of their respective appointments.
(iii) The arbitrators shall make their award within four months after entering on the reference or
after having been called upon to act by notice in writing from any party to the arbitration
agreement or within such extended time as the Court may allow.
(iv) If the arbitrators have allowed their time to expire without making an award or have delivered
to any party to the arbitration agreement or to the umpire a notice in writing stating that they
cannot agree, the umpire shall forthwith enter on the reference in lieu of the arbitrators.

BLAW | CAF4 | RANA NAVEED KHAN PTO

 (v) The umpire shall make his award within two months of entering on the reference or within
such extended time as the Court may allow.
(vi) The parties to the reference and all persons claiming under them shall subject to the provisions
of any law for the time being in force, submit to be examined by the arbitrators or umpire on
oath or affirmation in relation to the matters in difference and shall, subject as aforesaid,
produce before the arbitrators or umpire all books, deeds, papers, accounts writings and
documents within their possession or power respectively, which may be required or called for,
and do all other things which, during the proceedings on the reference, the arbitrators, or
umpire may require.
(vii) The award shall be final and binding on the parties and persons claiming under them
respectively.
(viii) The cost of the reference and award shall be in the discretion of the arbitrators or
umpire who may direct to, and by whom, and in what manner, such costs or any part thereof
shall be paid, and may tax or settle the amount of costs to be so paid or any part thereof and
may award costs to be paid as between legal practitioner and client.

Question# 7 Solution
a) As per section 8 of the Negotiable Instruments Act, 1881 ‘holder’ of a Negotiable
Instrument means any person entitled in his own name to the possession of it and
to receive or recover the amount due thereon from the parties thereto.
On applying the above provision in the given cases
(i) Yes, X can be termed as a holder because he has a right to possession and
to receive the amount due in his own name.
(ii) No, he is not a ‘holder’ because to be called as a ‘holder’ he must be
entitled not only to the possession of the instrument but also to receive the
amount mentioned therein.
(iii) No, M is not a holder of the Instrument though he is in possession of the
cheque, so is not entitled to the possession of it in his own name.
(iv) No, B is not a holder. While the agent may receive payment of the amount
mentioned in the cheque, yet he cannot be called the holder thereof
because he has no right to sue on the instrument in his own name.
(v) No, B is not a holder because he is in wrongful possession of the
instrument.
a) The following are essentials of valid indorsement:
 It must be on instrument itself, if no space is left on the back of the indorsement, further
indorsements are signed on a slip of paper attached to the instrument called ‘allonge’.
 It must be signed by the indorser for the purpose of negotiation. Signature of the indorser on
the instrument without any additional words is sufficient.
 No particular form of words is necessary for an indorsement

BLAW | CAF4 | RANA NAVEED KHAN PTO

  It must be completed by the delivery of the instrument with the intention of passing the
property in it.
 Negotiation by indorsement must be of the entire instrument. Indorsement for part of the
amount is invalid.
b) Mansoor would issue a promissory note as time instrument to Saqlain in satisfaction of his debt

Date: March 08, 2022

Rs. 500,000/- only

Three months after date I promise to pay Saqlain or to his order the sum of Rupees Five Hundred
Thousand, for value received

To Sign: __________
Saqlain Mansoor
Jail Road Saddar
Karachi Karachi

Question No.8 Solution

a) Exceptions:
i) Natural love and affection
An agreement without consideration shall not be void if:
 it is expressed in writing and registered under the relevant law; and
 it is made on account of natural love and affection between parties standing in a near relation to
each other.
ii) Promise to compensate past voluntary services
An agreement without consideration shall not be void if it is a promise to compensate, wholly or in part,
a person who has already voluntarily done something for the promisor, or something which the
promisor was legally compellable to do
iii) Time barred debt
An agreement without consideration shall not be void if:
 it is a promise, made in writing and signed by the debtor or his agent; and
 it relates to a payment (wholly or in part) of time barred debt. A time barred debt is debt which a
creditor cannot enforce payment of due to law of limitation
iv) Completed gifts
Gift is the transfer of certain existing movable or immovable property made voluntarily and without
consideration by one person (i.e. donor) to another person (i.e. donee) and accepted by or on behalf of
the donee. Any completed gift actually made between donor and donee is valid, although without
consideration. A gift is executed in writing through a deed duly registered

b) Exceptions to rescind the contract under misrepresentation: A party cannot rescind the contract
where:
 Party whose consent was caused had means of discovering truth with ordinary diligence;
 Party gave the consent in ignorance of misrepresentation

BLAW | CAF4 | RANA NAVEED KHAN PTO

Question No.9 Solution
a. Time being essence of the contract, following would be the rights of Dawood Pakwan Centre (DPC)
under the circumstances:
 Contract would be voidable at the option of Dawood Pakwan Centre (DPC)
 Dawood Pakwan Centre (DPC) may insist that Basmati Rice Traders (BRT) should deliver building
material. However, in order to claim compensation on account of the delayed supply, Dawood
Pakwan Centre (DPC) shall have to give notice to Basmati Rice Traders (BRT) of their intention
to do so at the time of acceptance of performance at any time other than earlier agreed.
 Dawood Pakwan Centre (DPC) may decide not to accept performance beyond the stipulated
time and rescind the contract and claim compensation for any damages which it may have
sustained due to nonfulfillment of the contract by Basmati Rice Traders (BRT).
b. To constitute a quasi-contract and be entitled for reimbursement, following conditions must be
satisfied:
 the person who made the payment must have his own interest in the payment; and
 the other person must be bound by law to pay.
As Burhan does not seem to have any interest in the payment and therefore, So he is not justified in his
suit

Question No.10 Solution

a)
DIFFERENCE Civil Law Criminal Law

1. Definition and Civil law sets out the rights and
explanation duties of persons as between
themselves. The person whose rights
have been affected can claim a
remedy from the wrongdoer.
Criminal law is concerned with conduct
that is considered so undesirable that
the State punishes persons who
transgress.

2. Purpose The purpose is to provide a means The purpose is to regulate the society by
whereby an injured party can obtain the threat of punishment.
compensation.

3. Harm caused The claimant sues the defendant for The State (Government) prosecutes the
harm caused. accused (the defendant) whether or not
the harm was caused.

4. Burden of If the claimant can prove the wrong If the state can prove the offence beyond
proof on the balance of probabilities, his all reasonable doubt, the prosecution is
litigation is successful and the successful and the accused is found
defendant is held liable. guilty and convicted.

5. Remedy The civil court may order the The criminal court may sentence the
defendant to pay damages or it might defendant to a fine or it might impose
order some other remedy such as some other fine such as imprisonment or
specific performance or injunction. death sentence.

BLAW | CAF4 | RANA NAVEED KHAN PTO

 Example: Civil laws
 property disputes (Transfer of property Act)
 work-related disputes (employment law)
 accusations of negligence (negligent behaviour) (Tort)
Example: Criminal laws
 Pakistan Penal Code
 Anti-Money Laundering Act
 Prevention of Electronics Crimes Act

b) In Delegated Legislation power is given to an Executive (a minister or public body to make

subordinate or delegated legislation for specified purposes only) e.g. local authorities are given
statutory powers to make bye-laws which apply within a specific locality

Advantages of delegated legislation

Time: Parliament does not have time to examine matters in detail
Expert opinion: Much of the content of delegated legislation is technical and is better worked out in
consultation with professional, commercial or industrial groups outside Parliament.
Flexible: Delegated legislation is more flexible than an Act of Parliament. It is far simpler to amend a
piece of delegated legislation than to amend an Act of Parliament

Disadvantages of delegated legislation

The main criticism of delegated legislation is that it takes law making away from the democratically
elected members. Power to make law is given to unelected civil servants and experts working under the
supervision of a government minister.
Because delegated legislation can be produced in large amounts the volume of such law making
becomes unmanageable and it is impossible to keep up-to-date

Question No.11 Solution

i) The communication of offer is complete on 6 February because the letter containing the offer
reaches the offeree on 6 February, 2022.
 The communication of acceptance is complete against the offeror on 8 February because the letter
of acceptance is posted on 8 February, 2022.
 The communication of acceptance is complete as against the acceptor on 12 February because the
letter of acceptance is received by the offeror on 12 February.
ii) Qasier’s revocation is not valid because Qasier only revoke his offer before communication of
acceptance is completed against Qaiser that was completed on 8 February.

Question No.12 Solution

a) critical infrastructure" means critical elements of infrastructure namely assets, facilities, systems,
networks or processes the loss or compromise of which could result in:

BLAW | CAF4 | RANA NAVEED KHAN PTO

 major detrimental impact on the availability, integrity or delivery of essential services including
those services, whose integrity, if compromised, could result in significant loss of life or casualties,
taking into account significant economic or social impacts; or
 significant impact on national security, national defence, or the functioning of the state.
 The Government may also designate any private or Government infrastructure in accordance with
the above objectives, as critical infrastructure.
b)

 Unauthorized access to critical infrastructure information system or data

Offender Punishment
Whoever with dishonest intention gains unauthorized access to Imprisonment upto 3 years; and/or
any critical infrastructure information system or data. Fine upto Rs. 1,000,000

 Unauthorized copying or transmission of critical infrastructure data

Offender Punishment
Whoever with dishonest intention and without authorization Imprisonment upto 5 years; and/or
copies or otherwise transmits or causes to be transmitted any Fine upto Rs. 5,000,000
critical infrastructure data.

 Interference with critical infrastructure information system or data

Offender Punishment
Whoever with dishonest intention interferes with or damages, Imprisonment upto 7 years; and/or
or causes to be interfered with or damaged, any part or whole Fine upto Rs. 10,000,000
of a critical information system, or data.

Question No. 13 Solution

Every offer/tender of valid performance must fulfill the following conditions:
(i) It must be unconditional
(ii) It must be made:
 At a proper time.
 At a proper place.
 Under such circumstances that the person to whom it is made may have a reasonable opportunity of
ascertaining that the person by whom it is made is able and willing there and then to do the whole of
what he is bound by his promise to do.
(iii) If the offer is an offer to deliver anything to the promisee, the promisee must have a reasonable
opportunity of ascertaining that the thing being offered is the one which the promisor is bound to
deliver. Effect of refusal to accept offer of performance: Where a promisor has made an offer of
performance to the promisee, and the offer has not been accepted, the promisor is not responsible for
non-performance, nor does he thereby lose his rights under the contract.

BLAW | CAF4 | RANA NAVEED KHAN PTO