Outlines:

CAF 04: Business Laws

This chapter discusses: Premium Content
Chapter 1: Introduction to the legal system
Secret Sheet for Quick Revision
Constitution of Pakistan. (For Spring 2022)
Legislative Authorities
(For students of Muhammad Asif, FCA) Regards@Awais Ali Process of Legislation

Part - 1: Introduction to the Law and its Types

LO 4: Legislative Bodies
Regards@Awais Ali
LO 1: Difference between Civil Law LO 2: Sources of Law LO 3: Constitution of Pakistan
and Criminal Law Government System Legislative System
Basis of Legal System of Pakistan: 12 Parts: (Parliamentary System)
1. Definition Constitution of Pakistan 1973 as well as 1. Introductory: President Prime Minister
2. Purpose Islamic law (Sharia). 2. Fundamental rights and principles of policy National Assembly Senate
3. Case filed by 3. The Federation of Pakistan
4. Burden of proof Sources of Law in Pakistan: 4. Provinces Functions of President: Elected by MNAs.
5. Type of punishment/ Remedy 1. Legislation (act by Parliaments) 5. Relationship between Federation and Provinces Head of the state. PM is assisted by Federal Cabinet Role is Law making and formulation of policies. Role is Law making (except money bill) of Senate,
6. Examples 2. Precedents (decisions by superior courts) 6. Finance, Property, Contracts and Suits Approves statutes. (appointed by President on advice of PM). Registered voters elect MNAs for 05 years. equal representation of all provinces.
3. Customs (common practices in a society) 7. Judiciary Guides PM. MNAs elect Speaker, Deputy Speaker and Prime Minister.. Registered voters elect MPAs. MPAs elect Senators
4. Agreement (between parties) 8. Elections Acts on advice of PM or Cabinet. for 06 years. Half senators are elected every 3 years.
9. Islamic Provisions PM informs President about Permanent legislative body.
10. Emergency Provisions. matters of internal and foreign policy. Senators elect Chairman and Deputy Chairman.
11. Amendment of Constitution
12. Miscellaneous How President is elected:
A Muslim.
5 Schedules:
1. “Laws exempted from Constitution”.
for 05 years by Senate, National Regards@Awais Ali
Assembly and Provincial Assemblies.
Regards@Awais Ali 2. “Election of President”. Eligible for re-election, more than
3. “Oaths of Office”. 02 consecutive terms not allowed.
4. “Legislative Lists”.
5. “Remuneration, T&C of Services of Judges”.

LO 5: Process of Legislation LO 6: Delegated Legislation

National Assembly is in session National Assembly NOT in session Money Bill Dissolution of National Assembly Definition: Control over Delegated Legislation:
Power given by Parliament to an executive to Parliamentary Control:
Origination of Bill: President can pass an Ordinance. Passed by National Assembly. Approval All bills pending in National Assembly shall lapse. make bye-laws for specified purposes. Restriction
By either House. Effective without approval of Parliament of Senate NOT required. Approval
Sent to President for approval. Bills pending in Senate: Advantages:
Validity: 120 days (National Assembly can
Passing of Bill by Other House: --> shall lapse if passed by National Assembly. 1. Time Saving Judicial Control:
extend period, or disapprove early by resolution)
1. Without amendment --> President --> shall not lapse if not yet passed by National Assembly. 2. Use of Expert Knowledge Challenge in Court if ultra-vires.
3. Flexibility
4. Speed
2. With amendment --> Originating House:
if amendments approved --> sent to President Disadvantages:
if amendments not approved -->sent in Joint-sitting. 1. Unconstitutional.
Regards@Awais Ali 2. Bulk.
3. Rejection or not passing within 90 days --> sent in Joint-sitting. 3. Loss of Accountability and Control.

Approval by President:
Within 10 days:
Approve, or
Sent to joint-sitting for reconsideration. Approve if passed by
joint-sitting.
 CAF 04: Business Laws Overview:
Chapter 02: Introduction to Law of Contract Offer and Acceptance are two most important elements of a Valid Contract.
Secret Sheet for Quick Revision This chapter discusses: Premium Content
(For students of Muhammad Asif, FCA) Offer: Essentials, Communication, Revocation (For Spring 2022)
Acceptance: Essentials, Communication, Revocation

Part 1: Definitions and Basic Concepts Regards@Awais Ali

LO 1: Definitions LO1: Basic Concepts

Offer/Proposal: Offer/Acceptance/Agreement can be either: Parties to the contract are called

One person shows his willingness: Express (by words spoken or written), or "Promisor" and "Promisee".
To do, or Implied (by conduct of parties) Other parties are called "Third
Not to do something. Parties", or "Stranger to the contract". Regards@Awais Ali
Acceptance:
When offeree communicates his consent to offeror.
Part 2: Offer
Agreement:
Offer + Acceptance + Consideration = Agreement
Types of Offer LO 2: Essentials of Offer LO 3: Communication of Offer LO 4: Revocation/Lapse of Offer
Contract:
Agreement + Enforceability by Law = Contract.
1. Specific (to specific person) 1. Two Persons. How: When: 1. By Offeror (before acceptance)
2. General (to general public) 2. Intention to create legal relationship. Express, or Implied When it comes to knowledge of Offeree. 2. By Offeree (effective when it reaches offeror)
3. Certain and Definite. 3. Non-fulfilment of condition
4. Offer may be Conditional. (accept as it is) 4. Acceptance not in prescribed manner.
5. Communicated to Offeree. 5. Time passed.
6. Invitation to Offer, is not an Offer. 6. Counter Offer
7. Subsequent illegality or destruction
Regards@Awais Ali Examples of Invitation to Offer:
8. Death or Insanity before Acceptance
Death of Offeree
Advertisement for Auction Death of Offeror
Display of goods with price tags at store
Circulation of Information
Notice of Tender

Part 3: Acceptance

LO 5: Essentials of Acceptance LO 6: Communication of Acceptance LO 6: Revocation of Acceptance

1. Absolute and Unconditional. Against Offeror (when it is transmitted by offeree) Before it comes to knowledge of Offeror
2. Within stipulated or reasonable time. Against Offeree (when it reaches offeror)
3. According to stipulated or reasonable mode/manner.
(If deviated, offeror may either accept or shall communicate non-acceptance)
4. By person to whom it is made. (or his Agent)
5. Communicated to Offeror.
6. Not before offer.
7. Not implied from silence. Important Concepts for Case Studies:
1. Revocation of Offer
8. Rejected offer cannot be accepted.
9. Performance of condition, or acceptance of consideration = Acceptance
Regards@Awais Ali 2. Communication and Revocation of Acceptance.
 Overview:
CAF 04: Business Laws This chapter discusses:
Chapter 03: Consideration and Capacity of Parties
Validity of Contracts: Types, Essentials
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Capacity to Contract: Minor, Unsound Mind, Disqualified
(For students of Muhammad Asif, FCA) (For Spring 2022)
Consideration: Essentials, Exceptions
Illegal Agreements: Exammples, Effect, Partial Illegality

Regards@Awais Ali
Part 1: Validity of Contracts Part 3: Consideration

LO 1: Types of Contracts LO2: Essentials of a Valid Contract LO 6: Essentials of Consideration LO 7: Exceptions to "Non Consideration, No
Contract"

Valid Contract: (Enforceable by Law)
Void Contract: (Not Enforceable by
Law)
Voidable Contract: (Enforceable at the
option of aggrieved party)
Void Agreement Vs. Void Contract:
Void agreement: Void from start.
Void Contract: Valid from start but
became void subsequently.
1. Offer and Acceptance 1. Consideration must be given at the desire of promisee.
2. Intention to create legal relationship 2. Consideration may be given by promisor or any other 1. Agreement made on account of natural love and affection.
3. Capacity/Competence of Parties person. Near Relation.
4. Free Consent 3. Consideration may be past, present or future. Natural love and affection.
5. Consideration 4. Consideration must be something in value. Written.
6. Legal Consideration/Object 5. Consideration must be real. Registered.
7. Possibility of Performance 6. Consideration must be something which promisor is not 2. Agreement to pay a time barred debt.
8. Certainty already bound to do. Not recoverable under Law of Limitation
9. Not expressely declared Void 7. Consideration must be legal. Written.
10. Writing and Registered (Natural love and Signed.
affection, Time-barred debt, Arbitration) 3. Completed Gift.(i.e.Transferred).
4. Contribution to Charity. (If promisee incurred liability)
5. Agreement to compensate for past voluntary services.
6. Other contracts (Bailment, Guarantee, Agency)

Regards@Awais Ali Part 2: Competence to Contract

LO 3: Agreement with Minor LO 4: Agreement with Person of LO 5: Agreement with Disqualified Persons
Unsound Mind

Minor means a person of 1. Agreement by a minor is void against him Necessities Supplied to Minor: 1. Alien Enemy (agreements suspended
18 years (or 21 years if (restoration possible, if in hands) Can be recovered from property if: Unsound means a person who is unable Agreement is Valid if made when person Necessities Supplied to Minor: during war)
Guardian is appointed). 2. Rule of Estoppel does not apply to minor. Necessities of life to understand terms of contract. is of sound mind. Can be recovered from property if: 2. Foreign Sovereigns and Ambassadors
3. No ratification of agreement by minor. Provided to minor/dependents Agreement is Void if made when person Necessities of life (cannot be sued)
Examples:
4. Minor in a partnership (cannot be partner, Price is reasonable. is of unsound mind. Provided to minor/dependents 3. Convicts (cannot contract during
1. Specific Person
can be admitted into benefits) Price is reasonable. imprisonment)
2. Lunatic Person
5. Minor in an agency (not personally liable) 4. Insolvent
3. Drunken/Delirous Person
6. Agreement by Guardian (valid for benefits If person is usually of sound If person is usually of
of minor) mind, burden of proof is on unsound mind, burden of
7. Contract by minor and adjult jointly. person rescinding the proof is on person
8. Minor and insolvency. contract. enforcing the contract.
9. Filing suit.

Regards@Awais Ali
Part 4: Illegal Agreements

Important Concepts for Case Studies:

LO 8: Examples of Illegal Agreements
Object/consideration is unlawful if:
1. Forbidden by Pakistan Penal Code.
2. Involves injury to a person.
3. Fraudulent.
4. If permitted, would defeat provisions of any law.
5. Court regards it Immoral or Opposed to public policy.
Agreements Opposed to Public Policy includes:
Trading with Alien Enemy.
Stifling Criminal Prosecution.
Sale of Public Office.
Marriage Brokerage Agreements.
Restraint of parental rights.
Restraint of personal liberty.
Agreement to create monopoly.
Effect
Illegal Agreement is Void.
Collateral Agreements also Void. (e.g.
debt for wagering purpose, agreement to
invest in business after winning wagering)
No Restoration of Benefits.
LO 9: Partial Illegality
If Illegal Part can be separated:
Legal part is valid, Illegal part is void.
If Illegal Part cannot be separated:
Whole Agreement is Void.
Examples:
1. Agreement with alternate promises.
2. Agreement first to do legal, and then illegal
things.
3. Agreement with combined consideration.
1. Conditions for Agreement on account of
natural love and affection.
2. Consideration need not be equal.
3. Agreement with minor (minor obtains goods
Necessary Vs. Not Necessary)
4. Difference between Void Agreement, Void
Contract and Voidable Contract.
 CAF 04: Business Laws
Overview:
Chapter 04: Free Consent and Void Agreements
This chapter discusses:
Secret Sheet for Quick Revision Premium Content
Free Consent: Examples when Consent is not free, and their Effects.
(For students of Muhammad Asif, FCA) (For Spring 2022)
Void Agreements: List of agreements which are Void, and their Exceptions.

Regards@Awais Ali Regards@Awais Ali

Part 1: Free Consent
(Consent not by Coercion, Undue influence, Fraud, Misrepresentation, Mistake.)

LO 2: Coercion LO3: Undue Influence LO 4: Misrepresentation LO 6: Mistake

Definition: Definition of Undue Influence: Examples of Relations/Positions in which Undue Definition: Mistake of Fact:
Doing act forbidden by law to make contract A dominating party uses his position/ Influence is assumed: 1. A false statement, or breach of duty, or mistake 1. Unilateral Mistake --> Contract remains valid.
with others. relation to make agreement and obtain 1. Employer and Employee, Police officer and Accused, 2. Without intention to deceive. 2. Bilateral Mistake --> Contract becomes void.
unfair advantage. Tax officer and Tax payer.
Effects of Coercion: 2. Parent and Child, Guardian and Minor, Advocate and Essentials of Misrepresentation: Mistake of Law:
Contract voidable. Effect of Undue Influence: Client, Trustee and Beneficiary, Fiance’ and fiancee’. 1. By Party to the contract: (not by stranger) 1. Mistake of Pakistani Law --> Contract remains valid.
If rescinded, restore benefits. Contract voidable. 3. Doctor and Patient, Medical Attendant and Patient, a 2. False representation: (not intention to deceive) 2. Mistake of Foreign Law --> Effect is same as mistake of Fact.
Court may set-aside contract absolutely Family Member and Enfeebled Old Man 3. Representation as to fact: (not opinions or intentions)
Burden of Proof: or conditionally. 4. Acted upon it: (not on other information)
On Party rescinding the contract. Burden of Proof:
Coercion Vs. Undue Influence (Main Points): Party in dominating position will prove “no undue Effect of Misrepresentation:
1. Relationship influence”. Contract voidable, except:
2. Consent (obtained by) 1. Party had means of discovery of truth.
3. Nature of Pressure Examples of Relations/Positions in which Undue 2. Party did not act on the basis of misrepresentation;
4. By whom Influence is NOT assumed: 3. Party received benefit after discovery.
5. On whom Husband and Wife 4. A third party acquired interest;
Regards@Awais Ali 6. Burden/Onus of Proof
7. Criminal liability
Creditor and Debtor 5. Restoration not possible.
Landlord and Tenant
8. Reason Principal and Agent
9. Restoration of benefit
Burden of Proof:
Party rescinding the contract will prove “undue
influence”.

LO 5: Fraud Part 2: Void Agreements

Definition of Fraud: Remaining Silent: LO 7: List of Void Agreements LO 8: Agreements in Restraint of Trade LO 9: Agreements in Restraint of Legal
1. False Representation (intentionally) Not a fraud, unless: Proceedings
2. Active Concealment. 1. silence is equivalent to speech, or
3. Empty Promise. 2. there is obligation to disclose Examples of void agreement: Sale of Goodwill:
4. Fitted or Declared Act 1. Uncertain agreements. Restriction valid if: Restriction valid to:
Misrepresentation Vs. Fraud (Main Points): 2. Illegal Agreement. similar business. 1. Refer dispute to Arbitration.
Essentials of Fraud: 1. Intention 3. Impossible Agreements. for period till buyer runs same business. 2. Not to appeal in upper court of law.
1. By Party to the contract (not by stranger) 2. Remedies 4. Agreements with incompetent persons. for specified local limits. 3. Choose a specific court of law.
2. False representation (intentional) 5. Agreement made without consideration. local limits must be reasonable.
3. Representation as to fact (not opinions or intentions). 6. Agreements in restraint of marriage.
4. Acted upon it (not on other information) 7. Wagering Agreements Agreements between partners:
5. Suffered loss Regards@Awais Ali 8. Agreements in restraint of trade. Restriction valid for:
9. Agreements in restraint of legal 1. Existing partners.
Effect of Fraud: proceedings. 2. Outgoing partner (if similar business,
Contract voidable (exceptions same as of for specified period, for specified
Misrepresentation) Effect on Collateral Agreements: local limits, local limits must be
Damages for loss. Agreements collateral/contingent on void reasonable).
agreements, also become void.
 CAF 04: Business Laws
Overview:
Chapter 05: Contingent Contracts
This chapter discusses:
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Contingent Contracts: Definition, and Essentials.
(For students of Muhammad Asif, FCA) (For Spring 2022)
Rules of Performance of Contingent Contracts: e.g. Happening/Non-happening, If Time specified.

Regards@Awais Ali
LO 1: Contingent Contract LO 2: Rules regarding Performance of Contingent Contracts

Definition Contracts contingent on happening. Contracts contingent on non-happening. Contingent on impossible event.
Contract to do something if some collateral Contract enforceable if event happens. Contract not enforceable if event happens. Void.
event happens e.g. Insurance Contract. Contract not enforceable if event does not Contract enforceable if event does not
happen within time (if time fixed) or happen within time (if time fixed) or Contingent on future conduct of a person.
Essentials: becomes impossible. becomes impossible. Void if conduct makes it impossible to
1. Dependence on a Future Event: perform contract within definite time.
2. Collateral Event:
3. Uncertain Event:

Wagering Vs. Contingent Agreement (Main Points):

1. Validity
2. Future/Uncertain Event
Regards@Awais Ali
3. Interest of parties
4. Reciprocal promises

CAF 04: Business Laws
Chapter 06: Performance of a Contract
Secret Sheet for Quick Revision
(For students of Muhammad Asif, FCA)
Part 1: Types of Performance
LO 1: Types of Performance
Two Types:
1. Actual Performance
2. Attempted/Tendered Performance
(promisor offered, but promisee refused
to accept)
Effect of refusal to accept:
Tender of goods/services:
Contract is voidable.
Damages.
Tender of money:
Liable to pay money, but not interest.
Regards@Awais Ali
Part 2: Who can Perform
LO 3: Who can Perform
1. Promisor (s) himself
2. Agent or Legal Representative (except of
personal nature, or agreed for promisor
himself)
3. Third Parties (with consent of promisee)
Overview:
This chapter discusses various rules of performance of a contract e.g.:
How to Perform the Contract
Premium Content
Who can perform the contract
(For Spring 2022)
Time, Place and Order of Performance
Appropriate of Payment
Regards@Awais Ali Part 3: Time, Place and Order of Performance
LO 2 & 5: Essentials of Valid Tender LO 6: Rules of Time, Place and Order of LO 7: Consequences of Non-Performance
Reciprocal Promises
1. Unconditional If time is essence:
2. At specified or reasonable time (on a 1. Mutual and Concurrent Promises: Contract is voidable.
working day within usual hours)
Perform simultaneously. Damages if notice is given.
3. At specified place. If place not specified,
Don’t perform if other party is not ready to perform.
Promisor asks and Promisee specifies a
If time is NOT essence:
reasonable place.
2. Mutual and Dependent Promises. Damages if notice is given.
4. To Proper Person (promisee or his agent)
Perform in specified order.
5. As per Terms and Conditions
Don’t perform if other party did not perform.
6. Opportunity to Inspect
7. Whole Obligation
3. Mutual and Independent Promises.
8. Exact Amount in Legal Tender
Perform in the order as nature of transaction required.
4. Illegal promise:
Only legal party to be enforced (if separable)
If alternative promises, perform legal only.
If different agreements (first legal and then illegal), perform legal only.
If different agreements (first illegal and then legal), don’t perform any.
5. Preventing party to Perform:
Remedies to aggrieved party:
Contract Voidable.
Quantum Meruit + Damages
Part 4: Appropriation of Payment
LO 4: Rules of Performance in Joint Promise
LO 8: Rules of Appropriation
1. Liability of Joint promisors is joint and
several (like partners). 1. As intimated by debtor (express or implied)
2. If death, legal representatives are liable. 2. If not intimated, as wished by creditor, any previous
3. If default, other promisors will bear loss. debt whether time-barred, but not disputed
4. If released, other promisors are still liable, 3. If neither makes appropriation,
and released also liable to other promisors. a. Adjustment in order of time.
5. Joint promisee claim performance b. first mark-up, then principal.
together.
 CAF 04: Business Laws
Chapter 07: Specific Types of Contract Overview:
Secret Sheet for Quick Revision This chapter discusses Quasi/Constructive contracts i.e. contract Premium Content
(For students of Muhammad Asif, FCA) created by law, not by parties. (For Spring 2022)

Regards@Awais Ali

Types of Quasi Contracts

Necessaries Supplied to Minor/Unsound mind Obligation Paid by Interested Party Non-Gratuitous Act

Amount can be recovered if:
If necessities of life
Supplied to minor/unsound mind, or dependent.
Reasonable Price can be recovered.
From Property of minor/unsound mind.
Amount can be recovered if: Amount can be recovered if:
Interested party paid. Act (goods/services) is Non-gratuitous.
Legal obligation of other party. Act is lawful.
To protect interested party’s own interest. Other party enjoyed the benefit.

Finder of Goods Goods/Money Delivered by Mistake or Coercion

Duties: Person must return or repay for it.

take reasonable care, and
trace true owner.

Rights:
retain goods.
sell goods (if perishable nature, or expenses Regards@Awais Ali
equal 2/3rd of value).

Chapter 08: Discharge of a Contract, and Remedies
By Actual Performance
Suit for specific performance
or Injunction
(allowed only in some cases)
CAF 04: Business Laws Overview:
This chapter discusses:
Secret Sheet for Quick Revision Modes of Discharge of a Contract Premium Content
(For students of Muhammad Asif, FCA) Remedies for Breach of a Contract (For Spring 2022)
How to Calculate Damages on Breach of Contract
LO 1: Modes of Discharge
By Mutual Agreement By Impossibility By Breach of contract
[one party willfully does
not perform promise]
1. Novation [making new contract in place of old contract] Initial Impossibility Supervening Impossibility
2. Alteration [making material changes in contract] [at time of agreement --> void ab [after making contract --> void +
3. Recission [cancelling contract without making new contract] initio + Damages if a party knew] Restore Benefits]
4. Remission [accepting lesser consideration in place of full]
5. Waiver [surrendering whole right]
6. Promisee’s refusal/neglect [not providing facilities to promisor] Examples causing Supervening Impossibility: Examples NOT causing Supervening Impossibility:
1. Destruction. 1. Strikes, Lockdowns etc. (unless agreed)
2. Death or Personal incapacity. 2. Default of a Third Party.
3. Alien enemies. 3. Difficulty of Performance
4. Change of law. 4. Commercial Impossibility
5. Non-occurrence of contingent things 5. Partial Impossibility
LO 2: Remedies for Breach of Contract Regards@Awais Ali Case Study Tips: How to Calculate Damages
Restitution Damages Goods/Services not Delivered Money not Paid
(i.e. restoration of (i.e. monetary
benefits already received) compensation of loss)
Ordinary Damages Special Damages (if communicated) Reasonable Interest.
For Goods --> Market Price – Contract Price. Cancellation of Other contracts --> Loss of Profit +
Ordinary Damages: Special Damages: For Services --> Reasonable Loss. Compensation Paid.
Definition: Definition: Stop of Production --> Loss of Normal Profit
which arise naturally in usual course Arise due to breach of contract, and parties knew Cancellation of future contracts --> No Damages.
[e.g. good/service bought at higher price] it [e.g. loss on other contracts due to breach of this
contract].
Rules:
Actual Damage allowed [e.g. market Rules:
price– contract price] Allowed only if communicated at time of contract.
Actual Damage allowed. Common Rules of Damages:
Allowed, whether communicated or not
Remote and indirect losses are not allowed [e.g. 1. Aggrieved party cannot claim a loss which could have been avoided reasonably.
in contract.
loss of future projects not yet made] 2. Court allows reasonable damages or fixed amount whichever is lower.
 CAF 04: Business Laws
Chapter 08: Agency
Overview:
Secret Sheet for Quick Revision Premium Content
This chapter discusses Intorduction and Authority of Agent.
(For students of Muhammad Asif, FCA) (For Spring 2022)

Agent

LO 1: Definition and Appointment of Agent LO 2: Authority of Agent:

(concept also applies on Partnership)

Examples of Agency Relationships: Who can be Agent or Principal:

A person appointed to sell a property.
A person appointed to collect rent.
Employees/Managers in a shop.
Rule of Law: Acts of agent are considered acts of
Principal.
Any person can be Principal (except Minor/ Express Authority:
Unsound Mind) Authority given by words.
Any person can be agent. If minor --> he is not
liable if he negligence or exceeding authority. Implied Authority:
Authority assumed in circumstances.
Authority in Emergency:
Conditions to exercise authority in emergency:
1. Real emergency.
2. Unable to obtain instructions.
3. Acted in best interest of principal.

Regards@Awais Ali Ostensible/Apparent Agency: (in Agency by Estoppel)

A person (Principal) is liable for acts of other person (Agent) if:
He made representation that other person is his Agent, and
third party contracted with agent.
He terminated agent, but did not give public notice.

Case Study Tip: Legal Position if Agent exceeds its Authority:

If an agent exceeds his authority, Principal is liable for his acts if:
1. Principal ratifies it, or
2. It is a case of emergency, or
3. Third party did not know actual authority.
Regards@Awais Ali
(Important for case studies. Same rule applies in Partnership)

CAF 04: Business Laws
Chapter 10: Partnership
Secret Sheet for Quick Revision
(For students of Muhammad Asif, FCA)
LO 1: Essentials of Partnership
1. There must be an agreement: (stating Capital, P&L
ratio, Duration, Rights and Duties)
2. There must be association of two or more persons (2
– 20, except in bank, professional firms)
3. Parties must agree to carry on business: (charity, or
rental income is not business)
4. There must be sharing of profits among partners
5. There must be mutual agency among partners
6. No separate legal status:
7. Unlimited Liability
Exceptions: Parties who share profit, but are not
partner:
1. Lender.
2. Employee/Agent.
3. Retired/Deceased Partner.
4. Previous owner of business.
5. Minor admitted into benefits.
6. Transferee of interest.
Case Study Tips:
1. If any essentials not present, no partnership.
2. A partner may NOT share losses, participate in
management or bring capital.
3. A partner may also get salary or interest, if agreed.
Rights of Partners:
1. Right to take part in the conduct of the business:
2. Right to be consulted: (decision on majority basis)
3. Right of access to books of accounts: (+ copy)
4. Right to share profits equally: (unless different agreed)
5. Right to receive interest on capital: (if agreed and firm
earns profit)
6. Right to receive interest on advance: (@6% or as
agreed)
7. Right to be indemnified:
8. Right to retire: (+ public notice)
9. Right of outgoing partner: (6% Interest or Share of
Profit until settled)
10. Variation in Partnership: (with consent of all partners)
11. Rights of partners after a change in firm: (mutual
rights same as before)
Overview:
This chapter discusses:
Part 1: Essentials of Partnership and Basic Terms
Premium Content
Part 2: Mutual Rights and Duties of Partners
(For Spring 2022)
Part 3: Authority and Liability of Partners + Other Concepts (Estoppel, Transferee, Minor)
Regards@Awais Ali
Part 1: Nature of Partnership
LO 2: Difference between Partnership and LO 3: Types of Partnership LO 4: Types of Partners
Co-Ownership
Particular Partnership: Actual Partner:
1. Formation For a particular project or period. who actively manages business and is
2. Business Dissolved on expiry. known to others.
3. Number of persons If continued after expiry, it becomes ‘partnership at will’. Public notice is required if he retires.
4. Sharing of profit
5. Agency Partnership at Will: Silent Partner:
6. Transfer of interest Duration not specified. Does not manage business.
Dissolved when a partner gives notice (wef specified date).
If dissolution with consent of all, it will not be ‘partnership Sleeping or dormant partner:
at will’. Not known to others.
Public notice is NOT required if he retires .
Partners in Profit only:
Does not share losses.
Liability is still unlimited.
Nominal Partner:
lends his name.
Liability is still unlimited.
Regards@Awais Ali
Sub-Partner/Transferee of Interest:
Not a partner.
Not liable for debts of firm.
Partners by estoppels or by holding out:
A person represented as partner.
Part 2: Mutual Rights and Duties of Partners
LO 5:Mutual Rights and Duties of Partners LO 6: Property of the Partnership/Firm
Absolute/General/Mandatory duties of Partners: Qualified duties of Partners: Property of the firm includes:
1. Joint and Several Liability: (i.e. Each partner has unlimited 1. Duty to use firm’s property exclusively for 1. Property (OR rights or interest in property) originally
liability) the firm: (return if benefit obtained) brought into common stock;
2. Duty to act within authority: (compensate firm if exceeded 2. Duty not to engage in competing business: 2. Property (OR rights or interest in property) acquired by
authority) A partner can do any other business but the firm or for the firm;
3. Duty in case of emergency: (can do acts to save firm from loss) cannot do similar/competing business. 3. Goodwill of firm;
4. Duty to carry on business to the greatest common advantage: 3. Duty not to assign/transfer his interest:
(no personal gain) 4. Duty to contribute to the losses: Any property purchased with partnership money will be
5. Duty to be just and faithful: 5. Duty to indemnify for willful neglect: deemed to be partnership property, unless any contrary
6. Duty to provide true accounts: 6. Duty to perform diligently his duties: intention appears.
7. Duty to provide full information: (disclose all interests in 7. Duty to work without remuneration:
transactions)
8. Duty to indemnify for fraud:
Regards@Awais Ali
 Overview:
CAF 04: Business Laws This chapter discusses:
Chapter 10: Partnership
Part 1: Essentials of Partnership and Basic Terms
Secret Sheet for Quick Revision Premium Content
Part 2: Mutual Rights and Duties of Partners
(For students of Muhammad Asif, FCA) (For Spring 2022)
Part 3: Authority and Liability of Partners + Other Concepts (Estoppel, Transferee, Minor)

Regards@Awais Ali
Part 3: Authority, Liability

LO 7: Authority of Partners LO 8: Liability of Partners, and Notices

Implied Authority of a partner:
1. To buy and sell goods (of business).
2. To borrow money (in trading business).
3. To receive and pay cash.
4. To settle accounts.
5. To employ servants
6. To pledge movable property of firm
7. To draw cheques or negotiable instruments.
8. To sue or defend suits.
Firm shall be liable to third parties if a third party
makes such agreements with a partner.
Exceptions: Parties who share profit, but are not
partner:
1. Lender.
2. Employee/Agent.
3. Retired/Deceased Partner.
4. Previous owner of business.
5. Minor admitted into benefits.
6. Transferee of interest.
Restrictions on Implied Authority:
1. Submit a dispute of the firm to arbitration.
2. Open a bank account on behalf of the firm in his own
name.
3. Compromise or relinquish any claim or portion of a claim
by the firm.
4. Withdraw a suit or proceeding filed on behalf of the firm.
5. Accept any liability in a suit or proceeding against the
firm.
6. Acquisition of immovable property on behalf of the firm.
7. Transfer immovable property belonging to the firm.
8. Enter into partnership on behalf of the firm.
Firm shall not be responsible if a third party makes such
agreements with a partner.
Case Study Tip: Legal Position if Partner
exceeds its Authority:
If a Partner exceeds his authority, Firm is
liable for his acts if:
1. Firm ratifies it, or
2. It is a case of emergency, or
3. Third party did not know actual authority.
Regards@Awais Ali
Liability of a partner for acts of the firm: Effect of notice received by a partner:
Each partner has unlimited liability. Notice is served to whole firm if:
If paid more than share, reimbursement from 1. given to active partner.
other partners. 2. relates to affairs of firm.
3. Does not relate to fraud by partner receiving notice.
Liability of firm for wrongful acts of a partner:
With respect to Third Parties: Effect of representation/statement by a partner:
Firm liable to third parties (if ordinary Representation can be used as evidence if:
course, third party acted in good faith) 1. relates to affairs of the firm.
2. made in the ordinary course of business.
With respect to Partners:
Guilty partner bears whole loss, and
indemnifies firm.
Liability of firm for misapplication of money or
property by partners:
The firm is liable to third parties.

Case Study Tips:

1. If any essentials not present, no partnership.
2. A partner may NOT share losses, participate in
management or bring capital.
3. A partner may also get salary or interest, if
agreed.

Part 3: Other Concepts

LO 9: Principle of Estoppel or Holding out LO 10: Transferee of a Partner’s Interest LO 11: Minor in a Partnership
Partner

Principle of Holding out partner:
If a person is represented as a partner
and third parties gave credit to firm on such
representation, person is liable for debt.
Examples/Application: (when a non-partner
is liable)
1. Minor attaining age of majority (if no
public notice given for 6 months)
2. Retirement of Active Partner (if no public
notice given)
Exceptions: (when a partner is not liable)
1. Death of a partner:
2. Insolvency of a partner:
Rights of Transferee:
1. To receive share of profits.
2. On dissolution:
(a) share of the assets, and
(b) Accounts of firm from dissolution.
Restrictions/Disabilities/Limitations
of Transferee:
Transferee shall NOT:
1. interfere in business.
2. inspect books.
3. require accounts.
4. challenge Accounts.
5. sue for dissolution
Legal Status of a minor admitted to benefits
of a partnership:
Rights of minor admitted to partnership:
1. to share profits and property of firm.
2. to access accounts.
3. cannot be declared insolvent.
Liabilities of minor admitted to partnership:
1. No personal/unlimited liability.
2. Only share in firm is liable.
Restrictions/Disabilities of minor admitted
to partnership:
1. Not a partner.
2. Cannot file suit for profit and property,
unless he disconnects.
3. No access to books.
Legal Status of a minor on attaining age of majority:
Make Decision and Public Notice whether to become
Partner:
Within 06 months of attaining majority (or becoming
aware of partnership whichever is later)
If elected to become a partner:
1. his share as minor will be share as partner.
2. Personal/unlimited liability, since admission as minor.
If elected NOT to become a partner:
1. Continues as minor till public notice.
2. No liability for acts of firm after public notice.
3. Can sue for recovery of his share of profits and property.
 CAF 04: Business Laws
Overview:
Chapter 11: Negotiable Instrument
This chapter discusses:
Secret Sheet for Quick Revision Premium Content
Part 1: Characteristics and Types of Negotiable Instruments
(For students of Muhammad Asif, FCA) (For Spring 2022)
Part 2 - 4 : Discussion on each type of Instrument i.e. Promissory Note, Bill of Exchange, Cheque.

Part 1: Negotiable Instruments

LO 3: “Holder”, “Holder in due course” and “Payment in due course”

LO 1: Negotiable Instruments and their

Characteristics
Regards@Awais Ali Holder: Payment in due course:
who is in possession, and Payment in accordance with apparent tenure.
who can receive the amount. Payment in good faith and without negligence.
Definition: LO 2: Parties to Negotiable Instruments Payment to a person who is in possession.
A written document giving right to receive money, and Holder in due course: Payment in money only.
is transferable. It includes Promissory Note, Bill of Who is in possession,
Exchange and Cheque. Parties to a Promissory Note: for adequate consideration, Examples when payments are NOT in due course:
1. Maker before its maturity. 1. Payment of Post-dated or Stale cheque.
Characteristics of negotiable instruments: 2. Payee in good faith. 2. Payment of cheque with forged signature of drawer.
1. Payable to Bearer or Order: complete and regular instrument. 3. Payment of a bill of exchange without making inquiry as
2. Easily transferable: Parties to a Bill of Exchange: to payee.
3. Title of holder in due course is free from all defects: 1. Drawer Examples when persons does NOT
4. Transferee can sue in its own name. 2. Drawee & Acceptor become “Holder in due course”:
3. Payee 1. After maturity.
2. Gift.
Parties to a Cheque: 3. Stolen instrument.
1. Drawe 4. Lost instrument.
2. Drawee (the bank) 5. Insufficient Stamp
3. Payee
Difference between Holder and Holder in
LO 5: Negotiation and Endorsement Endorsee: To whom instrument due course:
is endorsed. 1. Consideration
2. Holding of instrument
Negotiation: 3. Received in good faith
Essentials of a valid endorsement: 4. Title
Transfer of instrument from one person to another. Regards@Awais Ali 5. Right to sue
Bearer Instrument --> negotiated by delivery.
Order Instrument --> negotiated by endorsement and delivery.
LO 4: Types of Negotiable Instruments
Endorsement:
Definition:
Signing an instrument to endorse it. Bearer Instrument and Order Instrument: Demand Instrument and Time Instrument: Inland instrument and Foreign Instrument:
It can be Blank (holder only signs) or Full (holder signs and Bearer Instrument: Demand Instrument: Inland instrument
writes name of endorsee). Payable to anyone who holds it e.g. “Pay An instrument which is payable immediately. An instrument which is:
bearer” or “Pay A or bearer”. Drawn and payable in Pakistan, or
Essentials of a valid endorsement: Examples: Drawn in Pakistan on a person resident in
1. On Instrument. Order Instrument: 1. Payable on demand/ sight/presentment, or Pakistan (even if payable in foreign country)
2. Signed. Payable to a particular named person 2. No time specified.
3. Entire instrument. e.g. “Pay A” or “Pay A or order”. 3. Accepted/Endorsed after maturity. Foreign Instrument
4. Single endorsee.
An instrument which is not an inland instrument.
5. Delivery.
Time Instrument:
Liability of Endorser: An instrument which is payable:
Every endorser is liable to pay to any of subsequent party. on a certain date, or
on a certain date after sight, or
after a specified period, or
on or after happening of a certain event e.g.
death of a person.
 CAF 04: Business Laws
Overview:
Chapter 11: Negotiable Instrument
This chapter discusses:
Secret Sheet for Quick Revision Premium Content
Part 1: Characteristics and Types of Negotiable Instruments
(For students of Muhammad Asif, FCA) (For Spring 2022)
Part 2 - 4 : Discussion on each type of Instrument i.e. Promissory Note, Bill of Exchange, Cheque.

Regards@Awais Ali
Part 2 - 4: Mutual Rights and Duties of
Partners

LO 6: Promissory Note & its Essential LO 7: Bill of Exchange & its Essential LO 12: Difference between Promissory Note,
Elements Elements Bill, and Cheque

Definition of Promissory Note: Definition of Bill of Exchange: Difference between promissory note and bill Difference between cheque and bill of
It is a written, unconditional promise signed by maker to It is a written, unconditional order signed by drawer and drawee of exchange: exchange:
pay certain sum of money to a specified person or his order. to pay certain sum of money to certain party. 1. Number of Parties 1. Acceptance by drawee
2. Nature 2. Drawee
Essential Elements of a Promissory Note: Essential Elements of a Bill of Exchange: 3. Acceptance 3. Payable on demand or time
1. It must be in Writing. 1. It must be in Writing. 4. Nature of liability 4. Payable to Bearer
2. Promise to Pay (Not just acknowledgement of debt). 2. Order to pay. 5. Payable to 5. Stamp
3. Definite and Unconditional (payable on/after death is 3. Definite and Unconditional (payable on/after death is valid). 6. Maker as payee 6. Crossing
valid). 4. Signed by drawer and drawee. 7. Notice of dishonor 7. Stopping of payment by drawer
4. Signed by the maker. 5. Certain Sum of Money. 8. Noting or Protesting
5. Certain Sum of Money (No contingent addition or 6. Certain Parties.
contingent subtraction). 7. Order to pay money only. (no shares, furniture etc.)
6. Certain Parties. 8. Not Payable to bearer on demand.
7. Promise to pay money only (no shares, furniture etc).
8. Not payable to bearer. Liabilities of Parties:

Liabilities of maker:
Liabilities of Drawer: Liable until drawee accepts.
Liabilities of Drawee: Liable after acceptance.
Regards@Awais Ali
To pay the amount.
If default, he will also pay damages.

Cheque

LO 8: Cheque and its Essential Elements LO 9: Crossing of Cheque LO 10: Rules Relating to Payment of Cheque LO 11: Bank Draft

Definition of Cheque:
A "cheque" is a bill of exchange drawn on a specified
banker and payable only on demand.
Essential characteristics of a cheque:
1. It must be in writing.
2. It is an order, not request to pay (please Vs. please +
oblige + convenient).
3. It must be definite and unconditional.
4. It must be signed by drawer.
5. Parties must be certain.
6. Amount should be certain.
7. Money only. (no shares, furniture etc.)
8. It is always drawn on a specified banker.
9. It is always payable on demand only.
Types of Crossing:
General Crossing:
How: Two parallel lines on top left corner.
Effect: credited in a bank account only
Restrictive Crossing:
How: “A/C Payee” or “A/C Payee only” written.
Effect: Payable to payee only + Not-Negotiable
Special Crossing:
How: Name of a Bank written.
Effect: Only named Bank (or his agent) can collect
Adding words “Not Negotiable”:
Cheque is still transferable/negotiable.
Holder of defective title cannot transfer a good title.
Protection to Paying Bank: What is a Bank Draft:
Not liable if payment made in due course. Order issued by one bank to another bank, to
pay specified money to a specified person.
Protection to a Collecting Banker:
Not liable to true owner if it collected on behalf of a person with Difference between Cheque and Bank Draft:
defective title, provided: Issuer.
Bank acted in good faith and without negligence. Payable to bearer.
Bank received payment on behalf of customer. Dishonored due to insufficient funds.
Cheque was already crossed. Stop of payment.
If bank credited customer account provisionally, protection is still
available.
Protection to a Collecting Banker in case of Account Payee cheque:
Bank not liable if “account payee” cheque is:
altered cleverly, and
bank paid in good faith without negligence.

Crossing of a cheque after issue: Payment of cheque crossed specially more than once:
Regards@Awais Ali
Crossing by Holder: If a cheque is specially crossed twice (except to agent), its payment
If uncrossed --> General Crossing. will be refused.
If generally crossed --> Special Crossing
If generally/specially crossed -->Add words “not negotiable”. Revocation of Banker’s Authority:
1. Countermand of payment.
Crossing by Banker: 2. Notice of customer’s death.
Special Crossing. 3. Notice of customer’s insolvency.
Special Crossing again (to agent for collection).

CAF 04: Business Laws
Chapter 12: Anti-Money Laundering & Electronic Payments
Secret Sheet for Quick Revision
(For students of Muhammad Asif, FCA)
LO 1: Introduction
Financial Institutions: Role of Financial Institutions:
Persons doing activities of:
1. Deposits, and Lending.
2. Leasing.
3. Insurance.
4. Money Transfers.
5. Managing means of payments.
6. Business trading in Forex, Mutual
funds, Money market instruments etc.
Overview:
This chapter discusses :
Money Laundering: Offence and Punishment Premium Content
Designated Payment System (DPS): Arrangements and Revocation (For Spring 2022)
Definition of Electronic Money and Electronic Fund Transfer.
Regards@Awais Ali
Part 1: Anti-Money Laundering
LO 2: Offence and Evidence LO 3: Punishment
When is a person guilty of offence of money laundering: Evidence of offence of money laundering: For Individuals: (i.e. natural person) For Legal Persons: (i.e. company)
To monitor customers’ transactions If he knows that a property is proceeds of crime and still: Knowledge inferred from factual circumstances. Imprisonment 1 to 10 Years Fine upto Rs. 100 million.
To report large transactions. 1. Acquire, converts, possess, use or transfer such property. Fine upto Rs. 25 million. Individual liability for director,
2. Conceals the true nature, origin, location, ownership, movement of such property. Forfeiture of property officer or employees involved.
3. Holds or possess such property on behalf of any other person.
4. Aids, or counsels to commit above acts.
Part 2: Electronic Payments
Regards@Awais Ali
LO 4: Designated Payment System (DPS) LO 5: Electronic Fund Transfer (EFT)
Payment System: Electronic Fund Transfer:
System used to settle financial transactions through transfer of money. Transfer of funds, other than by paper instrument (without direct
intervention of bank staff).
Designation of Payment System:
State Bank designates, after inspection of premises, equipment etc. “Electronic Fund” or “Electronic Money”:
Financial Institution, who is authorized to operate a DPS is called “Operator”. Money transferred through electronic device.
Money stored in an electronic device or payment instrument.
Operational Arrangements:
Operate shall make:
1. Criteria.
2. Rights and liabilities of Operator and Participant.
3. Measures to ensure operational reliability and contingency arrangements.
4. Procedures for management of credit, liquidity and settlement risk.
Revocation of Designated Payment System (DPS):
State Bank may revoke if: Regards@Awais Ali
1. DPS ceases to operate effectively.
2. Operator submitted false information to SBP.
3. Operator is in winding up.
4. violation of T&C.
5. It is in public interest.
Designation can be suspended (without notice), or revoked (with notice).
 CAF 04: Business Laws
Chapter 13: Data Protection Outlines: Premium Content
Secret Sheet for Quick Revision This chapter discusses laws relating to protection of electronic (For Spring 2022)
(For students of Muhammad Asif, FCA) data of Individuals and Organizations.

Personal Data Protection Bill, 2020

(Protection For Individuals)
Regards@Awais Ali
Definitions Key Principles for Personal Data Rights of Individuals regarding
Processing Processing of Personal Data
Data Subject:
q Natural Persons whose personal data is being collected/processed. 1. Lawfulness, fairness and transparency 1. Right to be informed
2. Data minimisation. 2. Right of access to data
Personal Data: 3. Purpose limitation 3. Right to rectification of errors
Information of a Data Subject which is in possession of a Data Controller 4. Accuracy 4. Right of erasure
and from which he can be identified. 5. Security 5. Right to object
q It includes Sensitive Personal Data. 6. Storage limitation 6. Right to restrict processing
q It does not include encrypted data. 7. Accountability 7. Right to data portability
8. Right to withdraw consent
Sensitive Personal Data: 9. Right to complain
q It means data (i.e. usernames and passwords) which provides access
to Financial information, Medical Records, Religious beliefs, Passport,
Biometric Data.

Regards@Awais Ali
Prevention of Electronic Crimes Act, 2016
(Protection For Organizations)

Definitions Electronic Crimes and Punishments (upto)

Unauthorized Access: Non-Critical Infrastructure Critical Infrastructure

q It means accessing data not publicly available.

Damage to Data: Unauthorized access: Unauthorized access:

q Data Damage means unauthorized addition, deletion, q 3 months + Rs. 50,000 q 3 Years + Rs. 1,000,000
alteration of data or making it unavailable.
Unauthorized copying or transmission of data: Unauthorized copying or transmission of data:
Critical Infrastructure: q 6 months + Rs. 100,000 q 5 Years + Rs. 5,000,000
It means infrastructure (or its elements) whose loss may
cause adverse effect on: Damaging information system or data: Damaging information system or data:
q availability or delivery of essential services. q 2 Years + Rs. 500,000 q 7 Years + Rs. 10,000,000
q national security, or functioning of state.
Glorification of an offense:
q same as interference with critical infrastructure.
 CAF 04: Business Laws
Chapter 14: Competition Act, and Arbitration Act Outlines: Premium Content
Secret Sheet for Quick Revision This chapter discusses laws relating to Competition and Arbitration. (For Spring 2022)
(For students of Muhammad Asif, FCA)

Regards@Awais Ali
Competition Act
(to ensure free competition in markets)

Definitions Restrictions on Undertakings

Relevant Market: Abuse of dominant position Prohibited Agreements No Deceptive Marketing Practices
Relevant market includes:
q Geographic Market: Area in which undertakings are
involved in supply of goods or services and in which Following practices are not allowed: Following agreements are not allowed: Deceptive marketing practices include:
conditions of competition are similar. 1. Limiting quantity of production or sale. 1. Dividing markets. 1. False or misleading information harming other undertakings.
q Product Market: It means all those products and/or 2. Unreasonable increase in prices. 2. Fixing quantity of production or sale. 2. False or misleading information regarding own good/service.
services which are regarded as interchangeable or 3. Price discrimination. 3. Collusive tendering. 3. False or misleading comparison of goods in advertisement.
substitutable by consumer. 4. Predatory pricing. 4. Fixing the purchase or sale price. 4. Fraudulent use of another’s firm name, trademark, labelling
5. Boycotting other undertaking. 5. Limiting technical development or investment. or packaging.
6. Refusing to deal. 6. Applying dissimilar conditions to similar
7. Tie-ins. transactions.
Regards@Awais Ali 8. Applying dissimilar conditions to similar 7. Making contract dependent on supplementary
transactions. unrelated obligations.
9. Making contract dependent on
supplementary unrelated obligations.
Regards@Awais Ali
Regards@Awais Ali
Arbitration Act
(to resolve disputes out of Court)

Provisions applied in Arbitration Agreement Powers of Arbitrator Appointment by a third party or during a suit
(unless agreed otherwise)
1. To take oath. Parties can:
1. Sole-arbitrator. If even, Arbitrators shall appoint Umpire within 1 month of appointment. 2. To interrogate. q Agree that a third party (named or office holder)
2. Authority shall be irrevocable (cancellable by Court). 3. To make award conditional, or in alternative. will appoint arbitrator.
3. Decision by Arbitrators within 4 months of reference (extendable by Court). 4. To receive opinion of the Court. q Apply for arbitration during a suit.
4. Umpire shall enter if Arbitrators unable to make decision, or time is passed. 5. To correct clerical mistakes in the award.
5. Decision by Umpire within 2 months of entry (extendable by Court).
6. Parties shall produce record and other evidence to Arbitrator/Umpire.
7. Award shall be final and binding on parties. Arbitrators/Umpire may direct about cost of
the case. Regards@Awais Ali