CAF 04: Business Law

Suggested Solution – Test # 2

Answer # 1

(a)
C cannot claim the money from G because the act of appearing as a witness was a legal obligation, not a
contractual obligation. Thus, the promise lacks enforceable consideration.

(b)
 In this case, the agreement gives Wasim the option to deliver either rice or smuggled opium.
While the delivery of rice is legal, smuggling opium is prohibited by law.
 Since the legal portion of the agreement (delivery of rice) can be clearly separated from the illegal
portion (delivery of smuggled opium), the contract remains valid for the delivery of rice.
However, it is void with respect to the delivery of smuggled opium

Answer # 2

Here, Kedar Nath, trusting Gorie’s promise, signed a binding contract with Sunil Construction Co.,
incurring liabilities. Therefore, Gorie can be held liable, but only to the extent of the amount that Kedar
Nath has already incurred based on this reliance.

Answer # 3

(a)
Azam’s promise to "make Babar happy" is too vague and uncertain. As terms of agreement are uncertain,
so it can’t be enforced as a legal contract.

(b)
 First Promise (Rs. 10,000,000): The initial agreement to sell the house for Rs. 10,000,000 is a
valid and enforceable contract under the Contract Act, 1872. It has a lawful purpose, clear terms,
and lawful consideration.
 Second Condition (Rs. 50,000,000 for Gambling Use): The additional condition, where the
price increases if Babar uses the property for gambling, is not enforceable. Promoting gambling is
illegal and against public policy.

Answer # 4

(a)
The crew members were already under a duty to work on the ship as part of their job. No new
consideration was provided in exchange for the captain’s promise, which is essential for a binding
contract.

The captain’s promise is not legally binding as there was no new consideration in return; the crew was
already obligated to work on the ship.

(b)
Even if the minor misrepresented his age, the law protects minors to prevent exploitation. The principle
of estoppel does not apply to minors, meaning they cannot be held accountable for misrepresentation of
age in contracts.

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 CAF 04: Business Law
Suggested Solution – Test # 2

The moneylender cannot sue for repayment or damages due to the minor's legal protection. The contract
remains unenforceable despite the fraudulent representation.

Conclusion:
The moneylender has no legal right to recover the loan or claim damages for fraudulent
misrepresentation, as contracts with minors are void under the law.

Answer # 5

(i)
Promise to Pay a Time-Barred Debt
1. Time-Barred Debt: For a promise to pay a debt that is no longer legally enforceable (due to the
passage of time under the Limitation Act), certain conditions must be met under the Contract
Act, 1872:
o Written and Signed: The promise must be in writing and signed by the debtor or their
authorized agent.
o Amount Stated: The amount to be paid must be specified.
2. Application to Case: Raheel’s promise to pay Rs. 300,000 against a debt that became time-
barred in March 2010 would be enforceable if it is in writing and signed by Raheel.

(ii)
Promise to Pay a Family Member’s University Fees
1. Conditions for Validity without Consideration: For a promise to be binding without
consideration, it must fulfill these conditions:
o Written and Registered: The promise must be in writing and registered.
o Natural Love and Affection: It must be made out of natural love and affection.
o Near Relation: The promise must be between parties in a close relationship, such as
siblings.
2. Application to Case: Shazia’s promise to pay her brother Rauf’s university fees can be
enforceable if it is made in writing, registered, and based on natural love and affection.

Answer # 6

(a)
• Valid Contract? Yes.
• Reason: This is a valid contract as B’s promise to pay is in return for a voluntary service
that benefits B. This falls under the exception of past voluntary services.

(b)
• Valid Contract? Yes.
• Reason: This is a valid contract as B’s promise compensates A for a past voluntary act that
provided a benefit to B. A promise to pay for a past service can be enforceable.

(c)
• Valid Contract? Yes.
• Reason: This promise is enforceable as it compensates A for past expenses in supporting B’s
child, which B was legally responsible for. It qualifies under past consideration for something B
was obligated to do.

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 CAF 04: Business Law
Suggested Solution – Test # 2

(d)
• Valid Contract? Yes.
• Reason: The promise is enforceable under Section 25 as it is made out of natural love and
affection, is in writing, and is registered.

(e)
• Valid Contract? Yes.
• Reason: The promise is enforceable under if it is made out of natural love and affection, is in
writing, and is registered.

(f)
• Valid Contract? No.
• Reason: Although registered, this promise lacks natural love and affection as it references prior
disputes, indicating an absence of mutual affection. Therefore, it does not satisfy the conditions
for enforceability.

(THE END)

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