Certificate in Accounting and Finance Stage Examination
Business Law
Chapter 4
Total Marks: 30
Time Allowed: 50 minutes
Instructions:
(i) Answer all the questions.
(ii) Answer in black pen only.
(iii) Start a new question on a new page
(iv) Write the page number on top of your answer scripts.
Question 01
Sarah, a successful businesswoman, is interested in purchasing a historic property to expand her
business. She comes across an elderly property owner, Mr. Thompson, who is facing financial
difficulties and is eager to sell his property. Sarah is aware of Mr. Thompson's vulnerable financial
situation and approaches him with a contract for the sale of the property.
In the contract, Sarah includes terms that heavily favor her, such as an extremely low purchase
price and a quick closing deadline. Sarah knows that Mr. Thompson lacks legal expertise and is not
fully aware of the property's true market value. Due to his financial strain, Mr. Thompson feels
compelled to agree to the terms outlined in the contract.
Discuss the scenario under the light of the Contract Act of 1872 and explain whether Free
Consent of Mr. Thompson has been taken by Sarah or not also highlight legal implications
and remedies available to Mr. Thompson if he were to challenge the contract. (05)
Question 02
Mr. SAMANT owned a motor car. He approached Mr. CHHOTU and offered to sell his motor car for
Rs. 3.0 million. Mr. SAMANT told Mr. CHHOTU that the motor car is running at the rate of 30 KMs
per liter of petrol. Both the fuel meter and the speed meter of the car were working perfectly. Mr.
CHHOTU agreed with the proposal of Mr. SAMANT and took delivery of the car by paying Rs. 3.0
million to Mr. SAMANT. After 10 days, Mr. CHHOTU came back with the car and stated that the
claim made by Mr. SAMANT regarding fuel efficiency was not correct and therefore there was a
case of misrepresentation.
Referring to the provisions of the Contract Act, 1872, decide and write whether Mr. CHHOTU
can rescind the contract in the above ground. (06)
Question 03
Under the provisions of the Contract Act, 1872:
(a) Identify any FIVE differences between coercion and undue influence. (05)
(b) Define the term fraud and misrepresentation. And clearly distinguish between the two
with the help of relevant points. (10)
Question 04
Mark the correct answer: -
1. Jamal told Rehan that he wanted to spend his retired life in a peaceful area with green
surroundings. Rehan offered to sell his ancestral home to Jamal, located in an area known for
abundant parks and peaceful atmosphere. On Jamal’s query, Rehan told him that he is not
aware of any planned commercial developments in the area despite the fact that he knew from
a reliable source that construction of a large inter-city bus terminal was about to commence
(1)
on the land opposite his ancestral home.
Can Rehan be held liable if Jamal purchases his ancestral home?
(a) No, Rehan is not required to disclose such information to Jamal
(b) Yes, Rehan has committed a fraud against Jamal
(c) Yes, there is a fiduciary relationship between the contracting parties
(d) No, Rehan has not forced Jamal to buy his house (02)
2. Which of the following is not true
(a) Undue influence must be exercised by or against the party to a contract
(b) Coercion can be exercised by a stranger to the contract
(c) A contract is not voidable if it was caused by a mistake as to any law in force in Pakistan
(d) Duty to speak does not make silence as fraud (01)
3. Undue influence is legally not presumed in case of
(a) Guardian and ward
(b) Creditor and debtor
(c) Solicitor and client (01)
(d) Trustee and beneficiary
