Certificate in Accounting and Finance Stage Examination
17 October 2024
60 minutes – 34 marks
Additional reading time – None
CAF 4 – BUSINESS LAW [TEST – 2]
Syllabus [Chapter 2]
Instructions for Candidates
1. Answer ALL SIX questions, in BLACK pen only.
2. After attempting, convert your answer script to PDF using CamScanner and upload on your LMS.
3. Take CLEAR pictures, in sequence i.e. first Q. 1 then Q. 2. First part a then part b.
Q. 1 (a) C is called to be a witness in a court trial for G, who promises to pay C some money for the trouble.
After the trial, G doesn't pay C as promised. C decides to sue G to get the money. Is C entitled to get the
money that G promised? (03)
(b) Akram and Wasim are neighbors in a small town. They have known each other for years and often
engage in trade. One day, they decide to enter into an agreement. Akram promises to pay Wasim Rs.1,000
in exchange for goods that Wasim would deliver later. The agreement states that Wasim could either deliver
rice, which is a legal item, or smuggled opium, which is illegal.
Requirement:
Is the agreement between Akram and Wasim legally enforceable? (03)
Q. 2 Kedar Nath is the secretary of a community organization in Howrah, responsible for building a new Town
Hall. Gorie Mohammad, a local businessman, agrees to contribute Rs. 100,000 to help with the
construction. Trusting Gorie's promise, Kedar Nath signs a contract with Sunil Construction Co., a local
contractor. The contract stipulates that the Town Hall will be completed within six months, and payment
will be made in four installments.
After the first installment is paid, Gorie Mohammad decides he no longer wants to contribute his promised
Rs. 100,000. Kedar Nath is now concerned about how to meet the future payments to the contractor. He
believes Gorie should be held accountable for his original promise.
Requirement:
Is Gorie Mohammad legally obligated to pay the Rs. 100,000 he promised towards the construction of the
Town Hall? (03)
Q. 3 (a) Azam runs a busy accounting firm in a bustling city. He's been looking for a qualified accountant to help
him manage the increasing workload. After interviewing several candidates, he hires Babar for the position.
During the hiring process, Azam tells Babar, "I promise to make you happy here." Babar is thrilled and
immediately resigns from his old job to start work at Azam's firm.
Requirement:
Based on the Contract Act 1872, is Azam's promise legally binding? (03)
Business Law Page 2 of 2
(b)
Azam owns a two-story house located in the prime residential area of the city. Babar, interested in buying a
property, approaches Azam. After some discussions, Azam agrees to sell the house to Babar for Rs.
10,000,000. However, they make an additional agreement: if Babar uses the house for gambling activities,
then the price for the house will be Rs. 50,000,000 instead of Rs. 10,000,000.
Requirement:
Discuss the enforceability of this agreement between Azam and Babar under the Contract Act 1872. (03)
Q. 4 (a) Two crew members left a ship during its trip from London to the Baltic and back. The captain couldn't
find replacements, so he told the remaining crew that if they worked extra hard to get the ship back home,
they would get the pay of the two who left. Was the captain's promise legally binding? (03)
(b) A minor fraudulently represented to moneylender that he was of full age, and obtained a loan of Rs.
10,000. Has the money lender any right of action against the minor for the money lent or for damages of
fraudulent representation? (04)
Q. 5 In case of each of the following situations, state the conditions, as specified under the Contract Act, 1872
which must be fulfilled to make a binding contract.
(i) In February 2014, Raheel promised to pay Rs. 300,000 to Sameer against a debt of Rs. 500,000 which
was due for payment in March 2010. (03)
(ii) Shazia promised to pay Rs. 100,000 to her brother Rauf on account of his University fees for three years.
(03)
Q. 6 State whether a valid contract is created in following cases. Also state brief reason.
(a) A finds B's purse and gives it to him. B promises to give A Rs.50.
(b) A rescued B from drowning in the river, and B, appreciating the service that has been rendered, promises
to pay Rs.1,000 to A.
(c) A supports B’s infant son. B promises to pay A's expenses in so doing.
(d) A for natural love and affection, promises to give his son B, Rs.1,000. A puts his promise to B into
writing and registers it.
(e) A registered agreement, whereby an elder brother, on account of natural love and affection, promised to
pay the debts of his younger brother.
(f) A husband, after referring to quarrels and disagreement between him and his wife, executed a registered
document in favour of his wife, agreeing to pay for separate residence and maintenance on account of
natural love and affection. (06)
(THE END)
