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					QUESTION NO. 1

What are the meanings of the following terms:
(i)           bonafide                                          (ii)       ex-gratia
(iii)         ex-parte                                          (iv)      inter alia
(v)        pari passu                                           (vi)      prima facie
(vii)      quantum meriut                                       (viii)    ultra vires                    (04)
                                                                                                (Spring 2005 Q.1)
ANSWER NO. 1

Meanings of the terms
(i)           Bonafide                      =                   Without deceit and dishonesty
(ii)          Ex-gratia           =         Not legally required as necessary
(iii)         Inter alia          =         Among other things
(iv)          Ex parte            =         Without hearing arguments of the adverse party
(v)           Pari passu         =          Proportionately
(vi)          Prima facie        =          On first appearance without detailed inquiry
(vii)         Quantum meriut=               As much as one deserves
(viii)        Ultra Vires        =          Beyond the scope of power allowed




QUESTION NO. 2

Answer the following questions by only stating the alphabet of the most appropriate answer: M-10

i)       The negotiable instrument is a promise in writing to pay. Such promise to pay:
         a)        may be conditional
         b)        must be unconditional
         c)        depends upon the custom of that particular trade.
         d)        none of the above.

ii)      The price in a contract of sale may be:
         a)        determined by the course of dealing between the parties.
         b)        left to be fixed in a manner agreed at the time of the contract.
         c)        fixed by the contract.
         d)        all of the above.
         e)        a and c of the above.


iii)     Under the Partnership Act, a partner can retire from a partnership firm only:
         a)        by consent of all partners.

         b)        in accordance with an express agreement.

         c)        by a notice in writing to all the partners if the partnership is at will.

         d)        all of the above.
         e)        any of the above.
         f)        a and c of the above.
iv)     An unpaid seller in possession of goods sold may exercise his lien on goods until payment
        or tender of price.

        a)        where the buyer becomes insolvent.
        b)        where the goods have been sold on credit but the term of credit has expired.
        c)        where the goods have been sold under sale on return basis.
        d)        where the goods have been sold without stipulation as to credit.
        e)        a, b and d of the above.

v)      An agent under an agency contract has the right sums received on principal's account for:

        a)        advances made.
        b)        expenses properly incurred.
        c)        remuneration for acting as an agent.
        d)        all of the above.
        e)        b and c of the above.
                                                                                                            (Nov. 96 Q1)


ANSWER NO. 2



(i) b    (ii) d     (iii) e   (iv) e   (v) d QUESTION




NO. 3

i) Ali is indebted to Kamran, and Shahid is a surety for the debt. Kamran demands payment
      from Shahid and on his refusal sues him for the amount. Shahid defends the suit, having
      reasonable grounds for doing so, but is compelled to pay the amount of the debt with costs
      of the suit.                                                                       M-3
      Based on the above case, which one of the following is the best answer?
        a)        Shahid can recover from Ali, the amount paid by him for costs, as well as the principal debt.
        b)        Shahid can recover from Ali, only the amount of the principal debt.
        c)        Shahid can recover from Ali, the amount of principal debt plus one-half the costs for defending the
                  suit.
        d)        Shahid cannot recover any amount from Ali since, under the law, a surety cannot recover any
                  amount from the principal debtor.

ii)     Kamran lends a sum of money to Ali, and Shahid, at the request of Ali accepts a bill of
        exchange drawn by Ali upon Shahid. Kamran, the holder of the bill, demands payment of it
        from Shahid and, on Shahid's refusal to pay, sues him upon the bill. Shahid, not having
        reasonable grounds for so doing, defends the suit, and has to pay the amount of the bill and
        costs of the suit. M-3

        Based on the above case, which one of the following is the best answer:
        a)        Shahid can recover from Ali, the amount paid by him for costs, as well as the amount of the bill.
        b)        Shahid can recover from Ali, only the amount of the bill.
        c)        Shahid can recover from Ali, the amount of the bill plus one-half of the costs for defending the suit.
        d)        Shahid cannot recover any amount from Ali since, under the law, a surety cannot recover any
                  amount from the principal debtor.

iii)    Which one of the following statement is true:                                                             M-3
        a)        a person who is usually of unsound mind, but occasionally of sound mind may make a contract
                  when he is of sound mind.
        b)        a person who is usually of sound mind, but occasionally of unsound mind may not make a contract
                  when he is of unsound mind.
      c)     both of the above.
      d)     none of the above.
                                                                                          >

iv)   Which one of the following would amount to fraud:-                                                       M-3
      a)     the suggestion, as a fact, of that which is not true by one who does not believe it to be true.
      b)     the active concealment of a fact by one having knowledge or belief of the fact.
      c)     a promise made with an intention of performing it.
      d)     all of the above.
      e)     one and two of the above.
      f)     two and three of the above.
      g)     one and three of the above.
v)    When consent to an agreement is cased by coercion, then:-                                                M-3
      a)     the agreement is a contract voidable at the option of the party whose consent was so caused.
      b)     the contract is not voidable.
      c)     the contract becomes void.
      d)     the contract was void ab initio.
      e)     the agreement can become a valid contract, subject to arbitration.
                                                                                                    (May 96 Q4)

ANSWER NO. 3


i)     (a)               ii)       (b)                    iii)   (c)                iv)       (e)               v)(a)


QUESTION NO. 4

Aslam borrowed Rs 10,000 from Ahmed and simultaneously wrote down and signed the following on a piece of
paper and handed it over to Ahmed.

On demand I promise to pay Ahmed or order Rs. 10,000/-.

      DATE: 15-10-1995                                                                        Signature of Aslam

      Place: Islamabad

Assuming that the above document has been properly stamped, which of the following is the best answer?

a)    The document is a promissory note, and the primary body of law governing the same would be the
      Negotiable Instruments Act, 1881.
b)    The document is a cheque, and the primary body of law governing the same would be the Contract Act,
      1872.
                                                                                                                        i

c)    The above document is illegal because attestation of a Notary Public has not been obtained.
d)    The above document is illegal because it is hand-written.
e)    All of the above are untrue.                                                                           M-3
                                                                                                    (Nov. 95 Q5)

ANSWER NO. 4

This question requires the examinee to have in mind the following essentials to constitute a promissory note
within the meaning of S.4 of Negotiable Instruments Act, 1881.
i)    An instrument (in writing)
ii)    An unconditional undertaking to pay

iii)   A certain sum of money.
iv)    A certain person or to order of.
v)     The document should be signed by the person making it.
Keeping these criteria in mind we see that answer in clause (a) is the correct answer.




QUESTION NO. 5

Amir borrowed Rs 100,000.00 from XYZ Bank. In this regard, Anwar guaranteed repayment of Amir's
indebtedness to XYZ Bank. Prior to maturity and without the consent of Anwar, XYZ Bank Amir agreed to
reschedule the loan by increasing the rate of mark-up by two percent (2%) and extending the maturity date by
two years. Subsequent to rescheduling, Amir defaulted in his obligations to XYZ Bank. XYZ Bank instituted legal
proceedings against both Amir and Anwar. Which of the following is the best answer?
a)     The liability of Anwar is co-extensive with that of Amir.
b)     Anwar would not be liable to XYZ Bank as the contract between XYZ Bank and Amir was varied without
       the consent of Anwar.
c)     Anwar would be liable to XYZ Bank regardless of the variance in the contract without his consent as he
       had agreed to guarantee the obligations of Amir.
d)     Anwar would be liable to XYZ Bank as a contract of guarantee should be liberally construed.
e)     None of the above statements have any sound basis in law.
                                                                                                      (Nov. 95 Q4)

ANSWER NO. 5

In this case the material to be considered is the legal consequences of variation in the contract without consent of
surety S.133 of contract is the relevant section. The answer in cl.(b) is the correct answer, because variance in
the terms of contract without surety's consent discharges surety as to subsequent transactions.

QUESTION NO. 6

As Akbar had to leave the country on a business engagement for a period of one month, he executed a Power of
Attorney in favour of Ahmed for the stated purpose of empowering Ahmed to sell Akbar's house to any person
and upon such terms as Ahmed may decide. As Ahmed is a good friend of Akbar, he agreed to try and sell
Akbar's house without receiving any compensation for the same.
Which of the following is the best answer?

a)     Under the Contract Act, 1872, the relationship between Akbar and Ahmed is that of principal and agent.
b)     Akbar may revoke the Power of Attorney at any time.
c)     Third parties could rely on the Power of Attorney even though no consideration was paid by Akbar to
       Ahmed.
d)     All of the above are true.
e)     None of the above is true.                                                                            3
                                                                                                      (Nov. 95 Q3)

ANSWER NO. 6

a)     In this case the relationship between Akbar & Ahmad is that of Principal and agent - No consideration is
       necessary for the formation of Agency.

b)     Akbar can not revoke power of attorney after the same has been exercised.
c)    For the formation of an enforceable contract there must be consideration. The 3rd party can not rely or the
      power of Attorney. The best possible answer is clause (a) because even if the agents' acts are detrimental
      to the interest of the principal he is liable to the principal.


QUESTION NO. 7

Big Ticket Power Company Limited (thereafter, "Big ticket"), incorporated under the Companies Ordinance, 1984,
entered into a Memorandum of Understanding (hereafter, "MOU") with Power Generation Equipment Company
(hereafter, "Power Generation"), a company incorporated under the laws of United States, for the purpose of
Power Generation supplying to Big Ticket the equipments for setting up a 5000 mega watts power plant at
Paradise Point, near Karachi. The following, among other matters, were specifically described in the MOU:
1.    The identity, quality and nature of the equipments.
2.    The delivery of the equipments to Paradise Point shall take place on January 1, 1996.
3.    The price to be negotiated, discussed and agreed at a future date between the parties.
4.    The MOU to be governed by the laws of Pakistan.


Which of the following is the best answer?

a)    The MOU is a binding contract enforceable against the parties thereto as there is no ambiguity in it with
      respect to the description of the equipments and the date of delivery.

b)    The MOU does not constitute a binding contract as the parties have not agreed on the price.
c)    The MOU is unenforceable as in law all MOUs are nonbinding.

d)    The MOU is void as all equipments for the power sector have to be purchased from local suppliers.

e)    None of the above.                                                                                M-3

                                                                                                    (Nov. 95 Q2)
QUESTION NO. 9

Choose the correct answer:

a)    Consideration to be valid must be:                                                           M-2

      i)     payable in legal tender.

      ii)    simultaneously paid and received.

      iii)   legally sufficient.

      iv)    of the same economic value.

b)    On January 1, Rahman sent a telegram to Rahim offering to sell him a car. The offer
      required that Rahim's acceptance telegram must be sent by January 3, 5 p.m. On January
      3, at 3 p.m. Rahim sent his acceptance letter, which was received by Rahman on January
      5, Rahman refused to sell the car. Is there an enforceable contract?           M-2

      i)     Yes, because acceptance letter was sent to time.

      ii)    No, because Rahim did not accept by telegram.

      iii)   Yes, because acceptance was effective when sent.

      iv)    No, because acceptance was not received within time.

c)    Javed offered in writing to sell a piece of land to Sami for Rs. 5 lakh. If Javed dies, the offer
      will:

      i)     terminate prior to Sami's acceptance only if Sami received notice of Javed's death.

      ii)    remain open for a reasonable time after his death.

      iii)   automatically terminate despite Sami's prior acceptance.

      iv)    automatically terminate prior to Sami's acceptance.
d)       Sale of goods by a person, who is not the owner gives a valid title to the buyer, if:

         i)     buyer is not aware of the fact and buys innocently.

         ii)    sale by a mercantile agent in possession of the goods with owner's knowledge.

         iii)   sale by a mercantile agent without owner's consent.

         iv)    sale by a mercantile agent with buyer's knowledge that the agent has no authority.

e)       Ordinary difference among partners may be decided by:

         i)     arbitration.

         ii)    a majority of the partners.

         iii)   partners controlling more than 50% shares.

         iv)    reference to registrar.
                                                                                                     (April 95 Q1)

ANSWER NO. 9

a) iii              (b) i                     (c) i                        (d) ii                    (e) ii

				
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