ICAP CAF-4 Business Law Dynamics: mock exams and practice questions

Sample question 1 · A · Introduction to legal system

In March 2027 the Federal Government wants Parliament to pass a bill that changes the rules on borrowing money by the Federal Government. Under Article 73 of the Constitution, which statement about this Money Bill is correct?

1. A It may originate in either House, and the other House must pass or reject it within 14 days of receiving it.
2. B It must originate in the National Assembly; the Senate may recommend changes within 14 days, which need not be adopted.
3. C It must originate in the National Assembly, and it goes to the President only after the Senate has approved it.
4. D It must originate in the Senate, and the National Assembly may make recommendations on it within 14 days.

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Answer: B. Article 73 of the Constitution sets a special route for a Money Bill (a bill on matters such as the imposition of a tax, government borrowing or the Federal Consolidated Fund, Article 73(2)).

- It originates only in the National Assembly, and a copy goes to the Senate at the same time.
- The Senate may make recommendations within 14 days (Article 73(1)).
- The National Assembly considers them and sends the bill to the President whether or not it adopts them (Article 73(1A)).
- The Speaker's certificate that a bill is a Money Bill is conclusive (Article 73(5)).

A bill on borrowing by the Federal Government falls within Article 73(2), so this is a Money Bill.

Sample question 2 · B · Contract Act 1872

On 3 March 2027 Saqib Textiles emailed Mahnoor Boutique offering to sell 800 metres of khaddar at Rs 950 per metre, to be collected from Saqib's Faisalabad warehouse. Mahnoor replied the same day: 'We accept, provided you deliver free of charge to our Lahore shop.' What is the legal effect of Mahnoor's reply under the Contract Act, 1872?

1. A It is an acceptance, and the free-delivery term becomes part of the contract if Saqib stays silent.
2. B It is an acceptance of the original terms, and the delivery request is only a suggestion.
3. C It is a counter-proposal that rejects Saqib's offer, so no contract exists unless Saqib accepts it.
4. D It is a conditional acceptance that binds Saqib once received, because the parties agree on price.

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Answer: C. Section 7 of the Contract Act, 1872 requires an acceptance to be absolute and unqualified. A reply that accepts only on a new or different term (here, free delivery to Lahore instead of collection from Faisalabad) is not an acceptance. It is a counter-proposal (a new proposal under section 2(a)) and it rejects the original offer.

No contract exists unless Saqib accepts Mahnoor's counter-proposal. If Saqib refuses, Mahnoor cannot go back and accept the original offer, because it has been rejected.

Sample question 3 · C · Other business laws

Zahid lent Rs 3,000,000 to Nawaz & Co, a firm of furniture makers. Instead of interest, he receives 8% of the firm's annual profits. He takes no part in the business, and the partners do not act on his behalf. Under section 6 of the Partnership Act, 1932, is Zahid a partner?

1. A Yes, because a person who shares in the profits of a business is always a partner in it
2. B Yes, because he put money into the business and is paid out of its profits
3. C No, because a partnership exists only between persons registered as partners
4. D No, because a lender's share of profits does not by itself make him a partner

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Answer: D. Section 6 of the Partnership Act, 1932: whether a group of persons is a firm, or a person is a partner, is decided by the real relation between the parties, shown by all relevant facts taken together. Sharing profits or gross returns does not of itself make a person a partner (Explanation 1). In particular, a person who receives a share of profits as a lender of money to persons engaged in a business is not, by that alone, a partner (Explanation 2).

Under section 4, partnership also needs a business carried on by all or any of them acting for all. Zahid takes no part and nobody acts for him, so the real relation is that of lender and borrower. He is not a partner.