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ICAP PRC-3 Business and Economic Insights study materials
ICAP PRC-3 Business and Economic Insights study resources

ICAP PRC-3 Business and Economic Insights: Business law and regulatory environment

ICAP PRC-3 Business and Economic Insights · Work through your exam, one topic at a time.

All guide sections

Business law and regulatory environment

This domain tests the legal scaffolding around business in Pakistan: contract formation, the Companies Act 2017, agency and sale of goods basics, and the regulators that enforce them.

Core concepts

  • Contract (Contract Act 1872): offer, unconditional acceptance, consideration, intention to create legal relations, capacity, lawful object and free consent. A display of goods is an invitation to treat, not an offer. Consent is vitiated by coercion, undue influence, fraud, misrepresentation or mistake - voidable; an unlawful object makes the agreement void.
  • Companies Act 2017: incorporation through SECP, memorandum and articles as the constitution, share capital rules, directors' duties of good faith and avoidance of conflict, disclosure of interest in transactions, meetings and resolutions, and winding up. A company is a separate legal person; directors are its agents, not its owners.
  • Directors' conflicts: an interested director must disclose and typically abstain; failure can render the contract voidable and expose the director to liability.
  • Other statutes: Partnership Act 1932 (liability of partners), Sale of Goods Act 1930 (conditions versus warranties), Negotiable Instruments Act 1881 (cheques, bills), labour and tax legislation.
  • Regulators: SECP (corporate and securities), SBP (banking), FBR (tax), Competition Commission of Pakistan (abuse of dominance and anti-competitive agreements under the Competition Act 2010).

Worked example

A writes offering to sell machinery, and B posts an acceptance; A telephones to revoke before the letter arrives. Where the post is a contemplated mode of acceptance, acceptance is complete against the offeror on posting, so a contract already exists and the revocation is too late. The reasoning: identify offer, acceptance, communication rules, then remedy.

Traps that cost marks

Treating an invitation to treat as an offer; requiring consideration to be adequate rather than sufficient; assuming a director's conflict can be cured later without disclosure.