QUESTION TWO Ali owns a number of shops in Laamu. One of them is in need of complete refurbishing and re-equipping. Ali is approached by Wasim, a local builder. Wasim says to Ali 'Make me your contractor or I'll make you wish you had never been born'. Wasim makes it clear to Ali that unless he gives Wasim the contract for the refurbishment of the shop, he will harm Ali's whole Family. So Ali scared by Wasim's threats agrees that he will give Wasim the contract, with work to start in three months' time. Meanwhile, Ali's business is in need of additional capital. His Secretary Maly owns a large house, which was left to her by an aunt. Ali persuades Maly to use her house as security for a loan he is negotiating with the Laamu Bank plc, in return for which he promises to give her a share in the profits of the business. Maly, who has previously received good advice from Ali about investing some money she inherited, agrees, partly because she feels that this development makes it more likely that Ali will increase her salary or make her partner of his Company. They visit the bank together and Ali introduces Maly as 'my partner'. The bank's assistant manager tells Maly: 'You are doing well to team up with Ali. He is one of Laamu's rising stars. I must, however, tell you that you should see a legal consultant before committing yourself - not that there is anything to worry about.' Maly subsequently has a short private meeting with Ali's legal consultant, who fails to make clear the risks involved in using her house as security. Two months later, Maly realizes that Ali is never going to make her his company partner officially or give any big salary, and is regretting allowing her house to be used as security for his business loan. Advise (a) Ali as to whether he is bound to his contract with Wasim (b) Maly, as to whether she can avoid the contract for the use of her house as security regarding contract law.