This paper reports on a study that was conducted to examine formative assessment as a form of assessment that promotes critical pedagogy in teaching and learning. Using Freire's notion of critical pedagogy as an analytic framework, the argument is that formative assessment should transcend grading, selection and accountability for learning and elevate each student's learning threshold. Critical pedagogy is concerned with reconstructing the traditional student/teacher relationship and developing spaces and practices that nurture dialogue and possibilities. The study adopted a case-study research design. Discussions with educators and an examination of students' workbooks provided insights about how the educators understood formative assessment and how it can be used to promote socially just education. The findings indicate that even though the teachers viewed themselves as competent in using this assessment, this was not evident in their practices as well as the views they expressed about it. They appreciated the importance of the assessment for promoting socially just education but still had some misconceptions regarding its implementation, for example, the teaching of Business Studies. The teachers' professional understanding of formative assessment as a concept and a practice highlighted the need for teacher development. If teachers are encouraged to examine their practices, this will permit them to embrace formative assessment, and to stimulate students' interest, and performance in Business Studies.