FEDERAL PUBLIC SERVICE COMMISSION

COMPETITIVE EXAMINATION - 2017

FOR RECRUITMENT TO POST IN BS - 17
UNDER THE FEDERAL GOVERNMENT

MERCANTILE LAW
PART - II

Q. 2 Discuss the circumstances in which the veil of incorporation may be pierced in Pakistan
referring to the relevant case law and statutory provisions. (20)

Q. 3 Describe the legal rules and limitations for altering the memorandum and articles of
association of a company. (20)

Q. 4 Describe the features of partnership and the legal status of a minor partner in a
partnership. (20)

Q. 5 Discuss the creation and legal effects of agency relationship in law. (20)

Q. 6 Distinguish negotiable instruments by statute and explain the liability of parties to

these instruments. (20)

Q. 7 discuss the nature and scope of section 4 of the Competition Act 2010 regarding
prohibited agreements. (20)

Q. 8 In presence of an arbitration agreement discuss the legal aspects of the power of the
judicial authority to stay legal proceedings under the Arbitration Act 1940. (20)

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MERCANTILE LAW

Q 2. Define Endorsement. Explain its kinds. (20)

Q.3 What do you understand by partnership? Elaborate the points of difference between
partnership and company. (20)

Q.4 Define Contract. Explain the contracts which need not to be performed. (20)

Q.5 What do you understand by implied authority of a partner as an agent of the firm? Are
there any acts which he cannot do under his implied authority? (20)

Q.6 Discuss the composition and functions of Competition Commission of Pakistan under the
Competition Commission Act, 2010. (20)

Q.7 "None can transfer a better title like than he himself has". Are there any exceptions to
this rule? (20)
Q.8 Explain the terms and conditions of Transfer under the Electronic Fund Transfer Act
2007. What disclosures are required under such transfer? (20)
Mercantile Law Paper 2015

Q.2 Briefly explain the modes of winding up of a company.

Q.3 Explain the provisions pertaining to the notice of dishonour of a negotiable instrument.

Q.4 How a firm is registered? What is the effect of non-registration of a firm?

Q.5 When the property in the goods stands transferred from the seller to the buyer?

Q.6 What are the different powers of an arbitrator under the Arbitration Act, 1940? What
are the circumstances under which a

court can remove an arbitrator?

Q.7 When consent is said to be free?

Q.8 Write short notes on any TWO of the following:

(a) Consequences of a breach of contract

(b) Indemnity and Guarantee

(c) Condition and Warranty

MERCANTILE LAW 2014

Q.NO. 02 What is misconduct? What remedy is open to the litigating party against whom an
appointed arbitrator or umpire commits misconduct? Discuss.

Q.NO. 03 What are qualifications, powers and liabilities of director of public limited
company? In what circumstances his office falls vacant?

Q.NO. 04 What are rules of evidence relating to negotiable instrument?

Q.NO. 05 When does communication of proposal, acceptance and revocation become

complete? How revocation is made?

Q.NO. 06 What is legal status of a contract entered into by a minor ? Is is enforceable by

law? If so, under what circumstances?

Q.NO. 07 What do you mean by implied authority of partner? Discuss liability of firm for
partner's act?

Q.NO. 08 " A seller cannot convey a better title than he himself has". Are there any
exceptions to this rule? Discuss.
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Re-Examination of Competitive Examination
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Mercantile Law
Q.No.2. Write short notes on any Four of the following. (5 marks each ) (20)

a) Misrepresentation
b) Member (in relation to a company)
c) Holder in due course of negotiable Instruments
d) General duties of partners
e) Right of stoppage in transit
f) Re-Insurance

Q.No.3. Write essay on any TWO of the following (10 marks each) (20)
a) Voidability of agreements without free consent
b) Memorandum of company limited by guarantee
c) Presentment for payment of negotiable Instruments

Q.No.4. Write comprehensive note on any TWO of the following:- (20)

a) Mutual rights and liabilities of the partners
b) Reservation of right of disposal
c) Interest when no rate specified

Q,No.5. Discuss the consequences of breach of contract, compensation for failure to

discharge obligation those created by contract, compensation where penalty stipulated for
contract has been broken with examples.(20)

Q.No.6. Distinguish between statutory meeting, annual meeting and extraordinary meeting.
Discuss requirement, frequency and aims of the meetings in accordance with the provision
of law. (20)

Q.No.7. Discuss duration of transit, right of stoppage in transit and how stoppage in transit
is effected under section 50, 51 and 52 of the Sale of Goods Act, 1930. (20)

Q.No.8. Differentiate between dissolution by the Court, by agreement, by notice of

partnership at will and compulsory dissolution. Discus complete process of dissolution of the
firm under the partnership Act, 1932. (20)

mercantile law paper 2012

Q.2 section 10 of the contract act says that "all agreements are contracts if they are made
by the free consent of the parties competent to contract, for a lawful consideration and with
a lawful object, and or not expressly declared to be void'. explain fully what is intended by
the wording 'not expressly declared to be void'. be brief and to the point.

Q.3 discuss the circumtances under which a contract is discharged.

Q.4 what rights are conferred on an unpaid seller ? explain an unpaid seller's lien. under
what circumstances an unpaid seller loses his lien?

Q.5 explain ' sale by auction'. when does title of goods passes from he seller to a buyer in
an auction sale?

Q.6 how would a court determine the existence of a partnership ? explain the principle laid
down in Cox v . hickman.

Q.7 discuss the significance of 'resolutions' in regulating the affairs of a company . explain
what is meant by the doctrine of ultra vires a company?

Q.8 who may be appointed as an arbitrator? describe the powers of an arbirator under the
arbitration act, 1940.

PART 2:
Attempt only four questions:

Q2: Discuss the statutory liablity both civil and criminal which arises as a result of untrue
statement in a prospectus.

Q3: What are the modes in which maker, acceptor or endorcer of a negotiable insturment is
discharged.

Q4. How will u distinguish a mistake of fact from a mistake of law. Discuss their legal effect
on contract.

Q5. What is meant by expression Passing of Property? Discuss the law which governs the
transfer of property as between the seller and the buyer.

Q6. Discuss the scope and extend of powers of a judicial authority to stay legal proceedings
where there is an arbitration agreement. Elaborate as to what amounts To taking any steps
in the proceedings.

Q7. Write a comprehencive note on the relations of partners to one another.

Q8. write short notes on any two of the following:

A. Insurance appellate tribunal b. Feduciary relationship. C. Goodwill.

Mercantile Law Paper 2010

Q2. what is the difference between Memorandum and Article of association of a company?is
it essential to register the article of association signed by the subscribers to the
memorandum?what is the alternative if these are not registered?

Q3. loans by a Co. Ltd by shares,other than a Pvt Co.,on the security of its own shares to a
person to enable him to purchase its own shares is strictly prohibited.what are its
exceptions?what action can be taken in case of a contravention?

Q4. a-what do you understand by the expression Caveat-emptor?

b-define a warranty & distinguish it from a condition with reference to a contract of the
Sales of Goods Act?

Q5. define dissolution of a firm.explain various modes of dissolution of a firm?

Q6. state the rules for determining partners mutual relations.explain fully.

Q7. what are void and voidable agreements?state fully,quoting law.

Q8. define and explain consent & free consent.is it essential for validity of a contract
that the consent be free?what do you mean by the parties ad idem?

PART - II

Q.2. a) All contracts are agreements but all agreements are not contracts. Please justify.
(10)

b) Give five examples of such agreements which are declared to be void under the contract
Act, 1872. ' (10)

Q.3 a) When will consent of a party to a contract be deemed to have been caused by
coercion? (10)

b) Whether threat to commit suicide by. husband will amount to coercion against wife in a
contract between them? Comment. (10)

Q.4 a) A and B contract to marry each other. Before the time fixed for the marriage, A goes
mad. What type of contract it becomes? (10)

b) (i) Can A, who is pleader, recover fee from his client B, when there was no express
agreement as to the remuneration for the services rendered? Justify your reply. (5)
(ii) A, gratuitously saves B's property from fire. Is A entitled to any compensation for it
from
B? (5)

Q.5 a) Jewellery was pledged with a money lender as security. The lender gave it to his wife
for putting it on a marriage. While returning from the ceremony, she was attacked by
dacoits
and robbed of it. Was the money lender liable for making good the loss to the loanee after
such
incident? Comment. (10)

b) What are the rights of the Pawnee in respect of the thing pledged? (10)

Q.6 What statutory restrictions are imposed on the alteration of articles of association of a
company? (20)

Q.7 a) What remedies are available to a buyer when the seller delivers him goods less
than/or more than the quantity contracted? (10)

b) A purchased a pole for his carriage from B, While A was driving the pole due to a latent
defect, broke and the horses got frightened and injured. Is any remedy available to A in
such a case? Comment" (10)

Q.8 a) In what cases, a party to the arbitration agreement may appoint his own appointed
arbitrator to act as sole arbitrator in the reference? (10)

b) Define the following: (10)

(i) Drawee (ii) Payee (iii) Accommodation Bills (iv) Blank instrument (v) Cross cheque

Mercantile Law Paper 2008

 X agreed in writing to sell 120 acres of land to Y for Rs. 3 Million. The purchase price was to
be paid in three installments: a first of 1.6 million Rs., followed in twelve months by a
second of Rs. 0.7 Million and then, after further twelve months by a final payment of Rs. 0.7
million. It was further provided that 'on the occasion of each completion a propotionate part
of theland shall be released forthwirh to Y'. The parties provided no machinary for the
allocation of the propotionate parts. What is the legal effect of the agreement? Support your
answer with arguments discussing the question of law involved.

Q-3 Ahmad who was admitted in a hospital, was required to undergo a surgery, before his
operation he agreed to sell his house which was already listed for sale, to his doctor for Rs.
9.7 million. The market price of the house was Rs. 10 million. After the successful operation
Ahmad rescinded the agreement alleging "Undue influence" by the doctor. Can he succeed?
Explain keeping in view the ingredients of undue influence as laid down in the Contract Act,
1872.

Q-4 JK goes to the show room of Nasir a car dealer, and after looking at various models, he
agrees to buy a Honda Civic car. The car breaks down four times during the first month and
JK wished to know whether he has any remedies against Nasir. Advise him in the light of
Sales of Goods Act, 1930.

Q-5 Describe the general principle in determining the existence of partnership? Compare the
principle with the rule laid down in Cox v. Hickman.

Q-6 R signed a document in these terms 'in consideration of the loan of Rs. 1000/- from W;
I, R agree to repay W the sum of Rs.1000/- on or before December 31, 2007". Whether the
above document can be treated as a promissionary note? Give the specifics of a
promissionary note.

Q-7 Explain the status and significance of Articles of Association of a company. The articles
of a private company provided that 'every member who intends to transfer shares shall
inform the Directors who will take the said shares ... at a fair price'. The plaintiff held 725
fully paid up shares of Rs.10/- each and he asked the directors to buy them but they
refused. Were the directors bound to take the shares? Give reasons?

Q-8 Explain the essentials of a valid award. A ship called Tanais was chartered for a voyage
between Canada and Italy. A clause in the charter party provided for disputes to be settled
in London. A dispute arouse and the owners of the Tanais asked the charterers to agree on
an arbitrator but the charterers would not concur in an appointment. Suggest solution
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MERCANTILE LAW

TIME ALLOWED: THREE HOURS MAXIMUM MARKS:100

1. Aftab, Bashir and Chinar are partners in computer business. The terms of the partnership
agreement provided that the business of the firm is to buy and sell used computers. At the
beginning of December 2006, Chinar retired from the firm. Notice was placed in the
newspapers and existing clients were informed of the retirement. In the middle of December
2006 Dilawar joined the firm. In early January 2007 the partners were surprised to receive
delivery of an on invoice for some very expensive computers, which had been purchased in
the firms name by Chinar, shortly before his retirement. At the end of January 2007 Aftab
departed from the firm without notice, taking with him Rs. 4000,000 which had been left
with the firm by a client who wished the partnership to obtain some computers for him. How
far can the firm and/or the individual partners be made liable for:
(a) Payment for the computers
(b) The missing Rs. 4000,000

2. Adnan has entered into a partnership with Basharat and Chohan to operate a motor parts
manufacturing company. While Basharat and Chohan are out of town, Adnan signs the
following contracts, on behalf of the partnership:
(a) Contract for a Rs. 1000,000 loan from Bank of the West
(b) A contract to purchase an adjoining piece of real estate to build a new parking lot for the
company employees.
Furhermore, Adnan opens a new bank account for the business at the Utility Bank Limited.
Assuming that Adnan and the partnership breach their obligations under the two contracts
and Adnan makes some unauthorized withdrawals from the new bank account, please
discuss whether or not the partners (BAsharat and Chohan) and the partnership are likely to
be liable to the third party and the bank.

3. Hashim is a promoter in the process of forming a private limited company. He seeks your
advice on the following matters.
(a) Hashim has bought a piece of land which he wishes to sell to the company once it is
formed. He paid Rs. 4000,000 for the land but expects the company to pay him Rs.
5000,000 for it. He wishes to know if he can do this and what, if any, duties he owes to the
company in respect of the sale.
(b) Before he registers the company, Hashim wishes to know what restrictions there might
be on freedom to choose the companys name.

4. Aslams mate from the housing scheme he lives in, Bilal, has told Aslam that he should
never do business as a company, because in this country if you form a company, you gain
no advantages and spend the rest of your life dealing with red tape, worthless meetings,
and the like. Would you share Delawars sentiments? Discuss.

5. On January 10, 2007, A, a manufacturer of plastic products, sent a purchase order to B,

As regular supplier of raw plastic. The purchase order included a provision requiring that B
shall deliver the plastic on February 15, 2007. The Bs acknowledgment provided that
delivery would occur on March 1. 2007. When does the contract require seller to deliver the
goods? Discuss.

6. Javed advertises a kitchen table and chairs for sake in the newspaper classified. Aslam
answers the ad, and comes over to pick up the furniture and pay for it. After Aslam has paid
Javed, he realizes that none of the furniture will fit in the back of his car. So Aslam leaves
the furniture inplace and decides to quickly go borrow a truck from a friend and return.
However, during the interim, the furniture is destroyed when Javeds house burns down.
Aslam demands a refund of his payment which Javed straight away refuses. What would
you advise Aslam to file a suit in a court or a reference with an arbitrator? Which of these
two modes would be suitable i.e. swifter and less expensive for Aslam to adopt in this
situation?
7. One day this spring A awoke in the morning and looked out his window while B, his
neighbor who was a painter, painting outer walls of the As house. Isnt that nice, A
thought as he rolled over and went back to sleep, B want to make a good impression as a
helpful neighbor.
Later that day, B knocked at As door and asked for Rs. 2000 for the painting work. A told
him, Go away. I always myself paint my house. I never asked you to paint for me. The
going rate for the painting done by B is Rs. 1500. Is there any contract between A and B? If
so is A contractually obligated to pay B Rs. 2000 or Rs. 1500? Discuss.
MERCANTILE LAW
(CSS 2005)

TIME ALLOWED: THREE HOURS MAXIMUM MARKS: 100

Tariq works for a book publisher, taking orders for books and delivering books to the bookshops
throughout North West Frontier Province. The customers pay for the books by sending payment
direct to the publisher and Tariq has no authority to accept any payments. However, Hamid, the
owner of the City Book Mart, has given payment for books to Tariq on a number of occasions
and the publisher has not objected. A few weeks ago Hamid bought large quantity of books and
gave Tariq cash. Tariq has disappeared with the money. The publisher is threatening to sue
Hamid for the price of the books. Advise Hamid.
Javed, Murad and Danish carry on business in partnership as painters and decorators. The
business was started with a loan from Javeds father Bashir, which the partners are still re-
paying. The firm has two employees, Raheel and Mubashir, who, although not partners, are
treated as trusted members of the firm and have their names alongside those of the partners on all
of the firms stationery. Recently the firm has had some difficulties. Javed was working at a
customers house using a blow-lamp to strip paint from the window frames, when he
accidentally set fire to the wood and the house was badly damaged. Meanwhile, Murad was
holding a ladder for Danish but accidentally let it slip, so that Danish fell and was injured. It has
also come to light that Danish had taken money from a customer in order to buy paint and
wallpaper, but instead he kept the money for himself. The tow customers and Danish are
threatening to sue the firm, the partners, Raheel, Mubashir and Bashir, for the loss and injury
they have suffered. Advise the parties as to their potential liability.
Sardar, the owner of a small computer shop, bought a consignment of computers from Shahbaz.
The computers turned out to be defective and did not conform to the specification that Sardar had
been led to expect. Sardar had assumed he was dealing directly with Shahbaz, who had not
indicated that anyone else was involved in the transaction. However, when Sardar confronted
Shahbaz about the defects in the computers, Shahbaz told Sardar that he had been selling the
machines on behalf of Chips & Bytes (Private) Limited and added that any defects were not his
responsibility as he was only an agent. Sardar has made inquiries and discovered that Chips &
Bytes (Private) Limited have now gone into liquidation. Advise Sardar.
A and B agree to run a tution centre on the partnership basis. In one of the clauses of their
adjudication. In a dispute which was being settled by two arbitrators appointed by them, A
noticed that his arbitrator appointed is unjustifiably favouring B. A doubts that his arbitrator
might have been bribed by B, therefore, he does not expect any justice from him. How can he get
rid of his arbitrator ? What would you advise him in these circumstances?
Hightech (Private) Limited manufactures and sells computer modems. Goonline (Private)
Limited is an internet service provider that requires a large and complex modem to serve its
customers. Due to high demand, Goonline (Private) Limited is planning to expand its customer
base from 10,000 subscribers to 15,000 subscribers. 10,000 of the subscribers can be handled by
the existing modems that Goonline (Private) Limited already has. However, in order to
accommodate the additional 5000 subscribers, Goonline (Private) Limited contracts with
Hightech (Private) Limited to purchase 5 additional modems at a cost of Rs. 2000 each. The
contract specifies a delivery date of 1 March. Goonline (Private) Limited spends Rs. 1000 in
advertising during the month of February announcing the planned service, and is confident that it
will be able to sign up an additional 1000 subscribers in the month of March after installation of
the new modems. On 1 February, Hightech (Private) Limited calls and repudiates stating that it is
unable to meet the 1 March delivery due to backlog of orders, but would be able to deliver by 1
April. Goonline (Private) Limited chooses to wait for the delivery by 1 April. After the modems
are delivered and installed, Goonline (Private) Limited brings an action for the lost revenues
from an anticipated 1000 subscribers over the month of March (Rs. 20,000), the cost of
advertising during the month of February (Rs. 1000), and the cost of advertising during the
month of March (Rs. 1000). Which, if any, of these costs is recoverable ?
Hassan Seeds(Private) Limited is a supplier of Soya Beans seeds. Fahad contracted with Hassan
Seeds(Private) Limited for the delivery of one ton of Soya Bean seeds, for delivery at Fahads
plant. After delivery, Fahad began the process of inspecting the Soya Beans seeds for quality.
The inspection testing procedure is involved, and usually takes several weeks to complete
because it involves growing at least some of the seeds. After one month, Fahad noticed several
defects in the seedlings that were growing. Fahad immediately notified Hassan Seeds (Private)
Limited of the defects, and rejected the entire lot. Hassan Seeds(Private) Limited come to you for
advice concerning a possible action of breach against Fahad. Specifically, Hassan asks you
whether Fahad has accepted the seeds, or properly rejected the seeds. How do you advise Hassan
Seeds(Private) Limited ?
Tanweer, who owns a shop selling electrical goods, received an offer from Lowprice Electrical
Wholesalers to sell him 50 washing machines at a discount price of Rs. 700 each. The following
morning, Tanweer posted a letter to Lowprice Electrical Wholesalers accepting their offer,
unaware that, at the same time, Lowprice Electrical Wholesalers had sent him a letter
withdrawing the offer. Lowprice Electrical Wholesalers is now refusing to deliver the washing
machines. Tanweer also received a letter from Salams Discount Warehouse, offering to supply
him with 20 freezers at Rs. 1200 each. The letter stated that Salams would assume their offer
had been accepted if they did not hear to the contrary from Tanweer within 5 days. Tanweer,
who did not want the freezers, ignored the letter but Salams Discount Warehouse have now
delivered the freezers to his shop. Advise Tanweer of his legal position in respect of both
Lowprice Electrical Wholesalers and Salams Discount Warehouse.
EXAMINATION, 2004
MERCANTILE LAW.
TIME ALLOWED: THREE HOURS MAXIMUM MARKS: 100

NOTE: Attempt FIVE questions in all including QUESTION No.8 which is COMPULSORY.
Allquestions carry EQUAL marks.

1. A firm of building contractors had contracted to build 50 houses in 10 months. The work
took 20 months to complete because of the lack of skilled labour. The contractors pleaded
that the contract price was not bninding on them, and that they were entitled to 3 greater
sum on the basis of a quantum meruit in view of the extra labour costs involved because
the contract had been frustrated. What are you Comments?

2. Mr. Zulfiqar was offered the post of Professor of Law at X University on the condition that
he would get his practicing licence cancelled to cease law practice. Mr. Zulfiqar did not agree
to cease to practice. On this the University authorities refused to employ him in the post.
Can Mr. Zulfiqar succeed in the suit brought by him against the University for getting the
job? Explain.

3. A company had power under its * Memorandum'"to sell or lend all kinds of railway
plant and to carry on the business of mechanical engineers and contractors". Its directors
agreed to build a dam to produce hydra 1 power in country T and this agreement was
ratified by the company. Develop your answer keeping in view the legal importance of the
object clause in a memorandum of a company.

4. A. the holder of a bill transfers it to B, without consideration. B also transfers it to C

without consideration. C transfers to D for value. D transfers it to* E without consideration.
Discuss the rights of E against A, B, C and D.

5. Write a detailed note on the different modes of dissolution of a firm.

6. Discuss the law regarding appointment of Umpire. Can the court remove the umpire and
under what circumstances?

7. Is the insurer liable in the following cases?

(a) A takes a policy on his life and later commits suicide.
(b) A takes a policy on his wife's life and discovers her She dies. FEDERAL PUBLIC
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MERCANTILE LAW

1. Asif and Babar carried on a business of household furniture under the name Asif &
Babars. The partnership was dissolved in April 1999, but Babar carried on the business
under the same name. In 2001 Karigar (Pvt) Ltd. which had not previously dealt with Asif &
Babars, obtained an order to supply them with six suits of furniture. The price was never
paid, and the company obtained judgment for the recovery of the price against Asif &
Babars, and sought to enforce it against Asif. The only knowledge which the company had
of Asif was that his name has appeared on some old headed notepaper (used before the
dissolution), which had been used by Babar without Asifs authority in confirming the order
for the purchase of the furniture, and which Asif had failed to destroy before he left the
firm. Is Asif liable to Karigar (Pvt) Ltd? Why or why not?

2. The Law treats a registered company as a separate legal person from its members. To
this general rule there are several exceptions. Examine the statement by giving two
examples of circumstances in which the court will look at the reality behind the legal
faade.

3. Aftab subscribed for shares in Overseas Trade Ltd. on the basis of the prospectus which
showed that for the previous five years the company had earned substantial and increasing
profit. Shortly after allotment he sold half of his shares to Bilal at a large profit. The
information in the prospectus was correct but it omitted to mention that much of the
business was in the Middle East and because of war in that region the profits had been
materially reduced. The shares are now half the price paid by Aftab.
Compare and contrast the remedies available to Aftab and Bilal in such a situation.

4. How is a contract affected by a unilateral mistake of fact? Discuss in detail.

5. Arif purchased a used car from Green Motors. He asked the seller if the car had ever
been wrecked in an accident. The salesperson of the Green Motors Ltd. had never seen the
car before that morning and knew nothing of its prior history, but quickly answer Arifs
question by saying, No! It has never been wrecked in an accident. In fact the care had
been seriously damaged in an accident and, although repaired, was worth much less than
the value it would have had if there had not been any wreck. When Arif learnt the truth, he
sued Green Motors Ltd. and the salesperson for rescinding the contract on the basis of
fraud. They raised the defence that the salesperson did not know that the statement was
false and had not intended to deceive Arif. Did the contract of the salesperson constitute
fraud? Why or why not?

6. Compare the status of the finder of a lost cheque with the status of the finder of a lost
watch. Discuss in detail.

7. There was a dispute between Ali and Bashir which they referred to an arbitrator. The
arbitrator decided for Bashir. A law graduate nephew of him told him that, unlike a
judgment of a court of law, the award of an arbitrator cannot be executed by a court.
Can he involve a court in the execution of such award? How? Under which Law? Advise him
in detail.
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MERCANTILE LAW

1. Jamal Khan and Kamal Khan have planned to start a business of groceries in partnership.
They have agreed that in case of any future dispute between them they will never go to a
court of law for decision instead they will do their utmost to get their disputes settled by
some means outside the court. What do you think how can they seek their purpose? How
would you advise them?

2. Gama, Maja and Billoo were in partnership as hairdressers. On 8th April, 2002, Billoo
retired from the partnership. A few days later, Gama and Maja bought in the firms name an
expansive laser hairdressing machine to replace their traditional machines. On 17th April, a
van arrived with a delivery of seven hairdressing chairs. The van driver showed them a
purchase order in the firms name, dated 3rd April and signed Billoo. Gama and Maja are
refusing to pay for the chairs. They have also failed to pay for the laser hairdressing
machines and the firm is in severe financial difficulties. Both suppliers are threatening. Are
they bound to pay for both of the transactions? Discuss.

3. Jamal steals a bill of exchange and forges the signature of the payee on the reverse of
the bill. He then transfers it for value to Bilal who takes it in good faith without being aware
of the forgery. Bilal transfers the bill to Kamal. The payee discovers that Kamal is in
possession of the bill and he demands that Kamal return it to him. Who is legally entitled to
the bill and why? Would it make any difference to your answer if the payee had been aware
that Jamal had taken the bill but had done nothing about it until he heard that Kamal was in
possession of it?
4. Dilawar Khan and Badam Gul are in partner Ship running an extremely successful
computer software business. Sanobar Khan has decided to join the business and is able to
invest a substantial amount of capital. They have decided that the business should be
incorporated as a private limited company. Dilawar Khan, Badam Gul and Sanobar Khan will
each hold one third of the shares and they will be the directors of the company. Please
advise them on the advantages of a limited company as compared with a partnership:

A. With regard to obtaining finance for further business expansion

B. With regard to the liability of shareholders in the event of the winding up of the
company.

5. The National Association of Photo Exporter (NAPE) requires additional storage space. It
advertises for tenders to erect new storage facilities. It receives eight tenders and the Board
decides to accept the tender of Imam Bakhsh & CO. The Chief Executives, Mr. Shehbaz
Chatha is required to accept and to notify the others that they were unsuccessful Mr.
Chatha asked his secretary to type up the letters. A mistake is made in the typing and the
name of another tenderer, Badam Gul & CO. is replace for Imam Bakhsh & CO. The letter is
signed and delivered to Badam Gul & CO. The next day when the M.D. of Badam Gul & CO.
phoned Mr. Chatha to discuss some details of the work to be done Mr. Chatha realized that
there had been a mistake. Is there a binding contract between NAPE and Badam Gul & CO?

6. On 1 September Baber contracted for the purchase of 50 computers from Sardar. The
contract stated that the computers were to be delivered on 5 September. Despite the fact
that Baber persistently pressed Sardar for delivery, the computers had still not been
delivered by the end of the month while Sardar had repeatedly assured Baber that the
computers would be delivered by the first of October at the latest. Baber then told Sardar
that if the computes were not delivered by the 5 October, the contract would be terminated.
Sardar did not attempt to deliver until 10 October. Having bought other computes on the 6
October, Baber refused to take delivery. Was he justified in refusing the delivery? Discuss.

7. Mr. Brown agreed to sell his computer of a specified mark and model to Mr. Green for Rs.
30,000. When Mr. Green went to him to pay him the price and pick up the computer he
found that Brown had already sold such computer to someone else. He threaten to sue
Brown for the Breach of Contract but later on the same day he bought a computer of the
same mark, model and specification for a Rs. 20,000. Should he sue Brown for the Breach
of Contract? Is there any benefit for him in bringing such action against Brown?
FEDERAL PUBLIC SERVICE COMMISSION
COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS
IN BPS 17 UNDER THE FEDERAL GOVERNMENT, 2001.
MERCANTILE LAW
TIME ALLOWED: THREE HOURS MAXIMUM MARKS:100
1. Discuss the importance of free consent in contrasts. When do you think, consent is said
to be not free, and what effect will such a consent have on contracts?

2. Define in detail remedies for breach of a contract given to a seller against the buyer in
the Sale of Goods Act.

3. Define partnership, and discuss the essential elements of partnership in detail.

4. What do you understand by the words negotiation and negotiable? There are special
rules of evidence retailing to negotiable instruments. What are they?

5. What is arbitration? How an arbitrator is appointed, and what are his powers under the
Arbitration Act?

6. Explain the nature of a contract of insurance. Distinguish between life insurance and
other kinds of insurances.

7. Write short notes on the following:

(a) Surety
(b) Warranties
(c) Bailment
(d) Award
Mercantile Law 2000

Mercantile Law

TIME ALLOWED: 3 HOURS MAXIMUM MARKS: 100

NOTE: Attempt FIVE questions in all, including Question No.8 which is Compulsory. All
questions carry equal marks.

1. What are the various kinds of shares? Briefly give distinctive features of each.

2. Under what circumstances will a banker be justified in dishonoring a cheque of a

customer?

3. Discuss advantages and disadvantages of registration and non registration of a firm.

4. (a) Explain 'consideration' as an element in a valid contract. State the exceptions to the
rule that an agreement without consideration is void.

(b) Should consideration always move from the promisee?

5. State the various modes in which a contract may be discharged and the modes in which a
man may be discharged from the obligations of a contract.

6. (a) Explain the position and rights of a minor under the law of partnership.

(b) What are the powers and duties of an arbitrator?

7. Explain the general rule that no one can give a better title than he himself possesses.
Discuss and illustrate the exceptions to this rule.