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Solved Mcqs of Mercantile Law (2000 TO 2011)
Solved Mcqs of Mercantile Law (2000 TO 2011)
MERCANTILE LAW
(2000 TO 2011)
(2) How a cheque is treated by a banker among the following when the balance at credit of
drawer is found insufficient"
(a) Be dishonored.
(7.) When undue influence is used in a contract by one party against the other, the contract
becomes:
(b) voidable
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(9) Pledgor or Pawnor are:
(a) as a whole
(c) The buyer should be aware of the suitability of goods for his purpose.
(13) If the seller of immovable property has effected a fire insurance policy in respect of the
property, the purchaser, of the property:
(15) The grace period for every instrument payable at a specified period after date or after sight
is:
(c) 3 days.
(16) Special Resolution is passed at a general meeting of a Public Company when not less than
the following notice has been given:
(a) there is restriction on the right of members to transfer their shares. (By the way this is
not a privilege rather a disadvantage)
(18) A company shall be eligible for registration as a Modaraba Company if its paid-up capital is
not less than:
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(c) 2.5 million rupees.
(19) A and B are partners. A buys land with partnership moneys for his sole benefit. Thereafter,
A debits himself in the firm books and becomes a debtor to the firm for the amount of the
purchase money. The purchased property is:
(20) Whether a partner has got power to assign his partnership interest to any other person so as
to make him a partner in the business?
(b) No
(1) A proposes, by a letter sent by post, to sell his house to B. The acceptance of the proposal is
complete:
(b) the moment the letter is received by B.
(2) In order to convert a proposal into a promise, the acceptance must be:
(b) Unconditional
(3) A voidable contract may be turned by the option of the party at a loss into:
(b) A valid contract
(16) A minor:
(a) Can make, draw, accept, or indorse a negotiable instrument
(1) Portage Ltd wishes to alter its memorandum to state that all of the company’s shareholders
must hold a minimum of 200 shares. Can Brian, who currently owns 100 shares, be bound by
this alteration?
(a) Yes, if the alteration is done by special resolution
(2) Gama offers to sell his care to Maja for Rs. 550,000/-, Maja accepts the offer but states that
he would buy it for Rs. 500,000/-. The statement of Maja is:
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(b) A counter offer
(3) Kala Khan agreed to supply onion to Sodagar Khan six months after the date of contract and
Kala Khan agreed to pay for such supply. Two months after the conclusion of the contract Kala
Khan refused to supply. In such case which of the following facts is correct?
(c) Sodagar Khan can validly sue Kala Khan any time after he refused to supply onions.
(4) Sharafat Hussain offererd to sell his tonga to Sadaqat Hussain for Rs. 35,000/- but Sadaqat
Hussain did not answer and nearby standing Kiramat Hussain accepted the offer. Kiramat
Hussain’s answer to the offer is:
(d) None of these
(14) An empire in an arbitration reference is appointed when the number of arbitrators is:
(b) Even
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(b) Two
(18) The maximum age for a person who concludes a contract of sale of goods is:
(d) None of these
(19) It is essential for the validity of a contract of sale of goods that the price must be paid.
(c) None of these
(1) To what extent is a member of a company which is limited by guarantee personally liable for
the company’s debts?
(c) His personally liability is limited to the amount set out in the memorandum on a
winding up.
(2) Jamshed, a house painter, misreads his work under order and paints Salman’s house by
accident while Salman sits inside watching. Which of the following is correct?
(d) a quasi-contract has been formed
(3) On 30-11-2003 A offered to buy one of the 10 tables of the same specification present in B’s
shop for 500 rupees. B accepted the offer. It was agreed that the table would be delivered on 1-
12-2003 while the price would be paid on 8-12-2003. It was not clear which of those tables was
attributed to the contract. Which of the following is correct?
(c) The table will become the property of A on 8-12-2003 when he will pay the price.
(4) Akram sent a proposal to Banaras by post for the sale of his stall in the Sunday Market.
Banaras accepted the offer by post. Banaras may revoke his acceptance at any time before:
(a) Akram receives the letter of acceptance
(5) A appoints B as his agent for buying him a house. B appoints C as his agent to arrange a
house to be bought. C is liable to:
(a) B only
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(b) Essential to form a binding contract between the prties
(11) If a contract has been fully performed by both parties, that contract would be described as:
(a) Executed contract
(15) Shahid and Hamid wished to form a company. On 1 December 2002 they filed all the
required documents with the Register. On 10 February 2003 they received the Certificate of
Incorporation dated 1 February 2003. The company was incorporated on:
(b) 1 February 2003
(18) A, aged 18 for whom a court has appointed a guardian, wants to make a contract. He can
make a contract.
(b) After attaining the age of Twenty-one years
(19) A agrees to pay B 10,000 rupees if his (B’s) horse wins the race. The horse died one day
before the race. The contract is:
(b) Void
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(20) Abid’s son has forged Majid’s name to a pronote. Majid under threat of prosecuting Abid’s
son demanded that he should sell him his bungalow that is worth one billion rupees for one
million only. Abid had no way except to agree with the proposal. The contract is:
(c) Voidable
(2) A person who has attained the age of 18 while under guardian:
(b) Is not competent to contract
(7) A contract of which one party promises to save the other from loss caused to him by the
conduct of the promise himself or by the conduct of any other person.
(b) IS called a contract of indemnity
(9) If the bailee’s lawful charges are not paid, he may retain the goods:
(c) None of these
(11) A promises to pay Rs. 1000 to B and takes a promissory note from him for that amount but
pays only Rs. 500 on it.
(c) None of these
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firm’s name, (ii) it is accepted by B and C.
(c) None of these
(13) A buys nylon pant from a store and starts wearing it. A contracts skin disease:
(c) None of these
(14) A, B & C are partners in a business. An order for certain goods is placed with D. Before the
goods are delivered, C dies. D had no notice of the death of C:
(b) A & B are jointly as well as severally liable
(16) A partner may be expelled from a firm if there is agreement to that effect:
(a) By majority of the partners
(18) A authorizes B to buy 50 sheep for him. B buys the whole lot of 44 sheep and 15 lambs for
one sum of Rs. 30000:
(a) A can repudiate the whole transaction
(1) Talal is forming a business which he wants to control completely. He knows nobody else
with whom he wishes to work, he values his privacy, and he dislikes formality, paper work, state
filing requirements, and lawyers. What type of business organization should he prefer?
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(3) A partnership involves three essential elements. Which of the following is not one of those
elements?
(4) Rashid, Shahid and Talal agree to form a computer business. Rashid agrees to manage the
business and to assume full personal liability. Shahid and Talal agree to invest in the firm but to
be liable only to that extent. These three have formed
(9) When a partnership is found liable for a debt, which assets are first used to pay the debt?
(10) The board of directors does not have responsibility over which of the following areas?
(a) The appointment, supervision, and removal of corporate officers
(b) The appointment, supervision, and removal of employees generally
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(c) The declaration and payment of corporate dividends
(d) None of these
(11) A found a wallet full of money on a roadside and upon finding the address of the owner in
the wallet he returned it to its owner. When he came back he read the announcement of a reward
for the return of such wallet in the newspaper:
(12) Muhsin in considering forms of business organisation for his law firm. One advantage of the
limited liability partnership form is that it allow the limited partners to avoid personal liability
for:
(a) the malpractice of other limited partners regarding the conduct of the firm’s business
(b) the obligation of the firm beyond their contributions to the capital
(c) the obligations of the firm within the limit their contributions to be capital
(d) None of these
(13) A’s son has forged B’s name to a pronote. B under threat of prosecuting A’s son demanded
that A should sell him his house that is worth Rs. 1000,000/- for Rs. 300,000/- A agrees with the
proposal. The contract is
(15) Salman signs a written contract with Khalid giving him the right to cast his votes in the
election for the directors of Hashiya Limited, whose
shares Salman holds. This agreement between Slaman and Khalid is known as:
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(d) None of these
(16) A sent a proposal to B by post for the sale of his house. B accepted the offer by post. A may
revoke his proposal at any time before
(17) Danish offers to sell to Sadiq a mobile phone for Rs. 550. Sadiq tells Danish that he will
take the phone for Rs. 540. Nothing further is said and the next day, Danish demands Rs. 450
from Sadiq in exchange for the phone. Choose the correct statement
(a) Sadiq is bound to pay as his offer has been accepted by Danish;
(b) Although there is no contract Sadiq;
(c) Sadiq is not bound to pay as there is no contract;
(d) None of these
(18) If you want to start a partnership what formal requirements do you have to meet?
(a) You must register the firm with the Registrar of Firms;
(b) You do not need to satisfy any formal requirements;
(c) Your firm cannot operate until you draft and get registered the Article of Partnership;
(d) None of these
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(1) When an offer can only be accepted by the performance of the person to whom the offer is
made, is characteristic of:
(2) A tells B, “If you stood first in the class, I’ll pay you Rs.5000.00. B stood first in class and A
paid him Rs.5000.00. Which of the following is correct?
(a) A and B had a unilateral contract; (b) A and B had an executory contract;
(c) A and B had an executed contract; (d) None of these
(3) A offers to sell B his motorcycle at some time in the future. B accepts. Is there a valid
contract?
(5) A offers to sell B his collection of rare books for Rs.5000.00. Before B even has a chance to
accept, A says, “Sorry, I changed my mind, no deal.” This is an example of:
(6) A and B enter into a contract in which A agrees to deliver milk to a restaurant. They forget to
include a price in the agreement. A court will:
(7) A agreed to supply food for Walima to B at 1: 00 pm. However, he could hardly supply the
food at 5: 00 pm.
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(d) None of these
(8) Which of the following actions an unpaid seller can not take against a buyer:
(9) When a partnership is found liable for a debt, which assets are first used to pay the debt?
(10) A partnership involves three essential elements. Which of the following is not one of those
elements?
(11) Which of the following actions requires the unanimous consent of all partners before it may
be undertaken?
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(c) Who gets an instrument as a gift;
(d) None of these
(15) For the incorporation of a limited liability company filing of Memorandum of Association is
essential:
(17) A is considering different forms of business organization for his business. For the purposes
of owning property and being a party to litigation, forms which are legal entities separate from
their owners include:
(19) An empire in an arbitration reference is appointed when the number of arbitrators is:
(a) Odd; (b) Even;
(c) More than 10. (d) None of these
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Mercantile Law CE-2007
(a) A tells B that he will pay him Rs. 200 if B will wash his car which B does.
(b) A writes B a letter in which he promises that if B will wash his car, he will pay him Rs. 200
which B does.
(c) A and B both sign a piece of paper which says, “A agrees to pay B Rs. 200 if B agrees to
wash A’s car in exchange for Rs. 200.”
(d) None of these
(2) A called his friend B and offered to give him two tickets of a cricket match taking place next
month. B said “okay! I love to watch cricket matches.” A few days later A called B and told him
that he couldn’t give B the tickets. Assuming B sued A:
(3) Under the doctrine of quasi contract, a plaintiff may recover in “quantum merit”, a Latin
phrase that means:
(a) A promise to pay Rs. 2000 for the services rendered if the services are renders as soon as
possible.
(b) An unconditional promise to pay a reasonable sum for the services rendered.
(c) An unconditional promise to pay Rs. 3000 some time next month.
(d) None of these
(5) A has a bill of exchange that does not indicate when it is to be paid as the language of the bill
only says “Pay”. When is it payable to A?
(a) In 30 days.
(b) Never as the instrument is void if it does not have a payment date.
(c) In a reasonable time.
(d) None of these
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(6) A writes a cheque on his Habib Bank account to pay for groceries at Utility Stores. Who is
the drawee?
(8) Which of the following language on an order will create a bill of exchange?
(a) Yes
(b) No, because it does not specify a definite date of payment
(c) No, because postdated cheques are void
(d) None of these
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(12) You write a cheque to pay for your haircut. In this transaction, who is the drawee?
(14) If A is hit by a car, and B, a doctor, sees the incident and performs emergency first aid upon
A which results in A recovery:
(a) A unilateral contract is created whereby A is obligated to pay Dr. B for services rendered.
(b) A bilateral contract is created and both parties must perform their duties.
(c) A quasi contract is created between the parties.
(d) None of these
(15) A offers to sell to B a mobile phone for Rs. 5500. B tells A that he will take the phone for
Rs. 4500. Nothing further is said and the next day, A demands Rs. 4500 from B in exchange for
the phone. Choose the true statement:
(17) Assume that a new partner enters an ongoing partnership. The new partner’s liability to
preexisting creditors is best described by which of the following?
(a) The new partner is not liable to preexisting creditors of the firm.
(b) The new partner must negotiate his or her liability with the preexisting creditors.
(c) The new partner is only liable to the preexisting creditors to the extent of his capital
contribution.
(d) None of these
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(a) They are agents of the company
(b) They generally are active before the company is formed
(c) They owe fiduciary duties to the company
(d) None of these
(20) When someone gives to another person a power of attorney, this means that:
(iv) What is the amount of care a bailee is required to take in respect of goods bailed to him:
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(v) A Void Contract is:
(vi) X agrees not to carry on a similar business with Y for two years in consideration of Rs.
50,000/- as goodwill. The agreement is:
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(a) Employer beware (b) Seller beware
(c) Creditor beware (d) None of these
(xv) Which one of the following clauses is considered vital in a memorandum of association of a
public company:
(xvii) Which of the following actions an unpaid seller cannot take against a buyer:
(xix) X is involved in some business; he transfers his share without the consent of all its
members. He is working in:
(a) A company
(b) A firm
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(ii) Every agreement forbidding marriage of any adult person is void except of a minor:
(a) Yes (b) No (c) Partly correct (d) None of these
(v) The members of partnership carrying out business of banking must not exceed:
(a) 10 (b) 20 (c) 50 (d) None of these
(vi) The minimum number of members required for forming private company is:
(a) 1 (b) 3 (c) 5 (d) None of these
(vii) The minimum number of members required for forming public company is:
(a) 7 (b) 50 (c) 5 (d) None of these
(viii) After its incorporation, the ordinary General Meeting of a company must be held within:
(a) One year (b) the year of incorporation
(c) Eighteen months from the date of incorporation (d) None of these
(ix) What type of tax is referred to in the sale of Goods Act, 1930?
(a) Income tax (b) Wealth tax (c) Customs duty
(d) Sales tax (e) None of these
(xi) For how much days, a promissory note is entitled to days of grace to be at maturity when it
is not
expressed to be either payable on demand or otherwise?
(a) 30 days (b) 15 days (c) 3 days (d) None of these
(xii) A promissory note is at maturity on Sunday, being public holiday. Whether such promissory
note will be deemed to be due on:
(a) the next preceding business day (b) The next succeeding business day (c) None of these
(xiv) Life Insurance Policy cannot be called in question by an insurer on the ground of inaccurate
or false immaterial statement made in the proposal for insurance after:
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(a) one year (b) two years (c) three years (d) None of these
(xv) Willfully making statement false in any document required under Insurance Act. 1938, shall
be punishable with imprisonment upto:
(a) five years (b) four years (c) three years
(d) fine only (e) None of these
(xx) Within how much period, the arbitrators are legally required to make their award after
entering on the reference?
(a) one month (b) two months (c) three months
(d) four months (e) None of these
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6: Which of the following is eligible to become the director of the company.
A. Minor B. un discharged insolvent
c. person representing creditors d. none of these
9: The companies act repealed by the companies ordinance, 1984 pertained to year:
a. 1930 b. 1933 c. 1935 d. none of these
11. In which of the following an arbitration is not discharged by the death of party.
A. voluntary b. statutory c. contractual d. none of these
20. an exception to “No one can transfer what he does not have “:
A. registered gift b. will c.estoppel by owner d.none of these
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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”.
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