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.

COMPULSORY QUESTION

8. Write only the correct answers in the Answer Book. Don’t reproduce the questions.

(1) Payment can be made on a Bill of Exchange to:

(a) Its bearer (b) Only to a person specified therein (c) None of these.

(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. (b) Be honored partly

(c) Be treated a request for loan by way of an overdraft.

(3) 'Accommodation Party’ is a person who has signed a negotiable instrument:

(a) On receiving the value thereof. (b) Without receiving the value thereof.
(c) None of these.
(4) Which of the following is correct:

(a) A Provincial Government can constitute a Corporate Law Authority. (b) The minimum
number of members of the Corporate Law Authority is five (c) None of these.

(5) Which of the following is correct:

(a) Any member of a Public limited Company can appoint more than one proxy to attend any
meeting. (b) A proxy must be member of the company (c) None of these.

(6) Good will:

(a) can be sold separately from other property of a firm. (b) cannot be sold separately. (c) is not
saleable commodity.

(7.) When undue influence is used in a contract by one party against the other, the contract
becomes:

(a) void (b) void able (c) illegal

(8) Which of the following is correct:

(a) The bailee can mix the goods of the bailor with his own goods under the law: (b) cannot mix

(9) Pledgor or Pawnor are:

(a) same persons (b) different persons

(10) The principal must ratify the contract:

(a) as a whole (b) in part.

(11) A dormant partner is one:

(a) who is found sleeping during meeting of a firm.

(b) whose name does not appear in any way as partner.

(c) is not liable for the debts of the partnership.

(d) none of these.

(12) Caveat Emptor means:

(a) Preemptor against sale of goods.

(b) the seller is duty bound to point out the defects in the goods.

(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:

(a) cannot claim any benefit of it. (b) can claim benefit as transferee of the property.

(14) The delivery of the insurance policy to the assured is:

(a) essential to make binding contract. (b) not essential

(c) to accept the terms of the policy by the insurer. (d) none of these.

(15) The grace period for every instrument payable at a specified period after date or after sight
is:

(a) 15 days (b) 3 months (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) 30 days notice (b) 15 days notice

(c) None of these.

(17) One of the special privileges of a Private Limited Company is that:

(a) there is restriction on the right of members to transfer their shares.

(b) there is no restriction on the transfer of shares.

(18) A company shall be eligible for registration as a Modaraba Company if its paid-up capital is
not less than:

(a) 2 million rupees. (b) 3 million rupees. (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:

(a) partnership property.

(b) not partnership property.

(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?