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SOLVED MCQS OF

MERCANTILE LAW

(2000 TO 2011)

Mercantile Law CE-2000

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

(b) Only to a person specified therein

(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.

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

(b) Without receiving the value thereof.

(4) Which of the following is correct:

(a) A Provincial Government can constitute a Corporate Law Authority.


(c) None of these.

(6) Good will:

(a) can be sold separately from other property of a firm.

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

becomes:

(b) voidable


(b) cannot mix



(9) Pledgor or Pawnor are:

(a) same persons

(10) The principal must ratify the contract:

(a) as a whole

(11) A dormant partner is one:

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

(12) Caveat Emptor means:

(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.

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

(a) essential to make binding contract.

(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:

(b) 15 days notice

(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. (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:



(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:

(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?

(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

(4) The maximum number of members in a private company is:

(b) 50

(5) The maximum number of partners in a firm is:

(c) None of these

(6) The Companies Ordinance, 1984:

(c) None of these

(7) A Company is subsidiary of another Company:

(a) If the other company holds more than 50% of its voting shares

(8) P appoints A as his agent. A is not a person of full age:

(b) The appointment of A is valid

(9) Statutory meeting of a Company is held:

(a) Once in a life time of the Company

(10) Publication of Prospectus is compulsory by:

(a) A Private Company



(11) Award is a decision given by:

(b) An arbitrator

(12) A lends some ornaments to B to be used in a marriage. The transaction is:

(a) A bailment

(13) A partner may be expelled from a partnership by:

(a) A majority of partners

(14) Third Party Insurance is an Insurance Relating to:

(c) None of these

(15) A Bill of Exchange has:

(b) Three parties

(16) A minor:

(a) Can make, draw, accept, or indorse a negotiable instrument

(17) A void as well as an illegal contract is:

(b) Not familiar in effect

(18) In the Companies Ordinance, 1984, there are:

(a) Kinds of shares

(19) Like a cheque, a bill of exchange may be:

(b) Cannot be crossed ("Like" should not be used rather "unlike")

(20) An executor consideration takes the form of:

(a) A promise to be performed in future


(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:



(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

(5) The appointment of a person of the minor age as an agent is:

(b) Valid

(6) Third party insurance is an insurance for:

(a) Motor vehicles’ accidents (Doubt)

(7) A bill of exchange involves

(b) Three parties

(8) A bearer instrument may be negotiated by:

(a) Mere delivery

(9) An order instrument may be negotiated by:

(b) Endorsement and delivery

(10) A partnership business is unlawful if the number of partners in it is:

(c) More than twenty

(11) The relation between the partners of a firm is of:

(c) Principal and Agent

(12) An unregistered contract of partnership is:

(a) Valid (Doubt, Registration of partnership is not compulsory but unregistered partnership

suffers from some legal disabilities)

(d) None of these (May be the 2nd choice)

(13) A decision made by arbitrators is called

(b) Award

(14) An empire in an arbitration reference is appointed when the number of arbitrators is:

(b) Even

(15) The minimum number of members in a Private Limited Company is:



(b) Two

(16) A Public Limited Company must have:

(b) Seven directors

(17) Which of the following rights a company cannot have:

(b) Right to vote in the general elections of the state.

(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

(20) If the delivery of goods under a contract of sale of goods is late.

(a) The buyer is not bound to accept the delivery.


(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

(6) Delivery of an insurance policy to the insured is:



(b) Essential to form a binding contract between the prties

(7) A partner may be expelled from a firm

(a) By the majority of the partners

(8) An order instrument may be negotiated by:


(9) A cheque is always payable.

(b) On demand

(10) A sold some food stuff to B, a minor, on credit. If B refuses to pay:

(a) A can be paid out of the property of B

(11) If a contract has been fully performed by both parties, that contract would be described as:

(a) Executed contract

(12) An unregistered contract of sale of a computer is:

(c) Unenforceable

(13) A decision made by an arbitrator is:

(b) Appealable

(14) Each party to an arbitration agreement can appoint:

(a) Only one arbitrators

(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

(16) A public limited company must have:

(b) Seven directors

(17) A listed public limited company must have:

(b) Seven directors

(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



(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


(1) A person on attaining age of majority.

(a) Can ratify an agreement made by him during his minority.

(2) A person who has attained the age of 18 while under guardian:

(b) Is not competent to contract

(3) A person who is usually of unsound mind:

(a) Can make a contract during the interval when he is of sound mind.

(4) When a contract is substituted with a new contract.

(b) The original contract need not be performed.

(5) For a breach of contract:

(b) The plaintiff can recover compensation if the subject matter of the contract was not

easily available in the market.

(6) The supplier of necessaries:

(b) Can recover the price from the property of the minor.

(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

(8) Surety is a person:

(a) Who promises to perform or discharge the liability of a third person in case of his

default.

(9) If the bailee’s lawful charges are not paid, he may retain the goods:

(c) None of these

(10) A person who works under the control of another:

(a) Is known as an agent

(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

(12) A bill of exchange is addressed to B. It is accepted by (i) B as a partner of a firm in the



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

(15) When a firm is put to an end as between all the parties:

(b) It is dissolution

(16) A partner may be expelled from a firm if there is agreement to that effect:

(a) By majority of the partners

(17) Differences between the arbitrators are:

(b) Decided by an Umpire

(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

(19) A public limited company must have:

(c) None of these

(20) An agreement based on bilateral mistake:

(a) Is void


(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?

(a) general partnership (b) Sole Proprietorship

(c) Single Member Company (d) None of these

(2) The Articles of Association of a company contain:

(a) a set of governing rules adopting by the company (b) resolutions of the board of directors

(c) information about the corporation, including its organization and functions.

(d) None of these



(3) A partnership involves three essential elements. Which of the following is not one of those

elements?

(a) An equal right in the management of the business

(b) Limited liability for the liabilities of the firm (c) A joint ownership of the business

(d) None of these

(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

(a) a limited liability company (b) a limited liability partnership

(c) an unlimited partnership (d) None of these

(5) The members of a limited partnership include:

(a) general and limited partners (b) general partners only

(c) creditors (d) None of these

(6) A bearer cheque may be negotiated by:

(a) Mere delivery (b) Endorsement and delivery

(c) Delivery with a separate written contract (d) None of these

(7) The responsibility of overall management of a company belongs to:

(a) the chief financial officer (b) the employees

(c) the board of directors (d) None of these

(8) The best definition of a quorum is which of the following?

(a) It is 51% of all shareholders

(b) It is the number of members of a company that must be present before business may be

transacted.

(c) It is the number of voters who must agree to alter the company’s articles.

(d) None of these

(9) When a partnership is found liable for a debt, which assets are first used to pay the debt?

(a) Individual assets of the partners

(b) Personal property of the limited partners

(c) Partnership assets (d) None of these

(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



(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:

(a) The owner is liable to pay him the reward

(b) The owner is not liable to pay him the reward (c) The owner is liable to pay him half of the reward

(d) None of these

(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

(a) Valid (b) Voidable

(c) Void (d) None of these

(14) The best, simple definition of a contract is:

(a) an objective “meeting of the minds”

(b) a legally enforceable agreement

(c) a document reflecting a “meeting of the mind” between two or more competent parties

(d) None of these

(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:

(a) a derivative (b) a proxy

(c) a Memorandum of Understanding



(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

(a) B receives the letter of proposal

(b) B posts the letter of acceptance

(c) A receives the letter of acceptance

(d) None of these

(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

(19) The relation between the partners of a firm is of:

(a) Employer and Employee (b) Trustee and Beneficiary

(c) Principal and Agent (d) None of these

(20) A bearer instrument may be negotiated by:

(a) Mere delivery


(c) Delivery with a separate written contract

(d) None of these




(1) When an offer can only be accepted by the performance of the person to whom the offer is

made, is characteristic of:

(a) bilateral contracts; (b) unilateral contracts;

(c) implied contracts; (d) None of these

(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?

(a) Probably not, the terms are not definite;

(b) Probably yes;

(c) Definitely not because A failed to communicate the offer;

(d) None of these

(4) Which of the following is not an effective way to terminatean offer?

(a) By rejection; (b) By acceptance;

(c) By counter offer; (d) None of these

(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:

(a) Revocation; (b) Rejection;

(c) Counter Offer; (d) None of these

(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:

(a) refuse to enforce the agreement;

(b) select the lowest quoted price for milk and insert it into the contract;

(c) determine a reasonable price and insert it into the contract;

(d) None of these.

(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.

(a) B can reject the delivery; (b) He can not reject the delivery;

(c) B must accept the delivery;



(d) None of these

(8) Which of the following actions an unpaid seller can not take against a buyer:

(a) Lien; (b) Stoppage in transit;

(c) Sale; (d) None of these

(9) When a partnership is found liable for a debt, which assets are first used to pay the debt?

(a) Individual assets of the partners;

(b) Personal property of the limited partners;

(c) Partnership assets. (d) None of these

(10) A partnership involves three essential elements. Which of the following is not one of those

elements?

(a) An equal right in the management of the business;

(b) Limited liability for breach of contract; (c) A joint ownership of the business

(d) None of these

(11) Which of the following actions requires the unanimous consent of all partners before it may

be undertaken?

(a) Hiring a new employee

(b) Purchasing new office equipment;

(c) Admitting new partners;

(d) None of these

(12) An Order Instrument is the one which is payable to:

(a) A named person; (b) To a bearer;

(c) To both (d) None of these

(13) A bearer Instrument is the one which is payable to:

(a) A named person; (b) To a bearer;

(c) To both; (d) None of these

(14) A holder in due course is the one:

(a) Who finds an instrument;

(b) Who steals an instrument;



(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:

(a) for a public limited company only;

(b) for a private limited company, a public limited company and an unlimited company;

(c) for a Public Limited company only;

(d) None of these

(16) A subsidiary company is the one:

(a) which holds the majority shares of another company;

(b) which deals in the trading of shares of other companies;

(c) in which the majority shares are held by another company;

(d) None of these

(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:

(a) Limited Partnership only;

(b) Private Limited Companies only;

(c) Both Private and Public Limited Companies (d) None of these

(18) A decision made by arbitrators is called:

(a) Sentence; (b) Award;

(c) Judgment (d) None of these

(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

(20) The appointment of a person of the minor age as an agent is:

(a) Void; (b) Valid;

(c) Voidable (d) None of these




(1) Which of the following is a bilateral contract?

(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:

(a) He would probably win as a contract was formed.

(b) He would probably lose because the contract was not in writing.

(c) He would probably lose as the court would hold no contract was formed.

(d) None of these

(3) Under the doctrine of quasi contract, a plaintiff may recover in “quantum merit”, a Latin

phrase that means:

(a) “as much as he deserves” (b) “treble damages”

(c) “only a token sum” (d) None of these

(4) Which of the following writings are negotiable instrument?

(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



(6) A writes a cheque on his Habib Bank account to pay for groceries at Utility Stores. Who is

the drawee?

(a) Utility Stores

(b) Both Habib Bank and Utility Stores

(c) Habib Bank (d) None of these

(7) Which of the following may count as the signature of a drawer?

(a) An “X” made by the drawer

(b) The signature of the drawer’s agent

(c) Both of the above

(d) None of these

(8) Which of the following language on an order will create a bill of exchange?

(a) “Pay X if you can” (b) “I wish you pay X”

(c) “Please pay X” (d) None of these

(9) Which of the following is payable at a definite time?

(a) “Payable when “Z” wins the presidential election.”

(b) “Payable on or before May 30.” (c) Both (a) and (b)

(d) None of these

(10) Which of the following phrases makes an order bill of exchange?

(a) “Pay to the order of A.”

(b) “Pay to the order of my brother.”

(c) Both (a) and (b) (d) None of these

(11) A writes a postdated cheque. Is it negotiable?

(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



(12) You write a cheque to pay for your haircut. In this transaction, who is the drawee?

(a) You because you drew up the cheque

(b) Your bank because it must pay the cheque

(c) The person who cuts your hair because the cheque is payable to him

(d) None of these

(13) The best, simple definition of a contract is:

(a) An objective “meeting of minds.”

(b) A negotiated two-party agreement upon which each party will act or refrain from acting.

(c) A document reflecting a “meeting of the minds” between two or more competent parties.

(d) None of these

(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:

(a) B is not obligated to pay Rs. 4500 to A

(b) B is obligated to pay Rs. 4500 to A

(c) B is obligated to pay Rs. 5500 to A

(d) None of these

(16) The most common form of agency is:

(a) Implied (b) Express

(c) Injunctive (d) None of these

(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

(18) What is not a correct statement concerning promoters?



(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

(19) The phrase “piercing the corporate veil” refers to:

(a) Inspecting the books of the company

(b) The ignoring by courts of the corporate entity in order to do justice

(c) Learning the identity of the shareholders of the company

(d) None of these

(20) When someone gives to another person a power of attorney, this means that:

(a) Such person is an undisclosed principal

(b) Such person is a disclosed principal

(c) Such person given the power has authority to act as an agent (d) None of these


(i) If the consideration for an agreement is inadequate, the agreement is:

(a) Valid (b) Void

(c) Voidable (d) None of these

(ii) On a contract by an Agent on behalf of an undisclosed Principal, the Principal:

(a) May sue on contract (b) Cannot sue

(c) Is hit by privity of contract (d) None of these

(iii) Carlill v Carbolic Smoke Ball Co. Ltd. deals with:

(a) Counter proposal (b) Implied acceptance

(c) Implied revocation (d) None of these

(iv) What is the amount of care a bailee is required to take in respect of goods bailed to him:

(a) Extraordinary (b) Ordinary

(c) Reasonable (d) None of these



(v) A Void Contract is:

(a) An illegal agreement

(b) Parlty valid agreement

(c) Ceased to be a valid agreement (d) None of these

(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:

(a) Void due to restraint of trade (b) Valid

(c) Against X’s fundamental rights (d) None of these

(vii) Which one of the following cannot be called an Act of God:

(a) An unprecedented rainfall (b) An earthquake

(c) Fire not caused by lightening (d) None of these

(viii) An obligation arises from:

(a) A contract (b) From a wrongful act

(c) Both (a) & (b) (d) None of these

(ix) The rule nemo dat quod non habet means:

(a) No-one should interfere in another’s business

(b) No-one should be retained in a partnership against his will

(c) No-one can give what he has not got

(d) None of these

(x) In a public company the shares are subscribed by:

(a) Government (b) Management

(c) Creditors (d) None of these

(xi) Can a minor be:

(a) Admitted as partner in a firm

(b) Admitted to the benefits of partnerships

(c) Admitted as a sleeping partner

(d) None of these

(xii) Transfer of property means:

(a) Delivery of goods (b) Transfer of possession

(c) Transfer of ownership (d) None of these

(xiii) Caveat Emptor rule means:



(a) Employer beware (b) Seller beware

(c) Creditor beware (d) None of these

(xiv) A liquidator is a person:

(a) Who is chairman of Board of Directors

(b) Promoter of a company

(c) Who winds-up a company

(d) None of these

(xv) Which one of the following clauses is considered vital in a memorandum of association of a

public company:

(a) Name clause (b) Object clause

(c) Capital clause (d) None of these

(xvi) A subsidiary company means

(a) A supporting company (b) A non-entity

(c) An unregistered company (d) None of these

(xvii) Which of the following actions an unpaid seller cannot take against a buyer:

(a) Exercise the right of lien

(b) Stoppage of goods in transit

(c) Sale

(d) None of these

(xviii)X draws a gun and asks Y to sign an agreement. This is:

(a) Persuasion (b) Coercion

(c) Undue influence (d) None of these

(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


(i) Select the correct answer:

(a) Promisee and Offeree are one and same party

(b) Offeree is a party who propose an agreement while promisee accepts it

(c) None of these



(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

(iii) Can a contract executed in Saudi Arabia be enforced in courts in Pakistan?

(a) Yes (b) No (c) None of these

(iv) The effect of coercion on a contract is that the contract becomes:

(a) void (b) voidable (c) valid (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:


(vii) The minimum number of members required for forming public company is:


(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

(x) The carrier holds the goods in transit as:

(a) Trustee (b) Agent (c) Bailee (d) 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

(xiii) Can a minor become a payee of a negotiable instrument?

(a) Yes (b) No (c) Not himself but his guardian (B)

(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:



(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

(xvi) Whether a minor can be appointed as nominee to Life Insurance Policy?

(a) Yes (b) No (c) His guardian only (d) None of these

(xvii) Caveat emptor:

(a) is a person who institutes pre-emption suit

(b) is seller who discloses defects in the goods being sold (c) is the buyer who is supposed to be aware of the suitability of the goods (d) is owner of an

empty cave (e) None of these

(xviii) Penalty provided for driving uninsured vehicle is:

(a) imprisonment upto 5 years and fine upto Rs. 1000/- or both

(b) imprisonment upto 1 year and fine upto Rs. 100/- or both

(c) Imprisonment upto 3 months or fine upto Rs. 500/- or with both

(d) fine upto Rs. 10000/- only

(e) none of these

(xix) Can a compoundable criminal case be referred to arbitration?

(a) Yes (b) No (c) None of these as only civil matters can be referred to

(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


1: Which of the following contracts is voidable, where:

(a) Aparty is induced by undue influence (b) One party under mistake of fact

(c ) b oth parties under mistake of fact (d) None of these

2: in case of wilful wrong sub agent is responsible to:

(a) Agent (b) Principal (c) Sole agent (D) none of these

3: A tender notice amounts to:

(A) Proposal b. offer c. invitation d. none of these

4: A contract to sell property by minor through guardian is:

A. Void b. voidable c. valid d. none of these

5: How many parties are there in contract of guarantee?

A. 5 B. 4 C. 3 d. none of these



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

7: extra ordinary general meeting of a company includes:

A. Annual general meeting b. statutory meeting c. plenary meeting OR

D. none of these

8: Petition for the winding up of company may be moved by :

A. auditor general b. advocate general c. company judge

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

10: penalty for improper use of word “Limited” is:

A. fine b. imprisonment c. fine with imprisonment 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

12. the assent of arbitrator by court is:

A. optional b. not required c. necessary d. none of these

13. the number of arbitration act, 1940 is:

A. 11 b. 15 c. 20 d. none of these

14. natures of misconduct justifying removal of arbitrator should be:

A. Legal b. moral c. procedural d. none of these

15. suit by unregistered firm against third party is :

A. maintainable. B. barred c. permissible d. none of these

16. the partnership is:

A. juristic person b. juridical person c. natural person d. none of these

17. the firm and firm name are:

A. synonymous b. interchangeable. C.differe nt terms. D. none of these

18. the maker of the promissory note is liable as:

A. principal debtor b. principal creditor c. undischarged surety d. none of these

19. valid presentation of a cheque is within six months from:

A. the date is drawn b. date of last correection c. date of delivery 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



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.

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