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MERCANTILE LAW – PAPER B5

Presented by:
103-104, Amber Estate,
Mohammad Rehan Siddiqui Main Shahrah-e-Faisal, Karachi
Phone: 021 – 4535712-3
Partner Fax: 021 – 4546291
E-mail: mim@mimandco.com
TABLE OF CONTENTS

1. PLANNING

INDICATIVE GRID
SYLLABUS OUTLINE
RECOMMENDED READING

- BASIC READINGS
- REFERENCE BOOKS

CONSIDERATION FOR REFERENCE BOOK

2. ATTEMPTING THE PAPER

- HOW TO ATTEMPT THE PAPER


- ATTEMPTING SCENARIO BASED QUESTIONS

3. MISTAKES RECTIFICATION

4. UNDERSTANDING OF THE VERB USED IN THE EXAMINATION QUESTIONS

5. QUESTIONS AUTUMN 2009

6. CAVEATS
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PLANNING

INDICATIVE GRID
OBJECTIVE:

The Syllabus aims to enable the students to develop a professional approach towards
matters
Syllabus Content Area Weightage
1. Introduction to legal System
2. Contract Act 1872 40

3. Partnership Act 1932


4. Negotiable Act 1881 30
5. Sale of Goods Act 1930
6. Trust Act 1920 30
7. Carriage of Goods by Sea Act 1925
Total 100
Note: The weightings given above are for guidance purposes only and some deviations in
setting of papers could be expected. 3
OUTLINE OF SYLLABUS

1. Introduction to Legal System 5. Sale of Goods Act 1930


Sources of law; process of legislation; and All Sections
the legal system in Pakistan

2. Contract Act 1872 6. Trust Act 1920


All Sections Duties and Liabilities of Trustees;
Rights powers and liabilities of the
3. Partnership Act 1932 beneficiary;
All Sections Revocation of Trust
4. Negotiable Instruments Act 1881 7. Carriage of Goods by Sea Act 1925
All Sections All Sections

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RECOMMENDED READING

BASIC READINGS
Bare Acts:

 Contract Act 1872

 Sale of Goods Act 1930

 Partnership Act 1932

 Negotiable Instruments Act 1881

 Trust Act 1920

 Carriage of Goods by Sea Act 1925.

Bare Acts are the primary source and also contain a large variety of practical examples.

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RECOMMENDED READING

REFERENCE BOOKS
1. Elements of Mercantile Law by N.D Kapoor.  This book covers the entire syllabus and
is written in simple language.
2. Mercantile Law by M.C. Kuchhal  These books cover most of the syllabus
area.
3. Mercantile Law by M.C. Shukla.
 This book covers most of the syllabus area
4. Mercantile Law by Luqman Baig.
 Especially useful for the topic “Introduction to
Legal System”.
5. Business Law: Khalid Mehmood Cheema.
 A concise book on mercantile law, recommended
6. Lectures on Business Law by for revision purposes.

Rehan Aziz Sherwani  The book has been written in lecture form and will
be very beneficial for the studies
Supplementary Study Material

1. Mercantile Law Study Text and Revision Series by AT Foulks Lynch Pakistan.
2. Mercantile Law Study Text and Revision Series by Professional Business Publication (PBP).
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CONSIDERATION FOR REFERNECE BOOK

 Try to cover the topic from a single book. Otherwise you may get confused
which would also reflect in your answers.

 The key to selecting the right text book is consulting your teachers / senior
students

 Again, as the question paper is set to cover the whole grid, you should not
resort to selective reading, otherwise, you would just end up with some
unanswered questions and would not be able to pass the examination.

 It is important that you map the syllabus with the course material after
consulting senior students who have cleared the examinations.

 It is always recommended to answer the question in your own words instead


of reproducing the exact text books.

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ATTEMPTING THE PAPER

HOW TO ATTEMPT THE PAPER


1. Scan the paper

2. Priorities – easier ones first

3. Understanding the requirements of each question

4. Workings and presentation – legible handwriting

5. Do not write long answer in the form of a paragraphs, which you may find difficult
to learn and retain

6. Your answers, wherever necessary, should preferably be in the form of pointers;


which are easier to write, express and comprehend

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ATTEMPTING SCENARIO BASED QUESTIONS

1. The reason for the introduction of these types of questions is to discourage rote
learning
2. It has been noted that most students only give the conclusions in such type of
questions
3. The most important aspect of asking such questions is to test whether you can
apply the knowledge of law to a practical situation
4. The key to such questions is the reasoning and not the conclusion.
5. The examiner is interested in the thought process that went into the conclusion.
6. You can conclude correctly with out any reasoning, by sheer guessing you have a
fifty percent chance of getting it right. ICAP knows this and therefore no marks for
guessing the conclusion – you must support it.
7. If you have logical reasoning that forms the basis for your conclusions you will get
pass marks even if your conclusion does not match with that of the examiner . 9
HOW TO RECTIFY YOUR MISTAKES

ANALYSIS OF MISTAKES
1. What was your total mark?
2. How many marks were lost because you did not understand the theory?
3. How many marks did you lose as a result of simple errors in your
responses?
4. How many marks were lost because you could not interpret a question or
you answered a different question from the one you were asked?
5. How many marks were lost because you ran out of time?

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HOW TO RECTIFY YOUR MISTAKES
(Contd…)

RECTIFICATION / CORRECTIONS
Step 1 – Attempt the paper which you did not pass again and mark your copy and get it
marked by an independent person e.g. teacher / senior. Do not refer text book prior
to attempting the paper if you want a realistic assessment

Step 2 – On the basis of your attempt identify your weak areas. Closely analyze your answers
to see drafting mistakes, grammatical mistakes and most importantly conceptual
mistakes.

Step 3 – Consult the syllabus for your weak areas

Step 4 – After thoroughly revising the course, conduct mock examinations as discussed in
step-1 above.

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OBSERVATIONS AND STRONG
RECOMMENDATIONS

 In mercantile law paper, it is a common observation that students generally


prepare for Contract Act, 1872 and Partnership Act, 1932 paying little or no
heed to other civil laws like legal systems in Pakistan, Carriage of Goods by
Sea Act, 1925, Trust Act, 1882 and The Negotiable Instruments Act, 1881
which ultimately results in below average performances.

 One of the prerequisites for securing good marks in the professional


examinations is the importance of covering the entire syllabus.

 Multiple factors, for instance, selective studies, unnecessary deliberations on


irrelevant matters, lack of comprehension of the requirements of the question,
improper application of law to practical situations etc. are some of the facets
which contribute towards poor performances.

 Some of the students are very elaborative while others extremely brief. It must
be mentioned here that only a balanced approach produces good results.
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UNDERSTANDING OF THE VERB USED
IN THE EXAMINATION QUESTION

A list of verbs that appear in the syllabus and in the examination paper should be understand
as under:

It is important that you answer the question according to the definition of the verb.

VERB USED DEFINITION

List Make a list of

State Express, fully or clearly, the details of/facts of

Define Give the exact meaning of


Describe Communicate the key features.

Distinguish Highlight the differences between

Explain Make clear or intelligible/State the meaning of

Identify Recognize, establish or select after consideration

Illustrate Use an example to describe or explain Something

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UNDERSTANDING OF THE VERB USED
IN THE EXAMINATION QUESTION
(Contd…)

Apply To put to practical use


To ascertain or reckon mathematically
Calculate/compute
To prove with certainly or to exhibit by practical means
Demonstrate

Prepare To make or get ready for use


To make or prove consistent/compatible
Reconcile
Find an answer to
Solve
Arrange in a table
Tabulate

Analyze Examine in detail the structure of


Categorize Place into a defined class or division
Compare and contrast Show the similarities and/or difference between

Construct To build up or compile


Discuss To examine in detail by argument
Interpret To translate into intelligible or familiar terms
Produce To create or bring into exercise

Advice To counsel, inform or notify.


Evaluate To appraise or assess the value of
Recommended To advise on a course of action

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EXAMINATION QUESTIONS
AUTUMN 2009

Q.2 Describe the circumstances under which an agreement made without


consideration is considered valid and binding under the Contract Act, 1872.

Marks-(07)

Please note carefully the requirement of the question

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EXAMINATION QUESTIONS
AUTUMN 2009 – COMMON MISTAKES

Most of the students answered Q.2 in the following manner:

Ans.2

An agreement without consideration is considered valid in any of the following


circumstances:

1. Natural Love and affection


2. Past performance
3. Time barred debt
4. Gift
5. Agency
6. Remission
7. Charity and Donation
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EXAMINATION QUESTIONS
AUTUMN 2009 – COMMON MISTAKES
(Contd…)

The requirement of the question was to “describe” and not just to “list down” the circumstances.

 Without following the requirement(s) of the question, the students are not likely to get full marks on
the question.

In this question students were supposed to elaborate each point as follows:

Ans.2

An agreement without consideration is considered valid in any of the following circumstances:

1.Natural Love and affection: Agreement should be in writing and registered and made out of
natural love and affection between the parties standing in near relation to each other.

2.Past performance: a promise to compensate wholly or in part, a person who has already
voluntarily done something for the promisor, or something which the promisor was legally
compellable to do.

3.Time barred debt: A promise, made in writing and signed by the person to be charged
therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a
debt which is barred by the law for the limitation of suits. 17
EXAMINATION QUESTIONS
AUTUMN 2009 – COMMON MISTAKES
(Contd…)

Ans.2

An agreement without consideration is considered valid in any of the following circumstances:

4. Gift: any gift which is actually made as between the donor and the donee.

5. Agency: no consideration is necessary to create an agency

6. Remission: Remission by the promisee of the performance of the promise. A creditor


can agree to give up either the whole or part of his claim or may agree to extend time for
the performance of the promise and no consideration is required for such an agreement.

7. Charity and Donation: a promise to contribute to charity, though gratuitous, would be


enforceable, provided the promisee on the faith of such promise undertakes a liability not
exceeding the amount so promised.

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EXAMINATION QUESTIONS
AUTUMN 2009 – SCENARIO BASED

Q.5(b) Asim agreed to construct a bungalow for Ali at a cost of Rs. 50 million. However, it
was agreed that payment would only be made on completion of the project. Is this
a contingent contract under the Contract Act, 1872? Give reasons. Also list the
requisite characteristics of a contingent contract.

Marks-(03)

Please note carefully the requirement of the question

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EXAMINATION QUESTIONS
AUTUMN 2009 – SCENARIO BASED
MISTAKES

Most of the students answered Q.5(b) in the following manner:

Ans.5(b)

Contingent Contract

Yes, this is a contingent contract as the payment would be made on the completion of the
project.

Essentials of a contingent contract

The following are the essential characteristics of a contingent contract:

(i) the performance of such a contract depends upon the happening or non-happening of some
future event;

(ii) the event must be uncertain;

(iii) the event must be collateral i.e. incidental to the contract.


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EXAMINATION QUESTIONS
AUTUMN 2009 – SCENARIO BASED

In answering the second part of the question most of the students


correctly quoted the law, but failed to apply it in a practical
situation. They failed to understand that completion of a
bungalow in itself is a consideration for the payment and its
not a collateral event and therefore, gave a wrong answer.

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EXAMINATION QUESTIONS
AUTUMN 2009 – SCENARIO BASED

In order to understand the concept clearly, lets take an example: In the


same question if we say that the payment instead of “on completion of a
project” would be made “on approval by an architect”, it would become a
contingent contract.

Now in the revised scenario, approval by an architect is a collateral event,


which is independent of the consideration.

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EXAMINATION QUESTIONS
AUTUMN 2009 – SCENARIO BASED

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EXAMINATION QUESTIONS
AUTUMN 2009 – SCENARIO BASED
STOP WASTING YOUR TIME

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EXAMINATION QUESTIONS
AUTUMN 2009 – SCENARIO BASED
STOP WASTING YOUR TIME

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EXAMINATION QUESTIONS
AUTUMN 2009

Q.6(a) The authority of a partner to bind the firm is called “Implied Authority.”
List the acts which cannot be exercised by a partner as his implied
authority.

Marks-(04)

Please note carefully the requirement of the question

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EXAMINATION QUESTIONS
AUTUMN 2009 – COMMON MISTAKES

Most of the students answered Q.6(a) in the following manner:

Ans.6(a)

Following are the implied authority of a partner:

(a) arbitration;
(b) open a banking account ;
(c) compromise a claim;
(d) withdraw a suit ;
(e) admit any liability;
(f) purchased immovable property;
(g) sale immovable property; and
(h) enter into partnership.
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EXAMINATION QUESTIONS
AUTUMN 2009 – COMMON MISTAKES

Although in Q.6(a) the requirement of the question was just to list down the implied authority
of a partner, but it doesn’t mean that it should be reduced to such an extent that no meaning
can be derived from it.

For instance:

Arbitration: { Its not evident whether a partner can submit the disputes to arbitration
or not}

open a banking account : { a partner can open a bank account


in firm’s name but not in his own name, this fact is not evident
from the writing}

enter into partnership: { a partner can enter into partnership


with other persons but cannot enter into partnership on
behalf of the firm}

The students are not likely to get any marks on such vague answers.

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EXAMINATION QUESTIONS
AUTUMN 2009 – CORRECT ANSWER

√ The correct answer to Q.6(a) would be:


Ans.6(a)

In the absence of any usage or custom of trade to the contrary, the implied authority of a
partner does not empower him to:

(a) submit a dispute relating to the business of the firm to arbitration,

(b) open a banking account on behalf of the firm in his own name,

(c) compromise or relinquish any claim or portion of a claim by the firm,

(d) withdraw a suit or proceeding filed on behalf of the firm,

(e) admit any liability in a suit or proceeding against the firm,

(f) acquire immovable property on behalf of the firm,

(g) transfer immovable property belonging to the firm, or

(h) enter into partnership on behalf of the firm.


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CAVEATS

ALL COURSE MATERIAL, STUDY TECHNIQUES, KEY AREAS EMPHASIZED


DURING THIS SEMINAR REPRESENT MY VIEW POINT AND NOT THAT OF ICAP.
THE INSTITUTE DOES NOT PRESCRIBE A PARTICULAR PUBLISHER

ALTHOUGH RECOMMENDED COURSE MATERIAL LIST IS AVAILABLE IN THE


YELLOW BOOK.

ANSWERS AND DISCUSION ON EXAM QUESTIONS ARE THE PERSONAL VIEWS


OF THE PRESENTOR.

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