crash course (b5-mlw)

Rabbi Yassir wala tu-‘assirRabbi Yassir wala tu assir

ICAP CRASH COURSEICAP CRASH COURSEAUTUMN - 2011

FOR MODULES ‘A’ TO ‘D’MERCANTILE LAW – B 5MERCANTILE LAW – B 5

OBJECTIVES OF THIS SESSIONOBJECTIVES OF THIS SESSION

• An introduction• Past papers analysis• Spot light on examined areas• Discussion on Examiner’s commentsB i f di i i ti t h i• Brief discussion on examination techniques

• Attempting EXAMINATION QUESTION as practice• Comprehensive MUST DO QUESTIONS B 5• Comprehensive MUST DO QUESTIONS – B 5• Brain storming question answer session

WAHEED ANWAR - LLB, FPA, AFA, CA(f)4

OBJECTIVES OF PAPERMERCANTILE LAWMERCANTILE LAW

The syllabus aims to enable the students to develop a

PROFESSIONAL APPROACHtowards matters connected with towards matters connected with

MERCANTILE LAWi th f f th i d ti in the performance of their duties as

CHARTERED ACCOUNTANTS.


INDICATIVE GRID

SYLLABUS CONTENT AREA WEIGHTAGE WEIGHTAGE

1 Introduction to legal system12

Introduction to legal systemContract Act 1872

40

3 P hi A 193234

Partnership Act 1932Negotiable Instruments Act 1881

30

56

Sale of Goods Act 1930Trust Act 1920 30

7 Carriage of Goods by Sea Act 1925

TOTAL 100


TOTAL 100

P A S T P A P E R S A N A L Y S I SSPRING 2 0 0 7 TO SPRING 2 0 1 0

SYLLABUS INGREDIANTS WTA 10 S 10 A 09 S 09 A 08 S 08 A 07 S 07

AVGSYLLABUS INGREDIANTS WT AVG1 2 3 4 5 6 7 8

Legal System of Pakistan 7 6 6 4 4 7 6 6 6

The Contract Act 187240

General Principles (Sec 01 ‐ 75) 20 25 19 17 21 31 24 19 22

Special Provisions (Sec 124‐ 238) 16 10 17 19 14 6 7 12 12

SUB TOTAL 43 41 36 40 39 44 37 37 40SUB TOTAL 43 41 36 40 39 44 37 37 40

The Partnership Act 193230

20 20 15 20 18 14 17 21 18

The Negotiable Instrument Ac 1881 12 10 13 13 14 13 15 13 13

SUB TOTAL 32 30 28 33 32 27 32 34 31

The Sale of Goods Act 1930

30

13 14 12 11 16 17 16 19 15

The Trust Act 1882 4 7 10 10 7 7 6 5 730

The Carriage of goods by sea Act 1925

8 8 8 6 6 5 9 5 7

SUB TOTAL 25 29 30 27 29 29 31 29 29


100 100 100 100 100 100 100 100 100 100

MUST DO AREA OF SYLLABUS

A 10 S 10 A 09 S 09 A 08 S 08 A 07 S 07SYLLABUS INGREDIANTS

A 10 S 10 A 09 S 09 A 08 S 08 A 07 S 07AVG 75 %

1 2 3 4 5 6 7 8

The Contract Act 1872

General Principles (S 01 ‐ 75) 20 25 19 17 21 31 24 19 22 17General Principles (S 01 75) 20 25 19 17 21 31 24 19 22 17

Special Provisions (S 124‐ 238) 16 10 17 19 14 6 7 12 13 9

The Partnership Act 1932 20 20 15 20 18 14 17 21 18 14

The Sale of Goods Act 1930 13 14 12 11 16 17 16 19 15 11

Carriage of goods by sea Act 1925 8 8 8 6 6 5 9 5 7 5


TOTAL 77 77 71 73 75 73 73 76 74 56

MERCANTILE LAW

OPTIONAL AREA OF SYLLABUSOPTIONAL AREA OF SYLLABUS

A 10 S 10 A 09 S 09 A 08 S 08 A 07 S 07

SYLLABUS INGREDIANTS AVG 25%1 2 3 4 5 6 7 8

Legal System of Pakistan 7 6 6 4 4 7 6 6 6 1

The Negotiable Instrument Ac 1881

12 10 13 13 14 13 15 13 13 3

The Trust Act 1882 4 7 10 10 7 7 6 5 7 2

TOTAL 23 23 29 27 25 27 27 24 26 6


TOTAL 23 23 29 27 25 27 27 24 26 6

MARKS TO BE SECUREDMUST DO AREA = 56OPTIONAL AREA = 6TOTAL = 62 [GRADE B]

HOW MANY MARKS ARE REQUIRED TO PASS FINAL EXAM

50 %O O SSPROBALITY TO PASS EXAM

BY ATTEMPTING MUST DO AREA

100 %SAFTY MARGIN = 12/50 x 100 = 25%


SAFTY MARGIN = 12/50 x 100 = 25%

Q. 1 What are the passing marks?

ANS Passing marks for all subjects are 50%.

Q. 2 Is the passing criteria for those students who have failed once ormore different from those who are appearing for the first time?more different from those who are appearing for the first time?

ANS No, passing criteria for all students are the same irrespective ofthe number of attempts. In fact, the identity of students is notk t th i d th f th i h fknown to the examiner and, therefore, the examiner has no way ofknowing whether the student is making his/her first attempt.

Q. 3 Does the performance in one question of paper affect the marksobtained in other questions?

ANS The answer to one question will have no impact on the marksobtained in other questions.


obtained in other questions.

Q. 4 Does the inability to answer any one question will result in failure inthat paper?

ANS If a student is able to secure 50% marks on the remaining questionsattempted by him, he will be declared pass in that paper. However,keep in mind that of you have been asked to answer question and youhave answered only five. Then you will have to produce perfect answerto compensate the four you didn’t answer in order to pass theexamination. Therefore, be well prepared and attempt all the question.

Q. 5 Does a student’s hand writing have any impact on his performance inthe paper?

ANS No marks are allocated or deducted for hand writing. However, thewriting should at least be legible.

Q. 6 While writing a letter or a report etc. should we use our realnames/addresses or imaginary names/addresses or the roll number?g y

ANS When it is necessary to write a name/address and the name/addresshas not been specified in the question, you should use such names andaddresses like ABC, XYZ, PQR street etc. Specific names and addresses


, , Q por roll number whether your own or imaginary, should never be used.

Standard of paper Examiner’s worries SuggestionsStandard of paper Examiner s worries

• Inadequate knowledge,

Suggestions

• Relatively easy• Broad area of syllabus‐

i h f d

• Not only to pass the examination but

• Lack of practice• Presentation skills,• Failure to

straightforward• Easy‐based on history• Easy‐from core areas

also excel in practical life

• Lower the anxiety higher the quality’

Overall performance

comprehend the requirements,

• Illogical approachP l i f th

higher the quality’• The layout and presentation of answers

• Performed poorly• Better • POOR • Disorganized‐ bad

• Poor analysis of the problems

• Haphazard fashion. • Non‐indication of

answers • Avoid unnecessary Duplication

• Not only emphasis • Disorganized‐ bad impression

• Disappointing • Didn’t perform well

• Non‐indication of question number.

• Cutting , overwriting• Selective study

on practice but pay attention on developing the right concept

WAHEED ANWAR ‐ LLB, FPA, AFA, CA(f)13

• Not satisfactoryy concept.

• Syllabus coverage was identified as one significant issue which should be addressed bythe candidates. A balanced approach should be adopted and all areas should be givenproper coverage.

• Improper use of the English language was identified as another most important reasonfor poor performance in this paper. The students should learn to use appropriate wordsand phrases, without which they will be unable to express or convey their ideas properlyand to the satisfaction of the examiner.and to the satisfaction of the examiner.

• The inability to comprehend the questions correctly was witnessed in a number of casesas would be apparent from the question wise comments. [MLW/SPR 07/Gen]

One of the prerequisites for securing good marks in the professional examinationsis the importance of covering the entire syllabus. Multiple factors, for instance,l ti t di d lib ti i l t tt l k fselective studies, unnecessary deliberations on irrelevant matters, lack of

comprehension of the requirements of the question, improper application of lawto practical situations etc. are some of the facets which contribute towards poorperformances [MLW/SPR 09/Gen]

WAHEED ANWAR ‐ LLB, FPA, AFA, CA(f)14

performances. [MLW/SPR 09/Gen]

THE BEST EXAMINATION TECHNIQUE EVER FOUND IS TOTHE BEST EXAMINATION TECHNIQUE EVER FOUND IS TOWORK HARD (AT THE RIGHT PLACE, AT THE RIGHT TIME, INTHE RIGHT DIRECTION, UNDER THE RIGHT SUPERVISION))

HOWEVER

MOCK EXAMINATION

• 15 days before examination go through real time M o c k E x a m i n a t i o n .

• Simulating exam condition• Simulating exam condition.

• Self assessment.

• Identify and work on your weak areas.

• Go through examiner comments.

REMEMBER:

Actually attempt the questions and not just go through the solutions


Actually attempt the questions and not just go through the solutions

EXAM SIMULATION

Appraisal of performance is best directed by responding to fiveAppraisal of performance is best directed by responding to fivequestions.

(1) What totalmarks you gained in the mock exam?( ) y g

(2) How manymarks you lost because you did not understand thetheory?

(3) How many marks you lost as a result of error in yourresponses?

(4) How many marks were lost because you could not interpret(4) How many marks were lost because you could not interpretthe question or answer a different question?

(5) How many marks were lost because you ran out of time


REMEMBER

Before knowing exam techniques keep in mind that …

(1) Anxietymust be controlled a key factor(1) Anxietymust be controlled – a key factor.

(2) Difficult paper – as it is same for all students so it does not

determine your success.

(3) If you get the easy question wrong you will loose easy marks(3) If you get the easy question wrong you will loose easy marks

and will not pass the exam.


(1) Do good preparation and revision as well.

(2) Get information well in advance about exam center and arrive earlyat the exam to avoid panicat the exam to avoid panic.

(3) Read the paper carefully in first 5 minutes and decide the questionsto answer.

(4) U d t d th ti d h t i k d I l t(4) Understand the question and answer what is asked. Irrelevantanswer will not get marks even if it is excellent. Underline theinstructions and key words in question.

(5) Priority easier questions first(5) Priority – easier questions first

(6) Time management – Marks Vs Time

(7) Spend allocated time on a question and stop writing on it whenthat time is up. However return to it if you have time to spare.

(8) Working and presentation – legible handwriting and professionalpresentation


(9) Don’t think about success or failure while attempting the paper.

MOST COMMONLY MADE MISTAKES(1) Getting stuck over a single question.(2) N t t ti th ti d(2) Not stating the assumptions used.(3) Getting panic and under pressure.(4) Not being quick enough.( ) g q g(5) Inadequate rest before the paper.(6) Sleeping/rest practice at paper time in the ordinary days.

(i.e. 09 – 1200 OR 1400 ‐ 1700)(7) Starting the question without carefully understanding the

requirement of the same.q(8) Rush at the question without planning the answer.(9) Illegible handwriting.(10)W ki i h f i d h i i


(10)Working without cross referencing and pathetic presentation

This word may help you to pass the exam by This word may help you to pass the exam by impressing your examiner.impressing your examiner.p g yp g y

InstructionsInstructionsManage TimeManage Time

IM

PresentationPresentationRelevantRelevantEasy marksEasy marks

MPR

Easy marksEasy marksSurvivalSurvivalSuccessSuccess

ESS


SuccessSuccessS

GENERAL REMARKS ABOUT THE PAPERIt is a common observation that students generallyprepare for Contract Act, 1872 and Partnership Act,1932 paying little or no heed to other civil laws likelegal systems in Pakistan, Carriage of Goods by SeaAct, 1925, Trust Act, 1882 and The NegotiableInstruments Act, 1881 which ultimately results inbelow average performances. Some of the studentsare very elaborative while others extremely brief. Itmust be mentioned here that only a balancedapproach produces good results.


QUESTION – 1

(a) Based on the Legal System of Pakistan, identify the correct answer of the following:(1) District Magistrate is appointed by the:

(i) President (ii) chief justice(i) President (ii) chief justice(iii) federal government (iv) provincial government

(2) The Civil Court does NOT have jurisdiction over:(i) contract and tort claims (ii) disputes concerning land(i) contract and tort claims (ii) disputes concerning land(iii) blackmailing cases (iv) bankruptcy cases

(3) Choose the INCORRECT statement:Following must be considered when examining a precedent before it can beapplied to a case:(i) the precedent must be a proposition of law(ii) the precedent must form part of the obiter dicta of the case(iii) the material facts of each case must be the same(iii) the material facts of each case must be the same(iv) the preceding court must have had a superior status to the later court, such

that its decisions are binding on the later court [03](b) Briefly explain the following terms as used in the Courts in Pakistan.


( ) y p g(i) Juveniles (ii) Decision reversed [04]

Solution – 1

(a) (1) (iv)

(2) (iii)

(3) (ii)

(b) (i) Juveniles:

Any offence other than one punishable with death or transportation for lifeAny offence, other than one punishable with death or transportation for life,committed by any person under the age of fifteen years. The age is calculatedat the date when he appears or brought before the court, may be tried by aDistrict Magistrate working under the Reformatory Schools Act, 1897.District Magistrate working under the Reformatory Schools Act, 1897.

(ii) Decision Reversed:

If an appeal court gives its judgment in favour of the party making the appeal(the appellant) the original decision is said to be reversed(the appellant) the original decision is said to be reversed.


QUESTION – 2

Explain the term “Quasi contract”. Briefly describe different types of relationshipscommonly referred to as quasi contracts under the Contract Act, 1872. [10]Solution

Quasi contract:

A quasi contract is a kind of contract by which one party is bound to pay money inq y p y p y yconsideration of something done or suffered by the other party, though; nocontractual relation exists between the parties. As a result of the above, certain legalrights and obligations are created between the concerned parties. Such type ofrelations resembles those created by the contract and such a contract is called Quasicontract.

It is an obligation based on the principle of equity and justice, which the law creates inthe absence of any formal agreement.

Different Types of relationships causing Quasi Contracts

There are five kinds of quasi contractual obligations. These are discussed below:


q g

Solution ‐ 2

(a) Supply of necessaries: – If a person incapable of entering into a contract, or any onewhom he is legally bound to support, is supplied by another person with necessariessuited to his condition in life the person who has furnished such supplies is entitled tosuited to his condition in life the person who has furnished such supplies is entitled tobe reimbursed from the property of such incapable person.

(b) Payment of lawful dues by interested persons: – A person, who is interested in thepayment of money which another is bound by law to pay, and who therefore pays it, ispayment of money which another is bound by law to pay, and who therefore pays it, isentitled to be reimbursed by the other.

(c) Obligation of a person enjoying benefit of a non‐gratuitous act: – Where a personlawfully does anything for another person, or delivers anything to him, not intendingto do so gratuitously and such other person enjoys the benefit thereof, the latter isbound to make compensation to the former in respect of, or to restore, the thing sodone or delivered.

(d) Responsibility of finder of goods: – A person who finds goods belonging to another(d) Responsibility of finder of goods: – A person, who finds goods belonging to anotherand takes them into his custody, is subject to the same responsibility as a bailee.

(e) Liability of a recipient of goods delivered by mistake or under coercion: – A person towhom money has been paid or anything delivered, by mistake or under coercion, must


y p y g yrepay or return it.

QUESTION – 3

In view of the provisions of Contract Act, 1872 identify the correct answer:

(1) Wasi, with intent to deceive Tipu, falsely represented that twenty thousand motorcycles aref d ll h f d d d h b h f Thmanufactured annually at his factory and induced him to buy the factory.The contract is:

(i) void (ii) Voidable (iii) illegal (iv) Valid

(2) The term “Quid pro quo”means:

(i) something in return (ii) something important

(iii) something of value (iv) something relevant

(3) Which of the following is not an essential element of a valid contract:

(i) adequacy of consideration (ii) capacity to contract

(iii) free consent (iv) none of the above

(4) If a contract provides for the payment of a certain amount on breach of a contract, such(4) If a contract provides for the payment of a certain amount on breach of a contract, suchpayment is termed as:

(i) special damages (ii) nominal damages

(iii) liquidated damages (iv) compensatory damages


(iii) liquidated damages (iv) compensatory damages

QUESTION – 3

(5) Choose the INCORRECT statement:

To constitute a wager, following elements should be present in the agreement:

(i) uncertain event

(ii) each party must be in a win or lose situation

(iii) neither party should have any control over the event( ) p y y

(iv) there should be a promise to pay money only

(6) Aamir has proposed to sell a car to Parkash at a certain price by sending a letter. Thecommunication of the proposal is complete when :

(i) Aamir posts the letter

(ii) Parkash receives the letter

(iii) Aamir comes to know that Parkash has received the letter(iii) Aamir comes to know that Parkash has received the letter

(iv) Parkash posts his acknowledgment to Aamir [06]

SOLUTION

(1) (ii) (2) (i) (3) (i) (4) (iii) (5) (iv) (6) (ii)


(1) (ii) (2) (i) (3) (i) (4) (iii) (5) (iv) (6) (ii)

QUESTION – 4

In the light of the provisions of Partnership Act, 1932 select the correct answer:

(1) Public notice is NOT required to be given in case of:

(i) insolvency of a partner (ii) retirement of a partner

(iii) expulsion of a partner (iv) dissolution of a registered firm.

(2) X and Y formed a partnership firm to undertake construction of a shopping plaza(2) X and Y formed a partnership firm to undertake construction of a shopping plaza.Such a partnership is called:

(i) limited partnership (ii) particular partnership

(iii) partnership at will (iv) implied partnership

(3) The implied authority of a partner does NOT empower him to:

(i) submit a business dispute to arbitration( ) p

(ii) withdraw a suit filed on behalf of the firm

(iii) open a banking account on behalf of the firm

(i ) ll th b


(iv) all the above

QUESTION – 4

(4) Choose the INCORRECT statement:In the absence of a contract to the contrary,(i) i i l d i i f ki i h(i) a partner is not entitled to receive remuneration for taking part in the

conduct of the business(ii) the partners are entitled to share profits equally(iii) the partners are entitled to interest on capital subscribed by them(iii) the partners are entitled to interest on capital subscribed by them(iv) a partner shall indemnify the firm for any loss caused to it by his willful

neglect(5) Where a partner has paid a premium on entering into partnership for a fixed term(5) Where a partner has paid a premium on entering into partnership for a fixed term

and the firm is dissolved before the expiration of that term, such partner shallNOT be entitled to repayment of the premium if the dissolution is :(i) mainly due to his own misconduct( ) y(ii) in pursuance of an agreement between all the partners, containing no

provision for the return of the premium(iii) caused by the death of the partner


(iv) all the above

QUESTION – 4

(6) On dissolution of a firm, where there are joint debts due from the firm and alsoseparate debts due from any partner, the separate property of a partner:

(i) shall be applied proportionately in the payment of the firm’s debts and hisseparate debts

(ii) cannot be used in the payment of the firm’s debts

(iii) shall be applied, in the first instance, in payment of the firm’s debts and thesurplus, if any, in payment of his separate debts

(iv) shall be applied first in the payment of his separate debts and the surplus, if(iv) shall be applied first in the payment of his separate debts and the surplus, ifany, in the payment of the firm’s debts [06]

Solution

(1) (i) (2) (ii)(1) (i) (2) (ii)

(3) (iii) (4) (iii)

(5) (iv) (6) (iv)


QUESTION – 5

(a) Explain the following as described under the Contract Act, 1872.

(i) Undue influence

(ii) Contract of guarantee [04 + 04]

(b) Behram employed Thaseen to sell his car to Asad for Rs. 500,000 and invest theproceeds in Government Bonds. Thaseen invested Rs. 400,000 in Governmentproceeds in Government Bonds. Thaseen invested Rs. 400,000 in GovernmentBonds and Rs. 100,000 in a blue chip company expecting a high return on suchinvestment. Consequently, Behram lost Rs. 50,000 on the blue chip investment.

With reference to the provisions of Contract Act, 1872 describe the rights andWith reference to the provisions of Contract Act, 1872 describe the rights andobligations, if any, of Thaseen under the circumstances. [04]


Solution ‐ 5

5a(i) Undue influence:A contract is said to be induced by “undue influence” where the relation subsistingbetween the parties are such that one of the parties is in a position to dominate thewill of the other and uses that position to obtain unfair advantage over the other.In particular and without prejudice to the generality of the foregoing principle, a

d d b d h ll f hperson is deemed to be in a position to dominate the will of another ‐‐‐(a) where he holds a real or apparent authority over the other or where he stands in

a fiduciary relation to the other; or(b) where he makes a contract with a person whose mental capacity is temporarily or

permanently affected by reason of age, illness or mental or bodily distress.where a person who is in a position to dominate the will of another enters into a

i h hi d h i h f f i hcontract with him and the transaction appears, on the face of it or on theevidence adduced, to be unconscionable, the burden of proving that such contractwas not induced by undue influence shall lie upon the person in a position todominate the will of the other


dominate the will of the other.

Solution ‐ 5

5a(ii) Contract of guaranteeA “contract of guarantee” is a contract to perform the promise, or discharge theli bili f hi d i f hi d f l Th h i h iliability of a third person in case of his default. The person who gives the guarantee iscalled the “surety”; the person in respect of whose default the guarantee is given iscalled the “principal debtor”, and the person to whom the guarantee is given is calledthe “creditor” A guarantee may be either oral or writtenthe creditor . A guarantee may be either oral or written.5(b) Rights of an agentIn the absence of any special contract, payment for the performance of any act is notdue to the agent until the completion of such act.due to the agent until the completion of such act.Therefore, under the given situation, Thaseen is entitled to receive remuneration forselling the car and recovering Rs. 500,000 from Asad and for investing Rs. 400,000 ongood security, according to the instructions given by Behramg y g g yHowever, he is not entitled to receive any remuneration for investing Rs. 100,000 onvolatile security. As he is guilty of misconduct relating to that part of investment.Thaseen is also liable to make good the loss of Rs. 50,000 to Behram as he acted


otherwise than the directions given to him by Behram.

Question ‐ 6

(a) Ramla borrowed Rs. 100,000 from Ovais for a period of three months and kept herjewellery with Ovais as a security. On due date, Ramla defaulted in repayment. Ini f h i i f C A 1872 d ib h di il blview of the provisions of Contract Act, 1872 describe the remedies available toOvais under the circumstances. (04)

(b) Raheel leased a building from Atif, on five years term, for a rent of Rs. 200,000 perd h d b l h l d f l dannum and the payment was guaranteed by Kamal. Raheel defaulted in payment

of the rent in the third year. Atif sued Kamal and recovered the rent from him.Later, Kamal gave a notice to Atif for revoking his guarantee for the remainingperiod of lease Under the Contract Act 1872 discuss whether Kamal is justified inperiod of lease. Under the Contract Act, 1872 discuss whether Kamal is justified indoing so. (04)


Solution ‐ 6

(a) Pawnee’s right where pawnor makes default:

On default in payment of debt by Ramla, Ovais may:

(i) bring a suit against Ramla upon the debt and retain the goods pledged as acollateral security; or

(ii) he may sell the jewellery pledged on giving Ramla reasonable notice of the sale.

If the proceeds of such sale are less than the amount due in respect of the debt,Ramla would still be liable to pay the balance.

If the proceeds of the sale are greater than the amount so due, Ovais shall payp g , p yover the surplus to Ramla

(b) Revocation of a Continuing guarantee:

No, Kamal is not competent to revoke his guarantee. Where a guarantee is given for anNo, Kamal is not competent to revoke his guarantee. Where a guarantee is given for anentire consideration, the contract is not divisible and the guarantee is considered as aspecific guarantee. In this case also, the contract is not one of a continuing guaranteebecause “lease for five years” is an entire or indivisible consideration and not a


fragmented one.

QUESTION ‐ 7

(a) Aziz, Zohair and Ikram are partners in Moon Enterprises, an unregistered firm,engaged in trading business. Ikram contracted on behalf of the firm to supply two

f M h i i i l b f i h k h H Ik k dtons of sugar to Mohsin in special bags of eight kg each. However, Ikram packedthe sugar in bags of ten kg each. Consequently, Mohsin accepted the sugar butrefused to pay the full amount resulting in a loss of Rs. 52,000 to the firm.

h l h f h f h l h f llIn the light of the provisions of Partnership Act, 1932 explain the following:

(i) Can Zohair file a suit against Ikram for the recovery of the loss as it wascaused due to Ikram’s mistake? (03)

(ii) Can Moon Enterprises file a suit against Mohsin for the recovery of the fullamount? (03)

(b) Advise Aziz, Zohair and Ikram about the procedure they should follow for the( ) p yregistration of Moon Enterprises, as enumerated under the Partnership Act, 1932.

(08)


Solution ‐ 7

(a) Effect of non‐registration:(i) No Zohair cannot file a suit against his co‐partner Ikram to recover the loss, as in

case of an unregistered firm no suit can be instituted in a Court by any co partnercase of an unregistered firm no suit can be instituted in a Court by any co‐partnerto enforce a right arising from a partnership contract, or conferred by aPartnership Act, unless the firm is registered and the person suing is or has beenshown in the Register of Firms as a partner in the firm.shown in the Register of Firms as a partner in the firm.

(ii) Similarly, Moon Enterprises also cannot file a suit against Mohsin to enforce itsright arising from a contract in the court of law. If Moon Enterprises wants to file asuit it will have to get registered itself before filing a suit. The persons suing as afirm should be shown in the Register of Firms as partners in the firm.

(b) Procedure for registration of a firm:The registration is obtained by filing an application on a prescribed form accompaniedby the prescribed fee and filing the same with the Registrar of the Firms of the area inby the prescribed fee and filing the same with the Registrar of the Firms of the area inwhich any place of business of the firm is situated or proposed to be situated. Thisapplication can be sent by post also.The statement should be signed and verified in the prescribed manner by all the


g p ypartners, or by their agents specially authorized in this behalf.

QUESTION ‐ 8

(a) Under the provisions of Sale of Goods Act, 1930 briefly explain the terms“Condition” and “Warranty”. Briefly describe the circumstances in which a“C di i ” b d “W ” d h b A (07)“Condition” can be treated as a “Warranty” under the above Act. (07)

(b) When is a buyer deemed to have accepted the goods under the Sale of Goods Act,1930? (03)

( ) f d h f l b f k l l(c) Arif contracted to purchase from Talib 100 containers of cooking oil in special size containers of 15 liters each. When ready and packed, Talib informed Arif. Before Arif could reach the premises, fire broke out and the entire stock was destroyed. Arif contended that Talib should bear the loss as the goods were not delivered toArif contended that Talib should bear the loss as the goods were not delivered to him.

Who in your opinion should bear the loss? Discuss with reference to the Sale of Goods Act 1930? (03)Goods Act, 1930? (03)


Solution ‐ 8

(a) Condition and Warranty:ConditionA di i i i l i i l h i f h hA condition is a stipulation essential to the main purpose of the contract, thebreach of which gives rise to a right to treat the contract as repudiated.WarrantyA warranty is a stipulation collateral to the main purpose of the contract theA warranty is a stipulation collateral to the main purpose of the contract, thebreach of which gives rise to a claim for damages but not to a right to reject thegoods and treat the contract as repudiated.When condition to be treated as warranty:When condition to be treated as warranty:Where a contract of sale is subject to any condition to be fulfilled by the seller, thebuyer may waive the condition or elect to treat the breach of the condition as abreach of warranty and not as a ground for treating the contract as repudiated.y g g pWhere the buyer has accepted the goods or part thereof and the contract isindivisible, he will have to treat the breach of any condition by the seller as abreach of warranty only and not as a ground for rejecting the goods and treating


the contract as repudiated.

Solution ‐ 8

(b) The buyer is deemed to have accepted the goods under the followingcircumstances:

(i) when he intimates to the seller that he has accepted them or

(ii) when the goods have been delivered to him and he does any act in relation tothem which is inconsistent with the ownership of the seller, or

(iii) when after the lapse of a reasonable time he retains the goods withoutintimating to the seller that he has rejected them.

(c) Risk prima facie passes with property:(c) Risk prima facie passes with property:

Arif would bear the entire loss, as the ownership in the goods had passed to him as soon as the goods were put in deliverable state and notice of the fact was given by Talib irrespective of the fact whether delivery has been made or not.by Talib. irrespective of the fact whether delivery has been made or not.


QUESTION ‐ 9

(a) Based on the provisions of Negotiable Instruments Act, 1881 briefly explainwhether the following are promissory notes or not.(i) I i R h d d R 5 000 i(i) I promise to pay Rahat on demand Rs. 5,000 at my convenience.(ii) On demand, I promise to pay Sonu or order Rs. 5,000, for value received.(iii) I promise to pay Adil or order Rs. 5,000 and 500 shares of Sigma Limited.(iv) I promise to pay Mahi or order Rs 5 000 with interest calculated at quarterly(iv) I promise to pay Mahi or order Rs. 5,000 with interest calculated at quarterly

rests.(v) I promise to pay you or your successors on demand Rs. 10,000.(vi) I promise to pay Rafi or order Rs. 10,000 seven days after Salik’s death.(vi) I promise to pay Rafi or order Rs. 10,000 seven days after Salik s death.(vii) I am liable to pay Ahmad Rs. 5,000. [07]

(b) Haris drew a bill of exchange on Idress which was payable three months aftersight. The bill passed several hands before Ali became its holder. Ali presented theg p pbill to Idress for payment who dishonoured the bill by non‐payment. Fouad, inturn, paid the bill to Ali without any consideration.Under the Negotiable Instruments Act, 1881 enumerate the rights available to


Fouad on the bill and the conditions he must fulfill to enforce such rights. [05]

Solution ‐ 9

(a) (i) It is not a promissory note as promise to pay is not “unconditional”.

(ii) It is a valid promissory note containing all the essential elements.

(iii) It is not a promissory note as the payment is not in terms of money only.

(iv) It is not a promissory note as the amount payable under it is not certain.

(v) It is not a promissory note as the payee in the instrument is not certain(v) It is not a promissory note as the payee in the instrument is not certain.

(vi) It is a valid promissory note. It is not considered to be conditional, for it iscertain that Salik will die, though the exact time of his death is uncertain.

(vii) It is not a promissory note as it lacks unconditional undertaking. There is onlyan acknowledgement of indebtedness.


Solution ‐ 9

(b) Payment for honour:

Yes Fouad is entitled to all the rights, in respect of the bill, which were available toAli at the time of such payment. Fouad may recover the amount along withinterest from Idress, on whose honour he paid the amount to Ali and with allexpenses properly incurred by him in making such paymen

However, in order to make such payment for honour, the bill of exchange isrequired to be noted or protested for non‐payment. Also Fouad or his agent in thisbehalf must have previously declared before a notary public the party (in this caseIdress) for whose honour he was payingand that such declaration had beenrecorded by such notary public.


QUESTION ‐ 10

(a) Under the Carriage of Goods by Sea Act, 1925 list various circumstances underwhich a carrier shall not be responsible for loss or damage to the cargo. (08)

(b) Ashok, Ravi and Meher were partners. Ashok bequeathed all his property in thepartnership business to Ravi in trust for Mazen. Ashok died. Ravi and Mehercontinued with the partnership business without settling the account of Ashok.

In the light of the Trust Act, 1882 discuss the rights available to Mazen against Raviand Meher. (04)


Solution ‐ 10

(a) The carrier shall not be responsible for loss or damage arising or resulting from:

(i) act, neglect or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship:

(ii) fire, unless caused by the actual fault or privity of the carrier:

(iii) perils, dangers and accidents of the sea or other navigable waters:(iii) perils, dangers and accidents of the sea or other navigable waters:

(iv) act of God:

(v) act of war:

(vi) act of public enemies:

(vii) arrest or restraint of princes, rulers or people, or seizure under legal process:

(viii) quarantine restriction:

(ix) act or omission of the shipper or owner of the goods, his agent or representative:


p

Solution ‐ 10

(x) strikes or lock‐outs or stoppage or restraint of labour from whatever cause whether partial or general:

(xi) riots and civil commotions:(xii) saving or attempting to save life or property at sea:(xiii) wastage in bulk or weight or any other loss or damage arising from inherent

defect, quality or vice of the goods:(xiv) insufficiency of packing:(xv) insufficiency or inadequacy of marks:(xvi) latent defects not discoverable by due diligence:(xvii) any other cause arising without the actual fault or privity of the carrier, or

without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the default or neglect of the agents or servants of the carrier contributed to the loss or d


damage.

Solution ‐ 10

(b) Wrongful employment by partner‐trustee of trust property for partnershippurposes:

Mazen is entitled to compel Ravi to account for so much of the profits as arederived from Ashok’s share of property in the partnership.

Ravi is also liable to Mazen for the improper employment of Ashok’s assets.

Mazen can also compel Meher, jointly and severally with Ravi, if he had a notice ofthe breach of trust. Otherwise, Meher would not be personally liable to Mazen.


MOCK EXAMMOCK EXAMFOR PRACTICEMARKS : 100TIME : 3 HRS

QUESTIONS AND QUESTIONS AND

ANSWERS SESSION ANSWERS SESSION

…..…???


• All course material, study techniques, key areasemphasized during this presentation representmy view point and not that of ICAP

• The institute dose not prescribe a particularpublisher although recommended coursepublisher although recommended coursematerial. List is available in the yellow book.

• Answers and discussion of exam question arethe personal views of the presenter.


INTRODUCTION OF PRESENTERWAHEED ANWAR (ADVOCATE HIGH COURT) ( )MEMBERSHIPS Punjab Bar Council (PBC)

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