merchantile law papers

Presented by:

Mohammad Rehan SiddiquiPartner

103-104, Amber Estate, Main Shahrah-e-Faisal, KarachiPhone: 021 – 4535712-3Fax: 021 – 4546291E-mail: [email protected]

MERCANTILE LAW – PAPER B5

2

1. PLANNING

INDICATIVE GRIDSYLLABUS OUTLINERECOMMENDED 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

TABLE OF CONTENTS

3

PLANNING

OBJECTIVE:

The Syllabus aims to enable the students to develop a professional approach towards matters

INDICATIVE GRID

Syllabus Content Area Weightage1. Introduction to legal System2. Contract Act 1872

3. Partnership Act 19324. Negotiable Act 1881

5. Sale of Goods Act 19306. Trust Act 19207. Carriage of Goods by Sea Act 1925

Total

40

30

30

100Note: The weightings given above are for guidance purposes only and some deviations in

setting of papers could be expected.

4

1. Introduction to Legal SystemSources of law; process of legislation; andthe legal system in Pakistan

2. Contract Act 1872All Sections

3. Partnership Act 1932All Sections

4. Negotiable Instruments Act 1881All Sections

5. Sale of Goods Act 1930All Sections

6. Trust Act 1920Duties and Liabilities of Trustees;Rights powers and liabilities of thebeneficiary;Revocation of Trust

7. Carriage of Goods by Sea Act 1925All Sections

OUTLINE OF SYLLABUS

5

RECOMMENDED READING

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.

BASIC READINGS

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

6

RECOMMENDED READING

1. Elements of Mercantile Law by N.D Kapoor.

2. Mercantile Law by M.C. Kuchhal

3. Mercantile Law by M.C. Shukla.

4. Mercantile Law by Luqman Baig.

5. Business Law: Khalid Mehmood Cheema.

6. Lectures on Business Law by

Rehan Aziz Sherwani

This book covers the entire syllabus and is written in simple language.

These books cover most of the syllabus area.

This book covers most of the syllabus area

Especially useful for the topic “Introduction to Legal System”.

A concise book on mercantile law, recommended for revision purposes.

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).

REFERENCE BOOKS

7

CONSIDERATION FOR REFERNECE BOOKCONSIDERATION 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.

8

ATTEMPTING THE PAPER ATTEMPTING 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

HOW TO ATTEMPT THE PAPER HOW TO ATTEMPT THE PAPER

9

ATTEMPTING SCENARIO BASED QUESTIONSATTEMPTING SCENARIO BASED QUESTIONS

1. The reason for the introduction of these types of questions is to discourage rotelearning

2. It has been noted that most students only give the conclusions in such type ofquestions

3. The most important aspect of asking such questions is to test whether you canapply 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 afifty percent chance of getting it right. ICAP knows this and therefore no marks forguessing the conclusion – you must support it.

7. If you have logical reasoning that forms the basis for your conclusions you will getpass marks even if your conclusion does not match with that of the examiner .

10

HOW TO RECTIFY YOUR 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 oryou answered a different question from the one you were asked?

5. How many marks were lost because you ran out of time?

ANALYSIS OF MISTAKES

11

RECTIFICATION / CORRECTIONSStep 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.

HOW TO RECTIFY YOUR MISTAKES(Contd…)

12

OBSERVATIONS AND STRONG OBSERVATIONS AND STRONG RECOMMENDATIONSRECOMMENDATIONS

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.

13

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

State

Define

Make a list of

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

Give the exact meaning of

Describe

Distinguish

Explain

Identify

Illustrate

Communicate the key features.

Highlight the differences between

Make clear or intelligible/State the meaning of

Recognize, establish or select after consideration

Use an example to describe or explain Something

14

ApplyCalculate/computeDemonstrate

PrepareReconcileSolveTabulate

To put to practical useTo ascertain or reckon mathematically To prove with certainly or to exhibit by practical means

To make or get ready for useTo make or prove consistent/compatibleFind an answer toArrange in a table

Analyze CategorizeCompare and contrast

ConstructDiscussInterpret Produce

Examine in detail the structure ofPlace into a defined class or divisionShow the similarities and/or difference between

To build up or compileTo examine in detail by argumentTo translate into intelligible or familiar terms To create or bring into exercise

AdviceEvaluateRecommended

To counsel, inform or notify.To appraise or assess the value ofTo advise on a course of action

UNDERSTANDING OF THE VERB USED IN THE EXAMINATION QUESTION

(Contd…)

15

EXAMINATION QUESTIONS AUTUMN 2009

Q.2Q.2 DescribeDescribe the circumstances under which an agreement made without the circumstances under which an agreement made without consideration is considered valid and binding under the Contractconsideration is considered valid and binding under the Contract Act, 1872.Act, 1872.

MarksMarks--(07)(07)

Please note carefully the requirement of the questionPlease note carefully the requirement of the question

16

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

Ans.2Ans.2

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

1.1. Natural Love and affectionNatural Love and affection2.2. Past performancePast performance3.3. Time barred debtTime barred debt4.4. GiftGift5.5. AgencyAgency6.6. RemissionRemission7.7. Charity and DonationCharity and Donation

EXAMINATION QUESTIONS AUTUMN 2009 – COMMON MISTAKES

17

The requirement of the question was to The requirement of the question was to ““describedescribe”” and and notnot just to just to ““list downlist down”” the circumstances. the circumstances.

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

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

Ans.2Ans.2

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

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

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

3.3.Time barred debt:Time barred debt: A promise, made in A promise, made in writingwriting and and signed by the person to be charged signed by the person to be charged therewiththerewith, or by his , or by his agentagent generally or specially authorized in that behalf, to pay whollygenerally or specially authorized in that behalf, to pay wholly or in part a or in part a debt which is debt which is barred by the law for the limitation barred by the law for the limitation of suits. of suits.


(Contd…)

18

Ans.2Ans.2

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

4.4. Gift:Gift: any gift which is any gift which is actually made actually made as between the donor and the as between the donor and the doneedonee. .

5.5. Agency: Agency: no consideration is necessary to no consideration is necessary to create an agencycreate an agency

6.6. Remission: Remission: Remission Remission by the by the promiseepromisee of the performance of the promiseof the performance of the promise. A creditor . A creditor can agree to can agree to give up either the whole or part of his claimgive up either the whole or part of his claim or may agree to or may agree to extend time for extend time for the performance of the promise the performance of the promise and no consideration is required for such an agreement.and no consideration is required for such an agreement.

7.7. Charity and Donation: Charity and Donation: a a promise to contribute to charitypromise to contribute to charity, though gratuitous, would be , though gratuitous, would be enforceable, provided the enforceable, provided the promiseepromisee on the faith of such on the faith of such promise undertakes a liabilitypromise undertakes a liability not not exceeding the amount so promised. exceeding the amount so promised.


(Contd…)

19

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



EXAMINATION QUESTIONS AUTUMN 2009 – SCENARIO BASED

20

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

Ans.5(b)Ans.5(b)

Contingent Contract Contingent Contract

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

Essentials of a contingent contract Essentials of a contingent contract

The following are the essential characteristics of a contingent The following are the essential characteristics of a contingent contract: contract:

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

(ii) the event must be uncertain; (ii) the event must be uncertain;

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


MISTAKES

21

In answering the second part of the question most of the studentIn answering the second part of the question most of the students s correctly quoted the law, but failed to apply it in a practical correctly quoted the law, but failed to apply it in a practical situation. They failed to understand that situation. They failed to understand that completion of a completion of a bungalow in itself is a considerationbungalow in itself is a consideration for the payment and for the payment and its its not a collateral eventnot a collateral event and therefore, gave a and therefore, gave a wrongwrong answeranswer..


22

In order to understand the concept clearly, lets take an exampleIn order to understand the concept clearly, lets take an example: In the : In the same question if we say that the payment same question if we say that the payment instead ofinstead of ““on completion of a on completion of a projectproject”” would be made would be made ““on approval by an architecton approval by an architect””, it would become a , it would become a contingent contract.contingent contract.

Now in the revised scenario, Now in the revised scenario, approval by an architect is a approval by an architect is a collateral eventcollateral event, , which is independent of the consideration.which is independent of the consideration.


23


24


STOP WASTING YOUR TIME

25


STOP WASTING YOUR TIME

26

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



EXAMINATION QUESTIONS AUTUMN 2009

27

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

Ans.6(a)Ans.6(a)

Following are the implied authority of a partner:Following are the implied authority of a partner:

(a)(a) arbitration; arbitration; (b) (b) open a banking account ;open a banking account ;(c) (c) compromise a claim;compromise a claim;(d) (d) withdraw a suit ;withdraw a suit ;(e) (e) admit any liability;admit any liability;(f) (f) purchased immovable property;purchased immovable property;(g) (g) sale immovable property; andsale immovable property; and(h) (h) enter into partnership.enter into partnership.


28

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

For instance:For instance:

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

open a banking account : open a banking account : { a partner can open a bank account{ a partner can open a bank accountin firmin firm’’s name but not in his own name, this fact is not evidents name but not in his own name, this fact is not evidentfrom the writing}from the writing}

enter into partnership: enter into partnership: { a partner can enter into partnership{ a partner can enter into partnershipwith other persons but cannot enter into partnership onwith other persons but cannot enter into partnership onbehalf of the firm}behalf of the firm}

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


29

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

Ans.6(a)Ans.6(a)

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

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

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

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

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

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

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

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

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

EXAMINATION QUESTIONS AUTUMN 2009 – CORRECT ANSWER

30

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.

merchantile law papers

Documents