Mercantile Law MCQs - 2025

Section 34 specifies grounds for setting aside an award; if none apply, the court must refuse to overturn it.

Section 55 covers conditions precedent (obligations that must be fulfilled before a party’s performance is due).

Courts can set aside an arbitral award under Section 30 of the Arbitration Act, 1940, if the arbitrator exceeds jurisdiction, commits misconduct, or violates legal principles—not merely because a party finds it unfair.

Banks must investigate disputes within 45 days and resolve them per regulatory guidelines under the Act.

Only the drawee (person ordered to pay) can accept a bill of exchange, making them liable (Section 7).

A promissory note requires the maker’s signature, not the payee’s (Section 4). The payee is the recipient, not the signer.

This landmark case established that a bailee (custodian) in a gratuitous bailment (free service) is liable for negligence if they fail to take reasonable care of the goods.

The Competition Commission of Pakistan can impose a penalty of up to 10% of a company’s annual turnover for anti-competitive practices under Section 38 of the Competition Act, 2010.

Provincial Consumer Protection Councils are advisory bodies that promote consumer awareness and rights but do not have enforcement powers like punishing businesses or regulating prices.

A valid digital signature under the Ordinance must be issued by a licensed Certification Authority (CA) to ensure authenticity and non-repudiation.

Section 17 allows courts to enforce an arbitral award as a legal decree if a party refuses to comply voluntarily.

Section 14(a) implies that the seller has legal ownership and authority to transfer title to the buyer.

Section 15 mandates that goods sold by description must match the description (e.g., online purchases), even if not inspected.

Consumer courts under the Consumer Protection Act, 2006, primarily deal with awarding compensation to aggrieved consumers. They do not have the power to imprison business owners, regulate market prices, or grant tax exemptions.

Dishonor of a cheque due to insufficient funds (Section 138) can lead to criminal liability (fine or imprisonment) if the drawer issued it knowingly or fraudulently.

A sale contract requires transfer of ownership, tangible goods, and a determinable price, but no guarantee of quality unless explicitly agreed (implied conditions apply).

The Ordinance governs e-transactions, digital signatures, and data privacy but does not regulate intellectual property rights, which fall under separate IP laws.

A holder in due course (Section 9) takes the negotiable instrument (e.g., cheque, promissory note) in good faith, for value, and without notice of defects, thus acquiring a clean title.

The case defined consideration as "a right, interest, profit, or benefit to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other."

Contracts with minors are void ab initio (invalid from the outset) under Section 11 of the Contract Act, 1872, because a minor lacks the legal capacity to enter into a binding agreement.