Federal Public Service Commission (FPSC)
Competitive Examination for Recruitment to BPS-17 Posts under the Federal Government
Time Allowed: 3 Hours
MAXIMUM MARKS: 100 Marks
Paper : Mercantile Law
PART-I (Objective) 20 Marks
1. A kind of resolution that is required to alter the capital clause of the memorandum of Association is known as:
(A) Equity Resolution
(B) Ordinary Resolution
(C) Special Resolution
(D) Shareholders’ resolution with notice
Answer: C
2. A minor partner is liable to the third party:
(A) Personally
(B) Up to his share
(C) 3/4 of the actual loss
(D) For nothing
Answer: D
3. Compensation granted for indirect and remote losses is known as:
(A) Compensatory Damages
(B) Punitive Damages
(C) Special Damages
(D) Vindictive Damages
Answer: D (Note: Remote/indirect losses are generally not recoverable at all; however, among standard damage categories, special or punitive/vindictive deal with specific scopes, though remote losses fall under non-recoverable heads or remote/consequential exclusions. “None of these” is also standard, but let’s check standard options: standard contractual damages exclude remote losses altogether under Hadley v. Baxendale.)
4. In the light of the Contract Act ______________ is not a valid consideration.
(A) Illusory Consideration
(B) Past Consideration
(C) Present Consideration
(D) All of these
Answer: A
5. An agreement carrying inadequate consideration is:
(A) Valid
(B) Void
(C) Voidable
(D) None of these
Answer: A (Note: Under Section 25 of the Contract Act, an agreement without consideration is void, but an agreement with inadequate consideration is valid if freely given.)
6. A certificate of commencement of business is required for:
(A) Unlisted public company
(B) Listed public company
(C) Registered public company
(D) All of these
Answer: D (Note: Historically required for public companies before commencing business or exercising borrowing powers, though modern amendments like Companies Act 2017 streamlined business commencement provisions, public companies generally fell under this framework.)
7. In a limited company _______________ stands in a fiduciary relationship.
(A) Shareholders
(B) Promoters
(C) Creditors
(D) None of these
Answer: B
8. An equity capital might be:
(A) Nominal capital
(B) Unissued capital
(C) Paid up capital
(D) All of these
Answer: C (Note: Paid-up capital represents actual equity capital contributed and paid by shareholders.)
9. Members holding not less than _________ percent of the issued share capital of a company can make an application to the court against oppression.
(A) 10
(B) 20
(C) 33
(D) None of these
Answer: A (Note: Under the Companies Act, members holding not less than 10% of the issued share capital can apply for relief against oppression and mismanagement.)
10. A class action is an action by:
(A) A plaintiff against multiple defendants
(B) By multiple plaintiffs against a defendant
(C) By shareholder against company
(D) All of these
Answer: B (Note: A class action involves a representative lawsuit where a group of plaintiffs collectively sue a defendant.)
11. While conducting commercial legal research the initial step is to:
(A) Determine the relevant jurisdiction
(B) Find the relevant case law
(C) Identify the relevant legal issue
(D) All of these
Answer: C (Note: Identifying the core legal issue/question is universally recognized as the foundational starting point before looking up jurisdictions or case law.)
12. __________ purchases shares of a public company and arranges for their sale to the general public.
(A) Contributory
(B) Underwriter
(C) Promoter
(D) None of these
Answer: B
13. When the transfer of the property in the goods is to take place at a future time the contract is known as:
(A) Sale
(B) Provisional sale
(C) Conditional sale
(D) An agreement to sell
Answer: D
14. A stipulation collateral to the main purpose of the contract of sale of goods is called:
(A) Guarantee
(B) Warranty
(C) A condition
(D) A stipulation
Answer: B
15. In case of dishonor of a negotiable instrument notice is required to be given to:
(A) Drawer
(B) All endorsers
(C) Both (A) & (B)
(D) None of these
Answer: C
16. Questions arising at the meeting of the competition commission shall be determined by the ___________ of the members present.
(A) Vote of majority
(B) Vote of special majority
(C) Consensus
(D) None of these
Answer: A
17. In Payment Systems and Electronic Fund Transfers Act, 2007 electronic fund transfer means any transfer of funds which is initiated through:
(A) Electronic Terminal
(B) Telephonic instrument
(C) Both (A) & (B)
(D) None of these
Answer: C
18. A negotiable instrument is freely transferable by endorsement if it is ____________ instrument.
(A) Order
(B) Bearer
(C) Both (A) & (B)
(D) None of these
Answer: A (Note: Order instruments are transferred by endorsement and delivery, whereas bearer instruments are transferred by delivery alone.)
19. Doctrine that every person dealing with the company is presumed to have read and understood the Memorandum and Articles of Association is known as:
(A) Caveat emptor
(B) Indoor management
(C) Constructive notice
(D) None of these
Answer: C
20. In a contract of guarantee the person for whom the guarantee is given is called:
(A) Creditor
(B) Principal debtor
(C) Surety
(D) None of these
Answer: B
PART-II (Subjective) 80 Marks
Attempt ONLY FOUR Questions from PART-II. (20×4)
PART-II
Q.2. Describe the relationship, if any, between separate legal personality and limited liability of the corporate form of business.
Q.3. What is meant by charge? Explain the legal nature and significance of floating charge in company law.
Q.4. In the presence of majority rule, how well are minority shareholders protected in the Companies Act 2017?
Q.5. In the light of the Competition Act 2010, discuss six of the most common practices in Pakistani markets that prevent, restrict, reduce, and distort competition through abuse of dominant position.
Q.6. Discuss the basic legal features of a partnership agreement and the rights of a partner by estoppel in the light of the Partnership Act.
Q.7. Explain the meaning and legal function of negotiable instruments in the light of the Negotiable Instruments Act 1881.
Q.8. Write notes on any two of the following:
(a) Cumulative voting
(b) Legal status of promoters
(c) Doctrine of indoor management
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