Commercial and Mercantile Laws (Arbitration, Negotiable Instruments, Companies, IP, Labour)
What the exam tests
Commercial law questions test arbitration, cheque dishonour, company law, intellectual property and labour codes. The highest-yield area is section 138 of the Negotiable Instruments Act.
Core rules
- Arbitration agreement must be in writing (s.7); it is separable from the main contract.
- Section 9 gives interim measures before or during arbitral proceedings; section 11 deals with appointment of arbitrators.
- An award can be challenged under s.34 only on limited grounds; s.36 governs enforcement.
- Section 138 NI Act requires: a cheque for a legally enforceable debt, presentation within three months, dishonour, notice within 30 days, 15 days to pay, and complaint within one month of the cause of action.
- Companies Act 2013 covers incorporation, directors' duties, oppression and mismanagement (s.241), and winding up.
- IP rights are territorial; registration is not always compulsory for copyright, but it is for trademarks and patents.
Worked example
A cheque dated 1 January is presented on 20 January and dishonoured on 21 January. The bank returns it with the memo 'insufficient funds'. The holder sends notice on 10 February, which the drawer receives on 12 February. The drawer does not pay within 15 days. The cause of action arises on 28 February, and the complaint must be filed within one month, i.e., by 28 March. A complaint filed on 20 March is within time. Reasoning: the notice is within 30 days of dishonour and the complaint is within one month of the cause of action.
Traps
A cheque given as security can still attract s.138 if the debt exists. Notice must go to the drawer's correct address. Signing directors are not automatically liable; vicarious liability needs specific pleading. An arbitration clause does not oust the court's jurisdiction for interim relief under s.9.