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Business LawBusiness Law

IntroductionIntroduction

What is business?What is business? (Business is as old as civilization. Over the (Business is as old as civilization. Over the period of time it has gained enormous power period of time it has gained enormous power over customers/employees/shareholders)over customers/employees/shareholders)

Environment of BusinessEnvironment of Business

Factors Constituting the Business Factors Constituting the Business EnvironmentEnvironment

Meaning & Nature of LawMeaning & Nature of LawWhat is Law?What is Law? ( Legally Accepted Ways) ( Legally Accepted Ways)

Law to ; Law to ; a)a) A CitizenA Citizenb)b) A LawyerA Lawyerc)c) A LegislatorA Legislatord)d) A JudgeA Judge

““A set of rules derived by the State to regulate the conduct of A set of rules derived by the State to regulate the conduct of its people, recognized by the State and enforced by it on its its people, recognized by the State and enforced by it on its people termed as Law” people termed as Law” ““Business Law represents all those legal rules which are Business Law represents all those legal rules which are connected with Trade, Industry & Commerce”connected with Trade, Industry & Commerce”

Nature of Law -- Nature of Law -- Changing (Non Static)Changing (Non Static) Objective – Establishing OrderObjective – Establishing Order

Characteristics of LawCharacteristics of LawA body of rulesA body of rules

For the guidance and conduct of personsFor the guidance and conduct of persons

ImposedImposed

Enforced by the executiveEnforced by the executive

Contents are non-staticContents are non-static

Develop Social Order & Compel Social Develop Social Order & Compel Social Member to remain in orderMember to remain in order

Serves Social/Political/Economic purposeServes Social/Political/Economic purpose

Law & MoralityLaw & Morality

Law of Law of ContractContract

““ The law of contract is that branch of law The law of contract is that branch of law which determines the circumstances in which determines the circumstances in which promises made by the parties to a which promises made by the parties to a contract shall be legally binding on them. Its contract shall be legally binding on them. Its rules define the remedies that are available rules define the remedies that are available in court of law against a person who fails to in court of law against a person who fails to perform his/her contract and conditions perform his/her contract and conditions under which the remedies are available”under which the remedies are available”

Nature of Indian Contract Act, 1872Nature of Indian Contract Act, 1872Provides for remedies against failureProvides for remedies against failureThe conditions under which remedies are The conditions under which remedies are availableavailableEnsures realization of reasonable expectation of Ensures realization of reasonable expectation of the partiesthe partiesNot as exhaustive act (deals with the general Not as exhaustive act (deals with the general principles of law of contract and some special principles of law of contract and some special contracts only)contracts only)Doesn’t lay down limits & duties rather create Doesn’t lay down limits & duties rather create limiting principleslimiting principlesThe act is neither the whole law agreements nor The act is neither the whole law agreements nor whole law of obligationswhole law of obligationsjus in rem v/s jus in personem (privity of jus in rem v/s jus in personem (privity of contract)contract)

Agreement & ContractAgreement & Contract

““A contract is an agreement made between A contract is an agreement made between two or parties which the law will enforce”two or parties which the law will enforce” - - Section 2 (h)Section 2 (h)

Agreement = Offer + Acceptance >> Promise Agreement = Offer + Acceptance >> Promise (Promisee & Promisor)(Promisee & Promisor)

Consensus ad idem (Identity of minds)Consensus ad idem (Identity of minds)

Legal Obligation should be createdLegal Obligation should be created

What is a Contract ?What is a Contract ?

– An Agreement An Agreement

• Enforceable by lawEnforceable by law• Made between at least two partiesMade between at least two parties• By which rights are acquired by one, &By which rights are acquired by one, &• Obligations are created on the part of Obligations are created on the part of

anotheranother• And on failure, the other party has a remedy.And on failure, the other party has a remedy.

AGREEMENT & ENFORCEABILITYAGREEMENT & ENFORCEABILITY

Every promise and Every promise and

very set of promises very set of promises forming forming

consideration for consideration for each other.each other.

Enforce by lawEnforce by law

““All agreements are not All agreements are not contracts, but all contracts, but all

contracts are contracts are agreements”agreements”

Essential Elements of a Valid Essential Elements of a Valid ContractContract

Offer & AcceptanceOffer & AcceptanceIntention to create a legal relationshipIntention to create a legal relationshipLawful consideration –Lawful consideration – (advantage/benefits (advantage/benefits moving to & from - between the two parties)moving to & from - between the two parties)Capacity (Competency) of Parties – Capacity (Competency) of Parties – (age/sound (age/sound mind/not disqualified to enter)mind/not disqualified to enter)Free & Genuine consent of the partiesFree & Genuine consent of the parties – – (undue influence, fraud, misrepresentation may (undue influence, fraud, misrepresentation may cause absence of free consent)cause absence of free consent)

Lawful ObjectsLawful ObjectsMust not have been expressly declared VoidMust not have been expressly declared VoidCertainty & possibility of performanceCertainty & possibility of performanceLegal FormalitiesLegal Formalities

Kinds of ContractKinds of Contract

1. Classification according to Legal Effects:1. Classification according to Legal Effects:a.a. Valid Contracts : Valid Contracts : enforceable at lawenforceable at law

b.b. Void Contracts: A contract when it Void Contracts: A contract when it ceases to be enforceable by lawceases to be enforceable by lawValid at beginning (e.g. X offer to marry y is valid, but later on x dies )Valid at beginning (e.g. X offer to marry y is valid, but later on x dies )

c. Voidable Contract: c. Voidable Contract: (absence of free consent)(absence of free consent)

d.d. Illegal ContractsIllegal ContractsConsideration/object is illegalConsideration/object is illegal

e. Unenforceable Contracte. Unenforceable ContractCannot be enforced in court due to technical defects (absence of Cannot be enforced in court due to technical defects (absence of stamp)stamp)


2. Classification according to Formation2. Classification according to Formation

a.a. Express ContractExpress Contract

In writing (e.g. car sell) In writing (e.g. car sell)

b.b. Implied ContractImplied Contract

Not in writing ( e.g. went a hotel for tea)Not in writing ( e.g. went a hotel for tea)

c.c. Quasi ContractQuasi Contract

no intention to create contract but law no intention to create contract but law imposed a contract( e.g. imposed a contract( e.g. finder of lost finder of lost goods)goods)


3. Classification according to Performance3. Classification according to Performance

a.a. Executed Contract Executed Contract ((delivery has given but price delivery has given but price has paid)has paid)

b.b. Executory ContractExecutory Contract

(e.g. delivery has given but price not paid)(e.g. delivery has given but price not paid)

c. Unilateral Contractc. Unilateral Contract

one party yet to perform obligations (e.g. Coolie)one party yet to perform obligations (e.g. Coolie)

d. Bilateral Contractd. Bilateral Contract obligation for both the parties( e.g. sell after obligation for both the parties( e.g. sell after 10days)10days)


4. Classification according to Form4. Classification according to Form

a.a. Formal Contract:Formal Contract:

required to satisfy some legal formalitiesrequired to satisfy some legal formalities

b. Simple Contract:b. Simple Contract:

all others are simple contractsall others are simple contracts

Offer & AcceptanceOffer & Acceptance

““A person is said to have made an A person is said to have made an offer/proposal, when he “signifies to offer/proposal, when he “signifies to another his willingness “to do” or “not to another his willingness “to do” or “not to do” (i.e. abstain from doing) anything, do” (i.e. abstain from doing) anything, with a view to obtaining the ascent of with a view to obtaining the ascent of that other to such act or abstinence” that other to such act or abstinence”

– – Section 2 (a)Section 2 (a)

Offerer/Proposer/Promisor Offerer/Proposer/Promisor Offeree/Proposee/Promisee/AcceptorOfferee/Proposee/Promisee/Acceptor

Essentials of a Valid OfferEssentials of a Valid Offer

Offer must be such that is capable to be accepted in Offer must be such that is capable to be accepted in law and gives rise to legal relationship (e.g. Dinning)law and gives rise to legal relationship (e.g. Dinning)Terms of offer must be definite, unambiguous and Terms of offer must be definite, unambiguous and not loose & vague (.e.g. House on rent)not loose & vague (.e.g. House on rent)Offer must be communicated ( D& P to trace his son)Offer must be communicated ( D& P to trace his son)An offer must be distinguished fromAn offer must be distinguished from(i) an invitation to make an offer (display)(i) an invitation to make an offer (display)(ii) declaration of intention to offer(ii) declaration of intention to offer(iii) Open offer(iii) Open offerOffer must be made with a view to obtaining the Offer must be made with a view to obtaining the assent (e.g. advertisement)assent (e.g. advertisement)Offer should not contain a term the non-compliance Offer should not contain a term the non-compliance of which may be assumed to amount to acceptanceof which may be assumed to amount to acceptanceAn offer may be conditional (* condition apply) An offer may be conditional (* condition apply)

Acceptance Acceptance

The assent given to a proposal may be The assent given to a proposal may be understand as acceptance. In other understand as acceptance. In other words, words, offer + acceptance = contractoffer + acceptance = contract. . An acceptance once completed can An acceptance once completed can not be revoked. Acceptance is the act not be revoked. Acceptance is the act of assenting by the Offeree to the of assenting by the Offeree to the offerorofferor

Definition: “Acceptance is the manifestation by the offeree of Definition: “Acceptance is the manifestation by the offeree of his assent to the terms of the offer”his assent to the terms of the offer”

Essentials of valid AcceptanceEssentials of valid Acceptance

Acceptance must be by the OffereeAcceptance must be by the Offeree

Acceptance must be absolute and Acceptance must be absolute and unconditional unconditional (e.g. H sell to P rs.1000 P pay Rs. 950)(e.g. H sell to P rs.1000 P pay Rs. 950)

Must be given before the offer lapsesMust be given before the offer lapses

It must be communicated to the offerorIt must be communicated to the offeror

- - silence cannot silence cannot

- must to offeror- must to offeror

- acceptance by post or telegram- acceptance by post or telegram

- acceptance is complete when it comes to - acceptance is complete when it comes to the the knowledge of the offeror knowledge of the offeror

Revocation or Lapse of OfferRevocation or Lapse of Offer

An acceptance in English law cannot be An acceptance in English law cannot be revoked.revoked.

An acceptance may be revoked at any time An acceptance may be revoked at any time before the communication of the before the communication of the acceptance is complete as against the acceptance is complete as against the acceptor, but not afterwards.acceptor, but not afterwards.

Completion of CommunicationCompletion of Communication

Offer or AcceptanceOffer or Acceptance

OFFER : OFFER : when it comes to when it comes to the knowledge of the the knowledge of the

Offeree Offeree

ACCEPTANCE : ACCEPTANCE : (i) As (i) As against the offeror : when against the offeror : when

putted into course of putted into course of transmission (out of transmission (out of

acceptors’ power)acceptors’ power)

(ii) As against the acceptor : (ii) As against the acceptor : when it comes to the when it comes to the

knowledge of the offerorknowledge of the offeror

Revocation of Offer or Revocation of Offer or AcceptanceAcceptance

(i)(i) As against the As against the person who makes it -- person who makes it -- when putted into course when putted into course of transmission.of transmission.

(ii)(ii) As against the As against the person to whom it is person to whom it is made -- when it comes made -- when it comes to his knowledgeto his knowledge

ConsiderationConsiderationWhen A promises to do ‘something’ A must get ‘something’ When A promises to do ‘something’ A must get ‘something’

in return – this something is known as ‘consideration’ in return – this something is known as ‘consideration’ (Affirmative Act / Abstinence / Promise)(Affirmative Act / Abstinence / Promise)

Affirmative act:Affirmative act: doing something doing something

Abstinence:Abstinence: refrain from doing (X pay 1000 for not suit by Y) refrain from doing (X pay 1000 for not suit by Y)

Promise:Promise: A return promise A return promise

Sec. 2(d) of contract Act thus “ when at the desire of the Sec. 2(d) of contract Act thus “ when at the desire of the Promisor, the Promisee or any other person has done or Promisor, the Promisee or any other person has done or abstained from doing or does or abstains from doing or abstained from doing or does or abstains from doing or promises to do or to abstain from doing something, such promises to do or to abstain from doing something, such act or abstinence or promise is called a consideration for act or abstinence or promise is called a consideration for the promise”.the promise”.

Definition: “Consideration is the price for which the promise of the other Definition: “Consideration is the price for which the promise of the other

is bought”. is bought”.

ConsiderationConsiderationConsideration is Essential:Consideration is Essential:

Consideration must move at the desire of Consideration must move at the desire of the promisorthe promisor

( eg. A sees B drowning and saves his life( eg. A sees B drowning and saves his life..A cannot A cannot demand the payment for his sevices because b never demand the payment for his sevices because b never asked him to do so )asked him to do so )

( e.g. mosque: no repair, no money in return ( e.g. mosque: no repair, no money in return by promisor)by promisor)

Consideration may move from Promisee or Consideration may move from Promisee or any other person ( Eg of XYZ)any other person ( Eg of XYZ)

ConsiderationConsideration

Consideration Need not be adequate Consideration Need not be adequate (eg (eg MRP of a house is 10 lakh but owner is MRP of a house is 10 lakh but owner is selling for only 3 lakh)selling for only 3 lakh)

Consideration must be competent: it Consideration must be competent: it must be real, competent and not illusory.must be real, competent and not illusory.(eg of magic)(eg of magic)

Conti…Conti…

Consideration may be past, present, Consideration may be past, present, future future (eg. X render service to y in (eg. X render service to y in month of May,X pay him in month of month of May,X pay him in month of June)June)

““Consideration must be lawfulConsideration must be lawful

((Eg : X says to Y ,If you beat Z ,I will pay Eg : X says to Y ,If you beat Z ,I will pay you 10000)you 10000)

Contract without ConsiderationContract without Consideration(Exceptions)(Exceptions)

Love & Affection Love & Affection -- -- A registered agreement A registered agreement between near relatives based on natural love & between near relatives based on natural love & affection is enforceable.affection is enforceable.

Compensation for Voluntary Services Compensation for Voluntary Services

Promise to pay a time barred debt Promise to pay a time barred debt

Completed gift Completed gift

Agency Agency

Charitable subscriptionCharitable subscription

Capacity to ContractCapacity to ContractAs per Sec. 10 an agreement becomes a As per Sec. 10 an agreement becomes a contract if it is entered into between the contract if it is entered into between the parties competent to contract.parties competent to contract.As Sec. 11 declares following persons to As Sec. 11 declares following persons to be incompetent to contract;be incompetent to contract;a) Minorsa) Minorsb) Persons of unsound mindb) Persons of unsound mindc) Persons disqualified by from c) Persons disqualified by from contractingcontractingAlien Enemies / Corporations / Insolvent / Alien Enemies / Corporations / Insolvent / ConvictsConvicts

MinorMinorMinors: Minors: below 18 years, guardian and ward act he 21below 18 years, guardian and ward act he 21

Contract with a minor is absolutely Void Contract with a minor is absolutely Void (Case: (Case: Mohri Bibi vs dharmo das (1903Mohri Bibi vs dharmo das (1903))))Minor can be a Promisee or BeneficiaryMinor can be a Promisee or Beneficiary

(eg: insurance)(eg: insurance)No Estoppel against a Minor: No Estoppel against a Minor: rule of evidence by which a rule of evidence by which a person is not allowed to go back upon earlier representations but minor person is not allowed to go back upon earlier representations but minor not e.g. carnot e.g. car

Positions of minor’s parentsPositions of minor’s parentsPartnership Partnership (accord sec30.can be a partner)(accord sec30.can be a partner)

Liability for trots Liability for trots (tort is a civil wrong)(tort is a civil wrong)

Minor as agent (Minor as agent (but not liable for his acts)but not liable for his acts)

Joint contract by minor and adult.(Joint contract by minor and adult.(adult will be adult will be liable only for the contract not the minorliable only for the contract not the minor))

Person of Unsound MindPerson of Unsound Mind

When the person is incapable of understanding When the person is incapable of understanding the agreementthe agreement

It may arise from:It may arise from:

1 1 IdiocyIdiocy: lack of development of brain: lack of development of brain

2.2.LunacyLunacy: disease of brain due to some : disease of brain due to some mental stress mental stress

3.3.DrunknessDrunkness

4.4.HypnotismHypnotism

5.5.Mental decayMental decay: old age: old age

Person disqualified from ContracPerson disqualified from ContractingtingIncapacity Arising from StatusIncapacity Arising from Status– Foreign SovereignsForeign Sovereigns, Ambassadors etc. unless , Ambassadors etc. unless

they voluntarily submit to its jurisdiction (they cant be they voluntarily submit to its jurisdiction (they cant be sued in local courts)sued in local courts)

– Alien EnemiesAlien Enemies (living not in India, .they can enter into (living not in India, .they can enter into

contract during peace time ,but not during war time)contract during peace time ,but not during war time)– InsolventsInsolvents ( when a person’s debt exceed his assets)( when a person’s debt exceed his assets)– ConvictsConvicts ( A convict while undergoing imprisonments is ( A convict while undergoing imprisonments is

incapable to enter into a contract)incapable to enter into a contract)– CorporationsCorporations (it enter into a contract through its Agents)(it enter into a contract through its Agents)

Free ConsentFree ConsentSec. 13 “two or more persons are said to be Sec. 13 “two or more persons are said to be consented when they agree upon the same thing consented when they agree upon the same thing in the same sense”in the same sense”Definition “ free consent which is secured by the free Definition “ free consent which is secured by the free will of the parties out of their own accord”.will of the parties out of their own accord”.A consent is said to be free when it is not A consent is said to be free when it is not caused by;caused by;a) a) coercion – sec 15; coercion – sec 15; b) undue influence – sec 16;b) undue influence – sec 16;c) fraud – sec 17;c) fraud – sec 17;d) misrepresentation – sec 18d) misrepresentation – sec 18;;e) e) mistake – sec 20, 21 & 22 …void agreementmistake – sec 20, 21 & 22 …void agreement

Coercion – sec 15;Coercion – sec 15;

when a person is compelled to enter into a when a person is compelled to enter into a contract by the use of force by the other contract by the use of force by the other party, coercion is said to be employed. A party, coercion is said to be employed. A contract entered into under coercion is contract entered into under coercion is voidable at the option of the coerced. voidable at the option of the coerced. ExampleExample: By threat of suicide a person induced his wife and : By threat of suicide a person induced his wife and son to execute a release in favour of his brother in respect of son to execute a release in favour of his brother in respect of certain properties it was held that the contract is under certain properties it was held that the contract is under coercion and voidable at the option of wife and son.coercion and voidable at the option of wife and son.

Effects of coercion:Effects of coercion:

contract is contract is voidable voidable and can be void at the option of the and can be void at the option of the aggrieved partyaggrieved party

Undue influence – sec 16Undue influence – sec 16

Undue influence is the improper exercise of authority over the Undue influence is the improper exercise of authority over the mind of one of the contracting parties by other.mind of one of the contracting parties by other.

Indian Contract Act “ a contract is induced by undue influence Indian Contract Act “ a contract is induced by undue influence where the relationship subsisting between the parties are such where the relationship subsisting between the parties are such that one of the parties is in a position to dominate the will of that one of the parties is in a position to dominate the will of other and use that position to obtain an unfair advantage over other and use that position to obtain an unfair advantage over the other. Such asthe other. Such as– Parent and ChildParent and Child– Guardian and WardGuardian and Ward– Doctor and PatientDoctor and Patient

Effects of undue influence:Effects of undue influence:

contract is contract is voidable voidable and can be void at the option of and can be void at the option of the aggrieved partythe aggrieved party

Fraud – sec 17Fraud – sec 17Fraud is the willful misrepresentation made by one party of the Fraud is the willful misrepresentation made by one party of the

contract to the other with an contract to the other with an intention to deceiveintention to deceive..

The essential elements of fraud are:The essential elements of fraud are:– The suggestion by a person that a fact is true when it is The suggestion by a person that a fact is true when it is

not truenot true( Eg: X sells to y locally manufactured goods as imported goods ( Eg: X sells to y locally manufactured goods as imported goods

charging a higher price,it amounts to fraud)charging a higher price,it amounts to fraud)

– The active concealment of fact by a person who believe s The active concealment of fact by a person who believe s it to be trueit to be true

(eg: X a furniture dealer,conceals the cracks in furniture sold by him (eg: X a furniture dealer,conceals the cracks in furniture sold by him using some packing material and polishing and the buyer after using some packing material and polishing and the buyer after examination cannot trace the defect,then it is fraud) examination cannot trace the defect,then it is fraud)

– A promise made without intention of performing it.A promise made without intention of performing it. ((marriage by a person with an intention to go abroad)marriage by a person with an intention to go abroad)

Misrepresentation – sec 18Misrepresentation – sec 18A misrepresentation is a A misrepresentation is a representation that is falsely representation that is falsely

made. made. Representation always means a statement of Representation always means a statement of fact made by one party to the other before or at the fact made by one party to the other before or at the time the contract is made with regards time the contract is made with regards to some to some existing fact or some past events which materially existing fact or some past events which materially induces the formation of the ainduces the formation of the agreement.greement.

In simple words a In simple words a representation when wrongly representation when wrongly made either innocently or made either innocently or willfully is a misrepresentationwillfully is a misrepresentation. Thus , misrepresentation may . Thus , misrepresentation may be innocent or willful. The former is called ‘misrepresentation be innocent or willful. The former is called ‘misrepresentation and latter ‘fraud’.and latter ‘fraud’.

Effects of Misrepresentation

The aggrieved party has the right to rescind the contract

ExampleExampleA intends to sell his horse to B and says A intends to sell his horse to B and says “my horseis perfectly sound”.although he “my horseis perfectly sound”.although he does not know that the horse has fallen ill does not know that the horse has fallen ill yesterday.yesterday.

B there upon buy the horse.B there upon buy the horse.

There is misrepresentation on the part of AThere is misrepresentation on the part of A

Mistake– sec 20,21,22Mistake– sec 20,21,22

The next vitiating elements of consent is mistake. The next vitiating elements of consent is mistake. The terms mistake may be defined as an The terms mistake may be defined as an incorrect incorrect belief about something.belief about something. Mistake may be either of law Mistake may be either of law or of fact:or of fact:

Mistake of Law:Mistake of Law:

Mistake of law may be of the law of land or foreign Mistake of law may be of the law of land or foreign law. Mistake of law does not vitiate a contract as law. Mistake of law does not vitiate a contract as expressed in the expressed in the ignorance of the law is no excuse.ignorance of the law is no excuse.

Mistake of Fact:Mistake of Fact:

Mistake of fact may be either Mistake of fact may be either bilateral mistake or bilateral mistake or unilateral mistake.unilateral mistake.


Bilateral MistakeBilateral Mistake

Here both the parties of the contract make a Here both the parties of the contract make a mistake, which may be either common mistake, which may be either common mistake or mutual mistake. mistake or mutual mistake.

Common mistake (same mistake)Common mistake (same mistake)

Mutual mistake (different mistake)Mutual mistake (different mistake)

1. 1. Mistake as to the Subject matterMistake as to the Subject matter: here both : here both the parties to an agreement are working the parties to an agreement are working under a mistake relating to the subject matter under a mistake relating to the subject matter it falls as underit falls as under

Mistake– sec 20,21,22Mistake– sec 20,21,22a). a). Existence of the Subject matterExistence of the Subject matter: (The : (The

horse is dead at the time of agreement)horse is dead at the time of agreement)

b). b). Identity of the Subject matterIdentity of the Subject matter: (Maruti : (Maruti and santro)and santro)

c). c). Title of the Subject matterTitle of the Subject matter: (A wants to : (A wants to buy a particular horse from B which is buy a particular horse from B which is already by himalready by him))

Conti….Conti….d). d). Price of the Subject matter:Price of the Subject matter:

(seller A by mistake writes the price 2500 (seller A by mistake writes the price 2500 instead 1500 in front of B) instead 1500 in front of B)

e). e). Quantity of the Subject matterQuantity of the Subject matter::

(A writes to B ‘”send me horses”)(A writes to B ‘”send me horses”)

f). f). Quality of the Subject matterQuality of the Subject matter: :

(race horse but it is cart house)(race horse but it is cart house)


2.Mistake as to the possibility of Performing the 2.Mistake as to the possibility of Performing the contractcontract: :

a). a). Physical ImpossibilityPhysical Impossibility: a & C contract about : a & C contract about movie show. Show already cancelledmovie show. Show already cancelled

b). b). Legal ImpossibilityLegal Impossibility: something which cant : something which cant legally be done ( the person cannot lease the legally be done ( the person cannot lease the land of his own)land of his own)


Unilateral MistakeUnilateral Mistake

In this case of mistake, only one of the In this case of mistake, only one of the party is mistaken, but the other is awareparty is mistaken, but the other is aware

a). a). Nature of the ContractNature of the Contract: : (A blind man signing (A blind man signing a document read over to him wrongfully will not bind a document read over to him wrongfully will not bind him )him )

b). b). The Identity of the party contracted The Identity of the party contracted withwith: (A enter into contract with believing : (A enter into contract with believing him C)him C)

Legality of Object & ConsiderationLegality of Object & Consideration

In agreement the term ‘object’ and ‘consideration’ are not In agreement the term ‘object’ and ‘consideration’ are not synonymous. The synonymous. The object indicates purpose or design object indicates purpose or design of an of an agreement. It implies the manifestation of intention. The agreement. It implies the manifestation of intention. The consideration is some act or abstinence or reciprocal promises. consideration is some act or abstinence or reciprocal promises. In all agreement, both the and the consideration should be In all agreement, both the and the consideration should be lawfullawful, , otherwise the agreement is void. otherwise the agreement is void. In certain cases In certain cases consideration for an agreement may be lawful but the object for consideration for an agreement may be lawful but the object for which the agreement was entered into may be unlawful. which the agreement was entered into may be unlawful.

Example:Example: X executes a promissory note for Rs.5000 in favour X executes a promissory note for Rs.5000 in favour of Y. Y has paid Rs.5000 to X. This payment by Y is the of Y. Y has paid Rs.5000 to X. This payment by Y is the consideration. X wants to utilize the money for the marriage of consideration. X wants to utilize the money for the marriage of his son who is a minor. his son who is a minor. This is the object is forbidden by the This is the object is forbidden by the child Marriage Restraint Act as it is unlawful.child Marriage Restraint Act as it is unlawful.

Legality of Object & ConsiderationLegality of Object & Consideration Consideration & object could be unlawful:Consideration & object could be unlawful:

a) If it is forbidden by law: a) If it is forbidden by law:

E.g. Money paid for getting a jobE.g. Money paid for getting a job

22ndnd marriage while the wife is alive marriage while the wife is alive

b) If it is of such a nature that, if permitted, it b) If it is of such a nature that, if permitted, it would defeat the provisions of any law:would defeat the provisions of any law:

E.g X borrowed 10000 from y and y agreed not E.g X borrowed 10000 from y and y agreed not to raise any objection and that the y may recover to raise any objection and that the y may recover the amount even after the expiry of limitation the amount even after the expiry of limitation period. its void as it defeat the provision of Law period. its void as it defeat the provision of Law of Llimitationof Llimitation

Conti…Conti…c) If it is fraudulent: if the object is to defraud the c) If it is fraudulent: if the object is to defraud the

others.others.

d) If it involves or implies injury to the person or d) If it involves or implies injury to the person or property of another:property of another:

E.g X promised to pay 10,000 to Y when he E.g X promised to pay 10,000 to Y when he agreed to publish a libel (defamatory article agreed to publish a libel (defamatory article against someone)against someone)

Conti…Conti…e) If the court regards it as immoral or e) If the court regards it as immoral or

opposed to public policyopposed to public policy

E.g E.g

X gave 1 lakh to a married women to X gave 1 lakh to a married women to obtain a divorce from husband and agreed obtain a divorce from husband and agreed to marry her. As X could not recover the to marry her. As X could not recover the moneymoney

Unlawful & Illegal AgreementUnlawful & Illegal Agreement

An agreement is said to be unlawful when the object An agreement is said to be unlawful when the object for which it is made is forbidden by lawfor which it is made is forbidden by law. An unlawful . An unlawful agreement renders the transaction between the agreement renders the transaction between the immediate parties void, but has no effect on collateral immediate parties void, but has no effect on collateral transaction. transaction.

The term illegal agreement is defined The term illegal agreement is defined as the agreement which is expressly or impliedly as the agreement which is expressly or impliedly prohibited by law.prohibited by law.

An illegal agreement is not only void as between the An illegal agreement is not only void as between the immediate but has further effect that the collateral immediate but has further effect that the collateral transactions to it also become tainted with illegality.transactions to it also become tainted with illegality.

Agreement Opposed to Public PolicyAgreement Opposed to Public Policy

An agreement which is An agreement which is harmful to the public welfare harmful to the public welfare is said to is said to be an agreement opposed to public policybe an agreement opposed to public policy

Agreement in Restraint of MarriageAgreement in Restraint of Marriage

(x promised to marry none else except miss y and to pay (x promised to marry none else except miss y and to pay her a sum of 10000)her a sum of 10000)

• Trading with enemyTrading with enemy

• Agreement relating to public offices :Agreement relating to public offices :

( A pay to B to retire from public service)( A pay to B to retire from public service)• Marriage brocage agreement:Marriage brocage agreement:

(Dowry system)(Dowry system)

Agreement Opposed to Public PolicyAgreement Opposed to Public Policy

Restraint of Personal FreedomRestraint of Personal Freedom

Agreement in Restraint of Trade Agreement in Restraint of Trade (A agreed to (A agreed to B not to carry the same business after the expiry of B not to carry the same business after the expiry of service anywhere within 800 miles)service anywhere within 800 miles)

Exceptions:Exceptions:

-Partnership Agreement: any business-Partnership Agreement: any business

-Partner Agreement: -Partner Agreement: Same business within Same business within local limitslocal limits

Contingent ContractsContingent Contracts

Contract may be Absolute OR Contingent.Contract may be Absolute OR Contingent.

Absolute contract is one in which the promisor binds Absolute contract is one in which the promisor binds himself to performance in any event unconditionally.himself to performance in any event unconditionally.

A contingent contract is a contract to do or not to do A contingent contract is a contract to do or not to do something, if some event, collateral to such contract, something, if some event, collateral to such contract, does or does not happen (Sec 31)does or does not happen (Sec 31)

Essential characteristics of Contingent Contract;Essential characteristics of Contingent Contract;

i)i) Its performance depends upon happening or non-Its performance depends upon happening or non-happening of some event in future.happening of some event in future.

ii)ii) The event must be uncertain.The event must be uncertain.

iii)iii) The event must be collateral, i.e. incidental to the The event must be collateral, i.e. incidental to the contract.contract.

iv)iv) There must be valid contract.There must be valid contract.

Wagering ContractsWagering Contracts

A wagering is an agreement to pay money or money’s A wagering is an agreement to pay money or money’s worth on the happening of a specified uncertain event. worth on the happening of a specified uncertain event.

A wagering contract is one in which reciprocal A wagering contract is one in which reciprocal promises are made to give money or something of promises are made to give money or something of value upon the result of a future uncertain event with value upon the result of a future uncertain event with regard to which parties hold opposite views. regard to which parties hold opposite views.

Wager is a bet. It is game of chanceWager is a bet. It is game of chance

E.g. Suppose X & Y take a bet that if it rains tomorrow Y E.g. Suppose X & Y take a bet that if it rains tomorrow Y pay to X Rs.500.pay to X Rs.500.

X & Y bet loose apply for loan from Z .. Bombay is illegal Z X & Y bet loose apply for loan from Z .. Bombay is illegal Z cannot recover money from X. other parts of India cannot recover money from X. other parts of India such transactions are void. Z could recover from X. if such transactions are void. Z could recover from X. if X refuses to pay Y. Y cannot sue anywhere.X refuses to pay Y. Y cannot sue anywhere.

Quasi ContractsQuasi ContractsLaw of Quasi Contract – Law of RestitutionLaw of Quasi Contract – Law of RestitutionAs a matter of fact Quasi Contract is not a contract at all. As a matter of fact Quasi Contract is not a contract at all. It is rather created by Law.It is rather created by Law.It is an obligation which the law creates in the absence of It is an obligation which the law creates in the absence of any agreement. any agreement. Sec. 68-72 deals with following kinds of quasi-Sec. 68-72 deals with following kinds of quasi-contractual obligations;contractual obligations;

1.1. Supply of necessaries: reimbursed from propertySupply of necessaries: reimbursed from property2.2. Suit for Recovery of Money:Suit for Recovery of Money:

- By Mistake- By Mistake- Payment of money to a third party. E.g. arrears of - Payment of money to a third party. E.g. arrears of Govt. Govt.

3.3. Obligation to pay for non-gratuitous: leaves good at Y Obligation to pay for non-gratuitous: leaves good at Y house by merchant.house by merchant.

4.4. Responsibilities of finder of goods:Responsibilities of finder of goods:5.5. Quantum meruit >> ‘as much as earned’Quantum meruit >> ‘as much as earned’

Void AgreementsVoid Agreements

The following agreements have been expressly The following agreements have been expressly declared to be void by the Contract Act;declared to be void by the Contract Act;Agreements by incompetent parties-(Sec11)Agreements by incompetent parties-(Sec11)Agreements made under a mutual mistake of fact Agreements made under a mutual mistake of fact (Sec 20)(Sec 20)Agreements, the consideration or object of which Agreements, the consideration or object of which is unlawful (Sec 24)is unlawful (Sec 24)Agreements made without consideration (Sec 25)Agreements made without consideration (Sec 25)Agreements, meaning of which is uncertain (Sec Agreements, meaning of which is uncertain (Sec 29)29)Agreements to do impossible acts (Sec 56)Agreements to do impossible acts (Sec 56)

Performance of ContractPerformance of Contract

Performance of contract takes place when the parties to a contract fulfill Performance of contract takes place when the parties to a contract fulfill their respective obligations. Performance may be actual or attempted. their respective obligations. Performance may be actual or attempted.

Actual performance occur when a party has done what he undertook to Actual performance occur when a party has done what he undertook to do.do.

An offer to perform obligation is called ‘ attempted performance’ or tender An offer to perform obligation is called ‘ attempted performance’ or tender of performance. of performance.

A contract need not be actually performed.A contract need not be actually performed.

Section 37. “ the parties to a contract must either perform, or offer to Section 37. “ the parties to a contract must either perform, or offer to perform their respective promises, unless such performance is perform their respective promises, unless such performance is dispensed with or excused under the provision of this act or any other dispensed with or excused under the provision of this act or any other law”.law”.

In case promisor dies before the performance of a contract, his promises In case promisor dies before the performance of a contract, his promises are binding to his representative. Special qualification required he are binding to his representative. Special qualification required he himself must perform. himself must perform.

EX. X promise to paint a wall for Y. X dies before cannot be enforced by EX. X promise to paint a wall for Y. X dies before cannot be enforced by representatives of X or Y.representatives of X or Y.

Offer of Performance or TenderOffer of Performance or TenderTender is an offer of performance.Tender is an offer of performance.EX. A party who has entered into contract to deliver goods or EX. A party who has entered into contract to deliver goods or

to pay money to another is deemed to have performed it if to pay money to another is deemed to have performed it if he has he has offered theoffered the goods or money to the party to whom goods or money to the party to whom the delivery or payment was to be made.the delivery or payment was to be made.

Sec 38 says “where a promisor has made an offer to perform Sec 38 says “where a promisor has made an offer to perform as per the contract and the promisee does not accept that, as per the contract and the promisee does not accept that, the promisor is not responsible for non performance, nor the promisor is not responsible for non performance, nor does he thereby lose his rights under the contract”.does he thereby lose his rights under the contract”.

Conditions of a Valid TenderConditions of a Valid TenderIt should be unconditionalIt should be unconditionalIt must be made at a proper time and placeIt must be made at a proper time and placeOpportunity should be given to inspect good; goods must Opportunity should be given to inspect good; goods must be identical with the samplebe identical with the sampleThe person tendering should have the ability to perform The person tendering should have the ability to perform the promise.the promise.Tender to one of several joint promisees is tender to all of Tender to one of several joint promisees is tender to all of themthem

Who can Demand PerformanceWho can Demand Performance

Promisee or Agent or his legal representative Promisee or Agent or his legal representative in case of death.in case of death.

By whom the contract must be performed;By whom the contract must be performed;

Promisor himself,Promisor himself,

Non-personalNon-personal

-Agent-Agent

- Legal Rep.- Legal Rep.

Joint contractJoint contract

- Third Person- Third Person

-Joint Promisors.-Joint Promisors.

Devolution of joint liabilities Devolution of joint liabilities When 2 or more Promisors have made the promise, When 2 or more Promisors have made the promise,

All of them must fulfill the promise jointly. If All of them must fulfill the promise jointly. If anyone dies then the legal representative.anyone dies then the legal representative.

In case of joint promises any one of the promisors In case of joint promises any one of the promisors may be enforced to perform the whole may be enforced to perform the whole performance. In such cases, joint promisor may performance. In such cases, joint promisor may compel every other joint promisor to contribution compel every other joint promisor to contribution equally to the discharge of the promise. equally to the discharge of the promise.

EXAMPLEEXAMPLEX, Y, and Z jointly promise to pay Rs. 5000 to W. W X, Y, and Z jointly promise to pay Rs. 5000 to W. W may compel either X,Y or Z to pay him.may compel either X,Y or Z to pay him.X, Y, and Z jointly promise to pay Rs. 3000 to W. Z X, Y, and Z jointly promise to pay Rs. 3000 to W. Z is compelled to pay whole. X is insolvent but his is compelled to pay whole. X is insolvent but his assets are sufficient to pay one half of his debt. Z assets are sufficient to pay one half of his debt. Z is entitled to receive Rs. 500 from the estate of X is entitled to receive Rs. 500 from the estate of X and Rs.1250 from Y. and Rs.1250 from Y.

Discharge of ContractDischarge of ContractDischarge of contact means termination of the contractual Discharge of contact means termination of the contractual

relationship between the parties. A contract may be relationship between the parties. A contract may be discharged by;discharged by;

1. Performance:1. Performance:

2. Agreement of Consent: when to parties are mutually discharge of 2. Agreement of Consent: when to parties are mutually discharge of contract. The following are the various modescontract. The following are the various modes

- - Novation:Novation: by new contract X owes Y Rs.5000. X gives mortgage by new contract X owes Y Rs.5000. X gives mortgage

- - Recission:Recission: mutually agree to terminate eg X promise to deliver mutually agree to terminate eg X promise to deliver goods to Y . And Y does not want to be performed.goods to Y . And Y does not want to be performed.

- - Alteration:Alteration: term of contarct varied by mutual consent. term of contarct varied by mutual consent.

- - Remission:Remission: acceptance of lessor sum than the contractual acceptance of lessor sum than the contractual amount, eg Rs.400 For Rs.300amount, eg Rs.400 For Rs.300

- - Waiver:Waiver: X promises to paint for Y but later Y forbids. X promises to paint for Y but later Y forbids.

- - Accord & SatisfactionAccord & Satisfaction: satisfaction of any other than : satisfaction of any other than performance agreedperformance agreed

- - Merger Merger: Change the inferior right to superior right. Eg Leasee : Change the inferior right to superior right. Eg Leasee later buy assets.later buy assets.

3.Impossibility: may exist unknown at the time of 3.Impossibility: may exist unknown at the time of contractcontract

- Destruction of Subject matterDestruction of Subject matter: is destroyed. : is destroyed. E.g.. Music hall latter took fire.E.g.. Music hall latter took fire.

- Death or Disablement of PartiesDeath or Disablement of Parties: Ill or death: Ill or death- Subsequent Illegality:Subsequent Illegality: law changes, E.g.. Land law changes, E.g.. Land

for building latter railway acquired land.for building latter railway acquired land.- Declaration of WarDeclaration of War: :

4. Lapse of time: E.g. where debtor has failed to 4. Lapse of time: E.g. where debtor has failed to repay the loan creditor can sue but before repay the loan creditor can sue but before three year. After that he can not sue.three year. After that he can not sue.

5. Operation of law: 5. Operation of law: - By mergerBy merger- By insolvencyBy insolvency- By unauthorized alteration; without knowledgeBy unauthorized alteration; without knowledge

6. Breach of contract: where the promisor neither 6. Breach of contract: where the promisor neither performs his contract nor does he tender performs his contract nor does he tender performance, or where the performance is performance, or where the performance is defective, there is a breach of contract.defective, there is a breach of contract.

a.a. Actual Breach: at the time when performance is Actual Breach: at the time when performance is due or performingdue or performing

b.b. Anticipatory Breach: it indicates a breach Anticipatory Breach: it indicates a breach before the performance is due.before the performance is due.

Remedies for Breach of ContractRemedies for Breach of ContractA remedy is the means given by law for the enforcement of right. When a there A remedy is the means given by law for the enforcement of right. When a there

is breach of contract, the injured party has one or more of the following is breach of contract, the injured party has one or more of the following remedies;remedies;

1. 1. Rescission of contract:Rescission of contract: is revocation of a contract. It is the way by is revocation of a contract. It is the way by which contract may be discharged. Where one of the parties to contract which contract may be discharged. Where one of the parties to contract commits breach, the other party may treat the contract as rescinded.commits breach, the other party may treat the contract as rescinded.EG. A singer contract with B, to sing at his theatre for two nights in every EG. A singer contract with B, to sing at his theatre for two nights in every week. Willfully absent one night. B rescinds and sue for compensation.week. Willfully absent one night. B rescinds and sue for compensation.

2. 2. Suit for damages:Suit for damages: A person who commits a breach of contract must A person who commits a breach of contract must make compensation therefore to the injured party.make compensation therefore to the injured party.A). A). General Damage:General Damage: general damages are those which arises naturally in general damages are those which arises naturally in usual course of things for breach of contract. Eg. A to B supply Sugar. usual course of things for breach of contract. Eg. A to B supply Sugar. Price.Price.B). B). Special Damage:Special Damage: are those which are the result of unusual are those which are the result of unusual circumstances affecting the plaintiff. These are the damages which a circumstances affecting the plaintiff. These are the damages which a party knew, when they made the contract. Building house A and B. will be party knew, when they made the contract. Building house A and B. will be rented to C.rented to C.C). C). Exemplary Damages:Exemplary Damages: they are awarded with a view to punish the they are awarded with a view to punish the wrong doer and not primarily with the idea of awarding compensation to wrong doer and not primarily with the idea of awarding compensation to the injured party.the injured party.D). D). Nominal Damages:Nominal Damages: nominal damage are awarded where the injured nominal damage are awarded where the injured party has sustained damage of a short. party has sustained damage of a short.

3.3. Suit upon quantum meruit:Suit upon quantum meruit: The phrase ‘ The phrase ‘ quantum damage’ means payment in proportion to the quantum damage’ means payment in proportion to the amount of work done. A right to sue on a quantum amount of work done. A right to sue on a quantum meruit arise where a contract, partly performed by one meruit arise where a contract, partly performed by one party, has become discharged by other party.party, has become discharged by other party.

4.4. Restitution:Restitution: it means return of the benefit received by it means return of the benefit received by one party to the contract from the other party under a one party to the contract from the other party under a void contract.void contract.

5.5. Suit for injunction:Suit for injunction: An aggrieved party can sue for an An aggrieved party can sue for an injunction i.e., an order of the court restraining the injunction i.e., an order of the court restraining the wrong doer from doing or continuing the wrongful. Eg wrong doer from doing or continuing the wrongful. Eg

hotelhotel

6. Specific Performance.6. Specific Performance.

Contracts of Indemnity & GuaranteeContracts of Indemnity & GuaranteeChapter VIII (sec. 124- 147) of Indian Contract Act 1872 covers these Chapter VIII (sec. 124- 147) of Indian Contract Act 1872 covers these

provisionsprovisions

Contract of Indemnity:Contract of Indemnity:

A contract by which one party promises to save the other from loss A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a ‘contract of indemnity’. (sec conduct of any other person, is called a ‘contract of indemnity’. (sec 124)124)

Promisor >> indemnifier & the Promisee >> indemnifiedPromisor >> indemnifier & the Promisee >> indemnified

Eg. X contracts to indemify Y for Z proceedings.Eg. X contracts to indemify Y for Z proceedings.

Rights of indemnity holder when sued (sec 125) (all damages/all Rights of indemnity holder when sued (sec 125) (all damages/all expenses-costs/all sums)expenses-costs/all sums)

Rights of indemnifier (the act is silent)Rights of indemnifier (the act is silent)

GuaranteeGuarantee(Sec. 126)(Sec. 126)

A contract of guarantee of a contract to perform A contract of guarantee of a contract to perform the promise or discharge the liability of a third the promise or discharge the liability of a third person in case of his default.person in case of his default.

The person who gives – ‘surety’ or ‘ GuarantorThe person who gives – ‘surety’ or ‘ Guarantor

Who defaults – ‘principal debtor’Who defaults – ‘principal debtor’

To whom it is given – ‘creditor’To whom it is given – ‘creditor’

It may be oral or written; express or impliedIt may be oral or written; express or implied

Essential features;Essential features;

Concurrence/Primary & Secondary Concurrence/Primary & Secondary liability/Essentials of a Valid Contract (in case of liability/Essentials of a Valid Contract (in case of principal debtor being a minor, the surety is principal debtor being a minor, the surety is regarded as principal debtor)regarded as principal debtor)

Types of Guarantees:Types of Guarantees:

1.1. Retrospective GuaranteeRetrospective Guarantee

2.2. Prospective GuaranteeProspective Guarantee

3.3. Fidelity Guarantee: Fidelity Guarantee: for good or honesty conduct of a personfor good or honesty conduct of a person

4.4. Specific Guarantee: Specific Guarantee: for single transactionfor single transaction

5.5. Continuing GuaranteeContinuing Guarantee

Contract of Indemnity V/s Contract of GuaranteeContract of Indemnity V/s Contract of Guarantee

CoICoI >>>> CoGCoGTwo partiesTwo parties >>>> Three PartiesThree Parties

Liability is PrimaryLiability is Primary >>>> Liability is SecondaryLiability is SecondaryOnly one ContractOnly one Contract >>>> Total three contractsTotal three contractsIndemnifier not toIndemnifier not to >>>> Surety to give guaranteeSurety to give guaranteeAct on the request Act on the request upon debtor’s requestupon debtor’s requestOf IndemnifiedOf IndemnifiedLiability arises onlyLiability arises only >>>> Debt/duty already exists the Debt/duty already exists the In case of In case of performance of which has performance of which has ContingencyContingency been guaranteed by the been guaranteed by the

suretysurety

A few featuresA few features

Nature of surety’s liability (coextensive/limitation)Nature of surety’s liability (coextensive/limitation)

Rights of SuretyRights of Surety1. Rights against the creditor1. Rights against the creditor

-Right before payment-Right before payment- Right when paying- Right when paying- Right of set off- Right of set off

2. Right against the Principal debtor2. Right against the Principal debtor- Right to subrogation- Right to subrogation- Right to be Indemnified- Right to be Indemnified-Right against securities-Right against securities

3. Right against the Co-Sureties3. Right against the Co-Sureties- Right to contribution- Right to contribution- Liabilities of Co- sureties bound in different sums- Liabilities of Co- sureties bound in different sums

Bailment Bailment Ch. IX (sec 148 - 181) of Indian Contracts Act 1872Ch. IX (sec 148 - 181) of Indian Contracts Act 1872

‘‘Bailment’ means ‘delivery of goods’ by one person to Bailment’ means ‘delivery of goods’ by one person to another for some purpose upon a contract, that they shall, another for some purpose upon a contract, that they shall, when the purpose is accomplished be returned or when the purpose is accomplished be returned or disposed off as per the directions given by the person disposed off as per the directions given by the person delivering them. One who delivers called ‘Bailor’ and to delivering them. One who delivers called ‘Bailor’ and to whom delivered called ‘Bailee’. >>> (sec. 148)whom delivered called ‘Bailee’. >>> (sec. 148)

Bailment TypesBailment TypesGratuitousGratuitousNon- GratuitousNon- Gratuitous

Essential of BailmentEssential of BailmentDelivery of PossessionDelivery of PossessionDelivery of Goods must be for a Specific PurposeDelivery of Goods must be for a Specific PurposeContractContractReturn of GoodsReturn of Goods

Bailee’s lien;Bailee’s lien;

Lien means right of a person to retain Lien means right of a person to retain possession of some goods until the claims possession of some goods until the claims are satisfied. These could be of two types;are satisfied. These could be of two types;

i) Particular Lien: Only those goods against i) Particular Lien: Only those goods against which services Have been renderedwhich services Have been rendered

ii) General Lienii) General Lien

All the goods which are in possession All the goods which are in possession (bankers/attorneys)(bankers/attorneys)

Duties of BaileeDuties of BaileeTake care of bailed goodsTake care of bailed goodsNot to make unauthorized useNot to make unauthorized useDuty not to Set up Adverse TitleDuty not to Set up Adverse TitleNot to mix the bailed goods with his ownNot to mix the bailed goods with his ownTo return the goodsTo return the goodsDuty to Return any Accretion of the GoodsDuty to Return any Accretion of the Goods

Duties of BailorDuties of BailorDisclose known faultsDisclose known faultsBear extraordinary expenses of the baileeBear extraordinary expenses of the baileeReceive back the goodsReceive back the goodsIndemnify bailee in case of premature Indemnify bailee in case of premature terminationtermination

PledgePledgeBailment of goods as security for payment of Bailment of goods as security for payment of

a debt for performance of a promise is a debt for performance of a promise is called ‘pledge’; in this casecalled ‘pledge’; in this case

The bailor is called >> pledger or pawnorThe bailor is called >> pledger or pawnorThe bailee is called >> pledgee or PawneeThe bailee is called >> pledgee or PawneePledge is bailment of goods as security, Pledge is bailment of goods as security,

bailment is for a purpose of any kindbailment is for a purpose of any kind

Essentials of PledgeEssentials of PledgeDelivery of goodsDelivery of goodsThe delivery of good should be by the way of securityThe delivery of good should be by the way of securityThe security being for the payment of debt or promiseThe security being for the payment of debt or promise

Rights and Duties of PawneeRights and Duties of PawneeRight of retainerRight of retainerRight of Retainer for Subsequent Right of Retainer for Subsequent AdvancesAdvancesRight to extraordinary expensesRight to extraordinary expenses

Contract of AgencyContract of AgencyCh. X (sec. 182-238) of Indian Contract Act 1872Ch. X (sec. 182-238) of Indian Contract Act 1872An Agent is a person employed to do any act for another, or An Agent is a person employed to do any act for another, or

to represent another in dealings with third person(s) --- to represent another in dealings with third person(s) --- [sec. 182][sec. 182]

Person who represent called “Agent”Person who represent called “Agent” Person who is represented called “Principal”Person who is represented called “Principal”Who can Employ an AgentWho can Employ an Agent::

Any person who is of the age of majority according to Any person who is of the age of majority according to the law to which he is subjected, and who is of sound the law to which he is subjected, and who is of sound mind, may employ an agent.mind, may employ an agent.

Who can be Agent:Who can be Agent:Essentials of Agency Relationship;Essentials of Agency Relationship;

1.1. Agreement between Principal and the Agent (no Agreement between Principal and the Agent (no consideration is necessary to create agency) &consideration is necessary to create agency) &

2.2. Intention of the Agent to act on behalf of the PrincipalIntention of the Agent to act on behalf of the Principal

Classification of AgentsClassification of Agents

1.1. Factors: a factor is a mercantile agent to Factors: a factor is a mercantile agent to whom goods or bills of lading or other whom goods or bills of lading or other documents of title are consigned for sale documents of title are consigned for sale by a merchant.by a merchant.

2.2. Brokers:Brokers:

3.3. Auctioneers:Auctioneers:

4.4. Bankers:Bankers:

5.5. Partners:Partners:

6.6. Del Credere Agents:Del Credere Agents:

Duties of Agent Duties of Agent Duty to follow instructionsDuty to follow instructions

Duty to follow custom in the Absence of instructions Duty to follow custom in the Absence of instructions

Duty to Exercise Skill and DiligenceDuty to Exercise Skill and Diligence

Duty to render accountsDuty to render accounts

Duty to communicateDuty to communicate

Duty not to deal on his own accountDuty not to deal on his own account

Duty to pay sums received for the principalDuty to pay sums received for the principal

Duty to protect & preserve interest of the principal in case of his death or insolvencyDuty to protect & preserve interest of the principal in case of his death or insolvency

Duty not to use the information obtained in the course of agency against the principalDuty not to use the information obtained in the course of agency against the principal

Duty not to make secret profitDuty not to make secret profit

Duty not to delegate authorityDuty not to delegate authority

Rights of AgentRights of AgentRight of RetainerRight of Retainer

Right to RemunerationRight to Remuneration

Right of LienRight of Lien

Right of IndemnificationRight of Indemnification

Right to compensationRight to compensation

Unit IIUnit II

Sale of Goods Act 1930Sale of Goods Act 1930Sale of goods is a contract whereby the Sale of goods is a contract whereby the seller transfers or agrees to transfer the seller transfers or agrees to transfer the property in goods to the buyer for a price. property in goods to the buyer for a price. Sale contract may be absolute and Sale contract may be absolute and conditional:conditional:

- Sale - Sale - Agreement to Sell- Agreement to Sell

Essentials of Contract of Sale:Essentials of Contract of Sale:Valid contract Valid contract Two parties-Buyer & SellerTwo parties-Buyer & SellerTransfer of PropertyTransfer of PropertyGoodsGoodsPricePrice

Cont…..Cont…..

Sale & Agreement to SellSale & Agreement to Sell

Nature of contractNature of contract

Transfer of propertyTransfer of property

Risk of lossRisk of loss

Consequence of breachConsequence of breach

Insolvency of buyerInsolvency of buyer

Insolvency of sellerInsolvency of seller

Right of re-saleRight of re-sale

Cont…..Cont…..

Sale & Hire Purchase AgreementSale & Hire Purchase Agreement

Sale & barter or exchangeSale & barter or exchange

Sale & bailmentSale & bailment

Subject Matter of Contract:Subject Matter of Contract:A). Goods: not actionable or moneyA). Goods: not actionable or money

1. Existing Goods:1. Existing Goods:

- Specific Goods- Specific Goods

- Ascertained Goods- Ascertained Goods

- Unascertained Goods- Unascertained Goods

2. Future Goods2. Future Goods

3. Contingent Goods3. Contingent Goods

Goods Perishing Before Sales but After Agreement to SellGoods Perishing Before Sales but After Agreement to Sell

B). PriceB). Price

Conditions and WarrantiesConditions and Warranties

A condition is a stipulation essential to the main A condition is a stipulation essential to the main purpose of the contract. If one party breaches a purpose of the contract. If one party breaches a condition then the other party may terminate condition then the other party may terminate the contract and claim damagesthe contract and claim damages

On the other hand, a warranty is a stipulation On the other hand, a warranty is a stipulation collateral to the main purpose of the contract. If collateral to the main purpose of the contract. If one party breaches a warranty then the other one party breaches a warranty then the other party can only continue with the contract and party can only continue with the contract and then sue for damagesthen sue for damages

Conditions Vs WarrantiesConditions Vs Warranties

Difference as to ValueDifference as to Value

Difference as to BreachDifference as to Breach

Difference as to TreatmentDifference as to Treatment

Implied Conditions and WarrantiesImplied Conditions and WarrantiesImplied ConditionsImplied Conditions

1.1. Conditions as to Title:Conditions as to Title: Seller has the right to sell the goods as agreed to Seller has the right to sell the goods as agreed to be sold e.g. be sold e.g.

2.2. Sale by Description:Sale by Description: Goods must correspond to DescriptionGoods must correspond to Description Conditions as to MerchandabilityConditions as to Merchandability Condition as to Wholesomeness( for eatables)Condition as to Wholesomeness( for eatables) Condition as to Fitness for a Particular PurposeCondition as to Fitness for a Particular Purpose

3.3. Sale by Sample:Sale by Sample:– Bulk of the goods corresponds to sampleBulk of the goods corresponds to sample

– Reasonable opportunity of comparingReasonable opportunity of comparing

– Free from any defectFree from any defect

4.4. Sale by Sample as well as by Description:Sale by Sample as well as by Description:

Implied WarrantiesImplied Warranties

1.1. Warranties of Quiet PossessionWarranties of Quiet Possession

2.2. Warranties of Encumbrances: not subject to third party right.Warranties of Encumbrances: not subject to third party right.

Caveat EmptorCaveat EmptorIt means “ let the buyer beware” i.e. the seller is under no duty to It means “ let the buyer beware” i.e. the seller is under no duty to

reveal the defects in the goods he is selling. So it is not the reveal the defects in the goods he is selling. So it is not the part of seller’s duty to give to the buyer, an article suitable for part of seller’s duty to give to the buyer, an article suitable for a particular purpose unless such purpose is made known to a particular purpose unless such purpose is made known to the seller.the seller.

Caveat Emptor does not apply:Caveat Emptor does not apply:– Sale under fitness for buyer’s purposeSale under fitness for buyer’s purpose– Sale under merchandable qualitySale under merchandable quality– Consent by fraudConsent by fraud

Passing of Property of Transfer of OwnershipPassing of Property of Transfer of Ownership

The primary objective of the sale is the passing of ownership of The primary objective of the sale is the passing of ownership of the property from the seller to the buyer.the property from the seller to the buyer.

For determining the time passing the ownershipFor determining the time passing the ownership

1.1. Specific or ascertained goodsSpecific or ascertained goods- Deliverable state- Deliverable state

- Non- deliverable state- Non- deliverable state

2.2. Generic or uncertained goodsGeneric or uncertained goods

3.3. Goods delivered on sale or returnGoods delivered on sale or return

Passing of Risk in the Goods:Passing of Risk in the Goods:1. When the parties agrees to contrary provision1. When the parties agrees to contrary provision

2. When delivery is delayed through the fault of any one party2. When delivery is delayed through the fault of any one party

Unpaid SellerUnpaid Seller

- - When the whole of the price has not been paid or tenderedWhen the whole of the price has not been paid or tendered- When negotiable instrument is conditional or dishonorWhen negotiable instrument is conditional or dishonor

Right of an Unpaid Seller:Right of an Unpaid Seller:

A. Rights against the GoodsA. Rights against the Goods

1.1. Right of Lien( sec.47-49)Right of Lien( sec.47-49)

Linked with possessionLinked with possession

- where the goods have been sold without any stipulation of credit- where the goods have been sold without any stipulation of credit

- Where the goods have been sold credit, but term expired- Where the goods have been sold credit, but term expired

- where the buyer becomes insolvent.- where the buyer becomes insolvent.

Termination of lien (sec. 49)Termination of lien (sec. 49)

-- By delivery to carrierBy delivery to carrier

-- By delivery to buyerBy delivery to buyer

-- By WaiverBy Waiver

-- By tender of priceBy tender of price


2. Right of Stoppage in Transit (Sec. 50-52)2. Right of Stoppage in Transit (Sec. 50-52)

- Seller must be unpaid- Seller must be unpaid

- The seller must have parted with the possession and seller must - The seller must have parted with the possession and seller must not acquirednot acquired

- The buyer must be insolvent- The buyer must be insolvent

- The property must have passed from the seller to buyer- The property must have passed from the seller to buyer

3. Right of re-sale(sec.54)3. Right of re-sale(sec.54)

Perishable naturePerishable nature

Exercised the right of lien or stoppageExercised the right of lien or stoppage

Right expressly reserved by sellerRight expressly reserved by seller


B. Right against the BuyerB. Right against the Buyer

- Suit for Price (Sec. 55)Suit for Price (Sec. 55)- Suit for Damages for Non- Acceptance ( sec. 56)Suit for Damages for Non- Acceptance ( sec. 56)- Suit for Interest (Sec. 61)Suit for Interest (Sec. 61)

Negotiable Instrument Act 1881Negotiable Instrument Act 1881

A negotiable instrument means a promissory note, A negotiable instrument means a promissory note, constituted from two words Negotiable + Instrument.constituted from two words Negotiable + Instrument.

Negotiable means transferable from one person to another Negotiable means transferable from one person to another person in return for consideration.person in return for consideration.

Instrument means written document by which right is created Instrument means written document by which right is created in favour of some person.in favour of some person.

A negotiable instrument means a promissory note, bill of A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer.exchange or cheque payable either to order or to bearer.

Justice Wills “ a negotiable instrument is one, the property in Justice Wills “ a negotiable instrument is one, the property in which is acquired by anyone who takes it bona fide and for which is acquired by anyone who takes it bona fide and for value notwithstanding any defect of title in person from value notwithstanding any defect of title in person from whom he took it”whom he took it”

E.g. A bought some goods from a shop and paid stolen E.g. A bought some goods from a shop and paid stolen cheque.cheque.

A few Characteristics;A few Characteristics; Freely transferable Freely transferable Title of holder free from all defectsTitle of holder free from all defects DishonorDishonorContract to pay moneyContract to pay moneyTypes; Types; NegotiableNegotiable

i) negotiable by statute(promissory notes, i) negotiable by statute(promissory notes, bill of exchange and cheques)bill of exchange and cheques)

Non- negotiableNon- negotiable

ii)negotiable by custom or usage (Bankers ii)negotiable by custom or usage (Bankers draft or pay order, hundis, delivery orders draft or pay order, hundis, delivery orders and railway receipt for goods)and railway receipt for goods)

NegotiationNegotiationMeans transfer of instrument from one person to Means transfer of instrument from one person to

another in such a manner so as to convey the another in such a manner so as to convey the title and constitute the transferee the holder title and constitute the transferee the holder thereof.thereof.

Negotiable by Mere DeliveryNegotiable by Mere Delivery::E.g. X, the holder of a negotiable instrument E.g. X, the holder of a negotiable instrument

payable to bearer delivers it to the agent of Y to payable to bearer delivers it to the agent of Y to keep it for Y.keep it for Y.

Negotiable by Endorsement and DeliveryNegotiable by Endorsement and Delivery: means : means sign itsign it

HolderHolderHolder in Due CourseHolder in Due Course

Endorsement:Endorsement:Means writing on the back of an instrument.Means writing on the back of an instrument.Kind of Endorsement:Kind of Endorsement:

Blank or General Endorsement: Sd/- D.MohanBlank or General Endorsement: Sd/- D.MohanSpecial or Full Endorsement: Pay to Ram Sd/ Special or Full Endorsement: Pay to Ram Sd/ MohanMohanRestrictive Endorsement: not for further i.e. Restrictive Endorsement: not for further i.e. onlyonlyConditional or Qualified Endorsement:Conditional or Qualified Endorsement:

(a). Sans Recourse: not liable for (a). Sans Recourse: not liable for dishonor.dishonor.

(b). Liability upon a contingency:(b). Liability upon a contingency:Partial of Endorsement: for part of amountPartial of Endorsement: for part of amount

Notes, Bills and chequesNotes, Bills and chequesA promissory note is an instrument in writing (not A promissory note is an instrument in writing (not being a bank note or a currency note) containing being a bank note or a currency note) containing an unconditional undertaking, signed by the an unconditional undertaking, signed by the maker, to pay a certain sum of money only to or to maker, to pay a certain sum of money only to or to the order of certain person, or to the bearer of the the order of certain person, or to the bearer of the instrument [sec 4] two parties Maker and Payeeinstrument [sec 4] two parties Maker and PayeeElements Elements – WritingWriting– promise to paypromise to pay– definite & unconditionaldefinite & unconditional– signed by the makersigned by the maker– signed by the makersigned by the maker– certain partiescertain parties– certain sum of moneycertain sum of money– promise to pay money onlypromise to pay money only– formalities like number, date, place etc.)formalities like number, date, place etc.)

A bill of exchange is an instrument in writing A bill of exchange is an instrument in writing containing and unconditional order, signed by containing and unconditional order, signed by the maker, directing a certain person to pay a the maker, directing a certain person to pay a certain sum of money only to, or to the order of, certain sum of money only to, or to the order of, a certain person or to the bearer of the a certain person or to the bearer of the instrument [sec 5]instrument [sec 5]Parties to the bill >>> three (drawer, drawee, Parties to the bill >>> three (drawer, drawee, payee)payee)ElementsElements– WritingWriting– contain an order to paycontain an order to pay– order must be unconditionalorder must be unconditional– requires 3 partiesrequires 3 parties– sum payable must be certainsum payable must be certain

A cheque is a bill of exchange drawn upon a A cheque is a bill of exchange drawn upon a specified banker and payable on demand [sec 6]specified banker and payable on demand [sec 6]

Dishonour of a Negotiable InstrumentDishonour of a Negotiable Instrument

A bill may dishonoured by non-acceptance(since A bill may dishonoured by non-acceptance(since only bill required acceptance) or by non payment. only bill required acceptance) or by non payment. A promissory note or a cheque are dishonoured A promissory note or a cheque are dishonoured by non payment only. (sec 91 & 92)by non payment only. (sec 91 & 92)When a negotiable instrument is dishonoured When a negotiable instrument is dishonoured either by non-acceptance or non-payment, the either by non-acceptance or non-payment, the holder of the instrument must give notice to all holder of the instrument must give notice to all concerned.(sec 93)concerned.(sec 93)Notice of dishonour could be oral or written and Notice of dishonour could be oral or written and must be sent within a reasonable time.must be sent within a reasonable time.A drawer of dishonoured cheque shall be deemed A drawer of dishonoured cheque shall be deemed to have committed an offence. For which without to have committed an offence. For which without prejudice to any other provision of this act, be prejudice to any other provision of this act, be punished with imprisonment for a term which may punished with imprisonment for a term which may extend to one year OR with a fine which extend to extend to one year OR with a fine which extend to twice the amount of the cheque OR with bothtwice the amount of the cheque OR with both

Law of InsuranceLaw of InsuranceInsurance is “a means of shifting the risks to Insurance is “a means of shifting the risks to insurers in consideration of nominal cost called insurers in consideration of nominal cost called the premium. the premium. Insurance is “ a either to indemnify against a Insurance is “ a either to indemnify against a loss which may arise upon the happening to the loss which may arise upon the happening to the person insured”.person insured”.

Fundamental Principles/ Elements of InsuranceFundamental Principles/ Elements of Insurance• Utmost Good FaithUtmost Good Faith• Insurable InterestInsurable Interest• IndemnityIndemnity• SubrogationSubrogation• ContributionContribution• Mitigation of LossMitigation of Loss• Causa PromixaCausa Promixa

The Consumer Protection Act, 1986The Consumer Protection Act, 1986The act seeks to provide better protection to The act seeks to provide better protection to consumers’s rights. Such as rights to;consumers’s rights. Such as rights to;

1.1. Be protected against mktg. of products Be protected against mktg. of products hazardous to life & propertyhazardous to life & property

2.2. Be informed about the qlty, qty, ptency, purity, Be informed about the qlty, qty, ptency, purity, standard and price of products against unfair standard and price of products against unfair trade practicestrade practices

3.3. Be assured access to products at competitive Be assured access to products at competitive pricesprices

4.4. Be heard and to be assured that the consumers’ Be heard and to be assured that the consumers’ interest will receive due considerationinterest will receive due consideration

5.5. Seek redressal against unfair trade practicesSeek redressal against unfair trade practices6.6. Consumer educationConsumer education

The act provides for establishment of quasi-The act provides for establishment of quasi-judicial machinery at district, state & centre level judicial machinery at district, state & centre level for speedy & simple addressel.for speedy & simple addressel.















Disputes Redressal AgenciesDisputes Redressal Agencies

Consumer Disputes Redressal Forum (The Consumer Disputes Redressal Forum (The Disctrict Forum) ---- [sec 10 to 15]Disctrict Forum) ---- [sec 10 to 15]

A person who is, or has been, or is qualified to be A person who is, or has been, or is qualified to be a District Judge, shall be its Presidenta District Judge, shall be its President

Two other members of proven track record (one of Two other members of proven track record (one of whom shall be woman)whom shall be woman)

Term of office (5 yrs or 65 yrs of age whichever is Term of office (5 yrs or 65 yrs of age whichever is earlier)earlier)

Jurisdiction : To entertain complaints where the Jurisdiction : To entertain complaints where the value of the products and the compensation, if value of the products and the compensation, if any, claimed do not exceed Rs. 500,000/-any, claimed do not exceed Rs. 500,000/-

Consumer Disputes Redressal Consumer Disputes Redressal CommissionCommission

The State Commission [Sec 16 to 19]The State Commission [Sec 16 to 19]A person who is or has been a Judge of a High A person who is or has been a Judge of a High Court, shall be its President >>State Govt. Court, shall be its President >>State Govt. appoints under consultation with CJ of HCappoints under consultation with CJ of HCTerm is 5 yrs or 67 yrs of age, whichever is earlierTerm is 5 yrs or 67 yrs of age, whichever is earlierJurisdiction: 1. >5 lac but not more than 20 lac, Jurisdiction: 1. >5 lac but not more than 20 lac, 2.Appeals against the order of District Forum2.Appeals against the order of District Forum

National Commission [Sec 20 to 23]National Commission [Sec 20 to 23]A person who is or has been a Judge of Supreme A person who is or has been a Judge of Supreme Court, shall be its President>>Central Govt. Court, shall be its President>>Central Govt. appoints under consultation of CJ of SCappoints under consultation of CJ of SCTerm 5 yrs or 70 yrs of age, whichever is earlierTerm 5 yrs or 70 yrs of age, whichever is earlierAppeal against National Commission can be done Appeal against National Commission can be done in SC within 30 daysin SC within 30 days

MRTP Act 1969MRTP Act 1969The act aims at;The act aims at;

Preventing concentration of economic powerPreventing concentration of economic power

Prohibiting monopolistic trade practicesProhibiting monopolistic trade practices

Prohibiting restrictive/unfair trade practicesProhibiting restrictive/unfair trade practices

Constitution of MRTP Commission:Constitution of MRTP Commission:Sec 5 of the Act requires Central Govt. to Sec 5 of the Act requires Central Govt. to constitute a commission (MRTPC) act mgmt.constitute a commission (MRTPC) act mgmt.

The commission will have a Chairman & min. 2 or The commission will have a Chairman & min. 2 or max. 8 membersmax. 8 members

Term is 5 yrs, can be reappointed for 2Term is 5 yrs, can be reappointed for 2ndnd term only term only OR 65 yrs of age whichever is earlierOR 65 yrs of age whichever is earlier

Powers of MRTPCPowers of MRTPCPowersPowers

Of a Civil CourtOf a Civil CourtTo enquiry and pass final orderTo enquiry and pass final orderTo make enquiry & express opinionTo make enquiry & express opinionTo grant temporary injunctionTo grant temporary injunctionTo award compensationTo award compensationTo enforce orders of MRTPCTo enforce orders of MRTPCTo investigate whether the orders are being To investigate whether the orders are being implementedimplementedTo punish for contemptTo punish for contemptTo regulate the procedureTo regulate the procedure

Foreign Exchange Mgmt. Act 1999Foreign Exchange Mgmt. Act 1999FEMA replaced FERA 1973 and came into being w.e.f. FEMA replaced FERA 1973 and came into being w.e.f. June 1June 1stst, 2000, 2000

Authorized Person & its Duties:Authorized Person & its Duties:RBI may, on an application made in this RBI may, on an application made in this regard, authorize a person to deal in Forexregard, authorize a person to deal in Forex

Duties:Duties:To comply with RBI directionTo comply with RBI direction

To ensure compliance of FEMATo ensure compliance of FEMA

To produce books of accountsTo produce books of accounts

RBI may issue instructions time to timeRBI may issue instructions time to time

RBI may inspect the authorized personRBI may inspect the authorized person

FEMAFEMAContravention & Penalties:Contravention & Penalties:

PenaltiesPenalties

Enforcement of orders of Adjudicating AuthorityEnforcement of orders of Adjudicating Authority

Power to compound contraventionPower to compound contravention

Adjudication & Appeal:Adjudication & Appeal:Adjudicating authorityAdjudicating authority

Appeal to Special DirectorAppeal to Special Director

Appeal to Appelate TribunalAppeal to Appelate Tribunal

Appelate Tribunal:Appelate Tribunal:Constitution/Chairperson & Members/Term Constitution/Chairperson & Members/Term

(5yrs/65+62 yrs age bar respectively)(5yrs/65+62 yrs age bar respectively)

Powers of Tribunal and SDPowers of Tribunal and SD

Shall not be bound by the Code of Civil Shall not be bound by the Code of Civil ProcedureProcedureThey will have same powers as are vested in They will have same powers as are vested in a Civil Courta Civil CourtTheir order shall have same decree as that of Their order shall have same decree as that of a Civil Courta Civil CourtAll proceedings under these shall be deemed All proceedings under these shall be deemed to be judicial proceedingsto be judicial proceedingsPower to inter-bench transferPower to inter-bench transferAppeal against their decision may be filed in Appeal against their decision may be filed in HC within 60 days of the receipt of such HC within 60 days of the receipt of such decision.decision.

Information Technology Act, 2000Information Technology Act, 2000

Digital SignatureDigital SignatureElectronic GovernanceElectronic GovernanceCertifying Authorities;Certifying Authorities;

1.1. Appointment of Controller & other officersAppointment of Controller & other officers2.2. Functions of ControllerFunctions of Controller3.3. Controller as repositoryController as repository4.4. Licence to issue digital signature certificatesLicence to issue digital signature certificates5.5. Application/Renewal/Suspension of LicenceApplication/Renewal/Suspension of Licence6.6. Power to delegate and investigatePower to delegate and investigate

Penalties & Adjudication;Penalties & Adjudication;1.1. Penalty for damage,Penalty for damage,2.2. Penalty for failure to furnish information,Penalty for failure to furnish information,3.3. Residuary Penalty,Residuary Penalty,4.4. Power to adjudicatePower to adjudicate

Cyber Regulations & TribunalCyber Regulations & Tribunal

Establishment of tribunal (by center govt.)Establishment of tribunal (by center govt.)

Composition of tribunal (shall consist of only Composition of tribunal (shall consist of only one member termed as Presiding Officer)one member termed as Presiding Officer)

Qualification & Terms of Presiding Officer (a HC Qualification & Terms of Presiding Officer (a HC Judge OR Indian Legal Service Grade I officer Judge OR Indian Legal Service Grade I officer for at least 3 yrs; term shall be for 5 yrs OR 65 for at least 3 yrs; term shall be for 5 yrs OR 65 yrs of age whichever is earlier)yrs of age whichever is earlier)

Resignation / RemovalResignation / Removal

Procedure & Powers of the TribunalProcedure & Powers of the Tribunal

Civil Court not to have jurisdiction/Appeal to HCCivil Court not to have jurisdiction/Appeal to HC

The Patent Act 1957The Patent Act 1957(The act describes the procedure for grant of (The act describes the procedure for grant of patent and protect his rights against patent and protect his rights against infringement)infringement)Application for Patents:Application for Patents:

A patent application can be made by-A patent application can be made by-1.1. Any person claiming to be the true and first inventor of the inventionAny person claiming to be the true and first inventor of the invention2.2. Any person being the assignee of the above personAny person being the assignee of the above person3.3. The legal rep. of any deceased person, who immediately before his The legal rep. of any deceased person, who immediately before his

death was entitled to make such an applicationdeath was entitled to make such an application

The Specification [sec 10]:The Specification [sec 10]: A description of the invention A description of the invention is called the specification.is called the specification.

Examination of ApplicationsExamination of ApplicationsExclusive Marketing Rights (Application & Grant)Exclusive Marketing Rights (Application & Grant)Opposition to Grant of Patent (within 4 mnths of Opposition to Grant of Patent (within 4 mnths of ad)ad)Working of PatentsWorking of Patents

The Copyright Act, 1957The Copyright Act, 1957

The govt. has established a copy right office under The govt. has established a copy right office under the control of Registrar of Copyrights.the control of Registrar of Copyrights.The govt. has also constituted a Copyright Board. The govt. has also constituted a Copyright Board. The registrar of copyrights is the Secretary of the The registrar of copyrights is the Secretary of the Board. The board shall be deemed to be a civil Board. The board shall be deemed to be a civil court.court.The board will have a Chairman, who is or has The board will have a Chairman, who is or has been a Judge of a HC or is qualified to be a Judge been a Judge of a HC or is qualified to be a Judge of a HC.of a HC.The copyright subsists in; a)original, literary, The copyright subsists in; a)original, literary, dramatic, musical and artistic works; dramatic, musical and artistic works; b)cinematograph films and c) sound recordingsb)cinematograph films and c) sound recordingsMeaning of CopyrightMeaning of Copyright

contg..>>>contg..>>>

Registration of Copyright [sec 44-50]Registration of Copyright [sec 44-50]

Infringement of Copyright [sec 51]Infringement of Copyright [sec 51]

Civil Remedies for Infringement [sec 55]Civil Remedies for Infringement [sec 55]

The Companies Act, 1956The Companies Act, 1956An artificial person – has no body, no soulAn artificial person – has no body, no soulA voluntary association of personsA voluntary association of personsIt is not seen in physical form, but it exists and is It is not seen in physical form, but it exists and is not fictitious entitynot fictitious entityA separate legal entity, a limited liability, can be A separate legal entity, a limited liability, can be created & put to an end only by lawcreated & put to an end only by lawIt has its nationality and residence but is not a It has its nationality and residence but is not a cityzencityzenCompany v/s Partnership Company v/s Partnership Chartered/Statutory/Registered Co. Chartered/Statutory/Registered Co. Private & Public Limited Cos.Private & Public Limited Cos.Formation of Co. (Name approval/submission of Formation of Co. (Name approval/submission of docs.)docs.)Certification of IncorporationCertification of IncorporationThe PromoterThe Promoter

Memorandum & Articles of AssociationMemorandum & Articles of AssociationMemorendum of Assoication shall consists of;Memorendum of Assoication shall consists of;

1.1. Name of the Co.Name of the Co.2.2. State in which the registered office of the co. is State in which the registered office of the co. is

situatedsituated3.3. Object of the Co. within which the Co. shall Object of the Co. within which the Co. shall

keeps its businesskeeps its businessThe Articles of Association are the rules, The Articles of Association are the rules, regulations and bye-laws for the internal regulations and bye-laws for the internal management of the affairs of a Co.management of the affairs of a Co.Distinction between Memorandum & Articles of Distinction between Memorandum & Articles of AssociationAssociationDoctrine of Ultra ViresDoctrine of Ultra Vires (Ultra-Beyond & Vires – Power)(Ultra-Beyond & Vires – Power)

A co. has the power to all such things as are:- 1.authorized by Co. A co. has the power to all such things as are:- 1.authorized by Co. Act.1956, 2. essential to achieve its object given in Memorandum & 3. Act.1956, 2. essential to achieve its object given in Memorandum & 3. Reasonably and fairly incidental to its objects. Everything else is Ultra Reasonably and fairly incidental to its objects. Everything else is Ultra Vires the Co. The purpose of this doctrine is two fold; 1. To protect investors in Vires the Co. The purpose of this doctrine is two fold; 1. To protect investors in the company & 2. To protect creditors to ensure appropriation of funds.the company & 2. To protect creditors to ensure appropriation of funds.

I P OI P OProspectusProspectus (Invitation to public, dating, registration) (Invitation to public, dating, registration)

Contents of ProspectusContents of Prospectusi)i) General InformationGeneral Informationii)ii) Capital StructureCapital Structureiii)iii) Terms of the present offerTerms of the present offer (objects, project cost, (objects, project cost,

means of financing (including contribution of promoters)means of financing (including contribution of promoters)

iv)iv) Co., mgmt & projectCo., mgmt & projectv)v) Particulars in regard to the co. and other listed Particulars in regard to the co. and other listed

companies under the same mgmtcompanies under the same mgmtvi)vi) Outstanding litigationOutstanding litigationvii)vii) Mgmt.’s perception of risk factorsMgmt.’s perception of risk factors

Liabilities for mis-representation in prospectusLiabilities for mis-representation in prospectus (against the co., directors, promoters & experts)(against the co., directors, promoters & experts)

Underwriting Commission & BrokerageUnderwriting Commission & Brokerage

Contg. >>>Contg. >>>

Register of Members Register of Members [sec 150] (Index, Place of [sec 150] (Index, Place of keeping the register, Power to close)keeping the register, Power to close)

Annual Return Annual Return (Every co. having sharing capital (Every co. having sharing capital shall file this within 60 days of AGM)shall file this within 60 days of AGM)

Authorized, Registered or Nominal CapitalAuthorized, Registered or Nominal CapitalIssued & Subscribed CapitalIssued & Subscribed CapitalCalled-up CapitalCalled-up CapitalPaid-up CapitalPaid-up CapitalUncalled CapitalUncalled CapitalReserve CapitalReserve CapitalReduction of Share Capital Reduction of Share Capital (Under sec 100 a co. (Under sec 100 a co. may do so subject to confirmation by the court)may do so subject to confirmation by the court)


Procedure of reduction fo share capital;Procedure of reduction fo share capital;1.1. Special Resolution [sec 100]Special Resolution [sec 100]

2.2. Application to the courtApplication to the court

3.3. Registration of court-order with RegistrarRegistration of court-order with Registrar

Conversion of debentures or loan into sharesConversion of debentures or loan into shares

Stock & Shares (Distinction)Stock & Shares (Distinction)

Application & Allotment of SharesApplication & Allotment of Shares

Share CertificateShare Certificate

Share WarrantShare Warrant

Distinction between Share Warrant & Share Distinction between Share Warrant & Share CertificateCertificate

Buy Back of SecuritiesBuy Back of Securities

Transfer of SharesTransfer of Shares


Surrender of Shares (Sec 77 prohibits)Surrender of Shares (Sec 77 prohibits)

Forfeiture of SharesForfeiture of Shares

Purchase by Co. of its own sharesPurchase by Co. of its own shares

DividendsDividends

DebenturesDebentures

Appointment of Directors;Appointment of Directors;1.1. First Directors, 2.Appointment by Co., 3.By the Board, First Directors, 2.Appointment by Co., 3.By the Board,

4.By third parites, 5.By proportional representation, 6.By 4.By third parites, 5.By proportional representation, 6.By the Central Govt.the Central Govt.

Removal of Directors;Removal of Directors;1.1. Shareholders[284], 2.Central Govt., 3.Co. Law BoardShareholders[284], 2.Central Govt., 3.Co. Law Board

Reconstruction & Amalgamation [394]Reconstruction & Amalgamation [394]


Winding up OR Liquidation >>Last Winding up OR Liquidation >>Last stage in a Co.’s lifestage in a Co.’s life

A Process in which the Co. is dissolvedA Process in which the Co. is dissolved

Official Liquidator & His DutiesOfficial Liquidator & His Duties

Dissolution of Company [481]Dissolution of Company [481]

Defunct Company [560]Defunct Company [560]

RestorationRestoration

Cle

Education

law of contract

law business law

law valid

law agreements

law ofcontract

law of obligations jus

general principles of

availablein court of