LEGAL ASPECTS OF BUSINESS.<br />SESSION-5<br />
BILL OF EXCHANGE-SEC 5:<br />ACC. TO SEC 5 OF THE NEGOTIABLE INSTRUMENT ACT, 1881, “ A BILL OF EXCHANGE IS AN INSTRUMENT I...
ESSENTIAL CHARACTERISTICS OF A BILL OF EXCHANGE:<br />1) IT SHOULD BE IN WRITING<br />2) EXPRESS TO PAY<br />3) DEFINITE A...
PARTIES TO A BILL OF EXCHANGE:<br />1) DRAWER: THE PERSON WHO DRAWS A BILL OF EXCHANGE (ISSUER).<br />2) DRAWEE: THE PERSO...
SPECIMEN OF A BILL OF EXCHANGE:<br />BHARAT SELLS GOODS TO RAHUL FOR RS.10,000 TO BE PAID 3 MONTHS AFTER DATE AND BUYS FRO...
SPECIMEN OF BILL OF EXCHANGE:<br />RS.10,000/-ONLY.                      DATE:<br />THREE MONTHS AFTER DATE PAY TO RAJAT(P...
CHEQUE – SEC 6:<br />A CHEQUE IS A BILL OF EXCHANGE WHICH IS DRAWN UPON A SPECIFIED BANKER, AND PAYABLE ON DEMAND.<br />ES...
8) DRAWN UPON A SPECIFIED BANKER<br />9) PAYABLE ON DEMAND.<br />PARTIES TO A CHEQUE:<br />1)DRAWER<br />2) BANKER<br />3)...
CROSSING OF A CHEQUE-SEC123 TO 131A.<br />A CHEQUE IS SAID TO BE CROSSED WHEN IT BEARS ACROSS ITS FACE TWO PARALLEL TRANSV...
TYPES OF CROSSING:<br />GENERAL CROSSING:<br />A CHEQUE IS SAID TO BE CROSSED GENERALLY WHERE  IT BEARS ACROSS ITS FACE AN...
SPECIAL CROSSING: A CHEQUE IS SAID TO BE CROSSED SPECIALLY WHERE IT BEARS ACROSS ITS FACE IN ADDITION OF:<br />THE NAME OF...
BOUNCING OR DISHONOUR OF CHEQUES:<br />A CHEQUE IS SAID TO BE BOUNCED OR DISHONOURED  BY NON-PAYMENT WHEN THE DRAWEE OF TH...
1) IF THE DRAWEE HAS SUFFICIENT FUNDS OF THE DRAWER  IN HIS FUNDS<br />2) IF THE FUNDS ARE PROPERLY APPLICABLE TO SUCH PAY...
LIABILITY OF A DRAWER ON DISHONOUR OF A CHEQUE –SEC-138.<br />ON DISHONOUR OF A CHEQUE, THE DRAWER IS PUNISHABLE WITH IMPR...
A BANKER MUST REFUSE TO HONOUR A CUSTOMERS CHEQUE IN THE FOLLOWING CASES:<br />STOP PAYMENT<br />GARNISHEE ORDER<br />DEAT...
LOSS OF CHEQUE<br />MATERIAL ALTERATIOM<br />DIFFERENT SIGNATURE<br />NOTICE OF CLOSURE.<br />
‘HOLDER ‘ SEC-8:<br />A PERSON IS CALLED HOLDER OF A NEGOTIABLE INSTRUMENT IF HE SATISFIES THE FOLLOWING TWO CONDITIONS:<b...
HOLDER IN DUE COURSE-SEC-9<br />A PERSON IS SAID TO BE A HOLDER IN DUE COURSE  IF HE SATISFIES THE FOLLOWING CONDITIONS:<b...
MATURITY OF A PROMISSORY NOTE OR A BILL OF EXCHANGE IS THE DATE ON WHICH IT FALLS DUE (SEC-22).<br />DAYS OF GRACE (SEC-22...
COMPANIES ACT-1956.<br />MEANING AND NATURE OF A COMPANY:<br />A COMPANY IMPLIES AN ASSOCIATION OF PERSONS FOR SOME COMMON...
CHARACTERISTICS OF A COMPANY:<br />1) INCORPORATE ASSOCIATION: THE COMPANY MUST BE INCORPORATED OR REGISTERED UNDER THE AC...
4) PERPUTUAL SUCCESSION:<br />5) LIMITED LIABILITY<br />6) TRANSFERABLE SHARES<br />7) COMMON SEAL<br />8)SEPARATE PROPERT...
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L E G A L A S P E C T S O F B U S I N E S S 5

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L E G A L A S P E C T S O F B U S I N E S S 5

  1. 1. LEGAL ASPECTS OF BUSINESS.<br />SESSION-5<br />
  2. 2. BILL OF EXCHANGE-SEC 5:<br />ACC. TO SEC 5 OF THE NEGOTIABLE INSTRUMENT ACT, 1881, “ A BILL OF EXCHANGE IS AN INSTRUMENT IN WRITING CONTAINING AN UNCONDITIONAL ORDER SIGNED BY THE MAKER DIRECTING A CERTAIN PERSON TO PAY A CERTAIN SUM OF MONEY ONLY TO, OR TO THE ORDER OF A CERTAIN PERSON OR TO THE BEARER OF THE INSTRUMENT.” THUS, A BILL IS AN ORDER BY A CREDITOR UPON HIS DEBTOR REQUIRING HIM TO PAY THE MONEY TO THE PERSON SPECIFIED.<br />
  3. 3. ESSENTIAL CHARACTERISTICS OF A BILL OF EXCHANGE:<br />1) IT SHOULD BE IN WRITING<br />2) EXPRESS TO PAY<br />3) DEFINITE AND UNCONDITIONAL PROMISE<br />4) SIGNED BY THE MAKER<br />5) ORDER TO PAY CERTAIN SUM<br />6) ORDERTO PAY MONEY ONLY<br />7) CERTAIN THREE PARTIES.<br />
  4. 4. PARTIES TO A BILL OF EXCHANGE:<br />1) DRAWER: THE PERSON WHO DRAWS A BILL OF EXCHANGE (ISSUER).<br />2) DRAWEE: THE PERSON ON WHOM THE BILL OF EXCHANGE IS DRAWN IS CALLED THE DRAWEE.<br />HE IS ALSO CALLED THE ACCEPTOR OF THE BILL.<br />3) PAYEE: THE PERSON NAMED IN THE INSTRUMENT TO WHOM OR TO WHOSE ORDER THE MONEY IS DIRECTED TO BE PAID BY THE INSTRUMENT, IS CALLED THE PAYEE(RECEIVER).<br />
  5. 5. SPECIMEN OF A BILL OF EXCHANGE:<br />BHARAT SELLS GOODS TO RAHUL FOR RS.10,000 TO BE PAID 3 MONTHS AFTER DATE AND BUYS FROM RAJAT FOR RS.10,000 ON SIMILAR TERMS. IF BHARAT DIRECTS RAHUL TO PAY THE SUM OF RS.10,000 TO RAJAT , THIS ORDER WILL BE A BILL OF EXCHANGE.<br />
  6. 6. SPECIMEN OF BILL OF EXCHANGE:<br />RS.10,000/-ONLY. DATE:<br />THREE MONTHS AFTER DATE PAY TO RAJAT(PAYEE) OR ORDER THE SUM OF RUPEES TN THOUSAND, FOR VALUE RECEIVED.<br />ACCEPTED<br />RAHUL (DRAWEE)<br />TO ,<br />RAHUL,<br />ADDRESS. BHARAT(DRAWER) <br />
  7. 7. CHEQUE – SEC 6:<br />A CHEQUE IS A BILL OF EXCHANGE WHICH IS DRAWN UPON A SPECIFIED BANKER, AND PAYABLE ON DEMAND.<br />ESSENTAIL CHARACTERISTICS OF A CHEQUE:<br />1) IT SHOULD BE IN WRITING<br />2) EXPRESS TO PAY<br />3) DEFINITE AND UNCONDITIONAL PROMISE<br />4) SIGNED BY THE DRAWER<br />5) ORDER TO PAY CERTAIN SUM<br />6) ORDER TO PAY MONEY ONLY<br />7) CERTAIN THREE PARTIES.<br />
  8. 8. 8) DRAWN UPON A SPECIFIED BANKER<br />9) PAYABLE ON DEMAND.<br />PARTIES TO A CHEQUE:<br />1)DRAWER<br />2) BANKER<br />3) PAYEE. <br />
  9. 9. CROSSING OF A CHEQUE-SEC123 TO 131A.<br />A CHEQUE IS SAID TO BE CROSSED WHEN IT BEARS ACROSS ITS FACE TWO PARALLEL TRANSVERSE LINES WHICH ARE USUALLY DRAWN ON THE LEFTHAND TOP CORNER OF THE CHEQUE.<br />PURPOSE OF CROSSING: IS TO DIRECT THE DRAWEE(BANKER) TO PAY THE AMOUNT OF CHEQUE ONLY TO A BANKER SO THAT THE PARTY WHO RECEIVES THE PAYMENT OF THE CHEQUE CAN BE EASILY TRACED.<br />
  10. 10. TYPES OF CROSSING:<br />GENERAL CROSSING:<br />A CHEQUE IS SAID TO BE CROSSED GENERALLY WHERE IT BEARS ACROSS ITS FACE AN ADDITION OF <br />1) TWO PARALLEL TRANSVERSE LINES.<br />2) THE WORDS ‘AND COMPANY’ BETWEEN TWO PARALLEL LINES.<br />3) THE WORDS ‘NOT NEGOTIABLE’ BETWEEN TWO PARALLEL TRANSVERSE LINES.<br />
  11. 11. SPECIAL CROSSING: A CHEQUE IS SAID TO BE CROSSED SPECIALLY WHERE IT BEARS ACROSS ITS FACE IN ADDITION OF:<br />THE NAME OF THE BANKER IS WRITTEN .<br />
  12. 12. BOUNCING OR DISHONOUR OF CHEQUES:<br />A CHEQUE IS SAID TO BE BOUNCED OR DISHONOURED BY NON-PAYMENT WHEN THE DRAWEE OF THE CHEQUE MAKES DEFAULT IN PAYMENT UPON BEING REQUIRED TO PAY THE SAME.<br />LIABILITY OF DRAWEE ON DISHONOUR OF A CHEQUE SEC-31: THE DRAWEE MUST COMPENSATE THE DRAWER FOR ANY LOSS OR DAMAGE CAUSED BY NON-PAYMENT IF THE FOLLOWING THREE CONDITIONS ARE FULFILLED:<br />
  13. 13. 1) IF THE DRAWEE HAS SUFFICIENT FUNDS OF THE DRAWER IN HIS FUNDS<br />2) IF THE FUNDS ARE PROPERLY APPLICABLE TO SUCH PAYMENT<br />3) IF THE DRAWEE IS DULY REQUIRED TO PAY THE CHEQUE.<br />
  14. 14. LIABILITY OF A DRAWER ON DISHONOUR OF A CHEQUE –SEC-138.<br />ON DISHONOUR OF A CHEQUE, THE DRAWER IS PUNISHABLE WITH IMPRISONMENT FOR A TERM NOT EXCEEDING ONE YEAR OR WITH FINE NOT EXCEEDING TWICE THE AMOUNT OF A CHEQUE OR WITH BOTH .<br />REASONS COULD BE INSUFFICIENT CHEQUES, INVALIDITY OF CHEQUE TC.<br />
  15. 15. A BANKER MUST REFUSE TO HONOUR A CUSTOMERS CHEQUE IN THE FOLLOWING CASES:<br />STOP PAYMENT<br />GARNISHEE ORDER<br />DEATH<br />INSOLVENCY<br />INSANITY<br />DEFECT IN TITLE<br />
  16. 16. LOSS OF CHEQUE<br />MATERIAL ALTERATIOM<br />DIFFERENT SIGNATURE<br />NOTICE OF CLOSURE.<br />
  17. 17. ‘HOLDER ‘ SEC-8:<br />A PERSON IS CALLED HOLDER OF A NEGOTIABLE INSTRUMENT IF HE SATISFIES THE FOLLOWING TWO CONDITIONS:<br />1) HE MUST BE ENTITLED TO THE POSSESSION OF THE INSTRUMENT ON HIS OWN NAME AND<br />2) HE MUST BE ENTITLED TO RECEIVE /RECOVER THE AMOUNT DUE ON THE INSTRUMENTS.<br />
  18. 18. HOLDER IN DUE COURSE-SEC-9<br />A PERSON IS SAID TO BE A HOLDER IN DUE COURSE IF HE SATISFIES THE FOLLOWING CONDITIONS:<br />HE MUST BE A HOLDER<br />IT SHOULD BE FOR A VALID CONSIDERATION.<br />HE MUST HAVE OBTAINED IT BEFORE ITS MATURITY.<br />HE MUST HAVE OBTAINED IT IN GOOD FAITH. <br />
  19. 19. MATURITY OF A PROMISSORY NOTE OR A BILL OF EXCHANGE IS THE DATE ON WHICH IT FALLS DUE (SEC-22).<br />DAYS OF GRACE (SEC-22) EVERY INSTRUMENT OTHER THAN A CHEQUE IS ENTITLED TO THREE DAYS OF GRACE.<br />
  20. 20. COMPANIES ACT-1956.<br />MEANING AND NATURE OF A COMPANY:<br />A COMPANY IMPLIES AN ASSOCIATION OF PERSONS FOR SOME COMMON OBJECTS.<br />A COMPANY UNDER THE ACTIS DEFINED TO MEAN A “ COMPANY FORMED AND REGISTERED UNDER THE COMPANIES ACT,1956 OR UNDER ANY OF THE PREVIOUS COMPANY LAW”.<br />
  21. 21. CHARACTERISTICS OF A COMPANY:<br />1) INCORPORATE ASSOCIATION: THE COMPANY MUST BE INCORPORATED OR REGISTERED UNDER THE ACT.<br />2) ARTIFICIAL LEGAL ENTITY/PERSON:<br />THE COMPANY BEING A JURISTIC PERSON, DOES NOT POSSESS THE BODY OF A NATURAL BEING.IT EXISTS ONLY IN CONTEMPLATION OF LAW.<br />3) A SEPARATE LEGAL ENTITY:<br />SOLOMAN VS SOLOMANCO.LTD.<br />
  22. 22. 4) PERPUTUAL SUCCESSION:<br />5) LIMITED LIABILITY<br />6) TRANSFERABLE SHARES<br />7) COMMON SEAL<br />8)SEPARATE PROPERTY<br />9) CAPACITY TO SUE AND BEING SUED.<br />

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