B.l.r ppt according to jnt university syllabus

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B.l.r ppt according to jnt university syllabus

  1. 1. INTRODUCTION TO LAW OF CONTRACT <ul><li>Law of contract is the most important and basic part of mercantile law, and it is the foundation for various other laws falling under mercantile law. </li></ul><ul><li>Its not only the merchants or traders but every human being in an organized society ,consciously or unconsciously enters in to a contract. </li></ul><ul><li>As contracts are the basic of most of the business transactions ,law of contract is of great significance to all mercantile people ,traders ,owners, partnership firms , banks ,etc engaged in commercial activity . </li></ul>
  2. 2. ENFORCEABILITY <ul><li>An agreement to become a contract must have enforceability by law . It must give rise to legal obligation. legal obligation means a legal tie among the persons doing or performing an act . </li></ul><ul><li>So agreements may be social or legal related but social contracts do not give rise to legal obligations. </li></ul>
  3. 3. HISTORY OF INDIAN CONTRACT ACT -1827 <ul><li>The law related to contracts in India is contained in the Indian contract act 1872 </li></ul><ul><li>The act came in to force with effect from sep 1 1872 </li></ul>
  4. 4. THE ACT AS ENACTED HAS 266SECTIONS DIVIDED IN TO FOLLOWING GROUPS <ul><li>General principles of law of contract - 1to75 . </li></ul><ul><li>Contracts related to sale of goods - 76 to 124 . </li></ul><ul><li>Special kind of contracts (indemnity, guarantee, bailment etc ) - 125 to 238 . </li></ul><ul><li>Contracts relating to partnership - 239 to 266 . </li></ul>
  5. 5. CONTRACT DEFINITION :CONTRACT is a term derived from the Latin word “ CONTRACTUM ” ,which means “ DRAWN TOGETHER ” sec 2(H) of the Indian contract act 1872 defines contract as “ AN AGREEMENT ENFOCEABLE BY LAW”. Acc to Pollock: Every agreement and promise enforceable at law is a contract. Acc to salmond: Contract is an agreement creating and defining obligations between the parties. SO, a contract consists of an agreement and its enforceability by law
  6. 6. AGREEMENT <ul><li>AGREEMENT is defined as “every promise and set of promises forming consideration for each other” (sec2(e)). </li></ul><ul><li>PROMISE is defined as “when the person to whom the offer is made signifies his approval, the proposal is said to be accepted”. </li></ul><ul><li>CONSIDERATION: its nothing but something in return of doing something </li></ul>
  7. 7. CONTRACT=AGREEMENT+ENFORCEABILITY AT LAW AGREEMENT=OFFER+ACCEPTANCE
  8. 8. Essential elements of valid contract <ul><li>Offer and acceptance. </li></ul><ul><li>Consideration-lawful consideration with lawful object. </li></ul><ul><li>Capacity of parties to contract. </li></ul><ul><li>Free consent . </li></ul><ul><li>Agreement should be declared valid it shouldn’t be void. </li></ul><ul><li>Writing and registration, if so required by law. </li></ul><ul><li>Legal relationship. </li></ul><ul><li>Certainty. </li></ul><ul><li>Possibility of performance. </li></ul><ul><li>Enforceable by law. </li></ul>
  9. 9. OFFER OR PROPOSAL <ul><li>DEFINITION –Sec2(a) defines Proposal ( offer ) as “ when one person signifies to another person his willingness to do or to abstain from doing anything with a view to obtain the assent of that other person to such act or abstinence he is said to make a proposal ” . </li></ul><ul><li>The person making such offer or proposal is proposer or offerer. </li></ul><ul><li>Sec2(c) states person making the proposal as promisor and the person accepting the proposal as promisee. </li></ul>
  10. 10. ESSENTIALS OF A VALID PROPOSAL OR AN OFFER <ul><li>Beyond expression of willingness ,there must be something in the nature of a request. </li></ul><ul><li>Proposer cant dictate terms . </li></ul><ul><li>Offer must be intended ,capable of creating legal relations ,the agreement must have an express or tacit reference to the legal relations between the parties ,there must be a common intention of the parties to enter in to legal obligation. </li></ul>
  11. 11. <ul><li>A simple statement of intention does not constitute a binding promise even though a person to whom it is made acts up on it. </li></ul><ul><li>The words used must apply to definite persons to create legal relations .the offer must be made to a definite person . </li></ul><ul><li>The terms of offer must be certain and instantly recognizable . </li></ul><ul><li>An offer can be express or implied from the circumstances. </li></ul>
  12. 12. <ul><li>An offer must be communicated to an offeree .A person cant accept an offer unless he knows of the existence of the offer. </li></ul><ul><li>An offer may be conditional but the conditions must be clearly communicated . A conditional offer lapses when the condition is not accepted by the offeree. </li></ul><ul><li>The offeror should intend to be bound by it as soon as it is accepted by the offeree he shouldn’t reserve to himself any furthur act to be done on his part ,if he does so ,then its an invitation to an offer and not an offer. There is no contract between the parties unless the offer is accepted ,so it can be withdrawn before it is accepted. </li></ul>
  13. 13. TEST TO DETERMINE WHETHER THE PROPOSAL MADE IS VALID OR NOT <ul><li>Intention of the proposer - Does he intend to create a legal obligation and stand to be bound by it as soon as it is accepted by the other. </li></ul><ul><li>Is the offer communicated to the person to whom it is definitely intended to be made. </li></ul>
  14. 14. COUNTER-OFFER <ul><li>A COUNTER-OFFER IS A REJECTION OF THE ORIGINAL OFFER .IT IS A NEW OFFER .THIS NEW OFFER IS TERMED AS COUNTER-OFFER </li></ul>
  15. 15. COUNTER-OFFER <ul><li>A COUNTER-OFFER is a REJECTION of the ORIGINAL OFFER ,Its a NEW OFFER .This new offer is termed as COUNTER-OFFER . </li></ul><ul><li>Simply said as OFFER TO AN OFFER . </li></ul>
  16. 16. ACCEPTANCE <ul><li>DEFINITION :According to sec2(b) when the person to whom the proposal is made signifies his assent thereto , the proposal is said to be accepted . </li></ul><ul><li>A proposal when accepted becomes a promise. Sec2(c) states person making the proposal as promisor and the person accepting the proposal as promisee. </li></ul>
  17. 17. <ul><li>Performance of the conditions of a proposal, The acceptance of any consideration for reciprocal promise which may be offered with a proposal is an acceptance of the proposal (sec 8). </li></ul><ul><li>An acceptance need not always be expressed in words . </li></ul><ul><li>performance of the conditions of a proposal is an acceptance of the proposal. </li></ul><ul><li>There must be absolute and unconditional acceptance of the terms of a proposal. </li></ul>
  18. 18. ESSENTIALS OF A VALID ACCEPTANCE <ul><li>RULES </li></ul><ul><li>Acceptance must be absolute and unqualified. </li></ul><ul><li>Mode of acceptance-acceptance must be expressed in some usual and reasonable manner. </li></ul><ul><li>Mental acceptance is not sufficient in law. </li></ul><ul><li>4. Acceptance must be communicated to the offeror. </li></ul><ul><li>5. Acceptance of the proposal. </li></ul>
  19. 19. <ul><li>6.Acceptance of the proposal need not always be expressed in words. </li></ul><ul><li>7.Acceptance must be by a certain person. </li></ul><ul><li>8.If the act is done in ignorance of the proposal ,it is not acceptance of the proposal. </li></ul><ul><li>9.Acceptance must be given within a reasonable time. </li></ul><ul><li>10.Acceptance must be given before the offer lapses or is revoked or is withdrawn. </li></ul>
  20. 20. CONSIDERATION <ul><li>Acc to Sec 2(d) of the INDIAN CONTRACT ACT CONSIDERATION is: </li></ul><ul><li>When at the desire of the promisor, the promisee or any other person </li></ul><ul><li>(1)Has done, or abstained from doing, or </li></ul><ul><li>(2)Does or abstains from doing ,or </li></ul><ul><li>(3)promises to do or to abstain from doing something . </li></ul><ul><li>Such act or abstinence or promise is consideration for the promise. </li></ul>
  21. 21. <ul><li>Acc to Pollock “consideration is the price for which the promise of other is bought , and the promise thus given for value is enforceable”. </li></ul><ul><li>Every contract consists of two parts: </li></ul><ul><li>(a) promise .(b) Consideration for the promise . </li></ul><ul><li>Simply said consideration is QUID PRO QUO “something in return of something.” </li></ul>
  22. 22. ESSENTIALS OF A VALID CONSIDERATION <ul><li>Consideration must move at the desire of the promisor. </li></ul><ul><li>Consideration may move from the promisee or any other person –stranger to a contract. </li></ul><ul><li>Consideration may be past, present or future. </li></ul><ul><li>Consideration may be an act of doing or abstaining from doing something or it may be an act of forbearance or abstinence . </li></ul>
  23. 23. <ul><li>Consideration need not be adequate. </li></ul><ul><li>Consideration must be real and not illusory. </li></ul><ul><li>Consideration must not be unlawful, illegal, immoral or opposed to public policy. </li></ul><ul><li>Performance of existing obligation is no consideration. </li></ul><ul><li>Forbearance to sue is a good consideration. </li></ul>
  24. 24. CAPACITY TO CONTRACT <ul><li>According to sec 11 of the contract act a </li></ul><ul><li>person is competent to contract if He/She : </li></ul><ul><li>Is a major . </li></ul><ul><li>Is of a sound mind . </li></ul><ul><li>Is not disqualified from contracting by any law to which he is subject. </li></ul>
  25. 25. MINOR’S AGREEMENT <ul><li>MINORS </li></ul><ul><li>According to sec3 of the Indian majority act,1875, a person domiciled in India ,who has not completed age of 18 is a minor. </li></ul><ul><li>A person is treated as minor until the age of 21 in the situation </li></ul><ul><li>a) Where a guardian to the person or property or both is appointed by the court ,or </li></ul><ul><li>b) The property of minor is put under the superintendence of court of wards. </li></ul>
  26. 26. WHEN CAN A MINOR CONTRACT <ul><li>Promisee or transferee. </li></ul><ul><li>Agency. </li></ul><ul><li>Partnership. </li></ul><ul><li>Necessaries. </li></ul>
  27. 27. PERSONS OF UNSOUND MIND <ul><li>Under sec 12, “A person is said to be of a sound mind for the purpose of making a contract, if at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effects up on his interests.” </li></ul><ul><li>Persons of unsound mind are: </li></ul><ul><li>Idiots lunatics. </li></ul><ul><li>Drunken or intoxicated person. </li></ul><ul><li>A person delirious from fever ,etc. </li></ul>
  28. 28. OTHER PERSONS DISQUALIFIED FOR CONTRACT <ul><li>Alien enemy. </li></ul><ul><li>Insolvent. </li></ul><ul><li>Foreign sovereigns. </li></ul><ul><li>Convicts. </li></ul><ul><li>Joint stock companies and corporations incorporated under special acts. </li></ul>
  29. 29. CONTRACTS BY <ul><li>MARRIED WOMEN. </li></ul><ul><li>CORPORATIONS. </li></ul><ul><li>INSOLVENTS. </li></ul>
  30. 30. FREE CONSENT consent <ul><li>According to sec 13 of the contract act Two or more persons are said to consent when they agree up on the same thing in the same sense. </li></ul><ul><li>It means that there must be consensus ad idem between the parties regarding the subject matter of the contract .such consensus must have arisen out of free consent in view of the provision of sec 10 “all agreements are contracts if they are made by free consent of the parties.” </li></ul>
  31. 31. FREE CONSENT <ul><li>Consent alone is not sufficient for a contract. It must also be free. Acc to sec 14, consent is said to be free when it is not caused by any of the following: </li></ul><ul><li>Coercion. </li></ul><ul><li>Undue influence. </li></ul><ul><li>Fraud. </li></ul><ul><li>Misrepresentation, and </li></ul><ul><li>Mistake. </li></ul>
  32. 32. <ul><li>COERCION </li></ul><ul><li>Under Sec 15 coercion means: </li></ul><ul><li>1. (a) The committing or threatening to commit an act forbidden by the Indian penal code,1860 ; </li></ul><ul><li>(b) The unlawful detaining or threatening to detain any property to the prejudice of any person, whatever. </li></ul><ul><li>2. The intention of the above act must be to cause the other person to enter in to an agreement. Sec15 states that it is immaterial whether the Indian penal code is or is not in force where the coercion takes place. </li></ul>
  33. 33. ESSENTIALS TO PROVE AS COERCION <ul><li>There must be the commitment or threatening to commit any act forbidden by the Indian penal code. </li></ul><ul><li>The coercion may comprise of unlawful detaining or threatening to detain any property to the badness of any person . </li></ul><ul><li>May proceed from either a party to the contract or from a stranger. </li></ul>
  34. 34. <ul><li>Coercion may be directed to the prejudice of any person whatever. </li></ul><ul><li>The intention of coercion must be to cause the other person to make a contract. </li></ul><ul><li>The application of IPC or otherwise at the place of coercion makes no difference. </li></ul>
  35. 35. UNDUE INFLUENCE <ul><li>Acc to sec16(1) A contract is said to be induced by undue influence when: </li></ul><ul><li>a) The relation existing between the parties is in a position to dominate the will of the other. </li></ul><ul><li>b) The party uses that position to obtain an unfair advantage over the other. </li></ul>
  36. 36. Assumptions OF UNDUE INFLUNCE <ul><li>Acc to sec 16(2) , A person is deemed to be in a position to dominate the will of another in the following cases. </li></ul><ul><li>a. Real or apparent authority : </li></ul><ul><li>b. Fiduciary relationship: </li></ul><ul><li>c. Mental distress: </li></ul>
  37. 37. FRAUD <ul><li>Sec 17 ,states fraud as “any of the following acts committed by a party to a contract or with his participation or by his agent to induce another to enter in to the contract.” </li></ul><ul><li>The false suggestion as to a fact known to be false or not believed to be true . </li></ul><ul><li>The active cover up of a fact by one having knowledge or belief of the fact. </li></ul>
  38. 38. <ul><li>c. A promise made without any intention of performing it. </li></ul><ul><li>d. Any other act fitted to deceive. </li></ul><ul><li>e. Any such act or omission as the law specifically declares to be fraudulent. </li></ul>
  39. 39. MISREPRESENTATION <ul><li>Acc to sec 18 REPRESENTATION means a statement of fact made by one party to the other before or at the time contract is made with regard to some existing facts or some past event which materially induces the formation of the agreement. </li></ul><ul><li>A wrong representation when made innocently is misrepresentation. </li></ul>
  40. 40. Misrepresentation may be committed in any of the following ways <ul><li>1.unwarranted statements. </li></ul><ul><li>2.breach of duty. </li></ul><ul><li>3.inducing mistake about subject matter. </li></ul>
  41. 41. MISTAKE <ul><li>Mistake is an wrong belief about something. </li></ul><ul><li>Mistake is of two major kinds: </li></ul><ul><li>1.Mistake of law : </li></ul><ul><li> a. mistake as to Indian law </li></ul><ul><li> sec 21 says that “ a contract is not voidable because it was caused by a mistake as to any law in force in India”. </li></ul><ul><li>b. mistake as to foreign law </li></ul><ul><li> “ mistake as to of a foreign country vitiates the contract and renders it void. it does not have the same effect as a mistake of fact” </li></ul>
  42. 42. <ul><li>2.Mistake of fact: </li></ul><ul><li>a. Bilateral mistake </li></ul><ul><li>“ Acc to sec 20 where both the parties to an agreement are under a mistake as to a matter of fact, essential to the agreement shall be void.” Therefore a bilateral mistake has two elements. </li></ul><ul><li>(1) there must be a common or mutual mistake , i.e mistake shared by both or all parties. </li></ul><ul><li>(2) the mistake must be related to a matter of fact essential to the agreement. </li></ul><ul><li>b . unilateral mistake </li></ul><ul><li>Acc to sec 22 a contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact. </li></ul>
  43. 43. LEGALITY OF OBJECT AND CONSIDERATION <ul><li>For a valid contract , both the consideration and object must be lawful. </li></ul><ul><li>Object may defined as purpose or design of the contract. </li></ul><ul><li>Acc to sec 23 ,the object and consideration of an agreement shall be unlawful if: </li></ul><ul><li>1.it is forbidden by law. </li></ul><ul><li>2.it is of such nature if permitted ,it would defeat the provisions of law </li></ul><ul><li>3.it is fraudulent. </li></ul><ul><li>4.it involves or implies injury to the person or property of other. </li></ul><ul><li>5.the court regards it as immoral or opposed to public policy. </li></ul>
  44. 44. Agreements opposed to public policy <ul><li>1.Trading with enemy. </li></ul><ul><li>2.Stifling prosecutions. </li></ul><ul><li>3.Maintenance and champerty. </li></ul><ul><li>4.Marriage brokerage agreements. </li></ul><ul><li>5.interfering with course of justice. </li></ul><ul><li>6.Trafficking in public offices and titles. </li></ul>
  45. 45. <ul><li>7.Agreement restricting personal liberty. </li></ul><ul><li>8.Agreement in restraint of parental rights </li></ul><ul><li>9.Agreements tending to create interest opposed to duty. </li></ul><ul><li>10.Agreements interfering with marital status. </li></ul><ul><li>11.Agreements to vary the period of limitation. </li></ul>
  46. 46. CONTINGENT CONTRACTS <ul><li>MEANING:A contract to do or not to do something, if some event collateral to such contract does or does not happen. </li></ul><ul><li>Contracts may be either absolute or contingent. </li></ul><ul><li>ABSOLUTE CONTRACT- a contract in which the parties must perform their reciprocal promises in all events. </li></ul><ul><li>CONTINGENT CONTRACT-it is a contract to do or not to do something if some event, collateral to such contract does or does not happen. </li></ul>
  47. 47. <ul><li>ESSENTIALS OF A CONTINGENT CONTRACT </li></ul><ul><li>Dependence on a future event. </li></ul><ul><li>Collateral event. </li></ul><ul><li>uncertain event. </li></ul><ul><li>Insurance ,indemnity,& guarantee are some examples </li></ul><ul><li>SECTION 32 TO 36 OF THE CONTRACT ACT CONTAIN THE RULES REGARDING PERFORMANCE OF CONTINGENT CONTRACTS. </li></ul>
  48. 48. RULES REGARDING CONTINGENT CONTRACT <ul><li>Contracts contingent on the happening of an event. </li></ul><ul><li>Contracts dependent on the non happening of an event. </li></ul><ul><li>Contracts contingent upon the future conduct of a living person. </li></ul><ul><li>Contracts contingent upon happening or non happening of a specified event within a fixed time. </li></ul><ul><li>Contracts contingent upon the happening of an impossible event. </li></ul>
  49. 49. PERFORMANCE AND DISCHARGE OF A CONTRACT <ul><li>PERFORMANCE OF CONTRACT </li></ul><ul><li>It means fulfillment of the terms of the contract by the respective parties to the contract. </li></ul><ul><li>Who can demand performance. </li></ul><ul><li>Who should perform the promise. </li></ul><ul><li>In case of joint promisor. </li></ul>
  50. 50. DISCHARGE OF CONTRACT <ul><li>Means discontinuation of the contractual relation between the parties. </li></ul><ul><li>When the rights & obligations arising out of a contract are extinguished the contract is said to be discharged or terminated. </li></ul>
  51. 51. MODES OF DISCHARGE <ul><li>Discharge by performance. </li></ul><ul><li>Discharge by mutual consent and agreement. </li></ul><ul><li>Discharge by subsequent or supervening impossibility or illegality. </li></ul><ul><li>Discharge by lapse of time. </li></ul><ul><li>Discharge by operation of law </li></ul>
  52. 52. REMEDIES FOR BREACH OF CONTRACT <ul><li>Rescission of contract. </li></ul><ul><li>Suit for damages. </li></ul><ul><li>1.general or compensatory damages. </li></ul><ul><li>2.special damages. </li></ul><ul><li>3.exemplary ,punitive or vindictive damages. </li></ul><ul><li>4.nominal damages. </li></ul><ul><li>5.liquidated damages . </li></ul><ul><li>Suit for specific performance. </li></ul><ul><li>Suit for injunction. </li></ul><ul><li>Suit for quantum meruit. </li></ul>
  53. 53. CONTRACTS OF INDEMNITY AND GUARANTEE <ul><li>CONTRACT OF INDEMNITY </li></ul><ul><li>Acc to sec 124, “a contract of indemnity means a contract by which one party promises to save the other from loss caused by the conduct of the promisor himself or by the conduct of any other person”. </li></ul><ul><li>The person who promises to make good for the loss is INDEMNIFIER or PROMISOR. </li></ul><ul><li>The person whose loss is promised to be made good is the INDEMNIFIED or PROMISEE. </li></ul><ul><li>Sec 124 has restricted the scope of indemnity only to cases where loss is caused by a human agency namely: </li></ul><ul><li>(a) By the conduct of the promisor. </li></ul><ul><li>(b) By the conduct of a third party. </li></ul>
  54. 54. CONTRACT OF GUARANTEE <ul><li>Acc to sec126, “a contract of guarantee is to perform the promise or to discharge liability of a third person in case of his default”. </li></ul><ul><li>The person giving the guarantee is the surety. </li></ul><ul><li>The person on whose behalf the guarantee is given called the principal debtor. </li></ul><ul><li>The person to whom the guarantee is given is called the creditor. </li></ul>
  55. 55. Requisites of a valid guarantee <ul><li>Principal debt. </li></ul><ul><li>Consideration. </li></ul><ul><li>Competent parties. </li></ul><ul><li>No misrepresentation. </li></ul><ul><li>Surety’s liability must be conditional. </li></ul><ul><li>Concurrence of all the three parties. </li></ul><ul><li>Writing not compulsory. </li></ul>
  56. 56. CONTRACT OF AGENCY <ul><li>SEC 182 defines “a person employed to do any act for another or to represent another in dealing with third person”. </li></ul><ul><li>The person for whom such act is done or who is represented is called PRINCIPAL. </li></ul><ul><li>The relation between these two is termed as AGENCY . </li></ul>
  57. 57. Principles of Agency <ul><li>Contracts of agency are based on two important principles: </li></ul><ul><li>(a) whatever a person can do personally shall also be allowed to be done through an agent except in case of contracts involving personal services such as painting, marriage ,singing ,etc. </li></ul><ul><li>(b) He who does an act through a duly authorized agent does it by himself, i.e., the acts of the agent are considered the acts of the principal </li></ul>
  58. 58. Essentials of a contract of Agency <ul><li>Existence of agreement. </li></ul><ul><li>Competency of the principal. </li></ul><ul><li>The agent need not be competent. </li></ul><ul><li>No consideration is required to create agency. </li></ul>
  59. 59. THE SALE OF GOODS ACT, 1930 <ul><li>GENERAL PRINCIPLES </li></ul><ul><li>Meaning: </li></ul><ul><li>Acc to sec4of the act ,a contract of sale means “ a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price”. </li></ul><ul><li>Thus a contract may be: (a) a sale or (b) an agreement to sell. </li></ul><ul><li>The term property has been used in sec 4 in the sense of ownership . </li></ul>
  60. 60. Essential elements of contract of sale <ul><li>Two parties. </li></ul><ul><li>Agreement. </li></ul><ul><li>Goods. </li></ul><ul><li>Transfer of property. </li></ul><ul><li>Price. </li></ul><ul><li>All the essential elements of a valid contract must also be present in a contract of sale. </li></ul>
  61. 61. CLASSIFICATION OF GOODS <ul><li>EXISTING GOODS </li></ul><ul><li>(a) Specific goods. </li></ul><ul><li>(b) Ascertained goods. </li></ul><ul><li>(c) Unascertained goods. </li></ul><ul><li>FUTURE GOODS </li></ul><ul><li>CONTINGENT GOODS </li></ul>
  62. 62. EFFECT OF PERISHING OF GOODS <ul><li>Goods perishing before making of contract(sec7). </li></ul><ul><li>Goods perishing before sale but after agreement to sell(sec8). </li></ul><ul><li>Perishing of future goods. </li></ul>
  63. 63. Performance of contract of sale <ul><li>Performance means the delivery of goods by the seller ,and acceptance and payment for the goods by the buyer (sec31). </li></ul><ul><li>Delivery means voluntary transfer of possession from one person to another sec2(2). </li></ul>
  64. 64. Modes of delivery <ul><li>Actual delivery : In this the goods are physically handed over to the to the buyer by the seller or to the person authorized to hold them on his behalf. </li></ul><ul><li>Symbolic delivery : It is the doing of some act which has the effect of putting the goods in possession of the buyer. </li></ul><ul><li>Constructive delivery : It takes place when a person in possession of goods of the seller acknowledges to the buyer that he holds the goods on his behalf. </li></ul>
  65. 65. Rules regarding delivery(sec32-38) <ul><li>Delivery and payment are concurrent conditions [sec32]. </li></ul><ul><li>Delivery should have the effect of putting the goods in possession of the buyer or his agent [sec33]. </li></ul><ul><li>Effect of part delivery[sec34]. </li></ul><ul><li>Buyer to apply for delivery[sec35]. </li></ul><ul><li>Place of delivery[sec36(1)]. </li></ul><ul><li>Time for delivery of goods[36(2)]. </li></ul><ul><li>Goods in possession of a third party[sec36(3)]. </li></ul><ul><li>Expenses of delivery[sec36(4)]. </li></ul>
  66. 66. <ul><li>Delivery of wrong quantity. </li></ul><ul><li>a) short delivery </li></ul><ul><li>b) excess delivery </li></ul><ul><li>c) mixed delivery </li></ul><ul><li>10.Instalment delivery. </li></ul><ul><li>11.Delivery of carrier or wharfinger. </li></ul><ul><li>a) to make a suitable contract with the carrier or wharfinger </li></ul><ul><li>b) to inform the buyer in time to enable him to insure his goods </li></ul><ul><li>12.Deteriaration of goods during transit. </li></ul>
  67. 67. Acceptance of delivery by the buyer <ul><li>Buyer’s right to examine the goods. </li></ul><ul><li>Acceptance of the goods by the buyer. </li></ul><ul><li>a) he intimates the seller that he has accepted the goods </li></ul><ul><li>b) he does any act to goods which is inconsistent with the ownership of the seller. </li></ul><ul><li>c) he fails to return the goods to the seller after the expiry of reasonable time. </li></ul>
  68. 68. <ul><li>Buyer not bound to return the goods. </li></ul><ul><li>buyer’s liability for neglecting or refusing to take delivery of goods . </li></ul><ul><li>a) any loss arising from the buyers negligence or refusal to take delivery of the goods ,and </li></ul><ul><li>b) reasonable expenses for the care and custody of goods .where the negligence or refusal of the buyer amounts to repudiation of the contract ,the seller can claim damages for breach. </li></ul>
  69. 69. NEGOTIABLE INSTRUMENTS ACT-1881 <ul><li>NEGOTIABLE INSTRUMENT. </li></ul><ul><li>Acc to sec 13of the act a negotiable instrument means “a promissory note, bill of exchange or cheque payable either to order or bearer, whether the words order or bearer appear on the instrument or not.” </li></ul><ul><li>Thus, the negotiable instruments act has mentioned only three types of instruments, </li></ul><ul><li>1.promissory note . </li></ul><ul><li>2.bill of exchange. </li></ul><ul><li>3.cheque. </li></ul>
  70. 70. ESSENTIAL CHARACTERISTICS OF A NEGOTIABLE INSTRUMENT <ul><li>Free transferability. </li></ul><ul><li>Holder’s title free from defects. </li></ul><ul><li>Recovery. </li></ul><ul><li>Presumptions of sections 118&119. </li></ul><ul><li>(a) date </li></ul><ul><li>(b) time of acceptance </li></ul><ul><li>(c) time of transfer </li></ul><ul><li>(d) order of endorsements </li></ul><ul><li>(e) stamp </li></ul><ul><li>(f) holder in due course </li></ul><ul><li>(g) Consideration </li></ul><ul><li>(h) Proof of protest </li></ul>
  71. 71. PROMISORY NOTE <ul><li>Sec 4 defines a promissory note as an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or the order of, a certain person, or to the bearer of the instrument. </li></ul>
  72. 72. Characteristics of a promissory note: <ul><li>Instrument in writing. </li></ul><ul><li>Promise to pay. </li></ul><ul><li>The promise to pay must be unconditional. </li></ul><ul><li>Signed by the maker. </li></ul><ul><li>Certainty of the parties. </li></ul><ul><li>Certain sum of money. </li></ul><ul><li>The promise must relate to the payment of money only. </li></ul><ul><li>Other formalities like stamp, date place, consideration. </li></ul><ul><li>It may be payable on demand or after a definite period of time. </li></ul><ul><li>It can be made payable to bearer on demand on account of the prohibition of sec 31 of reserve bank of India act 1934. </li></ul>
  73. 73. Raghavendra 8-3-141 Balaji nagar khammam Rs 10,000/- only 24-10-2009 Three months after date I promise to pay to kiran kumar or to his order the sum of rupees ten thousand for value received. To Kiran kumar 13-rly qtrs Warangal Raghavendra
  74. 74. BILL OF EXCHANGE <ul><li>Sec 5 defines “ a bill of exchange as, 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.” </li></ul>
  75. 75. CHEQUE <ul><li>Sec 6 of negotiable instruments act defines a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form </li></ul>
  76. 76. CHARACTERSTICS OF A CHEQUE <ul><li>It is always drawn on a specified banker. </li></ul><ul><li>It is always payable on demand. </li></ul><ul><li>It doesn't require any acceptance. </li></ul><ul><li>No grace days are allowed. </li></ul><ul><li>It may be crossed sometimes. </li></ul>
  77. 77. ENDORSEMENT <ul><li>When the maker or holder of a negotiable instrument signs the same ,otherwise than such a maker ,for the purpose of negotiation ,on the back or face thereof or on a slip of paper annexed to it ,or signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to endorse the same. </li></ul>
  78. 78. Types of endorsements <ul><li>Blank or general. </li></ul><ul><li>Full or special. </li></ul><ul><li>Restrictive. </li></ul><ul><li>Partial. </li></ul><ul><li>Conditional or qualified. </li></ul><ul><li>Sans recourse. </li></ul><ul><li>Sans frais . </li></ul><ul><li>Faculative. </li></ul>
  79. 79. HOLDER <ul><li>The holder of a negotiable instrument means any person entitled to the possession of the instrument in his own name and to receive or recover the amount due on it from the parties to it. </li></ul><ul><li>HOLDER IN DUE COURSE </li></ul><ul><li>Holder in due course is a person who for some consideration became the possessor of a bill of exchange or a promissory note if payable to the bearer or payee, or endorsee, before the amount mentioned in it became payable ,and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title. </li></ul>
  80. 80. DISCHARGE OF PARTIES <ul><li>By payment in due course. </li></ul><ul><li>By cancellation of the instrument. </li></ul><ul><li>By release of the of a party to the instrument. </li></ul><ul><li>By allowing drawee more than 48 hours to accept. </li></ul><ul><li>By non presentment of a cheque with in a reasonable time of its issue. </li></ul><ul><li>In case of a qualified acceptance, the parties not consenting to are discharged. </li></ul><ul><li>By operation of law: </li></ul><ul><li>(a) by an order of insolvency of court . </li></ul><ul><li>(b) by lapse of time. </li></ul><ul><li>(c) by merger of amount of instrument in to the judgment debt. </li></ul>
  81. 81. COMPANIES ACT,1956 <ul><li>Company: Acc to sec 3(1)1 of the companies act a company means a group formed and registered under this act or an existing company as defined in sec(1)2 as an existing company means a company formed and registered under any of the previous companies law. </li></ul>
  82. 82. KINDS OF COMPANIES <ul><li>ON THE BASIS OF MODE OF INCORPORATION. </li></ul><ul><ul><li>CHARTERED COMPANIES: like east India company. </li></ul></ul><ul><ul><li>STATUORY COMPANIES: these are created by a special act like LIC ,RBI, SBI. </li></ul></ul><ul><ul><li>REGISTERED COMPANIES: are companies registered under the act. </li></ul></ul>
  83. 83. <ul><li> ON THE BASIS OF LIABILITY OF MEMBERS: </li></ul><ul><ul><li>LIMITED BY SHARES: where the liability of the members is limited to the amount unpaid on the shares. </li></ul></ul><ul><ul><li>LIMITED BY GUARANTEE: where the liability of the members of a company is limited to a fixed amount which the members undertake to contribute to the assets of the company in the event of its being wound up . </li></ul></ul><ul><ul><li>UNLIMITED: every member is liable for the debts of the company ,as in an ordinary partnership ,in proportion to his interest in the company. </li></ul></ul>
  84. 84. <ul><li> ON THE BASIS OF NUMBER OF MEMBERS: </li></ul><ul><ul><li>PRIVATE: where the minimum number of members is two and maximum is fifty. </li></ul></ul><ul><ul><li>PUBLIC: where the min number is seven and max is limited by number of shares. </li></ul></ul><ul><ul><li>OTHER TYPES OF COMPANIES : </li></ul></ul><ul><ul><li>GOVERNMENT COMPANIES: the companies in which not less than 51%of the paid up share capital is held by the state govt and partly by one or more state govts. </li></ul></ul><ul><ul><li>FOREIGN COMPANY: means a company incorporated outside India but having branches in India. </li></ul></ul>
  85. 85. <ul><ul><li>PRODUCER COMPANIES: The companies (amendment) act 2002 ,has introduced a new type of company known as producer companies. any ten individual producers or any two or more producer institutions may form and incorporate a company as a producer company . </li></ul></ul>
  86. 86. Formation and Incorporation of a Company <ul><li>Promotion </li></ul><ul><li>Registration/Incorporation </li></ul><ul><li>Flotation/Raising of capital </li></ul><ul><li>Commencement of Business </li></ul>
  87. 87. Memorandum of Association <ul><li>Contents </li></ul><ul><li>Name of the Company </li></ul><ul><li>Registered Office </li></ul><ul><li>Objects of the company </li></ul><ul><li>Liability </li></ul><ul><li>Capital </li></ul><ul><li>Association or Subscription </li></ul>
  88. 88. Articles of Association <ul><li>Contents of Articles </li></ul><ul><li>Different classes of shares and there rights </li></ul><ul><li>Procedure of making an issue of share capital and allotment of shares </li></ul><ul><li>Procedure of issuing of share certificates and share warrants </li></ul><ul><li>Forfeiture of share and the procedure of there reissue </li></ul><ul><li>Procedure for transfer and transmission of shares </li></ul><ul><li>Directors there appointment remuneration qualification etc... </li></ul><ul><li>Accounts and audit </li></ul><ul><li>Alteration of share capital and buy back of shares </li></ul><ul><li>Borrowing powers of directors </li></ul><ul><li>General meetings alternatives and polls </li></ul><ul><li>Voting rights of members </li></ul><ul><li>Dividend and reserves </li></ul><ul><li>Winding up </li></ul>
  89. 89. Company Management and Administration <ul><li>Director- according to the act director means any person who runs the organization, through whom a company acts does it’s business. They are the brains of the company. Board of directors or the board in relation in company means the board of directors of a company. </li></ul><ul><li>Min and Max Number of directors </li></ul><ul><li>- Min 2 in a private company. </li></ul><ul><li>- Min 3 in a public company. </li></ul><ul><li>- The max number may be as mentioned in the articles of the company. </li></ul>
  90. 90. <ul><li>First director. </li></ul><ul><li>Appointment of directors by company. </li></ul><ul><li>Appointment of directors by the board. </li></ul><ul><li>Appointment of directors by third parties. </li></ul><ul><li>Appointment of directors by proportional representation. </li></ul><ul><li>Appointment of directors by central government. </li></ul><ul><li>Appointment of directors by small share holders. </li></ul>Appointment of Directors
  91. 91. Powers &duties of directors <ul><li>Powers to be exercised by resolutions passed by the board’s meetings </li></ul><ul><li>1) the power to make calls. </li></ul><ul><li>2) to issue debentures. </li></ul><ul><li>3) to borrow money other than on debentures. </li></ul><ul><li>4) to invest funds. </li></ul><ul><li>5) to make loans. </li></ul><ul><li>6) to fill casual vacancy in board. </li></ul><ul><li>7) to make political contributions. </li></ul><ul><li>8) recommend rate of dividend at the annual general meetings. </li></ul>
  92. 92. <ul><li>Powers to be exercised by company in general meetings: </li></ul><ul><li>1)sale lease or disposal of the undertaking. </li></ul><ul><li>2)showing any concession regarding payment of debts. </li></ul><ul><li>3)make investment of the amount of compensation received. </li></ul><ul><li>4)contribution of charitable and other funds. </li></ul>
  93. 93. <ul><li>Duties of directors </li></ul><ul><li>1) duty of good faith. </li></ul><ul><li>2) duty to take reasonable care. </li></ul><ul><li>3)duty to disclose interest. </li></ul><ul><li>4)duty to participate in committees of the board like audit committee or investors grievance committee. </li></ul>
  94. 94. Company meetings and resolutions <ul><li>A company being an artificial legal person can only act through some human intermediary. the various provisions of the act and rules empower members to do certain things all decisions of the company are taken in meetings . </li></ul>
  95. 95. KINDS OF MEETINGS <ul><li>Statutory meetings </li></ul><ul><li>Annual general meetings {AGM} </li></ul><ul><li>Extraordinary general meetings {EGM} </li></ul><ul><li>Board meetings </li></ul><ul><li>RESOLUTIONS </li></ul><ul><li>Any motion voted upon and agreed to in a meeting and entered in minutes, a motion when passed ,with or without amendment is called resolution. </li></ul><ul><li>Types of resolutions: </li></ul><ul><li>1. ordinary resolution </li></ul><ul><li>2. special resolution </li></ul><ul><li>3. resolutions requiring special resolution </li></ul>
  96. 96. <ul><li>Modes of winding up </li></ul><ul><li>Compulsory winding up by Court [Sec.433] </li></ul><ul><li>Voluntary winding up </li></ul><ul><li>Members voluntary winding up </li></ul><ul><li>Creditors voluntary winding up </li></ul><ul><li>Voluntary winding up under supervision of the court. </li></ul>
  97. 97. <ul><li>Special Resolution. </li></ul><ul><li>Default in holding statutory meeting. </li></ul><ul><li>Failure to commence business. </li></ul><ul><li>Reduction in membership. </li></ul><ul><li>Inability to pay debts. </li></ul><ul><li>Just & equitable. </li></ul>
  98. 98. <ul><li>Ordinary resolution passed where the period fixed by the Articles for the duration. </li></ul><ul><li>If the company resolves by special resolution that it shall be wound-up voluntarily [sec.484] </li></ul>
  99. 99. <ul><li>Members </li></ul><ul><li>Solvent companies </li></ul><ul><li>No need of creditors meeting </li></ul><ul><li>Liquidator appointed by the member </li></ul><ul><li>No committee of inspection can be formed. </li></ul><ul><li>Creditors </li></ul><ul><li>Insolvent Companies </li></ul><ul><li>Creditors meeting necessary </li></ul><ul><li>Liquidator appointed by the creditor </li></ul><ul><li>If wish can formed a Committee of inspection. </li></ul>
  100. 100. Definition of tax A charge imposed by government on the annual gains of a person, corporation, or other taxable unit derived through work, business pursuits, investments, property dealings, and other sources determined in accordance with the state law A tax levied on the annual earnings of an individual is called personal income tax. Personal Income taxes are levied by the central government. Income Tax Act, 1961 imposes tax on income other than agricultural income. Tax on agricultural income can be imposed only by State Governments
  101. 101. <ul><li>A charge imposed by government on the annual gains of a person, corporation, or other taxable unit derived through work, business pursuits, investments, property dealings, and other sources determined in accordance with the state law </li></ul><ul><li>A tax levied on the annual earnings of an individual is called personal income tax. Personal Income taxes are levied by the central government. </li></ul>
  102. 102. Classification of income <ul><li>Salary / remuneration </li></ul><ul><li>Income from house property </li></ul><ul><li>Income from business/profession </li></ul><ul><li>Gifts / charity </li></ul><ul><li>Capital gains </li></ul>
  103. 103. Tax is classified in to two categories <ul><li>DIRECT TAX: These are the taxes paid after the benefit reaches the hands of a person .{these taxes are paid from income, benefits and wealth} </li></ul><ul><li>INDIRECT TAX: These are the taxes paid when a person or consumer purchases something .{these taxes are paid on the goods or services consumed} </li></ul>
  104. 104. Assessee <ul><li>“ Assessee” means a person by whom Income tax or any other sum of money is payable under the act. </li></ul><ul><li>It includes every person in respect of whom any proceeding under the act has been taken for the assessment of his income or loss and the amount of refund due to him. </li></ul><ul><li>It also includes a person who is assessable in respect of the income or loss of another or who is deemed to be an assessee or an assessee in default under the provisions of the act. </li></ul>
  105. 105. Assessment year <ul><li>Assessment Year – ( Sec 2(9) </li></ul><ul><li>Assessment year may be defined as a year in which the income of the previous year is to be assessed. </li></ul><ul><li>In some countries it is called “ tax year” </li></ul><ul><li>It always starts on April 1 and ends on March 31 of the next year </li></ul><ul><li>Income of the previous year is taxed in the immediately following assessment year. </li></ul><ul><li>In some countries it is called “ Income Year” </li></ul><ul><li>From the assessment year 1989-90 onwards all assesses are required to follow the financial year. </li></ul>
  106. 106. WHO IS A PERSON? <ul><li>Person‘ includes * Individual * HUF * Company * Partnership Firm * Association of Persons (AOP) or body of individuals whether incorporated or not * Local Authority like Municipality etc. * Artificial Judicial person [section 2(31) of Income Tax Act] </li></ul>
  107. 107. Procedure for advance payment of tax <ul><li>It is another method of collection of tax by the central government in the form of prepaid tax . </li></ul><ul><li>Its also known as “PAY AS YOU EARN”. </li></ul><ul><li>Advance tax liability under different situations </li></ul><ul><li>1)payment of advance tax by the assessee of his own account (sec 210) </li></ul><ul><li>2)payment of advance tax in pursuance of assessing officer (210) </li></ul><ul><li>a) order by the assessing officer. </li></ul><ul><li>b) lower estimate by assessee. </li></ul><ul><li>c) higher estimate by the assessee. </li></ul>
  108. 108. Computation by an assessee <ul><li>3)payment of advance tax in pursuance of revised order of assessing officer. </li></ul><ul><li>a) lower estimate by the assessee. </li></ul><ul><li>b) higher estimate by the assessee. </li></ul><ul><li>Computation of advance tax (sec 209) </li></ul><ul><ul><li>computation by an assessee . </li></ul></ul><ul><ul><li>Computation by assessing officer . </li></ul></ul>
  109. 109. GROSS TOTAL INCOME <ul><li>Gross total income is commonly defined as the amount of company’s or person’s income before all deductions or any tax payers income, except which is specifically excluded by the internal revenue code ,before taking deduction taxes in to account. </li></ul><ul><li>The GTI is computed by aggregating incomes the following five head </li></ul><ul><ul><li>Income from salary </li></ul></ul><ul><ul><li>Income from house property </li></ul></ul><ul><ul><li>Profits and gains of business or profession </li></ul></ul><ul><ul><li>Capital gains </li></ul></ul><ul><ul><li>Income from other sources </li></ul></ul>

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