Legal aspect in supply chain healthcare management / marketing / logistics

1. Legal Aspects in Supply
Chain
VKS 1

2. Contract
What is a Contract?
The Contracts or agreements between various parties are framed and validated by the Indian
Contract Act.
Contract Act is one of the most central laws that regulates and oversees all the business wherever
a deal or an agreement is to be reached at.
Contract is defined by The Indian Contract Act, 1872.
VKS 2

3. Contract
Contract Act
The Indian Contract Act, 1872 defines the term “Contract” under its section 2 (h) as
“An agreement enforceable by law”.
In other words, we can say that a contract is anything that is an agreement and enforceable by
the law of the land.
This definition has two major elements in it viz – “agreement” and “enforceable by law”. So in
order to understand a contract in the light of The Indian Contract Act, 1872 we need to define
and explain these two pivots in the definition of a contract.
VKS 3

4. Contract
Agreement
The Indian Contract Act, 1872 defines what we mean by “Agreement”. In its section 2 (e), the
Act defines the term agreement as “every promise and every set of promises, forming
the consideration for each other”.
Now that we know how the Act defines the term “agreement”, there may be some ambiguity
in the definition of the term promise.
VKS 4

5. Contract = agreement + Law
Agreement = Promise + Consideration
Promise = proposal + Acceptance
VKS 5

6. Contract
Promise
This ambiguity is removed by the Act itself in its section 2(b) which defines the term “promise”
here as: “when the person to whom the proposal is made signifies his assent thereto, the
proposal is said to be accepted. Proposal when accepted, becomes a promise”.
In other words, an agreement is an accepted promise, accepted by all the parties involved in
the agreement or affected by it.
VKS 6

7. Contract
The steps may be described as under:
The definition requires a person to whom a certain proposal is made.
The person (parties) in step one have to be in a position to fully understand all the aspects of a
proposal.
“signifies his assent thereto” – means that the person in point one accepts or agrees with the
proposal after having fully understood it.
Once the “person” accepts the proposal, the status of the proposal changes to “accepted
proposal”.
“accepted proposal” becomes a promise. Note that the proposal is not a promise. For the
proposal to become a promise, it has to be accepted first.
VKS 7

8. Contract
Thus, in other words, an agreement is obtained from a proposal once the proposal, made by
one or more of the participants affected by the proposal, is accepted by all the parties
addressed by the agreement. To sum up, we can represent the above information below:
Agreement = Offer + Acceptance.
Difference Between Agreement And Contract
Let us see how a contract and agreement are different from each other. This will help you
summarize and make a map of all the important concepts that you have understood.
VKS 8

9. Contract
Contract Agreement
A contract is an agreement that is enforceable by
law.
A promise or a number of promises that are not
contradicting and are accepted by the parties
involved is an agreement.
A contract is only legally enforceable.
An agreement must be socially acceptable. It may
or may not be enforceable by the law.
A contract has to create some legal obligation. An agreement doesn’t create any legal obligations.
All contracts are also agreements. An agreement may or may not be a contract.
VKS 9

10. Sales Act
The Sale of Goods Act 1979 is an Act which regulates contracts in which goods are sold and
bought.
The Sale of Goods Act performs several functions.
Buyer is a person that who wants to buy something from seller and seller is a person that sells
out something that a buyer wants.
To purely define Sales of Goods Act, it is a contracts in which goods are sold and bought, it
means whereby the seller transfer the property in the goods to the Buyer for a consideration
called price.
The Sale of Goods Act lays down a small number of compulsory legal rules concerned with an
array of presumptions and implied terms, which aim to reflect the commercial expectations in
the most commonly agreed sales contracts.
In the absence of contrary agreement these terms will govern a contract within the Act’s remit.
VKS 10

11. Sales Act
Definition sale of goods
A contract of sale is a legal contract an exchange of goods, services or property to be
exchanged from seller to buyer for an agreed upon value in money paid or the promise to pay
same.
It is a specific type of legal contract.
VKS 11

12. Partnership
A partnership is an arrangement where parties, known as business partners,
agree to cooperate to advance their mutual interests.
The partners in a partnership may be individuals, businesses, interest-based
organizations, schools, governments or combinations.
A legal form of business operation between two or more individuals who share
management and profits.
In a general partnership, the partners manage the company and assume
responsibility for the partnership's debts and other obligations.
A limited partnership has both general and limited partners.
VKS 12

13. Partnership
Businesses as partnerships do not have to pay income tax; each partner files the profits or
losses of the business on his or her own personal income tax return.
This way the business does not get taxed separately. Easy to establish.
There is an increased ability to raise funds when there is more than one owner
two heads (or more) are better than one.
your business is easy to establish and start-up costs are low.
more capital is available for the business. you'll have greater borrowing capacity
VKS 13

14. Negotiable instruments
negotiable instruments are documents which promise payment to the assignee (the person whom it is assigned
to/given to) or a specified person.
These instruments are transferable signed documents which promises to pay the bearer/holder the sum of
money when demanded or at any time in the future.
In terms of Non-negotiable and negotiable instruments, a negotiable instrument is a document guaranteeing
the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named
on the document.
Document of title or evidence of indebted ness that is freely (unconditionally) transferable in trading as a
substitute for money.
Negotiable instruments are unconditional orders or promise to pay, and include checks, drafts, bearer bonds,
some certificates of deposit, promissory notes, and bank notes (currency).
Non-Negotiable Financial Products
Non-negotiable securities and products are those that cannot be transferred from one party to the next. An
example of a non-negotiable instrument, also referred to as a non-marketable instrument, would be a
government savings bond.
VKS 14

15. Negotiable instruments
The principal difference between negotiable and non-negotiable instruments is: Negotiable
instruments are governed by UCC Article 3[2].
Non-negotiable instruments are governed by applicable common law. Most significantly,
a non-negotiable instrument typically cannot be transferred from its holder to a third party.
Checks are a type of document that is known as a "negotiable instrument." Specifically, it is a
draft, which is an order from one person (the account holder) to another (the bank) to pay
money to another (the payee).
Saying "non negotiable" is just a technical term meaning this isn't a real check.
VKS 15

16. Negotiable instruments
Non-negotiable
used to describe a financial product that cannot be traded: Time deposits are non-
negotiable deposits that are maintained in a bank for a specified period of time.
Non-negotiable securities and products are those that cannot be transferred from one party to
the next. An example of a non-negotiable instrument, also referred to as a non-
marketable instrument, would be a government savings bond
VKS 16

17. Future of supply chain
Reducing inventory.
Reducing middlemen's.
More closeness between end users and manufacturers.
Reduced cost.
More customised products.
Reduced lead time.
Less expiry and returns.
VKS 18