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Overview Of Business Law From Examination Perspective
Business Laws
CC 1.1 Chg
MCQ Paper
6 CREDIT HOURS
SUNITA SAHA
CONTENT OF THE PRESENTATION
1. The Indian Contract Act 1872
2. The Sale of Goods Act 1930
3. The Indian Partnership Act 1932
4. The Limited Liability Partnership Act,2008
5. The Negotiable Instruments Act 1881
6. The Consumer Protection 2019
Indian Contract Act 1872
Content of the syllabus
1. Contract- Definition & Features
2. Agreement & contract
3. Essentials of a valid contract
4. Offer ; essential elements of offer
5. Kinds of offer
6. Legal rules of offer and revocation of offer
7. Acceptance and legal rules of acceptance
8. Revocation of acceptance
9. Consideration & legal rules of consideration
10. Legality of objects and consideration
11. Capacity of the parties to the contract
12. Free consent
13. Void and voidable contract
14. Discharge of a contract
15. Breach of contract and its remedies
16. Specific contract: Contingent contract, Quasi Contract, contract of Indemnity,
contract of guarantee, Bailment , Pledge
M wants to sell his house at a price of Rs 60 Lakh to A and A agrees to purchase
the same. This is a contract
30 marks
CONTRACT
IN A CONTRACT THERE MUST BE TWO IMPORTANT ASPECTS:
1. An agreement
2. The agreement must be enforceable by law
SECTION 2(e): Agreement:
Every promise and every set of promise,
forming consideration for each other, is
an agreement.
Agreement:
1. Legal obligation
2. Enforceability by law
Eg: An agreement to go to cinema is not
enforceable by law .
SECTION 2(h): CONTRACT
“An agreement enforceable by law is a
contract”
Contract= Agreement+ Enforceable
by law
Consideration
Agreement
Legally
Enforceable
Contract
Legally Not
Enforceable
VOID NO CONTRACT
CLASSIFICATION OF CONTRACT
CONTRACT
CREATION
VALIDITY
EXECUTION
LIABILITY
EXPRESS
IMPLIED
TACIT
QUASI
E-
CONTRACT
VALID
VOID
VOIDABLE
UNENFORCEABLE
ILLEGAL EXECUTED
EXECUTORY
PARTLY EXECUTED
PARTLY
EXECUTORY
Bilateral
Unilateral
Offer & Acceptance
Offer
1. Two parties
2. Must be communicated to the offeree
3. Willingness of the offeror must be
specified
4. Assent of the offeree must be made
5. An offer may involve for doing the
act
1. Express Offer: Express Communication
2. Implied Offer: Conduct of the parties
3. Specific Offer: To specific person
4. General Offer: General Offer
5. Cross Offer: Exchange identical offer
6. Counter offer: Qualified Acceptance on
Alteration
7. Standing offer: acceptance over period of time
Acceptance
Proposal or offer is said to have been accepted when the person to whom the
proposal is made gives his assent to the proposal.
OFFER ACCEPTED PROMISE
REVOCATION OF
OFFER &
ACCEPTENCE
1. By lapse of time
2. By communication of notice
3. By death or insanity
4. By counter offer
5. By rejection of the offer by the
offeree
Revocation of
the acceptance
does not arise
when the offer is
accepted
Consideration
•Consideration: “Quid pro quo” {something in return}
•Consideration is an essential element for a contract to be valid
•Consideration moves from the promisee to the promisor
•Consideration is the implied or express request of the promisor, in return for his
promise
•Consideration must be at the desire of the promisor
•Consideration may be given by the promisee or any other person
•Consideration need not be adequate
•Consideration should be real not illusory
•Consideration must be lawful
“Ex nudo pacto oritur action” an agreement without consideration is void
Exceptions
1. Agreement made on
account of natural
love and affection
2. Compensation for
past voluntary
service
3. Promise to pay
time barred debt:
4. Completed gift
5. Agency
6. Bailment
Competent to contract:
1. Must attained the age of majority
2. He is of sound mind
3. He is not disqualified from contracting by any other law to which he is subject
4. Must not minor
FREE CONSENT
Free consent= valid contract
Consent is not said to be free when it is caused byany of the following:
1. Coercion
2. Undue influence
3. Fraud
4. Misrepresentation
5. mistake
Free consent
Coercion (Threatening)
Undue influence (Domination of will)
Fraud (Deceive)
Misrepresentation (Non true statement)
Mistake (Error)
Voidable at the option
of the aggrieved party
Void agreement
1. Agreements made by incompetent parties (minor/
incapacited person)
2. Agreements made under bilateral mistake as to material
fact is void.
3. Agreements which have unlawful consideration and
object are void
4. Agreements with unlawful consideration and objectives
in past.
5. Agreements made without consideration is void except
i. It is made out of natural love
ii. A promise to pay a time barred debt
iii. Agreements to agency
iv. Agreements for donations and gifts
v. Agreements to bailment without charge
6. Agreement in restraint of marriage of any major person is
void.
7. An agreement the terms of which are uncertain is void.
8. An agreement by way of wager is void
9. An agreement in restraint of legal proceedings is void
10. An agreement contingent upon the happening of an
impossible event is void
11. Agreement to do impossible acts is void.
VOID AGREEMENTS
Void agreements Voidable agreements
A void contract is considered
to be an illegal contract and
is invalid from the starting
date of signing of the contract
A voidable contract is a legal
contract which is declared
invalid by one of the two
parties for certain legal
reasons
A void contract becomes
invalid at the time of its
creation
A voidable contract only
becomes invalid if it is
cancelled by one of the two
parties who are engaged in
the contract
No performance is possible Performance is possible in a
voidable contract
Void contract is not valid at
face value
A voidable contract is valid
but can be declared invalid
at any time
A void contract is non
existent and can not be upheld
by any law
A voidable contract is an
existing contract and is
binding to at least one party
involved in the contract
Discharge of Contract
By
Performance
By Agreement By Impossibility
of Performance
By Lapse of
Time
Actual
Performance
Attempted
Performance
Novation
Rescission
Alteration
Remission
Waiver
Merger
Initial
impossibility
Supervening
impossibility
By Operation
of Law
Death
Insolvency
Merger
Alteration
Same Identity
Breach of
contract
Actual
Breach
Anticipatory
Breach
Remedies for
breach
Rescission
Damages
Quantum
Meruit
Specific
Performance
Injunction
Special Contract
Contingent
Contract
Quasi Contract Contract of
Indemnity
Contract of
guarantee (Surety)
Bailment Pledge
A contract the
performance of
which is dependent
upon happening
or non happening
of an uncertain
event, collateral to
such contract.
Contracts which are
not created by
parties but by law
itself.
(no man must grow
rich out of another
persons cost)
A contract of
indemnity is a
contract in which
one party
promises to
compensate or
protect the other
party from the
losses arising in
future.
A contract of
guarantee is a
contract to
perform the
promise or
discharge the
liability of a third
person in case of
his default.
A "bailment" is the
delivery of goods
by one person to
another for some
purpose, upon a
contract that they
shall, when the
purpose is
accomplished.
Type of Bailment
It is a transfer of
goods as security
for a payment of a
debt or
performance of
promise.
A contracts to sell
B 100 bales of
cotton for Rs
2,00,000 if the ship
by which they are
coming returns
safely
A supplies B, a
lunatic with
necessaries suitable
to his condition in
life. A is
reimbursed from
B’s property
A promises to
deliver certain
goods to B for Rs.
2,000 every month.
C comes in and
promises to
indemnify B’s
losses if A fails to
When A requests B
to lend `10,000 to C
and guarantees that
C will repay the
amount within the
agreed time and
that on C failing to
do so, he will
Contracts for the
lease of a car, for
sale of goods on
consignment,
A borrows Rs 100
from B and keeps
his watch as
security for
payment of the
debt. The bailment
of watch is called a
pledge
Sale of Goods Act 1930
Content of the Syllabus
1. Essentials of contract of sale
2. Sale and agreement to sale
3. Condition and Warranty
4. Express and implied condition and warranty
5. The Doctrine of Caveat Emptor
6. Transfer of ownership in goods
7. Sale by Non Owners
8. Performance of Contract
9. Unpaid seller
A buys 200 shares from B at a price of Rs 1.5 Lakh. A is the buyer and B is the seller
Sale by Non Owner 1. Sale By A Mercantile Agent
2. Transfer of title by Estoppels
3. Sale by Unpaid Seller
4. Sale by buyer/seller after possession
Goods 2(7)
Every kind of movable
property
What are not good?
1. Actionable claims
2. Immovable property
3. Money
Goods
Existing Goods
(Physically Present)
Future Goods
Yet to come Contingent Goods
“May or May not”
Specific Ascertained Unascertained
a shirt made of
cotton and
with a Mickey
Mouse cartoon
on it
A seller agrees to
sell 100 tones of
the 200 tones of
wheat
sale of 100
tonnes of soya
bean meal
a farmer may
agree to sell a
buyer all of the
milk produced by
his/her cows in
the coming year
sell your apples
from your
orchard
Condition Warranty
Which is essential to the
main purpose of the
contract
It is a stipulation
collateral to the main
purpose of the contract
NO CONDITION= NO
CONTRACT
NO WARRANTY=
REMIDIES CAN BE
CLAIMED
NO CONDITION= NO
CONTRACT= NO
WARRANTY= NO
BREACH = NO
REMIDIES
NO WARRANTY= YES
CONTRACT =
REMIDIES = NO
BREACH OF
CONTRACT
The right to repudiate
{CANCEL} the
contract
The contract cannot be
repudiated
Implied Condition Implied Warranty
Conditions as to title
{OWNERSHIP}
Warranty of quite possession
Sale by description Warranty against encumbrances
Condition as to quality or
fitness
Warranty to disclose dangerous
natures of goods
Conditions as to mercanbility Warranty as to quality or fitness by
usage of trade
Conditions implied by
customs sale by sample
Condition as to
wholesomeness
DOCTRINE OF CAVEAT EMPTOR
It means “Caution Buyer”, Let the buyer beware
1. In case of misrepresentation by the seller
2. In case of concealment of latent defeat
3. In case of sale by description
4. In case of sale by sample
5. In case of sale by sample and description
6. Fitness for a particular purpose
7. Merchantable quality
EXCEPTION TO THE DOCTRINE OF CAVEAT EMPTOR
TRANSFER OF PROPERTY
Property Right Possession
Right
Right to Own Right to Hold
May not be
the owner
Owner
UNPAID SELLER RIGHTS OF AN UNPAID SELLER
1. Against goods
2. Against buyer personally
AGAINST GOODS
Where the property in
goods has passed to
the buyer
Where the property in
goods has not passed
to the buyer
Right of lien
Right of stoppage
in transit
Right to resale
Possession
Right with the
seller till the
final payment
Right to stop the
goods before the
goods reaches to
the buyer
Unpaid seller
exercises the right
for perishable
goods
Against the buyer personally
1. Suit for price
2. Suit of damages for non
acceptance
3. Suit for repudiation of the
contract before due date
The Indian Partnership Act 1932
Content of the Syllabus
1. Partnership and the essential elements of partnership
2. Tests of Partnership
3. Types of partners
4. Partnership Deed
5. Rights and duties of partners
6. Implied authority of a partner
7. Registration of a partnership Firm
8. Dissolution of a partnership firm
“Partnership is the relation between persons who have agreed”
Sec 4: “Carried by all or by any of them acting for all”
Utmost Good
Faith
Unlimited
Liability
Essentials of partnership
• No separate legal entity
• Mutual Agency: Partners have the authority to act on behalf of each other
• Sharing of profit or losses
• Relationship: Arises from contract not from status
• Agreement
Types of
Partners
Active
Partner
Partner
by
Holding
Out
Partner
by
Estoppel
Dormant
Partner
Sub
Partner
1. Partner by Estoppel: Person who falsely represents
himself as a partner
2. Partner by Holding out: a person who remains silent
while the partners of a firm declares his status as a partner
, he remains liable to all the parties of the partner
Rights, Duties and Authority of A Partner
Rights Duties Authority
Registration
Reliable Evidence
of the Existence
Non
Registration
Transaction is
not Invalidated
1. Conduct of the
business
2. Have access on
the books of
the firm
3. Share the profit
4. Indemnity
5. Use property
of the firm
1. Duty of
diligence
2. Duty to carry on
business
3. Duty to
contribute to the
loss
4. Duty to utilize
the property
5. Duty to account
for personal
profits
1. Buying , selling
and Pledging the
goods
2. Receiving
payments of the
debts
3. Settling accounts
4. Borrowing and
repaying loans
for the firm
5. Taking legal
actions and
defending
Register of firms
Issue
Certificate of
Registration
Dissolution
By Act of the Parties
By agreement By Consent By Notice
By Operation Of Law
Compulsory
Dissolution
On Certain
Contingencies
By Intervention of the Court
1. By Insanity
2. Misconduct
3. Breach of Agreement
The Limited Liability Partnership Act 2008
Content of the syllabus
1. Salient features of LLP Agreement
2. Designated partner
3. Advantages of LLP
4. Difference between LLP and Partnership
5. The incorporation rules of LLP
Suppose Mr X and Mr Y are partners in an LLP and have invested Rs. One lakh as Capital. The Company,
unfortunately, makes a huge business loss of Rs. 25 lakhs. But the liability is limited to just the investment in business
and the business assets i.e. Rs. One lakh. The Creditors cannot touch their personal and home assets to recover the
remaining Rs. 24 lakhs.
But if Mr X and Mr Y are partners in a Firm and the business makes the loss of Rs. 25 lakhs, then
the partners are personally liable. It means that the partners are personally liable and even their home and business assets
can be sold off to recover the Rs. 25 lakhs.
Limited Liability Partnership = Partnership Firm + Limited Company
Benefits
of LLP
Limited
Liability Separate
Legal
Entity
No Limit On
Number of
Partners
Only
profit
Incorporated
Association
Perpetual
succession
Managed
By ROC
No
Mutual
Agency
Designated Partner
• Responsible towards the liabilities as prescribed by
LLPAct & other legal compliances and penalties
• Two(2)
• DPIN
Partner
• Liability is limited solely towards LLP
Agreement
• No Minimum requirement
• Partners are agent of LLP firm but not
of Partner
The Negotiable instrument Act 1881
Content of the Syllabus
1. Definition and features of negotiable instruments Act 1881
2. Types of negotiable instruments
3. Holder of negotiable instruments
4. Endorsement
5. Dishonor of negotiable instruments
6. Noting and Protesting
7. Discharge of negotiable instruments
For example, A purchases from B INR 10,000 worth of goods. In case A is not able to pay for the purchases
in cash, or doesn’t want to do so, he could give B a promissory note. It is A’s promise to pay B either on a
specified date or on demand.
Negotiable Instrument : “Payable either to order or to the
bearer”, whether the word “order” or “bearer” appear on the
instrument or not
Essentials of Negotiable Instruments:
1. Written instrument
2. Signed by the maker or drawer
3. Freely transferable by endorsement
4. Contains an unconditional promise or order to pay
5. An exact sum of money
6. Right of Holder in due course
7. To a specific person, or to order or to its bearer
8. A lost negotiable instrument is duly stamped
9. NI bears a date
10. NI Accepted after date but before maturity
11. Proof of protest on dishonor
Negotiation
By Delivery
By Endorsement
Promissory Note {Sec 4} Bills of Exchange {Sec 5} Cheque {Sec 6}
“I promise to pay B or order Rs 500”
is a Promissory Note
Two months from date pay B or order
a sum of Rs 5,000
Drawn on a specified banker payable
on demand only
Maker: Prepares the promissory note
(Payer)
Payee: To whom the amount is
payable
Drawer: who makes the order for
making payment
Drawee: to whom the order to pay is
made
Payee: to whom the payment is made
Drawer: Account Holder
Drawee: Banker
Payee: the person named in the
instrument
No need of notice of dishonor The notice of dishonor must be given
by the holder
Cheque is dishonored by the bank
Promissory note does not require
acceptance
Requires the acceptance of the
drawee
Does not require any acceptance
Promissory note cannot be made
payable to the maker
It can be payable to the maker
(Seller)
Always Payable on demand
Unconditional Promise Unconditional Order Drawn on a banker
HOLDER IN DUE COURSE
Maker Payee or bearer Holder in due
Course
• Holder
• Takes a Negotiable Instrument
• For Value
• In good Faith
• Without notice of defect
• The instrument bears no apparent
evidence of forgery, alteration and
irregularity
ENDORSEMENT
Dishonor {Failure to honor the
negotiable instrument}
Dishonor by Non Acceptance Dishonor By Non Payment
Is presented to the drawee but not
accepted with 48 hours and the drawee
is incompetent
If the acceptor or the maker fails
to make the payment
Effect of Dishonor
Holder is entitled to sue
Notice of dishonour
By Whom
Holder of the instrument
To Whom
To all parties to whom the holder seeks to make liable
Noting
{Authentication for
Dishonor}
Protesting: Notary
public attestation for
dishonour
Consumer Protection Act, 2019
Chapter Content
1. Objectives and Features of Consumer Protection Act
2. Definition: Complainant, Complaint, Consumer, Consumer
Dispute, Defect, Deficiency, District Forum, Person
3. Unfair and Restrictive Trade Practices
4. Consumer Protection Council(Central, State, District—their
constitutions and objects
5. Consumer Disputes Redressal Agencies(District, State, National)
6. E-Commerce and Electronic Service Provider
Example: A was running a small type institute to earn his livelihood. He purchased a photocopy machine-
canon NP 150. It proved defective. He sued the seller who contended that A is not a consumer under the Act
as he purchased the photocopier for commercial use.
1. Buys any goods for a consideration
2. Hires or avails any services for a consideration
But does not include a person who obtains such goods or avails any services for any commercial purposes
1. the right to be protected against the marketing of goods, products or services
2. the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services
3. the right to be assured, wherever possible, access to a variety of goods, products or services at competitive prices
4. the right to be heard and to be assured that consumer's interests
5. the right to seek redressal against unfair trade practice or restrictive
trade practices
6. the right to consumer awareness;
means buying or selling of goods or services including digital products over digital or electronic network;
In writing an allegation:
1. Unfair trade practices and restrictive trade practices
2. Goods bought suffers from defects
3. Services hired or availed suffer from defects
4. A trader or service provider has charged a price in excess of the price as fixed by law
5. Services which are hazardous to life and safety of the public
Advisory Bodies
(Consumer Protection Council)
Adjudicative Bodies
(Consumer Disputes
Redressal Agencies)
Central Consumer
Protection Council
State Consumer
Protection Council
District Consumer
Protection Council
District
Forum
State
Commission
National
Commission
Ministry in Charge-
Depart. Of
Consumer Affairs
& Other Officials
Ministry in Charge-
Depart. Of Consumer
Affairs, State Govt.
& Other Officials
Collector of the
district & Other
Officials
Advice on the promotion and protection of the consumer rights
Value of the
goods/services
< 1 crore
Value of the
goods/services
>1 cr < 10 crore
& appeals
against the
district
commission
order
Value of the
goods/servic
es > 10 crore
& appeals
against the
order of state
commission
& Central
Authority
Illustrations of Unfair Trade Practices:
• A dress has been used for 2 months and is now being
sold by a seller as a new dress.
• The battery of a mobile phone is guaranteed to work
well for one year but wears away in a month.
• A geyser that is not ISI approved has an ISI mark.
• A table of Rs. 500 is sold online with Rs. 600 delivery
charge, but the good is claimed by the seller to be free
of cost
Illustrations of Restrictive Trade Practices:
• A trader accumulates his stock of food grains in order
to increase the price of the grains in the market so that
he can sell it at a higher price.
• In order to buy a television from trader X, one needs to
buy a table first.
“Unfair trade practice“ carried out for promotion of sale.
Distribution or utilization of any good or service by
adopting a deceptive method or practice.
“Restrictive trade practice“ Maximize their profit
Misleading Advertisement 2(28) means any advertisement that falsely describes a product or services or falsely
guarantee any product or services and expresses and conveys any representation that is unfair and conceals any important
information
Mediation 2(25)
means the process by which a mediator mediates the consumer disputes;
DIFFERENCE
MCQ Questions.docx
MCQ Question Discussion
Business Laws Sunita saha

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Business Laws Sunita saha

  • 1. Overview Of Business Law From Examination Perspective Business Laws CC 1.1 Chg MCQ Paper 6 CREDIT HOURS SUNITA SAHA
  • 2. CONTENT OF THE PRESENTATION 1. The Indian Contract Act 1872 2. The Sale of Goods Act 1930 3. The Indian Partnership Act 1932 4. The Limited Liability Partnership Act,2008 5. The Negotiable Instruments Act 1881 6. The Consumer Protection 2019
  • 3. Indian Contract Act 1872 Content of the syllabus 1. Contract- Definition & Features 2. Agreement & contract 3. Essentials of a valid contract 4. Offer ; essential elements of offer 5. Kinds of offer 6. Legal rules of offer and revocation of offer 7. Acceptance and legal rules of acceptance 8. Revocation of acceptance 9. Consideration & legal rules of consideration 10. Legality of objects and consideration 11. Capacity of the parties to the contract 12. Free consent 13. Void and voidable contract 14. Discharge of a contract 15. Breach of contract and its remedies 16. Specific contract: Contingent contract, Quasi Contract, contract of Indemnity, contract of guarantee, Bailment , Pledge M wants to sell his house at a price of Rs 60 Lakh to A and A agrees to purchase the same. This is a contract 30 marks
  • 4. CONTRACT IN A CONTRACT THERE MUST BE TWO IMPORTANT ASPECTS: 1. An agreement 2. The agreement must be enforceable by law SECTION 2(e): Agreement: Every promise and every set of promise, forming consideration for each other, is an agreement. Agreement: 1. Legal obligation 2. Enforceability by law Eg: An agreement to go to cinema is not enforceable by law . SECTION 2(h): CONTRACT “An agreement enforceable by law is a contract” Contract= Agreement+ Enforceable by law Consideration Agreement Legally Enforceable Contract Legally Not Enforceable VOID NO CONTRACT
  • 6. Offer & Acceptance Offer 1. Two parties 2. Must be communicated to the offeree 3. Willingness of the offeror must be specified 4. Assent of the offeree must be made 5. An offer may involve for doing the act 1. Express Offer: Express Communication 2. Implied Offer: Conduct of the parties 3. Specific Offer: To specific person 4. General Offer: General Offer 5. Cross Offer: Exchange identical offer 6. Counter offer: Qualified Acceptance on Alteration 7. Standing offer: acceptance over period of time Acceptance Proposal or offer is said to have been accepted when the person to whom the proposal is made gives his assent to the proposal. OFFER ACCEPTED PROMISE REVOCATION OF OFFER & ACCEPTENCE 1. By lapse of time 2. By communication of notice 3. By death or insanity 4. By counter offer 5. By rejection of the offer by the offeree Revocation of the acceptance does not arise when the offer is accepted
  • 7. Consideration •Consideration: “Quid pro quo” {something in return} •Consideration is an essential element for a contract to be valid •Consideration moves from the promisee to the promisor •Consideration is the implied or express request of the promisor, in return for his promise •Consideration must be at the desire of the promisor •Consideration may be given by the promisee or any other person •Consideration need not be adequate •Consideration should be real not illusory •Consideration must be lawful “Ex nudo pacto oritur action” an agreement without consideration is void Exceptions 1. Agreement made on account of natural love and affection 2. Compensation for past voluntary service 3. Promise to pay time barred debt: 4. Completed gift 5. Agency 6. Bailment Competent to contract: 1. Must attained the age of majority 2. He is of sound mind 3. He is not disqualified from contracting by any other law to which he is subject 4. Must not minor
  • 8. FREE CONSENT Free consent= valid contract Consent is not said to be free when it is caused byany of the following: 1. Coercion 2. Undue influence 3. Fraud 4. Misrepresentation 5. mistake Free consent Coercion (Threatening) Undue influence (Domination of will) Fraud (Deceive) Misrepresentation (Non true statement) Mistake (Error) Voidable at the option of the aggrieved party Void agreement
  • 9. 1. Agreements made by incompetent parties (minor/ incapacited person) 2. Agreements made under bilateral mistake as to material fact is void. 3. Agreements which have unlawful consideration and object are void 4. Agreements with unlawful consideration and objectives in past. 5. Agreements made without consideration is void except i. It is made out of natural love ii. A promise to pay a time barred debt iii. Agreements to agency iv. Agreements for donations and gifts v. Agreements to bailment without charge 6. Agreement in restraint of marriage of any major person is void. 7. An agreement the terms of which are uncertain is void. 8. An agreement by way of wager is void 9. An agreement in restraint of legal proceedings is void 10. An agreement contingent upon the happening of an impossible event is void 11. Agreement to do impossible acts is void. VOID AGREEMENTS Void agreements Voidable agreements A void contract is considered to be an illegal contract and is invalid from the starting date of signing of the contract A voidable contract is a legal contract which is declared invalid by one of the two parties for certain legal reasons A void contract becomes invalid at the time of its creation A voidable contract only becomes invalid if it is cancelled by one of the two parties who are engaged in the contract No performance is possible Performance is possible in a voidable contract Void contract is not valid at face value A voidable contract is valid but can be declared invalid at any time A void contract is non existent and can not be upheld by any law A voidable contract is an existing contract and is binding to at least one party involved in the contract
  • 10. Discharge of Contract By Performance By Agreement By Impossibility of Performance By Lapse of Time Actual Performance Attempted Performance Novation Rescission Alteration Remission Waiver Merger Initial impossibility Supervening impossibility By Operation of Law Death Insolvency Merger Alteration Same Identity Breach of contract Actual Breach Anticipatory Breach Remedies for breach Rescission Damages Quantum Meruit Specific Performance Injunction
  • 11. Special Contract Contingent Contract Quasi Contract Contract of Indemnity Contract of guarantee (Surety) Bailment Pledge A contract the performance of which is dependent upon happening or non happening of an uncertain event, collateral to such contract. Contracts which are not created by parties but by law itself. (no man must grow rich out of another persons cost) A contract of indemnity is a contract in which one party promises to compensate or protect the other party from the losses arising in future. A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default. A "bailment" is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished. Type of Bailment It is a transfer of goods as security for a payment of a debt or performance of promise. A contracts to sell B 100 bales of cotton for Rs 2,00,000 if the ship by which they are coming returns safely A supplies B, a lunatic with necessaries suitable to his condition in life. A is reimbursed from B’s property A promises to deliver certain goods to B for Rs. 2,000 every month. C comes in and promises to indemnify B’s losses if A fails to When A requests B to lend `10,000 to C and guarantees that C will repay the amount within the agreed time and that on C failing to do so, he will Contracts for the lease of a car, for sale of goods on consignment, A borrows Rs 100 from B and keeps his watch as security for payment of the debt. The bailment of watch is called a pledge
  • 12. Sale of Goods Act 1930 Content of the Syllabus 1. Essentials of contract of sale 2. Sale and agreement to sale 3. Condition and Warranty 4. Express and implied condition and warranty 5. The Doctrine of Caveat Emptor 6. Transfer of ownership in goods 7. Sale by Non Owners 8. Performance of Contract 9. Unpaid seller A buys 200 shares from B at a price of Rs 1.5 Lakh. A is the buyer and B is the seller Sale by Non Owner 1. Sale By A Mercantile Agent 2. Transfer of title by Estoppels 3. Sale by Unpaid Seller 4. Sale by buyer/seller after possession
  • 13. Goods 2(7) Every kind of movable property What are not good? 1. Actionable claims 2. Immovable property 3. Money Goods Existing Goods (Physically Present) Future Goods Yet to come Contingent Goods “May or May not” Specific Ascertained Unascertained a shirt made of cotton and with a Mickey Mouse cartoon on it A seller agrees to sell 100 tones of the 200 tones of wheat sale of 100 tonnes of soya bean meal a farmer may agree to sell a buyer all of the milk produced by his/her cows in the coming year sell your apples from your orchard
  • 14. Condition Warranty Which is essential to the main purpose of the contract It is a stipulation collateral to the main purpose of the contract NO CONDITION= NO CONTRACT NO WARRANTY= REMIDIES CAN BE CLAIMED NO CONDITION= NO CONTRACT= NO WARRANTY= NO BREACH = NO REMIDIES NO WARRANTY= YES CONTRACT = REMIDIES = NO BREACH OF CONTRACT The right to repudiate {CANCEL} the contract The contract cannot be repudiated Implied Condition Implied Warranty Conditions as to title {OWNERSHIP} Warranty of quite possession Sale by description Warranty against encumbrances Condition as to quality or fitness Warranty to disclose dangerous natures of goods Conditions as to mercanbility Warranty as to quality or fitness by usage of trade Conditions implied by customs sale by sample Condition as to wholesomeness
  • 15. DOCTRINE OF CAVEAT EMPTOR It means “Caution Buyer”, Let the buyer beware 1. In case of misrepresentation by the seller 2. In case of concealment of latent defeat 3. In case of sale by description 4. In case of sale by sample 5. In case of sale by sample and description 6. Fitness for a particular purpose 7. Merchantable quality EXCEPTION TO THE DOCTRINE OF CAVEAT EMPTOR TRANSFER OF PROPERTY Property Right Possession Right Right to Own Right to Hold May not be the owner Owner
  • 16. UNPAID SELLER RIGHTS OF AN UNPAID SELLER 1. Against goods 2. Against buyer personally AGAINST GOODS Where the property in goods has passed to the buyer Where the property in goods has not passed to the buyer Right of lien Right of stoppage in transit Right to resale Possession Right with the seller till the final payment Right to stop the goods before the goods reaches to the buyer Unpaid seller exercises the right for perishable goods Against the buyer personally 1. Suit for price 2. Suit of damages for non acceptance 3. Suit for repudiation of the contract before due date
  • 17. The Indian Partnership Act 1932 Content of the Syllabus 1. Partnership and the essential elements of partnership 2. Tests of Partnership 3. Types of partners 4. Partnership Deed 5. Rights and duties of partners 6. Implied authority of a partner 7. Registration of a partnership Firm 8. Dissolution of a partnership firm “Partnership is the relation between persons who have agreed” Sec 4: “Carried by all or by any of them acting for all” Utmost Good Faith Unlimited Liability
  • 18. Essentials of partnership • No separate legal entity • Mutual Agency: Partners have the authority to act on behalf of each other • Sharing of profit or losses • Relationship: Arises from contract not from status • Agreement Types of Partners Active Partner Partner by Holding Out Partner by Estoppel Dormant Partner Sub Partner 1. Partner by Estoppel: Person who falsely represents himself as a partner 2. Partner by Holding out: a person who remains silent while the partners of a firm declares his status as a partner , he remains liable to all the parties of the partner
  • 19. Rights, Duties and Authority of A Partner Rights Duties Authority Registration Reliable Evidence of the Existence Non Registration Transaction is not Invalidated 1. Conduct of the business 2. Have access on the books of the firm 3. Share the profit 4. Indemnity 5. Use property of the firm 1. Duty of diligence 2. Duty to carry on business 3. Duty to contribute to the loss 4. Duty to utilize the property 5. Duty to account for personal profits 1. Buying , selling and Pledging the goods 2. Receiving payments of the debts 3. Settling accounts 4. Borrowing and repaying loans for the firm 5. Taking legal actions and defending Register of firms Issue Certificate of Registration
  • 20. Dissolution By Act of the Parties By agreement By Consent By Notice By Operation Of Law Compulsory Dissolution On Certain Contingencies By Intervention of the Court 1. By Insanity 2. Misconduct 3. Breach of Agreement
  • 21. The Limited Liability Partnership Act 2008 Content of the syllabus 1. Salient features of LLP Agreement 2. Designated partner 3. Advantages of LLP 4. Difference between LLP and Partnership 5. The incorporation rules of LLP Suppose Mr X and Mr Y are partners in an LLP and have invested Rs. One lakh as Capital. The Company, unfortunately, makes a huge business loss of Rs. 25 lakhs. But the liability is limited to just the investment in business and the business assets i.e. Rs. One lakh. The Creditors cannot touch their personal and home assets to recover the remaining Rs. 24 lakhs. But if Mr X and Mr Y are partners in a Firm and the business makes the loss of Rs. 25 lakhs, then the partners are personally liable. It means that the partners are personally liable and even their home and business assets can be sold off to recover the Rs. 25 lakhs.
  • 22. Limited Liability Partnership = Partnership Firm + Limited Company Benefits of LLP Limited Liability Separate Legal Entity No Limit On Number of Partners Only profit Incorporated Association Perpetual succession Managed By ROC No Mutual Agency Designated Partner • Responsible towards the liabilities as prescribed by LLPAct & other legal compliances and penalties • Two(2) • DPIN Partner • Liability is limited solely towards LLP Agreement • No Minimum requirement • Partners are agent of LLP firm but not of Partner
  • 23. The Negotiable instrument Act 1881 Content of the Syllabus 1. Definition and features of negotiable instruments Act 1881 2. Types of negotiable instruments 3. Holder of negotiable instruments 4. Endorsement 5. Dishonor of negotiable instruments 6. Noting and Protesting 7. Discharge of negotiable instruments For example, A purchases from B INR 10,000 worth of goods. In case A is not able to pay for the purchases in cash, or doesn’t want to do so, he could give B a promissory note. It is A’s promise to pay B either on a specified date or on demand.
  • 24. Negotiable Instrument : “Payable either to order or to the bearer”, whether the word “order” or “bearer” appear on the instrument or not Essentials of Negotiable Instruments: 1. Written instrument 2. Signed by the maker or drawer 3. Freely transferable by endorsement 4. Contains an unconditional promise or order to pay 5. An exact sum of money 6. Right of Holder in due course 7. To a specific person, or to order or to its bearer 8. A lost negotiable instrument is duly stamped 9. NI bears a date 10. NI Accepted after date but before maturity 11. Proof of protest on dishonor Negotiation By Delivery By Endorsement
  • 25. Promissory Note {Sec 4} Bills of Exchange {Sec 5} Cheque {Sec 6} “I promise to pay B or order Rs 500” is a Promissory Note Two months from date pay B or order a sum of Rs 5,000 Drawn on a specified banker payable on demand only Maker: Prepares the promissory note (Payer) Payee: To whom the amount is payable Drawer: who makes the order for making payment Drawee: to whom the order to pay is made Payee: to whom the payment is made Drawer: Account Holder Drawee: Banker Payee: the person named in the instrument No need of notice of dishonor The notice of dishonor must be given by the holder Cheque is dishonored by the bank Promissory note does not require acceptance Requires the acceptance of the drawee Does not require any acceptance Promissory note cannot be made payable to the maker It can be payable to the maker (Seller) Always Payable on demand Unconditional Promise Unconditional Order Drawn on a banker
  • 26. HOLDER IN DUE COURSE Maker Payee or bearer Holder in due Course • Holder • Takes a Negotiable Instrument • For Value • In good Faith • Without notice of defect • The instrument bears no apparent evidence of forgery, alteration and irregularity ENDORSEMENT
  • 27. Dishonor {Failure to honor the negotiable instrument} Dishonor by Non Acceptance Dishonor By Non Payment Is presented to the drawee but not accepted with 48 hours and the drawee is incompetent If the acceptor or the maker fails to make the payment Effect of Dishonor Holder is entitled to sue Notice of dishonour By Whom Holder of the instrument To Whom To all parties to whom the holder seeks to make liable Noting {Authentication for Dishonor} Protesting: Notary public attestation for dishonour
  • 28. Consumer Protection Act, 2019 Chapter Content 1. Objectives and Features of Consumer Protection Act 2. Definition: Complainant, Complaint, Consumer, Consumer Dispute, Defect, Deficiency, District Forum, Person 3. Unfair and Restrictive Trade Practices 4. Consumer Protection Council(Central, State, District—their constitutions and objects 5. Consumer Disputes Redressal Agencies(District, State, National) 6. E-Commerce and Electronic Service Provider Example: A was running a small type institute to earn his livelihood. He purchased a photocopy machine- canon NP 150. It proved defective. He sued the seller who contended that A is not a consumer under the Act as he purchased the photocopier for commercial use.
  • 29. 1. Buys any goods for a consideration 2. Hires or avails any services for a consideration But does not include a person who obtains such goods or avails any services for any commercial purposes 1. the right to be protected against the marketing of goods, products or services 2. the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services 3. the right to be assured, wherever possible, access to a variety of goods, products or services at competitive prices 4. the right to be heard and to be assured that consumer's interests 5. the right to seek redressal against unfair trade practice or restrictive trade practices 6. the right to consumer awareness; means buying or selling of goods or services including digital products over digital or electronic network; In writing an allegation: 1. Unfair trade practices and restrictive trade practices 2. Goods bought suffers from defects 3. Services hired or availed suffer from defects 4. A trader or service provider has charged a price in excess of the price as fixed by law 5. Services which are hazardous to life and safety of the public
  • 30. Advisory Bodies (Consumer Protection Council) Adjudicative Bodies (Consumer Disputes Redressal Agencies) Central Consumer Protection Council State Consumer Protection Council District Consumer Protection Council District Forum State Commission National Commission Ministry in Charge- Depart. Of Consumer Affairs & Other Officials Ministry in Charge- Depart. Of Consumer Affairs, State Govt. & Other Officials Collector of the district & Other Officials Advice on the promotion and protection of the consumer rights Value of the goods/services < 1 crore Value of the goods/services >1 cr < 10 crore & appeals against the district commission order Value of the goods/servic es > 10 crore & appeals against the order of state commission & Central Authority
  • 31. Illustrations of Unfair Trade Practices: • A dress has been used for 2 months and is now being sold by a seller as a new dress. • The battery of a mobile phone is guaranteed to work well for one year but wears away in a month. • A geyser that is not ISI approved has an ISI mark. • A table of Rs. 500 is sold online with Rs. 600 delivery charge, but the good is claimed by the seller to be free of cost Illustrations of Restrictive Trade Practices: • A trader accumulates his stock of food grains in order to increase the price of the grains in the market so that he can sell it at a higher price. • In order to buy a television from trader X, one needs to buy a table first. “Unfair trade practice“ carried out for promotion of sale. Distribution or utilization of any good or service by adopting a deceptive method or practice. “Restrictive trade practice“ Maximize their profit Misleading Advertisement 2(28) means any advertisement that falsely describes a product or services or falsely guarantee any product or services and expresses and conveys any representation that is unfair and conceals any important information Mediation 2(25) means the process by which a mediator mediates the consumer disputes; DIFFERENCE