Business law PPT- First Two Units

1. BUSINESS LAW
Prepared by
Dr. K.RAJESWARI
Associate Professor
Avinash Degree College
Kukatpally, Hyderabad
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2. Unit 1
INTRODUCTION TO BUSINESS LAWS
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3. CONTENTS
Unit 1:
• INTRODUCTION TO BUSINESS LAWS :
• Introduction
• Nature of Law
• Meaning and Definition of Business Laws
• Scope and Sources of Business Law
• Fundamental Rights and Directive Principle of State Policies
• Principles having economic significance
• Overview of Business Laws in India.
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4. LEARNING OBJECTIVES
• To understand the Nature of Law, Meaning and Definition of Business Laws
• To Know the Scope and Sources of Business Law
• To have an clarity about Fundamental Rights and Directive Principle of State Policies
• To Know the economic significance
• To have an Overview of Business Laws in India.
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5. INTRODUCTION
• Law is a main contributory factor for man’s welfare and wellbeing.
• The study of law is of enormous practical value and vital and ever- present force in modern life.
• Every business man needs more through knowledge of the law than the person not so engaged.
• As he carried his business he is confronted with problems arising out of contract, sale of goods,
bailment, agency, negotiable instruments, cybercrimes environmental issues, international
dealings and so on.
• This made compulsory to study BUSINESS LAW or to the knowledge of various legal aspects as
a part of commerce, management and business study curriculum with different titles
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6. WHAT IS LAW
What is
Law
Commanding
Binding Force
Regularity
Subject of study
Rule of action
Judicial remedy
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7. DEFINITION
“ A law is a rule of conduct imposed and enforced by sovereign”- AUSTIN
“ Law is the body of principles recognised and applied by the state in
administration of justice” - SALMOND
The term Mercantile or Business law refers to those legal rules which govern and regulate
business transactions. These rules, regulations etc brings a sense of seriousness in
business dealings. They provide for rules regarding the validity of making contract and their
performance. They deal with various types of contracts.
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8. WHY SHOULD ONE KNOW LAW
“ Ignorantia Juris non – exusat”
Which means
IGNORANCE OF LAW IS NO EXCUSE
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9. OBJECT OF LAW
OBJECT
Uniformity and
Social Security
Remove existing
imbalance
To make strong Govt. &
implement Law positively
Create awareness
of Law
Impose social justice
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10. NATURE OF LAW OF CONTRACT
• It is a conduct, culture, tradition and religion developed by human beings
• It creates rights and duties
• It maintains peace and security
• It regulates internal activity
• It always aims to give justice to the victim and punishment to the law breakers
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11. SCOPE AND SOURCES OF BUSINESS LAW
Scope of Law: It includes the law relating to contracts, Sale of goods, Partnership, Negotiable
instruments, Insurance, Insolvency, Carriage of goods, Companies activities etc.
Sources of Business Law
English Mercantile Law
• The of merchant
• Common law
• Equity
• Statute law
Statute of Indian
Legislation
• Indian contract act
• Sale of goods act
• The Indian Partnership
act
• The companies act
Judicial Decision
• Case Law
Customs& Usages
• Principles of
justice and public
utility
• Rational
expectation
• Observances over
a long period
• Interest of the
society
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12. FUNDAMENTAL RIGHTS
Equality
Article 14-18
Freedom
Article
19-22
Against
Exploitation
Article
23-24
Culture and
Education Article
25-28
Property
Article 29-31
Constitutional
Remedies
Article 32
Rights to
Article 14-31
DIRECTIVE PRINCIPLE OF STATE POLICIES Part - IV
Classified as
1. Socialist and
Economic Principles
2. Gandhian Principles
3. International
Principles
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13. ECONOMIC SIGNIFICANCE OF DIRECTIVE PRINCIPLES
• The constitution framers enshrined so many principles in order to establish a new social order in which justice
social, economic and political shall prevail.
• To ensure minimum basic necessities of citizen in civilized society and to establish a democratic setup rest on
social justice, the constitution framers adopted peaceful and evolutionary method followed by constitutional reform.
• To fulfill basic objective, the State has been charged to make effective provisions for securing the Right to work, to
education and to public assistance in case of unemployment, old age, sickness and disablement and in other
cases of undeserved want (Art.-41).
• To implement and translate such directives into action, the govt. has taken so many steps coloured by these
directive principles.
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14. OVERVIEW OF BUSINESS LAWS IN INDIA
• India’s laws are derived from English common law and seem recognizable to American, Canadian, British,
Australian and New Zealand attorney and others familiar with the heritage of English legal practices.
• Employees are offered many protections by business laws in India, which is a member of the International Labor
Organization. These include the Payment of Wages Act of 1936, the Industrial Employment Act of 1946, the
Industrial Disputes Act of 1947, the Payment of Bonus Act of 1965 and the 1972 Payment of Gratuity Act.
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15. Thank you
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16. UNIT 2
Indian Contract Act, 1872: Definition of Contract, essentials of a valid contract (all
essentials need to be explained in great detail), classification of contracts, remedies for
breach of contract.
Indian Sale of Goods Act, 1930: Definition of contract of sale, essentials of contract of
sale, conditions and warrantees, rights and duties of buyer, rights of an unpaid seller.
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17. LEARNING OBJECTIVES
• To have in depth knowledge about Indian Contract Act, 1872
• To have in depth knowledge about Indian Sale of Goods Act, 1930
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18. METHODOLOGY
• Every heading and sub heading should be explained with examples.
• Important case reference should be dealt where ever possible
• Example problems should be given as group activity
• House and sale agreement - - should be given as individual activity in class
• How tender is prepared should be discussed in class
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19. DEFINITION OF CONTRACT
According to above definitions, it is clear that a contract should consist of two elements;
(i) Agreement (ii) Legal obligation or agreement must be enforceable by law.
(i) Agreement:
An agreement should have a Promise and Promise should have Proposal.
• 2(e) as, “Every promise or every set of promise, forming the consideration for each other is an agreement.”
• Section 2 (b) as, “when the person to whom the proposal is made signifies his assent there to, the proposal is said
to be accepted. A proposal when accepted, becomes a promise.”
• Section 2 (a) as, “When one person signifies to another his willingness to do or to abstain from doing anything,
with a view to obtain the assent of that other to such act or abstinence, he is said to make a proposal.”
• Agreement = offer + Acceptance.
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Sir Fredirck Pollock defines, “Every agreement and promise enforceable at law is a Contract.”
According to the Indian Contact Act, Section 2 (h) “An agreement enforceable by law is a Contract.”

20. Continued…
(ii) Legal obligation or agreement must be enforceable by law.
An agreement to become a contract must give rise to legal obligation.
Balfour V/s Balfour (1919)
So,
Or
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Contract = Agreement + Legal obligation
Contract = Agreement + Enforceability at law
All contracts are agreements but all agreements are not contracts.”

21. 21
Essential of a Valid Contract
Intention to create Legal
Relationship
Capacity of parties
Proper Offer and Acceptance Lawful object
Agreement not declared
void or illegal
Legal formalities
Possibility of performance
Certainty of meaning
Lawful consideration
Free consent
“All contracts are agreement but all agreements are not contract.”

22. TYPES OF CONTRACT
Classification Under English Law:
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English Law
Formal Contracts
Contract records Contract under seal
Simple Contract

23. TYPES OF CONTRACT
According to the Indian Contract Act contracts may be classified on the basis of their
Validity, formation or performance.
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Indian Contract Act
On the basis of
formation or mode of
creation
On the basis of validity or
enforceability
On the basis of
performance
• Express contracts
• Implied contracts
• Quasi contracts
• Valid contracts
• Void contracts
• Void agreements
• Voidable contracts
• Unenforceable contracts
• Illegal contracts
• Executed contracts
• Executory contracts
(i) Unilateral contracts
(ii) Bilateral contracts
(iii) Partly Executed/
Executory

24. OFFER [PROPOSAL]
Proposal Promise Offer = Express readiness / show intention
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Types
Express /Implied Specific/ General Positive /Negative Definite/ Standing Counter/ Cross
• Legal relationship
• Express or implied
• Certain and definite
• Communication to offeree
• Assent of the party
• May be conditional
• Not a mere statement
• Intentional to do an act
• Through printed contracts
• By notice
• Lapse of time
• Non fullfilment of condition
• By death or insanity
• By rejection
• By failure to accept
Subsequent illegality
When can it be revoked
Essentials

25. ACCEPTANCE
Acceptance is Assent / Approval / Accepting the proposal
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Essentials Revocation (Sec. 5)
• Obsolute and unconditional
• Express or implied
• Communication to the offeror
• In response to offer
• Made in a reasonable time
• In a prescribed manner
• Acceptance by the offeree
• Aware of the proposal by the acceptor
• Before lapse of time
• Silence is not an acceptance
• Failure of acceptor
• Death or insanity
• No reasonable time & manner
• By rejection
• By Supervening impossibility

26. Capacity of Parties-Persons who is competant to contract
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Person not capable for contract
Minor Person of unsound mind
• Idiot
• Insane/ Lunacy
• Drunkard
• Old person
Disqualified by other law
Married Women
Insolvent
Alien enemies
Convict
Professionals
Foreign Soverigns
Ambassadors
Corporations
Exception/Law
relatingtoMinors
Void-ab-initio
Can be a promise or beneficiary
No restitution
No ratification
Pleade for minority/No estoppel
Liability for necessaries
Not to hold any specific
performance
• Cannot be a partner
• Cannot be an Insolvent
• Cannot be a surety
• Can be for Joint Contract
• Shareholder only for transmission
• Be an agent Parents are not liable
• Contract for training &development
• Liable for tort

27. CONSIDERATION
Consideration is something in return or price of a promise “No considerations, no contract”.
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Consideration is :
• Is an act / abstinence
• Done by promise / other persons
• Executed / Executory
Essentials consideration should be:
• It should move
• May be from the promisee or any other person
• Need not be adequate
• Real and not illusory
• Lawful
• It is act/abtinence or promise
Exceptions:
• Natural love and affection [Sec. 25(1)]
• Compensation for services rendered [Sec. 25(2)]
• Time bared debt. [Sec. 25(3)]
• Gift
• Agency

28. FREE CONSENT
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Consensus - as - idems” - Meeting of mind at the same time with same sense
Elements
Coercion
Sec. 15
Undue-influence
Sec. 16
Frauds- Sec. 17
Mis-representation
Sec. 18
Mistake
Sec. 20, 21 and
22
Agreement is voidable Void/Voidable

29. LEGALITY OF OBJECT
Legality of object - Object should be Lawful
Sec. 23 - Unlawful act are
• For-bidden by law
• Prohibited by special legislation
• It would defeat the provisions of any law
• If it is fraudulent
• Involves injury to the person/property of another Courts to public policy
• Opposed to public policy
• Trade with alien enemies
• Interference with the course of justice
• For suppressing the prosecution
• For sale of public offices/title and honours
• Marriage brokerage
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30. VARIOUS MODES OF DISCHARGE OF A CONTRACT
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Modes of Discharge of Contract
Discharge by
Agreement-
Sec. 62 63
• Novation
• Rescission
• Alteration
• Remission
• Wavier
• Merger
Performance
Sec. 37, 38
• Actual Performance
• Tender
Breach
Sec. 39
 Actual
 Anticipatory
• At the due date of performance
• During the performance
• By express repudiation
• By implied repudiation
Operation of law
• Unauthorized
material alteration
• Insolvency
• Merger
• Death
Impossibility
Sec. 56
a)Initial Impossibility
b) Subsequent
Impossibility
• Destructions of subject matter
• Change of circumstances
• Death
• Change of law
• Declaration of war
• Failure of Pre-condition
Lapse of time

31. REMEDIES FOR BREACH OF CONTRACT
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Suit for
Damages
Ordinary or General or
Compensatory Damages
Special damages
Vindictive or exemplary damages
• Breach of a contract to marry
• Dishonour of a cheque
Nominal damages
Cancellation/Recession
Specific Performance
Quantum merit
Injunction
Demanding for Restitutions

32. DIFFERENCE BETWEEN
• Void agreement and Voidable agreement
• Void agreement and Illegal agreement
• Offer and invitation to offer
• Stranger to Consideration and Stranger to Contract
• Coercion and Undue influence
• Fraud and Mis-representation
• Void Contract and Voidable Contract
• Wagering agreement and Contingent contract
• Novation and Alteration
• Indemnity and Guarantee
• Bailment and Pledge
• Offerer and Offeree
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33. SALES OF GOODS ACT
Main Stipulation
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Enforced on 1st July 1930
Section 4(1): A contract of sale of goods as - “a contract whose by the seller
transfers or agrees to transfer the property in goods to the buyer for a price”.
Essentials
• Two parties
• Transfer of property
• Goods
• Price
• Sale and agreement to sell
• No formalities (only
understanding)
Sale of goods
Agreement to sell
Condition
Warranty
Executed
Contract
Executory
Contract
Main
Stipulation
Stipulation
Collateral

34. CLASSIFICATION OF GOODS
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Goods
Existing Goods Future Goods Contingent Goods
• Specific Goods
• Ascertain Goods
• Unascertained Goods

35. EFFECT OF DESTRUCTION OF GOODS [SEC 7]
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Price Agreement to sell at valuation
Ascertainment of Price Stipulations as to time (Sec 11)
Document of title of goods

36. CONDITION AND WARRANTY
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A stipulation in a contract of sale with reference to goods which are the subject
thereof may be a condition or a warranty.
As per Sec 12(2) of the sale of Goods Act, a condition is a stipulation
essential to the main purpose of the contract, the breach of which gives
rise to right to treat the contract as repudiated.
Conditions and Warranties may be either expressed or implied When
terms of contract expressly provide for them, they are known as express
conditions or warranties.

37. 37
Express conditions and warranties are expressly provided in the contract
Implied conditions and warranties are implied by law in every contract of sale
of goods unless a contrary intention appears from the terms of the contract
Implied conditions and warranties
Implied conditions
• Condition as to title [Sec 14(a)]
• Sale by description (Sec 15)
• Condition as to quality or fitness (Sec 16)
• Sale by sample (Sec 17)
• Condition as to quality or fitness{sec 16(1)}
• Condition as to merchantable quality {sec 16(2)}
• Condition as to Wholesomeness
• Condition implies by custom {sec 16(3)}
Implied Warranty
• Warranty of quiet possession [Sec.14(b)]
• Warranty of freedom from
encumbrances[Sec.14(c)]
• Warranty as to top quality or fitness for
particular purpose annexed by usage of
trade {sec 16(3)}

38. Where there is a contract for the sale of unascertained goods, no property in
the goods is transferred to the buyer unless and until the goods are sanctioned.
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Doctrine of Caveat Emptor-Caveat Emptor means ‘let buyer be aware’.
Goods must be ascertained

39. PASSING OF THE PROPERTY FROM THE SELLER TO THE BUYER
PASSING OF THE PROPERTY implies transfer of ownership and not the physical possession of goods.
• Goods must be ascertained
• Intention of the parties for such transfer
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What are the rules relating to transfer of ownership in case of
RESERVATION OF RIGHT OF DISPOSAL
Risk prima facie passes with property
• Specific goods
• Unascertained goods
• Goods on approval or ‘on sale or return

40. SALE BY PERSON NOT THE OWNER
• Sale by mercantile agent
• Sale by one of joint owners
• Sale by person in possession under voidable contract
• Seller or buyer in possession after sale
• Sale by estoppel
• Sale by an unpaid seller after exercising his right of lien or stoppage
in transit
• Exceptions in other Acts
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41. Performance of the Contract of Sale
Performance of a Contract of sale means as regards the Seller, delivery of goods to the buyer. From buyer’s side the
performance means the acceptance of the delivery of goods and payment for them as per the terms and conditions of
sale.
RULES AS TO DELIVERY
• Delivery of goods and payment of price are concurrent conditions unless otherwise agreed upon. Effect
of part delivery
• Buyer to apply for delivery
• Place of delivery
• Time of delivery
• Goods in possession of a third person
• Cost of delivery
• Mode of delivery
• Delivery of wrong quality
• Installment delivery
• Delivery to carrier or wharfinger
• Risk where goods are delivered at distant place
• Buyer’s right of examination the goods
• Buyer not bound to return rejected goods
• Liability of buyer for neglecting or refusing delivery of goods
Delivery are of following types: Symbolic-/ Actual-/ Constructive
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42. RIGHTS AND DUTIES OF BUYER
 Right to have delivery as per contract
 Right to reject the goods
 Right to repudiate
 Right to notice of insurance
 Right to examine
 Right against the seller for breach of contract
• Suit for damages
• Suit for price
• Suit for specific performance
• Suit for breach of warranty
• Repudiation of contract before due date
• Suit for interest
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43. DUTIES OF THE BUYER
• Duty to accept the goods and pay for them in exchange for possession
• Duty to apply for delivery
• Duty to demand delivery at a reasonable hour.
• Duty to accept installment delivery and pay for it.
• Duty to take risk of deterioration in the course of transit.
• Duty to intimate the seller where he rejects the goods
• Duty to take delivery
• Duty to pay prices according to the terms of contract.
• Duty to pay damages for non acceptance.
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44. RIGHTS OF AN UNPAID SELLER
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RIGHTS OF AN UNPAID SELLER
(Sec 46-52, 54-56, 60-61)
I.)Against Goods
A. Where the property in goods has
passed to the buyer:
• Right of lien
• Right of stoppage in transit
• Right of resale
B. Where the property in goods has not
passed to the buyer:
• With holding delivery
• Lien
• Stoppage in transit
• Resale
II.) Against the Buyer
personally
A. Suit for Price
B. Suit for Damage
C. Suit for Interest

45. DIFFERENCE BETWEEN
• Sale and Agreement to sale
• Sale and Hire- Purchase agreement
• Right of lien and Right of stoppage in transit
A brief idea about the following to be discussed in class
• Right of lien
• Right of stoppage of goods in transit
• Right of unpaid seller in case of transfer of document by way of pledge
• Right of Resale
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46. Thank you
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