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MB 108

Business Law

Contract Act, 1872:

1. Transfer of Property Act

2. Company Act

3. Railway Act

4. Specific Relief Act

Element of Contract:

Proposal [Sec. 2 (a)]:

When one person signifies to another his willingness to or abstaining from doingsomething with view to obtain the ascent of the others to such act or abstinence, he is said

to make a Proposal.

Characteristics:

1. The offer must be intended to create legal obligation and must be capable of

creating legal obligation.

2. The Proposal must be make with a view to obtain ascend of the other party.

Communication

Or

Acceptance

Proposal Acceptance

Offer

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3. Terms and Conditions must be definite and certain.

4. The offer may be order written or oral or by Contract.

5. Offer may be positive or negative.

6. An offer may be communicated as offering or otherwise he cant accept it.

7. The offer must be addressed to world at large or to a specified person or a specificclass of person.

8. An offer once rejected its dead and cant be accepted unless a fresh offer is made.

Acceptance and Promise [Sec. 2 (b)]:

Acceptance:

As defined in Sec. 2(b) when the person to whom the Proposal is made signifies his asset

there to the Proposal is said to be accept, and the person who is accepting the Proposal issaid to be Promise.

Characteristics:

1. Acceptor must be aware of the Proposal at the time of Acceptance.

2. The Acceptance must be absolute, unconditional and unqualified.

3. The Acceptance must be expressed in some usual and reasonable manner until

specified otherwise.

4. The Acceptance of an offer may express or implied.

5. The offer can be accepted only by the person to whom it is made and to whom it

exports in intension of Contract.

Communication of Acceptance

1. In order to complete a Contract an Acceptance of the terms by the person to

whom their offer must be communicated to the person making the offer whichmay be by words or conduct.

2. A may have mental ascent to a Proposal will not constitute a Valid Acceptance.

3. Communication of Acceptance must be made to a Proposal or not to a third

person.

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4. Communication of Acceptance must be made by acceptor and the acceptor alone.

Promise:

A Proposal when accepted becomes a Promise.

Consideration [Sec. 2 (d)]:

As laid down in Sec. 2(d) when at the desire of Promiser, the Promises or other person

1. Has done or abstain from doing

2. Does or abstain from doing

3. Promises to do or abstain from doing something

Such act or abstinence is called for a Consideration for the Promise.

Characteristics:

1. Consideration must be made at the desire of the Promiser.

2. It may move from Promisee or any other person.

3. It may be past, present and future.

4. It must be real, competent and of some values.

5. It must not be illegal, impossible or illusionary.

6. It must not be immortal or opposed to public policy.

Kinds of Consideration:

Law of Contract recognizes three kinds of Consideration.

1. Executary Consideration: It consists of a Promise to the Promisee to do or

abstain from doing something in the future. Example: - A pay to B to draw aproduct of B which b would likely to draw in future. It is basically halfwayfulfillment of Contract. This Contract is called an Executory Consideration.

2. Executed Consideration: Where one party has done or competed all theactivities Promised with respect to other parties who has also competed the same

as his part. The Consideration is said to be an Executed Consideration.

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3. Past Consideration: Past Consideration is something wholly done or for borne or

suffered before the meeting of Agreement.

Time Barred Debt:

It has always been held to be a Valid Consideration for new Contract under this Promisesbut past Consideration is no Consideration under English law.

Agreement [Sec. 2 (e)]:

As defined in Sec. 2(e) every Promise or every set of Promise forming the Consideration

for each other, is an Agreement.

Classification of Agreement:

There are five types of Agreement

1. Valid Agreement: Valid Agreements those are enforceable by law.

2. Voidable Agreement: Voidable Agreement is one which is Valid as long as it is

not aVoided by the young party entitled to do so.

3. Void Agreement: Void Agreement is an Agreement in which there no legaleffect and not enforceable by law. This is the subject matter of consideration is

law full then that Agreement will be Void Agreement.

4. Unenforceable Agreement: If otherwise Valid Agreement becomes an

Agreement unenforceable by law due to technical defect then it becomes

enforceable Agreement.

5. Illegal Agreement: Whenever the subject matter of the Contract is illegal or

against the public policy is called Illegal Agreement.

Who are competent to Contract? [Sec. 11]:

The Sec. 11 lies down that all Agreements are Contract if made by a person

1. Who has the age of manufacturing

2. Who is a sound mind

3. Who is not disqualified by any law from Contractee

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Consent and Free Consent [Sec. 13 and Sec. 14]:

Free Consent of the parties is one of essential for Valid Contract as defined in Sec. 13.Two or more persons are said to be in Consent when they agree upon the same thing in

the same sense.

In some case these may not be any Consent at all the parties may work under mistake and

the mistake when so complete as to prevent the formation for any real Agreement which

include error relating to identify of the party, nature of transactions, sub matter ofAgreement.

Free Consent [Sec. 14]: Consent is said to be free when it is not caused by Consent [Sec.

14], undue influence [Sec. 16], fraud [Sec. 17] misrepresentation or mistake.

Breach of Contract:

Whenever a subject matter or mutual obligations of the parties are not followed then theother party may seek for redressal, sitting the non performances of the part as Breach of

Contract.

Remedy of Breach of Contract [Sec. 73]:

1. Suit for specified performance: In this case non guilty party requests the Courtto compel the guilty party to perform the act specifically.

2. Suit for injunction: It is a remedy by way of injunction which is used as a meansfor enforcing a Contract of a Premise for fear.

1. DEFINE CONTRACT. DISCUSS THE DETAILS DIFFERENT OF

CONTRACT.

2. WHAT IS CONSIDERATION? WHAT ARE THE DIFFERENT TYPES OF

CONSIDERATION?

3. WHAT IS FREE CONSENT?

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Sale of Goods Act, 1930:

Distinguish between Sale and Agreement of Sale:

An Agreement to Sale becomes a Sale when the time elapses when conditions are

fulfilled subject to the transfer of property in goods.

The distinction between of these two can be discuss below

1. Transfer of property: In a sale the property of goods passes from the seller to

the buyer for a price or in consideration and the seller losses the ownership of

goods. In the agreement to sale the transfer of property of goods is to take place at

a future time and or subject to certain conditions to be fulfilled.

2. Risk of loss: Risk follows property, whoever is the owner of goods at the time

loss will bear the risk. During agreement to sale the ownership lies with the seller

so the risk is with seller whereas incase of sale risk lies with buyer.

3. Remedies in case of breach of contract: In a sale if the buyer fails to pay theprice of the goods or breach occurs from the side of the buyer, the seller can sue

for the price even though the goods are still in seller position. In a agreement to

sale if there is breach on the part of the buyer, the seller can only sue for thedamages and not for the price even though the goods are in the position of the

buyer.

4. Right to resale: In a sale the seller can not resale the goods even if he does so thesubsequent buyer does not acquire the title. In the agreement to sale incase of

resale that takes of the goods for consideration and without notice of the prioragreement gets a good title, in this case the original buyer can only sue the sellerfor damages.

5. Insolvency of buyer: Incase of sale if the buyer becomes insolvent before payingthe price the seller cannot retain the goods. Only thing the seller can have a

ratable dividend for the price of goods out of the estate of insolvent buyer. In an

agreement to sale, seller is not bound to pass the right of property unless the buyer

pays for it.

6. Insolvency of seller: Incase of sale if the seller becomes insolvent the buyer

being the owner is entitled to receive the goods from the official receiver orassignee. In agreement to sale the buyer who has already paid and subsequently

the seller becomes insolvent he can only claim ratable dividend and not the goods.

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Hire Purchase:

A hire purchase agreement is a contract where by the owner of goods lets them on hire toanother person on payment of rent (EMI) to be paid in installment and upon on

agreement that when a certain number of such installment are paid the ownership in

goods will pass to hire and the hirer becomes owner. The hirer may return the goods atany time without any obligation to pay the rent.

Distinction between the sale and hire purchase:

1. A sale includes a sale proper and an agreement to sale. But a hire purchase

includes an agreement to sale and an installment.

2. In a sale ownership in goods passes immediately but incase higher purchase the

goods asses physically earlier and title passes after fulfillment of certain condition

which is the basically payment of all installment.

3. In a sale there is no option for non payment of price. The ownership in goods intransferred for all incase of higher purchase however if the installment is paid it

becomes a sale otherwise the property goes back to the seller.

4. Incase of relationship of the parties in sale process they are either seller or buyer

but incase of hire purchase bailer or bailee.

Conditions and Warranty:

Stipulation in a contract of sale with reference to any goods may be described under twoterms mainly condition and warranty.

Condition [Sec. 12 (2)]:

A condition is a stipulation which is essential for the main purpose of the contract it goes

to the root of the contract and its non-fulfillment upsets the very basis of the contract.

Fletcher defines Condition as an obligation which goes to so directly to the substance of

the contract or in other words in very much essential by nature that its non-performance

may fairly be considered by the other party as a substantial failure to perform the contractat all.

Warranty:

A warranty is a stipulation which co-lateral to the main purchase of the contract it is not

of such vital performance as condition as define in the English law it is an obligationthough likely to be perform is not so vital that a failure to perform does not affect the

substance of the contract. Incase of failure of warranty the buyer has no right to reject the

goods.

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The rights of unpaid seller:

The rights of an unpaid seller may be divided under two heads.

1. Rights against the goods

2. Rights against the buyer personally

Now the rights are going to discussed below

1. Rights against the goods:

i. When the property in goods has passed.

ii. Rights of Linen: Linen is the right to retain the possession of goods until

the buyer pays the price.

iii. When an unpaid seller made the past delivery of the goods he may

exercise the rights of Linen as reminder.

iv. Right to stoppage in transit: This right is basically an extension of

Linen. According to Sex 50 when the buyer of goods becomes insolvent

the unpaid seller can stop the transfer of possession in transit.

2. Rights against the buyer personally:

i. Sec. 55/1 when the buyer of the property in the goods wrongfully neglect

or refuses to pay for the goods the seller may sue him for the price of the

goods.

ii. Sec. 55/2 if the payment of the price is death oriented irrespective of the

date of delivery and the buyer wrongly neglect or refuses to pay the pricethe seller may sue him the price even though the property in goods has not

passed.

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Rights to Resale:

The unpaid seller resale the goods

1. Where the goods are of perishable nature.

2. Where the seller expressly reserve a right of resale incase of occurrence of default

by buyer.

3. When the seller gives the notice to buyer of his intension to resale the goods and

the buyer does not either tendered the price or given a feedback within a

reasonable time.

1. WHAT DO YOU MEAN BY CONDITION AND WARRANTY? DISCUSS

EACH OF THEM WITH EXAMPLE.

2. WRITE DOWN THE RIGHTS OF UNPAID SELLER.

3. WHAT ARE THE PRE-CONDITIONS AVAILABLE TO AN UNPAID

SELLER TO RESALE?

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Negotiable Instrument Act, 1881:

It is act of 36 of 1881.

Promissory Note [Sec. 4]:

Under Sec. 4 of Negotiable Instrument Act the Promissory Note is a instrument in writing

eventually not a bank note certain the unconditional undertaking signed by the maker to

pay certain sum of money only to or, the order of a certain person or to the bearer to theinstrument.

Essential element of Promissory Note:

1. It must be in writing.

2. It should be express promise to pay.

3. Promise should be certain unconditional.

4. The amount of the instrument must be certain.

5. The instrument must be signed by the maker.

6. The parties are also to be certain.

7. Promises must be made to pay money only.

8. The Promissory Note must be stamp according to the Indian Stamp act ofadequate value.

Bill of Exchange [Sec. 5]:

A Bill of Exchange is an instrument in writing containing an unconditional buyer signed

by the maker directive a certain person to pay a certain amount of money only, or to the

order of, a certain person or to the bearer of the instrument.

Parties to a Bill:

These are three parties to a Bill of Exchange.

1. Drawer

2. Drawee

3. Payee

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Drawer: The person who gives the order to pay or who make the bill is called as drawer.

Drawee: The person directed to pay is called as drawee.

Payee: The person to whom the payment is to be made is called as payee.

Acceptor: When the drawee accepts the bill is called as acceptor.

Characteristics of Bill of Exchange:

1. It must be in writing.

2. It must contain order to pay.

3. The order must be unconditional.

4. It requires three parties drawer, drawee and payee.

5. It must be signed by the drawer.

6. The sum payable must be certain.

7. It must contain an order to pay money only.

8. It should be stamped duly following the Indian Stamp act.

Distinction between Bill of Exchange and Promissory Note:

1. A bill has three parties drawer, drawee and payee whereas the promissory notehas two parties maker and payee.

2. A bill contains an unconditional order to pay whereas promissory note containsan unconditional promise to pay.

3. The drawer of a bill is creditor who directs the drawee to pay. The maker of a

note is basically a debtor and he undertakes to pay.

4. In a bill a drawer and the payee may be one and the same person. A note cannot

be made payable to the maker himself.

5. A bill must be accepted before execution of order. A note requires no acceptance.

6. A bill can be drawn payable to the bearer but incase of promissory note it is not

possible.

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Cheque:

It is a special type of bill of exchange. It is drawn on a specified banker with whom thedrawer has deposit money. A Cheque is always payable only on demand.

Types of Cheque:

It is two types

1. Open Cheque

2. Cross Cheque

Now types are discussing below

1. Open Cheque: When cheque is payable on the counter of the bank on which it is

drawn, it is called as open cheque.

It is two types.

i. Payable to bearer.

ii. Payable to order.

2. Cross Cheque: There are some risks involved incase of bearer cheque because it

can be exchange by wrong person. To increase the safety usually the cheques arecrossed by which it is possible to tress and recover the amount if it is paid to a

wrong person.

& CO

NOT NEGOTIABLE

& CO

NOT NEGOTIABLE

BANK OF BARODA

BANK OF INDIA

& CO

BANK OF INDIA

NOT NEGOTIABLEA/C PAYEE ONLY

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Types of crossing:

1. General Crossing: A cheque is said to be generally crossed where it bears on theface of it any of the crossing shows at tier 1[Sec. 123]. Where a cheque is crossed

generally the drawee banker shall not pay unless it is presented by a banker.

2. Special Crossing: Under Sec. 124, there is the provision for special crossing and

the specimen is show in tier 2. The effect of it the payee banker will pay the

amount of the cheque only through the bank named on the cheque.

3. Restrictive Crossing: Incase of restrictive crossing, the tier 3 crossing is done. It

is basically a direction to the collective banker that the amount collected on the

cheque is to be credited to the A/c of the payee and not directly to the payee.

1. WHAT DO YOU MEAN BY BILL OF EXCHANGE?

2. DISTINCTION BETWEEN BILL OF EXCHANGE AND CHEQUE.

3. DISCUSS THE DETAILS DIFFERENT CROSSING OF CHEQUE.

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Company Act, 1956:

Company:

It is voluntary association of persons form for some common purpose with a capital,

divisible into parts known as share and with a limited liability. It is a creation of law andperceived as artificial person with perpetual succession and common seal, though it has

no physical existence.

Characteristics:

1. Separate legal entity: A company is a legal entity quite separate from its

members. It has separate and distinct personality from those who composes it.

2. Perpetual succession and common seal: The life and the expectancy of the

company are never dependent on the inclusion and exclusion with the death of the

members. A company has always acclaimed a succession which is perpetual. Thecommon seal is the legal succession of the company as a whole.

3. Limited liability: A company usually offers limited liability which is either

limited by shares or limited by guarantee.

4. Shares transferable: Under Sec. 82 of the act, it provides that the share or

interest of any member of the company is transferable following the manner

provided the article of the company.

5. Ownership: A company being a legal person is capable of owing, enjoying and

disposing the property in its own name. The company but not the shareholder isthe real person in which all the property is vested.

6. Power to sue: The Company can sue and be sued in its own corporate name. It

may be held liable for torts in individual.

Kinds of company:

The company act recognizes two kinds of company.

1. Statuary company: These are created by a special act of legislator. Example:-Reserve Bank of India (RBI), Life Insurance Corporation of India (LIC), State

Trading Corporation etc. The provisions of the Company act applied to them if

they are not consistent with the provisions of the special acts under which they areformed.

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2. Registered company: This is basically common type of company. It is two types.

i. Company limited by share

ii. Company limited by guarantee

Now they are going to discuss below.

i. Company limited by share: Such companies demarked the liability of themembers as limited by the memorandum to the amount paid on the share.

This type of company usually a Private Company.

ii. Company limited by guarantee: These companies are not formed for thepurpose of profit but it is form for some development purpose. This type

of company may or may not have share capital. Here liability of the

member is limited by the memorandum to such an amount as the members

undertake to contribute assets of the company incase of winding up. Thistype of company usually a Public Company.

Distinction between Private and Public Company:

A private company has the right to transfer share in a restricted cost and the number of

member is limited to 50 and invitation to the public for subscription of share isprohibited.

A public company Ltd. Means it has the share capital which can be transferred andsubscription of share by public is allowed.

1. Minimum member number: Any seven or more person can make the publiccompany where in private two or more persons are required.

2. Maximum member number: There is no restriction on the maximum number ofmember in public company whereas incase of private company the number is 50.

3. Restriction on the subscription of share: A public company extends its

invitation to general public to subscribe for share and debenture which isimpossible incase of private company.

4. Transferability of share: In public company shares are freely transferablewhereas in public company it is restricted according to article of association.

5. No of directors: A public company must have at least three directors but incaseof private company there is two directors.

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6. Appointment of director: Incase of public company, the director must fine to

ROC (Register of Company Act), the Consent to act as director or sign the

memorandum and comply with qualification shares.

All these rules are not followed in the private company.

7. Quorum: For the general meeting of a public company the quorum required id

five members personally present which is two incase of private company unless

something otherwise provided in the article.

8. Managerial remuneration: In public company, a managerial remuneration

cannot exceed 11% of net profit but incase of inadequacy of profit an amount of

10,000 can be paid. There is no such restriction on private company.

9. raising of share: A public company can raise of the share with a issue of

prospectus after 3 days of the first allotment of either share or debenture. The

entire thing is to appreciated to ROC (Register of Company Act) including thenames of every person who are there in directors or proposed directors of

company

In case of private company after having minimum subscription the issue of share

can be made within the members. But strictly the proposal should not address to

the public.

Memorandum of Association:

It is the fundamental document of the company and contains condition on which the

company is incorporated. Under Sec. 2(28) this association of memorandum is defined. It

is chapter of powers of the company and also defined with relationship of the companywith the outside world.

Constituents of Memorandum:

1. Name: It described the name of the proposed company ending with the word Ltd.

incases of public company and pvt. Ltd. incases of private company.

2. Registered office: In the memorandum the company should state the full address

of their registered office.

3. Objects: A series of object is usually given in the memorandum and those

objects can be of two types.

i. The main objects of the company inclusive of the object incidental to the attainment of

main object.

ii. Any other object.

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4. Territories out-side state: It is to be defining property and specially incase of

company other than trading corporation.

5. Clause of limited liabilities: The memorandum clearly describes whether the

proposed company is limited by share or guarantee. Incase of the companylimited by share, the amount of share capital with which the company is to be

registered and the divisional shares there of should be disclosed. The number of

share by each subscriber to be mention with their name.

6. Guarantee or being wound up: The memorandum of the company limited by

guarantee must also state the contribution to the associated of the company be

wound up.

The memorandum concludes an association clause which states that the subscriber

desire to forward the company and agrees to take share in it.

Article of Association:

After the formation of memorandum of a proposed company, the article of association is

formed which is basically the rules and regulation for the internal management of affairs

of a company.

The article plays a subsidiary role over the memorandum and should not be inconsistent

or over right or control the memorandum. It may be possible by any company not to fall

any customized article. They have the liberty to adopt schedule A of Company Act as itis. The article generally provides all matter consult with internal administration which

may include capital to be used, right of respective clauses, holding of meeting, quorum

voting, and appointment of director etc. The companies with unlimited liabilities, limitedby guarantee, limited by share have to have an article to follow.

It should be printed, derived into paragraph and signed by subscriptor of memorandumwith his full signature, description and occupation in presence at least one witness who

can alter the signature.

It should be remember in faming the articles in the regulation frame there in is notbeyond the power of company itself and not violate any provision of Company Act and

other statutory act.

Prospectus [Sec. 2 (36)]:

The prospectus is the basis on which the investor from their opinion and take decisionabout the work and prospect of the company legally it is a document which includes any

notice, circular, advertisement and other document, inviting deposits for the general

public or inviting the people for subscription, for purchase of any share or debenture of

body corporate.

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Statutory requirement of prospectus:

Sec. 55: It should include the issues details, their relation with the company, date and

country, date of publication.

Sec. 60: It must have a copy of original document incorporated and sent to ROC

(Register of Company Act). The copy must be signed by the director or directors or

proposed director and having Consent of the attached experts and it should be on offerwithin ninety days from the date of submission of ROC (Register of Company Act).

Sec. 56: A prospectus must state that the matters specified in part 1 of schedule 2 and

having the reports specified there in.

Sec. 56(9): The provisions of part III of schedule 2 schedule 2 must be maintain in the

articulation of prospectus.

Share capital:

It is the capital raised by the company by issue of shares usually the start up capital is

derived into equivalent share at the initial stage.

Types of share capital:

1. Nominal, Authorized or Registered Capital: This is the nominal value of share

which companies authorize to issue by its memorandum of association.

2. Issue or Subscribed Capital: This is the capital which is actually the nominal

value of share offered to public for subscription.

3. Paid up Capital: This is the part of the issued capital which has been paid up by

the shareholders and credited as paid up capital.

4. Reserve Capital: It is the part of the uncalled capital which can be called only in

the event of winding up of the company. It can not be turned into capital without

the permission of the Court. It is available only to the creditor.

Kinds of Share Capital:

It can be two types.

1. Equity Share: This is ordinary share tradable at primary and secondary market.

2. Preference Share: This type of share have two fold preferences over equity

shares.

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i. Payment of dividend during the life time of the company.

ii. Return of capital in the event of winding up of the company.

Capital of the company [Sec. 106] may be of two kinds.

1. Preference Share Capital: It means in the case of company limited by share that

part of capital of the company which carries a preferential right as to

i. Assumed payment of preferential dividend during the continuance of the

company otherwise consist of a fixed amount before payment what so ever

to the ordinary share holder or, having a fixed rate.

ii. Preference right of repayment of capital on winding up of the company

which must be paid back preferentially over the ordinary stakeholders.

2. Equity Share Capital: Sec. 85 as defined equity share capital will not having theprivilege of preference share capital and likely to be dealt with ordinary trading.

Administration Structure:

Director:

Sec. 2 (B) for company act defines a director as any person who occupies the position of

the director by any name whatever. It is not only meaning a person in particular rather

having perpetual succession. It is the nature of the office and duties that determine thestatus. According to the explanation of Sec. 303 any person in accordance with directions

or instructions of the company or board of a company is occurs formed to act is deemed

to be a director of a company.

Appointment of Director:

1. First Director: The article of the company usually describes name the first

director by the respective name, occupation, designation, addresses and

participation clause. In the prescribe method for appointing them following

procedure laid down in ROC (Register of Company Act).

2. Appointment by the Company at General Meeting: Sec. 255 provides that the

directors must be appointed by the Company in a general meeting. Incase of apublic company or private company which is subsidiary of a public company

unless the articles otherwise provides 2/3rd of the total number of directors must be

appointed in a general meeting. These directors are liable to retire in notation. Theremaining 1/3

rd directors incase of such company on ordinary private company are

appointed following the article and usually also in general meeting.

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3. Appointment at Boards Meeting: According to Sec. 262 casual vacancies

among the director may be filled in during the board meeting subject to regulation

in the article.

4. Appointment of alternate Director: As described in Sec. 313 during the absence

of any original director for a period of not less than three month from the meetingof the board, the board of director if so authorized by the article may appoint an

alternative director to act for him.

5. Appointment of Director by Central Government: According to Sec. 408, this

provides the central government to appoint such of director in the board of a

company as per the necessity in any circumstances or to effectively safeguard the

interest of the company. Its shareholder or the public interest for a period notmore than three year or any occasion.

Board of Directors:

The directors of the company are collectively to as Board of Directors.

Power: This body is entitled to exercise all such power and to do all such acts and think.

As the company authorized to exercise and do. However according to Sec. 291 the Board

of Directors (BOD) should not done anything which is mark as the activity of general

meeting. Sec. 292 discuss the general power of Board of Directors

1. To make call on share holders in respect of the money unpaid on the share.

2. To issue the debenture.

3. To borrow money otherwise than on debenture.

4. To invest the funds of the company.

5. To make loans.

Sec. 293 places a restriction on the powers of the Board of Directors to contribute any

amount to any political party or for any political purpose to any individual or body.

General duties of Directors:

Duties of director are money paid which again be classified to may headings

1. Fiduciary duty

2. Duties of care, skill, diligence etc.

Now they are going to discuss below.

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1. Fiduciary duty: The directors must exercise their power honestly and in the

interest of the company and the shareholders thereof. They must not place

themselves into a position in which there is a conflict between their duties to thecompany and their personal interest. They must not make any secret profit out of

their position.

2. Duties of care, skill, diligence etc. The directors have to carry out their duties

with such care, skill and diligence as expected normally from person of their

knowledge and status living. He need not exhibit the performance of his duty agreat duty of skills but reasonably should try for the best. He is not bound to give

continuous attention to the affair of the company. His duty is of intermitted

nature. In respect of all duties having regard to the exigency of business may

property be left to some other official?

Every director is to use disclose the nature of the concern or interest in any

contract entered into or proposed to be entered by the company according to Sec.

299, except with the concept of Board of Directors (BOD).

A director must not enter into a contract for sale, purchase, supply of material orsubscription of any share or debenture of the company. The Board of Directors

(BOD) should forward the reports (statutory report) to every member at least 21

days before the meeting. The board should hold 1 st agreement within fifteen

months of their incorporation. The board shall call extraordinary general meetingof the company on the requisition of company members holding not less than 1/10

th

of paid up capital of the company or1/10th voting rights according to Sec. 169. The

board shall at every general meeting put up balance sheet and profit and loss A/c.A report is to be with the balance describing the affairs of the company and other

allied matters. Any interested director must not vote in the affairs of the company

to which he is interested or directly bind up. It is the duty of director present in themeeting to sign the register of the contract maintain by the company containing

the following description

i. Date of contract or arrangement

ii. Names of the parties attached to.

iii. Principle condition and terms associated with.

iv. Date of placement before the board

v. List of director voting for or against the proposal.

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Winding up of the company:

It is basically the liquidation the life of the company. An appropriation for the benefit ofthe creditors and members. There are three modes of winding up.

1. Winding up by Court

2. Voluntary winding up

3. Winding up subject to the permission of Court.

Voluntary winding up can be two types

i. Member voluntary winding up

ii. Creditor voluntary winding up

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Consumer Protection Act, 1986:

Consumer:

Sec. 2(1D) defines consumer as any person who

1. Buyer any goods for consideration which has been paid for promise for partly

paid or partly promised for any system of deferred payment and includes any user

of such good other than the person who buy such goods when such use is madewith the approval of such person but does not include a person who obtains such

goods for resale or for any commercial purpose.

2. Hires or avails any of the service the consideration of which has been paid onpromised for partly paid or partly promise or under system of deferred payment

and includes any beneficiary of such services other than the person who hires

when such services are availed with the approval of the first mention person.

Commercial Purpose:

A purpose of goods can be said to be used for commercial purpose subject to the

following conditions.

1. The goods must have been purchased for being need in some profit making

activity on a large and continuous scale.

2. These should be close and direct relation between the purchase of goods andprofit making activities.

Defect:

As per Sec. 2F defects means any fault, imperfection or short coming in the quality,

quantity, potentiality, purity or standard which is require to maintain by or under any lawfor the time being enforce or under any contract what so ever in relation to any goods.

Consumer Protection Council:

1. Central Consumer Protection Council: Sec. 4 provides that the central

government by notification establish a council to be known as central consumer

protection council constituting of the following member.

i. Minister-in-charge consumer affairs in the central government as the

chairman.

ii. Other official and non- official member having interest in the matter for

the purpose.

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Al least one meeting in a year is mandatory.

2. State Consumer Protection Council: According to Sec. 7 it is generally formedby the state government having minister-in-charge of consumer affair of the

concern state government or chairman.

These are usually other member as prescribed by the state government.

District Forum:

Sec. 9 of the act provides that in each district of state there must be one district forum. As

described in Sec. 10 (1) each district forum shall consists of a person who is or has been

or qualified to be a district judge is the president.

There are other two members who shall be persons of ability, integrity and standing and

have adequate knowledge and experience in this affair, one of whom should be a woman.

Selection Committee:

Sec. 10A provides that every appointment shall be made by the state on the

recommendation of the selection committee consisting of the following

1. Every president of state commissionaire

2. Secretary of law department of state as a member

3. Secretary-in-charge of the department dealing with the consumer affair in the

state member.

Every member of the district forum shall hold the office for a term of five years or up to

the age of sixty five whichever is earlier and shall not eligible for reappointment.

Procedure for compliant:

Sec. 12 of the act provides that a compliant in a selection to any goods sold or delivered

or any service provided or agreed to be provided mat be put to the district forum by

1. The consumer to whom such goods are sold or delivered or agreed to be sold or

delivered or such service provided or agreed to be provided.

2. Any recognized consumer association.

3. One or more consumer where there are numerous consumer having the same

interest with the permission of district forum.

4. The central or state government.

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Procedure applicable to National Commission:

Rule 14 from 1987 laid down the following procedure for hearing of complain.

A compliant containing the following particular shall be present by the compliant or hisagent to the National Commission in person or through registered post.

1. The names, description and address of company.

2. The name, description and address of the opposite party and parties.

3. The facts relating to compliant noting down the time and place of the sales.

4. The document in support of the allegations made in the compliant.

5. Relief or claim expected.

Appeal to State Commission:

Any person agreed by an order made by the district forum may prefer and appeal against

such order to the state commission with a period of thirty days from the date of order.

However the commission may entertain an appeal after the expiry of same period. If it issatisfied that there was sufficient cause under Sec. 15.

However no appeal by a person who is require paying any amount in term of an order ofthe district forum shall be entertained unless the applicant has deposited the 50% of the

amount or Rs. 25,000 whichever is lower.

Appeal to National Commission:

Under Sec. 19 provides that any aggrieved by the order made by the state commissionmay prefer an appeal against such order to national commission within thirty days from

the date of order.

Even after the expiry period in presence of sufficient cause in the eyes of nationalcommission appeal can be accepted.

However no appeal by a person who is required to pay any amount in terms of an order ofthe district forum shall be entertained unless the applicant have deposited the 50% of the

amount or Rs. 35,000 whichever is lower.

Hearing of Appeal:

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Under Sec. 19A an appeal file before the state commission or on the national commission

shall be heard expeditiously (as possible) and an endeavor shall be made to finally

dispose the appeal within a period of ninety days from the date of admission.

However no adjustment shall be ordinarily granted unless sufficient cause is shown for

the grant of the same.

An appeal to the Supreme Count can lie only against the order made by the national

commission in exercise of its original jurisdictions, where the value of goods or servicesand compensation claimed exceed one crore.

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Law relating to different factors:

Patent:

A patent is generally speaking a grant from government conferring on the grantee for a

limited period of time. The exclusive privilege of making selling and using the inventionfor which a patent has been granted and also authorizing others to do so.

Thus within cast creative work based on private initiative is granted the status of withincourt property which can be sold, hired, licensed and purchased. Thus patent protection

encourages invention by reducing the risk of pirative or copying or spread of knowledge

for the benefit of mankind.

Requirements for an invention to be Patentable:

An invention should satisfy following test to get patent.

1. Test of novelty: The subject matter should be new.

2. Test of utility: The subject matter should be useful.

3. Test of veniality: The subject matter should be capable of being marketable for

commercial purpose.

Types of patent:

These are three provisions.

1. Ordinary Patent: This type of patent is normally obtained by filling applicationunder Sec. 6 (1) of patent Act, 1970.

2. Patent of addition: Patent of addition is a patent of improvement formodification of invention for which a patent has already being made or has been

granted. Sec. 54 to 56 contains provisions regarding application ceiling of patent,

renewal fees, and terms of patent and validity period.

3. Special types; Under Sec. 54/1 application for grant of patent of addition can be

made offer obtaining a patent in respect of main invention.

Procedure for grants of Patent:

The steps involved are as follows:

1. Filling an application for the patent.

2. Examination of patent.

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3. Acceptance of the application or advertisement of such acceptance in the official

gadget.

4. Opposition to the grant of patent.

5. Grant and ceiling of patent.

Register of Patent (Sec. 67 to 72):

Ceiling of patent is done at patent office which is available in state headquarter. The

controller keeps the relevant details as follows:

1. Name, address and nationality of patentee.

2. Title of invention.

3. Date of patent and date of ceiling.

4. Renewal fees and date of renewal.

5. Change in the patentees address, if any.

6. All these information is recorded in the register of patent.

Compulsory Licensing:

At any time after the expiration of three years from the date of ceiling of a patent any

person interested in the matter may make any application to the controller eluding that thereasonable requirement of the public are not satisfied and patented invention is not

available to the public at a reasonable price and paying for the grant of a compulsorily

license to work with the patented version.

Such application may be made by any person who is already liquescency. The controller

if satisfied at the reasonable requirement of public with respect to the patent, have not

been satisfied or the patented invention license upon such terms as he may deemed fit.Then proper licensing policies will be adopted.

Trade Mark Act, 1999:

Trade Mark:

Trade mark means a mark capable of being represented graphically and which is capable

of distinguishing the goods or services of one person from those of others and may

include shape of goods their packaging and combination of color.

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A register is called a register of trade mark kept at the head office of trade mark registries

where in the entire record about a trade mark consisting of names, addresses, description

at the proprietor, notification of the assignment, description of registered user, conditions,limitations and other associated matters. This register is kept under the control of the

registrar of trade mark (Sec. 6). The branch office of the register keeps the following

documents

1. Copy of a register book of trade mark.

2. Copy and application of registration.

3. Notices of opposition to registration.

4. Application for rectification.

5. Regulations deposited under Sec. 65.

6. Index of pending application.

7. Index of registered trade marks.

8. Index of proprietor trade mark.

9. Index of registered users.

Procedure of registration of trade mark:

1. Application for search (under form T.M. 54).

2. Application for registration (Sec. 18).

3. Advertisement of application (Sec. 20).

4. Opposition to registration (Sec. 21).

5. Correction and amendment (Sec. 22).

6. Registration (Sec. 23).

Copyright:

According to under Sec. 14, copyright means exclusive right to provisions of this act todo or authorize the doing of any of the following acts in respect of a work or any

substantial part there is namely

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1. In case of literacy, dramatic or musical work:

i. To reproduce the work in any material for including the story of it inelectronic medium.

ii. To issue copies of the work to the public not being copies already incirculation.

iii. To perform the work in public or communicate it to the public.

iv. To make any cinematograph, film or sound recording in respect of the

work.

v. To make any adaptation of the work.

vi. To make any translation of the work.

2. In case of computer programme:

i. To sale, give on hire offer for sale.

ii. To do any of the act in the related clause.

3. In case of artistic work:

i. To reproduce the work in any material for even with dimensionconversation.

ii. Not to make ay cinematographic presentation or copy for any ofthe form.

iii. Not to photograph.

4. In case of sound recording:

i. Using of snipped in making other sound.

ii. Communicate it to the public.

iii. To sale or hire the same.

Registration of copyright (Sec. 44 to Sec. 58):

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All the records regarding the copyright are kept at the copyright office in a form of

register. It includes the name and title of the work, names and addresses of authors,

publishers, user of the copyright and other particular as may be prescribed.The copyright board on application of any agreed person can or orders the rectification of

record in the register either by dropping the recorder editing the record or adding a new

record.

Copyright Board:

The central government had constituted copyright board consisting of a chairman and at

least two members. Maxi number of member cannot exceed eight. A judge of the

Supreme Court or High Court or a person who is qualified to appoint at that level chairs

the board. The board has power to regulate the procedure of the operation and deemed tobe a Civil Court. As a Civil Court the board has power of summarizing witness, receiving

of indebts etc.

Insurance Regulatory Development Association (IRDA):

Duties, powers and functions of IRDA:

1. Subject to the provision of the act, the authority should have the duty to regulate,

promote and insure orderly growth of the insurance business and reinsurance

business.

2. Without prejudice to the generality of the provisions, the powers and functions of

the authority shall include.

i. Issue to the applicant a certificate of registration, renew, modify,

withdraw, subject or conceal such registration.

ii. Protection of the interest of policy holders in matter concerning

assignment of policy, nomination, insurable interest, settlement ofinsurance claim, surrender value of policy and other terms and conditions.

iii. Specified requisite qualification, code of conduct and practical training of

the intermediately and of the agent.

iv. Specifying the code of conduct for savior and loss accessor.

v. Promoting X regulating professional organizations corrected to the

insurance business.

vi. Levying fees and other charges concern with the purpose of business.

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vii. Collection of information and conducting the inspection and enquires

including audit of the insurer, intermediateries and other associated

organization.

viii. Control and regulation of the rates, advantages, specification in respect of

general insurance business specifying the fall and manner in which bookof account should be maintained.

ix. Regulative investment of funds.

x. Regulating maintenance of margin of solvency.

xi. Adjudication of disputes between insurances and intermediateries.

xii. Supervising and functioning of tariff advisory committee.

xiii. Specified percentage of the premium income of the insurer and share ofbusiness to be undertaken by the insurer.

xiv. Exercising such other powers as may be prescribed.

IT Act, 2000:

Ref: The unite nation commission on international trade law adopted the model on e-

commerce in 1996 and on Jan, 1997 this was recommended with favorable considerationtwo dissent number in response to that Government of India in acted Information

Technology Act, 2000.

Objective:

1. To grant legal recognition to the transaction carried out through electronic datainterchange.

2. To give legal recognition to digital signature.

3. To facilitate e-file and government document.

4. To facilitate electronic storage of data.

5. To set up licensing monitoring and satisfying authority to oversee pressure

regarding jurisdiction, origin, authentication, privacy and cyber crime.

6. To establish cyber regulation appellate tribunal.

7. To facilitate and give legal sanction.

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8. To e-transfer and transaction between banks and financial institutions.

9. Give legal recognition of electronically maintain book of account.

The act becomes effective on 17th

October, 2000.

Computer:

It means any electro-magnetic optical or other high speed device which can perform

logical operation and calculation as well as having the facility of storage and

communication through network using satellite, microwave and terrestrial line and other

communication media is a computer.

Digital Signature:

As defined in Sec.2 (1) (t), digital signature is the authentication of any electronic recordby a subscriber using electronic method for procedure accordingly to the provisions of

Sec.3 of the act.

Electronic Form:

With reference to information either generated, sent, received or stored in media all arecalled as electronic form according to Sec. 2 (1) (r).

Penalty and Adjudication:

Chapter 9 of the act these provision.

Sec. 43 provides penalty for damage to any computer network of introduction of virus,

unauthorized access and other type of mischief.

If any person without permission of owner or the legal user

1. Access or trying to access the machine, system or network.

2. Downloads, copies or expect data.

3. Inoculate any maneuvers within the system.

4. Damages or cause the damage of the system and network.

5. Dispute for cause disruption to the communication system or network.

6. Infringe the privacy of any local user.

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7. Tampering the proprietary software data.

8. He shall be liable to pay damages by way compensation not exceeding one croreto the affected person or organization.

Common offences:

According to chapter 11, Sec 65 to 68

1. Tapering with computer source document (Sec. 65) punishment recommended

and imprisonment up to three years or with a fine up to Rs. 2,00,000 or both.

2. Hacking the computer system (Sec. 66) punish with the imprisonment of threeyears or fine not grater than Rs. 2,00,000.

3. Publication for transmission of obsess material (Sec. 67)

i. 1st conviction is with imprisonment up to five years with a fine up to Rs.

1,00,000.

ii. 2nd conviction is with the same condition imprisonment extension up to ten

years and with a fine extension up to Rs. 2,00,000.

4. Breach of confidentiality and privacy (Sec. 72)is with imprisonment up to two

years with a fine up to Rs. 1,00,000.

5. Publication of digital signature for falsie using the sign (Sec. 73) is with

imprisonment up to two years with a fine up to Rs.1,00,000 or both.

6. Fraudulently using the digital signature (Sec. 74) is with imprisonment up to two

years with a fine up to Rs. 1,00,000.

7. Confiscation of computer, system and storage devices and media (Sec. 76) is with

imprisonment up to three years with a fine up to Rs. 5,00,000.

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