8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
1/169
MMS : Semester I
Session 1 & 2
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
2/169
Marks Distribution
Term
ExamViva
50Marks10Marks
Project&
Presentation
40Marks
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
3/169
Presentation
40 marks for each presentation 4 students in each group
Each group is suppose to make a One pager / handout about theresentation and ive out the same to the class before the
presentation starts Project will be on Re-do basis, if project / presentation is not up to
the mark, ZERO marks will be ive
Each presentation should be of 30 minutes
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
4/169
,
Topic 1
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
5/169
Agreement & Contract
Agreement Every promise and every set of promises, forming the
consideration for each other
Contract An agreement enforceable by law
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
6/169
Essentials of a valid contact u/s 10
All agreements are contracts if
they are made by the free consent of parties
competent to contract,
or a aw u cons erat on an
with a lawful object,
and are not hereby expressly declared to be void.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
7/169
Competency to Contract u/s 11
Every person is competent to contract who is of the age of majorityaccording to the law to which he is subject, and who is sound mindand is not disqualified from contracting by any law to which he issubject.
Age of majority 18 years (21 years where there is a courtcustodian)
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
8/169
Free Consent u/s 14
Consent is said to be free when it is not caused by :
coercion, as defined in section 15, or
undue influence, as defined in section 16, or
rau , as e ne n sect on , or
misrepresentation, as defined in section 18, or
mistake, subject to the provisions of section 20,21, and 22.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
9/169
Coercion
Coercion" is the committing, or threatening to commit :
any act forbidden by the Indian Penal Code, or
the unlawful detaining, or threatening to detain, any property, tothe prejudice of any person
whatever, with the intention of causing any person to enter into
an agreement.
It is immaterial whether the Indian Penal Code is or is not in force inthe place where the coercion is employed.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
10/169
Undue Influence
A contract is said to be induced by undue influence where therelations subsisting between the parties are such that :
one of the parties is in a position to dominate the will of theother
and uses that osition to obtain an unfair advanta e over theother.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
11/169
Fraud
"Fraud" means and includes any of the following acts committed bya party to a contract, or with his connivance, or by his agent, withintent to deceive another party thereto of his agent, or to induce himto enter into the contract:-
the suggestion, as a fact, of that which is not true, by one whodoes not believe it to be true ;
the active concealment of a fact by one having knowledge orbelief of the fact ;
a promise made without any intention of performing it
any other act fitted to deceive; any such act or omission as thelaw specially declares to be fraudulent.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
12/169
Misrepresentation
Misrepresentation, means and includes :
the positive assertion, in a manner not warranted by theinformation o the erson makin it, of that which is not true,though he believes it to be true
advantage to the person committing it, or any one claimingunder him, by misleading another to his prejudice or to the
re udice of an one claimin under him;
causing, however innocently, a party to an agreement to make a
the agreement.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
13/169
Illustrations
A, intending to deceive B, falsely represents that five hundred tonsof indigo are made annually at A's factory, and thereby induces B tobuy the factory. The contract is voidable at the option of B.
A fraudulently informs B that A's estate is free from incumbrance. Bthereupon buys the estate. The estate is subject to a mortgage. B mayeither avoid the contract, or may insist on its being carried out andthe mortgage debt redeemed.
B, havin discovered a vein of ore on the estate o A, ado ts meansto conceal, and does conceal, the existence of the ore from A.Through A's ignorance B is enabled to buy the estate at an under-value. The contract is voidable at the option of A.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
14/169
Void Agreements
A agrees to sell to B a specific cargo of goods supposed to be on itsway from England to Bombay. It turns out that, before the day ofthe bargain, the ship conveying the cargo had been cast away andthe goods lost. Neither party was aware of the facts. The agreements vo .
A agrees to buy from B a certain horse. It turns out that the horsewas dead at the time o the bargain, though neither party was awareof the fact. The agreement is void.
A, being entitled to an estate for the life of B, agrees to sell it to C. Bwas dead at the time of the agreement, but both parties wereignorant of the fact. The agreement is void.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
15/169
Consideration
When, at the desire of the promisor,
the promisee or any other person
has done or abstained from doing,
or oes or a sta ns rom o ng,
or promises to do or to abstain from doing,
something, such act or abstinence or promise is called aconsideration for the romise
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
16/169
Illustration
A agrees to sell his house to B for 10,000 rupees. Here Bs promise topay the sum of 10,000 rupees is the consideration for As promise tosell the house, and A's promise to sell the house is the considerationfor B's promise to pay the 10,000 rupees. These are lawfulcons era ons.
A promises to pay B 1,000 rupees at the end of six months, if C, whoowes that sum to B, fails to pay it. B promises to grant time to Caccordingly. Here the promise-of each party is the consideration for
the promise of the other party and they are lawful considerations.
A promises, for a certain sum paid to him by B, to make good to Bthe value of his ship if it is wrecked on a certain voyage. Here A's
promise is the consideration for B's payment and B's payment is theconsideration for A's promise and these are lawful considerations.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
17/169
Void Agreements
Agreement void, if considerations and objects unlawful in part. Ifany part of a single consideration for one or more objects, or any oneor any part of any one of several considerations for a single object, isunlawful, the agreement is void.
A promises to superintend, on behalf of B, a legal manufacture ofindigo, and an illegal traffic in other articles. B promises to pay to Aa salary of 10,000 rupees a year. The agreement is void, the object ofA's promise, and the consideration for B's promise, being in part
unlawful.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
18/169
Illustration
A promises, for no consideration, to give to B Rs. 1,000. This is avoid agreement.
A, for natural love and affection, romises to ive his son, B, Rs.1,000. A puts his promise to B into writing and registers it. This is acontract.
A finds B's purse and gives it to him. B promises to give A Rs. 50.This is a contract.
A supports B's infant son. B promises to pay A's expenses in sodoing. This is a contract.
A owes B Rs. 1,000, but the debt is barred by the Limitation Act. Asigns a written promise to pay B Rs. 500 on account of the debt. This
.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
19/169
Illustrations
A agrees to sell a horse worth Rs. 1,000 for Rs. 10. As consent to theagreement was freely given. The agreement is a contractnotwithstanding the inadequacy of the consideration.
A agrees to sell a horse worth Rs. 1,000 for Rs. 10. A denies that hisconsent to the agreement was freely given. The inadequacy of theconsideration is a fact which the Court should take into account inconsidering whether or not A's consent was freely given.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
20/169
Void Agreements
Agreement in Restrain of Trade
Agreement in Restrain of Marriage
Agreement in Restrain of Legal Proceedings
greement y way o ager
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
21/169
Contingent Contract
A "contingent contract" is a contract to do or not to do something, ifsome event, collateral to such contract, does or does not happen.
A contracts to a B Rs. 10,000 if B's house is burnt. This is acontingent contract.
.Contingent contracts to do or not to do anything if an uncertainfuture event happens cannot be enforced by law unless and untilthat event has ha ened.
If the event becomes impossible, such contracts become void.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
22/169
Illustration
A makes a contract with B to buy B's horse if A survives C. Thiscontract cannot be enforced by law unless and until C dies in Aslifetime.
A makes a contract with B to sell a horse to B at a specified price, ifC, to whom the horse has been offered, refuses to buy him. Thecontract cannot be enforced by law unless and until C refuses to buythe horse.
A contracts to a B a sum of mone when B marries C. C dieswithout being married to B. The contract becomes void.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
23/169
Contingent Contracts
Enforcement of contracts contingent on an event not happening.Contingent contracts to do or not to do anything if an uncertainfuture event does not happen can be enforced when the happeningof that event becomes impossible, and not before.
A agrees to pay B a sum of money if a certain ship does not return.The ship is sunk. The contract can be enforced when the ship sinks.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
24/169
Contingent Contracts
Agreement contingent on impossible events void. Contingentagreements to do or not to do anything, if an impossible eventhappens, are void, whether the impossibility of the event is knownor not to the parties to the agreement at the time when it is made.
A agrees to pay B 1,000 rupees if two straight lines should enclose aspace. The agreement is void.
A agrees to pay B 1,000 rupees if B will marry A's daughter C. C was
dead at the time of the a reement. The a reement is void.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
25/169
Performance of Contract
A, B and C jointly promise to pay D 3,000 rupees. D may compeleither A or B or C to pay him 3,000 rupees.
A, B and C ointl romise to a D the sum o 3,000 ru ees. C iscompelled to pay the whole. A is insolvent, but his assets aresufficient to pay one-half of his debts. C is entitled to receive 500rupees from A's estate, and 1,250 rupees from B.
A, B and C are under a joint promise to pay D 3,000 rupees. C is
unable to a an thin , and A is com elled to a the whole. A isentitled to receive 1,500 rupees from B.
being only sureties for C. C fails to pay. A and B are compelled topay the whole sum. They are entitled to recover it from C.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
26/169
Time of Performance
A promises to deliver goods at B's warehouse on the first January.On that day A brings the goods to B's warehouse, but after the usualhour for closing it, and they are not received. A has not performedhis promise.
Time and place for performance of promise, where time is specifiedand no application to be made. When promise is to be performed ona certain day, and the promisor has undertaken to perform itwithout application by the promisee, the promisor may perform it at
any time during the usual hours of business on such day and at thep ace a w c e prom se oug o e per orme .
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
27/169
Performance of Contract
Performance in manner or at time prescribed or sanctioned bypromisee. The performance of any promise may be made in anymanner, or at any time which the promisee prescribes or sanctions.
B owes A 2,000 rupees. A desires B to pay the amount to As accountwith C, a banker. B, who also banks with C, orders the amount to betransferred from his account to A's credit, and this is done by C.Afterwards, and before A knows of the transfer, C fails. There hasbeen a good payment by B.
A and B are mutually indebted. A and B settle an account by settingoff one item against another, and B pays A the balance found to bedue from him
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
28/169
Novation, Rescission, & Alteration of Contract
Effect of novation, rescission, and alteration of contract. If the partiesto a contract agree to substitute a new contract for it, or to rescind oralter it, the original contract need not be performed.
A owes money to B under a contract. It is agreed between A, B andC that B shall thenceforth accept C as his debtor, instead of A. Theold debt of A to B is at an end, and a new debt from C to B has beencontracted.
A owes B 10,000 ru ees. A enters into an arran ement with B, andgives B a mortgage of his (A's) estate for 5,000 rupees in place of thedebt of 10,000 rupees. This is a new contract and extinguishes theold.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
29/169
Consequences of rescission of voidable contract
When a person at whose option a contract is voidable rescinds it, theother party thereto need not perform any promise therein containedin which he is promisor. The party rescinding a voidable contractshall, if he have received any benefit thereunder from another partyo suc con rac , res ore suc ene , so ar as may e, o e person
from whom it was received
A pays B 1,000 rupees in consideration of B's promising to marry C,A's daughter. C is dead at the time of the promise. The agreement is
void, but B must repay A the 1,000 rupees.
A contracts to sing for B at a concert for 1,000 rupees, which are paidin advance. A is too ill to sing. A is not bound to make
compensation, to B for the loss o the profits which B would havemade if A had been able to sing, but must refund to B the 1,000rupees paid in advance.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
30/169
Contract for Necessities
Claim for necessaries supplied to person incapable of contracting, oron his account. If a person, incapable of entering into a contract, orany one whom he is legally bound to support, is supplied byanother, person with necessaries suited to his condition in life, theperson w o as urn s e suc supp es s en e o e re m urse
from the property of such incapable person
A supplies B, a lunatic, with necessaries suitable to his condition inlife. A is entitled to be reimbursed from B's property.
A supplies the wife and children of B, a lunatic, with necessariessuitable to their condition in life. A is entitled to be reimbursed fromB's property.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
31/169
Responsibility of finder of goods
Responsibility of finder of goods.-A person who finds goodsbelonging to another, and takes them into his custody, is subject tothe same responsibility as a bailee.
Illustration :
A and B jointly owe 100 rupees to C. A alone pays the amount to C,
and B, not knowing this fact, pays 100 rupees over again to C. C isoun to repay t e amount to B.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
32/169
Breach of Contact
Compensation for loss or damage caused by breach of contract.
en a contract as een ro en, t e party w o su ers y sucbreach is entitled to receive, from the party who has broken thecontract, compensation for any loss or damage caused to himthereb which naturall arose in the usual course o thin s fromsuch breach, or which the parties knew, when they made the
contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirectloss or damage sustained by reason of the breach.
Compensation for failure to discharge obligation resembling thosecreated by contract. When an obligation resembling those created bycontract has been incurred and has not been discharged, any person
compensation from the party in default, as if such person hadcontracted to discharge it and had broken his contract.
Ill
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
33/169
Illustration
A contracts to sell and deliver 50 Kgs of wheat to B, at a certain priceto be paid on delivery. A breaks his promise. B is entitled to receivefrom A, by way of compensation, the sum, if any, by which thecontract price falls short of the price for which B might haveo a ne gs o w ea o e qua y a e me w en e w ea
ought to have been delivered.
A hires B's ship to go to Bombay, and there take on board, on thefirst of January, a cargo which A is to provide and to bring it to
Calcutta, the freight to be paid when earned. B's ship does not go toom ay, u as oppor un es o procur ng su a e conveyancefor the cargo upon terms as advantageous as those on which he hadchartered the ship. A avails himself of those opportunities, but is
.compensation from B in respect of such trouble and expense.
Ill i
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
34/169
Illustration
A sells certain merchandise to B, warranting it to be of a particularquality, and B, in reliance upon this warranty, sells it to C with asimilar warranty. The goods prove to be not according to thewarranty, and B becomes liable to pay C a sum of money by way ofcompensa on. s en e o e re m urse s sum y .
B h f C t t
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
35/169
Breach of Contract
Compensation for breach of contract where penalty stipulated for :
When a contract has been broken, if a sum is named in thecontract as the amount to be aid in case of such breach, or if thecontract contains any other stipulation by way of penalty, the
party complaining of the breach is entitled, whether or not actualdamage or loss is proved to have been caused thereby, to receivefrom the party who has broken the contract reasonablecompensation not exceeding the amount so named or, as the
case may be, the penalty stipulated for.
A contracts with B to pay B Rs. 1,000, if he fails to pay B Rs. 500 on agiven day. A fails to pay B Rs. 500 on that day. B is entitled to
recover from A such compensation, not exceeding Rs. 1,000 as theCourt considers reasonable.
Ill t ti
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
36/169
Illustration
A, a singer, contracts with B, the manager of a theatre, to sing at histheatre for two nights every week during the next two months, andB engages to pay her 100 rupees for each nights performance. Onthe sixth night, A wilfully absents herself from the theatre, and B, inconsequence, resc n s e con rac . s en e o c a m
compensation for the damage which he has sustained through thenon-fulfilment of the contract.
Indemnit
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
37/169
Indemnity
"Contract of indemnity is a contract by which one party promisesto save the other from loss caused to him by the conduct of thepromisor himself, or by the conduct of any other person.
A contracts to indemnify B against the consequences of any
proceedings which C may take against B in respect of a certain sumof 200 rupees. This is a contract of indemnity.
Right of Indemnity Holder
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
38/169
Right of Indemnity Holder
The promisee in a contract of indemnity, acting within the scope of
his authority, is entitled to recover from the promisor :
all damages which he may be compelled to pay in any suit inrespect of any matter to which the promise to indemnify applies
all costs which he may be compelled to pay in any such suit if, in
bringing or defending it, he did not contravene the orders of thepromisor, and acted as it would have been prudent for him toact in the absence of any contract of indemnity, or i thepromisor authorized him to bring or defend the suit ;
all sums which he may have paid under the terms of anycompromise of any such suit, if the compromise was notcontrary to the orders of the promisor, and was one which itwould have been prudent for the promisee to make in thea sence o any con rac o n emn y, or e prom sorauthorized him to compromise the suit.
Contract of Guarantee
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
39/169
Contract of Guarantee
Contract of guarantee " is a contract to perform the promise, or
discharge the liability, of a third person in case of his default.
The erson who ives the uarantee is called the " suret ; theperson in respect of whose default the guarantee is given is called
the " principal debtor ", and the person to whom the guarantee isgiven is called the " creditor ". A guarantee may be either oral orwritten.
An thin done, or an romise made, for the benefit o theprincipal debtor, may be a sufficient consideration to the surety forgiving the guarantee.
Illustrations
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
40/169
Illustrations
B requests A to sell and deliver to him goods on credit. A agrees to
do so, provided C will guarantee the payment of the price of thegoods. C promises to guarantee the payment in consideration of A'spromise to deliver the goods. This is a sufficient consideration for
s prom se.
A sells and delivers goods to B. C afterwards, withoutconsideration, agrees to pay for them in default of B. The agreementis void.
Suretys Liability
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
41/169
Surety s Liability
The liability of the surety is coextensive with that of the principal
debtor, unless it is otherwise provided by the contract.
A uarantees to B the a ment of a bill of exchan e b C, theacceptor. The bill is dishonored by C. A is liable not only for the
amount of the bill but also for any interest and charges which mayhave become due on it.
Continuing guarantee
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
42/169
Continuing guarantee
A guarantee which extends to a series of transactions is called a
cont nu ng guarantee
A guarantees payment to B of the price of five sacks of flour to bee vere y o an o e pa or n a mon . e vers ve
sacks to C. C pays for them. Afterwards B delivers four sacks to C,which C does riot pay for. The guarantee given by A was not acontinuin uarantee, and accordin l he is not liable for the riceof the four sacks.
A becomes surety to C for B's conduct as a manager in Cs bank.Afterwards B and C contract, without A's consent, that Bs salaryshall be raised, and that he shall become liable for one-fourth of thelosses on overdrafts. B allows a customer to overdraw, and the bank
.
variance made without his consent, and is not liable to make goodthis loss.
Bailment
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
43/169
Bailment A " bailment " is the delivery of goods by one person to another for
some purpose, upon a con rac a ey s a , w en e purpose saccomplished, be returned or otherwise disposed of according to thedirections of the person delivering them. The person delivering thegoods is called the bailor. The person to whom they are delivered iscalled, the bailee.
A lends a horse, which he knows to be vicious, to B. He does notsc ose e ac a e orse s v c ous. e orse runs away. s
thrown and injured. A is responsible to B for damage sustained.
. ,it, and A is injured. B is responsible to A for the injury.
A bails 100 bales of cotton marked with a articular mark to B. B,
without A's consent, mixes the 100 bales with other bales of his own,bearing a different mark : A is entitled to have his 100 bales returned,and B is bound to bear all the expense incurred in the separation of the
Pledge
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
44/169
Pledge
The bailment of goods as security for payment of a debt or
performance of a promise is called " pledge ".
The bailor is in this case called the awnor , the bailee is calledthe pawnee.
the debt or the performance of the promise, but for the interest ofthe debt, and all necessary expenses incurred by him in respect of
the ossession or for the reservation of the oods led ed.
Agency
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
45/169
Agency
An "agent" is a person employed to do any act for another or to
represent another in dealings with third persons. The person forwhom such act is done, or who is so represented, is called the "principal.
No consideration is necessary to create an agency
A directs B, his solicitor, to sell his estate by auction, and to employan auctioneer for the purpose. B names C, an auctioneer, to conduct
the sale. C is not a sub-a ent, but is A's a ent for the conduct of thesale.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
46/169
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
47/169
Topic - 2
Goods
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
48/169
Goods" means every kind of moveable property
other than actionable claims and money;
and includes stock and shares, growing crops, grass, and thingsattached to or forming part of the land
which are agreed to be severed before sale or under the contractof sale
Key Terms
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
49/169
y
immoveable property does not include standing timber, growing
crops or grass
bu er means a erson who bu s or a rees to bu oods;
seller means a person who sells or agrees to sell goods
price means the money consideration for a sale of goods
delivery means voluntary transfer of possession from one personto another
specific goods means goods identified and agreed upon at thetime a contract of sale is made
Definitions outside Sale of Goods Act
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
50/169
Actionable Claim is a plain unsecured debt which can be claimed
by a person against another person and which can be enforced incivil courts according to law. An Actionable Claim is transferableand inheritable and it is deemed to be a property in the hands of theperson w o as e c a m. (TOP Act)
"Immovable property" shall include land, benefits to arise out ofan , an ngs a ac e o e ear , or permanen y as ene o
anything attached to the earth (General Clauses Act)
Sale & Agreement to Sell
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
51/169
A contract of sale of goods is a contract whereby the seller transfers
or agrees to transfer the property in goods to the buyer for a price.
A contract of sale ma be absolute or conditional.
Where under a contract of sale the property in the goods is.
where the transfer of the property in the goods is to take place at a,
contract is called an agreement to sell.
n agreemen o se ecomes a sa e w en e me e apses or econditions are fulfilled subject to which the property in the goods isto be transferred.
Illustration
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
52/169
X agrees to sell and Y agrees to buy 100 Kg of Rice for Rs. 10,000. X
pays Y Rs. 10,000 and Y delivers 100 Kg of Rice, this is a SaleContract
A agrees to buys shares of XYZ Ltd from B if the market price of
shares of XYZ Ltd falls from Rs. 10 to Rs. 5. There is agreement tosale. Upon the market price of shares of XYZ Ltd getting to Rs. 5, theagreement to sale converts to Sale
Formalities of Contract
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
53/169
A contract of sale is made by an offer to buy or sell goods for a price
and the acceptance of such offer.
The contract ma rovide for the immediate deliver of the oodsor immediate payment of the price or both, or for the delivery or
payment by installments, or that the delivery or payment or bothshall be postponed.
Subject to the provisions of any law for the time being in force, a
contract o sale ma be made in writin or b word of mouth, orpartly in writing and partly by word of mouth or may be impliedfrom the conduct of the parties.
Perishable Goods
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
54/169
Where there is a contract for the sale of specific goods, the contract
is void if the goods without the knowledge of the seller
have, at the time when the contract was made,
description in the contract.
Price
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
55/169
The price in a contract of sale may be fixed by the contract or may be
left to be fixed in a agreed manner or may be determined by thecourse of dealing between the parties.
Where the price is not determined, as above, the buyer shall pay the
seller a reasonable price.
What is a reasonable price is a question of fact dependent on thecircumstances of each particular case.
Sell at valuation
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
56/169
Where there is an agreement to sell goods on the terms that the price
is to be fixed by the valuation of a third party and such third partycannot or does not make such valuation, the agreement is therebyavoided;
If the goods or any part thereof have been delivered to, andappropriated by, the buyer, he shall pay a reasonable price there for.
Where such third party is prevented from making the valuation by
the fault of the seller or bu er, the art not in fault ma maintain asuit for damages against the party in fault.
Conditions & Warranties
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
57/169
A condition is a stipulation
essential to the main purpose of the contract,
the breach of which gives rise to a right to treat the contract asre udiated.
A warranty is a stipulation collateral to the main purpose of the
not to a right to reject the goods and treat the contract as repudiated.
case on the construction of the contract.
s pu a on may e a con on, oug ca e a warran y n e
contract.
When condition to be treated as warranty
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
58/169
Where the buyer may waive the condition; he cannot insist on its
fulfillment. (Where is accepts defective goods)
A bu s a Car rom B. The car is delivered without a en ine and Aaccepts delivery of the car. Here A has waves the condition
.(Where he claims damages instead of repudiating the contract)
.accepts delivery of the car and claims damages from B for cost ofengine. Here A treats breach of condition as breach of warranty
Express Conditions & Warranties
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
59/169
Where the buyer expressly specifies the good that he wants to buy,
it is called Express Condition / warranty
A informs B, the seller, that he intends to bu a Motor Car HondaCity Vxi model Silver Color. This is called express condition.
nd
floor of building # 2, this is express condition
Implied Conditions
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
60/169
Seller has right to sell goods
Or will have right to sell the goods at thetime when the property is to pass
Implied Condition as toTitle
Goods supplied to be same as sample
Good shall correspond with descriptionSale by Description
Goods must corres ond with sam le ualit
Buyer must be given reasonable time tocorrespond with bulk
Goods must be free from defect
Sale by Sample
Implied Conditions
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
61/169
Goods must correspond with sample qualityand description
Sale by Sample &Description
The ualit and condition of oods must besuch that a man of ordinary prudence wouldaccept them as goods of that description
Goods must be free from latent / hidden
Condition as toMerchantable Quality
Only in case of eatables / provisions / food Goods shall be fit for human consumptionCondition as toWholesomeness
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
62/169
Caveat Emptor is let buyer be aware.
uyer must satis y imse a out t e qua ityas well the suitability of the goods
Caveat Emptor - exceptions
Wh th b l b i li ti k k t th
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
63/169
Where the buyer, expressly or by implication, makes known to the
seller the particular purpose for which the goods are required, and thatthe buyer relies on the seller's skill or judgment, there is an impliedcondition that the goods shall be reasonably fit for such purpose
Where goods are bought by description from a seller who deals ingoods of that description, there is an implied condition that the goods
Where seller makes a misrepresentation and buyer relies of the
Where seller knowing conceals a defect which would not have
Where goods are sold by description/sample and the goods supplied
Transfer of property
Wh th i t t f th l f t i d d
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
64/169
Where there is a contract for the sale of unascertained goods, no
property in the goods is transferred to the buyer unless and until thegoods are ascertained.
Where there is an unconditional contract for the sale of specific
goods in a deliverable state, the property in the goods passes to thebuyer when the contract is made, and it is immaterial whether thetime of payment of the price or the time of delivery of the goods, orboth, is postponed
goods are said to be in a "delivered state" when they are in such state that thebuyer would under the contract be bound to take delivery of them
Where there is a contract for the sale of specific goods and the seller is
bound to do something to the goods for the purpose of putting them into adeliverable state, the property does not pass until such thing is done and the
.
Transfer of property
Where there is a contract for the sale of specific goods in a
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
65/169
Where there is a contract for the sale of specific goods in a
deliverable state, but the seller is bound to weigh, measure, test ordo some other act or thing with reference to the goods for thepurpose of ascertaining the price, the property does not pass untilsuc ac or ng s one an e uyer as no ce ereo .
Where there is a contract for the sale of unascertained or futuregoods by description and goods of that description and in adeliverable state are unconditionally appropriated to the contract,either by the seller with the assent of the buyer or by the buyer with
e assen o e se er, e proper y n e goo s ereupon passesto the buyer. Such assent may be expressed or implied, and may begiven either before or after the appropriation is made.
Reservation of right of disposal
Where there is a contract for the sale of specific goods or where
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
66/169
Where there is a contract for the sale of specific goods or where
goods are subsequently appropriated to the contract, the seller may,reserve the right of disposal of the goods until certain conditions arefulfilled. In such case, the property in the goods does not pass to the
uyer un e con ons mpose y e se er are u e .
Risk prima facie passes with property
The goods remain at the seller's risk until the property therein is
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
67/169
The goods remain at the seller s risk until the property therein is
transferred to the buyer, but when the property therein istransferred to the buyer, the goods are at the buyer's risk whetherdelivery has been made or not.
Exceptions : Where delivery has been delayed through the fault ofeither buyer or seller, the goods are at the risk of the party in fault asregards any loss which might not have occurred but for such fault
Seller or buyer in possession after sale
Where a person having sold goods continues or is in possession of
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
68/169
Where a person, having sold goods continues or is in possession of
the goods or of the documents of title to the goods : the delivery or transfer by that person, to any person receiving
the same in good faith and without notice of the previous sale
shall have the same effect as if the person making the delivery or
transfer were expressly authorized by the owner of the goods tomake the same.
A sells 50 kg of wheat to B, however A still hold possession of the 50
k sack o wheat and B has not taken ossession o the same. Capproaches A for 50 kg of wheat and A sells the same sack of wheatset aside for delivery to B, to C. C did not have knowledge of thecontract of sale between A & B, and takes possession of the sack ofwheat.
Here it will be treated as if A was acting on Bs behalf to sell the 50kg of wheat to C
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
69/169
-
Namo dat quod non habet
~ no one can give what he does not himself
The rule
Where goods are sold by a person who is not the owner of them and
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
70/169
Where goods are sold by a person who is not the owner of them and
who sell them without any authority or consent of the owner, the buyer acquires no better title to the goods than the seller had
unless the owner of the oods is b his conduct disallowed fromdenying the seller's authority to sell
.at auction. Here Z obtained no title to the TV because X had no titleto it.
Exception to Rule
A ent much be in ossession of ood with the
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
71/169
A ent much be in ossession of ood with the
consent of the ownerThe Agent must have sold good in ordinary course of
business and buyer must have acted in good faith
Buyer must not have knowledge of that the seller does
Sale by Mercantile Agent
not have authority
consent of co-owner
Buyer must have acted in good faith
Buyer must not have knowledge of that the seller does
not have authorit
Sale by Joint Owner
Seller must have possession of goods under a voidablecontract on grounds of coercion, undue influence,misrepresentation or fraud
Good must have to be sold before the contract isrescinded
Buyer must have acted in good faith without knowledge
a e y person in
possession undervoidable contract
Exception to Rule
Seller in possessions after sale - Seller should be in
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
72/169
Seller in possessions after sale Seller should be in
possession of goods as seller and not bailee. Buyermust buy in good faith, without knowledge ofpervious sale
be found or if found, refuses to pay lawful chargesor if goods are perishable in nature
stoppage in transit
Delivery
Delivery means the voluntary transfer of possession from one
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
73/169
y y p
person to another
Mode o deliver
By doing anything which the parties agrees shall be treated as
delivery
By doing anything which has the effect of putting the goods intothe buyers possession
Mode of Delivery
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
74/169
Constructive
Where goods are Where some symbol
Delivery
Where person in
over to the buyer control is handedover to buyer
E.g. Home keys /
,acknowledges tohold goods onbehalf of the buyer
ar eys
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
75/169
When the whole of the price has not been paid ortendered; or when a negotiable instrument has
,
same is dishonored
Right of unpaid seller
A lien on the goods for the price while he is in possession of them;
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
76/169
In case of the insolvency of the buyer a right of stopping the goodsin transit after he has arted with the ossession of them;
Right of re-sale
Where the property in goods has not passed to the buyer, theunpaid seller has a right of withholding delivery and co-extensive
has passed to the buyer.
Seller's lien
The unpaid seller of goods who is in possession of them is entitled
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
77/169
to retain possession of them until payment o the price in thefollowing cases -
where the goods have been sold without any agreement on
credit
where the goods have been sold on credit, but the term of credithas expired
where the buyer becomes insolvent
Suit for price
Where under a contract of sale the property in the goods has passed
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
78/169
to the buyer and the buyer wrongfully neglects or refuses to pay forthe goods according to the terms of the contract, the seller may suehim for the price of the goods.
Where under a contract of sale the price is payable on a day certainirrespective of delivery and the buyer wrongfully neglects or refusesto pay such price, the seller may sue him for the price although theproperty in the goods has not passed and the goods have not beenappropriated to the contract.
Where the buyer wrongfully neglects or refuses to accept and payfor the goods, the seller may sue him for damages for non-acceptance
Specific performance
In any suit for breach of contract to deliver specific or ascertained
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
79/169
goods, the court may, if it thinks fit, on the application of theplaintiff, by its decree direct that the contract shall be performedspecifically, without giving the defendant the option of retaining thegoo s on paymen o amages.
The decree may be unconditional, or upon such terms andconditions as to damages, payment of the price or otherwise, as thecourt may deem just, and the application of the plaintiff may bemade at any time before the decree.
Auction Sale
where goods are put up for sale in lots, each lot is prima facie deemed to be
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
80/169
the subject of a separate contract of sale; the sale is complete when the auctioneer announces its completion by the
fall of the hammer or in other customary manner; and, until such,
a right to bid may be reserved expressly by or on behalf of the seller and,
where such right is expressly so reserved, but not otherwise, the seller oran one erson on his behalf ma , sub ect to the rovisions hereinaftercontained, bid at the auction;
where the sale is not notified to be subject to a right to bid on behalf of theseller, it shall not be lawful for the seller to bid himself or to employ any
person o a suc sa e, or or e auc oneer now ng y o a e anyfrom the seller or any such person; and any sale contravening this rule maybe treated as fraudulent by the buyer;
if the seller makes use of pretended bidding to raise the price, the sale isvoidable at the option of the buyer.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
81/169
Constitution of India
Certain key aspects of the Indian Constitution that weshould be aware of
PreambleWE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
82/169
and to secure to all its citizens: JUSTICE, social, economic and political;
LIBERTYof thought, expression, belief, faith and worship;
EQUALITYof status and of opportunity;
and to promote among them all; FRATERNITYassuring the dignity of the individual andthe unity and integrity of the Nation;
IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November, 1949, doHEREBY
ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION.
Meaning
sovereign means supreme or independent. India is internally and externally
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
83/169
sovereign - externally free from the control of any foreign power andinternally, it has a free government which is directly elected by the peopleand makes laws that govern the people
Socialistmeans the absence of discrimination on the grounds only of caste,
color, creed, sex, religion, or language. Under social equality all are equalbefore law and has e ual status and o ortunities
Secularimplies separation of state and religion. It means the state will makelaws without regards to any religion. India, therefore does not have anofficial state religion. Every person has the right to preach, practice andpropagate any religion they choose. The government must not favor ordiscriminate against any religion. It must treat all religions equally. All
,
Meaning
Democracy means citizens elect their governments at all levels
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
84/169
(Union, State and local) by a system of universal adult franchise;popularly known as 'One man one vote'. Every citizen, who is 18years of age and above and not otherwise debarred by law, isen e o vo e. very c zen en oys s r g w ou anydiscrimination on the basis of caste, creed, color, sex, religion or
education
Republic democratic republic is an entity in which the head of state iselected, directly or indirectly, for a fixed tenure. The President of
n a s e ec e y an e ec ora co ege or a erm o ve years. ePost of the President Of India is not hereditary. Every citizen ofIndia is eligible to become the President of the country
Six Fundamental Rights
Right to equality *
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
85/169
Right to freedom *
Right against exploitation
g o ree om o re g on
Cultural and educational rights
Right to constitutional remedies
Right of Equality Equality Before Law - All citizens enjoy equality before law. All enjoy equal protection of law.
, , .
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
86/169
It means equality or equality among the unequal. It means equality among the similarly placedpeople. It does not prohibit the classification of persons into different groups.
Prohibition o discrimination - It rohibits discrimination on rounds of reli ion race caste sexor place of birth. No person can, on any of any of these grounds, be denied access to shops, hotels,public restaurants and places of public entertainment or the use of wells, tanks, bathing Ghats,
and places of public resort.
Equality of Opportunity - this right provides equality of opportunity for all citizens in mattesrelating to employment or appointment to any office the state. However, qualifications can befixed for various jobs.
Abolition of Untouchables - For eradicating the evil practice of untouchables in India, theConstitution has abolished untouchable. Practice of untouchable in any form is an offencepublishable by law. All citizens of India now enjoy equal status.
o on o es - e ons u on pro s e s a e rom con err ng any e on c zens.However honors for military or academic distinctions can be given. This right does not preventthe grant of military decorations such as Parma Vir Chakra, Mahavir Chakra. Vir Chakra and AshokChakra.
Right of Freedom Fundamental Freedoms of Citizens - All citizens have the right to: (i) Freedom of speech and
. .
( ) F d id d l (VI) F d f f i i d
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
87/169
movement (v) Freedom to reside and settle (VI) Freedom of profession, occupation, trade orbusiness.
The i ht to reedom - like the ri ht to e ualit is also not absolute. It is also sub ect toreasonable limitations. These freedoms have to be used without any violation of public order,public health, morality and security of state. Further, in respect of freedom of profession, trade,
and business, the state can prescribe professional or technical qualifications. The State can alsonationalize any industry or business.
Protection against Arbitrary conviction - No person can be punished except for a violation oflaw. No person can be subjected to a punishment greater than the one prescribed by law. For onecrime one punishment can be given. No person accused of any offence can be forced to give
.
Protection of Life and Liberty - It grants protection to the life and liberty of citizens as well asnon-citizens. It says, No person can be deprive of his life and liberty except according to the procedure
.
Protection against Arrest and Detention - The Constitution also provides protection againstarbitrary arrest and detention. Any person arrested by the police enjoys certain protections. Hehas a ri ht to be informed about the rounds of his arrest. He has the ri ht to consult his law er.He is to be produced before the nearest magistrate within a period of 24 hours of his arrest
Fundamental Duties To respect and incorporate the ideals which were the very base of our national struggle
or ree om
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
88/169
To follow the Constitution and respect its institutions, the National Flag and theNational Anthem
irrespective of linguistic, religious and regional or sectional diversities
To discontinue practices pertaining to the impairment of the dignity of women To protect and promote the sovereignty, unity and integrity of India
To protect public property and to avoid violence
To respect and preserve the rich heritage of Indian culture
To contribute towards making improvements in all spheres of individual and collective
functions to take the nation to new heights of achievement
To develop the spirit of inquiry and reform, a scientific temper and sense of humanism
To provide defense and national service when called upon to the country during hours of
To preserve the natural environment of India like the forests, lakes, rivers and wild lifeand to have a compassionate outlook towards the living creatures
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
89/169
MMS : Semester I
Session 4
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
90/169
Topic - 3
Organization Structures
Sole Trader
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
91/169
Partnership Firms
Co-operative Society
ompany
Companies formed under a special law of Parliament
Introduction to Companies Act, 1956
Com = Together + pains = bread
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
92/169
Com = Together + pains = bread
Act is applicable to whole of India
658 Section 15 Schedules
Features of a Company
Association of Persons
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
93/169
Separate Legal Entity
Limited Liability
Perpetual Succession
Separate Property
Common Seal
Transferabilit of Shares
Number of members
Illegal Associations
No company, association or partnership consisting of more than tenpersons s a e orme or t e purpose o carry ng on t e us nessof banking unless it is registered as a company under this Act
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
94/169
of banking, unless it is registered as a company under this Act
o company, assoc a on or par ners p cons s ng o more antwenty persons shall be formed for the purpose of carrying on any
other business that has for its object the acquisition of gain by thecom an , association or artnershi , or b the individual membersthereof, unless it is registered as a company under this Act
Every member of a company, association or partnership carrying onbusiness in contravention of this section shall be personally liablefor all liabilities incurred in such business.
Type of Companies
Private Companies
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
95/169
Public Companies
Government Companies
ect on ompan es ot or ro t ompan es
Further bifurcation of com anies
Companies Limited by Shares
Companies Limited by Guarantee
Company, Private Limited Company
"company" means a company formed and registered under this Act
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
96/169
"private company" means a company which has a minimum paid-u ca ital of one lakh ru ees or such hi her aid-u ca ital as mabe prescribed, and by its articles :
b) limits the number of its members to fifty;
c) Prohibits any invitation to the public to subscribe for any shares
, ,d) Prohibits any invitation or acceptance of deposits from persons
other than its members, directors or their relatives;
Public Company
"public company" means a company which
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
97/169
a) is not a private company;
-higher paid-up capital, as may be prescribed;
c) is a private company which is a subsidiary of a company which
Holding & Subsidiary Company A Company shall be deemed to be a subsidiary of another if
a) that other controls the composition of its Board of directors; or
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
98/169
a) that other controls the composition of its Board of directors; or
i. where the holders of preference shares issued before the
commencement of this Act have the same voting rights inall respects as the holders of equity shares, exercises orcontro s more t an a o t e tota voting power o succompany;
-. ,holds more than half in nominal value of its equity sharecapital; or
c e rs -men one company s a su s ary o any company
which is that others subsidiary
Procedure for Formation of Company Promoter
Selection of type of Company Private or Public
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
99/169
Selection of type of Company Private or Public
Approva o Name o t e Company Form 1A
Drafting key document emoran um o ssoc at on
Articles of Association
er ca e o ncorpora on
Drafting Prospectus or Statement in Lieu of Prospectus
Dating and Filing of Prospectus with the ROC
Flow Chart
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
100/169
Memorandum of Association
Name Clause
Registered Office Clause
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
101/169
Registered Office Clause
Objects Clause
Main Object
Objects incidental or ancillary to attainment o main object
Other object
Liabilit Clause
Limited Liability
Unlimited Liability
Capital Clause
Authorized Capital
Articles of Association
Schedule I Part A
Areas Covered in AoA
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
102/169
Areas Covered in AoA
Issue, Forfeiture
Members oar o rectors
Manager & Secretary
Common Seal
Dividend and Reserve
Accounts
Ultra Virus & Indoor Management
ultra virus is Beyond the Powers
ultra virus in relation with MoA and AoA
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
103/169
ultra virus in relation with MoA and AoA
Public documents
n oor anagement o
Investors Rights : General Meetings
Type of Meetings
Statutory Meeting Only once in the life time of the Company
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
104/169
y p y
To be held within 6 months of incorporation (not earlier than1 month from incorporation)
Annual General Meeting
Once every year
Two Conditions to be satisfied :
Once in every calendar year
Gap between two AGMs not more than 15 months
Extra-Ordinary General Meeting
Any number of times
For special reasons where matter cannot be delayed tillnext AGM
Board of Directors Board is the Governing body of the Company
Directors are members of the Company and NOT employees
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
105/169
Directors are appointed by members thru election
Directors are NOT owners of the Company
Maximum number of directorship that could be held by a person - 15Companies
Minimum number of directors :
Private Company 2 Directors
Public Company 3 Directors
Maximum number of directors : 12 Directors (both Private and Public Cos)
.
Type of Directors
Additional Director
Director in Casual Vacancy
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
106/169
Director in Casual Vacancy
Alternate Director
anag ng rector
Method of appointment
Appointment & Retirement of Director
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
107/169
Disqualification of Directors he has been found to be of unsound
he is an un-discharged insolvent or he has applied to be adjudicated asi l t d hi li ti i di
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
108/169
an insolvent and his application is pending;
he has been convicted by a Court of any offence involving moral
turpitude and sentenced in respect thereof to imprisonment for not lessto six months, and a eriod of five ears has not ela sed from the dateof expiry of the sentence;
he has not paid any call in respect of shares of the company held by
m, w et er a one or o nt y w t ot ers, an s x mont s ave e apsefrom the last day fixed for the payment of the call; or
passed by a Court in pursuance of section 203 and is in force, unless the
leave of the Court has been obtained for his appointment in pursuanceof that section.
Vacation of Office he fails to obtain within the time specified qualification shares, if any, required
he is found to be of unsound mind or he applies to be adjudicated an insolvent
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
109/169
pp jor he is adjudged an insolvent;
he is convicted by a Court of any offence involving moral turpitude and
sentenced in respect thereof to imprisonment for not less than six months;
he fails to pay any call in respect of shares of the company held by him, whetheralone or jointly with others, within six months from the last date fixed for thepayment of the call
he absents himself from three consecutive meetings of the Board of directors, orfrom all meetings of the Board for a continuous period of three months,whichever is longer, without obtaining leave of absence from the Board;
he is a partner or any private company of which he is a director, accepts a loan,or any guarantee or security for a loan, from the company in contravention ofsection 295
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
110/169
MMS : Semester I
Session 5
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
111/169
Constitution of India
Topic - 4
PreambleWE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a
and to secure to all its citizens: JUSTICE, social, economic and political;
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
112/169
J p
LIBERTYof thought, expression, belief, faith and worship;
EQUALITYof status and of opportunity;
and to promote among them all; FRATERNITYassuring the dignity of the individual andthe unity and integrity of the Nation;
IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November, 1949, doHEREBY
ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION.
Meaning
sovereign means supreme or independent. India is internally and externallysovereign - externally free from the control of any foreign power and
internally, it has a free government which is directly elected by the peopleand makes laws that govern the people
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
113/169
g p p
Socialistmeans the absence of discrimination on the grounds only of caste,
color, creed, sex, religion, or language. Under social equality all are equalbefore law and has e ual status and o ortunities
Secularimplies separation of state and religion. It means the state will makelaws without regards to any religion. India, therefore does not have an
official state religion. Every person has the right to preach, practice andpropagate any religion they choose. The government must not favor ordiscriminate against any religion. It must treat all religions equally. All
,
Meaning
Democracy means citizens elect their governments at all levels(Union, State and local) by a system of universal adult franchise;popularly known as 'One man one vote'. Every citizen, who is 18years of age and above and not otherwise debarred by law is
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
114/169
years of age and above and not otherwise debarred by law, isen e o vo e. very c zen en oys s r g w ou anydiscrimination on the basis of caste, creed, color, sex, religion or
education
Republic democratic republic is an entity in which the head of state iselected, directly or indirectly, for a fixed tenure. The President of
n a s e ec e y an e ec ora co ege or a erm o ve years. ePost of the President Of India is not hereditary. Every citizen ofIndia is eligible to become the President of the country
Six Fundamental Rights
Right to equality *
Right to freedom *
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
115/169
Right against exploitation
g o ree om o re g on
Cultural and educational rights
Right to constitutional remedies
Right of Equality Equality Before Law - All citizens enjoy equality before law. All enjoy equal protection of law.
, , .It means equality or equality among the unequal. It means equality among the similarly placedpeople. It does not prohibit the classification of persons into different groups.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
116/169
Prohibition o discrimination - It rohibits discrimination on rounds of reli ion race caste sexor place of birth. No person can, on any of any of these grounds, be denied access to shops, hotels,public restaurants and places of public entertainment or the use of wells, tanks, bathing Ghats,and places of public resort.
Equality of Opportunity - this right provides equality of opportunity for all citizens in mattesrelating to employment or appointment to any office the state. However, qualifications can befixed for various jobs.
Abolition of Untouchables - For eradicating the evil practice of untouchables in India, theConstitution has abolished untouchable. Practice of untouchable in any form is an offencepublishable by law. All citizens of India now enjoy equal status.
o on o es - e ons u on pro s e s a e rom con err ng any e on c zens.However honors for military or academic distinctions can be given. This right does not prevent
the grant of military decorations such as Parma Vir Chakra, Mahavir Chakra. Vir Chakra and AshokChakra.
Right of Freedom Fundamental Freedoms of Citizens - All citizens have the right to: (i) Freedom of speech and
. .movement (v) Freedom to reside and settle (VI) Freedom of profession, occupation, trade orbusiness.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
117/169
The i ht to reedom - like the ri ht to e ualit is also not absolute. It is also sub ect toreasonable limitations. These freedoms have to be used without any violation of public order,public health, morality and security of state. Further, in respect of freedom of profession, trade,and business, the state can prescribe professional or technical qualifications. The State can alsonationalize any industry or business.
Protection against Arbitrary conviction - No person can be punished except for a violation oflaw. No person can be subjected to a punishment greater than the one prescribed by law. For onecrime one punishment can be given. No person accused of any offence can be forced to give
.
Protection of Life and Liberty - It grants protection to the life and liberty of citizens as well asnon-citizens. It says, No person can be deprive of his life and liberty except according to the procedure
.
Protection against Arrest and Detention - The Constitution also provides protection againstarbitrary arrest and detention. Any person arrested by the police enjoys certain protections. Hehas a ri ht to be informed about the rounds of his arrest. He has the ri ht to consult his law er.He is to be produced before the nearest magistrate within a period of 24 hours of his arrest
Fundamental Duties To respect and incorporate the ideals which were the very base of our national struggle
or ree om
To follow the Constitution and respect its institutions, the National Flag and theNational Anthem
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
118/169
irrespective of linguistic, religious and regional or sectional diversities
To discontinue practices pertaining to the impairment of the dignity of women
To protect and promote the sovereignty, unity and integrity of India
To protect public property and to avoid violence
To respect and preserve the rich heritage of Indian culture
To contribute towards making improvements in all spheres of individual and collective
functions to take the nation to new heights of achievement To develop the spirit of inquiry and reform, a scientific temper and sense of humanism
To provide defense and national service when called upon to the country during hours of
To preserve the natural environment of India like the forests, lakes, rivers and wild life
and to have a compassionate outlook towards the living creatures
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
119/169
Topic - 5
Some hard facts
Results of Survey Conducted by the American Society for IndustrialSecurity ( ASIS )
an97 - an 98 : Fortune 1000 Com anies sustained losses of
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
120/169
an 97 - an 98 : Fortune 1000 Com anies sustained losses ofmore than $ 45 billion from proprietary information thefts
$900 million
, ,to incidents of industrial espionage and 550 to suspectedincidents of espionage.
The White House Office of Science & Tech. Estimates that since1990, six million jobs have been lost as a result of trade secret
Types of IPR
Copyright
Trademarks
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
121/169
Patents
Industrial Designs
Geographic Indicators
Undisclosed Information
What is IPR
Property created as a result of intellectual creative effort orcommercial reputation and goodwill.
Basic Features of IPR:
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
122/169
Basic Features of IPR:
Intangible
Territorial
Governed by Law of Land
Nature of intellectual property
IP is an intangible property
IP holder has following rights:
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
123/169
Right to prevent others
Rights encapsulated in a time frame g t to ass gn, to cense
Inheritable
Trademark
A mark used or ro osed to be used in relation to oods
for the purpose of indicating a connection in the course
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
124/169
of trade between
mark
Trademarks
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
125/169
Trade & Service Mark
Mark includes :
Device Brand
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
126/169
Ticket Name
Signature Word
Letter Numerical
Function of Trademark
distin uish the roducts of one manufacturer from
those of another indicate the source or origin of the goods
t th d ill f th f t
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
127/169
represent the goodwill of the manufacturer
guarantee of quality
create a feeling of trust
Essentials of a good trademark
Eas to ronounce
Easy to remember
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
128/169
Easy to spell and write
Should not be descriptive
Should be short
Appeal to EYE & EAR
Satisfy statutory requirements
Statutory requirement to registration
Mark must be distinctive
Adapted to distinguish
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
129/169
Must not conflict
Must not deceive
Not contrary to aw
Must not hurt religious sentiments
Registration Process
Selection of mark
Search Preliminary advice
A li i
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
130/169
Application
Examination jection
Advertisement
Accept / reject
Proceeds to re istration
Right of a trade mark owner
Ri ht to use
Right to prevent others from using similar or deceptivelysimilar marks
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
131/169
similar marks
TM
Similar Packaging
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
132/169
Infringement of TM
Falsif in the mark
Falsely applying the mark Making / possessing instrument of falsification
Falsely representing a TM as registered
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
133/169
Falsely representing a TM as registered
Selling goods falsely marked
Breach of Trademark
In unction
Damages / account of profits
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
134/169
Handing over possession of copies
mprisonment ine
Confiscation/ delivery of goods
Search & seizure of infringing goods
Service Marks
Marks Which Are Capable Of Distinguishing Services
Insurance
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
135/169
Hotels
Laundry ucat on
Transport
Research Laboratories
Copyright
Ri ht To
reproduce the work ( incl. Storing ) issue copies of the work
perform work in public
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
136/169
perform work in public
communicate the work to the publicma e trans ation
make adaptation
Scope
Co ri ht subsists in ori inal
literary, dramatic, musical & artistic works
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
137/169
cinematographic films
sound recordings
which are first published in India
Range of Copyright Protection
Product Packaging
Scenic Arrangement
Paintings
D i ( )
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
138/169
Drawings ( maps,..)
Engravings otograp s
Architectural Works
Computer Software
Research Papers Computer databases
Basic Rules
No Co ri ht in ideas, themes, rinci les
Creation must be independent
Term of the Copyright : Life + 60 years
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
139/169
Term of the Copyright : Life 60 years
Registration Of Copyright not a pre-requisite
Assignment of Copyright
Owner or prospective owner(future work) may assign copyright toany person wholly/ partially & either generally or subject to
limitations and either for the whole term of copyright or any partthereof
It must be in writing, signed by the assignor or by his duly
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
140/169
It must be in writing, signed by the assignor or by his dulyauthorized agent.
specify rights assigned & duration and territorial extent of suchassignment, Royalty payable
Patent
A ri ht bestowed b the state, and which ri ht vests in
an invention. a right to prevent others from making useof an invention
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
141/169
Reward the inventor
-
Technical advancement
Encoura e investment in infrastructure
Increase employment opportunities
Encourage Research & Development
Patent protection emphatically stated in US Constitution
Fundamental Principal
Patent Ri ht subsists in an INVENTION
INVENTION must be
New (novel)
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
142/169
( )
Useful (utility) on-o vious
What are not inventions
Frivolous Inventions Contrary To Natural Laws
Contrary To Laws Of Morality Discovery
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
143/169
Co t a y o aws O Mo a ty scove y
Method Of Agriculture
Beings
Mere Admixture Mere Arrangement
Scheme, Plan Or System Computer Program
Term of Patent
A rocess of manufacture of Five ears rom sealin orsubstance used as food / seven years from date of
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
144/169
medicine / drug patent whichever is shorter
Any other invention Fourteen years from date ofpatent
Design Act
A registered design includes - features of shape, configuration,Pattern, ornament or composition of lines or colors,
A lied to an article either in two or three dimensions or in bothforms by any industrial process which in the finished article appeal
d d d b h
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
145/169
to and are judged by the eye.
Term : Protection for 15 years ( renewable )
Geographic Indicators
Protection ive to
indications which identify goodsas originating from/manufactured in
a particular territory
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
146/169
where a given quality, reputation orot er c aracteristics o t e goo s
is essentially attributable to that region
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
147/169
MMS : Semester I
Session 6
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
148/169
Consumer Protection Act
Topic - 6
Consumer Rights
Right to be protected against the marketing of goods and serviceswhich are hazardous to life and property
Right to be informed about the quality, quantity, potency, purity,standard and price of goods or services so as to protect theconsumer against unfair trade practices
Right to be assured wherever possible access to a variety of
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
149/169
Right to be assured , wherever possible , access to a variety of
goods and services at competitive prices Right to be heard and to be assured that consumers' interests will
receive due consideration at appropriate forums
Ri ht to seek redressal a ainst unfair trade ractices and
unscrupulous exploitation of consumers Right to consumer education
Consumer
buys any goods for a consideration (paid or promised)
includes any user of such goods other than the person who buys
such goods for consideration (paid or promised), when such use ismade with the approval of such person,
does not include a person who obtains such goods for resale or for anycommercial purpose;
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
150/169
commercial purpose;
hires or avails of any services for a consideration (paid or promised)
includes any beneficiary of such services other than the person who'
does not include a person who avails of such services for any commercialpurposes;
commercial purpose does not include use by a person of goods bought and used
by him and services availed by him exclusively for the purposes of earning hislivelihood b means o sel -em lo ment
Goods
Goods" means every kind of moveable property
other than actionable claims and money;
and includes stock and shares, growing crops, grass, and thingsh d f f h l d
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
151/169
attached to or forming part of the land
which are agreed to be severed before sale or under the contractof sale
Service
Service means, service of any description which is made available topotential users and includes, but not limited to, the provision
of facilities in connection with banking, financing insurance,transport, processing, supply of electrical or other energy, board oro g ng or o , ous ng cons ruc on, en er a nmen , amusemen or
the purveying of news or other information,
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
152/169
but does not include the rendering o any service free o charge orunder a contract of personal service;
Commercial Purpose
A tractor purchased primarily to till the land of the purchaser andlet out on hire during the idle time to till the land of others does not
amount to commercial use
To determine weather the goods are purchased for commercialpurpose or not has to be decided on weather goods were to be used
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
153/169
purpose or not has to be decided on weather goods were to be used
for profit making activities on large scale or for use in smallventures in order to make a living.
Who is a consumer
Widow of a deceased policy holder is a consumer. Consumerincludes any beneficiary of service
Consumer also includes a famil member. A minor was wron ldiagnosed and the National Commission awarded compensation toboth Minor and his parents separately
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
154/169
both Minor and his parents separately
Under the act, a transaction of sale and purchase of goods shouldhave already taken place and complaint must relate either to anydefect in the oods or char in excessive rice b trader of oods
Passengers travelling by trains on payment of stipulated fare
by rail provided by railway administration is service
Who is a consumer
University in conducting examination, evaluating answer sheetsand publishing the results was not performing any service for
consideration and a candidate who appears for the examinationcannot be regarded as a Consumer Alex Rebello v/s Vice Chancellor,
anga ore n vers y
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
155/169
Consumer needs protection against
Unfair trade practice
estr ct ve tra e pract ce
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
156/169
Deficiencies
Restrictive Trade Practice
Manipulation of price or its conditions of delivery or to affect flowof supplies in market relating to goods or services in a manner as to
impose on consumer unjustified costs or restrictions
Collusive tendering; market fixing territorially among competing
suppliers, depriving consumers of free choice, fair competition.
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
157/169
pp , p g , p
Supplying only to particular distributors or on condition of sale only
within a territory.
Delaying in supplying goods/services leading to rise in price.
Requiring a consumer to buy/hire any goods or services as a pre-
condition for buying/hiring other goods or services.
Unfair Trade Practices
Ado tin unfair methods or dece tion to romote sale, use or
supply of goods or services e.g.
Misleading public about price (e.g. bargain price when it is not so).
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
158/169
Charging above MRP printed.
Mis ea ing pu ic a out anot er s goo s or services.
a se y c a m ng a sponsors p, approva or a a on.
Defects & Deficiency
De ects
Any fault, imperfection or shortcoming in the quality, quantity,potency, purity or standard which is required to be maintained
y or un er any aw or e me e ng n orce or un er any
contract express or implied or as is claimed by the trader in any
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
159/169
manner whatsoever in relation to any goods.
Deficiency
, ,
quality, nature and manner of performance which is required to
be maintained by or under any law for the time being in force or
as een un erta en to e per orme y a person in pursuance
of a contract or otherwise in relation to any service.
Case Studies
Ornaments kept in the bank locker were found lost, though thecertificate by custodian of the bank stated that all lockers operated
have been checked and found properly locked. The bank was heldguilty of negligence and therefore liable to make good the loss.
un a a ona an v s . . e y
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
160/169
Cancellation of train service by railways due to disturbanceinvolving violence so as to safeguard the passengers as well as itsown property does not constitute deficiency in service (Dainik RailYatri Sangh v/s General Manager, Northern Railway)
Non-delivery of a video cassette by a courier service companyresulting in complainant losing admission to the desired college was
e as e c ency n serv ce . was rea e as neg ec an a ureon the part of the courier to deliver the article entrusted to them for
carriage (Skypack Courier v/s Ms. Anupama Bagla)
Consumer Redressal Forum
mount ofCompensation You Court President
District ConsumerMust be qualified to be a
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
161/169
Up to Rs. 20 Lakh Disputes RedressalMust be qualified to be a
Forum.
State Consumer Must be a erson who is
s. a o s.
Crore Disputes RedressalCommission or has been a Judge of aHigh Court.
Higher than Rs. 1
Crore
National ConsumerDisputes Redressal
Commission
Must be a person who isor has been a Judge of the
Supreme Court
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
162/169
Topic 7
What is Money Laundering ?
Money laundering is the practice of disguising illegally obtainedfunds so that they seem legal. It is a crime in many jurisdictions
with varying definitions. It is a key operation of the undergroundeconomy.
Terrorism, illegal arms sales, financial crimes, smuggling andactivities of organized crime, including drug trafficking and
8/3/2019 Business Law - MMS - Consolidated - 1 Thru 6
163/169
prostitution rings, generate huge funds. When a criminal activitygenerates su stant a pro ts, t e n v ua or group nvo ve nsuch activity routes the funds to safe heavens by disguising thesources, changing the form, or moving funds to a place where they
.
Money Laundering Process
Placement Stage Layering Stage Integration Stage
Cash paid into bank
(sometimes with staffcomplicity or mixed with
Wire transfers abroad
(often using shellcompanies or funds
False loan repayments or
forged invoices used ascover for laundered
business).
legitimate business)..
Cash exported. Cash deposited in Complex web of transfers