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MB0051 Spring Drive Assignment 2012

MB0051 Spring Drive Assignment 2012

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Master of Business Administration (Semester 3)
MB00051 Legal Aspects of Business
ASSIGNMENT- Set 1 (Marks 60)
Note: Each Question carries 10 marks. Answer all the questions.
Q1. “All agreements are not contracts, but all contracts are agreements”.Comment.
Ans: - A contract is a legally binding agreement or relationship that exists between two ormore parties to do or abstain from performing certain acts. A contract can also be definedas a legally binding exchange of promises between two or more parties that the law willenforce. For a contract to be formed an offer made must backed acceptance of whichthere must be consideration. Both parties involved must intend to create legal relation ona lawful matter which must be entered into freely and should be possible to perform.An agreement is a form of cross reference between different parties, which may bewritten, oral and lies upon the honor of the parties for its fulfillment rather than being inany way enforceable.All contracts are agreement because there must be mutual understanding between twoparties for a contract to be formed. All parties should agree and adhere to the terms andconditions of an offer. The following cases illustrate ways in which all contracts are agreements;In the case of invitation to treat, where an invitation to treat is merely an invitation tomake an offer. When a firm's offer is accepted it results into a contract provided otherelements of contracts are accepted.Considering person A buying a radio on hire purchase from person B who deals withelectronics and its appliances. Both parties must come to an agreement on payment of monthly installment within specified period of time. Such an agreement result to specialtycontract which a contract under seal.All contracts are agreement until avoided for example, avoidable contract where one of the parties can withdraw from it if s/he wishes. This occurs due to minor agreement andmisrepresentation or undue influence. Considering a case where person A make contractwith person B but during the contract period B realizes that he was engaged to perform anagreement under undue influence.
Definition of contract 
According to section 2(h) of the Indian Contract Act: " An agreement enforceable by law isa contract." A contract therefore, is an agreement the object of which is to create a legalobligation i.e., a duty enforceable by law.From the above definition, we find that a contract essentially consists of two elements: (1)An agreement and (2) Legal obligation i.e., a duty enforceable by law. We shall nowexamine these elements detail.
1. Agreement.
As per section 2 (e): “Every promise and every set of promises, formingthe consideration for each other, is an agreement." Thus it is clear from this definition thata 'promise' is an agreement. What is a 'promise'? The answer to this question is contained
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in section 2 (b) which defines the term." When the person to whom the proposal is madesignifies his assent thereto the proposal is said to be accepted. A proposal, whenaccepted, becomes a promise."An agreement, therefore, comes into existence only when one party makes a proposal oroffer to the other party and that other party signifies his assent (i.e., gives his acceptance)thereto. In short, an agreement is the sum total of 'offer' and 'acceptance'.On analyzing the above definition the following characteristics of an agreement becomeevident:(a) At least two persons. There must be two or more persons to make an agreementbecause one person cannot inter into an agreement with himself.(b) Consensus-ad-idem. Both the parties to an agreement must agree about the subjectmatter of the agreement in the same sense and at the same time.
2. Legal obligation.
As stated above, an agreement to become a contract must give riseto a legal obligation i.e., a duty enforceable by law. If an agreement is incapable of creating a duty enforceable by law. It is not a contract. Thus an agreement is a wider termthan a contract. “All contracts are agreements but all agreements are not contracts,"Agreements of moral, religious or social nature e.g., a promise to lunch together at afriend's house or to take a walk together are not contracts because they are not likely tocreate a duty enforceable by law for the simple reason that the parties never intendedthat they should be attended by legal consequences.
What are the essentials of a contract of sale under the sale of Goods Act, 1930?
A contract of sale as ‘a contract whereby the seller transfers or agrees to transfer theproperty in goods to the buyer for a price’. From the definition, the following essentials of 
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the contract emerge:1.
There must be at least two parties
A sale has to be bilateral because the propertyin goods has to pass from one person to another. The seller and the buyer must bedifferent persons. A person cannot buy his own goods. However, a part-owner may sell toanother part-owner.2.
Transfer or agreement to transfer the ownership of goods
In a contract of sale,it is the ownership that is transferred (in the case of sale), or agreed to be transferred (inthe case of agreement to sell), as against transfer of mere possession or limited interest(as in the case of bailment or pledge).3.
The subject matter of the contract must necessarily be goods.
 The sale of immovable property is not covered under Sale of Goods Act. The expression ‘goods’ isdefined in Sec.2(7).4.
Price is the consideration of the contract of sale
 The consideration in a contractof sale has necessarily to be ‘money’, (i.e., the legal tender money). If for instance, goodsare offered as the consideration for goods, it will not amount to sale. It will be called a‘barter’.
Payment by installments:
In the case of sale of goods, the parties may agree that theprice will be payable by installments. Also, the terms may stipulate some amount by wayof down payment and the balance by installments.
Sale and agreement to sell 
Where under a contract of sale, the property (ownership) in the goods is transferred fromthe seller to the buyer; it is called a sale [Sec. 4(3)]. Thus, sale takes place when there is atransfer of ownership in goods from the seller to the buyer. A sale is an executed contract.
Q3. Describe the main features of Consumer Protection Act 1986.
Ans:- Consumer is at the core of business world in the present day economy. Quantity and
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