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business law

business law

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Published by Rabna Akbar
questions and answers of business law
questions and answers of business law

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Categories:Types, Business/Law
Published by: Rabna Akbar on Dec 16, 2012
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Master of Business Administration - Semester 3MB 0051: “Legal Aspects of Business1.Discuss the nature and significance of business law?
The term „law is used in many senses: you may speak of the law
of physics, mathematics, science, or the laws of the football or health. Initswidest sense, „law means any rule of conduct, standard or pattern, to
which actions are required to conform; if not conformed, sanctions areimposed.When we speak of the law of a State, we use the term „law in a
special and strict sense
Significance of law
1.
Law is a body of rules:-
These rules prescribe the conduct,standard or pattern to which actions of the persons in the state arerequired to conform. However, all rules of conduct donot becomelaw in the strict sense. We resort to various kinds of rules to guideour lives. For example, our conduct may be guided by a rule such as“do not bearrogant” or “do not be disrespectful to elders orwomen”. These are ethical or moral rules by which our daily livesare guided. If we do not follow them, we maylose our friends andtheir respect, but no legal action can be taken against us.
2.
Law is for the guidance or conduct of persons :–
both humanand artificial. The law is not made just for the sake of making it.Therules embodied in the law are made, so as to ensure that actions of thepersons in the society conform to some predetermined standardor pattern. Thisis necessary so as to ensure continuance of thesociety. No doubt, if citizensare „self-enlightened
or „self-controlled
, disputes may be minimized, but will not be eliminated.Rules are, therefore,drawn up to ensure that members of thesociety may live and work together in anorderly manner. Therefore,if the rules embodied in the law are broken, is used toenforceobedience, and certain consequences ensue.
3.
Law is imposed :-
Law is imposed on the members to bring aboutan order in the group, enablingit to continue and prosper. It is notsomething which may or may not be obeyedat the sweet will of themembers of society. If you cannot impose a rule it is better not tohave it. Thus, law is made obligatory on the members of the society.
4.
 
Law is enforced by the executive :-
Obviously, unless a law isenforced it ceases to be a law and those personssubject to it willregard it as dead.
For example
, if A steals Bs bicycle, he may be
 
prosecuted by a court and may be punished. Also, the court mayorder therestitution of the bicycle to its rightful owner i.e., B. If thegovernment passesmany laws but does not attempt to enforcethem, the citizens lose their respect for government and law, andsociety is greatly weakened. The force used is knownas sanctionwhich the state administers to secure obedience to its laws. 
5.
The state :-
 A state is a territorial division, with people thereinsubject to a uniform system of law administered by some authorityof the state. Thus, law presupposes a state.
6.
Content of law :-
 
The law is a living thing and changes throughoutthe course of history. Lawresponds to public opinion and changesaccordingly. Law can never bestatic. Therefore, amendments aremade in different laws from time to time.For example, theMonopolistic and Restrictive Trade Practices Act, 1969, hasbeensubjected to many amendments since its inception in 1969.
7.
Two basic ideas involved in law :-
The two basic ideas involvedin any law are: (i) to maintain some form of socialorder in a groupand (ii) to compel members of the group to be within thatorder. These basic ideas underlie formulation of any rules for the membersof agroup. A group is created because first, there is a social instinctin the people tolive together and secondly, it helps them in self-preservation. Rules are made bythe members of the group, so thatthe group doesnt whither away.
8.
Law is made to serve some purpose which may besocial,economic or political :-
Some examples of „law in the widest
sense of the term. „Law in its widest sense may include:
a.
Moral rules or etiquettes, the non-observance of which may lead topublicridicule,
b.
Law of the Land the non-observance of which may lead toarrest,imprisonment, fines, etc.,
c.
Rules of international law, the non-observance of which may lead tosocialboycott, trade-sanctions, cold war, hot war, proxy war, etc
Q2. Define contract of indemnity. Describe the rights of theindemnifier and the indemnityholder.Ans:-- Meaning of indemnity-
Secs.124 and 125 provide for a contract of indemnity. Sec.124 provides that acontract of indemnity is a contract whereby one party promises to save the other from loss caused to him(the promisee) by the conduct of the promisor himself or 
 
by the conduct of any other person. A contract of insurance is a glaring exampleof such type of contracts.A contract of indemnity may arise either by(i) an express promise or (ii) operation of law, e.g., the duty of a principal to indemnify an agent fromconsequences of all lawful acts done by him as an agent.The contract of indemnity, like any other contract, must have all the essentials of a valid contract. These are two parties in a contraction of identity indemnifier andindemnified. The indemnifier promises to make good the loss of the indemnified(i.e., the promisee)
Example:
 A contracts to indemnify B against the consequences of anyproceeding which Cmay take against B in respect of a certain sum of Rs200. This is a contract of indemnity.
Rights of the indemnified (i.e., the indemnity holder)-
He is entitled to recover from the promisor:
(i)
 All damages which he may be compelled to pay in any suit in respectof any matter to which the promise to indemnify applies;
(ii)
(ii) All costs of suit which he may have to pay to such third party,provided in bringing or defending the suit (a) he acted under theauthority of the indemnifier or (b) if he did not act in contraventionof orders of the indemnifier and in such a way as a prudent man wouldact in his own case;
(iii)
All sums which may have been paid under the terms of anycompromise of any such suit, if the compromise was not contrary tothe orders of the indemnifier and was one which it would have beenprudent for the promisee to make.
Rights of the indemnifier-
The Act makes no mention of the rights of indemnifier. However, his rights, insuch cases, are similar to the rights of a surety under Sec.141, viz., he becomesentitled to the benefit of all thesecurities which the creditor has against theprincipal debtor whether hewas aware of them or not.
Q3. What is Partnership? Briefly state special features of apartnership on the basis of which its existence can bedetermined under the Indian Partnership Act?
Partnership is defined as “the relationship between persons who have agreed toshare profits of a business carried on by all, or by any of them acting for all”. Onanalysis of the definition, certain essential elements of partnership emerge.These elements must be present so as to form a partnership and are discussedbelow.
1. Partnership is an association of two or more than twopersons:-
There must be at least two persons who should join together to constitute apartnership, because one person cannot become a partner with himself. These

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