Master of Business Administration - Semester 3 MB 0051: “Legal Aspects of Business (4 credits) ASSIGNMENT- Set 1

Q1. Discuss the nature and significance of business law? Ans:- 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. In its widest sense, „law‟ means any rule of conduct, standard or pattern, to which actions are required to conform; if not conformed, sanctions are imposed. 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 are required to conform. However, all rules of conduct do not become law in the strict sense. We resort to various kinds of rules to guide our lives. For example, our conduct may be guided by a rule such as “do not be arrogant” or “do not be disrespectful to elders or women”. These are ethical or moral rules by which our daily lives are guided. If we do not follow them, we may lose our friends and their respect, but no legal action can be taken against us. 2. Law is for the guidance or conduct of persons :– both human and artificial. The law is not made just for the sake of making it. The rules embodied in the law are made, so as to ensure that actions of the persons in the society conform to some predetermined standard or pattern. This is necessary so as to ensure continuance of the society. No doubt, if citizens are „self-enlightened‟ or „selfcontrolled‟, disputes may be minimized, but will not be eliminated. Rules are, therefore, drawn up to ensure that members of the society may live and work together in an orderly manner. Therefore, if the rules embodied in the law are broken, is used to enforce obedience, and certain consequences ensue. 3. Law is imposed :- Law is imposed on the members to bring about an order in the group, enabling it to continue and prosper. It is not something which may or may not be obeyed at the sweet will of the members of society. If you cannot impose a rule it is better not to have it. Thus, law is made obligatory on the members of the society. 4. Law is enforced by the executive :- Obviously, unless a law is enforced it ceases to be a law and those persons subject to it will regard it as dead. For example, if A steals B‟s bicycle, he may be prosecuted by a court and may be punished. Also, the court may order the restitution of the bicycle to its rightful owner i.e., B. If the government passes many laws but does not attempt to enforce them, the citizens lose their respect for government and law, and society is greatly weakened. The force used is known as sanction which the state administers to secure obedience to its laws.

cold war. like any other contract. Rules of international law. 1969. the non-observance of which may lead to social boycott.Some examples of „law‟ in the widest sense of the term.e. Therefore. must have all the essentials of a valid contract. These basic ideas underlie formulation of any rules for the members of a group. has been subjected to many amendments since its inception in 1969. A contract of indemnity may arise either by (i) an express promise or (ii) operation of law.5. Ans:-. Thus. A group is created because first. trade-sanctions. the Monopolistic and Restrictive Trade Practices Act. economic or political :. Q2. c. 6. Moral rules or etiquettes. the non-observance of which may lead to public ridicule. hot war.Secs. the duty of a principal to indemnify an agent from consequences of all lawful acts done by him as an agent. Rules are made by the members of the group. Law of the Land the non-observance of which may lead to arrest. .. b. Law is made to serve some purpose which may be social.g.. Content of law :. Describe the rights of the indemnifier and the indemnity holder. The state :. so that the group doesn‟t whither away. 7. For example. e. Two basic ideas involved in law :.A state is a territorial division. proxy war. Define contract of indemnity. the promisee).The law is a living thing and changes throughout the course of history. etc. Sec. it helps them in selfpreservation.124 and 125 provide for a contract of indemnity. law presupposes a state.124 provides that a contract 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. The contract of indemnity. „Law‟ in its widest sense may include: a.Meaning of indemnity. fines. Law responds to public opinion and changes accordingly. Law can never be static. A contract of insurance is a glaring example of such type of contracts. there is a social instinct in the people to live together and secondly.. etc. 8.The two basic ideas involved in any law are: (i) to maintain some form of social order in a group and (ii) to compel members of the group to be within that order. with people therein subject to a uniform system of law administered by some authority of the state. The indemnifier promises to make good the loss of the indemnified (i. imprisonment. amendments are made in different laws from time to time. These are two parties in a contraction of identity indemnifier and indemnified.

puts the limit at 10 in case of banking business and 20 in case of any other business. at least two persons must make an agreement. 2. Q3. As regards maximum number of partners in a partnership firm. provided in bringing or defending the suit (a) he acted under the authority of the indemnifier or (b) if he did not act in contravention of orders of the indemnifier and in such a way as a prudent man would act in his own case. Sec. his rights. a partnership firm cannot be a partner of another partnership firm. certain essential elements of partnership emerge. 1956. Partnership is the result of an .141. Similarly. What is Partnership? Briefly state special features of a partnership on the basis of which its existence can be determined under the Indian Partnership Act? Ans:-. (ii) All costs of suit which he may have to pay to such third party. 1. a partnership to arise. Partnership must be the result of an agreement between two or more persons:. or by any of them acting for all”.He is entitled to recover from the promisor: (i) All damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies. These elements must be present so as to form a partnership and are discussed below.11 of the Companies Act. he becomes entitled to the benefit of all the securities which the creditor has against the principal debtor whether he was aware of them or not. As mentioned above. Partnership is an association of two or more than two persons:There must be at least two persons who should join together to constitute a partnership.Partnership is defined as “the relationship between persons who have agreed to share profits of a business carried on by all.Example: A contracts to indemnify B against the consequences of any proceeding which C may take against B in respect of a certain sum of Rs 200. This is a contract of indemnity. are similar to the rights of a surety under Sec. Thus. if the compromise was not contrary to the orders of the indemnifier and was one which it would have been prudent for the promisee to make.An agreement presupposes a minimum number of two persons. because one person cannot become a partner with himself.. On analysis of the definition. a company (which is an artificial person) cannot be a partner.e. Rights of the indemnifier-The Act makes no mention of the rights of indemnifier. These persons must be natural persons having legal capacity to contract. in such cases. However. Rights of the indemnified (i. viz.. the indemnity holder). (iii) All sums which may have been paid under the terms of any compromise of any such suit.

A partnership is an extension of agency for which no consideration is necessary. (i) it is not constituted for a fixed period of time and .The term „business‟ includes every trade. Though the word „business‟ generally conveys the idea of numerous transactions. (1860) 8 H. Therefore. there must be an agreement to share profits arising from the business. However. 4. The following points must be kept in mind: 1. 1956 can enter into a contract of partnership. Partnership at will In accordance with Sec. 3. oral or writing) or implied and the latter may be inferred from the conduct or the course of dealings of the parties or from the circumstances of the case. 4. sharing of losses is not. a person may become a partner with another even in a particular adventure or undertaking (Sec. 268].e. Unless otherwise so agreed. 5. the arrangement did not make creditors partners with A in business [Cox v.. A person of unsound mind is not competent to enter into a partnership. But whereas the sharing of profits is an essential element of partnership. Example: A. Formation of partnerships All the essential elements of a valid contract must be present in a partnership as it is based on an agreement. He agreed to pay his creditors out of the profits of his business (run under the creditors‟ supervision) what he owed to them. The agreement must be to share profits of the business:. The Act provides that a minor may be admitted to be benefits of partnership.7. owed money to several creditors. An alien friend can enter into partnership. A company.2(b)]. Unless the person joins for the purpose of carrying on a business. it is always advisable to have the partnership agreement in writing. an alien enemy cannot. incorporated under the Companies Act. 3. The partnership agreement may be express (i. 2. a partnership is called a partnership at will where. Duration of partnership The duration of partnership may or may not be fixed. it will not amount to partnership. 6.C. sharing of profits also involves sharing of losses.The joint carrying on of a business alone is not enough. No consideration is required to create partnership.8). The agreement must be to carry on some business:. a trader.. Held. It may be constituted even for a particular adventure.L. occupation or profession [Sec. Hickman.agreement between two or more persons (who are known as partners after the partnership comes into existence) . while constituting a partnership.

Thus. Where the property in goods has not passed to the buyer. (iii) suit for interest (Sec.55).Remedies for Breach of a Contract In addition to the rights of a seller against goods provided in Secs.61) When under a contract of sale. the difference between the market price and the contract price can be recovered.000 and the price was agreed to be paid before the expiry of ten days of the contract. the seller has the following remedies against the buyer personally. Such a partnership is usually dissolved on the completion of the adventure or undertaking. Example: A sold certain goods to B for Rs 5. 1 Suit for price (Sec. the seller cannot file a suit for the price. Where the property in the goods has not passed to the buyer and the price was not payable without passing of property. Q4. there will be at least one general partner whose liability is unlimited and one or more special partners whose liability is limited.56). In a limited partnership. the seller may sue him for damages for non-acceptance. as a rule. (ii) damages for non-acceptance of goods (Sec.55) Where under a contract of sale the property in the goods has passed to the buyer and the buyer wrongfully neglects or refuses to pay the price. 3 Suit for interest (Sec. 2 Suit for damages for non-acceptance (Sec.8 a particular partnership is one which is formed for a particular adventure or a particular undertaking. the seller can sue the buyer for the price of the goods. the seller has a further right to claim interest on the amount of the price. Accordingly death or retirement of a partner does not affect the continuance of such a partnership. the seller tenders the goods to the buyer and the buyer wrongfully refuses or neglects to accept and pay the price. B fails to pay the price within the stipulated time.47 to 54. Limited partnership In this type of partnership. 1872. Particular partnership In accordance with Sec.56).56) Where the buyer wrongfully neglects or refuses to accept and pay for the goods.73 of the Indian Contract Act. A can file a suit for price against B even though the goods have not been delivered or the property in goods has not been passed to B. the seller can only sue for damages and not for the price. Therefore such a partnership has no fixed or definite date of termination. where there is an available market for the goods prima facie. the liability of certain partners is limited to the amount of capital which they have agreed to contribute to the business. The amount of damages is to be determined in accordance with the provisions laid down in Sec. What remedies are available to a seller for breach of contract of sale? Ans:-. his only remedy is to claim damages. .(ii) there is no provision made as to the determination of partnership in any other way. (i) suit for price (Sec.

Right to choose: It means right to be assured. it means right to be assured of satisfactory quality and service at a fair price. access to a variety of goods and services at competitive prices.e. telephones. so as to protect the consumer against unfair trade practices. 1986.e.58).Rights of Consumers For the first time in the history of consumer legislation in India. standard and price of goods or services. Right to be informed. (ii) right of recovery of the price. Right to seek redressal: It means the right to seek redressal against unfair practices or restrictive trade practices or unscrupulous exploitation of consumers. Right to be heard. Ans:-. i. as the case may be. wherever possible. Examine the rights of a consumer enshrined under the Consumer Protection Act. the court may award interest at such rate as it thinks fit on the amount of the price. the Consumer Protection Act.In the absence of a contract to the contrary. i. the consumers‟ interests will receive due consideration at appropriate forums. 5. The interest may be calculated from the date of the tender of the goods or from the date on which the price was payable. 3. (vii) recovery of interest (Sec. 1986 extended a statutory recognition to the rights of consumers. Q5. quantity.. the right to be protected against the marketing of goods and services which are hazardous to life and property. etc. i. railways.. In case of monopolies. It also includes right to be represented in various forums formed to consider the consumers‟ welfare.61). then he cannot claim interest. purity. It is obvious that the unpaid seller can claim interest only when he can recover the price. Right to consumer education: It means the right to acquire the knowledge and skill to be an informed consumer.59).57).60).e.. say... 4. (v) suit for breach of warranty (Sec.6 of the Act recognizes the following six rights of consumers: 1.e. Right to safety. i. Sec. the right to be informed about the quality. 2. (iii) specific performance (Sec. . 6. potency. (vi) (anticipatory breach (Sec. It also includes right to fair settlement of the genuine grievances of the consumers. (iv) suit for breach of condition. if the seller’s remedy is to claim damages only. 4 Buyer’s remedies against seller The buyer has the following rights against the seller for breach of contract: (i) damages for non-delivery (Sec.

(vi) to make any adaptation of the work.Q6. (iv) to make any cinematograph film or sound recording in respect of the work. (e) In the case of a sound recording – (i) to make any other sound recording embodying it. or offer for sale or hire. (iii) to issue copies of the work to the public not being copies already in circulation. (d)in the case of a cinematograph film – (i) to make a copy of the film. (b) in the case of computer programme – (i) to do any of the acts specified in clause (a) above. in relation to a translation or an adaptation of the work. (iv) to include the work in any cinematograph film. or offer for sale or hire. (ii) to sell or give on hire. or communicate it to the public. Copy right b.a. or offer for sale or hire any copy of the computer programme. by virtue of. (iii) to perform the work in public. (vi) to do in relation to an adaptation of the work any of the acts specified in relation to the work in (i) to (iv) above. (v) to make any adaptation of the work. any of the acts specified in relation to the work in (i) to (vi). (c) in the case of an artistic work – (i) to reproduce the work in any material form including depiction in three dimensions of a two – dimensional work or in two dimensions of a three – dimensional work. (ii) to sell or give on hire. License Ans:-. (ii) to sell or give on hire.14) The term „copyright‟ means the exclusive right. (ii) to issue copies of thework to the public not being copies already in circulation. (vii) to do. Write short notes on the following: a. regardless of whether such copy has been sold or given on hire on earlier occasions. and subject to the provision of the Act: (a) in the case of literary. dramatic or musical work. regardless of whether such copy has been sold or given on hire on earlier occasions. not being a computer programme – (i) to reproduce the work in any material form including the storing of it in any medium by electronic means. Meaning of copyright (Sec. including a photograph of any image forming part thereof. (v) to make any translation of the work. (iii) to communicate the film to the public. any copy of the sound recording regardless of whether such . (ii) to communicate the work to the public. any copy of the film.

30 provides that the owner of the copyright in any existing work or the prospective owner of the copyright in any future work may grant any interest in the right by licence in writing signed by him or by his duly authorised agent. the applicant shall publish his proposal in one issue of a daily newspaper in the English language having circulation in the major part of the country and where the application is for the publication of a translation in . or (b) has refused to allow communication to the public by broadcast of such work or in the case of a sound recording the work recorded in such sound recording. the licence shall take effect only when the work comes into existence. Compulsory licence in works withheld from public Sec.copy has been sold or given on hire on earlier occasions. on terms which the complainant considers reasonable. Before making an application. b. any person may apply to the Copyright Board for a licence to publish such work or translation thereof in any language. Compulsory Licence in unpublished Indian works (Sec. (iii) to communicate the sound recording to the public. But in the case of a licence relating to copyright in any future work. the author is dead or unknown or cannot be traced or the owner of the copyright in such work cannot be found.31 provides that at any time during the term of copyright in any Indian work which has been published or performed in public a complaint may be made to the Copyright Board that the owner of copyright in the work (a) has refused to re-publish or allow the republication of the work or has refused to allow the performance in public of the work and by reason of such refusal the work is withheld from the public.31A) Where in the case of an Indian work. License Licence by owners of copyright Sec.

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