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Master of Business Administration - Semester 3 MB 0051: Legal Aspects of Business (4 credits) (Book ID: B1207) ASSIGNMENT- Set 1

1. Discuss the nature and significance of business law? 2. Define contract of indemnity. Describe the rights of the indemnifier and the indemnity holder. Answer: Contract of indemnity:- It is a contract by which one party promises to save the other party from any loss caused to him by the conduct of promisor himself or any other person. Thus there are two parties in the contract of indemnity they are_ a. Indemnifier (promisor) & b. Indemnified/ indemnity holder (promisee). Essential elements of a contract of indemnity are_ The following are the essential elements of a valid contract i. It must be a valid contract :- Since the contract of Indemnity is a contract between two parties of Indemnifier & Indemnity holder it must fulfill all the essential elements of a valid contract under the section 10 of the Indian Contract Act. ii. Parties:- The two parties in a contract of indemnity are_ a. indemnifier(promisor) b. Indemnity holder (Promisee). iii. Loss to promisee:- The indemnity holder must have suffered damage or loss before he can hold the promisor liable. Thus the happening of the loss or damage is a contingency upon which liability of the indemnifier comes into existence. iv. Lawful object:- The object in a contract of indemnity must be one which can be enforceable by law.

v. Express/Implied:- A contract of indemnity may be expressed or implied. A contract is expressed when it is in word of mouth (i.e) oral or in written. An implied contract is one which it neither in oral nor in written but it is presumed from circumstances. For eg. In a contract of Agency, there is an implied contract by the principle to indemnify the agent for any loss which is incurred by him towards the third party. vi. Exceptions(Exclusion):- A contract of indemnity does not include_ a. Cases where loss arises due to accidents such as fire/marine, or any unforeseen event. b. Any event not depending on the conduct of the person For e.g. Death The right of the Indemnity holder when sued are as follows. i. Damages:- An indemnity holder when sued is entitled to recover all damages from the indemnifier. ii. Cost:- An indemnity holder when sued is entitled to recover all cost from the indemnifier, provided he acted according to the authority of the indemnifier. iii. Sum:- All sum which he may have paid under the terms of compromise (settlements) provided it is not contrary to the orders of the indemnifier. 3. 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? 4. What remedies are available to a seller for breach of contract of sale? Answer: Remedies available to the seller: In case of breach of the contract of sale of goods where the seller is the aggrieved party he has the following remedies: Suit for price: 1) 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 for the goods according to the terms of the contract, the seller may sue him for the price of the goods. 2) Where under a contract of sale, the price is payable on a certain day irrespective of delivery and the buyer wrongfully neglects or refuses to pay such price the seller may sue him for the price although the property in the goods has not passed and the goods have not been appropriated to the contract. In short, section 55 gives right to the seller to sue the buyer for the price. Now a seller can institute suit for the price when:

(i) the property in the goods has passed to the buyer, for example, goods have been sold and delivered. (ii) Where the goods have not been delivered and the property in the goods has not passed to the buyer. The seller can sue for the price under clause (2), if the price is payable on a certain day and the buyer wrongfully neglects or refuses to pay such price. He may also exercise right of lien and stoppage in transit as discussed. Suit for damages: For non-acceptance: Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance. The measure of damages is according to the provisions of section 73 of The Indian Contract Act, depending upon the available market for the goods. In action for damages fro breach of contract to buy goods, plaintiff can only recover difference between contract price and market price and not between contract price and actual price. For repudiation of the contract Anticipatory breach: Where the buyer repudiates the contract before the date of delivery, the seller may either treat the contract as subsisting and wait till the date of delivery, or he may treat the contract as rescinded and sue for damages for the breach. This remedy is in anticipation of the breach of contract popularly known as anticipatory breach of contract. The words repudiates the contract occurring in section 60, demonstrate that the repudiation must be of the contract in its entirety and that it is only in that event, that there is anticipatory breach which can create the right to rescind the contract. Remedies available to the buyer: In case of breach of the contract of sale, where the buyer is the aggrieved party he has the following remedies: Suit for damages for non-delivery of the goods (Sec 57): Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer may sue the seller for damages for non-delivery. This remedy of the buyer is similar to that of the seller under section 56, discussed above under suit for damages by the seller. Suit for specific performance: In any suit by the buyer for breach of contract to deliver specific or ascertained goods, the Court may, if it thinks fit, on application of the buyer, by its decree, direct that the contract shall be performed specifically, without giving the seller the option of retaining the goods on payment of damages. The decree, may be

unconditional, or upon such terms and conditions as to damages, payment of the price or otherwise as the court may deem just. Specific performance is subject to the provisions of The Specific Relief Act 1877. It should be noted that this section applies only to specific or ascertained goods. The Court has discretion to order specific performance whenever damages would not be an adequate remedy.

5. Examine the rights of a consumer enshrined under the Consumer Protection Act, 1986. 6. Write short notes on the following: a. Copy right b. License Answer: The first thing you need to understand is the difference between copyright and license. A copyright safeguards the ownership of an intellectual property. If you holdcopyright to some intellectual property, you have several rights regarding that property, and you can assign (sell or give) some or all of those rights to others. ALicense, on the other hand, is a document lets someone use your intellectual property. For example, the GNU General Public License (GPL), which is often incorrectly called a copyright, is a license. Applying the GPL to code to which you own the copyright does not assign the copyright to the Free Software Foundation (FSF, the authors of the GPL). You still own the copyrightapplying the GPL to your code merely lets other people modify and redistribute your code in accordance with the GPL's terms. The GPL is too long to include in this article; you can use FTP to retrieve a copy from the canonical site,, in the /pub/gnu directory. The GPL is one of the most popular licenses in the Linux world; the MIT X and BSD licenses are also popular. The MIT license is very permissive: it says (like all software licenses of which I am aware) that no warranty is provided, that the copyright notices must be maintained, and that MIT's name (or with similar licenses, the name of the copyright holder) cannot be used in advertising or publicity without written permission. The BSD license, by contrast, requires that all advertising materials display an acknowledgment of the University of California, Berkeley and its contributors, while prohibiting using either name as an endorsement. In other respects, it is much like the MIT license. If you can't figure out how to acknowledge MIT and BSD without using them, talk to a lawyer. The MIT and BSD licenses are short enough to reprint in this articlesee the sidebars.

Let's say you wish to develop free software derived from software that is licensed under the terms of any one of these agreements. All you have to do is maintain the current copyrights and insert your copyright notice for the code you add, thereby licensing your additions under the same license as the rest of the code. However, if you wish to develop commercial software derived from free software, there are thornier issues. The MIT and BSD licenses do not require you to release your source code. You must simply follow the terms of the license, which mostly have to do with maintaining copyright notices and following limitations about advertising and promotion. If the original software is licensed under the GPL, however, you mustrelease your source code in compliance with the GPL in order for you to distribute the derived work. Licensing when Developing under Linux The biggest single concern shared by software developers new to Linux is that because Linux is subject to the GPL, any software written or compiled under Linux is also subject to the GPL. Fortunately, this concern is groundless. Plenty of commercial software is available for Linux, and it does not violate the GPL in any way. Developing and compiling your software on a Linux system does not cause your software to bederived from the GPL-licensed Linux source code. Some people assume that because they use #include to include system header files in their application, their application is suddenly considered to be derived from those header files. This is not the case; the declarations in header files are legally considered public interfaces and cannot be copyrighted. This is the same as any other development platform: the header files on every commercial platform sport copyright notices that assert ownership over the header files, but that doesn't mean your application was derived from those header files. Some people also assume that if they compile their program with the GNU C compiler (gcc), their program must be licensed under the terms of the GPL. This is not true. The GPL states that the output from the Program is covered only if its contents constitute a work based on the Program (independent of having been made by running the Program). Many commercial software vendors compile their products exclusively with GCC; some Unix systems are shipped from the vendor with GCC as the standard system compiler. They are not in violation of the GPL. You do need to be careful, however, when linking with libraries that are licensed under a slightly relaxed version of the GPL called the GNU Library General Public License, or LGPL. Linux's standard C library, and most of its other libraries, are licensed under these terms, which require you (read the license for further details) to do one of the following:

Link dynamically.

Provide object files that can be linked to static libraries. Provide source code.

The second option isn't very easy to implement, and the third option, while great for freely redistributable software, is less than ideal for more restricted commercial software vendors. The right answer for everyone, whether the software is free or not, is to link dynamically. This provides several advantages:

Your program uses less system memory when running. Allows your program to be upgraded automatically when bugs are found in the library. Creates smaller binaries.

Since dynamic linking is the default on all normal Unix platforms, using it on Linux platforms is not likely to be a hardship. Note that this restriction applies only to libraries licensed under the LGPL. Commercial libraries such as the Motif libraries are not affected by this condition, nor are libraries that are licensed under the BSD or MIT terms. Since there is rarely any reason to link statically, you can almost always ignore this issue. You need only worry about it if you want to distribute a program that is staticly linked against an LGPL-licensed library and you do not wish to distribute the source code. Master of Business Administration - Semester 3 MB 0051: Legal Aspects of Business (4 credits) (Book ID: B1207) ASSIGNMENT- Set 2 1. All agreement are not contracts but all contracts are agreements. Comment. Answer: Contract A contract is an agreement, enforceable by law, made between at least two parties by which rights are acquired by one and obligations are created on the part of another. If the party, which had agreed to do something, fails to do that, then the other party has a remedy. Example: D Airlines sells a ticket on 1 January to X for the journey from Mumbai to Bangalore on 10 January. The Airlines is under an obligation to take X from Mumbai

to Bangalore on 10 January. In case the Airlines fails to fulfil its promise, X has a remedy against it. Thus, X has a right against the Airlines to be taken from Mumbai to Bangalore on 10 January. A corresponding duty is imposed on the Airlines. As there is a breach of promise by the promisor (the Airlines), the other party to the contract (i.e., X) has a legal remedy. Agreement Sec.2(e) defines an agreement as every promise and every set of promises forming consideration for each other. In this context, the word promise is defined by Sec.2(b). In a contract there are at least two parties. One of them makes a proposal (or an offer) to the other, to do something, with a view to obtaining the assent of that other to such act. When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted becomes a promise (Sec.2(b)). Enforceability by law: The agreement must be such which is enforceable by law so as to become a contract. Thus, there are certain agreements which do not become contracts as this element of enforceability by law is absent. Essentials of a contract Sec.10 provides that all agreements are contracts, if they are made by free consent of parties, competent to contract, for a lawful consideration, and with a lawful object, and are not expressly declared by law to be void. To constitute a contract, there must be an agreement between two or more than two parties. No one can enter into a contract with himself. An agreement is composed of two elements offer or proposal by one party and acceptance thereof by the other party. Effect of absence of one or more essential elements of a valid contract: If one or more essentials of a valid contract are missing, then the contract may be either voidable, void, illegal or unenforceable. Classification of contracts Contracts may be classified as follows: Classification of contracts according to formation: A contract may be (a) Made in writing (b) By words spoken and (c) Inferred from the conduct of the parties or the circumstances of the case. Formal and informal contracts: This is another way of classifying contracts on the basis of their formation. A formal contract is one to which the law gives special effect because of the formalities or the special language used in creating it. The best example of formal contracts is negotiable instruments, such as cheques.

Informal contracts are those for which the law does not require a particular set of formalities or special language. Classification according to validity: Contracts may be classified according to their validity as (i) Valid, (ii) Voidable, (iii) Void, (iv) Unenforceable. A contract to constitute a valid contract must have all the essential elements discussed earlier. If one or more of these elements are missing, the contract is either voidable, void, illegal or unenforceable. As per Sec.2(i) A voidable contract is one which may be repudiated (i.e., avoided) at the will of one or more of the parties, but not by others.

2. What do you mean by bailment? What are the requisites of a contract of bailment? Explain. Answer: Bailment :A bailment is a delivery of goods one person to another for some purpose upon a contract that they shall be returned or otherwise disposed of according to the directions of the person delivering. The person delivering the goods is called the "Bailor". The person to whom they are delivered is called "Bailee". Example :- Mr. Jhon enters into agreement with Miss. Sony to deliver her laptop to him on this condition that it shall be returned to her after one month. In this example Mr. Jhon is a Bailee and Miss. Sony is a Bailor. Laptop is good bailed. It is a contract of Bailment.

Essentials or Features of Bailment :Following are the important essential of bailment : 1. Contract :It is the basic essential for the bailment. For the delivery of goods contract between the two parties is necessary. Contract may be oral or written, implied or expressed. 2. Moveable Property :It is the main feature of bailment that it is only for the moveable property and not for the immoveableproperty. 3. Delivery of Goods :It is also necessary that goods should be delivered by one person to another. 4. Change of Possession :Bailment contract also brings change in the possessions of the goods.

Only b without possession is not sufficient for this contract. 5. Purpose of Bailment :The object of bailment may be for the safety of goods or for hire or for the use. 6. Temporary Delivery :The delivery of the goods may not be for the permanent purpose. it is essential that delivery must be made for the temporary purpose. 7. Ownership :right of ownership remains with bailor and it does not change by the delivery of goods to other person. 8. Change In Shape :If bailed goods shape changes in the mean time even then it remains a contract of bailment. 9. Parties of the Contract :In the contract of bailment there are two parties, the bailor and the bailee. 10. Returnable :It is very important feature of the bailment. The bailee should return the goods to the bailor or disposed according the directions of the bailor 3. What do you mean by del credere agent? Answer: Sales agent who guarantees that a buyer is trustworthy and, in case the buyer defaults, compensates the principal (the seller). To cover such risks, del credere agents charge higher than normal commission rates. Italian for, of belief or of trust. 4. What do you mean by Memorandum of Association? What does it contain? Answer: Memorandum of Association contains all the details of the company regarding its powers ,objectives , external relationship and share capital. 1. Name clause: The Name(identity)of the company should be clearly mentioned. The company whether Public limited or Private limited should be mentioned. The name should not be relevent/resembling the existing company. 2.Place clause: The place(s) where the company is actually located should be mentioned. The location of Headquarter of the company and its existing branches should be clearly titled. The locations of new branches where the the company will be incorated should be mentioned.

3.Object clause: The company is restricted within the objectives of itself,prescribed in MoA. The company should mention its Main objectives, Incidental or Ancilliary objectives and Other objectives. The main objects enlists the core purposes of the company.The Ancilliary objects enlists the objects that determine the attainment of the main objects.The Other objects enlists the subsidiary objects or the objects for which the company will be incorparated in future. 4.Liability clause: The Liability of the company whether limited or unlimited *to its members , to its shareholders, to the Board of directors* should be mentioned. 5.Capital clause: The Authorised Capital of the company including the value of all Assets(acquired or to be acquired by the company in future) should be mentioned in the MoA.The types of shares into which the capital would be divided and treatment of those shares in case of Capital Appreciation or Depreciation. 6.Association clause: The company in its Association clause enlists the Names, Addresses & Descriptions of the subscibers to its shares(Equity only),Number of equity shares held by each of them and the Signatures of the respective Shareholders. It ensures the Bond between the company and its owners. 5. Name the instruments which are recognized as negotiable instruments by the Negotiable Instruments Act, 1881.

6. Write short notes on the following: a. Digital Signature b. Information Technology Act Answer: A digital signature or digital signature scheme is a mathematical scheme for demonstrating the authenticity of a digital message or document. A valid digital signature gives a recipient reason to believe that the message was created by a known sender such that they cannot deny sending it (authentication and nonrepudiation) and that the message was not altered in transit (integrity). Digital signatures are commonly used for software distribution, financial transactions, and in other cases where it is important to detect forgery or tampering. Information technology Act 2000 consisted of 94 sections segregated into 13 chapters. Four schedules form part of the Act.

In the 2008 version of the Act, there are 124 sections (excluding 5 sections that have been omitted from the earlier version) and 14 chapters. Schedule I and II have been replaced. Schedules III and IV are deleted. Essence of the Act Information Technology Act 2000 addressed the following issues: 1. Legal Recognition of Electronic Documents 2. Legal Recognition of Digital Signatures 3. Offenses and Contraventions 4. Justice Dispensation Systems for Cybercrimes ITAA 2008 (Information Technology Amendment Act 2008) as the new version of Information Technology Act 2000 is often referred has provided additional focus on Information Security. It has added several new sections on offences including Cyber Terrorism and Data Protection.