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

For example.The law is a living thing and changes throughout the course of history. A group is created because first. Thus. 6. These basic ideas underlie formulation of any rules for the members of a group. 5. law is made obligatory on the members of the society. the Monopolistic and Restrictive Trade Practices Act. If you cannot impose a rule it is better not to have it. with people therein subject to a uniform system of law administered by some authority of the state. law presupposes a state. Content of law :. . if A steals B‟s bicycle. the court may order the restitution of the bicycle to its rightful owner i. there is a social instinct in the people to live together and secondly. 7. unless a law is enforced it ceases to be a law and those persons subject to it will regard it as dead..A state is a territorial division. Two basic ideas involved in law :. Also. Law is enforced by the executive :. Law can never be static. For example.Obviously.of the members of society. The state :.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. has been subjected to many amendments since its inception in 1969. The force used is known as sanction which the state administers to secure obedience to its laws. Law responds to public opinion and changes accordingly. 4. the citizens lose their respect for government and law. 1969. Rules are made by the members of the group. If the government passes many laws but does not attempt to enforce them. Therefore. and society is greatly weakened. B. it helps them in self-preservation. Thus. so that the group doesn‟t whither away. amendments are made in different laws from time to time. he may be prosecuted by a court and may be punished.e.

proxy war. . the non-observance of which may lead to social boycott.Some examples of „law‟ in the widest sense of the term. „Law‟ in its widest sense may include: (i) Moral rules or etiquettes. fines. etc.. Law is made to serve some purpose which may be social. cold war. etc. Law of the Land the non-observance of which may lead to arrest. economic or political :. imprisonment. hot war. trade-sanctions.8. the non-observance of which may lead to public ridicule. (ii) (iii) Rules of international law.

124 and 125 provide for a contract of indemnity. Ans:-Meaning of indemnity Secs.. The contract of indemnity.Q2. like any other contract. (ii) All costs of suit which he may have to pay to such third party.e. Rights of the indemnified (i. 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.. e. if . must have all the essentials of a valid contract. This is a contract of indemnity. These are two parties in a contraction of identity indemnifier and indemnified. Describe the rights of the indemnifier and the indemnity holder. Sec. 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 respect of any matter to which the promise to indemnify applies. A contract of insurance is a glaring example of such type of contracts. The indemnifier promises to make good the loss of the indemnified (i.g. (iii) All sums which may have been paid under the terms of any compromise of any such suit. the duty of a principal to indemnify an agent from consequences of all lawful acts done by him as an agent. the promisee). Define contract of indemnity. A contract of indemnity may arise either by (i) an express promise or (ii) operation of law.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. 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.e..

viz.141. his rights. 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.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. in such cases.. Rights of the indemnifier The Act makes no mention of the rights of indemnifier. . are similar to the rights of a surety under Sec. However.

it will not amount to partnership.Partnership is defined as “the relationship between persons who have agreed to share profits of a business carried on by all. certain essential elements of partnership emerge. 1956. As regards maximum number of partners in a partnership firm. at least two persons must make an agreement. As mentioned above. a partnership to arise. Though the word „business‟ generally conveys the idea of numerous transactions. The agreement must be to carry on some business:. a person may become a partner with another even in a particular adventure or undertaking (Sec. Similarly. Sec. 1. a partnership firm cannot be a partner of another partnership firm. These elements must be present so as to form a partnership and are discussed below. puts the limit at 10 in case of banking business and 20 in case of any other business.Q3. because one person cannot become a partner with himself. 2. . occupation or profession [Sec.11 of the Companies Act. 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:-.2(b)].The term „business‟ includes every trade. On analysis of the definition.An agreement presupposes a minimum number of two persons. Partnership is the result of an agreement between two or more persons (who are known as partners after the partnership comes into existence) . These persons must be natural persons having legal capacity to contract. 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. or by any of them acting for all”.8). Unless the person joins for the purpose of carrying on a business. a company (which is an artificial person) cannot be a partner. Partnership must be the result of an agreement between two or more persons:. Thus. 3.

6. Therefore. 1956 can enter into a contract of partnership. it is always advisable to have the partnership agreement in writing. Hickman. (1860) 8 H. The agreement must be to share profits of the business:.The joint carrying on of a business alone is not enough. The Act provides that a minor may be admitted to be benefits of partnership. A person of unsound mind is not competent to enter into a partnership. The partnership agreement may be express (i. 2. an alien enemy cannot. while constituting a partnership.4. Held. . 3. 268]. A partnership is an extension of agency for which no consideration is necessary. 5. owed money to several creditors. sharing of profits also involves sharing of losses. No consideration is required to create partnership.L.e. Duration of partnership The duration of partnership may or may not be fixed. the arrangement did not make creditors partners with A in business [Cox v. a trader.. The following points must be kept in mind: 1. However. An alien friend can enter into partnership. It may be constituted even for a particular adventure. 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. there must be an agreement to share profits arising from the business. A company. But whereas the sharing of profits is an essential element of partnership. 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. sharing of losses is not. Unless otherwise so agreed. incorporated under the Companies Act..C. 4. Example: A.

Partnership at will In accordance with Sec. Particular partnership In accordance with Sec. . the liability of certain partners is limited to the amount of capital which they have agreed to contribute to the business. (i) it is not constituted for a fixed period of time and (ii) there is no provision made as to the determination of partnership in any other way. Accordingly death or retirement of a partner does not affect the continuance of such a partnership. there will be at least one general partner whose liability is unlimited and one or more special partners whose liability is limited. Limited partnership In this type of partnership. In a limited partnership.7. Therefore such a partnership has no fixed or definite date of termination.8 a particular partnership is one which is formed for a particular adventure or a particular undertaking. a partnership is called a partnership at will where. Such a partnership is usually dissolved on the completion of the adventure or undertaking.

Remedies for Breach of a Contract In addition to the rights of a seller against goods provided in Secs. his only remedy is to claim damages.55). the seller can sue the buyer for the price of the goods.56) Where the buyer wrongfully neglects or refuses to accept and pay for the goods. The amount of damages is to be determined in accordance with the provisions laid down in Sec. 1 Suit for price (Sec. (ii) damages for non-acceptance of goods (Sec. B fails to pay the price within the stipulated time. Thus. 2 Suit for damages for non-acceptance (Sec.47 to 54. where there is an available market for the goods prima facie.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. the difference between the market price and the contract price can be recovered. Where the property in goods has not passed to the buyer. Example: A sold certain goods to B for Rs 5. the seller may sue him for damages for non-acceptance. What remedies are available to a seller for breach of contract of sale? Ans:-.000 and the price was agreed to be paid before the expiry of ten days of the contract. as a rule. the seller has the following remedies against the buyer personally. (i) suit for price (Sec.56).56).73 of the Indian Contract Act. . (iii) suit for interest (Sec. 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. Where the property in the goods has not passed to the buyer and the price was not payable without passing of property. the seller cannot file a suit for the price. the seller can only sue for damages and not for the price. 1872.Q4.

(vii) recovery of interest (Sec. the seller has a further right to claim interest on the amount of the price.59). (iii) specific performance (Sec.57). i. (ii) right of recovery of the price. (v) suit for breach of warranty (Sec.e.61) When under a contract of sale.3 Suit for interest (Sec.61). It is obvious that the unpaid seller can claim interest only when he can recover the price. then he cannot claim interest. the seller tenders the goods to the buyer and the buyer wrongfully refuses or neglects to accept and pay the price. (vi) (anticipatory breach (Sec.58).. the court may award interest at such rate as it thinks fit on the amount of the price. In the absence of a contract to the contrary.60). . The interest may be calculated from the date of the tender of the goods or from the date on which the price was payable. (iv) suit for breach of condition. 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. if the seller‟s remedy is to claim damages only.

access to a variety of goods and services at competitive prices.. potency. i. standard and price of goods or services. the right to be informed about the quality. Ans:-. Right to be informed. Right to choose: It means right to be assured. Right to consumer education: It means the right to acquire the knowledge and skill to be an informed consumer. i. Sec. the consumers‟ interests will receive due consideration at appropriate forums.e. as the case may be. wherever possible. it means right to be assured of satisfactory quality and service at a fair price.. 5. 1986 extended a statutory recognition to the rights of consumers. Right to be heard. purity. 6. 1986. i. In case of monopolies.e.6 of the Act recognizes the following six rights of consumers: 1. quantity. telephones.Q5. It also includes right to be represented in various forums formed to consider the consumers‟ welfare. 3. the right to be protected against the marketing of goods and services which are hazardous to life and property. the Consumer Protection Act. ..Rights of Consumers For the first time in the history of consumer legislation in India. Right to safety. Examine the rights of a consumer enshrined under the Consumer Protection Act. 2. railways.. 4.e. It also includes right to fair settlement of the genuine grievances of the consumers. say. etc. so as to protect the consumer against unfair trade practices. Right to seek redressal: It means the right to seek redressal against unfair practices or restrictive trade practices or unscrupulous exploitation of consumers.

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

any copy of the film. (ii) to sell or give on hire. Compulsory licence in works withheld from public Sec. regardless of whether such copy has been sold or given on hire on earlier occasions. b. But in the case of a licence relating to copyright in any future work. (d) in the case of a cinematograph film – (i) to make a copy of the film.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 . any copy of the sound recording regardless of whether such copy has been sold or given on hire on earlier occasions.adaptation of the work any of the acts specified in relation to the work in (i) to (iv) above.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. (e) In the case of a sound recording – (i) to make any other sound recording embodying it. including a photograph of any image forming part thereof. License Licence by owners of copyright Sec. or offer for sale or hire. (iii) to communicate the sound recording to the public. or offer for sale or hire. (ii) to sell or give on hire. (iii) to communicate the film to the public. the licence shall take effect only when the work comes into existence.

the author is dead or unknown or cannot be traced or the owner of the copyright in such work cannot be found. on terms which the complainant considers reasonable.(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. 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 . Before making an application. any person may apply to the Copyright Board for a licence to publish such work or translation thereof in any language. 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. Compulsory Licence in unpublished Indian works (Sec.

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Ans:-. The following cases illustrate ways in which all contracts are agreements. oral and lies upon the honor of the parties for its fulfillment rather than being in any way enforceable. “All agreement are not contracts but all contacts are agreements”. avoidable contract where one of the parties can withdraw from it if s/he wishes.Q 1. which may be written. For a contract to be formed an offer made must backed acceptance of which there must be consideration. Both parties must come to an agreement on payment of monthly installment within specified period of time.A contract is a legally binding agreement or relationship that exists between two or more parties to do or abstain from performing certain acts. All contracts are agreement because there must be mutual understanding between two parties for a contract to be formed. Considering a case where person A make contract with person B but during the contract period B realizes that he was engaged to perform an agreement under undue influence. Comment. When a firm's offer is accepted it results into a contract provided other elements of contracts are accepted. Considering person A buying a radio on hire purchase from person B who deals with electronics and its appliances. A contract can also be defined as a legally binding exchange of promises between two or more parties that the law will enforce. All contracts are agreement until avoided for example. This occurs due to minor agreement and misrepresentation or undue influence. In the case of invitation to treat. All parties should agree and adhere to the terms and conditions of an offer. An agreement is a form of cross reference between different parties. where an invitation to treat is merely an invitation to make an offer. Both parties involved must intend to create legal relation on a lawful matter which must be entered into freely and should be possible to perform. . Such an agreement result to specialty contract which a contract under seal.

becomes a promise.e." When the person to whom the proposal is made signifies his assent there to the proposal is said to be accepted. What is a 'promise'? The answer to this question is contained in section 2 (b) which defines the term. an agreement is the sum total of 'offer' and 'acceptance'. therefore.e." A contract therefore. (b) Consensus-ad-idem. 1. forming the consideration for each other..Definition of contract According to section 2(h) of the Indian Contract Act: “An agreement enforceable by law is a contract. Both the parties to an agreement must agree about the subject matter of the agreement in the same sense and at the same time. we find that a contract essentially consists of two elements: (1) An agreement and (2) Legal obligation i. There must be two or more persons to make an agreement because one person cannot inter into an agreement with himself. From the above definition. We shall now examine these elements detail. a duty enforceable by law." Thus it is clear from this definition that a 'promise' is an agreement. when accepted. A proposal. a duty enforceable by law... .e. comes into existence only when one party makes a proposal or offer to the other party and that other party signifies his assent (i. is an agreement." An agreement. On analyzing the above definition the following characteristics of an agreement become evident: (a) At least two persons. is an agreement the object of which is to create a legal obligation i. In short. Agreement As per section 2 (e): " Every promise and every set of promises. gives his acceptance) thereto.

a duty enforceable by law. 1. The adjective 'lawful' implies that the offer and acceptance must satisfy the requirements of the contract act in relation thereto.2.. competent to contract. an agreement to become a contract must give rise to a legal obligation i. Thus an agreement is a wider term than a contract.. Legal obligation. and where necessary. According to section 10. Intention to create legal relations. As stated above. for a lawful consideration." To be enforceable by law. As the details of these essentials form the subject matter of our subsequent chapters. 2. are not expressly declared by the Act to be void.g. satisfy the requirements of any law as to writing or attention or registration. with a lawful object. It is not a contract. "All contracts are agreements but all agreements are not contracts." Agreements of moral. we propose to discuss them in brief here. Offer and acceptance. There must a 'lawful offer' and a 'lawful acceptance' of the offer. thus resulting in an agreement.e. all agreements are contracts if they are made by the free consent of the parties. There must be an intention among the parties that the agreement should be attached by legal consequences and create legal obligations. The essential elements of a valid contract are as follows. an agreement must possess the essential elements of a valid contract as contained in sections 10. religious or social nature e. If an agreement is incapable of creating a duty enforceable by law. . 29 and 56. a promise to lunch together at a friend's house or to take a walk together are not contracts because they are not likely to create a duty enforceable by law for the simple reason that the parties never intended that they should be attended by legal consequences Essential Elements of a Valid Contract A contract has been defined in section 2(h) as "an agreement enforceable by law.

The 'consideration' may be an act (doing something) or forbearance (not doing something) or a promise to do or not to do something. or involves or implies injury to the person or property of another. gratuitous promises are not enforceable at law. The contracting parties must be of the age of majority and of sound mind and must not be disqualified by any law to which they are subject (sec. The parties to an agreement must be competent to contract. . But the question that arises now is that what parties are competent and what are not..23).Agreements of a social or domestic nature do not contemplate legal relations. But only those considerations are valid which are 'lawful'. lunacy. Agreements between husband and wife also lack the intention to create legal relationship and thus do not result in contracts. An agreement is legally enforceable only when each of the parties to it gives something and gets something. or is opposed to public policy (sec. An agreement to dine at a friend's house in not an agreement intended to create legal relations and therefore is not a contract. or is fraudulent. if permitted it would defeat The provisions of any law. the supplier of goods is entitled to be reimbursed from their estate (sec 68). The agreement is not enforceable at law. 3. Consideration has been defined as the price paid by one party for the promise of the other. Try to work out the solution in the following cases and then go to the answer. It may be past. If any of the parties to the agreement suffers from minority. in the case of necessaries supplied to a minor or lunatic. The consideration is 'lawful'. or is of such a nature that. idiocy. The something given or obtained is the price for the promise and is called 'consideration' subject to certain exceptions. except in some special cases e. Lawful consideration.11). unless it is forbidden by law. Capacity of parties. The third essential element of a valid contract is the presence of 'consideration'. drunkenness etc. 4. and as such they do not give rise to a contract. or is immoral.g. present or future.

must be in writing and registered.5. For example. Certainty.e. 14). 20) 6.' if the agreement is induced by (i)coercion. or (v) mistake (sec. 7. 'Consent' means that the parties must have agreed upon the same thing in the same sense (sec. If the agreement is vitiated by any of the first four factors. when a landlord knowingly lets a house to a prostitute to carry on prostitution. For the formation of a valid contract it is also necessary that the parties to an agreement must agree for a lawful object. 13). it requires that an agreement to pay a time barred debt must be in writing and an agreement to make a gift for natural love and affection must be in writing and registered to make the agreement enforceable by law which must be observed. undue influence etc. The object for which the agreement has been entered into must not be fraudulent or illegal or immoral or opposed to public policy or must not imply injury to the person or the other of the reasons mentioned above the agreement is void. subject to the rules laid down in the act. a contract to be valid. If the agreement is induced by mutual mistake which is material to the agreement.. (ii) undue influence. it would be void (sec. According to the Indian contract Act. Free consent. the aggrieved party) can either reject the contract or accept it. Writing and registration. Lawful object. the contract would be voidable and cannot be enforced by the party guilty of coercion." In order to give rise to a valid contract the terms of the agreement must not be vague or . are void. (iii) fraud. Free consent of all the parties to an agreement is another essential element. Thus. 8. the meaning of which is not certain or capable of being made certain. (iv) misrepresentation. The other party (i. This concept has two aspects. Section 29 of the contract Act provides that “Agreements. he cannot recover the rent through a court of law or a contract for committing a murder is a void contract and unenforceable by law. (1) Consent should be made and (2) it should be free of any pressure or misunderstanding. There is absence of 'free consent.

Sections 24-30 specify certain types of agreements that have been expressly declared to be void. it cannot be enforced Illustration. For example. 10. Yet another essential feature of a valid contract is that it must be capable of performance. physically or legally. 27 and 30 respectively. for otherwise. the agreement cannot be enforced at law. The agreement must not have been expressly declared to be void under the Act. Section 56 lays down that "An agreement to do an act impossible in itself is void". The agreement is not enforceable. agrees to sell B " a hundred ton of oil" there is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainly.uncertain. Illustration. A agrees with B. Possibility of performance. an agreement in restraint of trade. A. and an agreement by way of wager have been expressly declared void under sections 26. 9. . It must be possible to ascertain the meaning of the agreement. to discover treasure by magic. If the act is impossible in itself. an agreement in restraint of marriage. Not expressly declared void.

Q2. From the definition of bailment. the following characteristics should be noted: 1. a jeweller. has elapsed or been performed”. Ans:-.. A delivers a suit-length to a tailor for stitching. in their original or altered form. a dry cleaner. upon a contract that they shall. as soon as the time of use for. (vi) Delivery of goods to a carrier for the purpose of carrying them from one place to another. Delivery of goods may. A lends his book to B for reading. Let‟s illustrate.148) Bailment is defined as the “delivery of goods by one to another person for some purpose. The person delivering the goods is called the „bailor‟ and the person to whom the goods are delivered is called the „bailee‟. where one person. The explanation to the above Section points out that delivery of possession is not necessary.Definition of bailment (Sec. Actual delivery may be made by handing over goods to the . Delivery of goods. or condition on which they were bailed. i. when the purpose is accomplished. for dry cleaning. be returned or otherwise disposed of according to the directions of person delivering them”. however. already in possession of goods contracts to hold them as bailee. (vii) Delivery of goods as security for the repayment of loan and interest thereon.e. pledge. (i) (ii) (iii) (iv) (v) A delivers some clothes to B. be actual or constructive. What do you mean by bailment? What are the requisites of a contract of bailment? Explain. The essence of bailment is delivery of goods by one person to another for some temporary purpose. for making jewellery. A delivers some gold biscuits to B. A delivers a wrist watch to B for repairs. The bailee is under an obligation to re-deliver the goods.

Thus.bailee. there is a constructive transfer of possession from C to A. Constructive delivery may be made by doing something which has the effect of putting the goods in the possession of the intended bailee or any person authorised to hold them on his behalf (Sec. there is no bailment. therefore the person delivering the possession of goods need not be the owner. The goods are delivered for some purpose and it is agreed that the specific goods shall be returned. after repair. where a watch is delivered to a watch repairer for repair. where an equivalent and not the same is agreed to be returned. . 4. In bailment. the delivery of goods is upon a contract that when the purpose is accomplished. agrees to hold them on behalf of C. For example. Return of goods in specie. Return of specific goods (in specie) is an essential characteristic of bailment. it is agreed that it will be returned. they shall be returned to the bailor.149). In a bailment. 2. Bailment is based on a contract. his business is to transfer possession and not ownership. 3. it is only the possession of goods which is transferred and not the ownership thereof. Ownership of goods. on the receipt of the agreed or reasonable charges. Example: A holding goods on behalf of B.

called the memorandum book and to sign them. He can even sell the goods on credit and in his own name. unless expressly authorised to do. A commission agent is agent who is employed to buy or sell goods or transact business.A mercantile or commercial agent may assume any of the following forms: broker. however. auctioneer. called a del credere commission. Pakka and Katcha Adatias and indentor. A factor.Q3. Also. A commission agent is not liable in case the third party fails to carry out the agreed obligation. A broker is a mercantile agent engaged to buy and/or sell property or to make bargains and contracts between the engager and third party for a commission (called brokerage). A broker has no possession of goods or property. factor. banker. guarantees the performance of the contract by the other party. He is also authorised to raise money on their security. The remuneration that he gets for the purpose is called the commission. He is merely a connecting link between the engager and a third party. A factor is a mercantile agent who is entrusted with the possession of goods with an authority to sell the same. A del credere agent is one who. . del credere agent. commission agent. he cannot delegate his authority. His lien in case of goods in his possession is a particular lien. A factor has a general lien on the goods in his possession. The document sent to the seller is called the sold note and the one sent buyer is called the bought note. in consideration of an extra remuneration. The usual method of dealing by a broker is to make entries of the terms of contract in a book. A commission agent may have possession of the goods or not. cannot barter the goods. What do you mean by del credere agent? Ans:-. He then sends the particulars of the same to both parties.

a supplier of goods or money.Sec. Thus. with „limited‟ as the last word of the name in the case of a public company and „private . Sec.15 requires the memorandum to be printed. will know whether the transaction he intends to make with the company is within the objects of the company and not ultra virus its objects. Form and contents Sec. If anything is done beyond these powers. creditors and all those who deal with the company to know what its powers are and what is the range of its activities. or the purpose for which his money is going to bused by the company and what risk he is taking in making the investment. that will be ultra vires (beyond powers of) the company and so void. C. divided into paragraphs. Thus. or in Forms as near thereto as circumstances admit.Q4.D and E in Schedule I to the Act.14 Requires that the memorandum of a company shall be in such one of the Forms in Tables B. Also. The memorandum serves a two-fold purpose. It tells us the objects of the company‟s formation and the utmost possible scope of its operations beyond which its actions cannot go. who will attest the signature. it defines as well as confines the powers of the company. as may be applicable in the case of the company. What do you mean by Memorandum of Association? What does it contain? Ans:-Memorandum of Association Meaning and purpose The Memorandum of Association of a company is its charter which contains the fundamental conditions upon which alone the company cans be incorporated. the intending shareholder can find out the field in. Each of the members must take at least one share and write opposite his name the number of shares he takes. say. numbered consecutively and signed by at least seven persons (two in the case of a private company) in the presence of at least one witness. It enables shareholders. any one dealing with the company.13 requires the memorandum of a limited company to contain: (i) the name of the company.

the resemblance between the two names must be such as to be calculated to deceive.147).20(1)].25 as an „association not for profit‟ [Sec. Publication of name (Sec. Every company shall: (a) paint or affix its name and the address of its registered office and keep the same painted or affixed.25]. if limited by shares or guarantee is „limited‟ unless the company is registered under Sec. on the outside of every office or place of business in a conspicuous position in letters easily legible and in the language in general use in the locality . divided into shares of fixed amounts.13(1) (a) & Sec. These contents of the memorandum are called compulsory clauses and are explained below: The name clause. A name shall be said to be calculated to deceive where it suggests some connection or association with the existing company. Too similar name. the name chosen is not undesirable [Sec. (ii) The name of the State. and (v) The amount of the authorized share capital. The promoters are free to choose any suitable name for the company provided:(a) the last word in the name of the company. stating separately „Main objects‟ and „other objects‟. In case of too similar names.(b) In the opinion of the Central Government.limited‟ as the last words in the case of a private company. in which the registered officer of the company is to be situated. (iii) The objects of the company. (iv) The declaration that the liability of the members is limited.

The procedure depends on whether the change is within the jurisdiction of same registrar of companies (Sec. within 30 days after the date of the change. no approval of the Central Government is necessary if the change of the name involves only the addition or deletion of the word „private‟ (i. Change of registered office. The company may do so anytime. Are solution passed by the Board of directors shall be sufficient. However. be given to the Registrar who shall record the same (Sec.Alteration of memorandum Provides that the company cannot alter the conditions contained in memorandum except in the cases and in the mode and to the extent express provision has been made in the Act. The Registrar shall then enter the new name on the register in the place of the old name and shall issue a fresh certificate of incorporation with necessary alterations [Sec. notice of the change should.146) or whether the shifting is to the jurisdiction of another registrar of companies in the same state (Sec.146 and Sec. (b)Change of registered office from one town or city or village to another town or city . when public company is converted into a private company or vice versa).The change of name must be communicated to the Registrar of Companies within 30 days of the change.. town or village. Provides that the name of a company may be changed at any time by passing a special resolution at a general meeting of the company and with the written approval of the Central Government. However.17A).23 (1)]. This may include : ( a)Change of registered office from one premises to another premises in the same city.146).e. These provisions are explained herein below: Change of name. The change of name becomes effective on the issue of fresh certificate of incorporation.

(iii) Within 30 days of the removal of the registered office. notice of the new location has to be given to the Registrar who shall record the same. Such certificate shall be conclusive evidence of the compliance of all requirements under the Act. Such confirmation is required to be filed within two months with the registrar of companies who shall register and certify the same within one month.17A): The shifting of the registered office by a company from the jurisdiction of one registrar of companies to the jurisdiction of another registrar of companies within the same state shall (in addition to requirements under Sec.146) also require confirmation by the Regional Director. an application is to be made in the prescribed Form and the confirmation shall be communicated within four weeks. the procedure is:(i) a special resolution is required to be passed at a general meeting of the shareholders. For this purpose.146). .or village in the same State (Sec. In this case. (c)Shifting of the registered office from one place to another within the same state (Sec.(ii) a copy of it is to be filed with the Registrar within 30 days.

till its maturity. A negotiable instrument can be transferred infinitum. Holder‟s title free from defects. The holder can sue in his own name. whereby rights are created in favour of one and obligations are created on the part of another.e.Q5. Transferability may be by (a) delivery. The word „negotiable‟ means transferable from one person to another either by mere delivery or by endorsement and delivery. 4. can be transferred any number of times. Another feature of a negotiable instrument is that its holder in due course can sue on the instrument in his own name. i. Promissory note. 1881. but that its holder in due course acquires a good title notwithstanding any defects in a previous holder‟s title. There are certain instruments which are recognised as negotiable instruments by usage. bank notes. An instrument is called „ negotiable‟ if it possesses the following features: 1. bearer debentures. The term „negotiability‟ means that not only is the instrument transferable by endorsement and/or delivery. to enable the transferee to get a title in the instrument. Thus. or (b) by endorsement and delivery. Name the instruments which are recognized as negotiable instruments by the Negotiable Instruments Act. 2. Ans:-.. A holder in due course is one who receives the instrument for value and without any notice as to the defect in the title of the transferor. Freely transferable.13. scripts and treasury bills are negotiable by usage. .An „Instrument‟ as referred to in the Act is a legally recognised written document. share warrants. bank drafts. bill of exchange and cheque are negotiable instruments by statute as they are so recognised by Sec. dividend warrants. An instrument may possess the characteristics of negotiability either by statute or by usage. 3.

signed by the maker to pay a certain sum of money to. for value received. but is assignable.” (vi) “I promise to pay B Rs 500 seven days after my marriage with C. the transferee takes it subject to all equities and liabilities of the transferor. 10. i. The following are two illustrations of promissory notes. 2006 (xi) On demand [or six months after date] I promise to pay X or order the sum of rupees ten thousand with interest at 12 per cent per annum only for value received.” (viii) Specimen of a promissory note (ix) Rs 10. A negotiable instrument is subject to certain presumptions.O.000 New Delhi – 1100 01 (x) Jan. (I owe you) Rs 1000.” (vii) “I promise to pay B Rs 500 and to deliver to him my white Maruti Car 1 January next. a certain person or to the bearer of the instrument (Sec. I.” (ii) “I acknowledge myself to be indebted to B in Rs 1000. the following are NOT promissory notes: (i) “Mr B. . first deducting there out any money which he may owe me.. which does not have these characteristics.U.” (iv) “I promise to pay B Rs 500.4). Promissory note A promissory note is an instrument in writing (not being a bank or a currency note) containing an unconditional undertaking. or to the order of. Where A signs instruments in the following terms: (i) “I promise to pay B or order Rs 500.5.” (ii) “I am liable to pay you Rs 500”. An instrument. to be paid on demand. provided he leaves me enough to pay that sum. is not negotiable.” (v) “I promise to pay B Rs 1500 on D‟s death.e.” But. (iii) “I promise to pay B Rs 500 and all other sums which shall be due to him.

Specimen of a bill of exchange Rs 10. A is the payee and X is the drawee. 2006 Six months after date pay to A or order/bearer the sum of ten thousand rupees only for value received. The holder – is either the original payee or any other person in whose favour the note has been endorsed. The endorsee – the person in whose favour the note is negotiated by indorsement.(xii) To X Sd/-A (xiii) Address ____________________________ Stamp (xiv) ____________________________ Parties to a promissory note 1. The endorser – the person who endorses the note in favour of another person. directing a certain person to pay a certain sum of money only to or to the order of. a certain person. 13. 4. X will express his willingness to pay „accepting‟ the bill by writing words somewhat as below across the face of the bill: ACCEPTED .5 as „an instrument in writing. 000 New Delhi – 110 016 Jan. 5. The maker – the person who makes the note promising to pay the amount stated therein. containing an unconditional order. or to the bearer of the instrument‟. To X Sd/-Y Address _______________________________ Stamp _______________________________ Here Y is the drawer. 2. The payee – the person to whom the amount of the note is payable. 3. signed by the maker. Bill of exchange A „bill of exchange‟ is defined by Sec.

16. It provides that a „cheque‟ is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and . is an order by the customer of the bank directing his banker to pay on demand. the endorsee. on demand or payable „after certain time after sight‟ also. The specimen given above is of a usance bill. In certain cases however a stranger may accept the bill on behalf of the drawee.  The endorser: It is the person who endorses a bill. Thus.Sd-X Jan.  Acceptor for honour.6.  The drawee: The person on whom the bill is drawn. Cheques A cheque is the usual method of withdrawing money from a current account with a banker. The Amendment Act 2002 has substituted new section for Sec. In case of a bearer bill. the bearer or possessor is the holder.  The payee: The person to whom amount of the bill is payable. 2006. Parties to a bill of exchange  The parties of bill of exchange are:  The drawer: The person to whom the amount of the bill is payable. i. payable after a specified period of time. to or to the order of the person named therein or to the bearer.e. drawee is the person responsible for acceptance and payment of the bill.  The endorsee: It is the person to whom the bill is negotiated by endorsement. A bill of exchange may be drawn payable „at sight‟.  Drawee in case of need.. in essence. It may be the drawer himself or any other person.  The holder: It is the original payee but where the bill has been endorsed. A cheque. Sec. Savings bank accounts are also permitted to be operated by cheques provided certain minimum balance is maintained. the specified amount.6 defines a cheque.

legally. Specimen of a cheque Every bank has its own printed cheque forms which are supplied to the account holders at the time of opening the account as well as subsequently whenever needed. a customer may withdraw his money even by writing his directions to the banker on a plain paper but in practice bankers honour only those orders which are issued on the printed forms of cheques. . These forms are printed on special security paper which is sensitive to chemicals and makes any chemical alterations noticeable.it includes the electronic image of a truncated cheque and a cheque in the electronic from. and is generated. Although. written and signed in a secure system ensuring the minimum safety standards with the use of digital signature and asymmetric crypto system. „A cheque in the electronic form‟ means a cheque which contains the exact mirror image of a paper cheque.

A cheque must contain an unconditional order. The order must be only for the payment of money and that too must be specified. Payee to be certain. however. A certain sum of money. Similarly. On a specified banker only. 4. Generally. A cheque to be valid must be payable to a certain person. local authorities. are valid instruments being payable to legal persons. is not a cheque as the sum payable is not certain. Regarding the writing materials to be used. law does not lay down any restrictions and therefore cheque may be written either with (a) pen (b) type writer or may be (c) printed. etc. The term in fact includes „legal persons‟ also. an order asking the banker to pay a specified amount with interest. not necessary that the word order or its equivalent must be used to make the document a cheque. the rate of interest not specified. institutions. the name and address of the banker should be specified. It is. orders asking the banker to deliver securities or certain other things cannot be regarded as cheques. Unconditional order. instruments drawn in favour of a body corporate. clubs. 2. A cheque must be drawn on a specified banker. Thus. .. 3. Thus.. A cheque must be an instrument in writing. Written instrument. „Person‟ should not be understood in a limited sense including only human beings. To avoid any mistake. the order to bank is expressed by the word “pay”. If the word “please” precedes “pay” the document will not be regarded as invalid merely on this account.Requisites of a cheque The requisites of a cheques are: 1. 5.

Dating of cheques. i. . like that of the cheque on which payment is due. if he is a holder in due course. Payable on demand.19). The drawer can date a cheque with the date earlier or later than the date on which it is drawn. till the date mentioned.6. A cheque that bears a date earlier than six months is a stale cheque and cannot be claimed for. acquires a better title than its transferor. A post-dated cheque cannot be honoured. A cheque bearing an earlier date is antedated and the one bearing the later date is called post-dated.e. 7. the instrument is payable on demand (Sec. The drawer of a cheque is expected to date it before it leaves his hands. When the drawer asks the banker to pay and does not specify the time for its payment. A cheque to be valid must be payable on demand and not otherwise. A cheque without a date is considered incomplete and is returned unpaid by the banks. Use of the words „on demand‟ or their equivalent is not necessary.. except at the personal risk of the bank‟s manager. the transferee of a post-dated cheque. A post-dated cheque is as much negotiable as a cheque for which payment is due.

Authentication is a process used to confirm the identity of a person or to prove the integrity of information. generally smaller set known as “hash result” such that an electronic record yields the same hash result every time the algorithm is executed with the same electronic record as its input making it computationally infeasible (a) to derive or reconstruct the original electronic record from the hash result produced by the algorithm. (b) that two electronic records can produce the same hash result using the algorithm. . In all these years. B-Information Technology Act In May 2000. at the height of the dot-com boom. despite the growing crime rate in the cyber world.Question 6: Write short note on : A-Digital Signature B-Information Technology Act Ans:-. India enacted the IT Act and became part of a select group of countries to have put in place cyber laws. The “hash function” means an algorithm mapping or translation of one sequence of bits into another. The authentication of message involves determining its source and verifying that it has not been modified or replaced in transit. Subject to the provisions of section 3 any subscriber may authenticate an electronic record by affixing his digital signature.A-Digital Signature Authentication of electronic records. only less than 25 cases have been registered under the IT Act 2000 and no final verdict has been passed in any of these cases as they are now pending with various courts in the country.

The prime reason for this is the fact that the IT Act is a set of technical laws. We are now beginning to see new categories and varieties of cyber-crimes. law enforcing agencies and even the judiciary. Though Section 67 of the Information Technology Act. as they don't want to get negative publicity or worse get entangled in legal proceedings. but such powers are largely inefficient. cyber harassment. any material which is obscene in electronic form with imprisonment for a term which may extend to two years and with fine which may extend to twenty five thousand rupees on first convection and in the event of second may extend to five years and also with fine which may extend to fifty thousand rupees.Although the law came into operation on October 17. which have not been addressed in the IT Act. it still has an element of mystery around it. The IT Act does give extra-territorial jurisdiction to law enforcement agencies. cyber nuisance. The Indian IT Act also needs to evolve with the rapidly changing technology environment that breeds new forms of crimes and criminals. Another major hurdle is the reluctance on the part of companies to report the instances of cyber-crimes. A major hurdle in cracking down on the perpetrators of cyber-crimes such as hacking is the fact that most of them are not in India. 2000. Not only from the perception of the common man. it does not expressly talk of cyber defamation. This is because India does not have reciprocity and extradition treaties with a large number of countries. This includes cyber stalking. The above provision chiefly aim at curbing the increasing number of child pornography cases and does not encompass other crimes which could have been expressly brought within its ambit such as cyber defamation. but also from the perception of lawyers. . cyber defamation and the like. 2000 provides for punishment to whoever transmits or publishes or causes to be published or transmitted.

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