MBA Semester 3rd - MB0051 Legal aspects of Business Question1- Discuss the nature and significance of business law

Answer- Business Law means branch of law which prescribes a set of rules for the governance of certain transactions and relation between (A) Business persons themselves (B) Business persons and their customers, dealers, suppliers (C) Business persons and the state In the Indian Business some of these transactions and relations concern the following: 1) Regulation of restrictive and unfair business practices 2) Foreign exchange management and regulation 3) Insolvency of business persons 4) Promotion of conciliation and arbitration for settlement of business disputes 5) Regulation of companies incorporated under the Companies Act 1956. 6) Negotiable instruments 7) Patents, trademarks and copyrights 8) Actionable claims, factoring and forfeiting 9) Import and export regulation 10) Contracts, sale of goods, guarantee, indemnity, bailment, pledge, charge, mortgage, partnerships, insurance, carriage of goods. 11) Prevention of food adulteration, regulation of essential commodities 12) Regulation of stock exchange, financial securities, foreign contributions, foreign capital Nature of Business law 1) Law lays down the framework within which business activities shall be carried out. 2) A businessperson can resort to various judicial and quasi-judicial authorities against the government in case his legal rights have been violated.

3) Some laws are made to facilitate the business persons to achieve their goals smoothly. Example: Business has been extended the facility of doing business by getting a company incorporated, deriving all the advantages of incorporation, such as separate legal entity, limited liability. 4) Business law has social objectives too. Example: anti competition laws, pollution control laws 5) Business laws aim to prevent concentration of economic power and help in the adjustment of claims of individuals against each other. Question2 - 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. Answer-PartnershipThe relationship between persons who have agreed to share profits of a business carried on by all, or by any of them acting for all. All the essential elements must be present so as to form a partnership 1) Partnership is an association of two or more than two persons - At least two persons who should join together to constitute a partnership. These persons must be natural persons having legal capacity to contract. A company cannot be a partner. A partnership firm cannot be a partner of another partnership firm. 2) Partnership must be the result of an agreement between two or more persons- Partnership is the result of an agreement between two or more persons. ( Who are known as partners as partners after the partnership comes into existence) 3) The agreement must be to carry on same business- Business includes every trade, occupation or profession. Business generally conveys the idea of numerous transactions, a person may become a partner with another even in a particular adventure or undertaking. Unless the persons joins for the purpose of carrying on a business, it will not amount to partnership. 4) The agreement must be to share profits of the business- The joint carrying on of a business alone is not enough; there must be an agreement to share profits arising from the business. Unless otherwise so agreed, sharing of profits also involves sharing of losses. But whereas the sharing of profits is an essential element of partnership sharing of losses is not. All the essential elements of a valid contract must be present in a partnership as it is based on an agreement. Therefore while constituting a partnership the following points must be kept in mind:

1) The act provides that a minor may be admitted to be benefits of partnership. 2) No consideration is required to create partnership. A partnership is an extension of agency for which no consideration is necessary. 3) It is advisable to have the partnership agreement in writing. 4) An alien friend can into partnership, an alien enemy cannot. 5) A person of unsound mind is not competent to enter into a partnership. 6) A company, incorporated under the Companies Act, 1956 can enter into a contract of partnership. Question 3- Examine the rights of a Consumer enshrined under the consumer protection Act, 1986. Answer- Consumer means 1) a person who buys any goods for a consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment. The term Includes any other user of such goods when such use is made with the approval of the buyer. The Consumer Protection Act, 1986 of the Act recognizes the following six rights of consumers. 1) Right to safety The right to be protected against the marketing of goods and services which are hazardous to life and property. 2) Right to be informed The right to be informed about the quality, quantity, potency, purity, standard and price of goods or services as the case may be so as to protect the consumer against unfair trade practice. 3) Right to choose It means right to be assured, wherever possible, access to a variety of goods and services at competitive prices. In case of monopolies, say railways, telephones, etc. it means right to be assured of satisfactory quality and service at a fair price. 4) Right to be heard the consumers interests will receive due consideration at appropriate forums. It also includes right to be represented in various formed to consider the consumers welfare. 5) Right to seek redressal It means the right to seek redressal against unfair practices or restrictive trade practices or unscrupulous exploitation of consumers. It also includes right to fair settlement of the genuine grievances of the consumers. 6) Right to consumer education It means the right to acquire the knowledge and skill to be an informed consume.

Question 4- What do you need by bailment? What are the requisites of a contract of bailment. Explain

Answer-Bailment Delivery of goods by one to another person for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of person delivering them. The person delivering the goods is called the bailor and the person to whom the goods are delivered is called the bailee. Need and characteristics of Bailment 1. Delivery of goods- Bailment is delivery of goods by one person to another for some temporary purpose. Delivery of books may be actual or constructive. Actual delivery may be made by handing over goods to be bailee. 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 authorized to hold them on his behalf. 2. Bailment is based on a contract- In bailment the delivery of goods is upon a contract that when the purpose is accomplished, they shall be returned to the bailor. 3. Return of goods in specie The goods are delivered for some purpose and it is agreed that the specific goods shall be returned. Return of specific goods is an essential characteristic of bailment. Where an equivalent and not the same is agreed to be returned, there is no bailment. 4. Ownership of goods In a bailment, it is only the possession of goods which is transferred and not the ownership therefore the person delivering the possession of goods need not be the owner, his business is to transfer possession and not ownership.

Requisites of Bailment Contract A bailment is usally created by agreement between the bailor and the bailee. The agreement may be expressed or implied. In certain exceptional case, bailment is applied by law as between a finder of goods and the owner. Delivery of possession A Bailment necessarily involved delivery of possessions of goods by bailor to bailee. The basic features of possession are control and an intention to exclude others. Consideration in a contract of Bailment- In a contract of bailment, the consideration is generally in the form of money payment either by the bailor or the bailee, Question 5- Name the Instruments which are recognized as negotiable instruments by the negotiable instruments Act, 1881. Answer- Instruments is a legally recognized written document, whereby rights are created in favour of one and obligations are created on the part of another.

Negotiable means transferable from one person to another either by mere delivery or by endorsement and delivery, to enable the transferee to get a title in the instrument. An instrument may possess the characteristics of negotiability either by statue or by usage. Negotiable Instruments is primarily contained in the Negotiable Instruments Act, 1881, which came into force on 1st March, 1882. There are certain instruments which are recognized as negotiable instruments by usage. 1) 2) 3) 1) Promissory notes Bill of Exchange Cheques Promissory note A Promissory note is an instrument in writing containing an unconditional undertaking, signed by the maker to pay a certain sum of money to or to the order of, a certain person or to the bearer of the instrument. Specimen of a promissory note Rs 10,000 New Delhi- 110001 Jan. 10. 2006 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. To X Sd/-A Stamp Address-------------------------------------------------------Parties to a promissory note: 1) The maker the person who makes the note promising to pay the amount stated therein. 2) The Payee The person to whom the amount of the note is payable. 3) The holder is either the original payee or any other person in whose favour the note has been endorsed. 4) The endorser the person who endorses the note in favour of another person. 5) The endorsee the person in whose favour the note is negotiated by indorsement. 2) Bill of Exchange A bill of exchange is defined as an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of, a certain person, or to the bearer of the instrument.

Specimen of a Bill of exchange Rs 10,000 New Delhi- 110016 Jan. 13. 2006

Six months after date pay to A or order/bearer the sum of ten thousand rupees only for value received. To X Sd/-Y Address--------------------------------------------------------Stamp Y is the drawer, A is the payee and X is the drawee. X will express his willingness to pay accepting the bill by writing words somewhat as below across the face of the bill: ACCEPTED Sd-X jan16, 2006 The specimen given is of a usance bill, payable after a specified period of time. A bill of exchange may be drawn payable at sight i.e. on demand or payable after certain time after sight also. Parties of bill of exchange 1) The drawe- the person to whom the amount of the bill is payable. 2) The drawee- The person on whom the bill is drawn. Drawee is the person responsible for acceptance and payment of the bill. 3) The payee- The person to whom amount of the bill is payable. It may be the drawer himself or any other person 4) The holder it is the original payee but where the bill has been endorsed, the endorsee. In case of a bearer bill, the bearer or prossessor is the holder. 5) The endorser- It is the person who endorses a bill. 6) The endorsee It is the person to whom the bill is negotiated by endorsement. 7) Drawee in case of need 8) Acceptor for honour. 3) Cheques- A cheque I the usal method of withdrawing money from a current account with a banker. A cheque, in essence, is an order by the customer of the bank directing his banker to pay on demand, the specified amount, to or to the order of the person named therein or to the bearer. A Cheque in the electronic form means a cheque which contains the exact mirror image of a paper cheque, and is generated, written and signed in a secure system ensuring the minimum safety standards with the use of digital signature and asymmetric crypto system. 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. The requisites of a cheques are;

1) 2) 3) 4) 5) 6) 7)

Written instrument Unconditional order On a specified banker only A certain sum of money Payee to be certain Payable on demand Dating of cheques

Question 6 (A) Write on short note on Intellectual Property Right Answer- 6(A) The concept of property is very important in business law. The term Property refers neither to objects nor to land alone. It is legal sense, property refers to legally protected rights to use, possess, enjoy and dispose of thing. Property rights can exist only where there is some law to define and enforce them. Intellectual Property Rights (IPR) Intellectual Property Intellectual Property is the Property derived by an individual for his intellectual efforts. It is the result of a persons creative capability. The Intellectual Property refers to creation of a concept such as inventions, design, for industrial articles, literary, artistic work, symbols which are ultimately used in a commercial Derivative. The Concept of Intellectual Property Rights gives these rights legal recognition legislations have been enacted. A trademark, a copyright, or a patent right are incorporeal assets. These are known as IPR. For Instance, musical copyright in respect of songs, tunes and literary and artistic copyright belong to the author as his property. IPR, the subject matter of proprietary interest is not the product such as a book, a cassette but the exclusive right of the author or singer or inventor to publish a book, record music or manufacture a particular thing or allow others to do so only at his behest. Patent Section 2(m) of the Patents Act, 1970 defines Patent as a Patent for any inventions granted under this Act. Further it could be explained as a grant from the Government to the inventor for a limited period of time, the exclusive right to make use, exercise and vend his inventions. After the expiry of the duration of patents, anybody could use the inventions. Rights of Patentee 1) The patentee can sell the whole or part of this property. 2) He can also grant license to others to use the patented property. 3) He can also assign such property to any others.

Trade Marks A trademark is a mark used in relation to goods for the purpose of indicating a connection between the goods and a particular person having the right as proprietor to use the mark. Rights of Trade Mark Owners - Once a trade mark is registered, the registered owner will be granted a type of property right to use that trade mark in association with his or her trade and in accordance with the class of goods and services approved by the Trade Marks office. The rights exist as long as the registered owner continues to use the mark in the course of Trade. Registration is for an initial 10 years and renewals of registration must be made in order for the rights to continue. Copyrights Copyright are a bundle of rights, which grants protection to the unique expression of ideas. Copyright is a negative right and the owner of copyrights gets the right to prevent others from copying his work without his consent towards a commercial end. At the same time it gives to the author an exclusive right for the commercial exploitation of his work.

Question 6(B) - A leaves a Cow in the Custody of B to be taken care of A Cow gives birth to a Calf. Who will take the Calf and Why Answer- According to Section 163 of Indian Contract Act, Bailor entitled to increase or profit from goods bailed.- In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed. As such the bailee is under statutory obligation to deliver to the bailor any increase or profit derived from the goods bailed. For example, if A leaves a cow in the custody of B to taken care of, thereafter the cow has calf during the period of bailment, B is bound to deliver the calf as well as the cow to A or to anyone according to his directions. Further, if new shares are required by bailee out of the profits of the shares bailed, the bailor will be entitled to recover the shares placed as well as the new shares.