GL BAJAJ INSTITUTE OF MANAGEMENT AND RESEARCH

GREATER NOIDA
(2019-2021)

ASSIGNMENT
On
Legal Environment of Business
Post Graduation Diploma In management
Term -3

BATCH – 2019-21

SUBMITTED BY: SUBMITTED TO:

Saloni Sharma Dr. Arvind Bhatt
PGDM19122
GM19162
 Answer 1
Answer 1-i(a)
ABOUT CASE –

Connecting Giants Limited VS. Sriram travels Ltd

ISSUE-
Connecting Giants Limited advertised a proposal regarding transportation of its employees,
advertised in the newspapers informing interested persons to submit proposals for supplying
two Innova cars on contract basis with drivers for a year. Sriram travels win the bid and
according to law it a general contract but in last minute giant ltd gave their contract to very old
and reputed travel agency.

The Indian Contract Act, 1872 defines what we mean by “Agreement”. In its
section 2 (e), the Act defines the term agreement as
An agreement results when two minds meet upon a common purpose. They agree to the same
thing in the same sense. Section 2(e) defines the term agreement as “every promise and every
set of promise, forming the consideration for each other.” An agreement only happens when
there is an offer by one party and acceptance by the other party. Therefore, offer + acceptance
= agreement.

General offer -
• When an offer is made to the general public, it is called a general offer and can be taken
up by any person who wishes to fulfill the terms of the offer. When an offer is accepted
by the individual to whom it is directed, the offeror and the offeree enter into a contract.
• If the offer is accepted by a large number of people, the number of contracts formed
will be equal to the number of individuals who accept the offer. If a reward is offered
for completing a certain task, only the person who completes the task can accept the
offer.

Agreement was justify-

➢ Agreement has been formed when Sriram travels Ltd submit the proposal on a sheet of
paper the relevant details which was mentioned in the advertisement.Connecting Giant
Ltd makes a general offer, and from the above discussion general offer is open to public
at large. If it is a specific offer then Connecting Giant Ltd can changed their mind and
award it to a very reputed travel agency.
➢ In my point of view when giant ltd publish their proposal in newspaper. it became
general offer and Ten persons applied for the contract as per the advertisement. And at
this time all are fill contract legally. And agreement in eye of laws define above.
According to law sriram travel got low bid and announced as winner but avoiding law
things giant give the contract to other which is unlawful.
From the above discussion we may conclude that their has been an agreement between
Connecting Giant Ltd and Sriram Travels Ltd. The advertisement was an offer, more
specifically General Offer. General Offer: when offer is given to entire world at a large. The
offer had been made to the whole world and will ripen into a contract with anyboby who comes
forward and performs the condition mentioned in the advertisement.

ANSWER 1-i(b)
Yes, Sriram travels Ltd can sue Connecting Giants Limited to award the contract in above
mentioned case .

A breach of contract occurs when one of the parties fails to live up to his or her responsibilities
under a contract. This can include:
• Failing to perform as promised
• Making it impossible for the other party to perform as promised; or
• Making it known there is an intention not to perform
Under what circumstances can you sue for breach of contract?

• your contract has to be in writing.

• Most states have a law called the Statute of Frauds that specifies which types of
contracts must be in writing to be enforceable.

➢ So according to contract act sriram ltd is legally follow the criteria of giant ltd and he
was announced as winner in bid.
➢ Connecting Giant Ltd made a general offer and Sriram travels Ltd submitted the
proposal, from this Sriram Ltd and Connecting Giant Ltd are in contract. Instead of that
Connecting Giant Ltd changed their mind and awarded the contract to a very reputed
travel agency.
➢ Connecting Giant Ltd breach the contract made with Sriram Travel Ltd.
➢ So sriam travel can sue in court and according to law. He may win the sue also and in
the case of winning entitled to a remedy, which may include:

▪ Damages: payment by the breaching party to the non-breaching party

▪ Specific performance: compels the breaching party to do what was agreed to under
the contract

▪ Cancellation and restitution: If the non-breaching party has performed under the
contract, the non-breaching party can cancel the contract and sue for restitution, which
will put the non-breaching party in the same position as before the breach.
From the above discussion we may conclude that, Sriram Travels Ltd can Sue Connecting
Giant Ltd to award the contract.
 Answer 1-ii(a)

The type of damage I think in the case –

Special damage-
Special damages compensate the claimant for the quantifiable monetary losses suffered by the
plaintiff. Special damages can include direct losses such as amounts the claimant had to spend
to try to mitigate damages and consequential or economic losses resulting from lost profits in
a business. Special damages basically include compensatory damages for the injury or harm to
the plaintiff that result from the tort committed by the defendant.

For example-
As an example, Neal agrees to sell Mary an antique Rolex for £100. In fact the watch is a fake
and worth only £50. If it had been a genuine antique Rolex, it would have been worth £500.
Neal is in breach of contract and could be sued. In contract, Mary is entitled to an item worth
£500, but she has only one worth £50. Her damages are £450. Neal also induced Mary to enter
into the contract through a misrepresentation . If Mary sues in tort, she is entitled to damages
that put herself back to the same financial position place she would have been in had the
misrepresentation not been made.

Some of the examples of Special damages are:

▪ Loss of business opportunities, contract and profits.

▪ Damage or loss to business reputation.
▪ Loss of time and other inconveniences.
▪ Loss from Operating revenues.
▪ Loss of business product and properties.

Answer 1- ii(b)

As per my opinion the limitation of liability clause as per the terms of the contract is as follows:

➢ Negligence/ Party fault: Under this case it was clearly mentioned that clause 5 of the
terms of courier had limited the liability of the DHL in the event of loss of courier to
100 dollar. DHL made its customers sign a form containing the terms and it is apparent
that the appellant (DHL) was negligent in not delivering the consignment and due to
deficiency in service, the consignment was lost because of the negligence, loss has
occurred to the complainant (Bharati Knitting) which clearly show that DHL party's
conduct fails to meet a reasonable duty of care and cause harm to the Bharati Knitting.

➢ Breach of duty: Under this at the time of export consignment to a party in Germany in
DHL the DHL lost the courier and causing losses to Bharati Knitting so the DHL has
proved that the do the breach of duty so their liability is to pay compensation for such
losses to the Bharati Knitting.
Usually, special damages do not occur in a normal situation, failing to request for special
damages will occur in losing the right of special damages by the non-breaching party. In order
to receive Special damages, some essentials need to be fulfilled.

➢ Foreseeable- The loss can be easily predicted by the parties at the time of forming
contract.

➢ Flowing from the Breach- The losses should not be the direct and ultimate
consequences of the breach of contract. Some sort of connection should be present
between the breach and losses.

➢ Calculable– Since special damages are not given under the situation of the ordinary
contract it is difficult to calculate the loss amount.

➢ For example- the loss incurred due to business reputation to an individual cannot be
calculated. It should be calculated during the time of the formation of the contract.

From the above discussion we may conclude, that their is a negligence by DHL and there
is also a deficiency in service. The loss has not been restricted only upto $100 as mentioned
in clause 5 of the terms of courier. Bharati knitting can recover all losses from DHL courier.

Answer 2 – I

I. Why it is necessary for the managers to

understand the Legal Environment of the
Business?
• Managers operate their businesses and make their decisions within the constraints of
the legal system and government regulations.
• Managers, businesses, and their related stakeholders strive to operate to legally protect
their rights.
• They also face potential legal liability and legal consequences from their decisions and
actions.
• They must understand the legal environment of business includes the legal system and
its processes; and sources of law in our society.
• It requires studying and comparing the business-related legal rules of tort law, criminal
law, contract law, and government regulatory mechanisms.
• Finally, managers must realize the ethical implications of their decisions in society and
the corresponding perspective the law brings in formulating the ethical decisions in
society.
 1. Successful Conduct of Business
The business executive can successfully conduct the business operation. Since chances for
losses are minimized, the firm can withstand in the long run, widen its financial base and face
competition more effectively. All these finally lead the business venture to a grand success.

2. Opening of New Avenues

Environment opens fresh avenues for the expansion of new entrepreneurial operations. When
the business climate is favorable, new ideas, schemes and ventures may be put into action. The
firm can utilize its resources advantageously and derive the maximum benefits.

3. Dynamism in Approach
Business enterprise is essentially a dynamic endeavor. Hence the business executive should be
a dynamic personality. Acquisition of knowledge about the changing environment will keep
the businessmen always alert and dynamic in his approach. His dynamic approach in turn will
help the firm to avoid ecological stresses and to maintain harmony with the environment.

4. Chances for Growth

By identifying itself with the changing situations and environment, the firm can gain the
popular support and win the confidence of the consumers and others. This popular support will
produce many chances for growth and development of the firm.

5. Control over Environment

We all know that environment exercises vital control over the scope and performance of a
business firm. A proper understanding of the nature, character and influence of the environment
over the activities of the firm and its continued efforts to identify with the changing economic
conditions will at one stage enable the business firm to exercise control over the environment
itself. This will result in a smooth and successful running of the venture in the short run as well
as in the long run.

Thus, a clear understanding of the environment shall bring many benefits, while a minimum
disregard of these factors will entail a heavy penalty to the firm.

ANSWER 2 – II
Are the offer and acceptance express or implied?

Offer is expressed and Acceptance is Implied

In this Case offer is expressed

An express contract is a legally binding agreement, the terms of which are all clearly stated
either orally or in writing. For an express contract to come together, there must be an offer
made by one of the parties, and acceptance of that offer by the other party. To determine if an
express contract has been properly formed, courts will analyze the communications made
between the parties during the formation of the contract.
Example
an express contract is formed when one party offers to install new carpet in the other party’s
house for the payment of $1,000. Here, the terms are clear. One party is receiving an installation
of carpet, and the other party is paying a clear amount for that service. This agreement then
becomes an example of an express contract that can be validated in a court of law.

In this Case Acceptance is implied

Implied Acceptance - An implied acceptance is one that is not directly stated but is
demonstrated by any acts indicating a person's assent to the proposed bargain. An implied
acceptance occurs when-

Example-
A shopper selects an item in a supermarket and pays the cashier for it. The shopper's conduct
indicates that he or she has agreed to the supermarket owner's offer to sell the item for the price
stated on it.

Answer – 2 (III)

Can Mr. X take an excuse that the contract stood discharged

based on supervening impossibility?
NO,
• Supervening impossibility is the impossibility arising after the formation of a contract.
However, this arises at the time when the promisor's performance is due. Such
impossibility usually arises due to facts that the promisor had no reason to anticipate
and did not contribute to the occurrence of. If contracting parties were allowed to plead
supervening impossibility, it would make the whole basis of contract insecure.
Therefore, the risk involved in supervening impossibility could be deliberately
excluded by stipulations in the contract.
• No Mr X not take an excuse that the contract stood Because Section 27- Agreement in
restraint of trade, void. —Every agreement by which any one is restrained from
exercising a lawful profession, trade or business of any kind, is to that extent void. —
Every agreement by which any one is restrained from exercising a lawful profession,
trade or business of any kind, is to that extent void. Mr x unable to fill full the agreement
due to govt. issue, it means when govt. restriction gone out then he will able to full the
order
 Answer – 2 IV

IV. “Customs and usages are important sources of

Business Law”.
• Customs and usage plays an important role in regulating business transactions. Most of
the business customs and usage have been already codified and given legal sanctions in
India. Some of them have been ratified by the decisions of the competent Courts of law.
When a custom is accepted by a court and is incorporated in a judicial decision, it
becomes a legally recognized custom.

▪ Custom is an important source of law and it is desirable to define the same. Custom has
been defined by various jurists as per their notion, understanding, philosophy, views
and opinion. The different jurists also defined custom on the basis of source, validity,
practice, history &utility. A conventional custom or usage which does not possess
absolute authority is clearly distinguishable from a legal custom having a force of law.

▪ A custom is binding irrespective of the consent of the parties, whereas usages are
binding only when they are not expressly excluded by the terms of agreement entered
into by the parties. If a custom is local, it is confined to a particular locality, on the other
hand, the usage need notto be confined to a particular locality.

▪ A custom to be valid should have been in existence from time immemorial but it is not
so in case of a usage. In other words, unlike custom, a usage, need not to be of
immemorial antiquity. A usage of recent origin can be given effect by the courts on the
ground that parties had contracted with reference to the usage. In Noble v. Kenova,
Lord Mansfield said, “it is no matter if the usage has only been for a year.

▪ A local custom can easily derogate from or common law of the realm, but not from
statute law.

▪ Usage, however, can do so to the extent to which it is possible to exclude the common
law by specific and express contract between the parties

▪ If in any particular case, common law cannot be excluded by express agreement, it

cannot be excluded by usage also. However, custom can override the common law.
 ANSWER 2 (V)
Q2 (V)
ANSWER-
“Ignorance of Law has no Excuse”.
➢ The concept that ignorance of the law is no excuse means that because the laws are
published and available to everyone, you are expected to know what the law requires
or prohibits. If you violate a law, it is not an acceptable excuse that you were not aware
of the requirements of that law, because you have every opportunity to know, and you
are expected to know, those requirements.

➢ It is your duty as a citizen to know, understand, and obey the law. This is why laws are
written.

➢ It is well known that ignorance of any of these laws cannot constitute an excuse. You
are not permitted to plead ignorance as a defense to escape the rigors of law. If it is
so, it is very easy for any person can put forward ignorance as a defense though he
was actually aware of the law and its full consequences.

For example –
➢ If the speed limit is 45, and you are going 55, but did not see the sign, you are still
speeding. Not seeing the sign does not excuse you.

➢ In India hunting of a Wild Buffalo (Bubalus bubalis) is an offence as per section 9

of the Wild life Protection Act 1972. If a person, who is ignorant of section 9 of the
Wild life protection Act, shoots a wild Buffalo thinking that it is a domestic buffalo
he is said to be acting in ignorance of law as well as of a fact.

• You are not permitted to plead ignorance as a defense to escape the rigors of law. If it
is so, it is very easy for any person can put forward ignorance as a defense though he
was aware of the law and its consequences. Law is all pervading.

• Almost all your actions are regulated by law except a few. We have all sorts of law like
personal, family, civil, criminal, revenue, commercial, taxation, public and private
international law and so on. Law can be statutory, customary, moral or ethical,
ecclesiastical, etc. But it is well known that ignorance of any of these laws cannot
constitute an excuse. You are not permitted to plead ignorance as a defence to escape
the rigors of law. If it is so, it is very easy for any person can put forward ignorance as
a defence though he was actually aware of the law and its full consequences. The law
enforcement machinery shall come to a grinding halt if ignorance is accepted as a
defence. Being a negative fact, court cannot insist on proof also.
• “Every person is presumed to be aware of the law”. But on a closer analysis it can be
seen that both statements are not one and the same. There is absolutely no justification
for the presumption that everybody is aware of all the laws in operation. It is a ridiculous
presumption if not an arbitrary one. If everybody knows the law, then what is the
necessity for the courts? If everybody knows the law then there is no need for consulting
an advocate or a solicitor. We quite often find that District Court is reversed by the
High Court which is in turn reversed by the Supreme Court. Is it not because the High
Court was ignorant of the law? If High court was aware of the law then why Supreme
Court reversed the judgment of the High court? Thus it is crystal clear that High court
was ignorant of the law. It is also equally possible that the Supreme Court itself may
over rule or reverse its own decision and then it is quite clear that the Supreme Court
was ignorant of the law while deciding the case at the first instance.