Class Presentation JD Sales of Goods 14feb

Business Law for
BBA-102/BUSS2422
Himalayan College of Management

student of 2018group email-hcmbba2018@gmail.com
Jiban Prasad Dallakoti, Advocate

LL.M. Business Law and MA-Political Science
Assistant General Manager-Legal, Tara Management
Email:- dallakotijiban@gmail.com
Jiban Prasad Dallakoti, LLM/Corporate Lawyer
Major areas to study
• Law of Contract
• Law of Agency
• Sale of Goods
• Hire Purchase
• Lesson 42 hours (guided), other activities

(independent) 78 hours-3 credit

Introduction and definition of Contract
• In the primitive stage of society, the life of people was not complex and needs of
people also were very limited. People were capable themselves to fulfill their
requirements with taking help of other persons.
• People believes that they would have to bear a sin if they did not perform their
promises. Therefore they perform honestly. But such promises could not remain
only in the religion or morality because of the development of human conscience
and civilization. Some of the promises remain not to be performed. As a result, law
relating to contract was felt necessary for regulating such transactions or promises.
Now the states begun enact and issues various kinds of laws to regulate the
human activities. The law related to trade, commerce and industry is enacted.
Those laws are subsequently called the law of contract.
• Basically, the law of contract emerged due to increase of economic and business
activity in the society.
• Simply, the law of contract is that law which is made to control and systematize the
rules formulated or contract concluded by the parties to it.
• Set of the rules made for having the promises, made by the business person
performed, for settling the disputes arising out between them is called the law of
contract.
• A contract is mutual assent, that is, it is a legal agreement created by an exchange
of promises between two parties to do or not to do something.

Why contract law ?
 The law of contract particularly relates to an agreement
enforceable by law. Basically it relates enforceability of promises.
 Contract Law is for security and stability of business world.
 Contract law is basis for trade and Commerce.
 There is no security, if there is no binding nature of promises.
 Contract Law is foundation of commercial law or mercantile Law.
 Everyone enters in a contract several times a day Vis; purchasing
groceries, riding on a bus or taxi; having a cup of tea or coffee in
restaurant, taking the laundry services etc.
 Criminal Law imposes duty / punishment in violation. But contract
law as a Private legislation imposes obligation in breach such as
compensation, specific performance e.t.c.

Development of contract law
 Contract law is developed as part of obligation
 Developed as a private law or private legislation.
 18th and 19th century/existence of natural law.
 During the 19th century philosophy of lasses faire took root.
 At that time judges created more principles which are the basis of
contract law.
 At that time more people thought that law should interfere people
as less as possible. / Cause of private legislation or contract.
 People felt only statutory law can not provide fairness and justice in
each and every transaction.
 Contract was introduced for the private agreement of parties.

Some Definitions of Contract
Section 1 of Contract Act 1950 of Malaysia
(e) every promise and every set of promises, forming the consideration
for each other, is an agreement;
(h) an agreement enforceable by law is a contract
Indian Contract Act 1872
Section 2 (h) – “Contract is an agreement enforceable by law’’
Muliki Civil (code) Act, 2074- Part 4- contract and other liablity
related
 Section 504 (1) has defined the Contract is an agreement
Concluded between two or more parties to do or not to do
something which must be enforceable by law.
Sir William Anson
A legally binding agreement between two or more persons by
which right are acquired by one or more to act or forbearances on
the part of others.

Definitions continue
Salmond
A Contract is an agreement creating and defining
obligation between the two parties or more
persons.
Frederic Pollock-
A contract is a promise or set of promises for the
breach of which law provides remedy.
Halsbury defines that “A contract is an agreement
made between two or more persons which is
intended to be enforceable at law”
Black’s Law Dictionary defines “An agreement
between two or more persons which creates an
obligation to do or not to do a particular things.
Jiban Prasad Dallakoti, LLM/Corporate
Lawyer
Agreement and Contract
 Set of promise +some consideration = Agreement
 Agreement +Enforceable by law = Contract
 All the contracts are agreement but all the
agreements are not contract.
Consensus Ad Idem – Meeting of mind. It is a
Latin legal principle.
Meeting of mind is essence of agreement which
is Consensus Ad Idem.
-Consent at the ‘Same sense’ at the ‘same time’.
No consensus Ad Idem, No Contract

What agreements are contracts
# Section 505 of Muliki Civil (code) Act, 2074- contract can
be done in writing or oral or conduct of the parties. However,
contract can not executed if contract does not complete
certain procedure or formalities that has prescribed by law.
# Section 10 of contract Act 1950 of Malaysia
(1) All agreements are contracts if they are made by the
free consent of parties competent to contract, for a
lawful consideration and with a lawful object, and are
not hereby expressly declared to be void.
(2) Nothing herein contained shall affect any law by which
any contract is required to be made in writing or in the
presence of witnesses, or any law relating to the
registration of documents.

Case Laws
# Balfour v Balfour (1919) - Husband and Wife’s Case
– Husband agreed to pay 30 pound every months to his wife while he
was in abroad. Latter on, he failed to pay and his wife filed a suit
against her husband for recovery the amount. The court denied the
claim because it was only a domestic agreement and did not intention
to create legal relationship.
• This case established that only Agreement plus Only social
obligation is not Contract.
Marrit Vs Marrit (1970)
• The husband promised to transfer a house to his wife, after she
pays the whole installments dues. The wife performed her
obligation but her husband rejected to transfer the house to his
wife. The wife sued her husband and the court decided that her
husband is bound to perform his promises because there was
intention to create legal relationship between them.

Lawyer
Types of Contract
# On the basis of legal validity:-
(a) Valid contract (b) Void Contract (c ) Voidable contract
(d)illegal contract (e) unenforceable contract
# On the basis of formation
(a) Expressed Contract (b) Implied Contract
(c ) Quasi contract- indirect contract. obligation
created by law. Ex. Lost of goods.
# On the basis of performance- Executed and Executory
Contract. Executory means that which remains to be
carried into effect. Contract to be implement in future.
Example-Appoint manager with effect from next year.)
# on the basis of Liability :-Unilateral (one sided contract) and
Bilateral contract.

Lawyer
Elements/essential
elements/Components/Ingredients/prerequisites of Contract
• The scope of an agreement is wider then that of a

contract because a contract must fulfill some
essential elements. It has limited scope which
exists within the limitations of legality. Thus all
contract are agreements but all agreements are
not contract.
• An agreement to be enforceable by law must
possess the following elements, which are
essential for a valid contract.
• In lacking of any necessary element of a contract,
it looses its validity and enforceability.

Elements of a Contract
1. Plurality of Parties
2. Offer and Acceptance
3. Intention to create legal relationship
4. Free Consent
5. Capacity/Competent Parties
6. Lawful consideration
7. Lawful Object
8. Not expressly declared void
9. Clarity and Certainties
10. Possibility to perform
11. Meeting of Mind
12. Legal Formalities

1. Plurality of Parties
• To form a contract, there must be at least two
parties. A promise or a set of promises are
exchanged between offeror and acceptor.
Therefore, two parties i.e. offeror and acceptor
are required for this purpose.
• Example
Amar makes an offer to Bhawana to buy a car for
Rs.5o Lakhs and Bhawana agrees to sell her car
for Rs.50Lakhs. Here, Amar is the offeror and
Bhawana acceptor.
#Muliki Civil (code) Act, 2074 provides in its
definitions that there must be two or more
parties to conclude a valid contract.

Lawyer
2. Offer and Acceptance
• There must be at least two parties to form/create
a contract. The agreement involves a valid offer
by one party and a valid acceptance to the offer
by the other party. Both the offer and acceptance
must be communicated to person who accepts an
offer, and to the person who makes an offer.
• The offer and acceptance must be “consensus ad-
idem”. It means that the both parties must agree
upon the same thing in the same sense.

Lawyer
3. Intention to create legal relationship
• The parties to a contract must intend to create legal
relationship. The relationship, which is enforceable by
the law, is known as legal relationship.
• It is assumed that all business agreements, parties have
intention to create legal relationship. But in the case of
agreements of friendship, social or moral nature or
domestic nature, it is assumed that the parties have no
intention to create legal relationship.
• A invites B to have a breakfast and B accepts the
invitation. It is a social agreement, which does not
intend to create legal relationship because either A fails
to serve breakfast to B or B falls to attend the
breakfast, neither of them can go the court of law for
enforcement of the agreement.

4. Free Consent
• If the parties give their consent freely or
knowingly or voluntarily, it is terms as free
consent. Therefore, every valid contract
requires free consent of the parties.
• A positive decision towards the terms of the
agreement is consent.
• If the consent is made by any means of
coercion, fraud, undue influence,
misrepresentation or mistake, such consent is
not said to be free.

Lawyer
5. Capacity to contract /Competent
Parties
• Both parties to the agreement must be capable of
entering into a contract. It means that both the parties
must have qualification prescribed by law.
# Muliki Civil (code) Act 2074 section 506- minor and
person of unsound mind (not mentally capable
person).
# any person who has not completed the age of 16 or
minor
# Who is not of sound mind
# who is declared disqualified by law
 Incompetence to contract makes an agreement void.

6 Lawful consideration
• Consideration is “something in return”. There is general
rule that no consideration no contract.
• Consideration means an advantage or benefit from one
party to another party. The agreement is legally
enforceable only when the parties give something and
get something in return or something for something.
Not only cash and kinds but to do or not to do
something.
• Consideration may be past, present and future and
positive or negative. The consideration must be lawful.
• Exception is contract of agency or contract based on
love and affection.

Lawyer
7. Lawful object
• The object of an agreement must be lawful. It
is prerequisite of a valid contract.
• The object must not be contrary to the
prevailing law or public policy or morality.
• Example: A provides Rs.50,000 to B for
restrain his lawful marriage with C. This
contract is void because lawful marriage is a
legal right of B. Here, the object of contract is
contrary to the prevailing legal provision.

Lawyer
8. Not expressly declared void
• The agreement must have not been expressly
declared void by any prevailing law of the
country.
• If a contract is made contrary to current law is
regarded as void. So the contract which is
expressly declared void by law is no more
contract.
• Exe: In restrain of trade, In restrain of legal
proceeding.

9 Clarity and Certainties
• Ambiguous and vague contract can not be
performed. So the terms of the contract must
be clear.
• A contract which is vauge term as it does not
provide reasonable meaning thereof void ab
initio.

10. Possibility to perform
• The obligation must be possible to perform.
• If a contract creates impossible obligation to
perform to the party, it is itself void.
• Exe- a contract to change the color of sky.
• Generally law does not compel to do
impossible work.

Lawyer
11. Meeting of Mind
• Two parties should agree the term in same sense.
• Two or more persons are said to consent when
they agree upon the same thing in the same
sense.
• Mutual assent or consensus ed idem) is a phrase
in contract law used to describe the intentions of
the parties forming the contract.
• It refers to the situation where there is a common
understanding in the formation of the contract.
• This condition or element is often considered a
necessary requirement to the formation of
a contract.

Lawyer
12. Legal Formalities
• The legal formalities are determined by the local
law of land. The agreement must fulfill the
necessary legal formalities to form a valid
contract.
• Part 4-Section 464 of Civil (Code) Act, 2074 says
that the house rent agreement above one lakhs
and ownership transfer of immovable property
should be registered.
• If legal formalities do not complete, agreement
looses its enforceability.
•
Offer (proposal)
• Rujan makes an offer to Ruben to buy a car for Rs.15lakhs
and Ruben agrees to sell his car for Rs. 15 lakhs. Here,
Rujan is the offeror and Ruben is acceptor.
• Offer must be definite and acceptance must be absolute or
unconditional.
• The person making the proposal or the Person who makes
that proposal is called :-“Promisor”or“offeror”.
• The person to whom it is made or the person accepting the
proposal is called “promisee” or “offeree”.
• “Merely supplying of information can not be treated as an
offer and acceptance, so as to create a valid contract”.
• Offer of a contract is an expression of willingness to
contract on certain terms, made with the intention that it
shall become binding as soon as it is accepted by the
person to whom it is addressed.
Lawyer
Types of Offer
1 Express – words, spoken or written
# an offer which is made by words of speaking or by
writing is known as express offer.
‘A” will you buy my house in one cores.
‘B’ yes, I will purchase in this price.
They made agreement – Written.
2 Implied
By conduct or circumstances.
# An offer is made by conduct of party is known as implied
offer.
Saja Bus Company runs a bus on a particular route there is
an offer to carry the passenger. If the passenger rides that
becomes offer after acceptance.

Lawyer
Cont.
3 Specific
When an offer is made for to a particular or definite person . It can be accepted by
that person only.
A proposed only for B to buy A’s a piece of land.
C the brother of B can not accept.
This offer is only for B.
4. General
Offer is made for entire universe.
• Sec 511 of Muliki Civil (code) Act 2074 reads that if the advertisement published
for public to offer to do something by giving remuneration then publisher has to
give said amount If any one claim that h/she has worked that work as per
advertisement.
• Contract according to proposals presented before the public.
• Case; Carlill V. Carbolic Smoke Ball Co. 1893 1QB 256.
‘A’ Company by notice announced to pay £100 in case of not recovering infection
diseases by using the medicinal balls
But not recovered and claimed by ‘A’ that was only puffing advertisement.
# But the Court held that ‘A’ is liable to pay the promised reward.
5 Negative Offer, Positive Offer and Counter Offer also can put under types of
offer.

Lawyer
Rules regarding Offer
i. Offer must be made to obtain the
assent/consent to create contractual obligation.
There must be intention to create legal relation.
ii. Offer should be clear and specific. It should be
definite.
iii. Different from invitation to offer.
iv. Counter offer is the rejection of original offer
v. Offer may be expressed or implied
vi. An order is not an offer
vii. Mere expression not an offer
Cont.
• Advertisements catalogues or store flyers are not offers
• ‘For sale”is not offer.
• Only prospectus to subscribe share of a company is not
offer
• Application of share is offer.
• Allotment is the acceptances.
• Price list at petrol pump – Invitation, odder by the
Consumer to fill the petrol – offer.
• Filling of the petrol by petrol Pump is acceptance.
• Advertisement of tender is only invitation. An offer must
be definite / certain.

Lawyer
Lapses of offer / duration of offer
• Offer lapses after reasonable or stipulated time.
• Lapse by death or insanity.
• Subsequent illegality or destruction in
subsequent matters.
• When condition is not accepted by offeree.
• Be denying or rejection.
• Counter offer by offeree, accepted with some
other offers.
• Revocation by offeree, revocation before
accepting.

Lawyer
Acceptance
• To agree, to receive or to do something offered.
• Only offer has no meaning to be made a contract, acceptance is
equally important essential to form a valid contract.
• the term acceptance means ‘Absent or consent or affirmative
answer to offer.
• Country or Muliki Civil (Code) Act, 2074 defines “Acceptance
means the consent given by the person to whom a proposal has
been presented in the same meaning of that offer”
• 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 promises.
• Anson says “ acceptance of an offer is the expression, bywords or
conduct of the assent to the terms of the offer in the manner
prescribed or indicated by the offeror”
• It denotes the affirmative response to an offer regarding to do or
not to do something. .. Has to follow all conditions of the offer.

Rules Regarding to Acceptance
i. Acceptance must be given only by the person to
whom the offer is made
ii. Acceptance must be absolute and unconditional
iii. It should be in a reasonable mode
iv. Acceptance must be communicated by the
acceptor
v. Acceptance must be given within a reasonable
time and before the lapse or revocation of offer
vi. Acceptance must succeed the offer
vii. Rejected offer can be accepted only, if renewal
Types and condition of acceptance
1. Express or Implied Acceptance
#Acceptance is express when it is made by words, spoken or written. In case of offer made in writing
acceptance must be given accordingly.
# Implied when it is made by doing some required things. Acceptance is implied when it is to be
gathered from the conduct of the person. Acceptance given by conduct is termed as implied.
2. Absolute and Unconditional Acceptance
3. Acceptance by Whom. This means acceptance must be given only by the offeree.
4. Knowledge of offer
5. Mode of offer must be as prescribed
6. Acceptance must be communicated. (Communication of acceptance)
7. Acceptance must be given within fixed time or reasonable time.
8. Acceptance must be given after receiving the offer.
9. Once offer rejected by offeree it can be accepted later.
10. Acceptance must be given before the laps of offer.

Communication of Acceptance
• Communication is an act of exchanging views,
opinions, ideas or thought. Means it is the process of
transmitting information from one person to another.
• An acceptance must be communicated to the offerer to
be regarded as valid.
• Important of communication is that the offerer must
know whether his offer has been accepted or not.
• Knowledge about the acceptance to the offerer is
necessary and sufficient condition to form a contract in
the view point of communication of acceptance.
• Acceptance is not completed unless and until it is
communicated to the offerer.
Lawyer
Means of Acceptance
• Communication can be done through different
means of communication including telephone,
fax, internet, post etc.

Lawyer
Void Acceptance
Following are the causes of Revocation or
Lapse of Acceptance
• 1. Acceptance revoked by notification
• 2. By death or insanity of offeree
• 3. By the effects of two notices
• 4. By lapse of time
• 5. By non communication

Lawyer
Consideration- definition
• Consideration is some thing of value promised by one party to another while
entering into a contract. Promise without ‘something in return’ is not enforceable.
This something is called consideration.
• Consideration should contain payment of money, some act or promise.
• For a valid consideration there must be a promise from both sides. The
consideration is certain value getting and loosing by the parties pursuant to the
contractual rights and obligations.
Sir Frederic Pollock : “Consideration is the price for which the promise of the other is
bought”
Black’s Law Dictionary : “The inducement to a contract, the cause, motive, price or
impelling influence which induces a contracting party to enter into a contract, the
reason or material cause of contract”.
Blackstone : “consideration is the recompense given by party contracting to the

other”.
Prof. Anson defines one the basis of its nature, that “ consideration must be valuable
in the eye of law”

Types of Consideration
1. Past consideration (executed consideration)

2. Future consideration(executory consideration)
3. Present consideration (executed
consideration)
4. Positive or Negative Consideration
(can be classified on the basis of contractual
obligation)

Lawyer
Rules regarding consideration
1. consideration to be given at the desire of the
promiser. (desire of the promiser must be seen)
2. Consideration must be something of value.
3. Consideration must be real
4. Consideration must not be illegal, immoral or
opposed to public policy.
5. Consideration may be direct or indirect.
6. Consideration need not be adequate.
Comparison of English and Malaysian law
• Consideration is fundamental prerequisite in

English contract law. A promise will not be
enforceable unless it is supported by
consideration.
• In some cases, consideration can be provided by
promise not to sue. If A has claim against B, A’s
promise not to enforce claim can be valid
consideration for promise given by B in return. So
if B negligently damages A’s property, A’s promise
not to sue B for negligence can be consideration
for B’s promise to pay for the damage.

Lawyer
Cont.
# section 26 of Malaysian contract act 1950 says
An agreement made without consideration is
void, unless it is in writing and registered or is a
promise to compensate for something done or
is a promise to pay a debt barred by limitation
law.
# In English law if other than the promisee
provide consideration, then the promise could
not be enforce by the law, However under the
Malaysia law third party of promise are allowed
to provide consideration.

Lawyer
Agreement without consideration
• Generally it is assumed that No consideration no Agreement.
• Roman maxim ‘ ex mudo non oritur actio’ . It means an agreement without
consideration is no contract.
• Creating a legal obligation is that there must be consideration.
Exceptions :
(1) Natural love and affection
(2) Exchange of gift
(3) Promise to compensate
(4) Agency
(5) Promise to pay time barred debt
(6) Charity
• # Country Civil (code) Act, 2074 does not provides any definitions of consideration.

Capacity to Contract
# the term contractual capacity means the legal
capacity of the parties to a contract. It is one of
the essential elements of the valid contract.
# Contract must be formulated by the capable or
competent parties in accordance with the
prevailing law for its validity and enforceability.
# Every person is competent to contract who is the
age of majority according to law which he is
subject and who is of sound mind and is not
disqualified from contracting by any law to which
he is subject.
Lawyer
1. Attain the Age of Majority
• Minor is a child, it refers an infant person who
has not attained certain age as prescribed by law
for certain purpose.
• In nepal, the age of majority is 20 years to the
both bride and bridegroom for the purpose of
marriage as per County Civil(code) act, 2074.
# Section 2 of Children Act, 2075 of Nepal:-
Children means “the person who has not attained
the age of 18 years”.
# Section 66 of the Companies Act, 2063 says, the
children who has not attained the age of 16, can
not purchase shares.

Lawyer
Rules regarding Minor
Law protects the interest of minor from unfair advantage by
adult.
1. A contract made by or with a minor is void.
2. Beneficial to minor is valid.
3. No ratification is possible after minor is adult.
4. Estoppel does not apply
5. Contract can be made on behalf of minor
6. The minor as partner- benefit can be shared. limited liability only
investment.
7. Minor cannot be declared insolvent
8. Contract of necessary is valid one.
9. The minor as Shareholder or member of the company
through his/her guardian.

Lawyer
2. Sound Mind
• The sound mine means the normal condition of mind
through which a person understand the cause and
consequences of actions.
• Loosing soundness of mind of a person is called an
unsound mind.
• A person is said to be of sound mind for the purpose of
making a contract, if at the time when he makes it is
capable to understand the terms of the contract and to
form a rational judgment as to effect on his interest.
1. Lunatic 2. Drunker person
3. Idiot : an idiot is a person who has completely lost his
mental faculties of thinking.
4. Person of Slow pace of mind
3. Not Disqualified
Following are the Person Disqualified by law
1. Alien enemy
2. Person having diplomatic privileges
3. Convicted person in crime
4. Insolvent
5. Company/corporation.
6. Professional person

Lawyer
Intention to Create a legal relation
Meaning
- The agreements are not contract without intention of parties to create legal
relationship between them.
Agreement- commercial and business
- All general agreements of commercial nature are legally binding.
• Agreement Domestic, social and family
- In the case of Balfore, promised to pay to his wife on medical ground. So does not
create legal relationship at the time of promise.
- Domestic agreement with legal binding. In the case of Merritt. His
wife pay money againt mortgage and later she claimed house
ownership in her name. Husband Merritt denied. but the court
held, in this case, agreement between husband and wife creates
legal relation, so Agreement is legally binding.

Lawyer
Void and Voidable Contracts
Free Consent
- Free means not under the control of anyone else
or able to do what one wants. Consent means an
agreement.
- The free decision to form a contract by the
parties is known as free consent.
- Two or more persons are said to consent when
they agree upon the same thing in the same
sense.
- Being agreed to do or not to do something, in the
same sense taken by offerer is called consent.

When consent is not free
• There are certain circumstances or flaws which
the law presumes that the consent of the parties
is not free.
• Section 518 of Country Civil (code) Act 2074 is
related about the voidable contract.
1. Coercion
2. Undue influence
3. Fraud
4. Misrepresentation
5. Mistake
Lawyer
1. Coercion/duress
• Compelled to do or not to do, against his/her willingness or judgment.
• Hampering factor of voluntary consent.
Coercion if any of the following acts if employed to obtain the consent:
1. The act of coercion must be done with the intention of causing the other
party to enter into a contract.
2. By unlawful detaining or threatening to detain his property.
3. By threatening to affect his life or prestige.
4. By threatening to commit any act forbidden by prevailing laws.
Conditions or circumstances for non coercion
1. Threat to law suit/prosecute. Should not be of false case.
2. Threat to suicide
3. High price
4. High rate of interest.

Lawyer
2. Undue influence
• Under any kind of influence, which prevent such party
from exercising a free and independent decision.
1. Person of real or apparent authority:
tax officer---assessee, police officer----accused
person,.
2. Fiduciary relation : close relation due to their work
nature. Doctor—patient. Lawyer---client, professor----
--student.
3. Mentally or physically weak person.
4. Inadequacy of consideration

Lawyer
3. Fraud
• To fraud means to cheat.
• Fraud is a false statement made to trick someone,
to enter into a contract.
• Fraud is an untrue statement made knowingly, or
without belief in its truth or recklessly, carelessly
whether it be true or false.
Basic Elements of fraud:-
1. There must be false representation.
2. Actually acted. There must be certain loss.
3. Fraud by one party of the contract.
4. Any act declared as fraud by existing law.
Lawyer
Consequences of fraud
1. Legal action need to avoid the contract
2. Acceptance and demand
3. Claim of damages.
- Mere Silence is not a fraud. But silence is fraud in the

following conditions:-
1. Statutory or legal obligation to disclose
2. Contract of utmost confidence(insurance contract)
3. Changes if circumstances
4. Half truth
5. Silence equivalent to speech.
Lawyer
4. Misrepresentation
• A misrepresentation is a representation that is untrue
in reality. It means a statement of facts not a statement
of intention or opinion or about law.
• Anson “ Misrepresentation is false statement which the
person making it honestly believes to be true or which
at any rate, he does not know to be false.”
• False statement made without any reasonable ground
to support it.
• Any party deceived injuriously by the other.
• Mistake committed on the subject matter of contract.

Lawyer
5. Mistake
• Mistake is a wrong opinion about something.
• An erroneous belief concerning a particular thing is
known as mistake.
• Mistake affects the meeting of mind of the contracting
parties.
• Mistake of Law- Mistake as to Foreign law may be
allowed because it has the same effect as a mistake of
fact. Mistake of law of own country cannot be excuse.
• Mistake of Fact. Bilateral and Unilateral
• Both the parties to the Agreement are under a mistake
as to matter of fact essential to the Agreement, the
Agreement is void. (contract law of India)
Lawyer
Certainty
• Certainty means it must be precise and
definite in order to be subject to acceptance. .
• Not so vague or uncertain
• Certainty should be—subject matter, purpose,
design, intention, motive,procedure
• Unlawful object is void.
• Unlawful Agreement
• Agreement opposed to the public policy
• Void Agreement
• Wagering Agreement.
Lawyer
Void Agreements
(section 517 of country civil (code)Act 2074
• Void means no need to declare void.
• An agreement is not enforceable by law is said to be void.
• It does not create rights and obligations because it is not enforced by the court of law.
(1) Agreement in restraint of trade
Exceptions:- Sale of good will, existence of partners agreement, agreement not accepting service,
sole dealing agreement, service contract.
(2) Agreement in restraint marriage
(3) Agreement in restraint for using public facility to the general people
(4) Agreement in restraint of legal proceedings
5) Agreement against law or restrain by law
6) Agreement having immoral or public order
7) Agreement made by mutual mistake
8) Agreement to do impossible work or imaginary contract.
9) Agreement having uncertain meaning
10) Agreement by incompetent party
11) Agreement having unlawful objective
12) Essential fact of the Agreement made by mistake by the parties.

Section 24 of Contract Act of Malaysia
• The consideration or object of an agreement is lawful, unless—
(a) it is forbidden by a law;
(b) it is of such a nature that, if permitted, it would defeat any
law;
(c) it is fraudulent;
(d) it involves or implies injury to the person or property of
another; or
(e) the court regards it as immoral, or opposed to public
policy.
In each of the above cases, the consideration or object of an
agreement is said to be unlawful. Every agreement of which the
object or consideration is unlawful is void.

Null Agreements
• A matter that is absolutely void is called null.
• Agreement prohibited by law is comes under Null
Agreement.
• What is Null and Void, as per Black’s Law Dictionary
“Something redundant, or that has no value, or effect,
commonly used in the legal sense”.
# Unlawful Agreement----not made in accordance with law.
• Fraudulent Object..the agreement is made to impose a
fraud upon a third person, it is unlawful and void.
• Defeating the provision of any law..two rent agreement for
the same house to evade taxes and is therefore unlawful.
# Wagering Agreement is also prohibited. It is unenforceable
by the court of law.

Law of Agency
Existence of Agency
• Business is a complex nowadays. One can not carry his/her business along. The
circumstances require a business man necessarily depend on other persons for the
efficient running of the business.
• Delegates power to another person to perform contractual work.
• Another person who woks on behalf of businessman is known as Agent.
• The person to whom the act is done or who is so represented is called the
Principal.
• The contract which creates the relationship between the principal and agent is
called a contract of agency. And a law which deals the agency contract is called
the Law of Agency.
• When one person appoints another person as his/her representative to do
something on his/her behalf, the relationship is established and it creates agency
relationship….
• Competent person can be appoint as agent.
• No rule but appointment by principal in his/her pleasure.
• The principal delegates the authority to the agent to do work for him/her behalf.
• No consideration is required in a principal- Agent

Lawyer
Existence of Agency/Definitions
Section 591 of Country Civil(code)Act, 2074
Every person appoints any other person as his/her representative to do anything on his/her behalf
except the subject concerning his/her personal skill, or to conduct business or any transaction with
a third person oh his/her behalf or to represent himself to such person or to establish legal
relations with principal person and a third person in case the person is appointed in this way, it is
deemed to have been concluded the contract of Agency.
Section 135 of Malaysian Contract Act 1950
• An “agent” is a person employed to do any act for another or to represent another in dealings with
third persons. The person for whom such act is done, or who is so represented, is called the
“principal”.
Black’s Law Dictionary
A fiduciary relationship created by express or implied contract or by law, in which one party(the
agent) may act on behalf of another party (the Principal) and bind the other party by word or
actions.
G.H. Treitel
“Agency is a relationship which arises when one person, called the Principal, authorises another
called the agent, to act on his behalf, and the other agrees to do so. Generally the relationship
arises out of an agreement between principal and agent. It enables the agent to make a contract
between his principal and a third party.”

Appointment of Agency
(1) Agency by express Agreement
(a) General power of attorney-to do all dealings
(b) Special power of attorney- a special transaction
(C ) Particular power of attorney-single act.
(2) Agency by Implied Agreement
(implied modes of authority)
(a) Agency by estoppel (B) Agency by holding out
(b)Agency by necessity
• By ratification
• By operation of law

Lawyer
Types of Agency
# on the basis of Authority---
(1) General Agent
(2) Special Agent
(3) Universal Agent
# Nature of work Performed or on the basis of transactions
Commercial (Mercantile) agents
• Factor
• Broker
• Commission Agents-to buy goods in a foreign market.
• Del-credare Agents- provides guarantee to principal for extra commission.
• Auctioneer agents ..
• Bankers
Non- Commercial (Non Mercantile) Agents
• Attorney
• Lawyers
• Spouse
• Election agent

Sub-agent and Substitute Agent
• Sub-agent is one whom the original agent
appoints to assist him/her.
• A substituted agent is the person appointed
by an original agent to act for the Principal in
the business of agency, with the knowledge
and consent of the principal.
• The substituted agent is also known as a co-
agent.

Lawyer
Differences of Subagent and
Substituted Agent
1. Appointment
2. Control
3. Nature of delegation
4. Relationship
5. Nature of power
6. Responsibility
7. Liability
8. Remuneration
9. Sue

Lawyer
Agent- Principal Relationship
• Legal Representative: A contract of agency is a
legal relationship between agent and principal
to deal third party on behalf of principal by
agent.
• No employment is created between agent and
principal.
• What ever a person can do, he/she may do so
through an agent.
• Authority. Direction. Liability. Remuneration.
Lawyer
Power of the Agent
1. Right to receive commission
2. Right to retain money
3. Right to particular lien-- on the goods/or
property.
4. Right to stoppage in transit
5. Right to indemnifications of costs of incurred in
a lawful act.
6. Right to be indemnified for the act in good faith.
7. Right to compensation of loss
Lawyer
Termination of the Agency relationship
1. By act of parties
(a) By agreement
(b) By revocation
(C ) By renunciation
(d) By completion of work
2. By operation of law
( a) By expiry of time
(b) By death or insanity
(c ) By insolvency of the Principal
(d) By destruction of subject matter
(e) On dissolution of a company
(f) If alien enemy
(g) On change of law
# Section 597 of Country Civil(code) Act, 2074

Law of Sales of Good
• Transfer of ownership of goods
• Moveable goods—goods means any movable
goods which can be sell except money, securities
and actionable claim.
• Price
• Buyer---person who buys and Seller who sells or
agree to sell the goods.
• Sale of goods means transfer of ownership of
goods for price from seller to the buyer.
Ownership is the legal right over the goods of a
person.
Lawyer
Definitions of Sales of Goods
Part 5, Chapter 6,Section 545 of Country Civil Code Act, 2074 of Nepal
A contract relating to sales of goods shall be deemed to have been
concluded in case any seller agrees to hand over any goods to the
buyer immediately or in the future by receiving a price.
Indian Sales of Goods Act, 1930
A contract of sales of goods is a contract whereby the sellers transfers
or agrees to transfer the property in goods to the buyer for a price.
Sales of Goods Act, 1957 of Malaysia
4. (1) A contract of sale of goods is a contract whereby the seller
transfers or agrees to transfer the property in goods to the buyer
for a price. There may be a contract of sale between one part owner
and another.

Lawyer
Essentials elements of Sales of Goods
1. Goods/Movable Property- money, Securities and
actionable claim are not goods.
2. Price
3. Two parties
4. Transfer of Ownership
5. Sale or agreement to sell
6. Terms of Contract- place, price, goods, mode of
payment, mode of delivery, time
7. Essentials of valid contract
Lawyer
Terms of the Contract of Sales of
Goods
• At the time of selling of goods.
• The terms of contract of sales of goods which
form a part of the contract…Condition or
warranties.
• Conditions……..hardcore/essential
• Warranties….not vital/only claim damage.

Express Terms
• Are those which clearly mentioned in such
contract and the parties are agreed upon
those conditions at the time of formation of
contract.
• Both in condition and warranty, express terms
are clearly mentioned.

Lawyer
Implied Terms of Condition
• Not mentioned clearly at the time of formation of
contract. Such conditions are established on the basis
of recognition of law.
1. Condition as to title
2. Condition in sales of goods by description
3. Condition in a sale by sample
4. Condition as to fitness or quality of goods
5. Conditions as to merchantability
6. Conditions as to wholesomeness---good for health in
the case of eatables.
7. Conditions as to price.

Lawyer
Implied Terms of Warranty
1. Warranty of quiet possession of buyer
2. Warranty as to freedom from encumbrances.
3. Warranty to disclose dangerous nature of
goods
4. Warranty implied by custom or usage of
trade

Lawyer
Nemo Dat Quod Nan Habet and
Exceptions
• Common law principles- one can not give what he
has not.
• “No one can give what he does not himself
possess”
• No one can pass better title then he acquired.
• Only true owner is entitled to sell the goods.
• Authority-Ownership-Possession
• Main objective is to protect the right and interest
of true owner

Lawyer
Exceptions to the transfer of title
1. Sale by a mercantile agent.
2. Sale by co-owner (one of the joint owners).
3. Sale by a person in possession of goods under voidable
contract.
4. Sale by seller in possession of goods after sale
5. Sale by a buyer in possession of goods under an agreement
to sell.
6. Resale by an unpaid seller
7. Sale by a finder of lost goods
8. Sale by a pledge in case of default of debt payment
9. Sale by liquidator/or official assignee
10. Purchase in market- overt….buys in open and public market
Lawyer
Remedies to Buyer against seller
1. Suit for specific performance
2. Suit for damages for non delivery
3. Suit for breach of warranty
4. Suit for interest
5. To treat the contract as alive.

Lawyer
Remedies to Seller against Buyer
• Goods are sold on both cash and credit.
• Remedies need to seller if price not get.
1. Rights against the goods
A. right to lien
B. right of stoppage in transit
C. right to resale
2. Rights against the buyer personally
A. Right of suit for price
B. Right of suit for damages for non acceptance
C. Right of suit for damages in case of repudiation
(cancel the contract before the date of delivery)
D. Right of suit for interest

Lawyer

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Business Law for

Himalayan College of Management

Jiban Prasad Dallakoti, Advocate

• Lesson 42 hours (guided), other activities

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

• The scope of an agreement is wider then that of a

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Blackstone : “consideration is the recompense given by party contracting to the

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

1. Past consideration (executed consideration)

Jiban Prasad Dallakoti, LLM/Corporate

• Consideration is fundamental prerequisite in

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

- Mere Silence is not a fraud. But silence is fraud in the

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate Lawyer

Jiban Prasad Dallakoti, LLM/Corporate

Jiban Prasad Dallakoti, LLM/Corporate

# Section 597 of Country Civil(code) Act, 2074

Jiban Prasad Dallakoti, LLM/Corporate Lawyer