INTERNATIONAL SCHOOL OF INFORMATICS AND

MANAGEMENT

BUSINESS LAW
SUBMITTED TO:- Dr. Osheen
Modi
SUBMITTED BY:- Savi
Bilandi
MBA 4th
sem.
1
Q.1.
What is breach of contract? Discuss in brief the remedies
available to an aggrieved party in case of breach of
contract.
What Is a Breach of Contract:-

A breach of contract is a violation of any of the agreed-upon terms and

conditions of a binding contract. The breach could be anything from a late
payment to a more serious violation such as the failure to deliver a
promised asset. A contract is binding and will hold weight if taken to court. To
successfully claim a breach of contract, it is imperative to be able to prove that
the breach occurred.

Understanding a Breach of Contract :-

A breach of contract is when one party breaks the terms of an agreement between two
or more parties. This includes when an obligation that is stated in the contract is not
completed on time—you are late with a rent payment, or when it is not fulfilled at all
—a tenant vacates their apartment owing six-months' back rent.

Sometimes the process for dealing with a breach of contract is written in

the original contract. For example, a contract may state that in the event of late
payment, the offender must pay a $25 fee along with the missed payment. If the
consequences for a specific violation are not included in the contract, then the parties
involved may settle the situation among themselves, which could lead to a new
contract, adjudication, or another type of resolution.

Discuss in brief the remedies available to an aggrieved party in

case of breach of contract:-

A contract is a legally binding agreement that is enforced by the full weight of

the court. In the event that either party to a contractual agreement fails to
perform according to the terms of the contract, the other party may take legal
action. The party who fails to perform is referred to as the breaching party.  A
civil lawsuit for breach of contract may be filed to obtain a remedy for the
breach.

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There are a variety of remedies available for a contract breach:-

The appropriate compensation or remedy depends upon the circumstances. The

non-breaching party will need to demonstrate that the other party failed to
perform in order to be entitled to any type of remedy. The Southern California
Breach of Contract Lawyers at Brown & Charbonneau, LLP can provide legal
representation in cases where one party failed to perform according to the terms
of a contractual agreement.

WHAT ARE THE REMEDIES AVAILABLE FOR A

CONTRACT BREACH:-
The remedies available for a contract breach include:

 Monetary damages. The party who breached the contract can be held
responsible for the losses caused by the breach.  Both general or
expectation damages and consequential damages can result from a breach
of a contract.  General or expectation damages refer to the loss directly
caused by the breach. Consequential damages refer to losses that occurred
because of the breach but that were an indirect cause.  For example, if
you contracted and paid for a machine to be delivered and it never came,
the general losses would include the value of the money you paid for the
machine. The consequential losses could include the loss of business
caused by the fact you did not have the machine you needed to do your
work.
 Specific performance. In some cases, the appropriate remedy for a
breach of contract is to correct the breach by forcing the breaching party to
complete the terms of the agreement. Specific performance is an
appropriate remedy in situations where monetary damages could not
possibly make the non-breaching party whole for the losses. For example,
if there was a contract created for a buyer to purchase a very rare piece of
art, the buyer could not simply find the art elsewhere. The only remedy
that would help the buyer in this circumstance is for the court to require
the sale to go through so the buyer got the unique one-of-a-kind painting
that he contracted for.
 Rescission. Rescission allows the non-breaching party to essentially be
released from performance obligations. Recession is a remedy for a breach
of contract because it makes clear that the party is relieved of his duties
due to the failure of the other party to perform.
 Liquidation damages. Sometimes, it is very difficult to determine how
much a person was damaged by a breach of contract. To address this

3
 problem, some contracts contain liquidated damage clauses. Essentially,
these clauses specify that the non-breaching party will be awarded.

Q.2
Explain redressal mechanism available under Consumer
Protection Act ?

Redressal Mechanism Under Consumer Protection Act, 1986

  

In this blog post, Sreeraj K.V., a student of Government Law College,

Ernakulam, Kerala writes about the importance of the redressal machinery
under the Consumer Protection Act, 1986. The post discusses the importance of
the Act, the functions of the grievance redressal commissions at various levels
including their jurisdiction and powers.

Consumers play a key role in maintaining the economy of

India. Each and every person constitutes a consumer because each one of us is
engaged in some form of exchange of goods or services through money as a
medium. Gradually, there arise many kinds of disputes among the consumers as
well as consumers and the sellers. In this context, it has to be stated that there
lies a need for a statute which regulates the friction between the consumers and
the sellers. For this purpose, Consumer Protection Act was enacted in the year
1986 to look after the various rights and duties of the consumers during the time
of purchasing a product and even after that. The Act plays an important role in
the fields where there arises an incidence of exchange of goods or services
between two persons where money acts as a medium. The Act also provides
certain guidelines as to what measures must be complied with during the time of
such exchange, what are the various rights available to both the buyer and seller
etc. It also provides certain provisions regarding the need and formulation of
various. Consumer Redressal Centres’ both at the central as well as
states level.

The Act lays down certain provisions regarding the definition of consumer,
various consumer protection councils, and provisions in connection with various
consumer redressal agencies in India as well as other miscellaneous provisions.
Among this, provisions relating to consumer redressal agencies demand a lot of

4
attention in the present Indian scenario. Many people are still not aware that
there are such agencies working in favor of consumers in every district. Due to
this reason, many of them are not getting proper solutions for their problems as
consumers. Chapter III of the Act provides for the implementation of redressal
agencies. Section 9 of the Act provides for ‘establishment of consumer dispute
redressal agencies’ which include:

 A District forum established by the State Government in each district

of the State by its notification.
 A State Commission established by the State Government in each state
by its notification and
 A National Commission established by Central Government by
notification.

District Forum:-

Each District Forum shall consist of a person who is or has been qualified as a
District judge, as the President. There must be two other persons who are not
less than thirty-five years of age and also possesses a degree from a recognized
university. The persons must have adequate knowledge in the field of
economics, commerce, industry, public affairs, and administration. The district
forum must have the jurisdiction to entertain such complaints where the value of
goods or services and the compensation, does not exceed Rs. twenty lakhs. The
need for district forums for consumer redressal is that majority of the people
who face any consumer rights violation are unable to file a complaint in a state
or national forum because such f have to look at matters concerning various
other district forums which result in a large number of pending cases. District
forums are also enabled with a faster way of dispensing consumer redressal as
the amount of claim is pretty less than that of State/National redressal forums
which enables normal people to seek a solution for their problems.

State Commission:-

Each State Commission shall consist of a person who is or has been a judge of
High Court as its president. The Commission also consists of not less than two
members, who are above thirty-five years of age and also possesses a degree
5
from a recognized university. The persons must have adequate knowledge in the
field of economics, commerce, industry, public affairs, and administration. The
Act also states that not less than fifty percent of the members shall be from
amongst the persons having a judicial background. The State Commission has a
jurisdiction to entertain cases where the value of goods or services or the
compensation claimed, if any, exceeds the number of Rs. twenty lakhs but does
not exceed Rs. one crore. It also entertains appeals against any District Forum
within the state and also looks after any pending disputes or cases decided by
any of the District forums in which the forums have exercised a jurisdiction not
vested in them by the law, or has been exercised illegally or with any material
irregularity.

 National Commission:-

The National Commission shall consist of a person, who is or has been a judge
of the Supreme Court, to be appointed by the Central Government, shall be the
President, provided that no appointment shall be made except after the
consultation with the Chief Justice of India. The commission shall consist of not
less than four members of its executive committee who shall not be less than
thirty-five years of age and must be graduates from a recognized university.
They must also be specialized in the areas of commerce, economics, and
administration. The jurisdiction of the commission shall extend to any case
where the compensation amount might exceed Rs. one crore and the
Commission shall also entertain appeals against State Commissions. The
Commission also has the power to check any pending disputes or cases decided
by any of the State Commissions where the State Commission has exercised a
jurisdiction not vested in it by law or it has been exercised illegally or with any
material irregularity.

Power of redressal forums:-

There are various powers for all of the redressal forums with regards to its
jurisdiction. Some of them include:

1. Examining, enforcing as well as summoning the witness on oath;

2. Discovering and producing any material evidence;
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 3. Receiving evidence on affidavit;
4. Requesting for report or test analysis from the concerned authorities
and laboratories;
5. Issuing commission for examining the witness;
6. Enforcing any other powers prescribed by the Central or State
Government.

 Limitation period:-

The District, State or National Forum for consumer grievance redressal will not
entertain a case which is filed two years after the occurrence of the case unless
the party/parties can condone themselves regarding the reasons behind the delay
of filing within the specified period. Such a provision was formulated to
increase the accuracy of the function of such forums and also for delivering fast
redressal solutions to the parties.

Conclusion:-

From various landmark judgments by the Supreme Court in connection with

cases affecting consumer rights, it will be clear that there is an increase in the
number of cases involving consumer protection when compared to the past. It
indicates that people are now aware of their various rights as consumers. The
Act not only covers the rights of the consumers but also provides certain duties
for them too. It has been stated that it is the duty of a consumer to ask clearly
about various characteristics and features of the product which he/she wishes to
buy. The Act does not entertain certain malicious acts such as black marketing
and selling a good above the prescribed rate of MRP. The doctrine of ‘caveat
venditor’ (let the seller beware) has been changed into ‘caveat emptor’ (let the
purchaser beware) so that the purchaser will also be aware of various features,
merits and demerits of the good as well as protection of their rights themselves.
There is still an emerging need of various other redressal machineries in this
field due to the increased number of pending cases as well as for implementing
alternative means in the field of consumer protection. The Act may be amended
in such a way that it includes certain dispute redressal mechanisms like
‘Alternative Disputes Resolution’ as a core function of the said redressal
agencies dealing with consumer rights.
7
Q.3

what is the concept of transfer of property under sale of

goods act?Why is it significant?Briefly explain the rules
for transfer of property.?

Passing of Property :-

A sale of goods or property implies a transfer or passing of ownership to the

buyer. The passing of property is an important aspect to help determine
the liabilities and rights of both the buyer and the seller. Once a property is passed
to the buyer, then the risk in the goods sold is that of the buyer and not the seller.
This is true even if the goods are in the possession of the seller. Let us learn more
about the passing of property in the Sale of Goods Act.

Briefly explain the rules for transfer of property.

Passing of Property
There are four primary rules that govern the passing of property:

 Specific or Ascertained Goods

 Passing of Unascertained Goods
 Goods sent on approval or “on sale or return”
 Transfer of property in case of reservation of the right to disposal
In this article, we will be looking at the first two rules.

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Passing of Ascertained Goods:-
This is the first rule of the passing of property. It deals with the passing
of specified goods and states that –Specific or ascertained goods pass when
intended to pass. Section 19 of The Sale of Goods Act, 1930, has three sub-
sections as follows:-

 Sub-section (1): Imagine a contract for the sale of specific or ascertained

goods with a clear mention of the time when the parties to
the contract intend to transfer the property. In such cases, the property is
transferred at the time mentioned in the contract.
 Sub-section (2): To understand the intention of the parties, the terms of
the contract, the conduct of the parties, and the circumstances of the case are
considered.
 Sub-section (3): Sections 20 to 24 of The Sale of Goods Act, 1930,
contain rules to ascertain the intention of the parties. This intention is about
the time at which the property in the goods will pass to the buyer. Let’s look
at these section
Some Points to Remember about the Appropriation of Goods:

If goods are selected with the intention of using them in performing

the contract, with the mutual consent of the buyer and the seller, then
it is called appropriation of goods. Here are some essentials:

 A contract for the sale of unascertained or future goods exists

 The goods conform to the quality and description stated in the
contract
 They are in a deliverable state
 The goods are unconditionally appropriated to the contract either
by delivery to the buyer of his agent or the carrier.
 The appropriation is made by the buyer with the assent of the
seller or the seller with the assent of the buyer.
 The assent can be express or implied
 The assent can be given before or after the appropriation.
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 Q.4.

What is the procedure of registration of Partnership firm

under partnership Act 1932? What are the implications of non
registration of a partnership firm.

Introduction:-

The fundamental premise of understanding of the statutory provisions

associated with the area of partnership is principally derived from the
understanding of the Indian Partnership Act 1932. This was one of the earlier
precedent set in the Indian statutory history which fundamentally evaluates and
analyses the critical junctures associated with the process of partnership in
India.

However this is essentially a relic

of our colonial past which is undoubtedly a no forged one. The fundamental
notion of partnership as an act of mutual trust is essentially not codified.
However, the principle notion associated with the development of such is act is
critically evaluated as major milestone in the statutory history of Indian
jurisprudence which undoubtedly requires major changes in its modus
operandi. Although many judicial precedents have been in resolute, however
none of them have critically made a justification. The fundamental notion of
this understanding is based on the fact that partnership as an act is invariably
based on the fact that partnership as an act requires a factor of mutual trust and
dignity in an amicable manner which is needed in an amicable manner and can’t
be forfeited. However a codification of such a document requires an invariable
amount of flexibility as it necessitates a laudable amount of combination of
statutory compliance and values. However the law of the land necessarily needs
a value phase but in a case of fact value conjectures the fact and the matter of
compliance always presides over the value. However in a rapidly changing
business environment where the impersonal business entity such as a company
are in prominence, the concept of partnership as a business needs much
modification to gain legitimacy and value in changing business environment

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Having said that, among the number of pros and cons, the legitimacy of the
partnership as a business entity needs particular speculation and analysis of the
business environment as a new form of business known as the “Limited
Liability Partnership” has evolved into a mainstream business establishment
model where the concerned business developers can opt for a relative term of
risk and liability which was fundamentally missing in the partnership agreement
and was a much needed change, which is particularly appreciated by the
business communities across the world for the amount of flexibility it provides
for the new business commodities such as startups and other ventures. However
an exclusive understanding of the registration of the firms under the Indian
Partnership Act, 1932.

The Process of Registering a Partnership under Indian

Partnership Act, 1932.

The primary initiative regarding the process of registration or incorporation of

partnership firm is to forward an application filling Form No. 1. As per the
provision of section 58 it should include following details:

1. The name of the firm.

2. The full names and permanent resident address of the partners.
3. The timespan of the firm.
4. Business the date when each partner effuse to the firm.
5. The principal place of business transaction of the firm.
6. The names of any other places where the firm carries its functional
obligations.

This undertaking is needed to be signed by all the associate partners, or by their

respective agents principally given authority in their behalf.

Secondly, all partners should necessarily solicit their signature application form
or their authorised agents in their behalf in the occupancy of a witness who must
be Advocate, Gazetted Officer, Vakil or Magistrate of Registered Accountant. If
a partner declines to sign the application form, registration cannot happen unless
that partner’s name is dribbled.
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The application as mentioned above has to be sent to the Registrar at the
enumerated address along with the prescribed fees. As per section 71 of Indian
Partnership Act, states are authorized to make their own regulations with respect
to prescribe the fee structure for registration or incorporation of partnership.
However, Schedule I of Indian Partnership act states the at most or maximum
prescribed fees that can be charged by the states. As per Schedule I, the
maximum registration fees for a statement under section 58 is Rs.525

Fundamentals Problems Faced By Not Registering a Firm:

The following can be understood as the principle disadvantages faced by a

partner if he/she does not register the firm under Indian Partnership Act, 1932:

(1) A partner is not entitled to file a suit in any court of law against the other
partners or the firm for the execution of any right emerging from any
undertaking or right bestowed by the Partnership Act.

(2) A right evolving from an undertaking cannot be implemented in any Court

of law by or in support of one’s firm against any other firm.

(3) Moreover, the firm or any of its associates cannot assert a set off (i.e.
fundamental negotiation of debts possessed by the argufied parties to one
another) or other actions in a disagreement with a third party.

Registration of a firm is not compulsory in India. While the Act does not
impose any penalty for non-registration, there are certain legal disabilities
arising from non-registration which are so great that generally the partners of a
firm would want to have their firm registered.

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Section 69 of the Indian Partnership Act is designed to exert pressure on
partners to get the firm registered.

If the firm is not registered there are the following consequences or

effects :-

1.No suit by a partner:-

Under Section 69(1), a partner or any person on his behalf cannot file a suit
against the firm or any person alleged to be a partner of the firm to enforce a
right arising from a partnership contract or under thePartnership Act unless the
firm is a registered one and the person has his name filed as a partner in the
register of firms as held in the case of Jagat Mittar Saigal v. Kailash Chander
Saigal. Thus, if a firm is unregistered or the name of a partner isn’t lodged in
the register of firms, that partner cannot sue the firm or another partner of the
firm if any of his rights are violated.

2.No suit by the firm:-

Under Section 69(2), a firm or any other person on its behalf cannot file a suit
against a third party for enforcing any contractual rights unless that firm is a
registered one as held in the case of Beacon Industries v. Anupam
Ghosh and Bharat Sarvodaya Mills Co. Ltd v. M/s Mohatta Brothers. This can
be overcome only by registration of the firm before filing a suit. No such
disability has been imposed upon a third party. Any person can bring a suit even
against an unregistered firm or any of its partners.

3.No claim of set-off or other proceedings to enforce a right

arising from a contract:-

Under Section 69(3), a claim of set-off or any other proceeding to enforce a

right arising from a contract cannot be filed unless the firm is a registered firm.
A set-off is an equitable defence to the whole or to a portion of a plaintiff’s
claim. It is the right of a debtor to balance mutual debts with a creditor. Other
proceedings include arbitration proceedings. So, if in a dispute, one of the
partners referred the matter to arbitration as per the agreement clause but the
other partner did not agree, the suit to enforce the arbitration agreement would
fail as the firm wasn’t a registered firm as held by the Supreme Court in the case
of Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd.

13
Q.5.
Explain the main provisions of offences, penalties and
adjudication under Information Technology Act 2000.

Introduction:-
Information Technology Act, 2000 was enacted on 17 th May, 2000 to provide
legal recognition for electronic transactions and facilitate E-Commerce. It was
later amended by passing Information Technology (Amendment) Act, 2008.
The following are the important objectives of Information Technology Act,
2000 

1. Grant legal recognition to E-Transactions

2. Provide legal recognition to Digital Signatures for authentication
3. Facilitate E-Filing of data and information
4. Allow Electronic storage of data
5. Grant recognition to maintenance of books of accounts in Electronic
Form

Penalties, Compensation and Adjudication under Information

Technology Act, 2000:-
Section 43: Where a person without the permission of owner or any other
person-in-charge damage the Computer, or Computer System, or Computer
Network, the he shall be liable for Penalty and Compensation to such person so
affected.
Section 44: Where a person fails to furnish any document, return, report to the
controller, or certifying authority, then he shall be liable to pay penalty
upto Rs.1,50,000/- per failure. Further where a person fails to furnish any
information, books or other documents within time specified, then he shall be
liable to pay penalty upto Rs.5,000/- per day. Further provided that where a
person fails to maintain books of accounts or other records, then he shall be
liable to pay penalty upto Rs.10,000/- per day.

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Offences under Information Technology Act, 2000:-
Section 65: Any person tamper, conceal, destroy, or alter any computer source
document intentionally, then he shall be liable to pay penalty
upto Rs.2,00,000/-, or Imprisonment upto 3 years, or both.
Section 66: Any person dishonestly, or fraudulently does any act as referred
in Section 43, then he shall be liable to pay penalty upto Rs.5,00,000/-, or
Imprisonment upto 3 years, or both.
Section 66B: Any person dishonestly, or fraudulently receives or retains any
stolen computer resource or communication device, then he shall be liable to
pay penalty upto Rs.1,00,000/-, or Imprisonment upto 3 years, or both.
Section 66C: Any person dishonestly, or fraudulently make use of Electronic
Signature, Password or any other Unique Identification Feature of any other
person, then he shall be liable to pay penalty upto Rs.1,00,000/-, or
Imprisonment upto 3 years, or both.
Section 66D: Any person dishonestly, or fraudulently by means of any
communication device or computer resource cheats by personating, then he
shall be liable to pay penalty upto Rs.1,00,000/-, or Imprisonment upto 3 years,
or both.
Section 66E: Any person intentionally captures, publishes, or transmits image
of private area of any person without consent, then he shall be liable to pay
penalty upto Rs.2,00,000/-, or Imprisonment upto 3 years, or both.
Section 66F: Any person does any act electronically, or with use of computer
with intent to threaten unity, integrity, security, or sovereignty of India, then he
shall punishable with Imprisonment for Life.
Section 67: Any person publishes, or transmits in electronic form any material
which appeals to prurient interest, or if its effect is such as to tend to deprave
and coorupt persons who are likely to read, see, or hear matter contained in it,
then he shall be liable to pay penalty upto Rs.5,00,000/-, or Imprisonment
upto 3 years, or both, And in the event of second or subsequent conviction, he
shall be liable to pay penalty upto Rs.10,00,000/-, or Imprisonment upto 5
years, or both.
Section 67A: Any person publishes, or transmits in electronic form any material
which contains sexually explicit act, or conduct, then he shall be liable to pay
penalty upto Rs.10,00,000/-, or Imprisonment upto 5 years, or both, And in the
event of second or subsequent conviction, he shall be liable to pay penalty
upto Rs.10,00,000/-, or Imprisonment upto 7 years, or both.
Section 68: The Controller may, by order, direct a Certifying Authority or any
employee of such Authority to take such measures or cease carrying on such

15
activities as specified in the order if those are necessary to ensure compliance
with the provisions of this Act, rules or any regulations made thereunder and if
any person who intentionally or knowingly fails to comply with the order, then
he shall be liable to pay penalty upto Rs.1,00,000/-, or Imprisonment upto 2
years, or both.
Section 69: Where the Central Government or a State Government or any of its
officers specially authorized by the Central Government or the State
Government, as the case may be, in this behalf may, if satisfied that it is
necessary or expedient so to do, in the interest of the sovereignty or integrity of
India, defense of India, security of the State, friendly relations with foreign
States or public order or for preventing incitement to the commission of any
cognizable offence relating to above or for investigation of any offence, it may
with reasons to be recorded in writing, by order, direct any agency of the
appropriate Government to intercept, monitor or decrypt or cause to be
intercepted or monitored or decrypted any information generated, transmitted,
received or stored in any computer resource, Any person who fails to comply
with the order, then he shall be liable to Imprisonment of 7 years, along with
the fine (amount of fine is not specified in the act).
Section 70: The appropriate Government may, by notification in the Official
Gazette, declare any computer resource which directly or indirectly affects the
facility of Critical Information Infrastructure, to be a protected system, Any
person who fails to comply with the notification, then he shall be liable to
Imprisonment of 10 years, along with the fine (amount of fine is not specified
in the act).
Section 71: Whoever makes any misrepresentation to, or suppresses any
material fact from the Controller or the Certifying Authority for obtaining any
License or Electronic Signature Certificate, as the case may be, then he shall be
liable to pay penalty upto Rs.1,00,000/-, or Imprisonment upto 2 years, or both.
Section 72: If any person who has secured access to any electronic record,
book, register, correspondence, information, document or other material without
the consent of the person concerned discloses such electronic record, book,
register, correspondence, information, document or other material to any other
person, then he shall be liable to pay penalty upto Rs.1,00,000/-, or
Imprisonment upto 2 years, or both.
Section 72A: If any person who has secured access to any material containing
personal information about another person, with the intent to cause or knowing
that he is likely to cause wrongful loss or wrongful gain discloses, without the
consent of the person concerned, or in breach of a lawful contract, then he shall
be liable to pay penalty upto Rs.5,00,000/-, or Imprisonment upto 3 years, or
both.

16
 Section 73: If any person publishes a Electronic Signature Certificate, or make
it available to any other person with the knowledge that
 Certifying Authority has not issued it, or
 Subscriber has not accepted it, or
 Certificate has been revoked or suspended
then he shall be liable to pay penalty upto Rs.1,00,000/-, or Imprisonment
upto 2 years, or both.
Section 74: If any person knowingly creates, publishes, or otherwise makes
available Electronic Signature Certificate for any fraudulent or unlawful
purpose, then he shall be liable to pay penalty upto Rs.1,00,000/-, or
Imprisonment upto 2 years, or both.
Section 75: If any person have committed an offence, or contravention
committed outside India, and if the act or conduct constituting the offence or
contravention involves a computer, computer system or computer network
located in India, then the provisions of this Act shall apply also to any offence
or contravention committed outside India by any person irrespective of his
nationality.
Section 76: Any computer, computer system, floppies, compact disks, tape
drives, or any other accessories related thereto, in respect of which any
provision of this Act, rules, orders, or regulations made thereunder has been, or
is being contravened, shall be liable to confiscation. However, if it is proved
that such resources were not used in committing fraud then only person in
default will be arrested.

17
Q.6.
Write short note on following, (a) Memorandum and
Articles of Association,
(b)Procedure for formation of companies, (c) Carbon
Credit.

{A}

Memorandum of Association:-

Memorandum of Association is a document which actually forms the charter of

the company and defines its powers and objects. It is the basic document and it
states how the company is to be constituted and what work it will perform at the
same time. It contains rules regarding the capital structure, the liability of the
members, the objects clause, and other important matters of the company. 

Forms of Memorandum:-

According to Sec. 14 of the Companies Act, Memorandum of

Association will be in such one of the forms which are laid down
in Tables B, C, D and E in Schedule I to the Companies Act:-

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Table B = It relates to Memorandum of Association of a company limited by
shares.

Table C = It relates to Memorandum and Articles of Association of a company

limited by guarantee and not having a share capital.

Table D = It relates to Memorandum and Articles of Association of the

company limited by guarantee and having a share capital.

Table E = It relates to Memorandum and Articles of Association of an unlimited

company.

Contents of Memorandum:
Sec. 13 of the Companies Act states that the Memorandum of Association
of every company must contain

Articles of Association:-
Articles of Association contain the rules and regulations which are to be
followed for the internal management of the company based on the
Memorandum of Association. In other words, it is a document which contains
rules, regulations, bye-laws etc. of the company.

Form of Articles:-
Sec. 30 of the Companies Act lays down the model form of Articles, for use in
the case of companies not limited by shares, which are given in Schedule I to
the Act. The Articles must (i) be printed, (ii) be divided into paragraph and
numbered consecutively, and (iii) be signed by each member of the
Memorandum in the presence of at least one witness who shall attest the
signature, add his address and description and occupation.

{B}
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Procedure for formation of companies:-

Company is a a legal entity, allowed by legislation, which permits a group of

people, as shareholders, to apply to the government for an independent
organization to be created, which can then focus on pursuing set objectives, and
empowered with legal rights which are usually only reserved for individuals,
such as to sue and be sued, own property, hire employees or loan and borrow
money.
Incorporation / Formation of company involve a number of steps. We have tried
to simplify the procedure to the maximum extent possible.
Minimum Requirement of a Private Company:
1. Minimum 2 Shareholders
2. Minimum 2 Directors (The directors and shareholders can be same
person)
3. Minimum Authorised Share Capital shall be Rs. 100,000 (INR One Lac)
4. DSC (Digital Signature Certificate) for all the Directors (for applying of
DIN)
5. DIN (Director Identification Number) for all the Directors

Minimum Requirement of a Public Company:

1. Minimum 7 Shareholders
2. Minimum 3 Directors (The directors and shareholders can be same
person)
3. Minimum Authorised Share Capital shall be Rs. 500,000 (INR Five Lac)
4. DIN (Director Identification Number) for all the Directors
5. DSC (Digital Signature Certificate) for one of the Directors

{C}

What Is a Carbon Credit:-

Carbon credits is a mechanism adopted by national and international

governments to mitigate the effects of Green House Gases(GHGs). One Carbon
Credit is equal to one ton of Carbon. Capped Greenhouse Gases are traded in
the market to regulate the emissions from the sources. The idea is to allow
market mechanisms to drive industrial and commercial processes in the

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direction of low Greenhouse Gases(GHGs). These mitigation projects generate
credits, which can be traded in the international markets for monetary benefits.

There are also many companies that sell carbon credits to commercial and
individual customers who are interested in lowering their carbon footprint on a
voluntary basis. These carbon credits are bought from an investment fund or a
carbon development company that has aggregated the credits from individual
projects. The quality of the credits is based in on the validation process and
sophistication of the fund or development company that acted as the sponsor to
the carbon project. Voluntary units typically have less value than the units sold
through the rigorously-validated Clean Development

A carbon credit is a permit that allows the company that holds it to emit a
certain amount of carbon dioxide or other greenhouse gases. One credit permits
the emission of a mass equal to one ton of carbon dioxide.

The carbon credit is one half of a so-called "cap-and-trade" program.

Companies that pollute are awarded credits that allow them to continue to
pollute up to a certain limit. That limit is reduced periodically. Meanwhile, the
company may sell any unneeded credits to another company that needs them.

Private companies are thus doubly incentivized to reduce greenhouse emissions.

First, they will be fined if they exceed the cap. Second, they can make money
by saving and reselling some of their emissions allowances.

Understanding a Carbon Credit:-

The ultimate goal of carbon credits is to reduce the emission of greenhouse
gases into the atmosphere.

KEY TAKEAWAYS

 Carbon credits were devised as a market-oriented mechanism to reduce

greenhouse gas emissions.
 Companies get a set number of credits, which decline over time. They can
sell any excess to another company.
 Thus, "cap-and-trade" is an incentive to reduce emissions.
As noted, a carbon credit is equal to one ton of hydrocarbon fuel. According to
the Environmental Defense Fund, that is the equivalent of a 2,400-mile drive in
terms of carbon dioxide emissions.

Companies or nations are allotted a certain number of credits and may trade
them to help balance total worldwide emissions. "Since carbon dioxide is the

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principal greenhouse gas," the United Nations notes, "people speak simply of
trading in carbon."

The intention is to reduce the number of credits over time, thus incentivizing
companies to find innovative ways to reduce greenhouse gas emissions.

Section B
Solve the following Case studies

Q1 a) Mr. X has made an offer to sell the Car which Mr. Y has accepted on
behalf of Mr. Z. When offer was made Mr. Y had no authority to accept
the offer on the behalf of Mr. Z But subsequently Mr. Z has ratified the act
of Mr.Y. Are Mr. X and Mr. Y bound to sell and buy the Car. Give your
decision with support of appropriate provisions under the Act.
Ans.Indian sale of goods act 1930. Is a mercantile law which provisions for the
selling up of contract where the transfer the tiltle in the goods for buyer for
condition.
Under given circumstances where Mr. X has made an offer to sell the Car which
Mr. Y has accepted on behalf of Mr Z. Mr z ratified the act of Mr y. Under such
situation Mr x and Mr y are not bound to sell/buy the car as the agreement to
valid on the basis of following provision.
A Latin maxim says: ‘Nemo dat quod non habet’ which means that no one can
give what he doesn’t have. This is the ground principle regarding the transfer of
title. Sections 27 to 30 of the Sale of Goods Act, 1930 specify these laws about
the transfer of title. Let us take a look.
Transfer of Title
Section 27 deals with the sale by a person who is not the owner. Imagine a sale
contract where the seller –
 Is not the owner of the goods
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 Does not have consent from the owner to sell the goods

 Has not been given authority by the owner to sell the goods on his behalf

 In such cases, the buyer acquires no better title to these goods than the seller
had, provided the conduct of the owner precludes the seller’s authority to
sell.

Now, this seems to be a really straight-forward rule. However, enforcing this

rule can mean that innocent buyers might suffer losses in most cases. Therefore,
to protect the interest of the buyers, certain exceptions are provided.
Exceptions to Section 27
In the following scenarios a non-owner of goods can transfer a better title to the
buyer:
1] Sale by a Mercantile agent (Proviso to Section 27)
Consider a mercantile agent, who is in possession of the goods or a document to
the title of the goods, with the consent of the owner. Such an agent can sell the
goods when acting in the ordinary course of business of a mercantile agent. The
sale shall be valid provided the buyer acts in good faith and has no reason to
believe that the seller doesn’t have any right to sell the goods. The transfer of
title is valid in such a case.
2] Sale by one of the Joint Owners (Section 28)
Many times goods are purchased in joint ownership. In many cases, the goods
are kept in the possession of one of these joint owners by the permission of the
co-owners. If this person (who has the sole possession of the goods) sells the
goods, the property in the goods is transferred to the buyer. This is provided the
buyer acts in good faith and has no reason to believe that the seller does not
have a right to sell the goods.
Example: Peter, John, and Oliver are three friends to buy a 42-inch television
set to watch the upcoming cricket World Cup. They unanimously decide to keep
the television set at Oliver’s house. Once the World Cup is over, the TV is still
at his house.
One day, Oliver’s office colleague Julia visits his house and he sells the TV to
her. She buys it in good faith and has no knowledge about the fact that it was
purchased jointly. In this case, she gets a good title to the TV.
3] Sale by a Person in Possession of Goods under a Voidable Contract (Section
29)
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Consider a person who acquires possession of certain goods under a contract
voidable on grounds of coercion, misrepresentation, fraud or undue influence. If
this person sells the goods before the contract is terminated by the original
owner of the goods, then the buyer acquires a good title to the goods.
Example: Peter fraudulently obtains a gold diamond ring from Olivia. Olivia
can void the contract whenever she wants. Before she realizes the fraud, Peter
sells the ring to Julia – an innocent buyer. In this case, Olivia cannot recover the
ring from Julia since she didn’t void the contract before the sale was made.
4] Sale by a Person who has already sold the Goods but Continues to have
Possession [Section 30 (1)]
Consider a person who has sold goods but continues to be in possession of them
or of the documents of title to them. This person might sell the goods to another
buyer.
If this buyer acts in good faith and is unaware of the earlier sale, then he will
have a good title to the goods even though the property in the goods was passed
to the first buyer. A pledge or other disposition of the goods or documents of
title by the seller in possession are valid too.
5] Sale by Buyer obtaining possession before the Property in the Goods has
Vested in him [Section 30 (2)]
Consider a buyer who obtains possession of the goods before the property in
them is passed to him, with the permission of the seller. He may sell, pledge or
dispose of the goods to another person.
If the second buyer obtains delivery of the goods in good faith and without
notice of the lien or any other right of the original seller, he gets a good title to
them.
This rule does not hold true for a hire-purchase agreement which allows a
person the possession of the goods and an option to buy unless the sale is agreed
upon.
Example: Peter takes a car from John under the conditions that he will pay Rs.
5,000 every month as rent of the vehicle and that he can choose to purchase it
for Rs. 100,000 to be paid in 24 equal installments. Peter pays Rs. 5,000 for
three months and then sells the car to Oliver. In this case, John can recover his
car from Oliver since Peter had neither purchased the car nor agreed to purchase
it. He only had an option to buy the car.
6] Estoppel

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If an owner of goods is stopped by the conduct from denying the seller’s
authority to sell, the buyer gets a good title. However, to get a good title by
estoppel, it needs to be proved that the original owner had actively suffered or
held out the seller in question as a person authorized to sell the goods.
Example: Peter, John, and Oliver are having a conversation. Peter tells John that
he owns the BMW car parked nearby which actually belongs to Oliver.
However, Oliver remains silent. Subsequently, Peter sells the car to John.
In this case, John will get a good title to the car even though the seller is Peter
who has no title to it. This is because, Oliver, by his conduct, did not deny
Peter’s authority to sell the car.
7] Sale by an Unpaid Seller [Section 54 (3)]
If an unpaid seller exercises his right of lien or stoppage in transit and sells the
goods to another buyer, then the second buyer gets a good title to the goods as
against the original buyer. So in such a case transfer of title will occur.

b) Explain whether a promissory note with following statement valid or not

“ I promise to pay Ms. Priya a sum of Rs. 20000, 1 month after the death of
Ms. Riya. ( Also mention the reason of your answer)
Ans.According to the section 4 of negotiable instrument act 1881. A promissory
not is an instrument writing containing an unconditional undertaking signed by
maker to pay certain sum of money. In given case promisor promised to pay Mr.
Priya a sum of 20000 1 month after date of Mr Riya. In this case the promissory
note is condition based, on the basis of following grounds it is not valid.
Features of a Promissory Note:
 The promissory note must be in writing- Mere verbal promises or oral
undertaking does not constitute a promissory note. The intention of the
maker of the note should be signified by writing in clear words on the
instrument itself that he undertakes to pay a particular sum of money to the
payee or order or to the bearer

 It must contain an express promise or clear undertaking to pay- The promise

to pay must be expressed. It cannot be implied or inferred. A mere
acknowledgment of indebtedness is not enough.

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 The promise to pay must be definite and unconditional- The promise to pay
contained in the note must be unconditional. If the promise to pay is coupled
with a condition, it is not a promissory note.

 The maker of the pro-note must be certain- The instrument should show on
the fact of it as to who exactly is liable to pay. The name of the maker should
be written clearly and ascertainable on seeing the document.

 It should be signed by the maker- Unless the maker signs the instrument, it is
incomplete and of no legal effect. Therefore, the person who promises to pay
must sign the instrument even though it might have been written by the
promisor himself.

 The amount must be certain- The amount undertaken to be paid must be

definite or certain or not vague. That is, it must not be capable of contingent
additions or subtractions.

 The promise should be to pay money- The promissory note should contain a
promise to pay money and money only, i.e., legal tender money. The
promise cannot be extended to payments in the form of goods, shares, bonds,
foreign exchange, etc.

 The payee must be certain- The money must be payable to a definite person
or according to his order. The payee must be ascertained by name or by
designation. But it cannot be made payable either to bearer or to the maker
himself.

 It should bear the required stamping- The promissory note should,

necessarily, bear sufficient stamp as required by the Indian Stamp Act, 1889.

 It should be dated- The date of a promissory note is not material unless the
amount is made payable at the particular time after date. Even then, the
absence of date does not invalidate the pro-note and the date of execution
can be independently proved. However to calculate the interest or fixing the
date of maturity or lm\imitation period the date is essential. It may be ante-
dated or post-dated. If post-dated, it cannot be sued upon till ostensible date.

 Demand- The promissory note may be payable on demand or after a certain

definite period of time.

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 The rate of interest- It is unusual to mention in it the rated interest per
annum. When the instrument itself specifies the rate of interest payable on
the amount mentioned it, interest must be paid at the rate from the date of the
instrument.

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