Assignment

NAME : DARSHANKUMAR K. VAJA

ROLL NO. : 91900373002

MS. PRAKRUTI JOSHIPURA:

( LEGAL ASPECTS OF BUSINESS )

DR. RAVIRAJ SINH GOHIL

(PROGRAM CO – ORDINATOR) :
 INDEX

1. ASSIGNMENT
2. ACKNOWLEDGEMENT
3. QUESTION – 1
4. QUESTION – 2
5. QUESTION – 3
6. QUESTION – 4
7. QUESTION – 5
8. QUESTION – 6
 ACKNOWLEDGEMENT

I WOULD LIKE TO EXPRESS MY SPECIAL THANKS OF

GRATITUDE TO MY TEACHER MS. PRAKRUTI JOSHIPURA
AS WELL AS OUR PROGRAM CO – ORDINTOR DR.
RAVIRAJ SINH GOHIL . WHO GAVE ME THE GOLDEN
OPPORTUNITY TO DO THIS WONDERFUL
ASSIGNMENT , WHICH ALSO HELPED ME IN DOING A
LOT OF RESEARCH AND I CAME TO KNOW ABOUT SO
MANY NEW THINGS
I AM REALLY THANKFUL TO THEM.
SECONDLY I WOULD ALSO LIKE TO THANK MY
PARENTS AND FRIENDS WHO HELPED ME A LOT IN
FINISHING THIS ASSIGNMENT WITHIN LIMITED
TIME .
I AM MAKING THIS ASSIGNMENT NOT ONLY FOR
MARKS BUT TO ALSO INCREASE MY KNOWLEDGE.

THANKS AGAIN TO ALL WHO HELPED ME.

QUE 1 :
Essential of Valid Contract.
In a business, contract or agreement plays a significant role in smooth
functioning between two parties. In simple terms, the contract is a
written agreement between two parties, which contains certain
obligations and enforced by the law. Violation of the contract or law can
attract legal action by any of the parties, including cancellation of the
entire contract. Any individual entering into a written agreement should
be knowledgeable enough with an essential of a contract.

Definition of Contract
The Indian Contract Act 1872 states the term contract is like an
agreement that creates an obligation between parties. According to the
act, the contract is "an agreement enforceable by law."

The act also lists the essentials of a valid contract directly or through
various judgements of the Indian judiciary.

Essentials Elements of a Valid Contract

According to the Indian Contract Act 1872, "Agreements are also
contracts made by the consent of parties, competent to contract to
consider with a lawful object and are not hereby expressly declared to be
void”. Therefore, the contract or the agreement must carry essential
aspects to maintain the normal phase of duties by both parties.

Example:
A and B underwent the contact, where A will purchase 10 bags of
cement for Rs 1, 00,000. B promises to supply the same in the given
period and the quality mentioned. A promise to pay the sum as per the
mentioned method in the contract. In this case, both parties have to
perform the act as per the agreement signed.

Essential Elements of a Valid Contract

To explain the essentials of a valid contract, we bring you with the list
unfolded by the Indian Contract Act 1872-

• Offer and Acceptance

Generally, the written contract only unfolds when the other party accepts
the offer by one party and is definite in all sense. The offer or agreement
must be clear and complete in all sense. Both parties should
communicate to ensure there is no lapse of the contract act. Both the
offer and acceptance must be "consensus ad idem", meaning, both
parties must comply on the same thing.

• Intention to create a Legal Relationship

To bind, both parties should have a specific intention that can create a
legal relationship, resulting in an agreement. Agreements in social or
household nature are not contracts because parties do not intend to build
legal relationships.

• The intent of Legal Obligations

One of the essential elements of a valid offer is that both parties subject
to a contract must be clear with the intentions of creating a legal
relationship. This also means that agreements that are not enforceable by
the law like agreements between relatives are enforceable in the court of
law.

• Possibility of Performance of Agreement

In this case, suppose two people decide to undergo an agreement where
person A agrees to bring person B’s dead relative back to life, this will
not fall under the legal contract act because bringing back the deceased
person alive is an impossible task. Thus, the agreement does not stand
valid.
 • Legal Formalities
In this agreement, if there is any uncertainty and both parties are not
capable of finding the right path, then it is deemed void. As a part of
essentials of a valid consideration, the terms and conditions of the
contract should be concrete. Any contract, which is uncertain in any
sense, can be termed as void. The terms mentioned in the agreement
should be capable of performing specific thoughts.

• Consideration
Consideration means the moral value given for the performance of the
promise. It should not be only limited to money, but there should be
some value to what has been agreed upon. One of the essentials of valid
consideration is that it should not be adequate, but should carry some
value.

Some pointers under consideration are:

Consideration is wholly according to the desire of the promisor, which
means the review must come from the promisor. Consideration can be
either:

Past Consideration
Present Consideration
Future Consideration
Consideration can be tangible, like the performance of the service like
teaching and labour.

Conclusion
These are the essentials of a valid contract, which needs to be fulfilled
led by the contract act of India. Before getting into any agreement, it is
essential to know what action has led.
QUE 2 :
Types of Negotiable Instruments.
Personal cheques and promissory notes are two prime negotiable
instrument examples, but there are many different types of documents
that fall under this category. Here are some of the most commonly used
negotiable instrument types:

Cheques
Cheques are perhaps the most common negotiable instrument example.
This is an instrument in writing with a specific payment amount. Upon
receipt, the payer’s financial institution pays out these funds to the
bearer, either in cash or to a chosen bank account. Cheques are used to
pay many different types of bills, from loans to university fees and rent.
They’re being phased out in favour of online banking transactions, but
cheques still provide a helpful paper trail for businesses.

Traveler’s cheque
Another less common form of negotiable instrument is a traveller’s
cheque. These require two signatures for the transaction to be approved.
The payer signs the document at the time of issue, with a
countersignature added when payment is issued. These documents are
designed for use in foreign countries, issued by financial institutions in
prepaid amounts. However, traveller’s cheques are becoming
increasingly rare and aren’t accepted by all foreign retailers.
Money order
Money orders offer a quick and efficient payment method. They can be
issued by a financial institution or other entity. You can pay for a money
order in cash to specify its value before sending it to the payee. It’s then
exchanged for cash at the other end. The main difference between
money orders and cheques is that they usually come with a limit on
issued value. They also contain less personal information than a cheque,
as no personal bank account details are necessary.

Bills of exchange
Used in transactions related to both goods and services, bills of
exchange are legally binding documents. They instruct one party to pay
a predetermined sum to a secondary party. The payer signs the bill of
exchange, creating a written contract of payment. When issued by a
financial institution, a bill of exchange is often called a bank draft. When
issued by an individual, it’s called a trade draft.

Promissory notes
When a promissory note is issued, it shows the amount owed together
with the date of payment and interest rate. Like other negotiable
instruments, they are written documents showing the promise of
payment between a payer and payee. The document contains all relevant
information, including interest rate, principal amount, date of issue, and
payer signature. The benefit of a promissory note is that it enables
businesses to obtain financing from sources outside of official financial
institutions.
QUE 3 :
Difference between Sale and Agreement to Sell.
No Sale
1
Meaning: where the Property
immediately transferred from
seller to buyer, it is called
‘Sale’.
2 Definition: Sale can be defined
as “transfer of ownership in the
goods by the seller to buyer in
exchange of price paid or
promised or partly paid and
partly promised.
3 Example: ‘X’ sold 10 bags of
Wheat to ‘Y’ against payment
of Rs. 3,000.
4 In contract of sale property in
goods transfers from seller to
buyer immediately
5 Contract of sale is an executed
contract
6 It creates right in rem
Agreement to Sell
Meaning: where the transfer of
property in goods is to take place
in future, from seller to buyer is
called ‘Agreement to Sell’.
Definition: in case where the
seller agrees with the buyer to
transfer the title of ownership on
a future date upon satisfying
certain condition is called as
‘Agreement to Sale’.
Example: ‘X’ agrees to sell 10
bags of wheat to ‘Y’ for
Rs.3,000 after getting the stock.
In agreement to sell, property in
goods does not transfer
immediately
Agreement to Sell is an executory
contract
It creates rights in personal
7 The seller can sue the buyer for The seller can sue the buyer only
case of breach of contract. for damages but not for the price.

8 Sale is liable for the Sale Tax. Agreement to sale is not liable for
the Sale Tax.

9 Seller has no right of resale. Seller has right of resale.

10 If the goods are destroyed, the The loss fall on the seller even
loss is borne by the buyer even though the goods are in the
though the goods are in the possession of the buyer.
possession of the seller.
QUE 4 :
Discuss in Brief Information Technology Act.
This article gives a gist of The Information Technology Act, 2000.
However the main motive of this Act is to provide legal recognition for
transactions carried out by means of electronic data interchange and
other means of electronic communication commonly known as E-
commerce.

Introduction Of The Information Technology

Act, 2000
The Information Technology Act, 2000 provides legal recognition for
transactions carried out by means of electronic data interchange and
other means of electronic communication, commonly referred to
as“electronic commerce”, which involve the use of alternatives to paper-
based methods of communication and storage of information, to
facilitate electronic filing of documents with the Government agencies
and further to amend The Indian Penal Code, The Indian Evidence Act,
1872, The Banker’s Books Evidence Act, 1891 and The Reserve Bank
of India Act, 1934 and for matters connected therewith or incidental
thereto.
The Information Technology Act, 2000 extend to the whole of India and
it applies also to any offence or contravention thereunder committed
outside India by any person.

Salient Features of The Information Technology

Act, 2000
The salient features of The IT Act, 2000 are as follows −
Digital signature has been replaced with electronic signature to make it a
more technology neutral act.
It elaborates on offenses, penalties, and breaches.
It outlines the Justice Dispensation Systems for cyber-crimes.
The Information Technology Act defines in a new section that cyber
café is any facility from where the access to the internet is offered by
any person in the ordinary course of business to the members of the
public.
It provides for the constitution of the Cyber Regulations Advisory
Committee.
The Information Technology Act is based on The Indian Penal Code,
1860, The Indian Evidence Act, 1872, The Bankers’ Books Evidence
Act, 1891, The Reserve Bank of India Act, 1934, etc.
It adds a provision to Section 81, which states that the provisions of the
Act shall have overriding effect. The provision states that nothing
contained in the Act shall restrict any person from exercising any right
conferred under the Copyright Act, 1957.

Application of The Information Technology Act,

2000
Nothing in The Information Technology Act, 2000 shall apply to
documents or transactions specified in the First Schedule: Provided that
the Central Government may, by notification in the Official Gazette,
amend the First Schedule by way of addition or deletion of entries
thereto. Every notification issued shall be laid before each House of
Parliament.
Following are the documents or transactions to which the Act shall not
apply −
Negotiable Instrument(Other than a cheque) as defined in
The Negotiable Instruments Act, 1881;
A power-of-attorney as defined in The Powers of Attorney Act, 1882;
A trust as defined in The Indian Trusts Act, 1882;
A will as defined in The Indian Succession Act, 1925 including any
other testamentary disposition;
Any contract for the sale or conveyance of immovable property or any
interest in such property;
Any such class of documents or transactions as maybe notified by the
Central Government.
Amendments Brought in The Information
Technology Act, 2000
The Information Technology Act, 2000 has brought amendment in four
statutes vide section 91-94. These changes have been provided in
schedule 1-4.
The first schedule contains the amendments in the Penal Code. It has
widened the scope of the term “document” to bring within its ambit
electronic documents.
The second schedule deals with amendments to the India Evidence
Act. It pertains to the inclusion of electronic document in the definition
of evidence.
The third schedule amends the Banker’s Books Evidence Act. This
amendment brings about change in the definition of “Banker’s-book”. It
includes printouts of data stored in a floppy, disc, tape or any other form
of electromagnetic data storage device. Similar change has been brought
about in the expression “Certified-copy” to include such printouts within
its purview.
The fourth schedule amends the Reserve Bank of India Act. It pertains to
the regulation of fund transfer through electronic means between the
banks or between the banks and other financial institution.
A major amendment was made in 2008. Amendment introduced the
Section 66A which penalized sending of “offensive messages”. It also
introduced the Section 69, which gave authorities the power of
“interception or monitoring or decryption of any information through
any computer resource”. It also introduced penalties for child
porn, cyber terrorism and voyeurism. Amendment was passed on 22
December 2008 without any debate in Lok Sabha. The next day it was
passed by the Rajya Sabha. It was signed by the then President (Pratibha
Patil) on 5 February 2009.
Objectives of the Amendments in The Information
Technology Act, 2000:
With proliferation of information technology enabled services such as e-
governance, e-commerce and e-transactions, protection of personal data
and information and implementation of security practices and
procedures relating to these applications of electronic communications
have assumed greater importance and they require harmonization with
the provisions of the Information Technology Act. Further, protection of
Critical Information Infrastructure is pivotal to national security,
economy, public health and safety, so it has become necessary to declare
such infrastructure as a protected system so as to restrict its access.
A rapid increase in the use of computer and internet has given rise to
new forms of crimeslike publishing sexually explicit materials in
electronic form, video voyeurism and breach of confidentiality and
leakage of data by intermediary, e-commerce frauds like personation
commonly known as Phishing, identity theft and offensive messages
through communication services. So, penal provisions are required to be
included in the Information Technology Act, the Indian Penal Code, the
Indian Evidence Act and the Code of Criminal Procedure to prevent
such crimes.
The United Nations Commission on International Trade Law
(UNCITRAL) in the year 2001 adopted the Model Law on Electronic
Signatures. The General Assembly of the United Nations by its
resolution No. 56/80, dated 12th December, 2001, recommended that all
States accord favorable consideration to the said Model Law on
Electronic Signatures. Since the digital signatures are linked to a specific
technology under the existing provisions of the Information Technology
Act, it has become necessary to provide for alternate technology of
electronic signatures for bringing harmonization with the said Model
Law.
The service providers may be authorized by the Central Government or
the State Government to set up, maintain and upgrade the computerized
facilities and also collect, retain appropriate service charges for
providing such services at such scale as may be specified by the Central
Government or the State Government.

Offences under The Information Technology Act,

2000
The Information Technology Act, 2000 has specified that Tampering
with computer source documents, Hacking computer system, Publishing
of information which is obscene in electronic form or failure of a CA or
its employees to follow the directions/ Orders of the CCA, failure to
comply with Directions of Controller to a subscriber to extend facilities
to decrypt information, accessing a protected system without proper
authorization, material mis-representation, Penalty for publishing
Electronic Signature Certificate false particulars, Publication for
fraudulent purpose, sending of grossly offensive information, false
information, etc will be offences.
QUE 5 :
Importance of IPR.
Intellectual property (IP) contributes enormously to our national and
state economies. Dozens of industries across our economy rely on the
adequate enforcement of their patents, trademarks, and copyrights, while
consumers use IP to ensure they are purchasing safe, guaranteed
products. We believe IP rights are worth protecting, both domestically
and abroad. This is why:

Intellectual Property Creates and Supports High-

Paying Jobs
• IP-intensive industries employ over 55 million Americans, and
hundreds of millions of people worldwide.

• Jobs in IP-intensive industries are expected to grow faster over the

next decade than the national average.

• The average worker in an IP-intensive industry earned about 30%

more than his counterpart in a non-IP industry

• The average salary in IP-intensive industries pay $50,576 per

worker compared to the national average of $38,768.

Intellectual Property Drives Economic Growth and

Competitiveness
• America’s IP is worth $5.8 trillion, more than the nominal GDP of
any other country in the world.

• IP-intensive industries account for over 1/3– or 38%– of total U.S.

GDP.

• These industries also have 72.5% higher output per worker than
the national average, valued at $136,556 per worker.
 • IP accounts for 74% of all U.S. exports- which amounts to nearly
$1 trillion.

• The direct and indirect economic impacts of innovation are

overwhelming, accounting for more than 40% of U.S. economic
growth and employment.

Strong and Enforced Intellectual Property Rights

Protect Consumers and Families
• Strong IP rights help consumers make an educated choice about
the safety, reliability, and effectiveness of their purchases.

• Enforced IP rights ensure products are authentic, and of the high-

quality that consumers recognize and expect.

• IP rights foster the confidence and ease of mind that consumers

demand and markets rely on.

Intellectual Property Helps Generate Breakthrough

Solutions to Global Challenges
• Nearly all of the 300 products on the World Health Organization’s
Essential Drug List, which are critical to saving or improving
people’s lives around the globe, came from the R&D-intensive
pharmaceutical industry that depends on patent protections.

• Innovative agricultural companies are creating new products to

help farmers produce more and better products for the world’s
hungry while reducing the environmental impact of agriculture.

• IP-driven discoveries in alternative energy and green technologies

will help improve energy security and address climate change.
Intellectual Property Rights Encourage Innovation
and Reward Entrepreneurs
• Risk and occasional failure are the lifeblood of the innovation
economy. IP rights incentivize entrepreneurs to keep pushing for
new advances in the face of adversity.

• IP rights facilitate the free flow of information by sharing the

protected know-how critical to the original, patented invention. In
turn, this process leads to new innovations and improvements on
existing ones.

• American’s Founding Fathers so recognized the importance of

innovation and ensured that strong IP rights for authors and
inventors are protected in the U.S. Constitution, thus making
America the world’s entrepreneurial leader— a fact borne out by
the overwhelming number of patents, copyrights and trademarks
filed by the U.S. annually.
QUE 6 :
Brief about Company Act , 2013.
A company is a legal entity formed by a group of individuals in order
to work towards a common objective. The Act was introduced with
the objective of meeting the changed national, international and
economic environment and to accelerate the expansion and growth of
the economy in India. A company can be a commercial or an
industrial enterprise. An identity of a company is separate from the
individuals who own, manage and support its operations. Each
company has its vision, mission, values, appraisal system, corporate
structures and hierarchy.

Definition of a company Under Companies Act

2013
A company is a registered association denoting an artificial legal
person. It has an independent legal entity with perpetual succession, a
common capital composed of transferable shares, a common seal for
its signatures, and carrying limited liability.

Q1. What is Companies Act 2013?

Ans. The Companies Act 2013 is an Act of the Parliament of India
which regulates the incorporation, formulation and functioning of
companies India. The Companies Act 2013 is the replacement of
Indian Companies Act, 1956. The Act makes comprehensive
provisions to govern all the listed and unlisted companies of the
country. The Companies Act 2013 empowers shareholders and
highlights higher value for corporate Governance.
Q2. How many sections are there in Companies
Act 2013?
Ans. The Companies Act 2013 contains 29 chapters and has fewer
sections (470) in comparison to companies Act 1956 (658). It has 7
schedules.

Q3. What kind of changes is done in Companies

Act 2013?
Ans. With the enactment of Companies Act 2013, the financial year
ends on 31st March, schedule 3 of format of financial statements is
followed, concept of one person company has been introduced which
was missing in previous Companies Act.

Q4. Why was the Companies Act 2013

introduced?
Ans. The Companies Act 2013 was introduced to ease the process of
doing business in India and improving corporate governance. Another
factor behind the introduction of Companies Act 2013 was to make
companies more accountable.

Q5. How to form or register a company under

Companies Act 2013?
Ans. Here are the steps to form or register a company under
Companies Act 2013:
Step #1: Application for allotment of Director Identification Number
in DIR-3: Apply for the Directors identification number by attaching
documents - resistance proof, ID proof, copy of verification by the
Applicant in DIR - 4 and specimen signature.
Step #2: Applicability of name: The name of a company can be
reserved by making an application to the registrar. An application for
reservation of name is to be filed through Form No. INC-1 alongwith
the fees as provided under the Companies (Registration offices and
fees) Rules, 2014.
Step #3: Application of incorporation of company: Filing of
application with the Registrar of companies alongwith relevant
documents - Memorandum of Association, Articles of Association,
Declaration of accepting Table A, Affidavit from each subscriber in
INC - 9 and specimen signature in INC - 10.
#Step 4: Notice of location of registered office of Company under
Incorporation INC-22: Proof of registered office addresses (Lease
deed/Conveyance/Rent Agreement with the rent receipts).
#Step 5: Intimation regarding its first directors DIR - 12: e-Form DIR
- 12 needs to be filed with the registrar within 30 days from the date
of appointment/resignation taking place.
#Step 6: Declaration prior to commencement of business INC-21:
Declaration has to be filled by director within a period of 180 days
from the date of incorporation.

Q6. What are the features of Companies Act

2013?
Ans. Companies Act 2013 has introduced new features as given
below:
1. Democracy of shareholders: The Companies Act 2013 has
introduced new concept of class action suits to make shareholders
more knowledgeable and informed about their rights.
2. More power to shareholders: The Companies Act 2013 has given
an eminent importance to shareholders. The Act provides approvals
from shareholders on various important transactions. They have been
vested with the power to sanction the limit.
3. Corporate social responsibility: The Companies Act 2013 stipulates
the class of companies to spend a certain amount on various activities
and initiatives to contribute towards corporate social responsibility.
4. Women empowerment: The Companies Act 2013 emphasizes on
appointing atleast one woman Director (on certain class of
companies). This feature is enacted in order to widen the talent pool
enabling big corporation to seek benefits from diversified
backgrounds having different opinions.
5. National Company Law Tribunal: The Act has introduced National
Company Law Tribunal and the National Company Law Appellate
Tribunal for replacing the Company Law Board and Board for
Industrial and Financial Reconstruction. Now, the courts are relieved
of their burden, while simultaneously providing specialized justice.
6. Fast track mergers: The Companies Act 2013 simplifies the
procedure of mergers and amalgamations in certain class of
companies like - small companies and holding & subsidiary in order
to obtain approval of the Indian Government.
7. Cross borders mergers: The Companies Act 2013 now permits
cross border mergers in both ways; a foreign company merging with
an India Company and vice versa. But it can only be done with the
prior permission of RBI.
8. Strict prohibition on forward dealings and insider trading: The
Companies Act 2013 prohibits key managerial personnel and
directors from purchasing call and put options of shares of the
company. Earlier these regulations were framed by SEBI as the
capital market regulator.
Q7. What are the provisions of Companies Act
2013?
Ans. Provisions of Companies Act 2013
The Ministry of Corporate Affairs has notified 12th September 2013
as effective date for 98 sections of Companies Act 2013. Certain
important provisions are given below to ensure timely compliance by
the companies:
1. Special resolution for borrowing in excess paid - up capital and
free reserve:
Section 180 of the Companies Act 2013 requires that company cannot
borrow in excess of its paid up capital and free reserves, unless
approved by the special resolution. A private company is also
required to pass special resolution of its proposed borrowing with its
existing borrowing exceeds the paid – up capital and free reserves.
2. Provisions on free reserves: Section 2 (43) defines the free reserve
as amount available for distribution according to the latest audited
balance sheet. However, it excludes the revaluation reserve and
change due to change in carrying value of its assets/liability routed
through profit & loss or otherwise.
3. Limit on maximum partners: The maximum number of
persons/partners in any association or partnership cannot exceed 100.
This restriction is not applicable on a company formed by
professionals like – CAs, CSs, lawyers etc.
4. Net - Worth: According to Section 2(57) of Companies Act 2013
includes securities premium account; however it excludes write back
of depreciation in Net - Worth.
5. One Person Company: The Indian Companies Act 2013 provides
new form of private company, i.e. one person company is introduced.
It includes only one director and one shareholder. In case of a private
company, minimum 2 shareholders and 2 directors were included.
6. Restriction on composition: Every company will have minimum
one director who stays in India for atleast 182 days in the previous
calendar year.
7. Rotation of Auditors: The Act provides rotation of auditors in case
of publicly traded companies. The Act also prohibits auditors from
performing non - audit services.

Q8. What are the objectives of Companies Act

2013?
1. To protect the interests of investors by drafting accurate
information in the prospectus.
2. To promote corporate social activities undertaken by the
companies.
3. To promote the use of technology by making mandatory
maintenance of books of accounts in electronic form.
4. To ensure full disclosure of affairs of the companies in their
published annual accounts.
5. To enhance the economy the company by encouraging
entrepreneurship.
6. To curtail insider trading activities.
7. To prevent malpractices on the part of company’s management.
8. To protect the rights of investors and creditors of the company.
9. To enforce proper performance of duties by the people responsible
for the management of companies.
10. To enhance the economy of the country by enhancing
entrepreneurship.
THANK
YOU