Professional Documents
Culture Documents
Phone – 99035-03989
VARSHA GUPTA
RUPA GUPTA
SANJAY GUPTA
1 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get the
opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
INGREDIENTS TO SUCCESS
Chapters Page No.
1. The Indian Contract Act, 1872 3
2. The Sale of Goods Act, 1930 Transfer of Ownership 21
3. The Sale of Goods Act, 1930 Unpaid Seller 24
4. Partnership Laws The Partnership Act, 1932 26
5. Partnership Laws The Limited Liability Partnership Act, 2008 32
6. The Negotiable Instrument Act, 1881 37
7. The Consumer Protection Act, 1986 43
2 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get the
opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Meaning of law: A law may be defined as a body of official rules and regulations, generally found in
constitutions, legislation and in different judicial opinions. These rules and regulations are used to
govern a society and to control the behavior of its members, According to Holland, “a rule of
external human action enforce by the sovereign”
Meaning of Business Law: Business law is the body of law, which governs the broad areas of
business, trade and commerce. It regulate numerous issue of law, such as contracts, banking, hiring
practices, manufacture and sales of consumer goods, secured transaction, real estate and other.
There are numerous laws at the central and at the state level governing business law practices.
Definition and meaning of contract: Sec. 2(h) of the Indian contract Act define a contract. Under this
section “an agreement enforceable by law is contract”.
A. According to validity:
1. Valid Contract: valid contract is that contract which has all the essential components of
a contract.
2. Void Contract: void contract is that contract is that contract which frequently become
enforceable.
3. Voidable Contract: voidable contract is that contract which can be enforce at the option
of one party but not at the option of other party.
4. Illegal Contract: Illegal contract is that contract which the law foebids to be made. The
court will not enforce such a contract .Eg, Contract to commit crime.
5. Unenforceable Contract: Unenforceable contract is that contact where a contract is
good in substance but because of some technical defect i.e. absence in writing,
disqualified by limitation etc. one or both the parties cannot sue upon it.
B. According to formation:
1. Express Contract: Express contract is that contract, which are written or spoken.
2. Implied Contract: An implied contract is a contract which is created otherwise than by words
spoken or written. It is of two types.
(i) Tacit contract: It is a contract created by the conduct of the parties.
(ii) Quasi contract: It is a contract created by law.
C. According to Performance:
1. Executed contract: An executed contract is one in which both the parties have
performed their obligation.
2. Executory contract : An executory contract is one in which both the parties have still
to perform their obligations.
3. Unilateral Contract: A unilateral contract is a one sided contract in which only one
party has to perform their obligation.
3 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get the
opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Definition of Agreement:
According to Sec.2(e) of the Indian contract Act 1872, “every promise and every set of promises,
forming the consideration for each other, is an agreement,”
Definition of “offer” or “proposal”: According to sec. 2 (a) of the Indian Contract Act 1872, “When
one person signifies to another his willingness to do or to abstain from doing anything with a view to
obtaining the assent of that of other to such or abstinence, he is said to make a proposal or offer."
Essential elements of a valid offer or Rules of offer: Following are the essential of a valid offer:
1. Intention to create legal Relationship: An offer must be made with an intention to create a
legal relation. In other words an offer must be such that it will create a legal relation as soon
as accepted by the offeree.
2. Definite and unambiguous terms: The terms of the offer must be certain, definite,
unambiguous and not vague.
3. A mere declaration of intention is not an offer: A statement or declaration indicates that an
offer will be made in future. Therefore it just be distinguished from an offer.
4. An invitation to an offer is not an offer: In case of an invitation to offer, the person making
it proposes certain terms on which he is willing to negotiate and invites others to make an
offer on those terms e.g. menu card in a hotel. Therefore it should be distinguished from the
tern offer.
5. Communication :An offer is not complete e unless it is communicated to the person to
whom it i made i.e. the offeree.
6. No term must be there non-Compliance of which amounts to acceptance: A valid offer
must not contain any term, the non-compliance of which would amount to acceptance of
the offer.
Example: X offers Y to sell his car by a letter. The letter contains a term that if no reply is
received from Y by Sunday, it will be presumed that the offer has been accepted. Hence, if Y
does not comply with the terms, it does not amount to acceptance.
7. Communication of special terms: The offeree will not be bound by any special terms of the
offer unless such terms are communicated along with the offer.
Definition of Acceptance: According to Section 2(b) of the India Contract Act 1872, "When the
person to whom the proposal is made, signifies his assent thereto, the proposal is said to be
accepted."
Essential elements of a valid acceptance or Rules of acceptance: Following are the essential
elements of a valid acceptance:
4 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get the
opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
1. Acceptance must be absolute and unqualified [Sec. 7(1)]: In order to convert a proposal
into a promise, the acceptance must be absolute and unqualified.
2. Acceptance must be communicated by words or conduct [Se 7 (2)]:-The offer must be
accepted in some usual or reasonable manner unless the proposal prescribes the manner in
which it is to be accepted.
3. Acceptance must be communicated to proposer: To be a valid acceptance, an acceptance
must be communicated to the offeror, a mere mental acceptance is not sufficient to
constitute a valid acceptance.
4. Acceptance by whom: A valid acceptance must be communicated by the person to born the
offer is made i.e. the offeree himself or by a person authorised to accept it.
5. Acceptance to whom: A valid acceptance must be communicated to the person who has
made the offer i.e, the offeror himself.
6. Acceptance must be made within the time specified: If any time is prescribed for the
acceptance of the offer, the acceptance must be given within the time specified or if no such
time is prescribed, an acceptance must be given within a reasonable time.
7. Acceptance must be given before the offer lapses: An offer must be accepted before it
lapses or is withdrawn.
Definition of "Consideration": According to Sec. 2(d) of the Indian Contract Act 1872 “When, at the
desire of the promisor, the promise or any other person has done or abstained from doing, or does
or abstains from doing, or promises to do or to abstain from doing, something, such act or
abstinence or promise is called a consideration for the promise.
(1) Consideration must move at the desire of the promisor: It is the essential that
consideration must move at the Desire of the promisor, but not at the instance of a third
party
(2) Consideration may move from the promisee or any other person: A party who wishes to
enforce a contract must be able to show that he himself has furnished consideration for the
promise of the other party.
(3) Consideration must be real not illusory: Consideration must be real and possible. it must
not be illusory or unsubstantial.
(4) Consideration may be past, present or future: The words used in the definition under
section 2(d) of the Indian contract Act, clearly state that, consideration may be past, present
or future.
(5) It must be Lawful: Consideration must not be illegal it must be Lawful.
(6) It must not be immoral or opposed to public policy: Consideration must not be immoral for
opposed to public policy.
Types of consideration:
(i) Past Consideration: A past consideration is a consideration which has already done or
which has already moved before the formation of agreement;
5 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get the
opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
(ii) Present Consideration: The consideration which moves simultaneously with the promise
is called present consideration.
(iii) Future Consideration: The Consideration which moves after the formation of contract is
called future consideration or executory consideration. In the case of future
consideration both the parties promise to perform their obligation after the formation
of the contract.
Valid contract without consideration: According to Sec. 25 of the Indian Contract Act, an
agreement without consideration is void. Therefore, the general rule is "no consideration, no
contract".
1. Agreements made on account of natural love and affection [Sec. 25 (1)]: An agreement
made without consideration is valid if it is expressed in writing and registered under the law
and is made on account of love and affection between the parties standing in a near relation
to each other.
2. Promise to compensate [Sec. 25 (2)]: An agreement made without consideration is valid if it
is a promise to compensate, wholly or in part, a person who has already voluntarily done
something for the promisor, or something which the promisor was legally compelled to do.
3. Promise to pay a debt which has been time barred [Sec. 25 (3)]: An agreement made
without consideration is valid, if it is a promise made in writing and signed by the person to
be charged therewith to pay wholly or in part a debt of which the creditor might have
enforced payment but which could not be enforced because of limitation.
4. Complete Gifts [Explanation 1 to Sec 25]: An agreement without consideration is valid in
case of completed gifts.
5. For creation of agency [Sec.185]: No consideration is necessary to create an agency.
6. Gratuitous Bailment [Sec.148]:No Consideration is necessary for gratuitous Bailment
6 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get the
opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Definition and meaning of capacity of parties: As per Section 10, all agreements are contracts, if
they are made by the parties competent to contract. The competency of parties is one of the
essential elements of the valid contract. The capacity of parties to the contract means the legal
ability of the parties to enter into a contract.
Definition and meaning of capacity to contract: As per section 11 of the Indian Contract Act 1872,
“every person is competent to contract who is of the age of majority according to the law to which
he is subject, and who is of sound mind and is not disqualified from contracting by any law to which
he is subject.
1. Person of the age majority: According to section 3 of the Indian Majority Act 1875, a person
shall be deemed to have attained his majority as under:
i) In case where a guardian of the minor‘s person or property is appointed by a court of law,
on completion of 21 years. ii) In case where a minor‘s property is taken over by the court of
words for the superintendence of the property, on completion of 21 years. iii) In any other
case, on completion of 18 years.
2. Person of sound mind: As per section 12 of the Indian Contract Act, 1872, "a person is said
to be of sound mind for the purpose of making a contract if, at the time when he makes it,
he is capable of understanding it and of forming a rational judgement as to its effect upon
his interests".
3. Person not disqualified from contracting: Person other than the following persons, who are
disqualified from contracting, can enter into a contract.
(i) Alien Enemy.
(ii) Foreign Sovereigns and Ambassadors
(iii) Convicts
(iv) Corporations
(v) Insolvent
7 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get the
opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Definition of Consent: According to section 13 of the Indian Contract Act 1872, "Consent is essential
to the creation of a contract that both parties agree to the same thing in the same sense. When two
or more persons agree upon the same thing in the same sense, they are said to consent.
Definition of Free Consent: According to section 14 of the Indian Contract Act 1872, "Consent is said
to be free when it is not caused by: 1. Coercion, as defined in section 15, or 2. Undue influence, as
defined in section 16, or 3. Fraud, as defined in section 17, Or 4. Misrepresentation, as defined in
section 18, or 5. Mistake, subject to the provisions of section 20, 21 and 22.
Definition of Coercion: According to section 15 of the Indian Contract Act1872, “coercion is the
committing, or threatening to commit, any act forbidden by the Indian Penal Code, or the unlawful
detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the
intention of causing any person to enter into an agreement."
Example: Mr. X beats Mr. Y and compels him to sell his motor cycle for Rs.5,000. Here the consent of
Mr. Y is obtained by coercion.
Definition of Undue Influence: According to section 16 (1) of the Indian ContractAct1872, "a
contract is said to be induced by undue influence where the relations subsisting between the parties
are such that one of the parties is in a position to dominate the will of the other and uses that
position to obtain an unfair advantage over the other."
Example: Mr. X has advanced money to his son Y when he was a minor and has obtained upon Y's
coming of age, by misuse of parental influence, a bond from Y for a greater amount than the sum
due in respect of the advance. In the given case Mr. X employs undue influence.
Definition of Fraud: According to section 17 of the Indian Contract Act 1872," Fraud means and
includes any of the following acts committed by a party to a contract, or with his connivance, or by
his agent with intent to deceive another party thereto or his agent, or to induce him to enter into
the contract.
1. a positive Operation of a person, which is not true, though the person making it believes it to be
true, it is not warranted by his information.
2. any breach of duty which, without an intent to deceive, gains an advantage to the person
committing it, by misleading another to his prejudice.
Example: X says Y that his car gives 40km. per litre, believing that the statement to be true. But
actually the car runs at 30km. per litre. In the given case, X is making a misrepresentation.
8 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get the
opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Definition of Mistakes: A mistake occurs where the parties intending to do one thing but have done
something else by error. Mistakes are of two types : 1) Mistakes as to fact; 2) Mistakes as to law.
Example: A enters into an agreement with B to buy a horse from him. The horse was dead at the
time of the bargain. Neither A nor B was aware of the fact. Hence, the agreement is void.
Definition of Void Agreement: According to Section 2(g) of the Indian Contract Act 1872, "An
agreement not enforceable by law is said to be void." Example: A contract entered into by a minor,
or by a person of unsound mind or by a person disqualified from contracting.
Definition of Voidable Contract or Voidable Agreement: According to Section 2(i) of the Indian
Contract Act 1872, "An agreement which is enforceable by law at the option of one or more of the
parties thereto, but not at the option of the other or others, is a voidable contract." Example:
Contracts made by coercion, undue influences misrepresentation etc.
9 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get the
opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
10 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Meaning of Discharge of contract: when the rights and obligations arising out of a contractual
relationship are extinguished; the contractual relationship comes to an end and it is called
"discharge of contract."
Modes of Discharge of contract: A contract may be discharged in various ways. These are discussed
below:
1. Discharge by performance: when the parties to a contract have performed whatever was
contemplated under the contract, the contract will come to an end. Under this, a contract
may be discharged in the following ways.
i) by the actual performance or ii) by the attempted performance.
2. Discharge by mutual agreement [Sec. 62]: A contract can be discharged by the mutual
agreement between the parties to the contract. It can be done in different ways such as:
i) Novation ii) Rescission iii)Alteration iv)Remission v)Waiver etc.
3. Discharge by impossibility of performance [Sec. 56]: Sec. 56 of this Act, provides that a
contract to do an act which after the contract is made becomes impossible or unlawful is
void. Thus, it results in discharge of contract under Sec.56, a contract is discharged under the
circumstances:
i) due to destruction of subject matter. ii) due to death or incapacity of parties to the
contract. iii) due to change of law. iv) due to non-existence or non-occurrence of particular
state of things. v) due to outbreak of war.
4. Discharge by operation of law:- A contract may be discharged by the operation of law in the
following circumstances:
i) by death of a party, where the contract involves personal skill knowledge or ability
of the deceased party.
ii) by insolvency, where the insolvent is discharged from all his liabilities incurred up to
the date of his insolvency.
iii) by the unauthorised material alteration of the terms of a written agreement.
iv) by merger of rights where the rights and liabilities become vested in the same
person.
5. Discharge by breach of contract: When a party to the contract does not fulfil his contractual
obligation, it is called breach of contract that results in discharge of contract. There are two
kinds of breach of contract. These are: i) Actual breach of contract and ii) Anticipatory
breach of contract.
6. Discharge by lapse of time: If a contract is not performed within the period of limitation as
laid down in the Limitation Act, 1963, it is said to be discharged by lapse of time.
Meaning of a Breach of Contract: A breach of contract means one party to the contract fails
to fulfill her contractual obligations. A breach can occur if a party fails to perform within the
time frame specified in the contract, does not perform in accordance with the terms of the
agreement, or fails to perform whatsoever. If one party fails to perform while the other
party fulfills her duties under the contract, the performing party is entitled to legal remedies
for breach of contract.
11 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Remedies for breach of contract: In case of breach of contract the aggrieved party is
entitled to one or more of the following remedies:
1. Suit for recession of the contract: In case of breach of contract, the injured party may need
to approach the court to grant him a formal rescission i.e. cancellation of the contract. On
the rescission of the contract, the injured will be freed from all his obligations under the
contract.
Example:-A promises B to sell his motor car on a certain day and B promises to pay the price
of the car on receipt of the car. If A does not deliver the car on the specified day, B will be
discharged from his liability to pay the price.
2. Suit for damages: In case of breach of contract, the injured party is entitled to receive
compensation for any loss caused to him for such breach of contract. He is also entitled to
file a suit for obtaining a decree for damages.
The injured party is entitled to the following damage:
i) ordinary damage; ii) special damage; iii) Punitive or Vindictive or exemplary damage; iv)
Nominal damage.
3. Suit for quantum meruit: The general rule of law is that unless a party has performed his
promise in its entirety, he cannot claim performance from the other party. But there are
certain exceptions to this rule. On the basis of quantum meruit a party can claim even for
the part performance. The claim under this principle can be made in the following situations:
i) In case of breach of Contract, the injured party can claim reasonable compensation for
the work done by him under the contract.
ii) When a contract becomes void, any person who has received any advantage under such
contract is bound to make compensation for it to the person from whom he received it
[Sec 65].
iii) In case of divisible contract, the party who is not in default enjoys the benefit of the part
performance, and the party who is in default may sure the other party on "quantum
meruit".
iv) In case where an indivisible contract for a lump sum is completely performed but
performed badly. The person who performed the contract can claim the lump sum after
making the deduction for bad work.
4. Suit for Specific performance: In case where damages are not considered as an adequate
remedy, the court may direct the defaulting party to carry out his promise according to the
terms of the contract, which is called specific performance of the contract.
However, suit for specific performance is not maintainable in the following cases:
i) Where monetary compensation is considered as an adequate remedy.
ii) In case of contract of personal nature e.g. A contract to marry.
iii) In case where it is not possible for the court to supervise the performance of the
contract.
5. Suit of injunction: Injunction means an order of the court prohibiting a person from doing a
particular act. It is commonly known as "stay order". In case where a party breaches a
negative term of contract i.e. where the party to the contract does something which he
promised not to do, the court may by issuing an order, prohibit such person from doing the
same.
12 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
13 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Definition of Contract of Guarantee: According to Section 126 of the Indian Contract Act, 1872, "a
contract of guarantee is a contract to perform the promise, or discharge the liability, of a third
person in case of his default. “ Example: X applies for shares of a public limited company and Y
enters into an agreement with the company that any amount which will remain unpaid on the call
shall be paid by him, it is a contract of guarantees
Different types of Contract of Guarantee:
A contract of Guarantee is of two types:
1. Specific Guarantee: A specific guarantee is one which is given for a single debt or obligation
and which comes to an end when the debt is paid off or the obligation is discharged.
Example: X gives a loan to Y for which Z gives a guarantee. This is a case of a contract of
specific guarantee.
2. Continuing Guarantee: As per Section 129 of the Indian Contract Act 1872, "a guarantee
which extends to a series of transactions is called a Continuing guarantee." Example: X
guarantees payment to Y, a tea-dealer, to the amount of Rs.5,000 for any tea he may from
time to time supply to Z. Y supplies Z with tea of Rs. 5,000 and Z pays Y for it. Afterwards Y
supplies Z with tea of Rs. 10,000 and Z fails to pay the same. In the given case, the guarantee
given by X was a continuing guarantee and he is accordingly liable to Y to the extent of
Rs.5000.
Essential elements of contract of Guarantee:
1. Elements of a valid contract: All the essential elements of a valid contract must be there
in a contract of guarantee.
2. Parties to a contract of guarantee: There are three parties to a contract of guarantee,
the "surety" who gives the guarantee, the 'principal debtor’ in respect of whose default
the guarantee is given, the 'creditor' to whom the guarantee is given.
3. Form: A guarantee may be either oral or written.
4. Conditional Contract: Under a contract of guarantee, the liability of the principal debtor
is primary. Whereas the liability of the surety is secondary because it arises only when
the principal debtor makes a default.
5. Consideration: A contract of guarantee must be made for some consideration. Anything
done or any promise made, for the benefit of the principal debtor, is sufficient
consideration to the surely for giving the guarantee.
Definition of Bailment:
According to Section 148 of the Indian Contract Act 1872, "a bailment is the delivery of
goods by one person to another for some purpose upon a contract that they shall, when the
purpose is accomplished, be returned or otherwise disposed of according to the directions
of the person delivering them." Example: 1) A delivers to B his watch for repairing.
Definition of the Bailor:
As per Sec148 of the Indian Contract Act 1872, a person delivering the goods under a
contract of bailment is called the "bailor". Example: A delivers to B his wrist watch for
repairing. In this case A is he Bailor.
Definition of the Bailee:
According to Sec148 of the Indian contract Act 1872, the person to whom goods are
delivered under the a contract of bailment is called the "Bailee".
14 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Example: A delivers to B his wrist-watch for repairing. In this case B is the Bailee.
Essential elements of Bailment:
1. Contract: There must be a contract, which may be express or implied, between the
bailor and the bailee.
2. Goods: The contract for bailment must relate to only movable goods. The contract
cannot be made for immovable goods.
3. Delivery of Goods: Under the contract for bailment, there must be a delivery of goods
by one person to another.
4. Purpose: Under bailment, goods must be delivered by one person to another for some
temporary purpose.
5. Ownership: Under the contract for bailment, only the possession of the goods is
transferred from one person to another, but the ownership is not transferred. It remains
with the bailor.
6. Return or disposal of Goods: Under the contract for bailment, the delivery of goods
must be one the condition that either the goods will be returned to its original owner or
the goods will be disposed of according to the directions of the bailor, when the purpose
is accomplished.
Duties of the Bailee:
1. Take reasonable care of the goods bailed [Sec 151, 152]: The bailee is bound to take care of
the goods bailed to him as a man of ordinary prudence would take of his own goods. If the
bailee has taken the care as described above and if there is no special contract, the bailee is
not responsible for the loss, destruction or deterioration of the goes bailed.
2. Bailee's Act inconsistent with conditions [Section 153]: A contract for bailment is voidable
at the option of the bailor, if he bailee does any act inconsistent with the conditions of the
bailment.
3. Unauthorised use of Goods [Section 1 54]: If the bailee makes any use of the goods bailed,
which is not according to the conditions of the bailment, he is liable to make compensation
to the bailor for any damage arising to the goods from such use.
4. Not to mix goods of bailor with his own goods [Section 155-157]: If the bailee mixes the
goods of the bailor, with his own goods, without the consent of the bailor and if the goods
can be separated or divided, the bailee is bound to bear the expense of separation of
division. If it is impossible to separate the goods the bailor is entitled to be compensated by
the bailee for the loss of the goods.
5. Return of goods on expiration of time or accomplishment of purpose [Section 160, 161]: It
is the duty of the bailee either to return the goods or to dispose the goods of according to
the bailor‘s direction when the time for which the goods were bailed has expired or the
purpose for which they were bailed has been accomplished. If the goods are not so returned
or not so disposed of, the bailee is responsible to the bailor for any loss, destruction or
deterioration of the goods.
6. Entitlement of increase or profit from goods bailed: In the absence of any Contract to the
contrary, the bailee is bound to deliver to the bailor or according to his directions, any
increase or profit which may have accrued from the goods bailed.
15 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Example: X has left a cow in the custody of Y to be taken care of. The cow has given a birth
to a calf. Y is bound to deliver the calf as well as the cow to X.
Duties of Bailor:
1. To disclose faults in goods bailed [Section 150]: The bailor is bound to disclose the
bailee all the faults in the goods bailed, which were known to him and which are
material for the use of the goods or which may expose the bailee to an extraordinary
risks; otherwise he shall be held responsible for any damage arising to the bailee from
such faults.
If the goods are bailed for hire, the bailor shall be held responsible for such damage,
whether or not he was aware of the existence of such faults in the goods.
2. Repayment by bailor, of necessary expenses [Sec 158]: Where, by the conditions of the
bailment, the goods are to, be kept or to be carried, or to have work done upon them by
the bailee for the bailor and the bailee is to receive no remuneration, the bailor shall
repay to the bailee the necessary expenses incurred by him for the purpose of the
bailment.
3. To indemnity the bailee for premature termination [Section 159] : In case of pre-
mature termination of a gratuitous bailment the bailor shall indemnify the bailee for any
loss incurred by the bailee.
4. Responsibility for defective title [Sec 164]: The bailor is responsible to the bailee for any
loss sustained by the bailee by reason that the bailee was not entitled to make the
bailment, or to receive back the goods or to give directions respecting them.
Rights of the Bailee:
1. Right to recover charges : The bailee has a right to recover charges from the bailor in the
following cases:
i) for non-disclosure of material fact by the bailor [Sec 150]
ii) for expenses incurred by the bailee [Sec158]
iii) for premature termination of contract [Sec 159]
iv) for defective title of the bailor [Sec 164]
2. Right to deliver goods to one of the joint owners [165] : if several joint owners bail the
goods, the bailee may deliver them back to or according to the directions of, one joint owner
without the consent of all, in the absence of any agreement to the contrary.
3. Right to deliver goods to bailor without title [Sec.166]: If the bailor has no title to the
goods, and the bailee, in good faith, delivers them back to, or according to the directions of
the baiior, the bailee is not responsible to the owner in respect of such delivery.
4. Right of lien[Sec.170] : The bailee has a right to retain the goods bailed to him until he
receives his due numeration for the services rendered by him in respect of such goods.
5. Right to file suit against wrong doers [Sec 180]: If a third person wrong fully deprives the
bailee of the use or possession of the goods bailed, he has a right to file suit against the
wrong doer.
Rights of the Bailor:
1. Right to claim for damages: The bailor has a right to claim damages from the bailee in the
following cases:
i) for negligence of the bailee in taking care of the goods [Sec.151, 152]
16 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
17 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Meaning of Contract of sale: According to sec.4(1) of the sale of Goods Act, “a contract of sale of
goods is a contract where by the seller transfer of agrees to transfer the property in goods to the
buyer for a price.”
DIFFERENCES BETWEEN A SALE AND AN AGREEMENT TO SALE:
Basis of Difference Sale Agreement
Transfer of ownership In a sale, the property in In an agreement to sale, the
goods is transferred from the transfer of the property in
seller to the buyer goods takes place at a future
immediately. time or subject to fulfillment
of certain conditions.
Transfer of risk In a sale, the risk is transferred In an agreement to Sale, since
to the buyer along with the the property is not transferred
transfer of property in goods. to the buyer, the risk is also
not transferred to the buyer.
Nature of Contract A sale is an executed contract An agreement to see is an
because the consideration for executory contract because
sale moves simultaneously the consideration for sale
with I the promises of both moves at a future date.
the buyer and the seller.
Right to sue In a sale, since the property is In an agreement to sale, the
transferred to the buyer, the aggrieved party can only sue
seller can sue the buyer for for damages and not for the
the price of the goods. On the price unless the price was
other hand, the seller can also payable at a specified date.
be sued for the non-delivery
of the goods.
Liabilities in case of loss or In case of sale, the buyer is In an agreement to sale, the
destruction of goods liable for any subsequent loss seller is liable for such loss or
or goods destruction of goods. destruction of goods.
Right in case of insolvency In case of sale, where the In case of agreement to sale, if
seller Becomes, insolvent and the seller becomes insolvent,
the goods are in his the buyer can only claim a
possession, the buyer has a rateable dividend from the
right to claim the goods from seller for the price paid. But if
the official receiver or the buyer becomes insolvent
Assignee, since the ownership the seller can refuse to deliver
of goods has, passed to the the goods to the official
buyer. But here the buyer Receive or Assignee.
become insolvent without
paying the price, the seller has
to deliver the goods to the
Official Receiver or Assignee.
He can only claim a rateable
dividend from m estate of the
insolvent buyer.
Remedies in case of Breach In case of sale, the seller's In case of agreement to sale
18 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
of contract breach of contract gives the the seller, being the owner of
buyer two remedies. One is a the goods, may dispose of the
suit for damages against the goods and buyer can only file
seller and another is the a suit for damages.
remedy to recover f the goods
from the third part who
bought such goods.
Default of Buyer In sale, in case of default of In an agreement to sell, in
the buyer, the seller can case of buyer's default, the
1. sue the buyer for the price, seller can sue the buyer for
even of the goods are still in damages only but not for the
the possession of the seller. price, even if the goods are in
2. resale such goods. the buyer's possession.
3. exercise the right of
stoppage of goods in transit, if
necessary.
4. exercise the right of lien.
Definition of condition: Sec. 12(2) of the Sales of Goods Act 1930 defines condition. Under this
section, "a condition is a stipulation essential to the main purpose of the contract, the breach of
which gives rise to a right to treat the contract as repudiated."
Definition of Warranty: As per Sec. 12(3) of the Sales of Goods Act 1930, "a warranty is a
stipulation collateral to the main purpose of the contract the breach of which gives rise to a
claim for damages but not to a right to reject the goods and treat the contract as repudiated".
Circumstances when a breach of condition be treated as a breach of warranty: According to
Sec. 13 of the Sale of Goods Act 1930, in the following cases, a condition can be treated as a
warranty:
1. Where a contract of Sale is subject to any condition to be fulfilied by the seller the buyer
may waive the condition or elect to treat the breach of the condition as a breach of warranty
and not as a ground for treating the contract as repudiated.[Sec.1 3(1 )]
2. Where a contract of sale Is not severable and the buyer has accepted the goods or part
thereof the breach of any condition to be fulfilled by the seller can only be treated as a
breach of warranty and not as a ground for rejecting the goods and treating the contract as
repudiated, unless there is a term of the contract, express or implied, to that effect.
[Sec.13(2)].
3. Where in case of any condition or warranty fulfillment of which Is excused by law by reason
of impossibility or otherwise. [Sec. 13(3)].
RULE, REGARDING IMPLIED CONDITION:
19 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
1. Implied undertaking as to title [sec.14(a)]: In case of sale, the seller has a right to sell the
goods and in case of an agreement to sale, the seller will have a right to sell the goods at the
time when the property is to pass.
2. Sale by description [Sec.15]: if there is a contract for the Sale of Goods by description, there is
an implied condition that the goods shall correspond with the description.
3. Sale by Sample as well as description [Sec.15]: If the sale is by sample as well as by description,
it is not sufficient that the goods must correspond with the sample, the goods must also
correspond with the description.
4. Sale by sample [Sec. 17 (2)]: In the case of contract for sale by sample there is an implied
condition that the bulk shall correspond with the sample in quality.
5. Implied condition as to quality or fitness [Sec.16(1)]: Where the buyer expressly or by
implication, makes known to the seller the particular purpose for which the goods are required
and relies on the skill or judgment of the seller and the seller or manufacturer has ordinarily
been dealing in those goods, there is an implied condition that the goods shall be reasonably fit
for such purpose.
6. Condition as to merchantable quality [Sec.16(2)]: Where goods are bought by description from
a seller who deals in goods of that description, there is an implied condition that the goods must
be of merchantable quality.
7. Condition as to wholesomeness: There is an implied condition that the goods must be fit for
Consumption.
8. Condition as to usage of trade [Sec. 16(3)]: An implied condition as to quality or fitness for a
particular purpose may be annexed by usage of trade.
Rules regarding Implied Warranties in a contract of sale of goods:
1. Implied warranty as to quiet possession (Sec. 14(6)] :In a contract of Sale, there is an
implied warranty that the buyer shall have and enjoy quit possession of the goods.
2. Implied warranty as to freedom from encumbrances [Sec.14(c): In a contract of Sale, there
is an implied warranty that the goods shall be free from any charge or encumbrance in
favour of any third party, which was not declared or known to the buyer before or at the
time when the contract is made.
3. Implied warranty as to usage of trade [Sec.18(3)]: An implied warranty as to quality or
fitness for a particular purpose may be annexed by the usage of trade.
4. Implied warranty as to danger: There is an implied condition on the part of the seller that in
case of goods of dangerous nature, the seller must disclose the fact or warn the buyer of the
probable danger, otherwise he shall be held liable for breach of implied warranty.”
20 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
1. In case of Specific or Ascertained Goods [Sec.19 (1)]: Where there is a contract for
the sale of specific or ascertained goods, the property in them is transferred to the
buyer at such time as the parties to be contract intend it to be transferred.
iii) If he does not signify his approval or acceptance to the seller but retains the
goods without giving notice of rejection, then the following two rules shall
apply:
(a) If a time has been fixed for the return of the goods: The property passes
on the expiration of such time.
(b) If no such time has been fixed: The property passes on the expiration of a
reasonable time.
“No seller of goods can give the buyer of the goods a better title of those goods than he
himself has” – Discuss:
The general rule regarding transfer of ownership is that only the owner of the goods can
transfer a good title. In other words, if the title to the goods of the seller is defective, the
buyer will also acquire a defective title to the goods. Therefore, no seller of goods can give
the buyer of the goods a better title of those goods than he himself has. “But the general
has the following exceptions:
22 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
5. Sale by seller in possession of the goods after sale [sec.30(1)]: where a person, after
selling the goods, continues to be in the possession of the goods or of the
documents of title to the goods, sell or otherwise dispose of the goods again to any
other person, the person who buys the goods will acquire a better title thereto,
provided.
i) He has bought them in good faith, and
ii) Without notice of the previous sale.
6. Sale by a buyer in possession of the goods before the transfer of ownership
[sec.30(2)]: Where a person, having bought or agreed to buy the goods, obtain the
possession of the goods or the documents of the title to the goods with the consent
of the seller, sells or otherwise dispose of the goods to any other person, the person
who acquires the goods will obtain a better title thereto, provided.
i) He has bought them in good faith; and
ii) Without notice of any lien or other right of the original seller in respect of
those good.
7. Sale by an unpaid seller [sec.54(3)]: Where an unpaid seller who has exercised his
right of lien or stoppage in transit, resells the goods, the buyer acquires good title
thereto in spite of the fact that no notice of the re-sale has been given to the original
buyers.
8. Sale by a finder of lost goods [sec169 of the Indian Contract Act 1872]: The person,
who buys goods from the finder of lost goods, will acquire a better title under certain
circumstance as laid down under sec. 169 of the Indian Contract Act, 1872.
9. Sale by Pawnee or Pledgee [sec. 176 of the Indian Contract Act]: If the pawnor make
default in payment of the debt or performance, at the stipulated time of the
promise, in respect of which the goods were pledged, the Pawnee may sell the goods
on giving the pawnor a reasonable notice of the sale. In that case the buyer will
acquire a good title.
10. Sale by Official Receiver or liquidator or Assignee: A buyer will get a valid title when
the sale is made by official receiver or liquidator or assignee?
23 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
1. When the whole of the price has not been paid or tendered.
2. When a bill of exchange or other negotiable instrument has been received as
conditional payment and the conditions on which it was received has not been
fulfilled by reason of the dishonour of the instrument or otherwise.”
The seller may exercise his right of lien not withstanding that he is in possession of the
goods as agent or bailee for the buyer [sec.47(2)].
ii) Right of stoppage in transit [sec.50]: An unpaid seller has a right to stop
the goods while they are in transit, to resume the possession of the goods
and to retain them until the payment or tender of the price. The unpaid
seller can exercise such right if the following condition are met:
(a) The unpaid seller must have parted with the possession of the goods.
(b) The goods must be in transit
(c) The buyer of the goods has become insolvent.
(d) The right can be exercised, subject to the provisions of this Act.
iii) Right of re-sale [sec.54]: An unpaid seller has a right to re-sale the goods
and he can exercise such right in the following case:
(a) Where the goods are of a perishable nature, or
(b) Where the unpaid seller gives notice to the buyer of his intention to
re-sell and the buyer does not within a reasonable time pay or
tendered the price, or
24 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
(c) Where the seller expressly reserves a right of re-sale in case the buyer
should make default and on the buyer making default.
2. Where the property in the goods has not passed to the buyer:
Right of withholding delivery: where the property in the goods has not been
transferred to the buyer, the unpaid seller in addition to the rights of lien, the
rights of lien, the rights of stoppage in transit and the right of resale has a right of
withholding delivery.
(b) Rights against the buyer personally:
1. Suit for price: Where the property in the goods has passed to the buyer and the
buyer wrongfully neglects or refuses to pay for the goods as per the terms of
contract, the seller may sue him for the price of the goods [sec.55(1)]. Where as
per the contract the price is payable on a particular day irrespective of delivery
and the buyer wrongfully neglects or refuses to pay such price, the seller may sue
to him for the price although the property in the goods has not passed to the
buyer [sec.52(2)].
2. Suit for damages for non acceptance [sec.56]: Where the buyer wrongfully
neglects or refuses to accept and pay for the goods, the seller may sue him for
damages for non acceptance.
3. Repudiation of contract before due date [sec.60]: Where the buyer repudiates
the contract before the date of delivery, the seller may either treat the contract
as subsisting and wait till the date of delivery or may treat the contract as
rescinded and sue for damages for the breach.
4. Suit for interest [sec.61]: The seller has a right to recover interest on the delayed
payment, when there is specific agreement in this regard. If there is no such
agreement, the seller may serve a notice on the buyer indicating his intention to
charge interest on the delayed payment.
25 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
“Persons who have entered into partnership with one another are called individually
“partners”
Definition of Partnership:
As per sec. 4 of the Indian Partnership Act 1932, “Partnership” is the relation between
persons who have agreed to share the profits of a business carried on by all any of them
acting to all.”
Characteristics of a partnership:
A partnership has the following essential elements which the court must take into
consideration while determining the existence of partnership:-
1. Two or more persons: There shall be at least two persons to form a partnership and
all of them must be competent to contract under the Indian Contract Act, 1872.
2. Voluntary Agreement: A agreement arises as a result of an agreement between two
or more persons. It is not created by status. The agreement may be express or
implied. The nature of such agreement is voluntary and contractual.
3. Business: There must be a business. The term business includes every trade,
occupation & profession. It must be lawful.
4. Sharing of profits of business: This element specifies two propositions. First, the
existence of a business is essential to a partnership. Secondly, to constitute a
partnership there must be an agreement to share the profits of the business. An
agreement to share, the losses of the business is not an essential element. However,
in case of losses, such losses must be borne by the partners in the profit sharing
ratio, unless agreed otherwise.
5. Mutual Agency: The most important element of a partnership is that the business
must be carried on by all the partners or any one or some of them acting for all. This
element also states that partners carrying on business in partnership are agents as
well as principles. The act of one partner binds all the other partners.
1. Active Partner: An active partner is one who takes part in the day-to-day working of
the business. He may act in difficult capacities such as manager, organiser, adviser
and controller of all the affairs of the firm. He may also be called a working partner.
2. Sleeping or Dormant Partner: A sleeping partner is one who contributes capital,
shares profits and contributes to the losses of the business but does not take part in
26 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
the working of the concern. Sleeping partner is liable for the liabilities of the
business like other partners. He cannot bind the business, i.e., firm, to third parties,
by his acts. He is not known to the public as a partner, he may be called as a ‘secret
partner’.
3. Nominal Partner: A nominal partner is one who lends his name to the firm. He does
not contribute any capital nor does he share profits of the business. He is known as a
partner to the third parties. On the strength of his name, the business may get more
credit in the market or may promote its sales. A nominal partner is liable to those
third parties who give credit to the firm on the assumption of that person being a
partner in the firm.
4. Partner in Profit: A person may become a partner for sharing the profit only. He
contributes capital and is also liable to third parties like other partners. He is not
allowed to take part in the management of the business. Such partners are
associated for their money and goodwill.
5. Partner by Estoppel or Holding Out: When a person is not a partner but poses
himself as a partner, either by words or in writing or by its acts, he is called a partner
by estoppels or by holding out. A partner by estoppels or by holding out shall be
liable to outsiders who deal with the firm on the presumption of that person being a
partner in the business even though he is not a partner and does not contribute
anything of the business.
6. Secret Partner: The position of a secret partner lies between active and sleeping
partner. His membership of the firm is kept secret from outsiders. His liability is
unlimited and he is liable for the losses for the business. He can take part in the
working of the business.
7. Sub-Partner: A partner may associate anybody else in his share in the firm. He gives a
part of his share to the stranger. The relationship is not between the sub-partner and
the firm but between him and the partner. The sub-partner is a non-entity for the
partnership. He is not liable for the debts of the firm.
8. Minor as a partner: A minor is a person who has not yet attained the age of majority.
A minor cannot enter into a contract according to the Indian Contract Act because a
contract by a minor is void ab initio. However, a minor may be admitted to the
benefits of an existing partnership with the consent of all partners. The minor is not
personally liable for liabilities of the firm, but his share in the partnership property
and profits of the firm will be liable for debts of the firm.
Under the Indian Partnership Act, it is not compulsory for a partnership firm to get it
registered. Thus, an unregistered firm shall not be considered as an illegal association.
1. No suit between partners and the firm: No suit shall be instituted by a partner
against the firm or any partner to enforce a right arising from a contract unless the
firm is registered [Sec. 69 (1)].
2. No suit between the firm and third parties: No suit can be instituted by the firm
against any third party to enforce a right arising from a contract unless the firm is
registered. It may be noted that this section does not prohibit the third party from
instituting a suit against the firm or the partner [sec.69 (2)].
3. No right to clam set off: Neither any unregistered firm nor any partner thereof can
claim a set off (if value exceeds ₹100) in proceeding instituted against the firm by a
third party to enforce a right arising from a contract [sec. 69 (3)].
Subject to the agreement between the partners, the partners has the following rights.
1. Right to take part: Every partner has a right to take part in the conduct of the
business of the firm [sec.12 (a)].
2. Right to express opinion: Any difference relating to the ordinary matters connected
with the business may be decided by a majority. Every partner shall have the right to
express his opinion before the matter is decided, but no change may be made in the
nature of the business without any consent of all the partners.
[Sec.12 (c)]:
3. Right to have access to books of the firm: Every partner has a right to have access to
and to inspect and copy any of the books of the firm [sec.12 (d)].
4. Right to share profit: The partners are entitled to share the profit and losses of the
business of the firm equally [sec. 13(b)].
5. Right to receive interest on capital: If a partner is entitled to receive interest on
capital, the interest shall be payable only out of profit. In case of loss, no such
interest is allowed. [Sec. 13 (c)].
6. Right to receive interest on advance: A partner is entitled to receive interest@6%
p.a. on advance made by him to the firm. [sec. 13 (d)].
7. Right to be indemnified: The firm shall indemnify a partner in respect of payments
made and liabilities incurred by him,
1) In the ordinary and proper conduct of the business, and
2) In case of emergency, for the purpose of protecting the firm from loss as would
be done by a person of ordinary prudence, in his own case, under similar
circumstances
[sec. 13 (e)]
28 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
8. Right to use the property of the firm: The property of the firm shall be held and used
by the partners exclusively for the purpose of the business [sec. 15].
9. Right of partner as agent of the firm: A partner is the agent of the firm for the
purpose of the business of the firm. Any act done by a partner to carry on, in the
usual way, business of the kind carried on by the firm, binds the firm. [sec. 18 and
sec. 19].
10. Right to resist the introduction of a new partner: No reason shall be introduced as a
partner into a firm without the consent of all the existing partners [sec.31].
11. Right to retire: A partner may retire-
i) With the consent of all the other partners, or
ii) In accordance with an express agreement by the partners, or
iii) Where the partnership is at will by giving notice in writing to all the other
partners of his intention to retire. [sec. 32]
12. Right not to be expelled: A partner may not be expelled from a firm by any majority
of the partners [sec. 33 (1)]
13. Right to carry on similar business: An outgoing partner may carry on a business
competing with that of the firm and he may advertise such business but subject to
contract to the contrary, he may not
i) Use the firm name
ii) Represents himself as carrying on the business of the firm
iii) Solicit the custom of persons who were dealing with the firm before he
ceased to be a partner. [sec.36 (1)]
14. Right to share subsequent profits: The outgoing partner or the legal representative
of the deceased partner is entitled to receive either a share in the subsequent profits
of the firm or interest @6% p.a. on the amount of his share in the property of the
firm till the accounts are finally settled. [sec.37]
15. Right to dissolve the partnership firm: A firm may be dissolved with the consent of all
the partners or in accordance with a contract between the partners. [sec. 40]
1. Duty of absolute good faith [sec. 9]: Section 9 of Indian Partnership Act, 1932
provides, “Partners are bound to carry on the business of the firm to the greatest
common advantages, to be just and faithful to each other, and to render true
accounts and full information of all things affecting the firm to any partner or his
legal representative”. Thus, all partners must act in good faith of the firm. Also, they
must use their skill and knowledge for the benefit of the firm.
2. Duty of not to compete [sec. 16 (b)]: Section 16(b) says that if a partner carry on any
business of the same nature as and competing with that of the firm, he shall account
29 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
for and pay to the firm all the profits may be him in that business. Also, if that
partner faces loss in competing business, then old firm won’t be liable for this
3. Duty of due Diligence [sec. 12(b) & sec. 13(f)+: According to section 12(b), “Every
partner is bound to attend diligently to his duties in the conduct of the business”.
Also, Section 13(f) says that, a partner shall indemnify the firm for any loss caused to
it by his wilful neglect in the conduct of the business of the firm. Therefore, a partner
shall act diligently for the firm.
4. Duty to indemnify for fraud [Section 10]: According to section 10, every partner shall
indemnify the firm for any loss caused to it by his fraud in conduct of the business of
the firm. Hence, if a partner deceives the firm, then he will be held liable to
indemnify.
5. Duty to render true accounts [section 9]: Section 9 tells that partners are bound to
render true accounts and full information of all things affecting the firm. Thus, it’s
the duty of partner to be true to other partners. Also, he shouldn’t provide fake
information to the firm.
6. Duty to use the property properly [section 15]: Section 15 of Indian Partnership Act,
1932 says that, subject to contract between the partners, the property of the firm
shall be held and used by the partners exclusively for the purposes of the business.
Thus, partner must use the property of the firm properly. If not done so, he shall be
made liable for the losses incurred by the firm due to his concern.
7. Duty to account for personal profits [section 16]: In section 16, it has been said that
if the partner derives profits for himself for any transaction of the firm then he shall
pay it to the firm. Also, if the partner is doing the same kind of business, then the
profits earned by him must be paid to the firm.
Meaning of Dissolution of firm: When the relation between all the partners of the firm is
discontinued, it is called dissolution of the firm. In case of dissolution of the firm, the
assets of the firm are realised and its liabilities are paid off and if there is any surplus, it
is distributed among the partners according to their rights.
Grounds for dissolution by the court [section 44]: At the suit of a partner, the court may
dissolve a firm on any of the followings grounds, namely:
1. Incapacity of a partner: When a partner has become of unsound mind, the court may
dissolve the firm on a suit files by any other partner or by the next friend of the
insane partner.
2. Permanent incapacity of a partner: When a partner has become permanently
incapable of performing his duties as partner, the court may order for dissolution of
the firm on a suit filed by any of the other partners.
30 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
31 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
According to the Limited Liability Partnership Act, 2008, “LLP shall be a body corporate and a
legal entity separate from its partners. It will have perpetual succession. While the LLP will
be a separate legal entity liable to the full extent of its assets, the liability of partners would
be limited to their agreed contribution.”
1. It is a body corporate with separate legal entity from its partners. The mutual rights
and duties of the partners of an LLP are governed by LLP Agreement.
2. LLP is liable to the extent of its assets. Partner’s liability is limited to the extent of
agreed contribution (capital) in the LLP Agreement.
3. No partner is liable on account of the independent or unauthorized action of other
partners or for their misconduct.
4. Every LLP should have at least two partners with at least two individuals as
“designated partners”, of whom at least one must be resident in India. Only
designated partners are responsible for compliance with the Act.
5. A firm, private company or an unlisted public company can be converted into LLP.
6. The Act empowers Central Government to apply provisions of the Companies Act,
1956 as appropriate, by notification with such changes as deemed necessary, in the
LLP Act, 2008.
7. The winding up of LLP is either voluntary or by the High Court.
Advantages of LLP:
The first LLP was registered on 2nd April, 2009 and till 25th April, 2011, 4580 LLPs were
registered. This form of Organisation offers the following benefits:
1. The process of formation is very simple as compared to companies and does not
involve much formality. Moreover, in terms of cost, the minimum fee of
incorporation is as low as fee ₹800 and maximum is fee ₹5,600.
2. Just like a Company, LLP is also body corporate, which means it has its own existence
as compared to partnership. LLP and its partners are distinct entities in the eyes of
law.
3. An LLP exists as a separate legal entity different from the lives of its partners.
4. LLP has perpetual succession.
5. LLP Act 2008 gives an LLP flexibility to manage its own affairs.
6. It is easy to join or leave the LLP or otherwise it is easier to transfer the ownership in
accordance with the terms of the LLP Agreement.
32 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
7. An LLP, as legal entity, is capable of owing its Separate Property and funds. The LLP is
the real person in which all the property is vested and by which it is controlled,
managed and disposed off. The property of LLP is not the property of its partners.
Therefore, partners cannot make any claim on the property in case of any dispute
among themselves.
8. Another main benefit of incorporation is the taxation of a LLP. LLP is taxed at a lower
rate as compared to company. Moreover, so there will not be any tax while you
distribute profit to your partners.
9. Financing a small business like sole proprietorship or partnership can be difficult at
times. An LLP being a regulated entity like company can attract finance from Private
Equity Investors, financial institutions etc.
10. As a juristic legal person, an LLP can sue in its name and be used and be sued by
others. The partners are not liable to be used for dues against the LLP.
11. Under LLP, only in case of business, where the annual turnover/contribution exceeds
₹40 lakh ₹25 lakh are required to get their accounts audited annually by a chartered
accountant. Thus, there is no mandatory audit requirement.
12. In LLP, partner, unlike partnership, are not agents of the partners and therefore they
are not liable for the individual act of other partners, which protects the interest of
individual partners.
13. As compared to a private company, the numbers of compliance are on a lesser side
in case of LLP.
Disadvantages of LLP:
33 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
34 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Two or more persons are required to file an incorporation document for incorporating a LLP
with the Registrar of Companies (ROC) in the state in which the registered office of the LLP is
situated.
There shall be filed, along with the incorporation document, a statement in the prescribed
form that all the requirements of the act and the rules have been complied with. Once the
incorporation documents of the LLP are registered and a certificate of its incorporation is
issued by the registrar, the said certificate of registration shall be conclusive evidence that
the LLP is incorporated by the name specified therein.
Every LLP needs to have a registered office to which all communications will be made and
received. The act has imposed an obligation on every LLP to suffix “Limited Liability
Partnership” or “LLP” with its name. The clause also seeks to provide that no LLP shall be
registered with an undesirable name or a name which is identical or nearly resembles to
35 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
that of any other partnership firm or an LLP or a body corporate or a registered trade mark
or a trade mark, the application of which is pending.
The act has made provisions for the application for the reservation of proposed name of the
LLP or changes of its existing name of the Registrar who may reserve the name of the period
of three months. Further, the Central Government is empowered to give directions to the
LLP to rectify its name if the name registered is undesirable or so nearly resembles the name
of any other LLP or body corporate or other name as to be likely to be mistaken for it.
36 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
37 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Definition of cheque: According to Sec. 6 to the Negotiable Instrument Act 1881, “a cheque
is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise
than on demand and it include the electronic image of a truncated cheque and a cheque in
the electronic form.”
Types of Cheques:
Definition of endorsement:
As per Sec. 15 of the Negotiable Instrument Act 1881, “When the maker or holder of
a negotiable instrument signs the same, otherwise than as such maker, for the purpose
of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so
signs for the same purpose a stamped paper intended to be completed as a negotiable
instrument, he is said to endorse the same.”
38 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
1. Endorsement in blank: As per Sec. 16 of the Negotiable Act, if the endorser signs his
name only, the endorsement is said to be “in blank”.
2. Endorsement in full: As per Sec. 16 of the Negotiable Act, if the endorser signs his
name and adds a direction to pay the amount mentioned in the instrument to or the
order of a specified person, the endorsement is said to be “in full”.
3. Restrictive Endorsement: As per Sec. 50 of the Negotiable Act, an endorsement
which may be express words, restrict or exclude the right of further negotiation is
said to be a restrictive endorsement.
4. Partial Endorsement: As per Sec. 56 of the Negotiable Act, an endorsement which
purports to transfer only a part of the amount appearing to be due on the
instrument is called as partial endorsement.
5. Conditional Endorsement: As per Sec. 52 of the Negotiable Act, under this type of
endorsement the endorser excludes his own liability or makes the instrument
conditional.
An instrument may be made conditional in the following manner:-
Definition of holder:
According to Sec. 8 of the Negotiable Instruments Act 1881, “The holder of a promissory
note, bill of exchange or cheques means any person entitled in his own name to the
possession thereof and to receive or recover the amount due thereon from the parties
thereto.”
“Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at
the time of such loss or destruction.”
According to Sec.9 of the Negotiable Instrument Act 1881 “a holder in due course is
a holder who has received a negotiable instrument for consideration in good faith and
before the maturity of the instrument.
1. Inchoate stamped instrument: As per Sec. 20 of the Negotiable Instrument Act, the
holder in due course can claim the full amount of the negotiable instrument even
though such amount is in excess of the amount specified by the person who signed
and delivered the inchoate instrument. The holder in due course cannot claim the
amount exceeding the amount covered by the stamp.
2. Liability of prior parties: As per Sec. 36 of the Negotiable Instrument Act, every prior
party to a negotiable instrument is liable thereon to a holder in due course until the
instrument is duly satisfied.
39 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
3. Fictitious Bill: As per Sec.42 of the Negotiable Instruments Act, an acceptor of a bill
of exchange drawn in a fictitious name and payable to the drawer’s order is not
relived from liability to any holder in due course.
4. Negotiable instrument drawn without consideration: As per Sec.43 of the Negotiable
Instrument Act, a holder-in-due course and every subsequent holder deriving title
from him, may recover the amount due from such instrument from the transferor
for consideration or any prior party thereto even if the instrument is made without
consideration.
5. Holder deriving title from holder in due courses: As per Sec. 53 of the Negotiable
Instrument Act, a holder of a negotiable instrument deriving title from a holder in
due course has the same rights thereon as that of a holder in due course.
6. Elimination of defects in title: A holder in due course gets a valid title to the
negotiable instrument even if there is a defect in the title of the transferor.
7. Instrument obtained by unlawful means or for unlawful consideration: As per Sec.58
of the Negotiable Instrument Act, the plea that the instrument was obtained by
unlawful means or for unlawful consideration cannot be raised against a holder in
due course.
8. Conditional delivery: As per Sec.46 of the Negotiable Instrument Act, no prior party
can be alleging that the negotiable instrument was delivered conditionally or for a
special purpose only, escape from his liability if the instrument is negotiated to a
holder in due course.
40 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
As per Sec.93 of the Negotiable Instrument Act 1881, when a negotiable instrument is
dishonoured by non-payment or by non-acceptance, the holder of the instrument or any
party to the instrument who remains liable on the instrument must give a notice that the
instrument has been so dishonoured to all other parties whom he wants to make liable.
Meaning of “Nothing”
Meaning of Protest:
As per Sec.100 of the Negotiable Instrument Act 1881, when a negotiable instrument has
been dishonoured by non-acceptance or non-payment the holder may within a reasonable
time, cause such dishonour to be noted and certified by a notary public. Such certificate is
called a protest.
A negotiable instrument is said to be discharged when all rights on it are extinguished. The
discharge of liability may be either the discharge of one or more parties to the instrument or
the discharge of the instrument itself. The later takes place when the party is ultimately
liable on it discharged from liability.
1) Discharge by payment in due course: When the party liable on the instrument makes
the payment in due course at the maturity, all the parties to the instrument stand
discharged.
41 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
In order that a payment may operate as a payment in due course, it is necessary that the
payment is made to: (i) A person in possession of the instrument (ii) In accordance with
apparent tenor of the instrument (iii) That it was paid in good faith, without suspecting
that the person in possession is not entitled to payment (iv) The payment is made
without negligence
42 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
Definition of Complainant:
According to section 2(1)(b) of the Consumer Protection Act 1986,” complainant" means:'
1. a consumer; or
2. Any voluntary consumer association registered under the Companies Act 1956 (1 of 1956) or
under any other law for the time being in force; or
3. The Central Government or any State Government;
4. one or more consumers, where there are numerous consumers having the same interest:
5. In case of death of a consumer, his legal heir or representative ; who or which makes a
complaint;
Definition of Complaint:
According to section 2(1)(c) of the Consumer Protection Act 1986 ‘’complaint” means any allegation
in writing made by a complainant that:
1. an unfair trade practice or a restrictive trade practice has been adopted by any trader or
service provider;
2. the goods bought by him or agreed to be bought by him; suffer from one or more defects;
3. the services hired or availed of or agreed to be hired or availed of by him suffer from
deficiency in any respect;
4. a trader or service provider, as the case may be, has charged for the goods or for the service
mentioned in the complaint a price in excess of the price –
(a) fixed by or under any law for the time being in force
(b) displayed on the goods or any package containing such goods ;
(c) displayed on the price list exhibited by him by or under any law for the time being in
force;
(d) agreed between the parties;
5. goods which will be hazardous to life and safety when used or being offered for sale to the
public- Services which are hazardous or likely to be hazardous to life and safety of the public
when used, are being offered by the service provider which such person could have known
with due diligence to be injurious to life and safety;
Definition of "Consumer” under the Consumer Protection Act 1986:
According to section 2(1)(d) of the Consumer Protection Act 1 986, "consumer" means any
person who-
1. Buys any goods for a consideration which has been paid or promised or partly paid and
partly promised, or under any system of deferred payment and includes any user of such
goods other than the person who buys such goods for consideration paid or promised or
partly paid or partly promised.
Definition of Consumer dispute.
According to section 2(1)(e) of the Consumer Protection Act 1986, "consumer dispute" means a
dispute where the person against whom a complaint has been made, denies or disputes the
allegations contained in the complaint.
Definition of Defect:
According to Section 2 (1) (f) of the Consumer Protection Act 1986, 'defect' means any fault,
imperfection or shortcoming in the quality, quantity, potency, purity or standard which is required to
44 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
be maintained by or under any law for the time being in force or under any contract, express or
implied, or as is claimed by the trader in any manner whatsoever in relation to any goods.
Definition of Deficiency: According to Section 2 (1) (g) of the Consumer Protection Act 1986,
‘deficiency’ means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or
standard that is required to be maintained by or under any law for the time being in force or has
been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to
any service.
Definition of District Forum: According to Section 2 (1) (h) of the Consumer Protection Act1986,
“District forum" means a Consumer Disputes Redressal Forum established under clause (a) of section
9. This shall consists of:
1. a person who is, or has been or is qualified to be a District Judge. Who shall be its president.
2. Two other members who shall be persons of ability, integrity and standing and have
adequate knowledge or experience of or shown capacity in dealing with problems relating to
economics, law, commerce, accountancy, industry, public affairs or administration, one of
whom shall be a woman.
Definition of Person: According to Section 2 (1) (m) of the Consumer Protection Act 1988 person"
includes: (i) a firm whether registered or not; (ii) a Hindu undivided family. (iii) a co-operative
society; (iv) every other association of persons whether registered under the Societies Registration
Act, 1860 or not;
Meaning of unfair trade practice under the Consumer Protection A t, 1986: According to Section
2(1)(r) of the Consumer Protection Act 1986, "unfair trade practice" means a trade practice which,
for the purpose of promoting the sale, use or supply of any goods or for the provision of any service,
adopts any unfair method or unfair or deceptive practice including any of the following practices,
namely:
1. False representation;
2. Giving to the public any warranty or guarantee that is not based on an adequate or proper
test thereof;
3. Sale or supply of goods and services at a bargain price;
4. Offering of gifts, prizes or other items;
5. Conduct of any contest, lottery, game of chance or skill;
6. Non-compliance with standards prescribed by competent authority;
7. Permitting the hoarding or destruction of goods tending to raise the cost of goods or
services;
8. Manufacture of spurious goods;
9. Adopting deceptive practices.
Definition and Meaning of Central Consumer Protection Council:
As per Section 4 of the Consumer Protection Act 1 986, "the Central Government shall, by
notification, establish with effect from such date as it may specify in such notification, a Council
to be known as the Central Consumer Protection Council (hereinafter referred to as the Central
Council)".
The Central Council shall consist of the following members, namely:-
1. The Minister in charge of the consumer affairs in the Central Government, who shall be its
Chairman, and
45 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
2. Such number other official or non-official members representing such interests as may be
prescribed.
Constitution of the Central Consumer Protection Council:
(1) The Central Government shall, by notification in the Official Gazette constitute the Central
Consumer Protection Council (herein after referred to as the Central Council) which shall
consist of [the following members, not exceeding 150]
(a) the Minister in-charge of Consumer Affairs in the Central Government who she be the
Chairman of the Central council;
(b) the Minister of State (where he is not holding independent charge) or Deputy Minister [in
charge of Consumer Affairs in the Central Government] who shall be me Vice-Chairman of
the Central Council;
(c) the Minister in charge of Consumer Affairs in States;
(d) eight Members of Parliament-five from the Lok Sabha and three from the Ranjya Sabha;
(e) the Secretary of the National Commissioner for Scheduled Castes and Scheduled Tribes]
(f) representatives of the Central Government Departments and autonomous organisations
concerned with consumer interests-not exceeding twenty
(i) representatives of the Consumer organisations or consumers-not less than 35:
(ii) representatives of women-not less than ten;
(iii) representatives of farmers, trade and industries-not exceeding twenty;
(iv) persons capable of representing consumer interest not specified above-not
exceeding fifteen;
(d) The [Secretary in-charge of Consumer Affairs in the Central Government] shall be the member-
secretary of the Central Council.
(2) The term of the Council shall be three years.
(3)Any member may, by writing under his hand to the Chairman of the Central Council, resign from
the Council, The vacancies, so caused or otherwise, shall be filled from the same category by the
Central Government and such person shall hold office so long as the member whose place he fills
would have been entitled to hold office, if the vacancy had not occurred.
(4) For the purpose of monitoring the implementation of the recommendations of the Centre
Council and to suggest the working of the Council, the Central Government may constitute from
amongst the members of the Council, a Standing Working Group shall consist of not exceeding 30
members and shall meet as and when considered necessary by the Central Government.
Objectives of Central Consumer Protection Council:
Section 6 of the Consumer Protection Act 1986, lays down the objects of the Central Council. Under
this section the objects of the Central Council shall be to promote and protect the rights of the
consumers such as,
1. the right to be protected against the marketing of goods and services which are hazardous
to life and property.
2. the right to be informed about the quality, quantity, potency, purity, standard and price of
goods or services, as the case may be so as to protect the consumer against, unfair trade
practices;
3. the right to be assured, wherever possible, access to a variety of goods and Services at
competitive prices;
46 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
4. the right to be heard and to be assured that consumer's interests will receive due
consideration at appropriate forum;
5. the right to seek redressal against unfair trade practices or restrictive trade Practices or
unscrupulous exploitation of consumers; and
6. the right to consumer education.
Definition and Meaning of State Consumer Protection Council:
As per section 7 of the Consumer Protection Act 1986, "The State Government Shall, by
notification, establish with effect from such date as it may specify in such notification, a
Council to be known as the Consumer Protection Council (hereinafter referred to as the
State Council)". The State Council shall consist of the following members, namely:
1. Minister in charge of consumer affairs in the State Government who shall be its
Chairman;
2. Such number of other official or non-official members representing such interests as
may be prescribed by the State Government.
3. Such number of other official or non-official members, not exceeding ten, as may be
nominated by the Central Government.
Constitution of the State Consumer Protection Council:
In term of Section 7 of the Consumer Protection Act,1986, the State Govt. set up the State Consumer
Protection Council. The Council was re-constituted under Notification No. 32(B)-DCA consisting of 85
members.
1. The minister in charge of Consumer Affairs of the state government will act as chairman.
2. Such Members official and non-official are representing such interests as may be prescribed by the
state government.
The State Council shall meet as and when necessary. The time and place of the meeting shall be
fixed by the Chairman. The Council shall observe such procedure regard to the transaction of its
business as may be prescribed by the state government. At least two meetings shall be held every
year.
Objective of State Consumer Protection Council:
Section 8 of the Consumer Protection Act 1986, Lays down the objects of the State Council. Under this
section the objects of the State Council shall be to promote and protect the rights of the consumers such
as,
1. The right to be protected against the marketing of goods and services which are hazardous to life
and property.
2. The right to be informed about the quantity , quality, potency, purity, standard and price of goods or
services, as the case may be so as to protect the consumer against, unfair trade practices;
3. the right to be assured, wherever possible, access to a variety of goods and Services at competitive
prices;
4. the right to be heard and to be assured that consumer's interests will receive due consideration at
appropriate forum;
5. the right to seek redressal against unfair trade practices or restrictive trade Practices or
unscrupulous exploitation of consumers; and
6. the right to consumer education.
Definition and Meaning of District Consumer Protection Council:
47 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
As per Section 8A (1) of the Consumer Protection Act 1986, The State Government shall establish for
every district , by notification, a council to be known as the District Consumer Protection Council with
effect from such date as it may specify in such notification.
Constitution of the District Consumer Protection Council:
(1) The District consumer Protection Council (hereinafter referred to as the District Council) shall consist
of the following members, namely (a) The collector of the district (by whatever name called),
who shall be its Chairman; and (b) such number of other official and non-official members
representing such interests as may be prescribed by the State Government.
(2) The District Council shall meet as and when necessary but not less than two meetings shall be held
every year.
(3) The District Council shall meets at such time and place within the district as the Chairman may think
fit and shall observe such procedure in regard to the transaction of its business as may be prescribed
by the State Government.
Objective of District Consumer Protection Council:
Consumer dispute redressal agencies:
Composition of the District forum [Section 10]:
1. Each District Forum shall consist of,
i) A person who is or has been, or is qualified to be a District Judge, who shall be its President
ii) Two other members one of whom shall be a women, who shall have the following qualifications
namely
(a) Be not less than thirty five years of age’
(b) Possess a bachelor’s degree from a recognized university,
(c) Be person of ability integrity and standing and have adequate knowledge and experience of
at least 10 years in dealing with problems relating to economics, law ,commerce
,accountancy industry public affairs or administration:
2. Every appointment under sub-section (1) shall be made by the following, namely:-
i) The president of the State Commission – Chairman
ii) Secretary , Law Department of the State – Member
iii) Secretary in Charge of the Department dealing with consumer affairs in the State – Member
3. Every member of the District Forum shall hold office for a term of five years or up to the age of 65
years, whichever is earlier.
Provided that a member shall be eligible for re-appointment for another term of five years or up to
the age of 65 years, whichever is earlier.
Jurisdiction of the District Forum [Section 11]:
1. Subject to the other provisions of this Act, the District Forum shall have jurisdiction to
entertain complaint where the value of the goods or services and the compensation if any
claimed does not exceed rupees twenty lakhs.
2. A complaint shall be instituted in a District Forum within the local limits of whose
jurisdiction,
3. The opposite party or each of the opposite parties, where there are more than one at the
time of the institution of the complaint, actually and voluntarily resides or carries on
business or has a branch office or personally works for gain, or
48 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
4. Any of the opposite party where there are more than one at the time of the institution of
the complaint, actually and voluntarily resides or carries on business or has a branch office,
or personally work for gain, provided that in such case either the permission of the District
Forum is given, or the opposite parties who do not reside or carry on business or have a
branch office, or personally work for gain, as the case may be acquiesce in such institution;
or
5. The cause of action, wholly or in part, arises.
Composition of the State Commission [Section 16]
Each State Commission shall consist of:
(a) A person who is or has been a judge of a High Court, appointed by the State Government,
who shall be its President:
(b) Not less than two and not more than such number of members as may be prescribed and
one of who shall be a women, who shall have the following qualification, namely:-
(i) Be not less than thirty five years of age
(ii) Possess a bachelor’s degree from a recognized university; and
(iii) Be person of ability, integrity, and standing and have adequate knowledge and
experience of at least ten years in dealing with problems relating to economics , law
, commerce , accountancy, industry, public affairs or administration.
Provided that not more than fifty percent of the members shall be from amongst
persons having a judicial background.
Every appointment under Sub-section (1) shall be made by the State Government
on the recommendation of a Selection Committee consisting of the following
members, namely:-
(i) The president of the State Commission – Chairman
(ii) Secretary , of the Law Department of the State – Member
(iii) Secretary in Charge of the Department dealing with consumer affairs in the
State Member.
Every member of the State Commission shall hold office for a term of five years or
up to the age of sixty seven years, whichever is earlier:
Provided that a member shall be eligible for re-appointment for another term of five
years or up to the age of sixty-seven years, whichever is earlier.
Jurisdiction of the State Commission [Section 17]:
1. Subject to the other provisions of this Act, the State Commission shall have
jurisdiction-
(a) To entertain-
(i) Complaints where the value of the goods or services and compensation, if
any claimed exceeds rupees twenty lakhs but does not exceeds rupees one
crore; and
(ii) Appeals against the orders of any District Forum within the State; and
(b) To call for the records and pass appropriate orders in any consumer dispute
which is pending before or has been decided by any District Forum has
exercised a jurisdiction not vested in it by law, or has failed to exercise a
49 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
50 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.
Guiding You Today For a Better Tomorrow Aaditya Gupta Classes
Phone – 99035-03989
(b) To call for the records and pass appropriate orders in any consumer dispute which is pending
before or has been decided by any State Commission where it appears to the National
Commission that such State Commission has exercised a jurisdiction not vested in it by law,
or has failed to exercise a jurisdiction so vested or has acted in the exercise of its jurisdiction
illegally or with material irregularity.
Procedure for settlement of dispute: Section 13 of the Consumer Protection Act 1986
provides the procedures for settlement of disputes. The procedures prescribed under this
section are equally applicable to the district forum, state commission with required
modification and national commission with additional procedures required by the rules. The
procedures prescribed under this section are as follows:
1. The commission, on receipt of a complaint, if it relates to any goods-
(a) refer a copy of the complaint to the opposite party mentioned in the complaint
directing him to give his version of the case within a period of thirty days or such
extended period not exceeding fifteen days as may be granted by the commission;
(b) Require the complainant to deposit a specified fee for payment to the appropriate
laboratory for carrying out the necessary test in relation to the goods in question.
(c) Obtain a sample of the goods from the complainant, seal it and authenticate it in the
manner prescribed and refer the sample so sealed to the appropriate laboratory for
a test with a view to finding out whether such goods suffer from any defect. The
laboratory shall report its findings thereon to the commission within a period of
forty-five days of the receipt of the reference or within such extended period as may
be granted by the commission;
(d) upon receiving the report from the appropriate laboratory, the commission shall
forward a copy of the report along with such remarks as the commission may feel
appropriate to the opposite party;
(e) The parties disputing the correctness of the findings of the appropriate laboratory,
or disputing the correctness of the methods of analysis or test adopted by the
appropriate laboratory may submit their objection in writing with commission;
(f) The objecting parties shall be given a reasonable opportunity of being heard.
(g) The commission shall issue an appropriate order after hearing the parties.
2. If the complaint relates to any service,
(a) refer a copy of such complaint to the opposite party directing him to give his version
of the case within a period of thirty days or such extended period not exceeding
fifteen days as may be granted by the commission;
(b) the commission shall proceed to settle the consumer dispute,
(i) on the basis of evidence brought to its notice by the complainant and the opposite
party, where the opposite party denies or disputes the allegations contained in the
complaint, or (ii) on the basis of evidence brought to its notice by the complainant
where the opposite party omits or fails to take any action to represent his case within
the time given by the commission.
(c) the commission shall issue an appropriate order after hearing the parties.
51 | P a g e Enroll now for B.COM / CA / CS / CMA / MBA / Govt. Exams for all subjects and get
the opportunity to learn from the best. Centres – Bhawanipur – Girish Park –Bangur- Tollygunj –
Rishra.