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LEGAL ASPECTS OF
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BUSINESS

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1.

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1

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1
1. Define Contract. There are certain essential conditions one need to
follow to create a valid contract – discuss.
Or
Walt and Jesse want to enter into a business contract with each
other. What are the essential elements that they need to take
care of to make sure that their contract is valid?
or
Discussion the provisions regarding competencies of parties to
enter into a contract.

2. “A company is an artificial person created by law, having a separate

entity with a perpetual succession and a common seal.” Discuss the
above statement and explain the characteristics of a company.

3. Discuss main provisions of a partnership act.

4. What are the essential characteristics of Partnership?

5. What are the Rights & Duties of a Partner as defined in Indian Part-
nership Act?

6. Who can be a trustee as per Indian Trust Act? Discuss the rights
and liabilities of a trustee?

7. Differentiate holder and holder in due course. What are the con-
ditions for and privileges of holder in due course

8. Highlight the main provisions of Consumer Protection Act in

detail.

9. Explain the process of obtaining a Patent.

10. Explain Cyber-crime and their remedies.

11. Harvey has sold some goods to Mike. The property in goods has
already passed 07 from Harvey to Mike. Now, Mike is refusing to
Pay Harvey. What are the rights available with Harvey against Mike?

12. Define Memorandum of Association. Explain the contents of MoA

13. What is a Promissory Note? What are the essential elements of a

Promissory Note?

14. What is Central Pollution Control Board? What are the functions of
CPCB?

15. What is Bailment? Explain the essentials of a valid Bailment

16. Explain briefly the rights and duties of a seller and a buyer.

17. Distinguish between a bill of exchange and a cheque.

18. Discuss the remedies of an unpaid seller as per sale of goods Act
Or
Define unpaid seller. Explain his rights with suitable examples.

19. Explain the objectives of the consumer protection law. What are un-
fair trade practices?

20. What is the meaning of intellectual property rights? Explain the need
for this law.

21. Define a company Meeting. Discuss the different kinds of Meetings.

22. Explain the nature and scope of the environmental protection Act.
23. Discuss remedies available to aggrieved party under Breach of Con-
tract.

24. Explain applicability and registration process for GST Act, 2017

25. What is GST? What are its benefits and challenges in Indian eco-
nomy?

26. Explain the classification of Negotiable Instruments

27. What is Trademark? Explain infringement of Trademark with prac-

tical examples. State the remedies available for the same.

28. Discuss the legal position of a minor in the India contract act.

29. What is a prospectus of a company? Discuss its importance and

content.
3. Discuss main provisions of a partnership act.

As per the Indian Partnership Act, 1932. Here are the following provi-
sions that stays relevant when a partnership deed is not present:

1. Sharing of profits and losses:

If a partnership deed is absent, then the profit sharing ratio should
be equal among all partners, as per Partnership Act, 1932.
2. Interest on Partner’s capital:
If partnership deed is absent, then as per Partnership Act, 1932,
the partners are not entitled to interest earned on capital.
3. Interest on Partner’s drawings:
If partnership deed is absent, then as per Partnership Act, 1932,
no interest shall be charged to the partners in event of drawing
money.
4. Interest on Partner’s loan:
If partnership deed is absent then the partner is eligible for a 6%
interest on loan to the firm.
5. Salary to a partner:
In case of absence of partnership deed, the partners are not eli-
gible for any salary, any salary whatsoever if paid will be as appro-
priation of profit (in case there is profit).
4. What are the essential characteristics of Partnership?
i.Two or more persons:

To form a partnership, there must be at least 2 partners who are com-

petent to contract and who are not minor, persons of unsound mind and
persons disqualified by any law. The maximum number of the partners in
the firm cannot exceed 50 vide Rule 10 of the Companies Rules, 2014
as prescribed by the Central Government.

ii. Agreement:

It is a legal document signed by all the partners. A written agreement

containing the terms and conditions of partnership and because of which
the partnership comes into existence is known as Partnership Deed.

iii. Lawful Business:

A partnership is formed to do a lawful business which includes trade, vo-

cation and profession. Any type of charitable institution running as a not-
for-profit organization will not be considered as a business.

iv. Profit-Sharing:

A partnership agreement specifies how the profits and losses of the firm
will be shared by the partners.

v. Mutual Agency:-

Business can be carried on by all or any of the Partners Acting for All:
Since, the partners are the agents as well as principals of the firm, such
business of the partnership firm can be carried on by all or any of the
partners acting for all, that is there must be mutual agency

vi. No separate Entity:-

partnership does not have a separate entity from its partner

vii. Unlimited LIABILITY:-

liability of all the partners of a firm are unlimited like the sole proprietor-
ship.
9. Explain the process of obtaining a Patent.

Meaning of patent :-

A patent is a legal document that is granted by the government of the

state or the country, depending on the national rules. It gives an in-
ventor of a particular thing, the exclusive right to make, use and sell
his or her creation for a specified period of time. 
Step 01: Invention disclosure

The first step is to disclose your invention to the professional. This is

done by signing a non-disclosure agreement. 

Pro-tip: It is recommended to submit each known fact about your inven-

tion. Do not hold anything back.

Step 02: Patentability search

Usually, a professional charges a fee (approx INR 10,000 to INR 20,000)

at this step. At this stage, your professional performs extensive research
for prior evidence in all the possible databases. Further, he or she builds
a patentability search report based on your invention. 

Step 03: Decision to file an application for patent

This is where the actual process begins. After detailed research about
(any) existing history of your invention, you can decide if you want to go
ahead with the patent application filing. 

Please note: Your invention must have an ‘inventive step’ as compared

with existing prior art pieces to qualify for a patent. It must have either
‘technical advanced’ or ‘economically significant’ or both, over any exist-
ing piece of arts. 

The step where you decide to go ahead with the filing process by writing
an application is called patent drafting.

Step 04: Patent drafting

You can choose to draft the application on your own or take a profes-
sional’s help to do this. If you choose to take help, you might have to pay
somewhere around INR 20,000 to INR 30,000. 
Please note: This is one of the most crucial steps of the entire process.
It requires both technical and legal understanding. If not drafted the right
way, all the efforts you out in gets wasted. Hence it’s a good idea to take
professional help here. 

Step 05: Filing the patent application

After you are done with a review of your patent draft and are satisfied
with the scope and details, you are ready to file for a patent. 

You can file the patent application in a prescribed manner with appropri-
ate forms with fees. You need to pay fees of INR 1,600 or 4,000 or 8,000
(based on the type of application) while submitting the patent application
in the patent office. If you do not file a request for early publication, the
patent application will be published on expiry of 18 months.

Step 06: Request for examination

This is the step where the applicant is required to request the Indian pat-
ent office to examine your patent application, within 48 hours. Request
for examination fees ranges from INR 4,000 to INR 20,000 (based on the
type of applicant).

Step 07: Responding to objections (if any)

The draft and the report submitted to the officers in the patent office are
thoroughly examined at this step. At this step, there is a chance for the
inventor to communicate his novelty or inventive step over any other
piece of art found during the assessment. If all the things are well clari-
fied and solved, the patent application is almost ready to come to action. 

Step 08: Grant of patent

If the application meets all the prescribed requirements, it is placed in or-

der for the grant. Usually, the final grant of the application is notified
through a journal that is published

Step 09: Renewal of your patent

Usually, a patent is in force for 20 years. On completion of 20 years, the

owner is required to renew the patent by paying a small fee.

10.Explain Cyber-crime and their remedies.

 Cybercrime refers to criminal conduct committed with the aid of a
computer or other electronic equipment connected to the internet. In-
dividuals or small groups of people with little technical knowledge and
highly organized worldwide criminal groups with relatively talented de-
velopers and specialists can engage in cybercrime.

REMEDIES:

 Identification of exposures through education will assist respons-

ible companies and firms to meet these challenges.

 One should avoid disclosing any personal information to strangers

via e-mail or while chatting.

 One must avoid sending any photograph to strangers by online as

misusing of photograph incidents increasing day by day.

 An update Anti-virus software to guard against virus attacks should

be used by all the netizens and should also keep back up volumes
so that one may not suffer data loss in case of virus contamination.

 A person should never send his credit card number to any site that
is not secured, to guard against frauds.

  It is always the parents who have to keep a watch on the sites that
your children are accessing, to prevent any kind of harassment
or deprivation in children.

 Web site owners should watch traffic and check any irregularity on
the site. It is the responsibility of the web site owners to adopt
some policy for preventing cyber crimes as number of internet
users are growing day by day.

 Web servers running public sites must be physically separately

protected from internal corporate network.

  It is better to use a security programmed by the body corporate to

control information on sites.

 Strict statutory laws need to be passed by the Legislatures keeping

in mind the interest of netizens.
 IT department should pass certain guidelines and notifications for
the protection of computer system and should also bring out with
some more strict laws to breakdown the criminal activities relating
to cyberspace.

 As Cyber Crime is the major threat to all the countries worldwide,

certain steps should be taken at the international level for prevent-
ing the cyber crime.

 A complete justice must be provided to the victims of cyber crimes

by way of compensatory remedy and offenders to be punished
with highest type of punishment so that it will anticipate the crimin-
als of cyber crime.

11. Harvey has sold some goods to Mike. The property in goods
has already passed 07 from Harvey to Mike. Now, Mike is re-
 fusing to Pay Harvey. What are the rights available with Har-
vey against Mike?

Meaning of Bailor: – A bailor is a person who temporarily gives the pos-

session of goods or property but not the ownership under the bailment.
The temporary possession of the goods or property is given by the bailor
to another person who is known as bailee.

Following are the rights of the bailor: –

1. Right to Claim Compensation Against the Unauthorized Use

of Goods: – If any of the third person, does some injury to the
goods bailed or deprive (stop) the bailee to use bailed goods, in
such a case bailor has right to file the suit against the wrong-doer
and to get compensation from him.

2. Right to Claim Compensation: – In the case of bailment, bailor

has the right to claim the compensation if any damage is done to
the goods bailed due the bailee’s negligence or misconduct.

3. Right to Demand the Return of the Goods: – The bailor has the
right to get his goods back in a safe and good condition after the
expiry of the bailment time period or the achievement of the pur-
pose for which the goods were bailed.

4. Right to Enforce Bailee’s Performance: – The bailor deliver his

goods to the bailee for some specific purpose and in the case of
the non-gratuitous bailment, the bailor has the right to achieve that
purpose or to get benefits through the same.

Following are the duties of the bailor: –

1. Duty to Disclose Faults: – In the case of a gratuitous bailment,

the bailor is expected to disclose all the defects to the bailee
known by him and that can arise while using the bailed goods. A
non-gratuity carries a major responsibility on the part of the bailor
as in this case bailor will also be liable even if he does not know
about the defects.
 2. Duty to Repay Bailee’s Expenses: – Bailor is bound to repay all
the expenses which were incurred by him for the work done on the
goods received in the bailment.

3. Duty to Indemnify the Bailee: – The bailor is obliged to make

good for the losses suffered by the bailee, or that because of the
bailor, where the goods were delivered without any reason or force
the bailee to return the goods before the expiry period of the bail-
ment.

4. Duty to Claim Back the Goods: – In accordance with the terms
of the bailment, bailor is obliged to accept the goods returned by
the bailee. If bailor refuse to accept the returned goods without any
reasonable ground then in such a case, bailor will be responsible
for all the damage done to the goods and not the bailee.

5. Duty of the Bailor to Compensate for the Breach of  Warranty:

– In every contract of bailment warrants, bailor’s title should be de-
fect free. If bailee suffers any losses due the bailor’s defective title
then in such a case the bailor will be responsible for the damages
done to the bailee for breach of warranty

17. Distinguish between a bill of exchange and a cheque.

24.Explain applicability and registration process for GST Act, 2017

SHORT QUESTION
Legal Aspects of Business
Agency by Estoppel
A person who gives the impression to another person that they are
acting as an agent for another person or business legally is known
as agency by estoppel. The agent must be given the power to act on
behalf of the principal under the terms of the agency agreement.

Consumer Dispute
 “Consumer dispute” refers to a dispute where a consumer make a
complaint against a person and the person denies the allegations
contained in the complaint.

Digital Signature
A digital signature is an electronic, encrypted stamp of authentica-
tion on digital information such as messages. The digital signature
confirms the integrity of the message.

Lien
The term lien refers to a legal claim or legal right which is made
against the assets that are held as collaterals for satisfying a debt.
A lien can be established by a creditor or a legal judgement. The
purpose of the lien is to guarantee an underlying obligation such as
the repayment of the loan.

Cyber Crime
Cybercrime is a crime involving a computer or computer network.
The computer may have been used in committing the crime, or it
may be the target. Cybercrime may harm someone's security or fin-
ances.

Proposal
 “when one person will signify to another person his willingness to
do or not do something (abstain) with a view to obtain the assent
of such person to such an act or abstinence, he is said to make a
proposal or an offer.”

Prospectus
A prospectus is an essential disclosure document that a company
has to issue at the time of issuing investment securities to the pub-
lic. These formal documents provide detailed information to pro-
spective investors about mutual funds, bonds, stocks, and other in-
vestment offerings to the public.

Conditions & Warranties

 Conditions are the set term of the contract, whereas war-
ranties are considered to be an additional set of rules.
 They both might have time requirements, but the time limits
set on the conditions of the contract are legally enforceable.
Consumer
A consumer is defined as someone who acquire goods or services
for direct use or ownership rather than for resale or use in produc-
tion and manufacturing.

Trust
A trust is a legal relationship in which the holder of a right
gives it to another person or entity who must keep and
use it solely for another's benefit.

Cheque
A cheque is a bill of exchange in which one party orders the bank to
transfer the money to the bank account of another party.

Bilateral Contract
A bilateral contract is a contract in which both parties exchange
promises to perform. One party's promise serves as consideration
for the promise of the other. As a result, each party is an obligor on
that party's own promise and an obligee on the other's promise. 

Sale by description
A contract for the sale of goods which includes some description of
the goods, and is wholly or in part created or induced by said de-
scription.

Promissory note
It's a legal lending document that says the borrower promises to
repay to the lender a certain amount of money in a certain time
frame

Trademark
A trademark can be any word, phrase, symbol, design, or a com-
bination of these things that identifies your goods or services. It's
how customers recognize you in the marketplace and
distinguish(difference) you from your competitors.

Certifying authority
Certifying Authorities (CA) has been granted a license to issue
a digital signature certificate under Section 24 of the Indian IT-Act
2000.
Some of the examples include Income Tax Return filings, MCA, PF,
GST etc.

Consideration
Consideration is a promise, performance, or forbearance bargained
by a promisor in exchange for their promise. Consideration is the
main element of a contract. Without consideration by both parties,
a contract cannot be enforceable.

Novation
Novation is the act of replacing a existing contract with a new con-
tract, where the transfer is mutually agreed by both parties con-
cerned

Dormant Partner
A partner who takes no share in the active business of a company
or partnership, but is entitled to a share of the profits, and subject
to a share in losses. This partner is also called a sleeping partner or
silent partner.

Holder in Due Course

A holder in due course is any person who receives or holds a nego-
tiable instrument such as a check or promissory note in good faith
and in exchange for value; without any notice or suspicion that it is
overdue or was previously dishonoured.

Trustee
A trustee is a person who takes responsibility for managing money
or assets that have been set aside in a trust for the benefit of
someone else.

E-Governance
E-governance, meaning 'electronic governance' is using informa-
tion and communication technologies (ICTs) (such as Wide Area
Networks, the Internet, and mobile computing) at various levels of
the government and the public sector and beyond, for the purpose
of enhancing governance.

Agency
agency, in law, the relationship that exists when one person or
party (the principal) engages another (the agent) to act for him—
e.g., to do his work, to sell his goods, to manage his business. 

Complaint
 a complaint is an allegation made to the Magistrate in writing or
verbal form which mentioned about the offence committed by a
person whether known or unknown and does not include a police
report.

Quorum
Quorum means the minimum number of directors who are re-
quired be present at the meeting to make the proceedings valid. 

Environmental Impact Assessment

 Environmental Impact Assessment (EIA) is a tool used to as-
sess the significant effects of a project or development pro-
posal on the environment.
  EIAs make sure that project decision makers think about the
likely effects on the environment at the earliest possible time
and aim to avoid, reduce or offset those effects

Passing Off (in case of Trademark)

Passing off arises when there are false claims and harm to the ex-
isting reputation or goodwill of the owner.
In a Passing off action, the user must prove that the trademark
they are using has a distinct identity for the product.

GST
 The goods and services tax (GST) is a tax on goods and ser-
vices sold domestically for consumption.
 The tax is included in the final price and paid by consumers
at point of sale and passed to the government by the seller.
 The GST is usually taxed as a single rate across a nation.