SM702MS- PROFESSIONAL PRACTIECES

LAWS AND ETHICS

NOTES

V.DIVYA
ASSISTANT PROFESSOR
UNIT - I
Professional Practice and Ethics: Definition of Ethics, Professional Ethics - Engineering
Ethics, Personal Ethics; Code of Ethics - Profession, Professionalism, Professional
Responsibility, Conflict of Interest, Gift Vs Bribery, Environmental breaches, Negligence,
Deficiencies in state-of-the-art; Vigil Mechanism, Whistle blowing, protected disclosures.
Introduction to GST- Various Roles of Various Stake holders

Definition of Ethics
Professional Ethics are the guiding principles that are to be followed by or expected to be
followed by the people in that profession.
These principles in any company or group can be termed as ethics.
Similarly, professional ethics are to be applied by the people of a particular profession if they
can be based on the duties that they have to follow, their skills and specific knowledge.
Every profession has its particular rules, regulations, or you could say principles.
A person when choosing a job must know that specific profession. Ethics means principles of
something. In different roles, they have ethics according to their knowledge about the
situation, how people belonging to that profession should behave.

Professional Ethics
Professional ethics is guidance for people working in a particular profession that tells them
what they supposed to do and what they are not supposed to do while working there.
A particular profession has its specific behavior, and everyone must follow them.
Be it engineering, medical or health industry, or law or any other profession.
You are supposed to behave the way a person should according to what your professional
ethics says. It shows how much you know about the job, your passion for your work.
Now that every person has a choice for a specific profession, they need to what some basic
facts about ethics related to occupations. To know about professional ethics in detail,
continue reading the whole article.
Examples of Professional Ethics
Professional Ethics’ best example can be the one Doctors take. The Hippocratic Oath, taken
by doctors when they are rewarded the degree in medicine. This oath is one of the ethics that
have to follow before practicing medicine. And, every ethics differs depending upon the type
of profession a person has.
It becomes easier to understand something when somebody describes it with a commonly
seen example. Professional ethics might sound critical to understand, but it is not. A common
cause can explain the whole thing.
Almost everyone knows that students who persuaded medical studies or health-related studies
or you can say would he doctors, nurses, etc. take an oath before joining as a professional.
Now the oath they take is what they will be doing for the rest of their lives. It is a promise
they make that they will never harm a person; they will give the best treatment possible to
their patients, etc. What they say during the oath is the ethics of their profession. Those are
the principles or guidance they are bound to follow.
Types of Professional Ethics
Every profession has its way of dealing and making the profession work.
Although ethics differ in every profession, some principle ethics are universal.
They are followed by each profession, which is being honest in their work and serving the
people along with trustworthiness, respecting others, honesty, accountability, abiding by the
rules and avoiding harming anyone.
Generally, the rules mentioned above are followed by every professional.
nd, if anyone fails to do so, s/he becomes unworthy of being in that profession. Some
particular associations around the world and nation determine the ethics of a specific
profession. And it has to be followed by the people with full honesty.
1. Media and their Professional Ethics

Journalists or anyone related to media has a great responsibility for transparency.

No one in the media should be biased regarding any happenings around the world. The job of
journalists is fierce and terrifying because they are always in the target. If any journalist gives
news related to a criminal s/he has a chance that they can be harmed.
But journalists have to be honest and unbiased while reporting the news. Any news that is
about making people aware of their surroundings. Therefore, ethics in media is crucial and is
about sticking to the facts instead of presenting their opinions. In short, we can say that media
ethics are about “seeking truth and reporting it.”
2. Judicial and Legal Professional Ethics
Anyone who is in the field of law and justice is required to abide by its rules and ethics.
Here, the lawyers or anyone in the legal area should balance their duty to prosecute criminals
and defend the clients. It should be under the obligation of ethics to uphold the law and be
truthful regarding it.
People from the Legal field are to maintain the confidentiality of their clients and avoid
conflicts. Everything should be balanced, and they should be honest about their duty. The
most important thing is that they should not make their clients fools. If any lawyer is unable
to convince their clients then s/, he should drag themselves away from the case.
In the judiciary, field balance is a must. This balance is the primary principle of their
profession. A person involved in a legal or judicial business, must defend their clients or
prosecute the criminal with honesty. It’s not always winning the case but being honest with
the laws. They cannot force anyone to say something even if they know it’s a lie, but they can
make them confess the truth with tricks.

3. Engineer’s Professional Ethics

Engineers also have specific ethical codes that they have to follow anyhow.
There is so much responsibility on the shoulders of Engineers. They are the one building
houses, dams, highways, any gadget or even a car. They have to be honest enough while
designing and making them.
National Society of Professional Engineers created an ethics code for engineers to make sure
that engineers know that in their profession, they need to be honest and responsible. Being
fair, taking care of public health and their safety should be their priority as a professional.
This code is the principle they follow.
The ethical code of engineering was created to facilitate the tenets of impartiality, equity,
honesty and fairness in their work. When they are to conduct any building making or
designing, they have to do it with full sincerity to decrease the risk of harm. For the highway,
people use it very often, and it should be safe. Therefore the one making it should be honest.
4. Medical Professional Ethics
People of medicine have to take an oath about promising and serving the people who are in
pain.
The Hippocratic Oath is one of the prominent ethical codes which almost people know.
Other than this oath, the nurses and doctors are advised to respect the patient’s dignity,
respect the human right. The Hippocratic Oath is the most famous ethical code, yet not the
only system that shows the moral standard of the medical field.
Doctors and nurses should always respect their patient’s dignity, honest, helpful to their
patients. They must maintain their patients confidently. Any major fault or mistake can ruin
the entire professional life of a person. They need to be very careful with the principles.
Being honest and treating everyone equally is very much required in the medical field. Just
like the ethics in media, here the doctors can’t be biased towards the patients. Everyone has
equal rights. Therefore, s/he has the full power of being treated, and their confidentiality
should be maintained.

5. Codes of Conduct
There are many industries; it can be about medical and legal fields or any institution.
Every company, group or administration has a particular code of conduct that is to be
followed by the people there. This is often organized by the Association that looks on the
legal field. This helps in creating and modifying the rules.
This can build confidence among people. Also, it creates transparency with the clients and
makes it easier to take decisions accurately. Any person who is unable to follow the ethics of
their profession can be disbarred and making them no longer practice their business, it can be
medical or law.
Ask the students to study reports of disasters and accidents that had a profound effect on the
common mass. Bring their attention to the professional, ethical issues that might have led to
that accident or disaster. However, it is advised not to focus solely on case studies as students
might become skeptical about how a professional works. Focus on the brighter side as well,
where something good came out of adhering to professional ethics.

Personal ethics
A person’s personal ethical principles are important for several reasons, including that they:
Allow leaders to more effectively lead their teams: When a leader regularly follows a
predictable and respectable code of ethics, their team is more likely to follow their lead and
feel confident in the contributions they make to the organization as a whole.

 Instill a sense of trust and support in leaders: Leaders and other professionals who
regularly behave in the same way no matter the situation are more likely to be trusted
and supported by colleagues and employees. Individuals who follow a sound ethical
code are easier to believe in and are more likely to establish credibility among others.
 Give individuals a solid basis of which to determine the most appropriate action in
any given situation: When a person has solid personal ethics, they are better able to
make decisions and take action in situations that may otherwise seem challenging.
 Improve the decision-making process: A professional’s ability to make decisions is
based on their personal and professional ethics and what they believe to be good or
bad. Having strong ethics makes the decision-making process easier and more
streamlined.
 Set a standard of behavior: In the workplace and in life, ethics help establish an
appropriate standard of behavior for individuals. This behavior is called ethical
behavior and refers to a person’s ability to make sound decisions based on their
ethical nature.
 Support motivation: Individuals with strong ethics are often easily self-motivated and
willing to go the extra mile to accomplish a task or goal on time and in the correct
manner.
Examples of personal ethics
The following are examples of a few of the most common personal ethics shared by many
professionals:
Honesty
Many people view honesty as an important ethic. This ethic transfers from an individual’s
personal life into their professional life and ensures they are truthful in all scenarios.
Loyalty
Loyalty is another common personal ethic that many professionals share. People who have a
personal ethic of loyalty demonstrate trustworthiness and fidelity in all of their dealings and
can be trusted by others to maintain their loyal behavior no matter the situation.
Integrity
Integrity refers to a person’s commitment to upholding their moral principles in any situation
and is an important component of trustworthy and sound relationships both in and out of the
workplace. People with integrity are reliable, responsible, and hold themselves accountable
for their actions.
Respect
People with sound personal ethics demonstrate respect for those around them both at work
and in their personal lives. They respect others’ autonomy, rights, and interests, and do not
discriminate based on someone’s religion, sex, or race.
Selflessness
People who are selfless put others first and do not act in selfish or self-serving ways. They
consider the needs and situations of others and prioritize these needs before their own.
Responsibility
Someone with a strong moral code is willing to take responsibility for their actions and make
changes or amends when necessary.

Profession
Profession means a job or an occupation, that helps a person earn his living. The main criteria
of a profession involves the following.
Advanced expertise − The criteria of a profession is to have sound knowledge in both
technical aspects and liberal arts as well. In general, continuing education and updating
knowledge are also important.
Self-regulation − An organization that provides a profession, plays a major role in setting
standards for the admission to the profession, drafting codes of ethics, enforcing the standards
of conduct and representing the profession before the public and the government.
Public good − Any occupation serves some public good by maintaining high ethical
standards throughout a profession. This is a part of professional ethics where each occupation
is intended to serve for the welfare of the public, directly or indirectly to a certain extent.

Professionalism
Professionalism covers comprehensively all areas of practice of a particular profession. It
requires skills and responsibilities involved in engineering profession. Professionalism
implies a certain set of attitudes.
The art of Professionalism can be understood as the practice of doing the right thing, not
because how one feels but regardless of how one feels. Professionals make a profession of the
specific kind of activity and conduct to which they commit themselves and to which they can
be expected to conform. Moral ideals specify virtue, i.e., desirable feature of character.
Virtues are desirable ways of relating to other individuals, groups and organizations. Virtues
involve motives, attitudes and emotions.

Professional Responsibility
Loyalty to corporations, respect for authority, collegiality and other teamwork are a few
important virtues in the field of Engineering. Professionalism in engineering would be
threatened at every turn in a corporation driven with powerful egos. Robert Jackall, a
Sociologist criticizes professionalism saying, “what is right in the corporation is what the guy
above you wants from you. That’s what morality is in the corporation.”
In order to understand how good the ethical factors in a corporate world should be, let us
consider the following points −
Ethical values in their full complexity are widely acknowledged and appreciated by managers
and employees alike.
In an ethical corporate climate, the use of ethical language is honestly applied and recognized
as a legitimate part of corporate dialogue.
Top management sets a moral tone in words, in policies and by personal example.
The procedures should be followed for conflict resolution.
Loyalty
Loyalty is the faithful adherence to an organization and the employer. Loyalty to an employer
can be either of the two types
Agency-loyalty − Agency-loyalty is acting to fulfil one’s contractual duties to an employer.
This is entirely a matter of actions, such as doing one’s job and not stealing from one’s
employer, irrespective of the motive behind it.
Attitude-loyalty − Attitude-loyalty has a lot to do with attitudes, emotions and a sense of
personal identity as it does with actions. It can be understood that people who work
grudgingly and spitefully are not loyal; in spite of the fact they may adequately perform all
their work responsibilities and hence manifest agencyloyalty.
Collegiality
Collegiality is the term that describes a work environment where responsibility and authority
are shared among the colleagues. When Engineering codes of ethics mention collegiality,
they generally cite acts that constitute disloyalty. The disloyalty of professionals towards an
organization, reflects the attitude they have towards the work environment for the salaries
they are paid and the trust the company has for them.
The National Society of Professional Engineers (NSPE) Code, for example, states that
“Engineers shall not attempt to injure, maliciously or falsely, directly or indirectly, the
professional reputation, prospects, practice or employment of other engineers. Engineers who
believe others are guilty of unethical or illegal practice shall present such information to the
proper authority for action”.
Collegiality
The main factors that help in maintain harmony among members at a workplace are −
 Respect
 Commitment
 Connectedness

In detail, the colleagues are to be respected for their work and contribution towards the
organizational goals and should be valued for their professional expertise and their dedication
towards the social goods promoted by the profession. Commitment observed in the sense of
sharing a devotion to the moral ideals inherent in one’s profession. The coordination among
all the members at a workplace or the awareness of participating in cooperative projects
based on shared commitments and mutual support, also encourages the quality of the work.
Respect for Authority
In order to meet the organizational goals, the professionals should possess respect for
authority. The levels of authority maintained by the organization provides a means for
identifying areas of personal responsibility and accountability.
Following are the major types of authority −
Executive Authority − The corporate or institutional right given to a person to exercise
power based on the resources of an organization.
Expert Authority − This is the possession of special knowledge, skill or competence to
perform a particular task or to give sound advice.
According to the goals of the company, the hierarchical authority is distributed. A service
oriented or engineer-oriented company concentrates on the quality of the products which are
decided by the engineers as they are the subject matter experts. Whereas a company when it
is customer-oriented company, focuses primarily on the satisfaction of the customers. Hence
the goal of the company decides the power between a General Manager and a Technical
Manager or an Engineer.

Conflict of interest
A conflict of interest happens when an individual involved in multiple interests finds
themselves in a decision-making situation where serving one of those interests would harm
another. Interests include many different types of commitments, duties, obligations, and
values, such as:
Contractual or legal obligations (to business partners, vendors, employees, employer, etc.)
Loyalty to family and friends
 Fiduciary duties
 Professional duties
 Business interests

An individual’s potential interests can be grouped broadly into 4 types:

 Direct Interests – An individual’s own personal self-interest, family-interest and
personal business interests.
 Indirect Interests – Personal, family, and business interests of people or groups with
whom the individual associates.
 Financial Interests – Involve a gain or loss of money or value.
 Non-financial Interests – Involve personal or familial relationships and other potential
sources of bias.
 Conflicts of interest create a risk that the individual will act in a way that betrays their
duties or obligations, usually to their primary employer.

Three Common Types of Conflicts of Interest

Many different types of corruption stem from conflicts of interest that arise between an
individual’s professional duties and direct or indirect interests.
Nepotism
Nepotism happens when an individual in charge of a hiring process chooses to award a job
offer to someone in their own family or with whom they have a personal relationship. In this
case, the individual’s duty to their employer (choosing the most qualified or best candidate
for the role) may conflict with their loyalty to a family member (choosing a family member to
receive the benefits of the job instead of an unknown person).
Self-Dealing
A corporate fiduciary is legally obligated to act in the best interests of the corporation and its
shareholders. When a fiduciary acts in their own best interests instead of in the best interests
of their client, this is known as self-dealing. Self-dealing involves a conflict of interests
between an individual’s fiduciary duties (legal obligation to the client) and financial interests
(desire for personal financial gain).
Business Relationships
Many conflicts of interest stem from personal business interests. An individual who works for
two businesses in the same industry, or who works for the public sector while maintaining
interests in companies that bid on government contracts may experience a conflict of interest
when their job duties and business interests come into competition. In addition, a conflict of
interest could be sitting on the board of another company, owning stock in another company,
and deciding which vendor gets a contract.

Gift Vs Bribe
 Gift is given to someone without any expectation in return. Value of gift are often
based on closeness in relation, time of gifting, economic condition of giver and
receiver.
 Bribe is given with expectation of favour toward giver. Its economic value are
incoherent to closeness in relation, timing (inappropriate timing) and costly. Business
gifts may be a Costly Cricket match ticket, desk clock, sweets or even a cash
envelope. Timing of such gifts makes them bribe. Suppose a gift from someone just
before you are going to roll-out a tender, a calendar and desk accessories with bold
name of pharma companies to doctor. Such things are actually bribe and not gift.
Many MNC organisations have come up with norms and structures already. Some
norms which are still needed are:
 Reporting to department about any gifts that is received from whom, value and date
details. This part is already applicable to judicial judges in India.
 Any gifts above certain monetary values should be avoided.
 No gifts received with brand name should be put on desk as it will tarnish the image
of official/public servant for lenient toward certain brand.
 Provision of filing gift tax by receiver. IT department should tally the gift received as
mentioned in department books and filed by receiver. Failure to file tax for gift should
be taken seriously.
 Scrutiny of gifts received by officials regularly and checking of property declaration
regularly. Repeated gift from same person should be brought under Directorate
Enforcement radar.
 Bribes are complex thing for receiver because it puts him into moral dilemma for how
to return the favour and makes them corrupt once they receive.

Environmental Breaches
Controlling Environmental Pollution
 It is important to understand that the environment offers various opportunities for all
stakeholders in society; therefore, it must be conserved and protected at all costs.
 This means that everybody requires the environment to conduct various activities and
since it has no alternative I must be guarded jealously (Rezaee 2009).
 The first step in conserving the environment is to create awareness among
manufacturers regarding the importance of these measures.
 This will enable them to realize the need to conserve the environment and establish
measures to ensure the company does not engage in any activity that will pollute the
environment.
 Secondly, there must be strict penalties for companies and investors that endanger the
lives of other people through pollution (Larimore 2013).
 There should be no compromise when a company is involved in pollution, and this
case should culminate in the termination of the operations of that company or heavy
fines.
 This will be a good way of ensuring other companies are careful in disposing their
wastes and using various ways of manufacturing their products.
 Also, all manufacturing companies must be forced to participate in corporate social
responsibilities to ensure they are actively involved in conserving the environment.
 It will be very difficult for companies to participate in tree planting and street cleaning
and at the same time pollute the environment through poor waste disposal methods
(Grice 2010).
 These responsibilities make sure a company matches its social objectives with
production processes; therefore, making it difficult for it to pollute the environment.

Negligence
  Negligence, in law, the failure to meet a standard of behaviour established to protect
society against unreasonable risk. Negligence is the cornerstone of tort liability and a
key factor in most personal injury and property-damage trials.
 negligence is of two types, civil and criminal and each has various repercussions. In
order to prove that an act was negligent, it is necessary to prove all the essentials
namely duty, breach of duty, damages and actual and proximate cause.
 Professional negligence is also termed malpractice. It occurs when a professional
breaches a duty to a client (see also negligence).
 Examples of professional negligence include, but are not limited to: An accountant
who fails to provide services at the level expected of a reasonably competent
accountant, and the client suffers damages as a result. An engineer or architect who is
responsible for building a structure that proves to be unsafe.
 Medical malpractice is when a healthcare professional is aware of the possible
consequences before making a mistake that led to an injury. Medical negligence is
when a healthcare professional makes an honest mistake that leads to an injury.

Deficiencies in the State of Art

The level of development (as of a device, procedure, process, technique, or science) reached
at any particular time usually as a result of modern methods.
The state of the art (sometimes cutting edge or leading edge) refers to the highest level of
general development, as of a device, technique, or scientific field achieved at a particular
time.
Ethical dilemmas are not uncommon in the art world and often arise from the perception or
interpretation of the artwork's content or message. Provocative themes of spirituality,
sexuality, and politics can and may be interpreted in many ways and provoke debates as to
their being unethical or without morality.
There is long history surrounding the relationship between the arts and ethics. The arts affect
individual identities, communities, and relationships between people and their environments.
The arts can contribute to the ethical life of a community, as exemplified by public art and
theatre. The two are different Art is based on its external form, its result, while in ethics result
cannot be separated from the internal process. An ethical life is no art.

Vigil Mechanism
The Vigil Mechanism aims to provide a channel to the Directors and employees to report
genuine concerns about unethical behaviour, actual or suspected fraud or violation of the
Codes of Conduct or policy.
This mechanism seeks to prevent malpractices, to investigate and resolve complaints, take
appropriate action to safeguard the interests of the Company and to ensure that any person
making a complaint (referred to as "a whistleblower”) is protected; at the same time, it guards
against frivolous, baseless or malicious.
Vigilance Department in IFCI deals with the above issues in an effective manner. However,
Section 177 (9) and (10) of the Companies Act, 2013 provides for establishment of a vigil
mechanism in every listed company for its directors and employees to report genuine
concerns in such manner as may be prescribed. the Companies which have borrowed money
from banks and public financial institutions in excess of fifty crore rupees. Shall establish a
vigil mechanism for directors and employees to report genuine concerns in such manner as
may be prescribed.

Protected Disclosure

“Protected Disclosure” means any communication made in good faith that discloses or
demonstrates information that may evidence unethical or improper activity h. “Subject”
means a person against or in relation to whom a Protected Disclosure has been made or
evidence gathered during the course of an investigation.
A protected disclosure is a qualifying disclosure under the Employment Rights Act 1996 that
is made by a worker that they reasonably believe shows serious wrongdoing within the
workplace. This will typically relate to some form of dangerous or illegal activity that the
person has witnessed at work.
A protected disclosure is defined in the PDA as disclosure made in good faith "in accordance
with any procedure prescribed, or authorised by the employee's employer for reporting the
impropriety concerned.
The purpose of the Protected Disclosures Act, 2000, is to provide procedures and to offer
protection. The Act provides procedures in terms of which any employee may disclose
information relating to an offence or a malpractice in the workplace by his or her employer or
fellow employees.

Whistleblowing
Whistleblowing is the term used when a person passes on information concerning
wrongdoing, such as corruption, sexual harassment... This can be referred to as "blowing the
whistle", "making a disclosure", "making a whistleblowing report", or otherwise. The person
is usually closely associated with the organisation, often an employee, but also sometimes a
supplier or a customer. They become a whistleblower when they observe behaviour or actions
that they believe to be misconduct, illegal and not in line with the company's Code of
Conduct, and report that suspicion as a whistleblowing matter.
Whistleblowing can take place either within an organisation, or publicly.
 Organisational whistleblowing: is a preventive tool for organisations to reduce the
risks of malpractice and irregularities. Empowering employees and other relevant
stakeholders to blow the whistle increases the chances of managers obtaining
 information on irregularities that should be acted upon at an early stage. Organisations
that take their Code of Conduct seriously will therefore put in place mechanisms to
enable organisational whistleblowing, such as a secure corporate whistleblowing
system or hotline and a whistleblowing policy or guidelines.
 Public whistleblowing: In organisations where trust is low, the above mechanisms
are not in place, or there is no possibility to be an anonymous whistleblower, the
person may be more inclined to blow the whistle publicly. This may include reporting
to the police, media or through online social channels, which of course brings a
greater risk of reputational damage for organisations. In some instances, though, there
is a duty to blow the whistle to a professional body or regulator.

GST
GST stands for Goods and Services Tax, which is a tax on the sales of goods and services in
India. With its origin, it has replaced many other indirect taxes such as VAT, CST, central
excise duty, service tax, and so on. The goods and services tax (GST) is a value-added tax
(VAT) levied on most goods and services sold for domestic consumption. The GST is paid by
consumers, but it is remitted to the government by the businesses selling the goods and
services.
Goods and services tax should not be confused with the generation-skipping trust, also
abbreviated GST (and its related taxation, GSTT).
In general, goods and services tax (GST) is paid by the consumers or buyers of goods or
services. Some products, such as from the agricultural or healthcare sectors, may be exempt
from GST depending on the jurisdiction. The goods and services tax (GST) is computed by
simply multiplying the price of a good or service by the GST tax rate. For instance, if the
GST is 5%, a $1.00 candy bar would cost $1.05. The GST can be beneficial as it simplifies
taxation, reducing several different taxes into one straightforward system. It also is thought
to cut down on tax avoidance among businesses and reduces corruption. The GST can be
beneficial as it simplifies taxation, reducing several different taxes into one straightforward
system. It also is thought to cut down on tax avoidance among businesses and reduces
corruption.
Various roles of various stake holders
The important stakeholders in the process were the Government of India and States. The
states faced challenges of apparent loss of revenue extent of uniformity across various
commodities and their tax rates, input credit mechanism and dispute
Internal Stakeholder Investors are a common type of internal stakeholder and are heavily
impacted by a business outcome. For example, if a venture capital firm decides to invest Rs.5
million in a technology startup in exchange for 10% equity and significant control, the firm
becomes the startup's internal stakeholder.
The returns on the investment depend on the startup's success, or failure, which means it has
a vested interest.
External Stakeholder External stakeholders are a little more difficult to identify since they
have no direct relationship with the company. When a company goes beyond the allowable
carbon emission cap, the city in which the company is located is deemed an external
stakeholder because it is impacted by the increased emissions.

UNIT-II
UNIT – II
 Law of Contract: Nature of Contract and Essential elements of valid contract, Offer and
Acceptance, Consideration, Capacity to contract and Free Consent, Legality of Object.
Unlawful and illegal agreements, Contingent Contracts, Performance and discharge of
Contracts, Remedies for breach of contract. Contracts-II: Indemnity and guarantee, Contract
of Agency, Sale of goods Act -1930: General Principles, Conditions & Warranties,
Performance of Contract of Sale.

DEFINITION, MEANING AND NATURE OF CONTRACT

The term Contract has been defined under Section 2(h) of Indian Contract Act, 1872 as, “agre
ement enforceable by law is a contract”
A Contract therefore, is an agreement the object of which is to create a legal obligation, i.e. a
duty enforceable by law.
Two main elements
 Agreement‐ As per Sec 2 (e) “ Every promise and every set of promises, forming the
consideration for each other, is an agreement”
 Legal Obligation‐ An agreement to become a contract must give rise to a legal obligat
ion that is duty enforceable by law.

ESSENTIALS OF VALID CONTRACT

1‐AGREEMENT: To form a contract there must be an agreement between the parties.
Agreement is created by offer and acceptance. It is result of mutual exchange of promises
between the parties.
Eg: an agreement between the tenant and the owner.
2‐CREATION OF LEGAL RELATIONSHIP: Agreement made between parties must create
legal relationship. Legal relationship consists of rights and obligations which can be claimed
by the parties in the court of law.
3‐LAWFUL CONSIDERATION: Agreement is a mutual exchange of promises between
parties. Each party making a promise gets something in return of his promise. It constitutes a
consideration for his promise .
4‐CONTACTUAL CAPACITY: Parties making an agreement must have contractual
capacity. Lack of contractual capacity would invalidate contract. Contractual capacity of the
party means he or she must be legally competent for making a contact. The person to have
contractual capacity must satisfy the following conditions:

 He must not be a minor.

 He must be of a sound mind and not lunatic, idiot or drunkard.
 He must not have been declared disqualified by law from contracting such as
insolvent, convict and alien enemy etc.
5‐FREE CONSENT OF THE PARTIES: State of mind of parties is involved in making offer
and giving acceptance for it. As soon as offer is accepted it becomes a binding promise
having a legal consequences. Two or more persons are set to have consent if they agree upon
same thing in the same sense. And their consent is said to be free if it has not been induced by
anyone one of the following factors; Coercion b)undue influence c)misrepresentation d)fraud
e)mistake
6‐LAWFUL OBJECT OF AGREEMENT: Agreement is made for some object or purpose
such object is formed on the basis of promises made by the parties. These promises are made
either for doing or not doing anything.
7‐AGREEMENT, NOT DECLARED EXPRESSLY VOID: There are certain agreements
which have been expressly declared void by the law. Thus an agreement made by parties
should not fall in that category. If it is so it would also meet same fate and cannot be enforced
in the court of law.
8‐CERTAINITY IN THE MEENING OF AGREEMENT: Agreement made by the parties
must be certain or capable of being made certain in its meaning. It is because agreement
would result in creating rights and obligations between the parties.
9‐OTHER LEGAL FORMALITIES: agreement to be enforced, needs to satisfy other
conditions of being in writing, registered and duly stamped. Generally Indian contract act
does not make any discrimination between written and oral agreement. Oral agreements are
as good as written agreement.

VALID CONTRACT
VALID CONTRACT: Contract is said to be valid if it satisfies all conditions required for its
enforceability. In other words, valid contract is enforceable in the court of law.
Suppose a person A agrees to pay a sum of Rs. 10,0000 to a person B for an antique chair.
This contract would be valid, the only problem is that person B is a minor and can't legally
enter a contract. So this contract is a valid contract from the point of view of A and a
“voidable” contract from the point of view of B.

OFFER, ACCEPTANCE AND CONSIDERATION

OFFER:
Offer is one of the essential elements of a contract. According to Sec 2(a) of Indian Contract
Act 1872, defines the term Offer or Proposal “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 other to such act or abstinence, he is said to make a proposal”
CLASSIFICATION OF OFFER:
1.) SPECIFIC OFFER: Sometimes an offer is made to a particular person, part or org. , such
offer is known as a specific offer. This specific offer can be accepted only by that particular
person or org.
2.) GENERAL OFFER: It is an offer which is made to a group of people or public at large.
Such offer can be accepted by any member of that group or public.
3.) CROSS OFFER: Two parties exchange identical offers with each other. They are ignorant
about each other’s offers.
4.) COUNTER OFFER: Incomplete and conditional acceptance of an offer is known as a
counter offer. In other words, the acceptor, instead of accepting the offer as such along with
all its terms and conditions deviates from it. Such acceptance becomes a counter offer.
ESSENTIALS OF VALID OFFER:
1.) Offer must create a legal relationship and consequence: The whole concept of contract is
based on legal relationships or obligations of legal consequences .Thus the formation of
contract with starts with an offer, its acceptance followed by the legal relationships and its
consequences means the party making an offer must have clear intention to establish the legal
relationship with other party.
2.) Offer may be express or implied: The offer may be made either by the word of mouth or
in writing. Such an offer is known as an express offer. On the other hand if the offer is
inferred, or indirectly understood either from the conduct of parties or from the
circumstances, such offer is known as implied offer.

3.) Offer may be specific or general: The offer being made to a particular individuals or orgs.
Is known as specific offer. On the other, if an offer has been made to a group of people or
public at large is known as general offer.
4.) Offer must be communicated: An offer is made with a view to create, legal relationships
so it must be communicated to the person to whom it is made. Without communications the
offer is incomplete and cannot be accepted.
5.) Offer must be distinguished from a mere expression of intention or invitation: Sometimes
one party merely shows his intention for making an offer or invites other party for making it.
Such intention or invitation for making an offer will not be considered as a valid offer.
6.) Offer maybe conditional: While making an offer the offeror may impose conditions for
the acceptor, such conditional offer is valid subject to the following conditions:
a.) Offeror cannot impose any such condition the non‐fulfillment of which would lead to
acceptance of that offer.
b.) The terms and conditions imposed by the offeror must be mentioned in the offer in such a
way that a person of a reasonable prudence may find indication for those conditions and those
conditions must be reasonable eyesight.
REVOCATION OF OFFER:
Revocation of offer means withdrawal, cancellation or lapse of offer.
According to Sec 6 of this act, Offer can be revoked under the following circumstances:
a) By notice, b) By lapse of time, c) Death or insanity of offeror
D) Non‐fulfillment of prerequisite conditions, e) by counter offer, f) by compliance of
prescribed mode or manner
ACCEPCTANCE
According to Sec 2(b) of Indian contract act 1872, defines the term acceptance “as a proposal
or offer is said to have been accepted when the person to whom the proposal is made signifies
his assent to the proposal”.
ESSENTIALS OF VALID ACCEPTANCE:
1.) Acceptance must be absolute and unconditional: Offer may be made for a specific
quantity, volume and price. It may also contain terms and conditions. It is necessary for the
acceptor that he must give his acceptance for the entire quantity and volume offered.
2.) Acceptance must be given in a prescribed mode or manner: While making an offer the
offeror may prescribe a particular mode or manner of acceptance and the acceptor must abide
by it. If the acceptor does not follow that particular mode for sending his acceptance, the
offeror that further insist the acceptor to abide by it. But if it is still not followed the offeror
can reject the acceptance. On the other if no mode is prescribed, by the offeror then the
acceptor can follow the usual mode of acceptance.
3.) Time of acceptance: To make it valid acceptance, it must be given within stipulated period
of time if any. When no time is specified, acceptance must be given within reasonable period
of time.
4.) Acceptance must be communicated: As the offer needs to be communicated, so does the
acceptance. Acceptance to be legally effective must be communicated and brought to the
knowledge of the offeror. Even if the acceptor has accepted the offer but if it is not
communicated properly it would not result into an agreement.
5.) Acceptance may be expressed or implied: The acceptor may give his assent for the
proposed act by the word of mouth or in writing. Such acceptance is known as express
acceptance. If the acceptance is directly understood either from conduct of the party or from
circumstance, it is known as implied acceptance.
6.) Acceptance must be made before offer is revoked: Acceptance implies mental readiness of
the person for proposed act or abstinence. Therefore, it must be given before the offer lapses
or is withdrawn or cancelled. Once the offer is dead due to any reason if it is dead for ever,
and to revive it, such offer is to be made afresh.
7.) Acceptance is not implied from silence if the party: Acceptance of offer is not implied
from silence. The offeror cannot impose condition on offered that his silence will amount to
acceptance. Silence on the part of offered regarding the offer in no case may amount to
acceptance.
REVOCATION OF ACCEPTANCE:
1) Failure of acceptor
2) Death or insanity of acceptor
3) No reasonable time and manner
4) By rejection
5) By supervising impossibility
CONSIDERATION
According to Sec 2(d) of this act ,” When at the desire of promisor, promise or other person
has done or abstained from doing, does or abstains for doing or promises to do or to abstain
from doing something, such act, abstinence or promise is called consideration for the
promise”
ESSENTIALS OF VALID CONSIDERATION:
1.) Form of consideration: The consideration will always be in the form of some act or
abstinence or a promise for doing or not doing something.
2.) Consideration must be moved or given at the desire of promisor: In agreement there are
two parties
i.e. promisor and promise. The consideration is generally given by the promise to promisor.
According to this rule any act or promise will be valid consideration if such act has been done
or promise is made at the desire or request of the promisor.

3.) Consideration may be past, present or future: Promisor makes a promise and consideration
is given to him for his promise. If these two act of making promise and getting consideration
are done simultaneously, the consideration is known as present consideration. If the
consideration has been given to the promisor before he makes a promise, it is known as past
consideration. Consideration may be in the form of promise to be performed in future, such
consideration is known as future consideration.
4.) Consideration may be moved or given by promise or any other person: Generally in every
agreement consideration is given by promise to the promisor. But it is not necessary. Any
other person on behalf of promise may give consideration. Such consideration will also be
valid.
5.) Consideration need not be adequate: According to Indian Contract Act it is not necessary
that the value of promise should be equal to the value of consideration. Even if the value of
consideration is less than the value of promise, the contract is valid.
6.) Consideration must be real and not be illusory: Consideration given must be real and must
have some value in the eyes of law. It must not be illusory, factious, fraudulent, uncertain and
illegal.
7.) Consideration must be lawful: Agreement to be enforced in the court must be made for
lawful consideration. Any act which is illegal, immoral and against public policy will not
constitute valid consideration for the contract.
CAPACITY OF PARTIES
Contractual capacity is an essential ingredient of a valid contract.
According to Sec 10 of this act, parties making an agreement must have contractual capacity.
Contractual capacity means they must be legally competent for making a contract.
To have a Contractual capacity, one must fulfill the following conditions:
Elements:
1.) Age
2.)Soundness of mind 3.)Legal Disqualification
1.) Minor:
A minor is a person, male or female, who has not completed the age of 18 years. In case a
guardian has been appointed to the minor or where the minor is under the guardianship of the
court of wards, the person continues to be a minor until he completes his age of 21 years.
According to Indian Contract Act, only a major person is competent to contract. Thus,
contract with or by a minor is altogether void. The word “Void” when used in relation to a
minor, it should be understood as “ void against the minor”.
2.) Soundness of mind:

According to Sec 12 of this act, “ A person is said to be a sound mind for the purpose of
making contract, if at the time, when he makes it he is capable of understanding it and
forming a rational judgement as to its effects upon his interests”.
  Lunatics: A lunatic is a person who is mentally affected due to some mental strain or
other personal experience. He suffers from intermittent intervals of sanity and
insanity. He can enter into a contract only during the period when he is of sound
mind.
 Idiot: An idiot is a person who is permanently of unsound mind. He does not exhibit
minor understanding of even minor objects or things. An idiot cannot enter into a
valid contract.
 Drunken Person: A person who takes any intoxicants like alcohol or drugs etc. he is
temporarily incompetent of entering into a contract. Thus, so long as one remains
under the influence of intoxicants or drugs, he has no contractual capacity. Thus
agreement made by such person are void.

3.)Legal Disqualification:
 Alien enemy: A person who lives in and is a citizen of a foreign country is known as
an alien. He may be a friend or an enemy to the citizen of our country. Alien friend
can make an agreement with indian citizen. But is war is declared between the two
countries, the citizens of those countries become alien enemies to each other. And
agreements made with alien enemies are void.
 Foreign sovereign: Ambassadors, high ommisioners or foreign deplomatic staff do
represent their country
 Therefore thayhave been provided some imunities. They can make an agreement with
Indian citizensand can enforce those agreements against Indian citizens in india. But
Indian citizens to sue upon them for the rights arising out of an agreement has to seek
prior permission from central govt.
 Corporations: A corporation is an artificial person created by law, eg: A company
registered under Companies act. A corporation exists only in contemplation of law
and has no physical shape or form. The indian contract act does not sleak about the
capacity of a corporation to enter into a contract. But if properly incorporated , it has a
right to enter into a contract. It can sue and can be sued in its own name. There are
some contracts into which a corporation cannot enter without its seal.
 Insolvent: Generally, when the assets of person fall short of liablities and liablities
cannot be paid fully, such state of affair is called insolvency. The person is declared
as an insolvent by the court. He has to handover his propert to the official reciever. He
cannot enter into contracts relating to his property. It is only when the court issues
order of discharge in favour of that person he becomes competent.
 Married women: they have no right to make agreements regarding joint property of
husband and wife, unless she is authorised to do so by husband. She is free to make
any agreement to deal with their personal property such as bank balance in her name
and jewelleries ect on the failure of husband, to fulfill the basic necessities of her life,
she becomes an agent of her husband by necessity. For the supply of such basic
necessities she can make agreements binding on the property of her husband.
 Convict: A convict is incapable of entering into a contract during the continuance of
sentence of imprisonment. However, he can enter into a valid contract after the
 expiration of his term of imprisonment. A convict can also, enter into, or sue on, a
contract when on parole, bail or when he has been pardoned by the court.

FREE CONSENT
Sec 13 Indian Contract act, “two or more persons are set to concent when they agree upon the
same thing in the same sense.”
Sec 14 of this act states that, concent is said to be free when it is not caused by :
1. Coercion: Application of physical force
2. Undue influence: Use of mental pressure
3. Misrepresentation: Innocent false representation
4. Fraud: Cheating or deceiving
5. Mistake: Wrong impression about anything
ELEMENT OF FREE CONSENT:
1. COERCION: it implies use of some kind of physical force by doing some act
forbidden by law to seek concent of other party.
2. UNDUE INFLUENCE: It implies unfair use of dominating position to cause the
concent of other party for a contract. In undue influence some kind of mental and moral
pressure is brought upon a party to cause his concent.
3. MISREPRESENTION: While making a contract, one of the party may make any
statement regarding the subject matter of a contract. Such statement, if turns to be untrue
amounts to misrepresentation. It is a misstatement of material facts.
4. FRAUD: An intentional misrepresentation of the facts amounts to fraud. Fraud is
always committed with a view to diceive to cheat another person . Thus, when one person
does anything or makes false statement knowing to induce other for causing this concent , it
is known as fraud.
5. MISTAKE:It maybe defined as a wrong impression or erroneous opinion in the mind
of a person about any subject matter, event or it may concent something .

LEGALITY OF OBJECT
Every contract is made for object or purpose . The object of a contract ikis formed on the
basis of promises made by the parties. The contract to be legally valid , must contain lawful
object . When the contract is made for doing something illegal defeating provisions of the law
such contract is not valid in the eyes of law.
According to sec 23 of this act the unlawful acts are :
1. Forbidden by law
2. Probhited by special legislation
3. It would defeat the provisions of any law
4. It is fraudulent
5. Involves enquiry to person/property if another
6. Courts tp public policy
7. Opposed to public policy
8. Trade with alien enemies
9. Interfearance with course of justice
10. For supersing prosecution
11. For sale of public titles/offices and honors
12. Marriage brokerage

An Unlawful/Illegal Agreement
An unlawful agreement is one which, like a void agreement and is not enforceable by law. It
is destitute (lacking) of legal effects altogether. If affects only the immediate parties and has
no further consequences. An illegal agreement, on the other hand, is not only void as between
the immediate parties but has this further effect that the collateral transactions to it also
become tainted (infect) with illegality. Thus, ‘every illegal agreement is unlawful, but every
unlawful agreement is not necessarily illegal’. It is sometimes difficult to decide as to
weather an act is illegal (or) unlawful because, as many of the illegal and the unlawful acts lie
on the borderline. It may, however, be observed that illegal acts are those which are opposed
to public morals and unlawful acts are those which are less rigorous in effect and involves a
‘non-criminal breach of law’. These acts do not effect public morals (nor) do they results in
the commission of crime.

Contingent Contracts
A contract can be entered into by parties for the performance or non-performance of an action
or an event.
There are primarily two types of contracts: Absolute Contracts and Contingent Contracts. In a
contingent contract, the performance of the promisor is dependent on the fulfillment of
certain conditions.
These contracts create an obligation on the promisor only if the conditions collateral to the
contract are met.
Example: A promises to pay B a sum of 20 thousand rupees if there is damage to his house
from fire. The payment of the amount is contingent on the house being destroyed by fire. If
there is no fire, B cannot claim the amount from A who is not liable to pay since the fire that
was the collateral condition, did not happen. There are certain essential elements of a
contingent contract as stated under section 31 of the Contract Act.
Depends on the Occurrence or Non-Occurrence of an Event
A contingent contract will be deemed valid only if an event occurs or does not occur and it is
collateral to the contract.
Contract Performance Must be Conditional
The meaning of a contingent contract is that the conditions collateral to the contract must be
certain to happen in the future. The presence of a condition is essential for a contract to be
contingent. Section 32 and Section 33 of the Contract Act state that the enforcement of a
contingent contract is subject to the collateral conditions being fulfilled.
Example: X agrees to employ Z as an employee if he clears the exams with 85 percent marks
or more. X is liable to give the job to Z only when he meets the condition specified of
clearing the exams with the required percentage.
The Condition of the Contract must be a Future Event
A contract will be considered a contingent contract only if the event specified is a future
event that may or may not happen.
The Condition Specified must be Collateral to the Contract
A contingent contract is based on the occurrence or non-occurrence of an event. This event
must be collateral to the contract and not a part of the consideration mentioned in the
contract. The contingency must be an independent event.
Example: X enters into a contract with Y to pay him 10000 rupees on the delivery of some
books. This is not a contingent contract since X has an obligation to pay for an event that is
part of the contract and not collateral to it.

Example: X enters into a contract with Y to pay him 10000 rupees if the books are delivered
to him by Friday. In this case, delivery by Friday is collateral to the contract and not a part of
the consideration. Hence this is a contingent contract.
The Event must not Depend on the Mere will of the Promisor
The event must not be influenced only by the will or wish of the promisor.
Example: X promises to pay a certain sum to Y if Y leaves for Delhi on 1st June. Going to
Delhi is Y’s will but is not an event completely dependent on his will.

PERFORMANCE OF CONTRACTS
The term ‘Performance of contract‘ means that both, the promisor, and the promisee have
fulfilled their respective obligations, which the contract placed upon them. For
instance, A visits a stationery shop to buy a calculator. The shopkeeper delivers the calculator
and A pays the price. The contract is said to have been discharged by mutual performance.
Section 27 of Indian contract Act says that
The parties to a contract must either perform, or offer to perform, their respective promises,
unless such performance is dispensed with or excused under the provisions of this Act, or any
other law.
Promises bind the representatives of the promisor in case of the death of the latter before
performance, unless a contrary intention appears in the contract.
Thus, it is the primary duty of each contracting party to either perform or offer to perform its
promise. For performance to be effective, the courts expect it to be exact and complete, i.e.,
the same must match the contractual obligations. However, where under the provisions of the
Contract Act or any other law, the performance can be dispensed with or excused, a party is
absolved from such a responsibility.
Example
A promises to deliver goods to B on a certain day on payment of Rs 1,000. A expires before
the contracted date. A‘s representatives are bound to deliver the goods to B, and B is bound
to pay Rs 1,000 to A‘s representatives.
DISCHARGE/TERMINATION OF CONTRACT
Discharge of a contract implies termination of the contractual relationship between the
parties. On the termination of the such relationship the parties are realesed from their
obligations in the contract. And in this way contract comes to an end.
MODES OF DISCHARGE IN CONTRACT:
1. By performance
2. By mutual agreement
3. By supervising impossibility
4. By operation of law
5. By lapse of time
6. By material alteration
7. By breach of contract
 REMEDIES OF BREACH OF CONTRACT
BREACH OF CONTRACT: A formation of contract results in creating contractual
obligations between the parties. These contractual agreements are to be fulfilled by the parties
on the due date as per terms and conditions of a contract . When the party does not fulfill his
obligation or refuses to fulfill it or disables himself from fulfiling him it Is known of breach
of contract.
Breach of contract is of 2 types:
1) Actual breach: This contract takes palce when the promiser fails to perform his
obligation or refuses to do so on the due date of performance.
2) Anticipatory breach: This contract the promiser either refuses to perform or makes
himself unable to perform a promise before the due date of performance . Anticipatory breach
of contract takes place before the date of actual performance.
REMEDIES :
• RESCISSION: When a party makes breach of contract by not fulfilling his obligation,
the aggrieved party has a right to rescind such contract. To exercise this right, the aggrieved
has to file a suit for rescission of a contract. On granting rescission, the aggrieved party gets
relaesed from his obligation in that contact. He is no more liable to perform his promise.
• SUIT OF DAMAGES: On making a breach of contract by a party, the aggrieved party
may suffer monetary loss. In the event of breach he may be put in a disadvantageous position
or in a position of discomfort. In such case, the agrrieved party has a right to claim for
compensation.
• SUIT FOR SPECEFIC PERFORMANCE: Whren, breach of contract takes place and
aggrieved party suffers a loss. These losses may be of such a nature that damage granted for
these by the court maybe inadequate. It is because such losses cannot be measured in terms of
money.In such cases, the aggrieved party is entitled to claim for order of specefic
performance.
• SUIT FOR INJUNCTION: In a contract if the party has made a promise for not doing
something, and that party takes a breach of contract by doing that thing. To prevent such
party from doing that act an order of injunction may be claimed by an aggrieved party. It is
an order passed by court of law, directing upon the party and refraining him from performing
what he has promised not to perform.An injunction is a preventive relief, which is provided
to an aggrieved party where damages would not be an advocate relief, it is negative form of
order of specefic performance.
• SUIT UPON QUANTUM MERUIT: In a contract maybe in the process of
performing his promise before he completes it, the promise makes a breach of contract.
Quantum Meruit is a Latin dictum, which means “ as much as earned or merited”. That
means under Quantum Meruit aggrieved party can also claim for the reasonable cost of work
done by him in the contract.

INDEMNITY & GUARANTEE

“Contract of Indemnity” defined (Section 124) : A contract by which one party promises to
save the otherfrom loss caused to him by the conduct of the promisor himself, or by the
conduct of any other person, is called a“contract of indemnity.” There are two parties in this
form of contract. The party who promises to indemnify/ savethe other party from loss is
known as ‘indemnifier’, where as the party who is promised to be saved against theloss is
known as ‘indemnified’ or indemnity holder.
Example 1 : A may contract to indemnify B against the consequences of any proceedings
which C may takeagainst B in respect of a sum of ` 5000/- advanced by C to B. In
consequence, when B who is called upon to paythe sum of money to C fails to do so, C
would be able to recover the amount from A as provided in Section 124.
Example 2 : X, a shareholder of a company lost his share certificate. He applied for the
duplicate. The companyagreed to issue the same on the term that X will compensate the
company against the loss where any holderproduces the original certificate. Here, there is
contract of indemnity between X and the company.
Explanation
To indemnify means to compensate or make good the loss. Thus, under a contract of
indemnity the “existenceof loss” is essential. Unless the promisee has suffered a loss, he
cannot hold the promisor liable on the contract of indemnity.However, the above definition of
indemnity restricts the scope of contracts of indemnity in as much as it covers only the loss
caused :
(i) By the conduct of the promisor himself, or
(ii) By the conduct of any other person.
Thus, loss occasioned by the conduct of the promise, or accident, or an act of God is not
covered.

 A contract of indemnity like any other contract may be express or implied.

 A contract of indemnity is like any other contract and must fulfill all the essentials of
a valid contract like consideration, free consent, competency of contract, lawful object
etc.

Example : A asks B to beat C promising to indemnify him against the consequences. The
promise of A cannotbe enforced. Suppose, B beats C and is fined Rs. 1000, B cannot claim
this amount from A because the objectof the agreement is unlawful.
A contract of Fire Insurance or Marine Insurance is always a contract of indemnity. But there
is no contract of indemnity in case of contract of Life Insurance.
Rights of Indemnity—holder when sued (Section 125) : The promisee in a contract of
indemnity, actingwithin the scope of his authority, is entitled to recover from the
promisor/indemnifier—
(1) All damages which he may be compelled to pay in any suit in respect of any matter to
which the promise toindemnify applies;
(2) All costs which he may be compelled to pay in any such suit if, in bringing or defending
it.
(3) All sums which he may have paid under the terms of any compromise of any such suit.

Contract of guarantee
“Contract of guarantee”, “surety”, “principal debtor” and “creditor” [Section 126]
Contract of guarantee : A contract of guarantee is a contract to perform the promise made or
discharge the liability, of a third person in case of his default.
Three parties are involved in a contract of guarantee
 Surety - Person who gives the guarantee,
 Principal debtor - Person in respect of whose default the guarantee is given,
 Creditor- Person to whom the guarantee is given

Example 1 : When A requests B to lend `10,000 to C and guarantees that C will repay the
amount within the agreed time and that on C falling to do so, he will himself pay to B, there
is a contract of guarantee. Here, B is the creditor, C the principal debtor and A the surety.
Example 2 : Where ‘A’ obtains housing loan from LIC Housing and if ‘B’ promises to pay
LIC Housing in the event of ‘A’ failing to repay, it is a contract of guarantee.
Example 3 : X and Y go into a car showroom where X says to the dealer to supply latest
model of Wagon R to Y. In case of Y’s failure to pay, X will be paying for it. This is a
contract of guarantee because X promises to discharge the liability of Y in case of his
defaults.
Explanation
Guarantee is a promise to pay a debt owed by a third person in case the latter does not pay.
Any guarantee given may be oral or written.
From the above definition, it is clear that in a contract of guarantee there are, in effect three
contracts
(i) A principal contract between the principal debtor and the creditor
(ii) A secondary contract between the creditor ad the surety.
(iii) A implied contract between the surety and the principal debtor whereby principal debtor
is under an obligation to indemnify the surety; if the surety is made to pay or perform.

Contract of Agency
Definition: Agency can be defined as the relationship between two persons, wherein a person
has the authority to act on behalf of another, bind him/her into a legal relationship with the
third party. There are two parties in a contract of agency – principal and agent.Contract of
Agency is based on the fact that one person cannot perform all the transactions and so he can
appoint another perform or act on his behalf.
Who is a Principal?
Any person who employs another person to perform an act and who is being represented by
another person in dealing with the third party is the Principal.
Who is an Agent?
A person employed by the Principal, to act on his behalf, represent him in the dealings with
the third party and also to bring him into a contractual relationship with the third party, is
called an Agent.In a contract of agency, the agent is not just the bridge between the principal
and the third party, but he can also make the principal answerable for the acts performed by
him. Here it must be noted that while the agent is acting for the principal, he works in the
capacity of principal.
The basic characteristics of the contract of the agency are discussed as under:
characteristics of contract of agency
 Legal Binding: The crux of the contract of agency is that the principal is legally
bound by the acts performed by the agent.
 Consideration is not mandatory: There is no legal requirement of consideration, to
support the relationship between the principal and agent.
 Capacity of Principal: One who is legally competent to contract is eligible to employ
an agent, i.e. he should have attained the age of 18 years and of sound mind.
 Authority to contract: Authority to contract is the basic requirement to become an
agent. So a minor can also act as an agent, though he is not having the capacity,
however, he can have the authority to act as agent.

This is due to the fact that an agent initiates a contractual relationship amidst the principal
and third party, and so the contractual capacity of the agent is irrelevant.
Creation of Agency
The agency can be created in the following ways:
Express Agency: One can enter into the contract of agency through an express agreement,
i.e. oral or written. In a written contract of agency, the power of attorney is transferred in the
name of the agent, conferring him the authority and power to act on behalf of the principal,
subject to the terms and conditions specified in the contract.
When the purpose of creation of agency is to transfer the immovable property, it is required
to be registered,
Implied Agency: When something is not directly or clearly stated, it is said to be implied.
Therefore, the implied agency is created by way of conduct, the situation of the parties, i.e.
principal and agent, or necessity of the case.
Agency by Estoppel: Suppose a person by his conduct informs another person that a
particular person is his agent and the person who is signified as an agent is present and
hearing at the time when it is intimated. Now, if the third person enters into a contract with
that person thinking that he is the agent. This is the case of agency by estoppel, where the
agent will be precluded from refusing his authority.
Wife as an agent: When a legally married couple lives together, the wife is supposed to have
the authority of his husband to pledge his credit, in order to afford the basic necessities of
life, according to their standard of living. However, it has certain exceptions, if the husband
proves that:
 He has explicitly warned the dealer not to give the goods on credit to his wife, or
 He has explicitly forbidden his spouse to pledge his credit, or
 He has already supplied the mentioned stuff in sufficient quantity to his wife or
 He is providing sufficient allowance to his wife.

Sale of Goods Act- 1930

Scope of the Act
The sale of Goods Act deals with ‘Sale of Goods Act,1930,’contract of sale of goods is a
contract whereby the seller transfers or agrees to transfer the property in goods to the buyer
for a price.” ‘Contract of sale’ is a generic term which includes both a sale as well as an
agreement to sell
Essential elements of Contract of sale
1. Seller and buyer
There must be a seller as well as a buyer.’Buyer’ means a person who buys or agrees to buy
goods[Section 2910].’Seller’ means a person who sells or agrees to sell goods [Section
29(13)].
2. Goods
There must be some goods.’Goods’ means every kind of movable property other than
actionable claims and money includes stock and shares,growing crops,grass and things
attached to or forming part of the land which are agreed to be severed before sale or under the
contract of sale[Section 2(7)].
3. Transfer of property
Property means the general property in goods,and not merely a special property[Section
2(11)].General property in goods means ownership of the goods. Special property in goods
means possession of goods.Thus,there must be either a transfer of ownership of goods or an
agreement to transfer the ownership of goods.The ownership may transfer either immediately
on completion of sale or sometime in future in agreement to sell.

4. Price
There must be a price.Price here means the money consideration for a slae of goods[Section
2(10)].When the consideration is only goods,it amounts to a ‘barter’ and not sale.When there
is no consideration ,it amounts to gift and not sale.
5. Essential elements of a valid contract
In addition to the aforesaid specific essential elements,all the essential elements of a valid
contract as specified under Section 10 of Indian Contract Act,1872 must also be present since
a contract of sale is a special type of a contract.
Meaning and types of goods
Goods means every kind of movable property other than actionable claims and money,and
includes the following:
Stock and share
Growing crops,grass and thing attached to or forming part of the land which are agreed to be
served before sale or under the Contract of sale.
Types of Goods[Section 6]
1.Existing Goods
Existing goods mean the goods which are either owned or possessed by the seller at the time
of contract of sale.The existing goods may be specific or ascertained or unascertained as
follows:
a) Specific Goods[Section 2(14)]:
These are the goods which are identified and agreed upon at the time when a contract of sale
is made-For example,specified TV,VCR,Car,Ring.
b) Ascertained Goods:
Goods are said to be ascertained when out of a mass of unascertained goods,the quantity
extracted for is identified and set aside for a given contract.Thus,when part of the goods
lying in bulk are identified and earmarked for sale,such goods are termed as ascertained
goods.
c) Unsanctioned Goods:
These are the goods which are not identified and agreed upon at the time when a contract of
sale is made e.g. goods in stock or lying in lots.
2. Future Goods[Section 2(6)]
Future goods mean goods to be manufactured or produced or acquired by the seller after the
making of the contract of sale.There can be an agreement to sell only.There can be no sale in
respect of future goods because one cannot sell what he does not possess.
3. Contingent Goods [Section 6(2)]
These are the goods the acquisition of which by the seller depends upon a contingency which
may or may not happen.
Price Of Goods
Price means the money consideration for a sale of goods.

 There are three modes of determining the price as under:

 It may be fixed by the contract or
 It may be left to be fixed in an agreed manner
 It may be determined by the course of dealing between the parties.

Thus,the price need not necessarily be fixed at the time of sale.

Conditions and Warranties

It is usual for both seller and buyer to make representations to each other at the time of
entering into a contract of sale. Some of these representations are mere opinions which do not
form a part of contract of sale.Whereas some of them may become a part of contract of
sale.Representations which become a part of contract of sale are termed as stipulatuins which
may rank as condition and warranty e.g. a mere commendation of his goods by the seller
doesn’t become a stipulatuin and gives no right of action to the buyer against the seller as
such representations are mere opinion on the part of the seller.But where the seller assumes to
assert a fact of which the buyer is ignorant,it will amount to a stipulation forming an essential
part of the contract of sale.
Meaning of Conditions [Section 12(2)]
 A condition is a stipulation
 Which is essential to the main purpose of the contract
 The breach of which gives the aggrieved party a right to terminate the contract.

Meaning of Warranty[Section 12(3)]

 A warranty is a stipulation
 Which is collateral to the main purpose of the contract
 The breach of which gives the aggrieved party a right to claim damages but not a right
to reject goods and to terminate the contract.

Conditions to be treated as Warranty[Section 13]

In the following three cases a breach of a condition is treated as a breach of a warranty:
 Where the buyer waives a conditions; once the buyer waives a conditions,he cannot
insist on its fulfillment e.g. accepting defective goods or beyond the stipulated time
amount to waiving a conditions.
 Where the buyer elects to treat breach of the condition as a breach of warranty;e.g.
where he claims damages instead of repudiating the contract.
 Where the contract is not severable and the buyer has accepted the goods or part
thereof,the breach of any condition by the seller can only be treated as breach of
warranty.It can not be treated as a gorund for rejecting the goods unless otherwise
specified in the contract.Thus,where the buyer after purchasing the goods finds that
 some condition is not fulfilled,he cannot reject the goods.He has to retain the goods
entitling him to claim damages.

Performance of the Contract

It is the duty of the seller and buyer that the contract is performed. The duty of the seller is to
deliver the goods and that of the buyer to accept the goods and pay for them in accordance
with the contract of sale.
Unless otherwise agreed, payment of the price and the delivery of the goods and concurrent
conditions, i.e., they both take place at the same time as in a cash sale over a shop counter.
Delivery (Sections 33-39) Delivery is the voluntary transfer of possession from one person to
another. Delivery may be actual, constructive or symbolic. Actual or physical delivery takes
place where the goods are handed over by the seller to the buyer or his agent authorized to
take possession of the goods.
1.Constructive delivery takes place when the person in possession of the goods acknowledges
that he holds the goods on behalf of and at the disposal of the buyer. For example, where the
seller, after having sold the goods, may hold them as bailee for the buyer, there is
constructive delivery.
2.Symbolic delivery is made by indicating or giving a symbol. Here the goods themselves are
not delivered, but the “means of obtaining possession” of goods is delivered, e.g, by
delivering the key of the warehouse where the goods are stored, bill of lading which will
entitle the holder to receive the goods on the arrival of the ship.

UNIT-III
ARBITRATION: MEANING,SCOPE & TYPES
Arbitration is a mechanism of resolving disputes using private entities called arbitral
tribunals. The dispute is decided by one or more persons, known as the arbitrators or arbiters,
who render an arbitration award. Such an award is legally binding on both the parties and is
enforceable in the courts.
arbitration is no more and less than litigation. These parts and apply where the place of
arbitration is in India. It shall not affect any other law for the time being in force in India.
Domestic Arbitration
The term ‘domestic arbitration’ has not been expressly defined in the Arbitration and
Conciliation Act, 1996. However, after interpreting Section 2 (2) (7) of the Act, we can imply
that ‘domestic arbitration’ means an arbitration in which the arbitral proceedings must
necessarily be held in India and according to Indian substantive and procedural laws and the
cause of action for the dispute has completely arisen in India or in the case that both the
parties are subject to Indian jurisdiction.
International Arbitration
When arbitration happens within India or outside India containing elements that are foreign
in origin in nature to the relations of the parties or the subject of the dispute, it is called
International Arbitration. To fulfill the criteria of an international dispute, it is sufficient
If any of the parties is domiciled abroad
OR
If the subject matter of the dispute is foreign in nature
Institutional Arbitration
In the arbitral agreement, the parties have the choice of specifying a selected arbitral
institution whose rules will be referred to in the event of disputes. An institution that has the
relevant experience will ordinarily have a list of arbitrators having expertise in that field;
from which one can potentially appoint one or more arbitrators especially in a case when
parties don’t appoint them on their own. Some arbitral institutions do not allow the parties to
designate an arbitrator or co-arbitrator.
Ad-hoc Arbitration
It means that the arbitration is being conducted without adherence to the rules of an arbitral
institution. Since parties do not have an obligation to submit their arbitration to the rules of an
arbitral institution, they are free to establish their rules of procedure. The geographical
jurisdiction of Arbitration is pertinent since most of the issues concerning arbitration will be
resolved in accordance with the law applicable to the seat of arbitration.
Fast track Arbitration
Other processes of arbitration may prove to be time-consuming and wearisome; therefore,
people can resort to Fast track Arbitration to save time and energy. Its procedure has been
established in such a way that it has abandoned all the methods which consume time and
uphold accessibility and expeditiousness, which constitute the very essence of the process of
Arbitration.

DISTINCTION BETWEEN LAWS OF 1940 AND 1996

 The basic difference in 1940 and 1996 Act was that in the former one a party could
commence proceedings in court by moving an application under Section 20 for
appointment of an arbitrator and simultaneously could also move an application for
interim relief under the Schedule read with Section 41(b) of the 1940 Act. The later
one does not contain any provision similar to Section 20 of the 1940 Act but the court
can pass orders even before the commencement of the arbitration proceedings.
Another difference was that in the former act, there was no requirement to give
reasons for an award until and unless agreed by the parties to arbitration. However, in
the later Act, the award has to be given with reasons, which minimized the Court's
interpretation on its own. There were changes with respect to the award passed by the
arbitral tribunal in the 1940 and 1996 Act.
 The 1996 Act since its enactment faced many challenges and the Courts brought out
what was actually intended by the Legislation, the Courts clarified the said Act and
the intention by various landmark judgments. In particular, the landmark case of
Bharat Aluminium Co., saw at least three phases before the Hon'ble Supreme Court of
India since the year 2001 till now i.e 2016 carrying from two Hon'ble Judges to the
Constitution Bench.
 In the first case, the Hon'ble Supreme Court was of the view that Part I is to apply also
to international commercial arbitrations which take place out of India, unless the
parties by agreement, express or implied exclude it or any of its provisions, it was also
held that the Arbitration Act of 1996 was not a well drafted act and had some lacunas.

UNCITRAL MODEL LAW

The Model Law is designed to assist States in reforming and modernizing their laws on
arbitral procedure so as to take into account the particular features and needs of international
commercial arbitration. It covers all stages of the arbitral process from the arbitration
agreement, the composition and jurisdiction of the arbitral tribunal and the extent of court
intervention through to the recognition and enforcement of the arbitral award. It reflects
worldwide consensus on key aspects of international arbitration practice having been
accepted by States of all regions and the different legal or economic systems of the world.
Amendments to articles 1 (2), 7, and 35 (2), a new chapter IV A to replace article 17 and a
new article 2 A were adopted by UNCITRAL on 7 July 2006. The revised version of article 7
is intended to modernise the form required of an arbitration agreement to better conform with
international contract practices. The newly introduced chapter IV A establishes a more
comprehensive legal regime dealing with interim measures in support of arbitration. As of
2006, the standard version of the Model Law is the amended version. The original 1985 text
is also reproduced in view of the many national enactments based on this original version.
ARBITRATION & EXPERT DETERMINATION

EXTENT OF JUDICIAL INTERVENTION

According to Section 5 of the Act, the court should not intervene unless there is a clear
provision mentioned in Part I of the Act 1996. This limits and defines the court’s role in
arbitration. It is the duty of the court to review the proceedings if there are any irregularities
in the process but resist reviewing the merits of the award. It emphasizes the importance of
the autonomy of the party and restricts the role of the judiciary by ensuring that the court’s
duty is limited to assisting the arbitral process and should not interfere in it.

INTERNATIONAL COMMERCIAL ARBITRATION

International commercial arbitration is a means of resolving disputes arising under
international commercial contracts. It is used as an alternative to litigation and is
controlled primarily by the terms previously agreed upon by the contracting parties, rather
than by national legislation or procedural rules. In the Indian legal system, under the
Arbitration and Conciliation Act 1996 (the Indian Act) an International Commercial
Arbitration is defined as an arbitration arising from a legal relationship which must be
considered commercial, where either of the parties is a foreign national or resident or is a
foreign body . International commercial arbitration is an alternative method of resolving
disputes between private parties arising out of commercial transactions conducted across
national boundaries that allows the parties to avoid litigation in national courts.
International commercial arbitration is a means of resolving disputes arising under
international commercial contracts. It is used as an alternative to litigation and is
controlled primarily by the terms previously agreed upon by the contracting parties, rather
than by national legislation or procedural rules.

ARBITRATION AGREEMENTS

Arbitration agreement is an agreement signed by the parties that, if in case any future dispute
arises, then the disputed matter will go before the arbitration.

Essentials of Arbitration Agreement

The essentials of the Arbitration Agreement are listed below:-
1. Form of arbitration.
An arbitration agreement can be either in the form of an arbitration clause in a contract itself,
or a separate agreement can be made for it.
2. Arbitration agreement must be in writing.
The arbitration agreement must be in writing. An agreement is considered to be in writing, if:
Both parties have signed the document.
Letters, telexes, telegrams, and other forms of communication are used to agree.
If there is an exchange of defendants and claimants statements.
3. Valid contract.
The agreement must fulfil all the essentials of a valid contract as provided under section 10 of
the Indian Contract Act, 1872. The parties must be major, of sound mind, not disqualified by
law, with free consent, and for lawful object and consideration.
4. Separate agreement.
The arbitration agreement must be in the form of a separate agreement or clause in the
contract.
5. Intention.
There must be an intention of the parties to refer a dispute to arbitration.
6. Dispute.
It must refer to a dispute, present or future, between the parties to the arbitration.
VALIDITY, REFERENCE AND INTERIM MEASURES BY COURT
First, any valid arbitration agreement must reflect the conscious, mutual and free will of the
parties to resort to arbitration and not to other means of dispute resolution, including State
courts. The consent of both parties to submit their dispute to arbitration is the cornerstone of
arbitration.
ARBITRATION TRIBUNAL
Arbitration is an alternative method provided for dispute resolution in civil matters. It is a
way in which a dispute is decided by private individuals appointed and not the judicial
officers appointed to the courts and tribunals of the country directly. These private
individuals are called arbitrators, and they are quasi-judicial officers. However, all the
matters cannot be decided by way of arbitration. Such matters involve matters related to
crimes, matrimony, insolvency and winding up, guardianship, tenancy, testamentary matters,
trusts, etc. This bifurcation is made by keeping in mind the kind of right affected, i.e., ‘right
in rem’ or ‘right in personam’ and also the jurisdiction of special courts and the analysis of
public policy.
Whenever a dispute arises between two parties and they decide to resolve the dispute through
arbitration, an arbitral tribunal is to be set up. An “arbitral tribunal” means a sole arbitrator or
a panel of arbitrators. Their task is to adjudicate and resolve the dispute and to provide an
arbitral award.
Powers of an arbitrator in India
These powers include the following provisions-
Power to administer an oath to the parties and witnesses
 The Arbitration and Conciliation Act, 1996 provides arbitrators with the power to
administer an oath to the parties and all the witnesses. He can also issue
interrogatories to the parties if he/she finds it necessary to do so. This function is
available to the arbitrator because he/she acts as a quasi-judicial officer.

Power to take interim measures

 Section 17 of the Arbitration and Conciliation Act, 1996 provides the power to the
tribunal to take an interim measure when a party to the dispute approaches the tribunal
for the same. The interim measures that can be taken by the arbitration tribunal
include the following:
 Appointment of a guardian for a minor or person of unsound mind for the purposes of
arbitral proceedings
Preservation, interim custody, or sale of any goods which is the subject-matter of the
arbitration agreement
 Securing the amount in dispute in the arbitration
Interim injunction or the appointment of a receiver
Such other interim measures of protection as may appear to the arbitral tribunal to be
just and convenient.
The power to grant interim relief by the arbitral tribunal and enforcing them as orders
of the courts ensures that the relief granted by tribunals is not ambiguous and holds an
impartial value. The parties no longer have to engage in the tedious process of
approaching the courts for effective interim relief, which contributes to increasing the
convenience for the parties opting for arbitration and strengthens the appeal of
arbitration in India.

Power to proceed ex-parte

 The arbitration tribunal has the power to proceed ex parte (an order which is given in
absence of one of the parties caused on their own will) if any of the following
conditions arise-
 In cases where the claimant fails to submit or communicate their statements as
per Section 23 of the Arbitration and Conciliation Act, 1996;
 In cases where the respondent fails to submit or communicate their statements as
per Section 23 of the Arbitration and Conciliation Act, 1996; and
 In cases where, any of the parties to the dispute fails to appear at an oral hearing or to
produce the document or any sort of documentary evidence asked by the tribunal.
 Although it is to be noted that an arbitration tribunal cannot pass an ex parte order on
the mere filing of an interim application as the Arbitration and Conciliation Act, 1996
mandates sufficient advance notice for any hearing.

Power to appoint an expert

 Section 26 of the Arbitration and Conciliation Act, 1996 authorises the arbitral
tribunal to appoint one or more experts to assist him on a specific issue if he finds it
necessary in any case.
 The arbitrator also has the power to give any relevant information, documents, or
property to the experts for the purpose of inspection. If necessary, then the arbitrator
also has the power to appoint the expert as a participant in a hearing.
 There is only one condition to be satisfied to exercise this power, which is that the
expert must have to show the parties that he has expertise in matters related to this
case.

Power to make awards

 An arbitral award is similar to a judgement of the court. It is based on the
interpretation of the facts and evidence by the arbitral tribunal. The decision of the
tribunal is what resembles an arbitral award.
 The main motive of the arbitral proceeding is the determination of the arbitral award
and the power to declare it lies with the arbitral tribunal. However, the rules
 applicable in an arbitration proceeding are to be verified on the basis of the below-
mentioned provisions:
 In matters related to international commercial arbitration, the dispute shall be decided
according to the rules of proceedings which are decided by the parties, but if they fail
to decide upon the rules, then the arbitrator himself decides them and they become
applicable.
 In other matters, the arbitral tribunal shall have the right to decide the rules which are
in accordance with the substantive law.
 Declaring an arbitral award is not only a power conferred on the arbitral tribunals but
also a duty on their part to assess all the information related to the dispute and then
decide upon the same.

Grounds of challenges in Arbitration tribunal

 Arbitrator’s relationship with parties or counsel
 Arbitrator’s relationship to the dispute
 Arbitrator’s interest in the dispute
 Arbitrator’s past involvement with the dispute
 Relationship of co-arbitrator’s
 Relationship of the arbitrator with parties and others in the dispute
 Other Circumstances

Procedure for Arbitration Tribunal

 Claimant. Appoints its arbitrator, pays the registration fee and files its request for
arbitration.
 SCC. Serve the Respondent the request for arbitration.
 Respondent. Appoints its arbitrator and submits an answer to the request for
arbitration.

Court Assistance in taking Evidence

(1) The arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the
Court for assistance in taking evidence.
(2) The application shall specify -
(a) the names and addresses of the parties and the arbitrators,
(b) the general nature of the claim and the relief sought;
(c) the evidence to be obtained, in particular, the name and address of any person to be heard
as witness or expert witness and a statement of the subject matter of the testimony required;
(ii) the description of any document to the produced or property to be inspected.
(3) The Court may, within its competence and according to its rules on taking evidence,
execute the request by ordering that the evidence be provided directly to the arbitral tribunal.
(4) The Court may, while making an order under sub-section (3), issue the same processes to
witnesses as it may issue in suits tried before it.
(5) Persons failing to attend in accordance with such process, or making any other default, or
refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the
conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and
punishments by order of the Court on the representation of the arbitral tribunal as they would
incur for the like offences in suits tried before the Court.
(6) In this section the expression "Processes" includes summonses and commissions for the
examination of witnesses and summonses to produce documents.

DISTINCTION BETWEEN CONCILIATION, NEGOTIATION,

MEDIATION, ARBITRATION & CONFIDENTIALITY
 RESORT TO JUDICIAL PROCEEDINGS,COSTS

Resort to arbitral or judicial proceedings.

The parties shall not initiate, during the conciliation proceedings, any arbitral or judicial
proceedings in respect of a dispute that is the subject- matter of the conciliation proceedings
except that a party may initiate arbitral or judicial proceedings where, in his opinion, such
proceedings are necessary for preserving his rights.
The costs of arbitration include arbitrator's fee, administrative and secretarial expense,
expenses on travel of arbitrator and others concerned, stenographic, translation and
interpretation charges, stamp duty on award, expenses of witnesses, cost of legal or technical
advice and other incidental expenses arising out of or in connection with the arbitration
proceeding or award.
Amount and Party liable to payThe rules of arbitration of arbitral bodies generally contained
detailed provisions regarding costs and expenses of arbitration and the fee payable to the
arbitrator.

In non-institutional arbitrations, the fees were generally fixed in advance by arrangement

with the arbitrator. He might refuse to pronounce the award if his fees were not paid. As to
costs of arbitration, the arbitrator could direct by whom they should be payable. This was
done in the award. If the award was silent, each party bore its own costs.
Remuneration of arbitratorAn arbitrator might fix his remuneration either at the time of his
appointment or during the course of arbitration. The award which would contain an order as
to costs and expenses of arbitration generally included the fees of the arbitrator. The
arbitrator had a lien on the award for his fees and till it was paid he might refuse to deliver the
award to the party. He could also apply to the court for an order for the payment of his fee.
Any party who felt that the fee demanded by an arbitrator was excessive might apply to the
court for determination of the fee. Before doing so, the fee demanded by the arbitrator had to
be paid in court.

DISPUTR RESOLUTION BOARDS

LOK ADALATS

Lok Adalat is one of the alternative dispute redressal mechanisms, it is a forum where
disputes/cases pending in the court of law or at pre-litigation stage are settled/ compromised
amicably. Lok Adalats have been given statutory status under the Legal Services Authorities
Act, 1987. Under the said Act, the award (decision) made by the Lok Adalats is deemed to be
a decree of a civil court and is final and binding on all parties and no appeal against such an
award lies before any court of law.

If the parties are not satisfied with the award of the Lok Adalat though there is no provision
for an appeal against such an award, but they are free to initiate litigation by approaching the
court of appropriate jurisdiction by filing a case by following the required procedure, in
exercise of their right to litigate.
 UNIT – IV
Engagement of Labour and Labour & other construction-related
Laws:
ROLE OF LABOUR IN CIVIL ENGINEERING:
Civil engineering labourers perform routine tasks in connection with the building and
maintenance of roads, railways, dams and other civil engineering projects.

 Drainage, Sewerage and Stormwater Labourerÿ

 Earthmoving Labourerÿ
 Paving and Surfacing Labourer.
 Railway Track Worker.
 Surveyor's Assistant

Piece rate work system

 In this category the labors are being paid based on their performance.
 Piece rate system was introduced in the year 1963.
 For a piece rate, rate is being fixed and the amount is being paid to the labor is directly
 Industrial Disputes Act, 1947
An Act to make provision for the investigation and settlement of industrial disputes, and for
certain other purposes.
Objectives:
 The objective of the Industrial Disputes Act is
 To secure industrial peace and harmony by providing machinery and procedure for
the investigation and settlement of industrial disputes bynegotiations.
 its ambit by reducing the threshold to 100 workers.
 The provision for payment of compensation to the workman on account of closure or
lay off orretrenchment.
 The procedure for prior permission of appropriate Government for laying off or
retrenching theworkers or closing down industrial establishments
 Unfair labour practices on part of an employer or a trade union or workers.
Applicability:-
The Industrial Disputes Act extends to whole of India and applies to every
industrialestablishment carrying on any business, trade, manufacture or distribution of goods
and servicesirrespective of the number of workmen employed therein.
Every person employed in an establishment for hire or reward including contract
labour,apprentices and part-time employees to do any manual, clerical, skilled, unskilled,
technical,operational or supervisory work, is covered by the Act.
This Act though does not apply to persons mainly in managerial or administrative
capacity,persons engaged in a supervisory capacity and drawing > 10,000 p.m or executing
managerialfunctions and persons subject to Army Act, Air Force and Navy Act or those in
police service orofficer or employee of a prison.by the union in writing at the commencement
of the dispute. Subsequentespousal will render the reference invalid. Therefore date when the
dispute was espoused is veryimportant.
COLLECTIVE BARGAINING
“Collective bargaining is a process ofdiscussion and negotiation between two parties, one or
both of whom a group of personsis acting in consent. The resulting bargain is an
understanding as to the terms andconditions under which a continuing service is to be
performed..... More specificallycollective bargaining is a procedure by which employers and
a group of employees agreeupon the conditions of work.”
Strictly speaking collective bargaining is a bipartite process, employers and employeesare the
only parties involved in the bargaining process. There is no third partyintervention. The
conditions of employment are regulated by those directly concerned.
Collective bargaining is only that activity which is carried out between employers andtheir
employees collectively.
ILO (1980) defines collective bargaining as an institutional procedure of jointdetermination o
f the rules to govern the terms and conditions o f employment of theworkers concerned and
the labour management relations itselfCollective bargaining is a technique adopted by the
organisations of workers andemployers collectively to resolve their differences without the
assistance of a third partyor the intervention o f third party.
The phrase collective bargaining is made up o f two words collective which means united
or a group action and bargaining implies negotiating. So put together it means collective
negotiation or group negotiation. The people involved in the negotiation are on one side
the representatives o f management and on the other the representatives o f employees or
unions.

Industrial Employment (Standing Orders)Act, 1946

It applies to every industrial establishment wherein one hundred or moreworkmen are
employed, or were employed on any day of the preceding twelve months: Provided that the
appropriate Government may, after giving not less than twomonths’ notice of its intention so
to do, by notification in the Official Gazette, apply theprovisions of this Act to any industrial
establishment employing such number of numberof persons less than one hundred as may be
specified in the notification :
[(a) “appellate authority” means an authority appointed by the appropriateGovernment by
notification in the Official Gazette to exercise in such area as maybe specified in the
notification the functions of an appellate authority under thisAct :Provided that in relation to
an appeal pending before an Industrial Court or otherauthority immediately before the
commencement of the Industrial Employment(Standing Orders) Amendment Act, 1963, that
Court or authority shall be deemedto be the appellate authority:]
(b) “appropriate Government” means in respect of industrial establishments under thecontrol
of the Central Government or a 11[Railway administration] or in a majorPort, mine or
oilfield, the Central Government, and in all other in all other casesthe State Government :
[Provided that where question arises as to whether any industrial establishment isunder the
control of the Central industrial establishment is under the control of theCentral Government
that Government may, either on a reference made to it by theemployer or the workman or a
trade union or other representative body of theworkmen, or on its own motion and after
giving the parties an opportunity ofbeing heard, decide the question and such decision shall
be final and binding onthe parties :]
(c) “Certifying Officer” means a Labour Commissioner or a Regional Labour Commissioner,
and includes any other officer appointed by the appropriateGovernment, by notification in the
Official Gazette, to perform all or any of thefunctions of a Certifying Officer under this Act:]
(d) “employer” means the owner of an industrial establishment to which this Act forthe time
being applies, and includes
 Employees’ Compensation Act,1923

The Workmen’s Compensation Act, 1923 (Employees’ Compensation Act, with effect
from31.05.2010) aims to provide financial protection to the workmen and/or their dependants
incase of accident arising out of and in the course of employment and causing either death
ordisablement of the workman, come into force with effect from 1st July, 1924.Besides, the
Act has a provision of paying compensation to the workman for some occupational diseases
contracted by them during the course of their employment.
Provision and Scope of the Act
The Act applies to workers of the employees in any capacity specified in Schedule (ii) of the
Actwhich includes mines, plantations, construction work and certain other and specific
category ofrailway servers.The amount of compensation payable to workman depends on the
nature of the injury causedby the accident based on the monthly wages of the workman and
age of the workman concerned.In case of death, the minimum amount of compensation fixed
is Rs.1.20 Lakh and maximumRs.4.56 Lakh, whereas in case of permanent total disablement
the minimum compensationfixed is Rs.1.40 Lakh and maximum Rs.5.48 Lakh.

Other Construction Workers (Regulation of Employment and Conditions

of Service) Act, 1996.
 It extends to the whole of India.
 It shall be deemed to have come into force on the 1st day of March, 1996.
 It applies to every establishment which employs, or had employed on any day of the
precedingtwelve months, ten or more building workers in any building or other
construction work.

RERA ACT 2016

• RERA is The Real Estate (Regulation and Development) Act, 2016. It is got into
existence for the development and promotion of the real estate sector to provide
transparency in the real estate sector like in terms of buying & selling of property. It
has built confidence in buyers and boosted the real estate sector.
• Through this act, it is assumed that the communication between buyers and builders
will be in a smooth manner. The RERA act proposes that developers share up-to-date
information about projects delivery time. So, the property buyers will have an
estimated time of their project delivery and will beware of imposters.

NBC ACT-2017
The National Building Code of India (NBC), a comprehensive building Code, is a national
instrument providing guidelinesfor regulating the building construction activities across the
country. It serves as a Model Code for adoption by allagencies involved in building
construction works be they Public Works Departments, other government construction
departments,local bodies or private construction agencies. The Code mainly contains
administrative r controlrulesand general building requirements; fire safety requirements;
stipulations regarding materials, structural design and
construction (including safety); building and plumbing services; approach to sustainability;
and asset and facility management.
 UNIT-5
Introduction
Intellectual Property (IP) deals with any basic construction of human intelligence such as
artistic, literary, technical or scientific constructions. Intellectual Property Rights (IPR) refers
to the legal rights granted to the inventor or manufacturer to protect their invention or
manufacture product. These legal rights confer an exclusive right on the
inventor/manufacturer or its operator who makes full use of it’s his invention/product for a
limited period of time.
In other words, we can say that the legal rights prohibit all others from using the Intellectual
Property for commercial purposes without the prior consent of the IP rights holder. IP rights
include trade secrets, utility models, patents, trademarks, geographical indications, industrial
design, layout design of integrated circuits, copyright and related rights, and new varieties of
plants. It is very well settled that IP plays an important role in the modern economy.
There are many types of intellectual property protection. A patent is a recognition for an
invention that satisfies the criteria of global innovation, and industrial application. IPR is
essential for better identification, planning, commercialization, rendering, and thus the
preservation of inventions or creativity. Each industry should develop its speciality based on
its IPR policies, management style, strategies, and so on. Currently, the pharmaceutical
industry has an emerging IPR strategy, which needs better focus and outlook in the coming
era.
IPR is a strong tool, to protect the investment, time, money, and effort invested by the
inventor/creator of the IP, as it gives the inventor/creator an exclusive right for a certain
period of time for the use of its invention/creation. Thus, IPR affects the economic
development of a country by promoting healthy competition and encouraging industrial
growth and economic growth. The present review presents a brief description of IPR with
particular emphasis on pharmaceuticals.
Meaning of intellectual Property
Intellectual Property can be defined as inventions of the mind, innovations, literary and
artistic work, symbols, names and images used in commerce. The objective of intellectual
property protection is to encourage the creativity of the human mind for the benefit of all and
to ensure that the benefits arising from exploiting a creation benefit the creator. This will
encourage creative activity and give investors a reasonable return on their investment in
research and development.
IP empowers individuals, enterprises, or other entities to exclude others from the use of their
creations. Intellectual Property empowers individuals, enterprises, or other entities to exclude
others from the use of their creations without their consent.
According to Article 2 of the WIPO (World Intellectual Property Organisation) – Central
Organisation for the protection of Intellectual Property Laws and the expert organization of
the UN, “”Intellectual Property shall include the rights relating to literary, artistic and
scientific works, inventions in all fields of human endeavour, scientific discoveries, industrial
designs, trademarks, service marks and commercial names and designations, protection
against unfair competition, and all the other rights resulting from intellectual activity in the
industrial, scientific, literary or scientific fields.””
The intellectual property right is a kind of legal right that protects a person’s artistic works,
literary works, inventions or discoveries or a symbol or design for a specific period of time.
Intellectual property owners are given certain rights by which they can enjoy their Property
without any disturbances and prevent others from using them, although these rights are also
called monopoly rights of exploitation, they are limited in geographical range, time and
scope.
As a result, intellectual property rights can have a direct and substantial impact on industry
and business, as the owners of IPRs one can enforce such rights and can stop the
manufacture, use, or sale of a product to the public. IP protection encourages publication,
distribution, and disclosure of the creation to the public, rather than keeping it a secret and to
encourage commercial enterprises to select creative works for exploitation.
Nature of intellectual Property
Intangible Rights over Tangible Property: The main Property that distinguishes IP from other
forms of Property is its intangibility. While there are many important differences between
different forms of IP, one factor they share is that they establish property protection over
intangible things such as ideas, inventions, signs and information whereas intangible assets
and close relationships are a tangible object. In which they are embedded. It allows creators
or owners to benefit from their works when they are used commercially.
Right to sue: In the language of the law, IP is an asset that can be owned and dealt with. Most
forms of IP are contested in rights of action that are enforced only by legal action and by
those who have rights. IP is a property right and can, therefore, be inherited, bought, gifted,
sold, licensed, entrusted or pledged. The holder of an IPR owner has a type of Property that
he can use the way he likes subject to certain conditions and takes legal action against the
person who without his consent used his invention and can receive compensation against real
Property.
Rights and Duties: IP gives rise not only to property rights but also duties. The owner of the
IP has the right to perform certain functions in relation to his work/product. He has the
exclusive right to produce the work, make copies of the work, market work, etc. There is also
a negative right to prevent third parties from exercising their statutory rights.
Coexistence of different rights: Different types of IPRs can co-exist in relation to a particular
function. For example, an invention may be patented, and the invention photograph may be
copyrighted. A design can be protected under the Design Act, and the design can also be
incorporated into a trademark. There are many similarities and differences between the
various rights that can exist together in IP. For example, there are common grounds between
patent and industrial design; Copyright and neighbouring rights, trademarks and geographical
indications, and so on. Some intellectual property rights are positive rights; the rest of them
are negative rights.
Exhaustion of rights: Intellectual property rights are generally subject to the doctrine of
exhaustion. Exhaustion basically means that after the first sale by the right holder or by its
exhaustion authority, his right ceases and he is not entitled to stop further movement of the
goods. Thus, once an IP rights holder has sold a physical product to which IPRs are attached,
it cannot prevent subsequent resale of that product. The right terminates with the first
consent. This principle is based on the concept of free movement of goods which is in force
by consent or right of the rights holder. The exclusive right to sell goods cannot be exercised
twice in relation to the same goods. The right to restrict further movements has expired as the
right holder has already earned his share by the act of placing goods for the first sale in the
market.
Dynamism: IPR is in the process of continuous development. As technology is rapidly
evolving in all areas of human activities, the field of IP is also growing. As per the
requirement of scientific and technological progress, new items are being added to the scope
of IPR, and the scope of its preservation is being expanded. Bio Patents, Software
Copyrights, Plant Diversity Protection, these are few names which reflect contemporary
developments in the field of IPR. The importance of intellectual property and its mobility is
well established and reflected at all levels, including statutory, administrative and judicial.
Scope of intellectual Property
The scope of IP rights is broad; two classification modes are used to determine whether IP is
copyright or Industrial Property. Industrial properties include patents or inventions,
trademarks, trade names, biodiversity, plant breeding rights and other commercial interests. A
patent gives its holder the exclusive right to use the Intellectual Property for the purposes of
making money from the invention.
An invention is itself a new creation, process, machine or manufacture. Having copyright
does not give you the exclusive right to an idea, but it protects the expression of ideas that are
different from a patent. Copyright covers many fields, from art and literature to scientific
works and software.
Even music and audio-visual works are covered by copyright laws. The duration of copyright
protection exists 60 years after the death of the creator. In other words, an author’s book is
copyrighted for his entire life and then 60 years after his death. Unlike patent laws, there is no
requirement of the administrative process in copyright laws.
Why promote and protect Intellectual Property?
There are several reasons for promoting and protecting intellectual property. Some of them
are:
Progress and the good of humanity remain in the ability to create and invent new works in the
field of technology and culture.
IP protection encourages publication, distribution, and disclosure of the creation to the public,
rather than keeping it a secret.
Promotion and protection of intellectual Property promote economic development, generates
new jobs and industries, and improves the quality of life.
Intellectual Property helps in balancing between the innovator’s interests and public interest,
provide an environment where innovation, creativity and invention can flourish and benefit
all.
 MAIN FORMS OF IP
The subject of intellectual property is very broad. There are many different forms of rights
that together make up intellectual property. IP can be basically divided into two categories,
that is, industrial Property and intellectual property. Traditionally, many IPRs were
collectively known as industrial assets.
It mainly consisted of patents, trademarks, and designs. Now, the protection of industrial
property extends to utility models, service marks, trade names, passes, signs of source or
origin, including geographical indications, and the suppression of unfair competition. It can
be said that the term ‘industrial property” is the predecessor of ‘intellectual property”.
Copyright
Copyright law deals with the protection and exploitation of the expression of ideas in a
tangible form. Copyright has evolved over many centuries with respect to changing ideas
about creativity and new means of communication and media. In the modern world, the law
of copyright provides not only a legal framework for the protection of the traditional
beneficiaries of copyright, the individual writer, composer or artist, but also the publication
required for the creation of work by major cultural industries, film; Broadcast and recording
industry; And computer and software industries.
It resides in literary, dramatic, musical and artistic works in ”original’ cinematic films, and in
sound recordings set in a concrete medium. To be protected as the copyright, the idea must be
expressed in original form. Copyright acknowledges both the economic and moral rights of
the owner. The right to copyright is, by the principle of fair use, a privilege for others,
without the copyright owner’s permission to use copyrighted material. By the application of
the doctrine of fair use, the law of copyright balances private and public interests.
Patent
Patent law recognizes the exclusive right of a patent holder to derive commercial benefits
from his invention. A patent is a special right granted to the owner of an invention to the
manufacture, use, and market the invention, provided that the invention meets certain
conditions laid down in law. Exclusive right means that no person can manufacture, use, or
market an invention without the consent of the patent holder. This exclusive right to patent is
for a limited time only.
To qualify for patent protection, an invention must fall within the scope of the patentable
subject and satisfy the three statutory requirements of innovation, inventive step, and
industrial application. As long as the patent applicant is the first to invent the claimed
invention, the novelty and necessity are by and large satisfied. Novelty can be inferred by
prior publication or prior use. Mere discovery ‘can’t be considered as an invention. Patents
are not allowed for any idea or principle.
The purpose of patent law is to encourage scientific research, new technology, and industrial
progress. The economic value of patent information is that it provides technical information
to the industry that can be used for commercial purposes. If there is no protection, then there
may be enough incentive to take a free ride at another person’s investment. This ability of
free-riding reduces the incentive to invent something new because the inventor may not feel
motivated to invent due to lack of incentives.
Trademark
A trademark is a badge of origin. It is a specific sign used to make the source of goods and
services public in relation to goods and services and to distinguish goods and services from
other entities. This establishes a link between the proprietor and the product. It portrays the
nature and quality of a product. The essential function of a trademark is to indicate the origin
of the goods to which it is attached or in relation to which it is used. It identifies the product,
guarantees quality and helps advertise the product. The trademark is also the objective
symbol of goodwill that a business has created.
Any sign or any combination thereof, capable of distinguishing the goods or services of
another undertaking, is capable of creating a trademark. It can be a combination of a name,
word, phrase, logo, symbol, design, image, shape, colour, personal name, letter, number,
figurative element and colour, as well as any combination representing a graph. Trademark
registration may be indefinitely renewable.
Geographical indication
It is a name or sign used on certain products which corresponds to a geographic location or
origin of the product, the use of geographical location may act as a certification that the
product possesses certain qualities as per the traditional method. Darjeeling tea and basmati
rice are a common example of geographical indication. The relationship between objects and
place becomes so well known that any reference to that place is reminiscent of goods
originating there and vice versa.
It performs three functions. First, they identify the goods as origin of a particular region or
that region or locality; Secondly, they suggest to consumers that goods come from a region
where a given quality, reputation, or other characteristics of the goods are essentially
attributed to their geographic origin, and third, they promote the goods of producers of a
particular region. They suggest the consumer that the goods come from this area where a
given quality, reputation or other characteristics of goods are essentially attributable to the
geographic region.
It is necessary that the product obtains its qualities and reputation from that place. Since those
properties depend on the geographic location of production, a specific link exists between the
products and the place of origin. Geographical Indications are protected under
the Geographical Indication of Goods (Registration and Protection) Act, 1999.
Industrial design
It is one of the forms of IPR that protects the visual design of the object which is not purely
utilized. It consists of the creation of features of shape, configuration, pattern, ornamentation
or composition of lines or colours applied to any article in two or three-dimensional form or
combination of one or more features. Design protection deals with the outer appearance of an
article, including decoration, lines, colours, shape, texture and materials. It may consist of
three-dimensional features such as colours, shapes and shape of an article or two-dimensional
features such as shapes or surface textures or other combinations.
Plant variety
A new variety of plant breeder is protected by the State. To be eligible for plant diversity
protection, diversity must be novel, distinct and similar to existing varieties and its essential
characteristics under the Plant Protection and Protection Act, 2001 should be uniform and
stable. A plant breeder is given a license or special right to do the following in relation to
different types of promotional material:
 Produce and reproduce the material
 Condition the material for the purpose of propagation
 Offer material for sale
 Sell the materials
 Export the materials
 Import the materials

The stock of goods for the above purposes

Typically, countries are protecting new plant varieties through the Sui Genis system. The
general purpose of conservation is to encourage those who intend to manufacture, finance, or
exploit such products to serve their purpose, particularly where they otherwise do not work at
all.
The enactment of the Protection of Plant Varieties and ‘Farmers’ Rights Act 2001 is an
outcome of the India’sIndia’s obligation which arose from article 27(3)(b) of the TRIPs
Agreement of 2001 which obliges members to protect plant varieties either by patents or by
effective sui generic system or by any combination thereof India declined to protect plant
varieties by a sui generis law, i.e. the Plant Varieties Act.

The Copyright Act, 1957

The Copyright Act, 1957-Historical evolution of copyrights
Copyright laws serve to create property rights for certain kinds of intellectual property,
generally called works of authorship. Copyright laws protect the legal rights of the creator of
an ‘original work’ by preventing others from reproducing the work in any other way.

Kinds of Intellectual Property

Modern copyright laws serve to protect a variety of intellectual property ranging from songs
and jingles to computer software and proprietary databases. The intellectual property
protected under copyright laws can be classified as follows:
Literary Works:
These cover published works including books, articles, journals, and periodicals, as well as
manuscripts. Even adaptations, translations, and abridgements are taken as original works and
are protected under copyright law. Very importantly, these also cover computer programs and
computer databases.
Dramatic Works:
A dramatic work is a work capable of being physically performed. It need not be fixed in
writing or otherwise. Some examples of dramatic works are a piece of recitation,
choreographic work, elements of a dance or ballet, costumes, and scenery associated with a
drama, etc.
Musical Works:
A musical work means a work consisting of music and it includes graphical notation of such
a work. The words in a song and the music have separate rights and the rights cannot be
merged.
Artistic Works:
Artistic works are works such as paintings, sculptures, drawings, engravings, photographs,
and architectural works, irrespective of judgements on their artistic quality.
Cinematographic Films and Sound Recordings:
Cinematography covers any method used to record moving images, including video recording
and recordings of short clips using webcams and cell-phones. Soundtracks of movies also
come under cinematography. Similarly, stand-alone sound recordings are also protected
under copyright laws.

Registration of Copyright:
Though the Indian Copyright Act provides for a procedure for registration of copyright,
registration is not necessary for acquiring a copyright. In fact, it is not advisable to go through
the trouble of registering a copyright.
In Indian laws, a copyright is created when the original work is created and unlike laws in the
US, registering it does not confer any special rights. The particulars with the Registrar of
Copyrights will serve as evidence of existence of the work on the date of registration. Many
creators of original work use other methods to prove existence of their work on a particular
date such as depositing manuscripts in a bank locker.
Copyright Protection:
There are four basic concepts central to the idea of copyright protection as discussed here.
Idea vs. Expression:
It is necessary to fix the boundary between the idea and the expression contained in the
original work. It is important to note that copyright applies only to the expression and not to
the idea. But what constitutes the idea and not the expression can be a source of great legal
debate.
Originality:
To get protection under copyright laws, it is important to establish that the work originates
from the author and is not a copied work.
Fixation:
Copyright can exist only if the work is represented in a material form. It is only if the book is
written, the sound is recorded, or the painting or sculpture is executed, that the work is
eligible for protection under copyright laws.
Fair Use:
Copyright holders are deemed to consent to fair use of their work by others. Fair use is not
defined but can include use in the course of news reporting, commenting, scientific research,
etc.
Copyright Term:
In most cases, the term of copyright is the lifetime of the author plus 60 years thereafter.
There are some notable exceptions as given below:
1. Broadcasting organization has rights with respect to their broadcasts. The term of this right
is 25 years from the beginning of the calendar year following the year in which the broadcast
is made.
2. Performers have some special rights in relation to their performance. These rights are for a
period of 50 years from the beginning of the calendar year following the year of the first
performance.
3. In case of posthumous publications, the rights stand for a period of 60 years after the
publication.

Criteria of Infringement of Copyright

A copyright grants protection to the creator of an original work and prevents such work from
being copied or reproduced without consent. The creator of a work can prohibit anyone from
i. Reproducing the work in any form, such as print, sound, video, etc.,
ii. Recording the work in compact disks, cassettes, etc.,
iii. Broadcasting it in any form,
iv. Translating it into other languages, and
v. Using the work for a public performance, such as a stage drama or musical performance.
A copyright is infringed when someone, without the permission of the copyright holder, does
any of the above, which only the copyright holder has the exclusive right to do.
The Copyright Act provides for both civil and criminal remedies for infringements of
copyrights. On proving an infringement, the copyright owner is entitled to remedy by way of
injunctions and order for seizure and destruction of infringing articles. The offending parties
may also be asked to pay damages.
The Registrar of Copyrights has the power to prevent the import of infringing copies. On
receiving a complaint, the Registrar can enter ships, docks, or warehouses, housing the
alleged infringing material and examine them. In case the infringing material is found, it is
handed over to the copyright holder.

Copyright Protection for Computer Programs

In 1994, the definition of the term literary work in the Copyright Act was amended to include
‘computer programs, tables and compilations, including computer databases.’
Owners of computer programs get protection under copyright laws. A computer program can
be registered with the Registrar of Copyrights by giving the first 25 and the last 25 lines of
the source code. Here again, it is preferred to establish date of development by submitting
logbooks detailing development work, etc.
Making copies of legally obtained computer programs for purposes of making back-up copies
as a temporary protection against damage or destruction is permitted. Knowingly making use
of an infringing copy of a computer program is a punishable offence.
The penalty for such an offence is imprisonment (minimum of seven days and maximum of
three years) and a fine (Rs. 50,000 to Rs. 2, 00,000). If the offender pleads and proves that
he/she used the infringing copy for personal use and not in the course of trade, court is likely
to take a lenient view of the matter and impose the minimum fine of Rs. 50,000.

PIRACY IN INTERNET
In 1994, the definition of the term literary work in the Copyright Act was amended to include
‘computer programs, tables and compilations, including computer databases.’
Owners of computer programs get protection under copyright laws. A computer program can be
registered with the Registrar of Copyrights by giving the first 25 and the last 25 lines of the source
code. Here again, it is preferred to establish date of development by submitting logbooks detailing
development work, etc.
Making copies of legally obtained computer programs for purposes of making back-up copies as a
temporary protection against damage or destruction is permitted. Knowingly making use of an
infringing copy of a computer program is a punishable offence.
The penalty for such an offence is imprisonment (minimum of seven days and maximum of three
years) and a fine (Rs. 50,000 to Rs. 2, 00,000). If the offender pleads and proves that he/she used the
infringing copy for personal use and not in the course of trade, court is likely to take a lenient view of
the matter and impose the minimum fine of Rs. 50,000.

REMEDIES & PROCEDURES IN INDIA

 Civil remedies. Injunction damages or account of profit, delivery of infringing copy

and damages for conversion.
 Criminal remedies. Imprisonment of the accused or imposition of fine or both. Seizure
of infringing copies.
 Administrative remedies.

LAW RELATING TO PATENT UNDER PATENTS ACT,1970

The Patents Act 1970 had a very limited scope of protection wherein the essential elements of
invention were new, useful and manner of manufacture. The Act defines ‘capable of
industrial application’ in relation to an invention as capable of being made or used in an
industry.
The Patents Act, 1970 is the legislation that till date governs patents in India. It first came
into force in 1972.
The main purpose of patent system is to encourage innovation and eventually results in
technological development.
The present Patents Act, 1970 came into force in the year 1972, amending and incorporating
the existing laws relating to Patents and Designs act 1911 in India.
A patent is the granting of a property right by a sovereign authority to an inventor. A
patent provides the inventor exclusive rights to the patented process, design, or invention for
a certain period in exchange for a complete disclosure of the invention.
There are three types of patents - Utility, Design, and Plant.
Utility patents may be granted to anyone who invents or discovers any new and useful
process, machine, article of manufacture, or compositions of matters, or any new useful
improvement thereof.
Patents protect the investments made for research and development and create an incentive
for innovation. Granted patents as well as patent applications are published. They therefore
provide an insight into current technological developments and help avoiding parallel
redundant developments.