Business law exercise basis ppt, Exercises of Business Systems

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Biyani's Think Tank

Concept based notes

Business Laws

(MBA)

P.C Jangir

Deptt. of Commerce & Management

Biyani Institute of Science and Management, Jaipur

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Published by :

Think Tanks

Biyani Group of Colleges

Concept & Copyright :

Biyani Shikshan Samiti

Sector-3, Vidhyadhar Nagar, Jaipur-302 023 (Rajasthan) Ph : 0141-2338371, 2338591-95 Fax : 0141- E-mail : acad@biyanicolleges.org Website :www.gurukpo.com; www.biyanicolleges.org

Edition : 2011

Leaser Type Setted by : Biyani College Printing Department

While every effort is taken to avoid errors or omissions in this Publication, any mistake or omission that may have crept in is not intentional. It may be taken note of that neither the publisher nor the author will be responsible for any damage or loss of any kind arising to anyone in any manner on account of such errors and omissions.

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Syllabus

Section A

Contract Act: Contract vs. Agreement, Element of valid contract, Offer and Acceptance Rules regarding revocation of offer and acceptance, Standard form contract a new innovation to suit the needs, Consideration Essential elements. Exception to the Rule No consideration no contract Privity of contract and consideration, Capacity to contract, Free consent coercion, undue influence, misrepresentation, fraud. Mistake ñ as to identity, as to subject matter, as to nature of promise, Legality of the object ñ void agreement, voidable agreement, agreements opposed to public policy ,Discharge of contract modes of discharge, by performance, by impossibility, by agreement, by breach ,Damages ñ Rules, remoteness of damages, measure of damages, liquidated damages and penalty, Quasi contract or certain relations resembling those created by contract, Bailment Duties of bailer & bailee, Law relating to agency - types of agency, agents responsibility and rights.

Companies Act, 1956: Company ñ meaning & characteristics and kinds, lifting the corporate veil Registration & Incorporation, Memorandum of Association, Doctrine of Ultravires, Consequences of Ultravires transaction, Articles of Association, Rule of Constructive Notice, Doctrine of Indoor Management, Prospectus, Shares, Shareholders & Members, Directors: Position, appointment, removal, power & duties, Meetings, Majority powers & minority rights Prevention of oppression and mis- management, Winding up, Winding up by court, Voluntary winding up, Winding up subject to supervision of court, Conduct of winding up.

Partnership Act, 1932: Nature of partnership, Relation of partners ñ Inter se, Relation of partners to third parties, Incoming and outgoing partners, Dissolution of firm, Registration of firms.

Negotiable Instruments: Act, 1881-Promissory Notes, Cheques, Bills of Exchange, Sale of Goods Act, 1930-Contract of Sale, Transfer of Property; Sale by Non-Owner, Performance of Contract. Central Excise Act. Central Sales Act.-

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VAT. Income Tax Act 1961-Income from Salaries; Income form other Property, Profit and Gains - Capital Gains, Deductions, Profit & Loss

Section B Case and Problems

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Q.6 What is general and standing offer?

Ans.: The offer made to the public in general and any one can receive, it is general offer, whereas standing offer is an offer made as tender to supply goods as and when required amounts to a standing offer.

Q.7 What is cross offer and counter offer?

Ans.: When two parties exchange identical offers in ignorance at the time of each other‟s offer, it is called cross offer, on the other hand when offeree offers variations in the original offer, it is called as counter offer.

Q.8 What is executed and executory contract?

Ans.: A contract in which all the parties to the contract have performed their respective obligation is known as executed contract, whereas Executory contracts is one in which all or something still remain to be fulfilled or performed by the parties.

Q.9 What is Bilateral and Unilateral contract?

Ans.: Bilateral contract is one in which both the parties exchange a promise to each other, which is to be performed in future, but still outstanding hence, it is called bilateral contract and similar to executory contract on the other hand, Unilateral contract is one in it a promisor promises to do something. In such a contract, promisor binds himself to perform his promise but the offerer does not do so. Therefore, it is called Unilateral Contract.

Q.10 Explain capacity to contract.

Ans.: The term capacity to contract means competence to legally enter into a contract that is legally binding to the parties.

Q.11 Who is a Minor?

Ans.: A minor is a person who has not completed eighteen years of age. Who has not completed the age of 21 years in case the court has appointed guardian or superintendence of court of wards of minor‟s property.

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Q.12 What is Consent?

Ans.: According to Section 13 “Two or more persons are said to consent when they agree upon the same thing in the same sense.” It is Unison or meeting of mind or consensus ad idem.

Q.13 What is Coercion?

Ans.: According to Section 15 of Indian Contract Act, 1872, “Committing any act forbidden by Indian Penal Code or detaining or threatening to detain property of another for getting consent is coercion.”

Q.14 Explain undue influence.

Ans.: When a dominating party misuses his influence to dominate the will of the weaker party to get undue or unfair advantage in a contract, then it is called undue influence (Section 16).

Q.15 What do you mean by fraud?

Ans.: According to Section17, “The term fraud is the intentional misrepresentation or concealment of material facts of an agreement by a party to or by his agent with an intention to deceive and induce the other party to enter into an agreement

Q.16 What do you mean by misrepresentation?

Ans.: It is defined under section 18. It means any innocent or without intentional false statement or positive assertion of fact made by one party to the other during the course of negotiation of a contract is known as misrepresentation.

Q.17 What is mistake?

Ans.: It is defined under Section20 to 22, “It is an erroneous belief about something. When the consent of one or both the parties to a contract is caused by misconception or erroneous belief, the contract is said to be

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Ans.: It simply mean whenever an agreement is harmful or injurious to public interest and welfare it is said to be against public policy. It is harmful to the social, political, economic and other interest and welfare of the public is called agreement opposed to public policy.

Q.25 What is Contingent contract?

Ans.: It is a contract in which the promisor undertakes to perform the contract upon the happening or non happening of a specified future uncertain event, which is collateral to the contract (Section 32).

Q.26 What is Appropriation of payments?

Ans.: In case of a debtor owes several distinct debts to the same creditor, he makes payment which is insufficient to satisfy all the debts. In such a situation a question arises as to which particular debt the payment is to be appropriated.

Q.27 What is Novation?

Ans.: Novation means substitution of a new contract in place of an existing one with the consent of all the parties to the contract.

Q.28 What is Rescission?

Ans.: It is cancellation of a contract by the consent of all the parties to it or by the aggrieved party to it.

Q.29 Explain Remission.

Ans.: According to Section63, “Remission meant acceptance of a lesser performance in discharge of a whole obligation under a contract.

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Q.30 What is Waiver?

Ans.: When a party entitled to claim performance releases the other party from his obligation it is known as waiver.

Q.31 What is supervening impossibility?

Ans.: If after making agreement it becomes impossible to fulfill the promise under contract, it is supervening impossibility. The contract becomes void.

Q.32 What is liquidated damages?

Ans.: When the sum payable in the event of breach is decided by parties in advance, it is called liquidated damages.

Q.33 What are exemplary damages? When they are awarded?

Ans.: The damages which are awarded with a view to punish the defendant. These are awards in two cases i) On breach of contract of marriage and 2) wrongful dishonour of customer‟s cheque by the bank.

Q.34 What is the contract of Indemnity?

Ans.: A contract of indemnity means a contract by which one person promises to save the other from the loss caused to him by conduct or incident.

Q.35 What is contract of guarantee?

Ans.: According to Section126 of contract Act “A contract of guarantee as a contract to perform the promisor discharge the liability of a third person in case of his default.

Q.36 What is bailment?

Ans.: According to section 148 “bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the direction of the person delivering them.

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transfer property in goods in future on fulfillment of certain conditions is called as agreement to sell.

Q.43 How sale is different from Bailment?

Ans.: The intention of parties in case of sale is to transfer property in goods immediately, but in case of bailment, the property in goods is not transferred.

Q.44 What is goods under sale of goods Act, 1930 and its types?

Ans.: According to Section2(7) “Goods means every kind of movable property other than actionable claims and money and includes stock and shares, growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. According to Section 6 (1 and 2) of the act there are three types of goods as : (1) Existing goods viz – Specific, ascertained or unascertained goods (2) Future goods and (3) Contingent goods

Q.45 What is condition and warranty?

Ans.: According to Section12(2), a condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated, whereas warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives right to claim for damages but not to a right to reject the goods and treat the contract as repudiated (Section 12(3)].

Q.46 What is doctrine of Caveat Emptor?

Ans.: The buyer must take care when buying goods; it is not seller‟s duty to point out the defects in goods.

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Q.47 What is the meaning of Res Prit Domine?

Ans.: It simply means risks follows ownership. It is general rule that risk prima facie passes with ownership.

Q.48 What is the meaning of Nemo dot quod non habit.?

Ans.: It means nobody can give what he himself has not or no seller can transfer a better title than he himself has.

Q.49 What is unpaid seller?

Ans.: According to Section45 (1) the seller of goods deemed to be unpaid seller when whole price has not been paid or negotiable instrument received as payment dishonoured.

Q.50 What are the rights of unpaid seller?

Ans.: He has two rights :

(1) Right against the goods i.e. right of lien, right of stoppage of goods in transit and right of resale. (2) Rights against buyer personally i.e. a) suit for price, b) damages for non acceptance, repudiation of the contract before the due date and suit for interest.

Q.51 What is retracting the bid?

Ans.: The term retracting means withdraw or revoke. A bidder may retract his bid at any time before the compilation of sale. Any condition in an auction sale which forbids the bidder to retract his bid is void.

Q.52 What is damping?

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Q.57 What is a Government Company?

Ans.: According to Section617 “a Govt. company means any company in which not less than 51% of the paid up share capital is held by the following : (i) By the Central Govt; (ii) By any State Govt. or Governments; or (iii) Partly by Central Govt. And partly by one or more State Governments. A subsidiary of a Government Company is an also Government Company.

Q.58 Foreign companies?

Ans.: According to Section 591(1) “A foreign company is the company which is or has been incorporated outside India but establish or has established a place of business within India.”

Q.59 What is one man company?

Ans.: It is also known as family company. The one man holds entire share capital of the company. Other person holds only the minimum or negligible number of shares in the company.

Q.60 Who is a promoter?

Ans.: A promoter is a person or group of persons who conceives an idea regarding the formation of a company for the first time. He also takes necessary steps for formation of a company and takes other essential steps for its incorporation, raising of capital and making it a going concern.

Q.61 What is commencement of business certificate?

Ans.: A public company cannot start business without it. Hence, a public company before start of business must get a certificate that is called Commencement of Business Certificate. At the same time a public as well

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as private company must also commence its business within one year of its incorporation.

Q.62 What is Ultra Vires?

Ans.: It is composed of two Latin words i.e. Ultra and Vires. Ultra means beyond and vires means power. Hence ultra vires means beyond one‟s power. In the context of company law, ultra vires means the acts beyond the legal powers or objects of the company. If a company acts/contracts beyond the memorandum either expressly or impliedly, it is null and void.

Q.63 How doctrine of Constructive notice is opposed to the doctrine of indoor management?

Ans.: This is against the principle of constractive notice which protects the company against outsiders for notice given to all due to public documents on the other hand doctrine of indoor management believes that internal management of the company and rules are according to memorandum and Articles. In case of irregularity and mismanagement, then the company will be held liable.

Q.64 What is abridged prospectus?

Ans.: Abridged means which is in brief and it is a memorandum containing such salient features of a prospectus prescribed.

Q.65 What is Statement in lieu of prospectus? Explain the varying conditions of issue of it.

Ans.: If a company requires to get shares or debentures amount from the public. The private company is restricted but the public company is required to issue prospectus. But some time the company privately managed the funds in such a case statement in lieu of prospectus ;must be filed at least three days before the allotment of shares or debentures; so it is substitute to prospectus.

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Q.71 What is oblitering a Crossing?

Ans.: According to Section89 provides protection to a collecting banker of a cheque whose crossing is obliterated or erased by a dishonest person under the following condition of such cheque the paying bank shall be discharged from its liability if A) The cheque is not crossed or obliteration of crossing is not apparent at the time of presentation for payment, and B) The payment has been made in due course as required under section

Q.72 What is noting and protesting?

Ans.: According to Section99, “Noting consists of recording and authenticating the fact and reasons of dishonour of a N.I. by the notary public at the request of the holder upon the same instrument or upon a paper attached thereto or party upon each. It contains date of dishonour, reasons for the dishonour, fees of Notary Public, his signature and reference to the notary public.” Protesting : According to Section100 “Protest is a formal certificate of dishonour issued by the notary public to the holder of a bill or note on his demand. It contains signature of Notary Public, about the fact time and place of the dishonour. The name of person for and against whom the instrument is protested.”

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Meaning and Essentials of Contact

Q.1 “An agreement enforceable by law is a contract” Comment and explain the essentials of a valid contract in brief.

Ans.: Generally contract means a promise or agreement made by two or more persons enforceable by law. According to Indian Contract Act 1872 Section 2(h) defined. “An agreement enforceable by law is a contract.” Hence, agreement and legal enforceability creates an agreement as contract. Section 10 defines “All Agreements are contracts if they are made by the free consent of parties, competent to contract for a lawful consideration and with a lawful object and are not hereby expressly declared void. The contract to be made in writing by law of land or in the presence of witnesses or be registered, if required” On the basis of the above definitions and judgment given by judges, help us to mention the following essentials of a valid contract : (1) Atleast two parties are required to enter into a contract that is promisor and promisee. (2) Agreement : Proposal and acceptance must be absolute and unconditional. The two identical Cross-offers and successive counter offer are only offer and not agreement. (3) The intention should be to create legal relations not the social, domestic, political relations.

CHAPTER- 2