Term Paper

Course: Legal Environment of Business

Course Code: ALD 2202

Submitted To:

Dr. Shima Zaman

Professor in Law, Department of Business Administration in Finance and Banking

Faculty of Business Studies,

Bangladesh University of Professionals

Submitted By:

Taj Ul Al Tonoy

ID: 17221052

Section: B

Department of Business Administration in Finance and Banking

Faculty of Business Studies,

Bangladesh University of Professionals

Chapter 1
Alternate Dispute Resolution

In an attempt to control lawsuit costs, many companies are looking to employ other dispute
resolution instruments – usually mentioned to as ADR ,to avoid the courthouse. Two of the most
generally used ADR instruments are mediation and arbitration. Mediation is a intended process
through which the parties meet and try to negotiate a determination to their argument by using an
neutral third-party organizer. Arbitration is a procedure that results in a compulsory decision that
the parties can seek to enforce through the courts.

There are basic three types of ADR-

 Negotiation
 Mediation
 Arbitration

Negotiation:

Negotiation is a procedure where two parties in a conflict or argument (fight) reach a settlement
between themselves that they can together agree on. Negotiations are reached through
discussions made between the parties or their representatives without an participation of the third
party. Each party should refer or see a lawyer before settling down the matter, so that they are
well aware of their privileges and duties in respect to the matter or disagreement they are willing
to solve.

Mediation:

Mediation is planned to offer the parties an opportunity to completely deliberate and explore the

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possibility of deciding their argument by agreement. Really, it is not rare to see a mediation
obligation written into contracts as a requirement to the filing of a lawsuit or arbitration
happening. There is no compulsory format, and it is essentially at the parties' will as to how they
want the mediation to be organized. Mediations typically last only a day, but normally a very
long day. If the parties decide, and the details of the case demand it, the parties can make the
mediation a numerous day event.

Usually, most mediators will need a short report or brief prior to the mediation from each party
that sets forth the individual positions, and depending on the agreement of the parties, these state
papers may or may not be shared with the other side. The mediation originates usually with the
complainant making a presentation which is followed by the defendant's presentation. After the
presentations, there may be a short question and answer session in which the parties can contest
each other or the mediator asks questions to explain the facts of the case or situations. After the
Q & A session, the parties go to their own private rooms, and the mediator then pays shuttle
diplomacy by going back and forth between the separate rooms to discuss privately the strengths
and weaknesses of everyone's particular positions. However, there is a school of thought that is
producing some mediators to extend this Q & A session through questioning by the mediator.
The goal of this protracted discussion is to encourage the parties to more fully discuss the case
between themselves so that each party has a better understanding of everyone's situation prior to
each party receding to its private room.

Once the parties are in their own rooms, the mediation then chores on with the mediator trying to
initiative the parties into a range that the mediator believes would be a fair and sensible
settlement of the case given the evidences and law of the matter. This apparent range is largely
based on the mediator's experience and knowledge with the subject matter of the dispute and, in
business arguments, knowledge of the industry involved. So, the key to a successful mediation is
an experienced and knowledgeable mediator and, particular in the mediation of business
arguments, a mediator that can think outside of the box and help the parties grow settlements that
do not always need cash payments. Settlements that involve the trading, buying or selling
services, goods, equipment, and so forth at the right value may permit a complainant to get an
asset that is strategic to its business while allowing the defendant to deprive itself of an asset that
it may have been planning to sell and to obtain a fair price or trade-off for it. Luckily, for any

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argument in the Houston area, there are many good mediators from which the business
community can attraction upon.

Arbitration:

Arbitration refers to the procedure where the choice is made by a third party. The arbitrator
catches the case as presented by the parties in conflict or argument (fight) and makes a decision
or award in the same way as a Judge would. Awards are usually final and binding on all parties.
An award may be filed in Court and compulsory as if it were a Court judgment. Arbitration is
usually used in labor disputes and commercial disputes. It is also used in oil and gas arguments,
insurance claim disagreements and family and divorce quarrels.

The arbitrator arranges a meeting between the parties to control what issues need to be resolved.
The arbitrator then holds a hearing into the matter where both sides present information and
indication they believe supports their case. The arbitrator may also request written proposals
before and/or after the hearing. Once the arbitrator has all the proof, the arbitrator considers the
matter and issues a decision that is binding upon the parties. It can often take a significant
amount of time to receive an arbitration decision.

Advantages of ADR:

Sometimes people become involved in arguments which, though very important and upsetting to
those troubled, are better resolved outside the reasonably expensive court system. Some
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disagreements do not have a legal solution, while others may be made worse by court action.
There are a number of advantages of Alternative Dispute Resolution in general:

 it is generally faster and less expensive

 people have a chance to tell their section as they see it
 it is springier and approachable to the individual needs of the people involved
 it is more casual
 the parties' participation in the process creates greater obligation to the result so that
obedience is more likely
 the private nature of the process
 Alternative Dispute Resolution is more likely to reserve goodwill or at least not worsen
the conflict, which is especially important in circumstances where there is a ongoing
relationship.

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Chapter 2
Law Of Contracts

Contract:

A contract is a legally enforceable procedure between parties to do approximately. Any legal

contract must cover certain basics. First, it must cover an offer. The offer is what someone is
going to do, such as occupancy me a tractor, sell me a guitar, paint my house, or simply pay me.
Second, the offer must be accepted. Acceptance means that I agree to what is offered, without
any deviations. Third, it must signify the intent of both parties to enter into a legally required
agreement. In other words, both parties have to be conscious that the agreement could be
enforced by law.

Finally, it must cover consideration. “Consideration” means something of worth, which is

generally money, negotiated for in exchange for the product or service that is being offered.

The parties have to be experienced to enter into this agreement and they have to have arrived into
it willingly. These agreements can be verbal, but logically their enforceability increases if they
are printed. If the agreement is spoken, it is still enforceable, but first I have to prove that it
existed, which can sometimes be tough to do.

Agreement:

An agreement is the second important stage in making a contract. An agreement signifies the
acceptance of an offer made by another party. When an agreement is grasped, it means that the
two parties to a contract have agreed to terms and have decided to become certain to do the
actions in the contract.

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Offer/Proposal:

An offer is a suggestion made by one party to another representing a willingness to enter a

contract.

To establish a contract there must be an offer and an acceptance. The party making the offer is
known as the offeror and the party to whom the offer is made is known as offeree.

An offer may be made verbally, in writing or by conduct to a convinced person or group of

persons or to the whole world and it must be transferred to the offeree.

An offer can be ended in various conditions such as break of offer, cancelation of offer, rejection
of offer, mental acceptance and specific method acceptance.

Break of offer is the conclusion method due to the death of offeree or offeror before acceptance
of an offer or by non-acceptance within the time specified for acceptance, or within a sensible
time.

lt should noted that although death of offeror or offeree before acceptance dismisses the offer,
death after acceptance has no belongings on the majority of contracts.

Some offers are completed within a specific time, so must be accepted nearly immediately.
Where an offer is made by telegram, the mode of offer indicates" prima facie" that the
acceptance should be rapid also, and in this case a answer by letter may be too late. Additional
offers may be accepted within a month or even lengthier.

Offer and Invitation to Offer:

An invitation to treat is when a consumer invites contractors to make him/her an offer. For
example, when the consumer promotes a job on internet or newspaper, it is generally an

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invitation to treat rather than an offer. The offer only comes into existence after the client
analyses the proposals handed in by the contractors and accept the offer.

An offer on the other hand is when the client offers the job to one contractor without publicity
the job or having contractors to submit in the tender.

Building an invitation to treat, slightly than an offer, defends the client from finding him/her self
agreed into a contract he/she cannot achieve. Instead the client can refuse the contractor’s offer
for many different explanations.

This can be a very significant defense for the client making the offer if the announcement for the
job offers at long distance: for example, through the internet or newspaper. Always guarantee
that any website, advertisement etc make it clear that it is only an invitation to treat, not an offer.

Acceptance:

A completely compulsory contract is only shaped if an offer is accepted. Acceptance is a final

and definite acceptance of all the terms of the offer. The offer must be accepted without
presenting any new terms. Acceptance does not take place till connected to the client making the
offer. Statement of acceptance is the moment when the contract is formed and the acceptance
must be in the form of chosen by the client.

Counter Offer:

A counter offer is an offer completed in reply to a preceding offer by the other party throughout
negotiations for a final contract. It is a new offer made in reply to an offer received. It has the
consequence of refusing the original offer, which cannot be accepted afterward unless revived by
the offeror. Making a counter offer repeatedly rejects the prior offer, and needs an acceptance
under the terms of the counter offer.

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Communication:

1.Communication of an offer: complete when it originates to the knowledge of the person to

whom it is made, when the letter covering the offer spreads the offeree.
2.Communication of an acceptance: has two aspects. Complete (a) as against the proposer, when
it is put in a course of broadcast to him/out of the power of the acceptor, complete(b) as against
the acceptor, when it comes to the knowledge of proposer/letter of acceptance is established by
proposer.

Consideration:

Consideration is the advantage that each party accepts, or expects to receive, when ingoing into a
contract. Consideration is often economic, but it can be a potential to achieve a specific act, or a
promise to refrain from doing something. In direction for a contract or agreement to be legally
requisite, every party to the contract must obtain some type of consideration. In other words, a
contract is a two-way road, so each party must receive something of worth from the other party
or parties. Illegal or wicked acts are not legally considered to attend as consideration.

Past Consideration:

Past consideration is defined as an act done before a contract is made. It is consideration that is
already given or some act that is already performed and therefore cannot be induced by the other
party's thing, act, or promise in exchange.

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Fraud:

Fraud is generally defined in the law as an intentional misrepresentation of material existing fact
made by one person to another with knowledge of its falsity and for the purpose of inducing the
other person to act, and upon which the other person relies with resulting injury or damage.
Fraud may also be made by an omission or purposeful failure to state material facts, which
nondisclosure makes other statements misleading.

Misrepresentation:

A misrepresentation is a form of statement made prior to the contract being formed. There are
two types of statement that can be made before a contract forms, these will either:

1. Form part of the contract

2. Not form part of the contract, therefore becoming a representation.

Void Agreement:

A void agreement definition would be an agreement or contract with no legal value. Legally, a
void agreement means the contract or agreement is no longer enforceable. While precise
definitions vary by jurisdiction, void agreements are generally categorized as being void from the
beginning and were never valid at any point. On the other hand, void contracts are generally
defined to have been valid at one time, but are now invalid. However, despite those precise
definitions existing, the terms are most often used interchangeably.

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Breach of Contract:

A business contract creates certain obligations that are to be fulfilled by the parties who entered
into the agreement. Legally, one party's failure to fulfill any of its contractual obligations is
known as a "breach" of the contract. Depending on the specifics, a breach can occur when a party
fails to perform on time, does not perform in accordance with the terms of the agreement, or does
not perform at all. Accordingly, a breach of contract will usually be categorized as either
"material" or "immaterial" for purposes of determining the appropriate legal solution or
"remedy" for the breach.

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CHAPTER 3

SALE OF GOODS

Definition of Contract of Sale:

As per section 4(1) of the Sale of Goods Act defines a contract of sale of goods as-“A contract
whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.”

So,from the definition we can trace out three vital features of contract of sale of goods.These are:

a. There should be two parties in a contract of sale viz a buyer & a seller.
b. There should be a transfer of property in which the buyer must either transfer or agree to
transfer the property in the goods to the buyer.
c. The whole point of concentration in contract of sale must be goods.
d. The consideration for contract of sale must be money consideration called the price.
e. Sale and Agreement to sale should be included in the term of sale of contract.
f. No need of a particular form to constitute a valid contract of sale.1

Types of Goods
Goods may be of the following types:

a. Existing Goods- Goods which are physically in existence & which are in the seller’s
ownership & possession, at the time of entering the contract of sale are called existing goods.
b. Future Goods- Goods to be manufactured,produced or acquired by the seller after making the
contract of sale are known as future goods.
c. Contingent Goods- Goods the the acquisition of which by the seller depends upon an
uncertain contingency called contingent goods.2

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Effect of perishing of goods
Section 7 & 8 deals with the effect of perishing of goods.Here scope of perishing is not confined
to the physical distortion of goods.It covers the following facts respectively:

a. Damage of goods which in return cease the merchantable character of goods although the
good is not damaged physically.For example due to spilting of water cement turns into
stone.As a result,this cement is unsaleable due to its ineffectiveness as a cement.
b. If any good is lost due to theft.
c. Where the goods have been lawfully requisitioned by the government.

The effect of perishing of goods can be discussed under the following two heads:

a. Perishing of specific goods at or before making of the contract: Under this scope of if
the specific goods which are the main subject matter of the contract if perishes without the
knowledge of the seller at or before the time of contract the agreement will be void.3For
example-A sold specific goods to B which were lying in A’s godown unknown to both the
parties the goods got destroyed due to fire.In this case the contract will be void between
the parties.4
b. Perishing of specific goods before sale but after agreement to sell: As per section 8
where there is an agreement to sell specific goods and subsequently the goods without any
fault of the seller perish before the risk passes to the buyer,the agreement is thereby
avoided.
In the case of Appleby vs Myers, The plaintiffs had a contract with the defendant to erect
machinery on his premises at a specific price for particular portions and to keep the premises in
good repair for two years. The price for the work was to be paid at the end of the two years.

13
After some portions of the work had been finished and others were in the course of completion,
the premises with all the machinery and materials inside were destroyed by an accidental fire.
The plaintiffs sued the defendant for the recovery of the sum for the completed work. The Court
of Common Pleas ruled in favour of the plaintiffs. The defendant appealed to the Court of
Exchequer Chamber.Now the issue is,” Are the plaintiffs entitled to recover the sum for the
completed work?”5

Here the plaintiffs were not entitled to sue in respect of those portions of the work which had
been completed, whether or not the materials used had become the property of the defendant or
not.

Conditions & Warranties-

• Condition- As per Section 12(2),” A condition is a stipulation essential to the main
purpose of the contract,the breach of which gives the aggrieved party a right to repudiate
the contract itself. Moreover the person can take an action for damages for loss suffered,
if any, on the ground that the whole contract is broken and the seller is guilty of no
delivery.
• Warranty- A stipulation collateral to the main purpose of the contract, the breach of
which gives the aggrieved party a right to sue for damages only, and not to avoid the
contract itself.
Conditions and Warranties can be either expressed or implied.It is expressed when the
stipulations are inserted at the will of the parties.It is implied when the stipulations are
presumed in terms of their existence in the contract automatically by the law.6

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Rights of unpaid seller:
The operation of the seller’s right over the goods in the Act is dependent upon the being
‘unpaid’. Section 45, the seller of goods is deemed to be an “unpaid seller” within the meaning
of this Act-
a) When the whole of the price has not been paid or tendered

b) When a bill of exchange or other negotiable instrument has been received as conditional
payment, and the condition on which it was received has not been fulfilled by reason of the
dishonour of the instrument or otherwise.7

The rights can be classified into two types:

a. Rights against goods

b. Rights against Buyer8

Rights against goods

In this case,the seller has the rights when the property/goods are transferred to the buyer:

a. Right of lien- For the recovery of price an unpaid seller has a right to keep the goods in
his own possession. For example :- Mr. H sells the goods to Mr. A for Tk 10 lac. Mr. A
pays 5 lac and promises to pay the remaining 5 lac after two month. Mr. H has a right of
lien on the goods.
b. Right to stoppage of goods in transit- If buyer becomes insolvent, an unpaid seller has a
right of stopping the goods in transit.For example-"X" sells 100 bales of cotton to "Y" but
delivery will be two stages. "X" delivers 50 bales first. Later on he comes know that "Y"
has become insolvent. "X" can stop delivery of bales in transit.
c. Right of resale- An unpaid seller is considered the owner of the goods until he is not paid
by the buyer. So he has a right to sell his goods subject to few conditions.For example-“X"
sells one horse to "Y" on credit. "Y" does not pay. "X" can resell to other person.9

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Rights against Buyer
At times it becomes inevitable choice to exercise rights on buyers for non payment of price.The
unpaid seller can file suits against buyers as explained below:

a. Suit for price- Under the contract of sale if the property of the goods is already passed but
the buyer refuses to pay for the goods the seller becomes an unpaid seller. In such a case. the
seller can sue the buyer for wrongfully refusing to pay him his due.But if the sales contract
says that the price will be paid at a later date irrespective of the delivery of goods,. And on
such a day the if the buyer refuses to pay, the unpaid seller may sue for the price of these
goods. The actual delivery of the goods is not of importance according to the law.

b. Suit for damages of non-acceptance- If the buyer wrongfully refuses or neglects to accept
and pay the unpaid seller, the seller can sue the buyer for damages caused due to his non-
acceptance of goods. Since the buyer refused to buy the goods without any just cause, the

seller may face certain damages. The measure of such damages is decided by the Section 73

of the Indian Contract Act 1872, which deals with damages and penalties. Take for example
the case of seller A. He agrees to sell to B 100 liters of milk for a decided price. On the day,
B refuses to accept the goods for no justifiable reason. A is not able to find another buyer and
the milk goes bad. In such a case, A can sue B for damages.

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Right of buyer against seller due to breach of contract-

A buyer also has certain remedies against the seller who commits a breach. These are:

a. Suit for Damages for Non-Delivery- When the seller wrongfully neglects or refuses to deliver
the goods to the buyer, the buyer may sue the seller for damages for non-delivery. This is in
addition to the buyer's right to recover the price, if already paid, in case of non-delivery.

b. Suit for price- Where the buyer has paid the price and the goods are not delivered to him, he
can recover the amount paid.

c. Suit for specific performance- When the goods are specific or ascertained, a buyer may sue
the seller for specific performance of the contract and compel him to deliver the same goods. The
court orders for specific performance only when the goods are specific or ascertained and an order
for damages would not be an adequate remedy. Specific performance is generally allowed where
the goods are of special significance or value e.g. a rare paining, a unique piece of jewellery, etc.

d. Suit for Breach of Warranty- Where there is a breach of warranty by the seller, or where the
buyer elects or is compelled to treat the breach of condition as breach of warranty, the buyer cannot
reject the goods. The buyer may, (a) set up the breach of warranty in extinction or diminution of
the price payable by him, or (b) sue the seller for damages for breach of warranty.

e. Suit for Damages for Repudiation of contract before Due date-Where the seller repudiates
the contract before the date of delivery, the buyer may adopt any of the following two courses of
action :

 He may treat the contract as rescinded and sue the seller for damages. This is also known
as 'damages for anticipatory breach'. The damages will be assessed according to the prices
prevailing on the date of breach
 He may treat the contract as subsisting and wait till the date of delivery. The contract
remains open at the risk and for the benefit of both the parties. If the seller subsequently
chooses to perform there shall be no damages otherwise he shall be liable to damages
assessed according to the prices on the day stipulated for delivery.

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f. Suit for interest- The buyer may recover such interest or special damages, as may be
recoverable bylaw. He may also recover the money paid where the consideration for the
payment of it has failed. In the absence of a contract to the contrary, the court may award
interest, to the buyer, in a suit by him for the refund of the price in a case of a breach on
the part of the seller, at such rate as it thinks fit on the amount of the price from the date on
which the payment was made.

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Chapter 4

Negligence
Negligence: To refrain from doing something that a reasonable man guided by his conscience
and conduct of human affairs and involving in something that a rational or logical human being
would not do under similar circumstances.

Elements of Negligence Action:

Negligence is initiated by some factors ; which include:

I. Duty: The defendant ( negligent person) had a duty of care towards the plaintiff (damaged
person) II. Breach: The defendant has violated the duty of care due to negligence III. Injury: The
plaintiff suffers from legally definable damage IV. Causation: Defendants deliberate or negligent
attitude has caused injury of the plaintiff.

Duty Of Care:
Duty of Care is a subject of responsibility that deals with being authorized for the safety , care ,
guard over someone. Any person that might be affected by one’s actions is defined to be under
that person’s duty of care.

However , the person whom one did not see , that person is not under his/her duty of care.
However , incase of consumer company the duty of care exists towards their customers and
consumers.

Moreover , any individual is not bound to do charity , but if that person does so they have to be
cautious about the duty of care till the end.

Whether there is a duty of care by one person over the other , can be tested by some assumptions.
These include:

I. The Neighbor Principle II. The Current Test Foresight Proximity Nearness III. An
Alternative Test: assumption of Responsibility.

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Negligence: Breach OF Duty:
A breach of duty occurs if the defendant has not acted adjusting with the appropriate standard of
care. The standard is considered to be what an ordinary, reasonable, prudent person would have
done in the same situation

However , professionals are held to the standard applicable to their particular professions.

Medical Negligence:
The defendant Medical Professional Person is to be compared with a reasonable person of the
same specialism and status

For instance:- A general practitioner is not judged by the same standards as a consultant
cardiologist and so on. If the defendant medical professional has acted in a way that would be
supported by a body of respectable medical opinion , it is to tested by a specialized test named
as:

Bolam Test:
This test allows medical professional in some extent to determine appropriate standards for
itself, but the courts reserve the right to strike down a medical practice as unreasonable too as per
the situation.

This decision was reached in the medical case hearing of Bolam v Friern Hospital Management
Committee during the year 1957.
Causation Of Damage:

To ascertain whether the causation of the damage is direct effect of the Defendant’s breach of
promise this test is done. The test is as below:

But For Test: This test is done to measure if the damage would have occurred anyway if it had
not been for the sake of Breach Of Duty.

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Remoteness of Damage:
As under the rules of this test , the defendant will be held liable only if the consequence was
foreseeable before the breach of duty occurred.

The Question used here for measuring the remoteness is , the degree of the foreseeability for the
damage to have occurred.

Intervening Acts Of Third Party:

If a breach of duty takes place towards someone due to the meddling or intervening acts of
somebody , then , the defendants would be held liable as per:

If two or more incidents combinedly led to cause the damage, all wrongdoers are liable. When
second incidents is wiped out by the effect of the first, the second wrongdoer escapes liability
and vice versa

However, If second incident increases the damage, first wrongdoer remains liable for damages
caused by the first incident, second wrongdoer liable for the further deterioration.

Defenses:
The defenses in supporting of the defendant comprises of: I. Assumption of Risk: If the plaintiff
knowingly and voluntarily assumes the risk of participating in a dangerous activity, then the
defendant is not liable for injuries incurred.

II. Contributory negligence: The second defense to negligence is to allege that the plaintiff’s own
negligence contributed to his or her injuries. Under the contributory negligence rule, a plaintiff’s
own negligence, no matter how minor, bars the plaintiff from any recovery.

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