ASSIGNMENT FOR JUNE 2020 EXAMINATION

Course Name: Business Law

Session: Jan- June 2020 /Semester 2

Answer 1.
The term contract is defined as - An agreement enforceable by law is a contract.
Agreement is defined as "every promise and every set of promises, forming the consideration for each other.”.
However, a promise cannot be one sided, only a mutual promise forming consideration for each other is
‘agreement’.

For example- A agrees to pay Rs 500 to B and B agrees to give him a table which is priced at Rs 500. This is
a set of promises, which form consideration for each other.
However, if A agrees to pay Rs 500 to B, but B does not promise anything, it is not ‘set of promises forming
consideration for each other’ and hence not an agreement.
Promise is: "when the person to whom the proposal is made signifies his assent thereto, the proposal is said to
be accepted. Proposal when accepted becomes a promise.
Therefore,
Contract = Agreement + Enforceability (Should be in writing and signed by the parties)

For Example: I send an Email to sell my washing machine to my friend. My friend agrees to buy my washing
machine over a telephonic call. It is not a contract. This means that if I make a written, signed offer to which
my friend has only orally agreed, the agreement is still not enforceable. To be enforceable, these contracts
must also be "signed by the party to be charged"; i.e., my friend against whom i want to enforce the contract.

An agreement becomes a contract when below conditions are satisfied:

1. Minimum two parties- At least two parties are necessary to form a contract because one person cannot
enter into a contract with himself. To form a contract, one party has to make an offer and the other
must accept it.
2. Offer and acceptance - There must be an offer and an acceptance to the offer, resulting into an
agreement. Both offer and acceptance should be lawful.

3. Intention to create legal obligation - The parties must create a legal obligation. In business
agreements, an intention to create legal relations is recognized, unless the parties have expressly agreed
to do so otherwise.
4. Lawful Consideration - An agreement is legally enforceable only when each of the parties thereto
gives something and gets something that is a consideration. Consideration may be past, present or
future.
5. Competent Parties - The parties to the contract must be competent i.e., of the age of maturity (Over
18 Years), of sound mind and not disqualified from contracting by any Law to which they are subject
to.
6. Free Consent - All the parties must give their free consent, to form a valid contract. Consent means
that the parties must agree about the subject matter of the agreement in the same sense and at the same
time. Consent is said to be free unless it is induced by coercion, undue influence, fraud,
misrepresentation or mistake.
7. Lawful Object - The object of an agreement must not be deceitful and illegal or immoral or opposed
to public policy or must not imply injury to the person or property of another.

➢ It is true that all contracts are agreements because for a Contract to be there, an agreement is essential;
without an agreement, there can be no contract.

➢ The element that distinguishes a contract from casual agreements is that it is legally binding: The law
provides a solution in case the promise is broken. Legally, certain types of contracts should be in
 writing, while oral contracts are also legally binding in many situations. An oral contract can occur
even if not all the terms of a contract are present in the agreement.

An agreement to become a contract must give rise to a legal obligation. If an agreement is incapable of
creating a duty enforceable by law. It is not a contract. Thus, an agreement is a wider term than a contract.

Agreements of moral, religious or social nature e.g., a promise to lunch together at a friend’s house or to take
a walk together are not contracts because they are not likely to create a duty enforceable by law for the simple
reason that the parties never intended that they should be attended by legal consequences. On the other hand,
legal agreements are contracts because they create legal relations between the parties.

Examples:
• I invite my friend to my birthday party. He accepts this invitation but does not attend the party. I cannot
sue my friend for damages. It is social agreement because it does not create legal obligation. It is not
a contract.

• A promised to sell his 1 acre farm land to B for 1 lakh INR. It is legal agreement because it creates
legal obligations between the parties. It is a contract, because it created a legal obligation whether it
was oral or written.

Answer 2.

The Consumer Protection Act, was introduced in 1986 and is the most important and comprehensive Act for
the protection of consumer rights. It was amended last in 2019 to keep pace with the changing times and
increased awareness about consumer rights.
It provides various rights to customers which include right to safety, right to be informed, right to choose,
right to seek redressal, right to consumer education etc. In continuation the consumer courts can provide a
variety of reliefs to the consumers. Some of them are:
1) Eliminate the defect from the goods in question.
2) Replace the goods with new goods of similar description.
3) Return of the price spent by the customer or compensation amount.
4) To see that unfair trade practice or the restrictive trade practice are discontinued or warn the parties not to
repeat it.
5) To ensure that the hazardous goods are not offered for sale.

A. NIKHIL BANSAL VS SNAPDEAL -2016 (I-PHONE 5S for INR 68)

Issue - Nikhil Bansal, a BTech Student at Punjabi University spotted an unbelievable discount of
99.7% on iPhone 5S Gold on Snapdeal. The price after discount came out to be Rs 68. Without wasting
another moment, he booked one for himself.

His order was soon cancelled proving that the offer was only to mislead customers. But he refused to
let it go. He filed a complaint against Snapdeal at the District Consumer Forum.

Consumer court Relief - Within days, a judgement was passed in his favour, ordering Snapdeal to
deliver the product to him at Rs 68. That’s not even all. Snapdeal was slapped with a Rs 2000 penalty.
When the E-Com giant tried to fight back, the penalty increased to Rs 10,000.

B. TEA VENDOR Mr. SAKRE VS STATE BANK OF INDIA -2011 (Missing Bank balance)
Issue - Mr Sakre a tea vendor from Bhopal had Rs 20,000 in his account, from which he withdrew a
sum of Rs 10,800. However, on his next ATM visit he realized his account had been wiped clean. Mr
 Sakre went to one of the Bank's branches to complain but the officers shrugged, and blamed him for
the mess. He then made an appeal to the bank's Mumbai headquarters, but it didn't work.
As a last resort, he filed a case in the District Consumer Disputes Redressal Forum.

He didn't have enough money to hire a lawyer, so he went head to head with the bank's lawyers to fight
his own case in court.

The bank insisted that it was Mr Sakre who had withdrawn the amount in question. But they could not
produce any evidence like CCTV footage to back their claim.

Consumer Court Relief - The consumer court ruled in his favour and ordered the State Bank of India
to return Rs 9,200 along with 6% interest within two months. In addition to this, the bank also had to
cough up Rs 10,000 for the mental anguish they caused their consumer and another sum of Rs 2,000
for his legal expenses.

Conclusion – It is evident from the above cases that if the consumers are fully aware of their rights they cannot
be cheated or misled or harassed for the product /services provided. The consumer protection act provides this
right to every citizen to protect interest of the consumers and so they do not get cheated.

Answer 3 (a)

Jack and Jill can look for following kinds of business forms:

1. Sole proprietorship
Here the owner and manager is the same person, who will have the responsibility of taking care of each and
every aspect of the business. This is a common business structure. With this structure, operation is easy and
devoid of any authoritative control. But in case of any liabilities, owner will have to take the complete
responsibility.

Pros
• It is easy to setup and cost involved is very low as compared to other business forms and No Corporate
taxes.
Cons
• Unlimited liability of the owner and difficult to get investment.

2. General partnership
In general partnership, two or more people agree to share each aspect of business, which could be in terms of
contributing money, skill and labour. Partners share profit, loss and managerial aspects of the businesses. They
are also equally responsible for the liabilities. A written agreement is used for stating the formal terms of
partnership.

Pros
• Lesser financial burden, learning of skills & experience and a partner for support.

Cons
• Consent of other partners before taking any decision, Distribution of profits & losses, disagreements
among partners.

3. Limited liability partnership

LLP is composed of at least two individuals as designated partners and may include one or more limited
partners who can be individuals, firms or other body corporates. The designated partners manage the business
and share profits and losses fully. Limited partners share profits of the business, but their losses are limited to
the extent of their investment. Limited partners are usually not involved in the day-to-day operations of the
business. LLP is a separate entity registered as a body corporate under the Companies Act. Existing
Partnership firms, Private Limited Companies and unlisted Public Companies can convert into LLP if they
want to.

Pros
• Easy Registration, limited annual compliance, & restructuring to give higher rights to some partners.

Cons
• Even if an LLP does not have any activity, it is required to file an income tax return and MCA annual
return each year and higher income tax.

As per my view, as both Jack and Jill are freshers and wanted to go for Start-up, LLP will be the good choice
and reasons are:
• Can get third party limited partner for high value investment in robotics.
• Flexibility to setup and manage.
• Lesser compliance issues.

Answer 3 (b)

Competency to contract or capacity to contract is an indispensable part of a valid contract. A contract has to
be made with free consent of the parties. That is, they are competent to contract, for a lawful consideration
and with a lawful object. Every person is competent to contract, who has attained the age of majority according
to the law to which he is subject, and who is of Sound mind, and is not barred from contracting by any law to
which he/she is subject. If the incompetent persons enter into any contracts, such contracts become void. A
person who has not completed his 18th year of age is considered to be a minor. In such a case a guardian to
the person or property of the minor is appointed by the court or the property of the minor is put under the
charge of a court of wards, during the period of his/her minority.

Law relating to minor’s Agreement

1. No legal action can be taken against him for his/her false promises.

Contract with a minor is void. It is considered to be a nullity and absent from the very beginning and therefore
devoid of any consequences. This is because the child may show poor judgment in making a particular
contract, and this rule is a protection against his own ignorance and immaturity.

In India, the Indian Majority Act, 1875 declares the age of majority of all persons to be 18 years. If a minor
has a guardian or Court of Ward looking after him, his/her age of majority becomes 21 years. Hence, any
contract with a party below the age of 18 years is invalid as per the Act.

On the basis of above explanation, it can be said that Jill is not eligible to enter in any business
relationship as she is just 18 and as she was looking after by her guardian, she will attain majority only after
three years i.e. when she is 21