Learnovate Ecommerce – Finance intern

NAME: YASH KUMAR NAYAK

DATE: 29 JULY 2021

MENTOR: DAMODAR DASH

1 A) Define holder. Explain the rights of holder in due course.
Ans. - The person is said to be a holder of negotiable instrument who is legally entitled to possess the
instrument, in his name and to get its payment on due date or on demand.

Rights of holder in due course

1. Instrument Cleansed of all Defects: Once a negotiable instrument passes through the hands of a
holder .in due course, it gets cleansed of its defects provided the holder was himself not a party to the
fraud or illegality which affected the instrument in some stage of its journey.

2. Rights not Affected in Case of an Inchoate Instrument: The right of holder in due course to
recover money is not at all affected even though the instrument was originally an inchoate stamped
instrument and the transferee completed the instrument for a sum greater than what was intended by
the maker.

3. All Prior Parties Liable: All prior parties to the instrument (the maker or drawer, acceptor and
intervening endorsers) continue to remain liable to the holder in due course until the instrument is
duly satisfied. The holder in due course can file a suit against the parties liable to pay, in his own
name.

4. Can Enforce Payment of a Fictitious Bill: Where both drawer and payee of a bill are fictitious
persons, the acceptor is liable on the bill to a holder in due course, if the latter can show that the
signature of the supposed drawer and the first endorser are in the same hand, for the bill being payable
to the drawer’s order the fictitious drawer must endorse the bill before he can negotiate it.
5. No Effect of Conditional Delivery: Where a negotiable instrument delivered conditionally or for
a special purpose and is negotiated to a holder in due course, a valid delivery, of it is conclusively
presumed and he acquires good title to it.

1. B) A sells a ratio to M, a minor who pays for it by cheque. A indorses the cheque to B who
takes it in good faith and for more value. The cheque in dishonoured on presentation. Can B
enforce payment of the cheque against of the cheque against A or M?
Ans. -. The payment cannot be enforced against M as he is a minor. But the instrument can be enforced
against A.

2. A) Define promissory note. Explain the essential features of promisory note. (Specimen is
required)
Definition

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According to the Negotiable Instruments Act 1881, a promissory note is defined as an instrument in
writing (not being a bank note or a currency note), containing an unconditional undertaking signed
by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer
of the instrument. According to the Reserve Bank of India Act, a promissory note is not a bearer
instrument.

Features
Printed/Written Agreement – A promissory should be in writing, and an oral promise to pay money
is not accepted.
Pay Defined Amount – It is a promise to pay the money on a particular time or when demanded. The
mentioned amount can neither be added nor subtracted.
Signed Documents – The document is duly signed and drawn by the drawer and stamped.

Unconditional Promise – The promise to pay a certain amount of money must be absolute in all
cases. In such notes, a conditional guarantee is not accepted.
Legal Composition – All the payment should be made in the nation’s legal currency.

Detailed Information – The note has all the required information including the name of the drawer
and payee, date of maturity, terms of repayment, issue date, name of the drawee, name, and signature
of the drawer, principal amount, and the rate of interest, etc.

2. B) A is the payee of a bearer instrument A misplace the instrument in his office. It is picked
by B. B delivers it to C who takes it in good faith and for valuable consideration. Is C a holder
in due course?
Yes, C is a holder in due course because he is taking instrument in a good faith and for valuable
consideration.

Q. 3 Define company. Differentiate between a company and a partnership firm. And also
differentiate between private company and public company.
Difference between a company and partnership firm

BASIS FOR PARTNERSHIP FIRM COMPANY

COMPARISON

Meaning When two or more persons agree to A company is an association of

carry on a business and share the persons who invests money towards a
profits & losses mutually, it is common stock, for carrying on a
known as a Partnership firm. business and shares the profits &
losses of the business.

Governing Act Indian Partnership Act, 1932 Indian Companies Act, 2013

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How it is created? Partnership firm is created by The company is created by
mutual agreement between the incorporation under the Companies
partners. Act.

Registration Voluntary Obligatory

Minimum number Two Two in case of private company and

of persons Seven in case of public company.

Maximum 100 partners 200 in case of a private company and

number of persons a public company can have unlimited
number of members.

Differentiate between private company and public company.

BASIS FOR
COMPARIS PUBLIC COMPANY PRIVATE COMPANY
ON
Meaning A public company is a company A private company is a
which is owned and traded company which is owned
publicly and traded privately.

Minimum 7 2
members

Maximum Unlimited 200

members

Minimum 3 2
Directors

Suffix Limited Private Limited

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Start of business After receiving certificate of After receiving certificate of
incorporation and certificate of incorporation.
commencement of business.

Statutory Meeting Compulsory Optional

Issue of Obligatory Not required

prospectus /
Statement in
lieu of
prospectus
Public subscription Allowed Not allowed

Quorum at AGM 5 members must present in 2 members must present in

person. person.

Transfer of shares Free Restricted

Q. 4 Write a short note.

A) Trade mark
A trademark is a sign capable of distinguishing the goods or services of one enterprise from those
of other enterprises. Trademarks are protected by intellectual property rights.

b) Digital Signature
A digital signature is a mathematical technique used to validate the authenticity and integrity of a
message, software or digital document. Digital signatures can provide evidence of origin, identity
and status of electronic documents, transactions or digital messages.

c) Consumer and Not a consumer

Consumer is the one who is the end user of any goods or services. Consumers are unable to resell
any product or service. Customers need to purchase a product or service in order to use it. For a
consumer purchasing a product or service is not essential.

d) Patent

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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.

e) Unfair Trade Practices

The phrase unfair trade practices can be defined as any business practice or act that is deceptive,
fraudulent, or causes injury to a consumer. These practices can include acts that are deemed
unlawful, such as those that violate a consumer protection law