Ans.

ICA states: “A proposal is said to be accepted when the person to whom the proposal is
made signifies his assent thereto. A proposal when accepted becomes a promise.” The offeree
agrees to be bound by the terms of the offer by accepting it. Acceptance of offer must fulfill the
following conditions:
a. It must be absolute, unqualified, and unconditional.
b. Only the offeree himself or a person authorized by him can accept the offer.
c. It must be communicated to the offerer within the prescribed or reasonable time
otherwise the offer may lapse.
d. Acceptance communicated to an unauthorized person is not valid.
e. It must be expressed in some usual and reasonable manner.
f. It must be made in the manner specified in the offer otherwise the proposer may, within
a reasonable time, insist that it be given in the prescribed manner.
g. Conditional acceptance or qualified acceptance is no acceptance.

‘Express/ Implied’ and ‘Specific/ General’ offers and acceptances

a. Express / Implied:
i) Express offers and acceptances are made in words, spoken, or written. For example, A offers
to sell his house to B for a specified sum either verbally or in writing and B agrees.
ii) Implied offers and acceptances are offers not made in words but inferred from the conduct of
a party or circumstances of the case. For example, the electricity board does not send letters to
people but the offer to sell electricity is implied.
b. Specific / General:
i) Specific offers and acceptances: A specific offer is made to a particular person or a group of
persons and only he/they are competent to accept the offer. A specific acceptance can be made
only by the person or a group of persons to whom the offer has been made.
ii) General Offers: A general offer is made to the world at large and not to a particular person or
a group of persons. A general offer can be accepted by any member of the general public by
fulfilling the terms of the offer.
Case: Carlill V. Carbolic Smoke Ball Co.
A company manufacturing smoke balls advertised in all leading newspapers that a reward of
£100 would be given to any person who contracted influenza in spite of using the smoke balls of
the company as per the printed instructions. One person, Mrs. Carlill, used the smoke balls as per
instructions but contracted influenza. Held, she is entitled to the reward as by using the smoke
balls, she had accepted the company’s offer.

Q2. What are the different ways in which an agency may be formed?

Ans. An agency can be formed in the following ways:

a) Agency by express authority:
An Agency by express authority is created when the principal confers express authority on the
agent in spoken or written words. Express authority arises by mutual agreement between the
Principal and Agent. The Agent agrees to act on behalf of the agent and in doing so he binds
the principal to all the obligations and promises he makes with the third parties. An Agent is
bound by the scope of authority conferred on him by the principal. Overstepping that scope is
akin to breach of contract.
b) Agency by implied authority:
Implied agency is inferred from the conduct and behaviour of the concerned parties or
circumstances of the case e.g., when a person is appointed in a capacity which carries agency-
like powers, third parties may assume that he has the authority to act on behalf of the Principal.
Implied Agency may arise in the following ways:
i) Agency by Estoppel: Such an agency exists when the Principal's words or conduct
make a third party believe that he has authorised the Agent to act on his behalf even though there
is no express agreement to such effect between the two. In such cases, the principal can be
stopped from denying the existence of the Agency. For example, A in Presence of X tells B that
he is agent of X. X does not contradict him. B enters into a contract with A believing him to be
X’s agent. X would be bound by the contract.
ii) Agency by Holding Out: Agency by holding out arises when a person who had given
the authority to another in the past and who continues to exercise that authority without the
Principal proclaiming that he is no more his agent. In such cases third parties are led to believe
that the Agent still enjoys the authority. For example, X sends A to buy goods on credit from B.
A buys goods on credit for himself and defaults on paying. B sues X. X is bound. He cannot
plead that A had no authority.
iii) By Necessity: Such agencies arise in the following circumstances:
a. Definite and actual necessity for the agent to act on behalf of the Principal.
b. Impossibility of communicating with the Principal.
c. Necessity to act in the best interest of the Principal.

c) Agency by Ratification:
Agency by ratification comes into existence when a person grants post facto or subsequent
acceptance of an unauthorised act done by another person on his behalf, without any authority.
Such acceptance may be expressed or implied. Post facto ratification grants the hitherto
unauthorised act, the legal status of an Agency and the Principal becomes bound by the act done
by his agent. The Agency is deemed to have come into existence from the time when the Agent
first acted on the Principal’s behalf.

Essentials of a valid ratification

i) Full knowledge: A person ratifying an act of another must have full knowledge of all the
material facts. Incomplete knowledge would render ratification invalid.
ii) Whole transaction: Principal must ratify the full transaction and not parts thereof.
iii) Damage to third party: An act that is detrimental or damaging to a third party cannot be
ratified.
iv) Act on behalf of another person: The Principal can ratify an act done by an Agent on his
behalf but he cannot ratify an act done by the Agent in his own name.
v) Existence of Principal: Principal must be in existence when the act is done in his name.
vi) Contractual capacity: The Principal must be competent to contract in order to be competent
to ratify the act. A minor cannot ratify a contract even after reaching maturity.
vii) Reasonable time frame: Ratification must be made within a reasonable time otherwise it will
not be binding.
viii) Lawful act: The act to be ratified must be lawful.
ix) Act within the Principal’s power: A Principal cannot ratify an act which is not within his
power and competence.
x) Communication: Ratification must be communicated to the third party in order to become
binding.
d) Agency By Operation of Law:
An agency by operation of law arises when the law grants a person the status of another person’s
agent. For example, when a partnership is legally formed, every partner legally becomes the
Agent of other partners.

Q3. “A bill may be dishonoured by non-acceptance or by non-payment”. Explain

Ans. A bill may be dishonored by non-acceptance or by non-payment. Promissory notes and
cheques are dishonored by non-payment only. When a negotiable instrument is dishonored, the
holder must give notice of dishonor to all the prior parties in order to make them liable on the
instrument. If the holder fails to do so, then the notice of dishonor may be to all the parties who
are liable on the instrument and entitled to notice are discharged. He forfeits his right of actions
against the prior parties entitled to the notice of dishonor (Sec. 93).

Dishonor by non-acceptance (Sec. 91): A bill of exchange is dishonored by non-acceptance in

any one of the following ways:
1. If the drawee does not accept the bill within 48 hours from the time of
presentment though it is duly presented for acceptance.
2. If there are several drawees and all of them do not accept.
3. When presentment for acceptance is excused and the bill is not accepted.
4. When the drawee is incompetent to contract.
5. When the drawee gives a qualified acceptance.
6. When the drawee is fictitious person or after reasonable search cannot be found.

If a drawee in case of need is mentioned in a bill, the bill is not deemed to be dishonored unless it
is dishonored by such drawee in case of need also (Sec.115).

Dishonor by non-payment (Sec. 92): A promissory note, bill of exchange or cheque is said to
be dishonored by non-payment when the maker of the note, acceptor of the bill or drawee of the
cheque commits a default in payment, upon being duly required to pay the same (Sec.92). An
instrument is also dishonored by non-payment when presentment for payment is excused and the
instrument when overdue remains unpaid. (Sec. 76).

When a negotiable instrument is dishonored either by non-acceptance or by non-payment,

the holder of the instrument or some party to it who is liable there on, must give a notice of
dishonor to all the prior parties who are liable on the instrument. If he dose not give this notice,
except in cases where notice of dishonor may be excused, all the prior parties liable there on, are
discharged of their liability (Sec. 93).

Ans. Decisions of the members at general meetings are expressed by way of resolutions. At the
meetings, a definite proposal in the form of a ‘motion’ is placed; it is discussed thoroughly and
finally is put to vote. Once voted upon by a majority of members, it becomes a resolution and is
recorded by the company. Resolutions are used as tools for introducing new policies and for
amending existing policies of the company.
The following three kinds of resolutions are recognised by the Companies Act:
a) Ordinary resolution – Section 189 (1) defines an ordinary resolution as a resolution passed at
a general meeting of the company for which the necessary notice has been given, votes have
been cast (either by show of hands or by poll) along with the casting vote of the Chairperson,
members and proxies.
b) Special resolution – A resolution is said to be a special resolution if notice of the intention to
move it as a special resolution is given specifically and it is passed by three- fourth of the
number of members voting for it. The notice convening the meeting, at which a special
resolution is to be considered, must set out the actual wording of the resolution. The Articles of
Association may provide that certain types of business shall be approved by a special resolution.
c) Resolutions’ requiring a special notice – The Act requires that if a shareholder has the
intention to move either an ordinary or a special resolution, he has to ensure that a special notice
is to be sent to the company. The period of such notice is 14 clear days. After the receipt of
the notice, the company must immediately issue a notice to the shareholders in this regard, not
less than seven days before the meeting. Such a notice should be served on them, either by
service or by advertisement in the newspaper having an appropriate circulation or in any other
mode allowed by the articles of the company. The types of resolutions for which a special notice
is required are –

i) A resolution appointing an auditor, other than the retiring one.

ii) A resolution providing expressly that the retiring auditor shall not be re-appointed.
iii) A resolution purposing to remove a director, before the expiry of his period of office.
iv) A resolution to appoint another director in place of a removed director.

From the above provisions of the Companies Act, 1956, it is evident that it is a comprehensive
legislation which addresses all the areas of management of a company, from its inception to its
winding up. This law has been subject to successive amendments, which has ensured that the
loopholes are plugged and any company’s activities are monitored closely. Such strict regulation
ensures that companies carry out their responsibilities to their shareholders and creditors, as well
as society at large, thereby ensuring that the interests of all stakeholders are protected.
Q5. “FEMA clearly defines the acts that can be termed as offences under its purview. Whare
covered under FEMA act?
Ans. FEMA clearly defines the Acts that can be termed as offences under its purview. It is
the duty of the Directorate of Enforcement to investigate and prevent leakage of foreign
exchange which generally occurs through the following malpractices:

i. Remittances of Indians abroad otherwise than through normal banking

channels,
i.e. through compensatory payments.
ii. Acquisition of foreign currency illegally by person in India.
iii. Non-repatriation of the proceeds of the exported goods.
iii. Unauthorised maintenance of accounts in foreign countries.
iv. Under-invoicing of exports and over-invoicing of imports and any other type of
invoice manipulation.
v. Siphoning off of foreign exchange against fictitious and bogus imports.
vi. Illegal acquisition of foreign exchange through Hawala.
vii. Secreting of commission abroad.
If any person commits any such offence or contravenes any provision of FEMA, or contravenes
any rule, regulation, notification, direction or order issued in exercise of the powers under this
Act, or contravenes any condition subject to which an authorisation is issued by the Reserve
Bank of India, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in
such contravention where such amount is quantifiable. In case of unquantifiable sums he is liable
to pay up to two lakh rupees, and where such contravention is a continuing one, further penalty
which may extend to five thousand rupees for every day after the first day during which the
Contravention continues. In addition to the above mentioned penalties, an Adjudicating
Authority may direct that any currency, security or any other money or property in respect of
which the contravention has taken place be confiscated to the central government and further
direct that the foreign exchange holdings, if any, of the persons committing the contraventions or
any part thereof, be brought back into India or be retained outside India in accordance with the
directions made in this behalf. If any person fails to make full payment of the penalty imposed on
him within a period of ninety days from the date on which the notice for payment of such penalty
is served on him, he shall be liable to civil imprisonment.

Directorate of Enforcement has to detect cases of violation and also perform substantial
adjudicatory functions to curb the above mentioned malpractices. The main functions of
the Directorate are as under:
a. To collect and develop intelligence relating to violation of the provisions of Foreign
Exchange Management Act.
b. To conduct searches of suspected persons, conveyances and premises for seizing
incriminating materials (including Indian and foreign currencies involved).
c. To enquire into and investigate suspected violations of provisions of the Foreign
Exchange Management Act.
d. To adjudicate cases of violations of Foreign Exchange Management Act for levying
penalties departmentally and also for confiscating the amounts involved in
contraventions.
e. To realise the penalties imposed in departmental adjudication.

For enforcing the provisions of various sections of FEMA, 1999, the officers of
Enforcement Directorate of the level of Assistant Director and above may perform the
following functions:
a. Collection and development of intelligence/information.
b. Keeping surveillance over suspects
c. Searches of persons/vehicles by provisions of Income-tax Act, 1961.
d. Searches of premises as per provisions of Income-tax Act, 1961.
e. Summoning of persons for giving evidence and producing of documents as per
provisions of Income-tax Act, 1961.
f. Power to examine persons as per provisions of Income-tax Act,1961.
g. Power to call for any information/document as per provisions of Income tax Act,
1961.
h. Power to seize documents, etc. as per provisions of Income-tax Act, 1961.
i. Custody of documents as per Income-tax Act, 1961.

Officers of and above the rank of Deputy Director of Enforcement, are authorised to deal
with cases of contravention of the provisions of the Act. These proceedings are quasi-judicial in
nature and start with the issuance of show cause notice. In case the reply to the show cause
notice is not found to be satisfactory, further proceedings are held. The contravener is summoned
for a personal hearing, in which the noticee has a further right to present his defense, either in
person or through any authorised representative. After the completion of these proceedings, the
adjudicating authority has to examine and consider the evidence on record, in its entirety. If the
charges are not proved, the noticee is acquitted, and in the event of charges being found
substantiated, such penalty, as is considered appropriate as per the provisions of FEMA are
imposed, besides confiscation of amounts involved in these contraventions.
notes on:
a) Copyright b) Electronic Governance

Ans. Copyright: In simple words it means the right to copy. It is based on the notion that
people who create or produce creative work have the right to decide how the fruits of their talent,
skill and labour should be displayed. It is an exclusive right to reproduce an original work of
authorship fixed in a tangible medium of expression, to prepare derivative works based upon the
original work and to perform or display the work in case of musical, dramatic, choreography, art,
literature and sculptural works. Copyrighting is in favour of the author or creator of work. It
arises the moment the author creates the work and the act requires it to get it registered with the
government for its protection so that nobody can reproduce the same without the creator’s
permission. The holder of the copyright can sue the unauthorised user and claim damage and
compensation as well. Copyrights are protected in India by the Copyright Rules, 1957 and after
several subsequent amendments the latest Copyrights (Amendment) Act of 1999.

Copyrighted work: Works of authorship that fall within the definition of copyrightable
work includes:
1. Literary work which includes books and other writing, musical composition,
paintings, sculpture, computer programming and films, television recording of events and
television shows.
2. Musical works and accompanying lyrics.
3. Dramatic work.
4. Pictorial graphic and sculptural works.
5. Sound recordings.
6. Cinematograph.

Electronic Governance: The Act deals with the provisions relating to electronic governance
ore-Governance. Governance is the outcome of politics, policies and programs. E-Governance
can be defined as the use of a range of modern information and communication technologies
such as the Internet, Local Area Networks, mobiles etc. by the government to improve the
effectiveness, efficiency and service delivery. Governance in IT framework means expansion of
Internet and electronic commerce and redefining of relationships among various stake holders in
the process of governance. It is a new model of governance which is based upon the transactions
in virtual space, digital economy and deals with knowledge oriented societies. E-Governance is
an emerging trend to re-invent the way the governments functions. It is required in order to
attract greater attention to improve service delivery mechanism, enhance the efficiency of
production and emphasis upon the wider access of information. E-Governance is necessary
today, as it can transform citizen service, provide access to information to empower citizens,
enable their participation in governance and enhance their economic and social opportunities, so
that they can better their lives. It leads to digital interaction between a government and citizens
(G2C), Government and Businesses/commerce/ecommerce (G2B), between Government
agencies (G2G), Government-to-Religious Movements/Church (G2R) and Government-to-
Households (G2H).

Within each of these interaction domains, four kinds of activities take place:
i. Pushing information over the Internet, e.g., regulatory services, general holidays, public
hearing schedules, issue briefs, notifications etc.
ii. Two-way communications between the agency and the citizen, a business or another
government agency. In this model, users can engage in dialogue with agencies and post
problems, comments or requests to the agency.
iii. Conducting transactions, e.g., lodging tax returns, applying for services and grants.
iv. Governance-It enables the citizen transition from passive information access to active
citizen participation by the following methods:
a) Informing the citizen
b) Representing the citizen
c) Encouraging the citizen to vote
d) Consulting the citizen
e) Involving the citizen