ASSIGNMENT

LEGAL ASPECTS OF BUSINESS

(DMBA302)

STUDENT NAME : DESHETTY LINGAIAH

ENROLMEN NO. : 2114503127
SESSION : AUG – SEP 22
PROGRAMME : MBA
SEMISTER : III

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Assignment By: Deshetty Lingaiah (2114503127)
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 SET – I

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Assignment By: Deshetty Lingaiah (2114503127)
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1. All agreements are not contracts but all contacts are agreements. Comment.
Ans: Contract According to Section 2 (h) of the Indian Contract Act, 1872, a contract is an
agreement enforceable by law made between at least two parties as per which rights and
obligations are mutually created for both parties. If the party who had agreed to do or not do
something fails to so do or not do that thing, then the other party has a remedy in law to
enforce its contract or seek compensation for it.
Example: D Airlines sells a ticket on 1 January to X for the journey from Mumbai to Bangalore
on 10 January. The airline is under an obligation or duty to take X from Mumbai to Bangalore
on 10 January. In case the airline fails to fulfill its promise, X has the right to sue the airlines
for breach of contract.
“All contracts are agreement”
We know that when an agreement enforceable by law is a contract. A contract is an
agreement that is enforceable by law. It is an agreement or set of promises giving rise to
obligations that can be enforced or are recognized by law. In order to become an agreement
into a contract, it has to satisfy all the essentials of a valid contract as mentioned in section
10 of the Indian Contract Act 1872.
Section 10 of this act says, “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 to be void”.
The essentials of a valid contract:
1. There must be two parties.
2. The agreement should be between the parties who are competent to contract.
3. There should be a lawful consideration.
4. The object of the agreement must be lawful.
5. There should be free consent between the parties.
6. The agreement must not be one that has been expressly declared to be void.
“All agreements are not contracts”
An agreement is a set of promises. Section 2(e) of The Indian Contract Act 1872 says, “Every
promise and every set of promises, forming the consideration for each other, is an
agreement”. In an agreement, there is a promise between both parties. For
example, A promises to deliver his book to B, and in return of B promises to pay Rs. 1,000
to A. there is said to be an agreement between A and B. After acceptance of the
offer/proposal it becomes a promise, promise is the result of offer acceptance.

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Thus, when there is a proposal/offer from the proposer and the acceptance of that proposal
by the propose it results in a promise. Promise and reciprocal promise from promisor and
promisee form an agreement.
Hence, we can conclude only commercial agreements where parties are intending to
shoulder responsibility upon each other and when they are entering into an agreement
keeping in mind that in case of breach of agreement terms by one of the parties, the
aggrieved party may go to court against the party who breaches the terms and compel him
by the process of law to pay compensation as decided.

2. Define contract of indemnity. Describe the rights of the indemnifier and the
indemnity holder.
Ans: Meaning of Indemnity Sections 124 and 125 deal with contracts of indemnity. Section
124 provides that a contract of indemnity is one in which a party promises to save the other
from a loss caused to him/her (the promisee) by the conduct of the promisor himself/herself
or by the conduct of any other person. A contract of insurance is an example of such types
of contracts. A contract of indemnity may arise either by an express promise or by an
operation of law, e.g., the duty of a principal to indemnify an agent from consequences of all
lawful acts done by him/her as an agent.
A contract of indemnity must have all the essentials of a valid contract. There are two parties
in a contract of indemnity – indemnifier and indemnified. The indemnifier promises to make
good the loss of the indemnified (i.e., the promisee). The indemnified or indemnity holder is
the person whose loss is being made up. Example: A contracts to indemnify B against the
consequences of any proceeding, which C may take against B with respect to a sum of Rs.
20,000. This is a contract of indemnity.
Rights of the Indemnified
The indemnity holder is entitled to recover from the promisor:
• All damages that he/she may be compelled to pay in any suit with respect to matters wherein
the promise to indemnify applies
• All costs of legal proceedings that he/she may have to pay to the third party, provided that:
o The person either acted under the authority of the indemnifier or if he/she has acted in such
a way as a prudent person would act in his/her own case
• All sums that may have been paid under the terms of any compromise of any such suit if
the compromise was not contrary to the orders of the indemnifier and was one which it would
have been prudent for the promisee to make.
Rights of the Indemnifier The Act makes no mention of the rights of the indemnifier.
However, the indemnifier’s rights are similar to the rights of a surety under Section 141, viz.,

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the person is entitled to the benefits of all the securities that the creditor has against the
principal debtor, whether he/she was aware of them or not.
3. What is meant by dissolution of a firm? Is it different from the dissolution of
partnership?
Ans: Dissolution of partnership firm is a process in which relationship between partners of firm
is dissolved or terminated. If a relationship between all the partners of firm is dissolved then it
is known as dissolution of firm. In case of dissolution of partnership of firm, the firm ceases to
exist. This process includes the discarding and disposing of all the assets of firm or and
settlements of accounts, assets, and liabilities. Learn more about Dissolution of partnership
firm, legal provisions, and settlement of accounts.

BASIS FOR DISSOLUTION OF

DISSOLUTION OF FIRM
COMPARISON PARTNERSHIP

Meaning Dissolution of a partnership Dissolution of firm implies that entire

refers to the discontinuance firm ceases to exist, including the
of the relation between relation among all the partners.
partner and other partners
of the firm.

Nature Voluntary Voluntary or Compulsory

Business Business of the firm Business of the firm comes to an end.

continues as before.

Economic Continues to exist but in a Comes to an end.

relationship changed form.

Account Revaluation account is Realisation account is prepared.

created.

Books of Books of accounts are not Books of accounts are closed.

accounts closed

The points presented below explain the difference between the dissolution of partnership and
dissolution of the firm, on various grounds:
1. Dissolution of Partnership can be defined as the breaking of the relationship between
the partner and other partners of the firm. On the other hand, dissolution of a firm is

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 used to mean discontinuance of the entire firm including the relation among all the
partners.
2. Dissolution of the partnership is voluntary in nature, as it is dissolved by mutual
agreement. Conversely, a firm is dissolved either voluntarily or compulsorily.
3. Dissolution of partnership does not lead to the discontinuance of business, and so it
is carried on by the remaining partners as before. As against this, with the dissolution
of the firm, the business carried on by the firm also comes to an end.
4. In the case of dissolution of the partnership, the economic relationship between the
partners continues to exist but in changed form. On the contrary, in the dissolution of
the firm, economic relationship between partners ceases to exist.
5. When there is the dissolution of the partnership, revaluation account is prepared in
order to revalue assets and reassess liabilities. In contrast, realisation account is
prepared when the dissolution of firm takes place.
6. The firm’s books of accounts are not closed in the dissolution of the partnership, but
the firm’s books are closed along with the closure of partner’s account, in the
dissolution of the firm.

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 SET – II

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Assignment By: Deshetty Lingaiah (2114503127)
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4. Define negotiable instruments? What are the various types of negotiable
instruments recognised by the Negotiable Instruments Act, 1881?
Ans: Documents that are freely used in commercial transactions and monetary dealings are
known as negotiable instruments if they satisfy certain conditions. The term “negotiable
instrument” refers to a written document transferable by mere delivery or by indorsement and
delivery to enable the transferee to get a title in the instrument. An instrument may possess
the characteristics of negotiability either by statute or usage. Laws relating to negotiable
instruments are contained in the Negotiable Instruments Act, 1881. This Act deals exclusively
with promissory notes, cheques and bills of exchange, as defined under Section 13.
There are certain instruments that are recognized as negotiable instruments by usage. Thus,
bank notes, bank drafts, share warrants, bearer debentures, dividend warrants, scripts and
treasury bills are negotiable by usage.
An instrument is called ‘negotiable’ if it possesses the following features:
• Freely transferable – Transferability may be by either by delivery, or by endorsement and
delivery.
• Holder’s title frees from defects – The term ‘negotiability’ means that not only is the
instrument transferable by endorsement and/or delivery, but that its holder in due course or
a bona fide transferee is not affected by defect in title, either of the transferor or any prior
party. The transferee acquires a good title, notwithstanding any defects in a previous holder’s
title. A holder in due course is the one who receives the instrument for value and without any
notice as to the defect in the title of the transferor.
• The holder can sue in his own name – Another feature of a negotiable instrument is that
its holder in due course can sue on the instrument in his/her own name and he/she need not
give any notice to the transferor or third party liable for payment.
• Transfer infinitum – A negotiable instrument can be transferred infinitum, i.e., it can be
transferred any number of times till its maturity.
• Presumptions – A negotiable instrument is subject to certain presumptions in law.
Apart from the above features, a negotiable instrument also follows certain rules of evidence,
as it is in writing and signed by the parties concerned. It also possesses the features of a
valid contract. An instrument that does not possess the above characteristics is not
negotiable, but is assignable, i.e., the transferee takes it, subject to all equities and liabilities
of the transferor.
Negotiable instruments are of two kinds:
• Bearer instruments – where the property passes to transferee by mere delivery of the
instrument

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• Order instruments – here both endorsement and delivery are required for the transfer of
property.

5. Describe the main features of the Consumer Protection Act, 2019.

Ans: Key features of the Consumer Protection Act, 2019
1. Establishment of the Central Consumer Protection Authority (CCPA):
The act has the provision of the Establishment of the CCPA which will protect, promote and
enforce the rights of consumers. The CCPA will regulate cases related to unfair trade
practices, misleading advertisements, and violation of consumer rights.
The CCPA will have the right to impose a penalty on the violators and passing orders to recall
goods or withdraw services, discontinuation of the unfair trade practices and reimbursement
of the price paid by the consumers.
The Central Consumer Protection Authority will have an investigation wing to enquire and
investigate such violations. The CCPA will be headed by the Director-General.
2. Rights of consumers:
The act provides 6 rights to the consumers;
i. To have information about the quantity, quality, purity, potency, price, and standard of
goods or services.
ii. To be protected from hazardous goods and services.
iii. To be protected from unfair or restrictive trade practices.
iv. To have a variety of goods or services at competitive prices
3. Prohibition and penalty for a misleading advertisement:
The Central Consumer Protection Authority (CCPA) will have the power to impose fines on
the endorser or manufacturer up to 2-year imprisonment for misleading or false
advertisement (Like Laxmi Dhan Warsha Yantra).
Worth to mention that repeated offense may attract a fine of Rs 50 lakh and imprisonment of
up to 5 years.
4. Consumer Disputes Redressal Commission:
The act has the provision of the establishment of the Consumer Disputes Redressal
Commissions (CDRCs) at the national, state and district levels.
The CDRCs will entertain complaints related to;
i. Overcharging or deceptive charging

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ii. Unfair or restrictive trade practices
iii. Sale of hazardous goods and services which may be hazardous to life.
iv. Sale of defective goods or services
Jurisdiction under the Consumer Protection Act, 2019
The act has defined the criteria of Consumer Disputes Redressal Commission (CDRCs). The
National CDRC will hear complaints worth more than Rs. 10 crores. The State CDRC will
hear complaints when the value is more than Rs 1 crore but less than Rs 10 crore. While the
District CDRC will entertain complaints when the value of goods or service is up to Rs 1
crore.

6. Describe the objectives of IT Act, 2000.

Ans: he Information Technology Act, 2000 is a comprehensive legislation in India that
governs the use of electronic communications and transactions. The Act was enacted to
facilitate e-commerce, e-governance, and to provide a legal framework for the protection of
electronic data and personal information. The objectives of the IT Act, 2000 are
multifaceted and are aimed at promoting electronic transactions and securing cyberspace.

The IT Act, 2000 has the following objectives:

• Facilitating Electronic Transactions: One of the primary objectives of the IT Act, 2000
is to facilitate electronic transactions by providing legal recognition to electronic
documents, digital signatures, and electronic contracts. The Act ensures that
electronic transactions are legally valid, enforceable, and admissible in court.
• Protecting Personal Information: The IT Act, 2000 aims to protect the privacy and
confidentiality of personal information. The Act lays down the rules for the collection,
use, disclosure, and storage of personal information by any person or entity. The Act
also provides for compensation to be paid to a person whose personal information
has been disclosed without their consent.
• Preventing Cybercrime: The IT Act, 2000 aims to prevent cybercrime and create a
safe and secure cyberspace. The Act criminalizes activities such as hacking,
computer-related fraud, and the spread of computer viruses. It also provides for
punishment and penalties for those found guilty of such crimes.
• Promoting E-Governance: The IT Act, 2000 aims to promote e-governance by
making it mandatory for all government agencies to maintain their records in
electronic form. The Act also provides for the use of digital signatures and electronic
authentication for online delivery of government services.
• Protecting Intellectual Property Rights: The IT Act, 2000 aims to protect intellectual
property rights in the digital world. The Act provides for the protection of copyrights,
trademarks, and patents in electronic form. The Act also makes it an offence to
infringe on these rights and provides for penalties and punishments for those found
guilty.

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 • Facilitating Electronic Filing of Documents: The IT Act, 2000 aims to facilitate
electronic filing of documents by introducing the concept of electronic records and
electronic signatures. This enables documents to be filed electronically and reduces
the need for physical filing.
• Establishing Cyber Appellate Tribunal: The IT Act, 2000 established the Cyber
Appellate Tribunal to hear and resolve disputes relating to cybercrime and other
offences under the Act. The Tribunal has the power to adjudicate and impose
penalties and compensation for violations of the Act.
• Encouraging the Development of the IT Industry: The IT Act, 2000 aims to
encourage the development of the IT industry in India. The Act provides for tax
incentives and other benefits to IT companies and promotes the use of IT in all
sectors of the economy.

In conclusion, the IT Act, 2000 has several objectives aimed at promoting electronic
transactions, protecting personal information, preventing cybercrime, promoting e-
governance, protecting intellectual property rights, facilitating electronic filing of documents,
establishing the Cyber Appellate Tribunal, and encouraging the development of the IT
industry. The Act has played a crucial role in creating a legal framework for the use of
electronic communications and transactions in India and has contributed significantly to the
growth of the IT sector in the country.

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