PONDICHERRY UNIVERSITY

DIRECTORATE OF DISTANCE EDUCATION

MBA – 1ST SEMESTER

BUSINESS ENVIRONMENT AND LAW
BUSINESS LAW – AN INTRODUCTION

PRESENTATION – 5 & 6 (19th & 20th MARCH 2022)

DR. YARLAGADDA SRINIVASULU

PROFESSOR

DEPARTMENT OF INTERNATIONAL BUSINESS

PONDICHERRY UNIVERSITY

PUDUCHERRY - 605014
 Business comprises all profit seeking activities and
enterprises that provide goods and services necessary to
an economic system.
Law refers to the principles and regulations established
by the Government, applicable to people/ organizations/
things and enforced by judicial decision.
Meaning Of Law: Law is a system of rules that are
created and enforced through social or governmental
institutions to regulate behaviour.
 Meaning and Definition Of Business Law
 Business law is that portion of the legal system
which guarantees an orderly conduct of business
affairs and the settlement of legitimate disputes in a
just manner.
It establishes a set of rules and prescribes conduct
in order to avoid misunderstandings and injury in
our business relationships.
‘THE INDIAN PARTNERSHIP ACT 1932’
 INTRODUCTION TO BUSINESS ORGANIZATIONS

The way that a business is set up is

often as important as how it is run and
the choice of business entity often has
a huge influence on the eventual
success or failure of that business.
 Types of Business Organizations
• Sole Proprietorships
• HUFs – Karta
• Partnerships
• Co-op (Cooperative) Societies
• Trusts
• Registered/ Joint Stock Companies
• Government Companies
• Statutory Corporations
• Joint Ventures
 ‘THE INDIAN PARTNERSHIP ACT 1932’
A partnership is a kind of business where a formal agreement
(oral/written) between two or more people is made and agreed to be the
co-owners, distribute responsibilities for running an organization and
share the profit or losses that the business generates.
As most of the businesses in India are going for a partnership business, to monitor
and govern such partnership, The Indian Partnership Act was established on the
1st October 1932. As per this act, an agreement(oral/written) made between two
or more persons who agrees to operate the business together and distribute the
profits and losses they gain from the business is Partnership.
DEFINITION OF "PARTNERSHIP", "PARTNER", "FIRM" AND "FIRM NAME".

Section4 of The Indian partnership Act defines that:

• "Partnership" is the relation between persons who have
agreed to share the profits of a business carried on by all or
any of them acting for all.
• Persons who have entered into partnership with one another
are called individually, "partners" and collectively "a firm", and
the name under which their business is carried on is called the
"firm-name".
FEATURES/CHARACTERISTICS OF PARTNERSHIP
1.Agreement between partners: it is an association of two or more
individuals, and a partnership arises from an agreement or a contract. The
agreement (accord) becomes the basis of the association between the
partners. Such an agreement may be in the written form. An oral
agreement is even handily legitimate. In order to avoid controversies, it is
always good, if the partners have a written agreement.
2. Two or more persons: in order to manifest a partnership, there should
be at least two (2) persons possessing a common goal. To put it in other
words, the minimal number of partners in an enterprise can be 02 and
maximum number of people can be 20.
FEATURES OF PARTNERSHIP continued..,
3. Sharing of profit: another significant component of the partnership is,
the accord between partners has to share gains and losses of a trading
concern. However, the definition held in the partnership act elucidates –
partnership as an association between people who have consented to
share the gains of a business, the sharing of loss is implicit. Hence, sharing
of gains and losses is vital.
4.Business motive: it is important for a firm to carry some kind of
business and should have a profit gaining motive.
FEATURES OF PARTNERSHIP continued..,
5. Mutual business: the partners are the owners as well as the
agent of their firm. Any act performed by one partner can affect
other partners and the firm. It can be concluded that this point
act as a test of partnership for all the partners.
6. Unlimited liability: every partner in a partnership has
unlimited liability. The liability of the partners is joint and several.
The firm and the partners are considered as one and same.
ADVANTAGES OF PARTNERSHIP
• Easy Formation : An agreement can be made oral or written to enter
partnership and establish a firm.
• Larger Resources: Unlike sole proprietorship where every contribution is made
by one person, in partnership, partners of the firm can contribute more capital
and other resources as required.
• Flexibility :The partners can initiate any changes if they think it is required to
meet the desired result or change circumstances.
• Sharing Risk: Pains/Gains of the firm is distributed among all the partners.
• Combination of different skills: The partnership firm has the advantage of
knowledge, skill, experience, and talents of different partners.
PROCEDURE FOR REGISTRATION OF PARTNERSHIP FIRM
The registration of a firm may be effected at any time by sending by post or
delivering to the registrar of firms of the area in which the place of business of the
firm is situated or proposed to be situated, a statement in the prescribed form and
accompanied by the prescribed fee, stating:
*The firm name;
*The place or principal place of business of the firm;
*The names of any other places where the firm carries on business;
*The date when each partner joined the firm;
*The names in full and permanent addresses of the partners; and
*The duration of the firm.
PROCEDURE FOR REGISTRATION continued..,
The statement shall be signed by all the partners or by their
agents specially authorised in this behalf. Each person signing the
statement shall also verify in the manner prescribed.
A firm name shall not contain any of the following words viz.
"Crown", ‘Emperor", "Empress", "Empire", "Imperial", "King",
"Queen", "Royal", or words expressing or implying the sanction,
approval or patronage of Government, except when the State
Government signifies its consent to the use of such words as
part of the firm name by order in writing.
PROCEDURE FOR REGISTRATION continued..,
All the States of the Country have framed rules prescribing the forms, fee for
registration and verification of the statement. The application for registration has
to be made to the Registrar of Firms of the Business area, in the prescribed form.
When the Registrar is satisfied that the provisions have been complied with, (s)he
shall record and make an entry of the statement in a register called the Register of
Firms. The Registrar is the competent authority and if (s)he acts bona fide and
follows the procedure, his/ her satisfaction cannot be challenged.
The firm, which is registered, shall use the brackets and the word
(Registered/Regd.,) immediately after its name.
 NON REGISTRATION
It is not compulsory to register the firm.
However there are serious effects of non-registration.
No suit to enforce a right arising from a contract or conferred by the Indian
Partnership Act shall be instituted in any court by or on behalf of any person
suing as partner in a firm against the firm or any person alleged to be or to
have been a partner in the firm, unless the firm is registered and the person
suing is or has been shown on the Register of firms as a partner in the firm.
Similarly, no suit to enforce a right rising from a contract shall be instituted in
any court by or on behalf of a firm against any third party unless the firm is
registered.
PARTNERSHIP DEED
A partnership deed should contain the following clauses
• Names of the partners *Nature of business
• Duration of partnership *Name of the firm
• Capital *Share of partners in profits and losses
• Firm Bank Account Operation *Books of account
• Powers of partners *Retirement and expulsion of partners
• Death of partner *Dissolution of firm
• Settlement of Disputes
ELIGIBILITY/COMPETENCY TO BECOME PARTNERS
• A partnership agreement can be entered between persons who are
competent to contract. Every person who is of the age of major according to
the law to which he is subject and who is of sound mind and is not
disqualified from contracting by any law to which he is subject can enter into a
partnership. The following can enter into a partnership.
• INDIVIDUAL
• PARTNERSHIP FIRM
• HINDU UNDIVIDED FAMILY
• COMPANY
• TRUSTEES
ELIGIBILITY continued..,
• INDIVIDUAL: An individual, who is competent to contract, can become a
partner in the partnership firm.
• PARTNERSHIP FIRM: A partnership firm don’t have separate legal entity and
therefore a firm can not enter into partnership with any other firm or
individual. But a partner of the partnership firm can enter into partnership
with other persons and he can share the profits of the said firm with his
other co-partners of the parent firm.
• HINDU UNDIVIDED FAMILY: A Karta of the Hindu undivided family can
become a partner in a partnership in his individual capacity, provided the
member has contributed his self acquired or personal skill and labour.
ELIGIBILITY continued

• COMPANY: A company is a juristic artificial person with separate

legal entity and therefore can become a partner in a partnership
firm, if it is authorised to do so by its Memorandum of
Association.
• TRUSTEES: Trustees of private religious trust, family trust and
trustees of Hindu mutts or other religious endowments are
juristic persons and can therefore enter into partnership, unless
their constitution objects or forbid them to do so.
TYPES OF PARTNERSHIPS
• A partnership is divided into different types depending on the state and
where the business operates. Here are some general aspects of the three
most common types of partnerships.
• General Partnership: A general partnership comprises of two or more
owners to run a business. In this partnership, each partner represents the
firm with equal right. All partners can participate in management activities,
decision making, and have the right to control the business. Similarly, profits,
losses, and assets, liabilities are equally shared. Each partner should take full
responsibility for the debts and liability incurred by the other partner. If one
partner is sued, all the other partners are considered accountable. The
creditor or court will hold the partner’s personal assets. Therefore, most of
the partners do not opt for this partnership.
TYPES OF PARTNERSHIPS continued..,
• Limited Partnership: In this partnership, includes both the general and limited
partners. The general partner has unlimited liability, manages the business.
Limited partners have limited control over the business (limited to their
investment). They are not associated with the everyday operations of the
firm. The limited partners only invest and take a profit share. They do not
have any interest in participating in management or decision making.
• Limited Liability Partnership: In Limited Liability Partnership (LLP), all the
partners have limited liability. Each partner is guarded against other partners
legal and financial mistakes. A limited liability partnership is almost similar to a
Limited Liability Company (LLC) but different from a limited partnership or a
general partnership.
TYPES OF PARTNERSHIPS continued..,
• Partnership at Will: Partnership at Will can be defined as when there is no
clause mentioned about the expiration of a partnership firm.
Under section 7 of the Indian Partnership Act 1932, the two conditions that
have to be fulfilled by a firm to become a Partnership at Will are:
*The partnership agreement should have not any fixed expiration date.
*No particular determination of the partnership should be mentioned.
• Therefore, if the duration and determination are mentioned in the
agreement, then it is not a partnership at will. Also, initially, if the firm had a
fixed expiration date, but the operation of the firm continues beyond the
mentioned date that it will be considered as a partnership at will.
DUTIES OF A PARTNER
Absolute Duties
• Carry on the business with common advantage
• Just, Trust and Faithful
• Record true accounts
• To provide full information
• To indemnify for loss caused by fraud
• Liable jointly and severally
• Not to assign his interest
DUTIES OF A PARTNER continued
Qualified duties
• Not to carry on business competing with the firm
• Indemnify the firm for wilful neglect
• Carry out the duties diligently
• To work with/ without remuneration
• To contribute to losses Partners
• Use firms property exclusively for the firm
• To account for personal profits derived
RIGHTS OF THE PARTNERS

• To take part in the day to day conduct and management of

the business
• Free access to all the records
• To express opinion in matters connected with the business
• Share in the profits and losses of the business
• To get interest on the payment of advance
• To be indemnified by the firm against losses or expenses
AUTHORITY OF PARTNERS
Express authority/ Implied authority: Acts of a partner which are incidental or
usually done in the course of the business. In case of emergency; all acts as
prudent. But the implied authority of a partner does not empower him to:
• Submit a dispute relating to the business of a firm to arbitration
• Open a bank account in his own name
• Compromise or relinquish any claim of the firm
• Withdraw a suit or proceeding on behalf of the firm
• Admit any liability in a suit or proceeding against the firm
• Acquire immovable property on behalf of the firm
• Transfer immovable property belonging to the firm, or
• Enter into partnership on behalf of the firm
LIABILITIES OF PARTNERS To Third Parties
• Liability of a partner for acts of the firm:
Partners are liable jointly and severally to 3rd party.
• Liability of firm for wrongful act of a partner:
Firm is liable to 3rd party for loss caused by the partner.
• Liability of firm for misappropriations by partners:
If any partner misappropriates received repayments on
account of the firm, 3rd party can make the firm liable.
RECONSTITUTION OF A PARTNERSHIP FIRM
• Partnership firm has no separate legal entity or perpetual
existence. Change in partners via death, retirement, admission of
new member, expulsion, insolvency, transfer of interest by partner
etc. This changes, the rights and liabilities of each partner. This is
termed as reconstitution of a firm.
• When one or more partners cease to be partners but others
continue it is called reconstitution of firm without dissolution.
• Dissolution of partnership between all partners of firm is
dissolution of firm.
DISSOLUTION OF A PARTNERSHIP FIRM
A Partnership firm may be dissolved in the following manner
• Dissolution by Court
• Dissolution by agreement
• Dissolution by operation of law
• Dissolution on the happening of certain contingencies
• Dissolution by notice
DISSOLUTION OF A PARTNERSHIP FIRM BY COURT
The court may dissolve a firm at the suit of any partners on any of the following
grounds namely :
• INSANITY OF A PARTNER: A partner has become of unsound mind. The
insanity of a partner does not ipso facto dissolve the firm but the next friend
or continuing partners has to file suit for dissolution.
• PERMANENT INCAPACITY OF A PARTNER: A partner has become
permanently incapable of performing his duties as partner.
• CONDUCT AFFECTING PREJUDICIALLY THE BUSINESS : A partner is guilty
of conduct, which is likely to affect prejudicially the carrying on the business of
the firm.
DISSOLUTION OF A PARTNERSHIP FIRM BY COURT continued..,
• BREACH OF PARTNERSHIP AGREEMENT: A partner will fully or
persistently commits breach of agreements relating to the management of
the affairs of the firm or the conduct of it’s business or otherwise conducts
himself in matters relating to the business, that it is not reasonably practical
for the other partners to carry on the business with him.
• TRANSFER OF INTEREST OF A PARTNER : A partner has in any way
transferred the whole of his interest in the firm to a third party.
• LOSS: The business of the firm cannot be carried on, to save at a loss.
• JUST AND EQUITABLE : On any other ground that renders it just and
equitable that the firm should be dissolved.
DISSOLUTION OF A PARTNERSHIP FIRM BY OTHER WAYS
• DISSOLUTION BY AGREEMENT: A firm may be dissolved with the consent of all
the partners or in accordance with the contract between the partners.
• DISSOLUTION BY OPERATION OF LAW: A firm is compulsorily dissolved on
the Insolvency of partners or by the happening of any event which makes it
unlawful for the business of the firm to be carried on.
• DISSOLUTION ON THE HAPPENING OF CERTAIN CONTINGENCIES: The
partnership agreement may contain a provision that the firm will be dissolved on
the happening of certain contingency like for a fixed term and by the expiry of that
term or constituted to carry out one or more ventures by its completion of the
same or By the death of a partner or On insolvency of a partner.
• DISSOLUTION BY NOTICE: If any partner don’t want to continue in the business
and other partners are not willing for any alternative proposal then the partner can
give a notice for dissolution.
CONSEQUENCE OF DISSOLUTION
• Continuing liability of partners
• Continuing authority of partners for winding up
• Liability to share personal profits
• Return of premium
• Where contract rescinded for fraud
• Right to impose restriction: Agreement to goodwill
SALE OF GOODWILL OF FIRM AFTER DISSOLUTION
• Intangible asset of the firm. Brands
• ‘Goodwill’ is the value of reputation of the business of the firm.
• It can be sold after dissolution either separately or along with the
other properties of the firm. As per section 14, property of
partnership firm includes goodwill of the firm. In winding up it has
to be included in the assets.
• The seller of goodwill i.e. partners of dissolved firm cannot use firm
name, represent themselves as carrying on business of old firm.
 LAW
•Law is a system of rules, usually enforced through
a set of institutions.
•It shapes politics, economics and society in
numerous ways and serves as the foremost social
mediator in the relations between people.
•Law governs a wide variety of social activities.
 INDIAN CONTRACT ACT 1872

•Contract law regulates everything from buying

a product to trading in stock markets.
•It is an act meant to ensure that rights
agreed between parties in a contract are
legally enforced.
 Contract -- Meaning/ Definition
As per Sec.2(h) of the Contract Act
“An agreement enforceable by law is a contract.”
• Therefore, a contract has two important elements, one is the agreement, and the other one is the
obligation which is enforceable by law.
Agreement + Enforceability by Law = Contract
Agreement must create a legal obligation or duty to become a Contract. There may be
Social agreements and Legal agreements. Only Legal agreements become contracts.
“All contracts are agreements but all agreements are not contracts.”
A contract is an exchange of promises between two or more parties to do, or
refrain from doing, an act, which is enforceable in a court of law.
 Basics of a Contract

*It must have an offer and acceptance

*It must not be prohibited by law.
*It must have the 3 C’s.
Capacity
Consideration
Consent
 Basics of an OFFER
1.It must be precise ; capable of being understood and communicated.
2.It must not contain a clause that does away with acceptance
3.Special terms must be brought to the notice of the offeree
4.It need not be in writing, (when both the parties stand on their words)
5.In immoveable property contracts it must be in writing.
6.Under certain circumstances an advertisement can become an offer.
7. An offer can be revoked before it is accepted. (In some countries it is not so)
8. In a digital contract the offer has been communicated once it has entered the
computer of the offeree.
 Basics of an ACCEPTANCE
• An acceptance must be in response to an offer.
• It must be in the mode prescribed
• It must be made by the person to whom the offer has been made.
• It must be unaltered and unconditional. (In some countries minor modifications
are permissible)
• Acceptance must be made within the time provided or reasonable time.
• Acceptance can be revoked before it reaches the offeree.
• In the case of cyber contracts acceptance has reached when it enters the
system of the offeror.
In the Three Cs the First C -CAPACITY
• A minor, An insane/lunatic person and an insolvent person cannot enter
into contracts . It is void ab – initio.
• void ab initio, means "to be treated as invalid from the outset.“ Not
legally binding. A document that is void is useless and worthless; as if it
did not exist.
• Reason : The contract creates legally binding obligations on the parties
and hence only those who have the capability (capacity) to do so should
be allowed otherwise they(Minor/Mentally unsound/Insolvent) may
harm themselves.
In the Three Cs the First C –CAPACITY continued…,
• Agreement with minor is void – ab – initio.
• Even if a minor declares himself to be a major he can plead that he is a minor
• An agreement with a minor cannot be ratified on his becoming a major.
• Guardians of a minor are not liable on contracts with a minor
• A minor if provided with necessaries of life then it can be reimbursed from the
minor’s estate.
• A minor can be a beneficiary.
• A minor can become a partner though he would not be liable.
In the Three Cs the Second C -CONSIDERATION

• Consideration is the price of a contract.

• A contract without consideration is void.
• Consideration must be decided by the parties
themselves.
• Consideration can also be fulfilled by third parties.
• Consideration must have some legal value in the eyes of law.
In the Three Cs the Third C - CONSENT
• According to Section 13 two or more persons are said to have consent when they agree
upon the same thing in the same sense. This means that there should be perfect identity
of mind (consensus ad idem) regarding the subject matter of the contract.
• To make a contract valid, not only consent is necessary but the consent should also be
free. According to Sec. 14, consent is said to be free and genuine when it is not caused by
any of the following
• (a)Coercion - sec 15
• (b)Un due influence - sec 16
• (c)Fraud
• (d)Mis représentation - sec 17,18
• (e)Mistake –sec 20,21
COERCION: SEC 15

Coercion is committing or threatening to commit any act forbidden by

the Indian Penal Code, or the unlawful detaining or threatening to
detain any property to the prejudice of any person, whatsoever with
the intention of causing any person to enter into an agreement .
When the consent of a party to an agreement is obtained by coercion,
the contract becomes voidable at the option of the party ,whose
consent is so obtained. The burden of proving that the consent was
obtained through coercion shall be upon the party who wants to set
aside the contract on the plea of coercion.
UNDUE INFLUENCE: SECTION16
Undue influence is the improper use of any power possessed over the mind
of the contracting party.
According to section 16 a contract is said to be affected by undue influence
when the relations subsisting between the parties are such that one of the
parties is in a position to dominate the will of other and uses that position
to obtain an unfair advantage over the other. Following are the parties that
can be affected by undue influence
Doctor and patient Lawyer and client
Guardian and ward Trustee and beneficiary
Teacher and student
FRAUD AND MISREPRESENTATION: SEC. 17

Providing wrong information of facts may be intentional or innocent.

Intentional misrepresentation has been termed as ‘Fraud’
Eg: Manoj says to Deepika that the winter coat he wants to sell is made of pure wool ,though
he knows that it is untrue, intentionally did it. Deepika purchases the coat by believing Manoj’s
statement is true , It is a fraud by Manoj and therefore contract is voidable at Deepika's option.

Innocent misrepresentation has been termed as ‘Misrepresentation’

Eg: Deepika was inspired to buy shares in a company as Manoj made a positive
statement based on previous data. She couldn't get benefited with the purchase,
but it is only a misrepresentation as Manoj don’t have any intention to mislead’.
MISTAKE: SEC 20,21

Mistake is of two types: (a)Mistake of law (b)Mistake of fact

Mistake of law may be due to (i)mistake of Indian law (ii)mistake of foreign law
Mistake as to private rights of the parties – treated as Mistake of fact . Here , the
agreement will be void in case of bilateral mistake only. Section 20 states that
both the parties to an agreement are under a mistake as to a matter of fact and
that is essential to the agreement is bilateral mistake and shall be void.
Eg: A agrees to buy certain horse from B .It turns out that the horse was dead at the
time of the agreement though neither of the parties was aware about this fact.
Summary of Essentials of a Valid Contract (sec.10)

• 1.Offer & acceptance.

• 2.Intention to create legal relationship.
• 3. Capacity of parties – Competent persons should only enter
• 4.Consideration -- Lawful consideration.
• 5.Consensus- ad – idem -- Free and genuine consent
• 6.Lawful object
• 7.Certainty and possibility of performance
• 8.Legal formalities like Writing & registration
• 9.Agreement not expressly declared void
 AGREEMENT Meaning/ Definition

According to sec.2(e) of the Act, every promise or set of promises forming

consideration for each other is an Agreement.
Agreement will be the outcome of the consensus between the parties who wish
to enter into a contract, i.e., the promise made between them, represents
concurrence of their minds. Both agreed same thing in same sense. There has to
be consensus ad idem.
According to Sec.13, consensus ad idem means meeting of minds or identity of
minds or receiving the same thing in the same sense at the same time.
There won't be an agreement even if the parties do agree, but not on the same
thing in the same sense.
VALID,VOID AND VOIDABLE CONTRACTS

• Valid Contract: It is a contract which satisfies all the requirements provided for under sec. 10.
• Void contract: Also known as a void agreement, is not actually a contract. A void contract
cannot be enforced by law. It creates no rights or obligations. An agreement to carry out an
illegal act is an example of a void contract or void agreement. For example, a contract
between drug dealers and buyers is a void contract simply because the terms of the contract
are illegal.
• Voidable contract: unlike a void contract, is a valid contract. At most, one party to the
contract is bound. For example, depending upon jurisdiction, a minor has the right to
repudiate certain contracts. Any contract with a minor is thus a voidable contract. If a minor
were to enter into a contract with an adult, the adult would be bound by the contract,
whereas the minor could choose to avoid performing the contract.
CONTINGENT CONTRACT - MEANING
A contingent contract is an agreement that states which actions under certain
conditions will result in specific outcomes. Contingent contracts usually occur
when negotiating parties fail to reach an agreement. The contract is characterized
as "contingent" because the terms are not final and are based on certain events
or conditions occurring. A contingent contract can also be viewed as protection
against a future change of plans.
Contingent contracts can also lead to effective agreement when each party has
different time preferences. For example, one party may desire immediate payoffs,
while the other party may be interested in more long-term payoffs. Further,
contingency contracts can foster an agreement in negotiations involving resolute
differences of expectations about the future.
CONTINGENT CONTRACTS -EXPLAINED

A contingency contract can also be viewed as protection

against a future change of plans. Contingency contracts can
create value by causing each negotiating party to stop arguing
about their different beliefs. Both parties will be better off
because they are each confident in their beliefs, ideas or
projections. Contingency contracts can be beneficial for both
parties by producing value and motivating performance
CONTINGENT CONTRACTS - CHARACTERISTICS
In order to be most effective, contingent contracts should possess some of the following characteristics:

@The objectives for each party involved must be aligned.

@The promise is based on an uncertain event: the action required of one party is only
dependent upon the occurrence of some event in the future.
@The event must be minor to the contract: the performance of a promise is not the
event; rather it is part of the contract.
@The event is independent of the promising party: the occurrence of an event is not
controlled by the promising party's will or desire.
@The agreements should be formalized in writing with appropriate legal counsel.
@The parties must mutually decide how the terms of agreement will be measured.
CONTINGENT CONTRACT - IMPLEMENTATION
Contingent contracts can be used in many types of settings such as
work, school, home, etc. In regards to work, a common example of
contingent contracts comes in the form of job negotiations. It usually
involves the opportunity to discuss salary, position, promotion, etc.
However, contingent contracts can often include negotiations regarding
flexitime, job sharing, responsibilities, etc. Although contingent contracts
concerning employment packages are more the exception than the
norm, these types of negotiations can be very successful, allowing both
parties to walk away feeling very satisfied with the newly agreed upon
arrangement.
CONTINGENT CONTRACT - EXAMPLES
The following examples are everyday agreements that may occur in the workplace:

*The employee and employer agree on a 1% bonus increase at the end

of the year if the employee receives all excellent reports on her/his
performance review.
*The employee will be allowed to work two days a week from home
after having worked at the company for one year, and if he/she submits
all reports on time.
*The employee will receive full insurance coverage after having worked
at the company for one full year, with less than five sick days.
QUASI CONTRACT

A quasi contract is a contract that is created by a court order, not by an

agreement made by the parties to the contract. For example, quasi contracts are
created by the court when no official agreement exists between the parties, in
disputes over payments for goods or services.
Quasi contracts are certain relations resembling those created by contracts. In a
transaction in which there is no contract between the parties; the law creates
certain rights and obligation between them which are similar to those created by
a contract.
A quasi-contract (or implied-in-law contract or constructive contract) is a
fictional contract recognised by a court
PERFORMANCE OF CONTRACT - MEANING
• Section 27 of Indian contract Act says that , The parties to a contract must
either perform, or offer to perform, their respective promises, unless such
performance is dispensed with or excused under the provisions of this Act, or
any other law. Promises bind the representatives of the promisor in case of the
death of the latter before performance, unless a contrary intention appears in
the contract.
• Each party to the contract is bound to perform promises according to the
stipulated terms. In case of any controversy as to the meaning of a promise, the
courts have usually decided that a person must perform it as the other party
reasonably understood it to be. Thus, a preference for the rights of the one who
is to receive the benefit of the promise is established.
‘PERFORMANCE OF CONTRACT‘ - EXAMPLES
• The term ‘Performance of contract‘ means that both, the promisor, and the
promisee have fulfilled their respective obligations, which the contract placed
upon them. For instance, A visits a stationery shop to buy a calculator. The
shopkeeper delivers the calculator and A pays the price. The contract is said to
have been discharged by mutual performance.
• For performance to be effective, the courts expect it to be exact and complete,
i.e., the same must match the contractual obligations. Example A promises to
deliver goods to B on a certain day on payment of Rs 1,000. A expires before
the contracted date. A‘s representatives are bound to deliver the goods to B,
and B is bound to pay Rs 1,000 to A‘s representatives.
DISCHARGE OF A CONTRACT - MEANING
• Discharge of a contract implies termination of contractual
obligations. This is because when the parties originally entered
into the contract, the rights and duties in terms of contractual
obligations were set up. Consequently when those rights and
duties are put out then the contract is said to have been
discharged. Once a contract stands discharged, parties to it
are no more liable even though the obligations under the
contract remain incomplete.
DISCHARGE OF A CONTRACT – DIFFERENT WAYS
A Contract is deemed to be discharged, that is, concluded and no
longer binding, in the following circumstances:
• Discharge by performance.
• Discharge of Contract by Substituted Agreement.
• Discharge by lapse of time.
• Discharge by operation of law.
• Discharge by Impossibility of Performance.
• Discharge by Accord and Satisfaction.
• Discharge by breach.
REMEDIES FOR BREACH OF CONTRACT - EXPLAINED
• A contract can be said to be breached or broken when either of the parties
fails or refuses to perform their obligations, or promises under the contract.
Therefore, it can be said that when a binding agreement is not honoured by one
or more parties by non-performance of the promises, the agreement can be
said to be breached.
• Parties to a contract are legally expected to perform their respective
obligations, so naturally, the law frowns upon a breach by either party. There are
several remedies for breach of contract, such as award of damages, specific
performance and injunction. In courts of limited jurisdiction, the main remedy is
an award of damages.
REMEDIES FOR BREACH OF CONTRACT – THE GRANTS
As soon as one party commits a breach of the contract, the law grants to the
other party one of the three remedies, He/she may seek to obtain:
• Damages for the loss sustained, Section 73 of
The Indian Contract Act 1872, or
• A decree for specific performance, Section 10 of
The Specific Relief Act, 1963,or
• An injunction. Section 36 of
The Specific Relief Act 1963
The laws relating to damages are governed by the Contract Act, whereas the laws
relating to injunctions and specific performance are governed by the Specific
Relief Act, 1963.