Introduction to Law

Legal and Tax Aspects of business

Law implies Rules and as such includes different sets of rules which govern or regulate various external human actions and conduct of individuals, institutions and the Government with each other

Characteristics of law
1. Law is related to external human actions 2. Law is rule of conduct imposed and enforced by the sovereign. Law is the command of the sovereign and is enforced by the state. 3. These rules of conduct are essential for peaceful and prosperous living of the people in the country. Law is supreme and is applicable to all.

1 Business Law includes laws concerning industry, commerce and trade. 2.Business Law and Mercantile Law are synonymous terms. 3. Business law can be defined as that branch of law which is concerned with or applicable to industry, commerce, trade, or business in connection with various business or mercantile transactions. 4.Object of BL is to regulate and control increasing business or commercial transactions and activities. 5. BL includes Laws relating to contracts, sale of goods, partnerships, companies, negotiable instruments, patents, designs, TM, insurance, contracts of guarantee & indemnity etc.

BUSINESS LAW

The Indian Contract Act 1872

INTRODUCTION Definition: Salmond An agreement creating and defining obligations between the parties. Sir Federic pollock Every agreement and promise enforceable at law is a contract. S-2(h) of Indian contract Act An agreement enforceable by law is a contract.

Essential Requirements of a contract

1. 1. 2. 2. AN AGREEMENT Two parties Consensus-ad-idem LEGAL OBLIGATIONS

AN AGREEMENT
S-2(e) every promise and every set of promises, forming the consideration for each other, is an agreement. And when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, something, such act or abstinence or promise is called consideration for the promise.

PROMISE S-2B When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted , becomes a promise An agreement therefore, comes into existence only when one party makes a proposal or offer to the other party and that the other party signifies his assent thereto,. Inshort, an agreement is the sum total of offer & acceptance.

TWO PARTIES : PROMISOR AND PROMISEE

When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. The person who makes the proposal is called the promisor and the person to whom the proposal is made called the promisee (2c). A proposal, when accepted, becomes a promise(2b) and when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that order to such act or abstinence, he is said to make a proposal (S-2a)

Legal Obligation 1. For formation of any contract, an agreement should give rise to a legal obligation and the obligation must be enforceable at law. 2. Legal obligation is distinct from that of a moral, religious or social obligations. 3. The LOC is not the whole law of agreements nor it is the whole law of obligations. It is the law of those agreements which create obligations, and those obligations which have their sources in agreements.

AGREEMENT VS. CONTRACT

 There must be an agreement Parties to a contract must be competent There should be an intention to create a legal relationship There must be free consent of parties to the agreement Consent is free when it is not caused by (i) Coercion (ii) Undue influence (iii) Fraud (iv) Misrepresentation (v) mistakes Lawful consideration Legal or lawful object Agreement not expressly declared void by law Compliance with legal formalities Certainty and possibility of performance

Essentials of valid contract

Classification of contracts
1. On the basis of mode of formation or creation a. Express contracts b. Implied contracts c. Quasi contracts On the basis of extent of execution or performance d. Executed contracts e. Executory contracts On the basis of parties to the contract f. Unilateral contracts g. Bilateral contracts On the basis of the form of contracts h. Formal contracts i. Simple contracts On the basis of validity of enforceability j. Valid contracts k. Void contract voidable contract- void agreement Enfrocibility- unenforceable contract Illegal or unlawful contract

2.
3.

4
5.

6.

 A. Check Your Progress T/F Law of contracts is not the whole law of agreements An agreement of social nature is not a contract A void contract is one which is void ab initio All void agreements are not necessarily illegal Collateral transactions to an illegal agreement are not void

Offers and Acceptance

Offer or Proposal : S-2(a) defines a proposal as When one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of that other to such an act or abstinence , he is said to make a proposal. Offer /proposal consist A promise by the promisor to do or abstain from doing something ,& A request to the promisee for giving his acceptance. Until and unless the promisee accepts the promise unconditionally, the promisor is not bound by the promisee. Lawfull offer:1. An offer may be express or implied 2.An offer must contemplate to give rise to legal consequences & be capable of creating legal relation 3. The terms of the offer must be certain & not loose or vague 4.An invitation to offer is not an offer 5. An offer may be specific or general 6. An offer must be communicated to the offeree 7. An offer should not contain term the non-compliance of which would amount to acceptance 8. An offer can be made subject to any terms & conditions 9. Two identical cross-offers do not make a contract

Types of proposal
Essentials or Rules of a valid offer

1.Express or Implied 2.Specific or General 3.+ve or - ve

a)Terms of an offer must be clear,specific or definite, certain & no loose or vague. b)An offer must create legal relationship c)An offer must be communicated to the person to whom it is made d) Intention of offer must be obtain the consent or assent e)Offer may be express or implied, Gen. or Specific , + ve or -ve f)An offer should not include any term or (s) of non-compliance which may be assumed to lead acceptance g)A statement of price is not an offer h)An Offer is different from an invitation to an offer i)Two identical cross offers do not constitute a contract j)An offer can be made subject to any terms and conditions

Lapse of an offer
An offer lapses If not accepted in the mode prescribed by an offeror After stipulated or reasonable time By revocation- R.of standing offer or tender R. by non-fulfillment of a condition precedent to acceptance Bcoz of subsequency illegality or destruction of subject matter By rejection By the death or insanity of the offeror/offeree before acceptance

 S-2(b)When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise S-2(e)Every promise & every set of promises, forming the consideration for each other,is an agreement & An Agrmt. enforceable by law is a contract (s-2h) Who can accept an offer? Person /(s) to whom it is made

Acceptance

Valid acceptance
Acceptance must be given only by the person to whom the offer is made Acceptance must be absolute & unqualified Acceptance may be express or implied Acceptance must be communicated to the offeror Acceptance may be given for the offer which has been communicated Acceptance must be in the mode prescribed or usual & reasonable mode Acceptance must be communicated within a reasonable time Silence is not considered as a mode of acceptance Rejected offers can be accepted only, if renewed

Communication of proposal, Acceptance & Revocation

When the contracting parties are face to face & negotiate in person, there is instantaneous communication of offer & acceptance, But where services of the post office are utilised for communicating among themselves by the contracting parties, it is not easy to ascertain the exact time at which an offer or/& an acceptance is made or revoked. Communication of an offer Communication of an acceptance Communication of a revocation Time during which an offer or acceptance can be revoked Effect of delay or loss of letter of acceptance in postal transit Contracts over the telephone

1. 2. 3. 4. 5. 6.

1. A proposal when accepted always becomes a contract. 2. A quotation of price is an offer or proposal 3. Acceptance can be made even without the knowledge of the offer. 4. If the offeree does not accept the offer according to the mode prescribed by offeror, the offer does not lapses automatically. 5. An offer may be revoked by the offeror before the posting of the letter of acceptance by the acceptor.

Check Your Progress T/F

Practical problems
A invites B to a dinner. B accepts the invitation . A made elaborate arrangement but B failed to turn up. Can A sue B for the loss he has suffered? M agrees to pay N Rs 100 & in consideration N agrees to write for him 100 pages within five minutes. Is it a valid contract? Harish says in conversation to Suresh that he will give Rs. 10,000/- to a person whosoever marries his daughter. Alok marries Harishs daughter & files a suit to recover Rs.10000. Will he succeed? X sees a book displayed in a shelf of a book shop with a price tag of Rs. 85. X tenders Rs. 85 on the counter & asks for the book. The bookseller refuses to sell saying that the book has already been sold to someone else & he does not have another copy of that book in the stock. Is the bookseller bound to sell the book to x?

problems
5. B offered to sell his car to A for Rs 95000/- A accepts to purchase it for Rs. 94500/- B refused to sell the car for Rs. 94,500/Subsequently A agrees to Purchase the car for Rs. 95,000/- but B refused to sell the car. A sues B for the Specific performance of the contract. Will he succeed? P sold his busi. To Q without disclosing this to his customers. M, an old cust. Sent an order for goods to P by name. Q, the new owner, executed the order. Is M bound to accept the goods? B offered to sell his house to A for Rs. 50,000/- A accepted the offer by post. On the next day A sent a telegram revoking the acceptance which reached B before the letter is the revocation of acceptance valid? Would it make any difference if both the letter of acceptance & the telegram of revocation of acceptance reach B at the same time?

CONSIDERATION
Sir.Pollock Con. Is the price for which the promise of the other party is brought. S-2d When, at the desire of the promisor, the promisee or any other person has done or abstained from doing or does or abstain from doing, or promises to do or to abstain from doing something, such act or promise is called a consideration for the promise & 2f promises which form the con. Or part of con. For each other, are called reciprocal promises.

 Def. consists- a) the act or abstinence or promise which forms the consideration for the promise, must be done at the desire of the promisor b) it must be done by the promisee or any other person c) it may have been already executed or is in the process of being done or may be still executory d) It must be something to which the law attaches a value

a)

b) c) d) e)
a) b) c) d)

Con. may be an act to do something or abstinence or forbearance of doing something Con. May be past, present or future Con. Must be real & not illusory Con. Should move at the desire of the promisor Con. may move from the promisee or any other person Chinyya V. Ramayya / A stranger to contract cannot sue For supporting each independent promise, there must be an independent consideration Con. need not be adequate Con. Must be something which the promisor is not already bound to do Con. must be valuable in the eyes of law

Essentials of a valid consideration

 Promise made on account of love & affection S-25(1)If it is(i) expressed in writing (ii) registered under the law for the time being in force for the registration of documents,& is (iii) made on a/c of natural love & affection Promise for compensation of voluntarily services(S25-2 Promise to pay time barred debt (S-25-3) Contribution to charity Contract of Agency Completed gifts Remission by the promisee, of performance of the promise

Exception to the rule of No consideration No contract

Check your progress T/F

An act constituting consideration for the promise must be done at the desire of the promisor or any other person. Past consideration is no consideration A stranger to a contract cannot sue thereon. Consideration need not be adequate to the promise for the validity of an agreement No consideration is necessary to create an agency.

Practical problems
M offered a reward to anyone who would rescue his wife dead or alive from a burning building. A fireman risking his life brought out the wifes dead body. Is he entitled to recovery of the reward? A & B are friends, B treats A during As illness. B does not accept payment from A for the treatment & A promises Bs son- X , to pay him Rs. 1000/- A being in poor circumstances, is unable to pay. X sues A for the money. Can X recover? X a social reformer, promised Y a reward of Rs. 1000/- if he refrained from smoking for two years. Y does so. Is he entitled to the reward? A writes to B, at the risk of your own life, you saved me from a serious motor accident. I promise to pay you Rs. 1000/- A does not pay. Advise B as to his legal rights.

Capacity of parties
S-11 lays down that Every person is competent to contract who is of the age of majority 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. S-11declares the foll. persons to be incompetent a) Minors b) Persons of unsound mind c) persons disqualified from contracting by The Law

Minors Agreements
An agreement by a minor is absolutely void & inoperative as against him Beneficial agreements are valid contracts Contracts of apprenticeship and service by a minor No ratification on attaining the age of majority The rule of estoppels does not apply to a minor Minors liability for necessaries Specific performance Minor partner Minor agent Minor & insolvency Contract by minor and adult jointly Surety for a minor Position of minors parents Minor shareholder Minors liability in tort

Person of unsound mind

What is sound mind? S-12-A person is said to be of sound mind for the purpose of making a contract, if at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effects upon his interests. Effects of agreements made by persons of unsound mind

Disqualified persons
Alien enemies Foreign sovereigns and ambassadors Convict Married women Insolvent JSC & corporation incorporated under a spl.Act

Check your progress

1. A Minor is a person who has not completed the age of 21 years 2. An agreement conferring some benefit upon the minor is a valid contract? 3. A minor cannot be adjudged insolvent 4. A minor is personally liable for necessaries supplied to him. 5. A person who is usually of unsound mind may enter into a contract when he is of sound mind. 6. A rule of estoppels does not apply to minor

A, an infant, obtains a loan from B. Can A be asked to repay the money? A , a minor lends Rs. 1,000/- against a Promissory Notes executed in his favour. Is the borrower liable to repay the money? A minor fraudulently represented to a money lender that he was of full age, & obtained a loan of Rs. 500. Has the moneylender any right of action against the minor for the money lent, or for damages for fraudulent misrepresentation? A, an infant, borrows Rs. 2000/- from B & executes a Promissory note for the amount in favour of B. On his attaining majority, the minor executes another promissory note in lieu of the first which is then cancelled . Is the second PN valid? A renders some service to B during his minority at the request of B. B, on attaining majority, enters into an agreement with A to compensate A for services rendered during Bs minority. Is the agreement valid?

Free consent
S-13 defines the term consent as two or more persons are said to consent when they agree upon the same thing in the same sense S-14 Consent is said to be free when it is not caused by 1. coercion 2. undue influence 3. misrepresentation 4. fraud 5. mistake Coercion S-15 coercion is the committing, or threatening to commit, any act forbidden by the IPC or the unlawful detaining, or threatening to detain any property , to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement(Ranganayakamma v Alwar Setti) 1. Coercion implies 2. the act constituting coercion, may be directed at any person 3. It does not matter whether IPC is or is not in force a)Threat to file a suit b) threat to commit suicide c) duress Effects:

S-16 (1)A contract is said to be induced by undue influence where the relations subsisting betn the parties are such that (i) one of the parties is in a position to dominate the will of the other and (ii) uses that position to obtain an unfair advantage over the other. In parti. & without prejudice to the generality of the forgoing principle a person is deemed to be a position to dominate the will of another a) Where he holds a real or apparent authority over the other or b) where he stands in a fiduciary relation to the other ; or c) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness ,or mental or bodily distress

Undue Influence

 3. Where a person who is in a position to dominate the will of another, enters into contract with him, and the transaction appears, on the face of it or on the evidence adduced to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of other. Effects of UI- 1.S-19A - contract is voidable at the option of the party whose consent was so caused Unconscionable transactions Pardanashin woman

Fraud
S-17 Fraud means & includes any of the foll. acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent , or to induce him to enter the contract The suggestion, as a fact, of that which is not true, by one who does not believe it to be true; The active concealment of a fact by one having knowledge or belief or the fact A promise made without any intention of performing it ; Any other act fitted to deceive Any such act or omission as the law specially declares to be fraudulent.

1.

2.
3. 4. 5.

Can silence be fraudulent?

1.(i) the circumstances of the case are such that, regard being had to the, it is the duty of the person keeping silence to speak, or 9ii) silence is, in itself, equivalent to speech . It therefore follows that 1. As a rule mere silence is not fraud bcoz there is no duty cast by law on a party to a contract to make a disclosure to the other party 2. Silence is fraudulent, if the circumstances of the case are such that it is the duty of the person keeping silence to speak a. Fiduciary relationship b. contracts of insurance c. Contract of marriage engagement d. contracts of family settlements e. share allotment contracts 3. Silence is fraudulent where the circumstances are such that silence is, in itself , equivalent to speech.

Essential elements of Fraud

There must be false representation It must be done by the party or his agent The representation must relate to a fact The other party must have been attracted to act upon the representation leading to a fraud The representation intentionally done to commit a fraud must have been done before the conclusion of the contract The other party must have relied upon the representation intentionally done to commit a fraud & thereby must have been deceived

Misrepresentation
S-18 MR means and includes: 1. The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true; 2. Any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another, to his prejudice, or to the prejudice of any one claiming under him; 3. Causing,however innocently, a party to an agrmt.,to make a mistake as to the substance of the thing which is the suject of agrmt.

Mistake 0f law & Mistake of fact

S-20 Where both the parties to an agrmt. are under a mistake as to a matter of fact essential to the agrmt., the agrmt.is void S-21 a contract is not voidable bcoz it was caused by a mistake as to any law in force in India; but a mistake as to law not force in India has the same effect as a mistake of fact. S-22 a contract is not voidable merely bcoz it was caused by one of the parties to it being under mistake as to a matter of fact

Mistake of law & Mistake of fact

Mistake of Law Mistake of Law of the country Mistake of Law of the foreign country Mistake of Fact: a) Unilateral b) Bilateral :i) Mistake to possibility of performing the contract ii) Mistake as to the subject matter regarding : 1) Existence 2) Identity 3) Quantity 4) Quality 5) Subject Matter 6) Title 7) Price

Check Your progress-T/F

1. In the absence of free consent, the contract is voidable at the option of either party. 2. A threat to commit suicide amounts to coercion. 3. There is no presumption of undue influence between n husband & wife. 4. Silence as to facts likely to affect the willingness of a person to enter into a contract is fraud. 5. Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.

Practical Problems
1.A, sells a horse to B knowing fully well that the horse is vicious. A does not disclose the nature of the horse to B. Is the sale valid? 2. A, who is trying to sell an unsound horse, forges a veterinary surgeons certificate, stating that the horse is sound & pins it on the stable door. B comes to examine the horse but the certificate goes unnoticed by him. He buys the horse and finds later on the horse to be unsound. He wants to avoid the agreement under the plea that he has been defrauded. Will he succeed? 3. X, offers to sell Y a painting which X knows is a copy of a well known masterpiece. Y, thinking that the painting is an original one & that X must be unaware of this, immediately accepts Xs offer, Does this result in a contract? 4. X buys from Y a painting which both believe to the work of an old master & for which X pays a high price. The painting turns out to be only a modern copy. Discuss the validity of the contract. 5. X, falsely representing herself as the wife of a millionaire takes a ring from a jeweler's shop for the approval of her husband. She pledges it with a pawn broker who in good faith & without notice of the fraud pays her Rs. 10,000/Can the jeweler recover the ring from the pawn broker? 6. M, an old man of poor sight endorsed a bill of exchange for Rs.3000/thinking that it was a guarantee. Is M liable to pay the amount?

Legality of object & consideration

1. 2. 3. 4. 5. 6.

S-23 the consideration or an object of an agreement is lawful,unless It is forbidden by law; or It is of such nature that, if permitted, it would defeat the provisions of any law,or It is fraudulent or It involves or implies injury to the person or property of another; or The court regards it as immoral; or The court regards it as opposed to public policy

Void Agreements:2(g)The agrmt.,which is not enforceable by law Agreement:

1. By incompetent parties(s-11) 2. Made under mutual mistake of facts(s-20) 3. The consideration or object of which is unlawful(s-23) 4. The con. Or object of which is partly unlawful (s-24) 5. Entered into without any consideration(s-25) 6. Made in restraint of marriages(s-26) 7. Made in restraint of trade,Busi.,Occupation(s-27) 8. In restraint of legal proceedings(s-28) 9. All agrmts.,the meaning of which is not certain(s-29) 10. Wagering agrmts.(s-30) 11. Agrmts. Contingent on impossible events(s36) 12. Agrmts. To do an act impossible in itself. (s-56)

Performance of contract
Contract creates some sort of legal obligation which continues till the contract is either performed or discharged. Performance of a contract implies fulfillment of the terms and conditions or obligation of the contract by the respective parties to the contract within the time and in the manner prescribed S-37 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 of any other law. Thus 1. Actual performance 2. Attempted performance

Performance of a contract
Actual performance : A party to a contract is said to have actually performed his promise when he has done something that he has undertaken or promise to do Attempted performance: the promisor offers to perform his obligation under the contract as per terms of the contract, but the performance is not complete unless the offer of performance is accepted by the promisee . Attempted performance is of two kinds 1) Tender of goods 2. Tender of money

 1. 2. 3.

4.
5. 6. 7.

A valid tender or offerIt must be unconditional It must be made at proper time & Place It must be of the whole obligation contracted for & not only of the part. If the tender relates to delivery of goods, it must give a reasonable opportunity to the promisee for inspection of goods It must be made by capable person If there are several joint promisees, an offer to any one of them is a valid tender. In case of tender of money, exact amount should be tendered in the legal tender money

WHO CAN DEMAND PERFORMANCE

It is only the promisee who is entitled to demand performance of the promise. When the promise is made with two or more promisees jointly and unless a contrary intention appears from the contract made ,the right of claiming performance of the contract rests with all the joint promises jointly. Legal representatives of such deceased persons jointly

By Whom must contracts be performed

Promisor Agent Legal Representation Third person Joint Promisor

 Mutual and Independent promises

Reciprocal promises & Rules regarding their performance

Mutual and Concurrent promises

Conditional and dependent promises Rule I-S-51- When a contract consist of reciprocal promises to be simultaneously performed, no promisor need to perform his promise unless the promisee is ready & willing to perform his RP According to order expressly fixed by the contract/nature of the transaction require When a contract contains RP, and one party to the contract prevent the other from performing his promise, the contract becomes voidable at the option of the party so prevented & entitle for compensation for any loss sustain by non-performance of contract RP are such of nature that one of them cannot be performed till the other party has performed his or her promise. If the other party fails to perform his/her promise , the other party cannot claim performance of RP from Ist party. Other party has to compensate to Ist party Where persons Rlly promise, I stly to do certain things which are legal and 2 ndly , under sepcified circumstances to do certain other things which are illegal , I st is a contract & 2 nd is a void agreement

Time & Place of performance of a contract

Within reasonable time Where time and place is specified On certain day & place Promisor to apply to promisee to appoint a place for performance of promise Manner or time by promisee to perform a promise Time of performance of contract a) Where time is the essence of the contract b) When time is not the essence of the contract

Contract which need not be performed

When there is n When performance become impossible(s-56) agrmt.,betn the parties to a contract to substitute a new contract /rescind the old/ alter it (s-62) When every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit, When a person, at whose option a contract is voidable, rescinds it, the other party thereto need not perform any promise contained therein in which he is promisor. Such contract need not be performed(s-64) If any promisee neglects or refuses to afford the promisor reasonable facilities for performance of his promise , the promisor is excused by such neglect, or refusal as to nonperformance caused thereby.

Discharge of contract
By performance of the contract By agreement 1)By novation(s62) 2) By recession (s-62) 3) By alteration(s-62) 4) By remission(s-63) 5)By Waiver By operation of law-death, insolvency, Merger By breach made by any party to contract- a. Anticipatory b. Actual By Impossibility of performance a. Impossibility at the time of contract b. Subsequent impossibility Not cover- a. Difficulty of performance b. Commercial Impossibility 3. Im. Due to the default of a third person d. strikes & lock outs e. Failure of one of the objects By Material alteration w/o the consent of the

Remedies for breach of a contract

Recession of the contract Suit for damages Quantum merit Suit for specific performance Suit for injection

Quasi contracts
a) b) c) d) e) S-68-72 Certain relations resembling those created by contractsor quasi contracts Kinds of quasi contracts Supply of necessaries(s-68) Reimbursement of payment by an interested person (s-69) Liabilities of payment for non-gratuitous act(s70) Responsibility of a finder of goods(s-71) Payment of money by mistake or coercion(s72)

Check your progress

T/F

1. An oofer to perform a promise in part is a valid tender. 2. In case of several Joint promisors, the promise can demand performance from one one of the JP. 3. Contractual obligations involving personal skill or ability cannot be assigned. 4. Where times is of the essence of contract & the promisor fails to perform his promise in time, the contract becomes-------5. In the ab. Of any direction by the debtor regarding appropriation, a creditor can apply the payment to any debt including a time-barred debt.

Practical Problems
1. 2. P,Q, & R jointly promise to pay Z Rs. 3000. P & Q are not traceable. Can Z compel R to pay him in full? A Firm consisting of two partners A & B, owes a sum of Rs. 5000/- to C. C filed a suit to recover the sum against A only & obtained a decree. The decree remains partially unsatisfied & C could recover from A Rs.3000/- only. C now wants to file a suit against B for the balance of Rs. 2000/- Advise C. A owes B a sum of Rs. 5000/- C who is As friend pays to B Rs. 2000/- B accepts the amt. in full satisfaction of his claim against A. Will this payment discharge A from the whole debt. A borrows Rs. 3000/- from B, C, & D. When the debt becomes due A tenders it to B who accepts it. Is A discharged by the payment? A & B execute a promissor note in favour of X & Y for Rs. 4000/- Will X succeed if he alone sues A on the pronote.

3.

4.

5.

Contract of Indemnity
S-124A contract by which one party promises to the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a COI Nature-1.Express promises to indemnify 2.Liability of indemnifier depends upon contingency 3.It does not include implied promises 4.S-69 also implies a promise to indemnify 5.It is species of gen. contract

Rights of Indemnity Holder and of an Indemnifier

Promisee in a COI, acting within the scope of his authority , is entitled to recover from the promisor- 1. damages 2. costs 3.All sums 4. Suit for specific performance Rights of Indemnifier = rights of surety

Contract of Guarantee
S-126A COG is a contract to perform a promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the surety,the person in respect of whose default the guarantee is given is called the principal debtor & the person to whom the guarantee is given is called the creditor. A gurantee may be either oral or written.

Essential features of a COG

all essentials of valid contract Existence of three parties-Principal debtor, surety, and creditor There must be a debt existing & it should be recoverable Liability of PD is primary one and liability of surety is secondary one. It arises only in case of default of the PD The Liability Undertaken by surety must be legally enforceable S-127-A COG without consideration is void There should not be any misrepresentation

 Retrospective & Prospective Guarantee Fidelity Guarantee Specific Guarantee Continuing Guarantee Revocation of continuing Guarantee 1.By notice 2. By death of surety(s-131) 3. By variation of contract w/o Knowledge and consent of surety(s-133) 4. By release of PD W/o K & C of surety(s-134) 5. By compounding with PD(s-135) 6. By Creditors Act(S-139) 7. By creditor losing security against the PD(S-141) 8. By invalidation of contract which inc. contract by misrepresentation (s-142)& contract by concealment(s143) 9. By failure of co-surety or(s) joining in the COG

Types of Guarantee

 Always contingent & Secondary If COG is silent , creditor may file a suit against the surety on the default of the PD w/o suiting him or w/o making the PD as codefendant Unless otherwise provided in the COG, a surety is not discharged from his liability in the case of death of the PD In continuing guarantee, a guarantee extends to a series of transaction, until the revocation of the guarantee When creditor holds some security from PD, it is not necessary for the creditor first to resort to the security before suing the surety, unless otherwise provided in the contract When the PD is discharged by operation of law & not by any voluntary act of the creditor, the surety is not discharged thereby and remains liable for the whole amount of debt. A surety is not liable for cost of fruitless action by creditor A surety is not liable, if guarantee is obtained by misrepresentation, concealment Contract betn creditor and surety is not collateral contract but an

Extent of liability of surety/Guarantor

Rights of surety
Against the PD-1)Right of subrogation 2)Right to claim indemnity 3)Right to be relieved of liability Against the creditor1) Right to benefit of Creditors security 2) Right to claim set-off, in any 3) Right of Exoneration & Subrogation Against co-sureties Co-sureties-Rights & Liabilities 1. Liable to contribute equally 2. liab. When they are bound to pay different amount 3. On the release of one of them 4. Lia. Of surety when other surety does not join 5. Lib. Of two persons primarily liable, when some

Discharge of surety from his liability

By revocation-By notice, Death of surety By the conduct of the creditor- By making variations in the terms of contract, By releasing PD, compounding by the creditor with PD, By an act of the creditor, by loss of security By invalidation of contract-Gnte. Obtained by misrepresentation/concealment, failure of joining any person as a co-surety, failure of consideration

 The persons who act in place of others are called agents. Agent is the connecting link betn the principal & third party. S-182-An agent is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act isw done or who is represented, is called the principal. Who May Employ an Agent- S-184 any person who is of age of majority according to the law to which he is subject, & who is of sound mind, may employ an agent

Contract of Agency Agent & Principal

Relation betn two parties created by an express or implied agreement 2 Imp. general rules1. Whatever a person can do himself personally, he can do the same through another person i.e. his agent. 2. The acts of an agent are considered the acts of principal. A person under any legal or natural disability or incapacity cannot appoint an agent.

Essential elements of Relationship of Agency

 Principal should As an agent is only a connecting link betn his principal & the third party & he is not bound personally by his acts performed on behalf of his principal, the law requires the principal & the third party to be competent to contract confer authority on his agent to act for him & the authority, thus conferred should be such so as to make the principal answerable to third person. The relationship of agency is basically based on confidence betn a principal & his agent. S-185, no consideration is necessary in order to create an agency. Acceptance of the office is regarded as a sufficient consideration for the appointment

Creation of Agency
By express agreement By implied agreement- conduct, situation, , circumstances of the case, from the relationship of the parties concerned Cl. Of IA-By Estoppel , By holding out & By necessity By operation of law & By ratification

 S-196 Where acts done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or disown such acts . If he ratifies them, the same effects will follow as if they had been performed by his authority. Rat.may be express or implied Rat. Is Tantamount to prior authority

Ratification Effects of ratification

Requisites of valid ratification

Existence of principal The capacity of the principal Full Kledge of Facts is essential The act must be done for or on behalf of the principal Rat. Of the whole transaction Unauthorized act injuring third person or party cannot be ratified The act to be ratified must be legal Rat. Can be done by the principal if he has the power to do so Rat. Must be done within a reasonable time Rat. Must be communicated to the concerned party Rat. Relates back to the date of the act of the agent The act ratified must be relate to an existing thing

Ratification cannot be valid

When the existence of a principal is not there at the time of the act which is to be ratified Where the principal is incompetent to enter into a contract Where the act is not done for or on behalf of the principal The principal does not have full Kledge of the fact When rat Is not done of the whole trasc. Where unauthorized act or acts injuring the third party or person is/are ratified Where the act to be ratified is illegal When the rat. Is done of the acts which the principal has no power to do Rat. Is not communicated to concerned party Rat. Is not done with a reasonbale time

Classification/types of agents
1.Special 2.General 3.Universal 4.co-agents 5. substituted 6.Sub-Ag. 7.Factors 8. Brokers 9. Auctioneers 10.Commission 11.Del Credere 12.Forwarding 13. clearing 14. Indenting

Authorities of an agent
The agents capacity to bind the prin. Is known as his authority When an agent is authorized to carry on busi., he can do every lawful thing or act necessary for that purpose Actual authority of an agent Apparent or ostensible authority Agents authority in an emergency Delegation of Authority by agent

Rights, Duties & liabilities of agent to his principal

Rights to do all lawfull things Right in emergency Right appoint sub-agent & substitute agent To renounce his agency Right to receive remuneration Right to receive compensation for premature revocation Agents right of retainer Agents right of lien on principals property Agents right of indemnification against the consequences of lawful or legal act /acts ARIAC of all the acts done in good faith Agents right of stoppage in transit AR of compensation for injury caused by his principals neglect or want of skill

Duties and liabilities

To conduct principals busi. According to his instruct. On termination of agency by his principals death or insanity To conduct /carry on the work with reasonable care,skill and diligence to render a/c properly to his prin. Not to delegate his authority To communicate with prin. In cases of difficulty Not to do deal on his own a/c in the busi. Of agency Not to earn or make secret profit from agency busi. Not to use information obtained In course of the agency busi. Against his prin. To pay sum received from the principal Not to set up advance adverse title Duty in naming an agent for his principal

 Agents liability in respect of damages and misconduct Personal liability of an agent where fixed by trade custom or usage Agent agrees expressly to be liable Agents liability for his wrongful acts Liability of an agent for the acts of sub-agents

 Rights-1. To demand accounts 2.To repudiate contract when agent deals in the busi. Of agency on his own a/c 3.To benefits gained by his agent dealing on his own a/c in busi. Of busi.of agency 4. To recover damages 5.To refuse remuneration to his agent when he is guilty of misconduct 6. To revoke agents authority To ratify/disown his agents acts

Rights, Duties and liabilities of principal to his agent

 To pay remuneration & dues To indemnify his agent against the consequences of all legal or lawful acts IAC of all acts done in good faith To compensate his agent for injury caused Liability of prin.in respect of contracts entered by his agent with third parties Lop. When the notice is properly given to his agent Lop. When he induces 3 rd parties or persons to believe that his agents unauthorized acts were authorized Pl on a/c of agents misrepresentation or fraud

Duties & Liabilities of principal

Termination of Agency-S-201- An agency is terminated by the principal revoking his authority, or by the agent renouncing the busi. of agency, or by the Boa being completed, or by either the prin. Or agent dying or becoming of unsound min, or by the prin. Being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtor. Modes of termination of an agency A. By act of the parties to the contract of agency B. By operation of law

ToA by act of parties to the con.of agency

By agreement between prin. & his Agent By revocation of agency by the prin By renunciation of bus.by an agent 1.By completion of the agency of busi 2.By expiry ofperiod or time 3. By destruction of subject matter 4. By insolvency of the prin.& in some cases that of the agent 5. By death of agent/principal 6. By insanity of either party 7. By prin. Becoming an alien enemy 8. By object of agency becoming illegal or unlawful 10. By incapacity of principal or agent 11. By termination of sub-agents authority

SALE OF GOODS ACT 1930

When under a contract of sale, the property in goods is transferred from the seller to the buyer(at once) the contract is called a sale But where the transfer of the property in the goods takes place at a future time or subject to condition thereafter to be fulfilled , the contract is called an agreement to sell. An agreement to sell becomes sale when the time elapses or the conditions are fulfilled subject to which the property in goods is to be transferred.

Essentials of valid contract

1.Two parties 2.Goods 3.Transfer of property 4. Monetary consideration price 5.elements of valid contract FORMALITIES OF A CONTRACT OF SALE 1.Goods Existing , Future , contingent 2. Effects of destruction of goods or perishing of goods 3. Ascertainment at price Stipulation as to time a) Stipulations relating to time of payment & b) Stipulations not relating to time of payment but to other things like delivery of goods etc.

Contract of sale and agreement to sell a) nature of contract b) transfer of ownership of property c)Types of goods or nature of property transferred d) General and particular property e) Consequences of breach f) Risk of loss g) Sellerss right of re-selling the goods h) Sellers Insolvency i) Buyers insolvency SALE & HPA, BAILMENT AND BARTER EXCHANGE Difference betn sale & HPAa) Nature of contract & Ownership b) Termination of a contract c) Implied conditions and warranties d) Payment in installments e) Insolvency of the buyer and risk of loss f) Sale and bailment g) Sale and barter exchange

Conditions and warranties

S-12-(1)A stipulation with reference to goods which are subject there of may be a condition or warranty S12-(2) A condition is a stipulation essential to main purpose of the contract, the breach of which gives rise to a right the contract as repudiated S-12(3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives right to a claim for damages, but not a right to reject the goods & treat the contract repudiated. S-12(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.

When a condition is treated as a warranty

A) Voluntary waiver of condition B) Acceptance of goods by buyer Warranty Condition 1.Stipulation collateral stipulation essential to the to the main purpose main purpose of COS 2. A breach of W-right A breach of C-right to sue to sue for damages for Dam. & repudiate con. 3.BOW cannot be BOC may be treated as treated as BOC BOW 4.IN BOW buyer cannot In BOC buyer can claim Dam. repudiate the con. instead of repudiation of con.

Express & Implied con.& warranties

Implied conditions in a contract of sale a)S-14a con. As to title b) Con. to sale by description(S-15) c) con. As to sale by description as well as by sample(s-15) d) Con as to sale by sample (s-17) e) Con. As to quality or fitness( s-16(1) f) Con. As to merchantability (s-16(2) g) Con. As to wholesomeness h) Con. Implied by custom (s-16(3)

Implied warranties in a con. Of sale

1. 2. 3. 4. Implied warranty of quiet possession(s-14b) Iw of freedom from encumbrance (s-14c) IW as to quality or fitness by usage of trade(s16(3)) IW to disclose dangerous nature of goods Inclusion of express conditions & warranties Exclusion of implied conditions & warranties in a contract of sale Doctrine of caveat emptor-Exceptions Implied con. As to quality or fitness for buyers purpose(s-16(1) Merchantable quality or sale of goods by description(s-16(2) Usage by trade(s-16(3) Consent by fraud

Transfer of property or ownership

Passing of property from seller to the buyer POP in a contract for sale of specific or Ascertained Goods i) intention of parties S-19 ii) POP at the time of con.s-20 iii)POP in the case of specific goods where the goods are to be put into deliverable state s-21 iv) POP ICSG when the price is to be ascertained by weighing (s-22 POP in the con. Of sale of Unascertained goods(s-23) POP in Goods sent on Approval or on sale or return(s-24) Reservation of Right of Disposal(S-25) Passing of Risk(S-26)

Transfer of title by Non-owners

1. 2. 3. 4. Sale by a person not the owner or title by estoppel Sale by mercantile agent Sale by one of joint owner Sale by a person in possession under voidable contract 5. Sale by the buyer or the seller as possession after sale 6. Sale by unpaid seller 7. Exceptions in other acts Sale by official Assignee or Liquidator of theco. Sale by a person who finds the lost goods under certain circumstances Sale by a pawnee of pledge under certain circum.

Performance of the contract of sale

Delivery of goods-Actual, Symbolic, Constructive Rules regarding delivery of goods Mode of delivery(s-33) DoG & Payment of price are concurrent conditions (s32) Effect of part DoG (s-34) Buyer to apply for delivery(s-35) Place of DoG(s-36) Risk of delivery (S-40) Time of delivery (S-36(2) & (4) Goods in possession of a third person or party Cost of DoG(S-36(5))

Delivery of wrong quantity(s-37)

DOG less than contracted for/ In excess DoG contracted for mixed with other goods Installment deliveries of goods Delivery to carrier or wharfinger When an acceptance is complete on DoG Buyer not bound to return rejected goods Liability of buyer for neglecting or refusing DoG

Rights of unpaid seller & Remedial measures

A seller is deemed do be an unpaid seller when (a) the whole of the price has not been paid or tendered (b) the bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise Rights- a) Against goods & b) Against the buyer Personally RAG-i) Where property in goods has passed- Right of a) lien (b) stoppage of goods in transit (c) Resale ii)Where PiG has not passed (a) Withholding the delivery of goods (b) Stoppage in Transit RAB- 1)Suit for price 2)Suit for damages 3) Repudiation of contract 4) Suit for contract AUCTION SALE

RESTRICTIVE TRADE PRACTICES

Trade practice(S-2(u)-TP means any practice relating to the carrying on of any trade & includes: (i) anything done by any person which controls or affects the price charged by, or the method of trading of, any trader or any class of traders (ii) a single or isolated action of any person in relation to any trade; S-2(s)Trade means any trade busi.,ind., profession or occupation relating to the production, supply, distribution, or control of goods & includes the provision of any services

What is restrictive trade practice?

S-2(o) A RTP means a TP which has or may have the effect of preventing, distorting or restricting competition in any manner and in particular-(i) which tends to obstruct the flow of capital or resources into stream of production ; or (ii) which tends to bring about manipulation of prices or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner or to impose on the consumers unjustified cost or restrictions A RTP shall be deemed to be prejudicial to the public interest

What is price? / What is goods?

S-2(e)-Price in relation to sale of any goods or to the performance of any services includes every valuable consideration, whether direct or indirect & includes any consideration which in effect relates to the sale of any goods or to the performance of any services although obstensibly relating to any other matter or thing. S2(e)Goods may be existing or future; specific or unascertained or generic goods. The follow. Are also included within the meaning of the termgoods (i) Products manufactured ,processed or mined in India (ii) shares & stocks including issue of shares before allotment (iii) goods imported into India wherever ref. is made to goods supplied, distributed or controlled in In India.

What is service?
Service means service which is made available to potential users & includes the provision of facilities in connection with banking, financing, insurance, chitfund, real estate, transport, processing, supply of electrical or other energy, boarding or lodging or both, entertainment, amusement or the purveying of news or other information. Service does not include the rendering of any service free of charge or under a contract of personal service.

 I)

Registration of Agreements relating to RTP

AGREEMENT REGISTRABLE (S-33)DEEMED RTP AGREEMENTSAny Agrmt. by any method, which restricts, or is likely to restrict, the persons or classes of persons to whom goods are sold or from whom goods are bought. Any agrmt. Requiring a purchaser of goods, to purchase some other goods as a condition of such purchase Any agrmt. Restricting in any manner the purchaser in the course of his trade from acquiring or otherwise dealing in any goods other than those of the seller or any other person. Any agrmt. to purchase or sell goods or to tender for the sale or purchase of goods only at prices or on terms or conditions agreed upon betn the sellers or purchasers. An agrmt. May have the effect of forming either a buyers cartel or a sellers cartel. Cartel must carry out RTP in India or its actions must have the effect of a retrospective TP being carried out in India to attract jurisdiction of the commission.

II) III)

IV)

v)

vi)

vii)

viii)

ix)

Any agrmt. To grant or allow concessions or benefits, including allowances, discounts, rebates or credits in connection with, or by reason of dealings Any agrmt. to sell goods, on condition that the prices to be charged on resale by the purchaser shall be the prices stipulated by the seller unless it is clearly stated that prices lower than those prices may be charged Any agrmt. to limit, restrict or withhold the output or supply of any goods or allocate any area or market for the disposal of the goods Any agrmt.not to employ or restrict the employment of any method, machinery or process in the manufacture of goods Any agrmt. For the exclusion from any trade asso. of any person carrying on or intending to carry on,in good faith the trade in relation to which theTAformed

x) Any agrmt. to sell goods at such prices as would have the effect of eliminating competition or a competitor xi)Any agrmt. Restricting in any manner, the class or number of wholesalers, producers or suppliers from whom any goods may be bought xii) Any agrmt. As to the bids which any of the parties therto may offer at an auction for the sale of goods or any agrmt. whereby any party thereto agrees to abstain from bidding at any auction for the sale of goods xiii) Any agrmt. Not referred to above, which the CG may,(by notification) specify for the time being as being one relating to a RTP pursuant to any recommendation made by the Commission in this behalf xiv) Any agrmt.to enforce the carrying out of any such agreement (s-33(1) xv) Any agrmt making provision for services as they apply in relation to agreements connected with the production, storage, supply ,distribution or control of goods (s-33(2)

 Agreements which do not require registration(s33(3)-(i) agreements expressly authorized by or under any law for the time being in force, or (ii) Agreements which have the approval of the CG or(iii)if the govt. is a party to any agreement The above exclusions are on a/c of public policy Procedure for Registration of Agreements(s-35R12&14) 1.Time limit for registration 2.In case of variation or determination of any agrmt. 3. In case of agrmt. Made by trade association 4.Where one person is party to numerous agrmts. 5. Terms in one or more instruments

 Examination & recording of agrmts (R13) Register of agreements parti. To be entered in the register & its maintenance-The director General shall i) enter the parti. Of agrmts registrable in the register maintained in accordance with form X ii)Maintain a spl.sec. of the register for entering therein such parti. As may be directed by the commission iii)Maintain an alphabetical index of the names of the parties to the agrmts other than those reserved to be entered in the spl.sec. of the register. iv) Also maintain an AI of the agrmts in relation to the goods or services covered by such agrmts, as far as practicable, on the lines of the classification specified in the Sch. To the MRTP (classification of Goods)Rules 1971 v) All agrmts & other documents furnished shall be kept in separate folders arranged in alphabetical order accoring to the name of the first contracting party. vi) Also maintain in separate registers, particulars in respect of RTP,Monopolistics TP & UTP investigated by him or inquired into by the Commission, in accordance with form XI,XIA & form XIB respectively of the sch. To the rules

 Inspection & extracts of the register Presumption as to the public interest The practice shall not be prejudicial to the PI where the Commission is satisfied-a) that the restriction is reasonably necessary, having regard to the character of the goods to which it applies, to protect the public against injury in connection with consumption, installation or use of those goods ( b) that the removal of the restriction would deny to the public as purchasers, consumers or users of any goods, other specific & substantial benefits or advantages enjoyed or likely to be enjoyed by them as such, whether by virtue of the restriction itself or of any arrangements or operations resulting therefrom .

c) That the restriction is reasonably necessary to counteract measures taken by any one person not party to the agreement with a view to preventing or restricting competition in or in relation to the trade or busi. In which the persons thereto are engaged d) TRRN to enable the person party to the agrmt. to negotiate fair terms for the supply of goods to, or the acquisition of goods from, any one person not party thereto who controls a preponderant part of the trade or busi. Of acquiring or supplying such goods, or for the supply of goods to any person not party to the agrmt. & not carrying on such a trade or busi. who, either alone or in combination with any other such persons, controls a preponderant part of the market for such goods e) That having regard to the conditions actually obtaining or reasonably foreseen at the time of the application, the removal of the restriction would be likely to have a serious & persistent adverse effect on the general level of unemployment in an area, or in areas taken together, in which a substantial proportion of the trade, or industry to which the agrmt. relates is situated

f)_____ To cause a reduction in the volume or earnings of the export busi. Which is substantial either in relation to the whole export busi. of India or in relation to the whole busi. (including export busi.) of the said trade or industry g) That the restriction is reasonably required for purposes in connection with the maintenance any other restriction accepted by the parties, whether under the same agrmt.or under any other agrmt. Betn them, being a restriction which is found by the Commission not to be contrary to the public interest, or has been so found in previous proceedings before the Commission h)That the restriction does not directly or indirectly restrict or discourage competition to any material degree in any relevant trade or industry & is not likely to do so i)That such restriction has been expressly authorised & approved by the CG j) That such restriction is necessary to meet the requirements of the defence of India or any part thereof, or for the security of the State ; or k) That the restriction is necessary to ensure the maintenance of supply oof goods & services essential to the community.

Control of certain RTP

Inquiries & Investigations into RTP by Commission The com. may inquire into-a)any RTP (i)upon receiving a complaint of facts which constitutes such practice from any trade association or from any consumer or a Regd. Consumer Association Whether such consumer is a member of that CA or not; or (ii) upon a ref. made to it by the CG or a SG; (iii)upon an application made to it by the Director General ; or (iv)upon its own Knowledge or information(s-10) b) any MTP, upon a ref. made to it by the CG or upon an application made to it by the DG or upon its own Kge or Information

Procedure(s-11)
A complaint shall contain the facts complained of , which constitute RTP A ref. made by CG or a SG shall similarly contain the facts which constitute a RTP & shall be signed & verified An application by DG shall contain the facts which constitute a RTP & if it is in relation to any Agrmt. Registrable, shall set out such protions of the agrmt. As may be necessary to bring out the facts complained of & signed & verified by the DG. The DG may, upon his own Kge or information or on a complaint made to him make a preliminary investigation in such manner as he may think fit to enable him to satisfy himself as to whether or not an application should be made by him to the Comm.

DG should file the application along with

i) A copy of the application of the party concerned ii) A copy of the agreement in quadruplicate; & iii) Comments of the DG on the application On the receipt of the application, the comm. May, give an opportunity to the applicant & the DG of being heard. Investigation by DG a) Powers of DG(s-42) b) Duties & Functions of the Director General

a) b) c) d) e) f)

Notice of enquiry Acceptance & reply by respondent Powers of Comm(s-12)- have same powers as are vested in a civil court under the Code of Civil procedure,1908, while trying a suit, in respect of the follow. matters , namely The summoning & enforcing the attendance of any witness & examining him on oath The discovery & production of any document or other material object producible as evidence; The receiving of evidence on affidavits The requisitioning of any public record from any court or office The issuing of any Comm. For the examination of witnesses The appearance of parties & consequences of nonappearance

Any proceeding before the Comm. Shall be deemed to be a judicial proceeding & the Comm. shall be deemed to be a Civil Court The Comm. shall have power to require any person- a) to produce before the Comm. Such books, a/cs or other documents in the custody or under the control of the person, being documents relating to any TP, the examination of which may be required ; & b) To furnish to an officer so specified such information as respects the TP as may be required or such other information as may be in his possession in relation to the trade carried on by any person.

 Protection to persons making statements(s-59) Restrictions on disclosure of information(s-60) Directions-Comm. may give any of the foll. Directions i) the amendment of the notice of enquiry or any representation, answer or reply ii)The delivery of further & better particulars iii) The delivery of interrogatories iv) Admission of any facts or documents v) The discovery or further discovery of any documents & inspection thereof vi) The admission , in evidence of any document vii) The mode in which the evidences to be given

viii) The taking & recording of any events including the appointment of a Commissioner for that purpose ix) The investigation of the cause in respect of any class of goods in producing or supplying any goods or in applying any process of manufacture to goods & the manner in which the result of such investigation is to be brought before the Comm. at the final hearing; & x) Any other matter, as may be considered necessary or proper for the purpose of enquiry Interlocutory applications Proving of facts Power to grant temporary injunctions(s-12A)

 The FH shall take place in the open court/shall be in public. If the commission is satisfied by reason of the confidential nature of any offence or matter or for any other reason, the Comm. May- a) hear the proceedings or any part thereof in private; b) give directions as to the persons who may be present threat c) prohibit or restrict the publication of issuance given before the comm. Or of matters contained in the documents filed before the Comm. Comm. shall order hearing to take place in camera if- (i) the Comm. Is satisfied that it is the public interest that the hearing or part thereof should not take place in the open court; or ii) that evidence may be given as to a secret process or other deposits; or (iii)as to the presence, or ab. Or situation of any mineral or other deposits; or (iv) as to any similar matter, the publication of which is likely to damage substantially the legitimate busi. Interest of any person.

Final hearing (S-17)

Determination of issue in a summary way

When matter is substantially similar to those considered in previous proceedings before the comm., it may direct that the issue be referred for determination in a summary way (a) determine the issue in a summary way W/O hearing the evidence or on such evidence whether oral or documentary as it may think fit;& (b) by order give any direction if the issue had been determined after final hearing in the ordinary way or defer making of any such order, giving any direction, until all other issues in the proceedings have been disposed of.

Final order(s-19)
After hearing Comm. Shall pass final orders on the complaint, application, ref. etc. If the comm. Is of the opinion that the practice is prejudicial to the public interest , the comm. Amy, by order direct that- a) the practice shall be discontinued or shall not be repeated (b) The agreement relating thereto shall be void in respect of such RTP or shall stand modified in respect thereof in such manner as may e specified in the order. A copy of such order shall be served on the complainant , applicant, Govt., making the ref., the respondent & other persons permitted to take part in the proceedings.

Power to award compensation (s12b)-If as a result of UTP carried on by any Utaking or any person, any loss or damage is caused to CG/SG or any trader or any consumer, such aggrieved may make application to the Comm. For an order for recovery, such Amt. as comm. may determine as compensation for the loss or damage so caused comm. may, after an inquiry , make an order directing to concern person Enforcement of the order every order made by the comm.
granting a temporary injunction or directing the owner of Utaking or other person to make payment of any amt., may be enforced by the comm. In the same manner as if it were a decree or order, made by a court in a suit pending therein.If the comm.has any reasonable cause to believe that any person has omitted or failed to comply with any order, in that event comm. May authorise DG or any officer of the Comm. To make investigation into the matter. A report of investi. Enable the comm. To take such action in the matter as he may think fit.

UNFAIR TRADE PRACTICES(S-36A)

A TP, which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any services, adopts any unfair method or unfair or deceptive practice is an UT P. Trade means any trade,busi.,ind., profession or occupation relating to the production, supply, Distribution, or control of goods & includes the provisions of any services (s-2s)

False representations or statements

i) ii) iii) A TP of making any statement, whether orally or in writing or by visible representation whichFalsely represents that the goods are of a parti. Std. quality, quantity, grade, composition, style or model FR that the services are of a parti. SQG FR any rebuilt ,second-hand, renovated, reconditioned or old goods as new goods; Represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have Represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have Makes a false or misleading reption concerning the need for ,or the usefulness of, any goods or services;

iv)

v)

vi)

vii) Gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof; viii) Makes to the public a rep.tion in a form that purports to be- a) a warranty or guarantee of a product or of any goods or services; or

THE COMPANIES ACT 1956

Def. & Meaning of company-S-3 A co. means a co. formed & registered under this Act or an existing co. as defined in clause (ii)*(S-3(1)(i). While Cl.(ii) of S-3(1) implies that an existing co. means any co. formed & registered under any of the previous companies Act. Lord Justice Lindley-By a co. is meant an association of many persons who contribute money or moneys worth to a common stock & employ it for a common purpose. The common stock so contributed is denoted in money & is the capital of the co. The persons who contribute it or to whom it belongs are members The proportion of capital to which each member is entitled is his share.

Characteristics of a company
incorporate association Separate legal entity An artificial person but not a citizen Common seal Limited liability Perpetual succession Separate name Separation of ownership & Mngt. Transferability of shares Separate property Number of members Shareholders are actual owners Raising of capital on the large scale Capacity to sue Rigidity of objects

Types of companies
Classification on the basis of liability a)Ltd. By shares b) Ltd.By Guarantee c) unltd co CoB Mode of incorporation- a) Chartered Co. b) Statutory co. c) Registered co. under the Act CoB if Ownership- a) Private b) Public c)Govt. CoB of Jurisdiction of Functioning- a) National b) Multinational c) Foreign co. CoB of control & on share holding a) Holding co. b) Subsidiary company Other types-one man co., Association not for profits, Existing co.

FORMATION OF A COMPANY
Stages- a) Promotion b) Registration c) floatation or raising of the capital d) commencement of busi. Procedure of Registration of a co.1. Mode of forming Incorporated co. 2. Registration of a) Memorandum & Articles b) A letter of approval c) Declaration d) List of directors e) Sanction of the Controller of Capital Issue f) Challan 3. Certificate of incorporation 4)Effects of incorporation

Directors of the co.

1)Elected Directors 2) Managing Director 3)Whole time Director 4) Director in vacancy 5)Additional director 6) Nominal Director Appointment & Termination of Directors Rights & Duties ,Powers & liabilities of Directors Appointment & Termination of MD Rights & Powers of MD

Company Meetings
Different types - a) Board Meeting b) Meetings of committees of the board c) Meetings of debenture holders d) Meeting of creditors e) Meeting of contributors f) Shareholders Meetings-1)Statutory 2)AGM 3)Extra-ordinary General Meeting 4) Class Meet. Essentials of a valid Meeting-a) Proper authority to convene & hold a co. meeting b) notice c) Agenda d) Chairman e) Quorum f) Proxy g) Ascertainment of sense of Meeting (vote) h) Resolutions i) Minutes

Account and Audit

Books of a/c to be kept by co. Persons responsible for keeping proper BoA & penalty for failure to take necessary steps to secure compliance with the requirements of S209 Inspection of BoA, other books & Papers etc. Provisions of S-210Relating to Annual a/c & B/s Form & contents of B/s & P&L(s-211) Filing of copies of a/cs of a co. with registrar of co.

Auditor of the company

Appointment & Remuneration Qualifications & disqualifications Powers & Duties , liabilities Audit of a/c of branch office of co. Audit Report