1. LEGAL ASPECTS OF BUSINESS. SEM-2

2. SYLLABUS: 1) INDIAN CONTRACT ACT 1872. 2) SALE OF GOODS ACT 1930. 3) COMPANIES ACT 1956 4) THE NEGOTIABLE INSTRUMENTS ACT 1881. 5) THE M.R.T.P ACT.

3. 1) THE INDIAN CONTRACT ACT 1872: INTRODUCTION: LAW IS SET OF RULES AND REGULATIONS. IT REGULATES THE CONDUCT OF PEOPLE TO PROTECT THEIR PROPERTY AND CONTRACTUAL RIGHTS WITH A VIEW TO SECURING JUSTICE, PEACEFUL LIVING AND SOCIAL SECURITY.

4. THERE ARE SEVERAL BRANCHES OF LAW SUCH AS INTERNATIONAL LAW, CONSTITUITIONAL LAW, CRIMINAL LAW, CIVIL LAW ETC. EVERY BRANCH OF LAW REGULATES AND CONTROLS A PARTICULAR FIELD OF ACTIVITY.

5. WHAT IS MERCANTILE LAW OR COMMERCIAL LAW OR BUSINESS LAW? IT IS A PART OF CIVIL LAW WHICH DEALS WITH THE RIGHTS AND OBLIGATIONS OF MERCANTILE PERSONS ARISING OUT OF MERCANTILE TRANSACTIONS.IT INCLUDES LAWS RELATING TO VARIOUS CONTRACTS, PATERNISHIP, COMPANIES, NEGOTIABLE INSTRUMENTS ETC.

6. SOURCES OF MERCANTILE LAW: 1) ENGLISH MERCANTILE LAW 2) INDIAN STATUE LAW 3) JUDICIAL DECISIONS 4) CUSTOMS AND USAGES.

7. THE LAW OF CONTRACT: THE LAW OF CONTRACT IS CONTAINED IN THE INDIAN CONTRACT ACT, 1872 WHICH... A) DEALS WITH THE GENERAL PRINCIPLES OF LAW GOVERNING ALL CONTRACTS AND B) COVERS THE SPECIAL PROVISIONS RELATING TO SPECIAL CONTRACTS LIKE BAILMENT, PLEDGE, INDEMNITY, GUARANTEE AND AGENCY.

8. THE LAW OF CONTRACT RELATES TO THE ESSENTIALS OF A VALID CONTRACT, BUT ALSO TO ALL DAY-TO-DAY PERSONAL DEALINGS.

9. MEANING OF A CONTRACT: ACCORDING TO SEC2(H) OF THE INDIAN CONTRACT ACT 1872, AN AGREEMENT ENFORCEABLE BY LAW IS A CONTRACT. A CONTRACT MUST HAVE THE FOLLOWING TWO ELEMENTS: 1) AN AGREEMENT AND 2) ENFORCEABILITY OF AN AGREEMENT.

10. CONTRACT = AN AGREEMENT+ ENFORCEBILITY OF AN AGREEMENT. WHAT IS AN AGREEMENT?

11. WHAT IS AN AGREEMENT? ACC. TO SEC2(E) OF THE INDIAN CONTRACT ACT 1872, “EVERY PROMISE AND EVERY SET OF PROMISES FORMING THE CONSIDERATION FOR EACH OTHER IS AN AGREEMENT.”

12. WHAT IS A PROMISE? ACC. TO SEC 2(B) OF THE ACT ,”A PROPOSAL WHEN ACCEPTED BECOMES A PROMISE.” AGREEMENT=OFFER+ACCEPTANCE. ENFORCEABILITY OF AN AGREEMENT IS PRESENT WHEN IT CREATES SOME LEGAL OBLIGATIONS FOR THE BOTH THE PARTIES.

13. CLASSIFICATION OF CONTRACTS: ON THE BASIS OF CLASSIFICATION OF CONTRACTS: 1) CREATION 2) EXECUTION 3) ENFORCEABILITY.

14. CONTRACTS ON THE BASIS OF CREATION: A) EXPRESS CONTRACT : EXPRESS CONTRACT IS ONE WHICH IS MADE BY WORDS SPOKEN OR WRITTEN. B) IMPLIED CONTRACT: AN IMPLIED CONTRACT IS ONE WHICH IS MADE OTHERWISE THAN BY WORDS SPOKEN OR WRITTEN.IT IS INFERRED FROM THE CONDUCT OF A PERSON OR THE CIRCUMSTANCES OF THE PARTICULAR CASE. EG : COOLIE IN THE RLY.STN.

15. CONTRACTS ON THE BASIS OF EXECUTION: A) EXECUTED CONTRACT :IT IS A CONTRACT WHERE BOTH THE PARTIES TO THE CONTRACT HAVE FULFILLED THEIR RESPECTIVE OBLIGATIONSMUNDER THE CONTRACT. B) EXECUTORY CONTRACT: IT IS A CONTRACT WHERE BOTH THE PARTIES TO THE CONTRACTHAVE STILL TO PERFORM THEIR RESPECTIVE OBLIGATIONS.

16. C) PARTLY EXECUTED AND PARTLY EXECUTORY CONTRACT : IT IS A CONTRACT WHERE ONE OF THE PARTIES TO THE CONTRACT HAS FULFILLED HIS OBLIGATION AND THE OTHER PARTY HAS STILL TO PERFORM HIS DUTY.

17. CONTRACTS ON THE BASIS OF ENFORCEABILITY: A) VALID CONTRACT: A CONTRACT WHICH SATISFIES ALL THE CONDITIONS PRESCRIBED BY THE LAW IS A VALID CONTRACT. B) VOID CONTRACT: THE TERM VOID CONTRACT IS DEFINED IN SEC2(J),” A CONTRACT WHICH CEASES TO BE ENFORCEABLE BY LAW BECOMES VOID WHEN IT CEASES TO BE ENFOCEABLE.”

18. 3)VOID AGREEMENT:ACC. TO SEC2(G) OF THE ACT AN AGREEMENT NOT ENFORCEABLE BY LAW IS SAID TO BE VOID. SUCH AGREEMENTS ARE VOID-AB-INITIO WHICH MEANS THEY ARE NOT ENFORCEABLE RIGHT FROM THE STARTING .

19. 4) VOIDABLE CONTRACT : ACC.TO SEC2(I) OF THE ACT, AN AGREEMENT WHICH IS ENFORCEABLE BY LAW AT THE OPTION OF ONE OR MORE OF THE PARTIES THEREON BUT NOT AT THE OPTION OF THE OTHER OR OTHERS. EG. AGREEMENT SIGNED BY COERCION.

20. 5)ILLEGAL AGREEMENT : IT IS ONE THE OBJECT OF WHICH IS UNLAWFUL.THEY ARE ALWAYS VOID-AB-INITIO. 6) UNENFORCEABLE CONTRACT:IT IS A CONTRACT WHICH IS ACTUALLY VALID BUT CANNOT BE ENFORCED DUE TO SOME TECHNICAL DEFECT SUCH AS NOT IN WRITING OR UNDERSTAMPED.

21. ESSENTIALS OF A VALID CONTRACT: 1)OFFER AND ACCEPTANCE 2) INTENTION TO CREATE LEGAL RELATIONSHIP 3)FREE CONSENT 4)CAPACITY TO CONTRACT 5)LAWFUL CONSIDERATION 6)LAWFUL OBJECTIVE 7)AGREEMENT NOT EXPRESSLY DECLARED VOID

22. 8) CERTAINITY OF MEANING 9) POSSIBILITY OF PERFORMANCE 10) LEGAL FORMALITIES.

23. HOME WORK: DISTINCTION BETWEEN AN AGREEMENT AND A CONTRACT.