NTA UGC NET - Commerce - Unit 09 _ Legal Aspects of Business (part 01)

 

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Unit 09

Legal Aspects of Business

part 01

 

• Indian Contract Act, 1872: Elements of a valid contract; Capacity of parties; Free consent; Discharge of a contract; Breach of contract and remedies against breach; Quasi contracts;

 

• Special contracts: Contracts of indemnity and guarantee; contracts of bailment and pledge; Contracts of agency

• Sale of Goods Act, 1930: Sale and agreement to sell; Doctrine of Caveat Emptor; Rights of unpaid seller and rights of buyer

 

• Negotiable Instruments Act, 1881: Types of negotiable instruments; Negotiation and assignment; Dishonor and discharge of negotiable instruments

 

• The Companies Act, 2013: Nature and kinds of companies; Company formation; Management, meetings and winding up of a joint stock company

 

• Limited Liability Partnership: Structure and procedure of formation of LLP in India

 

• The Competition Act, 2002: Objectives and main provisions 

 

• The Information Technology Act, 2000: Objectives and main provisions; Cyber crimes and penalties

 

• The RTI Act, 2005: Objectives and main provisions

• Intellectual Property Rights (IPRs) : Patents, trademarks and copyrights; Emerging issues in intellectual property

• Goods and Services Tax (GST): Objectives and main provisions; Benefits of GST; Implementation mechanism; Working of dual GST 

 

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MCQ 01: The Indian Contract Act came into force

a. From 1 September, 1872 but with retrospective effect 

b. Before 1 September, 1872 

c. From 1 September, 1872 

d. After 1 September, 1872

 

Answer : From 1 September, 1872

Indian Contract Act 1872 

Lays down the principles which have to be followed to create contract 

 

Contains a few types of special contracts like indemnity, guarantee, bailment, agency etc

Elements of a valid contract (Sec 10)
 

1. Proper offer and acceptance.

2. Parties must be competent : They must have the legal capacity to create a contract

    Capacity of parties (Sec 11) : 

        Age of majority (Sec.3 of The Indian Majority Act, 1875) An             agreement with or by a minor is void

        Sound mind ( unsound mind: idiocy, lunacy, drunkenness)

        Not disqualified from contracting by any law 

         (alien enemies, insolvent, foreign sovereigns and ambassadors,         corporations, convicts)

3. Parties must give Free consent (sec 13): agree upon the same thing in the same sense

    Free Consent

    Consent can be said to be free when it is not caused by (Sec 14):
    i. Coercion
    ii. Undue influence
    iii. Misrepresentation
    iv. Fraud
    v. Mistake

4. There must be legal relationship between the parties

5. There must be lawful consideration 

6. Objective of contract must be lawful 7. Must comply legal             formalities

Discharge of a contract –

termination of the contractual relationship between the parties. 

 

Modes:
a.By performance

b.By agreement 

    * Novation : substituting by a new contract 

    * Rescission: cancel by mutual consent 

    * Alteration : alteration of terms etc.

 

c. By impossibility (doctrine of supervening impossibility, post –            contractual impossibility ) 

 

d. By laps of time (The Limitation Act- 1963 ) e. By operation of law     (By death, insolvency, unauthorized alteration)

 

f. Discharge by Breach of Contract - breaking of the contractual obligation by a party to the contract without lawful excuse. 

    1. Actual breach of contract (due or performance) 

    2. Anticipatory breach of contract ( Renounces the obligation                 before the fixed time)

Remedies for Breach of Contract 

The affected party has many options available: 

    i. Rescission of the contract 

    ii. Suit for Damages. (monitory compensation) 

    iii. Suit for injunction 

    iv. Suit upon quantum (quantum meruit – as much as earned)

Quasi – Contracts 

 A contract that exists by order of a court, not by agreement of the parties 

 

It s based on the principle of equity

Contract of Indemnity (sec 124) - 

    A contract to compensate or make good the loss. 

 

    Indemnifier => indemnified. 

 

Contract of Guarantee (Sec 126) – Tripartite agreement 

    Creditor => debtor => surety 

 

Contract of Bailment (Sec 148) – 

    Bailor => Bailee (Finder of goods)

Pledge (sec 172) - 

    Delivery of good as a security 

    pledgor or pawner => pledgee or pawnee 

 

Law of agency – 

    principal => agent

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