PGPM 2016 LAB- COMPREHENSIVE EXAM- GLOSSARY

INDIAN CONTRACT ACT

ACCEPTANCE
A. RULES
1. Acceptance must be communicated to the person who has made an offer.
2. Acceptance must be communicated by the person to whom an offer has been made
3. Acceptance must be communicated in the prescribed manner only else it is not binding on the
proposer.
4. Acceptance must be absolute and unqualified.
5. An offer once rejected is dead and cannot be accepted unless it is revived.
PARTIES COMPETENT TO CONTRACT
Persons who are majors
Persons who have completed 18 years of age, and
Persons of sound mind
FREE CONSENT
A consent is said to be free when it is not caused by 1.
2.
3.
4.
5.

Coercion
Undue influence
Fraud
Misrepresentation
Mistake

SILENCE WHEN FRAUD

Mere silence as to facts likely to affect the willingness of a party to enter into a contract is not fraud,
unless it is the duty of the person keeping silence to speak or where his silence is equivalent to speech.
DOCTRINE OF NOVATION
The parties to the contract may agree to substitute a new contract for it or to rescind or alter it. The
original contract need not be performed.
APPROPRIATION OF PAYMENTS
Where a debtor owing several debts to a creditor, makes payment to the creditor, the following rules
applyRules:

The debtor has the first right to indicate the debt towards which the payment is to be applied
If the debtor does not indicate as above, the creditor can appropriate the payment towards any
lawful debt, even though it is time-barred
Where neither the debtor nor the creditor makes appropriation, the payment shall be applied in
order of time i. e. the first debt shall be deemed to be repaid first, then the next debt and so on till
the payment is exhausted, whether the debts are barred by law of limitation or not
CONTRACT OF INDEMNITY
A contract by which one party promises to save the other from loss caused to himi)
by the conduct of the promisor himself or
ii)
by the conduct of any other person
Illustration:- i) General Insurance contracts,
ii) Manufacturer of goods giving an indemnity to the agent for any defect
in quality of goods
CONTRACT OF GUARANTEE
A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in
case of his default.
PARTIES TO A CONTRACT OF GUARANTEE
Guarantor- Surety
Person to whom guarantee is given- Creditor
Person for whose protection the guarantee is given- Principal Debtor
BAILMENT
Bailment is thea) delivery of movable goods by one person to another for some purpose
a) upon a contract that
b) they shall be returned or disposed of according to the directions of the person delivering the goods.

LAW RELATING TO SALE OF GOODS

UNPAID SELLER
An unpaid seller is one who has not been paid or tendered the whole of the price or one who receives a
bill of exchange or other negotiable instrument 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 OF AN UNPAID SELLER
1. Right of lien
2. Right of stoppage in transit
3. Right of resale
LAW RELATING TO NEGOTIABLE INSTRUMENTS
Promissory Notes
Definition:
It is an instrument in writing containing an unconditional undertaking signed by the maker, to pay a
certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.
Cheque Dishonour
Penalty- An amount equal to cheque amount and\or imprisonment
LAW OF PARTNERSHIP
PARTNERSHIP ESSENTIALS
Definition :Section 4 of the Partnership Act,1932, defines partnership :Partnership is the relation between persons
who have agreed to share the profits of business carried on by all or any of them acting for all.
1.
2.
3.
4.

Agreement
Business
Sharing of profits
The business must be carried on by all or any of them acting for all-Mutual agency (the real
test of partnership)

DIFFERENT TYPES OF PARTNERSHIPS

1. Partnership for a fixed term :Where partners have agreed to carry on the business for a definite period of time, the partnership is said
to be for a fixed period. It shall come to an end only after the expiry of the stipulated period. However,
where the partners continue the business even after the expiry of the stated period, the partnership ipso
facto gets converted into partnership at will.

2. Particular Partnership :A person may become a partner with another person in particular adventures or undertakings . Where
two or more persons agree to do business in particular adventure or undertaking, such a partnership is
called a Particular Partnership.

Illustration
A and B enter into partnership for producing a particular film. Since the object is to produce a particular
film, it is formed for a particular adventure, and immediately on completion of the film, the partnership
may be dissolved.
Sometimes persons enter into partnership for carrying out a particular adventure or undertaking within a
certain period of time. In such a case, the partnership is to exist, either till the particular adventure is
determined or till the expiry of the fixed period of time as intended to by the parties.
Partnership at will :Where no provision is made by contract between the partners for the duration of their partnership, or for
the determination of their partnership, the partnership is Partnership at Will. Accordingly, a partnership
is deemed to be a partnership at will when :(i)
(ii)

No fixed period has been agreed upon for the duration of partnership; and
There is no provision made as to the determination of partnership in any other way.

LAW RELATING TO COMPANIES

DIVIDEND
A company can declare or pay dividend for any Financial year out of profits for that financial year or any
earlier financial year\s
Dividend is payable on face value of shares
Preference shares are entitled to a dividend at a fixed rate or a fixed amount
It is not mandatory for the company to pay dividend for every financial year