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Assignment A

Q1 What is business environment? What are the benefits & limitations of environmental analysis?
Ans :
The success of every business depends on adapting itself to the environment within which it
functions. For example, when there is a change in the government polices,the business has
to make the necessary changes to adapt itself to the new policies. Similarly,a change in the
technology may render the existing products obsolete, as we have seen that the
introduction of computer has replaced the typewriters; the colour television has made the
black and white television out of fashion. Again a change in the fashion or customers taste
may shift the demand in the market for a particular product, e.g., the demand for jeans
reduced the sale of other traditional wear. All these aspects are external factors that are
beyond the control of the business. So the business units must have to adapt themselves to
these changes in order to survive and succeed in business. Hence, it is very necessary to
have a clear understanding of the concept of business environment and the nature of its
various components.
The term business environment connotes external forces, factors and institutions that are
beyond the control of the business and they affect the functioning of a business enterprise.
These include customers, competitors, suppliers, government, and the social, political,legal
and technological factors etc. While some of these factors or forces may have direct
influence over the business firm, others may operate indirectly. Thus, business environment
may be defined as the total surroundings, which have a direct or indirect bearing on the
functioning of business. It may also be defined as the set of external factors, such as
economic factors, social factors, political and legal factors, demographic factors, technical
factors etc., which are uncontrollable in nature and affects the business decisions of a firm.

Following are main limitation of business environment analysis:
1. Unexpected and Unanticipated Events
We can not tell unexpected and unanticipated events in business environment analysis.
Sometime, business has to face unexpected happenings. So, there will no benefit of business
environment in these cases.
2. No sufficient Guarantee
Business environment analyst does not give any guarantee whether all events will happen as per
estimation in business environment.
3. Uncritical Faith
Sometime data may be incorrect. So, decisions on basis of these analysis may be risky for
4. To much information
Sometime too much information relating to business environment analysis will create the doubt
in businessmen.

Q2 Define contract. Explain any four element of a contract.
Definition of Contract
an agreement between two or more parties for the doing or notdoing of som
ething specified.

an agreement enforceable by law.

the written form of such an agreement.

the division of law dealing with contracts.

Also called contract bridge. a variety of bridge in which theside that wins the
bid can earn toward game only that numberof tricks named in the contract,
additional points being creditedabove the line.

Four Essential Elements of a Contract
An agreement must contain four essential elements to be regarded as a contract. If any one of them is
missing, the agreement will not be legally binding.
There must be a definite, clearly stated offer to do something. For example: A quotation by sub-contractor
to the main contractor and an offer to lease.
An offer does not include ball park estimates, requests for proposals, expressions of interest, or letters of
An offer will lapse:
when the time for acceptance expires;
if the offer is withdrawn before it is accepted; or
after a reasonable time in the circumstances (generally the greater the value of the contract, the longer
the life of the offer).
Invitation to treat
An invitation to treat is a mere declaration of willingness to enter into negotiations; it is not an offer, and
cannot be accepted so as to form a binding contract. An agreement is not created if there is an
acceptance of the invitation to treat.
An invitation to treat is part of the preliminaries of negotiation, whereas an offer is legally binding once
accepted, subject to compliance with the terms of the offer. For example: Invitations to treat are
advertisements, price lists, circulars and catalogues.
Only what is offered can be accepted. This means that the offer must be accepted exactly as offered
without conditions. If any new terms are suggested this is regarded as a counter offer which can be
accepted or rejected.
There can be many offers and counter offers before there is an agreement. It is not important who makes
the final offer, it is the acceptance of that offer that brings the negotiations to an end by establishing the
terms and conditions of the contract.
Acceptance can be given verbally, in writing, or inferred by action which clearly indicates acceptance
(performance of the contract). In any case, the acceptance must conform with the method prescribed by
the offerer for it to be effective.
Intention of legal consequences
A contract requires that the parties intend to enter into a legally binding agreement. That is, the parties
entering into the contract must intend to create legal relations and must understand that the agreement
can be enforced by law.
The intention to create legal relations is presumed, so the contract doesn't have to expressly state that
you understand and intend legal consequences to follow.
If the parties to a contract decide not to be legally bound, this must be clearly stated in the contract for it
not to be legally enforceable.
In order for a contract to be binding it must be supported by valuable consideration. That is to say, one
party promises to do something in return for a promise from the other party to provide a benefit of value
(the consideration)
Consideration is what each party gives to the other as the agreed price for the other's promises. Usually
the consideration is the payment of money but it need not be; it can be anything of value including the
promise not to do something, or to refrain from exercising some right.
The payment doesn't need to be a fair payment. The courts will not intervene where one party has made
a hard bargain unless fraud, duress or unconscionable conduct is involved.

Q3 What are the rights of a finder of a good under the Indian contract Act?
Status of a Finder of Goods & his Rights:
A person, who finds goods belonging to another and takes them into his custody is subject to
the same responsibility as a bailee. He is bound to take as much care of the goods as a man
of ordinary prudence would, under similar circumstances, take of his own goods of the same
bulk, quality and value. He must also take all necessary measures to trace its owner. If he
does not, he will be guilty of wrongful conversion of the property. Till the owner is found out,
the property in goods will vest with the finder and he can retain the goods as his own against
the whole world (except the owner, of course).1.4 Business and Corporate Laws

A finder of goods has the following rights under the Indian Contract Act, 1872
1. Right of lien: The finder of goods has a right of lien over the goods for his expenses. As
such he can retain the goods against the owner until he receives compensation for
trouble and expenses incurred in preserving the goods and finding out the owner. But he
has no right to sue the owner for any such compensation (Section 168).
2. Right to sue for reward. The finder can sue for any specific reward which the owner has
offered for the return of the goods. He may also retain the goods until he receives the
reward. (Section 168)
3. Right or resale: The finder has a right to sell the goods in the following cases:
(a) where the goods found is in danger of perishing;
(b) where the owner cannot, with reasonable diligence, be found out;
(c) where the owner is found out, but he refuses to pay the lawful charges of the finder;
(d) where the lawful charges of the finder, in respect of the goods found, amount to
2/3rd of its value.

Q4 For every valid agreement there should be a consideration. Comment
The section 25 of the Indian Contract Act, 1872 openly declares that an agreement made
without consideration is void I n ot her wor ds t he pr es ence of cons i der at i on
i s an essential for a contract to be valid. In England too promises without consideration
are not enforced, because they are gratuitous. In England the contracts are divided into two

1.Contracts under seal, or contracts in the form of a deed. Such contracts are valid
even without consideration.

2.Simple contracts or parol contracts. For validity of such contracts the presence
of consideration is needed. Consideration in simple words means something in return of a
promise which may either be benefit gained by one party or something lost by
the other. So generally there can be no doubt that for a valid contract, there must be
consideration, and also free consent.

Definitions of Consideration According to Blackstone

:Consideration is the recompense given by a party contracting to the other.Or the price of the
promise.Sir Fredrik Pollock summarized the position of words adopted by the House of Lords
in1915: An act of forbearance of one party or the promise thereof is the price for
whichthe promise of the other is bought, and the promise thus given for value is enforceable.

The definition given in Curre v Misa by Lush J is widely acceptor and stated on the next
page:A valuable consideration in the sense of the law may consist either in some right,
i n t e r e s t , p r o f i t o r b e n e f i t a c c r u i n g t o t h e o n e p a r t y , o r s o me f o r b e
a r a n c e , determent, loss, or responsibility given, suffered or undertaken by the other

Definitions of Consideration under Section 2(d)

Section 2 (d), The Indian Contract Act, 1872 defines consideration as given under:When, at the
desire of the promisor, the promise or any other person has done or abstained from doing, or
does or abstains from doing or promises to do or abstain from doi ng s omet hi ng,
s uch act or abs t i nence or pr omi s e i s cal l ed a cons i der at i on f or t he promise.

Q5 Explain the rights of an unpaid seller under Indian sales of goods Act.

Section 45 lays down that a seller is unpaid :
(1) When the whole of the price has not been paid or tendered.
(2) When a negotiable instrument or a bill of exchange has been received as conditional payment and
the condition in which it was received has not been fulfilled by reason of the dishonor of the
instrument or otherwise.
The seller remains as unpaid seller as long as any portion of the price, however small, remain unpaid.
Where the whole of price has been tendered, and the seller refused to accept such a tender, seller
ceases to be an unpaid seller. In such a case the seller loses all high right against the goods.
If there is a period of credit then the seller is not unpaid until the price become due. Against if there
is a condition attached to payment it must be fulfilled.
The unpaid sellers right can be exercised by an agent of the seller to whom the bill of leading has
been endorsed, or a consignor or an agent who has himself paid, or is directly responsible for the
Rights of an unpaid seller
The sale of Goods Act has expressly given two kinds of right to an unpaid seller of goods, namely :
(1) Against the goods
(a) When property in the goods has passed
(i) Right of lines
(ii) Right of stoppage of goods in transit
(iii) Right of re-sale
(b) When property in the goods has not passed
(i)Right of withholding delivery.
(2) Against the buyer personally
(i) Right to use for price
(ii) Right to sue for damages
(iii)Right to sue for interest.

Assignment B

Q1 What is a negotiable instrument, explain its characteristics.

Negotiable instrument:

It is a written document, money. A negotiable instrument is transferable to
the another person. Under the negotiable instrument act 1881.


Negotiable Instrument have following features.

1. Transferable by delivery:

negotiable instrument is transferable from one person to another by
delivery or by endorsement and delivery.

2. Entitled to receive money:

The legal person of the instrument is entitled to receive money mentioned
in it.

3. Filing a sue:

The holder of a negotiable instrument has the right to document a sue in his
name for payment from all or any of the concerned parties.

4. Transferee is not affected by defective title:

If the transferee must has accepted the negotiable instrument in good faith,
then he is not affected by the defective title of the transfer in any way.

Kinds of negotiable instruments

There are three kinds of negotiable instruments.

1. Promissory note:

A promissory note is the simple and earliest kind of credit instrument. there
is no conditional written promise by one person to another in which the
maker promise to pay an demand or at a fixed or determinable date in the
future, a stated sum of money pad to or to the order of a.

2. Bill of exchange:

It is a written document drawn by the seller on the buyer to pay certain
amount of money on due date.

3. Cheque:

A cheque may be defined as, a written order of a depositer upon a bank to
pay to or to the order of a designated party or a bearer, a specified sum of
money on demand.

Q2 Explain various types of companies.
A company is an association or collection of individuals, whether natural persons, legal persons, or a
mixture of both. Company members share a common purpose and unite in order to focus their
various talents and organize their collectively available skills orresources to achieve specific,
declared goals. Companies take various forms such as:
Voluntary associations which may be registered as a Nonprofit organizations
A group of soldiers
Business entity with an aim of gaining a profit
Financial entities and Banks
A company or association of persons can be created at law as legal person so that the company in itself
can accept Limited liability for civil responsibility and taxation incurred as members perform (or fail) to
discharge their duty within the publicly declared "birth certificate" or published policy.
Because companies are legal persons, they also may associate and register themselves as companies -
often known as a Corporate group. When the company closes it may need a "death certificate" to avoid
further legal obligations.
A company limited by guarantee. Commonly used where companies are formed for non-
commercial purposes, such as clubs or charities. The members guarantee the payment of certain
(usually nominal) amounts if the company goes into insolvent liquidation, but otherwise they have no
economic rights in relation to the company. This type of company is common in England. A company
limited by guarantee may be with or without having share capital.
A company limited by shares. The most common form of company used for business ventures.
Specifically, a limited company is a " company in which the liability of each shareholder is limited to
the amount individually invested" with corporations being "the most common example of a limited
This type of company is common in England and many English-speaking countries. A
company limited by shares may be a
publicly traded company or a
Privately held company.
A company limited by guarantee with a share capital. A hybrid entity, usually used where the
company is formed for non-commercial purposes, but the activities of the company are partly funded
by investors who expect a return. This type of company may no longer be formed in the UK, although
provisions still exist in law for them to exist.

A limited-liability company. "A companystatutorily authorized in certain statesthat is
characterized by limited liability, management by members or managers, and limitations on
ownership transfer", i.e., L.L.C.
LLC structure has been called "hybrid" in that it "combines the
characteristics of a corporation and of a partnership or sole proprietorship". Like a corporation it has
limited liability for members of the company, and like a partnership it has "flow-through taxation to the
members" and must be "dissolved upon the death or bankruptcy of a member".

An unlimited company with or without a share capital. A hybrid entity, a company where the
liability of members or shareholders for the debts (if any) of the company are not limited. In this case
doctrine of veil of incorporation does not apply.
Less common types of companies are:
Companies formed by letters patent. Most corporations by letters patent are corporations sole and
not companies as the term is commonly understood today.
Charter corporations. Before the passing of modern companies legislation, these were the only
types of companies. Now they are relatively rare, except for very old companies that still survive (of
which there are still many, particularly many British banks), or modern societies that fulfill a quasi
regulatory function (for example, the Bank of England is a corporation formed by a modern charter).
Statutory Companies. Relatively rare today, certain companies have been formed by a private
statute passed in the relevant jurisdiction.

Q3 What relief is/are available to the consumer under Consumer Protection Act.
The consumer protection Act, 1986, provides for the better protection of consumers. Unlike
existing laws which are punitive or preventive in nature, the provisions of this Act are
compensatory in nature. The act is intended to provide simple, speedy and inexpensive
redressal to the consumers' grievances, award relief and compensation wherever
appropriate to the consumer. The act has been amended in 1993 both to extend its
coverage and scope and to enhance the powers of the redressal machinery.

Depending on the facts and circumstances, the Redressal Forums may give order for one or
more of the following relief.

Removal of defects from the goods,
Replacement of the goods;
Refund of the price paid;
Award of compensation for the loss or injury suffered;
Removal of defects or deficiencies in the services;
Discontinuance of unfair trade practices or restrictive trade practices or direction not
to repeat them;
CASE STUDY: Case1 A dealer in radios gives a Murphy radio to a customer on the terms that Rs.
100 should be paid by him immediately and Rs 200 more in two monthly equal installments. It
was further agreed that if the radio is found defective the customer may return it within a week
but not later. The customer makes default in paying the last installment. Can the radio dealer
take back the radio on his default?

Solution :
No, the radio dealer cannot take back the radio on default by the
customer because it is a contract of sale and not of hire-purchase.

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 and asks for the book. The bookseller refuses to sell saying that the book has already been
sold to someone else and he does not have another copy of that book in the stock. Is the bookseller
bound to sell the book to X?

Solution :
No, a display of goods with prices marked thereon is only an invitation for offer, and not an offer
itself. Hence the bookseller is free to accept the offer or not.


1. D
2. D
3. A
4. B