Vous êtes sur la page 1sur 40

National Management Programme

(NMP)
1

LEGAL ASPECTS OF BUSINESS


(LAB)

Prof. Parul Gupta


PhD (Faculty of Law-JMI, New Delhi), LL.M., PGDBM

Dr. Parul Gupta


Course Overview
2

This course is designed to enhance the legal


literacy of the participants by developing a
body of legal knowledge and honing legal
instincts to help business leaders attain a
competitive edge and promote long-term
success of the business firms.

Indian Contact Act, 1872,


Sales of Good Act, 1930 and
Companies Act, 2013

Dr. Parul Gupta


Evaluation Scheme
3

S.NO ACTIVITY NUMBE WEIGHTAGE TOTAL


. R WEIGHTAGE
1 Quiz Test 5 5% 20% (Best
Four will be
considered)
3 Group 1 10% 10%
Project
4 Group 1 10% 10%
Assignment
s
5 Mid Term 1 30% 30%
examinatio
n
6 End Term 1 30% 30%
Examinatio
n
Dr. Parul Gupta
INDIAN CONTRACT ACT,1872
4 Session Details

Session 1 - Indian Contract Act, 1972


Formation of contracts, Its kinds and Essential
Elements of a valid Contract

Session 2 - Indian Contract Act, 1972


Legal Insights Of Offer, Acceptance And Capacity
Of Parties

Session 3- Indian Contract Act, 1972


Legal Insights of Consideration And Free Consent

Dr. Parul Gupta


INDIAN CONTRACT ACT,1872
5 Session Details

Session 4 Indian Contract Act, 1972


Quiz Test One Session 1 to 3
Modern Categories of Contract - Tenders, Swiss
Challenge Method of Tendering, Standard Form
Contracts, Letter of Intent & Memorandum of
Understanding

Session 5- Indian Contract Act, 1972


Void Agreements, Wagering Agreements And
Contingent Contracts

Dr. Parul Gupta


INDIAN CONTRACT ACT,1872
6 Session Details
Session 6
Quiz Test Two Session 4 & 5
Performance, Discharge of Contract &Remedies for the

Breach of Contract

Session 7
Quasi Contracts Meaning, Features And Kinds
Law of Contract of Agency

Session 8 Law of Bailment & Pledge and Law of


Indemnity And Guarantee
Announcement Group Assignment

Dr. Parul Gupta


INDIAN CONTRACT ACT,1872
7 Session Details
Session 9-Sale of Goods Act, 1930
Quiz Test Three Session 6 to 9
Meaning and Essential Elements of Contract of Sale and
Meaning of Goods, Conditions and Warranties, Transfer
of Ownership

Session 10- Sale of Goods Act, 1930


Doctrine of Caveat Emptor and its exceptions, Transfer
of Title by Non-Owners, Rights of an Unpaid Seller,
Auction Sale

MID TERM EXAMINATION

Dr. Parul Gupta


COMPANIES ACT, 2013
8
Session 11- Legal Status of a Company
Session Details
Announcement - Group Project
Definition of a company, Nature & essential characteristics of a
company, Lifting of Corporate Veil

Session 12- Types of Companies


Classification of Companies on the basis of incorporation,
liability, number of members, control and ownership, One person
company, Associations not for profit

Session 13- Incorporation of a Company


Process of incorporation of a company, Promoter Duties and
responsibilities of promoter, Process of Registration, Important
documents Incorporation, Floatation, Certification, Pre-incorporation
contracts, Provisional contracts
Dr. Parul Gupta Submission Group Assignment
COMPANIES ACT, 2013
9 Session Details
Session 14- Incorporation of a Company
Quiz Test Four - Session 11 to 13
Nature of the document, Content of the document, Alteration of
the document, Doctrine of ultra vires

Session 15- Memorandum of Association


Nature of the document, Content of the document, Alteration of

the document, Doctrine of ultra vires

Session 16- Articles of Association


Nature of the document, Content of the document, Alteration of
the document, Articles and Memorandum the relationship,
Legal effect of the Article & Memorandum

Dr. Parul Gupta


COMPANIES ACT, 2013
Session
10 Session Details
17- Board of Directors And Company
Management & Administration
Directors and their appointment, Positions of directors, Number
of directorship, Disqualification of directors, Vacation of office
and removal of directors, Managerial remuneration, Loans to
Director

Session 18- Board of Directors And Company


Management & Administration
Quiz Test Five - Session 14 to 17
Submission- Group Project
Meeting of board, Powers and duties of director Contracts in
which directors are interested, Liabilities of directors, Validity of
acts of directors, Disabilities of director, Managing director and
Manager
Dr. Parul Gupta
COMPANIES ACT, 2013
11 Session Details
Session 19- Company Meetings and Proceedings
Meetings, General meeting of shareholders, Requisites of a
valid meeting, Proxies, Voting and poll, Resolutions,
Company management, Accounts and auditors, Prevention
and oppression of mismanagement

Session 20

GROUP ASSIGNMENT PRESENTATIONS


WRAPPING UP & QUERY SESSION
END TERM EXAMINATION

Dr. Parul Gupta


SESSION 1
12

Indian Contract Act, 1972


Formation of contracts,
Its kinds and
Essential Elements of a valid
Contract

Dr. Parul Gupta


Indian Contract Act, 1972
13

Introduction
The Act does not lay down so many precise rights and
duties which the law will protect and enforce;
It contains a number of limiting principles, subject to
which the parties may create rights and duties for
themselves and the law will uphold those rights and
duties.
The Act is not exhaustive since it does not take into its
purview all the relevant legislations.
It does not override customs or usages.

Jus in Personam/ Jus in Rem


Dr. Parul Gupta
MEANING OF VALID CONTRACT
14 UNDER THE ACT
1. Every agreement and promise enforceable at law
is a contract - Sir Fredrick Pollock

2. A contract is an agreement, creating and defining


the obligation between parties - Salmond

3. A contract is an agreement enforceable at law


made between two or more persons by which
rights are acquired by one or more to acts or
forbearances on the part of others. - Sir William
Anson.

Dr. Parul Gupta


CONTRACT
15

Acontracthasbeendefinedin
Section2(h)as
"an agreement enforceable by
law"
1.An Agreement
2. Enforceability or legal obligation

Dr. Parul Gupta


Agreement
16

Agreement -Section 2(e),


"Every promise and every set of promises, forming
the consideration for each other, is an agreement."

What a Promise'? -Section 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."
Offer + Acceptance = Agreement

1. Plurality of Parties
2.Consensus ad idem
Dr. Parul Gupta
Legal Obligation
17

A Duty Enforceable by Law

Only that obligations which


are arising out of an
agreement, are concerned
with the law of contract

Dr. Parul Gupta


Contract
18

"All contracts are agreements but


all agreements are not
contracts.

Dr. Parul Gupta


Contract
19

Acc to Sec. 10 of Indian Contract Act,

"All agreements are contracts if they are


made by the free consent of the parties
competent to contract, for a lawful
consideration and with a lawful object, and
are not hereby expressly declared to be
void."

Dr. Parul Gupta


Essential Elements of a Valid Contract
20

1. Intention to create legal


relations
legal consequences

a) Treatment of Domestic and social


relationships

b) Treatment of Commercial Agreement

Dr. Parul Gupta


Essential Elements of a Valid Contract
21

Intention to Create Legal Relations

Case 1: Domestic Relationships


A resident of India invited her daughter who
lived and worked in the United States to move
to England to study. They agreed that the
mother would let the daughter stay in the
house rent free. A dispute arose and the
mother brought an action to evict the daughter
from the house.
Dr. Parul Gupta
Essential Elements of a Valid Contract
22

Intention to Create Legal Relations


Case 2: Domestic Relationship
An elder brother invited his sister and her
husband, who gave up paid employment, to
come to Australia to live with him and care
for him until his death in which he agreed
to give consideration of this of an income
for life provided by the elderly man and his
property upon his death. A dispute arose
and the couple sued for breach of contract.
Dr. Parul Gupta
Essential Elements of a Valid Contract
23

Case 3: Esso Petroleum v Customs & Excise Esso

Esso Petroleum, for promotion purposes distributed


millions of coins, of no intrinsic value, to petrol
stations that sold Esso petrol. The advertisement to
the public indicated that these coins were a gift and
for every four gallons of petrol purchased a coin
would be given.
Discussion Point
Whether the parties had the necessary intention to form
a contract ?

Dr. Parul Gupta


Essential Elements of a Valid Contract
24

Lawful Object & Lawful Consideration

Lawful Object
Must not be fraudulent or illegal or immoral or
opposed to public policy or must not imply injury
to the person or property of another.

Case
A, being agent for a landed proprietor,
agrees for money, without the knowledge
of his principal, to obtain for B a lease of
land belonging to his principal.
Dr. Parul Gupta
Essential Elements of a Valid Contract
25

Lawful Object & Lawful Consideration

Lawful Consideration (Sec. 2(d))


When at the desire of the promisor, the promisee or any other person
has done or abstained from doing, or does or abstains from doing,
or promises to do or to abstain from doing' something, such act or
abstinence or promise is called a consideration for the promise.
Case 1
X agrees to buy books from Y for Rs. 50. Here the
consideration of X is books and the consideration of Y
is Rs.50.
Case 2
X agrees to Kill Z for Y for Rs. 50, 000/- . Here the
consideration of Y is killing and the consideration of X
is Rs.50,ooo/-.

Dr. Parul Gupta


Essential Elements of a Valid Contract
26

Agreement not expressly declared void


(Sec. 24 to 30)

Case: Carew Co Ltd. v North Bengal etc


Two sugar manufacturers entered into an
agreement allocating zones to procure sugar
for meeting the needs of their respective
factories and each of the manufacturers
under took not to draw any cane from the
zones allotted to the other factory.

Dr. Parul Gupta


Essential Elements of a Valid Contract
27

Valid Offer and Valid Acceptance


Valid Offer or Proposal (Section 2(a) )
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 act or abstinence, he is said to make
a proposal".

Case 1
X proposes, over telephone, to sell a house to Y at a
certain price.
Case 2
X owns a motor boat for taking people from Bombay to
Goa. The boat is in the waters at the Gateway of
India. the boat owner does need not speak or call the
passengers.
Dr. Parul Gupta
Essential Elements of a Valid Contract
28

Valid Offer and Valid Acceptance

Acceptance : Sec 2(b),

"when the person to whom the proposal is made


signifies his assent thereto, the proposal is
said to be accepted."

Case 1
P offers to sell his camera to Q for Rs.1000.
Case 2
P advertised in a Newspaper that he would give Rs.
2000 to anyone who finds and returns his lost dog.

Dr. Parul Gupta


Essential Elements of a Valid Contract
29

"Consent"
Two or more person are said to consent when
they agree upon the same thing in the same
sense.
Free consent
Consent is said to be free when it is not caused by
(1)coercion, as defined in section 15, or
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18,
or
(5) mistake, subject to the provisions of section 20,21,
and 22
Dr. Parul Gupta
Essential Elements of a Valid Contract
30

Capacity of Parties
Sec. 11
"Every person is competent to contract who has
attained 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."

Incompetent to contract
I. if he is a minor, according to the law to which he is subject,
II. if he is of unsound mind, and
III. if he is disqualified from contracting by any law to which
he is subject.

Dr. Parul Gupta


Essential Elements of a Valid Contract
31

Certainty of Meaning (Sec. 29)


Wording of the agreement must be clear and not uncertain or
vague.
Agreements, the meaning of which is not certain or capable of
being made certain, are void.

Case1
Jatin agrees to sell 500 tones of oil to Marium

Case 2
Jatin, the sole trader of coconut oil agrees to sell 500
tones of oil to Marium

Dr. Parul Gupta


Essential Elements of a Valid Contract
32

Possibility of Performance (Sec. 56)


If the act is impossible of performance, physically or legally,
the agreement cannot be enforced by law.
There must be possibility of performance of the agreement.

Case 1
A agrees with B to put life into Bs dead wife
Case 2
A agrees with B to produce treasure by magic
Legal Formalities
The contract act does not insist that the agreement must be in
writing, it could be oral.

Dr. Parul Gupta


KINDS OF CONTRACTS
33

Contracts can be classified on the


following basis;

On the basis of validity


On the basis of formation

On the basis of performance

Dr. Parul Gupta


KINDS OF CONTRACTS
34

A. On the basis of validity

1. Valid contract
2. Void contract
3. Voidable contract
4. Illegal contract
5. Unenforceable contract

Dr. Parul Gupta


KINDS OF CONTRACTS
35

B. On the basis of Formation


Case 1 Mr. A, a student called Mr. B on the phone
and agreed to buy his textbooks from last
semester for Rs. 300.
Case 2 If A enters into a bus for going to his
destination and takes a seat.
Case 3 ABC Company Ltd. a TV Company
delivers a new television to Mrs. Z that she did
not order and she keeps the television and does
not attempt to return it to the company that
mistakenly shipped it to her.
Dr. Parul Gupta
KINDS OF CONTRACTS
36

B. On the basis of Formation

1. Express contracts
2.Implied Contracts
3.Quasi Contracts
4.E Commerce Contract
(a) Click Wrap

(b) Browse Wrap

(c ) Shink Wrap

Dr. Parul Gupta


KINDS OF CONTRACTS
37

C. On the basis of Performance


Case
J Inc., agreed to buy ten tons of coal from the
Northern Coal Company. Northern delivered the
coal to J's steel mill, where it is being burned.

1. Executed Contracts
2. Executory Contracts
Unilateral
Bilateral

Dr. Parul Gupta


GROUP CASE DISCUSSION 1
38

P stayed with family in a rented house.


P participated in newspaper
competition and agreed to share the
prize money with the family members.
P won a prize money of Rs. 1,00,000/-
but he denied to share the money with
family members.
Can family members sue P for
recovering their share?
Dr. Parul Gupta
NEXT SESSION
39

SESSION 2
Legal Insights to valid Offer
Legal Aspects of Acceptance
And
Legal Aspects Capacity of
Parties

Dr. Parul Gupta


40

Dr. Parul Gupta