Contract

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WHAT IS
LAW
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Law
LAW denotes rules and principles established by sovereign authority whether in the form of legislation or self imposed customs applicable to people.
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BRANCHES OF LAW
CIVIL LAW
CRIMINAL LAW
ADMINISTRATIVE LAW CONSTITUTIONAL LAW
BUSINESS OR MERCANTILE LAW

LABOUR LAWS ETC.
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WHAT IS BUSINESS LAWS?

Business laws deals with rights and obligations
arising out of mercantile transactions among mercantile persons It denotes the aggregate body of legal rules connected with trade,industry,commerce. It relates to law relating to contracts,sale of goods,negotiable instruments, partnership, companies, insurance, carriage of goods,insolvency,consumer protection etc.
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The role of contract law in commercial activity

Most important branch of mercantile law Contract is the most common legal transaction The law is about enforcing promises Common law is the foundation complemented by
modern legislation
Legislation recognises public values and seeks to
impose standards of conduct

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OBJECT OF CONTRACT ACT
To ensure that the rights and obligations created by
the contract are honored. That the expectations created by the promises of the parties to an agreement are fulfilled and the legal remedies are available to the aggrieved party against the party failing to perform his part of obligation.
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INDIAN CONTRACT ACT 1872
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Sections divided
General Principles of Law of contract : sec 1 to 75
Contracts relating to sales of goods : Sec 76 to 124 Special kinds of contracts (indemnity, guarantee,
bailment & Pledge) : Sec 125 to 238 Contracts relating to partnership : Sec 239 to 266
Definitions of contract
Section 2(h) defines contract as an agreement
enforceable by law Salmond contract is an agreement creating and defining obligation between the parties Sir Fredrick Pollock every agreement and promise enforceable at law is contract
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Meaning
Contract=agreement + enforceability at law where Agreement= offer + acceptance Enforceability at law means intention to create legal obligation Creation of rights 1.Right in rem 2.Right in personam
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Essentials of a valid Contract (Sec-10)

Essentially an agreement (offer+acceptance) Intention to create legal relationship (Balfour Vs Balfour) Lawful Consideration (quid pro quo) the cost of each others
promise Parties are competent to contract: ( persons incompetent to contract:- a) Minors b) Persons of unsound mind c) Persons disqualified by law to which they are subject) Free consent Lawful object and Terms must be legal and reasonable Certainity of meaning Possibility of performance and Contract not declared void or illegal Legal formalaties
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Classification of Contracts
Valid Contract Void Contract Void Agreement Voidable Contract Illegal agreements Express and Implied Contract Quasi Contract Executed and Executory contracts Unilateral and Bilateral Contracts
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What is an offer
Section-2(a)
When one person signifies to another his willingness to do or abstain from doing anything with a view to obtaining the assent of that other to such act or abstinence,he is said to make an offer
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Kinds of offer
Express offer Implied offer Specific offer General offer
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What are the rules about it (essentials)

Offer must be capable of creating legal relations Must be certain,Definite and not Vague Must be communicated to other party/
offeree(Lalman Shukla vs gauri Dutt) Offer must be made with a view to obtaining the assent of the other party An offer may be conditional Offer should not contain a term the non-compliance of which would amount to acceptance Offer can be made to particular person or whole world (Carlill Vs Carbolic smoke ball Co)
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Essentials contd
Offer can lapse by passing of time or revoked
before acceptance Rejection destroys offer An Invitation to offer is not an offer An offer may be Conditional. Offer Different from Cross Offers In case of counter offers, original offer is cancelled
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ACCEPTANCE
SECTION-2(d)
When the person to whom the proposal is made is made signifies his assent it is acceptance of the proposal.An accepted proposal is called a promise or an agreement.
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offer and the rules relating to acceptance

Acceptance is like lighting a fuse it cannot be
undone Acceptance of an offer must be absolute and unconditional Acceptance must be made within reasonable time Acceptance must be identical with offer and acc to mode prescribed Can be accepted only by person to whom offer was made the offeror
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Rules contd
Acceptance must be communicated Acceptance occurs when communicated to maker of offer Acceptance may be implied Time of acceptance = time of formation
of contract Acceptance must be given before the offer lapses and it cannot be implied by silence
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COMMUNICATION OF OFFER,ACCEPTANCE
COMMUNICATION OF AN OFFER (SECTION-4)
Communication of proposal is complete as soon as it comes to the knowledge of the offeree
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COMMUNICATION OF ACCEPTANCE (SECTION-4)
Communication of acceptance is complete a)As against the proposer when it is put in
course of transmission to him,so as to be out of the power of the acceptor to withdraw the same b) as against the acceptor when it comes to the knowledge of the proposor.
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REVOCATION OF OFFER & ACCEPTANCE (section-5&6)

By NOTICE LAPSE OF TIME NON FULFILLMENT OF CONDITION
PRECEDENT BY DEATH OR INSANITY BY COUNTER OFFER
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Revocation contd..
BY NON ACCEPTANCE OF THE OFFER ACC TO
PRESCRIBED MODE BY SUBSEQUENT ILLEGALITY
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and the underlying presumptions of law for commercial and social relationships
A contract naturally demands that parties intend
that the agreement be enforceable Commercial agreements are presumed to be legally binding Social and domestic agreements are presumed not to be binding
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CONSIDERATION-MEANING
SECTION-2(d) Defines consideration as
A) When at the desire of the promisor,

B) The promisee or any other person C) Has done or abstained from doing ,or does or
abstains from doing,or promises to do or abstain from doing, D)Something, such act or abstinence or promise is called a consideration for promise.
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Consideration and its rules

Consideration amounts to an exchange of
promises(It is the price paid for the other persons promise) It must move at the desire of the promisor (Durga Prasad vs Baldeo) Kedar Nath vs Gori Mohammed It must move from the promisee or any other person It may be past,present,or,future It need not be adequate but must be real and lawful It must not be something which the promisor is already bound to do Anything valuable to promisor can be consideration Value not adequacy is the test MB 302 27
NO CONSIDERATION NO CONTRACT --Exceptions(sec-25)

Natural love and affection (section-25(1)) Compensation for services rendered sec- 25(2) Time barred debt sec-25(3)
Completed gifts sec-25 exp-1

Agency sec-185 Guarantee sec-127
Remission (sec 63)
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Privity of contract
Only those who made the contract can derive benefits
under it Where a contract is made for the benefit of a third party that person cannot enforce contact
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STRANGER TO CONTRACTEXCEPTIONS
Chinnaya Vs Ramayya Trust Where the provisions are in relation to marriage settlement Where provision is made in a partition or family settlement Where the promisor has by his conduct created privity of contract with a stranger(agent) Covenants running with land
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Capacity of parties
Minors (under 18 years of age)
(Section-11)
can make contract; problem is to enforce it against minor at common law contracts for necessaries not luxuries are
enforceable. Similarly contracts for beneficial services, employment or apprenticeship are enforceable
legislation in NSW and South Australia makes enforceable a
contract for minors benefit

Corporations
fully capable to make contract persons contracting with company agents are entitled to
assume agent has authority to bind company in contract

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Drunks
contracts are prima facie valid
can repudiate if they were incapable and other party knew that.
Unsound mind (sec-11 &12)

void unless court has not declared them to be of unsound mind
can repudiate if they were incapable and other party knew that
Bankrupts
not limited per se
legislation prevents bankrupt from entering certain contracts
without disclosing bankruptcy
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Minor main provisions

Leading case Mohiri bibi Vs Dharamdas ghose(1903) Effects of aggrement with minor Agreement Void ab initio No ratification Can be a promisee or a beneficiary No estoppel against a minor Minor as a partner & agent Liability under torts and contract No specific performance & no insolvency
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Effects contd
Cannot bind parent or guardian
Joint contract by a minor and adult

Minor as a shareholder Liability for necessities
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PERSONS DISQUALIFIED FROM CONTRACTING

Alien enemies Foreign sovereigns and ambassadors Insolvents Convict
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The significance of consensus ad idem in contract and the modern approach of the courts to agreement
Contracts are consensual transactions Parties must be in complete agreement
Acceptance of offer means agreement has been reached on doing business

Sometimes the terms are dictated by the
stronger party as in standard form contracts and there is no room for negotiation
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FREE CONSENT-(SECTION 13-21)

COERCION UNDUE INFLUENCE
VOIDABLE
FRAUD
MISREPRESENTATION MISTAKE
VOID
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DEFINITIONS
COERCION(SEC-15)
committing or threatening to commit any act forbidden by IPC OR unlawfully detaining or threatening to detain,any property to the prejudice of any person with the intention of inducing any person to enter into an agreement. UNDUE INFLUENCE(SEC-16) A contract is said to be induced by undue influence where the relations subsisting between the parties are such that one of the parties is in the position to dominate the will of the other and uses the position to obtain an unfair advantage over the other
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UNDUE INFLUENCE Section16(2) of IC Act

A person is deemed to be in a position to dominate the will of another a) Where he holds a real or apparent authority over the other eg. master servant, public officer & accused b) Where he stands fiduciary relationship to the other eg. father-son, guardian-ward c) Where he is mentally or physically ill either temporarily or permanently due to age, illness,mentally or bodily distress
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FRAUD SECTION -17

MEANS AND INCLUDES ANY OF THE
FOLLOWING ACTS; A false suggestion as to a fact known to be false or not believed to be true Active concealment of fact by one having knowledge or belief of fact A promise made without any intention of performing it Any other act fitted to deceive Any such act or omission as law specifically declares to be fraudulent
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MISREPRESENTATION (SECTION-18)
Means false representation made innocently with an
honest belief as to its truth by a party without any intention to deceive Thus false statement is made willfully or innocently
Fraudulent misrepresentation
innocent misrepresentation
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MISTAKE(SECTION-20)something.It MEANS erroneous belief concerning

means that parties intending to do one thing have by intentional error done something else Mistake is of two kinds 1. Mistake of fact 2. Mistake of law Mistake of law is of Indian law or foreign law Mistake may be unilateral or bilateral
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BILATERAL MISTAKES
Mistake as to subject matter i.e.
existence,identity,price,quantity,title,price,quality Mistake as to possibility of performance i.e.physical impossibility,legal impossibility UNILATERAL MISTAKE As to nature of contract As to identity of persons
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LEGALITY OF OBJECT AND CONSIDERATION

If it is forbidden by law If it is of such a nature that if permitted it would defeat the provisions of law If it is fraudulent If it involves injury to any person or property of another If the court regards it as immoral If the court regards it as being opposed to public policy
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AGREEMENTS OPPOSED TO PUBLIC POLICY

Trading with enemy Stifling prosecution Maintenance and Champerty Traffic relating to public offices Agreements tending to create interest opposed to duty Marriage brokerage contracts Agreements tending to create monopolies Agreements in restraint of personal liberty Agreements to influence elections to a public offices
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VOID AGREEMENTS
Agreement made under mutual mistake of fact(sec-20) Agreement made by incompetent parties(sec-11)
Agreements, the consideration and object is unlawful(sec-23-24)

Agreements made without consideration(sec-25) Agreements in restraint to marriage (sec-26) Agreements in restraint to trade (sec-27)
Agreements in restraint of legal proceeding(sec-28)

Agreements the meaning of which is uncertain(sec-29) Agreements by way of wager(sec-30) Agreements to do impossible act(sec-56)
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PERFORMANCE AND DISCHARGE OF CONTRACT

Every contract consists of reciprocal promises Sec-37 The parties to a contract must either
perform or offer to perform their respective promises, unless such performance is dispensed with or excused under the provisions of this act or of any other law The parties to a contract however need not to perform their promises in case: 1. Such performance is dispensed with or( sec-63) 2. Excused under the provisions of this act,or any other law (sec-56)
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OFFER OF PERFORMANCE OR TENDER

When the promisor is willing to perform the
contract and he offers to perform the same, the promisee has a duty to accept the performance of the contract.If the offer of performance is not accepted by the promisee,the promisor cannot be blamed for non-performance of the contract Sec-67 ;-Effect of neglect of promisee to afford promisor reasonable facilities for performance Sec-38 ;- Effect of refusal to accept offer of performance
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ESSENTIALS OF Must be unconditional A VALID TENDER Must be made at proper time and place The promisee must be given an opportunity to ascertain that the goods are acc. to the contract If there are number of joint promisees,the offer of performance may be made in favour of any of them Performance on death of a party By whom the contracts should be performed Joint promisors and the nature of their liability
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By Anupam Gupta
Meaning of Discharge of Contract

What is a Contract ?
It is Agreement + Enforceability at Law

Whereas Discharge is
Releasing of the parties to an agreement

A Contract is said to be discharged when rights and obligations of the parties created by it are extinguished.
Discharge of Contract contd..
Discharge of contract can take place in following way 1. By Performance (Sec 37 / 38) 2. By Agreement (Sec 62, 63) 3. By operation of Law 4. By Breach (Sec 39) 5. By impossibility of performance (Sec 56) 6. By lapse of time
Discharge parties to the contract perform When the by Peformance

their part of the duties.
Discharge by Agreement 1. Novation

2. Alteration
3. Rescission 4. Remission
5. Waiver
Discharge by Agreement Novationcontract substituted by new contract either between Original

Old parties Or New parties Essentials : 1. Consent of all the parties 2. New Contract capable of being enforced 3. New Contract must be made before the expiry of the time of performance of the original contract.
Discharge by Agreement Alteration

Change in terms of the contract with the consent of
the parties But no change in the parties
Discharge by Agreement Rescission

Cancellation of Contract either by
Mutual Consent 2. By Aggrieved party 3. By Party whose consent is not free

1.
Discharge by Agreement Remission

Acceptance of Lesser amount or lesser
degree of performance than what was originally due under the contract Leading case : Kapur Chand vs Himayat Ali Khan
Discharge by Agreement Waiver

Abandonment of ones rights
Discharge by operation of Law

Insolvency : Rights of insolvent transferred to official assignee
Merger : When there is acceptance of higher
security in the place of lower. Alteration : A material change without the consent of the other party. Death : When performance is required in person and the personal qualifications of the promisor are considerations for the contract.
Discharge by Breach Actual Breach

Anticipatory Breach
Discharge by breach Actual breach

It can take place either When performance is actually due Or While performing the act
Discharge by Breach Anticipatory Breach

Refusal by the promissor to perform his part of the
contract before the due date of performance Consequences: 1. The other party may treat the whole contract as broken and claim damages or 2. Wait till the due date and then take action
Discharge by Impossibility of Performance

Initial it may be on the face of the contract or may
exist unknown to the parties at the time of making the contract. Subsequent : It may arise subsequently after the contract is made. It may take place by 1. Destruction of the subject matter (Taylor vs Caldwell- Music Hall). 1. Death or personal incapacity 2. Change of law 3. Non existence of particular state of things 4. Declaration of war
Discharge by impossibility Contd

Effects of impossibility
Contract becomes void 2. Benefit to be restored 3. Compensation for non performance

1.
Discharge by Lapse1940 time of A contract Under Limitation Act
should performed within a specified period otherwise aggrieved party is deprived of his remedy in law
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REMEDIES FOR BREACH OF CONTRACT

Cancellation or rescission Restitution Specific performance Injunction Quantum Meruit Damages ;- general or ordinary damages,special damages,vindictive or exemplary damages,nominal damages
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Part performance
Equitable remedy Overcomes legalism Puts good conscience ahead of legalism Allows person who has performed all or part of
contract to defeat other partys defence that contact is unenforceable
Requires three features;

oral agreement acts done in reliance on that agreement existence of contract is the only explanation of
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Measure of damages(sec. 73)

Leading case:Hadley v. Baxendale Principles Restitution General damages Special damages Remote damages Performance of obligation Mitigation of loss Liquidated/vindictive damages Damages in quasi-contract Difficulty of assessment
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AGENCY
SECTION-182 OF IC-ACT
An agent is a person employed to do any act for another or to represent another in dealings with third person.The person for whom such act is done or who is so represented,is called the principal. Agent is a connecting link between principal & third person The agent may be expressly or impliedly authorized to do an act on behalf of the principal The courts have to examine the relationship of
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Kinds of agents
Express or implied
General,special or universal
Mercantile or Non-mercantile
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KINDS OF MERCANTILE AGENTS

Auctioneers (open sale or auction) Factors (possession for sale or on credit) Broker (connecting link merely negotiate and no
possession) Del credere agent (mercantile agent who on payment of extra commission, guarantees the performance of the contract by the third party Commision agent Banker General agent and particular agent
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FEATURES OF CREATION OF AGENCY

The principal should be competent to contract (183)
The agent may not be competent to contract (184)

No consideration is necessary to create an agency (185)
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HOW AGENCY IS CREATED

By authority either express or implied (187-188) Agents authority in case of emergency (189)
By conduct of principal i.e.on the basis of law of estoppel (237)

By ratification of agents act by principal (196-200)
By presumption of agency in husband wife relationship
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DUTIES OFto delegate his duties (190) AGENTS Duty not

Duty to follow principals directions (211) Duty to show proper skill and care (212) Duty to render proper accounts (213) Duty to communicate with principal(214) Duty not to deal on his own accounts (215&216) Duty to pay sums received for principal (217-218) Duty to protect and preserve the interest of
principal
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RIGHTS OF AGENT & DUTIES OF PRINCIPAL

Right to remuneration (219)
Right to retain sums (217&218)

Right of lien on principals property (221) Right to be indemnified for lawful acts (222-224)
Right to compensation for damages due to principals
neglect(225)
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PERSONAL LIABILITY OF AGENT

Where agent acts for foreign principal Where agent acts for undisclosed principal When the agent acts for a disclosed principal who

cannot be sued When the agents authority is coupled with interest Where the agent receives or pays money by mistake or fraud Where the agent signs the negotiable instrument in his own name Where the agent exceeds his authority or where the contract so provides Where acc to usage or trade, agent is personally liable
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MODES OF TERMINATION OF AGENCY

BY ACT OF PARTIES By agreement between parties By revocation of authority by principal By renunciation by the agent
BY OPERATION OF LAW By completion of
business of agency By death or insanity of the principal or agent By the efflux of time By insolvency of the principal By the destruction of the subject matter By subsequent illegality By dissolution of a company
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THANKYOU
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LAW OF INSURANCE
BY ANUPAM GUPTA
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Future is unknown and uncertain. The lack of knowledge about future exposes life and property to varied risks. Insurance is a co-operative
way of spreading the loss by following the principle of pooling of risks.

Definition by Thomas:Insurance is a provision, which a prudent man makes against inevitable contingencies, loss or misfortune and is a form of spreading risks. Contract of Insurance :may be defined as a contract between two parties whereby a person undertakes in consideration of a fixed sum pay to the other a fixed amount of money on the happening of a certain event (death or attaining a certain age in case of human life) or to pay the
amount of actual loss when it takes place through a risk insured (in case
of a property). Policy: The instrument containing the contract of insurance is called a policy. Insured: The person whose risk is insured is called insured or assured. Insurer: The person or company, which insures the risk of other, is
called insurer, assuror or underwriter.
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Premium: The consideration is return for which the insurer agrees to make good the loss is known as premium. Subject Matter Of Insurance: The thing or property which forms the basis of insurance is called the subject matter of insurance. Insurable Interest: The interest of the assured in the subject matter is called the insurable interest. NATURE OF THE CONTRACT. The contract of insurance is a special type of contract. Earlier it was treated alike wagering contract. Now rules have changed and law regards
it now as a system of sharing risks. It is a type of contingent contract.

So the rules relating to valid contract apply to a contract of insurance.
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Kinds of insurance
Life assurance General(non-life) insurance
Fire
Marine
miscellaneous
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FUNDAMENTAL PRINCIPLES/ELEMENTS OF INSURANCE

1. Utmost Good Faith: The general rule of caveat emptor (let the buyer be aware), which applies to ordinary trade contracts, does not apply to insurance contracts. It is a condition of every insurance contract that both the parties should display the utmost good faith towards each other in regard to the contract. Case: ( Mithulal Nayak Vs LIC of INDIA, A.I.R.) 2.Insurable Interest: The insured must possess an insurable interest in the subject matter of the insurance at the time of contract otherwise the contract of insurance will be a wagering agreement which shall be void and unenforceable.
3.Indemnity: Indemnity means compensation of loss. Assured ,in the case of loss against which the policy, has been made shall be fully indemnified but never more than the loss occurred. Case: Castellian vs Prestan (1883)
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4.Causa Proxima: When a loss has been caused by a number of causes, the nearest cause will be taken into consideration for fixing the liability of the insurance company. Proximate cause is not meant the latest i.e. proximate in time,
but the direct dominant and efficient causes.

Case: William & Co. Vs North of England Assurance Co. (1917)
5.Subrogation: Subrogation means substitution. The insurer after indemnify the assured in full for the loss, be entitled to step into the shoes of assured i.e. the rights of the assured pass on to the insurer. Case: Midland Insurance Co. Vs Smith
6.Risk Must Attach: Premium is the consideration for the risk sun by the insurance companies
and if there is no risk, there should be no premium.
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7.Mitigation Of Loss: It means minimization of loss. When the event occur which is insured against, it is the duty of the insured take all such steps to mitigate or minimize the loss as if he was uninsured. 8.Contribution:
Like the doctrine of subrogation the doctrine of contribution also applies

only to contracts of indemnity i.e. to fire and marine insurances. This principle states that in case of double insurance, all insurers must share the burden of payment in proportion to the amount assured by each. If an insurer pays more than his reliable proportion of the loss, he has a right to recover the excess from his co-insurers who have paid less than their rate able proportion. 9.Period of Insurance: Insurance policy specifies the term or period of time it covers. A life insurance policy may cover a specified number of years or the balance of the insureds life. A contract of fire is normally of a year. A contract
of marine insurance may be either for a particular period or particular voyage 87
Thank you
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SALES OF GOODS ACT 1930

BY ANUPAM GUPTA
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CONTRACT OF SALE (SECTION-4)

A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods for a price
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Essentials of contract of sale

A valid contract
Two parties Transfer the property Goods Price
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Important distinctions
Sale and agreement to sell
Sale and bailment
Sale and Hire-purchase

Sale and mortgage
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Sale and agreement to sell Nature of contract

Transfer of property Risk of loss Consequences of breach Insolvency of buyer Insolvency of seller General and particular property Right of re-sale
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Sale and bailment

Transfer of property and possession Return of goods Consideration
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Nature of contract Sale and hire purchase

Termination Insolvency of buyer Implied conditions and warranties Effect of payments
resale
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Elements of a sale of goods contract

A contract involving
transfer of ownership
in goods for a money consideration called the price
Not
hire purchase barter
chattel security
leasing goods and services
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DEFINITION OF GOODS
SECTION 6
GOODS MEANS
Every kind of movable property other than actionable claims and money and includes stock and shares, growing crops,grass,and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale
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Goods
Chattels personal but not choses in action currency not goods but money sold as
collectibles is not growing crops but harvested crops are

Types of goods
future goods = to be manufactured specific goods = identified and agreed upon at
time of sale existing goods = in existence but not yet seller's property unascertained goods = goods not yet appropriated to this contract ascertained goods = identified and appropriated
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DEFINITION OF PRICE
Price
not necessarily wholly in money must be specified or readily ascertainable no prescribed form except in Tasmania and Western
Australia where Statute of Frauds applies to contracts over $20
- does not include old and rare coins

must be in money
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MODES OF FIXING PRICE SECTION-9

As expressly stated in the contract I.e by agreement By the course of dealing between the parties If nothing is there then reasonable price Through valuation By the third party
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Passing of property and risk

General rule is that risk passes with property unless
otherwise agreed
Property passes when
goods are ascertained
contract is made for sale of specific goods in a deliverable state when whatever needs to be done to put specific goods in a
deliverable state is done

when something that needs to be done to determine price of
specific goods is done and buyer has notice

when goods are delivered on approval or sale or return basis
when buyer expressly or impliedly accepts goods
-- Where contract has a reservation of title clause (Romalpa) on fulfilling those conditions
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Where non-owner can validly pass title to goods

sells with authority of true owner
Nemo dat quod non habet rule cannot give better title than you have Exceptions to nemo dat
true owner is estopped by own conduct from denying
sellers authority
disposal by mercantile agent
under court order

sale under common law or statutory power sale under voidable title
sale by seller in possession

sale in market overt
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CONDITIONS AND WARRANTIES

SEC-12(1) A stipulation in a contract of sale with
reference to goods which are subject matter there of , may be a condition or a warranty
The stipulation which are essential for the main
purpose of the contract and the breach of which gives rise to right to treat the contract as repudiated is called Condition. Section 12(2) Essentials 1.essential to the main purpose 2.Non-fullfillment causes irreparable damage 3.Breach gives right to rescind the contract
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The stipulation which is collateral to Warranty and the breach of whichthe main purpose of the contract gives rise to claim fo
damages but not a right to reject the goods and treat it as repudiated is called Warranty Section 12(3)
Essentials
Collateral to the main purpose Breach causes damages No right to repudiate contract
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Distinction b/w condition and warranty
Importance in contract
Consequences of breach
Option of treatment
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When condition to be treated as warranty

Voluntary waiver by buyer
Treating condition as warranty

Acceptance of goods by buyer
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IMPLIED CONDITIONS
Condition as to title:- (sec-14) subject to a contrary
intention,there is an implied condition on the part of the seller that in the case of sale, he has a right to sell goods and that in case of the agreement to sell, he will have a right to sell the goods at the time when property is to pass.
Sale by description :- (sec-15) where goods are sold by
description, there is an implied condition that the goods shall correspond with the description. This rule is based on the maxim,if you contract to sell peas,you cannot oblige a party to take beans. Sale by sample as well as description;-(sec-15) if the sale is by sample as well as description, it is not sufficient that the bulk of the goods shall correspond with the sample,if the goods do not also correspond with the description.thus should correspond with both sample as well description.
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Contd..
Condition as to quality or fitness ;- subject to the
provisions of this act, and of any other law for a time being in force,there is no implied condition as to quality or fitness for any particular purpose of goods supplied
Condition as to merchantability ;- there is always
an implied condition in a contract of sale that the goods purchased should be of merchantable quality.thus where goods are brought by description from a seller,who deals in such goods,there is an implied condition as to merchantability
Merchantability means;- that the article sold must be
of such quality and in such condition that reasonable man would accept the article as performance of a 108
SALE BY SAMPLE ;- In the contract of sale by sample, there is an implied condition(i) That the bulk shall correspond with the sample in quality (ii) That the buyer should have reasonable opportunity of comparing the bulk with the sample (iii) That the goods shall be free from any defect rendering them unmerchantable, which would not apparent on reasonable examination
CONDITION AS TO CUSTOM OR USAGE;- An implied condition as to quality or fitness for a particular purpose may be annexed by custom or 109 usage of trade (sec-16(3))
IMPLIED WARRANTIES
Implied warranty of quiet possession Implied warranty of freedom from encumbrances Implied warranty annexed by usage of trade.
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CAVEAT EMPTOR
Let the buyer beware Exceptions; where the buyer relies on the skill and judgment the skill Merchantability quality of goods Consent by fraud Usage of trade
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Difference between Transfer of Property and Possession,

Transfer of property means Transfer of possession
transfer of ownership Risk of loss also passes with ownership to buyer When the goods are destroyed or damaged ,only the owner can sue The seller can sue for price only if the ownership of goods has been transferred to the buyer
means property just passes Risk of loss remains with the seller Possessor does not have the right to sue This is not in case of transfer of possession
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Express and implied terms in a sale of goods contract (conclusion)

Express terms are those expressly agreed upon and included in the agreement Terms implied by custom, usage or statute Terms are either conditions essential or warranties subsidiary less important Remedies depend on significance of breached
term
condition treat contract as terminated and sue for
damages or affirm warranty sue for damages only
113
Remedies for breach of a sale of goods contract

Failure to deliver goods or to pay for them will amount to
breach of the sales contract Remedies of unpaid seller lien against goods (sec-47-49) right of stoppage in transit right of retention of goods right of resale (sec-54) sue for price if it is due and payable sue for damages for non-acceptance Sue for interest Rights of buyer reject the goods recover the price sue for damages for breach of warranty sue for damages for non-delivery sue for specific performance sue in detinue or conversion
GOODS
BUYER
114
Auction sales
Legislative provisions changeable by agreement between parties Auction sale is a contract Each lot is subject of a separate contract Bidder makes offer, acceptance is at fall of hammer. Auctioneer can refuse to accept bid Normally sellers cannot bid for own goods but can reserve the right to bid Auction may be subject to reserve price Where no reserve auctioneer may refuse to accept bid can specify this right in sale conditions.
115
Implied conditions under Sale of Goods Act

that seller has the right to sell the goods
that unascertained goods when delivered will correspond
with description or sample

where buyer relies on seller, that the goods are fit for
purpose
where the goods are bought by description from a dealer
that they are of merchantable quality

Implied warranties under Sale of Goods Act
that buyer shall have and enjoy quiet possession of goods the goods shall be free of any charge or encumbrance
Terms implied under sale of Goods Act can be excluded Similar terms implied under Trade Practices Act non-
excludable
116
THANK YOU
117
ANUPAM GUPTA
118
Definition:-Negotiable Instrument
Section 13(i) says that it is one when
transferred by delivery passes to the transferee, a good title to payment irrespective of the title of the transferor, provided the transferee is a bonafide holder for value without notice of any defect in the title of the transferor Promissory note, bills of exchange & cheques are negotiable instruments.
119
FEATURESPropertyN.I. OF
Negotiability
Good title Right to sue in own name Presumptions Prompt payment
120
Section 4 says Note Promissory an instrument in writing (not being a
bank note or currency note) containing an unconditional undertaking signed by the maker , to pay a certain sum of money only ,or to the order of ,a certain person ,to the bearer of the instrument.
121
Essentials of a Promissory Note
Must be in writing It must contain promise to pay must be expressin to pay certain sum and it must also be unconditional Promise to pay must be express Should have certain maker and payee It must be duly signed by the maker Promise should be to money and money only It may be payable on demand or after a definite period of time
122
Answer yes or no
I promise to pay B Rs. 500 and all other sums which
shall be due to him I promise to pay B or order Rs 500 Mr. B.i.o.u Rs 500 I promise to pay B Rs 200 seven days after my marriag with C I acknowledge myself to be indebted to B Rs. 500 to be paid on demand of values received
123
Bills of exchange instrument in writing containing an unconditional
Definition :-Section 5 defines `Bill of exchange` as an
order, signed by a maker, directing a certain person to pay a certain sum of money only to or to the bearer of the instrument. A bill of exchange is also draft. There are three parties to a bill of exchange:Drawer,Drawee,Payee.
124
Essentials of B/E to pay Unconditional order

Writing
Signed by drawer
3 parties Certain sum of money
Must contain an order to pay money only

Compliance of formalities
125
CHEQUECheque is the means by which a person A

who has funds in the hands of a bank , withdraws the same or some part of it. Section 6 defines a Cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
126
Bill of exchange and Promissor note
SIMILARITIES: All are in writing and signed by the maker All are payable in money terms only All are unconditional For a specific amount Payable either to the specified person or order of the specified person or the bearer of the instrument
127
Bill of exchange and Promissory note

Parties
Order/Promise
Acceptance Period
Circulation/Area
Crossing Mistake
Liability if not presented in due course
128
Difference Between Promissory Note & Bill of Exchange

Bill of exchange Basis Parties Nature of payment Accep tance Three parties Two parties Unconditional order to Unconditional promise to pay pay Requires an Do not require any acceptance since it acceptance of the is signed by the maker drawee before its presentation Liability of the drawer Liability of the maker is primary is secondary when drawee fails to pay Promissory note
Liability
Notice of Notice must be given to Notice to the maker is not necessary dishon all who are liable to or pay Nature of Can be accepted Can never be conditional accept conditionally ance Copies Can be drawn in sets Cannot be drawn in sets
129
DIFFERENCE BETWEEN CHEQUE & BILLS OF EXCHANGE

Bill of exchange Basis Drawee Acceptanc e Payment Can be drawn on any person including a banker Requires an acceptance of the drawee before its presentation B.O.E. is normally entitled to three days grace unless payable on demand No such provision Always drawn on a bank or a banker Does not require any acceptance Payable immediately on demand May be crossed Cheque
Crossing Notice of dishonor Payable to bearer on demand Stamp Protection
Notice must be given to all who Notice of dishonor is not are liable to pay necessary if it is not met Cannot be so drawn Can be drawn payable to bearer to demand Does not any stamp banker is given statutory protection w.r.t payment of 130 cheques in certain cases.
Must be stamped No such protection
Ambiguous and Inchoate instrument
Ambiguous instrument:(Section-17) If an instrument drawn in such a manner that it ca be classified both as a BOE and PN, then the hold of such an instrument may treat it as BOE or PN a his own option. E.g. Difference between Cheque, Bill of
exchange and Promissory note When the Drawer and the Drawee is the same
person e.g. BOE drawn by Agent on his Principal When the Drawer of the BOE is a Fictitious perso When the Drawer is a person incompetent to contract
131
The instrument Inchoateinstrument which is
incomplete like leaving blank name of payee or amount payable or date.
132
Cheques are of two types:Crossing of cheques
crossed cheques
Open cheques
133
Open Cheques:- Open cheques are those which are
paid over the counter of the bank. They need not to be put through the bank account. Open cheques are liable to great risk in the course of circulation
Crossing of cheques:- Crossing is a direction to a
banker not to pay the cheque across the counter but to pay to a bank only or to a particular bank in a account with the bank. Thus , crossing provides a protection and the safeguard to the owner of the cheque as by securing payment through a banker, it can easily be detected to whose use the money is received.
134
Modes of crossing---(Section 123) crossing General

Special crossing---(Section124) Payment of cheque crossed specifically
more than once---(Section 127)

Restrictive crossing---
135
A negotiable cheques Dishonor of instrument may be dishonored by :-
i) non-acceptance ii) non-payment. A Cheque and a promissory note can only be dishonored by non-payment but a bill of exchange ca be dishonored either by non-acceptance or by nonpayment.
136
When banker may dishonor a customers Cheque

1) 2) 3) 4) 5) Where the customer has not got sufficient funds with the bank and there is no overdraft arrangements. Where the form of the Cheque is legally doubtful. Where the Cheque is not presented within the banking hours. Where the Cheque is presented in the branch where the customer has no account. Where the Cheque has become stale where the bank has a general lien on the customers funds and there are no funds available after the exercise of its lien permitting the bank to honor the cheques. Where some persons have joint account and the cheque is not signed by all. Where the Cheque is not properly drawn.
137
6) 7)
When banker must dishonor a customers Cheque
1) When the customer has died and the bank has the notice of it. 2) When the customer has become insolvent or an order of adjudication has been passed against him. 3) When the bank has received an order from the court prohibiting payment out of the funds belonging to the custom 4) When a customer has become lunatic and the banker has got notice of his insanity. 5) Where the drawer informs the bank that the Cheque is lost. 6) Where there are material alterations or the signatures of the drawer or endorsee are irregular. 7) When the banker suspects that the title of the person presen the Cheque is defective. Note: The above mentioned list is not exhaustive. For more de
138
Liabilities of parties (Banker and Drawee) to negotiable instrument

Liability of the banker (drawee): Section 31
The drawee of a Cheque must pay the Cheque when duly presented for payment provided he has sufficient funds of the drawer applicable to the payment of such Cheque .If the drawee banker wrongfully dishonors the Cheque he can be made liable to pay exemplary damages to the drawer. When the banker makes the default he is liable not towards the payee or the holder but towards the drawer. This is so because there is no privity of contract between the banker and the holder. The holder has the remedy against the drawer and not the banker.
The drawer of the Cheque is liable to the holder only if (i) the instrument has been dishonored (ii) due notice of the dishonor has been given to him. The liability of a drawer of a Cheque arises only when drawee bank fails or refuses to pay. The liabilit of the drawer of a Cheque is primary because on dishonor the 139 holder cannot sue the banker but can sue the drawer only .
Liability of drawer :Section 30
THANKYOU
140
ANUPAM GUPTA
141
COMPANY: EVOLUTION 1956 Concept of company originated in Italy in the 12th
century. Govt. of Italy issued promissory notes to public. Members of the public formed associations to acquire these. First co. Estd. In England in 16th century AD.East India company 1600 Before Co's act 1956, Companies act of 1850 which come up in England applicable in India.
142
History and development is closely linked up with that of
England. Company Law is the cherished child of the English parents.

Companies Act (of 1956) which came into force on 1st April, 1956.
The Indian Companies Act, 1913 was repealed by the present
The present Companies Act is based largely on the
recommendations of the company law committee (Bhabha Committee) which submitted its report in March, 1952. Parliament.. Consists of 658 sections and 15 schedules. Company Act, 1956 to amend the Companies Act force with effect from 1-1-03
This Act is the largest piece of legislation ever passed by our

Recently two bills passed in Parliament to amend the The Companies (Second Amendment Act), 2002 came in to
143
Company: Meaning
Derivative of Latin word Companis
According to Alfred Palmer, men of business thought
it appropriate to discuss the affairs of business over lunch or dinner.
144
Company: Important Definitions

A company is an incorporated
association which is a artificial person

created by law, having a separate entity with a perpetual succession and
common seal.
-- L.H.Haney
145

Company means a company formed and registered
under this Act or and existing company -Secti 3(1)(i) Existing company means a company formed and registered under any of the previous companies laws. -Section 3(1)(ii)
146

By a company is meant an association of any persons
who contribute money or money's worth to a common stock and employ it in some trade or business, and who share the profit and loss( as the case may be) arising therefrom. -Lord Justice Lindley
147
Company Characteristics
Incorporated Association.
Artificial Person.
Separate legal Entity.(Soloman vs. Soloman & Co.
Ltd.)
148
Company Characteristics Contd.

Perpetual Succession.The modern corporation, with its continuous existence despite its changing membership, has been compared with a river which retains its identity even though the parts which compose it are constantly changing
by R.N.Owens. Lee vs.Lee farming Co. Ltd.1960
149
Company Characteristics contd.

Common Seal. Limited liability. Number of Members. Representative Management. Limitation of Action.
Transferability of Shares.
150
Company Characteristics contd.

Termination of Existence.
Company is not a Citizen.(State Trading
Corporation of India vs. commercial Tax Officer.)
151
COMPANY: LIFTING OR PIERCING OF CORPORATE VEIL

Principle of Perpetual succession decided in Soloman vs. Soloman &co. Ltd.
Resultant in a corporate veil(distinction) between company and its members.

If members/directors defraud company by its
personal acts. There is lifting or piercing of corporate veil to hel members/directors personally liable.
152

(A). Under Statutory Provisions Members below statutory limit(Sec.45) Mis-statement in prospectus.(62) Non-refund of Application money Sec.65(5) Investigating affairs of the company i.e. Oppression and mismanagement(239) Investigating the fraudulent trading/Defraud creditors.
153

Non-Disclosure of company's name on legal
documents(Hendon vs. Addleman) Investigating company's ownership(247)
154

(B). Under Judicial Interpretations Protection of Revenue i.e. to avoid tax evasion(Re Sir Dinshaw Maneckjee Petit) Prevention of fraud and improper conduct(Jones Vs. Lipman) Ddetermination of Enemy character of the company(Daimler Co. Ltd Vs. Continental Tyre & Rubber Co. Ltd.) Government companies
155
COMPANY: HOW DIFFER FROM PARTNERSHIP

Governing Act Number of Members
Registration and Incorporation

Separate Entity Liability
Management
Transfer of Interest
156
COMPANY: HOW DIFFER FROM PARTNERSHIP

Agency relationship Audit Perpetual succession Capacity to contract with owners Mandatory Documents Distribution of profits Winding up
157
LIFTING OF A CORPORATE VEIL
The principle of separate entity is regarded as a curtain, a veil, or shield between the company and its members, thus protecting the members from the liability of the company. This principle cannot be pushed to the unnatural limits i.e. to defeat the public convenience, justify wrong, protec fraud and defend crime, then the law will not regard the company
SINCE AN ARTIFICIAL PERSON IS NOT CAPABLE OF DO ANYTHING ILLEGAL OR FRAUDULENT,THE NOTION OF CORPORATE PERSONALITY MIGHT HAVE TO BE ABONDON TO IDENTIFY THE PERSONS WHO ARE REALLY GUILTY. TH IS KNOWN AS LIFTING OF CORPORATE VEIL
158
Corporate veil may be lifted in the following circumstances; ---- Common Law Exceptions (Judicial interpretations) ---- Statutory exceptions
COMMON LAW EXCEPTIONS

Determination of the character It is against the public policy
to allow alien enemies to trade under corporate faade in the

times of war
159
Persons controlling the affairs are residents of the alien company
Or where residents are acting under the direction & control of enemies
Where company is a mere sham--- where the device of incorporation is used for illegal or improper use
Case : Daimler Co. LTD v. Continental Tyre & Rubber Co. LTD.
Where company is formed to do fraud or improper conduct : whe company is incorporated for evading contractual and statutory obligations Where a company is used to evade tax Where the sole purpose of the new company is to use it as a device to reduce the amount to be paid by way of bonus.
160
Number of members below statutory minimum: If company works for the p more than six month with the reduced number of members, all will be liable payments to be made which are contracted for during that period
Failure to refund the application money: If the directors are unable the refund the amount within 130 days the directors will be jointly or severally liable with interest. Company not mentioned on the bill of exchange: A person is personally liable if he
signs the document where the company name is not clearly mentioned.
Group accounts: Separate identity is not considered in case of laying down the accounts of group companies. Investigation in to the related companies: an inspector can lift the veil in case he feels it necessary to investigate the affairs of its subsidiary or the holding company. Fraudulent trading: if at the time of winding up of the company, it appears that the 161
COMPANY: ITS TYPES

COMPANIES
Incorporated
Unincorporated
Chartered cos'.
Statutory cos'.
Registered cos'.
Cos'. Ltd. by Shares
Cos'. Ltd. by Guarantee
UnLtd. cos'.
Public
Private
Public
Private
Public
Private
162
COMPANY: ITS TYPES
(A). Chartered companies: e.g. Bank of England(1694 East India Co.(1600) (B). Statutory companies: e.g. LIC, RBI, FCI, UTI etc. (C). Registered companies: Ltd. by shares Ltd. by guarantee Unltd. Cos.
163
Company limited by shares:- in co. ltd by shares the liability of
members of members is limited by the memorandum to the amount,if any,unpaid on the shares resp. held by them Company limited by guarantee;- it is a registered company public or private,in which the liability of members is limited to such amounts as they may respectively undertake by the memorandum to contribute to the assets of the company in the event of its being wound up. In case of such companies , as in the case of companies limited by shares,the liability of its members is limited ,to the amount of guarantee undertaken by them Unlimited companies a company not having any limit on the liability of its members is termed as unlimited company.In such a company the liability of each member extends to whole amount contribution from other members.an unlimited company must not incorporate limited as the last word.it need not have a share capital, but it must file the articles and the memorandum.
164
COMPANY: ITS TYPES

Private company: Section-3(1)(iii)
a company which has a minimum paid-up capital of rupees one lakh rupees or such higher paid-up capital as may be prescribed, and by its articles: Restricts right to transfer its shares; Limits membership to 50 (excluding employed members) Prohibits invitation to public to subscribe shares & debentures. Prohibits invitation or acceptance of deposits.
165
COMPANY: ITS TYPES Public company: Section-3(1)(iv)

A public company means a company Is not a private company Has a minimum paid-up capital of rupees five lakh or more. Is a private co. which is a subsidiary of a public company.
166
COMPANY: HOW PRIVATE CO. DIFFER FROM PUBLIC COMPANY

No. of members Minimum Paid capital Restriction on name Commencement of Business Invitation to public for shares Acceptance of Deposits from public Transferability of shares Rules regarding Directors Allotment before minimum subscription
167
COMPANY: HOW PRIVATE CO. DIFFER FROM PUBLIC COMPANY

Issue of share warrants Further issue of capital Directors Statutory meeting Quorum
Managerial remuneration
Number of members
168
CONVERSION OF PRIVATE COMPANY INTO A PUBLIC COMPANY

Conversion by default
Conversion by operation of law

Conversion by choice
169
Holding companies Other important concepts Subsidiary companies Government companies Foreign companies
170
HOLDING COMPANY AND SUBSIDIARY COMPANY
Holding Company: (Section 4) is one: Controls the composition of board of directors of another company; or Holds more than half of the nominal value of equity share capital of another company. (if a company say X) is a subsidiary of any company say Z which is in turn a subsidiary of another company say Y then:
171
Y
Z
.
Holding company
Y automatically becomes holding company of x Subsidiary company
Subsidiary Company: A company so controlled is called subsidiary company
172
Government Company (Section 617):

A company
in which not less than fifty one percent of
the paid up share capital is held by Central Govt., or by any State Government or Governments, or partly by the Central Government and partly by one or more State
Governments. A subsidiary of a government company is

also a government company.
Foreign companies (Sec. 591)

It means a company incorporated outside India and having a place of business in India.
173
One Man Company:
These are the companies in which one man holds virtually the whole of the share capital with a few extra members holding the remainder who may be his relations or nominees. This is done with a view to fulfill the statutory requirements.
174
175
A company comes into existence when a number of Incorporation of a company persons come together with a
view to exploit some business opportunity The purpose and the object for which the company is formed must be lawful and not forbidden u/s12, 7 or more may incorporate a company for lawful purpose
176
Documents required to be filed with registrar

Memorandum of association Articles of association,if any, duly signed by the subscribers to
the memorandum The agreement,if any,which is entered A statement of the nominal capital A notice of addresses of registered office of the company A list of directors and their consent to act signed by each An undertaking in writing signed by each such director to take and pay for qualification shares A declaration that all requirements are complied with
177
COMPANY:HOW IT FORMED
Stages in the formation of a company:
Promotion of a company.
Incorporation or Registration of the company. Capital subscription.
Commencement of Business
178
COMPANY:PROMOTION STAGE
1.
Promotion of a company: Promotion may be defined as the discovery of business opportunities, and the subsequent organisation of funds, property and managerial ability into a business concern for the purpose of making profits there from -C.W. Gesternberg Promoters are the persons who get together and the conceive the idea of doing the business.
179
Promoter is the person who assembles the men, the money and the materials into a going concern. -Guthmannn and Doughall
180
STATUS OF PROMOTERS Does promoter act as an agent(no)

Does he act as a trustee(no) Is the promoter owner of the co.(no) or is he an official(no)
181
Companies Act doesn't define a promoter. He is having fiduciary relationship which means a relationship of trust and confidence. Lord chancellor has observed, they stand, in my opinion, undoubtedly in a fiduciary position. They have in their hands the creation and moulding of the company.
182
PROMOTERS: FIDUCIARY RELATIONSHIP
Lord Lindley observed in the case of Laygunas Nitrateco. Ve. Lagunas Syndicate: Not to make any secret profits Not to earn profit on personal assets Promoters not personally liable Termination of contract, if based on misrepresentatio No termination of voidable contracts if the situation parties changed.
183
Rights of Promoters:
Right
to get legitimate preliminary expenses(Mehladeo vs. Port Alegre Railway) Right to get proportionate amount from copromoters Right to get remuneration
184
Duties of Promoters:
To disclose private arrangement To disclose the secret profits To disclose the material facts To show goodwill towards the future shareholders
185
Liabilities of Promoters:
Liability due to fiduciary relationship In case of fraud and breach of duty. For statutory mistakes in prospectus Misstatement in prospectus (Sec. 62 & 63) Liability in case of Insolvency Liability upto completion of contract Liability in case of winding up of co.
186
COMPANY:INCORPORATION STAGE
Incorporation or Registration of the company: Floatation is the conception of a company wherea its incorporation is its birth when it takes on the form of an artificial person.
187
Steps for Incorporation:

Preliminary activities Documents filing with the ROC Payment of prescribed fees Certificate of Incorporation Capital subscription Commencement of Business
188
Preliminary activities: Location of Regd. Office To decide the name of the co. To get the licence under IDRA,1951(if required) To make appointments Preparation of MOA and AOA To send the application to the ROC
189
Documents filing with the ROC: MOA AOA Information about the HO List of Directors Written consent of Directors Directors undertaking regarding Qualification
shares Preliminary Agreement with managerial personnel Statutory Declaration.

190
COMPANY: CAPITAL SUBSCRIPTION

Capital subscription and commencement of business stage are relevant only for a public
company with a share capital Co. issued prospectus inviting public to invest an also sends a copy to ROC Applications along with prescribed amount received by cos bankers Company passes the formal resolution for allotment and filed return of allotment with RO Refund within
191
Business
Commencement of Business: After Incorporation a private co. can commence its business immediately, by a public co. require certificate of commencement of business subject to conditions of Sec 149(1)(a to d) and 149(2)(a to c)
192
COMPANY:Commencement of
Business
Public co. issuing Prospectus 149(1) a). Minimum Subscription( within 120days) b). Qualification shares c). Refund d). Declaration
193
COMPANY:Commencement of
Business
Public company not issuing the Prospectus: 149(2) a). Issue of statement in lieu of prospectus b). Qualification shares c). Declaration
194
ANUPAM GUPTA
195
MOA: WHAT IT MEANS

To recall or memories the purpose for which the Association(co.) formed Also called charter/principal document of the company Required for both Pvt. and Public ltd. Co. No co. can be regd. without MOA Every person presumed to know the about provisions of MOA, for which co. formed Co. is not bound for acts not defined in MOA
196
MOA: WHAT IT MEANS

Memorandum means the MOA as originally framed or as altered from time to time in pursuance of any previous companies law or of this Act. -Section 2(28) The purpose of the memorandum is to enable the shareholders, creditors and those who deal with the company, to know its permitted range of enterprise. -Lord Macmillan
197
MOA: WHAT IT MEANS

Features or basic characteristics of MOA: Basic and mandatory for each co. As constitution of company Altered but subject to certain conditions Acts beyond this are ultra virus I.e not enforceable against the co. Public document and open for for inspection of those who deal with the co. Basis for relationship of co. with outsiders.
198
MOA: WHAT IT MEANS Forms of MOA:

Table-B For co. Ltd. by shares
Table-C For co. Ltd. by guarantee without share
capital Table-D For co. Ltd. by guarantee with share capital Table-E For unlimited co.
199
MOA: WHAT IT (Section15): MEANS Legal Provisions:

Printed and divided into the paragraphs
Signed by each subscriber along with their
name, address, description and occupation Signed in presence of at least one witness, who sign along with his name, address, description and occupation
200
MOA: ITS SUBJECT-MATTER

Name clause
Registered office clause

Object clause Liability clause
Share capital clause

Association or subscription clause
201

Name clause: Restriction of undesirable(identical) and inappropriate name(Section-20) North Chashier and Manchester Brewery co. vs. Manchester Brewery co. Not prohibited under Emblems and Name(Prevention of improper use)Act,1950 e.g.seal or emblem of CG or SG, international organizations, national leaders etc. Mandatory to use the word Ltd. or Pvt. Ltd.(except license granted by CG u/s 25) Name must be Published and displayed
202

Registered office clause: Describes the name, address, city and state in which co. has its Regd. Office. Helpful in determination of cos nationality and governing laws. Legal documents & books are kept here and notices are served. Not necessary the principal place of business i.e. different from operational field If MOA not contain Regd. Office address this should be intimated to ROC within 30 days of DOI or DOC, whichever is earlier.
203

Object clause: To inform the members how co. will use their capital To inform creditors and outsiders about the rights of company(in case of ultra-virus acts). Limits the area of operations of the company Divided into two parts-Main object and Incidental or Ancillary objects.
204

Attorney General vs. Great Eastern Railway co., If the object mentioned in MOA is to deal in coal, then hiring wagons for transportation is the object incidental to it. Restricted objects: Immoral Illegal Oppose to public policy Violation of Indian Cos act
205

Liability clause: the memorandum of a company limited by shares or by guarantee shall also state that the liability of its members is limited. -Section 13(2) Limited liability either Ltd. by shares or by guarantee
206

Exceptions to limited liability: No. of members reduced below min. no. and co. carries on business for more than 6 months with this reduced no.(Sec. 45) If mentioned in MOA as unltd. Liability If mentioned in AOA as unltd. Liability Company willfully defraud creditors.
207

Share Capital clause: Authorised capital with its division into fixed denominations e.g. 100000 shares of Rs. 10 each Authorised capital is the maximum limit upto which co. can issue shares
208

Association or Subscription clause: Declaration of Association made by the signatories Duly attested by witness Desire to form company and subscription to shares made herein
209
ANUPAM GUPTA
210
COMPANY MEETIGS
Any gathering, assembly or coming together of two or more persons for the transaction of some lawful business of common concern is called meeting. A concurrence or coming together of atleast a quorum* of members by previous notice or mutual agreement for transacting business for a common interest is a meeting. *Quorum= Min. no. of persons required to be personally present for a valid meeting
211
COMPANY MEETINGS : Characteristics of meeting

Two or more persons required(except if otherwise
provided) For some lawful business Notice pre-requisition for intimation Specified date, place and time Companys meetings governed by provisions of cos act, 1956
212
COMPANY MEETINGS
Company's Meetings
Shareholders meetings
BOD Meeting
Creditors' meeting
Debentureholders' meeting
Statutory meeting
Annual general meeting
Extarordinary general meeting
Class meeting
213
COMPANY MEETINGS
A). Shareholders
meetings:
1. Statutory meeting: Called only once in lifetime of the co. Mandatory for Co. Ltd. by shares or Co.Ltd. by guarantee having share capital Deals with sources of capital and its utilisation Appointment & Remuneration of various persons
214
STATUTORY MEETING
According to Section 165 of Co s act 1956 Every co limited by shares and every co, limited by guarantee and having share capital, shall, within a period of not less than one month and not more than six moths from the date at which the co. is entitled to commence business, hold a general meeting of the members of the , company, which shall be called the statutory meeting.
215
OBJECT OF STATUTORY MEETINGS

To discuss the success of the flotation and
To approve any modification in the contracts specified
in the prospectus,if need arises.
216
STATUTORY MEETING
Legal Provisions regarding the Statutory meeting: Statutory report Certification of Report Filing of report with ROC Procedure of meeting Consequences for not calling Statutory meeting
217
STATUTORY MEETING
Statutory report: The BOD must, before the
21 days of the statutory meeting forward a Statutory report to each and every member of the co.(It shall be deemed to be forwarded later than such period, if all the members entitled to attend and vote at the meeting agreed on it)
218
STATUTORY REPORT: CONTENTS
Contents of Statutory report - Total no. of shares allotted(in cash or otherwise) - Cash received - Names, addresses and occupations of - Directors, Managing agents, secretary treasurer and Auditors of co. - Contracts and modifications thereon for approv - Arrears from director or manager - Commission of Brokerage on shares or debenture
219
STATUTORY of Report: Certified by at least MEETING Certification

two directors, one of them must be MD, if any. If the shares are allotted by the co. certificate of auditor regarding receipts and payments of such .Filing of report with ROC: After sending copies to the members its mandatory to file report to ROC.
220
STATUTORY MEETING Procedure of meeting

- Preparation of list of members - Members are free to discuss any issue related to incorporation - Resolutions cannot be passed without the prior notice - May be adjourned from time to time
221
STATUTORY MEETING
Consequences for not calling Statutory meeting:
- Either holding statutory meeting or sending statutory report - Every officer in default punishable with a fine upto the extent of Rs. 5000(Sec 165) - Court may order for winding up(Sec 433) - Court may order for holding meeting and submission of statutory report(Sec 443)
222
Companies need not have a statutory meeting

A private company An unlimited company
A company limited by guarantee and not having a
share capital.
223
ANNUAL GENERAL MEETING

Meaning: Every co. must hold in each year, in addition to any other meetings, a general meeting of its members, which is called the cos AGM Who can call AGM: In normal case, by company In special circumstances, by Central government
224
Features of AGM: ANNUAL GENERAL MEETING

Mandatory for both private and public co. At least once in a year To appraise financial performance
and position Declaration of dividend To present Directors and Auditors report
225
AGM:Business of the AGM: Its Purpose

1.
2.
General Business Special Business
226
1. General Business: AGM: Its Purpose
To discuss the Final accounts of the co. To discuss the Directors and Auditors report of the last year To declare the dividend for the year To appoint the directors in place of those who retired by rotation Appointment and reappointment of auditors
227
AGM: Its Purpose Any other business 2. Special Business:

besides what is normally conducted in the meeting is called the special business i.e. Increasing the cos authorised share capital Altering the AOA Appointment, reappointment and remuneration of directors
228
AGM: Statutory provisions AGM 1. Time interval for calling the

Notice and place of the meeting 3. Sending copies of B/S and Auditors report to members 4. Consequences for not calling the AGM
2.
229
AGM: Statutory provisions

1.
Time interval for calling the AGM: To call AGM in each and every year Not more than 15 months in between the two AGMs First AGM of co. within a period of not more than 18 months of the date of incorporation ROC may extend the period by 3months(except first AGM) Necessarily be called either the accounts are finalised or not(Even if the co. not operated for whole year)
230

2.
Notice and place of the meeting: Not less than 21 days clear notice(short notice, if all the members entitled to vote consented on it) Time during the business hours, on a day which is not a public holiday Either at Registered office or at some other place within the same city in which Regd. Office situated A public co. may, by its AOA fix the date and time of AGM and by passing resolution in the first AGM regarding the subsequent AGMs
231

3.
Sending copies of B/S and Auditors report to members: Copy of Balance sheet and auditors report to every member, debenture holder or trustees of such debenture holders At least 21 days before the date of meeting(if otherwise agreed) Fine of Rs.5000 on every officer in case of default
232
AGM:4.Statutory provisionscalling the AGM: Consequences for not
Company law board call or direct to call an AGM (on receipt of application from any of the member Here one man meeting also constitute a valid meeting Fine of Rs.50000 on co. or on every office, an additional fine of Rs. 2500 per day if the default continues
233
EXTRA ORDINARY GENERAL MEETING

Meaning: Any general meeting which is called during the period between its two consecutive annual general meetings When an Extraordinary General meeting called: To make an alteration in MOA or AOA To issue fresh debentures To increase, reduce or reorganise the cos share capital
234

Who may call the Extraordinary general meeting: 1. By the directors 2. By the directors on requisition of the members 3. By the requisitionists themselves 4. By the CLB
235

1.
By the directors: If AOA authorised Resolution passed in director's meeting in this regard At least 21 days notice specifying date and place of the meeting
236

2.
By the directors on requisition of the members(169) Members can bind the directors for such a meeting Members having 10% of share capital or 10% of voting rights can ask for such The demand notice must bear the signatures and purpose of the meeting and served of Regd. Office of the co. Directors initiate the procedure within 21 days of the requisition and meeting should actually be held with in 45 days from the from the date of requisition
237

3

By the requisitionists themselves: If directors fails to call the meeting with in the above said period Requisitionists may themselves convene a meeting within 3 months from the date of deposit of requisition Any reasonable expenses should be reimbursed by the BODs
238

4.
By the CLB: Suo motto or on the application of directors One member meeting either in person or proxy shall be deemed to constitute a meeting(186)
239
CLASS MEETINGS Class meetings(106)_
When the co. having different classes of shares To alter or define the rights and obligations of class o
shareholders e.g. conversion of preference into equit Alterations upto defined in AOA or MOA Passed by special resolution
240
BOARD OF DIRECTORS MEETING

Except for the issues on which the
decision-making right rests with the shareholders, all matters of the co. are dealt with in the meetings of its Board of Directors
241

Meetings of directors classified as: 1. Meetings of BODs 2. Meetings of Directors committees
242

1.
Meeting of Board of Directors Statutory provisions regarding directors meetings Power to convene the meeting Frequency of the meetings Notice and Agenda of the meeting Quorum Chairman of the meeting Business/Procedure during the meeting Minutes
243

Power to convene the meeting: Any of the director can request the Managing director or Chairman to convene the meeting. As a general rule, the MD or the Chairman directs the company secretary to call the meeting
244

Frequency of calling the meeting: As and when required Weekly, Monthly or shorter than that Every co. shall call and held BODs meeting at least once in every three months and at least four such meeting shall be held in a year(Section 285)
245

Notice and Agenda of the meeting: Mandatory to send written notice to each and every director resident in India by Regd. Post Place, date and time mentioned in such a notice No need of notice, if Place, date and time already mentioned in AOA Validity of the meeting challenged in case of default in sending the notice No legal necessity to send the agenda alongwith notice, but in practice it is sent
246
MEETING
Quorum of the meeting: Defined in AOA, otherwise 1/3 of total strength or 2 directors, whichever is higher (287) In case of absence of valid Quorum, deemed to be adjourned on next week on same day, place and time(288) If directors having interest in the contracts under considerations, then they shall be excluded from discussion as well as from quorum
247

Chairman of the meeting: Every meeting shall be presided by one chairman Either elected by company or by the directors in the meeting
248

Business/Procedure during the meeting: Issue and allotment of shares Forfeiture and re-issue of shares Calling meeting of shareholders Declaration of dividend Making contracts with third parties Chairman has a right of casting vote, in case of equal votes in favour and against any resolution
249

Minutes: Summary of the proceedings of the meeting Minutes shall be made within 30 days of the meeting Each page of the minute book shall be consecutively numbered and signed
250

2.
Meetings of directors committees Permanent committees like Remuneration committee, investors grievance committee etc. Temporary committees, are formed for the matters which are time being important for the co. and committees recommendations considered by the Board for decision meeting
251
CREDITORS MEETINGS
A creditors meeting, is in fact not a
cos meeting because such a meeting is organised by creditors Called to settle the suit between the Creditors and co. To get the creditors consent in amalgamation and reorganisation of the co. To get creditors consent at the time of amalgamation of the co.
252
DEBENTURE HOLDERS MEETING
Rules regarding conduct printed on reverse of the
debenture certificates Called for alteration of the repayment schedule Also called when the rights of the debenture-holder altered
253
WINDING UP OF COMPANIES
ANUPAM GUPTA
254
WINDING UP BY COURT
A company may be wound up by an order of the Court. This is called compulsory winding up. Section 433 lays down the following grounds where a company may be wound up by the court.
1. 2. 3. 4. 5.
Special resolution [Sec. 433 (a)]; Default in filing statutory report, or holding statutory meeting [Sec-433 (6)];. Failure to commence business within time [Sec. 433 (c)]; Reduction of membership [Sec. 433 (d)]; Inability to pay debts [Sec. 433 (e)]; Just and equitable [Sec. 433(f)].
6.
255
Special resolution sec-433(a)

Thus by special resolution resolved the company may
be wound up by the tribunal Power of tribunal in such cases is discretionary and should be exercised bonafide case
256
Default in holding statutory meeting (433(a))

Within 6 months from the date on which the
company is entitled to commence business The petition for winding up must not be filed before the expiration of 14 days after the last day o which the statutory meeting ought to have been held Petition to wind up is on the ground of nondelivery to the registrar of the statutory report shall not be entertained.
257
Failure to commence business

Where a company does not commence business
within a year of its incorporation or suspends its business for the whole year. Such suspension must be temporary and can be satisfactorily accounted for Tribunal my refuse to make an order. A company will not be wound if it abandons one o its several businesses, unless that business is the main object of the company.
258
Reduction of Members Below Minimum(Section 433(b))
Where the number of members is reduced below 7 in
case of a public company and below 2 in case of a private company, The tribunal may order the winding up of the company. If the company carries business with the reduced members for more than 6 months the members shall be personally liable for debts contracted during that period.
259
Inability to pay debts (Sec 433(e))
a. b. c.
The tribunal may order winding up if it is unable to pay the debts I.e. it has ceased to be commercially solvent. Section 434 says that a company shall be deemed to be unable to pay the debts in the following cases: Statutory notice Decreed debts Commercial insolvancy
260
Just and equitable (Sec 433(f))

If it is in the opinion of the tribunal that it is just
and equitable that the company should be wound up, such order may be given. E.g Loss of substratum Deadlock in management Oppression of minority Fraudulent purpose Incorporated partnership (quasi) Where the company is a bubble Where the company was insolvent
261
Default in filing P/L Account and B/l or annual Report (Sec 433(g))
2002 if a company has made a default in filing with the registrar balance sheet and profit and loss account or annual report for consecutive 5 financial year the tribunal may order winding up.
As per the new section introduced under companies act
262
Acted against sovereignty and integrity of India (Sec 433(h))
According to companies act 2002, if the company act
against the sovereignty and integrity of India and thu maintain friendly relation with the enemy country then the court may order for winding up.
263
Sick Industrial company under Sec 424(G)

If the tribunal is of the opinion that the company should be wound up under the circumstances specified under sec 424(G) it may order by petition the winding up of such sick industrial unit. (Companies act-2002)
264
Who will file the Petition for winding up
Company Any creditor or creditors including any contingent or
prospective creditor Any contributory or contributories All or any of aforesaid parties, together or separately The registrar Any person authorized by the central government under section-234
265
Consequences of winding up
Intimation to official liquidator and registrar Copy of the winding up in order to be filled with the registrar Order for winding up deemed to be notice of discharge Suits stayed on winding up order Power of the tribunal Responsibility of directors and officers to submit
to tribunal audited books of account Effect of winding up order Official liquidator to be liquidator
266
THANKYOU
267
Transportation is the means o marketing of our huge nationa production and an important link in th development of many industries in th country. The role of transport is ver important in modern commerce. Hence study of law of carriage is essentia
268
CARRIAGE OF GOODS BY LAND The Law relating to carriage of goods by land (including inland navigation) is contained in
(a) the Carriers Act, 1865, and

(b) the Indian Railway Act 1890. Both these Acts have been amended many times.
CONTRACT OF CARRIAGE:
A contract whereby a person or company agrees to carry goods or people from one place to another in return for payment. Carrier: The party who undertakes to carry the goods or people for payment (e.g. railway, steamship) is called the carrier.
269
Classification of Carrier
Carriage of passengers
Carriage of goods
On the basis of reward
Gratuitous carrier
Private carrier
LAW RECOGNISES TWO CLASSES OF CARRIERS: COMMON CARRIER PRIVATE CARRIER

270
Common Carrier: (Sec. 2 of Carrier Act, 1865)

DEFINITIONS:A Common carrier is one (other than Govt.) who undertakes for hire to transport goods from one place to another (by land or inland navigation) of all such persons indiscriminately as think fit to employ him A person other than government engaged in the business of transporting for hire property from place to place by land or inland navigation , for all persons indiscriminately. A person who reserves the right of accepting or rejecting the offers of goods for carriage is not a common carrier.
271
CHARACTERSTICS OF COMMON CARRIER
Common Carrier may be an individual, firm an association of persons

(except government.) Railways being a government owned is not a common carrier though
carries goods by land. The carriage of goods by the Railways is Governed

by Indian Railway act, 1890 Person must have been engaged in the business of transportation of goods. It should not be a casual occupation. One who carries passengers is not a common carrier. He is governed
by local statutes like Motor Vehicle Acts & the police Acts Term applies only in case of carrier by land or inland navigation. Common carrier should get some consideration for carriage.
272 He cannot reserve the right to choose from persons to carry their goods
Exceptions:- C.C can lawfully refuse to carry the goods in the

following circumstances.
if there is no space in the vehicle if the goods are not of a type he usually profess to carry if goods are subject to extraordinary risk or danger if the destination is not on his normal routine if reasonable charges are not paid
if goods are not properly packed
If a common carrier refuse to carry goods beyond the reasons stated above then, he can be sued and made liable for damages.
DUTIES AND RIGHTS OA COMMON CARRIERDo it self
273
Liabilities of a Common Carrier At a common law, a common carrier is liable as an insurer of the goods.
The common carrier is liable for loss or damage caused wholly by the
negligence of other persons over whom he has no control or where the goods are destroyed by accidental fire or when they are stolen from him EXCEPTIONS
The liability of a common carrier is completely excused if the loss or

damage is caused by what are called the excepted perils. The excepted perils include: the act of God ,losses due to the acts of public enemy etc. The common carrier is not liable for damage or loss to goods which has arisen due to an inherent vice in or natural deterioration in the goods. The common carrier is even relieved of all liability for damage when consigner is guilty of fraud. The liability of a common carrier ceases when he brings goods to the destination and gives notice for the same to the consignee or his agent for the removal of goods within the reasonable time. However he is liable as a bailee.
Common carrier may limit his liability by special agreement with the 274
Liability in case of goods- Scheduled & non-scheduled

Scheduled goods
Include valuable goods such as gold, silver, precious stones, pearls, jeweller notes & coins, maps, title deeds, government securities etc. The list of such g given in the act. Liability C.C. should not be liable for loss or damage if the value of the goods exceeds Rs. 100 unless their value & description are expressly declared
Even if value is expressed, C.C. is liable as an insurer while they are in

transit except in some natural circumstances.
He is liable where the loss has arisen due to the criminal act of the carrier
or his agents or his servants.

If the value is declared , he can ask for the extra freight but he is liable for the loss.
275
Non-Scheduled goods
The goods which are not specified in the list or schedule, given in the act. Liability
The liability can be limited by a special act signed by the owner
of the goods. C.C. is liable as an insurer while they are in transit except in some natural circumstances. He is liable where the loss has arisen due to the criminal act of the carrier or his agents or his servants.
276
Private Carrier:Carries goods on occasions, and for particular persons of his choice under a special contract either for hire or gratuitously. Not governed by the carriers act but under the contract act as private carrier acts as a bailee Common carrier Private carrier
Engaged in regular trade or business Engaged in casual business

carries for all indiscriminately governed by the carrier act 1865 Carries goods for hire or reward
Carries for persons of his choice Liability is that of bailee .
Comes under contract act

May carry goods for hire or
gratuitously
277
Railways as Carriers As railways are owned and operated by the Government in India, it is not governed by carriers Act 1865. The carriage of goods by railways is governed by the Indian Railways Act, 1890.
Forwarding Note (Section 72):

Every consignor of goods or animals has to execute a note in the form prescribed by the railway administration and approved
by the Central Government. This note is referred as the forwarding

note or consignment note. The forwarding note contains the
description of goods, number of packages, weight, the names and add
of the consignor and consignee, the extent of the liability

of the railway administration for loss and damage and is marked
either Freight paid or Freight to pay. The terms and conditions on w
goods are carried by the railway are printed on the back
278
Railway Receipt:
On submission of the forwarding note to the railway parcel

office, consignor is given a receipt acknowledging the goods and undertaking to carry the same in accordance with the terms contained in the forwarding note. This document is called as
Railway Receipt (R/R). Alike common carriers, Railway Administration has certain duties and liabilities with respect to loss, non-delivery of the goods
DUTIES OF RAILWAY ADMINISTRATION Bound to carry the goods of all persons who are prepared to pay necessary freight and observed the regulations of packing Duty not to give any undue or unreasonable preference or
advantage to any person
279
LIABILITIES OF RAILWAY ADMINISTRATION

GENERAL R.A. shall be responsible for the loss, destruction, damage, deterioration or non-delivery, in transit of animals or goods delivered to the administration to be carried by railways EXCEPTIONS Act of war Act of war Act of public enemies Arrest, restrain or seizure under legal process
Order of Restriction imposed by central government or Central gov
280
Liability in case of owner's risk rates

Goods may be carried at ORDINARY RATE (railway risk rate) & at SPECIAL REDUCED RATE (owners rate). The goods should be carried at owners risk but railway administration cannot be held liable for any loss or damage in transit of such goods except the negligence or misconduct of railways is proofed Liability for delay or detention in transit
Liability for deviation of route

liability in cease of animals Liability for wrong delivery Liability after termination of transit Liability in case of articles of a special value. liability for damage to goods in defective condition or defectively packed Liability of passenger luggage
281
Exoneration from responsibility
Following circumstances: Where goods have been despatched with false description Where fraud has been practised by consignor or consigne or his agent Where damage or non-delivery is due to -Improper loading or unloading -Riots, strike, lockout etc. For any consequential damage or loss of particular marke
282
Carriage laws
BY: ANUPAM GUPTA
283
CARRIAGE BY AIR
The law relating to carriage by Air in India was based upon the Carriage by Air Act, 1934. The Carriage by Air Act, 1934 now stands
repealed by the Carriage by Air Act,1972.

The Act applies to the whole of India.
284
High Contracting Party:

It means governments of countries to the convention. It
thus includes all parties originally signatories to the
convention together with those who adhere thereto subsequently.

The term high contracting party alsomeans that the parties who have effectively contractedby occasion or ratification. India is a signatoryto the Warsaw Convention of 1929, and is, therefore, a high contracting party. Under Section 4(2) of the Act, the Central Government may by notification in the official Gazette certify who are the high
contracting parties to the amended convention and in respect of

what territories they are parties.
285
International Carriage: The expression international carriage means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break, in the Carriage or a transshipment, are situated either within the territories of two High Contracting parties or within the territory of a single high contracting party.
286
Documents of Carriage
The passenger ticket: The carrier must deliver to the passenger, a passenger ticket containing prescribed particulars. The ticket is prima facie evidence of the condition of the carriage. The absence , irregularity or loss of the ticket does not affect the existence of the validity of the contract.
The luggage ticket or baggage check : (Rule 4): For the carriage or
registered baggage (i.e. luggage other than small personal objects of which the passenger takes charge himself ), the carrier must deliver a baggage check to the passenger which must mention (i) the number and weight of the packages (ii) the value, as declared by the passenger, of the baggage booked, and (iii) a statement that the delivery, of the baggage will be made 287
Air waybill (or Air consignment note) In the case of carriage of goods or cargo by air, every carrier of cargo has the right to require the consignor to make out and hand over to him a document called an airway bill and
every consignor has the right to require the carrier to accept this document
It is made out in three original parts. FOR DETAILS REFER BOOK
Liability of the Carrier

The carrier is liable for damages sustained in the event of death or wounding of a passenger or any other bodily injury suffered by a
passenger,
if the accident which caused the damage so sustained took place on
board the aircraft or in the course of any of the operations of embarking
288
The carrier is liable for damages sustained in the event of the destruction or loss of, or of damage to, any registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the carriage by air. The term carriage by air here comprises the period during which the baggage or cargo is in charge of the carrier. The carrier is also liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo (Rule 19). 289
Carrier and his agents have taken necessary measure when not liable He
to avoid damages Or it was impossible to take such measures There was negligence on the part of passenger Limitations: Limitation period of 2 years is applicable for filin suit for damages, from the date of arrival of aircr at destination
290
Thankyou
291
292
Contract of Affreightment
A contract for the carriage of goods by sea'. It is a contract by which

a ship owner undertakes to carry the goods of another in consideration of a price called
A contract of affreightment may take the form of

charter party or a bill of lading.
The rights and liabilities of parties to a contract of affreightment are

regulated, (subject to any stipulations in the contract), by the Bill of Lading Act, 1856 and the carriage of Goods by Sea Act, 1925.
293
CHARTER PARTY
When a merchant wishes : (Kinds of charter Party)
1. Time Charter--- to hire a ship for a fixed time

2. Voyage Charter Party---- to hire a ship or portion of the ship for a certain voyage 1. Charter by Demise ----to become for the time being owner of a ship, by causing her to be leased to him. The contract entered in any of these three cases is a charter party. The charter party may not be necessarily
sealed, but it must be stamped.
294
Implied undertakings in a charter party: In case of a voyage charter party, (i) the ship-owner impliedly undertakes to provide a seaworthy ship. (ii) the ship shall proceed with a reasonable dispatch. (iii) the ship shall proceed without unjustifiable deviation (iv)the chartered undertakes not to ship dangerous goods. Effects of Breach of Implied Conditions ---self study (book by- M.C. Kuchhal) 295
Clauses of Charter Party

Names of the parties and of the ship Class of the charter party Time charter or Voyage charter
Now at
Advance Freight Seaworthy and the fitness of the ship

Port of loading Full & complete Cargo Lay Days and Demurrage Lawful Merchandise Payment of freight Ship owner's Lien Expected Perils War Clause Delivery of goods in usual manner-providing appliances for taking delivery
296
Dead Freight
Lump-sum Freight
Freight Pro-rate
Bill of lading
Meaning: when the carrier accepts goods for shipment, it ordinarily issues to the shipper a bill of lading. A bill
of lading is generally used for the carriage of goods on

a general ship i.e. a ship which is used for the carriage of goods of several merchants. A bill of lading is a : (i) evidence of the contract ,
(ii) it is a receipt without which delivery of goods

cannot be normally obtained.
297
Difference between Charter Party and Bill of Lading

Charter Party
1.
Bill of lading
1.
contract relating to the hiring of the entire or principal part of the ship. a charter party is not such a document.
2.
contract for the carriage of the goods on board the ship as well as an evidence of the contract for the carriage of the goods. document of title to the goods specified therein being a document of title to the goods, can be transferred by endorsement and delivery conveys no such implications. always for a particular destination.
2. 3.
not transferable since its a contract of hire.

3.
4.
A charter party may amount to a lease of

the ship A charter party be for a particular voyage 4. (a voyage charter) or for a particular
5.
5.
period of time (a time charter),
Alike carrier of goods by land, carrier of goods by sea are also bound by some duties and liabilities.
298
CERTAIN TERMS Clean bill of lading: When the ship owner admits in the bill of lading that the goods shipped are in good order and condition, it is called clean bill of lading. Through bill of lading: Where the goods have to be carried partly across the sea and partly by land, the shipowner generally charges a rate which cover the charges for both, the carriage by sea and land. In such cases, the shipowner issues to the shipper what is called through bill of lading.
299
Mates receipt: It is a temporary form of receipt given by mate of ship for goods which have been received on boa mates receipt is a mere acknowledgement of the receipt goods. It is not regarded in law as a document of title to goods. This receipt is subsequently handed over to the s owner in exchange for the bill of lading.
Primage: An extra money paid over and above the agre freight is called the hat money or primage. It is paid to the master of a ship as consideration for extra care to be tak on the goods.
Master of the ship: The master of the ship is its principa officer and represents the ship-owner as his agent for va purposes such as signing of the bill of lading and entering the contracts
300
Shipowners lien: The shipowner generally has
right to retain the goods in his possession until th
freight upon them and sometimes other charges a

have been paid. This right is called a lien.
Maritime lien: A maritime lien is a claim on a shi
cargo and the freight in respect of services rende
to them. This right is given by law to all persons w have rendered some service to save the ship or cargo in time of danger.
301
Bottomry and Respondentia Bonds:
When a s
needs urgent repairs in course of its voyage and i
not possible for the master or captain of the ship t

communicate with the shipowner to arrange the
necessary fund, it becomes necessary for the cap
of the ship to borrow money on the security of the
ship, cargo or freight by executing a bond. This bo is called as a Bottomry Bond.
But if the cargo only is hypothecated the bon is known as respondentia Bond.
302
TAXATION LAWS
By ANUPAM GUPTA
303
TAXATION
The word Tax was derived from the latin word Taxore. The meaning of taxo is to estimate, appreciate or value.
304
Definitions
limit of a sovereign state and is levied on individuals, goods, property, business, services etc. Tax constitutes government revenue.
---Tax may also be defined as compulsory/exaction of money
---Tax is the amount paid by persons staying within a territo
public authorities for public purposes enforceable by law and doesnt mean payment for services rendered.
Taxes are compulsory contributions imposed by the government on its citizens to meet its general expenses incurr for the common good, without any corresponding benefits to the tax payer.
305
Tax is levied by the state by virtue of its sovereign powers. B the Union Parliament and the State legislatures are empowered und the constitution to make laws for the levy and collection of taxes.
Tax Revenue: A fund raised through the various taxes is referred to a tax revenues FEATURES OF A TAX Compulsory payment. Refusal to pay a tax is offence No direct relation b/w tax payer & public authority. Tax payer
cannot claim reciprocal benefits against the taxes paid .

Reciprocation is towards the society in terms of public interest not towards the individual interest as such . Tax is a payment for an indirect service made by the government to the community as a whole Tax is payable periodically & regularly determined by the taxing authority
306
Tax Vs Fees Tax is a compulsory charge or payment levied or imposed by a public authority on an individual. Fees are charged for rendering services to the beneficiaries. Generally the amount of the fee depends upon the cost of services rendered e.g. court fees, license fees etc. Taxes Vs Penalties: A tax is compulsory contribution made by a tax payer. Fines and penalties are the payments made for the contravention of law. A public authority impose taxes mainly to obtain revenue and imposes penalties mainly to punish people for violating certain laws.
307
Principles of Taxation:
Canons or principles of taxation relate to the
administrative aspects of a tax i.e. rate, amount, method o levy and collection of Tax. A good tax system must have a proper combination of all kinds of taxes having cannons like canon of equality, economy, convenience, certainty, productivity etc. Requisite Features of Good Tax System:
Good tax system should ensure maximum social
advantage
the allocation of taxes among tax payers is to made
according to the ability to pay.

Taxes should be universally applicable in the sense that
persons with same ability to pay are treated in the same way without any discrimination whatsoever.
308
A good Contd. tax system should have built in flexibility, so
that changes are possible according to the changing conditions of a dynamic economy.
Should satisfy canons of taxation
Healthy combination of various types of taxes

Easy to administer Simple to understand
Should help in economic development
309
TYPES OF TAXATION
Taxes
have been classified in various ways on different bases such as the form, nature, aim and method of taxation. The most important classifications are:1. Progressive, proportional, regressive and digressive Taxes. 2. 3. Specific and Ad Valorem Taxes Direct and Indirect taxes
310
DIRECT TAXES
Direct tax is a tax which is paid by a person on whom it is
legally imposed and the burden of which cannot be shift to any person. ---- Dalton
Thus, impact, i.e., the initial or first burden, and the
incidence, the ultimate burden of a direct tax- is on the sa person. The tax payer is the tax bearer.
A TAX WHICH CANNOT BE SHIFTED IS DIRECT

Capital gains tax
311
Ex. Income tax, wealth tax, property tax, estate duty
Advantages of Direct Tax

1.
Justifiable:- based on the taxable capacity and burden is justifiably distributed
2.
Progressive :- as higher rate of taxes on higher income groups and vice-versa. Poor people are exempted from direct tax.
Certain:- Assesses is certain about the amount of income tax Elastic: Higher proceeds are possible by increasing the rate of these taxes Distributive justice;- as they help in reducing the glaring inequalities of income & wealth.
312
3. 4. 5.
Disadvantages
Arbitrary:- fixed by the govt. as it depends upon the political will.
Evasion:- conceal their income by maintaining the bogus accounts.

Reduce saving:- as major chunk is taken away in the form of taxes. It effects the capital formation. Limited tax base:- reach only salaried people, businessman avoid and evade tax
313
INDIRECT TAXES

An indirect tax is imposed on one person but is paid partly or wholly by another. Indirect taxes are those taxes the burden of which by nature is shifted & which are paid by the tax payer indirectly i.e. while purchasing goods & commodities, paying for services etc.
1.
Taxes are paid only when goods are purchased, so tax payer does not feel the burden of tax
2. This tax is convenient as govt. collects it directly from
producers or importers.
Ex. Commodity tax, sales tax, excise duty, custom duty, sales tax, service tax etc
314
FEATURES OF INDIRECT TAXATION

Shifting of tax burden
Tax payer doesn't receive a direct pinch Tax evasion is comparatively less in case of organized sector Tax imposed on commodities directly effects the prices of commodities.
MERITS
Convenient:- to pay as tax payer doesn't feel the burden directly Disguised (hidden):-announcement doesn't provoke resentment as tax payer is in the dark about the amount of tax. Not easily evadable:- as they are merged with the prices. Broad based:- people who are exempted from direct tax, caught in the net of indirect tax according to the ability to pay tax. Social Value;- discourage consumption of some harmful commodities as intoxicants, tobacco, etc
315
Forced saving:-moving the saving potential into the hands of govt. who utilises it for public interest. Complementary:- Additional revenue can be generated by introducing an indirect tax rather than a direct tax.
Progressive:-Indirect taxes on luxuries and semi- luxuries are progressive as they fall on rich peoples outlays. DEMERITS In equitability;- charged at a proportional rate in case of general commodities, not paid according to the principle of ability to pay. Less productive;- as this tax involves many stages, so cost of collection is high comparative to revenue yielded. Inflationary potentially Disincentive effect on saving;- discourages savings due to high prices of commodities.
No educative value;- don't promote any civic sense as no relation between 316
Government of every country mobilizes resources through taxes to meet requirements of maintaining law & order, protecting economy from external aggression,. TAXATION SYSTEM HAS BEEN STRUCTURED WITH FOLLOWING OBJECTIVES IN VIEW: Mobilization of resources for economic development
Reduction of inequality in distribution of income & wealth
Controlling consumption of particular commodities and consumption pattern Protecting domestic industries against foreign competition Encouraging saving & investment and promotion of capital formation
317
THE INDIAN TAX SYSTEM a) Taxes on income:i) Personal income tax b) Taxes on property and capital transactions:(i) Estate duties (ii) wealth tax (iii) Gift tax c) Taxes on commodities: (i) Excise duties (ii) Customs duties (iii) Sales tax
318
Central Excise is not one enactment. The body of Law

of Central Excise is Governed mainly by the Central Excise Act, 1944; Central Excise rules 2002; Central Excise Tariff Act 1985
319
Central excise duties contribute approximately 36% share to the Union

exchequer. These duties form the single largest source of revenue for the Central Government. Central Excise duty is levied and collected through the machinery of Central Excise Act, 1944.
Nature of Excise duty

Excise duty is a duty levied on the production or manufacture of excisable goods in India. It is a tax levied upon manufacture and not sale of goods. Excise duty is paid by manufacturer in the first instance and then he passes it on to the ultimate consumers that is why it is called indirect tax. Types of Excise Dutiesself study
320
In Order to attract levy of Excise Duty, three conditions must be fulfilled
There should be goods

the goods should be excise able goods goods must have been manufactured / produced in India. Basic Features Tax on manufacture of goods. Central Excise Tariff Act 1985 classifies goods for the purposes of levy
and rates of duty.

Excise duty on most of items is levied by Central Government except on certain specified goods (alcohol, liquor etc.) on which state excise levies and collects tax. Excise duty is charged on assessable value. Rate of tax is uniform.
Tax is levied only when production and manufacture of goods within India.
It is payable on removal of goods from factory godown.
321
Central Excise Laws

Central Excise is not one enactment. The body of Law of Central Excise is Governed mainly by the Central Excise Act, 1944; Central Excise rules 2002; Central Excise Tariff Act 1985 Central Excise Act,1944 amended from time to time provides for the basis of charging of excise duty, valuation of goods for excise purposes, powers of officers, penalties etc.
basic Act governing Central excise Central Excise rules, 2002

All maters are regulated by rules Not feasible to put each & every detail in the Act itself
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Rules compliment the Act
Framed , amended and notified by the Central Government as per the

powers granted to it by section 37 of the CEA,1944 Rules prescribe the procedures to be followed
Forms to be filled for clearance and storage of goods

Accounting & Licensing procedures of goods procedure for refund of duty, appeals against the orders of Excise
authorities etc.
Central Excise Tariff Act 1985 Classifies all the goods under various heads and sub-head for prescribing different rates of duties Each head has a specific code assigned to it
323
Constitutional Provision for Levy of Excise Duty (Article 265)
Central Excise Duty is levied & collected by the Central Government Excise Duty is Levied on articles produced or manufactured in India Seventh Schedule
on the basis of
having Union List 1 having
Entry 84
Entry 84 empowers the central government to levy duty of excise on all articles (including Tobacco) , except alcohol, alcoholic preparations and narcotic substances like opium, but including medicinal preparations containing alcohol, narcotics etc.
Power to collect Excise Duty on alcohol & opium has been assigned
to the States and thus it To illustrate- Read example from notes is called State Excise Duty
324
Levy and Collection of Central Excise Duty

Levy means imposition and assessment of tax
Levy and collection has no value unless they are quickly followed by collectio
Do little bit of detail regarding:Event of calling for the levy etc
325
CUSTOMS LAW
Custom duty in simple language may be
regarded as duty imposed on goods imported into or exported out of the country. The Customer Act was passed in 1962 replacing Sea Customs Act, 1878 while the Customs Tariff Act was passed in 1975. In 1985, the Customs Tariff Act was amended by Customs Tariff (Amendment) Act, 1985. The amended Tariff Act is in the line with Harmonized Systems Nomenclature. The custom Act are complete codes by themselves and provide effective machinery for solving problems relating to levy and collection of duties.
326
Nature of Custom Duty

Entry 88 to the Union list of Seventh Schedule to
the Constitution provides for Duties of Customs including Export Duties. The role at which the duty is to be imposed are specified under The Customs Tariff Act, 1975. Article 266 of the constitution provides that the proceeds from the customs duty are to be kept by Union only and are not to be shared between union and any states.
327
Custom Act 1962

levy of custom duty, appointment of custom officers, ports, airports, landing stations to prevent and check illegal imports and exports and to provide administrative body to administer the Act, control over import and export, prohibitions, exemptions from custom duty, time and manner of payment of duty, warehousing of imported goods, procedures for claiming duty drawback, confiscation and penalties in case of violation of provisions, search, seizure and arrest, offences and prosecutions, appeals and revisions, special provisions regarding baggage, postal imports etc.
328
The Customs Act 1962 is the basic Act providing fo
Basic features of Custom Duty Charged on import/export of goods from India.
A Custom Tariff Act 1985 classifies goods for the purpose of levy and rates of duty. Taxable event is entry inward/onward of goods into and from India. Custom duty on import/export is levied collected and retained by Central government. Duty is charged on assessable value. Duty rates in respect of specific goods is uniform. It is a payable on before custom clearance.
329
Central tax is a tax upon goods Sales Tax A sales

which operates by choosing the act of sale as the criterion for attracting liability to pay the tax sole being a central part of the concept. The sales tax is levied at the time when sale or purchase of goods takes place.
330
Central Sales Tax
Central Sales Tax Act, 1956 was enacted by Parliament in exercise of authority conferred upon it under Article 286 and Article 269 (3) of the constitution. Central Sales Tax is a tax levied by Union Government but administered and collected by State Governments. The tax is collected in the State from which movement of goods starts. State Govt. have been authorized to collect tax revenue from sales tax in the basic scheme of taxation in India. Though states were expected to collect and retain sales tax, it was provided in our constitution that tax on Inter-state sales will be levied only by law of Parliament. Levy of tax on sale within a state (Intra State Sale) is within the authority of State Government, while levy of tax on sale outside the State (Inter-State Sale) is within the authority of Central Govt.
The
331
Objectives of CST
(i) to formulate basis for determining when a sale or purchase of goods take place in the course of inter-state trade or outside state or in the course of import into and export from India. (ii) to formulate rules for levy of tax, exemptions, collection of tax, penal provisions, offences and penalties etc. (iii) to specify the restrictions and conditions subject to which state laws impose taxes on the sale or purchase of goods of special importance. (iv) to fix liabilities of persons for payment of sales tax.
332
Features of Sale Tax

Tax on sale of goods within India. Central Sales Tax Act classifies goods for C.S.T. on inter-state sales and state tax on sales within a particular states for the purpose of determining rates of Sales Tax Taxable event is sale of goods within inter-state. CST levied by Central govt. but collected and retained by State Government. Collection of State Sales Tax is sole prerogative of concerned states. Sales tax is charged on sale price. C.S.T. rate @ 4% is also uniform but rates of state sales tax vary. It is payable after sales take place.
333

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BUSINESS OR MERCANTILE LAW

WHAT IS BUSINESS LAWS?

The role of contract law in commercial activity

impose standards of conduct

OBJECT OF CONTRACT ACT

To ensure that the rights and obligations created by

INDIAN CONTRACT ACT 1872

Essentials of a valid Contract (Sec-10)

What are the rules about it (essentials)

offer and the rules relating to acceptance

Communication of proposal is complete as soon as it comes to the knowledge of the offeree

COMMUNICATION OF ACCEPTANCE (SECTION-4)

Communication of acceptance is complete a)As against the proposer when it is put in

REVOCATION OF OFFER & ACCEPTANCE (section-5&6)

PRECEDENT BY DEATH OR INSANITY BY COUNTER OFFER

PRESCRIBED MODE BY SUBSEQUENT ILLEGALITY

A) When at the desire of the promisor,

Consideration and its rules

NO CONSIDERATION NO CONTRACT --Exceptions(sec-25)

Completed gifts sec-25 exp-1

Remission (sec 63)

contract for minors benefit

assume agent has authority to bind company in contract

Unsound mind (sec-11 &12)

legislation prevents bankrupt from entering certain contracts

without disclosing bankruptcy

Minor main provisions

Joint contract by a minor and adult

PERSONS DISQUALIFIED FROM CONTRACTING

Contracts are consensual transactions Parties must be in complete agreement

Acceptance of offer means agreement has been reached on doing business

FREE CONSENT-(SECTION 13-21)

UNDUE INFLUENCE Section16(2) of IC Act

FRAUD SECTION -17

MISTAKE(SECTION-20)something.It MEANS erroneous belief concerning

LEGALITY OF OBJECT AND CONSIDERATION

AGREEMENTS OPPOSED TO PUBLIC POLICY

Agreements, the consideration and object is unlawful(sec-23-24)

Agreements in restraint of legal proceeding(sec-28)

PERFORMANCE AND DISCHARGE OF CONTRACT

OFFER OF PERFORMANCE OR TENDER

Meaning of Discharge of Contract

It is Agreement + Enforceability at Law

Releasing of the parties to an agreement

Discharge of Contract contd..

Discharge parties to the contract perform When the by Peformance

Discharge by Agreement 1. Novation

Discharge by Agreement Novationcontract substituted by new contract either between Original

Discharge by Agreement Alteration

the parties But no change in the parties

Discharge by Agreement Rescission

Mutual Consent 2. By Aggrieved party 3. By Party whose consent is not free

Discharge by Agreement Remission

Discharge by Agreement Waiver

Discharge by operation of Law

Discharge by Breach Actual Breach

Discharge by breach Actual breach

Discharge by Breach Anticipatory Breach

Discharge by Impossibility of Performance

Discharge by impossibility Contd

Contract becomes void 2. Benefit to be restored 3. Compensation for non performance

Discharge by Lapse1940 time of A contract Under Limitation Act