Q1) Write short notes (any two) (10 Marks) a) Void Contracts and Void able Contracts Ans:

A void contract, also known as a void agreement, is not actually a contract. A void contract
cannot be enforced by law. Void contracts are different from voidable contracts, which are contracts that may be (but not necessarily will be) nullified. An agreement to carry out an illegal act is an example of a void contract or void agreement. For example, a contract between drug dealers and buyers is a void contract simply because the terms of the contract are illegal. In such a case, neither party can go to court to enforce the contract. A void contract is void ab initio, i e from the beginning while a voidable contract can be voidable by one or all of the parties A contract can also be void due to the impossibility of its performance. E g: If a contract is formed between two parties A & B but during the performance of the contract the object of the contract becomes impossible to achieve (due to action by someone or something other than the contracting parties), then the contract cannot be enforced in the court of law and is thus void. A void contract can be one in which any of the prerequisites of a valid contract is/are absent for example if there is no contractual capacity, the contract can be deemed as void. In fact,void means that a contract does not exist at all. The law can not enforce any legal obligation to either party especially the disappointed party because they are not entitled to any protective laws as far as contracts are concerned. Features of Void agreements: An agreement made by incompetent parties (Minor/Incapacitated Person) is void. Any agreement with a bilateral mistake is void. Agreements which have unlawful consideration is void. Agreement with a unlawful object is void. Agreements made without consideration is void. Agreement in restraint of marriage of any major person is void (absolute restriction). Agreement in restraint of trade is void.(reasonable reason) Agreement in restraint of legal proceedings is void. An agreement the terms of which are uncertain is void. An agreement by way of wager (betting/gambling) is void. An agreement contingent upon the happening of an impossible event is void. Agreement to do impossible acts is void.

b) Standard Terms and Freedom of Contract Ans: Freedom of contract is the freedom of individuals and corporations to form contracts without
government restrictions. This is opposed to government restrictions such as minimum wage, competition law, or price fixing. The freedom to contract is the underpinning of laissezfaire economics and is a cornerstone of free market libertarianism. Through freedom of contract, individuals entail a general freedom to choose with whom to contract, whether to contract or not, and on which terms to contract. Henry James Sumner Maine proposed that social structures evolve from roles derived from status to those based on contractual freedom. A status system establishes obligations and relationships by birth whereas a contract presumes that the individuals are free and equal. Modern libertarianism such as that advanced by Robert Nozick sees freedom of contract as the expression of the independent decisions of separate individuals pursuing their own interests in a "minimal state." In 1902 a New York baker named Joseph Lochner was fined for violating a state law limiting the number of hours his employees could work. He sued the state on the grounds that he was denied his

right to "due process". Lochner claimed that he had the right to freely contract with his employees and that the state had unfairly interfered with that right. In 1905 the Supreme Court used the "due process" clause in the 14th Amendment to accuse the majority of basing its decision on laissez-faire ideology. He believed that they were making law based on economics rather than interpreting the Constitution. Neither did he believe that "Liberty of Contract" existed or was intended in the Constitution. In his "Liberty of Contract" (1909), Roscoe Pound critiqued freedom of contract laws by laying out case after case where labor rights were struck down by State and Federal Supreme Courts. Pound argued the courts' rulings were "simply wrong" from the standpoint of common law and "even from that of a sane individualism" (482). Pound further compared the situation of labor legislation in his time to common opinion of usury and that the two were "of the same type" (484). Pound lamented that the legacy of such "academic" and "artificial" judicial rulings for liberty of contract engendered a "lost [1] respect for the courts", but predicted a "bright" future for labor legislation (486-87). The Supreme Court applied the liberty of contract doctrine sporadically over the next three decades, but generally upheld reformist legislation as being within the states' police power. In 1937 the Court reversed its view in the caseWest Coast Hotel Co. v. Parrish. In that case the court upheld a Washington state law setting a minimum wage.

c) Banking Law Ans: PDF: d) Negotiable Instruments Ans: A negotiable instrument is a document guaranteeing the payment of a specific amount of
money, either on demand, or at a set time. Negotiable instruments are often defined in legislation. For example, according to the Section 13 of the Negotiable Instruments Act, 1881 in India, a negotiable instrument is a promissory note, bill of exchange or cheque payable either to order or to bearer. Cheque also includes demand draft [Section 85A]. More precisely, it is a document contemplated by a contract, which (1) warrants the payment of money, the promise of or order for conveyance of which is unconditional; (2) specifies or describes the payee, who is designated on and memorialized by the instrument; and (3) is capable of change through transfer by valid negotiation of the instrument. Since a negotiable instrument is a promise of a payment of money, the instrument itself can be used by the holder in due course as a store of value; although instruments can be transferred for amounts in contractual exchange that are less than the instruments face value (known as discounting). Under United States law, Article 3 of the Uniform Commercial Code as enacted in applicable state law governs the use of negotiable instruments, except banknotes (Federal Reserve Notes, a.k.a. "paper dollars"). A negotiable instrument can serve to convey value constituting at least part of the performance of a contract, albeit perhaps not obvious in contract formation, in terms inherent in and arising from the requisite offer and acceptance and conveyance of consideration. The underlying contract contemplates the right to hold the instrument as, and to negotiate the instrument to, a holder in due course, the payment on which is at least part of the performance of the contract to which the negotiable instrument is linked. The instrument, memorializing (1) the power to demand payment; and, (2) the right to be paid, can move, for example, in the instance of a 'bearer instrument', wherein the possession of the document itself attributes and ascribes the right to payment. Certain exceptions exist, such as instances of loss or theft of the instrument, wherein the possessor of the note may be a holder, but not necessarily a holder in due course. Negotiation requires a valid endorsement of the negotiable instrument. The consideration constituted by a negotiable instrument is cognizable as the

value given up to acquire it (benefit) and the consequent loss of value (detriment) to the prior holder; thus, no separate consideration is required to support an accompanying contract assignment. The instrument itself is understood as memorializing the right for, and power to demand, payment, and an obligation for payment evidenced by the instrument itself with possession as a holder in due course being the touchstone for the right to, and power to demand, payment. In some instances, the negotiable instrument can serve as the writing memorializing a contract, thus satisfying any applicable Statute of Frauds as to that contract.

Q2) Explain the procedure of Incorporation of Companies, issuance of Prospectus and Rising of Capital? (10 Marks) Ans:
The Companies Act of 1956 sets down rules for the establishment of both public and private companies. The most commonly used corporate form is the limited company, unlimited companies being relatively uncommon. A company is formed by registering the Memorandum and Articles of Association with the State Registrar of Companies of the state in which the main office is to be located. Foreign companies engaged in manufacturing and trading activities abroad are permitted by the Reserve Bank of India to open branch offices in India for the purpose of carrying on the following activities in India: # To represent the parent company or other foreign companies in various matters in India, for example, acting as buying/selling agents in India, etc. # To conduct research work in which the parent company is engaged provided the results of the research work are made available to Indian companies # to undertake export and import trading activities # to promote possible technical and financial collaboration between Indian companies and overseas companies. Application for permission to open a branch, a project office or liaison office is made via the Reserve Bank of India by submitting form FNC-5 to the Controller, Foreign Investment and Technology Transfer Section of the Reserve Bank of India. For opening a project or site office, application may be made on Form FNC-10 to the regional offices of the Reserve Bank of India. A foreign investor need not have a local partner, whether or not the foreigner wants to hold full equity of the company. The portion of the equity thus not held by the foreign investor can be offered to the public. Incorporating a Company - Approval of Name The first step in the formation of a company is the approval of the name by the Registrar of Companies (ROC) in the State/Union Territory in which the company will maintain its Registered Office. This approval is provided subject to certain conditions: for instance, there should not be an existing company by the same name. Further, the last words in the name are required to be "Private Ltd." in the case of a private company and "Limited" in the case of a Public Company. The application should mention at least four suitable names of the proposed company, in order of preference. In the case of a private limited company, the name of the company should end with the words "Private Limited" as the last words. In case of a public limited company, the name of the company should end with the word "Limited" as the last word. The ROC generally informs the applicant within seven days from the date of submission of the application, whether or not any of the names applied for is available. Once a name is approved, it is valid for a period of six months, within which time Memorandum of Association and Articles of Association together with miscellaneous documents should be filed. If one is unable to do so, an application may be made for renewal of name by paying additional fees. After obtaining the name approval, it normally takes approximately two to three weeks to incorporate a company depending on where the company is registered. Memorandum and Articles

The Memorandum of Association and Articles of Association are the most important documents to be submitted to the ROC for the purpose of incorporation of a company. The Memorandum of Association is a document that sets out the constitution of the company. It contains, amongst others, the objectives and the scope of activity of the company besides also defining the relationship of the company with the outside world. The Articles of Association contain the rules and regulations of the company for the management of its internal affairs. While the Memorandum specifies the objectives and purposes for which the Company has been formed, the Articles lay down the rules and regulations for achieving those objectives and purposes. The ROC will give the certificate of incorporation after the required documents are presented along with the requisite registration fee, which is scaled according to the share capital of the company, as stated in its Memorandum. A private company can commence business on receipt of its certificate of incorporation. A public company has the option of inviting the public for subscription to its share capital. Accordingly, the company has to issue a prospectus, which provides information about the company to potential investors. The Companies Act specifies the information to be contained in the prospectus. The prospectus has to be filed with the ROC before it can be issued to the public. In case the company decides not to approach the public for the necessary capital and obtains it privately, it can file a "Statement in Lieu of Prospectus" with the ROC. On fulfillment of these requirements, the ROC issues a Certificate of Commencement of Business to the public company. The company can commence business immediately after it receives this certificate. Certificate of Incorporation After the duly stamped Memorandum of Association and Articles of Association, documents and forms are filed and the filing fees are paid, the ROC scrutinizes the documents and, if necessary, instructs the authorised person to make necessary corrections. Thereafter, a Certificate of Incorporation is issued by the ROC, from which date the company comes in to existence. It takes one to two weeks from the date of filing Memorandum of Association and Articles of Association to receive a Certificate of Incorporation. Although a private company can commence business immediately after receiving the certificate of incorporation, a public company cannot do so until it obtains a Certificate of Commencement of Business from the ROC.

Q3) Explain the law of Contract and discuss the term Offer, Acceptance and Agreement? (10 Marks) Ans: DDD

I. CONTRACT & ITS ESSENTIALS 1. What is a contract? A contract is an agreement enforceable by law. 2. What is an agreement? An agreement is an arrangement between parties that creates legal obligations between them. Generally an agreement is said to be arrived at when an offer

or proposal made by one person is accepted by another, with the intention of creating mutual obligations between them. 3. What is an offer or proposal? An offer is an indication from one person to another that he is willing to do or refrain from doing a specified act. An offer is the first step in the formation of a contract. 4. What is an acceptance? An acceptance is the assent to the offer made by the person to whom the offer is proposed. In order to convert a proposal into a promise, the acceptance must a.be absolute and unqualified. b.be expressed in some usual and reasonable manner, unless the proposal prescribed the manner in which it is to be accepted. 5. What are the essential features of a contract? The following features are considered to be essential to a contract: A minimum of two parties. There has to be a lawful offer and acceptance which results in an agreement. There must be intention between the parties to create a legal obligation. Consideration must pass: Each party to the agreement must benefit from the agreement. Therefore, each party must give and get something. Consideration need not be immediate. It can be for something done in the past, present or future. In a contract, each party puts the other party under some obligation or extracts some promise from him or her. The exchange given for the obligation or promise is called consideration. It can be in cash or in kind. Lawful consideration: Consideration must be lawful. That means the consideration given by one party to another should not be illegal, fraudulent, or opposed to public policy. Competent parties: the parties to a contract must be competent to contract. For this they must be 18 years old (must have attained majority). They must be of sound mind and should not be disqualified by law from entering into contracts. This means that, lunatics, drunkards, etc. cannot

enter into a valid contract except in special cases. Sound mind means being able to make a rational decision as a normal person would be able to do. It also implies that one should not be in a state of intoxication in any manner. Free consent: The parties to a contract must agree to enter into a contract freely. This means that they should not be coerced or be under any kind of undue influence, fraud, misrepresentation or mistake while entering into a contract. When consent is given it must specifically relate to the offer. When a person has the capacity to force another to do or not do something and the other person cannot resist that, the first person is said to have undue influence over the second. The parties cannot enter into a contract which has terms which are contrary to any law. This means that the contract cannot contain terms which are illegal, fraudulent , immoral or opposed to public policy. Not expressly declared void: No law should clearly ban contract of that particular nature. Clarity of terms: The terms of the agreement must be clear. If an agreement is unclear it cannot be enforced under law. Legal formalities to be complied with: Contracts may be either oral or written. However, certain contracts have to be in writing while some contracts have to be written and registered. For example, a contract to sell property has to be written and registered. 6. Do contracts have to be in a particular format? No. Contracts can be in any format, oral or written. If it is in the written form it can be entered into through the exchange of letters, or the sending of a fax message. It may be also entered into when a person completes an order form, booking tickets etc. 7. What are the various kinds of contracts? A. Express Contract: when both offer and acceptance are clearly made in words (whether spoken or written) it is called an express contract. B. Implied contract: when the offer or the acceptance is implied from the conduct of the parties it is called an implied contract. C. Contingent contract: When the performance of an obligation by a party depends on whether a certain event happens or not, it is called a contingent

contract. This means that the agreement becomes enforceable only on the happening or not happening of an event. For example, in a contract of insurance, the insurance company pays the sum of money if and when an accident happens and the claim is made on it. When it is impossible for the event to occur the agreement becomes void. D. Quasi-contract: Such contracts are also known as constructive contracts. These are contracts which do not arise out of an understanding between the parties but when law demands it. For example if somebody finds a lost purse, he is under a legal obligation to return it to the owner. E. Executed Contract: when both parties have performed their obligations in a contract it is called an executed contract. F. Executory Contract: when both parties have not yet performed their respective obligations it is called an executory contract. Sometimes, if some obligations have been performed, it will be a partly executed contract and a partially executory contract. G. Contracts for executed consideration: When only one party to a contract has to fulfil his obligation at the time of entering into the contract, such a contract is a contract for executed consideration. H. Valid contract: When an agreement is enforceable by law and contains all the essential elements of a contract it is a valid contract. I. Voidable contract: A valid contract which can be cancelled (rescinded) at the choice of a party whose consent to the contract was obtained by coercion, undue influence, misrepresentation or fraud is called voidable contract. Such contracts remain valid until they are cancelled by the party who was the victim of any of the conditions mentioned above. J. Void contract : when a contract ceases to be enforceable by law it is a void contract. A contract can become a void contract on the event of certain subsequent events such as impossibility, illegality or on repudiation of a voidable contract. Impossibility : When something cannot be done. physically or legally. For e.g. A who lives on the eastern side of the river Godavari has to deliver certain goods within one week to B who lives on the western bank of the river. The river floods and cannot be crossed by A. This makes his obligation impossible to perform Illegality: Anything that is prohibited by law or is an offence.

Repudiation: The rejection of a contract on the grounds that it is unjust or illegal.] K. Unenforceable contracts: When a contract cannot be enforced because it has some technical defect in it, it is an unenforceable contract. For example, A cannot legally recover the money which B owes him after a period of three years from the date on which B had to repay him as the debt becomes time barred under the Limitation Act. 8. What are standard forms of contracts ? Printed forms containing terms and conditions are standard contracts for e.g. contracts entered into with the LIC, Railways etc. 9. What are Quasi Contracts? Transactions which do not arise between the parties in the proper legal sense but out of rights and obligations similar to those created by a contract is a Quasi Contract. For e.g. A pays to B the money that C owes B. A shall be entitled to be reimbursed by C. 10. When is time considered to be essence of a contract ? 1. when the parties expressly agree to treat time to be of essence ; or 2. the delay in performance causes loss or injury to atleast one of the parties ; or 3. the nature and necessity of the contract requires it to be so understood. For example - A tell B that he wants a kilogram of mangoes for the party he is having next week. B will have to deliver the mangoes before the end of the week and before the day of the party. 11. Distinguish between Voidable and Void Contracts. Voidable contract: A valid contract which can be cancelled (rescinded) at the choice of a party whose consent to the contract was obtained by coercion, undue influence, misrepresentation or fraud is called voidable contract. Such contracts remain valid until they are cancelled by the party who was the victim of any of the conditions mentioned above. Void contract : when a contract ceases to be enforceable by law it is a void contract. A contract can become a void contract on the event of certain subsequent events such as impossibility,illegality or on repudiation of a voidable contract.

12. What is Quasi Contract? Explain the different types of Quasi Contracts. Quasi Contract or Implied Contract deals with rights or liabilities accruing from relations resembling those created by Contract. These relations resembling contract are known as contract implied in law or quasi contract. It is not a real contract and thus called a consensual contract based on agreement of the parties. Quasi-contracts are based on the principal of equity and justice and prevent enrichment of one person at the cost of another. The different types of Quasi Contracts are: a.Claim for necessaries supplied to person incapable of contracting or on his account.- If a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with necessities suited to his condition in life, the person who has furnished such supplies in entitled to be reimbursed from the property of such incapable person. b.Reimbursement of person paying money due by the other, in payment of which he is interested A person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, in entitled to be reimbursed by the other. c.Obligation of person enjoying benefit of non-gratuitous act When a person lawfully does anything for another person or delivers anything to him not intending to do so gratuitously and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of or to restore, the thing so done or delivered. d.Responsibility of finder of goods; A person who finds goods belonging to another and takes into his custody, is subject to the same responsibility as a bailee. e.Liability of person to whom money is paid, or thing delivered by mistake or under coercion A person to whom money has been paid or anything delivered by mistake or under coercion must repay or return it. 13. What are the essentials of an offer ? i) Intention to create legal obligations: The person who makes the offer should want to create a legal obligation and/or legal consequence when the agreement is entered into. ii) Certainty: The offer should be clear and definite. The person to whom the offer is made must understand it exactly as the offerer made it. The person to whom the offer is made should not be able to interpret it in any different way.

iii) To do or not to do something: The Offeror must propose to the Offeree that s/he, the Offeror shall do or not do something. For example, when A offers to buy B's motorcycle for Rs.18,000/- he makes a proposal to do something. When A makes an offer to B that he shall not smoke if he is paid a sum of Rs.50/- by B, he makes an proposal not to do something. iv) Communication of offer: When an offer is made it must be communicated to the person to whom it is intended. v) Offer should not be in negative terms: When an offer is made it should not contain a term to the effect that if the person to whom the offer is made does not do or say something then it shall mean that the offer has been accepted. For example, if A tells B that if B does not tell A that he does not want to purchase A's motor cycle within two days A shall take it to mean that B is purchasing the Motorcycle. 14. What are the different kinds of offers? An Offer can be express or implied, specific or general. There can also be standing offers. (i)An offer is said to be an express offer when it is made by words clearly spoken or written. For example when X tells Y - will you buy my 1996, Hero Honda motorcycle for Rs 18,000/-? (ii)An implied offer is when the offer can be understood from the conduct of the parties or the circumstance of the situation. For example- when a train is being run on a particular route the implication is that the train will carry the passengers at the rate fixed. (iii)A Specific offer is when an offer is made to a particular person and only that person can accept the offer or reject it. (iv)A general offer is an offer is made to the public at large and can be accepted by any person. (v)Standing offers: When an offer is open for acceptance for a long stretch of time it is called a Standing Offer. A long stretch of time depends on the circumstances of the case. Such an offer may be accepted by the Offeree until it is withdrawn by the Offerer. Offeree is the person to whom the offer is made Offerer is person who makes the offer. 15. What is not an offer ? i)When an invitation is made by a person asking for offers it does not amount to an offer but an invitation to offer. For example, when a Company invites people to purchase its shares, it is not offering to sell shares but is inviting people to make offers to purchase its shares. It is not obvious, but when a Company invites tenders to execute jobs the

invitation is not an offer but an invitation to offer. ii)Cross offers : When two people make identical offers to each other not knowing that the other has made the same offer, the offers are called cross offers. In this case, it cannot be presumed that they shall accept each others offer. iii)Special Terms:If any special terms are included in a Contract they have to be brought to the notice of the Offeree and the Offeree must clearly accept or acknowledge the special terms while entering into the Contract. If he does not explicitly accept the special terms, they shall not be binding on him. 16. When does an offer lapse ? By efflux of time :When an offer is not accepted within the prescribed time (or within a reasonable time if there is no prescribed time) it lapses. For e.g. a Company offers to sell Televisions worth Rs.15,000/- for Rs.10,000/- during the month of December. The offer lapses at the end of December. Wrong mode of acceptance : Offers have to be accepted in the usual or customary manner. However, if the contract specifies a particular mode of acceptance, the offer lapses if it is not accepted in that manner}. Rejection by the Offeree :If an Offeree refuses to accept the offer, the offer lapses. Once he rejects the offer expressly, the Offeree cannot accept it later. Counter offer or conditional acceptance : When an Offeree makes a counter offer or says that he accepts but only on certain conditions, the offer lapses. This is because a counter offer or conditional acceptance implies that the original offer is rejected. For example, A offers to sell his motorcycle to B for Rs.18,000/-. B says that he will purchase the motorcycle for Rs.15,000/-. Here,A's offer has been rejected by B and B has made a counter offer. Death or insanity of any of the parties : If the Offeror dies or becomes insane before the offer is accepted, the offer lapses. However, if the Offeree accepts the offer without knowing of the Offerors death or insanity, the acceptance will be valid. Subsequent illegality or Destruction or Impossibility of subject matter: When the object of the offer becomes illegal or is destroyed or becomes impossible to perform, the offer lapses. For example, A cannot sell his bike to B if the law bans the sale of motorcycles or if it is totally destroyed in an accident. Revocation : When the Offeror takes back or revokes his offer before it is

accepted, the offer lapses. Revocation means withdrawing or taking back. 17. Distinguish between counter and cross offers. Cross offers are offers that the parties make to each other, in ignorance of each others offers. Cross offers are identical. In the case of cross offers, the court cannot construe one offer as the offer and the other as acceptance and as such there is no contract. A counter offer, on the other hand is a rejection of the original offer. It is a new offer that needs acceptance by the original promisor before a contract is made. For e.g., If X offers Y, agreeing to sell his car and writes a letter to Y offering him to sell the car and Y also, at the same time, sends a letter to X, offering to buy his car, there is said to be a cross offer as X and Y are ignorant of each others offer before they make their own offers. However, if X asks Y,Will you buy my car for Rs. 80,000? and Y says, No, but for Rs. 50,000 there is said to be counter offer. II. AGREEMENTS 1. What are the various kinds of Void Agreements ? Agreements are void when:i) consideration and objects are unlawful in part or full ii) they are without consideration. iii) They aim at restraining marriage. iv) They are agreements which try to restrain trade. This means that one party cannot restrain another party from carrying on lawful profession, trade or business of any kind. This is true except when there is a Sale of goodwill i.e. when one person sells the goodwill of his business to another the Buyer may insist on the Seller refraining from carrying on identical or similar business in the locality wherein the Sellers goodwill exists. Goodwill is the benefit, advantage, reputation that is derived out of a business a) Partnership Agreements : Partners may agree with each other that i) they shall not during the continuance of the firm carryon any business other than that of the firm. ii) they shall not carry business similar to that of business of the firm after its dissolution ; and iii) a retiring partner shall not carryon similar business for a certain period or within certain local limits.

c) Association understanding / Trade combinations : When associations are formed to regulate and promote trade it would not amount to restraint of trade if such regulation and promotion brings about standardised goods, fixed prices and eliminates bad competition. d) Sole Dealing Agreements for e.g. X appoints Y as his sole agent or distributor for a specified area and Y agrees not to deal with goods of any other manufacturer. e) Service Agreements : When an employee is restrained from working for another during the contract period by the employer it is a void agreement. The above restraint should however be limited by time and territory. v) Agreement in restraint of legal proceedings : when one party in an agreement attempts to restrain the other party from enforcing the rights which the other party has by way of legal proceedings in the ordinary tribunals / Courts, the agreement is void. Agreements which limit the time within which the other party may enforce his/her rights or which cancels the rights of a party on the expiry of a specified period will be void to that extent. i.e. to say that the provisions of the contract shall be void but the rest of the contract shall remain. Exceptions : a) when parties agree that disputes arising between them shall be referred to Arbitration and that only the amount awarded in the arbitration shall be recoverable, then it is a valid restraint of the rights of the parties to approach the court. b) An agreement to refer to arbitration any question which comes up between the parties is valid. vi) Unclear Agreements. For e.g. A agrees to sell his motorcycle to B for Rs.18,000/- or Rs.20,000/-. Here the price is uncertain and unclear. vii) Wagering Agreements: An agreement wherein two parties hold opposite views as to the result of an uncertain event and agree to give consideration upon the happening or non-happening of the event is a Wagering Agreement. For e.g. A tells B that X team shall win. B tells A that Y shall win. Both A and B are aware that it is very unlikely there will be match between X and Y and yet they decide that they shall pay the other Rs.1000/- if the team they support loses. viii) An agreement to do impossible acts. 2. What is meant by agreement opposed to public policy? An agreement opposed to public policy is any agreement that may harm public safety, health, morals or general welfare. 3. Explain the six agreements opposed to public policy.

a. Trading with enemy country. b. Inducing a public offer to act corruptly. a.Interfering with administration of Justice. b.Sale of seats in public administration. c.Marriage of minor. 4. What is meant by Ignorantia juris non excusat? Ignorantia juris non excusat is a famous principle meaning ignorance of law is not excusable. This means that a contract entered or extended into an erroneous belief as to law in force in India is a valid contract and can not be avoided. Thus a person ignoring a law in force in India cannot be excused. 5. Explain any two agreements in restraint of trade. The Indian Contract Act, 1872 provides that every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind is to an extent, void. It is the fundamental right of the citizens to carry on a lawful business of their own choice. The two agreements in restraint of trade are : a)Agreement to close down a business in a particular locality b)Agreement to carry on any business in competition.

III. ACCEPTANCE 1. What is acceptance ? An acceptance is the assent to the offer made by the person to whom the offer is proposed. 2. What are the features of valid acceptance ? i)Communication to the Offeror: When an offer is accepted, that acceptance must be communicated to the Offeror. This communication must be only by the Offeree or by a person authorised by the Offeree. An exception to this is when the Offeror has said that communication of acceptance is not necessary or when the offeree does something to clearly indicate that he accepts. For example, A makes an offer stating that he will give the person who finds and returns his purse Rs. 50/-. When a person finds and returns the purse, he has acted on the offer. Because he has acted on the offer, he is said to have accepted it.

ii) Made by the Offeree : An offer can be accepted by the Offeree only. If the offer is towards a specific person only that person can accept and if it is a general offer any or all the recipients of the offer can accept. iii) Acceptance must be given after the offer is made and not before. iv) Acceptance must be given within the stipulated time period (or if there is no stipulated time, within a reasonable time period). Acceptance must also be given before the offer lapses or is revoked by the Offeror. v)Acceptance must be communicated in the manner prescribed or in the usual or reasonable manner. vi)Acceptance must not be conditional. When an Offeree says that he accepts but only on certain conditions, it is not acceptance but a counter offer made by the Offeree. vii)Once the offer is rejected it cannot be accepted unless the offer is renewed by the Offeror. 3. Is there any prescribed manner for acceptance ? Acceptance can be express or implied. IV. CONSIDERATION 1. Define consideration. What are the features of consideration? Consideration may be defined as a benefit falling due to a promisor or a detriment incurred by the promises. For e.g., A sells a car to B for Rs. 1.00 lakh. Here consideration for A is Rs. 1.00 lakh and B, the car. The features of consideration are: i) As consideration is the price paid for an obligation that is undertaken by an offeror, it should be paid or given in the way that the offeror wants. That is, the person offering should do so at his wish. Therefore, if a party or a person does something or abstains from doing something voluntarily or without the consent of the Promisor it shall not be valid consideration. ii) Consideration can move from the Promisee to any other person and from that person to another. iii) Consideration must be of some value. It may be in the form of a promise to

do or not to do something. This promise should be of some value to the Promisor or to the detriment of the Promisee. It must be real, definite and not vague. iv) Consideration may be past, present or future. This means that it may be :the doing or not doing of something (called executed or present consideration). something that shall be done or not done in the future (executory or future consideration). something that has already been done or not done in the past (called past consideration). Past consideration is valid only if it is given by the Promisee at the desire of the Promisor. For example, B wants A's motorcycle. A gives it to him while saying that it is consideration for B dropping him to college for a year v) Consideration need not be adequate i.e. the value of the consideration need not be proportionate to what is received by the offerer. It is sufficient for something of value to pass from one party to another. Consideration must be real and not vague, illusory, physically impossible, uncertain or ambiguous. For example, A tells B if you drop C to college everyday I will reward you. Here reward is vague. vi) Consideration must be legal. For e.g. A cannot tell B that he will kill D for B, if B drops A to college everyday. 2. State the essentials of a valid consideration. They are: Desire of the promisor Consideration may be an act or abstinence Consideration may be past, present or future Consideration need not be adequate Consideration must be real and not illusionary Consideration must be legal and moral. 3. When is consideration not necessary in a contract ? or Explain No consideration, no contract. Ans: Consideration is notnecessary in case: i. Love & affection. ii. Compensation for voluntary services. iii.Paying a time-barred debt. iv.Completed gift.

v.Agency. i) Agreements entered into on account of natural love and affection between the parties do not have to have consideration passing. ii) Compensation for past voluntary service : This occurs when a person compensates wholly or partly a person who does something voluntarily. This can also occur when a person compensates another for something the other person is legally compelled to do. For e.g. B finds A's motorcycle which was lost and returns it to him. This is in accordance with the law. A promises to give B Rs.1000/- as a reward. This would be a binding contract. iii) Promise to pay a time barred debt: When an agreement is entered into under which a person undertakes to pay to his Creditor a sum of money wholly or in part even if the debt is time barred (3 years) it is enforceable. Such agreements should be in writing and signed by the Debtor or his authorised representative). iv) Gifts : Consideration is not required when a gift is made or given. v) Agency : No consideration is necessary to create a contract of agency. 4. A contract without consideration is void. Consideration is a necessary element of a binding contract. Each party to the agreement must benefit from the agreement. Therefore, each party must give and get something. Consideration need not be immediate. It can be for something done in the past, present or future. In a contract, each party puts the other party under some obligation or extracts some promise from him or her. The exchange given for the obligation or promise is called consideration. It can be in cash or in kind. Consideration must be lawful. That means the consideration given by one party to another should not be illegal, fraudulent, or opposed to public policy. 5. When is the consideration of an agreement or the object of an agreement deemed to be unlawful ? The consideration or the object of an agreement is deemed to be unlawful when it is forbidden by law. For example, X promises B to get him a license to drive a car for a sum of money despite knowing that B is only 15 years old and cannot hold a valid Driving License. The consideration or the object of an agreement is deemed to be unlawful when it defeats the provisions of law.Parties cannot enter into an agreement

under which the consideration aims to defeat the provisions of law. Consideration should not be fraudulent. For e.g. Parties cannot enter into an agreement to defraud their creditors. The consideration or object of an agreement should not cause, or involve hurt or injury to another person or damages his property. Consideration should not be for immoral reasons. Consideration should not be opposed to public policy. The agreement and consideration therein should not injure the public interest or public welfare. 6. What happens if the consideration or the object of an agreement is partly unlawful? If the legal part of an agreement can be performed separately from the illegal part of the agreement the legal part of the agreement can be enforced. 7.A stranger to consideration can sue, but a stranger to a contract cannot sue. This means that only a party to a contract has a right to sue. For e.g.: A enters into a contract with B. In case of a default by A, the other party i.e. B can sue A. C, a stranger to the contract cannot sue A or B. However, the exceptions to the following rule are: a)A beneficiary; b)Minors or dependents; c)Acknowledgement or estoppel; d)Insolvency. V. MODES OF DISCHARGE OF CONTRACT 1. Discuss the various modes by which the contract may be discharged. The various modes are: a.By performance b.By agreement c.By impossibility d.By bar of limitation e.By operation of law f.By breach of contract 2. What is Doctrine of Frustration? State any four instances where this doctrine is applied.

Where the supervening circumstances have so changed by the time of performance of a promise, that to compel the parties to perform the promise under conditions so altered, would require them o do something, which in fact they had never agreed to do. This is called the frustration of contract. The doctrine of frustration arises from the coming into existence of facts not within the contemplation of the parties, beyond the control of parties. The four instances where this doctrine is applied are: a)Impossibility created by change of law: A contract is discharged when its performance becomes impossible on account of a change of law. Persons generally contract on the basis of the law existing at the time of the contract. b)Frustration by delay: The commercial frustration of adventure by delay means the happening of some unforeseen delay, without the fault of either party to a contract. c)Destruction of subject matter of the contract: A contract is discharged if a specific thing that is essential to the performance of the contract is destroyed. d)Non-existence or non-occurrence of a state of things that form the basis of the contract: If a state of things on the basis of which a contract was made does not exist, the contract is discharged. Death or serious illness of promisor in a contract for personal service. 3. Explain the various instances in which Doctrine of supervening impossibility is implied. A contract that was possible to perform at the time it was entered into, may be impossible to perform at the time it is required to perform. This is due to supervening factor. Instances of supervening impossibility are: a)Destruction of the subject matter of the contract; b)Alteration of matter that were present at the time of contract; c)Declaration of war d)Loss of skill e)Failure of one of the objects of the contract. 4. Explain the instances in which the rule of Quantum Meruit is applied. Quantum Meruit means as much as is merited when a person has done some work and the other party repudiates the contract, then the party who has performed the work can claim remuneration for work already done. Instances :

a)When the agreement is discovered to be void; b)When something is done without any intention; c)When there is an expressed or implied contract to render services but no agreement as to the remuneration d)When the completion of the contract has been prevented by the act of another party to the contract e)When contract is divisible f)When an indivisible contract is performed but defectively. 5. What is meant by Champerty? The action of assisting a party in a suit in which one is not naturally interested, with a view to receiving a share of the disputed property. Champerty is unlawful if it tends to encourage litigation that is not bona fide but speculative. VI. PERFORMANCE OF CONTRACTS 1. Who can enter into a Contract ? Any person who is of the age of majority, of sound mind, and not disqualified from contracting by law can enter into a contract. A contract can be entered into by a guardian for the benefit of the minor. People of unsound mind can enter into contracts during lucid intervals. 2. Who cannot enter into a contract? No person is competent to contract who is not the age of majority according to the law to which he is subject, in other words a minor is not competent to contract. 3. Explain the position of a minor regarding contract. A minor is a person who has not completed 18 years of age. However in the following cases, a person continues to be a minor upto 21 years of age: a.Where a guardian of a minors person or property is appointed. b.Where the superintendence or a minors property is assumed by a court of wards. Legally a minors contract remains valid until disaffirmed. In most instances, the minors privilege of escaping responsibility for a contract is absolute. This

means that a minor is protected even though he lied about his age at the time the contract was made 4. Explain the exceptions to the statement-An agreement with a minor is void. A contract entered into by a minor is void. The exceptions are: a)Contracts of marriage b)Contracts if apprenticeship c)Contracts for necessities and benefit 5. Can a minor cancel or confirm an agreement entered into by him after he attains majority ? An agreement made by a minor is void from the beginning (void ab initio) and therefore, he cannot cancel or ratify such an agreement. 6. Can a person of unsound mind enter into a contract ? If a person of unsound mind enters into a contract at a time when he is capable of understanding the terms of the contract and making rational judgements, it is a valid contract. At the other times, the contract is void. This special provision is made because there are certain people who are mentally capable of rational thought but only for some time. 7. Can a contract be entered into with an insolvent?
Q4) Discuss the Fundamental Rights of the Business? (10 Marks) Ans: Do businesses have any fundamental rights? Should businesses have any fundamental rights? Strange as these questions may seem, it is important to pose them at this point of our economic development.
Fundamental rights are important because they guarantee certain basics that are needed for realising the full potential of the individual. Though India became an independent nation on 15 August 1947, it was not until 26 January 1950 that its citizens at least the educated ones came to know about the exact fundamental rights that were being guaranteed to them by the Constitution. Of course, the Constitution gave the Indian citizens many other rights as well. But the fundamental rights were written as a special category simply because they were so crucial for the growth and development of the Indian citizens. Of course, when the Constitution was written, there were no fundamental rights provided for the corporate or business entity per se. Indeed, it would have been quite extraordinary if such provisions had been made at all. There is no constitution anywhere in the world that has anything

called fundamental rights for businesses. Not even in the US, the country in which the business entity has overarching importance. And even if there were precedents anywhere around the world, why would India need to create any fundamental rights for business in its Constitution? The fundamental rights for the citizens already guaranteed by the Constitution, when read along with the directive principles of state policy, pretty well cover anything that the countrys businesses could want.The right to freedom, for example, explicitly states that all citizens are free to choose any trade, set up any business or follow any occupation. The right against exploitation and the right to equality are not just important for the individual, they are equally important for business entities. And the right to constitutional remedies is the final protection. These rights were designed for the individual but they fit nicely for business entities as well. So in this 62nd year of Indias independence, why is there any need to debate on the necessity of certain fundamental rights of business? Arent there a plethora of laws both corporate as well as pertaining to specific industries and sectors that lay down and clarify the rights (and duties) of business entities? And arent these laws enforceable in courts of law the corporate equivalent of the right to constitutional remedies? And shouldnt the fundamental rights for citizens also help businesses in the natural course of things? Actually, there is a need to debate the necessity of fundamental rights for businesses for a few good reasons. First, since 1991, the country has moved towards a path of giving increasing economic freedom and independence to its businesses. But those freedoms have not been backed by the kind of fundamental guarantees that businesses in the developed world can take for granted. These might be unwritten guarantees, but they are an important part of doing business properly. Then again, the Indian government is hoping for many years of 9 per cent plus growth rates and it is depending largely on the corporate entities, both in the manufacturing and services sector, to achieve that ambition. But that growth rate is unlikely to be achieved year after year unless businesses count on certain very basic conditions and rights. And finally, none of the rights that are being focused on in the following pages are unusual or extraordinary or require any special effort. They are all essentially provisions that are already provided for the Indian citizen that now need to be interpreted keeping the business entity in mind. What are these fundamental rights of business that we are talking about? The first one is right to infrastructure to good roads, ports, airports and uninterrupted power supply. The second one is right against corruption. The third, right to rational taxation. The fourth, right to fair labour laws.

The fifth, right to speedy clearances. And finally, the sixth the right to an educated and skilled workforce, something that should naturally flow from the recently passed Right to Education Act. These are the very basics that every business in every developed country can bank on. These are the basics that all developed nations guarantee to their corporate entities. In no other country is a corporate entity asked to create its own infrastructure, educate its own workforce even in the basics, or deal with complicated structures to open businesses. This is our basic case: it is high time the government thought in terms of guaranteeing certain basic fundamental rights to our corporate citizens, much like it does for individuals. This is necessary to help India take its place among the economic superpowers around the globe. Implement the fundamental rights for business and you will have created a more conducive ground for business to flourish as well. You would have created the environment for 9 per cent plus growth for years to come.

Q5) Discuss the aims and objectives Indian Sale of Goods Act, 1930? (10 Marks) Ans: DDDD Q6) What is the Intellectual Property Rights Law. Discuss its relevance to liberalization and Globalization? (10 Marks ) Ans: Q.1 (a) What is the impact of globalization and liberalization on industries in our country?
Ans: 1 (a) The Programme of Economic Liberalization The New Economic policy During the mid 1980s, the Congress Government headed by Rajiv Gandhi made a move to change its policies regarding business, licenses and permits, as also its attitude towards multinational companies (MNCs) operating in India. However, it was only during the succeeding government of Narasimha Rao (1991-96) that a strategy was actually formulated in this direction and marketed both in India and abroad. The strategy aimed to bring the Indian economy into the mainstream of the global economy, and, at the same time allow a whiff of competition and growth to India business. This, it was hoped would bring a new dimension to the concepts of quality, productivity and growth. Inevitably, the winds of liberalization that swept through the nation opened a variable Pandoras box, with far-reaching implications for human resource management. It brought in a new era of technology, quality consciousness and competition, which compelled Indian business to wake up from its somnambulism and reassess its assumptions for dealing with the compete-or-perish situation. The Pre-reform Scenario In the pre-liberalization period India had pursued a shortsighted policy in the name of self-reliance, blocking out the rest of the world in the manufacturing and services sectors. Relying on bureaucratic controls, through licensing and centralized planning, the government had imposed restrictions on the capacity of business units, their location, choice and source of raw materials and so on. It had also kept a check on corporate take-overs and mergers, through the monopolies and Restrictive Trade Practices Commission (MRTP). India had actively discouraged foreign investments in its capital markets to protect domestic industries. It had also denied itself access to international capital, technology and markets; Unlike the Asian Tigers who went on to beat the first World nations at their own game. However, as seen by the recent downslide in the South Asian economy and the currency crisis in Indonesia, this access to international

capital and markets has been a mixed blessing for these countries. Notwithstanding this, the tremendous progress made by the Asian Tigers during the last three decades can certainly serve as an example to developing countries such as India. Not that socialistic state planning did not have its benefits in India. Heavy industries were established and significant strides were made in the field of agriculture, Industrial growth rose from 7 per cent in the early 1950s to 9% in the early 1960s. However the inevitable

problems of socialism outweighed the benefits. Protected employment led to loss making units where as the License Raj worked against competitive forces. The Reform Process and Imperatives After 1991 there was a two fold shift in the Indian economic policy-at the global level as also the national level. 1. At the global level, it sough to integrate the Indian economy with the world economy by allowing free movement of capital investment, both into and from India. This exchange would also expose India to new technology Table 1.1 indicates that there has been a significant time lag between foreign direct investment (FDI) approvals and actual in-flows. This has been possibly due to the governments failure to ensure a smooth single-window clearance for projects. Other factors have been the governments tendency to backtrack on its own policy, and lack of congruity in Center-state clearance for FDI inflows. 2. At the national level, it envisaged a decontrolled business environment where free market forces would be given more freedom to operate and state control would be reduced or eliminated. The omnipotent role of public sector corporations would be redefined, allowing disinvestments of their equity holdings by the government. One of the desired effects of such a major restructuring of the economy was growth and generation of employment which, it was hoped would lead to more purchasing power for the common man. The central governments reform package was a mix of policy and administrative changes. The budget was used as a major instrument for altering the financial policies. The 1996 budget, which was awaited with both skepticism and hope proved to be turnaround in many ways-custom duties applicable to core industries were reduced, excise duty was rationalized and a commitment was made towards disinvestments of PSUs. The budget identified the existing infrastructure as inadequate for growth and indicated efforts to encourage investment in this critical area. Further it took cognizance of the aspirations of farmers and the poor, offering schemes and subsidies to uplift these neglected sections. Unfortunately the budget elicited a lukewarm response and failed to energies the capital market. This resulted in a slow down of economic reforms and loss of investor confidence in the Indian economy. In February 1997, the budget presented by the formed finance minister, Mr. P.Chidambaram, tried to firmly establish Indias commitment to the reform process and managed to enthuse both Indian and Foreign business. The budget showed a spirit of optimism and growth. Market-men were amply encouraged and share indices recorded their biggest jump in any post budget session in the last two decades. The budget reformed Indias tax structure in line with the structure

in developed countries; significantly reduced tariffs; rationalized excise rates; encouraged investment in infrastructure; and also opened up the insurance sector partially. On the negative side, however the budget paid more lip-service to reduction in government expenditure and remained silent on the huge oil-pool deficit. (This was subsequently tackled by an administrative decision). One of the imperatives of the environment is to have a skilled and educated workforce, which can understand and cope with the requirements of IT and other technologies in the manufacturing and services sectors. Therefore, the state has to make heavy investments in education. It is worth noting that Yashwant Sinha, minister of finance, in his 1998 budget speech, stressed on the importance of education as a key vehicle for social transformation and provided total budgetary allocation of Rs70, 470 million to the sector. This was an increase of 50% over the preceding years allocation. Here, it must, however, be pointed out that a significant share of this increase would go into paying the increases in salaries. The finance minister also expressed the governments intention to eventually raise total resource allocation for education to 6% of GDP, in a phased manner. He further stated the governments plan to implement the constitutional provision for making primary education free and compulsory up to

fifth standard, and also to go beyond and provide free education for girls up to the college level. Mahajan (1998) estimates that the central governments expenditure on human resource development (HRD), which was Rs 32,410 million in 1989-90, dropped to Rs28, 910 million in 1992-93. The expenditure by the states was Rs 1,23,100 million in 1989-90, which marginally improved to Rs 1,29,020 million in 1992-93. Given Indias vast population, the number of poor and school drop-outs (turned child laborers), it is indeed a critical situation. Unfortunately, not much has gone into the National Renewal Fund (NRF) either, which was originally created to impart training, retrain workers whose skills has become inadequate or redundant as a result of technology up gradation. The new economic programme has opened up the economy to a greater degree of international participation and investments. The service industry has taken significant strides in areas such as tourism, hospitalize or medicine, banking and financial services. Consequently, not only have more players come into India, but mergers and acquisitions of a large number of India companies have also taken place. This has compelled Indian companies to sit up and re-examine their strategies and practices, as also the type of business they are in. Such a shake-out is indeed in stark contrast to their attitude in the recent past, where cornering a license mattered more than a companys product or competence. Liberalization has thus resulted in paradigmatic shift.

Q7) What is the aims and objectives of the Standards of Weights and Measures Act, 1976? (10 Marks) Ans:

THE STANDARD OF WEIGHTS AND MEASURES ACT, 1976 The Act is another piece of consumer welfare legislation. The Standard of weights and measures Act, 1976, aims at introducing standard in relation to weights and measures used in trade and commerce. The ultimate objective is to subserve the interests of the consumers. The purpose of this Act is to:i) Replace the bewildering varieties of weights and measures in

use in the country by standards based on the metric system ii) Provide better protection to consumers by ensuring accuracy

in weights and measures Objectives: The Act enlists the following objectives a) b) Establish standards of weights and measures Regulate inter-State trade or commerce in weights &

measures and other goods, which are sold or distributed by weights, measures and number. Legal metrology: The branch of knowledge concerning weights and measures is known as metrology. The law relating to weights and

measures is known as legal metrology. The scope of legal metrology extends to three broad fields of human activity, namely, commercial transactions, industrial measurements and measurements needed to ensure public health and human safety. Enforcement of the Act: Though the act is a central legislation, its enforcement lay with the State Governments. For enforcement, a new Act was enacted the Standards of Weights and Measures (Enforcement) Act, 1985. STANDARD UNITS: Section 4 of the act stipulates that every unit of weight or measure shall be based on the units of the metric system. Section 15 to 19 deals with the physical representation of standard units. Manufacture/Sale/distribution: Only licence holder can

manufacture weights and measures and shall have approved models. Repairs etc. shall be recorded in a register and produce the records for inspection to the director. Penal Provisions: a) A fine of Rs. 500/- to 1000/- and imprisonment upto seven

years, if violation (use of non-standard units in non-metric system for weights and measures) of any provison of the Act is found. b) Authorities also have the power to inspect, search, seize and

forfeit the goods involved in the offence. c) d) Non-registration Not maintaining prescribed registers/records.

Packaged Commodities Rule 1977: 1) All the manufacturers of packaged products shall register

under the Act. 2) All the weights and measures are to be indicated only in

standard units

3)

All the commodities sold in packaged form shall contain a

clear declaration regarding the following in print or inscribed on the package. a) Name & address of the manufacturer and also of the Packer

(if the manufacturer is not the packer). b) c) d) The description of the commodity The net quantity in terms of standard unit in the metric system The unit sale price (only if the same is fixed by the If required, printing of package shall be maximum Price Rs

manufacturer) e)

L.T.extra. f) The month and year of manufacture (not required for metallic

products) g) h) Package held in storage should also contain the details. The manufacturer should maintain prescribed registers and

make available for inspection i) surface If cylindrical container, 20% of the total area For any other shape, 20% of the surface area. It is mandatory that the weights and balances be checked and sealed once a year. Every consumer must know how to identify false weights and measures. As a proof of having been inspected, there should be three seals on the back of the weights; ;the number assigned to the sealing Inspector, the year in which the seal is affixed and the quarterly seal.
Q8) Discuss in brief the Consumer Protection Act 1986? (10 Marks)

The size of the display panel should be as followsIn case of rectangular container-,40% of the area of the largest