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Q1. All agreement are not contracts but all contracts are agreements . Comment. Answer: Contract A contract is an agreement, enforceable by law, made between at least two parties by which rights are acquired by one and obligations are created on the part of another. If the party, which had agreed to do something, fails to do that, then the other party has a remedy. Example: D Airlines sells a ticket on 1 January to X for the journey from Mumbai to Bangalore on 10 January. The Airlines is under an obligation to take X from Mumbai to Bangalore on 10 January. In case the Airlines fail to fulfill its promise, X has a remedy against it. Thus, X has a right against the Airlines to be taken from Mumbai to Bangalore on 10 January. A corresponding duty is imposed on the Airlines. As there is a breach of promise by the promisor (the Airlines), the other party to the contract (i.e., X) has a legal remedy Agreement Sec.2 (e) defines an agreement as every promise and every set of promises forming consideration for each other. In this context, the word promise is defined by Sec.2 (b). In a contract there are at least two parties. One of them makes a proposal (or an offer) to the other, to do something, with a view to obtaining the assent of that other to such act. When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted becomes a promise (Sec.2 (b)). Enforceability by law: The agreement must be such which is enforceable by law so as to become a contract. Thus, there are certain agreements which do not become contracts as this element of enforceability by law is absent. Essentials of a contract Sec.10 provides that all agreements are contracts, if they are made by free consent of parties, competent to contract, for a lawful consideration, and with a lawful object, and are not expressly declared by law to be void. To constitute a contract, there must be an agreement between two or more than two parties. No one can enter into a contract with himself. An agreement is composed of two elements offer or proposal by one party and acceptance thereof by the other party. Effect of absence of one or more essential elements of a valid contract: If one or more essentials of a valid contract are missing, then the contract may be voidable, void, illegal or unenforceable.
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Q2. What do you mean by bailment? What are the requisites of a contract of bailment? Explain. Answer: Definition of bailment (Sec.148) Bailment is defined as the delivery of goods by one to another person for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of person delivering them. The person delivering the goods is called the Baylor and the person to whom the goods are delivered is called the bailee. The explanation to the above Section points out that delivery of possession is not necessary, where one person, already in possession of goods contracts to hold them as bailee. The bailee is under an obligation to re-deliver the goods, in their original or altered form, as soon as the time of use for, or condition on which they were bailed, has elapsed or been performed. Lets illustrate, (i) A delivers some clothes to B, a dry cleaner, for dry cleaning. (ii) A delivers a wrist watch to B for repairs. (iii) A lends his book to B for reading. (iv) A delivers a suitlength to a tailor for stitching. (v) A delivers some gold biscuits to B, a jeweler, for making jewelry. (vi) Delivery of goods to a carrier for the purpose of carrying them from one place to another. (vii) Delivery of goods as security for the repayment of loan and interest thereon, i.e., pledge. From the definition of bailment, the following characteristics should be noted: 1. Delivery of goods. The essence of bailment is delivery of goods by one person to another for some temporary purpose. Delivery of goods may, however, be actual or constructive. Actual delivery may be made by handing over goods to the bailee. Constructive delivery may be made by doing something which has the effect of putting the goods in the possession of the intended bailee or any person authorized to hold them on his behalf (Sec.149). Example: A holding goods on behalf of B, agrees to hold them on behalf of C, there is a constructive transfer of possession from C to A. 2. Bailment is based on a contract. In bailment, the delivery of goods is upon a contract that when the purpose is accomplished, they shall be returned to the bailor. For example, where a watch is delivered to a watch repairer for repair, it is agreed that it will be returned, after repair, on the receipt of the agreed or reasonable charges. 3. Return of goods in specie. The goods are delivered for some purpose and it is agreed that the specific goods shall be returned. Return of specific goods (in specie) is an essential characteristic of bailment. Thus, where an equivalent and not the same is agreed to be returned, there is no bailment.

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4. Ownership of goods. In a bailment, it is only the possession of goods which is transferred and not the ownership thereof, therefore the person delivering the possession of goods need not be the owner; his business is to transfer possession and not ownership. Kinds of bailments Bailments may be, classified into six kinds as follows. i) Deposit. Delivery of goods by one person to another for the use of the former, i.e., Baylor; ii) Commodatum. Goods lent to a friend gratis to be used by him; iii) Hire. Goods lent to the bailee for hire, i.e., in return for payment of money; iv) Pawn or Pledge. Deposit of goods with another by way of security for money borrowed; v) Delivery of goods for being transported, or something to be done about them, by the bailee for reward. vi) Delivery of goods as in vii) above, but without reward.

Q3. What do you mean by del credere agent? Answer: A mercantile or commercial agent may assume any of the following forms: broker, factor, commission agent, delcredere agent, auctioneer, banker, pakka and katcha adatias and indentor. A Broker is a mercantile agent engaged to buy and/or sell property or to make bargains and contracts between the engager and third party for a commission (called brokerage). A broker has no possession of goods or property. He is merely a connecting link between the engager and a third party. The usual method of dealing by a broker is to make entries of the terms of contract in a book, called the memorandum book and to sign them. He then sends the particulars of the same to both parties. The document send to the seller is called the sold note and the one sent buyer is called the bought note. A factor is a mercantile agent who is entrusted with the possession of goods with an authority to sell the same. He can even sell the goods on credit and in his own name. He is also authorized to raise money on their security. A factor has a general lien on the goods in his possession. A factor, however, cannot barter the goods, unless expressly authorized to do. Also, he cannot delegate his authority. A commission agent is agent who is employed to buy or sell goods or transact business. The remuneration that he gets for the purpose is called the commission. A commission agent is not liable in case the third party fails to carry out the agreed obligation. A commission agent may have possession of the goods or not. His lien in case of goods in his possession is a particular

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lien. A Del credere agent is one who, in consideration of an extra remuneration, called a Del credere commission, guarantees the performance of the contract by the other party.

Q4. What do you mean by Memorandum of Association? What does it contain? Answer: The Memorandum of Association of a company is its charter which contains the fundamental conditions upon which alone the company can be incorporated. It tells us the objects of the companys formation and the utmost possible scope of its operations beyond which its actions cannot go. Thus, it defines as well as confines the power of the company. If anything is done beyond these powers, that will be ultra vires (beyond powers of) the company and so void. The memorandum serves a two-fold purpose. It enables shareholders, creditors and all those who deal with the company to know what its powers are and what is the range of its activities. Thus, the intending shareholder can find out the field in, or the purpose for which his money is going to be used by the company and what risk he is taking in making the investment. Also, any one dealing with company, say, a supplier of goods or money will know whether the transaction he intends to make with the company is within the objects of the company and not ultra-virus its objects. Form and contents Sec. 14 requires that the memorandum of a company shall be in such one of the forms in Tables B,C,D and E in Schedule I to the Act, as may be applicable in case of the company, or in Forms as near there to as circumstances admit. Sec.15 requires the memorandum to be printed divided into paragraphs, numbered consecutively and signed by at least seven persons (two in the case of a private company) in the presence of at least one witness, who will attest the signature. Each of the members must take at least one share and write opposite his name the number of shares he takes, sec.13 requires the memorandum of a limited company to contain: (i) the name of the company, with limited as the last word of the name in the case of a public company and private limited as t the case of the last words in the case of private company (ii) the name of the state, in which the registered officer of the company is to be situated;(iii) the objects of the company, stating separately main objects and other objects(iv) the declaration that the liability of the members is limited; and (v) the amount of the authorized share capital, divided into shares of fixed amounts. These contents of the memorandum are called compulsory clauses and are explained below: The name clause. The promoters are free t choose any suitable name for the company provided:
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(a) The last word in the name of the company, if limited by shares or guarantee is limited unless the company is registered under Sec.25 as an association not for profit (sec.13(1)(a) & Sec.25) (b) In the opinion of the Central Government, the name chosen is not undesirable (Sec.20 (1). Too similar name. In case of too similar names, the resemblance between the two names must be such as to be calculated to deceive. A name shall be said to be calculated to deceive where it suggests come connection or association with the existing company. Publication of name(Sec.147). Every company shall:(a) paint or affix its name and the address of its registered office and keep the same painted or affixed, on the outside of every office or place of business in a conspicuous position in letters easily legible and in the language in general use in the locality.

Q5. Name the instruments which are recognized as negotiable instruments by the Negotiable Instruments Act, 1881. Answer: An Instrument as referred to in the Act is a legally recognized written document, whereby rights are created in favor of one and obligations are created on the part of another. The word negotiable means transferable from one person to another either by mere delivery or by endorsement and delivery, to enable the transferee to get a title in the instrument. An instrument may possess the characteristics of negotiability either by statute or by usage. Promissory note, bill of exchange and cheque are negotiable instruments by statute as they are so recognized by Sec.13. There are certain instruments which are recognized as negotiable instruments by usage. Thus, bank notes, bank drafts, share warrants, bearer debentures, dividend warrants, scripts and treasury bills are negotiable by usage. An instrument is called negotiable if it possesses the following features: 1.Freely transferable. Transferability may be by (a) delivery, or (b) by endorsement and delivery. 2. Holders title free from defects. The term negotiability means that not only is the instrument transferable by endorsement and/or delivery, but that its holder in due course acquires a good title notwithstanding any defects in a previous holders title. A holder in due course is one who receives the instrument for value and without any notice as to the defect in the title of the transferor.

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3. The holder can sue in his own name. Another feature of a negotiable instrument is that its holder in due course can sue on the instrument in his own name. 4. A negotiable instrument can be transferred infinitum, i.e., can be transferred any number of times, till its maturity. 5. A negotiable instrument is subject to certain presumptions . An instrument, which does not have these characteristics, is not negotiable, but is assignable, i.e., the transferee takes it subject to all equities and liabilities of the transferor.

Q6. Write short notes on the following (a) Digital Signature (b) Information Technology Act Answer: (a) Digital Signature Authentication is a process used to confirm the identity of a person or to prove the integrity of information. The authentication of message involves determining its source and verifying that it has not been modified or replaced in transit. Subject to the provisions of section 3 any subscriber may authenticate an electronic record by affixing his digital signature. The hash function means an algorithm mapping or translation of one sequence of bits into another, generally smaller set known as hash result such that an electronic record yields the same hash result every time the algorithm is executed with the same electronic record as its input making it computationally infeasible(a) to derive or reconstruct the original electronic record from the hash result produced by the algorithm(b)that two electronic records can produce the same hash result using the algorithm. (b) Information Technology Act In May 2000, at the height of the dot-com boom, India enacted the IT act and became part of a select group of countries to have put in place cyber laws. In all these years, despite the growing crime rate in the cyber world, only less than 25 cases have been registered under the IT Act 2000 and no final verdict has been passed in any of these cases as they are now pending with various courts in the country. Although the law came into operation on October 17, 2000, it still has an element of mystery around it. Not only from the perception of the common man, but also from the perception of lawyers, law enforcing agencies and even the judiciary.
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The prime reason for this is the fact that the IT Act is a set of technical laws. Another major hurdle is the reluctance on the part of companies to report the instances of cybercrimes, as they dont want to get negative publicity or worse get entangled in legal proceedings. A major hurdle in cracking down on the perpetrators of cybercrimes such as hacking is the fact that most of them are not in India. The IT Act does give extra-territorial jurisdiction to law enforcement agencies, but such powers are largely inefficient. This is because India does not have reciprocity and extradition treaties with a large number of countries. The Indian IT Act also needs to evolve with the rapidly changing technology environment that breeds new forms of crimes and criminals. We are now beginning to see new categories and varieties of cybercrimes, which have not been addressed in the IT act. This includes cyber stalking, cyber nuisance, cyber harassment, cyber defamation and the like. Though Section 67 of the Information Technology Act , 2000 provides for punishment to whoever transmits or publishes or causes to be published or transmitted, any material which is obscene in electronic form with imprisonment for a term which may extend to two years and with fine which may extend to twenty five thousand rupees on first convection and in the event of second may extend to five years and also with fine which may extend to fifty thousand rupees, it does not expressly talk of cyber defamation. The above provision chiefly aim at curbing the increasing number of child pornography cases and does not encompass other crimes which could have been expressly brought within its ambit such as cyber defamation.

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