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Assignment A
There are some exceptions when this rule will not apply. For example, when
any company starts acting like an agent of shareholders. At that time,
company and its shareholders will not different. At that time, its liability will
be unlimited.
1. An Association of Persons:
At least two persons or seven persons must come together to form a private
or a public company respectively. A single individual cannot constitute a
company. This is the reason why a company is called on Association of
Persons.
It is invisible, intangible, immortal and exists only in the eyes of law. It has no
body, no soul and no conscience; it is regarded as an artificial person.
It can own property, conduct a lawful business, enter into contracts with
others, buy, sell and hold property, all in its own name under its own seal. It
can file a suit against others and can be sued against.
Members may come and go, but the company continues its operations so
long as it fulfils the requirements of the law under which it has been formed.
Thus, a company has a perpetual succession irrespective of its membership.
Any individual is free to acquire the share of any company and become to
the owner to that extent only. As such ownership is spread among a number
of share holders.
Being a share holder of a company does not give him the right to manage
the affairs of a company. The management is vested with the directors, who
are the legal representatives of the shareholders. Thus owners of the
company have no direct control over the management of the company.
The common seal of the company is approved in the first Board Meeting held
immediately after the incorporation. Common seal has to be affixed on all
important documents and contracts.
Any document bearing the common seal of the company duly signed by at
least two directors will be legally binding on the company.
According to Section 10, all agreements are contracts if they are made by
the free consent of the parties, competent to contract, for a lawful
consideration, with a lawful object, are not expressly declared by the Act to
be void, and, where necessary, satisfy the requirements of any law as to
writing or attestation or registration.
10. Not expressly declared void: The agreement must not have been
expressly declared to be void under the Act. Sections 24-30 specify certain
types of agreements which have been expressly declared to be void.
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The effect of general crossing is that the payment of the cheque will
not be made at the counter, it can be collected only through a
banker.
2. Special Crossing:
The effect to special crossing is that the paying banker will be the
amount of the cheque only through the bank named in the cheque.
3. Restrictive crossing:
Example:
A cheque was drawn in favour of a firm B & Co. The cheque was
crossed 'not negotiable'; one of the partners, A in fraud of his Co-
partner B, endorsed the cheque to P who encashed it. Held that B,
who under the terms of the partnership agreement was entitled to
the cheque could recover the amount from P as A could not transfer
better title than he himself had [Fisher v. Roberst]
Who may cross a cheque? As a rule, it is the drawer who can cross a
cheque. However, Sec. 125 provides that even a holder can cross the
cheque. It further provides that a banker
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(a) the cheque has been, presented to the bank within a period of
six months from the date on which it is drawn or within the period
of its validity, whichever is earlier;
(b) the payee or the holder in due course. of the cheque as the case
may be, makes a demand for the payment of the said amount of
money by giving a notice, in writing, to the drawer of the cheque,
within fifteen days of the receipt of information by him from the
bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said
amount of money to the payee or, as the case may be, to the holder
in due course of the cheque, within fifteen days of the receipt of the
said notice. Explanation.- For the purposes of this section," debt or
other liability" means a legally enforceable debt or other liability.
(i)
Features of Consumer Protection Act 1986
1. This Act is applicable on both goods and services. Goods are manufactured
by the manufacturer and consumer buys them from manufacturer or seller.
Services include transport, electricity, water; roads, etc. are under this Act.
3. Under this Act there is provision to settle the complaint within three
months of filing it. If the complaint needs laboratory testing, the period is
extended to five months.
5. There is no fee for lodging a complaint. Even poor people can get justice.
6. The clause II of this Act has defined some terms used by Consumer
Protection Act like:
III. Unfair Trade Practice-it is unfair and deceptive procedure used to promote
sale or supply of goods and services like lottery, chit fund, conducting
competitions, etc.
(ii)
Unfair Trade Practice and Restrictive Trade Practice
The Act defines restrictive trade practice as a trade practice which tends to
bring about manipulation of price or conditions of delivery or to affect flow of
supplies in the market relating to goods or services in such a manner as to
impose on the consumers unjustified costs or restrictions and shall include
delay beyond the period agreed to by a trader in supply of such goods or in
providing the services which has led or is likely to lead to rise in the price;
any trade practice which requires a consumer to buy, hire or avail of any
goods or services as condition to buying, hiring or availing of other goods or
services.
Assignment B
Read the case study given below and answer the questions given at
the end
Case Study
Question No. 2
Question No. 3
Options
Externally manifested
Options
Question No. 5
Options
Coercion
Fraud
Undue Influence
All of them
Question No. 6
If the goods have perished, the contract of sale of such specific goods, will beco
Options
voidable
void
illegal
None of these
Ans. voidable
Question No. 7
Options
Ordinary resolution
Special Resolution
Unanimous resolution
Question No. 8
Options
An express contract
An implied contract
A quasi Contract
An excited contract
Question No. 9
A prospectus is issued---
Options
None of these
Ans. By a Private LImited Company
Question No. 10
When, before the contract becomes due for performance, the promisor declar
performing his promise, it is called---
Options
Remission
Waiver
Alteration
Anticipatory breach
Ans. Remission
Question No. 11
Options
Car
Furniture
Money
Television
Ans. Money
Question No. 12
The damages which arise in the usual course of things happening from the b
called---
Options
Remote Damages
Ordinary damages
Special damages
Nominal Damages
Question No. 13
Options
Bailment
Guarantee
Agency
Pledge
Ans. Agency
Question No. 14
Options
Price
Railway receipts
Ans. Railway receipts
Question No. 15
Options
Death of principal
Insolvency of principal
Destruction of subject-matter
Question No. 16
Options
Debtors is limited
Creditors is limited
Members is limited
Question No. 17
Options
Raw Materials
Movable goods
Ownership
Immovable property
Question No. 18
The goods which are yet to be acquired by the seller, are called---
Options
Existing Goods
Contingent Goods
Unascertained goods
Future goods
Question No. 19
Options
If a company fails to pay its debts suit can be filed against the---
Options
Directors
Members
Officers
Company
Ans. Directors
Question No. 21
Options
Illegal
Valid
Void
Voidable
Ans. Void
Question No. 22
Options
His guardian
His Manager
His property
He himself
Question No. 23
In return for a new television, Raju agrees to give his old television value
amount of cash worth Rs. 5,000 to Ganesh. This is a---
Options
Barter
Exchange
Sale of approval
Question No. 24
Options
Right of lien
Right of resale
All of these
Options
Restitution of benefit
Question No. 26
A contract by which one party promises to save the other from loss is called---
Options
Contract of guarantee
Contract of indemnity
Quasi contract
None of these
Question No. 27
Options
Primary
Secondary
Absolute
None of these
Ans. Primary
Question No. 28
Options
Delivery
Assignment
None of these
Ans. Delivery
Question No. 29
Options
All of these
Options
The Promisor
The promisee
A third party
None of them
Question No. 31
Options
Question No. 32
Options
Condition
Warranty
Guarantee
None of these
Ans. Warranty
Question No. 33
Options
Holder
None of these
Question No. 34
A director must vacate his office if he fails to obtain qualification shares within-
Options
1 week
two weeks
One month
two months
Options
7 members
3 members
3 directors
2 Members
Ans. 2 Members
Question No. 36
Options
by delivery
By endorsement
None of these
Question No. 37
Options
Restrictive endorsement
Conditional endorsement
Special endorsement
Partial endorsement
Question No. 38
When a cheque bears across its face an addition of the words & between t
lines, it is called---
Options
Special crossing
Restrictive crossing
General crossing
Double crossing
Question No. 39
Options
By impossibility of performance
By lapsse of time
By breach of contract
All of the above
Question No. 40
Options
Right of lien
All of these
2. Title
The transferee of a negotiable instrument is known as holder in due course. A bon
is not affected by any defect of title on the part of the transferor or of any of the p
instrument. This is the main distinction between a negotiable instrument and othe
transfer. The general rule of nemo dat quod non habet does not apply to negotiabl
3. Rights
The transferee of the negotiable instrument can sue in his own name, in case of di
A negotiable instrument can be transferred any number of times till it is at maturit
instrument need not give notice of transfer to the party liable on the instrument to
4. Presumptions
Certain presumptions apply to all negotiable instruments e.g. a presumption that c
paid under it.
5. Prompt Payment
A negotiable instrument enables the holder to expect prompt payment because a
of the credit of all persons who are parties to the instrument.
2. He must have become a holder (passessor) before the date of maturity of the ne
Therefore, a person who takes a bill or promissory note on the day on which it bec
claim rights of a holder in due course because he takes it after it becomes payable
be discharged at any time on that day.
3. He must have become holder of the negotiable instrument in good faith. Good f
should not have accepted the negotiable instrument after knowing about any defe
instrument. But, notice of defect in the title received subsequent to the acquisition
the rights of a holder in due course. Besides good faith, the Indian Law also require
part of the holder before he acquires title of the negotiable instrument. He should
without any negligence on his part.
Reasonable care and due caution will be the proper test of his bona fides. It will no
the holder acquired the instrument honestly, if in fact, he was negligent or careles
sufficient indications showing the existence of a defect in the title of the transferor
become a holder in due course even though he might have taken the instrument w
knowledge.
Example:
(i) A bill made out by pasting together pieces of a tom bill taken without enquiry w
holder in due . It was sufficient to show the intention to cancel the bill. A bill should
enquiry if suspicion has been aroused.
(ii) A post-dated cheque is not irregular. It will not preclude a bonafide purchase in
the rights of a holder in due course. It is to be noted that it is the notice of the defe
immediate transferor which deprives a person from claiming the right of a holder i
defect in the title of any prior party does not affect the title of the holder.
4.A holder in due course must take the negotiable instrument complete and regula
Purpose of Amendment
o These provisions were incorporated with a view to encourage the culture of use
enhancing the credibility of the instrument.
o The larger objective is to protect the interest of honest people dealing in chequ
o DRAWER BEWARE, Because, by the said amendment the DISHONOURED CHEQU
CRIMINAL OFFENCE.