Business Law

Introduction

Meaning

Business Law
Business law may be defined as that branch of law which comprises laws concerning trade, industry and commerce. It is an ever growing branch of law with the changing circumstances of trade and commerce. Business law is the general field of law relating to business organizations, business structures, and business transactions. In the business law field issues related to real estate, tax, and the environment are also included.

Scope of Business Law

Business law, also known as commercial law, is a general term that contains a large number of topics within it. Broadly, it is the body of laws that regulate commercial and business actions, but there are more specific areas of influence. Business law can be considered to contain the following areas: Corporate contracts Hiring regulations Manufacture and sale of consumer goods Protecting customers and business
It also deals with such fields as guarantees, various types of insurance (including fire, life, accident, and business), and the like.

Contract Act (1872)

The act provides a framework of rules and regulations which govern formation and performance of a contract. The rights and duties of parties and the terms of an agreement are decided by all the parties.

Contract
A contract is an agreement, enforceable by law, made between two or more parties. Eg. When we go to restaurant and take snacks then you have to pay the amount to enter into a contract. (contract= agreement+ enforceability by law)

Essential Ingredients of a Contract

Agreement: Every promise and every set of promises, forming the consideration for each other, is an agreement. [section 2(e)]. - - A person makes a proposal (offer). When it is accepted by other, it becomes a promise. (agreement= offer/proposal+ acceptance) It should be noted that the term agreement as defined in Contract Act requires mutual consideration. Thus, if A invites B to dinner and B agrees to come, it is not an agreement as defined in Contract Act.

Types of Agreement
A.) Uncertain Agreement: Agreements, which are not certain. Eg. A agree to sell to B his maruti car for Rs. 1.35 lakh to 1.50 lakh. B.) Wagering Agreement: It is a promise to give money or moneys worth upon the determination of an uncertain event. Exp. A & B bet as to whether it would rain on a particular day or not. A promise to pay rs. 100 to b if it rained& B promising an equal amount to A if it did not. This agreement is wager.

Meaning of Proposal- It is a plan/an offer made by a person to another. Promise: A proposal, when accepted, becomes a promise.
Promisor and Promisee - The person making the proposal is called the promisor, and the person accepting the proposal is called the promisee.

Steps involved in Contract

1. Proposal and its communication 2. Acceptance of proposal and its communication 3. Agreement by mutual promises 4. Performance of Contract

Types of Contract
Valid Contract A contract which have all the essential elements discussed below: Offer and its acceptance Free consent of both parties Mutual and lawful consideration for agreement It should be enforceable by law. Hence, intention should be to create legal relationship. Parties should be competent to contract Object should be lawful Certainty and possibility of performance Contract should not have been declared as void under Contract Act or any other law

Void Contract
A void contract, also known as a void agreement, is not actually a contract. A void contract cannot be enforced by law.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.

Voidable Contract
A void able contract is that which may be refuse to accept at the will of one or more of the parties. Until it is go to refuse, it remains valid & binding.At most, one party to the contract is bound. The unbound party may refuse to fulfill the contract.

Circumstances or features that make a contract voidable

(1) Non-disclosure of one or more material facts (2) Misrepresentation (3) Mutual mistake (4) lack of free will of a contracting party.

Unforceable Contract is a contract which is valid in itself, but is not capable of being enforced in a court of law because of some technical defect such as absence in writing, registration, requisite stamp. Illegal Contract

CONTINGENT CONTRACT
A contingent contract is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen. Illustration - A contracts to pay B Rs. 10,000 if B sell his house. This is a contingent contract. RULES REGARDING CONTIGENT CONTRACT 1. contracts contingent upon the happening of an uncertain event. 2. contracts contingent upon the non happening of a certain event. 3. Contracts contingent upon the happening of an uncertain specified event with in a fixed period. 4. contracts contingent upon the non happening of an uncertain specified event with in a fixed time.

QUASI CONTRACT: Some times , obligations are imposed on a party by law (regardless of any agreement) & an action is allowed to be brought by another party. Such obligations are known as quasi contract eg. A, a tradesman, leaves goods at Bs warehouse by mistake. B treats the goods as his own. B is bound to pay A for them. Kinds of Quasi Contract Right to recover the price of necessaries supplied. Right to recover money paid for another person. Right to recover for non-gratuitous act. Responsibility of finder of goods. Right to recover from a person to whom money is paid or thing is delivered, by mistake or under coercion. WHAT AGREEMENTS ARE CONTRACTS - All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not.

BREACH OF CONTRACT: a breach of contract occurs if party fails to perform his part of the contract. Compensation is payable for breach of contract. Penalty is also payable if provided in contract. Ways of Breach of Contract Anticipatory breach of contract Actual breach of contract Remedies of Breach of Contract . Rescission of contract . Suit for damage . Suit for specific performance . Suit for injunction . Suit for quantum meruit

Types of Damages
1. ORDINARY DAMAGES: (difference between market price & contract price) 2. SPECIAL DAMAGES: (Loss of profit) 3. Punitive damage 4. Nominal damage 5. Liquidated damage and penalty

CONTRACT OF GUARANTEE

A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the surety; the person in respect of whose default the guarantee is given is called the principal debtor, and the person to whom the guarantee is given is called the creditor.

Kinds of Guarantee

Oral/writing Specific/continuing Whole debt/part of debt

Rights and obligation of the creditors

Rights: Demand the payment from surety in case of default. Claim from suretys insolvency. Obligations: Not to change any term of the original contract. Not to release or discharge the principal debtor. Not to compound, or give time to, or agree not to sue the principal debtor. Not to do any act inconsistent with the rights of the surety.

Rights of surety

Rights against creditors. Rights against the principal debtor. Rights against co-sureties.

Liability of Surety
Discharge of surety

By notice of revocation By death of surety By variance in terms of contract By release or discharge of principal debtor By compounding with, or giving time to, or agreeing not to sue, principal debtor By creditors act or omission impairing suretys eventual remedy Loss of security

BAILMENT
Bailment is another type of special contract. Bailment means act of delivering goods for a specified purpose on trust. The goods are to be returned after the purpose is over. In bailment, possession of goods is transferred, but ownership is not transferred. The person delivering the goods is called the bailor. The person to whom they are delivered is called the bailee.

BAILMENT OF PLEDGES

Pledge is special kind of bailment, where delivery of goods is for purpose of security for payment of a debt or performance of a promise. Common example is keeping gold with bank/money lender to obtain loan. The bailor is in this case called the pawnor or pledgor. The bailee is Called the pawnee/ pledgee.