Professional Documents
Culture Documents
Fraud:1. Fraud is defined under Sec. 17. 2. Fraud means a misrepresentation made with an intention to cheat 3. The distinction between fraud and misrepresentation is solely on intention. 4. In case of fraud, the aggrieved party can avoid the contract even if the means to discover the truth were available. 5. In case of fraud not only the agreement is voidable but also the aggrieved party can claim damages. Misrepresentation:1. Misrepresentation is defined under Sec. 19 2. Misrepresentation means a misstatement made innocently. 3. In case of misrepresentation misstatement is made innocently. 4. In case of misrepresentation if the aggrieved party has the means to discover the truth, it cannot avoid the contract. 5. In case of misrepresentation no damages can be claimed, the aggrieved party can only avoid the contract.
contract. The fundamental principal underlying damages is not punishment but compensation. By awarding damages the court aims to put the injured party into the position he would have been, had there been performance and not breach, and not to punish the defaulter party.
Who can employ an agent? Sec.183 declares that any person who is the
age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent.
What is the difference between cheque and bill of exchange ? A cheque differs from a bill of exchange in the following
respects:
1. Drawee: A cheque is always drawn on a bank or a banker while a bill
must be accepted before the drawee can be made liable upon it.
3. Payment: A cheque is payable immediately on demand without any
days of grace, but a bill of exchange is normally entitled to three days of grace unless it is payable on demand.
4. Crossing: A cheque may be crossed but there is no such provision in
not necessary. Want of assets in the hands of the banker is sufficient notice. It is necessary to give a notice of dishonor in order to make the drawer of a bill liable.
6. Payable to bearer on demand: A cheque can be drawn payable to
otherwise the drawer will be discharged. The drawer of a cheque is not discharged by failure of the holder to present it in due time unless the drawer has sustained damage by the delay.
11. Protection: A banker is given statutory protection with regard to
payment of cheques in certain circumstances. No such protection is available to the drawee or acceptor of a bill of exchange.
Rights of an unpaid seller: The sale of Goods Act has expressly given
two kinds of right to an unpaid seller of goods, namely: (1) Against the goods (a) When property in the goods has passed (i) Right of lines: A lien is a right to retain possession of goods until payment of the price. Its available when; a) Goods sold without any condition b) Goods sold on credit but the period has expired c) The buyer becomes insolvent (ii) Right of stoppage of goods in transit: Its the right of stopping the goods in transit after the unpaid seller has parted with the possession of the goods. It is possible when; a) The buyer becomes insolvent; and b) Goods are in transit
(iii) Right of re-sale: The unpaid seller can re-sell the goods. When; a) Goods are Of a perishable in nature; b) Notice provided to the buyer for the intention of resell but he isnt paying within a reasonable time; c) Expressly reserves the right of resale. (b) When property in the goods has not passed (i)Right of withholding delivery: When the goods are not passed to buyer, the seller cant acquire the rights of lien but gets a right of withholding the delivery of goods. (2) Against the buyer personally (i) Right to use for price (Sec. 56): Where the property in the goods has passed to the buyer, the seller is entitled to sue for price, whether the possession is with the buyer or the seller. Similarly, where the price is payable on a certain day irrespective of delivery, the seller may sue for the price, if it is not paid on that day, although the property in goods has not passed. (ii) Right to sue for damages:(Sec. 56). Where the buyer wrongfully neglects or refuses to pay for the goods, the seller may sue him for the price of the goods. (iii)Right to sue for interest: [Sec. 61 (2) (a)]. Where there is a specific agreement between the seller and the buyer as to interest on the price of the goods from the date on which payment, becomes due, the seller may charge interest on the price when it becomes due from such day as he may notify to the buyer.
sea or air. Accordingly, the law relating to carrying of goods is contained in the following enactments: 1. In case of carriage of goods by land: (i) The Carriers Act, 1865. (ii) The Railways Act, 1989. 2. In case of carriage of goods by sea: (i) The (Indian) Bills of Landing Act, 1856. (ii) The Carriage of Goods by Sea Act, 1925. (iii) The Merchant Shipping Act, 1958. (iv) The Marine Insurance Act, 1963. 3. In the case of carriage of goods by air: The Carriage by Air Act, 1972. Wherever there is no specific provision for a particular matter in these statutes, then the Indian Courts resort to English Common Law.
2. Which is specified in relation to any goods in the Section or Chapter notes of the Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture; and 3. Which in relation to goods specified in the Third Schedule to the Central Excise Tariff Act, 1985, involves packing or repacking of such goods in a unit, container or labeling or re-labeling of containers or declaration or alteration of retail sale price or any other treatment to render the product marketable to consumer.
What is Consideration?
Anything given or promised or forborne by promissory in exchange for the promise or undertaking of another in a lawful agreement. Consideration means a reasonable equivalent or other valuable benefit passed on by the promisor to the promise or by the transferor to the transferee.
Who is Minor? According to INDIAN LAW minor is the person who did not
attain the age of 18. he did not understand what is right and what is wrong for him. no one can sue case against him.
Holder: The definition given in section 8 implies that any person (a) who is
entitled in his own name to the possession of the negotiable instrument and (b) has right to receive or recover the amount from the parties thereto. (a) Possession of instrument (b) Entitled to receive the amount.
Direct tax : A direct tax is one paid directly to the government by the persons
juristic on whom it is imposed often accompanied by a tax return filed by the taxpayer. For example some income taxes, some corporate taxes, and transfer taxes such as estate tax and gift tax.
INDIRECT TAX: INDIRECT TAX is the tax collected from the customers on
the goods purchased or for the service provided. That is VAT, sales tax, excise duty, customs duty etc.
An Initial Public Offer (IPO) : An Initial Public Offer (IPO) is the selling of
securities to the public in the primary market. This Initial Public Offering can be made through the fixed price method, book building method or a combination of both.
Winding Up: A process that involves selling all the assetsof a business
entity, paying off creditors, distributing any remaining assets to the principals, and then dissolving the business.
Commencement of Winding Up
The winding up of a Company by the Court is deemed to commence from the time of the presentation of the petition for winding up.-Sec. 441.
Sales Tax is a tax levied on the sale of goods. In India, the law for levying sales tax is provided in the Central Sales Tax Act of 1956 which applies to the entire country. Generally, the CST Act does not deal with intra-state or import or export sales. However, with respect to certain declared goods such as oil seeds, sugar, pulses, crude oil etc., the CST Act imposes restrictions on the powers of state governments to levy sales tax even in the case of intra-state sales. Accordingly, sales can broadly be classified into three categories. Intra-State sales, i.e, sales within the state. Sales during import and export. Inter-State sales.
The Act also provides for the levy, collection and distribution of taxes on sale of goods in the course of inter-state trade or commerce.
What happens when the free consent is missing in the contract /Voidable Contract :An agreement An agreement which is
enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract[Sec.2(i)] This happens when the essential element of free consent in a contract is missing
2. It must contain a promise or undertaking to pay a definite sum of money. 3. The promise to pay must be unconditional.
4. It must be signed by the maker.
5. The payee must be identified & must be certain. 6. The sum payable must be certain.
Essentials of a Bill of Exchange The amount payable must be certain. The payment must be made in money. The bill payable may be either on demand or after a specified period. The bill may be payable either to the bearer or to the order of payee. It must comply with other formalities e.g. stamps, date etc.
Essentials of a Chque
It is always drawn on a banker It is always payable on demand It does not require acceptance No Stamp is required to be affixed on cheques A cheque is usually valid for fix months The banker is liable only to the drawer
In a contract of sale, parties make certain stipulations, i.e., agree to certain terms. Some of them may be intended by the parties to be of a fundamental nature, e.g., quality of the goods to be supplied. The stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. Such stipulations are known as `Conditions`. In contrast, some may be intended by the parties to be binding, but of a subsidiary or inferior character, e.g., time of payment. Thus, stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods. Here the stipulations are known as `warranties'.
When a contract is substituted by a new contract, or is rescinded or altered, the original contract need not be performed. Contracts discharged by operation of law need not be performed. Contracts which have lapsed by time.
When can unpaid sellers resell the goods? Unpaid sellers can resell
the goods : (a) the whole of the price, has not been paid or tendered;
(b) When a bill of exchange or other negotiable instrument has been received as conditional payment and the condition on which it was received has not been fulfilled by reason of the dishonor of the instrument or otherwise.
It must be properly convened. The persons calling the meeting must be authorized to do so. Proper and adequate notice must have been given to all those entitled to attend. The meeting must be legally constituted. There must be a chairperson. The rules of quorum must be maintained and the provisions of the Companies Act, 1956 and the articles must be complied with. The business at the meeting must be validly transacted.. The meeting must be conducted in accordance with the regulations governing the meetings.
Basic difference between CSTDuty , Central ExciseDuty and Customs Duty
Classificati CST classify goods on Classify goods for the Classify goods for on of goods interstate sale & state purpose of levy & rates of the purpose of levy sales tax classify as duty & rates of duty per the particular state Taxable event Collection Power Sale of goods in interstate trade or commerce CST is levied by the central govt. but collected & returned by respective state govt. Production or Entry inward of manufacturing of goods in goods or outward of India goods from India Most of the products are levied by central govt. except on alcoholic liquors, OPM, Indian hemp. Above are even levied & collected by state govt. Excise duty is levied on accessible value Basic excise duty is uniform @ 16% It is levied, collected and retained by central govt.
Sales tax is charged on sale price CST is 4% is uniform by rates of state sales tax varies
It is levied on accessible value Customs duty rates irrespective of goods is uniform @ 20% It is payable on or before customs clearance
It is payable after the It is payable on removal sale takes place of goods from factory or godown
contract if he is of the age of majority, is of sound mind, and is not disqualified from contracting by any law to which he is subject. Flaw in capacity to contract may arise from minority, lunacy, idiocy, drunkenness, etc., If a party suffers from any flaw in capacity, the agreement is not enforceable except in some special cases.
Bill Discounting: While discounting a bill, the Bank buys the bill (i.e. Bill of
Exchange or Promissory Note) before it is due and credits the value of the bill after a discount charge to the customer's account. The transaction is practically an advance against the security of the bill and the discount represents the interest on the advance from the date of purchase of the bill until it is due for payment.
A guarantee is basically a commitment on the part of the guarantor to make good any defects in a product or a service during a fixed period while a warranty mainly pertains to the repairing of an article or replacing a defective part of an article within the validity period. One key difference between a guarantee and a warranty is that unlike a guarantee which is always free, you will need to pay for a warranty to avail the benefit. The second important difference is that unlike a guarantee which is provided by the manufacturer, a warranty is usually provided by the retail sellers or distributors.
Within 14 days of passing the resolution, whether ordinary or special, it must be advertised in the Official Gazette and also in some important newspaper circulating in the district of the registered office of the company. Once the resolution of voluntarily winding up is passed, and then the company may be wound up, either through: Members voluntarily winding up, or
The only difference between the abate two, is that in case of members voluntarily winding up, Board of Directors have to make a declaration to the effect, that company has no debts.
Central Excise : The meaning of Central Excise, that the duties of Central
Excise are levied and collected by the Government of India only on Production or Manufacture. It is one of the Indirect Taxes by character as the manufacturers can shift the incidence of the Central Excise duty on the Consumers.
perpetual succession?
A company is a stable form of business organisation. Its life does not depend upon the death, insolvency or retirement of any or all shareholder(s) or director(s). Law creates it and law alone can dissolve it. Members may come and go but the company can go on forever.
Common seal: Common Seal more often called as the Company Seal or the
Corporate Seal. This is used to get an authentic embossing imprint generally r required on the paper documents and certificates. Common Seals are generally only used for two purposes by corporations today:
Documents which need to be executed as deeds (as opposed to simple contracts), may be executed under the company's common seal. Certain corporate documents, for example share certificates are often issued under the common seal.
Private Carriers: A private carrier is one who does not transport goods from
one place to another regularly; he may engage in some casual jobs of carrying goods for certain selected persons between certain terminals. In fact, he carries his own goods and thats why he is known as a private carrier and not a common carrier. Also, he does not make a general offer to carry goods for any one from one place to another for hire. However, he may enter into a contract with someone to carry goods on the terms agreed upon between them. In such
a situation, it is a contract of bailment. Therefore, such transactions are not covered by the Common Carriers Act, 1865.
Thus the transit continues so long as the goods are not delivered to the buyer or his agent, no matter whether they are lying at the destination with the carrier awaiting transmission or are in actual transit. The goods are still deemed to be in transit if they are rejected by the buyer and the carrier or other bailee continues in possession of them, even if the seller has refused to receive them back.
Difference between a public company and a private company: The distinction between a public company and a private company
are explained in the following manner:
1. Minimum number of members: The minimum number of person required to form a public company is seven, whereas in a private company their number is only two. 2. Maximum number of members: There is no limit on the maximum number of member of a public company, but a private company cannot have more than fifty members excluding past and present employees. 3. Commencement of Business: A private company can commence its business as soon as it is incorporated. But a public company shall not commence its business immediately unless it has been granted the certificate of commencement of business. 4. Invitation to public: A public company by issuing a prospectus may invite public to subscribe to its shares whereas a private company cannot extend such invitation to the public. 5. Transferability of shares: There is no restriction on the transfer of share In the case of public company whereas a private company by its articles must restrict the right of members to transfer the share. 6. Number of Directors: A public company must have at least three directors whereas a private company may have two directors. 7. Statutory Meeting: A public company must hold a statutory meeting and file with the register a statutory report. But in a private company there are no such obligations. 8. Further Issue of Capital: A public company proposing further issue of shares must offer them to the existing members. A private company is free to allot new issue to outsiders.
Is a person bound by the terms printed on a ticket issued to him and which he has not read? The theory in case of tickets issued
by clerks is that the company makes the offer of the ticket and the customer by paying for the ticket without objection accepts it with all its terms. He has a chance to reject the ticket. But where the ticket is issued by an automatic machine, the customer cannot refuse it. He is committed the moment when puts his money into the machine. The contract is then made. The terms of the offer are contained in the notice placed on the rear of the machine. The customer is bound by its terms if they are sufficiently brought to his notice beforehand, but not otherwise. He is not bound by the terms printed on the ticket if they differ from the notice, because the contract has already been made and the ticket comes too late. The ticket is therefore no more than a receipt for money. Hence, it is the duty of the party relying on the exclusion clause to make the terms and conditions clear to the other party at the time of contract that the same has been incorporated into the contract.
Discuss how far agreements in restraint of trade are enforceable in India. Courts do not allow any tendency to impose
restrictions upon the liberty of an individual to carry on any business, profession or trade.In India, the law on the subject is contained in Section 27 which reads: every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. Thus, in India, all agreements in restraint of trade, whether general or partial, qualified or unqualified, are void. It is, therefore, not open to the Courts in India to enter into any question of reasonableness or otherwise of the restraint
Explain the circumstances whereunder a party to a contract may be exempted from the performance of contract on the ground of Supervening impossibility under the Indian Contract Act, 1872
When performance of a promise becomes impossible or illegal by occurrence of an unexpected, event or a change of circumstances beyond the contemplation of parties, is called supervening impossibility. In case of supervening impossibility the contract becomes void.
Supervening impossibility:
Circumstances: A party to a contract may be excused from the performance of his promise on the ground of supervening impossibility under the Indian Contract Act, 1872 in the following circumstances. (a) Accidental destruction of the subject matter of the contract: If the subject matter of the contract is destroyed by an accident both the parties are excused from the performance of the contract.
(b)
Non-existence or non occurrence of a particular state of things: Nonexistence or non occurrence of a particular state of things of the contract exempts the parties from the performance of the contract.
(c) Incapacity to perform a contract of personal services: In case of contract of personal service, disability or incapacity to perform, caused by the act of God e.g. illness, constitutes lawful excuse for non-performance of the contract. (d) Change in law: Performance of a contract may also become impossible due to a subsequent change in the law. The law passed after the contract may prohibit performance of some act, which may be very basis of the contract. As such the contract is discharged due to subsequent impossibility and the parties become free from their mutual obligations. (e) Outbreak of war: Contracts may be affected by war in a variety of ways, viz., (i) by emergency legislation controlling prices or otherwise relating to restriction of trade; (ii) by prohibiting or restraining transaction with alien enemy.
Dishonour of a cheque by a banker when there are sufficient funds to the credit of the customer.
consideration can file a suit to enforce the promise as you might have noticed in the case of Chinayya v. Ramayya
legal relations, An offer must be such that when accepted, it will create legal relationship among the parties
2. Certain and Unambiguous Terms: The terms of the offer must be certain
and unambiguous and not vague. If the terms of the offer are vague, no contract can be entered into because it is not clear as to what exactly the parties intended to do.
3. Different from a Mere Declaration of Intention: The offer must be
distinguished from a mere declaration of intention. Such statement or declaration merely indicates that an offer will be made or invited in future.
4. Different from an Invitation to Offer: An offer must be distinguished
from an invitation to offer. In case of an invitation to offer, the person making an invitation invites others to make an offer to him. It is prelude to an offer inviting negotiations or preliminary discussions.
5. Communication: An offer must be communicated to the person to whom it
is made. An offer is complete only when it is communicated to the offeree. One can accept the offer only when he knows about it. Thus, an offer accepted without its knowledge does not confer any legal rights on the acceptor.
6. Non-compliance of offer doesnt Amounts to Acceptance: The offer
must not contain a term the non-compliance of which would amount to acceptance. It means that while making the offer, the offerer can not say that if offer is not accepted before a certain date, it will be presumed to have been accepted.
Causa Proxima: It is a rule of law that in actions on fire policies, full regard
must be had to the causa proxima. If the proximate cause of the loss is fire, the loss is recoverable. If the cause is not fire but some other cause remotely connected with fire, it is not recoverable, unless specifically provided for. Fire risks do not cover damage by explosion, unless the explosion causes actual ignition, which spreads into fire. The cause of the fire is immaterial, unless it was the deliberate act of the insured.
Liability of the Banker in Case of Wrongful Dishnour of Cheques: A Banker has the statutory obligation to honour his customers
cheques unless there are valid reasons for refusing payment of the same. In case he dishonours the cheque, intentionally or by mistake, he is liable to compensate the customer for the loss suffered by him. According to section 31 of the Negotiable Instrument Act, 1981, the banker is liable to compensate the drawer for any loss or damage caused by the default on his part in dishonouring the cheques without sufficient reason. The banker thus incurs heavy liability for any mistake or default committed in dishnouring his customers cheques.
Circumstances under which the Creditors Voluntary Winding up takes place: A Creditors Voluntary Winding u takes place when a
company is unable to pay its liabilities in full [i.e., when a company is insolvent] and still wants to undergo voluntary winding up. In this case, creditors voluntary winding up is reslated. So as to protect the into of the creditors.
What is an EGM (Extraordinary General Meeting), when it is to be convened? An Extraordinary General Meeting (EGM) is a meeting of
the shareholders of a company which is not an AGM. When certain urgent issue arises in relation to the working of the company which requires the input of the members and is too serious or urgent to wait until the next AGM, an EGM is held. Members and/or shareholders must be informed of the purpose of the EGM so that they can prepare themselves to discuss and exercise intelligent judgment over the matters under consideration. A notice of at least 21 days before the meeting must be given to the members unless consent is accorded to a shorter notice by members, holding not less than 95% of voting rights in the company.On the receipt of a valid requisition, the board of directors of a company shall within 21 days move to call an EGM and the meeting should be held within 45 days from the date of the requisition.