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SIKKIM MANIPAL UNIVERSITY-DE Vernacular Programs Assignment format

Student Name: Registration Number: Subject Name: Legal Aspect of Business

Course: LC Code: Subject Code:

Q1:- Discuss the nature and significance of business law. Answer:- The term law is used in many senses: you may speak of the law of physics, mathematics, science, or the laws of the football or health. In its widest sense, law means any rule of conduct, standard or pattern, to which actions are required to conform; if not conformed, sanctions are imposed. When we speak of the law of a State, we use the term law in a special and strict sense. Nature and Significance of Business Law:1. Law is a body of rules:- These rules prescribe the conduct, standard or pattern to which actions of the persons in the state are required to conform. However, all rules of conduct do not become law in the strict sense. We resort to various kinds of rules to guide our lives. For example, our conduct may be guided by a rule such as do not be arrogant or do not be disrespectful to elders or women. These are ethical or moral rules by which our daily lives are guided. If we do not follow them, we may lose our friends and their respect, but no legal action can be taken against us. 2. Law is for the guidance or conduct of persons both human and artificial:The law is not made just for the sake of making it. The rules embodied in the law are made, so as to ensure that actions of the persons in the society conform to some predetermined standard or pattern. This is necessary so as to ensure continuance of the society. No doubt, if citizens are self-enlightened or self-controlled, disputes may be minimized, but will not be eliminated. Rules are, therefore, drawn up to ensure that members of the society may live and work together in an orderly manner. Therefore, if the rules embodied in the law are broken, compulsion is used to enforce obedience, and certain consequences ensue. 3. Law is imposed:- Law is imposed on the members to bring about an order in the group, enabling it to continue and prosper. It is not something which may or may not be obeyed at the sweet will of the members of society. If you cannot impose a rule it is better not to have it. Thus, law is made obligatory on the members of the society. 4. Law is enforced by the executive:- Obviously, unless a law is enforced it ceases to be a law and those persons subject to it will regard it as dead. For example, if A steals Bs bicycle, he may be prosecuted by a court and may be punished. Also, the court may order the restitution of the bicycle to its rightful owner i.e., B. If the government passes many laws but does not attempt to enforce them, the citizens lose their respect for government and law, and society is greatly weakened. The force used is known as sanction which the state administers to secure obedience to its laws.

SIKKIM MANIPAL UNIVERSITY-DE Vernacular Programs Assignment format

5. The state:- A state is a territorial division, with people therein subject to a uniform system of law administered by some authority of the state. Thus, law presupposes a state. 6. Content of law:- The law is a living thing and changes throughout the course of history. Law responds to public opinion and changes accordingly. Law can never be static. Therefore, amendments are made in different laws from time to time. For example, the Monopolistic and Restrictive Trade Practices Act, 1969, has been subjected to many amendments since its inception in 1969. 7. Two basic ideas involved in law:- The two basic ideas involved in any law are: (i) to maintain some form of social order in a group and (ii) to compel members of the group to be within that order. These basic ideas underlie formulation of any rules for the members of a group. A group is created because first, there is a social instinct in the people to live together and secondly, it helps them in self-preservation. Rules are made by the members of the group, so that the group doesnt whither away. 8. Law is made to serve some purpose which may be social, economic or political:- Some examples of law in the widest sense of the term. Law in its widest sense may include: (i) Moral rules or etiquettes, the non-observance of which may lead to public ridicule, (ii) Law of the Land the non-observance of which may lead to arrest, imprisonment, fines, etc., (iii) Rules of international law, the nonobservance of which may lead to social boycott, trade-sanctions, cold war, hot war, proxy war, etc.

Q2:- What is Partnership? Briefly state special features of a partnership on the basis of which its existence can be determined under the Indian Partnership Act? Answer:- Partnership:- A partnership is defined as the relationship between persons who have agreed to share profits of a business carried on by all, or by any of them acting for all. On analysis of the definition, certain essential elements of partnership emerge. These elements must be present so as to form a partnership and are discussed below. Features of partnership 1. Partnership is an association of two or more than two persons:- There must be at least two persons who should join together to constitute a partnership, because one person cannot become a partner with himself. These persons must be natural persons having legal capacity to contract. Thus, a company (which is an artificial person) cannot be a partner. Similarly, a partnership firm cannot be a partner of another partnership firm. As regards maximum number of partners in a partnership firm, Sec.11 of the Companies Act, 1956, puts the limit at 10 in case of banking business and 20 in case of any other business. 2. Partnership must be the result of an agreement between two or more persons:An agreement presupposes a minimum number of two persons. As mentioned above, a partnership to arise, at least two persons must make an agreement. Partnership is the result of an agreement between two or more persons (who are known as partners after the partnership comes into existence).

SIKKIM MANIPAL UNIVERSITY-DE Vernacular Programs Assignment format

3. The agreement must be to carry on some business:- The term business includes every trade, occupation or profession [Sec.2(b)]. Though the word business generally conveys the idea of numerous transactions, a person may become a partner with another even in a particular adventure or undertaking (Sec.8). Unless the person joins for the purpose of carrying on a business, it will not amount to partnership. 4. The agreement must be to share profits of the business:- The joint carrying on of a business alone is not enough; there must be an agreement to share profits arising from the business. Unless otherwise so agreed, sharing of profits also involves sharing of losses. But whereas the sharing of profits is an essential element of partnership, sharing of losses is not. Example: A, a trader, owed money to several creditors. He agreed to pay his creditors out of the profits of his business (run under the creditors supervision) what he owed to them. Held, the arrangement did not make creditors partners with A in business [Cox v. Hickman, (1860) 8 H.L.C., 268]. Q3:- Examine the rights of a consumer enshrined under the Consumer Protection Act, 1986. Answer:- For the first time in the history of consumer legislation in India, the Consumer Protection Act, 1986 extended a statutory recognition to the rights of consumers. Sec.6 of the Act recognizes the following six rights of consumers: 1. Right to safety:- The right to be protected against the marketing of goods and services which are hazardous to life and property. 2. Right to be informed:- The right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, as the case may be, so as to protect the consumer against unfair trade practices. 3. Right to choose: It means right to be assured, wherever possible, access to a variety of goods and services at competitive prices. In case of monopolies, say, railways, telephones, etc., it means right to be assured of satisfactory quality and service at a fair price. 4. Right to be heard:- The consumers interests will receive due consideration at appropriate forums. It also includes right to be represented in various forums formed to consider the consumers welfare. 5. Right to seek redressal:- It means the right to seek redressal against unfair practices or restrictive trade practices or unscrupulous exploitation of consumers. It also includes right to fair settlement of the genuine grievances of the consumers. 6. Right to consumer education:- It means the right to acquire the knowledge and skill to be an informed consumer.

Q4:- What do you mean by bailment? What are the requisites of a contract of bailment? Explain. Answer:- 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,
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SIKKIM MANIPAL UNIVERSITY-DE Vernacular Programs Assignment format

be returned or otherwise disposed of according to the directions of person delivering them. The person delivering the goods is called the bailor 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 suit-length to a tailor for stitching. (v) A delivers some gold biscuits to B, a jeweller, for making jewellery. (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. Requisites of a contract of bailment: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 authorised 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. 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., bailor; (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 (v) above, but without reward.
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SIKKIM MANIPAL UNIVERSITY-DE Vernacular Programs Assignment format

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 recognised written document, whereby rights are created in favour 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 recognised by Sec.13. There are certain instruments which are recognised 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. 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 . Negotiable Instrument:Ambiguous instrument (Sec.17):An ambiguous instrument is one which may be construed either as a promissory note or as a bill of exchange. Regarding such instruments, Sec.17 provides that the holder may, at this election treat it as either and the instrument shall be thenceforward treated accordingly. Thus, a bill of exchange drawn by a person upon himself may be construed as a promissory note. Inchoate stamped instruments (Sec.20):An inchoate instrument means an instrument that is incomplete in certain respects. Where one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in India and either wholly
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SIKKIM MANIPAL UNIVERSITY-DE Vernacular Programs Assignment format

blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein but not exceeding the amount covered by the stamp. Promissory note:A promissory note is an instrument in writing (not being a bank or a currency note) containing an unconditional undertaking, signed by the maker to pay a certain sum of money to, or to the order of, a certain person or to the bearer of the instrument (Sec.4). The following are two illustrations of promissory notes. Where A signs instruments in the following terms: (i) I promise to pay B or order Rs 500. (ii) I acknowledge myself to be indebted to B in Rs 1000, to be paid on demand, for value received. But, the following are NOT promissory notes: (i) Mr B, I.O.U. (I owe you) Rs 1000. (ii) I am liable to pay you Rs 500. (iii) I promise to pay B Rs 500 and all other sums which shall be due to him. (iv) I promise to pay B Rs 500, first deducting thereout any money which he may owe me. (v) I promise to pay B Rs 1500 on Ds death, provided he leaves me enough to pay that sum. (vi) I promise to pay B Rs 500 seven days after my marriage with C. (vii) I promise to pay B Rs 500 and to deliver to him my white Maruti Car 1 January next. Specimen of a promissory note Rs 10,000 New Delhi 1100 01 Jan. 10, 2006 On demand [or six months after date] I promise to pay X or order the sum of rupees ten thousand with interest at 12 per cent per annum only for value received. To X Sd/-A Address ____________________________ Stamp Parties to a promissory note 1. The maker the person who makes the note promising to pay the amount stated therein. 2. The payee the person to whom the amount of the note is payable. 3. The holder is either the original payee or any other person in whose favour the note has been endorsed. 4. The endorser the person who endorses the note in favour of another person. 5. The endorsee the person in whose favour the note is negotiated by indorsement. Bill of exchange A bill of exchange is defined by Sec.5 as an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of, a certain person, or to the bearer of the instrument. Specimen of a bill of exchange Rs 10, 000 New Delhi 110 016 Jan. 13, 2006 Six months after date pay to A or order/bearer the sum of ten thousand rupees only for value received. To X Sd/-Y Address _______________________________
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SIKKIM MANIPAL UNIVERSITY-DE Vernacular Programs Assignment format

Here Y is the drawer, A is the payee and X is the drawee. X will express his willingness to pay accepting the bill by writing words somewhat as below across the face of the bill: ACCEPTED Sd-X Jan. 16, 2006. The specimen given above is of a usance bill, payable after a specified period of time. A bill of exchange may be drawn payable at sight, i.e., on demand or payable after certain time after sight also. Parties to a bill of exchange The parties of bill of exchange are: The drawer: The person to whom the amount of the bill is payable. The drawee: The person on whom the bill is drawn. Thus, drawee is the person responsible for acceptance and payment of the bill. In certain cases however a stranger may accept the bill on behalf of the drawee. The payee: The person to whom amount of the bill is payable. It may be the drawer himself or any other person. The holder: It is the original payee but where the bill has been endorsed, the endorsee. In case of a bearer bill, the bearer or possessor is the holder. The endorser: It is the person who endorses a bill. The endorsee: It is the person to whom the bill is negotiated by endorsement.

Q6:- Write short note on Intellectual property right. A leaves a cow in the custody of B to be taken care of. The cow gives birth to a calf. Who will take the calf and why? Answer:- The importance of intellectual property in India is well established at all levels- statutory, administrative and judicial. India ratified the agreement establishing the World Trade Organisation (WTO). This Agreement, inter-alia, contains an Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) which came into force from 1st January 1995. It lays down minimum standards for protection and enforcement of intellectual property rights in member countries which are required to promote effective and adequate protection of intellectual property rights with a view to reducing distortions and impediments to international trade. The obligations under the TRIPS Agreement relate to provision of minimum standard of protection within the member countries legal systems and practices.The Agreement provides for norms and standards in respect of following areas of intellectual property

Patents Trade Marks Copyrights Geographical Indications Industrial Designs

SIKKIM MANIPAL UNIVERSITY-DE Vernacular Programs Assignment format

Patents The basic obligation in the area of patents is that, invention in all branches of technology whether products or processes shall be patentable if they meet the three tests of being new involving an inventive step and being capable of industrial application. In addition to the general security exemption which applied to the entire TRIPS Agreement, specific exclusions are permissible from the scope of patentability of inventions, the prevention of whose commercial exploitation is necessary to protect public order or morality, human, animal, plant life or health or to avoid serious prejudice to the environment. Further, members may also exclude from patentability of diagnostic, therapeutic and surgical methods of the treatment of human and animals and plants and animal other than micro-organisms and essentially biological processes for the production of plants and animal.The TRIPS Agreement provides for a minimum term of protection of 20 years counted from the date of filing. Trade Marks Trade marks have been defined as any sign, or any combination of signs capable of distinguishing the goods or services of one undertaking from those of other undertakings. Such distinguishing marks constitute protectable subject matter under the provisions of the TRIPS Agreement. The Agreement provides that initial registration and each renewal of registration shall be for a term of not less than 7 years and the registration shall be renewable indefinitely. Compulsory licensing of trade marks is not permitted.Keeping in view the changes in trade and commercial practices, globalisation of trade, need for simplification and harmonisation of trade marks registration systems etc., a comprehensive review of the Trade and Merchandise Marks Act, 1958 was made and a Bill to repeal and replace the 1958 Act has since been passed by Parliament and notified in the Gazette on 30.12.1999. This Act not only makes Trade Marks Law, TRIPS compatibility but also harmonises it with international systems and practices. Work is underway to bring the law into force. Copyrights Indias copyright law, laid down in the Indian Copyright Act, 1957 as amended by Copyright (Amendment) Act, 1999, fully reflects the Berne Convention on Copyrights, to which India is a party. Additionally, India is party to the Geneva Convention for the Protection of rights of Producers of Phonograms and to the Universal Copyright Convention. India is also an active member of the World Intellectual Property Organisation (WIPO), Geneva and UNESCO.The copyright law has been amended periodically to keep pace with changing requirements. The recent amendment to the copyright law, which came into force in May 1995, has ushered in comprehensive changes and brought the copyright law in line with the developments in satellite broadcasting, computer software and digital technology. The amended law has made provisions for the first time, to protect performers rights as envisaged in the Rome ConventionSeveral measures have been adopted to strengthen and streamline the enforcement of copyrights.

SIKKIM MANIPAL UNIVERSITY-DE Vernacular Programs Assignment format

Geographical Indications The agreement contains a general obligation that parties shall provide the legal means for interested parties to prevent the use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the goo. There is no obligation under the Agreement to protect geographical indications which are not protected in their country or origin or which have fall en into disuse in that country. A new law for the protection of geographical indications, viz. the Geographical Indications of Goods (Registration and the Protection) Act, 1999 has also been passed by the Parliament and notified on 30.12.1999 and the rules made there under notified on 8-3-2002. Industrial Designs Industrial designs refer to creative activity which result in the ornamental or formal appearance of a product and design right refers to a novel or original design that is accorded to the proprietor of a validly registered design. Industrial designs are an element of intellectual property. Under the TRIPS Agreement, minimum standards of protection of industrial designs have been provided for. As a developing country, India has already amended its national legislation to provide for these minimal standards. The essential purpose of design law it to promote and protect the design element of industrial production. It is also intended to promote innovative activity in the field of industries. The existing legislation on industrial designs in India is contained in the New Designs Act, 2000 and this Act will serve its purpose well in the rapid changes in technology and international developments. India has also achieved a mature status in the field of industrial designs and in view of globalization of the economy, the present legislation is aligned with the changed technical and commercial scenario and made to conform to international trends in design administration. This replacement Act is also aimed to in act a more detailed classification of design to conform to the international system and to take care of the proliferation of design related activities in various fields. Obligations envisaged in respect of industrial designs are that independently created designs that are new or original shall be protected. Individual governments have been given the option to exclude from protection, designs dictated by technical or functional considerations, as against aesthetic consideration which constitutes the coverage of industrial designs. The right accruing to the right holder is the right to prevent third parties not having his consent from making, selling or importing articles being or embodying a design, which is a copy or substantially a copy of the protected design when such acts are undertaken for commercial purposes. The duration of protection is to be not less than 10 years.

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