Legal Environment of Business

Program : MBA Course Code : SL GM 502

:
Semester II Sessions : 33
:
Class of 2010 Credit :3

Objective

To familiarize with the legal environment in which the business entities operate and provide
basic appreciation of relevant legal provisions and their impact on business decisions and
operations.

REFERENCE BOOKS AUTHOR / PUBLICATION

Legal Environment of Business
Student's Guide to Company Law
Student's Guide to Income Tax
Company Law & Secretarial
Practice
Income Tax Law & Practice
Elements of Mercantile Law
SEBI Guidelines
Mercantile Law
Banking Law and Practice
Information Technology Act
ICFAI
A K Majumdar -Taxmann Publishers
V K Singhania - Taxmann Publishers
N D Kapoor - Sultan Chand & Sons
Gaur & Narang - Ludhiania Kalyani
Publisher
N D Kapoor - Sultan Chand & Sons
Nabhi Publication
Avatar Singh – Eastern Book
Company
Vashney – Sulton Chand, 2002
Publications
Satya Prasad – Asia Law House

Detailed Syllabus
Introduction to Legal Environment
Meaning of Law – Purpose of Law – Sources of Law – Classification of Law – Torts – National
and International Law – Evolution of Mercantile / Business Law – International Business Law –
Justice Delivery System in India.
Business Contracts
• Legal Elements of Contracts – Parties – Offer – Acceptance – Conside ration
← Types of Contracts – Valid Contracts – Voidable Contracts – Breach of Contracts and
Remedies – Payment of Damages
← Contracts of Agency – Rights and Duties of Principal and Agent – Termination of
Agency
← Special Contracts – Guarantee / Indemnity / Letter of Credit / Lien / Set Off
← Important Clauses in Corporate & Commercial Agreements

-Description of Parties – Recitals of Subject – Consideration – Covenants and Undertakings

– Signatures and Attestation – Endorsement and Supplement Deeds – Stamp Duty and
Registration – Applicable Law – Force Majeure – Notice – Arbitration.
• Employer and Employee Contracts
-Conditions – Obligations – Termination – Liquidated damages – Data Privacy –
Confidentiality – Indemnification.
Non-Corporate Business Entities
← Legal Formalities and Registration – Rights and Liabilities of Members – Sole
Proprietorship – Partnership – society
0 • Limited Liability Partnership Firms (LLPs)
1 – Hindu Undivided Family (HUF).
← Insolvency – Acts of Insolvency – Consequences.

Law Relating To Corporate Business Entities

← Advantages of a Corporate Entity – Salient Features of a Company – Lifting the
Corporate Veil – Types of Companies – Difference between Private and Public Companies
← Incorporation of a Company – Documents of Incorporation
← Raising of Capital from Public – Prospectus – SEBI Guidelines.
← Share Capital and Allotment
← Transfer of Shares – Buyback of Shares – Dividend on Shares.
← Company Management – Qualifications for Appointment of Directors – Duties and
Liabilities of Director

- Meetings and Resolutions

- Board Meetings – Statutory Meetings
-Annual General Meeting – Extraordinary General Meeting
-Voting- Proxy -Resolutions. -Reconstruction and Amalgamation -Mergers and Acquisitions
- Winding up
Property Law for Business
0 • Classification of Property – Moveable and
1 Immovable Property / Tangible and Intangible Assets
← Sale and Agreement to Sell – Rights and Duties of Seller and Buyer – Rights of Unpaid
Seller (Sale of Goods Act)
← Borrowing against Property as Security

-Hypothecation / Pledge of Current Assets – Right s and Liabilities of Parties

 - Mortgage of Immovable Property
- Registration of Charges by Companies
← Hire Purchase / Lease of Property
← Exchange / Gift / Assignment of Property
← Intellectual Property Rights

- Classification – Protection of IPR Law against infringement – Remedies.

Business and Tax Laws
Classification of Taxes – Income Tax – Wealth Tax – Excise Customs Duty – Sales Tax – VAT
– Service Tax.
Financial Services – Legal and Regulatory Environment
• Banking – Regulation of Banking in India – RBI & Banking R egulations Act
- Negotiable Instruments Act
- Kinds of Negotiable Instruments – Special Characteristics – Cheques – Crossing of
Cheques – Endorsements
-Banker’s Duties and Liabilities for Collection and Payment of Cheques
-Dishonor of Cheques – Liabilities of Parties and Penalties
-SARFAESI Act – Salient Features – Execution.
• Insurance
-Essential Elements of Insurance Contracts
-Principles of Insurance – Insurable Interest – Indemnity – Causa Proxima – Risk –
Mitigation of Loss – Subrogation – Contribution – Reinsurance – Double Insurance.
-Standard Clauses in Insurance Policies – Fire Insurance – Marine Insurance – Liability
Insurance.
- IRDA – Role and Functions
• Trading of Securities – Market Regulation by Companies Act – Securities Contracts
Regulation – SEBI – Stock Exchanges – Depositories.
Business Transactions and Cyber Law
Application of IT Act, 2000 to Contracts and Transactions
Digital Signature and Authentication of Electronic Records
Cyber Offences and Penalties.

Competition and Consumer Protection

← Consumer Protection Law in India – Redressal Procedure
← Competition Law in India – Prohibition of Anti-competitive Agreements and Abuse of
Dominant Position
← Restrictive and Unfair Trade Practices
← Product Liability
← Public Interest Litigation in India

• Class Action Suits in US.

Environment Protection and Business Obligations
← Types of Pollution
← Rule of Strict Liability and Absolute Liability
← Applicability of Criminal Law
← Environmental Legislations in India – An Overview.

Alternative Dispute Resolution Mechanisms (ADR)

← Alt ernative Dispute resolution Mechanisms
← Arbitration and Conciliation Law in India.

Cases
Faculty will be handling eight or more cases.
← Nuisance Must Happen!
← Overseas Liability for Credit Card Issuers
← Can Advertisements Create a Contract?
← Contracts over Telephone
← But …… Minor is an Innocent!
← Identity Crisis in Contracts
← Unilateral Mistake and Blind Belief
← Stranger to Contract
← Confusion over Subject
← Claim beyond Sight
← VRS: Is It a Right of the Employee?
← Agreeing under Pressure
← Is a Bank Guarantee More than a Normal Guarantee?
← Proof of Agency: Whose Burden?

← Letter of Credit and Sale

← Can there be a Pledge by Documents?
← Implied Authority of Partners
← Salomon and Salomon: Is One and the Same?
← Is a Company a Citizen?
← Do Workmen Have a Stake in the Company?
← “Monsoon Wedding”: Only by Invitation
← Harsh Truths in Software Piracy
← Recognize Profit : Ignore Loss!
← Purchase of Business vs. Purchase of Property
← Over Flowing Cash: Is it a Losing Business?
← Dishonour of Cheque: Jeopardy of a Joint Account Holder
← Stop Payment Cannot Save Criminal Action?
← Should Insurer Compensate Loss from Riots?
← Manipulating Public Issue: Is it a Fraud?
← Know Your Customer
← Invasion of Privacy over Internet
← Car Parking in Hotel Premises at Risk

← Seeds Fail the Farmer

← Trade and Environment: Conflict and Compatibility
← Arbitration Clause is Enough to Arbitrate

(Source: Case Studies in Management Volume IX)

Suggested Schedule of Sessions

No. of
Topic
Sessions
Introduction to Legal
2
Environment
Business Contracts 6
Non-Corporate Business
2
Entities
Law Relating to 6
Corporate Business
Entities
Property Law for
5
Business
Business and Tax Laws
Financial Services –
25
Legal and Regulatory
Environment
Business Transactions
1
and Cyber Law
Competition and
2
Consumer Protection
Environment Protection
and Business 1
Obligations
Alternative Dispute
1
Resolution Mechanisms
Total 33