Legal aspects of Business

Unit 1:1) What is a Contract?

2) Legal implication of Contract?
3) Indian Contract Act 1972

Unit 2:1)
2)
3)
4)

Bailment(Handling to other Person) and Pledge(Mortgage)

Indemnity(Insurance) and Guarantee(Getting into Shows of other Person)
Sale of Goods Act,1930
Contract of Agency

Unit 3:1) Industrial law

Indian Factories Act ,1948
Indian Trade Union Act, 1926

Unit 4:Company law

1)
2)
3)
4)

Company meaning & definition of Company

Formation of a company
Rise , deities and Liabilities of Directors
Winding up of Company

Note:-in joint shared company the capital is mounted by both the owners and the Company

Unit 5:Associated to the general public

1)
2)
3)
4)

Consumer Protection Act ,1986

Information technology Act ,2000
Right of information Act
SEB-Securities Exchange Board of India

Unit 1 :-Indian Contract Act ,1972

Classification of a Contract

a) Validity
Variable Contract
Void agreement
Void contract
Illegal contract
Unenforceable contract

E) Under the Law

1. Formal Contract
a)Contracts of Rear
b)Contracts wider
Rear
2. Simple Contracts
D) Performance

B) Formation
1. Express Contract

of

2. Implied Contract

Parties

3. Quasi Contract

1.Unilateral

4. E-Commerce contract

2.Bilateraal

C) Performance
1. Executed
2. Executory

Proposal (Proposing a Project in an Organization)

Promise (Being In charge of the proposal)

Consideration (What will I get in Return)

Agreement (Signing in a Paper)

Legally Enforceable
(Permitted under the law)

Contract

Legally Unenforceable
(Going against the law)

Void Agreement (Invalid)

Agreement + Legal Enforcement

Essential Elements of a Contract

1)
2)
3)
4)
5)
6)
7)

8)
9)

Offer and Acceptance (Two parties giving and taking and Vice-versa)
Intention to create legal Relationship
Lawful Consideration (What you get , as the benefit should be legal)
Capacity of Parties (Should not be Drunken/ mentally retorted / Minor / intoxicated
person)we should not enter in to contract with those people
Free consent ->Mean approval
(Should not be threatened or forced to sign a contract)->we call it as coercion
Legality of Objective:-the purpose of the contract should be legal
Agreement not declared void:- there are some contracts which is already considered as
void .Entering into such contract will be declared as void such as teasing a girl,
kidnapping, harassment
Certainty and possibility of the performance:-whatever act should be expected from
you should be certain and should be possible to perform
Legal Formalities:-rules are formalities by law

Classification of contract
1) Validity: If any one of the essential element is missing called void contract
Which is not enforceable by law
Will have illegal ,immoral ,Unethical contract
2) Formation: Everything expressed to you in the form of writing or telling or something ,where
both have agreed to something
Implied contract is like purchasing a ticket in the train (here ticket is a valid
agreement , it is understood from the situations)
Quasi contract means unfinished ,like failing to accomplish the agreement at any
case due to unknown reasons (Ex: Malaysian airlines :they promised to land the
flight to Malaysia but unfortunately accident happened and they failed to
accomplish the contract)
3) Performance level: Executed :- the task which is already done
Executory:-the task or agreement which s to be done
4) Performance of the parties: Unilateral:-one side the task has been performed and the other side the task has
to be performed Ex: Bank transactions
Bilateral:- both the sides the task or the agreement is yet to be performed
5) Under the law: Formal contract:- the contract entered into companies in front of court
Simple contract:-contracts like sale contracts

Essential elements of contract

1) Offer and acceptance:-an offer is a proposal from one party to the other party to enter
into legally binding agreement with him. The person who is making the offer is called as
offerer or the promiser. The person to whom the offer is being given is called as the
acceptor or the offeree
Offer

Implied
Express

general (for the public)

specific
(For specific person)

An acceptance is an act of accenting to an offer

Acceptance
Express

Implied

2) Consideration:- it means something in return. It is not a gift and should be voluntarily

given. It should be lawful ,it should not be immoral or charity donation cannot be taken
as consideration
(Doctrine or privity of contract)
Relationship subsisting between two parties who have entered into continental
obligations this creates:
(i)
Mutuality of bond
(ii)
Create a legal bond
3) Capacity of parties:-every party is competent to enter into the contract who is
i)
of the age of maturity
ii)
of the sound mind
iii)
is not disqualified from contracting
4) Free consent :- consent means accepting to an offer when both the offerer and the
acceptor agree upon something in the same sense
Note :Coercion :-it means committing or threatening to commit any act forbidden under the
IPC(Indian Penal Court ,1860) with an intention of making any person to enter into
agreement
Undue influence:- one of the parties has enough possession to dominate the will of
another relation subsisting between the parties
Misrepresentation: it is the misstatement of a material fact made innocently with
honest belief on its truth. This also is not accepted by the law
Fraud:-fraud exists when it is known that fake representation has been made
(i)
Knowingly
(ii)
Concealment of a material fact
(iii)
Recklessly not caring weather its true or false
5) Mistake:- Mistake is enormous belief of something
Mistake of law: you should not tell that you are not aware of the laws
Mistake of fact: you should keep update of the current situations in that particular
country where you want to do business and you should not tell that you dont know that
6) Legality of object:
Illegal:
If It is forbidden by the law
If it is defeated by provisions of any law

If it is fraudulent if it is immoral
If it causes any material damage
If it is opposed by public policy
Agreements entered with enemy country
Agreements entered to commit crime
Agreement entered to restrain of marriage
Agreements oppose to duties
Agreements restricting to personal liberty
Marriage breakage

Wagering Agreements: (this is a kind of gambling)

Promises to pay
Uncertain event
No control over the event
No other intense
Win / loss situation

Definition: Agreement between two parties by which one promises to pay money with the
happening of some uncertain event

The essence of gambling and wagering is one party will win and the other party will
loose

Contingent contract:

Happening or not happening of the future event

Uncertain event
Collaterally related event

It is a contract depending upon happening of an uncertain event

7) Performance of the parties: when parties of a contract fulfill the obligations of arriving
in the contract and manner described

Legal rules of performance:

1)
2)
3)
4)
5)
6)
7)

it must be unconditional
whole quantity contracted for the whole obligate
person should be willing to perform
made to the proper person
made at the proper time and place
made to one of the several joint promises
in case of tender of goods

What is need not be performed:

1)
2)
3)
4)

Impossible
Substitute to new contract
Exceedance of time and acceptance
Promise neglects to removable failed to promises to perform

Who can perform?

1)
2)
3)
4)

Promises himself
Legal up
Agent
Third person

Discharge of control
1)
2)
3)
4)
5)
6)

By agreement
By performance
By impossibility
By lapse of time
By operation of low
By branch of contract