May 2018 Research Methods

What is the difference between Pure and Applied Research?

Pure vs. Applied Research
Pure research is conducted without any specific goal. Applied research is conducted with a specific goal in
mind.
Aim
The main aim is to advance knowledge. The main aim is to solve a specific and practical
problem.
Nature
Pure research is exploratory in nature. Applied research is descriptive in nature.
Theories and Principals
Pure research identifies new ideas, theories, Applied research is based on the theories, principals
principals and new ways of thinking. discovered through pure research.
Findings
Findings of pure research usually have a future use, Findings of applied research always have a current use.
not a current use.
Summary – Pure vs. Applied Research
The difference between pure and applied research depends on the goal of the research. Pure research, also
known as basic research, has no specific goal, but it advances the knowledge and contributes to the
generation of new theories, principals and ways of thinking. Applied research, on the other hand, aims to
solve a specific and practical problem. Applied research is also based on the findings of pure research.

What are the uses of social science research?

 Social science is involved everywhere starting from healthcare sector to business world. It also
contributes to social welfare, formulation of theories, and development of methodology, social
planning, prediction, and control.
 Social research also contributes to societal development by increasing creativity and innovation.
 The new idea leads to the up-gradation of society.
 Focusing on research enhances the knowledge thereby giving more power to the society.
 Creativity and innovation help in formulating new theories that help in the upliftment of the societal
behavior.
 Social science research studies various theories on motivation, personality, leadership, team skills,
etc. that are already accepted.
 It changes the already accepted principles through its new research methodologies.
 Social research studies the society and helps in making laws for the benefit of the government.
 It helps in smooth functioning of the society by bringing social order and control.
 The research studies the trends of the past and predicts the future.
 The prediction of the future trends many tasks may it be businesses, government or the society.
 The government can make the rules by taking in consideration about the future trends and the
businesses can design their strategies in the same way.

What are the characteristics of a good research problem?

Characteristics of a good thesis research problem
 1 The problem can be stated clearly and concisely.
2 The problem generates research questions.
3 It is grounded in theory.
4 It relates to one or more academic fields of study.
5 It has a base in the research literature.
6 It has potential significance/importance.
7 It is do-able within the time frame, budget.
8 Sufficient data are available or can be obtained.
9 The researcher’s methodological strengths can be applied to the problem.
10 The problem is new; it is not already answered sufficiently.
Explain the meaning and significance of a research design.
A research design is a framework or blueprint for conducting the marketing research project. It details the
procedures necessary for obtaining the information needed to structure or solve marketing research
problems. In simple words it is the general plan of how you will go about your research.

Definitions of Research Design

According to Kerlinger
Research design is the plan, structure and strategy of investigation conceived so as to obtain answers to
research questions and to control variance.

To be effective, a research design should furnish at least the following details.

1. A statement of objectives of the study or the research output.
2. A statement of the data inputs required on the basis of which the research problem is to be solved.
3. The methods of analysis which shall be used to treat and analyze the data inputs.
The need for research design is as follows:
 It reduces inaccuracy;
 Helps to get maximum efficiency and reliability;
 Eliminates bias and marginal errors;
 Minimizes wastage of time;
 Helpful for collecting research materials;
 Helpful for testing of hypothesis;
 Gives an idea regarding the type of resources required in terms of money, manpower, time, and
efforts;
 Provides an overview to other experts;
 Guides the research in the right direction.

Define hypothesis. What are its types?

A hypothesis (plural: hypotheses), in a scientific context, is a testable statement about the relationship
between two or more variables or a proposed explanation for some observed phenomenon. In a scientific
experiment or study, the hypothesis is a brief summation of the researcher's prediction of the study's
findings, which may be supported or not by the outcome. Hypothesis testing is the core of the scientific
method.
TYPES OF HYPOTHESIS • Simple • Complex • Empirical • Null • Alternative • Logical • statistical
 SIMPLE HYPOTHESIS • Simple hypothesis is that one in which there exits relationship between
two variables one is called independent variable or cause and the other is dependent variable or
effect. • Ex. Smoking leads to cancer • The higher ratio of unemployment leads to crimes.
 COMPLEX HYPOTHESIS • Complex hypothesis is that one in which as relationship among
variables exists. • In this type dependent and independent variables are more than two • Ex. Smoking
and other drugs leads to cancer, tension, chest infections etc. • The higher ration of unemployment
poverty illiteracy leads to crimes like dacoit etc.
 EMPIRICAL HYPOTHESIS • Empirical which means it is based on evidence. • In scientific method
the word "empirical" refers to the use of working hypothesis that can be tested using observation and
experiment. • Empirical data is produced by experiment and observation.
 QUESTION FORM OF HYPOTHESIS • It Is the simplest form of empirical hypothesis. • In simple
case of investigation and research are adequately implemented by resuming a question. • Ex. how is
the ability of 9th class students in learning moral values?
 NULL HYPOTHESIS • Null the hypothesis that there is no significant difference between specified
populations, any observed difference being due to sampling or experimental error. • It is denoted by
H0
 ALTERNATE HYPOTHESIS • The alternative hypothesis, denoted by H1 or Ha, • Is the hypothesis
that sample observations are influenced by some non-random cause.
 STATISTICAL HYPOTHESIS • A hypothesis which can be verified statistically called statistical
hypothesis. • The statement would be logical or illogical but if statistic verifies it, it will be statistical
hypothesis..
 DIRECTIONAL HYPOTHESIS • Directional Hypothesis predicts the direction of the relationship
between the independent and dependent variable. • Example- High quality of nursing education will
 lead to high quality of nursing practice skills. • Girls ability of learning moral science is better than
boys.
 NON DIRECTIONAL HYPOTHESIS • Non -directional Hypothesis predicts the relationship
between the independent variable and the dependent variable but does not specific the directional of
the relationship. • Example- teacher student relationship influence student’s learning. • There is no
significant difference between 9th class boys and girls abilities of learning moral values.
 CASUAL HYPOTHESIS • Causal Hypothesis predicts a cause and effects relationship or interaction
between the independent variable and dependent variable. • This hypothesis predicts the effect of the
independent variable on the dependent variable
 ASSOCIATIVE HYPOTHESIS • Associative Hypothesis predicts an associative relationship
between the independent variable and the dependent variable. • When there is a change in any one of
the variables, changes also occurs in the other variable.

List the types of Questions to be avoided in Questionnaire.

Mistake #1: Leading questions
Mistake #2: Assuming prior knowledge or understanding
Mistake #3: Starting with demographics
Mistake #4: Asking two questions in one
Mistake #5: Inadequate response options
Mistake #6: Grammatical inconsistencies
Mistake #7: Using negative question wording
Mistake #8: Too many open-ended questions
Mistake #9: Asking too much of respondents
Mistake #10: Unnecessary questions

What do you mean by tabulation? Discuss the characteristics of a good table.

Tabulation of Data. The process of placing classified data into tabular form is known as tabulation. A table
is a symmetric arrangement of statistical data in rows and columns. Rows are horizontal arrangements
whereas columns are vertical arrangements.
A good statistical table in research must contain the following characteristics:
- Table Number
- Title for the table
- Caption- Headings for columns
- Stubs- Headings for rows
- Body
- Head note which is a basic description of the data present in the table. This should be present below the
title and in brackets.
- Footnotes which should explain important points in the table that a reader may not understand by simply
reading

What are the principles of good report writing?

1. Clarity and coherence
2. Writing correctly
3. Brevity
4. Objective
5. Styled to the readers taste
6. Readability
7. Effective arrangement
8. Continuity of ideas
9. Consistency
10. Planning and organizing
11. Interest and appeal
12. Primarily a craft
13. Concentrate on central ideas
Describe the steps involved in a research process.

Evaluate the main characteristics of a good

hypothesis.

Discuss the various factors affecting the size of the sample.

Explain the different types of interviews
There are three fundamental types of research interviews, these are:
 Structured,
 Semi-structured
 Unstructured.
Structured Interview
The structured interview is by its very nature a very rigid instrument,In the view of Gill et al., (2008) the
structured interviews is defined as a “verbally administered questionnaire” which does not use prompts and
provides very little scope for follow up questions to investigate responses which warrant more depth and
detail. The advantage of such an approach is that this extra structure allows for the interview to be
administered quickly, though it is of little use if ‘depth’ is required.
Unstructured Interview (In-depth interview)
The opposite to this type of approach is the unstructured interview also referred to by Legard et al., (2003)
as the In-depth interview. Legard et al., (2003) describe the unstructured interview as a “conversation with a
purpose” (p. 138) as it is intended to allow researchers to collect in-depth information. This is a view also
shared by Morse & Corbin (2003) who describe the unstructured interview as a shared experience “in which
researchers and interviewees come together to create a context of conversational intimacy in which
participants feel comfortable telling their story”. In the view of Legard et al., (2003) one of the “main
advantages of the in-depth interview is the ability to combine structure with flexibility” (p. 141).
Gill et al., (2008) view the unstructured interview in a slightly different light and argue that the unstructured
interview does “not reflect any preconceived theories or idea and are performed with little or no
organisation”, thereby implying that the process of the unstructured interview can be a little bit chaotic with
little structure or planning.
Semi-structured Interview
The final interview approach is the semi-structured interview, Gill et al., (2008) define this approach as an
interview that has several key questions which help to define the areas to be explored, but also allow the
researcher the flexibility to pursue an idea in a response in more detail, this is a medium between structured
and unstructured interviews.

Describe the steps involved in the formulation of research problem.

Discuss the content of a research report.

DEC 2017

Define Research. What are its characteristics?

Research is defined as a careful consideration of study regarding a particular concern or a problem using
scientific methods. According to the American sociologist Earl Robert Babbie, “Research is a systematic
inquiry to describe, explain, predict and control the observed phenomenon. Research involves inductive and
deductive methods.”
Inductive research methods are used to analyze the observed phenomenon whereas, deductive methods are
used to verify the observed phenomenon. Inductive approaches are associated with qualitative research and
deductive methods are more commonly associated with quantitative research.
Characteristics of Research
1. A systematic approach is followed in research. Rules and procedures are an integral part of research that
set the objective of a research process. Researchers need to practice ethics and code of conduct while
making observations or drawing conclusions.
2. Research is based on logical reasoning and involves both inductive and deductive methods.
3. The data or knowledge that is derived is in real time, actual observations in the natural settings.
4. There is an in-depth analysis of all the data collected from research so that there are no anomalies
associated with it.
5. Research creates a path for generating new questions. More research opportunity can be generated from
existing research.
6. Research is analytical in nature. It makes use of all the available data so that there is no ambiguity in
inference.
7. Accuracy is one of the important character of research, the information that is obtained while conducting
the research should be accurate and true to its nature. For example, research conducted in a controlled
environment like a laboratory. Here accuracy is measured of instruments used, calibrations, and the final
result of the experiment.

Explain the significance of research in modern times.

What are the factors affecting the research design?

Discuss the need for reviewing literature for research
You need a good literature review because it:
 Demonstrates that you know the field. This means more than reporting what you've read and
understood. Instead, you need to read it critically and to write in such a way that shows you have a
feel for the area; you know what the most important issues are and their relevance to your work, you
know the controversies, you know what's neglected, you have the anticipation of where it's being
taken. All this would allow you to map the field and position your research within the context.
 Justifies the reason for your research. This is closely connected with demonstrating that you know
the field. It is the knowledge of your field which allows you to identify the gap which your research
could fill. However, it is not enough to find a gap. You have also to be able to convince your reader
that what you are doing is important and needs to be done.
 Allows you to establish your theoretical framework and methodological focus. Even if you are
proposing a new theory or a new method, you are doing so in relation to what has been done.
The literature review becomes your springboard for the whole thesis.

What are the advantages and disadvantages of sampling?

Advantages of Sampling
Sampling has various benefits to us. Some of the advantages are listed below:
 Sampling saves time to a great extent by reducing the volume of data. You do not go through each of
the individual items.
 Sampling Avoids monotony in works. You do not have to repeat the query again and again to all the
individual data.
 When you have limited time, survey without using sampling becomes impossible. It allows us to get
near-accurate results in much lesser time
 When you use proper methods, you are likely to achieve higher level of accuracy by using
sampling than without using sampling in some cases due to reduction in monotony, data handling
issues etc.
 By using sampling, you can get detailed information on the data even by employing small amount of
resources.
Disadvantages of Sampling
Every coin has two sides. Sampling also has some demerits. Some of the disadvantages are:
 Since choice of sampling method is a judgmental task, there exist chances of biasness as per the
mindset of the person who chooses it.
 Improper selection of sampling techniques may cause the whole process to defunct.
 Selection of proper size of samples is a difficult job.
 Sampling may exclude some data that might not be homogenous to the data that are taken. This
affects the level of accuracy in the results.

Briefly discuss the various stages in interviewing process.

Explain the meaning and importance of scaling techniques in research.

 Definition: Scaling is the procedure of measuring and assigning the objects to the numbers according to the
specified rules. In other words, the process of locating the measured objects on the continuum, a continuous
sequence of numbers to which the objects are assigned is called as scaling.

What is research report? Discuss its types.

A research report is: – a written document or oral presentation based on a written document that
communicates the purpose, scope, objective(s), hypotheses, methodology, findings, limitations and finally,
recommendations of a research project to others.
Types of Research Report
"Research report can vary differently in its length, type and purpose. Kerlinger (2004) states that the results
of a research investigation can be presented in number of ways via a technical report, a popular report, a
monograph or at times even in the form of oral presentation." Some typology of research reports are more
popular for business purposes can be as:
1. Formal and Informal report
2. Written and Oral report
3. Internal and external report
4. long and short report
5. Descriptive and Analytical report
6. Technical and popular report
But, for the academic report like Thesis, GRP or Project reports, only either descriptive or analytical report
is prepared. A short description of each type of description and analytical report is given below:
1. Descriptive Report
In descriptive report, researcher describes the facts, trends or opinions experienced or gathered during the
research work. In such reports, data presentation and analysis are more importantly presented. Such reports
are more suitable in case of describing current situations, etc. It is more popular method of report writing.
2. Analytical report
As name given analytical, such reports are prepared with analyzing and interpretation of the facts or trends
or situations. This means analytical report is one step ahead than descriptive reports. Such reports follow the
scientific investigation and reporting. Analytical reports also recommend some measures to improve the
situation with stating different problems on the situation. Policy research and managerial research which are
normally funded by any agencies seeking solution of prevailing problems demand analytical report.

Explain the different types of research

Types of research methods can be broadly divided into two quantitative and qualitative categories.
Quantitative research “describes, infers, and resolves problems using numbers. Emphasis is placed on the
collection of numerical data, the summary of those data and the drawing of inferences from the data”.
Qualitative research, on the other hand, is based on words, feelings, emotions, sounds and other non-
numerical and unquantifiable elements. It has been noted that “information is considered qualitative in
nature if it cannot be analysed by means of mathematical techniques. This characteristic may also mean that
an incident does not take place often enough to allow reliable data to be collected”
Types of Research Methods according to Research Design
On the basis of research design the types of research methods can be divided into two groups – exploratory
and conclusive. Exploratory studies only aim to explore the research area and they do not attempt to offer
final and conclusive answers to research questions. Conclusive studies, on the contrary, aim to provide final
and conclusive answers to research questions.
Table below illustrates the main differences between exploratory and conclusive research designs:
Exploratory research Conclusive research

Well structured and systematic in

Structure Loosely structured in design design

Have a formal and definitive

Are flexible and investigative in methodology that needs to be
Methodology methodology followed and tested
 Most conclusive researches are
Do not involve testing of carried out to test the formulated
Hypotheses hypotheses hypotheses

Findings might be topic specific

and might not have much Findings are significant as they
relevance outside of researcher’s have a theoretical or applied
Findings domain implication

What are the content of a research design?

The most common aspects involved in research design include at least followings:
1. Statement of research objectives, i.e., why the research project is to be conducted
2. Type of data needed
3. Definition of population and sampling procedures to be followed
4. Time, costs, and responsibility specification
5. Methods, ways, and procedures used for collection of data
6. Data analysis – tools or methods used to analyze data
7. Probable output or research outcomes and possible actions to be taken based on those outcomes

Discuss the main sources of hypothesis.

A hypothesis may be formulated through a number of is sources. Following are the main sources of
hypothesis.
Personal Experience
Imagination & Thinking
Observation
Scientific Theory
Previous Study
Culture
Culture is the accumulation of ways of behaving and adoption in a particular place and time. While
formulating a hypothesis for a problem, culture should be studied. If we want to study trends towards female
education in a particular area, for this purpose we will study, traditions, family system, Norms, Values,
region and education system of that area.

Explain the differences between Questionnaire and Schedule.

BASIS FOR
QUESTIONNAIRE SCHEDULE
COMPARISON

Meaning Questionnaire refers to a technique Schedule is a formalized set of

of data collection which consist of a
series of written questions along
with alternative answers.
questions, statements and spaces for
answers, provided to the
enumerators who ask questions to
the respondents and note down the
answers.

Filled by Respondents Enumerators

Response Rate Low High

Coverage Large Comparatively small

Cost Economical Expensive

Respondent's Not known Known

identity
 BASIS FOR
QUESTIONNAIRE SCHEDULE
COMPARISON

Success relies on Quality of the questionnaire Honesty and competence of the

enumerator.

Usage Only when the people are literate Used on both literate and illiterate
and cooperative. people.

What are the characteristics of a good research report?

Characteristics of a Good Research Report:

1. Clarity of thought 2. Conceptual clarity 3. Explicit statement of research problem
4. Simple and appropriate language 5. Detailed and orderly presentation 6. Size 7. Chapterization
8. Quotations and footnotes 9. Summary 10. Limitations 11. acknowledgement

MAY2017
Define research. Discuss its importance in the current scenario.
Research is defined as a careful consideration of study regarding a particular concern or a problem using
scientific methods. According to the American sociologist Earl Robert Babbie, “Research is a systematic
inquiry to describe, explain, predict and control the observed phenomenon. Research involves inductive and
deductive methods.”
The research and innovation ecosystem in India at current scenario presents an important and significant
opportunity for multinational organizations across the globe due to its intellectual capital available in the
country. Today numerous MNCs have shifted or are going to shift their research and development (R&D)
base to India. According to Indian Brand Equity foundation the Overall India-based R&D Globalization and
R&D Services market reached US$ 20 billion in 2015, up by 9.9 per cent over 2014.The govt. of India is
now focusing more and more on research and development sector which can easily be concluded from the
union budget 2015-16. The industry demands more and more fund to emphasize the research and
development program in the social sector where the ample opportunity is present. Our Scientific fraternity
has been in a right track to find the opportunity from the social sector.
There are several research organizations like DRDO, ISRO, IISc etc has been taken initiative towards the
social innovation where several satellites has been in 2015 to improve our life style in terms of
communication and information.

Explain how induction and deduction are applied in scientific research.

In logic, we often refer to the two broad methods of reasoning as the deductive and inductive approaches.
Deductive reasoning works from the more general to the more specific. Sometimes this is informally called a "top-
down" approach. We might begin with thinking up a theory about our topic of interest. We then narrow that down into
more specific hypotheses that we can test. We narrow down even further when we collect observations to address the
hypotheses. This ultimately leads us to be able to test the hypotheses with specific data -- a confirmation (or not) of
our original theories.
Inductive reasoning works the other way, moving from specific observations to broader generalizations and theories.
Informally, we sometimes call this a "bottom up" approach (please note that it's "bottom up" and not "bottoms up"
which is the kind of thing the bartender says to customers when he's trying to close for the night!). In inductive
reasoning, we begin with specific observations and measures, begin to detect patterns and regularities, formulate some
tentative hypotheses that we can explore, and finally end up developing some general conclusions or theories.
These two methods of reasoning have a very different "feel" to them when you're conducting research. Inductive
reasoning, by its very nature, is more open-ended and exploratory, especially at the beginning. Deductive reasoning is
narrower in nature and is concerned with testing or confirming hypotheses. Even though a particular study may look
like it's purely deductive (e.g., an experiment designed to test the hypothesized effects of some treatment on some
outcome), most social research involves both inductive and deductive reasoning processes at some time in the project.
In fact, it doesn't take a rocket scientist to see that we could assemble the two graphs above into a single circular one
that continually cycles from theories down to observations and back up again to theories. Even in the most constrained
experiment, the researchers may observe patterns in the data that lead them to develop new theories.

What are the main characteristics of a good hypothesis?

Discuss the factors affecting the sample size.

Distinguish between questionnaire and schedule.

Discuss the various kinds of observation.

1. Casual and Scientific observation – An observation can be sometimes casual in nature or sometimes it may act
scientifically. An observation with a casual approach involves observing the right thing at the right place and also at
the right time by a matter of chance or by luck whereas a scientific observation involves the use of the tools of the
measurement, but a very important point to be kept in mind here is that all the observations are not scientific in nature.
2. Natural Observation – Natural observation involves observing the behaviour in a normal setting and in this type of
observation, no efforts are made to bring any type of change in the behavior of the observed. Improvement in the
collection of the information and improvement in the environment of making an observation can be done with the help
of natural observations.
3. Subjective and Objective observation – All the observations consist of the two main components, the subject and
the object. The subject refers to the observer whereas the object refers to the activity or any type of operation that is
being observed. Subjective observation involves the observation of the one’s own immediate experience whereas the
observations involving observer as an entity apart from the thing being observed, are referred to as the objective
observation. Objective observation is also called as the retrospection.
4. Direct and Indirect observation – With the help of the direct method of observation, one comes to know how the
observer is physically present in which type of situation is he present and then this type of observation monitors what
takes place. Indirect method of observation involves studies of mechanical recording or the recording by some of the
other means like photographic or electronic. Direct observation is relatively more straight forward as compared to the
indirect observation.
5. Participant and Non Participant observation – Participation by the observers with the various types of operations
of the group under study refers to the participant type of observation. In participant observation, the degree of the
participation is largely affected by the nature of the study and it also depends on the type of the situation and also on
its demands. But in the non participant type of observation, no participation of the observer in the activities of the
group takes place and also there occurs no relationship between the researcher and the group.
6. Structured and Unstructured observation – Structured observation works according to a plan and involves
specific information of the units that are to be observed and also about the information that is to be recorded. The
operations that are to be observed and the various features that are to be noted or recorded are decided well in
advance. Such observations involve the use of especial instruments for the purpose of data collection that are also
structured in nature. But in the case of the unstructured observation, its basics are diametrically against the structured
observation. In such observation, observer has the freedom to note down what he or she feels is correct and relevant to
the point of study and also this approach of observation is very suitable in the case of exploratory research.
7. Controlled and Non Controlled observation: Controlled observations are the observations made under the
influence of some of the external forces and such observations rarely lead to improvement in the precision of the
research results. But these observations can be very effective in the working if these are made to work in the
coordination with mechanical synchronizing devices, film recording etc. Non controlled observations are made in the
natural environment and reverse to the controlled observation these observations involve no influence or guidance of
any type of external force.

What are the various statistical tools applied in research for data analysis?
Statistical methods involved in carrying out a study include planning, designing, collecting data, analysing, drawing
meaningful interpretation and reporting of the research findings. The statistical analysis gives meaning to the
meaningless numbers, thereby breathing life into a lifeless data. The results and inferences are precise only if proper
statistical tests are used. This article will try to acquaint the reader with the basic research tools that are utilised while
conducting various studies. The article covers a brief outline of the variables, an understanding of quantitative and
qualitative variables and the measures of central tendency. An idea of the sample size estimation, power analysis and
the statistical errors is given. Finally, there is a summary of parametric and non-parametric tests used for data analysis.

The type of statistical methods used for this purpose are called descriptive statistics. They include both numerical
(e.g. mean, mode, variance…) and graphical tools (e.g. histogram, boxplot…) which allow to summarize a set of
data and extract important information such as central tendencies and dispersion.
State the criteria for evaluating research reports.
1. Identify the author's thesis. Determine what the author is arguing for or against. ...
2. Note all main ideas. Identify the main ideas of the work in order to analyze its structure. ...
3. Research unfamiliar material. ...
4. Describe the work in your own words. ...
5. Identify any appeals used. ...
6. Evaluate how well the author conveyed meaning.

Describe the different steps involved in research process.

Explain the process of identification of a research problem.

A research problem is a question that researcher wants to answer or a problem that a researcher wants to solve
Identification & formulation of a research problem is the first step of the research process. Selection of research
problem depends on several factors such as researcher’s knowledge, skills, interest, expertise, motivation &creativity
with respect to the subject of inquiry. It is believed that most of the good research studies need lots of time for
selection of a research problem.

Describe the various methods of sampling used in business research.

Definition: The Sampling is a statistical process of selecting few representatives from the population, called
as a sample, on the basis of which the characteristics of the total population can be ascertained.
Since the sample selected should reflect the true characteristics of the population the researcher must decide
which sampling method should be used. The sampling methods can be classified as:
1. Random Sampling Methods: The random sampling is also called as a probability sampling since
the sample selection is done randomly so the laws of probability can be applied. Following are the
important methods of Random Sampling:
 Simple Random Sampling
 Stratified Sampling
 Systematic Sampling
 Multi-Stage Sampling
Non-Random Sampling Methods. In the case of non-random sampling, the selection is done on the basis
other than the probability considerations, such as judgment, convenience, etc. The non-random sampling is
subject to sampling variability, but however there is no certain pattern of variability in the process. What is
Sampling Variability? Since the results are obtained from the sample rather than the population, there is a
possibility of variations in the published estimates and the actual. This variation is called as Sampling
Variability. The methods of non-random sampling are given below:
 Judgement sampling
 Convenience Sampling
 Quota Sampling
 Snowball Sampling

Thus, the researcher can apply either of the sampling methods depending on the size of the population and
the objective of the research.

Define interview. Discuss the major techniques of interview.

Narrate the various sources of secondary data.

SOURCES OF SECONDARY DATA
Secondary data is data collected by someone other than the user. Common sources of secondary data for
social science include censuses, surveys, organizational records and data collected through qualitative
methodologies or qualitative research. Primary data, by contrast, are collected by the investigator conducting
the research.
Secondary data analysis saves time that would otherwise be spent collecting data and, particularly in the
case of quantitative data, provides larger and higher-quality databases that would be unfeasible for any
individual researcher to collect on their own. In addition, analysts of social and economic change consider
secondary data essential, since it is impossible to conduct a new survey that can adequately capture past
change and/or developments.
As is the case in primary research, secondary data can be obtained from two different research strands:
 Quantitative: Census, housing, social security as well as electoral statistics and other related
databases.
 Qualitative: Semi-structured and structured interviews, focus groups transcripts, field
notes, observation records and other personal, research-related documents.
A clear benefit of using secondary data is that much of the background work needed has been already been
carried out, for example: literature reviews, case studies might have been carried out, published texts and
statistic could have been already used elsewhere, media promotion and personal contacts have also been
utilized.
This wealth of background work means that secondary data generally have a pre-established degree
of validity and reliability which need not be re-examined by the researcher who is re-using such data.
Furthermore, secondary data can also be helpful in the research design of subsequent primary research and
can provide a baseline with which the collected primary data results can be compared to. Therefore, it is
always wise to begin any research activity with a review of the secondary data
Secondary data are those which have already been collected and analyzed by someone else. There are two
major sources of Secondary data. They are:
a. Published Sources: The sources of published data are as below:
i. Official publications of Central and local governments.
For example: CBS, NRB, different Ministries, etc.
ii. Official publications of semi government statistical organization. For example: Tribhuvan University,
Nepal Bank Ltd., NIDC, Nepal Telecom Ltd, NEA etc.
iii. Official publication of foreign government or international bodies like the UNO, World Bank, ADB,
WTO, UNESCO, etc.
iv. Reports and publications of Trade union, Chamber of Commerce, Commercial Banks, Co-operatives,
Stock Exchange etc.
v. Report submitted to economists, re-search scholars, universities and various educational and research
institutions.
vi. Reports of various committees and commissions appointed by government.
vii. Newspaper and Periodicals.

Some of them may be continuous or regular and others are periodical and irregular.
b. Unpublished Sources: The statistical data needn’t always be published. There are various sources of
unpublished statistical material such as the records maintained by private firms, business enterprises,
scholars, research workers, etc. They may not like to release their data to any outside agency.

‘‘Processing of data implies editing coding, classification and tabulation’’– Discuss.

After collecting data, the method of converting raw data into meaningful statement; includes data
processing, data analysis, and data interpretation and presentation.
Data reduction or processing mainly involves various manipulations necessary for preparing the data for
analysis. The process (of manipulation) could be manual or electronic. It involves editing, categorizing the
open-ended questions, coding, computerization and preparation of tables and diagrams.

Editing data:
Information gathered during data collection may lack uniformity. Example: Data collected through
questionnaire and schedules may have answers which may not be ticked at proper places, or some questions
may be left unanswered. Sometimes information may be given in a form which needs reconstruction in a
category designed for analysis, e.g., converting daily/monthly income in annual income and so on. The
researcher has to take a decision as to how to edit it.

Editing also needs that data are relevant and appropriate and errors are modified. Occasionally, the
investigator makes a mistake and records and impossible answer. “How much red chilies do you use in a
month” The answer is written as “4 kilos”. Can a family of three members use four kilo chilies in a month?
The correct answer could be “0.4 kilo”.

Care should be taken in editing (re-arranging) answers to open-ended questions. Example: Sometimes “don’t
know” answer is edited as “no response”. This is wrong. “Don’t know” means that the respondent is not sure
and is in a double mind about his reaction or considers the questions personal and does not want to answer
it. “No response” means that the respondent is not familiar with the situation/object/event/individual about
which he is asked.

Coding of data:
Coding is translating answers into numerical values or assigning numbers to the various categories of a
variable to be used in data analysis. Coding is done by using a code book, code sheet, and a computer card.
Coding is done on the basis of the instructions given in the codebook. The code book gives a numerical code
for each variable.
Now-a-days, codes are assigned before going to the field while constructing the questionnaire/schedule.
Pose data collection; pre-coded items are fed to the computer for processing and analysis. For open-ended
questions, however, post-coding is necessary. In such cases, all answers to open-ended questions are placed
in categories and each category is assigned a code.

Manual processing is employed when qualitative methods are used or when in quantitative studies, a small
sample is used, or when the questionnaire/schedule has a large number of open-ended questions, or when
accessibility to computers is difficult or inappropriate. However, coding is done in manual processing also.

Data classification/distribution:
Sarantakos (1998: 343) defines distribution of data as a form of classification of scores obtained for the
various categories or a particular variable. There are four types of distributions:

1. Frequency distribution
2. Percentage distribution
3. Cumulative distribution
4. Statistical distributions
Tabulation of data:
After editing, which ensures that the information on the schedule is accurate and categorized in a suitable
form, the data are put together in some kinds of tables and may also undergo some other forms of statistical
analysis.

Table can be prepared manually and/or by computers. For a small study of 100 to 200 persons, there may be
little point in tabulating by computer since this necessitates putting the data on punched cards. But for a
survey analysis involving a large number of respondents and requiring cross tabulation involving more than
two variables, hand tabulation will be inappropriate and time consuming.
Usefulness of tables:

Tables are useful to the researchers and the readers in three ways:

1. The present an overall view of findings in a simpler way.

2. They identify trends.
3. They display relationships in a comparable way between parts of the findings.
By convention, the dependent variable is presented in the rows and the independent variable in the columns.

Discuss the contents of a good research report.

May 2018 Business Environment

Explain the importance of business environment.

Points that would help us to understand the importance of business environment are: 1. Enabling the identification of
opportunities and getting the first mover advantage 2. Helping in the identification of threats and early warning signals
or Radar effect 3. Tapping useful resources 4. Coping with the rapid changes 5. Assisting in planning and policy
formulation 6. Improvement in performance 7. Image building.
Each business firm has to exist, survive and grow in relation to the various forces of the business environment. Since
business firms have no control on these forces, it has to adapt itself according to these forces.
Environment is closely related with business. There is a constant ‘give and take’ relationship between environment
and business. The business receives inputs, information and technology from the environment and gives it back in the
form of outputs (goods and services).
If these outputs are accepted by the environment, the environment-business interaction continues but if they are
unacceptable to the environment, firms adapt to the environmental requirements and change their operations.

Discuss the impact of political environment on business.

There are many external environment factors affect business negatively and positively. Business managers must
address these factors and make decisions that minimize the impact of external environment. These factors include
political factors, economic, social, technological, legal and environmental also known as PESTLE Analysis.
Political factors and environment of a country impacts any business organization and can also introduce a risk factor
can cause the business to suffer losses or compromise over its profit stream. Political environment can change because
of the policies and actions of the prevailing government at every level, federal to local level. It is very important that a
business should plan for the variability in the policies and regulations of the government to maintain a stable business
environment.
Definition
Political factors are government regulations that influence business operation positively and negatively. Managers
must keep a bird’s eye view over political factors. These factors may be current and impending legislation, political
stability and changes, freedom of speech, protection and discrimination laws are factors affecting business operation
and activities
How political factors affecting business environment?
 Political decisions affect the socio-cultural environment of the country.
 Political decisions have an impact on the economic environment.
 Politicians can also influence the acceptance of new technologies.
 Politicians can also influence the rate of development of new technologies.
What political factors affect business environment?
#Tax and economic policies #Political stability #Foreign trade regulations #Employment laws
What is economic environment? How it is important for business?
The term economic environment refers to all the external economic factors that influence buying habits of consumers
and businesses and therefore affect the performance of a company. These factors are often beyond a company’s
control, and may be either large-scale (macro) or small-scale (micro).
Macro factors include:
 Employment/unemployment
 Income
 Inflation
 Interest rates
 Tax rates
 Currency exchange rate
 Saving rates
 Consumer confidence levels
 Recessions
Micro factors include:
 The size of the available market
 Demand for the company’s products or services
 Competition
 Availability and quality of suppliers
 The reliability of the company’s distribution chain (i.e., how it gets products to customers)
While companies often can’t control their economic environment, they can evaluate economic conditions before
choosing to enter a particular market or industry or pursue other strategies.
Importance of Business Environment
firm to identify opportunities and getting the first mover advantage: Early identification of opportunities helps an
enterprise to be the first to exploit them instead of losing them to competitors. For example, Maruti Udyog became the
leader in the small car market because it was the first to recognize the need for small cars in India.
firm to identify threats and early warning signals: If an Indian firm finds that a foreign multinational is entering the
Indian market it should gives a warning signal and Indian firms can meet the threat by adopting by improving the
quality of the product, reducing cost of the production, engaging in aggressive advertising, and so on.
Coping with rapid changes: All sizes and all types of enterprises are facing increasingly dynamic environment. In
order to effectively cope with these significant changes, managers must understand and examine the environment and
develop suitable courses of action.
Improving performance: the enterprises that continuously monitor their environment and adopt suitable business
practices are the ones which not only improve their present performance but also continue to succeed in the market for
a longer period.

Explain the role of information technology in business.

Information technology has become very important in the business world. no matter small or big business, IT has
helped the organization, manager, and workers in a more efficient management, to inquire about a particular problem,
conceive its complexity, and generate new products and services; thereby, improving their productivity and output.
Information technology can helps through:
Communication
Inventory management
Management Information Systems
Customer Relationship Management

Advantages of Information Technology in Business.

 Storing and Protecting Information
 Working away
 Automated Processes
 Communication

Discuss the need for technology transfer.

What is technology transfer anyway?
According to the Association of University Technology Managers (Autm), technology transfer is the process of
transferring scientific findings from one organisation to another for the purpose of further development and
commercialisation. The process typically includes:
 Identifying new technologies.
 Protecting technologies through patents and copyrights.
  Forming development and commercialisation strategies such as marketing and licensing to existing private
sector companies or creating new start-up companies based on the technology.

What are the objectives of consumer protection Act?

Explain the benefits and obstacles for privatisation.

Explain the impact of LPG on business. LPG
LPG stands for Liberalization, Privatization, and Globalization. India under its New Economic Policy approached
International Banks for development of the country. These agencies asked Indian Government to open its restrictions
on trade done by the private sector and between India and other countries.
Indian Government agreed to the conditions of lending agencies and announced New Economic Policy (NEP) which
consisted wide range of reforms.

Discuss the environmental factors that affecting the business.

The different environmental factors that affect the business can be broadly categorized as internal and has its
own external factors.
INTERNAL FACTORS: Internal factors are those factors which exist within the premises of an organization and
directly affects the different operations carried out in a business. These internal factors are :
A. VALUE SYSTEM : It implies the culture and norms of the business. In other words, it means the regulatory
framework of a business and every member of the organization has to act within the limits of this framework.
B. MISSIONS AND OBJECTIVES : Different priorities, policies and philosophies of a business is guided by the
mission and objectives of a business.
C. FINANCIAL FACTORS : Financial factors like financial policies, financial position and capital structure also
affects a business performance and its strategies.
D. INTERNAL RELATIONSHIP : Factors like the amount of support the top management enjoys from its
shareholders, employees and the board of directors also affects the smooth functioning of a business.
The EXTERNAL FACTORS include all those factors which exists outside the firm and are often regarded as
uncontrollable.. These external forces can further be categorized as MICRO ENVIRONMENT and MACRO
ENVIRONMENT.
MICRO ENVIRONMENT includes the following factors.
1.SUPPLIERS : Suppliers are those people who are responsible for supplying necessary inputs to the organization
and ensure the smooth flow of production.
2.COMPETITORS : Competitors can be called the close rivals and in order to survive the competition one has to
keep a close look in the market and formulate its policies and strategies as such to face the
competition.3.MARKETING INTERMEDIARIES : Marketing intermediaries aid the company in promoting,
selling and distribution of the goods and services to its final users. Therefore, marketing intermediaries are vital link
between the business and the consumers.
MACRO ENVIRONMENT includes the following factors.
1.ECONOMIC FACTORS : Economic factors includes economic conditions and economic policies that together
constitutes the economic environment. These includes growth rate, infation, restrictive trade practices etc. Which have
a considerable immpact on the business.
2.SOCIAL FACTORS : Social factors includes the society as a whole alongside its preferences and priorities like the
buying and consumption pattern, beliefs of people their purchasing power, educational background etc.
3.POLITICAL FACTORS : The political factors are related to the management of public affairsAnd their impact on
the business. It is important to have a political stability to maintain stability in the trade.
4.TECHNOLOGICAL FACTORS : Latest technologies helps in improving the marketablity of the product plus
makes it more consumer friendly. Therefore, it is important for a business to keep a pace withv the changing
technologies in order to survive in the long run.

What are the promotion schemes carried out by government to promote SSI?
Measures to Promote Small Scale Industries in India
Small Scale Industries have contributed a lot for the development of the economy of India. Still SSI face problems due
to the nature and size of their business. Some of the measures that can be taken by government and NGOs to boost the
performance are as follows:
1. Government should ensure that adequate financial assistance is provided to SSls through banks and financial
institutions. The rate of interest on loans should be low. Financial assistance must be provided to SSI through
unsecured loans or after obtaining minimum security.
2. Insurance coverage must be extended to new and existing small scale industries.
3. The gap that exists between consumers and small business must be bridged through effective marketing. Lot of
industrial fairs, exhibitions must be organized by the government to encourage the sale of SSI products.
4. The infrastructural facilities must be improved and measures must be taken to enhance the supply of water,
electricity to backward and rural areas.
5. Technological support must be provided to SSI to import machinery at lower cost.
6. Many industrial estates must be established by the government.
7. The informal money market should be regulated to avoid exploitation by money lenders on small scale
industrialists.
8. Training must be provided to entrepreneurs in technological, managerial, financial and marketing areas.
9. Awareness campaigns must be carried out in full swing to encourage youngsters to become first generation
entrepreneurs.
10. The sick industries must be rejuvenated instead of liquidation.
11. The licensing procedure must be simple and at ease.
12. Fair Incentives and subsides must be given to SSI units and an awareness must be made about the incentives
available to new entrepreneurs
13. Export promotion schemes must be devised in such a way that encourages SSI to export their goods.

Discuss the EXIM policy of India.

Discuss the salient features of India’s technological policy.
The growth and development of Science and Technology in India is not a decade or a century old activity. There is
evidence which shows that it is no less than an ancient saga; the growth and development is evident through the town
planning, drainage system, road planning, etc. of the Indus Valley Civilization.
Likewise, throughout from the very ancient period to the medieval or to the modern, the planning and policy of
Science and Technology are the major areas of emphasis.
However, after the independence, the five-year planning scheme commenced and over a period of time, Science and
Technology accordingly became a major area of emphasis.
Pandit Jawaharlal Nehru, the first prime minister of India was the torchbearer who initiated by laying more emphasis
on education and further led the foundation of Science and Technology.

Discuss the legal aspect of entering in to primary and secondary capital market.
The main components of capital market are: 1. Primary Market 2. Secondary Market !
1. Primary Market (New Issue Market):
Primary market is also known as new issue market. As in this market securities are sold for the first time, i.e., new
securities are issued from the company. Primary capital market directly contributes in capital formation because in
primary market company goes directly to investors and utilises these funds for investment in buildings, plants,
machinery etc.
The primary market does not include finance in the form of loan from financial institutions because when loan is
issued from financial institution it implies converting private capital into public capital and this process of converting
private capital into public capital is called going public. The common securities issued in primary market are equity
shares, debentures, bonds, preference shares and other innovative securities.

Method of Floatation of Securities in Primary Market:

The securities may be issued in primary market by the following methods:
1. Public Issue through Prospectus: Under this method company issues a prospectus to inform and attract general
public. In prospectus company provides details about the purpose for which funds are being raised, past financial
performance of the company, background and future prospects of company.
The information in the prospectus helps the public to know about the risk and earning potential of the company and
accordingly they decide whether to invest or not in that company Through IPO company can approach large number
of persons and can approach public at large. Sometimes companies involve intermediaries such as bankers, brokers
and underwriters to raise capital from general public.
2. Offer for Sale: Under this method new securities are offered to general public but not directly by the company but
by an intermediary who buys whole lot of securities from the company. Generally the intermediaries are the firms of
brokers. So sale of securities takes place in two steps: first when the company issues securities to the intermediary at
face value and second when intermediaries issue securities to general public at higher price to earn profit. Under this
method company is saved from the formalities and complexities of issuing securities directly to public.
3. Private Placement:
Under this method the securities are sold by the company to an intermediary at a fixed price and in second step
intermediaries sell these securities not to general public but to selected clients at higher price. The issuing company
issues prospectus to give details about its objectives, future prospects so that reputed clients prefer to buy the security
from intermediary. Under this method the intermediaries issue securities to selected clients such as UTI, LIC, General
Insurance, etc.
The private placement method is a cost saving method as company is saved from the expenses of underwriter fees,
manager fees, agents’ commission, listing of company’s name in stock exchange etc. Small and new companies prefer
private placement as they cannot afford to raise from public issue.
4. Right Issue (For Existing Companies):
This is the issue of new shares to existing shareholders. It is called right issue because it is the pre-emptive right of
shareholders that company must offer them the new issue before subscribing to outsiders. Each shareholder has the
right to subscribe to the new shares in the proportion of shares he already holds. A right issue is mandatory for
companies under Companies’ Act 1956.
The stock exchange does not allow the existing companies to go for new issue without giving pre-emptive rights to
existing shareholders because if new issue is directly issued to new subscribers then the existing equity shareholders
may lose their share in capital and control of company i.e., it would water their equity. To stop this the pre-emptive or
right issue is compulsory for existing company.
5. e-IPOs, (electronic Initial Public Offer):
It is the new method of issuing securities through on line system of stock exchange. In this company has to appoint
registered brokers for the purpose of accepting applications and placing orders. The company issuing security has to
apply for listing of its securities on any exchange other than the exchange it has offered its securities earlier. The
manager coordinates the activities through various intermediaries connected with the issue.
2. Secondary Market (Stock Exchange):
The secondary market is the market for the sale and purchase of previously issued or second hand securities.
In secondary market securities are not directly issued by the company to investors. The securities are sold by existing
investors to other investors. Sometimes the investor is in need of cash and another investor wants to buy the shares of
the company as he could not get directly from company. Then both the investors can meet in secondary market and
exchange securities for cash through intermediary called broker.
In secondary market companies get no additional capital as securities are bought and sold between investors only so
directly there is no capital formation but secondary market indirectly contributes in capital formation by providing
liquidity to securities of the company.
If there is no secondary market then investors could get back their investment only after redemption period is over or
when company gets dissolved which means investment will be blocked for a long period of time but with the presence
of secondary market, the investors can convert their securities into cash whenever they want and it also gives chance
to investors to make profit as securities are bought and sold at market price which is generally more than the original
price of the securities.
This liquidity offered by secondary market encourages even those investors to invest in securities who want to invest
for small period of time as there is option of selling securities at their convenience.

Describe the role of World Bank in global economic development.

Compare and contrast the various types of economic system.
The way scarce resources get distributed within an economy determines the type of economic system. There are four
different types of economies; traditional economy, market economy, command economy and mixed economy. Each
type of economy has its own strengths and weaknesses.
The Four Types of Economies
1. Traditional Economic System
The traditional economic system is the most traditional and ancient types of economies in the world. Vast portions of
the world still function under a traditional economic system. These areas tend to be rural, second- or third-world, and
closely tied to the land, usually through farming. In general, in this type of economic system, a surplus would be rare.
Each member of a traditional economy has a more specific and pronounced role, and these societies tend to be very
close-knit and socially satisfied. However, they do lack access to technology and advanced medicine.
2. Command Economic System
In a command economic system, a large part of the economic system is controlled by a centralized power. For
example, in the USSR most decisions were made by the central government. This type of economy was the core of the
communist philosophy.
Since the government is such a central feature of the economy, it is often involved in everything from planning to
redistributing resources. A command economy is capable of creating a healthy supply of its resources, and it rewards
its people with affordable prices. This capability also means that the government usually owns all the critical
industries like utilities, aviation, and railroad.
In a command economy, it is theoretically possible for the government to create enough jobs and provide goods and
services at an affordable rate. However, in reality, most command economies tend to focus on the most valuable
resources like oil.
China or D.P.R.K. (North Korea) are examples of command economies.
Advantages of Command Economic Systems
 If executed correctly, the government can mobilize resources on a massive scale. This mobility can provide
jobs for almost all of the citizens.
 The government can focus on the good of society rather than an individual. This focus could lead to a more
efficient use of resources.
Disadvantages of Command Economic Systems
 It is hard for central planners to provide for everyone’s needs. This forces the government to ration because it
cannot calculate demand since it sets prices.
 There is a lack of innovation since there is no need to take any risk. Workers are also forced to pursue jobs the
government deems fit.
3. Market Economic System
In a free market economy, firms and households act in self-interest to determine how resources get allocated, what
goods get produced and who buys the goods. This is opposite to how a command economy works, where the central
government gets to keep the profits.
There is no government intervention in a pure market economy (“laissez-faire“). However, no truly free market
economy exists in the world. For example, while America is a capitalist nation, our government still regulates (or
attempts to control) fair trade, government programs, honest business, monopolies, etc.
In this type of economy, there is a separation of the government and the market. This separation prevents the
government from becoming too powerful and keeps their interests aligned with that of the markets.
Hong Kong has been seen as an example of a free market society.
Advantages of a Free Market Economy
 Consumers pay the highest price they want to, and businesses only produce profitable goods and services.
There is a lot of incentive for entrepreneurship.
 This leads to the most efficient use of the factors of production since businesses are very competitive.
 Businesses invest heavily in research and development. There is an incentive for constant innovation as
companies compete to provide better products for consumers.
Disadvantages of a Free Market Economy
 Due to the fiercely competitive nature of a free market, businesses will not care for the disadvantaged like the
elderly or disabled. This leads to higher income inequality.
 Since the market is driven solely by self-interest, economic needs have a priority over social and human needs
like providing healthcare for the poor. Consumers can also be exploited by monopolies.
4. Mixed Economic System
A mixed economy is a combination of different types of economic systems. This economic system is a cross
between a market economy and command economy. In the most common types of mixed economies, the market is
more or less free of government ownership except for a few key areas like transportation or sensitive industries
like defense and railroad.
However, the government is also usually involved in the regulation of private businesses. The idea behind a mixed
economy was to use the best of both worlds – incorporate policies that are socialist and capitalist.
To a certain extent, most countries have a mixed economic system. For example, India and France are mixed
economies.
Advantages of Mixed Economies
 There is less government intervention than a command economy. This means that private businesses can run
more efficiently and cut costs down than a government entity might.
 The government can intervene to correct market failures. For example, most governments will come in and
break up large companies if they abuse monopoly power. Another example could be the taxation of harmful
products like cigarettes to reduce a negative externality of consumption.
 Governments can create safety net programs like healthcare or social security.
 In a mixed economy, governments can use taxation policies to redistribute income and reduce inequality.
Disadvantages of Mixed Economies
 There are criticisms from both sides arguing that sometimes there is too much government intervention and
sometimes there isn’t enough.
 A common problem is that the state run industries are often subsidized by the government and run into large
debts because they are uncompetitive.

DEC 2017 Business Environment

Bring out the importance of scanning the business environment.
Environmental analysis will help the firm to understand what is happening both inside and outside the
organization and to increase the probability that the organisational strategies developed will appropriately
reflect the organizational environment.
Environmental scanning is necessary because there are rapid changes taking place in the environment that
has a great impact on the working of the business firm. Analysis of business environment helps to identify
strength weakness, opportunities and threats. SWOT analysis is necessary for the survival and growth of
every business enterprise.
The following is the need and importance of environmental scanning:
1. Identification of strength:
Strength of the business firm means capacity of the firm to gain advantage over its competitors. Analysis of
internal business environment helps to identify strength of the firm. After identifying the strength, the firm
must try to consolidate or maximise its strength by further improvement in its existing plans, policies and
resources.
2. Identification of weakness:
Weakness of the firm means limitations of the firm. Monitoring internal environment helps to identify not
only the strength but also the weakness of the firm. A firm may be strong in certain areas but may be weak
in some other areas. For further growth and expansion, the weakness should be identified so as to correct
them as soon as possible.
3. Identification of opportunities: Environmental analyses helps to identify the opportunities in the market.
The firm should make every possible effort to grab the opportunities as and when they come.
4. Identification of threat:
Business is subject to threat from competitors and various factors. Environmental analyses help them to
identify threat from the external environment. Early identification of threat is always beneficial as it helps to
diffuse off some threat.
5. Optimum use of resources:
Proper environmental assessment helps to make optimum utilisation of scare human, natural and capital
resources. Systematic analyses of business environment helps the firm to reduce wastage and make optimum
use of available resources, without understanding the internal and external environment resources cannot be
used in an effective manner.
6. Survival and growth:
Systematic analyses of business environment help the firm to maximise their strength, minimise the
weakness, grab the opportunities and diffuse threats. This enables the firm to survive and grow in the
competitive business world.
7. To plan long-term business strategy:
A business organisation has short term and long-term objectives. Proper analyses of environmental factors
help the business firm to frame plans and policies that could help in easy accomplishment of those
organisational objectives. Without undertaking environmental scanning, the firm cannot develop a strategy
for business success.
8. Environmental scanning aids decision-making:
Decision-making is a process of selecting the best alternative from among various available alternatives. An
environmental analysis is an extremely important tool in understanding and decision making in all situation
of the business. Success of the firm depends upon the precise decision making ability. Study of
environmental analyses enables the firm to select the best option for the success and growth of the firm.

Discuss the environmental threats to a business organisation.

Environmental risks to your business
The environment can pose many risks to your business, but climate change is perhaps the biggest environmental risk.
Climate change refers to the build-up of man-made gases in the atmosphere that trap the sun's heat, causing changes in
global weather patterns. It has environmental, economic and social impacts.
Climate change risks for your business may include:
 frequent extreme weather - you may have increased insurance costs, more damage to property and
resources, and disruption of power and water. Customers may be unable to visit or contact your business, or
suppliers may be unable to deliver goods or services.
 decreased demand - there may be less demand for your goods and services if they are not environmentally
friendly, or competitors with energy-efficient products may target your customers. It may also be difficult to
attract and retain staff if your business is not sustainable.
 global impacts - overseas suppliers may be unable to deliver goods or services due to climate change events
in their country or international customers being encouraged to buy locally.
 increased costs - you may experience higher costs for energy, water and other resources. Water restrictions
may also affect your business.

What are the problems of SSI in India?

Problems faced by Small Scale Industries
1. Poor capacity utilization 2. Incompetent management 3. Inadequate Finance
4. Raw material shortages 5. Lack of marketing support 6. Problem of working capital
7. Problems in Export 8. Lack of technology up-gradation 9. Multiplicity of labor laws
10. Inability to meet environmental standards 11. Delayed payments 12. Poor industrial relations
13. Strain on government finances 14. Concentration of industrial units 15. Inadequate dispersal
16. Widespread sickness 17. Lack of awareness 18. Government interference

Discuss the merits and demerits of mixed economy.

A mixed economy is variously defined as an economic system blending elements of market economies with
elements of planned economies, free markets with state interventionism, or private enterprise with public
enterprise.
Advantages of Mixed Economy
1. Efficiency 2. Reduced inequality 3. Systematic plan 4. Economic Stability 5. Consumer sovereignty
6. Freedom 7. Promotion of social welfare 8. Rights of Individual.
Demerits of Mixed Economy
1. Unhealthy Competition 2. No freedom to pvt sector 3. Inefficient public sector 4. Unemployment and
Uncertainties 5. Threat of Nationalization.

Explain the impact of foreign culture on business.

Write a descriptive note on “Consumer Protection Act, 1986”.

An Act to provide for better protection of the interests of consumers and for that purpose to make provision
for the establishment of consumer councils and other authorities for the settlement of consumers' disputes
and for matters connected there with.
Discuss the impact of liberalisation on business growth in India.
Liberalisation in India: There has been a revolutionary change in Indian Economy since the espousal of the
New Economic Strategy in 1991. This had great impacts on all the areas of life in India. When a nation
becomes liberalised, the economic effects can be intense for the country and as well as for the investors.
Economic liberalisation is relaxing the government regulations in a country to allow the private sector
companies to operate business transactions with comparatively fewer restrictions.
With reference to the developing countries, this term denotes to opening of economic borders to
multinationals and foreign investments. Investors face problems to enter in the emerging market countries
when there are lots of barriers. These barriers can include legal issues, tax laws, foreign investment
restrictions, and accounting regulations that can make it difficult or impossible to gain access to the entire
nation. The economic liberalisation begins by relaxing these obstacles and relinquishing some control over
the direction of the economy to the private sector. This often involves some form of deregulation and a
privatization of corporations.
Impacts of Liberalisation in India
Positive impacts of liberalisation in India Negative impacts of liberalisation in India
Free flow of capital: Liberalisation has improved flow of
Destabilization of the economy: Tremendous
capital into the country which makes it inexpensive for
redistribution of economic power and political power
the companies to access capital from investors. Lower
leads to Destabilizing effects on the entire Indian
cost of capital enables to undertake lucrative projects
economy.
which they may not have been possible with a higher cost
of capital pre-liberalisation, leading to higher growth
rates.
Stock Market Performance: Generally, when a country Impact of FDI in Banking sector: Foreign direct
relaxes its laws, taxes, the stock market values also rise. investment allowed in the banking and insurance sectors
Stock Markets are platforms on which Corporate resulted in decline of government’s stake in banks and
Securities can be traded in real time. insurance firms.
Political Risks Reduced: Liberalisation policies in the Threat from Multinationals: Prior to 1991 MNC’s did
country lessens political risks to investors. The not play much role in the Indian economy. In the pre-
government can attract more foreign investment through reform period, there was domination of public enterprises
liberalisation of economic policies. These are the areas in the economy. On account of liberalisation, competition
that support and foster a readiness to do business in the has increased for the Indian firms. Multinationals are
country such as a strong legal foundation to settle quite big and operate in several countries which has
disputes, fair and enforceable laws. turned out a threat to local Indian Firms.
Diversification for Investors: In a liberalised economy, Technological Impact: Rapid increase in technology
Investors gets benefit by being able to invest a portion of forces many enterprises and small scale industries in
their portfolio into a diversifying asset class. India to either adapt to changes or close their businesses.
Impact on Agriculture: In the area of agriculture, the Mergers and Acquisitions: Acquisitions and mergers are
cropping patterns has undergone a huge modification, but increasing day-by-day. In cases where small companies
the impact of liberalisation cannot be properly measured. are being merged by big companies, the employees of the
It is observed that there are still all-pervasive government small companies may require exhaustive re-skilling. Re-
controls and interventions starting from production to skilling duration will lead to non-productivity and would
distribution for the produce. cast a burden on the capital of the company.

What are the functions of world bank?

World Bank is playing main role of providing loans for development works to member countries, especially
to underdeveloped countries. The World Bank provides long-term loans for various development projects of
5 to 20 years duration.
The main functions can be explained with the help of the following points:
1. World Bank provides various technical services to the member countries. For this purpose, the Bank has
established “The Economic Development Institute” and a Staff College in Washington.
2. Bank can grant loans to a member country up to 20% of its share in the paid-up capital.
3. The quantities of loans, interest rate and terms and conditions are determined by the Bank itself.
4. Generally, Bank grants loans for a particular project duly submitted to the Bank by the member country.
5. The debtor nation has to repay either in reserve currencies or in the currency in which the loan was
sanctioned.
6. Bank also provides loan to private investors belonging to member countries on its own guarantee, but for
this loan private investors have to seek prior permission from those counties where this amount will be
collected.

Explain the various factors influencing the business environment.

Discuss the role of Government in business

Describe the features of new EXIM policy.

1. Increase in number of Export Items:
The Govt. has identified many new products for exports. They are fish and fish preparations, agricultural
products and marine products etc. These products are import-light and hence pressure on foreign exchange
was relieved.
2. Special Economic Zones: For promotion of exports, special economic zones (SEZ) have been
established. SEZ units are deemed to be foreign territory for the purpose of trade operations and tariffs. The
main objective of the SEZ units is to provide a congenial atmosphere for exports. Indian banks were pre-
mitted to establish off share banking units in SEZ. These units will attract foreign direct investments (FDI’s)
and would be free from cash reserve ratio (CRR) and statutory liquidity ratio (SLR).
3. Role of Public Sector Agencies:
Certain exports are controlled by Public sector agencies like State Trading Corporations (STC), Mineral and
Metal Trading Corporation (MMTC). Now these are asked to compete with other exporters. Foreigners have
been permitted to set up trading houses for export purposes.
4. Restriction Free Export Policy:
Restrictions on exports have been reduced to minimum according to new policy. Export restrictions have
been imposed on a few sensitive commodities taking the domestic demand and supply factors into
consideration. Export duties are now not considered as source of revenue generation but a means of
increasing the competitiveness of domestic exporters in the international market.
5. Liberalisation of Export-Oriented Import:
Import licenses were removed from most of the items. Provisions were made to levy low custom duties an
imports which were used as inputs for production of export goods. Imports were linked to the availability of
foreign exchange generated through exports.
Import duties were gradually reduced and the objective was to equal the same with other countries of the
world. The restrictions laid on import of all items were removed to conform to the WTO norms and these
were put under Open General License (OGL) list. This process liberalized imports and simplified export-
import procedures.
6. Convertibility of Rupee:
To increase exports, the rupee was made partly convertible on current account. In 1994-95 budget rupee was
made fully convertible.
7. Devaluation of Rupee:
Generally speaking, devaluation of rupee means lowering the value of rupee in terms of foreign currencies.
Devaluation makes domestic goods cheaper in the foreign market. To cover the balance of payment
difficulty. Govt. of India devalued rupee in June 1991 by 23%. This helped in encouraging exports.

What is foreign exchange? How it helps business development?

Foreign exchange, or forex, is the conversion of one country's currency into another. In a free economy, a country's
currency is valued according to the laws of supply and demand. In other words, a currency's value can be pegged to
another country's currency, such as the U.S. dollar, or even to a basket of currencies. A country's currency value may
also be set by the country's government.
However, most countries float their currencies freely against those of other countries, which keeps them in constant
fluctuation.
First, direct impact. This will happen in three cases:
1. If the business buys any products from another country. The cost of those products will change if the
exchange rate changes.
2. If the business sells any products to a foreign country. The sale price (and therefore profits) will change if the
exchange rate changes.
3. If the business has borrowed money from, or lent money to, someone in a foreign country. The amount to be
repaid, and the interest amount, will change if the interest rate changes.
That was the direct impact. There is also an indirect impact. No business is an island - it depends upon other
businesses which might be affected by exchange rates. For example, a UK business which neither sells nor buys nor
borrows from another country. However, it uses trucks to move it's products around the country. If the foreign
exchange rate changes, the cost of the fuel those trucks use changes (because it is imported from abroad) and that
affects the costs of the business … this is an example of indirect impact.

Advantages of Forex Market

The biggest financial market in the world is the biggest market because it provides some advantages to its
participants. Some of the major advantages offered are as follows:
1. Flexibility
Forex exchange markets provide traders with a lot of flexibility. This is because there is no restriction on the
amount of money that can be used for trading. Also, there is almost no regulation of the markets. This
combined with the fact that the market operates on a 24 by 7 basis creates a very flexible scenario for
traders. People with regular jobs can also indulge in Forex trading on the weekends or in the nights.
However, they cannot do the same if they are trading in the stock or bond markets or their own countries! It
is for this reason that Forex trading is the trading of choice for part time traders since it provides a flexible
schedule with least interference in their full time jobs.
Transparency: The Forex market is huge in size and operates across several time zones! Despite this,
information regarding Forex markets is easily available. Also, no country or Central Bank has the ability to
single handedly corner the market or rig prices for an extended period of time. Short term advantages may
occur to some entities because of the time lag in passing information. However, this advantage cannot be
sustained over time. The size of the Forex market also makes it fair and efficient!
2. Trading Options
Forex markets provide traders with a wide variety of trading options. Traders can trade in hundreds of
currency pairs. They also have the choice of entering into spot trade or they could enter into a future
agreement. Futures agreements are also available in different sizes and with different maturities to meet the
needs of the Forex traders. Therefore, Forex market provides an option for every budget and every investor
with a different appetite for risk taking.
Also, one needs to take into account the fact that Forex markets have a massive trading volume. More
trading occurs in the Forex market than anywhere else in the world. It is for this reason that Forex provides
unmatched liquidity to its traders who can enter and exit the market in a matter of seconds any time they feel
like!
3. Transaction Costs
Forex market provides an environment with low transaction costs as compared to other markets. When
compared on a percentage point basis, the transaction costs of trading in Forex are extremely low as
compared to trading in other markets. This is primarily because Forex market is largely operated by dealers
who provide a two way quote after reserving a spread for themselves to cover the risks. Pure play brokerage
is very low in Forex markets.
4. Leverage
Forex markets provide the most leverage amongst all financial asset markets. The arrangements in the Forex
markets provide investors to lever their original investment by as many as 20 to 30 times and trade in the
market! This magnifies both profits and gains. Therefore, even though the movements in the Forex market
are usually small, traders end up gaining or losing a significant amount of money thanks to leverage!

What is meant by technology transfer? Examine the policy of the Indian Government in this regard.

Is the legal environment conducive for industrial development? Explain.

Narrate the role of IMF in global economic development.

The role of the IMF has increased since the onset of the 2008 global financial crisis. In fact, an IMF
surveillance report warned about the economic crisis but was ignored. As a result, the IMF has been called
upon more and more to provide global economic surveillance. It's in the best position to do so because
it requires members to subject their economic policies to IMF scrutiny. Member countries are also
committed to pursuing policies that are conducive to reasonable price stability, and they agree to avoid
manipulating exchange rates for unfair competitive advantage.

MAY2017 Business Environment

Bring out the importance of scanning the environment.

What is industrial policy? Discuss its objectives.

Write a descriptive note on “EXIM Policy”.

Briefly discuss the role of banks in Economic Growth.

What are the special features of Government Policy on SSI?

In India, Small-scale enterprises have been given an important place for both ideological and economic
reasons. It is well documented that the small scale industries have an important role in the development of
the country. It contributes almost 40% of the gross industrial value added in the Indian economy.
Government's approach and intention towards industries in general and SSIs in particular are revealed in
Industrial policy Resolutions. There are many Government Policies for development and promotion of
Small-Scale Industries in India. These are mentioned as below:
1. Industrial Policy Resolution (IPR) 1948
2. Industrial Policy Resolution (IPR) 1956
3. Industrial Policy Resolution (IPR) 1977
4. Industrial Policy Resolution (IPR) 1980
5. Industrial Policy Resolution (IPR) 1990
Salient Features of the Government’s Small Scale Industrial Policy of 1991!
Small Scale Industry (SSI) is an industrial undertaking in which the investment in fixed assets in plant and
machinery, whether held on ownership term or on lease or hire purchase, does not exceed Rs 1 crore.
However, this investment limit is varied, by the Government from time to time.
India has the longest history of small enterprise development policy both in Asia and the world. Over the
last six decades, India has built up one of the world’s most elaborate small enterprise development
programmers for providing assistance to individuals and institutions, both in the urban and rural areas, for
setting up small-scale enterprises. In the post-reforms period, there has been a shift in focus from
‘protection’ to ‘promotion’. The Micro, Small and Medium Enterprises Development Act, 2006, defines
small enterprises as those manufacturing units, which have investment above Rs 25 lakh and up to crore. It
takes into account investments in plant and machinery only and does not consider money invested for
effluent treatment, quality control, fire-fighting equipment and safety. It also excludes the ‘standby’
investment in land and buildings. A separate category of medium enterprises upto a capital investment of Rs
10 crore has also been recognised in the Act.
i. A separate package for the promotion of Tiny Enterprises was introduced. This constituted the main thrust
of Government’s new policy. While the small scale sector (other than ‘Tiny Enterprises”) were mainly
entitled to one-time benefits (like preference in land allocation/power connection, access to facilities for
skill/technology upgradation), the “Tiny” enterprises were also made eligible for additional support on a
continuing basis, including easier access to institutional finance, priority in the Government Purchase
Programme and relaxation from certain provisions of labour laws.
ii. The scope of the National Equity Fund Scheme was widened to cover projects upto Rs.1 million for
equity support (upto 15 per cent). Single Window Loan Scheme was enlarged to cover projects up to Rs. 2
million with working capital margin up to Rs 1 million.
Composite loans under Single Window Scheme, which was previously available only through State
Financial Corporation’s (SFCs) and twin function State Small Industries Development Corporation
(SSIDCs), were channelised through commercial banks to facilitate access to large number of entrepreneurs.
iii. Emphasis was shifted from subsidised/cheap credit, except for .specified target groups, and efforts were
made to ensure both adequate flow of credit on a normative basis, and the quality of its delivery, for viable
operations of this sector.
iv. To provide access to the capital market and to encourage modernisation and technological upgradation,
equity participation by other industrial undertakings in the SSI, not exceeding 24 per cent of the total
shareholding was allowed. This was done to give and impetus to ancillarisation and sub-‘ contracting,
leading to expansion of employment opportunities.
v. A beginning was made towards solving the problem of delayed payments to small industries by setting up
of ‘factoring’ services through Small Industries Development Bank of India (SIDBI). Network of such
services was set up throughout the country and operated through commercial banks.
vi. It was recognised that a large potential of small scale sector in contributing to exports still remained
untapped. The SIDO was recognised as the nodal agency to support the small scale industries in export
promotion. An Export Development Centre was set up in SIDO to serve the small scale industries through
its network of field offices to further augment export activities of this sector.
vii. Industry Associations were encouraged and supported to establish quality counselling and common
testing facilities. Technology Information Centres to provide updated knowledge on technology and markets
were proposed to be established. It was decided to enforce compulsory quality control, where nonconformity
with quality and standards involves risk to human life and public health.
viii. A reoriented programme of modernisation and technological upgradation aimed at improving
productivity, efficiency and cost effectiveness in the small scale sector was intended to be pursued. Specific
industries in large concentrations/clusters were identified f6r studies in conjunction with SIDBI and other
banks.
Such studies were supposed to establish commercial viability of modernisation prescriptions, and financial
support was to be provided for modernisation of these industries on a priority basis. Indian Institutes of
Technology (IITs) and selected Regional/other Engineering Colleges were chosen as Technology
Information. Design and Development Centres in their respective command areas.
ix. A Technology Development Cell (TDC) was set up in the Small Industries Development Organisation
(SIDO) to provide technology inputs to improve productivity and competitiveness of the products of the
small scale sector.
The TDC coordinated the activities of the Tool Rooms. Process-cum-Product Development Centres
(PPDCs), existing as well as to be established under SIDO, and would also interact with the other industrial
research and development organisation to achieve its objectives.
x. Adequacy and equitable distribution of indigenous and imported raw materials was to be ensured to the
small scale sector, particularly the tiny sub-sector. It was decided to give priority to Tiny/Small Scale units
in allocation of indigenous raw material based on the capacity needs.
xi. Need for developing a strong Entrepreneurship Development Programme (EDP) and developing a pool
of trainers for EDP was also felt.
Define Culture. State its essential elements.
Culture is the social behaviour and norms found in human societies. Culture is considered a central concept
in anthropology, encompassing the range of phenomena that are transmitted through social learning in
human societies.

What are the essential conditions for globalisation?

Discuss the various objectives of World Bank.

Discuss how Social and Cultural Environment affect business.

Describe the role of Government in Business.

Explain the different stages of “Economic Growth”.

Discuss the pros and cons of FDI policy in India.

Foreign direct investment (FDI) is an investment in a business by an investor from another country for
which the foreign investor has control over the company purchased & it is different from FII(Foreign
institutional investors)defined as those institutional investors which invest in the assets belonging to a
different country other than that where these organizations are based

PROS:-
1. Seed funding for various Startups and ventures which leads to manufacturing and launch in global
market.Due to this the potential idea is turned into a finisu product.
2. Startups and ventures leads to creation of employment and job opportunity to earn earning for
people.
 3. FDI leads to more investment in Research and development (R&D) which tends to development in
science and technology which ultimately leads to improvement in finish product.
4. Competition between companies to be on leads better products and at cheaper rates
CONS:-
1. More investment leads to ownership on the company to the concerned foreign entitiy or individual
due which its indigenousness comes to an end.
2. Loss of a potential idea in name in our own country
Example :
Alibaba is the biggest shareholders of Paytm holding 40% of total stakes.Further it is planing to increase its
stake to 67% making it the owner of the Indian company by investing more money in it.
PROS
1. Increase in revenue generation
2. Increase in Employment generation
3. Getting the latest technology
4. Culture exchange
5. Increase Diversity
6. Infrastructure Development
7. Price Reduction
8. Ultimately benefit the customer
CONS
1. Foreign Investors are volatile
2. The imbalance between sectors and states
3. Tax Evasion
4. Money Laundering
5. Harms Domestic Companies
6. Possibility of Inflation
7. Increase in dependency
8. Political Involvement

Describe the role of Information Technology in business.

What are the powers of Government of India under Environmental Protection Act, 1986?
Power of Central Government to take Measures to Protect and Improve Environment
(1) Subject to the provisions of this Act, the Central Government shall have the power to take all such
measures as it deems necessary or expedient for the purpose of protecting and improving the quality of
the environment and preventing, controlling and abating environmental pollution.
(2) In particular, and without prejudice to the generality of the provisions of sub-section (1), such
measures may include measures with respect to all or any of the following matters, namely :
(i) co-ordination of actions by the State Governments, officers and other authorities –
(a) under this Act, or the rules made thereunder; or
(b) under any other law for the time being in force which is relatable to the objects of this Act;
(ii) planning and execution of a nation-wide programme for the prevention, control and abatement of
environmental pollution;
(iii) laying down standards for the quality of environment in its various aspects;
(iv) laying down standards for emission or discharge of environmental pollutants from various sources
whatsoever :
Provided that different standards for emission or discharge may be laid down under this clause from
different sources having regard to the quality or composition of the emission or discharge of
environmental pollutants from such sources;
(v) restriction of areas in which any industries, operations or processes, or class of industries, operations
or processes shall not be carried out or shall be carried out subject to certain safeguards;
(vi) laying down procedures and safeguards for the prevention of accidents which may cause
environmental pollution and remedial measures for such accidents;
(vii) laying down procedures and safeguards for the handling of hazardous substances;
(viii) examination of such manufacturing processes, materials and substances as are likely to cause
environmental pollution;
 (ix) carrying out and sponsoring investigations and research relating to problems of environmental
pollution;
(x) inspection of any premises, plant, equipment, machinery, manufacturing or other processes, materials
or substances and giving, by order, of such directions to such authorities, officers or persons as it may
consider necessary to take steps for the prevention, control and abatement of environmental pollution;
(xi) establishment or recognition of environmental laboratories and institutes to carry out the functions
entrusted to such environmental laboratories and institutes under this Act;
(xii) collection and dissemination of information in respect of matters relating to environmental
pollution;
(xiii) preparation of manuals, codes or guides relating to the prevention, control and abatement of
environmental pollution;
(xiv) such other matters as the Central Government deems necessary or expedient for the purpose of
securing the effective implementation of the provisions of this Act.
(3) The Central Government may, if it considers it necessary or expedient so to do for the purposes of
this Act, by order, published in the Official Gazette, constitute an authority or authorities by such name
or names as may be specified in the order for the purpose of exercising and performing such of the
powers and functions (including the power to issue directions under section 5) of the Central
Government under this Act and for taking measures with respect to such of the matters referred to in
sub-section (2) as may be mentioned in the order and subject to the supervision and control of the
Central Government and the provisions of such order, such authority or authorities may exercise the
powers or perform the functions or take the measures so mentioned in the order as if such authority or
authorities had been empowered by this Act to exercise those powers or perform those functions or take
such measures.

Analyse the Advantages and Disadvantages of globalisation with reference to India

Globalisation is the process of international integration through acceptance and exchange of each other’s
goods, services, culture among others. Thus, virtually , it is a process of vanishing of the borders between
various countries.
However, this phenomenon is a twin-faced one, thus having both advantages and disadvantages. Let us have
an insight on them:
Advantages:
 With better exchanges of goods and services, each and everything is now available everywhere in the
world.
 The North(refers to the developed world) merges with the South(developing and Least developed),
thus leading to an era of overall technological advancement which in turn has its huge advantages on
literally every aspect including health, education, poverty among others.
 Better relations between various nations who provide a jig-saw fit for each other. For example. India
provides a bulk of resources, both natural and human but it lacks the required technology for a
particular task which is possessed by Japan. The latter is lacking young population. So , it would
invest in India for good returns. This way they provide a jig saw fit for each other.
 Cultural exchange is the best way to establish strong people-to-people links. This is facilitated by
globalisation.
 Joint efforts on common problems like climate change, terrorism, trade etc.
 Economic exchange in the form of trade and investment, which is a major component of this process,
is a good method of calming down the tensions between any two countries.
 Flow of information and ideas from those who have it to those who don’t. For example from the U.S
to South Africa. Internet, in general and Social Media in particular has played a huge role here.
Disadvantages:
 This process is leading to an era of Neo-colonialism, as the developed nations are trying to assert
their dominance in the name of globalisation.
 This has led to global lobbying by the developed nations in the developing ones so that the latter
does not overtake the former. For example, a report of IB, India revealed that Greenpeace
International of the U.S is hindering the progress of the major Indian development projects.
  Cultural exchanges though tie people together, are leading to overshadowing of one culture by
another. For example. Overshadowing of western culture on the Indian culture. This way even the
pros of one’s own culture are subdued.
 Particularly, in value-rich countries like India, where family life used to be its forte, globalisation has
caused devastation. Now, the process of NUCLEARisation is soaring with families getting divided.
This is also leading to a scenario where the old age dependents are pushed into pitiable conditions by
their children.
 Developing countries like India is facing a phenomenon called “brain-drain”, where a huge chunk of
India’s youth is preferring jobs/education in the developed countries than their own. This will leave
lesser scope of tapping the demographic potential of the country.
 Terrorism has soared in the globalised world. This is due to multiple reasons:
o Developed nations’ tendency to interfere in the affairs of other nations to fulfil their greed
leads to upraising of some rebellion forces which later on turn to become a terrorist group.
o Social Media which has facilitated the flow in info and also eased the people-to-people
contacts has become a facilitator of the terrorist activities as it eases the radicalisation process
across the globe.
o Cyber crimes are on a rise which has grave consequences when it comes to security of a
country.

May 2018 Business Laws

What are the essentials elements of a valid contract?

‘‘All agreements are not contract but all contracts are agreement’’– Discuss.
A contract is a legally binding agreement or relationship that exists between two or more parties to do or
abstain from performing certain acts. There must be offer and acceptance for a contract to be formed. An
offer must backed by acceptance of which there must be consideration. Both parties involved must intend to
create legal relation on a lawful matter which must be entered into freely and should be possible to perform.

Definition of contract
According to section 2(h) of the Contract Act 1872:
” An agreement enforceable by law is a contract.”
A contract therefore, is an agreement the which creates a legal obligation i.e., a duty enforceable by law.
From the above definition, we find that a contract essentially consists of two elements:
(1) An agreement and (2) Legal obligation i.e., a duty enforceable by law.
Example;
A promises to sell a horse to B for Rs.100,000, and B promises to buy horse at that price.
All contracts are agreements:
For a Contract to be there an agreement is essential; without an agreement, there can be no contract. As the
saying goes, “where there is smoke, there is fire; for without fire, there can be no smoke”. It could will be
said, “where there is contract, there is agreement without an agreement there can be no contract”. Just as a
fire gives birth to smoke, in the same way, an agreement gives birth to a contract.
What is agreement?
An agreement is a form of cross reference between different parties, which may be written, oral and
lies upon the honor of the parties for its fulfillment rather than being in any way enforceable.
As per section 2 (e) of Contract At 1872:
” Every promise and every set of promises, forming the consideration for each other, is an agreement.”
Thus it is clear from this definition that a ‘promise’ is an agreement.
What is a ‘promise‘?
the answer to this question is contained in section 2 (b) which defines the term.” When the person to whom
the proposal is made signifies his assent thereto the proposal is said to be accepted. A proposal, when
accepted, becomes a promise.”
An agreement, therefore, comes into existence only when one party makes a proposal or offer to the other
party and that other party signifies his assent thereto.
All agreements are not contracts
As stated above, an agreement to become a contract must give rise to a legal obligation. If an agreement is
incapable of creating a duty enforceable by law. It is not a contract. Thus an agreement is a wider term than
a contract.
Agreements of moral, religious or social nature e.g., a promise to lunch together at a friend’s house or to
take a walk together are not contracts because they are not likely to create a duty enforceable by law for the
simple reason that the parties never intended that they should be attended by legal consequences
On the other hand, legal agreements are contracts because they create legal relations between the parties.
EXAMPLE: a- A invites B to dinner. B accepts this invitation but does not attend the dinner. A can not sue
B for damages. It is social agreement because it does not create legal obligation. So it is not a contract.
b- A promises to sell his car to B for one million. It is legal agreement because it creates legal obligations
between the parties. So it is a contrac
According to section 10 of the contract act 1872,
“All agreements are contracts if they are made by the free consent of the parties, competent to contract, for
a lawful consideration and with a lawful object and not hereby declared to be void.”
Thus an agreement becomes a contract when at least the following conditions are satisfied.
1-free consent
2-competency of the parties
3-lawful consideration
4- lawful object.
Conclusion:
In a nut shell, an agreement is the basis of a contract and contract is the structure constructed on these basis.
An agreement starts from an offer and ends on consideration while a contract has to achieve an other
milestone that is enforceability. Due to this, breach of an agreement does not give rise to any legal remedy to
the aggrieved party while breach of contract provides legal remedy to the aggrieved party against the guilty
party. Thus we can say that all contracts are agreements but all agreements are not contracts.

Briefly explain the different types of agents.

Meaning and Definition of Agency
Agency is the Legal relationship between an Agent and Principal. In a contract of Agency, a person
appoints another person to act on his behalf with a third party. The person who appoints another person is
called 'Principal' and the person, who is appointed is called 'Agent'
For example, 'A' appoints 'B' to buy 50 bags of Wheat on his behalf, Here 'A' is Principal and 'B' is
Agent. The relation between 'A' and 'B' is called Agency.
Agent:
An “agent” is a person employed to do any act for another or to represent another in dealing with
third persons.
Principal :
The person for whom such act is done, or who is so represented, is called the “principal”.
Kinds of Agents
On the point of view of the extent of their authority and the nature of the work performed by them agents
may be Classified under the following heads : -
1)Universal Agent :
A Universal agent is one who is authorised to do all the acts which the Principal can lawfully do
and can delegate.
2) Special Agent:
A Special Agent is one who is employed to do some particular act or represent his Principal in some
particular transactions.
for example, An agent employed to sell a Bike. If the special agent does anything outside his authority, the
principal is not bound by it and third parties are not entitled to assume that the agent has unlimited powers.
3) General Agent: A General Agent is one was employed to do all acts connected with particular business
or employment.
For example, A manager of a firm. He can bind the principal by doing anything which Falls within the
ordinary scope of that business. Whether he is actually authorised for any particular act or not, is immaterial
provided that third party acts bona fide.
4) De Credere Agent:
He is one who in consideration of an extra commission guarantee his Principal that the third person
with whom he enters into contracts on behalf of the principal shall perform their financial obligations that is,
if the buyer does not pay, he will pay. Thus he occupies the position of a surety it as well as an Agent. He is
not answerable to his principle for the failure of the third person to perform the contract. A del credere agent
constituted an exception to this rule.
5) Pakka Adatia And Kaccha Adatia
Pakka Adatia is an agent of his constituent only up to a certain point only for the purpose of ascertaining and
giving a correct quotation of the price. But thereafter when the transaction takes place, he cease to be an
agent and assumes towards his constituent the character of a Principal, and the transaction must be regarded
as a contract between Principal and Principal.
6) Broker :
He is one who is employed to make contracts for the purchase and sale of goods. He is not entrusted with the
possession of goods. He simply act as a connecting link and bring it to parties together to bargain and if the
circumstances materialise he becomes entitled to his commission called brokerage. He makes a contract in
the name of his Principal. Thus, a broker is an agent primarily employed to negotiable a contract between
two parties where he is a broker for sale he has no position of the goods to be sold.
7) Factor :
A factor is a mercantile agent to home goods are entrusted for sale. He enjoys Wide discretionary powers in
relation to the sale of goods. A Factor is an agent who is entrusted with the possession and contract of the
goods to be said by him for his Principal.
He has possession of the goods, authority to sell them in his own name and a general discretion as to
this sale. He may sale on the usual term of credit may receive the price and give a good discharge to the
buyer.
8) Commission Agent:
Commission Agent is a mercantile Agent who buys or sells goods for his Principal on the best
possible terms in his own name and who receives Commission for his labours. He may have possession of
course or not.
9) Auctioneers :
An auctioneer is an agent to sell property at a public auction. He is primary an agent for the seller,
but upon the property being knocked down he becomes also the agent of the buyer. He is mercantile agent
within the meaning of Section 2(9) of the Sale of goods Act.

What are the differences between sale and agreement to sell?

Key Differences Between Sale and Agreement to Sell
The following are the major differences between sale and agreement to sell:
1. When the vendor sells goods to the customer for a price, and the transfer of goods from the vendor to the
customer takes place at the same time, then it is known as Sale. When the seller agrees to sell the goods to the
buyer at a future specified date or after the necessary conditions are fulfilled then it is known as Agreement to
sell.
2. The nature of sale is absolute while an agreement to sell is conditional.
 3. A contract of sale is an example of Executed Contract whereas the Agreement to Sell is an example of
Executory Contract.
4. Risk and rewards are transferred with the transfer of goods to the buyer in Sale. On the other hand, risk and
rewards are not transferred as the goods are still in possession of the seller.
5. If the goods are lost or damaged subsequently, then in the case of sale it is the liability of the buyer, but if we
talk about an agreement to sell, it is the liability of the seller.
6. Tax is imposed at the time of sale, not at the time of agreement to sell.
7. In the case of a sale, the right to sell the goods is in the hands of the buyer. Conversely, in agreement to sell,
the seller has the right to sell the goods.

Discuss the rights of a surety

 Rights of Surety against Creditor
o 1. Rights in Case of Fidelity Guarantee
o 2. Before the Payment of the Debt Guaranteed
o 3. Right to Claim Securities
o 4. Right of Equities
o 5. Right of Set-off
 Rights of Surety against the Principal Debtor
o 1. Right of Subrogation
o 2. Right of Indemnity
o 3. Right to be Relieved Earlier
 Rights of Surety against Co-sureties
o 1. Right to Contribute Equally
o 2. Liability of Co-sureties bound in Different Sums
1. Rights against the Creditor
As per section 141, a surety is eligible to the benefit of every security which the creditor has against the
principal debtor. This holds true even if at the time of entering into the contract of guarantee the surety was
unaware of the existence of such a security.
Also, when the creditor losses or parts with such security without the consent of the surety, this discharges the
surety to the extent of the value of such security.
2. Rights against the Principal Debtor
Once the surety discharges the debt, he obtains the rights of a creditor against the principal debtor. He can now
sue the principal debtor for the amount of debt paid by him to the creditor due to the default of the principal
debtor.
In a case where the principal debtor on discovering that the debt has become due, starts disposing of his
properties in order to prevent seizure by the surety, the surety can compel the debtor to pay the debt and
discharge him from his liability to pay.
3. Surety’s rights against the co-sureties
When a surety pays more than his share to the creditor, he has a right of contribution from the co-sureties, who
are equally liable to pay. For example, Anthony, Barkha, and Chaya are the co-sureties to David for a sum of
₹30000 lent to Erwin who made default in payment.
Thus, Anthony, Barkha, and Chaya are liable to pay ₹10000 each as between them. So, in this case, if any one
of them pays more than ₹10000, he can claim the excess from the other two co-sureties so as to reduce his
payment to ₹10000 only. However, if one of the co-sureties becomes insolvent, the other co-sureties shall
contribute his share equally.

Define partnership deed. Discuss its contents.

A partnership deed, also known as a partnership agreement, is a document that outlines in detail the rights
and responsibilities of all parties to a business operation. It has the force of law and is designed to guide the
partners in the conduct of the business.
Essential Contents of a Partnership Deed:
The deed of partnership contains the following contents;
 Name of the Business / Choosing a Partnership Firm Name
 Location of the Business
 Name and Address of Partners
 Nature of Firm’s Business
  Duration of Partnership
 Partners’ Capitals
 Interest on Capital
 Drawing and Interest rate
 Division of Profit/profit sharing ration
 Partners’ Salary and Commission
 Rights and Duties of Partners
 Admission and Retirement of Partners
 Death of a Partner
 Valuation of Goodwill
 Revaluation of Assets and Liabilities
 Accounts and Audit
 Dissolution of Partnership
 Arbitration in case of disputes among partners
 Arrangements to be followed in case a partner become insolvent
 Salary, if any payable to the partners for managing the firm
 The method of preparing accounts and arrangement for audit.
 The operation of banks account.

What are the advantages of registration of a partnership firm?

According to the Indian Partnership Act 1932 the partnership firm is the relation between two or more
person who have agreed to come together and share the profits carried on by all or any of them. It is one of
the most popular business structures in India with the legal agreement between the partners. According to
the rules and regulations of Partnership act currently it is not mandatory to obtain the partnership registration
in India. However, it is highly recommended for the partners to obtain this registration in order to provide
the legality to their business structure. There are multiple advantages of partnership firm that makes it the
popular business structure-
Ease of formation-At the time of incorporating the partnership firm there are very less requirements to be
followed as compared to other company structures and the limited liability partnership. Moreover, the
partnership firm can be started on the same day of making the application thus the time consumed in its
registration is also very less.
More Resources- Due to the increased number of partners the resources in the partnership firm are very
large. Moreover, the knowledge and experience of multiple partners are there.
Risk sharing- In the partnership firm the risk is equally distributed among all the partners. This risk is
balanced.
No need to statuary audit- There is no requirement of the audit in the partnership firm like every other
form of company structures. However, the need of audit may occur in case of the income tax act requires so.
Flexibility of Operations- In comparison to the other company structures there exist the flexibility of
operations in the partnership firm. This is because there are less rules and regulations applicable on this
structure.
Ease of closure- Most of the people miss out on this aspect at the time of starting the business. However, if
you go on closing the company structure there is a complete step by step procedure that the partners are
required to follow. However, this is not the case with the registered partnership firm in India. The closure
procedure of partnership firm is very simple.
So these are main advantages of partnership that makes it is ideal structure for the association of two or
more persons.

Discuss the essentials of a company meeting.

Essentials of Company Meetings
The essential requirements of a company meeting can be summed up as follows:
1. Two or More Persons: To constitute a valid meeting, there must be two or more persons. However, the
articles of association may provide for a larger number of persons to constitute a valid quorum.
2. Lawful Assembly: The gathering must be for conducting a lawful business. An unlawful assembly shall
not be a meeting in the eye of law.
3. Previous Notice: Previous notice is a condition precedent for a valid meeting. A meeting, which is purely
accidental and not summoned after a due notice, is not at all a valid meeting in the eye of law.
4. To Transact a Business: The purpose of the meeting is to transact a business. If the meeting has no
definite object or summoned without any predetermined object, it is not a valid meeting. Some business
should be transacted in the meeting but no decision need be arrived in such meeting.
Kinds of Company Meetings
The meetings of a company can be broadly classified into four kinds.
1. Meetings of the Shareholders.
2. Meetings of the Board of Directors and their Committees.
3. Meetings of the Debenture Holders.
4. Meetings of the Creditors.

Describe the various kinds of contract.

Understanding the Different Kinds of Contracts
A contract can be a simple oral or written agreement that does not have to be signed, witnessed, or sealed. It
can also be a formal agreement that is written, witnessed, signed, and sealed by the parties involved.
Traditionally, a contract was regarded as legally enforceable only if it was sealed. Now that courts are
recognizing implied contracts and other kinds of informal contracts, the use of formal contracts under seal
has diminished. When it comes to contracts, there are four classifications, including:
 Contracts based on formation
 Contracts based on nature of consideration
 Contracts based on execution
 Contracts based on validity
Contracts Based on Formation
Contracts based on formation can be categorized into three groups: express contracts, implied contracts, and
quasi contracts. An express contract refers to a contract resulting from an expression or conversation, while
an implied contract occurs without an expression. While an implied contract can be implied in fact or
implied in law, a true implied contract arises from a mutual agreement that has not been expressed in words.
An implied-in-law contract is also known as a quasi contract. It is not predicated on the consent of the
parties involved and exists regardless of consent.
Contracts Based on the Nature of Consideration
There are two types of contracts based on the nature of consideration: unilateral and bilateral contracts. In a
unilateral contract, only one party makes a promise. Such a contract can be established with just
an acceptance of an offer. In a bilateral contract, participating parties promise each other they will perform
or refrain from performing an act. This type of contract is also known as a two-sided contract.
Contracts Based on Execution
Contracts based on execution can either be executed contracts or executory contracts. An executed contract
is a contract in which performance is already completed. To a certain extent, the term is a misnomer since a
contract no longer exists once the parties involved have fulfilled their obligations. An executory contract
refers to a contract that obligates the participating parties to perform their obligations in the future.
Contracts Based on Validity
Contracts based on validity can come in five different forms, including valid contracts, void contracts,
voidable contracts, illegal contracts, and unenforceable contracts. A valid contract is one that is legally
enforceable, while a void contract is unenforceable and imposes no obligations on the parties involved. If a
contract is established under certain physical or mental pressure, it is called a voidable contract. Such a
contract may become a valid or void contract in the future. An illegal contract refers to a contract with
unlawful object, whereas an unenforceable contract is a contract that has not fulfilled certain legal
formalities.

What are the different modes of creation of an agency?

It may be created in any one of the following ways:
1. BY DIRECT APPOINTMENT
Where the agent’s authority is expressed, it is said to be a creation of agency by direct appointment.
The authority of the agent is said to be expressed when it is given by words spoken or written.
Illustration: X appoints Y as his agent to sell his goods at X’s shop by spoken words. It will be a
 creation of agency by direct appointment.
2. BY IMPLICATION
When the agency is inferred from the course of dealings between two persons or from the conduct,
the agency is said to be created by implication. Here the genital authority is not given by words
spoken or written but it is assumed by the conduct or by the dealing of the parties.
Illustration; A owns a shop in Multan and lives in Bahawalpur. The shop is managed by B. B is in
the habit of ordering goods from C in the name of A and makes payment from A’s fund with A’s
knowledge. It means B has implied authority from A to deal with C.
3. AGENCY BY NECESSITY
When the agent has no authority from his principal in expressed or any other way, but under certain
emergency circumstances he does any act for the principal, it is known the creation of agency by
necessity.
illustration; A horse is sent by a train but at arrival, there is no one to receive it The railway company
is bound to take reasonable steps to keep the horse alive. It will be a creation of agency by necessity.
The railway company will have agental position in such case.
4. AGENCY BY ESTOPPEL
When an agent has without authority, done acts or incurred obligations to third persons on behalf of
his principal, the principals are bound, by such acts or obligations if he has by his words or conduct
induced such third persons to believe that such acts and obligations were within the scope of agent’s
authority. It will be the case of creation of agency by estoppels. Sec. 237
Illustration ; X consigns goods to Y for sale, and gives him instructions not to sell under a fixed
price. Z, being ignorant of Y’s instructions enters ‘into a contract with Y in X’s presence to buy the
goods at a price lower than the reserved price. X is bound by the contract.
5. AGENCY BY RATIFICATION
Where a person (Principal) ratifies an unauthorized act done by another person (agent) on his behalf.
It is known as creation of agency by ratification ,
Illustration; A having no authority from B purchases goods on B’s behalf. But after that B sells the
goods on his account, B’s conduct implies a ratification of the purchase made by A on his behalf
6. AGENCY BY OPERATION OF LAW
Under some cases the agency is automatically created by the Operation of law enforceable in India.
For example, a partner is an agent of the firm for the purpose of the business of the firm.

Explain the implied conditions and warranties in contract of sale of goods Act, 1930.
Express and Implied Conditions / Warranties: A Sale
Conditions and warranties may be express or implied.
Express conditions and warranties are which, are expressly provided in the contract. Implied conditions and
warranties are those which are implied by law or custom; these shall prevail in a contract of sale unless the
parties agree to the contrary.
i) Condition as to title -- In every contract of sale, unless the circumstances of the contract are such as to
show a different intention, there is an implied condition on the part of the seller, that :
a. In case of a sale, he has a right to sell the goods, and
b. In case of an agreement to sell, he will have a right to sell the goods at the time when the property is
to pass.

The words 'right to sell' contemplate not only that the seller has the title to what he purports to sell,
but also that the seller has the right to pass the property. If the seller's title turns out to be defective,
the buyer may reject the goods.
ii) Condition as to Description -- In a contract of sale by description, there is an implied condition that the
goods shall correspond with the description. The term ' sale by description' includes the following situation ;
a. Where the buyer has not seen the goods and buys them relying on the description given by the seller.
b. Where the buyer has seen the goods but he relies not on what he has seen but what was stated to him
and the deviation of the goods from the description is not apparent.
c. Packing of goods may sometimes be a part of the description. Where the goods do not conform to be
method of packing described (by the buyer or the seller) in the contract, the buyer can reject the
goods.
iii) Condition as to Quality or Fitness -- Where the buyer, expressly or by implication, makes known the
seller the particular purpose for which goods are required, so as to show that the buyer relies on the seller's
skill or judgment and the goods are of a description which it is in the course of the seller's business to supply
(whether or not as the manufacturer of producer), there is an implied condition that the goods shall be
reasonably fit for such purpose. In other words, this condition of fitness shall apply, if:
a. The buyer makes known to the seller the particular purpose for which the goods are required,
b. The buyer relies on the seller's skill or judgment,
c. The goods are of a description which he sellers ordinarily supplies in the course of his business, and
d. The goods supplied are not reasonably fit for the buyer's purpose.
iv) Condition as to Merchantability -- Where the goods are bought by description from a seller, who deals in
goods of that description (whether or not as the manufacturer or producer) there is an implied condition that
the goods shall be of merchantable quality.
Merchantable quality ordinarily means that the goods should be such as would be commercially saleable
under the description by which they are known in the market at their full value.
v) Condition as to Wholesomeness -- In case of sale of eatable provisions and foodstuff, there is another
implied condition that the goods shall be wholesome. Thus, the provisions or foodstuff must not only
correspond to their description, but must also be merchantable and wholesome. By 'wholesomeness' it means
that goods must be for human consumption.
vi) Condition Implied by Custom or Trade Usage: An implied warranty or condition as to quality or fitness
for a particular purpose may be annexed by the usage of trade. In certain sale contracts, the purpose for
which the goods are purchased may be implied from the conduct of the parties or from the nature or
description of the goods. In such cases, the parties enter into the contract with reference to those known
usage. For instance, if a person buys a perambulator or a medicine the purpose for which it is purchased is
implied from the thing itself; the buyer need not disclose the purpose to the seller.
vii) Conditions in a Sale by Sample: A contract of sale is a contract for sale by sample where there is a term
in the contract, express or implied to that effect. Usually, a sale by sample is implied when a sample is
shown and the parties intend that the goods should be of he kind and quality as the sample is.
viii) Conditions in a sale by Sample as well as by Description: A vast majority of cases where samples
are shown, are sales by sample as well as by description. In a contract for sale by sample as well as by
description, the goods supplied must correspond both with the sample as well as with the description.

Implied Warranties
A condition becomes a warranty when --
a) the buyer waives the conditions or opts to treat the breach of the condition as a breach of warranty ; or
b) The buyer accepts the goods or a part thereof, or is not in a position to reject the goods.
i. Implied Warranty of Quiet Possession -- In every contract of sale, unless there is a contrary intention,
there is implied warranties that the buyer's shall have and enjoy quiet possession of the goods. If the
buyer's right to possession and enjoyment of the goods is in any way disturbed as consequences of
the seller's defective title, the buyer may sue the seller for damages for breach of this warranty.
ii. Implied Warranty of Freedom from Encumbrances -- The buyer is entitled to a further warranty that
the goods shall be free from any charge or encumbrance in favor of any third party not declared or
known to buyer before or at the time when the contract is made. If the buyer is required to discharge
the amount of the encumbrance it shall be a breach of this warranty and the buyer shall be entitled to
damages for the same.

Discuss the essential features of negotiable instruments

Essential Features of Negotiable Instruments are given below:
1. Writing and Signature:
Negotiable Instruments must be written and signed by the parties according to the rules relating to
Promissory Notes, Bills of Exchange and Cheques. Demand Drafts are also construed as Negotiable
Instruments in the limiting case as they have the same property as N.I. Instruments.
2. Money: Negotiable instruments are payable by legal tender money of India. The liabilities of the parties of
Negotiable Instruments are fixed and determined in terms of legal tender money.
3. Negotiability:
Negotiable Instruments can be transferred from one person to another by a simple process. In the case of
bearer instruments, delivery to the transferee is sufficient. In the case of order instruments two things are
required for a valid transfer: endorsement (i.e., signature of the holder) and delivery. Any instrument may be
made non-transferable by using suitable words, e.g., “pay to X only.”
4. Title:
The transferee of a negotiable instrument, when he fulfils certain conditions, is called the holder in due
course. The holder in due course gets a good title to the instrument even in cases where the title of the
transferor is defective.
5. Notice:
It is not necessary to give notice of transfer of a negotiable instrument to the party liable to pay. The
transferee can sue in his own name.
6. Presumptions: Certain presumptions apply to all negotiable instruments. Example: It is presumed that there is
consideration. It is not necessary to write in a promissory note the words “for value received” or similar expressions
because the payment of consideration is presumed. The words are usually included to create additional evidence of
consideration.
7. Special Procedure:
A special procedure is provided for suits on promissory notes and bills of exchange (The procedure is
prescribed in the Civil Procedure Code). A decree can be obtained much more quickly than it can be in
ordinary suits.
8. Popularity:
Negotiable instruments are popular in commercial transactions because of their easy negotiability and quick
remedies.
9. Evidence:
A document which fails to qualify as a negotiable instrument may nevertheless be used as evidence of the
fact of indebtedness.

Narrate the fundamental principles of insurance.

The main motive of insurance is cooperation. Insurance is defined as the equitable transfer of risk of loss
from one entity to another, in exchange for a premium.
1. Nature of contract:
Nature of contract is a fundamental principle of insurance contract. An insurance contract comes into
existence when one party makes an offer or proposal of a contract and the other party accepts the proposal.
A contract should be simple to be a valid contract. The person entering into a contract should enter with his
free consent.
2. Principal of utmost good faith:
Under this insurance contract both the parties should have faith over each other. As a client it is the duty of
the insured to disclose all the facts to the insurance company. Any fraud or misrepresentation of facts can
result into cancellation of the contract.
3. Principle of Insurable interest:
Under this principle of insurance, the insured must have interest in the subject matter of the insurance.
Absence of insurance makes the contract null and void. If there is no insurable interest, an insurance
company will not issue a policy.
An insurable interest must exist at the time of the purchase of the insurance. For example, a creditor has an
insurable interest in the life of a debtor, A person is considered to have an unlimited interest in the life of
their spouse etc.
4. Principle of indemnity:
Indemnity means security or compensation against loss or damage. The principle of indemnity is such
principle of insurance stating that an insured may not be compensated by the insurance company in an
amount exceeding the insured’s economic loss.
In type of insurance the insured would be compensation with the amount equivalent to the actual loss and
not the amount exceeding the loss.
This is a regulatory principal. This principle is observed more strictly in property insurance than in life
insurance.
The purpose of this principle is to set back the insured to the same financial position that existed before the
loss or damage occurred.
5. Principal of subrogation:
The principle of subrogation enables the insured to claim the amount from the third party responsible for the
loss. It allows the insurer to pursue legal methods to recover the amount of loss, For example, if you get
injured in a road accident, due to reckless driving of a third party, the insurance company will compensate
your loss and will also sue the third party to recover the money paid as claim.
6. Double insurance:
Double insurance denotes insurance of same subject matter with two different companies or with the same
company under two different policies. Insurance is possible in case of indemnity contract like fire, marine
and property insurance.
Double insurance policy is adopted where the financial position of the insurer is doubtful. The insured
cannot recover more than the actual loss and cannot claim the whole amount from both the insurers.
7. Principle of proximate cause:
Proximate cause literally means the ‘nearest cause’ or ‘direct cause’. This principle is applicable when the
loss is the result of two or more causes. The proximate cause means; the most dominant and most effective
cause of loss is considered. This principle is applicable when there are series of causes of damage or loss.

Define partnership. Explain the various kinds of partners

A partnership is a form of business where two or more people share ownership, as well as the responsibility
for managing the company and the income or losses the business generates.
1. Active or managing partner:
A person who takes active interest in the conduct and management of the business of the firm is known as
active or managing partner.
He carries on business on behalf of the other partners. If he wants to retire, he has to give a public notice of
his retirement; otherwise he will continue to be liable for the acts of the firm.
2. Sleeping or dormant partner:
A sleeping partner is a partner who ‘sleeps’, that is, he does not take active part in the management of the
business. Such a partner only contributes to the share capital of the firm, is bound by the activities of other
partners, and shares the profits and losses of the business. A sleeping partner, unlike an active partner, is not
required to give a public notice of his retirement. As such, he will not be liable to third parties for the acts
done after his retirement.
3. Nominal or ostensible partner:
A nominal partner is one who does not have any real interest in the business but lends his name to the firm,
without any capital contributions, and doesn’t share the profits of the business. He also does not usually
have a voice in the management of the business of the firm, but he is liable to outsiders as an actual partner.
Sleeping vs. Nominal Partners:
It may be clarified that a nominal partner is not the same as a sleeping partner. A sleeping partner
contributes capital shares profits and losses, but is not known to the outsiders.
A nominal partner, on the contrary, is admitted with the purpose of taking advantage of his name or
reputation. As such, he is known to the outsiders, although he does not share the profits of the firm nor does
he take part in its management. Nonetheless, both are liable to third parties for the acts of the firm.
4. Partner by estoppel or holding out:
If a person, by his words or conduct, holds out to another that he is a partner, he will be stopped from
denying that he is not a partner. The person who thus becomes liable to third parties to pay the debts of the
firm is known as a holding out partner.
There are two essential conditions for the principle of holding out : (a) the person to be held out must have
made the representation, by words written or spoken or by conduct, that he was a partner ; and (6) the other
party must prove that he had knowledge of the representation and acted on it, for instance, gave the credit.
5. Partner in profits only:
When a partner agrees with the others that he would only share the profits of the firm and would not be
liable for its losses, he is in own as partner in profits only.

6. Minor as a partner:
A partnership is created by an agreement. And if a partner is incapable of entering into a contract, he cannot
become a partner. Thus, at the time of creation of a firm a minor (i.e., a person who has not attained the age
of 18 years) cannot be one of the parties to the contract. But under section 30 of the Indian Partnership Act,
1932, a minor ‘can be admitted to the benefits of partnership’, with the consent of all partners. A minor
partner is entitled to his share of profits and to have access to the accounts of the firm for purposes of
inspection and copy.
He, however, cannot file a suit against the partners of the firm for his share of profit and property as long as
he remains with the firm. His liability in the firm will be limited to the extent of his share in the firm, and his
private property cannot be attached by creditors.
On his attaining majority, he has to decide within six months whether he will become regular partner of
withdraw from partnership. The choice in either case is to be intimated through a public notice, failing
which he will be treated to have decided to continue as partner, and he becomes personally liable like other
partners for all the debts and obligations of the firm from the date of his admission to its benefits (and not
from the date of his attaining the age of majority). He also becomes entitled to file a suit against other
partners for his share of profit and property.
7. Other partners:
In partnership firms, several other types of partners are also found, namely, secret partner who does not want
to disclose his relationship with the firm to the general public. Outgoing partner, who retires voluntarily
without causing dissolution of the firm, limited partner who is liable only up to the value of his capital
contributions in the firm, and the like.
However, the moment public comes to know of it he becomes liable to them for meeting debts of the firm.
Usually, an outgoing partner is liable for all debts and obligations as are incurred before his retirement. A
limited partner is found in limited partnership only and not in general partnership.

Explain the different modes of winding up of a company.

The Liquidation or winding up a company is a process through which life of company and it’s all affairs are
wound up and its property administered for benefits of its creditors and members.
According to Section 297 of ordinance these are the following modes of winding up a company.
1. Winding up by the Court
A company formed and registered under the ordinance, may be wound up by the court. This kind of winding
up is also called compulsory winding up.
Explanation of winding up a company by Court
Following points are important to explanation
i. Special Resolution
As far as winding up of company by court is concerned, company can wound up only when company has
passed special resolution for its winding up and court orders for its winding up on basis of some specific
grounds.
ii. Oppression
If it is conducting its business in a manner oppressive to any member or person concerned with the
formation or minority share-holders.
iii. Inability to pay debts
When is it’s proved that public company is unable to pay its debts, court can order for its winding up.
iv. Unauthorized business
If it is carrying on business not authorized by the memorandum.
v. Non-maintenances of accounts
If company fails to maintain its accounts, court can order for its winding up.
vi. Non-holding of Statutory Meeting
When statutory meeting is not held within prescribed period, court can order for winding up of company.
vii. Non-submission of Statutory Report
When statutory report is not submitted to registrar, court can order for winding up of company.
viii. Failure to commence or suspend business
If the company does not commence its business within a year from its incorporation or suspends the
business for a whole years.

ix. Reduction of members

If the number of member is reduced in the case of a public company, below seven and in the case of a
private company, below two.
x. Failure to carryout directions
If it is managed by person who fail to carry out the directions of the court or Registrar or commission.
2. Voluntary winding up a Company
The object of a voluntary winding is that the company and its creditors shall be left to settle their affairs
without going to Court, but they may apply to the court for any directions and order if and when necessary.
Explanation voluntary winding up a company
Following are the points are important to explanation
i. Expiry of period
When the period if any fixed for the duration of the company expires.
ii. Occurrence of events
When the event occurs, on the occurrence of which the articles provide that the company is to be dissolved
and the company has passed a resolution to winding up.
iii. Special Resolution
If the company by a special resolution resolves that the company be wound up voluntarily for any reason
whatsoever.
iv. Extraordinary Resolution
When the company has passed an extra-ordinary resolution that it cannot by reason of its liabilities carry on
its business, and that it is expedient that the company be wound up.
3. Winding up a company under supervision of court
When company has passed special or extra-ordinary resolution for its liquidation or winding up, court can
pass an order on application of creditors, contributors or other persons for conducting of liquidation or
winding up of company under supervision of court.
Explanation of winding up a company under supervision of court
As far as winding up a company under supervision of court is concerned, all proceedings for winding up of
company are though conducted voluntarily, yet it is necessary that these proceedings should be conducted
under supervision of court.

DEC 2017 Business laws

Briefly explain the type of Contracts.

What are the remedies available to an aggrieved party on breach of Contract?

Remedies for Breach of Contract
When a promise or agreement is broken by any of the parties we call it a breach of contract. So when either of the
parties does not keep their end of the agreement or does not fulfill their obligation as per the terms of the contract, it is
a breach of contract. There are a few remedies for breach of contract available to the wronged party. Let us take a
look.
1] Recession of Contract
When one of the parties to a contract does not fulfill his obligations, then the other party can rescind the contract and
refuse the performance of his obligations.
As per section 65 of the Indian Contract Act, the party that rescinds the contract must restore any benefits he got under
the said agreement. And section 75 states that the party that rescinds the contract is entitled to receive damages and/or
compensation for such a recession.
2] Sue for Damages
Section 73 clearly states that the party who has suffered, since the other party has broken promises, can claim
compensation for loss or damages caused to them in the normal course of business.
Such damages will not be payable if the loss is abnormal in nature, i.e. not in the ordinary course of business. There
are two types of damages according to the Act,
 Liquidated Damages: Sometimes the parties to a contract will agree to the amount payable in case of a breach.
This is known as liquidated damages.
 Unliquidated Damages: Here the amount payable due to the breach of contract is assessed by the courts or any
appropriate authorities.
3] Sue for Specific Performance
This means the party in breach will actually have to carry out his duties according to the contract. In certain cases, the
courts may insist that the party carry out the agreement.
So if any of the parties fails to perform the contract, the court may order them to do so. This is a decree of specific
performance and is granted instead of damages.
For example, A decided to buy a parcel of land from B. B then refuses to sell. The courts can order B to perform his
duties under the contract and sell the land to A.
4] Injunction
An injunction is basically like a decree for specific performance but for a negative contract. An injunction is a court
order restraining a person from doing a particular act.
So a court may grant an injunction to stop a party of a contract from doing something he promised not to do. In a
prohibitory injunction, the court stops the commision of an act and in a mandatory injunction, it will stop the
continuance of an act that is unlawful.
5] Quantum Meruit
Quantum meruit literally translates to “as much is earned”. At times when one party of the contract is prevented from
finishing his performance of the contract by the other party, he can claim quantum meruit.
So he must be paid a reasonable remuneration for the part of the contract he has already performed. This could be the
remuneration of the services he has provided or the value of the work he has already done.

What are the different kinds of Agents?

Distinguish between “Sale” and “Agreement to Sell”.

State the rights and duties of the finder of lost goods

DUTIES OF FINDER OF ANY LOST GOODS

If a person finds any lost goods he does not become the actual of those goods. He, in fact, becomes a special
kind of bailee in the sense that he has to take care of the goods until the actual owner of the goods is found.
Thus he possesses same duties towards the lost goods as of a bailee, and therefore finder’s position has been
considered along with bailment. A finder of the lost goods has to observe following duties towards the goods
he possesses:
1. Duty to take reasonable care of goods (section 151 & 152)
According to Section 151, the finder of goods should take such care of the goods as a man of ordinary
prudence would take of his own goods. If he fails to act like an ordinary prudent man, he cannot be excused
by pleading that he had taken similar care of his own goods also, and his goods have also been lost and
damaged along with those of the ordinary prudent man.
According to section 152, the finder of goods in the absence of any special contract, is not responsible for
the loss, destruction or deterioration of the goods, if he has taken the amount of care of it described on
section 151.
2. Duty not to make unauthorized use of goods (section 153 & 154)
According to section 153, termination of bailment by finder of good’s act inconsistent with conditions: – a
contract of bailment is voidable at the option of the actual owner, if the finder of goods make any
unauthorized use of the goods found inconsistent with the condition of the bailment.
According to section 154, liability of finder of goods making unauthorized use of goods bailed: – if the
finder of goods makes any use of the goods found, which is not according to the conditions of the bailment,
he is liable to make compensation to the owner of goods for any damage arising to the goods from or during
such use of them.
3. Duty not to mix goods (section 155 – 157)
According to Section 155, effect of mixture with owner’s consent, of this goods with finder of good’s: – if
the finder of goods, with consent of the owner, mixes the goods of the owner with his own goods, the owner
and the finder of goods must shall have an interest in proportion to their respective shares, in the mixture
thus produced.
According to section 156, effect of mixture without owner’s consent when the goods can be separated: –
when the goods mixed can be separated, the finder and the owner will remain the possessor of their
respective shares. But the finder of goods is bound to bear the expense of separation, and any damage arising
from the mixture.
According to section 157, effect of mixture, without owner’s consent when the goods cannot be separated: –
in case, the nature of the goods is such that the owner’s cannot be separated from those of the finder’s good,
it is deemed to be loss of goods and the owner cannot recover compensation for the same from the finder of
goods.
4. Duty to return goods (section 160 & 161)
According to section 160, return of goods found on expiration of time period: – it is the duty of the finder of
the goods to return or deliver the goods found to the true owner as per his directions before the expiration of
the time period specified by him.
According to section 161, finder of goods responsibility when the goods are not duly returned: – if by the
default of the finder of goods, the goods are not returned or delivered at the proper time, he is responsible to
the loss or destruction of goods from that time.

Define Negotiable instruments. What are its features?

A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on
demand, or at a set time, with the payer usually named on the document.
According to section 13 of the Negotiable Instruments Act, 1881, a negotiable instrument
means “Promissory note, bill of exchange, or cheque, payable either to order or to bearer”.
Major features of negotiable instruments are;
 Easy Transferability- A negotiable instrument is freely transferable. Usually, when we transfer any
property to somebody, we are required to make a transfer deed, get it registered, pay stamp duty, etc.
But, such formalities are not required while transferring a negotiable instrument. The ownership is
changed by mere delivery (when payable to the bearer) or by valid endorsement and delivery (when
payable to order). Further, while transferring it is also not required to give a notice to the previous
holder.
 Title- Negotiability confers absolute and good title on the transferee. It means that a person who
receives a negotiable instrument has a clear and undisputable title to the instrument. However, the
title of the receiver will be absolute, only if he has got the instrument in good faith and for a
consideration. Also the receiver should have no knowledge of the previous holder having any defect
in his title. Such a person is known as holder in due course.
 Must be in writing- A negotiable instrument must be in writing. This includes handwriting, typing,
computer printout and engraving, etc.
 Unconditional Order- In every negotiable instrument there must be an unconditional order or
promise for payment.
  Payment- The instrument must involve payment of a certain sum of money only and nothing else.
For example, one cannot make a promissory note on assets, securities, or goods.
 The time of payment must be certain- It means that the instrument must be payable at a time which
is certain to arrive. If the time is mentioned as ‘when convenient’ it is not a negotiable instrument.
However, if the time of payment is linked to the death of a person, it is nevertheless a negotiable
instrument as death is certain, though the time thereof is not.
 The payee must be a certain person- It means that the person in whose favor the instrument is
made must be named or described with reasonable certainty. The term ‘person’ includes individual,
body corporate, trade unions, even secretary, director or chairman of an institution. The payee can
also be more than one person.
 Signature- A negotiable instrument must bear the signature of its maker. Without the signature of
the drawer or the maker, the instrument shall not be a valid one.
 Delivery- Delivery of the instrument is essential. Any negotiable instrument like a cheque or a
promissory note is not complete till it is delivered to its payee. For example, you may issue a cheque
in your brother’s name but it is not a negotiable instrument till it is given to your brother.
 Stamping- Stamping of Bills of Exchange and Promissory Notes is mandatory. This is required as
per the Indian Stamp Act, 1899. The value of stamp depends upon the value of the pronote or bill
and the time of their payment.
 Right ot file suit- The transferee of a negotiable instrument is entitled to file a suit in his own name
for enforcing any right or claim on the basis of the instrument.
 Notice of transfer- It is not necessary to give notice of transfer of a negotiable instrument to the
party liable to pay.
 Presumptions- Certain presumptions apply to all negotiable instruments, for example consideration
is presumed to have passed between the transferor and the transferee.
 Procedure for suits- In India a special procedure is provided for suits on promissory notes and bills
of exchange.
 Number of transfer- These instruments can be transferred indefinitely till they are at maturity.
 Rule of evidence- These instruments are in writing and signed by the parties, they are used as
evidence of the fact of indebtness because they have special rules of evidence.
 Exchange- These instruments relate to payment of certain money in legal tender, they are considered
as substitutes for money and are accepted in exchange off goods because cash can be obtained at any
moment by paying a small commission.

Briefly discuss the various kinds of partners.

Discuss the contents of a Prospectus.

Prospectus:
Section 2(70) of the Companies Act, 2013 defines a prospectus as ““A prospectus means Any documents
described or issued as a prospectus and includes any notices, circular, advertisement, or other documents
inviting deposit from the public or documents inviting offer from the public for the subscription of shares or
debentures in a company.” A prospectus also includes shelf prospectus and red herring prospectus. A
prospectus is not merely an advertisement.

A document shall be called a prospectus if it satisfy two things:

1. It invites subscription to shares or debentures or invites deposits.
2. The aforesaid invitation is made to the public.

Contents of a prospectus:
1. Address of the registered office of the company.
2. Name and address of company secretary, auditors, bankers, underwriters etc.
3. Dates of the opening and closing of the issue.
4. Declaration about the issue of allotment letters and refunds within the prescribed time.
5. A statement by the board of directors about the separate bank account where all monies received out of
shares issued are to be transferred.
6. Details about underwriting of the issue.
7. Consent of directors, auditors, bankers to the issue, expert’s opinion if any.
8. The authority for the issue and the details of the resolution passed therefore.
9. Procedure and time schedule for allotment and issue of securities.
10. Capital structure of the company.
11. Main objects and present business of the company and its location.
12. Main object of public offer and terms of the present issue.
13. Minimum subscription, amount payable by way of premium, issue of shares otherwise than on cash.
14. Details of directors including their appointment and remuneration.
15. Disclosure about sources of promoter’s contribution.
16. Particulars relation to management perception of risk factors specific to the project, gestation period of
the project, extent of progress made in the project and deadlines for completion of the project.

Describe the methods of discharge of Contract

Discharge of a contract implies termination of contractual obligations. This is because when the parties
originally entered into the contract, the rights and duties in terms of contractual obligations were set up.
Consequently when those rights and duties are put out then the contract is said to have been discharged.
Once a contract stands discharged, parties to it are no more liable even though the obligations under the
contract remain incomplete.
A Contract is deemed to be discharged, that is, concluded and no longer binding, in the following
circumstances:
 Discharge by performance.
 Discharge of Contract by Substituted Agreement.
 Discharge by lapse of time.
 Discharge by operation of law.
 Discharge by Impossibility of Performance.
 Discharge by Accord and Satisfaction.
 Discharge by breach.

Discharge by performance
Where both the parties have either carried out or tendered (attempted) to carry out their obligations under the
contract, is referred to as discharge of the contract by performance. Because performance by one party
constitutes the occurrence of a constructive condition, the other party’s duty to perform is also triggered, and
the person who has performed has the right to receive the other party’s performance. The overwhelming
majority of contracts are discharged in this way.
Discharge by lapse of time
A contract stands discharged if not enforced within a specified period called the ‘period of limitation‘. The
Limitation Act, 1963 prescribes the period of limitation for various contracts. For instance, period of
limitation for exercising right to recover an immovable property is twelve years, and right to recover a debt
is three years. Contractual rights become time barred after the expiry of this limitation period. Accordingly,
if a debt is not recovered within three years of its payment becoming due, the debt ceases to be payable and
is discharged by lapse of time.
Discharge by Impossibility of Performance
Sometimes after a contract has been established, something might occur, though not at the fault of either
party, which can render the contract impossible to perform, or illegal, or radically different from that
originally undertaken.
However, if whatever happens to prevent the contract from being performed
 has not been caused by either party
 could not have been foreseen, and
 its effect is to destroy the basis of the contract
then the courts will, generality, state that the contract has become impossible to perform. If that happens
then the contract is discharged and neither party will have any liability under it. Section 56 of the Indian
Contract Act clearly provides that an agreement to do an act impossible in itself is void
The performance of a contractual obligation may become subsequently impossible on a number of grounds.
They include the following.
 Objective impossibility of performance
  Commercial impracticability
 Frustration of purpose
 Temporary impossibility

Explain the various types of Quasi Contracts.

Quasi Contract is based on the principle of equity. that "A person shall not be allowed to enrich himself
unjustly at the expense of another. It means one should not accept or receive any benefit unjustly.
The term Quasi Contract is derived from the Roman Law "Obligatio quasi ex contractu". Quasi Contract is
not real Contract entered into by parties intentionally. It resembles a contract in which law imposes on
obligation on a person to perform an obligation on the ground of equity.

Section 68 to Section 72 of the Indian Contract Act, 1872 deals with Five Kinds of Quasi-Contract which
are as follows -

1) Claim for necessaries supplied to person incapable of contracting, or on his account (Section 68) -
" If a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is
supplied by another person with necessaries suited to his condition in life, the person who has furnished such
supplies is entitled to be reimbursed from the property of such incapable person.
Illustrations -
(a) A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be reimbursed
from B’s property.
(b) A supplies the wife and children of B, a lunatic, with necessaries suitable to their condition in life. A
is entitled to be reimbursed from B’s property.
2) Reimbursement of person paying money due by another, in payment of which he is
interested (Section 69) -
A person who is interested in the payment of money which another is bound by law to pay, and who
therefore pays it, is entitled to be reimbursed by the other.
Illustration -
B holds land in Bengal, on a lease granted by A, the zamindar. The revenue payable by A to the
Government being in arrear, his land is advertised for sale by the Government. Under the revenue law, the
consequence of such sale will be the annulment of B’s lease. B to prevent the sale and the consequent
annulment of his own lease pays the Government the sum due from A. A is bound to make good to B the
amount so paid.
3) Obligation of person enjoying benefit of non-gratuitous act (Section 70). -
Where a person lawfully does anything for another person, or delivers anything to him, not intending to do
so gratuitously, and such another person enjoys the benefit thereof, the letter is bound to make compensation
to the former in respect of, or to restore, the thing so done or delivered.
4) Responsibility of finder of goods (Section 71) -
A person who finds goods belonging to another, and takes them into his custody, is subject to the same
responsibility as a bailee.
5) Liability of person to whom money is paid, or thing delivered, by mistake or under coercion
(Section 72) -
A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or
return it.
Illustrations -
(a) A and B jointly owe 100 rupees to C, A alone pays the amount to C, and B, not knowing this fact, pays
100 rupees over again to C. C is bound to repay the amount to B.
(b) A railway company refuses to deliver up certain goods to the consignee except upon the payment of an
illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled
to recover so much of the charge as was illegal and excessive.

Discuss the rights and duties of common carrier.

The duties of the common carrier in India are governed by the carrier’s act 1865, and by the rules of the
English law. These duties are as follows.
Duties of a common carrier :
1. A common carrier must receive and carry the goods of all persons who offer them. The consignor can
recover damages from the carrier if he wrongfully refuses to accept and carry his goods. But a common
carrier cannot be compelled to carry the goods in the following cases :
(a) If his vehicle is already full;
(b) If the goods are inadequately dangerous nature;
(c) If the goods are inadequately packed;
(d) If the goods belong to a class which he does not profess to carry;
(e) If the route through which the goods are to be carried is in a disturbed state;
2. A common carrier must follow his customary route and must not deviate from it without cause. He need
not carry by the shortest route.
3. He is bound to carry the goods safely
4. He must deliver the goods to the consignee within the time expressed in the contract or within a
reasonable time.
5. He must deliver the goods to the consignee at the place designated by the consignor; unless the consignee
requires the goods to be delivered at another place.
Rights of a common carrier
1. He can ask the consignor to deliver the goods to him.
2. He can claim payment in advance i.e., before he carries, but not before he receives the goods.
3. He is entitled to reasonable compensation for the services rendered.
4. He has a lien to retain the goods until his charges for the carriage are paid. It is a particular and not
general lien. The lien cannot be enforced if the carrier has agreed to give credit.
5. The carrier is entitled to make a charge for the unreasonable detention of his vehicles by the consignor of
the consignee. This is the right to charge demurrage.
6. Where a consignor delivers goods of a dangerous character to a common carrier, the consignor will be
liable in damages if the carrier suffers any loss or injury there from.
7. A common carrier has a right to refuse to carry the goods under certain circumstances.
8. A common carrier can limit his liability by entering into a special contract under certain circumstances.

Explain the different ways of creation of Agency.

What is meant by Caveat emptor? Discuss its exceptions

Caveat Emptor
Latin for "let the buyer beware." A doctrine that often places on buyers the burden to reasonably examine
property before purchase and take responsibility for its condition. Especially applicable to items that are not
covered under a strict warranty.
Doctrine of Caveat Emptor
The doctrine of Caveat Emptor is an integral part of the Sale of Goods Act. It translates to “let the buyer
beware”. This means it lays the responsibility of their choice on the buyer themselves. It is specifically
defined in Section 16 of the act “there is no implied warranty or condition as to the quality or the fitness for
any particular purpose of goods supplied under such a contract of sale”
A seller makes his goods available in the open market. The buyer previews all his options and then
accordingly makes his choice. Now let’s assume that the product turns out to be defective or of inferior
quality. This doctrine says that the seller will not be responsible for this. The buyer himself is responsible for
the choice he made.
So the doctrine attempts to make the buyer more conscious of his choices. It is the duty of the buyer to check
the quality and the usefulness of the product he is purchasing. If the product turns out to be defective or does
not live up to its potential the seller will not be responsible for this.
Let us see an example. A bought a horse from B. A wanted to enter the horse in a race. Turns out the horse
was not capable of running a race on account of being lame. But A did not inform B of his intentions. So B
will not be responsible for the defects of the horse. The Doctrine of Caveat Emptor will apply.
Exceptions to the Doctrine of Caveat Emptor
The doctrine of caveat emptor has certain specific exceptions. Let us take a brief look at these exceptions.
1] Fitness of Product for the Buyer’s Purpose
When the buyer informs the seller of his purpose of buying the goods, it is implied that he is relying on the
seller’s judgment. It is the duty of the seller then to ensure the goods match their desired usage.
Say for example A goes to B to buy a bicycle. He informs B he wants to use the cycle for mountain trekking.
If B sells him an ordinary bicycle that is incapable of fulfilling A’s purpose the seller will be responsible.
Another example is the case study of Priest v. Last.
2] Goods Purchased under Brand Name
When the buyer buys a product under a trade name or a branded product the seller cannot be held
responsible for the usefulness or quality of the product. So there is no implied condition that the goods will
be fit for the purpose the buyer intended.
3] Goods sold by Description
When the buyer buys the goods based only on the description there will be an exception. If the goods do not
match the description then in such a case the seller will be responsible for the goods.
4] Goods of Merchantable Quality
The section 16 (2) deals with the exception of merchantable quality. The sections state that the seller who is
selling goods by description has a duty of providing goods of merchantable quality, i.e. capable of passing
the market standards.
So if the goods are not of marketable quality then the buyer will not be the one who is responsible. It will be
the seller’s responsibility. However if the buyer has had reasonable chance to examine the product, then this
exception will not apply.
5] Sale by Sample
If the buyer buys his goods after examining a sample then the rule of Doctrine of Caveat Emptor will not
apply. If the rest of the goods do not resemble the sample, the buyer cannot be held responsible. In this case,
the seller will be the one responsible. For example, A places an order for 50 toy cars with B. He checks one
sample where the car is red. The rest of the cars turn out orange. Here the doctrine will not apply and B will
be responsible.
6] Sale by Description and Sample
If the sale is done via sample as well as a description of the product, the buyer will not be responsible if the
goods do not resemble the sample and/or the description. Then the responsibility will fall squarely on the
seller.
7] Usage of Trade
There is an implied condition or warranty about the quality or the fitness of goods/products. But if a seller
deviated from this then the rules of caveat emptor cease to apply. For example, A bought goods from B in an
auction of the contents of a ship. But B did not inform A the contents were sea damaged, and so the rules of
the doctrine will not apply here.
8] Fraud or Misrepresentation by the Seller
This is another important exception. If the seller obtains the consent of the buyer by fraud then caveat
emptor will not apply. Also if the seller conceals any material defects of the goods which are later
discovered on closer examination then again the buyer will not be responsible. In both cases, the seller will
be the guilty party.

Describe the different modes of dissolution of a partnership firm.

According to Section 39 of the Partnership Act, 1932, “The dissolution of partnership between all the
partners of a firm is called dissolution of the firm.” The Indian Partnership Act, 1932 recognises the
difference between ‘dissolution of partnership’ and ‘dissolution of firm’.
Dissolution of a firm involves the complete breakdown of partnership relation. In the dissolution of
partnership firm, the partners may by agreement provide for the continuance of the firm after its dissolution
by death, lunacy or insolvency of any partner. In such cases the firm is reconstituted without any dissolution.
Thus dissolution of firm does involve the dissolution of partnership while the dissolution of partnership does
not necessarily involve dissolution of the firm.
Modes of Dissolution of a Firm:
Following are the modes of a dissolution of a partnership firm:
1. Dissolution by Agreement:
A firm may be dissolved:
(i) With the consent of all the partners.
(ii) In accordance with a contract between the partners.
2. Compulsory Dissolution:
A firm is compulsorily dissolved:
(i) By the adjudication as insolvent of all the partners or of all partners except one.
(ii) By the happening of any event which makes it unlawful for the business of the firm to be carried on or
for the partners to carry it on in partnership.
3. Dissolution on the Happening of Certain Contingencies:
Subject to the contract between the partners, a firm can be dissolved by:
(i) The death of a partner.
(ii) The insolvency of a partner,
(iii) The retirement of a partner,
(iv) The completion of the adventure,
(v) The expiry of the term fixed.
4. Dissolution by Notice of Partnership at will:
If the partnership is ‘at will’ then any partner can get the firm dissolved by giving notice in writing to other
partners of the firm.
5. Dissolution by Court:
The court may order the dissolution of the firm at the suit of a partner in any of the following ways:
(i) Where a partner of the firm has become of unsound mind.
(ii) Where a partner of the firm has become permanently incapable of performing his duties as a partner.
(iii) Where a partner commits wilful or persistent breaches of agreement.
(iv) Where a partner is guilty of misconduct,
(v) Where the business of a firm cannot be carried on save at a loss,
(vi) Where a partner has transferred the whole of his interest in the partnership to an outsider.
(vii) Where on any other ground the court is satisfied that it is just and equitable that the firm may be
dissolved.
Settlement of Accounts on Dissolution:
On the dissolution of the partnership firm, the firm’s assets are realised and liabilities are discharged.
Section 48 deals with the mode of settlement of accounts between the partners after the dissolution of the
firm.
The accounts of a firm on the dissolution must be settled according to the following rules:
1. Losses suffered by the firm shall be paid:
(i) Out of profit.
(ii) Out of capital.
(iii) If necessary by the partners individually in the proportion in which they were entitled to share profits.
2. Assets of the firm are to be distributed in the order given below:
(i) In paying the debts due to third parties.
(ii) In paying the partners rateably advances made by them to the firm.
(iii) In paying the partners rateably is due to them on account of capital.
(iv) If there is any surplus in the firm, it will be divided between the partners proportionately.

Explain the different kinds of Companies.

According to sec 2(20) of the companies act, 2013 “’A company is a company formed under the companies
Act 2013 or under any of the previous acts relating to companies.” A company may be defined as “an
incorporated association which is an artificial person, having a separate legal entity, with a perpetual
succession, a common seal, a common capital compromised of transferable shares and limited liability.”

Companies can be classified into different types based on their mode of incorporation, the liability of the
members, and number of the members. The most common types of companies are:
 Royal Chartered Companies
 Statutory Companies
 Registered or Incorporated Companies
 Companies Limited By Shares
 Companies Limited By Guarantee
 Unlimited Companies
 Public Company (or Public Limited Company)
 Private Company (or Private Limited Company)
 One Person Company
Royal Chartered Company – These are companies formed under the Royal Charter of a company or by
a special order of king or queen. Eg. East India Company formed by the Royal Charter of Great Britain.
Such a company derives its nature on the basis of the charter under which they are formed.
Statutory Company – It is incorporated by a special Act passed either by the Central or State
legislature. Companies intended to carry on some business of national importance are formed this way to
provide a service to its citizens. Eg. RBI formed under RBI Act 1934.
Registered Companies – A company registered under the companies Act 2013 or any other existing
Act. It is governed by the companies Act 2013.
Company limited by shares – It is a company in which the liability of the members (shareholders)
limited i.e. they are only liable for the unpaid value of shares held by the member. The unpaid amount
can be called upon any time during the life time or winding up of the company. If the shares of a
member are fully paid up then his liability will be nil.
Company limited by Guarantee – In such a company the Liability of shareholders is limited up to the
amount guaranteed or invested by the shareholder towards the assets of the company in the event of its
being wound up. The amount guaranteed can be only demanded at the time of its wound up, hence it is a
reserve capital. Such companies are generally formed to promote art, science, commerce, sports etc. and
are not for profit making.
Unlimited companies – A company having no limit on the liability of its Shareholders is an unlimited
company. Thus the liability may extend to the personal property of the Shareholders in case the company
is not able to satisfy its claims at the time of winding up. This liability of members is like a partnership
where they have to contribute according to the ratio of amount invested in the company.
Holding and Subsidiary company – Where one company controls the management of another
company, the former is called the holding company and the later over which the control is exercised is
termed as a subsidiary company. 1. A company shall deemed to be a holding company of another, if that
other is a subsidiary 2. A company shall be deemed to be subsidiary of another company if the other
company – Controls the composition of its Board of Directors. Holds more than half of nominal value of
equity share capital.
It is a subsidiary of another company which is another company’s subsidiary. If it holds more than 50%
of the total voting rights of the company.
Private Company – The term “private company” has been defined under section 2(68) of Companies
act 2013. A private company means a company, which has a minimum paid up share capital of Rs. 1
lakh and which provides the following restrictions through its Articles of Association and Memorandum
– Restricts the transfer of shares by its members Limits the maximum number of members to 50
Prohibits any invitation or acceptance of public deposits Prohibits invitation to public for debentures of
the company It enjoys special privileges also – It can be started with only 2 members (minimum
members) It is not required to prepare a prospectus and it can start its operations immediately after
receiving the certificate of incorporation.
Public company – The term ‘public company’ has been defined under section 2(71)of Companies act
2013. A ‘public company’ means a company which has minimum paid up share capital of Rs. 5 lakh and
which is not a private company. It has the following features – It does not restrict transferability of
shares At least 7 members are required to form a public company There is no restrictions on the number
of members.
It has atleast 3 directors Its name end with the word “limited” It can accept public deposits and invite
public for subscription of its shares and debentures A private company which is a subsidiary of a public
company will also be considered a public company under this Act
Domestic company – A company which is based in India registered under the Companies Act 2013.
The head Office and its business operations are conducted within the country. It can either be private or
public.
Foreign company – A Foreign company is a company incorporated outside India which establishes its
business operations within India under the Companies Act 2013. Within 30 days of its establishment, it
has to furnish important documents to the registrar as per Sec 380. They are: A certified copy of the
charter of the company Memorandum and Articles of Association of the company Address of the
registered office List of directors and secretary Full address of the principle place of business in India
Name and address of the authorised person to do business on behalf of the company in India.
 One Man Company – Where one man holds practically the whole of the share capital of a company and
takes a few more dummy members simply to meet the statutory requirements of the minimum number of
persons such a company is one man company. A one man company can be incorporated under sec 2(62)
of the Companies Act, 2013. In such a company the principle shareholder is the virtual owner running
the business with limited liability and other members may have even one share.
Companies not for profit – These companies must obtain a license from the central government before
they are registered. They are limited liability but are not required to use the word Limited or private with
their names. They are formed promoting art, science, commerce, sports etc. Profits are applied towards
its objective and cannot be distributed among its members. 1. It enjoys various exemptions on
registration. 2. It does not pay stamp duty for registration of Memorandum and Articles of Association.
3. It can be formed without share capital 4. Government can revoke license any time by giving a notice

MAY2017 Business laws

Discuss the legal rules relating to offer.
Rules for a valid Offer
1. Expectation to Create Legal Relationship: – An offer must mean to make lawful relations. An
offer should be such that when the other party will accept it then it will make the legal relationship
among the parties.
2. Certain and Clear Terms: – The terms of the offer must be certain and clear and not ambiguous. If
the terms of the offer made are unclear, then no agreement can be gone into because it is not clear
regarding what precisely the parties expected to do.
3. Differ from Declaration of Intention: -Offer and intention are different. Intention to offer indicates
the offer will be made.The case of Farine v Ficker.
4. Proper Communication: – The offer should be properly communicated as to whom the offer is
made. The offer stands completely only when the offeree is communicated about the same. If offer
accepted without any proper communication and information is not valid.
5. Presumption of the offer: – The offeror cannot pressure the offer is accepted if the offeree does not
accept for a certain period. Till the offeree replies back with the acceptance of the offer, then only the
offer stands to be a valid offer.

“All agreements are not contract, but all contracts are agreements” – Explain.

Briefly explain the various kinds of guarantee.

Types of Guarantee
The Indian Contracts Act defines Guarantee as a contract in which one promises to discharge the liability of the other
upon the default of the latter. Creditor, debtor and the surety are the three parties to the contract of guarantee. This
contract is formed by the consent of the all the three parties to the contract. Guarantee contract may be oral or written.
The contract of guarantee is of different types depending on the contract’s contents and the nature of the same. Here
under are the different types of guarantee contracts.
Unilateral Contract of Commercial Credit
This is a type of contract of guarantee usually seen in trade transactions. It commonly arises between the wholesale
trader and a retail trader. Also, it arises between a retail trader and the customer. In this type of guarantee contract, the
goods are delivered against no payment but with an agreement. The agreement between parties is either written or
oral. The agreement may or may not have any securities against discharge of the payment on a later date.
Bank Guarantee
This type of guarantee contract is common in the contracts of the Government. Also, it is common in tender for
contracts. This type of guarantee contract is a commercial document. The bank guarantee is autonomous and is
independent of the contract that is underlying. It is a guarantee from a bank against liabilities.
Letter of Credit
A letter of credit is an instrument which is written by one person to the other about giving of credit. The one who
writes the letter, requests the other to give credit to the bearer of the letter or in whose favor the letter is drawn. In the
international trade this practice is commonly seen. This can be general letter of credit which is drawn against
merchants in general or special letter of credit which is drawn against a specific person with all the information
enclosed.
Absolute Performance Bonds Absolute means perfect and it also means complete. In this type of guarantee contract,
the surety pays the amount written in the contract upon the failure to discharge the contract by the person against
whom the guarantee is given.
Retrospective Guarantee
When the guarantee is given for an existing obligation or debt, it is called retrospective guarantee.
Prospective Guarantee
When the guarantee is given for a future obligation or debt it is called prospective guarantee.
Specific Guarantee
This type of guarantee is for a single transaction. It is extended only to a single debt. It is also called as simple
guarantee.
Continuing Guarantee
This type of guarantee extends to more number of transactions. It continues until the guarantee is revoked.

What are the rights and duties of finder of lost goods?

What are the differences between sale and agreement to sell?

Discuss the features of marine insurance

1. Insurable interest: in order to claim for a loss or damage, the insured must have a financial interest
in the insured property. A person can be said to have an insurable interest in the property insured
when he suffers a loss if the property is lost or damaged or when he gains a profit when the property
insured is safe and is in continuous existence. Every person who is engaged in a marine adventure is
said to have an insurable interest. Example: interest of the shipowner in his ship, an interest of master
and crew for there wages, an interest of the insurance company in the property insured.
2. Utmost good faith: a contract of marine insurance is a contract based upon utmost good faith and if
the utmost good faith is not exercised by either party, the contract may be avoided by the other party.
The duty of utmost good faith is required by both the parties. The insurer must deal with all claims
fairly and expeditiously and must be able to pay for potential claims. The assured must disclose all
material facts about the condition of the insured property which the insurer knows or ought to know.
Material facts are those facts which could affect the judgment of a prudent underwriter in deciding
whether to accept the risk of insuring the property and at what rate of premium and to what terms
and conditions.
3. Indemnity: an insurance contract is a contract of indemnity. Such an insurance contract will make
good a loss or damage in such a manner that the assured is neither better-off nor worse-off as a result
of the loss. In other words, the assured is placed in the same financial position as he was in
immediately before the loss. Thus the principle of indemnity prevents the insurer from making a
profit out of his loss or gaining any benefit out of the insurance.
4. Subrogation: it is the right of the insurer, after he pays for the loss, to assume the rights of the
insured to recover this loss from the responsible party. This prevents the insured from collecting the
 claims twice, thus reducing the cost of claims. The insurer can sue a responsible party in the name of
the insured up to the amount of the settlement.

Mention the different kinds of partners.

What are the characteristics of a company?

A company as an entity has many distinct features which together make it a unique organization. The
essential characteristics of a company are following:
Separate Legal Entity:
Under Incorporation law, a company becomes a separate legal entity as compared to its members. The
company is distinct and different from its members in law. It has its own seal and its own name, its assets
and liabilities are separate and distinct from those of its members. It is capable of owning property, incurring
debt, and borrowing money, employing people, having a bank account, entering into contracts and suing and
being sued separately.
Limited Liability:
The liability of the members of the company is limited to contribution to the assets of the company upto the
face value of shares held by him. A member is liable to pay only the uncalled money due on shares held by
him. If the assets of the firm are not sufficient to pay the liabilities of the firm, the creditors can force the
partners to make good the deficit from their personal assets. This cannot be done in the case of a company
once the members have paid all their dues towards the shares held by them in the company.
Perpetual Succession:
A company does not cease to exist unless it is specifically wound up or the task for which it was formed has
been completed. Membership of a company may keep on changing from time to time but that does not affect
life of the company. Insolvency or Death of member does not affect the existence of the company.
Separate Property:
A company is a distinct legal entity. The company's property is its own. A member cannot claim to be owner
of the company's property during the existence of the company.
Transferability of Shares:
Shares in a company are freely transferable, subject to certain conditions, such that no share-holder is
permanently or necessarily wedded to a company. When a member transfers his shares to another person,
the transferee steps into the shoes of the transferor and acquires all the rights of the transferor in respect of
those shares.
Common Seal:
A company is an artificial person and does not have a physical presence. Thus, it acts through its Board of
Directors for carrying out its activities and entering into various agreements. Such contracts must be under
the seal of the company. The common seal is the official signature of the company. The name of the
company must be engraved on the common seal. Any document not bearing the seal of the company may
not be accepted as authentic and may not have any legal force.
Capacity to sue and being sued:
A company can sue or be sued in its own name as distinct from its members.
Separate Management:
A company is administered and managed by its managerial personnel i.e. the Board of Directors. The
shareholders are simply the holders of the shares in the company and need not be necessarily the managers
of the company.
One Share-One Vote:
The principle of voting in a company is one share-one vote i.e. if a person has 10 shares, he has 10 votes in
the company. This is in direct distinction to the voting principle of a co-operative society where the "One
Member - One Vote" principle applies i.e. irrespective of the number of shares held, one member has only
one vote.

What are the remedies for breach of contract?

Describe the rights and duties of bailor

As per the section 148 of the Indian Contract Act, 1872, a bailment is a contract where one person delivers
goods to another person for some purpose. The person delivering the goods is the Bailor and the person
receiving the goods is the Bailee. After the accomplishment of the purpose, the Bailee needs to return these
goods to the Bailor or dispose of them according to the directions of the Bailor. Let us now discuss the
duties of bailee and bailor.
The following are the rights of a Bailor:
1. Right to Enforce
If the bailee neglects in any one of his duties, the bailor has a right to enforce them by filing a suit against
the bailee.
2. Right to Avoid the Contract
If the bailee does any act, which is inconsistent with the terms of the bailment as regards the goods bailed,
the bailor can terminate the bailment.
Example: A lets a car to B for his private use only. But B used it as taxi. A can terminate the bailment.
3. Right to Return the Goods Lent Gratuitously
When the goods are lent gratuitously, the bailor can demand back the goods at any time even before the
expiry of the time fixed or the achievement of the object.
Example: A, while going out of station delivered his ornaments to B for safe custody for one month. But A
returned to station after one week. He may demand the return of his ornaments even though the time of one
month has not expired.
However, due to the premature return of the goods, if the bailee suffers any loss, which is more than the
benefit actually obtained by him from the use of the goods bailed, the bailor has to compensate the bailee.
4. Right to Get Compensation
If any third person does some injury to the goods bailed or deprives the bailee of the use of the goods, then
the bailor may file a suit against the wrong-doer, and recover compensation from him.
Example: A bailed 50 bags of rice to B, a godown keeper, for safe custody. C a fraudulent man, prepared a
fake delivery order for 10 bags of rice and claimed the delivery from B, the godown keeper. B believing in
good faith, that 10 bags have been sold by A to C, delivered the same to C. Here A may file a suit against C
to recover the rice bags from him.
Duties of a bailor are as follows:
1. It is the duty of a bailor to disclose all faults. If bailor fails to disclose such faults then he will be
responsible for the damage caused to goods or loss suffered by the bailee.
2. Also, bailor is under the duty to pay the extraordinary expenses incurred by the bailee for such
bailment.
3. It is the duty of the bailor to accept the goods after the purpose for which such goods were bailed is
accomplished.
4. It is the duty of the bailor to indemnify the bailee for cost incurred due to the defective title of goods
bailed to the bailee.

Explain the various modes by which an agency may be created.

Discuss the fundamental principles of contract of insurance.

Understanding Principles of Insurance
The main objective of every insurance contract is to give financial security and protection to the insured
from any future uncertainties. Insured must never ever try to misuse this safe financial cover.
Seeking profit opportunities by reporting false occurrences violates the terms and conditions of an insurance
contract. This breaks trust, results in breaching of a contract and invites legal penalties.
An insurer must always investigate any doubtable insurance claims. It is also a duty of the insurer to accept
and approve all genuine insurance claims made, as early as possible without any further delays and annoying
hindrances.
The seven principles of insurance are :-
1. Principle of Uberrimae fidei (Utmost Good Faith),
2. Principle of Insurable Interest,
3. Principle of Indemnity,
4. Principle of Contribution,
5. Principle of Subrogation,
6. Principle of Loss Minimization, and
7. Principle of Causa Proxima (Nearest Cause).
Following are the general principles of contract of insurance:
1. Uberrimae Fidei: A contract of insurance is a contract uberrimae fidei, i.e. a contract
requiring utmost good faith of the parties. So, all material facts which are likely to influence the
insurer in deciding the amount of premium payable by the insured must be disclosed by the insured.
Failure to disclose material facts renders the contract voidable at the option of the insurer.
2. Insurable Interest: The assured must have, what is called “insurable interest” in the subject
matter of the contract of insurance. “He must be so situated with regard to the thing insured that he
would have benefit from its existence, loss from its destruction”.
3. Indemnity: Every contract of insurance such as life insurance and personal accident and
sickness insurance, is a contract of indemnity. So, the insurer pays the actual loss suffered by the
insured. He does not pay the specified amount unless this amount is the actual loss to the insured.
4. Mitigation of Loss: The insured must take reasonable precautions to save the property, in the
event of some mishap to the insured property. He must act as a prudent uninsured person would act
in his own case under similar circumstances to mitigate or minimize losses.
5. Risk must Attach: The insurer must run the risk of indemnifying the insured. If he does not run
the risk, the consideration for which the premium is paid, fails and consequently, he must return
the premium paid by the insured.
6. Causa Proxima: The insurer is liable for loss which is proximately caused by the risk
insured against. The rule is “causa proxima non remota spectatur”, i.e. the proximate but not the
remote cause is to be looked to. So, the loss must be proximately caused in order that the insurer is
to become liable.
7. Period of Insurance: Except in the case of life insurance, every contract of insurance comes to
an end of the expiry of every year, unless the insured continues the same and pays the premium
before the expiry of the year.
8. Subrogation: According to the rule of subrogation, when the loss is caused to the insured by
the conduct of a third party, the insurer shall have to make good such loss and then have a right to
step into the shoes of the insured and bring an action against such third party who caused the loss to
the insured. This right of subrogation is enforceable only when there is an assignment of cause of
action by the insured in favour of the insurer. The doctrine of subrogation does not apply to life
insurance.
9. Contribution: Where there are two or more insurances on one risk, the principle of
contribution applies as between different insurers. The aim of contribution is to distribute the actual
amount of loss among the different insurers who are liable for the same risk under different policies
in respect of the same subject-matter. In case of loss, any one insurer may pay to the assured the full
amount of the loss covered by the policy. Having paid this amount, he is entitled to contribution from
his coinsurers in proportion to the amount which each has undertaken to pay in case of loss of the
same subject-matter.

Explain the rights, duties and liabilities of common carrier.

Rights
(1) He is entitled to the settled remuneration and in case no remuneration was settled, to a reasonable
remuneration. What is reasonable remuneration is depends on the circumstance of the case.
(2) He has a right to refuse to carry goods under certain circumstances-
(a) if the goods are dangerous in nature
(b) if there is no accommodation in carriage.
(c) if the goods are to be carried over a route which is not his regular route;
(d) if the consignor refuses to disclose the nature of the goods.
(e) if the goods are not properly packed.
(3) He has a lien on the goods for his remuneration. He can refuse to deliver them until his charges are paid.
This is known as the carrier Lien.
(4) If the consignee refuses to accept delivery of the goods, then the common carrier has a right, to deal with
the goods as he thinks reasonable and prudent under the circumstances. After giving notice to the
consignee, the common carrier may even sell perishable goods. He can recover all reasonable expenses
incurred by him in this connection with whom the contract of carriage was entered into.
(5) He can recover damages from the consignor if the goods are dangerous or are loosely packed as a result
the carrier suffers injury there from.
(6) He can limit his liability subject to the provisions of the Carriers Act.
Duties
The duties of a common carrier is determined by the Common Carriers Act, 1865.The duties are as follows-
1. A common carrier is bound to carry goods of all persons without any discrimination. However he can,
refuse to carry goods under the following circumstances:
(a) If there is no accommodation in the carriage.
(b) If the person is not willing to pay reasonable charges for the carriage of goods.
(c) If the goods are dangerous in nature and the goods is not accustomed to carry.
(d) If the goods are to be carried over a route which is not his regular route;
(f) If the consignor refuses to disclose the nature of the goods to be carried.
(g) If the goods are not properly packed.

Note: If a carrier refuses to carry the goods of a person without the above mentioned reasons, he can
be sued and the customer can recover damages.
2. He must carry the goods over the usual and ordinary route and take all reasonable precautions for their
safe carriage. He must not change the usual route unless necessary by exceptional circumstance.
3. He must deliver the goods at the agreed time and if no time had been fixed, within a reasonable time. The
place of delivery is subject to contract.
4. According to Common Law, he is an insurer of the goods because he warrants carrying the goods safely
and securely, and he is bound to indemnify the owner for loss or damage to the goods in course of carriage.

Describe the various modes of dissolution of a firm.

Narrate the steps involved in the formation of a company.

The whole process of company formation can be divided into four stages as given below.
1. Promotion of a Company
2. Registration of a Company
3. Certificate of Incorporation; and
4. Commencement of the Business.
1. Promotion of a Company:
A business enterprise does not come into existence on its own. It comes into existence as a result of the
efforts of an individual or group of people or an institution. That is, it has to be promoted by some person or
persons. The process of business promotion begins with the conceiving of an idea and ends when that idea is
translated into action i.e., the establishment of the business enterprise and commencement of its business.
Who is a Promoter in a Company?
A successful promoter is a creator of wealth and an economic prophet. The person who is concerned with
the promotion of business enterprise is known as the Promoter. He conceives the idea of starting a business
and takes all the measures required for bringing the enterprise into existence.
For example, Dhirubhai Ambani is the promoter of Reliance Industries.
The promoters find out the ways to collect money, investigate business ideas arranges for finance, assembles
resources and establishes a going concern.
The company law has not given any legal status to promoters. He stands in a fiduciary position.
Types of Promoters
Promoters are different types such as professional promoters, occasional promoters, promoter companies,
financial promoters, entrepreneurs, lawyers and engineers.
2. Registration of a Company
It is registration that brings a company into existence. A company is properly formed only when it is duly
registered under the Companies Act.
Procedure of Registration
In order to get the company registered, the important documents required to be filed with the Registrar of
Companies are as follows.
1. Memorandum of Association: It is to be signed by a minimum of 7 persons for a public company and by
2 in case of a pvt company. It must be properly stamped.
2. Articles of Association: This document is signed by all those persons who have signed the Memorandum
of Association.
3. List of Directors: A list of directors with their names, address and occupation is to be prepared and filed
with the Registrar of Companies.
4. Written consent of the Directors: A written consent of the directors that they have agreed to act as
directors has to be filed with the Registrar along with a written undertaking to the effect that they will take
qualification shares and will pay for them.
5. Notice of the Address of the Registered Office: It is also customary to file the notice of the address of
the company’s registered office at the time of incorporation. It is to be given within 30 days after the date of
incorporation.
6. Statutory Declaration: A statutory declaration by
a. any advocate of the Supreme Court or
b. of a High Court, or
c. an attorney or pleader entitled to appear before a High Court or
d. a practicing chartered accountant in India, who engages in the Company formation or
e. by a person indicated in the articles as director, managing director, Secretary or manager of the
company, mentioning that the requisites of the Act and the rules there under have been complied
with. It is to be filed with the Registrar of Companies.
When the required documents have been filed with the Registrar along with the prescribed fee, the Registrar
scrutinizes the documents. If the Registrar is satisfied, the name of the company is entered in the register.
Then the Registrar issues a certificate known as Certificate of Incorporation.
3. Certificate of Incorporation
On the registration of Memorandum of Association, Articles of Association and other documents, the
Registrar will issue a certificate known as the ‘Certificate of Incorporation‘. The issue of certificate is the
evidence of the fact that the company is incorporated and the requirements of the Companies Act have been
complied with.
4. Certificate of Commencement of Business
As soon as a private company gets the certification of incorporation, it can commence its business. A public
company can commence its business only after getting the ‘certificate of commencement of business‘.
After the company gets the certificate of incorporation, a public company issues a prospectus for inviting the
public to subscribe to its share capital. It fixes the minimum subscription. Then it is required to sell the
minimum number of shares mentioned in the prospectus.
After completing the sale of the required number of shares, a certificate is sent to the Registrar along with a
letter from the bank stating that all the money is received.
The Registrar then scrutinizes the documents. If he is satisfied he issues a certificate known as ‘Certificate of
Commencement of Business’. This is the conclusive evidence for the Commencement of Business.