Sie sind auf Seite 1von 50


Unit – I


1. Contract:

A contract is an agreement made between two or more parties

which the law will enforce. Sec 2(h) defines contract as an
agreement enforceable by law. According to Salmond, a contract
is “an agreement creating and dealing obligations between the


An agreement is defined as “every promise and every set of

promises, forming consideration for each other” Sec 2(e).

Agreement= offer + Acceptance

2. Offer and acceptance:

There must be two parties to an agreement, i.e., one party

making the offer and other party accepting it. The terms of the
offer must be definite and the acceptance of the offer must be
absolute and unconditional. The acceptance must also be
according to the mode prescribed and must be communicated to
the offeror.

3. Essential elements of a valid contract:

• Offer and acceptance

• Intention to create legal relationship

• Lawful consideration

• Capacity of parties- Competency


• Free and genuine consent

• Lawful object

• Agreement not declared void

• Certainty and possibility of performance

• Legal formalities.

4. Legal rules as to valid offer:

 Offer must be such as in law is capable of being accepted

and giving rise to legal relationship.

 Terms of offer must be definite, unambiguous and certain

and not loose any vague.

 An offer may be distinguished from:

• A declaration of intention and an announcement

• An invitation to make an offer or to do business

 Offer must be communicated

 Offer must be made with a view to obtaining the assent.

 Offer should not contain a term the non-compliance of

which may be assumed amount to acceptance

 A statement of price is not an offer.

5. Consideration:

“A valuable consideration in the sense of the law may consist

either in some right, interest, and profit or benefit accruing to


one party, or some forbearance, loss or responsibility given,

suffered or undertaken by the other.”But to this definition there
should be added that “the benefit accruing or the detriment
sustained was in return for a promise given or received.”

6. Competency – Capacity of parties:

The parties to an agreement must be capable of entering into a

valid contract. Every person is competent to contract if he (a) is
of the age of majority, (b) is of sound mind, (c) is not disqualified
from contracting by any law to which he is subject (Secs 11 and

7. Persons of unsound mind:

“A Person is said to be of sound mind for the purpose of making

a contract if, at the time when he makes it, he is capable of
understanding it and of forming a rational judgment as to its
effect upon his interests”. Sec.12 lays down a lays down a test of
soundness of mind.

8. Mistake:

Mistake may be defined as an erroneous belief about something.

It may be a mistake of law or a mistake of fact.

 Mistake of law:

• Mistake of law of the country

• Mistake of law of the foreign country.

 Mistake of fact:

• Bilateral mistake


• Unilateral mistake.

9. Classification of contract:

 Classification according to validity

 Classification according to formation

 Classification according to performance

10. Express Contract:

If the terms of a contract are expressly agreed upon (whether by

words spoken or written) at the time of formation of the contract,
the contract is said to be an express contract.

Implied Contract:

An implied contract is one which is inferred from acts or conducts

of the parties or course of dealings between them.


A Quasi-Contract is not a contract at all. A contract is

intentionally entered into by the parties. A quasi-contract, on the other hand,
is created by law.

11. Executed Contract:

‘Executed’ means that which is done. An executed contract is

one in which both the parties have performed their respective

Executory contract:


‘Executory’ means that which remains to be carried into effect.

An executor contract is one in which both the parties have yet to perform
their obligations.

12. Modes of discharge of contract:

Performance of a contract is the most usual mode of its

discharge. It may be,

1. Actual performance

2. Attempted performance or Render.

13. Breach of contract:

Breach of contract means a breaking of the obligations which a

contract imposes.

Breach of contract may be-

 Actual breach of contract,

 Anticipatory or constructive breach of contract.

14. Sale and Agreement to sell:

Where under a contract of sale, the property in the goods is

transferred from the seller to the buyer, the contract is called a
‘sale’, but where the transfer of the property in the goods is to
take place at a future time or subject to some conditions
thereafter to be fulfilled, the contract is called an ‘agreement to
sell’ [sec. 4(3)]

15. The essential characteristics of sale of goods:

• Two parties


• Goods

• Price

• Transfer of general property

• Essential elements of a valid contract

16. Future goods:

These are the goods which a seller does not possess at the time
of the contract but which will be manufactured or produced or
acquired by him after the making of the contract of sale [Sec.

Contingent goods: Though a type of future goods, these are the goods
the acquisition of which by the seller depends upon a contingency which may
or may not happen [Sec. 6(2)].

Existing goods: These are the goods which are owned or possessed by
the seller at the time of sale. Only existing goods can be the subject of a

17. Delivery of goods:

Delivery means voluntary transfer of possession of goods from

one person to another [Sec. 2(2)].Delivery of goods may be
made by doing anything which the parties agree shall be treated
as delivery or which has the effect of putting the goods in the
possession of the buyer or his agent (Sec.33)


 Actual delivery

 Symbolic delivery


 Constructive delivery or delivery by attornment.

18. Performance of sales of contract:

Performance of a contract of sale means as regards the seller,

delivery of the goods to the buyer, and as regards the buyer,
acceptance of the delivery of the goods and payment for them,
in accordance with the terms of the contract of sale (Sec. 31).

19. Condition:

[Sec. 12(2)] A condition is a stipulation which is essential to the

main purpose of the contract.

Warranty: [Sec. 12(3)]. A Warranty is a stipulation which is collateral to

the main purpose of the contract.

20. Caveat Emptor:

This means ‘let the buyer beware’, i.e., in a contract of sale of

goods the seller is under no duty to reveal unflattering truths
about the goods sold. Therefore, when a person buys some
goods, he must examine them thoroughly. If the goods turn out
to be defective or to not suit his purpose or if he depends upon
his own skill or judgment and makes a bad selection, he cannot
blame anybody excepting himself.

21. Unpaid Seller:

i) The whole of the price has not been paid or tendered.

ii)A bill of exchange or other negotiable instrument has been

received as a conditional payment, and the condition on which it


was received has not been fulfilled by reason of the dishonor of

the instrument or otherwise [Sec. 45(1)].

 Against the goods

 Against the buyer personality

22. Auction sale:

A sale by auction is a public sale where different intending

buyers try to outbid each other. The goods are ultimately sold to
the highest bidder. The auctioneer who sells the goods by
auction is an agent of the seller. i.e., the owner.

23. Negotiable Instrument:

A negotiable instrument is a method of transferring a dept from

one person to another. The term ‘negotiable instrument’ as such
is not defined in the Negotiable Instrument Act. Sec, 13,
however, says that “a negotiable instrument means a promissory
note, bill of exchange or cheque payable either to order or to

24. Pro-Note:

A ‘promissory note’ is an instrument in writing (not being a bank

note or a currency note) containing an unconditional
undertaking, signed by the maker, to pay a certain sum of
money only to, or to order of, a certain person, or to the bearer
of the instrument (Sec. 4)

Bill of exchange:

A bill of exchange is an instrument in writing containing an

unconditional order, signed by the maker, directing a certain person to


pay a certain sum of money only to, or to the order of, a certain person
or to the bearer of the instrument (Sec. 5).


A Cheque is a bill of exchange drawn upon a specified banker

and payable on demand and it includes the electronic image of a
truncated cheque and a cheque in the electronic form.

25. Holder (Sec. 8)

The ‘holder’ of a promissory note, bill of exchange or cheque

means any person entitled in his own name.

Holder in due course (Sec. 9)

It means any person who for consideration became the

possessor of a promissory note, bill of exchange or cheque, if payable
to bearer, or the payee or indorsee thereof if payable to order, before
the amount mentioned in it became payable, and without having
sufficient cause to believe that any defect existed in the title of the
person from whom he derived his title.

26. Crossing of cheque:

A Crossed cheque is one on which two parallel transverse lines

with or without the words ‘&Co’. are drawn. The payment of such
a cheque can be obtained only through a banker. Thus crossing
is a direction to the drawee banker to pay the amount of money
on a crossed cheque generally to a banker or a particular banker
so that the party who obtains the payment of the cheque can be
easily traced.

27. Negotiation:


When a promissory note, bill of exchange, or cheque is

transferred to any person, so as to constitute that person the
holder thereof, the instrument is said to be negotiated. (Sec 14)


When a person transfers his right to receive the payment of a

debt, ‘assignment of the debt’ takes place. Thus where the holder of
an instrument transfers it to another so as to confer a right on the
transferee to receive the payment of the instrument, transfer by
assignment takes place.

28. Indorsement:

It means writing of a person’s name on an instrument for the

purpose of negotiation. The person who indorses the instrument
is called the ‘indorser’, and the person to whom it is indorsed is
called the ‘indorsee’.

29. Modes of discharge of negotiable instrument:

 By payment in due course

 By party primarily liable becoming holder

 By express waiver

 By cancellation

 By discharge as a simple contract

30. Agent and Principal:

An ‘agent’ is a person employed to do any act for another, or to

represent another in dealings with third persons (Sec 182) The


person for whom such act is done, or who is so represented is

called the ‘principal’.

31. Creation of agency:

The relationship of principal and agent may arise-

 By express agreement

 By implied agreement

 By ratification

 By operation on law.

32. Kinds of agent:

 Special agent

 General agent

 Universal agent

 Commission agent

 Del credere agent

33. Rights of an agent:

• Right of retainer

• Right to receive remuneration

• Right of lien

• Right of indemnification

• Right of compensation


• Right of stoppage in transit

Rights of the principal

• To recover damages

• To obtain an account of secret profits and recover them and

resist a claim for remuneration

• To resist agent’s claim for indemnify against liability incurred.

34. Unnamed Principal:

The principal is liable for the contracts of the agent, unless there
is a trade custom, or a term, express or implied, to the effect which
makes the agent personally liable. The legal position is the same as
where the principal is named.

Undisclosed Principal:

The agent is bound by the contract. He may be sued on it and he

has the right to sue the third party. The principal too has the right to
intervene and assert his position as an undisclosed party to the contract.

35. Termination of agency:

An agency is terminated (i) by the principal revoking agent’s

authority: or (ii) by the agent renouncing the business of the
agency; or (iii) by the business of the agency being completed;
or (iv) by either the principal or agent dying or becoming
unsound mind, or (v) when the principal’s adjudicated an
insolvent under the provisions of any Act for the time being in
force for the relief of insolvent debtors (Sec. 201)

36. Law:


In the words of salmond, “Law is the body of principles

recognized and applied by the state in the administration of
justice. The word ‘law’ is a general term and has different
connotations for different people. E.g., a citizen may think of law
as a set of rules which he must obey.

37. Consideration:

Consideration means something in return it is the price for which

the promise of the other is bought. It must result in a benefit to
the promisor and/or a detriment to the promise or both.

38. Consent:

It means acquiescence or act of assenting to an offer. “Two or

more persons are said to consent when they agree upon the
same thing in the same sense” (Sec 13)

39. Implied warranties:

In the contract of sale, unless there is a contrary intention, there

is an implied warranty that (1) the buyer shall have and enjoy
quiet possession of the goods [Sec. 14(b)], and (2) the goods are
free from any charge or encumbrance in favour of any third party
[Sec. 14(c)].

40. Agency Irrevocable:

When an agency cannot be terminated or put an end to, it is said

to be an irrevocable agency. An agency is irrevocable in the
following cases:

• Where the agency is coupled with interest

• Where the agent has incurred a personal liability


• Where the agent has party exercised the authority.

41. Difference between coercion and undue influence

Coercion Undue influence

The consent is given under the The consent is given by a person

threat of an offence. who is so situated in relation to
another that the other person is in a
position to dominate his will.

Coercion is mainly of a physical Undue influence is of moral

character. character

It involves a criminal act No criminal act is involved.

42. Distinction between a sale and a hire-purchase agreement

Sale Hire-purchase

Ownership is transferred from the Ownership is transferred from the

seller to the buyer, as soon as the seller to the hire-purchaser only
contract is entered into when a certain agreed number if
instalment is paid.

The position of the buyer is that of The position of the hire-purchaser

the owner. is that of the bailee.

43. Distinction between negotiation and assignment

Negotiation Assignment

Consideration is presumed. Consideration must be proved.

The title of the transferee is better The title of the assignee is subject
than that of the transferor to the defects and equities in the


title of the assignor.

44. Voidable contract:

A contract which is enforceable by law at the option of one party

thereto, but not at the option of the other [Sec 2(4)]

45. Distinction between a bill of exchange and a cheque

• A cheque may be crossed but not a bill.

• A cheque does not require any stamp whereas a bill, except in

certain cases, must be stamped.

• The payment of a cheque may be countermanded by the drawer

but the payment of a bill cannot be countermanded.


Unit – II


1. What is a general body meeting?

Every company shall in each year hold in addition to any other

meetings a general meeting as its annual general meeting and shall
specify the meeting as such in the notice calling it. There shall not
be interval of more than 15 months between one annual general
meeting of the company and the next.

2. Who is a director?

Director includes any person occupying the position of director, by

whatever name called. The important factor to determine whether a
person is or not a director is to refer to the nature of the office and
it duties.

3. What is a prospectus?

Sec 2(36) defines a prospectus as any document described or

issued as a prospectus and includes any notice ,circular,
advertisement or other document inviting deposits from the public
or inviting offers from the public for the subscription or purchase of
any shares in, or debentures of , a body corporate.

4. What is section 25 of companies Act?

Sec 25 of the Companies Act , it however permits the registration

,under a license granted by the Central Government , of an
association not for profit with limited liability without using the word
“Limited” or the words “Private Limited” to its name.


5. What is meant by holding company and subsidiary


HOLDING COMPANY: Sec 4(4) defines a company as a holding

company of another company if it has control over that other

SUBSIDIARY COMPANY: Sec 4 ((1) defines a company as a

subsidiary company of another company when control is exercised
by the latter over the former called a subsidiary company.

6. Distinguish between MOA and AOA.

Memorandum of Articles of Association


It is the charter of the company They are the regulations for the
indicating the nature of its internal management of the
business, its nationality and its company and are subsidiary to
capital. It also defines the the Memorandum.
company’s relationship with
outside world.

It defines the scope of the They are the rules for carrying
activities of the company or the out the objects of the company
area beyond which the actions of as set out in the memorandum.
the company cannot go.

It, being the charter of the They are the subordinate to the
company, is the Supreme memorandum. If there is a
document. conflict between the Articles and
the Memorandum, the latter

Every company must have its A company limited by shares


own Memorandum need not have Articles of

Association of its own.

There are strict restrictions on its They can be altered by a special

alterations. resolution to any extent,
provided they do not conflict
with the Memorandum and the
Companies Act.

7. What is meant by doctrine of Indoor Management?

The limitation to the doctrine of constructive notice of the

Memorandum and the Articles of a company. The outsiders dealing
with the company are entitled to assume that as far as the internal
proceedings of the company are concerned, everything has been
regularly done. This limitation of the doctrine of the constructive notice
is known as the “Doctrine of Indoor Management.”

8. Define a Government Company

A government company means a company in which not less that 51

percent of the paid up share capital is held by

1. The central government or

2. The state Government or
3. Partly by the Central government and partly by one or more
state governments.

9. Illegal Association –Consequences


a. Personal liability-every member of illegal association is

personally liable for all liabilities incurred in the business and is
punishable with fine which may extend to Rs 10,000/-
b. Contracts: I. An illegal association cannot enter into any
contract nor can it sue any member or outsider, not even if the
company is subsequently registered.
c. It cannot sue or be sued for debts due to it or from it in carrying
on its business for it cannot contract debts or enter in to any
d. No member of the association can sue any other member in
respect of any matter connected with the association.
e. The members cannot either individually or collectively bring an
action to enforce any contract which they may have purported to
make on behalf of the association or to recover any debt given to
the association.
f. Winding Up: An illegal association cannot be wound up under the
Companies Act either at the instance at the instance of a
creditor, or a member or the association itself.

10. What is meant by Ultravires?

‘Ultra’ means ‘beyond’ and ‘vires’ means ‘powers’. The term Ultra
vires a company means that the doing of act is beyond the legal
power and authority of the company.

11. Define Company Limited by Shares

Where the liability of the members of a company is limited to the

amount unpaid on the shares, such a company is known as a
Company Limited by shares. The liability can be enforced during the


existence of the company as also during the winding up of the


12. Define MOA and AOA

MOA: The Memorandum of Association is a document of great

importance in relation to the proposed company. It contains the
fundamental conditions upon which alone the company is allowed to
be incorporated.

AOA: AOA are the rules, regulations and bye-laws for the internal
management of the affairs of a company. They are framed with the
object of carrying out the aims and objects as set out in the
Memorandum if Association.

13. What are the contents of Articles of Association?

1. Share capital, rights of shareholders, variation of these rights,

payment of commissions, share certificates.
2. Lien on shares
3. Calls on shares
4. Transfer of shares
5. Transmission of shares
6. Forfeiture of shares
7. Conversion of shares into stock
8. Share warrants
9. Alteration of capital
10. General meetings and proceedings thereat
11. Voting rights of members, voting and poll proxies.


12. Directors, their appointment, remuneration, qualifications,

powers and proceedings of Board of Directors.
13. Manager
14. Secretary
15. Dividends and reserves
16. Accounts ,audit and borrowing powers
17. Capitalization of profits
18. Winding Up

14. Describe the Characteristics of a company

1. Separate Legal entity

2. Limited Liability
3. Perpetual Succession
4. Common seal
5. Transferability of shares
6. Separate Property
7. Capacity to use

15. What is a foreign company?

It means any company incorporated outside India which has an

established place of business in India Sec 591 (1).

16. What are the special privileges of a private company?

1. Number of members-May have only two members

2. Allotment before minimum subscription –Can allot shares before
the minimum subscription is subscribed for or paid.
3. Prospectus or statement in lieu of prospectus.
4. Number of Directors –Need not have more than two.
5. Kinds of shares-May issue share capital of any kind.


6. Index of numbers-Need not keeps an index of numbers.

7. Commencement of business – Immediately on incorporation

17. Define Director and what are the methods of appointing a

director of a company?

Director includes any person occupying the position of director, by

whatever name called. The important factor to determine whether a
person is or not a director is to refer to the nature of the office and
it duties.


1. First Directors
2. Appointment of Directors by the Company
3. Appointment of Directors by Directors
4. Appointment of Directors by Third Parties
5. Appointment by proportional representation
6. Appointment of Directors by the Central Government

18. Point out the difference between a Private company and

a Public company?

Private Company Public company

Minimum share capital of Rs Minimum share capital of Rs

100000 500000

Minimum number of persons are Minimum number of persons are

2 7

No restriction on the maximum Cannot exceed 50

number of persons.

At least 2 directors are At least 3 directors are necessary



Restrictions on the transfer of Free transfer of shares and

shares and debentures debentures.

Enjoys some privileges No privileges

Prohibits the invitation to the Invites the general public to

public subscribe for the shares.

Directors of Private company Directors must file with the

need not file a consent to the Registrar consent to act as
Registrar directors or sign an undertaking
for their qualification shares.

19. What are the contents of the Prospectus of a company?

1. Part I of schedule II

a. General Information
b. Capital Structure of the company
c. Terms of the present issue
d. Particulars of the issue
e. Company Management and Project
f. Particulars in regard to the company and other listed
companies under the same management.
g. Outstanding litigation pertaining to
h. Management perception of risk factors

2. Part II of schedule II
a. General Information
b. Financial Information
c. Statutory and other information.


3. Part III of Schedule II-Provision applying to Part I and Part

II of Schedule II

20. Who is a promoter and mention the functions of a


A promoter is a person who does the necessary preliminary work

incidental to the formation of a company. It is a compendious term
used for a person who undertakes, does and goes through all the
necessary and incidental preliminaries, keeping in view the object
to bring into existence an incorporated company.


The promoter of a company decides its name and ascertains that it

will be accepted by the Registrar of Companies.

He settles the details of the company’s Memorandum and Articles,

the nomination of directors, solicitors, bankers, auditors and
secretary and the registered office of the company.

He arranges for the printing of the memorandum and Articles, the

registration of the company, the issue of prospectus, where a public
issue is necessary.

21. What are the methods available for winding up a

company under the Companies Act?

1. Winding up of companies by the Court or Compulsory winding up

2. Voluntary Winding Up

a. Members Voluntary Winding Up

b. Creditors Voluntary Winding up


3. Winding up subject to the Supervision of the Court

22. What are the powers of the directors of a company under

the Companies Act?

1. General Powers of the board

2. Powers to be exercised at the Board Meetings

a. Make calls on shareholders in respect of money

unpaid on their behalf.
b. Issue debentures
c. Borrow money otherwise than on debentures
d. Invest funds of the company
e. Make loans

3. Powers to be exercised with the approval of company in general

4. Political Contributions

23. Define Prospectus and mention the liabilities for the

misallotment in Prospectus.

Sec 2(36) defines a prospectus as any document described or

issued as a prospectus and includes any notice ,circular,
advertisement or other document inviting deposits from the public
or inviting offers from the public for the subscription or purchase of
any shares in, or debentures of , a body corporate.

Liabilities for the Mis-allotment of Prospectus


1. Civil Liability

c. Against the company

i. Recession of contract

ii. Claim for damages.

d. Against the directors , promoters and experts

j. Damages

a. For fraudulent misrepresentation

b. For innocent misrepresentation.

k. Compensation under Sec 62 with sec 56

l. Damages for Non-Compliance.

2. Criminal Liability


Unit – III



1) What is a factory?

Factory means any premises including the precincts thereof where


i) 10 or more workers are working or were working on any day of

the preceding 12 months and in any part of which a
manufacturing process is being carried on with the aid of power,
or is ordinarily so carried on.

ii) 20 or more workers are working or were working on any day

of the preceding 12 months and in any part of which a
manufacturing process is being carried on without the aid of
power, or is ordinarily so carried on.

2) What do you mean by ’occupier of a factory’?

 ‘Occupier of a factory’ means the person who has ultimate

control over the affairs of the factory. Where the said affairs are
entrusted to a managing agent, such agent shall be deemed to
be occupier of the factory.

3) List the Power of inspectors of factories.

 Enter, with assistants who are in the services of the government or any
local or other public authority or with an expert, the premises of a


 Make examination of the premises, plant, machinery, article or


 Inquire into any accident or dangerous occurrence, whether resulting in

bodily injury, disability or not, and take on the spot or otherwise
statement of any persons which we may consider necessary for such

 Require the production of any prescribed register or any other

document relating to the factory.

 Seize, or take copies of, any register record or other document or any
portion the as he may consider necessary in respect of any offence
under this act, which he has reason to believe, has been committed.

 Direct the occupier that any premises or any part thereof, or anything
lying there in, shall be left undisturbed for so long as is necessary for
the purpose of any examination under clause (b).

4) Define Hazardous process under the factories act.

 Hazardous process means any process or activity in relation to an

industry specified in the first schedule where, unless special care
is taken, raw material used the rain or the intermediate or
finished products, by- products, wastes or effluents thereof would.

 Cause material impairment to the health of the persons

engaged in or connected therewith, or

 Result in the pollution of general environment.

5) What are the working hours for children in a factory?

 Working hour limited to 4-1/2.


 No child shall be employed or permitted to work in any


 For more than 4-1/2 hour in any day.

 During the night [Sec 71(1)] - Night means a period at least

12 consecutive hours which shall include the interval between 10
P.M. and 6 A.M.

6) Industrial dispute-Explain.

o “Industrial dispute” means any disputer or difference


 Employers and employers,

 Employers and workmen or

 Workmen and workmen, which is connected with (a) the

employment or non-employment (b) the terms of employment
(c) the conditions of labour of any person

 Three ingredients are

• There should be real and substantial dispute or difference.

• The dispute or difference should be between employer and

his workmen and

• The dispute or difference must be connected with the

employment or non-employment or terms of employment, or
with the conditions of labour of any person.

7) What is Strike and lock-out?

 Strike is a weapon available to the employees for enforcing their

industrial demand. A lock-out is a weapon available to the employers


to persuade by a coercive process the employees to see his point of

view to accept his demands.

8) Difference between lock-out and lay-off.

 Under lock-out the employer refuses to give employment because of

closing of a place of employment because of closing of a place of
employment or suspension of work. Under lay-off the employer refuses
to give employment because of shortage of coal, power or raw
materials or the accumulation of stocks or the breakdown of machinery
or natural calamity or for any other reason to give employment.

 Lock-out is restored to by the employer to coerce or pressurize the

workmen to accept his demands; lay-off is for trade reasons beyond
the control of the employer.

 Lock-out is due to an industrial dispute and continues during the period

of dispute; lay-0ff is not concerned with a dispute with the workmen.

9) Define the term ‘Retrenchment’ as used in the Industrial Dispute


 It means ‘to end, conclude, or cease’ .The term as used in the

industrial disputes act means the termination by the employer of the
service of a workman for any reason what over, otherwise than as
punishment inflicted by way of disciplinary action.

10) What is Allocable surplus?

 It means,

o In relation to an employer, being a company, which has not

made the arrangements prescribed under the income-tax act
1961 for the declaration and payment with in India of the
dividends payable out of its profit in accordance with the


provisions of sec 194 of the income-tax, act,1961,67 percent of

the available surplus in an accounting year.

o In any other case, to percent of the available surplus.

11) What are the principles of set-on and set-off of allocable surplus
under the payment of bonus act, 1965?

 Set on:

 Where the allocable surplus for any accounting year exceeds the
amount of maximum bonus payable to the employees in the
establishment under sec.11, then the excess of allocable surplus,
subject to a limit of 20 percent of the total salary or wage of the
employees employed in the establishment in that accounting year,
shall be carried forward for being get on to the succeeding accounting
year and so on up and inclusive of the 4th accounting year.

 Set off:

 Where foe any accounting year ,there is no allocable surplus or the

allocable surplus in respect of that year falls short of the amount of
minimum bonus payable to employees in the establishment under
sec.10, and there is no amount or sufficient amount carried forward
and set on which could be utilized for the purpose of payment of the
minimum bonus, then such minimum amount or the deficiency, as the
case may be, shall be carried forward for being set off in the
succeeding accounting year and so on up to and inclusive of fourth
accounting year in the manner illustrated in the fourth schedule.

12) Define (1) Industrial Tribunal and (2) Unfair Labour Practices.

 Industrial Tribunal:


 It means an industrial tribunal constituted under the sec.7-A. It

includes an industrial tribunal constituted before the 10th day of March,
1957 under this act.

 Unfair Labour Practices:

 It means any of the practices specified in the fifth schedule which

declares certain labour practices as unfair on the part of employers
and their trade union and on the part of workmen and their trade

13) When a strike said to be illegal?

 Strike is said to be illegal if

 It is commenced or declared in contravention of sec 22 or sec 23 or.

 It is continued in contravention an order made under sec 10(3) or sec

10-A (4-A).

14) Define (1) young person and (2) Adolescent person.

 Young person:

 A ‘young person’ means a person who is either child or an adolescent.

 Adolescent:

 An ‘adolescent’ means a person who has completed his 15 th year of

age but has not completed his 18th year.

15) Define worker and Chief Inspector.

 Worker:


 A worker means a person employed, directly or by or through any

agency with or without the knowledge of the principal employer .he
may be employed for remuneration or without remuneration.

 Chief inspector:

 Chief inspector is a person to exercise the power conferred on him by

the factories act. He shall also exercise the powers of an inspector
throughout the state.

16) When was factories act enacted?

 The first factories act in India was passed in was designed
primarily to protect children and to provide for some health and safety
measures. it was followed by new acts in 1891, 1911, 1922 and
1934.the act of 1934 was passed to implement the recommendations
of the royal commission on Labour in India and the conventions of the
international Labour organization.

17) Distinguish between lay-off & Retrenchment?

 Workman have completed not less than I year of continuous service, in

retrenchment, the must has been in the continuous service for not less
than 1 year.

 The rate of compensation shall be equal to 50 percent of the total of

the total of basic wages. In lay-off and in retrenchment, the
compensation which is equivalent to15 days average pay for every
completed year of continuous service.

 In lay-off, where the employer decides to retrench a workman under

provision 2 to sec 25-c,In retrenchment, notice in the appropriate
government or such authority as may be specified by the appropriate
government by notification in the official gazette [sec 25-f(c)].


18) What is the Maximum punishment possible under the factories


 Whoever will fully obstruct in inspector in the exercise of any power

conferred on him by or under the act, or fails to produce on demand by
an inspector any registers or documents, shall be punished with
imprisonment up to 6 months or with fine up to Rs 10,000 or with both.

19) Distinguish between strike and lockout.

 In strike no person employed in a public utility service shall go on

strike in breach of contract with in 14days of giving such notice. In
lock-outs, no employer carrying on any public utility service shall lock-
out any of his workmen within 14 days of giving such notice.

 In strike for illegal workman the punishment may the imprisonment for
1month or with fine may extend to Rs 50 or with both. In lock-out the
punishment for Legal employer is imprisonment of 6months, or with
fine which may extend to Rs 1,000 or with both.

20) State the objectives of payment of wages act?

 The object of the act is to secure the welfare of the workers in a

competitive market by fixing the minimum rates of wages in certain

 The Legislature undoubtedly intended to apply the act to those

industries or localities in which by reason of causes such as
unorganized labour or absence of machinery for regulation of wages.

21) Who are the authorities to settle industrial dispute?

 The authorities to the settlement of industrial disputes are

 Conciliation officers (sec.4).


 Boards of conciliation (sec.5).

 Courts of Inquiry (sec.6).

 Labour courts (sec.7).

 Industrial Tribunals (sec.7-A).

 National Tribunals (sec.7-B).

22) What is the machinery provided to prevent & settle disputes in

the Industry?

 The machinery provided to prevent & settle disputes in the industry


 Voluntary settlement & conciliation machinery.

 Adjudication machinery.

 Arbitration machinery.

23) What are the conditions under which an employee is entitled to


 Every employee shall be entitled to be paid by his employer in an

accounting year, bonus, in accordance with the provisions of the act,
provided he has worked in the establishment for not less than 30
working days in that year. Where an employee has not worked for all
the working days in any accounting year, the bonus payable to him
under sec.10 shall be proportionately reduced (sec.13).

24) Define minimum bonus.

 The minimum bonus is the bonus payable whether or not the employer
has any allocable surplus in the accounting year. A minimum bonus


which shall be 8.33 per cent of the salary or wage earned during the
accounting year or Rs.100.whichever is higher.

25) Define conciliation.

 Dispute resolution in which the parties in dispute are not in the

same room. A conciliator meets with each party separately in an
attempt to narrow the differences and convince the parties to agree
to a general meeting. Conciliation differs from mediation, in which
the parties in dispute meet directly with a neutral third party.


Unit – IV


1. VAT:

A value Added Tax is a multi stage sales tax. It is different from a retail
sales tax. It’s a method of taxation whereby the tax is levied on the value
added at each stage of the production or distribution chain.

2. Advantages of VAT:

Removes the cascading of taxes due to its inherent features of offering

set-off of taxes paid already.

Encourages winding of tax base and reduction in rates of tax.

Particularly improves export competitiveness of local industries due to

‘Zero rating’ of exports.

3. Sales Tax:

“Sale” with all its grammatical variations and cognate expressions

means every transfer of goods in by one person to another in the course of
business for cash, deferred payment or other valuable consideration.

4. Objectives of VAT:

Prevent double taxation with cascading effect.

Eliminate inter-state tax. (e.g. Central Sales Tax)

Improve tax compliance

Make the tax structure, simple, efficient, and transparent.

5. Needs for Corporate Tax Planning:


With increasing burden of direct taxes, like income tax, gift tax, wealth
tax etc... the tax payers have come to realize that tax planning has
considerably increased in the recent past.

The stability of the tax laws as well as the rate structure has been
affected adversely.

These have made proper tax management a vital necessity for the tax
payers or assesses.

6. ‘Casual Trader’:

‘Casual Trader’ means a person who has, whether as principal agent or

in any other capacity, occasional transactions of a business nature involving
buying, selling, supply or distribution of goods in the state.

7. Tax Avoidance and Tax Evasion:

Tax Avoidance is the legal utilization of the tax regime to one’s own
advantage, by means that are within the law in order to reduce the amount
of tax that is payable.

Tax Evasion us the illegal practice of intentionally evading taxes.

Taxpayers who evade their true tax liability may underreport income,
overstate deductions and exemptions, or participate in fraudulent tax

8. Four Indirect Taxes:

Excise duty, VAT, Customs duty, Service Tax, Value Added Tax (VAT).


CST- Central Sales Tax; TNGST- Tamil Nadu General Sales Act.

10. Distinguish between Tax Avoidance and Tax Evasion:


Tax Avoidance Tax Evasion

1. It is the legal utilization of the 1. It is the illegal practice of intentionally

tax. evading taxes.

2. If the tax payer is caught, tax evasion

is liable to criminal penalties.
2. It which is the legal use of tax
code to reduce tax liability.

11. Corporate Tax:

Income Tax is a very important direct tax. It is an important and most

significant of revenue to the government. The government needs money to
maintain law and order in the country; safeguard the security of the country
from foreign powers and promote the welfare of the people.

12. Tax Planning:

Tax avoidance is perfectly legal and is referred to as “Tax Planning”.


Unit – V


1. Objectives of consumer protection Act:

Objectives of the Act are as follows:

Better Protection of interests of Consumers.

Protection of rights of consumers.

Consumer Protection Act.

2. Copy right:

Copyright is a right, When a person creates a literacy, musical, or

artist work, he /she is the owner of that work and is free to decide on its use.
That person called the “Creator” or the “author” or “owner of rights”, can
control the density of the work.

3. Defect as per Consumer Production Act:

[Sec.2(1)(f)], It means any faulty, imperfection or shortcoming in the

quality, quantity, potency, purity or standard which is required to be
maintained by or under any law for the time being in force under any
contract, express or implied, or as is claimed by the trader in any manner
whatsoever in relation to any goods.

4. Consumer Dispute:


[Sec2 (1) (e)], It means a dispute where the person against whom a
complaint has been made, denies or disputes the allegations contained in
the complaint.

5. Cybercrime:

Cybercrime in a narrow sense (computer crime): Any illegal behaviour

directed by means of electronic operations that targets the security of
computer systems and the data processed by them.

6. Consumers Rights Protected By Consumer Protection Act:

1. The rights to be protected against marketing of goods and services.

2. The rights to be informed about the quality, quantity, potency,

purity, standard and price of goods or services.

3. The right to be assured, wherever possible, access to goods and


4. The right to be heard and to be assured that consumers interest will

receive due consideration at appropriate forums

5. The right to seek redressal against unfair trade practices or

restrictive trade practices.

6. Right to consumer education.

7. Need & Significance of Cyber law:

Due to the anonymous nature of the internet, it is possible to engage

into a variety of criminal activities with impunity and people with intelligence
have been grossly misusing this aspect of the internet to perpetuate criminal
activities in cyberspace. Hence the need for cyber laws.

8. Consumer:


The word consumer has been defined separately for “goods” and
“services” “One who buys or agrees to buy any goods for a
consideration which has been paid or promised or partly paid and partly
promised or under any system of deferred payment.”

9. Relief Available To The Consumers:

Removal of defects from the good;

Replacement of the goods;

Refund of the price paid;

Award for adequate costs of parties.

10. Redressal Machinery Act:

The consumer protection Act provides for a 3 tires approach in

resolving consumer disputes. The District Forum has jurisdiction to entertain
complaints where the value of goods/services complained against and the
compensation claimed is less than Rs.5 lakhs, the state commission for
claims exceeding Rs.5 lakhs but not exceeding Rs.20 lakhs and the National
Commission for claims exceeding Rs.20 lakhs.

11. Trademark:

“A trademark is a visual symbol in the form of word, a device or a label

applied to articles of commerce as distinguished from similar goods
manufactured or dealt in by others”.

12. Purpose of Trademark :

The primary purpose of marks is to prevent consumers from becoming

confused about the source or origin of a product or service.

13. Functions and Characteristics of Trademark?



It identifies the product and its origin.

It guarantees its quality.

It advertises the product.


It must be easy to spell correctly and write legibly.

It should be short.

It should satisfy the requirements of registration.

14. Infringement of Trademark:

The infringing mark must be used in the course of trade, i.e. in a

regular trade wherein the proprietor of the mark is engaged.

The use of the infringing mark must be printed or usual representation

of the mark in advertisements, invoices or bills.

Any oral use of the trademark is not an infringement.

15. Rights Conferred By Copyright:

The copyright confers following rights:

Statutory Right

Negative Right

Multiple Rights

Economic Rights

Moral Rights


16. Protected and not protected by copyright:

Copyright protects “Original works of authorship” that are fixed in a

tangible form of expression.

Literary works

Sound recordings

Architectural works

Several categories of material are generally not eligible for copyright

protection. They are:

Work that have been fixed in a tangible form of expression.

Work consisting entirely of information that is common property

and containing no original authorship.

17. Patent:

A patent is a monopoly right granted by the government to a person

who invented or manufacture an article according to the invented process for
a limited period.

18. Purpose Of The Patent Rights:

The following are the purpose of the Patent rights;

Acquiring a monopoly of a business.

Acquisition of freedom.

Income from licensing fees.

19. Need For Patent System in India:


Patent system encourages an inventor to disclose his invention instead

of keeping it secret.

It helps to explore unexplored and uncovered areas.

Patent invention becomes open to public for free use when it ceases to
be in effect.

20. Patentable and Non-Patentable:


A new product or process, involving an inventive step and

capable of being made or used in an industry.


Inventive step

Industrially applicable


An invention that is frivolous or which claims anything obviously

country to well established natural laws;

A presentation of information;

Topography of integrated circuits;

Invention relating to atomic energy.

21. Patent Filing:

Application is required to be filed according to the territorial limits

where the applicant or the first mentioned applicant in case of joint


applicants for a patent normally resides, or has domicile or has a place of

business or the place from where the invention actually originated.

22. Service marks:

Service marks indicate the source or origin of services. For all practical
purposes, trademarks and service marks are subject to the same rules of
validity, use, protection and infringement. When a trademark is used in
connection with services it is called as “Service mark”.

23. Community Trade mark and Its Advantages:

The community trademark offers the opportunity to protect a

trademark in all the countries of the European union by filling a single

Advantages of using the CTM:

The most attractive feature of CTM registration is that it offers

trademark protection in all 25 members’ state of the EU at a cost that is
much lower than that of filing separate applications in each Member state.

24. PCT:

The Patent Cooperation Treaty is an agreement for international

cooperation in the field of patents. It’s the most significant advancement in
international cooperation in the field since the adoption of the Paris
convention itself.

25. Deficiency In Services:


Deficiency means any fault, imperfection, or short coming or

inadequacy in the quality, nature and manner of performance which is
required to be maintained by or under any law for the time being in force or
has been undertaken to be performed by a person in pursuance of a contract
or in relation to any service.

26. “Hacking”:

“ Whoever with the intent to cause or knowing that he is likely to cause

wrongful loss or damage to the public or any person destroys or deletes or
alters any information residing in a computer resource or diminishes its value
or utility or affects it injuriously by any means commits hacking ” .

27. “Person” under the Consumer Protection Act, 1986:

Person [Sec, 2 (1) (m)], Person includes –

(i) a firm whether registered or not;

(ii) a Hindu undivided family;

(iii) a Co-operative society

(iv) every other association of persons whether registered

under the Societies Registration Act, 1860 or not.

28. Attribution of Electronic Records:

[Sec 11]. An electronic record shall be attributed to the originator, it

was sent by-

(a) the originator himself;

(b)by a person who had the authority to act on behalf of the originator
in respect of that electronic record;


(c) by an information system programmed by or on behalf of the

originator to operate automatically.

29. Digital Signature:

[Sec 2 (1) (p)]. It means authentication of any electronic record by a

subscriber by means of an electronic method or procedure in accordance
with the provision of Sec 3.

30. Secure System

[Sec 2 (1) (ze)]. It means computer hardware, software, and procedure


(a) are reasonably secure form unauthorized access and misuse;

(b)provide a reasonable level of reliability and correct operation;

(c) are reasonably suited to performing the intended functions; and

(d)adhere to generally accepted security procedures.’

31. Salient Features of the Consumer Protection Act, 1986:

The law relating to consumer protection is contained in the consumer

protection act, 1986. The act applies to all goods and services. The central
government may however by notification published in the official Gazette
exempt any goods or services [Sec 1]

32. Computer network:

[Sec. 2 (1) (f)]. “Computer network” means the inter-connection of one

or more computers or computer systems or communication device through-

(i) the use of satellite, microwave , terrestrial line, wire, wireless or

other communication media; and


(ii) terminals or a complex consisting of two or more inter connected

computers or communication device whether or not the
interconnection is continuously maintained.

33. Private and Public key:

Private key [Sec 2 (1) (zc)]. It means the key of a key pair used to
create a digital signature.

Public key [Sec 2 (1) (zd]. It means the key of a key pair used to verify
a digital signature and listed in the digital signature certificate.

34. Electronic Signature:

[Sec 3A]. (1) Notwithstanding anything contained in section 3, but

subject to the provisions of sub-section (2), a subscriber may authenticate
any electronic record by such electronic authentication technique which-

(a) is considered reliable ; and

(b) May be specified in the second schedule.

35. Reasons for passing the competition act 2002:

a. To prevent practices having adverse effect on competition ;

b. To promote and sustain competition in market;

c. To protect the interest of consumers; and

d. To ensure freedom of trade carried on by other participants in

markets in India.

36. powers of Commission:

Inquiry into certain agreements.


Inquiry whether an enterprise enjoys dominant position.

Inquiry into combination by commission

37. Duties of Director General:

The director general shall, on receipt of direction under sub section (1),
submit a report on his findings within such period as may be specified by the
commission [Sec 26(3)].

Provided that incase of investigation period.