ASSIGNMENTS

ADL 12 : BUSINESS LAW

Assignment A
1. Explain the essential elements of a valid contract Following are the essential elements of a valid contract. a. b. c. d. e. f. g. h. i. There must be an agreement between two parties. Parties to a contract must be competent. There should be an intention to create a legal relationship. There must be free consent of parties to the agreement. Lawful consideration. Legal or lawful object. Agreement not expressly declared void by law Compliance with legal formalities. Certainty and possibility of performance.

2. Enumerate the different remedies for breach of a contract. Explain one of the remedies. An aggrieved party has certain remedies against the guilty party when there is a breach of contract. These remedies are as follows: a. b. c. d. e. Rescission of the contract. Suit for damages. Quantum meruit. Suit for specific performance Suit for injuction.

Quantum meruit: The literal meaning of the phrase Quantum Meruit is as much as earned. It is the remedy available for an aggrieved or injured party for breach of contract. A right to sue on quantum meruit arises when a contract, partially performed by one of the parties, has become discharged by the breach of the contract by the other party. The first party, therefore, must be compensated for the part he has performed.

3. Describe the procedure of incorporation of public company limited by share. A public company means a company which a. is not a private company; b. has a minimum paid up capital of Rs. 5 lakhs or such higher amount as may be prescribed by the government from time to time; c. is a private company, which is a subsidiary of a company which is not a private company. Procedure for form a public company limited by share: Any seven or more persons associated for any lawful purpose may by subscribing their names to a memorandum of association and otherwise complying with the requirements of the Companies Act in respect of registration form an incorporated company with limited liability. The following three documents are required to be presented tot the registrar of the state in which the registered office for the company is to be situated, for the purpose of registration of a company: 1. The memorandum of association of the company 2. The articles of association, if any; 3. The agreement, if any, which the company proposes to enter into with any individual for appointment as its managing or whole time director or manager. 4. Describe the different methods by which a company may be dissolved. A company, which is brought into existence through the process of law can be brought to an end by following the procedure given in the act. A company is said to be dissolved which it ceases to exist as a corporate body. Dissolution of a company may be brought about in any of the following three ways: 1. By removal of its name from the register of companies. If the registrar has reason to believe that a company is not carrying on business, he is empowered to strike out the companys name from the register of company, as being a defunct company. 2. By the order of the company law tribunal without following the elaborate procedure of winding up. The tribunal is empowered to

order dissolution of a company where reconstruction or amalgamation is to be carried out. 3. By winding of the company. A company may be winded up in any of the following two ways: a. Compulsory winding up under an order the company law tribunal. b. Voluntary winding up (Members voluntary winding up or creditors voluntary winding up) 5. Explain the implied conditions and warrantee in a contract for sale of goods. The implied conditions and warranties are deemed to be incorporated in every contract of sale of goods unless the terms of the contract show contrary intentions. The following are the implied conditions: a. Condition as to title: There is an implied condition on the part of the seller that in the case of sale, he has a right to sell the goods, and that in the case of agreement to sell, he win have a right to sell the goods at the time of ownership is to pass. b. Implied condition of sale by description: Where there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description. If the sale is by sample as well as description, the goods must not only correspond with the sample but also with description. c. Implied condition as to quality or fitness: Where the buyer makes it known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the sellers skill or judgment and the goods are of a description which it is in the course of the sellers business to supply. d. Implied conditions as to the merchantability of goods: Where goods are brought by description from a seller who deals in goods of that description, there is an implied condition that the goods shall be of merchantable quality. The following are the implied warranties: a. Implied warranty of quiet possession: In a contract of sale, there is an implied warranty that the buyer shall have and shall enjoy quiet possession of the good. Thus, if the right of enjoyment of possession

of the buyer is distributed by the seller or any other person, the buyer is entitled to sue the seller for damages. b. Implied warranty of freedom from encumbrances: There is an implied warranty that the goods are free from any charge or encumbrance in favour of a third person.

Assignment B
1 Define a bill of exchange. Explain the salient features of a 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 the bearer of the instrument. There are three parties to a bill of exchange. The person who gives the order to pay or who prepares the bill is called the drawer. The person who is asked or ordered to pay is known as the drawee. The person to whom the bill is made payable is the payee. The following are the important feature of a bill of exchange: a. b. c. d. e. f. g. h. i. It must be in writing. It must contain an order to pay and not request The order must be unconditional The parties to the bill of exchange i.e. drawer, drawee and payee must be certain Bill of exchange must be signed by the drawer and accepted by the drawee The sum payable must be certain Bill of exchange must contain an order to pay money only Bill of exchange must be stamped properly Bill of exchange originally drawn cannot be made payable to bearer.

2. Explain some of the more important general principles of insurance. Insurance transactions are conducted upon certain fundamental principles. These are described below: a. Indemnity The contract of insurance is essentially a contract of indemnity and except for life insurance the insurer contracts to indemnity the insured for actual loss incurred. b. Good Faith: The insured is under an obligation to make the full disclosure of 11 such facts which may have some bearing on the decision of the insurer to enter into contract of insurance.

c. Insurable interest: The insured must have an insurable interest in the object or life insured. Such an interest must always be a pecuniary or financial interest. d. Causa Proxima: When a loss has resulted due to two or more causes, we have to look to the proximate or the nearest cause of the loss, although the loss might not have taken place without the remote cause. e. Subrogation: The underwriter after paying to the insured for the loss steps into the shoes of the insured with regard to all the rights the\at the insured may have against a third party and with regard to any benefit arising therefrom. f. Contribution: In case a property is insured with more than one insurer, and a loss takes place, then the assured will get compensation only for the amount of actual loss. The insurers will share the burden of payment in proportion to the amount insured by each. g. Re-insurance: Reinsurance means that the insurer insures the same risk with some other insurance companies with a view to sparead and share risk with others. 3. Describe the rights and duties of an arbitrator. Arbitrator means a person chose by the opposing parties in a dispute to decide the differences between them. The rights of arbitrator are as follows: a. To conduct the arbitral proceedings in the manner in which he considers appropriate. b. To determine the place of arbitration having regard to the circumstances of the case including the convenience of the parties. c. To determine the time frame for filling statements of claim by the claimant and the defense by the respondent. d. To fix the cost of an arbitration. e. To take a courts assistance in taking evidence. f. To appoint one or more experts to report on specific issues to be determined by the tribunal. The duties of the arbitrator are as follows: a. To satisfy himself that the disputes which are dealt with are within the scope of the arbitration. b. To act judicially and impartially c. To encourage settlement of the dispute by mediation or conciliation. d. To be within the scope of the arbitration agreement. e. To observe the rules of natural justice.

Case Study Shyam Sunder admitted his only infant son in a private nursing home. As a result of a strong dose of medicine administered by the nursing attendant, the child became mentally retarded. Shyam Sunder made a complain to the district forum seeking relief by way of compensation to the extent of 21 lakhs on the ground that there was a deficiency in service by the nursing home. 1. What is the applicable law for handling the case? Deficiency of Service 2. Is the district forum the proper competent authority to whom the complaint should be made? No, as he has filed compensation for 21 lakhs, the complaints should be made to state level forum. 3. Does Shyam Sunders complaint give rise to a consumer dispute? Yes, because the negligence of nursing home, his son became mentally retarded. 4. Who is the consumer in this case; Shyam Sunder or his infant son? Shyam Sunder, as his son is minor and Shyam Sunder is his guardian, so he is the consumer in this case. 5. Is a private nursing home liable in such type of case under the consumer protection Act? Yes, because they are providing services to sick people and also charging for that. 6. What, if any, is the limitation period for filling the complain by a consumer? 72 Hours

Assignment C Answer True or False

1. 2. 3. 4. 5. 6. 7. 8.

An invitation to offer is a good offer. False A quasi contract is not a contract at all. True An agreement to agree is a valid contract. True

An attempt at deceit which does not deceive is not fraud. False A stranger to a consideration cannot maintain a suit. True A married woman cannot enter into a contract. False A minor girl can enter into a contract. False For breach of a contract a party cannot claim compensation for loss or damage. False 9. A contract for fire insurance is not valid. False 10. A seller cannot convey a better title to the buyer than he himself has. True 11. The ownership in goods passes only on delivery. True 12. The present sale of future goods is an agreement to sell. True 13. Risk follows ownership. True 14. An agreement to sell is not a contract of sale. False 15. Not negotiable crossing of a cheque stops its transferability. True 16. A bill of exchange cannot be crossed. True 17. A cheque is a promise to pay. False 18. A cheque is always payable on demand. True 19. A promissory note can be made payable to bearer on demand.

True
20. A crossed cheque can be encashed at a counter of the bank.

False
21. The first directors of a company are appointed at its statutory meeting. False 22. A person applying for share in a company in fictitious name is liable to be punished with imprisonment. True 23. A public company can never be converted into a private company.

True
24. A public company can have two or more managing directors.

False
25. A person can be a director of not more than 15 companies. True 26. Insurable interest is not necessary in all types of insurance contracts False 27. Insurance contracts are based on utmost good faith. True 28. A contract of life insurance is a contract of indemnity True

29. The consent of the insurer is necessary for an assignment of a life policy. True 30. There must be at least three directors in a private company. False 31. A person of 68 years cannot be appointed a director of a company.

True
32. A company can issue debentures with rights. True 33. A company can issue shares without voting rights. True 34. A private company can commence business without obtaining a certificate to commence business. True 35. A share certificate is conclusive evidence of the holders title to share. True 36. There cannot be more than one district consumer forum in a district. True 37. There are consumer protection councils at national, state and district level. True 38. Deficiency of service is not covered under the consumer protection act. False 39. The term consumer does not include a person who obtains good for resale. True 40. There can be a settlement between the parties to the arbitration agreement during arbitral proceedings. True 41. The arbitral award can be set aside. False 42. The arbitral tribunal can make interim award during the course of arbitration proceedings. True