Sales of Goods

SALES OF GOODS ACT 1930
CONTRACT OF SALE (SECTION-4)

A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods for a price
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Essentials of contract of sale

A valid contract Two parties Transfer the property Goods Price
Important distinctions
Sale and agreement to sell Sale and bailment Sale and Hire-purchase Sale and mortgage
Sale and agreement to sell
Nature of contract Transfer of property Risk of loss Consequences of breach Insolvency of buyer Insolvency of seller General and particular property Right of re-sale
Transfer of property and possession Return of goods Consideration
Sale and bailment

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Nature of contract Termination Insolvency of buyer Implied conditions and warranties Effect of payments resale
Sale and hire purchase
Elements of a sale of goods contract

A contract involving
transfer of ownership
in goods for a money consideration called the price
Not
hire purchase barter
chattel security
leasing goods and services
DEFINITION OF GOODS
SECTION 6 GOODS MEANS Every kind of movable property other than actionable claims and money and includes stock and shares, growing crops,grass,and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale
Goods Chattels personal but not choses in action currency not goods but money sold as collectibles is not growing crops but harvested crops are
Types of goods
future goods = to be manufactured specific goods = identified and agreed upon at time of sale existing goods = in existence but not yet seller's property unascertained goods = goods not yet appropriated to this contract ascertained goods = identified and appropriated
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DEFINITION OF PRICE
Price
not necessarily wholly in money must be specified or readily ascertainable no prescribed form except in Tasmania and Western Australia where Statute of Frauds applies to contracts over $20
- does not include old and rare coins

must be in money
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MODES OF FIXING PRICE SECTION-9
As expressly stated in the contract I.e by agreement By the course of dealing between the parties If nothing is there then reasonable price Through valuation By the third party
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Passing of property and risk

General rule is that risk passes with property unless otherwise agreed Property passes when goods are ascertained contract is made for sale of specific goods in a deliverable state
when whatever needs to be done to put specific goods in a deliverable state is done when something that needs to be done to determine price of specific goods is done and buyer has notice when goods are delivered on approval or sale or return basis when buyer expressly or impliedly accepts goods -- Where contract has a reservation of title clause (Romalpa) on fulfilling those conditions 13
Where non-owner can validly pass title to goods Nemo dat quod non habet rule cannot give better title
than you have Exceptions to nemo dat sells with authority of true owner true owner is estopped by own conduct from denying sellers authority disposal by mercantile agent under court order sale under common law or statutory power sale under voidable title
sale by seller in possession

sale in market overt
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CONDITIONS AND WARRANTIES
SEC-12(1) A stipulation in a contract of sale with reference to goods which are subject matter there of , may be a condition or a warranty The stipulation which are essential for the main purpose of the contract and the breach of which gives rise to right to treat the contract as repudiated is called Condition. Section 12(2) Essentials 1.essential to the main purpose 2.Non-fullfillment causes irreparable damage 3.Breach gives right to rescind the contract
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The stipulation which is collateral to the main purpose of the contract and the breach of which gives rise to claim for damages but not a right to reject the goods and treat it as repudiated is called Warranty Section 12(3)
Essentials
Collateral to the main purpose Breach causes damages No right to repudiate contract
Warranty
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Distinction b/w condition and warranty
Importance in contract Consequences of breach Option of treatment

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When condition to be treated as warranty
Voluntary waiver by buyer Treating condition as warranty Acceptance of goods by buyer
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Condition as to title:- (sec-14) subject to a contrary IMPLIED CONDITIONS intention,there is an implied condition on the part of the seller
that in the case of sale, he has a right to sell goods and that in case of the agreement to sell, he will have a right to sell the goods at the time when property is to pass. Sale by description :- (sec-15) where goods are sold by description, there is an implied condition that the goods shall correspond with the description. This rule is based on the maxim,if you contract to sell peas,you cannot oblige a party to take beans. Sale by sample as well as description;-(sec-15) if the sale is by sample as well as description, it is not sufficient that the bulk of the goods shall correspond with the sample,if the goods do not also correspond with the description.thus should correspond with both sample as well description.
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Contd.. Condition as to quality or fitness ;- subject to the

provisions of this act, and of any other law for a time being in force,there is no implied condition as to quality or fitness for any particular purpose of goods supplied Condition as to merchantability ;- there is always an implied condition in a contract of sale that the goods purchased should be of merchantable quality.thus where goods are brought by description from a seller,who deals in such goods,there is an implied condition as to merchantability Merchantability means;- that the article sold must be of such quality and in such condition that reasonable man 20 would accept the article as performance of a promise
SALE BY SAMPLE ;- In the contract of sale by sample, there is an implied condition(i) That the bulk shall correspond with the sample in quality (ii) That the buyer should have reasonable opportunity of comparing the bulk with the sample (iii) That the goods shall be free from any defect rendering them unmerchantable, which would not apparent on reasonable examination CONDITION AS TO CUSTOM OR USAGE;- An implied condition as to quality or fitness for a particular purpose may be annexed by custom or usage of trade (sec-16(3))
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IMPLIED WARRANTIES
Implied warranty of quiet possession Implied warranty of freedom from encumbrances Implied warranty annexed by usage of trade.
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CAVEAT EMPTOR
Let the buyer beware Exceptions; where the buyer relies on the skill and judgment of the sk Merchantability quality of goods Consent by fraud Usage of trade
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Difference between Transfer of Property and Possession,

Transfer of property means transfer of ownership Risk of loss also passes with ownership to buyer When the goods are destroyed or damaged ,only the owner can sue The seller can sue for price only if the ownership of goods has been transferred to the buyer
Transfer of possession means property just passes Risk of loss remains with the seller Possessor does not have the right to sue This is not in case of transfer of possession
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Express and implied terms in a sale of goods contract (conclusion)

Express terms are those expressly agreed upon and included in the agreement Terms implied by custom, usage or statute Terms are either conditions essential or warranties subsidiary less important Remedies depend on significance of breached term
condition treat contract as terminated and sue for damages or affirm warranty sue for damages only
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Remedies for breach of a sale of goods contract
Failure to deliver goods or to pay for them will amount to breach of the sales contract Remedies of unpaid seller lien against goods (sec-47-49) right of stoppage in transit GOODS right of retention of goods right of resale (sec-54) sue for price if it is due and payable sue for damages for non-acceptance BUYER Sue for interest Rights of buyer reject the goods recover the price sue for damages for breach of warranty sue for damages for non-delivery sue for specific performance sue in detinue or conversion 26
Auction sales
Legislative provisions changeable by agreement between parties Auction sale is a contract Each lot is subject of a separate contract Bidder makes offer, acceptance is at fall of hammer. Auctioneer can refuse to accept bid Normally sellers cannot bid for own goods but can reserve the right to bid Auction may be subject to reserve price Where no reserve auctioneer may refuse to accept bid can specify this right in sale conditions. 27
that seller has the right to sell the goods
that unascertained goods when delivered will correspond with description or sample
where buyer relies on seller, that the goods are fit for purpose
where the goods are bought by description from a dealer that they are of merchantable quality
Implied warranties under Sale of Goods Act
that buyer shall have and enjoy quiet possession of goods

the goods shall be free of any charge or encumbrance Terms implied under sale of Goods Act can be excluded
Similar terms implied under Trade Practices Act non-excludable
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THANK YOU
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INSTRUMENTS ACT, 1881
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Definition:-Negotiable Instrument
Section 13(i) says that it is one when transferred by delivery passes to the transferee, a good title to payment irrespective of the title of the transferor, provided the transferee is a bonafide holder for value without notice of any defect in the title of the transferor Promissory note, bills of exchange & cheques are negotiable instruments.
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Property Negotiability Good title Right to sue in own name Presumptions Prompt payment
FEATURES OF N.I.
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Section 4 says an instrument in writing (not being a bank note or currency note) containing an un-conditional undertaking signed by the maker , to pay a certain sum of money only ,or to the order of ,a certain person ,to the bearer of the instrument.
Promissory Note
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Essentials of a Promissory Note
Must be in writing It must contain promise to pay must be expressing to pay certain sum and it must also be unconditional Promise to pay must be express Should have certain maker and payee It must be duly signed by the maker Promise should be to money and money only It may be payable on demand or after a definite perio of time
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Answer yes or no
I promise to pay B Rs. 500 and all other sums which shall be due to him I promise to pay B or order Rs 500 Mr. B.i.o.u Rs 500 I promise to pay B Rs 200 seven days after my marriage with I acknowledge myself to be indebted to B Rs. 500 to be paid o demand of values received
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Definition :-Section 5 defines `Bill of exchange` as an instrument in writing containing an unconditional order, signed by a maker, directing a certain person to pay a certain sum of money only to or to the bearer of the instrument. A bill of exchange is also draft. There are three parties to a bill of exchange:Drawer,Drawee,Payee.
Bills of exchange
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Writing Unconditional order to pay Signed by drawer 3 parties Certain sum of money Must contain an order to pay money only Compliance of formalities
Essentials of B/E
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A Cheque is the means by which a person who has funds in the hands of a bank , withdraws the same or some part of it. Section 6 defines a Cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
CHEQUE
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Cheque, Bill of exchange and Promissory note
SIMILARITIES: All are in writing and signed by the maker All are payable in money terms only All are unconditional For a specific amount Payable either to the specified person or order of the specifie person or the bearer of the instrument
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Bill of exchange and Promissory note

Parties Order/Promise Acceptance Period Circulation/Area Crossing Mistake Liability if not presented in due course
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Difference Between Promissory Note & Bill of Exchange

Bill of exchange Basis Parties Nature of payment Accep tance Three parties Two parties Unconditional order to Unconditional promise to pay pay Requires an Do not require any acceptance since it acceptance of the is signed by the maker drawee before its presentation Liability of the drawer Liability of the maker is primary is secondary when drawee fails to pay Promissory note
Liability
Notice of Notice must be given to Notice to the maker is not necessary dishon all who are liable to or pay Nature of Can be accepted Can never be conditional accept conditionally ance Copies Can be drawn in sets Cannot be drawn in sets
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DIFFERENCE BETWEEN CHEQUE & BILLS OF EXCHANGE

Bill of exchange Basis Drawee Acceptanc e Payment Can be drawn on any person including a banker Requires an acceptance of the drawee before its presentation B.O.E. is normally entitled to three days grace unless payable on demand No such provision Always drawn on a bank or a banker Does not require any acceptance Payable immediately on demand May be crossed Cheque
Crossing Notice of dishonor Payable to bearer on demand Stamp Protection
Notice must be given to all who Notice of dishonor is not are liable to pay necessary if it is not met Cannot be so drawn Can be drawn payable to bearer to demand Does not any stamp
Must be stamped No such protection
banker is given statutory protection w.r.t payment of cheques in certain cases.
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Ambiguous and Inchoate instrument

Ambiguous instrument:(Section-17) If an instrument drawn in such a manner that it can be classified both as a BOE and PN, then the holder of such an instrument may treat it as BOE or PN at his own option. E.g. Difference between Cheque, Bill of
exchange and Promissory note
When the Drawer and the Drawee is the same person e.g. BOE drawn by Agent on his Principal When the Drawer of the BOE is a Fictitious person When the Drawer is a person incompetent to 43 contract
The instrument which is incomplete like leaving blank name of payee or amount payable or date.
Inchoate instrument
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Cheques are of two types:-
crossed cheques
Open cheques
Crossing of cheques
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Open Cheques:- Open cheques are those which are paid
over the counter of the bank. They need not to be put through the bank account. Open cheques are liable to great risk in the course of circulation
Crossing of cheques:- Crossing is a direction to a banker
not to pay the cheque across the counter but to pay to a bank only or to a particular bank in a account with the bank. Thus , crossing provides a protection and the safeguard to the owner of the cheque as by securing payment through a banker, it can easily be detected to whose use the money is received. 46
General crossing---(Section 123) Special crossing---(Section124) Payment of cheque crossed specifically more than once---(Section 127)
Modes of crossing
Restrictive crossing---
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A negotiable instrument may be dishonored by :i) non-acceptance ii) non-payment. A Cheque and a promissory note can only be dishonored by non-payment but a bill of exchange can be dishonored either non-acceptance or by non-payment.
Dishonor of cheques
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When banker may dishonor a customers Cheque

1) 2) 3) 4) 5) Where the customer has not got sufficient funds with the bank and there is no overdraft arrangements. Where the form of the Cheque is legally doubtful. Where the Cheque is not presented within the banking hours. Where the Cheque is presented in the branch where the customer has no account. Where the Cheque has become stale where the bank has a general lien on the customers funds and there are no funds available after the exercise of its lien permitting the bank to honor the cheques. Where some persons have joint account and the cheque is not 49 signed by all. Where the Cheque is not properly drawn.
6) 7)
When banker must dishonor a customers Cheque
1) When the customer has died and the bank has the notice of it. 2) When the customer has become insolvent or an order of adjudication has been passed against him. 3) When the bank has received an order from the court prohibiting payment out of the funds belonging to the custom 4) When a customer has become lunatic and the banker has got notice of his insanity. 5) Where the drawer informs the bank that the Cheque is lost. 6) Where there are material alterations or the signatures of the drawer or endorsee are irregular. 7) When the banker suspects that the title of the person presen 50 the Cheque is defective. Note: The above mentioned list is not exhaustive. For more de
Liabilities of parties (Banker and Drawee) to negotiable instrument

Liability of the banker (drawee): Section 31
The drawee of a Cheque must pay the Cheque when duly presented for payment provided he has sufficient funds of the drawer applicable to the payment of such Cheque .If the drawee banker wrongfully dishonors the Cheque he can be made liable to pay exemplary damages to the drawer. When the banker makes the default he is liable not towards the payee or the holder but towards the drawer. This is so because there is no privity of contract between the banker and the holder. The holder has the remedy against the drawer and not the banker.
The drawer of the Cheque is liable to the holder only if (i) the instrument has been dishonored (ii) due notice of the dishonor has been given to him. The liability of a drawer of a Cheque 51 arises only when drawee bank fails or refuses to pay. The liabilit of the drawer of a Cheque is primary because on dishonor the holder cannot sue the banker but can sue the drawer only .
Liability of drawer :Section 30
THANKYOU
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CORPORATE LEGAL ENVIRONMENT
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COMPANY: EVOLUTION
1956
Concept of company originated in Italy in the 12th century. Govt. of Italy issued promissory notes to public. Members of the public formed associations to acquire these. First co. Estd. In England in 16th century AD.East India company 1600 Before Co's act 1956, Companies act of 1850 which come up in England applicable in India.
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History and development is closely linked up with that of England. Company Law is the cherished child of the English parents. The Indian Companies Act, 1913 was repealed by the present Companies Act (of 1956) which came into force on 1st April, 1956. The present Companies Act is based largely on the recommendations of the company law committee (Bhabha Committee) which submitted its report in March, 1952.
This Act is the largest piece of legislation ever passed by our Parliament.. Consists of 658 sections and 15 schedules.
Recently two bills passed in Parliament to amend the Company Act, 1956 to amend the Companies Act The Companies (Second Amendment Act), 2002 came in to force with effect from 1-1-03
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Company: Meaning
Derivative of Latin word Companis According to Alfred Palmer, men of business thought it appropriate to discuss the affairs of business over lunch or dinner.
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Company: Important Definitions

A company is an incorporated association which is a artificial person created by law, having a separate entity with a perpetual succession and common seal. -- L.H.Haney
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Company means a company formed and registered under Act or and existing company -Section 3(1)(i) Existing company means a company formed and registered under any of the previous companies laws. -Section 3(1)(ii)
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By a company is meant an association of any persons who contribute money or money's worth to a common stock and employ it in some trade or business, and who share the profit and loss( as the case may be) arising therefrom. -Lord Justice Lindley
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Company Characteristics
Incorporated Association. Artificial Person. Separate legal Entity.(Soloman vs. Soloman & Co. Ltd.)
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Contd.
Perpetual Succession.The modern corporation, with its continuous existence despite its changing membership, has been compared with a river which retains its identity even though the parts which compose it are constantly changing by R.N.Owens. Lee vs.Lee farming Co. Ltd.1960
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Company Characteristics contd.

Common Seal. Limited liability. Number of Members. Representative Management. Limitation of Action. Transferability of Shares.
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Company Characteristics contd.
Termination of Existence. Company is not a Citizen.(State Trading Corporation of India vs. commercial Tax Officer.)
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COMPANY: LIFTING OR PIERCING OF CORPORATE VEIL
Principle of Perpetual succession decided in Soloma vs. Soloman &co. Ltd. Resultant in a corporate veil(distinction) between company and its members. If members/directors defraud company by its person acts. There is lifting or piercing of corporate veil to held members/directors personally liable.
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COMPANY: LIFTING OR PIERCING OF CORPORATE VEIL (A). Under Statutory Provisions

Members below statutory limit(Sec.45) Mis-statement in prospectus.(62) Non-refund of Application money Sec.65(5) Investigating affairs of the company i.e. Oppression and mismanagement(239) Investigating the fraudulent trading/Defraud creditors.
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Non-Disclosure of company's name on legal documents(Hendon vs. Addleman) Investigating company's ownership(247)
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(B). Under Judicial Interpretations Protection of Revenue i.e. to avoid tax evasion(Re Sir Dinshaw Maneckjee Petit) Prevention of fraud and improper conduct(Jones Vs. Lipman) Ddetermination of Enemy character of the company(Daimler Co. Ltd Vs. Continental Tyre & Rubber Co. Ltd.) Government companies
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COMPANY: HOW DIFFER FROM PARTNERSHIP

Governing Act Number of Members Registration and Incorporation Separate Entity Liability Management Transfer of Interest
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COMPANY: HOW DIFFER FROM PARTNERSHIP

Agency relationship Audit Perpetual succession Capacity to contract with owners Mandatory Documents Distribution of profits Winding up
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LIFTING OF A CORPORATE VEIL
The principle of separate entity is regarded as a curtain, a veil, or shield between the company and its members, thus protecting the members from the liability of the company. This principle cannot be pushed to the unnatural limits i.e. to defeat the public convenience, justify wrong, protec fraud and defend crime, then the law will not regard the company
SINCE AN ARTIFICIAL PERSON IS NOT CAPABLE OF DO ANYTHING ILLEGAL OR FRAUDULENT,THE NOTION OF CORPORATE PERSONALITY MIGHT HAVE TO BE ABONDON 70 TO IDENTIFY THE PERSONS WHO ARE REALLY GUILTY. TH IS KNOWN AS LIFTING OF CORPORATE VEIL
Corporate veil may be lifted in the following circumstances; ---- Common Law Exceptions (Judicial interpretations) ---- Statutory exceptions
COMMON LAW EXCEPTIONS

Determination of the character It is against the public policy
to allow alien enemies to trade under corporate faade in the

times of war
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Persons controlling the affairs are residents of the alien company
Or where residents are acting under the direction & control of enemies
Where company is a mere sham--- where the device of incorporation is used for illegal or improper use
Case : Daimler Co. LTD v. Continental Tyre & Rubber Co. LTD.
Where company is formed to do fraud or improper conduct : whe company is incorporated for evading contractual and statutory obligations Where a company is used to evade tax Where the sole purpose of the new company is to use it 72 as a device to reduce the amount to be paid by way of bonus.
Number of members below statutory minimum: If company works for the p more than six month with the reduced number of members, all will be liable payments to be made which are contracted for during that period
Failure to refund the application money: If the directors are unable the refund the amount within 130 days the directors will be jointly or severally liable with interest. Company not mentioned on the bill of exchange: A person is personally liable if he
signs the document where the company name is not clearly mentioned.
Group accounts: Separate identity is not considered in case of laying down the accounts of group companies. Investigation in to the related companies: an inspector can lift the veil in case he feels it necessary to investigate the affairs of its subsidiary or the holding company.
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Fraudulent trading: if at the time of winding up of the company, it appears that the
COMPANY: ITS TYPES

COMPANIES
Incorporated
Unincorporated
Chartered cos'.
Statutory cos'.
Registered cos'.
Cos'. Ltd. by Shares
Cos'. Ltd. by Guarantee
UnLtd. cos'.
Public
Private
Public
Private
Public
Private
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COMPANY: ITS TYPES

(A). Chartered companies: e.g. Bank of England(1694), East India Co.(1600) (B). Statutory companies: e.g. LIC, RBI, FCI, UTI etc. (C). Registered companies: Ltd. by shares Ltd. by guarantee Unltd. Cos.
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Company limited by shares:- in co. ltd by shares the liability of members of members is limited by the memorandum to the amount,if any,unpaid on the shares resp. held by them Company limited by guarantee;- it is a registered company public or private,in which the liability of members is limited to such amounts as they may respectively undertake by the memorandum to contribute to the assets of the company in the event of its being wound up. In case of such companies , as in the case of companies limited by shares,the liability of its members is limited ,to the amount of guarantee undertaken by them Unlimited companies a company not having any limit on the liability of its members is termed as unlimited company.In such a company the liability of each member extends to whole amount contribution from other members.an unlimited company must not incorporate limited as the last word.it need not have a share capital, 76 but it must file the articles and the memorandum.
COMPANY: TYPES Private company: ITS Section-3(1)(iii)

a company which has a minimum paid-up capital of rupees one lakh rupees or such higher paid-up capital as may be prescribed, and by its articles: Restricts right to transfer its shares; Limits membership to 50 (excluding employed members) Prohibits invitation to public to subscribe shares & debentures. Prohibits invitation or acceptance of deposits.
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Public company: Section-3(1)(iv)
A public company means a company Is not a private company Has a minimum paid-up capital of rupees five lakh or more. Is a private co. which is a subsidiary of a public company.
COMPANY: ITS TYPES
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COMPANY: HOW PRIVATE CO. DIFFER FROM PUBLIC COMPANY

No. of members Minimum Paid capital Restriction on name Commencement of Business Invitation to public for shares Acceptance of Deposits from public Transferability of shares Rules regarding Directors Allotment before minimum subscription
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COMPANY: HOW PRIVATE CO. DIFFER FROM PUBLIC COMPANY

Issue of share warrants Further issue of capital Directors Statutory meeting Quorum Managerial remuneration Number of members
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CONVERSION OF PRIVATE COMPANY INTO A PUBLIC COMPANY
Conversion by default Conversion by operation of law Conversion by choice
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Holding companies Subsidiary companies Government companies Foreign companies
Other important concepts
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HOLDING COMPANY AND SUBSIDIARY COMPANY
Holding Company: (Section 4) is one: Controls the composition of board of directors of another company; or Holds more than half of the nominal value of equity share capital of another company. (if a company say X) is a subsidiary of any company say Z which is in turn a subsidiary of another company say Y then: 83
Y
Z
.
Holding company
Y automatically becomes holding company of x Subsidiary company
Subsidiary Company: A company so controlled is called subsidiary company
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Government Company (Section 617):

A company
in which not less than fifty one percent of
the paid up share capital is held by Central Govt., or by any State Government or Governments, or partly by the Central Government and partly by one or more State
Governments. A subsidiary of a government company is

also a government company.
Foreign companies (Sec. 591)

It means a company incorporated outside85 India and having a place of business in India.
One Man Company:
These are the companies in which one man holds virtually the whole of the share capital with a few extra members holding the remainder who may be his relations or nominees. This is done with a view to fulfill the statutory requirements.
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Formation of a
company
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Incorporation of a company
A company comes into existence when a number of persons come together with a view to exploit some business opportunity The purpose and the object for which the company is formed must be lawful and not forbidden u/s12, 7 or more may incorporate a company for lawful purpose
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Documents required to be filed with registrar
Memorandum of association Articles of association,if any, duly signed by the subscribers to the memorandum The agreement,if any,which is entered A statement of the nominal capital A notice of addresses of registered office of the company A list of directors and their consent to act signed by each An undertaking in writing signed by each such director to take and pay for qualification shares A declaration that all requirements are complied with
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COMPANY:HOW IT FORMED
Stages in the formation of a company:
Promotion of a company. Incorporation or Registration of the company. Capital subscription. Commencement of Business
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COMPANY:PROMOTION STAGE
1. Promotion of a company: Promotion may be defined as the discovery of business opportunities, and the subsequent organisation of funds, property and managerial ability into a business concern for the purpose of making profits there from -C.W. Gesternberg Promoters are the persons who get together and the conceive the idea of doing the business.
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Promoter is the person who assembles the men, the money and the materials into a going concern. -Guthmannn and Doughall
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Does promoter act as an agent(no) Does he act as a trustee(no) Is the promoter owner of the co.(no) or is he an official(no)
STATUS OF PROMOTERS
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Companies Act doesn't define a promoter. He is having fiduciary relationship which means a relationship of trust and confidence. Lord chancellor has observed, they stand, in my opinion, undoubtedly in a fiduciary position. They have in their hands the creation and moulding of the company.
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PROMOTERS: FIDUCIARY RELATIONSHIP
Lord Lindley observed in the case of Laygunas Nitrateco. Ve. Lagunas Syndicate: Not to make any secret profits Not to earn profit on personal assets Promoters not personally liable Termination of contract, if based on misrepresentation No termination of voidable contracts if the situation of the changed.
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Rights of Promoters:
Right to get legitimate preliminary expenses(Mehladeo vs. Port Alegre Railway) Right to get proportionate amount from co-promoters Right to get remuneration
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Duties of Promoters:
To disclose private arrangement To disclose the secret profits To disclose the material facts To show goodwill towards the future shareholders
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Liabilities of Promoters:
Liability due to fiduciary relationship In case of fraud and breach of duty. For statutory mistakes in prospectus Misstatement in prospectus (Sec. 62 & 63) Liability in case of Insolvency Liability upto completion of contract Liability in case of winding up of co.
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COMPANY:INCORPORATION STAGE
Incorporation or Registration of the company: Floatation is the conception of a company whereas its incorporation is its birth when it takes on the form of an artificial person.
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Steps for Incorporation:
Preliminary activities Documents filing with the ROC Payment of prescribed fees Certificate of Incorporation Capital subscription Commencement of Business
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Preliminary activities: Location of Regd. Office To decide the name of the co. To get the licence under IDRA,1951(if required) To make appointments Preparation of MOA and AOA To send the application to the ROC 101
Documents filing with the ROC:
MOA AOA Information about the HO List of Directors Written consent of Directors Directors undertaking regarding Qualification shares Preliminary Agreement with managerial personnel Statutory Declaration.
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COMPANY: CAPITAL SUBSCRIPTION
Capital subscription and commencement of business stage are relevant only for a public compa with a share capital Co. issued prospectus inviting public to invest and also sends a copy to ROC Applications along with prescribed amount received by cos bankers Company passes the formal resolution for allotment and filed return of allotment with ROC Refund within
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Business
Commencement of Business: After Incorporation a private co. can commence its business immediately, by a public co. require certificate of commencement of business subject to conditions of Sec 149(1)(a to d) and 149(2)(a to c)
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COMPANY:Commencement of
Business
Public co. issuing Prospectus 149(1) a). Minimum Subscription( within 120days) b). Qualification shares c). Refund d). Declaration
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COMPANY:Commencement of
Business
Public company not issuing the Prospectus: 149(2) a). Issue of statement in lieu of prospectus b). Qualification shares c). Declaration
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MEMORANDUM OF ASSOCIATION
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MOA: WHAT IT MEANS

To recall or memories the purpose for which the Association(co.) formed Also called charter/principal document of the company Required for both Pvt. and Public ltd. Co. No co. can be regd. without MOA Every person presumed to know the about provisions of MOA, for which co. formed Co. is not bound for acts not defined in MOA
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MOA: WHAT IT MEANS

Memorandum means the MOA as originally framed or as altered from time to time in pursuance of any previous companies law or of this Act. -Section 2(28) The purpose of the memorandum is to enable the shareholders, creditors and those who deal with the company, to know its permitted range of enterprise. -Lord Macmillan
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MOA: WHAT IT MEANS

Features or basic characteristics of MOA: Basic and mandatory for each co. As constitution of company Altered but subject to certain conditions Acts beyond this are ultra virus I.e not enforceable against the co. Public document and open for for inspection of those who deal with the co. Basis for relationship of co. with outsiders. 110
Forms of MOA: Table-B For co. Ltd. by shares Table-C For co. Ltd. by guarantee without share capital Table-D For co. Ltd. by guarantee with share capital Table-E For unlimited co.
MOA: WHAT IT MEANS
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MOA: WHAT IT MEANS
Legal Provisions: (Section15): Printed and divided into the paragraphs Signed by each subscriber along with their name, address, description and occupation Signed in presence of at least one witness, who sign along with his name, address, description and occupation
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MOA: ITS SUBJECT-MATTER

Name clause Registered office clause Object clause Liability clause Share capital clause Association or subscription clause
113

Name clause:
Restriction of undesirable(identical) and inappropriate name(Section-20) North Chashier and Manchester Brewery co. vs. Manchester Brewery co. Not prohibited under Emblems and Name(Prevention of improper use)Act,1950 e.g.seal or emblem of CG or SG, international organizations, national leaders etc. Mandatory to use the word Ltd. or Pvt. Ltd.(except license granted by CG u/s 25) 114 Name must be Published and displayed

Registered office clause:
Describes the name, address, city and state in which co. has its Regd. Office. Helpful in determination of cos nationality and governing laws. Legal documents & books are kept here and notices are served. Not necessary the principal place of business i.e. different from operational field If MOA not contain Regd. Office address this 115 should be intimated to ROC within 30 days of DOI or DOC, whichever is earlier.

Object clause: To inform the members how co. will use their capital To inform creditors and outsiders about the rights of company(in case of ultra-virus acts). Limits the area of operations of the company Divided into two parts-Main object and Incidental or Ancillary objects.
116

Attorney General vs. Great Eastern Railway co., If the object mentioned in MOA is to deal in coal, then hiring wagons for transportation is the object incidental to it. Restricted objects: Immoral Illegal Oppose to public policy Violation of Indian Cos act
117

Liability clause: the memorandum of a company limited by shares or by guarantee shall also state that the liability of its members is limited. -Section 13(2) Limited liability either Ltd. by shares or by guarantee
118
Exceptions to limited liability: No. of members reduced below min. no. and co. carries on business for more than 6 months with this reduced no.(Sec. 45) If mentioned in MOA as unltd. Liability If mentioned in AOA as unltd. Liability Company willfully defraud creditors.
119
Share Capital clause: Authorised capital with its division into fixed denominations e.g. 100000 shares of Rs. 10 each Authorised capital is the maximum limit upto which co. can issue shares
120
Association or Subscription clause: Declaration of Association made by the signatories Duly attested by witness Desire to form company and subscription to shares made herein
121
COMPANY MEETINGS
122
COMPANY MEETIGS
Any gathering, assembly or coming together of two or more persons for the transaction of some lawful business of common concern is called meeting. A concurrence or coming together of atleast a quorum* of members by previous notice or mutual agreement for transacting business for a common interest is a meeting. *Quorum= Min. no. of persons required 123 to be personally present for a valid meeting
Characteristics of meeting:
Two or more persons required(except if otherwise provided) For some lawful business Notice pre-requisition for intimation Specified date, place and time Companys meetings governed by provisions of cos act, 1956
COMPANY MEETINGS
124
Company's Meetings
Shareholders meetings
BOD Meeting
Creditors' meeting
Debentureholders' meeting
Statutory meeting
Annual general meeting
Extarordinary general meeting
Class meeting
COMPANY MEETINGS
125
COMPANY MEETINGS
A). Shareholders
meetings:
1. Statutory meeting: Called only once in lifetime of the co. Mandatory for Co. Ltd. by shares or Co.Ltd. by guarantee having share capital Deals with sources of capital and its utilisation Appointment & Remuneration of various persons
126
STATUTORY MEETING
According to Section 165 of Co s act 1956 Every co limited by shares and every co, limited by guarantee and having share capital, shall, within a period of not less than one month and not more than six moths from the date at which the co. is entitled to commence business, hold a general meeting of the members of the , company, which shall be called the statutory meeting.
127
OBJECT OF STATUTORY MEETINGS
To discuss the success of the flotation and To approve any modification in the contracts specified in the prospectus,if need arises.
128
STATUTORY MEETING
Legal Provisions regarding the Statutory meeting: Statutory report Certification of Report Filing of report with ROC Procedure of meeting Consequences for not calling Statutory meeting
129
STATUTORY MEETING
Statutory report: The BOD must, before the 21 days of the statutory meeting forward a Statutory report to each and every member of the co.(It shall be deemed to be forwarded later than such period, if all the members entitled to attend and vote at the meeting agreed on it)
130
STATUTORY REPORT: CONTENTS

Contents of Statutory report - Total no. of shares allotted(in cash or otherwise) - Cash received - Names, addresses and occupations of - Directors, Managing agents, secretary treasurer and Auditors of co. - Contracts and modifications thereon for approval - Arrears from director or manager 131 - Commission of Brokerage on shares or debentures
Certification of Report: Certified by at least two directors, one of them must be MD, if any. If the shares are allotted by the co. certificate of auditor regarding receipts and payments of such .Filing of report with ROC: After sending copies to the members its mandatory to file report to ROC.
STATUTORY MEETING
132
Procedure of meeting - Preparation of list of members - Members are free to discuss any issue related to incorporation - Resolutions cannot be passed without the prior notice - May be adjourned from time to time
STATUTORY MEETING
133
STATUTORY MEETING
Consequences for not calling Statutory meeting: - Either holding statutory meeting or sending statutory report - Every officer in default punishable with a fine upto the extent of Rs. 5000(Sec 165) - Court may order for winding up(Sec 433) - Court may order for holding meeting and submission of statutory report(Sec 443)
134
Companies need not have a statutory meeting

A private company An unlimited company A company limited by guarantee and not having a share capital.
135
ANNUAL GENERAL MEETING
Meaning: Every co. must hold in each year, in addition to any other meetings, a general meeting of its members, which is called the cos AGM Who can call AGM: In normal case, by company In special circumstances, by Central government
136
Features of AGM: Mandatory for both private and public co. At least once in a year To appraise financial performance and position Declaration of dividend To present Directors and Auditors report
ANNUAL GENERAL MEETING
137
Business of the AGM: 1. General Business 2. Special Business
AGM: Its Purpose
138
1. General Business: To discuss the Final accounts of the co. To discuss the Directors and Auditors report of the last year To declare the dividend for the year To appoint the directors in place of those who retired by rotation Appointment and reappointment of auditors
AGM: Its Purpose
139
2.
Special Business: Any other business besides what is normally conducted in the meeting is called the special business i.e. Increasing the cos authorised share capital Altering the AOA Appointment, reappointment and remuneration of directors
AGM: Its Purpose
140
1. 2. 3.
Time interval for calling the AGM Notice and place of the meeting Sending copies of B/S and Auditors report to members 4. Consequences for not calling the AGM
AGM: Statutory provisions
141

1. Time interval for calling the AGM: To call AGM in each and every year Not more than 15 months in between the two AGMs First AGM of co. within a period of not more than 18 months of the date of incorporation ROC may extend the period by 3months(except first AGM) Necessarily be called either the accounts are finalised or not(Even if the co. not operated for whole year)
142

2. Notice and place of the meeting: Not less than 21 days clear notice(short notice, if all the members entitled to vote consented on it) Time during the business hours, on a day which is not a public holiday Either at Registered office or at some other place within the same city in which Regd. Office situated A public co. may, by its AOA fix the date and time of AGM and by passing resolution in the first AGM regarding the subsequent AGMs
143

3. Sending copies of B/S and Auditors report to members: Copy of Balance sheet and auditors report to every member, debenture holder or trustees of such debenture holders At least 21 days before the date of meeting(if otherwise agreed) Fine of Rs.5000 on every officer in case of default
144
4.Consequences for not calling the AGM: Company law board call or direct to call an AGM (on receipt of application from any of the member) Here one man meeting also constitute a valid meeting Fine of Rs.50000 on co. or on every office, an additional fine of Rs. 2500 per day if the default continues
145
EXTRA ORDINARY GENERAL MEETING

Meaning: Any general meeting which is called during the period between its two consecutive annual general meetings When an Extraordinary General meeting called: To make an alteration in MOA or AOA To issue fresh debentures To increase, reduce or reorganise the cos share capital
146
Who may call the Extraordinary general meeting: 1. By the directors 2. By the directors on requisition of the members 3. By the requisitionists themselves 4. By the CLB
147
1.
By the directors: If AOA authorised Resolution passed in director's meeting in this regard At least 21 days notice specifying date and place of the meeting
148

2. By the directors on requisition of the members(169) Members can bind the directors for such a meeting Members having 10% of share capital or 10% of voting rights can ask for such The demand notice must bear the signatures and purpose of the meeting and served of Regd. Office of the co. Directors initiate the procedure within 21 days of the requisition and meeting should actually be held with in 45 days from the from the149 date of requisition

3 By the requisitionists themselves: If directors fails to call the meeting with in the above said period Requisitionists may themselves convene a meeting within 3 months from the date of deposit of requisition Any reasonable expenses should be reimbursed by the BODs
150
4.
By the CLB: Suo motto or on the application of directors One member meeting either in person or proxy shall be deemed to constitute a meeting(186)
151
Class meetings(106)_ When the co. having different classes of shares To alter or define the rights and obligations of class of shareholders e.g. conversion of preference into equity Alterations upto defined in AOA or MOA Passed by special resolution
CLASS MEETINGS
152
BOARD OF DIRECTORS MEETING

Except for the issues on which the decision-making right rests with the shareholders, all matters of the co. are dealt with in the meetings of its Board of Directors
153
Meetings of directors classified as: 1. Meetings of BODs 2. Meetings of Directors committees
154

1. Meeting of Board of Directors Statutory provisions regarding directors meetings: Power to convene the meeting Frequency of the meetings Notice and Agenda of the meeting Quorum Chairman of the meeting Business/Procedure during the meeting Minutes 155

Power to convene the meeting: Any of the director can request the Managing director or Chairman to convene the meeting. As a general rule, the MD or the Chairman directs the company secretary to call the meeting
156

Frequency of calling the meeting: As and when required Weekly, Monthly or shorter than that Every co. shall call and held BODs meeting at least once in every three months and at least four such meeting shall be held in a year(Section 285)
157

Notice and Agenda of the meeting: Mandatory to send written notice to each and every director resident in India by Regd. Post Place, date and time mentioned in such a notice No need of notice, if Place, date and time already mentioned in AOA Validity of the meeting challenged in case of default in sending the notice No legal necessity to send the agenda 158 alongwith notice, but in practice it is sent
MEETING
Quorum of the meeting: Defined in AOA, otherwise 1/3 of total strength or 2 directors, whichever is higher (287) In case of absence of valid Quorum, deemed to be adjourned on next week on same day, place and time(288) If directors having interest in the contracts under considerations, then they shall be 159 excluded from discussion as well as from quorum

Chairman of the meeting: Every meeting shall be presided by one chairman Either elected by company or by the directors in the meeting
160

Business/Procedure during the meeting: Issue and allotment of shares Forfeiture and re-issue of shares Calling meeting of shareholders Declaration of dividend Making contracts with third parties Chairman has a right of casting vote, in case of equal votes in favour and against any resolution 161

Minutes: Summary of the proceedings of the meeting Minutes shall be made within 30 days of the meeting Each page of the minute book shall be consecutively numbered and signed
162
2.
Meetings of directors committees Permanent committees like Remuneration committee, investors grievance committee etc. Temporary committees, are formed for the matters which are time being important for the co. and committees recommendations considered by the Board for decision meeting
163
CREDITORS MEETINGS
A creditors meeting, is in fact not a cos meeting because such a meeting is organised by creditors Called to settle the suit between the Creditors and co. To get the creditors consent in amalgamation and reorganisation of the co. To get creditors consent at the time of amalgamation of the co.
164
DEBENTURE HOLDERS MEETING
Rules regarding conduct printed on reverse of the debentur certificates Called for alteration of the repayment schedule Also called when the rights of the debenture-holders altered
165
WINDING UP OF COMPANIES
166
WINDING UP BY COURT
A company may be wound up by an order of the Court. This is called compulsory winding up. Section 433 lays down the following ground where a company may be wound up by the court.
1. 2. 3. Special resolution [Sec. 433 (a)]; Default in filing statutory report, or holding statutory meeting [Sec-433 (6)];. Failure to commence business within time [Sec. 433 (c)];
4.
5. 6.
Reduction of membership [Sec. 433 (d)];

Inability to pay debts [Sec. 433 (e)]; Just and equitable [Sec. 433(f)].
167
Special resolution sec433(a)
Thus by special resolution resolved the company may be wound up by the tribunal Power of tribunal in such cases is discretionary and should be exercised bonafide case
168
Default in holding statutory meeting (433(a))
Within 6 months from the date on which the company is entitled to commence business The petition for winding up must not be filed before the expiration of 14 days after the last day on which the statutory meeting ought to have been held Petition to wind up is on the ground of non-delivery t the registrar of the statutory report shall not be entertained.
169
Failure to commence business
Where a company does not commence business within a year of its incorporation or suspends its business for the whole year. Such suspension must be temporary and can be satisfactorily accounted for Tribunal my refuse to make an order. A company will not be wound if it abandons one of i several businesses, unless that business is the main object of the company.
170
Reduction of Members Below Minimum(Section 433(b))
Where the number of members is reduced below 7 in case of a public company and below 2 in case of a private company, Th tribunal may order the winding up of the company. If the company carries business with the reduced members for more than 6 months the members shall be personally liable fo debts contracted during that period.
171
Inability to pay debts (Sec 433(e))

a. b. c. The tribunal may order winding up if it is unable to pay the debts I.e. it has ceased to be commercially solvent. Section 434 says that a company shall be deemed to be unable to pay the debts in the following cases: Statutory notice Decreed debts Commercial insolvancy
172
Just and equitable (Sec 433(f))

If it is in the opinion of the tribunal that it is just and equitable that the company should be wound up, such order may be given. E.g Loss of substratum Deadlock in management Oppression of minority Fraudulent purpose Incorporated partnership (quasi) Where the company is a bubble Where the company was insolvent 173
Default in filing P/L Account and B/l or annual Report (Sec 433(g))
As per the new section introduced under companies act 2002 if a company has made a default in filing with the registrar balance sheet and profit and loss account or annual report for consecutiv 5 financial year the tribunal may order winding up.
174
and integrity of India (Sec 433(h))
According to companies act 2002, if the company act agains the sovereignty and integrity of India and thus maintain friendly relation with the enemy country then the court may order for winding up.
175
under Sec 424(G)
If the tribunal is of the opinion that the company should be wound up under the circumstances specified under sec 424(G) it may order by petition the winding up of such sick industrial unit. (Companies act-2002)
176
Who will file the Petition for winding up

Company Any creditor or creditors including any contingent or prospective creditor Any contributory or contributories All or any of aforesaid parties, together or separately The registrar Any person authorized by the central government under section-234
177
Consequences of winding up Intimation to official liquidator and registrar

Copy of the winding up in order to be filled with the registrar Order for winding up deemed to be notice of discharge Suits stayed on winding up order Power of the tribunal Responsibility of directors and officers to submit to tribunal audited books of account Effect of winding up order Official liquidator to be liquidator 178
THANKYOU
179
LAW OF CARRIAGE OF GOODS
Transportation is the means of marketing of our huge national production and an important link in the development of many industries in the country. The role o transport is very important in modern commerce. Hence, study of law of carriage is essential.
180
CARRIAGE OF GOODS BY LAND The Law relating to carriage of goods by land (including inland navigation) is contained in
(a) the Carriers Act, 1865, and

(b) the Indian Railway Act 1890. Both these Acts have been amended many times.
CONTRACT OF CARRIAGE:
A contract whereby a person or company agrees to carry goods or people from one place to another in return for payment. Carrier:
181 The party who undertakes to carry the goods or people for
payment (e.g. railway, steamship) is called the carrier.
Classification of Carrier
Carriage of passengers
Carriage of goods
On the basis of reward
Gratuitous carrier
Private carrier
LAW RECOGNISES TWO CLASSES OF CARRIERS: COMMON CARRIER PRIVATE CARRIER
182
Common Carrier: (Sec. 2 of Carrier Act, 1865)

DEFINITIONS:A Common carrier is one (other than Govt.) who undertakes for hire to transport goods from one place to another (by land or inland navigation) of all such persons indiscriminately as think fit to employ him A person other than government engaged in the business of transporting for hire property from place to place by land or inland navigation , for all persons indiscriminately. A person who reserves the right of accepting or rejecting the offers of goods for carriage is not a common carrier. 183
CHARACTERSTICS OF COMMON CARRIER
Common Carrier may be an individual, firm an association of persons

(except government.) Railways being a government owned is not a common carrier though
carries goods by land. The carriage of goods by the Railways is Governed

by Indian Railway act, 1890 Person must have been engaged in the business of transportation of goods. It should not be a casual occupation. One who carries passengers is not a common carrier. He is governed
by local statutes like Motor Vehicle Acts & the police Acts Term applies only in case of carrier by land or inland navigation. Common carrier should get some consideration for carriage.
184
He cannot reserve the right to choose from persons to carry their goods
Exceptions:- C.C can lawfully refuse to carry the goods in the

following circumstances.
if there is no space in the vehicle
if the goods are not of a type he usually profess to carry

if goods are subject to extraordinary risk or danger if the destination is not on his normal routine if reasonable charges are not paid if goods are not properly packed
If a common carrier refuse to carry goods beyond the reasons stated above then, he can be sued and made liable for damages.
DUTIES AND RIGHTS OA COMMON CARRIERDo it self
185
Liabilities of a Common Carrier At a common law, a common carrier is liable as an insurer of the goods.
The common carrier is liable for loss or damage caused wholly by the
negligence of other persons over whom he has no control or where the goods are destroyed by accidental fire or when they are stolen from him EXCEPTIONS
The liability of a common carrier is completely excused if the loss or

damage is caused by what are called the excepted perils. The excepted perils include: the act of God ,losses due to the acts of public enemy etc. The common carrier is not liable for damage or loss to goods which has arisen due to an inherent vice in or natural deterioration in the goods. The common carrier is even relieved of all liability for damage when consigner is guilty of fraud. The liability of a common carrier ceases when he brings goods to the destination and gives notice for the same to the consignee or his agent for the removal of goods within the reasonable time. However he is
186
liable as a bailee.
Common carrier may limit his liability by special agreement with the
Liability in case of goods- Scheduled & non-scheduled

Scheduled goods
Include valuable goods such as gold, silver, precious stones, pearls, jeweller notes & coins, maps, title deeds, government securities etc. The list of such g given in the act. Liability C.C. should not be liable for loss or damage if the value of the goods exceeds Rs. 100 unless their value & description are expressly declared
Even if value is expressed, C.C. is liable as an insurer while they are in

transit except in some natural circumstances.
He is liable where the loss has arisen due to the criminal act of the carrier
or his agents or his servants.

If the value is declared , he can ask for the extra freight but he is liable
187
for the loss.
Non-Scheduled goods
The goods which are not specified in the list or schedule, given in the act. Liability
The liability can be limited by a special act signed by the owner
of the goods. C.C. is liable as an insurer while they are in transit except in some natural circumstances. He is liable where the loss has arisen due to the criminal act of the carrier or his agents or his servants.
188
Private Carrier:Carries goods on occasions, and for particular persons of his choice under a special contract either for hire or gratuitously. Not governed by the carriers act but under the contract act as private carrier acts as a bailee Common carrier Private carrier
Engaged in casual business

Engaged in regular trade or business
carries for all indiscriminately governed by the carrier act 1865 Carries goods for hire or reward
Carries for persons of his choice Liability is that of bailee . Comes under contract act
189
May carry goods for hire or
Railways as Carriers As railways are owned and operated by the Government in India, it is not governed by carriers Act 1865. The carriage of goods by railways is governed by the Indian Railways Act, 1890. Forwarding Note (Section 72): Every consignor of goods or animals has to execute a note in the form prescribed by the railway administration and approved by the Central Government. This note is referred as the forwarding note or consignment note. The forwarding note contains the
description of goods, number of packages, weight, the names and addresses of the
consignor and consignee, the extent of the liability of the railway administration for loss and damage and is marked
either Freight paid or Freight to pay. The terms and conditions on which goods a
carried by the railway are printed on the back

of the note.
190
Railway Receipt:
On submission of the forwarding note to the railway parcel

office, consignor is given a receipt acknowledging the goods and undertaking to carry the same in accordance with the terms contained in the forwarding note. This document is called as
Railway Receipt (R/R). Alike common carriers, Railway Administration has certain duties and liabilities with respect to loss, non-delivery of the goods
DUTIES OF RAILWAY ADMINISTRATION Bound to carry the goods of all persons who are prepared to pay necessary freight and observed the regulations of packing Duty not to give any undue or unreasonable preference or
advantage to any person
191
LIABILITIES OF RAILWAY ADMINISTRATION

GENERAL R.A. shall be responsible for the loss, destruction, damage, deterioration or non-delivery, in transit of animals or goods delivered to the administration to be carried by railways EXCEPTIONS Act of war Act of war Act of public enemies Arrest, restrain or seizure under legal process
Order of Restriction imposed by central government or Central gov
192
Liability in case of owner's risk rates

Goods may be carried at ORDINARY RATE (railway risk rate) & at SPECIAL REDUCED RATE (owners rate). The goods should be carried at owners risk but railway administration cannot be held liable for any loss or damage in transit of such goods except the negligence or misconduct of railways is proofed Liability for delay or detention in transit
Liability for deviation of route

liability in cease of animals Liability for wrong delivery Liability after termination of transit Liability in case of articles of a special value. liability for damage to goods in defective condition or defectively packed Liability of passenger luggage
193
Exoneration from responsibility

Following circumstances: Where goods have been despatched with false description Where fraud has been practised by consignor or consignee or his agent Where damage or non-delivery is due to -Improper loading or unloading -Riots, strike, lockout etc. For any consequential damage or loss of particular market
194
Carriage laws
195
CARRIAGE BY AIR
The law relating to carriage by Air in India was based upon the Carriage by Air Act, 1934. The Carriage by Air Act, 1934 now stands
repealed by the Carriage by Air Act,1972.

The Act applies to the whole of India.
196
High Contracting Party:

It means governments of countries to the convention. It
thus includes all parties originally signatories to the
convention together with those who adhere thereto subsequently.

The term high contracting party alsomeans that the parties who have effectively contractedby occasion or ratification. India is a signatoryto the Warsaw Convention of 1929, and is, therefore, a high contracting party. Under Section 4(2) of the Act, the Central Government may by notification in the official Gazette certify who are the high
contracting parties to the amended convention and in respect of

what territories they are parties.
197
International Carriage: The expression international carriage means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break, in the Carriage or a transshipment, are situated either within the territories of two High Contracting parties or within the territory of a single high contracting party.
198
Documents of Carriage
The passenger ticket: The carrier must deliver to the passenger, a passenger ticket containing prescribed particulars. The ticket is prima facie evidence of the condition of the carriage. The absence , irregularity or loss of the ticket does not affect the existence of the validity of the contract.
The luggage ticket or baggage check : (Rule 4): For the carriage or
registered baggage (i.e. luggage other than small personal objects of which the passenger takes charge himself ), the carrier must deliver a baggage check to the passenger which must mention (i) the number and weight of
199 the packages (ii) the value, as declared by the passenger, of the baggage
booked, and (iii) a statement that the delivery, of the baggage will be made
Air waybill (or Air consignment note) In the case of carriage of goods or cargo by air, every carrier of cargo has the right to require the consignor to make out and hand over to him a document called an airway bill and
every consignor has the right to require the carrier to accept this document
It is made out in three original parts. FOR DETAILS REFER BOOK
Liability of the Carrier

The carrier is liable for damages sustained in the event of death or wounding of a passenger or any other bodily injury suffered by a
passenger,
if the accident which caused the damage so sustained took place on
200
board the aircraft or in the course of any of the operations of embarking
The carrier is liable for damages sustained in the event of the destruction or loss of, or of damage to, any registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the carriage by air. The term carriage by air here comprises the period during which the baggage or cargo is in charge of the carrier. The carrier is also liable for damage occasioned by delay 201in the carriage by air of passengers, baggage or cargo (Rule 19).
He and his agents have taken necessary measures to avoid damages Or it was impossible to take such measures There was negligence on the part of passenger Limitations: Limitation period of 2 years is applicable for filing suit for damages, from the date of arrival of aircraft destination
Carrier when not liable
202
Thankyou
203
CARRIAGE BY SEA
204
Contract of Affreightment
A contract for the carriage of goods by sea'. It is a contract by which

a ship owner undertakes to carry the goods of another in consideration of a price called
A contract of affreightment may take the form of

charter party or a bill of lading.
The rights and liabilities of parties to a contract of affreightment are

regulated, (subject to any stipulations in the contract), by the Bill of Lading Act, 1856 and the carriage of Goods by Sea Act, 1925.
205
CHARTER PARTY
When a merchant wishes : (Kinds of charter Party)
1. Time Charter--- to hire a ship for a fixed time

2. Voyage Charter Party---- to hire a ship or portion of the ship for a certain voyage 1. Charter by Demise ----to become for the time being owner of a ship, by causing her to be leased to him. The contract entered in any of these three cases is a
206 charter party. The charter party may not be necessarily sealed, but it must be stamped.
Implied undertakings in a charter party: In case of a voyage charter party, (i) the ship-owner impliedly undertakes to provide a seaworthy ship. (ii) the ship shall proceed with a reasonable dispatch. (iii) the ship shall proceed without unjustifiable deviation (iv)the chartered undertakes not to ship dangerous goods. 207 Effects of Breach of Implied Conditions ---self study (book by- M.C. Kuchhal)
Clauses of Charter Party

Names of the parties and of the ship Class of the charter party Time charter or Voyage charter
Now at
Seaworthy and the fitness of the ship Port of loading Full & complete Cargo Lay Days and Demurrage Lawful Merchandise Payment of freight
Advance Freight Dead Freight
Lump-sum Freight
Freight Pro-rate
Ship owner's Lien

Expected Perils War Clause
208
Delivery of goods in usual manner-providing appliances for taking delivery
Bill of lading
Meaning: when the carrier accepts goods for shipment, it ordinarily issues to the shipper a bill of lading. A bill
of lading is generally used for the carriage of goods on

a general ship i.e. a ship which is used for the carriage of goods of several merchants. A bill of lading is a : (i) evidence of the contract ,
(ii) it is a receipt without which delivery of goods

cannot be normally obtained.
209
Difference between Charter Party and Bill of Lading

Charter Party 1. 1. 2. contract relating to the hiring of the entire or principal part of the ship. a charter party is not such a document. not transferable since its a contract of hire. A charter party may amount to a lease of the ship 4. 5. 2. 3.
Bill of lading
contract for the carriage of the goods on board the ship as well as an evidence of the contract for the carriage of the goods. document of title to the goods specified therein being a document of title to the goods, can be transferred by endorsement and delivery conveys no such implications. always for a particular destination.
3. 4.
5.
A charter party be for a particular voyage

(a voyage charter) or for a particular period of time (a time charter),
210
Alike carrier of goods by land, carrier of goods by sea are also bound by some duties and liabilities.
CERTAIN TERMS Clean bill of lading: When the ship owner admits in the bill of lading that the goods shipped are in good order and condition, it is called clean bill of lading. Through bill of lading: Where the goods have to be carried partly across the sea and partly by land, the shipowner generally charges a rate which cover the charges for both, the carriage by sea and land. In such cases, the shipowner issues to the shipper what is called through bill of lading.
211
Mates receipt: It is a temporary form of receipt given by mate of ship for goods which have been received on boa mates receipt is a mere acknowledgement of the receipt goods. It is not regarded in law as a document of title to goods. This receipt is subsequently handed over to the s owner in exchange for the bill of lading.
Primage: An extra money paid over and above the agre freight is called the hat money or primage. It is paid to the master of a ship as consideration for extra care to be tak on the goods.
Master of the ship: The master of the ship is its principa officer and represents the ship-owner as his agent for va 212 purposes such as signing of the bill of lading and entering the contracts
Shipowners lien: The shipowner generally has
right to retain the goods in his possession until th
freight upon them and sometimes other charges a

have been paid. This right is called a lien.
Maritime lien: A maritime lien is a claim on a shi
cargo and the freight in respect of services rende

213 or have rendered some service to save the ship
to them. This right is given by law to all persons w
cargo in time of danger.
Bottomry and Respondentia Bonds:
When a s
needs urgent repairs in course of its voyage and i
not possible for the master or captain of the ship t

communicate with the shipowner to arrange the
necessary fund, it becomes necessary for the cap
of the ship to borrow money on the security of the
ship, cargo or freight by executing a bond. This bo is called as a Bottomry Bond.
214 But if the cargo only is hypothecated the bon
is known as respondentia Bond.
TAXATION LAWS
215
TAXATION
The word Tax was derived from the latin word Taxore. The meaning of taxo is to estimate, appreciate or value.
216
Definitions
---Tax is the amount paid by persons staying within a territorial limit of a sovereign state and is levied on individuals, goods, property, business, services etc. Tax constitutes government revenue. ---Tax may also be defined as compulsory/exaction of money by public authorities for public purposes enforceable by law and doesnt mean payment for services rendered.
Taxes are compulsory contributions imposed by the government on its citizens to meet its general expenses incurred f the common good, without any corresponding benefits to the tax 217 payer.
Tax
is levied by the state by virtue of its sovereign powers. Both the Union Parliament and the State legislatures empowered under constitution to make laws for the levy and collection of taxes Article 246. (List I,List II, List III Union ,state and concurrent list) .In case of conflict b/w state and union ,laws made by parliament shall prevail. SVENTH SCHEDULE
Power of central govt.to levy tax List I

Entry Entry
No. 82:taxes on income other than agricultural income. No. 83 :duties of customs including export duties
Entry
No. 84 :duties of exercise on tobacco and other goods manufactured of produced in India except alcoholic liquor for human consumption,opium, narcotics,but including medicinial and toilet preparations containing alcohol,opium or narcotics. 218
Entry No. 85 :corporation tax Entry No 92 A.taxes on inter state sale or purchase of goods Entry No 92 B :Taxes on inter state consignment transfer of goods Entry No 92 C : Taxes on services Entry No 97 :any other matter(Residual powers)
STATE LIST List II Entry No 46 :Taxes on Agricultural income Entry No 51: Excise duty on alcoholic liquor for human consumption, opium & narcotics Entry No 52 : taxes on entry of goods into local area of consumption or use of sale (octroi) Entry No 54 : tax on intra state sale or purchase Article 271: parliament can levy surcharge on any of duties or taxes and proceeds shall go into Consolidated Fund of India Article 265 :no state can levy tax except authorised if do so govt has to repay the collected tax.
219
CONCURRENT LIST List III Entry No 17A : Forests Entry No 25 :Education

Tax Revenue: A fund raised through the various taxes is referred to as tax revenues FEATURES OF A TAX Compulsory payment. Refusal to pay a tax is offence No direct relation b/w tax payer & public authority. Tax payer cannot claim reciprocal benefits against the taxes paid . Reciprocation towards the society in terms of public interest not towards the individual interest as such . Tax is a payment for an indirect service made by the government to the community as a whole . Tax is payable periodically & regularly determined by the taxing authority
220
Tax Vs Fees Tax is a compulsory charge or payment levied or imposed by a public authority on an individual. Fees are charged for rendering services to the beneficiaries. Generally the amount of the fee depends upon the cost of services rendered e.g. court fees, license fees etc. Taxes Vs Penalties: A tax is compulsory contribution made by a tax payer. Fines and penalties are the payments made for the contravention of law. A public authority impose taxes mainly to obtain revenue and imposes penalties mainly to punish people for violating certain laws. 221
Principles of Taxation:
Canons or principles of taxation relate to the
administrative aspects of a tax i.e. rate, amount, method of levy and collection of Tax. A good tax system must have a proper combination of all kinds of taxes having cannons like canon of equality, economy, convenience, certainty, productivity etc. Requisite Features of Good Tax System: Good tax system should ensure maximum social
advantage
the allocation of taxes among tax payers is to made according to the ability to pay.
Taxes should be universally applicable in the sense that

persons with same ability to pay are treated in the same way without any discrimination whatsoever. 222
A good tax system should have built in flexibility, so that changes are possible according to the changing conditions of a dynamic economy. Should satisfy canons of taxation Healthy combination of various types of taxes Easy to administer Simple to understand Should help in economic development
Contd.
223
TYPES OF TAXATION
Taxes have been classified in various ways on different bases such as the form, nature, aim and method of taxation. The most important classifications are:1. Progressive, proportional, regressive and digressive Taxes. 2. 3. Specific and Ad Valorem Taxes Direct and Indirect taxes
224
DIRECT TAXES
Direct tax is a tax which is paid by a person on whom it is legally imposed and the burden of which cannot be shifted to any person. ---- Dalton Thus, impact, i.e., the initial or first burden, and the incidence, the ultimate burden of a direct tax- is on the same person. The tax payer is the tax bearer. A TAX WHICH CANNOT BE SHIFTED IS DIRECT 225 Ex. Income tax, wealth tax, property tax, estate duty,
Advantages of Direct Tax

1. Justifiable:- based on the taxable capacity and burden is justifiably distributed
2.
Progressive :- as higher rate of taxes on higher income groups and vice-versa. Poor people are exempted from direct tax. Certain:- Assesses is certain about the amount of income tax
Elastic: Higher proceeds are possible by increasing the rate of these taxes Distributive justice- as they help in reducing the glaring 226 inequalities of income & wealth.
3.
4. 5.
Disadvantages
Arbitrary:- fixed by the govt. as it depends upon the political will.
Evasion:- conceal their income by maintaining the bogus accounts.

Reduce saving:- as major chunk is taken away in the form of taxes. It effects the capital formation. Limited tax base:- reach only salaried people, businessman avoid and evade tax
227
INDIRECT TAXES
An indirect tax is imposed on one person but is paid partly or wholly by another. Indirect taxes are those taxes the burden of which by nature is shifted & which are paid by the tax payer
Indirectly i.e. while purchasing goods & commodities,

paying for services etc.
1. Taxes are paid only when goods are purchased, so tax payer does not feel the burden of tax 2. This tax is convenient as govt. collects it directly from producers or importers.
Ex. Commodity tax, sales tax, excise duty, custom duty, service tax etc
228
FEATURES OF INDIRECT TAXATION

Shifting of tax burden
Tax payer doesn't receive a direct pinch Tax evasion is comparatively less in case of organized sector Tax imposed on commodities directly effects the prices of commodities.
MERITS
Convenient:- to pay as tax payer doesn't feel the burden directly Disguised (hidden):-announcement doesn't provoke resentment as tax payer is in the dark about the amount of tax. Not easily evadable:- as they are merged with the prices. Broad based:- people who are exempted from direct tax, caught in the net of indirect tax according to the ability to pay tax.
229
Social Value;- discourage consumption of some harmful commodities as intoxicants, tobacco, etc
Forced saving:-moving the saving potential into the hands of govt. who utilises it for public interest. Complementary:- Additional revenue can be generated by introducing an indirect tax rather than a direct tax. Progressive:-Indirect taxes on luxuries and semi- luxuries are progressive as they fall on rich peoples outlays. DEMERITS In equitability;- charged at a proportional rate in case of general commodities, not paid according to the principle of ability to pay. Less productive;- as this tax involves many stages, so cost of collection is high comparative to revenue yielded. Inflationary potentially Disincentive effect on saving;- discourages savings due to high prices of 230 commodities. No educative value;- don't promote any civic sense as no relation between
Government of every country mobilizes resources through taxes to meet requirements of maintaining law & order, protecting economy from external aggression,.
TAXATION SYSTEM HAS BEEN STRUCTURED WITH FOLLOWING OBJECTIVES IN VIEW: Mobilization of resources for economic development
Reduction of inequality in distribution of income & wealth
Controlling consumption of particular commodities and consumption pattern Protecting domestic industries against foreign competition Encouraging saving & investment and promotion of capital formation 231
THE INDIAN TAX SYSTEM a) Taxes on income:i) Personal income tax b) Taxes on property and capital transactions:(i) Estate duties (ii) wealth tax (iii) Gift tax c) Taxes on commodities: (i) Excise duties (ii) Customs duties (iii) Sales tax
232
CENTRAL EXCISE DUTY

Central Excise is not one enactment. The body of Law
of Central Excise is Governed mainly by the Central Excise Act, 1944; Central Excise rules 2002; Central Excise Tariff Act 1985
233
Central excise duties contribute approximately 36% share to the Union

exchequer. These duties form the single largest source of revenue for the Central Government. Central Excise duty is levied and collected through the machinery of Central Excise Act, 1944.
Nature of Excise duty

Excise duty is a duty levied on the production or manufacture of excisable goods in India. It is a tax levied upon manufacture and not sale of goods. Excise duty is paid by manufacturer in the first instance and then he passes it on to the ultimate consumers that is why it is called indirect tax. Types of Excise Dutiesself study
234
In Order to attract levy of Excise Duty, three conditions must be fulfilled
There should be goods

the goods should be exciseable goods goods must have been manufactured / produced in India. Basic Features Tax on manufacture of goods. Central Excise Tariff Act 1985 classifies goods for the purposes of levy
and rates of duty.

Excise duty on most of items is levied by Central Government except on certain specified goods (alcohol, liquor etc.) on which state excise levies and collects tax. Excise duty is charged on assessable value. Rate of tax is uniform.
Tax is levied only when production and manufacture of goods within India.
235
It is payable on removal of goods from factory godown.
Central Excise Laws

Central Excise is not one enactment. The body of Law of Central Excise is Governed mainly by the Central Excise Act, 1944; Central Excise rules 2002; Central Excise Tariff Act 1985 Central Excise Act,1944 amended from time to time provides for the basis of charging of excise duty, valuation of goods for excise purposes, powers of officers, penalties etc.
basic Act governing Central excise Central Excise rules, 2002

All maters are regulated by rules Not feasible to put each & every detail in the Act itself
236
Rules compliment the Act
Framed , amended and notified by the Central Government as per the

powers granted to it by section 37 of the CEA,1944 Rules prescribe the procedures to be followed
Forms to be filled for clearance and storage of goods

Accounting & Licensing procedures of goods procedure for refund of duty, appeals against the orders of
Excise authorities etc.

Central Excise Tariff Act 1985 Classifies all the goods under various heads and sub-head for prescribing different rates of duties Each head has a specific code assigned to it
237
Constitutional Provision for Levy of Excise Duty (Article 265)
Seventh Schedule having Union List 1 having
Entry 84
Central Excise Duty is levied & collected by the Central Government Excise Duty is Levied on articles produced or manufactured in India Levy means imposition and assessment of tax
Levy and collection has no value unless they are quickly followed by collection
238
Entry 84 empowers the central government to levy duty of excise on all articles (including Tobacco) , except alcohol, alcoholic preparations and narcotic substances like opium, but including medicinal preparations containing alcohol, narcotics etc. Power to collect Excise Duty on alcohol & opium has been assigned to the States and thus it is called State Excise Duty
239
CUSTOMS LAW
Custom duty in simple language may be regarded as duty imposed on goods imported into or exported out of the country. The Customer Act was passed in 1962 replacing Sea Customs Act, 1878 while the Customs Tariff Act was passed in 1975. In 1985, the Customs Tariff Act was amended by Customs Tariff (Amendment) Act, 1985. The amended Tariff Act is in the line with( Harmonized Systems Nomenclature. Harmonized Commodity Description and Coding System (HS) of tariff nomenclature is an internationally standardized system of names and numbers for classifying traded products developed and maintained by the World Customs Organization (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization with over 170 member countries based in Brussels, Belgium.) Contents [hide] The custom Act are complete codes by themselves and provide effective machinery for solving problems relating to levy and 240 collection of duties.
Nature of Custom Duty
Entry 83 to the Union list of Seventh Schedule to the Constitution provides for Duties of Customs including Export Duties. The role at which the duty is to be imposed are specified under The Customs Tariff Act, 1975. Article 266 of the constitution provides that the proceeds from the customs duty are to be kept by Union only and are not to be shared between union and any states.
241
The Customs Act 1962 is the basic Act providing for levy of custom duty, appointment of custom officers, ports, airports, landing stations to prevent and check illegal imports and exports to provide administrative body to administer the Act, control over import and export, prohibitions, exemptions from custom duty, time and manner of payment of duty, warehousing of imported goods, procedures for claiming duty drawback, confiscation and penalties in case of violation of provisions, search, seizure and arrest, offences and prosecutions, appeals and revisions, special provisions regarding baggage, postal imports etc. 242
India. A Custom Tariff Act 1985 classifies goods for the purpose of levy and rates of duty. Taxable event is entry inward/onward of goods into and from India. Custom duty on import/export is levied collected and retained by Central government. Duty is charged on assessable value. Duty rates in respect of specific goods is uniform. It is a payable on or before custom clearance. 243
Charged on import/export of goods from
Central Sales Tax

A sales tax is a tax upon goods which operates by choosing the act of sale as the criterion for attracting liability to pay the tax sole being a central part of the concept. The sales tax is levied at the time when sale or purchase of goods takes place.
244
Objectives of CST
(i)to formulate basis for determining when a sale or purchase of goods take place in the course of inter-state trade or outside state or in the course of import into and export from India. (ii) to formulate rules for levy of tax, exemptions, collection of tax, penal provisions, offences and penalties etc. (iii) to specify the restrictions and conditions subject to which state laws impose taxes on the sale or purchase of goods of special importance. (iv) to fix liabilities of persons for payment of sales tax.
245
Central Sales Tax Act, 1956 was enacted by Parliament in exercise of authority conferred upon it under Article 286 and Article 269 (3) of the constitution. Central Sales Tax is a tax levied by Union Government but administered, collected & retained by State Governments. The tax is paid by the inter state dealer in the State from which movement of goods starts. Levy of tax on sale within a state (Intra State Sale) is within the authority of State Government, while levy of tax on sale outside the State (Inter-State Sale) is within the authority of Central Govt. Registration is compulsory for every interstate dealer ( Sec 7) Liability of dealer in inter state sale to pay sales tax on sale ( Sec 3) Import & export of goods are not subject to sale tax Sale within state is not covered under CST(under VAT ,State list II) Single point taxability Types of goods : Declared goods and other goods Charged on taxable turnover after deducting trade and cash discount No exemption limit
The
Features of Sale Tax
246
Features of Sale Tax

Tax on sale of goods within India. Central Sales Tax Act classifies goods for C.S.T. on inter-state sales and state tax on sales within a particular states for the purpose of determining rates of Sales Tax Taxable event is sale of goods within inter-state. CST levied by Central govt. but collected and retained by State Government. Collection of State Sales Tax is sole prerogative of concerned states. Sales tax is charged on sale price. C.S.T. rate @ 4% is also uniform but rates of state sales tax vary. It is payable after sales take place.
247

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SALES OF GOODS ACT 1930

CONTRACT OF SALE (SECTION-4)

Essentials of contract of sale

Sale and agreement to sell

Transfer of property and possession Return of goods Consideration

Sale and bailment

Sale and hire purchase

Elements of a sale of goods contract

- does not include old and rare coins

MODES OF FIXING PRICE SECTION-9

Passing of property and risk

sale by seller in possession

CONDITIONS AND WARRANTIES

Distinction b/w condition and warranty

Importance in contract Consequences of breach Option of treatment

When condition to be treated as warranty

Voluntary waiver by buyer Treating condition as warranty Acceptance of goods by buyer

Contd.. Condition as to quality or fitness ;- subject to the

Difference between Transfer of Property and Possession,

Express and implied terms in a sale of goods contract (conclusion)

Remedies for breach of a sale of goods contract

that seller has the right to sell the goods

that buyer shall have and enjoy quiet possession of goods

Similar terms implied under Trade Practices Act non-excludable

INSTRUMENTS ACT, 1881

Essentials of a Promissory Note

Cheque, Bill of exchange and Promissory note

Bill of exchange and Promissory note

Difference Between Promissory Note & Bill of Exchange

DIFFERENCE BETWEEN CHEQUE & BILLS OF EXCHANGE

Crossing Notice of dishonor Payable to bearer on demand Stamp Protection

Must be stamped No such protection

banker is given statutory protection w.r.t payment of cheques in certain cases.

Ambiguous and Inchoate instrument

Cheques are of two types:-

Open Cheques:- Open cheques are those which are paid

Crossing of cheques:- Crossing is a direction to a banker

When banker may dishonor a customers Cheque

When banker must dishonor a customers Cheque

Liabilities of parties (Banker and Drawee) to negotiable instrument

Liability of drawer :Section 30

CORPORATE LEGAL ENVIRONMENT

Company: Important Definitions

Company: Important Definitions

Company: Important Definitions

Company Characteristics contd.

Company Characteristics contd.

COMPANY: LIFTING OR PIERCING OF CORPORATE VEIL

COMPANY: LIFTING OR PIERCING OF CORPORATE VEIL (A). Under Statutory Provisions

COMPANY: LIFTING OR PIERCING OF CORPORATE VEIL

COMPANY: LIFTING OR PIERCING OF CORPORATE VEIL

COMPANY: HOW DIFFER FROM PARTNERSHIP

COMPANY: HOW DIFFER FROM PARTNERSHIP

LIFTING OF A CORPORATE VEIL

COMMON LAW EXCEPTIONS

to allow alien enemies to trade under corporate faade in the

Persons controlling the affairs are residents of the alien company

COMPANY: ITS TYPES

Cos'. Ltd. by Shares

Cos'. Ltd. by Guarantee

COMPANY: ITS TYPES

COMPANY: TYPES Private company: ITS Section-3(1)(iii)

Public company: Section-3(1)(iv)

COMPANY: ITS TYPES