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LEGAL AND ETHICAL ASPECTS OF

BUSINESS.

Dr. Ajay Kumar Dogra


B.D.S., H.P.U, Shimla
M.B.A.(Hospital management), U.I.A.M.S, P.U Chandigarh
Ph. D (Healthcare marketing), U.B.S., P.U. Chandigarh
U.GC JRF-NET

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Definition
 Ignorantia juris non excusat
 Sources of business law:
 The English mercantile law
 The statute law
 Case laws or Judicial decisions
 Customs and usages

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 What is a contract:
 2(h).....Contract
 2(e).....Agreement
 2(b).....Promise
Basic components of a contract.
(i) A proposal or an offer
(ii) Acceptance
(iii) Enforced by law
Nature of contract act

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Agreement
 Intention to create legal relationship/Legal obligation
 Free consent
 Competent parties
 Lawful consideration
 Lawful Object
 Agreements not declared void or illegal
 Certainty of meaning
 Possibility of performance
 Necessary legal formalities

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


a/t Enforceability i.e., Legal Validity
a/t Formation i.e., Mode of Creation
a/t Performance

(A) a/t Enforceability i.e., Legal Validity


 Valid contract
 Void Agreement
 Void Contract
 Voidable Contract
 Illegal Agreement
 Unenforceable Contract

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


(B) a/t Formation i.e., Mode of Creation
 Express Contracts
 Implied Contracts
 Quasi Contracts
(C) a/t Performance
 Executed Contract
 Executory Contract
 Unilateral Contract
 Bilateral Contract

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


OFFER AND ACCEPTANCE

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Definition- 2(a)
 How an offer is made
 Express Offer
 Implied Offer
 Specific Offer
 General Offer
 Cross Offer
 Counter Offer
 Standing Offer

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Essentials and Legal Rules for a Valid Offer :
 Offer must be communicated to other party
(Lalman Shukla vs. Gauri Dutt, 1913)
 Terms of offer must be definite and clear
(Taylor vs. Portington,1855)
 Offer must be capable of creating legal relationship
(Balfour vs. Balfour,1919)
 Offer must be made with a view to obtain acceptance
(Harris vs. Nickerson,1873)
 An offer may be positive or negative
 Offer should not contain any term, the non compliance of
which amounts to acceptance
 Special terms and conditions of the offer should be
communicated
(Parker vs. South eastern Railway Co. ,1877)
 Two identical cross offers do not result in a contract
(Tin vs. Hoffman,1873)

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Definition- 2(b)
 Essentials and legal rules for a valid acceptance:
 Acceptance must be absolute and unconditional
(Hyde vs. Wrench,1840)
 Acceptance must be communicated to the offeror
 Acceptance must be in prescribed form
 Acceptance must be in response to offer
 Acceptance must be by offeree
(Powell vs. Lee,1908)
 Acceptance must be given before the offer lapses or is
revoked
(Ramsgate Victoria Hotel vs. Montefiero,1866)
Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019
 Revocation of an offer:
 By Notice
 By Lapse of time
 After expiry of reasonable time
 By death or insanity
 By non fulfilment of conditions
 By counter offer
 By rejection by offeree

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


CONSIDERATION

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 It is an act or abstinence
 It should be done at the desire of promisor
 May be done by promisee or any other person
 It can be executed, in process of execution or to be
executed in future

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Essentials for a valid Consideration
 Consideration must move at the desire of promisor
(Durga prasad vs. Baldeo,1880)
 The consideration may move from promisee to any other
person (Chinayaa vs. Ramayya,1881)
 Consideration must be past, present or future
 Consideration need not to be adequate
 Consideration must be real and not illusiory
 Consideration must be Lawful
 Consideration must be something that promisee is not
already bound to do (Collins vs. Godefray,1831)
 Can be positive or negative

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Exceptions:
 Natural love and affection (Rajlukhy debi vs.
Bhootnath,1900)
 Compensation for past voluntary services
 Contract of Agency
 Completed gift
 Contract of guarantee
 Contract of Gracious bailment
 Promise to pay time barred debt.
 Remission.

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


CAPACITY TO CONTRACT

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Persons not competent to contract
 Minors
 Persons of unsound Mind
 Persons disqualified by law

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 MINOR
 Who has not attained age of 18 years
 Where a guardian of minor’s person or property is
appointed under the guardian’s and wards act 1890.....21
years
 Where superintendence of minor’s property is assumed
by court of wards.....21 years

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 An agreement with a minor is void ab initio (Mohri bibee Vs
Dharmo dass,1903)
 Rule of estoppel does not apply to minor
 No specific performance
 No ratification
 A minor can be a beneficiary
 Partnership by minor
 A minor can be an agent
 A minor can not be declared insolvent
 Minor’s liability for necessaties (Nash vs. Inman, 1908;
Kunwarlal vs Surajmal,1963)

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 PERSONS OF UNSOUND MIND
 Idiots
 Lunatics
 Drunken persons or delirious persons

 PERSONS DISQUALIFIED BY LAW


 Alien enemies
 Ambassadors
 Convicts
 Insolvents

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


FREE CONSENT

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Agree upon same thing in same sense
 Free consent
 Not under coercion
 Not under undue influence
 Not by fraud
 Not by misrepresentation
 Not by mistake

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 COERCION
 To commit an act forbidden by IPC
 The threat to commit an act forbidden by IPC
 Unlawful detention of property
 Threat to unlawful detention of property
(Chikkam Amiraju Vs. Chikkam Sheeshamma,1918)
(Bansraj vs. the secretary of state,1939)
(Renganayakamma vs. Alwar Chetty,1889)
 UNDUE INFLUENCE
 One party holds authority over other
 Fiduciary relationship between two parties
 Where contract is made with person who is in mental distress
 Pardanashin women
Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019
 FRAUD
 Making a false suggestion or representation
 Active concealment of a fact
 A promise without intention to perform
 Any act to deceive
 The party subjected to fraud suffered losses
 MISREPRESENTATION
 It must be false, but person who made it believes it to be true
 It must relate to the material facts of the contract
 It must be made without intention to deceive other party
 Other party must have believed and acted upon it
 It must subsequently become false

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 DIFFRENCE BETWEEN FRAUD AND
MISREPRESENTATION
 INTENTION
 OFFENCE UNDER IPC
 NATURE (WRONG)
 EFFECT ON CONTRACT

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 MISTAKE
 MISTAKE OF LAW
 LAW OF LAND
 FOREIGN LAW
 MISTAKE OF FACT
 UNILATERAL
 NATURE OF TRANSCATION
 IDENTITY OF PERSON
 BILATERAL
 SUBJECT MATTER (Existence, Identity, Quality, Quantity, Price)
 POSSIBILITY OF PERFORMANCE

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


LEGALITY OF OBJECT AND
CONSIDERATION

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 WHEN CONSIDERATION OR OBJECT IS
UNLAWFUL
 IF IT IS FORBIDDEN BY LAW (Srinivaso Rao Vs. Raja
Ram Mohan,1952)
 IF IT WOULD DEFEAT THE PROVISION OF ANY LAW
(Alexender Vs. Rayson,1936)
 IF IT IMPLIES INJURY TO PERSON OR PROPERTY OF
OTHERS (Ram Saroop Vs. Bansi Mandar,1915)
 IF COURT REGARDS IT AS IMMORAL (Upfill Vs.
Wright)
 IF COURT REGARDS IT AS OPPOSED TO PUBLIC
POLICY

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


VOID AGGREMENTS

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Competency
 Mistake
 Consideration
 Uncertain agreements
 Agreements by way of wager
 Agreements in Restrains.
 Agreement for impossible events
 Reciprocal promise to do things legal and also other
illegal things

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


DISCHARGE OF CONTRACTS

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 BY PERFORMANCE
 ACTUAL
 ATTEMPTED
 BY MUTUAL AGREEMENT
 AT TIME OF CONTRACT
 SUBSEQUENT TO FORMATION OF CONTRACT
 NOVATION
 RESCISSION
 ALTERATION
 REMESSION
 WAIVER
 MERGER

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 BY IMPOSSIBILITY
 EXCUSABLE
 DESTRUCTION OF SUBJECT MATTER
 DEATH/INCAPACITY
 CHANGE OF LAW
 DECLARATION OF WAR
 FAILURE OF PRE-CONDITION
 NON EXCUSABLE
 DIFFICULTY IN PERFORMANCE
 COMMERCIAL IMPOSSIBILITY
 FAILURE OF THIRD PARTY
 SELF INDUCED IMPOSSIBILITY
 FAILUIRE OF ONE OF THE OBJECT
 STRIKE/LOCKOUT

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 BY LAPSE OF TIME
 BY OPERATION OF LAW
 UNAUTHORISED MATERIAL ALTERATION
 DEATH
 INSOLVENCY
 MERGER
 BY BREACH OF CONTRACT
 ACTUAL
 ANTICIPATORY

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


CONTINGENT CONTRACTS

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Collateral event
 For future events
 RULES REGARDING PERFORMANCE OF
CONTINGENT CONTRACT:
 The happening of a future uncertain event
 The non happening of a future uncertain event
 The happening of an event within fixed time
 The non happening of an event within fixed time
 When event is deemed to be impossible

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


QUASI CONTRACT

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 IMPOSED BY LAW
 NOT A TRUE CONTRACT
 A DUTY
 right in personam,not in rem
 PRINCIPLE OF EQUITY
 SUIT

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 TYPES OF QUASI CONTRACTS
 CLAIM FOR NECESSATIES SUPPLIED
 REIMBURSEMENT OF MONEY, DUE BY ANOTHER
 LIABILITY TO PAY FOR NON GRATIOUS ACT
 RESPONSIBILITY OF FOUNDER OF GOODS
 MONEY PAID OR THINGS DELIVERED BY MISTAKE

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


REMEDIES FOR BREACH OF A
CONTRACT

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 SUIT FOR RESCISSION
 SUIT FOR DAMAGES
 ORDINARY/GENERAL/COMPENSATORY DAMAGES
 SPECIAL DAMAGES
 EXEMPLARY/PUNITIVE/VINDICTIVE DAMAGES
 NOMINAL DAMAGES
 SUIT UPON QUANTUM MERUIT
 SUIT FOR SPECIFIC PERFORMANCE
 SUIT FOR INJUCTION

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


CONTRACT OF INDEMNITY
AND GUARANTEE

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 To protect the promisee
 Compensation
 By conduct of promisor or any other person
 Indemnifier and indemnified

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Must contain all essentials of a valid contract
 Contract between two parties
 Loss may be from the side of promisor or any other
person
 It is expressed but may be implied also

 Rights of Indemnity holder- for damages, costs,


amount for compromise

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Contract to perform the promise or discharge the
liability of a third person in case of default.
 A- Creditor
 B- Principal debtor
 C-Surety or Guarantor

 Three separate contracts

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 All essential elements of a valid contract
 At least three parties
 Should be liability present or arising in future
 There are two liabilities- Primary liability and
secondary liability
 Express- oral or written.

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Parties
 Liability
 Contract
 Reimbursement and security

 Specific and continuing guarantee


 Kinds of Guarantee:
 For debt
 For repayment
 For good conduct and honesty
Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019
CONTRACT OF
BAILEMENT AND PLEDGE

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Delivery of Goods
 Definite Purpose
 Condition to return

 Examples

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Delivery (Kaliaperimul vs. Visalakshi)
 Goods
 Bailor
 Bailee
 Specific purpose
 Contract-Original or altered form of goods
 Disposed off

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 BENEFIT
 For exclusive benefit of bailor
 For exclusive benefit of bailee
 For mutual benefit
 REWARD
 Gratuitous bailment
 Non gratuitous bailement

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 DUTIES OF BAILOR
 To disclose known defects
 To bear expenses.
 To bear extra ordinary expenses.
 To receive back goods

 DUTIES OF BAILEE
 To take reasonable care of Goods bailed
 No unauthorized use of Goods bailed
 Not to mix the goods with his own goods
 To deliver increase or profit
 To return back the goods.
Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019
 Rights of Bailor
 Suit
 Termination
 Damages
 Mixture of Goods
 Demand return of goods
 Claim profit
 Rights of Bailee
 Damages against defects, Expenses incurred, Right to
indemnify, Joint bailors

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Special type of bailment
 Bailor-pawnor-pledger
 Bailee-pawnee-pledgee

 ESSENTIALS
 As Security
 Only Possession
 Only Movable goods
 Return on receipt of full dues

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


CONTRACT OF AGENCY

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Principal
 Agent
 Employed or delegated to represent or act on behalf of
someone else.
 Rules of agency Qui facit per alium facit per se
 Types of Agents.

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Competent person to appoint an agent
 Competent person to act as an agent
 Agreement between principal and agent
 Consideration

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Express
 Implied
 Agency by estoppel
 Agency by holding out
 Agency by necessity (G.N.Railways vs. Swaffield,1874)
 Agency by Operation of Law
 Agency by Ratification

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


DUTIES OF AGENT
Conducting business of principal
Use of required skill and reasonable diligence
Duty to render accounts
Follow directions of Principal
Liable for acts of sub agent
Pay sums received for principal
RIGHTS OF AGENT
Right to retain money
Right to receive remuneration
Right to retain goods
Right to get indemnified

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


CONTRACT OF SALES OF GOODS
1930

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


SCOPE:
 Goods
 Movables
 Actionable claims
 Money
 Classification of Goods
 Existing- Specific, Ascertained, Unascertained Goods
 Future
 Contingent

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Sec 4(1)
 Sec 4(3)
 ESSENTIALS OF A CONTRACT OF SALE
 TWO PARTIES State of Gujrat Vs. Ramlal and Company
 GOODS
 TRANSFER OF PROPERTY
 PRICE
 CONTRACT

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 NATURE
 TRANSFER OF PROPERTY
 RISK OF LOSS
 RIGHT
 PERFORMANCE
 INSOLVENCY OF BUYER
 INSOLVENCY OF SELLER
 BREACH

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


CONDITIONS AND
WARRANTIES

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 STIPULATION
 Importance
 12(1)
 12(2)
 12(3)

 Difference between condition and warranty

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 BREACH OF CONDITION
 Repudiation and rejection of goods
 Claim damages
 No remedy , if impossibility excused by law
 BREACH OF WARRANTY
 Only claim for damages
 Can not reject goods
 No remedy if impossibility excused by law

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Condition as to Title : “Rowland vs. Divall”
 Condition as to Description : “Beal vs. Taylor”
 Condition as to Sample : “Lorymer vs. Smith”
 Condition as to Sample as well as Description :
“Nicholas vs. Godts”
 Condition as to Fitness or Quality : “Grant vs.
Australian Knitting Mills”
 Particular purpose
 Reliability
 Seller’s business

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Condition as to Merchantability : “Morelli vs. Fitch and
Gibsons”
 Seller should be a dealer of goods of that description
 No chance of examination
 Latent defect

 Condition as to Wholesomeness : “Frost vs. Avlesbury


dairy Co.”

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Warranty of Quiet possession : “Masson vs.
Burmingham”
 Warranty of freedom from Encumbrances
 Warranty to disclose dangerous nature of Goods :
“Clark vs. Army & Navy cooperative society”

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 SPECIFIC OR ASCERTAINED GOODS
 When goods are in deliverable state : “Underwood vs. BC
Cement syndicate”
 When goods have to be put in a deliverable state : “Rugg
vs. Minnet”
 When goods have to be measured to ascertain price .
 UNASCERTAINED GOODS
 Assent of buyer or seller : “Rhode vs. Thwaites”

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 “nemo dat quod non habet”
 Sale by mercantile agent
 Sale by a joint owner
 Sale under a voidable contract
 Resale by unpaid seller
 Sale by finder of lost goods

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


PERFORMANCE OF
CONTRACT OF SALES

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Delivery and Acceptance of Goods
 MODES OF DELIVERY: Actual , Symbolic , Constructive
 RULES REGARDING DELIVERY :
 Possession of Goods
 Delivery and Payment are concurrent Conditions
 Demand for delivery of goods
 Time of Delivery
 Place of Delivery
 Expenses of Delivery
 Delivery of wrong quantity- Short, excess , mixed
 Delivery at a distant place

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 ACCEPTANCE OF DELIVERY :
 Buyer’s right to examine goods
 Acceptance?
 Buyer not bound to deliver the rejected goods
 Buyer’s liability for refusing the acceptance of goods

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 RIGHTS OF BUYER :
 Right to have delivery of goods
 Right to reject the goods
 Right not to accept installments
 Right to examine the goods
 Right not to deliver back refused goods
 Right to the notice of insurance
 Right against seller for breach of contract

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 DUTIES OF BUYER :
 Duty to pay price and accept the goods
 Duty to apply for the delivery
 Duty to demand delivery at a reasonable hour
 Duty to intimate the seller about rejection of goods
 Duty to pay damages for non acceptance
 Duty to pay increased tax

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 Who is an Unpaid seller ?
 Rights of Unpaid seller :

 Rights against goods

 Rights against the Buyer personally

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


Where ownership has not been transferred

Where ownership has been transferred


 RIGHT OF LIEN
 RIGHT OF STOPPAGE IN TRANSIT
 RIGHT OF RESALE
 Where goods are perishable
 Where unpaid seller gives notice of his intention
 Where the seller expressly reserves the right of resale

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019


 SUIT FOR PRICE
 SUIT FOR DAMAGES
 SUIT FOR REPUDIATION OF CONTRACT
 SUIT FOR INTEREST.

Dr. Ajay Kumar Dogra, UIAMS, PU Chandigarh 7/21/2019