bl assignment 1 & 2

8/6/2019 BL Assignment 1 & 2

1/7

1

Business Law

Assignment

Submitted By:-

Aniruddh Tiwari

(Roll No :- 101104)

PGDBM (2010-2014)


2/7

2

Assignment 1

Que 1 What are the stages with regard to formation of a company?

Ans Formation of a company is considered to be a responsible job. It involves

compliance with technical formalities of the provisions under the companies act

by the promoters who are the architects or founder fathers of the company.

The entire formation of a public limited company could be studied under

three heads. They are:-

1)Pre-Incorporation Stage i.e. prior to obtaining the certificate ofincorporation (section 35).

2)P

rovisional Stage i.e. the stage after obtaining the certificate ofincorporation but prior to obtaining the certificate of commencement of

business (section 149).

3)Perfect Stage i.e. the stage after obtaining the certificate ofcommencement of business (section 149).

The promotes who have to represent the company may have to transect several

matter right from procurement of property (land, building etc.) to finalization

with regard to the appointment of the directors. Each and every act a promoter

done for the sake of the company will have a binding effect on the company.

(i) Liability of the promoter in respect of pre-incorporation contracts:Any contract made by the promoter with the third parties will not be

binding on the company, since the company itself is not said to be in

existence at the time of contract.

(ii) Pre-Incorporation contracts cannot be enforced by companiescoming into existence (subsequently):

Any contract that has been entered into by a promoter on behalf of the

company, cannot be enforced by the company after it has come into

existence against such third party claims.

(iii) Promoters are personallyheldliable for contracts made on behalfofthecompany (yetto comeinto existence):


3/7

3

Even third parties cannot file a suit against for monies due to them in

respect of the contracts entered by promoters on companys behalf.

(iv) Regularization ofPre-Incorporation Act:The regularization of the contracts entered by a promoter as foundunder the heading ofPromoter.

(v) Specific performance ofthePre-Incorporation contract:If the contract that has been entered into by the promoters on behalf of

the companies is warranted by the terms of incorporation. Then

specific performance may be obtained in respect to such contract. In

such cases, the company after having come into existence should have

accepted to abide by the terms of the contract.

ProvisionalStage ofIncorporation:

Public limited company must not only obtain certificates of incorporation but

they also must obtain certificate to commence business. Till obtaining the

certificate of commencement of business the company has to enter into several

transactions including entering agreements with the third parties. Such contracts

under the companies provision act are only treated as the Provisional Contracts.

They are regarded as temporary contracts. Such contracts have to necessa rily beapproved by the company before the date at which it is entitled to commence

business.

From this, it is clear that any contract entered into by a company

subsequent to incorporation with the third party is still not binding on the

company in the absence of obtaining the certificate to commence the business.

If the company fails to obtain this certificate, then the provisional certificate is

also lapsed. On the other hand if the certificate of commencement of the

business is obtained, the provisional certificate is automatically validated.

Nevertheless in the statutory meeting, which are convened by the public limited

companies, these type of contract are also placed before the general body to get

their tacit approval. Provisional contract become binding on the co mpany

provided the terms and the conditions contained therein are not oppressive,

fraudulent or found to be irregular.


4/7

4

PerfectStage

Obtaining the certificate of business is a necessary condition for a public limited

company for doing business. Perfect stage signifies the period after the

company obtains the certificate of commencement of business. A public limited

company is prohibited from carrying on any business without obtaining thecertificate of commencement of business.

Obtaining the certificate of commencement of business is so important for a

public limited company that it cannot convene a statutory meeting without it.

Public limited companies should compulsorily convene a statutory meeting in

every six (6) months for the date which it has obtained the certificate of

commencement of business. The following conditions must also be fulfilled: -

(i) Minimum subscription should have been obtained against the sharesthat are to be allotted according the guidance prescribed by SEBI.

(ii) The directors should have paid in cash the application money andallotment money that is due and payable to the company as against the

shares agreed to be taken by them.

(iii) No money should become refundable by the company to theapplicants by its reason of its failure to apply for permission on any

recognised stock exchange.

(iv) A declaration that the above requirements have been complied withmust be signed by any of the director of the company. The abovementioned declaration must be filled with the registrar.


5/7

5

Assignment 2

Que State the difference between the following terms:

(i) SaleIn sale the ownership passes from the seller to the buyer. Forconsidering the transaction as a sale, delivery of goods, and payment

of price, need not take place simultaneously. Sale does not mean

delivery of goods for a price which is to be paid immediately or fore

with.

(ii) Agreement To SaleAn agreement to sell is the agreement where the transfer of the

ownership of the goods is to take place at a future time or subject to

fulfilment of some condition.

(iii) PledgeA pledge is something about a transaction where the borrower delivers

the possession of a movable property as security for the loan advanced

or to be advanced by the lender as security. There is transfer of

possession of goods of the borrower to the lender as securities.

(iv) ChargeSometimes a movable or immovable properties are given as securities

to the lender without delivering possession of the same with an

undertaking that the goods given as securities shall not be sold or

transferred without notice to the lender.

(v) Charge withhypothecationA charge may also be created by hypothecation, where the borrower

not only gives his movable or immovable property as security without

delivering possession of it to the lender, but he also gives a declaration

that the right to sell the property given as security shall only be

exercised by the lender. In short the borrower not only gives his

movable or immovable property but he also transfers the right to sell

the property in case he defaults the payments.


6/7

6

(vi) InstalmentPurchaseDelivery of goods may take place immediately but price may become

payable at suitable instalments, convenient to the buyer.

(vii) H

ireP

urchaseOn certain occasions, goods are taken for hire on an agreement that on

payment of the last instalment, the ownership of the goods passes to

the buyer. Even if the buyer commits default in payment of hire for

one instalment, the seller is at liability to revoke the agreement and

resume the possession of goods.

(viii) Contract For LaboursIn this type of transaction, the buyer pays money not for the material

but for the valuable work which is considered precious. For example,when a person purchases a painting on a canvas, the value he pays is

not towards the purchase of the canvas, but it is meant only for the

painting done on the canvas. Hence in this nature of transaction, work

alone pays a major role and is re garded as a contract of work and

labour.

(ix) MortgageIn mortgage, the interest in immovable properties is given or

transferred as securities by the borrower (owner) in favour of thelender (mortgagee). There is no transfer of ownership but only transfer

of interest in a specific immovable property in the case of mortgage.

Que Differentiate between sale and agreement to sell

Sale Agreement To Sell

1) In a sale the ownership passes tobuyer from the seller

1) In an agreement to sell,ownership does not pass to the buyer, but it is subjected tofulfilment of certain conditions.

2) Sale creates right in rem. 2) Agreement to sale creates Right to personam

3) In a sale if the buyer fails to payfor thee goods, the seller maysue for the price.

3) In an agreement to sell, if thebuyer fails to accept and pay forthe goods, the seller can sue for


7/7

7

damages.

4) In a sale, if the good is in possession of the seller havingbecome damaged, the loss has to be borne by the buyer, unless

the seller occupies the positionof the bailey.

4) In an arrangement to sell, evenif the goods are in possession ofthe buyer if they get damaged.The loss has to be borne by the

seller since ownership has notpassed to the buyer.

5) In a sale, if the seller has become insolvent, the official

assignee cannot proceed againstthe goods, since they are owned

by the buyer.

5) In an agreement to sell, if thebuyer has become insolvent, the

official assignee cannot proceedagainst the goods in the

possession of the buyer , sincethe buyer has not yet become

the owner.

6) A sale is said to be on executedcontract.

6) An agreement to sell is said tobe an executor contract.

bl assignment 1 & 2

Documents