legal aspects of business - 2012 nov sem

7/31/2019 Legal Aspects of Business - 2012 Nov SEM

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SET - 1

1. What are the sources of law? Explain.

Answer:

Sources of LawThe main sources of modern Indian Law, as administered by Indian courts, may be divided into

two broad categories: (i) Primary sources and, (ii) Secondary sources.

Primary sources of law

The primary sources of Indian law are: (a) customs, (b) judicial precedents (stare decisis), (c)statutes and (d) personal law.

Customary law

Customs have played an important role in making the law and therefore is also known as

customary law. „Customary Law‟, in the words of Keeton, may be defined as “those rules of

human action, established by usage and regarded as legally binding by those to whom the rulesare applicable, which are adopted by the courts and applied as sources of law because they aregenerally followed by the political society as a whole or by some part of it”. In simple words, “it

is the uniformity of conduct of all persons under like circumstances”. It is a generally observedcourse of conduct by people on a particular matter. When a particular course of conduct is

followed again and again, it becomes a custom.

Judicial precedents are an important source of law

Judicial precedents are another important source of law. It is based on the principle that a rule of law which has been settled by a series of decisions generally should be binding on the court and

should be followed in similar cases. These rules of law are known as judicial precedents.

However, only such decisions which lay down some new rules or principles are treated as judicial precedents. Thus, were there is a settled rule of law, it is the duty of the judges to followthe same; they cannot substitute their opinions for the established rule of law. This is known as

the doctrine of „stare decisis‟. The literal meaning of this phrase is “stand by the decision”.

„Statute‟ – an important source of lawThe statutes or the statutory law or the legislation is the main source of law. This law is created

by legislation such as Parliament. In India, the Constitution empowers the Parliament and statelegislatures to promulgate law for the guidance or conduct of persons to whom the statute is,

expressly or by implication, made applicable. It is sometimes called „enacted law‟ as it is broughtinto existence by getting Acts passed by the legislative body. It is called Statute Law because it is

the writ of the state and is in written form ( jus scriptum).

Personal law

Many times, a point of issue between the parties to a dispute is not covered by any statute or

custom. In such cases, the courts are required to apply

the personal law of the parties. Thus in certain matters, we follow the personal laws of Hindus,

Mohammedan and Christians.



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Secondary sources of Indian law

The secondary sources of Indian Law are English Law and Justice, Equity and Good Conscience.

English law

The chief sources of English Law are: (i) the Common Law (ii) Equity,(iii) The law Merchant and (iv) The Statute Law.

Nowadays, English law is not very important source of Indian law. The English law, in its

application to India, has to conform to the peculiar circumstances and conditions prevailing inthis country. Even though the bulk of our law is based on and follows the English law, yet in itsapplication our courts have to be selective. It is only when the courts do not find a provision on a

particular problem in the primary sources of Indian Law that it my look to subsidiary sources

such as the English Law. For example, the greater part of the Law Merchant has been codified in

India. The Indian Contract Act, 1872, the Indian Partnership Act, 1932, the Scale of Goods Act1930 and the Negotiable Instruments Act, 1882, are some of the very important Acts relating to

business transactions. Where, however, there is some doubt as to the interpretation of any

provisions of these Acts or where certain branches of the Law Merchant have not been codified,the courts in India look to English decisions on the point, for guidance.

Justice, equity and good conscience

In India we do not have, no did we ever had separate courts (as in England) administering

„equity‟. But the equitable principles of law, i.e., justice, equity and good conscience, are the

guiding force behind most of the statutes in our country and the decisions of the courts.

Especially, where law is silent on any point or there is some lacuna in a statute, the principles of equity come handy to the judges who exercise their discretion often on equitable considerations.

The frequent use of terms such as ‟good faith‟, „public interest‟, „public policy‟, in statutes andby the judges in their judgements is based on principles of equity.

Now we shall briefly describe the main sources of English law:

1. Common law. This source consists of all those unwritten legal doctrines embodying customsand traditions developed over centuries by the English courts. Thus, the common law is found in

the collected cases of the various courts of law and is sometimes known as „case law‟.

2. Equity. The literal meaning of the term „equity‟ is „natural justice‟. The development of equityas a source of law occurred due to rigours and hardships of the Common Law. Therefore, in its

technical and narrower sense, „equity‟ means a body of legal doctrines and rules emanating from

the administrations of justice, developed to enlarge, supplement or override a narrow rigid

system of existing law of the land. However, like the common law, the „equity‟ is unwritten andis a supplement to common law as a source of law.

3. Statute law. The Statute law consists of the law passed by the Parliament and therefore, is

„written‟ law. The authority of parliament is supreme but is subject to natural limitations and

those laid down by the Constitution. It can pass any law it pleases and can override its own

previous Acts and the decisions of the courts. Statute law, therefore, is superior to and canoverride any rule of Common Law or equity.



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4. The law merchant or lex mercatoria. It is another important source of law and is based to a

great extent on customs and usages prevalent among merchants and traders of the middle ages.Its evolution like that of equity can be traced to unsuitability of Common Law so far as the

commercial transactions were concerned. The Common Law was found to be unsatisfactory in

dealing with disputes between merchants. The merchants, therefore, developed certain rules

based upon customs and usages to govern their mercantile transactions. These rules were knownas Lex Mercatoria or the Law Merchant.

2. What is meant by contract? Explain about “quasi contracts”

Answer:

ContractA contract is an agreement, enforceable by law, made between at least two parties by which

rights are acquired by one and obligations are created on the part of another. If the party, which

had agreed to do something, fails to do that, then the other party has a remedy.

Example:D Airlines sells a ticket on 1 January to X for the journey from Mumbai to Bangalore on 10

January. The Airlines is under an obligation to take X from Mumbai to Bangalore on 10 January.In case the Airlines fails to fulfill its promise, X has a remedy against it. Thus, X has a right

against the Airlines to be taken from Mumbai to Bangalore on 10 January. A corresponding duty

is imposed on the Airlines. As there is a breach of promise by the promisor (the Airlines), the

other party to the contract (i.e., X) has a legal remedy.

Meaning of quasi contracts: „Quasi Contracts‟ are so-called because the obligations associated

with such transactions could neither be referred as tortuous nor contractual, but are stillrecognized as enforceable like contracts, in courts. According to Dr Jenks, quasi contract is “asituation in which law imposes upon one person, on grounds of natural justice, an obligation

similar to that which arises from a true contract, although no contract, express or implied, has

infact been entered into by them”.

Cases which are treated as quasi contracts

Following are the cases which are to be deemed quasi contracts:

1. Claim for necessaries supplied to a person incapable of contracting or on his account.

If a person, incapable of entering into a contract or anyone whom he is legally bound to supportis supplied by another person with necessaries suited to his condition in life, the person who

furnished such supplies is entitled to be reimbursed from the property of such incapable person

(Sec.68).

2.Reimbursement to a person paying money due by another in payment of which he is

interested.A person who is interested in the payment of money which another is bound by law to

pay, and who, therefore, pays it, is entitled to be reimbursed by the other. (Sec.69).



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3. What are the rights of consumer under consumer protection act?

Answer:

Rights of Consumers

For the first time in the history of consumer legislation in India, the Consumer Protection Act,1986 extended a statutory recognition to the rights of

consumers. Sec.6 of the Act recognizes the following six rights of consumers:

1. Right to safety, i.e., the right to be protected against the marketing of goods and serviceswhich are hazardous to life and property.

2. Right to be informed, i.e., the right to be informed about the quality, quantity, potency, purity,

standard and price of goods or services, as thecase may be, so as to protect the consumer against unfair trade practices.

3. Right to choose: It means right to be assured, wherever possible, access to a variety of goods

and services at competitive prices. In case of

monopolies, say, railways, telephones, etc., it means right to be assured of satisfactory quality

and service at a fair price.4. Right to be heard, i.e., the consumers‟ interests will receive due consideration at appropriate

forums. It also includes right to be represented in

various forums formed to consider the consumers‟ welfare.

5. Right to seek redressal: It means the right to seek redressal against unfair practices or

restrictive trade practices or unscrupulous exploitation of

consumers. It also includes right to fair settlement of the genuine grievances of the consumers.6. Right to consumer education: It means the right to acquire the knowledge and skill to be an

informed consumer.

4. Explain the purpose and meaning of contract of guarantee.

Answer:

Purpose of guarantee

The contracts of guarantee are among the most common business contracts and are used for anumber of purposes. These are:

i) The guarantee is generally made use of to secure loans. Thus, a contract of guarantee is for the

security of the creditor.ii) The contracts of guarantee are sometimes called performance bonds. For example, in the case

of a construction project, the builder may have to find a surety to stand behind his promise to

perform the construction contract. Also employers often demand a type of performance bond

known as a fidelity bond from employees who handle cash, etc., for the good conduct of the

latter. If an employee misappropriates then the surety will have to reimburse the employer.iii) Bail bonds, used in criminal law, are a form of contract of guarantee. A bail bond is a device

which ensures, that a criminal defendant will appear for trial. In this way a prisoner is released

on bail pending his trial. If the prisoner does not appear in the court as desired then the bond isforfeited.

Meaning of contract of guarantee:



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A contract of guarantee is defined as “a contract to perform the promise, or discharge the

liability, of a third person in case of his default”. The person who gives the guarantee is called

„surety‟; the person for whom the guarantee is given is called the „principal debtor‟, and the person to whom the guarantee is given is called the „creditor‟. A contract of guarantee may be

either oral or in writing.

5. What is partnership? Explain the nature of partnership under „law of partnership‟.

Answer:

Meaning and Nature of Partnership

A partnership is defined as “the relationship between persons who have agreed to share profits of

a business carried on by all, or by any of them

acting for all”. On analysis of the definition, certain essential elements of partnership emerge.

These elements must be present so as to form apartnership and are discussed below.

1. Partnership is an association of two or more than two persons. There must be at least two

persons who should join together to constitute a partnership, because one person cannot becomea partner with himself. These persons must be natural persons having legal capacity to contract.

Thus, a company (which is an artificial person) cannot be a partner. Similarly, a partnership firm

cannot be a partner of another partnership firm. As regards maximum number of partners in a

partnership firm, Sec.11 of the Companies Act, 1956, puts the limit at 10 in case of bankingbusiness and 20 in case of any other business.

2. Partnership must be the result of an agreement between two or more persons.

An agreement presupposes a minimum number of two persons. As mentioned above, apartnership to arise, at least two persons must make an agreement. Partnership is the result of anagreement between two or more persons (who are known as partners after the partnership comes

into existence).

3. The agreement must be to carry on some business. The term „business‟ includes every trade,occupation or profession [Sec.2 (b)]. Though the word „business‟ generally conveys the idea of numerous transactions, a person may become a partner with another even in a particular

adventure or undertaking (Sec.8). Unless the person joins for the purpose of carrying on a

business, it will not amount to partnership.4. The agreement must be to share profits of the business. The joint carrying on of a business

alone is not enough; there must be an agreement to share profits arising from the business.

Unless otherwise so agreed, sharing of profits also involves sharing of losses. But whereas thesharing of profits is an essential element of partnership, sharing of losses is not. Example: A, a trader, owed money to several creditors. He agreed to pay his creditors out of the

profits of his business (run under the creditors‟ supervision) what he owed to them. Held, the

arrangement did not make creditors partners with A in business [Cox v. Hickman, (1860) 8H.L.C.,



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6. Write a note on the following on Copy Right Act.

Answer:

Meaning of copyright (Sec.14)

The term „copyright‟ means the exclusive right, by virtue of, and subject to the provision of the

Act:(a)in the case of literary, dramatic or musical work, not being a computer programme – (i) to

reproduce the work in any material form including the storing of it in any medium by electronic

means; (ii) to issue copies of the work to the public not being copies already in circulation; (iii)to perform the work in public, or communicate it to the public; (iv) to make any cinematograph

film or sound recording in respect of the work;(v) to make any translation of the work; (vi) to

make any adaptation of the work; (vii) to do, in relation to a translation or an adaptation of thework, any of the acts specified in relation to the work in (i) to (vi);

(b) in the case of computer programme – (i) to do any of the acts specified in clause (a) above;

(ii) to sell or give on hire, or offer for sale or hire any copy of the computer programme,

regardless of whether such copy has been sold or given on hire on earlier occasions;

(c) in the case of an artistic work – (i) to reproduce the work in any material form includingdepiction in three dimensions of a two – dimensional work or in two dimensions of a three –

dimensional work; (ii) to communicate the work to the public; (iii) to issue copies of the work to

the public not being copies already in circulation; (iv) to include the work in any cinematograph

film; (v) to make any adaptation of the work; (vi) to do in relation to an adaptation of the work any of the acts specified in relation to the work in (i) to (iv) above;

(d) in the case of a cinematograph film – (i) to make a copy of the film, including a photographof any image forming part thereof; (ii) to sell or give on hire; or offer for sale or hire, any copy of

the film, regardless of whether such copy has been sold or given on hire on earlier occasions; (iii)

to communicate the film to the public.

(e) In the case of a sound recording – (i) to make any other sound recording embodying it; (ii) to

sell or give on hire, or offer for sale or hire, any copy of the sound recording regardless of

whether such copy has been sold or given on hire on earlier occasions; (iii) to communicate thesound recording to the public.

Ownership of copyright (Sec.17)The author of the work is recognised to be the first owner of the copyright therein. This is

however, subject to some exceptions given below:

1. In the case of a literary, dramatic or artistic work made by the author in the course of his

employment or apprenticeship under the proprietor of a newspaper, magazine or similarperiodical, for the purpose of publication, the said proprietor shall be the first owner of the

copyright in the work (in the absence of any agreement to the contrary) insofar as the copyright

relates to the publication in the newspaper, magazine or other periodical. Except in such cases,

the author will be the first owner of the copyright in the work.



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2. If the photograph is taken or a painting or portrait is drawn or an engraving or cinematograph

film is made on payment at the instance of any person, such person, in the absence of anyagreement to the contrary, shall be the first owner of the copyright therein.

3. If a work is made in the course of the author‟s employment under a contract of service or

apprenticeship, the employer (not being the proprietor of a newspaper, magazine or periodical) inthe absence of any agreement to the contrary, the employer shall be the first owner of the

copyright therein.

4. If any person has delivered any address or speech in public, then he shall be the first owner of

the copyright. However, if the address or speech is delivered on behalf of any other person, then

such other person shall be the owner of the copyright therein.

5. In the case of government work, the government is the owner of the copyright in the absence

of any agreement to the contrary.

6. In the case of a work made or first published by or under the direction or control of any publicundertaking, such public undertaking shall, in the absence of any agreement to the contrary, be

the first owner of the copyright therein.

Term of copyright

Sec.22 provides that copyright shall subsist in any literary, dramatic, musical or artistic work

(other than a photograph) published within the lifetime of the author until 60 years from thebeginning of the calendar year next following the year in which the author dies. Sec.23 provides

for the term of copyright in anonymous and pseudonymous works. In the case of a literary,

dramatic, musical or artistic work (other than a photograph), which is published anonymously orpseudonymously, copyright shall subsist until 60 years from the beginning of the calendar year

next following the year in which the work is first published.

Sec.24 provides for term of copyright in posthumous works. Where copyright subsists at the dateof death of the author and adaptation of which has not been published before that date, the

copyright will subsist until 60 years of from the beginning of the calendar year next following

the year in which the work is first published.

Licences

Licence by owners of copyright

Compulsory licence in works withheld from public

Compulsory Licence in unpublished Indian works (Sec.31A)

Licence to produce and publish translation (Sec.32)

Copyright Societies

Registration of a copyright society (Sec.33)No person or association of persons shall commence or carry on business of issuing or granting

licences in respect of any work in which copyright subsists or in respect of any other rights

conferred by this Act except under or in accordance with the registration granted by the Central



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Government.

The Central Government may, having regard to the interests of the authors and other owners of

rights under this Act, the interest and convenience of the public and in particular of the groups of

persons who are most likely to seek licences in respect of the relevant rights and the ability and

professional competence of the applicant, register such association of persons as a copyrightsociety subject to such conditions as may be

prescribed.

However, the Central Government shall not ordinarily register more than one copyright society

to do business in respect of the same class of works.

The Central Government may, if it is satisfied that a copyright society is being managed in a

manner detrimental to the interests of the owners of rights concerned, cancel the registration of

such society after such inquiry as may be prescribed.

Further, if the Central Government is of the opinion that in the interests of the owners of rightsconcerned, it is necessary so to do, it may suspend the registration of such society pending

enquiry for such period not exceeding one year. In such a situation, the Government shallappoint an administrator to discharge the functions of the copyright society.

Administration of rights of owner by copyright society (Sec.34). A copyright society may accept

from an owner of rights exclusive authorisation to administer any right in any work. But he shallhave the right to withdraw such authorization without prejudice to the rights of the copyright

society under the contract.

Payment of remuneration by copyrights society (Sec.4A). The copyright society is empowered

to frame a scheme for determining the quantum of

remuneration payable to individual copyright owners having regard to the number of copies of

the work in circulation.

Control over the copyright society by the owner of rights (Sec.35). Every copyright society shall

be subject to the collective control of the owners of rights under this Act whose rights itadministers. The society shall (a) obtain the approval of such owners of rights for its procedures

of collection and distribution of fees; (b) obtain their approval for the utilisation of any amounts

collected as fees for any purpose other than distribution to the owner of rights; and (c) provide tosuch owners regular, full and detailed information concerning all its activities in relation to the

administrator of their rights.

International CopyrightSec.40 authorises the Central Government to extend copyright protection to foreign works.

Accordingly the Central Government made the International copyright order, 1991.

Sec.41 provides that works made or published by certain International Organisations are grantedcopyright protection in India. Accordingly, the Central Government passed the copyright



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(International Organisations) Order (1958) under which copyright protection was granted to

certain International Organisations.

Infringement of Copyright

Sec.51 provides that copyright in a work shall be deemed to be infringed in the following cases:

(a) when any person without a licence from the owner or the Registrar of copyrights doesanything, the exclusive right to do which is by this Act conferred upon the owner of copyright, or

permits for profit, any place to be used for the communication of the work to the public, unless

he was not aware and had no reasonable ground for believing that such communication would bean infringement of copyright; or

(b) when any person: (i) makes for sale or hire or sells or lets for hire or by way of trade displaysor offers for sale or hire any infringing copies of the work covered by copyright; or (ii)

distributes, either for the purpose of trade or to such an extent as to affect prejudicially the owner

of the work; (iii) exhibits in public by way of trade any infringing copies of the work; or (iv)

imports into India any infringing copies of the work except the copy of any work for the private

and domestic use of the importer.

The reproduction of a literary, dramatic, musical or artistic work in the form of a cinematographfilm shall be deemed to be infringing copyright.

Certain acts not to be infringement of copyright. (Sec.52). This section specifies acts which do

not constitute an infringement of copyright. These are:

(a) A fair dealing with a literary, dramatic, musical or artistic work, not being a computer

program, for the purposes of (i) private use, including research; (ii) criticism or review, whetherof that work or of any other work.

(b) The making of copies or adaptation of a computer programme by the lawful possessor of a

copy of such computer programme, from such copy(i) in order to utilise the computerprogramme for the purpose for which it was supplied; or (ii) to make back-up copies purely as a

temporary protection against loss, destruction or damage in order only to utilise the computer

programme for the purpose for which it was supplied.

(c) A fair dealing with a literary, dramatic, musical or artistic work for the purpose of reporting

current events – (i) in a newspaper, magazine or similar periodical, or (ii) by broadcast or in acinematograph film or by means of photographs.

(d) The reproduction of a literary, dramatic, musical or artistic work for the purpose of a judicial

proceeding or for the purpose of a report of a judicial proceeding.

(e) The reproduction or publication of literary, dramatic, musical or artistic work in any work

prepared by the Secretariat of a Legislature exclusively for the use of its members.

(f) The reproduction of any literary, dramatic or musical work in a certified copy made or

supplied in accordance with any law for the time being in force.



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(g) The reading or recitation in public of any reasonable extract from a published literary ordramatic work.

(h) The publication in a collection, mainly composed of non-copyright matter bonafide intended

for the use of educational institutions and so described in the title and in any advertisementissued by or on behalf of the publisher, of short passages from published literary or dramatic

works.

(i)The reproduction of a literary, dramatic, musical or artistic work (i) by a teacher or a pupil in

the course of instruction; or (ii) as part of the questions to be answered in an examination; or (iii)

in answer to such questions.

(j) The performance, in the course of the activities of educational institution of a literary,

dramatic or musical work by the staff and students of the institution, or of a cinematograph film

or a sound recording, if the audience is limited to such staff and students, the parents and

guardians of the students and persons directly connected with activities of the institution or thecommunication to such an audience of a cinematograph film or sound recording.

(k) The making of sound recordings in respect of any literary, dramatic or musical work, if (i)

sound recording of that work have been made by or with the licence or consent of the owner of

the right in the work; (ii) the person making the sound recordings has given a notice of his

intention to make the sound recordings, has provided copies of all covers or labels with whichthe sound recordings are to be sold, and has paid in the prescribed manner to owner of rights in

the work, royalties in respect of all such sound recordings to be made by him, at the rate fixed by

the Copyright Board in this behalf.

(l) The causing of a recording to be heard in public by utilising it, (i) in an enclosed room or hall

meant for the common use of residents in residential premises (not being a hotel or similar

commercial establishment) as part of the amenities provided exclusively or mainly for residents,therein; or (ii) as part of the activities of a club or similar organisation which is not established or

conducted for profit.

(m) The performance of a literary, dramatic or musical work by an amateur club or society, if the

performance is given to a non-paying audience or for the benefit of a religious institution;

(n) The reproduction in a newspaper, magazine or other periodical of an article on current

economic, political, social or religious topics, unless the author of such article has expressly

reserved to himself the right of such reproduction.

(o) The publication in a newspaper, magazine or other periodical of a report of a lecture

delivered in public.

(p) The making of not more than three copies of a book (including a pamphlet, sheet of music,map, chart or plan) by or under the direction of the person in charge of a public literary for the

use of the library if such book is not available for sale in India.



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(q) The reproduction for the purpose of research or private study or with a view to publication, of an unpublished literary, dramatic or musical work kept in a library, museum or other institution

to which the public access.

(r) The reproduction or publication of (i) any matter which has been published in any OfficialGazette except an Act of a Legislature; (ii) any Act of a Legislature subject to the condition that

such Act is reproduced or published together with any commentary thereon or any other original

matter; (iii) the report of any committee, commission, council, board or other like bodyappointed by the Government if such report has been laid on the Table of Legislature, unless the

reproduction or publication of such report is prohibited by the Government; (iv) any judgment or

order of a court, tribunal or other judicial authority, unless the reproduction or publication of such judgment or order is prohibited by the court, the tribunal or other judicial authority, as the

case may be.

(s) The production or publication of a translation in any Indian language of an Act of a

Legislature and of any rules or orders made there under (i) if no translation of such Act or rulesor orders in that language has previously been produced or published by the Government; or

(ii) Where a translation of such Acts or rules or orders in that language has been produced orpublished by the government if the translation is not available for sale to the public.

(t) The making or publishing of a painting, drawing, engraving or photograph of a work of

architecture or photograph of a work of architecture or the display of a work of architecture.

(u) The making or publishing of a painting, drawing, engraving or photograph of a sculpture, or

other artistic work falling under Sec.2(e) (iii), if such work is permanently situated in a publicplace or any premises to which the public has access.

(v) The inclusion in a cinematograph film of – (i) any artistic work permanently situated in a

public place or any premises to which the public has access; or (ii) any other artistic work, if such inclusion is only by way of background or is otherwise incidental to the principal matters

represented in the film.

(w) The use by the author of an artistic work where the author of such work in not the owner of

the copyright therein, of any mould, cast, sketch, plan, model or study made by him for the

purpose of the work.

(x) The reconstruction of a building or structure in accordance with the architectural drawings or

plans by reference to which the building or structure was originally constructed.

(y) In relation to literary, dramatic or musical work recorded or reproduced in any cinematograph

film, the exhibition of such film after the expiration of the term of copyright therein.

(z) The making of an ephemeral recording, by a broadcasting organisation using its own facilitiesfor its own broadcast by a broadcasting organisation of a work which it has the right to



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broadcast, and the retention of such recording for archival purposes on the ground of its

exceptional documentary character.

(za) The performance of a literary, dramatic or musical work or the communication to the public

of such work or of a sound recording in the course of any bona fide religious ceremony or an

official ceremony held by the Central Government or the State Government or any localauthority.

Sec.52A requires certain particulars to be included in sound recording and video films. Noperson can publish a sound recording in respect of any work unless the following particulars are

displayed on the sound recording and on any container thereof; (a) the name and address of the

person who has made the sound recording; (b) the name and address of the owner of thecopyright in such work; (c) the year of its publication.

In the case of a video film in respect of any work, the following particulars are to be displayed in

the video film, when exhibited. Also, it is necessary that on the video cassette or other container

thereof the following particulars are shown:

(a) If such work is a cinematograph film required to be certified for exhibition under theprovisions of the Cinematograph Act, 1952, a copy of the certificate granted by the Board of

Film Certification;

(b) The name and address of the person who has made the video film and a declaration by himthat he has obtained the necessary licence or consent from the owner of the copyright in such

work for making such video film; and

(c) The name and address of the owner of the copyright in such work.



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SET - 2

1. Explain different modes of discharge of contracts.

Answer:

Different Modes of Discharge of Contracts (Secs.73-75)A contract may be discharged by (i) performance, (ii) tender; (iii) mutual consent; (iv)

subsequent impossibility; (v) operation of law; (vi) breach.

Discharge of contracts by performance or tenderThe obvious mode of discharge of a contract is by performances that is where the parties have

done whatever was contemplated under the contract; the contract comes to an end. Thus, where a

contracts to sell his car to B for Rs 1, 85, 000, as soon as the car is delivered to B and B pays the

agreed price for it, the contract comes to an end by performance. The tender or offer of performance has the same effect as performance. If a promisor tenders performance of his

promise but the other party refuses to accept, the promisor stands discharged of his obligations.

Mutual consent (Sec.62)If the parties to a contract agree to substitute a new contract for it, or to rescind it or alter it, the

original contract is discharged. A contract may terminate by mutual consent in any of the six

ways viz. novation, rescission, alteration and remission, waiver and merger. Novation means

substitution of a new contract for the original one.

Discharge of contracts by impossibility of performanceA contract may be discharged because of impossibility of performance. There are two types of

impossibility: (i) Impossibility may be inherent in the transaction (i.e., the contract), (ii)Impossibility may emerge later by the change of certain circumstances material to the contract.

Discharge of a contract by operation of law

Discharge by operation of law may take place in four ways: (i) By death. Death of the promisorresults in termination of the contract in cases involving personal skill or ability. (ii) By

insolvency. The insolvency law provides for discharge of contracts under certain circumstancesso where an order of discharge is passed by an insolvency court the insolvent stands discharged

of all debts incurred previous to his adjudication. (iii) By merger.

Discharge of contracts by breach

A breach of contract is one party‟s f ailure, without a legal excuse, to live up to any of its

promises under a contract. A contract terminates by breach of contract. If the promisor has not

performed his promise in accordance with the terms of the contract or where the performance is

not excused by tender, mutual consent or impossibility or operation of law, then this amounts toa breach of contract on the part of the promisor. The consequence

of this is that the promisee becomes entitled to certain remedies. The breach of contract mayarise in two ways: i) anticipatory and (ii) actual.

Anticipatory breach of contracts: The anticipatory breach of contract occurs when a partyrepudiates it before the time fixed for performance has arrived or when a party by his own act

disables himself from performing the contract.

Actual breach of contracts: The actual breach can occur by (i) failure to perform as promised,(ii) making it impossible for the other party to perform. The failure to perform means that one

party must not have performed a material part of the contract by a stated deadline. The actual



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breach by failure to perform may take place (a) at the time when performance is due, or (b)

during the performance of the contract. Thus, if a person does not perform his part of the contractat the stipulated time, he will be liable for its breach.

2. Distinguish between a contract of guarantee and a contract of indemnity

Answer:

Guarantees and indemnities are both long established forms of what the law terms surety ship.There are important legal distinctions between them. Append below some salient points

pertaining to the difference/distinction between Indemnity and Guarantee:

Contracts of Indemnity

A contract of indemnity is any agreement whereby one party agrees to indemnify, or pay, theother party for certain types of loss. Depending on the contract, those losses could be caused bythe party promising to pay or by any other individual. The most common type of contracts of

indemnity are insurance contracts. For instance, in an automobile insurance contract, theinsurance company promises to indemnify (or pay) the insured for any losses he suffers as a

result of automobile accidents.

Contracts of Guarantee

In a contract of guarantee, or contract of guaranty, one party agrees to act on behalf of anothershould that second party default. In plain terms, this means that if an individual fails to pay her

guaranteed debt or to perform some other duty or obligation, the guarantor -- the party who has

agreed to act on behalf of another -- will step in to pay or perform the obligation. Commoncontracts of guarantee include a loan with a co-signer and a student loan, where the government

guarantees payment if the student should default.

1. Section 124 of the Indian Contract Act 1872 defines a "contract of indemnity" as a contract by

which one party promises to save the other from loss caused to him by the conduct of the

Promisor himself, or by the conduct of any other person.e.g. = 'x' contracts to indemnify 'y' against the consequences of any legal proceedings which may

take against B in respect of a certain sum of Rs.200/=, Where as Section 126 of the Indian

Contract Act 1872 defines a contract of guarantee is a contract to perform the promise or

discharge the liability of a third person in case of his default”. The person who gives theguarantee is called the “surety”; the person in respect of whose default the guarantee is given is

called the “principal debtor”, and the person to whom the guarantee is given is called the

“creditor”. A guarantee may be either oral or written. e.g., 'P' lends Rs. 5000/= to 'Q' and 'R'promises to 'P' that if 'Q' does not pay the money back then 'R' will do so.

2. Indemnity comprise only two parties- the indemnifier and the indemnity holder, There arethree parties in guarantee namely the surety, principal debtor and the creditor.

http://www.ehow.com/info_8094382_differences-contract-indemnity-contract-guarantee.html

http://www.ehow.com/info_8094382_differences-contract-indemnity-contract-guarantee.html



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3. Liability of the indemnifier is Primary; in guarantee the liability of the surety is secondary.

The surety is liable only if the principal debtor makes a default. The primary liability being thatof the principal debtor.

4. The indemnifier need not necessarily act at the request of the indemnified. In guarantee the

surety give guarantee only at the request of the principal debtor.

5. The possibility of any loss happening is the only contingency against which the indemnifier

undertakes to indemnify. Whereas there is an existing debt or duty, the performance of which isguarantee by the surety.

6. An indemnity is for reimbursement of a loss, a guarantee is for security of the creditor.

7. In a contract of indemnity the liability of the indemnifier is primary and arises when the

contingent event occurs, In case of contract of guarantee the liability of surety is secondary and

arises when the principal debtor defaults.

8. The indemnifier after performing his part of the promise has no rights against the third party

and he can sue the third party only if there is an assignment in his favor, Whereas in a contract of guarantee, the surety steps into the shoes of the creditor on discharge of his liability, and may sue

the principal debtor.

9. In a contract of indemnity, the indemnifier promises without the request of debtor, Contract of Guarantee is for security of a debt or performance of promise.

3) Briefly state special features of a partnership on the basis of which its existence can be

determined under the Indian Partnership Act?

Answer:

A partnership is defined as “the relationship between persons who have agreed to share profits of

a business carried on by all, or by any of them acting for all”. On analysis of the definition,

certain essential elements of partnership emerge.

Features of a partnership:

1. Partnership is an association of two or more than two persons.

There must be at least two persons who should join together to constitute a partnership, because

one person cannot become a partner with himself. These persons must be natural persons having

legal capacity to contract. Thus, a company (which is an artificial person) cannot be a partner.Similarly, a partnership firm cannot be a partner of another partnership firm. As regards

maximum number of partners in a partnership firm, Sec.11 of the Companies Act, 1956, puts the

limit at 10 in case of banking business and 20 in case of any other business.

2. Partnership must be the result of an agreement between two or more persons.

An agreement presupposes a minimum number of two persons. As mentioned above, a

partnership to arise, at least two persons must make an agreement. Partnership is the result of an



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agreement between two or more persons (who are known as partners after the partnership comes

into existence).3. The agreement must be to carry on some business. The term „business‟ includes every trade,occupation or profession [Sec.2 (b)]. Though the word „business‟ generally conveys the idea of

numerous transactions, a person may become a partner with another even in a particular

adventure or undertaking (Sec.8). Unless the person joins for the purpose of carrying on abusiness, it will not amount to partnership.

4. The agreement must be to share profits of the business. The joint carrying on of a business

alone is not enough; there must be an agreement to share profits arising from the business.Unless otherwise so agreed, sharing of profits also involves sharing of losses. But whereas the

sharing of profits is an essential element of partnership, sharing of losses is not.

Example: A, a trader, owed money to several creditors. He agreed to pay his creditors out of the

profits of his business (run under the creditors‟ supervision) what he owed to them. Held, thearrangement did not make creditors partners with A in business [Cox v. Hickman, (1860) 8

H.L.C., 268].

4) Distinguish between condition and warranty. State the circumstance under which a

condition can be waived and treated as a warranty.

Answer:

In a contract of sale, parties make certain stipulations, i.e., agree to certain terms. All stipulationscannot be treated on the same footing. Some may be intended by the parties to be of a

fundamental nature, e.g., quality of the goods to be supplied, the breach of which, therefore, will be

regarded as a breach of the contract. Some may be intended by the parties to be binding, but of a

subsidiary or inferior character, e.g., time of payment, so that a breach of these terms will not put an

end to the contract but will make the party committing the breach liable to damages. The former

stipulations are called ‘conditions’ and the latter ‘warranties’.

Difference between conditions and warranty

Condition: A condition is a stipulation which is essential to the main purpose of the contract, the

breach of which gives rise to a right to treat the contract as repudiated [Sec. 12(2)].

Thus, a condition is regarded as the very basis or foundation of the contract. If there is a breach

of a condition, the contract will fail and it will entitle the aggrieved party to put an end to thecontract.

Example: B asked a car dealer to suggest him a suitable car for touring purposes. The dealersuggested to buy a "Buggatti" car. B accordingly purchased the car but found it unfit for the

purpose. Held, the suitability of the car for touring purposes was so important that its non-fulfdment defeated the very purpose. Hence B could return the car and get back the price [Baldry

v. Marshal.

Warranty: A warranty is a stipulation collateral to the main purpose of the contract. The breach

of which gives rise to a claim for damages but not a right to reject the goods and treat thecontract as repudiated [Sec. 12(3)].



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A warranty is not regarded as the very basis of a contract or its foundation. Hence a breach of

warranty does not give the aggrieved party, a right to reject the goods and repudiate the contract.The party will have to accept the goods but can claim damages for breach of warranty.

It should be noted that whether a stipulation in a contract of sale is a condition or a warranty

depends in each case on the construction of the contract. A stipulation may be a condition,

though called a warranty in the contract and vice-versa [Sec. 12(4)].

Breach of condition to be treated as breach of warranty (Sec.13). Under certain circumstances a

breach of condition is to be treated as a breach of warranty, i.e., the right to repudiate the contractis deemed to have been lost. These circumstances are:

i) Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may

either (a) waive the condition, or (b) elect to treat the breach of the condition as a breach of

warranty. In such situations, the buyer is active and is either waiving the condition or electing to

treat the breach of condition as a breach of warranty. If the buyer decides to waive the condition,he cannot later on insist that the condition be fulfilled. Where the buyer treats the breach of

condition as a breach of warranty, he has to give a notice to the seller to that effect.

ii) There is also a compulsory treatment of breach of condition as a breach of warranty. Where

the contract of sale is not severable and the buyer has accepted the goods or part thereof, the

breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty.However, the agreement may provide otherwise, i.e. may permit repudiation of the contract in

spite of the acceptance of the goods by the buyer.

Express and implied conditions and warranties. Conditions and warranties may be either

express or implied. They are said to the „express‟ when the terms of the contract expressly, provide for them. They are said to be „implied‟ when the law deems their existence in the

contract even without their actually having been put in the contract. However, an impliedcondition or warranty may be negative by an express term to the contrary. Sec.62 recognizes the

following two principles: (i) what is expressed makes what is implied to cease and (ii) custom

and agreement overrule law.

Express condition or warranty. These may be of any kind that the parties may choose to agree

upon, e.g., it may be agreed that delivery of goods shall be made or taken on or before a certaindate. Similarly, in a contract of sale of a car, express warranty as to its soundness may be

incorporated.

Implied conditions and warranties [Secs.14-17]. Implied conditions and warranties are deemed

to be incorporated by law in every contract of sale of goods unless the terms of the contract show

a contrary intention. The implied conditions: (i) condition as to title (Sec.14), (ii) sale by

description (Sec.15), (iii) condition as to quality or fitness for buyer‟s purpose (Sec.16(1)), (iv)condition as to merchantable quality [Sec.16(2)],

(v) condition as to wholesomeness, (vi) implied condition in the case of sale by sample (Sec.17),

(vii) implied condition in the case of sale by sample as well as description (Sec.15).

Doctrine of caveat emptor



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The doctrine of caveat emptor is a fundamental principle of the law of sale of goods. It means

„CAUTION BUYER‟, i.e., „let the buyer beware‟. In other words, it is no part of the seller‟s dutyto point out defects of his own goods. The buyer must inspect the goods to find out if they will

suit his purpose.

5) What is meant by Memorandum of Association? Explain in brief.

Answer:

Meaning and purpose

The Memorandum of Association of a company is its charter which contains the fundamentalconditions upon which alone the company can be incorporated. It tells us the objects of the

company‟s formation and the utmost possible scope of its operations beyond which its actions

cannot go. Thus, it defines as well as confines the powers of the company. If anything is done

beyond these powers, that will be ultra vires (beyond powers of) the company and so void.

The memorandum serves a two-fold purpose. It enables shareholders, creditors and all those who

deal with the company to know what its powers are and what is the range of its activities. Thus,the intending shareholder can find out the field in, or the purpose for which his money is going to

be used by the company and what risk he is taking in making the investment. Also, any one

dealing with the company, say, a supplier of goods or money, will know whether the transaction

he intends to make with the company is within the objects of the company and not ultra virus itsobjects.

Form and contents

Sec.14 requires that the memorandum of a company shall be in such one of the Forms in Tables

B, C, D and E in Schedule I to the Act, as may be applicable in the case of the company, or in

Forms as near thereto as circumstances admit. Sec.15 requires the memorandum to be printed,divided into paragraphs, numbered consecutively and signed by at least seven persons (two in the

case of a private company) in the presence of at least one witness, who will attest the signature.

Each of the members must take at least one share and write opposite his name the number of shares he takes. Sec.13 requires the memorandum of a limited company to contain: (i) the name

of the company, with „limited‟ as the last word of the name in the case of a public company and

„private limited‟ as the last words in the case of a private company; (ii) the name of the State, inwhich the registered officer of the company is to be situated; (iii) the objects of the company,

stating separately „Main objects‟ and „other objects‟; (iv) the declaration that the liability of themembers is limited; and (v) the amount of the authorised share capital, divided into shares of

fixed amounts. These contents of the memorandum are called compulsory clauses and areexplained below:

The name clause. The promoters are free to choose any suitable name for the company

provided:

(a)the last word in the name of the company, if limited by shares or guarantee is „limited‟ unless

the company is registered under Sec.25 as an „association not for profit‟ [Sec.13(1) (a) &Sec.25].



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(b) In the opinion of the Central Government, the name chosen is not undesirable [Sec.20 (1)].

Too similar name. In case of too similar names, the resemblance between the two names must be

such as to be calculated to deceive. A name shall be said to be calculated to deceive where it

suggests some connection or association with the existing company.

Publication of name (Sec.147). Every company shall: (a) paint or affix its name and the address

of its registered office and keep the same painted or affixed, on the outside of every office orplace of business in a conspicuous position in letters easily legible and in the language in general

use in the locality.

Alteration of memorandum

Sec.16 provides that the company cannot alter the conditions contained in memorandum except

in the cases and in the mode and to the extent express provision has been made in the Act. These

provisions are explained herein below:

Change of name. Sec.21 provides that the name of a company may be changed at any time bypassing a special resolution at a general meeting of the company and with the written approval of

the Central Government. However, no approval of the Central Government is necessary if the

change of the name involves only the addition or deletion of the word „private‟ (i.e., when public

company is converted into a private company or vice versa).

The change of name must be communicated to the Registrar of Companies within 30 days of the

change. The Registrar shall then enter the new name on the register in the place of the old nameand shall issue a fresh certificate of incorporation with necessary alterations [Sec.23 (1)]. The

change of name becomes effective on the issue of fresh certificate of incorporation.

Change of registered office. The procedure depends on whether the change is within the jurisdiction of same registrar of companies (Sec.146) or whether the shifting is to the jurisdiction

of another registrar of companies in the same state (Sec.146 and Sec.17A). This may include:

(a)Change of registered office from one premises to another premises in the same city, town or

village. The company may do so anytime. A resolution passed by the Board of directors shall be

sufficient. However, notice of the change should, within 30 days after the date of the change, begiven to the Registrar who shall record the same (Sec.146).

(b) Change of registered office from one town or city or village to another town or city or

village in the same State (Sec.146). In this case, the procedure is:(i) A special resolution is required to be passed at a general meeting of the shareholders;

(ii) A copy of it is to be filed with the Registrar within 30 days.

(iii) Within 30 days of the removal of the registered office, notice of the new location has to be

given to the Registrar who shall record the same.



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(c) Shifting of the registered office from one place to another within the same state (Sec.17A):

The shifting of the registered office by a company from the jurisdiction of one registrar of companies to the jurisdiction of another registrar of companies within the same state shall (in

addition to requirements under Sec.146) also require confirmation by the Regional Director. For

this purpose, an application is to be made in the prescribed form and the confirmation shall be

communicated within four weeks. Such confirmation is required to be field within two monthswith the registrar of companies who shall register and certify the same within one month. Such

certificate shall be conclusive evidence of the compliance of all requirements under the Act.

6) Write short note on Right to Information Act.

Answer:

Right to Information Act

Right to information is a part of fundamental rights under Article 19 (1) of the Constitution.

Article 19 (1) says that every citizen has freedom of speech and expression. As early as in 1976,the Supreme Court said that people cannot speak or express themselves unless they know. India

is a democracy and people are the masters. Therefore the masters have the rights to know how

the Govts., meant to serve them, are functioning.

In Indian democratic system, the right of every citizen to know information is no doubt a

revolutionary step. Since long the officials in the name of administrative secrecy hesitated todisclose information and thereby kept in darkness to general public about important decision of

Govt. & other administrative bodies. This has widened the path of corruption in manifold. The

main aim of this act is to eradicate the existing practice of concealing facts & events and to

empower every citizen to exercise their legal right in obtaining information under RTI Act, 2005.

The ideal objectives of the RTI Act are to promote transparency and accountability in the

working of public authority and to set up a practical regime for giving citizens access toinformation under the control of public authorities.

RTI Act, 2005 was implemented in our country on 15th June, 2005 and became operational on

12.10.2005. The act extends to the whole of India except the State of Jammu and Kashmir.

What rights are available under RTI Act, 2005

Right to Information Act, 2005 empowers every citizen to:

Ask any questions from the Government or seek any information.

Take copies of any Govt. documents.

Inspect any Govt. documents.

Inspect any Govt. works.

Take samples of materials of any Govt. work.



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Coverage of the Act: The RTI Act covers all level of Govt. – Center, State, District and Local

self Governing Bodies like Panchyat and Municipal bodies. It also covers NGOs – that arefinanced substantially with public funds provided by Govt. Every citizen of India are empowered

to seek information from public authority. Information must be shared for the interest of public

as the purpose of this Act is to evolve an interface between public authority and citizen. Since the

Act imposes liability on public authority, it should not be misinterpreted rather it makes theadministration more responsive and removes sloth. Maximum possible information must be

disclosed voluntarily. For this openness and change of attitude is required.

legal aspects of business - 2012 nov sem

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