ASSIGNMENTSUBJECT CODE & NAME: MB0051 LEGAL ASPECTS OF BUSINESS Q1. Explain the performance of contracts.Ans.Definition: Sections 37-67 of the Contracts Act deal with the performance of a contract. A contract creates obligations. Performance of a contract takes effect when the parties to the contract fulfill their obligations within the time and manner specified under the contract. The parties to a contract must either perform or offer to perform their respective promises unless such performance is dispensed with or excused under the provisions of law (Section 37).Offer of performance: It may happen that the promisor offers performance of his/her obligation under the contract at the proper time and place, but the promisee refuses to accept the performance. This is called tender or attempted performance. If a valid tender is made and is not accepted by the promisee, the promisor shall not be responsible for non-performance nor shall he/she lose his/her rights under the contract (Section 38).Onus of performance: The promise may be performed by the promisor himself/herself, his/her agent or his/her legal representative. In case there was an intention of the parties that the promise must be performed by the promisor himself/herself, such a promise is to be performed by him/her only. Thus, where A promises to paint a pitcure for B, then A must perform this promise personally. If there is no such intention of the parties, then the promisor may employ a competent person to perform the promise. If A had promised to deliver some items of grocery to B, A may perform this promise either personally or have it delivered to B through someone. In case of death of the promisor, the legal representative must perform the promise unless a contrary intention is mentioned in the contract.

Q2. Elaborate the rights of surety.Ans.Rights against the creditor: In case of fidelity guarantee, the surety can direct can direct a creditor to dismiss the employee whose honesty he/she has guaranteed, in the event of proven dishonesty of the employee. The creditors failure to do so will exonerate the surety from his/her liability.Rights against the principal debtor: Right of subrogation: Section 140 provides that where a surety has paid the guaranteed debt on the due date or has performed the guaranteed duty on the default of the principal debtor, he/she is invested with all rights that the creditor has against the debtor. In other words, the surety is subrogated to all rights that the creditor had against the principal debtor. Hence, if the creditor loses or without the consent of the surety parts with any securities (Whether known to the surety or not), the surety is discharged to the extent of the value of such securities (Section 141). Further, the creditor must hand over to the surety the securities in the same condition as they formerly stood in his/her hands. Right to be indemnified: The surety has a right to recover from the principal debtor the amount that he/she has rightfully paid under the contract of guarantee.Rights against co-sureties: Right of contribution: Where a debt has been guaranteed by more than one person, they are called co-sureties. Section 146 provides for a right of contribution between them. When a surety has paid more than his/her share or a decree has been passed against the surety for more than his/her share, he/she has a right of contribution from the other sureties who are equally bound to pay with him/her.Example: A, B and C are sureties to D for Rs. 3,000 lent to E.E defaults in making the payment. A, B and C are liable to pay Rs. 1,000 each, and if any one of them has to pay more than his/her share, i.e. Rs. 1,000 he/she can claim contribution from the others.

Q3. Discuss the termination of bailment.Ans.A contract of bailment is terminated under the following circumstances: On the expiry of the stipulated period: Where a bailment is for a specific period, it comes to an end on the expiry of the specified period.Example: A room cooler is hired by X from Y for six months. On the expiry of six months, X must return the cooler to Y.

On the accomplishment of the specified purpose: In case the bailment is for specific purpose, it terminates as soon as the purpose is accomplished. When bailees act is inconsistent with the conditions of bailment: If the bailee does any act with regard to the goods bailed, inconsistent with the conditions of the bailment, the bailor may terminate the bailment( section 153).Example: A lets B for hire a horse for his own riding. B drives the horse in his carriage. A will have the option to terminate the bailment. A gratuitous bailment may be terminated at any time (Section 159): However, if premature termination causes any loss to the bailee exceeding the benefit derived from the bailment, the bailor must indemnify. Further, a gratuitous bailment terminates by death of either the bailor or the bailee ( Section 162).

Q4. Explain the performance of a contract of sale of goods.Ans.The contract of sale of goods is to be performed. In this context, Sections 31-44 provide for duties of the seller and the buyer and the rules regarding delivery of goods.Duties of the seller and the buyer: It is the duty of the seller to deliver goods and the buyer to accept and pay for them, in accordance with the terms of the contract of sale ( Section 31). However, no delivery need be given, if the buyer is not willing to pay the price, nor need the buyer pay the price, unless the seller is ready and willing to give delivery, as unless otherwise agreed, delivery and payment of price are concurrent conditios (senction 32).The seller has the duty of giving delivery of goods according to the Terms of the contract, and Rules contained in the Act.The buyer of goods has to pay for the goods, accept delivery and pay compensation to the seller in case he/she wrongfully refuses to accept delivery.Delivery: Delivery is defined as a voluntary transfer of possession from one person to another( section 2(2)). Section 33 provides that delivery of goods sold may be made by doing anything that the parties agree, shall be treated sa delivery or which has the effect of putting goods in the possession of the buyer or of any person authorised to hold them on his behalf.Passing of property in goods in the case of foreign trade:There are certain terms that are used in the contract of sale of goods in foreign trade. These terms reflect a number of conditions that are either attached by the parties or by custom and practice of business people.Usually such contracts are: Free on board ( F.O.B) or Free on Airport ( F.O.A), and Cost, Insurance and Freight (C.I.F) and Ex-ship.

Q5. Discuss the law related to the prohibition of anti-competitive agreements.Ans.Section 3 provides for prohibition of entering into anti-competitive agreements. Accordingly no enterprice of person or association of enterprises/persons shall enter into any agreement in respect of production, suppy, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within india. Any agreement entered into in contravertion of this provision shall be void.Further, this section also specifies certain activities that shall be presumed to heve an appreciable adverse effect on competition. Any enterprise or person or association of enterprises/persons, including cartels, shall be presumed to heve an appreciable adverse effect on competition if they do any of the following: Directlyor indirectly determine purchase or sale prices Limit or control production,supply, markets, technical development, investment or provision of services Share the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods and services, or number of customers in the market or any other similar way Directly or indirectly results in bid rigging or collusive biddingFactors that adversely affect competiton: Section 19 enumerates the factors that are to be kept in mind by the commission while determining not under section 3.

Q6.Explain the need and types of meetings.Ans.Need for meeting: A company is an artificial person and therefore, must act through some human intermediary. The various provisions of law empower shareholders to do certain things. They are specifically reserved for them to be done in companys general meetings. Section 291 empowers the board of directors to manage the affirs of the company. In this context, meetings of shareholders and directors become necessary. The Act has made provisions for following different types of meetings of shareholders: (i) Statutoy meetings; (ii) Annual General meeting; (iii) Extraordinary General meeting; and (iv) Class Meetings.Statutory meetings: The most important legal provisions regarding statutory meetings are: It is required to be held only by a public company having share capacity. A private company or a public company rigistered without share capital is under no obligation to hold such a meeting. It must be held within a period of not less than month and not more than six months from the date on which the company is entitled to commence business. At least 21 days before the day of meeting, a notice of the meeting is to be sent to every member starting it to be a statutory meeting.Annual general meeting (AGM) (Sections 166-168):As the name signifies, this is an annual meeting of a company. The provisions relating to this meeting are: Every company, where public or private, having a share capital or not, limited or unlimited must hold this meeting. The meeting must be held in each calendar year and not more than 15 months shall elapse between two meetings. However, the first AGM may be held within 18 months from the date of its incorporation and if such general meeting is held within that period, it need not hold any such meeting in the year of its incorporation or in the following year. The maximum gap between two such meetings may be extended by three months by taking permission of the registrar, who may so allow for any special reason. The meetings must be heldi. On a day that is not a public holidayii. During business hoursiii. At the registered office of the company.Extraordinary meeting (EGM) section 169:Clause 47 of table A (section -1) provides that all general meetings other than AGMs shall be called the EGMs. The legal provisions as regards such meetings are: EGM is convened for transacting some special or urgent business that may arise in between two AGMs, for instance, change in the objects or shift of registered office or alteration of capital. All business transacted at such meetings is called special business. An EGM may be called by:i. Directors of their own accordii. Directors on requisitioniii. Requisitionists themselvesiv. The TribunalClass Meetings: A company has two classes of shares- eauality shares and preference share. The class meetings are held for these different classes of shareholders, as and when their rights are affected.