mi0051- set 1
TRANSCRIPT
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Q1. Discuss the nature and significance of business law?
Answer:
The term law is used in many senses: you may speak of the law of physics, mathematics,
science, or the laws of the football or health. In its widest sense, law means any rule of
conduct, standard or pattern, to which actions are required to conform; if not conformed,
sanctions are imposed. When we speak of the law of a State, we use the term law in a special
and strict sense.
Significance of law
1. Law is a body of rules. These rules prescribe the conduct, standard or pattern to whichactions of the persons in the state are required to conform. However, all rules of conduct do
not become law in the strict sense. We resort to various kinds of rules to guide our lives. For
example, our conduct may be guided by a rule such as do not be arrogant or do not be
disrespectful to elders or women. These are ethical or moral rules by which our daily lives
are guided. If we do not follow them, we may lose our friends and their respect, but no legal
action can be taken against us.
2. Law is for the guidance or conduct of personsboth human and artificial. The law is notmade just for the sake of making it. The rules embodied in the law are made, so as to
ensure that actions of the persons in the society conform to some predetermined standard
or pattern. This is necessary so as to ensure continuance of the society. No doubt, if citizens
are self-enlightened or self-controlled, disputes may be minimized, but will not be
eliminated. Rules are, therefore, drawn up to ensure that members of the society may live
and work together in an orderly manner. Therefore, if the rules embodied in the law are
broken, compulsion is used to enforce obedience, and certain consequences ensue.
3. Law is imposed.Law is imposed on the members to bring about an order in the group,enabling it to continue and prosper. It is not something which may or may not be obeyed at
the sweet will of the members of society. If you cannot impose a rule it is better not to have
it. Thus, law is made obligatory on the members of the society.
4. Law is enforced by the executive. Obviously, unless a law is enforced it ceases to be a lawand those persons subject to it will regard it as dead. For example, if a steals Bs bicycle; he
may be prosecuted by a court and may be punished. Also, the court may order the
restitution of the bicycle to its rightful owner i.e., B. If the government passes many laws
but does not attempt to enforce them, the citizens lose their respect for government and
law, and society is greatly weakened. The force used is known as sanction which the state
administers to secure obedience to its laws.
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5. The state. A state is a territorial division, with people therein subject to a uniform systemof law administered by some authority of the state. Thus, law presupposes a state.
6. Content of law. The law is a living thing and changes throughout the course of history. Lawresponds to public opinion and changes accordingly. Law can never be static. Therefore,
amendments are made in different laws from time to time. For example, the Monopolistic
and Restrictive Trade Practices Act, 1969, has been subjected to many amendments since
its inception in 1969.
7. Two basic ideas involved in law. The two basic ideas involved in any law are: (i) to maintainsome form of social order in a group and (ii) to compel members of the group to be within
that order. These basic ideas underlie formulation of any rules for the members of a group.
A group is created because first, there is a social instinct in the people to live together and
secondly, it helps them in self-preservation. Rules are made by the members of the group,
so that the group doesnt away.
8. Law is made to serve some purpose which may be social, economic or political. Someexamples of law in the widest sense of the term. Law in its widest sense may include: (i)
Moral rules or etiquettes, the non-observance of which may lead to public ridicule, (ii) Law
of the Land the non-observance of which may lead to arrest, imprisonment, fines, etc., (iii)
Rules of international law, the non-observance of which may lead to social boycott, trade-
sanctions, cold war, hot war, proxy war, etc.
Law and morality
It was stated earlier that one of the characteristics of law is that it is for the guidance or
conduct of persons. This is so in the case of morality also as there is a close relationship
between the two. In fact law not only has its origin in morality, but also is easier to enforce
when people yield to government for moral reasons. However, a person may be morally bound
but not legally. Thus, if a young person does not show respect for an elderly person on the
street, the law will take no action, although he stands condemned by the moral judgment of
people on the street. On the other hand, the law occasionally has to decide on a person who is
not morally at fault. For example, X appoints Y as his agent. Y enters into contact with Z onbehalf of X. Y commits fraud in the transaction and thereby injures Z. X is bound to compensate
Z. Further, there are some actions in which both morality and legality are involved.
Ignorance of law is no excuse
This is the literal translation of maxim ignorantia juris non excusat. Every member of the
society is expected that his actions conform to a set pattern or standard as reflected in legal
rules. For this purpose, he is presumed to know the legal rules. He cannot take the plea that he
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did not know them. No doubt, in practice, he cannot learn and know all the laws of the land,
but he can obtain expert guidance from those who possess legal knowledge. Thus, he has
access to books on law and to those persons who are experts in legal matters. Therefore, the
maxim ignorantia juris non excusatplaces a burden on every member of the society with the
knowledge of law. In other words, Ignorance of law is not a good excuse.
Q2. Define contract of indemnity. Describe the rights of the indemnifier and the indemnity
holder.
Answer:
Contract of indemnity is a contract whereby one party promises to save the other from loss
caused to him (the promisee) by the conduct of the promisor himself or by the conduct of any
other person. A contract of insurance is a glaring example of such type of contracts. A contract
of indemnity may arise either by (i) an express promise or (ii) operation of law, e.g., the duty ofa principal to indemnify an agent from consequences of all lawful acts done by him as an agent.
The contract of indemnity, like any other contract, must have all the essentials of a valid
contract. These are two parties in a contraction of identity indemnifier and indemnified. The
indemnifier promises to make good the loss of the indemnified (i.e., the promisee).
Example: A contracts to indemnify B against the consequences of any preceding which C may
take against B in respect of a certain sum of Rs 200. This is a contract of indemnity.
Rights of the indemnified (i.e., the indemnity holder)
He is entitled to recover from the promisor: (i) All damages which he may be compelled to pay
in any suit in respect of any matter to which the promise to indemnify applies; (ii) All costs of
suit which he may have to pay to such third party, provided in bringing or defending the suit (a)
he acted under the authority of the indemnifier or (b) if he did not act in contravention of
orders of the indemnifier and in such a way as a prudent man would act in his own case; (iii) All
sums which may have been paid under the terms of any compromise of any such suit, if the
compromise was not contrary to the orders of the indemnifier and was one which it would have
been prudent for the promise to make.
Rights of the indemnifier
The Act makes no mention of the rights of indemnifier. However, his rights, in such cases, are
similar to the rights of a surety under Sec.141, viz., he becomes entitled to the benefit of all the
securities which the creditor has against the principal debtor whether he was aware of them or
not.
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Q3. What is Partnership? 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. These elements must be present so as to
form a partnership and are discussed below.
1. Partnership is an association of two or more than two persons. There must be at least twopersons 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.3. 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 agreement between two or more persons (who are known as partners after the
partnership comes into existence).
4. The agreement must be to carry on some business. The term business includes everytrade, 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.
5. The agreement must be to share profits of the business. The joint carrying on of a businessalone 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.
6. Example: A, a trader, owed money to several creditors. He agreed to pay his creditors out ofthe 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) 8 H.L.C., 268].
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Formation of partnerships
All the essential elements of a valid contract must be present in a partnership as it is based on
an agreement. Therefore, while constituting a partnership. The following points must be kept in
mind:
1. The Act provides that a minor may be admitted to be benefits of partnership.2. No consideration is required to create partnership. A partnership is an extension of agency
for which no consideration is necessary.
3. The partnership agreement may be express (i.e., oral or writing) or implied and the lattermay be inferred from the conduct or the course of dealings of the parties or from the
circumstances of the case. However, it is always advisable to have the partnership
agreement in writing.
4. An alien friend can enter into partnership, an alien enemy cannot.5. A person of unsound mind is not competent to enter into a partnership.6. A company, incorporated under the Companies Act, 1956 can enter into a contract of
partnership.
Duration of partnership
The duration of partnership may or may not be fixed. It may be constituted even for a particular
adventure.
Partnership at will
In accordance with Sec.7, a partnership is called a partnership at will where; (i) it is not
constituted for a fixed period of time and (ii) there is no provision made as to the determination
of partnership in any other way. Therefore such a partnership has no fixed or definite date of
termination. Accordingly death or retirement of a partner does not affect the continuance of
such a partnership.
Particular partnership
In accordance with Sec.8 a particular partnership is one which is formed for a particular
adventure or a particular undertaking. Such a partnership is usually dissolved on the completion
of the adventure or undertaking.
Limited partnership
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In this type of partnership, the liability of certain partners is limited to the amount of capital
which they have agreed to contribute to the business. In a limited partnership, there will be at
least one general partner whose liability is unlimited and one or more special partners whose
liability is limited.
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Q4. What remedies are available to a seller for breach of contract of sale?
Answer:
Remedies for Breach of a Contract
In addition to the rights of a seller against goods provided in Secs.47 to 54, the seller has the
following remedies against the buyer personally. (i) suit for price (Sec.55); (ii) damages for non-
acceptance of goods (Sec.56); (iii) suit for interest (Sec.56).
Suit for price (Sec.55)
Where under a contract of sale the property in the goods has passed to the buyer and the
buyer wrongfully neglects or refuses to pay the price, the seller can sue the buyer for the price
of the goods. Where the property in goods has not passed to the buyer, as a rule, the seller
cannot file a suit for the price; his only remedy is to claim damages.
Example: A sold certain goods to B for Rs 5,000 and the price was agreed to be paid before the
expiry of ten days of the contract. B fails to pay the price within the stipulated time. A can file asuit for price against B even though the goods have not been delivered or the property in goods
has not been passed to B.
Suit for damages for non-acceptance (Sec.56)
Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may
sue him for damages for non-acceptance. Where the property in the goods has not passed to
the buyer and the price was not payable without passing of property, the seller can only sue for
damages and not for the price. The amount of damages is to be determined in accordance with
the provisions laid down in Sec.73 of the Indian Contract Act, 1872. Thus, where there is an
available market for the goods prima facie, the difference between the market price and the
contract price can be recovered.
Suit for interest (Sec.61)
When under a contract of sale, the seller tenders the goods to the buyer and the buyer
wrongfully refuses or neglects to accept and pay the price, the seller has a further right to claim
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interest on the amount of the price. In the absence of a contract to the contrary, the court may
award interest at such rate as it thinks fit on the amount of the price. The interest may be
calculated from the date of the tender of the goods or from the date on which the price was
payable. It is obvious that the unpaid seller can claim interest only when he can recover the
price, i.e., if the sellers remedy is to claim damages only, then he cannot claim interest.
Buyers remedies against seller
The buyer has the following rights against the seller for breach of contract: (i) damages for non-
delivery (Sec.57); (ii) right of recovery of the price; (iii) specific performance (Sec.58); (iv) suit
for breach of condition; (v) suit for breach of warranty (Sec.59); (vi) anticipatory breach
(Sec.60); (vii) recovery of interest (Sec.61).
Q5. Examine the rights of a consumer enshrined under the Consumer Protection Act, 1986.
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 the case 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 ofgoods 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 atappropriate 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 orrestrictive 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 aninformed consumer.
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Q6. Write short notes on the following
a) Copy rightb) License
Answer:
a) Copy rightThe 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 the work, 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 formincluding depiction 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 aphotograph of 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 embodyingit; (ii) to sell or give on hire, or offer for sale or hire, any copy of the sound recording
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regardless of whether such copy has been sold or given on hire on earlier occasions;
(iii) to communicate the sound recording to the public.
b) LicenseSec.30 provides that the owner of the copyright in any existing work or the prospective ownerof the copyright in any future work may grant any interest in the right by license in writing
signed by him or by his duly authorized agent. But in the case of a licence relating to copyright
in any future work, the licence shall take effect only when the work comes into existence.
Compulsory license in works withheld from public
Sec.31 provides that at any time during the term of copyright in any Indian work which has
been published or performed in public a complaint may be made to the Copyright Board that
the owner of copyright in the work (a) has refused to re-publish or allow the republication of
the work or has refused to allow the performance in public of the work and by reason of such
refusal the work is withheld from the public; or (b) has refused to allow communication to the
public by broadcast of such work or in the case of a sound recording the work recorded in such
sound recording, on terms which the complainant considers reasonable.
Compulsory License in unpublished Indian works (Sec.31A)
Where in the case of an Indian work, the author is dead or unknown or cannot be traced or the
owner of the copyright in such work cannot be found, any person may apply to the Copyright
Board for a licence to publish such work or translation thereof in any language. Before makingan application, the applicant shall publish his proposal in one issue of a daily newspaper in the
English language having circulation in the major part of the country and where the application
is for the publication of a translation in any language, also publish his proposal in one issue of
any daily newspaper in that language.
License to produce and publish translation (Sec.32)
Any person may apply to the Copyright Board for a licence to produce and publish a translation
of a literary or dramatic work in any language after a period of 7 years for the first publication
of the work. Also, an application may be made for a licence to translate foreign literary or
dramatic work, after three years from its publication. Every application shall state the proposed
retail price of copy of the translation of the work.