unit – 1. law of contract - general principles.(indian
TRANSCRIPT
19-05-2020
UNIT – 1. LAW OF
CONTRACT -GENERAL
PRINCIPLES.(INDIAN CONTRACT ACT, 1872)
BY PROF. SWATI
BHALERAO
(DNYANSAGAR ARTS
AND COMMERCE
COLLEGE, BALEWADI,
PUNE – 45)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
DEFINITION, CONCEPT AND KINDS OF CONTRACT
• As per Section 2 (h) of the Indian Contract Act – An Agreement is that which is
enforceable by the law. An agreement accordingly is an assertion of the object of which is
to make a legitimate commitment i.e. an obligation enforceable by law
• All Contracts are agreements, but all agreements are not contracts.
• A contract is an agreement between two or more parties to perform a service, provide a
product or commit to an act and is enforceable by law. There are several types of
contracts, and each have specific terms and conditions.
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TYPES OF CONTRACT
• A - From the perspective of Legality
• Valid Contract
• Voidable contract
• Void Contracts
• Unenforceable contract
• B - From the perspective of execution
• Executed Contract
• Executory Contract
• Unilateral Contract
• Bilateral Contract
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OFFER AND ACCEPTANCE.
• Offer 2(a): When one person signifies to another his willingness to do or to abstain from
doing anything, with a view to obtaining the assent of that other to such act or
abstinence, he is said to make a proposal.
• An "offer" is the starting point in the process of making an agreement
• Acceptance 2(b): When the person to whom the proposal is made, signifies his assent
there to, the proposal is said to be accepted.
• An agreement emerges from the acceptance of the offer.
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CAPACITY OF PARTIES
• Capacity to Contract
• According to Section 11, “Every person is competent to contract who is of the age of
majority according to the law to which he is subject, and who is of sound mind and is not
disqualified from contracting by any law to which he is subject.”
• we have three main aspects:
• 1. Attaining the age of majority
• 2. Being of sound mind
• 3. Not disqualified from entering into a contract by any law that he is subject to
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CONSIDERATION
• According to Section 2(d), Consideration is defined as: "When at the desire of the
promisor, the promisee or any other person has done or abstained from doing, or does or
abstains from doing, or promises to do or abstain from doing something, such act or
abstinence or promise is called consideration for the promise". Consideration means
'something in return'.
• Mutual and lawful consideration for agreement, it should be enforceable by law. Hence,
intention should be to create legal relationship. Agreements of social or domestic nature
are not contracts, Parties should be competent to contract, and contract should not have
been declared as void under Contract Act or any other law is also important elements of a
valid contractTY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
CONSENT AND FREE CONSENT.
• According to Section 13, " two or more persons are said to be in consent when they agree
upon the same thing in the same sense (Consensus-ad-idem). According to Section 14,
• Elements Vitiating free Consent
• Coercion (Section 15)
• Undue influence (Section 16)
• Fraud (Section 17)
• Misrepresentation (Section 18)
• Legality of object and consideration
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
19-05-2020
UNIT 2. - LAW OF PARTNERSHIPS
BY PROF. SWATI
BHALERAO
(DNYANSAGAR ARTS
AND COMMERCE
COLLEGE, BALEWADI,
PUNE – 45)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
INTRODUCTION
• The Indian Partnership Act 1932 defines a partnership as a relation between two or
more persons who agree to share the profits of a business run by them all or by one or
more persons acting for them all.
• What is Partnership?
• A partnership is a kind of business where a formal agreement between two or more
people is made and agreed to be the co-owners, distribute responsibilities for running an
organization and share the income or losses that the business generates.
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FEATURES OF PARTNERSHIP:
• Following are the few characteristics of a partnership:
• Contract or Formation
• Unlimited Liability
• Continuity
• Number of Members
• Mutual Agency
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
TYPES OF PARTNERSHIPS
• General Partnership
• Limited Partnership
• Limited Liability Partnership
• Partnership at Will
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LIMITED LIABILITY PARTNERSHIP ACT 2008
• A typical partnership form of the business suffers from the problem of unlimited liability.
Liabilities of partners of a firm extend right up to their personal assets. This makes
regular partnerships undesirable for a lot of entrepreneurs. One solution for this issue
exists in the form of Limited Liability Partnerships, better known as LLP.
• The Parliament of India passed the Limited Liability Partnership Act in 2008 to govern
LLP businesses in India. According to Section 2 of this law, an LLP is a partnership
registered under the Act. Further, an LLP agreement means a written agreement either
between an LLP’s partners or between the LLP itself and its partners. This agreement
defines the rights, liabilities, duties, and powers of the partners.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
DISTINCT FEATURES OF AN LLP
1. Separate legal entity
2. Limited liability of partners
3. Sharing of profits
4. Partners of LLPs
The salient features of the Limited Liability Partnership Act, 2008, are as
follows:-
1. Body corporate 2. Mutual rights and duties of partners 3. Separate legal existence 4.
Minimum partners 5. Perpetual succession
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
DESIGNATED PARTNERS
• [Section 2(1)(o)] "Partner" in relation to LLP means a person who becomes a partner in
a LLP in accordance with the LLP agreement.
• [Section 2(1)(q)] DESIGNATED PARTNERS [SECTION 7] LLP shall have at least two
"designated partners" who are individuals and at least one of them shall be "resident in
India".
• "Resident in India" means a person who has stayed in India for minimum 182 days during
the immediately preceding 1 year. Designated partner is responsible for compliance with
the provisions of LLP Act. Designated Partner is required to obtain Designated Partner
Identification Number [DPIN] from the Central Government.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
INCORPORATION OF LLP
• INCORPORATION OF LLP [SECTIONS 11 TO 21] Procedure for incorporation of LLP is
similar to the procedure for incorporation of a company under the Companies Act, 1956.
Applicants are first required to file the application for reservation of name with the Registrar
of Companies [ROC]
• Any entity (body corporate/registered partnership firm) which has a name similar to the
name of LLP which has been incorporated subsequently may seek change of name of such LLP
through ROC within 24 months from date of registration of such LLP
• No person shall carry on business under any name/title which contains the words "Limited
Liability Partnership" or "LLP" without duly incorporating it as LLP under the LLP Act
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
CONTRIBUTION BY PARTNER [SECTIONS 32 AND 33]
• A contribution of a partner to the capital of LLP may consist of any of the –
• — tangible, movable or immovable property
• — intangible property
• — Other benefit to the LLP including money, promissory notes, contracts for services
• performed or to be performed. The obligation of a partner for the contribution shall be
as per the LLP agreement
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AUDIT/FINANCIAL DISCLOSURES [SECTIONS 34 AND 35]
• LLP shall maintain the prescribed books of accounts relating to its affairs on cash or
accrual basis and according to the double entry system of accounting.
• The accounts of every LLP are required to be audited, except in following situations:
• — When turnover does not exceed Rs. 40,00,000/- in any financial year; or
• — Where contribution does not exceed Rs. 25,00,000/-
• Central Government has powers to exempt certain class of LLP from requirement of
compulsory audit.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
19-05-2020
UNIT 3. SALE OF GOODS.(SALE OF
GOODS ACT,1930)
BY PROF. SWATI
BHALERAO
(DNYANSAGAR ARTS
AND COMMERCE
COLLEGE, BALEWADI,
PUNE – 45)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
INTRODUCTION
• The Sale of Goods Act, 1930 herein referred to as the Act, is the law that governs the sale of
goods in all parts of India. It doesn’t apply to the state of Jammu & Kashmir. The Act defines
various terms which are contained in the act itself.
• . Buyer And Seller
• As per the sec 2(1) of the Act, a buyer is someone who buys or has agreed to buy goods.
Since a sale constitutes a contract between two parties, a buyer is one of the parties to the
contract.
• The Act defines seller in sec 2(13). A seller is someone who sells or has agreed to sell goods.
For a sales contract to come into existence, both the buyers and seller must be defined by
the Act. These two terms represent the two parties of a sales contract.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
GOODS
One of the most crucial terms to define is the goods that are to be included in the contract for
sale. The Act defines the term “Goods” in its sec 2(7) as all types of movable property.
• 1. Existing Goods
• The goods that are referred to in the contract of sale are termed as existing goods if they are
present (in existence) at the time of the contract
• . In sec 6 of the Act, the existing goods are those goods which are in the legal possession or
are owned by the seller at the time of the formulation of the contract of sale. The existing
goods are further of the following types
• A) Specific Goods
• According to the sec 2(14) of the Act, these are those goods that are “identified and
agreed upon” when the contract of sale is formed. For example, you want to sell your
mobile phone online. You put an advertisement with its picture and information. A buyer
agrees to the sale and a contract is formed. The mobile, in this case, is specific good.
• B) Ascertained Goods:
• This is a type not defined by the law but by the judicial interpretation. This term is used
for specific goods which have been selected from a larger set of goods
• C) Unascertained Goods:
• These are the goods that have not been specifically identified but have rather been left to
be selected from a larger group
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• Delivery
• The delivery of goods signifies the voluntary transfer of possession from one person to
another. The objective or the end result of any such process which results in the goods
coming into the possession of the buyer is a delivery process
• There are various forms of delivery as follows:
• Actual Delivery: If the goods are physically given into the possession of the buyer, the
delivery is an actual delivery.
• Constructive delivery: The transfer of goods can be done even when the transfer is
effected without a change in the possession or custody of the goods.
• Symbolic delivery: This kind of delivery involves the delivery of a thing in token of a
transfer of some other thing.
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THE DOCUMENT OF TITLE TO GOODS
• From the Sec 2(4) of the act, we can say that this “includes the bill of lading, dock-
warrant, warehouse keeper’s certificate, railway receipt, multimodal transport document,
warrant or order for the delivery of goods and any other document used in the ordinary
course of business as proof of the possession or control of goods or authorizing or
purporting to authorize, either by endorsement or by delivery, the possessor of the
document to transfer or receive goods thereby represented.”
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Mercantile Agent [Section 2(9)]
• Mercantile agent is someone who has authority in the customary course of business, either to sell or
consign goods under the contract on behalf of the one or both of the parties. Examples include
auctioneers, brokers, factors etc.
Property [Section 2(11)]
• In the Act, property means ‘ownership’ or the general property i.e. all ownership right of the goods. A sale
constitutes the transfer of ownership of goods by the seller to the buyer or an agreement of the same.
Insolvent [Section 2(8)]
• The Act defines an insolvent person as someone who ceases to pay his debts in the ordinary course of
business or cannot pay his debts as they become due, whether he has committed an act of insolvency or
not.
Price [Section 2(10)]
• In the Act, the price is defined as the money consideration for a sale of goods.
Quality of Goods
• In Sec 2(12) of the Act, the quality of goods is referred to as their state or condition.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
ESSENTIALS
The five essential features of a contract of sale are as discussed below:
• 1) Two partied
• 2) Subject matter to be goods
• 3) Transfer of ownership of goods
• 4) Consideration is price.
• 5) Essential elements of a valid contract
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
19-05-2020
UNIT 4. E-CONTRACTS (E-TRANSACTIONS/E-
COMMERCE.)
BY PROF. SWATI
BHALERAO
(DNYANSAGAR ARTS
AND COMMERCE
COLLEGE, BALEWADI,
PUNE – 45)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
INTRODUCTION
• E-Contracts are modelled, specified and executed by a software system and were born out of
convenience, the need for speed and efficiency. This article titled ‘E-Commerce and E-Contracts:
Overview’ understands the world of e-commerce and questions the validity of e-contracts in an entirely
online world.
• I. E-Commerce in India
• E-commerce in simple terms refers to the buying and selling of both products and services through the
internet. This essentially includes all commercial transactions that are based on electronic processing and
transmission of data including sound, text and images.
• Additionally, e-commerce also refers to the effects that electronic exchange of commercial information
may have on institutions and processes that support and govern commercial activities.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
TYPES OF ONLINE TRANSACTIONS
• Business to Customer transactions [B2C]
• Business to Business [B2B]
• Customer to Customer [C2C]
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E-CONTRACTS IN INDIA
• An e-contract refers to the computerized facilitation of a contract in a cross-
organizational business progression. It is an incredibly new mechanism in India and
facilitates electronic trading relationships between parties. In essence, it is modelled,
executed, specified, controlled, enacted, monitored and either fully or partially deployed
by a software system.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
19-05-2020
UNIT – 5. CONSUMER
PROTECTION ACT, 1986
BY PROF. SWATI
BHALERAO
(DNYANSAGAR ARTS
AND COMMERCE
COLLEGE, BALEWADI,
PUNE – 45)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
INTRODUCTION
• The Consumer Protection Act, 1986 (COPRA) is an Act of the Parliament of
India enacted in 1986 to protect the interests of consumers in India. It is replaced by The
consumer protection act 2019 It is made for the establishment of consumer councils and
other authorities for the settlement of consumer's grievances and for matters connected
there with it. The act was passed in Assembly in October 1986 and came into force on
December 24, 1986
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
SALIENT FEATURES OF C.P. ACT
• The salient features of Consumer Protection Act (CPA), 1986 are as follows
• Coverage of Items: It applies to all goods, services and unfair trade practices unless
specifically exempted by the Central Government.
• Coverage of Sectors: It covers all sectors-private, public or co-operative.
• Compensatory Nature of Provisions: Many Acts have been passed for the help of
consumers. Consumers enjoy the benefits of these Acts but if a consumer wishes the
Consumer Protection Act can provide extra help. As a result the nature of provisions of this
Act is compensating for the loss or providing extra help. Consumer is totally free to enjoy the
benefits provided in the Act.
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• Three-tier Grievances Redressal Machinery. This is an important landmark legislation in
the field of consumer protection as it provides for establishment of three-tier quasi-judicial
consumer disputes Redressal machinery at the District, States and National levels to render
simple, inexpensive and speedy justice to consumers. It provides for establishment of
consumer protection councils at the central, state and district levels to promote and protect
the rights of consumers and a three-tier quasi-judicial machinery to deal with consumer's
grievances and disputes
• Group of Consumer’s Rights: It provides a statutory recognition to the six rights of
consumers. These rights are related to safety, information, choice, representation, redressal,
education etc.
• Effective Safeguards: This Act provides safety to consumers regarding defective products,
dissatisfactory services and unfair trade practices. So under the purview of this Act there is a
provision to ban all those activities which can cause a risk for consumer.
• Consumer Protection Council: To favour consumer protection and to encourage
consumer’s awareness there is a provision in this Act to establish Consumer Protection
Councils
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DEFINITION OF CONSUMERS
• As per Consumer Protection Act, 1986, “Consumer” means any person who buys or
avails of any service for a consideration which has been paid or promised or partly paid
and partly promised under any system of deferred payment etc. (for details refer to
Section 2(1)(d) of CP Act, 1986).
• A person who buys a good or service for his own personal use and not for further
manufacture is called a consumer.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
DEFINITION OF SERVICE
• "service" means service of any description which is made available to potential users and
includes, but not limited to, the provision of facilities in connection with banking,
financing insurance, transport, processing, supply of electrical or other energy, board or
lodging or both, housing construction, entertainment, amusement or the purveying of
news or other information, but does not include the rendering of any service free of
charge or under a contract of personal service;
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
DEFINITION OF DEFECT AND DEFICIENCY
• "defect"
• means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or
standard which is required to be maintained by or under any law for the time being in force
or under any contract, express or implied or as is claimed by the trader in any manner
whatsoever in relation to any goods or product and the expression "defective" shall be
construed accordingly;
• "deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature
and manner of performance which is required to be maintained by or under any law for the
time being in force or has been undertaken to be performed by a person in pursuance of a
contract or otherwise in relation to any service;
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
DEFINITION OF COMPLAINANT
• complainant" means—
• (i) a consumer; or
• (ii) any voluntary consumer association registered under any law for the time being in force; or
• (iii) the Central Government or any State Government; or
• (iv) the Central Authority; or
• (v) one or more consumers, where there are numerous consumers having the same interest; or
• (vi) in case of death of a consumer, his legal heir or legal representative; or
• (vii) in case of a consumer being a minor, his parent or legal guardian;
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UNFAIR TRADE PRACTICE
An unfair trade practice refers to that malpractice of a trader that is unethical or fraudulent.
These practices cause an inconvenience or grievance to consumers.
Examples of Unfair Trade Practices:
• A dress has been used for 2 months and is now being sold by a seller as a new dress.
• The battery of a mobile phone is guaranteed to work well for one year but wears away in a
month.
• A geyser that is not ISI approved has an ISI mark.
• A table of Rs. 500 is sold online with Rs. 600 delivery charge, but the good is claimed by the
seller to be free of cost.
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RESTRICTIVE TRADE PRACTICES
• Examples of Restrictive Trade Practices:
• A trader accumulates his stock of food grains in order to increase the price of the grains
in the market so that he can sell it at a higher price.
• In order to buy a television from trader X, one needs to buy a table first.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
CONSUMER DISPUTES REDRESSAL AGENCIES
• District Consumer Disputes Redressal Forum (DCDRF): Also known as the "District
Forum" established by the State Government in each district of the State.
• State Consumer Disputes Redressal Commission (SCDRC): Also known as the "State
Commission" established by the State Government in the State.
• National Consumer Disputes Redressal Commission (NCDRC): Established by the
Central Government.
• Video - https://www.youtube.com/watch?v=p2QzY0plaiQ
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
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19-05-2020
UNIT – 6. INTELLECTUAL
PROPERTY RIGHTS
BY PROF. SWATI
BHALERAO
(DNYANSAGAR ARTS
AND COMMERCE
COLLEGE, BALEWADI,
PUNE – 45)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
INTRODUCTION
• What is a property?
• Property designates those things that are commonly recognized as being the possessions of
An individual or a group.
• Properties are of two types - tangible property and intangible property i.e. one that is
physically present and the other which is not in any physical form. Building, land, house, cash,
jewellery are few examples of tangible properties which can be seen and felt physically. On the
other hand there is a kind of valuable property that cannot be felt physically as it does not
have a physical form.
• Intellectual property is one of the forms of intangible property which commands a material
value which can also be higher than the value of a tangible asset or property
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
INTELLECTUAL PROPERTY RIGHTS (IPRS)
• Intellectual property refers to creations of the mind: inventions; literary and artistic works;
and symbols, names and images used in commerce.
• Intellectual property is divided into two categories:
1. Industrial Property includes patents for inventions, trademarks, industrial designs and
geographical indications.
2. Copyright covers literary works (such as novels, poems and plays), films, music, artistic works
(e.g., drawings, paintings, photographs and sculptures) and architectural design. Rights related to
copyright include those of performing artists in their performances, producers of phonograms in
their recordings, and broadcasters in their radio and and television programs.
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
• IP is protected in law by, for example, patents, copyright and trademarks, which
enable people to earn recognition or financial benefit from what they invent or create. By
striking the right balance between the interests of innovators and the wider public
interest, the IP system aims to foster an environment in which creativity and innovation
can flourish.
• Video - https://www.youtube.com/watch?v=hHQWCFE0J84
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TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
WHAT IS THE WORLD INTELLECTUAL PROPERTY ORGANIZATION?
• Established in 1970, the World Intellectual Property Organization (WIPO) is an
international organization dedicated to helping ensure that the rights of creators and
owners of intellectual property are protected worldwide, and that inventors and authors
are therefore recognized and rewarded for their ingenuity. stablished in 1970, the World
Intellectual Property Organization.
• This international protection acts as a spur to human creativity, pushing back the limits of
science and technology and enriching the world of literature and the arts. By providing a
stable environment for marketing products protected by intellectual property, it also oils
the wheels of international trade.
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HOW DOES WIPO PROMOTE THE PROTECTION OF INTELLECTUAL PROPERTY?
• As part of the United Nations system of specialized agencies, WIPO serves as a forum
for its Member States to establish and harmonize rules and practices for the protection
of intellectual property rights. WIPO also services global registration systems for
trademarks, industrial designs and appellations of origin, and a global filing system for
patents. These systems are under regular review by WIPO’s Member States and other
stakeholders to determine how they can be improved to better serve the needs of users
and potential users.
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TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPS)
• Trade-Related Aspects of Intellectual Property Rights (TRIPS) is arguably the
most important and comprehensive international agreement on intellectual
property rights. Member countries of the WTO are automatically bound by
the agreement. The Agreement covers most forms of intellectual property
including patents, copyright, trademarks, geographical indications, industrial
designs, trade secrets, and exclusionary rights over new plant varieties. It
came into force on 1 January 1995 and is binding on all members of the World
Trade Organization (WTO).
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
• Intellectual Property Rights are the rights given to persons/agencies for their
creativity/innovations. These rights usually give the creator, an exclusive right over the use
of his/her creation for a certain period of time. The importance of intellectual property in
India is well established at all levels- statutory, administrative and judicial.
• This Agreement, inter-alia, contains an Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS) which came into force from 1st January 1995. It lays
down minimum standards for protection and enforcement of intellectual property rights
in member countries which are required to promote effective and adequate protection
of intellectual property rights with a view to reducing distortions and impediments to
international trade. The obligations under the TRIPS Agreement relate to provision of
minimum standard of protection within the member countries legal systems and
practices.
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TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
19-05-2020
UNIT 7. NEGOTIABLE
INSTRUMENTS ACT, 1881
BY PROF. SWATI
BHALERAO
(DNYANSAGAR ARTS
AND COMMERCE
COLLEGE, BALEWADI,
PUNE – 45)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
INTRODUCTION
• Negotiable Instrument Is that document which contains a promise by one person to pay a
specific amount to another certain person.
• In simple word, It is a written promise to pay a certain amount by the borrower to the lender
of money or services.
• When the seller sold goods on credit to another person, he has a fear of non-payment of his
due, in this case, negotiable instruments provide the guarantee to the seller for receipt of
payment.
• Negotiable Instruments (Amendment) Bill, 2017 - Aims to amend the Negotiable Instruments
Act, 1881
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CHARACTERISTICS OF NEGOTIABLE INSTRUMENTS
1. It must be a written document
2. It must be an unconditional promise to pay a stated fixed amount of money
3. It must be payable to order or to bearer
4. It must be payable on demand or at a definite time
5. It must be signed by the maker or the drawer
6. It must be freely transferable from one party to another party
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TYPE OF NEGOTIABLE INSTRUMENT: –
• There are following three type of Negotiable Instruments
• Promissory Note
• Bill of Exchange
• Cheque
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PROMISSORY NOTE: –
• A promissory note is an instrument that contains the written and signed promise by the
maker(debtor) to pay a certain amount to the creditor on the specific date or on
demand.
• “A Promissory Note is an writing (not being a bank note or currency note), containing an
unconditional undertaking, signed by the maker to pay a certain sum of money only to or
to the order of a certain person or the bearer of the instrument”.
• -Section 4 of India’s Negotiable Instruments Act, 1881
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TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
BILLS OF EXCHANGE
• A bill of exchange is an instrument that contains a promise to pay some amount of money to a certain
person after a certain period of time. It is generally drawn by the creditor(maker or drawer) on his
debtor(acceptor or drawee) and debtor gives the acceptance to that he will pay the money to the
maker(drawer) after some certain period or specific date. It should be accepted by the person to whom
it is created or by another person on his/her behalf. Without acceptance, this document doesn’t have any
value.
• Definition: –
• “A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker,
directing a certain person to pay a certain sum of money only to, or to the order of, a certain person, or
to the bearer of the instrument.”
-Section 5 of India’s Negotiable Instruments Act, 1881
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
CHEQUE
• The cheque is an instrument in writing which contains an unconditional instruction to a banker (by a
person who has already deposit the amount with a banker), to pay a specific amount to a certain person
or to the order of the certain person or to the bearer of the instrument only on the demand.
• The cheque is the most used type of negotiable instrument. It is simple and easy to use. It is the piece of
paper on which the same of the payer is already mention and he will write the name of the receiver of
the payment and amount to be paid and signed it. The receiver will receive cash from the cheque by
encashing it from the bank.
• “A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise
than on demand and it includes the electronic image of a truncated cheque and a cheque in the
electronic form.”
-Section 6 of India’s Negotiable Instruments Act, 1881
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
CROSSING OF CHEQUES
• Crossing a cheque refers to drawing two parallel transverse lines on the cheque with or
without additional words like “& CO.” or “Account Payee” or “Not Negotiable” between the
lines.
• By using a crossed cheque, one can make sure that the amount specified cannot be en-
cashed but can only be credited to the payee’s bank account.
• Crossing of Cheque is recognized under The Negotiable Instruments Act, 1881.
• The crossing of cheque had developed gradually as a means of protection against misusing of
cheques.
• Video - https://www.youtube.com/watch?v=hotkHSggsng
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
DISHONOUR OF CHEQUE
• This article on “Dishonour of Cheque – Section 138 of the Negotiable instruments
Act” gives a comprehensive overview about all aspects of cheque bouncing and Cheque
Dishonour as per laws in India
• A person suffers a lot if a cheque issued in his favour is dishonoured due to the
insufficiency of funds in the account of the drawer of the cheque.
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WHAT IS ENDORSEMENT?
• A signature authorizing the legal transfer of a negotiable instrument between parties is an
endorsement.
• The act of a person who is holder of a negotiable instrument in signing his or her name on
the back of that instrument, thereby transferring title or ownership. An endorsement may be
made if favour of another individual or legal entity, resulting in a transfer of the property to
that other individual o legal entity.
• Endorsement means signing at the back of the instrument for the purpose of negotiation. The
act of the signing a cheque, for the purpose of transferring to the someone else, is called the
endorsement of Cheque. Section 15 of the Negotiable Instrument Act 1881 defines
endorsement.
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TYPES OF ENDORSEMENT
1. Blank endorsement,
2. Full or Special endorsement,
3. Restrictive endorsement,
4. Partial endorsement,
5. Conditional endorsement,
6. Sans Recourse endorsement
• Video - https://www.youtube.com/watch?v=9ACbabKwAG0 Explanation in Hindi
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19-05-2020
UNIT 8. ARBITRATION & CONCILIATION:
BY PROF. SWATI
BHALERAO
(DNYANSAGAR ARTS
AND COMMERCE
COLLEGE, BALEWADI,
PUNE – 45)
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INTRODUCTION
• An Act to consolidate and amend the law relating to domestic arbitration, international
commercial arbitration and enforcement of foreign arbitral awards as also to define the
law relating to conciliation and for matters connected therewith or incidental thereto.
• On August 9, 2019, the President of India gave his assent to the amendments to the
Arbitration and Conciliation Act, 1996 ('Act') and the same has been published in the
Official Gazette of India. Some of the key highlights of the Arbitration and Conciliation
(Amendment) Act, 2019 ('Amendment Act') are set out below:
TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
• Arbitral Institution
• Section 1(ca) has been introduced to define an 'arbitral institution' as an arbitral
institution designated by the Supreme Court or a High Court under the Act.
• Appointment of Arbitrators under Section 11
• The Amendment Act empowers the Supreme Court (in the case of an international
commercial arbitration) and the High Court (in cases other than international
commercial arbitration) to designate arbitral institutions for the purpose of appointment
of arbitrators. Such arbitral institutions will be graded by the Arbitration Council of India
(discussed below). Where a graded arbitral institution is not available, the Chief Justice of
the concerned High Court may maintain a panel of arbitrators for discharging the
functions and duties of the arbitral institution.
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ARBITRATION COUNCIL
• Part 1A has introduced the concept of an Arbitration Council of India ('Council'), which
will be established by a notification by the Central Government, and will have its
headquarters in Delhi.
• The composition of the Council will include a Chairperson who is a Judge of the
Supreme Court/ Chief Justice of a High Court/Judge of a High Court or an eminent
person, having special knowledge and experience in the conduct or administration of
arbitration, who will be appointed by the Central Government in consultation with the
Chief Justice of India.
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GRADING OF ARBITRAL INSTITUTIONS AND ARBITRATORS
• The Council will make grading of arbitral institutions on the basis of
criteria relating to infrastructure, quality and calibre of arbitrators,
performance and compliance of time limits for disposal of domestic or
international commercial arbitrations, in such manner as may be specified
by the regulations under the Act.
• The qualifications, experience and norms for accreditation of arbitrators
will be such as specified in the Eighth Schedule to the Act.
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QUALIFICATIONS AND EXPERIENCE OF ARBITRATORS
• A person will not be qualified to be an arbitrator unless he is/ has been:
• (i) an advocate within the meaning of the Advocates Act, 1961 having ten years of
practice experience as an advocate;
• (ii) a chartered accountant within the meaning of the Chartered Accountants
Act, 1949 having ten years of experience;
• (iii) a cost accountant within the meaning of the Cost and Works Accountants
Act, 1959 having ten years of experience;
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• (iv) a company secretary within the meaning of the Company Secretaries
Act,1980 having ten years of experience;
• (v) an officer of the Indian Legal Service;
• (vi) an officer with law degree having ten years of experience in the legal
matters in the Government, autonomous body, public sector undertaking
or at a senior level managerial position in private sector;
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TY B.COM (Pattern 2013) Business Regulatory Framework (Mercantile law) (301)
Thank You