Business and Industrial Law PDF

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Dear Bcom (Regular) Students & CA Students,These notes are a summarized version of questions prepared fromthe past papers. These notes are mainly for revision purposes.Guess paper is also provided.Do not wholly and solely depend on them.It has a coverage from 2010 to 2014 (Regular).Good luck...

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Dear Bcom (Regular) Students & CA Students,

These notes are a summarized version of questions prepared from the past papers. These notes are mainly for revision purposes. Guess paper is also provided. Do not wholly and solely depend on them. It has a coverage from 2010 to 2014 (Regular). Good luck for your exams. Regards, Sanam Alam

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Guess Paper Commercial Law Contract Act (With examples) 1) How contract is classified? 2) State the essential elements of an offer. When an offer can be revoked? 3) What do you understand by performance of contract? 4) Give essential elements of valid contract. 5) Define consideration under contract act 1872.What are the exceptions to the rule “No Consideration No Contract”. 6) Explain possible ways of “Termination of Contract” & remedies of Breach of Contract. 7) What do you understand by capacities of parties under contract act? 8) All agreements enforceable by law are contract. Comment. 9) What is meant by free consent? When consent is said to be free? Also describe a) Fraud, b) Coercion, c) Undue influence & d) Misrepresentation.

Other Topics (With examples) 10) Give essentials of agreement to sale. How price determined under Sales of goods act. 11) Distinguish between sale and agreement to sale. 12) Give the rights of an unpaid seller. 13) What is bill of lading and describe its kinds? 14) Distinguish between bill of lading and charter party, Indemnity and Guarantee, Bailment and Pledge. 15) Private and common carrier. 16) Price and different kinds of goods. 17) What are negotiable instruments? Differentiate between holder and holder in due course, bill of exchange and promissory notes. 18) What are various kinds of partners, also describe rights and liabilities of partners and dissolution of partnership. Minor as a partner. Formation of Partnership. 19) What are rights and duties of surety, bailer and Bailee, Agent and Principal, Mortgagor, Common Carrier? 20) Kinds of Mortgage. Distinguish between Charge and Mortgage.

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Industrial Law 1. Strike and Lock out. 2. Ordinary and seasonal Factory. 3. Accident. 4. Provision relating to health and safety of workers. 5. When employer is not liable under workmen compensation act. 6. Total and partial disablement. 7. Unfair labour practice. 8. Inspector and certifying agent. 9. Holidays and working hours. 10. Work council and labour court. 11. Manufacturing process and occupational diseases. 12. Restriction on the employment of women and children. 13. Award and settlement, Wage commission, Occupier.

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Section-1 Commercial Law Q1. Contract and essentials of a valid contract (2010, 2013, 2014) Contract “An agreement enforceable by law” Essentials 1. Offer and Acceptance. 2. Intention to Create Legal Relationship. 3. Lawful Consideration. 4. Capacity of parties. Persons disqualified by law to create a contract are: (a) Minors, (b) Persons of unsound mind, (c) persons disqualified by law to which they are subject. 5. Free Consent Consent is said to be free when it is not caused by(1) Coercion, or (2) Undue influence, or (3) Fraud, or (4) Misrepresentation, or (5) Mistake. 6. Lawful Object. The Object is said to be unlawful if-

7. 8. 9. 10.

(a) it is forbidden by law; (b) it is of such nature that if permitted it would defeat the provision of any law; (c) it is fraudulent; (d) it involves an injury to the person or property of any other; (e) the court regards it as immoral or opposed to public policy. Certainty Possibility of Performance. Not declared to be void or illegal. Legal Formalities.

Q2. Rights of Mortgagee (2010)    

Hes the lender. Property is transferred to him as a security of the loan It gives him rights to collect payments on the loan and to foreclose on the property if those payments are not made The borrower cannot sell the property before paying off the full loan Mortgagee has the rights to sell the property and recover his loan by its proceeds

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Q3. How can agency be created (2010, 2012, 2013) 1. Express appointment    

Written Verbal Deed agreement

2. Ratification Effects:  ratification is established from the time of formation of contract between the ratifier and the person who did the act  a contractual relationship is created between the ratifier and the third party Requisites of valid ratification        

an act to get ratified, should be done on behalf of the person who wants to ratify it ratifier must be in existence at time of contract ratifier must be competent to contract at time of contract only lawful acts can be ratified ratification has to be of the whole transaction ratifier must have complete knowledge of the transaction acts which damage the third party cannot be ratified ratification must be made in reasonable time

3. Estoppel Conditions must apply in order for third party to rely on existence of agency by estoppel  principal must give clear representation to others  representation must have been made to the third party who then relies on the existence of agency  third party must have relied on the existence of agency in reaching a decision about the transaction 4. Necessity For it to exist, following conditions must apply    

real emergency impossible to contact the owner agent must act as far as possible in the best interest of the agent agent is in charge of goods owned by principal

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5. Agency by operation of law It arises when:  company is formed, its first directors are its agents  a partner is the agent of the firm for the purpose of the business of the firm

Q3. Rules to discharge of surety (2010, 2012, 2013) 1. Revocation  Notice  Death of surety  novation 2. Conduct of creditor  alteration  release of debtor  arrangement 3. Invalidation of contract    

fraud misrepresentation act or omission failure of co-surety to join surety

Circumstances when surety is not discharged  contract to give time to give to debtor is made by the creditor with a third person  patience on the part of creditor to not sue the debtor  when there are co-sureties and creditor releases one of them

Q4. Free consent (2010) “two or more parties are said to consent when they agree upon the same thing in the same sense” Consent is said to be free when it is not caused by(1) Coercion, or (2) Undue influence, or (4) Misrepresentation, or (5) Mistake.

(3) Fraud, or

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Q5. Difference between fraud and misrepresentation (2010, 2013) Fraud (1) False assertion (2) Active concealment (3) Empty promise; (4) Any other act fitted to deceive; (5) Any such act or omission as the law specially declares to be fraudulent. Essentials of fraud: 1. Party to a contract must commit the fraud 2. False representation made with knowledge 3. An opinion is not a fraud 4. Party must actually be deceived 5. Party must have suffered the loss

Misrepresentation Essentials: 1. 2. 3. 4. 5.

party to a contract must have made a misrepresentation False representation made without knowledge An opinion is not a misrepresentation Misrepresentation must be made without the intention to deceive Party must have acted on the faith of representation

Q6. Define terms 1. Condition (2010)  It is a stipulation essential to the main purpose of the contract, the breach of which gives right to treat the contract as repudiated  The opposite party can get its remedy A condition maybe:   

Precedent Concurrent Subsequent

2. Warranty (2010)  It is a stipulation collateral to the main purpose of the contract, the breach of which gives right to an action for damages but not the right to reject the goods or to treat the contract as repudiated

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3. Common carrier (2012) "Common carrier" denotes a person, other than the Government, engaged in the business of transporting for hire property from place to place, by land or inland navigation, for all persons indiscriminately. He should provide his service to all persons without any discrimination Carriers that are not included In this definition  Government carriers  Casual carriers  Free carriers

4. Railway (2012) Railways are bound to carry goods to every person and every passenger who is prepared to pay the required freight.

5. Assignment (2013) Under general contract principles, a negotiable instrument may be transferred to an assignee, who then holds the instrument with all the rights of the assignor

6. Ambiguous instrument (2013) Ambiguous Instrument is an instrument, which in form is such that it may either be treated by holder as a note or as a bill. In a bill, the drawee and the drawer are the same people or where the drawee is a fictitious person or a person inept to contract, the holder may treat the instrument, at his alternative, either as a promissory note or a bill of exchange.

7. Inchoate instrument (2013) Inchoate instrument means an unregistered, unrecorded instrument that becomes effective to third parties only when the instrument is recorded.

8. Fictitious bill (2013) A bill in which the drawer or the payee or both are non existent. In such case the drawee or the acceptor is liable to pay the due amount to the holder in due course.

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Q7. Difference between sale and agreement to sell (2010, 2014) BASIS FOR COMPARISON

SALE

AGREEMENT TO SELL

Meaning

When in a contract of sale, the exchange of goods for money consideration takes place immediately, it is known as Sale.

When in a contract of sale the parties to contract agree to exchange the goods for a price at a future specified date is known as an Agreement to Sell.

Nature

Absolute

Conditional

Type of Contract

Executed Contract

Executory Contract

Transfer of risk

Yes

No

Title

In sale, the title of goods transfers to the buyer with the transfer of goods.

In an agreement to sell, the title of goods remains with the seller as there is no transfer of goods.

Right to sell

Buyer

Seller

Consequences of subsequent loss or damage to the goods

Responsibility of buyer

Responsibility of seller

Tax

VAT is charged at the time of sale.

No tax is levied.

Suit for breach of contract by the seller

The buyer can claim damages from the seller and proprietary remedy from the party to whom the goods are sold.

Here the buyer has the right to claim damages only.

Right of unpaid seller

Right to sue for the price.

Right to sue for damages.

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Q8. Different modes in which agent can be terminated (2010) 1. by the act of parties  mutual agreement  revocation by principal  compensation  reasonable notice  express or implied  termination takes effect for the agent when he gets to know about and for the third parties, when they get to know about it  revocation by agent  compensation  reasonable notice  express or implied

2. by operation of law       

completion of business expiry of time death or insanity of principal or agent insolvency of principal destruction of subject matter winding up of company principal or agent becoming an alien enemy

Q9. Liabilities of partners (2010)            

work for the greatest common advantage be just and faithful render true accounts give full information indemnify for fraud indemnify for wilful neglect share losses attend diligently without remuneration hold and use property for private purposes account for profits of a competing business act within authority not assign his rights

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Q10. Dissolution of partnership firm (2010, 2013)  



 

by agreement by operation of law o insolvency o unlawful acts contingent dissolution o expiry of term decided o completion of a venture o death o insolvency by notice by court o unsound mind o permanent incapability o guilty o breach o whole interest transferred to a third party

Q11. Short notes 1. kinds of endorsement (2010)  blank or general (It specifies no endorsees. It contains signature of the endorser and it becomes payable to the bearer)  special or full (in addition to the signature of endorser, the person to whom the amount is payable. Ex: pay Ameer Ahmed)  restrictive (it isn’t further negotiable or is restricted for one person to use)  partial (only a part amount is payable to endorsee on the instrument)  conditional or qualified (payable when a certain condition is fulfilled) 2. kinds of bill of lading (2010)  clean (If a consignment with no damage on packages apparently, the carrier issues a Bill of lading called Clean Bill of Lading)  through (It allows for the shipping carrier to pass the cargo through several different modes of transportation and/or several different distribution centers. This Bill of Lading needs to include an Inland Bill of Lading and/or an Ocean Bill of Lading depending on its final destination)  on board (A consignment with no damage on packages apparently and if such consignment gone on board the vessel, a Clean On Board Bill of Lading is issued by carrier of goods)

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3. duties & rights of bailor (2010, 2011, 2013) Duties  Disclose faults  Bear expenses  Indemnify bailee for loss in case of early termination of gratuitous bailment  Receive back the goods  Indemnify the bailee in case of defective title  Bear the risk of loss Rights 1. Right of Return 2. Return Before Time 3. Right of Termination 4. Right of Profit 5. Gratuitous Good Right Of Return

4. quasi contracts (2010, 2011) A quasi contract is an obligation imposed by law in absence of any agreement between the parties. It is not an actual contract but it is legal substitute formed to impose equity between two parties. The concept of quasi contract is that of a contract that should’ve been formed even though in actuality it wasn’t. The other name for it is constructive contracts. Kinds of quasi contracts: 1. 2. 3. 4. 5.

Supply of necessaries Payment by interested persons Person enjoying the benefit of non-gratuitous act/goods Finder of goods Payment by mistake or under coercion

5. un-paid seller (2010, 2011) A seller is unpaid if:  the amount remains unpaid  dishonoured negotiable instrument  he has an immediate right of action of price Rights:   

a lien on the goods remaining in his possession a right to stoppage of transit a limited right to re-sale

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6. undue influence (2011) 1. A person is said to be in the dominant position when: 1. He holds real and apparent authority over the person 2. Stands in a fiduciary relationship 3. He makes a contract with a person whose mental capacity is temporarily or permanently affected 2. Effect of undue influence The contract becomes voidable at the option of the party whose consent was so caused. The burden of proof lies on the party who is in the position to dominate. In the following relationships it is presumed that a person is in positon to dominate:  Father and son  Employer and employee  Teacher and student  Doctor and patient  Fiancé and fiancée  Pardanasheen lady In the following relationships it is not presumed:   

Landlord and tenant Creditor and debtor Husband and wife

Rebutting presumption:   

Dominant party has made a full disclosure of all facts to the weaker party before the contract Price was adequate Weaker party has received competent impendence advice before entering into the contract

7. charter party (2011, 2012, 2014)

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3. charter by demise The charterer becomes the owner of the ship and the crew becomes his servant

Implied Warranties The following terms are implied by law which may or may not be expressly provided in a charter party: (a) The ship is sea worthy at the commencement of the proposed voyage (b) The ship shall be ready to commence the voyage (c) The ship shall not deviate from the agreed or customary route except for good cause (d) The charterer shall not include in his cargo illegal or contraband goods.

8. existing and future goods (2011) 1. Existing goods: At the time of sales if the goods are physically in existence and are in possession of the seller the goods are called ‘Existing Goods’. Existing goods can be classified into: (a) Specific goods. (b)Unascertained goods 2. Future goods: Future goods are goods to be manufactured or produced or yet to be acquired by seller. There cannot be present sale in respect future goods because the property cannot pass.

9. Contract of affreightment A contract between a ship owner and a person in which ship owner agres to carry goods for the charterer in the ship or give charterer the control of the whole or part of ship’s cargocarrying space

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10. Doctrine of caveat emptor Caveat Emptor. Latin for "let the buyer beware." A doctrine that often places on buyers the burden to reasonably examine property before purchase and take responsibility for its condition. Especially applicable to items that are not covered under a strict warranty.

Q12. Rules regarding delivery of goods under Sale of Goods Act (2011)   

  

Place of Delivery Time of Delivery Attornment (If the situation is such that the goods are in the possession of a third party there is no delivery until the third party acknowledges to the buyer that he holds the goods on his behalf) Delivery of Wrong Quantity (smaller, larger, mixed) Delivery by Installments (unless there is an agreement that the goods should be delivered by installments, the buyer is not bound to accept delivery of the goods by instalments) Delivery to a Carrier

Q13. When is an offer complete (2011, 2012) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Offer must be capable of creating legal relations. Offer must be certain, define and not vague3. Offer must be communicated to the offeree. Offer must be made with a view to obtaining the assent of the other party An offer may be conditional Two persons Contractual intention Negative confirmation Communication of special conditions An invitation to offer is not an offer.

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Q14. Who are competent to contract? (2011, 2012) Who is competent to contract? 1. Who is age of majority a. 21 years where a guardian of a minor’s person or property is appointed by court of law b. 18 years in other cases 2. Who sound mind is of A person is said to be of a sound mind when:  

He is capable to understand the terms of contract He can form rational judgement as to its effects

3. Who is not disqualified from contracting a. Alien enemies b. Convicts c. Insolvent d. Foreign ambassadors and sovereigns

Q15. Difference between pledge and bailment (2011) BASIS FOR COMPARISON

BAILMENT

PLEDGE

Meaning

When the goods are temporarily handed over from one person to another person for a specific purpose, it is known as bailment.

When the goods are deliver...