Taxmann's Legal Aspects of Business | Text & Cases

Chapter-heads

LEGALITY OF

PART II

SALE OF GOODS ACT, 1930

CHAPTER

PART III

PART IV

PART V

COMPANIES ACT, 2013

CONTRACT OF BAILMENT AND PLEDGE

FIG 1.1

What is a Promise?

A proposal (offer) when accepted becomes a promise’. Thus, a promise implies an accepted offer’. i.e., consensus ad idem i.e.

EXAMPLE :

A offers to sell his car to B for ` 80,000 and B accepts the offer. It becomes a promise and can be treated as an agreement between A and B.

FIG 1.2

Legal Obligation

i.e

EXAMPLE :

Mr. A, father of B, promises to his son(B) to buy an expensive mobile handset if he secures first division in his university examination, but later on eventually if father fails to fulfil his promise, he (A)cannot be sued by the son(B) for his promise. Because at the time of making such an offer, it was not intended to create a legal obligation.

“all contracts are agreements, but all agreements may not necessarily be contracts”.

Acceptance of an offer by one party to another is called promise.

the law of contract ‘is the law of those agreements which create obligations, and those obligations which have their source in agreements’.

FIG: 1.3. ALL CONTRACTS ARE AGREEMENTS, BUT ALL AGREEMENTS MAY NOT NECESSARILY BE CONTRACTS

Relationship between Contract, Agreement, Promise, and Offer

FIG:1.4

ESSENTIAL ELEMENTS OF A VALID CONTRACT

Section 10 All agreements are contracts if they are made by the free consent of parties competent to contract for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void

viii. “agreements, capable of being made certain,

i. Valid Contracts

A valid contract is a contract that fulfils all legal requirements.

ii. Void contracts

void Section 2(j) ‘a contract which ceases to be enforceable by law becomes void, when it ceases to be enforceable.’

A void contract is a contract which has no legal binding effect at all.

iii. Voidable contracts

Section 2(i), “An agreement which is enforceable by law at the option of one or more of the parties thereto but not at the option of other or others, is a voidable contract i.e

Sections 19 19A

(Section 53).

(Section 55).

(b) Unenforceable and Illegal Contracts

i. Unenforceable contractsi.e

An unenforceable contract is a valid contract but due to some technical flaws, it cannot be enforceable.

For instance,

EXAMPLE :

Where a document, which embodies a contract, requires to be stamped is under-stamped; the contract as such is unenforceable. But if the requisite stamp is affixed subsequently, the document will become enforceable. If the defect cannot be cured or removed, the contract remains unenforceable.

ii. Illegal or unlawful contracts -

illegal agreement void ab-initio

EXAMPLE :

A agreed to pay B ` 1 lakh for killing C. A managed the amount by taking a loan from X to pay B. X was aware of the purpose of the loan. In this case the main agreement between A and B is illegal and void ab-initio because its object is unlawful. Even if B kills C, he cannot recover the agreed amount from A through a legal action. Besides the main agreement between A and B, the collateral transaction between A and X is also void in the eyes of law.

(c) Executed and Executory Contracts

i. Executed contractsExecutory contracts -

An executory contract is a contract where reciprocal promises or obligation are yet to be carried

EXAMPLE :

A agrees to sell his scooter to B. The latter has paid the price but A is yet to deliver the scooter. The contract is thus executory as the right to the goods is transferred but not the possession. Thus an executed contract conveys a ‘chose in possession’ while an executory contract conveys a ‘chose in action’.

(d) Express and Implied Contracts

i. Express contracts -

For example Implied contracts -

Contract is a contract which is based on Non-Verbal Conduct (action) of the parties.

CASE LAW : Upton Rural District Council v. Powell (1942)

A fire broke out in the Powell’s farm. He called upon the fire brigade to put out the fire which the latter did. But Powell’s farm did not come under the service zone although he believed it to be so. Held, he was liable to pay for the services rendered as the services were rendered by Uptron fire brigade on an implied promise to pay.

(e) Unilateral and Bilateral Contracts

i. Unilateral contractA B, ` A B B ` A B i.e.

Where one party performs his promise at the time of contract and other party has to perform his promise in future is called Unilateral Contract.

Legal Aspects of Business Text & Cases

Description

This book is a treatise that adopts a fresh approach to acquaint the readers with the nuances of various business laws. It provides a thorough understanding of the legal aspects of a business.

It is designed to cater to the needs of MBA, PGP, M.Com. students. and other allied courses. This book covers the syllabus of legal aspects of business, business law, and company law prescribed by various Indian universities and institutions.

The Present Publication is the Latest Edition, authored by M.K. Nabi, with the following noteworthy features:

[Simple, Systematic & Comprehensive Explanation] The subject matter is presented in a simple, systematic method along with a comprehensive explanation of the various laws with snippets

[Decoding the Law in Easy Language] It presents the complicated provisions of the laws in simple & lucid language without using legal jargon

[Comprehensive Coverage] This book provides comprehensive coverage with the help of various leading case laws & examples

[Review Questions] given at the end of the chapter for recapitulating the subject

[Student-Oriented Book] This book has been developed keeping in mind the followingInteractionfactors: of the author/teacher with thousands of students

Shaped by the author/teacher's experience of teaching the subject matter to varying levels

Reactions and responses of students have also been incorporated at different places in the book