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Price may be either fixed by the contract. May be agreed to be fixed in a manner provided by the contract. May be determined by the course of dealing between the parties. Difference between a condition and warranty SL.
A condition is a stipulation in a contract which is essential to the main purpose of the contract 2. A breach of condition gives the aggrieved party a right to sue for damages as well as the right to repudiate the contract 3. A breach of condition may be treated as a breach of warranty in certain circumstances A warranty is a stipu lation which is only collateral or subsidiary to the main purpose of the contract A breach of warranty gives only the right to use for damages.
A condition is a stipulation which is essential to the main purpose of the contract. It goes to the root of the contract. A warranty is a stipulation which is collateral to the main purpose of the contract. It is not of such vital importance as a condition. A man buys a particular horse, which is warranted to ride. If the horse turns out to be vicious, the buyers only remedy is to claim damages. But if instead of buying a particular horse, asks a dealer to supply him with a quiet horse and the horse turn out to be vicious, the stipulation is a condition and the buyer can reject the horse or keep the horse and claim damages.
When can the condition be treated as a warranty? A breach of condition can be treated as a beach of warranty under certain conditions.
A breach of warranty cannot be treated as a breach of condition. Contract of guarantee A contact to perform the promise or discharge of liability of a third person in case of default.
The person who gives the guarantee is called the Surety. The person for whom the guarantee is given is called as principal debtor. The person to whom the guarantee is given is called the as creditor.
Two contacts Principal contract between the principal debtor and creditor. In this case there is a contract of guarantee. Express and implied conditions and warranties In a contract of sale of goods, conditions and warranties may be expressed or implied. Express conditions and warranties are those which are expressly provided in the contract.
Implied conditions and warranties are those which the law implies into the contract unless the parties stipulate to the contrary. Express condition: If the terms of contract expressly provide for them. Implied conditions 1. Condition as to title- In a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied condition on the seller that is: R bought a car from D and used it for four months.
D had no title to the car and consequently R had to hand it over to the true owner. R could recover the price paid. Divail, 2 K. Sale by description Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description. Example; A ship was contracted to be sold as a copper fastened vessel to be taken with all faults, without any allowance for any defects whatsoever.
The ship turned out to be partially copperfastened. The buyer was entitled to reject [Sheperd v. Conditions as to fitness or quality - Normally, in a contract of sale there is no implied condition as to quality or fitness of the goods for a particular purpose. The buyer must examine the goods thoroughly before he buys them in order to satisfy himself that the goods will be suitable for the purpose for which he is buying them.
Goods to be of merchantable quality- Where goods are bought by description from a seller who deals in goods of that description, there is an implied condition that the goods are of merchantable quality.
This means that goods should be such that they are commercially saleable under the description by which they are known in the market at their full value. A manufacturer supplied horns under a contract. Condition implied by custom or trade -An implied condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. A bought a set of false teeth from a dentist.
The set did not Held- He could reject the set as the purpose for which anybody would buy it was implicitly known to the seller, i. Baretto v.
Price, A. In case of sale by sample, the a Bulk to correspond with sample b Buyer to have reasonable opportunity to compare the bulk with sample c Goods to be of merchantable quality Implied warranties The implied warranties in a contract of sale are as follows: Warranty of quite possession-In a contract of sale; unless there is a contrary intention, there is an implied warranty that the buyer shall have and enjoy quiet possession of the goods.
If the buyer is in any way disturbed in the enjoyment of the goods in consequence of the sellers defective title to sell, he can claim damages from the seller. Warranty of freedom from encumbrances- In a contract of sale; unless there is a contrary intention, there is an implied warranty that the buyer shall have freedom from any encumbrance of the goods obtained from the seller. A contract of sale always involves reciprocal promises, the seller promising to deliver the goods and the buyer promising to accept and pay for them.
In the absence of a contract to the contrary they are to be performed simultaneously and each party should be ready and willing to perform his promise before he can call upon the other to perform his promise. Delivery of goods sold may be made by doing anything, which if the parties agrees shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer.
Delivery of the goods may be actual, symbolic, or constructive. This is explained as follows: Actual delivery-Where the goods are handed over by the seller to the buyer or his duly authorized agent, the delivery is said to be actual. Delivery of goods may also be made by doing anything which has the effect of putting the goods in the possession of the buyer.
Symbolic delivery- Where the goods are ponderous or bulky and incapable of actual delivery, i. Handing over of the key of a warehouse to the buyer is symbolic delivery of the goods to the buyer and is as effective as the actual delivery, eventhough there is no change in the possession of the goods. Constructive delivery- Where a third person who is in possession of the goods of the seller at the time of the sale, acknowledges to the buyer that he holds the goods on his behalf and and there takes place a delivery by the attainment or the constructive delivery.
Acceptance is something of mere receipt or taking possession of the goods by the buyer. It means the final assent by the buyer that he has received the goods under and in performance of the contract of sale. If he wrongfully refuses to accept the goods under the contract, he is liable for damages. The buyer is deemed to have accepted the goodsa when he intimates to the seller that he has accepted the goods, b when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller.
The following conditions must be fulfilled before a seller of goods can be deemed to be an unpaid seller: He must be unpaid and the price is due. He must have an immediate right of action for the price 3.
A bill of exchange or other negotiable instrument was received but the same has been dishonored. They are 1. Right to lien- A lien is a right to retain possession of goods until payment of the price is made available to the unpaid seller of the goods, who is in possession of them wherea The goods have been sold without any stipulation as to credit, b The goods have been sold on credit, but the term of credit has expired, c The buyer becomes insolvent.
Right of stoppage in transit- The right of stoppage in transit is a right of stopping the goods in transit after the unpaid seller has parted with the possession of the goods. He has further right of resuming possession of the goods as long as they are in the course of transit and retaining possession until payment or tender of the price is available to the unpaid sellerAnna Universtiy Chennai Buyers suits a Suit for damages for non-delivery of the goods b Suit for breach of warranty c Suit for damages for repudiation of contract by the seller before the due date d Suit for specific performance e Suit for interest Sellers suits Suit for price Suit for damages for non-acceptance of the goods Suit for damages for repudiation of contract by the buyer before the due date d Suit for interest 1.
In case of the sale of unascertained goods or future goods by description, property passes to the buyer, when goods of that description in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the assent of the seller. When A signifies his approval or acceptance to the seller B. The seller B does any act adopting the transaction e.
Exceptions 1. When effected by a mercantile agent in the ordinary course of business, 2. When made by a joint owner in possession with the consent of other joint owners.
Commencement of the indemnifiers liability The indemnified may compel the indemnifier to place links in a position to meet the liability that may be cast upon him without waiting until the promise the indemnified has actually discharged it. B supplies C with tea to the value of Rs. Afterwards B suppli es C with tea to the value of Rs. The guarantee given by A was a continuing guarantee and he is accordingly liable to B to the extent of Rs.
The creditor is entitled to demand payment, from the surety as soon as the principal debtor refuses to pay or makes default in payment. Where surety is insolvent, the creditor is entitled to proceed on the suretys insolvency and claim the pro- rata dividend. Obligations 1. Not to change any terms of the original contracts. Not to release or discharge the principal debtor. Not to compound or give time to or agree not to sue the principal debtor.
Not to do any act inconsistent with the rights of the surety. A, B and C are sureties to D for a sum of Rs. If D defaults in making payment to E. If one of the sureties become insolvent, the solvent constitutes shall have to contribute the whole amount equally. A, B and C are sureties for D; enter into a contract to contribute each in a different penalty.
A in the penalty of Rs. D makes default to be extent of Rs. In the example above, if D makes default to the extent of Rs. The liability of the surety is co-extensive with that of the Principal Debtor. The surety is liable for all those amounts which the principal debtor is liable for. Surety is discharged 1. Right to retain the goods. Right to sell: The buyer must inspect the goods to find out if they will suit his purpose. Where the seller makes a false representation and the buyer relies on that representation.
Seller actively conceals a defect in the goods, so that on a reasonable examination the same could not be discovered. Buyer makes known to the seller, the purpose for which he is buying the goods and the seller should know to sell the goods of that description.
Have you understood? Objective questions: A sold quintals of groundnut oil to B. Before he could deliver to B, the Government of India requisitioned the whole quantity lying with A in public interest. B wants to sue A for breach of contract. Is the contract void?
A agrees to sell a horse to B who tells A that he B needs the horse for riding to Mumbai immediately. The horse is ill at the time of agreement.
What are the rights of A and B? A contracts with B to buy 50 easy chairs of a certain quality. B delivers 25 chairs of the type agreed upon and 25 chairs of some other type. What are the rights of A? A contracts with B to purchase 30 tons of apple juice. B crushes the apples, put the juice in containers and keeps it ready for delivery. A delay to take delivery and the juice goes damaged and has to be thrown away. Is liable to pay the price? At a sale by auction without reserve, the auctioneer is instructed not to sell for less than a certain price.
The auctioneer accepts the highest bonafide bid which, however, is lower than the reserved price. Is the sale valid? Void 2. Void 3. May accept the order, may reject the other 4. Yes Short questions: Define the term goods Q. What are the different types of goods? Distinguish between the sale and hire purchase. What is implied warranty? What is F. When is a seller of goods deemed to be an unpaid seller? Extended Questions: Explain the nature of a contract of sale of goods and bring out clearly the distinction between a sale and an agreement to sell.
Briefly explain the conditions and warranties implied by the law in a contract for the sale of goods. State the doctrine of caveat emptor and the exceptions to it. Explain what is meant by the reservation of the right of disposal in a contract for the sale of goods Q. What remedies are open to a buyer for a breach of contract by the seller? What are his liabilities for rejecting or refusing the delivery of goods? Distinguish between an unpaid sellerss right of lien and the right of stoppage in transit.
When can he resell the goods? Negotiable means transferable from one person to another person. Instrument means Any written document by which a right is created in favor of some person. The Reserve Bank of India Act, Sec No person other than RBI or the Central Government can draw, accept, make or issue any bill of exchange or promissory note payable to the bearer on demand. No person other than RBI or Central Government can make or issue any promissory note payable to the bearer of the instrument.
Definition of a Negotiable Instrument A Negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or bearer Section 13 An instrument may be negotiable either by 1 Statute or 2 by usage. Promissory note, bill of exchange, Cheque By statute; Bank notes, Bank drafts, share warrants, bearer instruments, dividend warrants, scripts and treasury bills by usage. A holder in due course is one who receives the instrument for value and without any notice as to the defect in the title of the transferor.
As to consideration: Every negotiable instrument is deemed to have been made, drawn, accepted, endorsed, negotiated or transferred or transformed for consideration Marimuthu Kounder Vs Radakrishnan and other AIR , Kerala 39 2.
As to date: Every negotiable instrument bears the date on which it is made or drawn. As to acceptance: Every bill of exchange is accepted within a reasonable time after the date mentioned therein and before the date of its maturity.
As to transfer: Transfer is made before the date of maturity, in the case of an instrument payable, otherwise than on demand. As to the order of endorsement: The endorsement appearing on it are made in the order in which it appears.
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As to lost instruments: Where an instrument has been lost or destroyed, that it was duly stamped and the stamp was duly cancelled. As to the holder in due course: The holder of the instrument is a holder in due course. As to dishonour: Court shall on the proof of protest, presume the fact of dishonour unless it is disproved. This transfer may take place either: Transfer by negotiation- When a promissory note, bill of exchange or cheque is transferred by one party to another, so as to constitute the transferee the holder thereof, the instrument is said to be negotiated.
There are two methods of transfer by negotiation, namely, a Negotiation by delivery- An instrument payable to bearer is negotiable by delivery thereof. A is the holder of negotiable instruments payable to bearer. He makes a promissory note for the amount payable to B. He dies and the note is afterwards found among his papers and delivered to B.
B cannot sue upon the note if delivered to him. Transfer by assignment- When a person transfers his right to receive the payment of a debt, assignment of the debt takes place. Thus where the holder of an instrument transfers it to another, so as to confer a right on the transferee to receive the payment of the instrument, transfer by assignment takes place.
Liability of parties The liability of the parties is mentioned below: In default of such payment, the drawee, i. Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction.
Holder in due course: Holder, in due course, acquires a better title than that of its transferor. Any person is a holder in due course if he fulfils the following conditions; a That, for consideration, he becomes i the possessor of the negotiable instrument if payable to bearer, or ii the payee or endorsee thereof, if payable to order. A holder of a negotiable instrument will not be a holder in due course ifb he has obtained the instrument by gift or for and unlawful consideration or by some illegal method, c he has obtained the instrument after its maturity, d he has not obtained the instrument bona fide.
Privileges of a holder in due course The special privileges of a holder in due course are as follows: Inchoate stamped instrument- A person, who has signed and delivered to another person, a stamped but otherwise inchoate instrument, is precluded from asserting, as against a holder in due course, that the instrument has not been filled in accordance with the authority given by him, the stamp being sufficient to cover the amount.
Liability of prior parties- Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied. Fictitious payee- where a bill is drawn payable to the drawers order in a fictitious name and is indorsed in the same hand as the drawers signature, the acceptor is not relieved from liability to any holder in due course, on the plea that the drawer is fictitious.
Negotiable instrument without consideration- When a negotiable instrument is made, drawn, accepted or transferred without Anna Universtiy Chennai An agreement made without consideration is void. But if the negotiable instrument gets into the hands of a holder in due course, he can recover the amount on it from any of the prior parties thereto. Conditional delivery- If a bill or note is negotiated to a holder in due course, the other parties to the instrument cannot avoid liability on the ground that the delivery of the instrument was conditional or for a special purpose only.
Instrument cleared of all defects- Once a negotiable instrument passes through the hands of a holder in due course, it gets cleared of its defects provided the holder was himself not a party to the fraud or illegality which affected the instrument in some stage of its journey. Thus any defect in the title of the transferor will not affect the rights of the holder in due course even if he had knowledge of the prior defect provided he himself is not a party to the fraud.
Instrument obtained by unlawful means or for unlawful consideration- The person liable to pay on a negotiable instrument cannot, as against a holder in due course, contend that he had lost it, or that it was obtained from him by means of an offence or fraud or for an unlawful consideration. Estoppels against denying original validity of instrument-. The maker of a promissory note, the drawer of a bill of exchange or cheque and the acceptor of a bill of exchange for the honor of the drawer cannot, in a suit thereon by a holder in due course, deny the validity of the instrument as originally made or drawn.
Every holder is a holder in due course- The law presumes that every holder is a holder in due course, although the presumption is reputable. Estoppels against denying capacity of payee to indorse- The maker of a promissory note and acceptor of a bill of exchange payable to order cannot, in a suit thereon by a holder in due course, deny the payees capacity at the date of the note or bill, to indorse the same.
Endorser not permitted to deny the capacity of prior partiesThe endorser of a negotiable instrument cannot in a suit thereon by a subsequent holder, deny the signature or capacity to contract of any prior party to the instrument. Promissory note An instrument in writing not being a bank note of a 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 to the bearer of the instrument.
The following however, are not Promissory Notes a Mr. I owe you Rs. We have received a sum of Rs.
This amount will be repaid on demand. We have received the amount in cash. Use of word promise is not essential to constitute an instrument as Promissory Note. Specimen of a promissory note Rs Chennai 10th Sept Six months after date I promise to pay X or order the sum of rupees thousand only for value received. To X Address: To X Drawee Address: Bill of Exchange: 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.
Unconditional order is essential Please pay Rs. Usance bill - Payable after a specified period of time At sight bill Payable on demand or payable at sight. Crossing of cheques Payment cannot be claimed across the counter in a crossed cheque. It can only be credited to an account with a bank Type of crossing 1 General 2 Special. General Crossing a Not Negotiable crossing -It is not non-transferable- The cheque having the special feature as these can be no holder in due course.
Drawer intends the payment to be credited to payees account and none else. Discharge of the instrument 2. Discharge of one or more of the parties from liability thereon An instrument is said to be discharged when all rights of action under it are completely extinguished and when it ceases to be negotiable. This would happen when the party who is ultimately liable on the instrument is discharged from liability.
In such a case, even a holder in due course does not acquire any rights under the instruments. The discharge of one or more of the parties continues to be liable on it. Discharge of an Instrument The different modes of discharge of an instrument are as follows: An instrument is discharged by payment made in due course by the party who is primarily liable to pay, or by a person who is accommodated in case the instrument was made or accepted for his accommodation.
The payment of the amount due on the instrument must be made at or after the maturity to the holder of the instrument if the maker or acceptor is to be discharged. A payment by a party who is secondarily liable does not discharge the instrument. Again, any person liable to pay is entitled to have the instrument shown to him before payment. On payment he is entitled to have the instrument delivered up to him.
The remuneration must be in writing unless the instrument is delivered up to the party primarily liable. Cancellation may take place by crossing out signatures on the instrument, or by physical destruction of the instrument with intention of putting an end to the liability of the parties to the instrument.
This includes, for example discharge of an instrument by novation or rescission or by expiry of period of limitation. The subsequent parties are in the position of sureties to the prior party whose name is cancelled and discharge of the principal debtor automatically discharges the sureties.
In determining what reasonable time is, regard shall be had to the nature of the instrument, the usage of trade and of bankers. Where a cheque is originally expressed to be payable to bearer the drawer is discharged by payment in due course to the bearer thereof. It makes no difference even if any endorsement whether in full or in blank appears on the cheque and even if any such endorsement purports to restrict or exclude further negotiation.
Parties not consenting discharged by qualified acceptance- If the holder of a bill of exchange acquiesces assents in a qualified acceptance, all the previous parties whose consent is not obtained to such acceptance are discharged from liability, they will however, be liable if on a notice being given to them they give their assent to such acceptance.
By operation of law- This includes dischargeBy an order of insolvency court, discharging the insolvent By merger- When a judgment is obtained against the acceptor, maker or indorser, the debt under the bill is merged into judgment debt. By lapse of time i. By material alteration- A material alteration of a negotiable instrument renders the same void against persons who were parties thereto before such alteration unless they have consented to the alteration.
Discharge by payment of altered instrument- When a promissory note, bill of exchange or cheque had been materially altered but does not appear to have been so altered, or where a cheque is presented for payment which does not at the time of presentation appear to be crossed, payment on such an instrument discharges the party liable if he pays according to the apparent tenor of the instrument as altered at the time of payment and otherwise in due course.
Such a payment cannot be questioned even if it is proved that the instrument has been altered or that the cheque was originally crossed. Have you under stood? A bill is drawn, payable at door no. B who resides at door no. Is it a valid bill? A bill is drawn pay to A or order the sum of Rs. In the margin the amount stated is Rs. Is this a valid bill? A, on attaining the age of majority, executes a fresh promissory note in consideration of a promissory note executed by him during his minority.
Can a suit be maintained on the fresh promissory note? A promissory note is executed by A in favor of B in consideration of C, a relation of B, forbearing to sue on a prior promissory note executed in favor of C. Is the note executed by A in favor of B any lawful consideration?
A accepts a bill payable at the syndicate bank, Chennai, and nowhereelse, is it a valid acceptance? Yes 2. Yes 3, No 4. Yes Short questions: What is negotiable instrument? What are the types of negotiable instruments? Distinguish a cheque with bill of exchange.
Define a holder in due course. What is meant by acceptance of a bill of exchange? When is a negotiable instrument said to be discharged? What are the provisions of the negotiable instruments Act? Examine the liabilities of the drawer and the indorser in case of a bill of exchange. Define acceptance for honor. Can the drawer of a bill of exchange accept it for honor? Dishonor of a cheque for want of funds is an offence under the Negotiable instruments Act.
Do you agree with the statement? What is the difference between discharge of an instrument and discharge of a party to an instrument? A approves B a broker to sell his car on his behalf then 1. Relationship between A and B is Agency 3.
Act of an agent is the act of the principal. Who may be an Agent? Classification of Agent: I-Agents are classified as: Commercial Agent or Mercantile Agent 2. Mercantile or Commercial Agent 1. Factor Agent who is entrusted with possession of goods with an authority to sell them. He can sell the goods on credit in his own name. He is also authorized to raise money on their security. Commission Agent- Agent who is employed to buy or sell goods or transact business. Delcredere Agent -Agent whos consideration of an extra remuneration called a delcredere commission guarants the performance of the contract by the other parties.
Auctioneer - Agent appointed to sell goods by auction. Non Commercial Agent: If the wife and husband are living together and the wife is booking for necessaries she is an agent.
When the wife lives apart from the husband, though no fault of hers, the husband is liable to provide her maintenance. If he does not provide for her maintenance, she has implied authority to bind the husband for redressal.
However an agent may appoint an agent in the following circumstances. Sub Agent-: Person employed by and acting under the control of the original agent in the business of the agency. There is no priority of contact between the subagent and the principal.
Substituted Agent: Where an agent appoints or names other person for being appointed as an agent in his person, such person is called a substituted agent. A directs B, his solicitor to sell his house by auction and to employ an auctioneer for the purpose. B names C an auctioneer to conduct the sale.
C is not a sub agent but is As agent for the conduct of the sale. Agency can be created in the following ways as mentioned below: Consideration is not essential to create an agency A-Express Agency The authority of an agent may be expressed by the following forms: B-Implied Agency Implied agency is possible by the below said method: From conduct, situation or relationship of parties.
It includes: Estoppels arise when you are precluded from denying the truth of anything, which you have represented as a fact, although it is not a fact. On the occasion, P pays his servant cash to purchase the goods. The servant purchases the goods on credit, pocketing the money. C can recover the price from P since through previous dealings P has held out his servant A as his agent.
He will be considered as the agent of the owner by necessity. The Principal if he so desires can ratify the act of the agent. Agency in such a case comes into existence from the moment the agent first acted. Requisites of valid ratification 1. Agent must contract as agent.
Principal must have been in existence at the time the agent originally acted. Principal must also be competent of contracting at the time of contract as well as at the time of ratification. Ratification must be done within a reasonable time. The act to be ratified must be a lawful one. Principal should have full knowledge of facts. Ratification must be of a contract as a whole.
Principal must have authority to ratify. Ratification cannot be made so as to subject a third party to damage or terminate any right or interest of a third person. Right to receive agreed or reasonable remuneration. Right to retain money of the principal towards advances made or expenses properly included by him. Right of lien to retain properties of the principal for the amount due to himself for commission, disbursements or services rendered.
Right of stoppage- in transit -in case. B-Principals duties to agent 1. To indemnify the agent against the consequences of all lawful acts done by such agent in exercise of authority conferred upon him. Liable to indemnify an agent against the consequences of an act done in, good faith, though it causes an inquiry to the right of third persons.
The principal is not liable for acts which are criminal in nature though done by the agent at the instance of the principal. The principal must make compensation to his agent in respect of injury caused to such agent by the principals neglect or want of skill.
C-Duties of an agent 1. To conduct the business of agency to the principles directions and not to deviate even for the benefit of the principal, 2. To conduct the business with the diligence and skill generally possessed by persons engaged in similar business, 3. To render proper accounts, 4. In case of difficulty to communicate with the principal, 5. Not to make any secret profits, 6. Not to deal on his own account, Anna Universtiy Chennai Not entitled to remuneration for business misconduct, 8.
An agent should not disclose confidential information, 9. When an agency is terminated by the principal dying or becoming of unsound mind, the agent is bound to take on behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him.
Contracts entered into through an agent and obligations arising from acts done by an agent may be enforced in the same manner and will have the same legal consequence as contracts had been entered into and the acts done by the principal in person.
Liable for the acts of the agents falling within actual authority, afferent or ostensible authority. Principal will be liable even for misrepresentatives made or frauds constituted, by an agent for his benefits.
B-Personal liability of an agent 1. Where acting for a foreign principal. Where acting for a principal whose name he does not disclose. Where the principal cannot be sued e. Where he acts without authority or exceeds authority. Where be agrees to be personally bound. Where be signs a negotiable instrument in his own name.
Where he is a factor or an auctioneer. Where he is guilty of fraud or misrepresentations in matters outside his authority. Where trade or custom makes him personally liable. Where agency is one coupled with interest. In the event of insanity or death of the principal or agent. In the event of insolvency of the principal. A police man, thinking that the driver of a bus was drunk, ordered him to leave the bus.
The conductor asked the man in the street to drive the bus to its destination, a kilometer away. He drove the bus negligently and a passenger received injuries. Is the proprietor liable?
A, professing to act for a joint stock company about to be incorporated, enters into a contract with B on its behalf as agent. After incorporation the company passes a resolution adopting As transaction.
Is the company liable on the contract? P instructed his agent A to sell a picture at a named price. P died. Afterwards, before the fact of his death became known to A, A sold and delivered the picture.
Was the sale binding on Ps executors? A not being authorized thereto by P, demands on behalf of P the delivery of a painting, the property of P, from T who is in possession of it. T refuses to deliver.
Can P ratify the demand and render T liable for non-delivery? M gave his wife authority to buy goods from D. M became insane, but the wife continued to buy from D, who did not know of Ms insanity.
Is M liable to D? Yes 4. Define agent and principal. What are the different kinds of agents? Write short note on agency by holding out. Define a sub-agent. When is an agency irrevocable? Discuss the various ways in which the relation of agency arises.
Explain the nature of agency by ratification. Discuss about the rights and liabilities of the principal and the agent. Discuss the different modes in which the authority of an agent may terminate. A contract is an agreement made between two or more parties which the law will enforce. An agreement comes into existence by the process of offer by one party and its qualified acceptance by the other party and their must be consensus ad idem.
There should be a consideration in a contract which means something in return. Every person is competent to contract who is of the age of majority, sound mind.
A contract is said to be discharged when the obligations created by law comes to an end. In case of breach of a contract, the injured party is having the remedies according to the law of contract.
In certain cases the law imposes an obligation and allows an action to be brought on it as if it arose out of an agreement, though none was present in fact called as quasi contracts.
A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for the price. A stipulation in a contract of a sale with reference to goods which are the Anna Universtiy Chennai It is important to know that the property should be good passes of transfers from the seller to the buyer. It is the duty of the seller to deliver the goods and the buyer to accept and pay for them in accordance with the terms of the contract of sale.
A Negotiable instrument is one, which is acquired by any one who takes it bonafide and for value, notwithstanding any defect of title in the person from whom he took it. This negotiable instruments act deals with promissory notes, bill of exchange and cheques with all the characteristics or essential elements.
The capacity of a person is to incur liability as a party to negotiable instruments. When these instruments are transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated. An agent is a person employed to do any act for another or to represent another in dealings with third persons.
The person for whom such act is done, or who is so represented, is called the principal. Any person who is of the age of majority, sound mind, according to the law may employ an agent. Introduction A company means a group of persons associated voluntarily together for the attainment of a common goal either, social or economic.
Much the way people came together to buy and sell, lend and borrow, so did people come together and pooled their resources for common benefit. It represents different kinds of associations, both business and otherwise. Late s early was the period of much industrial and commercial activity. The vigorous activity raised several disputes and the courts were called upon to adjudicate this. The courts had to apply the provisions in a new and emergent context.
In this, the courts gave several landmark judgments in interpreting the provisions. The British Act, as well as the Indian Act, was amended, enlarged and consolidated several times. The law which governs companies in India at present is the Companies Act, As a result the companies act became voluminous.
The Act, runs into Sections and 15 Schedules. Companies incorporated under the Companies act, are mostly business companies but they may also be formed for promoting art, charity, research, religion, commerce, or other useful purpose. Define a company Understand the principles of company Describe the scope and nature of the types of companies Know the formalities in forming a company Understand the Articles and Memorandum of Association Determine the powers, liability and duties of directors of the company Interpret the importance of Corporate Governance Definition Meaning of the company The company is one of the forms of organization.
It has its distinctive characteristics and advantages which make it suitable for different purposes. Literary Meaning The term Company implies an association of a number of persons formed for some common object or objects. Legal Meaning According to section 3 1 i of The Companies Act, , Company means a company formed and registered under this Act or an existing company.
An artificial person created by law: A company is called an artificial person because it does not take birth like a natural person but comes into existence through law. Being the creation of law, the company possesses only those properties which are conferred upon it by its charter. Separate Legal Entity: The case of Solomon v. Solomon and Company Ltd. Solomon was running a shoe business in England. He formed a company known as Solomon and Co. It consisted of Solomon himself, his wife, his four sons and a daughter.
The company ran into financial difficulties after some time and went into liquidation within a year. Solomon , nothing was left for unsecured creditors. Thus, after paying off the debenture priority over the debentures contending that Mr.
Solomon and Solomon and Co. Solomon should not therefore, be treated as a secured creditor. The Company had been validly constituted and it had an independent existence distinct from its members.
Therefore, Mr. Solomons business belonged to the company and not to Mr. The company and Mr. Solomon enjoyed separate legal entities. The fact that the members were from one single family had no bearing upon the validity of the company. Perpetual Existence: The term perpetual existence means the continued existence.
The death, insolvency or unsoundness of mind of its members or transfer of shares by its members does not in any way affect the existence of the company. Members may come and members may go but the company goes on forever. The company can be compared with flowing river where water members keeps on changing continuously; still the identity of the river company remains the same. Common Seal: The term Common Seal means the official signature of the company. Since the company being an artificial person cannot sign its name on a document, every company is required to have its common seal with its name engraved on the same.
This seal acts as the official signature of the company. Any document bearing the common seal of the company and duly witnessed by at least two directors will be binding on the company.
Limited Liability: In case of a company limited by share, the liability of a member is limited up to the amount remaining unpaid on the shares held by a member. Free Transferability of shares: The shares of a public company are freely transferable. A shareholder can transfer association, even a public limited company can put certain restrictions on the transfer of shares but it cannot altogether stop it. A shareholder of public company possessing fully paid up shares is at liberty to transfer his shares to anyone he likes in accordance with the manner provided for in the articles of association of the company.
Types of Companies The companies can be classified under the three categories as follows: Basis of incorporation Basis of liability Basis of control Basis of incorporation: This is further divided into three categories. They are as follows: A company incorporated under a special charter granted by the king or Queen of England is called Charted Company.
Now this type of company cannot be formed in India. A statutory company is one which is created by a special Act of Parliament or a state legislature. Such companies are usually formed for achieving a purpose related with public utilities. The nature and powers of such companies are laid down in the special Act under which they are created.
A statutory company has also a separate legal entity is conducted under the control and supervision of the Auditor General of India and the annual report of working is required to be placed before the Parliament or state legislature, a the case may be.
Example, Reserve Bank of India. A registered company is one which is registered in accordance with the provisions of the Companies Act of and also includes the existing companies. Existing company means a company formed and registered under any of the previous laws. A registered company may either be a private company or a public company.
It is explained as follows: Private Company- A private company means a company which has a minimum paid up capital of Rs. A- Restriction on Transfer of shares- The right of transfer is generally restricted in the following manner: B - Limitation of Membership- The articles must contain a provision whereby the company limits the number of its members to C - Prohibition on Making an Invitation to Public- The articles must prohibit any invitation to the public to subscribe for any of its shares or debentures.
Such a prohibition is necessary for the substance of the private character of the company. II- Public Company A Public company means a company which is either a not a private company and has a minimum paid up capital of Rs 5,00, or such higher paid-up capital as may be prescribed: Based on Liability On the basis of liability, an incorporated company may either be i a company limited by shares ii a company limited by guarantee iii an unlimited company Company Limited by Shares- A Company limited by shares is a company in which the liability of its members is limited by its memorandum to the amount unpaid on the share respectively held by them.
The companies limited by shares may be either public companies or private companies. If a member has paid the full amount of shares, then his liability shall be nil. In other words, the liability of members is unlimited.
The members of such companies may be required to pay companys losses from their personnel property. Based on Control On the basis of control, the companies may be grouped as follows: Hindustan Aeronautics Ltd. Non-Government Company- A company which may not be termed as a government company as defined in Section is regarded as a nongovernment company 3.
Foreign Company- A foreign company means a company, which is incorporated in a country outside India under the law of that country. After the establishment of business in India, the relevant documents must be filed with the registrar of companies within 30 days from the date of establishment. Domestic Company-A company which cannot be termed as foreign company under the provisions of the companies act as a domestic company.
Holding and Subsidiary Company- If one company controls the other company, the controlling company may be termed as the Holding Company and company so controlled may be termed as a Subsidiary Company.
Multi National Company A multinational company is huge industrial organization whicha operate in more than one country b carries out production, marketing and research activities on international scale in those countries, and c attempts to maximize profits world over. I Where an unregistered association is formed for carrying on the business of banking with 8 members.
Subsequently 3 more persons join the association as members. The association would become an illegal association from the moment the number of its members exceed Example II.
Where an unregistered association is formed for carrying on the business of nonbanking with 18 members. Example III Where an un-registered association is formed for noncommercial purposes such as promotion of religion, art, science, charity or any other useful object, with 18 members. The association would not become an illegal association because the limit on maximum number of members is not applicable to such association.
Example IV Where an association is formed between three partnerships firms X having 8 persons , Y having 7 persons , and Z having 8 persons.
Conciliation Part IV: Supplementary Provisions 3. Selling Price: You will save: Frequently Brought Together. Selected items: Offer Price: You Save: Buy This product. Snapshot About the book.
Table of Contents: Operations Research: Case Study Solutions Financial Management. Customer Relationship Management. Business Statistics. Management and Entrepreneurship. Security Analysis And Portfolio Management. Operations Research.
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