2. LAW
system of rules and regulations which a country or
society recognizes as binding on its citizens, which
the authorities may enforce, and violation of which
attracts punitive action. These laws are generally
contained in the constitutions, legislations, judicial
decisions etc.
3. PURPOSE/FUNCTIONS OF LAW
To deliver justice.
To provide equality and uniformity.
To maintain impartiality.
To maintain law and order.
To maintain social control.
To resolve conflicts. vii.
To bring orderly change through law and social
reform.
4. SOURCES OF LAW
Customs
Religion
Judicial decisions
Legislation
equity
5. INDIAN CONTRACT ACT
Law of contract lays down legal rules relating to
promises, their formation, performance and
enforcement.
Agreement : A negotiated and usually legally
enforceable understanding between two or more
legally.
Contract :A contract is a legally enforceable
agreement between two or more parties with
mutual obligations.
6. ESSENTIAL INGREDIENTS OF CONTRACT
An offer & acceptance
A promise to perform
A valuable and legal consideration
Free consent of both parties
Parties should be competent to contract
Object should be lawful
Possibility of Performance
Contract should not have been declared void
Legality
7. FEATURES
Proposal and acceptance
Consideration
Capacity to contract
Free consent
Legality of object
Discharge of contract
Breach of contract
8. PROPOSAL AND ACCEPTANCE
Proposal/offer : 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. [section 2(a)].
Types of offer : express and implied
Acceptance : when one person signifies his assent
on the proposal made.
9. CONSIDERATION
Something in return
It is anything of value promised to another when
making a contract. It can take the form of money,
physical objects, services, promised actions
If A signs a contract to buy a car from B for $5,000,
A's consideration is the $5,000, and B's consideration
is the car.
10. Promise : the proposal is said to be accepted. A proposal,
when accepted, becomes a promise.
Promisor and promise - The person making the
proposal is called the “promisor”, and the person
accepting the proposal is called the “promisee”. [section
2(c)].
Reciprocal promises - Promises which form the
consideration or part of the consideration for each other
are called reciprocal promises. [section 2(f)].
11. CAPACITY TO CONTRACT
Minor
Person of Unsound mind
A person who is intoxicated state
Free consent : Consent of both parties must be free. It is not a
free consent :
1.Coercion 2.Undue influence,
3.Fraud 4.Misrepresentation
5.Mistake
12. DISCHARGE OF CONTRACT
Discharge of a contract relates to the circumstances in which
the contract is brought to an end. Where a contract is
discharged, each party is freed from their continuing
obligations under the contract.
Modes of discharge :
• Discharge by Performance
• Discharge by repudiatory breach
• Discharge by Agreement
• Discharge by Frustration
13. BREACH OF CONTRACT
If the party does not fulfill his contractual promise, or has
given information to the other party that he will not perform his
duty as mentioned in the contract or if by his action and
conduct he seems to be unable to perform the contract, he is
said to breach the contract.
Anticipatory breach :Anticipatory breach occurs when the
party declares his intention of non performing the contract
before the performance is due.
Actual breach : when the party to contract refuses to perform
his part at the time fixed for performance
14. WHAT AGREEMENT ARE CONTRACT
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. Nothing
herein contained shall effect any law in force in India
and not hereby expressly repealed, by which any
contract is required to be made in writing or in the
presence of witnesses, or any law relating to the
registration of documents. [section 10].
15. REMEDIES FOR BREACH OF CONTRACT
Recession of contract
Suit for damage
Suit for specific performance
Suit for injunction
Suit upon quantum profit
Quasi contract :A quasi contract is not a contract at all because
one or other essential for the formation of a contract is absent It is
a law upon a person for the benefit of another even in the absence
of a contract. It is based on the principle of equity, which means
no person shall be allowed to unjustly enrich himself at the
expense of another such obligations are called quasi contracts
16. COMPANY LAW
A company can be defined as an "artificial person",
invisible, intangible, created by or under law, with a
discrete legal entity, perpetual succession and a common
seal. It is not affected by the death, insanity
or insolvency of an individual member.
A company is an association or collection of individuals,
whether natural persons, legal persons, or a mixture of
both. Company members share a common purpose
17. CHARACTERISTICS
Separate legal entity
Limited liability
Perpetual succession
Transferable shares
Capacity to sue and being sued
Professional management
Corporate veil
18. CLASSIFICATION OF COMPANIES
1. On the basis of incorporation
Statuary company
Registered company
2. On the basis of liability :
limited liability
3. On the basis of number of members
private company
Public company
19. 4. On the basis of control :
Holding
Subsidiary company
5.On the basis of ownership
Govt company
Non govt company
20. MEMORANDUM OF ASSOCIATION
Memorandum of association is the document that governs the
relationship between the company and the outside. It is one of
the documents required to incorporate a company. MOA is
required to file at incorporate of a company.
Name clause : name of registered entity
Registered office clause: office address
Object clause: aims & objective of company
The association clause: 1st shareholder, his allocated shares
The capital clause: share capital, minimum paid up capital
The liability clause: limited liability, each member’s liability
21. ARTICLES OF ASSOCIATION
Articles of association is a document which defines the
responsibility of the directors, the kind of business undertaken
and the means by which shareholders exert control over BOD.
It covers :
Powers, duties, rights and liabilities of Directors
Powers, duties, rights and liabilities of members
Rules for Meetings of the Company
Dividends
Borrowing powers of the company
Calls on shares
Transfer of shares,Forfeiture of shares
Voting powers of members
22. Doctrine of constructive notice
Documents are open & accessible to all.
Presumption that any outsider dealing with company
has read & understood the documents.
It is a negative doctrine, acting only against the
outsiders & not the company.
23. DOCTRINE OF INDOOR MANAGEMENT
Persons dealing with the company in good faith have a
right to assume that the internal requirements prescribed
in public documents have been observed
Persons are not bound to enquire into regularity of
internal proceedings Exceptions :
Knowledge of irregularity
Negligence on part of the outsider
Forgery
Acts outside scope of apparent authority
24. SHARES
The capital of a company is divided into shares. Each share
forms a unit of ownership and is offered for sale so as to raise
capital for the company.
Types of shares :
Equity share
Preference shares
Bonus shares
Right shares
Allotment of shares
Calls on shares
Forfeiture of shares
Share certificate
Share warrant
25. Equity shares: it give their holders the power to share the
earnings/profits in the company as well as a vote in the AGMs
of the company. Such a shareholder has to share the profits and
also bear the losses incurred by the company. Equity
shareholders are regarded as the real owners of the company.
Preference shares: preference shares earn their holders only
dividends, which are fixed, giving no voting rights
Bonus shares : bonus shares are additional shares given to the
shareholders without any additional cost, based upon No. of
shares that a shareholder owns.
Right shares : right shares are those shares which are issued to
existing shareholders. company can issue right shares only
after two years of creation of company.
26. Allotment of shares: an appropriation of a certain no. of shares
to an applicant in response of his application for shares.
Allotment means distribution of shares who has submitted
written application.
Oversubscription: the excess no. of shares that investors want
to buy but are not available due to high demand.
Calls on shares: a demand made by company on its
shareholders to pay whole or part of the balance remaining
unpaid on each share at any time during the life time of a
company.
Forfeiture of shares : share forfeiture is the process by which
the directors of a company cancels the power of shareholders if
he does not pay his call money when the company demands for
it. Company gives 14 days notice.
27. Share certificate: a certificate issued by a company certifying
that on the date the certificate is issued a certain person in the
registered owner of shares in the company.
Share warrant: share warrant are securities issued by a
company which give their owner the right to purchase shares in
a company at a specific price at a future date.
28. PARTNERSHIP
A partnership is an arrangement where parties, known
as partners, agree to cooperate to advance their mutual
interests. The partners in a partnership may be
individuals, businesses, interest-
based organizations, schools, governments or combinations
thereof.
“Partnership is the relation between persons who have agreed
to share the profits of a business carried on by all or any of
them acting for all”.
29. ESSENTIALS OF PARTNERSHIP
Voluntary agreement
Sharing profit of business
Contract for partnership
Maximum no. of partners is 20
Mutual agency
30. TYPES OF PARTNERS
Active partner
Dormant partner
Nominal partner
Partner in profit
Partner by estoppel
31. RIGHTS OF PARTNERS
Right to take part in management:
Right to express opinion:
Right to take out copies and inspect the books of account:
Right to share profits:
Right to have interest on capital and advances
Right to be indemnified.
Right to have joint share in the partnership property:
Right of preventing the entry of new partner:
Right to retirement:
Right to dissolve:
Right to have profits after retirement or death:
Right to carry on competitive business:
32. DUTIES OF PARTNERS
To carry on the business to the greatest common advantage:
To be just and faithful to each other:
To render true accounts:
To provide full information:
To attend diligently to his duties:
To work without remuneration:
To indemnify for loss caused by fraud or willful neglect:
To share losses:
To act within authority:
Duty not to assign his interest:
