MODULE 1

INDIAN CONTRACT ACT

Introduction The law relating to contracts is contained in the Indian Contract Act, of 1872. For business executives, contract law is tremendously significant
because it underlies or is related to all major areas of law affecting business. It is the most important branch of business law. It is, however, of particular
importance to people engaged in trade, commerce and industry as the bulk of their business transactions are based on contracts. The law of contract is a
branch of law that determines the circumstances in which promises made by the parties to a contract shall be legally binding on them.
The law relating to contracts is contained in the Indian Contract Act, of 1872. The Act deals with:
a) General principles of the law of contract (Secs. 1 to 75),
b) Some special contracts (Secs. 124 to 238).
The contract consists of two essential elements:
• an agreement,
• enforceability by law.
Definition of contract
A contract is an agreement, enforceable by law, made between at least two parties to do a particular act or abstain from doing a particular act. When parties
create a contract, they create legal rights and obligations between themselves. If the party, that had agreed to do something, fails to do that, then the other
party has legal remedies. “Contract is an agreement, enforceable by law” - Sec.2(h) “A contract is an agreement, creating and defining the obligation
between Parties.” - Salmond “Every agreement and promise enforceable at law is a contract.” - Sir Fredrick Pollock.
Thus, an agreement is an accepted proposal. Thus, an agreement has two following elements: • Offer • Acceptance Offer + Acceptance = Agreement
Nature and Kinds of Contracts
NATURE-The law of contract is that branch of law which determines the circumstances in which a promise or an agreement shall be legally binding on the
person making it. Unlike other branches of law, law of contract does not state a number of rights and duties, but lays down certain limiting principles within
the framework of which the parties to an agreement may lay down their own terms and conditions. These will be upheld by the courts as long as they do not
infringe upon any provisions of the law.
The contracts being the basis of most of the business transactions, the law of contract is of particular significance to people (i.e., traders, factory owners,
partnership firms, joint stock companies, banks, insurance companies, etc.) engaged in trading, commercial and industrial activities.
KINDS OF CONTRACT
1.Valid Contracts-Contracts that are valid have all the necessary components and can be enforced in court. Legal responsibilities are established between
contractual parties by a legitimate contract. It offers one party justification to compel another party to do something or not. Legal responsibility for contract
performance rests with the parties. If a party breaches a contract, the other side may file a lawsuit. In many situations, signing on the dotted line binds you to
uphold the terms of the agreement, but there are several situations that render contracts legally unenforceable.
2. Void Contract- A contract that ceases to be enforceable by law becomes void when it ceases to be enforceable [Sec. 2 (j)]. In other words, a void contract
is a contract that is valid when entered into but which subsequently became void due to impossibility of performance, change of law or some other reason.
The contract turned into a Void contract due to the impossibility of performance.
3. Voidable Contracts- Voidable contracts seem to be valid since they possess the criteria for enforcement. Yet, they also feature a weakness that might allow
one or both sides to revoke it. A voidable contract may initially have legal force but end up being null and void. If a victim does not act, it is still seen as
genuine. The majority of sales agreements have contingency clauses, which render them voidable. A party must exercise its right to enforce a voidable
agreement to make it enforceable. Legally, the contract can be carried out or not by either party. Usually, only one party is required to abide by the terms.
4. Void Agreements According to Section 2(g), an agreement not enforceable by law is said to be void.
5. Unenforceable Contracts It is a contract that is legally binding but cannot be enforced due to a technical flaw (such as not being in writing or not being
properly stamped or some other reasons). Such contracts can be enforced if the technical defect involved is removed.
6. Illegal or unlawful Agreement- An illegal agreement is one the object of which is unlawful. Such an agreement cannot be enforced by law. Thus, illegal
agreements are always void-ab-initio (i.e. void from the very beginningAll illegal agreements are void but all void agreements or contracts are not
necessarily illegal.
Based on Formation
a) Express Contact It is contract that is made in writing or by word of mouth.
example:- • Vivan writes a letter to Yuvraj, “I offer to sell my car for 1,00,000 to you”. Yuvraj sends a letter to Vivan saying “I am ready to buy you a car
for 100000”

b) Implied Contract An implied contract is inferred from the conduct of a person or the circumstance of a particular case.
Ex-If Akash boards a bus to go to his destination and whether he takes a seat or not, the law will imply a contract from the very nature of the circumstances,
and Akash will have to pay the fare.
c) Quasi Contact or Constructive Contract A quasi contract is based on the principle that a person shall not be allowed to enrich himself at the expense of
another. These contracts are strictly not contracts as there is no intention of parties to enter into a contract.
Example: • ABC Ltd., a TV co., wrongly delivered a new TV to Mrs. Zenith that she did not order. She kept the TV and did not attempt to return it. In this
case, a Quasi-contract may be enforced on her to pay for the TV.
d) E-Commerce Contract A contract modelled, specified, executed and deployed by a software system. It is very similar to traditional contracts. Formation
of E-Commerce contracts: • Click-Wrap: In click-wrap contract, the party’s affirmative acceptance is taken by means of checking on an ‘I accept’ tab with
the scroll box that allows the accepting party to view the terms and conditions. • Browse-Wrap: In case of browse-wrap agreement the mere use (or browse)
of the website makes the terms binding on the contracting party. • Shrink-Wrap: In case of shrink-wrap agreement the contracting party can read the terms
and conditions only after opening the box within which the product (commonly a license) is packed. Such agreements are relevant in the context of e-
commerce mostly because of the kind of goods associated with shrink-wrap agreements.
On the Basis of Performance
a) Executed Contract It is a contract where both the parties to the contract have fulfilled their respective obligations under the contract.
Example: Amita agrees to paint a picture of Seema for 1 Lakh. Amita paints the picture on set time and Seema pays 1 Lakh to Amita.
b) Executory Contract It is a contract where both the parties to the contract have to perform their respective obligations.
Example: Ankur offers to sell his car to Nitin for 1 lakh. Nitin accepts the offer. If the car has not yet been delivered by Ankur and the price has not yet been
paid by Nitin. It will be an executory contract as the performance from both parties is due. Executory contracts can be further classified as Unilateral
Contract and Bilateral Contact.
i) Unilateral Executory Contract It is a contract in which only one party has to fulfill his/her obligation at the time of the formation of the contract. Such
contracts are also known as contracts with executed consideration
Example: Shilpa offers to sell her car to Rahul for 3 lakhs on a credit of 1 month. Rahul accepts the Shilpa offer. Shilpa sold the car to Rahul and delivered
the same to him. It is an example of a unilateral executory contract. Here the contract is executed as to Shilpa and Executory as to Rahul.
ii) Bilateral contract It is a contract in which the obligations on the part of both parties to the contract are outstanding at the time of formation of the contract.
These contracts are known as contracts with executory consideration
essentials elements
The following are the essential elements of a valid contract.
i) Offer and Acceptance: In order to create a valid contract, there must be a “lawful offer” by one party and “lawful acceptance” of the same by the other
party.
ii) Intension to create legal relationship: There must be an intension among the parties to create a legal relationship. In case of social (or) domestic
agreements, the usual presumption is that the parties do not intend to create legal relationship. But in commercial (or) in business agreement the usual
presumption is that the parties intend to create legal relationship unless otherwise agreed upon.
Case law: Balfour vs Balfour Mr. Balfour was employeed in Ceylon. Mrs. Balfour owing to ill health had to stay in England and couldn’t accompany him to
Ceylon. Mr. Balfour promised to send 30₤ per month while he was abroad. But Mr. Balfour fails to pay that amount. So Mrs. Balfour filed a suit against her
husband for recovering the said amount. The court held that it was a mere domestic agreement and that the promise made by the husband in this case was not
intended to be a legal obligation. Other leading cases on this point are week’s vs Tybald and Rose and Frank company vs Compton brothers.
iii) Lawful consideration: An agreement must be supported by lawful consideration. Consideration means something in return. The consideration must be
lawful. E.g.: ‘A’ promises to obtain employment in public service for ‘B’ and ‘B’ promises to pay Rs 50,000/- to ‘A’. The agreement is not enforceable as
the consideration for it is unlawful.
iv) Capacity of Parties: The Parties who enter into an agreement should be legally competent to do so. A Person is said to be legally competent to contract if
has attained the age of majority, is of sound mind and is not disqualified from contracting by any law. An agreement made by parties incompetent to
contract, then no valid contract comes into existence because those agreements are not enforceable by law. E.g.: Agreements made with minors (or) unsound
mind persons are not valid contracts.
v) Free Consent: The consent of the parties to the agreement must be free and genuine. A Consent is said to be free when it is not caused by co-ercion,
undue influence, fraud, misrepresentation (or) mistake. If the consent of the parties is not free, then no valid contract comes into existence. E.g.: ‘A’ who
owns two cars, one Maruthi and the other Indica, offers to sell ‘B’ one car, ‘A’ intending it to be the Maruthi, ‘B’ accepts the offer thinking that it was the
Indica, there is no free consent and hence no contract.
vi) Lawful Object: The object of an agreement must be lawful. It must not be illegal (or) immoral (or) opposed to public policy and must not be forbidden by
law. E.g.: Any agreement entered between parties for doing a crime (or) committing an offence is unenforceable because there is no lawful object.
vii) Certainity of Meaning: The terms and conditions of an agreement must be précised and certain. They must not be indefinite (or) uncertain. If they are so
the agreement is not enforceable. E.g.: ‘A’ agrees to sell ‘B’ 100 tons of oil. There is nothing whatever to show what kind of oil was intended. So the
agreement is not enforceable.
viii) Possibility Of Performance: The agreement must be capable of being performed. A promise to do an impossible thing cannot be enforced.
E.g.: Mr. ‘A’ agrees with ‘B’ to discover treasure by magic. Such agreement is not enforceable.
ix) Not Declared to be void (or) illegal: The agreement though satisfying all the above conditions for a valid contract must not have been expressly declared
void by any law in force in the country. E.g.: Agreement in restraint of marriage, agreement in restraint of trade etc.
x) Legal Formalities: An oral agreement is a perfectly valid contract except in those cases where writing, registration etc is required by some provisions. In
India, writing is required in cases of sale, mortgage, lease, memorandum of association, articles of association of a company etc. in some cases a contract has
to be attested, registered and stamped. Thus where there is a statutory requirement that a contract should be made in writing and registered, they require by
legal formalities should be fulfilled.
Types of a contract

According to the Indian Contract Act of 1872, a contract can be classified on the following basis:
Based on the validity.

Valid Contract: An agreement that is binding and enforceable, containing all essential elements, is termed a valid contract.
Void Contract: As per Section 2(j), a contract becomes void when it ceases to be enforceable by law, rendering it incapable of court enforcement.
Voidable Contract: Defined in Section 2(i), this type of contract is enforceable by law at the option of one or more parties but not at the option of others.
Illegal Contract: Forbidden by law, a court will not enforce an illegal contract, and connected contracts may also be affected. Notably, all illegal agreements
are void, but not all void agreements are necessarily illegal.
Unenforceable Contract: While good in substance, a contract may be deemed unenforceable due to technical defects, such as absence in writing or being
barred by limitation, preventing one or both parties from suing upon it.

Based on the formation of a contract.

Express Contracts: Contracts where terms are explicitly stated in words or in writing, as per Section 9, where a proposal or acceptance is made in words.
Implied Contracts: Arising from actions, conduct, or the course of dealings between parties, implied contracts come into existence without explicit terms.
Quasi-Contract: Not an actual contract but resembling one, it is created by law under specific circumstances, enforcing legal rights and obligations in the
absence of a real contract.
E-Contracts: Contracts formed through electronic means, like emails, are termed e-commerce contracts.
Based on the performance of the contract.

Executed Contract: When the consideration in a contract, be it an act or forbearance, has been completed or brought on record, it is termed an executed
contract.
Executory Contract: In an executory contract, the consideration involves reciprocal promises or obligations to be performed in the future, characterising
these contracts as executory.
Formation of a contract

Offer: Clearly say what you're willing to do or not do.

Acceptance: Agree exactly as the offer was made and tell the other party you agree.
Consideration: Both sides should get something valuable out of the deal.
Intention to Create Legal Relations: Both parties must mean to make a real, legal agreement.
Capacity: Make sure everyone involved is old enough and sane enough to understand what they're agreeing to.
Free Consent: Everyone should agree without being forced, tricked, or mistaken.
Lawful Object and Consideration: The deal shouldn't involve anything illegal or against what's considered right.
Certainty and Possibility of Performance: Make sure the deal is clear and can actually be done.
Legal Formalities (if required): Some contracts need to be written down or registered, as the law demands.
Performance of contracts
According to Section 31 of the Sale of Goods Act, the gist of a contract of sale is the performance of their obligations by the parties to the contract.
Performance of a contract of sale means as regards the seller, delivery of the goods to the buyer, and as regards the buyer, acceptance of the delivery of the
goods and payment for them, by the terms of the contract of sale. The contract is completed when both parties have carried out their obligations.
If the contract contains any special terms as to delivery and acceptance, these must be complied with. In the absence of a contract to the contrary, delivery of
the goods and payment of price are concurrent conditions, that is, both these must take place at the same time i.e., the seller must be willing and ready to
deliver the goods and the buyer must be willing to and ready to accept the goods and pay the price to the seller, as in, for instance, a cash sale over a shop
counter (Sec. 32). A contract of sale always involves reciprocal promises, the seller promising to deliver the goods and the buyer to accept and pay for them
breach of contract and its remedies.
Breach of contract amounts to a broken promise to do or not to do an act in legal terms. It may be single, occurring at a single point of time or continuing
breaches. A lawsuit for breach of contract is a civil action and the remedies awarded to the aggrieved party are designed to place him in the position that he
would be in if not for the breach. Breach of contract can be an Actual Breach or Anticipatory Breach.

Actual Breach occurs when one of the parties denies to perform its side of the bargain on the due date or performs incompletely. It is failure of one party to
perform as promised, or making it impossible for the other party to perform. a) at the time when performance is due, or b) during the performance of the
contract. Thus, if a person does not perform his part of the contract at the stipulated time, he will be liable for its breach.
Anticipatory Breach The anticipatory breach of contract occurs when a party repudiates it before the time fixed for performance has arrived or when a party
by his act disables himself from performing the contract.
Remedies of Breach of Contract In case of breach of contract, the injured party may go for the following remedies available under the Act: 1) Rescind the
contract and refuse further performance of the contract. 2) Sue for damages 3) Sue for specific performance 4) Sue for an injunction to restrain the breach of
a negative term 5) Sue for quantum meruit
1. Rescind the Contract and Refuses Further Performance of Contract Under Sec. 65, when a party treats a contract as rescinded, it makes itself liable to
restore any benefits it received under the contract to the party from whom such benefits were received.
2. Sue for damages: Sec. 73 The party injured by the breach of contract can claim damages. Damage is the monetary compensation allowed by the court to
the injured party for the loss or injury suffered by him as a result of a breach by the other party.
3. Sue for specific performance Where damages are not an adequate remedy, the court may direct the party in breach to carry out his promise according to
the terms of the contract. This is called the specific performance of the contract.
4. Sue for an injunction to restrain the breach of a negative term
• The power to grant an injunction is discretionary. • It may be granted temporarily or for an indefinite period. • It may be prohibitory or mandatory
It means “as much as earned or deserved” or “as much as is merited”. Example: A contractor was contracted to work at a school. The contractor did some
work but messed up part of the work (breach of contract). The school suspended the construction work because of the problem. Based on quantum meruit,
the contractor was entitled to be paid for the services he had already performed for the school.
Principles Governing Capacity of Parties and Free Consent

Here's a simplified breakdown of the principles governing capacity of parties and free consent under the Indian Contract Act:
Capacity of Parties: Both parties entering into a contract must have the legal capacity to do so. This means they must be of sound mind, not minors, and not
otherwise disqualified by law from entering into contracts.
Free Consent: Consent of both parties must be given freely, without any coercion, undue influence, fraud, misrepresentation, or mistake.

Legality of Objects
Legality of Objects under the Indian Contract Act, 1872:
The Indian Contract Act, 1872, governs the law of contracts in India. One of the fundamental principles of contract law is that the object of a contract must
be lawful. The legality of objects refers to ensuring that the purpose or objective of a contract is not prohibited by law, is not against public policy, and does
not involve any illegal activities. The Act specifies that any agreement that is made for an unlawful object or consideration is void.
Ensuring the legality of objects in contracts is essential for upholding the principles of justice, fairness, and morality in society. It protects parties from
entering into agreements that may be harmful, illegal, or against public welfare. By upholding the legality of objects, the Indian Contract Act promotes
confidence in the validity and enforceability of contracts, thereby facilitating commercial transactions and promoting economic growth.
Performance and Discharge of Contract

PERFORMANCE OF CONTRACT: - Performance of a contract means the carrying out of legal obligations within time and in the manner prescribed in the
contract. Section 37 of the contract act lays down that the parties to a contract must either perform or offer to perform their respective promises unless such
performance is dispensed with or excused under the provisions of this act or any other act.
Types of performances: - Performances are two types :-
a. Actual performances: Where a promiser has made an offer of performance to the promisee and the offer has been accepted by the promisee, it is called an
actual performance. Eg: - ‘X’ and ‘Y’ enter into a contract that ‘X’ will sell the car to ‘Y’ for Rs.1, 00,000. When ‘X’ delivers the car and ‘Y’ pays Rs.1,
00,000 to ‘X’. This is an actual performance.
b. Attempted performance (or) offer to perform (or) Tender: Where a promiser has made on offer of performance to the promisee and the offer has not been
accepted by the promisee, It is called an attempted performance.
Eg: - ‘X’ and ‘Y’ enter into a contract that ‘X’ will sell the car to ‘Y’ for Rs.1,00,000 when ‘X’ offer to deliver the car to ‘Y’, but ‘Y’ refused to pay
Rs.1,00,000. This is an attempted performance.
The persons who should perform the contract: As a matter of fact the contract should be performed by the promiser himself. However in certain cases the
contract can also be performed by his representatives, agents etc. Depending upon the intention of the parties, the contract may be performed by the
following persons.
1) The Promiser himself: - If the contact involves personal skills, the promiser himself must perform. If the promiser dies such contracts comes to an end.
2) By the agent: - An agent appointed by the promiser may also perform the contracts, which don’t involve any personal skill. Eg: - ‘A’ contract to sell the
goods may be performed the agent appointed by the seller.
3) By the legal representatives: - Where the contract doesn’t involve personal skill, the contact may be performed by the legal representatives if the promiser
dies before the performance of the contract. However the liability of the legal representatives is limited to the value of the property of the deceased promiser
inherited by them. Ex: ‘A’ promises to deliver goods to ‘B’ on a certain day on payment of Rs.1000. ‘A’ dies before that date. A’s representatives are bound
to deliver the goods to ‘B’ and ‘B’ is bound to pay Rs.1000 to ‘A’s representatives.
4) By third persons: - In certain cases promises may also be performed by a third party when a third Party when a promisee accepts the performance from a
third person, he cannot after wards enforce it against the promiser. In such case the contract comes to an end and the promiser is discharged from further
liability.
DISCHARGE OF CONTRACT-Discharge of contract means termination of the contractual relations between the parties to a contract. A contract is said to
be discharged when the rights and obligations of the parties come to end under the contract.
Modes of discharge of a contract: The following are the various modes in which a contract may be discharged. 1. By performance. 2. By agreement or
consent. 3. By lapse of time. 4. By operation of law. 5. By impossibility of performance. 6. By breach.

Quasi contracts
Quasi-contracts are a concept under the Indian Contract Act, of 1872, that governs situations where there is no express or implied contract between parties
but still imposes an obligation on one party to pay the other party. It is also known as a “constructive contract” or “implied-in-law contract.” This type of
contract arises to prevent unjust enrichment of one party at the expense of the other party. Quasi-contracts are based on the principle of equity and justice,
rather than a mutual agreement between the parties.
Quantum Meruit is a Latin term that means “as much as he deserved.” This principle is often used in quasi-contract cases where one party has provided
goods or services to another party. It refers to the principle that if someone has provided services or goods to another person, they should be paid a
reasonable amount for the value of those goods or services, even if there was no express agreement between the parties.

Characteristics of Quasi Contracts

Absence of Agreement: Quasi-contracts arise in the absence of an agreement between the parties. There is no express or implied contract between the parties
that specifies their rights and obligations.
Implied by Law: Quasi-contracts are not created by the parties’ intention but rather imposed by the law to prevent unjust enrichment of one party at the
expense of the other.

Special contracts of Bailment and Pledge

Bailment and pledge are two significant concepts under the Indian Contract Act, 1872, governing the relationship between parties regarding the transfer of
possession of goods. Bailment refers to the delivery of goods by one person to another for some purpose, upon a contract that the goods shall be returned or
otherwise disposed of according to the directions of the person delivering them after the purpose has been accomplished. The person delivering the goods is
called the 'bailor', and the person to whom they are delivered is called the 'bailee'. Under the Indian Contract Act, certain conditions and rights are attached to
both bailment and pledge:

Duty of Care: The bailee or pawnee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar
circumstances, take of his own goods of the same bulk, quality, and value.
Liability for Unauthorized Use: The bailee or pawnee must not make any unauthorized use of the goods bailed. If he does so, he becomes liable to
compensate the bailor or pawnor for any damage directly resulting from such use.
Return of Goods: The bailee or pawnee is bound to return the goods, or deliver them as according to the bailor's or pawnor's directions, as soon as the
purpose of the bailment is accomplished or the loan is repaid.
Right of Indemnity: The bailor or pawnor has the right to claim indemnity from the bailee or pawnee in case of any loss arising from the bailee's negligence
or breach of terms of the bailment or pledge.
Right of Lien: Both the bailee and pawnee have the right of lien over the goods bailed or pledged. This means they can retain possession of the goods until
the bailment or pledge contract is duly performed.
Indemnity and Guarantee,
The contract of indemnity and contract of guarantee are specific types of contracts. The provisions relating to these contracts are contained in Sections 124 to
147 (Chapter VIII) of the Indian Contract Act, 1872.
Meaning and Definition of Contract of Indemnity Ordinarily, the term indemnity means to make good any loss or to compensate any person who has
suffered some loss. According to Section 124 of the Indian Contract Act, “A contract, by which one party promises to save the other from loss caused to him
by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity”. The person who makes the promise to make
good the loss is called the indemnifier. The person whose loss is to be made good is called indemnity holder.

A contract of indemnity refers to a promise made by one person to make good any loss or damage another has incurred or may occur by acting at his request
or for his benefit. As such, a contract of indemnity is a type of contingent contract. The performance of the contract is dependent on happening or non-
happening of a contingency, which may cause losses to another party. A contract of indemnity may be express or implied.
ESSENTIALS OF THE CONTRACT OF INDEMNITY-The definition of a contract of indemnity in Section 124 of the Indian Contract Act makes it clear
that, besides having the basic elements of a valid contract, a contract of indemnity must have the following two elements:
a) The indemnifier expressly promises to indemnify the indemnity holder.
b) The promise is to protect the indemnity holder against loss that could be the result of an act on the part of the promisor (i.e., the indemnifier) or a third
party.
Rights of Indemnity Holder (Section 125) Section 125 enumerates the rights of an indemnity holder in a contract of indemnity. According to this section, an
indemnity holder (or indemnified) is entitled to recover the following from the promisor:
1. Right to Damages: An indemnity holder is entitled to recover the amount of damage that he has been compelled to pay the other party in a suit to which
the contract of indemnity is applicable.
2. Right to Costs: An indemnity holder is also entitled to claim all the costs which he has incurred for defending himself in a suit to which the promise of
indemnity is applicable. Such costs may include all incidental charges and legal expenses paid in that suit. 3. Sums paid under the conditions of compromise:
The indemnity holder is entitled to recover all sums which he may have paid under the terms of any compromise of any such suit, provided such compromise
is not contrary to the orders of the promisor and was one which it would have been prudent for the indemnity holder to make.
Rights of the Indemnifier When the indemnifier indemnifies an indemnity-holder, he has some rights on the indemnified. The Indian Contract Act is silent
on the rights of the indemnifier but, as per the provisions of Section 141 and various court verdicts, the rights of the indemnifier are analogous to the rights
of a surety, which are as under:
1. An indemnifier, after he has paid the damages under an indemnity, regains the rights he had delegated to the indemnified. But he gets these rights only
after he has paid the damage, and not before.
2. If the indemnifier has indemnified the indemnity holder, he gets the right to sue third parties on behalf of the indemnified.
3. If the indemnified suffers any damages which are not covered by the contract of indemnity, the indemnifier is not bound by law to pay such damages.
4. The indemnifier is entitled to sue third parties only to the extent of the damages he has paid to the indemnified.
GUARANTEE
Section 126 of the Indian Contract Act defines a contract of guarantee as a contract to perform the promise, or discharge the liability, of a third person in case
of his default. The contract of guarantee is made to ensure performance of a contract or discharge of obligation by the promisor. In case he fails to do so, the
person giving assurance or guarantee becomes liable for such performance or discharge.
In a contract of guarantee, there are three parties, the creditor, the surety and the principal debtor. The person who gives the guarantee is called the surety, the
person in respect of whose default the guarantee is given is called the principal debtor and the person to whom the guarantee is given is called the creditor.
The contract can be oral or written; but English law stipulates it to be in writing. It may be expressed or implied and may even be inferred from the course of
conduct of the parties concerned.
the purpose of a contract of guarantee can be one of the following: i) For the security of a loan given to a party, ii) For the assurance of good conduct and
honesty of an employee in service contracts and iii) For indemnity of a third party from loss resulting from the non-payment of a debt.

Contract of Agency: Nature of agency

Under the Indian Contract Act, 1872, a contract of agency is an agreement where one person, called the principal, authorizes another person, called the
agent, to act on their behalf and to create legal relations with a third party. Here are some key aspects of a contract of agency:

Principal-Agent Relationship: It establishes a legal relationship between the principal and the agent, where the agent acts on behalf of and under the control
of the principal.
Authority of the Agent: The principal grants authority to the agent to act on their behalf within the scope of the agency relationship. This authority may be
express, implied, or apparent, depending on the circumstances.
Fiduciary Duty: The agent owes a fiduciary duty to the principal, meaning they must act in the best interests of the principal, avoid conflicts of interest, and
maintain confidentiality.
Creation of Legal Relations: The acts of the agent bind the principal in legal relations with third parties, as long as the agent acts within the scope of their
authority.
Types of Agents: Agents may be classified based on their authority and relationship with the principal, such as general agents, special agents, sub-agents,
and mercantile agents.
Termination of Agency: The agency relationship may be terminated by mutual agreement, expiration of the agency period, completion of the task, breach of
contract, or by operation of law.

Creation

Creation of Agency: An agency relationship is established when one person, known as the principal, authorizes another person, called the agent, to act on
their behalf and to create legal relations with third parties. This authorization can be explicit or implied, and it may arise through a formal agreement or the
conduct of the parties involved.

Types of agents

Under the Indian Contract Act, of 1872, agents are classified into different types based on their authority and relationship with the principal. Here are the
main types of agents:

General Agents: These agents are authorized to conduct a series of transactions or manage certain aspects of the principal's business continuously. They have
broad authority to act on the principal's behalf within their agency's scope.
Special Agents: Special agents are appointed for a specific purpose or a particular transaction. Their authority is limited to the specific task or tasks outlined
in the agency agreement. Once the task is completed, their authority typically terminates.
Sub-agents: Sub-agents are appointed by the original agent (the agent of the principal) to assist in performing the tasks delegated by the principal. The sub-
agent's actions are binding on the principal to the same extent as those of the original agent, as long as the appointment of the sub-agent is within the scope
of the original agency agreement.
Mercantile Agents: Mercantile agents are special types of agents who have the authority to deal with goods and documents of title to goods in the ordinary
course of business. They may have authority to sell goods, pledge goods, or deliver goods on behalf of the principal. Mercantile agents have certain statutory
rights and obligations under the Sale of Goods Act, of 1930.
Del Credere Agents: Del Credere agents are a type of mercantile agent who guarantees to the principal the due performance of contracts entered into by them
on behalf of the principal with third parties. They undertake an additional risk and usually charge a higher commission for their services.

Authority and liability of Agent and principal: Rights and duties of principal and agents

AUTHORITY OF THE AGENT:

In the realm of legal aspects of business, the Indian Contract Act, 1872 outlines the authority, rights, and duties of both principals and agents in an agency
relationship.

Express Authority: The principal clearly tells the agent what they can do. It's like giving specific instructions or a to-do list.
Implied Authority: Sometimes, agents can do things that aren't spelled out but are necessary to get the job done. It's like using common sense to figure out
what needs to be done.
Apparent Authority: Even if not directly given, agents might seem to have authority because of how the principal acts or speaks. It's like giving someone the
impression that they're in charge, even if it's not explicitly stated.

LIABILITY of AGENT

Responsibility for Actions: Agents are accountable for their actions while working for the principal. If they make mistakes or act negligently, they can be
held responsible.
Breach of Authority: Agents must stick to the authority given by the principal. If they go beyond their authority, they can be personally responsible for any
problems that arise.
Negligence: Agents are expected to be careful and do their job properly. If they are careless and it cause harm to the principal or others, they can be held
liable.
Breach of Fiduciary Duty: Agents have special duties to the principal, like being loyal and keeping secrets. If they break these duties and it hurts the
principal, they can be held accountable.
Contractual Liability: If agents make contracts they're not supposed to or don't fulfill their contract obligations, they can be personally liable for any resulting
issues.
Indemnification: Sometimes, principals might cover the agent's losses if they were acting within their authority. But if the agent acted wrongly or outside
their authority, they might not get this protection.

TERMINATION OF AGENCY

Mutual Agreement: The agent and the principal can agree to end the agency relationship. It's like deciding together that it's time to part ways.
Expiration of Time: If the agency agreement has a set time period, the agency automatically ends when that time is up. It's like a contract that ends on a
specific date.
Completion of Task: If the agency was for a specific task or purpose, it ends once that task is completed. It's like finishing a project and moving on.
Breach of Contract: If either the agent or the principal breaks the terms of the agency agreement, the other party might end the agency. It's like breaking the
rules and facing consequences.
Operation of Law: Sometimes, the law might say that the agency ends automatically in certain situations, like if one of the parties dies or becomes
incapacitated. It's like the law stepping in to end things.
Sale of Goods Act, 1930:
A sale is a type of contract in which the seller transfers the ownership of goods to the buyer for a money consideration.‘Goods’ means every kind of movable
property, other than actionable claims and money; and includes stocks and shares, growing crops, grass and things attached to or forming part of the land
which are agreed to be severed before sale or under the contract of sale.
Sale of goods is the most prevalent of all commercial contracts. Awareness of its key principles is inevitable to all those involved in any business function.
The law relating to sale of goods or movable property in India is codified in the Sale of Goods Act, 1930. The Act covers topics such as the concept of sale
of goods, conditions and warranties arising out of sale, delivery of goods and passing of property, rights of an unpaid seller and other rights and obligations
of the buyer and the seller.
The Act came into force on 1st July, 1930. It extends to the whole of India. It is well known fact that before a contract of sale is entered into, a seller
frequently makes representations or statements with reference to the goods which influence the buyer to clinch the bargain. Such representations or
statements differ in character and importance. Whether any statement or representation made by the seller with reference to the goods is a stipulation
forming part of the contract or is a mere representation (such as expression of an opinion) forming no part of the contract, depends on the construction of the
contract. If there are no such representations, the ordinary rule of law - caveat emptor’, i.e., “let the buyer beware” --applies. This means the buyer gets the
goods as they come, and it is no part of the seller’s duty to point out the defects in the goods to the buyer.
“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 a price. There may be a
contract of sale between one part-owner and another” [Sec. 4(1)].
A contract of sale is a legal term which includes both sale and an agreement to sell. There are always two parties viz. a buyer and a seller in a sale. Sale
means the transfer of goods from a seller to the buyer for a price.A contract of sale may be absolute or conditional [Sec. 4(2)].
There can be two types of contracts related to Sales: • Actual or Absolute Sale • Conditional Sale or Agreement to sell

Sale and Agreement to Sell,

DIFFERENCE BETWEEN SELL AND AGREEMENT TO SALE The terms "sell" and "agreement to sale" refer to different stages in a transaction
involving the transfer of goods or property. Sell: Selling refers to the actual act of transferring ownership or possession of goods or property from one party
(the seller) to another party (the buyer) in exchange for a mutually agreed-upon consideration, typically money. When a seller sells an item, the transaction is
completed, and the buyer takes immediate possession and ownership of the goods. Agreement to Sale: An agreement to sale, also known as a sales
agreement or a contract for sale, is a legal document that outlines the terms and conditions agreed upon by the buyer and the seller for the sale of goods or
property. It serves as a preliminary or intermediate step before the actual sale takes place. The agreement to sale specifies the details of the transaction,
including the description of the goods, the purchase price, payment terms, delivery terms, warranties, and any other conditions both parties have agreed
upon. It establishes a mutual understanding and commitment between the buyer and the seller to complete the sale at a future date or upon the fulfillment of
certain conditions.
In summary, "sell" refers to the completed act of transferring ownership, while an "agreement to sale" is a legal agreement outlining the terms and conditions
for the sale that precedes the actual transfer of ownership. The agreement to sale sets the stage for the sale transaction, and once all the conditions are met,
the sale is finalized, and the transfer of ownership occurs.

Hire Purchase –

Hire purchase agreements are the kind of agreements whereby the owner of goods allows a person (the hirer) to hire goods from him for a specific period by
paying instalments. Hire purchase agreement is not a contract of sale but a contract of bailment as the hirer hardly has the option to buy the goods and it is a
notable fact that although the hirer has the right to use the goods, he is not the legal owner while the term of the agreement is functioning. In India, all the
hire purchase finance organisations are controlled by the Hire Purchase Act, 1972.

Pledge
According to Section 172, the bailment of goods as security for
payment of a debt or performance of a promise is called a ‘pledge’. The
bailor is, in this case, called the ‘pledger’ or ’ pawnor’ and the bailee is
called the ‘pawnee’ or ‘pledgee’.
A pledge is a bailment for security. If the purpose of bailment is to
provide security for the payment of a loan or the performance of a
promise, then such bailment is called a pledge. In a contract of pledge,
the pawnor delivers the goods to the pawnee. Such delivery may be
actual or constructive, but it can only be of movable property. A pledge
for the immovable property is called a ‘mortgage’. If because of the
bulk of the property or for some other reason, actual delivery is
impracticable, a symbolic delivery will suffice (as, the delivery of the
keys to a safe deposit box.

Mortgage

Definition: A mortgage is a legal agreement where a borrower (mortgagor) pledges an interest in real property as collateral for a loan from a lender
(mortgagee). The lender provides funds to the borrower, and in return, the borrower grants the lender a security interest in the property.
Creation of Mortgage: The mortgage is created by a written agreement, often called a mortgage deed, which outlines the terms and conditions of the loan,
including the amount borrowed, interest rate, repayment schedule, and conditions for default.

Rights and Responsibilities:

Mortgagor: The borrower retains possession and ownership of the property but agrees to transfer the property to the lender if the loan is not repaid as per the
agreement.
Mortgagee: The lender holds a security interest in the property and has the right to enforce the terms of the mortgage agreement, including foreclosure in
case of default.

Hypothecation Lease

Hypothecation:
Definition: Hypothecation is a legal arrangement where a borrower pledges an asset as collateral to secure a loan without transferring ownership of the asset
to the lender. The lender has a right to take possession of the asset if the borrower defaults on the loan.
Creation of Hypothecation: The borrower retains possession and ownership of the asset while granting the lender a security interest in the asset. The terms of
the hypothecation agreement, including the loan amount, interest rate, and repayment schedule, are outlined in a written contract.
Security Interest: The asset hypothecated serves as security for the loan. If the borrower fails to repay the loan according to the terms of the agreement, the
lender has the right to seize and sell the asset to recover the outstanding debt.
Rights and Responsibilities:
Borrower: The borrower retains ownership and possession of the asset but agrees to pledge it as collateral for the loan.
Lender: The lender holds a security interest in the asset and has the right to enforce the terms of the hypothecation agreement, including seizing the asset in
case of default.

Lease:
Definition: A lease is a contractual arrangement where the owner of a property (lessor) grants the right to use the property to another party (lessee) in
exchange for periodic payments (rent).
Creation of Lease: The terms of the lease, including the duration of the lease, rent amount, and conditions of use, are outlined in a written lease agreement
signed by both parties.
Rights and Responsibilities:
Lessor: The lessor owns the property and grants the lessee the right to use it for a specified period in exchange for rent payments. The lessor is responsible
for maintaining the property and ensuring it is in a habitable condition.
Lessee: The lessee has the right to possess and use the property for the duration of the lease term. The lessee must pay rent on time and abide by the terms of
the lease agreement.

Goods

There must be some goods.’ Goods’ means every kind of movable property other than actionable claims and money including stock and shares, growing
crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale [Section 2(7)].

Different types of Goods

1.Existing Goods Existing goods mean the goods which are either owned or possessed by the seller at the time of the contract of sale. The existing goods
may be specific or ascertained or unascertained as follows:
a) Specific Goods[Section 2(14)]: These are the goods that are identified and agreed upon at the time when a contract of sale is made-For example, specified
TV,VCR,Car,Ring.
b) Ascertained Goods: Goods are said to be ascertained when out of a mass of unascertained goods,the quantity extracted for is identified and set aside for a
given contract.Thus,when part of the goods lying in bulk are identified and earmarked for sale,such goods are termed as ascertained goods.
c) Unsanctioned Goods: These are the goods which are not identified and agreed upon at the time when a contract of sale is made e.g. goods in stock or lying
in lots.

2. Future Goods [Section 2(6)] Future goods mean goods to be manufactured produced or acquired by the seller after the making of the contract of sale.
There can be an agreement to sell only. There can be no sale in respect of future goods because one cannot sell what he does not possess.

3. Contingent Goods [Section 6(2)] These are the goods the acquisition of which by the seller depends upon a contingency which may or may not happen.

Passing of Property in Goods

The passing of property refers to the transfer of ownership of goods from the seller (vendor) to the buyer (vendee) in a sale transaction.

Conditions for Passing of Property:

Intention of the Parties: The intention of the parties involved in the sale transaction is a crucial factor in determining when the property passes from the seller
to the buyer. This intention can be expressed explicitly in the sales contract or implied from the circumstances of the transaction.
Agreement: The agreement between the seller and the buyer governs the passing of property. The terms of the contract, including clauses related to delivery,
payment, and transfer of title, determine when ownership of the goods is transferred.
Transfer of Possession: In most cases, the property passes when the seller delivers the goods to the buyer or to a carrier for transportation to the buyer.
Actual or constructive delivery of the goods is often necessary for the passing of property.
Payment of Price: In some situations, the passing of property may be contingent upon the payment of the purchase price. Ownership of the goods may not
transfer to the buyer until full payment has been made.

Conditions and Warranties

A stipulation in a contract of sale with reference to goods which are subject matter there of, may be a condition or a warranty. All the stipulations in a
contract of sale are not of equal importance. Some of them are essential to the main purpose of the contract which are called conditions and some are
collateral to he main purpose of the contract which are called warranties.
CONDITIONS: Section 12 (2) of the sale of Goods Act defines a condition as “a stipulation essential to the main purpose of the contract, the breach of
which gives right to treat the contract as repudiated”. In other words, if an express stipulation is a part of the contract, i.e., its fulfillment is essential to be
completed, it is deemed to be a condition. If the condition is not met, the aggrieved party is entitled to terminate the contract. It may well be said that
‘condition’ is the foundation of the edifice of a contract of sale — the moment it is broken, the whole edifice collapses, and the contract terminates.
Essentials of Conditions 1. It is essential to the main purpose of the contract. 2. The non-fulfillment of condition causes irreparable damage to the aggrieved
party which would defeat the very purpose for which the contract is made. 3. The breach of a condition gives a right to the aggrieved party to rescind the
contract and recover the damages for breach of condition
Doctrine of Caveat emptor,
This means ‘let the buyer beware’, i.e., in a contract of sale of goods the seller is under no duty to reveal unflattering truths about the goods sold. Therefore,
when a person buys some goods, he must examine them thoroughly. If the goods turn out to be defective or do not suit his purpose or if he depends upon his
own skill or judgment and makes a bad selection, he cannot blame anybody excepting himself.
Section 16 of the sale of Goods Act endorses this doctrine when it lays down that there is no implied condition or warranty in a contract of sale about the
quality or usability of goods transferred under the contract for specific requirements. In other words, the seller is not bound by any implied condition in a
contract of sale about the quality and usability of goods, and the entire responsibility rests with the buyer.
Rights of an Unpaid Seller

The rights of an unpaid seller under the Sale of Goods Act, 1930 are essential legal protections provided to sellers who haven't received payment for goods
sold. Here's a simplified breakdown:
Rights of an Unpaid Seller under Sale of Goods Act, 1930:
Right of Lien: An unpaid seller can keep hold of the goods until the buyer pays the full purchase price. This right, known as the right of lien, serves as
security for the seller.
Right of Stoppage in Transit: If the seller has delivered goods to a carrier for the buyer but learns that the buyer is insolvent (can't pay debts), the seller can
stop the goods while they're in transit and take them back. This right is called the right of stoppage in transit.
Right of Resale: If the buyer fails to pay or refuses to accept the goods, the unpaid seller can sell them to someone else. This can happen after giving the
buyer reasonable notice. Any shortfall in the resale price compared to the original price can be claimed from the buyer.
Right to Sue for Price: If the property in the goods has passed to the buyer and the buyer hasn't paid according to the contract terms, the seller can sue the
buyer for the price of the goods.
Right to Sue for Damages: Alongside suing for the price, the seller can also sue for damages. This could be for loss of profit or additional expenses incurred
due to the buyer's failure to pay.
Negotiable Instruments Act, 1882:
Negotiable instruments are commercial documents that are used as means of payment of goods and services. They are the documents of certain type used in
the commercial transactions and monetary dealings and are significant part of the modern business world. The need to pay for goods and services in physical
cash is obviated by using negotiable instruments. The law dealing with negotiable instruments in India is known as the Negotiable Instruments Act, 1881.
The Negotiable Instruments Act, 1881, defines and amends the law relating to Promissory Notes, Bills of Exchange and Cheques.The main objective of the
Act is to legalize the system by which instruments contemplated by it could pass from hand to hand by negotiation like any other goods.The Act applies to
the whole of India.The provisions of this Act are also applicable to Hundis, unless there is a local usage to the contrary.
Meaning of Negotiability and Negotiable Instruments,
Negotiable instruments are commercial documents that are used as means of payment of goods and services. They are the documents of certain type used in
the commercial transactions and monetary dealings and are significant part of the modern business world. The need to pay for goods and services in physical
cash is obviated by using negotiable instruments.
The law dealing with negotiable instruments in India is known as the Negotiable Instruments Act, 1881. The Negotiable Instruments Act, 1881, defines and
amends the law relating to Promissory Notes, Bills of Exchange and Cheques. The main objective of the Act is to legalize the system by which instruments
contemplated by it could pass from hand to hand by negotiation like any other goods. The Act applies to the whole of India.The provisions of this Act are
also applicable to Hundis, unless there is a local usage to the contrary.
Meaning Negotiable instrument is an instrument which is freely transferable (by customs of trade) from one person to another by mere delivery or by
indorsement and delivery. The property in such instrument passes to bonafide transferee for value.
Negotiable Instruments: Parties (Sec. 7)
“Drawer" and Drawee" The maker of a bill of exchange or cheque is called the "drawer"; the person thereby directed to pay is called the "drawee". "Drawee
in case of need" When in the bill or in any indorsement thereon the name of any person is given in addition to the drawee to be resorted to in case of need,
such person is called a "drawee in case of need".
"Acceptor" After the drawee of a bill has signed his assent upon the bill, or, if there are more parts thereof than one, upon one of such parts, and delivered
the same, or given notice of such signing to the holder or to some person on his behalf, he is called the "acceptor".
"Acceptor for honour"When a bill of exchange has been noted or protested for non-acceptance or for better security, and any person accepts it supra protest
for honour of the drawer or of any one of the indorsers, such person is called an "acceptor for honour".
"Payee" The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the "payee".

Nature and requisites of negotiable instruments

Nature of Negotiable Instruments under Negotiable Instruments Act, 1882:

Transferability: Negotiable instruments are documents that can be transferred from one person to another in a way that confers legal rights to the transferee
(the person receiving the instrument). This transferability allows for easy and secure transactions in business and commerce.
Payment Promise: Negotiable instruments contain a promise or order to pay a certain sum of money to the bearer or to a specified person. This promise is
legally enforceable, providing assurance to the holder of the instrument that they will receive payment.
Legal Framework: Negotiable instruments are governed by specific legal rules and regulations outlined in the Negotiable Instruments Act, 1882. This act
defines the rights, duties, and liabilities of parties involved in negotiable instrument transactions, ensuring consistency and predictability in their use.

Requisites of Negotiable Instruments under Negotiable Instruments Act, 1882:

In Writing: Negotiable instruments must be in writing, either handwritten, printed, or in electronic form. This ensures clarity and evidentiary value in
documenting the payment promise.
Signed by the Maker or Drawer: The negotiable instrument must be signed by the person making the promise to pay (maker) or giving the order to pay
(drawer). The signature signifies the intention to be bound by the terms of the instrument.
Unconditional Promise or Order to Pay: The promise or order to pay stated in the instrument must be unconditional. It should not be subject to any
conditions or contingencies, ensuring certainty of payment.
Fixed Amount of Money: The amount of money to be paid must be certain and fixed. This clarity prevents ambiguity and ensures enforceability of the
payment obligation.
Payable on Demand or at a Fixed Future Time: Negotiable instruments are either payable on demand (e.g., checks) or at a fixed future time (e.g.,
promissory notes). This determines when the payment obligation becomes due and enforceable.

Types of negotiable instruments

Section 13 of the Negotiable Instruments Act states that a negotiable instrument is a promissory note, bill of exchange or a cheque payable either to order or
to bearer. Negotiable instruments recognised by statute are:
(i) Promissory notes (ii) Bills of exchange (iii) Cheques. Negotiable instruments recognised by usage or custom are: (i) Hundis (ii) Share warrants (iii)
Dividend warrants (iv) Bankers draft (v) Circular notes (vi) Bearer debentures (vii) Debentures of Bombay Port Trust (viii) Railway receipts (ix) Delivery
orders. This list of negotiable instrument is not a closed chapter. With the growth of commerce, new kinds of securities may claim recognition as negotiable
instruments. The courts in India usually follow the practice of English courts in according the character of negotiability to other instruments
Cheques

Section 6 of the Act defines “A cheque is a bill of exchange drawn on a specified banker, and not expressed to be payable otherwise than on demand”. A
cheque is bill of exchange with two more qualifications, namely, (i) it is always drawn on a specified banker, and (ii) it is always payable on demand.
Consequently, all cheque are bill of exchange, but all bills are not cheque. A cheque must satisfy all the requirements of a bill of exchange; that is, it must be
signed by the drawer, and must contain an unconditional order on a specified banker to pay a certain sum of money to or to the order of a certain person or to
the bearer of the cheque. It does not require acceptance. Distinction Between Bills of Exchange and Cheque
1. A bill of exchange is usually drawn on some person or firm, while a cheque is always drawn on a bank.
2. It is essential that a bill of exchange must be accepted before its payment can be claimed .A cheque does not require any such acceptance.
3. A cheque can only be drawn payable on demand, a bill may be also drawn payable on demand, or on the expiry of a certain period after date or sight.
4. A grace of three days is allowed in the case of time bills while no grace is given in the case of a cheque.
5. The drawer of the bill is discharged from his liability, if it is 17 not presented for payment, but the drawer of a cheque is discharged only if he suffers any
damage by delay in presenting the cheque for payment.
6. Notice of dishonour of a bill is necessary, but no such notice is necessary in the case of cheque. 7. A cheque may be crossed, but not needed in the case of
bill.
8. A bill of exchange must be properly stamped, while a cheque does not require any stamp.
9. A cheque drawn to bearer payable on demand shall be valid but a bill payable on demand can never be drawn to bearer.
10. Unlike cheques, the payment of a bill cannot be countermanded by the drawer.
Bill of Exchange
According to Section 5 of the N I Act, 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’.
A bill of exchange facilitates modern business. It provides a mechanism for settlement of debts at a future date when goods are sold on credit.
Drawing of a bill of exchange enables the purchaser to settle payment on a future date. The seller is also able to proceed against the purchaser legally,
in case of default. Generally, the bills are of three months maturity. Usually, there are three parties to a bill of exchange. The maker of the bill is called
‘the drawee’. The person who is entitled to receive the money is called the ‘payee’. The drawer himself may be the payee.
Essential Features of a bill of Exchange 1. It should be in writing 2. It must be signed by the drawer 3. It must contain an express order to pay a certain sum
of money. A mere request to pay will not amount to an order, even though the order is politely worded. 4. The amount payable must be certain. 5. There
are three parties, the drawer, drawee and payee must be certain. 6. The order must be unconditional. The payment of the bill should not be dependent on
the fulfillment of a condition. 7. The bill must be properly stamped. 8. It may be made payable on demand (in the cause of a demand bill) or after a definite
period of time (in the case of a ‘time’-or ‘usance’bill) 9. It must be accepted
Type of bills of exchange.
Bill of exchange can be classified as;
A. Inland Bills and foreign Bills
B. Trade and Accommodation Bills
C. Demand Bills and Usance Bills
D. Documentary and Clean Bills

Inland and Foreign bills:-As the name indicates, inland bills are used to finance
inland trade, and foreign bills are used finance foreign trade. Thus an inland bill
Type of bills of exchange. Bill of exchange can be classified as; A. Inland Bills and foreign Bills B. Trade and Accommodation Bills C. Demand Bills and
Usance Bills D. Documentary and Clean Bills Inland and Foreign bills:- As the name indicates, inland bills are used to finance inland trade, and foreign bills
are used finance foreign trade. Thus an inland bill is one which is drawn in India and made payable in India, or, it is drawn in India
and drawn upon any person resident in India.
A foreign bill of exchange is one which is executed (Drawn and payable) outside
india or partly in India and Partly on out side.
Trade and Accommodation Bills:- Trade bills are drawn for genuine trade
transactions. Consideration against this bill is the value of goods supplied.
Accommodation bill is drawn to provide financial help to some person,
when a bill is drawn, accepted or endorsed without any consideration, it is called
an accommodation bill.
Demand Bills and Usance Bills:- A bill of exchange payable ‘at sight’ or upon
presentation is termed as a demand bill or sight bill.
Time bill or usane bill is a bill of exchange payable ‘after maturity’. In the case of
a bill payable ‘after date’ (or after maturity’), the date of maturity, is to be calculated
from the date mentioned in the bill.
Documentary and Clean bills:- When a bill of exchange is not accompanied by
any document, it is called a clean bill. But, when documents are attached to a bill
of exchange, such a bill is called a documentary bill. Documentary bills are usually
used in foreign trade. The exporter may draw a bill of exchange on the importer
for the value of the exports and attach certain documents like invoice, insurance
policy, bill of lading, etc to the bill.
Cheque (Section 6)
According to section 6 of N I Act “cheque is a bill of exchange drawn on a
specified banker and payable on demand and it includes the electronic image of
a truncated cheque and a cheque in the electronic form”.
Thus a cheque may be defined as a written order, signed by a customer of a bank,
directing the bank to pay on demand out of the customer’s account a stated sum
of money to or to the order of a specified person, or to the bearer.
Characteristics of a cheque.
1. It must be in writing:-It may be in printed form, or type written or by a pen.
Cheques drawn in pencil may not be generally honoured by banks because
it is easy to make unauthorized alterations.
2. It must contain an unconditional order: Ifthe order to pay to the banker
is dependent on the fulfillment of certain conditions by the payee, it cannot
be considered a cheque. But if such instrument are addressed to the payee
and not to the banker, the order to pay may be regarded as unconditional.
3. It must be signed by the drawer.Thumbimpression will sufficient in the
case of an illiterate person.
4. A cheque is always drawn on a banker and that banker must be a specified
one.
5. The order must be for a certain sum of money only. The amount of money
6. The amount must be payable on demand.
7. The cheque must be payable to or to the order of a certain person or to the
bearer.
8. A cheque does not need acceptance, nor stamping.
9. The validity of cheque is 3 months from the date of issue.
Type of bills of exchange. Bill of exchange can be classified as; A. Inland Bills and foreign Bills B. Trade and Accommodation Bills C. Demand Bills and
Usance Bills D. Documentary and Clean Bills
Inland and Foreign bills:- As the name indicates, inland bills are used to finance inland trade, and foreign bills are used finance foreign trade. Thus an
inland bill is one which is drawn in India and made payable in India, or, it is drawn in India and drawn upon any person resident in India. A foreign bill of
exchange is one which is executed (Drawn and payable) outside india or partly in India and Partly on out side. Trade and Accommodation Bills:- Trade bills
are drawn for genuine trade transactions. Consideration against this bill is the value of goods supplied. Accommodation bill is drawn to provide financial
help to some person, when a bill is drawn, accepted or endorsed without any consideration, it is called an accommodation bill. Demand Bills and Usance
Bills:- A bill of exchange payable ‘at sight’ or upon presentation is termed as a demand bill or sight bill. Time bill or usane bill is a bill of exchange payable
‘after maturity’. In the case of a bill payable ‘after date’ (or after maturity’), the date of maturity, is to be calculated from the date mentioned in the bill.
Documentary and Clean bills:- When a bill of exchange is not accompanied by any document, it is called a clean bill. But, when documents are attached to
a bill of exchange, such a bill is called a documentary bill. Documentary bills are usually used in foreign trade. The exporter may draw a bill of exchange on
the importer for the value of the exports and attach certain documents like invoice, insurance policy, bill of lading, etc to the bill.
Promissory Note –liability of parties,
A promissory note is a legally binding document that contains a written promise from one party (the "promisor" or "maker") to pay a specific sum of money
to another party (the "promisee" or "payee") at a specified time or upon demand. It serves as evidence of a debt and outlines the terms and conditions of the
loan or financial transaction. Here are the key details typically included in a promissory note:
Parties Involved: The promissory note identifies the parties involved, including their legal names, addresses, and any additional relevant information that
helps identify them accurately.
Date: The note includes the date when the promissory note is created. This is important for record-keeping and establishing the timeline of the agreement.
Principal Amount: The principal amount is the specific sum of money that the promisor promises to repay to the promisee. It should be clearly stated in both
numerical and written forms.
Interest Rate (if applicable): If interest is charged on the loan, the promissory note specifies the interest rate, whether it's a fixed or variable rate, and how it is
calculated. The interest rate determines the additional amount the promisor must pay on top of the principal when repaying the loan. Repayment Terms: The
promissory note outlines the terms and schedule for repayment. This includes the frequency of payments (e.g., monthly, quarterly, annually), the due date(s)
of each payment, and the total number of payments required.
Payment Method: The note may specify the accepted methods of payment, such as check, electronic transfer, or cash, along with any instructions or
requirements for making payments.
Late Payment and Default Terms: The promissory note defines the consequences if the promisor fails to make payments on time or defaults on the loan. This
may include penalties, late fees, acceleration clauses (allowing the entire balance to become due immediately), or other remedies available to the promisee.
Collateral (if applicable): If the promissory note is secured by collateral, such as real estate or personal property, details about the collateral and the rights
and obligations of both parties related to it should be included. Governing Law and Jurisdiction: The note specifies the governing law that applies to the
agreement and the jurisdiction where any legal disputes or claims arising from the promissory note will be addressed.
Signatures: The promissory note must be signed by the promisor and, in some cases, witnessed or notarized to make it legally enforceable. This ensures the
parties' acknowledgment and consent to the terms outlined in the document.
Promissory notes are commonly used in various financial transactions, including personal loans, business loans, mortgage loans, and other credit
arrangements. It's important to consult with legal professionals or financial advisors to ensure the promissory note meets the specific requirements and
regulations of your jurisdiction and to address any specific considerations related to your situation
Holder in due course,
A "holder in due course" is a legal term that refers to a person who acquires a negotiable instrument (such as a promissory note or a bill of exchange) in good
faith, for value, and without notice of any defects or claims against the instrument. The concept of a holder in due course provides certain legal protections
and rights to the holder.
To qualify as a holder in due course, the following conditions must generally be met:
Good Faith: The holder must acquire the negotiable instrument without knowledge of any facts that would indicate its invalidity or the existence of any
defenses or claims against it. The holder should not have any reason to believe that the instrument is irregular, fraudulent, or unenforceable.
Value: The holder must give value in exchange for the negotiable instrument. This typically means that the holder provides consideration, such as money,
goods, or services, in return for the instrument. A holder who receives the instrument as a gift or without providing any value would not qualify as a holder
in due course.
Notice: The holder must acquire the instrument without notice of any defects or claims. This means that the holder should not have knowledge of any
problems or legal disputes related to the instrument, such as prior non-payment, forgery, alteration, or illegality.
When someone meets the requirements to be a holder in due course, they gain certain advantages and protections under the law, including: Rights Free from
Defenses: A holder in due course takes the instrument free from most defenses and claims that the original parties may have against each other. This means
that the holder's rights to payment are generally unaffected by disputes or conflicts between the previous parties.
Enforceability: A holder in due course has the right to enforce the instrument against the party who originally issued it. The holder can demand payment
from the maker or drawee of the instrument, subject to certain legal requirements.
Priority: A holder in due course typically has priority over competing claims or interests in the instrument. If multiple parties have conflicting rights or
claims related to the instrument, the holder in due course generally has a superior position.
Protection from Personal Defenses: Personal defenses, such as lack of consideration or failure of consideration, generally do not affect the holder in due
course's rights to payment. These defenses may only be asserted against the original parties to the instrument and not against the holder in due course.
It's important to note that the specific rules and requirements for being a holder in due course may vary depending on the jurisdiction and the applicable laws
governing negotiable instruments, such as the Uniform Commercial Code (UCC) in the United States
SPECIAL rules for Cheque and drafts

Special rules for cheques and drafts under the Negotiable Instruments Act, 1882, are vital in understanding the legal framework surrounding these financial
instruments. Here's a simplified explanation:
Special Rules for Cheques and Drafts under Negotiable Instruments Act, 1882:
Cheques:
Definition: A cheque is a type of negotiable instrument that contains an unconditional order signed by the drawer (the person who writes the cheque)
directing the bank (the drawee) to pay a specified sum of money to the payee (the person to whom the cheque is made payable).
Drawer, Drawee, and Payee:
Drawer: The person who writes and signs the cheque, directing the bank to make payment.
Drawee: The bank on which the cheque is drawn. The bank is obligated to honor the cheque and make the specified payment.
Payee: The person to whom the payment is directed, i.e., the recipient of the funds.
Crossing of Cheques: Crossing a cheque involves drawing two parallel lines across the face of the cheque, along with additional instructions like "account
payee only" or "not negotiable." This adds a layer of security and directs the bank to only pay the cheque into the account of the payee.
Presentment of Cheques: The payee must present the cheque to the drawee bank for payment within a reasonable time. Failure to present the cheque within
the stipulated time may discharge the drawer from liability.
Drafts:
Definition: A draft is a written order issued by one party (drawer) directing another party (drawee) to pay a specified sum of money to a third party (payee).
Unlike cheques, drafts are typically used in commercial transactions and are not drawn on a bank.
Types of Drafts:
Demand Draft (DD): A demand draft is payable on demand and is issued by a bank. It is a secure method of making payment and is often used for interbank
transactions or for making payments in situations where a personal cheque is not accepted.
Bill of Exchange: A bill of exchange is a type of draft used in commercial transactions. It contains an unconditional order from the drawer to the drawee to
pay a specified sum of money to the payee.
Acceptance and Payment: Upon presentation, the drawee must accept the draft by signing it, indicating their commitment to make the specified payment.
Once accepted, the drawee becomes primarily liable for payment.

Crossing of Cheques
Crossing of a cheque refers to the process of drawing two parallel lines across the face of a cheque. This crossing creates a specific instruction to the bank
regarding the way the cheque should be handled and paid. The crossing is typically done to enhance the security and control over the payment of the cheque.
Here are the main types of crossings:
General Crossing: When two parallel lines are drawn across the face of the cheque without any additional instructions or words, it is known as a general
crossing. The general crossing indicates that the cheque should be deposited into the payee's bank account and cannot be cashed over the counter. It helps
prevent the cheque from being fraudulently cashed by unauthorized individuals.
Special Crossing: In addition to the two parallel lines, the name of a specific bank is written between the lines in a special crossing. This type of crossing
instructs the paying bank to only make the payment through the mentioned bank. The cheque can only be credited to the account of the payee in the specified
bank.
Both general and special crossings can be made on a cheque to provide an extra layer of security and ensure that the payment is made through the banking
system.

Endorsement

Endorsement is the act of signing the back of a negotiable instrument by the holder (endorser), thereby transferring or assigning the rights to the instrument
to another person (endorsee). It serves as a formal method of transferring ownership of the instrument.

Types of Endorsement:
Blank Endorsement: In a blank endorsement, the endorser simply signs the back of the instrument without specifying the name of the endorsee. This
endorsement turns the instrument into a bearer instrument, allowing it to be negotiated by mere delivery.
Special or Full Endorsement: In a special endorsement, the endorser specifies the name of the endorsee, thereby making the instrument payable only to that
person or their order. This endorsement restricts further negotiation to the specified endorsee.

Effect of Endorsement:
Transfer of Ownership: Endorsement operates as a transfer of ownership of the negotiable instrument from the endorser to the endorsee. The endorsee
becomes the new holder of the instrument and has the right to negotiate it further.
Liability of Endorser: By endorsing the instrument, the endorser incurs liability to subsequent holders if the instrument is dishonoured. This liability ensures
the reliability and enforceability of the instrument.

Dishonour of Cheques

Definition: Dishonour of a cheque occurs when the bank refuses to make payment on a cheque presented for payment due to various reasons, such as
insufficient funds, account closed, or irregular signature.
Legal Framework: The Negotiable Instruments Act, 1882, provides the legal framework for dealing with dishonoured cheques. It outlines the rights and
remedies available to the payee (person to whom the cheque is payable) in case of dishonour.
Notice of Dishonour: Upon dishonour of a cheque, the bank is required to issue a "cheque return memo" to the payee, informing them of the dishonour and
the reason for it. The payee must then issue a notice of dishonour to the drawer (the person who wrote the cheque) within a specified time frame.

Discharge of negotiable instruments.

The Negotiable Instruments Act 1881 is a significant law in India concerning financial transactions. It regulates documents l ike promissory notes, bills
of exchange, and cheques, which are essential for smooth business operations. A crucial aspect of this law is the discharge o f negotiable instruments,
which means releasing parties from their obligations under these documents. Understanding how to properly discharge such inst ruments is essential for
businesses to operate efficiently and fairly. It ensures that parties involved in financial transactions are protected, and d isputes can be resolved according
to legal standards. Essentially, the Act establishes rules that provide clarity and security in commercial dealings.

Takeaways:

The Negotiable Instruments Act sets clear legal guidelines for documents like promissory notes, bills of exchange, and cheques, ensuring smooth
transactions.
Discharge of negotiable instruments frees parties from their responsibilities under these documents, maintaining fairness and transparency.
Knowing discharge mechanisms helps in handling risks linked with financial transactions, reducing potential conflicts.

MODULE 2
Indian Partnership Act 1932: Meaning and definitions

The Indian Partnership Act of 1932 is a fundamental piece of legislation that governs the formation, operation, and dissolution of partnerships in India.
Here's a concise definition:
The Indian Partnership Act 1932 is a statutory framework that provides legal guidelines and regulations for the establishment, management, and dissolution
of partnerships in India. It defines the rights, duties, and liabilities of partners, outlines the requirements for partnership agreements, and governs matters
such as profit-sharing, decision-making, and the conduct of business. The Act aims to promote transparency, fairness, and accountability in partnerships,
facilitating smooth functioning and resolving disputes effectively within the partnership framework.

Registration of partnerships

According to the India Partnership Act 1932, there is no time limit as such for the registration of a firm. The firm can be registered on the date when it is
incorporated or any such date after so. The requisite fees and fines must be paid. The procedure for such a registration is as follows,
1] Application to the Registrar of Firms in the prescribed form (Form A). Nowadays this facility is even available online. Such an application must contain
certain basic details about the firm such as,
Name of the Partnership Firm
Name and address of all partners
Place of business (address of main and branch offices)
Duration of the partnership
Date of joining of partners
Date of commencement of business
2] The duly signed copy of the Partnership Deed (which contains all the terms and conditions) must be filled with the registrar
3] Deposit/pay the necessary fees and stamp duties
4] Once the registrar approves the application, the firm will be entered into the records. And the registrar will also issue a certificate of incorporation.

Types of partners

Active/Managing Partner: They run the show, making decisions and overseeing daily operations.
Sleeping/Inactive Partner: They're investors, putting in money but not getting involved in the business.
Nominal Partner: Their name's on the paperwork, but they're not really in the game.
Secret Partner: They're part of the business, but their involvement is kept under wraps.
Minor Partner: They're under 18, so they can't sign contracts, but they might still get some benefits from the partnership.
Partner by Estoppel: They act like a partner, so they're treated like one legally, even if they're not officially recognized.
Limited Partner: They put in money but don't have to deal with the nitty-gritty of managing the business, and their liability is limited to what they invested.

Dissolution

The partnership may be dissolved due to the following reasons:

Due to the death of the partner.
Due to the admission of a new partner.
Due to the retirement of a partner.
Due to the bankruptcy of a partner.
Due to the expiry of the partnership period, if the partnership is for a particular period.
Modes of Dissolution
There are some modes by which a partnership can be dissolved and those are:
By an act of partners: Partners agree on a specific time to end the partnership, like after five years, and can dissolve it earlier if certain conditions are met.
By operation of law: If the partnership engages in illegal activities, it automatically dissolves under the law, even if it was validly formed initially.
By the court's decree: The court can dissolve a partnership if a partner becomes unable to work, mentally unstable, behaves badly, or breaches the
partnership agreement.
Statement of dissolution: Partners officially dissolve the partnership by filing a statement with the state's secretary, including details like the partnership's
name, date of dissolution, and reasons for it.
Limited Liability Partnership Act, 2008– Meaning & definitions,
Limited Liability Partnerships (LLPs) are commercial vehicles which combine the features of partnership and company form of business. The concept of
Limited Liability Partnership (LLP) has been introduced in India by way of Limited Liability Partnership Act, 2008 (notified on 31st March 2008).LLP is an
alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its
existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
• The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
• In an LLP one partner is not responsible or liable for another partner’s misconduct or negligence.
In an LLP, all partners have limited liability for everyone’s protection within the partnership, similar to that of the shareholders of a limited company.
• However, unlike the company shareholders, the partners have the right to manage the business directly. An LLP also limits the personal liability of a
partner for the errors, omissions, incompetence, or negligence of the LLP’s employees or other agents.
• Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case
may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
• Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a
partnership
Meaning of designated partner,
Designated Partner: • Every LLP shall be required to have at least TWO DESIGNATED PARTNERS.
• Designated Partners shall be Individuals.
• At least one of the Designated Partner shall be a resident of India.
• 4. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two
individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.

Registration of LLP

Obtain a Digital Signature Certificate (DSC) - All proposed partners of the LLP must obtain a Digital Signature Certificate (DSC) since all government
filings require digital signatures.

2. Obtain Director Identification Number (DIN)- Partners without a DIN need to apply for one. The Director Identification Number (DIN) is a unique
identification number assigned to individuals aspiring to become directors or designated partners in LLPs.
3. Choose a Name for the LLP- Select a unique and suitable name for your LLP, adhering to Ministry of Corporate Affairs guidelines.

4. Form for Incorporation of LLP (FiLLiP)- This form collects essential information about the proposed LLP, partners, LLP agreement, and registered
office address. It includes a declaration from partners consenting to act as designated partners and comply with LLP regulations.

5. Draft LLP Agreement: Create the LLP Agreement outlining partner rights, duties, and obligations. This agreement must be notarized and filed with the
Ministry of Corporate Affairs within 30 days of incorporation.

6. Obtain a Certificate of Incorporation- Once forms and documents are filed and verified, the Registrar of Companies (RoC) will issue the Certificate of
Incorporation, officially recognizing the LLP's existence.

7. Apply for PAN and TAN- After obtaining the Certificate of Incorporation, apply for the Permanent Account Number (PAN) and TAN for the LLP.
You can successfully register your LLP and embark on your entrepreneurial venture by following these steps diligently.

Conversion into LLP

Conversion into an LLP involves restructuring a business entity, such as a partnership firm, private limited company, or unlisted public company, into a
limited liability partnership (LLP) under the provisions of the Limited Liability Partnership Act, 2008.

Eligibility: Businesses eligible for conversion into LLP include existing partnership firms, private limited companies, and unlisted public companies. Certain
conditions and criteria must be met, such as compliance with regulatory requirements and approval from stakeholders.

Procedure:
Application: The partners or directors of the existing business entity must file an application for conversion with the Registrar of Companies (RoC) along
with the required documents and fees.
Approval: Upon receipt of the application, the RoC reviews the documents and verifies compliance with the LLP Act. If satisfied, the RoC approves the
conversion and issues a Certificate of Incorporation.
Publication: The approval and Certificate of Incorporation must be published in newspapers and notified to stakeholders, creditors, and regulatory authorities
as per legal requirements.

Dissolution
Dissolution refers to the legal process of ending the existence of an LLP. It involves settling the affairs of the LLP, liquidating its assets, and distributing the
proceeds among the partners or creditors.
Modes of Dissolution:
Voluntary Dissolution: Partners may voluntarily decide to dissolve the LLP by passing a resolution to that effect. This could be due to the completion of the
LLP's objectives, mutual agreement, or any other reason specified in the LLP agreement.
Compulsory Dissolution: The LLP may be compulsorily dissolved by the Tribunal (National Company Law Tribunal) in cases of non-compliance, fraud,
insolvency, or any other grounds specified in the LLP Act.
Order of Court: The Tribunal may also order the dissolution of an LLP based on an application by partners, creditors, or regulatory authorities if it's just and
equitable to do so.
Dissolution Process:
Resolution: In the case of voluntary dissolution, partners must pass a resolution for dissolution and notify the Registrar of Companies (RoC) within 30 days
of passing the resolution.
Appointment of Liquidator: A liquidator may be appointed to oversee the winding-up process, including the collection, realization, and distribution of assets,
and settlement of liabilities.
Liquidation: The assets of the LLP are liquidated, and the proceeds are used to settle outstanding debts and liabilities. Any surplus is distributed among the
partners as per their entitlements.
Filing of Documents: The LLP must file various documents, including a statement of accounts and a notice of dissolution, with the RoC to inform
stakeholders and regulatory authorities of the dissolution.
Settlement of Liabilities:
Payment of Creditors: The LLP's debts and liabilities must be settled from the proceeds of the liquidation process. Creditors are paid according to their
priority, as determined by law.
Distribution to Partners: After settling all liabilities, any remaining assets are distributed among the partners in accordance with their profit-sharing ratio or
as per the LLP agreement.
Consequences of Dissolution:
Cessation of Business: Upon dissolution, the LLP ceases to carry on its business activities. Its legal existence comes to an end.
Termination of Liabilities: Dissolution terminates the LLP's obligations and liabilities, except to the extent required for winding up.
Public Notice: The dissolution of the LLP must be advertised in newspapers and notified to stakeholders and regulatory authorities as per legal requirements.
Completion and Closure: Once all assets have been realized, liabilities settled, and necessary filings made with the RoC, the LLP's dissolution process is
considered complete, and it is formally closed.

MODULE 3
COMPANIES ACT, 2013-MEANING
The Companies Act 2013 regulates the formation and functioning of corporations or companies in India. The first Companies Act after independence was
passed in 1956, which governed business entities in the country. The 1956 Act was based on the recommendations of the Bhabha Committee. This Act was
amended multiple times, and in 2013, major changes were introduced. By Section 135 of the 2013 Act, India became the first country to make corporate
social responsibility (CSR) spending mandatory by law.
Currently, the Ministry of Corporate Affairs is administering the following Central government Acts:
Companies Act 2013
Companies Act 1956 (some provisions of this Act still apply)
Competition Act 2002
Insolvency & Bankruptcy Code, 2016
Chartered Accountant Act 1949
The Companies Act 2013 has replaced the 1956 Act.

TYPES of companies
One-Person Company- OPC is a type of private company that has only one member. OPC was introduced with the main aim of promoting entrepreneurship
and corporatization of business.
However, it is to be noted that an OPC is different from a sole proprietorship, as an OPC is a separate legal entity and the member of the OPC has limited
liability, whereas in the case of a sole proprietorship the liability of the owner is not limited. There is no minimum paid-up capital required for constituting
OPC.
Private Limited Company- A Private Company as mentioned under Section 2(68) of the Companies Act 2013, has a minimum of 2 members and a
maximum of 200 members, however, this figure shall exclude employees and ex-employees who are also the shareholders in the company.
A Private Company cannot invite the general public to subscribe to their shares/debentures. Shares of private companies are not freely transferable and these
shares can’t be transferred. A private company should have Private Limited as a suffix in its name.
Public Limited- A Public Company is defined in Section 2(71) of the Companies Act, 2013. To establish a Public company, a minimum of seven members is
required and there is no ceiling limit on the number of maximum members. In the case of a Public company, there are no restrictions on the buying and
selling of shares.
Any subsidiary of a public company shall be deemed to be a Public company. The shares of a Public company can be freely transferred. A Public company
that has limited liability is required to add the word ‘limited’ at the end of the name. A Public company should have ‘limited; as a suffix in its name.
Section 8 Company- Section 8 Companies, also known as companies formed with charitable objects. According to section 8 of the Companies Act, 2013,
these companies are formed to promote the charitable objects of commerce, art, science, sports, education, research, social welfare, religion, charity,
environment conservation etc.
Such companies are required to apply their profits back to promote their objectives. Section 8 companies can’t pay dividends to their members.

Formation of a company

The formation of a company goes through a number of steps, starting from idea generation to commencing of the business.
The major steps in formation of a company are as follows:
Promotion stage- In this phase, the idea of starting a business is converted into reality with the help of promoters of the business idea.
In this stage the ideas are executed. The promotion stage consists of the following steps:
Identify the business opportunity and decide on the type of business that needs to be done.
Perform a feasibility study and determine the economic, technical and legal aspect of executing the business.
Interest shown by promoters towards the business idea and supply of capital and other necessary procedures to start the business.
Registration stage- In this stage, the company gets registered, which brings the company into existence.

Memorandum of Association (MoA): Get at least 7 people (for public) or 2 people (for private) to sign a paper that explains what your company is about.
Make sure it's officially registered.
Article of Association (AoA): After the MoA, the same people need to sign another paper that lays out how the company will run.
List of Directors: Make a list of who's going to be in charge and give it to the Registrar of Companies.
Consent from Directors: The people listed as directors need to agree in writing that they're okay being directors. This also goes to the Registrar of
Companies.
Office Address Notice: Tell the Registrar of Companies where your company's office is going to be located.
Statutory Declaration: A legal statement confirming that everything you've said is true, made by a lawyer or someone in a high position within the company.
This also goes to the Registrar of Companies.

Incorporation stage- Certificate of incorporation is issued when the registrar is satisfied with the documents provided. This certificate validates the
establishment of the company in the records.
Commencement of Business stage- Certificate of commencement of business is required for a public company to start doing business, while a private
company can start business once it has received the certificate of incorporation. The registrar will issue a certificate upon finding the provided documents
satisfactory. This certificate is known as certificate of commencement of business. The company can start business activities from the date of issue of the
certificate and the business shall be done as per rules laid down in the MoA (Memorandum of Association).

Incorporation of companies-Memorandum and Articles of Association

Memorandum of Association (MoA):

Foundational Document: The MoA is a foundational document that sets out the company's constitution and objectives. It defines the company's scope of
activities and its relationship with shareholders and external stakeholders.
Content: The MoA includes essential details such as the company's name, registered office address, objectives, type of company (public or private),
authorized share capital, and liability of its members.
Signing Requirement: The MoA must be signed by the initial subscribers, who are typically the founders or promoters of the company. A public company
requires a minimum of 7 subscribers, while a private company needs at least 2.
Legal Formalities: Proper registration and stamping of the MoA are necessary for legal validity. This involves filing the MoA with the Registrar of
Companies (RoC) and ensuring compliance with statutory requirements.
Articles of Association (AoA):
Internal Rulebook: The AoA is an internal rulebook that governs the internal management and operations of the company. It specifies rules regarding
meetings, voting rights, appointment and powers of directors, etc.
Content: The AoA contains rules and regulations for the company's internal affairs. It covers matters such as the rights and duties of shareholders, the
conduct of board meetings, appointment and removal of directors, etc.
Signing Requirement: Similar to the MoA, the AoA must be signed by the initial subscribers and filed with the RoC. It is often signed alongside the MoA by
the same subscribers.
Flexibility and Amendment: Unlike the MoA, which outlines the company's fundamental characteristics, the AoA can be amended by special resolution of
shareholders. However, any amendments must comply with legal requirements and cannot contravene the provisions of the Companies Act or other relevant
laws.

Securities Regulation- Share Capital and Shareholders

Share Capital:
Definition: Share capital represents the total value of shares issued by a company. It is the amount of money raised by a company through the sale of its
shares to shareholders.
Types of Share Capital: There are two main types of share capital:
Equity Share Capital: Represents ownership in the company and carries voting rights. Shareholders of equity shares are entitled to dividends and have a
residual claim on the company's assets.
Preference Share Capital: Preference shares have priority over equity shares in terms of payment of dividends and repayment of capital in the event of
liquidation. However, preference shareholders usually do not have voting rights.

Shareholders:
Definition: Shareholders are the owners of a company, holding shares in the company's share capital. They have certain rights and obligations as per the
Companies Act, 2013.
Rights of Shareholders: Shareholders have various rights, including:
Right to receive dividends when declared by the company.
Right to attend and vote at general meetings of the company.
Right to transfer shares to another person.
Right to inspect company records and documents.
Obligations of Shareholders: Shareholders also have certain obligations, such as:
Paying the subscription price for shares issued to them.
Complying with the company's rules and regulations.
Exercising their voting rights responsibly in the best interest of the company.
Regulatory Compliance:
Issue of Shares: The Companies Act, 2013, regulates the issuance of shares by companies, including the procedures for allotment, transfer, and forfeiture of
shares.
Disclosure Requirements: Companies are required to make various disclosures regarding their share capital and shareholders, including the number and
types of shares issued, changes in shareholding patterns, and details of significant shareholders.

Prospectus

A prospectus is a legal document issued by a company that contains detailed information about its operations, financials, management, and the securities
(such as shares or debentures) being offered for sale to the public.

Purpose:
Information Disclosure: The primary purpose of a prospectus is to provide potential investors with all the necessary information to make an informed
investment decision.
Legal Compliance: It ensures compliance with regulatory requirements and safeguards the interests of investors by promoting transparency and disclosure of
material facts.

Registration and Approval:

A prospectus must be registered with the Registrar of Companies (RoC) before it can be issued to the public.
The RoC reviews the prospectus to ensure compliance with legal requirements and may require amendments or clarifications before granting approval.

Issue of Shares

Shares represent ownership in a company and entitle the shareholder to certain rights, such as voting rights, dividends, and a share in the company's profits.

Modes of Issuing Shares:

Public Issue: Companies can issue shares to the public through an initial public offering (IPO), where shares are offered for sale to retail and institutional
investors via stock exchanges.
Private Placement: Companies can also issue shares to a select group of investors through private placement, subject to certain conditions and regulatory
approvals.
Rights Issue: A rights issue allows existing shareholders to purchase additional shares at a discounted price in proportion to their existing shareholding.

Regulatory Compliance:
Companies must comply with various regulatory requirements and procedures specified under the Companies Act, 2013, and other relevant regulations, such
as the Securities and Exchange Board of India (SEBI) guidelines.
Compliance includes obtaining approvals from regulatory authorities, filing necessary documents with the Registrar of Companies (RoC), and adhering to
disclosure and transparency norms.

Raising of Capital

Capital refers to the funds invested in a company by its shareholders or creditors. It provides the financial resources necessary for the company's operations,
investments, and growth.

Modes of Raising Capital:

Equity Financing: Companies can raise capital by issuing equity shares to investors. Equity financing involves selling ownership stakes in the company in
exchange for capital.
Debt Financing: Companies can also raise capital through debt instruments such as debentures, bonds, or loans. Debt financing involves borrowing funds
from creditors with the promise of repayment with interest.
Hybrid Financing: Hybrid financing involves a combination of equity and debt instruments, offering companies flexibility in structuring their capital raising
activities.
Regulatory Compliance:
Companies must comply with various regulatory requirements and procedures specified under the Companies Act, 2013, and other relevant regulations, such
as the Securities and Exchange Board of India (SEBI) guidelines.
Compliance includes obtaining approvals from regulatory authorities, filing necessary documents with the Registrar of Companies (RoC), and adhering to
disclosure and transparency norms.

Buy Back of Shares

Buy-back is the process by which Company buy-back it’s Shares from the existing Shareholders usually at a price higher than the market price. When the
Company buy-back the Shares, the number of Shares outstanding in the market reduces/fall. It is the option available to Shareholder to exit from the
Company business. It is governed by section 68 of the Companies Act, 2013.

Reasons of Buy-back:-
• To improve Earning per Share; • To use ideal cash; • To give confidence to the Shareholders at the time of falling price; • To increase promoters
shareholding to reduce the chances of takeover; • To improve return on capital ,return on net-worth

OBJECTIVES

1)To increase the promoters holding as the shares which are bought are cancelled.
2) To increase EPS, if there is no dilution in companies earnings as the buy-back reduces the outstanding number of shares.
3) To support the share price when the share price, in the opinion of the management is less than its fair value.
4) To pay surplus cash to the shareholders when the company does not need it for the business.

Debentures

A debenture is a type of debt instrument which is issued by a company to raise capital. Debenture is a long-term debt instrument which may be in the form of
a bond or a loan which is secured by the charge upon the assets which have been provided as securities. Debentures have a fixed rate of interest and other
characteristics which are described in detail later in the article. According to Section 2(30) of the Companies Act, 2013 – the term “debenture” includes
debenture stock, bonds, or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not. The
definition in the Companies Act, 2013 does not mandate the creation of a charge.

Types of debentures
Debentures based on security
Debentures based on tenure
Debentures based on conversion
Debentures based on registration

Company Meetings and Proceedings

Powers

Board Powers:
Management: Boards have the authority to manage company affairs, make strategic decisions, and ensure compliance with laws and regulations.
Investments: Boards can authorize investments, acquisitions, and divestitures in line with company objectives and shareholder interests.
Shareholder Powers:
Voting: Shareholders exercise voting rights in general meetings to approve resolutions, elect directors, and ratify company decisions.
Dividends: They have the power to approve dividends, distribution of profits, and capital restructuring proposals.
Amendments: Shareholders can amend company articles, approve mergers, and authorize significant transactions.
Legal Powers:
Legal Proceedings: Companies can initiate legal actions and defend against lawsuits on behalf of shareholders and stakeholders.
Contracts: They have the power to enter into contracts, agreements, and partnerships to conduct business operations.
Compliance: Ensuring compliance with statutory requirements, regulatory guidelines, and corporate governance standards.
Financial Powers:
Borrowing: Companies can borrow funds, issue debentures, and raise capital through debt or equity instruments.
Investments: They have the authority to invest surplus funds, manage cash flows, and make financial decisions to optimize returns.
Financial Reporting: Preparing and presenting financial statements, audits, and reports to shareholders, regulators, and other stakeholders.
Corporate Governance Powers:
Policies: Establishing and enforcing corporate governance policies, codes of conduct, and ethical standards.
Risk Management: Identifying, assessing, and mitigating business risks to safeguard company assets and reputation.
Transparency: Ensuring transparency, accountability, and disclosure of information to shareholders and stakeholders.
Regulatory Powers:
Compliance: Companies must comply with provisions of the Companies Act, 2013, and other applicable laws, regulations, and guidelines.
Regulatory Filings: Submitting required filings, disclosures, and reports to regulatory authorities, such as the Registrar of Companies (RoC) and Securities
and Exchange Board of India (SEBI).

DUTIES

Directors' Duties:
Fiduciary Duty: Directors must act in good faith, with due care, skill, and diligence, and in the best interests of the company and its stakeholders.
Compliance: Ensuring compliance with laws, regulations, and company articles, and avoiding conflicts of interest.
Financial Responsibility: Overseeing financial affairs, ensuring accurate financial reporting, and safeguarding company assets.
Shareholders' Duties:
Voting: Exercising voting rights responsibly in general meetings, approving resolutions, and participating in company decisions.
Disclosure: Providing accurate and timely information to shareholders, including financial reports, disclosures, and updates on company affairs.
Engagement: Actively engaging with the company, raising concerns, and holding management and directors accountable for their actions.
Auditors' Duties:
Independence: Maintaining independence, objectivity, and integrity while conducting audits and reviewing company financial statements.
Professional Standards: Adhering to auditing standards, ethics, and professional conduct prescribed by regulatory bodies.
Reporting: Reporting findings, identifying irregularities or fraud, and providing recommendations for improvements to corporate governance and internal
controls.
Compliance Officers' Duties:
Monitoring: Monitoring compliance with legal and regulatory requirements, company policies, and codes of conduct.
Training: Providing training and awareness programs to employees on compliance matters and promoting a culture of compliance.
Reporting: Reporting compliance breaches, incidents, or violations to senior management and regulatory authorities, and implementing corrective actions.
Company Secretary's Duties:
Corporate Governance: Ensuring compliance with corporate governance norms, maintaining company records, and facilitating board meetings and general
meetings.
Legal Compliance: Advising the board on legal matters, preparing board resolutions, and ensuring compliance with the Companies Act, 2013, and other
relevant laws.
Disclosure: Facilitating disclosures, filings, and communications with regulatory authorities, shareholders, and other stakeholders.
Employees' Duties:
Performance: Performing assigned duties diligently, efficiently, and ethically, and contributing to the achievement of company goals and objectives.
Compliance: Following company policies, procedures, and codes of conduct, and complying with applicable laws and regulations.
Confidentiality: Maintaining confidentiality of company information, trade secrets, and intellectual property, and avoiding conflicts of interest.

Liabilities of Directors

Liabilities of directors under the Companies Act, 2013 are a fundamental aspect of corporate law, serving as a mechanism to balance the powers granted to
directors with accountability. The Companies Act, 2013, articulates these liabilities across several sections, categorising them into civil and criminal
liabilities, liabilities for fraud, breach of warranty, third-party liabilities, statutory duties and liabilities for acts of other directors.
This legal framework ensures directors act within the bounds of their authority, safeguarding the interests of the company, its shareholders and stakeholders.

Liabilities of Directors Towards the Company

Directors have a fiduciary relationship with the company. They are expected to act in the best interest of the company and its stakeholders. Key liabilities of
directors towards the Company under the Companies Act, 2013 include:
Breach of Fiduciary Duty: Directors must act with honesty, integrity and in good faith. Breaching these duties can lead to personal liability, especially if the
company suffers a loss due to their actions.
Ultra Vires Acts: Actions taken beyond the scope of authority granted by the company’s memorandum and articles of association can render directors
personally liable.
Negligence: Directors are expected to perform their duties with due diligence. Failure to do so can result in liability for any resulting damages to the
company.
Malafide Acts: Engaging in dishonest or fraudulent activities can lead to directors being held liable for any losses incurred by the company.

Merger and Amalgamation

Amalgamation is the blending of two or more undertakings (companies) into one undertaking, the shareholders of each blending company substantially
become the shareholders of the other company that holds blended undertakings.

Merger is a form of amalgamation where all the assets and liabilities of a transferor company get merged with the assets and liabilities of the transferee
company leaving behind nothing for the transferee company except, its name which gets removed through the process of law.

The reasons why companies choose merger and amalgamation in India are:

For economies of scale.

For the increasing market share of companies.
For reducing competition.
For increasing shareholder value.
For diversifying risk.
For minimizing tax liabilities.
For developing a brand name.

Scheme of Merger/Amalgamation:
Companies prepare a scheme of merger or amalgamation detailing the terms, conditions, and implications of the transaction, including the treatment of
assets, liabilities, and share capital.
The scheme must be approved by the board of directors and subsequently by shareholders and creditors.

Winding up of Company

The process of ending the life of a company by administering its properties for the benefit of shareholders & creditors of the company is known as the
winding up of a company. A company is a corporate body that is an association of people for some common purpose of carrying on the business and earning
profits. A company has to be incorporated and registered according to the Companies Act 2013.
A company, being a corporate body has the following characteristics:
It has a separate legal entity.
It has perpetual succession.
It is an artificial person.
It has limited liability.
It can own separate properties and assets.
It has a common seal.

Modes of winding up of a company

Winding up by the Tribunal (NCLT)/ Compulsory winding-up- A company may be wound up at an order of the Court. This is also called Compulsory
Winding Up. The cases in which a company may be wound up are given in Section 433.
Voluntary winding up of a company- Voluntary winding up of a company refers to the process by which a company decides to close down its operations and
dissolve voluntarily. In this type of winding up, the decision to liquidate the company is made by its members or shareholders, typically when they believe
that the company has fulfilled its objectives or is no longer viable to continue operating. It can occur when the company is solvent, meaning it can pay its
debts as they become due, and there are surplus assets available for distribution to shareholders after settling all liabilities.
MCA21

MCA21 (Ministry of Corporate Affairs 21) is an e-Governance initiative introduced under the Companies Act, 2013, aimed at facilitating online compliance
and regulatory filings by companies registered in India.

Objectives:
Digitalization: Promoting digitalization of corporate governance processes, filings, and interactions with regulatory authorities.
Efficiency: Enhancing efficiency, transparency, and accessibility in regulatory compliance and corporate governance practices.
Ease of Doing Business: Simplifying procedures for companies, improving ease of doing business, and reducing administrative burdens.

Corporate Governance

Corporate Governance is a multi-faceted subject and difficult to comprehend in a concise definition. The main theme of corporate governance is to integrate
sound management policies in the corporate framework in such a manner to bring economic efficiency in the organization in order to achieve twin goals of
profit maximization and shareholder welfare.

Key Principles:
Transparency: Companies must disclose relevant information to stakeholders, including shareholders, regulators, and the public, ensuring transparency in
decision-making and operations.
Accountability: Directors and management are accountable to shareholders and must act in the best interests of the company, avoiding conflicts of interest
and self-dealing.
Fairness: Fair treatment of all stakeholders, including shareholders, employees, customers, suppliers, and creditors, is essential for maintaining trust and
confidence in the company.
Responsibility: Directors have a fiduciary duty to exercise due care, diligence, and skill in managing company affairs, ensuring compliance with laws, and
safeguarding company assets and resources.

SEBI-Objectives and Functions

SEBI or the Security and Exchange Board of India is a regulatory body controlled by the Government of India to regulate the capital and security market.
Before the Security and Exchange Board of India, the Controller of Capital Issues was the regulating body to regulate the market which was controlled by
the Capital Issues (Control) Act, 1947.
The objectives of SEBI are:
Protection of investors: The primary objective of SEBI is to protect the rights and interests of the people in the stock market by guiding them to a healthy
environment and protecting the money involved in the market.
Prevention of malpractices: The main objective for the formation of SEBI was to prevent fraud and malpractices related to trading and to regulate the
activities of the stock exchange.
Promoting fair and proper functioning: SEBI was established to maintain the functioning of the capital market and to promote functioning of the stock
exchange. They are ordered to keep eyes on the activities of the financial intermediaries and regulate the securities industry efficiently.
Establishing Balance: SEBI has to maintain a balance between the statutory regulation and self-regulation of the securities industry.

Functions of SEBI

Protective Function- Protective functions are used to protect the interest of investors and other financial participants. These functions are:

1. Prevent Insider Trading: When the people working in the market like director, promoters or employees working in the company starts to buy or sell the
securities because they have access to the confidential price which results in affecting the price of the security is known as insider trading.
2. Checks price rigging: The malpractices which create unreasonable fluctuations in the price of the securities with the help of increasing or decreasing the
market price of stocks which results in an immense loss for the investors or traders are known as price rigging.
3. Promotes fair trade practices: SEBI established rules and regulations and a certain code of conduct in the securities market to restrict fraudulent and unfair
trade practices.
4. Providing awareness/financial education for investors: SEBI conducts seminars both online and offline to educate the investors about insights into the
financial market and money management.

Regulatory Function- Regulatory functions are generally used to check the functioning of the financial business in the market. They establish rules to
regulate the financial intermediaries and corporates for the efficiency of the market. These functions are:
SEBI designed guidelines and code of conduct for efficient working of financial intermediaries and corporate.
Established rules for taking over a company.
Conducts regular inquiries and audits of stock exchanges.
Development Function- The development functions are the steps taken by SEBI to improve the security of the market through technology. The functions are:
By providing training sessions to the intermediaries of the market.
By promoting fair trading and restrictions on malpractices of any kind.
By introducing the DEMAT format.

MODULE 4
Consumer Rights

The Consumer Protection Act, implemented in 1986, gives easy and fast compensation to consumer grievances. It safeguards and encourages consumers to
speak against insufficiency and flaws in goods and services. If traders and manufacturers practice any illegal trade, this act protects their rights as a
consumer. The primary motivation of this forum is to bestow aid to both the parties and eliminate lengthy lawsuits.
This Protection Act covers all goods and services of all public, private, or cooperative sectors, except those exempted by the central government. The act
provides a platform for a consumer where they can file their complaint, and the forum takes action against the concerned supplier and compensation is
granted to the consumer for the hassle he/she has encountered.

Procedures for Consumer Grievances Redressal

Here's a breakdown of the procedures for consumer grievances redressal under consumer rights:

Filing a Complaint: Start by writing down what went wrong with your purchase and gather any papers related to it. Then, send all of this to the right place
where they handle complaints about things you buy.
Jurisdiction Determination: Think about where you should send your complaint based on where you live and how much money is involved in the problem.
Notice to Opposite Party: After you send your complaint, the people you're complaining about will get a letter asking them to explain what happened.
Evidence Presentation: Both sides get to show their papers and explain what they think happened.
Mediation and Conciliation: Sometimes, a person who doesn't pick sides will try to help you and the other party find a solution that you both agree on.
Hearing: If you can't agree, you'll have a meeting where you can talk about what happened and answer any questions.
Decision and Order: After listening to everyone, the people in charge will decide who is right and what should be done to fix the problem.
Appeal Process: If you don't agree with the decision, you can ask someone else to look at the case again.
Execution of Order: Once the decision is final, the people you complained about have to do what they're told to fix the problem.

Types of Consumer Redressal Machineries and Forums

Here are the types of consumer redressal machineries and forums under consumer rights:

District Consumer Disputes Redressal Forum: These are local places where you can complain if you've had a problem with something you bought or a
service you paid for, as long as the value isn't too high.
State Consumer Disputes Redressal Commission: If your problem is bigger than what the local forum can handle, you go to these places, which are in your
state. They deal with complaints involving more money.
National Consumer Disputes Redressal Commission (NCDRC): This is like the big boss of consumer complaints. If your problem is really serious or
involves a lot of money, you can take it here.
Online Consumer Complaint Portals: Some places have websites where you can complain about things you bought or services you got online. It's like
sending an email about your problem.
Consumer Ombudsman: These are people who listen to both sides of a problem and try to find a fair solution. They don't take sides, they just want to help fix
things.
Alternative Dispute Resolution (ADR) Mechanisms: Instead of going to court, you can try other ways to solve your problem, like talking it out with the other
person or having someone else help you come to an agreement.
Consumer Rights Organizations: These are groups that are there to help you if you're having trouble with something you bought. They can give you advice,
help you understand your rights, or even help you get your problem fixed.

MODULE 5

Introduction of IPR
Intellectual property rights (IPRs: In the modern era, Intellectual property rights play an important role in every nation's trade. In this globalized and digitized
world, there is a higher risk of creative ideas getting copied or stolen without the author's permission. The need for strong IP laws gives an overall
contribution in the economy of the respective state. IPR is one of the security for intangible properties that are still open to the public and can be quickly
replicated by anyone.
Intellectual property (IP) refers to the intangible assets (creations of the mind: inventions, literary and artistic works, and symbols, names, images, and
designs used in commerce) created by the human mind. In other words, Intellectual Property is a generic term that defines intangible assets that are owned
by individual person or company contributing to the national as well the state economies.
– Overview of Law & Procedure relating to Copyrights,

Copyright is a right given by the law to creators of literary, dramatic, musical and artistic works and producers of cinematograph films and sound recordings.
Unlike the case with patents, copyright protects the expressions and not the ideas. There is no copyright in an idea. Just as you would want to protect
anything that you own, creators want to protect their works. Copyright ensures certain minimum safeguards of the rights of authors over their creations,
thereby protecting and rewarding creativity. Creativity being the keystone of progress, no civilized society can afford to ignore the basic requirement of
encouraging the same. The economic and social development of a society is dependent on creativity. The protection provided by copyright to the efforts of
writers, artists, designers, dramatists, musicians, architects and producers of sound recordings, cinematograph films and computer software, creates an
atmosphere conducive to creativity, which induces them to create more and motivates others to create.

Trademarks

A trade mark provides protection to the owner of the mark by ensuring the exclusive right to use it, or to authorize another to use the same in return for
payment. The period of protection varies, but a trademark can be renewed indefinitely beyond the time limit on payment of additional fees. In a larger sense,
trademarks promote initiative and enterprise worldwide by rewarding the owners of trademarks with recognition and financial profit. Trade mark protection
also hinders the efforts of unfair competitors, such as counterfeiters, to use similar distinctive signs to market inferior or different products or services. The
system enables people with skill and enterprise to produce and market goods and services in the fairest possible conditions, thereby facilitating international
trade. Trademarks being an important aspect of the intellectual property, students need to be well versed with the conceptual and legal framework, and
procedural requirements relating to trade marks.

Patent Act

Patent is one of the ways through which the scientific inventions which have a potential for industrial application are being protected and thus promoted. In
India, however, very few scientific organizations and much less industries take adequate measures to protect their inventions by getting a Patent in respect of
them. The importance of Patents has increased tremendously over last few decades which is evident from the fact that every company is now creating its
own strong Patent portfolio. It is thus important to know the advantages involved in getting a Patent and also as to how does the Patent benefit an Inventor.
The objective of this lesson is to develop amongst the students a greater awareness about the Patent law in India and spell out the procedural mechanism
involved in obtaining a Patent, besides explaining the concepts of Assignment & Licensing of Patents and Compulsory Licensing.

Infringements.

Patent infringement is the unauthorized making, using, offering for sale or selling any patented invention within India, or importing into India of any
patented invention during the term of a patent. Patent infringement occurs in every industry and the job of fighting patent infringement falls on the shoulders
of the patent holder. When patent infringement happens, the patentee may sue for relief in the appropriate court. The patentee may ask the court for an
injunction to prevent the continuation of the patent infringement and may also ask the court for an award of damages because of the patent infringement.
Information Technology Act 2008
The Information Technology Act, 2000 (ITA-2000) is an important legislation in India that addresses various legal aspects of electronic governance, digital
signatures, and cybercrime. It was later amended in 2008, hence referred to as the Information Technology Amendment Act, 2008. This amendment aimed
to align the ITA-2000 with contemporary technological advancements and emerging challenges in cyberspace.
Here are some key aspects of the Information Technology Act, 2008, relevant to the legal aspects of business:
Electronic Governance: The Act says it's okay to use electronic stuff like emails or online forms instead of paper. This makes things faster and easier for
businesses.
Digital Signatures: The Act says if you sign something digitally, like typing your name at the end of an email, it's legally the same as signing on paper. This
makes online contracts and transactions safe and valid.
Cybercrimes and Security: The Act punishes bad online behavior like hacking or stealing data. It makes sure businesses and people are protected from these
cybercrimes.
Intermediary Liability: The Act makes websites responsible for what people post on them. It sets rules to make sure websites take down illegal stuff but also
protects their freedom to share information.
Data Protection and Privacy: Though not in the Act directly, rules from later years make sure companies handle your personal info safely. They have to
follow certain rules to keep your data private and secure.
Jurisdiction and Enforcement: The Act sorts out who's in charge if something illegal happens online. It gives the authorities power to catch bad guys and
make sure everyone follows the rules when doing business online.

Scope and Applicability

Digital Transactions: The Act covers all electronic transactions and contracts made by businesses, ensuring they're legally binding and enforceable.
Cybercrimes Protection: It protects businesses from cybercrimes like hacking, data theft, and online fraud, providing legal remedies and penalties for
offenders.
Data Security: The Act addresses the security of digital data handled by businesses, setting standards for safeguarding sensitive information and preventing
unauthorized access.
Online Governance: It regulates online activities of businesses, including electronic communication, digital signatures, and internet usage, ensuring legal
compliance and accountability in cyberspace.

Penal provisions

Cybercrimes Penalties: The Act punishes bad online actions like hacking or stealing data with fines or jail time. Businesses must follow rules to protect their
digital stuff or face consequences.
Unauthorized Access: If someone gets into a business's computer system without permission, they can get fined or go to jail under the Act. Businesses need
strong online locks to stop this from happening.
Data Theft and Misuse: Taking or using a business's data without permission is a big no-no under the Act. People who do this can get fined or put behind
bars. Businesses should keep their data safe to avoid trouble.
Identity Theft: The Act deals with stealing someone's online identity. Businesses caught up in this, even if they didn't mean to, could get in big trouble, with
hefty fines or jail time.

IMPORTANT QUESTIONS

1. NATURE AND ELEMENTS OF A CONTRACT?

1. Agreement: A contract begins with an agreement between two or more parties to do, or refrain from doing, something. This agreement must be
supported by mutual consent.
- Example: Two friends agree to trade their bicycles.

2. Offer and Acceptance: One party must make an offer to enter into a contract, and the other party must accept that offer without any conditions.
- Example: Person A offers to sell their car to Person B for $10,000. Person B accepts the offer without proposing any changes.

3. Intention to Create Legal Relations: Both parties must intend for their agreement to have legal consequences and create a binding contract.
- Example: A company offers a job to an individual, indicating their intention to establish an employment contract.

4. Consideration: There must be something of value exchanged between the parties, such as money, goods, services, or promises to do or not do
something.
- Example: A person promises to pay $500 in exchange for lawn mowing services provided by another person.

5. Capacity: Both parties must have the legal capacity to enter into the contract, meaning they must be of sound mind and legal age.
- Example: A minor cannot enter into a contract for the purchase of a car because they lack the legal capacity to do so.
 6. Legal Object: The purpose of the contract must be legal and not against public policy.
- Example: A contract to sell illegal drugs would not be enforceable in court because the object of the contract is illegal.

7. Certainty: The terms of the contract must be clear and specific enough for a court to enforce them.
- Example: A contract to purchase "a car" without specifying the make, model, or price would lack the necessary certainty.

8. Consent: Both parties must enter into the contract freely and without any undue influence, coercion, or misrepresentation.
- Example: If one party was misled about the terms of the contract or was forced to sign it under duress, their consent would be invalid.

These elements collectively form the foundation of a valid contract, ensuring that it is enforceable in a court of law.
2. DIFFERENCE BETWEEN BAILMENT AND PLEDGE/ INDEMNITY AND GUARANTEE?

Feature Bailment Pledge

Defined As Per Section 148 of Indian Contract Act, 1872 Section 172 of Indian Contract Act, 1872
Bailment refers to the transfer of possession of a good Pledge is the transfer of possession of a good as security for a debt or
Definition
from the bailor to the bailee. obligation.

Parties Involved Two parties are involved: the bailor and the bailee. Three parties are involved: the pledgor, the pledgee, and the debtor.

The purpose is usually for the safekeeping, repair, or use

Purpose The purpose is to secure a debt or obligation.
of the good.

Return of Good The good is returned after the agreed purpose is fulfilled. The good is returned after the debt is repaid.

Rights of the The bailee cannot use the good for any purpose other
The pledgee has the right to sell the good if the debt is not repaid.
Possessor than the agreed one.
Risk of Loss The risk of loss generally falls on the bailee. The risk of loss falls on the pledgor.

Parameter Indemnity Guarantee

Indemnity is a contractual obligation where one party promises to A guarantee is a legal promise made by a third party to cover a
Definition compensate for the potential loss or damage incurred by another debt or obligation of another party if they fail to fulfill their
party. obligation.

Nature of Indemnity is a primary obligation that is independent of any other Guarantee is a secondary obligation that comes into play if the
Obligation obligations. primary obligation (the debt) is not fulfilled.

Number of Indemnity typically involves two parties – the indemnifier and the Guarantee usually involves three parties – the creditor, the
Parties Involved indemnified party. principal debtor, and the guarantor.

The indemnifier is liable for the loss suffered by the indemnified The guarantor is liable for the principal debtor’s default, which
Risk
party. is generally considered riskier.

The purpose of a guarantee is to ensure the performance of an

Purpose The purpose of indemnity is to compensate for a loss.
obligation.

Example An example of indemnity is an insurance contract. An example of a guarantee is a bank guarantee.

Bailment vs. Pledge:

1. Nature:
- Bailment: Bailment involves the transfer of possession of goods by one party (bailor) to another (bailee) for a specific purpose, with the goods to be
returned or disposed of as per the bailor's instructions.
- Pledge: Pledge is a special type of bailment where goods are delivered by a debtor (pledgor) to a creditor (pledgee) as security for a debt or obligation.

2. Purpose:
- Bailment: Bailment can be for various purposes like safekeeping, repair, transportation, etc.
- Pledge: Pledge is specifically for securing a debt or obligation.

3. Ownership:
- Bailment: Ownership of the goods remains with the bailor.
- Pledge: Ownership of the goods remains with the pledgor, but possession is with the pledgee.

4. Return of Goods:
- Bailment: Goods are to be returned to the bailor after the purpose of bailment is fulfilled.
 - Pledge: Goods are returned to the pledgor after the debt or obligation is fulfilled.

Example:
- Bailment: You give your car to a friend for a road trip. Your friend is the bailee, and you are the bailor. The purpose is transportation, and your friend is
expected to return the car after the trip.
- Pledge: You pawn your watch at a pawn shop to secure a loan. The pawn shop is the pledgee, and you are the pledgor. The watch serves as collateral until
you repay the loan, upon which the pawn shop returns the watch.

Indemnity vs. Guarantee:

1. Nature:
- Indemnity: Indemnity is a promise to compensate for loss or damage suffered by a party.
- Guarantee: Guarantee is a promise to be liable for the debt or obligation of another party if that party fails to perform.

2. Party Involved:
- Indemnity: It involves two parties, the indemnifier (who provides the indemnity) and the indemnified (who receives compensation).
- Guarantee: It involves three parties, the creditor (to whom the debt is owed), the debtor (who owes the debt), and the guarantor (who promises to fulfill
the debtor's obligation if they fail to do so).

3. Trigger:
- Indemnity: It is triggered by loss or damage suffered by the indemnified party.
- Guarantee: It is triggered by the failure of the debtor to perform their obligation.

4. Nature of Liability:
- Indemnity: The indemnifier's liability is secondary; they only compensate if the indemnified party suffers a loss.
- Guarantee: The guarantor's liability is primary; they are directly liable for the debtor's obligation if the debtor fails to fulfill it.

Example:
- Indemnity: You hire a contractor to renovate your house, and they provide an indemnity against any damage caused during the renovation. If they
accidentally damage your property, they are obligated to compensate you for the repair costs.
- Guarantee: You apply for a loan, and your friend guarantees the loan. If you default on the loan, the bank can demand payment from your friend (the
guarantor) to cover the outstanding amount.

These examples illustrate the practical applications and distinctions between bailment and pledge, as well as indemnity and guarantee in everyday scenarios
involving transactions and obligations.
3. PRINCIPLE AGENT RELATIONSHIP?

Principle-Agent Relationship:

1. Definition: The principle-agent relationship refers to a situation where one party (the principal) delegates authority to another party (the agent) to act on
their behalf in certain matters or transactions.

2. Roles:
- Principal: The individual or entity that authorizes the agent to act on their behalf.
- Agent: The person or entity authorized to act on behalf of the principal.

3. Agency Agreement: Typically established through a contract or agreement between the principal and the agent, outlining the scope of authority,
responsibilities, and any limitations.

4. Fiduciary Duty: The agent owes a fiduciary duty to the principal, meaning they must act in the best interests of the principal, with loyalty, honesty, and
diligence.

5. Types of Agents: Agents can take various forms, including employees, independent contractors, attorneys, brokers, etc.

6. Authority: The agent's authority may be actual (explicitly granted), apparent (perceived by third parties based on the principal's actions), or inherent
(implied by the nature of the agency relationship).

7. Liability: The principal may be liable for the actions of the agent within the scope of their authority, known as vicarious liability.

8. Termination: The agency relationship can be terminated by mutual agreement, expiration of a specified term, completion of the specified task, or by
unilateral termination (if allowed by the agreement or law).

Real-Time Example in Legal Aspects of Business:

Example: Employment Relationship

1. Scenario: A company (the principal) hires an employee (the agent) to manage its legal affairs, including contract negotiations and compliance matters.

2. Agency Agreement: The company provides a job offer and employment contract outlining the employee's responsibilities, authority, and obligations.
3. Fiduciary Duty: The employee, as the company's legal representative, has a fiduciary duty to act in the best interests of the company, maintaining
confidentiality, avoiding conflicts of interest, and upholding legal standards.

4. Authority: The employee has explicit authority to negotiate contracts, represent the company in legal proceedings, and ensure compliance with relevant
laws and regulations.

5. Liability: If the employee acts within the scope of their authority and causes harm or breaches contractual obligations, the company may be held
vicariously liable for their actions.

6. Termination: The agency relationship can be terminated by either party through resignation or dismissal, subject to any notice periods or contractual
terms.

In this example, the principle-agent relationship is evident in the employment context, where the company delegates legal responsibilities to an employee,
who acts as its agent in legal matters.
4. SALE AND GOODS ACT INCLUDING RIGHTS OF AN UNPAID SELLER ?
1. Sale of Goods Act (SGA):
- The Sale of Goods Act is a piece of legislation that governs the sale of goods in many jurisdictions around the world, including the United Kingdom.

2. Definition of Sale:
- According to the SGA, a sale is a contract where one party (the seller) transfers or agrees to transfer the ownership of goods to another party (the buyer)
for money consideration.

3. Implied Conditions and Warranties:

- The SGA implies certain conditions and warranties into contracts for the sale of goods, ensuring that buyers receive goods of satisfactory quality and
sellers fulfill their obligations.

4. Rights of an Unpaid Seller:

- An unpaid seller refers to a seller who has not been paid the full price of the goods or whose payment has been dishonored. The SGA provides certain
rights to such sellers:

5. Right to Withhold Delivery:

- An unpaid seller can withhold delivery of the goods until payment is made or tendered. For example, if a customer fails to pay for goods purchased from
an online store, the seller can refuse to deliver the goods until payment is received.

6. Right to Stoppage in Transit:

- If the buyer becomes insolvent and the goods are still in transit, the unpaid seller can stop the goods in transit and resume possession of them. For
instance, if a wholesaler discovers that a retailer who purchased goods on credit has declared bankruptcy, the wholesaler can instruct the carrier to return
the goods.

7. Right of Lien:
- An unpaid seller has a right to retain possession of the goods until payment is made. This is known as the right of lien. For example, if a mechanic repairs a
customer's car but the customer fails to pay the repair bill, the mechanic can keep possession of the car until the bill is settled.

8. Right of Resale:
- If the buyer defaults on payment and the seller has given reasonable notice to the buyer, the seller can resell the goods and recover any damages from
the original buyer. For instance, if a farmer sells livestock to a buyer who fails to pay, the farmer can resell the livestock to another buyer and claim damages
from the original buyer for any loss incurred.

9. Right to Sue for Damages:

- An unpaid seller can sue the buyer for damages in case of breach of contract, such as non-payment or refusal to accept delivery. This could include
compensation for any loss suffered due to the buyer's actions.

These rights ensure that sellers are protected in commercial transactions and have recourse in case buyers fail to fulfill their obligations under the contract.
Let's illustrate these points with a real-life example:
EXAMPLE SCENARIO:
Imagine you run a small electronics store, and you've sold a high-end laptop to a customer on credit. According to your agreement, the customer is supposed
to pay the full price within 30 days of receiving the laptop. However, after receiving the laptop, the customer stops responding to your payment reminders
and fails to make the payment on the due date.

In this scenario:

1. Right to Withhold Delivery: Since the payment hasn't been made, you can withhold delivery of any further goods or services until the outstanding
payment for the laptop is settled.

2. Right to Stoppage in Transit: If you discover that the customer has become insolvent and the laptop is still in transit (e.g., it's being shipped to the
customer's location), you can instruct the carrier to stop the delivery and return the laptop to you.

3. Right of Lien: You have the right to retain possession of the laptop until the payment is made. Even if the customer requests the return of the laptop, you
can refuse until the outstanding payment is settled.
4. Right of Resale: After giving reasonable notice to the customer about your intention to resell the laptop due to non-payment, you can proceed to resell
the laptop to another customer. Any loss incurred in the resale process (e.g., selling at a lower price) can be claimed from the original buyer as damages.

5. Right to Sue for Damages: If the customer continues to refuse payment or breaches the contract in any other way, you have the right to sue them for
damages, seeking compensation for the unpaid amount, any costs incurred due to non-payment, and possibly even additional damages for breach of
contract.

This example demonstrates how the rights of an unpaid seller under the Sale of Goods Act come into play in a real-life business situation, providing legal
protections and recourse in case of non-payment or breach of contract by the buyer.

5. DIFFERENCE BETWEEN BILLS AND EXCHANGE PROMISORY NOTE AND CHEQUE?

1. Nature and Parties Involved:

- Bill of Exchange: It involves three parties - the drawer (the person who issues the bill), the drawee (the person who is ordered to pay), and the payee (the
person to whom the payment is to be made).
- Promissory Note: It involves two parties - the maker (who promises to pay) and the payee (the person to whom the payment is promised).
- Cheque: It also involves two parties - the drawer (the person who writes the cheque) and the payee (the person to whom the payment is to be made).

2. Promise to Pay:
- Bill of Exchange: It contains an unconditional order by the drawer to the drawee to pay a certain sum of money to the payee.
- Promissory Note: It contains an unconditional promise by the maker to pay a certain sum of money to the payee.
- Cheque: It contains an order by the drawer to the drawee bank to pay a certain sum of money to the payee.

3. Payment Timing:
- Bill of Exchange: It can be payable on demand or at a specified future date.
- Promissory Note: It is typically payable on a specified future date.
- Cheque: It is payable on demand.

4. Transferability:
- Bill of Exchange: It is freely transferable by endorsement.
- Promissory Note: It is transferable but not as freely as a bill of exchange.
- Cheque: It is transferable by endorsement.

5. Stamp Duty:
- Bill of Exchange: It attracts stamp duty.
- Promissory Note: It also attracts stamp duty.
- Cheque: It does not attract stamp duty.

Real-time example:
Imagine you've borrowed money from a friend and have to repay it. You could use any of these instruments:

- Bill of Exchange: If you issue a bill of exchange to your friend, it would be like issuing an order to your bank (drawee) to pay your friend (payee) a certain
amount of money.

- Promissory Note: If you issue a promissory note, it would be like writing a note promising your friend to repay the borrowed amount on a specified future
date.

- Cheque: If you issue a cheque, it would be like writing a check from your bank account to your friend for the amount owed.

6. DIFFERENT TYPE OF CROSSING OF CHEQUE ?

Crossing a cheque refers to drawing two parallel lines across the face of the cheque. This practice is used to make the cheque more secure and prevent its
unauthorized transfer. There are different types of crossing of cheques, each serving a distinct purpose in terms of security and transaction handling:

1. General Crossing: In a general crossing, the two parallel lines are drawn across the cheque without any additional instructions. This indicates that the
cheque can only be credited to the bank account of the payee and cannot be encashed directly over the counter.

Example: Suppose John issues a cheque to Sarah for payment of rent. He crosses the cheque generally by drawing two parallel lines across it. Now, Sarah
can only deposit this cheque into her bank account; she cannot cash it directly.

2. Special Crossing: Special crossing involves adding the name of a particular bank between the two parallel lines. This specifies that the cheque must be
deposited into an account held at that particular bank. It adds an extra layer of security and ensures that the cheque reaches the intended bank account.

Example: If John writes a cheque to Sarah and specially crosses it by adding "For ABC Bank" between the lines, Sarah can only deposit it into her account
at ABC Bank. She cannot deposit it into any other bank account.

3. Restrictive Crossing: A restrictive crossing involves adding specific instructions between the two parallel lines regarding the manner in which the cheque
can be cleared. This is typically used when the payee wants to limit how the cheque can be cashed or deposited.
 Example: John writes a cheque to Sarah and restrictively crosses it by adding "Account Payee Only" between the lines. This means that Sarah cannot
endorse the cheque to anyone else; it must be deposited directly into her own bank account.

4. Not Negotiable Crossing: This type of crossing indicates that the cheque cannot be further negotiated or transferred to any other party. It ensures that the
payee mentioned on the cheque receives the payment and prevents the cheque from being passed on to a third party.

Example: John issues a cheque to Sarah and crosses it with "Not Negotiable" between the lines. This means that even if Sarah loses the cheque or it gets
stolen, the thief cannot cash it as it is not negotiable.

Each type of crossing serves to enhance the security and control over the cheque, ensuring that it is safely deposited into the intended bank account and
reducing the risk of fraudulent activity.
7. INDIAN PARTNERSHIP ACT: (IN SHORT, DETAILED EXPLAINED IN MODULE 2)
The Indian Partnership Act, 1932 is the primary legislation governing partnerships in India. It defines the rights, duties, and liabilities of partners within a
partnership firm. Here are some key points covered by the Indian Partnership Act:

1. Definition of Partnership: The Act defines partnership as 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.

2. Formation of Partnership: According to the Act, a partnership may be formed either orally or in writing. However, it is advisable to have a written
agreement to avoid misunderstandings in the future.

3. Partnership Deed: Partners can create a partnership deed, which outlines the terms and conditions of the partnership, including profit-sharing ratio,
capital contributions, duties and responsibilities of partners, etc.

4. Rights and Duties of Partners: The Act specifies the rights and duties of partners, including the right to participate in the management of the business,
the duty to act in good faith, the duty to indemnify for losses caused by willful misconduct, etc.

5. Liability of Partners: In a partnership firm, partners have unlimited liability, which means they are personally liable for the debts and obligations of the
firm. This extends to their personal assets, not just their investment in the business.

6. Registration of Partnership: While registration of a partnership firm is not mandatory, it is advisable. Registration offers various legal benefits, including
the right to file a lawsuit against third parties and the right to claim set-off or counter-claim in a lawsuit.

7. Rules for Dissolution: The Act provides rules for the dissolution of a partnership, which may occur due to various reasons such as expiry of the
partnership term, mutual agreement among partners, insolvency of a partner, etc.

8. Minor's Position in Partnership: A minor can be admitted to the benefits of partnership with the consent of all partners, but they cannot become a full-
fledged partner until they attain majority.

9. Rights of Outgoing Partner: An outgoing partner has certain rights under the Act, including the right to receive their share of the assets after the
settlement of liabilities, the right to have their share in the firm's goodwill, etc.

10. Arbitration Clause: The Act allows partners to include an arbitration clause in the partnership deed, which can help in resolving disputes between
partners without resorting to lengthy court proceedings.

These are some of the key provisions of the Indian Partnership Act, 1932, which governs the formation, operation, and dissolution of partnership firms in
India.
8. REGISTRATION AND DEFINITION:
The Indian Partnership Act, 1932 governs partnerships in India. Here's an overview of registration requirements and the definition of a partnership under
this act:

1. Definition of Partnership: According to the Indian Partnership Act, a partnership is defined as "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." In simpler terms, it's an agreement between two or more people to run a business
together and share its profits.

2. Registration of Partnership: Although registration of a partnership is not mandatory under the Indian Partnership Act, it is highly recommended. Here
are some key points regarding registration:

- Voluntary Registration: Partnerships can be registered with the Registrar of Firms by submitting an application along with the prescribed fee and
necessary documents.

- Advantages of Registration:
- Evidence: Registered partnership documents serve as primary evidence in case of disputes or legal proceedings.
- Rights: Registered partners have certain legal rights, such as the right to sue other partners or the firm itself in case of disagreements.
- Third-party Verification: Third parties dealing with the firm can verify its existence and details through the Registrar's records.

- Procedure for Registration:

- Application: Partners need to submit an application to the Registrar of Firms containing details such as the firm's name, place of business, names and
addresses of partners, duration of the partnership (if any), etc.
- Document Submission: Along with the application, a copy of the partnership deed and prescribed fees must be submitted.
 - Verification: The Registrar verifies the documents and, if satisfied, records the partnership in the Register of Firms.

- Effects of Registration: Once registered, the partnership becomes a separate legal entity from its partners. It can sue or be sued in its own name.

- Non-Registration: If a partnership is not registered, it doesn't enjoy certain legal benefits. For example, partners cannot sue the firm or other partners in
case of disputes. However, they can still enforce their rights under the partnership agreement through legal action.

Overall, while registration is not mandatory, it offers various legal protections and benefits to partners, making it advisable for most partnerships to
undergo the registration process.
9. DIFFERENCE BETWEEN GENERAL PARTNERSHIP AND Ltd. LIABILITY PARTNERSHIP?

General Partnership:
1. Definition: A General Partnership is a business structure in which two or more individuals manage and operate a business in accordance with the
terms and objectives set out in a Partnership Deed.
2. Liability: In a General Partnership, each partner has unlimited liability, meaning they are personally responsible for the debts and liabilities of the
business.
3. Management: Partners have equal rights in the management and decision-making processes of the business.
4. Taxation: Profits and losses are shared among partners and taxed at the individual level.
5. Example: A law firm formed by two or more attorneys who share profits, liabilities, and management responsibilities.

Limited Liability Partnership (LLP):

1. Definition: An LLP is a legal business structure that combines the flexibility of a partnership with the limited liability of a corporation.
2. Liability: In an LLP, partners have limited liability, meaning their personal assets are protected from the debts and liabilities of the business.
3. Management: Partners may have varying degrees of management control depending on the terms outlined in the LLP agreement.
4. Taxation: Similar to a General Partnership, profits and losses are passed through to the partners and taxed at the individual level.
5. Example: A consultancy firm formed by professionals such as accountants, architects, or engineers who wish to share resources and expertise
while limiting personal liability.

In summary, the main difference between a General Partnership and an LLP lies in the extent of liability protection offered to partners. While a
General Partnership exposes partners to unlimited liability, an LLP provides partners with limited liability protection, making it a more attractive
option for professionals and businesses seeking to mitigate personal risk.
10. CONSUMER PROTECTION ACT. AND DIFFERENT FORUMS?

1. Consumer Protection Act (CPA):

- The Consumer Protection Act 1986 is a legislation enacted to safeguard the rights of consumers and provide them with avenues for seeking
redressal against unfair trade practices and defective goods/services.
- It applies to all goods and services, barring a few exceptions such as goods bought for commercial purposes.

2. Forums under CPA:

- District Consumer Disputes Redressal Forum (DCDRF): This forum handles cases involving claims up to a specified monetary limit.
- State Consumer Disputes Redressal Commission (SCDRC): Deals with cases where the claim amount exceeds the limit set by the DCDRF but is
within the limit set by the SCDRC.
- National Consumer Disputes Redressal Commission (NCDRC): Has jurisdiction over cases involving claims exceeding the limit set by the SCDRC.

3. Real-time Examples:

- District Consumer Disputes Redressal Forum (DCDRF): Suppose you bought a defective mobile phone from a local store. Despite several attempts to
get it repaired, the issue persists. You can file a complaint with the DCDRF seeking a refund or replacement.

- State Consumer Disputes Redressal Commission (SCDRC): Imagine you booked a holiday package with a travel agency, and they failed to provide the
promised services. Despite multiple requests for compensation, they haven't responded satisfactorily. You can approach the SCDRC for resolution.

- National Consumer Disputes Redressal Commission (NCDRC): Let's say you purchased a high-value electronic item online, and it turned out to be
significantly different from what was advertised. The seller refuses to acknowledge your complaint. In such a scenario, you can escalate the matter to
the NCDRC.

These forums provide consumers with accessible and efficient mechanisms for resolving disputes and seeking compensation for grievances related to
goods and services.
11. COPYRIGHT, INTELLECTUAL PROPERTY RIGHTS, TRADEMARK, PATENTS:

1. Copyright:
- Definition: Copyright is a form of legal protection granted to original works of authorship fixed in a tangible medium of expression. It grants the creator
exclusive rights to control the reproduction, distribution, performance, and adaptation of their work.
- Elaboration:
1. Copyright protects various forms of creative expression, including literary works, music, art, films, software code, and architectural designs.
2. It provides creators with economic incentives by allowing them to profit from their creations and controls unauthorized use by others.
 3. Copyright protection typically lasts for the life of the author plus 70 years, though this duration can vary depending on factors like the type of work and
jurisdiction.

2. Intellectual Property Rights (IPR):

- Definition: Intellectual property rights (IPR) encompass legal rights granted to individuals or entities over creations of the mind, which can include
inventions, literary and artistic works, designs, symbols, names, and images used in commerce.
- Elaboration:
1. IPR serves to protect the interests of creators and innovators by providing them with exclusive rights to their creations, thereby incentivizing innovation
and creativity.
2. Types of intellectual property rights include copyright, patents, trademarks, trade secrets, and industrial designs, each offering different forms of
protection for different types of intellectual creations.
3. Effective management of intellectual property rights is crucial for businesses to safeguard their competitive advantage, mitigate risks of infringement,
and capitalize on their intellectual assets.

3. Trademark:
- Definition: A trademark is a recognizable sign, symbol, design, or expression that distinguishes products or services of a particular source from those of
others in the marketplace.
- Elaboration:
1. Trademarks serve as valuable assets for businesses by establishing brand identity, fostering consumer trust, and enabling brand differentiation in
competitive markets.
2. They can take various forms, including words, logos, slogans, colors, sounds, and even product packaging.
3. Trademark rights are acquired through registration with the relevant government authority, providing the owner with exclusive rights to use the mark in
connection with specific goods or services within the registered classes.

4. Patents:
- Definition: A patent is a government-granted right that gives the inventor exclusive control over the manufacture, use, and sale of an invention for a
limited period, typically 20 years from the filing date.
- Elaboration:
1. Patents are granted for inventions that are novel, non-obvious, and useful, providing inventors with a temporary monopoly to exploit their inventions
commercially.
2. They cover a wide range of inventions, including new products, processes, machines, compositions of matter, and improvements thereof.
3. Patent protection incentivizes innovation by rewarding inventors with exclusive rights and promoting disclosure of technological advancements for the
benefit of society.
12. IT ACT. (THE INFORMATION TECHNOLOGY ACT, 2000):
The Information Technology Act, 2000 (IT Act) is a significant legislation in India that deals with various aspects of electronic commerce, digital
signatures, cybercrime, and other issues related to the digital realm. Here's an overview of the key points of the IT Act along with real-time
examples:

1. Legal Recognition of Electronic Documents: The IT Act provides legal recognition to electronic documents and digital signatures, making them
equivalent to their paper counterparts. For example, signing a contract electronically is legally binding under the IT Act.

2. Regulation of Certifying Authorities: The Act establishes the Controller of Certifying Authorities (CCA) to license and regulate Certifying Authorities
(CAs) which issue digital certificates. This ensures the authenticity and integrity of digital signatures. An example could be a digital signature issued
by a licensed Certifying Authority to authenticate online transactions.

3. Electronic Governance: The Act promotes electronic governance by providing legal recognition to electronic records used by government agencies.
For instance, government departments accepting online applications for various services comply with the IT Act.

4. Offenses and Penalties: The Act defines various cybercrimes such as hacking, phishing, and identity theft, and prescribes penalties for them. For
example, unauthorized access to computer systems leading to data theft can result in imprisonment and/or fines as per the provisions of the Act.

5. Cyber Appellate Tribunal: The Act establishes a Cyber Appellate Tribunal to deal with disputes arising from the IT Act and other cyber-related
issues. An example would be an appeal filed against a judgment related to cybercrime or data breach.

6. Network Service Providers' Obligations: The Act imposes certain obligations on intermediaries and network service providers to promptly remove
or disable access to illegal or objectionable content. This is relevant in cases where social media platforms are required to take down objectionable
content.

7. Data Protection and Privacy: While the IT Act does not comprehensively address data protection and privacy, it does contain provisions related to
unauthorized access and breach of sensitive personal data. For example, unauthorized access to personal information stored in a database could
lead to penalties under the Act.

8. International Cooperation: The Act provides mechanisms for international cooperation in matters related to electronic transactions and
cybercrime. This enables collaboration between law enforcement agencies across borders to tackle cyber threats. An example could be cooperation
between Indian and international authorities in investigating a cross-border cybercrime.
13. COMPANY ACT. 2013:
The Companies Act, 2013 is a comprehensive legislation governing companies in India.
1. Types of Companies: The Act defines various types of companies, including private, public, one-person, and government companies.
- Example: Tata Sons Limited is a prominent example of a private company, while Indian Oil Corporation Limited represents a public sector company.
2. Corporate Governance: The Act lays down regulations for corporate governance, including the roles and responsibilities of directors, shareholders,
and auditors.
- Example: Infosys Limited adheres strictly to corporate governance practices, maintaining transparency and accountability to its shareholders.

3. Corporate Social Responsibility (CSR): The Act mandates certain companies to spend a portion of their profits on CSR activities.
- Example: Reliance Industries Limited allocates a significant portion of its profits towards CSR initiatives, such as education, healthcare, and
environmental sustainability.

4. Financial Reporting: It sets out guidelines for financial reporting, auditing, and disclosure requirements.
- Example: Hindustan Unilever Limited prepares its financial statements in accordance with the Companies Act, ensuring transparency and accuracy
in reporting.

5. Merger and Acquisitions (M&A): The Act regulates mergers, acquisitions, and amalgamations of companies.
- Example: The merger of Vodafone India and Idea Cellular into Vodafone Idea Limited was governed by the provisions of the Companies Act, 2013.

6. Insolvency and Bankruptcy: It provides a legal framework for resolving insolvency and bankruptcy matters of companies.
- Example: Jet Airways (India) Limited underwent insolvency proceedings under the Insolvency and Bankruptcy Code, 2016, which works in
conjunction with the Companies Act, 2013.

7. Protection of Minority Shareholders: The Act safeguards the interests of minority shareholders and provides mechanisms for their protection.
- Example: Minority shareholders of Cadbury India Limited were assured fair treatment during its acquisition by Mondelez International.

8. Regulation of Board Meetings and Resolutions: It governs the conduct of board meetings, passing of resolutions, and decision-making processes.
- Example: The board of directors of Tata Consultancy Services Limited convenes regular meetings to discuss strategic decisions and ensure
compliance with the Companies Act.
14. MEMORANDUM OF ASSOCIATION, ARTICLE OF ASSOCIATION, PROSPECTUS,
FORMATION COMPANY, WINDING OF A COMPANY, COMPANY GOVERNERS, BOARD OF
DIRECTOR:
1. Memorandum of Association:
- It's a legal document that outlines the fundamental principles and objectives of a company.
- It defines the scope of the company's activities and its relationship with shareholders.
- It includes details such as the company's name, location, objectives, and authorized share capital.
- Real-time example: The Memorandum of Association of a tech company might state that its objectives include developing software products,
providing IT consulting services, and engaging in related activities.

2. Articles of Association:
- This document complements the Memorandum of Association and provides rules for the internal management of the company.
- It covers matters like the rights and duties of shareholders, the appointment and powers of directors, and conduct of board meetings.
- Real-time example: The Articles of Association may specify the procedure for appointing directors, the process for issuing shares, and the
distribution of dividends among shareholders.

3. Prospectus:
- A prospectus is a legal document issued by a company to potential investors, providing details about its operations, financial status, and investment
opportunities.
- It aims to attract investors by presenting the company's business model, financial projections, risks, and other relevant information.
- Real-time example: A company planning to go public (IPO) issues a prospectus to inform potential investors about its growth prospects, competitive
advantages, and risks associated with investing in its shares.

4. Formation of a Company:
- Formation involves the process of legally incorporating a company, which typically includes registering with the appropriate government
authorities, drafting the Memorandum and Articles of Association, and issuing shares.
- It involves selecting a suitable business structure (e.g., LLC, corporation), appointing directors, and complying with legal requirements.
- Real-time example: A group of entrepreneurs interested in starting a software development company would go through the formation process by
registering their business, drafting necessary documents, and obtaining necessary permits and licenses.

5. Winding up of a Company:
- Winding up refers to the process of closing down a company's operations and liquidating its assets to pay off debts and distribute remaining funds
to shareholders.
- It can be voluntary (by shareholders' decision) or involuntary (court-ordered).
- Real-time example: If a company becomes financially insolvent and unable to repay its debts, it may opt for voluntary winding up, where assets are
sold off to settle liabilities and distribute remaining funds among shareholders.

6. Company Governance:
- Company governance refers to the system of rules, practices, and processes by which a company is directed and controlled.
- It encompasses the relationships between various stakeholders, including shareholders, management, and the board of directors.
- Real-time example: Effective company governance ensures transparency, accountability, and ethical conduct in business operations, ultimately
safeguarding the interests of shareholders and other stakeholders.

7. Board of Directors:
- The board of directors is a group of individuals elected by shareholders to oversee the management of the company on their behalf.
 - They set strategic goals, appoint executives, and make major decisions affecting the company's direction and performance.
- Real-time example: A multinational corporation may have a diverse board of directors comprising industry experts, financial specialists, and
independent directors, who provide guidance and oversight to ensure the company's long-term success.
15. MCA 21 ( MINISTRY OF COMPANY/ CORPORATE AFFAIRS) GOVERNMENT OF INDIA:
The Ministry of Corporate Affairs (MCA) is primarily concerned with the administration of the Companies Act 2013, the Companies Act 1956, The Limited
Liability Partnership Act, 2008 & other allied Acts, rules & regulations framed mainly for regulating the functioning of the corporate sector in accordance
with law. In order to simplify the compliance procedures and provide consolidated information on applicable Acts, Rules and Regulations to the
stakeholders.
Sure, here's an overview of MCA 21, the Ministry of Corporate Affairs initiative in India, along with real-time examples:

1. Digitalization of Corporate Affairs: MCA 21 is a comprehensive e-Governance initiative undertaken by the Ministry of Corporate Affairs, Government of
India, aimed at digitizing and streamlining various processes related to corporate affairs.

- Real-time Example: Companies in India can now file various statutory documents like annual returns, financial statements, and incorporation
documents online through the MCA portal.

2. Transparency and Accountability: One of the key objectives of MCA 21 is to enhance transparency and accountability in corporate operations by
making relevant information easily accessible to stakeholders.

- Real-time Example: Shareholders and investors can access company information, including financial reports, board resolutions, and regulatory filings,
through the MCA portal, ensuring transparency in corporate governance.

3. Efficiency and Ease of Doing Business: MCA 21 aims to improve the ease of doing business in India by simplifying and expediting regulatory processes
related to company registration, compliance, and governance.

- Real-time Example: The introduction of initiatives like SPICe (Simplified Proforma for Incorporating Company Electronically) has significantly reduced
the time and paperwork required for incorporating a company in India, promoting entrepreneurship and investment.

4. Corporate Compliance Monitoring: The MCA 21 system facilitates real-time monitoring and enforcement of corporate compliance norms, thereby
promoting adherence to legal and regulatory requirements.

- Real-time Example: Companies are required to file various forms and returns within specified deadlines. The MCA 21 system automatically flags non-
compliant entities, enabling regulatory authorities to take prompt action.

5. Promotion of Digital India: MCA 21 aligns with the broader Digital India initiative by leveraging technology to deliver efficient and citizen-centric
services in the corporate sector.

- Real-time Example: Integration with digital signatures, Aadhaar authentication, and online payment gateways on the MCA portal has reduced
paperwork and enabled secure and convenient transactions for stakeholders.

Overall, MCA 21 represents a paradigm shift in the way corporate affairs are managed and regulated in India, ushering in an era of digital governance
and transparency.
16. SEBI (OBJECTIVES & STRUCTURE):
SEBI (Securities and Exchange Board of India) in terms of its objectives, structure
Objectives of SEBI:

1. Protection of Investors: SEBI aims to safeguard the interests of investors by ensuring fair practices, transparency, and accountability in the securities
market. It regulates various entities like stock exchanges, brokers, and listed companies to prevent fraud and manipulation.

Real-time example: SEBI may intervene in cases of insider trading, ensuring that investors are not disadvantaged by unfair advantages gained by
insiders trading on non-public information.

2. Regulation of Securities Market: Another objective is to regulate and develop a fair, efficient, and transparent securities market. This involves
formulating regulations, setting standards, and promoting fair competition among market participants.

Real-time example: SEBI regularly reviews and updates listing requirements for companies going public to ensure that investors have access to accurate
and relevant information for making investment decisions.

3. Promotion of Fair Practices: SEBI promotes fair practices and ethical behavior in the securities market. It enforces rules and regulations to prevent
fraudulent activities and market manipulation, thereby maintaining market integrity.

Real-time example: SEBI may take action against companies or individuals involved in misleading financial reporting or market manipulation, ensuring
that investors are not misled or harmed.

4. Development of the Securities Market: SEBI works towards the development and growth of the securities market by introducing new products,
technologies, and trading mechanisms. It aims to enhance market liquidity, efficiency, and depth.

Real-time example: SEBI may introduce new trading platforms or financial instruments like exchange-traded funds (ETFs) to diversify investment
options and attract more investors to the market.

Structure of SEBI:
1. Board of Directors: SEBI is governed by a board of directors appointed by the government. The board consists of members with expertise in finance,
economics, law, and other relevant fields.

2. Divisions and Departments: SEBI has various divisions and departments responsible for different functions such as regulation, enforcement, market
surveillance, investor education, and market research.

3. Regional Offices: SEBI has regional offices across major cities in India to ensure effective oversight and regulation of the securities market at the local
level.

4. Committees and Advisory Panels: SEBI may constitute committees or advisory panels comprising experts from the industry, academia, and regulatory
bodies to provide recommendations on policy matters and regulatory reforms.

5. Collaboration with Other Regulators: SEBI collaborates with other regulatory bodies such as the Reserve Bank of India (RBI) and the Ministry of
Corporate Affairs to coordinate regulatory efforts and address overlapping jurisdictional issues.

Real-time Example: SEBI's collaboration with RBI to regulate credit rating agencies involved in assessing the creditworthiness of corporate bonds,
ensuring that investors receive accurate and reliable credit ratings for informed investment decisions.

In conclusion, SEBI plays a crucial role in regulating and developing the securities market in India, with objectives centered around investor protection,
market regulation, fair practices, and market development. Its structure comprises a board of directors, various divisions and departments, regional
offices, committees, and collaborations with other regulators to fulfill its mandate effectively.