Class 1&2 AdvBeenaMenon.pdf

Copyright Protected - Adv.Beena Menon 2024 LEGAL ASPECTS OF BUSINESS...

Copyright Protected - Adv.Beena Menon 2024 LEGAL ASPECTS OF BUSINESS What is Law of Contracts  The intricacies of India's business laws  The legal framework that governs them Sale of Goods Act  Understanding these laws Competition Law  Crucial for any entrepreneur or business Dispute Resolution looking to thrive in the Indian market Formation of companies 1 2 History The key business laws in India India's legal landscape has evolved over centuries. The Contract Act Sale of Goods Act Ancient customary laws to the colonial influence Companies Act Understanding this colonial influence Competition Act Understanding this historical context : Consumer Protection Act Intellectual Property Rights Essential for grasping the current legal framework Laws governing e-commerce governing businesses. Laws governing Advertising and promotions Each law plays a pivotal role in ensuring fair practices and protecting the interests of businesses. 3 4 Regulation and Compliances Disputes Resolution India's business environment is overseen by various regulatory bodies Mechanisms are in place Securities and Exchange Board of India (SEBI) Understanding dispute resolution mechanisms is vital for businesses. Reserve Bank of India (RBI) Competition Commission OPTIONS Consumer Protection Authority Arbitration FSSAI – Food safety and standards authority of India Mediation Ministry of Corporate Affairs Enforcement Directorate Litigation and many others for resolving conflicts, helping maintain relationships and ensuring smooth operations These organizations ensure compliance and protect stakeholders' interests 5 6 Copyright Protected - Adv.Beena Menon 2024 Challenges Future Businesses often face challenges in complying with India's complex The future of India's business laws is poised for legal framework. transformation. These include : Advancements in technology Bureaucratic hurdles Increasing globalization Regulatory changes Laws will need to evolve Need for constant legal updates. Address new challenges and opportunities in the business Awareness and Adaptability are key landscape 7 8 LEGAL ASPECTS OF BUSINESS Navigating India's legal landscape is both a Sources of Law Challenge and an Opportunity. Justice Dispensation System Understanding the laws and frameworks Influences Businesses can strategically position themselves for success in this dynamic environment 9 10 Sources of Law & Research approaches Constitution Preamble  Constitution Fundamental Rights  Legislative Enactment – Statute Fundamental Duties  Each statute will have Regulations framed Directives Principles of State Policy and Rules prescribed Union List  Judicial Decisions State List  Treaties/International Conventions Concurrent List  Other Sources 11 12 Copyright Protected - Adv.Beena Menon 2024 Understanding Laws The Indian Legal Justice Dispensation System Parliament, State Assembly Statute – Enactment – Act – Law Courts Regulations-Rules Centre/State Tribunals Citations – Case laws – Forums Authority – Judicial Precedent Commissions Arbitration 13 14 Hierarchy of Courts Supreme Court of India (The Apex Influences court) Legal aspects influence every aspect of business operations : High Court (Highest court at the state level) → Company's formation to its day-to-day activities Sessions/District Court → Interactions with stakeholders Provides a framework for : Judicial Magistrates of the First Class/Metropolitan Magistrate’s Court → Operate within (internal activities) Court of the Judicial Magistrates of → Ensure that transactions are fair and legal the Second Class → Protects businesses from legal liabilities and helps Executive Magistrates minimize risk 15 16 Importance It can help businesses in many ways, including: Transparency: Encourage transparency and help retain a Fairness: ensure fairness in business transactions & disputes. harmonious working environment. Rights: Protect the rights of individuals, shareholders, Compliance: Ensure organizational compliance with laws employees, and employers. and regulations Standards: Provide standards for responsible behavior, such Dispute resolution: Resolving disputes. as employment contracts, anti-discrimination policies, and Intellectual property: Safeguard intellectual property. workplace rights. Culture: Foster a culture of integrity, accountability, and Economic stability: Promote economic stability through legal sustainability certainty. 17 18 Copyright Protected - Adv.Beena Menon 2024 Law of Contracts What is a Contract? Origin, Need & Efficacy Basic principles of Contract Law Stages to formation of a contract The Indian Contract Act, 1872  Trade ,Commerce and Industry -> Important Component of ECONOMY. Promises are made. PRINCIPLES   They are Accepted.  They are Performed. ֎ Consent  Sometimes NOT Performed. ֎ Freedom Law of Contract deals with promises which create legal obligation. Daily Contracts. ֎  Intent Purchase - Price – Service ֎ Binding Value ֎ Privity CONSIDERATION most important aspect of contract – a benefit or a detriment ֎ Good faith  Creates “Right in Personam” ֎ Proportionality 19 Means right against a particular person. 20 Oral and Written contracts Formation of Contracts Oral contracts can be legally binding in some circumstances But they are generally considered less reliable than written contracts. 1. Offer: One party proposes the terms of the agreement They lack evidence, can be subject to memory and interpretation errors 2. Acceptance: The other party agrees to the offered terms Can be difficult to enforce in court. 3. Consideration: Involves the exchange of something of value between both parties 4. Intention: To create legal relations Written Contracts documented in writing On paper or in electronic format Lets see a few examples. Often signed by one or both parties Provide a clear, tangible record of the parties' intentions and terms You want to buy a house, product, service, etc Offer more certainty for both parties than oral contracts Easy to enforce in court Formalities : Identify, Offer, Acceptance, Awareness (Ad Idem), Consideration, Capacity, Legality Law requires some Contracts to be in writing Oral and written contracts Law requires some contracts to be mandatorily registered Under Transfer of Property Act , 1882 21 Sale Deed, Gift Deed , etc. 22  Oral contracts are valid  Offer(i.e. Proposal) [section 2(a)]:-When person signifies to  Ideallyit should be in writing another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of the other  Law requires some Contracts to be in writing person to such act or abstinence, he is said to make a proposal.  Law requires some contracts to be mandatorily registered Under Transfer of Property Act , 1882 Acceptance, Promise  Acceptance 2(b):- When the person to whom the proposal is  Sale Deed, Gift Deed , etc. made, signifies his assent thereto, the proposal is said to be For Enforceability by Law accepted. A contract to be valid must be enforceable by law  Promise 2(b) :- A Proposal when accepted becomes a  An aggrieved party to the contract should be entitled to relief from promise. the offending party – remedies to be available  Liquidated or unliquidated damages.  Contract tainted with illegality cannot be enforced. Proposal + Acceptance = Promise Contract to sell pirated DVD’s/banned substances, do illegal acts, etc…. 23 24 Copyright Protected - Adv.Beena Menon 2024 Promisor and Promisee SC - held that abstinence on the part of the  Promisor and Promisee 2(c) :- When the proposal is accepted, the person promisor to do something can undoubtedly be making the proposal is called as promisor and the person accepting the proposal is called as promisee. consideration for a contract. (FCI Vs Suvarna Consideration 2(d):- Commercial Co)  When at the desire of the promisor, the promisee or any other person has done or abstained Wife forbears to sue her husband for from doing something or does or abstains from doing something or promises to do or abstain from doing something, such act or abstinence or promise is called a consideration maintenance allowance on her husband for the promise. agreeing to pay her monthly maintenance.  Past, Present or Future consideration  Stranger – Privity of Contract (Combe Vs. Combe)  Trust/Charge, Assignment, Marriage/Family settlements, Agency, Acknowledgment of Should be “at the desire of the promisor” and a Liability part of the Agreement A pays a price for the promise of B Consideration core essential element QUID-PRO-QUO - A favour for a favour Creates Legal Rights / Duties between the parties.  Only agreements which have consideration for both the parties can be legally enforceable 25  Such agreements are called Contracts 26 Formation of Agreement Without Consideration  An Agreement – foundation for Natural Love and Affection – Written and Regd formation of a contract. Promise to pay time barred debt of self or another out of affection  Clarity into the terms of business relationship Formation of Agreement Agreement 2(e) :- Every promise and set of promises forming the consideration between the parties. for each other.  Each parties rights/duties are identified Agreement = Offer + Acceptance. Promises and sets of promises Contract : - An Enforceable Agreement  Contract is essential. Contract 2(h) :- An agreement enforceable by Law is a contract. All Contracts are Agreements  Agreement 2(e) :- Every promise and set of All Agreements are not Contracts promises forming the consideration for each other. Agreements + Legal Obligations = Enforceability Agreement = Offer + Acceptance. 27 Agreement + Enforceability = Contract 28 Contract : - An Enforceable Agreement Agreement Vs. Contract Offer + Acceptance = Agreement Contract 2(h) :- An agreement enforceable by Law is a contract. Agreement + Enforceability = Contract 29 30 Copyright Protected - Adv.Beena Menon 2024 All agreements are contracts if Agreement Vs. Contract An Agreement is any understanding or free consent of parties arrangement reached between two or more competent to contract, parties. lawful consideration  A Contract is a specific type of agreement lawful object, that, by its terms and elements, is legally not hereby expressly declared to be void. binding and enforceable in a court of law. 31 32 Agreement Agreement may not create any legal obligation. not a concluded contract not binding contract All agreements are not contracts All agreements may not culminate into contracts Contract is concluding and binding A contract necessarily creates a legal obligation. All contracts are agreements 33 34 Offer Valid Contract - Essential Elements  Section10 :- "All agreements are contracts, if they are made by expression to contract the free consent of parties competent to contract, for a lawful without further negotiation. consideration with a lawful object, and not hereby expressly declared to be void." Acceptance is only required Proper Offer + Proper Acceptance from the other party  Agreement based on Contract is formed a lawful offer made by one person to another The parties might engage in and lawful acceptance of that offer consideration later Sections 3 to 9 of the Contract Act deals with making valid proposals and valid acceptance. 35 36 Copyright Protected - Adv.Beena Menon 2024 Agreements -] Contracts Padia Timber Co. P. Ltd Vs The Board Of Trustees, 5 Jan 2021 All agreements are contracts if Whether the acceptance of a conditional offer with a further condition free consent of parties results in a concluded contract, irrespective of whether the offerer competent to contract accepts the further condition proposed by the acceptor lawful consideration Offer, Acceptance and Communication, Counter-Offer lawful object Communication Enforceable by law Sec 4. Communication when complete.—The communication of a not hereby expressly declared to be void proposal is complete when it comes to the knowledge of the person to Lawful Objects whom it is made.  Not forbidden by law The communication of an acceptance is complete,—  If permitted would defeat the provisions of any law as against the proposer, when it is put in a course of transmission to  Fraudulent him, so as to be out of the power of the acceptor;  Involves/implies injury to a person/property  Regarded immoral or opposed to public policy as against the acceptor, when it comes to the knowledge of the proposer. 37 38 Section 7 Acceptance The communication of a Revocation is complete Acceptance must be absolute. In order to convert a proposal into a promise the acceptance must— - as against the person who makes it, when it is put into a course (1) be absolute and unqualified; of transmission to the person to whom it is made, so as to be out (2) be expressed in some usual and reasonable manner, unless the proposal of the power of the person who makes it; prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance - as against the person to whom it is made, when it comes to his is not made in such manner, the proposer may, within a reasonable time after the knowledge. acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance. Cardinal principle of the law of contract that the offer and acceptance of an offer Trial Court and HC held that Padia Timber had committed must be absolute breach of contract When the acceptor puts in a new condition while accepting the contract already signed by the proposer, the contract is not complete until the proposer accepts that Both judgments overruled by the SC condition An acceptance with a variation is no acceptance. It is simply a counter proposal which must be accepted fully by the original proposer, before a contract is made. 39 40 Original Offer Rejected Referred amongst several other judgments: Cardinal Principle Counter Offer New Offer In Union of India Vs. Bhim Sen Walaiti Ram – 1969 - a three-Judge Bench of this Court held that :  Original Offer comes to an end acceptance of an offer may be either absolute or conditional.  Counter Offer takes its place If the acceptance is conditional, offer can be withdrawn at any  There is no contract moment until absolute acceptance has taken place. Counter proposal + accepted by the original proposer = Contract 41 42 Copyright Protected - Adv.Beena Menon 2024 Invitation to offer Harris Vs Nickerson Requirements of offer and acceptance in the formation of a contract  An advertisement inviting tenders? An auctioneer does not make a contractual offer when advertising lots that not an offer! appear in his auction catalogue, thus there is no claim when he does not  It is intention to invite offers. advertise them.  It is called Standing or Open Offer. Issue raised - withdrawal of the lots was a breach of contract which had been formed by the offer made by the defendant in the advertisement, and  The party making an offer can revoke accepted by the claimant in attending the auction before any order has actually been placed. Legal Issue - Whether the advertisement placed by the defendant was a  Carlill v Carbolic Smoke Ball Company legally binding offer of sale, which had been accepted by the claimant’s claimed to be a cure for influenza attendance at the auction, forming a completed contract. award if not working Held - advertisement was merely a declaration to inform potential purchasers that the sale was taking place. It was not an offer to contract Carlil sued with anyone who might act upon it held it was offer and not invitation to offer Held that nor was it a warranty that all the articles advertised would be accepted terms-ie proposal was accepted put on sale 44 43 Sections 3 to 9 (Reference) Sec. 3 :- Communication, Acceptance and revocation of proposals Sec. 4 :- Communication when complete (proposal/Acceptance) Sec. 5 :- Revocation of proposals and acceptance Sec. 6 :- Revocation – modes (4) Sec. 7 :- Acceptance must be absolute and unqualified Sec. 8 :- Acceptance by performing conditions or receiving consideration Sec. 9 :- Promises – express (words) / implied (conduct) 45