Business Law · 2019-12-15 · Business Law CA Foundation 2 | Author: CA. Aseem Trivedi 1. Difference between Offer and Invitation to Offer Basis Offer Invitation to offer 1. Meaning

Business Law CA Foundation

2 | Author: CA. Aseem Trivedi

1. Difference between Offer and Invitation to Offer

Basis Offer Invitation to offer

1. Meaning Offer is a final

expression of the

willingness of the

offeror to be bound by

his promise if the other

party accept it.

An invitation to offer

means an intention

of a person to invite

others with a view to

enter into an

agreement.

2. Object An offer can be

accepted by the

offeree.


on the other hand in

made with a view to

invite people to

make the offer.

3. Right of

acceptance

An offer can be

accepted by the

offeree.


cannot be accepted

by the person to

whom it is made.

4. Agreement An offer when

accepted becomes an

agreement.


cannot become an

agreement.

Nahata Professional Academy Indore

Author: CA. Aseem Trivedi | 3

2. Difference between Coercion and Undue

Influence

Basis Coercion Undue influence

1. Meaning The consent is given

under the threat of an

offence (i.e.

committing or

threatening to commit

an act forbidden by

the Indian Penal Code

or detaining or

threatening to detain

property unlawful)

The consent is given

by a person who is

so situated in relation

to another that the

other person is in a

position to dominate

his will. In other

words, consent is

given under moral

influence.

2. Nature of

Threat

Coercion is mainly of

a physical character. It

involves mostly use of

physical or violent

force.

Undue influence is of

moral character. It

involves use of moral

force or mental

pressure.

3. Intention There must be

intention of causing

any person to enter

into an agreement.

Here the influencing

party uses its position

to obtain an unfair

advantage over the

other party.

4. Nature of It involves a criminal No criminal act is



Act act. involved.

5. Relationshi

p of Parties

For coercion no

special relationship is

required.

For undue influence

a special type of

relationship is

required, such as,

doctor and patient,

master and servant.

6. Parties Coercion may be

exercised against party

to the agreement or

even by a third party.

Undue influence

must be exercised by

or against the party

to the contract.

3. Difference between Fraud and Misrepresentation

Basis Fraud Misrepresentation

1. Meaning Fraud means a

misrepresentation

made with an

intention to cheat.

Misrepresentation

means a

misstatement made

innocently.

2. Intention The distinction

between fraud and

misrepresentation is

solely based on

intention.

In case of fraud the

In case of

misrepresentation

misstatement is made

an innocently.



misstatement is made

with an intention to

cheat.

3. Right to

avoid

contract

In case of fraud, the

aggrieved party can

avoid the contract

even if the means to

discover the truth were

available.

In case of

misrepresentation if

the aggrieved party

had the means to

discover the truth. It

cannot avoid the

contract.

4. Right to

damages

In case of fraud not

only the agreement is

voidable but also the

aggrieved party can

claim damages.

In case of

misrepresentation no

damages can be

claimed, the

aggrieved party can

only avoid the

contract.

5. Belief in the

Facts

The person committing

of a fraudulent act

does not believe to be

true.

The person makes

misrepresentation

believes in its facts to

the true.



4. Difference between Contingent Contract and

Wagering Agreement:

Basis Contingent Contract Wagering Agreement

1. Meaning A contingent contract

is a contract to do or

not to do something if

some event, collateral

to such contract, does

or does not happen.

A wagering

agreement is an

agreement to pay

money or money’s

worth on happening

or non-happening of

an uncertain event.

2. Mutual

Promises

In a contingent

contract it is not,

necessary that there,

should be mutual

promises.

In the case of

wagering agreement,

there are mutual

promises.

3. Validity A contingent contract

is a valid contract.

A wagering

agreement is a void

agreement.

4. Nature of

Event

In this case, the event

is collateral or

incidental to contract.

In this case, event is

the sole determining

factor.

5. Interest in

the subject-

matter

In this case, the parties

are interested in the

subject-matter and

In this case, the

parties are not

interested in the



hence the happening

or non-happening of

the event is material

for them.

subject-matter of the

agreement except of

the winning or losing

the money at stake.

6. Nature of

Contract

All contingent

contracts are not

wagering agreements.

All wagering

agreements are

contingent

agreements.

5. Difference between a Quasi-Contract and an

Ordinary Contract

Basis Quasi-Contract Ordinary Contract

1. Origin It does not arise out of

agreement but is

imposed by law.

It arises out of

agreement.

2. Essentials It does not possess all

the essentials of a valid

contract.

It possess all the

essentials of a valid

contract.

3. Liability or

obligation

Liability/Obligation is

thrust upon by the

law.

Liability/Obligation is

mutually created

voluntarily.

4. Foundation It is founded upon the

principle of justice and

equity.

It is founded upon

general principles of

contracts.



5. Agreement For a quasi-contract an

agreement is not

essential.

For an ordinary

contract an

agreement is

essential.

6. Difference between Liquidated Damages and

Penalty

Basis Liquidated Damages Penalty

1. Estimate Liquidated damages

are the fair and

genuine pre-estimate

of the probable loss

that might occur as a

result of breach of

contract.

Penalty is not an

estimate of damages.

2. Imposition Liquidated wages are

awarded by way of

compensation.

Penalty is imposed by

way of

compensation.

3. Purpose It is estimated with a

view to ascertain

maximum amount of

damages likely to

result from the breach

of contract. In this

way, it avoids

The amount of

penalty is fixed so as

to prevent a party

from committing a

breach of contract.



uncertainty.

4. Recogni-

tion by

court &

Payment

of

Compen-

sation

The Indian Court does

not make any

distinction between

liquidated damages

and penalty They

allow compensation

for actual damages

only.

English courts treat

penalty as invalid and

allow liquidated

damages without any

regard to actual loss.

7. Difference between Sale and Agreement to sell

Basis Sale Agreement to Sell

1. Nature of

Contract

A sale is an executed

contract.

An agreement to sell

in an executory

contract as the

property has to pass

at a future date.

2. Transfer of

Ownership

In sale, the ownership

of the goods is

transferred

immediately.

In case of an

agreement to sell,

transfer of ownership

of the goods takes

place at a future date

or subject to

fulfilment of certain

conditions.



3. Risk of Loss In sale risk passes

immediately with the

ownership from seller

to buyer.

In case of agreement

to sell, the seller

remains the owner

and hence the risk is

with him even

though the goods are

in possession of the

buyer.

4. Remedies

for Breach

of Contract

In a sale, if buyer fails

to pay the price or

refuses to accept the

delivery of the goods,

the seller has a right to

file a suit for the price

of the goods, even if

the goods are in the

possession of the seller

himself.

In an agreement to

sell, the seller has

only one right, i.e. to

sue for damages and

not for price even if

the goods ae in the

possession of the

buyer.

5. Insolvency

of Buyer

In case of a sale, if the

buyer becomes

insolvent before

paying the price THE

Seller cannot retain the

goods as the buyer

becomes the owner of

the goods. The seller,

In an agreement to

sell, the seller

continues to be the

owner of the goods

as no property passes

to the buyer. As such

the seller can refuse

to deliver the goods



in such a case, will

only be entitled to

ratable dividend, for

the price of the goods,

out of the estate of the

insolvent buyer.

to the Official

Assignee or Receiver.

6. Insolvency

of Seller

In case of a sale, if the

seller becomes

insolvent, before

delivering the goods to

the buyer, the Official

Assignee or Receiver of

the Seller cannot refuse

to deliver the goods.


to sell, if the seller

becomes insolvent,

the Official Assignee

or Receiver of the

Seller can refuse to

deliver the goods the

buyer can only claim

a ratable dividend

from the estate of

the insolvent seller.

7. Right of

Re-sale

In a sale, the property

is with the buyer and

as such the seller

cannot re-sale the

goods.

In an agreement to

sell, the property in

the goods remains

with the seller and

hence he can re-sale

the goods if the

buyer commits a

breach of his

contract.



8. Types of

Goods

8. Only the existing

and specific goods can

be the subject-matter

of sale.


to sell, the goods are

generally the future

goods.

8. Difference between Sale and Bailment

Basis Sale Bailment

1. Transfer of

Property

and

Possession

In a sale, the property

in the goods is

transferred from the

seller to the buyer and

the buyer can

therefore deal with the

goods in any way he

likes.

In a bailment, there

is only transfer of

Possession of goods

from the bailor to

the Bailee for any of

the reasons like safe

custody, carriage, use

etc. and the Bailee

can only deal with

the goods according

to the directions of

the bailor.

2. Return of

Goods

Goods once sold

normally cannot be

returned unless there is

a breach of some

condition.

In bailment the

Bailee must return

the goods to the

bailor on the

accomplishment of

the purpose for



which the bailment

was made.

3. Considerati

on

In a sale the

consideration is the

price in terms of

money.

In a bailment the

consideration is an

undertaking to return

the goods after the

accomplishment of

purpose.

4. Scope of

Use

In a sale, the buyer can

use the goods as he

likes.

In a bailment, Bailee

has to use the goods

according of the

bailor.

5. Application

of Law

In a sale, the sale of

Goods Act, 1930

apply.

In a bailment, Indian

Contract Act apply.

9. Difference between Sale and Hire-purchase

Agreement

Basis Sale Hire-purchase

Agreement

1. Transfer of

Ownership

In a contract of sale

the ownership of the

goods is transferred

to the buyer either

immediately or on

In a hire-purchase

contract, the buyer

becomes the owner of

the goods only when

he pays all the



fulfilment of certain

conditions.

instalments.

2. Position of

parties

In a contract of sale

the position of the

buyer is that of the

owner of the goods.

In a hire-purchase

contract the buyer is

only in the capacity of

a Bailee.

3. Terminate

the

Contract

The buyer has no

option to put an end

to the contract. He is,

therefore, bound to

pay the price.

The buyer has the

option to set aside the

contract. In case he

decides to do so, he

cannot be held liable

to pay the price.

4. Treatment

of

Instalments

In case the buyer has

to pay the price in

instalments, each

instalment’s payment

will be taken as a part

payment toward the

price of the goods.

The instalments paid

by the buyer will be

taken as a part

payment towards the

price only when the

buyer exercises his

option to buy the

article. In case he

decides otherwise, it

will be taken as hire

for use of the article.

5. Possession

of Goods

In sale, the possession

of goods remains

In hire-purchase

agreement, if the



with the buyer. buyer of goods

decides not the buy

goods, he is bound to

return the goods to

the owner of goods.

6. Right to

Re-Sale

The buyer can use his

right to re-sale the

goods as and when

he likes.

In a hire-purchase

agreement, the buyer

cannot re-sale the

goods unless he Has

paid all the

instalments of hire-

purchase.

10. Difference between Condition and Warranty

Basis Condition Warranty

1. Necessity or

Significance

A condition is

essential to the main

purpose of the

contract

A warranty is

collateral to the main

purpose of the

contract.

2. Consequences

Breach

The aggrieved party

may treat the

contract as

repudiated.

The aggrieved party

cannot repudiate the

contract but can

claim damages only.

3. Treatment Breach of Condition

may be treated as

A breach of warranty

cannot be treated as



breach of warranty. breach of warranty.

4. Freedom

from

performance

of contract

Breach of condition

gives the aggrieved

party freedom from

performance of the

contract.

Breach of warranty

does not provide the

aggrieved party

freedom from

performance of the

contract.

11. Difference between Right of Lien and Stoppage

in Transit

Basis o Right of Lien Right of Stoppage in

Transit

1. Meaning A lien is a right to

retain possession

with himself.

Right of stoppage in

transit is a right to

regain possession.

2. Possession of

Goods

In order to exercise

the right of lien,

unpaid seller must

be in possession of

goods.

In order to exercise

the right of stoppage

in transit, the carrier

or the other Bailee

must be in possession

of goods on behalf

of unpaid seller.

3. Availability of

Right

Right of lien is

available only when

Right of stoppage is

transit is available



the buyer fails to

pay or tender the

price of goods to

the seller.

when the buyer

becomes insolvent.

4. Exercise of

Right

Right of lien comes

to an end when the

possession of goods

is lost.

Right of stoppage in

transit comes to an

end when the buyer

or his agent takes

possession of goods.

12. Difference between Partnership and Co-

Ownership

Basis Partnership Co-Ownership

1. Creation Partnership is

always created by

agreement.

Co-ownership may

arise by agreement

or by operation of

law of inheritance

or succession.

2. Objective A partnership is

formed to run a

business on profit

basis.

The objective of

co-ownership is to

share property in

joint ownership.

3. Transfer of

interest

A partner cannot

transfer his interest

without the consent

A co-owner can

transfer his interest

in the property



of all partners. without the

consent of other

co-owners.

4. Mutual Agency Partners are mutual

agents.

Co-owners are not

mutual agents.

5. Nature of

Authority

A partner has an

implied authority to

act on behalf of

other partners.

A Co-owner has

no implied

authority to act on

behalf of other co-

owners except to

sell the joint

property.

6. Right of Lien A partner has a lien

on the property of

the firm for

expenses incurred

by him on behalf of

the firm.

A co-owner does

not have such lien

on the joint

property.

7. Partition of

property

A partner cannot

ask for partition of

property except

case of dissolution.

A co-owner can

ask for partition of

joint property,

when- ever, he

likes.

8. Limit of

Members

In partnership there

is limit of maximum

In co-ownership

there is on limit of



number 100 partner

(at present notified

by cc-50)

members.

9. Business To carry on some

business is necessary

in case of

partnership

Co-ownership may

exist even without

any business.

13. Difference between Partnership and Joint Hindu

Family Business

Basis Partnership Joint Hindu Family

Business

1. Operation Law Partnership is

governed by

Partnership Act,

1932

Joint Hindu Family

business is

governed by the

two schools : (a)

Mitakshara, and

(b) Dayabhaga of

Hindu Law

2. Creation Partnership is

created by the

mutual agreement

between the

partners, which may

be written of oral.

Joint Hindu Family

Firm is not created

by any such law as

the membership is

acquired by birth.



3. Number of

members

The number of

members in

partnership is

limited to 100

presently notified as

50

In Joint Hindu

Family Business,

there is no limit on

its members.

4. Management In partnership,

every partner has a

right to take active

part in the

management.

In Joint Hindu

Family Business the

power to manage

is centralised in

Karta only.

5. Registration The registration of

partnership is

essential from

practical point of

view to enable it to

enforce its claim

against outsider.

In case of Joint

Hindu Family

business, the

question of

registration does

not arise.

6. Position of a

Minor

A minor cannot

become a partner in

the partnership

except with the

consent of all the

partners and for the

benefit of the firm.

In joint Hindu

Family business

even a child

becomes a

member after his

both.



7. Liability The liability of all

the partners in

partnership is

unlimited.

The liability of all

the members

except Karta is

limited. The

liability of Karta is

unlimited.

8. Right to

Accounts

Right to see and

take copy of

accounts lies with all

the partners of the

partnership firm.

In Joint Hindu

Family Business,

no member has

the right to see

and take copy of

account except

Karta.

9. Dissolution Partnership firm is

dissolved on the

death, insolvency

and lunacy of any

partner.

Join Hindu Family

Business is not

affected by death

insolvency and

lunacy of any of its

members

10. Right of profits In Partnership, the

right to contract

usually lies in the

hand of all the

partners.

Right to contract

lies In the hands of

the Karta only.

11. Sharing of Partners share the Coparceners do



Profits profit of partner’s

business in a

mutually agreed

ratio.

not share the

profit as the entire

expenses of the

family are met by

the Joint Hindu

Family Business.

14. Difference between Dissolution of Firm and

Dissolution of Partnership

Basis Dissolution of Firm Dissolution of

Partnership

1. Scope Dissolution of firm

also includes the

dissolution of

partnership. Thus its

scope is wide.

Dissolution of

partnership does

not necessarily

include the

dissolution of firm.

2. Effect on the

Relation

between

partners

In case of

dissolution of firm,

the relation

between all partners

come to an end.

In case of

dissolution of

partnership, the

relations between

partners do not

come to an end

but change.

3. Continuation

Busyness

The business is

discontinued in the

The business may

be continued in



firm’s name. firm’s name.

4. Effect As an effect of

dissolution of firm

partnership is

automatically

dissolved.

In case of

dissolution of

partnership, the

partnership is not

automatically

dissolved but is

continued.

5. Distribution

Assets

When a firm is

dissolved, the

whole of assets are

distributed among

partners.

When a

partnership is

dissolved, the

question of

distribution of all

assets does not

arise but are

revalued so as to

determine the

share of each

partner.

6. Reconstitution &

Winding up

Dissolution of firm

results winding up

of the firm.

Dissolution of

partnership results

in reconstitution of

the partnership.



15. Distinction between LLP and Partnership Firm

Basis LLP Partnership firm

1. Regulating

Act

The Limited Liability

Partnership Act,

2008.

The Indian Partnership

Act, 1932.

2. Body

corporate

It is a body

corporate

It is not a body

corporate

3. Separate

legal entity

It is a legal entity

separate from its

members.

It is a group of

persons with no

separate legal entity.

4. Creation It is created by a

legal process called

registration under

the LLP Act, 2008.

It is created by an

agreement between

the partners.

5. Registration Registration is

mandatory. LLP

can sue and be sued

in its own name.

Registration is

voluntary. Only the

registered partnership

firm can sue the third

parties.

6. Perpetual

succession

The death, insanity,

retirement or

insolvency of the

partner(s) does not

The death, insanity

retirement or

insolvency of the

partner(s) may affect



affect its existence

of LLP. Members

may join or leave

but its existence

continues forever.

its existence. It has no

perpetual succession.

7. Name Name of the LLP to

contain the word

limited liability

partners (LLP) as

suffix.

No guidelines. The

partners can have any

name as per their

choice.

8. Liability Liability of each

partner limited to

the extent to agreed

contribution except

in case of willful

fraud.

Liability of each

partner is unlimited. It

can be extended upto

the personal assets of

the partners.

9. Mutual

agency

Each partner can

bind the LLP by his

own acts but not

the other partners.

Each partner can bind

the firm as well as

other partners by his

own acts.

10. Designated

partners

At least two

designated partners

and at least one of

them shall be

resident in India.

There is no provision

for such partners

under the Indian

partnership Act, 1932.



11. Common

seal

It may have its

common seal as its

official signatures.

There is no such

concept in

partnership.

12. Legal

compliances

Only designated

partners are

responsible for all

the compliances and

penalties under this

Act.

All partners are

responsible for all the

compliances and

penalties under the

Act.

13. Annual ling

of

documents

LLP is required to le:

(i) Annual

statement of

accounts

(ii) Statement of

solvency

(iii) Annual return

with the

registration of

LLP every year.

Partnership firm is not

required to file any

annual document with

the registrar of firms.

14. Foreign

partnership

Foreign nationals

can become a

partner in a LLP.

Foreign nationals

cannot become a

partner in a

partnership firm.

15. Minor as Minor cannot be Minor can be



partner admitted to the

benefit of LLP.

admitted to the

benefits of the

partnership with the

prior consent of the

existing partners.

16. Distinction between LLP and Limited Liability

Company (LLC)

Basis LL Partnership LL Company

1. Regulating

Act

The LLP Act, 2008 The companies Act,

2013

2. Members/Par

tners

The persons who

contribute to LLP

are Known as

partners of the LLP.

The persons who

invest the money in

the shares are known

as members of the

company.

3. Internal

Governance

structure

The internal

governance

structure of LLP is

governed by

agreement between

the partners.

The internal

governance structure

of a company is

regulated by statute

(i.e. companies Act,

2013).

4. Name Name of the LLP to

contain the word

“Limited Liability

Name of the public

company to contain

the word “limited”



partnership” or

“LLP” as Suffix.

and private company

to contain the word

“private limited” as

suffix.

5. Number of

members/

partners

Minimum – 2

Members

Maximum – No

such limit on the

members in the Act.

The members in the

Act. The Members

of the LLP can be

individuals/ or body

corporate through

the nominees.

Private company:

Minimum – 2

Members

Maximum – 200

Members

Public company:

Minimum – 7

members

Maximum – No such

limit on the members.

Members can be

organizations, trusts,

another business form

or individuals.

6. Liability of

members/par

tners

Liability of partners

is limited to the

extent of agreed

contribution except

in case of willful

fraud.

Liability of a member

is limited to the

amount unpaid on the

shares held by them.



7. Minimum

number of

directors/

designated

partners

Minimum 2

designated partners.

Private Co. – 2

Directors

Public Co. – 3

Directors

Documents

Business Law · 2019-12-15 · Business Law CA Foundation 2 | Author: CA. Aseem Trivedi 1. Difference between Offer and Invitation to Offer Basis Offer Invitation to offer 1. Meaning