TM
MAM4M - Business Regulatory Framework
SYLLABUS –UNIT I
• Brief outline of Indian Contracts Act • Special contracts Act • Sale of goods Act • Contract of Agency
2
CONTRACT - According to sec.2(h), a contract is defined as an agreement enforceable before the law.
AGREEMENT – According to sec.2(e), every promise or set of promises forming consideration for each other.
PROMISE - According to sec.2(b), when a person made a proposal to another to whom proposal is made, if proposal is assented there to.
MAM4M - Business Regulatory Framework 3
OFFER. According to Sec.2(a), when a person made a proposal, when he signifies to another his willingness to do or to abstain from doing something.
AGREEMENT = OFFER + ACCEPTANCE CONSENSUS - AD – IDEM- According to Sec.13, meeting of minds or identity of minds or receiving the same thing in same sense at same time.
MAM4M - Business Regulatory Framework
4
ESSENTIAL ELEMENTS OF A VALID CONTRACT (Sec.10) 1.Offer & acceptance. 2.Intention to create legal relationship. 3.Consensus - ad - idem. 4.Consideration. 5.Capacity to contract. 6.Free consent. 7.Legality of object. 8.Possibility of performance. 9.Writing & registration.
MAM4M - Business Regulatory Framework 5
TYPES OF CONTRACTS VALID CONTRACTS Absolute contract Contingent contract(Sec. 31-36) Express contract Implied/Quasi contract(Sec.68- 72)
MAM4M - Business Regulatory Framework 6
Valid contract – If all the condition are fulfilled it is called as a valid contract.
Contingent contract – In a contract to do or not to do something, if an event is collateral, does or doesn't happen.
Express contract – When contracts are either in writing or in oral.
Implied contract – When contracts are neither in writing nor in oral.
MAM4M - Business Regulatory Framework 7
INVALID CONTRACTS
• Void contract Is void(Void - ab - initio) Becomes void • Voidable contract Illegal contract • Unenforceable contract
MAM4M - Business Regulatory Framework 8
Invalid contract – In a contact if any one condition is not fulfilled.
void (Void-ab-initio) – An agreement which is not valid from the beginnin
void An agreement which is valid in the beginning but due to some supervening impossibility the contract becomes void.
MAM4M - Business Regulatory Framework
9
OTHER TYPES OF CONTRACTS
•Executed contract
•Executory contract
•Unilateral contract
•Bilateral contract
MAM4M - Business Regulatory Framework 10
OFFER According to Sec.2(a), when a person made a proposal, when he
signifies to another his willingness to do or to abstain from doing something.
MAM4M - Business Regulatory Framework 11
TYPES OF OFFER
Express offer Implied offer Specific offer General offer Cross offer Counter offer Standing offer
MAM4M - Business Regulatory Framework 12
LEGAL RULES FOR OFFER Offer must be given with an intention to create a legal
relationship.(Balfour Vs. Balfour) Offer must be definite.(Taylor Vs. Portington) There is a clear cut difference between offer, invitation to offer,
invitation to sale. (Harris Vs. Nickerson) Offer must be communicated. (Fitch Vs. Snedkar)
Mere statement of price of price is not an offer.(Harvey Vs. Facey)
MAM4M - Business Regulatory Framework 13
ACCEPTANCE
According to sec.2(b), when a person made a proposa another to whom proposal is made, if proposal is assented there to, it is called acceptance.
MAM4M - Business Regulatory Framework 14
According to sec 2(d) consideration is defined as “when at the desire of the promisor , or promisee or any other person has done or abstained from doing or does or abstains from doing ,or promises to do or to abstain from doing , something , such an act or absinence or promise is called a consideration for the promise .
CONSIDERATION
MAM4M - Business Regulatory Framework 16
LEGAL RULES AS TO CONSIDERATION
1)It must move at the desire of the promisor. [Durga Prasad v. Baldeo ] 2)It may move by the promisee . [Chinnaya v. Ramayya ] 3)It must be past ,present or future . 4)It need not be adequate . 5)It must be real . 6)It must not be illegal , immoral or opposed to public policy .
17 MAM4M - Business Regulatory Framework 17
Contract without consideration is void – Exceptions
Love & affection . [Venkataswamy v. Rangaswamy] Compensation for voluntary service . Promise to pay a time – barred debt . Completed gift . Agency sec (185) . Charity . Contract of bailment sec(148 ) .
MAM4M - Business Regulatory Framework 18
Capacity to contract Following are the condition for a person to enter into
contract • He must be major • He must be sound mind • He must not be disqualified by any other law.
MAM4M - Business Regulatory Framework 19
Disqualified persons to enter into a contract
a) Minor b) unsound person c)others i.e alien enemy, insolvent, convict,
company/corporation against MOA / AOA .
MAM4M - Business Regulatory Framework 20
Essentials of undue influence
1. There are two persons 2. The relations are satisfying between them 3. One must dominate the other 4. There must be unfair advantage 5. It involves the moral pressure
MAM4M - Business Regulatory Framework 21
There is an undue influence between the following persons: -Principal and agent -Superior and and subordinate - Doctor and patient - Father and son - Teacher and student - Promoter and company - Master servant - Spiritual advisor and devotee
MAM4M - Business Regulatory Framework 22
MISTAKE
Mistake of fact
Of the country
Of the foreign country Bilateral mistake
Unilateral mistake
Mistake as to subject matter
Mistake as to possibility
As to person
As to nature
Physical impossibility Legal impossibility
existence identity quality quantity title price
Mistake of law
MAM4M - Business Regulatory Framework 23
• If the object of an agreement is the performance of an unlawful act, the agreement is unenforceable.
• For a contract to be valid only if the object and the consideration should be legal.
• The word object means purpose or design.
UNLAWFUL OBJECT
MAM4M - Business Regulatory Framework 24
Wager Contract (Sec 30) A wager contract is a contract in which one person promises to
another to pay money or money’s worth by the happening of an uncertain future event in consideration for other person’s promise to pay if the event does not happen.
MAM4M - Business Regulatory Framework 25
Essential Elements of Wagering
• There are two persons. • There must be an uncertain future event. • No control over the event by both the parties. • There must be a reciprocal promise. • Others are not interested in the contract.
MAM4M - Business Regulatory Framework 26
Example:
In a wrestling bout, A tells B that wrestler no.1 will win. B challenges the statement of A. They bet with each other over the result of the bout. This is a wagering agreement.
MAM4M - Business Regulatory Framework 27
Contingent Contract(sec 31)
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. It is also called a conditional contract.
MAM4M - Business Regulatory Framework 28
Essential Elements of a Contingent Contract: • There are two persons. • There must be an uncertain future event. • Some control over the event but not absolute control. • There is no reciprocal promise between the persons. • Others may be interested in the contract. • It is a valid contract.
MAM4M - Business Regulatory Framework 29
Example:
• A contracts to pay B Rs.10,000 if B’s house is burnt. This is a contingent contract.
MAM4M - Business Regulatory Framework 30
Differences Between a Wagering Agreement and a Contingent Agreement: • Wager agreement
• There is a reciprocal promise.
• It is a void contract. • Others are not interested
in the contract. • It is contingent in nature.
• Contingent agreement • There is no reciprocal
promise. • It is a valid contract. • Others are interested in the
contract. • It may not be wagering in
nature.
MAM4M - Business Regulatory Framework 31
DISCHARGE OF A CONTRACT
DISCHARGE BY AGREEMENT OR CONSENT DISCHARGE BY PERFORMANCE DISCHARGE BY IMPOSSIBILITY OF PERFORMANCE DISCHARGE BY LAPSE OF TIME DISCHARGE BY OPERATION OF LAW DISHARGE BY BREACH OF CONTRACT
MAM4M - Business Regulatory Framework 32
DISCHARGE BY OPERATION OF LAW MERGER INSOLVENCY UNAUTHORISED ALTERATION OF THE TERMS OF A
WRITTEN AGREEMENT DEATH RIGHTS & LIABILITIES VESTING IN THE SAME PERSON
MAM4M - Business Regulatory Framework
33
DISCHARGE BY BREACH OFCONTRACT ACTUAL BREACH : At the time of performance During the performance
ANTICIPATORY BREACH By the act of promisor (implied repudation) By renunciation of obligation (express repudation)
MAM4M - Business Regulatory Framework
34
REMEDIES OF INJURED PARTY
• A remedy is a means given by law for the enforcement of a right
• Following are the remedies • [1] Rescission of damages. • [2] Suit upon quantum meruit. • [3] Suit for specific performance. • [4] Suit for injunction.
MAM4M - Business Regulatory Framework 35
INDEMNITY (Sec 124)
A contract by which one party promises to another to save him 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.
MAM4M - Business Regulatory Framework 36
TYPES OF GUARANTEE
• SPECIFIC GUARANTEE : When a guarantee extends to a single transaction or debt it I
known as a specific or simple guarantee CONTINUING GUARANTEE : When a guarantee extends to a series of transactions It is called continuing guarantee
MAM4M - Business Regulatory Framework 37
BAILMENT Sec 148
• The word Bailment is derived from the French word “ballier” which means “to deliver” .
• Bailment means delivery of goods by one person to another for some purpose ,upon a contract ,that they shall ,when the purpose is accomplished ,be returned or otherwise disposed of according to the instructions of the person delivering them. The person delivering the goods is called the ‘bailor’ and the person to whom they are delivered is called the ‘bailee’.
MAM4M - Business Regulatory Framework 38
Duties and rights of Bailor and Bailee Duties of bailor. To disclose known faults. To bear extraordinary expenses of bailment. To indemnify bailee for loss in case of pre mature termination of
gratuitous bailment. To receive back the goods. To indemnify the bailee.
MAM4M - Business Regulatory Framework
https://www.youtube.com/watch?v=dHYJKitT130
39
PLEDGE (SEC 172)
The bailment of goods as security for payment of a debt or performance of a promise is called “Pledge”.
The bailor in this case is called the “pledger” or “pawnor” and the bailee is called the “pledgee” or “pawnee”
Rights of Pawnee. Right of retainer. Right of retainer for subsequent advances. Right to extraordinary expenses. Right against true owner, when the Pawnor’s title is defective. Pawnee’s rights where pawnor makes default . MAM4M - Business Regulatory Framework 40
CREATION OF AGENCY • By express agreement • By implied agreement • Agency by estoppel • Agency by holding out • Agency by neccesity • Agency by ratification • Agency by operation of law
• http://study.com/academy/lesson/agency-relationship-definition-
principles-problems.html
MAM4M - Business Regulatory Framework 41
Sale of Goods Act 1930
42
https://www.youtube.com/watch?v=il7BSjkebc8
MAM4M - Business Regulatory Framework 42
Distinction between sale and agreement to sell
43
S.No BASIS SALE AGREEMENT TO SELL
1. Transfer of ownership
Transfer of ownership of goods takes place immediately.
Transfer of ownership of goods takes place in future times.
2. Executed or Executory
It is an executed contract.
It is an executory contract because something remains to happen.
3. Conveyance of Property
Buyer gets the right to enjoy the goods against whole of the world. It creates jus in rem(Right against property)
Buyer does not get such right to enjoy the goods. It only creates jus in personam (Right against person)
MAM4M - Business Regulatory Framework 43
Cont.
44
4. Transfer of Risk Transfer of risk* of loss of goods takes place immediately as the ownership is been transferred. As a result in case of destruction of goods, the loss shall be beared by the buyer. (Risk*-Risk follows ownership)
Transfer of risk of loss of goods does not takes place because the ownership is not transferred. As a result, in case of destruction of goods the loss shall be borne by the seller.
MAM4M - Business Regulatory Framework 44
UNIT II Brief outline of Indian Companies
Act 1956.
GROUP 1
MAM4M - Business Regulatory Framework 45
Features of Company
• Company • Nature of company • Types of companies • Private vs public company • Privileges of private company • Doctrine of constructive notice • Prospectus • Memorandum of association. • Article of association. • Cases
MAM4M - Business Regulatory Framework 46
1 separate legal entity 2.Artificial person 3.Perpetual existence 4.Common seal 5.Limited liability 6.Capacity to sue or to be sued 7.Transferability of share
NATURE OF COMPANY
MAM4M - Business Regulatory Framework 47
Private Vs Public Company
Private Company Public Company
Minimum paid up capital 1 Lac 5 Lacs
Minimum no of members 2 7
Maximum no of members 50 No limit
Minimum no of Directors 2 3
Transfer of Shares
Restricted AOA & requires the prior permission of Board of Directors
Shareholders can transfer shares freely
MAM4M - Business Regulatory Framework 48
Private Vs Public Company ..Contd.. Private Company Public Company
Public Subscription
AOA prohibits any invitation to public to subscribe to its sharess & debentures
Can invite public to subscribe to its shares & debentures
Acceptance of public Deposits
AOA prohibits acceptance of deposits from public
Can acceptance of deposits from public
Commencement of Business
Immediately after Certificate of Incorporation
Only after getting the Certificate of commencement of Business
Issue of prospectus
Need not prepare or file 'Prospectus' or 'statement in lieu of prospectus' with registrar
Must prepare or file Prospectus with registrar
MAM4M - Business Regulatory Framework 49
Private Vs Public Company…Contd..
Private Company Public Company
Statutory meeting Not required to hold
Must hold after one month and before 6 months from date of obtaining the Certificate of commencement of business
Provisions regarding directors
No Central Govt approval for appointing and reappointing of MD or Whole time director
Central Govt approval is must for appointing and reappointing of MD or Whole time director
Managerial remuneration
No restriction on payemnt of remuneration to directors & MD's
Remuneration is fixed at 11 % of net profits
Index of members Need not maintain index of members
Must maintain index of members if no of members exceed 50
MAM4M - Business Regulatory Framework 50
Consumer Protection Act • Enacted by the Parliament in 1986 • To provide for better protection of interest of consumers. • To make provisions for the establishment of Consumer Councils and
other authorities for the settlement of consumer disputes.
https://www.youtube.com/watch?v=yBwtdKLg-ng
MAM4M - Business Regulatory Framework 52
Who is a Consumer?
• Consumer is one who – Buys any goods for a consideration and includes a hire-
purchaser; – Any user of such goods for consideration but excludes one, who
obtains for re-sale or for commercial purposes; – Hires a service for consideration and includes a beneficiary of
such service, if availed of with the approval of the hirer.
MAM4M - Business Regulatory Framework 53
54
FERA & FEMA
• Object to conserve and prevent misuse
• Violation was Criminal Offence and was non compoundable
• It was a draconian police law
• To facilitate external trade and payments
• Violation is a civil offence and is compoundable
• It is a civil law
MAM4M - Business Regulatory Framework
https://www.youtube.com/watch?v=f-mkq7doMnY
54
The laws of Trade Marks Copyright Patents Designs Trade related Intellectual Property Rights (TRIPS) RTP IDRA -an overview
UNIT IV
MAM4M - Business Regulatory Framework 55
Overlapping IP Protection
• Patents, Trademarks & Copyrights
– These IP rights are often confused. There are some similarities, but these IP rights are different and serve different purposes.
– But they need not be mutually exclusive. For any one work, more than one form of IP protection may apply, as long as it meets the requirements of the laws that govern that form of protection.
– https://www.youtube.com/watch?v=e9M-NrX8jx8
MAM4M - Business Regulatory Framework 56
• Patents
– Patent protection is afforded to inventions and industrial designs (and even plants).
– A patent gives the inventor the exclusive right to exclude others from making, using, offering for sale or selling the invention.
– Different types of patents have different terms:
• Utility patents have a 20-year term.
• Design patents have a 14-year term.
Forms of Intellectual Protection
MAM4M - Business Regulatory Framework 57
• Trademarks
– Trademark protection is afforded to words or designs that are used to distinguish the source of the goods or services from the goods or services of others.
– A trademark gives the owner the right to prevent others from using a confusing, similar mark.
– Trademark rights may continue indefinitely.
Forms of Intellectual Protection
MAM4M - Business Regulatory Framework 58
• Copyright
– Copyright protection is afforded to authors of “original works of authorship,” including literary, dramatic, musical, artistic and certain other intellectual works.
– A copyright gives the owner the exclusive right to do certain things, e.g., copy the work, adapt the work and distribute copies of the work.
– Copyright terms (for works created on or after January 1, 1978).
• Individual: life + 70 years
• Work made for hire: 95 years from publication or 120 years from creation
Forms of Intellectual Protection
MAM4M - Business Regulatory Framework 59
• An ornamental design may be protected by copyright as a work of art and also may be the subject of a design patent.
• Where a copyrighted artistic representation identifies a product or service, it also may be the subject of a trademark.
• In some instances, an industrial design can span patent, trademark and copyright protection.
Overlapping IP Protection
MAM4M - Business Regulatory Framework 60
• Depending on the features of the “intellectual property” in question, it may be covered by: – Patent protection
• Design 14 years, or • Utility 20 years.
– Copyright protection: • Life + 70, or • Works made for hire, 95 or 120.
– Trademark protection • Indefinite
Overlapping IP Protection
MAM4M - Business Regulatory Framework 61
• Patents, trademarks, copyright – OH MY!
– Different types of protection
– Different terms of protection
• Therefore, the “exclusive” use of the creation/invention may be extended if:
– It spans; or
– Is made to span more than one type of IP.
Overlapping IP Protection
MAM4M - Business Regulatory Framework 62
• In 1915, Alexander Samuelson and Earl R. Dean designed the original "hobble skirt" contour bottle.
• The first design patent on the bottle, D63,657, was granted on December 26, 1923, to the bottle manufacturer.
Overlapping IP Protection: The Coca-Cola Contour Bottle
MAM4M - Business Regulatory Framework 63
• Trademark: Bottle, COCA-COLA, COKE
• Copyright: Bottle, keychain, advertising
• Trade secret: The formula
(SHHH! It’s a secret!)
• Right of publicity: Use of sports figures
Other IP Rights in Play: The Coca-Cola Product
MAM4M - Business Regulatory Framework 64
WTO TRIPS Agreement
• It is the GATT Uruguay Round Agreement on “Trade Related Intellectual Property”.
• It deals with the protection & enforcement of “Trade-Related” intellectual property “rights”.
• It establishes minimum levels of protection that each government has to give to the intellectual property of fellow WTO members
MAM4M - Business Regulatory Framework 65
“Literary & Artistic Works” * They are books, paintings, musical compositions, plays, operas, movies, radio/tv programs, performances, & other
artistic works.
How are they Protected? * Protected by “Copyright” which provides the individual “author” or
“artist” the exclusive right to do certain things with an “original work”, including the right to reproduce, publish, perform the work in public, & to make adaptations of it & benefit thereby.
MAM4M - Business Regulatory Framework 66
Patent
• Patent is the right given to inventors to have protected exclusive use
for specified period of time (“term”) for making, using, or selling a
new, useful, non-obvious invention.
• Patents are available for both products & processes.
• Patent in the law is a property right and hence, can be gifted,
inherited, assigned, sold or licensed
MAM4M - Business Regulatory Framework 67
TRIPS : Main Provisions on Patents
Section 5, Part II contains the following standards:
• 1) Patents shall be granted for any inventions, provided they are new,
& are capable of industrial application.
• 2) Patents shall be granted in all fields of technology.
• 3) Members can exclude from patentability diagnostic, therapeutic, &
surgical methods of treatment for humans or animals, as well as
plants & animals & biological process for the production thereof.
MAM4M - Business Regulatory Framework 68
TRIPS : Main Provisions on Patents
• 4) Plant varieties shall be protected by patents.
• 5) Exclusive rights conferred in the case of product and process
patents are defined, subject in the case of imports.
• 6) Inventions shall be disclosed in a manner which is sufficiently clear
& complete for a skilled person in the art to carry out the invention.
• 7) Limited exceptions to the exclusive rights can be defined by
national laws (TRIPS Art. 30)
MAM4M - Business Regulatory Framework 69
Copyright
• Copyright is the exclusive right to do certain things with an original
work, including the right to reproduce, publish, perform the work in
public, & to make adaptations of it.
• Copyright is a right, which is available for creating an original literary
or dramatic or musical or artistic work.
• include Cinematographic films and Computer programs and software
MAM4M - Business Regulatory Framework 70
TRIPS: Main Provisions on Copyright • 1) Protection of works covered by the Berne Convention excluding moral
rights to the expression
• 2) Protection of computer programs as literary works & of compilations of
data.
• 3) Recognition of rental rights, at least for phonograms, computer
programs, & for cinematographic works.
MAM4M - Business Regulatory Framework 71
TRIPS: Main Provisions on Copyright
• 4) Exceptions to exclusive rights must be limited to special cases
which do not conflict with normal exploitation of the work & do not
unreasonably prejudice the legitimate interests of the rights-holder.
• 5) Recognition of the 50 year minimum exclusivity term for works
• 6) Recognition of rights of performers, producers of phonograms, &
broadcasting organizations
MAM4M - Business Regulatory Framework 72
*Trademark – consists of any sign, or combination of signs, capable of distinguishing
the goods or services of one person from those of another, including personal names, designs, letters, numerals, colours, figurative elements, shape of goods, or their packaging. TMs include service marks, collective marks, & mayinclude certification marks.
*Trade Secrets – are information deriving its value from not beingknown or available to
the public competitors, or other parties who might otherwise gain benefit from its disclosure or use.
MAM4M - Business Regulatory Framework 73
*Geographical Indications – (sometimes called appellations of origin) are any indication that
identifies a product as originating in the territory of a Member, or a region or locality therein, for reason of which a particular quality, reputation, or other characteristic of the product is essentially attributable to geographical origin.
*Industrial Design – is the shape, configuration, pattern or ornamentation of a useful article
but not a method or principle of construction
MAM4M - Business Regulatory Framework 74
INTRODUCTION
• GROWTH OF CYBER SPACE
• ONSET OF INTERNET
• CYBER LAW OR LAW OF INTERNET
• https://www.youtube.com/watch?v=Sur0qrM7-vM
MAM4M - Business Regulatory Framework 76
NEED FOR CYBER LAWS
• Tackling cyber
crimes
• Intellectual property rights and copyrights protection act
MAM4M - Business Regulatory Framework 77
CYBER LAWS IN INDIA
• ITACT PASSED IN 2000
• INTERNET IN INDIA
• IMPLEMENTATION OF
CYBER LAW
• REASONS FOR DELAY IN
IMPLEMENTATION OF
CYBER LAWS IN INDIA
MAM4M - Business Regulatory Framework 78
IT ACT PROVISIONS
• email would now be a valid and legal form of communication in our country that can be duly produced and approved in a court of law.
• Companies shall now be able to carry out electronic commerce using the legal infrastructure provided by the Act.
• Digital signatures have been given legal validity and sanction in the Act.
MAM4M - Business Regulatory Framework 79
OFFENCES AND LAWS IN CYBER SPACE
• TAMPERING WITH COMPUTER DOCUMENTS
• HACKING WITH COMPUTER SYSTEM
• PUBLISHING OBSCENE MATERIAL ON INTERNET
• BREACHING OF CONFIDENTIALITY AND PRIVACY
MAM4M - Business Regulatory Framework 80