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LEGAL SYSTEM IN BUSINESS

DR.S.SELVARASU

selvarasu
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LEGAL SYSTEM IN BUSINESS

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  1. Legal systems in business PRESENTED BY DR.SELVARASU.M.A.,M.Phil.,MBA.,SLET.,Ph.D ASSISTANT PROFESSOR Department of MBA VEL TECH RANGA SANKU ARTS COLLEGE AVADI CHENNAI-62 TAMILNADU

  2. 1. Mercantile law : Contracts - nature and classification of contracts - consideration capacity , performance and discharge of contracts c only general contracts . 2. Sales of good Act : 1930 Negotiable instruments act . Nature and requisties of negotiable instruments - transfer of negotiable instruments - holder in due courses special rules for cheques and banks discharge of negotiable instrments . 3. Company law : 1956 Types of companies moaaoa - prospectus - powers, duties and liabilities of directors meetings resolution - winding up. 4. Industrial law : Factories act - minimum wage act, industrial dispute act, workmen’s compensation act, payment of bonus act , esi act, cpf act 1952. Employees family pension scheme. 1917 payment of gratuity act 1972.

  3. Important Act ( LSB ) Contract act : 1872. Sales of goods act : 1930. Indian partnership act : 1932. Contracts : nature and classification. 1872 : total section 266 General principles - section 1 to 75. Sales of good act - section 75 to 123. Specific contract - section 124 to 238. Contract indemnity and guarantee - section 124 to 147. Contract of bailment and pledge - section 148 to 181. Contract of agency - section 182 to 238. Indian partnership act - section 239 to 266.( special contract )

  4. Definition of contract : 1872 . Indian contract act : section 2(h) “an agreement enforceable by law”. Agreement = offer + acceptance. Contract = agreement + enforceability Agreement: section 2(e) “every promise and every set of promise forming the consideration of each other is an agreement “. For example : A offered to sell his house and b” accepted to purchase the same”. A is called offeror. B is called acceptor. Essential of contract ( section 10 ) Note : All contracts are agreement but all agreement are not contract. 1.two parties (offer s.2a acceptor s.2b). 2.consensus – ad –idem (identity of mind). 3.capacity of contract section of mind. 4.free consent section 14. 5.lawful consideration section 2(d). 6.legal relationship.

  5. 7.lawful object section 23. 8.terms must be certain. 9.possibility of performance. 2. Identity of minds : (for example) “a” has two houses namely x.y. Offer to sell x to b. B accept to king y. 3.capacity of parties : section 11 He is a major. He is a sound mind. He is not disqualified by law in force to contract. 4.Free consent : section 14 Same thing } Same sense } not fraud Same time }  5.lawful consideration : 2( d ) “something in return”.  6.legal relationship : For example : defended civil servant he left for England . He promised his wife to send 30 pounds per month not send. Plaintiff field a suit against her husband. Suit is nor actionable.

  6. KINDS OF CONTRACT CLASSIFICATION: Valid contract. Void contract. Voidable contract. Unenforceable contract. Illegal contract. 1.valid contract section 2( h ) and 10 : 1.capacity of parties. 2.free consent. 3.lawful consideration. 4.legality of object. 2.void contract :section 2( 9 ) : 1.not enforceable. 2.without any legal offer. 3.voidable contract: section 2( i ) : 1.which is enforceable. 4.unenforceable contract : It is valid for all practical purpose until validity is challenged. 1.want registration enforceable. 2.future after registration. 5.Illegal contract : 1.against legal.

  7. Consideration : section 2( d ) 1872 : 1.desire of the promisor . Promise any other person. 2.past consideration is no consideration. Essential elements : 1.move desire of promisor. 2.move from promisee. 3.real. 4.need not adequate. 5.past,present,future. 6.not illegal. 2.Past consideration : Promisor and receiver the consideration before the date of promise is called past consideration.  3.contract without consideration section ( 25 ) : A contract without consideration is void (invalid) Section (25) : 1.love and affection 2.compansation for voluntary service. 3.time barred debt.

  8. 4. Stranger to contract: A stranger to contract cannot sue but a stranger to consideration can sue. Stranger to contract : 1.beneficiary of a trust. 2.marriage settlement. 3.acknowledge. 4.assignment of a contract. 5.contract through an agent. Capacity to contract : Indian contract act 1872 section (11).  Qualification of party enter into a valid contract. Section ( 11 ) : 1.he is a major. 2.he is a sound mind. Qualification of party enter into a valid contract. Section ( 11 ) : 1.he is a major. 2.he is a sound mind.

  9. 3.Legal disqualified to contract. 4.minor. 5.unsoundmind. 6.person disqualified by law. Minor’s agreement : 1.void ab-initio. 2.promisee. 3.no ratification. 4.no restitution. 5.no estoppel. 6.no specific performance. 7.no vicarious liability. Discharge of contract: Termination –between two part Mode of discharge : 1.by performance of contractual obligations. 2.by subsequence agreement. 3.by impossibility of performance. 4.by breach of contract. 5.by lapse of time. 6.by operation of law.

  10. 1.tender or offer of performance. 2.performance by joint promisor. 3.appropriation of payments. 4.discharge by impossibility of performance. 5.novation. 6.discharge by remission. 7.accord and satisfaction. Sales of goods act : 1930 section 76 to 123 : Contract of sale , sale and agreement to sell. Conditions and warranties. Implied conditions and warranties. Caveat emptor. Right of unpaid vendor / seller. Nemo dot quod non habit. Passing of risk. Contract of sale agreement to sell the goods section 4 ( 1 ) Transfer property to the buyers.

  11. Definition of goods : Goods means every kind of movable property other than actionable claims and money.  Kinds of goods : 1.existing goods A. specific goods. B. unascertained goods 2.future goods. 3.contigent goods. Existing : already owned. Specific : identify. 2. Condition and warranties : Definition of condition section 12 ( 2 ). Main purpose of contract (for example) Promise to supply wedding cards on (or) before 15th june if supplies wedding card after 20th june. Definition of warranty section 2( 3 )

  12. 3.implied conditions and warranties section 14a to 17. 1.implied undertaking section 14. 2.sale by description section 15. 3.implied condition as to quality and fitness section 16 ( 1 ). 4.implied condition as to merchantability section 16 ( 2 ). 5.implied condition by custom sec 16 ( 3 ). 6.sales by sample section 17. 4.caveat emptor – section 16 buyers aware. 5.rights of unpaid vendor (or) unpaid seller. Rights of unpaid seller section 46 to 61 :

  13. Rights against the goods : 1.when property in goods gas passed section 46 ( 1 ). Right to lion. Stoppage in transit. Right to sale. 2.when property in goods has not passed section 46 ( 2 ). With holding of delivery. Stoppage in transit. Rights against the buyer : 1.suit for price section ( 55 ). 2.suit for damages section ( 56 ). 3.reputation of contract section(60). 4.suit for interest section ( 61 ). 6.nemo dat quod non-habet. Sale by non- owner 1930 section :27.

  14. 1.transfer of title by estropple section : 27. 2.sale by mercantile agent. 3.sale by co- owner/joint owner 28. 4.sale by a person in possession under voidable contract section ( 29 ). 5.sale by the seller i possession after sale section 30 ( i ). 6.sale by the buyer in possession after sale section 30 ( ii ). Negotiable instrument Act 1881 : 1.negotiable instrument :meaning, definition. 2.promisory note. 3.bill of exchange. 4.cheque. 5.distinction between bonds and cheque. 6.crossing of cheque. 7.holder and holder in due courses. 8.negotiation. 9.kinds of endorsement. 10.assignment and negotiation. 1.negotiation instrument :1881 : A piece of paper in writing entitling a right to the holder, “a certain sum of money”. For example :cheque, DD, promissory note, bonds.

  15. Kinds of negotiable Instrument : 1.promisory note. 2.bonds. 3.cheque. Promissory note : 1881 section ( 4 ) : An instrument in writing unconditional undertaking signed by the maker to pay a certain sum of money only to (or) to the order of (or) certain person it is called promissory note. Essential : Writing. Promise undertaking to pay certain sum of money. Promise must be unconditional. Duly signed and delivered by maker. Parties must be certain. Stamped act 1840. Contents : Date. Place. Sum of money. Name of the parties. Revenue stamp.

  16. BOE 1881 act : section ( 5 ): Definition : A BOE is an instrument in writing contain an unconditional order signed by the maker. Directing a certain person to pay a certain sum of money only. Draws the bill drawer . Accept the bill Drawee. Paid by payee. Cheque 1881 section ( 6 ): Cheque : A bill of exchange drawn on a specified banker and not expressed to be payable otherwise on demand. Essential : Drawn specified banker . Always payable on demand. Dated. Property signed.

  17. Crossing of cheque. Meaning : It is a process by which drawer of the cheque directs his banker to make payment only through bank a/c and not through the bank cash counter. Kinds of crossing : General crossing. Special crossing. Holder and holder in due courses holder : 1881 section ( 8 ) : It means owner of negotiable instrument. Holder in due courses : 1881 section ( 9 ) : It means any person who for consideration became the processor of a promissory note . Bill of exchange Negotiation 1881 section ( 14 ) : Transfer of instrument from one person to another. Kinds of endorsement : General endorsement. Special endorsement. Conditional endorsement. Restrictive endorsement. Contingent endorsement.

  18. Company law 1956 : Types of company : Company – meaning, definition. Feature characteristics of a company. Kinds of companies. Partnership and company. Company meaning and definition : Businnes is carried on by a single person it is called sole trading concern Company : “to an association of person”. “an association of individual formed for some”. Company act 1956 – section 3( 1 ) i, 3 ( 1 ). Features and characteristics of a company : Artificial person. Voluntary association. Perpetual existence. Legal entity. Transferability of shares. Limited liability. Capacity to sue and be sued.

  19. Company Act 1956 : Kinds of companies : Un incorporated companies. Incorporated companies. Chattered companies. Statutory companies. Registered companies. Private company (unlimited company)section 3 (I )III Public company (limited company) section 3(I)IV. Company limited by shares section 13 ( 2 ). Company limited by guarantee section 13 ( 2 ). An unlimited company section 12 ( 2 ) © Holding company and subsidiary company section 4. Government company section 617. Banking company section 2 ( 5 ). Foreign company section 591.  Addition to above three : One – man company. Defund company. Illegal association.

  20. Companies on the basis of control : Holding companies. Company holding companies on the basis of ownership. 1. Private company 2. Government company Companies on the basis of ownership : Private, public company. (registered in India under companies act 1956). Banking company. (Registered in India under banking companies act 1949). Foreign company. (registered in foreign country). Unincorporated companies : It is also known as common law. Companies there are constituted by contract .no legal personality .liabilities of its member is unlimited. Company act 1956. 2.incorporated companies : Which is formed for the purpose of carrying business to profit. Three categories : companies act : 1956. Chartered companies. Statutory companies. Registered companies.

  21. 4.government company section 617 : This classification made on the basis of ownership. Any company not less than 50% paid-up capital hold by the central government. Subsidiary to government company. 5.banking company section 2 (5) 1949 : Accept deposit. Advance loan. Repay withdraw able by cheque, dd. 6.foreign company section 591. Partnership and company : 1932 Essential features : Association two or more persons. Agreement. To carry on business. Sharing of profits. Mutual agency.

  22. “memorandum of association” 2(28) : Meaning : Moa is a important document to be filled with registrar of companies. for in corporation of a company. It contains the relation ship between the company and outsiders 2 (28) Form of memorandum : section 14 : One of the form in tables b,c,d,e schedule one . Companies act 1956.

  23. 1.chartered companies : Established under the royal charter issued by the crown. For example :east Indian company 1600. 2.statutory companies : Public utility service companies ,namely, railways, roadways, electricity, etc. It is a legal personality. 3.registered companies : A registered company is one which is registered with the registrar of the join stock companies 1956 Private company (unlimited company ) section 3 (i) (iii). Public company (limited company) section 2(i) (iv). Company limited by shares section 13 (2) Company limited by guarantee section 13 (2). An unlimited company section 12 (2) (c).

  24. A. private company section 3(i) III : A private company is one in respect of which not loss than two and not more than fifty members section 3 (i) iii. Restricts the right to transfer its shares. Its member to fifty. B.public company : section 3 (1) (iv) : Not less than 7 members with out maximum limit. Not a private company. Minimum paid up capital 5 lakhs. Subsidiary of a company. Company limited by shares : section 13 (2) : Company limited by shares . Company paid up capital. Company huge loss. The shareholders are not share. Unlimited company :section 12 (2 ) (c): Creditors cannot proceed against the personal assets of the shareholders. 3.holding company and subsidiary company section ( 4 ) 1956 : Controlling company is called holding company. Subsidiary company : Controlled company is called subsidiary company. According to section (4) 1956 : Controlled by board of directors. Controlled by voting power. Nominal equity share capital. Subsidiary of the subsidiary company.

  25. 4.government company section 617 : This classification made on the basis of ownership. Any company not less than 50% paid-up capital hold by the central government. Subsidiary to government company. 5.banking company section 2 (5) 1949 : Accept deposit. Advance loan. Repay withdraw able by cheque, dd. 6.foreign company section 591. Partnership and company : 1932 Essential features : Association two or more persons. Agreement. To carry on business. Sharing of profits. Mutual agency. “memorandum of association” 2(28) : Meaning : Moa is a important document to be filled with registrar of companies. for in corporation of a company. It contains the relation ship between the company and outsiders 2 (28) Form of memorandum : section 14 : One of the form in tables b,c,d,e schedule one . Companies act 1956.

  26. Table c - related to aoa company limited by guarantee. Not share capital. Table d - memorandum aoa company limited by guarantee and having share capital. Table e - related to memorandum and aoa of an unlimited company. Printing and signing of memorandum section : 15 : Printed Divided in to paragraphs. Signed by subscribers. Contents of memorandum section :13 : Name clause section 20 (2). Registered office clause section 13 (1) (b). Objects clause section 13(1). Liability clause section 13(2). Capital clause section sec 13(4). Subscription clause section 13 (4). The association clause section 13 (4).

  27. 1.name clause section 20 (2). Name of the proposed company. The last word and word of the name must be limited. Public limited company and private limited company. 2.Registered office clause section 13(1) (b) : Place and state which the registered office of the proposed company situated. Starts business with in 30 days. 3.object clause section 13 (1) : An ultra act is void (illegal) if all members which is not ratify it. 4.liability clause section 13 (2) : It contains the nature of liability of its members. Liability of member limited. 5.capital clause section 13(4) : Capital structure of the company capital with which a company registered is called registered, authorized, nominal capital share issued by company only. 6.Subscription clause section 13 (4) : Moa subscribed by at 7 person incase of a private limited company. 7.The association clause section 13(4) : 1.name, address, and description of the subscribers. Public company at least 7 subscribers signed. Private company at least 2 subscribers signed. 2.doctrine ultra vires . Ultra means – beyond, vire means – power. Ultra vire company means beyond the authority or power beyond the legal power and authority of company .

  28. Two objects clause : Main objects clause. Other object clause. Company object gives the creditors feeling the security protection to creditors. Ultra vires transaction : Ultra vires contract. Ultra vires torts and crimes. Liability of directors. Ultra vires acquired property. Ultra vires borrowings. 1.Ultra vires contract : Ultra vires contracts are void and not enforceable by or against the company. 2.ultra vires torts and crimes : Torts or crimes committed by its officer, director or servants Following conditions : Torts or crime has been committed by its officer , directors, servant in the course of employment. Committed with in the ultra vires power. 3.liability of directors : 1. Towards the company. 2. Towards the third party.

  29. 4.ultra vires acquired property : Ultra vires transaction are void. Property protect its against damage by other person. 5.ultra vires borrowings : Borrowings beyond the object clause of memorandum are called ultra vires powers. Alteration of amendment of memorandum of association. Amendment of memorandum : It means changing the contents of memorandum . Section 2 (1) company act :1956 alteration includes the making of additions and omissions. Change of name section 21-24. Change of registered office section 17-a. Change of objects clause section 17. Alteration of liabilities clause section 38. Alteration of capital clause section 100-101.

  30. THANK YOU

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