Post Graduate Programme in International

- (PGPIM)
Management
1

LEGAL ASPECTS OF BUSINESS

(LAB)
Prof. Parul Gupta
PhD (Faculty of Law-JMI, New Delhi), LL.M., PGDBM

Dr. Parul Gupta

Course Overview
2

This course is designed to enhance the legal

literacy of the participants by developing a
body of legal knowledge and honing legal
instincts to help business leaders attain a
competitive edge and promote long-term
success of the business firms.
Indian Contact Act, 1872,
Sales of Good Act, 1930 and
Companies Act, 2013
Dr. Parul Gupta

Evaluation Scheme
3

S.NO
.
1
3
4
5
6
Dr. Parul Gupta

ACTIVITY

NUMBE
R

WEIGHTAGE

Quiz Test

5%

TOTAL
WEIGHTAGE
20% (Best
Four will be
considered)

Group
Project
Group
Assignment
s
Mid Term
examinatio
n
End Term
Examinatio
n

10%

10%

10%

10%

30%

30%

30%

30%

INDIAN CONTRACT ACT,1872

4

Session Details

Session 1 - Indian Contract Act, 1972

Formation of contracts, Its kinds and Essential
Elements of a valid Contract
Session 2 - Indian Contract Act, 1972
Legal Insights Of Offer, Acceptance And Capacity
Of Parties
Session 3- Indian Contract Act, 1972

Legal Insights of Consideration And Free Consent

Dr. Parul Gupta

INDIAN CONTRACT ACT,1872

5

Session Details

Session 4 Indian Contract Act, 1972

Quiz Test One Session 1 to 3

Modern Categories of Contract - Tenders, Swiss
Challenge Method of Tendering, Standard Form
Contracts, Letter of Intent & Memorandum of
Understanding

Session 5- Indian Contract Act, 1972

Void Agreements, Wagering Agreements And

Contingent Contracts

Dr. Parul Gupta

INDIAN CONTRACT ACT,1872

6

Session Details

Session 6

Quiz Test Two Session 4 & 5

Performance, Discharge of Contract &Remedies for the
Breach of Contract

Session 7

Quasi Contracts Meaning, Features And Kinds

Law of Contract of Agency

Session 8 Law of Bailment & Pledge and Law of

Indemnity And Guarantee

Announcement Group Assignment
Dr. Parul Gupta

INDIAN CONTRACT ACT,1872

7

Session Details

Session 9-Sale of Goods Act, 1930

Quiz Test Three Session 6 to 9

Meaning and Essential Elements of Contract of Sale and
Meaning of Goods, Conditions and Warranties, Transfer
of Ownership

Session 10- Sale of Goods Act, 1930

Doctrine of Caveat Emptor and its exceptions, Transfer

of Title by Non-Owners, Rights of an Unpaid Seller,

Auction Sale
MID TERM EXAMINATION
Dr. Parul Gupta

COMPANIES ACT, 2013

8
Session Details

Session 11- Legal Status of a Company

Announcement - Group Project

Definition of a company, Nature & essential characteristics of a

company, Lifting of Corporate Veil

Session 12- Types of Companies

Classification of Companies on the basis of incorporation, liability,

number of members, control and ownership, One person company,
Associations not for profit
Session 13- Incorporation of a Company

Process of incorporation of a company, Promoter Duties and responsibilities

of promoter, Process of Registration, Important documents Incorporation,
Floatation, Certification, Pre-incorporation contracts, Provisional contracts
Submission Group Assignment

Dr. Parul Gupta

COMPANIES ACT, 2013

9
Session Details
Session 14- Incorporation of a Company

Quiz Test Four - Session 11 to 13

Nature of the document, Content of the document, Alteration of

the document, Doctrine of ultra vires

Session 15- Memorandum of Association

Nature of the document, Content of the document, Alteration of
the document, Doctrine of ultra vires
Session 16- Articles of Association
Nature of the document, Content of the document, Alteration of
the document, Articles and Memorandum the relationship,
Legal effect of the Article & Memorandum
Dr. Parul Gupta

 Session

COMPANIES ACT, 2013

10
Session Details

17- Board of Directors

Management & Administration

And

Company

Directors and their appointment, Positions of directors, Number

of directorship, Disqualification of directors, Vacation of office
and removal of directors, Managerial remuneration, Loans to
Director

Session

18- Board of Directors

Management & Administration

And

Company

Quiz Test Five - Session 14 to 17

Submission- Group Project

Meeting of board, Powers and duties of director Contracts in

which directors are interested, Liabilities of directors, Validity of
acts of directors, Disabilities of director, Managing director and
Manager

Dr. Parul Gupta

COMPANIES ACT, 2013

11
Session Details
Session 19- Company Meetings and Proceedings

Meetings, General meeting of shareholders, Requisites of a

valid meeting, Proxies, Voting and poll, Resolutions,
Company management, Accounts and auditors, Prevention
and oppression of mismanagement

Session 20

GROUP ASSIGNMENT PRESENTATIONS

WRAPPING UP & QUERY SESSION

END TERM EXAMINATION

Dr. Parul Gupta

SESSION 1
12

Indian Contract Act, 1972

Formation

of contracts,
Its kinds and
Essential Elements of a valid
Contract

Dr. Parul Gupta

Indian Contract Act, 1972

13

Introduction

The Act does not lay down so many precise rights and
duties which the law will protect and enforce;
It contains a number of limiting principles, subject to
which the parties may create rights and duties for
themselves and the law will uphold those rights and
duties.
The Act is not exhaustive since it does not take into its
purview all the relevant legislations.
It does not override customs or usages.

Jus in Personam/ Jus in Rem

Dr. Parul Gupta

MEANING OF VALID CONTRACT

UNDER THE ACT
14
1. Every agreement and promise enforceable at law
is a contract - Sir Fredrick Pollock
2. A contract is an agreement, creating and defining
the obligation between parties - Salmond
3. A contract is an agreement enforceable at law
made between two or more persons by which
rights are acquired by one or more to acts or
forbearances on the part of others. - Sir William
Anson.
Dr. Parul Gupta

CONTRACT
15

Acontracthasbeendefinedin
Section2(h)as
"an agreement enforceable by
law"
1.An Agreement
2. Enforceability or legal obligation

Dr. Parul Gupta

Agreement
16

Agreement -Section 2(e),

"Every promise and every set of promises, forming
the consideration for each other, is an agreement."

What a Promise'? -Section 2(b)

"When the person to whom the proposal is made
signifies his assent thereto, the proposal is said
to be accepted. A proposal, when accepted,
becomes a promise."
Offer + Acceptance = Agreement
1. Plurality of Parties
2.Consensus ad idem
Dr. Parul Gupta

Legal Obligation
17

A Duty Enforceable by Law

Only that obligations which
are arising out of an
agreement, are concerned
with the law of contract
Dr. Parul Gupta

Contract
18

"All contracts are agreements but

all agreements are not
contracts.

Dr. Parul Gupta

Contract
19

Acc to Sec. 10 of Indian Contract Act,

"All agreements are contracts if they are
made by the free consent of the parties
competent to contract, for a lawful
consideration and with a lawful object, and
are not hereby expressly declared to be
void."

Dr. Parul Gupta

Essential Elements of a Valid Contract

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1. Intention to create legal

relations
legal consequences
a) Treatment of Domestic and social

relationships

b) Treatment of Commercial Agreement

Dr. Parul Gupta

Essential Elements of a Valid Contract

21

Intention to Create Legal Relations

Case 1: Domestic Relationships
A resident of India invited her daughter who
lived and worked in the United States to move
to England to study. They agreed that the
mother would let the daughter stay in the
house rent free. A dispute arose and the
mother brought an action to evict the daughter
from the house.
Dr. Parul Gupta

Essential Elements of a Valid Contract

22

Intention to Create Legal Relations

Case 2: Domestic Relationship
An elder brother invited his sister and her
husband, who gave up paid employment, to
come to Australia to live with him and care
for him until his death in which he agreed
to give consideration of this of an income
for life provided by the elderly man and his
property upon his death. A dispute arose
and the couple sued for breach of contract.
Dr. Parul Gupta

Essential Elements of a Valid Contract

23

Case 3: Esso Petroleum v Customs & Excise Esso

Esso Petroleum, for promotion purposes distributed
millions of coins, of no intrinsic value, to petrol
stations that sold Esso petrol. The advertisement to
the public indicated that these coins were a gift and
for every four gallons of petrol purchased a coin
would be given.
Discussion Point
Whether the parties had the necessary intention to form
a contract ?

Dr. Parul Gupta

Essential Elements of a Valid Contract

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Lawful Object & Lawful Consideration

Lawful Object

Must not be fraudulent or illegal or immoral or

opposed to public policy or must not imply injury
to the person or property of another.

Case

A, being agent for a landed proprietor,

agrees for money, without the knowledge
of his principal, to obtain for B a lease of
land belonging to his principal.
Dr. Parul Gupta

Essential Elements of a Valid Contract

25

Lawful Object & Lawful Consideration

Lawful Consideration (Sec. 2(d))
When at the desire of the promisor, the 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 act or
abstinence or promise is called a consideration for the promise.

Case 1
X agrees to buy books from Y for Rs. 50. Here the
consideration of X is books and the consideration of Y
is Rs.50.
Case 2
X agrees to Kill Z for Y for Rs. 50, 000/- . Here the
consideration of Y is killing and the consideration of X
is Rs.50,ooo/-.
Dr. Parul Gupta

Essential Elements of a Valid Contract

26

Agreement not expressly declared void

(Sec. 24 to 30)
Case: Carew Co Ltd. v North Bengal etc
Two sugar manufacturers entered into an
agreement allocating zones to procure sugar
for meeting the needs of their respective
factories and each of the manufacturers
under took not to draw any cane from the
zones allotted to the other factory.
Dr. Parul Gupta

Essential Elements of a Valid Contract

27

Valid Offer and Valid Acceptance

Valid Offer or Proposal (Section 2(a) )
When one person signifies to another his willingness to do or to
abstain from doing anything, with a view to obtaining the
assent of that other to such act or abstinence, he is said to make
a proposal".

Case 1
X proposes, over telephone, to sell a house to Y at a
certain price.
Case 2
X owns a motor boat for taking people from Bombay to
Goa. The boat is in the waters at the Gateway of
India. the boat owner does need not speak or call the
passengers.
Dr. Parul Gupta

Essential Elements of a Valid Contract

28

Valid Offer and Valid Acceptance

Acceptance : Sec 2(b),
"when the person to whom the proposal is made
signifies his assent thereto, the proposal is
said to be accepted."
Case 1
P offers to sell his camera to Q for Rs.1000.
Case 2
P advertised in a Newspaper that he would give Rs.
2000 to anyone who finds and returns his lost dog.
Dr. Parul Gupta

Essential Elements of a Valid Contract

29

"Consent"
Two or more person are said to consent when
they agree upon the same thing in the same
sense.

Free consent
Consent is said to be free when it is not caused by
(1)coercion, as defined in section 15, or
(2) undue influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4) misrepresentation, as defined in section 18,
or
(5) mistake, subject to the provisions of section 20,21,
and 22
Dr. Parul Gupta

Essential Elements of a Valid Contract

30

Capacity of Parties
Sec. 11
"Every

person is competent to contract who has

attained the age of majority according to the law
to which he is subject, and who is of sound mind
and is not disqualified from contracting by any
law to which he is subject."

Incompetent to contract
I. if he is a minor, according to the law to which he is subject,
II. if he is of unsound mind, and
III. if he is disqualified from contracting by any law to which
he is subject.
Dr. Parul Gupta

Essential Elements of a Valid Contract

31

Certainty of Meaning (Sec. 29)

Wording of the agreement must be clear and not uncertain or

vague.
Agreements, the meaning of which is not certain or capable of
being made certain, are void.

Case1
Jatin agrees to sell 500 tones of oil to Marium
Case 2
Jatin, the sole trader of coconut oil agrees to sell 500
tones of oil to Marium
Dr. Parul Gupta

Essential Elements of a Valid Contract

32

Possibility of Performance (Sec. 56)

If the act is impossible of performance, physically or legally,

the agreement cannot be enforced by law.
There must be possibility of performance of the agreement.

Case 1
A agrees with B to put life into Bs dead wife
Case 2
A agrees with B to produce treasure by magic

Legal Formalities
The contract act does not insist that the agreement must be in
writing, it could be oral.
Dr. Parul Gupta

KINDS OF CONTRACTS
33

Contracts can be classified on the

following basis;
On

the basis of validity

On the basis of formation
On the basis of performance

Dr. Parul Gupta

KINDS OF CONTRACTS
34

A. On the basis of validity

1.
2.
3.
4.
5.

Dr. Parul Gupta

Valid contract
Void contract
Voidable contract
Illegal contract
Unenforceable contract

KINDS OF CONTRACTS
35

B. On the basis of Formation

Case 1 Mr. A, a student called Mr. B on the phone
and agreed to buy his textbooks from last
semester for Rs. 300.
Case 2 If A enters into a bus for going to his
destination and takes a seat.
Case 3
ABC Company Ltd. a TV Company
delivers a new television to Mrs. Z that she did
not order and she keeps the television and does
not attempt to return it to the company that
mistakenly shipped it to her.
Dr. Parul Gupta

KINDS OF CONTRACTS
36

B. On the basis of Formation

1. Express contracts
2.Implied Contracts
3.Quasi Contracts
4.E Commerce Contract
(a) Click Wrap
(b) Browse Wrap
(c ) Shink Wrap

Dr. Parul Gupta

KINDS OF CONTRACTS
37

C. On the basis of Performance

Case
J Inc., agreed to buy ten tons of coal from the
Northern Coal Company. Northern delivered the
coal to J's steel mill, where it is being burned.
1. Executed Contracts
2. Executory Contracts

Unilateral
Bilateral

Dr. Parul Gupta

List of Cases To Be Discussed in Next

38
Session
1. Case 2.1: Carlill v. Carbolic Smoke
Ball Co Page No. 17
2. Case 2.2: Balfour v. Balfour Page

No. 19

Dr. Parul Gupta

GROUP CASE DISCUSSION 1

39

P stayed with family in a rented house.

P participated in newspaper
competition and agreed to share the
prize money with the family members.
P won a prize money of Rs. 1,00,000/but he denied to share the money with
family members.
Can family members sue P for
recovering their share?
Dr. Parul Gupta

NEXT SESSION
40

SESSION 2
Legal Insights to valid Offer
Legal Aspects of Acceptance
And
Legal Aspects Capacity of
Parties
Dr. Parul Gupta

41

Dr. Parul Gupta