ASSIGNMENT-01

Name Registration No. Learning Center Learning Center Code Course Subject Semester Module No. Date of Submission Marks Awarded

:Kanika Shekhawat :581125443 :Gupta Computers : 0363 : MBA : Legal Aspects of Business : 3rd :B1207 :04 October,2012 :

Directorate of Distence Education Sikkim Manipal University II Floor, Syndicate House Manipal- 576104 -----------------------------Signature of Coordinator --------------------------Signature of Centre ----------------Signature of Evaluator

Master of Business Administration - Semester 3 MB0051: Legal Aspects of Business (4 credits) (Book ID: B1207) ASSIGNMENT- Set 1

Q1.What are the sources of law? Explain.

Q2.What is meant by contract? Explain about quasi contracts.

Q3.What are the rights of consumer under consumer protection act?

Q4.Explain the purpose and meaning of contract of guarantee.

Q5.What is partnership? Explain the nature of partnership under law of partnership.

Q6.Write a note on the following on Copy Right Act. **************

ANSWERS ANS1- Sources of Indian Law The main sources of modern Indian Law, as administered by Indian courts, may be divided into two broad categories: (i) Primary sources and, (ii) Secondary sources. Primary sources of Indian law The primary sources of Indian law are: (a) customs, (b) judicial precedents (stare decisis), (c) statutes and (d) personal law. Customary law Customs have played an important role in making the law and therefore is also known as customary law. Customary Law, in the words of Keeton, may be defined as those rules of human action, established by usage and regarded as legally binding by those to whom the rules are applicable, which are adopted by the courts and applied as sources of law because they are generally followed by the political society as a whole or by some part of it. In simple words, it is the uniformity of conduct of all persons under like circumstances. It is a generally observed course of conduct by people on a particular matter. When a particular course of conduct is followed again and again, it becomes a custom. Judicial precedents are an important source of law Judicial precedents are another important source of law. It is based on the principle that a rule of law which has been settled by a series of decisions generally should be binding on the court and should be

followed in similar cases. These rules of law are known as judicial precedents. However, only such decisions which lay down some new rules or principles are treated as judicial precedents. Thus, were there is a settled rule of law, it is the duty of the judges to follow the same; they cannot substitute their opinions for the established rule of law. This is known as the doctrine of stare decision. The literal meaning of this phrase is stand by the decision. Statute an important source of law The statutes or the statutory law or the legislation is the main source of law. This law is created by legislation such as Parliament. In India, the Constitution empowers the Parliament and state legislatures to promulgate law for the guidance or conduct of persons to whom the statute is, expressly or by implication, made applicable. It is sometimes called enacted law as it is brought into existence by getting Acts passed by the legislative body. It is called Statute Law because it is the writ of the state and is in written form (jus scriptum). Personal law Many times, a point of issue between the parties to a dispute is not covered by any statute or custom. In such cases, the courts are required to apply the personal law of the parties. Thus in certain matters, we follow the personal laws of Hindus, Mohammedan and Christians. Secondary sources of Indian law The secondary sources of Indian Law are English Law and Justice, Equity and Good Conscience. English law

The chief sources of English Law are: (i) the Common Law (ii) Equity, (iii) The law Merchant and (iv) The Statute Law 1. Common law. This source consists of all those unwritten legal doctrines embodying customs and traditions developed over centuries by the English courts. Thus, the common law is found in the collected cases of the various courts of law and is sometimes known as case law. 2. Equity. The literal meaning of the term equity is natural justice. The development of equity as a source of law occurred due to rigours and hardships of the Common Law. Therefore, in its technical and narrower sense, equity means a body of legal doctrines and rules emanating from the administrations of justice, developed to enlarge, supplement or override a narrow rigid system of existing law of the land. However, like the common law, the equity is unwritten and is a supplement to common law as a source of law. 3. Statute law. The Statute law consists of the law passed by the Parliament and therefore, is written law. The authority of parliament is supreme but is subject to natural limitations and those laid down by the Constitution. It can pass any law it pleases and can override its own previous Acts and the decisions of the courts. Statute law, therefore, is superior to and can override any rule of Common Law or equity. 4. The law merchant or lex mercatoria. It is another important source of law and is based to a great extent on customs and usages prevalent among merchants and traders of the middle ages. Its evolution like that of equity can be traced to unsuitability of Common Law so far as the commercial transactions were concerned. The Common Law was found to be unsatisfactory in dealing with disputes between merchants. The merchants, therefore, developed certain rules based upon customs

and usages to govern their mercantile transactions. These rules were known as Lex Mercatoria or the Law Merchant. ANS2- Contract- A contract is an agreement, enforceable by law, made between at least two parties by which rights are acquired by one and obligations are created on the part of another. If the party, which had agreed to do something, fails to do that, then the other party has a remedy. Example: D Airlines sells a ticket on 1 January to X for the journey from Mumbai to Bangalore on 10 January. The Airlines is under an obligation to take X from Mumbai to Bangalore on 10 January. In case the Airlines fails to fulfill its promise, X has a remedy against it. Thus, X has a right against the Airlines to be taken from Mumbai to Bangalore on 10 January. A corresponding duty is imposed on the Airlines. As there is a breach of promise by the promisor (the Airlines), the other party to the contract (i.e., X) has a legal remedy. Meaning of quasi contracts: Quasi Contracts are so-called because the obligations associated with such transactions could neither be referred as tortuous nor contractual, but are still recognized as enforceable like contracts, in courts. According to Dr Jenks, quasi contract is a situation in which law imposes upon one person, on grounds of natural justice, an obligation similar to that which arises from a true contract, although no contract, express or implied, has infact been entered into by them. Cases which are treated as quasi contracts Following are the cases which are to be deemed quasi contracts: 1. Claim for necessaries supplied to a person incapable of contracting or on his account.

If a person, incapable of entering into a contract or anyone whom he is legally bound to support is supplied by another person with necessaries suited to his condition in life, the person who furnished such supplies is entitled to be reimbursed from the property of such incapable person (Sec.68). 2.Reimbursement to a person paying money due by another in payment of which he is interested.A person who is interested in the payment of money which another is bound by law to pay, and who, therefore, pays it, is entitled to be reimbursed by the other. (Sec.69). ANS3-Consumer Protection Act was enacted with the view to provide protection to the consumers. The Act, ensures certain rights to the consumers. These are: Right to be protected against the marketing of goods and services which are hazardous to life and property Right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so as to protect the consumer against unfair trade practices. Right to be assured , wherever possible , access to a variety of goods and services at competitive prices Right to be heard and to be assured that consumers' interests will receive due consideration at appropriate forums Right to seek redressal against unfair trade practices and unscrupulous exploitation of consumers

 Right to consumer education. ANS4- Purpose and Meaning of the Contract of Guarantee Purpose of guarantee The contracts of guarantee are among the most common business contracts and are used for a number of purposes. These are: i) The guarantee is generally made use of to secure loans. Thus, a contract of guarantee is for the security of the creditor. ii) The contracts of guarantee are sometimes called performance bonds. For example, in the case of a construction project, the builder may have to find a surety to stand behind his promise to perform the construction contract. Also employers often demand a type of performance bond known as a fidelity bond from employees who handle cash, etc., for the good conduct of the latter. If an employee misappropriates then the surety will have to reimburse the employer. iii) Bail bonds, used in criminal law, are a form of contract of guarantee. A bail bond is a device which ensures, that a criminal defendant will appear for trial. In this way a prisoner is released on bail pending his trial. If the prisoner does not appear in the court as desired then the bond is forfeited. In this unit our primary concern is with the contracts of guarantee which are used for securing loan. Definition and nature of the contract of guarantee A contract of guarantee is defined as a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called surety; the person for whom the guarantee is given is called the principal debtor,

and the person to whom the guarantee is given is called the creditor. A contract of guarantee may be either oral or in writing. ANS 5- Definition of partnership Partnership is the relation which subsists between persons carrying on a business in common, with view of profit, but the relationship between members of any incorporated company or association is not a partnership within the meaning of this Act. Nature of partnership1. Partnership is an association of two or more than two persons. There must be at least two persons who should join together to constitute a partnership, because one person cannot become a partner with himself. These persons must be natural persons having legal capacity to contract. Thus, a company (which is an artificial person) cannot be a partner. Similarly, a partnership firm cannot be a partner of another partnership firm. As regards maximum number of partners in a partnership firm, Sec.11 of the Companies Act, 1956, puts the limit at 10 in case of banking business and 20 in case of any other business. 2. Partnership must be the result of an agreement between two or

more persons.

An agreement presupposes a minimum number of two persons. As mentioned above, a partnership to arise, at least two persons must make an agreement. Partnership is the result of an agreement between two or more persons (who are known as partners after the partnership comes into existence). 3. The agreement must be to carry on some business. The term business includes every trade, occupation or profession [Sec.2 (b)]. Though the word business generally conveys the idea of numerous transactions, a person may become a partner with another even in a

particular adventure or undertaking (Sec.8). Unless the person joins for the purpose of carrying on a business, it will not amount to partnership. 4. The agreement must be to share profits of the business. The joint carrying on of a business alone is not enough; there must be an agreement to share profits arising from the business. Unless otherwise so agreed, sharing of profits also involves sharing of losses. But whereas the sharing of profits is an essential element of partnership, sharing of losses is not. Example: A, a trader, owed money to several creditors. He agreed to pay his creditors out of the profits of his business (run under the creditors supervision) what he owed to them. Held, the arrangement did not make creditors partners with A in business [Cox v. Hickman, (1860) 8 H.L.C., Rules to determine existence of partnership In determining whether a partnership does or does not exist, regard shall be had to the following rules: (a) joint tenancy, tenancy in common, joint property, common property or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof; (b) the sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which, or from the use of which, the returns are derived; (c) the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but the receipt of such a share, or of a payment contingent on or varying with

the profits of the business, does not of itself make him a partner in the business and, in particular, (i) the receipt by a person of a debt or other liquidated amount by instalments or otherwise out of the accruing profits of a business does not of itself make him a partner in the business or liable as such, (ii) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such, (iii) a person being the surviving spouse or a child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not by reason only of such receipt a partner in the business or liable as such, (iv) the advance of money by way of loan to a person engaged or about to engage in any business on a contract with that person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of the profits arising from carrying on the business, does not of itself make the lender a partner with the person or persons carrying on the business or liable as such, provided that the contract is in writing and signed by or on behalf of all the parties thereto, (v) a person receiving by way of annuity or otherwise, a portion of the profits of a business in consideration of the sale by him of the goodwill of the business is not by reason only of such receipt a partner in the business or liable as such. R.S., c. 334, s. 5. Insolvent borrower or buyer of goodwill

In the event of any person to whom money has been advanced by way of loan upon such a contract as is mentioned in Section 5, or of any buyer of goodwill in consideration of a share of the profits of the business, making an assignment for the benefit of creditors, being insolvent, entering into an arrangement to pay his creditors less than one hundred cents on the dollar or dying in insolvent circumstances, the lender of the loan shall not be entitled to recover anything in respect of his loan, and the seller of the goodwill shall not be entitled to recover anything in respect of the share of profits contracted for, until the claims of the other creditors of the borrower or buyer for valuable consideration in money or money's worth have been satisfied. "firm" defined Persons who have entered into partnership with one another are for the purposes of this Act called collectively a "firm", and the name under which their business is carried on is called the "firm name". ANS6- Copy Right Act The law relating to copyright is contained in the Copyright Act, 1957. It extends to the whole of India and came into force on January 21, 1958. The Act has been amended in 1983, 1984, 1992 and 1994 primarily to bring the Indian law in conformity with the international conventions in general and Bern Convention and the Universal Copyright Convention in particular. The term copyright means the exclusive right, by virtue of, and subject to the provision of the Act: (a) In the case of literary, dramatic or musical work, not being a computer programmed (i) to reproduce the work in any material form including the storing of it in any medium by electronic means; (ii) to

issue copies of the work to the public not being copies already in circulation; (iii) to perform the work in public, or communicate it to the public; (iv) to make any cinematograph film or sound recording in respect of the work; (v) to make any translation of the work; (vi) to make any adaptation of the work; (vii) to do, in relation to a translation or an adaptation of the work, any of the acts specified in relation to the work in (i) to (vi); (b) in the case of computer programme (i) to do any of the acts specified in clause (a) above; (ii) to sell or give on hire, or offer for sale or hire any copy of the computer programme, regardless of whether such copy has been sold or given on hire on earlier occasions; (c) in the case of an artistic work (i) to reproduce the work in any material form including depiction in three dimensions of a two dimensional work or in two dimensions of a three dimensional work; (ii) to communicate the work to the public; (iii) to issue copies of the work to the public not being copies already in circulation; (iv) to include the work in any cinematograph film; (v) to make any adaptation of the work; (vi) to do in relation to an adaptation of the work any of the acts specified in relation to the work in (i) to (iv) above; (d) in the case of a cinematograph film (i) to make a copy of the film, including a photograph of any image forming part thereof; (ii) to sell or give on hire; or offer for sale or hire, any copy of the film, regardless of whether such copy has been sold or given on hire on earlier occasions; (iii) to communicate the film to the public. (e) In the case of a sound recording (i) to make any other sound recording embodying it; (ii) to sell or give on hire, or offer for sale or hire, any copy of the sound recording regardless of whether such copy

has been sold or given on hire on earlier occasions; (iii) to communicate the sound recording to the public. ****************