File Downlaod From Bustudymate.

in

BUSINESS REGULATIONS

UNIT: 1
INTRODUCTION TO BUSINESS LAWS
Meaning and Definition of Business
Human beings are continuously engaged in some activity or other in order to satisfy their
unlimited wants. Every day we come across the word 'business' or 'businessman' directly or
indirectly. Business has become essential part of modern world.
Business is an economic activity, which is related with continuous and regular production and
distribution of goods and services for satisfying human wants.
Lewis Henry defines business as, "Human activity directed towards producing or acquiring
wealth through buying and selling of goods."
Meaning and Definition of Law
The law is a system of rules that a society or government develops in order to deal with
crime, business agreements, and social relationships.
Law is a system of rules that are created and enforced through social or governmental
institutions to regulate behavior.
Salmond defines law as the “body or principles recognized and applied by the state in the
administration of justice”.
According to Austin, “Law is a rule of conduct imposed and enforced by the state."
 Nature of Law
Law is the result of continuous effort through a workable set of rules in the society. It is not
pure science based upon unchanging and universal truth. It affects every activity of the
individual. The natures of law are as follows:
1. Justice is an aim of Law- Justice is always provided through law. The law means to
provide justice to people.
2. Create a peaceful and harmonious relation between people living under society-Law
is made for keeping peace and harmonious relation by providing security.
3. The law is pervasive (spreading or spread throughout)- Every person is presumed to know
it.
4. It regulates human activities- It regulates human behavior in three ways: Prohibitory,
mandatory and permissive.
5. Ignorance of law is not excused.
6. It is a set of rules which is set by the state.
7. It regulates the human conduct.
8. It is created and maintained by the state.
9. It has the certain amount of stability, fixity and uniformity.
10. It ensures all the people have specific power and responsibilities.
11. Its violation leads to punishment.

Meaning and definition of “Business Laws”

Business law, also called commercial law or mercantile law, the body of rules,
Commercial law or business law is the body of law which governs business and commerce
and is often considered to be a branch of civil law and deals both with issues of private law
and public law. Commercial law regulates corporate contracts, hiring practices, and the
manufacture and sales of consumer goods.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 1

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Business law is also known as commercial law and is that branch of law that deals with the
legal rights, duties, liabilities of parties involved in any kind of business transactions related
to commerce, trade, sales and merchandising. It is a branch of civil law and includes public as
well as private law.
Commercial law or business law deals with legal aspects such as the laws of principal and
agent, carriage by sea or land, laws of indemnity and guarantee, laws of insurance (marine,
fire, life, accident insurance), laws of banking, partnership and much more. Business law is a
very broad term by itself and has many divisions and types of law to be studied under it.

Here are a few important features of business law

1. It is the law of commerce or commercial law as it deals with all the aspects of entering into
selling and purchasing agreements.

2. It includes the study of the law of contract which is important in agreements or contracts
that involve two or more parties buying and selling things in exchange for a consideration or
purchase price.

3. Business law clearly explains the rights, duties, liabilities and legal obligations of the
parties involved in a contract of sales, purchase or any other kind of contract or agreement
entered into in relation to any kind of business or commercial activity.

4. It includes intellectual property law (patents, trademarks, copyrights, etc.) and consumer
protection law.

5. Business law will also apply to anyone who plans on opening or starting a business of their
own.

6. Business law also deals with banking law, finance law and other important civil laws.

Scope of Business laws

The scope of business law is very wide and varied. It includes law relating to contracts,
partnership, sale of goods, negotiable instruments, companies, insolvency, insurance, carriage
of goods, etc.
Business law is concerned with the study of rights and obligations arising out of business
transactions between mercantile persons. Business persons are persons who carry on
commercial transactions. They may be individuals, partnership concerns or joint stock
companies.
Knowledge of business law is essential to merchants. It helps the merchants to avoid conflicts
with the persons with whom he comes into business contacts.

The Scope of Business Law can be broadly classified as:

1. Law of contract
Deals with any agreement which may be in particular or general with the individuals
belonging to the society and also of various commercial activities.
2. Law of sale of goods
Deals with the agreement between one trader to another trader with only commercial
transactions.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 2

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

3. Economic and other Legislation

These are termed as ‘General Law’, deals with both the business and society which sets the
rules towards rights, duties and obligations for any category of people in the society.

Sources of Business Law

A source of law in its narrow sense means the origins of law, i.e. the binding rules governing
human conduct. More generally, it means any premises of a legal reasoning. Such sources
may be international, national, regional or religious.
Major part of Indian Mercantile Law or Commercial Law is based on English Law
The main sources of Indian Mercantile Law are:
1. English Mercantile Law.
2. Statute Law.
3. Judicial Decisions.
4. Customs and Usage.
5. Expert opinions
6. Commercial treaty and agreements
1. English Mercantile Law
The English law is the most important source of Indian mercantile law. Many rules of English
law have been incorporated into Indian law through statutes and judicial decisions. The
sources of English law are:
a. Common Law
This law is known as judge made law. It is based upon customs and practices handed down
from generation to generation. It is the oldest unwritten law. The English Courts developed
these over centuries.
b. Equity
Equity is also unwritten law. It is based upon concepts of justice developed by the judges
whose decisions become precedents. It grew as a system of law supplementary to the
common law and covered the deficiencies of the common law. Its rules were applied in cases
where the rules of common law were considered harsh and oppressive.
The Judicature Acts of 1873 and 1875 abolished the distinction between Common Law and
Equity so that they are now applied to all cases.
c. Case Law
This is also an important source of the English mercantile law. It is built upon the decisions
of the Judges. It is based on the principle that what has been decided in earlier case is binding
in similar future case also unless that there is a change in the circumstances of the case.
d. A Lex Mercatorian or Law Merchant
It is also one of the important sources of English mercantile law. A Lex Mercatorian or law
merchant consists of legal principles based on customs and usage. They developed first as a
separate system of law and subsequently became part of the common law.
2. Statute Law
A Bill passed by the parliament and signed by the President becomes a “Statute” or an Act.
Most of the Indian laws are embodied in the various Acts passed by the Central as well as
State legislators.
• • The Indian contract act 1872
• • The sale of goods act 1930

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 3

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

• • The companies act 1956

• • The Negotiable instrument act 1881
• • The Indian partnership act 1932

3. Judicial Decisions
Judicial decisions are also called as case laws. They referred to as precedents and are binding
on all Courts having jurisdiction lower to that of the Court, which gave the judgment. The
Courts in deciding cases involving similar points of law also follow them.
4. Customs and Usage
Customs and usage plays an important role in regulating business transactions. A well-
recognized custom or usage can even override the statute law. Most of the business customs
and usage have been already codified and given legal sanctions in India. Some of them have
been ratified by the decisions of the competent Courts of law.
5. Experts opinion
The experts can help us to make good business rules. Our law makers take opinion and
guidelines from the exports before making business rules. If we have good business rules our
businessman can managed, regulate and lead business organization successfully. The experts
are the manufactures helping WTO create good business environment in the business
community so experts are considered as a source of business law.
6. Commercial treaty and agreement: - WTO, etc.
Commercial treaty and agreement are business understanding and compromise between or
among the organization and countries. After making business agreement all the members of
that follow its provisions as its business rules. Commercial agreement is always made with a
view to develop and extend business relation between or among the business organization or
countries. The member countries or organization should make business rules according to
provisions of that agreement. For example, member countries of WTO etc. should follow its
rules as their business rule. Therefore, it is also considered is a source of business law.

*****************************************************************

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 4

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

UNIT: 2
CONTRACT LAWS
Part – A: Indian Contract Act 1872
Contract Meaning
A contract is a voluntary arrangement between two or more parties that is enforceable by law
as a binding legal agreement.
Contract law concerns the rights and duties that arise from agreements.
A contract is a legally enforceable agreement between two or more parties. It may be oral or
written. A contract is essentially a set of promises. Typically, each party promises to do
something for the other in exchange for a benefit.
Definition of contract
According to Sir John Salmond defines a contract as, “An agreement creating and defining
obligations between two parties.
According to Sir Fredirck Pollock defines, “Every agreement and promise enforceable at
law is a contract”.
The definition of Contract is given under S.2(h) of the Indian Contract Act, of 1872 which
provides ‘a contract is an agreement enforceable by law’. Thus, a contract is an agreement
made between two or more parties which the law will enforce.
According to above definitions it is clear that a contract should consist of two elements
a. Agreement
b. Legal obligation (enforceable by law)
a. Agreement
Agreement is considered to be prime element to form any contract. An agreement is defined
u/s 2 (e) as ‘every promise and every set of promises, forming consideration for each other.
When a proposal is accepted it becomes a promise. Thus, an agreement is an accepted
proposal. Therefore, in order to form an agreement there must be a proposal or an offer by
one party and its acceptance by other party.
In short Agreement = Proposal + Acceptance.
b. Legal obligation (enforceable by law)
An agreement to become a contract must give rise to legal obligation. The second part of the
definition deals with enforceability by law. An agreement is enforceable u/s 10 if it is made
by competent parties, out of their free consent and for lawful object and consideration.
Therefore, a Contract = Agreement + Enforceability. Thus, all contracts are agreements but
all agreements are not necessarily contracts.

Essentials elements of a valid Contract

1. Offer and Acceptance: Basically, a contract unfolds when an offer by one party is
accepted by the other party. The accepted offer should be without any qualification and be
definite. An offer needs to be clear, definite, complete and final. It should be communicated
to the offeree. A proposal when accepted becomes a promise or agreement. The offer and
acceptance must be ‘consensus ad idem’ which means that both the parties must agree on the
same thing in the same sense i.e. identity of wills or uniformity of minds.
Example:

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 5

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

A say to B that he will sell his cycle to him for Rs.2000. This is an offer. If B accepts this
offer, there is an acceptance.
2. Intention to Create Legal Relationship: The intention of the parties to a contract must be
to create a legal relationship between them. Agreements of social nature, as they do not
contemplate legal relationship, are not contracts. For instance, if a father fails to give his
daughter the promised pocket money, the daughter cannot sue the father, because it was
purely a domestic arrangement. Thus, it is clear that all agreements, which do not result in
legal relations, are not contracts.

Example:
1. A father promises to pay his son Rs.500 every month as pocket money. Later, he refuses to
pay. The son cannot recover as it is a social agreement and does not create legal relations.
2. A offers to sell his watch to B for Rs.200 and B agrees to buy it at the same price, there is a
contract as it creates legal-relationship between them.

3. Capacity to Contract: If an agreement is entered between parties who are competent

enough to contract, then the agreement becomes a contract.
Example:
1. M, a person of unsound mind, enters into an agreement with S to sell his house for Rs.2
lac. It is not a valid contract because M is not competent to contract.
2. A, aged 20 promises to sell his car to B for Rs.3 Lac. It is a valid contract because A is
competent to contract.
4. Genuine and Free Consent: Free consent is another essential element of a valid contract.
An agreement must have been made by free consent of the parties. The contract would be
void in case of mutual mistakes. When consent is obtained by unfair means, the contract
would be voidable.

Example:
1. A compels B to enter into a contract on the point of pistol. It is not a valid contract as the
consent of B is not free.
5. Lawful Object: Objectives of an agreement should be lawful. It must not be illegal or
immoral or opposed to public policy. It is lawful unless it is forbidden by law. When the
object of a contract is not lawful, the contract is void.
Example:
A promise to pay B Rs.5 thousand if B beats C. The agreement is illegal as its object is
unlawful.

6. Lawful Consideration: Something in return is Consideration. In every contract, agreement

must be supported by consideration. It must be lawful and real.

1. A agrees to sell his house to B for Rs.10 Lac is the consideration for A’s promise to sell the
house, and A’s promise to sell the house is the consideration for B’s promise to pay Rs.10
Lac. These are lawful considerations.

7. Certainty and Possibility of Performance: The agreements, in which the meaning is

uncertain or if the agreement is not capable of being made certain, it is deemed void. T&C of
the contract should always be certain and cannot be vague. Any contracts that are uncertain

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 6

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

are considered void. The terms of the agreement must also be capable of performance and
should not enforce impossible act.
Example:
A promised to sell 20 books to B. It is not clear which books A has promised to sell. The
agreement is void because the terms are not clear.

Possibilities of performance
Example: A agrees with B to discover treasure by magic, the agreement is not enforceable.
A agrees with B to put life into B’s dead brother. The agreement is void as it is
impossible of performance
8. Legal Formalities: Legal formalities if any required for particular agreement such as
registration, writing, they must be followed. Writing is essential in order to affect a sale,
lease, mortgage, gift of immovable property etc. Registration is required in such cases and
legal formalities in the relevant legislation should be strictly followed.
Example:
1. A Verbally promises to sell his book to y for Rs.200 it is a valid contract because the law
does not require it to be in writing.
2. A verbally promises to sell his house to B it is not a valid contract because the law requires
that the contract of immovable property must be in writing.

Classifications of Contract
1. Contracts on the basis of creation:
a) Express contract: Express contract is one which is made by words spoken or written.
Example No. 1: X says to Y, will you buy a car for ₹. 100000? Y says to X, I am ready to buy
your car for ₹. 100000. It is an express contract made rally.
Example No. 2: X writes a letter to Y, I offer to sell my car for ₹. 100000 to you. Y send a
letter to Y, I am ready to buy your car for ₹. 100000. It is an express contract made in
writing.
b) Implied contract: An implied contract is one which is made other than by words, spoken
or written. It is inferred from the conduct of a person or the circumstance of the particular
case.

Example: X, a coolie in uniform picks up the bag of Y to carry it from railway platform to the
------ without being used by Y to do so and Y allow it. In this case there is an implied offer by
the coolie and an implied acceptance by the passenger. Now, there is an implied contract
between the coolie and the passenger is bound to pay for the services of the coolie.
c) Quasi or constructive contract:
It is a contract in which there is no intention either side to make a contract, but the law
imposes contract. In such a contract eights and obligations arise not by any agreement
between the practice but by operation of law.
e.g. where certain books are delivered to a wrong address the addresses is under an
obligation to either pay for them or return them.
2. Contracts on the basis of execution:
a) Executed contract: It is a contract where both the parties to the contract have fulfilled
their respective obligations under the contract.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 7

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Example: X offer to sell his car to Y for ₹. 1 lakh, Y accepts X offer. X delivers the car to y
and Y pays ₹. 1 lakh to X. it is an executed contract.
b) Executory contract: It is a contract where both the parties to the contract have still to
perform their respective obligations.
Example: X offers to sell his car to y for ₹ . 1 lakh. Y accepts X offer. It the car has not yet
been delivered by X and the price has not yet been paid by Y, it is an Executory contract.
c) Partly executed and partly executory contract: It is a contract where one of the parties
to the contract has fulfilled his obligation and the other party has still to perform his
obligation.
E.g. X offers to sell his car to y for ₹. 1 lakh on a credit of 1 month. Y accepts X offer. X sells
the car to Y. here the contract is executed as to X and Executory as to Y.
3. Contracts on the basis of enforceability:
a) Valid contract: A contract which satisfies all the conditions prescribed by law is a valid
contract.
E.g. X offers to marry y. y accepts X offer. This is a valid contract.
b) Void Contract: the term void contract is described as under section 2(j) of I.CA, 1872, A
contract which ceases to be enforceable by law becomes void when it ceases to be
enforceable. In other words, a void contract is a contract which is valid when entered into a
contract but which subsequently became void due to impossibility of performance, change of
law or some other reason.
E.g. X offers to marry Y, Y accepts X offer. Later on, Y dies this contract was valid at the time
of its formation but became void at the death of Y.

c) Void Agreement: According to Section 2(g), an agreement not enforceable by law is said
to be void. Such Contracts are void- ab- initio which means that they are unenforceable right
from the time they are made.
E.g. in agreement with a minor or a person of unsound mind is void –ab-initio because a
minor or a person of unsound mind is incompetent to contract.
d) Voidable contract: According to section 2(i) of the Indian contract act, 1872, contract
which is enforceable by law at the option of one or more of the parties thereon but not at the
option of the other or other, is a voidable contract. In other words, A voidable contract is one
which can be set aside or avoided at the option of the aggrieved party. Until the contract is set
aside by the aggrieved party, it remains a valid contract. For e.g. a contract is treated as
voidable at the option of the party whose consent has been obtained under influence or fraud
or misinterpretation.
e) Illegal Contract: An illegal contract is one the object of which is unlawful. Such an
contract cannot be enforced by law. Thus, illegal agreements are always void – ab- initio (i.e.
void from the very beginning)
f) Unenforceable contract: It is contract which is actually valid but cannot be enforced
because of some technical defect (such as not in writing, under stamped). Such contracts can
be enforced if the technical defect involved is removed.

4. Classification of Contracts according to performance

According to the extent of performance of contracts, contracts may be classified as
1. Unilateral Contract

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 8

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

It is also called as one-sided contract. In a unilateral contract, only one party has to
satisfy his obligation at the time of the formation of it, the other party having fulfilled
his obligation at the time of the contract or before the contract comes into existence.
2. Bilateral Contract
A contract is said to be a bilateral contract where the obligations of both the parties to
the contract are pending at the time of formation of the contract. In this type of
contract, a promise on one side is exchanged for a promise on the other.

OFFER:
Meaning:
Offer is nothing but the “Proposal”. The meaning of these two words is same i.e,
signifying the willingness to do or to abstain from doing any act.
Definition:
According to Section 2(a) of ICA 1872, “When one person signifies to another his
willingness to do or to abstain from doing anything with a view to obtaining the assent of the
other to such act or abstinence”.
Essentials of Offer:
a. Offer must be capable of creating legal relations: the intension of the offeror while
making the offer is to create legal relations.
b. Offer must be Definite, Certain and non-vague: if the contents of the offer are
indefinite, uncertain and vague, it is not a valid offer. It is essential that the terms of
the offer must be clear and certain, so that the rights and obligations can be exactly
fixed.
c. Offer must be communicated to the offeree: Communication of offer is essential to
obtain the assent of the offeree. If there is no communication of offer, there is no
acceptance.
d. Offer must be made with a view to obtain the assent of the other party: the main
purpose of an offer is to get the assent of the other party. Just expressing a mere
intension or making an enquiry is not sufficient to constitute an offer.
e. An offer may be conditional: Sometimes offer may contain one or more conditions.
These are called conditional offer. It can be accepted only subject to that condition.
f. Offer should not contain any assumptions: the offer given by the offeror must not be
the assumed condition.
g. Lapse of an offer:
- If either offeror or offeree dies before acceptance
- It is not accepted within the specified time or within the reasonable time.
- If the offeree does not make a valid acceptance.
- If the offer is revoked by the offeror himself, before acceptance.
h. An invitation to offer is not an offer: Generally, confusion arises between an
invitation to offer and valid offer. This confusion should be removed for
understanding the real sense of proposal.
i. Offer may be Specific or general: when offer is made to a specific person or a body
of persons, it is called a specific offer. When an offer is addressed to the world, it is a
called a general offer. A general offer can be accepted by one from the public.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 9

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Kinds of offer
1. Express offer: An express offer is one which may be made either by words spoken or
written. A offer to sell his car by a letter to B for 1000.
2. Implied Offer: An implied offer is one which may be gathered from the conduct of
the parties or from the circumstances of the case.
3. Specific offer: When an offer is made to a specific person or body of persons is called
a specific offer
4. General offer: when an offer is addressed to the whole world, it is called general
offer. A general offer can be accepted by any person from the public.
5. Counter offer: A counter offer is the rejection of the original offer and making new
offer. A person who makes a counter offer and subsequently changes his mind and
wishes to accept the original cannot do as the first offer lapses and he cannot treat it as
still open.
6. Standing offer: where large quantities of goods are required by certain companies or
other bodies from the time to time, it is usual ti call tenders for supply of goods for
long duration.
7. Cross offer: When two parties make identical offer to each other in ignorance of each
offer, such offers are known as cross offer.
Conditional Offer:
When a person makes a proposal to the other person without any conditions, it is
called absolute or unconditional offer. On the other hand if any conditions are imposed there
on which are to be fulfilled before its acceptance, it is called a conditional offer.
Important rules of conditional offers:
- Conditions must be communicated to the offeree.
- Conditions should attract the attention of offeree.
- Conditions may be in any language
- Conditions should be reasonable.

ACCEPTANCE:
Meaning:
An offer must be communicated to the offeree. If the offeree signifies his/her assent, it
is called acceptance. An accepted proposal is called promise or agreement.

Definition:
According to Section 2(b), “When the person to whom the proposal is made signifies
his assent, it is an acceptance of the proposal. An accepted proposal is called a promise or
agreement”.

Essentials of a valid acceptance:

1. Acceptance must be absolute and unconditional: A valid acceptance should not
posses any conditions, it must be absolute. It is contains any condition is not a valid
acceptance.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 10

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

2. Acceptance must be communicated to the offeror: acceptance must be

communicated to the offeror by the offeree. The mode of communication may be oral
or written.
3. Acceptance must be made with a reasonable time: acceptance must be given within
the time specified by the offeror. If no time is specified by the offeror, it must be
within a reasonable time.
4. Acceptance must be in the mode prescribed by the offeror: Acceptance is to be made
in the manner prescribed or indicated by the offeror. Acceptance given in any other
mode than the prescribed one, it may not be effective.
5. Acceptor must be aware of the offer: The acceptor must be aware of the offer before
giving consent to it. If the acceptor without knowing the proposal conveys his
acceptance, it is not valid acceptance.
6. Acceptance cannot be implied by silence: Silence of the promise in response to a
proposal cannot be deemed as acceptance.
7. Acceptance must be given before offer lapses: acceptance must be given before the
offer lapses or revokes by the offeror. An acceptance given after lapse or revocation
of an offer is not a valid acceptance.
8. Acceptance must be given only by the offeree: it should be given by the person to
whom the proposal is made. An acceptance given by a third party will not create legal
right and obligations between him and offeror.

Exceptions to this rule:

a. By performing a condition in a conditional offer.
b. Waiver of the communication of acceptance
c. Acceptance given for a general offer
d. An implied acceptance is a good acceptance

Communication of offer and acceptance:

Section 4 of ICA, deals with the communication of offer and acceptance by post. To
create a valid agreement, it is necessary to communicate the offer and acceptance by the
respective parties. When the parties are at the same place, it is east to communicate their offer
and acceptance. But when the parties are at the distant places, offer and acceptance are
generally exchanged through post.
Communication of revocation
Revocation means taking back or cancellation of something. Section 5 of the act
governs regarding the revocation of offer and acceptance.
1. Revocation of offer – rules – section 5: A proposal may be revoked at any time
before the communication of its acceptance is complete against the offeror but not
afterwards. It means the offeror can withdraw his offer at any time before its
acceptance but not later.
- Mode of revocation of offer:
 By notice of revocation by the offeror to the offeree.
 By lapse of time
 By non-fulfillment of a condition by the offeree
 By death or insanity of offeror

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 11

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

 When the acceptance is not given in a prescribed mode.

 By subsequent illegality.
2. Revocation of acceptance – Rules- Section 5: An acceptance may be revoked any
time before the communication of acceptance is complete but not afterwards. The
acceptance is binding on the acceptor when the letter of acceptance actually reaches
the proposal.

CONSIDERATION
What is Consideration?
Consideration is the benefit that each party receives, or expects to receive, when
entering into a contract. Consideration is often monetary, but it can be a promise to perform a
specific act, or a promise to refrain from doing something.
Section 2(d), defines Consideration as follows; “When at the desire of the promisor, the
promise or any other person has done or abstained from doing, or does or abstains from doing
or promises to do or abstain from doing something, such as an act or abstinence or promise is
called consideration for the promise”.

Essentials of Valid Consideration:

- Consideration at the desire of the promisor: Consideration must be given by the
promisee at the desire of the promisor only. A gratuitous service rendered by the
promisee without any request or desire of the promisor is not treated as a valid
consideration.
- Consideration may move from promise or any other person: consideration may be
given by the promisee or any other person on his behalf. Under Indian law it is allowed
that a strange to the contract may give consideration.
- Consideration may be past, present or future: When the promisor receives the
consideration before the date of contract, it is said to be past consideration. The
consideration received along with contract is said to be present consideration, if same is
received at a future date then it is future consideration.
- Consideration need not be adequate: it is not necessary that the consideration should be
adequate to the promise. But it must be of some value. Law requires some sort of
consideration for the promise.
- Consideration must be real: though the consideration need not be adequate but it must be
real not illusory. Consideration is also to be competent.
- Consideration must be lawful: the consideration for an agreement must be lawful. An
agreement is void if it is based on unlawful consideration. The consideration of an
agreement is unlawful unless –
a. It is forbidden by law
b. It would defeat the provision of law if it is permitted
c. It is fraudulent and involves or implies injury to a person or property of another.
d. The court regards it immoral or opposed to public policy.
- Consideration must be something which the promisor is not already bound to do: a
promise to do what one is already bound to do either by general law or under an existing
contract is not good consideration.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 12

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Exceptions of consideration:
1. Promise made on account of natural love and affection – Sec 25(1)
2. Promises to compensate voluntary services – Sec 25(2)
3. Time barred debts – Sec 25(3)
4. Complete Gifts – Sec25(4)
5. Remission – Sec 63
6. Guarantee Contracts – Sec 127
7. Agency Contract – Sec 85

CAPACITY OF PARTIES
Meaning:
The term capacity to contract means the competency or qualification of the parties to
enter into a valid contract.
Definition:
Section 11 of ICA 1872, deals with the competency of parties and provided that
“every person is competent to contract who is of 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”.
According to Sec 11 the following persons are competent to enter into the contract;
a. Majors c. Sound Minded persons
b. The persons who are not disqualified by any law of the land.
Reasons for incapacity:
1. Incapacity out of mental deficiency
2. Incapacity out of unsound mind
3. Incapacity arising out of status
a. Alien enemies’ d. Convicts
b. Insolvents e. Corporation
c. Foreign sovereigns an f. Married women
ambassador g. Professional persons

Minor
According to section 11 of ICA, a minor is an incompetent person to enter into a contract.
Definition:
Section 3 of Indian Majority Act 1875, defines a minor as “A minor is one who has not completed
the age of his or her 18th year”.
Law relating to contracts of Minors:
1. An agreement by or with minor is void: In 1903, the privacy council made it perfectly clear that a
contract entered into by or with a minor is void. A contract of minor is nullity and non-existence
from the inception in the eyes of law.
2. No Ratification: Ratification means subsequent approval of an act already done an agreement with
minor is void from the beginning. A minor cannot ratify the agreement even on attaining a majority,
because a void agreement cannot be ratified.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 13

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

3. Minor can be promise or beneficiary: where a minor is a promise or beneficiary in a contract it can
be enforced by him. There is no restriction on minor from being beneficiary.
4. No Estoppels against minor: where a minor by innocently misrepresenting his age has induced the
other party to enter into a contract, he can be made liable on that contract.
5. No Specific performance: a minor contract is absolutely void and therefore, there can be question of
specific performance of such a contract.
6. Liability for torts: a tort is a civil wrong. A minor is liable for torts. Minors are liable for causing
injury or damage to the property of others, due to their negligence. They will treat at par with others
in the cases of torts.
7. No Insolvency: a minor cannot be declared are insolvent even though they are due payable from the
properties of a minor.
8. Minor as a partner: As a general rule a minor cannot be admitted as a partner in partnership firm.
This is because a partnership comes into existence out of an agreement. Minor cannot be a party to
an agreement according to ICA but he can admit as a partner under section 30 of Indian Partnership
Act, to the benefits of Partnership firm.
9. Minor cannot bind parent or guardian: In the absence of authority express or implied minor is not
capable for binding his parents or guardian even for necessaries.
10. Minor as an agent: Minor can act as an agent but he will not be liable to his principal for his acts.
The principal cannot make the minor liable for any acts good or bad.
11. Joint contract by minor or adult: in this case of a joint contract entered into by a minor a along with
an adult, the adult will be liable on the contract on the contract but not the minor.
12. Minors’ liability for necessaries: Necessaries means the things that are essentially needed by a minor.
They do not include luxuries, costly items and unnecessary articles. The question of necessary
depends on the class of society.
Free Consent
Meaning of Consent: Sec 13 of ICA 1872, “two or more persons are said to contract when they agree upon
the same thing in the same sense”.
Meaning of Free Consent: Sec 14 of ICA 1872, “Consent is said to be free when it is not caused by
coercion, undue influence, fraud, misrepresentation or mistake”.

COERCION AND OTHER CONSEQUENCES

1. Coercion
Meaning: it means a threat or force used by one party against another for compelling him to enter
into an agreement.
Definition: According Sec 15 of ICA 1872, “Committing or threatening to commit any act forbidden
by the Indian Penal Court (IPC) or the unlawful detaining or threatening to detain by property to the
prejudice of any person, with the intension of causing any person to enter into an agreement” is
called coercion.
Essentials that amounts to coercion:
a. Committing any act forbidden by IPC
b. Threatening to commit any act forbidden by the IPC
c. Unlawful retaining of property of another
d. Threatening to detain the property unlawfully.
2. Undue Influence:
RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 14

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Meaning: it is the domination of one person who is having strong mind will over another who is
having weak mind and weak will.
Definition: Sec 16 of ICA 1872, “A contract is said to be influenced by undue influence, where the
relations subsisting between the parties are such that one of the parties is in a position to dominate
the will of other and uses the position, to obtain an unfair advantage over the other”.
Essentials elements of undue influence:
1. Existence of apparent authority
2. Existence of by fiduciary relationship
3. Existence of mental in capacity
4. Existence of unconscionable bargains
5. Contracts with pardanashin ladies
6. Burden of proof.
7. Effect of undue influence
3. Fraud
Meaning: fraud is a willful misrepresentation made by a party to a contract with the intension to
deceive the other party. It means a false statement made knowingly without belief in its truth or
recklessly without caring whether it is true or not.
Definition: According to Sec 17 of ICA 1872,
a. A false suggestion as to a fact knows known to be false or not believe to be true.
b. The active concealment of a fact.
c. A promise made without any intention of performing it
d. Doing any such act or making any such omission as the law specifically declares to be fraudulent
e. Doing any other act fitted to deceive.
Essentials of fraud:
1. Fraud must be committed by a party to the contract.
2. There must be false suggestion
3. There was no intention to perform the promise
4. There must be active concealment of the fact
5. Where law specifically declared an act to be fraudulent
6. Any other act fitted to deceive
7. There must be an intention to deceive and must actively deceive
8. Mere silence is not fraud
4. Misrepresentation
Meaning: the word representation means a statement made by one party to another. This may be
added before or at the time of contract. It may be made with regard to some existence fact or past
event which may materially include the other party to enter into a contract.
Essentials of Misrepresentation:
- Making a positive assertion
- Committing the breach of duty
- Causing a party to make a mistake as to substance
- Innocent intention of the party
5. Mistake

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 15

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

It is a misconception or error. A mistake means that the parties are intending to do one thing but have
done something else. To create a valid contract consensus as idem is necessary. Section 20, 21, 22
deals with mistake;
a. Mistake of law – Section 21
- Mistake of general law
- Mistake of foreign law
- Mistake as to private property rights
b. Mistake of facts – Section 20 & 22
- Bilateral mistake – Sec 20: When both the parties to the contract under a misconception to the
facts of the contract, it is called bilateral mistake.
- Unilateral mistake – Sec 22: A mistake of fact in the mind of one party is called unilateral
mistake.

Breach of contract
What do you mean by breach of contract?
When any party to a contract, whether oral or written, fails to perform any of the contract’s terms, they may
be found in breach of contract. While there are many ways to breach a contract, common failures include
failure to deliver goods or services, failure to fully complete the job, failure to pay on time, or providing
inferior goods or services. In other words, a breach of contract is a broken promise to do or provide
something. To explore this concept, consider the following breach of contract definition.

Definition of Breach of Contract

1. An unjustifiable failure to perform terms of a contract.
2. A violation of contract through failure to perform, or through interference with the performance of the
contractual obligations.

Different ways to breach a contract

Types of Breaches
There are four different types of breaches of contract:
1. Actual Breach
Most breaches of contracts are one of two types: actual or anticipatory. Actual breaches occur when a party
fails to fulfill her obligations on the date performance is due, or when a party performs her obligations and
the other party refuses to perform.
2. Anticipatory Breach
Anticipatory breach occurs when a party refuses to perform her obligations under the contract before the due
date of performance. For example, if a party agrees to sell her car to a buyer in five days, but then reneges
on day three, she is anticipatorily breaching the contract.
3. Minor Breach
A contract breach can either be minor or material. A minor breach, also known as a partial breach, is a
failure to complete a minor, non-essential part of a contract. Although it is technically a breach, the contract
can still be completed.
4. Material Breach

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 16

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

A material breach, on the other hand, is a substantial breach in contract terms usually excusing the non-
breaching party from performing and giving her the right to sue for damages. For example, in a home
purchase contract, a seller refusing to give the buyer the keys to the home after the buyer has completed all
contract terms is a material breach.

Remedies for breach of contract

1. Compensatory damages:
This is the most common breach of contract remedy. When compensatory damages are awarded, a court
orders the person that breached the contract to pay the other person enough money to get what they were
promised in the contract elsewhere.
2. Restitution:
When a court orders restitution, they tell the person that breached the contract to pay the other person back.
In the example above, the court would order the first cleaner to pay you back $100, since that's what you
paid him to clean your house.
3. Punitive damages:
This is a sum of money intended to punish the breaching party, and is usually reserved for cases in which
something morally reprehensible happened, such as a manufacturer deliberately selling a retailer unsafe or
substandard goods.
4. Nominal damages:
A court awards nominal damages when there has been a breach of contract but no party to the contract
suffered any harm.
5. Liquidated damages:
These are damages that the parties agree to pay in the event a contract is breached.
6. Quantum Meruit:
A court can award one party payment for what they deserve for any work that she performed before the
other party breached the contract. For example, if the cleaner in the example above had cleaned half the
house, and then you decided you didn't want him to finish, he can demand $50 as quantum meruit.
Translated from Latin, the term means "as much as he deserved."
7. Remedies in Equity
A remedy in equity is when the court orders someone do something. This can also be called "injunctive
relief." In breach of contract cases, this can look like any of the following:
a. Cancellation: The court cancels the contract and decides that the parties are no longer bound by it.
b. Specific Performance: This is when the court forces the breaching party to perform the service or deliver
the goods that they promised in the contract. This is typically reserved for cases when the goods or services
are unique and no other remedy will suffix.

DISCHARGE OF CONTRACT
Discharge of contract refers to an agreement that's fully performed. However, discharge of contract can
happen due to other circumstances. Sometimes, obligations are incomplete, but the parties are no longer
liable for them. When a contract is discharged, it's no longer binding.

 Discharge by performance.
 Discharge of Contract by Substituted Agreement.
 Discharge by lapse of time.
 Discharge by operation of law.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 17

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

 Discharge by Impossibility of Performance.

 Discharge by Accord and Satisfaction.
 Discharge by breach.

UNIT: 2

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 18

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

CONTRACT LAWS
Part – B: The Sale of Goods Act 1930
Introduction
Till 1930, transactions relating to sale and purchase of goods were regulated by the Indian Contract
Act,1872.
In 1930, Sections 76 to 123 of the Indian Contract Act, 1872 were repealed and a separate Act called ‘The
Indian Sale of Goods Act,1930 was passed.
It came into force on 1st July, 1930.With effect from 22ndSeptember,1963, the word ‘Indian ‘was also
removed. Now, the present Act is called ‘The sales of goods act,1930’. This Act extends to the whole of
India except the State of Jammu and Kashmir.

Scope of the Act

The sale of Goods Act deals with ‘Sale of Goods Act,1930,’contract of sale of goods is a contract whereby
the seller transfers or agrees to transfer the property in goods to the buyer for a price.” ‘Contract of sale’ is a
generic term which includes both a sale as well as an agreement to sell.

Meaning and Definition of contract of sale

What is Contract of Sale of goods?
Contract of sale of goods is a contract, whereby, the seller transfers or agrees to transfer the property in
goods to the buyer for a price. There can be a contract of sale between one part-owner and another.
In other words, under a contract of sale, a seller (or vendor) in the capacity of the owner, or part-owner of
the goods, transfers or agrees to transfer the ownership in goods to the buyer (or purchaser) for an agreed
upon value in money (or money equivalent), called the price, paid or the promise to pay same.
A contract of sale may be absolute or conditional depending upon the desire of contracting parties.

Definition
According to Section 4 of the Sale of Goods Act a contract of the sale of goods is a contract whereby the
seller transfers, or agrees to transfer, the property in (i.e., ownership of) goods to the buyer for a price.

Essentials elements of a Contract of Sale

The following six features are essential elements of any contract of sale of goods.
 Goods
 Prices
 Two parties
 Transfer of ownership
 Includes both a ‘sale ‘and ‘an agreement to sell ‘
 All essentials of a valid contract

1. Two Parties:
A contract of sale of goods is bilateral in nature wherein property in the goods has to pass from one party to
another. One cannot buy one’s own goods.
For example, A is the owner of a grocery shop. If he supplies the goods (from the stock meant for sale) to
his family, it does not amount to a sale and there is no contract of sale. This is so because the seller and
RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 19

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

buyer must be two different parties, as one person cannot be both a seller as well as a buyer. However, there
shall be a contract of sale between part owners.
Suppose A and B jointly own a television set, A may transfer his ownership in the television set to B,
thereby making B the sole owner of the goods. In the same way, a partner may buy goods from the firm in
which he is a partner, and vice-versa. However, there is an exception against the general rule that no person
can buy his own goods. Where a Pawnee sells the goods pledged with him/her on non-payment of his/her
money, the pawnor may buy them in execution of a decree.

2. Goods: The subject matter of a contract of sale must be goods. Every kind of movable property except
actionable claims and money is regarded as ‘goods’. Contracts relating to services are not considered as
contract of sale. Immovable property is governed by a separate statute, ‘Transfer of Property Act’.

3. Transfer of ownership:
Transfer of property in goods is also integral to a contract of sale. The term ‘property in goods’ means the
ownership of the goods. In every contract of sale, there should be an agreement between the buyer and the
seller for transfer of ownership. Here property means the general property in goods, and not merely a special
property.
Thus, it is the general property, which is transferred under a contract of sale as distinguished from special
property, which is transferred in case of pledge of goods, i.e., possession of goods is transferred to the
pledgee or Pawnee while the ownership rights remain with the pledger. Thus, in a contract of sale there must
be an absolute transfer of the ownership. It must be noted that the physical delivery of goods is not essential
for transferring the ownership.

4. Price:
The buyer must pay some price for goods. The term ‘price’ is ‘the money consideration for a sale of goods’.
Accordingly, consideration in a contract of sale has necessarily to be in money. Where goods are offered as
consideration for goods, it will not amount to sale, but it will be called barter or exchange, which was
prevalent in ancient times. Similarly, if a person offers the goods to somebody else without consideration, it
amounts to a gift or charity and not sale. In explicit terms, goods must be sold for a definite amount of
money, called the price. However, the consideration can be partly in money and partly in valued up goods.
Furthermore, payment is not necessary at the time of making the contract of sale.

5. All essentials of a valid contract:

A contract of sale is a special type of contract, therefore, to be valid, it must have all the essential elements
of a valid contract, viz., free consent, consideration, competency of contracting parties, lawful object, legal
formalities to be completed, etc. A contract of sale will be invalid if important elements are missing. For
instance, if A agreed to sell his car to B because B forced him to do so by means of undue influence, this
contract of sale is not valid since there is no free consent on the part of the transferor.

6. Includes both a ‘Sale’ and ‘An Agreement to Sell’:

The ‘contract of sale’ is a generic term and includes both sale and an agreement to sell. The sale is an
executed or absolute contract whereas ‘an agreement to sell’ is an executory contract and implies a
conditional sale.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 20

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

A contract of sale can be made merely by an offer, to buy or sell goods for a price, followed by acceptance
of such an offer. Interestingly, neither the payment of price nor the delivery of goods is essential at the time
of making the contract of sale unless otherwise agreed.
Subject to the provisions of the law for time being in force, a contract of sale may be made either orally or in
writing, or partly orally and partly in writing, or may even be implied from the conduct of the parties.

CONDITIONS & WARRANTY

Meaning of Conditions [Section 12(2)]
A condition is a stipulation;
1. Which is essential to the main purpose of the contract?
2. The breach of which gives the aggrieved party a right to terminate the contract.

Meaning of Warranty [Section 12(3)]

A warranty is a stipulation;
1. Which is collateral to the main purpose of the contract
2. The breach of which gives the aggrieved party a right to claim damages but not a right to reject goods
and to terminate the contract.

Distinguish Between Conditions and Warranties

Sl no Basis Condition Warranty
1 Meaning A requirement or event that
A warranty is an assurance
should be performed before
given by the seller to the
the completion of another
buyer about the state of the
action, is known as Condition.
product, that the prescribed
facts are genuine.
2 In the case of The party can bring the The party can only claim
Breach contract to an end. damages.
Condition/Warranty
3 What is it? The party can only claim It is a subsidiary provision
damages. related to the object of the
contract.
4 Superiority of A condition has a direct link A breach of warranty may
Condition: with the essential party of the not be treated as a breach of
contract. condition.
5 Violation Violation of condition can be Violation of warranty does
regarded as a violation of the not affect the condition.
warranty.
6 Basic difference A breach of condition can A breach of warranty
also be considered as a breach cannot be considered as a
of warranty. breach of condition.
Types of Conditions and Warranties
1. Express Conditions & Warranties: -

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 21

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Conditions and warranties are those which are included in clear words and all parties are agrees at the time
of contract.
Example
These are expressly provided in the contract. For example, a buyer desires to buy a Sony TV Model No.
2020.Here, model no. is an express condition. In an advertisement for Sony TV for 5 years is an express
warranty.
2. Implied conditions: -
Those conditions are not included in the contract but the law presumes their existence in the contract is
called implied conditions.

 Condition as to title {sec. 14(a)} or Right to sell. This right is considered as an implied condition in
every sale contract. It is presumed that he can sell the goods and he can enter in sale agreement.
 Sale by Description {sec 15} In this case implied condition is that goods shall the correspond with
the description. A buyer can reject if the goods if these are not according the description.
 Sale by Sample {sec 17} In this case goods must be supplied according the sample agreed upon
condition.
i. The buyer may be able to compare the sample with the bulk.
ii. The goods should be free from any defect.
iii. The bulk should match with the quality of the sample.
 Sale by Sample & Description {sec 15} in this case goods supplied must correspond with sample
and description both. So there is implied condition in it that if bulk does not match with one even
then buyer may reject the goods.

 Condition of Merchantable Quality {sec 16 (2)} Merchantable quality means that the goods must
be sale able in the market as goods of that description are sold. In case of any defect a seller must
inform the buyer. It is implied condition.
 Conditions as Quality to Fitness {16 (1)} Sometimes buyer informs the seller that he wants to
purchase the goods for particular purpose. It is implied condition that goods shall serve the purpose
of buyer. As the buyer relays on the seller’s skill then seller should provide the goods according the
description.
 Wholesomeness Condition It means conductive to health. When someone makes a sale of contract
about the eatable goods this condition is applied. If someone supply the goods and it damages to
health then supplier will be liable for damages. Example: - Sam’s Food Company supplied food on
the marriage party of Mr. Vicky. After eating the food people were infected and died. The company
was held liable in damages.
 Conditions implied by custom [Section 16(3)]
Condition as to quality or fitness for a particular purpose may be annexed by the usage of trade.
 2 (A) Implied warranties
 Possession of Goods {sec 14(b)} It is an implied warranty on the part of the seller that buyer
shall enjoy the quiet possession of goods sold to him without any disturbance. In case of any
disturbance a buyer can claim the damages from the seller.
 Dangerous Nature Must Be Disclosed It is necessary that seller should disclose the
dangerous nature of the good sold to the buyer. If he does not disclose then any type of loss
suffered by the buyer will be compensated by the seller.

Delivery of Goods (SECTIONS 31-44)

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 22

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Delivery means voluntary transfer of possessions from one person to another. Delivery of goods sold
may be made by doing anything which the parties agree, shall be treated as delivery or putting the goods in
the possession of the buyer or of any person authorized to hold them on his behalf.

Rule regarding delivery of goods (SECTION 33-39)

1. Effect of part delivery (Sec. 34)
2. Buyer to apply for delivery (Sec. 35)
3. Place of Delivery (Sec. 36/1)
4. Time of Delivery (Sec. 36/2)
5. Goods in possession of a third party (Sec.36/3)
6. Time for tender of delivery (Sec. 36/4)
7. Expenses for delivery (Sec. 36/5)
8. Installment deliveries (Sec. 38)
9. Delivery of wrong quantity (Sec. 37)
10. Delivery carrier (Sec. 39/1)
11. Deterioration during transit (Sec. 40)
12. Buyer’s right to examine the goods (Sec. 41)

Rights of an unpaid seller

What are the Rights of Unpaid Seller?

The seller who has not received price of goods sold or the seller who has got his negotiable instrument
dishonored will become Unpaid Seller. Sale of goods act, 1930 Section 45 to 55 read about the rights of
Unpaid Seller. Those rights can be classified into two groups. They are as follows.
1. Rights of unpaid seller against Goods
2. Rights of unpaid seller against Buyer

1. What are the Rights of Unpaid Seller against Goods;

When goods are in existence and title has not gone to buyer, Unpaid Seller can exercise the rights against
goods. These rights are categorized into three types. They are as follows.
a. Right of lien
b. Right of stoppage in transit
c. Right to Re-Sell

a. Right of lien
Right to retain goods by unpaid seller till amount is recovered is called right of lien. If unpaid seller wants to
exercise right of lien, he has to fulfill the following conditions.
• He must be unpaid seller
• There should be no credit terms in the Contract of Sale.
• After completion of credit period, right of lien can be exercised.
• The unpaid seller should have obtained those goods lawfully.
• Amount must be due on those goods only against which right of lien is decided.

b. Right of stoppage in transit

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 23

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Unpaid Seller has right to stop the goods in the transit itself. To exercise this right the following conditions
are to be fulfilled.
• He must be unpaid seller.
• Buyer must be insolvent.
• There should be no credit terms in the Contract of Sale. After expiry of Credit period, this right can
be exercised.
• Amount must be due on those goods only against which this right is desired.
At times the transport company may refuse to deliver the goods to buyer due to any reason. Then the goods
are said to be in transit. At times, the buyer may retain the goods at the transport company. Then the goods
are said to be not in transit.

c. Right to re-sale
The unpaid seller can re-sell the goods for non-payment of price by buyer. He can exercise this right when
the goods are of perishable nature while doing so it is beneficiary to the seller to give a notice to buyer with
regard to resale. If such notice is given seller can claim loss. If any on resale from the buyer. On the other
hand if there is profit on resale the former buyer cannot claim that profit. If notice is not given the seller has
to face adverse consequence. If there is any loss on re-sale, that loss cannot be recovered from buyer. But in
case of profit, seller has responsibility to pay that amount of profit to buyer.

2. What are the Rights of Unpaid Seller against Buyer?

At times it becomes inevitable choice to exercise rights on buyer for non-payment of price. The unpaid seller
can file suits against the buyer as explained below.
 Right to sue for price
It is fundamental right of buyer to file a suit for recovery of unpaid price. In the case of sale. Suit will be
made for price balance, but not for compensation.
 Right to sue to interest
If the buyer makes unreasonable delay for making payment, the seller has right to claim interest also.
 Right to sue for compensation
When an agreement to sell is breached, the seller can see only for compensation for the breach of
Contract. Under such circumstances he cannot sue for price.
 Right to Sue for anticipatory contract
When an agreement to sell is breached by buyer before date of performance. It is called anticipatory
breach. Then also seller can sue for compensation.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 24

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

UNIT: 3
COMPETITION AND CONSUMER LAWS
Part – A: The competition Act, 2002
Introduction
An Act to provide, keeping in view of the economic development of the country, for the establishment of a
Commission to prevent practices having adverse effect on competition, to promote and sustain competition
in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other
participants in markets, in India, and for matters connected therewith or incidental thereto. The Monopolies
and Restrictive Trade Practices Act, 1969 [MRTP Act] repealed and is replaced by the Competition Act,
2002, with effect from 01st September, 2009

Competition: It is “a situation in a market in which firms or sellers independently strive for the buyer’s
patronage in order to achieve a particular business objective for example, profits, sales or market share”.
- It is foundation of an efficiently working market system.
- The process of rivalry between firms striving to gain sales and make profits.
- Motive: Self-interest, but outcome mostly beneficial for the society.
- Competition is not just an event, but a process.
- It is not automatic – needs to be nurtured.
Types of competition:
a. Price Competition: Winning customers by lowering price.
b. Non-price Competition: Winning customers by advertising, offering after sales-services, using promotion
tools etc..
Ways of Competition:
a. Fair Competition: Fair means such as producing quality goods, becoming cost-efficient, optimizing the
use of resources, best technology, research & development etc.
b. Unfair Competition: Unfair means such as fixing price with the rivals, predatory pricing, disparaging or
misleading advertisements etc.

The Competition Act 2002

 A new Law called Competition Act 2002 has been enacted to replace the extent law, MRTP Act 1969.
 The new law has been amended on 10th September 2007 by the parliament.
 An act to provide, keeping in view of the economic development of the country for the establishment of a
commission to prevent practices having adverse effect on competition, to promote and sustain competition in
markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants
in markets, in India, and for matters connected therewith or incidental thereto.

Objective of the act

Competition Act 2002 notified in January 2003. Stated objective in preamble is to provide “for establishment of a
commission”.
 To ensure fair competition in India
 To eliminate practices having adverse effect on competition.
 To prohibit Trade Practices Which causes adverse effect on Competition in markets within India.
 To promote and sustain competition in markets.
 To protect consumers interests.
 To ensure freedom of trade carried on by other participants in markets, in India.
 To curb negative aspects of competition through the competition commissions of India (CCI).

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 25

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Competition Act, 2002 – What practices are stopped by it?

a. Pricing fixing: if two or more supplier fixe the same price for supply the goods then it will be restricted
practice.
b. Bid rigging: if two or more supplier exchange sensitive information of bid, then it will also be restricted
practice and against competition.
c. Re-sale price fixation: if a producer sells the goods to the distributors on the conditions that he will not
sell any other price which is not fixed by producer.
d. Exclusive dealing: this is also restricted practice. If a distributor purchases the goods on the condition
that supplier will not supply the goods any other distributors.

Main features of Competition Act 2002:

1. Anti – competitive agreements between enterprises (Section 3)
There are two a types of agreements in anti-competitive agreements. They are as follows;
- Horizontal agreement: Agreements between enterprises at the same stage of production, services,
etc.
- Vertical Agreements: agreements between enterprise at different stage of production, distribution
etc. Agreement includes arrangement or understanding, oral, or in writing, not necessarily
enforceable by law.
Unfair trade practices: Any trade practice whose harm outweighs its benefits. It can be defined as
using various deceptive, fraudulent or unethical methods to obtain business. Unfair trade practices
include misrepresentation, false advertising, tied selling and other acts that are declared unlawful by
statute. It can also be referred to as deceptive trade practices.
Restrictive trade practices: Any trade practice that tends to block the flow of capital into production
and also bring in conditions of delivery to affect the flow of supplies leading to unjustified cost.
2. Abuse of Dominance (Section 4)
Dominance means a position of strength enabling an enterprise to operate independently of competitive
pressure and to appreciably affect the relevant market, competition and consumers.
Abuse of dominant position –
 No enterprise or group shall abuse its dominant position.
 There shall be an abuse of dominant position – under sub-section (1), if an enterprise or a group-
o Directly or indirectly imposes unfair or discriminatory
Condition in purchase or sale of goods or service.
Price in purchase or sale of goods and services.
o Limits or restricts –
 Production of goods or provision of services or market therefore.
 Technical or scientific development relating to goods or services to the prejudice of
consumers.
o Indulges in practice or practices resulting in denial of market access.
o Makes conclusion of contracts subject to acceptance by other parties of supplementary
obligations which, by their nature or according to commercial usage, have no connection with
the subject of such contracts.
3. Mergers and Acquisitions : (Section 5&6) Regulation of combination:
Combination definition: Combination under the competition Act means acquisition of control, shares,
voting rights or assets, acquisition of control by a person over an enterprise where such person by a
person over an enterprise where such person has direct or indirect control over another enterprise
engaged in competing businesses and mergers and amalgamations between or amongst enterprises when
the combining parties exceed the thresholds set in the act.
Types of combination:
- Horizontal Combinations: these are those that are between rivals and are most likely to cause
appreciable adverse effect on competition.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 26

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

- Vertical combinations: these are those that are between enterprises that are at different stages of the
production chain and are less likely to cause appreciable adverse effect on competition.
- Conglomerate Combinations: These are those that are between enterprises not in the same line of
business or in the same relevant market and are least likely to cause appreciable adverse effect on
competition.
4. Competition Advocacy: (Section 49)
The aim of competition advocacy is to foster conditions that will lead to a more competitive market
structure and business behavior without the direct intervention of the Competition Law Authority,
namely CCI
For promotion of competition advocacy and creation of awareness about competition issues, the
commission may take suitable measures to:
- Promote competition advocacy
- Create public awareness
- Impart training about competition
The commission shall render opinion on a reference from the Central Government on policy/law on
competition. CCI is required to give opinion in 60 days.
Competition Commission of India (CCI)
The Competition Act provides for adjudicating relief machinery Competition Commission of India is a
statutory body of the Government of India responsible for enforcing The Competition Act, 2002 throughout
India and to prevent activities that have an appreciable adverse effect on competition in India. It was
established on 14 October 2003. It became fully functional in May 2009 with Dhanendra Kumar as its first
Chairman.
(The Commission comprises a Chairperson and six members. Devender Kumar Sikri is the current Chairperson
of the CCI.2018)

The following are the objectives of the Commission.

1. To prevent practices having adverse effect on competition.
2. To promote and sustain competition in markets.
3. To protect the interests of consumers and
4. To ensure freedom of trade

Competition Appellate Tribunal (COMPAT or CAT)

The COMPAT is a quasi-judicial body constituted under the provisions of the Competition Act 2002 as amended
by competition Act 2007.
COMPAT is headed y a Chairperson, who shall be a serving/retired judge of Supreme Court of India or Chief
Justice of high court or qualified to be judge of Supreme Court or Chief Justice of a high Court. The Members
shall be eminent persons from socio-economic fields.

Offence and Penalties under Competition act 2002

Under the section 43, 44, 45 & 46
Penalty for failure to comply with directions of Commission and Director General. —If any person
fails to comply with a direction given by—
(a) The Commission under sub-section (5) of section 36; or
(b) The Director General while exercising powers referred to in sub-section (2) of section 41, the
Commission shall impose on such person a penalty of rupees one lakh for each day during which such
failure continues.
43A Power to impose penalty for non-furnishing of information on combinations. —If any person or
enterprise who fails to give notice to the Commission under sub-section (2) of section 6, the Commission

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 27

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

shall impose on such person or enterprise a penalty which may extend to one per cent. Of the total turnover
or the assets, whichever is higher, of such a combination.]
44. Penalty for making false statement or omission to furnish material information. —If any person,
being a party to a combination, —
(a) makes a statement which is false in any material particular, or knowing it to be false; or
(b) omits to state any material particular knowing it to be material, such person shall be liable to a penalty
which shall not be less than rupees fifty lakh but which may extend to rupees one crore, as may be
determined by the Commission.
45. Penalty for offences in relation to furnishing of information. —
(1) Without prejudice to the provisions of section 44, if any person, who furnishes or is required to furnish
under this Act any particulars, documents or any information, —
(a) Makes any statement or furnishes any document which he knows or has reason to believe to be false in
any material particular; or
(b) Omits to state any material fact knowing it to be material; or
(c) Willfully alters, suppresses or destroys any document which is required to be furnished as aforesaid, the
Commission shall impose on such person a penalty which may extend to rupees ten lakh.
(2) Without prejudice to the provisions of sub-section (1), the Commission may also pass such other order as
it deems fit.
46. Power to impose lesser penalty.—The Commission may, if it is satisfied that any producer, seller,
distributor, trader or service provider included in any cartel, which is alleged to have violated section 3,
has made a full and true disclosure in respect of the alleged violations and such disclosure is vital, impose
upon such producer, seller, distributor, trader or service provider a lesser penalty as it may deem fit, than
leviable under this Act or the rules or the regulations: Provided that lesser penalty shall not be imposed by
the Commission in cases where proceedings for the violation of any of the provisions of this Act or the
rules or the regulations have been instituted or any investigation has been directed to be made under
section 26 before making of such disclosure.
Conclusion: The Indian Competition Act, 2002 is very much comprehensive and enacted to meet the
requirements of the economic growth and international economic developments relating to competition
laws. The legislation is in synchronization with other policies such as trade policy, FDI norms, FEMA etc,
which would ensure uniformity in overall competition policy.

UNIT: 3
COMPETITION AND CONSUMER LAWS
Part – B: Consumer Protection Act 1986
Introduction:
The Consumer Protection Act 1986 was passed by the Indian Parliament to protect consumer rights and to
redress consumer complaints and resolve consumer disputes.
Every individual is a consumer of goods and services and expects a fair deal against unfair exploitation.
This Consumer Protection Act applies to the whole of India except the State of Jammu and Kashmir and covers
all goods and services purchased by the consumers and to all sectors — private, public and cooperative. The
objective of the Act is “to provide for better protection of the interests of consumers and for that purpose to make
provisions for the establishment of Consumer Councils and other authorities for the settlement of consumer
disputes and for matters connected therewith”. It protects the consumers from unfair trading or unfair trade
practices.
It is important to note that the Indian Consumer Protection Act is social welfare legislation and has been designed
to avoid technicalities, procedural delays, procedural requirement, court fees and costs.
RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 28

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Rights of Consumer under the Act

The Consumer Protection Act, 1986 provides for the following rights to the consumers:
(a) Right to be heard and to be assured that consumers’ interests will receive due consideration at
appropriate forum;
(b) Right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers; and
(c) Right to consumer education.
The Consumer Protection (Amendment) Act 1993 adds the following consumer rights:
(a) The right to be assured wherever possible, access to a variety of goods and services at competitive
prices;
(e) The right to be informed about the quality, potency, purity, standard and price of goods (or services as
the case may be) so as to protect the consumers against unfair trade practices; and
(f) The right to be protected against the marketing of goods (and services) which are hazardous to life and
property.

Consumer Redressal Agencies

Three Tier Consumer Grievances Machinery under the Consumer Protection Act!
1. District Forum:
District forum consists of a president and two other members. The president can be a retired or
working judge of District Court. They are appointed by state government. The complaints for goods or
services worth Rs 20 lakhs or less can be filed in this agency.
The agency sends the goods for testing in laboratory if required and gives decisions on the basis of
facts and laboratory report. If the aggrieved party is not satisfied by the jurisdiction of the district forum
then they can file an appeal against the judgment in State Commission within 30 days by depositing Rs
25000 or 50% of the penalty amount whichever is less.
2. State Commission:
It consists of a president and two other members. The president must be a retired or working judge of high
court. They all are appointed by state government. The complaints for the goods worth more than Rs 20
lakhs and less than Rs 1 crore can be filed in State Commission on receiving complaint the State
commission contacts the party against whom the complaint is filed and sends the goods for testing in
laboratory if required.
3. National Commission:
The national commission consists of a president and four members one of whom shall be a woman. They
are appointed by Central Government. The complaint can be filed in National Commission if the value of
goods exceeds Rs 1 crore. On receiving the complaint the National Commission informs the party against
whom complaint is filed and sends the goods for testing if required and gives judgment?

Definition of Important Terms

Consumer" means any person who—
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised,
or under any system of deferred payment and includes any user of such goods other than the person who
buys such goods for consideration paid or promised or partly paid or partly promised, or under any system
of deferred payment when such use is made with the approval of such person, but does not include a person
who obtains such goods for resale or for any commercial purpose; or

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 29

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and
partly promised, or under any system of deferred payment and includes any beneficiary of such services
other than the person who 'hires or avails of the services for consideration paid or promised, or partly paid
and partly promised, or under any system of deferred payment, when such services are availed of with the
approval of the first mentioned person but does not include a person who avails of such services for any
commercial purposes;
"consumer dispute" means a dispute where the person against whom a complaint has been made, denies or
disputes the allegations contained in the complaint.
"defect" means any fault, imperfection or shortcoming in the quality, quantity, potency, purity or standard
which is required to be maintained by or under any law for the time being in force under any contract,
express or implied or as is claimed by the trader in any manner whatsoever in relation to any goods;
"deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of
performance which is required to be maintained by or under any law for the time being in force or has been
undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service;
- "unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or
supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive
practice including any of the following practices, namely; —
(i) Falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style
or model;
(ii) Falsely represents that the services are of a particular standard, quality or grade;
(iii) Falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
(iv) Represents that the goods or services have sponsorship, approval, performance, characteristics,
accessories, and uses or benefits which such goods or services do not have;
(v) Represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or
supplier does not have;
(vi) Makes a false or misleading representation concerning the need for, or the usefulness of, any goods or
services;
(vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a
product or of any goods that is not based on an adequate or proper test thereof;

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 30

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Chapter No: 04
ECONOMIC LAW
Part – A: - Intellectual Property Rights

The history of intellectual property is complex and fascinating. It begins in 500 BCE when
Sybaris, a Greek state, made it possible for citizens to obtain a one year patent for "any new
refinement in luxury." Patent, trademark and copyright laws have become more complicated
in the ensuing centuries but the intent remains the same. Countries establish intellectual
property laws to foster creativity and to make it possible for the inventor to reap the benefits
of their ingenuity.
It is not until medieval Europe that some major and well-known legislation was passed. The
first of these was the Statute of Monopolies. This British law was established in 1623.

INTELLECTUAL PROPERTY SYSTEM IN INDIA

In 1485 the first system of protection of intellectual property came in the form on Venetian
Ordinance historically. In England in 1623 it was followed by Statue of Monopolies, which
extended rights of patents for Technology Inventions. In 1760, patent laws were introduced
in The United States. Between 1880 and 1889 patent laws of most European countries were
developed. In the year 1856 in India Patent Act was introduced which remained in force for
more than 50 years which was later modified and revised and was called “The Indian Patents
and Designs Act, 1911”. A complete bill on patent rights was enacted after Independence in
the year 1970 and was called “The Patents Act, 1970”.
Specific statues protected only specific type of intellectual output; till very recently only four
forms were protected. The protection was in the form of grant of designs, patents, trademarks
and copyrights. In India, copyrights were regulated under the Copyright Act, 1957;
trademarks under Trade and Merchandise Marks Act 1958; patents under Patents Act, 1970;
and designs under Designs Act, 1911.
The establishment of WTO and India also being signatory to the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS), many new legislations were passed
for the protection of intellectual property rights to meet the obligations internationally. These
included the following: Designs Act, 1911 was changed by the Designs Act, 2000; Trade
Marks, called the Trade Mark Act, 1999; the Copyright Act, 1957 was revised number of
times, the latest is known as Copyright (Amendment) Act, 2012; and the recent amendments
made to the Patents Act, 1970 in 2005. Other than this, plant varieties and geographical
indications were also enacted in new legislations. These are called Geographical Indications
of Goods (Registration and Protection) Act, 1999, and Protection of Plant Varieties and
Farmers’ Rights Act, 2001 respectively.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 31

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Intellectual property rights have developed to a stature from where it plays an important role
in developing economy globally, over the last fifteen years. In 1990s, laws and regulations
were strengthened in this area by many countries unilaterally. In the multilateral level, there
was enhanced protection and enforcement of IPRs to the level of solemn international
commitment because of successful conclusion of the Agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS) in World Trade Organization. It is felt strongly that
under the competitive environment globally, stronger IPR protection raises the incentives for
innovations and raises returns to international transfer of technology.

Meaning: Intellectual property is a category of property that includes intangible creations

of the human intellect. Intellectual property encompasses two types of rights; industrial
property rights and copyright.
A right that is had by a person or by a company to have exclusive rights to use its own plans,
ideas, or other intangible assets without the worry of competition, at least for a specific
period of time. These rights can include copyrights, patents, trademarks, and trade secrets.

What is Intellectual Property Law?

Intellectual property law deals with the rules for securing and enforcing legal rights to
inventions, designs, and artistic works. Just as the law protects ownership of personal
property and real estate, so too does it protect the exclusive control of intangible assets. The
purpose of these laws is to give an incentive for people to develop creative works that benefit
society, by ensuring they can profit from their works without fear of misappropriation by
others.

Types of IPR
The four types of intellectual property include: Trade Secrets. Trademarks, Copyrights, and
Patents.
1. Trade secret: A trade secret is a formula, practice, process, design, instrument,
pattern, commercial method, or compilation of information not generally known or
reasonably ascertainable by others by which a business can obtain an economic
advantage over competitors or customers
2. Patents: A patent is a form of intellectual property. A patent gives its owner the right
to exclude others from making, using, selling, and importing an invention for a limited
period of time, usually twenty years. The patent rights are granted in exchange for an
enabling public disclosure of the invention.
Types of Patent:
1. Utility Patents
RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 32

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

According to the USPTO, 90 percent of all patents are utility patents, which protect the
utility or functional aspects of an invention. Though the definitions are broad, utility patents
cover machines, processes, methods, compositions and anything manufactured that has a
useful and specific function.
For purposes of clarity, the USPTO defines “useful” as anything that has a recognizable
benefit and use capability. A utility patent can also be issued as an improvement to any of the
above inventions.
When the patent is being reviewed, reviewers look for inventions and functions that are
novel, not obvious, and specific, though, the function of the patent does not have to be
immediately obvious to the user.
2. Design Patents
While a utility patent protects the utility or function of a product, a design patent protects its
aesthetic appearance. Design patents can be issued for the appearance, design, shape or
general ornamentation of an invention.
To qualify for a design patent, the patented product must be non-functional; otherwise, a
utility patent would be necessary to protect it. Like the utility patent, design patents are
granted for those appearances that are new, specific, and not obvious.
If a design patent is filed, the function or utility of the product is not protected, unless a
utility patent is also filed in order to protect both the function and appearance of the
invention. A design patent application usually includes a simple drawing and quick
description of the product’s appearance.
3. Plant Patents
Each year, less than 1,200 plant patent applications are filed with the USPTO. It’s
historically been an uncommon patent: in 1948, 18 years after plant patents had started, only
750 plant patents were issued, half of which were for different types of roses.
Plant patents are available for the discovery or invention of plants that are asexually
reproduced. They must be, like the other patents, novel, distinct and not obvious. They have
a 20-year lifespan that does not include maintenance fees.
Hybrids (though not first-generation), mutants, sports and other plan varieties can have plant
patents, which prevents others from growing and selling the plants. This type of patent was
created in order to protect the grower who found a new variety and would then be
subsequently put out of business once competitors learned how to produce the plant as well,
and usually, at a greater scale.

Objectives of IP Law

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 33

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

There are laws that protect owners of IP, mostly in the form of patents, copyrights, and
trademarks. However, violation of the terms of these protections can lead to
misappropriation and unfair competition.
IP serves the purpose of accelerating the application of the Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS). This agreement seeks to:
 Conclude agreements that seek to protect and enforce IP rights covering new and
upcoming technologies and new transmission and distribution methods.
 Eliminate or prevent discrimination in matters that affect the availability, scope,
acquisition, use, maintenance, and enforcement of IP rights.
 Enable U.S. citizens who need IP protection to gain fair and equitable market access
opportunities.
 Play an active role in developing the IP regime of the World Trade Organization
(WTO) to make sure that it is consistent with other U.S. objectives.
 Help the World Intellectual Property Organization (WIPO) build a cooperative
relationship with the WTO.
Steps involved in the patent process in India
The procedure for obtaining a patent in India starts even before a patent application is filed
with the patent office in India.
Step 1 – Decision on doing it yourself or engaging a professional
Before you proceed with the patent application process, you need to decide if you will be
using the assistance of a patent professional or undertaking the patent process yourself.
Considering the number of deadlines and the impact of these deadlines, it is highly
recommended that you engage a patent professional / firm who has years of experience in the
patent field.
If you decide to use the services of a professional, then make sure that you sign a Non-
Disclosure Agreement (NDA) with the patent professional / firm before disclosing the
invention to them. It is a good idea that all your disclosures with any third parties are done
confidentially and you sign NDA’s with each party.
Step 2 – Check the Patentability of the invention by performing a search for similar
technologies
Before filing a patent application in India or in any other country, the first step (optional but
recommended) in the patent registration process is to perform a detailed to determine the
chances of getting a patent. The search should ideally be performed for both patent and non-
patent references.
The advantage of a search is it provides a good idea of the merit of the invention and helps in
deciding if there are good chances of ultimately getting a patent granted. Furthermore, based
on the references discovered during the search, you have the option of fine-tuning your

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 34

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

patent application to ensure that you don’t end up filing a patent for something which already
existed.
Hence, a thorough patentability search is always advised but from a patenting process point
of view is totally optional.
If you are thinking of going international with your patent application, spending time and
money on the search will be well worth every Rupee.
Step 3 – Drafting a patent application (Provisional or Complete)
Once, you have made up your mind to go forward with the patent application process, the
next step is to prepare an Indian patent application (Form 1).
Each patent application has to be mandatorily accompanied by a patent specification (Form
2). Based on the state of the invention, you can either file a provisional patent application or
a complete patent application (also known as Non-provisional in some countries).
If the invention is still in the development mode and tests are underway, it is a good idea
to quickly file a provisional application to block the all-important filing date. Filing of the
provisional application gives you 12 months of time to test and finalize your invention and
file the complete application.
It is best to work with a patent agent with the expertise and experience in working and
prosecuting patent applications in your area of technology. Since it may not be very easy to
find quality patent professionals for your area of technology, you can seek free assistance
from experts at Zatalyst.com in helping you finding quality patent professionals and law
firms for each and every patent requirement you may have.
Step 4 – Filing the patent application in India
Patent filing in India can happen in the following scenarios:
o First filing in India – Once the patent application is drafted, the next step is to file the
patent application in India and secure the filing date. In case you are filing a
provisional application first, you need to file the complete application within 12
months from the provisional filing date.
o Foreign filing decision – Further, if you are interested in protecting your invention in
foreign jurisdictions, the maximum time allowed is 12 months from your first filing
date. Based on the countries you are interested in; you can opt for filing a convention
application in Paris convention members individually in each of the countries you is
interested in protecting your invention. Alternatively, you can use the Patent
Cooperation Treaty (PCT) system to reserve your right in 140 odd member countries.
Both the systems have their pros and cons and the decision of choosing one over other
changes based on your requirement and will be the basis of another post.
o Foreign applications entering India – In another scenario where the patent
application was first filed in a foreign jurisdiction and the patent applicant is
interested in filing a patent application in India under the Paris Convention route or
the PCT route, the time limit to enter India is 12 months and 31 months respectively.
RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 35

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Each application for a patent which is filed with the Indian patent office needs to be
accompanied by the forms provided below:
 Form 1 – Application for grant of a patent
 Form 2 – Provisional/Complete specification)
 Form 3 – Statement and undertaking regarding foreign application under section 8 (only
required if a corresponding patent application is filed in another country)
 Form 5 – Declaration as to inventor ship (only to be filed along with the complete
application)
 Form 26 – Form for authorization of a patent agent (only required if you are using a
patent agent to help you file the application)
 Form 28 – To be submitted by startup or small entity (only required if you are claiming
startup or small entity status)
 Priority documents – In case you are claiming priority from a foreign patent application
and entering India, you may be required to provide the priority document as well.
Step 5 – Publication of patent application
o When is it published? – Every patent application which is filed with the Indian patent
office is kept as a secret until the time it is published in the official patent journal.
Indian patent office will publish patent applications ordinarily after 18 months. This is
an automatic event and you need not make any request. However, if you wish to get
your application published earlier, you can make a request for early publication
(Form 9) and your application will ordinarily be published within 1 month of the
request.
o The advantage of publication – The date of publication is important as your privileges
and rights start from the date of publication, although you can’t enforce your rights by
way of any infringement proceedings until your patent is granted.
o When not published – It is also important to know that there are a few scenarios under
which a patent application may not be published and kept as a secret:
 Secrecy directions have been imposed under the patent act. Secrecy directions are
imposed if the invention falls in a category publication of which could be against
the interest of the nation.
 A complete application was not filed within 12 months from the date of filing of
the provisional application
 A request for withdrawal was made. Such a request has to be made at least 3
months prior to publication. So, for practical purposes, it is 15 months from the
date of priority in a standard patent application process.
Step 6 – Examination of the patent application
Every patent application which is filed for protection has to be substantively examined
before a patent is finally granted. The examination process is where your patent application

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 36

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

will finally be examined on merits of the invention as described and claimed in the patent
specification.
Request for Examination
The examination process, unlike publication, doesn’t happen automatically by way of filing
of the Indian patent application. The applicant has to specifically make a request for
examining their patent application (Form 18). Only when a Request for Examination (RFE)
is received, will the application be queued for examination. So, the earlier you make the RFE
request, the earlier your application may be examined by the examiner.
If you wish to fast track your patent application even further and jump the examination
queue, you can file a request for expedited examination (Form 18A). However, an expedited
examination is only available to the applicant if the applicant is either a startup; or the
applicant chose the Indian Patent Office as the International Search Authority (ISA) or
International Preliminary Examining Authority (IPEA) during their international application
(PCT application).
On the contrary, you may sometimes not want to get your application examined early for
strategic reasons. Reasons for deferring the request could include extending the patent-
pending life, waiting for funding, etc.
Examination process (Objections by examiner & responding to objections)
Once, the Request for Examination has been filed, it will eventually land up on the desk of
the examiner from the relevant technology background for examination. During the
examination process, the examiner will scrutinize the application to ensure that the
application is in accordance with the patent act and rules. The examiner also performs a
search to understand similar technologies to ascertain if the invention would satisfy the
patentability criteria.
Based on the review of the application, the examiner will issue an Examination Report to the
applicant, stating the grounds for objections. The first such examination report is called the
First Examination Report (FER).
Once, the FER is issued, the patent applicant needs to successfully overcome the objections
to receive a patent grant. The whole process may involve responding to examination reports,
appearing for hearing, etc. The total time needed to put an application in order for the grant
is 6 months (earlier 12 months) from the date on which the FER is issued to the applicant.
However, this 6 month period can be extended for a period of 3 months by the applicant by
filing a request for an extension of time (Form 4).
Step 6 – Final decision on grant of patent
Once, the patent application overcomes all the objections, the patent will be granted and
published in the patent gazette.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 37

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Step 7 – Renewal
After the patent has been granted, it has to be renewed every year by paying the renewal fee.
A patent in India can be renewed for a maximum period of 20 years from the patent filing
date.

RIGHTS OF PATENTEE OF LAPSED PATENT WHICH HAVE BEEN RESTORED

SECTION 62
 On the restoration of a patent, the rights of the patentee shall be subject to such
provision as may be prescribed by the Controller in his order and to such other
provisions as he thinks fit to impose for the protection of compensation of persons
who might have began to avail them off. Or the patented invention between the date
when the patent ceased to have effect and the date of publication of the application for
the restoration of patent Section 62(1),
 On the lapsing of the patent due to nonpayment of the renewal fees, the patentee loses
his right in the patent and the invention becomes public property. The provision
contained in section 62 of The Act is to safeguard the interests of those persons who
after ascertain from the Register of Patents that the patent has lapsed due to
nonpayment of the renewal fees and become public property had started commercially
using the invention

Trade Marks:
A trademark, trade mark, or trade-mark is a recognizable sign, design, or expression
which identifies products or services of a particular source from those of others, although
trademarks used to identify services are usually called service marks.
Importance of trade mark:
Trademark is essentially another word for brand or brand name. A trademark can be
any name, word, symbol, slogan, or device that serves to both identify and distinguish a
business or product from others in the market. Once you have trademarked your business, if
someone else makes an attempt to use something similar enough to confuse customers, you
have the right to legally protect yourself and stop the other party.

Copyright:
Copyright is a legal right, existing in many countries, that grants the creator of an original
work exclusive rights to determine whether, and under what conditions, this original work
may be used by others. This is usually only for a limited time.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 38

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Part – B: FEMA Act 1999

FEMA Act 1999
- The Foreign Exchange Management Act, 1999 (FEMA) has been in force from 2000, thus replacing
the old Foreign Exchange Regulation Act (FERA) 1973.
- The preamble to FEMA lays down the purpose of the Act is to consolidate and amend the law
relating to foreign exchange with the objective of facilitating external trade and payments and for
promoting the orderly development and maintenance of foreign exchange market in India.
- This act seeks to make offenses related to foreign exchange civil offenses.
- It extends to the whole of India.
- FEMA has brought a new management regime of Foreign Exchange consistent with the emerging
framework of the World Trade Organization (WTO).
- It had become the need of the hour since FERA had become incompatible with the pro-liberalization
policies of the Government of India.
- It is another matter that the enactment of FEMA also brought with it the Prevention of Money
Laundering Act 2002, which came into effect from 1st July 2005.
Main objectives of FEMA
To reduce restriction on Foreign Exchange
To increase the flow of foreign exchange in India, under this law you can bring the foreign exchange
to country without any legal barrier.
To help in maintaining exchange rate stability.
To conserve precious foreign exchange.
To prevent/regulate foreign business in India.
To consolidate and amend the law relating to foreign exchange with the object to facilitating external
trade and payments and for promoting the foreign exchange market in India.
The draconian provisions were dropped out in new enactment.
To facilitate external trade and payments.
To promote the orderly development and maintenance of foreign exchange market.

Current account and capital account transactions

o Under the FEMA regime, the thrust was on regulation and control of the scarce foreign exchange,
whereas under the FEMA, the emphasis is on the management of foreign exchange resources.
o Under FERA, it was safe to presume that any transaction in foreign exchange or with a non-resident was
prohibited unless it was generally or specifically permitted.
o FEMA has normally recognized the distinction between current account and capital account transactions.
Two golden rules or principles in FEMA are mentioned as follows:
1. All current account transactions are permitted unless otherwise prohibited.
2. All capital account transactions are prohibited unless otherwise permitted.
Penalties for contravention under FEMA;
- The penalty could be up to thrice the sum involved where amount is quantifiable
- If the amount is not quantifiable, penalty up to Rs. 2 lacs can be imposed.
- If contravention is of continuing nature, further penalty up to Rs. 5000 per day during which the
contravention continues can be imposed.
What are the details required to be filled in the application form?
Along with the application in the prescribed format, the applicant may also furnish the details as per
the Annexes - relating to Foreign Direct Investment, External Commercial Borrowings, Overseas
Direct Investment and Branch Office / Liaison Office, as applicable, (annexes available in the FED
Master Direction No. 18/2015-16 as mentioned in answer to Q.5 above) along with an undertaking
that they are not under investigation of any agency such as DOE, CBI, etc., a copy of the

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 39

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Memorandum of Association and latest audited balance sheet while applying for compounding of
contraventions under FEMA, 1999.

Important definitions
1. Authorized dealers: An authorized forex dealer is a type of financial institution that has
received authorization from a relevant regulatory body to act as a dealer involved with the trading
of foreign currencies. Dealing with authorized forex dealers ensures that your transactions are
being executed in a legal and just way.
2. Currency: Currency refers to any kind of money that is in circulation in an economy, used to
purchase goods and services. Easily invoice in your customer's currency and keep up with
exchange rates automatically with Debtor.
3. Foreign Currency: Foreign exchange, or forex, is the conversion of one country's currency into
another. In other words, a currency's value can be pegged to another country's currency, such as
the U.S. dollar, or even to a basket of currencies.
4. Foreign Exchange: The foreign exchange market is a global decentralized or over-the-counter
market for the trading of currencies. This market determines the foreign exchange rate. It includes
all aspects of buying, selling and exchanging currencies at current or determined prices.
5. Foreign security: foreign security means any security, in the form of shares, stocks, bonds,
debentures or any other instrument denominated or expressed in foreign currency and
includes securities expressed in foreign currency, but where redemption or any form of return such
as interest or dividends is payable in Indian currency.
Offences and penalties:
With effect from June 1, 2000, FEMA came to power with the objective of enabling all the external trades
and payments for promoting the orderly development and maintenance of foreign exchange market in
India. There is a paradigm shift from objective under FERA viz. controlling/conversation of foreign
exchange for utilization of economic development of the country. With this shift in objective in mind
there was also a shift in dealing with the issue relating to penal provisions.
Compliance with FEMA
Compliance means, compliance with the provisions of FEMA 1999, any rule, regulation, notification,
direction or order issued in exercise of the powers under this Act.
Three stages of compliance –
 Before undertaking the transaction;
 While undertaking the transaction; and
 After undertaking the transaction.
Powers to compound by
 Directorate of Enforcement
1. Sec.3(a) i.e. Hawala transactions.
 Reserve Bank of India
1. Sec.3 – Dealing in Foreign Exchange
2. Sec.4 – Holding of foreign currency
3. Sec.5 – Current account transactions
4. Sec.6 – Capital account transactions
5. Sec.7 – Export of goods and services
6. Sec.8 – Realization and repatriation of FE
7. Sec.9 – Exemption from realization & repatriation
8. Sec.10.6 – Miss-utilization of FE

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 40

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

Penalties under section 13 of the Foreign Exchange Management Act, 1999

 If any person contravenes any provision of this Act, or contravenes any rule, regulation, notification,
direction or order issued in exercise of the powers under this Act, or contravenes any condit ion subject to
which an authorization is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up
to thrice the sum involved in such contravention which has quantifiable amount or up to 2 lakhs which
includes not quantifiable amount and where such contravention is a continuing one, further penalty which
may extend to five thousand rupees for every day after the first day during which the contravention
continues.
 If any person contravenes any provision of this Act or contravenes any rule, regulation, notification,
direction or order issued in exercise of the powers under this Act, or contravenes any condit ion subject to
which an authorization is issued by the Reserve Bank of India, he shall, upon adjudication, be liable to a
penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two
lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further
penalty which may extend to five thousand rupees for every day after the first day during which the
contravention continues.”
 Any Adjudicating Authority adjudging any contravention under sub-section (1), may, if he thinks fit in
addition to any penalty which he may impose for such contravention direct that any money, safety or any
other money or property in respect of which the contravention has taken place shall be confiscated to the
Central Government and further direct that the foreign exchange holdings, if any, of the persons committing
the contraventions or any part thereof, shall be brought back into India or shall be retained outside India in
accordance with the directions made in this behalf.
 Explanation for this subsection, “property” in respect of which contravention has taken place, shall
include—
1. Deposits in a bank, where the said property is converted into such deposits;
2. Indian currency, where the said property is converted into that currency; and
3. Any other property which has resulted out of the conversion of that property.

Following are the main features of Foreign Exchange

Management Act, 1999:
1. FEMA gives power to the central government for imposing restriction on activities like making payments
to a person situated outside of the country or receiving money through them. Apart from this, foreign
exchange as well as foreign security deals is also restricted by FEMA.

2. Transactions revolving around foreign security or foreign exchange as well as payments made from any
foreign country to India cannot be made without specific or general permission of FEMA. All transactions
must be carried out via an individual who has received authorization for the same.

3. The central government can restrict an authorized individual to carry out foreign exchange deals within
the current account, on the basis of general interest of the public.
4. Even though drawing or selling of foreign exchange is carried out via an authorized individual, the FEMA
act empowers the Reserve Bank of India to place a number of restrictions on the transactions of the capital
account.

5. Under the act, the Indian residents have the permission to conduct foreign exchange and foreign security
transactions or the right to hold or own immovable property in a foreign country in case the security,
property or currency was acquired or owned when the individual was based outside of the country, or when
they inherit the property from another individual staying outside the country.

6. The act is not applicable on the resident (of an Indian citizen) based outside the country

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 41

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

UNIT: 5
ECONOMIC AND ENVIRONMENTAL LAW
Part – B: Environment Protection Act 1986

Introduction
The Environment (Protection) Act was enacted in the year 1986. It was enacted with the main objective to
provide the protection and improvement of environment and for matters connected therewith. The Act is one
of the most comprehensive legislations with pretext to protection and improvement of environment.
The Constitution of India also provides for the protection of the environment. Article 48A of the
Constitution specifies that the State shall endeavor to protect and improve the environment and to safeguard
the forests and wildlife of the country. Article 51 A further provides that every citizen shall protect the
environment.

Objectives of the Act

As mentioned earlier, the main objective of the Act was to provide the protection and improvement of
environment and for matters connected therewith. Other objectives of implementation of the EPA are:
To enact a general law on the areas of environmental protection which were left uncovered by existing
laws? The existing laws were more specific in nature and concentrated on a more specific type of
pollution and specific categories of hazardous substances rather than on general problems that chiefly
caused major environmental hazards.
To co-ordinate activities of the various regulatory agencies under the existing laws
To provide for the creation of an authority or authorities for environmental protection
To provide a deterrent punishment to those who endanger human environment, safety and health.
History of Act
This act was enacted by the Parliament of India in 1986. As the introduction says, "An Act to provide for the
protection and improvement of environment and for matters connected there with: WHEREAS the decisions
were taken at the United Nations Conference on the Human Environment held at Stockholm in June, 1972,
in which India participated, to take appropriate steps for the protection and improvement of human
environment. AND WHEREAS it is considered necessary further to implement the decisions aforesaid in so
far as they relate to the protection and improvement of environment and the prevention of hazards to human
beings, other living creatures, plants and property".[2] This was due to Bhopal Gas Tragedy which was
considered as the worst industrial tragedy in India.

SHORT TITLE, EXTEND AND COMMENCEMENT

(1) This Act may be called the Environment (Protection) Act, 1986.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification in the Official
Gazette, appoint and different dates may be appointed for different provisions of this Act and for different
areas.1

2. DEFINITIONS of Important Terms

(a) "environment" includes water, air and land and the inter- relationship which exists among and between
water, air and land, and human beings, other living creatures, plants, micro-organism and property;

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 42

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

(b) "environmental pollutant" means any solid, liquid or gaseous substance present in such concentration
as may be, or tend to be, injurious to environment;
(c) "environmental pollution" means the presence in the environment of any environmental pollutant;
(d) "handling", in relation to any substance, means the manufacture, processing, treatment, package,
storage, transportation, use, collection, destruction, conversion, offering for sale, transfer or the like of such
substance;
(e) "hazardous substance" means any substance or preparation which, by reason of its chemical or physio-
chemical properties or handling, is liable to cause harm to human beings, other living creatures, plant,
micro-organism, property or the environment;
(f) "occupier", in relation to any factory or premises, means a person who has, control over the affairs of the
factory or the premises and includes in relation to any substance, the person in possession of the substance;
(g) "prescribed" means prescribed by rules made under this Act.
Environmental Pollution and Types of pollution
Pollution is the introduction of contaminants into the natural environment that cause adverse change.
Pollution can take the form of chemical substances or energy, such as noise, heat or light. Pollutants, the
components of pollution, can be either foreign substances/energies or naturally occurring contaminants.
Air pollution
Air pollution is the introduction of harmful substances in the air that results in detrimental impacts to the
environmental and humanity. Air pollution simply makes the air unclean or contaminated. It occurs when
harmful substances such as foreign gases, odours, dust, or fumes are released in the air at levels that can
harm the comfort or health of animals and humans, or even destroy plant life.
Examples of air pollutants (substances that pollute the air) include hydrocarbons, organic compounds, dust
particles, carbon monoxide, sulfur oxides, and nitrogen oxides. Air pollution results from both human and
natural activities. Emissions from power plants present a perfect example of human activities contributing to
air pollution whereas volcanic eruptions and forest fires are some of the natural aspects.
Water pollution
Water pollution is the act of contaminating water bodies including rivers, oceans, lakes, streams, aquifers,
and groundwater. It occurs when foreign harmful materials like chemicals, waste matter, or contaminated
substances are directly or indirectly discharged into water bodies.
Land Pollution
Land pollution is the destruction or decline in quality of the earth’s land surfaces in term of use, landscape
and ability to support life forms. Many times, it is directly and indirectly caused by human activities and
abuse of land resources.
Land pollution takes place when waste and garbage is not disposed off in the right manner thus, introducing
toxins and chemicals on land. It also occurs when people dump chemical products to soils in the form of
herbicides, fertilizers, pesticides, or any other form of the consumer by-products. Mineral exploitation
equally leads to the decline in quality of the earth’s land surfaces.
As such, it has grave consequences for human health, plant life, and soil quality. Acid rain, construction
sites, solid waste, mineral exploitation, and agricultural chemicals are the primary causes of land pollution.
Soil Pollution
Soil pollution takes place when chemical pollutants contaminate the soil or degraded by acts such as mining,
clearance of vegetation cover, or topsoil erosion. Usually, it happens when human activities directly or
indirectly introduce destructive chemicals, substances, or objects into the soil in a way that causes damage to
the immediate earthly environment.

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 43

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

As a consequence, soil losses its value of natural minerals and nutrients compositions. Soil degradation also
contributes to soil pollution, and it occurs as a result of over-grazing, over-farming, or mining activities. The
notable causes of soil pollution include agricultural farming activities, waste dumping on land, industrial
activities, mining, and acid rain.
Noise Pollution
Noise pollution is mostly an undesirable sound or sound which generates horrible discomfort on the ears.
Noise pollution is defined as unpleasant and undesirable sound levels that cause serious discomfort to all
living things. It is measured in decibels (dB).
In the contemporary society, noise has become a permanent aspect owing to the daily activities such as
transportation, industrial manufacturing, and technology. In contrast to the other types of pollution, noise
pollution lacks the element of accumulation in the environment.
It merely occurs when sounds waves of intense pressure reach the human ears and may even affect the body
muscles due to sound vibrations. Noise pollution similarly affects marine and wildlife animals in the same
manner it affects humans, and can even cause their death.
Thermal Pollution
Thermal pollution occurs when water bodies are degraded in terms of altering their temperatures.
Commonly, it happens when people or industries undertake activities that suddenly decrease or increase the
temperature of a natural water body which may include lakes, rivers, oceans or ponds.
In the current era, thermal pollution is a huge menace and is mainly influenced by power plants and
industrial manufacturers that use water as a coolant.
Therefore, thermal pollution is one aspect of the wider subject of water pollution. The alterations of natural
water resource temperatures can have dire consequences on aquatic life and the local ecosystems.
Industrial Pollution
Industrial pollution is the release of wastes and pollutants generated by industrial activities into the natural
environment including air, water, and land. The pollutants and wastes from industries encompass air
emissions, deposit of used water into water resources, landfill disposal, and injection of toxic materials
underground. Industrial pollution can adversely damage plants, kill animals, cause ecosystem imbalance,
and degrade the quality of life.
They release smoke, effluents, material wastes, toxic by-products, contaminated residues, and chemical
consumer products that eventually end up in the environment thereby causing pollution.
Light Pollution
Light pollution occurs due to lengthened and excessive use of artificial lights, such that it results in the
brightening of the skies at night. As a consequence, it upsets the activities and natural cycles of wildlife and
also affects the welfare of humans. Whenever artificial lights are used where they are not intended, it causes
a nuisance.
Light pollution is also referred to as luminous pollution or photo pollution. The types of light pollution
include glare, light trespass, and sky glow.

POWER OF CENTRAL GOVERNMENT TO TAKE MEASURES TO PROTECT AND IMPROVE

ENVIRONMENT
(1) Subject to the provisions of this Act, the Central Government shall have the power to take all such
measures as it deems necessary or expedient for the purpose of protecting and improving the quality of the
environment and preventing controlling and abating environmental pollution.
(2) In particular, and without prejudice to the generality of the provisions of sub-section (1), such measures
may include measures with respect to all or any of the following matters, namely: --
(i) co-ordination of actions by the State Governments, officers and other authorities--
RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 44

Follow Us on Instagram for Regular Updates @bustudymate

 File Downlaod From Bustudymate.in

BUSINESS REGULATIONS

(a) under this Act, or the rules made there under, or

(b) under any other law for the time being in force which is relatable to the objects of this Act;
(ii) planning and execution of a nation-wide programme for the prevention, control and abatement of
environmental pollution;
(iii) laying down standards for the quality of environment in its various aspects;
(iv) laying down standards for emission or discharge of environmental pollutants from various sources
whatsoever:
Provided that different standards for emission or discharge may be laid down under this clause from
different sources having regard to the quality or composition of the emission or discharge of environmental
pollutants from such sources;
(v) restriction of areas in which any industries, operations or processes or class of industries, operations or
processes shall not be carried out or shall be carried out subject to certain safeguards;
(vi) laying down procedures and safeguards for the prevention of accidents which may cause environmental
pollution and remedial measures for such accidents;
(vii) laying down procedures and safeguards for the handling of hazardous substances;
(viii) examination of such manufacturing processes, materials and substances as are likely to cause
environmental pollution;
(ix) carrying out and sponsoring investigations and research relating to problems of environmental pollution;
(x) inspection of any premises, plant, equipment, machinery, manufacturing or other processes, materials or
substances and giving, by order, of such directions to such authorities, officers or persons as it may consider
necessary to take steps for the prevention, control and abatement of environmental pollution;
(xi) establishment or recognition of environmental laboratories and institutes to carry out the functions entrusted
to such environmental laboratories and institutes under this Act;
(xii) collection and dissemination of information in respect of matters relating to environmental pollution;
(xiii) preparation of manuals, codes or guides relating to the prevention, control and abatement of environmental
pollution;

Global Warming:
Global warming is the gradual rise in the earth's temperature caused by high levels of carbon dioxide and
other gases in the atmosphere.

Causes for global warming:

Global warming occurs when carbon dioxide (CO2) and other air pollutants and greenhouse gases collect in
the atmosphere and absorb sunlight and solar radiation that have bounced off the earth’s surface. Normally,
this radiation would escape into space—but these pollutants, which can last for years to centuries in the
atmosphere, trap the heat and cause the planet to get hotter. That's what's known as the greenhouse effect.

*************************************************************************

RASHMI K A. Asst. Professor, Dept of Commerce, JJDC Page 45

Follow Us on Instagram for Regular Updates @bustudymate