BUSINESS LAW ANSWERS PDF BY VINAY 5K

UNIT 1. INDIAN CONTRACT ACT

1 . Define contract . explain essentials of a valid contract ?

Contract : a contract is an agreement between two or more parties which will be administered by law, as per sec 2(h)
of the Indian contract act “an agreement enforceable by law is a contract ” >>> contract = agreement +
enforceability at law.. > Hence contract is an agreement whose objective is to establish a legal obligation.

Essential elements of a valid contract : An agreement in order to become a contract , must have the following
essentials. All the agreements are not contracts, only the agreement which is enforceable at law is contract. Thus all
contracts are agreements but all the agreements are not contracts.

1.Offer and acceptance: The contract in order to become an agreement must be made between two parties, one
should make an offer and the other should accept that offer. The offer and acceptance must be in lawfull nature
which means that they should fullfill the requirements of the contract.

Ex: laxmi tells to Maheshwari that she wants to sell jewellary to her for 500. Here laxmi provides offer to Maheshwari
and if Maheshwari accepts laxmi offer then it becomes acceptance.

2.intention to create a legal relationship: The parties of agreement should have an intention to establish a legal
relationship between them. If such intention does not exist then a contract cannot be found.

Ex: karan wants to sell his car to arjun for 1,00,000 and if he agrees to buy it at the same price,then it becomes a
contract because it creates a legal relationship between them.

3.Lawfull consideration: An agreement can be enforceable by law only when it has consideration. It is defined as the
price paid by one party to other, an agreement is legally enforced only when both parties provide something and
receive something in return.

Ex. Ramu agrees to sell his computer to raju for 60,000. Thus the consideration for ramu is promise to sell his
computer. While raju promises to pay 60,000 as consideration. This can be called as lawfull consideration.

4.Capacity of parties: The parties should be capable enough to enter into a valid contract. A person is considered to
be competant to a contract if he/she has : a) the age of of major. b) a sound of mind. c) person disqualified by law.

5.Free and genuine consent: in order to make a valid contract there should be free consent from parties involved in
an agreement should be induced with: i) correcion ii) undue influence iii) fraud iv) misrepresentation.

Ex. Yash forces Rahul to enter into a contract on the gun point of pistol. It is not a valid contract as consent of raju is
not free and genuine.

6. Lawfull object: A contract is said to be valid, only if the object of agreement is lawfull, the object should not be
illegal, fraudulent, immoral or opposed to public policy.

Ex. Ramesh promises suresh to pay 5 lakhs if he kills arya. This is not a valid contract as agreement is illegal because
its object is unlawfull.

7. Writing amd registration: as per the Indian contract act a contract can be either oral or in written from. But in few
special circumstances it emphasizes on the point that an agreement in order to be valid, should be in writing and
should be registered. According to transfer of property act 1882, an agreement for a sale of immovable property
should be in writing and registered before enforcing it legally.

Ex. Saanvi wants to sell her property for 10 Lakhs and radha is interested to purchase it then, the contract should be
in writing and must be registered with the signatures of them.
8.Not declared as void : the agreement should not be declared directly void law enforced in a country for instance
and agreement in restraint of trade and an agreement by way of wages have been expressively declared as void.

Ex. Pranav promise to close his business against the promise of Nikhil to pay him 10 lakhs is a void agreement
because it is restraint of trade.

9.certainity / possibility of performance certainity: acc to sec 29 of the contract act “agreements, the meaning of
which is not certain or capable of being made certain are void ”. the agreement should be clear and certain in order
to form a valid contract, if in case agreements are vague/uncertain then it would be difficult to form the contract and
hence it cannot be executed.

Ex. Prem promised to sell 30 bags to riya, it is not clear which bags prem promised to sell. Thus the agreement is void
because the terms are not clear.

10.Legal formalities: an agreement to be enforceable by law should comply with all legal formalities such as
registration stamps wherever it is necessary. The contract may be oral or in written form agreement should satisfy all
legal formalities mentioned in the contract act .
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2.Define offer, what are the esssentials elements of valid offer ? explain acceptance ?

Offer: An offer is a proposal made by one party to the other party in order to establish a legal agreement between
them according to section 2(a). the person is said to make a proposal when he “signifies to another his willingness to
do or abstrain from doing anything with a view of obtaining the assent of other its realization”.

Essentials of valid offer :

1. offer should be as per law and should have the capability of being accepted and establishing a legal relationship :
>According to law an offer which does not lead to the establishment of legal relationship is not valid offer. The offers
of a social and domestic nature do not constitute legal relationship. Legal relationships are generally established in
business transactions. In these transactions, if one party is responsible for the breach of contract, then the other
party can sue against the party responsible for breaching.

2. An offer should be definite, unambiguous and certain is not loose and vague :
>if the terms of an offer are not clear, specific and certain, then it cannot constitute a valid offer and hence cannot
create a contractual relationship. Hence an agreement which is to be agreed in future cannot constitute a contract as
terms of agreement are not yet decided because of which it is uncertain take place.
For example : ‘P’ purchased a cow from ‘Q’ & is promised to buy one more if the first cow gives good quantity of
milk,but later’P’ denied to buy one more cow. Here Q cannot enforce the agreement as it was loose,not clear & vague

3.An offer may be differ from expressing of intention and an announcement :

>when a person expresses that he has an intention to do something then the second person cannot take an action
againist first person. This expression indicates that an offer will be made or invited in future but not at present.
For example : A college conducts a scholarship test and announces that the first five merit students will be given
scholarship. Here the student who got 6th place in merit list cannot sue against the college, for not giving him
scholarship. In this case the expression of intension to write an exam does not establish a blinding contract on these
who have appeared in it. Hence the 6th student cannot receive scholarship.

4. An invitation to make an offer or do business :

>An offer should be differ from an “invitation to receive an offer”. In this case, the person inviting will not make any
offer and instead of it invites the other party to make offer.in this case the person inviting will not make any offer &
instead of it invites the other person or party to make an offer, they are not considered as per law ,as they do not
involve in any legal obligation
for example : when a shopkeeper demonstrates some of the goods available in his window then it does not mean
that he is making an offer. But instead of this it means informing an inviting public to make an offer by buying goods.
5.An offer should be communicated :
>the offer cannot be accepted if it is not communicated by an oferee to the offerer. Anything which is done in the
ignorance of offer cannot be accepted, as there is no conseous of will. Finally an offer can be effective only when it is
communicated. (write example)

6.Offer should be made with a perspective to receive acceptance :

>The offer should be made with intension of gaining other party acceptance & not just for revealing the intention of
making offer. ( write example )

7.Offer should not include the term non-compliance :

>A person cannot declare that the offer is assumed to be accepted, if acceptance is not communicated within time.

8.A statement of price is not an offer :

>The statement of price cannot make an offer to sell as not offer cannot be completed without complete info.
For example : P asks Q are u ready to buy my house ? Q replies I will buy it for 10 lakhs P also agrees to sell the house
but here a contract can b made only if all the conditions were told no offer can be made without complete info….

9. An offer should follow the terms and conditions :

> Before making an offer the offerer should reveal the terms with the offer and the offeree should accept all the
terms and conditions if he wants to make an offer, hence a cannot contract exist without accepting terms and
conditions

10. Two identical cross offers cannot make a contract :

>if two parties make similar offers to each other then the offers are reffered to as cross offers. These offers does not
form an acceptance if ones offer by the other there is no mutual agreement.

Acceptance : 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 an agreement. An acceptance must be communicated to the offerer in
order to complete the acceptance mental acceptance is not acceptance, when acceptance is made by words spoken /
written it is an expressed acceptance. If it is accepted by conduct it is implied acceptance, an offer can be accepted
only by the person to whom it is made it means that the person to whom the offer is made can alone accept it. It
cannot be accepted by another without consent of the person making it.
Essentials of a valid acceptance :-
>acceptance must be absolute & unconditional >acceptance cannot implied from silence
>acceptance must be communicated to offerer >communication & revocation of offer
>acceptance must be made within reasonable time
>acceptor must be aware of proposal at the time of offer
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3. What do u mean by discharge of contract ? explain modes of discharge of contract ?

Discharge of contract : discharge of contract refers to ending up of the contractual relationship that exists between
two parties. When the rights and obligations of a contract is terminated then contract is said to be discharged and its
operations tends to discontinue.
Modes of discharge of contract : 1) By performance 2) By agreement/consent 3) By impossibility of performance
4) By lapse of time 5) By operation of law 6) By breach of contract
1.Performance : discharge by performance occurs when both the parties to the contract accomplishes their
obligations that are developed under the contract in specific time & manner prescribed. Performance of a contract is
one of the common way of its discharge it can be > i) actual performance ii) attempted performance
i) Actual performance : when both the parties perform the obligations the contract is discharged. The party who is
bound ii) Attempted performance : The party who is bound to perform a promise under a contract is ready &
willing to perform it at the proper time & place. The willingness of the party is known as attempted performance’’.

2.Agreement / consent : the rule of law states that procedures of destroying a thing is same as procedure of
creating/formatting it since a contract is formed by agreement, discharge can be either expressed or implied in
nature. The different cases of discharge of contract by agreement are as follows ,

i) Novation ( section 62 ) – novation occurs when a new contract is being substituted for an already present contract
among the same parties. The new contract can be either between same old parties or between differ parties. The
consideration for a new contract is same as that of old contract. Novation must occur before the time of performing
the original contract gets expired .
ii) Alteration ( section 62 ) – when one or more of conditions of contract are modified by mutual consent of parties is
know as alteration of a contract in this case old contract is discharged
iii) Remission ( section 63 ) – when fulfillment of the promise is accepted even though if the object of the contract is
less it is known as remission .

3. Impossibility of performance : if the agreement involve terms which are impossible to perform then the agreement
is void this is based on two rules ,
: a)law does not consider what is impossible and b) impossible things do not create any legal obligation.
According to section 56 the impossibility of performance is of two types ,
>>> a contract is discharged if its performance becomes impossible however it is also divided into two types
*initial impossibility *subsequent impossibility [ write some matter about it ]

4.Lapse of time : a contract must be performed within a specific time period known as period of limitation. If contract
is not performed & no action is taken by the promise during the limitation period, he is denied for his remedy as it
becomes time barred and hence irrecoverable.

5. Operation of law : a contract can also be discharged by the will of the parties i.e by operation of law, discharge by
operation of law involves the following . > by death > by insolvency > by unauthorized alternation of the terms of
the written agreement > by rights and liabilities vested in same person
*a contract may be discharged independently of wishes of parties
*it can be discharged by operation of law.
*death of the promisor results in termination of contract in cases involving personal skill or ability
*in other cases the rights and the liabilities of the deceased person pass on to the legal representatives
*unauthorized material alteration – a material made in a written document of a contract by one party without the
consent of the other will make the whole contract void .

6. Breach of contract : when a obligation involved in a contract is broken then it is termed as breach of the contract if
a party to a contract does not fulfill his contractual obligation and make the performance of contract impossible then
he is liable for the damages incurred by the injured party .
4.Define consideration, explain essentials of valid consideration ?
consideration :- Consideration is the foundation of every contract. The law enforces only those promises which are
made for consideration, where one party promises to do something, it must get something in return. This ‘something
in return ‘ is called as consideration. Sec.2(d) of the Indian contract act defines consideration as >>> when at the
desire of the promisor the promise or any other person has done or abstained from doing, something returning for
the sake of promise is called as consideration .
Consideration is something of value which the promiser has given or gives promises to give in return for the promise
can be a consideration for another promise. A single consideration may support more than one promise.
Essentials of a valid consideration :
>it must move at the desire of promisor : the act must have been at the desire of promisor. It follows that any act
performed at the desire of a third party cannot be a consideration, the desire of the promisor may be express or
implied, a gratuitous service rendered by promise is not a consideration enforceable at law.
>it must move from the promise or any other person : as long as there is a consideration for a promise, it is
immaterial who has given it, it may move from the promise, or if the promisor has no objection, from any other
person
>Consideration must be past, present, future : the words has done or abstained from doing , or does abstained from
doing, this indicates that consideration can be in past, present / future.
*past consideration * present cons * future consideration [ write some matter ]
>it need not be adequate : it is nowhere laid down that consideration should be adequate to the promise.
Adequency is for the parties to decide at the time of making the agreement where in an agreement the consent of
the promisor has been freely given and inadequancy of the consideration will not render it unenforaceable.
>consideration must be real : consideration need not be adequate yet it must be real , a promise to do that which a
person by law bound to do does not amount to consideration a promise not to sue for a reasonable time is a good
consideration
>consideration must be lawfull : an agreement is void if it is based on unlaw full consideration the consideration of an
agreement is lawfull unless – it is forbidden by law, it involves in fraudulent, implies injury to person or property.

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4. All contracts are agreements but all agreements are not contracts ? discuss the statement ?
:Yes, the above statement is correct that ‘’All contracts are agreements, but all agreements are not contracts” The
justification for this statement is as follows ,
Definition of contract – A contract is an agreement between two or more parties which will be enforceable by law.
As per sec 2(h) of the Indian contract act. “ an agreement enforceable by law is a contract”. Hence contract is an
agreement, whose objective is to establish a legal obligation, duty enforceable by law.
* An agreement should be enforceable by law
* it should poses all the essentials of a valid contract as per sec. 10 of the Indian contract act 1872
* All agreements are contracts if they are made by the free consent of the parties, competent to contract, for a
lawful consideration and with a lawful object and are not expressly declared to be void “.
Agreements which are not enforceable by law are not contracts, It includes -
~ Agreements of social nature
~ Agreements of domestic nature
~ Agreements of religious and moral nature
i) Agreements of social nature – These agreements are entered between the parties having some social relationship
it does not create any legal obligation between parties thus cannot be enforced in the court of law hence social
agreements are not contracts.
Case example – Mr. X in Chennai writes to Mr. Y a frnd in hyd “if you come to Chennai u can stay with me “ on the
receipt of this letter Mr. Y visits Chennai but mr. X refuses to provide accomodation. Can Mr. Y file a suit against X ?
ii) Agreements of Domestic nature – agreements of domestic nature are not contracts .
ex ; promise made by husband to gift jewelry to his wife is not enforceable in the court of law .
iii) Agreements of religious & moral nature -
- Agreements of moral nature : agreements which have been expressly declared void such as agreements in retraint
of trade, marriage, wagering agreements etc…
Ex : A and B bet as to whether it would rain on a particular day or not, A promises to pay 500 to B if it rains and B
promises an equal amount to A if it did not rain.
~ Agreements of religious nature : Religious agreements are not enforceable in the court of law.
Ex : Deepak makes a promise to the protest to the priest of a temple that he will get the walls of the temple painted
during the ram Navami festival when festival approached Deepak failed to get walls painted. Can priest of temple file
a case against Deepak .
Conclusion – The law of the contract is law of those agreements which create legal obligation and obligation which
have their source in agreement . Hence if the agreement does not hold the capablility to establish a duty enforceable
by law then it cannot form a contract. Therefore the term agreement is wider term than a contract , All contracts are
agreements but all agreements are not contracts, the agreements which are social, moral or religious in nature
cannot become a contract as they cannot be enforced by the law .
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5. Describe in brief about the objectives of Information technology act , 2000 .

Information technology act has opened a new vista for business world as transmission of the information,
advertising, marketing, retailing, ordering, other activities can be undertaken through internet, thus cyber law is the
field of law dealing with computer & the internet including such issues as IPR, freedom of expression & free access to
the information. The passage of the it act in October 2000 gave a legal sanction that to efforts to spread e –
commerce in the country that will be useful to everyone.
Objectives :-
- to grant legal recognition to transactions carried out by means of electronic commerce
- to give legal recognition to digital signature
- to facilitate electronic filling of the documents with govt departments
- to facilitate electronic storage of the data
- to set up licensing, monitoring and certifying authorities to oversee issues like jurisdiction, origin, privacy protection
and computer crimes
- to facilitate and give legal sanction to electronic and transfers between banks and also financial transactions
- to give legal recognition for keeping books of the account by bankers in electronic form
- to support the admission of computer evidence in courts proceedings
> Thus, the objectives of the act include enabling or facilitating the use of e- commerce and
providing equal treatment to users of paper – based documentation & to users of computer based information. The
aim of the act is to promote efficient delivery of the government services by means of the reliable electronic records.
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