Legal Aspects2

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Legal aspects of business


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Legal aspects are an indispensable part of

a successful business environment in any

country.

They reflect the policy framework and themind set of the Governmental structure of

that country.


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Law

Rules to conduct enforced by the State to

maintain peace and order in the society


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The body of rules whether proceeding

from formal enactment or from custom,

which a particular State or communityrecognizes as binding on its subjects or

members.

- Oxford English Dictionary


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Business Law

It relates to industry, trade and commerce.

It ensures that every company is

functioning as per the statutory framework

of the country


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Branch of law which prescribes a set of rules forthe governance of certain transactions and

relations between:

I. Business persons themselvesII. Business persons & their customers, dealers,

suppliers, etc.

III. Business persons & State


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Indian Contract Act, 1872


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Contract

According to Sec. 2(h) contract is :

An agreement enforceable by law.


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Agreement

Offer Acceptance


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Sec. 2 (e) defines agreement as :

Every promises and every set of promises

forming consideration for each other.

According to sec 2(b),

When the person to whom the proposal is made

signifies his assent thereto, the proposal is saidto be accepted. A proposal when accepted

becomes a promise.


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Sections 1 - 75

Preliminary (section 1 to 2)

Interpretation clause


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The communication, acceptance and revocation

of proposals (section 39)

Communication, acceptance & revocation of

proposals

Communication when complete Revocation of proposal & acceptances

Revocation how made

Acceptance must be absolute

Acceptance by performing conditions or receivingconsideration

Promises, express & implied

What agreements are contracts?


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Contracts, voidable contracts and void

agreements. (10 -30)

Consequences of breach of contract (section 73

75)


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Essential Elements of

Contract Offer & acceptance

Intention to create legal relationship

Lawful consideration

Capacity of parties

competancy

Free or genuine consent

Lawful object

Agreement not declared void

Certainty and possibility of

performance


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Offer & Acceptance

Two parties

Must be communicated & in

prescribed mode

Offer must be definite

Acceptance must be absolute and

unconditional


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Intention to create legal

relationship no such intention, to create legal

relationship, no contract between the

parties.


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Lawful consideration

Consideration

Advantage or benefitfrom one party to another.

Something in return


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Capacity to the parties

Age of majority

Sound mind

Not disqualified from contracting by

any law


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Free and Genuine Consent

Same mind of the partiesagreement forthe subject-matter in the same sense and at

the same time

Absence of free consentcoercion, undueinfluence, fraud, misrepresentation, etc.


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Lawful object

Object must not be

a)Illegal,

b) Immoral

c) Opposed


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Agreement not declared void

Must be enforceable by law


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Certainty and possibility of

performance Agreement or performance must be

certain, not indefinite.


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Legal formalities

Must be oral or written

Other legal formalities regarding the

agreement.


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Classification

On the basis of

1. Validity

2. Formation

3. Performance


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Classification according to Validity

Voidable contract

Void agreement and void contract

Void agreement

Void contract

Illegal agreement

Unenforceable


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According to formation

Express contract

Implied contract

Quasi contract

E-commerce contract


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According to performance

Executed contract

Executory contract

Unilateral or one sided contract

Bilateral


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Offer & Acceptance

A person said to have made a proposal ,when he signifies to another his

willingness to do or not to abstain form

doing anything, with a view to obtainingthe assent of that other to such act or

abstinence.

- Sec 2 (a)


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Types of offer

Express offer

Implied offer

Specific offer

General offer

Cross offer

Standing or continuing offer


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Legal rules to offer

Give rise to legal relationship

Certain or unambiguous

Must be distinguished from a declaration

of intention & an announcement

Distinguished from an invitation to make

an offer or do business

Must be communicated

Must be made with a view to obtaining

the assent


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Should not contain a term the non-compliance of which may be assumed

to amount to acceptance

A statement of price is not an offer


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Acceptance

When the person to whom the offer

is made signifies his assent thereto,

the offer is said to be accepted.

Sec 2(b)


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Legal rules as to acceptance

Must be absolute and unqualified

Must be communicated to the offeror

Must be according to the mode prescribed

or usual and reasonable mode

Must be given within a reasonable time

period

Must show an intention on the part of theacceptor to fulfill terms of the promise


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Must be given by the parties to whom theoffer is made

Must be given before the offer lapses or

before the offer is withdrawn Cannot be implied from the silence


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Communication of Offer,

Acceptance and Revocation


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Communication of Offer

When it is complete?

Communication offer is complete

When it comes to the knowledge of the person

to whom it is made


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Communication of

Acceptance When it is complete?

As against proposer when it is put into a

course of transmission to proposer, so asto be out of the power of the acceptor

As against acceptor when it comes to the

knowledge of the proposer


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Communication of Revocation

Revocationtaking back, withdrawal.

Revocation may be of offer and

acceptance.

Communication of revocation completes

As against the person who makes it

As against the person to whom it is made

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