Legal Environment, Business Contracts, Non-Corporate & Corporate Business Entities

Topic No. of Sessions
Introduction to Legal Environment 2
Business Contracts5
Non-Corporate Business Entities 2
Law Relating to Corporate Business Entities 5
Number
of
Sessions
Topic Details of the Topic Pedagogy
1 Introductionto
Legal
Environment
Meaning of Law – Purpose of Law –
Sources of Law – Classification of Law –
Torts – National and International Law
Lecture
2 Introductionto
Legal
Environment
Evolution of Mercantile / Business Law –
International Business Law – Justice
Delivery System in India.
Lecture
3
Introductionto
gst
Classification of Taxes – Income Tax –
Wealth Tax – GST
Lecture
4 Business
Contracts
Legal Elements of Contracts – Parties –
Offer – Acceptance – Consideration-Types
of Contracts – Valid Contracts – Voidable
Contracts
Lecture
5 Breach of Contracts and Remedies –
Payment of Damages-Liquidated damages
lecture
Agency – Rights and Duties of Principal
and Agent – Termination of Agency
lecture
6 Special Contracts – Lien / Guarantee /
Indemnity / Letter of Credit / Set
Off-Important clauses in Corporate &
Commercial Agreements-- Conditions –
Obligations – Termination –– Data Privacy
– Confidentiality – Indemnification.
Lecture
using small
caselets
7 Description of Parties – Recitals of Subject
– Consideration – Covenants and
Undertakings – Signatures and Attestation
– Endorsement and Supplement Deeds –
Stamp Duty and Registration – Applicable
Law – Force Majeure – Notice –
Arbitration Employer and Employee
Contracts
Lecture
using small
caselets
8 Business
Transactionsand
Cyber
Application of IT Act, 2000 to Contracts
and Transactions
Digital Signature and Authentication of
Electronic Records
Cyber offences

9 Non-Corporate
Business Entities
Legal Formalities and Registration – Rights
and Liabilities of Members – Sole
Proprietorship – Partnership – society
Lecture
10 Limited Liability Partnership Firms (LLPs)
– Hindu Undivided Family (HUF).
Insolvency – Acts of Insolvency –
Consequences.
Lecture +
Case

Chapter 1; Session 1:
A person is a social human being living in the group, called society. He has to do various
activities for his livelihood. Some activities are good or some are bad. In other words, some
are beneficial for the society and some are harmful to the society. To regulate the activities of
human behaviour a group of set activities is introduced by regulatory authorities so that no
one could harm the other one, this set of rules is called Law. Let us take a look at the meaning
of the law and a brief introduction to Indian Law.
Meaning of Law
In the real world, the law is an amorphous set of rules govern individuals and group
behaviour. We don’t even know about many of these rules or we understand them only
generally. For example, you don’t need to see a written law to know that it’s a crime to steal
or destroy someone else property.
In other words, the law is a system of rules that are created and enforced through the social or
governmental institution to regulate behaviour. Stamp that regulates and ensure that
individuals
SESSION 2
INTRODUCTION TO BUSINESS LAW MEANING AND DEFINITION OF BUSINESS
The term business may be understood as the organised efforts of enterprises to supply
consumers with goods and services and to earn profit in the process. Business is a broad term
and includes such varied activities as production, promotion, wholesaling, retailing,
distribution, transportation, warehousing, financing, insurance, consultancy, and the like. The
two definitions on business given below echo the same meaning. Business is a “complex field
of commerce and industry in which goods and services are created and distributed ... in the
hope of profit within a framework of laws and regulations.” Business “comprises all profit
seeking activities and enterprises that provide goods and services necessary to an economic
system. It is the economic pulse of a nation, striving to increase society’s standard of living.
Profits are a primary mechanism for motivating these activities. Business is as important as it
is vast in its scope. It is a unique institution which converts ideas into saleable products. From
the time we get up early in the morning till we go to bed in the nigh the products we consume
and the services we use are all supplied to us by business. Business offers innumerable
opportunities for us to earn money so that we can buy and enjoy the products. We depend so
much on business that except for six or seven hours we sleep every day the remaining hours
we spend for or on business. It is really shiver to imagine what would happen to us without
business. Indeed there is no life without business.
MEANING AND DEFINITION OF LAW Law refers to the principles and regulations
established by a Government and applicable to people, whether in the form of legislation or
of custom and policies recognised and enforced by judicial decision. A few definitions of law
are worth quoting in this context. According to BLACKSTONE “Law in its most general and
comprehensive sense signifise a rule of action and is applied indiscriminately to all kinds of

actions whether animate or in animate, rational or irrational.” Salmond defines law as the
“body or principles recognised and applied by the State in the administration of Justice.”
Woodrow Wilson defines law as “that portion of the established habit and thought of mankind
which has gained distinct and formal recognitions in the shape of uniform of rules backed by
the authority and power of the Government.” Definitions of law frequently emphasis the
coercive power of the State which stands behind the rules. And it is true of many rules that
failure to comply with them may lead to the use of coercion by officials. Thus, if a man
refuses to perform his/her obligations under a contract, he/she is sued in a ... Business
Regulations court of breach of contract, loses the suit and is ordered to pay damages. But
many rules of law merely grant permission to do creation things; and if a citizen does not do
what he/she is permitted to do, he/ she is not subject to any coercion. Moreover, the
government often induces people to do what it wants them to do by the lure of benefits. An
entrepreneur, for example, is assured of certain concessions if he/she were to set-up his/her
plant in a backward area. If he/she ignores the offer, he/she is not penalised, he/she simply
does not get the concessions.
Session 3:
Taxation in India
The India Constitution is quasi-federal in nature, and the country has three tier government
structure.
To avoid any disputes between the centre and state the Constitution envisage following
provisions regarding taxation:
●Division of powers to levy taxes between centre and state is clearly defined.
●There are certain taxes which are levied by the centre, but their proceeds are distributed
between both centre and the state. Example- Union Excise Duty.
●There are certain taxes which are levied by the centre, but their proceeds are transferred to the
states. Example-Estate duty on property other than agriculture income.
●There are certain taxes which are levied by the central government, but the responsibility to
collect them is vested with the states. Example- Stamp Duty other than included in the Union
List.
●There are certain taxes which are levied by the states, and their proceeds are also kept by
states. Example: Erstwhile VAT
Classification of Taxes
What is a Tax?
Taxes are generally an involuntary fee levied on individuals and corporations by the
government in order to finance government activities. Taxes are essentially of quid pro quo in
nature. It means a favour or advantage granted in return for something.
Direct Tax versus Indirect Tax
Basis Direct Tax Indirect Tax

Meaning
The tax that is levied by the
government directly on the
individuals or corporations are
called Direct Taxes.
The tax that is levied by the
government on one entity
(Manufacturer of goods), but is passed
on to the final consumer by the
manufacturer.
IncidenceThe incidence and impact of the
direct tax fall on the same person.
The incidence and impact of the tax fall
on different persons.
ExamplesIncome Tax, Corporation Tax and
Wealth Tax.
VAT, Service tax, GST, Excise duty,
entertainment tax and Customs Duty.
Nature They are progressive in nature. They are regressive in nature.
Objective
Both Social and Economical.
Social objective of direct tax is the
distribution of income. A person
earning more should contribute
more in the provision of public
service by paying more tax. This
provision is also known as
progressive taxation.
Only Economical. When an indirect tax
is levied on a product, both rich and
poor must pay at the same rate. A
person earning 10 lakh a month pays
the same tax on the Wheat purchase as
the person earning 3000 Re a month.
This principle is called regressive
taxation.
Impact Not at all Inflationary. Is inflationary.
Session 4:
INDIAN CONTRACT ACT 1872 INTRODUCTION
∙The Law of Contract deals with the law relating to the general principles of contract. It is
the most important part of Mercantile Law. It affects every person in one way or the other, as
all of us enter into some kind of contract everyday. ∙Since this law was not happily worded,
two subsequent legislations namely Indian Sale of Goods Act – Sections 76 to 123 of the
Indian Contract Act 1872 were repealed; and Partnership Act was also enacted and Sections
239 to 266 of the Contract Act were also repealed. What is `Contract`
∙The term `Contract` is defined in Section 2(h) of the Indian Contract Act, which reads as
under “An agreement enforceable by law is a contracts.”
∙The analysis of this definition shows that a contract must have the following two elements:
1. An agreement, and 2. The agreement must be enforceable by law.
∙In other words: Contract = An Agreement + Enforceability (by law) Agreement (Section
2(e) Every promise and every set of promises forming the consideration for each other is an
agreement. Promise (Section 2(b)) A proposal when accepted becomes a promise.

∙Every agreement is not a contract. When an agreement creates some legal obligations and is
enforceable by law, it is regarded as a contract.
2.1 ESSENTIAL ELEMENTS OF CONTRACT 1. Agreement 2. Intention to create legal
relationship 3. Free and genuine consent. 4. Parties competent to contract. 5. Lawful
consideration. 6. Lawful object. 7. Must be in writing. (Generally, oral contract is not
enforceable) 8. Agreement not declared void or illegal. 9. Certainty of meaning. 10.
Possibility of performance. 11. Necessary legal formalities.
Ex – Where 'A' who owns 2 cars x and y wishes to sell car 'x' for Rs. 30,000. 'B', an
acquaintance of 'A' does not know that' A' owns car 'x' also. He thinks that' A' owns only car
'y' and is offering to sell the same for the stated price. He gives his acceptance to buy the
same. There is no contract because the contracting parties have not agreed on the same thing
at the same time, 'A' offering to sell his car 'x' and 'B' agreeing to buy car or'. There is no
consensus-ad-idem.
LAW OF CONTRACT CREATES jus in personam ∙The term jus in personam means a “right
against or in respect of a specific person.” Thus, law of contract creates jus in personam and
not jus in rem. A jus in rem means a right against or a thing. CLASSIFICATION OF
CONTRACTS 1. Classification according to validity or enforceability. a) Valid b) Voidable c)
Void contracts or agreements d) Illegal. e) Unenforceable 2. Classification according to Mode
of formation (i) Express contract (ii) Implied contract 2. Classification according to
Performance
CONTRACT ACT (i) Executed contract (ii) Executory contract. (iii) Unilateral Contract (iv)
Bilateral Contract
2.2 OFFER AND ACCEPTANCE [Sections 3-9] OFFER What is `Offer/Proposal` ∙A
Proposal is defined as quot;when one person signifies to another his willingness to do or to
abstain from doing anything, with a view to obtaining the assent of that other to such act or
abstinence, he is said to make a proposal.quot; [Section 2(a)]. How an Offer is made? ∙An
offer can be made by (a) any act or (b) omission of the party proposing by which he intends
to communicate such proposal or which has the effect of communicating it to the other
(Section 3).
ESSENTIAL REQUIREMENTS OF A VALID OFFER∙An offer must have certain
essentials in order to constitute it a valid offer. These are: I. The offer must be made with a
view to obtain acceptance. 2. The offer must be made with the intention of creating legal
relations. [Balfour v. Balfour (1919) 2 K.B.57Il 2. The terms of offer must be definite,
unambiguous and certain or capable of being made certain. The terms of the offer must not
be loose, vague or ambiguous. 4. An offer must be distinguished from (a) a mere declaration
of intention or (b) an invitation to offer or to treat. An auctioneer, at the time of auction,
invites offers from the would-be-bidders. He is not making a proposal. A display of goods
with a price on them in a shop window is construed an invitation to offer and not an offer to
sell. Offer vis-a-vis Invitation to offer An offer must be distinguished from invitation to
offer. θA prospectus issued by a company for subscription of its shares by the members of
the public, is an invitation θto offer. The Letter of Offer issued by a company to its existing
shareholders is an offer. 5. The offer must be communicated to the offeree. An offer must be
communicated to the offeree before it can be accepted. This is true of specific as sell as
general offer. 6. The offer must not contain a term the non-compliance of which may be
assumed to amount to acceptance. Cross Offers ∙Where two parties make identical offers to
each other, in ignorance of each other's offer, the offers are known as cross-offers and