The aim of this book is to provide an introduction to the core concepts of Business Laws in a student friendly style. The book is primarily written for the students of Foundation Course of Chartered Accountancy under the new syllabus introduced by the Institute of Chartered Accountants of India. It is also useful for the students of other professional exams. We have attempted to present the subject in a lucid and simple style keeping in mind the students of undergraduate level. To test the understanding of the student and also to enable them to have sufficient knowledge. The exercise given at the end of chapters covers a lot of Multiple Choice Questions, True and False type questions, Theoretical Questions and Practical Questions as well as questions in the pattern of Case Studies.
Preface to Fifth Edition
The book is divided into five units depending upon their respective Acts. The answers and hints for writing the answers further adds up to the value of the book. In preparation of this book we have received encouragement and support from various quarters. We would be failing in our duty if we do not acknowledge the deep sense of gratitude that we owe to various people for providing us an insight and inspiration in writing this book. I-7
Any comment and criticism relating to the present work will be most welcome. Happy Reading! V.K. JAIN SHASHANK S. SHARMA I-8
Contents About the Authors I-5 Preface to Fifth Edition I-7 UNIT 1 INDIAN CONTRACT ACT, 1872 CHAPTER 1 3 CHAPTER 2 22 CHAPTER 3 41 CHAPTER 4 54 CHAPTER 5 63 CHAPTER 6 81 CHAPTER 7 98 CHAPTER 8 111 CHAPTER 9 131 UNIT 2 SALE OF GOODS ACT, 1930 CHAPTER 10 157 CHAPTER 11 171 CHAPTER 12 184 CHAPTER 13 199 I-9
CHAPTER 14 210 CHAPTER 15 223 UNIT 3 INDIAN PARTNERSHIP ACT, 1932 CHAPTER 16 231 CHAPTER 17 250 CHAPTER 18 257 CHAPTER 19 272 UNIT 4 LIMITED LIABILITY PARTNERSHIP ACT, 2008 CHAPTER 20 293 UNIT 5 COMPANIES ACT, 2013 CHAPTER 21 317 SOLVED PAPER : DECEMBER 2021 P.1 SOLVED PAPER : JUNE 2022 P.4 I-10
TAXMANN®By AgreementMutual By Breach of contract i.e.i.e. By operation of law By partybyrescissionrightfulone orimpossibilitysuperveningByillegality 9.1 METHODS OF TERMINATION OF CONTRACT I. DISCHARGE BY PERFORMANCE tt ofDischargeContract9 CHAPTER 131
®TAXMANN II.132DISCHARGE BY ATTEMPTED PERFORMANCE III. DISCHARGE BY MUTUAL AGREEMENT “If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.” Sec. 62. NOVATION Example: ALTERATION Novation Alteration
TAXMANN® 133 Novation Alteration AccordingREMISSION to Sec. Example:bac ` ` Gopala Venkata ACCORD AND SATISFACTION
®TAXMANN 134 MERGERWAIVERRESCISSION Illustration: iii IV. DISCHARGE BY BREACH OF CONTRACT iii i.e. i.e. (Sec. 39)
TAXMANN® 135 iii viz iii e.g. V. DISCHARGE BY OPERATION OF LAW
®TAXMANN 136A. Death B. Insolvency C. Merger D. Lapse of time E. Unauthorised material alteration VI. SUBSEQUENT OR SUPERVENING IMPOSSIBILITY A. Pre-contractual Impossibility ab initio “An agreement to do an act impossible in itself is void.” i Known to the parties: ab initio ii Unknown to the parties: iii Known only to the promisor
“A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful”.
TAXMANN® 137 B. Post-contractual Impossibility impossible to perform deprived of its commercial purpose.
[Sec.56] Para 2. Grounds of Frustration i Destruction of the subject matter of contract ii Change of Law iii Failure of pre-conditions Illustration:Illustration:
®TAXMANN 138 iv Death or incapacity for personal services v Outbreak of war ab-initio 9.2 THE DOCTRINE OF FRUSTRATION Satyabharata Ghosh Mugniram Bengur
TheGroundsunlawful”offrustrationeffectoffrustration
“A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or
TAXMANN® 139 Exceptions to the doctrine of frustration Impossibility of performance, is, as a rule, not an excuse from performance. i.e. 1. Difficulty of performance Tsakiroglou & Co v. Noblee Thori (1962) AC 93, via via 2. Commercial Impossibility 3. Strikes, lock-outs, civil disturbances and riots 4. Failure of one of the objects 9.3 REMEDIES FOR BREACH OF CONTRACT I. Rescission of the contract i.e.
®TAXMANN II.140Suit for damages
Hadley v. Baxendale Hadley Baxendale (Sec. 73) “When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in usual course of things from such breach, or which the parties knew, when they made the contract to be likely to result from the breach of it.”
Nature
TAXMANN® 141 If there is no damage, damages cannot be claimed. ` RULESOrdinary damages are recoverable Special damages are recoverable only if the parties knew about them Compensation is recoverable for:
®TAXMANN 142
Nominal damages for no loss suffered: i.e Charter Sullivan Vindictive or exemplary damages: Other Heads for Damages: Damages for inconvenience caused by breach.
Damages for pre-contract and wasted expenditure. Damages for delay in delivery.
Damages for mental pain and suffering. In a Scottish case, a pho tographer who agreed to take photographs at a wedding, failed in breach of his contract to appear there. As a result the bride had no photographs of her wedding. She was allowed damages for resulting injury to her feelings.
Remote or indirect damages are not recoverable
Liquidated Damages and Penalty [Sec. 74]
TAXMANN® 143
Liquidated Damages: Penalty liquidated damages or as a penalty if the parties have fixed what the damages will be, the courts will never allow more. But the court may allow less. the actual loss or damage has to be proved proof of actual loss or damage is not essential. The difference between the liquidated damages and penalty depends on the facts and circumstances of each case and the intention of the parties which is to be gathered from the whole contract.
®TAXMANN 144Astipulation for higher rate Mackintosh Crow Earnest Money and Security DepositEarnest money Security deposit (Shree Hanuman Cotton Mills Tata Aircraft Ltd. III. Suit for specific performance of the contract Specific performance is an order of the Court directing the defendant to fulfil his obligations under the contract
TAXMANN® 145 Examples:Specificperformance is not allowed e.g. e.g. IV. Suit for an injunction i.e. X. Warner Bros. Nelson V. Suit for quantum meruit as much as merits’ as much as deserves or earns
®TAXMANN 146 iii 1. Where there is breach of the contract Example: Planche Colbum 2. When an agreement is discovered to be void Example: Craven Ellis Canons Ltd. 3. When something has been done non-gratuitously i.e.,
TAXMANN® 147 4. Where work has been done by the person guilty of breaking the contract a Where the work to be done was divisible Example:iii ` b i.e. Example: ` Ans.: Cutter Powell 5. When the indivisible contract is performed substantially/fully Example: ` ` `
®TAXMANN 148 MULTIPLE CHOICE QUESTIONS: 1. bacd 2. bacd 3. dbac 4. dbac 5. bacd 6. bacd 7. dbac 8. bacd 9. bacd 10.
TAXMANN® 149 dbac 11. bacd 12. Hadley Baxendale bacd 13. ba dc 14. dbac 15. bacd 16. ` bacd OBJECTIVE KEY a c d c c c d b c c a c d b a d STATE WHETHER THE FOLLOWING ARE TRUE OR FALSE: 1.2.
®TAXMANN 1503.4.5.6.7.8.9.10.11.12.13.14. Answers THEORETICAL: QUESTIONS: 1. Hint: Refer Chapter text 9.1.4. 2. Hint: Refer Chapter text 9.3.II.7 3. Hint: Refer Chapter text 9.3.III. 4. Hint: Refer Chapter text 9.2 5. (RTP Nov. 2018) Hint: Chapter text 9.1.IV.B.
2. ` ` Hint: A can recover ` 1 lakh as special damages from C as it was within C’s knowledge that breach of contract by him (C) would result in non-performance of con tract between A and B resulting in loss of ` 1 lakh (i.e., the difference between ` 5,000 per ton and ` 4,800 per Ton for 500 tons) to A (Sec. 73).
1. urad dal ` viz. urad dal ` urad dal ` Hint: Increase in price of urad dal - does not amount to supervening impossibility (Sec. 56). Mr. Shah committed breach of contract. If Ramaswamy waits till 9.12.2006 Mr. Shah shall be liable to pay damages to Mr. Ramaswamy. The amount of damages shall be 10 tons @ ` 13 per kg (i.e., difference between the contract price and price as on 9.12.2006), i.e., ` 1,30,000. However, if some supervening impossibility arises before 9.12.2006 (e.g., imposition of ban on trading in urad dal by the Government), the contract shall become void, and consequently, Mr. Shah shall not be liable to pay any damages. If Ramaswamy repudiates the contract on 4.12.2006 Mr. Shah shall be liable to pay damages to Mr. Ramaswamy. The amount of damages shall be 10 tons @ ` 10 per kg (i.e., dif ference between the contract price and price as on 4.12.2006), i.e., ` 1,00,000.
TAXMANN® 151 PRACTICAL QUESTIONS:
3. ` ` Hint: Labour strike does not amount to supervening impossibility (Sec. 56). Hence, non-delivery of machinery by M Ltd. results in a breach of contract by M Ltd. M Ltd. is liable to compensate the loss incurred by Shanti Traders, i.e. to pay ordinary damages of ` 1.25 lakhs (i.e., the difference between ` 12.75 lakhs and ` 11.50 lakhs) (Sec. 73). M Ltd. is not liable to pay any compensation for loss caused to Shanti Traders due to non-performance of contract entered into with Zenith
®TAXMANN 152 Traders; since special circumstances, viz. contract between Shanti Traders and Zenith traders were not brought to the knowledge of M Ltd. 4. ` Hint: (Sec. 75 of the Indian Contract Act). 5. Hint: 6. Hint: 7. ` ` Hint: 8. Hint: 9. ` Hint: 10. ` Hint:
Rs. : 575 | USD : 39 AUTHOR : V.K. Jain , Shashank Sharma PUBLISHER : TAXMANN DATE OF PUBLICATION : July 2022 EDITION : 5th Edition ISBN NO : 9789356223196 NO. OF PAGES : 386 BINDING TYPE : PAPERBACK Business Laws (Law) | Study Material ORDER NOW Description The book aims to introduce the core concepts of Business Laws in a student-friendly manner. This book is prepared exclusively for the Foundation Level of Chartered Accountancy Examination requirement. It covers the entire revised, new syllabus as per ICAI. The Present Publication is the 5th Edition & updated till 30th April 2022 for CA-Foundation | New Syllabus | Dec. 2022/June 2023 exams. This book is authored by Dr. V.K. Jain & CA Shashank S. Sharma, with the following noteworthy features: · [Simple & Lucid Language] has been used throughout the book to present the subject matter · Coverage of this book includes: Previous Exam Solved Paper for CA Foundation Solved Paper – December 2021 Solved Paper – June 2022 Multiple Choice Questions (MCQs) True/False Type Questions Theoretical Questions Practical QuestionsQuestionsinthepattern of Case Studies · [Answers & Hints] for writing, the answers are given in this book · Student-Oriented Book] The authors have developed this book, keeping in mind the following factors: Interaction of the authors with their students, with specific emphasis on difficulties faced by students in the examinations Shaped by the authors' experience of teaching the subject matter at different levels Reactions and responses of students have also been incorporated at different places in the book
