A HIGHLIGHT ON BUSINESS LAWS

 A HIGHLIGHT ON BUSINESS LAWS

Contract

The British Rulers established the Courts of Justice in India for three presidency towns of Mumbai, Madras and Calcutta in 18th century by Charters. Those three Courts introduced into their jurisdictions the English common and statute law in force during that period, to the extent the same were applicable to the Indian Contracts. Application of English Laws to Hindus and Mohammedans resulted into many inconveniences as a result whereof a statute of 1781 empowered the Court at Calcutta and of 1791 empowered the Courts of Mumbai and Madras to determine inter alia all matters of contract between Hindus and Mohammedans by their laws and usages. This continued till the Indian Contract Act was enacted in the year 1872. Since then the Indian Contract Act of 1872 is the law relating to contracts in India. It is based on English common law and includes concepts of proposal, promise, consideration, voidable contracts, void agreements, free consent, undue influence, fraud, misrepresentation, etc. similar to those found in English Law. As per the provisions of the Indian Contract Act 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. The parties to a contract must either perform or offer to perform their respective promises unless such performance is dispensed with or excused under the provisions of the Act or of any other law. Promises bind the representative of the promisers in case of death of such promisers before performance, unless a contrary intention appears from the contract. 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 the 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. Under the Act it is also provided that when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. Even a person who rightfully rescinds a contract is entitled to a compensation for any damage which he has sustained for a non-fulfillment of the contract. The Indian Contract Act also lays down provisions of indemnity, guarantee, bailment and agency. Provisions relating to sale of goods and partnership which were originally in the act are now subject matter of separate enactments viz., the Sale of Goods Act and the Indian Partnership Act.

Partnership

The Indian Partnership Act enacted in the Year 1932 defining the law relating to partnership the relation between the persons who have agreed to share the profits of a business carried on by all or any of them acting for all -- makes it obligatory to have a partnership registered with the Registrar of Firms, failing which the firm is prohibited from enforcing any right in a Court of Law. This Act defines the relationship of partners to one another and to third parties and lays down provisions as regards incoming and outgoing partners, dissolution of a firm, etc. Under the Act partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other and to render true accounts and full information of all things effecting the firm to any partner or its legal representative. A partner is liable to indemnify the firm for any loss caused to it by his willful neglect in the conduct of the business of the firm. A partner is the agent of the firm for the purpose of the business of the firm. The act also provides for the sale of goodwill of the firm after its dissolution and the rights of the buyer and seller of the goodwill.

Sale of Goods

The law relating to the sale of goods is codified in the Sale of Goods Act, 1930. It defines sale and agreement to sell as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price and provides that there may be a contract of sale between part owner and another and that the contract of sale may be absolute or conditional. According to the provisions of this act, a contract of sale is made by an offer to buy or sell the goods for a price and the acceptance of such offer. The act further provides that the contract may provide for the immediate delivery of the goods or immediate payment of the price or both or for the delivery or payment by installments or that the delivery or payment or both shall be postponed. Provisions are made in this Act for existing or future goods, perishable goods, ascertainment of price, conditions and warranties, effects of the contract, delivery to career, duties of seller and buyer, buyers right of examining the goods, liability of buyer for neglecting or refusing the delivery of goods, rights of unpaid seller, suits for breach of the contract, sale, etc.