BCOC 133
BUSINESS LAW
BCOC 133 Solved Free Assignment 2023
BCOC 133 Solved Free Assignment January 2023
Section – A
Q 1) Explain briefly the law relating to communication of offer, acceptance and revocation. Is there any limit of time after which an offer cannot be revoked?
Ans. The law of contract is built on the basic principle that for a contract to exist, there must be an offer, acceptance, and consideration. The communication of offer, acceptance, and revocation forms an essential part of the process of entering into a contract.
Offer:
An offer is an expression of willingness by one party (offeror) to enter into a contract with another party (offeree) on certain terms. The offer must be communicated to the offeree in a clear and unequivocal manner.
It must be precise and complete, leaving no room for doubt or confusion. The offer must also be made with the intention to create legal relations, and it must not be vague or uncertain. BCOC 133 Solved Free Assignment 2023
An offer can be made in writing, orally, or by conduct. However, it must be communicated to the offeree in a manner that would indicate the offeror’s intention to be bound by it.
The offeree must be aware of the offer, and it must be addressed to him specifically or to a class of people of which he is a member.
Acceptance:
Acceptance is the expression of the offeree’s willingness to accept the terms of the offer. Acceptance must be communicated to the offeror, and it must be unequivocal and unqualified.
The acceptance must be in response to the offer and must conform to its terms. If the acceptance seeks to modify or add to the terms of the offer, it will be considered a counter-offer and not an acceptance.
The communication of acceptance must be made in a reasonable time, and the method of communication must be in the manner prescribed by the offeror.
If no method is prescribed, then the acceptance can be communicated by any reasonable means, including email, fax, or telephone.
The acceptance is complete as soon as it is communicated to the offeror, and it cannot be withdrawn. BCOC 133 Solved Free Assignment 2023
Revocation:
Revocation is the withdrawal of an offer before it is accepted. An offer can be revoked at any time before acceptance, provided that the revocation is communicated to the offeree.
The revocation must be communicated by the offeror, or by a reliable third party, or by conduct that would lead the offeree to believe that the offer has been revoked.
If the offer is made by post, the revocation is effective only when it is received by the offeree. If the offer is made by telegram, the revocation is effective when it is received by the offeree’s agent, and not when it is sent.
Time limit for revocation:
There is no time limit for revocation of an offer, except in certain circumstances. If the offeror has fixed a time limit for acceptance, then the offer cannot be revoked before the expiry of that time limit.
If the offeree fails to accept the offer within the time limit, then the offer lapses, and the offeror is free to withdraw the offer.
In cases where the offeror has not fixed a time limit, the offer can be revoked at any time before acceptance.
However, if the offeree has started to perform the contract, or has incurred expenses in reliance on the offer, then the offer cannot be revoked. In such cases, the offer becomes irrevocable, and the offeror is bound to perform the contract.
Q 2. “Insufficiency of consideration is immaterial, but a valid contract must be supported by lawful and real consideration.” Comment.
Ans. The doctrine of consideration is one of the fundamental principles in contract law. Consideration refers to something of value given by one party to another in exchange for something else. BCOC 133 Solved Free Assignment 2023
It is an essential element of a valid contract, as it ensures that both parties have something to gain or lose from the agreement.
However, the nature and sufficiency of consideration have been a subject of much debate and interpretation in contract law.
One common misconception is that consideration must be adequate or fair. In other words, the consideration given by one party should be of equal value to the consideration given by the other party.
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However, the law does not require consideration to be adequate, only that it is real and lawful. This means that even if one party gives very little in exchange for what they receive, the contract is still valid as long as the consideration is real and lawful.
Real consideration refers to something of value that is exchanged between the parties. It can take many forms, such as money, goods, services, promises, or forbearance from doing something.
For example, if A promises to pay B $1000 in exchange for B’s promise to deliver a new laptop, both parties have given something of value, and therefore, the contract is supported by real consideration.
Lawful consideration refers to something that is not prohibited by law. For example, if A promises to pay B $1000 in exchange for B’s promise to sell illegal drugs, the contract would not be enforceable as it is based on unlawful consideration.
The law does not recognize agreements that are based on illegal consideration or are contrary to public policy.
On the other hand, insufficiency of consideration refers to situations where the consideration given by one party is much less valuable than what they receive.
For example, if A promises to pay B $1000 in exchange for B’s promise to give A a pencil, the consideration given by A is much less valuable than what they receive.
In such cases, the law generally does not intervene as long as the consideration is real and lawful. The courts do not concern themselves with the adequacy or fairness of the consideration, as parties are free to make their own bargains.
However, there are certain situations where the courts may intervene even if the consideration is real and lawful. One such situation is where there is a lack of mutuality of obligation.
Mutuality of obligation refers to situations where both parties are bound to perform their promises. If one party is not bound to perform their promise, the contract may not be enforceable. BCOC 133 Solved Free Assignment 2023
For example, if A promises to pay B $1000 if B decides to sell their house, the contract may not be enforceable as B is not bound to sell their house.
Another situation where the courts may intervene is where there is a lack of intention to create legal relations. For a contract to be enforceable, both parties must have intended to create a legally binding agreement.
If there is evidence that one party did not intend to create a legally binding agreement, the contract may not be enforceable.
For example, if A promises to give B $1000 as a gift, the contract may not be enforceable as there was no intention to create a legally binding agreement.
Q 3. Enumerate the different types of partners and briefly explain the extent of their liabilities
Ans. A partnership is a form of business organization where two or more people come together to carry on a trade or business with a view to making a profit.
Each partner contributes capital, skill, or labor, and shares in the profits and losses of the partnership.
Partnerships are governed by the Partnership Act, 1932, and the extent of the liabilities of partners varies depending on the type of partner. The different types of partners and their extent of liabilities are as follows:
General Partners: A general partner is a partner who is actively involved in the management of the business and is personally liable for all the debts and obligations of the partnership. BCOC 133 Solved Free Assignment 2023
This means that the general partner’s personal assets can be used to satisfy the partnership’s debts and obligations. In other words, the general partner has unlimited liability.
Limited Partners: A limited partner is a partner who does not participate in the management of the business and is only liable to the extent of his or her contribution to the partnership.
This means that the limited partner’s liability is limited to the amount of capital that he or she has invested in the partnership.
The limited partner cannot be held liable for the partnership’s debts and obligations beyond the amount of his or her capital contribution.
Sleeping Partners: A sleeping partner is a partner who does not take an active part in the management of the business but is entitled to a share in the profits of the partnership.
The sleeping partner is liable to the extent of his or her capital contribution, but not beyond that. This means that the sleeping partner’s liability is limited to the amount of his or her capital contribution.
Nominal Partners: A nominal partner is a partner who lends his or her name to the partnership but does not contribute any capital or participate in the management of the business.
The nominal partner is not liable for the partnership’s debts and obligations, as he or she has not contributed anything to the partnership.
Partner by Estoppel:
A partner by estoppel is a partner who is not actually a partner but is held out to be a partner by the partnership or by another partner.
This can happen when a third party relies on the representation of the partnership or another partner and deals with the person as if he or she were a partner.
In such cases, the partner by estoppel is liable for the debts and obligations of the partnership to the extent that the third party has relied on the representation.
Secret Partner:
A secret partner is a partner who is not known to the public or to third parties as a partner in the partnership. BCOC 133 Solved Free Assignment 2023
A secret partner’s liability is the same as that of a general partner. The secret partner is personally liable for the debts and obligations of the partnership to the extent of his or her contribution.
Incoming Partner:
An incoming partner is a partner who joins an existing partnership. An incoming partner is not personally liable for the debts and obligations of the partnership that arose before he or she became a partner.
However, the incoming partner is liable for the debts and obligations of the partnership that arise after he or she becomes a partner.
Q 4. “No seller of goods can give to the buyer a better title than he himself has”. Explain this rule. Are there any exceptions to this rule?
Ans. The rule “No seller of goods can give to the buyer a better title than he himself has” means that a person selling goods cannot transfer a higher level of ownership or better rights to the buyer than what the seller already possesses.
For example, if a thief steals a car and sells it to someone else, the buyer cannot claim legal ownership of the car, even if they purchased it in good faith.
This is because the thief did not have the legal right to sell the car, and therefore, the buyer cannot acquire a better title than the thief had.
Similarly, if a person sells goods that are subject to a lien or encumbrance, the buyer takes ownership subject to those encumbrances.
For instance, if a person sells a car that is still under a bank loan, the buyer acquires the car subject to the bank’s lien, and the bank can repossess the car if the seller fails to pay off the loan.
Exceptions to this rule may arise in certain situations, such as when a seller transfers goods to a buyer through a court-ordered sale or a foreclosure sale.
In these cases, the buyer acquires good title to the goods, even if the seller did not have a clear title before the sale. BCOC 133 Solved Free Assignment 2023
Additionally, some jurisdictions have laws that provide protection to innocent buyers who purchase goods in good faith without knowledge of any defects in the title.
Another exception to this rule is when the seller has apparent authority to sell the goods.
For instance, if an employee of a company sells goods to a buyer in the normal course of business, the buyer can acquire good title even if the employee did not have actual authority to sell the goods.
This is because the buyer can reasonably assume that the employee has the authority to sell the goods on behalf of the company.
It is essential for buyers to be cautious when purchasing goods, especially when dealing with private sellers or individuals.
Buyers should conduct due diligence and ensure that the seller has a clear title to the goods before making any payment.
They should also ensure that the seller has the legal right to sell the goods and that there are no liens or encumbrances on the goods that can affect their ownership.
By being diligent and careful, buyers can avoid legal disputes and financial losses resulting from defective title or ownership rights.
Q 5. Discuss the essentials of a contract of bailment and state the rights and duties of a bailee.
Ans. A contract of bailment is a legal agreement in which the owner of personal property (known as the bailor) temporarily gives possession of the property to another person (known as the bailee) for a specific purpose.
The essential elements of a contract of bailment include delivery of the property, the purpose of the bailment, and the obligation to return the property. Let’s discuss each of these elements in more detail. BCOC 133 Solved Free Assignment 2023
Delivery: The bailor must deliver the property to the bailee for the purpose of the bailment. The delivery can be actual or constructive, meaning that the bailor can physically hand over the property or give the bailee access to the property.
The bailor must also transfer the possession of the property to the bailee, which means that the bailee has exclusive control over the property during the period of the bailment.
Purpose of the Bailment: The bailment must have a specific purpose, which can be either for the benefit of the bailor, the bailee, or a third party.
For example, a bailment for the benefit of the bailor could be a situation where a person leaves their car with a mechanic for repairs.
A bailment for the benefit of the bailee could be a situation where a person borrows a book from a library. A bailment for the benefit of a third party could be a situation where a person delivers goods to a carrier for delivery to a third party.
Obligation to Return the Property: The bailee has an obligation to return the property to the bailor once the purpose of the bailment is fulfilled.
The bailee must also return the property in the same condition as it was at the time of delivery, except for any normal wear and tear.
The bailee must take reasonable care of the property during the period of the bailment and is liable for any loss or damage caused to the property due to their negligence.
Some of the rights of a bailee include:
Right of possession: The bailee has the right to possess the property while it is in their possession, but they do not own it.
Right to use: The bailee may use the property for the specific purpose for which it was entrusted to them, unless otherwise agreed.
Right to compensation: If the bailee is providing a service, they have the right to be compensated for their services, unless otherwise agreed.
Right to lien: If the bailee has not been paid for their services or expenses, they may have a right to retain possession of the property until payment is made.
Some of the duties of a bailee include:
Duty of care: The bailee has a duty to take reasonable care of the property while it is in their possession. BCOC 133 Solved Free Assignment 2023
Duty to return: The bailee must return the property to the owner or their authorized representative when the bailment ends or when requested to do so by the owner.
Duty not to use: The bailee must not use the property for any purpose other than the specific purpose for which it was entrusted to them.
Duty to account: The bailee must keep accurate records of the property while it is in their possession and provide an accounting of the property to the owner upon request.
Duty to compensate: If the bailee damages the property or fails to return it as agreed, they may be responsible for compensating the owner for any losses.
These are some of the basic rights and duties of a bailee, but they may vary depending on the specific circumstances of the bailment agreement. It’s important for both the owner and the bailee to fully understand their respective rights and duties before entering into a bailment agreement.
Section – B
Q 6. Define the term “proposal”. Discuss the essentials of a valid offer.
Ans. The term “proposal” refers to an offer made by one party to another, with the intention of creating a binding contract.
A proposal can be made in various ways, such as through verbal communication, written correspondence, or electronic communication. The main objective of a proposal is to create a legal relationship between the parties involved.
In order for a proposal to be valid, it must satisfy certain essential elements. These include: BCOC 133 Solved Free Assignment 2023
Intention to create legal relations: The proposal must indicate an intention to create a legally binding agreement between the parties. A proposal made in a social or domestic setting may not be considered legally binding.
Definiteness and certainty: The proposal must be clear and definite in terms of the essential terms of the agreement, such as the subject matter, price, payment terms, and delivery terms. A vague or ambiguous proposal may not be enforceable.
Communication of the proposal: The proposal must be communicated to the offeree in a manner that enables them to understand the terms of the proposal.
The offeror must take reasonable steps to ensure that the proposal is received and understood by the offeree.
Unconditional offer: The proposal must be unconditional in nature. It cannot be subject to any conditions, such as the approval of a third party, unless such conditions are expressly stated in the proposal.
Capacity to contract: Both parties must have the capacity to enter into a contract. This means that they must be of legal age, of sound mind, and not under any undue influence or duress.
Acceptance: The offeree must accept the proposal in its entirety, without any modifications or conditions. Any modification or condition to the proposal will be considered a counter-offer, which the offeror may accept or reject.
Consideration: The proposal must be supported by consideration, which refers to a benefit or detriment that is exchanged between the parties. Consideration can be in the form of money, goods, or services.
It’s important to note that a proposal can be revoked at any time before it is accepted, unless the offeror has promised to keep the proposal open for a specified period of time. BCOC 133 Solved Free Assignment 2023
A proposal may also lapse if it is not accepted within a reasonable period of time, or if it is rejected by the offeree.
In addition to the above essential elements, there are certain other factors that may affect the validity of a proposal. These include:
Misrepresentation: If the proposal is made based on false or misleading information, it may be considered invalid.
Mistake: If the proposal is made based on a mistake of fact or law, it may be considered invalid.
Illegality: If the subject matter of the proposal is illegal or contrary to public policy, the proposal may be considered invalid.
Coercion: If the proposal is made under duress or coercion, it may be considered invalid.
Q 7. Define mistake and explain various types of mistakes.
Ans. In the context of contract law, a mistake refers to an error made by one or both parties that has a significant impact on the terms of the contract.
A mistake may result in the contract being voidable or unenforceable, depending on the nature of the mistake and the circumstances surrounding the contract.
There are several types of mistakes that can occur in contract law. These include:
Mistake of fact: This occurs when one or both parties make an error in understanding a key fact or detail related to the subject matter of the contract.
For example, if a seller mistakenly believes that a piece of property they are selling includes a specific easement, when in fact it does not, this would be a mistake of fact.
Mistakes of fact can be unilateral (one party makes a mistake) or mutual (both parties make a mistake).
Mistake of law: This occurs when one or both parties make an error in understanding the legal implications of a situation.
For example, if a party mistakenly believes that they have the right to terminate a contract for a certain reason, when in fact the law does not permit this, this would be a mistake of law. BCOC 133 Solved Free Assignment 2023
Generally, a mistake of law is not a valid defense to a breach of contract, as the parties are presumed to have knowledge of the law.
Unilateral mistake: This occurs when one party makes a mistake that is not shared by the other party.
For example, if a buyer mistakenly offers to purchase a piece of property for a significantly higher price than they intended, this would be a unilateral mistake.
Unilateral mistakes are generally not sufficient grounds for rescinding a contract, unless the other party was aware of the mistake or the mistake was due to fraud or misrepresentation.
Mutual mistake: This occurs when both parties make the same mistake about a key term or detail related to the subject matter of the contract.
For example, if both parties mistakenly believe that a piece of property is zoned for commercial use, when in fact it is zoned for residential use, this would be a mutual mistake.
Mutual mistakes may be grounds for rescinding the contract if the mistake is material to the agreement and if rescinding the contract would not cause undue hardship to either party.
Mistake due to fraud or misrepresentation: This occurs when one party makes a misrepresentation or engages in fraudulent behavior that causes the other party to make a mistake about a key term or detail related to the contract.
For example, if a seller misrepresents the condition of a car they are selling, causing the buyer to make a mistake about the value of the car, this would be a mistake due to fraud or misrepresentation.
Mistakes due to fraud or misrepresentation are generally grounds for rescinding the contract.
Mistake as to identity: This occurs when one party mistakenly believes that they are contracting with someone else.
For example, if a party mistakenly believes that they are entering into a contract with a company, when in fact they are contracting with an individual who is fraudulently posing as the company, this would be a mistake as to identity.
Mistakes as to identity are generally grounds for rescinding the contract.
Q 8. Describe the rights and liabilities of partners on dissolution of a firm.
Ans. When a partnership firm is dissolved, the partners’ rights and liabilities come into play. The partnership can dissolve in several ways such as by mutual agreement, insolvency, death, or retirement of a partner.
Rights of Partners on Dissolution of a Firm
Right to Share in the Assets: When a partnership firm dissolves, the assets of the firm are sold off, and the proceeds are used to pay off the firm’s liabilities.
The remaining amount is distributed among the partners in the proportion of their capital contributions or as per the partnership agreement.
Each partner has a right to share in the assets of the firm according to their share in the partnership. BCOC 133 Solved Free Assignment 2023
Right to Indemnity: The partners are jointly and severally liable for the debts of the firm. However, on the dissolution of the firm, each partner is entitled to be indemnified against the firm’s liabilities from the assets of the firm.
This means that the assets of the firm will be used to pay off the firm’s debts before the remaining amount is distributed among the partners.
Right to Return of Capital: On the dissolution of a partnership firm, each partner has a right to receive the amount of capital contributed by them. This means that each partner is entitled to receive back the money they have invested in the firm.
Right to Receive Interest: The partners are entitled to receive interest on the amount of capital contributed by them.
The rate of interest is usually specified in the partnership agreement. If the partnership agreement is silent on the rate of interest, the partners are entitled to interest at the rate of 6% per annum.
Right to Dissolve the Firm: A partner has the right to dissolve the firm by giving notice to the other partners if the partnership agreement allows it.
If the partnership agreement is silent on the right to dissolve the firm, a partner can dissolve the firm by giving notice to the other partners.
Liabilities of Partners on Dissolution of a Firm
Liability for the Firm’s Debts: The partners are jointly and severally liable for the debts of the firm.
This means that each partner is liable for the entire amount of the firm’s debts. On the dissolution of the firm, the partners are liable for the firm’s debts until they are paid off from the assets of the firm.
Liability to Third Parties: The partners are also liable to third parties for the firm’s debts incurred before the dissolution of the firm.
This means that the partners are personally liable for the firm’s debts, and their personal assets can be used to pay off the firm’s debts.
Liability for Misconduct: If a partner has been guilty of misconduct during the partnership, they may be held personally liable for any loss caused to the firm.
Misconduct may include fraud, misappropriation of funds, or breach of the partnership agreement. BCOC 133 Solved Free Assignment 2023
Liability for Overdrawn Accounts: If a partner has an overdrawn account in the firm, they are liable to repay the amount of the overdraft to the firm on the dissolution of the firm.
This means that the partners are liable to repay any amounts they have borrowed from the firm.
Liability for Unsatisfied Judgments: If the firm has any unsatisfied judgments against it, the partners are liable to pay off the judgments from their personal assets.
This means that the partners are personally liable for any judgments against the firm that have not been paid off.
Q 9. Distinguish between the right of lien and stoppage-in-transit
Ans. The right of lien and stoppage-in-transit are two important legal concepts that are often used in commercial transactions.
They are both used to protect the interests of sellers in the event of a buyer’s default on payment.
Right of Lien
The right of lien is the right of the seller to retain possession of the goods until the buyer has paid the full price for the goods.
The seller can exercise this right even if the buyer has already taken possession of the goods. The right of lien is available to the seller only if the following conditions are met:
The seller must be in possession of the goods: The right of lien is available to the seller only if they are in possession of the goods.
If the goods have already been delivered to the buyer, the seller cannot exercise the right of lien.
The goods must be sold without a credit period: The right of lien is available to the seller only if the goods have been sold without a credit period.
If the goods have been sold on credit, the right of lien cannot be exercised until the credit period has expired. BCOC 133 Solved Free Assignment 2023
The buyer must be in default of payment: The right of lien can be exercised only if the buyer is in default of payment. If the buyer has paid the full price of the goods, the seller cannot exercise the right of lien.
The right of lien is a possessory right. This means that the seller can exercise the right only if they are in possession of the goods. If the goods are lost or destroyed while in the possession of the seller, the right of lien is extinguished.
Stoppage-in-Transit
Stoppage-in-transit is the right of the seller to stop the delivery of goods in transit to the buyer if the buyer is in default of payment. The right of stoppage-in-transit can be exercised only if the following conditions are met:
The goods must be in transit: The right of stoppage-in-transit can be exercised only if the goods are in transit. Once the goods have been delivered to the buyer, the right of stoppage-in-transit is extinguished.
The buyer must be in default of payment: The right of stoppage-in-transit can be exercised only if the buyer is in default of payment. If the buyer has paid the full price of the goods, the right of stoppage-in-transit cannot be exercised.
The seller must have a right to resell the goods: The seller can exercise the right of stoppage-in-transit only if they have a right to resell the goods.
If the seller has already sold the goods to a third party, the right of stoppage-in-transit is extinguished.
The right of stoppage-in-transit is a right of ownership. This means that the seller can exercise the right even if they are not in possession of the goods.
If the goods are lost or destroyed while in transit, the seller can still exercise the right of stoppage-in-transit.
Differences between Right of Lien and Stoppage-in-Transit
Nature of Right: The right of lien is a possessory right, while the right of stoppage-in-transit is a right of ownership.
Conditions for Exercise: The right of lien can be exercised only if the seller is in possession of the goods and the buyer is in default of payment.
The right of stoppage-in-transit can be exercised only if the goods are in transit, the buyer is in default of payment, and the seller has a right to resell the goods.
Effect on Ownership: The right of lien does not affect the ownership of the goods
Q 10.Discuss the common features among promissory note, bill of exchange and cheque.
Ans. Promissory notes, bills of exchange, and cheques are all negotiable instruments used in commercial transactions. While each instrument serves a unique purpose, there are several common features among them.
Negotiability: All three instruments are negotiable. This means that they can be transferred from one person to another by endorsement and delivery. The transferee acquires all the rights of the transferor with respect to the instrument.
Unconditional Payment: The payment obligation under each instrument is unconditional. This means that the payment must be made without any conditions or limitations. BCOC 133 Solved Free Assignment 2023
Written Document: All three instruments are written documents. They must be in writing and signed by the maker or drawer.
Payment to Order: The payment under each instrument can be made only to the person named in the instrument or their order.
Time Limit: Each instrument has a time limit within which it must be presented for payment. The time limit is specified in the instrument and is usually expressed in days.
Liability of Parties: All parties to each instrument are liable for payment. This includes the maker or drawer, the payee, and any endorsers.
Presumption of Consideration: There is a presumption of consideration in each instrument. This means that the instrument is presumed to have been issued for valuable consideration unless proven otherwise.
Now let’s discuss each instrument individually.
Promissory Note:
A promissory note is a written promise by one person (the maker) to pay a sum of money to another person (the payee) or their order, on demand or at a specific time in the future. The common features of a promissory note include:
Promise to Pay: The maker promises to pay the sum of money to the payee or their order.
Signature: The maker signs the note.
Time of Payment: The time of payment is specified in the note.
Payment on Demand: The note can be payable on demand or at a specific time in the future.
Bill of Exchange:
A bill of exchange is a written order by one person (the drawer) to another person (the drawee) to pay a sum of money to a third person (the payee) or their order, on demand or at a specific time in the future. The common features of a bill of exchange include:
Order to Pay: The drawer orders the drawee to pay the sum of money to the payee or their order.
Signature: The drawer signs the bill.
Acceptance: The drawee must accept the bill before it becomes a legally binding obligation.
Time of Payment: The time of payment is specified in the bill.
Payment on Demand: The bill can be payable on demand or at a specific time in the future.
Cheque:
A cheque is a written order by one person (the drawer) to a bank to pay a sum of money to another person (the payee) or their order. The common features of a cheque include: BCOC 133 Solved Free Assignment 2023
Order to Pay: The drawer orders the bank to pay the sum of money to the payee or their order.
Signature: The drawer signs the cheque.
Payable on Demand: The cheque is payable on demand.
Drawn on a Bank: The cheque is drawn on a bank.
Crossing: The cheque may be crossed, which means that the payment must be made to a bank and cannot be cashed by the payee.
Section C
Q 11. Distinguish between :
(i) Coercion and undue influence
(ii) Fraud and Misrepresentation
Ans. (i) Coercion and undue influence:
Coercion is the act of forcing someone to do something against their will through threats, physical harm, or other forms of pressure.
Undue influence, on the other hand, is the use of one’s position of power or trust to manipulate another person into making a decision that benefits the influencer.
The key difference between coercion and undue influence is that coercion involves the use of force or threats, while undue influence involves taking advantage of a person’s vulnerability or trust in a manipulative manner.
Coercion is often illegal, while undue influence may be legal or illegal depending on the circumstances.
(ii) Fraud and Misrepresentation:
Fraud and misrepresentation are both types of deception, but they differ in their intent and severity. Fraud is the deliberate and intentional deception of one person by another, often for financial gain.
Misrepresentation, on the other hand, is a false statement made by one party to another that induces the other party to enter into a contract or transaction.
The key difference between fraud and misrepresentation is the intent to deceive. Fraud involves a deliberate and intentional deception, while misrepresentation may be made without the intention to deceive. Fraud is often a criminal offense, while misrepresentation may be a civil offense.
Q 12. “An agreement in restraint of trade is void”. Examine this statement mentioning exceptions, if any.
Ans. The statement “an agreement in restraint of trade is void” is a well-established principle of contract law. It means that any agreement that restricts a person’s ability to carry on their trade or profession is invalid and unenforceable.
The reason for this rule is to promote competition and protect the interests of consumers. If agreements in restraint of trade were enforceable, it would create monopolies and limit consumer choice.
Therefore, the law seeks to prevent such agreements and promote free competition in the market. BCOC 133 Solved Free Assignment 2023
However, there are certain exceptions to this rule. These exceptions include:
Reasonable restrictive covenants in employment agreements: An employer may impose reasonable restrictions on an employee’s ability to work in the same industry or with a competing business for a certain period after leaving their employment.
These restrictions are meant to protect the employer’s legitimate business interests, such as confidential information, trade secrets, or customer relationships.
Sale of goodwill: When a business is sold, the seller may agree to a restriction on their ability to compete with the buyer in the same business for a certain period.
This is known as a non-compete clause and is meant to protect the buyer’s investment in the business.
Trade secrets: Agreements to keep trade secrets confidential are enforceable. This is because the protection of confidential information is essential for businesses to maintain their competitive edge in the market.
Q 13. What can’t be a partner of a Limited Liability Partnership?
Ans. A Limited Liability Partnership (LLP) is a popular form of business organization that combines the benefits of a partnership with the limited liability of a company. An LLP is governed by the Limited Liability Partnership Act, 2008, and has its own separate legal identity.
However, there are certain individuals or entities who cannot become partners in an LLP. In this essay, we will examine who cannot be a partner of an LLP and why.
Minors
A person who has not attained the age of 18 years cannot become a partner in an LLP. This is because minors are not considered legally competent to enter into contracts. BCOC 133 Solved Free Assignment 2023
Since an LLP is essentially a partnership agreement, a minor cannot become a partner in an LLP. If a minor wishes to become a partner, they must wait until they attain the age of 18 years.
Persons of unsound mind
A person who is of unsound mind and has been declared as such by a competent court cannot become a partner in an LLP.
This is because a person who is of unsound mind is not considered competent to enter into a contract. Any agreement entered into by such a person would be voidable at the option of the other party.
Insolvent persons
A person who has been declared as insolvent by a court cannot become a partner in an LLP. This is because an insolvent person is not considered financially stable and cannot be trusted with the assets of the LLP.
Any money or property invested by such a person would be at risk of being seized by creditors.
Foreign entities that are not allowed to invest in India
LLPs are governed by the Foreign Exchange Management Act (FEMA), which regulates foreign investment in India.
Foreign entities that are not allowed to invest in India, either wholly or partially, cannot become partners in an LLP.
For example, foreign companies engaged in the manufacture of cigarettes or tobacco products are not allowed to invest in India and cannot become partners in an LLP.
Individuals who have been disqualified from being a partner
Any person who has been disqualified from being a partner in an LLP under the Limited Liability Partnership Act, 2008, or any other law cannot become a partner in an LLP.
The disqualification may be due to various reasons, such as conviction for a criminal offense, insolvency, or professional misconduct.
Q 14. Explain the essentials of valid contract of sale.
Ans. A contract of sale is an agreement between two parties where one party agrees to transfer ownership of goods or services to another party in exchange for a consideration, usually money. BCOC 133 Solved Free Assignment 2023
A valid contract of sale is essential for any transaction involving the sale of goods or services to protect the interests of both parties. In this article, we will discuss the essentials of a valid contract of sale.
Offer and Acceptance
The first essential of a valid contract of sale is an offer and acceptance. An offer is a proposal made by one party to another to buy or sell goods or services at a certain price.
The offer should be communicated clearly and unambiguously to the other party. Acceptance is the unconditional agreement of the other party to the terms of the offer. Acceptance should also be communicated clearly and unambiguously.
Competent Parties
The parties to a contract of sale must be competent to enter into a contract. This means that they must be of legal age, of sound mind, and not disqualified by law from entering into a contract.
A contract entered into by a minor, a person of unsound mind, or a person disqualified by law is voidable at the option of the party who is not competent.
Intention to Create Legal Relations
The parties to a contract of sale must have the intention to create legal relations. This means that they must intend that the agreement they enter into is legally binding.
An agreement entered into between friends or family members without the intention to create legal relations is not a valid contract.
Free Consent
The parties to a contract of sale must give their consent freely and voluntarily. This means that the consent must not be obtained by coercion, undue influence, fraud, misrepresentation, mistake, or any other means that vitiates free consent.
Any agreement entered into without free consent is voidable at the option of the party whose consent was not freely given.
Lawful Consideration
A contract of sale must have a lawful consideration. Consideration is the price paid by one party in exchange for the goods or services provided by the other party.
The consideration must be lawful, meaning it must not be illegal or against public policy. A contract entered into without lawful consideration is void.
Lawful Object
The object of a contract of sale must be lawful. This means that the goods or services being sold must not be illegal or against public policy.
For example, a contract to sell illegal drugs or weapons is not a valid contract. A contract entered into with an unlawful object is void.
Capacity to Contract
The parties to a contract of sale must have the capacity to contract. This means that they must be legally capable of entering into a contract.
For example, a person who has been declared bankrupt may not have the capacity to enter into a contract. A contract entered into by a party who lacks capacity is voidable at the option of the party who has capacity.
Certainty of Terms
A contract of sale must have certainty of terms. This means that the terms of the agreement must be clear, definite, and capable of being understood by both parties.
The terms should include the price of the goods or services, the payment terms, delivery terms, and any other terms that are necessary for the contract to be enforceable. BCOC 133 Solved Free Assignment 2023