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Monday, May 4, 2009

Business Law (Old Pattern)





Ans.     According to Section 2(h) of the Indian contract Act: "An agreement enforceable by law is a contract". A contract, therefore, is an agreement the object of which is to create a legal obligations between the parties entering into the contract.


Thus, the two essential elements of a contract are:-

a)         Agreement: As per section 2(e): Every promise and every set of promises, forming the consideration for each other, is an agreement. Agreement comes into existence only when one party makes a proposal to the other party and the other party accepts.

b)         To Parties: For the formation of a contract the existence of two parties is compulsory because a person cannot enter into a contract with himself. The person and the person to whom the proposal is made called the promise.

c)         Legal Obligation: An agreement to become a contract must give rise to a legal obligation i.e. a duty inforceable by law. "All contracts are agreements but all agreements are not contracts". Thus, here an obligation means the legal duty to do or to abstain from doing something.


Essential Elements of A Valid Contract

According to section 10, all agreement are contracts if they are made by the free consent of the parties, competent to contract, for a lawful consideration, with  a lawful object, are not expressly declared by the Act to be void, and, where necessary, satisfy the requirements of any law as to writing or attestation of registration.


The  essential elements of a valid contract can be represented as:-






















The above elements can be explained as:-

i)          Offer & Acceptance: There must be a lawful offer and  lawful acceptance of the offer, thus resulting in an agreement. The offer or proposal as well as acceptance should be definite. The acceptance of the   offer should also be in the mode prescribed and it must be communicated to the offer.


ii)         Intention To Create Legal Relations: There must be an intention among the parties that the agreement should be attached by legal consequences and create legal obligations. Agreements of a social or domestic nature do not contemplate legal relations and as such they do not give rise to a contract.


            E.g. Balfour Vs. Balfour and Rose & Franke Co. Vs. Crompton & Brothers Ltd. were dismissed on the ground that no legal relations had been contemplated.


iii)         Lawful Consideration: Consideration has been defined as the price pad by one party for the promise of the other. It is an act or promise to do or not to do something. It need not necessarily be  in cash or kind. But, only those considerations are valid which are 'lawful'.


iv)        Capacity of Parties: In order to be competent to contract the parties must be of the age of majority, is of sound mind & must not be disqualified from contracting by any law to which they are subject (Sec. 11)


v)         Free Consent: 'Consent' means that the parties must have agreed upon the same thing in the same sense (Sec. 13). There is absence of 'free consent', if the agreement is induced by (a) Courier (b) under influence (c) fraud (d) misrepresentation or (e) mistake.


vi)        Lawful Object: The object of the contract or agreement must necessarily be legal. The object for which the agreement has been entered into must not be graudulent or illegal or immoral or against public interest.

            E.g. Thus, if a landlord knowingly lets out his house on rent to a prostitute to carry on prostitution cannot recover the rent through a court of law.


vii)        Compliance With Legal Formalities: According to the Indian Contract Act, a contract may be oral or in writing. But in certain special cases it lays down that the agreement, to be valid, must be in writing or/and registered.


            For e.g., it requires that an agreement to pay a time barred debt must be in writing and an agreement to make a gilt for natural love and affection must be in writing and registered.


viii)       Certainty: Section 29 of the contract act provide that "Agreements, the meaning of which is not certain or capable of being made certain, are void. It must be possible to ascertain the meaning  of the agreement, for otherwise, it cannot be enforced.


            Fog e.g.: A agrees to sell B a hundred tons of oil. There is nothing to show what kind of oil was intended. The agreement is void for uncertainty.


ix)        Possibility of Performance: Section 56 lays down that, "An agreement to do an act impossible in itself is void". Even a contract to do an act, which after the contract is entered into, becomes impossible or unlawful is said to be void.

            E.g. A agrees with B to bring gold by magic. The agreement is not enforceable.


x)         Not Expressly Declared Void: The agreement to be entered into must not have been expressly declared void by any law in force in the country. Sections 24-30 specify certain types of agreements which have been expressly declared to be void.


            Eg. Agreements in restraint of marriage (Section 26), agreements in restraint of trade (Section 27), etc.



It has been rightly stated by Sir John Salmond, "The law of contracts is not the whole law of agreements, nor is it the whole law of obligations. It is the law of those agreements which create obligations, and those obligations, which have their source in agreements.


To be enforceable by law an agreement must posses the essential elements of a valid contract.


Q3.      What do you mean by discharge of a contract? What are various ways in which a contract may be discharged?


Ans.     When the rights and obligations arising out of a contract are extinguished, the contract is said to be discharged or terminated. In other words, discharge of a contract means termination of the relationship between the parties to a contract


There are many ways in which a contract may be discharged or dissolved. They can be diagrammatically represented as:-


Discharge of Contract









The ways of discharging a contract can be discussed as:-


i)          Discharge of Contract By Performance: When a contract is duly performed by both the parties within the specified time and in the manner prescribed, the contract is said to have been performed and discharged. Performance may be: (a) Actual (b) Attempted.


a)         Actual Performance: When each party to a contract fulfils his obligation arising under the contract within the time and in the manner prescribed, it is called actual performance of the contract and the  contract is discharged.


b)         Attempted Performance – When the promisor offers to perform his obligation under the contract, but is unable to do so because the promise does not accept the performance, it is called attempted.


iii)         Discharge BY Mutual Consent Or Agreement: Line a contract is created by an agreement, it may also be discharged by another agreement between the same parties.


            The methods of discharging a contract by mutual agreement are:-

a)         Novation – Novation occurs when a we contract is substituted  for an existing contract, either between the same parties or between different parties, the consideration being the discharge of old contract, mutually.

            E.g.: A is indebted to B & C to C. By mutual agreement B's debt to C & B's loan to A are cancelled & C accepts as his debtor.


b)         Alteration -  Alteration of a contract means change in one or more of the  material terms of a contract. There lies a difference between 'novation' & alteration. In novation' there may be a well as a change in the parties. But, in alteration the parties. But, in alteration the parties remain the same. Thus the two are not the same

c)         Rescisson : A contract may be discharged, before the date of performance, by agreement between the parties. Such a agreement accounts. The contract may be cancelled by either both the parties mutual or any one of them, on certain grounds.


d)         Remission: Remission may be defined "as the acceptance of a lesser sum than what was contracted for or a lesser fulfillment of the promise made".


            Eg.: A borrows Rs.2,00 from B. B repays only Rs.1000 which A accepts in will satisfaction of the whole debt.


e)         By waiver – Waiver means the deliberate abandonment or giving up of a right which a party is entitled to under a contract.


f)          Merger – Under this an unferior right of one of the parties merges into a superior right of the same party under the same contract or another.


            E.g: X holds a house on lease. Later he buys this house. Here, his right as a lesse merges into the right of an owner.


g)         Owing to the occurrence of an event – It is agreed between the parties  that a contract will be discharged on the happening of an event ad that even  occurs, the contract is discharged.


iii)         By Lapse of Time: Every contract must be performed with a specified of reasonable time. If this is not done the contract is discharged. This means that after the lapse of time the contract cannot be enforced in the court of law.


iv)        By Operation of Law: A contract termination, by the operation of law in the following cases:-

a)         Death – where the contract is of personal nature i.e. personal skill or ability is required, the death of the promisor discharges the contract. In other cases, the right & liabilities pass on to the legal representatives.


b)         Insolvency – when a person is declared insolvent, he is released from his liabilities and the contract is discharged.


c)         Merger – When an inferior right contract merges with the superior right contract, the  former stands discharged automatically.

d)         Complete loss of evidence – If the evidence providing the existence of the contract is lost, it stands terminated.


e)         Rights and liabilities vest in one and the same person – In such a case also the contract stands discharged.

            Eg. If a bill of  exchange is accepted by its acceptor, other parties are discharged.


v)         By Breach of Contract: Breach means failure of a party to a contract to perform his obligations under a contract. Breach may be of two kinds:


a)         Actual Breach – It occurs when a party fails to perform his obligation  upon the date fixed for performance by the contract. It is committed either at time when performance is due or during performance.


b)         Anticipatory Breach – It is breach of contract occurring before the time fixed for performance has arrived. It is expressly by words spoken or written when a party to the contract communicates to the other party, before the due date of performance, his intention not the perform it. It is  implied by the conduct of the party when a party disables himself from performing the contract.


vi)        By Assignment: Assignment of contract means transfer of rights or benefits under a contract in existence.


vii)        By Impossibility of Performance: Section 56 states that "An agreement to do an impossible act is void". Even if such impossibility occurs after the contract has been entered into, the contract will be discharged as and when the impossibility occurs.


viii)       By Material Alteration: If one of the parties makes any material alterations i.e. alterations that would affect the rights and liabilities of the parties, without the consent of the other party, the other party can discharge the contract. Thus, in such a case the contract is discharged  and cannot be enforced.



Thus, as a contract is formed so can it be discharged or determinate in the way illustrated. A discharge actually terminates the rights and liabilities of the parties to contract that may kind them.


Q4.      Classify and explain different types of agents?


Ans.     Section 182 of the contract Act States, "An agent is a person employed to do ay act for  another or to represent another in dealings with third persons. The person for whom such act is done, or who is represented, is called the principal".


            The contract which creates the relationship of 'principal & agent' is called an 'agency'.

            E.g.: Where A appoints B to buy 10 bags of sugar on his behalf, A is the 'principal'. B is the 'agent' and the contract between the two is 'agency'.


            Agents can be classified in various ways according to the point of view adopted. Their classification can be explained as:-


Different Types of Agents


Extent of Authority

Mercantile Agents


Special Agents

General Agents

Universal Agents


Substituted Agents

Sub Agents




Commission Agents

Del Credere Agents

Forwarding Agents

Clearing Agents

Indenting Agents










I.          Classification on the Basis of Extent of Authority


i)          Special Agents: A special agent is one who is employed to do some particular act or represent his principal in some particular transaction. As soon as the act is performed, the authority of such an agent comes to an end. If a special agent does anything outside his authority, the principal is not bound by it. A special agent is also called a specific or a particular agent.


            Eg.: A broker appointed specially for the sale of a particular property. As soon as the property is sold the authority of the broken will end.


ii)         General Agent: A general agent is one who is employed to do all acts connected with a particular business or employment. He can bind the principal by doing anything which falls within the ordinary scope of that business. Such authority of an agent continuous till it is put to an end. If the principal secretly restricts the rights of his agent and if the agent still acts beyond that the principal will be bound by the acts which fall within the scope of business, unless the third parties have notice of the limitation.


iii)         Universal Agents: A universal agent is one whose authority is unlimited, i.e. who is authorized to all the acts which the principal can lawfully do and can delegate. A universal agent is practically a substitution for his principal for all those transactions wherein his principal cannot participate. A universal agent with very extensive powers.


iv)        Co-agents: When a principal appoints two or more persons as agents jointly or severally, such agents are known as co agents. If nothing is specified regarding their authority it is considered to be joint authority. When their authority is several, any one of the co-agents can act without the concurrence of other.


v)         Substituted Agents: When an agent holding an express or implied authority to name another person to act for & on behalf of his principal in his business, is known as substituted agent. The substituted agent is taken as the agent of his principal for such part of the work as is entrusted to whom. Sometimes a substituted agent is also called a co-agent.


            Eg.: A  is a solicitor & B directs  A to sell his estate by auction and to appoint an auctioneer for the same. A names X to conduct the sale. Here , X is substituted agent.


vi)        Sub-Agents – Section 191 defines a sub-agent as, "A person employed and acting under the control of the original agent in sub agent of the original agent. The relation of the sub-agent of the original agent. The relation of the sub-agent with the principal depends on the fact whether the agent has the authority to appoint a sub-agent. If he is authorized to do so, then the acts of a sub-agent will bind the principal as that for original agent. The agent is responsible to the principal for the acts of sub-agent.


            If, however, the agent is not authorized to appoint a sub-agent and still he does so the principal will not be bound by his acts Rather, the agent will be responsible both to the principal and the third parties.




            A mercantile agent is one who has authority either to sell goods or to raise money on the security of goods or to buy goods.


            The various mercantile agents are:

i)          Factor: A facto is a mercantile agent to whom good are entrusted for sale. He enjoys wide discretionary powers in relation to the sale of goods. He sells the goods in his own name upon the conditions which he thinks favourable. He may pledge the goods as well. He can perform all the functions of business on the behalf of his principal like selling goods, giving their delivery, receive the price of goods and can even give a good discharge to the purchaser. A factor is the best example of a general mercantile agent.


            Eg.: A delivers his car to a mercantile agent B for its sale at Rs. 1,00,000. B sells it to C for Rs. 90,000 & hands over the full amount of Rs. 90,000 to A. A sues B for the recovery of car. But, since B is a mercantile agent appointed by A he cannot be sued. Thus, the transaction is binding on A.


ii)         Brokers: A broker is employed to make contracts for the purchase and sale of goods. He is not entrusted with the possession of goods but acts as a link between the seller and the buyer. He brings the two parties together and if the transaction is completed he is entitled to his commission called brokerage. His authority ends when the transaction is completed.


iii)         Auctioneers: He is a mercantile agent appointed to sell goods on behalf of the principal and he gets a reward in the form of a commission.


            An auction is a public sale of goods where the highest bidder gets the possession of goods. An  auctioneer conducts auction on behalf of the seller.


iv)        Commission Agents: He is a mercantile agent who buys or sells goods for his principal on the best possible terms in his own name and who receives commission for his labours. He may have possession of goods are to be distributed in distant markets or are to be purchased from far off markets.


v)         Del Credere Agents: He is  a mercantile agent who is employed to sell goods on behalf of his principal. He is one who guarantees the principal the payment of the goods, sold by the agent, by the third party and if the third party is unable to make such payment, the agent will pay from his pocket. To make good the loss caused by bad debts, the agent charges on extra commission called the del Credere Commission.


            Thus, he serves an insure to his principal against bad debts on account of credit sales besides being an agent.


vi)        Forwarding Agents: The service provided by forwarding agents is that of collecting goods from their principal and forwarding them to shipping companies. Forwarding agents are of great helps to producers and exporters in case of foreign trade.


vii)        Clearing Agents: Clearing agents provide help to importers. They complete various customs and exchange formalities on behalf of the importers who appoint them. These agents help in saving the time and energy of importers.

viii)       Indenting Agents: He is an important mercantile agent who facilitates the distribution of goods at international level. He is a commission agent who procures a sale or purchase from a merchant abroad against a commission at the rate mentioned in the indent.



            Non-mercantile agents also play an important role and perform various functions for and on behalf of their principals. The various types of non-mercantile agents can be listed as: Bankers Underwriters, Solicitors, Life, Estate Agent, Attorneys, etc.



            Thus, to conclude the agent is actually a representative of his principal. The basic difference in different types of agents being the difference in their authority and the kind of work they do.

Q5       Explain the rights, duties and responsibilities of an agent to his principal?


Ans.     Section 182 of the contract act defines, "An agent is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is represented, is called the principal".


            The function of an agent is essentially to bring about contractual relations between the principal and third parties. An agent has certain rights, duties and liabilities towards the principal and third parties depending upon the nature of business. These rights, duties and liabilities can be generated as:-


Rights of an Agent

i)          Right to Receive Remuneration – The agent is entitled to receive an agreed remuneration or reasonable remuneration unless otherwise agreed upon. An agent has a right to claim his remuneration on completion of his work, even if the contract never materializes on account of breach. But, if an agent is found guilty of misconduct or fraud, etc. he has no right over remuneration. In addition, he is entitled or liable to compensate the principal for any such loss.


ii)         Right of Retainer: An agent has the right to retain any sum, received by him on behalf of his principal from the third parties, which may fall due as part of his remuneration, or advances or expenses incurred in the general conduct of business.


iii)         Right of Lien: An agent has the right to retain any movable or immovable property, papers or goods of the principal received by him, until the amount of commission due to him is received. This kind of  a lien is a 'Particular lien' which will end as soon as the possession is cost. However, by a special contract such a lien can be extended to a 'General Lien'.


iv)        Right to be Indemnified Against Consequences of Lawful Acts: An agent has also the right to be indemnified against the consequences of all lawful acts done by him in exercise of authority conferred upon him. This right of the agent is obvious for the simple reason that an agent is a representative of his principal.


v)         Right to be Indemnified Against Consequences of Acts Done in Good Faith: An agent has the right to be indemnified against all acts done by him in utmost good faith ,where one person employs another to do an act and the agent does the act in good faith, the employer or principal is liable to indemnify the agent.


            Eg.: A employs B to sell the goods in A's possession B sells the goods unaware of the fact that C is the actual owner of the goods. C sues B for the recovery of the value of goods. In this case B has a right to be indemnified by A and to rum burse the  expenses incurred by B is the liability of A.


vi)        Right to Compensation: The agent has a right to be compensated for injuries sustained by him due to the principals neglect or want of skill. However, the principal is not liable for any compensation for the injuries caused by the own neglect of the agent.


vii)        Right of Stopping of Goods in Transit: An agent has a right to stop the goods in transit if:-


a)         He has bought goods either with his own money or by incurring a personal liability for the price on behalf of the principal,

b)         The principal has become insolvent of/and

c)         When an agent, e.g. del Credere agent is personally liable to his principal to his principal for the price of the goods sold, he can exercise the unpaid seller's right and stop the goods in transit on the unsolvency of the buyer.


viii)       Agent's Right To do All Lawful Things: A person who is appointed as an agent has the right to do all lawful things which fall under the usual course of business.


ix)        Right in Emergency: An agent has a right to do all such acts which could protect his principal from loss in case of emergency as would have been done in his own case, in a similar situation.


x)         Right to Appoint Sub-Agent & Substitute Agent: An original agent has a right appointed would be responsible to the original agent, except in case of fraud, etc.


            Where an agent has an express or implied authority he may name another person as  substitute agent to act for his principal.


xi)        Right  to Renounce His Agency: An agent is in full right to renounce his agency by giving a reasonable notice to  his principal.


xii)        Right to Receive Compensation for Remature Revocation: If there is an express or implied conduct on the part of the agency that the agency would continue for a specified period and if there is previous revocation without any reasonable cause, the agent would have a right to compensation in such a case.



i)          Duty of Follow Principal's Directions of Customs: The first and the foremost duty of an agent is to act within the scope of authority conferred upon him and act according to the directions given by his principal. In the absence of any such instructions the agent should work according to the customs prevailing in the agency. If he acts otherwise he is liable to make good the loss caused by him.


ii)         duty to Carry Out Work With Reasonable Skill & Diligence: The agent must conduct the business with reasonable skill and diligence unless otherwise specified i.e. if the principal has notice of want of skill. In general the agent is expected to work in the manner as he would do in his own name.


iii)         Duty to Render Accounts: It is the duty of the agent to maintain proper accounts of his principal's property and render it to him on demanded, or periodically if so agreed upon.


iv)        Duty to Communicate: It is the duty of the agent to communicate to the principal with full diligence any difficulty that may arise from time to time. He should obtain proper instructions from the principals, before taking any steps in facing the difficulty. But, if due to certain reasons he is unable to communicate the difficulty, he has full authority to take all reasonable steps to prevent loss.


v)         Duty Not to deal on his On Account: It is the duty of the agent not to buy from or sell goods to the principal in his own account, which he is actually asked to sell or buy on his principal's behalf, without obtaining prior consent of his principal, all material facts being disclosed.


vi)        Duty not to make any profit out of his Agency Except his Remuneration: An agent stands in a fiducidary relation to his principal and therefore he must not make any secret profits from the agency. He is authorized only to a fixed remuneration or commission as the case may be. If the principal gets the notice of any such secret profit he can either recover the amount of profit from the agent, refuse to pay his remuneration, terminate the agency without prior notice, file a suit against his agent or can even repudiate the contract entered by his agent with the third party.


vii)        Duty on Termination of Agency by Principal's death or Insanity:  When an agency is terminated due to the death or insanity of his principal, it is the duty of the agent to take all steps to protect and preserve all the  interests entrusted to him.


viii)       Duty not to delegate His Authority: It is the duty of an agent not to do his work i.e. to perform the work which he has expressly or impliedly undertaken to perform personally except  of specifically agreed upon.


ix)        Duty  not to use the Information Obtained in the course of the Agency Against his Principal: It is  the duty of the agent not to use the information obtained in the course of business against his principal. If he does so, he must compensate the loss incurred by his principal.


x)         Duty to Pay Sums Received for the Principal: It is the duty of the agent to pay all such sums to his principal which he may have received for him. He has the right to deduct any amount which may be outstanding in this account like remuneration, etc.


xi)        Duty not to set up an Advance Adverse Title: When an agent receives goods from his principal or other sources, on behalf of the principal, it is the duty of the agent not to set up on adverse title i.e. his own title or title of third parties to it. If he does so, he can be held liable.


xii)        Duty in Naming an Agent for his Principal: Selecting an agent for his principal, an agent is bound to put in same amount of discretion, as he would do in his own case, under similar circumstances.



i)          Liabilities in Respect of Damages and Misconduct:  In case of breach of contract by an agent, he is liable to pay damages. If he is found guilty of misconduct, the principal can hold back his  remuneration for that part of business which he has mis-conducted.


ii)         Personal Liability of an Agent where Fixed by Trade Custom or Usage: If the trade custom or  usage in business specifies the personal liability of an agent, then hill be held personally liable for his misconducts, until unless specified.

iii)         When an Agent Expressly Agrees to be Liable: When the contract expressly specifies that the agent shall be held personally liable in  case of breach of contract, then he can be held liable personally.

iv)        Liability for his wrongful Acts: An agent is held liable personally when he acts beyond his authority or commits fraud or misrepresentation.

v)         Liability for the Acts of Sub-agents: When an agent appoints a sub-agent, without having the authority to do so, hill be liable for all acts of the sub agent, both to the principal and the third party.



Rights and duties or liabilities are like the two sides of a coin. An agent cannot enjoy just his rights, without performing certain duties and owing certain liabilities. The rights of an agent give him the necessary freedom to perform a particular kind of business and on the other hand the duties and liabilities kind him to act in good faith, depending upon the nature of business.

Q6.      Explain the mutual rights and liabilities of partners in a partnership firm?


Ans.     Section 4 of Indian Partnership Act, 1932 defines Partnership as, "Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all".


            The rights, duties and liabilities of partners make the mutual relationship between the partners more clear. Partners can themselves determined their rights by contract, but the  partnership act confers certain rights upon the partners. The rights and liabilities of partners can be illustrated as:-


Rights of Partners

i)          Right to take part in the Conduct or Management of Business: Every partner, irrespective of the amount contributed by him, has an inherent right to participate in the conduct of business of the firm. However, by mutual agreement, some partners may be restricted to take part but, the right to participate in the management must be available to all


ii)         Right to be Consulted & To  Take Decisions by Majority: Before taking up any major decisions, it is the right of the partners to be consulted and heard. Any disagreement should be solved by majority decision. But, no change in the nature or constitution of the business can be done without the consent of all partners.


iii)         Right of Access To  Books: Every partner has a right to have access to and to inspect and copy the books of firm.


iv)        Right to Share the Profits: Every partner has a right to share the profits equally, unless otherwise agreed upon, and bear the losses as well.


v)         Right to Receive Interest on Capital: If the partnership deed so decides that a partner is entitled to receive interest on capital at a fixed or certain rate, he has a right to receive it but, only out of profits.


vi)        Right to be Indemnified: Every partner has a right to claim indemnity from the firm in respect of payments made or liabilities incurred by him in the ordinary and proper conduct of business and in emergency to  protect the firm from loss, provided the act should be such as would have been done by a person of ordinary prudence, in his own case and under similar circumstances.


vii)        Right to Receive Interest on Advances: If a partner makes any advances beyond the amount of capital he has agreed to subscribe, he has a right to claim an interest at the rate of six percent per annum.


viii)       Right to Act in Emergency: A partner has every right and authority to act in emergency, in order to protect the firm from loss, and the firm would be bound by such an act, provided the act would similar in his own case, under same situation.


ix)        Right to Apply to the Property of the Firm for Business of the Firm: Subject to contract between the partners, every partner has a right to apply and use the property of the firm exclusively for business of the firm.


x)         Right to Apply to the Property of the Firm for Business of the Firm: Subject to contract between the partners, every partner has a right to apply and use the property of the firm exclusively for business of the firm.


xi)        Right to Prevent Introduction of a New Partner: Every partner has a right to prevent the introduction of any new partner in the firm. No person can be admitted into partnership firm without the consent of all the  partners.


xii)        Right to Retire: A partner has a right to retire with the consent of all the partners. If the partnership is at will, he has the right to retire by giving due notice in writing to all other partners.


xiii)       Right Not to be Expelled: A partner has a right not to be expelled by  any majority of partners without any cause.


xiv)       right of an Outgoing Partner to Carry on a Competing Business: Every partners has a right to carry on a business, similar to the partnership business, after his retirement with certain restrictions being that he cannot use the firm name, represent himself as carrying on the business of the firm or solicit the customs of persons who were dealing with the firm before he ceased to be a partner.


xv)       Right of Outgoing Partner in Certain Cases to Share Subsequent Profits: If any partner of the firm dies or otherwise ceases to be a partner and the continuing partners continue to carry on business with the property of the firm, without any settlement being given to the outgoing partner, then in the absence of any contract, he himself or his representative are entitled to a share of profits made since he ceased to be a partner, as may be attributable to the use of his share of property or to interest at six percent per annum of his share in the property of the firms.


Liabilities of Partners

i)          Joint & Several: Every partner is liable jointly and severally for all the acts of the firm done while he was a partner. The liability of a partner is always unlimited.


ii)         Liability for Losses causes by HIM:  Every partner shall be liable to make good any loss caused to the firm by his fraud or willful neglect in the conduct of business. No partner can in any way exempt himself from such loss.


iii)         Liability for Secret Profits: A partner is liable to account for and pay to the firm any private profits earned from the business of the firm or property or goodwill of the firm.


iv)        Liability for Profits From Competing Business: If a partner carries on any business of the same nature and competing with that of the firm, he would be liable to account for and pay to the firm all profits made by him in that business.


v)         Liability to Render true Accounts: A partner is liable to render true accounts to profit to other partners. He is liable to disclose any legal or illegal accounts which fall within the scope of business of the firm.


vi)        Liability for Losses of the firm: As a partner has a right to share the profits of the firm so is he liable to share the losses equally unless otherwise agreed upon.



            Every partner acts as an agent of the firm in the ordinary course of business and so his acts kind the firm. The rights and liabilities of the partners lay down the extent of freedom of work enjoyed by them and the extent of liability to the borne by them. The rights and liabilities are according to the general concept of partnership deed and the partners are at power to amend the agreement accordingly, but with the unanimous consent of all the partners.


Q7.      What is the nature and extent of partner's authority to bind the firm by his acts?


Ans.     Sections 18 declares that from the point of view of the third parties a partner is an agent of the firm for the purposes of the business of the firm. Even if only one partner acts on behalf of the firm liable. One partner can make all the other partners liable only if he acts within his express or implied authority.


Thus, it is the express and implied authority of the partners which decides the nature and extent of their authority to kind the firm.



When a partner is expressly authorized by an agreement of all the partners to do certain acts on behalf of the firm, it is called the express authority of a partner. A partner can kind the firm by any such act which falls width the scope of his authority, even if it does not fall within the scope of business.



Such acts of a partner which are incidental to or usually done in the course of proper conduct of business come within the scope of his implied authority.


Sections 19(1) & 22 lays done certain provisions. For an act to be covered within the implied authority it is necessary that,

(a)        the act is done in the name of the form,

(b)        in the ordinary course of the business of the firm and,

(c)        with the intention to bind the firm.




The implied authority of a partner does not empower him to:

(a)        submit a dispute relating to the business of the firm or arbitration,

(b)        open a bank account on behalf of the firm in his own name,

(c)        compromise or relinquish any claim or portion of a claim by the firm,

(d)        withdraw a suit or proceeding field on behalf of  the firm,

(e)        admit a liability in a suit on behalf of the firm,

(f)         acquire or transfer any immovable property on behalf of the firm,

(g)        enter into partnership on behalf of the firm.


However, the partners in a firm may, by contract among themselves, extend or restrict the implied authority of any partner.



Section 21 extends the authority of a partner in an emergency. According  to this section, a partner, in an emergency, has authority to do all such acts to protect the firm from loss, as would be done by a person of ordinary prudence, in his own name, under similar situation and such acts will kind the firm.



If a partner makes any admission concerning the business of the firm in the ordinary course of business, it is considered as a sufficient evidence against the firm and it binds the firm.



Any notice given to a partner who habitually acts in the business of the firm, for any matter relating to the affairs of the firm, acts as a notice to the firm, except in case of fraud on the firm and that too by with the consent of that partner.


Thus, any such notice to an acting partner, not to a dormant partner, cannot to ignored by other partners.



Thus, any act done by a partner within the express or implied authority of a partner will bind the firm. The partner implied authority is extended in certain special cases in order to give them the necessary space to take actions to protect the firm from any loss.


Q8.      Distinguish between a sale and an agreement to sell & explain fully the essential of a contract of sale of goods?


Ans.     Section 4(1) of the sale of Goods Act defines a contract of sale of goods as – "a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price".


            The definition of contract of sale of goods reveals that either actual sale or an agreement to sell both are covered under the act. But, there are certain differences between the two.


            Where in a contract of sale, the property in the goods is immediately transferred from the buyer to the seller it is called a sale.


            Where under a contract of sale, the transfer of property in the goods is to take place in the future or after the fulfillment of certain conditions, it is called 'An agreement to sell".


            A sale and an agreement to sell can be distinguished as:-

i)          Transfer of Property (Ownership): In a sale, the property in goods or the ownership is immediately transferred from the seller to the buyer.


            In an agreement to sell the property in the goods is not transferred immediately at the time of contract, but the ownership is transferred at a later time either at the expiry of a certain period or fulfillment of certain condition. Until then, the seller continues to be the owner of the goods.


ii)         Risk of Loss: The general rule is that, unless otherwise agreed, the risk of loss passes with property. In case of sale, if the goods are destroyed the loss falls on the buyer, even if the buyer is not in possession of goods because the ownership has been transferred.


            In an agreement to sell, the loss is to be borne by the seller because the ownership has still not passed on to the buyer, even if the buyer has possession of it.


iii)         Consequences of Breach: In case of sale, if the buyer fails or refuses to pay the price of the goods, the seller can sue for the price, even if he has the possession of goods.


            In an agreement to sell, if the buyer fails to accept and pay the price, the seller can sue him only for damages and not for the price, even if the goods in possession of the buyer.



iv)        Right of Resale: In a sale the property of goods is immediately transferred to the buyer and so the seller (even if the goods are in his possession) cannot result the goods. If the seller does so, the subsequent buyer cannot acquire the title to the goods. The original buyer can recover the goods from the third person and can also sue the seller for the breach of contract.


            In an agreement to sell, the seller can sell the goods to anyone as he has the property of goods and the new buyer gets the title of goods as he purchases the goods for consideration and without any notice of prior agreement. In such  a case the original buyer can only sue for damages.


v)         Buyers Insolvency: In a sale, if the buyer becomes insolvent before he pays the price of the goods, the seller will have to deliver the goods to the official assignee or receiver and he can only claim dividend for the price of the goods.


            In an agreement to sell, if the buyer becomes insolvent and has not paid the price, the seller can refuse to deliver the goods to the official assignee or receiver until paid in full.


vi)        Seller's Insolvency: If the seller becomes insolvent then in case of sale the buyer is entitled to recover the goods from the official assignee of receiver since the ownership has been transferred to the buyer.


            In case of an agreement to sell, if the buyer has paid the full price, he can only claim a rateable dividend and not the goods because the property in the goods still rests with the seller.


vii)        Nature of Contract: A sale is an executed contract. An agreement to sell is an executary contract.


viii)       Types of Goods: A sale can only be in the case of existing and specific goods. An agreement to sell mostly takes place in the case of future and contingent goods.


            A sale and an agreement to sell both form a part of contract of sale.

            A contract of sale has certain essential elements. These elements can be illustrated as:-



i)          Two Parties: The first essential is that there must be two distinct parties to a contract – a buyer and seller, as a person cannot buy his own goods. A buyer is a person who buys or agrees to buy and a seller is a person who sells or agrees to sell. An exception to this rule is like auction sale, execution of a decree, etc. where a person can buy what he himself sells.


ii)         Transfer of Property: Property here means ownership transfer of property in the goods means general property and not special property. A mere transfer of possession of the goods cannot be termed as sale.


            If P owns certain goods, he has general property and if he pledges them to R then R is said to have special property and R cannot sell them.


iii)         Goods: The subject matter of contract of sale should be goods. Goods mean every kind of movable property other than actionable claim means against which a legal action can be taken.


iv)        Price: The consideration for a contract of sale must be money consideration called the 'price'. If goods are exchanged goods it is not covered under the contract of sale of goods. Any transfer of property which is not for a price i.e. gift, etc is also excluded. But, where goods are exchanged party for money and partly for goods, will be a contract of sale.


v)         Includes Both 'Sale' and 'An Agreement to Sell: A contract of sale may either be a sale or an agreement to sell.


            'Sale' is where under a contract of sale the  property is immediately transferred at the time of the contract from the seller to the buyer.


            'An agreement to sell' is a contract of sale where the property in the goods is transferred at a later period, either at time of expiry of the period or at the time of fulfillment of some condition as the case may be.


vi)        Essential Elements of A Contract: A contract of sale, to be valid, must have all the essential elements of a contract as laid down in section 10 of the Contract Act e.g. consideration, mutual consent of the parties, etc.



The sale of goods act covers the law relating to sale of movable goods. Thus, a contract of sale of goods is one whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price. This definition reveals in itself the essentials of a contract of sale, without which the contract will not be valid.



Q9.      Define the term "Negotiable Instrument' and explain its types and various parties of the types of negotiable instruments?


Ans.     Section 13 of Negotiable Instruments Act defines Negotiable instrument as, "a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer". Thus, the act mentions three kinds of negotiable instruments, namely notes, bills and cheques.


            The word negotiable means transferable by delivery, and the word instrument means a written document by which a right is created in  favour of some person. Literally, the term means, a written document transferable by delivery.


            The Act recognizes only three instruments but it, does not prohibit to include other instruments in the category of negotiable instruments which satisfy the conditions of negotiability, the conditions being:-

a)         It should be freely transferable either by delivery or by endorsement and delivery, and

b)         The person who obtains it in good faith and for value, he gets it free from all defects and is entitled to recover the money of the instrument in his own name.



a)         Negotiable Instruments Recognised by Statute: The Negotiable Instruments Act, 1981 in section 13 mentions only three kinds of negotiable instruments – bills of exchange, cheques and promissory notes.


b)         Negotiable Instruments Recognized by Usage or Customs of Trade: Bank notes, exchequer bills, share warrants, bearer debentures, dividend warrants, share certificates attached with the blank transfer deeds, etc are considered to be negotiable by custom in England. In India Banker's drafts, pay of orders, hundies, etc. are considered to be negotiable by custom or usage.


i)          Bill of Exchange: According to section 5 a Bill of Exchange is an instrument in writing containing an unconditional order, signed by the makers, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument.


The essential characteristics of a bill of exchange are:-

a)         It must be in writing

b)         It must contain an order to pay and not request

c)         The order must be unconditional

d)         The parties to a bill of exchange i.e. drawer, drawee and payee must be certain.

e)         It must be signed by the drawer and accepted by the draww

f)          The sum payable must be certain

g)         It must contain an order to pay money only

h)         It must be stamped properly

i)          Bill of exchange originally drawn cannot be made payable to bearer.


ii)         Promissory Note: According to section 4 a promissory note is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person or the bearer of the instrument.


The essential characteristics are:-

a)         It must be in writing

b)         It must contain a promise or undertaking to pay money only

c)         The promise must be unconditional

d)         Must be signed by the maker

e)         The maker must be a certain person

f)          The payee must be certain

g)         The sum payable must be certain

h)         The promise must be definite

i)          Formalities like number, date, consideration, place, etc are generally      there

j)          It must be properly stamped according to the provisions of the Indian    stamp act, 1899.


iii)         Cheque: Section 6 puts that a cheque is a bill of exchange which is drawn an a specified banker and is payable only on demand and not otherwise.


            The essential characteristics of a cheque are:

            a)         It is a negotiable instrument

            b)         It is a bill of exchange

            c)         It is always drawn on a banker

            d)         It is always payable on demand

            e)         A cheque can be bearer, order or crossed

            f)          It requires no acceptance as it is intended for immediate payment

g)         In a cheque – a drawee is always a specified bank, a drawer is a person who draws a cheque and who has an account in the bank and payee is a person to whom the amount of cheque is made payable.


iv)        Trade Bill & Accommodation Bill: When a bill is drawn and accepted for a genuine trade transaction it is termed as a trade bill. When a bill drawn and accepted not for a trade transaction but to provide financial help or assistance to some party is called an accommodation bill. This bill may be for the accommodation bill. This bill may be for the accommodation of both the drawer and acceptor. In such a case they share the proceeds of the bill by discounting it.

v)         Fictitious Bill: When in a bill of exchange the name of either drawer or payee or both is fictitious, the bill is called a fictitious bill. When either payee or drawer or both are fictitious, the acceptor, is liable to a holder in due course, provided he proves that the signature of the drawer and payee are the same.


vi)        Documentary and Clean Bills: When documents relating to the goods represented by the bill, e.g. invoice, bill of lading, etc. are attached to a bill, it is called a documentary bill. Such bills are delivered to the buyer only on acceptance or payment of the bill. Such bills are usually used in foreign trade.

            When no documents relating to the bills represented by the bill are attached to it, the bill is called a clean bill and is generally used in inland trade.



i)          Parties to a Promissory Note

a)         Maker – Maker is the person who promises to pay the certain amount   stated in the promissory note.


b)         Payee – He is the person to whom the amount specified in the   promissory note is made payable


c)         Holder- A holder can either be the payee or the person to whom the promissory note has been endorsed. He  is a person entitled to the possession of the note and to receive or receiver the amount due from the liable party.


d)         Endorser & Endorsee – When the holder of a promissory note endorses it to somebody else, he becomes the endorser and to whom it is endorsed is known as the endorse.


ii)         Parties to  a cheque

a)         Drawer – he is a person who draws a cheque on his bank and is usually the       account holder of the bank


b)         Drawee – The drawee is always the bank of the drawer. The bank is     directed to pay the amount mentioned on the cheque


c)         Payee – The payee is the person to whom the payment is made. It         can be a person or an organisation


d)         Holder – He can be the payee or any other person to whom the cheque is         endorsed.


e)         Endorser & Endorsee – When the holder of the  cheque endorses it to   somebody else, he is called the endorser and the person to whom it is   endorsed is called the tndorse.


iii)        Parties to a Bill of Exchange

            a)         Drawer – The maker of a bill of exchange is called the drawer


b)         Drawee – The person on whom the bill is drawn is called the drawee.


c)         Acceptor – He is the person who accepts the bill. Once the drawee       puts his             signature on the bill showing his assent, he is called the acceptor. At times    a stranger accepts the bill on behalf of the drawee.


d)         Payee – He is the person to whom the bill is made payable. He is the     real beneficiary of the instrument and can be the drawer or any other person


e)         Endorser and Endorsee – When a holder transfers the bill to      somebody else he is called the endorser and to whom it is endorsed is           called the endorsee.

f)          Holder – A person who is legally entitled to the possession of the bill     of exchange in his an name and to receive the amount of the bill is called a             holder. He may be the payee or endorse or bearer.


g)         Drawee in Case of Need – He is the person who can be resort to in      case of             need.  In such a case, the holder has to present the bill to him when the   original drawee refuses to accept the bill or pay the amount             of bill.


h)         Acceptor For Honour: Any person may become a party to the bill on    his own as an acceptor. When the original drawee refuses to accept           the bill, a person who accepts the bill or pay the amount of bill, a person             who accepts the bill in order to safeguard the honour of the        drawer or         endorser is called the acceptor for honour.



Thus, a negotiable instrument is a  piece of paper which entities a person to a certain sum of money and which is transferable from one to another person by delivery or by endorsement and delivery. The person who receives it is entitled to money and also gets the right to transfer it further. It is a special type of a contract.


Q12.    Explain Rights Duties and Disqualification director


Ans.     Section 2(13) defines a Director as, "any person occupying the position of director by whatever name called".


            Thus, a person will be deemed to be a director if he performs the functions of a director, though he may be named differently. A director is that  person who has full control over the direct management and conduct of the company.


            The directors of a company are collectively referred as the "Board of Directors", or "Board". Only individuals can be directors. No body corporate, association or a firm can be appointed director of a company.




i)          Right to Participate in the Affairs of the Company: A director, validly appointed, has a right to attend the meetings and participate in the affairs of the company regarding direction, supervision and control, etc.


ii)         Right to have Remuneration: Every director has a right to remuneration fixed either under any contract or under the articles of association of a company. The remuneration of the directors is not directly related to the profits of the company i.e. even if the company. The remuneration of the directors is not directly related to the profits of the company i.e. even if the company does not earn profit the directors will be paid their fixed remuneration.


iii)         Right to Compensation: In case of premature termination of a directors service, a director has a right to receive compensation from his company. Exceptions to his right are:-

a)         If premature termination is due to either reconstruction or           analgamation of a company.

            b)         If his company is wound up.

            c)         If the director has to vacate his office according to the provisions of       the companies Act of 1956.

            d)         If he is found to be guilty of fraud or breach of trust

            e)         If he himself is responsible for taking part in brining about the     termination of his office.



i)          Duty of Greatest Good Faith of Fudiciary Duties: The directors of a company are fudiciary agents of their company and so they must exercise their powers honestly and in best interest of the company. The business opportunities should never be exploited for their personal benefits but for the prosperity of the company.

ii)         Duty of Reasonable Care, Skill & Diligence: The directors are expected to perform with reasonable care, skill and diligence and if not they are guilty of negligence. The actions of a directors should be such as would be expected in similar circumstances on his behalf.


iii)         Duty to Attend Board Meetings: It is not compulsory to attend all such meetings but it is his duty to attend them whenever he is able to do so.


iv)        Duty to Invest Company's Money: It is an important duty of the  directors to invest their company's funds properly and profitably as per the provisions of articles of association, if any , made in this regard.


v)         Duty not to Delegate Functions: It is the duty of the directors to attend personally to the business of the company in which they are directors. They should not delegate their function unless otherwise authorized to do so.


vi)        Statutory Duties: Directors are bound to perform certain duties as prescribed by the Companies Act of 1956:

a)         Duty to see that the prospectus issued by the company makes a             disclosure of all the matters.

b)         Duty to see that no prospectus is used to the public unless a copy of      it has been delivered to the Registrar of Companies for registration.

c)         To call on extra ordinary general meeting when demanded by a valid      requisition.

d)         To present annual accounts and balance sheet and if any director fails    to take all reasonable steps in this regard, he is punishable in respect         of each offence with imprisonment which may extend to six month          or a fine upto rupees ten thousand or both.

e)         Duty to forward a statutory report to every member and must also get   it filed with the Registrar. The board of directors must also call and   hold the statutory meeting, which does not apply to a private      company.

f)          Duty to provide and make good any losses in capital before       recommending any dividend.

g)         Must prepare and place the report of the company's affairs with the       Balance Sheet and profit and Loss.

h)         To disclose his interest while entering into any transaction with the company.

i)          To uniform is name, address, occupation, nationality and other   information required by the Act for the purpose or entering the same     in the Register of Directors.

            j)          To disclose the number of shares of the company held by him.

            k)         To send to the Registrar his consent in writing to the post of director

            l)          To hold certain qualification shares according to the provisions of           the        articles of association.

m)        Duty not to enter into any contract with the company without the            consent             of Board of Directors for the sale, purchase, etc.

o)         When the company is liquidated, a director must refrain himself from      acting on behalf of company except to the extent authorized by court,           liquidator or shareholder in the general



i)          Office of Profit: A person cannot be appointed as director if he holds any office or place of profit under the company.


ii)         Age Limit: With he object of ensuring physical and mental fitness on the part  of the director it has been provided that no person who is above the age of 70 years or below the age of 25 years should be appointed as a director.


iii)         Convicted: A person who has been convicted by court of any offence involving moral turpitude and sentenced to imprisonment for not less than 6 months and a period of 5 years has not elapsed from the date of expiry of the sentence cannot be appointed as a director.


iv)        Calls – in-Arrears: A person cannot be employed as a director whose calls  in  respect of shares of a company held by him are not paid within six months from the lost date fixed.


v)         Unsound Mind: Persons of unsound mind are disqualified for appointment as directors.

vi)        Insolvent: Persons who are undischarged insolvents or declared fraudulent by court or who has applied to be adjudicated as an solvent and an application is pending are disqualified from becoming a director.

vii)        Not More than Twenty Directorship: A person holding more than 20            directorship of public Ltd Co. cannot be appointed as director of any other     public   ltd. Co. by shares. However, he can be a director of any number of             private ltd.        cos.

viii)       Additional Grounds: A private company which is not a subsidiary of a public company may by its articles provide that a person shall be disqualified for appointment as a director on any additional grounds.

ix)        Court Order: An order disqualifying him for appointment as a director has been passed.



Every company public private is required to have directors to manage its affairs. Directors are the persons elected by shareholders to direct, conduct, manage and supervise the affairs of the company. The Board of Directors have a pivotal role to play and as such it occupies very important position in a company. Directors are the mainspring and brain of the company.


Q10.    Explain the object of the consumer protection act and state explain the following terms as used in the consumer protection act, 1986 (a) consumer (b) Dispute (c) Deficiency & (d) Restrictive Trade Practice and Unfair Trade Practice


Ans.     The Consumer Protection Act provides the forum for redressal of consumer grievances. This act makes available rights of the consumers to be the same as before. Section 3 of this Act clearly states that, "the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.


This implies that the remedies provided under this Act are in addition to the provisions of any other law being in force for the time. The consumer protection act of 1986, extends to the whole of India except for the state of Jammu and Kashmir.


The aims and objects of the Act can be stated as:-

i)          Protect Interest of the Consumers: The first and foremost object of the Consumer Protections Act is to protect the general interest of the consumers. Many times consumers are cheated and this act provides a legal protection.


ii)         Establishment of Consumer Councils and Other Authorities:  The act makes provisions for establishing various consumer councils and other authorities to protect the consumer's interest.


iii)         Fast and Simple Redressal to Consumer Disputes: The other object of the Act is to provide fast and simple redressal to consumer disputes through a quasi-judicial machinery set up at the District, state and central leaves. These bodies observe the principle of natural justice keeping in view the provisions of the Act. These bodies have been entrusted with the power to give specific reliefs and to award compensation to consumers on the basis of merit. Such bodies can even impose penalties for  non-compliance of their order.


            Certain terms used in the Consumer Protection  Act of 1986 can be explained as:-

a)         Consumer – A consumer is one who purchases the commodities not for trading but for self consumption. The definition of consumer given in Section 2(1) (d) of the act lays down the following points of a consumer:-

            A consumer is:-

i)          Any person who buys or hires/avails any service or goods for a consideration.

ii)         Any user of the goods who may not have purchased it but uses it with the approval of the person who has purchased the goods for consideration.

iii)         Any person who is a beneficiary of such services with the consent of the original consumer.


iv)        Consideration for the goods is an important factor. Such consideration must have actually been paid or promised or partly paid and partly promised.


v)         The intention of he present purchasing it should be consumption and not sale


b)         Dispute – Consumer dispute has been  covered under section 2(1)(e).Any consumer has a right to seek remedy or file a complaint against the manufacturer or trader in case of any dispute between the two.


            According to section 2(1) (e), consumer dispute is a dispute where the person against whom a complaint has been made and he denies the allegations contained in such complaint.


c)         Deficiency – Section 2(1)(g), of the Act defines a deficiency as, "deficiency means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.


            For making any complaint in respect of a service or service rendered, a complaint has to prove that services suffer from deficiency. The consumer has been given protection under this act from any kind of incompetence, negligence, etc. and those responsible for deficiency are punished according to the provisions of the Act.


d)         Restrictive Trade Practice and Unfair Trade Practice – A consumer has a free right to purchase any kind of good according to his needs in order to get maximum satisfaction. According to section 2(1) (nn), a Restrictive trade Practice, refers to any practice that requires a consumer to buy, hire or avail any goods or services prior to buying, hiring or availing any other goods or services.


            The consumer protection act of 1986 provides for better protection of the interests of consumers and also has provisions to protect their interests from Unfair trade practices. Section 2(1)(r) states that an 'unfair trade practice' means a trade practice which for the purpose of prompting sale, use or supply of any goods of for the provision of any service, adopts any unfair methods or practice, which may include the following.


1.         The practice of making on oral or written statement which:-

i)          Talsely represents that the goods are of a particular standard quality, quantity, style, etc.


ii)         Talsely represents the quality, quantity or grade of services.


iii)         Talselty represents and old, re-built, renovated goods as new goods.


iv)        Representing that the goods have certain characteristics, uses, accessories, etc which they may not actually have


v)         Representing that the seller has a sponsorship or approval which is false


vi)        Assuring of life of goods or giving a guarantee thereof without proper checking


vii)        Making a false representation which might seem to be a promise to replace, maintain or repair an article


viii)       Misleading regarding the price


ix)        Giving misleading facts about goods or other traders


2.         Permits the publication of any advertisement in any newspaper or magazine for sale at a bargaining price in reference to ordinary price or other product brand.


3.         Permitting the offers of gifts or other items with the intention of charging the amount from the transaction, partly or as a whole.


4.         Permits the sale or supply of goods or services which do not comply with the general standards set.


5.         Boarding or destructing the goods or refusing to sell goods with a view to raise the prices.



Consumer is one of the important components of an economy as he exhibits his important role both on demand and supply side. His major economic activity is consumption which actually leads to demand and supply. This means that the consumer is the center of all economic activities. In order to protect the consumers from exploitation the Consumer Protection  Act of 1986 was laid, which puts forward various provisions for them.



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