ASSIGNMENT

DRIVE FALL 2013

PROGRAM BBA- SEMESTER III
SUBJECT CODE & NAME: BBA 301LEGALAND REGULATORY FRAMEWORK

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Q.No 1 Discuss the major commercial and corporate laws prevailing in India.
Answer: Commercial laws
Commercial laws govern business and trade relationships and transactions. Following are the major
commercial laws in India:

The Indian Contract Act, 1872: Most of the transactions in trade, commerce and industry in India are
based on contracts. The Indian Contract Act, 1872 lays down the general principles relating to
formation, performance and enforceability of contracts and the rules relating to certain special types
of contracts like Indemnity and Guarantee; Bailment and Pledge as well as Agency. The law related
to Agency is a part of this Act. It also contains provisions pertaining to breach of a contract.

Sales of Goods Act, 1930: This Act governs all aspects of sale and purchase of goods. A sale is a
specialised form of contract. Therefore, the basic principles of the contract Act applies to the sale
of goods also. It also deals with issues of ownership and the quality of goods sold or to be sold.

Indian Partnership Act, 1932: Partnership is the relationship between two or more persons who
agree to enter into business together with mutual assent. This law governs all the modalities and
issues arising out of such business relationships.

Corporate laws
Corporate law pertains to all aspects of business enterprise in the modern world. Issues such as
the role of shareholders, directors, employees, creditors and stakeholders; the interest of the
consumers and the community; and the impact of the company activities on the environment etc.
are part of this law. They also deal with mergers, takeovers and winding up of sick units.

The Companies Act, 1956: This is the most important corporate law in India. It lays down the
provisions relating to the formation of a company, powers, roles and responsibilities of the directors
and managers, raising of capital, holding company meetings, maintenance and audit of company
accounts, powers of inspection and investigation of company affairs, reconstruction and amalgamation
of a company and, if necessary, its winding up also.

Commercial laws
Commercial laws govern business and trade relationships and transactions. Following are the major
commercial laws in India:

The Indian Contract Act, 1872: Most of the transactions in trade, commerce and industry in India are
based on contracts. The Indian Contract Act, 1872 lays down the general principles relating to
formation, performance and enforceability of contracts and the rules relating to certain special types of
contracts like Indemnity and Guarantee; Bailment and Pledge as well as Agency. The law related to
Agency is a part of this Act. It also contains provisions pertaining to breach of a contract.

Sales of Goods Act, 1930: This Act governs all aspects of sale and purchase of goods. A sale is a
specialised form of contract. Therefore, the basic principles of the contract Act applies to the sale of
goods also. It also deals with issues of ownership and the quality of goods sold or to be sold.

Indian Partnership Act, 1932: Partnership is the relationship between two or more persons who agree to
enter into business together with mutual assent. This law governs all the modalities and issues arising
out of such business relationships.

Corporate laws

Corporate law pertains to all aspects of business enterprise in the modern world. Issues such as the role
of shareholders, directors, employees, creditors and stakeholders; the interest of the consumers and the
community; and the impact of the company activities on the environment etc. are part of this law. They
also deal with mergers, takeovers and winding up of sick units.

The Companies Act, 1956: This is the most important corporate law in India. It lays down the
provisions relating to the formation of a company, powers, roles and responsibilities of the directors
and managers, raising of capital, holding company meetings, maintenance and audit of company
accounts, powers of inspection and investigation of company affairs, reconstruction and amalgamation
of a company and, if necessary, its winding up also.

Foreign Exchange and Management Act, 1999 (FEMA) is a successor to the Foreign Exchange
Regulation Act, 1973 (FERA). FEMA was enacted to consolidate and amend the already existing law
relating to foreign exchange with the objective of facilitating external trade and payments and for
promoting the orderly development and maintenance of foreign exchange market in India. However,
the provisions of FEMA are very different from those of FERA.

FOREIGN Exchange and Management Act, 1999 (FEMA) is a successor to the Foreign
Exchange Regulation Act, 1973 (FERA). FEMA was enacted to consolidate and amend the already
existing law relating to foreign exchange with the objective of facilitating external trade and
payments and for promoting the orderly development and maintenance of foreign exchange market in
India. However, the provisions of FEMA are very different from those of FERA.

2 Explain the essentials of a contract of sale. Discuss the rights of an unpaid seller.

Answer:
Essentials of a contract of a sale: From the Section 4 of the Sale of Good Act, we can understand that the
following essential elements must be present in the Contract of Sale.
1. There must be Two parties.
There must be at least two parties, i.e. one buyer and the other seller. A person cannot buy his own
goods. For example Shyam is the owner of certain goods, but he is not aware of this fact. Ram pretends
to be the owner of the goods and sells them to Shyam. Since the goods already belongs to Shyam, he
cannot buy his own goods, hence there is no sale and the contract is not valid. (Bell V. Lever Bros. Ltd.)
There is exemption in the case of a part owner. For the purpose of sale of partnership property, partners
are not regarded as separate persons. They cannot be both seller and buyer. But a partner may sell goods
to the firm or buy goods from the firm. However, a part owner can sell his ownership to another part
owner.

2. Subject matter of Sale must be "goods"

The subject matter of contract of sale must be movable goods. Sale and purchase of immovable property
is regulated by the Transfer of Property Act. Contracts relating to services are also not treated as contract
of sale. So the subject matter of contract must be goods which can be

movable.

3. Transfer of property in the goods: It is the ownership that is transferred in a Contract of sale. The
ownership is agreed to be transferred in an agreement to sell as in case of pledge. According to Section 2
(II) of the Act, property means the general property in the goods and not merely a special property.

The

general property is transferred from seller to the buyer in a contract of sale. When the goods are pledged,
it is only the special property which is transferred i.e., possession of the goods is transferred to the
pledgee while the ownership rights remain with the pledger. You should note that for transferring the
ownership of goods, the physical delivery of the goods is not

essential.

4. Consideration in Price:
Consideration in a contract of sale has necessarily to be money. Thus, if for instance, goods are offered as
consideration for goods, it will not amount to sale, but it will be called a 'brater'. Similarly, in case there

is no consideration, it amounts to gift and not sale. However the consideration may be partly in money
and partly in goods.
Rights of an unpaid seller: He has following important rights against goods.
1. Right of Lien:For the recovery of price an unpaid seller has a right to keep the goods in his own possession.
Example:- Mr. Hunny sells the goods to Mr. Abhijit for Rs. 10 lac. Mr. Abhijit pays 5 lac and promises to
pay the remaining 5 lac after two month. Mr. Hunny has a right of lien on the goods.
2. Right of Stopping:If buyer becomes insolvent, an unpaid seller has a right of stopping the goods in transit.
3. Right of Resale:An unpaid seller is considered the owner of the goods until he is not paid by the buyer. So he has a right
to sell his goods subject to few conditions.
4. Right of Delivery:The unpaid seller has a right of with holding the delivery of goods where the property in the goods has
not passed to the buyer.
5. Right of Claim:The unpaid seller has also a right to claim the buyer for the prices of goods.
i. Suit For Price:- If the goods have passed to the buyer and buyer refuse to pay the price, the seller can
sue for price.
ii. Suit For Damages For Non Acceptance:- If buyer refuses to accept and pay for the goods, the seller has
the right to sue him for damages non-acceptance. He can recover only damages and not full price.
iii. Suit For Interest & Special Damages:- The unpaid seller can recover the reasonable interest on the
unpaid price goods sold. The seller can also sue the buyer for special damages where both the parties are
aware of such loss at the time of contract.

3 Discuss the documents that are to be submitted to the ROC along with the application of for
incorporation of a company
Answer: Following are the documents needed for incorporation of a company:
Private Ltd Company - An application in form No.1A is prescribed to the companies (Central
Government's) General Rules and Forms, 1956, and a fee of Rs.500 is payable with each application
(Rule 4A); the Registration fees paid to the Registrar are Rs. 4000 and the Filing fee is Rs. 100 (Schedule
X of the Act). The Documents required to be prepared/completed before submitting to Registrar Of
Companies (ROC) are:
1. Memorandum of Association (MOA) and Articles of Association (AOA). These should be executed by
the promoters in their own hand in the presence of a witness in quadruplicate stating their full name,
father's name, residential address, occupation and number of shares subscribed for,

etc.

2. Form No. 1 - a declaration to be executed on a non-judicial stamp paper of INR 20 by one of the
directors of the proposed company or other specified persons such as Attorneys or Advocates, etc. stating
that all the requirements of the incorporation have been complied with.
3. Form No. 18 - to be filed by one of the directors of the company informing the ROC of the registered
office

of

the

proposed

company.

4. Form No. 29 - a consent by all the proposed directors of the proposed company to act as directors of it.
(Not required in the case of a private company).
5. Form No. 32 - stating the appointment of the proposed directors on the board of directors from the date
of incorporation of the proposed company and signed by one of the proposed
6. Company name approval letter (in original

directors.

form).

7. Power of Attorney signed by all the subscribers of the MOA authorizing one of the subscribers or any
other person to act on their behalf for the purpose of incorporation and accepting the certificate of
incorporation.
8. Power of Attorney in case of a subscriber who has appointed another person to sign the MOA on his
behalf.
Public Limited Company- The documents are the same as that of a Ltd company. Registration fees paid
to the Registrar are Rs. 16000 and the filing fee is Rs. 200 (Schedule X of the Act).

Q4. Differentiate Competition Act 2002 and MRTP act 1969. Discuss the salient features of
Competition Act.
ANSWER: 1. The MRTP Act 2002 based on the pre-liberalisation and globalisation era.
The Competition Act 2002 is based on the post-reforms scenario.
2 The objective of the MRTP Act 2002 is to prevent concentration of economic power to common
detriment to control of monopolies, prevention of monopolistic and restrictive trade practices.
The objective of the Competition Act 2002 is prevent practices having adverse effect on competition and
to promote as well as sustaining the competition to protect consumer interests at market place and
ensuring freedom of trade.
3 The MRTP act lists out 14 offences, which are against the principle of natural justice.
The Competition Act 2002 recognizes only 4 offences, which are deemed to be against the principle of
natural justice.
4 MRTP Commission has the power to pass only "Cease" and "Desist" orders.
The Competition Act can pass an order to prevent and punish such of those activities, which abuses
competition.
5 The MRTP Act did not provide for the formation of fund for its activities.
The Competition Act provides competition fund for promotion of competition advocacy and creation of
awareness about competitive issues and training as may be prescribed in its rules.
6 In MRTP act, the entity having status of dominant position is itself considered as bad.
In the Competition Act 2002 the entity having status of dominant position is not considered as bad.
Whereas abuse of dominant position affecting consumer interest is considered as immoral.
7 In general registration of agreement was mandatory in MRTP act.
In the Competition Act 2002, it does not lay down any such requirement for registration of agreements.
8 The defination of 'group' was wider in MRTP act.
The 'group' defination has been simplified in the Competition Act 2002.

9 The size of the firm, is the factor for determining dominance etc. in MRTP act.
But in the Competition Act 2002 it focuses on the firm's structure not on the size factor.
10 MRTP Commission role was only advisory.
Competition Commission can initiate the sue mote proceedings and levy penalties.
11 MRTP Commission dealt with the unfair trade practices.
But in the Competition Act 2002, cases relating to unfair trade practices will be transferred to consumer
courts.
12 In MRTP act, the focused on consumer interest at large.
But in the Competition Act 2002, Focuses on public at large.
13 The chairman of MRTP Commission was appointed by Central Government.
The chairman of the Competition Act 2002, commission will be appointed by a committee consisting of
retired judiciary, person having professional expertise in various fields of trade commerce, industry,
finance etc.
The salient features of Competition Act, 2002

The competition Act, 2002 which passed on 13 th January, 2003 is a laudable step towards harmonizing
international trade policy.
It intends to provide:a)

For establishment of a commission to prevent practice having adverse effect on competition.

b)

To promote & sustain competition in market

c)

To protect the interest of consumers

d)

To ensure freedom of trade carried on by other participants in markets

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5 Explain the key elements of IPRs. Differentiate between trademarks and copy right.
Answer:
Key elements (4) along with explanation: Almost every entrepreneur has heard that its important to
protect the idea and most have heard about patents. But in addition to patents there are other forms of
protection that come under the name of Intellectual Property. They are

Trade Secrets--information about your product/service that is not publicly known

Trade Patents--protection based on legal means through the US patent office
Copyrights--set of exclusive rights granted to the author or creator of an original work
Trademarks-- a distinctive sign or indicator used by an individual, business organization, or other
legal entity to identify that the products or services.

A robust intellectual property strategy for your business includes all of the above. Some recommend you
start with trade secrets and only move to patents if necessary. Using copyrights and trademarks you can
add additional layers of protection around your business.
For a software business many startups talk about their patents, but most angels know that patent
protection is weak at best in the software world since there are many ways to work around a patent if
someone wants to duplicate the idea. A better measure is to calculate the cost of duplicating the software
including design, coding, build out, and most importantly data set build out.
Differences between trade marks and copy right:
1. The purpose of a copyright is to protect works of authorship as fixed in a tangible form of expression.
Thus, copyright covers: a) works of art (2 or 3 dimensional), b) photos, pictures, graphic designs,
drawings and other forms of images; c) songs, music and sound recordings of all kinds; d) books,

manuscripts, publications and other written works; and e) plays, movies, shows, and other performance
arts.
2.

The purpose of a trademark is to protect words, phrases and logos used in federally regulated

commerce to identify the source of goods and/or services.

3. There may be occasions when both copyright and trademark protection are desired with respect to the
same business endeavor. For example, a marketing campaign for a new product may introduce a new
slogan for use with the product, which also appears in advertisements for the product. However, copyright
and trademark protection will cover different things. The advertisement's text and graphics, as published
in a particular vehicle, will be covered by copyright - but this will not protect the slogan as such. The
slogan may be protected by trademark law, but this will not cover the rest of the advertisement. If you
want both forms of protection, you will have to perform both types of registration.
4.

If you are interested in protecting a title, slogan, or other short word phrase, generally you want a

trademark. Copyright law does not protect a bare phrase, slogan, or trade name.
5. Whether an image should be protected by trademark or copyright law depends on whether its use is
intended to identify the source of goods or services. If an image is used temporarily in an ad campaign, it
generally is not the type of thing intended to be protected as a logo.
6. The registration processes of copyright and trademark are entirely different. For copyright, the filing
fee is small, the time to obtain registration is relatively short, and examination by the Copyright Office is
limited to ensuring that the registration application is properly completed and suitable copies are attached.
For trademark, the filing fee is more substantial, the time to obtain registration is much longer, and
examination by the Trademark Office includes a substantive review of potentially conflicting marks
which are found to be confusingly similar. While copyright registration is primarily an administrative
process, trademark registration is very much an adversarial process.
7.

Copyright law provides for compulsory licensing and royalty payments - there is no analogous

concept in trademark law. Plus, the tests and definition of infringement are considerably different under
copyright law and trademark law.
6 Explain the main objectives of Factories Act, 1948. Discuss the main areas that are focused in this act.
Answer: The main objectives of the Indian Factories Act, 1948 are to regulate the working conditions in
factories, to regulate health, safety welfare, and annual leave and enact special provision in respect of
young persons, women and children who work in the factories.

1. Working Hours:
According to the provision of working hours of adults, no adult worker shall be required or allowed to
work in a factory for more than 48 hours in a week. There should be a weekly holiday.
Compensatory holidays should be given to employees who work on holidays, i.e., compensatory holidays
of equal number to the holidays so lost should be given to the workers.
No adult worker shall be required or allowed to work in a factory for more than nine hours in any day.
According to this Act, the working hours each day shall be so fixed that no period shall exceed five hours.
He should be given half an hour rest after every five hours of work.
Extra wages for the overtime done by the worker should be paid. A worker who completes work for a
period of 240 days or more during a year will be granted annual leave with wages.
A child worker should not be allowed to work for more than 41/2 hours a day. Women and child workers
should not be asked to work or allowed to work between 7 P.M. and 6 A.M. and in no case between 10
P.M. and 5 A.M.
The manager of every factory is required to maintain a separate register for child workers (i.e., workers
below the age of 18). No child below the age of 14 will be employed.
2. Health:
For protecting the health of workers, the Act lays down that every factory shall be kept clean and all
necessary precautions shall be taken in this regard. The factories should have proper drainage system,
adequate lighting, ventilation, temperature etc.
Adequate arrangements for drinking water should be made. Sufficient latrine and urinals should be
provided at convenient places. These should be easily accessible to workers and must be kept cleaned.
3. Safety:
In order to provide safety to the workers, the Act provides that the machinery should be fenced, no young
person shall work at any dangerous machine, in confined spaces, there should be provision for man holes
of adequate size so that in case of emergency the workers can escape.

Wherever there are chances of fire, fire-fighting equipments should be available at convenient places.
Efforts should be made to give training to the workers to save themselves in case of fire.
Such factories should have arrangements for conveying warning to the workers in the event of fire or any
other dangerous situations.
Under this Act, the State Government may appoint inspector for undertaking checking of factories to
ensure that safety measures are taken by them.
4. Welfare:
For the welfare of the workers, the Act provides that in every factory adequate and suitable facilities for
washing should be provided and maintained for the use of workers.
Facilities for storing and drying clothing, facilities for sitting, first-aid appliances, shelters, rest rooms
and lunch rooms, crches, should be there.
5. Penalties:
If the provisions of The Factories Act, 1948, or any rules made under the Act, or any order given in
writing under the Act is violated, it is treated as an offence. The following penalties can be imposed:
(a) Imprisonment for a term which may extend to three months;
(b) Fine which may extend to one lace rupees; or
(c) Both fine and imprisonment.
Areas and the factors that influence: The factories act is an extensive and lengthy act that covers an
endless number of concerns for labour working in factories. The following is an overview of provisions in
the act that are relevant to children ages 0-18.The act defines a child as a person who has completed
him/her 15th year of age. It defines an adolescent as one who is has completed his/her15th year of age but
not completed his/her 18th year of age. A young person is defined as either a child or an adolescent.
According to this act it is the duty of a certified medical practitioner or surgeon to examine and medical
condition and certifies all young people working in the factory. These examinations take place where a
young person is or is going to be engaged in work that is injurious to his health. Under this act a young
person may not clean or lubricate the parts of any moving machinery that is likely to cause them injury.

Section 23 is concerned with the employment of young persons on dangerous machinery. Young persons
are not to be compelled to work dangerous machinery unless they have full prior knowledge of the
danger, are trained and there is a supervisor present at all times who is fully trained in the machinery.
Children are prohibited from working in any area where a cotton opener is functional. The act calls for a
crche service to be available to children below the age of six with the factory has a minimum of 30
women working there.
Chapter VII of the act concerns the employment of young persons. This section states that no child below
the age of fourteen will be allowed or required to work in a factory. It requires that all non-adult workers
or adolescents carry tokens that show that they have been deemed medically fit by a certifying surgeon.
The certificate of fitness is given for a 12 month period, and can be revoked at any point if the child is
found not to be medically fit anymore. The certificate also deem an adolescent to be treated as an adult as
per certain provisions of this act. An adolescent who has not been deemed an adult for provisions of this
act shall be considered a child.
The act places time restrictions to the work of adolescents who have been granted a certificate to work as
adults. Adolescents are only allowed to work in the factory between 6 a.m. and 7 p.m. unless the State
Government decides otherwise. Children or adolescents who have not been deemed adults shall not be
allowed to work in a factory for more than four and half hours in any day and can not work at night. They
must no work more than two shifts, are not allowed to work in two factories in the same day and a
register of all children working there and their hours must be maintained by the manger in every factory.
An inspector has the power to order a medical check-up at any point if he suspects a child is working
against the provisions of this act.
Children who have worked more than 240 days in the previous calendar year are allowed one day paid
leave for every fifteen days they worked. He/She can carry forth forty unused leave days to the next
calendar year. A child who has been granted five or more days leave can collect the wages for those days
before the leave. Parents/Guardians of a child can be fined for allowing the child to work in two factories
in the same day. Adolescents and children are not permitted to work in the manufacturing process or any
other dangerous environment in a factory.
In 2005 the Ministry of Labour proposed an amendment bill that has yet to be passed. It was reintroduced
in 2009 but was still not passed. The amendment does not really concern any of the provisions related to
the child but is concerns the right of women to work at night in the factories.