Law Class Test

30 marks

1. Short Notes
Solution 1-
Difference between Company, Partnership and Limited liability
Partnership are as follows:-

S.no Basis Partnership Company Limited liability

Partnership
1. Registration Registration is Registration Registration with
optional. with Registrar Registrar of LLP
of Roc required.
required.
2. Liability of Unlimited, Generally Limited to the
Partners/ partners are limited to the extent their
Members. severally and amount contribution
jointly liable for required to be towards LLP,
action of other paid up on except in case of
partners and each share. international
the firm and fraud or wrongful
liability extend act of omission or
to their commission by
personal assets. the partner.
3. Perpetual It does not have It has It has perpetual
Succession a perpetual perpetual succession,
succession as succession and partners may
 this depends members may come and go.
upon the will of come and go.
partners.
4. Distinct Not a separate It is a separate It is a separate
Entity legal entity. legal entity legal entity under
under the the limited
companies liability
act , 1956 Partnership Act,
2008.

SOLUTION: 2
Essentials of a Contract:-
1.) Agreement: Offer and Acceptance

A contract unfolds when an offer by one party is accepted by the other

part . An offer needs to be clear, definite, complete and final. It should
be communicated to the offeree. A proposal when accepted becomes a
promise or agreement.

2.) Legal Relationship

Parties to a contract must intend to constitute legal relationship. It

arises when the parties know that if any one of them fails to fulfill his
part of the promise, he would be liable for the failure of the contract .
 3.) Lawful Consideration
Something in return is Consideration. In every contract, agreement
must be supported by consideration. It must be lawful and real.

4.) Competency of parties

The parties to an agreement must be competent to contract. In

other words, they must be capable of entering into a contract.

5.) Free and Genuine Consent

Another essential of a valid contract is the consent of parties, which

should be free. Under Sec. 13, “Two or more parties are said to
consent, when they agree upon the same thing in the same sense.”
Under Sec. 14, the consent is said to be free, when it is not induced
by any of the following:- (i) coercion, (ii) misrepresentation, (iii)
fraud, undue influence, or (v) mistake.

6.) Certainty and Possibility of Performance

The agreements, in which the meaning is uncertain or if the agreement

is not capable of being made certain, it is deemed void. T&C of the
contract should always be certain and cannot be vague. Any contract
that are uncertain are considered void. The terms of the agreement
must also be capable of performance and should not enforce
impossible act.

7.) Legal Formalities

Legal formalities if any required for particular agreement such as
registration, writing, they must be followed. Writing is essential in order
to effect a sale, lease, mortgage, gift of immovable property etc.
Registration is required in such cases and legal formalities in the
relevant legislation should be strictly followed.

SOLUTION: 3

Rights of an unpaid seller are as follows:-

1) Suit for Price

Under the contract of sale if the property of the goods is already passed
but he refuses to pay for the goods the seller becomes an unpaid seller.
In such a case, the seller can sue the buyer for wrongfully refusing to pay
him his due. But say the sales contract says that the price will be paid at a
later date irrespective of the delivery of goods. And on such a day the if
the buyer refuses to pay, the unpaid seller may sue for the price of these
goods. The actual delivery of the goods is not of importance according to
the law.

2) Suit for Damages for Non-Acceptance

If the buyer wrongfully refuses or neglects to accept and pay the unpaid
seller, the seller can sue the buyer for damages caused due to his non-
acceptance of goods. Since the buyer refused to buy the goods without
any just cause, the seller may face certain damages.

The measure of such damages is decided by the Section 73 of the Indian

Contract Act 1872, which deals with damages and penalties. Take for
example the case of seller A. He agrees to sell to B 100 liters of milk for a
decided price. On the day, B refuses to accept the goods for no justifiable
reason. A is not able to find another buyer and the milk goes bad. In such
a case, A can sue B for damages.

3) Repudiation of Contract before Due Date

If the buyer repudiates the contract before the delivery date of the goods
the seller can still sue for damages. Such a contract is considered as a
rescinded contract, and so the seller can sue for breach of contract. This
is covered in the Indian Contract Act and is known as Anticipatory Breach
of Contract.

4) Suit for Interest

If there is a specific agreement between the parties the seller can sue for
the interest amount due to him from the buyer. This is when both parties
have specifically agreed on the interest rate to be paid to seller from the
date on which the payment becomes due. But if the parties do not have
such specific terms, still the court may award the seller with the interest
amount due to him at a rate which it sees fit.