Centre for Management Studies MBA-Executive

Semester-IV (2020)
Name : Mohd Zuhaib

Roll no: 18MBA031

Subject: LEGAL ENVIRONMENT OF BUSINESS
Paper Code : MBA (Exec) CP- 402
1. List Indian constitutional provisions governing Business/ Commerce? Explain
theirinterface with other procedural businesslaws.

Ans : - Our Constitution provide freedom to business, trade and commerce. To ensure and protect the
rights of traders businesses and commerce entities it has introduced Article in it. There are seven
Articles that govern business/ commerce.

Article 301 to 307 of the Indian Constitution states the constitutional provisions governing Business/
Commerce.

Mentioned below is a brief description:-

 Article 301 - Freedom of “trade, commerce and intercourse throughoutthe

territory ofIndia”
 Article 302 - Power of Parliament to impose restrictions on trade commerceand
Intercourse.
 Article 303 - Restrictions on the legislative power of the union and the statewith
regard to trade andcommerce.
 Article 304 - Restrictions on trade commerce and intercourse amongstates
 Article 305 - Saving of existing laws and laws providing for statemonopolies.
 Article 306 –REPEALED
 Article 307 – Appointment of authority for carrying out the purposes of article301
to304.
Broadly any law can be divided into two types basis its purpose:
a) Substantive Law - Substantive law is the set of laws that governs how members of a society
are to behave. Substantive law defines rights and responsibilities in civil law, and crimes and
punishments in criminal law. It may be codified in statutes or exist through precedent in
common law. Ex. Indian PenalCode,
b) Procedural Law - Law that prescribes the procedures and methods for enforcing rights and
dutiesandforobtaining redress(asina suit)andthatisdistinguishedfromlawthatcreates,
defines, or regulates rights. Ex. Consumer Protection act, CRPC , Indian EvidenceAct.

Interface with other procedural business laws.

  Abrogation of Article 370 from Jammu & Kashmir opens the gates for constitutional provisions
for Business and Commerce, However After abrogation only CRPC is allowed not the business
laws that allow people to purchase land and do business inKashmir.
 While travelling to North east states like Mizoram we need to apply a kind of soft VISA in
advance
 The Indian Constitution give right to a parliamentarian (MP) to make a law like CAA however the
CAA laws contradicts the basic nature of the secularism of Indian Constitution as it appears
biased to Muslim Community straightaway contradicting Article 21(14) which is protects the
fundamental rights of Muslimcommunity.

2. What are the sources of ‘Business Laws’ explain the light of Common Vs. Civil
(Codified Laws) and their enforcement in BusinessEnvironment?

Answer –

Common law system: The original source of the can be traced back to the English monarchy,
which used to issue formal orders called “writs” when justice needed to be done. Because writs
were not sufficient to cover all situations, courts of equity were ultimately established to hear
complaints and devise appropriate remedies based on equitable principles taken from many
sources of authority (such as Roman law and “natural” law). As these decisions were collected
and published, it became possible for courts to look up precedential opinions and apply them to
current cases. And thus the common law developed.

Civil law in other European nations, on the other hand, is generally traced back to the code of
laws compiled by the Roman Emperor Justinian around 600 C.E. Authoritative legal codes with
roots in these laws (or others) then developed over many centuries in various countries, leading
to similar legal systems, each with their own sets of laws.

Common law as said by Abrahan Lincoln is “ by the people for the people of the people”.
However civil law like “Sharia” Islamic Jurisprudence in codified law, One cannot put a single
comma or full stop in it.

Conclusion: There could be broadly two sources of law, and we need to understand that which
law in question comes from a common law background and the ones coming from the civil law
back ground

Business Laws

 Indian Contract Act 1872 (Common LawBackground)

 Sales of goods act 1930. (Common LawBackground)
 Negotiable Instrument Act 1881(Common LawBackground)
  The Companies Act 1956(Common LawBackground)
 Indian Partnership Act 1932 (Common LawBackground)
 The Consumer Protection Act 1986(Common LawBackground)
 Information Technology Act 2000 (Common LawBackground)

Hence we can say that mostly all the business laws have common law background. Common law
included previous judgments ,PILs etc.

Enforcement in Business environment:

 Sales of goods act allows the seller to sell anywhere in India but Constitutional provisions does
not allow him to sell inKashmir
 Business laws allows the sale of liquor anywhere in India but Certain States have banned liquor
which is acontradiction
 Interest is the backbone of banking system but ISLAMIC Jurisprudence “ Shariah” call Interest as
prohibited PrimaFacie.

After looking at the above mentioned examples under enforcement we can safely say that when
it comes to enforcement of business law , one law restricts other law in the name of Public
Interest, National Security and Bilateral relations,

3. What are the salient features of ‘Indian Contract

Act, 1872’?
Answer: - An agreement enforceable in the court of law is contract {Section 2(h)}. Any contract
within the geographical boundaries of India is governed by Indian Contract Act 1872. Contracts
can be both verbal and written. Types of Contract can be divided on the basis of

 On the basis ofcreation

 On the Basis ofperformance
 On the basis ofEnforceability

AGREEMENT+ ENFORCEABILTIY = CONTRACT

Enforceability comes from validity of the contract either written or verbal. Validity of acontract
comes from certain essentialelements.

The essential elements of a valid contract are:

 At least 2 or moreparties
  Offer and Acceptance (One party should make the offer and the other party mustaccept
it.)
 Intention to create legal relationship ( there should be an intention to create a legal
relationship – In a marriage the intention is not to create a legal relationship
hence husband cannot complaint that the wife doesn’t cook forhim)
 Free Consent ( Consent should be followed by willingness and consent should befree
from Coercion, undue influence, Fraud, Misrepresentation andmistake)
 Possibility of performance (One cannot have a contract for breaking stars from thesky.
Performance should be realistic andpossible)
 Capacity to enter into a contract ( Who cannot enter into contract – Minor, Person
of unsound mind, Someone not disqualified by law like alien enemy foreign
sovereign andambassador)
 Lawful object and consideration. (The object and consideration should not be
prohibited bylaw)
 Consensus ad idem (Parties must have clear and same understanding about
the contract.)
 Not expressly declared void by law. (The type of contract or its nature should not be
void by lawexpressly
 Legal formalities. (If the requirement of the contract is that it should be in written form
then it must be done and all other legal formalities must be completed for the contractto
bevalid.)

CASE STUDY

1. Whether Ms Kumari Pune can be given compensation Rs25 Lakhs?

Answer: In the light of governing Indian contract act 1872 it will be just to provide the
compensation to Ms Kumari Pune. Common law takes inferences from previous similar cases.
One such case is Carlill_v_Carbolic_Smoke_Ball_Co. In that case as well there was a universal
offer. The Honorable court held that Carlill paid the consideration to the company in the form of
money to obtain the medicine. She was a major and the contract was created by her conduct and
the suppliers conduct. All the essential elements of valid contract were present.

In case of Ms Kumari pune the COVID relief Pill &Co might argue that it is not a valid contract
since the offer was general and offered to a large no. of people but Ms Kumari never communicated
her acceptance to the offer to the company.
As per the precedence set by the judgment of Carlill_v_Carbolic_Smoke_Ball_Co it should be
held that offer was general and offered to a large number of people and it is not obligatory in
case of a general public offer to communicate the acceptance of the contract, merely fulfillingthe
conditions of the offer issufficient.

Hence Ms Kumari should be given a compensation of Rs 25 lakhs.

2. Whether the’ offer’ is Universal orspecific?

Answer: The advertisement was given in a local daily which is widely read by the people all over
the nation, Hence it was not a specific offer. It was a universal offer. Anyone buying the Covid 19
pills by paying a consideration in the form on money enters into a valid contract with the company
by conduct of Purchase and Sale.

3. Decide the entire case in the light of Carlil Vs Corbolic SmokeBall &CO.
Carlill_v_Carbolic_Smoke_Ball_Co is a classic case that explains what is offer and what is the
meaning of acceptance of the offer.

Universal Offer Vs Specific Offer:::Kumari Pune Vs COVID relief Pill &Co raises certain
questions

 Is the contract a validcontract?

 Is it obligatory to communicate the acceptance after every purchase of Covid19pills?
 Is Just following the directions for use of the pills is sufficient or you also need to proveit?
 Was the offer accepted by theplaintiff?
 Is paying the consideration in the form of money sufficient to enter into thecontract.

In the light of Carlill_v_Carbolic_Smoke_Ball_Co all the above question can be answered

The Contract is a valid contract. It’s not obligatory to communicate the acceptance after every
purchase of Covid19 pills. You don’t need to prove following the directions for use. Offer was
accepted by the conduct of purchase. And Yes paying the consideration in the form of money is
sufficient to enter into valid contract.

Hence Ms Kumari Pune Should be given a Compensation of Rs 25 lakh