Corporate Laws

BBA(FIA)
Lecture 1

Dr. Nidhi Kesari

 Syllabus

Unit 1 (20 Hours)

• The Indian Contract Act 1872: Meaning and Essentials of contract;
Kinds of contract; law relating to offer and acceptance, consideration,
competency to contract, free consent, void agreements, performance of
contracts, discharge of contracts, breach of contracts and quasi
contract; Special contracts: contract of indemnity and guarantee,
bailment and pledge, and agency.

Unit 2 (16 Hours)

• The Companies Act 2013: Meaning and Nature of Company with
Emphasis on its Advantages and Disadvantages over other forms of
Business organizations, Comparison between Company and
Partnership and Company and Limited Liability Partnership, Kinds of
Companies – Public, Private, Holding, Subsidiary, Limited and
Unlimited Companies, Share-holding and Guarantee Companies, Small
company, One person company, Government company and foreign
company.

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 Syllabus Contd.
Unit 3 (16 Hours)
• Incorporation and Documents of Company: Incorporation of
Company, Procedure of registration, Certificate of Incorporation,
Promoters and their position, Powers, Duties and Liabilities;
Memorandum of Association (MOA), Articles of Association (AOA),
Alteration of MOA and AOA; Prospectus and its Kinds, Directors:
Duties of Directors and their Criminal and Civil liabilities.

• Company Meetings: Kinds of Meetings, Essential Conditions of a

Valid Meeting, Procedure for Calling Company Meeting; Adjudicatory
Bodies: National Company Law Tribunal; National Company Law
Appellate Tribunal – Constitution, Powers, Jurisdiction, Procedure;
Winding up of Companies.

Unit 4 (8 Hours)
• Insolvency and Bankruptcy Code 2016: Introduction of Insolvency
and Bankruptcy Code 2016 (IBC), purpose behind enactment of IBC,
regulatory mechanism, Insolvency Process, Adjudicating authority,
Committee of creditors, Reorganization, Liquidation.

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 Essential Readings

• Singh Avtar, Principle of Mercantile Law, Eastern Book Company.

• Kapoor Gulshan, Business Law. New Age International Pvt. Ltd
Publishers.
• Maheshwari & Maheshwari, Principle of Mercantile Law, National
Publishing Trust.
• Aggarwal Rohini, Mercantile & Commercial Law, Taxmann.

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 Unit 1: Indian Contract Act 1872

• Meaning and Essentials of contract;

• Kinds of contract;
• Law relating to offer and acceptance,
• Consideration,
• Competency to contract,
• Free consent,
• Void agreements,
• Performance of contracts,
• Discharge of contracts,
• Breach of contracts and quasi contract;
• Special contracts: contract of indemnity and guarantee, bailment and
pledge, and agency.

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 History of Law

• Indian Contract Act came into force on 1st Sept, 1872.

• Generally accepted principles of English contract law.

• Act recognizes freedom of contract.

• Sir William Anson “the parties to a contract, in a sense, make the law
for themselves”.

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 Contract: Section 2(h)

• Section 2(h): “An agreement enforceable by law is contract”

• Contract implies of two constituents:

An Agreement + Enforceable by Law

• According to Sir John Salmond, Contract is “An agreement creating

and defining obligations between the parties.”

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 Agreement: Section 2(e)

• Section 2(e): “Every promise and every set of promises, forming the
consideration for each other is an agreement”.
For example: If we buy a book for Rs. 450 from a seller, then
consideration to buyer is a book and to seller is Rs.450.

• Agreement implies of two constituents:

Promise + Consideration

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 Promise- Section 2(b)

Sec 2 (b) “When the person to whom the proposal is made signifies his
assent thereto, the proposal is said to be accepted. A proposal, when
accepted, becomes a promise”

Promise = Proposal + Acceptance

Promise = Offer + Acceptance

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 Summarizing the Concepts

 Contract = Agreement + Enforceability by law

 Agreement = Promise + Consideration

OR
 Agreement = Offer + Acceptance + Consideration
(Promise = Offer + Acceptance)

 Contract = Offer + Acceptance + Consideration + Enforceability by law

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 Parties to an Agreement / A Contract

Promisor: A person making the proposal (offer) is known as a promisor

or offeror or proposor.

Promisee: A person accepting the proposal (offer) is known as a

promisee or offeree or acceptor.

PROMISOR PROMISEE

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 Discussion Point

“All contracts are agreements, but all agreements are not contracts”

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 Essential Elements of Valid Contract
Section 10
“All agreements are contract if they are made by free consent of the
parties competent to contract, for a lawful consideration and with a
lawful object, and are not hereby expressly declared to be void.”

Thus, for understanding of essentials of a valid contract we need to refer

Section 2(h) and Section 10.

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 Essential Elements of Valid Contract Contd.

Section 2 (h): Features:

1. Offer & acceptance – An Agreement

2. Intention to create legal obligation
Test of contractual intention is objective not subjective. Not what
parties had in mind but what a reasonable person would think their
intention to be in the circumstances.
Balfour vs. Mrs. Balfour [Social obligation]
Simpkins vs. Pays
Rose & Frank Co. vs. J R Crompton & Bros. Ltd.

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 Case Discussion
Case: Balfour vs. Balfour (1919)

Facts of the Case:

Mr. Balfour was serving the Government of Ceylon,
went to England with his wife (Mrs. Balfour) on leave.
After expiry of the leave period Mr. Balfour had to go
back to Ceylon but his wife could not accompany him
for medical reasons.

He promised verbally to pay an allowance of £30 a

month for her maintenance until she rejoined him.

He failed to pay the promised amount.

On his failure to make the payment, his wife sued

him for recovery of the promised amount.

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 Case Discussion
Case: Balfour vs. Balfour (1919)

Facts of the Case:

Mr. Balfour was serving the Government of Ceylon,
went to England with his wife (Mrs. Balfour) on leave.
After expiry of the leave period Mr. Balfour had to go
back to Ceylon but his wife could not accompany him
for medical reasons.
He promised verbally to pay an allowance of £30 a
month for her maintenance until she rejoined him.
He failed to pay the promised amount.
On his failure to make the payment, his wife sued
him for recovery of the promised amount.

Decision: Her suit was dismissed by Court of

Appeals. This was a mere domestic arrangement with
no intention to create legally binding relations.
Therefore, there was no contract.
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 Case Discussion
Case: Simpkins vs. Pays

Facts of the Case:

Three ladies, mother; daughter and paying guest, together made entries in
a crossword puzzle in the name of the mother.

The expenses being met by one or the other without any rules. The entry
was successful one week and the mother received winning amount.

Mother then refused to divide the prize.

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 Case Discussion
Case: Simpkins vs. Pays

Facts of the Case:

Three ladies, mother; daughter and paying guest, together made entries in
a crossword puzzle in the name of the mother.

The expenses being met by one or the other without any rules. The entry
was successful one week and the mother received winning amount.

Mother then refused to divide the prize.

Decision:
The court held that she was bound to divide the winning amount, for
any reasonable person looking at their conduct would at once conclude
that they must have intended to share the prize.

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 Case Discussion

Case: Rose & Frank Co. vs. J. R. Crompton & Bros. Ltd.

Facts of the Case:

Three firms entered into a written contract for the sale and purchase of
tissue paper. The agreement contained a clause to the effect that “this
arrangement is not entered into, nor is this memorandum written, as a
formal or legal document, and shall not be subject to legal jurisdiction in
the law courts”.

Since the goods were not delivered, the buyers brought an action for non-
delivery.

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 Case Discussion
Case: Rose & Frank Co. vs. J. R. Crompton & Bros. Ltd.

Facts of the Case:

Three firms entered into a written contract for the sale and purchase of
tissue paper. The agreement contained a clause to the effect that “this
arrangement is not entered into, nor is this memorandum written, as a
formal or legal document, and shall not be subject to legal jurisdiction in
the law courts”.

Since the goods were not delivered, the buyers brought an action for non-
delivery.

Decision:
It was held that there was no intention to create legal relations on the
part of the parties to the agreement and thus there was no contract.

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 THANK YOU

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