1.How do you get a formal contract? what are the characteris cs and necessi es of a real contract?

 Executory Contracts: An executory contract is a contract in which one or both parties still 5. characteris cs and importance considera on?
How to Get a Formal Contract have outstanding obligations to perform. The terms of the contract are yet to be fully Characteris cs of Considera on in Contracts
1. Iden fy the Need: Determine the specific terms and condi ons that need to be legally documented. executed or completed. 1. Something of Value: Considera on must involve something of value being exchanged between the
2. Engage a Lawyer: It's advisable to consult with a lawyer who specializes in the relevant field. 4. Valid, Void, Voidable, and Unenforceable Contracts: par es. This can be money, goods, services, or a promise to do or not do something.
3. Dra ing the Contract:  Valid Contracts: A valid contract is one that meets all the essen al elements required by law, such as 2. Mutual Exchange: Both par es must provide considera on; one party's promise or performance is the
o Ini al Discussion: Discuss the main points, terms, and condi ons with all par es involved. offer, acceptance, considera on, capacity, and legality. It is legally binding and enforceable by law. price for the other party's promise or performance.
o Dra ing: Have the lawyer or a professional dra the contract based on these discussions.  Void Contracts: A void contract is one that lacks legal validity right from the beginning. It is usually 3. Legality: The considera on must be legal. An agreement based on illegal acts or promises is not
4. Nego a on: Discuss and nego ate any terms that may need modifica on. unenforceable, and the par es involved are not legally bound by its terms. enforceable.
5. Finaliza on: Once all par es agree, the contract should be finalized. 4. Adequacy: While courts generally do not assess the fairness or adequacy of considera on, there must
3.Implied condi on of contract?
6. Signatures: All par es should sign the contract. Signatures may need to be notarized, depending on be some value, even if minimal, exchanged. However, grossly inadequate considera on may indicate
1. Condi on of Fitness for Purpose: This condi on implies that the goods or services provided
the nature of the contract. issues like fraud or undue influence.
Characteris cs of a Real Contract
under the contract are suitable for the purpose for which they are being acquired, provided
5. Possibility: The considera on must be possible to perform. A promise to do something impossible
1. Offer and Acceptance: the buyer has made that purpose known to the seller. does not cons tute valid considera on.
o Offer: One party must make a clear and definite offer. Example: If you buy paint for a specific type of surface, it is implied that the paint will be Importance of Considera on in Contracts
o Acceptance: The other party must accept the offer without any modifica ons. suitable for that surface. 1. Legal Binding Nature: Considera on is essen al for a contract to be legally binding. Without it, a
2. Mutual Consent: Both par es must agree to the terms of the contract freely and without coercion. 2. Condi on of Merchantable Quality: This condi on implies that the goods supplied will be of contract may be considered a gi or a non-binding promise.
3. Considera on: There must be something of value exchanged between the par es, which can be a quality that is acceptable in the market and fit for the general purpose for which such 2. Ensures Reciprocity: Considera on ensures that there is a reciprocal exchange of value, making the
money, services, or goods. goods are used. contract a mutual agreement where both par es gain something.
4. Capacity: Both par es must have the legal ability to enter into a contract. This means they must be of Example: Buying a toaster that should toast bread properly without any defects. 3. Evidence of Agreement: The presence of considera on demonstrates that the par es have entered
legal age, sound mind, and not under the influence of substances or duress. into an agreement inten onally and have commi ed to fulfilling their promises.
3. Condi on of Title: This condi on implies that the seller has the right to sell the goods and
5. Legality: The contract's subject ma er must be legal and not against public policy. 4. Protects Against Fraud: Requiring considera on helps prevent fraudulent or coerced agreements by
that the buyer will have undisturbed possession of the goods.
6. Intent to Create Legal Rela ons: Both par es must intend for the contract to be legally binding. ensuring that there is a mutual exchange and that each party has something to lose if the contract is
Necessi es of a Real Contract
Example: When you purchase a car, it is implied that the seller has the legal right to sell the
not honoured.
1. Iden fica on of Par es: Clearly iden fy who the par es involved are. car and that there are no undisclosed encumbrances on the vehicle.
5. Promotes Fairness: While courts do not usually evaluate the adequacy of considera on, the concept
2. Detailed Terms and Condi ons: Clearly state the obliga ons, rights, and du es of each party. 4. Condi on of Correspondence with Descrip on: This condi on implies that the goods will encourages fairness in agreements by ensuring that each party provides something of value.
3. Payment Terms: Specify how and when payments will be made. correspond with the descrip on provided at the me of the sale. 6. effect of breach of contract?
4. Termina on Clause: Outline how the contract can be terminated by either party. Example: If a product is described as a "100% co on shirt," it is implied that the shirt will be
5. Dispute Resolu on: Include a clause on how disputes will be resolved, such as through arbitra on or made en rely of co on. 1. Damages: The non-breaching party can seek monetary compensa on for losses resul ng
li ga on. 5. Condi on of Sample: When a sale is made based on a sample, it is implied that the bulk of from the breach. Damages can include:
6. Signatures: Ensure that all par es sign the contract. the goods will correspond with the sample in quality. o Compensatory Damages: Intended to cover direct losses and costs.
2. Classifica on of contracts? Example: If you are shown a sample fabric and then order 100 meters of it, it is implied that o Consequen al Damages: Cover indirect and foreseeable losses.
1. Express and Implied Contracts: the 100 meters will match the quality of the sample shown. o Puni ve Damages: Intended to punish the breaching party for par cularly egregious
 Express Contracts: These contracts are formed through explicit and direct communica on, either 6. Condi on of Reasonable Care and Skill: In service contracts, it is implied that the service behavior (less common in contract law).
orally or in wri ng. The terms and condi ons of the agreement are clearly stated and agreed provider will carry out the service with reasonable care and skill. 2. Specific Performance: A court may order the breaching party to perform their obliga ons as
upon by the par es involved. Example: If you hire a plumber to fix a leak, it is implied that the plumber will use reasonable specified in the contract. This remedy is more common in unique or rare cases, such as real
 Implied Contracts: These contracts are not explicitly stated in words but are inferred care and skill in repairing the leak. estate transac ons.
from the ac ons, conduct, or circumstances of the par es involved. 3. Rescission: The contract may be canceled, and both par es are returned to their posi ons
before the contract was made. This can occur when the breach is fundamental.
2. Unilateral and Bilateral Contracts: 4. comparison between undue influence and coercion? 4. Res tu on: The non-breaching party may be en tled to res tu on, which involves returning
 Unilateral Contracts: In a unilateral contract, one party makes a promise or an offer to perform an
Undue Influence Coercion any benefits or payments made under the contract to prevent the breaching party from
ac on upon the occurrence of a specific event or condi on. The contract is formed when the other
party accepts the offer by performing the requested ac on. Exploita on of a rela onship of trust and Use of threats or physical force being unjustly enriched.
 Bilateral Contracts: In a bilateral contract, both par es make promises or offers to each other, forming confidence 5. Liquidated Damages: If the contract includes a liquidated damages clause, the breaching
mutual obliga ons. The contract is formed when both par es exchange promises and agree to be Psychological pressure, manipula on Physical or economic threats, actual harm party must pay the agreed-upon amount as compensa on for the breach.
bound by the terms. Compromised ability to exercise free will Lack of voluntary consent due to fear of harm
Contract is voidable at the op on of the Contract is voidable at the op on of the
3. Executed and Executory Contracts: influenced party coerced party
 Executed Contracts: An executed contract is one in which both parties have fulfilled their
O en involves a pre-exis ng rela onship No need for a pre-exis ng rela onship
obligations under the agreement. All terms and conditions have been performed, and the
contract is considered completed.

7. Consumer Protec on Act? 10. important steps to follow while filling a complaint 12. how does legal environment influence business in the Indian economy?
The Consumer Protection Act (CPA) is a law that aims to protect consumers' rights and promote fair business 1. Understand the Issue: Clearly iden fy the problem or issue you want to address. Gather all relevant 1. Regulatory Framework: The legal environment in India encompasses various laws, regula ons, and
practices. It provides a framework of rules and regulations that businesses must adhere to when dealing with facts, documents, and evidence related to the ma er. policies that businesses need to adhere to. These include company law, labor law, tax law, intellectual
consumers. Here are some key points about the Consumer Protection Act: 2. Review Relevant Laws and Regula ons: Research and familiarize yourself with the relevant laws and property law, environmental regula ons, consumer protec on laws, and more.
1. Purpose: The primary purpose of the Consumer Protection Act is to protect the interests of regula ons that apply to your situa on. 2. Business Forma on and Structure: The legal environment determines the processes and
consumers by ensuring fair trade practices, providing mechanisms for redressal of consumer 3. Consult with an A orney: If the issue is complex or if you are unsure about the legal aspects, consider requirements for business forma on and structuring. Indian businesses can be established as sole
grievances, and promoting consumer awareness. consul ng with a business a orney. They can provide you with legal advice, help you assess the merits proprietorships, partnerships, private limited companies, or public limited companies, each with its
2. Consumer Rights: The CPA grants consumers several rights, including the right to safety, right to be of your complaint, and guide you through the process. own legal obliga ons and benefits
informed, right to choose, right to be heard, right to seek redressal, and the right to consumer
4. Determine the Appropriate Jurisdic on: Iden fy the appropriate court or administra ve body where 3. Contractual Agreements: The legal environment sets the framework for crea ng and enforcing
education.
you need to file your complaint. This will depend on the nature of the issue, the jurisdic onal contracts. Contracts are vital for conduc ng business transac ons, and Indian law provides guidelines
3. Unfair Trade Practices: The Act prohibits businesses from engaging in unfair trade practices that may
deceive or mislead consumers. This includes practices such as false advertising, misleading product requirements, and the remedies you seek. for their forma on, validity, interpreta on, and enforcement.
information, and unfair contract terms. 5. Dra the Complaint: Prepare a wri en complaint that clearly and concisely states the facts of the 4. Intellectual Property Protec on: The legal environment in India offers protec on for intellectual
4. Consumer Complaints: The CPA establishes consumer forums and commissions at various levels to case, iden fies the par es involved, and outlines the legal basis for your complaint property rights (IPR), including patents, trademarks, copyrights, and trade secrets. These protec ons
address consumer complaints and grievances. Consumers can file complaints against businesses for 6. Follow the Court Rules and Procedures: Research and understand the specific court rules and encourage innova on and crea vity, allowing businesses to safeguard their inven ons, brands, ar s c
defective products, deficient services, unfair trade practices, or any other violations of their rights. procedures that govern the filing of complaints. Pay a en on to deadlines, forma ng requirements, works, and confiden al informa on
5. Penalties and Remedies: The Act provides for penalties and remedies in case of violations. Businesses and any other procedural details. 5. Employment Laws: Indian labor laws regulate aspects such as minimum wages, working hours,
found guilty of unfair trade practices or non-compliance with consumer protection regulations may 7. File the Complaint: File the complaint with the appropriate court or administra ve body. Pay any employment contracts, social security, industrial disputes, and occupa onal health and safety.
face fines, imprisonment, product recall, or other appropriate actions. necessary filing fees and submit the required number of copies as per the rules Businesses must comply with these laws to ensure fair treatment of employees, maintain a safe work
6. Consumer Awareness: The CPA emphasizes the importance of consumer education and awareness. It 8. Serve the Complaint: Serve a copy of the filed complaint to the opposing party or par es involved in environment, and prevent legal disputes.
encourages the government and consumer organizations to undertake campaigns and initiatives to accordance with the relevant rules of service. This typically involves delivering a copy of the complaint 13. caveat emptor
educate consumers about their rights, product standards, and available remedies.
to the opposing party by a specific method (such as cer fied mail or through a process server). Defini on: "Caveat emptor" is a La n phrase meaning "let the buyer beware." It is a principle in contract law
8.Step Redressal System?
9. Await Response: A er the complaint is served, the opposing party will have a certain period of me that places the onus on the buyer to perform due diligence before making a purchase. Under this doctrine, the
1. Informal Resolu on: The first step in the redressal system is o en an a empt to resolve the dispute
to respond to the complaint. The response may include an answer, a mo on to dismiss, or other legal buyer assumes the risk for the quality and condi on of the goods or property purchased, unless protected by a
through informal means. This can involve direct communica on between the par es involved,
documents. warranty or other legal guarantees.
nego a on, or media on. The goal is to reach a mutually acceptable resolu on without the need for
Key Characteris cs of Caveat Emptor
formal legal ac on. Par es may exchange informa on, discuss their concerns, and explore possible 11.Indian Contract Act
solu ons to the problem. 1. Buyer Responsibility: The buyer is responsible for inspec ng the goods or property before the
The Indian Contract Act is a legisla on that governs the law of contracts in India. It was enacted in 1872 and is
2. Alterna ve Dispute Resolu on (ADR): If the informal resolu on fails or is not feasible, the next step is purchase. They must ensure that it meets their needs and expecta ons.
applicable to the whole of India. The act is based on the principles of English common law and aims to ensure
o en resor ng to alterna ve dispute resolu on (ADR) methods. ADR refers to processes like 2. Limited Seller Liability: The seller is generally not liable for any defects in the goods or property once
fairness, jus ce, and enforceability of agreements.
arbitra on that provide a neutral third party to help the par es reach a resolu on. In arbitra on, the the sale is complete, unless they have made specific warran es or representa ons about the
1. Defini on of Contract: The act defines a contract as an agreement enforceable by law. An agreement
arbitrator reviews the evidence and makes a binding decision condi on or quality of the item.
becomes a contract when it is made by the free consent of par es, for a lawful considera on, with a
3. Legal Ac on: If informal resolu on and ADR methods do not lead to a sa sfactory resolu on, the final 3. No Implied Guarantees: There is no implied guarantee from the seller about the suitability or
lawful object, and is not expressly declared to be void.
step is to ini ate legal ac on. This involves filing a lawsuit in a court of law and following the formal condi on of the product. The buyer cannot assume that the product is free from defects or fit for a
2. Essen al Elements of a Valid Contract: The act specifies certain essen al elements that must be
legal process. The par es present their case before a judge or jury, who will make a legally binding par cular purpose.
present in a contract. These elements include an offer and acceptance, lawful considera on, lawful
decision based on the evidence and applicable law. Legal ac on can be more me-consuming and 4. Excep ons: There are excep ons to this rule, such as when the seller commits fraud, makes
object, competent par es, free consent, and a valid agreement not declared void.
expensive, but it provides a formal mechanism for resolving disputes and enforcing legal rights. misrepresenta ons, or there are implied warran es under consumer protec on laws.
3. Types of Contracts: The act recognizes various types of contracts, such as contracts of sale, contracts
9. Contract vs Agreement Prac cal Applica on
of indemnity, contracts of guarantee, contracts of bailment, contracts of agency, etc. Each type of
Real Estate Transac ons: In real estate, caveat emptor is commonly applied. Buyers are expected to conduct
Contract Agreement contract has its own set of rules and provisions.
thorough inspec ons and due diligence, including hiring professionals to inspect the property for any
A contract is a legally binding agreement between An agreement refers to the mutual understanding 4. Offer and Acceptance: The act lays down rules regarding the communica on of proposals, acceptance
structural, mechanical, or environmental issues.
two or more par es that establishes their rights and between two or more par es regarding a specific of proposals, revoca on of proposals, and acceptance by electronic means.
obliga ons. It can be in wri en or oral form, ma er. It can be a formal or informal understanding, Purchases of Used Goods: When buying used goods, such as cars or electronics, the principle of caveat emptor
5. Considera on: Considera on refers to something of value given by one party to another as a part of
although certain types of contracts must be in but it may or may not have the legal enforceability of o en applies. Buyers are encouraged to test and inspect the items thoroughly before purchasing.
the contract. The Indian Contract Act requires that every contract must be supported by a lawful
wri ng to be enforceable. a contract. considera on. 14. Warranty vs condi on
6. Capacity to Contract: The act specifies that par es to a contract must have the capacity to enter into a
A contract is generally enforceable by law. If one An agreement may or may not be legally Warranty Condi on
contract. For example, minors, persons of unsound mind, and individuals disqualified by law cannot
party fails to fulfil their obliga ons under the enforceable. If an agreement lacks the necessary A warranty is a less cri cal term of the contract. It is A condi on is a fundamental term that goes to the
enter into a valid contract.
contract, the other party may seek legal remedies elements to be considered a contract a secondary obliga on that does not go to the root root of the contract. It is a major s pula on that is
7. Free Consent: The act emphasizes that consent must be freely given by the par es without any of the contract. essen al to the main purpose of the agreement.
such as damages or specific performance.
coercion, undue influence, fraud, misrepresenta on, or mistake. Contracts entered into under such Warran es are less central to the contract’s main Condi ons are cri cal to the contract's overall
circumstances can be considered voidable. purpose compared to condi ons. performance and purpose.
A contract is formed when there is a valid offer An agreement can be formed through various
made by one party, followed by an acceptance by means, such as informal discussions, emails, or even 8. Performance and Discharge of Contracts: The act deals with the performance of contracts and the Allows damages but not termina on Allows termina on and damages
the other party. a handshake various ways in which a contract can be discharged, such as by performance, agreement, frustra on, Secondary to the contract's purpose Fundamental to the contract's purpose
: A contract is based on the presump on that the an agreement may lack the inten on to create legal breach, or impossibility of performance. Quality of goods, standard of service Delivery dates, essen al qualifica ons
par es intend to create legally binding obliga ons rela ons.
15. Sale vs Agreement 18.Rights of a Partner 19. Characteristics of a Partnership
Sale Agreement  Sec on 12(a): Right to take part in the conduct of the Business A partnership is a business arrangement where two or more individuals share ownership and the
When in a contract of sale, the exchange of goods When in a contract of sale the par es to contract All the partners of a partnership firm have the right to take part in the business conducted by the firm responsibili es of managing a company. Key characteris cs of a partnership include:
for money considera on takes place immediately, it agree to exchange the goods for a price at a future as a partnership business is a business of the partners, and their management powers are generally 1. Shared Ownership: Partners share ownership of the business, contribu ng resources such as capital,
is known as Sale specified date is known as an Agreement to Sell. coextensive. If the management power of a par cular partner is interfered with and the individual has skills, or labor.
Executed Contract Executory Contract been wrongfully precluded from par cipa ng, the Court of Law can intervene under such 2. Profit and Loss Sharing: Profits and losses are shared among partners according to the partnership
In sale, the tle of goods transfers to the buyer with In an agreement to sell, the tle of goods remains circumstances. The Court can, and will, restrain the other partner from doing so by injunc on. agreement or, in the absence of such an agreement, equally.
the transfer of goods. with the seller as there is no transfer of goods. 3. Joint Decision-Making: Partners par cipate in decision-making processes, and major decisions usually
 Sec on 12(c): Right to be consulted
VAT is charged at the me of sale. No tax is levied. require mutual consent.
Right to sue for the price. Right to sue for the damages. When a difference of any sorts arises between the partners of a firm concerning the business of the firm, it 4. Unlimited Liability: In general partnerships, each partner has unlimited liability, meaning they are
Responsibility of buyer Responsibility of seller shall be decided by the views of the majority among the partners. Every partner in the firm shall have the personally liable for the debts and obliga ons of the business.
16. Partnership firm vs company right to express his opinion before the decision is made. However, there can be no changes like the 5. Mutual Agency: Each partner can act as an agent of the partnership, binding the business to contracts
business of the firm without the consent of all the partners involved. and agreements.
Partnership Firm Company
6. Flexibility: Partnerships are rela vely easy to form and dissolve compared to corpora ons, providing
 Sec on 12(d): Right of access to books flexibility in opera ons and management.
Partnership Firm is a mutual agreement between two or Company is an associa on of persons with a common Every partner of the firm, regardless of being an ac ve or a sleeping partner, is en tled to have access to
more persons to run the business and share profit and loss objec ve of providing goods and services to any of the books of the partnership firm. The partner has the right to inspect and take a copy of the same 20.Companies Act
The forma on of a company goes through a number of steps, star ng from idea genera on to commencing of
mutually. customers. if required. However, this right must be exercised bonafide.
the business. This whole process can be broken down into 4 major phases or steps,
 Sec on 13(a): Right to remunera on 1. Promo on Stage: Promo on is the first step in the forma on of a company. In this phase, the idea of
Indian Partnership Act, 1932 Indian Companies Act, 2013
star ng a business is converted into reality with the help of promoters of the business idea. In this
No partner of the firm is en tled to receive any remunera on along with his share in the profits of the stage the ideas are executed. The promo on stage consists of the following steps: Iden fy the
2 members for a partnership firm 7 for public limited, 2 for Private Limited, business by the firm as a result of taking part in the business of the firm. Although, this rule may always business opportunity and decide on the type of business that needs to be done. Perform a feasibility
vary by an express agreement, or by a course of dealings, in which case the partner will be en tled to study and determine the economic, technical and legal aspect of execu ng the business.
Partnership Deed required for the crea on of a partnership Memorandum of Associa on and ar cle of associa on remunera on. Thus, a partner may claim remunera on even in the absence of a contract, when such 2. Registra on stage: Registra on stage is the second part of the forma on process. In this stage, the
firm is mandatory for incorpora ng a company remunera on is payable under the con nued usage of the firm company gets registered, which brings the company into existence. A company is said to be in
existence, if it is registered as per the Companies Act, 2013. In order to get a company registered,
No such amount required 1 Lakh minimum for a Pvt Ltd and 5 lakhs in case of  Sec on 13(b): Right to share profits
some documents need to be provided to the Registrar of Companies.
Public Company 3. Cer ficate of Incorpora on: Cer ficate of incorpora on is issued when the registrar is sa sfied with
Partners are en tled to share all the profits earned in the business equally. Similarly, the losses sustained
by the partnership firm is also equally contributed. The amount of a partner’s share must be ascertained the documents provided. This cer ficate validates the establishment of the company in the records.
Consent required from all partners before transferring Can be transferred 4. Cer ficate of commencement of business: Cer ficate of commencement of business is required for a
by inquiring whether there is an agreement in that behalf among the partners.
public company to start doing business, while a private company can start business once it has
17. Du es of a Partner
 Sec on 13(c): Interest on capital received the cer ficate of incorpora on. Public companies receiving the cer ficate of incorpora on
 Sec on 9: General du es of a partner can issue prospectus in order to make the public subscribe to the share for raising capital. Once all the
Partners are legally bound to carry on the business of the partnership firm. The general responsibili es of a If a partner subscribes interest on capital is payable to the partner under the partnership deed, then the
minimum number of required shares have been subscribed, a le er should be sent to the registrar
partner are listed below. A partner is required to carry on the business to the highest common advantage. interest will be payable out of the profits only in such a case. In a general rule, the interest on a capital
along with a bank document sta ng the receiving of the money.
 Sec on 10: To indemnify for fraud subscribes by partners is not permi ed unless there is an agreement or a usage to that effect.
According to Sec on 10, a partner of the partnership firm is liable to compensate the firm for any damages 21. memorandum of Associa on
 Sec on 13(d): Interest on advances A Memorandum of Associa on (MoA) is a legal document that is required to form a company. It is one of the
caused to its business or the firm because of a partner’s fraud in the conduct of the business of the firm.
 Sec on 16(a): To account for any profit If a partner makes an advance to the partnership firm in addi on to the amount of capital to be fundamental documents in company forma on and outlines the company's structure and purpose. The MoA
If a partner of a partnership firm derives any profit for himself for any transac on of the firm or from the contributed by him, the partner is en tled to claim interest thereon at 6 per cent per annum. While the defines the company's rela onship with the outside world and specifies the scope of its ac vi es. Here are the
use of the property or business connec on of the firm or firm’s name, then the partner is bound to interest on capital account ceases to run on dissolu on, the interest on advances keeps running even a er key components typically found in a Memorandum of Associa on:
account for that profit and refund it to the firm. dissolu on and up to the date of payment. It can be noted that the Partnership Act makes a dis nc on 1. Name Clause: This specifies the official name of the company. The name must be unique and should
between the capital contribu on of a partner and the advance made by him to the firm not be similar to any exis ng company's name.
 Sec on 16(b): To account and pay for profits of compe ng for business
2. Registered Office Clause: This clause states the loca on of the company's registered office. It
If a partner carries on a company of the same nature as the firm and competes with that of the firm, the
 Sec on 13(e): Right to be indemnified determines the jurisdic on under which the company falls.
partner must be accountable for and pay to the firm all the profits made in the business by the partner.
3. Objec ve Clause: This clause defines the purpose and objec ves for which the company is
The partnership firm will not be held liable for any losses caused in the business. All the partners of the firm have the right to be repaid by the firm in respect of the payments made and established. It details the main ac vi es the company will engage in and any ancillary ac vi es.
 Sec on 13(f): To indemnify for wellful neglect the liabili es incurred by him in the ordinary and proper conduct of the business of the firm. This also 4. Liability Clause: This clause outlines the liability of the members. In the case of a limited company, it
According to the Sec on, a partner of a partnership firm must compensate the firm for any damages or includes the performance of an act in an emergency for protec ng the firm from a loss, if the payments, specifies that the liability of its members is limited to the amount unpaid on their shares.
loss caused to it by willful neglect in the conduct of the business of the firm. liability and ac on are such as a prudent man would make, incur or perform in his case, under similar 5. Capital Clause: This clause specifies the company's share capital. It details the total amount of capital
circumstances. the company is authorized to raise through shares and the division of this capital into shares of a fixed
amount.

22.Characteres cs of a company o Importance of the supplier’s product to the industry

1. Separate Legal En ty: A company is a separate legal en ty from its owners. It can own property, enter o Forward integra on by suppliers
into contracts, sue and be sued in its own name. 4. Bargaining Power of Buyers: This force assesses the influence customers have over the pricing and
2. Limited Liability: The liability of shareholders is limited to the amount unpaid on their shares. quality of goods and services. High buyer power can drive prices down and affect profitability.
Personal assets of shareholders are generally protected from the company’s debts and liabili es. o Number of buyers
3. Perpetual Succession: A company has a con nuous existence independent of its members. It is not o Volume of purchase per buyer
affected by changes in ownership or the death of shareholders or directors. o Availability of subs tute products
4. Transferability of Shares: Shares of a company can usually be transferred freely, which facilitates o Buyer’s price sensi vity
changes in ownership without affec ng the company’s opera ons. 5. Threat of Subs tutes: This force evaluates the presence of alterna ve products or services that can
5. Separate Management: The management of a company is typically separate from its ownership. perform the same func on. A high threat of subs tutes can limit industry profitability by pu ng a
Shareholders elect a board of directors to oversee the company’s management. ceiling on prices.
6. Common Seal: A company o en has a common seal, which acts as its official signature. This is used to o Availability of subs tute products or services
execute documents legally binding the company. o Performance and cost of subs tutes
7. Capacity to Sue and Be Sued: A company, as a legal en ty, can ini ate legal proceedings and can also o Buyer’s propensity to switch to subs tutes
be sued. o Price-performance trade-off of subs tutes
23. Ar cle of Associa on 25.Pestle Model - The PESTLE model is a strategic framework used to analyze the external macro-
The Ar cles of Associa on (AoA) is a crucial document in the forma on and governance of a company. It environmental factors that can impact an organiza on. PESTLE stands for Poli cal, Economic, Social,
outlines the rules and regula ons for the management of the company and defines the responsibili es of Technological, Legal, and Environmental factors.
directors, the kind of business to be undertaken, and the means by which shareholders exert control over the 1. Poli cal Factors: These involve the influence of government policies and ac ons on the business
board of directors. environment. Key elements include:
1. Preliminary: This sec on includes defini ons and interpreta ons of terms used in the document. o Government stability and changes
2. Share Capital and Varia on of Rights: Details about the company’s share capital, the division of o Tax policies and regula ons
shares, and the rights a ached to different classes of shares. It also covers the procedures for altering o Trade restric ons and tariffs
share rights. o Labor laws
3. Issue of Shares and Other Securi es: Procedures for issuing new shares or other securi es, including o Foreign trade policies
rights issues, bonus issues, and the allotment of shares. 2. Economic Factors: These include the economic condi ons and variables that influence a business's
4. Transfer of Shares: Regula ons regarding the transferability of shares, the procedure for transferring opera ons and profitability. Key elements include:
shares, and restric ons (if any) on the transfer of shares. o Economic growth rates
5. Share Cer ficates: Provisions regarding the issuance of share cer ficates, their form, and the process o Infla on rates
for replacing lost or damaged cer ficates. o Interest rates
6. Lien on Shares: Condi ons under which the company can exercise a lien on shares, including the o Exchange rates
company’s rights in case of non-payment of calls or debts owed by shareholders. 3. Social Factors: These pertain to the societal and cultural aspects that can affect an organiza on
7. Calls on Shares: Procedures for making calls on shares, the liability of shareholders to pay calls, and o Demographic changes (age, gender, ethnicity, etc.)
consequences of non-payment. o Cultural norms and values
24. porters five forces o Educa on levels
Porter's Five Forces is a strategic framework developed by Michael E. Porter to analyse the compe ve forces o Lifestyle changes and trends
within an industry and to understand its a rac veness and profitability. The model examines five key forces 4. Technological Factors: These involve the impact of technological advancements and innova ons on
that influence the compe ve intensity and, consequently, the poten al for profit in an industry. the business environment. Key elements include:
1. Compe ve Rivalry: This force looks at the level of compe on among exis ng firms in the industry. o Rate of technological change
High rivalry can limit profitability due to price wars, adver sing ba les, and product innova ons. o Research and development (R&D) ac vity
o Number and size of compe tors o Automa on and digitaliza on
o Industry growth rate o Technological infrastructure
o Exit barriers 5. Legal Factors: These encompass the laws and regula ons that can affect an organiza on's opera ons
2. Threat of New Entrants: This force examines how easily new compe tors can enter the industry and and compliance requirements. Key elements include:
challenge exis ng firms. If the barriers to entry are low, the threat is high. Key factors include: o Employment laws
o Economies of scale o Health and safety regula ons
o Capital requirements o Consumer protec on laws
o Access to distribu on channels 6. Environmental Factors: These relate to ecological and environmental aspects that can influence an
o Brand loyalty organiza on. Key elements include:
3. Bargaining Power of Suppliers: This force analyzes how much power suppliers have over the prices o Climate and weather condi ons
and quality of materials and services. High supplier power can erode industry profitability. o Environmental regula ons and sustainability ini a ves
o Number of suppliers o Corporate social responsibility (CSR) policies
o Availability of subs tute inputs o Waste management and recycling