CENTER FOR DISTANCE AND ONLINE EDUCATION

ASSIGNMENT-JANUARY 2024
SUB. NAME: -MERCANTILE LAW B.COM – 102: Online Mode

Q-1 What is included in mercantile law?

Mercantile Law is a repository of all the Laws included in a company to handle or
look after its commercial activities. It is a generalized term for the entire legal body.
All the other acts like the company act, limitations act, Indian contract act, etc. are
subsidiaries of the Mercantile Law. And the acts are known as Mercantile Law acts.
It deals with all the commercial transactions of the trader, whether it is an individual
or an organization or maybe a joint venture. The commercial transactions include
the agreements between both parties, operational activities, the delegation of work,
financial transactions, memorandum of associations, etc. So let us understand the
meaning of Mercantile Law and its sources, scope.
Mercantile law is a combination of various laws and principles of individuals having
legal knowledge to resolve various issues in the company. But in 1872, all these laws
are joined and termed as mercantile law and from then to regulate various issues of
your company several acts are formed respectively such as the Indian contract act,
the company act, the limitations act, etc. from the definition of mercantile law it is
clear that it has a very wide scope.
Mercantile Law, also known as Commercial Law, governs the commercial activities
of the economy. It is a broad term that encompasses all of the Laws in India that
govern commercial transactions. Such a transaction necessitates a valid agreement
between the contract's parties. It can be explicitly stated or implicitly stated.
It is concerned with traders' rights and obligations arising from commercial
transactions. The trader can be an individual, a partnership, or a corporation. The
Mercantile Law of India encompasses all Indian Acts that govern trade or commerce.
For example, the Indian Contract Act of 1872, the Sale of Goods Act of 1930, the
Companies Act of 2013, and so on.
Q-2 Where is mercantile law applicable?
The Mercantile Law of India encompasses all Indian Acts that govern trade or
commerce. For example, the Indian Contract Act of 1872, the Sale of Goods Act of
1930, the Companies Act of 2013, and so on.
Q-3 What are the main sources of Indian mercantile law?
Principal Sources of Mercantile Law
Law Merchant: The main source of Mercantile Law is the Law merchant. It refers to
the customs and rules that govern traders' and businessmen's dealings and
transactions with one another.
Statute Law: Legislation creates Law, which is referred to as statute Law. A statute
is a written formal act of the legislature. It has also evolved into a significant source
of Mercantile Law.
The Principle of Equity: The principle of equity refers to a set of rules that are not
based on customs or statutory Law. As a result, equity rules were formed based on
the basis of conscience dictates decided in chancery courts.
Common Law: Common Law is a set of rules defined by customs, judicial decisions,
and old scholarly works on the subject. It is an unwritten English Law that applies
to everyone in the country. In this context, common law refers to legal principles
developed by judges through case decisions.
Q-4 Who can be appointed as an agent?
In other words, any person capable of contracting can legally appoint an agent.
Minors and persons of unsound mind cannot appoint an agent. Who may be an
Agent? In the same fashion, according to Section 184, the person who has attained
the age of majority and has a sound mind can become an agent.
Q-5 What are the types of mercantile agents?
As per section 182, an agent is a person who brings his principal into the contractual
relations with the third parties. The principal appoints or employs an agent under the
contract of agency. Thus, an agent is the link that connects the principal to the third
parties. An agent binds the principal by his acts. In other words, a principal is
responsible for the acts of the agent to the third parties. When an agent acts for his
principal, he has the capacity of his principal. There are 3 classes of agents: General
agent, Special agent and Mercantile agent. Let us discuss the Classification of Agents
in detail.
Classification of Agents
General Agent
Special Agent
Mercantile Agent
1. General Agent:
The principal appoints a general agent to do anything within his authority in all
transactions or in all transactions relating to a specific trade, business or matter. The
principal grants the authority to the agent to act on his behalf.
It may be assumed by the third party that such an agent has the authority to do all
that is usual for a general agent to do. Any private restrictions on the agent’s authority
do not affect the third party.
2. Special Agent:
He is the one who is appointed or employed to do or perform only a specific act, task
or function. Outside of this special act, task or function, he has no authority or power.
In this case, the third party cannot assume that the agent has unlimited authority.
Thus, any act of the agent outside his authority cannot bind the principal.
Classification of Agents
Source: freepik.com
3. Mercantile Agent:
As per section 2(9) of the Sale of goods act, 1930, a mercantile agent is a person
who in the customary course of business has an agent’s authority either to sell or
consign the goods for the purpose of sale or to buy goods or to raise money on the
security of goods. Thus, this definition covers the following:
a. Factors: A factor is a person who is appointed to sell goods which are put in his
possession or to buy goods for his principal. He is the evident owner of the goods in
his custody and can thus sell them in his own name and receive payment for them.
He also has an insurable interest in the goods in his custody and a general lien
regarding any claim that he may have to arise out of the agency.
b. Brokers:
A broker is a person whose business is to make contracts with the other parties for
the sale and purchase of goods or securities for brokerage.
He does not have the possession of the goods and acts in the name of the principal.
Also, he has no lien over goods because he has no possession of goods.
c. Del Credere Agent:
A del credere agent is a person who ensures or guarantees his principal that the
creditors of goods will pay for the goods they buy for extra remuneration. In the case
of failure to pay by the third party, he needs to pay the due amount to his principal.
d. Bankers:
The relation between a banker and a customer is basically that of a debtor and
creditor. However, when a banker buys or sells securities or collects cheque,
dividends, interests, bills of exchange or promissory notes on behalf of his customer,
he becomes the agent of his customer. Thus, he has a general lien on all the securities
in his possession regarding the general balance due to him by the customer.
e. Partners:
As per the Partnership Act, every partner is an agent as well as the principal of every
other partner in a Partnership firm. Also, every partner is the agent of the firm for
the business of the firm.
f. Auctioneers:
An auctioneer is a person who sells the goods by auction. An auction is a process by
which goods are sold to the highest bidder in a public competition. He cannot warrant
his principal’s title to the goods.
He is the agent of the seller until the goods are auctioned or knocked down. However,
after the knockdown, he becomes the agent of the buyer. Also, he is evidence that
the sale took place.
Q-6 Describe 'Fraud'. What are the consequences of fraud?
Fraud is a criminal offence conducted through dishonest practice with the intention
to gain a benefit for the fraudster. Accordingly, the consequences for fraud offences
are taken seriously and implemented rigorously. The administered consequences
increase in relation to the offence which has been committed.
Q-7 Who is competent to contract? State the location of contracts with a minor?
In this regard section 11 is very clear. It states that: "Every person is competent to
contract who is of the age of majority according to the law to which he is subject,
and who is of sound mind, and is not disqualified from contracting by any law to
which he is subject."
Q-8 Is past consideration valid? Can consideration move from a stranger?
Consideration may move from the promisee or any other person. Under Indian law,
consideration may be from the promisee of any other person i.e., even a stranger.
Q-9 What do you mean through a common offer? What happens if an offer is not
accepted in the prescribed mode?
Section 7 of the Indian Contract Act, 1872 states that communication of an
acceptance must be made in the prescribed mode or if no mode is prescribed, in a
usual and reasonable manner. Therefore, a communication not made in prescribed
manner does not constitute valid acceptance and does not become a valid contract.
Q-10 What happens if the acceptance is not just as to the mode prescribed?
Section 7 of the Indian Contract Act, 1872 states that communication of an
acceptance must be made in the prescribed mode or if no mode is prescribed, in a
usual and reasonable manner. Therefore, a communication not made in prescribed
manner does not constitute valid acceptance and does not become a valid contract.