LEGAL ASPECTS OF BUSINESS

UNIT - 1
1 What is contingent contract?
Section 31 of the indian contract act defines contingent contract as “A contract to do or
not to do something if some event, collateral to such contract, does or dose not
happen”.
2 Distinguish between condition and warranty?
Condition Warranty
It is a stipulation that is vital to the It is a stipulation collateral to the
main purpose of the contract main purpose of the contract
Can be treated as breach Cannot be treated as breach
3 What is meant by marking of cheques?
Marking of cheques as “Good for payments”. Marking when made has the atlthnfifity of
certification to the effect that the paying banker has veriefied the amount of the
drawyer of the cheque and there by certifies that there are sufficient funds in the
respective amount to meet the amount of cheque drawn.
4 What is the test for agency?
. International tort motivation test work related test.
5 What is a valid contract?
An agreement which is enforceable at law is said to valid contract.
6 Define performance contract?
The performance of the contract may be
Actual performance
Offer to perform or tender
7 What is the role of warranties in sales contract?
There are two roles in a warranties
Express warranties
Implied warranties
8 state the liability of third party?
The third party has discounted that there is a principal he may file a suit against the
principal Or his agentor both.
9 What is consent?
Sec 13 “Two or more persons are are said to consent when they agree up on
something in a same sense”.
10 Define consideration?
According topallock” Consideration is the price for which the promise of others is
bought and the promise thus given for value is enforceable”.
11 Define void contract?
According to sec 2 defines this contract as” a contract which ceases to be an
enforceable by law becomes void contract.

12 Different between Agreement and Contract?

Offer + Acceptence =Agreement
Contract=Agreement+Enforceability by th law
The agreement made without consider The contract is cannot be made up of
without conside
-ationIs enforceable -ration” there is no consideration no contract”.

13 Who is an unpaid seller?

The seller of goods is deemed to be an ‘unpaid seller’ .
14 What are the rights of unpaid seller?
1. The rights of unpaid seller against the goods
2. The rights of unpaid seller against the buyer personally
15 State the elements of contract?
1. Offer and acceptance
2. Intension to create legal relationship
3. Capacity to contract
4. Genuine and free consent
5. Lawful object
6. Lawful consideration
7. Certainty and possibility of performance
8. Legal formalities
16 What is Lawful object?
The object of an agreement must be lawful. It must not be illegal or opposed to public
policy. It is lawful unless it is forbidden by law.
17 State the various kinds of object?
1. Validity
2. Formation
3. Performance
4. Execution
18 Distinguish between illegal and void contract?
1. A voidable contract is voidable at the option of one of the parties their to. But a
void cannot be enforced by any one of the parties there to.
2. The defect in the case of voidable contract is curable and may be condoned,
whereas a void agreement is void ab initio, and its defects are not curable.
19 What is wagering Contract?
Sec 30 defines wager as an agreement between the parties by which one promises to
pay money ormoneys worth on the happening of uncertain event in the consideration of
the other party’s promise to pay if the event does not happen.
20 List out the characteristics of agreement?
1. At least two persons. There must.
2. Consenusus-ad-idem.
21 What is Quasi Contract?
A quasi contract is one, which is created by law. In the quasi-contract, there is no
intention on either side to make a contract. In quasi-contract, rights and obligations arise
not by an agreement but by operations of law.
22 What is Implied contract?
An Implied contract is one for which the proposal or acceptance is made otherwise than
in words (sec 9). Where the proposal or the acceptance of any promise is made
otherwise than in words, the promise is known as implied contract.

23 What is Pluarlity of contract?

Their must be two or more persons to make an agreement because one person cannot
enter an
Agreement by himself.
24 What is consensus ad idem?
An agreement is necessarily the outcome of consenting minds or consensus ad idem.
25 What is right in rem?
Right in rem is wright against the whole world.
26 What is offer or Define offer?
An offer is an proposal made by one party to another to enter into a legally binding
agreement with him.
27 How an offer is made?
An offer is made by either express or implied. If an offer is made by words spoken or
written its called express. On other hand, an implied offer is one, which be inferred from
the conduct of the party or the circumstance of the case.
28 What are the conditions of making an offer?
1. The offer must be definite and not vauge.
2. An invitation to make an offer does not construe an offer.
3. A mere statement of intention is not an offer.
4. Offer must be communicated to the offeree.
5. Offer must be capable of creating a Legal Relation.
6. Offer must be so as to obtain the assent.
7. An offer may be conditional.
8. A statement of price is not an offer.
29 What is counter offer?
The counter offer is a new offer, which is made with a view to reject the original offer.
30 What is cross offer?
When two parties make offer similar in all respects to each other , in ignorance of each
other’s offer are called cross offer.
31 Who can accept the offer?
Acceptance may be of acceptance of particular offer or acceptance of general offer.
When offer is made to a particular persons, it is called particular offer.

32 What is general offer?

On the other hand, a general is one, which is made to world at large. It can be
accepted by any persons to whom the offer is made.
33 What are Tenders?
A tender is an offer. It may either be a standing offer or a definite offer. Standing offer is
one, which is made for the continuous supply of a certain article at a certain rate over a
definite period.
34 What are the conditions of acceptance?
1. An offer should be accepted only by the person to whom it is made.
2. An acceptance of an offer should be absolute and unqualified and should confirm
totally with the offer made.
3. The acceptance must communicated to the offeror.
4. The acceptance must be given within the time specified.
5. Contract can be entered into between the parties by an authorized reprenstative.
6. Acceptance must be given before the offer lapses or is revoked.
7. Acceptance must show an intention.
8. Acceptance cannot be inferred from the silence of the offeree or his failure to
reply.
35 What is the need for consideration?
Consideration is the very essence of a contract. If there is no consideration in an
agreement, it is not enforceable by law except in certain cases. As somebody said “No
Consideration No Contract”.
36 What are the different kinds of consideration?
1. Executory or Future consideration.
2. Exucuted or Present consideration.
3. Past consideration.
37 Give any four exceptions to the doctarine of privity of contract?
1. Trust or Charge.
2. Acknowledgement of payments.
3. Agency
4. Assignment
38 Name the persons who are not competent to contract?
Minors, Persons of unsound mind, Persons disqualified by law.
39 Who are lunatics?
A person, whose mental power are disordered is called a lunatic. The term “lunacy”
denotes periodically insanity with lucid intervals.

40 Who are alien enemies?

An alien means citizen of foreign state. Contracts with aliens are valid. In case of
sovereign or state of alien is at peace with the country of his stay, he is an alien friend.
41 Who are persons of unsound mind?
1. Idiot
2. Lunatics
3. Drunken or intoxicated person
42 Who are person disqualified by law?
1. Alien enemies
2. Insolvents
3. Convicts
4. Corporations
5. Foreign Sovereigns and Ambassadors
6. Professional Persons
 7. Married women
43 Why the married women are disqualified by law?
Woman can enter into contracts. She can bind her property, sue and be sued on such
contract. A married woman has a right to pledge the credit of her husband to purchase
household necessaries except when she is forbidden to do so or when she is given
required amount or when the shopkeeper is warned not to give goods on credit bases.
44 What is free consent?
Consent is said to be free when it is not caused by coercion, undue influence,
Fraud, misrepresentation, Mistake subject to be provision.
45 When is a consent is said to be unfree?
If any consent is given owing to any one of the any reasons, the consent thus given is
said to be unfree.
46 Define fraud?
The term fraud means an international, deliberate or willful misstatement of facts, which
are material for the formation of a contract.
47 Define Coercion?
In England the term “Coercion” is called as “Duress”. The term “Coercion” in india
covers much wider than “Duress”, the consent is obtained by the threat of bodily harm
to another person, or his wife, parents or children.
48 What is meant by misrepresentation?
When a representation is wrongly made its called as misrepresentation. So
misrepresentation means false representation made innocently and with an honest
belief as to its truth by an party without any intention of deceiving the other party.
49 Distinguish between misrepresentation and fraud?
1. In fraud, the aggrieved party apart from avoiding the contract can also sue for
damages. But no such damages lie in case of misrepresentation.
2. Fraud may amount to an offence of cheating under criminal law. But in
misrepresentation, there is no such offence.
50 What are Unilateral Mistakes?
Unilateral mistakes, as the name suggests, is an One sided mistake with regard to
either the subject matter, terms of contract or the legal implications of the contract.
51 What are Bilateral mistakes?
Bilateral mistakes are those where there is mistake by both the parties. Such mistakes
may be declared as void.
52 Negotiable instrument act.
The word “negotiable” means transferable by delivery and the word ‘instrument’
means written documents by which a right is created in favour of some person.
53 kinds of negotiable instruments?
1 Promissory note
2 Bill of exchange
3 cheque
54 what are the essential feutures of negotiable instrument?
Payable to order or bearer.
Freely transferable
Presumption as to holder
 Title of holder in due cource
Presumption as to consideration
55 define bill of exchange?
A bill of exchange is an instrument in writing containing an unconditional order
signed by the maker , directing a certain person to pay a certain sum of money only to ,
or to the order of certain person to the bearer of the instrument.
56 parties to a bill of exchange?
the drawer
thedrawee or acceptor
the payee
57 difference between a promissory note and bill of exchange.
Promissory note bill of exchange
1 There are two parties there are three parties
Maker and payee.Drawer ,drawee, and payee.
2 it contains an unconditional it contains unconditional order to pay
Promise to pay.
58 definiton of cheque
A cheque is a bill of exchange drawn on a speciefied banker and not expressed to be
payable otherwise than on demand and includes the electronic image of a truncated
cheque and a cheque in the electronic form.
59 crossing of cheque
General crossing
Special crossing
Restrictive crossing
60 dishoner of negotiable instrument.
Generally the parties who is bound to pay the amount in an instrument may honour the
same by accepting it for payment or by payment or by payment straight away.