COMMERCIAL LAW

UNIT I

DEFINITION OF LAW AND COMMERCIAL LAW

Definition of Law: According to salmond law is the body of principle recognized and applied by the state in the administration of justice. Definition of Commercial law: Commercial law also called business law deals with the principles of business and commerce. It covers matters like trading and sale of goods, bank transactions, loan and guarantee matters and other things related to the laws of trade and commerce.

Nature of contract
Contract: A contract is a legally enforceable agreement between two or more parties with mutual obligations. Nature of contract:
 Agreement  Enforceability by law

Elements Of Contract: offer acceptance consideration

Classification of Contract
I According to Validity
              Void Contract Valid Contract Voidable Contract Unenforceable Contract Illegal Contract Quasi Contract Implied Contract Express Contract Bilateral Contract Unilateral Contract Executory Contract Executed Contract Contingent Contract Wagering Contract

II According to Formation

III According to Performance

IV According to Execution

V Other Contracts

Essential Elements of valid contract

Offer and Acceptance Intention to create legal relationship Capacity to Contract Genuine and free consent Lawful object Lawful consideration Certainty and possibility of performance Legal formalities

Offer
Offer: An offer is a proposal made by one party to another party to enter into a legally binding agreement with him. Types of offer: Counter offer Cross offer

Acceptance
Acceptance: When a person to whom the proposal is made signifies his assent there to the proposal is said to accepted. Rules to Communication of Acceptance Mode of Communication Completeness of Communication
i)Offer ii)Acceptance iii)Revocation

Consideration
Definition: It is a price for which the promise of others is bought and the promise thus given for value is enforceable. Kinds of Consideration: Executory or Future consideration Executed or Present consideration Past consideration

Capacity of Contract
Every person is competent to contact 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. The following persons are not competent to contract a) Minor b) Person of unsound Mind c) Person disqualified by law

Unit II

Different modes of discharge of contract

Discharge of contract: When the obligation created by a contract comes to an end the contract is said to be terminated. Different modes of discharge of contract:  By Performance  By Mutual agreement  By Impossibility  By Operation of law  By Breach of contract  By Lapse of Time

Remedies for breach of contract

Rescission of contract Damages for the loss suffered Suit for the specific performance Suit upon quantum meruit Suit for injunction

Contract of indemnity and Guarantee

Indemnity of Contract: A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself or by the conduct of other person. Contract of Guarantee: It is a contract to perform the promise or discharge the liability of a third person in case of his default. Kinds of Guarantee: i) Specific Guarantee ii) Continuing Guarantee

Difference between indemnity and Guarantee

Number of Parties Number of Contract Purpose Consideration Nature of Liability Rights of Indemnifier and Surety

Essentials of a contract of a Guarantee

The contract of Guarantee involves three parties: Surety: Person who gives the Guarantee. Principal Debtor: The person in respect of whose default the guarantee is given. Creditor: The person to whom the guarantee is given. Essentials of a contract of a Guarantee Concurrence of all the parties Liability Existence of a debt Consideration Writing not necessary Essentials of a valid contract No concealment of facts No misrepresentation

Rights and Discharge of Surety

Surety: Person who gives the Guarantee. Rights of Surety: I. Rights against the creditor II. Rights against the Principal Debtor III. Rights against the Co-sureties

Discharge of surety
By notice of revocation By death of surety Terms of contract By release or discharge of debtor By making arrangement with principal debtor By giving time to the debtor By novation By loosing the security of the creditor By invalidation of contract of guarantee

UNIT III

Law of Agency
Agency: It means what is done with the help of another is the act of the person himself. Essentials of Agency: Capacity of the person Consideration No contract of agency is needed

Kinds / Classification of agents

I Mercantile Agent  Factor  Broker  Auctioner  Commission Agent  Delcredere agent  Banker II Non mercantile agent  Insurance agent  Counsels or advocate III Based on authority  Special agent  General agent  Universal agent

Duties of agents
 Duty to follow Principal instruction  Duty to conduct the business with skill and care  Duty to render proper account  Duty to communicate with the Principal  Duty not to deal on his own account  Duty to not make secret profit  Duty to pay sum received  Duty not to delegate authority  Duty to protect and preserve the Principal s interest

Rights of agents
Right of retainer Right to remunerations Right to lien Right of indemnity Right of compensation Right of stoppage of goods in transit

Rights and Duties of Principal

Rights: Right to recover damage Right to recover secret profit made by the agent Duties: The principal is to follow the consequence of law The principal is to do the job almost in good faith The principal must make compensation with the agent. The principal must pay the reward amount to the agent.

Partnership
Definition: Partnership is the relation between the persons who have agreed to share the profit of the business carried on by all or any of them acting for all. Rights of a Partner:  Right to take part in the conduct of the business  Right to consulted  Right to have check the book of accounts  Rights to share profit  Rights to interest on capital  Rights to interest on advance  Rights to be indemnified  Power in an emergency  Rights to retired  Right to introduce new partner

Duties of partner
The observe good faith To indemnify for loss To attend duty diligently Not to claim remuneration To indemnify for willful neglect To share losses To use property of the firm To account for private profits To be liable jointly and severally

Dissolution of partnership
Dissolution by agreement Dissolution by court Dissolution by compulsory Misconduct of a partner Perpetual loss in business Permanent in capacity of a partner

Unit IV

Sale
Sale: Its is a contract where the seller transfer or agree to transfer the property in goods to the buyer for a price. Agreement to sell: The ownership of goods is transferred at a future date is called agreement to sell.

Difference between sale and agreement to sell

Transfer of property Type of contract Particular and general property Consequence of breach Risk of loss Insolvency of the seller Insolvency of the buyer Right to resell. Type of goods

Conditions and Warranties

Condition: It is the main purpose of the contract the breach of which give rise to a right to treat the contract as repudiated. Warranty: The main purpose of contract in which the aggrieved party cannot treat the contract as repudiated. He can claim only damages

Express and implied conditions

I Express conditions It is a condition which is been agreed by both the parties at the time of contract of sale. II Implied Conditions It is the condition not written in the contract but are attached to the contract by the operation of law or custom.

Express and implied

I. Express warranties It is been agreed by both the parties at the time of contract of sale. II. Implied warranties It is the law which implies into the contract of sale.

Doctrine of Caveat Emptor

Doctrine of Caveat Emptor: Let the buyer beware . Exception to the Doctrine: Quality Description Usage of trade Consent by fraud

Unpaid seller
Unpaid seller: It is the whole of the price or part of the price has not paid. It is the condition of payment made through bill of exchange or other negotiable instrument which is dishonoured

Rights of Unpaid seller

I Rights against the goods  The ownership of the goods transferred
 Right of lien  Right of stoppage  Right of resale

 Ownership of the goods not transferred II Rights against the buyer personally  Suit for price  Suit for damage  Repudiation of contract  Suit for interest

UNIT V

Carriage of goods by sea

Meaning: A contract of carriage of goods by sea is called the contract of affreightment. Two forms of sea i)Charter party ii)Bill of lading. Charter Party: It is an agreement where by a ship is booked to the exclusive use of one shipper either for a particular voyage or voyages for a certain time. Bill of Lading: It is a document or receipt of goods acknowledged for shipment on a ship for carriage by sea and deliver to the shippers order and the document signed by the master of bill of lading.

Difference between Bill of lading and Charter party

Bill of lading
Bill of lading is a receipt of acknowledgement of goods It is document of title to the goods It is transferable by endorsement and delivery It does not amount to a lease of receipt of goods It is drawn in set of three or more It may not be stamped

Charter party
It does not contain any receipt It is not so It is not so It may amount to a lease of the ship It is not drawn in sets. It must be stamped

Insurance
Definition: It is a co-operative device to spread the loss caused by a particular risk over a number of persons who are spread and exposed to it and agreed to ensure themselves against the risk.

Kinds of insurance
Life insurance Fire insurance Marine insurance Third party insurance

Characteristics of insurance
Sharing of risks Co-operative device Value of risk Payment of contingency Amount of payment Large number of insured persons Insurance is differ from gambling Insurance is not charity