A PRESENTATION ON BUSINESS LEGISLATION

Topic: THE INDIAN CONTRACT ACT 1872

&

AGMARK ACT 1937Presented by

SATHYENDRA KUMAR A.D,M.B.A.(Agri-business),

Presented to Dr. S. MOKSHAPATHY,

Assistant ProfessorM.B.A.(Agri-business),

Institute of Development Studies,'Leela Vihar', University of Mysore,

Manasagangotri-06November-2013

LIST OF CONTENT

Introduction About Law Business Law Sources Of Business Law In India The Indian Contract Act 1872 Meaning And Definition DEFINITIONS (Sec 2)] Essentials Of A Valid Contract All Contracts are Agreements, but all Agreements are not Contracts Distinction between Contract & Agreement TYPES OF CONTRACT Rights and duties of indemnifier Rights and duties of indemnity-holder THE AGRICULTURAL PRODUCE (GRADING AND MARKING) ACT, 1937 Explanation Salient features of the Agricultural Produce (Grading & Marking) Act, 1937 Penalty etc.,……

INTRODUCTION ABOUT LAW

Law means a ‘set of rules’ which governs our behaviors and relating in a civilized society. So there is no need of Law in a uncivilized society.

Law is a system of rules and guidelines, usually enforced through a set of institutions.

It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. 

One should know the law to which he is subject because ignorance of law is no excuse

Law of India refers to the system of law in modern India

BUSINESS LAW

• Broadly speaking, business law refers to the laws that apply to business entities, such as partnerships and corporations. For the moment, QuizLaw has focused on the laws relating to setting up and creating such a business.

• Business law is all so known as Commercial law,  is the body of law that applies to the rights, relations, and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales

Sources of Business Law in India

The main sources of business law in India are shown in the table

English Law Judicial Decisionsor Case Law

Customs and Usages

Indian Statutes

English CommonLaw

Equity Law Merchant or Maritime Usage

Statutes Law

Sources of Business Law in India

The Main Sources of Business Law In India are Discussed

English Law: Indian business law is modeled on the lines of English mercantile law, as India was under British rule before its independence. The differences in the laws of India and England are primarily on account of their different business environment, customs, and trade practices.

Judicial Decisions or Case Law: The judicial decisions, usually referred to as precedents, are binding on all courts having jurisdiction lower to that of the court, which gave the judgment. This is also called judge made law.

Customs and Usages: Customs or usages of a particular trade also guide the courts in deciding disputes arising out of mercantile transactions.

Indian Statutes: The constitution of India confers power to enact law on its parliament and legislatures of states.

THE INDIAN CONTRACT ACT 1872

HISTORY

Commencement and applicability

Short Title Extent commencement

The Indian contract Act 1872

Applicable to whole Indian First day of September 1872Except the state of Jammu & Kashmir

First day of September 1872

Meaning And Definition

• The word ‘contract’ is derived from the Latin ‘Contractum’ meaning drawing together. According to the Act, “An Agreement enforceable by law is a contract”.

• “Every agreement and promise enforceable at law is a contract”. — Sir Frederick Pollock

• “An agreement creating and defining obligations between the parties”. — Salmond

• An analysis of these definitions would show that a contract must have the following two elements:

(a) An agreement, and

(b) Its enforceability (legal obligation)

In the form of an equation, it can be shown as under:• Contract = An agreement + its enforceability• Now the question arises, what is an agreement? and what is enforceability of an

agreement?

DEFINITIONS (Sec 2)

• Offer(i.e. Proposal) [section 2(a)]:-When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other person either to such act or abstinence, he is said to make a proposal.

• Acceptance 2(b):- When the person to whom the proposal is made, signifies his assent there to , the proposal is said to be accepted.

• Promise 2(b) :- A Proposal when accepted becomes a promise. In simple words, when an offer is accepted it becomes promise.

•  Promisor and promise 2(c) :- When the proposal is accepted, the person making the proposal is called as promisor and the person accepting the proposal is called as promisee.

•  Consideration 2(d):- When at the desire of the promisor, the promisee or any other person has done or abstained from doing something or does or abstains from doing something or promises to do or abstain from doing something, such act or abstinence or promise is called a consideration for the promise

Con……..

• Agreement 2(e) :- Every promise and set of promises forming the consideration for each other. In short, agreement = offer + acceptance.

•  Contract 2(h) :- An agreement enforceable by Law is a contract. •  Void agreement 2(g):- An agreement not enforceable by law is void. •  Voidable contract 2(i):- An agreement is a voidable contract if it is

enforceable by Law at the option of one or more of the parties there to (i.e. the aggrieved party), and it is not enforceable by Law at the option of the other or others.

•  Void contract: - A contract which ceases to be enforceable by Law becomes void when it ceases to be enforceable.

ESSENTIALS OF A VALID CONTRACT

 Proper offer and proper acceptance with intention to create legal relationship.

Lawful consideration Capacity of parties to contract -- Competent parties Free consent Lawful object Possibility of performance The terms of the agreements are certain or are capable of being made

certain [29]: Not declared Void Necessary legal formalities Intention to Create Legal Relation

All Contracts are Agreements, but all Agreements are not Contracts

An agreement is termed a contract only when it is enforceable by law. All agreements are not necessarily legally enforceable. It can rightly be said that an agreement has a much wider scope than a contract. For example that agreements are not legally binding are an invitation to dinner or to go for a walk and its acceptance. These are agreements not contracts.

Agreement is the first step of contract. But after making agreement, it may be enforceable by law or may not be enforceable at law. If that agreement is enforced by law then it will be treated or turned into contract, But if the agreement is not enforced by law that will not be treated as a contract but merely an agreement. So all contracts are agreement, but all agreements are not contract.

Distinction between Contract & Agreement

Si. No.

Basis  

Contract  

Agreement  

1. Section  

Sec. 2(h)  

Sec. 2(e)  

2.   Definition  

A contract is an agreement enforceable by law  

Every promise or every set of promises forming consideration for each other is an agreements.  

3. 

Enforceability  

Every contract is enforceable  

Every promise is not enforceable  

4.   Interrelationship  

A contract includes an agreement  

An agreement does not include a contract  

TYPES OF CONTRACT

On The Basis of the Mode of Formation Express Contract

An express contract is a contract made by the use of words spoken or written.

Example: A says to B ‘Will you purchase my bike for Rs 20,000?’ B says ‘Yes’ to A. Implied Contract

An implied contract is a contract which is made otherwise than by the words spoken or written. It came into existence on account of an act or conduct of the parties

Examples: A stops a taxi by waving his hand and boards it. There is an implied contract that A will pay the prescribed fare on reaching his destination.

Withdrawal of cash from the ATM of a bank.

Con….

Quasi-contract • Neither by word spoken • Nor written • Nor by the conduct of the parties. • But these are created by the law.

Example: If Mr. A leaves his goods at Mr. B’s shop by mistake, then it is for Mr. B to return the goods or to compensate the price. In fact, these contracts depend on the principle that nobody will be allowed to become rich at the expenses of the other E-contract: An e-contract is a contract made through the electronic mode. In

other words An e – contract is one, which is entered into between two parties via the internet.

On the Basis of Performance

Executed Contract

In an executed contract both the parties have performed their promises under a contract. It is a contract where, under the terms of contract, nothing remains to be done by the parties.

Example: A sells his car to B for Rs 1 lakh. A delivered the car and B paid the price. This is an executed contract. Executory Contract

In an executory contract both the parties are yet to perform their promises. In other words, it is a contract where parties have to still perform their obligation in the future.

Example: A sells his car to B for Rs 1 lakh. If A is still to deliver the car and B is yet to pay the price, it is an executory contract

Con…..

Partly Executed and Partly Executory Contract

In a partly executed and partly executory contract, one party has already performed his promise and the other party has yet to execute his promise.

Example: A sells his car to B. Though A has delivered the car, B has yet to pay the price. For A it is an executed contract, whereas it is an executory contract on the part of B since the price has yet to be paid. Unilateral Contract

A unilateral contract is also known as a one-sided contract. It is a contract where only one party has to perform his promise. In such a contract, the promise on one side is exchanged for an act on the other side. Aft er the formation of a unilateral contract, only one party remains liable to perform his obligation because the other party has already performed his obligation.

Example: Alap promises to pay Rs 1000 to anyone who finds his lost cellphone. Bansi finds and returns it to Alap. From the time Bansi found the cell phone, the contract came into existence. Now Alap has to perform his promise, i.e., the payment of Rs 1000.

Con….

Bilateral Contract

In a bilateral contract both the parties have to perform their respective promises. It is also known as a two-sided contract. Here, the obligation is outstanding on the part of both the parties.

Example: A promises to sell his car to B for Rs 1 lakh and agrees to deliver the car on the receipt of the payment by the end of the week. The contract is bilateral as both the parties have exchanged a promise to be performed within a stipulated time.

On the Basis of Validity or Enforceability

Valid Contract

If the contract entered into by the parties and satisfies all the elements of a valid contract as per the act, it is said to be a valid contract. Void Contract

A contract which ceases to be enforceable by law is known as a void contract. A void contract is not enforceable by the court. Generally, a valid contract ceases to be enforceable on the change in circumstances or on the change of provisions of an act.

Con…

Voidable Contract

When the contract is entered into without the free consent of party, it is considerate as a voidable contract. The definition of the act states that a voidable contract is enforceable by law at the option of one or more parties but not at option of the other parties. Voidable contract will be considered as valid if it is not cancelled by the aggrieved party within a reasonable time. Illegal Agreement

An illegal agreement is one which is forbidden by law. All illegal agreements are void ab initio. It cannot be enforced by any court. Not only that any associated or collateral transaction to an illegal agreement is also void. No action is allowed on an illegal agreement. No action can be taken for the recovery of the money paid under illegal agreement or for the breach of the illegal agreement. The parties to an illegal agreement cannot get help from the court. No suit can be filled or any action taken in respect of the illegal agreement.

Contracts of Indemnity

Section 124 - 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 any other person is a "contract of Indemnity“

Illustration - A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of Rs 200. This is a contract of indemnity.

For example - A and B go into a shop. B says to the shopkeeper “Let A have the goods, I will see you paid”. The contract is one of Indemnity.

Rights and duties of indemnifier

Rights of the indemnifier

The rights of the indemnity-holder are the duties of indemnifier, and duties of the indemnity-holder are the rights of the indemnifier. There are not prescribed any specific rights of the indemnifier either in Nepalese law or in Indian law. However, he is not liable for indemnity. If indemnity-holder acts negligently. If indemnity-holder is acting with the intention of causing any

loss or damage If he is acting against the instructions of the other party

(promisor).

Con…

Duties of indemnifierThe duties of an indemnifier arise in the following circumstances: There must be a loss in accordance with the contract to make the

indemnifier liable. There must be an occurrence of the anticipated event. Without any

occurrence of the prescribed event, there is no indemnity by the indemnifier.

Where the right of indemnity is used by the indemnity-holder prudently and the instruction of the indemnifier is not contravened or when there is no breach of contract.

If the costs demanded by the indemnifier are not caused by negligence, haphazard behaviour

Rights and duties of indemnity-holder

Rights of indemnity-holder [Sec. 22(1) of NCA]

A person whose loss is to be made good is called the indemnity-holder. He has some rights against the indemnifier in accordance with the legal provisions incorporated under the Nepalese and Indian Contract Acts. But, the duties of the indemnity-holder have not been mentioned under the Acts. The indemnity-holder is entitled to recover any or all of the amounts of compensation under the contract. They are as follows All the indemnity amount (damage) prescribed in the contract. All the damages he may be compelled to pay a third party for the loss. All the costs spent on the case filed or defended by him in connection with

the contract relating to indemnity. All the costs of legal actions, if it becomes necessary to initiate such an

action for a failure to pay the amount mentioned in all the above clauses.

Con…

Duties of indemnity-holderExcept otherwise is mentioned in the contract, the indemnifier will not liable for the loss in the following circumstances. They are called duties of indemnity-holder too. Duty to work prudently: Except otherwise is mentioned in the contract, the

indemnifier will not liable for the loss caused by the negligence work of the indemnity-holder. In other words, it is the duty of indemnity-holder to work prudently.

Duty not to act to cause harm or loss: If the indemnity-holder acting with the intention of causing any loss or damage, the indemnifier will not liable for such loss. In other words, it is the duty of indemnity-holder not to act to cause harm or loss.

Duty to comply with the intention of promisor: If the indemnity-holder acting against the instruction of the other party or promisor, the indemnifier will not liable for the loss caused by such against act to his instruction. In other words, it is the duty of indemnity-holder to comply with the intention of promisor.

THE AGRICULTURAL PRODUCE (GRADING AND MARKING)

ACT, 1937

An Act to provide for the grading and marking of agricultural (and other) produce

Where as it is expedient to provide for the grading and marking of Agricultural (and other) produce, it is hereby enacted as follows:-

Short title and extent• This Act may be called the Agricultural Produce (Grading and

Marking) Act, 1937• It extends to all the provinces and capital of the Federation,

including Baluchistan

Explanation

In this Act, unless the contrary appears from the subject or context-• “Agricultural Produce” includes all produce of agriculture or horticulture and

all articles of food or drink, wholly or partly manufactured from any such produce, and fleeces and the skins of animals.

• counterfeit" has the meaning assigned to that word by section 28 of the Indian Penal Code (45 of 1860 );

• "covering" includes any vessel, box, crate, wrapper, tray or other container•  "grade designation" means a designation prescribed as indicative of the

quality of any scheduled article;• "grade designation mark" means a mark prescribed as representing a

particular grade designation;• "quality" in relation to any article includes the state and condition of the

article

Con…

• "prescribed" means prescribed by rules made under this Act;•  "Scheduled article" means an article included in the Schedule• An article is said to be marked with a grade designation mark, if the article itself

is marked with a grade designation mark or any covering containing or label attached to such article is so marked.

•  An article is said to be misgraded if :-  the article is not of the quality prescribed for the grade designation with which it

is marked; the composition of the article offered for grading is altered in any way after a

sample has been drawn for analysis and determination of the grade designation of the article in accordance with the rules made under this Act;

 the article is tampered with in any manner, and any false claim is made for the quality prescribed for its grade designation, upon

the label or through advertisement or in any other manner.

Salient features of the Agricultural Produce (Grading & Marking) Act,

1937

It is an Act to provide for the grading and marking of the agricultural and other produce

Agricultural produce has been defined as to include all produce of agriculture or horticulture and all articles of food or drink wholly or partly manufactured from any such produce, and fleeces and the skins of animals.

The Act has provision for making Rules to carry out the provisions of the Act. General Grading and Marking Rules, 1988 and 105 Specific Commodity Grading and Marking Rules are notified.

Penalty's

Penalty for unauthorised marking with grade designation mark

Whoever marks any scheduled article with a grade designation mark, not being authorised to do so by rule made under section 3, shall be punishable with fine which may extend to five hundred 

Penalty for counterfeiting grade designation mark

Whoever counterfeits any grade designation mark or has in his possession any die, plate or other instrument for the purpose of counterfeiting a grade designation mark shall be punishable with imprisonment which may extend to two years, or with fine, or with both.

GENERAL GRADING AND MARKING RULES 1937

• These rules may be called General Grading and Marking Rules 1937.

• Any person or a body of persons desirous of being authorized to mark any article with grade designation mark shall apply to the Agricultural Marketing Adviser to the Government of India and Faridabad

• If after due inquiry the Agricultural Marketing Adviser is satisfied that it is expedient in the interest of better marketing and authorization be granted and that applicant is a fit and a proper person to receive a certificate of authorization, he shall issue such a certificate to the applicant.

Agmark Grades

• CommodityCoverage:181Number.• Quality Grading and Certification for:• Export• Domestic Trade• Farm Level Grading:• Grading at Producer's Level.• Quality Certification Mark:

AGMARK Acts as: Third Party Guarantee to Quality Certified.

Legal Backup: Agricultural Produce (Grading and Marking)Act,1937asamendedin1986

GROUPWISE LIST OF THE COMMODITIES FOR WHICH AGMARK GRADE STANDARDS HAVE BEEN FORMULATED

UNDER THE AGRICULTURAL PRODUCE (GRADING AND MARKING) ACT, 1937

Si No. Name of the Group: No. of commodities notified

1. Food grain and allied products 29

2. Fruits and Vegetables 29

3. Spices and condiments 26

4. Edible Nuts 8

5. Oil Seeds 15

6. Vegetable Oils and Fats 18

7. Oil cakes 8

8. Essential oils 8

9. Fibre crops 5

10. Live stock, Dairy and poultry products 10

11. Other products 25

TOTAL 181

Strengthening of Agricultural Marketing

Strengthening of Agricultural Marketing

Capacity enhancement in Terminal Markets

Capacity enhancement in

Grading and Standardization

Capacity enhancement in

Quality and Safety issues

Setting up National Resource Centre

Capacity enhancement in

Market News

Capacity enhancement in

Marketing Extension

THANK

YOU