BBA-104 (Legal Framework)

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1: Define 

Coercion.
Coercion is the practice of forcing another party to act in an involuntary manner by use of intimidation o
r threats or some other form of pressure or force. It involves a set of various types of forceful actions tha
t violate the free will of an individual to induce a desired response.
2: What do you mean by unpaid seller.
Ans the seller remains as unpaid seller if any portion of the price, however small, remain unpaid. Where 
the whole of price has been tendered, and the seller refused to accept such a tender, seller ceases to be 
an unpaid seller.
3: Explain different types of partner.
There are various types of partners in a partnership firm. Active Partner: 
Partner who takes an active part in the management of the business.  Dormant Partner:  dormant partn
er is one who does not take any active part in the management of the business.
Nominal Partner: A partner who simply lends his name to the firm is called nominal partner. He neither c
ontributes. 
4: Explain duties of an agent.

An agent has a fiduciary duty to act loyally for the principal’s benefit in all matters connected with the
agency relationship. This duty supplements the duties created by an agency contract. A fiduciary duty
exists because agency is a relationship of trust and confidence.

5: Explain National Commission.


The Central Government must establish a consumer disputes resolving agency at the national level. This
is known as "National Commission”. The National Commission shall consist of a president and four other
members to be appointed by the Central Government.

6: What do you mean by consent?

Consent occurs when one person voluntarily agrees to the proposal or desires of another. For example,
a person with a mental disorder, a low mental age, or under the legal age of sexual consent may
willingly engage in a sexual act that still fails to meet the legal threshold for consent as defined by
applicable law.

7: Define Goods.

Goods' is defined as. “Every kind of movable property other than actionable claims and money; and
includes stock and shares, growing crops, grass, and things attached to or forming part of the land which
are agreed to be severed before sale or under the contract of sale.”

8: What do you mean by lawful object?

An object or action which is authorized, approved, and not prohibited by law. The concept of a lawful
object also implies an ethical quality in that the object under consideration is not only legal, but also
ethical and acceptable by society at large.
9: What do you mean by state Commission?

State Commission means any agency of any State having jurisdiction to enforce


such State's securities laws. State commission is an official administrative agency appointed by
the state government in India to resolve any state level consumer dispute/s. Explanation: ... The
organizational structure of the commission usually comprises of one president and two additional
members appointed by the state government.

10: Define pawn.

Pawn means to pledge an item of personal property as security for a loan and leave the pledged item
with a pawnbroker. The property is known as collateral. A pledge occurs when someone gives property
to a pawnbroker in exchange for money.

Q2: Explain the characteristics of contract.

A simple contract is an agreement made by two parties. This agreement can be an oral or a written one.
There must be an offer, consideration, and an acceptance to make it valid. Even if the document is not
drafted by a lawyer, it can still land you in court in the case of a breach of the contract. It is advisable to
have a written contract rather than a verbal one.

Offer and Acceptance: The offeror is the party who makes the offer, and the offeree is the person that
receives the offer. This contract can be made in the name of a business, a sole proprietor, or a limited
liability partnership.

Consideration: This is the value given by one party to another in exchange for a service or product, often
money. It is one of the most important aspects of a contract, and without consideration people
generally do not enter into a binding agreement.

Capacity to enter a contract: Both parties should be capable of consent, otherwise the contract will be
void. Parties to the contract must be 18 years old or over, of sound or stable mind, not under the
influence of drugs or alcohol, and not incarcerated.

Terms: As mentioned, a written contract is highly recommended. In the case of a breach, you have a
physical copy, and the suffering party will be protected. A simple contract must include the terms and
conditions that each party must abide by. It should include details regarding services, money, dates,
timeframes, and all clauses. For example, in an agreement between a tenant and a landlord the tenant
pays the landlord a certain amount of money over a fixed period while the landlord provides the
property for the tenant to live in.
Breach of contract: This occurs when one party defaults on their part of the agreement. If one of the
parties does not follow the terms, then the other party can sue them for damages. With enough
evidence, a judge can award compensation to the injured party. Having a written contract makes
resolving disputes much easier; if the situation does escalate into a lawsuit, the terms of the agreement
(and what constitutes a breach) are clearly laid out. If it is just a verbal agreement, it becomes a matter
of one party’s word against another, which is much more difficult to prove in court.

Contract Termination: A contract may be ended for many reasons:

1. Both parties perform their obligations.


2. Because of natural calamities.
3. By mutual consent from both parties.
4. By frustration: if one of the parties dies or gets prolonged sickness and become unable to fulfill
their end of the agreement.

For small matters, many people do not like to get tied up in legal contracts. But always try to get a
detailed, dated, and signed simple contract when it is beneficial to both parties.

Q3: What do you mean by consideration? Explain essential elements of consideration.

Consideration is the benefit that each party receives, or expects to receive, when entering a contract.
Consideration is often monetary, but it can be a promise to perform a specific act, or a promise to
refrain from doing something. For a contract or agreement to be legally binding, every party to the
contract must receive some type of consideration. In other words, a contract is a two-way street, so
each party must receive something of value from the other party or parties. Illegal or immoral acts are
not legally considered to serve as consideration.

Example 1

John backed into Allen’s car, damaging it. John is liable to pay for the damages but does not have the
money right now. While Allen could sue John for the damages to his car, he enters into an agreement
with John to give him 90 days to pay the full amount of $1,500, plus an additional $250 for the
inconvenience. The agreement states that Allen will not file a lawsuit before the 90 days is up but is free
to do so after that time. This agreement, or “contract,” provides consideration for both parties:

 John’s benefit: Allen gives up the right to sue for a period of 90 days.
 Allen’s benefit: John will pay for the damages, plus an additional amount of $250.

 Essential elements of Consideration: 

 I) Consideration must move at the desire of the promisor

 ii) Consideration may move from the promise or any other person

 iii) Consideration must be real not illusory


 iv) Consideration may be paste, present or future.

 v) It must be Lawful vi) It must not be immoral or opposed to public policy.

(I) Consideration must move at the desire of the promisor:

             It is the essential that consideration must move at the Desire of the promisor, but not at the
instance of a third party. An act done at the Desire of a third person will not constitute a good
consideration within the meaning of section 2 (d) of the Indian Contract Act 1872.

(ii) Consideration may move from the promise or any other person: 

           A party who wishes to enforce a contract must be able to show that he himself has furnished
consideration for the promise of the other party. In English law, consideration must move from promise
only. But in Indian law it may move from promise to any other person.

(iii) Consideration must be real not illusory: 

           Consideration must be real and possible. It must not be illusory or unsubstantial.

(iv) Consideration may be paste, present or future: 

            The words used in the definition under section 2(d) of the Indian contract Act, clearly state that,
consideration may be past, present, or future.

(v) It must be Lawful:

           Consideration must not be illegal it must be Lawful.

(vi) It must not be immoral or opposed to public policy.: 

         Consideration must not be immoral for opposed to public policy.


Q4: Explain rights of consumer according to consumer protection act.

The Consumer Protection Act, implemented in 1986, gives easy and fast compensation to consumer
grievances. It safeguards and encourages consumers to speak against insufficiency and flaws in goods
and services. If traders and manufacturers practice any illegal trade, this act protects their rights as a
consumer. The primary motivation of this forum is to bestow aid to both the parties and eliminate
lengthy lawsuits.
This Protection Act covers all goods and services of all public, private, or cooperative sectors, except
those exempted by the central government. The act provides a platform for a consumer where they can
file their complaint, and the forum acts against the concerned supplier and compensation is granted to
the consumer for the hassle he/she has encountered.

Consumer Rights

There are six broad consumer rights defined as per the Consumer Protection Act, 1986. These are:

Right to Safety
The Consumer Protection Act defines this right as a protection against goods and services that are
‘hazardous to life and property’. This particularly applies to medicines, pharmaceuticals, foodstuffs, and
automobiles. The right requires all such products of critical nature to life and property to be carefully tested
and validated before being marketed to the consumer.

Right to Information
This right mentions the need for consumers to be informed about the quality and quantity of goods being
sold. They must be informed about the price of the product and have access to other information specific to
the product that they wish to consume.

Right to Choose
The consumer must have the right to choose between different products at competitive prices. Thus, the
concept of a competitive market where many sellers sell similar products must be established to ensure
that the consumer can choose what to consume and in what quantity. This is to avoid monopoly in the
market.

Right to Seek Redressal


When a consumer feels exploited, he/she has the right to approach a consumer court to file a complaint. A
consumer court is a forum that hears the complaint and provides justice to the party that has been hurt.
Thus, if the consumer feels he/she has been exploited, they can approach the court using this right.

Right to be Heard
The purpose of this right is to ensure that the consumer gets due recognition in consumer courts or
redressal forums. Basically, when a consumer feels exploited, he has the right to approach a consumer court
to voice his complaint. This right gives him/her due respect that his/her complaint will be duly heard. The
right empowers consumers to fearlessly voice their concerns and seek justice in case they are exploited.
Right to Consumer Education
Consumer must be aware of their rights and must have access to enough information while making
consumption decisions. Such information can help them to choose what to purchase, how much to
purchase and at what price. Many consumers in India are not even aware that they are protected by the
Act. Unless they know, they cannot seek justice when they are hurt or exploited.

Q5: Explain essential element of valid contract.

Essential elements of a valid contract in business law are explained below:


“All agreements are contract if they are made by the free consent of parties competent to contract for a
lawful consideration and with a lawful object and are not expressly declared to be void.”

There are some essential elements of a valid contract. If any of these elements is not satisfied by an
agreement, it will affect the validity and will not form a valid contract.

1. Offer and acceptance:


In a contract there must be at least two parties one of them making the offer and the other accepting it.
There must thus be an offer by one party and its acceptance by the other. The offer when accepted
becomes agreement.

2. Legal relationship:
Parties to a contract must intend to constitute legal relationship. It arises when the parties know that if
any one of them fails to fulfil his part of the promise, he would be liable for the failure of the contract.

3. Consensus-ad-idem:
The parties to an agreement must have the mutual consent i.e., they must agree upon the same thing
and in the same sense. This means that there must be consensus ad idem (i.e., meeting of minds).

4. Competency of parties:
The parties to an agreement must be competent to contract. In other words, they must be capable of
entering into a contract.

According to the Act, “Every person is competent to contract who is of the age of majority according to
the law to which he is subject to and who is of sound mind and is not disqualified from contracting by
any law to which he is subject.”
5. Free consent:
Another essential of a valid contract is the consent of parties, which should be free. “Two or more
parties are said to consent, when they agree upon the same thing in the same sense.” Under Sec. 14, the
consent is said to be free, when it is not induced by any of the following: - (I) coercion, (ii)
misrepresentation, (iii) fraud, (iv) undue influence, or (v) mistake.

6. Lawful consideration:
Consideration is known as ‘something in return’. It is also essential for the validity of a contract. A
promise to do something or to give something without anything in return would not be enforceable at
law and, therefore, would not be valid.

Consideration need not be in cash or in kind. A contract without consideration is a ‘wagering contract’ or
‘betting’. Besides, the consideration must also be lawful.

7. Lawful objects:
According to Sec. 10, an agreement may become a valid contract only if it is for a lawful consideration
and lawful object. The following considerations and objects are not lawful: -

(I) If it is forbidden by law.

(ii) If it is against the provisions of any other law.

(iii) If it is fraudulent.

(iv) If it damages somebody’s person or property.

Thus, any agreement, if it is illegal, immoral, or against the public policy, cannot become a valid contract.

8. Agreement not expressly declared void:


An agreement to become a contract should not be an agreement which has been expressly declared
void by any law in the country, as it would not be enforceable at law.

9. Certainty and possibility of performance:


Agreements to form valid contracts must be certain, possible and they should not be uncertain, vague,
or impossible. An agreement to do something impossible is void under Sec. 56.
10. Legal formalities:
The agreement may be oral or in writing. When the agreement is in writing it must comply with all legal
formalities as to attestation, registration. If the agreement does not comply with the necessary legal
formalities, it cannot be enforced by law.

Q6: Explain the essential elements of bailment and pledge?

Bailment and Pledge are two special contracts that are often confused. Every pledge is a bailment, but
every bailment is not pledge. Bailment means a delivery of goods from one person to another for a
special purpose. Whereas Pledge means delivery of goods as security for the payment of debt or
performance of a promise. Therefore, Bailment & Pledge are two different contracts. Pledge is a special
kind of bailment.

Bailment
A bailment is a special contract defined under section 148 of the Indian Contract Act, 1872. It is derived
from a French word i.e., “bailer” which means “to deliver”. The etymological meaning of bailment is
“handing over” or “change of possession of goods”. By bailment, we mean delivery of goods from one
person to another for a special purpose on the contract that they shall reimburse the goods on the
fulfilment of the purpose or dispose of them as per the direction of the bailor. The person who delivers
the goods is known as bailor. And the person to whom the goods are given is known as Bailee. And the
property bailed is known as Bailed Property.

Essentials of Bailment

 There shall be a contract between the parties for the delivery of goods,
 The goods shall be delivered for a special purpose only,
 Bailment can only be done for movable goods and not for immovable goods or money,
 There shall be a transfer of possession of goods,
 Ownership is not transferred to Bailee; therefore, Bailor remains the owner,
 Bailee is duty bound to deliver the same goods back and not any other goods.

Pledge
Pledge is a kind of bailment. Pledge is also known as Pawn. It is defined under section 172 of the Indian
Contract Act, 1892. By pledge, we mean bailment of goods as a security for the repayment of debt or
loan advanced or performance of an obligation or promise. The person who pledges the goods as
security is known as Pledger or Pawn or and the person in whose favor the goods are pledged is known
as Pledgee or Pawnee.

Essentials of Pledge
Since Pledge is a special kind of bailment, therefore all the essentials of bailment are also the essentials of
the pledge. Apart from that, the other essentials of the pledge are:

 There shall be a bailment for security against payment or performance of the promise,
 The subject matter of pledge is goods,
 Goods pledged for shall be in existence,
 There shall be the delivery of goods from pledger to pledgee,
 There is no transfer of ownership in case of the pledge.

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