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MMPC 13
BUSINESS LAW
TABLE OF
CONTENTS
01 LONG IMP QUESTIONS
02 EXTRA LONG QUESTIONS
03 VERY IMP SHORT NOTES
04 EXTRA SHORT NOTES

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MMPC 13- BUSINESS LAW

FIRST PRIORITY MOST IMPORTANT QUESTIONS
YOU HAVE TO DO 05 QUESTIONS OUT OF 08
Q1- Explain the meaning of Intellectual Property Explain the need for protecting Intellectual
Property and Describe the two types of Intellectual Property? (v v v v v imp)
ANS- INTELLECTUAL PROPERTY-- There is no universally accepted definition of ‘intellectual
property’. This is not surprising, as it is nearly impossible to find one definition that can
comprehensively cover all the subject matters that are currently considered as intellectual property.
The World Intellectual Property Organisation (WIPO) has provided a relatively more comprehensive
definition which reads as follows:
Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic
works; designs; and symbols, names and images used in commerce
Some of the scholars like William Fisher highlight the fact that intellectual property is not a single
homogenous law when he says that the term ‘intellectual property’ refers to a loose cluster of legal
doctrines that regulate the uses of different sorts of ideas and insignia. However, if the term
intellectual property refers to a loose cluster of legal doctrines, then it becomes pertinent to ask
when we can call something as intellectual property. According to Bently and Sherman, the term
‘intellectual’ (adjective) indicates the character of some of the material this area of law protects, i.e.,
products of human mind/ intellect and the term ‘property’ indicates the form of regulation, i.e., the
grant of exclusive rights which operate in a manner similar to property rights over tangibles.
Different countries protect these diverse creations of the mind under different branches of law such
as patent law, copyright law, trademark law, and design law. Together they are often referred to as
‘intellectual property laws’, though it needs to be kept in mind that it is becoming increasingly
difficult to find common theoretical justifications for all such branches of law and that there are
major differences between the legal and economic foundations of these laws
Need for protecting Intellectual Property
While there are different theoretical rationales for affording legal protection to different types of IP,
the most widely used one is the ‘incentive theory’, also known as ‘welfare theory’.5 According to the
proponents of this theory, most information products like books or music have two characteristics of
public goods.
The first characteristic is the non-rivalrous character in consumption. We say that a good has non-
rivalrous character in consumption when more than one person is able to use the good
simultaneously without affecting the possibilities of consumption of that good by another. For
example, a digital copy of a book which is stored on the cloud could be read by more than one
person and each Intellectual Property Rights person would be able to read the book without
diminishing the possibilities of enjoyment of reading of that book by another. On the other hand, if
the book is in physical form or hard copy, only one person might be able to use that copy at a time.
Most information products have non-rivalrous character in consumption
The second characteristic is relative non-excludability. It is relatively hard to exclude people from the
consumption of information goods. This is a particularly important challenge, as many information
goods also have strong positive externalities. Economists argue that because of these public goods
characteristics, inventors or creators will not have the incentives to create information products and
there will ultimately be under-production of information goods.6 To address this issue of under-
production, the economists suggest that there should be at least some legal protection against
copying. The legal protection suitable for different information products would have to be fine-
tuned both in terms of duration of protection and scope of protection, keeping in mind both the
requirements of protecting the incentives for production of such goods as well as the broader
interest of the society in getting access to such products. Most laws that come under the broader
umbrella of IP laws, particularly patents and copyrights, can be seen attempting to seek this
fundamental balance through diverse measures such as limited term protection and exceptions to
infringement
In the context of trademarks, there are two commonly cited economic arguments. Firstly,
trademarks can reduce consumer search costs. In the absence of trademarks, consumers may have
to spend substantial amount of time and efforts to identify a product that they wish to consume.
Secondly, in the absence of trademark protection, there may not be much incentives for producers
to maintain or improve the quality of their products or services. In other words, trademarks have a
self-enforcing characteristic when it comes to quality improvements.
TYPES OF INTELLECTUAL PROPERTY
As indicated earlier, IP law is not a homogenous body of law, but rather a collection of distinct, but
related legal doctrines covering diverse subject matters. This subsection will explore the basic
aspects of some of the major types of IP
Trademarks
Trademarks are another important type of IP rights. In general, a trademark refers to a word,
symbol, or any other signifier that can distinguish the goods or services produced by one firm from
the goods or services of another firm.35 In India, trademarks are governed by Trademarks Act 1999.
The Trademarks Act 1999 defines a trademark as a mark capable of being represented graphically
and which is capable of distinguishing the goods or services of one person from those of others and
may include shape of goods, their packaging and combination of colours.36 If one looks at the
definition given for ‘mark’ under the Trademarks Act 1999, it can be seen that the term has been
provided with an inclusive definition, so as to meet the contemporary as well as future
requirements. As per Sec. 2(1)(m) of the statute, the term ‘mark’ includes a device, brand, heading,
label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of
colours or any combination thereof. Thanks to this inclusive approach, Indian trademark law is able
to protect not just conventional signs like logos or words, but also many non-conventional marks like
sound marks and colour marks, as long as they can meet the other requirements under the law,
particularly the requirement that the sign should be capable of distinguishing the goods or services
of the producer from those of others. With regard to the shapes, it needs to be noted that if the
shape is resulting from the nature of the goods themselves, it cannot be protected as a trademark
under Indian trademark law.37 For example, the shape of a cricket ball cannot be registered as a
trademark for the product category of cricket ball. Similarly, if the shape is necessary to obtain a
technical result, it cannot be protected as a trademark.38 This is also an important prohibition, as
many producers might seek protection for technical solutions under trademark law, even if the same
should have been a subject matter of protection under patent law. This is primarily due to the fact
that the term of protection for trademarks is infinite, provided the producer renews the registration
promptly. But allowing trademark owners to seek protection for technical solutions under trademark
law would defeat the purpose of creating other types of IP regimes like patents, which provide a
limited term monopoly right for inventors and ensure that those inventions can be used by the
general public after the expiry of the patent term. In the past, there have been attempts to protect
inventions like a three-headed rotary shaver and the courts have denied trademark protection to
such technical solutions.39 Finally, if a shape adds substantial value to the goods, it cannot be
protected as a trademark under Indian trademark law.40 Indian trademark law also has a graphical
representation requirement.41 In other words, a mark can be protected as a trademark in India, only
if it can be represented graphically. Since non-conventional marks like taste marks and smell marks
are hard to be represented graphically, they are generally considered not capable of attaining
protection under the current Indian trademark law. The capacity of a mark to distinguish the goods
or services of one undertaking from the goods or services of another is also an important
requirement.
To obtain trademark protection in India, an applicant has to file a trademark application in the
prescribed format before one of the trademark offices in India.42 The applications can be refused on
several grounds which can be broadly classified as absolute grounds for refusal and relative grounds
for refusal.43 Once a trademark is granted in India, the protection is given for a duration of ten years
and it can be renewed further.44 Like most other types of IP rights, trademark protection is also
territorial in character, and if a trader wishes to get trademark protection abroad, she may make use
of the flexibilities provided under the Paris Convention.45 The alternate option is to file an
application under the Madrid Protocol (Protocol Relating to the Madrid Agreement Concerning the
International Registration of Marks) route.46 The Madrid Protocol is administered by the World
Intellectual Property Organisation and India is a party to this international treaty. It provides an
easier pathway for registering and managing trademarks in different member countries of the
Madrid Protocol.47 India became a party to the protocol in 2013 and currently many firms from
India are using the Madrid Protocol to file trademark applications abroad. Registration of a
trademark in India provides the trademark owner the exclusive right to use the trade mark in
relation to the goods or services in respect of which the trade mark is registered. It also entails her
to obtain reliefs in respect of infringement of trade mark.48 Trademark owners can assign or license
their rights. However, like most other areas of IP, such rights are also subject to the specific
limitations and exceptions provided under the legislation.49 For example, if a defendant is using a
trademark only to describe the product of the competitor or to compare it to her own products, it
will be a nominative use and it will not amount to infringement of trademark. Similar is the case of
the use of trademarks for making a critical comment on someone’s product or service. One concept
closely related to trademark infringement is passing off, which is a common law cause of action that
can apply to diverse factual scenarios. It is the oldest of the modern legal regimes used for
protecting trade symbols.50 In a nutshell, this remedy can help a trader X to prevent a competitor Y
from passing their goods or services off as if they were the goods or services of trader X.
Geographical Indications
Geographical Indications (GI) broadly refers to signs used on products that have a specific
geographical origin and the quality or the reputation of that product is attributable to that
geographical origin. The TRIPS Agreement has mandated protection of geographical indications.54 In
furtherance to the TRIPS Agreement, India has drafted a sui generis law for protecting GIs. The title
of the legislation is the Geographical Indications of Goods (Registration and Protection) Act, 1999
(“GI Act”). However, even before the enactment of this legislation, passing off action has been acting
as a powerful remedy in India against unauthorised use of GIs. It is still a very useful remedy in cases
of authorized uses of unregistered GIs in India. Some of the producers have also been using
certification marks and collective marks to protect GIs. For example, the word ‘Darjeeling’ and its
logo were registered as certificate marks in India by the Tea Board of India.
GI Act defines the term ‘geographical indication’ as follows:
“Geographical indication, in relation to goods, means an indication which identifies such goods as
agricultural goods, natural goods or manufactured goods as originating, or manufactured in the
territory of a country, or a region or locality in that territory, where a given quality, reputation or
other characteristic of such goods is essentially attributable to its geographical origin and in case
where such goods are manufactured goods one of the activities of either the production or of
processing or preparation of the goods concerned takes place in such territory, region or locality, as
the case may be.”
As one may notice from the definition, the key requirement for GI protection is that the given
quality, reputation or other characteristic of the good is essentially attributable to its geographical
origin. While many of the GIs might be agricultural products or food-related products, it is important
to remember that there could also be other categories of products such as handicrafts wherein the
specific qualities of the products are attributable to human skills such as manufacturing skills or
traditional knowledge in the location where the product was produced.57 Examples of handicrafts
protected as GIs in India include Aranmula Kannadi (mirror) and Kashmir Pashmina
The term ‘indication’ is given an inclusive definition in the GI Act and as per the statute, “indication
includes any name, geographical or figurative representation or any combination of them conveying
or suggesting the geographical origin of goods to which it applies.”59 Though many GIs consist of the
name of the geographical location, it is important to remember that a GI registration could also be
on figurative representations like logos or any combination of names and geographical or figurative
representations. For example, the first and second GI applications filed in India under the GI Act
were relating to the word ‘Darjeeling Tea’ and the logo of Darjeeling Tea, for tea produced from 87
tea gardens in the Darjeeling region.
To get GI protection, an application has to be filed in the prescribed format before the Geographical
Indications Registry. As GI is a collective right, it is important to note that unlike trademark
applications, individuals cannot file and get GI protection. The GI application has to be filed by an
association of persons or producers or any organisation or authority representing the interest of
producers of the concerned goods.61 The applicants are also required to file an affidavit clearly
indicating how they represent their interest. Once a GI is granted, the registration is valid for a
duration of 10 years and it can be renewed from time to time in accordance with the provisions of
the statute.62 The registration of a GI can help the producers of such goods to prevent unauthorised
uses of the GI by others. For example, with the GI registration, Kancheepuram Silk producers will be
able to prevent anyone who is not an authorised producer of Kancheepuram silk from using the
indication ‘Kancheepuram’ in their silk products. The possibilities for prevention of free riding on the
reputation of GIs may help in quality control and increase in revenues. While registration provides
legal protection against unauthorised uses of GIs, it is important to note that other remedies like
passing off action can also be effective against unauthorised use of GIs, even when those indications
are not registered under the GI Act.
Q2- Explain the applicability of Consumer Protection (E-Commerce) Rules, 2020 and discuss the
duties and liabilities of e-commerce entities under this rule? (v v v v v imp)
ANS- Applicability of Consumer Protection (E-Commerce) Rules, 2020 ECOMMERCE-- The new
consumer protection regime under 2019 Act covers all modes of transactions offline, online through
electronic means, teleshopping, direct selling or multi-level marketing.
To regulate the E-commerce sector in India and protect consumers from unfair trade practices in e-
commerce, Consumer Protection (E-Commerce) Rules, 2020, were passed which came into effect
from 23 July 2020. These rules put a lot of duties on e-commerce entities in the interest of
consumers.
Applicability of the Rules:
The Consumer Protection (E-Commerce) Rules, 2020, are applicable to the following:
A-- These rules apply to all goods and services bought or sold over digital or electronic network
including digital products;
. As per the Rules an e-commerce entity be a company incorporated under Indian Companies Act,
1956/2013 or a foreign company covered under clause (42) of section 2 of the Companies Act, 2013
or an office, branch or agency outside India owned or controlled by a person resident in India as
provided in sub-clause (iii) of clause (v) of section 2 of the Foreign Exchange Management Act, 1999,
needs to appoint a nodal person of contact or an alternate senior designated functionary who is
resident in India, to ensure compliance with the provisions of the Act or the rules made thereunder.
A marketplace e-commerce entity which seeks to avail the exemption from liability under sub-
section (1) of section 79 of the Information Technology Act, 2000 shall comply with sub-sections (2)
and (3) of that section, including the provisions of the Information Technology (Intermediary
Guidelines) Rules, 2011.
1-- Every marketplace e-commerce entity shall require sellers through an undertaking to ensure that
descriptions, images, and other content pertaining to goods or services on their platform is accurate
and corresponds directly with the appearance, nature, quality, purpose and other general features
of such good or service
2-- Every marketplace e-commerce entity shall provide the following information in a clear and
accessible manner, displayed prominently to its users at the appropriate place on its platform:
Q3- Explain the methods for dispute resolutions including Alternate Dispute Resolution (ADR)? (v v
v v v imp)
ANS- BASIC SCHEME OF LITIGATIONRESOLUTION THROUGH COURTS -- In India, the adjudication of
disputes is carried out by the judiciary. The Court system follows a hierarchical structure with the
Supreme Court at the apex, being the Union Judiciary. The Supreme Court is empowered to exercise
original, appellate and extraordinary jurisdiction. The State Judiciary comprises of High Courts,
entrusted with the power to supervise the functioning of all other lower courts and tribunals in the
Country, including district courts. The adjudicatory courts are categorized into Civil Courts and
Criminal Courts.
India follows an adversarial form of system. A plaintiff is the party bringing a lawsuit before a court
of law in pursuance of a legal remedy. A defendant is the party against whom relief is sought in a
Civil proceeding. The Code of Civil Procedure, 1908, governs the procedure in relation to civil suits.
The code lays down the substantive and procedural aspects in the form of provisions and orders
drafted in the code for regulating the proceedings in courts of civil judicature. The orders provide for
rules in regards to parties to the suits, framing and institution of suits, the particulars to be present
in pleadings, plaints and written statements, pronouncement of judgement or decree, among
others. The Code also provides rules regarding the grant of temporary and permanent injunction,
and summary procedure.
ALTERNATIVE DISPUTE RESOLUTION
The path of litigation and use of the court system to resolve the commercial disputes usually takes
years to resolve and costs a lot due to the legal fees and expenses. During the process of litigation,
the normal business operations are hampered and disrupted. In order to avoid these issues, the
businesses usually prefer the mode of settlement without involving the courts. Here the disputes are
resolved outside the court judicial system this is often referred to as the Alternative Dispute
Resolution (ADR). ADR is being increasingly used to resolve legal problems as it provides many
benefits in terms of quick redressal and resolution and are much cheaper than litigation. ADR
includes within its scope arbitration, negotiation and mediation.
The active participation by the parties in the negotiations produces satisfying results for both the
parties. The flexibility offered by the ADR methods can prove useful in combating the ever-increasing
backlog of cases. These also address the delays associated with the onerous procedure of litigation.
The sheer volume of cases, lengthy and time-consuming procedures for appeals and review further
Concepts and Principles aggravate the delays in the finality of proceedings in an adversarial set-up,
overwhelming the system. This may also thwart investments as firms looking to invest in the country
may be cautious on evaluation of legal and financial risks, that the exit mechanism may be drawn-
out pending the resolution of laborious litigation. ADR techniques are gaining popularity due to the
flexibility in procedures and the wide range of innovative solutions available at disposal based on the
problem at hand, side-stepping the rigidity associated with precedents giving rise to creative ideas
“The technique of ADR is an effort to design a workable and fair alternative to our traditional judicial
system. It is a fast-track system of dispensing justice. These techniques have been developed on
scientific lines in USA, UK, France, Canada, China, Japan, South Africa, Australia and Singapore. ADR
has emerged as a significant movement in these countries and has not only helped reduce cost and
time taken for resolution of disputes, but also in providing a congenial atmosphere and a less formal
and less complicated forum for various types of disputes. The advantage of ADR is that it is more
flexible and avoids seeking recourse to the courts. In conciliation/mediation, parties are free to
withdraw at any stage of time. It has been seen that resolution of disputes is quicker and cheaper
through ADR. The parties involved in ADR do not develop strained relations; rather they maintain
the continued relationship between themselves
Section 89 of the Civil Procedure Code (CPC), 1908, enlists the different ADR techniques that the
Court may refer to after reformulating the terms of possible settlement between the parties, if it
appears to the Court that the parties to the dispute may be willing to settle. The court may
formulate the terms of settlement of a dispute and after receiving observations of parties refer the
terms to arbitration, conciliation, judicial settlement through Lok Adalat or mediation.
Q4- Discuss the modes of dissolution of a partnership and explain the grounds on which a court
can order dissolution of a firm? (v v v v v imp)
ANS- DISSOLUTION -- According to Section 39, “The dissolution of partnership between all the
partners of a firm” is called the “Dissolution of the Firm”.
The law of Partnership makes a distinction between the “dissolution of partnership” and “dissolution
of firm”. Where the relation between all the partners come to an end, it is a dissolution of the firm
(Section 39). Where there is an extinction of relationship between some of the partners only, it is a
dissolution of partnership. So the dissolution of a partnership may or may not include the dissolution
of the firm, but the dissolution of the firm necessarily means the dissolution of the partnership as
well.
Dissolution of Partnership
The dissolution of partnership takes place (even when there is no dissolution of the firm) in the
following circumstances:
Fig- : Different Forms of Dissolution of a Firm

Effect of Dissolution:
After dissolution, the rights and obligations of partners continue in all things necessary for the
winding up of the business. The partners may complete unfinished transactions. But this authority is
only for the winding up of the affairs of the firm and not for new transactions. These rights and
liabilities are discussed below:
Rights of Partners on Dissolution:
Q5- Discuss the Applicable Law And Rules for International Sale of Goods and Covid-19 Pandemic
and its Impact on the Performance of International Sale of Goods Contract? (v v v v v imp)
ANS- Applicable Law And Rules for International Sale of Goods—
I)—Conventions
In some international sale contracts, the law applicable to a contract will be provided for in a Treaty.
The United Nations Commission on International Trade Law (UNCITRAL) has created three treaties
that provide the applicable rules governing certain contracts.
a-- United Nations Convention on Contracts for the International Sale of Goods (CISG):
The United Nations Convention on Contracts for the International Sale of Goods is the most widely
adopted treaty providing substantive contract rules.5 The CISG’s scope is limited to commercial
contracts for the crossborder sale of goods6 Successful implementation of the CISG requires more
countries to adopt it and parties to use it. Courts and arbitral tribunals must interpret the CISG in a
uniform manner and not through the lens of domestic laws
b-- The Convention on the Limitation Period in the International Sale of Goods:
The Convention on the Limitation Period in the International Sale of Goods (the “Limitation
Convention”) is a sister treaty to the CISG. Originally adopted in 1974, it was amended in 1980 in
order to operate seamlessly with the CISG.8 The Limitation Convention applies to the same types of
international sales contracts as the CISG with the same scope of application,9 but its substantive
provisions deal solely with limitation or prescription, providing a sort of statute of limitations for
international sales disputes. The general period of limitation provided in the Limitation Convention is
four years Till date, there are 30 State parties to the Limitation Convention whereas 84 State parties
in the CISG’s. As is the case with the CISG, parties may opt out of its provisions.11 The rules of
uniform interpretation for the Limitation Convention generally mirror those found in the CISG
c-- United Nations Convention on the Use of Electronic Communications Convention in
International Contracts:
The United Nations Convention on the Use of Electronic Communications in International Contracts
13 is a much more recent Treaty than the CISG or Limitation Convention. Adopted in 2005, it
currently has seven State parties. The purpose of the treaty is to remove any legal obstacles to the
use of electronic communications in international contracting, creating certainty for contractual
parties that contracts and other communications exchanged electronically are as valid and
enforceable as their traditional paper-based equivalents.
The scope of the Electronic Communications Convention is broader than that of the other UNCITRAL
Treaties in that it is not limited to sales contracts, although it is still aimed at only commercial
contracts. Contractual parties may, of course, opt out of its provisions.14 Like the Limitation
Convention, the rules of uniform interpretation for the Electronic Communications Convention
mirror those found in the CISG,15 making the same general categories of research resources
relevant.
II)--- National Laws
Parties may also choose national laws to apply to their international commercial contracts. The party
with greater bargaining power may insist on its national laws, or parties may instead choose the law
of a third State, usually one considered to have a well-developed law with regards to commercial
transactions. English law is frequently used in international transactions, in particular with reference
to reinsurance, charter parties, and sea trade, among other areas.16 Parties may select Swiss law
because of the perception that Switzerland’s political neutrality makes this a neutral law.
Nonetheless, political neutrality may not always be the best guide as to the suitability of a chosen
law for a specific transaction.17 The ICC International Court of Arbitration 2013 Statistical Report
mirrors the 201018 survey and also indicates frequent choice of German and French law. 19 When
considering these types of surveys, it is important to recall that, generally, the choice of law of any
CISG State will also include the CISG unless the Convention’s application is clearly excluded by the
parties.
Soft Law and Trade Usages
There are many international texts and standards that may be chosen by traders to govern their
contracts. These rules may be referred to variably as “rules of law,” “soft law” or “trade usages,” 21
but they are connected by their use in international contracting and potential direct application by
arbitral tribunals. Even otherwise binding texts, such as the CISG, may fall into this category when
chosen by parties to apply to their contracts without reference to a specific State law22. Like arbitral
tribunals23, State courts may recognize and apply these rules, but, depending on the relevant
domestic law, they may do so simply as a set of rules that are considered to be part of the contract
and not overriding any mandatory law.24 The Hague Principles, where followed, may serve to
further legitimize some of these sources. The Hague Principles, in Article 3, allow for the law chosen
by contracting parties to be “rules of law that are generally accepted on an international,
supranational or regional level as a neutral and balanced set of rules, unless the law of the forum
provides otherwise,” specifically naming the CISG, the UNIDROIT Principles, and the Principles of
European Contract Law (PECL) in the accompanying commentary. A few of the more prominent texts
and standards generally discussed in this category of “rules of law,” “soft law” or “trade usages” are
as follows:
UNIDROIT Principles
The UNIDROIT Principles of International Commercial Contracts (the “UNIDROIT Principles”) were
first finalized by UNIDROIT in 1994 and revised in 2004 and 2010. UNIDROIT continues to revise the
Principles as appropriate, currently considering revisions meant to deal with specific aspects of long-
term contracts. While following the CISG’s approach in many instances, the UNIDROIT Principles are
a set of general rules for international commercial , addition, they are able to cover areas that the
drafters of the CISG were not able to agree upon, such as validity, agency, and assignment, among
others. Also unlike the CISG, the UNIDROIT Principles are not a binding text and will generally only be
applied where chosen by the parties or through application by an arbitral tribunal with the authority
to do so.
Significantly, the UNIDROIT Principles contain rules of interpretation almost identical to CISG,26
making case law and academic writings of great use in interpreting the Principles. In addition, the
UNIDROIT Principles have a builtin commentary that gives detailed guidance. The advantage of
Principles of International Commercial Contracts (PICC) is that they do not favour one particular
domestic system of contract law or even legal system but rather provide a neutral set of rules that
combine the best practices from legal systems around the world. The UNCITRAL on its’ endorsement
of the 2010 PICC stated that these Principles and the CISG principles are complementary relationship
and that PICC can be used to interpret and supplement the convention.27 The 2015 Hague principles
on choice of law in International Commercial Contracts, which were adopted by the Hague
Conference on Private International Law might trigger welcome change.28Continuously improved
since their first inception in 1983, the PICC have been described as a ‘restatement of international
contract law’29 The PICC could function as a new lex mecatoria.
Lex mercatoria
The lex mercatoria has been described as “a synthesis of generally held and generally accepted
commercial principles that may be expected to be applied to contracts among the major trading
nations.”30 There is a controversy31 surrounding the lex mercatoria and, in particular, the specifics
of its content,32but arbitral tribunals can, nonetheless, where authorized, apply these principles.33
Certainly, the content of the lex mercatoria may be informed by or, in fact, contain the content of
international instruments, such as the CISG and the UNIDROIT Principles.34 For an example of a
contract clause containing choice of such broad principles, consider the United Nations General
Conditions of Contract, which state, with regard to dispute settlement, that “the decisions of the
arbitral tribunal shall be based on general principles of international commercial law
Incoterms
In the specific area of delivery of goods, the International Chamber of Commerce (ICC) has
developed a set of rules governing trade terms that describe the obligations of buyers and sellers
and supplement any other rules governing the contract. The terms are in combination of three
letters. One example is FOB, standing for “Free on Board”, and the Incoterms rules cover who bears
the risks and obligations when the seller has contracted to deliver goods in this way, namely “on
board the vessel nominated by the buyer at the named port of shipment or procures the goods
already so delivered.”36The Incoterms come with instructions as to how parties can incorporate
them in their contracts. There have been many versions of the rules, and the most recent are the
Incoterms 2010 and 2020. They were first published in 1936. Incoterms 2010 defines 11 rules. They
are upgraded as per the trade practices.
The Uniform Customs and Practice for Documentary Credits (UCP 600)
This was another creation of International Chamber of Commerce for the convenience of
international trade. The Uniform Customs and Practice for Documentary Credits, 2007 revision UCP
600, is the soft-law instrument for regulating letters of credit, a common payment method in
international transactions. The contract must indicate the application of UCP 600 towards the credit
document. It contains rules specifically for electronic records.
COVID-19 PANDEMIC AND ITS IMPACT ON THE PERFORMANCE OF INTERNATIONAL SALE OF
GOODS CONTRACT
A force majeure clause in international sale of goods contract relives a party from performing its
contractual obligations when certain circumstance beyond its control arise, making performance
inadvisable, commercially impracticable, illegal or impossible.
The CISG Article 79 provides that “(a) Party is not liable for a failure to perform any of his obligations
if he proves that the failure was due to an impediment beyond his control and that he could not
reasonably be expected to have taken impediment into account at the time of conclusion of the
contract or to have avoided or overcome it, or its consequences”
The treatment of impediment under CISG is different from the treatment under common law.
Generally, four conditions must be satisfied to assert the force majeure protection under the CISG:
Q6- Explain the necessity for the Insolvency and Bankruptcy Code 2016 (IBC-2016) and briefly
discuss the four pillars of Institutional Infrastructure under IBC-2016.? (v v v v v imp)
ANS- UNIFIED INSOLVENCY AND BANKRUPTCY LAW - THE INSOLVENCY AND BANKRUPTCY CODE,
2016--As mentioned above a host of legislation and forum combined with potentially conflicting
jurisdictional issues had resulted in systemic delays and complexities in the insolvency and
bankruptcy process. Additionally, all these legislations have been identified as being inadequate in
by themselves. Thus the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC or the
Code) was enacted. This Code aims to consolidate the laws relating to insolvency of companies and
limited liability entities (including limited liability partnerships and other entities with limited
liability), unlimited liability partnerships and individuals, presently contained in a number of
legislations, into a single legislation. Such consolidation will provide for a greater clarity in law and
facilitate the application of consistent and coherent provisions to different stakeholders affected by
business failure or inability to pay debt.
“An effective insolvency regime is a critical component of ease of doing business in India”.
This Code is considered as the biggest economic reform next only to GST5 . The insolvency regime is
expected not only to facilitate an easy revival and rehabilitation process for companies in financial
trouble but also to be very effective in safeguarding the interests of the stakeholders such as
creditors, shareholders, government, etc. It is also expected to stabilize the commercial dealings,
financial stability and better environment for attracting investments, besides mitigation of corporate
failures. Further, it should also ensure that the financial resources of a country are utilized efficiently
to enhance the overall growth of the economy.
Salient features of IBC 2016
The salient features of the IBC 2016 are as follows:
FOUR PILLARS OF INSTITUTIONAL INFRASTRUCTURE UNDER IBC 2016

There exist four pillars of institutional infrastructure created by the IBC 2016. These are as follows:
1--Insolvency Professionals and Insolvency Professionals Agencies:
The first pillar of institutional infrastructure is a class of regulated persons, the Insolvency
Professionals. They play a key role in the efficient working of the bankruptcy process and are
regulated by Insolvency Professional Agencies. An Insolvency Professional (IP) plays a central role in
the effective and efficient implementation of an insolvency law, with certain powers over debtors
and their assets and a duty to protect those assets and their value, as well as the interests of
creditors and employees, and to ensure that the law is applied effectively and impartially.
An IP may hold any of the following roles under the Code:
Q7- Define Business Law. Discuss the objectives of Business Law.? (v v v v v imp)
ANS- MEANING OF BUSINESS A business can be defined as an enterprise or organization involved in
an industrial, mercantile or commercial activity. A business entity may be brought forth for a profit
purpose or it can serve non-profit purposes supporting a charitable or a social cause. A business may
also be referred to the activities of an individual or a group of individuals engaged in the sale of
goods and provision of services with a profit motive.
“The term ‘business’ may be understood as the organised efforts of enterprises to supply consumers
with goods and services and to earn profit in the process. Business is a broad term and includes such
varied activities as production, promotion, wholesaling, retailing, distribution, transportation,
warehousing, financing, insurance, consultancy, and the like.”8 L.R. Dickson has defined ‘business’ as
a form of activity pursued primarily with the object of earning profit for the benefit of those on
whose behalf the activity is conducted.
“Businesses vary in size, as measured by the number of employees or by sales volume etc. But all
businesses share one common purpose that is to earn profits. The purposes of business that goes
beyond earning profits are -an important institution in society, for the supply of goods and services,
creating job opportunities, offering better quality of life, contributing to the economic growth of the
country, etc.”
Business law, also commonly known as commercial or mercantile law, is that branch of law that
conducts the relationship between the enterprises, companies and individuals engaged in
commercial matters. This section of law governs issues in relation to the legal rights, duties and
liabilities of the entities engaged in business transactions. Business Law has attained a significant
position in the current era, due to the formidable position held by the business enterprises and
corporations in contributing to the economy and by the supply of abundant job positions boosting
the employment sector, thereby contributing towards the generation of revenues. “Business law
consists of the enforceable rules of conduct that govern commercial relationships. In other words,
buyers and sellers interact in market exchanges within the rules that indicate the boundaries of legal
business behavior. Constitutions, legislatures, regulatory bodies, and courts spell out what market
participants may or may not legally do. Understanding business law is necessary for future
businesspeople because there simply is no market transaction that occurs outside legal guidelines.
All contracts, employment decisions, and payments to a supplier are limited and protected by
business law. Each of the six functional areas of business - management, production and
transportation, marketing, research and development, accounting and finance, and human resource
management - sits on a foundation of business law
OBJECTIVES OF BUSINESS LAW
We enter into contracts every day. Some of these contracts are made consciously, for example, for
the purchase or sale of any goods, purchase of a share of a company or a plot of land. Entering into
contracts determines the legal rights of each party giving rise to legal obligations as well. People who
are engaged in business activities such as business owners enter into a contract on a daily basis to
further the business transactions. All business activities include a variety of transactions which give
rise to contracts on a daily basis. Some of these contracts are as simple as purchasing goods from a
shop thus giving rise to a legal right and legal obligation
Business law serves a variety of purposes some of which are listed below:
1-- A comprehensive set of standards established universally: Business laws are comprehensive and
uniform set of standards that are applicable to all business entities. Uniformity in laws helps in
maintaining smooth relations between the businesses and its various stakeholders including
consumers, suppliers, etc. It provides an environment where the businesses can function smoothly
and efficiently as the same rule shall be applicable to all the business organisations falling in a
particular category. However, there can be different compliances for different kinds of business
organisations depending upon the size, nature of business activity or certain threshold limits. It also
helps in identifying and establishing the rights and liabilities of the various parties interacting with
each other. It provides a framework for reducing the harm caused to either party due to fraudulent
or unethical activities. Business law also provides for steps that needs to be followed while
conducting due diligence before engaging with a particular company.
2-- Promoting industrial growth: Business laws not only provides different provisions for compliance
for the business but also facilitate industrial growth by protecting and promoting the rights of
businesses. Adherence to the rules prescribed by the range of laws falling under the domain of
business facilitates businesses to achieve growth and success. Thus, business laws enable; capital
formation, promote industrial relations, facilitation of licensing, ease of doing business, financial
inclusion, etc. which promote economic growth.
3-- Laying down the procedure for the establishment of business: The laws dealing with business
provide the necessary framework required for the commencement of a business corporation along
with building of a strong foundation for the business entity to thrive in the market. The formal
process provided under the laws also facilitates successful conduct throughout the life-cycle of the
business. For instance, Companies Act, 2013 lays out the steps involved in the incorporation of a
company, and provisions related to the Articles of Association and the Memorandum of Association
in detail.
4-- Enforcement of Rights: Business laws provide provisions for judicially enforcing the rights of all
the parties involved in a business transaction. Thus, the businesses can approach the court to
enforce the claims against the debtors or right to a patent or copyright or the right to hold property,
etc. Businesses also have a right to defend themselves in case actions are filed by the central, state
and local bodies. Thus, businesses have been given the power of initiating legal action in case any
legal compliance are breached by any outside party and also allowed to defend themselves against
the litigation filed by the government for the various stakeholders. Various provisions aiding in
carrying out the enforcement action have been provided in statutes for effective regulation of the
business practices.
5-- Contributes to the building of healthy business relationships: Laws dealing with business
matters are extremely significant in the establishment of secure and effective business relationships
amongst the concerned entities as the formation of strong business ties is an absolute must for
building a strong economy of a country. For instance, the Partnership Act lists out the rights, duties,
and obligations of the partners in a firm for carrying out a successful venture. Business Law also
plays an extremely important role in facilitating Mergers and Acquisitions (M&As) between
enterprises looking to collaborate and expand their business. Cross-Border M&AS transactions also
contribute immensely to the economy of a country by playing a significant role in increasing the
revenues generated through the means of Foreign Direct Investment. Cross border M&A occurs
between companies situated in two different jurisdictions. If the resulting company is an Indian
company, it qualifies as an inbound merger, and if the resulting company is a foreign company, it is
christened as an outbound merger.
6-- Reduced possibilities of fraud: A robust and effective business law framework helps in reducing
the possibility of fraud as the parties entering into contracts or dealing with each other are well
aware of their rights and liabilities which would prevent them in falling prey to the illegal or
fraudulent activities by the other party. The laws associated with Business Law also provides for a
highly effective enforcement mechanism, which are further lined with stringent measures that could
minimize the possibility of perpetuating fraud.
7-- Business laws help maintain equilibrium: Business laws help in bringing about uniformity and
maintaining equilibrium as there are set rules which have to be followed by each entity. Different
forms of business organisations are regulated by different laws. This helps in the ease of dealing and
conducting business as the same standards are followed throughout the country. It helps in making
the business transactions easier and smoother across the country
8-- Ethical conduct: Business laws also help in improving the conduct of the business as the laws
have to be followed in letter and spirit. Therefore, the business organisations have a responsibility of
maintaining ethical conduct Introduction to Business Law while functioning in the society. As
businesses survive in the society and use its resources, there is a responsibility on the businesses to
give back by dealing ethically with all its stakeholders.
business organisations have a responsibility of maintaining ethical conduct Introduction to Business
Law while functioning in the society. As businesses survive in the society and use its resources, there
is a responsibility on the businesses to give back by dealing ethically with all its stakeholders.
9-- Social Responsibility: Business laws also lay down the criteria for business to function in a society
as the business utilize the resources of the society there arises a responsibility of the business to give
back to the various stakeholders. This enables social justice and social responsibility in the form of
good employment practices, non-discrimination, sustainable utilization of resources, prevention of
environmental damage etc. Thus, it prohibits businesses from entering into practices that are
harmful to the society at large.
10-- Laying down law in accordance with the evolving standards: The business environment is ever-
changing and dynamic in nature. The laws have to be enacted taking into account the economic and
business environment of the country. These laws not only provide uniformity in business operations
but also provide clarity to unforeseen situations. Legislative changes in the form of amendments are
made to address the occurrence of unforeseen situations. An example for this would be the Indian
Competition Act, which handles and regulates antitrust issues in the country. The Competition Act,
2002 is concerned with keeping a check on the prevailing anti-competitive acts in the relevant
market being governed. The Act encompasses horizontal and vertical agreements, cases related to
abuse of dominance, and regulation of combinations. It must be noted that until now Competition
Act only focused on price parameters such as unreasonable increase in prices or reduced output in
the supply of the goods. However, the advent of digital technology has ushered an era demanding a
change in the traditional methods employed to gauge anti-competitive practices. The Indian
Competition regulatory authorities have also initiated investigation into degradation of non-price.
parameters such as quality, privacy and innovation keeping pace with the changing needs of the
society in an era of online platform markets. The Competition Commission of India, which until
recently investigated anticompetitive conduct solely based on monetary price increase, has
acknowledged the importance of data as a currency in the current business scenario and initiated
investigation against data monopolies.
11-- Providing penalties for violation of laws: Business law serves an extremely important purpose
of enlisting the various penalties that may be employed by the regulatory bodies to ensure that the
conduct of business activities conforms to the prescribed standards set by the concerned branch of
law. The legislations dealing with the various aspects of the business have provided the penalties
that may be incurred by the wrongdoers on contravention of the law and the rules provided therein.
For instance, chapter VI under the Competition Act, provides for various penalties for contravention
of the orders of the Commission or for non-compliance of the directions of the Director-general or
the Commission. Similarly, Chapter VII of the Insolvency and Bankruptcy code (IBC) provides for
punishment of offences, penalties for acts including falsification of books of corporate debtor, false
representations to creditors and transactions for defrauding creditors, etc
12-- Insurance against Risks: Every business involves inherent risks that may be related to operations
of business, movement or transit of goods, and financial risks, etc. Insurance laws provide
mechanisms for insuring against such unforeseen circumstances for the business. Directors and
officers of the companies can also take D & O insurance policies for protection against future
liabilities
Q8- Explain the main features of a Company form of Business..? (v v v v v imp)

ANS- Main features of a Company form of Business- “Company means a company incorporated
under this Act or under any previous company law”, Section 2(20) of the Companies Act, 2013.
The expansion in business needed an unlimited extent of capital. But the unlimited liability of the
partners of the traditional partnerships under the Partnership Act, 1930 became a hurdle to meet
the capital requirement. The corporate form of business helped to solve this problem through
introduction of concept of limited liability. From formation to its winding up a company is governed
by Companies Act. Apart from the Companies Act, the Parliament of India has enacted several other
acts like, The Company Secretaries Act, The Competition Act, Monopolies & Restrictive Trade
Practices Act, Indian Partnership Act, Sick Industries Act, etc., to have a control over the changing
corporate world.
The expansion in business needed an unlimited extent of capital. But the unlimited liability of the
partners of the traditional partnerships under the Partnership Act, 1930 became a hurdle to meet
the capital requirement. The corporate form of business helped to solve this problem through
introduction of concept of limited liability. From formation to its winding up a company is governed
by Companies Act. Apart from the Companies Act, the Parliament of India has enacted several other
acts like, The Company Secretaries Act, The Competition Act, Monopolies & Restrictive Trade
Practices Act, Indian Partnership Act, Sick Industries Act, etc., to have a control over the changing
corporate world.
This definition does not clearly bring out the meaning of the company. To define and understand the
nature of a company the outside attempts and judicial decisions may be explored. Accordingly, ‘a
corporation is an artificial being, invisible, intangible, existing only in contemplation of law. Being a
mere creation of law, it possesses only those properties which the charter of its creation confers
upon it, either expressly or as accidental to its very existence’ Chief Justice Marshall. In the words of
professor Haney “A company is an incorporated association, which is an artificial person created by
law, having a separate entity, with a perpetual succession and a common seal.” This definition sums
up the meaning as well as the features of a company succinctly
Features:
The distinctive features of the company help to understand the realms of a company. Following are
the main features:
A-- Incorporated Association: Registration of a company is mandatory under the Companies Act. The
minimum number required for the same is seven in case of public company, two in case of a private
company and one for one Person Company.
B-- Separate Legal Entity:On incorporation a company acquires a unique character of being a
separate legal entity. It bears its own name and acts under the same and owns assets in its name. It
has a separate existence from that of the subscribers to the memorandum and also from the
personality of those who compose it. Members can enter into contract with company, acquire right
against it or incur liability to it. For the debts of the company, only its creditors can sue it and not its
members.
A company can own property, have bank account, raise loans, incur liabilities and enter into
contracts. A company is capable of owning, enjoying and disposing of property in its own name.
Although the capital and assets are contributed by the shareholders, the company becomes the
owner of its capital and assets. The shareholders are not the private or joint owners of the
company’s property. A member does not even have an insurable interest in the property of the
company The leading case on this point is of Macaura v. Northern Assurance Co. Limited (1925).
Macaura (M) was the holder of nearly all (except one) shares of a timber company. He was also a
major creditor of the company. M insured the company’s timber in his own name. The timber was
lost in a fire. M claimed insurance compensation. Held, the insurance company was not liable to him
as no shareholder has any right to any item of property owned by the company, for he has no legal
or equitable interest in them
C-- Perpetual Succession: A company once incorporated can never be incapacitated till it is wound
up on the grounds specified by the Act. Its members may come and go, but the company goes on
forever. Even the death or insolvency or retirement of its members leaves the company unaffected.
For example companies like TATA and Birla are in existence for over 100 years. This is possible only
due to the fact that the company has perpetual existence.
D-- Limited Liability: Limited liability means that the member of the company, in case of liquidation
or winding-up of the company, cannot be called upon to contribute more than that has been agreed.
The liability of a member depends upon the kind of company of which he is a member. Thus, in the
case of a limited liability company, the liability of the members of the company is limited to the
extent of the nominal value of shares held by them. In the case of a company limited by guarantee,
the members are liable only to the extent of the amount guaranteed by them and that too only
when the company goes into liquidation. However, if it is an unlimited company, the liability of its
members is unlimited as well.
E-- Artificial Person: A company is an artificial person created by law and is clothed with all the rights
of an individual and being subject to duties. It is called an artificial person since it is invisible,
intangible, existing only in the contemplation of law. As a legal person it can enter into contracts,
possess properties in its own name, sue and can be sued by others. However, it is not a citizen under
the Citizenship Act, 1955 or the Constitution of India. But, certain fundamental rights enshrined in
the Constitution for protection of “person”, e.g., right to equality (Article 14) are available to
company and also, it has nationality, domicile and residence.
F-- Common Seal: A company being an artificial person functions through its Directors. Common seal
is the official signature of a company, which is affixed by the officers and employees of the company
on its every document. The Companies (Amendment) Act, 2015, has made the common seal
optional by omitting the words “and a common seal” from Section 9 so as to provide an alternative
mode of authorization for companies who opt not to have a common seal. This amendment provides
that the documents which need to be authenticated by a common seal will be required to be so
done, only if the company chooses to have a common seal. In case a company does not have a
common seal, the authorization shall be made by two Directors or by a Director and the Company
Secretary, wherever the company has appointed a Company Secretary
G-- Transferability of Shares: Section 44 of the Companies Act, 2013, provides that the shares held
by the members are movable property and can be transferred from one person to another in the
manner provided by the Articles of Association. If the Articles are silent on the provision for the
transfer of shares, the Regulations contained in Table “F” in Schedule I to the Companies Act, 2013,
are applicable; and if Table “F” is expressly excluded, the transfer of shares will be governed by the
general law relating to transfer of movable property. However, in Private Company, there are
restrictions with respect to transferability of shares, but the right to transfer is not taken away
absolutely. The objective behind the right of restriction on the transfer of shares is to preserve the
composition of the shareholding.
SECOND PRIORITY MOST IMPORTANT QUESTIONS

Q9- Describe the process of formation of a contract. Discuss the main characteristics that an offer/
proposal must possess. Also explain the essentials of a valid acceptance ? (v v v v v imp)
ANS- Process of formation of a contract - A contract is an agreement enforceable in a court of law.
An agreement is a set of reciprocal promises between the parties to the contract. These set of
promises arises from an offer and acceptance from the parties to the contract The contract may be
express or implied i.e., it may be oral words or in writing and even inferred from the conduct of the
parties.2 It may be bilateral or unilateral contract. The former one refers to the involvement of two
parties and the latter refers one party alone can perform without the other
Agreements: Two or more persons agree mutually to undertake to do or not do certain things
through an agreement, for example, to deliver goods and to pay for them. This is not through a
process of offer and acceptance.
Offer: The offer is a proposal by the offeror to undertake to do or abstains from doing something
provided the offeree will also undertake to do or abstains from doing something.3 The offer contains
two things namely ‘an expression of a willingness to be bound’ and ‘a statement of what each party
to the proposed agreement must do or not to do.’ The person making the proposal is said to be
called as ‘Promisor’, ‘Offeror,’ or‘Proposer.’ The offer is of two types namely specific offer and
General offer. An offer to a specific person is specific offer and the offer to public at large is general
offer. ‘A’’s offer to sell his watch to ‘B’ is specific and ‘X’ offer to pay Rs.1,000/- to one who finds his
lost dog is the example of general offer.
Acceptance: The person to whom the proposal is made signifies his assent thereto, the
offer/proposal has been accepted and which raises a promise.5 The person to whom the proposal is
made or the person from whom the promisor seeks the assent is said to be called as ‘Promisee’or
‘AcceptorExample: When ‘A’ signifies his willingness to sell his motor cycle for Rs.55,000/- to B, and
B express his willingness to purchase for the said price, A is the proposer/ promisor or offeror and B
is the promisee/acceptor
The proposal/offer/promise must possess the following characteristics:
ESSENTIALS OF VALID CONTRACT

Consideration, capacity to contract, free consent, and legality of consideration and object are some
of the essentials of a valid contract. These are explained in detail below:
1-- Consideration:
Consideration is one of the essential conditions for the validity of contract.18 The essential condition
for the enforceability of simple contacts is consideration, and the rule is expressed by the Latin
maxim: ex-nudopacto non orituractio which means out of nude pact no cause of action arises. It can
be understood in the sense quid pro quo.
Q10- What is the objective of the Foreign Exchange Management Act ? Discuss the mechanism for
acquiring property in India by a non-resident and outside India by a resident.? (v v v v v imp)
ANS- OBJECTIVES OF FEMA- The Foreign Exchange Management Act (Act No 42 of 1999) has been
formulated by the Central Government to consolidate and amend the law relating to foreign
exchange with the objective of facilitating external trade and payments and for promoting the
orderly development and maintenance of foreign exchange market in India. It aims to provide the
basic understanding of different concepts under the Foreign Exchange Management Act, 1999, and
its related rules and regulations. It would also help the students to have a broad understanding of
how foreign exchange is managed in India and what is the regulatory framework which govern the
people who deal with foreign exchange.
Modes of Acquiring Property in and Outside India
The FEMA Act 1999 lays down the mechanism for acquiring property in India by a non-resident and
outside India by a resident. The Act provides the following
1--Modes of acquiring property outside India by a resident
A person resident in India can hold, own, transfer or invest in foreign currency, foreign security or
any immovable property situated outside India, if such currency, security or property was acquired,
held or owned by such person when he was resident outside India or inherited from a person who
was resident outside India.17In this regard, the provisions laid down under the Foreign Exchange
Management (Acquisition and transfer of immovable property outside India) Regulations, 2015 state
that the following
A resident can acquire immovable property outside India by way of gift or inheritance from:
Q11- Discuss the role of ‘Privacy’ in the context of Digital World. Briefly, discuss the Personal Data
Protection Bill, 2019? (v v v v v imp)
ANS- PRIVACY AS AN EVOLVING CONCEPT IN THE DIGITAL CONTEXT - One of the primary factors
that necessitated the evolution of privacy rights was the need to safeguard and preserve the dignity
of an individual and consequently preventing unauthorized disclosure of personal information in the
public domain. As defined by Samuel D. Warren and Louis D. Brandeis, two among the earliest
scholars, who contributed immensely to the evolution of privacy laws, “privacy is a concept
encompassing the inviolate personality of a person, which does not include within its ambit matters
which are privileged, published with consent or, existing in the public domain.”1 Over the years,
privacy rights have risen to become one of the most prominent factors for facilitating self-definition
irrespective of whether an individual is in public or in a private space.
But with the advent of the digital age, the scale of data produced and used have changed drastically.
The ability to store large swathes of data and their subsequent analysis using diverse data mining
techniques have unearthed unprecedented opportunities for firms to use and trade on personal
data. The fast developments in the area of artificial intelligence further contributes to unparalleled
challenges to privacy and autonomy.3 The manner in which the digital revolution impacts privacy,
particularly the concerns with regard to the misuse and manipulation of personal information, has
also given rise to the concept of informational privacy
While anecdotal accounts might suggest that awareness about privacy rights might be improving
among the public due to the diverse discussions on privacy in the mainstream media as well as social
media, most people still rarely hesitate to surrender their informational privacy in return for the
receipt of free or ‘better’ services, or ‘convenience’ in the digital context. The manner in which most
of us share our location data with so many apps on our phones or smart watches is just one of the
many examples in this regard. At times, firms might also not give consumers any choices. When a
firm takes an approach that they will allow consumers to use their services only if they agree to the
data policies of the firm, consumers are often left with no choices, but to agree to the terms of the
firm. It is in this broader context that we need strong legislative and policy frameworks that can
protect the privacy rights of consumers.
the evolution of the right to privacy and other key elements and principles of data protection in
India. Accordingly it has six parts– namely, First, that deals with a brief summary on the evolution of
privacy as a right in India, in particular through judicial pronouncements; Second, the Information
Technology Act, 2000 and the provisions therein that relate to data protection; Third, the need for
specific data protection legislations; Fourth, the state of the data protection framework in India –
the aspect which receives elaboration in the next two sections namely the Fifth, that discusses the
salient features of the Justice Srikrishna Committee Report and the Personal Data Protection Bill,
2018; and Sixth, a discussion on the provisions of the Personal Data Protection Bill, 2019, with
particular reference to the departures it has made from the 2018 Bill.
THE PERSONAL DATA PROTECTION BILL, 2019
The Personal Data Protection Bill (PDP Bill) was introduced in the Lok Sabha on 11.12.2019, and it
was subsequently forwarded to a Joint Parliamentary Committee (JPC)73. While the Bill has retained
many elements of the draft bill provided by the Srikrishna Committee, it has also made some radical
changes. This section will highlight the major differences between the draft bill provided by the
Srikrishna Committee and the Bill which was introduced in the Lok Sabha.
The definition of personal data, which was defined in a way so as to include characteristics, traits or
attributes of identity used to identify an individual, was expanded to also include any inference
being drawn from such data for profiling purposes.74 The definition of sensitive personal data which
included passwords as per the Bill proposed by the Srikrishna Committee, was amended to remove
passwords from under this category.75 The power to categorise personal data as sensitive personal
data, which was conferred upon the Data Protection Authority (DPA) under the draft PDP Bill, has
been granted to the Central Government (in consonance with DPA) under the 2019 Bill
The Srikrishna Committee bill had no reference to social media intermediaries. However, the 2019
PDP bill not only provided a definition but further necessitated the social media intermediaries
classified as significant data fiduciaries to provide a voluntary user verification mechanism for all
users.77 The Srikrishna Committee bill had further exempted the State from abiding by the
requirements of the bill while processing personal data in the interest of national security, as long as
it was permissible under law and performed in a fair and reasonable manner.78 The 2019 bill, on the
other hand, grants the government the power to exempt any of its agencies from the provisions of
this Act in certain cases (security of state, sovereignty and integrity of India, public order etc.), thus
enhancing the powers of the Government
The 2019 PDP Bill incorporates data subject rights such as the right to erasure, granting the right to
the data principal to request data fiduciaries for erasing any personal data that may have been
stored by the latter once the purpose has been fulfilled.80 The Srikrishna Committee bill also
required one serving copy of all personal data to be stored in India every time transfer of personal
data took place outside the country.81 This mandatory storage requirement for all personal data has
been removed in the 2019 PDP bill, necessitating only mirror copies of sensitive personal data and
critical personal data to be stored in the country.82 The conditions for transfer of sensitive personal
data also includes receiving express consent by the individual whose data is being transferred
outside the Country
The composition of the Data Protection Authority (DPA) was also subjected to certain modifications
in the 2019 PDP bill. Under the Srikrishna Committee bill, the selection committee was empowered
to give recommendations to the Central Government for the appointment of members of the Data
Protection Authority, comprised of (i) Chief Justice of India or a Judge of Supreme Court as the
chairperson, (ii) Cabinet Secretary, and (iii) an expert in field of data protection, information
technology and related subjects.84 However, the 2019 Bill does away with the requirement of a
judicial member from the selection committee. The selection committee, as per the 2019 Bill
consists of (i) Cabinet Secretary as the chairperson, (ii) Secretary, Department of Legal Affairs, and
(iii) Secretary, Ministry of Electronics and Information Technology
While the Srikrishna Committee Bill neither defined non-personal data nor envisaged application of
non-personal data by the Government for making policies for digital economy or security, the 2019
PDP bill, in addition to defining the term, also empowers the government to direct data fiduciaries to
provide any non-personal data and anonymised personal data for better targeting of provision of
services.86 Additionally, the 2019 PDP Bill has brought forth the concept of privacy by design policy
whereby every data fiduciary has to prepare a privacy by design policy and get it approved by the
Data Protection Authority.
Q12- Explain the key constitutional provisions in India relating to Environment and Discuss the
International Developments in the field of Environmental Law and its impact on Businesses and
Industries ? (v v v v v imp)
ANS- EVOLUTION OF ENVIRONMENTAL PROTECTION LEGISLATION IN INDIA- India’s approach
towards environmental protection was piecemeal and reactive in nature. In response to Stockholm
declaration 1972, Air (Prevention and Control of Pollution) Act, 1981, and Water (Prevention and
Control of Pollution) Act, 1974, were introduced. Further, Art 48 A and 51(g) were incorporated in
Indian Constitution by way of 42nd amendment in 1976. It is unfortunate to note that beyond
causing continual environmental harms industries can also be responsible for severe and large-scale
disasters resulting in the deaths of millions of people. India was ill fated to witness one of the
world’s worst industrial disasters in the form of Bhopal gas tragedy in 1984 killing thousands of
people.
This incident was a turning point for environmental jurisprudence in India. Several prominent
legislations, rules, notifications were adopted after this incidenttaking into account issues and
challenges that increasingly emerged as part of modernday developments. India experienced a
virtual explosion of public interest litigations specifically on environmental issues and courts also
assumed a more pro-active role in the form of public educator10, policy maker11and
administrator12. India even started contemplating on having a specialized tribunal dealing
specifically with environmental matters13 as the Supreme Court stressed on its importance in
numerous instances.14Finally after much deliberation and failed attempts, National Green Tribunal
was established in 2010. Since its inception, it has played an important role in shaping the
environmental litigation in India.15 Thus, India started adopting a more holistic and comprehensive
approach towards environmental protection and regulating the pollution emanating from industries.
Constitutional provisions for Environmental Protection:
The Indian Constitution is a living document which has evolved and grown with time. Substantive
provisions for environmental rights and duties were lacking in our original Constitution. However, its
landscape was changed by way of 42nd amendment which introduced specific provisions for
environmental protection in the form of Directive Principles of State Policy16 and Fundamental
Duties17. With the introduction of these two Articles, both the State and the Citizens are now under
the constitutional obligation to protect, preserve and safeguard the environment.
Article 21 of the Indian Constitution states that, “no person shall be deprived of his life or personal
liberty except according to procedure established by law”. Supreme Court in the case of Virender
Gaur Ors. vs. State of Haryana18 interpreted the word ‘life’ in a liberal manner and stated that,
‘Article 21 protects right to life as a fundamental right. Enjoyment of life and its attainment including
their right to life with human dignity encompasses within its ambit, the protection and preservation
of environment, ecological balance free from pollution of air and water, sanitation without which life
cannot be enjoyed. Any contra acts or actions that would cause environmental, ecological, air,
water, pollution, etc. should be regarded as amounting to violation of Article 21.”
Further, in the case of M.C Mehta v. Union of India19the Supreme Court treated the right to live in
healthy and pollution-free environment as a part of fundamental right to “life” under Article 21 of
the Constitution. Public Interest Litigations under art. 32 and art 226 also resulted in a wave of
environmental litigations, producing a rich environmental jurisprudence in India. Thus, India’s
Constitution now guarantees a right to healthy environment20, right to clean air21, right to clean
water
Article 19 (1) (g) of the Indian constitution confers fundamental right on every citizen to practice any
profession or to carry on any occupation, trade or business. However, it is subject to reasonable
restrictions. In the case of Burra bazar Fireworks Dealers Association v. Commissioner of police,
Calcutta23it was held that,
“Art. 19(1)(g) of the Constitution of India does not guarantee the fundamental right to carry on trade
or business which creates pollution or which takes away that community’s safety, health and peace.”
ENVIRONMENTAL FRAMEWORK IN INDIA AND ITS IMPACT ON BUSINESSES AND
INDUSTRIES
In the present section we will be dealing with Environment Protection Act 1986, Water (Prevention
and Control of Pollution) Act 1974, Air (Prevention and Control of Pollution) Act 1981, Forest
Conservation Act 1980 and The Wildlife (Protection) Act, 1972, etc.
A--Water (Prevention and Control of Pollution) Act 1974
In order to deal with the issue of water pollution, the Water Act was enacted in 1974 with the
primary objective of prevention and control of water pollution and maintaining or restoring the
wholesomeness of water. The Act specifically prohibits the disposal of any poisonous, noxious or
polluting matter directly or indirectly into any stream, well, sewer or land.24 In order to achieve its
objective, it established Central and State Pollution Control Boards with the function of developing
standards for effluents and sewage as well as the quality of water etc. It empowers the State Boards
to obtain information from any establishment regarding its construction, installation or operation
with a view to prevent and control water pollution.25 It also authorizes the State Boards to take
water samples from any stream, well, sewage or trade effluent passing through any plant or
vessel.26 The act further authorises the State Boards27 to enter and inspect any plant, record,
register, or document in order to determine whether the orders or directions of Boards have been
complied with or not. With regard to the power of entry and inspection, the State Boards shall have
the powers of district magistrate under section 94 of CRPC relating to search and seizure. It is
important to point that if an offence is committed under this Act by a company, then every person
who at the time of offence, was responsible for the affairs of the company or in charge thereof shall
be guilty of the offence and punished accordingly.28 The Act provides for a wide array of penalties
ranging from imprisonment of 3 months to 6 years and daily fines as well in case of continuous
violations. Consent to Establish and Consent to Operate-Establishment of any industry, operation or
process, which is likely to discharge sewage or trade effluent into a stream, well, sewer, well or land
requires prior consent of the Board
B--Air (Prevention and Control of Pollution) Act 1981
The Act was enacted in 1981 to provide for the prevention, control and abatement of air pollution in
India. In the case of New Era High School v. State of Bihar30it was stated that,
“Statute mandates board to inspect air pollution control areas at intervals, assess quality of air
therein and take steps for prevention, control and abatement of air pollution in such areas”
The Act includes noise pollution. It specifically prohibits the industries from emitting air pollutants in
excess of the standards laid down by the State Boards.31 Similar to the Water Act, the Air Act also
authorises the State Boards with the power to obtain information32, power of entry and
inspection33, power to take samples from air emissions34 and permits action against company
officials in case of contravention of its provisions by a company35. The Air Act as well provides for a
wide array of penalties ranging from imprisonment of 3 months to 6 years and daily fines in case of
continuous violations.
Consent to Establish and Consent to Operate- The Act requires certain industrial plants to apply for
consent from the State Boards before establishing or operating any industrial plant in an air
pollution control area.36 The Board while granting consent may also impose certain conditions,
which are required to be followed by the concerned industry. Failure to comply with conditions or
operating without appropriate consent could result in the closure of the industry. Supreme Court in
the case of M.C Mehta v. Union of India37 held that,
“Carrying of mining operation of stones on the border of Rajasthan and U.P without obtaining
necessary permission from competent authority was held to be illegal and persons were restrained
from working out mining activities”
C--Environment (Protection) Act 1986
Even though there were existing laws in India dealing directly or indirectly with a vast array of
environmental issues, India still lacked a general legislation for environmental protection in India.
Due to constantly changing paradigms in the field of environmental law, a need was felt to have an
umbrella legislation for environmental protection in India, which would enable better coordination
between regulatory authorities and provide for speedy and adequate responses to varying
environmental issues. Further, Bhopal Gas tragedy also exacerbated the loopholes in the existing
system of environmental protection and highlighted the need for an all-encompassing legislation for
the protection of environment in India. In view of these issues the Environment (Protection)Act was
enacted in 1986. The Act gave sweeping powers to the Central Government38, providing that it
could take, “all such measures as it deems necessary or expedient for the purpose of protecting and
improving the quality of the environment and preventing, controlling and abating environmental
pollution.” In particular, for instance, measures could include restriction of areas in which any
industries, operations or processes shall not be carried out or shall be carried out subject to certain
safeguards; laying down procedures and safeguards for prevention of accidents which may cause
environmental pollution and remedial measures for such accidents; laying down procedures and
safeguards for handling of hazardous substances; examination of such manufacturing processes,
materials and substances as are likely to cause environment
The Act also empowered the Central Government to make rules by notification on specific issues
pertaining to environmental conservation and protection.40 However, each rule made under the
Act, is required to be laid before each House of the Parliament.41 In light of this power, Central
Government has been able to issue notifications on a plethora of environmental issues in India such
as waste management, environmental impact assessment, Coastal Regulation Zone (CRZ) etc. The
Act also provides for a penalty of imprisonment ranging from five years to seven years along with
fines which may extend to Rs. one lakh and daily fines of Rs.5000 in case of continuous
contravention.
As per the 1991 Development Control Regulation, Floor Area Ratio had been frozen. As of now it
stands defreezed and Floor Space Index is permitted for construction projects which imply a boost
for the real estate sector
II---Waste Management Rules: In a developing country like India with high consumption pattern and
huge quantities of different kinds of waste, lack of proper management and disposal system can be a
serious issue. Several rules have been notified in India dealing with different kinds of waste such as
municipal solid waste, plastic waste, hazardous waste, bio- medical waste, etc. These rules are based
on the principle of making stakeholders accountable for the management of waste. Most
importantly, the rules stipulate that it is the responsibility of the producers to ensure that the waste
generated from their products is disposed of in an environmentally friendly manner. It can be
defined as,”a policy principle to promote total life cycle environmental improvements of product
systems by extending the responsibilities of the manufacturer of the product to various parts of the
entire life cycle of the product, and especially the take-back, recycling and final disposal of the
product.42"In India, the principle of Extended Producers Responsibility (EPR) has been an integral
part of the waste management rules. The Batteries (Management and Handling) Rules (BMHR),
2001, was the first to be based on the concept of EPR without explicitly mentioning it. Thereafter,
the rules made for plastic waste (Plastic Waste [Management and Handling] Rules, 2011) and e-
waste (E-Waste [Management and Handling] Rules, 2011) explicitly laid down the provisions for EPR
in managing waste
The concept of EPR has received much-needed attention in the recent rules formulated for effective
management of solid waste. It is one of the most important parts of the e- waste rules 2016 and
Plastic Waste Management Rules, 2016. For the first time, it has also been included in the Solid
Waste Management Rules, 2016 as well. Plastic Waste Management Rules, 2016, illustrates that the
primary responsibility for collection of used multi-layered plastic sachet or pouches or packaging is
of Producers, Importers and Brand Owners who introduce the products in the market. They need to
establish a system for collecting back the plastic waste generated due to their products. There are
different approaches for successful implementation of EPR. Indore adopted a ward wise approach,
and in one year achieved 100% segregation of waste at source from households and commercial
establishments. The sorted waste is easily saleable to the recyclers. The recyclers are queuing up
daily for collecting their category of waste with an assured quantity and quality.
III--Environment Impact Assessment (EIA) Notification: Initiated formally in 1994, the current EIA
Notification 2006 lays out a detailed process for obtaining Prior Environment Clearance for any new
projects or activities, or the expansion or modernisation of existing projects and projects seeking
capacity addition with change in process or technology. Category A projects acquire their clearance
from the Ministry of Environment, Forest and Climate Change (MoEFCC) while category B projects
apply for clearances to the State Environment Impact Assessment Authority (SEIAA). Category B
projects can be further broken down to B1 and B2, thereby determining which projects and activities
will require an EIA before approval. Since January 2016, institutions have been created at the District
level as well and they too have been included in the EIA Notification for approving certain instances
of mining of minor minerals. These are the District Environmental Impact Assessment Authority
(DEIAA) and District Level Expert Appraisal Committee (DEAC). Since March 2016, Ministry of
Environment, Forest and Climate Change, has adopted a new method of classifying each type of
industry. A concept of ‘white industries’ has been introduced to denote ‘non polluting’ industries.
They do not need permit or consent and just require to notify the relevant State Pollution Control
Board. For other colour coded industries (red, orange, green) environmental permits are needed
according to kind of activity and size of activity being conducted. A Pollution Index (PI) score is given
to each industry, depending on utilization of resources, air emissions, hazardous waste generated,
etc. (e.g., red category – PI score of 60 and above including but not restricted to asbestos, nuclear
power plants, ship breaking, oil and gas extraction; orange category- PI score of 41 to 59 including
food processing, pharmaceutical formulations; green category- PI score of 21 to 40 including
sawmills, tyres/tubes retreading; white category- PI score upto 20 including wind power, mini hydel
electric power less than 25 megawatts). No red category of industries shall normally be permitted in
ecologically fragile area/protected area.43 An integrated permit system can be submitted to
relevant State Pollution Control Board to obtain consent to establish and consent to operate,
authorisation under various Acts/Rules- submit a combined consent application to relevant
SPCB/CPCB. In August 2018, a new online environmental portal was launched by MoEFCC named
Parivesh which stands for Pro-Active and Responsive facilitation by Interactive, Virtuous and
Environmental Single window Hub.- to facilitate online submission and tracking of various
environmental clearance applications. It allows a single registration and single sign in for all types of
clearances (environment, forest, wildlife, CRZ) and create a unique ID for each project.
IV--Forest (Conservation) Act, 1980: The Forest (Conservation) Act, 1980 lays down the provisions
that regulate the diversion of forestland for non-forest purposes. This is with the stated objective of
ensuring longterm conservation of the forests in India, and reducing forest degradation. Any user
agency (both government and non-government) has to seek prior permission from the Central
Government before de-reserving any forest land, felling of trees or before diverting any forestland
for nonforest use. The application for the same is moved through the Forest Department of the State
Government, which is the final point of approval for forest diversion under this legislation. Non-
forest use implies the breaking up or clearing of any forest land for the cultivation of tea, spices,
rubber, palms, oil-bearing plants, horticultural crops or medicinal plants and for any purpose other
than re-afforestation. Proposals involving forest land upto 40 hectares (not including activities
related to mining and encroachments) are handled by the regional office of the MoEFCC. Proposals
involving forest land above 40 hectares and those related to mining and encroachments are handled
by the MoEFCC.
V---The Wildlife (Protection) Act, 1972: The Wildlife (Protection) Act, 1972, is a statute to provide
for the protection of wild animals, birds and plants. It provides for declaration of national parks and
sanctuaries and prohibits hunting and harm of wild animals and uprooting of specified plants in
general. A permit is required in case any activity including industrial, mining or infrastructure is likely
to destroy, exploit or remove any wildlife including forest produce from a Protected Area. A
Protected Area includes a Sanctuary, National Park, Conservation Reserve or a Community Reserve.
It is also required in case an activity could destroy, damage or divert the habitat of any wild animal
and in cases where activities are likely to divert, stop or enhance the flow of water into or outside
the protected area. This is granted through the Chief Wildlife Warden only after the state
government in consultation with the National Board for Wild Life (NBWL) is satisfied that such an
action is necessary for the improvement and better management of the wild life. In case of non-
compliance the permits can be cancelled and punishment can be imposed through imprisonment
and/or fine.
Q13- Explain Evolution of Banking Regulation and Explain the terms and conditions to be complied
with for obtaining a bank license? (v v v v v imp) or REGULATION IN RELATION TO CHARTERING /
LICENSING
ANS- EVOLUTION OF BANKING REGULATION - After understanding the importance of banks in the
economy and the necessity of regulating them, more than other players in the economy, the
question arises as to who is best placed to regulate the banks and the legal basis of the regulatory
power
The first necessity for bank regulation came by the need for cooperation amongst the banks in
executing payment instructions and making collections on the cheques deposited with them. Instead
of chasing each bank individually, it was thought fit to have a central place where the banks of a
local area could meet and instead of paying each cheque individually to another bank for the other
bank’s customers, only the net balance due to each bank be paid. So, local areas had a clearing
houses. Since cheques honoured in the interim may bounce, either due to insufficiency of funds or
signature of the purported cheque writer not matching, the collecting bank had to be solvent
enough for return of moneys in such cases. Clearing house membership was an informal regulation
of the industry as it was dependent upon confidence in the solvency of the banks who met. But the
role of industry specific bodies in forming standards for the guidance of its members has over a
period of time has become more formal, and recognized by courts in determination of industry
standards for service.
The fragility of the banking system meant that whenever there was a run on the banks, howsoever
well run and solvent they might be individually, howsoever good their asset quality be, there would
always be a chance that they might fail. No other financier would be willing to lend to the bank
because it would be afraid that even if the money lent is not lost, it may not be available to it in
times of crisis. So, a need was felt for a lender of last resort in times of crisis – an entity willing to
lend when no one is willing to do so because they are dependent on demand deposits to lend. The
entity should not depend on retail deposits and have the power to create the money which is
accepted as a valid tender.
In the late nineteenth century, Bank of England emerged as a lender of last resort to the English
banks. In the first decade of the twentieth century, the Federal Reserve Board was formed to be the
lender of last resort in the United States of America. During the Great Depression a need was felt to
have a lender of last resort. In pursuance of this strongly felt need, the Reserve Bank of India (RBI)
was formed in 1934. Basically, the structure followed was that the banks which wanted to be eligible
to be considered for lending by the RBI, had to maintain a certain percentage of their deposits with
such lender of last resort (central bank) and had to observe prudent business practices to be
considered for lending in emergency situations. It is like a bank exercising some control and
surveillance over a borrower who has been given an overdraft facility. With banks having deposits
with the RBI, it also has a role in the clearing house operations, thus giving it a bird’s eye view of the
working of the financial system and the solvency of the individual players.
Regulation by perceptions of solvency and contract were thought to be insufficient. Regulatory
power was not statutory, as though the entities like Bank of England or RBI may have come into
existence either by charter or statute, the shareholders were private individuals. After the
nationalization of Bank of England and the Reserve Bank of India, regulatory powers were given to
the central bank, in the same way as they could be exercised by the said executive wing of the
government. The powers have been reserved with the executive wing of the government in some
countries. But it was thought appropriate to give it to an entity which has expertise in the sector,
which would anyway perform a regulatory role with regard to most of the banks because of it being
the lender of last resort and thus avoid duplication of effort. In this way, Banking Regulation Act,
1949, gave the Reserve Bank of India the statutory regulatory power over most of the banks. The
government retained for itself the role of giving directions where it found appropriate, and being a
forum for appeal for most decisions taken by the RBI.
While RBI has the primary role in regulation of banks, it shares the regulatory space with certain
other bodies. In the case of agricultural cooperative banks and regional rural banks, National Bank
for Agriculture and Rural Development (NABARD) also has a regulatory role as it is the principle
refinancing body for these banks serving specific needs of a sector of the economy. In the case of
urban cooperative banks, the principle means by which the RBI used to regulate was by being the
lender of the last resort for the banks which were in the second schedule of the RBI Act. Recently, by
amendment to the Banking Regulation Act, RBI has been given a primary regulatory role over these
banks, almost at par with what it has in the case of commercial banks. However, it ought to be noted
that cooperatives having been organized under the state statutes relating to cooperatives, the
registrar of cooperatives of the state of incorporation will also have a regulatory role (not so in the
case of multi state cooperatives). In the case of public sector banks, the regulatory role of the RBI is
dependent upon how much of the regulatory powers relating to them is ceded by the Central
Government to the RBI under the Banking Regulation Act (BRA). At present, Central Government has
given the RBI almost all the powers over the public sector banks which the RBI has over the private
commercial banks, with the exception of the powers over the Board and other Officers of the bank.
We have considered the regulation by industry standards setting bodies, contractual arrangements
for deriving of benefits, either as lender of last resort or refinancing arrangements or deposit
insurance etc., and by statute. Another source of regulation is the soft law framed by different
international associations for regulators for the guidance of the member regulatory bodies. As far as
banking is concerned two transnational bodies are important. The first is Bank of International
Settlements, Basel, and the Financial Action Task Force.
Bank for International Settlements (BIS) was originally a small body of central banks of developed
economies, but its membership has recently expanded. The bank has as its primary remit the
stability of the international financial system. After the Herstatt crisis in the mid 1970s, when the
failure of a German bank created problems for the payment system in New York, BIS has sought to
address the issue of how to ensure that the banks which are participants in the international
payments systems and mechanisms, stay solvent to honour their commitments. Towards this end,
with the sanction of the member central banks it has periodically made rules for calculation of the
capital required by a bank for doing business. Though the rules are meant only for the banks
engaged in cross border payments and which belong to the member states, requirements of
international trade and international payment system operation almost made it incumbent to most
central banks to frame regulations based on the BIS guidelines. International trade depends upon
letters of credit and banks must have confidence in the letter of credit opened by its counter party in
another country to agree to become the payer on being presented the documents by the exporter.
In a similar manner, the guidelines of the Financial Action Task Force (FATF), formed for the purpose
of curbing the use of the financial system for money laundering, are adopted by not just the member
countries but all others who want their financial institutions not to be excluded from the
international financial system. One has to remember that regulatory bodies acquire expertise in
certain sectors of the economy. The legislature may want to use the expertise developed by these
bodies for regulating the allied sectors. Sometimes it is necessary, as carrying out the responsibilities
in one area may require an input from or a corresponding action in another arena of economic
activity. Inactivity in the allied area may lead to the players exercising what many would call the
regulatory arbitrage - taking advantage of the absence of rules in the allied sector to carry on the
same activity without checks and balances. Banks and non banking finance companies (NBFCs) are
different. The deposits of the latter are not repayable on demand and they don’t act as the agent of
their customers in the payment system and so don’t form part of the payment system. But a very
short term deposit or commercial paper (as in the case of Lehman Bros which failed in 2008) may
make them also very fragile. If the lenders to these institutions are banks, then the regulator for
banks becomes interested in their solvency, more so if the banks form these NBFCs to bypass the
regulatory barriers. That is why they are sometimes called shadow banks. As a result of this, the RBI
was given the regulatory remit for the NBFC sector by an amendment to the RBI Act in 1997, when a
regulatory vacuum in the NBFC sector was noticed after the failure of many depository NBFCs.
Similarly, since the RBI has the remit to maintain the monetary stability (stability in the value of the
currency), it has the regulatory powers in the money market (short duration loan and short term
debenture market) under the RBI Act, monetary payment and settlement systems (under Payment
and Settlement Systems Act) and regulates the capital flows in the foreign exchange market (under
Foreign Exchange Management Act).
REGULATION IN RELATION TO CHARTERING / LICENSING
Banking is a business of borrowing and lending money, but with special features which are absent in
other borrowing and lending businesses. Not only are deposits with it repayable on demand, but
they are repayable only in the branch with which the account is kept, and the bank also gives the
cheque facility to its customers and would collect cheques on their behalf. The last requirement
means that the bank has to take a debt/deposit from its customer and whenever the customer
wants it the bank cannot refuse it as in case of ordinary debtors.
Banking Regulation Act prevents any person or entity to give a cheque writing facility to its
customers if the person or entity is not a bank. Further it prevents the use of the term bank by any
entity which is not a banking company registered under the Banking Regulation Act (though some
entities use the terminology under the special statutes by which they are created or under which
they are incorporated). While banks were in business long before BRA came to be enacted, a time
frame was given for such banks to get the license to operate as a bank from the RBI. All new banks to
operate as a bank needed a license from the RBI. The grant of a license is the discretion of the RBI,
but the BRA lays down certain conditions for the exercise of its discretion, conditions which it is
required to be satisfied about before grant of a license. The company must not only be in a position
to repay present and future depositors in full as their claims accrue, but should have adequate
capital structure and earning prospects along with the character of the proposed management and
the conduct of its affairs not being opposed to public interest or interests of depositors . In addition,
the RBI will look into the public interest and availability of banking facilities in the proposed area of
operations. While granting license, the RBI may lay down conditions to be fulfilled by the licensee
when operating as a bank.
The RBI license is also required for the opening of bank branches, the definition of which is very wide
in the BRA to take into account all payment offices. At present, such licenses are not individually
given but banking companies have been given general permission to open branches provided a
spatial distribution in terms of rural and urban branches is maintained. Foreign banks wanting to
open branches in India are required to have a license from the RBI. The license is granted on the
basis of reciprocity (Indian banks can open branches in the country of incorporation of the foreign
bank). The latest guidelines of the RBI provide that the foreign banks wanting to start a bank in India
will have to do so through a subsidiary incorporated in India, as it wants to insulate the Indian limb
of the business of the foreign bank from the fluctuations in the fortunes of the foreign bank in other
jurisdictions.
For any company to be licensed to operate as a bank, one essential aspect which is required to be
looked into is its capital. Capital of the banking company will have two aspects, initial capital and
capital in relation to business. BRA concerned itself only with the initial capital and the amounts
mentioned therein have only a historical importance, no longer relevant in the present times. RBI
gives out the minimum capital the bank requires to have(depending upon the type of bank license
applied for), but also lays out the capital which a bank needs to have in accordance with the size of
business and the risk profile of its loan assets. This is in pursuance of the application of the norms
agreed upon by the central banks in the Basel Accords. Basel Accords (at present we have Basel III)
take into account the reality that the shareholder, who controls the management, has a limited
liability. Because the liability of the shareholder is limited, the shareholder body has an incentive to
push the management to take greater risks in lending so as to increase the shareholder returns. This
risk reward conundrum in a limited liability entity can only be broken by requiring that the
shareholder put in additional capital where the risks are greater. So now the capital requirements of
a bank are based on the size of its loan book and the quality of its loan book. Less shareholder
capital is required when money is lent to the government, more capital is required when money is
lent to an individual backed by the security of mortgage of self occupied house and most capital is
required when an unsecured loan is given for a business. Basel norms also takes into account of
balance sheet exposure of banks in the form of bank guarantees, etc. The Basel capital requirements
refers to capital which is available to depositors of the bank as a cushion in the event of bank not
performing well. The capital can be in the form of equity shares, irredeemable preference shares
and debt in form of debentures (convertible or non convertible) or bonds which are subordinate to
debt due to the depositors. The capital requirements can further be divided into tier one and tier
two, depending upon how permanent the capital is. Tier one comprises equity shares, irredeemable
preference shares and some debentures or bonds with the condition that their redemption is
dependent upon the banking company fulfilling certain conditions and it wanting to redeem it.
Q14- Explain Appreciate different Anti-competitive Agreements and Vertical Agreements? (v v v v

v imp)
ANS- ANTI COMPETITIVE AGREEMENTS - Agreements entered between enterprises, persons, or
association of enterprises or persons in pursuance of production, distribution, supply, storage or
control of products or services, which have a tendency to result in Appreciable Adverse Effect on
Competition (AAEC) within the jurisdiction are referred to as anticompetitive agreements13 and
they shall be declared void.14 To determine if an agreement has an appreciable adverse effect on
competition, the Commission shall have due regard to factors including, creation of barriers to new
entrants, driving off existing competitors, foreclosure of competition by hindering entry,
improvement of production or distribution of goods, etc.
In a competitive market set-up, firms vying for the business or the consumers are supposed to
compete with one another, not collude and cooperate to alter the process of competition. Cartels
are horizontal agreements made for the purpose of market allocation, price fixing, output restriction
and, the submission of collusive tenders to rig the outcome of competitive tenders are some of the
techniques employed by conniving firms to distort competition.
Under the Competition Act, 2002, section 2(c) puts forth an inclusive definition of ‘cartel’, as “an
association of producers, sellers, distributors, traders or service providers who, by agreement
amongst themselves, limit, control or attempt to control the production, distribution, sale or price
of, or, trade in goods or provision of services.” In the cartelization by public sector insurance
companies’ 17case, the CCI took suo motu cognizance to investigate if four public sector insurance
companies had formed a cartel and engaged in bid-rigging in response to a tender issued by the
Kerala Government. Rejecting the argument of the insurance companies that they formed a single
economic entity and were thus subject to the control of the central government, the CCI held that
the submission of separate bids by the companies for the tender, along with the resolution regarding
determination of bid amounts being taken voluntarily through an internal meeting without the
supervision by the Finance Ministry, proved the contrary. Based on the business sharing agreement
and the evidence of the Opposite Parties (OPs) having met one day before the submission of tender,
the CCI held that there was a conclusive proof of bid rigging and collusive bidding by the OPs,
satisfying the requirements for contravention under section 3(3)(d) of the Competition Act.
Any agreement entered or decision taken amongst enterprises, persons, association of enterprises
or persons or, between a person and an enterprise, including cartels, shall be presumed to have an
appreciable adverse effect on competition and shall be considered anti-competitive per se, if they
result in the following:
a-- Determination of sale prices:
The competition regulatory framework not only concerns itself with blatant price fixing, but also
agreements having an effect on suppressing price competition. In other words, the act of price fixing
does not just encompass the final price but also instances having an indirect impact on the final
price. Reducing price competition by agreeing not to offer discounts, making use of an open
information scheme and, charging uniform delivered prices may also be instances of price fixing.19
Market participants forming a cartel, agreeing to offer identical discounts and applying the same in
the downstream market was also held to be another facet of price fixing and declared to be
anticompetitive in nature.
b-- Output control-
An agreement among firms to control or limit production, supply, technical progress, markets or
provision of goods and services shall be presumed to be anticompetitive.21 The CCI generally
focuses on factors such as production capacity, capacity utilization of the competitors, demand for
the product in question to decipher any patterns of output control for the concerned product.22 In
the Cement Cartel23case, the Commission found evidences regarding the formation of
understanding and agreement among the Opposite Parties (OPs) via the Cement Manufacturing
Association(CMA) for communicating and information sharing in relation to manufacture of cement.
The Commission also unearthed low-capacity utilization leading to controlled supply of cement by
the companies, which was in clear contravention of section 3(3)(b) of the Competition Act. The
commission opined that limiting the supplies of cement over the course of years and giving rise to
shortages had led to an upward demand, resulting in a hike in prices thereafter. In the absence of
any efficiency or improvement in manufacture owing to the coordinated behavior of the cement
manufacturing companies, the OPs were held to have formed a cartel.
Recently, the CCI passed a final order against three beer companies, viz., Competition Law United
Breweries Limited, SABMiller India Limited (renamed as Anheuser Busch InBev India Ltd.) and,
Carlsberg India Private Limited for forming a cartel and selling beer in many States and Union
Territories, in conjunction with the All-India Brewers’ Association. The cartel had engaged in price
parallelism which was in contravention of Section 3(3)(a) of the Competition Act, 2002.
c- Market allocation
Competition may also be threatened by an agreement between the firms to apportion segments of
market amongst themselves, to be handled exclusively by each seller such that they no longer have
to compete with each other. When the participating firms concur to share particular markets based
on geographical area, classes of customers or, on the basis of the product, such agreements may be
referred to as horizontal market sharing agreements.25 In HFB Holding v. Commission, the opposite
parties were penalized for forming a cartel and indulging in sharing of the entire European market
among themselves. They further engaged in acts to hinder the only substantial competitor not
forming a part of the cartel, driving it away from the concerned market.
d-- Bid rigging or collusive bidding
Agreements capable of lessening or wiping off competition for bids or, which have the effect of
manipulating the process of bidding are held to be anticompetitive per se. Bid rigging or collusive
tendering is said to occur when competing bidders decide not to compete genuinely, or endeavor to
secretly influence the outcome of a bidding process by submission of identical or cover bids.27 In the
case of cartelization in tenders of Pune Municipal Corporation for Solid Waste Processing28, a prima
facie opinion was formed by the CCI against the OPs for having engaged in the acts of bid rigging or
collusive bidding violating Section 3(3)(d) of the Competition Act, 2002. The CCI opined that bid
rigging under Section 3(3)(d) shall be presumed to have an adverse effect on the competition
irrespective of the purpose or duration of the cartel and, it is immaterial if the act culminated in a
benefit being accrued from the cartelization. The CCI also held that so long as a subset of bidders are
found rigging the bidding process by colluding, the onus shall shift on the OPs to rebut the
presumption of having caused an AAEC. Disagreeing with the contention of the OPs that the latter
were engaged in different business activities at the time of the bidding process, and thus not
amenable under section 3, the commission held that the activity for which bidding was held and in
pursuance of which the alleged violation of law took place is what proves significant in
determination of cartels.
VERTICAL AGREEMENTS
Vertical agreements are agreements between persons or enterprises at different levels of the
production chain in distinct markets in relation to production, distribution, supply, storage or price
of goods or provision of services.29 Unlike horizontal agreements, vertical agreements are not anti-
competitive per se, and it needs to be established that the alleged activity has caused an appreciable
adverse effect on competition (AAEC) in the country.30 Vertical agreements also comprise the
following:
EXTRA MOST IMPORTANT QUESTIONS IF TIME CAN DO
Q15- Explain the various sources through which business law has evolved? (v v v v v imp)
ANS- SOURCES OF BUSINESS LAW- There are many sources from which the business law evolves.
Some of these main sources are:
1--- Constitution
The text of the Constitution along with its interpretation by the Supreme Court from time to time, is
considered as the supreme law of the land. All laws and authority flowing from and traceable to the
Constitution are recognised as lawful power. The Indian Constitution establishes the fundamental
principles and rules by which the individual States are governed. The term constitutional law refers
to the general limits and powers of the Central and State governments as stated in written
constitutions. The Indian Constitution is the supreme law of the land, and all the laws of the country
have their foundation in the Indian Constitution.
The Indian Constitution was drafted with certain objectives that were latent in the text and provided
directions to the State to achieve a social order for the upliftment and welfare of the people. Even
otherwise, post the 42nd amendment, the Preamble of the Constitution was incorporated with the
terms “Socialist” and “Secular”, which strengthened the objective to promote social welfare. Article
38 places the responsibility on the State to strive to promote the welfare of the people by achieving
a social order, while Article 39 provides for a few principles of policy to be observed by the State.
Article 38 and 39, though having been placed in part IV of the Constitution as Directive Principles of
State Policy, and cannot be enforced in a Court of Law, prove extremely significant laying down
directions for good governance of a State. Especially, it directs the State to frame policies that
ensure that the ownership and control of the material resources are adequately distributed, and
that the operation of the economic system must not lead to a concentration of wealth to the
common detriment. For instance, the Government of India ordered the formation of a committee
(Mahalanobis Committee) to assess the income distribution in the society due to the rising
monopolistic and
restrictive trade practices that were being observed in the Country. This led Introduction to Business
Law to the formation of the Monopolies Inquiry Committee and the report submitted paved the way
for the Monopolies and Restrictive Trade commission Act (MRTP Act). This way, the Constitution of
India, specifically Article 39 sowed the seeds for the genesis of competition laws in India. Article 19
(1) (g) of the Constitution guarantees that all citizens shall have the right to practice any profession,
or to carry on occupation, trade or business. The right to carry on a profession, trade or business is
not absolute. Reasonable restrictions can be imposed by the state in the exercise of such right. Part
XIII of the Constitution deals with Trade, Commerce and Intercourse within the territory of India.
Article 301 provides that subject to the other provisions of this Part, trade, commerce and
intercourse throughout the territory of India shall be free. Article 302 gives power to the Parliament
to impose restrictions. It says that the Parliament may by law impose such restrictions on the
freedom of trade, commerce or intercourse between one State and another or within any part of the
territory of India as may be required in the public interest.
II-- Statutes:
A Statute can be defined as an act of the legislature in written form. “Legislative actions, called
statutes, are another important source of law. The assortment of rules and regulations put forth by
Legislatures is what we call statutory law.”17 The Parliament and the State Legislatures have been
conferred the primary responsibility to enact laws as per the requirements of the Union and the
State respectively. “Legislation is the common source of law. Both Parliament and State assemblies
have enacted a number of legislations that cover various aspects of business.”18 The act of creating
laws, also known as legislating, cannot solely be performed by the Parliament, due to the enormous
number of legislations required to run a State. The act of legislations can be delegated to
subordinate authorities such as executive bodies and individuals, by providing the necessary
guidelines, policies and rules that must be resorted to while laying down the law. This area of
legislations is also known as delegated or subordinate legislation. The Legislature has come up with
various laws to counter the issues cropping up in the business administration in our country
III-- Cases:
Case laws play an important role in shaping the law and bringing out its relevance as per the
prevailing conditions in the society. The interpretation offered by the judges in the form of ratio
decidendi aids in clarifying the nuances of the law. Judicial decisions, in the form of precedents, are
one of the most important sources of law. Case laws, Constitution, legislatures, and administrative
agencies encourage certain behavior and prevent other actions. But the boundaries of these laws
are seldom self-explanatory. Consequently, law must be interpreted. Case law is the collection of
legal interpretations made by judges. An alternative name for case law is common law as common
law is a judge made law. Interpretations provided by courts in cases are law unless they are revoked
later by new statutory law. Case law is especially significant for businesses because a modern
business often operates in multiple legal jurisdictions. Because statutory laws are subject
to interpretation, one court may have interpreted laws one way at one business location, and a
second court may interpret a similarly worded statute differently at a second business location.
Courts issue judicial decisions that often include interpretations of statutes and administrative
regulations. These decisions contain the reasoning the courts use to arrive at their decisions. The
reasoning depends heavily on precedent, the use of past decisions to guide future decisions. An
earlier decision in a similar fact pattern is a precedent that guides later decisions, thereby providing
greater stability and predictability to the law.
IV-- Custom:
Custom is one of the most important sources of law. It is possible to detect two basic elements in
the make-up of the custom - material facts, which is the actual behavior of states founded upon the
performance of the state activities and practices; psychological element, which is the belief by the
state that behaved in a certain way that it was a legal obligation to act that way. There are a number
of factors concerning the nature of a particular practice – Duration, repetition, consistency and
generality. “A substantial part of business law is customary, notwithstanding advances made in
science and technology. This is true both in developed and developing countries. A custom, when
accepted by courts and incorporated in judicial interpretations, becomes a law. Many of the
business customs or usages have already been adopted and legalized. The Indian Contract Act
provides that nothing therein contained, “shall affect any usage or custom of trade.” Similarly, the
Negotiable Instruments Act provides that nothing there-in contained “shall affect any local usage
relating to instruments in an oriental language.
V—Treaties
Treaties are a source of international business law. They are one of the sources that have been
mentioned under Article 38 of the Statute of the International Court of Justice. Treaties are
obligatory in nature and are founded upon the customary principle that agreements are binding
upon the parties and must be performed in good faith. For many writers, treaties constitute most
important source as they require the express consent of the contracting states, they are thus
considered superior to custom. The consent to a treaty can be signified by signature, exchange of
instruments, ratification or accession by the concerned countries. “The purpose of international laws
is to permit countries as much authority as possible over their own international business affairs,
while maximizing economic benefits of trade and working relationships with other nations. Since
many countries have historically allowed governance by international agreements when conducting
global business, there exists an evolving body of international laws that facilitate global trade and
commerce.”21 “A treaty is similar to a contract in two important ways. Both treaties and contracts
are attempts by parties to determine rights and obligations among themselves. In addition, when a
party fails to obey a treaty or an international contract, international law imposes liability on that
party.”22 Treaties can be multilateral – signed amongst many countries, and bilateral – existing
between two countries.
VI-- Government Policies:
The legal power to make laws comes to the government from the Constitution. Laws are framed
according to the policies of the government. One can understand the focus of any government
through its policies. For example, Introduction to Business Law when the focus is to promote ease of
doing business, the government accordingly brought new legislations and regulated to remove
bottlenecks which had increased time consumed in contracts enforcement. Similarly, the economic
reforms undertaken, provision of easy financing for MSME sector or women entrepreneurs, bringing
new polices like e-commerce policy, etc., are examples of government intervention for regulating
the business through policies. Laws are made according to the policies.
Q16- Understand important concepts under Business law and Appreciate various principles under
Business law ? (v v v v v imp)
ANS- CONCEPTS UNDER BUSINESS LAW- Any business begins with the basic understanding of what
has to be done under any particular business and in what form it has to be done. A business may be
established for production, manufacturing, provision of service or sale or purchase of products.
Every such objective involves a complex set of contracts, transactions and payments. Similarly, in
what form business has to be done requires deliberation about the type of business organization
through which the business will be conducted. The types of business organizations would begin from
sole proprietorship in which an individual carries the business followed by traditional partnerships,
limited liability partnerships and incorporation of a company. Doing business in Hindu Undivided
Family (HUF) is also prevalent in India in which male members of the family become coparceners in
the business by birth in the family. The business is conducted by the Karta of the family. Therefore,
the following concepts become important for any entrepreneur to understand:
PRINCIPLES OF BUSINESS LAW-

1-- Law and Morality: “The Natural Law School of jurisprudence postulates that the law is based on
what is “correct.” Natural law philosophers emphasize a moral theory of law—that is, law should be
based on morality and ethics. Natural law is “discovered” by humans through the use of reason and
choosing between good and evil.”3 “The very efficiency of the legal system depends on the moral
attitude towards the notion of legality, since conformity with the law is not, in itself, a legal matter,
but a moral obligation. Every law can be, and should be, evaluated from a moral viewpoint. The law
cannot and must not regulate every aspect and each moment of our lives. Most often the law tells
us how to proceed, but not what we should do.”4 Thus, businesses also have moral obligations and
the business law acts as a guiding force to fulfill these moral obligations. Morality is achieved by
following the law not only in letter but also in spirit.
2-- Business Ethics: Business being part of the society has an assortment of responsibilities.
Businesses have a relationship with the other parts of the community such as consumers, workers,
vendors, marketers, etc. Businesses owe responsibility towards these parties of the community. The
degree of responsibility may vary from business to business or stakeholder to stakeholder.
Responsibilities are of diverse nature such as safe working conditions for the employees, good
quality products, profit maximization for the shareholders, and sustainable use of the society’s
resources. “Ethics is the study and practice of decisions about what is good or right. Ethics guides us
when we are wondering what we should be doing in a particular situation. Business ethics is the
application of ethics to the special problems and opportunities business people experience. An
ethical dilemma is a problem about what a firm should do for which no clear, right decision is
available. At the same time the business ethics guides decisions within firms, ethics helps guide the
law. Law and business ethics serve as an interactive system—informing and assessing each other.
The principles of contract law, for instance, facilitate market exchanges and trade because the
parties to an exchange can count on the enforceability of agreements. Legal rules that govern the
exchange have been shaped in large part by our sense of commercial ethics.
“The law dictates how a person must behave. Any choice about how a person should behave that is
based on a sense of right and wrong is an ethics decision. Laws represent society’s view of basic
ethics rules. And most people agree that certain activities such as murder, assault, and fraud are
wrong. However, laws may permit behavior that some feel is wrong, and it may criminalize acts that
some feel are right.”6 Similar situations arise under business law for example, Factories Act, 1948
permits employment of children above 14 years of age, this may be wrong for some people
however, it has been permitted under the law to allow them to earn a living according to the
provisions set out in the law
3-- Common Law: Common law has been a major source of developing business law. Earlier
commercial law was not regulated through specific statues rather the principles of equity and justice
were adopted in the common law approach, where precedents acted as a guiding force. Thus,
common law still plays a very important role in the evolution and enactment of commercial law.
“The term common law has several different meanings. It is usually used to mean the law that is not
the result of legislation but is the law created by the decisions of the judges. When common law is
given this meaning, it encompasses cases that have used both, or either, equity and common law.”7
“English common law was law developed by judges who issued their opinions when deciding cases.
The principles announced in these cases became precedent for later judges deciding similar cases.
The English common law can be divided into cases decided by the law courts, equity courts, and
merchant courts.
“The common law is a beautiful system, containing the wisdom and experiences of ages. Like the
people it ruled and protected, it was simple and crude in its infancy and became enlarged, improved,
and polished as the nation advanced in civilization, virtue, and intelligence. Adapting itself to the
conditions and circumstances of the people and relying upon them for its administration, it
necessarily improved as the condition of the people was elevated. The inhabitants of this country
always claimed the common law as their birth right, and at an early period established it as the basis
of their jurisprudence
4-- Natural Law: “The term ‘natural law’ refers to the idea that there are certain ethical laws and
principles that are morally right and above the laws devised by humans. This concept suggests that
individuals should have the freedom to disobey a law enacted by a majority of people if their
individual conscience goes against the law and they believe the law is wrong. The idea that people
have basic human rights, for example, is rooted in the concept of natural law.”10 “The Natural Law
School of jurisprudence postulates that the law is based on what is “correct.” Natural law
philosophers emphasize a moral theory of law—that is, law should be based on morality and ethics.
Natural law is discovered by humans through the use of reason and choosing between good and
evil.”
“The law must have a moral basis. Where do we find the moral basis that would justify a law?
Aquinas says that “good is that which all things seek after.” Therefore, the fundamental rule of all
laws is that “good is to be done and promoted, and evil is to be avoided.” This sounds appealing, but
also vague. Exactly which laws promote good and which do not? Is it better to have a huge
corporation dominate a market or many smaller companies competing? Did the huge company get
that way by being better than its competitors?
There can be numerous examples of the natural law theory to business laws, as business laws have
evolved over time through customs and general usages which were considered as the rules of the
trade. These rules were based on ethical conduct, equity and fairness which has been ingrained in
the laws by the law making bodies.
5-- Contractual Principles: Salmon has defined a contract as an agreement that creates and defines
obligation between the parties. Section 2(h) of the Indian Contracts Act, 1872 defines the term
contract as an agreement enforceable by law. This also means that a contract is fundamentally an
agreement having the power to legally bind the parties. “A contract is an agreement that is
enforceable by a court of law or equity. Every contract involves at least two parties. The offer or is
the party who makes an offer to enter into a contract. The offeree is the party to whom the offer is
made. In making an offer, the offer or promises to do—or to refrain from doing—something. The
offeree then has the power to create a contract by accepting the offeror’s offer. A contract is
created if the offer is accepted. No contract is created if the offer is not accepted
6-- Equity and Fairness: Equity and fairness is an important principle of business law. The provisions
under business seek to provide equitable treatment to all. There are laws which vary according to
the size of the business organization or the nature of business activity thereby differentiating
between the business and the laws applicable to them. One such example can be the provisions of
Corporate Social Responsibility where the amount of contribution by the companies is divided by
thresholds on the basis of turnover, net worth or net profit thereby putting more responsibility on
the bigger companies.
Q17- Define partnership and explain its essential features and Describe different types of partners
and partnerships ? (v v v v v imp)
ANS- NATURE OF PARTNERSHIP-
Definition of Partnership, ‘Partners’, ‘Firm’ and ‘Firm’s Name’- Section 4, The Indian Partnership
Act, 1932, lays down the definition of “Partnership”, “Partner”, “Firm” and “Firm-Name”.
“Partnership” is the relationship between persons who have agreed to share the profits of the
business carried on by all or any of them acting for all”. There are three aspects to partnership:
partners, firm, and the firm name.
Persons who have entered into partnership with one another are called individually ‘partners’ and
collectively ‘a firm’, and the name under which the business is carried on is called the ‘firm’s name’.
Thus “a firm” in law is only a collective name of the partners of a partnership. It The Partnership Act,
1932 doesn’t have a separate legal existence as is in a corporation. While acquiring the “firm name”,
the partners should keep in mind that they do not violate the rules relating to trade name or
goodwill. The adopted name must not mislead the public to confuse them with a firm of repute
already in existence with a similar name. They must not use a name implying the sanction of
patronage of the Government. A partnership firm cannot use the word “Limited” as a part of its
name.
Essentials of a Partnership
The examination of the definition of partnership given in section 4 of the Act indicates that the
following elements must co-exist before a partnership can come into existence:
Types of Partner

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MMPC 13- BUSINESS LAW

Fig- : Different Forms of Dissolution of a Firm

FOUR PILLARS OF INSTITUTIONAL INFRASTRUCTURE UNDER IBC 2016

Q8- Explain the main features of a Company form of Business..? (v v v v v imp)

SECOND PRIORITY MOST IMPORTANT QUESTIONS

ESSENTIALS OF VALID CONTRACT

Q14- Explain Appreciate different Anti-competitive Agreements and Vertical Agreements? (v v v v

EXTRA MOST IMPORTANT QUESTIONS IF TIME CAN DO

PRINCIPLES OF BUSINESS LAW-

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