⚖️ BUSINESS LAW – SUMMARY NOTES
🧠 1. Meaning of Business Law
Business Law (also called Commercial Law or Mercantile Law) is the branch of law that governs business and commercial transactions.
➡️ It defines rights and obligations of parties involved in trade, commerce, and business.
📚 2. Main Sources of Business Law
| Source | Description |
|---|
| Indian Contract Act, 1872 | Deals with contracts and agreements. |
| Sale of Goods Act, 1930 | Rules for sale/purchase of goods. |
| Partnership Act, 1932 | Governs partnership firms. |
| Companies Act, 2013 | Formation and functioning of companies. |
| Negotiable Instruments Act, 1881 | Cheques, bills of exchange, promissory notes. |
| Consumer Protection Act, 2019 | Protects consumer rights. |
| Competition Act, 2002 | Prevents unfair trade practices. |
📘 3. Indian Contract Act, 1872
Definition
A contract is an agreement enforceable by law.
Contract = Agreement + Enforceability by law
Essential Elements of a Valid Contract
- Offer and Acceptance
- Intention to create legal relationship
- Lawful consideration
- Capacity to contract (age 18+, sound mind)
- Free consent (no coercion, fraud, mistake)
- Lawful object
- Certainty & Possibility of performance
- Not declared void
Types of Contracts
| Type | Description |
|---|
| Valid | Legally enforceable |
| Void | Not enforceable by law |
| Voidable | Valid until one party cancels |
| Illegal | Forbidden by law |
| Express | Written or spoken |
| Implied | Formed by conduct |
| Executed | Fully performed |
| Executory | Yet to be performed |
Performance of Contract
- Actual performance → Both parties perform.
- Attempted performance → Offer made but not accepted.
Discharge of Contract
Contract ends by:
- Performance
- Mutual consent
- Impossibility (e.g., death, war)
- Lapse of time
- Breach of contract
Remedies for Breach of Contract
| Remedy | Meaning |
|---|
| Damages | Monetary compensation |
| Specific Performance | Forced completion of contract |
| Injunction | Stop a party from doing something |
| Rescission | Cancellation of contract |
| Quantum Meruit | Payment for work done partly |
💰 4. Sale of Goods Act, 1930
Definition
A contract of sale is where the seller transfers or agrees to transfer the ownership of goods to the buyer for a price.
Essentials of Sale
- Two parties – seller & buyer
- Goods – movable property only
- Transfer of ownership
- Price consideration
Types of Goods
| Type | Example |
|---|
| Existing goods | Already in existence |
| Future goods | Yet to be manufactured |
| Contingent goods | Dependent on an event |
Conditions & Warranties
- Condition → Essential to contract
- Warranty → Secondary, not vital
Rights of Unpaid Seller
- Lien (retain goods)
- Stoppage in transit
- Resale
- Suit for price or damages
👥 5. Partnership Act, 1932
Definition
Partnership is a relation between persons who agree to share profits of a business carried on by all or any of them acting for all.
Essential Elements
- Agreement between partners
- Sharing of profits
- Mutual agency (acting for each other)
- Lawful business
Types of Partners
| Type | Description |
|---|
| Active Partner | Takes active part |
| Sleeping Partner | Invests but inactive |
| Nominal Partner | Lends his name only |
| Partner by Estoppel | Acts like a partner |
| Minor Partner | Admitted to benefits only |
Dissolution of Partnership
- By agreement
- By notice
- By death/insolvency
- By court order
🏢 6. Companies Act, 2013
Definition
A company is a legal entity formed by registration under the Companies Act.
Characteristics
- Separate legal entity
- Limited liability
- Perpetual succession
- Common seal
- Transferability of shares
Types of Companies
| Type | Example |
|---|
| Private Company | Small group (e.g., family) |
| Public Company | Shares traded publicly |
| One Person Company (OPC) | Single-member company |
| Government Company | ≥ 51% government ownership |
Documents Required
- Memorandum of Association (MOA) → Objectives
- Articles of Association (AOA) → Internal rules
- Prospectus → Invitation to public to buy shares
💳 7. Negotiable Instruments Act, 1881
Definition
A negotiable instrument is a written document guaranteeing payment of a certain amount of money.
Types
| Instrument | Example |
|---|
| Promissory Note | “I promise to pay…” |
| Bill of Exchange | Order to pay |
| Cheque | Bill of exchange drawn on a bank |
Features
- Freely transferable
- Written and signed
- Payable on demand or after a fixed time
Dishonour of Cheque
If a cheque is returned unpaid, the drawer may be liable under Section 138 (punishable by fine or imprisonment).
🛒 8. Consumer Protection Act, 2019
Objectives
- Protect consumers against unfair practices
- Ensure right to information, safety, and choice
- Provide grievance redressal mechanism
Consumer Rights
- Right to safety
- Right to information
- Right to choose
- Right to be heard
- Right to redress
- Right to education
Consumer Dispute Redressal Commissions
| Level | Jurisdiction |
|---|
| District Commission | Up to ₹1 crore |
| State Commission | ₹1–₹10 crore |
| National Commission (NCDRC) | Above ₹10 crore |
🧩 9. Competition Act, 2002
Objective
- Prevent monopoly and unfair trade practices
- Promote fair competition and consumer welfare
Prohibited Practices
- Anti-competitive agreements
- Abuse of dominant position
- Combination (mergers) that reduce competition
⚖️ 10. Difference Between Contract and Agreement
| Basis | Agreement | Contract |
|---|
| Definition | Promise between two or more persons | Agreement enforceable by law |
| Legal Obligation | May or may not create | Must create |
| Scope | Wider | Narrower |
🧠 11. Key Legal Terms
| Term | Meaning |
|---|
| Offer | Expression of willingness to contract |
| Acceptance | Consent to the offer |
| Consideration | Something of value exchanged |
| Consent | Free will agreement |
| Minor | Person below 18, cannot enter into valid contract |
| Breach | Failure to perform promise |
📋 12. Summary Chart
| Law | Key Focus |
|---|
| Indian Contract Act | Agreements & enforceability |
| Sale of Goods Act | Transfer of ownership of goods |
| Partnership Act | Business relations between partners |
| Companies Act | Formation & operation of companies |
| Negotiable Instruments Act | Cheques, bills, promissory notes |
| Consumer Protection Act | Consumer rights & redressal |
| Competition Act | Fair trade and anti-monopoly control |
