CONTENTS About the Author I-5 Preface to Sixth Edition I-7 Syllabus I-9 Chapter-heads I-13 List of Cases I-31 UNIT I INDIAN CONTRACT ACT, 1872 1 ICA, 1872 : NATURE, MEANING, ESSENTIALS AND KINDS OF CONTRACT 1.1 Introduction 3 1.2 Extent and commencement 3 1.3 Limitations or nature 4 1.4 Definition of contract 5 1.5 All contracts are agreements but all agreements are not contracts 6 1.6 Essentials of a Valid Contract 7 1.7 The law of contract is not the whole law of agreements nor is it the whole law of obligations 10 I-15
CONTENTS I-16 1.8 Kinds of contracts (Classification of Contracts) 12 1.9 Some distinctions 17 Test Questions 20 Practical Problems 20 True or False Statements 22 2 ICA, 1872 : OFFER AND ACCEPTANCE 2.1 Introduction 23 2.2 Definition of offer 23 2.3 What constitutes valid offer? 24 2.4 Distinction between offer and invitation to an offer 29 2.5 Kinds of offer 30 2.6 Special Terms and Conditions in a Contract 30 2.7 Agreement to agree in future enforceable or not 32 2.8 Acceptance 32 2.9 What constitutes valid acceptance? 32 2.10 When does an offer lapse? 37 2.11 Communication of offer and acceptance 39 2.12 Communication of Revocation (Sec. 4) 40 2.13 Revocation of offer and acceptance (Sec. 5) 40 2.14 Contracts through telephone, telex, fax or e-mail 41 2.15 Acceptance is to an offer what a lighted match stick is to a train of gun powder. It produces something which cannot be recalled or undone (Anson s Law of Contract) 41 Test Questions 42 Practical Problems 43 True or False Statements 44 3 ICA, 1872 : CONSIDERATION 3.1 Introduction 45
I-17 CONTENTS 3.2 Definition of consideration 45 3.3 Essentials of valid consideration 46 3.4 Rule of no consideration, no contract - Exceptions 51 3.5 Doctrine of privity of contract 56 Test Questions 58 Practical Problems 59 True or False Statements 61 4 ICA, 1872 : COMPETENCY OF THE PARTIES TO CONTRACT 4.1 Introduction 63 4.2 Who are competent to contract? 63 4.3 Who is a minor? 64 4.4 Nature of minor s agreements 65 4.5 Law relating to minor s agreements 65 4.6 Persons of sound and unsound mind 73 4.7 Disqualified persons 74 Test Questions 76 Practical Problems 77 True or False Statements 78 5 ICA, 1872 : FREE CONSENT 5.1 Introduction 80 5.2 Definition of consent (Sec. 13) 80 5.3 Definition of free consent (Sec. 14) 81 5.4 Factors affecting (vitiating) free consent 81 5.5 Coercion 82 5.6 Features of coercion 82 5.7 Effect of coercion (Secs. 19 and 19A) 85 5.8 Distinction between coercion and duress 86
CONTENTS I-18 5.9 Undue influence 86 5.10 Elements of undue influence 87 5.11 Presumption of undue influence 90 5.12 Effect of undue influence (Sec. 19A) 91 5.13 Distinction between coercion and undue influence 91 5.14 Fraud 93 5.15 Elements of fraud 95 5.16 Silence does not constitute fraud 96 5.17 Effect of fraud (Sec. 19) 98 5.18 Misrepresentation 99 5.19 Constituents of misrepresentation 99 5.20 Essential elements of misrepresentation 101 5.21 Effects of misrepresentation 102 5.22 Distinction between fraud and misrepresentation 103 5.23 Exceptions to the right of rescission of the contract 103 5.24 Mistake 105 5.25 Types and effect of mistake 105 Test Questions 112 Practical Problems 113 True or False Statements 115 6 ICA, 1872 : LEGALITY OF OBJECT AND CONSIDERATION 6.1 Introduction 116 6.2 What considerations and objects are unlawful? 116 6.3 Doctrine of public policy 121 6.4 Agreements opposed to public policy 121 6.5 Object or consideration unlawful in part 125 6.6 Effects of illegal agreements 126 Test Questions 127 Practical Problems 127 True or False Statements 128
I-19 CONTENTS 7 ICA, 1872 : VOID AGREEMENTS AND CONTINGENT CONTRACTS 7.1 Introduction 129 7.2 Expressly declared void agreements 129 7.3 Collateral transactions in case of expressly declared void agreements 144 7.4 Doctrine of restitution 144 7.5 Contingent contracts 145 7.6 Rules regarding Performance of Contingent Contracts 147 7.7 Distinction between Wagering Agreements and Contingent Contracts 149 Test Questions 150 Practical Problems 151 True or False Statements 152 8 ICA, 1872 : DISCHARGE OF CONTRACT 8.1 Introduction 153 8.2 Modes of discharge of contract 153 8.3 Discharge of contract by performance 154 8.4 Discharge of contract by agreement (Sec. 62) 154 8.5 Impossibility of performance 156 8.6 Discharge of contract by lapse of time 160 8.7 Discharge by breach of contract 161 8.8 Discharge of contract by operation of law 161 Test Questions 162 True or False Statements 163 9 ICA, 1872 : QUASI CONTRACTS 9.1 Introduction 165
CONTENTS I-20 9.2 Quasi contracts : Meaning 165 9.2A Quasi contract : Rationale 166 9.3 Kinds of quasi-contracts 167 Test Questions 171 Practical Problems 172 True or False Statements 173 10 ICA, 1872 : REMEDIES FOR BREACH OF CONTRACT 10.1 Introduction 175 10.2 Types of breach of contract 175 10.3 Remedies for breach of contract 178 10.4 Suit for damages 179 10.5 Suit for rescission 188 10.6 Suit upon quantum meruit 189 10.7 Suit for specific performance 191 10.8 Suit for injunction 192 Test Questions 193 Practical Problems 194 True or False Statements 195 11 ICA, 1872 : INDEMNITY AND GUARANTEE 11.1 Introduction 197 11.2 Contract of indemnity 197 11.3 Essentials of a contract of indemnity 199 11.4 Rights of indemnity-holder (Sec. 125) 199 11.5 When does the liability of indemnifier commence? 200 11.6 Contract of guarantee 201 11.7 Essentials of a contract of guarantee 201
I-21 CONTENTS 11.8 Distinction between contract of indemnity and guarantee 203 11.9 Kinds of guarantee 205 11.10 Revocation of continuing guarantee 206 11.11 Nature and extent of surety s liability 207 11.12 Rights of surety 209 11.13 Discharge of surety 212 Test Questions 217 Practical Problems 218 True or False Statements 219 12 ICA, 1872 : CONTRACT OF BAILMENT 12.1 Introduction 221 12.2 Bailment 221 12.3 Essentials of a valid contract of bailment 222 12.4 Kinds of bailment 224 12.5 Some distinctions 225 12.6 Duties of bailor 228 12.7 Duties of bailee 230 12.8 Rights of bailor 233 12.9 Rights of bailee 234 12.10 Right of lien and its types 235 12.11 Distinction between particular lien and general lien 238 12.12 Termination of bailment 238 Test Questions 239 Practical Problems 239 True or False Statements 241 13 ICA, 1872 : CONTRACT OF AGENCY 13.1 Introduction 243 13.2 Definition of agent and principal 243
CONTENTS I-22 13.3 Principles regarding the law of agency 244 13.4 Essential features of a contract of agency 244 13.5 Some distinctions 245 13.6 Creation of agency 248 13.7 Extent of authority of an agent 253 13.8 Delegation of authority 255 13.9 Distinction between Sub-Agent and Substituted Agent 257 13.10 Duties of agent 258 13.11 Rights of agent 261 13.12 Liability of the Principal for the Acts of the Agent 264 13.13 Personal liability of agent 268 13.14 Termination of agency 269 Test Questions 270 Practical Problems 271 True or False Statements 272 UNIT II SALE OF GOODS ACT, 1930 14 SALE OF GOODS ACT, 1930 : NATURE AND FORMATION OF CONTRACT OF SALE 14.1 Introduction 277 14.2 Provisions of the Indian Contract Act 277 14.3 Chapters and sections 278 14.4 Certain terms defined in the act 278 14.5 Definition of a contract of sale 280 14.6 Essentials of a valid contract of sale 281 14.7 Some distinctions 283 14.8 Subject-matter of the contract of sale 286 14.9 Classification of goods (Sec. 6) 288 14.10 Effect of perishing of specific goods 290
I-23 CONTENTS 14.11 Ascertainment of price 292 14.12 Stipulations as to time 293 Test Questions 293 Practical Problems 294 True or False Statements 295 15 SALE OF GOODS ACT, 1930 : CONDITIONS AND WARRANTIES 15.1 Introduction 297 15.2 Conditions and warranties 297 15.3 Distinction between condition and warranty 299 15.4 When breach of condition is to be treated as breach of warranty? 299 15.5 Express and implied conditions and warranties 300 15.6 Doctrine of caveat emptor 308 Test Questions 311 Practical Problems 311 True or False Statements 313 16 SALE OF GOODS ACT, 1930 : TRANSFER OF PROPERTY 16.1 Introduction 315 16.2 Rules regarding transfer of property (ownership) 316 16.3 Nemo dat quod non-habet (Sale by non-owners) 323 Test Questions 327 Practical Problems 328 True or False Statements 329
CONTENTS I-24 17 SALE OF GOODS ACT, 1930 : PERFORMANCE OF CONTRACT OF SALE 17.1 Introduction 330 17.2 Meaning and modes of delivery 330 17.3 Rules relating to delivery of goods 331 Test Questions 335 True or False Statements 336 18 SALE OF GOODS ACT, 1930 : UNPAID SELLER AND HIS RIGHTS 18.1 Who is an unpaid seller? 338 18.2 Features of an unpaid seller 338 18.3 Rights (remedies) of unpaid seller 339 18.4 Buyer s remedies against the seller 349 Test Questions 351 Practical Problems 352 True or False Statements 353 UNIT III LIMITED LIABILITY PARTNERSHIP ACT, 2008 19 INTRODUCTION TO LLP : NATURE AND SCOPE 19.1 Need for new corporate form (LLP) 357 19.2 Object of the LLP Act, 2008 357 19.3 Journey of the LLP Act, 2008 358 19.4 Global scenario of LLPs 358 19.5 Prospective users/beneficiaries of LLP 358 19.6 Legal framework 359
I-25 CONTENTS 19.7 Meaning and nature of LLP [Secs. 3 and 4] 359 19.8 Features of LLP 360 19.9 LLP vs. Other forms of business 363 Test Questions 367 True or False Statements 368 20 FORMATION AND INCORPORATION OF LLP 20.1 Introduction 369 20.2 Pre-requisites for incorporating a LLP 369 20.3 Incorporation of new LLP 370 20.4 Registered office of LLP and change therein (Sec. 13) 374 20.5 Effect of registration [Sec. 14] 375 20.6 Provisions relating to name of LLP and changes therein [Secs. 15-21] 375 Test Questions 378 True or False Statements 379 21 PARTNERS AND THEIR RELATIONS IN LLP 21.1 Introduction 380 21.2 Who is eligible to be a partner in a LLP (Sec. 22) 380 21.3 Definition of partner 381 21.4 Definition of body corporate 381 21.5 Disqualifications of becoming a partner (Sec. 5) 381 21.6 Designated partners 382 21.7 Partners and their relations 384 21.8 How can an existing partner cease to be a partner of a LLP? (Sec. 24) 386 21.9 Registration of changes in partners (Sec. 25) 387 21.10 Extent and limitation of liability of LLP and partners (Secs. 26 and 27) 387
CONTENTS I-26 21.11 Extent of liability of partner (Secs. 28-30) 388 21.12 Whistle blowing (Sec. 31) 389 21.13 Contribution (Secs. 32 and 33) 390 Test Questions 392 True or False Statements 392 22 FINANCIAL DISCLOSURES AND TAXATION OF LLP 22.1 Introduction 394 22.2 Financial disclosures 394 22.3 Maintenance of books of account [Sec. 34] 395 22.4 Statement of account and solvency (SAS) 395 22.5 Auditing of accounts of LLP [Sec. 34(4)] 396 22.6 Annual return [Sec. 35] 398 22.7 Other legal compliances relating to financial disclosures 399 22.8 Taxation of LLP 400 Test Questions 403A True or False Statements 403A 23 CONVERSION TO LLP 23.1 Introduction 404 23.2 Conversion from partnership firm into LLP [Sec. 55] 404 23.3 Effects of registration of conversion of partnership into LLP [Sec. 58] 407 23.4 Conversion from private company into LLP [Sec. 56] 407 23.5 Conversion from unlisted public company into LLP [Sec. 57] 410 Test Questions 413 True or False Statements 413
I-27 CONTENTS 24 WINDING UP AND DISSOLUTION OF LLP 24.1 Introduction 414 24.2 Rules for winding up and dissolution of LLP 414 24.3 Key definitions 415 24.4 Meaning of winding up 415 24.5 Winding up vs. Dissolution 415 24.6 Modes of winding up of LLP [Sec. 63] 416 24.7 Commencement of winding up 424A 24.8 Steps in the compulsory winding up 424B 24.9 Liquidator 424B Test Questions 424D True or False Statements 424E UNIT IV INFORMATION TECHNOLOGY ACT, 2000 25 INTRODUCTION TO IT ACT : SCOPE AND APPLICATION 25.1 Need for IT Legislation 427 25.2 Enactment of IT Act, 2000 427 25.3 Scheme of the Act 428 25.4 Scope of the Act 428 25.5 Exclusions from the Act 429 25.6 Essence of the Act 429 25.7 Objectives of the IT Act, 2000 429 25.8 Amendments to the IT Act, 2000 430 25.9 Key definitions (Sec. 2) 430 Test Questions 434 True or False Statements 434
CONTENTS I-28 26 DIGITAL SIGNATURE 26.1 Introduction 435 26.2 Definition and uses of digital signature 435 26.3 Authentication of electronic record 436 26.4 Private key vs. Public key 438 26.5 Electronic signature [Inserted vide ITAA, 2008 (Sec. 3A)] 438 26.6 Digital signature vs. Electronic signature 439 Test Questions 439 True or False Statements 440 27 ELECTRONIC GOVERNANCE 27.1 Introduction 441 27.2 Provisions which facilitate or strengthen electronic governance (Secs. 4-10) 441 27.3 E-Governance initiatives in India 444 Test Questions 444C True or False Statements 444C 28 ATTRIBUTION, ACKNOWLEDGEMENT AND DESPATCH OF ELECTRONIC RECORDS 28.1 Introduction 445 28.2 Validity of contracts formed through electronic means [Inserted vide ITAA, 2008 (Sec. 10A)] 445 28.3 Attribution of electronic records (Sec. 11) 446 28.4 Acknowledgement of receipt of electronic record (Sec. 12) 446 28.5 Time and place of despatch and receipt of electronic record (Sec. 13) 447 28.6 Secure electronic records and secure electronic signatures 448 Test Questions 448A True or False Statements 448A
I-29 CONTENTS 29 REGULATION OF CERTIFYING AUTHORITIES 29.1 Introduction 449 29.2 Appointment of Controller and other Officers 449 29.3 Functions of CCA (Secs. 18-25) 450 29.4 Rules regarding issue of licence 451 29.5 Powers of CCA 452 29.6 Definition and role of certifying authority 454 29.7 Duties of certifying authority (Secs. 30-34) 454 29.8 Electronic signature certificates (ESC) 455 29.9 Purpose of digital signature certificate 455 29.10 Contents of digital signature certificate (Rule 7) 456 29.11 Procedures relating to electronic signature certificate (Secs. 35-39) 456 29.12 Duties of subscribers 458 Test Questions 460 True or False Statements 460 30 CYBER CONTRAVENTIONS, ADJUDICATION, APPELLATE TRIBUNAL AND OFFENCES 30.1 Introduction 461 30.2 Penalties and compensation 461 30.3 Justice dispensation system for cyber crimes under IT Act 464 30.4 The Appellate Tribunal (AT) 467 30.5 Distinction between cyber contraventions and cyber offences 472 30.6 Compounding of contraventions 473 30.7 Offences 473 30.8 Compounding of offences (Sec. 77A) 477 Test Questions 480 True or False Statements 481
CONTENTS I-30 QUESTION PAPERS B. COM. (HONS.) SEM I, 2011 482 B. COM. (HONS.) PART I/SEM I, 2012 486 B. COM. (HONS.) PART I/SEM I, 2013 489 B. COM. (HONS.) PART I/SEM I, 2014 492 B. COM. (HONS.) PART I/SEM I, 2015 495 B. COM. (HONS.) CBCS SEM I DEC. 2016 498 B. COM. (HONS.) CBCS SEM I DEC. 2017 502