Assignment for Business Law

7/30/2019 Assignment for Business Law

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WORLD UNIVERSITY O F B A N G L A D E S H


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1 | B u s i n e s s & I n d u s t r i a l L a w

SERIAL SUBJECTS PAGE

01 What is contract? 02

02 Essential Elements of a Contract 02

03 Offer 05

04 Promise and Acceptance 05

05 Rules regarding offer 05

06 REVOCATION 07

07 CONSIDERATION 09

08 Rules (or the Essential Factors) of Consideration

09

09 "NO CONSIDERATION NO CONTRACT" 12

10 EXCEPTIONS TO THE RULE 15

11 THE ESSENTIAL ELEMENTS OF A PARTNERSHIP16

12 Partnership and co-ownership 17

13 Rights of partners 17

14Duties of partners

18

15 The grounds of dissolution 18

17 What is Company? 20

18 Essential features of Company 20

19 DIFFERENT BETWEEN PRIVATE & PUBLICCOMPANY

22


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According to Salmond a contract is

An agreement creating and defining obligations between the parties

According to Sir William Anson ,

A contract is-an agreement enforceable at law made between two or more persons, bywhich rights are acquired by one or more to acts or forbearances on the part of the other orothers.

An agreement becomes enforceable by law when it fulfills certain conditions. Theseconditions, which may be called the Essential Elements of a Contract, are explained below.

1. Offer and Acceptance:

There must be a lawful offer by one party and a lawful acceptance of the offer by the otherparty or parties. The adjective lawful implies that the offer and acceptance must conformto the rules laid down in the Indian Contract Act regarding offer and acceptance.

2. Intention to create Legal Relationship:

There must be an intention (among the parties) that the agreement `shall result in or createlegal relations. An agreement to dine at a friend house is not an agreement intended tocreate legal relations and is not a contract.


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But an agreement to buy and sell goods or an agreement to marry, are agreementsintended to create some legal relationship and are therefore contracts, provided the otheressential elements are present.

3. Lawful Consideration:Subject to certain exceptions, an agreement is legally enforceable only when each of theparties to it gives something and gets something.

An agreement to do something for nothing is usually not enforceable by law. The somethinggiven or obtained is called consideration. The consideration may be; in act (doingsomething) or forbearance (not doing something) or a promise to do or not to dosomething. Consideration may be past (something already done or not done).It may also bepresent or future: But only those considerations are valid which are lawful.

4. Capacity of Parties:

The parties to an agreement must be legally capable of entering into an agreementotherwise it cannot be enforced by a court of law.

Want of capacity arises from minority, lunacy, idiocy, drunkenness, and similar otherfactors. If any of the parties to the agreement suffers from any such disability, theagreement is not enforceable by law, except in some special cases.

5. Free Consent:

In order to be enforceable, an agreement must be based on the free consent of all theparties. There is absence of genuine consent if the agreement is induced by coercion, undueinfluence, mistake, misrepresentation, and fraud.

A person guilty of coercion, undue influence etc. cannot enforce the agreement. The otherparty (the aggrieved party) can enforce it, subject to rules laid down in the Act.

6. Legality of the Object:

The object for which the agreement has been-entered into must not be illegal, or immoralor opposed to public policy.

7. Certainty:

The agreement must not be vague. It must be possible to ascertain the meaning of theagreement, for otherwise it cannot be enforced.

8. Possibility of Performance:


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The agreement must be capable of being performed. A promise to do an impossible thingcannot be enforced.

9. Void Agreements:

An agreement so made must not have been expressly declared to be void. Under IndianContract Act there are five categories of agreements which are expressly declared to bevoid. They are:

1. Agreement in restraint, to marriage. (Sec. 26)2. Agreement in restraint of trade. (Sec. 27)3. Agreement in restraint of proceedings.

4.

Agreements having uncertain meaning... (Sec. 29}5. Wagering agreement. (Sec. 30)

10. Writing, Registration and Legal Formalities:

An oral, contract is a perfectly good contract, except in those cases where writing and/orregistration is required by some statute. In India writing is required in cases of lease, gift,sale and mortgage of immovable property: negotiable instruments; memorandum andarticles of association of a company etc. Registration is compulsory in cases of documentscoming. Within the purview of Section 17 of the registration Act, e.g., mortgage, deedscovering immovable property. The terms of an oral contract are sometimes difficult toprove.

Therefore important agreements are usually entered into in writing even in cases wherewriting is not compulsory.

Conclusion

.

The elements mentioned above must all be present. If any one of them is absent, theagreement does not become a contract. An agreement which fulfills a11 the essentialelements is enforceable by law and is called a contract. From this it follows that, everycontract is an agreement but all agreements are not contracts.

Every contract gives rise to certain legal obligations or duties on the part of the contractingparties. The legal obligations are enforced by the courts. The Indian Contract Act containsrules regarding each of the elements mentioned above. These rules are discussed in thesubsequent chapters. .


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A proposal is also called an offer. The promisor or the person making the offer iscalled the offeror. The person to whom the offer is made is called the offeree.

When, the person to whom the proposal is made signifies his assent thereto, theproposal is said to be accepted. A proposal when accepted becomes a promise.-Sec, 2(b),

The person making the proposal is called the `promisor and the person accepting theproposal is called the `promisee. -Sec. 2(c).

The Contract Act contains various rules regarding offer or proposal. They can be summed upas follows:

1. An offer may be express or may be implied from the circumstances:

An offer may be made in two ways:

I. by words, spoken or written and

II. by conduct.

When an-offer is made by stating so in words or in writing, it is called an Express offer.When an offer is implied from the conduct of a person, it is. Called an Implied offer.Examples (i) and (it) in the last page, are cases of express offer. Example - (ii) is a case of animplied offer.

In so far .as the proposal or acceptance of any promise is. Made in words, the promise issaid to be express. In so far as such proposal or acceptance is made otherwise than inwords, the promise is said to be implied-Sec. 9.

2. An offer may be made to a definite person;


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To some definite class of persons; or to the world at large an offer made to a definite personor a definite class of person is called a Specific offer. An offer sent to all persons (or theworld at large) is called a General offer.)Example (i) is an offer to a definite person; example(ii) is an offer to a definite class of persons; and example (iii) is an offer to the world at

large. (See pp. 17-18)

3. Legal relationship is required:

The offer must be one which -is capable of creating a legal relationship. A social party or aninvitation to play cards is not a legal relationship. Therefore, an offer to such an affair doesnot lead to a binding contract. (See chapter 3, Part I, p. 33)

The terms of the offer must be certain, definite, unambiguous and not vague: X says to Y, Iwill give some money if you marry Z . This is not an offer which can be accepted because

the amount of money to be paid is not certain.

1. A mere statement of intention is not an offer :2. A distinction is usually made, between an offer and a statement of intention.3. Price-lists and catalogues, and enquiries for customers are merely statements of

intention.4. They are not regarded as offers but as invitation to others to made offers.

An advertisement in a newspaper or elsewhere may be so worded that it amounts to anoffer. But ordinarily and advertisement is considered to be an invitation to make offers.

Similarly, in an auction sale, articles are displayed with an intention that the bidders presentmay bid for them i.e. may make an offer. Thus in an auction sale a bid is an otter while thefall of the hammer signifies the acceptance of the auctioneer. (Payre v. Cave)

Examples:

A label on an article in a shopkeepers showcase stating `price Rs. S is considered to be theexpression of an intention to sell the article at Rs.5. If is not an offer to the .world at largewhich can be accepted by anybody. The intending purchaser who wishes to buy the article isthe proposer. The shopkeeper may or may not accept the proposal. The same rule applies topricelist and catalogues. Fisher v. Bell.

6. Offer must be communicated to the offered:

A person cannot accept an offer unless he knows of the existence of the offer.

P offers a reward to anyone who returns his lost dog. Q finding the dog brings it to P withouthaving heard of the offer. Held, he was not entitled to the reward. Fitch v. Snedaker In this

case it was argued that a man cannot accept an offer without intending to do so, and hecannot intend to accept an offer of which he was ignorant.


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In Lalman v. Gauri Dutt. G sent his servant in search of his missing nephew. Subsequently Gannounced a reward for information concerning the boy. L brought back the missing boy,without having known of the reward. Held, there was so contract between L and G and thereward cannot be claimed.

7. An offer may be conditional:

An offer may be made subject to conditions. In such cases, the conditions must be clearlycommunicated to the offeree.

If a person accepts an offer without knowledge of the conditions, the offeror cannot claimfulfillment of the conditions. But if the conditions are clearly written or expressed andshould have been known to the offeree, he cannot plead ignorance of the conditions.

Example:

T, who could not read, took an excursion ticket on the railway. On the front of the ticket wasprinted for conditions see back. One of the conditions was that the railway companywould not be liable for personal injuries to passengers. T was injured by a railway accident.Held, T was bound by the conditions and could not recover any damages. Thomson v. L. M.& S Rly

Revocation of an Offer. When does an Offer Lapse?

An offer comes to an end, and is no longer open to acceptance under the following

circumstances.-Sec 6.

1. By notice

If the offeror gives notice of revocation to the other party, i.e., expressly withdraws theoffer, and the offer comes to an end. An offer may be revoked any time before acceptance.But not afterwards. Once an offer is accepted there is a binding contract. The acceptance of an offer becomes binding on the offeror as soon as the acceptance is, put in course of communication to the offeror so as to be out of the power of the acceptor. But any timebefore this happens the offer may be revoked.


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A proposal is sent by X to Y and is accepted by Y by letter. The proposal might have beenrevoked any time before the letter of acceptance was posted but it cannot be revoked afterthe letter is posted. The notice of revocation does not take effect until it comes within theknowledge of the offeree.

2. By lapse of time

When the proposer prescribes a time within which the proposal must be accepted, theproposal lapses as soon as the time expires.

3. After expiry of reasonable time

If no time has been prescribed, the proposal lapses after the expiry of a reasonable time.What is reasonable time will depend on the circumstances of the case.

Example:

On 8th June, M offered to take shares in R Company. He received a letter of allotment on23rd November. M refused to take the shares. Held, M was entitled to refuse as the offerhad lapsed by the delay in acceptance. Rams gate Victoria Hotel Co. v. Montefiore.

4. By failure of a condition precedent

An offer lapses by the failure of the acceptor to fulfill a condition precedent to acceptance,where such a condition has been prescribed

Example:

P says to Q. I will sell my house at Delhi to you for Rs. 50,000 if you are married. The offercannot be accepted until and unless Q is married.

5. By death or insanity

An offer lapses by the death or insanity of the proposer, if the fact of his death or insanitycomes to the knowledge of the acceptor before acceptance.

6. Counter Offer

When a counter offer is given, the original offer lapse. See the Case of Hyde v. Wrench

7. By refusal

A proposal once refused is dead and cannot be revived by its subsequent acceptance.

Example:


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An offer to sell his farm to B for Rs. 1,000. B replies offering to pay Rs. 950. A refuses.Subsequently B writes accepting the original offer. There is no contract because the originaloffer has lapsed.

Definition of Consideration

Consideration is an essential element in a contract. Subject to certain exceptions, anagreement is not enforceable unless each party to the agreement gets something: Thissomething is called consideration: It is used in the sense of quid -pro quo i.e. something inreturn.

In the English case, Currie v. Misa, consideration was defined as, some right, interest profitor benefit accruing to one party, or some -forbearance, detriment, loss or responsibilitygiven; suffered or undertaken by the other.

Section 2(d) of the Contract Act defines consideration as follows: When, at the desire of

the promisor, the promisee or any other person has done or abstained, from- doing, or.Does or abstains from doing, or promises to do or to abstain from, doing, something, suchact or abstinence or promise is called a consideration for the promise.

Examples

(i) P agrees to sell a house to Q for Rs. 80,000. For P s promise, the V consideration is Rs: 80;000. For Qs promise, the consideration is the house:


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The following rules may be laid down regarding consideration

1. Desire (or request) of the promisor is essential:

The act done or lass suffered by the promisee must have been done or suffered at thedesire of the promisor. An act done without any request is a voluntary act and does notcome within the definition of consideration.

Examples

X promised to pay. Y some money by a letter. Y showed the, letter to Z who thereuponconsented to the marriage of her daughter with Y. Z cannot force X to pay the money to Ybecause them is no connection between the marriage and the promise to pay. Dashwoodv.Jermyn

.

2. The -consideration must be real:

The consideration must have some value in the eye of taw.

It must not be sham or illusory.

The impossible acts and illusory or non-existing goods cannot support a contract.Therefore, real consideration comes from good consideration. (See p. 39)

A contribution to charity is without consideration. Therefore, it is not real consideration.

Examples:

No consideration : V owed 1208 to E who told V that if the money was not paid by 7th Julyhe would file a bankruptcy petition against V Thereupon V promised to pay the moneybefore 12 oclock on 8th July and E agreed not to file the petition before that time. Held,there was no consideration for Es promise. Vanburgen v. St. Edmunds Properties Ltd

3. Public duty:Where the promise is already under an existing public duty, an express promise to perform,or performance of, that duty will not amount to consideration.

There will be no detriment to the promisee or benefit to the promisor over and above theirexisting rights and liabilities

Example: A contract to pay money to a witness who has received a subpoena to appear at atrial. Collins v. Godefroy

4. Promise to a stranger:


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But a promise made to a stranger to perform an existing contract, is enforceable becausethe promisor undertakes a new obligation upon himself -which can be enforced by thestranger.

X wrote to his nephew B, promising to pay him an annuity of 150 in consideration of hismarrying C B was already engaged to marry C Held, the fulfillment of Bs contract with C wasconsideration to support Xs promise to pay the annuity. Shadwell v. Shadwell;

5. Consideration need not be adequate:

Section 25 (explanation 2) provides that, An agreement to which the consent of the party isfreely given is not void merely because the consideration is inadequate; but the inadequacyof the consideration may be taken into account by the court in determining the questionwhether the consent of the promisor was freely given.

Consideration means a reasonable equivalent or other valuable benefit passed on by thepromisor to the promisee or by the transferor `to the transferee. Similarly, when the word`Consideration is qualified by the word `adequate, it makes consideration stronger so as tomake it sufficient and valuable having regard to the facts, circumstances and necessities of the case. Sonia Bhatia v. State of U. P. and others.

Examples:

S files a suit against B for Rs. 5,000. Subsequently he agrees to withdraw the suit on

payment of Rs. 3,000. The agreement is a contract. The withdrawal of a suit is valuableconsideration so as to support the promise to pay money.

6. The consideration must not be illegal, immoral, or opposed to publicpolicy:

If either the consideration of the object of the agreement is illegal, the agreement cannot beenforced.

The same principle applies if the consideration is immoral or opposed to public policy. [See,Section 23 and Ch. S for examples of such agreements.

7. The consideration may be present, past, or future:

This follows from the definition of consideration given in the Act.

8. Consideration may move from the promise or from any other person:

A person granted some properties to his wife C directing her at the same time to pay anannual allowance to his brother R C also entered into an agreement with R promising to paythe allowance to R.


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This agreement can, be enforced by R even though no part of the consideration received byC moved from R Chinnaya v. Ramaya.

A stranger to the consideration can sue to enforce the contract, though a stranger to thecontract cannot. In England, a stranger to the consideration .cannot sues on the contract.

9. What is good consideration? :

The rules or the necessary factors for consideration can be summed up as follows:

(1) There must be desire of the promisor;

(2) It must be real;

(3) Reasonable;

(4) Not illegal, immoral or opposed to public policy;

(5) Present, past or future; and

(6) From the promisee or any person.

Subject to the above essential factors, a good consideration can be any of the following:

(1) Physical goods;

(2) Services;

(3) Forbearance (for example not to sue);

(4) Arbitration or the compromise of disputed claims, and

(5) Settlement or composition with creditors.


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Explanation

Consideration is essential for the validity of a contract. "A promise without consideration- isa gift; one made for a consideration is a bargain".-Salmond and Windfield, Law of Contracts.

A promise without consideration is a gratuitous undertaking and cannot create a legalobligation. Under Roman law an agreement without consideration was called a nudumpactum and was unenforceable. Under English law simple contracts must be supported byconsideration but especially contracts require no consideration. Under Indian law thepresence of consideration is, as a rule, essential to the validity of contracts.

Exceptions

There are exceptional cases where a contract is enforceable even though there is noconsideration. They are as follows:

I. Natural love and affection : An agreement made without consideration is valid if,`it is expressed in writing and registered under the law for the time being in force for the

registration of documents, and is made on account of natural love and affection betweenparties standing in a near relation to each other.''-Sec 25(1).

An agreement without consideration is valid under Section 25(l) only if the followingrequirements are complied with :

(i) The agreement is made by a written document.

(ii) The document is registered according to the law relating to registration inforce at the time.

(iii) The agreement is made on account of natural lave and affection.

(iv)The parties- to the agreement stand in a near relation to each other.

Examples

A for natural love and affection, promises to give his son B, Rs. 1,000. A puts his promise toB in writing and registers it. This is a contract. [Illustration (b) to Section 25]


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2. Voluntary Compensation:

A promise made without any consideration is valid if, it is a promise to compensate whollyor in part, a person who has already voluntarily done something for the promisor, or

something which the promisor was legally compellable to do.-Sec. 25(2).

Section 25(2) applies when there is a -voluntary act by one party and there is a subsequentpromise (by the party benefited) to pay compensation to the former. The term `voluntarilysignifies that the act was done, ` otherwise than at the desire of the promisor.

Examples

(i) D finds Bs purse and gives it to him. B promises to give D Rs. 50. This is a contract.

(ii) D supports Bs infant son. B promises to pay Ds expenses in so doing. This is a contract.

3. time-barred debt:

A promise to pay, wholly or in part, a debt which is barred by the law of limitation can beenforced if the promise is in writing and is signed by the debtor or his authorized agent.-Sec.25(3).

A debt barred by limitation cannot be recovered. Therefore a promise to repay such a debtis, strictly speaking, without any consideration. But nevertheless such a promise can beenforced if the debtor or his authorized agent makes written and signed promise to repaytithe debt must be a liquidated or ascertained sum of money and there must be a definitepromise to pay. A mere acknowledgement of the debt is not enough.

Example

D woes B Rs. 1000 but the debt is barred by the Limitation Act. D signs a written promise topay B Rs. 500 on account of the debt. This is a contract.

4. Agency:

No consideration is required to create an agency.-Sec. 185.

5. Completed gift:

The rule no consideration; no contract does not apply to completed gifts. Explanation l, toSection 25 states that, Nothing in this section shall affect the validity as between the donorand the donee, of any gift actually made.

Thus, if a person gives certain properties to another according to the provisions of theTransfer of Property Act (i.e., by a written and registered document) he cannotsubsequently demand the property back on the ground that there was no consideration.


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Definition and characteristics:

Partnership is the relation between persons who have agreed to share the profitsof a business carried on by all or any of them acting for all. A partnership asdefined in the act, must have three essential elements:

a) There must be an agreement entered into by two or more persons.b) The agreement must be to share the profits of a business.c) The business must be carried on by all or any of them acting for all.

I. Voluntary agreement: the first elements shows the voluntary contractualnature of partnership. A partnership can only arise as a result of anagreement, express or implied, between two or more person. Where thereis no agreement there is no partnership. But a partnership cannot beformed with more than ten person in banking and twenty person in othertypes of business. A partnership with persons exceeding the above limitsmust be registered under a companies act.

II. Sharing of profits of a business: The second elements state the motiveunderlying the information of a partnership. It also lays down that theexistence of a business is essential to a partnership business include anytrade, occupation or profession if two or more person join together to forma music club it is not a partnership because there is no business in this case.But if two or more persons join together to give musical performance tothe public with a view to earning profit, there is a business and apartnership is formed.

III. Mutual agency: The third element is the most important feature of partnership. It states that person carrying on business in partnership isagents as well as principles. The business of a firm is carried on by all or byany one or more of them on behalf of all. Every partner has the authority toact on behalf of all and can, by his actions, bind all the partners of the firm,each partner is the agent of the others in all matters connected with the


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business of the partnership. The law of partnership has therefore beencalled a branch of the law agency.

IV. The test of a true partnership: in a true partnership, all the essentialelements mentioned above must be present. If all the relevant facts takentogether show that all the three essential elements are present, the groupof persons doing business together will be called a partnership.

Co-ownership means joint ownership. A and B jointly purchase a horse. They are

co-owners but not necessarily partners. The distinction between co ownership andpartnership can be described as follows:

I. In a partnership each partner is the agent of the others but a co-owner isnot the agent of the other owners. The rights of a co-owner cannot beaffected by any act done by the other owners.

II. Partnership always arises out of agreement. Co ownership may arise byagreement or by operation of law. A and B inherit a house from theirfather. They become co owners by operation of the law of inheritance.

III. A co-owner can transfer his interest to a third party without the consent of the other co-owners. A partner can transfer his interest, under certaincircumstances, but the transferee can never become a partner of thebusiness without the consent of the other partners.

IV. A partnership always implies a business. Co ownership may exist withoutany business, e.g. joint ownership of a residential house.

V. Since co ownership may exist without a business. The question of sharingprofits or losses on immaterial in a co ownership. In a partnership theremust be sharing of profits.

VI. A partner has a lien on the partnership assets for moneys spent by him forthe partnership. A co-owner has no lien under similar circumstances.


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The rights of partners, and the relations of partners to one another, aredetermined by the agreement of the partners. The important rights of partners

are summarized below:

1. Conduct of business: Every partner has a right to take part in the conduct of the business.

2. Can express opinion: every partner shall have the right to express hisopinion.

3. Access, inspection, copy: Every partner has a right to have access to and toinspect and copy any of the books of the firm.

4. Equity of profits: The partners are entitled to share equally in the profitsearned.

5. Interest on capital: A partner is entitled to get interest on the capital out of profits only.

6. Interest on advance: A partner. Paid or advanced to the firm beyond theamount of capital, is entitled to interest thereon at the rate of six per centper annum.

7. To get indemnity: The firm shall indemnify a partner in respect of payments made and liabilities incurred by him, in the ordinary and properconduct of the business and in doing such act, in any emergency.

8. Application of property of firm: The property of the firm shall be held andused by the partners exclusively for the purposes of the business.

9. Partners authority: Every partner has right to act on behalf of the firm. Hehas express and implied authority.

10. Power in an emergency: he has certain powers in an emergency.11. Reconstitution: The constitution of a firm may be changed by the

introduction of a new partner, death, retirement, insolvency, expulsion or

by the transfer of a partners share to an outside.12. Dissolution: A partner has the right to get the firm dissolved under

appropriate circumstances. Upon dissolution, the partners have the right toget accounts of the firm and surplus assets according to their shares.

13. Right to carrying on a competing business: By a special agreement, anoutgoing partner can be prevented from carrying on a similar businesswithin a specified period or local limits,

14. Right to share profits after retirement: if after retirement and the

continuing partner carry on the business of the firm with the property of


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the firm the outgoing partner is entitled to get share of profits or 6% perannum of his share of the property of the firm at their option.

The important duties of partners are summarized below:

1. Justice, faithfulness, true accounts, full information: partner are bound tocarry on the business of the firm to the greatest common advantages, to be just and faithful to each other, and to render true accounts and full thingsaffecting the firm to any partner or his legal representative.

2. To pay indemnity: every partner shall indemnify the firm for any losscaused to it by his fraud in the conduct of the business of the firm.

3. To attend diligently: Every partner is abound to attend diligently to hisduties.

4. No remuneration: Subject to any contract to the contrary, a partner is notentitled to receive remuneration for taking part in the concert of thebusiness.

5. Equality of losses: Subject to any contract to the country, partners arebound to pay the losses of the firm equally.

6. To pay indemnity for willful neglect: A partner shall indemnity the firm forany loss caused to it by his willful neglect in the conduct of the business of the firm.

7. No private benefits: A partner cannot use the partnership properties,directly or indirectly, for his own benefits.

8. To account for secret profit: If a partner derives any profits for himself fromany transaction of the firm, or from the use of the property or businessconnection of the firm or the firm name, he shall account for that profit andpay it to the firm.

9. No secret profit: If a partner derives any competing business of the firm, heshall account for and pay to the firm all profits made by him in thatbusiness.

10. Unlimited liability: Every partner is liable for the acts of the firm done whilehe is a partner. The liability is joint and several.


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A firm may be dissolved on any of the following grounds:

1. By agreement (sec.40): A firm may be dissolved any time with the consent of all the partners of the firm. Partnership is created by contract, it can also be

terminated by contract. 2. Compulsory dissolution(sec.41): A firm is dissolved____

(a) By the adjudication of all the partners or of all the partners but one asinsolvent, or

(b) By the happening of any event which makes the business of the firmunlawful.But if a firm has more than one undertaking, some of which becomeunlawful and some remain lawful, the firm may continue to carry on the

lawful undertakings.3. On the happening of certain contingencies(sec.42): Subject to contractbetween the partners, a firm is dissolved----- (a) If constituted for a fixed term, by the expiry of that term;(b) If constituted to carry out one or more adventures or undertaking, by

the completion thereof.(c) By the death of a partner ; and(d) By the adjudication of a partner as an insolvent.

The partnership agreement may provide that the firm will not be dissolved in anyof the aforementioned cases. Such a provision is valid.

4. By notice(sec.43): where the partnership is at will, the firm may be dissolvedby any partner giving notice in writing to all other partners of his intention todissolve the firm. The firm is dissolved as from the data mentioned in thenotice as the data of dissolution, or, if no data is mentioned, as from the dataof communication of the notice.

5. Dissolution by the court(sec.44): At the suit of a partner, the court maydissolved a firm on any one of the following grounds: (a) Insanity: if a partner has become of unsound mind. The suit for

dissolution in his case can be filed by the next friend of the insanepartner or by any other partner.

(b) Permanent incapacity: if a partner becomes permanently incapable of performing his duties as a partner. Permanent incapacity may arise froman incurable illness.


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(c) Guilty conduct: if a partner is guilty of conduct which is likely to affectprejudicially the carrying on of the business, regard being had to thenature of the business. To justify

(d) Persisten breach agreement: If a partner wilfully and persistentlycommits breach of the partnership agreement regarding managementor otherwise conducts himself.

(e) Transfer of whole interest: If a partner has transferred the whole of thisinterest in the firm to an outside or has allowed his interest to be sold inexecution of a decree.

(f) Loos: If the business of the firm cannot be carried on except at a loss.The courts have been given discretion to dissolve a firm in cases whereit is impossible to make profits.

(g) Just and equitable clauses: If the court considers it just equitable todissolve the firm. This clause give a discretion power to the court todissolve a firm.

Company:

The term company is used to describe an association of a number of persons, formed forsome common purpose and registered according to the law relating to companies. Section3(1) (i) of the Companies Act, 1994 states that a company means, a company formed andregistered under this Act or an existing company.

Essential features of a company

1. Registration -


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A Company comes into existence only after registration under the Companies Act.But a Statutory Corporation is formed and commence business as notified or statedin the Act and as passed in the Legislature.

2. Voluntary Association-

A Company is an association of many people on a voluntary basis. Therefore acompany is formed by the choice and consent of the members.

3. Capital-

A Company must have a capital, otherwise it cannot work.

4. Permanent Existence-

The Company has Perpetual Succession. The death or insolvency of a shareholderdoes not affect its existence. A company comes into end only when it is liquidatedaccording to provision of the Company Act.

5. Legal Personality-

A Company is regarded by law as a single person. It has a legal personality. This ruleapplies even in the case of One-man Company.

6. Limited Liability-

The liabilities of shareholders of a company are usually limited. The creditors of acompany are not creditors of individual shareholders and a decree obtained against

a company cannot be executed against any shareholders. It can only be executedagainst the assets of the company. According to the Company Act 1994 of Bangladesh, the liability of shareholder may be limited by share under section 6(a)(4) or limited by the guarantee under section 7(a)(4).

7. Transferability-

The shareholder of a company can transfer its share and ordinarily the transfereebecomes a member of the company.


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8. Statutory Obligation-

A Company is required to comply with various statutory obligations regardingmanagement, e.g., filling balance sheets, maintaining proper account books andregisters etc.

9. Common Seal-

Company cannot sign on any contract because it is artificial person and it works withcommon seal.

10. Right To Sue-

Company can sue on other parties like natural person for protecting its assets andproperties. Other persons can also change on the company.

11. Financial Power-

A Company is given exclusive power and the only medium of organizing businesswhich is given the privilege of raising capital by public subscription either by way of shares or debentures.

PRIVATE LIMITED COMPANY PUBLIC SECTOR

1. PRIVATE LIMITED COMPANY IS OWNED BYPRIVATE INDIVIDUALS.

1. PUBLIC SECTOR INCLUDES ALL BUSINESS OWNBY STATE AND LOCAL GOVERNMENT.

2. PRODUCTS ARE COSTLY THAN PUBLICCOMPANIES.

2. LOW PRICE, SO THAT EVERYBODY CAN AFFORDTHE SERVICE.

3. SOME COMPANY DOESNT PROVIDE SERVICE INLOCAL ISOLATED AREAS.

3. OFFER A SERVICE TO THE PUBLIC IN ALL AREASOF THE COUNTRY.


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4. WORKS FOR LIMITED NUMBER OF PEOPLE 4. WORKS FOR EVERYBODY

5. MOST OF THE PRIVATE COMPANIES WORK FORPROFIT.

5. WORKS FOR PEOPLE WITH LOW PROFITMOTIVE

6. ITS MINIMUM NUMBER OF PERSONS IS TWOAND THE MAXIMUM IS50.

6. ITS MINIMUM NUMBER OF PERSONS IS SEVENAND THE MAXIMUM IS UNLIMITED.

7. IT MAKES THE USE OF PRIVATE LIMITED AFTERITS NAME.

7. IT MAKES THE USE OF THE WORD LIMITEDAFTER THE NAME.

8. IT CAN COMMENCE ITS BUSINESS OPERATIONAFTER GETTING CERTIFICATE OF

INCORPORATION.

8. IT REQUIRES BOTH THE CERTIFICATE OFINCORPORATION AND THE CERTIFICATE OF

COMMENCEMENT FOR ITS COMMENCEMENT.

9. THE MEMORANDUM OF ASSOCIATION AND THE

ARTICLES OF ASSOCIATION IS SIGNED BY ATLEAST TWO PERSONS.

9. ITSMEMORANDUM AND ARTICLES OF

ASSOCIATION IS SIGNED BY AT LEAST SEVENPERSONS.

10. THE FILLING OF BOTH MEMORANDUM ANDARTICLE OF ASSOCIATION IS OBLIGATORY.

11. IT DOES NOT REQUIRE THE FILLING OF THEPROSPECTUS OR STATEMENT-IN-LIEU OFPROSPECTUS.

10. IT MAY NOT HAVE ITS OWN ARTICLES OFASSOCIATION BECAUSE IT MAY ADOPT TABLE

'A'.11. IT MUST FILE PROSPECTUS OR STATEMENT IN

LIEU OF PROSPECTUS BEFORE ALLOTMENT OF

SHARES.

12. IT CANNOT SELL SHARES TO THE GENERALPUBLIC IN THE OPEN MARKET.

12. IT SELLS SHARES TO THE GENERAL PUBLIC INTHE OPEN MARKET.

13. TRANSFER OF SHARE IS RESTRICTED IN THEARTICLES OF ASSOCIATION.

13. TRANSFER OF SHARES IS NOT RESTRICTED ANDAS SUCH SHARES ARE FREELY TRANSFERABLE

AND ARE QUOTED IN THE STOCK EXCHANGE.

14. THERE ARE OF LEAST TWO DIRECTORS AND THEYNEED NOT RETIRE BY ROTATION.

14. IT HAS AT LEAST3 DIRECTORS AND THEY ARESUBJECT TO RETIRE BY ROTATION.

15. THERE IS NO LEGAL RESTRICTION ONDIRECTOR'S REMUNERATION.

15. THE DIRECTORS CANNOT DRAWREMUNERATION MORE THAN11 PERCENT OFTHE NET PROFIT OF THE COMPANY.

Documents

Assignment for Business Law