A PRESENTATION ON BUSINESS

LEGISLATION

Topic: THE INDIAN CONTRACT ACT 1872

&

AGMARK ACT 1937Presented by

SATHYENDRA KUMAR A.D,

M.B.A.(Agri-business),

Presented to

Dr. S. MOKSHAPATHY,

Assistant Professor

M.B.A.(Agri-business),

Institute of Development Studies,

'Leela Vihar', University of Mysore,

Manasagangotri-06

November-2013

LIST OF CONTENT

Introduction About Law

Business Law

Sources Of Business Law In India

The Indian Contract Act 1872

Meaning And Definition

DEFINITIONS (Sec 2)]

Essentials Of A Valid Contract

All Contracts are Agreements, but all Agreements are not Contracts

Distinction between Contract & Agreement

TYPES OF CONTRACT

Rights and duties of indemnifier

Rights and duties of indemnity-holder

THE AGRICULTURAL PRODUCE (GRADING AND MARKING) ACT, 1937

Explanation

Salient features of the Agricultural Produce (Grading & Marking) Act, 1937

Penalty etc.,……

INTRODUCTION ABOUT

LAW

Law means a ‘set of rules’ which governs our behaviors and

relating in a civilized society. So there is no need of Law in a

uncivilized society.

Law is a system of rules and guidelines, usually enforced

through a set of institutions.

It shapes politics, economics and society in numerous ways and

serves as a social mediator of relations between people.

One should know the law to which he is subject because

ignorance of law is no excuse

Law of India refers to the system of law in modern India

BUSINESS LAW

• Broadly speaking, business law refers to the laws that apply to

business entities, such as partnerships and corporations. For the

moment, QuizLaw has focused on the laws relating to setting up

and creating such a business.

• Business law is all so known as Commercial law, is the body of

law that applies to the rights, relations, and conduct of persons

and businesses engaged in commerce, merchandising, trade, and

sales

Sources of Business Law in

India

The main sources of business law in India are shown in the table

English Law Judicial

Decisions

or Case Law

Customs and

Usages

Indian Statutes

English Common

Law

Equity Law Merchant or

Maritime Usage

Statutes

Law

Sources of Business Law in India

The Main Sources of Business Law In

India are Discussed

English Law: Indian business law is modeled on the lines of English

mercantile law, as India was under British rule before its independence.

The differences in the laws of India and England are primarily on account

of their different business environment, customs, and trade practices.

Judicial Decisions or Case Law: The judicial decisions, usually referred

to as precedents, are binding on all courts having jurisdiction lower to

that of the court, which gave the judgment. This is also called judge made

law.

Customs and Usages: Customs or usages of a particular trade also guide

the courts in deciding disputes arising out of mercantile transactions.

Indian Statutes: The constitution of India confers power to enact law on

its parliament and legislatures of states.

THE INDIAN CONTRACT

ACT 1872

HISTORY

Commencement and applicability

Short Title Extent commencement

The Indian contract

Act 1872

Applicable to whole Indian

First day of September 1872

Except the state of Jammu & Kashmir

First day of

September 1872

Meaning And Definition

• The word ‘contract’ is derived from the Latin ‘Contractum’ meaning drawing

together. According to the Act, “An Agreement enforceable by law is a contract”.

• “Every agreement and promise enforceable at law is a contract”. — Sir Frederick

Pollock

• “An agreement creating and defining obligations between the parties”. —

Salmond

• An analysis of these definitions would show that a contract must have the

following two elements:

(a) An agreement, and

(b) Its enforceability (legal obligation)

In the form of an equation, it can be shown as under:

• Contract = An agreement + its enforceability

• Now the question arises, what is an agreement? and what is enforceability of an

agreement?

DEFINITIONS (Sec 2)

• Offer(i.e. Proposal) [section 2(a)]:-When one person signifies to another his

willingness to do or to abstain from doing anything, with a view to obtaining the assent

of that other person either to such act or abstinence, he is said to make a proposal.

• Acceptance 2(b):- When the person to whom the proposal is made, signifies his assent

there to , the proposal is said to be accepted.

• Promise 2(b) :- A Proposal when accepted becomes a promise. In simple words, when

an offer is accepted it becomes promise.

• Promisor and promise 2(c) :- When the proposal is accepted, the person making the

proposal is called as promisor and the person accepting the proposal is called as

promisee.

• Consideration 2(d):- When at the desire of the promisor, the promisee or any other

person has done or abstained from doing something or does or abstains from doing

something or promises to do or abstain from doing something, such act or abstinence or

promise is called a consideration for the promise

Con……..

• Agreement 2(e) :- Every promise and set of promises forming the

consideration for each other. In short, agreement = offer + acceptance.

• Contract 2(h) :- An agreement enforceable by Law is a contract.

• Void agreement 2(g):- An agreement not enforceable by law is void.

• Voidable contract 2(i):- An agreement is a voidable contract if it is

enforceable by Law at the option of one or more of the parties there to

(i.e. the aggrieved party), and it is not enforceable by Law at the

option of the other or others.

• Void contract: - A contract which ceases to be enforceable by Law

becomes void when it ceases to be enforceable.

ESSENTIALS OF A VALID

CONTRACT

Proper offer and proper acceptance with intention to create legal

relationship.

Lawful consideration

Capacity of parties to contract -- Competent parties

Free consent

Lawful object

Possibility of performance

The terms of the agreements are certain or are capable of being made

certain [29]:

Not declared Void

Necessary legal formalities

Intention to Create Legal Relation

All Contracts are Agreements, but all

Agreements are not Contracts

An agreement is termed a contract only when it is enforceable by law. All

agreements are not necessarily legally enforceable. It can rightly be said that an

agreement has a much wider scope than a contract. For example that agreements

are not legally binding are an invitation to dinner or to go for a walk and its

acceptance. These are agreements not contracts.

Agreement is the first step of contract. But after making agreement, it may be

enforceable by law or may not be enforceable at law. If that agreement is

enforced by law then it will be treated or turned into contract, But if the

agreement is not enforced by law that will not be treated as a contract but merely

an agreement. So all contracts are agreement, but all agreements are not contract.

Distinction between Contract &

Agreement

Si.

No.

Basis Contract Agreement

1. Section Sec. 2(h) Sec. 2(e)

2. Definition A contract is an agreement

enforceable by law

Every promise or every set

of promises forming

consideration for each other

is an agreements.

3. Enforceability Every contract is enforceable Every promise is not

enforceable

4. Interrelationship A contract includes an

agreement

An agreement does not

include a contract

TYPES OF CONTRACT

On The Basis of the Mode of Formation Express Contract

An express contract is a contract made by the use of words spoken or written.

Example: A says to B ‘Will you purchase my bike for Rs 20,000?’ B says ‘Yes’

to A.

Implied Contract

An implied contract is a contract which is made otherwise than by the words

spoken or written. It came into existence on account of an act or conduct of

the parties

Examples: A stops a taxi by waving his hand and boards it. There is an implied

contract that A will pay the prescribed fare on reaching his destination.

Withdrawal of cash from the ATM of a bank.

Con….

Quasi-contract

• Neither by word spoken

• Nor written

• Nor by the conduct of the parties.

• But these are created by the law.

Example: If Mr. A leaves his goods at Mr. B’s shop by mistake, then it is for

Mr. B to return the goods or to compensate the price. In fact, these contracts

depend on the principle that nobody will be allowed to become rich at the

expenses of the other

E-contract: An e-contract is a contract made through the electronic mode. In

other words An e – contract is one, which is entered into between two parties

via the internet.

On the Basis of Performance

Executed Contract

In an executed contract both the parties have performed their promises under a

contract. It is a contract where, under the terms of contract, nothing remains to be

done by the parties.

Example: A sells his car to B for Rs 1 lakh. A delivered the car and B paid the

price. This is an executed contract.

Executory Contract

In an executory contract both the parties are yet to perform their promises. In

other words, it is a contract where parties have to still perform their obligation in

the future.

Example: A sells his car to B for Rs 1 lakh. If A is still to deliver the car and B is

yet to pay the price, it is an executory contract

Con…..

Partly Executed and Partly Executory Contract

In a partly executed and partly executory contract, one party has already performed his

promise and the other party has yet to execute his promise.

Example: A sells his car to B. Though A has delivered the car, B has yet to pay the price.

For A it is an executed contract, whereas it is an executory contract on the part of B since

the price has yet to be paid.

Unilateral Contract

A unilateral contract is also known as a one-sided contract. It is a contract where only one

party has to perform his promise. In such a contract, the promise on one side is exchanged

for an act on the other side. Aft er the formation of a unilateral contract, only one party

remains liable to perform his obligation because the other party has already performed his

obligation.

Example: Alap promises to pay Rs 1000 to anyone who finds his lost cellphone. Bansi

finds and returns it to Alap. From the time Bansi found the cell phone, the contract came

into existence. Now Alap has to perform his promise, i.e., the payment of Rs 1000.

Con….

Bilateral Contract

In a bilateral contract both the parties have to perform their

respective promises. It is also known as a two-sided contract. Here,

the obligation is outstanding on the part of both the parties.

Example: A promises to sell his car to B for Rs 1 lakh and agrees

to deliver the car on the receipt of the payment by the end of the

week. The contract is bilateral as both the parties have exchanged a

promise to be performed within a stipulated time.

On the Basis of Validity or

Enforceability

Valid Contract

If the contract entered into by the parties and satisfies all the

elements of a valid contract as per the act, it is said to be a valid

contract.

Void Contract

A contract which ceases to be enforceable by law is known as a

void contract. A void contract is not enforceable by the court.

Generally, a valid contract ceases to be enforceable on the change

in circumstances or on the change of provisions of an act.

Con…

Voidable Contract

When the contract is entered into without the free consent of party, it is

considerate as a voidable contract. The definition of the act states that a voidable

contract is enforceable by law at the option of one or more parties but not at

option of the other parties. Voidable contract will be considered as valid if it is

not cancelled by the aggrieved party within a reasonable time.

Illegal Agreement

An illegal agreement is one which is forbidden by law. All illegal agreements are

void ab initio. It cannot be enforced by any court. Not only that any associated or

collateral transaction to an illegal agreement is also void. No action is allowed on

an illegal agreement. No action can be taken for the recovery of the money paid

under illegal agreement or for the breach of the illegal agreement. The parties to

an illegal agreement cannot get help from the court. No suit can be filled or any

action taken in respect of the illegal agreement.

Contracts of Indemnity

Section 124 - A contract by which one party promises to save the

other from loss caused to him by the conduct of the promisor

himself or by the conduct of any other person is a "contract of

Indemnity“

Illustration - A contracts to indemnify B against the consequences

of any proceedings which C may take against B in respect of a

certain sum of Rs 200. This is a contract of indemnity.

For example - A and B go into a shop. B says to the shopkeeper

“Let A have the goods, I will see you paid”. The contract is one of

Indemnity.

Rights and duties of

indemnifier

Rights of the indemnifier

The rights of the indemnity-holder are the duties of indemnifier,

and duties of the indemnity-holder are the rights of the indemnifier.

There are not prescribed any specific rights of the indemnifier

either in Nepalese law or in Indian law. However, he is not liable

for indemnity.

If indemnity-holder acts negligently.

If indemnity-holder is acting with the intention of causing any

loss or damage

If he is acting against the instructions of the other party

(promisor).

Con…

Duties of indemnifier

The duties of an indemnifier arise in the following circumstances:

There must be a loss in accordance with the contract to make the

indemnifier liable.

There must be an occurrence of the anticipated event. Without any

occurrence of the prescribed event, there is no indemnity by the

indemnifier.

Where the right of indemnity is used by the indemnity-holder

prudently and the instruction of the indemnifier is not contravened or

when there is no breach of contract.

If the costs demanded by the indemnifier are not caused by

negligence, haphazard behaviour

Rights and duties of indemnity-

holder

Rights of indemnity-holder [Sec. 22(1) of NCA]

A person whose loss is to be made good is called the indemnity-holder. He has

some rights against the indemnifier in accordance with the legal provisions

incorporated under the Nepalese and Indian Contract Acts. But, the duties of the

indemnity-holder have not been mentioned under the Acts. The indemnity-holder

is entitled to recover any or all of the amounts of compensation under the

contract. They are as follows

All the indemnity amount (damage) prescribed in the contract.

All the damages he may be compelled to pay a third party for the loss.

All the costs spent on the case filed or defended by him in connection with

the contract relating to indemnity.

All the costs of legal actions, if it becomes necessary to initiate such an action

for a failure to pay the amount mentioned in all the above clauses.

Con…

Duties of indemnity-holder

Except otherwise is mentioned in the contract, the indemnifier will not liable for the

loss in the following circumstances. They are called duties of indemnity-holder too.

Duty to work prudently: Except otherwise is mentioned in the contract, the

indemnifier will not liable for the loss caused by the negligence work of the

indemnity-holder. In other words, it is the duty of indemnity-holder to work

prudently.

Duty not to act to cause harm or loss: If the indemnity-holder acting with the

intention of causing any loss or damage, the indemnifier will not liable for such

loss. In other words, it is the duty of indemnity-holder not to act to cause harm or

loss.

Duty to comply with the intention of promisor: If the indemnity-holder acting

against the instruction of the other party or promisor, the indemnifier will not

liable for the loss caused by such against act to his instruction. In other words, it

is the duty of indemnity-holder to comply with the intention of promisor.

THE AGRICULTURAL PRODUCE

(GRADING AND MARKING)

ACT, 1937

An Act to provide for the grading and marking of agricultural

(and other) produce

Where as it is expedient to provide for the grading and marking

of Agricultural (and other) produce, it is hereby enacted as

follows:-

Short title and extent

• This Act may be called the Agricultural Produce (Grading and

Marking) Act, 1937

• It extends to all the provinces and capital of the Federation,

including Baluchistan

Explanation

In this Act, unless the contrary appears from the subject or context-

• “Agricultural Produce” includes all produce of agriculture or horticulture and

all articles of food or drink, wholly or partly manufactured from any such

produce, and fleeces and the skins of animals.

• counterfeit" has the meaning assigned to that word by section 28 of the Indian

Penal Code (45 of 1860 );

• "covering" includes any vessel, box, crate, wrapper, tray or other container

• "grade designation" means a designation prescribed as indicative of the

quality of any scheduled article;

• "grade designation mark" means a mark prescribed as representing a

particular grade designation;

• "quality" in relation to any article includes the state and condition of the

article

Con…

• "prescribed" means prescribed by rules made under this Act;

• "Scheduled article" means an article included in the Schedule

• An article is said to be marked with a grade designation mark, if the article itself

is marked with a grade designation mark or any covering containing or label

attached to such article is so marked.

• An article is said to be misgraded if :-

the article is not of the quality prescribed for the grade designation with which it

is marked;

the composition of the article offered for grading is altered in any way after a

sample has been drawn for analysis and determination of the grade designation of

the article in accordance with the rules made under this Act;

the article is tampered with in any manner, and

any false claim is made for the quality prescribed for its grade designation, upon

the label or through advertisement or in any other manner.

Salient features of the Agricultural

Produce (Grading & Marking) Act,

1937

It is an Act to provide for the grading and marking of the

agricultural and other produce

Agricultural produce has been defined as to include all produce

of agriculture or horticulture and all articles of food or drink

wholly or partly manufactured from any such produce, and

fleeces and the skins of animals.

The Act has provision for making Rules to carry out the

provisions of the Act. General Grading and Marking Rules, 1988

and 105 Specific Commodity Grading and Marking Rules are

notified.

Penalty's

Penalty for unauthorised marking with grade designation mark

Whoever marks any scheduled article with a grade designation

mark, not being authorised to do so by rule made under section 3,

shall be punishable with fine which may extend to five hundred

Penalty for counterfeiting grade designation mark

Whoever counterfeits any grade designation mark or has in his

possession any die, plate or other instrument for the purpose of

counterfeiting a grade designation mark shall be punishable with

imprisonment which may extend to two years, or with fine, or with

both.

GENERAL GRADING AND

MARKING RULES 1937

• These rules may be called General Grading and Marking Rules

1937.

• Any person or a body of persons desirous of being authorized to

mark any article with grade designation mark shall apply to the

Agricultural Marketing Adviser to the Government of India and

Faridabad

• If after due inquiry the Agricultural Marketing Adviser is

satisfied that it is expedient in the interest of better marketing

and authorization be granted and that applicant is a fit and a

proper person to receive a certificate of authorization, he shall

issue such a certificate to the applicant.

Agmark Grades

• CommodityCoverage:181Number.

• Quality Grading and Certification for:

• Export

• Domestic Trade

• Farm Level Grading:

• Grading at Producer's Level.

• Quality Certification Mark:

AGMARK Acts as: Third Party Guarantee to Quality Certified.

Legal Backup: Agricultural Produce (Grading and

Marking)Act,1937asamendedin1986

GROUPWISE LIST OF THE COMMODITIES FOR WHICH

AGMARK GRADE STANDARDS HAVE BEEN FORMULATED

UNDER THE AGRICULTURAL PRODUCE (GRADING AND

MARKING) ACT, 1937

Si No. Name of the Group: No. of commodities notified

1. Food grain and allied products 29

2. Fruits and Vegetables 29

3. Spices and condiments 26

4. Edible Nuts 8

5. Oil Seeds 15

6. Vegetable Oils and Fats 18

7. Oil cakes 8

8. Essential oils 8

9. Fibre crops 5

10. Live stock, Dairy and poultry products 10

11. Other products 25

TOTAL 181

Strengthening of Agricultural

Marketing

Strengthening of

Agricultural

Marketing

Capacity enhancement

in Terminal Markets

Capacity

enhancement in

Grading and

Standardization

Capacity

enhancement in

Quality and

Safety issues

Setting up National

Resource Centre

Capacity

enhancement in

Market News

Capacity

enhancement in

Marketing

Extension