Introduction to Business Law and Taxation

8/9/2019 Introduction to Business Law and Taxation

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Introduction toBusiness law

and Taxation

THE LAW AND

THE SOCIETY


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What is Law?

Law in its legal sense is distinguishedfrom other uses of the term, It means those rules and principles that

govern and regulate social conduct and

the observance of which can be enforcedin courts. It operates to regulate the actions of

persons in respect to one another and in

respect to the entire social group ofsociety.


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u!lic Law and ri"ate Law

Law is either u!lic Law or ri"ate Law

u!lic Law# Concerns the public as a wholeand is divided into three classes.

$% Constitutional Law

&% Ad'inistrati"e Law

(% Cri'inal Law


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u!lic Law and ri"ate Lawcont)))

ri"ate Law# It pertains to individuals.These areas generally are the ones thatpertain to business and are termed asbusiness law or commercial law andmercantile law.


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*OCESS O+ LE,ISLATION

Most Legislation are initiated by thegovernment and introduced asgovernment bills but there can beprivate bills also.

a bill may originate either in NationalAssembly or in enate.

a bill when passed by the house where itwas originated is sent to the other house. Ifthe second house passes the bill withoutany amendment the same is presented tothe !resident for assent to enact it as alaw.


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*OCESS O+ LE,ISLATION cont

"hen a bill is passed by one house butis re#ected or not passed by the otherhouse within $% days or is passed with

amendments it is considered in a #ointsitting of the National Assembly andenate. If passed by ma#ority votes byboth houses it is presented to the

president for assent to enact it as alaw.


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the resident shall within (-da.s#

a& give assent to the bill or

b& return the same forreconsideration or amendment.

)If both houses again pass the bill.!resident shall assent and the billshall become act of parliament.


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i/ a !ill is pending in the National Assembly or

after being passed by National Assembly

is pending in senate it shall lapse ondissolution of National Assembly.

If the bill is pending in senate which wasoriginally initiated by this house ,it shall

not lapse on dissolution of NationalAssembly.


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Le0islation !. resident

"hen the National Assembly is not in sessionand the !resident deems necessity of animmediate law he can promulgate anordinance.

The 'rdinance shall have the same force and

e(ect as an Act of !arliament. The 'rdinanceif not presented or passed by NationalAssembly within four months it shall standrepealed. )Cancelled&


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LA" '* C'NT+ACT-/


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INT*OD1CTION

Law of Contract is that branch of commercial

or business law, which ensures that thepromises made by one person to another inrespect of any transaction shall be performedby the parties e0actly in accordance with thearrangement between them.

And incase of any default the party at fault

shall compensate the innocent party.


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I2O*TANCE O+ THE LAW O+CONT*ACT

According to ir "illiam Anson 1Law ofContract is intended to ensure that what aman has been led to e0pect shall come topass and that what has been promised tohim shall be performed.


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Contract Act O/ a3istan

The laws relating to contracts in!a2istan is contained in the Contract

Act, -/.


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What is a Contract?

13very agreement and promiseenforceable at law is a contract.4 5ollac3

1A contract is an agreement creating andde6ning obligations between the parties.47

Sal'ond


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What is a Contract? Cont))))

A contract is an agreement between twoor more persons creating rights and

duties, which is enforceable by law.


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What is an A0ree'ent?

Agreement is de6ned as 1e"er. 4ro'iseand e"er. set o/ 4ro'ises /or'in0 theconsideration /or each other is an

a0ree'ent%5

Agreement is said to be enforceable if it is

recogni8ed by the court of law%


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Two 'ain characteristics o/ anA0ree'ent

!lurality of persons 7Two or more persons

Consensus ad idem 7 identity of minds


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T.4es o/ A0ree'ent

ocial agreement

Legal agreement


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What is a ro'ise?

"hen the person to whom the proposal ismade signi6es his assent there to, the

proposal is said to be accepted thus aproposal when accepted becomes apromise.4


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Di6erence !etween A0ree'entand Contract

Agreement 9 o(er : acceptance

Contract 9 agreement : enforceability


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ESSENTIALS O+ A CONT*ACT

$% O6er and acce4tance# for an

agreement there must be a lawful o(erby one party and a lawful acceptance ofthat o(er from the other party.

&% Le0al relationshi4#it arises whenparties 2now that if one of them fails toful6ll his part of the promise then he

shall be liable for the failure of acontract.


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ESSENTIALS O+ A CONT*ACTcont)))

(% Law/ul consideration# it means thatthere should be something in return forboth the parties.

7% Ca4acit. o/ 4arties# the parties to anagreement must be competent that isthey must be of the age of maturity as

well as of sound mind.


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8% +ree consent# the parties must haveagreed upon the same thing in the samesense and that the consent must be freeof any coercion, undue in;uence, fraudmisrepresentation or mista2e.

9% Law/ul o!:ect# the ob#ect for which the

agreement has been entered into mustnot be illegal, immoral or must not implyin#ury to the person or property ofanother.


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;% Writin0 and re0istration# contract canbe oral or in writing.


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=% ossi!ilit. o/ 4er/or'ance# acontract must be capable of being

performed. It should not be an act, whichis legally or physically impossible toperform.


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>INDS O+ CONT*ACTS

$% ALID CONT*ACT

. A valid contract is an agreementenforceable by law. An agreement

becomes enforceable by law when all theessentials of a valid contract are present.


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>INDS O+ CONT*ACTScont)))

&% OIDABLE CONT*ACT

A contract is said to be voidable whenthe consent of one of the parties is not

free. It is a valid contract until it isavoided by the party having the right toavoid. 'nce it is avoided it becomesvoid.


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>INDS O+ CONT*ACTS cont)))

Circu'stances under which acontract !eco'es "oida!le#

a. "hen the consent of one or more of theparties to a contract is obtained bycoercion, undue in;uence or fraud.

b. "hen a person promises to dosomething for another person but theother person prevents him fromperforming his promise.


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>INDS O+ CONT*ACTS cont)))(% OID CONT*ACT

.A contract, which is ordinarily

enforceable at law but cannot be soenforced due to the happening of a

certain event, is 2nown as a voidcontract%

. Circu'stances under which acontract !eco'es "oid@

a. Impossibility of performance

b. ubse>uent illegality


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7% 1NEN+O*CEABLE CONT*ACT

.An unenforceable contract is one, which isvalid but cannot be enforced in a court of

law because of some technical defects suchas absence of writing, registration re>uisite,stamp, etc.


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8% ILLE,AL A,*EE2ENT

. An agreement is illegal when itsperformance is forbidden by any law ofthe country.

9% E*ESS CONT*ACT

. An e0press contract is one in whichthe parties directly state the terms of

the contract orally or in writing at thetime the contract is made.


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;% I2LIED CONT*ACT#. Implied contract is one, which is not made

by words, written or spo2en. It arises whenone person without being re>uested to do

so, renders services under circumstancesindicating that he e0pects to be paid forthem and the other person 2nowing suchcircumstances accepts the bene6t of those

services.


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uity that a person shall notbe allowed to get bene6t at the e0pense of

another.


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OID A,*EE2ENT Accordin0 to the Contract Act An

a0ree'ent not en/orcea!le !. law issaid to !e "oid%5

A void agreement does not create legal

relations among the parties and is a! initiofrom the beginning.

In case of void agreement there isabsence of one or more essentials ofvalid contract.


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OID A,*EE2ENT cont)))

O!li0ation to 4arties "hen an agreement is discovered to be

void any person who has received anyadvantage under such agreement isbound to restore it to the person from

whom he received it. EA2LE A promises to purchase the horse of < for

rupees %%%. The horse was dead at the

time of bargain, though neither party wasaware of the fact. The agreement is voidand < must repay rupees %%% to A.


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E*+O*2ANCE O+CONT*ACT

DE+INITION ANDELANATION

E*+O*2ANCE O+


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E*+O*2ANCE O+CONT*ACT

2eanin0 o/ er/or'ance#!erformance of contract means thateach party to a contract has done,

whatever he@she has re>uired to dounder the contract, within theprescribed time in a manner that noparty to the contract has any claim,

grievance or right outstandingagainst the other party and thecontract has come to an end.


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E++ECT O+ *E+1SAL O+ A A*TYTO E*+O*2 *O2ISE

"here a party to a contract refusesto perform or disables himself fromperforming his promise in its

entirety, the promisee may put anend to the contract.

The promisee cannot, howeverrepudiate )re#ect& the contract if he

has signi6ed )by words or conduct&his acceptance in its continuance.

E++ECT O+ *E+1SAL O+ A


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E++ECT O+ *E+1SAL O+ AA*TY TO E*+O*2 *O2ISE

cont)))

Exa'4le # A, a singer, enters intoa contract with


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E*+O*2ANCE O+ CONT*ACTCONT) WHO 21ST E*+O*2

The 4ro'ise 'a. !e4er/or'ed !.@

a% the 4ro'isor hi'sel/

!% or his a0ent or

c% !. his le0al re4resentati"e%


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WHO 21ST E*+O*2 cont)))

a% er/or'ance !. 4ro'isorhi'sel/# Contracts involvingthe e0ercise of personal s2ill,volition, or diligence of the

promisor has to be performedonly by the promisor himself.

!% er/or'ance !. a0ent#"hen personal considerationis not the basis of a contract,the promisor may employ a

competent person to perform

WHO 21ST E*+O*2


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WHO 21ST E*+O*2cont)))

c% er/or'ance !. le0alre4resentati"e#The legalrepresentatives must performthe promise unless a contraryintention appears from thecontract.


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WHO CAN DE2ANDE*+O*2ANCE

The person to whom thepromise is made can demandperformance even though the

promise is not for the bene6t ofthe promisee but for the bene6tof some other person.


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DISCHA*,E O+

CONT*ACT

e6nition D

e0planation

DISCHA*,E O+ A


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DISCHA*,E O+ ACONT*ACT

DE+INITIONE

"hen the rights and obligations

arising out of a contract cometo an end the contract is said tobe discharged or terminated.


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DISCHA*,E O+ ACONT*ACT cont)))

A contract may be discharged inthe following waysE

$% Dischar0e !. 4er/or'ance

"hen the parties to a contractperform their shares of the

promises, the contract isdischarged.


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DISCHA*,E O+ A CONT*ACTcont))

&% Dischar0e !. a0ree'ent#

A contract can also bedischarged by the fresh

agreement between the sameparties. A contract may beterminated in any of thefollowing waysE

) No"ation

) Alteration

) *escission

) Wai"er

SC , O


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DISCHA*,E O+ ACONT*ACT cont))) )

(% Dischar0e !. su!seuenti'4ossi!ilit. @An agreement todo impossible act is void ab7initio.

+actors causin0 i'4ossi!ilit.o/ 4er/or'ance#

Destruction o/ su!:ect 'atter

Death or 4ersonal inca4acit. Chan0e o/ law

DISCHA*,E O+ A CONT*ACT


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DISCHA*,E O+ A CONT*ACTcont)))

7% Dischar0e !. la4se o/ ti'e

a. The li'itation ActF $=-


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4. Discharge by lapse of time cont

b. Frustration of a contract: itmeans premature terminationof a contract on account of the

happening of an event, whichwas not in the contemplation ofthe parties when they enteredinto the contract. *or e0ample7

war.


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DISCHA*,E O+ A CONT*ACTcont)))

8%Dischar0e !. o4eration o/

law

a. Insolvency

b. Merger

DISCHA*,E O+ A CONT*ACT


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cont)))

6% Dischar0e !. !reach o/contract

"hen one party to the contractbrea2s the contract by non7performance of the promise orotherwise, the other party isdischarged from his obligations

under the contract and has a rightof action against the partyresponsible for the breach.

9 Di h ! ! h /


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9% Dischar0e !. !reach o/contract cont)))

>INDS O+ B*EACH

i% Actual Breach# it occurs when

a party fails to perform acontract, when performancewas due.

ii% Antici4ator. Breach#it occursbefore the time 60ed forperformance has arrived whichcan be either done e0pressly or

Introduction to Business Law and Taxation

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