Business Law Flashcards
What is Law?
In general law means set of rules which is made by the authorities.
> Law is a set of rules and principles made by sovereign power through legitimate process to control or regulate the society for justice, peace and social security.
Nature of Law
- it is made and administered by the component authority which is known as sovereignty.
- based on reason and rationality
- uniformity in action
- rigid and equally enforceable to all person
- more powerful than lawmaker
- administered by the court
- changeable with the pace of time and on the basis of common needs
difference between substantive and procedural law (2)
substantive law
1. known as a law of the rights and duties.
2. end of the law
3. contains rights and remedies of the victim parties
procedural law
1. known as remedial law
2. means of law
3. contains modes and conditions to restores rights of the victim parties.
what is business law?
Business law is the branch of law that is connected to the trade, commerce and industry. it also called commercial or mercantile law.
> business law is that part of law which deals with all the laws connected with every activity of business and rights, obligation, of business person and firm arising from business transactions.
Source of Business law
Source of business law means the beginning point of rules and regulations regarding to trade, commerce and business. some of the major sources are as follows:
1. legislation: Legislation is the main source of law in the modern states. it is made according to the change of time and it is the outcome of a long series of discussion among the representative of people. it is made by legislative body and enforced by the supreme body.
- custom and usage: As it is ancient, reasonable, proved to be immemorial and continuously followed and recognized by the state, it plays an important role in the development of business law.
- precedents: Judicial decisions are called precedents. Decisions and judgment made by the supreme court and lower courts which serve in the law making.
- English mercantile law: Business law was evolved in England. Nepalese and Indian business law is influenced by the British business law that is why English mercantile law is another source of business law.
- opinion of professional and exports: Various research and analysis create the environment of enacting and amending the existing law as well as introducing the new one. So, the opinion of professional and exports on the business area helps to develop business law.
- Business agreements and convention: This is the most modern sources of business law. The international business organizations such as SAFTA, EU, WTO has made various agreement, bilateral and multilateral treaties and conventions.
What is Contract?
Contract is an agreement enforceable by law.
> Contract is an agreement made between two or more person or parties with free consent for to do or not to do something for a certain consideration.
> according to the Nepal contract Act 2056: contract is an agreement enforceable by law.
Nature of contract
- It is an agreement between two or more person on a particular matter.
- it is recognized and enforceable by law
- It creates legally binding obligations between the parties.
- it establishes a course of actions between the parties which is to be perform by them.
- it provides remedies if things go wrong to the affected party.
Essential for valid contract
To be a valid contract an agreement needs various elements. If these elements are not satisfied, law cannot enforce an agreement as contract. According to the Nepal Contract Act 2056, elements are as follows:
1. Plurality of parties: There must be two parties namely offerer and acceptor to form a contract.
- Proper offer and acceptor: there must be at least two parties, one making offer and other accepting it.
- intention to create legal relationship: When two parties enter into an agreement their intention must be to create legal relationship between them.
- lawful consideration: An agreement is legally enforceable only when each parties give and get something.
- Free consent: The parties must have agreed up on the same things in the same sense.
- Lawful object: There must be a lawful object. The object must not be fraudulent, illegal, immoral or opposed to public policy.
- Written form and registration: The agreement must be in written form and registered to be valid.
- certainty and clarity: To be a valid contract, the objective and obligation of contract must be clear and certain.
What is void contract?
If one or all the essential elements of a valid contract are not present in an agreement, it is called void contract.
- It does not create legally binding obligation between the parties from the beginning and have no legal effect.
- Generally, agreement which are illegal, immoral or opposite to the public policy or welfare are void.
Contracts that are expressly declared as void
- agreement made without intention to create legal relation
- agreement made by or with a person incapable to make a contract
- Agreements as against the criminal or other laws.
- agreement immoral or against the moral laws.
- agreements impossible to perform
- wagering contracts
- uncertain agreements
- agreements in restraint of trade
- agreements in restraint of marriage
- agreements in restraint of personal freedom
- agreements for marriage brokerage
What is offer?
Offer is a proposal made by one party to another party with the intention to create legally binding contract upon acceptance.
.> It expresses the willingness of the offerer to enter into an agreement on certain terms.
> The offer can be oral, written or through conduct.
> according to Nepal contract Act 2056, offer is a proposal presented by one person to another with the intention to obtaining his assent for performing or not performing any work.
Types of offer
- expressed or implied: An expressed offer is made by using words in written form or verbal.
An implied offer is made by the conduct of party or certain circumstances of the cases. - specific or general offer
specific offer is that offer in which the offerer propose the offer to particular person.
general offer is offered to the public in general.
- cross or counter offer
when two parties make different but similar offer to purpose each other without having knowledge of the other’s offer. is known as cross offer.
If the acceptor accepts offer by changing terms and conditions of offer is known as counter offer.
Rules regarding of an offer
- offer should be expressed or implied: An offer can be made in both expressed and implied form. Expressed offer means spoken and written offer and implied offer made by conduct of the party and the circumstance of the case.
- clarity and certainty: an offer which is intended to create contract must be certain and clear.
- an offer may be specific or general: It is based on the acceptor. If the acceptor is particular person then it is specific offer and if the acceptor is general public it is general offer.
- an offer must be communicated to the acceptor: Proper communication of the offer to the acceptor is necessary element to make a valid offer.
- intention to create legal relationship: to be a valid offer, it must be intended and capable to create legal relationship.
- cross and counter offer do not make a contract: to be a valid contract, there should be an offer and acceptance. if two parties make separate offer in the same subject matter it does not create a contract.
- an invitation of offer is not an offer: an invitation seems as offer but it is not valid offer. it is only a notice to make an offer to another person.
- offer is seeking acceptance of other parties: an offer is made to seek acceptance of the other party. an offer is not valid if there is just inquiry.
Revocation and Lapse of offer
Revocation of offer means cancellation or withdrawn of offer by offerer before it is accepted by acceptor.
conditions of revocation of offer
- by revocation notice: The offerer can revoke the offer any time by giving notice.
- By the expiry of prescribed time: An offer may lapse if acceptance is not communicated within the prescribed time.
- by the expiry of reasonable time: If the time limit is not specify in offer to get acceptance from the acceptor, the offer shall be revoked after expiry of reasonable time limit.
- by death or insanity of offerer or acceptor before acceptance: the death of offerer would not put an end to the offer until it notice by the acceptor before acceptance but acceptor’s death or insanity would put an end to the offer before acceptance.
- by counter offer: the offer is revoked if the acceptance is made by altering the terms and conditions.
- by non fulfilment of condition: if there is a condition in the offer before acceptance but acceptor accepts it without fulfilling the condition, the offer will be revoked.
- by rejection of acceptor: an offer is regarded as revoked when the acceptor rejects it.
- by subsequent illegality of subject matter: An offer lapses if it becomes illegal after it is made and before it is accepted.
