Commerce

Functions of Retailer

Last Updated on September 5, 2020 By Lisa C. Townes Leave a Comment

A retailer is the last link in the chain of distribution of consumer products. He brings the producer in close touch with the consumer. He is a part of the distribution mechanism which cannot be dispensed due to his following valuable services

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Distribution of Good

The functions retailers perform are the consequence of the separation of distance, time and information between producers and consumers. All retailers are involved in assisting in the physical movement of goods and in effecting a change of ownership. Retailers also hold stocks so that goods are available when required by the consumer

So, he plays a very important role in distributing goods to various consumption centers.

Consumers Choice

As the retailer is in close touch with his customers, he knows the demand, tastes and fashion of the consumer. This position enables the retailer to pass information on products to producers on behalf of consumers.

Storage Facilities

Retailers storage activities also help both producers and consumers. By ordering and accepting delivery in advance of the season, the retailer removes some of the risk of deterioration and damage and bears the costs of storage.

Buying and Selling Activities

Whether the retailer is supplied directly by the manufacturer or through a wholesaler, he buys in fairly large quantities and sells in the smaller quantities that are convenient for consumers use.

Credit Facilities

The retailer is often expected to provide credit facilities to his customers. This could be a selling advantage but is expensive to give and, in general, would derive from some relationship with the customer.

Grading and Packing

By dividing large unit quantities into consumer-sized amounts the retailer is performing a service to manufacturers as well as to consumers.

It would be highly uneconomical for manufacturers to package and ship their goods in the quantities demanded by consumers. But butchers, fruiters, tailors, and other retail traders are still concerned in their various ways with grading and preparing their goods.

Delivery Services

Many retailers offer delivery as an additional service. This is an expensive and a grocer, for example, who provided it would charge more for his goods.

Advice to Customer

Customers rely on the advice of their retailers when buying many goods, both those which are technically complex, such as motor-mowers or air conditioning plant, and also such apparently simple goods as packaged foods and dress materials.

The efficient retailer has a responsibility not only to advice on goods that are already established in the market, but to inform his customers of new lines as they becomes, available and to stock them if he believes that they will be needed.

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger

Rights of Parnters

Last Updated on February 5, 2020 By Lisa C. Townes Leave a Comment

Table of Contents

Consultation

Every partner has equal rights in disposing of the matter. However, ordinary matters are decided by the simple majority of partners and policy matters are settled with the consent of all the partners but every partner must be consulted.

Receive Profit

Every partner has a right to receive equal profit from the management in the absence of an agreement.

Participation in the Management

Every partner is allowed to take part in the management of the business.

Inspection of Accounts

Every partner has a right to Inspect and verify all types of record, books and accounts and is also allowed to copy them.

Compensation

A partner is entitled to be indemnified by the firm for all acts done by him in respect of:

Payment of debts and liabilities
Payment made in the emergency
Payment incurred to conduct the partnership affairs.

Exercise Power

As one partner is an agent of other partner, so he can exercise his power to protect the firm from loss and the expenses incurred in this respect will be paid by his copartner.

Interest on Capital

A partner is not allowed to receive interest on capital invested by them.

To use the business property

Every partner is a joint owner of the business property. So he has equal right to use it for business purpose.

Introduction of New Partner

New partner cannot be admitted in the firm without the consent of all partners.

Right to Continue

Every partner has the right to continue his partnership with the firm. He cannot be expelled from partnership without any solid reason.

Rights of other partner after outgoing of a Partner

After outgoing of a partner from the firm surviving partners have a right to carry on the business activities without’ any clearing of accounts. So out going partner or representative of deceased partner is entitled to receive profit or interest from the date of separation till the final settlement of accounts.

Liability before admitting

New admitting partners will not incur any obligation of the firm before the become a partner.

Retirement

Every partner has right to retire from the firm serving notice of 14 days to all partners in case of partnership at will.

Commence competing business

An out-going partner has right to commence competing business but he cannot use the firm’s name or trade market o other special privilege.

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger

Duties of Partners

Last Updated on February 5, 2020 By Lisa C. Townes Leave a Comment

Table of Contents

To Perform True Services

Every partner must perform true services in partnership i.e., to maintain the true accounts, to keep the actual vouchers records and transactions and to permit the other partners to inspect the accounts fairly.

To be Sincere and Careful

Every partner must be sincere, faithful and careful to other partners. He should discharge his duties very fairly.

To work for Best Advantages

Every partner is expected to conduct this business of the firm to the best advantages.

To Provide all Types of information

As one partner is an agent of another, he must conveys all types of information to them.

Compensation for Loss

If a partner commits a fraud to his copartners he must compensate them for any loss caused to them by his act.

To use the Partnership Property

Every partner is bound to use the property of the firm for the best interest of all the partners in the absence of an agreement.

To conduct the Business without Remuneration

In the absence of agreement every partner must conduct the business activity without any remuneration i.e., salary or commission in the form of goods.

Distribution of Loss

The amount of loss is sustained by each partner equally in the absence of any agreement.

To compensate for Intentional Neglect

If a firm suffers loss due to the intentional neglect in the conduct of the activities the partners are bound to indemnify the firm for such loss.

To Carry on Competing Business

Partners are not allowed to carry on business other than the business of the partnership as long as they are partners.

To keep the Secrecy

A partner is bound to keep the secrecy of the business. In case of leakage of secrecy, he will be personally liable.

Transferring of Interest

Partners interest cannot be transferred to any third person so as to make him a member in the firm.

To conduct within powers

Every partner is restricted to conduct his activities conferred upon him within the scope of powers.

To Get any Undue Advantages

The business property cannot be directly or indirectly used for private purposes. Partners are not allowed to take any undue advantages from the business of the partnership.

To Return Earned Profit

The profit earned from the sources of firm will be paid to the management of the partnership.

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger

Business Combination

Last Updated on November 12, 2021 By Lisa C. Townes Leave a Comment

The business combination is formed when two or more business undertaking units combine to carry on business together for achieving economic benefits.

It is also originated when a number of different business concerns of the same line combine together under one management with a view to achieving some definite objects of mutual benefits.

At present we find a general tendency to form a cartel, trust, holding companies, pool, and amalgamation, etc at home or abroad for the object of increasing capital volume, specialization, and standardization. Rival firms combine together in order to avoid the heavy cost of the competition.

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Forms of Business Combinations

These business combination forms have different types; entirely depend upon missions, agreements, benefits of both parties.

Trade Association

It is a voluntary association of traders, merchants, and industrialists who belong to a particular place and who engage in similar nature of business. It is formed for the achievement of common purposes.

For example, Cloth Merchants Association, Leader Traders Association, Iron Merchants Association. A common fund is established in which each member contributes for the protection of their interest.

Objective of Trade Associations

To Encourage the friendly relation among the members.
To avoid the competition among the members.
To promote the interest and welfare of its members.
To arrange the supply of raw material and labours.

Chamber of Commerce

It is an association of various merchants, industrialists, and businessmen who belong to a particular city or district. It is formed to promote trade, commerce, and industrial activities in the country. Its management is conducted by an elected executive committee.

The government has also the right to appoint some members. Its recommendations are considered very useful in formulating budgets and other trade and commercial policies. These chambers remain in close touch with the Ministry of Commerce.

Objectives of Chamber of Commerce

To protect the interest of its members.
To promote the business activities in the country.
To remove or minimize the effect of trade restrictions.
To collect the information relating to trade, commerce, industry and shipping.
To settle the disputes arising among the members inside or outside the business.

Pool

A pool is a device to regulate production, divide the territory of the market, and distribute the profit of its members. Under this system, members do not lose their entity so it is deemed a stable form of combination.

Objectives of Pool

To avoid competition among its members.
To regulate the supply of production.
To control the prices of product.
To avoid over production.
To minimize the expenditure on distribution.
To earn handsome profit of their goods.

Cartel

It is an association .of independent producers and businessmen to design certain arrangements for jointly conducting their marketing functions. A joint selling agency is to be organized for performing marketing functions.

All the participating members agree with the cartel to dispose of their entire product to it. Then the cartel arranges to supply the goods to the market. It is a loose type of combination where the member units enjoy full independence. So they can easily come out of the cartel at any time.

The form of the combination was first introduced in Germany.

Objectives of Cartel

To achieve economy of large scale distribution.
To eliminate unnecessary competition.
To limit the supplies of their product.
To improve the quality of the product and condition of sale.
To control the price of their products.

Rings

This is an organization of producers who combine to restrict the output they produce for the purpose of securing some monetary gain. All the members agree with the ring that they would not produce the goods in excess of the quota fixed for them. Defaulters are to be fined by the rings. It is usually organized to exploit the consumers.

Objectives of Rings

To avoid over production.
To control the supply of the product.
To secure monetary gain by controlling price.

Trust

Trust is another kind in which the stockholders transfer a majority of their stock or shares to a Board of Trustees in exchange for trust. certificates This is the combination of several joint-stock companies which is managed by the Board of Trustees who control the shares of stock of its members.

Trust is formed to control the production and distribution. As it enjoys a sound financial position it can achieve the benefits of large-scale production. This is a strong vertical type of combination. Its members cannot easily come out of the trust.

Trust originated in the U.S.A in 1879 but due to its harmful activities for the public, it was declared illegal by the court in 1890.

Objectives of Trust

To increase capital volume for large scale production.
To enjoy the benefits of large scale organization.
To achieve the economies in production and distribution.
To control the market.
To regulate the prices and output.

Corner

This is the combination of speculators which is generally organized in the share market. Under this system, entire goods or shares available on the particular market are purchased by the corner with the object of reducing the supply to the minimum.

Thus its members are in a position to achieve monetary gain by affecting prices. But in the modem age, this device cannot be successful due to fast means of transport and communications.

Objectives of Corner

To establish a temporary monopoly of the market.
To charge high prices of their goods.
To control the supply of the particular commodity.

Informal Agreement

This is the form of mutual understanding or agreements among the competing business with the object of controlling the prices of the product and regulating the market. This is the simplest and loose form of combination which is generally based on oral agreement among the rival units.

A member can be expelled from the combination if he fails to abide by any rules and regulations but it may also come to an end if the members are violating rules. This is also known as Gentlemen’s, Agreement.

Objectives of Informal Agreement

To avoid unnecessary competition among the constituent units.
To control the prices of the product.
To improve the condition of the scale.
To restrict output of the competing members.
To reduce the cost of marketing the product.

Syndicate

This is the organization of producers and manufacturers who combine to regulate the product and price. This is a loose type of combination in which member units have complete independence in the matter of internal administration of their own units.

It can be formed at a local, national and international level. The following procedure is to be adopted by the syndicate.

Its members cannot dispose of their product directly in the market, but entire output of its members are purchased by syndicate at agreed prices.
Syndicate arranges to sell the product of its members in the market at reasonable prices.
The profit earned by the syndicate is distributed among the members in agreed producers.

Objectives of Syndicate

To avoid competition among the producers.
To regulate the output and prices of the product.
To locate reasonable market for the products of its constituent units.
To dispose of the output at handsome prices.

Holding Company

A holding company is a device to control the majority of other company’s shares. Under this system, any company may become holding if a sufficient number of shares are purchased by it.

The company whose shares are owned by the holding company is named a subsidiary company. A company may itself be a holding company and at the same time be a subsidiary to another company.

Objectives of Holding Company

To eliminate competition.
To obtain the benefit of large scale production.
To achieve economy in the field of management and production.
To increase the efficiency of business by modern technique.
To control market and to avoid over production.
To enjoy the research results and patent rights of each other.
To increase the financial stability of the subsidiary company before the general public.

Amalgamation

When two or more joint-stock companies which are already established combine into large one amalgamation comes into existence. New combination companies generally take over all the assets and obligations of the old companies.

Each company of the amalgamation lost its separate entity. For example, if X company and Y company combined together under the new name of X and Y company it is called amalgamation.

Objectives of Amalgamation

To achieve the economies of large scale production.
To increase the financial resources.
To attain the benefit of technical and scientific development.

Merger

When a joint-stock company takes over the entire ownership of one or more than one business unit. It is known as a merger. So two or more firms absorb into one in exchange for stock and shares. In case of a merger, each firm loses ~ its separate entity. For instance, if y company merges with the A company, y company will lose its identity.

Objectives of Merger

To eliminate competition.
To secure benefit of large scale production.
To control market.
To achieve the economies in management, production and distribution.
To hire the services of expert and efficient persons.
To enjoy taxes and other exemption facilities.
To increase the efficiency of business by adopting technique, improved formula and scientific invention.

Types of Business Combination

Vertical Business Combination

The vertical combination takes place when the various departments of large industrial units combine together under single management. Under this arrangement, constituent units link up all the stages of production i.e. from purchasing raw material to its finishing.

Objectives of Vertical Business Combination

To regular the supply of raw material
To achieve economy in the purchasing and other sectors.
To locate the assured market for their products
To minimize the cost per unit.
To eliminate competition.
To avoid over production.
To reduce the middle man’s commission.
To supervise the management and production of effectively.

Horizontal Business Combination

When two or more similar nature business units combine under one management Horizontal combination comes into form. For instance, two or more textile industrial undertakings unite under single management it is called a horizontal combination. It is also known as a parallel combination

Objectives of Horizontal Business Combination

To achieve benefits of large scale production.
To avoid competition.
To obtain economy in management and production.
To regulate the prices of product.
To hire the service of outstanding talented persons.
To increase the efficiency of constituent units.
To produce the goods at minimum cost.
To supply the goods at possible lowest prices.
To secure the market of the product.
To introduce the improved method of production.
To avoid over production.

Circular Business Combination

When different natures of industrial business units combine into a single large company under one managing authority it is called a circular combination. It is also named a lateral combination.

For example, if sugar; chemical, and glass industries are combined together under one controlling authority, a circular combination takes place.

Objectives of Circular Business Combination

To establish the cordial relation among the constituent units.
To supervise the production and management most effectively.
To promote the cooperation in financing advertising, research and other overheads.

Diagonal Business Combination

The diagonal combination takes place when two or more business units rendering subsidiary services unite under the main industry. Suppose if repairing and distributing units are combined with the textile industrial units, it is called diagonal combination.

Objectives of Diagonal Business Combination

To maintain the quality of the product.
To reduce the cost per unit.
To achieve the economy in various overheads.
To promote the efficiency of business

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger

Rights and Duties of Collective Bargaining Agent

Last Updated on February 21, 2020 By Lisa C. Townes 1 Comment

Collective Bargaining Agent is the agent of the workmen in the establishment or, as the case may be industry, in the matter of collective bargaining.

It means the trade union of workmen which is formed for the purpose of regulating the relation between workmen and employers or for imposing restrictive conditions on the conduct of any trade or business

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Representation of Collective Bargaining Agent

In case of one trade union

Where there is only one registered trade union in an establishment or a group of establishment and the number of the members of such a trade union is not less than one third of the total number of workers in the establishment an application has been made for the purpose. The Registrar of trade union will certify such a trade union to be a collective bargaining agent.

Incase of more than one Trade Union

Where there are more registered trade union than one in an establishment or a group of establishments, the Registrar shall, upon an application made in this behalf by any union having not less than 1/3 members of total workers employed.

In such establishment or group of establishments or by the employer, or the government hold within fifteen days from making of the application, a secret ballot to determines as to which one of such trade unions shall be the collective bargaining agent form the establishment or group

Rights and Duties of Collective Bargaining Agent

The rights and duties of collective Bargaining Agent in relation to an establishment or group of establishment are given below:-

The Terms of Employment

He undertakes collective bargaining with the employer or employers an matters connected with employment, non–employment, the terms of employment or the conditions of work.

Nomination of Representative

He can nominate representative of workmen on the Board of Trustees of any welfare institution or Provident funds and of the worker’s participation fund.

Representation of Workman

He represents all or any of the workman in any proceedings.

Giving of Notice

The collective bargaining agent can give notice and declare a strike in according with provisions of ordinance.

Nomination of workers

He nominates workers representations on the Management committee which is to be constituted under section 23B to participate in Management.

Nominations of Shop Stewards

He can nominate shop stewards, who is required by section 23A to act as link between labour and management.

Appointment of Auditors

The collective bargaining Agent appoints auditors to audit accounts in case workers doubt the accuracy of the accounts already audited by the Managements auditors.

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger

The Statement In Lieu of Prospectus

Last Updated on July 30, 2021 By Lisa C. Townes Leave a Comment

A prospectus may be defined as any advertisement, notice circular, or other invitation, offering to the public for subscription or purchase of any share or debenture of the company. It is the nature of the contract between the company and the person who buys the shares.

The object of these documents is to convince the public to make an application for shares or debentures in the company. A public company is entitled to subscribe to its shares by means of a prospectus after receiving the certificate of incorporation.

Prospectus or Statement in Lieu of prospectus must be submitted to the registrar’s office before publication. The prospectus may be dated and signed by all the directors or proposed directors or his agents authorized in writing. Every copy issued to the public must, on the face of it state that a copy has been so submitted to the registrar’s office.

Grounds for Issuing Statement in Lie of Prospectus

Do not want to Issue Prospectus

If a company does not want to issue a prospectus to the public for the subscription of the shares, this statement is required to be issued to the public for necessary information.

It must be signed by every person named in it as a director or by his agent authorized in writing: The nature of the information of this document is more or less similar to that given in the prospectus.

A copy of this statement must be filed with the registrar within the prescribed time. This provision does not apply to a private company.

Share Certificate

A share certificate is a document issued under the common seal of the company and it states the extent of the interest of its holder in the company’s capital.

This certificate is usually given free of charge to every member whose name is entered in the register of members. It indicates the name, address, and other particulars of the holder, the number of shares, and the amount paid upon share held by him.

Share Warrant

This document is issued under the common seal of the company in respect of fully paid up shares. It is a negotiable instrument that is transferable by mere delivery. It must be stamped – according to the market value of the shares. It may be issued with- coupons attached by means of which the holder is entitled to claim and dividend.

Common Seal

Every company must have a common seal with its registered name engraved there in legible letters. It acts as the official signature of the company. Regulations governing the use and custody of the seal are laid down in the Articles of Association. It is generally to be used by the authority of the directors.

It is not necessary to use it on all documents. But the seal is required on documents when demanded by the company Ordinance or Articles of Association i.e. debentures, share certificate, or share warrant.

Dividend

A dividend is that portion of the company’s net profit which is distributed among the shareholders in proportion to the number of shares holding. It is first declared at the Board of Directors Meeting which is finally approved by shareholders at the annual general meeting.

Until a dividend is declared, no shareholders can claim any return on the capital he has invested in the: company. It must be paid out of the profits of the company. The directors are empowered to transfer some portion of profits to the reserve funds before recommending a dividend.

Minimum Subscription

It is the minimum amount of shares subscribed by the public before the directors can proceed to the allotment. The amount of minimum subscription fixed by the Memorandum or the Articles and named in the prospectus under the heading i.e., preliminary expenses, underwriting commission, working capital, and repayment of loans.

If no such amount is fixed then the whole of the capital offered for a subscription must be subscribed by the public. This is intended to ensure that the company will not commence the business without adequate capital.

Transmission of Shares

It signifies a change in ownership of the securities through the operation of law in case of death or insolvency of members. The right of the member is automatically transferred to his legal representatives after his death.

Similarly, on becoming bankrupt, a member’s shares may be transferred to a trustee by operation of law. The trustee must, however, prove to the company that he is entitled to deal with bankrupt shares.

Underwriting

The person who takes the risk to purchase a specified number of the shares and debentures of a newly floated company is known as an underwriter. He receives a commission in exchange for his services which is called underwriting commission.

So, the act of sale insurance by a specialized person in consideration of commission is named as underwriting. Sometimes underwritings do not want to take the whole risk, he may transfer a part to sub-underwriter which is arranged by means of a contract.

Contents of the Prospectus

The prospectus may be dated and signed by all the directors or proposed directors or his agents authorized in writing. Copies should be submitted to the public and must mention submission to the public.

Every prospectus issued by a public company must contain particulars:

Objectives

The main object for which the company is formed.

Particulars of Founders

The names, addresses and other particulars of founders.
Number of founders.
Their interest in the property and profit of the company.

Share Capital

The different classes of shares, number of each kind value of the share.

Dividend Right

Dividend capital and voting rights various classes of shares.

List of Directors

The names addresses and descriptions of directors or proposed directors.

Share Qualification

The number of shares if it is described in the Articles directors.

Remuneration of Directors

Any provisions in the Articles as to the remuneration of directors.

Minimum Subscription

The minimum subscription on which the directors may allot the shares. The amount payable on application and allotment.

Time of Opening

The lime of the opening of the subscription list.

Preliminary Expenses

The amount of the preliminary expenses commission is so payable in this regard.

Result of the Issue of the Shares

If the company has issued the various types of securities within the preceding two years, the results of the issue are to be given.

Underwriting Commission

The amount of underwriting commission paid within the previous two years in respect of the issue of shares. The names of underwriters of shares must be mentioned.

Property Purchased

The value and other detail of property purchased. The amount has been paid in cash or shares or debentures for such property.

Name of Vendor

The name and addresses of vendors. The amount paid or payable in cash or securities.

Material Contract

Date time and condition of the contract made by founders with different parties.

Interest of Directors

Full particularly in the nature of the interest of each director in all the matters of the company.

Auditor’s report

If the company has already been carrying on the business prior to the issue of prospectus, the auditor’s report must contain i.e. profit and losses, asset and liability, rate of dividend, etc.

Accountant’s Report

By name accountant’s report must also be included in the prospectus if the procedure of the issue of shares is to be applied in the purchase of any business.

Auditors

The name the auditors of the company.

Promoter Benefit

The benefit given to any promoter in terms of money or goods with the two previous years and the consideration given by him.

Preferential treatment

Particulars of .any preferential treatment given to any person to subscribe for any share or debenture of the company.

Duration

Duration for which the business is to be conducted where the period is less than three years.

Restriction

If there is any restriction imposed by the Articles upon the members of the company in respect of proxy, voting attending, and speaking.

Filling of the Prospectus

A statement that a copy has been submitted to the registrar’s office.

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger

Classes of Contract

Last Updated on February 26, 2020 By Lisa C. Townes Leave a Comment

Agreement between two or more members is known as a contract. A partnership deed is the best example of contact. Contracts are signed in an opening bank account, taking a payday loan and everything you sign for buying product/service. It’s awful.

Main Classes of Contract

Valid

A valid contract is one which is enforceable by law. the object of such a bond is to create an outstanding obligation between the parties, one party shall be bound to some performance, the other shall have a legal right to enforce.

Void

An agreement which is not enforceable by law is void. Such an agreement creates no legal right and obligations on either side, e.g. an agreement with an alien enemy, an agreement by way of wages, an agreement in restraint of trade. It is, in fact, a mere nullity. It may be treated as of no legal effect because it is contrary to some law or opposed to public policy.

Voidable Contract

A voidable contract is “an agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others”. e.g. a contract induced by fraud or misrepresentation or coercion, in other words, this type is, where an aggrieved party, thereto may avoid or repudiate while the other party cannot do so.

Unenforceable

The court, under certain circumstances, will not enforce a contract which is otherwise valid because of the technical difficulty created by the law of procedure generally, Such contracts are also called unenforceable which are incapable of proof owing to the neglect of some formalities required by special provisions of law. The most important contracts in this class are of guarantee and for the sale or other disposition of land of any interest in land.

Illegal Contract

The term “illegal” is used generally the wider sense. These types of contract are considered contrary to law and prohibited by law on pain of penalty where a void contract does not. All illegal contracts are void, but all void contracts are not illegal such as wagering agreement is void but not illegal

Contract on the Basis of their Performance

Executed Contract

An executed contract is one that has been fully performed by all parties. It is obvious, of course, that a contract may at a give time be at one of the various stages of execution

A contract may be executed at once, as in the case of cash sale; or it may be executed or performed in the future.

Executory Contract

An executory contract is one upon which no performance has taken place. For example, if a utility company agrees to furnish electricity to another party for a specified period of time at a stipulated price, the contract is executory. If the entire price is paid in advance, the commitment is still deemed executory, although, strictly speaking, it is executed on one side an executory on the other.

Contract on the Basis of Creation

Express Contract

An express contract is the result of the written or spoken words of the parties; these words establish the contractual relationship. The agreement and its terms are declared by the parties and are not left to interference or to be understood.

Implied Contract

An implied contract is one in which the evidence of the agreement is not shown by words, written or spoken, but by the acts and conduct of the parties. Such an agreement arises, for example, when one person, without being requested to do so, renders services under circumstances indicating that he expects to be paid for them, and the other person, knowing such circumstances accepts the benefit of those services.

Quasi Contract

Under certain circumstances the law imposes an obligation to pay for a benefit received as through a contract had actually been made. This will be done in a limited number of situations in order to attain an equitable or just result.

For Example

when a homeowner permits repairs to be made on his home with the knowledge that they are being made by a stranger who would expect to be paid for such repairs, there is quasi-contractual duty to pay for the reasonable value of the improvements.

In order to distinguish this type of obligation from a true contract which is based upon the agreement of the parties, the obligation is called a Quasi.

Contracts on the Basis of Nature

Bilateral Contracts

A bilateral contracts is created by an exchange of promises

Illustration

X promises to marry Y, and Y promises to marry X, this is a bilateral agreement.

Unilateral Contract

This type of contract is an exchange of a promise for an act. Since only one party is obliged to perform after the contract has been made, this is called unilateral contract.

Illustration

At Y’s request, X extends Rs. 2 lacs worth of credit to Z, and Y agrees to pay this sum in the even of Z’s default. This is unilateral contract, consisting of X’s act in exchange for Y’s promise for repayment.

Contingent Contract

Where the performance of contract depends upon the happening of uncertain event in the future it is called contingent contract.

According to section 31, It is a contract, to do or not to do something, if some event, collateral, to such legal commitments, does or does not happen.

Formal Contract

Formal contractors are those which are required to meet established standards of form, such as negotiable instruments; or those executed under seal. Must have essentials to be a valid contract

Writing
Signature
Seal
Delivery

Informal Contract

Most contracts are not required to conform to a set form or pattern. Such is referred to as being informal or simple. It may be written or oral. It must have consideration to support it otherwise it is not enforceable.

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger

Finger of Goods

Last Updated on February 20, 2020 By Lisa C. Townes Leave a Comment

A person, who find goods belonging to another and takes them into his custody, is subject to the responsibility of taking due care of them and trying to find out the real owner of the goods. It is also to be remembered that the finder has a good title over the things found and that his right is enforceable against all except the real owner.

In the words of section 71 “A person who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as a bailee”.

It is true that a person who comes by an article is not obliged to take charge of it, but if he does pick it up, he becomes a bailee.

Table of Contents

Rights of finder of goods

Right to receive compensation

The finder of goods has right to recover compensation for the trouble and expenses incurred in preserving.

Right of lien

He can exercise his right of lien and may retain the goods until he receive the expenses incurred in preserving the property or for finding out the true owner.

Right to Sue

He can file a suit against the owner for any reward that might have been offered to give him.

Right of legal Action

The finder may take necessary legal action against third party who wrongfully deprives him of the possession of the goods.

Right of Selling

The finder has a right to sell the thing of another found by him under the circumstances given below. (See 169)

The thing found is commonly the subject of sale.
The owner cannot be found with reasonable diligence.
The owner refuses to pay the lawful charges.
The thing is in danger of perishing or losing the greater part of its value or the lawful charges amount to two-thirds of its value.

Duties of Finder of Goods

Finding out the real owner

It is the duty of the finder of the goods to make possible effort in order to find out the real owner of the goods. He may retain such goods until he finds true owner by advertisement in case of costly thing.

Care to be taken by the finder

The finder is bound to take as much care of the goods lost as a man of ordinary prudence would under similar circumstances take of his own goods of the same bulk, quality and value as the goods lost.

Returning of goods

It is the duty of finder to return the lost goods to real owner when he receives reasonable compensation for his services he has rendered in respect of them.

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger

Rights, Duties & Liabilities of Agent to Principal

Last Updated on February 26, 2020 By Lisa C. Townes Leave a Comment

An agent on behalf of the principal has the same legal worth as principal himself. He can create legal contracts with third parties and act as an agent too. Sometimes or Often, agents are being paid for their services in the form of commission

Rights of Agent

Agent’s Lien

An agent is entitled to retain goods, papers and other property, whether movable or immovable, till the amount due to him for commission and disbursement etc in respect of the same has been paid.

Agent’s Right to Remuneration

The remuneration is generally specified in the agreement and may take the form of salary or commission or both.

Agent’s Right to an Indemnity

The agent may in the course of his duty incur liabilities or make payments of money for the principal, and he has a right to be indemnified against such liabilities and to recover any money paid.

Right of Compensation

He is entitled to be compensated by the principal in respect of injury caused to him by the principal’s neglect.

Right of Retaining

An agent has right to retain, out of any sums received an account of the principal in the business of the agency, all moneys due to himself in respect of advances made or expenses properly incurred by him in conducting such business, and also such remuneration as may be payable to him for acting as agent. (Sect. 217)

Right of Commission after rendering the Services

The commission is generally of the services but if “an agent who is guilty of misconduct in the business of the agency is not entitled to any remuneration in respect of that part of the business which he has misconducted”. (Sect. 217)

Duties of an Agent

Conducting Principal’s Business

An agent is bound to conduct the business of his principal according to the directions given by the principal, or in the custom which prevail in doing business of the same kind at the place where the agent conducts such business. (Sect. 211)

Requirement of Skill and Diligence

The agent must carry out his work with ordinary skill and diligent. (Sect. 212)

Submission of Accounts

An agent is bound to render proper accounts to his principal on demand. (Sect. 213)

Communicating with his Principal

It is the duty of an agent, in cases of difficulty, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions. (Sect. 214)

Separation of Accounts

The agent has a duty to keep the principal’s property separate.

Payment of Sum

The agent is bound to pay to his principal all sums received on his account. (Sect. 218). Payments methods can be Bank Transfer, Credit Card Payments, Cash and others

In Compliance with Lawful Instructions

The agent is under a duty to obey the lawful instructions of his principal.

Undue Advantage

If the agent takes any secret profit or undue advantage or bribe, the principal has right to dismiss the agent without notice.

Fiduciary Duty Towards his Principal

The agent has a fiduciary duty towards his principal. The agent must not use his position for his personal benefit to the detriment of his principal, and he must not become a principal as against his employer.

Liabilities of an Agent

In case of payment by mistake or fraud

Where an agent receives money by mistake or fraud from third parties, he can be sued there fore.

In Case of Bill of Exchange

The general rule is that an agent is liable on a bill of exchange if the sign it without making it clear that he is signing on behalf of a named principal.

In Case of Foreign Principal

Where as agent acts for a foreign principal, the presumption is that credit has been given to agent and not to the foreign principal. He can therefore, himself sue and be sued on the contract.

In Case of Undisclosed Principal

The agent is also presumed to be intended to be personally liable where he acts for an “Undisclosed Principal”.

Third Party Insistence

Where the third party insists that the agent should accept the liability before he will make the contract. If the agent has a greed to do this, he will be liable a long with the principal. In other cases the agent may have agreed to be the principal’s guarantor.

In case of Breach of Warranty

Where as agent exceeds his authority he is liable to the third party for breach of warranty of authority:

i. if the third party does not know of the lack of authority; and
ii. If the third party suffers loss as a result of this lack.

Liability for Dealing Person

In cases where the agent is personally liable, a person dealing with him may hold either him or his principal or both of them liable. (Sect. 233)

Liability of Pretended Agent

A person untruly representing himself to be the authorized agent of another, and thereby inducing a third person to deal with him as such agent, is liable, if his alleged employer does not ratify his acts, to make compensation to the other in respect of any loss or damage which he has incurred by so dealing. (Section 235)

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger

Types of Partnership

Last Updated on December 3, 2022 By Lisa C. Townes 2 Comments

According to the Tax Foundation, there are 8% of businesses in the US based on partnerships. A partnership is a kind of business where a minimum of two people start or a single person adds another owner to an existing business for any of the partnership benefits it’s looking for.

One of the most important characteristics is the different kinds and flexible number of partners in such a business.

Types of Business Partners

Active Partner (Managing or Working Partner)

A person who takes an active part, in the affairs and management of the business is called an active partner. He contributes his shares in the capital and is also liable to pay the obligations of the firm.

Nominal Partner

He is not in reality a partner of the firm but his name is used as if he is a member of the firm. He is not entitled to the profit or loss of the business but he is liable for all the acts of the firm. The person who has good prestige and status is given, the position of nominal partner.

Sub-Partner

The person who receives a share of the profit from one of the regular partners is called the Sub-Partner. He is not liable to pay the debt of the firm. He has no rights and privileges against the firm.

Silent Partner (Silent form managing point of view)

He is the kind of partner who does not participate in the affairs of the business but is known to outsiders as a partner of the firm. He is liable to pay the debts of the firm like another partner.

Secret Partner (Secret from the public point of view)

He is active in the running life of the firm but the public does not know him as a partner of the firm. He pays his share in the capital and is liable to settle the creditors of the firm.

Sleeping Partner or Dormant Partner

It is Sleeping from both Points of View i.e., public and managing

A person who

does not conduct the management of the firm personally
and is not known to outsiders as a partner of the firm is called a sleeping partner. But he invests his amount in the business and is liable to clear the debts of the firm. He is also called a dormant partner.

Minor Partner

There is no restriction to join the minor in the partnership by law. Although he may become a partner with the consent of all existing partners.

In this case, he can be admitted to the profits of the firm only but not losses.

He is not personally liable for the obligations of the firm. But the minor has the right to inspect and copy the accounts of the firm. Within six months of his attaining maturity, he has to give public notice of whether he wants to remain a partner or not. After his decision, he will be deemed a full-fledged partner.

Quasi Partner

A person who has retired from the running management life of the firm but he does not withdraw his capital from the business is known as a quasi-partner.

So his capital is considered a loan and he receives interest at a rate varying with the profit. Really he is not a partner but he is a Deferred Creditor.

Senior Partner

A person who brings a large portion of capital into the business is called a senior partner. He has a prominent position in the firm due to his experience, skill, energy, age, and other abilities.

Junior Partner

He invests a minor portion of capital in the business and so he has a small share in the profits. He is junior to another partner in the firm due to his age, experience, and other factors.

Holding Out Partner (Estoppels Partner)

A person who declares by word of mouth as a partner of the firm is called a holding-out partner. In reality, he is not a regular partner so he is not entitled to receive a share of the profit. Such persons are liable to those parties who have given credit on the faith of such representation.

Salaried Partner

An individual who does not bring anything i.e. amount or goods to the firm but has the right to receive a salary or share in the profit or both are named as a salaried partner. He is known to the outside world as a partner and is liable for all the acts of the firm like other partners.

Incoming Partner

A person who is newly admitted to the firm with the consent of all the parties is called an incoming partner. He is not liable for any act of the firm done before he became a partner unless he agrees;

Retired Partner (Outgoing Partner)

A person who goes out of a firm due to a certain event or reason is known as a retired or outgoing partner. In this situation, the remaining partners continue to carry on the business. The retiring partner is liable for all the obligations and debts incurred before retirement. But he will also be liable to third parties even for a future transaction if he does not give public notice of his retirement.

Partners in Profit Only

He is an individual who gets a share of the profits only without being liable for the losses. He does not participate in the management of the business. He will be liable to outsiders for all acts of the firm.

Limited Partner

A person who has not paid any obligation more than the share he holds in the firm is called a limited partner. He can not take part in the management of the firm. This kind of partner exists in a limited partnership. But this type of organizational structure is rare in our country.

Admission of a New Partner in an Existing Partnership

A new partner can be admitted into the partnership firm at any time with the consent of all existing partners.
A new partner to be admitted to a firm must not. be insolvent or lunatic.
The newly admitted partner is liable for all acts of the firm done after he becomes a partner.
A new incoming partner will not incur any obligation of the firm before he becomes a partner unless otherwise agreed.
Other terms and conditions will be determined under the terms of the partnership agreement.

Withdrawal or Retirement of any Partner

Every partner has a right to retire from the partnership firm by giving notice of fourteen days to all partners in case the partnership is at will.
If a partnership is formed for a definite period of time, a partner may retire or withdraw from the firm before the expiry of that period. But in case of loss borne by other partners due to his retirement, he will be responsible for the loss.
A partner may withdraw his share with the consent of existing partners.
An outgoing partner can start competing for business but he cannot use the firm’s name or trademark or other special privileges.
A retired partner will not be liable for any act of the firm after his retirement. But the withdrawing partner will be liable to third parties for all acts of the firm until he serves public notice of his retirement as withdrawal from the firm.
A withdrawing partner has the right to receive all his benefits i.e., share an interest, etc from other partners under the provisions of an agreement.

Difference between Co-Ownership and Partnership

Co-Ownership	Partnership
It is generally arisen by the operation of law or status. The agreement is not essential for the formation of co-ownership	It must be created by the agreement or contract. No contract no Partnership. The agreement may be expressed or implied
There is no concept of community sharing of profit or loss in co-ownership	Sharing of profits is the basic object of the formation of the partnership
Under this form of organization “business” may or may not be conducted	Various kinds of partners are united to carry on any type of “business”
As one co-owner is not an agent of another co-owner, he cannot bind another by his act	One partner is an agent of another partner and he can bind all persons by this act
A co-owner can transfer his share, right, and interest to other people without the consent of the existing co-owner	A partner cannot transfer his share or right to a stranger without the consent of other partners
There is no restriction for the maximum number of co-owner in the co-ownership business	There is a restriction for minors to become regular partners according to the Partnership Act. 1992
A Minor can become a regular co-owner in the co-ownership business	There is a restriction for the maximum number of partnership firms (i.e. not more than 20 in ordinary business and 10 in banking business)
A co-owner can demand a division of property for his own interest	A partner has no right to partition the property but he can demand a share of the profit out of the properties
A co-owner not being an agent of the other co-owner so he has no lien on the co-ownership property	As one partner is an agent of another partner, he has a lien on the business property
The business of the co-ownership cannot be dissolved by the death or retirement of any co-owner	The life of the partnership is affected by the death, retirement, or insolvency of any partner

Reference [1]: https://taxfoundation.org/overview-pass-through-businesses-united-states/

Lisa C. Townes

Lisa is a passionate travelers. She spends 3 months every year visiting different places worldwide. She has visited almost every famous place in the world. She herself is an affiliate blogger