BUSINESS LAW

BUSINESS LAW
1. All contracts are agreements, but all agreements are not

contracts. Why?
2. What is the difference between a void contract and a
voidable contract?
3. Who can accept and offer to constitute a contract?
4. What are implied warranties?
5. What is a contract based on utmost good faith?
6. Can an undisclosed principal sue and be sued?
7. What do you understand by Articles of Association?
8. What do you understand by Corporate Veil?
9. What is the difference between stocks, shares and bonds?
10.
How is a Company wound up under the Companies
Act?
11.
What are the different types of Marrine Insurance
Policies?
12.
Define Company and bring out the features of a
company.
13.
Explain the different types of bills.
14.
Explain the rules of communication of offer.
15.
Explain the different types of partners.
16.
What are Contingent Contracts? What are the rules
governing contingent Contracts?
17.
What is Consideration? What are the rules governing
consideration?
18.
Give the salient features of the Indian Partnership Act.
19.
What are the various forms of negotiable instruments?
What are the remedies available to one if a cheque received
is dishonoured?
20.
Discuss the rights of an unpaid seller.
21.
Discuss the concept of Quantum Merit.
22.
What is the nature of a Contract of Insurance? Discuss
the fundamental principles of Insurance.
23.
Explain Memorandum of Association under the
Companies Act.
24.
Explain the various forms of Companies. What are the
differences between a Private Limited Company and Public
Company
25.
Explain the role of Directors of a Company.
26.
Explain the different types of meetings.
27.
Explain the rules relating to endorsement.
28.
Explain the position of Minor as a partner.
29.
Explain the different types of Crossing of cheques.
30.
Explain the steps in formation of company.
CASE STUDY
In a precedent setting order, the Delhi High Court has ruled that a clause in an agreement
regulating a mode of trade is enforceable even after expiry of such agreement and would not be
hit by Section 27 of the Indian Contract Act (ICA).
The judgment was passed by Justice RC Jain in a case filed by Knorr Bremse AG of Germany
against Escorts Ltd. The Court, however, declined to grant interim injunction to the German
company against Escorts.
Knorr Bremse, a leading manufacturer of braking systems for railway wagons and engines, had
entered into a technology licensing agreement with Escorts in 1977 which expired in 1995. The
German company alleged in the case that Escorts offered to export braking systems
manufactured with Knorr Bremses technology to Iranian railways and Iraq railways through
Rites Ltd without any intimation and consent of the petitioner which was in violation of the
provisions of Article 1 (3) of the license agreement between the two companies.
Under this clause, Escorts was to take approval of the German company before exporting such
braking systems to countries where Knorr Bremse had licensing agreements with other parties or
had agents and distributors. Interestingly, Article 1 (5) of the agreement between the two
companies provided that even after the expiry of the agreement period, the clause regulating
Escorts exports of braking systems manufactured with Bremses technology would remain
enforceable.
An Escorts spokesperson, when contacted for comment, told FE, the honourable court has not
granted interim injunction sought by the petitioner (Knorr Bremse). Since the matter is subjudice, we would not like to make further comments.
The senior legal counsel for Escorts, Shanti Bhushan, maintained in the court that the clauses fall
within the purview of Section 27 of ICA and are therefore void and illegal as they are contrary to
Section 27 of ICA. The Escorts counsel argued that the restraint imposed by Clause 1 (5) of the
agreement was unreasonable and against the public policy as it imposed absolute restrictions on
Escorts to carry out even lawful trade or business and the company is within its rights to freely
export the products to other countries.
Senior counsel for Knorr Bremse, CA Sundaram along with Diljeet Titus of Titus & Co and Suhail
Dutt, on the other hand, argued that so far as exports from India of products manufactured by
Escorts with technology of Knorr Bremse were concerned, Escorts was bound by the conditions
of export as laid down in the agreement which survives even after the expiry of the license
agreement on the strength of Article 1 (5).
After hearing the arguments of counsels for both the companies, Justice Jain observed, this
Court on a consideration of the above stipulations is prima facie of the view that the restrictions
contained in Article 1 (3) do not appear to be in restraint of trade which should attract Section 27
of the Contract Act...so far as the question of survival of the aforesaid stipulations even after the
expiry of the agreement is concerned suffice it would be to mention that the respondent (Escorts)
having accepted the same with open eyes cannot be allowed to urge that the limitations contained
in Article 1 (3) would not survive after the expiry of the license agreement.
But the court declined to grant interim relief to Knorr Bremse. The court held that even if the
negative covenant embodied in the clause of the agreement is valid under German law, it cannot
be enforced in India and therefore injunction cannot be granted in favour of the plaintiff. Justice
Jain ruled that since Escorts is not debarred from supplying and making their offers for
supplying products to other countries, the company should be given a fair chance of competing
with them and if they are successful there should be no reason why they should not be allowed to
fulfill their commitment for exports.
Read the case and bring out the major issues involved. What is Section 27 of the
Indian Contract Act and how does that section becomes applicable in this case?

BUSINESS LAW - Important Questions

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1. All contracts are agreements, but all agreements are not

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