Sale of Goods

The sale and purchase of goods is the most common character of the business transaction. In fact, it plays very significant role in every business operation. Most of the business, by its very nature comprise buying and selling of goods. All the agricultural and industrial produce goods for the purpose of selling in the market to earn money. The transaction of selling and buying occupy the large number within the whole business activities.

To recognize and regulate such business every country requires own legal framework. Every country of this world has arranged legal framework for governing this area. Both the Acts, the sale of goods act 1971 and the unfair contract term acct 1977 has governed

Carriage of Goods ( Transportation)

As being a necessary part of modern business, it is essential to regulate such business under legal framework. Therefore, every country of the world has made required legal framework to regulate carriage of goods. The goods are carried by land, sea or air. All the laws, relating to carriage of goods by land, sea or air, are considered as the law of carriage. The contract of carriage of goods under the law of carriage plays very significant role for operating the business activities.

Quasi Contract

Contract is formulated on the basis of free consent of its parties. It is basic and general rule in the realm of contract but there are some exceptional situation under which even in absence of free consent or even in lacking of knowledge, a person becomes responsible to perform certain work pursuant to law as a contractual liability. Law imposes contractual liability to the person in certain circumstances for preventing the victim party and its is accepted as in indirect or quasi contract. It is also one of the issue to be discussed under concept of contract.

Duties and Liabilities of Surety

The liabilities of a surety arises from the creation of a contract. But it comes into execution only when the principal debtor fails to perform his obligation. The liabilities are already found in the name of contract and provided in Section. 16 of NCA. But a surety may place a limit upon his liability in the contract. The nature of liability of a surety according to the contract of guarantee is give below:

1.       Primary or co-extensive nature of liability: The liability of the surety is secondary and co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. In general terms the quantum of obligation of a surety wills neither be more nor less than the surety will be responsible until the principal debtor becomes free his liability.

Law of Company and Insolvency

When a person wants to operate any business or industry, s/he has to establish a firm or company as specified by prevailing law. A company plays very important role to develop the commerce and industry in the world because it is an organization having separate identity from its promoters and it has covered almost all areas of the business. In the contemporary world, all the big type of institutions, organization, insurance, banks, industries etc are operated as companies. To arrange the sufficient finance, to limit the liability, to operate the business as an organized way and to operate the transnational huge business as easy way, the company is as a panacea.

Company is an artificial person that is created, run and ended by the law. The scope of company is wider than that of partnership firm of business. Partnership firm is a suitable device for a small group of partners who take personal interest and there is a mutual trust and confidence among them. The concept of the formation of a company is to outcome of experiences of partnership business and incorporation by registration. In partnership the liability of the partners for the debts of the business is unlimited. They are bound to meet without any limit, all the business obligations of the firm. The company being a separate person, the liability of its shareholders is limited in the context of company. The shareholders are not liable personally.

 The concept of a person is great achievement of jurisprudence that enables to deal with someone as a person in the eye of law. Law is the creation of a human being and artificial person is creation of law but in the eye of law there is not so significant difference between them. Only those who are capable to enjoy the rights and fulfill the duty are person in the eye of law, whether natural or artificial. In this sense Law creates the rights and obligation of persons and divides them to two classes:

1.       Natural person

2.       Artificial person

Natural person: Natural person are the human beings.

Artificial person: Artificial person are those persons created and developed by laws for the purpose of society and government.

Pledge and Pawn

Bailment and Pledge are those matters which are governed by the special types of contract. It is specific types of transaction between the parties that play significant role in the operation of business. Bailment is a border term under which pledge is also compromised one of special form. It is one of the important areas to be addressed by the contract law. Nepalese Contract Act, 2000 has dealt the general principles in relation to this contract under its chapter 5 and 6. They are mentioned separately as underneath:

B. Pledge and Pawn 

Accumulation of capital is one of the significant functions for business. Capital may be raised by different means. One of these means is to obtain loan. Loan transaction is very much important in business operation and pledge or pawn provides security of repayment of such loan. Pledge is a specific bailment since it is relating only to the loan transaction. The goods deposited as security to repay the debt or to perform the promise is known as pledge. The term pawn is synonymous to the term pledge and it can be used interchangeably.

The Contract Act, 2000 has used the different terms Dhito or Dharaut for denoting pledge. Section 35 of the Act mentions that in case any person has obtained a collateral while supplying credit to anybody as a security for that credit, or obtained any property as a deposit in the form of a guarantee to perform the concerned work while having any work performed a contract relating to collateral or deposit shall be deemed to have been concluded. The Explanation of the same section further mentions that For the purpose of this chapter, the term property shall denote any movable or immovable property, and title or document establishing title to that property.

Therefore a pledge is only a special kind of bailment contract under which goods are deposited with a tender or promise as a security for the repayment, a pledge also involves only a transfer of possession of goods pledge not ht ownership. The ownership remains with the pledger. The pledge or Pawnee has a special interest in the goods pledged. The general interest always remains in the pawner and wholly reverts to him on discharge of debts or work to be performed.

Bailment and Pledge

Bailment and Pledge are those matters which are governed by the special types of contract. It is specific types of transaction between the parties that play significant role in the operation of business. Bailment is a border term under which pledge is also compromised one of special form. It is one of the important areas to be addressed by the contract law. Nepalese Contract Act, 2000 has dealt the general principles in relation to this contract under its chapter 5 and 6. They are mentioned separately as underneath:

A.      Bailment

A contract of bailment is one of the branch of general contract since it has to comply all the necessary elements of general contract. It is special in the sense that it comprises special matter under which party hands over certain movable goods to another party for certain purpose one returnable basis. This term bailment is received from the French term baillier. It means to deliver or handing over. A bailment is conditional delivery of goods by a person to another for definite purpose and after the fulfillment of purpose; the goods delivered have to be returned. The essence of bailment is to change the actual possession of goods; it does not comprise the transfer of ownership of goods like sale. Its common illustrations are hiring of goods, furniture cycle, delivering of cloth to a tailor for making suit, delivering a car or scooter for repairing, delivering dress to dry cleaner, etc.

Section 25 of Contract Act, 2000 defines: A contract relating bailment shall be deemed to have been concluded in case any person delivers any property to another person on a returnable basis or for handing it over to any other person or selling it as ordered by him/her. The same section has provided that a deed must be execute while bailing any property worth more than Five Thousand Rupees.

Some Examples of contract of bailment

1.       A hires 60 chairs from B for using in marriage ceremony

2.       A gives his suit to B, a dry cleaner for washing

3.       A gives his motorcycle to B for repairing

4.       A gives his watch to be for repairing

5.       A hand over his cow to B, a veterinary doctor, for treatment.

Carriage of goods

Transport plays a vital role in economic development of a country. It facilitates the movement of goods and labour from one place to another place. The role of carriage is very important in the development of industry and commerce. In one hand, it helps to carry the raw materials and machines to the industry and on the other hand the raw materials and machines to the industry and on the other hand it carries the industrial and agricultural productions to the market. Thus, the carriage of goods from one to another within the country or from one country to another plays an important role in the commercial life modern world.

As being a necessary part of modern business, it is essential to regulate such business under legal framework. Therefore, every country of the world has made required legal framework to regulate carriage of goods. The goods are carried by land, sea or air, are considered as ht law of carriage. The contract of goods under the law of carriage plays very significant role for operating the business activities.

The Contract Act, 2000 has incorporated some provision about the carriage under Section 65 to 70. Section 656 is concerning to the definition and other Sections relating to the liabilities to the carrier. The Act has not made sufficient provisions for regulating the carriage. It has not classified the carrier as common and private. It does not mention about the goods carriage. In the addition to this Act, there are other Acts also relating in respect of carriage. More or less these all Acts also relating in respect of carriage. More or less these all the Acts have made some provisions for regulating it. The relevant Acts are given below:

1.       The civil Aviation Act, 2015

2.       The Internal Postal Act, 2019

3.       The Necessary Services Discharging Act, 2014

4.       The Nepal Airlines Corporation Act, 2019

5.       The Railway Act, 2020

6.       The Shipping Act. 2027

7.       The Vehicle and Transport Management Act, 2049

8.       The Multimodal Transportation of Goods Act, 2063

Introduction to Agency

Modern business, due to it’s widen coverage and nature, is becoming complex with the pace of time. Due to vast expansion, it is not possible for a person to carry on all the businessman transactions him/herself. The circumstance requires a businessman necessarily depend on other persons to carry on all the business and even carrying out the several transactions. It is necessary to delegate powers to another for performing the contractual work. Another person who acts on behalf of the businessman is known as agent. The person to whom the act is done, or who is so represented is called principal and agent called a contract of agency. A appoints B to sell his land on his behalf and B sells the land of A on behalf of A. Here, A is principal and B is his agent. The relationship between A and B is called agency. In other words, here is a contract of agency between A and B for performing certain work.

The contract of agency is a special nature of contract. It governs the special relationship between the two persons, namely the principal and agent. The matter of contract of agency is governed by the Commercial Regulation, 1993 in England, Contract Act 1872 in India. In Nepalese context Nepal Agency Act 2014 B.S Nepal Agency Regulation 2019 B.S and Contract 2000 are relevant. Basically the Contract Act 2000 has made some provision in relation to the contract of agency.

The Contract Act 2000 has defined the term contract of agency under the Chapter 8. The section 56 of the Act defines it as any person may appoint any other person as his/her agent to do anything on his/her behalf, except connected to anything his/her personal skills or to conduct his/her agent of may transaction with a thirdperson on his behalf or to represent himself to such person, or toestablish any kind of legal relation with the person appointing an agent and a third party, and incase an agent is so appointed a contract relating to agent shall be deemed to have been concluded.

General Rules of Agency

1.       Whatever a person competent to contract may do himself, he do through an agent, except for acts involving personal skills and qualifications. In fact, where the work to be done is absolute personal, no agent can be employed.

2.       He, who does through another, does himself. In other words, the act of agent are, for all legall purpose, the acts of principal.

Contingent Contract

On the basis of creation of obligation a contract can be classified into two fold, namely general contract and contingent contract. Contingent contract is also one of the important parts of contract that plays significant role particularly in the area of insurance or indemnity. It remains incomplete to the study of contract until knowing about the contingent contract.

Contingent means dependent or conational and such condition is of uncertain in nature. It means there is no certainty about something, which may or may not happen in the day to come. It is a contract in which the performance remains due. At the time of making of contract, parties are bound by legal relationship but no obligation is emerged at that time. Obligation always based upon the event which may or may not happen in future. Thus, it is a contract, the performance of which is dependent upon, the happening or non- happening of an uncertain event, collateral to such contract, A aggress to pay B Rs. 10,000 if B’s house will burnt. This is a contingent contract. Here is no certainty the house B will burnt at the time of contract and there is no obligation at the time of making contract.

A promise, under the contract to be performed, may be absolute or unconditional when promissory undertakes to perform it any time and there is no precondition for the creation of an obligation. A promise is conditional when performance is due only if an event, collateral to contract, does or does not happen in future. A contract, for an illustration, to pay certain amount of money on the expiry of a fixed duration or on the death of a person is not contingent contract because these events are of certain in nature. But a contract to pay certain money on the destruction of a house due to earthquakes a contingent contract because that contingency may or may not happen is uncertain.

Performance of Contract

A contract is formed for fulfillment not to breach. After the formation of a contract the stage of fulfillment comes before the parties. The contract is performed when both the parties do what they had agreed to do in contract. This is called the performance of obligations by its parties. When both the parties have performed the respective obligations, the contract is said to be discharged by performance. This is the most usual and expected mode of termination of contract since parties wanted to perform it at the time of inception. Parties bound to perform only that obligation as specified by the contract. So, they are supposed to fulfill their respective obligations. Therefore, fulfillment of respective promises by the concerned parties on a manner as designed in the contract without making any variation in its terms and condition is called performance or execution of contract. If one party performs his promise under the contract, he alone is discharged from his liability and acquires right of action against the other non-performing party. But it is minimum condition to take action against other party that the claiming party has to perform or is willing to perform his promise on hi side.

 Possibility of performance is one of the significant elements of valid contract. An agreement must be capable of being performed to be regarded as valid one. If an agreement is made containing impossible obligation such as to colour in the sky, is void from the time of its formulation. Performance means fulfillment or execution of promises of parties by themselves.

Promises bind the representatives of the promisor in case of death of such promise before performance, unless a contrarily intention appears from the contract.

Performance of contract is expected at the time of its formulation and it is important to carry oui the sound business environment between the parties. The importance of performance of contract can be mentioned as:

1.       Performance promotes the good relationship between the parties.

2.       The good performance encourages the parties to further transactions.

3.       Both the parties feel greater profit and lesser loss from the consequence of performance.

4.       The parties have no further risk of disputing and invoking remedies.

5.       Both the parties are standing in winning position since they got what they want.

6.       The performance opens the further opportunities of exploring new areas of transactions.

7.       The purpose of making contract is fulfilled by the performance as expectation, and nothing remain to do between its parties.

Free Consent

Consent is a state of mind of a contracting party that leads to such party to enter into contract. It is a willingness or permission of party to form a contract after being aware about the terms and condition of the contract. It is a judgment to place oneself as a contracting party made by the party concerned. The free decision to form a contract by the parties is known as free consent upon it. Parties of the contract must be free from any kinds of coercion, pressure, threaten, undue influence to make contract in respect of forming the terms and condition under that contract. The contract Act 2000 has not defined the term consent but the section 14 of the Indian Contract Act, 1872 has defined this term as two or more are said to consent when they agree upon the same thing in the same sense. This definition clarifies the meaning of consent as agreeing upon the same thing in the same sense. Being agreed to do or not to do something in the same sense taken by offered is called consent The Both parties agree upon same thing is the same sense they are said to be consent or making meeting of mind. It is known as consensus-ad-idem in English law. It is the same intention regarding terms and condition of the contract of both parties.

Section 10 of the Indian Contract Act 1872 has mentioned that all agreements are contract if they are made by free consent of the parties. Therefore, only consent is not sufficient to form a contract but also it must be made freely.

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Fraud

It is a willful misrepresentation made by a party with intent to deceive another party through inducing such party into the contract believing that a thing is true which is untrue or false in reality. It means fraud is misrepresentation with bad or what we called in legal term mala fid intention. Such misstatement is made knowingly by a party to deceive another party through the intended transaction under the contract made.

To say, A party to the contract or his/her agent shall be deemed to have committed fraud if he/she, leads the other party or his/her agent to believe or takes any action to believe the particular matter is true, although he/her knows that it is fake, or suppress any information in his/her possession, or in indulging in any other fraudulent act punishable under prevailing law, with the intention of deceiving the opposite party or his/her agent. According to this explanation it includes anyone of the following situation if committed by one party of the contract or his agent with a view to deceiving another party or his agent:

1.       To induce other party to believe that a false act is as a true one.

2.       2 To conceal actively about any truth in relation to fact.

3.       3 To do any act that conveys other party to believe false as true, and

4.       4 To do some such acts that is declared to be fraudulent by the current Nepalese law.

The Indian contract Act, 1872 section 17 mentions about it that the fraud includes any of the following acts committed by a party to a contract, or with his connivance or by his agent, with intent to deceive another party thereto or his agent or to induce him to enter into the contract:

1.       The suggestion as to fact of that which is not true by one who does not believe it to be true

2.       The active concealment of a fact by one having knowledge or belief of fact

3.       A promise made without any intention of performing it

4.       Any other act  fitted to deceive

5.       Any such act or omission as the law specially declares to be fraudulent.

Law

The term Law indicates that legal instrument which comprises several forms of rules and principles. It is the guidance of society and treats equally to the every person. Being a subject of law every member of the society should regulate his/her conduct or act as specified by the law or within the ambit of the law. No one is permitted to breach it. In the case of infringement of law, concern person should be the subject of legal consequence namely the sanction. Law breaker person has to pay punishment as prescribed in that particular law.  It is presumed that everyone should know the law. It is a universally recognized principle that ignorance of law and mistake as to law is no excused. Therefore every person of the society should have knowledge about the current laws. This principle is necessary to execute or enforce law equally in the society as an instrument to achieve its end. Law is not itself an end it is only means to serve the needs of human beings. Therefore the ultimate goal of law is to provide valid means to achieve the ends as determined by the members of the contemporary society. In the very precise words it can be said that the law is the system of rules of conduct established by the sovereign government of a society to correct wrongs maintain the stability of political and social authority and deliver justice.

In this context it can be said that the law is a binding principles or the rules made by the competent authority or state to control systematize and regulate the human conduct or activities. It is believed that the law is a valid instrument to develop the society as excepted manner.

There are various schools of thoughts have been developed in the realm of law or jurisprudence with the pace of time. Every thought has its own specific message and importance

Definition of Law

Law is that which must be obeyed and followed by the citizen to sanction or legal consequences.

Rule made by authority for the proper regulation of a community or society for correct conduct in life.

A law is a rule of conduct imposed and enforced by the sovereign.

A law is at the body of principles recognized and applied by the state in administration of justice.

 Law is a rule of human action and conduct sanctioned by national usage.

Any kind of rule can in whereby action is framed is law.

A law is a general rule of external human action enforced by a sovereign political authority.

Law in its most general and comprehensive sense, signifies rule of action and is applied indiscriminately to all kind of action whether animated or inanimate, rational or irrational.

Business law

The term business comprises broad activities of human beings in the society. It is an act or activities of the human being in the society. It is an act or activities for livelihood or earning wealth. Human activities may be in various forms including enterprise, profession, occupation, service, export import, selling buying etc. Any kinds of human activities which are intended to earn money or to increase wealth composed under the business. L.H Haney has composed business as human activity directed towards producing or acquiring wealth by buying or selling goods. According to Peterson Business is an activity in which different person exchange something of value whether goods or services for actual gain or benefits.

Law is that valid instrument which is enforcing for controlling and regulating the human conduct or behavior in society. Everyone has to abide it as prescribed way. Business being an activity of human being must be congruence with the legal provisions.

The term Business law is a combination of two different terms business and law. The term business caries certain meaning and the same is true in respect of the term law. When these two are used conjointly for referring distinct meaning, it connotes the different meaning from its prior separate form. The term business law denotes that portion of law which is relating to the business activities. It is concerning with the establishment, operation, development, expansion and winding up of any business activities, facilitates and immunity of business person whether natural or artificial. It regulates the relation between public and private sector, and it creates, maintains and promotes the conducive environment for business.

In the ancient society, business activities were conducted on the basis of usage, custom, religious norm and mutual understanding. Due to increase of business activities, several new problems came into existence and businessman themselves started to formulate several rules and policies for conducting business activities and settling disputes.

Definition of Business Law

Business law may be defined as branch law which comprises laws concerning to trade industry and commerce.

Business law may be defined as branch law which deals with the rights and obligations of mercantile persons arising out of mercantile transaction in respect of mercantile property.

Business law provides legitimacy security control and incentives to business activities. It also protects rights and interests of consumers, labour, business and society.

Business law is that portion of legal system which guarantees and orderly conduct of business affairs and their settlements of legitimate disputes in just manner.