Mercantile Law

Legal Definition of Negotiable Instruments

Negotiable Instruments Act

The law relating to “Negotiable Instruments” is contained in the Negotiable Instruments Act, 1881, as amended up-to-date. It deals with three kinds of negotiable instruments, i.e., Promissory Notes, Bills of Exchange and Cherubs. The provisions of the Act also apply to ‘hands’ (an instrument in oriental language), unless there is a local usage to the contrary. Other documents like treasury bills, dividend warrants, share warrants, bearer debentures, port trust or improvement trust debentures, railway bonds payable to bearer etc., are also recognized as negotiable instruments either by mercantile custom or under other enactments like the Companies Act, and therefore, Negotiable Instruments Act is applicable to them.… Read the rest

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Legal Definition of a Contract

Definition of Contract

According to section 2(h) of the Indian Contract Act: “An agreement enforceable by law is a contract.” A contract therefore, is an agreement the object of which is to create a legal obligation i.e., a duty enforceable by law.

From the above definition, we find that a contract essentially consists of two elements: (1) An agreement and (2) Legal obligation i.e., a duty enforceable by law. We shall now examine these elements detail.

1. Agreement. As per section 2 (e): “Every promise and every set of promises, forming the consideration for each other, is an agreement.” Thus it is clear from this definition that a ‘promise’ is an agreement.… Read the rest

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Strategies Adopted in Proxy Battles

To win over proxy wars (in the case of takeover bids), where the corporate board or equity holders meetings are exposed to proxy wars, the directors have to adopt strategies based on the steps given below:

  • Collection of material information
  • Construction of proxy fight team
  • Mass contact with shareholders

Board of Directors of a company while facing a takeover bid have to work hard to defeat such a bid. Therefore they should collect all possible information about the affairs of their own company, competitors, the takeover — bidder and the opponents. Particularly the management of a company with small holdings on their board face stiff problem.… Read the rest

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Meaning of Proxy Battles

Proxy battles take place when the agenda items at the meeting are likely to be opposed by dissident equity shareholders. Management of the company collect proxies to face these opponents in the meetings of the Board of Directors as well as shareholders.

Meaning of Proxy

Proxy is defined as a vote in deciding corporate issues in meetings and determining elections.

Section 176 of the Companies Act, 1956 deals with the meaning, use and disposition of proxy, Section 176 is reproduced below:

“176. Proxies — (1) Any members of a company entitled to attend and vote at a meeting of the company shall be entitled to appoint another and vote instead of himself; but a proxy so appointed shall not any right to speak at the meeting:

Provided that, unless the articles otherwise provide:

(a)       this subsection shall not apply in the case of a company not having a share capital;

(b)     a member of private company shall not be entitled to appoint more than one proxy to attend on the same occasion; and

(c)       a proxy shall not be entitled to vote except on a poll.… Read the rest

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Application of General Rules of Law of Contracts to Life Insurance

A contract of insurance is a contract of utmost good faith technically known as uberrimae fide. The doctrine of disclosing all material facts is embodied in this important principles, which applies to all forms of insurance. The Proposer, who is one of the parties to the contract, is presumed to have means of knowledge, which are not accessible to the insurer, who is the other party to the contract. Therefore, the proposer is bound to tell the insurer, everything affecting the judgement of the insurer. In all contract of insurance, the proposer is bound to make full disclosure of all material facts and not merely those which he thinks material.… Read the rest

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Definition and nature of a company

A company can be defined as a group of persons associated together for the purpose of carrying on a business, with a view to earn profits. The word ‘Company’ is an amalgamation of the Latin word ‘Com’ meaning “with or together” and ‘Pains’ meaning “bread”. Thus, a company is nothing but a group of persons who have come together or who have contributed money for some common person and who have incorporated themselves into a distinct legal entity in the form of a company for that purpose.

There is very good definition by Lord Justice Lindey, “A company is an association of many persons who contribute money or money’s worth to a common stock and employ it in some trade or business and who share the profit and loss arising there from.… Read the rest

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