Public Company Accounting Reform and Investor Protection Act of 2002 commonly known as Sarbanes-Oxley Act or SOX Act was enacted by US Congress to handle concerned issues surrounding business management and financial reporting as a way to restore and maintain investor confidence in the US capital market grappling with corporate scandals and accounting irregularities. With the integrity of the market further compromised by the failures of Enron’s bankruptcy and WorldCom, the act considered as the most significant corporate regulatory reform since the Securities and Exchange Act of 1934, sought to curb the ongoing-spectacular corporate failures and scandals occurring in North America.… Read the rest
Legal Environment of Business
Rule of Caveat Emptor
Rule of Caveat Emptor
Caveat emptor is a Latin term meaning “let the buyer beware”. It is a general rule of law that a purchaser assumes the risk of his/her purchase. The intent of the rule is to place a duty of care on the buyer in selecting an item and putting forth appropriate inquiry before completing the sale. In this way, a seller is also protected from liability for buyer’s remorse.
A seller is under no duty to reveal unflattered truths about the goods sold and therefore, whenever the buyer buys goods, he must exercise necessary care in his own interest.
… Read the rest Discharge of a Contract
When the rights and obligations arising out of a contract are extinguished, the contract is said to be discharged or terminated. In other words, discharge of a contract means termination of the relationship between the parties to a contract.
The ways of discharging a contract can be discussed as:-
i) Discharge of Contract By Performance: When a contract is duly performed by both the parties within the specified time and in the manner prescribed, the contract is said to have been performed and discharged. Performance may be: (a) Actual (b) Attempted.
- Actual Performance: When each party to a contract fulfils his obligation arising under the contract within the time and in the manner prescribed, it is called actual performance of the contract and the contract is discharged.
Features of Negotiable Instruments
Negotiable Instrument, in law, a written contract or other instrument whose benefit can be passed on from the original holder to new holders. The original holder (the transferor) must countersign the instrument (as in the case of a cheque) or merely deliver it (as in the case of a bank note) to the new holder; the new holder is then entitled to the benefit of the instrument (in the case of a cheque, to the money from the bank; in the case of the bank note, to the sum promised on the note).
According to section 13 of the Negotiable Instruments Act, 1881, a negotiable instrument means “Promissory note, bill of exchange, or cheque, payable either to order or to bearer”.… Read the rest
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
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