Commercial Law and Business Ethics
Commercial Law and Business Ethics tests basic rules from contract, sale of goods, negotiable instruments, consumer law and ethical conduct.
Legal framework
The Indian Contract Act 1872 requires offer, acceptance, consideration, capacity, free consent and lawful object. Agreements without consideration are exceptions, not the rule. A void agreement has no legal effect; a voidable contract can be avoided by the aggrieved party. The Sale of Goods Act 1930 distinguishes sale from agreement to sell and conditions from warranties. Caveat emptor applies, subject to exceptions such as misrepresentation. The Negotiable Instruments Act 1881 covers promissory notes, bills of exchange and cheques. The Consumer Protection Act 2019 provides consumer rights and three-tier redressal. Business ethics covers honesty, fairness, transparency and responsibility beyond legal minimums.
Worked example
A buyer purchases a laptop described as new, but it is used. The description is a condition of the sale. The buyer may reject the goods and claim a refund. If the buyer accepts the goods and continues to use them, the breach may be treated as a breach of warranty, allowing damages but not rejection. The reasoning turns on whether the buyer has accepted the goods.
Traps
All agreements are not contracts. An invitation to offer is not an offer. A cheque is a bill of exchange drawn on a banker payable on demand, but not every bill is a cheque. Ethical conduct is not limited to what is legally enforceable.