DRIVE- SPRING 2014
PROGRAM- Bachelor of Business Administration- BBA
SEMESTER- III
SUBJECT CODE & NAME- BBA301
BK ID- B 1595 CREDIT & MARKS-4 Credits, 60 marks
Q.1: What are the various kinds of agencies?
(On the basis of extent of authority, On the basis of nature of work)
ANS:
On the basis of extent of authority:
Agents can be classified into the following three types on the basis of the extent of authority they
enjoy:
i) Universal agents hold broad authority to act on behalf of the Principal e.g., they may hold a
power of attorney (also known as mandate in civil law jurisdictions) or have a professional
relationship such as between a lawyer and his client. Universal agents are employed to do all
such acts that the Principal can lawfully do and delegate. Such Agents have exclusive rights and
unlimited authority.
ii) General agents hold a more limited authority to conduct a series of transactions over a
continuous period of time. General agent's carryout general acts connected with the Principal’s
business or trade
Such as buying or selling goods for a company.
iii) Special agents are authorized to do some particular act or carry out particular transaction
on behalf of the Principal such as sell arouse. They enjoy the authority to conduct either a single
transaction or a specified series of transactions over a limited period of time.
On the basis of nature of work
Agents can also be classified as Mercantile or non-mercantile Agents according to the nature of
work they carry out on behalf of the Principal:
a) Mercantile Agents represent the Principal in commercial and monetary transactions. The
following are mercantile Agents:
I.
Broker: A broker negotiates and makes contracts between the Principal and third
parties. The broker sells and buys goods on behalf of the Principal but does not have lien
over the goods. Heroes not have possession of the goods nor can he sell them in his own
name. His job is to bring buyers and sellers together for commission.
II.
Factor: A factor is a mercantile agent who is given a general right of lien on the goods
entrusted to him for selling. He is authorised to buy and sell goods in his own name.
III.
Auctioneer: A person authorized by the Principal to have possession over goods and to
sell them at a public auction in return for a commission is called an auctioneer.
IV.
V.
Commission agent: It is a general term that refers to brokers as well as to factors.
Del-cruder agent: A del-cruder agent guarantees to the Principal that the third
persons with whom he has entered into contract will perform his obligation under the
contract. He gives such a guarantee for an extra fee called Del-cruder commission. He
becomes liable to pay if the third party defaults.
VI.
Banker: A banker acts as an agent by providing all banking services to the customers by
collecting cherubs, drafts or sell securities etc. on their behalf.
b) Non-mercantile Agents do not deal with commercial or monetary transactions on behalf
of the Principal. They are not involved in the establishment of relations between a buyer and a
seller. Their job into carry out such acts which are connected to the rights and obligations of the
Principal e.g., a lawyer advising on legal matters, estate agent on property matters etc.
Attorneys, solicitors, insurance agents, election agents are all examples of non-mercantile
agents. A person’s Wife can also acts as a non-mercantile agent.
Q.2: Define the meaning of a ‘Cheque’. Explain the crossing of a cheque and its
types.
Meaning of ‘cheque
Crossing of a cheque’
Types of crossing
ANS:
Meaning of ‘cheque:
Cheque as a “bill of exchange drawn on a specified banker and not expressed to be payable
otherwise than on demand and it includes the electronic image of truncated cheque and a
cheque in the electronic form.”
Crossing of a cheque’:
There are two types of cheques, open cheques and crossed cheques. A cheque which is payable in
cash across the counter of a bank is called an open cheque. When such a cheque is in circulation,
a great risk is attached to it. If its holder loses it, its finder may go to bank and get the payment,
unless its payment has already been stopped. It was to prevent the losses incurred by open
cheques getting into wrong hands that the custom of crossing was introduced. A cross cheque is
one on which two parallel transverse lines with or without the words ‘& Co.’ are drawn. The
payment of such a cheque can be obtained only through a banker. Thus, crossing is a direction to
the draw eebanker to pay the amount of money on a crossed cheque generally to banker or a
particular banker, so that the party who obtains the payment of the cheque can be easily traced.
Types of crossing
There are two types of crossing:
1. General crossing
2. Special crossing
Another type of crossing known as ‘restrictive crossing’ has developed out of business usage.
1. General crossing: A cheque is said to be crossed generally where its bears across its face an
addition of:
i)
The word ‘and company’ or any abbreviation thereof, between two parallel transverse
lines, either with or without the words ‘not 'negotiable.
ii)
Two parallel transverse lines simply, either with or without the words ‘not negotiable’
2. Special crossing: Where a cheque bears the name of a banker across its face, either with or
without the words ‘not negotiable’, the cheque is deemed to be crossed specially. Transverse
lines are not necessary in case of special crossing. The payments of specially crossed cheque scan
are obtained only through the particular bankers whose name appears across the face of the
cheque or between the transverse lines.
3. Restrictive crossing: In addition to the two statutory types of crossing, there is another
type which has been adopted by commercial and banking usages. Here, the words ‘A/c payee’
are added to the general or Special crossing.
Q.3: Explain different types of share capital.
Explanation
ANS:
Explanation:
Share capital refers to the capital issued by a company by the issue of shares. The share capital
of a company may be classified as follows:
1. Authorized capital: It is the capital which is stated in companies 'memorandum of association
with which the company intends to be registered. It is called the nominal and registered capital.
It is the maximum amount of share capital which a company is authorized to raise by issuing the
shares.
2. Issued capital: It is that part of the authorized capital which is actually offered (issued) to the
public for subscription. Therefore, the issued capital can never be more than the authorized
capital. It can at the most be equal to the nominal capital. The balance of nominal capital
remaining to be issued is called ‘unissued capital’.
3. Subscribed capital: It is that part of the issued capital which has been actually subscribed by
the public. The amount of subscribed capital cannot exceed the amount of issued capital. This is
because the company cannot seek subscription on an amount greater than the issued amount.
4. Called up capital: It is that part of nominal value of issued capital which has been called up or
demanded by the company. Normally, a company does not collect the full amount on shares it
has allotted. It collects it in instalments known as application money, allotment money, first call,
and second call and so on.
5. Paid up capital: It is that part of the called up capital which has actually been received from
the shareholders.
6. Reserve capital: It is that part of the uncalled capital which cannot be called by the company,
except in the event of its winding up.
Q.4: “CPA provides for the establishment of the central consumer protection
council”. Explain the objectives of the central council in the light of the above
statement.
Explanation of objectives
ANS:
Explanation of objectives:
The primary objective of the Central Council is to promote and protect the rights of the
customers. These rights are as follows:
1. Right to safety: Consumers have the right to be protected against the marketing of goods
and services, which are hazardous to life and property. They have the right to insist on the
quality of the products as well as on the guarantee of the products and services. Standardization
of goods by special marks such as ISI, AGMARK, etc. helps consumers to purchase quality
goods.
2. Right to be informed: The consumer has the right to be informed about the quality,
quantity, potency, purity, standard and price of goods and services so as to be protected against
unfair trade practices. Consumer can insist on getting all the information about the product or
service before making a choice or a decision.
3. Right to choose: The consumer has the right to be assured of access to variety of goods and
services at competitive price, wherever possible. In case of monopolies, it means the right to be
assured of satisfactory quality and service at a fair price. It also includes the right to basic goods
and services. This is because unrestricted right of the minority to choose can mean a denial for
the majority of its fair share. This right can be better exercised in a competitive market where a
variety of goods are available at competitive prices.
4. Right to be heard: The consumers also have the right to be assured that their interests will
receive due consideration at appropriate forums. It also includes the right to be represented in
various forums formed to consider the consumer's welfare.
5. Right to seek redressed: The consumer has the right to seek redressed against unfair trade
practices or unscrupulous and illegal exploitation. It also includes the right to fair settlement of
the genuine grievances of consumers. Consumers can freely lodge complaints to seek redressed
for their genuine grievances. Many a times their complaint may be of small value but its impact
on the society as a whole may be very large. They can also take the help of consumer
organizations in seeking redressed of their grievances.
6. Right to consumer education: This means that the consumers have the right to be
informed and educated about their rights. Ignorance of consumers, particularly of rural
consumers, is mainly responsible for their exploitation. Therefore; they should know their rights
and must exercise them. Only then can real consumer protection be achieved with success. It is
the duty of the Central Consumer Protection Council as well as of the State Consumer Protection
Councils and District Consumer Protection Councils to ensure that all these rights of consumers
are protected.
Q.5: What are the salient features of combination regulations under the
Competition Act 2002?
Features
ANS:
Features
The salient features of combination regulations are:

The Act has set very high threshold limit based on turnover or assets of the enterprises
involved in combination for notification of combinations. The objective is to keep smaller
combinations outside regulation and encouraging Indian enterprises to grow in size as
well as in market share in the globalised market.

Higher threshold limit is set for combination involving parties having operation both in
India and outside India.

The notification of combination to the Commission is voluntary not mandatory.
However, if the parties to the combination choose not to notify the CCI, as it is not
mandatory to notify, they run the risk of a post combination action by the CCI. If the CCI
subsequently discovers that the combination has an appreciable adverse effect on
competition, it has the authority to initiate an inquiry after the expiry of one year from
the date on which the combination comes into effect.

Such notification has to be disposed away by the Commission within 90 working days,
failing which the same is deemed to be approved.

The commission also has the suomo to enquiry power.

Limited exemption is given to combinations involving public financial institution,
foreign institutional investors and venture capital fund.
Q.6: List the features and precautions of Trade mark Act, 1999.
Listing of features
Listing of precautions
ANS:
Listing of features:
1. Multi class applications are allowed in India. However, statutory filing fees will be applicable
for each class.
2. Classification of goods and services is according to Trademark Classification of Goods and
Services (45 classes).
3. Prior use of the trademark is not mandatory for filing. Therefore, applications can be filed on
a 'proposed to be used' basis.
4. Power of an attorney is required provided it is filed through an (agent / attorney).
5. Applications are examined as to registrability and availability based on existing filed
applications. Once accepted, it is published in the Trademarks Journal and any opposition to it
may be filed by a third party within 3 months (extendable by one month). If no opposition is
filed, the registration certificate is issued thereafter.
6. A trademark may be subject to removal on the grounds of non-use, if it is not used for a
continuous period of five years.
7. The registration is valid for 10 years from the date of application and can be subsequently
renewed after every 10 years by a payment of renewal fees.
8. Priority can be claimed provided the application is filed within 6 months from the date of
filing is in the convention country.
Listing of precautions:
Trademark is selected with certain precautions such as;
a) A trademark must be chosen carefully
b) If a product is going to be launched and is adopting a new trademark, it should bear in mind
the scope of legal protection it would have to obtain Similarly, it depends on pending work upon
which the type of trademark chosen. Descriptive trademarks are difficult to register and enforce.
Although it may be easier to market such products at inception, such trademarks are offered the
least amount of protection. In the long term, it would be difficult to stop the competitors from
using the same or similar trademarks.