Income Tax in short

An income tax is a tax levied on the income of individuals or business (corporations or other legal entities). Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate tax, corporate income tax, or profit tax. Individual income taxes often tax the total income of the individual (with some deductions permitted), while corporate income taxes often tax net income (the difference between gross receipts, expenses, and additional write-offs). Various systems define income differently, and often allow notional reductions of income (such as a reduction based on number of children supported).

Indemnity- easy for one to understand......

"To restore the victim of a loss, in all or in part, by payment, repair or replacement.

"To save harmless; to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss falling upon him.

"To make good; to compensate; to make reimbursement to one of a loss already incurred by him.

"In my opinion, the concept of indemnity has central to it the idea of compensation, of making good, of paying moneys to a person, to reimburse them for losses sustained."

Differences between legal capacity in an ordinary contract and insurance contract?

Insurance contracts in all countries are subject to the same basic law that governs all types of contracts but also to some legal principles that have been developed to handle the legal problems associated with insurance. Beyond the necessary contractual conditions, certain elements are peculiar to the insurance policy.
Generally an insurance policy is unilateral and only the insurer is obligated to act. It is also a conditional aleatory contract.
As a contract of "utmost good faith" (uberrimae fidei) a certain degree of honesty is presumed from both parties. This principle imposes a higher standard of honesty-on the two parties than is usually expected in an ordinary contract.
To avoid a contract a "warranty" (a statement contained in the contract and requires that a particular condition exists) must be false, or a "misrepresentation" (a statement made by the insured to the insurer on which the latter relies to price the contract) must be false and materially important. Concealment of these factors will be considered to be made with intent to deceive . The insured has an obligation to inform the insurer about facts that may be materially important.

The Importance of Insurance in Business

Despite continuing educational efforts many people lose much of their income each year to some sort of fraud, identity theft, bad investments, get rich quick, or to good to be true schemes. Some individuals seem to be particularly prone to such loss; it may equal their yearly savings, or even erase them. It is difficult to identify the type.

They can be found in the lowest strata of society or in high financial district offices. Wherever they are they seem to look for opportunities to lose their money in questionable deals. They become the prey of a lifelong parade of tricksters who continually descend upon them as though by instinct. Neither legislation nor education can stop the practice. Such predisposed suckers will fight both law and understanding, continuing to insist on their right to be free ó and cheated.

There are also whole classes of people, racial or vocational minorities most often, who fail to benefit from either protective law or instructive publicity. In our high tech civilization, these groups remain economically depressed, not only because of their low earning power and susceptibility to cyclical unemployment, but also because they are unable to handle whatever money they do get their hands on, and are constantly preyed upon by a marginal business community still using nineteenth century ethics.

It is difficult to blame any individual sunk in this morass of low dealing. Too few dollars are being spread too thin at this level. Most of the businessmen involved would love to move "uptown" or "downtown" and play it clean. They never clear enough profit to get out of the rut themselves. If often appears useless to subsidize the depressed groups with additional cash. The fact is that they are rooked out of half of what they do get.
Above this level, among the vast majority of Americans, from the lower middle class on up to the wealthy, we find a persistent apathy regarding daily money loss through shenanigans or carelessness. Literally hundreds of thousands of professional criminals make a parasitic living out of fishing in the daily stream of cash. They range from perfumed, silk-suited con-men to grubby panhandlers, all making an excellent tax-free living.

In another category we find the respected business manager or assistant who is tempted to tap the till. Recorded reasons for business failures have never considered the possibility of such factors going undiscovered during the brief life of unsuccessful enterprises. Insurance companies have plenty of information to indicate the importance of such loss as a constant factor in business.

Basic to the situation is the faith the businessman has in those he hires, even when he has not the slightest idea who they really are. The main cause of day-to-day individual loss is carelessness coupled with the lack of ability to count up the simplest numbers. Surveys among store clerks and money tellers show that great numbers of them frequently miscount. So do the customers. We have pursued the subject further in How to Beat Employee and Customer Stealing.

Losses to individuals through carelessness, ignorance of newest swindling techniques, or general inability to handle money wisely can often put a family into the red, undermining an otherwise solid future. Here then, for your information, is a survey of current gyps, dodges, deals, angles, and gimmicks. Recognizing a cheat when you see one is the best way to beat him at his game.

Breach of Contracts and Remedies

Breach of contract is a legal concept in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance. If the party does not fulfill his contractual promise, or has given information to the other party that he will not perform his duty as mentioned in the contract or if by his action and conduct he seems to be unable to perform the contract, he is said to breach the contract.

Remedies of Contract:

(a) He may be discharged from further performance.

(b) If he has done anything under the contract, he has a right to sue on the quantum meruit, a cause of action distinct from that arising out of the original contract, and based upon a contract created by law.

(c) He has a right of action on the original contract, or term of the contract broken, and may maintain:

(1) A suit to obtain damages for the loss sustained by the breach.

(2) A suit to obtain specific performance of the contract by the other party.

We have seen that if a contract is discharged by the breach the party injured is exonerated from further performance, provided he treats the breach as a discharge. Where he relies on a discharge, his remedy is by setting up his discharge as a defense in an action brought by the other party on the contract. In addition to his right to a discharge from performance, he has a right, if he has done anything under the contract, to sue on the quantum meruit for compensation for his partial performance.86 This cause of action is distinct from that arising out of the original contract. It is based upon a new contract, generally called an implied contract, but really a quasi contract, or contract created by law, because of the receipt by the other party of the benefits of such performance. In addition to these rights, the party so injured by a breach has a right of action based upon the original contract or term of the contract broken. This remedy exists not only where he is discharged by the breach, but also where he is not discharged, or where, though he was entitled to claim a discharge, he has preferred to waive such right, and go on with the contract. His remedy in this case is of two kinds: (1) He may seek, in a court of law, to obtain damages for the loss he has sustained by himself taking the initiative and bringing an action for damages, or by waiting until the other party sues him, and then asserting his right by way of recoupment, counterclaim, or cross action. He may resort to this remedy whether he claims a discharge by reason of the other's breach or not. (2) He may, in the case of certain contracts and under special circumstances, obtain specific performance of the contract by the other party, by bringing a suit in equity for that purpose. Of course he would not be entitled to such performance unless he performed the contract on his part, or offered to perform it, and therefore he cannot resort to this remedy where he claims a discharge from further performance.

Nemo dat quod non habet

Nemo dat quod non habet, literally meaning "no one [can] give what he does not have" is a legal rule, sometimes called the nemo dat rule, that states that the purchase of a possession from someone who has no ownership right to it also denies the purchaser any ownership title. This rule usually stays valid even if the purchaser does not know that the seller has no right to claim ownership of the object of the transaction (a bona fide purchaser); however it is often difficult for courts to make judgements as in many cases there is more than one innocent party. As a result of this there are numerous exceptions to the general rule which aim to give a degree of protection to bona fide purchasers as well as original owners.

Passing of Title Case Study

Ruling Court Case. Sedgwick Vs. Cottingham

Sedgwick, who resided in Portlandville, Iowa, was engaged in the purchase and sale of grain. Cottingham was engaged in milling at Benton, Wisconsin. Sedgwick and Cottingham made an agreement whereby the former was to ship a car load of wheat to the latter, to be delivered at Council Hill, from whence it was to be hauled by Cottingham to his mill. In pursuance of the terms of the contract, the car of wheat was placed on siding at Council Hill, and Cottingham was notified by the railroad company of its arrival. A day and a half later, before Cottingham could get it unloaded, the car containing the wheat was washed from the side track by an unusual and extraordinary freshet and the wheat was lost. Sedgwick sues for the price of the wheat. Cottingham contends that the loss was not his.

Mr. Justice Seevers delivered the opinion of the Court: "When the car containing the wheat was placed on the siding at Council Hill, Sedgwick's duties in respect thereto were over. Title to the wheat then passed to Cottingham. Title having passed, the wheat was then at the risk of Cottingham, loss occurring he, as owner, must bear it." Judgment was given for Sedgwick.

Intersting

Passing of Property

Passing of property

Property (i.e. ownership) cannot pass unless the goods are ascertained (i.e. the actual goods to be sold are identified). s.18 provides presumptions to determine when property will pass, both for specific goods (ascertained at the time of the contract) and goods unascertained at the time of contracting. These 'rules' can be excluded by contrary implication or express agreement.

Rule 1: in an unconditional contract for sale and delivery of specific goods in a deliverable state, property passes immediately on contract formation.

Rule 2: where the seller is bound to perform some condition before the sale is possible, property passes when this condition is performed.

Rule 3: where the seller is bound to measure or weigh the goods to ascertain the price, property passes when this is done and the buyer is notified.

Rule 4: when goods are delivered on sale or return, or on approval, property passes when the buyer adopts the transaction (or fails to give notice of rejection within a reasonable time).

Rule 5: in a sale of unascertained goods, the property will pass following an unconditional appropriation of goods or, where the sale is from a specified bulk, following ascertainment by exhaustion (i.e. removal of all the goods in the bulk but those destined for the buyer).

Seller does not have title

If the seller does not own the goods, the buyer generally cannot gain title, although he can sue for breach of the implied term as to title.

Seller has voidable title

Where the seller holds voidable title, title can pass to a buyer in good faith. If title is voided before the contract of sale is concluded, title cannot pass.

Condition And Warranty

Condition
A condition is a term (oral or written) which goes directly 'to the root of the contract', or is so essential to its very nature that if it is broken the innocent party can treat the contract as discharged. That party will not therefore be bound to do anything further under that contract.

Warranty
A warranty is the term of the contract which is collateral or subsidiary to the main purpose of the contract. It is therefore not so vital as to affect a discharge of the contract. A breach of warranty only entitles the innocent party to an action for damages; he cannot treat the contract as discharged.
Both conditions and warranties are terms in a contract and it is for the court to decide in each contract whether, having regard to the intentions of the parties, a term is a condition or a warranty. The importance lies in the remedy in the event of breach.

An Example An Agreement of Sale of Goods

THIS AGREEMENT made on this __________ day of __________, between XYZ a company incorporated under the Companies Act, 1956 and having its registered office at __________ (hereinafter referred to as the SELLER, which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to mean and include its successors and assigns) of the ONE PART and PQR (give name and description of the person or legal entity) (hereinafter referred to as the BUYER which expression shall, unless it be repugnant to the context or meaning thereof, be deemed to mean and include its successors and assigns) of the OTHER PART.

WHEREAS the Seller is a manufacturer of _______________ (Details of business)

WHEREAS the buyer is a trader and has approached the Seller asking him to sell the goods at the rate of __ per unit/ Kilo.

THE PARTIES HERETO agree to abide as under:

1. The Seller undertakes to sell the Buyer and the Buyer undertakes to buy from Seller___________ goods (hereinafter called the 'said goods') at a price of Rs. _____________.
2. The Seller will send the said goods through the designated ship the information of which ship and the date of its arrival at the port of dispatch in India shall be sent to the buyer.
3. The Seller shall make an agreement with the master of the ship for the transportation and delivery of the said goods at the Indian port.
4. It shall be the responsibility of the Buyer to have said goods insured for their value upon the current terms and make out an invoice.
5. It shall be the responsibility of the Buyer to have letter of credit through its banker which shall cover the price of the goods, freight insurance and other charges in favour of the Seller's banker.
6. After the shipment of the said goods the seller shall send all the necessary documents including the contract of a freightment, insurance policy, invoice, bills of lading, etc., to its banker at the Indian port.
7. The aforesaid document shall be delivered to the Buyer banker's against the encashment of the letter of credit which shall, in turn, deliver the same to the Buyer to enable him to get the goods cleared at the Indian port. Delivery of the documents shall constitute the delivery of goods and henceforth the goods shall be at the risk of the Buyer.
8. It shall be the responsibility the Buyer to open a letter of credit with his banker in favour of the Seller's banker. The Buyer's bankers shall credit the amount of price in the Seller's name with Seller's banker against the receipt of the document of title.
9. In case some formalities are to be completed prior to the import of the aforesaid goods at the place of destination the same shall be completed by the Buyer at his own costs.
10. If some export formalities are to be completed for the export of the aforesaid goods from the place of dispatch, the same shall be completed by the Buyer/Seller at his own costs.
11. It shall be the Buyer's right to examine the goods for his satisfaction at the point of destination. If the goods are not according to the sample or specification, the Buyer shall have the right to reject the goods at the risk and cost of the seller.
12. In the event of any dispute or difference between the parties hereto arising out of or in connection with this deed of whatsoever nature the same shall be referred to arbitration of a common arbitrator if agreed upon, failing which to two Arbitrators one to be appointed by each party to the Arbitration. The said Arbitrators shall appoint a presiding Arbitrator and the Arbitration shall be governed by the Arbitration Act and Conciliation Act, 1996, or any statutory modification thereof.

SIGNED, SEALED AND DELIVERED)

by the within named Seller by the hands)

of its authorised representative/Director)

Mr. ___in the presence of Mr.___ and)

Mr.___)

SIGNED, SEALED AND DELIVERED)

by the withinnamed Buyer by the hands of its)

authorised representative/Director Mr.___,)

in the presence of Mr. ___ and Mr. ___)

An Example of A Contract of Sale of Goods

Contract for Sale of Goods

This Contract for Sale of Goods is made this __ day of _______, 20__ by and between _________, a [STATE OF ORGANIZATION OR RESIDENCE] [CORPORATION/PARTNERSHIP/SOLE PROPRIETORSHIP/RESIDENT], with its principal place of business at [COMPLETE ADDRESS], (“Seller”) and ___________, a [STATE OF ORGANIZATION OR RESIDENCE] [CORPORATION/PARTNERSHIP/SOLE PROPRIETORSHIP/RESIDENT], with its principal place of business at [COMPLETE ADDRESS] (“Buyer”) for the purchase of the goods described below:

Qty.	Item #	Description	Price	Total

1. Term. This Contract shall begin on __________, 20__, and end upon the last delivery, which shall be shipped, with or without requisition for the balance of goods then unshipped, by___________, 20__, unless the parties agree otherwise. However, if as of such date, Buyer is in arrears on the account, Seller may then cancel this Contract and sue for its damages, including lost profits, offsetting the deposit there against, and further recover its cost of suit including attorney fees.

2. Delivery. Buyer will give Seller _____ days’ advance notice regarding the quantity requested for delivery. Upon receipt of the request for delivery, Seller will arrange for delivery through a carrier chosen by Seller, the costs of which shall be F.O.B.___________.

3. Risk Of Loss. The risk of loss from any casualty to the Goods, regardless of the cause, will be the responsibility of the Seller until the Goods have been received by the Buyer.

4. Acceptance. Buyer will have the right to inspect the goods upon receipt, and within __ business days after delivery, Buyer must give notice to Seller of any claim for damages on account of condition, quality, or grade of the goods, and Buyer must specify the basis of the claim in detail. Failure of Buyer to comply with these conditions will constitute irrevocable acceptance of the goods by Buyer. All notices between the parties must be in writing and delivered by courier or by certified mail, return receipt requested.

5. Charges. Seller shall invoice Buyer upon and for each shipment. Buyer shall pay all charges on terms of ___________________. Any late payment shall bear a late charge of ___%. Overdue invoices shall also bear interest at the rate of ___% per ______. If Seller undertakes collection or enforcement efforts, Buyer shall be liable for all costs thereof, including attorney fees. If Buyer is in arrears on any invoice, Seller may, on notice to Buyer, apply the deposit thereto and withhold further delivery until the deposit and all arrearages are brought current.

6. Deposit. Upon signing this Contract, Buyer shall pay Seller a deposit of $_________ toward the total price as a precondition for Seller's performance, which deposit is to be credited to the last shipment.

7. Warranty. Seller warrants that the goods sold hereunder are new and free from substantive defects in workmanship and materials. Seller's liability under the foregoing warranty is limited to replacement of goods or repair of defects or refund of the purchase price at Seller's sole option. No other warranty, express or implied, is made by Seller, and none shall be imputed or presumed.

8. Taxes. All sales taxes, tariffs, and other governmental charges shall be paid by Buyer and are Buyer's Responsibility Except As Limited By Law.

9. Governing Law. This Contract shall be governed by the laws of the State of _______. Any disputes hereunder will be heard in the appropriate federal and state courts located in [NAME OF COUNTY], [STATE].

10. Force Majeure. Seller may, without liability, delay performance or cancel this Contract on account of force majeure events or other circumstances beyond its control, including, but not limited to, strikes, acts of God, political unrest, embargo, failure of source of supply, or casualty.

11. Miscellaneous. This Contract contains the entire agreement between the parties and supersedes and replaces all such prior agreements with respect to matters expressly set forth herein. No modification shall be made to this Contract except in writing and signed by both parties. This Contract shall be binding upon the parties and their respective heirs, executors, administrators, successors, assigns and personal representatives.

______________________________________ ______________________________________

Seller Date Buyer Date

Lifting the Veil of Incorporation

The concept of a company being a legal entity can sometimes give undesirable results. In

particular, shareholders could use a company to obtain funds dishonestly, and then not be

liable for repayment.

There are therefore numerous exceptions to the rules defined by Salomon v Salomon & Co

Ltd. These can be implemented by the courts on a case-by-case basis, or by statute.

Exceptions implemented by the courts

Since the courts rule on a case-by-case basis, it can be difficult to classify the exceptions.

Generally, courts will intervene where justice demands it. Some examples of this include:

a) In cases of fraud or sham. These occur where individuals have used the

separate legal entity to do something they are personally forbidden from

doing.

Gilford Motor Co Ltd v Horne (1933)

H was a car salesman, and left G. His contract stated that he wasn’t

allowed to sell to G’s customers for a period after leaving. H set up a

company which then approached his former customers; H argued that

firstly his company was approaching the customers, not him; and

secondly, if thee was wrongdoing, his company was liable and not him.

The courts held that the company was sham, and granted an injunction

against his company as well as him.

Catamaran Cruises Ld v Williams (1994)

W was employed by C. W set up a company and C then subcontracted

with this company, paying the company W’s wages gross of tax. W

worked and had the same benefits as all other employees of C. C ended

their contract with W’s company, but the courts held that this was the

same as dismissing W directly, and W was able to sue for unfair

dismissal (however, W lost this case, since the dismissal was held to be

fair).

b) When the courts recognise an agency relationship. If a subsidiary

company is acting as an agent for its holding company, it may be bound

by the same liabilities and rights of its holding company. However, no

court has yet found subsidiary companies liable for their holding

company’s debts.

Smith, Stone & Knight Ltd v Birmingham Corporation (1939)

SSK owned some land, an a subsidiary company operated on this land.

BC issued a compulsory purchase order on this land. Any company

which owned the land would be paid for it, and would reasonably

compensate any owner for the business they ran on the land. Since the

subsidiary company did not own the land, BC claimed they were entitled

to no compensation. The courts held that the subsidiary company was an

agent and BC must pay compensation.

Why contract law is so important?

A contract law is a binding legal agreement that is enforceable in a court of law. That is to say, a contract is an exchange of promises for the breach of which the law will provide a remedy. I have a passion for these types of cases.

Many firms work on the basis of contract law. Such firms are called contract firms. Firms like construction firms work on contract basis.Law firms dealing with cases related to contract laws (employment, salary etc) are called contract law firms.

If an employee works in a company for more than one month, he is entitled to a written employment contract which will cover all the important terms and conditions. An employment contract is an agreement to the terms and conditions of employment - agreed by both the employer and employee.

In principle, there is always a contract between an employee and an employer as the agreement of an employee to work and the employer's agreement to pay for work is a contract by nature. The employer may have previously outlined the conditions of employment (pay, hours, etc).

Even if the employee does not serve two months of employment, according to the employment contract law, he is still entitled to a copy of the contract if the job was originally meant to last longer than one month.

The most important right that contract law ensures to the employees is that they have a right to be paid for the work they do. Most companies agree in this, however at times there is a disagreement about the amount owed the employee.

Every firm has different contract terms and conditions. For example a construction firm has a separate construction contract for its employees. The firms' employer has a right to give reasonable instructions to them and for them to work at their job. These rights and obligations are called contractual terms. The government contract law provides the employees the right to national minimum wage and right to paid holidays.

Contract law- case study

Tullula Investments Ltd is a large South Australian company, which owns and operates many hotel and restaurants throughout Australia. Italian Cuisine Ltd, a food and catering business whose headquarters are in Brisbane, supplies goods commonly used by businesses such as Tullula Investments Ltd. On September 1, 2000, Italian Cuisine Ltd sent a fax to Tullula Investments Ltd, which read:

"Can offer latest 'Speedy Rice Cookers' at $100 each."

On October 1, 2000, Tullula Investments Ltd faxed a reply stating: "Will have four dozen. Need delivery by November 1, 2000." Upon receiving the fax Italian Cuisine Ltd then wrote back to Tullula Investments Ltd saying "thank you for your fax which is receiving our attention".

Subsequently and prior to November 1, 2000, Italian Cuisine Ltd packed the rice cookers and loaded them on a van for delivery to Tullula Investments Ltd, but before the van set out, Tullula Investments Ltd phoned Italian Cuisine Ltd to say that they no longer needed the rice cookers.

Discuss the legal position of Tullula Investments and Italian Cuisine in relation to the law of contract.

Here is my view.....

The main issue in this problem is whether there is an 'agreement' - offer and acceptance

However, on the first element of intention to create legal relations, it is clearly a business/commercial relationship between Tallula Investments Ltd and Italian Cuisine Ltd and therefore the presumption is that the parties intend to enter into legal relations.

The next issue to be dealt with is the 'offer'. Has Italian Cuisine made an offer to Tallula in the fax September 1, 2000 which read:

'Can offer latest speedy Rice Cookers at $100 each'

In my view this is not a genuine offer, it is more in the nature of an invitation to treat. The words 'can offer' is not a definite proposal to sell the cookers at the stated price but is simply suggesting that the Speedy Rice Cookers are available for sale.

The test in deciding between an offer and an invitation to treat was set out in Carlill v Carbolic Smoke Ball Co which held that an 'invitation to treat is a request for offers' and determined by the 'ordinary person test'. Clearly here, we have an inducement sent out by Italian Cuisine to Tallula to enter into negotiations for the purchase of the rice cookers. It is not a definite proposal, made with the intention that it becomes binding once accepted.

As the fax sent on the 1st September, 2000 by Italian Cuisine is not an offer we now need to consider the position with the Tallula fax at 1st October, 2000. This reply is not an acceptance. An acceptance is an agreement to be bound to the terms of an offer. The fax by Tallula is actually an offer to buy the cookers at $100.

Italian Cuisine's response to the Tallula Investments' fax 'receiving attention' is not an acceptance to the offer. An acceptance must be clear and unqualified to be binding. It can be argued that Italian Cuisine is actually 'silent' on the issue of acceptance an silence is not acceptance.

We must now look at the issue of the revocation and decide whether Tallula Investments is required to take delivery and pay for the cookers. Since Tallula made the offer to Italian Cuisine which was not actually accepted, they are entitled to revoke that offer. An offer can be revoked by an offeror before communication of acceptance by the offeree.

Tallula Investments therefore, do not have to take delivery or pay for the rice cookers as they are not bound by the contract of law.