Jawaharlal Nehru Technological University Hyderabad MBA 2020 LEGAL AND BUSINESS ENVIRONMENT Previous Question Paper (January - 2020 - R19)

The powers of a director in a company are primarily derived from the Companies Act and the company's Articles of Association. These powers are exercised collectively by the Board of Directors. Key powers include:

1. General Management: The Board is empowered to exercise all such powers and do all such acts as the company is authorized to do, provided they are not required to be exercised by the company in a general meeting.
2. Financial Powers: Directors have the authority to make calls on shareholders for unpaid share capital, issue debentures, borrow money, and invest the funds of the company.
3. Administrative Powers: They hold the power to appoint or remove key managerial personnel, such as the Managing Director, Manager, or Company Secretary, and to approve the annual financial statements and board reports.
4. Strategic Decision Making: Directors are responsible for formulating company policies, diversifying business activities, and approving mergers, acquisitions, or the sale of company assets.
5. Delegation of Authority: The Board may delegate specific powers to committees or individual directors, such as the Managing Director, to facilitate the day-to-day operations of the company.

These powers must be exercised in good faith, in the best interests of the company, and in compliance with the legal framework governing corporate governance.

According to the Indian Contract Act, 1872, a valid contract requires the following essential elements:

1. Offer and Acceptance: There must be a lawful offer by one party and a lawful acceptance of that offer by the other party, resulting in an agreement.
2. Intention to Create Legal Relationship: The parties must intend to create legal obligations; social or domestic agreements generally do not constitute contracts.
3. Lawful Consideration: An agreement must be supported by consideration, which is something of value in the eyes of the law, moving from the promisee to the promisor.
4. Capacity of Parties: The parties entering into the contract must be legally competent, meaning they must be of the age of majority, of sound mind, and not disqualified by law.
5. Free Consent: Consent must be obtained without coercion, undue influence, fraud, misrepresentation, or mistake.
6. Lawful Object: The purpose or object of the agreement must be legal and not opposed to public policy.
7. Certainty and Possibility of Performance: The terms of the agreement must be certain and capable of performance; agreements to do impossible acts are void.
8. Not Expressly Declared Void: The agreement must not be one that the law has specifically declared to be void, such as agreements in restraint of trade or marriage.