Capital Expenditure and Revenue Expenditure

Capital Expenditure

Capital expenditures are those expenditure which normally occur at the time of acquiring fixed assets, they are non-recurring in nature and utility of which can be enjoyed by the firm or the organisation for more than on accounting year. Capital expenditure maximize the value of assets, while preparing final accounts of the organisation it is shown in Assets side of the Balance Sheet and not in Profit and Loss Account. 

Some of the example of Capital Expenditure are;

Installation Charges on machinery, Extension of Building, Addition to library books etc.

One-line Definition: Expenditure which add something in the value of fixed assets, is known as Capital Expenditure.

Revenue Expenditure

Revenue expenditures are those expenditure which normally take place to maintain the day to day operation of the firm or the organisation, they are recurring in nature and utility of which is enjoyed by the firm within accounting year. Revenue Expenditure are essential for smooth running of the organisation, it does not maximize the value of the assets of the organisation, while preparing final accounts of the organisation it is shown in Debit (Dr.) side of Profit and Loss Account and not in Balance Sheet.

Some of the Example of Revenue expenditure are;

Depreciation, Salary and wages, Fuel etc.

One-line Definition: 
Expenditure which does not add something in the value of  fixed assets, is known as Revenue Expenditure

Following example can explain better the concept of  Capital Expenditure and Revenue Expenditure;

Suppose you have car, you have added fuel of Rs. 1000/-, this is a revenue expenditure, instead if you replace its Tyre and tube, it is capital expenditure, because its utility can be enjoyed for more than one year.

Will RBI Reject Currency Notes if Written Something Accross It?

RBI Guideline to Reject Currency Notes if written a slogan or anything else.

Photo credit: http://www.rbi.org.in

Since last couple of weeks I have been seeing a continuous facebook post people saying and bothering that "RBI is going to reject all currencies/Notes from 1st January 2014 if anyone writes something across it or if it is already written." 

Much of the discussion have been made on this issue, but reality is that RBI has only warned people not to write anything on currencies and to keep it clean. A Banker cannot reject its own currency only on the ground that it is pre-written with a slogan or else. However, if you write something in front of a banker it will be rejected. 

Reality is that Bank cannot summarily reject all such currencies, what about those currencies we have, pre-written by someone else?

 In fact RBI tries to make us aware not to write any thing on a note. According to Deputy Governor K C Chakrabarty "If anyone writes anything on the currency note at the front of a banker then he may deny to accept that note so that this mistake may not be repeated again by that person."

He further stated "Our aim is to create awareness among the people that they should not write anything on the currency notes and need to keep the currency notes clean,"

Money Market and Capital Market

Basic Concept of Money markets and capital markets | Meaning of Money Market | Definition of Money market | Meaning of Capital Market | Definition of Capital market | Difference between money markets and capital markets |

 Money Market

What is money market??

Source: studypoints.blogspot.com

Money market (मुद्रा बाजार) is the trade in short-term loans between commercial banks and other financial institutions, in other words money market in that part of a financial market which deals in the borrowing and lending of short term loans generally for a period of one year (less than or equal to 365 days). Money market is a mechanism to clear short term monetary transactions in an economy.

Unlike organized markets (such as stock exchanges) money markets are largely unregulated and informal where most transactions are conducted over phone, fax, or online. Long-term borrowing and lending markets are called capital markets.

Definition of Money market as per RBI

 "The money market is the centre for dealing mainly of short character, in monetary assets; it meets the short term requirements of borrowers and provides liquidity or cash to the lenders. It is a place where short term surplus investible funds at the disposal of financial and other institutions and individuals are bid by borrowers, again comprising institutions and individuals and also by the government."

Definition of Money market as per Investopedia

'Money Market': The money market is used by a wide array of participants, from a company raising money by selling commercial paper into the market to an investor purchasing CDs as a safe place to park money in the short term. The money market is typically seen as a safe place to put money due the highly liquid nature of the securities and short maturities, but there are risks in the market that any investor needs to be aware of including the risk of default on securities such as commercial paper.

Capital Market

What is Capital Market??

Capital Market (पूँजी बाजार) is the part of a financial system concerned with raising capital by dealing in shares, bonds, and other long-term investments. Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc. The buying/selling is undertaken by participants such as individuals and institutions.

Wikipedia Definition of Capital Market 

Capital markets are financial markets for the buying and selling of long-term debt- or equity-backed securities. These markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Financial regulators, such as the UK's Bank of England (BoE) or the U.S. Securities and Exchange Commission (SEC), oversee the capital markets in their jurisdictions to protect investors against fraud, among other duties.

Definition of Capital Market  as per Investopedia

A market in which individuals and institutions trade financial securities. Organizations/institutions in the public and private sectors also often sell securities on the capital markets in order to raise funds. Thus, this type of market is composed of both the primary and secondary markets.

Capital Market Types

There is two typs of cpital market

1. Primary market

The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue.

2. Secondary market

The secondary market, also known as the aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold.

             

What is the difference between Money Market and Capital Market?

 Money markets and capital markets are parts of financial markets. Money market is distinguished from capital market on the basis of the maturity period, credit instruments and the institutions:

1. Time Period:

In money market only short-term finance (i.e., for 365 days or less) are made in the lending and borrowing, while the capital market deals in the lending and borrowing of long-term finance (i.e., for more 365 days).

2. Usage of Credit Instruments:

Money market uses credit instruments like call money, collateral loans, acceptances, bills of exchange. whereas,  the main instruments used in the capital market are stocks, shares, debentures, bonds, securities of the government.

3. Nature of Credit Instruments:

The credit instruments dealt with in the capital market are more heterogeneous than those in money market. Some homogeneity of credit instruments is needed for the operation of financial markets. Too much diversity creates problems for the investors.

4. Institutions:

Important institutions operating in the' money market are central banks, commercial banks, acceptance houses, non-banking financial institutions, bill brokers, etc. Important institutions of the capital market are stock exchanges, commercial banks and non-banking institutions, such as insurance companies, mortgage banks, building societies, etc.

5. Purpose of Loan:

The money market meets the short-term credit needs of business; it provides working capital to the industrialists. The capital market, on the other hand, caters the long-term credit needs of the industrialists and provides fixed capital to buy land, machinery, etc.

6. Degree of Risk Involved:

The degree of risk is fewer in the money market. while there is comparatively higher risk involved in capital market. The maturity of one year or less gives little time for a default to occur, so the risk is minimized. Risk varies both in degree and nature throughout the capital market.

7. Primary Function:

The primary function of money market is that of liquidity adjustment, whereas function of capital market is pushing capital to work, preferably to long-term, secure and productive employment.

8. Relation with RBI (Central Bank):

The money market is closely and directly linked with RBI or central bank of the country. The capital market feels central bank's influence, but mainly indirectly and through the money market.

9. Market Regulation:

In the money market, commercial banks are closely regulated. In the capital market, the institutions are not much regulated.

Searches related to money market and capital market

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What is 'Money Laundering'

 'Money Laundering' is a process of generating money from criminal activities or otherwise and making them appear legal. You may say it as conversion of Black money into white money.

   

Source:http://fiwebelize.com/belize-in-money-laundering-scheme-originating-from-argentina/ In fact, 'Money Laundering' is the process to show money obtained through illegal source as legitimate source. Usually it is raised from criminal activity, drug trafficking, terrorist activity or other serious crimes. 'Money Laundering' includes any type of predicate crime ranging from tax evasion and forgery, to drug- and people-trafficking. 'Money Laundering' As per Wikipedia,

Money laundering is the process of concealing sources of money. Money evidently gained through crime is "dirty" money, and money that has been "laundered" to appear as if it came from a legitimate source is "clean" money. Money can be laundered by many methods, which vary in complexity and sophistication.

'Money Laundering' As per Investopedia

Definition of 'Money Laundering

'The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.

Investopedia explains 'Money Laundering'

Some estimate the size of the problem is over $500 billion annually. Often thought of as a victimless crime, money laundering is a very serious issue. Without it, international organized crime would not be able to function.

Bailment and Its characteristics

Ques; Define the term “Bailment”. Discuss its Characteristics.

Contract of Bailment

Ans: Bailment is a type of special contract. Indian Contract Act 1872 discusses Bailment as delivery of goods by one party to another on condition that the recipient after use will ultimately restore them to the bailor or dispose of them with the direction of the bailor, here the delivery of goods is Bailment , the person delivering the goods is ‘Bailor’ and the person to whom they are delivered is ‘Bailee’.

" Bailment", "Bailor",  and "Bailee" defined.

Sec 148 of Indian Contract Act, 1872 provides

 A "Bailment" is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. 

The person delivering the goods is called the "Bailor".  The person to whom they are delivered is called, the "Bailee".

Illustrations: Mr. A While going to abroad delivers his Doggy to his neighbor Mr B to look it after unless he comes back. Here, delivery of doggy to Mr. B is a kind of  'Bailment', Mr. A is Bailor and Mr. B is Bailee.  

Features or Characteristics or Essentials of Bailment

On the basis of above definition it is clear here that a Bailment must have following features;

1. Agreement

2. Delivery of goods

3. Movable properties or goods

4. For Some specific purpose

5. For specific period of time

6. Return or disposal of specific goods

7. Ownership not transferred

Can you answer these questions related to "Contract of Bailment"???

• Kinds of Bailment.
• Difference between Sale and Bailment.
• Distinguish between Bailment and Pledge
• Rights and duties of a Bailor
• Rights and duties of a finder of goods
• What are the Duties of  Bailee?

Damini verdict Delhi gangrape: All four convicts will Hang

Delhi gang-rape convicts get death

Damini rape case accused | Delhi Gangrape | Accused hang till death |  Nirbhaya gang rape convict | Delhi gang rape Damini Nirbhaya |  December 16 Delhi gangrape case |

All four men convicted of raping and murdering a 23-year-old woman in Delhi were sentenced to death on Friday, nine months after a crime whose savagery triggered furious protests across India and rare national debate about violence against women.

"Everybody got the death penalty," defence lawyer A.P. Singh told reporters outside the Delhi courtroom, where dozens of police had formed a barricade to keep crowds back.

One of the four men sentenced to death by hanging, gym instructor Vinay Sharma, was dragged out of the court crying.

The victim, who was raped for an hour and tortured with an iron rod on a moving bus, became a symbol of the dangers women face in a country where a rape is reported on average every 21 minutes and acid attacks and cases of molestation are common.

The special court that convicted the four accused in December 16 Delhi gangrape case  has reserved its order on the quantum of punishment for Friday.

In the course of arguments spread over nearly three hours on Wednesday, the prosecutor demanded the death penalty in order to assuage "society's conscience", while the counsel for defence sought mercy on grounds of the young age and extreme poverty of the convicts.

Delhi gangrape: All accused held guilty of rape, murder

"Society today feels that no woman in this country is safe... Now it is up to the court to decide and change this," special prosecutor Dayan Krishnan said in conclusion to his arguments.

Advocate V K Anand, counsel for Mukesh Singh, the younger brother of alleged ringleader Ram Singh who was found dead in his Tihar cell in March, invoked the tragedy of the men's mother.

"Main iski ma ki taraf se aapse daya ki bheekh mangta hoon," Anand said. "His mother has already lost a son. Like the victim's mother, she too is asking for justice." Besides, Anand argued, "Mukesh was driving the bus, how could he know what was happening?"

'Advertising Budget'

Question: What ia an 'Advertising Budget'? What are the factors to be taken into consideration before preparing 'Advertising Budget'?

'Advertising Budget'

An Advertising Budget is an estimation of a company's promotional expenditures over a period of time. An advertising budget is the money a company is willing to set aside to accomplish its marketing objectives. When creating the advertising budget, a company must weigh the trade-offs between spending one additional advertising dollar with the amount of revenue that dollar will bring in as revenue.

The advertising budget of a business is typically a subset of the larger sales budget and, within that, the marketing budget. Advertising is a part of the sales and marketing effort. Money spent on advertising can also be seen as an investment in building up the business.

An estimation of a company's promotional expenditures over a period of time. An advertising budget is the money a company is willing to set aside to accomplish its marketing objectives. When creating the advertising budget, a company must weigh the trade-offs between spending one additional advertising dollar with the amount of revenue that dollar will bring in as revenue.

The advertising budget of a business is typically a subset of the larger sales budget and, within that, the marketing budget. Advertising is a part of the sales and marketing effort. Money spent on advertising can also be seen as an investment in building up the business.

In order to keep the advertising budget in line with promotional and marketing goals, a business owner should start by answering several important questions:

1. Who is the target consumer? Who is interested in purchasing the product or service, and what are the specific demographics of this consumer (age, employment, sex, attitudes, etc.)? Often it is useful to compose a consumer profile to give the abstract idea of a "target consumer" a face and a personality that can then be used to shape the advertising message.

2. What media type will be most useful in reaching the target consumer? These days, a small or mid-sized business will not only consider print, radio, and television ads, but -- more importantly, perhaps -- the Internet as a way of reaching customers.

3. What is required to get the target consumer to purchase the product? Does the product lend itself to rational or emotional appeals? Which appeals are most likely to persuade the target consumer?

4. What is the relationship between advertising expenditures and the impact of advertising campaigns on product or service purchases? In other words, how much profit is likely to be earned for each dollar spent on advertising?
Answering these questions will help to define the market conditions that are anticipated and identify specific goals the company wishes to reach with an advertising campaign. Once this analysis of the market situation is complete, a business must decide how best to budget for the task and how best to allocate budgeted funds.

BUDGETING FOR ADVERTISING

To be successful, advertising should carry messages that appeal to your customers when they want to buy and reach them through the media they use. It's amazing how many ad campaigns are based on trying to resolve a business problem -- i.e. clearance sales designed to reduce inventory using such slogans as "Everything Must Go" or "Must Reduce Overstocks." The U.S. Small Business Administration advises businesses that the main ingredient for successful advertising is to pitch your products or services to resolve a customer's problem. Given this, the SBA suggests that your advertising budget should be based on the following criteria:

• Time your ad campaign for when the customer wants to buy, not based only upon when you want to sell.

• Advertise items that will be popular with customers, instead of basing this decision on what items you want to get rid of.

• Ads should be written to tout customer benefits.

• Choose your advertising medium based on the ability to reach prospective customers.

Usefulness of Consumer Oriented Sales Promotion in FMCG

What is FMCG?

FMCG refers to Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG). FMCGs are products that are sold quickly and at relatively low cost.

Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG), are products that have a quick turnover, and relatively low cost. Consumers generally put less thought into the purchase of FMCG than they do for other products. Although the absolute profit made on FMCG products is comparatively small, they are generally sold in large numbers. Hence profit in FMCG goods generally scales with the number of goods sold, rather than the profit made per item.

The FMCG product category generally includes a wide range of frequently purchased consumer products including toiletries, soaps, cosmetics, teeth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products and drinks, although these are often categorized separately.

Characteristics of FMCG Products

•  Individual items are of small value. But all FMCG products put together account for a significant part of the consumer's budget.

•  The consumer keeps limited inventory of these products and prefers to purchase them frequently, as and when required. Many of these products are perishable.

•  The consumer spends little time on the purchase decision. Rarely does he/she look for technical specifications (in contrast to industrial goods). Brand loyalties or recommendations of reliable retailer/dealer drive purchase decisions.

•  Trial of a new product i.e. brand switching is often induced by heavy advertisement, recommendation of the retailer or neighbors/friends.

•  These products cater to necessities, comforts as well as luxuries. They meet the demands of the entire cross section of population. Price and income elasticity of demand varies across products and consumers.

Consumer Oriented Sales Promotion in FMCG

In ever changing world scenario hyper competition has become a regular phenomena. Today the markets are full of competition and every organization has to strive very hard for survival and growth. Because of very rapid industrialization all over the world the demand for the managerial skilled employees, officers and the administrative personnel has increased. The perfect study of Management involves both the theoretical as well as practical aspects. To survive in this highly competitive market “Practical Knowledge” is as relevant as the Theoretical. The significance of MBA Degree is that the Theoretical aspects, which a student learns throughout the year in the class sessions, can be practically applied through different projects, which one undertakes. Keeping in tune with this doctrine, we have tried to apply theoretical aspects throughout the project, which we learned under the course of management. In this project more emphasize given to the various tools of sales promotion and its impact on consumers buying decisions.

Actually in recent trend to some extent this technique also become victim of clutter, even though it can be eliminated by generating innovative and more attractive tools to lure the customers. Now a day most of the FMCG companies considering sales promotion as an important part of their marketing strategy. From the analysis of survey it becomes clear that consumers do response to the sales promotion campaign, but there are customers who strongly prefer to stick to brand name.

The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use. Conceptually, however, the term refers to relatively fast moving items that are used directly by the consumer. Thus, a significant gap exists between the general use and the conceptual meaning of the term FMCG.

Further, difficulties crop up when attempts to devise a definition for FMCG. The problem arises because the concept has a retail orientation and distinguishes between consumer products on the basis of how quickly they move at the retailer's shelves. The moot question therefore, is what industry turnaround threshold should be for the item to qualify as an FMCG.

Promotion is one of the important elements of marketing mix. There are so many elements of promotion such as …

• Advertising;
• Direct Marketing
• Public Relations
• Sales Promotion

Traditionally, sales Promotions have been used by marketer to increase sales in the short term. However, in the last few decades this communication tool has evolved and now is considered from a strategic point of view. For this reason, it is necessary to realize new studies in this area and study how consumers evaluate sales promotions.

Sales promotions have grown in both importance and frequency over the past few decades. Although an accurate estimate for total sales promotions expenditures does not exist, we can be sure that the trend is up.

Sales promotion serves three essential roles: It informs, persuades and reminds prospective customers about a company and its products. Even the most useful product or brand will be a failure if no one knows that it is available. As we know, channels of distribution take more time in creating awareness because a product has to pass through many hands between a producer and consumers.

Therefore, a producer has to inform channel members as well as ultimate consumers about the attributes and availability of his products. The second purpose of promotion is persuasion. The cut throat competition among different products puts tremendous pressure on their manufacturers and they are compelled to undertake sales promotion activities. The third purpose of promotion is reminding consumers about products availability and its potential to satisfy their needs.

Doctrine of Indoor Management Under Indian Company Law

The Doctrine of indoor management is a presumption on the part of the the people dealing with the company such as the shareholders that the internal requirements with regard to the articles of association and memorandum of association have been complied with.

The doctrine of indoor management helps in protection of external members from the company and states that the people are entitled to presume that the internal proceedings are as per the documents submitted with the registrar of companies.

They are not allowed to go into the procedural aspect, such as the fact that the internal proceedings might not happen regularly, or what are the proceedings before the directors, in an extraordinary general meeting.

The Doctrine of indoor management is an exception to the rule of constructive notice. It imposes an important limitation on the doctrine of constructive notice. According to this doctrine "persons dealing with the company are entitled to presume that internal requirements prescribed in memorandum and articles have been properly observed". A transaction has two aspects, namely, substantive and procedural. An outsider dealing with the company can only find out the substantive aspect by reading the memorandum and articles. Even though he may find out the procedural aspect, he cannot find out whether the procedure has been followed or not. For example, a company may have borrowing powers by passing a resolution according to its memorandum and articles. An outsider can only found out the borrowing powers of the company. But he cannot find out whether the resolution has in fact been passed or not. The outsiders dealing with the company are presumed to have read and understood the memorandum and articles and to see that the proposed dealing is not inconsistent therewith, but they are not bound to do more; they need not inquire into the regularity of the internal proceedings as required by the memorandum and articles. They can presume that all is being done regularly.

Exceptions to the Doctrine of Indoor Management

The doctrine of indoor management is subject to the following exceptions of limitation:-

1. The rule does not protect any person who has actual or constructive notice of the want of authority of the person acting on the behalf of the company.
2. The rule cannot be invoked in favors of a person who did not in fact consult the company memorandum andarticles and consequently did not act in reliance of those documents.
3. If an officer of the company act in a manner, which could not ordinarily be within his powers, the person dealing with him must make proper enquiries and satisfy himself as to the officer authority. If he fails to make enquiry, he cannot rely on the rule Anand Biharilal v. Din Shaw and co
4. The rule does not apply where a person relies upon a document that term out to be forged since nothing cans valid ate forgery. Ruben v Great Fingall Consolidated Ltd.
5. The rule does not apply to transactions which are illegal ar void-ab-intio.

Agricultural Marketing in India

Agricultural Marketing 

Agricultural marketing can be defined as the commercial functions involved in transferring agricultural products consisting of farm, horticultural and other allied products from producer to consumer. Agricultural marketing also reflect another dimension from supply of produce from rural to rural and rural to urban and from rural to industrial consumers. In the olden days selling of agricultural produce was easy as it was direct between the producer to the consumer either for money or for barter. It brief, it was selling not marketing. In the modern world it became challenging with the latest technologies and involvement of middlemen, commission agents who keep their margins and move the produce further. As it is well known more the number of mediators more will be the costs as each transaction incurs expenses and invites profits. Ultimately when it comes to the producer the cost of the produce goes up steep. In the entire process of marketing the producer gets the lowest price and the ultimate consumer pays the highest as the involvement of more middlemen in the entire distribution process.

Market information is an important aspect of Agricultural Marketing. The importance of sound agricultural marketing policies for ensuring fair returns to the farmers can hardly be over-emphasized. It, therefore, becomes necessary on the part of regulatory agencies to ensure remunerative prices to the farmers for the sale of their produce, to boost up their efforts for increasing and sustaining the agricultural production. A number of measures have been taken by the Government to protect and safeguard the interests of farmers, like regulation of markets, grading of agricultural produce, cooperative marketing etc. Still the benefits are not percolating down to the farmers, as they are unable to plan their strategies for sale of their produce at remunerative prices, in the absence of correct and timely market information and advice about arrivals, prices, market trend, etc.

AGRICULTURAL SCENARIO

Indian agricultural has set new mile stones in its progress. Tremendous strides have been made in recent past . All time high record of production of 209 million tonnes of food grains in 1999-2000 and 137 million tonnes of fruits and vegetables etc reminds us of reviewing the past and the strategies to be conceptualized keeping in view the future and fast changing scenario. The increased trend in production has brought in its wake new challenges to handle in terms of huge marketable surplus. A strong and efficient marketing systems is the core content of agricultural Marketing in the country keeping in view thee management of Marketable surplus. It is also noteworthy to find the markets overseas keeping in view the policy of liberalization .

What are Agribusinesses ?

ASF defines Agribusinesses as “all enterprises that assemble, process and transform raw agricultural commodities into final products for distribution to local and international consumers”

ASF works in the following Agribusiness Sub-Sectors

Fresh Horticulture (All fruits & vegetables – Processed to increase shelf life)

Floriculture (ornamental) products
Processed horticultural products (frozen, canned, dehydrated, freshly cut, in brine etc)

Processed dairy products

Processed Meats & Livestock Products

High Value Agricultural products suited to small farms (high quality wood, vanilla, black pepper, saffron & other spices).

Channels involved in Agricultural Marketing

Most of the Agricultural produce is indirect channels ( different agents and retailers) because of lot of care is required and money is invested by different stake holders, while transport, keeping in view of perishableness. the highest wastage is agricultural produce when compare to other non - agricultural produce. with in agricultural produce again two different kinds, perishable and non-perishables ( grains pulses etc.) the perishable agricultural produce is Fresh fruits and vegetables (ffv). 

Direct marketing channels for Agricultural produce is apanimandi and rythubazaars etc. in this, there is no middlemen are involved, direct grower/producer and consumer or customer interpace. These innovations are taken place for the benefit of both farmer and consumer after amendments of APMC act

What are the challenges thrown up by the growing influence of these agribusiness firms, and how can their monopoly and unfair practices be regulated? 

Global corporations now control one-third of the world's productive assets and three-quarters of all world trade. Agribusiness firms have matured steadily over the last several decades, with the result that small processors and small agricultural producers have become a shrinking part of the landscape. The increased consolidation of agribusiness firms in the food industry has led to a more imperfect market.

Farmers are at a disadvantage because they are numerous, while processors are few. They turn up as price-takers with invariably no bargaining power. Firms wielding immense market power squeeze farmers from both sides. The market power of retailers, processors and grain companies dominates the agri-food chain and takes a larger and increasing portion of the producer's surplus, making windfall gains. They win both ways -- when prices fall as well as when they peak. On the other hand, farmers always bear the brunt, losing out during times of bumper production as well as low yields. 

The following methods could be used to regulate the unfair practices of Agricultural Marketing (agribusiness firms):

Introduce fairness in trade: All transactions should be done in a fair and transparent manner wherein farmers are made aware of the prevailing market price and receive a fair margin of the market share.

Strengthen cooperatives: Most developing countries have a large number of small farms and a collective mechanism of marketing and delivery of input through the cooperative movement. This goes a long way in providing a congenial atmosphere and mitigating the risks of marketing.

Public scrutiny of mergers and acquisitions (M&As): Most cartels exist on account of lack of effective regulation mechanisms and a review of competition policies. Stronger regulation and civil society participation in the review of M&As between companies could reduce imperfections in the market.

Strict auditing of food and trade flows: On account of lopsided trade rules and a restriction of State intervention in the marketplace, the role of transnational and multinational corporations is set to increase in the production and trade of food articles in developing countries. To regulate speculation, cartelisation and malpractice, strict auditing of food balances and trade flows needs to be carried out. Only such strong action will help check speculation as well as exploitation of natural resources.

What is an "Agency"? Kinds of Agents, Creation and termination of Agency

Topics: Agency as per Indian contract Act 1872 | Contract of Agency | Principal and Agent | Kinds of Agents | Creation and Termination of Agency | how is it created and terminated | Rights and Duties of an Agent |

In this chapter, the students will come to know

1. What is a contract of agency-agent-principal?
2. Requirement of a valid agency contract.
3. Difference between an agent, a sub-agent and a substituted agent.
4. Types of agents.
5. Mode of creation of an agency.
6. Rights and duties of an agent and a principal.
7. Termination of an agency.

AGENCY

            The relationship between principal and agent is known as agency.

            According to Section [182] of Indian Contract Act 1872,

            "An agent is a person implied to do any act for another or to represent another in dealings with third person.  The person for whom such act is done, or who is represented is called principal."

            The relationship between principal and agent is known as Agency.

            There is a difference between agent and servant.

            No consideration is required in contact of agency.

Kinds of Agent :-

(i)         General Agent (Time Duration)

(ii)        Specific Agent (Specific Purpose)

(iii)       Universal Agent (Limited Authority)

Creation of Agency :-

(i)         Express Agreement

(ii)        Implied Agreement

(iii)       By Estoppel. ( A loss incrurred due to false representation)

When a person by his words or conduct has willingly led another to believe that certain set of circumstances or facts exists, and that another person has acted on that belief, he is estopped from be denying the truth.

(iv)       Agency by ratification.

Rights and duties of agents :-

(i)         Duty to follow principal's direction.

(ii)        Duty to carry out the work with reasonable skill.

(iii)       Duty to render accounts

(iv)       Duty to communicate. [Section-214]

(v)        Duty not to deal on his own account. [Section-215]

(vi)       Duty not to make any profit out of his agency except his remuneration.

(vii)      Duty on termination of agency by principal's death [Section-209]

(viii)     Duty not to delegate authority under [Section 190] He can delegate the authority to the third party.

"NO ONE CAN TRANSFER BETTER TITLE THAN HIMSELF"

Transfer of Property Act | Sale of Goods Act 1930 | "Nemo dat quod non habet" | No one can transfer a better title 

"NO ONE CAN TRANSFER BETTER TITLE THAN HIMSELF"

     The term  "Nemo dat quod non habet" refers to No one can transfer a better title in property than he himself has. It means Sales without title is not possible.  Sale of goods act describes rules regarding transfer of property and ownership.  Sometimes goods are transferred by none owner.  The general rule is no one can pass better title than himself.

Transfer of Ownership or Title (Sec 27 – 30):

Where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title than the seller had (Sec 27). As a general rule, no one can sell the goods and give a good title thereof unless he is the owner thereof. This general rule is expressed by the maxim: “Nemo dat quod non habet” which means “no one can give that which he possess not”. The seller cannot give to the buyer of the goods a better title to the goods than he himself has.

Example:

Mr. X sells goods to Mr.Y acquired by theft, where Mr. Z is the real owner of the goods. He later finds goods in possession of Mr. Y. Now Mr. Y has no title to the goods as Mr. X was not the owner and had no title to sell the goods. Therefore, Mr. Y  will have to return the goods to Mr. Z who is the real owner.

In the following instances the buyer does not obtain a better title:

1) Person who has bought the goods under hire purchase agreement sells them;

2) In an auction sale if stolen goods are sold, neither the auctioneer nor the buyer has knowledge that the goods are stolen.

Exception to the rule  No one can transfer a better title in property than he himself has ("Nemo dat quod non habet")         

 This rule protects the owner. However this rule has certain exception.

(I)        ESTOPPEL :- In case of estoppel the title of goods is transferred even without ownership.

(II)       SALE BY MERCHANTILE AGENT :- An agent can paas the title or transfer the goods even though he is not true owner.

(III)     SALE BY ONE OF THE JOINT OWNER :- In case of joint ownership if the goods which cannot be separated, may be transferred by one of the joint owner.

(IV)     SALE UNDER AVOIDABLE CONTRACT :- Under section-29 A person who obtains the possession of any goods under a voidable contract, and before the contract has been cancelled, sale this goods, ownership is transferred with a good title.

(V)       SALE BY SELLER IN POSSESSION AFTER SALE :- The buyer after purchasing the goods may leave them with the seller, if the seller sells these goods to someone other, the title of goods is transferred.  The later buyer becomes as obtains a good title.

(VI)     SALE BY AN UNPAID SELLER :- Under [Section – 54(3)]  Where an unpaid seller who has exercised his right of lien or stoppage in transit re- sells the goods, the buyer acquires a good title thereto as against the original buyer, notwithstanding that no notice of the re- sale has been given to the original buyer.

(VII)    SALE BY A FINDER OF GOODS: When thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses upon demand, to pay the lawful charges of the finder, the finder may sell it -
(1) when the thing is in danger of perishing or of losing the greater part of its value, or
(2) when the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value.
(VIII)  SALE BY THE OFFICIAL RECIEVER :  In the event of insolvency of either the seller or the buyer, the question whether the goods can be taken over by the Official Receiver or Assignee, will depend on whether the property in goods is with the party who has become insolvent.