Study Notes on Legal Environment for UGC NET Part-1

By BYJU'S Exam Prep

Updated on: September 13th, 2023

UGC NET Exam is conducted twice a year by NTA. There are ten units in Paper-1 and each unit has equal weightage in the examination. Most Important Topics in UGC NET Environment, Logical Reasoning, Teaching Aptitude, Research Aptitude, Communication, ICT, Higher Education. Below we are explaining the topic Legal Environment.

Legal Environment Affecting the Business Environment in India:

The legal environment of business is defined as the framework of rules and regulations, bylaws and various legislations that govern the day to day working of the business organisations. The legal environment dominates the business environment of a country.

  • The legislature of the country, being the law-making authority frames the laws and
  • The executive ensures that those rules are followed and;
  • If these rules are not implemented properly, the judiciary of the country comes into the picture in order to take necessary actions by imposing fines and penalties.

Various laws that govern the business environment in India are:

A. Business Laws B. Corporate Laws

C. Environment Laws

Indian Contract Act, 1872

Companies Act, 2013   The Environment Protection Act, 1986 

Sale of Goods Act, 1930

Consumer Protection Act, 1986

Air (Prevention and Control of Pollution) Act, 1981

Indian Partnership Act, 1932

Monopolies and Restrictive Trade Practices Act, 1969

Water (Prevention and Control of Pollution) Act, 1974

Negotiable Instruments Act, 1881

 Competition Act, 2002 The National Green Tribunal Act, 2010

A. Business Laws:

The Business Laws of the company is also known as Mercantile Law. It helps in regulating the day to day business transactions.

Indian Contract Act, 1872

It contains all the rules and regulations which helps the business (as well as non-business entities) in entering into various contracts and agreements.


  • There must be a valid contract among parties of the contract.
  • A valid contract is enforceable by law.
  • A valid contract must involve at least two parties.
  • There must be an intention of the parties to enter the contract.
  • The parties must be competent enough to perform the contract.
  • The intention of the parties and the contract must be lawful in nature.
  • The contract must be certain of in nature so that it can be performed and must be possible to perform.
  • There must be a consideration for fulfilling the contract.

Sale of Goods Act, 1930

Sale of Goods Act constitutes one of the most important types of a contract under the law in India. All the contracts or agreements related to the sale of goods are governed under this Act.


  • There must be two different parties to a contract of sale, i.e. there must be a buyer and a seller. A person cannot buy his own goods. There must be a contract of sale between both the parties.
  • There must be a transfer of property in order to complete the process of the sale. Here, transfer of property means to transfer the ownership rights of the property.
  • The main subject of the contract must be ‘ goods ‘. As per section 2(7) “goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which is agreed to be severed before sale or under the contract of sale.”

Here, ‘Actionable claims’ means claims which can be enforced by legal action, e.g., a book debt (i.e., a debt supported by an entry by the creditor in his Account Book). A book debt cannot be counted under the category of goods because it cannot be sold but can only be assigned as per the Transfer of Property Act.

  • There must be a consideration for the sale or transfer of the property. The consideration must be in monetary terms.
  • The contract to sell includes both sale and agreement to sell.
  • There is no particular format to constitute a sale. A contract of sale of goods can be made by just an offer and acceptance.

Indian Partnership Act, 1932

Indian Partnership Act defines a partnership as a relationship between persons who have agreed to share the profits of the business carried on by all or any of them acting for all. Those individuals who have entered into a partnership are individually known as ‘partners’ and collectively ‘a firm’.

The essential characteristics of the Act are:

  • There should be at least two persons who are competent to form a partnership.
  • The partnership relation is contractual in nature. It arises from the contract and not from the status of the partners.
  • The agreement may be express, i.e. it should be oral or written or implied.
  • The agreement may be for a fixed period of time or for the execution of a particular venture.
  • The partnership agreement must have all the essential elements of a valid contract, like any other contract.
  • The object of the partnership must be to make profits. Profits from the venture must be distributed among the partners in an agreed ratio.

Negotiable Instrument Act, 1881  

A negotiable instrument can be a Cheque, Demand draft or a Promissory note. The basic property of a negotiable instrument is the presence of a certain amount of money, a particular date and time, transferability and legal credibility of the instrument and a promise/undertaking to pay. A Negotiable Instrument is a document which entitles a person to a sum of money and which is transferable either by delivery or by endorsement and delivery. 

Characteristics of negotiable instruments:

  • Freely transferable: If the instrument is payable to order, the property in the instrument passes by endorsement, and if the instrument is payable to bearer, the property in the instrument passes by delivery.
  • Title of holder free from all defects: Individual or any person, taking an instrument bona fide and for value is known as a holder in due course, receives the instrument free from all defects in the title of the individual (transferor). The holder in due course is not affected by any defect in any way in the title of any prior party, including the transferor.
  • Recovery: The holder in due course has a right to sue or claim upon a negotiable instrument in his/her own name for the recovery of the amount. Also, he need not give the notice to transfer to the party liable on the instrument to pay.
  • Presumptions: There are certain presumptions which apply to all negotiable instruments until and unless the contrary is proved. These presumptions are consideration, date, time of acceptance, time of transfer, the order of endorsements, stamp, holder presumed to be a holder in due course, proof of protest.

The topic will be continued in the next article Study Notes on Legal Environment for UGC NET Part-2.

UGC NET Paper 2 Syllabus 2022 – Topics Wise Details

The UGC NET Test will consist of two papers. Paper 1 has 50 questions with each question comprising of 2 marks. Paper 2 will have 100 questions of 2 marks each. The direct link to the UGC NET syllabus pdf is linked below. Go through the UGC NET Exam Pattern 2022

Note: The duration of the examination will be 3 hours only. There will be no break. It will be a CBT mode examination and the candidate can choose any paper to attempt first. 

UGC NET Exam Pattern

  • The cut-off will be decided after obtaining marks out of 300 (Paper I and Paper II).


Total number of Questions

Total Marks


Paper I



3 hour duration

Paper II



Also Read: 

Best Books for UGC NET Paper 2 Read Here
Preparation Tips for UGC NET Read Here
UGC NET 3 month study plan Read Here
UGC NET 6 month study plan Read Here

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