Key Differences Between Important Concepts | Legal Reasoning for CLAT PDF Download

Civil Law System and Common Law System

• Civil law originated from Roman law and is predominantly followed in Europe and South America. Common law originated from England and is followed in England, the United States, India, Australia, Pakistan, Bangladesh, Hong Kong etc. 
• In the Civil law system, the major source of law is legislation or codified law while in the Common law system, the major source of law is customs and judge-made law or precedents. 
• In the Civil law system, the role of the judge is that of an examiner, actively examining the evidence; on the other hand in the Common law system, the judge plays the role of an umpire or a referee. 
• In the Civil law system, the lawyer does not play an important role in the trial whilst in the Common law system the trial is dominated by lawyers. 
• The trial in a Common law system is Accusatorial/ Confrontational while the trial in a Civil law system is Inquisitorial/Collaborative. 
• In the Civil law system, remedies not codified in the statues are not permitted. However, in the Common law system, the judges are empowered to provide an equitable remedy that is fair and just even if not codified in a statute. 
• In the Civil law jurisdictions, a trial is by a single or a panel of judges, while in many Common law jurisdictions, juries play an important role in the trial.

Fundamental Rights and Fundamental Duties

• Fundamentals Rights are in the nature of privileges granted under Part III of the Constitution of India while Fundamental Duties are in the nature of obligations imposed under Part IVA of the Constitution of India. 
• While some Fundamental Rights such as the right to freedom of speech and expression are granted only to the citizens of India other Fundamental Rights such as the right to life are granted to all persons. However, Fundamental Duties are imposed only on the citizens of India. 
• Fundamental Rights are considered sacrosanct rights and violation of any fundamental rights can be enforced in a court of law. On the other hand, Fundamental Duties are not enforceable unless a law has been passed for the implementation of the Fundamental Duties. That is in case of a violation of a fundamental right; the person whose fundamental right has been violated can approach a court of law for the protection of his right. However, if a citizen does not abide by a fundamental duty for which law has not been passed, the Government cannot enforce such a duty against the citizen. 
• Fundamental Rights are rights which citizens/persons have against the state while Fundamental Duties are obligations of citizens towards the state.

Fundamental Rights and Directive  Principles of State Policy (DPSP)

• Fundamentals Rights are in the nature of privileges granted to citizens and persons while DPSP are principles that the state should follow while making laws. 
• Fundamental Rights are enforceable in a court of law while DPSP are not enforceable in a court of law. For example, if a DPSP is not followed or obeyed, its implementation cannot be secured in a court of law.

Agreement and Contract 

• An agreement is a promise and a promise is an accepted proposal. An agreement that is enforceable by law is a contract. 
• Every contract is an agreement but every agreement is not a contract. 
• An agreement becomes a contract when (i) there is some consideration involved; (ii) the parties to the contract are competent to contract; (iii) the parties have given their consent freely and; (iv) the object of the contract is lawful. 
• If a person decided to give his house to another without any consideration, it is an example of an agreement since there is no consideration involved and hence cannot be enforced by law. On the other hand, if a person has decided to sell his house to another for an agreed sum, the agreement is a contract that is enforceable by law.

Void and Voidable

• An agreement that is not enforceable by law is a void agreement. On the other hand, a voidable agreement is an agreement which is enforceable at the option of one of the parties.
• Void agreements include (i) agreements whose objects are unlawful; (ii) agreements without consideration; (iii) agreements in restraint of marriage; (iv) agreements in restraint of trade; (v) agreements in restraint of legal proceedings; (vi) unmeaning agreements; (vii) wagering agreements; (viii) agreements to do impossible acts. Voidable agreements are agreements where the consent to the contract of one party is caused by coercion, undue influence, fraud or misrepresentation. 
• Void agreements are unenforceable agreements by operation of law and the parties are not permitted to enforce such an agreement while voidable agreements are enforceable at the option of the party whose consent was taken by way of coercion, under influence, fraud or misrepresentation. Such a party has the option of avoiding the agreement or affirming the agreement. 
• Void agreements are void ab initio or unenforceable from the beginning. On the other hand, voidable agreements are void only in the event the party at whose option the agreement becomes void elects to rescind or avoid the contract. 
• Any person receiving benefits under a voidable contract must return or compensate any benefit received under such a contract in the event the contract is avoided. On the other hand since void agreements are unenforceable, no compensation is required to be paid for any benefit derived from a void agreement. 
• Specific performance of a voidable contract is possible. However, in cases of void contracts specific performance is not permitted.

Void Agreements and Illegal Agreements

• Void Agreements are unenforceable agreements but may not be forbidden by law. However, illegal agreements are those agreements that are void and are also unlawful and are forbidden by law. 
• For example, an agreement without consideration is a void agreement. However, an agreement to procure drugs is an illegal agreement since drugs are forbidden by law and therefore an agreement for sale of drugs is an illegal agreement.

Misrepresentation and Fraud

• Misrepresentation is a misstatement of a fact material to a contract and includes
  (i) a positive assertion of a fact that is untrue though the person making such a statement believes it to be true;
  (ii) any breach of duty without the intention to deceive and such person gains an advantage; and (iii) innocently causing a party to an agreement to make a mistake regarding the subject matter of the contract. 
• Fraud is an act committed with an intention to deceive another party and includes;
  (i) assertion of a fact which the person knows to be false;
  (ii) active concealment of a fact;
  (iii) promise without any intention of performing it;
  (iv) any act or omission that is fitted to deceive or which has been specifically been declared to be fraudulent. 
• In Misrepresentation the person making the statement believes the statement to be true while in fraud the person making the representation does not himself believe in the truth of the statement he is making. 
• Misrepresentation does not have the element of malice while fraud is always done maliciously. 
• Simple misrepresentation is not a tort and a person to whom the facts have been misrepresented is entitled to rescind (terminate) the contract and claim compensation for any damages that have been sustained through the non-fulfilment of the contract. On the other hand, Fraud in addition to rendering the contract voidable is a cause of action in tort for damages. 
• In cases of misrepresentation the defense that a person has the means to discover the truth with ordinary prudence is allowed, however, this is not permitted in cases of fraud. 
• For example if a seller of a horse makes a statement that the horse is fit for racing without knowing that the horse has a disease has misrepresented the fact since he was unaware about the illness of the horse. On the other hand, if the seller knowingly suppresses the fact about the illness of the horse, he has committed fraud.

Substantive Law and Procedural Law

• Substantive law determines the rights and liabilities of the parties while procedural law determines the practice, procedure and machinery for the enforcement of the rights and liabilities as determined by the substantive law. 
• Procedural law is the means to achieve the goals of the substantive law. Procedural law is the accessory to and complementary to the substantive law. 
• For example, the Indian Contract Act (Substantive Law) gives the right to the parties to enforce a contract. The parties can approach the court to enforce this contract. The procedure to be followed for filing a suit in the court is given in the Code of Civil Procedure, 1908 (Procedural Law).

Strict Liability and Absolute Liability

• The rule of strict liability and absolute liability applies in cases where a dangerous or hazardous thing escapes due to no fault of the owner and the owner shall be held liable for damages caused due to such escape. In cases of strict liability, the defenses of
  (i) fault or consent of the claimant;
  (ii) act of god;
  (iii) statutory authority;
  (iv) act of the third party are permitted. However, in cases of absolute liability, no defenses are permitted.
• The rule of strict liability was framed in the 19th century in the U.K. courts whereas the rule of absolute liability has its origin in India in the Oleum gas leak case (M.C. Mehta vs Union of India). 
• The rule of absolute liability is more of an improvement on strict liability rule to make the age old rule suitable for the present situation with lots of industries of hazardous substances emerging, without adequate safeguards or protection.

Theft and Robbery

• The offence of theft is committed when a person dishonestly takes any movable property out of the possession of any person without that person’s consent and moves that property in order to perform such taking. Theft is robbery if in committing the offence of theft, the offender, for that end voluntarily causes or attempts to cause any person death or hurt or wrongful restraint. 
• In theft, there is no violence involved. Robbery is an aggravated form of theft. Theft is robbery when there is a presence of imminent fear of violence. 
• While the offence of theft is punishable with imprisonment for a term upto three years or with fine or both, the offence of robbery is punishable with rigorous imprisonment for a term which may extend to a term of ten years and fine. Further, if robbery is committed on the highway between sunset and sunrise, the imprisonment may extend to fourteen years. 
• For e.g. if a person pickpockets a wallet, he has committed the offence of theft. But if he threatens a person with a knife for his wallet, he has committed the offence of robbery since there is an apprehension of violence.

Servant and Independent Contractor

• The master has complete control over the work of a servant that is all elements including the mode and method of performing the task, while in case of an independent contractor; the employer has limited control over his work. The employer only has control over the final work product of the independent contractor. He does not have control over the method and technique/ style of carrying out the work. 
• A master-servant relationship is that of a contract of service while the relationship of the employer with the independent contractor is that of a contract for service. 
• The master is liable for the actions of the servant during the course of employment but the employer is not liable for the actions of an independent contractor. 
• A contract of service (master-servant relationship) is usually used in cases where the master is hiring labour and skill e.g. domestic workers. However, a contract for service (independent contractor) is usually used in cases where specific outputs are identified and the skills and inputs of the independent contractor are required e.g. an interior designer hired to decorate a room. 
• In most companies, employees have a contract of service and are entitled to benefits under the various labour statutes. However, independent contractors often referred to as consultants have contracts for services and are not entitled to benefits under the labour statutes.

Coercion and Undue Influence

• In coercion the consent to an agreement is obtained by committing or threatening to commit an offense forbidden by the Indian Penal Code. In undue influence the consent is obtained by dominating the will of the other person. 
• In coercion, there is a threat or actual use of violence for obtaining the consent for the agreement while in undue influence passive force by way of mental or moral influence is used to obtain consent of the party to the agreement. 
• In coercion, the party threatening the other party may be a stranger but in undue influence, there exists a relationship between the parties where one party is in a dominating position. 
• In cases of coercion, there is a presumption that there is no coercion and the burden of proof is on the party alleging coercion but on the other hand in cases of undue influence the burden of proof is on the person in the dominating position that the consent of the other party was taken freely without any undue influence. 
• Coercion also attracts criminal liability and is punishable under the provisions of the Indian Penal Code while undue influence is not considered an offence under the Indian Penal Code. 
• For e.g. when a person puts a gun to the head of another and asks him to sign a contract, it is an example of coercion. But if a spiritual guru knowing his influence over his disciple makes the disciple sign an agreement transferring a property to him, the spiritual guru has exploited his dominant position and has used undue influence in obtaining the consent of this disciple for the agreement to transfer property.

Assault and Battery

• Assault is the threat of violence while battery is the actual use of physical violence. 
• The victim of assault is only under an apprehension of being hurt and is not actually harmed, however in battery; actual physical harm is caused to the victim. 
• If a person waves a gun at another person and threatens to shoot him, it will be assault. If a person hits a person with a baseball bat he has committed the tort of battery.

Tort and Contract

• A tort is a civil wrong while a contract is an agreement between parties that is legally enforceable.
• A tort is inflicted on any person without his consent while a contract is based on the consent and will of the parties. 
• A breach of a contract is an infringement of a right in personam (only against one person) while a tort is a violation of right in rem (against the whole world). 
• In case of torts, the obligation is imposed by law and is on the community at large while in case of contracts, the obligations are as mutually agreed upon by the parties to the contract. 
• In cases of tort, the intention of the party committing the tort is often relevant but in breach of a contract, the intention of the party is irrelevant. 
• In tort, the damages are un-liquidated and the quantum payable is determined by the Court on a case to case basis. On the other hand the damages in a contract are generally liquidated and are mutually agreed upon by the parties to the contract.

Quasi Contracts and Contracts

• A Contract is based on the mutual will and consent of the parties to a contract whereas a quasi contract is one which resembles a contractual relationship and arises in situations where one party gets unjust enrichment. 
• In a contract the obligations of the parties are as set out in the contract whereas in cases of quasi contract this basis of the obligation is that no one should have unjust benefit at the cost of the other. A person who is enriched by a benefit at the expenses of another is bound to compensate the other party for the benefit received. 
• A contract is an agreement while a quasi contract is not. 
• For a contract to be valid the essential elements such as free consent, lawful object and consideration must be fulfilled while in quasi contracts, the essential elements for a contract need not be fulfilled for a quasi contract to be enforceable. 
• For e.g. if A supplies food to B, a lunatic, A is entitled to be reimbursed from B’s property even in the absence of a contract since B has received a benefit and hence B is under a quasi-contractual obligation to compensate A for the benefit received. On the other hand, if A and B have a contract where A will supply B with food, the obligation of B to compensate A for the food arises from the contract between the parties.

Joint and Several Tortfeasors

• When two or more persons act together to commit a tort against a person causing a single injury they are said to be joint tortfeasors. On the other hand, when two or more persons act independently and different damages are caused to a person, they are said to be several tortfeasors. 
• In joint tortfeasors, all parties must actively participate together and there must be a common goal. On the other hand in several tortfeasors the parties act independently and there is no common goal or design. 
• The cause of action for joint tortfeasors is the same for each of the joint tortfeasors while the cause of action for several tortfeasors is different. 
• In cases of joint tortfeasors, the damages must be borne by each of the tortfeasors in accordance with the proportion of their contribution to the commission of the tort. However in cases of several tortfeasors, each tortfeasor will be independently responsible for the tort committed by him and not for the torts committed by the other tortfeasors. 
• In cases of joint tortfeasors, each joint tortfeasor is jointly and severally liable for the damages and therefore the victim can claim the full damages from any one of the joint tortfeasors however, where one tortfeasor pays more than his share of the damages, he is entitled to recover the amount from the other tortfeasors on the principle of contribution. This is not possible in cases of several tortfeasors.

Arbitration and Conciliation

• In arbitration, the dispute is referred to a neutral third party who settles the dispute after hearing both sides, while in conciliation, the conciliator helps the parties reconcile their differences and formulate a solution, which is acceptable to both sides. 
• Arbitration is an adversarial process while conciliation is more informal and the purpose of conciliation is usually to help parties resolve their differences amicably in order to preserve their relationship. 
• In order to initiate arbitration proceedings, it is mandatory to have an arbitration agreement in writing wherein the parties agree to refer their dispute to an arbitrator. However, there is no such pre-condition in conciliation. 
• The party initiating conciliation shall send a written invitation to the other party, briefly identifying and explaining the subject and nature of dispute and the process of conciliation can only begin once the other party has accepted the invitation. If the other party rejects the invitation or does not respond within the prescribed time, there cannot be any conciliation proceedings. On the other hand, in arbitration, even if one party refuses to participate in the arbitration proceedings or does not appoint an arbitrator, the proceedings continue nonetheless. 
• The conciliator may make proposals for a settlement of the dispute and the parties have the option to either accept or refuse the proposals, however, the arbitrator’s decision on a dispute is an imposition on the parties.
• Any one party can unilaterally terminate the conciliation proceedings while this is not possible in the case of arbitration. 
• At the end of the arbitration proceedings, the arbitrator makes an award which is similar to a judgment, while a successful conciliation culminates into a settlement agreement.

Company and Partnership

• A company is governed by the Companies Act, 1956 while a partnership is governed by the Partnership Act, 1932. 
• A company must necessarily be registered under the Companies Act in order to come into existence; however, registration is not compulsory for a partnership firm. 
• A company is an artificial legal person, its identity is separate from its members; this means it can enter into contracts, sue and be sued in its own name. On the other hand a partnership is not recognized by a separate entity in the eyes of law; it is a collection of individuals. 
• The minimum number of persons required to form a company is two in case of private companies and seven in the case of public companies. The minimum number of persons required to form a partnership is two. 
• The maximum number of people in a partnership firm is 10 in case of a banking business and 20 in case of all other types of businesses. On the other hand, a public company can have as many members but a private company can have upto 50 members. 
• In a company, the liability of members is limited while in a partnership; the liability of partners is unlimited. This means, if a company becomes insolvent, the liability of its members is limited to the extent of their share in the company. However, if a partnership firm becomes insolvent, the personal wealth of the partners may be utilized for paying off the debts of the firm. 
• A company has perpetual succession; its existence is independent of the death or retirement of its members. On the other hand, a partnership firm’s existence depends on the individuals comprising it. 
• The day to day affairs of a company are managed by board of directors who are elected by the members of the company, while the partnership firm functions through all or some of the partners. 
• In a partnership, there are restrictions on transferability of shares; a partner cannot transfer his share without the consent of all other partners whereas in a company a member may transfer his share to any other member freely. 
• A company is subject to a lot of regulations in its functioning, maintenance of registers and accounts, while a partnership has no such statutory obligations.

Shares and Debentures

• Shares form part of owned capital of the company while debentures form part of borrowed capital of the company. 
• Shareholders are owners of the company while debenture holders are creditors of the company. 
• Debenture holders receive interest at a fixed rate on their investment and this return is independent of the company’s profit or loss. Shareholders receive a proportion of the profits as dividend. This return to shareholders is not guaranteed, as the dividend is dependent on the profits of the company. In case the company is running at a loss, it is not required to pay a dividend; however, the company would be required to pay interest to the debenture holders. Therefore, investing in shares is riskier than debentures as there is no assured return on shares. 
• Shareholders have a right to vote at the general meetings of the company, while debenture holders do not generally have the right to vote but may be allowed to do so on subjects that concern them. 
• Shares cannot be converted to debentures but certain debentures can be converted to shares. 
• If the company goes into liquidation i.e. the company is being wound up; debenture holders will get priority over shareholders in getting their investment back.

Partnership and Limited Liability  

Partnership (LLP)

• Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all, while LLP is an alternate form of business which combines the attributes of both partnership and a company. 
• An LLP is governed by the Limited Liability Partnership Act, 2008 and a partnership is governed by the Partnership Act, 1932. 
• An LLP shall be registered under the LLP Act, 2008 by complying with the regulations prescribed therein whereas a partnership may or may not be registered. 
• Liability of partners in a partnership firm is unlimited (explained above) while in LLP, the liability of partners is limited to their contribution as agreed upon in the agreement. 
• A minimum of two partners will be required for formation of an LLP. There will not be any limit to the maximum number of partners. The maximum number of people in a partnership firm is 10 in case of a banking business and 20 in case of all other types of businesses. 
• The LLP is a body corporate with a legal entity separate from its partners with perpetual succession, while a partnership’s existence is dependent on the individuals that comprise it. 
• In an LLP, no partner is liable for the independent or unauthorized actions of other partners; whilst on the other hand; a partnership is based on agency relationship where every partner is responsible for the acts of other partners.

Libel and Slander 

• Libel is the publication in print (including pictures), writing or broadcast through radio, television or film of any false and defamatory statement or information about a person which will do harm to that person or his/her reputation, by tending to bring the target into ridicule, hatred, scorn or contempt of others. On the other hand, Slander is any false and a defamatory statement that is made orally or through gestures about a person which will do harm to that person or his/her reputation, by tending to bring the target into ridicule, hatred, scorn or contempt of others. 
• Libel is a publication of a defamatory statement in a tangible form while slander is oral and therefore intangible. 
• In cases of slander other than slander per se (slander that is on the face of it defamatory e.g. Relating to the chastity of a woman), actual damages suffered by the person have to be proven; however there is no such requirement in cases of libel. 
• For example when a person wrongly accuses another of a person of being a thief in front of 10 people, it is slander, however, if the same statement is printed in a newspaper, it is libel.