MB0051 – Legal Aspects of Business – Set 1 Question 1: Distinguish between fraud and misrepresentation. Answer: Distinction between fraud and misrepresentation: Sometimes the terms fraud and misrepresentation are used inter-changeably by readers however they are actually different. There is not a much difference between the two but a little one as misrepresentation does not directly mean fraud. Below is a table on the salient points to distinguish the terms: Fraud |Misrepresentation | |The word fraud comes from the Middle English word “fraude” taken |Misrepresentation is a type of lying or falsehood in which a person| |from the Old French and derived from the Latin “fraus”. The word |says or does something that would lead another person to believe | |fraud means a deliberate form of deception that is practiced to |something that is not “in accordance with the facts”. |secure some sort of unlawful and unfair gain. | | |Implies on intention to deceive, hence it is intentional or willful|It is an innocent wrong without any intention to deceive. The | |wrong. |person making the statement believes it to be true. | |A civil wrong which entitles a party to claim damages in addition |It gives only the right to rescind the contract and there can be no| |to the right to rescind the contract. suit for damages. | |In fraud, the person making the representation does not himself |In situations of innocent misrepresentation the person making the | |believe in the truth of the statement he is making. n cases of |statement may believe that what he is saying is true. This is due | |fraud, the person making the statement is a complete liar and is |to the fact that the person making the tatement is simply | |making the statement to deceive others to enter into a contract |repeating what another person has asserted to be true | |Deceit, trickery, sharp practice, or breach of confidence, |A misrepresentation or concealment with reference to some fact | |perpetrated for profit or to gain some unfair or dishonest |material to a transaction that is made with knowledge of its | |advantage. falsity or in reckless disregard of its truth or falsity and with | | |the intent to deceive another and that is reasonably relied on by | | |the other who is injured thereby. | |Fraud always has malicious intent. |Misrepresentation may not have malicious intent to deceive if it | | |happens negligently through a misstatement and/or omission of a | | |material fact(s). |Types of fraud are: |Types of misrepresentation are: | |Fraud is fraud until you get into a legal issue. Then there are |Fraudulent misrepresentation | |differences but there is only one type of fraud in realty. |Negligent misrepresentation | | |Innocent misrepresentation | [pic] Question 2: What are the remedies for breach of contract?
Answer: Businesses both individual and corporate enter into business relationships with either individuals or businesses to enable them to carry on their day-to-day commercial transactions. Most of these relationships result in “contracts” that have legal consequences. Most contracts do not have to be in writing to be enforceable. Definition of a Contract: A contract is a legally enforceable agreement between two or more parties. The core of most contracts is a set of mutual promises (in legal terminology, “consideration”). The promises made by the parties define the rights and obligations of the parties.
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For every contract there must be an agreement. An agreement is defined as every promise and every set of promises forming the consideration for each other and a promise is an accepted proposal. Contracts are enforceable in the courts. If one party meets its contractual obligations and the other party doesn’t (“breaches the contract”), the non-breaching party is entitled to receive relief through the courts. Generally, the non-breaching party’s remedy for breach of contract is monetary damages that will put the non-breaching party in the position it would have enjoyed if the contract had been performed.
Under special circumstances, a court will order the breaching party to perform its contractual obligations. Because contracts are enforceable, parties who enter into contracts can rely on contracts in structuring their business relationships. Essentials of a Contract: The Indian Contract Act -1872 defines “contract” as an agreement enforceable by law. The essentials of a (valid) contract are: ? intention to create legal relations; ? offer and acceptance; ? consideration; ? capacity to enter into a contract ? free consent of the parties ? lawful object of the agreement
Remedy Clauses: These clauses state what rights the non-breaching party has if the other party breaches the contract. In contracts for the sale of goods, remedy clauses are usually designed to limit the seller’s liability for damages. In a contract the agreement being enforceable by law, each party to the contract is legally bound to perform his part of the obligation. The non-performance of the duty undertaken by a party in a contract amounts to breach of contract for which it can be made liable. Remedies for breach of contract: The legal remedies for breach of contract are: ) Damages b) Specific performance of the contract; and c) Injunction. When a contract has been breached, the party who suffers by such breach is entitled to receive, from the party who has breached the contract, compensation for any loss or damage caused to him thereby, being loss or damages which naturally arose in the usual course of things from such breach or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss of damage sustained by reason of the breach.
A person who rightfully rescinds a contract is entitled to compensation for any damage, which he has sustained through non-fulfillment of the contract. Liquidated damages and penal stipulations: If a sum is named in the contract as the amount to be paid in case of breach of contract, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage of loss is proved to have been caused thereby, to receive, from the party who has broken the contract, reasonable compensation, not exceeding the amount so named or the penalty stipulated for.
A stipulation for increased interest from the date of default may be regarded as a stipulation by “way of penalty”. The court is empowered to reduce it to an amount which is reasonable in the circumstances. Specific performance: In certain special cases (dealt with in the Specific Relief Act, 1963), the court may direct against the party in default “specific performance” of the contract, that is to say, the party may be directed to perform the very obligation which he has undertaken, by the contract.
This remedy is discretionary and granted in exceptional cases. Specific performance means actual execution of the contract as agreed between the parties. Specific Performance of any contract may, in the discretion of the court be enforced in the following situations ? When there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done; or ? When the act agreed to be done is such that monetary compensation for its non-performance would not afford adequate relief. Instances where compensation would be deemed adequate relief are: ? Agreement as a consequence of a breach by a landlord for repair of the rented premises; ? Contract for the sale of any goods, for instance machinery or goods. Exceptions: A contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific erformance of its material terms, cannot be specifically enforced. Another situation when a contract cannot be specifically enforced is where “the contract is in its nature determinable”. A contract is said to be determinable, when a party to the contract can put it to an end. A contract the performance of which involves the performance of a continuous duty, which the Court cannot supervise, cannot be specifically enforced. Persons who cannot obtain Specific Performance:
The specific performance of a contract cannot be obtained in favor of a person who could not be entitled to recover compensation for the breach of contract. Specific performance of a contract cannot be enforced in favor of a person who has become incapable of performing the contract that on his part remains to be performed, or who violates any essential term of the contract that on his part remains to be performed, or who acts fraudulently despite the contract, or who willfully acts at variance with, or in subversion, of the relation intended to be established by the contract.
I hope this gives you a relevant overview into the key aspect of business contracts and if one takes adequate care when drafting contracts; needless to say relationships will be better and probably more profitable. [pic] Question 3: Distinguish between indemnity and guarantee. Answer: Introduction: Guarantees and indemnities are both long established forms of what the law terms surety ship. There are important legal distinctions between them. Append below some salient points pertaining to the difference/distinction between Indemnity and Guarantee:
Distinction between Indemnity and Guarantee: |Indemnity |Guarantee | |Section 124 of the Indian Contract Act 1872 defines a “contract of |Section 126 of the Indian Contract Act 1872 defines a contract of | |indemnity” as a contract by which one party promises to save the |guarantee is a contract to perform the promise or discharge the | |other from loss caused to him by the conduct of the Promisor |liability of a third person in case of his default”.
The person who| |himself, or by the conduct of any other person. |gives the guarantee is called the “surety”; the person in respect | |e. g. = ‘x’ contracts to indemnify ‘y’ against the consequences of |of whose default the guarantee is given is called the “principal | |any legal proceedings which may take against B in respect of a |debtor”, and the person to whom the guarantee is given is called | |certain sum of Rs. 200/=. |the “creditor”. A guarantee may be either oral or written. | | |e. . , ‘P’ lends Rs. 5000/= to ‘Q’ and ‘R’ promises to ‘P’ that if | | |’Q’ does not pay the money back then ‘R’ will do so. | |Indemnity comprise only two parties- the indemnifier and the |There are three parties namely the surety, principal debtor and the| |indemnity holder. |creditor | |Liability of the indemnifier is primary |The liability of the surety is secondary.
The surety is liable only| | |if the principal debtor makes a default. The primary liability | | |being that of the principal debtor. | |The indemnifier need not necessarily act at the request of the |The surety give guarantee only at the request of the principal | |indemnified. |debtor |The possibility of any loss happening is the only contingency |There is an existing debt or duty, the performance of which is | |against which the indemnifier undertakes to indemnify. |guarantee by the surety | |An indemnity is for reimbursement of a loss |A guarantee is for security of the creditor. | |In a contract of indemnity the liability of the indemnifier is |In case of contract of guarantee the liability of surety is | |primary and arises when the contingent event occurs. secondary and arises when the principal debtor defaults. | |The indemnifier after performing his part of the promise has no |Whereas in a contract of guarantee, the surety steps into the shoes| |rights against the third party and he can sue the third party only |of the creditor on discharge of his liability, and may sue the | |if there is an assignment in his favor. |principal debtor. | |In a contract of indemnity, the indemnifier promises without the |Contract of Guarantee is for security of a debt or performance of | |request of debtor. promise | [pic] Question 4: What is the distinction between cheque and bill of exchange? Answer: Exchange of goods and services is the basis of every business activity. Goods are bought and sold for cash as well as on credit. All these transactions require flow of cash either immediately or after a certain time. In modern business, large number of transactions involving huge sums of money takes place every day. It is quite inconvenient as well as risky for either party to make and receive payments in cash.
Therefore, it is a common practice for businessmen to make use of certain documents as means of making payment. Some of these documents are called negotiable instruments. In this lesson let us learn about these documents. Distinction between Cheque and bill of exchange |Cheque |Bill of Exchange | |It is drawn on a banker |It may be drawn on any party or individual. | |It has three parties – the drawer, the drawee, and payee. There are three parties – the drawer, the drawee, and the payee. | | | | |The drawer can also draw a bill in his own name thereby he himself |Broadly speaking, cheques are of four types. | |becomes the payee. Here the words in the bill would be Pay to us or|a) Open cheque, and | |order. In a bill where a time period is mentioned, just like the |b) Crossed cheque. | |above specimen, is called a Time Bill.
But a bill may be made |c) Bearer cheque | |payable on demand also. This is called a Demand Bill. |d) Order cheque | |t is seldom drawn in sets |Foreign bills are drawn in sets | |It does not require acceptance by the drawee. |It must be accepted by the drawee before he can be made liable to | | |pay the bill. |Days of grace are not allowed to a banker |Three days of grace are always allowed to the drawee. | |No stamp duty is payable on checks |Stamp duty has to be paid on bill of exchange. | |It is usually drawn on the printed format |It may be drawn in any paper and need not necessarily be printed. | [pic] Question 5: Distinguish between companies limited by shares and companies limited by guarantee. Answer:
The Companies Act, 1956 defines the word “company as a company formed and registered under the Act or an existing company formed and registered under any of the previous company laws (Sec. 3)”. This definition does not bring out the meaning and nature of the company into a clear perspective. Also Sec. 12 permits the formation of different types of companies. These may be: ? Companies limited by shares ? Companies limited by guarantee and ? Unlimited companies. The vast majority of companies in India are with limited liability by shares. Distinction between Cheque and bill of exchange Companies limited by shares |Companies limited by guarantee | |A company limited by guarantee is normally incorporated for |Limited by shares is defined by: a company that has shareholders, | |non-profit making functions. The company has no share capital. A |and that the financial obligation of the shareholders to creditors | |company limited by guarantee has members rather than shareholders. |of the company is restricted to the capital invested in the first | |The members of the company guarantee/undertake to contribute a |place (i. . the specified value of the shares and any premium paid | |predetermined sum to the liabilities of the company which becomes |off in exchange for the issue of the shares by the company). | |due in the event of the company being wound up. |Shareholder’s individual’s assets are thereby secured in the case | | |of the company’s insolvency, but revenues invested in the company | |The Memorandum normally includes a non-profit distribution clause |will be unrecoverable. |and these companies are usually formed by clubs, professional, |Limited companies could be either private or public. A private Ltd. | |trade or research associations. |(limited company disclosure) involves are less demanding, but for | | |this reason its shares might NOT be provided to the general public | | |(and consequently can’t be listed on a national stock market | | |exchange).
This is the well-known distinctive characteristic | | |between a private limited company and a public limited company. | | |The absolute majority of trading corporations are private companies| | |limited by shares. | |Companies limited by shares are more popular |Companies limited by guarantee are less popular than companies | | |limited by shares. |Companies limited by shares are profit making companies. |Companies limited by guarantee are non-profit making | | | | |In case of companies limited by shares, there are shareholders. |Companies limited by guarantee have members, and not share holders | |Companies limited by shares can engage in legal trades and have |There is no share capital in case of companies limited by guarantee| |general clauses. |and it also has self-imposed restrictions | pic] Question 6: What is the definition of cyber-crime? Answer: Introduction: Crime and criminality have been associated with man since his fall. Crime remains elusive and ever strives to hide itself in the face of development. Different nations have adopted different strategies to contend with crime depending on their nature and extent. One thing is certain, it is that a nation with high incidence of crime cannot grow or develop. That is so because crime is the direct opposite of development. It leaves a negative social and economic consequence. Cybercrime:
Cybercrime is defined as crimes committed on the internet using the computer as either a tool or a targeted victim. It is very difficult to classify crimes in general into distinct groups as many crimes evolve on a daily basis. Even in the real world, crimes like rape, murder or theft need not necessarily be separate. However, all cybercrimes involve both the computer and the person behind it as victims; it just depends on which of the two is the main target. Hence, the computer will be looked at as either a target or tool for simplicity’s sake. For example, hacking involves attacking the computer’s information and other resources.
It is important to take note that overlapping occurs in many cases and it is impossible to have a perfect classification system. ? Computer as a tool: When the individual is the main target of Cybercrime, the computer can be considered as the tool rather than the target. These crimes generally involve less technical expertise as the damage done manifests itself in the real world. Human weaknesses are generally exploited. The damage dealt is largely psychological and intangible, making legal action against the variants more difficult. These are the crimes which have existed for centuries in the offline.
Scams, theft, and the likes have existed even before the development in high-tech equipment. The same criminal has simply been given a tool which increases his potential pool of victims and makes him all the harder to trace and apprehend. ? Computer as a target: These crimes are committed by a selected group of criminals. Unlike crimes using he computer as a tool, these crimes requires the technical knowledge of the perpetrators. These crimes are relatively new, having been in existence for only as long as computers have – which explains how unprepared society and the world in general is towards combating these crimes.
There are numerous crimes of this nature committed daily on the internet. But it is worth knowing that Africans and indeed Nigerians are yet to develop their technical knowledge to accommodate and perpetrate this kind of crime. The internet in India is growing rapidly. It has given rise to new opportunities in every field we can think of – be it entertainment, business, sports or education. There are two sides to a coin. Internet also has its own disadvantages. One of the major disadvantages is Cybercrime – illegal activity committed on the internet.
The internet, along with its advantages, has also exposed us to security risks that come with connecting to a large network. Computers today are being misused for illegal activities like e-mail espionage, credit card fraud, spams, and software piracy and so on, which invade our privacy and offend our senses. Criminal activities in the cyberspace are on the rise. Here we publish an article by Nandini Ramprasad in series for the benefit of our netizens. Cybercrimes can be basically divided into 3 major categories: 1) Cybercrimes against persons 2) Cybercrimes against property. 3) Cybercrimes against government.
Cybercrimes committed against persons include various crimes like transmission of child-pornography, harassment of any one with the use of a computer such as e-mail. The trafficking, distribution, posting, and dissemination of obscene material including pornography and indecent exposure, constitutes one of the most important Cybercrimes known today. The potential harm of such a crime to humanity can hardly be amplified. This is one Cybercrime which threatens to undermine the growth of the younger generation as also leave irreparable scars and injury on the younger generation, if not controlled.
In the United States alone, the virus made its way through 1. 2 million computers in one-fifth of the country’s largest businesses. David Smith pleaded guilty on Dec. 9, 1999 to state and federal charges associated with his creation of the Melissa virus. There are numerous examples of such computer viruses few of them being “Melissa” and “love bug”. A Mumbai-based upstart engineering company lost a say and much money in the business when the rival company, an industry major, stole the technical database from their computers with the help of a corporate cyber spy. Unauthorized access:
Using one’s own programming abilities as also various programs with malicious intent to gain unauthorized access to a computer or network are very serious crimes. Similarly, the creation and dissemination of harmful computer programs which do irreparable damage to computer systems is another kind of Cybercrime. Software piracy is also another distinct kind of Cybercrime which is perpetuated by many people online who distribute illegal and unauthorized pirated copies of software. Professionals who involve in these cybercrimes are called crackers and it is found that many of such professionals are still in their teens.
A report written near the start of the Information Age warned that America’s computers were at risk from crackers. It said that computers that “control (our) power delivery, communications, aviation and financial services (and) store vital information, from medical re-cords to business plans, to criminal records”, were vulnerable from many sources, including deliberate attack. [pic] MB0051 – Legal Aspects of Business – Set 2 Question 1: What are the situations which cannot be referred to arbitration? Answer: Arbitration law is a process that involves the assistance of one or more neutral parties known as arbitrators.
Arbitrators are charged with hearing evidence from numerous involved parties in a dispute, and their main duty is to issue an award deciding who gets what in order to resolve the situation. In some instances of arbitration law, an arbitrator may also issue an opinion in conjunction with the award, which is designed to explain the award and the reasoning that led to it. Arbitration law and mediation law are two different processes and should not be confused. The award and the opinion are not capable of being reviewed by a court, and there is no availability for appeal.
The purpose of arbitration law is to serve as a substitution to a trial and a review of the decision by a trial court. Subject matter of arbitration: Any commercial matter including an action in tort if it arises out of or relates to a contract can be referred to arbitration. However, public policy would not permit matrimonial matters, criminal proceedings, insolvency matters anti-competition matters or commercial court matters to be referred to arbitration. Employment contracts also cannot be referred to arbitration but director – company disputes are abatable (as there is no master servant relationship here)5.
Generally, matters covered by statutory reliefs through statutory tribunals would be non-abatable. Arbitration is an Alternative Dispute Resolution process whereby a person chosen as an arbitrator settles disputes between parties. Arbitration is similar to a court trial, with several exceptions: ? The arbitrator makes the decision called an “arbitration award” ? The arbitration does not take place in a courtroom ? The arbitration award is binding. With rare exceptions, there is no right to appeal ? Arbitration is not a matter of public record. It is private and confidential ?
There is no court reporter or written transcripts ? Lawyers generally prepare their cases in an extremely limited manner ? The rules of evidence are relaxed so that the parties have a broader scope, more expanded opportunity to tell their stories to present their cases ? With very few exceptions, it is much less expensive than legal litigation ? An arbitration time frame is substantially less than that of litigation and going to trial ? No jury. The Arbitrator(s) maintain neutrality and conflicts of interests ? Generally, all paperwork and evidence presented are destroyed after the Arbitration ?
The arbitration and arbitration award does not have to adhere to Judicial Case precedent nor formality of traditional court proceedings ? In India, Arbitration is one of the most effective and trusted proceedings in regard to private dispute settlement are guided by the Arbitration & Conciliation Act, 1996. Kind of matters cannot be referred for arbitration: As per general practice, matters involving moral questions or questions of public law cannot be resolved by arbitration. For instance, the following matters are not referred to arbitration: ? Matrimonial matters Guardianship of a minor or any other person under disability ? Testamentary matters ? Insolvency, proceedings ? Criminal proceedings ? Questions relating to charity or charitable trusts ? Matters relating to anti-trust or competition law ? Dissolution or winding up of a company Indian Arbitration Act follows the guideline of: ? The Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 ? The New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards ? The Geneva Protocol on Arbitration Clauses of 1923 [pic] Question 2: What is the role of a Conciliator? Answer: Conciliation:
Conciliation is a process in which the parties to a dispute, with the assistance of a neutral third party (the conciliator), identify the disputed issues, develop options, consider alternatives and endeavour to reach an agreement. The conciliator may have an advisory role on the content of the dispute or the outcome of its resolution, but not a determinative role. The conciliator may advise on or determine the process of conciliation whereby resolution is attempted, and may make suggestions for terms of settlement, give expert advice on likely settlement terms, and may actively encourage the participants to reach an agreement.
In order to understand what Parliament meant by ‘Conciliation’, we have necessarily to refer to the functions of a ‘Conciliator’ as visualized by Part III of the 1996 Act. It is true, section 62 of the said Act deals with reference to ‘Conciliation’ by agreement of parties but sec. 89 permits the Court to refer a dispute for conciliation even where parties do not consent, provided the Court thinks that the case is one fit for conciliation. This makes no difference as to the meaning of ‘conciliation’ under sec. 9 because; it says that once a reference is made to a ‘conciliator’, the 1996 Act would apply. Thus the meaning of ‘conciliation’ as can be gathered from the 1996 Act has to be read into sec. 89 of the Code of Civil Procedure. The 1996 Act is, it may be noted, based on the UNCITRAL Rules for conciliation. Role of conciliator: ? The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute. The conciliator shall be guided by principles of objectivity, fairness and justice, giving consideration to, among other things, the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties. ? The conciliator may conduct the conciliation proceedings in such a manner as he considers appropriate, taking into account the circumstances of the case, the wishes the parties may express, including any request by a party that the conciliator hear oral statements, and the need for a speedy settlement of the dispute. The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the masons therefore. Conciliators do not: ? Make decisions for disputing parties ? Make judgments about who is right, who is wrong or what the outcome of the dispute should be. ? Tell people what to do ? Make rulings ? Force parties to participate in the conciliation process. [pic] Question 3: What are the unfair trade practices under the MRTP Act? Answer:
THE MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969 – OBJECTIVES AND POLICY: The Monopolies and Restrictive Trade Practices Commission has been constituted under Section 5(1) of the MRTP Act, 1969. The Commission is empowered to enquire into Monopolistic or Restrictive Trade Practices upon a reference from the Central Government or upon its own knowledge or information. The MRTP Act also provides for appointment of a Director General of Investigation and Registration for making investigations for the purpose of enquiries by the MRTP Commission and for maintenance of register of agreements relating to restrictive trade practices.
The MRTP Commission receives complaints both from registered consumer and trade associations and also from individuals. Complaints regarding Restrictive Trade Practices or Unfair Trade Practices from an association are required to be referred to the Director General of Investigation and Registration for conducting preliminary investigation. The Commission can also order a preliminary investigation by the Director General of Investigation and Registration when a reference on a restrictive trade practice is received from the Central/State Government, or when Commission’s own knowledge warrants a preliminary investigation.
Enquiries are instituted by the Commission after the Director General of Investigation and Registration completes preliminary investigation and submits an application to the Commission for an enquiry. Unfair Trade Practices: An unfair trade practice means a trade practice, which, for the purpose of promoting any sale, use or supply of any goods or services, adopts unfair method, or unfair or deceptive practice. 1) False Representation: The practice of making any oral or written statement or representation which: ? Falsely suggests that the goods are of a particular standard quality, quantity, grade, composition, style or model; ?
Falsely suggests that the services are of a particular standard, quantity or grade; ? Falsely suggests any re-built, second-hand renovated, reconditioned or old goods as new goods; ? Represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which they do not have; ? Represents that the seller or the supplier has a sponsorship or approval or affiliation which he does not have; ? Makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services; ?
Gives any warranty or guarantee of the performance, efficacy or length of life of the goods, that is not based on an adequate or proper test; ? Makes to the public a representation in the form that purports to be- • warranty or guarantee of the goods or services, • a promise to replace, maintain or repair the goods until it has achieved a specified result, If such representation is materially misleading or there is no reasonable prospect that such warranty, guarantee or promise will be fulfilled ?
Materially misleads about the prices at which such goods or services are available in the market; or ? Gives false or misleading facts disparaging the goods, services or trade of another person. 2) False Offer Of Bargain Price: Where an advertisement is published in a newspaper or otherwise, whereby goods or services are offered at a bargain price when in fact there is no intention that the same may be offered at that price, for a reasonable period or reasonable quantity, it shall amount to an unfair trade practice. The bargain price, for this purpose means: the price stated in the advertisement in such manner as suggests that it is lesser than the ordinary price, or ? The price which any person coming across the advertisement would believe to be better than the price at which such goods are ordinarily sold. 3) Free Gifts Offer And Prize Scheme: The unfair trade practices under this category are: ? Offering any gifts, prizes or other items along with the goods when the real intention is different, or ? Creating impression that something is being offered free along with the goods, when in fact the price is wholly or partly covered by the price of the article sold, or ?
Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or skill, with real intention to promote sales or business. 4) Non-Compliance Of Prescribed Standards: Any sale or supply of goods, for use by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by some competent authority, in relation to their performance, composition, contents, design, construction, finishing or packing, as are necessary to prevent or reduce the risk of injury to the person using such goods, shall amount to an unfair trade practice. ) Hoarding, Destruction, Etc. : Any practice that permits the hoarding or destruction of goods, or refusal to sell the goods or provide any services, with an intention to raise the cost of those or other similar goods or services, shall be an unfair trade practice. 6) Inquiry Into Unfair Trade Practices: The Commission may inquire into any unfair trade practice: ? Upon receiving a complaint from any trade association, consumer or a registered consumer association, or ? Upon reference made to it by the Central Government or State Government ? Upon an application to it by the Director General or ?
Upon its own knowledge or information. Relief Available: After making an inquiry into the unfair trade practices if the Commission is of the opinion that the practice is prejudicial to the pubic interest, or to the interest of any consumer it may direct that? ? The practice shall be discontinued or shall not be repeated; ? The agreement relating thereto shall be void in respect of such unfair trade practice or shall stand modified. ? Any information, statement or advertisement relating to such unfair trade practice shall be disclosed, issued or published as may be specified ?
The Commission may permit the party to carry on any trade practice to take steps to ensure that it is no longer prejudicial to the public interest or to the interest of the consumer. However no order shall be made in respect a trade practice which is expressly authorized by any law in force. The Commission is empowered to direct publication of corrective advertisement and disclosure of additional information while passing orders relating to unfair trade practices. [pic] Question 4: What are essentials of a valid offer? Answer: Offer: A proposal is an expression of will or intention to do or not to do something.
It is also called an “offer”. It is one of the essential elements of an agreement. It is the very basis of the contract. It becomes a promise when it accepted. Section 2 (a) of the Contract Act defines the proposal as “when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other, to such act or abstinence, he is said to make a proposal”. The person making the proposal is called the proposer or offer or the promisor. The person to whom the proposal is made is called the offeree or promisee. For example; Sunil offers to sell his car to Padmaja for Rs. 0000. This is a proposal. Sunil is the offeror and Padmaja is the offeree. An offer may be express or implied. An offer which is expressed by words, written or spoken, is called an express offer. An offer which is expressed by conduct is called an implied offer. An offer may be positive or negative. It may be in the form of a statement or a question. for example; Sridhar says to Radhika that he will sell his scooter to her for Rs. 20000. This is an express offer. The Karnataka State Road Transport Corporation runs omnibuses on various routes to carry passengers at the scheduled fares.
This is an implied offer by KSRTC. The offer must be made in order to create legal relations otherwise there will be an agreement. If an offer does not give rise to legal obligations between the parties it is not a valid offer in the eye of law. In business transactions there is a presumption that the parties propose to make legal relationships. For example a person invite to another person to diner if the other person accepts the invitation then it is not any legal agreement between the parties it is social agreement. An offer must be definite and clear.
If the terms of an offer are not definite and clear it cannot be called a valid offer. If such offer is accepted it cannot create a binding contract. An agreement to agree in future is not a contract because the terms of an agreement are not clear. A person has two motorbikes. He offers to another person to sell his one bike for a certain price then it is not a legal and valid offer because there is an ambiguity in the offer that which motorcycle the person wants to sell. There is a difference between the offer and invitation of offer. Sometime people offer the invitation for the sale.
Essentials of a valid offer: ? A valid offer must intend to create legal relations. It must not be a casual statement. If the offer is not intended to create legal relationship, it is not an offer in the eyes of law e. g. Sunil invites Sridhar to a dinner party and Sridhar accepts the invitation. Sridhar does not turn up at the dinner party. Sunil cannot sue Sridhar for breach of contract as there was no intention to create legal obligation. Hence, an offer to perform social, religious or moral acts without any intention of creating legal relations will not be a valid offer. The terms of an offer must be definite, unambiguous and certain. They must not be loose and vague. A promise to pay an extra Rs. 500 if a particular house proves lucky is too vague to be enforceable. E. g. Sridhar says to Sunil “I will give you some money if you marry my daughter”. This is not an offer which can be accepted because the amount of money to be paid is not certain. ? An offer may be made to a definite person or to the general public. When offer is made to a definite person or to a special class of persons, it is called “specific offer”.
When an offer is made to the world at large or public in general, it is called “general offer”. A specific offer can be accepted only by that person to whom it has been made and a general offer can be accepted by any person. E. g. Sunil promises to give Rs. 100 to Sridhar, if he brings back his missing dog. This is a specific offer and can only be accepted by Sridhar. Sunil issues a public advertisement to the effect that he would give Rs. 100 to anyone who brings back his missing dog. This is a general offer. Any member of the public can accept this offer by searching for and bringing back Sunil’s missing dog. ?
An offer to do or not to do must be made with a view to obtaining the assent of the other party. Mere enquiry is not an offer. ? An offer should may contain any term or condition. The offeror may prescribe any mode of acceptance. But he cannot prescribe the form or time of refusal so as to fix a contract on the acceptor. He cannot say that if the acceptor does not communicate his acceptance within a specified time, he is deemed to have accepted the offer. ? The offeror is free to lay down any terms any terms and conditions in his offer. If the other party accepts it, then he has to abide by all the terms and conditions of the offer.
It is immaterial whether the terms and conditions were harsh or ridiculous. The special terms or conditions in an offer must be brought to the notice of the offeree at the time of making a proposal. ? An offer is effective only when it is communicated to the offeree. Communication is necessary whether the offer is general or specific. The offeror may communicate the offer by choosing any available means such as a word of mouth, mail, telegram, messenger, a written document, or even signs and gestures. Communication may also be implied by his conduct. A person can accept the offer only when he knows about it.
If he does not know, he cannot accept it. An acceptance of an offer, in ignorance of the offer, is no acceptance at all. It should be noted that an invitation to offer is not an offer. The following are only invitations to offer but not actual offers: ? Invitations made by a trade for the sale of goods. ? A price list of goods for sale. ? Quotations of lowest prices. ? An advertisement to sell goods by auction. ? An advertisement inviting tenders. ? Display of goods with price-tags attached. ? Railway time-table. ? Prospectus issued by a company. ? Loud speaker announcements. [pic]
Question 5: Find out a case where a person appealed under the Consumer protection Act and won. Answer: The Consumer Protection Act was born in 1986. It is described as a unique legislation of its kind ever enacted in India to offer protection to the consumers. The Act is claimed to have been designed after an in-depth study of consumer protection laws and arrangements in UK, the USA, Australia and New Zealand. The main objective of this Act is to provide better protection to the consumers. Unlike other laws, which are punitive or preventive in nature the provisions of this Act are compensatory in nature.
The Act intends to provide simple, speedy and inexpensive re-dressal to the consumer’s grievances. [pic] Question 6: What does the Information Technology Act enable? Answer: Information Technology Act: In May 2000, at the height of the dot-com boom, India enacted the IT Act and became part of a select group of countries to have put in place cyber laws. In all these years, despite the growing crime rate in the cyber world, only less than 25 cases have been registered under the IT Act 2000 and no final verdict has been passed in any of these cases as they are now pending with various courts in the country.
Although the law came into operation on October 17, 2000, it still has an element of mystery around it. Not only from the perception of the common man, but also from the perception of lawyers, law enforcing agencies and even the judiciary. The prime reason for this is the fact that the IT Act is a set of technical laws. Another major hurdle is the reluctance on the part of companies to report the instances of cyber-crimes, as they don’t want to get negative publicity or worse get entangled in legal proceedings.
A major hurdle in cracking down on the perpetrators of cyber-crimes such as hacking is the fact that most of them are not in India. The IT Act does give extra-territorial jurisdiction to law enforcement agencies, but such powers are largely inefficient. This is because India does not have reciprocity and extradition treaties with a large number of countries. The Indian IT Act also needs to evolve with the rapidly changing technology environment that breeds new forms of crimes and criminals. We are now beginning to see new categories and varieties of cyber-crimes, which have not been addressed in the IT Act.
This includes cyber stalking, cyber nuisance, cyber harassment, cyber defamation and the like. Though Section 67 of the Information Technology Act, 2000 provides for punishment to whoever transmits or publishes or causes to be published or transmitted, any material which is obscene in electronic form with imprisonment for a term which may extend to two years and with fine which may extend to twenty five thousand rupees on first convection and in the event of second may extend to five years and also with fine which may extend to fifty thousand rupees, it does not expressly talk of cyber defamation.
The above provision chiefly aim at curbing the increasing number of child pornography cases and does not encompass other crimes which could have been expressly brought within its ambit such as cyber defamation. [pic] [pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic][pic]