MB0051 Legal Aspects Of business

Assignment Set 1
Q.1. Distinguish between fraud and misrepresentation? Answer - MEANING OF FRAUD Fraud means and includes any of the following acts committed by a party to a contract with an intent to deceive the other party thereto or to induce him to enter into a contract: (i) The suggestion as a fact of that which is not true by one who does not believe it to be true; (ii) Active concealment of a fact by one having knowledge or belief of the fact; (iii) Promise made without any intention of performing it; (iv) any other act fitted to deceive; (v) Any such act or omission as the law specifically declares to be fraudulent.

MEANING OF MISREPRESENTATION Misrepresentation is also known as simple misrepresentation whereas fraud is known as fraudulent misrepresentation. Like fraud, misrepresentation is an incorrect or false statement but the falsity or inaccuracy is not due to any desire to deceive or defraud the other party. Such a statement is made innocently. The party making it believes it to be true. In this way, fraud is different from misrepresentation. Fraud is a crime punishable by the law because it is an intentional wrong committed by the party. In misrepresentation there are no such consequences, generally speaking. If a fraud is to proven, then each of the following parameters need to be proven in a court of law: 1. The physical proof presented by the defendant 2. The proof thus presented is incorrect 3. The defendant purposely made false representations (was aware of the falsehood)

4. The false proofs were made with the intention of duping the plaintiff 5. The defendant succeeded in duping the plaintiff 6. The plaintiff suffered loses due to the fraud If you are a plaintiff involved in committing a misrepresentation then you must prove the following parameters: 1. Validity of the evidence presented by the plaintiff 2. The claims were with regard to some legal agreement between the defending and the pleading party 3. False representation of facts at the time of entering into the agreement 4. The plaintiff was induced into entering the agreement by the defendant 5. The agreement resulted in loss for the plaintiff 6. This loss was a gain for the defendant Although it may not be possible for the plaintiff to prove the defendant as a fraudster, it is still possible for the former to validate his situation as that of a misrepresentation. DIFFERENCE BETWEEN FRAUD AND MISREPRESENTATION:The main difference in fraud and misrepresentation are, 1) In misrepresentation the person making the false statement believes it to be true. In fraud the false statement is person who knows that it is false or he does not care to know whether it is true or false. 2) There is no intention to deceive the other party when there is misrepresentation of fact. The very purpose of the fraud is to deceive the other party to the contract. 3) Misrepresentation renders the contract voidable at the option of the party whose consent was obtained by misrepresentation. In the case of fraud the contract is voidable It also gives rise to an independent action in tort for damages. 4) Misrepresentation is not an offence under Indian penal code and hence not punishable. Fraud, in certain cases is a punishable offence under Indian penal code. 5) Generally, silence is not fraud except where there is a duty to speak or the relations between parties is fiduciary. Under no circumstances can silence be considered as misrepresentation.

6) The party complaining of misrepresentation cant avoid the contract if he had the means to discover the truth with ordinary deligance. But in the case of fraud, the party making a false statement cannot say that the other party had the means to discover the truth with ordinary deligance.

Q.2.What are the remedies for breach of contract. Answer - REMEDIES FOR BREACH OF CONTRACT Remedies for breach of contract being a fountainhead of a correlative set of rights and obligations for the parties, would be of no value, if there were no remedies to enforce the rights arising there under. The party committing breach of contract is called the guilt party and the other party is called the injured or aggrieved party. In case of breach of contract, the aggrieved party would have one or more, but not all, of the following remedies against the guilty party.The remedies are: 1. Suit for rescission, 2. Suit for damages, 3. Suit for quantum meruit, 4. Suit for specific performance, 5. Suit for injunction,

1.

Suit for rescission :

The breach of contract no doubt discharges the contract, but the aggrieved party may sometimes need to approach the court to grant him a formal rescission, i.e. cancellation, of the contract. This will enable him to be free from his own obligations under the contract.

2. Suit for damages :

The word damages means monetary compensation for loss suffered. Whenever a breach of contract takes place, the remedy of damages is the one that comes to mind immediately as the consequence of breach. A breach of contract may put the aggrieved party to some disadvantage or inconvenience or may cause a loss to him. The court would desire the guilty part to accept responsibility for any such loss of the aggrieved party and compensate him adequately. The quantum of damages is determined by the magnitude of loss caused by breach.

3. Suit for quantum meruit :

The term quantum meruit means as much as earned. It implies a payment deserved by a person for the reason of actual work done. When a party has done some work under a contract, and the other party repudiates the contract or somehow the full performance of the contract becomes impossible, then the party who has done the work can claim remuneration for the work under a suit for quantum meruit. Likewise, where one party has expressly or impliedly requested another to render him a service without specifying any remuneration, but the circumstances of the request imply that the service is to be paid for, there is implied a promise to pay quantum meruit. Even in the case of where the person who has done the work is the one who is guilty of breach of contract, he too is entitled to be paid quantum meruit. But there is an exception such a contract must have involved work that was indivisible and it must not have been a contract for lumpsum remuneration. 4. Suit for specific performance: In certain cases of breach of a contract, damages may not be an adequate remedy. Then the Court may direct the party in breach to carry out his promise according to he terms of the contract. This is a direction by the Court for specific performance of the contract at the suit of the party not in breach. But in general, Courts do not wish to compel a party to do that which he has already refused to do. Chapter 2 of the Specific Relief Act,1963 lays down detailed rules on the specific performance of Contracts. Cases where specific performance may be ordered: (i) Where there exists no standard for ascertaining the actual damage caused to the aggrieved party by the non- performance (ii) Where monetary compensation will not be adequate relief. Example a contract for sale of a rare antique (iii) Where plaintiffs property is held by the defendant in the capacity of his agent or trustee (iv) Where the act to be done is in performance of trust Cases where specific performance will not be ordered: (i) Where monetary compensation is adequate relief (ii) Where contract is made by the agent or trustee in violation of his powers (iii) Where the contract is of a personal nature, such as a contract to marry or a contract of service (iv) Where the court cannot supervise the performance of promise as it involves performance of a continuous duty (v) Where the contract is in its nature revocable (vi) Where the contract is made by a company in excess of its powers as laid down in its Memorandum of Association 5. Suit for injunction :

Injunction is a court order or decree to a person asking him to refrain from doing a contemplated act or from continuing an ongoing act. Such an order of injunction becomes a remedy for the aggrieved party when the court orders the guilty party to refrain from doing precisely that which is causing the breach of contract. In a way, injunction is a mode of securing the specific performance of the negative terms of a contract. But for the performance of the positive terms of the contract, the aggrieved party may seek other remedies like damages. BUYERS REMEDIES AGAINST SELLER The buyer has the following rights against the seller for breach of contract: (i) damages for non-delivery; (ii) right of recovery of the price; (iii) specific performance ; (iv) suit for breach of condition; (v) suit for breach of warranty ; (vi) anticipatory breach; (vii) recovery of interest .) Q.3. Distinguish between indemnity and guarantee. Ans. INDEMNITY For a contract of indemnity provides that a contract of indemnity is a contract whereby one party promises to save the other from loss caused to him (the promisee) by the conduct of the promisor himself or by the conduct of any other person. A contract of insurance is a glaring example of such type of contracts. A contract of indemnity may arise either by (i) an express promise or (ii) operation of law, e.g. the duty of a principal to indemnify an agent from consequences of all lawful acts done by him as an agent. The contract of indemnity, like any other contract, must have all the essentials of a valid contract. These are two parties in a contraction of indemnifier and indemnified. The indemnifier promises to make good the loss of the indemnified (i.e. the promisee). GUARANTEE In law and common usage: A promise to answer for the payment of some debt, or the performance of some duty, in case of the failure of another person, who is, in the first instance, liable to such payment or performance, an engagement which secure or insures another against a contingency, a warranty, a security. Same as guaranty. Difference between indemnity and guarantee:There are distinguishing differences between Indemnity and Guarantee in the Indian Contract Act. Section 124 of the Indian Contract Act, 1872 defines the "Contract of Indemnity". It is a contract by which one party promises to save the other from loss caused to him by the contract of the promissory himself, or by the conduct of any other person. 'A' contracts to indemnify B against the consequences of any

proceedings which C may take against B in respect of a certain sum of 20000 rupees. This is a contract of indemnity. A contract of guarantee is defined in Section 126 of the Act. It is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the surety; the person in respect of whose default the guarantee is given is called the principal debtor and the person to whom the guarantee is given is called the creditor. In contract of indemnity there are only two parties viz the indemnifier or provisory and the indemnity holder or promise. In contract of guarantee there are three parties viz the creditor, principal debtor and surety. In indemnity, there is primary and independent liability. In guarantee the surety has collateral liability. There is no existing debt generally in the case of contract of indemnity where there is existing debt in the case of guarantee. There are two contracts in a contract of indemnity where there are three contracts in the case of guarantee. In Indemnity the promissory is discharged by payment. In guarantee the surety is discharged by payment made by principal debtor. Indemnifier may have some interest in the transaction where the surety will not have any connection with the transaction.

Indemnity Comprise only two parties- the indemnifier and the indemnity holder. Liability of the indemnifier is primary

Guarantee There are three parties namely the surety, principal debtor and the creditor 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 indemnified.

The surety give guarantee only at the request of the principal debtor.

The possibility of any loss happening is the only contingency against which the indemnifier undertakes to indemnify.

There is an existing debt or duty, the performance of which is guarantee by the surety.

Q.4. What is the distinction between cheque and bill of exchange. Answer - Cheques and bills of exchange are negotiable instruments and have been used by many people worldwide for many decades. Understanding these two instruments would be a fundamental task for any person who wishes to undertake banking as a career or even a past time activity. WHAT IS A NEGOTIABLE INSTRUMENT? The term negotiable instrument literally means a written document transferable by delivery. It can be a promissory note, bill of exchange or check payable either to order or to a bearer. BILL OF EXCHANGE A bill of exchange is defined by Sec.5 as an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of, a certain person, or to the bearer of the instrument. CHEQUES A cheque is the usual method of withdrawing money from a current account with a banker. Savings bank accounts are also permitted to be operated by cheques provided certain minimum balance is maintained. A cheque, in essence, is an order by the customer of the bank directing his banker to pay on demand, the specified amount, to or to the order of the person named therein or to the bearer. Sec.6 defines a cheque. The Amendment Act 2002 has substituted new section for Sec.6. It provides that a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic from.

Cheque

Bill of Exchange

It is drawn on a banker It has three parties - the drawer, the drawee, and payee. It is seldom drawn in sets It does not require acceptance by the drawee.

It may be drawn on any party or individual It has three parties - the drawer, the drawee, and payee. Foreign bills are drawn in sets It must be accepted by the drawee before he can be made liable to pay the bill Three days of grace are always allowed Stamp duty has to be paid on bill of exchange. It may be drawn in any paper and need not necessarily be printed.

Days of grace are not allowed to a banker the drawee. No stamp duty is payable on checks It is usually drawn on the printed

to

Q.5. Distinguish between companies limited by shares and companies limited by guarantee. Answer - A company limited by guarantee is normally incorporated for non-profit making functions. The company has no share capital. A company limited by guarantee has members rather than shareholders. The members of the company guarantee/undertake to contribute a predetermined sum to the liabilities of the company which becomes due in the event of the company being wound up. The Memorandum normally includes a non-profit distribution clause and these companies are usually formed by clubs, professional, trade or research associations. The main difference between a company limited by guarantee and a company limited by shares is that the company has no share capital. A Company limited by guarantee is a lesser known type of business entity which is generally formed by non-profit purposes and has members instead of shareholders. There are both some similarities and differences between the two groups. Members and shareholders enjoy limited liability, however in cases where a share based company is liquidated; the latter might be required to pay all amounts of unpaid monies relating to the shares they hold. For example, if an individual shareholder holds 100 shares of Rs.100 each, all of which remains unpaid at the time of dissolution, then they would be required to pay Rs.10000 to the company. Most companies limited by guarantee have a constitution which states that each member is only required to pay Rs.100 should it be dissolved. Assuming that an average shareholder holds more than one share in a company, members in a business limited by guarantee do appear to have less risk attached to their positions. PROFIT MAKING STATUS Perhaps the most fundamental difference between the two types of limited companies is that those with shares generally exist for profit making purposes. Companies limited by guarantee however, are non-profit making organisations and

are usually registered to provide a specified service to the public or a particular segment of the population. The memorandum and articles of association of each would also differ as companies limited by shares usually have very general objects clauses which allow them to pursue any legal trade or activity. OBJECTS OF COMPANIES LIMITED BY GUARANTEE Companies limited by guarantee however, often have very specific objects and detailed rules pertaining to which areas they can engage in. Charities, which are often of this type, might have restrictions imposed on them by their major donors who wish to ensure that their donations will be spent according to their wishes and not in a manner which they would not approve REMOVING THE WORD LIMITED Companies limited by guarantee can have the word limited removed from their name under section 30 of the Companies Act. COMPANY DIRECTORS, SECRETARY AND DECLARANT Both types of companies are bound by the same requirements to have at least one director, a secretary and a declarant at the time of incorporation and throughout any period of its existence. When forming a company limited by guarantee, members are listed in the same manner in which shareholders would be, even though no allotments are made to them. Q.6.What is the definition of cyber crime. Answer - Computer crime, or cyber crime, refers to any crime that involves a computer and a network. The computer may have been used in the commission of a crime, or it may be the target. Net crime refers, more precisely, to criminal exploitation of the Internet. Issues surrounding this type of crime have become high-profile, particularly those surrounding hacking, copyright infringement, child pornography, and child grooming. There are also problems of privacy when confidential information is lost or intercepted, lawfully or otherwise. Cyber crime includes anything from downloading illegal music files to stealing millions of dollars from online bank accounts. Cyber crime also includes non-monetary offences, such as creating and distributing viruses on other computers or posting confidential business information on the Internet. Perhaps the most prominent form of cyber crime is identity theft, in which criminals use the Internet to steal personal information from other users. Two of the most common ways this is done is through phishing and pharming. Both of these methods lure users to fake websites, where they are asked to enter personal information. This includes login information, such as usernames and passwords, phone numbers, addresses, credit card numbers, bank account numbers, and other information criminals can use to "steal" another person's identity. For this reason, it is smart to always check the URL or Web address of a site to make sure it is legitimate before entering your personal information. 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 simplicitys sake. For example, hacking involves attacking the computers 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. Cyber crime encompasses any criminal act dealing with computers and networks (called hacking). Additionally, cyber crime also includes traditional crimes conducted through the Internet. For example; hate crimes, telemarketing and Internet fraud, identity theft, and credit card account thefts are considered to be cyber crimes when the illegal activities are committed through the use of a computer and the Internet. Crime committed using a computer and the internet to steal a person's identity or sell contraband or stalk victims or disrupt operations with malevolent programs MODE AND MANNER OF COMMITING CYBER CRIME 1. Unauthorized access to computer systems or networks / HackingThis kind of offence is normally referred as hacking in the generic sense. However the framers of the information technology act 2000 have no where used this term so to avoid any confusion we would not interchangeably use the word hacking for unauthorized access as the latter has wide connotation. 2. Theft of information contained in electronic form-

This includes information stored in computer hard disks, removable storage media etc. Theft may be either by appropriating the data physically or by tampering them through the virtual medium. 3. Email bombingThis kind of activity refers to sending large numbers of mail to the victim, which may be an individual or a company or even mail servers there by ultimately resulting into crashing. 4. Data diddlingThis kind of an attack involves altering raw data just before a computer processes it and then changing it back after the processing is completed. The electricity board faced similar problem of data diddling while the department was being computerised. 5. Virus / worm attacksViruses are programs that attach themselves to a computer or a file and then circulate themselves to other files and to other computers on a network. They usually affect the data on a computer, either by altering or deleting it. Worms, unlike viruses do not need the host to attach themselves to. They merely make functional copies of themselves and do this repeatedly till they eat up all the available space on a computer's memory. E.g. love bug virus, which affected at least 5 % of the computers of the globe. The world's most famous worm was the Internet worm let loose on the Internet by Robert Morris sometime in 1988. Almost brought development of Internet to a complete halt.

Assignment Set 2
Q.1.What is 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

Q.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. 89 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.

Q.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 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; that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which they do not

 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.

5)

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. Q.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 madeis called the offered or promisee. For example; Sunil offers to sell his car to Padmaja for Rs. 50000. 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.

Q.5. Find out a case where a person appealed under the Consumer protection Act and won. Answer - CONSUMER PROTECTION ACT 1986 ( CPA) IN INDIA The Consumer Protection Act, 1986 was enacted for better protection of the interests of consumers. The provisions of the Act came into force with effect from 15-4-87. Consumer Protection Act imposes strict liability on a manufacturer, in case of supply of defective goods by him, and a service provider, in case of deficiency in rendering of its services. The term defect and deficiency, as held in a catena of cases, are to be couched in the widest horizon of there being any kind of fault, imperfection or shortcoming. Furthermore, the standard, which is required to be maintained, in services or goods is not to be restricted to the statutory mandate but shall extend to that claimed by the trader, expressly or impliedly, in any manner whatsoever. The salient features of the Act are: (I) it covers all the sectors whether private, public, and cooperative or any person. The provisions of the Act are compensatory as well as preventive and punitive in nature and the Act applies to all goods covered by sale of goods Act and services unless specifically exempted by the Central Government; (II) It enshrines the following rights of consumers: (a) right to be protected against the marketing of goods and services which are hazardous to life and property; (b) right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so as to protect the consumers against unfair trade practices; (c) right to be assured, wherever possible, access to a variety of goods and services at competitive prices; (d) right to be heard and to be assured that consumers interests will receive due consideration at the

appropriate fora; (e) right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers; and (f) right to consumer education; (III) The Act also envisages establishment of Consumer Protection Councils at the central, state and district levels, whose main objectives are to promote and protect the rights of consumers; (v) To provide a simple, speedy and inexpensive redressal of consumer grievances, the Act envisages a three-tier quasi-judicial machinery at the national, state and district levels. These are: National Consumer Disputes Redressal Commission known as National Commission, State Consumer Disputes Redressal Commissions known as State Commissions and District Consumer Disputes Redressal Forum known as District Forum; and (IV) the provisions of this Act are in addition to and not in derogation of the provisions of any other law for the time being in force. Purview of a complaint According to the CPA, Complaint means any of the following allegations made in writing by a complainanti. any unfair trade practice or a restrictive trade practice has been adopted by a trader, ii. the goods hired or bought suffer from one or more defects iii. The goods hired or availed of are deficient in any respect iv. A trader has charged price in excess of price fixed by law or displayed on the goods or any package containing goods v. Goods which will be hazardous to life and safety when used, are being offered for sale to the public in contravention of the provisions of any law requiring traders to display information in regard to the contents, manner and effect or use of such goods. Validity of Limitation of liability clauses Contractual liability has a role to play in product liability claims under the CPA. Courts in India have upheld limitation of liability clauses, which parties have specifically agreed to in the contract as recognized by the Supreme Court in Bharathi Knitting Company v DHL Worldwide Express Courier (1996) 4 SCC 704. However, such clauses may be struck down if found to be unconscionable in nature. In Maruti Udyog v. Susheel Kumar Gabgotra, [(2006) 4 SCC 644], the manufacturer of the vehicle had stipulated a warranty clause limiting its liability to merely repair the defects found if any. In view of this clause, the Supreme Court reversed the findings of the National Commission to replace the defective goods and held that the liability of the manufacture was confined to repairing the defect. Compensation was, however, awarded for travel charges to the complainant, which was incurred due to the fault of the car manufacturer. Applicability of other laws Section 3 of the CPA provides that the Act is in addition to and not in derogation of any other law. The Supreme Court in Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha, [(2004) 1 SCC 305] has interpreted the above provision to mean that the remedies provided under the CP Act are in addition to the remedies provided under other statutes. Hence, the fact that a remedy is specifically provided for under another statute would not

necessarily oust the jurisdiction of the appropriate authority under the CP Act. It has been further held that if forums under one statute and the CP Act are approached, then it is for the appropriate authority to permit the parties to opt between the consumer forum and the other forum, depending on the facts and circumstances of the case. Establishment of Consumer forums At present, there are 34 State Commissions, one in each State/UT and 571 district fora besides the National Commission. The state governments are responsible to set up the district fora and the State Commissions. States have been empowered to establish additional District Forum and also additional members in the State Commission to facilitate constituting benches and also for holding circuit benches. The Central Government is empowered to establish the National Commission. It has been empowered to appoint additional members to facilitate creation of more benches and holding of circuit benches. The second bench of the National Commission started functioning from 24 September 2003. The government is monitoring the disposal of cases by the consumer courts through National Commission. As per the current statistics, since its inception and up to 5.9.2008 , 2559451 cases were filed out of which 2327035 cases were disposed of by the District forums in various states of India .

Q.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.