55373089-mb0051 | Misrepresentation | Guarantee

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1.What is the difference between fraud and misinterpretation? What do you understand by mistake? Ans. Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for thepurpose of inducing the other person to act, and upon which the other person relies withresulting injury or damage. Fraud may also be made by an omission or purposeful failureto state material facts, which nondisclosure makes other statements misleading. Misrepresentation means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certaincircumstances, false statements or promises made by a seller of goods regarding thequality or nature of the product that the seller has may constitute misrepresentation. Afinding of misrepresentation allows for a remedy ofres cis s ion and sometimesdamagesdepending on the type of misrepresentation. Difference between fraud and misinterpretation: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 careto 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 whoseconsent was obtained by misrepresentation. In the case of fraud the contract isvoidable It also gives rise to an independent action in tort for damages. 4.Misrepresentation is not an offence under Indian penal code and hence notpunishable. Fraud, In certain cases is a punishable offence under Indian penalcode. 5.Generally, silence is not fraud except where there is a duty to speak or therelations between parties is fiduciary. Under no circumstances can silence beconsidered as misrepresentation.

Theparty making a false statement cannot say that the other party had the means todiscover the truth with ordinary deligance.money to reimburse you for costs to compensate for your loss Consequential and Incidental Damages . that certain facts are true." Ans-2 Many states utilize a mix of statutory and common law to provide remedies for breach of contract. MISTAKE Amis take is an erroneous belief.money for losses caused by the breach that were foreseeable (foreseeable y . at contracting.6. It may beused as grounds to invalidate the agreement. Performance involves forcing the other side to do what they originally promised in the contract agreement. Monetary Damages for Breach of Contract Before you file a breach of contract lawsuit."sometimes called "common mistake. you should know which type of remedy you are seeking. you may have several basic choices of remedies. Damages involve seeking monetary compensation for a breach of contract. There are two general categories of relief for breach of contract: damages and performance. An attorney that specializes in contract law can help you decide which direction is best for your breach of contract dispute. Common law has identified twodifferent types of mistake in contract: "unilateral mistake" and "mutual mistake. But in the case of fraud. Depending on the contract and circumstances of the breach.The party complaining of misrepresentation can¶t avoid the contract if he had themeans to discover the truth with ordinary deligance. Types of damages for breach of contract include: y Compensatory Damages . Many people simply want monetary compensation for the grief caused by the other party¶s breach of contract.

as the courts do not want to get involved with monitoring performance Rescission . Performance remedies for breach of contract include: y Specific Performance .money given to punish a person who acted in an offensive and egregious manner in an effort to deter that person and others from continuing to act in this way. If the breach was unintended and arose from negligent behavior.the contract is canceled and both sides are excused from further performance and any money advanced is returned y . you can also seek actual performance or modification of performance of the original contract. the conduct of the violating party. You generally cannot collect punitive damages in contract cases. punitive damages. The more egregious and intentional the behavior.damages specified in the contract that would be payable if there is a fraud Punitive Damages .only recoverable if expressly provided for in the contract Liquidated Damages . this remedy is rare.a court order requiring performance exactly as specified in the contract. y y The controlling law. Requesting Performance of the Contract Sometimes money just cannot fix the problem. the greater the chance you have of being awarded larger. you will probably receive compensatory or consequential damages. Instead of asking for damages.damages are when each side reasonably knew that--at the time of the contract--there would be potential losses if there was a breach y Attorney Fees and Costs . except in real estate transactions and other unique property. and the extent of harm you suffered can influence which of these damages for breach of contract will be awarded in your situation.

it may make more sense for the parties to agree on a form of alternative dispute resolution such as direct negotiation. Instead of jumping into a lawsuit. They can also help you draft pleadings so that you do not omit requests for certain remedies which you are entitled to by law or by contract. Even if you do not use an attorney to file a lawsuit. Before you file a lawsuit. Many communities now offer mediation and arbitration services for a nominal fee. you may want to consult with an attorney to help you draft and finalize settlement documents. you should consider the cost-effectiveness of full litigation. mediation. Ans-3 The difference between a guarantee and an indemnity . Before you make a final decision on which remedy you want to pursue and how you intend to obtain it. Enforcing a contract with a lawsuit can be expensive. or arbitration. you can accidentally forfeit your right to those remedies or damages. If the breach of contract dispute involves a significant amount of damages.y Reformation . a wise option would be to retain an experienced contract attorney to help you propose settlement terms and to review any proposed settlements in advance.the terms of the contract are changed to reflect what the parties actually intended Pursuing Appropriate Remedies for Breach of Contract Some of these remedies for breach of contract may be limited by the contract. you should review your contract for any limitations or notice requirements contained within your contract so that you do not accidentally waive any contractual remedies. These avenues for obtaining a remedy may be more cost effective than simply filing a lawsuit and letting the court settle the dispute. If your settlement does not include the particular remedy for breach of contract that you were seeking.

provides for concurrent liability with the principal throughout and there is no need to ³look first´ to the principal. Further. An indemnity however. a guarantee provides for a liability co-extensive with that of the principal. I will reimburse you the difference´. The obligation is a secondary one. In other words. the guarantor cannot be liable for anything more than the client. The document will be construed as a guarantee if. In essence it is an agreement that the surety will hold the financier harmless against all losses arising from the contract between the principal and the financier. the obligations of the surety are to ³stand behind´ the principal and only come to the fore once an obligation has been breached as between the principal and the financier. It is not always obvious whether a clause or agreement is a guarantee or an indemnity. There is no such requirement in the case of an indemnity. reflexive in character. on its true construction. There are important legal distinctions between them. I will´ a promise to be responsible for another¶s loss. and to compensate them for that loss on an agreed basis ³if it costs you more than £250 to fix that. . Section 4 of the venerable Statute of Frauds Act 1677 requires guarantees to be in writing if they are to be enforceable. What is what? A guarantee is For example: An indemnity is For example: a promise to someone that a third party will meet its obligations to them ³if they don¶t pay you.Introduction Guarantees and indemnities are both long established forms of what the law terms suretyship. although of course written agreement is always best as a matter of practice and for proof.

consideration and the intention to create legal relations). The minority shareholders lost the value of their shares and were left with . acceptance.. The majority shareholder had negotiated the sale of the company to a purchaser who had agreed to buy the shares of the minority at the same price. while all the other necessary elements of a legally binding contract were present (offer. On being made aware of the risk of the purchaser becoming insolvent within this period they declined to sign the documents but relented when the majority shareholder undertook verbally to pay if the purchaser failed to do so. The appellants were summoned to the sale completion meeting and were told that as part of the terms agreed their shares would be purchased after a delay of six months. Some of the differences were highlighted by the Court of Appeal in the 2007 case Pitts and Ors v Jones. The Court of Appeal found that. the undertaking given to the minority shareholders was unenforceable since it was a guarantee and was not in writing..And an example. so they sued the majority shareholder on his undertaking to pay them. The appellants bringing the claim were minority shareholders in a company of which the other party was managing director and majority shareholder. The purchaser did subsequently become insolvent and could not pay for the minority shareholders¶ shares.

no recourse. How to tell which is which Whether the security document is a guarantee or an indemnity (or both) is a matter of construction. the fact that one label or another is used is not determinative but it may demonstrate what the parties were attempting to achieve. principal debtor and the creditor. Whether a demand upon the principal debtor is defined as a condition precedent to proceeding against the surety ± in which case the document may well best be read as a guarantee. There is a mass of case law on the distinction. in which case the inference is that he is undertaking an obligation to indemnify.the indemnifier and the indemnity holder. An indemnity comprises only two parties. A guarantee is a contract between three parties namely the surety. but ultimately it comes down to the document in question. Ans-4 . Whether the document purports to make the surety liable for a greater sum than could be demanded under the principal contract. Considerations are as follows: y y y y The words used.

the drawee. There are three parties the drawer. Three days of grace are always allowed to the drawee. y y y y y y y y y y y y Ans-5 . and payee.Difference Between Bill of Exchange and Cheque/Check: Learning Objectives: 1. What is the difference between bill of exchange and cheque/check? Check y Bill of Exchange y It is drawn on a banker It has three parties . Days of grace are not allowed to a banker No stamp duty is payable on checks It is usually drawn on the printed f It may be drawn on any party or individual. It is seldom drawn in sets It does not require acceptance by the drawee. and the payee. Stamp duty has to be paid on bill of exchange.the drawer. the drawee. Foreign bills are drawn in sets It must be accepted by the drawee before he can be made liable to pay the bill. It may be drawn in any paper and need not necessarily be printed.

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. often have very specific objects . Objects of companies limited by guarantee 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. Most companies limited by guarantee have a constitution which states that each member is only required to pay £1 should it be dissolved. Members and shareholders enjoy limited liability.Companies Limited by Guarantee and by Shares 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. the latter might be required to pay all amounts of unpaid monies relating to the shares they hold. Assuming that an average shareholder holds more than one share in a company. all of which remains unpaid at the time of dissolution. 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. members in a business limited by guarantee do appear to have less risk attached to their positions. For example. then they would be required to pay £100 to the company. if an individual shareholder holds 100 shares of £1 each. There are both some similarities and differences between the two groups. however in cases where a share based company is liquidated.

secretary and declarant Both types of companies are bound by the same requirements to have at least one director. Ans-6 . Company directors. Charities. 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. members are listed in the same manner in which shareholders would be. a secretary and adeclarant at the time of incorporation and throughout any period of its existence. Removing the Word Limited Companies limited by guarantee can have the word ³limited´ removed from their name under section 30 of theCompanies Act. which are often of this type. By having a defined set of objects.and detailed rules pertaining to which areas they can engage in. companies limited by guarantee which are seeking to raise funds might find it easier to do so because they would be able to demonstrate that sufficient restrictions exist to protect the donor¶s intentions. even though no allotments are made to them. When forming a company limited by guarantee.

As hackers can easily hack through the computers of others. is because of the reason that most countries around the world have no existing law that they can exert against cyber crimes. This leaves the businessmen and their business at the mere mercy of the technology that is being used by the businessmen in their business. Serious concern and alarm have been raised against the growing threat of cyber crime and its potential threat to the information possessed in the computers. Computers along with them have brought greater work and time efficiency in the working circle of the society as a whole. Although self protection is the one step that people can take against cyber crimes. One main reason why cyber crime has been gathering so much of attention. there also comes the rising and alarming threat of cyber crime. With the advent of time and technology. as it has been reported that after committing the crime the hackers sell the leaked information to the rival countries for money. The only resort that the individuals have or can take against cyber crime is the way of self protection. The reason that cyber crime is posing a serious threat. is because of the fact that cyber crime has no boundaries of working or occurring.There is a very old and correct saying that goes on to say that a coin has two sides. Like a coin almost every aspect of life has two sides. The dangers that cyber crime is posing to computers and information in computers has been acknowledged by almost all the countries. but still unfortunately it's not a full proof safe step. . Along with all the benefits that computers and technology have brought. Cyber crime have been reportedly breaching national barriers at ease there by jeopardizing the political and the defense strategies of the country in front of the other nations. For example the most common example can be taken of the advent of technology and the crime associated with it. Cyber crime in recent times has been credited along with a lot of attention by the general public. this makes the information stored in the computer more vulnerable to information leakage. computers have formed an integral part of the working society. thanks to the almost impossible crimes committed by the hackers. But there comes the twist.

. making it harder for the law enforcers to track and find them.The other reason as to why cyber crime is posing a serious threat is because of the fact that it is usually very hard to track the hackers as they operate together but from far and different places. These hackers usually operate from different and far off places. Thus national bodies and governments should operate together to make a legal framework and structure through which no hackers can slip through after committing cyber crime. sometimes even different countries making it almost impossible for anyone to track them.

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