SMU MBAHCS ASSIGNMENT SEMESTER III MB0051 LEGAL ASPECTS OF BUSINESS ASSIGNMENT SET: I SUBMITTED BY: J.

.JERALD JEYAPRAKASH MBAHCS ROLL NO :- 531010671

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 INDEX ION?. Y AND ge No Q.5 DISTINGUISH BETWEEN COMPANIES LIMITED BY SHARES AND COMPANIES LIMITED BY GUARANT EE? 11 Q.6 WHAT IS THE DEFINITION OF CYBER CRIME? 12 Q.No Q.1 Q.2 Q.3 Q.4 QUESTION DISTINGUISH BETWEEN FRAUD AND MISREPRESENTAT WHAT ARE THE REMEDIES FOR BREACH OF CONTRACT? DISTINGUISH BETWEEN INDEMNIT GUARANTEE? WHAT IS THE DISTINCTION BETWEEN CHEQUE AND BILL OF EXCHANGE? Pa 3 5 8 10

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 Q.1 DISTINGUISH BETWEEN FRAUD AND MISREPRESENTATION Answer Fraud Fraud means and includes any of the following acts committed by a party to a contract with inte nt to deceive the other party thereto or to induce him to enter into a contract: 1. The suggestion as a fact of that which is not true by one who does not belie ve it to be true; 2. Active concealment of a fact by one having knowledge or bel ief of the fact; 3. Promise made without any intention of performing it; (iv) an y other act fitted to deceive; 4. Any such act or omission as the law specifical ly declares to be fraudulent. Misrepresentation Misrepresentation is also known as simple misrepresentation whereas fraud is known as fraudulent misrepresentati on. Like fraud, misrepresentation is an incorrect or false statement but the fal sity or inaccuracy is not due to any desire to deceive or defraud the other part y. Such a statement is made innocently. The party making it believes it to be tr ue. In this way, fraud is different from misrepresentation. Difference between F raud and Misrepresentation:The main difference in fraud and misrepresentation ar e, 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 purpos e of the fraud is to deceive the other party to the contract. 3) Misrepresentati on renders the contract voidable at the option of the party whose consent was ob tained by misrepresentation. In the case of fraud the contract is voidable It al so gives rise to an independent action in tort for damages.

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 4) Misrepresentation is not an offence under Indian penal code and hence not pun ishable. 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 th e relations between parties is fiduciary. Under no circumstances can silence be considered as misrepresentation. 6) The party complaining of misrepresentation c ant avoid the contract if he had the means to discover the truth with ordinary di ligence. 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 diligenc e.

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 Q.2. WHAT ARE THE REMEDIES FOR BREACH OF CONTRACT. When someone breaches a contr act, the other party is no longer obligated to keep its end of the bargain. From there, that party may proceed in several ways: i. ii. iii. iv. v. the other par ty may urge the breaching party to reconsider the breach; if it is a contract wi th a merchant, the other party may get help from consumers associations; the othe r party may bring the breaching party to an agency for alternative dispute resol ution; the other party may sue for damages; or the other party may sue for other remedies. Rescission of the contract: When a breach of contract is committed by one party, the other party may treat the contract as rescinded. In such a case the aggriev ed party is freed from all his obligations under the contract.Damages (Sec.75): Another relief or remedy available to the promise in the event of a breach of pr omise by the promise is to claim damages or loss arising to him there from. Dama ges under Sec.75 are awarded according to certain rules as laid down in Secs.7374. Sec.73 contains Three important rules: (i) Compensation as general damages will be awarded only for those losses that directly and naturally result from the breach of the contr act. (ii) Compensation for losses indirectly caused by breach may be paid as spe cial damages if the party in breach had knowledge that such losses would also fo llow from such act of breach. (iii) The aggrieved party is required to take reas onable steps to keep his losses to the minimum.

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 The most common remedy for breach of contracts: The usual remedy for breach of c ontracts is suit for damages. The main kinds of damages awarded in a contract su it are ordinary damages. This is the amount of money it would take to put the ag grieved party in as good a position as if there had not been a breach of contrac t. The idea is to compensate the aggrieved party for the loss he has suffered as a result of the breach of the contract. In addition to the rights of a seller a gainst goods provided in Secs.47 to 54, the seller has the following remedies ag ainst the buyer personally. (i) suit for price (ii) damages for non-acceptance o f goods (iii) suit for interest Suit for price Where under a contract of sale the property in the goods has pass ed to the buyer and the buyer wrongfully neglects or refuses to pay the price, t he seller can sue the buyer for the price of the goods. Where the property in go ods has not passed to the buyer, as a rule, the seller cannot file a suit for th e price; his only remedy is to claim damages. Suit for damages for non-acceptanc e Where the buyer wrongfully neglects or refuses to accept and pay for the goods , the seller may sue him for damages for non-acceptance. Where the property in t he goods has not passed to the buyer and the price was not payable without passi ng of property, the seller can only sue for damages and not for the price. The a mount of damages is to be determined in accordance with the provisions laid down in Sec.73 of the Indian Contract Act, 1872. Thus, where there is an available m arket for the goods prima facie, the difference between the market price and the contract price can be recovered. Suit for interest When under a contract of sal e, the seller tenders the goods to the buyer and the buyer wrongfully refuses or neglects to accept and pay the price, the seller has a further right to claim i nterest on the amount of the price. In the absence of a contract to the contrary , the court may award interest at such rate as it thinks fit on the amount of th e price. The interest may be calculated from the date of the tender of the goods or from the date on

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 which the price was payable. It is obvious that the unpaid seller can claim inte rest only when he can recover the price,i.e., if the sellers remedy is to claim d amages only, then he cannot claim interest. Buyers remedies against seller The bu yer has the following rights against the seller for breach of contract: (i) dama ges for non-delivery; (ii) right of recovery of the price; (iii) specific perfor mance ; (iv) suit for breach of condition; (v) suit for breach of warranty ; (vi ) anticipatory breach; (vii) recovery of interest .)

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 Q.3 DISTINGUISHES BETWEEN INDEMNITY AND GUARANTEE. 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 promise) by the conduct of the promise himself or by the conduct of any other person. A contract of ins urance is a glaring example of such type of contracts. A contract of indemnity m ay arise either by (i) an express promise or (ii) operation of law, e.g. the dut y 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 ha ve all the essentials of a valid contract. These are two parties in a contractio n of indemnifier and indemnified. The indemnifier promises to make good the loss of the indemnified (i.e. the promise). Guarantee:In law and common usage: A pro mise 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 agai nst a contingency, a warranty, a security. Same as guaranty. Difference between indemnity and guarantee:There are distinguishing differences between Indemnity a nd 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 p romises to save the other from loss caused to him by the contract of the promiss ory 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 respe ct 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 defaul t. The person who gives the guarantee is called the surety; the person in respec t 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.

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 In contract of indemnity there are only two parties viz the indemnifier or provi sory and the indemnity holder or promise. In contract of guarantee there are thr ee parties viz the creditor, principal debtor and surety. In indemnity, there is primary and independent liability. In guarantee the surety has collateral liabi lity. There is no existing debt generally in the case of contract of indemnity w here 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 guarante e. In Indemnity the promissory is discharged by payment. In guarantee the surety is discharged by payment made by principal debtor. Indemnifier may have some in terest in the transaction where the surety will not have any connection with the transaction.

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 Q.4 WHAT IS THE DISTINCTION BETWEEN CHEQUE AND BILL OF EXCHANGE. Bill of exchang e 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 c ertain sum of money only to or to the order of, a certain person, or to the bear er of the instrument. Cheques A cheque is the usual method of withdrawing money f rom 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 pa y on demand, the specified amount, to or to the order of the person named therei n or to the bearer. Sec.6 defines a cheque. The Amendment Act 2002 has substitut ed 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 elec tronic from. Cheque It is drawn on a banker Bill of Exchange It may be drawn on any party or individual It has three parties - the drawer, the It has three parties - the drawer, the dr awee, and payee. drawee, and payee. It is seldom drawn in sets Foreign bills are drawn in sets It does not require acceptance by the It must be accepted by the drawee before d rawee. he can be made liable to pay the bill Days of grace are not allowed to a banker to Three days of grace are always allowed the drawee. No stamp duty is pa yable on checks Stamp duty has to be paid on bill of exchange. It may be drawn i n any paper and need not necessarily be printed It is usually drawn on the printed

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 Q.5 DISTINGUISHES BETWEEN COMPANIES LIMITED BY SHARES AND COMPANIES LIMITED BY G UARANTEE. A company limited by guarantee is normally incorporated for non-profit making functions. The company has no share capital. A company limited by guaran tee has members rather than shareholders. The members of the company guarantee/u ndertake to contribute a predetermined sum to the liabilities of the company whi ch becomes due in the event of the company being wound up. The Memorandum normal ly includes a non-profit distribution clause and these companies are usually for med by clubs, professional, trade or research associations. The main difference between a company limited by guarantee and a company limited by shares is that t he company has no share capital. A Company limited by guarantee is a lesser know n type of business entity which is generally formed by non-profit purposes and h as members instead of shareholders. There are both some similarities and differe nces between the two groups. Members and shareholders enjoy limited liability, h owever in cases where a share based company is liquidated; the latter might be r equired to pay all amounts of unpaid monies relating to the shares they hold. Fo r 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 constitu tion which states that each member is only required to pay Rs.100 should it be d issolved. Assuming that an average shareholder holds more than one share in a co mpany, members in a business limited by guarantee do appear to have less risk at tached to their positions.

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 Q.6 WHAT IS THE DEFINITION OF CYBER CRIME. Computer crime, or cyber crime, refer s to any crime that involves a computer and a network. The computer may have bee n 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 thi s 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, lawful ly or otherwise. Cyber crime includes anything from downloading illegal music fi les to stealing millions of dollars from online bank accounts. Cyber crime also includes non-monetary offences, such as creating and distributing viruses on oth er computers or posting confidential business information on the Internet. Perha ps 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 method s lure users to fake websites, where they are asked to enter personal informatio n. This includes login information, such as usernames and passwords, phone numbe rs, addresses, credit card numbers, bank account numbers, and other information criminals can use to "steal" another person s identity. For this reason, it is s mart to always check the URL or Web address of a site to make sure it is legitim ate before entering your personal information. CYBERCRIME Cybercrime is defined as crimes committed on the internet using the computer as either a tool or a tar geted victim. It is very difficult to classify crimes in general into distinct g roups as many crimes evolve on a daily basis. Even in the real world, crimes lik e rape, murder or theft need not necessarily be separate. However, all cybercrim es involve both the computer and the person behind it as victims, it just depend s 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 at tacking the computers information and other resources. It is important to take no te that overlapping occurs in many cases and it is impossible to have a perfect classification system.

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 Computer as a tool When the individual is the main target of Cybercrime, the com puter can be considered as the tool rather than the target. These crimes general ly involve less technical expertise as the damage done manifests itself in the r eal world. Human weaknesses are generally exploited. The damage dealt is largely psychological and intangible, making legal action against the variants more dif ficult. These are the crimes which have existed for centuries in the offline. Sc ams, theft, and the likes have existed even before the development in hightech e quipment. The same criminal has simply been given a tool which increases his pot ential pool of victims and makeshim all the harder to trace and apprehend. Compu ter as a target These crimes are committed by a selected group of criminals. Unl ike crimes using he computer as a tool, these crimes requires the technical know ledge of the perpetrators. These crimes are relatively new, having been in exist ence for only as long as computers have which explains how unprepared society an d the world in general is towards combating these crimes. There are numerous cri mes 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 a ccommodate and perpetrate this kind of crime. Cyber crime encompasses any crimin al act dealing with computers and networks (called hacking). Additionally, cyber crime also includes traditional crimes conducted through the Internet. For exam ple; hate crimes, telemarketing and Internet fraud, identity theft, and credit c ard 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 u sing a computer and the internet to steal a person s identity or sell contraband or stalk victims or disrupt operations with malevolent programs Cyber crime ref ers to all the activities done with criminal intent in cyberspace or using the m edium of Internet. These could be either the criminal activities in the conventi onal sense or activities, newly evolved with the growth of the new medium. Any a ctivity, which basically offends human sensibilities, can be included in the amb it of Cyber crimes. Because of the anonymous nature of Internet, it is possible to engage in a variety of criminal activities with impunity, and people with int elligence, have been grossly misusing this aspect of the Internet to commit crim inal activities in cyberspace. The field of cyber crime is

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 just emerging and new forms of criminal activities in cyberspace are coming to t he forefront each day. For example, child pornography on Internet constitutes on e serious cyber crime. Similarly, online pedophiles, using Internet to induce mi nor children into sex, are as much cyber crimes as any others. Categories of cyb er crimes: Cyber crimes can be basically divided in to three major categories: 1 . Cyber crimes against persons; 2. Cyber crimes against property; and 3. Cyber c rimes against government. 1. Cyber crimes against persons: Cyber crimes committed against persons include various crimes like transmission of child-pornography, harassment of any one wit h the use of a computer and cyber stalking. The trafficking, distribution, posti ng, and dissemination of obscene material including pornography, indecent exposu re, and child pornography constitute the most important cyber crimes known today . These threaten to undermine the growth of the younger generation and also leav e irreparable scars on the minds of the younger generation, if not controlled. S imilarly, cyber harassment is a distinct cyber crime. Various kinds of harassmen ts can and do occur in cyberspace, or through the use of cyberspace. Harassment can be sexual, racial, religious, or of any other nature. Cyber harassment as a crime also brings us to another related area of violation of privacy of citizens . Violation of privacy of online citizens is a cyber crime of a grave nature. Cy ber stalking: The Internet is a wonderful place to work, play and study. The net is merely a mirror of the real world, and that means it also contains electroni c versions of real life problems. Stalking and harassment are problems that many persons especially women, are familiar within real life. These problems also oc cur on the Internet, in the form of cyber stalking or online harassment. 2. Cyber cr imes against property: The second category of Cyber crimes is Cyber crimes again st all forms of property. These crimes include unauthorized computer trespassing through cyberspace, computer vandalism, and transmission of harmful programs an d unauthorized possession of computerized information.

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 3. Cyber crimes against Government: The third category of Cyber crimes is Cyber crimes against Government. Cyber Terrorism is one distinct kind of crime in this category. The growth of Internet has shown that individuals and groups to threa ten international governments as also to terrorize the citizens of a country are using the medium of cyberspace. This crime manifests itself into Cyber Terroris m when an individual cracks into a government or military maintained website, for the purpose of perpetuating terror. Since Cyber crime is a newly emerging field, a great deal of development has to take place in terms of putting into place th e relevant legal mechanism for controlling and preventing cyber crime. The court s in United States of America have already begun taking cognizance of various ki nds of fraud and cyber crimes being perpetrated in cyberspace. However, much wor k has to be done in this field. Just as the human mind is ingenious enough to de vise new ways for perpetrating crime, similarly, human ingenuity needs to be can alized into developing effective legal and regulatory mechanisms to control and prevent cyber crimes. A criminal mind can assume very powerful manifestations if it is used on a network, given the reach ability and size of the network. Legal recognition granted to Electronic Records and Digital Signatures would certainl y boost E Commerce in the country. It will help in conclusion of contracts and c reation of rights and obligations through electronic medium. In order to guard a gainst the misuse and fraudulent activities over the electronic medium, punitive measures are provided in the Act. The Act has recognized certain offences, whic h are punishable. They are: Tampering with computer source documents Any person, who knowingly or intentionally conceals, destroys or alters or intentionally or knowingly causes another person to conceal, destroy or alter any 1. Computer so urce code when the computer source code is required to be kept by law for 2. the time being in force, 3. Computer programme, 4. Computer system and 5. Computer network. - Is punishable with imprisonment up to three years, or with fine, whic h may extend up to two lakh rupees, or with both.

SMU- MBA Semester III Reg. No: 531010671 LEGAL ASPECTS OF BUSINESS-MB0051 Hacking with computer system: Hacking with computer system is a punishable offen ce under the Act. It means any person intentionally or knowingly causes wrongful loss or damage to the public or destroys or deletes or alters any information r esiding in the computer resources or diminishes its value or utility or affects it injuriously by any means, commits hacking. Such offenses will be punished wit h three years imprisonment or with fine of two lakh rupees or with both. Publish ing of information which is obscene in electronic form (Sec 67): Whoever publish es or transmits or causes to be published in the electronic form, any material w hich is lascivious or appeals to prurient interest or if its effect is such as t o tend to deprave and corrupt persons who are likely, having regard to all relev ant circumstances, to read, see or hear the matter contained or embodied in it s hall be punished on first conviction with imprisonment for a term extending up t o 5 years and with fine which may extend to one lakh rupees. In case of second a nd subsequent conviction imprisonment may extend to ten years and also with fine which may extend up to two lakh rupees.