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.

5. i. the party making a false statement cannot say that the other party had the means to discover the truth with ordinary deligance.What are the remedies for breach of contract.2. if there were no remedies to enforce the rights arising there under. A breach of contract may put the aggrieved party to some disadvantage or inconvenience or may cause a loss to him. 3.e. of the contract.6) The party complaining of misrepresentation can’t avoid the contract if he had the means to discover the truth with ordinary deligance. Suit for rescission. 2. Suit for damages. the remedy of ‘damages’ is the one that comes to mind immediately as the consequence of breach. 4. Suit for rescission : The breach of contract no doubt discharges the contract. the aggrieved party would have one or more. The court would desire the guilty part to accept responsibility for any such loss of the aggrieved party and compensate him adequately. Suit for injunction. cancellation. But in the case of fraud. Whenever a breach of contract takes place. but not all. Suit for specific performance. 1. of the following remedies against the guilty party.The remedies are: 1. In case of breach of contract. Q. 2. Suit for damages : The word ‘damages’ means monetary compensation for loss suffered.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. Answer . The party committing breach of contract is called the ‘guilt party’ and the other party is called the ‘injured’ or ‘aggrieved’ party. but the aggrieved party may sometimes need to approach the court to grant him a formal rescission. This will enable him to be free from his own obligations under the contract. Suit for quantum meruit. . The quantum of damages is determined by the magnitude of loss caused by breach.

But in general. This is a direction by the Court for specific performance of the contract at the suit of the party not in breach. he too is entitled to be paid quantum meruit. and the other party repudiates the contract or somehow the full performance of the contract becomes impossible.1963 lays down detailed rules on the specific performance of Contracts. Courts do not wish to compel a party to do that which he has already refused to do. When a party has done some work under a contract.performance (ii) Where monetary compensation will not be adequate relief. Even in the case of where the person who has done the work is the one who is guilty of breach of contract. Suit for specific performance: In certain cases of breach of a contract. where one party has expressly or impliedly requested another to render him a service without specifying any remuneration. there is implied a promise to pay quantum meruit. 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 5.3. Suit for injunction : . 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. 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. then the party who has done the work can claim remuneration for the work under a suit for quantum meruit. but the circumstances of the request imply that the service is to be paid for. Likewise. Suit for quantum meruit : The term quantum meruit means ‘as much as earned’. Then the Court may direct the party in breach to carry out his promise according to he terms of the contract. 4. damages may not be an adequate remedy. Example a contract for sale of a rare antique (iii) Where plaintiff’s 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. Chapter 2 of the Specific Relief Act. It implies ‘a payment deserved by a person for the reason of actual work done’.

) Q. injunction is a mode of securing the specific performance of the negative terms of a contract. Difference between indemnity and guarantee:There are distinguishing differences between Indemnity and Guarantee in the Indian Contract Act. But for the performance of the positive terms of the contract. The indemnifier promises to make good the loss of the indemnified (i. (vii) recovery of interest . must have all the essentials of a valid contract. 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. an engagement which secure or insures another against a contingency. (iv) suit for breach of condition. 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. liable to such payment or performance. e. 'A' contracts to indemnify B against the consequences of any . 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. a warranty.g. or by the conduct of any other person. (v) suit for breach of warranty . In a way. Ans. the promisee). like any other contract. A contract of insurance is a glaring example of such type of contracts.e. (iii) specific performance . Distinguish between indemnity and guarantee. or the performance of some duty.‘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. in the first instance. Same as guaranty. (vi) anticipatory breach.  Section 124 of the Indian Contract Act. the aggrieved party may seek other remedies like damages. GUARANTEE In law and common usage: A promise to answer for the payment of some debt. in case of the failure of another person. A contract of indemnity may arise either by (i) an express promise or (ii) operation of law. a security. (ii) right of recovery of the price. 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. BUYER’S REMEDIES AGAINST SELLER The buyer has the following rights against the seller for breach of contract: (i) damages for non-delivery. 1872 defines the "Contract of Indemnity".3. who is. These are two parties in a contraction of indemnifier and indemnified.

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

The possibility of any loss happening is the only contingency against which the indemnifier undertakes to indemnify.Cheques and bills of exchange are negotiable instruments and have been used by many people worldwide for many decades. . the specified amount. WHAT IS A NEGOTIABLE INSTRUMENT? The term negotiable instrument literally means a written document transferable by delivery. signed by the maker. CHEQUES A cheque is the usual method of withdrawing money from a current account with a banker. bill of exchange or check payable either to order or to a bearer. is an order by the customer of the bank directing his banker to pay on demand. It can be a promissory note. 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. to or to the order of the person named therein or to the bearer. Sec. The Amendment Act 2002 has substituted new section for Sec. 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’.5 as ‘an instrument in writing.4. BILL OF EXCHANGE A ‘bill of exchange’ is defined by Sec.6. Savings bank accounts are also permitted to be operated by cheques provided certain minimum balance is maintained. What is the distinction between cheque and bill of exchange.6 defines a cheque. A cheque. 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. There is an existing debt or duty. Q. the performance of which is guarantee by the surety. containing an unconditional order. in essence. Answer .

10000 to the company. professional. Distinguish between companies limited by shares and companies limited by guarantee. Most companies limited by guarantee have a constitution which states that each member is only required to pay Rs. The Memorandum normally includes a non-profit distribution clause and these companies are usually formed by clubs. Answer . if an individual shareholder holds 100 shares of Rs. There are both some similarities and differences between the two groups.the drawer. 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. The company has no share capital. It is seldom drawn in sets It does not require acceptance by the drawee. Companies limited by guarantee however.100 each. For example. 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. then they would be required to pay Rs. and payee. Days of grace are not allowed to a banker the drawee. 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. all of which remains unpaid at the time of dissolution. the drawee. are non-profit making organisations and . Assuming that an average shareholder holds more than one share in a company. Members and shareholders enjoy limited liability. the latter might be required to pay all amounts of unpaid monies relating to the shares they hold.Cheque Bill of Exchange It is drawn on a banker It has three parties . 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 main difference between a company limited by guarantee and a company limited by shares is that the company has no share capital. It may be drawn on any party or individual It has three parties . and payee. It may be drawn in any paper and need not necessarily be printed. members in a business limited by guarantee do appear to have less risk attached to their positions. however in cases where a share based company is liquidated. A company limited by guarantee has members rather than shareholders.100 should it be dissolved.5.the drawer. No stamp duty is payable on checks It is usually drawn on the printed to Q. trade or research associations. the drawee.A company limited by guarantee is normally incorporated for non-profit making functions.

or cyber crime. even though no allotments are made to them. COMPANY DIRECTORS.Computer crime.6. or it may be the target. phone numbers. such as creating and distributing viruses on other computers or posting confidential business information on the Internet. and child grooming. Perhaps the most prominent form of cyber crime is identity theft. such as usernames and passwords. For this reason. which are often of this type. bank account numbers. This includes login information. SECRETARY AND DECLARANT Both types of companies are bound by the same requirements to have at least one director. often have very specific objects and detailed rules pertaining to which areas they can engage in. Net crime refers. Answer . a secretary and a declarant at the time of incorporation and throughout any period of its existence. to criminal exploitation of the Internet. Cyber crime also includes non-monetary offences. 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. where they are asked to enter personal information. It is very difficult to classify crimes in . Cyber crime includes anything from downloading illegal music files to stealing millions of dollars from online bank accounts. Q.are usually registered to provide a specified service to the public or a particular segment of the population. Charities. and other information criminals can use to "steal" another person's identity. CYBERCRIME Cybercrime is defined as crimes committed on the internet using the computer as either a tool or a targeted victim. particularly those surrounding hacking. child pornography. lawfully or otherwise. There are also problems of privacy when confidential information is lost or intercepted. in which criminals use the Internet to steal personal information from other users. When forming a company limited by guarantee. 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. addresses. Issues surrounding this type of crime have become high-profile. members are listed in the same manner in which shareholders would be. The computer may have been used in the commission of a crime. more precisely. Both of these methods lure users to fake websites. credit card numbers.What is the definition of cyber crime. OBJECTS OF COMPANIES LIMITED BY GUARANTEE Companies limited by guarantee however. refers to any crime that involves a computer and a network. copyright infringement. Two of the most common ways this is done is through phishing and pharming. 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.

identity theft. However. crimes like rape. Human weaknesses are generally exploited. 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.general into distinct groups as many crimes evolve on a daily basis. making legal action against the variants more difficult. 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. hacking involves attacking the computer’s information and other resources. These are the crimes which have existed for centuries in the offline. having been in existence for only as long as computers have . • Computer as a tool When the individual is the main target of Cybercrime. These crimes generally involve less technical expertise as the damage done manifests itself in the real world. Unauthorized access to computer systems or networks / HackingThis kind of offence is normally referred as hacking in the generic sense. these crimes requires the technical knowledge of the perpetrators. the computer will be looked at as either a target or tool for simplicity’s sake. These crimes are relatively new. It is important to take note that overlapping occurs in many cases and it is impossible to have a perfect classification system. 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. Theft of information contained in electronic form- . telemarketing and Internet fraud. and the likes have existed even before the development in high-tech equipment. cyber crime also includes traditional crimes conducted through the Internet. Cyber crime encompasses any criminal act dealing with computers and networks (called hacking). it just depends on which of the two is the main target. 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. 2. 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. Even in the real world. all cybercrimes involve both the computer and the person behind it as victims. The damage dealt is largely psychological and intangible. There are numerous crimes of this nature committed daily on the internet. murder or theft need not necessarily be separate. Hence. the computer can be considered as the tool rather than the target. For example. Additionally. hate crimes. Scams. For example.which explains how unprepared society and the world in general is towards combating these crimes. theft. Unlike crimes using he computer as a tool. • Computer as a target These crimes are committed by a selected group of criminals.

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

Arbitrators are charged with hearing evidence from numerous involved parties in a dispute. insolvency matters anti-competition matters or commercial court matters to be referred to arbitration. In some instances of arbitration law.Assignment Set – 2 Q. 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. Answer .Arbitration law is a process that involves the assistance of one or more neutral parties known as arbitrators. an arbitrator may also issue an opinion in conjunction with the award. public policy would not permit matrimonial matters. with several exceptions:   The arbitrator makes the decision called an "arbitration award” The arbitration does not take place in a courtroom . Arbitration law and mediation law are two different processes and should not be confused. Arbitration is similar to a court trial. which is designed to explain the award and the reasoning that led to it. Generally. matters covered by statutory reliefs through statutory tribunals would be non-abatable. and their main duty is to issue an award deciding who gets what in order to resolve the situation.1.What is the situations which cannot be referred to arbitration.company disputes are abatable (as there is no master servant relationship here)5. The purpose of arbitration law is to serve as a substitution to a trial and a review of the decision by a trial court. Employment contracts also cannot be referred to arbitration but director . However. criminal proceedings. and there is no availability for appeal. Arbitration is an Alternative Dispute Resolution process whereby a person chosen as an arbitrator settles disputes between parties. The award and the opinion are not capable of being reviewed by a court.

Kind of matters cannot be referred for arbitration: As per general practice. 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. The arbitration award is binding. With rare exceptions. The Arbitrator(s) maintain neutrality and conflicts of interests Generally. Arbitration is one of the most effective and trusted proceedings in regard to private dispute settlement are guided by the Arbitration & Conciliation Act. matters involving moral questions or questions of public law cannot be resolved by arbitration. 1996. there is no right to appeal Arbitration is not a matter of public record. 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 following matters are not referred to arbitration:  Matrimonial matters  Guardianship of a minor or any other person under disability  Testamentary matters  Insolvency. more expanded opportunity to tell their stories to present their cases With very few exceptions. 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. proceedings  Criminal proceedings  Questions relating to charity or charitable trusts . For instance.

Thus the meaning of ‘conciliation’ as can be gathered from the 1996 Act has to be read into sec. based on the UNCITRAL Rules for conciliation. it says that once a reference is made to a ‘conciliator’. and may make suggestions for terms of settlement.2. . 89 of the Code of Civil Procedure. This makes no difference as to the meaning of ‘conciliation’ under sec. 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. with the assistance of a neutral third party (the conciliator). and may actively encourage the participants to reach an agreement. give expert advice on likely settlement terms. section 62 of the said Act deals with reference to ‘Conciliation’ by agreement of parties but sec.Conciliation: Conciliation is a process in which the parties to a dispute. The conciliator may advise on or determine the process of conciliation whereby resolution is attempted. provided the Court thinks that the case is one fit for conciliation.What is the role of a Conciliator. 89 because. it may be noted. identify the disputed issues. The 1996 Act is. It is true. the 1996 Act would apply. 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. Answer . In order to understand what Parliament meant by ‘Conciliation’. 89 permits the Court to refer a dispute for conciliation even where parties do not consent. we have necessarily to refer to the functions of a ‘Conciliator’ as visualized by Part III of the 1996 Act. but not a determinative role. consider alternatives and endeavour to reach an agreement. develop options. The conciliator may have an advisory role on the content of the dispute or the outcome of its resolution.

3.  The conciliator may. Conciliators do not: Make decisions for disputing parties Make judgments about who is right. Answer THE MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT. the usages of the trade concerned and the circumstances surrounding the dispute.  The conciliator shall be guided by principles of objectivity. at any stage of the conciliation proceedings.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 may conduct the conciliation proceedings in such a manner as he considers appropriate. 1969. the wishes the parties may express. among other things. taking into account the circumstances of the case. 1969 OBJECTIVES AND POLICY: The Monopolies and Restrictive Trade Practices Commission has been constituted under Section 5(1) of the MRTP Act. Such proposals need not be in writing and need not be accompanied by a statement of the masons therefore. including any previous business practices between the parties. and the need for a speedy settlement of the dispute. 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. 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. fairness and justice. . make proposals for a settlement of the dispute. giving consideration to.What are the unfair trade practices under the MRTP Act. including any request by a party that the conciliator hear oral statements. 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 rights and obligations of the parties.

or the usefulness of.  Represents that the seller or the supplier has a sponsorship or approval or affiliation which he does not have. that the goods or services have sponsorship. 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.  Falsely suggests that the services are of a particular standard. any goods or services. composition. 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. approval. grade. that is not based on an adequate or proper test. or when Commission's own knowledge warrants a preliminary investigation. style or model. Unfair Trade Practices: An unfair trade practice means a trade practice. efficacy or length of life of the goods.The MRTP Commission receives complaints both from registered consumer and trade associations and also from individuals. accessories. characteristics. reconditioned or old goods as new goods. for the purpose of promoting any sale. quantity or grade. performance. which. use or supply of any goods or services. uses or benefits which they do not . quantity. 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.  Gives any warranty or guarantee of the performance. adopts unfair method. 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.  Represents have.  Makes a false or misleading representation concerning the need for. second-hand renovated.  Falsely suggests any re-built. or unfair or deceptive practice.

 Makes to the public a representation in the form that purports to be• • warranty or guarantee of the goods or services. prizes or other items along with the goods when the real intention is different. 3) Free Gifts Offer And Prize Scheme: The unfair trade practices under this category are:  Offering any gifts. for a reasonable period or reasonable quantity. . or  Gives false or misleading facts disparaging the goods. The bargain price. it shall amount to an unfair trade practice. If such representation is materially misleading or there is no reasonable prospect that such warranty. maintain or repair the goods until it has achieved a specified result. 2) False Offer Of Bargain Price: Where an advertisement is published in a newspaper or otherwise. services or trade of another person. or  Offering some prizes to the buyers by the conduct of any contest. with real intention to promote sales or business. or  Creating impression that something is being offered free along with the goods. 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. when in fact the price is wholly or partly covered by the price of the article sold. guarantee or promise will be fulfilled  Materially misleads about the prices at which such goods or services are available in the market. lottery or game of chance or skill. 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. for this purpose means:  the price stated in the advertisement in such manner as suggests that it is lesser than the ordinary price. a promise to replace.

in relation to their performance. with an intention to raise the cost of those or other similar goods or services. 6) Inquiry Into Unfair Trade Practices: The Commission may inquire into any unfair trade practice:  Upon receiving a complaint from any trade association. Destruction.4) Non-Compliance Of Prescribed Standards: Any sale or supply of goods. for use by consumers. statement or advertisement relating to such unfair trade practice shall be disclosed. construction.  Any information.: Any practice that permits the hoarding or destruction of goods. finishing or packing. issued or published as may be specified . Etc. as are necessary to prevent or reduce the risk of injury to the person using such goods.  The agreement relating thereto shall be void in respect of such unfair trade practice or shall stand modified. 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. contents. consumer or a registered consumer association. or to the interest of any consumer it may direct that?  The practice shall be discontinued or shall not be repeated. shall be an unfair trade practice. knowing or having reason to believe that the goods do not comply with the standards prescribed by some competent authority. shall amount to an unfair trade practice. 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. or refusal to sell the goods or provide any services. design. 5) Hoarding. composition.

The Karnataka State Road Transport Corporation runs omnibuses on various routes to carry passengers at the scheduled fares. 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. Sridhar says to Radhika that he will sell his scooter to her for Rs. This is a proposal. An offer must be definite and clear. For example. 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 . Sunil is the offeror and Padmaja is the offeree. An offer which is expressed by conduct is called an implied offer. The person making the proposal is called the proposer or offer or the promisor. Sunil offers to sell his car to Padmaja for Rs. to such act or abstinence. It is also called an "offer". It is the very basis of the contract. It is one of the essential elements of 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.4. Q.OFFER A proposal is an expression of will or intention to do or not to do something. The offer must be made in order to create legal relations otherwise there will be an agreement. with a view to obtaining the assent of that other. 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.20000. Answer . written or spoken. It may be in the form of a statement or a question. An offer may be positive or negative. In business transactions there is a presumption that the parties propose to make legal relationships. This is an express offer. is called an express offer. The Commission is empowered to direct publication of corrective advertisement and disclosure of additional information while passing orders relating to unfair trade practices. If the terms of an offer are not definite and clear it cannot be called a valid offer. An offer may be express or implied. A person has two motorbikes. If such offer is accepted it cannot create a binding contract. for example. he is said to make a proposal". An agreement to agree in future is not a contract because the terms of an agreement are not clear. An offer which is expressed by words.What are essentials of a valid offer. This is an implied offer by KSRTC. 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. It becomes a promise when it accepted. 50000. The person to whom the proposal is madeis called the offered or promisee.

g. An offer to do or not to do must be made with a view to obtaining the assent of the other party. telegram. or even signs and gestures. A person can accept the offer only when he knows about it. mail. When an offer is made to the world at large or public in general. An offer should may contain any term or condition. if he brings back his missing dog. The special terms or conditions in an offer must be brought to the notice of the offeree at the time of making a proposal. Sometime people offer the invitation for the sale. Sunil issues a public advertisement to the effect that he would give Rs. E. The offeror is free to lay down any terms any terms and conditions in his offer. But he cannot prescribe the form or time of refusal so as to fix a contract on the acceptor. it is called "specific offer". religious or moral acts without any intention of creating legal relations will not be a valid 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. 500 if a particular house proves lucky is too vague to be enforceable. E. it is called "general offer". a written document. It is immaterial whether the terms and conditions were harsh or ridiculous. Sridhar says to Sunil "I will give you some money if you marry my daughter". The offeror may prescribe any mode of acceptance. The terms of an offer must be definite. Sridhar does not turn up at the dinner party. messenger.100 to anyone who brings back his missing dog.g. A promise to pay an extra Rs. This is a specific offer and can only be accepted by Sridhar. An offer is effective only when it is communicated to the offeree. it is not an offer in the eyes of law e. The offeror may communicate the offer by choosing any available means such as a word of mouth. He cannot say that if the acceptor does not communicate his acceptance within a specified time. If he does not know. This is not an offer which can be accepted because the amount of money to be paid is not certain. he cannot       . Sunil promises to give Rs. Communication is necessary whether the offer is general or specific. then he has to abide by all the terms and conditions of the offer.100 to Sridhar. unambiguous and certain. he is deemed to have accepted the offer. Essentials of a valid offer:  A valid offer must intend to create legal relations. 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. If the offer is not intended to create legal relationship. This is a general offer. There is a difference between the offer and invitation of offer. Any member of the public can accept this offer by searching for and bringing back Sunil's missing dog. Mere enquiry is not an offer.wants to sell. It must not be a casual statement. Communication may also be implied by his conduct. Sunil cannot sue Sridhar for breach of contract as there was no intention to create legal obligation. Sunil invites Sridhar to a dinner party and Sridhar accepts the invitation. Hence. They must not be loose and vague. an offer to perform social.g. If the other party accepts it.

(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. and cooperative or any person. imperfection or shortcoming. An acceptance of an offer. in case of supply of defective goods by him. Display of goods with price-tags attached.5. The term “defect” and “deficiency”. Quotations of lowest prices. 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. purity. The salient features of the Act are: (I) it covers all the sectors whether private. in services or goods is not to be restricted to the statutory mandate but shall extend to that claimed by the trader. Q. Railway time-table. (d) right to be heard and to be assured that consumers’ interests will receive due consideration at the . potency. (c) right to be assured. as held in a catena of cases. the standard. quantity. 1986 was enacted for better protection of the interests of consumers. public. which is required to be maintained. standard and price of goods or services so as to protect the consumers against unfair trade practices. An advertisement inviting tenders. (b) right to be informed about the quality. Loud speaker announcements. access to a variety of goods and services at competitive prices. are to be couched in the widest horizon of there being any kind of fault. is no acceptance at all. The following are only invitations to offer but not actual offers:          Invitations made by a trade for the sale of goods. in any manner whatsoever. in case of deficiency in rendering of its services. A price list of goods for sale. Answer . It should be noted that an invitation to offer is not an offer. An advertisement to sell goods by auction. Furthermore. expressly or impliedly. and a service provider. Prospectus issued by a company. The provisions of the Act came into force with effect from 15-4-87. Consumer Protection Act imposes strict liability on a manufacturer. Find out a case where a person appealed under the Consumer protection Act and won.accept it. wherever possible. in ignorance of the offer.CONSUMER PROTECTION ACT 1986 ( “CPA”) IN INDIA The Consumer Protection Act.

Lalitha. Courts in India have upheld limitation of liability clauses. However. Purview of a ‘complaint’ According to the CPA. 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. [(2006) 4 SCC 644]. (v) To provide a simple. 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. whose main objectives are to promote and protect the rights of consumers. Susheel Kumar Gabgotra. 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. the manufacturer of the vehicle had stipulated a warranty clause limiting its liability to merely repair the defects found if any. M. ii. [(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. Thirumurugan Cooperative Agricultural Credit Society v. ‘Complaint’ means any of the following allegations made in writing by a complainanti. These are: National Consumer Disputes Redressal Commission known as National Commission. In Maruti Udyog v.appropriate fora. which was incurred due to the fault of the car manufacturer. and (f) right to consumer education. The Supreme Court in Secretary. the Act envisages a three-tier quasi-judicial machinery at the national. the fact that a remedy is specifically provided for under another statute would not . (III) The Act also envisages establishment of Consumer Protection Councils at the central. Validity of Limitation of liability clauses Contractual liability has a role to play in product liability claims under the CPA. State Consumer Disputes Redressal Commissions known as State Commissions and District Consumer Disputes Redressal Forum known as District Forum. the goods hired or bought suffer from one or more defects iii. any unfair trade practice or a restrictive trade practice has been adopted by a trader. (e) right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers. The goods hired or availed of are deficient in any respect iv. manner and effect or use of such goods. state and district levels. 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. such clauses may be struck down if found to be unconscionable in nature. 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. Compensation was. however. In view of this clause. awarded for travel charges to the complainant. 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. speedy and inexpensive redressal of consumer grievances. Hence. state and district levels.

Q. The second bench of the National Commission started functioning from 24 September 2003. Establishment of Consumer forums At present. In all these years. The prime reason for this is the fact that the IT Act is a set of technical laws. but also from the perception of lawyers. The state governments are responsible to set up the district fora and the State Commissions.2008 . Although the law came into operation on October 17. law enforcing agencies and even the judiciary. The Central Government is empowered to establish the National Commission. As per the current statistics. 2000.9. depending on the facts and circumstances of the case. as they don't want to get negative publicity or worse get entangled in legal proceedings. The IT Act does give extra-territorial jurisdiction to law enforcement agencies. What does the Information Technology Act enable. 2559451 cases were filed out of which 2327035 cases were disposed of by the District forums in various states of India . Answer . at the height of the dot-com boom. It has been further held that if forums under one statute and the CP Act are approached. despite the growing crime rate in the cyber world. one in each State/UT and 571 district fora besides the National Commission.Information Technology Act: In May 2000.6. it still has an element of mystery around it. India enacted the IT Act and became part of a select group of countries to have put in place cyber laws. 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 government is monitoring the disposal of cases by the consumer courts through National Commission. 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. but such . there are 34 State Commissions. It has been empowered to appoint additional members to facilitate creation of more benches and holding of circuit benches. Another major hurdle is the reluctance on the part of companies to report the instances of cyber-crimes. 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.necessarily oust the jurisdiction of the appropriate authority under the CP Act. then it is for the appropriate authority to permit the parties to opt between the consumer forum and the other forum. since its inception and up to 5. Not only from the perception of the common man.

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. This includes cyber stalking. cyber harassment. which have not been addressed in the IT Act. it does not expressly talk of cyber defamation. cyber nuisance. cyber defamation and the like. Though Section 67 of the Information Technology Act. We are now beginning to see new categories and varieties of cyber-crimes.powers are largely inefficient. 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. 2000 provides for punishment to whoever transmits or publishes or causes to be published or transmitted. 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.

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