Assignment on Business Law

Ans to Q1

Free Consent is an important essential element of a valid contract. Explain what is

Free Consent and the instances under which Free Consent in an agreement would
be affected. Please provide examples for each of such instance.

Introduction

Free consent is a crucial requirement for the formation of a valid contract. It implies
that the parties involved in the agreement must give their consent willingly, without
any form of coercion, fraud, misrepresentation, undue influence, or mistake. Free
consent ensures that the agreement is entered into voluntarily and without any unfair
advantage or deception.

CONCEPT & APPLICATION

Here are the instances under which free consent in an agreement can be affected:

1 Coercion: Coercion refers to the use of force or threats to compel someone to

enter into a contract against their will. It involves an unlawful act that deprives
a person of their freedom to make a choice. For example, if a person is
threatened with physical harm unless they sign a contract, their consent is not
free.

2 Fraud: Fraud occurs when one party intentionally misrepresents facts or

conceals information to deceive the other party, leading them to agree to the
contract based on false information. For instance, if a seller knowingly sells a
counterfeit product and represents it as an authentic one, the buyer's consent
is affected by fraud.

3 Misrepresentation: Misrepresentation happens when one party innocently or

negligently provides false information that induces the other party to enter into
a contract. Unlike fraud, misrepresentation is not intentional but still affects the
free consent of the other party. For example, if a seller mistakenly provides
incorrect specifications of a product, causing the buyer to make a decision
based on the incorrect information, the buyer's consent is affected.

4 Undue Influence: Undue influence occurs when one party takes advantage of
a position of power or trust to influence the decision-making of the other party.
The dominant party manipulates the weaker party's judgment, impairing their
free will. For instance, if an employer uses their authority to unduly influence
 an employee to enter into a contract that is unfavourable to the employee, the
employee's consent is affected by undue influence.

5 Mistake: Mistake refers to an error or misunderstanding about a fact or an

essential aspect of the contract. There are two types of mistakes: mutual
mistake (both parties make the same mistake) and unilateral mistake (only
one party makes the mistake, and the other party is aware or takes advantage
of it). For example, if both parties to a contract mistakenly believe that a
certain product is available in unlimited quantities, but in reality, it is scarce,
their consent is affected by a mutual mistake.

In all these instances, the affected party's consent is not considered free and
voluntary, and therefore, the contract may be voidable or unenforceable. Free
consent ensures fairness, integrity, and the voluntary nature of contractual
agreements, protecting the rights and interests of all parties involved.

Conclusion:

In conclusion, free consent is a fundamental element of a valid contract. It ensures

that parties enter into an agreement willingly and without any form of coercion, fraud,
misrepresentation, undue influence, or mistake. When free consent is affected, the
contract may be voidable or unenforceable, as the consent given under such
circumstances is not considered voluntary and fair.

It is crucial for parties to be aware of their rights and the instances under which free
consent can be compromised. By understanding the concept of free consent and
being vigilant in recognizing potential issues such as coercion, fraud,
misrepresentation, undue influence, or mistake, individuals and businesses can
protect themselves from entering into unfair or disadvantageous contracts.

Seeking legal advice, conducting due diligence, and ensuring transparent and
honest communication during the negotiation and formation of contracts can help
mitigate the risks associated with compromised free consent. By upholding the
principle of free consent, parties can maintain the integrity of contractual agreements
and promote fairness and justice in business transactions.
Ans to Q2

Please highlight two (2) instances where the courts in India have intervened to
protect environment or prevent degradation/pollution of environment. Kindly note that
the instances should be real life cases.

Introduction

Here are two real-life instances where courts in India intervened to protect the
environment and prevent degradation or pollution:

Concepts and Application related to the question

1 Vellore Citizens Welfare Forum v. Union of India (1996): In this landmark

case, the Supreme Court of India addressed the issue of pollution caused by
tanneries in and around Vellore, Tamil Nadu. The court recognized the severe
environmental and health hazards posed by the discharge of untreated
effluents from tanneries into water bodies, leading to groundwater
contamination and damage to agriculture. The court directed the closure of
tanneries that did not comply with environmental regulations and ordered the
establishment of common effluent treatment plants to control pollution. The
judgment emphasized the importance of the "polluter pays" principle and the
responsibility of industries to safeguard the environment.

2 M.C. Mehta v. Union of India (1986) – Oleum Gas Leak Case: This case
involved a gas leak from the Shriram Food and Fertilizer Industries' plant in
Delhi, where oleum gas leaked, resulting in significant environmental and
health hazards. The Supreme Court took suo moto cognizance of the matter
and issued several orders to address the situation. The court ordered the
closure of the plant, directed the compensation to affected individuals, and
established the concept of "absolute liability" for hazardous industries. This
case laid the foundation for the principle that industries engaged in hazardous
activities must ensure strict adherence to safety measures and be held liable
for any harm caused to the environment and public health.

These instances demonstrate the proactive role of the Indian courts in safeguarding
the environment and holding polluting industries accountable for their actions. The
judiciary has played a vital role in shaping environmental jurisprudence in India and
promoting sustainable development by enforcing environmental laws and protecting
the rights of citizens to a clean and healthy environment.
Conclusion

In conclusion, the Indian courts have played a significant role in intervening to

protect the environment and prevent degradation or pollution. The cases mentioned,
Vellore Citizens Welfare Forum v. Union of India and M.C. Mehta v. Union of India,
exemplify the courts' proactive approach in addressing environmental issues and
holding polluting industries accountable.

These cases demonstrate that the judiciary in India recognizes the importance of
environmental protection and upholds the rights of citizens to a clean and healthy
environment. The courts have set important precedents by establishing principles
such as the "polluter pays" principle and the concept of "absolute liability" for
industries engaged in hazardous activities.

By taking suo moto cognizance of environmental matters and issuing orders to close
non-compliant industries, enforce environmental regulations, and provide
compensation to affected individuals, the courts have played a crucial role in
ensuring environmental justice and promoting sustainable development.

The interventions by the Indian courts have had a lasting impact on environmental
governance and have contributed to raising awareness about environmental issues.
They serve as a reminder that the protection of the environment is a collective
responsibility, and all stakeholders, including industries and individuals, must adhere
to environmental regulations and work towards sustainable practices.
Ans to Q3 - a)

Gaurav is a new joinee in an organization and he has certain queries with respect to
employee related laws. He has been directed to reach out to you with the queries.
Kindly advise him:

a. As the organization deducts Provident Fund from the salary, can you please
explain applicability of the schemes under Provident Fund and how is the calculation
and apportionment of the Provident Fund done against various schemes?

Introduction

The Provident Fund (PF) scheme is applicable to organizations employing 20 or

more employees, and it is governed by the Employees' Provident Funds and
Miscellaneous Provisions Act, 1952. Both the employee and the employer make
contributions to the PF fund, which are calculated based on a percentage of the
employee's basic salary plus dearness allowance (if applicable).

The employee's contribution is deducted from their salary, while the employer also
contributes an equal amount. Out of the employer's contribution, a portion is
allocated to the EPF scheme, and the remaining portion is allocated to the
Employees' Pension Scheme (EPS). The EPF and EPS schemes are interlinked,
providing lump sum amounts and pensions to employees upon retirement,
resignation, or other eligible events.

The PF contributions made by both the employer and employee are deposited with
the Employees' Provident Fund Organization (EPFO), which manages the PF funds
and maintains individual PF accounts for employees. Employees should familiarize
themselves with the withdrawal and transfer procedures, nomination facility, and
other rules and regulations as per the EPF Act and EPFO guidelines.

CONCEPT & APPLICATION

Here's an overview of the applicability and calculation of PF schemes:

1 Applicability of the Provident Fund (PF) Scheme: The Employees' Provident

Fund (EPF) scheme is applicable to organizations employing 20 or more
employees. It covers both employees and employers. The scheme is
governed by the Employees' Provident Funds and Miscellaneous Provisions
Act, 1952.

2 Calculation and Apportionment of Provident Fund Contributions: Under the PF

scheme, both the employee and the employer make contributions towards the
fund. The contributions are calculated based on a percentage of the
employee's basic salary plus dearness allowance (if applicable). The current
contribution rate is set at 12% of the employee's eligible wages.
The 12% contribution is divided into two parts:

a. Employee Contribution: The employee's contribution is deducted from their

salary, and an amount equal to 12% of the eligible wages is deposited into
their individual PF account.

b. Employer Contribution: The employer also contributes an equal amount, i.e.,

12% of the employee's eligible wages, towards the PF. Out of the employer's
contribution, 3.67% is allocated to the EPF scheme, while the remaining
8.33% (subject to a maximum ceiling) is allocated to the Employees' Pension
Scheme (EPS).

It's important to note that the EPF and EPS schemes are interlinked. The EPF
scheme provides a lump sum amount at retirement, resignation, or other eligible
events, while the EPS scheme provides a pension to the employee after attaining a
certain age or in the event of disability or death.

The PF contributions made by the employer and employee are deposited with the
Employees' Provident Fund Organization (EPFO), a statutory body that manages the
PF funds. The EPFO maintains individual PF accounts for employees, which reflect
the contributions made and the accumulated balance.

Gaurav should also be aware of the PF withdrawal and transfer procedures,

nomination facility, and other related rules and regulations as per the EPF Act and
EPFO guidelines.

It's important for Gaurav to review the specific policies and practices of his
organization regarding PF, as some organizations may offer additional benefits or
have their own internal policies related to PF management. Gaurav can seek
clarification from the HR department or consult the EPF Act and relevant guidelines
for more detailed information.

Conclusion

In conclusion, It is essential for employees like Gaurav to review their organization's

specific policies and practices regarding PF, as there may be additional benefits or
internal policies related to PF management. Seeking clarification from the HR
department and referring to the EPF Act and relevant guidelines can provide more
detailed information.

Overall, the PF scheme ensures that employees have a dedicated fund for their
future financial security and retirement, and it is important for employees to
understand their rights and obligations related to PF contributions.
Ans to Q3 - b)

b. Who is entitled for Gratuity and how is the pay-out of gratuity calculated?

Introduction

Gratuity is a statutory benefit provided to employees in establishments with ten or

more employees as recognition for their long-term service. Eligibility for gratuity
requires completing a minimum of five years of continuous service with the same
employer and can be claimed upon retirement, resignation, death, disability, or other
recognized reasons.

The calculation of gratuity pay-out is determined by the formula specified in the

Payment of Gratuity Act, 1972. The formula takes into account the employee's last
drawn salary, years of service, and a constant factor. The maximum gratuity amount
is currently capped at Rs. 20 lakh under the Act.

Employers are responsible for managing gratuity funds and making the payout to
eligible employees within 30 days of it becoming payable. Employees should review
their employment contracts, company policies, and relevant laws to understand their
specific gratuity entitlement and calculation. Consulting with the HR department or
seeking professional advice can provide accurate and detailed information tailored to
their individual circumstances.

CONCEPT & APPLICATION

Gratuity is a statutory benefit provided to employees as a form of appreciation for

their long-term service to an organization. Here's an overview of who is entitled to
gratuity and how the pay-out is calculated:

Entitlement for Gratuity: Under the Payment of Gratuity Act, 1972, gratuity is
applicable to employees in establishments that have ten or more employees. Both
private and government sector employees are eligible for gratuity. However, there
may be variations in the eligibility criteria based on the specific laws of the country or
the employment contract.

To be eligible for gratuity, an employee must meet the following criteria:

• Completed a minimum of five years of continuous service with the same

employer.

• Termination of employment can be due to retirement, resignation, death,

disability, or any other reason recognized by the law.

Calculation of Gratuity Pay-out: The gratuity amount is calculated based on a

formula specified in the Payment of Gratuity Act, 1972. The formula is as follows:

Gratuity = (Last drawn salary * years of service * 15) / 26

Here's a breakdown of the components in the formula:

• Last Drawn Salary: This refers to the employee's basic salary plus dearness
allowance (if applicable) at the time of termination.

• Years of Service: The total number of completed years of service with the
employer. Any period less than a year is ignored, while a year or more is
considered a full year.

• 15/26: This is a constant factor used in the calculation.

It's important to note that the maximum gratuity amount is currently capped at Rs. 20
lakh under the Payment of Gratuity Act. If the calculated gratuity amount exceeds
this cap, the pay-out will be limited to Rs. 20 lakh.

Employers are responsible for managing the gratuity funds and making the pay-out
to eligible employees within 30 days from the date it becomes payable, as per the
law.

Employees should review their employment contract, company policies, and relevant
laws to understand the specific gratuity entitlement and calculation applicable to their
situation. Additionally, consulting with the HR department or seeking professional
advice can provide more accurate and detailed information based on the specific
circumstances.

Conclusion:

In conclusion, gratuity serves as a financial benefit to employees for their long-term

commitment to an organization and provides a sense of financial security upon
retirement or other eligible events.