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Master of Business Administration - MBA Semester III MB0051 Legal Aspects of Business - 4 Credits
(Book ID: B0764)

Assignment Set- 1 (60 Marks) Note: Each question carries 10 Marks. Answer all the questions.
Q.1 Distinguish between fraud and misrepresentation. 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. 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. Q.2 What are the remedies for breach of contract. When someone breaches a contract, the other party is no longer obligated to keep its end of the bargain. From there, that party may proceed in several ways: (i) the other party may urge the breaching party to reconsider the breach; (ii) if it is a contract with a merchant, the other party may get help from consumers associations; (iii) the other party may bring the breaching party to an agency for alternative dispute resolution; (iv) the other party may sue for damages; or (v) 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of the contract: When a breach of contract is committed by one party, the other party may treat the contract as rescinded.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 aggrieved party is freed from all his obligations under the contract. The usual remedy for breach of contracts is suit for damages. The main kind of damages awarded in a contract suit are ordinary damages. This is the amount of money it would take to put the

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aggrieved party in as good a position as if there had not been a breach of contract. The idea is to compensate the aggrieved party for the loss he has suffered as a result of the breach of the contract. Q.3 Distinguish between indemnity and guarantee. A contract of guarantee is defined as a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called surety; the person for whom the guarantee is given is called the principal debtor, and the person to whom the guarantee is given is called the creditor. A contract of guarantee may be either oral or in writing. Secs.124 and 125 provide for a contract of indemnity. Sec.124 provides that a contract of indemnity is a contract whereby one party promises to save the other from loss caused to him (the promisee) by the conduct of the promisor himself or by the conduct of any other person. A contract of insurance is a glaring example of such type of contracts. A contract of indemnity may arise either by (i) an express promise or (ii) operation of law, e.g., the duty of a principal to indemnify an agent from consequences of all lawful acts done by him as an agent. The contract of indemnity, like any other contract, must have all the essentials of a valid contract. In a contract of guarantee there are three parties, viz., the creditor, the principal debtor and the surety. These are two parties in a contraction of identity indemnifier and indemnified. The indemnifier promises to make good the loss of the indemnified (i.e., the promisee). Q.4 What is the distinction between cheque and bill of exchange. A bill of exchange is defined by Sec.5 as an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of, a certain person, or to the bearer of the instrument. Sec.6. 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. The Drawee of bill of exchange the Bill of exchange can be any person. The Drawee of bill of exchange the Bill of exchange is a Bank. Bill of Exchange any be for any period as specified by Drawer.

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A cheque that bears a date earlier than six months is a stale cheque and cannot be claimed for.

Q.5 Distinguish between companies limited by shares and companies limited by guarantee. Sec.12 permits the formation of different types of companies. These may be (i) companies limited by shares, (ii) companies limited by guarantee and (iii) unlimited companies. The main difference between company limited by guarantee and a company limited by shares is that the company has no share capital. A company limited by guarantee has members, rather than shareholders, the members of the company guarantee/undertake to contribute a predetermined sum to the liabilities of the company which becomes due in the event of the company going under.

Q.6 What is the definition of cyber crime. Section 67 of the Information Technology Act, 2000 provides for punishment to whoever transmits or publishes or causes to be published or transmitted, any material which is obscene in electronic form with imprisonment for a term which may extend to two years and with fine which may extend to twenty five thousand rupees on first convection and in the event of second may extend to five years and also with fine which may extend to fifty thousand rupees, it does not expressly talk of cyber defamation. Cyber Crime includes: Tampering with computer source document (Sec.65) Hacking with computer system (Sec.66) Publishing of information which is obscene in electronic form (Sec.67) Power of the controller to give directions (Sec.68) Directions of controller to a subscriber to extend facilities to decrypt information (Sec.69) Providing Access to protected system (Sec.70) Penalty for misrepresentation (Sec.71) Breach of confidentiality and privacy (Sec.72) Act to apply for offence or contravention committed outside India (Sec.75) Confiscation of Hardware (Sec.76) Penalties and confiscation not to interfere with other punishments (Sec.77) Power to investigate offences (Sec.78)

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Master of Business Administration - MBA Semester III MB0051 Legal Aspects of Business - 4 Credits
(Book ID: B0764)

Assignment Set- 2 (60 Marks) Note: Each question carries 10 Marks. Answer all the questions.
Q.1 What are the situations which cannot be referred to arbitration. Arbitration law is a process that involves the assistance of one or more neutral parties known as arbitrators. Arbitrators are charged with hearing evidence from numerous involved parties in a dispute, and their main duty is to issue an award deciding who gets what in order to resolve the situation. In some instances of arbitration law, an arbitrator may also issue an opinion in conjunction with the award, which is designed to explain the award and the reasoning that led to it. Arbitration law and mediation law are two different processes and should not be confused. The award and the opinion are not capable of being reviewed by a court, and there is no availability for appeal. The purpose of arbitration law is to serve as a substitution to a trial and a review of the decision by a trial court. Subject matter of arbitration: Any commercial matter including an action in tort if it arises out of or relates to a contract can be referred to arbitration. However, public policy would not permit matrimonial matters, criminal proceedings, insolvency matters anti-competition matters or commercial court matters to be referred to arbitration. Employment contracts also cannot be referred to arbitration but director company disputes are abatable (as there is no master servant relationship here)5. Generally, matters covered by statutory reliefs through statutory tribunals would be non-abatable. Arbitration is an Alternative Dispute Resolution process whereby a person chosen as an arbitrator settles disputes between parties. Arbitration is similar to a court trial, with several exceptions: The arbitrator makes the decision called an "arbitration award" The arbitration does not take place in a courtroom The arbitration award is binding. With rare exceptions, there is no right to appeal Arbitration is not a matter of public record. It is private and confidential There is no court reporter or written transcripts

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Lawyers generally prepare their cases in an extremely limited manner The rules of evidence are relaxed so that the parties have a broader scope, more expanded opportunity to tell their stories to present their cases With very few exceptions, it is much less expensive than legal litigation An arbitration time frame is substantially less than that of litigation and going to trial No jury. The Arbitrator(s) maintain neutrality and conflicts of interests Generally, all paperwork and evidence presented are destroyed after the Arbitration The arbitration and arbitration award does not have to adhere to Judicial Case precedent nor formality of traditional court proceedings In India, Arbitration is one of the most effective and trusted proceedings in regard to private dispute settlement are guided by the Arbitration & Conciliation Act, 1996. Kind of matters cannot be referred for arbitration: As per general practice, matters involving moral questions or questions of public law cannot be resolved by arbitration. For instance, the following matters are not referred to arbitration: - Matrimonial matters - Guardianship of a minor or any other person under disability - Testamentary matters - Insolvency, proceedings - Criminal proceedings - Questions relating to charity or charitable trusts - Matters relating to anti-trust or competition law - Dissolution or winding up of a company Q2. What is the role of a Conciliator. The conciliator's role in assisting parties come to an agreement is to: The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute. The conciliator shall be guided by principles of objectivity, fairness and justice, giving consideration to, among other things, the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties.

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The conciliator may conduct the conciliation proceedings in such a manner as he considers appropriate, taking into account the circumstances of the case, the wishes the parties may express, including any request by a party that the conciliator hear oral statements, and the need for a speedy settlement of the dispute. The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the masons therefore Q3. What are the unfair trade practices under the MRTP Act An unfair trade practice means a trade practice, which, for the purpose of promoting any sale, use or supply of any goods or services, adopts unfair method, or unfair or deceptive practice. Unfair practices may be categorised as under: 1.False Representation The practice of making any oral or written statement or representation which: 1.Falsely suggests that the goods are of a particular standard quality, quantity, grade, composition, style or model; 2.Falsely suggests that the services are of a particular standard, quantity or grade; 3.Falsely suggests any re-built, second-hand renovated, reconditioned or old goods as new goods; 4.Represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which they do not have; 5.Represents that the seller or the supplier has a sponsorship or approval or affiliation which he does not have; 6.Makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services; 7.Gives any warranty or guarantee of the performance, efficacy or length of life of the goods, that is not based on an adequate or proper test; 8.Makes to the public a representation in the form that purports to bewarranty or guarantee of the goods or services, a promise to replace, maintain or repair the goods until it has achieved a specified result, if such representation is materially misleading or there is no reasonable prospect that such warranty, guarantee or promise will be fulfilled

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9.Materially misleads about the prices at which such goods or services are available in the market; or 10.Gives false or misleading facts disparaging the goods, services or trade of another person.

2.False Offer Of Bargain Price Where an advertisement is published in a newspaper or otherwise, whereby goods or services are offered at a bargain price when in fact there is no intention that the same may be offered at that price, for a reasonable period or reasonable quantity, it shall amount to an unfair trade practice. The 'bargain price', for this purpose means: 1.the price stated in the advertisement in such manner as suggests that it is lesser than the ordinary price, or 2.the price which any person coming across the advertisement would believe to be better than the price at which such goods are ordinarily sold. 3.Free Gifts Offer And Prize Scheme

The unfair trade practices under this category are: 1.Offering any gifts, prizes or other items along with the goods when the real intention is different, or 2.Creating impression that something is being offered free alongwith the goods, when in fact the price is wholly or partly covered by the price of the article sold, or 3.Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or skill, with real intention to promote sales or business. 4.Non-Compliance Of Prescribed Standards Any sale or supply of goods, for use by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by some competent authority, in relation to their performance, composition, contents, design, construction, finishing or packing, as are necessary to prevent or reduce the risk of injury to the person using such goods, shall amount to an unfair trade practice. 5.Hoarding, Destruction, Etc. Any practice that permits the hoarding or destruction of goods, or refusal to sell the goods or provide any services, with an intention to raise the cost of those or other similar goods or services, shall be an unfair trade practice.

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Q4. What are essentials of a valid offer. A proposal is an expression of will or intention to do or not to do something. It is also called an "offer". It is one of the essential elements of an agreement. It is the very basis of the contract. It becomes a promise when it accepted. Section 2 (a) of the Contract Act defines the proposal as "when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other, to such act or abstinence, he is said to make a proposal". The person making the proposal is called the proposer or offer or the promisor. The person to whom the proposal is made is called the offeree or promisee. For example; Sunil offers to sell his car to Padmaja for Rs. 50000. This is a proposal. Sunil is the offeror and Padmaja is the offeree. An offer may be express or implied. An offer which is expressed by words, written or spoken, is called an express offer. An offer which is expressed by conduct is called an implied offer. An offer may be positive or negative. It may be in the form of a statement or a question. for example; Sridhar says to Radhika that he will sell his scooter to her for Rs.20000. This is an express offer. The Karnataka State Road Transport Corporation runs omnibuses on various routes to carry passengers at the scheduled fares. This is an implied offer by KSRTC. The offer must be made in order to create legal relations otherwise there will be an agreement. If an offer does not give rise to legal obligations between the parties it is not a valid offer in the eye of law. In business transactions there is a presumption that the parties propose to make legal relationships. For example a person invite to another person to diner if the other person accepts the invitation then it is not any legal agreement between the parties it is social agreement. An offer must be definite and clear. If the terms of an offer are not definite and clear it cannot be called a valid offer. If such offer is accepted it cannot create a binding contract. An agreement to agree in future is not a contract because the terms of an agreement are not clear. A person has two motorbikes. He offers to another person to sell his one bike for a certain price then it is not a legal and valid offer because there is an ambiguity in the offer that which motorcycle the person wants to sell. There is a difference between the offer and invitation of offer. Sometime people offer the invitation for the sale. Essentials of a valid offer:

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

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whether the offer is general or specific. The offeror may communicate the offer by choosing any available means such as a word of mouth, mail, telegram, messenger, a written document, or even signs and gestures. Communication may also be implied by his conduct. A person can accept the offer only when he knows about it. If he does not know, he cannot accept it. An acceptance of an offer, in ignorance of the offer, is no acceptance at all. It should be noted that an invitation to offer is not an offer. The following are only invitations to offer but not actual offers: - Invitations made by a trade for the sale of goods. - A price list of goods for sale. - Quotations of lowest prices. - An advertisement to sell goods by auction. - An advertisement inviting tenders. - Display of goods with price-tags attached. - Railway time-table. - Prospectus issued by a company. - Loud speaker announcements.

Q5. Find out a case where a person appealed under the Consumer protection Act and won. The Consumer Protection Act was born in 1986. It is described as a unique legislation of its kind ever enacted in India to offer protection to the consumers. The Act is claimed to have been designed after an in-depth study of consumer protection laws and arrangements in UK, the USA, Australia and New Zealand. The main objective of this Act is to provide better protection to the consumers. Unlike other laws, which are punitive or preventive in nature the provisions of this Act are compensatory in nature. The Act intends to provide simple, speedy and inexpensive re-dressal to the consumers grievances. Q6. What does the Information Technology Act enables. (i) to provide legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referred to as electronic commerce, which involves the use of alternatives to paper-based methods of communication and storage of information; (ii) to facilitate electronic filing of documents with the government agencies; (iii) to facilitate electronic storage of data in place of paper-based methods of storage of data.

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(iv) to amend the Indian Penal Code, the Indian Evidence Act, 1872, the Bankers Books Evidence Act, 1891, and the Reserve Bank of India Act, 1934, and (v) to provide for matters connected therewith or incidental thereto.