Assignment Set- 1

Ans.1 Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading. Misrepresentation means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation. A finding of misrepresentation allows for a remedy of rescission and sometimes damages depending on the type of misrepresentation. Difference between fraud and misinterpretation:1. In misrepresentation the person making the false statement believes it to be true. In fraud the false statement is person who knows that it is false or he does not 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. 6. The party complaining of misrepresentation can t avoid the contract if he had the means to discover the truth with ordinary diligence. 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 diligence.

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Ans. 2 Remedies in Contract Act When a party to the contract makes a breach of contract, there are two possible alternatives available to the other party. Firstly to bring an action for the breach of contract, and secondly he may bring an action for specific performance of the contract.  Compensation In Case Of Breach 1. Compensation for loss or damage caused by breach of contract. For the breach of contract damages is the most appropriate remedy. When a contact has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote or indirect loss or damage sustained by reason of the breach. 2. Compensation for breach of contact where penalty stipulated for. When a contract has been broken and a sum has been named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether actual damage or loss is proved to have been caused thereby, to receive from the party who as broken the contract reasonable compensation not exceeding the amount so named or, the penalty stipulated for. 3. Party rightfully rescinding contract entitled to compensation. A person who rightfully rescinds a contract is entitled to compensation for any damage, which he has sustained through non-fulfillment of the contract.  Specific Performance Specific performance means actual execution of the contract as agreed between the parties. Specific Performance of any contract may, in the discretion of the court be enforced in the following situations

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y y

When there exists no standard for ascertaining the actual damage caused by the nonperformance of the act agreed to be done. When the act agreed to be done is such that compensation in money for its nonperformance would not afford adequate relief.

 Exceptions: Where compensation would be adequate relief are: 1. Agreement by a landlord for repair of the rented premises. 2. Contract for the mortgage of immovable property. 3. Contract for the sale of any goods, for instance machinery or buffaloes. However, a contract to deliver rare coins would be specifically enforceable, as compensation would not constitute adequate relief in such a case. 4. An agreement to pay money by installments. 5. An agreement for lending money.  Besides The Following:
y

A contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms, cannot be specifically enforced. Another situation when a contract cannot be specifically enforced is where ''the contract is in its nature determinable''. A contract is said to be determinable, when a party to the contract can put it to an end. A contract the performance of which involves the performance of a continuous duty, which the Court cannot supervise, cannot be specifically enforced.

 Persons who Cannot obtain Specific Performance. 1. The specific performance of a contract cannot be obtained in favor of a person who could not be entitled to recover compensation for the breach of contract. 2. Specific performance of a contract cannot be enforced in favor of a person: i. who has become incapable of performing the contract that on his part remains to be performed, or ii. who violates any essential term of the contract that on his part remains to be performed, or iii. who acts in fraud of the contract, or iv. Who willfully acts at variance with, or in subversion, of the relation intended to be established by the contract.

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Ans.3 When getting a bank loan, a person is often asked to provide a guarantee. Guarantee an indemnity are often used to reinforce each other. Distinction between Indemnity & Guarantee Indemnity  A contract of indemnity is one in which the party sought to be made liable him or herself undertakes a primary liability to make good another s loss, which loss may or may not result from the act of another (third) person.  It is original and independent.  An indemnity is a personal security undertaking given by a third party, but under an indemnity the surety s obligation is independent of debtor/creditor relationship. It is therefore a primary liability, not dependent on the debtor s default.  Indemnity is not given by repayment after payment. Indemnity requires that the party to be indemnified shall never be called upon to pay.  In a contract of indemnity not only is there no requirement for a default by a third party as a condition of liability but there may not even be a third party involved for either the creation or exercise of the right. Guarantee

 A contract of guarantee is an undertaking

by which a person accepts what is sometimes called a secondary liability to answer for the debt or default of another person who is primarily liable to a third. The contract of guarantee is between the first and the third persons.

 A contract of guaranty is a collateral

undertaking, and presupposes an original contract.

 In a guarantee the liability arises at the

point of time when the principal borrower or debtor defaults on his obligation. Where there is liability even though there is no default or breach by the principal debtor, it is not a contract of guarantee.

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Ans.4 Distinction between a Cheque and a bill of exchange

Cheque

y y y y y y y

It is drawn on a banker It has three parties - the drawer, the drawee, and payee. It is seldom drawn in sets It does not require acceptance by the drawee. Days of grace are not allowed to a banker No stamp duty is payable on checks It is usually drawn on the printed form

Bill of exchange y y y y y y y It may be drawn in any paper and need not necessarily be printed. There are three parties - the drawer, the drawee, and the payee. 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 to the drawee. Stamp duty has to be paid on bill of exchange. It may be drawn on any party or individual.

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Ans.5 A guarantee company does not have shares. The members of the company do not own the company but are the decision makers for the company. This means that the profits of the company cannot be distributed to the members through dividends and that they do not have any claim upon the assets of the company. The members of the company may appoint Directors often called 'Trustees', who are given the responsibility for creating and implementing policies for the company. The Directors also enjoy limited liability, provided that they have not acted negligently, or fraudulently, and have not allowed the guarantee company to continue trading when it was insolvent (this is known as "wrongful trading"). The main difference between a 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 being wound up, normally.

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

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Companies limited by guarantee however, are non-profit making organizations and are usually registered to provide a specified service to the public or a particular segment of the population. 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. Objects of companies limited by guarantee Companies limited by guarantee however, often have very specific objects and detailed rules pertaining to which areas they can engage in. Charities, which are often of this type, 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. By having a defined set of objects, companies limited by guarantee which are seeking to raise funds might find it easier to do so because they would be able to demonstrate that sufficient restrictions exist to protect the donor s intentions. Removing the Word Limited Companies limited by guarantee can have the word limited removed from their name under section 30 of the Companies Act. Company directors, secretary and declaring Both types of companies are bound by the same requirements to have at least one director, a secretary and a declaring at the time of incorporation and throughout any period of its existence. When forming a company limited by guarantee, members are listed in the same manner in which shareholders would be, even though no allotments are made to them.

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Ans.6 Cybercrime is criminal activity done using computers and the Internet. This includes anything from downloading illegal music files to stealing millions of dollars from online bank accounts. Cybercrime also includes non-monetary offenses, such as creating and distributing viruses on other computers or posting confidential business information on the Internet. Perhaps the most prominent form of cybercrime 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 methods lure users to fake websites (that appear to be legitimate), where they are asked to enter personal information. This includes login information, such as usernames and passwords, phone numbers, addresses, credit card numbers, bank account numbers, and other information criminals can use to "steal" another person's identity. For this reason, 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. Because cybercrime covers such a broad scope of criminal activity, the examples above are only a few of the thousands of crimes that are considered cybercrimes. While computers and the Internet have made our lives easier in many ways, it is unfortunate that people also use these technologies to take advantage of others. Therefore, it is smart to protect yourself by using antivirus and spyware blocking software and being careful where you enter your personal information.

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Assignment Set- 2
Ans.1 DISPUTES EXCLUDED FROM ARBITRATION Generally speaking all disputes of a civil nature can be referred to Arbitration e.g. breach of a contract, question of assignment or right to hold premises etc. However, certain disputes where the law has given jurisdiction to determine certain matters to specified tribunal only cannot be referred to arbitration. An illustrative list of such matters is given below:
y y y y y y y y y y

Testamentary matters involving questions about validity of a will. Disputes relating to appointment of a guardian. Disputes pertaining to criminal proceedings Disputes relating to Charitable Trusts Winding up of a company Matters of divorce or restitution of conjugal rights Lunacy proceedings Disputes arising from an illegal contract Insolvency matters, such as adjudication of a person as an insolvent. Matters falling within the preview of the M.R.T.P. Act.

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Ans.2 ROLE OF CONCILIATOR The conciliator induces the parties to a course of action? His intervention in the dispute creates for the parties a situation different from the direct confrontation they had had before. The conciliator establishes for the parties a need to re-examine their positions in this new situation and to consider possible alternatives or options. The need to make a choice of possible options continues after his initial intervention; and depending on the shifting pressures on the parties he can sharpen or blunt the need to make a choice. As a Discussion Leader: As a discussion leader the conciliator reduces irrationality and antagonism between the parties. He guides them towards a problem-solving approach to their dispute; he ensures that they discuss their differences in as friendly a manner as possible; he helps them to analyze their problem, always striving to keep the analysis on rational ground; he identifies the elements of the problem, both for the parties benefit and for his own. As a Safety Valve: The conciliator places him in the position of an alternative target when he feels that the parties are in an aggressive mood. By setting a substitute target, the parties can achieve an emotional release without direct and immediate damage to the negotiations. As a Communication Link: The conciliator fulfils an important function as a communication link between the parties: serving as a communication link may either constitute his main conciliatory effort or be a contribution to it. He not only works as a conduit through which messages relayed from one side to the other, are passed, but he also provides a thorough explanation and interprets the intention of the party. As a Stimulator Sensing the need for positive action, the conciliator can provide necessary impulse; he makes a concise statement, supplies some date, gives a hint or suggestion. He crystallizes changes of opinions, in course of discussions, by intervening at the appropriate moment and giving such ideas a concrete form.

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As an Adviser: The conciliator tries to remove misunderstandings regarding the other position, intentions and capabilities. He tries to see that such misinterpretations do not occur and that each side thoroughly understands the others point of view obtains a picture of the opponent strength and realizes its own limitations and weaknesses. As a Promoter of Collective Bargaining: While intervening in a dispute, he is not only concerned with obtaining settlement, but often he assists and promotes collective bargaining and helps and guides the parties in the development of their relationship. Thus, a conciliator has to play a wide variety of roles of roles. When a strike or lock-out is threatened it is his duty to advise the party concerned on the legality of the proposed action and to use all his powers of pursuing so that at least the action can be postponed while conciliation is going on. He makes all efforts to persuade the parties against violent or disorderly behavior in carrying out the proposed action which might lead to bitterness. He also tries to bring the parties together to negotiate before the factory is shut down or any damage to equipment or property is done. He also ensures that work is immediately resumed when the strike or lock-out is terminated. The conciliator can:
y y y y y

contact and interview disputing parties over the telephone provide information about the Residential Tenancies and Rooming Accommodation Act 2008 assist the parties in the exchange of information including relevant documents such as receipts facilitate the resolution of disputes by sharing offers and suggesting options Provide a notice of unresolved dispute to enable an application to the tribunal for a hearing where a dispute remains unresolved.

Conciliators do not:
y y y y y

make decisions for disputing parties make judgments about who is right, 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.

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Ans.3 Unfair practices may be categorized 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 beo warranty or guarantee of the goods or services, o 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 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.

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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 along with 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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Ans 4. Essentials of a Valid Offer 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. Hence, an offer to perform social, religious or moral acts without any intention of creating legal relations will not be a valid offer. Express or Implied An Offer may be made either by words or by conduct. If the Offer is expressed by use of words, either spoke or written, it is called an 'Express Offer'. If the offer is inferred by the conduct of a person, it is an 'Implied Offer'. Capable of creating Legal Relations An Offer should be capable of creating legal consequences. Hence, social or moral agreements are not a valid offer in a contract. Terms must be certain and not vague An offer is not a valid offer if the terms mentioned in the offer are not definite and certain. The offer must not be vague or ambiguous. Example: An agreement to agree in future is not a contract. Offer may be specific or General An offer may be specific or general. If the offer is made to an individual or a body of individuals it is called a specific offer. If the offer is made to an unascertained individual, it is a general offer. Jurist Salmond called specific offers as "offers to individuals" and general offers as "offers at large". Must be communicated to the Offered An Offer is effective only if it is communicated to the Offered.

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Should not contain the term non-compliance would amount to acceptance The offer should not say that if acceptance is not communicated by a specified date the offer would be presumed to have been accepted. If the offered does not reply, there is no contract. Can be subject to any terms or conditions An Offeror can prescribe the mode of acceptance to the offer. He can also make any number of terms or conditions in the offer. The offeree will have to accept all the terms of the offer in the mode prescribed in a contract. Offer different from Quotation or Invitation An Offer should be distinct from a invitation or a quotation. Two incidental cross offers does not make a contract When two parties make offers to each other, the offers are known as cross offers. They do not constitute acceptance of one's offer by the other.  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 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.

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 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.

It should be noted that an invitation to offer is not an offer. The following are only invitations to offer but not actual offers;

1. Invitations made by a trade for the sale of goods. 2. A price list of goods for sale. 3. Quotations of lowest prices. 4. An advertisement to sell goods by auction. 5. An advertisement inviting tenders. 6. Display of goods with price-tags attached. 7. Railway time-table. 8. Prospectus issued by a company. 9. Loud speaker announcements. Offer and Tender:
A tender is not an offer to the public. It is in the nature of a continuing offer. It is different from general offer. A person who invites tenders for the purchase or sale of goods does not make an offer. The person who submits the tender is said to make an offer.

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Ans.5. National Insurance Company Limited, New Delhi vs (1) Venketshwera Distributor, Represented by its Managing Partner, R. Satish Kumar, Hyderabad; (2) Manager, State Bank of Hyderabad [NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, 11 Apr 2011] Consumer Protection - Insurance - Consumer Protection Act, 1986 - Repudiation of Insurance Claim - Challenged - Respondent no. 1 took insurance policy of Rs. 6 lakhs from the appellant (Insurance Company) in respect of the stock in the shop of respondent no. 1 - Subsequently, respondent no. 1 shifted his business from impugned shop to new shop at another place - Due to heavy rains the new shop were filled with water and stock of the respondent no. 1 was damaged and became useless - Respondent no. 1 filed a claim for compensation of Rs. 6 lakhs from the appellant along with interest @ 18% p.a - Appellant repudiated said claim of respondent no. 1 on the ground that there was flagrant violation of the terms of the insurance policy as respondent no. 1 was under obligation to inform about the date of the intended change of the premises and to obtain proper endorsement on the insurance policy which could permit continuation of the liability by the appellant - State Commission held that the repudiation of the claim by the appellant was invalid and improper and respondent no. 1 was entitled to the amount of insured sum along with due interest and costs - Hence, the instant appeal - Whether respondent no. 1 was entitled to the insured amount? - Held, respondent no. 1 gave mere intimation to the appellant regarding shifting of the impugned shop to new address - There was no valid acceptance of such offer by the appellant - There was no opportunity for the appellant to examine whether the business place in new shop was safe enough to continue the insurance cover - Respondent no. 1 could not have assumed acceptance of his proposal without obtaining the necessary endorsement allowing change of the premises by the appellant - Hence, the compensation ought not to have been granted to the respondent no. 1 when there was no valid contract subsisting between the appellant and respondent no. 1 - Impugned judgment was unsustainable - Petition allowed.

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Ans.6 The Information Technology Act enables:  Legal recognition to Electronic Transaction / Record  Facilitate Electronic Communication by means of reliable electronic record  Acceptance of contract expressed by electronic means  Facilitate Electronic Commerce and Electronic Data interchange  Electronic Governance  Facilitate electronic filing of documents  Retention of documents in electronic form  Where the law requires the signature, digital signature satisfy the requirement  Uniformity of rules, regulations and standards regarding the authentication and integrity of electronic records or documents  Publication of official gazette in the electronic form  Interception of any message transmitted in the electronic or encrypted form  Prevent Computer Crime, forged electronic records, international alteration of electronic records fraud, forgery or falsification in Electronic Commerce and electronic transaction.

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