assignment legal aspects

8/7/2019 Assignment Legal Aspects

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Legal Aspects of Business

Q.1 Distinguish between fraud and misrepresentation.

Ans : Meaning of fraud (Secs.17 and 19)

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 (Secs.18-19)

Misrepresentation is also known as simple misrepresentation whereas fraud is known asfraudulent 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 theother 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.

Ans : Remedies for Breach of Contract

When someone breaches a contract, the other party is no longer obligated to keep its endof 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 amerchant, 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other party may treat the contract as rescinded.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.

Damages (Sec.75):Another relief or remedy available to the promisee in the event of abreach of promise by the promisor is to claim damages or loss arising to him therefrom.

Damages under Sec.75 are awarded according to certain rules as laid down in Secs.73-74.

Sec.73 contains three important rules: (i) Compensation as general damages will be

awarded only for those losses that directly and naturally result from the breach of thecontract. (ii) Compensation for losses indirectly caused by breach may be paid as special

damages if the party in breach had knowledge that such losses would also follow from


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such act of breach. (iii) The aggrieved party is required to take reasonable steps to keep

his losses to the minimum.

The most common remedy for breach of contracts:The usual remedy for breach ofcontracts is suit for damages. The main kinds of damages awarded in a contract suit are

ordinary damages. This is the amount of money it would take to put the aggrieved partyin 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 thecontract.

In addition to the rights of a seller against goods provided in Secs.47 to 54, the seller has

the following remedies against the buyer personally. (i) suit for price (Sec.55); (ii)

damages for non-acceptance of goods (Sec.56); (iii) suit for interest (Sec.56).

Suit for price (Sec.55)

Where under a contract of sale the property in the goods has passed to the buyer and thebuyer wrongfully neglects or refuses to pay the price, the seller can sue the buyer for the

price of the goods. Where the property in goods has not passed to the buyer, as a rule, theseller cannot file a suit for the price; his only remedy is to claim damages.

Suit for damages for non-acceptance (Sec.56)

Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller

may sue him for damages for non-acceptance. Where the property in the goods has notpassed to the buyer and the price was not payable without passing of property, the seller

can only sue for damages and not for the price. The amount of damages is to be

determined in accordance with the provisions laid down in Sec.73 of the Indian ContractAct, 1872. Thus, where there is an available market for the goods prima facie, thedifference between the market price and the contract price can be recovered.

Suit for interest (Sec.61)

When under a contract of sale, the seller tenders the goods to the buyer and the buyer

wrongfully refuses or neglects to accept and pay the price, the seller has a further right toclaim interest on the amount of the price. In the absence of a contract to the contrary, the

court may award interest at such rate as it thinks fit on the amount of the price. The

interest may be calculated from the date of the tender of the goods or from the date on

which the price was payable. It is obvious that the unpaid seller can claim interest onlywhen he can recover the price, i.e., if the sellers remedy is to claim damages only, then

he cannot claim interest.

Buyers remedies against seller

The buyer has the following rights against the seller for breach of contract: (i)damages for non-delivery (Sec.57); (ii) right of recovery of the price; (iii) specific


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performance (Sec.58); (iv) suit for breach of condition; (v) suit for breach ofwarranty (Sec.59); (vi) anticipatory breach (Sec.60); (vii) recovery of interest(Sec.61).)

Q.3 Distinguish between indemnity and guarantee.

Ans: Distinction between a contract of guarantee and a contract of indemnity. L.C.

Mather in his book Securities Acceptable to the Lending Banker has very briefly, butexcellently, brought out the distinction between indemnity and guarantee by the

following illustration. A contract in which A says to B, If you lend 20 to C, I will see

that your money comes back is an indemnity. On the other hand undertaking in thesewords, If you lend 20 to C and he does not pay you, I will is a guarantee. Thus, in a

contract of indemnity, there are only two parties, indemnifier and indemnified. In case of

a guarantee, on the other hand, there are three parties, the principal debtor, the creditorand the surety. Other points of difference are:

1. The liability of a promissory is primary and independent in a contract of indemnity. In

a contract of guarantee, the liability of the surety is secondary, the primary liability being

that of the principal debtor.

2. In the case of guarantee, there is an existing debt or obligation, the performance ofwhich is guaranteed by the surety. In case of indemnity the possibility of any loss

happening is a contingency against which the indemnifier undertakes to indemnify.

3. In a contract of guarantee, after discharging the debt, the surety is entitled toproceed against the principal debtor in his own name while in case of indemnity,the indemnifier cannot proceed against third parties in his own name, unlessthere is an assignment in his favour.

Q.4 What is the distinction between cheque and bill of exchange.

Ans:

Bill of exchange

A bill of exchange is defined by Sec.5 as an instrument in writing, containing anunconditional 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.

Cheques

A cheque is the usual method of withdrawing money from a current account with abanker. Savings bank accounts are also permitted to be operated by cheques provided

certain minimum balance is maintained. A cheque, in essence, is an order by the

customer of the bank directing his banker to pay on demand, the specified amount, to orto the order of the person named therein or to the bearer. Sec.6 defines a cheque. The

Amendment Act 2002 has substituted new section for Sec.6. It provides that a cheque is


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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.

Check Bill of ExchangeIt is drawn on a banker It may be drawn on any party or

individual.

It has three parties - the drawer, thedrawee, and payee.

There are three parties - the drawer, thedrawee, and the payee.

It is seldom drawn in sets Foreign bills are drawn in sets

It does not require acceptance by the

drawee.

It must be accepted by the drawee

before he can be made liable to pay thebill

Days of grace are not allowed to a

banker

Three days of grace are always allowed

to the drawee.

No stamp duty is payable on checks Stamp duty has to be paid on bill ofexchange.

It is usually drawn on the printed It may be drawn in any paper and neednot necessarily be printed.

Q.5 Distinguish between companies limited by shares and companies limited byguarantee.

Ans :

A company limited by guarantee is normally incorporated for non-profit making

functions. The company has no share capital. A company limited by guarantee hasmembers 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. The Memorandum normally includes a non-

profit distribution clause and these companies are usually formed by clubs, professional,trade or research associations.

The main difference between a company limited by guarantee and a company limited by

shares is that the company has no share capital.

Q.6 what is the definition of cyber crime.

Ans:

Computer crime, orcyber crime, refers to any crime that involves a computer and a

network. The computer may have been used in the commission of a crime, or it may bethe target. Net crime refers, more precisely, to criminal exploitation of the Internet.


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Issues surrounding this type of crime have become high-profile, particularly those

surrounding hacking, copyright infringement, child pornography, and child grooming.

There are also problems of privacy when confidential information is lost or intercepted,lawfully or otherwise.

Cyber crime includes anything from downloading illegal music files to stealing millionsof dollars from online bank accounts. Cyber crime also includes non-monetary offences,

such as creating and distributing viruses on other computers or posting confidentialbusiness information on the Internet.

Perhaps the most prominent form of cyber crime is identity theft, in which criminals usethe 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, where they are asked to enter personal information. This includes logininformation, 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 Webaddress of a site to make sure it is legitimate before entering your personal information.

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