Legal Aspect of Bussiness

8/2/2019 Legal Aspect of Bussiness

1/17

Sikkim Manipal University MB0051 legal Aspects of business

Semester: 3 - Assignment Set: 1

M A H A V E E R A G A R W A L R O L L N O . 5 8 1 1 1 7 9 3 1 Page 1

Q.1 Distinguish Between fraud and misrepresentation.

Answer

FraudFraud means and includes any of the following acts committed by

a party to a contract with intent to deceive the other party thereto

or to induce him to enter into a contract:

1. The suggestion as a fact of that which is not true by one who

does not believe it to be true;

2. Active concealment of a fact by one having knowledge or beliefof the fact;

3. Promise made without any intention of performing it; (iv) any

other act fitted to deceive;

4. Any such act or omission as the law specifically declares to be

fraudulent.

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.


2/17




Difference between Fraud and Misrepresentation:-

The main difference in fraud and misrepresentation are,

1) In misrepresentation the person making the false statementbelieves 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 ofthe 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 tospeak or the relations between parties is fiduciary. Under no

circumstances can silence be considered as misrepresentation.

6) The party complaining of misrepresentation cant 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.


3/17




Q.2. What are remedies of breach of contract ?

ANS- When someone breaches a contract, the other party is no

longer obligated to keep its end of the bargain. From there, thatparty 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 foralternative 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 promise in the event of a breach of

promise by the promise is to claim damages or loss arising to him

there from. 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

the contract.

(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 such act of breach.


4/17




(iii) The aggrieved party is required to take reasonable steps to

keep his losses to the minimum. which the price was payable. It is

obvious that the unpaid seller can claim interest only when he canrecover 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; (ii) right of recovery of the

price; (iii) specific performance ; (iv) suit for breach of condition;

(v) suit for breach of warranty ; (vi) anticipatory breach; (vii)recovery of interest .)


5/17


6/17




the other from loss caused to him by the contract of the

promissory himself, or by the conduct of any other person. 'A'

contracts to indemnify B against the consequences of anyproceedings which C may take against B in respect of a certain

sum of 20000 rupees. This is a contract of indemnity.

A contract of guarantee is defined in Section 126 of the Act. It is 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 the surety; the person in respect of whose

default the guarantee is given is called the principal debtor andthe person to whom the guarantee is given is called the creditor.

In contract of indemnity there are only two parties viz the

indemnifier or provisory and the indemnity holder or promise. In

contract of guarantee there are three parties viz the creditor,

principal debtor and surety.

In indemnity, there is primary and independent liability. In

guarantee the surety has collateral liability.

There is no existing debt generally in the case of contract of

indemnity where there is existing debt in the case of guarantee.

There are two contracts in a contract of indemnity where there are

three contracts in the case of guarantee.

In Indemnity the promissory is discharged by payment. In

guarantee the surety is discharged by payment made by principal

debtor. Indemnifier may have some interest in the transaction

where the surety will not have any connection with the

transaction.


7/17




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 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.

Cheque A cheques is the usual method of withdrawing money

from a current account with a banker.

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

or to 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 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.


8/17




Cheque Bill of Exchange

It is drawn on a banker It may be drawn on any party or

individualIt has three parties - the drawer,

the drawee, and payee.

It has three parties - the drawer,

the drawee, and 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 the bill

Days of grace are not allowed toa banker to the drawee.

Three days of grace are alwaysallowed

No stamp duty is payable on

checks

Stamp duty has to be paid on

bill of exchange.

It is usually drawn on the printed It may be drawn in any paper

and need not necessarily be

printed


9/17




Q.5 DISTINGUISHES BETWEEN COMPANIES LIMITED BY

SHARES AND COMPANIES LIMITED BY GUARANTEE.

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

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.

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

Rs.100 each, all of which remains unpaid at the time of

dissolution, then they would be required to pay Rs.10000 to the

company.

Most companies limited by guarantee have a constitution which

states that each member is only required to pay Rs.100 should it

be dissolved.


10/17




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.


11/17




Q.6 What is the definition of cyber crime?

ANS:- Computer crime, or cyber crime, refers to any crime thatinvolves a computer and a network. The computer may have

been used in the commission of a crime, or it may be the target.

Net crime refers, more precisely, to criminal exploitation of the

Internet. 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 orintercepted, lawfully or otherwise. Cyber crime includes anything

from downloading illegal music files to stealing millions of dollars

from online bank accounts. Cyber crime also includes non-

monetary offences, such as creating and distributing viruses on

other computers or posting confidential business information on

the Internet.

Perhaps the most prominent form of cyber crime 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, 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.


12/17




CYBERCRIME

Cybercrime is defined as crimes committed on the internet usingthe computer as either a tool or a targeted victim. It is very difficult

to classify crimes in general into distinct groups as many crimes

evolve on a daily basis. Even in the real world, crimes like rape,

murder or theft need not necessarily be separate. However, all

cybercrimes involve both the computer and the person behind it

as victims, it just depends on which of the two is the main target.

Hence, the computer will be looked at as either a target or tool forsimplicitys sake. For example, hacking involves attacking the

computers information and other resources. It is important to take

note that overlapping occurs in many cases and it is impossible to

have a perfect classification system

Computer as a tool

When the individual is the main target of Cybercrime, the

computer can be considered as the tool rather than the target.These crimes generally involve less technical expertise as the

damage done manifests itself in the real world. Human

weaknesses are generally exploited. The damage dealt is largely

psychological and intangible, making legal action against the

variants more difficult. These are the crimes which have existed

for centuries in the offline. Scams, theft, and the likes have

existed even before the development in high-tech equipment. Thesame criminal has simply been given a tool which increases his

potential pool of victims and makeshim all the harder to trace and

apprehend.

Computer as a target


13/17




These crimes are committed by a selected group of criminals.

Unlike crimes using he computer as a tool, these crimes requires

the technical knowledge of the perpetrators. These crimes arerelatively new, having been in existence for only as long as

computers have which explains how unprepared society and the

world in general is towards combating these crimes. There are

numerous crimes of this nature committed daily on the internet.

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.

Cyber crime encompasses any criminal act dealing with

computers and networks (called hacking). Additionally, cyber

crime also includes traditional crimes conducted through the

Internet. For example; hate crimes, telemarketing and Internet

fraud, identity theft, 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. 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 Cyber crime refers to all the activities done

with criminal intent in cyberspace or using the medium of Internet.

These could be either the criminal activities in the conventional

sense or activities, newly evolved with the growth of the new

medium. Any activity, which basically offends human sensibilities,

can be included in the ambit of Cyber crimes. Because of the

anonymous nature of Internet, it is possible to engage in a variety

of criminal activities with impunity, and people with intelligence,


14/17




have been grossly misusing this aspect of the Internet to commit

criminal activities in cyberspace. The field of cyber crime is

just emerging and new forms of criminal activities in cyberspaceare coming to the forefront each day. For example, child

pornography on Internet constitutes one serious cyber crime.

Similarly, online pedophiles, using Internet to induce minor

children into sex, are as much cyber crimes as any others.

Categories of cyber crimes:

Cyber crimes can be basically divided in to three major

categories:

1. Cyber crimes against persons;

2. Cyber crimes against property; and

3. Cyber crimes against government.

1. Cyber crimes against persons: Cyber crimes committed

against persons include various crimes like transmission of child-

pornography, harassment of any one with the use of a computer

and cyber stalking. The trafficking, distribution, posting, and

dissemination of obscene material including pornography,

indecent exposure, and child pornography constitute the most

important cyber crimes known today. These threaten to

undermine the growth of the younger generation and also leave

irreparable scars on the minds of the younger generation, if not

controlled.

Similarly, cyber harassment is a distinct cyber crime. Various

kinds of harassments can and do occur in cyberspace, or through

the use of cyberspace. Harassment can be sexual, racial,


15/17




religious, or of any other nature. Cyber harassment as a crime

also brings us to another related area of violation of privacy of

citizens. Violation of privacy of online citizens is a cyber crime of agrave nature.

Cyber stalking: The Internet is a wonderful place to work, play

and study. The net is merely a mirror of the real world, and that

means it also contains electronic versions of real life problems.

Stalking and harassment are problems that many persons

especially women, are familiar within real life. These problemsalso occur on the Internet, in the form of cyber stalking or online

harassment.

2. Cyber crimes against property: The second category of

Cyber crimes is Cyber crimes against all forms of property. These

crimes include unauthorized computer trespassing through

cyberspace, computer vandalism, and transmission of harmful

programs and unauthorized possession of computerized

information.

3. Cyber crimes against Government: The third category of

Cyber crimes is Cyber crimes against Government. Cyber

Terrorism is one distinct kind of crime in this category. The growth

of Internet has shown that individuals and groups to threaten

international governments as also to terrorize the citizens of a

country are using the medium of cyberspace. This crime

manifests itself into Cyber Terrorism when an individual cracks

into a government or military maintained website, for the purpose

of perpetuating terror.


16/17




Since Cyber crime is a newly emerging field, a great deal of

development has to take place in terms of putting into place the

relevant legal mechanism for controlling and preventing cybercrime. The courts in United States of America have already begun

taking cognizance of various kinds of fraud and cyber crimes

being perpetrated in cyberspace. However, much work has to be

done in this field. Just as the human mind is ingenious enough to

devise new ways for perpetrating crime, similarly, human

ingenuity needs to be canalized into developing effective legal

and regulatory mechanisms to control and prevent cyber crimes.A criminal mind can assume very powerful manifestations if it is

used on a network, given the reach ability and size of the network.

Legal recognition granted to Electronic Records and Digital

Signatures would certainly boost E Commerce in the country. It

will help in conclusion of contracts and creation of rights and

obligations through electronic medium. In order to guard against

the misuse and fraudulent activities over the electronic medium,

punitive measures are provided in the Act. The Act has

recognized certain offences, which are punishable. They are:

Tampering with computer source documents

Any person, who knowingly or intentionally conceals, destroys or

alters or intentionally or knowingly causes another person to

conceal, destroy or alter any -

1. Computer source code when the computer source code is

required to be kept by law for

2. the time being in force,

3. Computer programme,

4. Computer system and


17/17



5. Computer network.

- Is punishable with imprisonment up to three years, or with fine,which may extend up to two lakh rupees, or with both.

Hacking with computer system:

Hacking with computer system is a punishable offence under the

Act. It means any person intentionally or knowingly causes

wrongful loss or damage to the public or destroys or deletes or

alters any information residing in the computer resources ordiminishes its value or utility or affects it injuriously by any means,

commits hacking.

Such offenses will be punished with three years imprisonment or

with fine of two lakh rupees or with both.Publishing of information

which is obscene in electronic form (Sec 67): Whoever publishes

or transmits or causes to be published in the electronic form, any

material which is lascivious or appeals to prurient interest or if its

effect is such as to tend to deprave and corrupt persons who are

likely, having regard to all relevant circumstances, to read, see or

hear the matter contained or embodied in it shall be punished on

first conviction with imprisonment for a term extending up to 5

years and with fine which may extend to one lakh rupees. In case

of second and subsequent conviction imprisonment may extend

to ten years and also with fine which may extend up to two lakh

rupees.

Date post:	05-Apr-2018
Category:	Documents
Upload:	mahaveer2010
View:	230 times
Download:	0 times

Legal Aspect of Bussiness

Documents