MB0051 Legal Aspects of Business Sem3,Feb 2011

8/6/2019 MB0051 Legal Aspects of Business Sem3,Feb 2011

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RollNo: 511011167

Master of Business Administration MBA Semester 3

MB0051 Legal Aspects of Business - 4 Credits

Assignment Set- 2

Q.1Q.1What are the situations which cannot beWhat are the situations which cannot bereferred to arbitration?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 hearingevidence 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 throughstatutory 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:

MB0051- Legal Aspects of Business Page 1 of 14


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RollNo: 511011167 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

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 inregard to private dispute settlement are guided by the Arbitration &

Conciliation Act, 1996.

Kind of matters cannot be referred forarbitration:

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



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RollNo: 511011167 Questions relating to charity or charitable trusts

Matters relating to anti-trust or competition law

Dissolution or winding up of a company

Indian Arbitration Act follows the guideline of:

The Geneva Convention on the Execution of Foreign Arbitral Awards, 1927

The New York Convention of 1958 on the Recognition and Enforcement of

Foreign Arbitral Awards

The Geneva Protocol on Arbitration Clauses of 1923

Q.2Q.2What is the role of a Conciliator?What is the role of a Conciliator?

Conciliator

Conciliation is a process in which the parties to a dispute, with the

assistance of a neutral third party (the conciliator), identify the disputed

issues, develop options, consider alternatives and endeavour to reach an

agreement.

The conciliator may have an advisory role on the content of the

dispute or the outcome of its resolution, but not a determinative role.The conciliator may advise on or determine the process of conciliation

whereby resolution is attempted, and may make suggestions for terms of

settlement, give expert advice on likely settlement terms, and may actively

encourage the participants to reach an agreement.

In order to understand what Parliament meant by Conciliation, we

have necessarily to refer to the functions of a Conciliator as visualized by

Part III of the 1996 Act. It is true, section 62 of the said Act deals with

reference to Conciliation by agreement of parties but sec. 89 permits the

Court to refer a dispute for conciliation even where parties do not consent,provided the Court thinks that the case is one fit for conciliation. This makes

no difference as to the meaning of conciliation under sec. 89 because; it

says that once a reference is made to a conciliator, the 1996 Act would

apply. Thus the meaning of conciliation as can be gathered from the 1996

Act has to be read into sec. 89 of the Code of Civil Procedure. The 1996 Act

is, it may be noted, based on the UNCITRAL Rules for conciliation.



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Role of conciliator:

The conciliator shall assist the parties in an independent and impartialmanner 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.

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.

Conciliators do not:

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.

Q.3Q.3What are the unfair trade practices underWhat are the unfair trade practices underthe MRTP Act?the MRTP Act?



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RollNo: 511011167 THE MONOPOLIES AND RESTRICTIVE

TRADE PRACTICES ACT, 1969 -OBJECTIVES AND POLICY:

The Monopolies and Restrictive Trade Practices Commission has been

constituted under Section 5(1) of the MRTP Act, 1969. The Commission is

empowered to enquire into Monopolistic or Restrictive Trade Practices upon

a reference from the Central Government or upon its own knowledge or

information. The MRTP Act also provides for appointment of a Director

General of Investigation and Registration for making investigations for the

purpose of enquiries by the MRTP Commission and for maintenance of

register of agreements relating to restrictive trade practices.

The MRTP Commission receives complaints both from registered consumer

and trade associations and also from individuals. Complaints regarding

Restrictive Trade Practices or Unfair Trade Practices from an association are

required to be referred to the Director General of Investigation and

Registration for conducting preliminary investigation. The Commission can

also order a preliminary investigation by the Director General of

Investigation and Registration when a reference on a restrictive trade

practice is received from the Central/State Government, or when

Commission's own knowledge warrants a preliminary investigation.Enquiries are instituted by the Commission after the Director General of

Investigation and Registration completes preliminary investigation and

submits an application to the Commission for an enquiry.

Unfair Trade Practices:

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.

1. False Representation:

The practice of making any oral or written statement or representation

which:



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Falsely suggests that the goods are of a particular standard quality, quantity,

grade, composition, style or model;

Falsely suggests that the services are of a particular standard, quantity or

grade;

Falsely suggests any re-built, second-hand renovated, reconditioned or old

goods as new goods;

Represents that the goods or services have sponsorship, approval,

performance, characteristics, accessories, uses or benefits which they do not

have;

Represents that the seller or the supplier has a sponsorship or approval or

affiliation which he does not have;

Makes a false or misleading representation concerning the need for, or the

usefulness of, any goods or services;

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;

Makes to the public a representation in the form that purports to be-

warranty 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

Materially misleads about the prices at which such goods or services are

available in the market; or

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:



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the price stated in the advertisement in such manner as suggests that it is

lesser than the ordinary price, or

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:

Offering any gifts, prizes or other items along with the goods when the real

intention is different, or

Creating impression that something is being offered free along with thegoods, when in fact the price is wholly or partly covered by the price of the

article sold, or

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 prescribedby 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 refusalto 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.

6. Inquiry Into Unfair Trade Practices:

The Commission may inquire into any unfair trade practice:



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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 legalrelationships. 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 certainprice 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 toanyone 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 theacceptor 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



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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. Theoffer or 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.

Q.5 Find out a case where a person appealedQ.5 Find out a case where a person appealedunder the Consumer protection Act andunder the Consumer protection Act andwon.won.

The Consumer Protection Act was born in 1986. It is described as aunique 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.



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The Act intends to provide simple, speedy and inexpensive re-dressal to the

consumers grievances.

The earlier principle of Caveat Emptor or let the buyer beware whichwas prevalent has given way to the principle of Consumer is King. The

origins of this principle lie in the fact that in todays mass production

economy where there is little contact between the producer and consumer,

often sellers make exaggerated claims and advertisements, which they do not

intend to fulfill. This leaves the consumer in a difficult position with very

few avenues for redressal. The onset on intense competition also made

producers aware of the benefits of customer satisfaction and hence by and

large, the principle of consumer is king is now accepted. The need to

recognize and enforce the rights of consumers is being understood andseveral laws have been made for this purpose. In India, we have the Indian

Contract Act, the Sale of Goods Act, the Dangerous Drugs Act, the

Agricultural Produce (Grading and Marketing) Act, the Indian Standards

Institution (Certification Marks) Act, the Prevention of Food Adulteration

Act, the Standards of Weights and Measures Act, the Trade and

Merchandise Marks Act, etc which to some extent protect consumer

interests. However, these laws required the consumer to initiate action by

way of a civil suit, which involved lengthy legal process proving, to be too

expensive and time consuming for lay consumers. Therefore, the need for a

more simpler and quicker access to redressal to consumer grievances wasfelt and accordingly, it lead to the legislation of the Consumer Protection

Act, 1986.

Glossary

Complaint: Complaint many allegation in writing by a complainantwith a view to obtaining any relief under the Act.

Consumer: Any person who buys any goods for consideration whichhas been paid orpromised or partly paid and partly promised.Service: Service means service of any description which is available to

potential users and includes, but not limited.



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Consumer Dispute: Dispute where the person against whom acomplaint has been made, denies or disputes the allegation contained in the

complaint.

Q.6 What does the Information TechnologyQ.6 What does the Information TechnologyAct enable?Act enable?

In May 2000, at the height of the dot-com boom, India enacted the IT Act

and became part of a select group of countries to have put in place cyber

laws. In all these years, despite the growing crime rate in the cyber world,only less than 25 cases have been registered under the IT Act 2000 and no

final verdict has been passed in any of these cases as they are now pending

with various courts in the country.

Although the law came into operation on October 17, 2000, it still has an

element of mystery around it. Not only from the perception of the common

man, but also from the perception of lawyers, law enforcing agencies and

even the judiciary.

The prime reason for this is the fact that the IT Act is a set of technical

laws. Another major hurdle is the reluctance on the part of companies to

report the instances of cyber crimes, as they don't want to get negative

publicity or worse get entangled in legal proceedings. A major hurdle in

cracking down on the perpetrators of cyber crimes such as hacking is the fact

that most of them are not in India. The IT Act does give extra-territorial

jurisdiction to law enforcement agencies, but such powers are largely

inefficient. This is because India does not have reciprocity and extradition

treaties with a large number of countries.

The Indian IT Act also needs to evolve with the rapidly changing

technology environment that breeds new forms of crimes and criminals. We

are now



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beginning to see new categories and varieties of cyber crimes, which

have not been addressed in the IT Act. This includes cyber stalking, cyber

nuisance, cyber harassment, cyber defamation and the like. Though 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. The above provision

chiefly aim at curbing the increasing number of child pornography cases and

does not encompass other crimes which could have been expressly brought

within its ambit such as cyber defamation.


Documents

MB0051 Legal Aspects of Business Sem3,Feb 2011