Legal Aspect of Bussiness
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Transcript of Legal Aspect of Bussiness
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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.
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Sikkim Manipal University MB0051 legal Aspects of business
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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 2
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.
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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 3
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.
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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 4
(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 .)
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Sikkim Manipal University MB0051 legal Aspects of business
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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 6
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.
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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 7
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.
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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 8
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
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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 9
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.
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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 10
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.
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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 11
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.
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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 12
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
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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 13
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,
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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,
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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.
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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
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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.