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MB0051 Legal Aspects of Business Page 1

Master of Business Administration - MBA Semester III

MB0051

Legal Aspects of Business - 4 Credits

(Book ID: B0764)

Assignment Set- 2 (60 Marks)

Note: Each question carries 10 Marks. Answer all the questions.

Q.1 what are the situations which cannot be referred to arbitration.

Q2. What is the role of a Conciliator?

Q3. What are the unfair trade practices under the MRTP Act?

Q4. What are essentials of a valid offer?

Q5. Find out a case where a person appealed under the Consumer protection Act and won.

Q6. What does the Information Technology Act enable?

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Q.1: What are the situations which cannot be referred to arbitration?

Ans:-

Arbitration law is a process that involves the assistance of one or more neutral parties known

as arbitrators. Arbitrators are charged with hearing evidence 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 a pinioning 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

purposes of arbitration law are to serve as a substitution to a trial and are view 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 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 through statutory 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:

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

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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 in regard to privatedispute settlement are guided by the Arbitration & Conciliation Act, 1996.

Kind of matters cannot be referred for arbitration:

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 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

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

Ans:-

Conciliation:

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

endeavor 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 where by 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, section62 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, if may be noted, based on the UNCITRAL Rules for conciliation.

Role of conciliator:

The conciliator shall assist the parties in an independent and impartial manner 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,

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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.

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Q.3: What are the unfair trade practices under the MRTP Act?

Ans:-

THE MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969 -OBJECTIVES AND

POLICY:

The Monopolies and Restrictive Trade Practices Commission have 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:

Falsely suggests that the goods are of a particular standard quality, quantity, grade,composition, styleormodel;

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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 hedoes not have;

Makes a false or misleading representation concerning the need for, or the usefulness of, anygoods or services;

Gives any warranty or guarantee of the performance, efficacy or length of life of the goods, thatis 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 suchwarranty, guarantee or promise will be fulfilled

Materially misleads about the prices at which such goods or services are available in themarket; 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 services are

offered at a bargain price when in fact there is no intention that the same may buffered at that

price, for a reasonable period or reasonable quantity, it shall amount to unfair trade practice.

The bargain price, for this purpose means:

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.

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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 the goods, when infect 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 prescribed by some competent

authority, if 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.

6) Inquiry Into Unfair Trade Practices:The Commission may inquire into any unfair trade practice:

Upon receiving a complaint from any trade association, consumer or a registered consumer

association ,or

Upon reference made to it by the Central Government or State Government

Upon an application to it by the Director General orUpon its own knowledge or information.

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Relief Available:

After making an inquiry into the unfair trade practices if the Commission is of the

opinion that the practice is prejudicial to the public interest, or to the interest of any consumer

it may direct that?

The practice shall be discontinued or shall not be repeated; The agreement relating thereto shall be void in respect of such unfair trade practice or shall

stand modified.

Any information, statement or advertisement relating to such unfair trade practice shall bedisclosed, issued or published as may be specified

The Commission may permit the party to carry on any trade practice to take steps to ensurethat it is no longer prejudicial to the public interest or to the interest of the consumer.

However no order shall be made in respect a trade practice which is expressly authorized

by any law in force.

The Commission is empowered to direct publication of corrective advertisement and

disclosure of additional information while passing orders relating to unfair trade practices.

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Q.4: What are essentials of a valid offer?

Ans:-

Offer :-

A proposal is an expression of will or intention to do or not to do something. It is also called an

"offer". It is one of the essential elements of an agreement. It is the very basis of the contract. It

becomes a promise when is accepted. Section 2 (a) of the Contract Act defines the proposal as "when

one person signifies to another his willingness to do or to abstain from doing anything, with a view to

obtaining the assent of that other, to such act 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 offer or promise. For example; Sunil offers to sell his car to Padmaja for Rs. 50000.

This is a proposal. Sunil is the offer and Padmajis the offer.

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 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 legal

relationships. 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 I cannot

be called a valid offer. If such offer is accepted it cannot create a binding contract. Agreement to agree

in future is not a contract because the terms of an agreement are not clear. Person has two motorbikes.

He offers to another person to sell his one bike for a certain price then it is not a legal and valid offer

because there is an ambiguity in the offer that whic 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.

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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 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, anoffer 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 onto 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 to anyone 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 todo 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 offer or 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 offer or 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 offered at the time of making a proposal.

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An offer is effective only when it is communicated to the offered. Communication is necessary

whether the offer is general or specific. The offer 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.

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Q.5: Find out a case where a person appealed under the Consumer protection Act

and won.

Ans:-

The Consumer Protection Act was born in 1986. It is described as a unique 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, these, 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.

The Act intends to provide simple, speedy and in expensivere-dressal to the consumers grievances.

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Q.6: What does the Information Technology Act enable?

Ans:-

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 finalverdict 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 cybercrimes, 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 cybercrimes 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 beginning to see new categories and varieties

of cybercrimes, 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.

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