Business Laws Solved Question Papers
B.Com 1st Sem
Dibrugarh University
2015 (November) – Semester System
COMMERCE (General/Speciality)
Course:
102 (Business Laws)
The
figures in the margin indicate full marks for the questions
1. Fill in the blanks: 1x4=4
a)
A contract is not discharged by commercial impossibility.
b)
Indian Contract Act was enacted in 1872.
c)
A sale is an executed contract.
d)
State Commission can entertain complaints of
goods/services up to Rs. 1,00,00,000.
2. Write ‘True’ or ‘False’: 1x4=4
a)
Promissory Note involves three parties. False, Maker and
Payee
b)
National Savings Certificates are not
negotiable instrument. True, Bonds
also
c)
Public Utility Services includes railway
service. True
d)
Industrial Disputes Act was enacted in 1948. False, 1947
3. (a) “No consideration
no contract.” Explain. Discuss the exceptions to this rule. 4+10=14
Ans: Consideration and
Its Essentials
Section 2 (d) of Indian Contract Act, 1872,
defines consideration as “When at the desire of the promisor the promise or any
other person has done or abstained from doing or does or abstains from doing
something, such act abstinence or promise is called a consideration for the
promisor.”
Consideration is based on the term ‘quid-pro-quo’ which means ‘something in return’. When a person
makes a promise to other, he does so with an intention to get some benefit from
him. This act to do or to refrain from doing something is known as
consideration.
Consideration is an advantage or benefit which
moves from one party to another. It is the essence of bargain. It is the
reciprocal promise i.e. to do something or abstain from doing something in
return of a promise. It is necessary for an agreement to be enforceable by law.
In consideration both the parties give something & get something in return.
It may be in cash or kind.
The
following are the rules related to the consideration
(i)
Consideration must move at the desire of promisor. If it is
done at the instance of a third party without the desire of the promisor, it is
not consideration. Act done at the desire of a third party is not a
consideration. Act must be done voluntarily at the desire of the promisor.
(ii) It
may move from the Promisee or any other person in the Indian Law so that a
stranger to the consideration may maintain a suit. A consideration may move
from the promise or any other person. Consideration from a third party is a
valid consideration. Under English Law, however, consideration must move from
the Promisee only.
(iii)
Consideration may be past, present or future. The words used in Section 2(d) are
“has done or abstained from doing (past), or does or abstains from doing
(present), or promises to do or to abstain from doing (future) something” This
means consideration may be past, present or future.
(iv) There
must be mutuality in consideration.
(v) It
must be real & not illusory, infinite or vague. Although
consideration need not be adequate, it must be real, competent and of some
value in the eye of law. Physical impossibility, legal impossibility, uncertain
consideration & illusory consideration.
(vi) Consideration must not be unlawful, illegal,
immoral or opposed to public policy. The consideration given for an
agreement must not be unlawful. Where it is unlawful, the courts do not allow
an action on the agreement.
(vii)
Consideration need not be adequate. Consideration as already explained
means “something in return”. This “something given”. The law simply provides
that a contract should be supported by consideration. So long as consideration
exists, the courts are not concerned as to its adequacy, provided it is of some
value. “The adequacy of the consideration is for the parties to consider at the
time of making the agreement, not for the court when it is sought to be
enforced.”
Exceptions
to the rule ‘No consideration no contract’
The general rule is that an agreement made without
consideration is void. Section 25 deals with the exceptions to this rule. In
such cases the agreements are enforceable even though they are made without
consideration. These cases are:
a) Love
and Affection [Section 25(1)]: Where an agreement is expressed in writing
and registered under the law for the time being in force for the registration
of documents and is made on account of natural love and affection between the
parties standing in a near relation to each other, it is enforceable even if there
is no consideration.
For e.g. F, for natural love and affection, promises to give his son A, Rs. 1 Lac. F puts this promise in writing and registers it. This is a
contract.
b)
Compensation for voluntary services [Section 25(2)]: A
promise to compensate wholly or part a person, who has already voluntarily done
something for the promisor, is enforceable, even though without consideration.
A promise to pay for a past voluntary service is binding.
For e.g. A says to B’ At the risk of your life
you saved me from a serious accident. I promise to pay you Rs.1, 000.” There is
a contract between A and B even though there is no consideration.
c) Promise
to pay a time barred debt [Section 25(3)]: A promise by a debtor to pay a time
barred debt is enforceable provided it is made in writing and is signed by the
debtor or by his agent generally or specifically authorized in that behalf. The
debt must be such “of which the creditor might have enforced payment but for
the law for limitation of suits”
For e.g. D owes C Rs.1, 000 but the debt is
barred by the Limitation Act. D signs a written promise to pay C Rs.500 on
account of the debt. This is a valid contract.
d) Agency
(Section 185): No consideration is necessary to create an agency.
e)
Completed Gift (Explanation 1 to Section 25): The rule ‘No consideration no
contract’ does not apply to completed gifts. This rule shall not affect the
validity, as between donor and donee, of any gift actually made.
Or
(b)
Define quasi-contract. Explain various quasi-contracts provided for by the
Indian Contract Act. 4+10=14
Quasi Contract
It means a contract which lacks one or more of
the essentials of a contract. In a contract, a promisor voluntarily undertakes
an obligation in favour of the promisee. When a similar obligation is imposed
by law upon a person for the benefit of another even in the absence of a
contract. Such contracts are the quasi-contracts. Quasi contract are declared
by law as valid contracts on the basis of principles of equity i.e. no person shall be allowed to enrich himself at the expense of another
the legal obligations of parties remains same.
Nature of Quasi contracts:
a) A quasi contract does not arise from
any formal agreement but is imposed by law.
b) Every quasi contract based upon the principle
of equity and good conscience.
c) A quasi contract is always a right to
money and generally though not always to a liquidated sum of money.
d) A suit for its breach may be filed in
the same way as in case of a complete contract.
e) The right grouted to a party under a
quasi contract is not available to him against the whole world but against
particular person(s) only.
f) A suit for breach of a quasi contract
may be filed in the same way as in case of an ordinary contract
g) Although there is no contract between
the parties under a quasi contracts, yet they are put in the same position as
if he were a contract between them.
Types of
Quasi Contracts
a) Claim
for necessaries supplied to persons incapable of contracting (Sec. 68): If a
person, incapable of entering into a contract, or anyone whom he is legally
bound to support, is supplied by another person, with necessaries suited to his
condition in life, the person who has furnished such supplies is entitled to be
reimbursed from the property of such incapable person.
b) Right
to recover money paid for another person (Section 69): A person
who has paid a sum of money which another is obliged to pay, is entitled to be
reimbursed by that other person provided the payment has been made by him to
protect his own interest.
c)
Obligation of a person enjoying benefits of non-gratuitous act (Section 70): Where, a
person does some act or delivers something lawfully to another person with the
intention of receiving payments for the same, in such a case, the other person
is bound to make payment if he accepts such services or goods or enjoys their
benefit.
d)
Responsibility of a finder of goods (Sec.71): A person who finds goods belonging
to another and takes them into his custody is subject to the same
responsibility as a bailee. Therefore, he is required:
Ø to take
proper care of the thing found as his own goods
Ø not to
appropriate it to his own use,
Ø to restore
it to the owner when the owner is traced.
Right
of finder
Ø Finder is
entitled to retain it against whole world.
Ø Finder has
lien for express incurred in preserving goods & finding true owner.
Ø However he
cannot file suit for recovery of this money.
Ø It he can
claim recovered. If it was offered.
Ø If true
owners refuses to pay lawful charge he May Sale.
a) When goods
are of perishable nature.
b) When
lawful charge amount to two third of its values or more.
e)
Liability for money paid or thing delivered by mistake or under coercion (Sec.
72): A person to whom money has been paid, or anything delivered, by
mistake or under coercion must repay or return it.
In each of the above cases, contractual
liability is the creation of law and does not depend upon any mutual agreement
between the parties.
4.
(a) Elucidate the essential elements of a contract of sale under the Sale of
Goods Act, 1930. 14
Ans: Contract of Sale
and Its essentials
According to Section 4 of the Sale of Goods
Act, 1930, ‘A contract of sale of goods is a contract whereby the seller
transfers or agrees to transfer the property in the goods to the buyer for a
price.’
The term ‘Contract of sale’ is a generic term
and includes both a sale and an agreement to sell. Where under a contract of
sale, the property in the goods is transferred from the seller to the buyer
(i.e. at once), the contract is called a ‘sale’ but where the transfer of the
property in the goods is to take place at a further time or subject to some
condition thereafter to be fulfilled, the contract is called an ‘agreement of
sell’. [Section 4(3)].
An agreement to sell becomes a sale when the
time elapses or the condition, subject to which the property in the goods is to
be transferred, is fulfilled. [Section 4(4)].
The
essentials of a contract of sale are:-
1. Numbers of parties: Since a contract of
sale involves a change of ownership, it follows that the buyer and the seller
must be different persons. A sale is a bilateral contract. A man cannot buy
from or sell goods to himself. To this rule there is one exception provided for
in section 4(1) of the Sale of Goods Act. A part-owner can sell goods to
another part-owner. Therefore a partner may sell goods to his firm and the firm
may sell goods to a partner.
2. Goods: The subject-matter
of the contract of sale must be ‘goods’. According to Section 2(7) “goods means
every kind of movable property other than actionable claims and money; and
includes stock and shares, growing crops, grass, and things attached to or forming
part of the land which are agreed to be severed before sale or under the
contract of sale.” Goodwill, trade marks, copyrights, patents right, water,
gas, electricity,, decree of a court of law, are all regarded as goods. In the
case of land the grass which forms part of land have to be separated from the
land. Thus where trees sold so that they could be cut out and separated from
the land and then taken away by the buyer, it was held that there was a
contract for sale of movable property or goods (Kursell vs Timber Operators
& Contractors Ltd.). But contracts for sale of things ‘forming part of the
land itself’ are not contracts for sale of goods.
3. Price: The consideration for a contract of
sale is price. Price means money consideration. If it is anything other than
money, it will not be sale. But if the exchange is made partly for goods and
partly for price, it will still amount to sale. However, the price may be paid
or promises to be paid.
4. Transfer of
property: 'Property' here means ownership. Transfer of property in the
goods is another essential of a contract of sale of goods. A mere transfer of
possession of the goods cannot be termed as sale. To constitute a contract of
sale the seller must either transfer or agree to transfer the property in the
goods to the buyer. Further, the term 'property', as used in the Sale of Goods
Act, means 'general property' in goods as distinguished from 'special property'
[Sec. 2(11)]. If P who owns certain goods, pledges them to R, he has general
property in the goods, whereas R (the Pawnee) has special property or interest
in the goods to the extent of the amount of advance he has made to the pawnor.
Similarly, in the case of bailment of goods for the purpose of repair, the
bailee has special interest in goods bailed to the extent of his labour
charges.
5. No formalities to
be observed (Sec. 5): The sale of Goods Act does not prescribe any
particular form to constitute a valid contract of sale. A contract of sale of
goods can be made by mere offer and acceptance. The offer may be made either by
the seller or the buyer and the same must be accepted by the other. Neither
payment nor delivery is necessary at the time of making the contract of sale.
Further, such a contract may be made either orally or in writing or partly
orally and partly in writing or may be even implied from the conduct of the
parties. Where articles are exhibited for sale and a customer picks up one and
the sales assistant packs the same for him, there has resulted a contract of
sale of goods by the conduct of the parties.
6. Includes both a ‘sale’ and
‘an agreement to sell’: The term ‘contract of sale’ is a generic term and
includes both a ‘sale’ and an ‘agreement to sell’.
Sale: Where
under a contract of sale, the property in the goods is immediately transferred
at the time of making the contract from the seller to the buyer, the contract
is called a 'sale' [Sec. 4(3)]. It refers to an absolute sale, e.g., an
outright sale on a counter in a shop. There is immediate conveyance of the
ownership and mostly of the subject-matter of the sale as well (delivery may
also be given in future). It is an executed contract.
An agreement to sell: Where under
a contract of sale, the transfer of property in the goods is to take place at a
future time or subject to some condition thereafter to be fulfilled, the
contract is called 'an agreement to sell' [Sec. 4(3)]. It is an executory
contract and refers to a conditional sale.
7. Other essential elements: A
contract for the sale of goods must satisfy all the essential elements
necessary for the formation of a valid contract, e.g., the parties must be
component to contract, there must be free consent, there must be consideration,
the object must be lawful etc.
Or
(b)
Describe the jurisdiction and composition of District Forum. 4+10=14
Ans:
The
District Consumer Protection Council
Section 8-A as inserted by the
Consumer Protection (Amendment) Act, 2002. The State government shall establish
for every district, by notification, a council to be known as the District
Consumer Protection Council.
Membership
The District Consumer Protection Council
(hereinafter referred to as the District Council) shall consist of the
following members:
a. The
collector of the district (by whatever name called) who shall be its Chairman;
and
b. Such
number of other official and non-official members representing such interest as
maybe described by the state government.
Objects
of the District Council:
The Objects of every District Council
shall be to promote and protect within the district the rights of consumers
laid down in the clause (a) to (f) of Section 6 (National Consumer Protection
Council)
District Consumer Disputes Redressal
Forums: At the lowest level are the
District Forums and these are established in each District and have jurisdiction
to entertain complaints where the value of goods or services and the
compensation if any, claimed does not exceed Rs.20,00,000 (TWENTY LAKHS), and a
complaint can be filed in a District Forum within the local limits of which
a.
The opposite party resides or
b.
Carries on his business or works for gain or
c.
Where the cause of action arises.
5.
(a) Define Promissory Note. Discuss the essential elements of a Promissory
Note. 4+10=14
Ans: Promissory Note: Promissory
Note, in the law of negotiable instruments, is a written instrument
containing an unconditional promise by a party, called the maker, who signs the
instrument, to pay to another, called the payee, a definite sum of money either
on demand or at a specified or ascertainable future date. The note may be made
payable to the bearer, to a party named in the note, or to the order of the
party named in the note.
According to the Section 4 of the Negotiable
Instrument Act, 1881 “A Promissory Note is an instrument in writing not being a
bank note or a current note containing an unconditional undertaking, signed by
the maker, to pay a certain sum of money only to, or do the order of, a certain
person, or to the bearer of the instrument.”
In other words, we can say that a promissory
note is an unconditional promise in writing made by one person to another,
signed by the maker, engaging to pay on demand to the payee, or at fixed or
determinable future time, certain in money, to order or to bearer.
The essentials of a valid Promissory
note
1)
The Promissory Note Must Be in Writing: Mere
verbal promises or oral undertaking does not constitute a promissory note. The
intention of the maker of the note should be signified by writing in clear
words on the instrument itself that he undertakes to pay a particular sum of money
to the payee or order or to the bearer
2) It Must
Contain an Express Promise or Clear Undertaking to Pay: The
promise to pay must be expressed. It cannot be implied or inferred. A mere
acknowledgment of indebtness is not enough.
3) The
Promise to Pay must be Definite and Unconditional: The
promise to pay contained in the note must be unconditional. If the promise to
pay is coupled with a condition, it is not a promissory note.
4) The Maker
of the Pro-note Must Be Certain: The instrument should show on the fact
of it as to who exactly is liable to pay. The name of the maker should be
written clearly and ascertainable on seeing the document.
5) It Should
be Signed By the Maker: Unless the maker signs the instrument, it is
incomplete and of no legal effect. Therefore, the person who promises to pay
must sign the instrument even though it might have been written by the promisor
himself.
6) The Amount
Must Be Certain: The amount undertaken to be paid must be
definite or certain or not vague. That is, it must not be capable of contingent
additions or subtractions.
7) The
Promise Should Be to Pay Money: The promissory note should contain a
promise to pay money and money only, i.e., legal tender money. The promise
cannot be extended to payments in the form of goods, shares, bonds, foreign
exchange, etc.
8) The Payee
Must Be Certain: The money must be payable to a definite person
or according to his order. The payee must be ascertained by name or by
designation. But it cannot be made payable either to bearer or to the maker
himself.
9) It Should
Bear the Required Stamping: The promissory note should, necessarily, bear
sufficient stamp as required by the Indian Stamp Act, 1889.
10) It Should
Be Dated: The date of a promissory note is not material unless the amount is
made payable at particular time after date. Even then, the absence of date does
not invalidate the promissory note and the date of execution can be
independently proved. However to calculate the interest or fixing the date of
maturity or lm\imitation period the date is essential. It may be ante-dated or
postdated. If post-dated, it cannot be sued upon till ostensible date.
11) Demand: The
promissory note may be payable on demand or after a certain definite period of
time.
12) The Rate
of Interest: It is unusual to mention in it the rated of interest per annum.
When the instrument itself specifies the rate of interest payable on the amount
mentioned it, interest must be paid at the rate from the date of the
instrument.
Or
(b)
What is a cheque? Distinguish between Cheque and Bill of Exchange. 4+10=14
Ans: Cheque is a very common form of
negotiable instrument. If you have a savings bank account or current account in
a bank, you can issue a cheque in your own name or in favor of others, thereby
directing the bank to pay the specified amount to the person named in the
cheque. A cheque is an instrument drawn on a specified banker and not expressed
to be payable otherwise than on demand Therefore, a cheque may be regarded as a
bill of exchange; the only difference is that the bank is always the drawee in
case of a cheque.
The maker of a cheque is called the ‘drawer’,
and the person directed to pay is the ‘drawee’. The person named in the
instrument, to whom or to whose order the money is, by the instrument directed,
to be paid, is called the ‘payee’
The Negotiable Instruments Act, 1881 defines a
cheque as a bill of exchange drawn on a specified banker and not expressed to
be payable otherwise than on demand.
From the above definition it appears that a
cheque is an instrument in writing, containing an unconditional order, signed
by the maker, directing a specified banker to pay, on demand, a certain sum of
money only to, to the order of, a certain person or to the bearer of the
instrument.. Actually, a cheque is an order by the account holder 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.
Difference
between cheque and bills of exchange:
Basis
|
Cheque
|
Bills of Exchange
|
Drawee
|
A cheque is always
drawn on a bank or banker.
|
A bill of exchange can be drawn on any person including a banker.
|
Acceptance
|
A cheque does not
require any acceptance.
|
A bill must be accepted before the Drawee can be made liable upon it.
|
Payment
|
A cheque is payable
immediately on demand without any days of grace.
|
A bill of exchange is normally entitled to three days of grace unless
it is payable on demand.
|
Stamp
|
A cheque does not
require any stamp.
|
A bill of exchange must be stamped.
|
Protection
|
A banker is given
statutory protection with regard to payment of cheques in certain
circumstances.
|
No such protection is available to the Drawee or acceptor of a bill of
exchange.
|
Crossing
|
A cheque may be crossed.
|
Bill can never be crossed.
|
Presentment
|
If not presented to the banker for payment, it does not
discharge the drawer unless he suffers injury or damages.
|
Drawer is discharged, if bill is not presented for payment to
the acceptor.
|
Noting and Protesting
|
A cheque is not required to be noted or protested for dishonour.
|
A bill of exchange may be noted or protested for dishonour.
|
6. (a) Write notes on (any two): 7x2=14
i.
Strike.
ii.
Lockout.
iii.
Public Utility.
Ans: Strike: A
strike is a very powerful weapon used by trade unions and other labor
associations to get their demands accepted. It generally involves quitting of
work by a group of workers for the purpose of bringing the pressure on their
employer so that their demands get accepted. When workers collectively cease to
work in a particular industry, they are said to be on strike.
According to
Industrial Disputes Act 1947, a strike is “a cessation of work by a body of
persons employed in an industry acting in combination; or a concerted refusal
of any number of persons who are or have been so employed to continue to work
or to accept employment; or a refusal under a common understanding of any
number of such persons to continue to work or to accept employment”. This
definition throws light on a few aspects of a strike. Firstly, a strike is a
referred to as stoppage of work by a group of workers employed in a particular
industry. Secondly, it also includes the refusal of a number of employees to
continue work under their employer.
The analysis of the definition would show that
there are the following essential elements or requirements for the existence of
a strike:
1. There must
be cessation of work.
2. The
cessation of work must be by a body of persons employed in any industry;
3. The
strikers must have been acting in combination;
4. The
strikers must be working in any establishment which can be called industry
within the meaning of Section 2(j); or
5. There must
be a concerted refusal; or
6. Refusal
under a common understanding of any number of persons who are or have been so
employed to continue to work or to accept employment;
7. They must
stop work for some demands relating to employment, non-employment or the terms
of employment or the conditions of labour of the workmen.
Lockout: A
lockout is a work stoppage in which an employer prevents employees from
working. It is declared by employers to put pressure on their workers. This is
different from a strike, in which employees refuse to work. Thus, a lockout is
employers’ weapon while a strike is raised on part of employees. Acc to
Industrial Disputes Act 1947, lock-out means the temporary closing of a place
of employment or the suspension of work or the refusal by an employer to
continue to employ any number of persons employed by him.
A lockout may
happen for several reasons. When only part of a trade union votes to strike,
the purpose of a lockout is to put pressure on a union by reducing the number
of members who are able to work.
"Public utility service" means: (i) any railway service or any
transport service for the carriage of passengers or goods by air; (ii) any
service in, or in connection with the working of, any major port or dock;
(ii) any section of an industrial
establishment, on the working of which the safety of the establishment or the
workmen employed therein depends;
(iii) any postal, telegraph or
telephone service;
(iv) any industry which supplies
power, light or water to the public;
(v) any system of public
conservancy or sanitation;
(vi) any industry specified in the First Schedule
which the appropriate Government may, if satisfied that public emergency or
public interest so requires, by notification in the Official Gazette, declare
to be a public utility service for the purposes of this Act, for such period as
may be specified in the notification
Or
(b)
Write the meaning of industry. Illustrate in detail the prohibition of strikes
and lockouts. 5+9=14
Ans: Industry: “Industry”
means any business, trade, undertaking, manufacture or calling of employers and
includes any calling, service, employment, handicraft, or industrial occupation
or avocation of workmen; the term ‘industry’ does not include:
(i) Agricultural operations (ii) Hospitals /
dispensaries (iii) Educational, scientific, research or training institutions (iv)
Organisations engaged in charitable, social or philanthropic work (v)
Khadi/Village industries (vi) Any activity of Government relatable to sovereign
functions of Govt. (vii) Domestic service (viii) Any professional activity,
provided the number of persons employed is less than ten.
Section 22: Prohibition of Strikes and Lock outs:
1.
No person
employed in a public utility service shall go on strike, (a) without giving to
the employer notice of strike within six weeks before striking or (b) within
fourteen days of giving such notice or (c) before the expiry of the date of
strike specified in any such notice as aforesaid or (d) during the pendency of
any conciliation proceedings before a conciliation officer and seven days after
the conclusion of such proceedings.
2.
No employer
carrying on any public utility service shall lock-out any of his workman (a)
without giving them notice of lock-out within six weeks before locking-out; or
(b) within fourteen days of giving such notice; or (c) before the expiry of the
date of lock-out specified in any such notice as aforesaid; or (d) during the
pendency of any conciliation proceedings before a conciliation officer and
seven days after the conclusion of such proceedings.
3.
The notice of lock-out or strike under this
section shall not be necessary where there is already in existence a strike or,
as the case may be, lock-out in the public utility service, but the employer
shall send intimation of such lock-out or strike on the day on which it is
declared, to such Authority as may be specified by the appropriate Government
either generally or for a particular area or for a particular class of public
utility services.
4.
The
notice of strike referred to in sub-section (1) shall be given by such number
of persons to such person or persons and in such manner as may be prescribed.
5.
The notice of lock-out referred to in
sub-section (2) shall be given in such manner as may be prescribed.
If on any day an employer receives
from any person employed by him any such notices as are referred to in
sub-section (1) or gives to any persons employed by him any such notices as are
referred to in sub-section (2), he shall within five days, thereof report to
the appropriate Government or to such authority as that Government may
prescribe the number of such notices received or given on that day.
Section 23: General Prohibition of Strikes and Lock-outs:
No workman who is
employed in any industrial establishment shall go on strike and no employer of
any such workman shall declare a lock-out
1. during the pendency of conciliation proceedings before a Board and
seven days after the conclusion of such proceedings;
2. during the pendency of proceedings before a Labour Court, Tribunal
or National Tribunal and two months after the conclusion of such proceedings
3. during any period in which a settlement is in operation,
7. Write in short (any four): 4x4=16
a)
Voidable Contract.
b)
Free consent.
c)
Unpaid seller
d)
Consumer.
e)
Objectives of Industrial Dispute Act.
f)
Crossing of cheques.
VOIDABLE CONTRACT: An
agreement, which is enforceable by law at the option of one more of the
parties, but not at the option of the other (s), is a voidable contract.
For example: -
Mr. A, at knife - point, asks B to sell his scooter for Rs. 50. Mr. B gives
consent. The agreement is voidable at the option of B, whose consent is not
free.
Features
of Voidable Contract
a) It is a
contract, which is enforceable by law at the option of one or more parties
thereof, but not at the option of others.
b) A voidable
contract takes its full and proper legal effect unless it is disputed and set
aside by the person entitled to do so.
c) A contract
may be voidable since very beginning or may subsequently become voidable.
d) A voidable
contract gives right to the aggrieved party to rescind the contract and claim
the damages, etc in certain cases.
e) A voidable contract does not affect the collateral transactions.
Free Consent
Section 13 defines consent as “Two or more
persons are said to consent when they agree upon the same thing in the same
sense.” Consent of the party’s means, the parties to a contract must mean the
same thing in the same sense. It means ‘Consensus
ad idem’. For e.g. A have 2 cars – Maruti 800 and Maruti Zen. A offers
to sell the Maruti 800 while B accepts the offer thinking the car to be sold is
Maruti Zen. Here there is no consent.
Free consent refers to consent which has been
rendered by free will of the parties i.e. consent is voluntary. Section 10 of
the Act, specifically states that a contract is valid and enforceable if it is
made with the free consent of the parties.
Section 14 defines ‘Free Consent’ as – Consent
is said to be free consent when it is not caused by –
(i) Coercion, as defined in Section 15, or
(ii) Undue influence, as defined in Section
16, or
(iii) Fraud as defined in Section 17, or
(iv) Misrepresentation as defined in Section
18, or
Consumer: Section 2
(1) (d) of the Consumer Protection Act, 1986 defines the term
"consumer". It says ‘consumer’ means any person:
a)
Who buys goods and has paid or promised to pay a consideration
partly or fully under any system of deferred payment.
b)
Who hires or avails of services and has paid or promised to pay a
consideration partly or fully under any system of deferred payment.
c) Who uses
the goods with the approval of the person who has bought the goods for a
consideration
d) Who is a
beneficiary of the services hired or availed by an individual with the
consent of that individual?
Who is not
a consumer?
a) An applicant
for a passport has been held to be not a consumer, because the duties of the
passport officer do not fall in the category of services for consideration.
b) An
applicant for ration card is not a consumer.
c)
The beneficiaries of municipal services have
been held to be not in the category of consumers.
Objectives of Industrial Dispute Act:
The Industrial Disputes Act, 1947 was enacted
to promote industrial peace by providing appropriate machinery for amicable
settlement of disputes arising between employers and employees.
Objectives of the Act:
1. The Act
provides machinery for the settlement of disputes by arbitration or
adjudication.
2. It
attempts to ensure social justice and economic progress by fostering industrial
harmony.
3. It enables
workers to achieve their demands by means of legitimate weapon of strike and
thus facilitates collective bargaining.
4. It
prohibits illegal strikes and lockouts.
5. It
provides relief to the workman in the event of layoff or retrenchment.
6. The act
relates to all the relevant aspects of industrial relations machinery
namely—collective bargaining, mediation and conciliation, arbitration,
adjudication and matters incidental thereto.
Crossing of a cheque
A cheque is said to be crossed when two
parallel transverse line with or without any words are drawn on the left hand
corner of the cheque. The negotiability of a cheque doesn’t affect for
crossing. Crossing of a cheque refers to the instruction to the banker relating
to the payment of the cheque. A crossing is the direction to the paying banker
that the cheque should be paid only to a banker. Crossing of cheque is very
safety because the holder of the cheque is not allowed to cash it across the
counter. A crossed cheque provides protection not only to the holder of the
cheque but also to the receiving and collecting bankers.
The
following parties can cross a cheque:
a) The
Drawer: The drawer of a cheque may cross a cheque before issuing it. He may
cross it generally or specially.
b) The
Holder: The holder of a cheque can cross in the following way:
Ø The holder
may cross an open cheque generally or specially.
Ø The holder
may specially cross a generally crossed cheque.
Ø The holder
may add the words “Not-Negotiable” in a generally or specially crossed cheque.
c) The
Banker: The banker to whom the cheque is crossed specially may again cross it
especially to another banker's agent, for collection. This is called double
special crossing.
(Old
COURSE)
(Business
Regulatory Framework)
Full
Marks: 80
Pass
Marks: 32
Time: 3
hours
1. Write short notes on (any four): 4x4=16
a)
Voidable contract.
b)
‘Price’ according to the Sale of Goods Act.
c)
Consumer.
d)
Contingent contract.
e)
Coercion.
f)
Person having the right of crossing a cheque.
2. (a) Describe various
ways for discharge of contract. 11
Ans: Meaning of
Discharge of a Contract
Discharge of a contract means
termination of the contractual relations between the parties to a contract. A
contract is said to be discharged when the rights and obligations of the
parties under the contract come to an end.
Modes
of discharge of a contract: A Contract is said to be discharged when the
rights and obligations created by it come to an end. A contract may be
discharged in the following modes:-
a)
Discharge
by performance: Discharge by performance takes place when the parties to a
contract fulfill their obligations arising under the contract within the time
and in the manner prescribed. Performance may be actual performance or attempted
performance.
b)
Discharge
by Agreement or Consent: A Contract comes into existence by an
agreement and it may be discharged also by an agreement. The following are
modes of discharge of a contract by an agreement:
a) By Waiver: Waiver takes place when the parties to
a contract agree that they shall no longer be bound by the contract. For e.g. A
an actor promised to make a guest performance in the film made by B. Later B
forbids A from making the guest appearance. B is discharged of his obligation.
b) By Novation: Novation
occurs when a we contract is substituted for an existing contract, either
between the same parties or between different parties, the consideration being
the discharge of old contract, mutually. E.g.: A is indebted to B & C to C.
By mutual agreement B’s debt to C & B’s loan to A are cancelled & C
accepts as his debtor.
c) By Rescission:
Rescission of a contract takes place when all or some of the terms of the
contract are cancelled. It may occur by mutual consent or where one party fails
in the performance of his obligations, the other party may rescind the
contract.
d) By alteration:
Alteration of a contract may take place when one or more of the terms of the
contract is/are altered by mutual consent of the parties to the contract.
e) By Remission: Remission
means acceptance of a lesser fulfillment of the promise made, E.g. Acceptance
of a lesser sum than what was contracted for, in discharge of the whole of the
debt.
f) By Merger: Merger takes place when an inferior
right accruing to a party under a contract merges into a superior right
accruing to the same party under the same or some other contract. For e.g. P
holds a property under a lease. He later buys the property. His rights as a
lessee merge into his rights as an owner.
c)
Discharge
by impossibility of performance: If a contract contains an undertaking
to perform impossibility, it is void
ab initio. As per Section 56, impossibility of performance may fall into
either of the following categories –
(i)
Impossibility existing at the time formation of the contract: This is
known as pre-contractual impossibility. The fact of impossibility may be:
a) Known
to the parties: Both the parties are aware or know that the contract is to
perform an impossible act. For e.g. A agrees with B to put life into dead wife
of B, the agreement is void.
b) Unknown
to the parties: Both the parties are unaware of the impossibility. The
contract could be on the ground of mutual mistake of fact. For e.g. contract to
sell his house at Andaman to B. Both the parties are in Mumbai and are unknown
to the fact that the house is actually washed away due to Tsunami.
(ii) Impossibility
arising subsequent to the formation of the contract: Where impossibility of
performance of the contract is caused by circumstances beyond the control of
the parties, the parties are discharged from further performance of the
obligation arising under the contract.
d)
Discharge
by lapse of time: The
Limitation Act, 1963 lays down certain specified periods within which different
contracts are to be performed and be enforceable. If a party to a contract does
not perform, action can be taken only within the time specified by the Act.
Failing which the contract is terminated by lapse of time. For e.g. A sold a
gold chain to B on credit without any period of credit, the payment must be
made or the suit to recover it, must be instituted within three years from the
date of delivery of the instrument.
e)
Discharge
by Operation of Law: A contract may be discharged independently of
the wished of the parties i.e. by operation of law. This includes discharge:
a) By death: In contract involving personal skill
or ability, the contract is terminated on the death of the promisor. In other
contracts the rights and liabilities of a deceased person pass on to the legal
representatives of the deceased person.
b) By insolvency: When a
person is declared insolvent, he is discharged from all liabilities incurred
prior to such declaration.
c) By unauthorized material alteration of the
terms of a written agreement: Any material alteration made by a party to
the contract, without the prior permission of the other party, the innocent
party is discharged.
d) By rights and liabilities becoming vested in
the same person: When the rights and liabilities under a
contract vests in the same person.
f)
Discharge
by Breach of Contract: A breach of contract occurs when a party
thereto without lawful excuse does not fulfill his contractual obligation or by
his own act makes it impossible that he should perform his obligation under it.
A breach to a contract occurs in two ways:-
a) Actual Breach: When a
party fails, or neglects or refuses or does not attempt to perform his
obligation at the time fixed for performance, it results in actual breach of
contract. For e.g. A promises to deliver 100 packs of ice-cream to B on his
wedding day. A does not deliver the packs on that day. A has committed actual
breach of the contract.
b) Anticipatory Breach:
Anticipatory Breach is a breach before the time of the performance of the
contract has arrived. This may take place either by the promisor doing an act
which makes the performance of his promise impossible or by the promisor, in
way showing his intention not to perform it.
Or
(b)
What is contract? Discuss briefly the essential elements of a contract. 4+7=11
Ans: Meaning of Contract and Its
essentials or (“All contracts are agreements, but all agreements are not
contracts.” [Essentials of a Valid Contract] or “A Contract is an agreement
enforceable by Law”)
Section 2 (h) defines ‘Contract’ as an
agreement enforceable by law. If we
analyse the definition it has two components viz.
1. An agreement
between two or more persons "To Do" or "Not to Do"
something.
2. An
enforceability of such an agreement at law i.e. personal rights and personal
obligations created and defined by agreement must be recognized by law.
Section 2 (e) defines ‘agreement’ as “every
promise and set of promises forming consideration for each other”. For a
contract to be enforceable by law there must be an agreement which should be
enforceable by law. To be enforceable, the agreement must be coupled with
obligation. Obligation is a legal duty to do or abstain from doing what one
promised to do or abstain from doing.
All contracts are agreements but for agreement to be a contract it has
to be legally enforceable.
Section10 of the Act provide “All agreements
are contracts if they are made by the free consent of the parties competent to
contract for lawful object & are not hereby expressly declared void.”
An agreement in
order to become a contract must be enforceable by law. Agreements, which do not
fulfill the essential requirements of a contract, are not enforceable. Thus when an agreement enables a person to
compel another to do something or not to do something it is called a contract.
Thus all contracts are agreements but all agreements are not contracts. In order to become a valid contract an
agreement must posses the following essential elements:
a) Offer & Acceptance: There
must be two parties to an agreement i.e. one making the offer & other party
accepting it. Acceptance of must be unconditional & absolute. A part of an
offer cannot be accepted. The terms of an offer must be definite. The
acceptance must be in the mode as prescribed & must be communicated. The
acceptor of an offer must accept it in the same way & same sense & at
the same time as offered by the offeror i.e. there must be consensus ad idem.
b) Intention to create legal relationship: When two
parties enter into a contract their intention must be to create legal
relationship. If there is no such intention between the parties, there is no
contract between them. Agreements of a social or domestic nature to do not
constitute contracts.
c) Lawful consideration: An
agreement to be enforceable by law must be supported by consideration.
“Consideration” means an advantage or benefit which one party receives from
another. It is the essence of bargain. The agreement is legally enforceable
only when both parties give something or get something in return. An agreement
to do something without getting anything in return is not a contract. Contract
must be in cash or kind.
d) Capacity to Contract-Competency: The
parties competent to contract must be capable of contracting i.e. they must be
of the age of majority, they must be of sound mind & they must not be
disqualified from contracting by any law to which they are subject to. An agreement with minors, lunatics,
drunkards, etc. is not contract & does not get a legal title.
e) Free Consent: It is
necessary between the contracting parties to have a free & genuine consent
to an agreement. The consent of parties is said to be free when the contracting
parties are of the same mind on the materials of a contract. They must mean the
same thing at the same time the parties must not enter into a contract under
undue influence, coercion, misrepresentation etc. If these flaws are present in
an agreement it does not become a contract.
f) Lawful object: The
object of an agreement must be lawful. It should not be illegal, immoral or it
should not oppose public policy. If an agreement suffers from a legal flaw with
respect to object it is not enforceable by law & so it is not a contract.
g) Agreement not declared void: For an
agreement to be a contract it is necessary for the agreement must not be
expressly declared void by any law in force in the country.
h) Possibility & Certainty of performance: The terms
of an agreement must not be vague or indefinite. It should be certain. The
agreement must be to do a thing which is possible. For e.g. an agreement to
sell a car for Rs. 100/- if sun does not rise tomorrow. This agreement is
impossible & so not enforceable by law.
Thus,
agreement is the genus of which contract is the specie.
3.
(a) Explain the essential elements of Sale of Goods Act, 1930. 11
Ans: Contract of Sale and Its
essentials
According to Section 4 of the Sale of Goods
Act, 1930, ‘A contract of sale of goods is a contract whereby the seller
transfers or agrees to transfer the property in the goods to the buyer for a
price.’
The term ‘Contract of sale’ is a generic term
and includes both a sale and an agreement to sell. Where under a contract of
sale, the property in the goods is transferred from the seller to the buyer
(i.e. at once), the contract is called a ‘sale’ but where the transfer of the
property in the goods is to take place at a further time or subject to some
condition thereafter to be fulfilled, the contract is called an ‘agreement of
sell’. [Section 4(3)].
An agreement to sell becomes a sale when the
time elapses or the condition, subject to which the property in the goods is to
be transferred, is fulfilled. [Section 4(4)].
The
essentials of a contract of sale are:-
1. Numbers of parties: Since a contract of
sale involves a change of ownership, it follows that the buyer and the seller
must be different persons. A sale is a bilateral contract. A man cannot buy
from or sell goods to himself. To this rule there is one exception provided for
in section 4(1) of the Sale of Goods Act. A part-owner can sell goods to
another part-owner. Therefore a partner may sell goods to his firm and the firm
may sell goods to a partner.
2. Goods: The subject-matter
of the contract of sale must be ‘goods’. According to Section 2(7) “goods means
every kind of movable property other than actionable claims and money; and
includes stock and shares, growing crops, grass, and things attached to or forming
part of the land which are agreed to be severed before sale or under the
contract of sale.” Goodwill, trade marks, copyrights, patents right, water,
gas, electricity,, decree of a court of law, are all regarded as goods. In the
case of land the grass which forms part of land have to be separated from the
land. Thus where trees sold so that they could be cut out and separated from
the land and then taken away by the buyer, it was held that there was a
contract for sale of movable property or goods (Kursell vs Timber Operators
& Contractors Ltd.). But contracts for sale of things ‘forming part of the
land itself’ are not contracts for sale of goods.
3. Price: The consideration for a contract of
sale is price. Price means money consideration. If it is anything other than
money, it will not be sale. But if the exchange is made partly for goods and
partly for price, it will still amount to sale. However, the price may be paid
or promises to be paid.
4. Transfer of
property: 'Property' here means ownership. Transfer of property in the
goods is another essential of a contract of sale of goods. A mere transfer of
possession of the goods cannot be termed as sale. To constitute a contract of
sale the seller must either transfer or agree to transfer the property in the
goods to the buyer. Further, the term 'property', as used in the Sale of Goods
Act, means 'general property' in goods as distinguished from 'special property'
[Sec. 2(11)]. If P who owns certain goods, pledges them to R, he has general
property in the goods, whereas R (the Pawnee) has special property or interest
in the goods to the extent of the amount of advance he has made to the pawnor.
Similarly, in the case of bailment of goods for the purpose of repair, the
bailee has special interest in goods bailed to the extent of his labour
charges.
5. No formalities to
be observed (Sec. 5): The sale of Goods Act does not prescribe any
particular form to constitute a valid contract of sale. A contract of sale of
goods can be made by mere offer and acceptance. The offer may be made either by
the seller or the buyer and the same must be accepted by the other. Neither
payment nor delivery is necessary at the time of making the contract of sale.
Further, such a contract may be made either orally or in writing or partly
orally and partly in writing or may be even implied from the conduct of the
parties. Where articles are exhibited for sale and a customer picks up one and
the sales assistant packs the same for him, there has resulted a contract of
sale of goods by the conduct of the parties.
6. Includes both a ‘sale’ and
‘an agreement to sell’: The term ‘contract of sale’ is a generic term and
includes both a ‘sale’ and an ‘agreement to sell’.
Sale: Where
under a contract of sale, the property in the goods is immediately transferred
at the time of making the contract from the seller to the buyer, the contract
is called a 'sale' [Sec. 4(3)]. It refers to an absolute sale, e.g., an
outright sale on a counter in a shop. There is immediate conveyance of the
ownership and mostly of the subject-matter of the sale as well (delivery may
also be given in future). It is an executed contract.
An agreement to sell: Where under
a contract of sale, the transfer of property in the goods is to take place at a
future time or subject to some condition thereafter to be fulfilled, the
contract is called 'an agreement to sell' [Sec. 4(3)]. It is an executory
contract and refers to a conditional sale.
7. Other essential elements: A
contract for the sale of goods must satisfy all the essential elements
necessary for the formation of a valid contract, e.g., the parties must be
component to contract, there must be free consent, there must be consideration,
the object must be lawful etc.
Or
(b)
Define warranty. Distinguish between conditions and warranties. When conditions
are treated as warranties? 3+6+2=11
Ans: Warranty: Section 12(3) states that a warranty is a
stipulation which is collateral to the main purpose of the contract. The breach
of a warranty gives rise to a claim for damages but not a right to reject the
goods and treat the contract as repudiated. The
above definition shows that for the implementation of a contract warranty is
not essential. For the breach of warranty only damages can be claimed.
Example: A while
selling his car to B, stated the car gives a mileage of 12 kms per litre of
petrol. The car gives only 10 kms per litre. B cannot reject the car. It is
breach of warranty. He can only claim damages for the loss due to extra
consumption of petrol.
Difference
between Condition and warranty:
Basis of Difference
|
Condition
|
Warranty
|
Definition
|
A stipulation which is essential to the main purpose of the
contract.
|
A stipulation which is collateral to the main purpose of the
contract.
|
Result of Breach
|
The aggrieved party can terminate the contract due to breach.
|
The aggrieved party cannot terminate the contract.
|
Remedy
|
The aggrieved party can terminate the contract, claim damages or
treat it as breach of warranty.
|
The aggrieved party cannot terminate the contract but can only
claim damages.
|
Treatment
|
A breach of condition can be treated as a breach of warranty.
|
A breach of warranty cannot be treated as breach of condition.
|
Link with contract
|
It is directly associated with the objective of the contract.
|
It is a subsidiary provision related
to the object of the contract.
|
When condition to be treated as warranty.
a) Where a
contract of sale is subject to any condition to be fulfilled by the seller, the
buyer may waive the condition or elect to treat the breach of the condition as
a breach of warranty and not as a ground for treating the contract as
repudiated.
b) Where a
contract of sale is not severable and the buyer has accepted the goods or part
thereof, the breach of any condition to be fulfilled by the seller can only be
treated as a breach of warranty and not as a ground for rejecting the goods and
treating the contract as repudiated, unless there is a term of the contract,
express or implied, to that effect.
c) Nothing in
this section shall affect the case of any condition or warranty fulfillment of
which is excused by law by reason of impossibility or otherwise.
4.
(a) What is meant by Promissory Note? Elucidate its essentials. 3+8=11
Ans: Promissory Note
Promissory Note, in the
law of negotiable instruments, is a written instrument containing an
unconditional promise by a party, called the maker, who signs the instrument,
to pay to another, called the payee, a definite sum of money either on demand
or at a specified or ascertainable future date. The note may be made payable to
the bearer, to a party named in the note, or to the order of the party named in
the note.
According to the Section 4 of the Negotiable
Instrument Act, 1881 “A Promissory Note is an instrument in writing not being a
bank note or a current note containing an unconditional undertaking, signed by
the maker, to pay a certain sum of money only to, or do the order of, a certain
person, or to the bearer of the instrument.”
In other words, we can say that a promissory
note is an unconditional promise in writing made by one person to another,
signed by the maker, engaging to pay on demand to the payee, or at fixed or
determinable future time, certain in money, to order or to bearer.
The essentials of a valid Promissory
note
1.
The Promissory Note Must Be in Writing: Mere
verbal promises or oral undertaking does not constitute a promissory note. The
intention of the maker of the note should be signified by writing in clear
words on the instrument itself that he undertakes to pay a particular sum of money
to the payee or order or to the bearer
2. It Must
Contain an Express Promise or Clear Undertaking to Pay: The
promise to pay must be expressed. It cannot be implied or inferred. A mere
acknowledgment of indebtness is not enough.
3. The
Promise to Pay must be Definite and Unconditional: The
promise to pay contained in the note must be unconditional. If the promise to
pay is coupled with a condition, it is not a promissory note.
4. The Maker
of the Pro-note Must Be Certain: The instrument should show on the fact
of it as to who exactly is liable to pay. The name of the maker should be
written clearly and ascertainable on seeing the document.
5. It Should
be Signed By the Maker: Unless the maker signs the instrument, it is
incomplete and of no legal effect. Therefore, the person who promises to pay
must sign the instrument even though it might have been written by the promisor
himself.
6. The Amount
Must Be Certain: The amount undertaken to be paid must be
definite or certain or not vague. That is, it must not be capable of contingent
additions or subtractions.
7. The
Promise Should Be to Pay Money: The promissory note should contain a
promise to pay money and money only, i.e., legal tender money. The promise
cannot be extended to payments in the form of goods, shares, bonds, foreign
exchange, etc.
8. The Payee
Must Be Certain: The money must be payable to a definite person
or according to his order. The payee must be ascertained by name or by
designation. But it cannot be made payable either to bearer or to the maker
himself.
9. It Should
Bear the Required Stamping: The promissory note should, necessarily, bear
sufficient stamp as required by the Indian Stamp Act, 1889.
10. It Should
Be Dated: The date of a promissory note is not material unless the amount is
made payable at particular time after date. Even then, the absence of date does
not invalidate the promissory note and the date of execution can be
independently proved. However to calculate the interest or fixing the date of
maturity or lm\imitation period the date is essential. It may be ante-dated or
postdated. If post-dated, it cannot be sued upon till ostensible date.
11. Demand: The
promissory note may be payable on demand or after a certain definite period of
time.
12. The Rate
of Interest: It is unusual to mention in it the rated of interest per annum.
When the instrument itself specifies the rate of interest payable on the amount
mentioned it, interest must be paid at the rate from the date of the
instrument.
Or
(b)
Distinguish between bill of exchange and Promissory Note. Give two examples of
quasi-negotiable instruments. 9+2=11
Ans: Difference between bill of exchange and
Promissory Note.
Basis
|
Bill of Exchange
|
Promissory Note
|
Parties
|
There are 3 parties – drawee, drawer and payee.
|
There are 2 parties – maker or promisor and payee or promisee.
|
Drawer
|
It is drawn by
the creditor
|
It is drawn by
the debtor
|
Order or
Promise
|
It contains an
order to make payment. There can be three parties to it, viz. the drawer, the
Drawee and the payee.
|
It contains a
promise to make payment. There are only two parties to it, viz. the drawer
and the payee.
|
Acceptance
|
It requires
acceptance by the Drawee or someone else on his behalf.
|
It does not require
any acceptance.
|
Payee
|
Drawer and
payee can be the same party
|
Drawer cannot
be the payee of it
|
Set
|
A bill of exchange can be drawn in sets.
|
Promissory note cannot be drawn in sets.
|
Notice
|
The maker of the bill of exchange is secondarily and conditionally
liable to payee. He becomes liable to pay only when the drawee refuses to
honour the bill. Drawer stands in immediate relation to the drawee or
acceptor and not the payee.
|
The maker of the Promissory note is primarily and absolutely
liable to payee. Promisor stands in the immediate relation to the payee.
|
Notice
|
In case of its
dishonour due notice of dishonour is to be given by the holder to the drawer
|
No notice needs
to be given in case of its dishonour
|
Quasi Negotiable instruments are those which
are capable of being transferred by delivery or endorsement but the transferor
of the document cannot give a better title to holder that he himself had.
a) Bills of lading;
b) Dock warrants;
c) Railway receipts;
d) Wharfinger certificates, etc.
5.
(a) Discuss the objects of Consumer Protection Act, 1986. 11
The main objective of the act is to provide
for better protection of consumers. Unlike existing laws which are punitive or
preventive in nature, the provisions of
this Act are compensatory in nature. The act is intended to provide simple,
speedy and inexpensive redressal to the consumers' grievances, and reliefs of a
specific nature and award of compensation wherever appropriate to the consumer.
The objectives of the Consumer
Protection Act are as follows:
a) To assist
countries in achieving or maintaining adequate protection for their population
as consumers;
b) To
facilitate production and distribution patterns responsive to the needs and
desires of consumers;
c) To
encourage high levels of ethical conduct for those engaged in the production
and distribution of goods and services to consumers;
d) To assist
countries in curbing abusive business practices by all enterprises at the
national and international levels which adversely affect consumers;
e) To
facilitate the development of independent consumer groups;
f) To further
international cooperation in the field of consumer protection;
g) To encourage
the development of market conditions which provide consumers with greater
choice at lower prices.
Or
(b)
Who is a consumer as defined in the Consumer Protection Act, 1986? Discuss the
type of rights given to a consumer by the Act. 3+8=11
Ans: Consumer and his
Rights and Responsibilities
Consumer: Section 2 (1) (d) of the Consumer
Protection Act, 1986 defines the term "consumer". It says ‘consumer’
means any person:
e)
Who buys goods and has paid or promised to pay a consideration
partly or fully under any system of deferred payment.
f)
Who hires or avails of services and has paid or promised to pay a
consideration partly or fully under any system of deferred payment.
g) Who uses
the goods with the approval of the person who has bought the goods for a
consideration
h) Who is a
beneficiary of the services hired or availed by an individual with the
consent of that individual?
Who is not
a consumer?
d) An applicant
for a passport has been held to be not a consumer, because the duties of the
passport officer do not fall in the category of services for consideration.
e) An
applicant for ration card is not a consumer.
f)
The beneficiaries of municipal services have
been held to be not in the category of consumers.
Rights
of Consumers:
a) The right
to safety: It refers to the right to be protected against products, production
processes and services which are hazardous to health or life. It includes
concern for consumers immediate and long term needs.
b) The right
to be informed: Consumers have a right to be informed about the quality, quantity,
potency, purity, standard and price of goods or services so that they can make
the right decision and protect themselves against malpractices.
c) The right
of choice: The consumer has the right to be assured of a choice of various goods
and services of satisfactory quality and competitive price.
d) Right to
representation (or right to be heard): It is a right and the responsibility of civil society to ensure consumer
interest prevails while formulating and executing policies which affect the
consumers, as well as right to be heard while developing or producing a product
or service.
e) Right to
seek redressal of grievances: The consumer has the right go to court if he has been unscrupulously
exploited against unfair or restrictive trade practices and receives
compensation for supply of unsatisfactory or shoddy goods.
f) The right
to consumer education: It is the right to acquire knowledge and skills to be an informed
consumer because it is easier for the literate to know their rights and to take
actions to influence factors that affect consumer’s decisions. The Union and
State Governments have accepted the introduction of consumer education in
school curriculum.
g) Right to
basic needs: It is the right to receive the eight basic necessities that are required
to survive and lead a dignified life. These eight basic necessities include
food, clothing, shelter, health care, sanitation, education, energy and transportation.
h) Right to
healthy environment: It is the right to be protected against environmental pollution and
environmental degradation so as to enhance the quality of life of both the
present and future generation.
6. (a) Write notes on (any two): 6x2=12
i.
Capital Account transactions.
ii.
Authorized person.
iii.
Foreign exchange.
Or
(b) What is Foreign Exchange
Management Act? State the salient features of this Act. 4+8=12
7. Write True or False: 1x8=8
a) The Indian
Contract Act was enacted in 1972. False,
1872
b) Consideration
may not be adequate. True,
consideration must be sufficient, but need not be adequate.
c) An
agreement to sell is an executed contract. False,
executory
d) Sale of
land and building is completed according to the provision of Sale of Goods Act,
1930. False
e) Crossed
cheque can be exchanged in bank for hard cash. False
f) Bill of
Exchange has two parties. False,
three parties
g) Consumer
Protection Act recognizes six rights of consumers. True
h) FEMA
is in force from the year 2000.