Course : GDM 2nd Sem
Sub : Corporate Law
Q.1.
In the following statements only one is correct statement.
Explain Briefly?
i) ii) iii)
An invitation to negotiate is a good offer. A quasi-contract is
not a contract at all. An agreement to agree is a valid
contract.
Ans : i) Incorrect : - Its not an offer only an indication of a
willingness to consider any offers and counter offers. ii) Correct
: A quasi contract is a fictional contract created by courts for
equilable, not contractual purposes. A quasi contract is not an
actual contract, but is a legal substitute for a conterformed to
impose equity between two parties the concept of a quasi contract
that show have been formed, even through in actually it was net. It
is used when a court finds it appropriate to crecite an obligation
upon a non contracting party to avoid injusand to ensure fciwiness.
It is invoved in circumstances of unjust enrichment an is connected
with the concept of restitutes. iii). Incorrect : All contracts are
agreement to all agreement not contracts. A
contract is a legally binding agreement relationship that exist
between two or more parties to do obstain from perfoming certain
acts. An agreement is form of ceios reference between different
parties, which may be written, oral and lies upon the no of the
parties for its fulfillment rather the being in anyway enforceable.
It follows, therefore, that the loss of profit here cannot
reasonnily be considered such a consequence of the breach of
contract as could have been family and reasonably contemplated by
both the parties when they made this contract.
Q.2.
A ship-owner agreed to carry to cargo of sugar belonging to A
from Constanza to Busrah. He knew that there was a sugar market in
Busrah and that A was a sugar merchant, but did not know that he
intended to sell the cargo, immediately on its arrival. Owning to
Shipments default, the voyage was delayed and sugar fetched a lower
price than it would have done had it arrived on time. A claimed
compensation for the full loss suffered by him because of the
delay. Give your decision. Explain Briefly?
Ans :
A can claim ordinary damages. Loss of profits is a special less
and can be claimed only if the other party was aware of the
possibility of such a loss. In the absence of any expiicit
communication, we have to infer what could have been in the
contemplation of the parties from their actions. The court reasoned
that the carriers had no way of knowing that a would loose profits
if the shipments was delayed. But it is obvious that, in the great
multitude of cases of sending off sugar to third person by career
under ordinary circumstances such consequences would not, in all
probability have occurred.. Such compensation is not be given for
any remote or indirect loss or damage sustained by reason of the
breach. Compensation for failure to discharge obligation resembling
those created by contract has been incurred and has not been
discharged (any person) injured by the failure to discharged it is
entitled to receive the some compensation from the party in default
as if such person had contracted to discharge it and had broken his
contract .
Q.3.
The proprietors of a medical preparation called the Carbolic
Smoke Ball published in several newspapers the following
advertisement: 1000 reward will be paid by the
Carbolic Smoke Ball Co. to any person who contracts the
increasing epidemic influenza after having used the Smoke Ball
three times daily for two weeks according to printed directions
supplied with each ball. 1000 is deposited with the Alliance Bank
showing our sincerity in the matter. . On the faith in this
advertisement, the plaintiff bought a Smoke Ball and used it as
directed. She was attacked by influenza. She sued the company for
the reward. Will she succeed? Explain Briefly Ans : She wire not
succeed. The facts show that there was no binding contract between
the parties. The case is not like, Williams v carwardine H.B Ad 621
where the
money was to become payable on the performance of certain acts
by the plantiff, here the plantiff could not be any act of her own
establish a claim for, two establish her right to the money, it was
necessary that she should be attacked by is fwenza an event over
which she had no central. The words express an intention, but do
not amount to promise. The advertisement is too vaque to be the
basis of contract, there is no unit as to time, and no mens of
chcking the ball anyone who had influenza might come forward and
depose that he had used the ball for a fortnight and it is
impossible to disprove it. Then it is contended that it is not
binding . in the first place, it is said that is not made with
anybody in particular, now that point is common to the words of
advertisement and to the words of all other advertisements offering
rewards. They are offers to anybody who perfoms the condition named
in the advertisements and anybody who does performance the
condition accepts the offen. In point of law this advertisements is
an offerto pay 100% anybody who will perform these condition and
the performance of the condition is the acceptance of offer when an
offer is made it is neccesaary in order to make a binding contract,
not only that should be notified. I apprehend that they are an
exception to that rule. Lastly it was said there was no
consideration and that is was andum pactum. There are 2
consideration here, one is the consideration of the incovience of
having to use this carbolic smake ball for 2 week 3 times day and
the other more important consideration is the money gain likely to
accrue to the different by the enhanced of the smoke balls, by
reason of the planti use of them. This is simple consideration to
support this promise. I have only to add that as regard the policy
and the wage points in my judgement, there is nothing in either of
them.
Q.6.
In each set of statements, only one is correct. State the
correct statements & Explain briefly?
A)
i) ii) iii)
A bailee has a general lien on the goods bailed. The ownership
of goods pawned passes to the pawnee. A gratuitous bailment can be
terminated by the bailor even before the stated time.
B)
i)
A substituted agent is as good an agent of the agent as a
subagent.
ii) iii)
An ostensible agency is as effective as an express agency. A
principal can always revoke an agents authority.
Ans :
A i) A bailee has a general lien on the goods bailed is an
incorrect statement.
ii) The ownership of good pawnes passes to is incorrect
statement. For ownership to pass, goods must be specific ownership
in goods cannot pass till the goods are curtained. iii). A
gratuitous bailment can be terminated by the bailer even before the
state time is correct statement. Gratuitous bailment is one in
which neither the bailer nor the bailee is entitled to any
remuneration eg loan of book tea depositing of goods for safe
cutody without and charge.
B i) A substituted agent is as good an agent of the agent as a
sub agent is incorrect statement. The general rule is that an agent
cant delegal his authority and appoint another agent. An agent
being delegates cannot transfer in authority or duties to another ;
as per sec 19 an agent cant lawfully employ another to perform acts
which he has express implied by undertake to perform personally
unless by the ordinary custom of trade a sub agent may of form the
nature of agency the agent must be appointed section 191, a sub
agent is a person employed by an acting under the control of the
original agent in the business of agency .
ii)
An ostensible agency is an effective as an ostensible authority
exist where the principles words or conduct would lead a reasonable
person in a 3rd partys position to believe that the agent was
authorized to act, even if the principles and the purporated agent
had never discussed such relationship for example, where one person
appoints a person to person to a position which carries with agency
like power, those who know of the appointment are entitled to
assume that there is ostensible authority to do the things
ordinarily entrusted it one occupying such a position . If a
principal crecite the impression that an agent is authorized but
there is no actual authority, third parties are protected so long
as they have acted reasonably. This is
sometimes termed as agency by stopped where the principal will
be stopped from denying the grant of authority if 3rd parties have
changed their positions to their detriment in reliance on the
represent ative made. iii). A principal can always revoke an agents
authority is incorrect statement. However, principal cannot revoke
agency coupled with interest to prejudice of such interest such
agency is coupled with interest. An agency is coupled with
interest. An agency is coupled with interest. An agency is coupled
with interest when agent himself has an interest in the subject
matter of agency.
Q .8.
X needs Rs. 10,000 but cannot raise this amount because his
credit is not good enough. Y whose credit is good accommodates. X
by giving him a pronote made out in favour of X, though Y owes no
money to X. X endorses the pronote to Z for value received. Z who
is holder in due course the pronote to Z for value received. Z who
is holder in due course demands payment from Y. Can refuse and
plead the arrangement between him and X Explain briefly?
Ans :
According to sec 120 of the negotiable instrument act, e
stoppets against denying original validity of instrument, No maker
of a promissory note, and no drawer of a bill of exchange or
cheque, & no acceptor of a bill of exchange for the honor of
the drawer shell, on proof of the protest, presums the fact of
dishonor, unless and until validity of the instrument as
originally made or drawn. Thus Z is entitled to receive payment on
the instrument.
Q.10. A promissory note was made without mentioning any time for
payment. The holder added the words on demand on the face of the
instrument. State whether it amounted to material alteration and
explain the effect of such alteration. Explain briefly?
Ans :
This is not note material alteration as a promissory note where
no data of payment is specified will be treated as payable on
demand. Hence adding the word on demand does not alter the business
effect of the instrument.
Q.11.
State whether the following instruments are valid promissory
notes:
i)
I promise to pay Rs. 5000 to B on the dearth of Bs uncle
provided that D in his will gives me a legacy sufficient for the
promise of payment of the said sum.
ii)
I hereby acknowledge that I owe X Rs. 5,000 on account of rent
due and I agree that the said sum will be paid be me in regular
installments. I acknowledge myself indebted to B in Rs. 5000 to be
paid on demand for value received.
Ans : i)
It is not a promissory note because it does not contain an
unconditional promise; the amount being payable only if uncle gives
sufficient legacy.
ii)
Again its not a valid promissory note because it does not
specified the amount of monthly installment.
iii). It is valid promissory note since it fulfill all the
requirements of a promissory not as per section 4 of negotiable
instrument act.
Q.12. A Payee holder of a bill of exchange. He endorses it in
blank and delivers it to B. B endorses in full to C or order. C
without endorsement transfers the bill to D. State giving reasons
whether D as bearer of the bill of exchange is entitled to recover
the payment from A or B or C. Explain briefly? Ans : D is the
bearer and the holder of the bill in case of dishounour of the
bill, D is entitled to receive payment or recover the money by suit
from the drawer, acceptor and A who have endorsed the bill in
blank. But D canno sue B or C as sec 55. Provide the once the
instrument is endorsed in blank and subsequent endorsed in fall,
the amount cannot be claimed from the endorsen in full except by
the person to whom it has been endorsed in full. In this case, the
bill has been endorsed in blank by A. even through B has endorsed
the bill, holder D cannot claim the money from B as B as has
not
endorsed the bill in his favour C is also not liable as has not
made any endorsement.
Q.13. Ans :
Write a short note on the Doctrine of Indoor Management? Explain
briefly? Memorandum of association and articles of association are
two most important document needed for the incorporation of a
company. The memorandum of a company is the constitution of that
company. It sets out the (A) Object (B) Name Clause (C) Registered
office clauses (D) Liability Clauses (E) Capital Clauses whereas
the articles of association enumerate the internal rules of the
company under which it will be governed. Undoubtly , both
memorandum of association and the articleos association are public
documents in the sense that any person under section 6/0 of Indian
company act, 1956 may inspect any document which will include the
memorandum and articles of the company kept by the registrar of
companies in accordance with the rules need under the distruction
of records act 1917
being document field registrar in pursuance of the act. The
doctrine of indoor management is an exception to the rule of
constructive notice. It imposes an important limitation on the
doctrine of constructive notice. According to this doctrine :
person dealing with the company are entitled to presume the
internal requirements prescribed in memorandum and articles have
been properly absorbed. A transaction has two aspects, namely
substantive and procedural. An outside dealing with the company can
only find out the substantive aspect by reading the memorandum and
articles. Even through he may find out the procedural aspect, he
cannot find out wheather the procedure has been followed or
note.
Q.14.
The shareholders at an annual general meeting passed a
resolution for the payment of dividend at a rate higher than that
recommended by the Board of Directors. Examine the validity of the
resolution. Explain briefly?
Ans
:
Dividend : According to regulation 85 of Table A of the
companies Act 1956, a company in general meeting may declare
dividend recommended by the board of the director of the company.
The share holders at an annual general meeting may reduce the
amount of dividend , recommended by the board of direction of the
of the company, but they cannot increase it. Hence the resolution
passed at the annual general meeting for payment of dividend at a
rate higher than that recommended by the board of directors is not
valid.
Revelation of deedbred dividend
Ordinary a dividend once declared at annual general meeting,
cannot be resolved, except, with the consent of shave holders, for
a declaration of dividend creates a dbt to the share holders in
whose favour it is declared if dividend creates a debt to the share
holders in whose favour it is declared if divident it declared and
the amount paid or credited to the share holders as dividend. The
character of the credit as payment as dividend cannot be altered by
a subsequent resolution., But where a dividend has been it legally
declared as where, desk to events interveuring after the
declaration, such as fire destroying the company property as the
out breach of a war, as the imposition of new heavy tax triden on
ther causes diminishing the assets of the company males it
adviseable to conserve the remaining assets, the board of directors
will be justified in revoliens the declaration of dividend.
Q.18.
A insured his house against fire. Later while insure, A killed
his wife, severely injured his only son, set fire to the house and
died in the fire. The son survived and sued the insurer for the
fire loss, advice the insurer. Explain briefly?
Ans :
Because the fire was set deliberately they would not cover the
cost. It as not accidental and as the son did not insure himself,
if the insurance company will not pay out and I believe they would
not because it was not a tenant, therefore, they would not cover
any lost of property or life but if the son had his own personal
insurance to cover himself for any injury. Loss of property, they
would have paid out.
I thinks its because he lives in the same house and a relative
and the fire was arson, they will not pay, then again it depends on
the insurance policy..
Q.21.
Avinash booked his goods with Superfast Freight Carriers at
Delhi for being carried to Ferozabad. The goods receipt note
mentioned that all the disputes would be subject to jurisdiction of
the Mumbai Court. Avinash lodged a complaint for certain deficiency
in service against the transporter in the District Forum at Delhi.
Superfast Carriers contested that District Forum at Delhi had no
jurisdiction to entertain the complaint as the head office of the
transporter was at Mumbai and the jurisdiction has been clearly
stated in the goods receipt not. Is the contet nation of the
transporter tenable? Explain briefly?
Ans :
The contention of the transporter is not tenable. This is based
on the facts in the paras vs Roshan freight carrier case, where in
the national commission has ruled that the parties could not confer
jurisdiction on a Court which had no jurisdiction.
The agreement signed between the parties conferring exclusion
jurisdiction on a particular court was of no avail. In the case at
hand, Avinash had booked his goods with superfast freight carriers
in delhi for being carried to ferozabad. As per sec 11 (2) , a
complain shall be instituted with in the local limits of whose
jurisdiction the cause of action arises, wholly or in part. In case
of deficiency in service, Avinash is competent to lodge a complain
in delhi.
Q.22.
With reference to the provisions of the Consumer Protection Act,
1986, decide the following giving reasons in support of your
answer.
i)
Sukh Dukh Ltd. dispatched certain consignments of goods by road
through Fastrack Roadways Ltd. The goods were unloaded and stored
in a godown enroute on the suggestion of consignee. A fire broke
out in the neighbouring godown spread to the godown and goods were
destroyed. The Fastrack Roadways Ltd. claimed that there was
neither negligence nor deficiency in service on their part and
goods were being carried at Owner risk and since no special premium
was paid, they were not responsible for the loss caused by fire.
Whether Fastrack Roadways Ltd. is liable to pay damages to
consignor? Life Insurance Corporation (LIC) formulated a scheme
called salary saving scheme under which employees of an
organisation could buy an insurance policy. Premium due on each
policy was collected by the employer from the salary of the
employees nor did it issue any premium notice. When the widow of
the deceased employee made a claim to LIC on the death of her
husband, the LIC repudiated the claim on the ground that four
ii)
installments of premium had not been paid. The widow was
approached the consumer forum for redressal. Is the LIC liable for
deficiency in service? Explain? iii). Raman booked a ticket from
Delhi to New York by Lufthansa Airlines. The airport authorities in
New Delhi did not find any fault in his visa and other documents.
However, at Frankfurt airport authorities instituted proceedings of
verification because of which Raman missed his flight to New York.
After necessary verification, Raman was able to reach New York by
the next flight. The airline authorities tendered apology to Raman
for the inconvenience caused to him and also paid as goodwill
gesture a sum of Rs. 5,000. Raman intends to institute proceedings
under the Consumer Protection Act, 1986 against Lufthansa Airlines
for deficiency in service. Will he succeed?
Ans :
i)
The present problem is based on nath bros exis international
ltd. V best
roadways ltd 2000 (2) scale 5ft, where the national commission
dismissed the claim. The supreme court allowed the appeal and held
that the liability of the carrier is that of an insuner and is
absolute in terms in the sense that the carrier has to deliver the
good, at destination indicated by the consignor safe, without
causing any damage and without any loss to theme. So long as the
goods were in the custody of the carrier it would be his duty to
take care as he would have taken of his own goods. Even if the
goods had been carried at owner risk the carried visk the carrier
would not fully absolved of its liability if the loss or damage was
occasioned on account of its negligence or that of its agent and
seewants.
Based on t he above state case, it can be inferred that fast
track Roadways ltd. Is liable to pay damages to sukh dukh ltd.
iii)
LIC is liable for deficiency in services. In the instant case
the employer had implied authority to called premium on behalf of
the corporation. There is no gain saying the fact that if the
employer had, after deduction the stipulated amount from the
employees salary failed to remit the premium to the corporation it
was clearly the fault of the agent of the corporation so, LIC has
wrongly discharged its liability under the policy. The present
problem is similar to delhi electric supply undertaking V Basant
devi 1999 (6) scale 236. Where it was held that since the burden of
collection the premium and remitting it to the corporation was on
the employer, it was net the responsibilities of the employee to
intimate the corporation about non remitiance of premium of
premium.
iii).
The present problem is similar to ravneet singh bagged and KLM
royal dutch Airlines 1999 (7) scale 47. In the present problem
lefthansa airlines could not be held to be quality of clerifency in
service. Although roman had been subjected to harassment, it is
equally true that none of respondents would be held quality of
deficiency in service. The airline authorities tender apology to
raman for inconvience caused to him $ also paid him taken of
compensation. Deficiency of semue could not be alleged without
attributing fault, imperfection or shouteoming or inadequately in
the quality nature & manner of performance which is required to
be performed by a person in persurance of a CONTRACT or otherwise
in relation to any service. S. Raman will not succed if the
institute proceeding under consumer protective act.
Q.23.
With reference to the provisions of the Consumer Protection Act,
1986, decide t he following giving reasons in support of your
answer.
i)
Sohn sent all relevant documents in an envelope regarding
consignment of goods to a buyer in the USA through Fast Service
Couriers. The documents did not reach the buyer as a consequence of
which the buyer could not take delivery of the goods. By the time
the duplicate copies of the document had been received by the
buyer, the season of the goods was over. He claimed that he had
suffered a loss of US $ 5,000 as a result of the negligence of the
courier. The State Commission ordered the payment to be made by the
Fast Service Couriers, but the National Commission in appeal
reversed the order and ordered payment of US $ 100 only as per the
receipt issued by the Fast Service Courier to the consignor at the
time of the dispatch of the latter. Advise Sohan.
ii)
Mahesh purchased a machine from Astute Ltd. to operate it
himself for earning his liverhood. He took the assistance of a
person to assist him in operating the machine. The machine
developed fault during the warranty period. He filed a claim in the
consumer forum against the company for deficiency in service.
Astute Ltd. alleged that Mahesh did not operate the machine himself
but had appointed a person exclusively to operate the machine. Will
Mahesh succeed?
iii)
Pillai purchased a car by taking a loan from Kerala cooperative
Bank Ltd. and gave postdated cheques to the bank not only in
respect of repayment of loan instalments but also of premium of
insurance policy for two succeeding years. On the expiry of the
policy. Pillais car met with an accident. Will Pillai succeed in
getting a claim against the Bank ?
Ans :
Sohan sent all relevant documents in an envelop regarding
consignment of goods to a tryer in the U.S through fast service
couriers. The documents did not reach the tryer as a consequence of
which the buyer could not delivery of the goods. By the time
duplicate copies of the documents had been received by the buyer,
the reason of goods was over. He claimed that he had suffer a loss
of US $5000 as the result of the negligence of the courier. The
state commission order the payment to the made by first so much
courier, but the national commission in appeal reversed the order
amd ordered payment of $100 only as per the receipt issue by fast
service to the consigner at the time of dispatch of the letter.
