Business Law: Concepts and Theories

Business Law: Concepts and Theories

Caveat Emptor

Caveat emptor (Latin term) means “let the buyer beware”. It means the buyer is responsible if the product fails to meet expectations or has some defects. This doctrine places the responsibility on buyers to reasonably examine the product/service before accepting it and take responsibility for its condition. The term was commonly used in real estate related things, but also applied to few other goods, as well as some services.

Over time, this approach resulted in several dis-satisfied buyers who felt cheated with the sellers. Over time, the caveat emptor got replaced with the caveat venditor, which now places the onus on the seller.

Please help Rakesh in the following:

a. Is Rakesh’s claim defeated under the principle of Caveat Emptor? Please give reasons for your answers. (5 Marks)
b. Assuming if Rakesh wanted to pursue this case before a Consumer Court, what are the remedies he would apply for?

Contracts in India

The Indian Contract Act, 1872 prescribes the law relating to contracts in India. Based on the circumstances, the act ensures that promises made by the parties to a contract are legally binding and the law enforces these rights and duties.

Website: The Indian Contract Act, 1872

Various Methods of Settlement of Disputes

There are various ways of settling disputes, besides going to court.

In India, it takes years for settlement of disputes as India courts already have a long list of pending cases. The good thing is that people can now opt for other methods of settling disputes.

• Arbitration is a procedure in which two or more parties, who are in dispute because of an agreement, go to an arbitrator (instead of court) who makes a binding decision (on the basis of their knowledge and experience) which is applicable to all the parties.

• Alternate Dispute Resolution (ADR) or external dispute resolution refers to dispute resolution processes and techniques (other than by litigation) that enable conflicting parties to reach a settlement. ADR is a comprehensive term used to refer to the ways that parties can use for settling disputes, with or without the help of a third party.

• Conciliation: As an important ADR technique, conciliation bridges the gap that may arise between parties due to disputes or conflicts. It brings an equilibrium in the concerns of both parties, so that a mutual agreement is obtained. A third party is involved in this process, which tries to mediate and make a compromise between the disputing parties.

• Mediation implies an involvement of a third party called a mediator as a dispute resolution practitioner who facilitates the resolution of disputes between the parties. Mediation take place when: Direct negotiations have failed, or are complex and difficult, or when multiple parties are involved, leading to confusion.

• Negotiation is an informal technique of resolving a dispute, where the parties in dispute directly try to communicate with each other and reach a conclusion. This is a preferred technique of dispute resolution when the parties want to maintain an on-going relationship with each other.

Alternate Dispute Resolutions (ADR)

Alternative Dispute Resolution (“ADR”) refers to any means of settling disputes outside of the courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation, mediation, and arbitration. Mediation is also an informal alternative to litigation.

If there’s a major problem related to money, something is not delivered as per contract, if a product/service is inferior, the more common approach is to take a legal action and go to court, which is a lengthy process in India (and in most places)
But thankfully there are quicker ways to settle their disputes, other than through litigation, which people are resorting to. Want a share in your ancestral property? Not happy with the way you were terminated from the company? You always have the option of going to court. But you also have access to another method (Alternative Dispute Resolution) of resolving disputes that is easier to pursue, is quicker and much cheaper, compared to going to court. More and more high-profile labour disputes, divorce actions, and personal injury claims, are getting settled using ADR, that would otherwise result in litigation.
Alternative Dispute Resolution (ADR) involves resolving disputes without having to go through the formal process of filing a court case. Also commonly known as mediation, ADR is a great method to help resolve conflict without getting into a lot of hassle. We all are well aware of how court cases can drag on for years, wasting valuable time as well as lot of money. That is why many parties are keen to look for alternate methods that will help them resolve their problems; ADR works in most situations and has become a sought after method to resolve issues among warring parties.

Competition Law in India

Competition laws are required to protect the market from distortions and abuse of power. These laws also help in the promotion of domestic industries ensuring they are not crushed by the fat wallet of global players. However, it is also important to be in tune with the needs of the business mind. Keeping all these factors in mind, the Competition Act was enacted in India. Competition Commission of India (CCI) was established under the Competition Act, 2002 for the administration, implementation and enforcement of the Act. The objectives of the Commission include preventing practices having adverse effect on competition, promote and sustain competition in markets, protect the interests of consumers and ensuring freedom of trade.

So, for example, if businesses are planning for merger or acquisition, they need to take the approval of the CCI who will then check if the deal is likely to cause any appreciable adverse effect on competition in a market in India, or may lead to a situation where the new company becomes very strong and could abuse its dominance in the market by driving out existing companies, or it may lead to market monopoly which may result in reduced quality of services to the consumer.

Any person can file an application or information before the Secretary of Commission to investigate a matter and if the CCI finds that there is a prima facie case, it has to investigate the case further.

Bailment vs Pledge

Key differences between Bailment and Pledge.

• Bailment refers to hand over or transfer of goods from one party to another party for some specific purpose. Pledge, on the other hand, implies a contract, where an article/thing is deposited with the money lender, as security for repayment of a debt.
• The use of goods is prohibited in pledge, whereas in bailment the goods can be used them.
• The word Bailment is derived from the French word ‘Bailor’, which means ‘to deliver’. It means possession goes voluntarily from one person to another.
• Pledge is a special kind of bailment. If the goods are bailed as a security for payment of a debt or performance of a promise, it is called Pledge.
• Example of Bailment: Sam delivers a cloth to John, a tailor making a shirt . The contract between Sam and John is bailment
• Example of Pledge: If a Farmer delivers to bank 50 bags of wheat as security for obtaining a loan, it is called pledge.

 

Right to Information Act (RTI)

Right to Information (RTI) is an Act of the Parliament of India. Under the provisions of the Act, any citizen of India may request information from a “public authority” (a body of Government or “instrumentality of State”) which is required to reply expeditiously or within thirty days.

The RTI Act is a great tool for the common man as it allows them to seek information from the government on important matters, such as how funds are being used for development projects. But it must be clearly understood that giving information to the citizens is the rule; and denying it is an exception.

RTI Act mandates timely response to citizen requests for government information. It is an initiative taken by Department of Personnel and Training, Ministry of Personnel, Public Grievances and Pensions to provide a– RTI Portal Gateway to the citizens for quick search of information on the details of first Appellate Authorities, PIOs etc. amongst others, besides access to RTI related information / disclosures published on the web by various Public Authorities under the government of India as well as the State Governments.

Website: https://rtionline.gov.in

There are several reasons why a request could be rejected. There are also several categories of information that are exempt from disclosure; certain Intelligence and Security Organisations are also exempt from the purview of the Act.

Information Technology Act – Indian IT Act

After the United Nations adopted the UNCITRAL Model Law on E-Commerce, India passed the Information Technology Act 2000 in May 2000 and notified it for effectiveness on October 17, 2000.

The Information technology Act 2000 has been substantially amended through the Information Technology Amendment Act 2008.

Useful Links

• THE INFORMATION TECHNOLOGY ACT, 2008
• THE INFORMATION TECHNOLOGY ACT, 2000
• More on the Information Technology Act

Major Legal Issues on the Internet

When it comes to crimes on the internet, there are several instances that involve theft, fraud, mischief, misrepresentation, breach of trust, Obscenity, Impersonation, statements hurting religious sentiments, Criminal intimidation, Defamation, and so on.

The major legal issues surrounding websites however are because of the following:

• Domain Names
• Trademark, Copyrights & Patent Law Issues
• Data Privacy & Protection
• Financial / identity related crimes
• Content related
• Pornography
• Intermediary liability
• Electronic evidence

 

Consumer Protection Law

India’s Consumer Protection Law came into existence in 1986. The law protects hassled consumers from deficient products and services that are offered by sellers.