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DRIVE-FALL 2013 PROGRAM-MBA SEMESTER-III

MB0051 LEGAL ASPECTS OF BUSINESS Q1.Wri ! "#$r %$ !" &i # !'()*+!", a) O--!r (%. (//!* (%/! b) C(*(/i 0 $ /$% r(/ 1O--!r (%. (//!* (%/! &i # !'()*+!"2 C(*(/i 0 $ /$% r(/ &i # !'()*+!"3 525 A%"&!r, O--!r (%. A//!* (%/! So far, we have seen the definition of a contract. Now, we will discuss offer and acceptance. Offer is the basic building block on which a contract rests. An offer is synonymous with a proposal. As per Section 2 a) of the !ontract Act, the offer or or proposer e"presses his#her willingness to do or not to do something i.e., act or abstain from doing something) with a view to obtain consent of the other party to such act or abstinence. O--!r (%. (//!* (%/! are elements re$uired for the formation of a legally binding contract% the e"pression of an offer to contract on certain terms by one person the &offeror&) to another person the &offeree&), and an indication by the offeree of its acceptance of those terms. 'he other elements traditionally re$uired for a legally binding contract are i) consideration and ii) an intention to create legal relations. Offer and acceptance analysis is a traditional approach in contract law. 'he offer and acceptance formula, developed in the ()th century, identifies a moment of formation when the parties are of one mind. 'his classical approach to contract formation has been weakened by developments in the law of estoppel, misleading conduct, misrepresentation and un*ust enrichment.

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'reitel defines an offer as &an e"pression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed&, the &offeree&. +(, An offer is a statement of the terms on which the offeror is willing to be bound. -t is the present contractual intent to be bound by a contract with definite and certain terms communicated to the offeree. 'he e"pression of an offer may take different forms, such as a letter, newspaper advertisement, fa", email and even conduct, as long as it communicates the basis on which the offeror is prepared to contract. .hether the two parties have reached agreement on the terms or whether a valid offer has been made is an issue which is determined by the courts using criteria known as /the ob*ective test/ which was e"plained in the leading 0nglish case of Smith v. Hughes.+2, -n Smith v. 1ughes, the court emphasised that the important thing in determining whether there has been a valid offer is not the party/s own sub*ective) intentions, but how a reasonable person would view the situation. 2nless the offer included the key terms of the contract, it cannot be the basis of a binding contract. 3or e"ample, as a minimum re$uirement for sale of goods contracts, a valid offer must include at least the following 4 terms% 5elivery date, price, terms of payment that includes the date of payment and detail description of the item on offer including a fair description of the condition or type of service. 2nless the minimum re$uirements are met, an offer of sale is not classified by the courts as a legal offer but is instead seen as an advertisement.

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'he contract in Carlill v Carbolic Smoke Ball Co+6, was of a kind of contract known as a unilateral contract, one in which the offeree accepts the offer by performing an act which indicates their agreement with the bargain. -n !arlill/s case this involved using a flu remedy, but the act could be something as simple as raising an eyebrow or wearing a certain color t7shirt. A unilateral contract can be contrasted with a bilateral contract, where there is an e"change of promises between two parties. -n Australian Woollen Mills Pty Ltd v. The Common ealth ()84), the 1igh !ourt of Australia held that, for a unilateral contract to arise, the promise must be made &in return for& the doing of the act. 'he court distinguished between a unilateral contract and a conditional gift. 'he case is generally seen to demonstrate the connection between the re$uirements of offer and acceptance, consideration and intention to create legal relations. b) 'he /(*(/i 0 of both natural and legal persons determines whether they may make binding amendments to their rights, duties and obligations, such as getting married or merging, entering into contracts, making gifts, or writing a valid will. !apacity is an aspect of status and both are defined by a person/s !ersonal la % for natural persons, the law of domicile or le" domicilii in common law *urisdictions, and either the law of nationality or le" !atriae, or of habitual residence in civil law states9 for legal persons, the law of the place of incorporation, the le" incor!orationis for companies while other forms of business entity derive their capacity either from the law of the place in which they were formed or the laws of the states in which they establish a presence for trading purposes depending on the nature of the entity and the transactions entered into. .hen the law limits or bars a person from engaging in specified activities, any agreements or contracts to do so are either voidable or void for i%/(*(/i 0. Sometimes such legal incapacity is referred to as incom!etence. 3or comparison, see !ompetence law). As an aspect of the social contract between a state and its citi:ens, the state adopts a role of protector to the weaker and more vulnerable members of society. -n public policy terms, this is the policy of parens patriae. Similarly, the state has a direct social and economic interest in promoting trade, so it will define the forms of business enterprise that may operate within its territory, and lay down rules that will allow both the businesses and those that wish to contract with them a fair opportunity to gain value. 'his system worked well until social and commercial mobility increased. Now persons routinely trade and travel across state boundaries both physically and electronically), so the need is to provide stability across state lines given that laws differ from one state to the ne"t. 'hus, once defined by the personal law, persons take their capacity with them like a passport whether or however they may travel. -n this way, a person will not gain or lose capacity depending on the accident of the local laws, e.g. if A does not have capacity to marry her cousin under her personal law a rule of consanguinity), she cannot evade that law by travelling to a state that does permit such a marriage see nullity). -n Saskatchewan !anada, an e"ception to this law allows married persons to become the common law spouse spouse of other s) prior to divorcing the first spouse. 'his law is not honored amongst other !anadian provinces.

Q2. Di"/4"" #! ri5# " (%. +i(6i+i i!" $- ( "4r! 0. 1Ri5# "2 Li(6i+i i!"3 52 5 A%"&!r, Ri5# " $- "4r! 0 ;ights of surety may be classified under three heads%

;ights against the creditor ;ights against the principal debtor ;ights against co7sureties A "4r! 0, "4r! 0 6$%. or 54(r(% 0, in finance, is a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults. 'he person or company providing this promise is also known as a &surety& or as a &guarantor&. A surety most typically re$uires a guarantor when the ability of the primary obligor or !rinci!al to perform its obligations to the obligee counterparty) under a contract is in $uestion, or when there is some public or private interest which re$uires protection from the conse$uences of the principal/s default or delin$uency. -n most common7law *urisdictions, a contract of suretyship is sub*ect to the Statute of 3rauds or its e$uivalent local laws) and is only enforceable if recorded in writing and signed by the surety and by the principal. -n the 2nited States of America, the <iller Act may re$uire a surety bond for certain federal pro*ects9 in addition, many states have adopted their own &=ittle <iller Acts&.+(, 'he surety transaction will typically involve a producer,+2,9 in the 2nited States the National Association of Surety >ond ?roducers NAS>?) is a trade association which represents this group. -f the surety is re$uired to pay or perform due to the principal/s failure to do so, the law will usually give the surety a right of subrogation, allowing the surety to &step into the shoes of& the principal and use his the surety/s) contractual rights to recover the cost of making payment or performing on the principal/s behalf, even in the absence of an e"press agreement to that effect between the surety and the principal. 'raditionally, a distinction was made between a suretyship arrangement and that of a guaranty. -n both cases, the lender gained the ability to collect from another person in the event of a default by the principal. 1owever, the surety/s liability was *oint and primary with the principal% the creditor could attempt to collect the debt from either party independently of the other. 'he guarantor/s liability was ancillary and derivative% the creditor first had to attempt to collect the debt from the debtor before looking to the guarantor for payment. <any *urisdictions have abolished this distinction, in effect putting all guarantors in the position of the surety. -n the 2nited States, under Article 6 of the 2niform !ommercial !ode, a person who signs a negotiable instrument as a surety is termed an accommodation !arty9 such a party may be able to assert defenses to the enforcement of an instrument not available to the maker of the instrument. 1. Ri5# " (5(i%" #! /r!.i $r -n case of fidelity guarantee, the surety can direct a creditor to dismiss the employee whose honesty he#she has guaranteed, in the event of proven dishonesty of the employee. 'he creditor@s failure to do so will e"onerate the surety from his#her liability. 2. Ri5# " (5(i%" #! *ri%/i*(+ .!6 $r Ri5# $- "46r$5( i$%, After paying the guaranteed debt, the surety steps into the shoes of the creditor and ac$uires all the rights which the latter had against the principal debtor i.e., he gets subrogated to all the rights and remedies available to the creditor) Sec. (4A). -f the creditor has the right to stop goods in transit or has a lien, the surety, on payment of all he is liable for, will be entitled to e"ercise these rights. Ri5# (" $ "!/4ri i!" &i # #! /r!.i $r % 'he surety has the right to proceed against such securities of the principal debtor, as the creditor could himself proceed. Ri5# $- i%.!)%i 0, 'he surety is entitled to be indemnified by the principal debtor for all payments rightfully made by him Sec. (48). C$)*!+ #! *ri%/i*(+ .!6 $r $ *!r-$r) #! *r$)i"!, 'he surety has also the right to insist the principal

debtor to perform the promise. 'he surety can, before making payment, compel the debtor to relieve him from liability by paying of the debt, provided that liability is an ascertained and subsisting one.

Q3. 7$& i" (% (5!%/0 -$r)!.8 Di"/4"" #! /+(""i-i/( i$% $- (5!% ". 1F$r)( i$% $- (5!%/02 C+(""i-i/( i$% $(5!% "3 52 5 A%"&!r, 'he C!% r(+ I% !++i5!%/! A5!%/0 CIA) is one of the principal intelligence7gathering agencies of the 2nited States federal government. 'he !-A/s head$uarters is in =angley, Birginia, a few miles west of .ashington, 5.!.+C, -ts employees operate from 2.S. embassies and many other locations around the world. +D,+), 'he only independent 2.S. intelligence agency, it reports to the 5irector of National -ntelligence.+(A, 'he !-A has three traditional principal activities, which are gathering information about foreign governments, corporations, and individuals9 analy:ing that information, along with intelligence gathered by other 2.S. intelligence agencies, in order to provide national security intelligence assessment to senior 2nited States policymakers9 and, upon the re$uest of the ?resident of the 2nited States, carrying out or overseeing covert activities and some tactical operations by its own employees, by members of the 2.S. military, or by other partners.+((,+(2,+(6,+(4,+(8, -t can, for e"ample, e"ert foreign political influence through its tactical divisions, such as the Special Activities 5ivision.+(E, -n 2A(6, the .ashington ?ost reported that the !-A/s share of the National -ntelligence ?rogram N-?), a non7 military component of the overall 2S -ntelligence !ommunity >udget, has increased to 2DF in 2A(6, e"ceeding the N-? funding received by military agencies the National ;econnaissance Office N;O) and the National Security Agency NSA).+4,+(C, 'he !-A has increasingly taken on offensive roles, including covert paramilitary operations.+4, One of its largest divisions, the -nformation Operations !enter -O!), has shifted focus from counter7terrorism to offensive cyber7operations.+(D, 'he !-A succeeded the Office of Strategic Services OSS), formed during .orld .ar -- to coordinate secret espionage activities against the A"is ?owers for the branches of the 2nited States Armed 3orces. 'he National Security Act of ()4C established the !-A, affording it &no police or law enforcement functions, either at home or abroad&.+(),+2A, 'here has been considerable criticism of the !-A relating to security and counterintelligence failures, failures in intelligence analysis, human rights concerns, e"ternal investigations and document releases, influencing public opinion and law enforcement, drug trafficking, and lying to !ongress. +2(, Others, such as 0astern bloc defector -on <ihai ?acepa, have defended the !-A as &by far the world@s best intelligence organi:ation,& and argued that !-A activities are sub*ected to scrutiny unprecedented among the world/s intelligence agencies.+22, According to its fiscal 2A(6 budget, the !-A has five priorities%+4, !ounterterrorism, the top priority, given the ongoing Global .ar on 'error. Nonproliferation of nuclear and other weapons of mass destruction, with North Horea described as perhaps the most difficult target. .arning American leaders of important overseas events, with ?akistan described as an &intractable target&. !ounterintelligence, with !hina, ;ussia, -ran, !uba, and -srael described as &priority& targets.

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'he 5irector of the !entral -ntelligence Agency 5#!-A) reports directly to the 5irector of National -ntelligence 5N-)9 in practice, he deals with the 5N-, !ongress usually via the Office of !ongressional Affairs), and the

.hite 1ouse, while the 5eputy 5irector is the internal e"ecutive. 'he !-A has varying amounts of !ongressional oversight, although that is principally a guidance role. 'he 0"ecutive Office also facilitates the !-A/s support of the 2.S. military by providing it with information it gathers, receiving information from military intelligence organi:ations, and cooperating on field activities. 'wo senior e"ecutives have responsibility, one !-A7wide and one for the National !landestine Service. 'he Associate 5irector for <ilitary Support, a senior military officer, manages the relationship between the !-A and the 2nified !ombatant !ommands, who produce regional#operational intelligence and consume national intelligence9 he is assisted by the Office of <ilitary Affairs in providing support to all branches of the military.
+26,

-n the National !landestine Services, an Associate 5eputy 5irector for Operations for <ilitary Affairs +24, deals with specific clandestine human7source intelligence and covert action in support of military operations. 'he !-A makes national7level intelligence available to tactical organi:ations, usually to their all7source intelligence group Q:. Di"/4"" #! r!5i" r( i$% $- -ir) 4%.!r "!/ i$% 5; $- I%.i(% P(r %!r"#i* A/ 2 1<32. E'*+(i% &#( *(r %!r"#i* .!!. i". 1R!5i" r( i$% $- -ir)2 P(r %!r"#i* .!!.3 :2 = A%"&!r, R!5i" r( i$% $- Fir)" 1S!/ i$%" 5;-5<3 1. A**+i/( i$% -$r r!5i" r( i$% Section 8D lays down the procedure for registration of partnership firms. A partnership firm may be registered at any time by post, or delivering to the ;egistrar of 3irms of the area in which the business of the firm is situated or proposed to be situated, a statement in the prescribed form and accompanied by the prescribed fee, stating% 3irm@s name ?lace or the principal place of business Names of any other places where the firm carries on business

5ate when each partner *oined the firm Names in full and addresses of the partners, and 5uration of the firm
SHORT TITLE, EXTENT AND COMMENCEMENT 1.1 The Indian Partnership Act, 1932 (hereinafter referred to as the Act.) applies to the whole of India except the State of Ja ! " #ash ir. The Act has co e into force w.e.f. 1st da$ of %cto&er, 1932 with the assent of the 'o(ernor 'eneral of India on )th April, 1932. 1.2 The total Act has &een di(ided into *i+ht ,hapters o!t of which there is onl$ one ,hapter- i.e,. ,hapter .II co prisin+ of sections ran+in+ fro /0 to 11 the application of which has &een ade optional to all the i ple entin+ States. 2) WHAT IS PARTNERSHIP 2.1 Partnership is the relation &etween persons who ha(e a+reed to share profits of a &!siness carried on &$ all or an$ of the actin+ for all. 2.2 Persons who ha(e entered into partnership with one another are called indi(id!all$ 2partner2 and collecti(el$ 2a fir 2. 2.3 3hen d!ration of partnership is not defined, the partnership is 2partnership at will2. 3hen persons &eco e partner for a partic!lar (ent!re or for a specified ti e, it is called a 2partic!lar partnership2. 3) RELATIONSHIP BETWEEN THE PARTNERS 3.1 4elationship &etween the partners is defined thro!+h the partnership deed. 3.2 Partnership 5eed is necessar$ !nder section /)(1) at the ti e of re+istration of an$ fir . Tho!+h, there is no re6!ire ent of ha(in+ an$ instr! ent in writin+ at the ti e of ad ission and 7 or retire ent or dissol!tion of fir , !nder 4!le 10 of Indian Partnership 4!les, 19)9, the 4e+istrar of 8ir s (who is a re+isterin+ a!thorit$ to re+ister the fir ) is e powered to ta9e on record the e(idence in s!pport of re+isterin+ an$ partnership. Therefore, the 5eed is necessar$ to &e exec!ted to place on record the relationship of partners at the ti e of re+istration and at s!&se6!ent chan+es to re+ister s!ch chan+es. 3.3 .ario!s for s as are re6!ired to &e filled !p and filed with the 4e+istrar need certain infor ation. Therefore, it is necessar$ to ha(e that infor ation incorporated in the deed which 4e+istrar can (erif$ while scr!tini:in+ the for s and !lti atel$ re+ister the fir . ;a es and Addresses of Partners are to &e entioned in the &e+innin+ paras. Partnership 5eed sho!ld, therefore, contain followin+ cla!ses. (i) ;a e of the fir (ii) 5ate of co ence ent of <!siness of the fir (iii) Address incl!din+ address of the additional place7s of <!siness of the fir (i() ;at!re of <!siness (() 5!ration ((i) Sharin+ of Profit " =oss &etween Partners ((ii) ,apital of the fir The a&o(e cla!ses are necessar$ in all deeds, since the entr$ on record which is f!rnished &$ the 4e+istrar to the 8ir +i(es the a&o(e infor ation as recorded in the 4e+ister. If for an$ reason, an$ of the a&o(e cla!ses are issin+ fro the deed, the re+istration proced!re cannot &e co pleted. As re+ards Point ;o. ((ii) a&o(e, it sho!ld &e noted that to &e a (alid doc! ent, partnership deed sho!ld necessaril$ &e on a sta p paper of re6!isite (al!e and this (al!e is deter ined &$ the a o!nt of capital. 3.> An$ additional cla!ses can &e incorporated &$ the partners as re6!ired &$ the . 3./ ?ence, relationship &etween partners ri+ht fro Partnership. for ation to dissol!tion is entioned in the 5eed of

4) RELATIONS OF PARTNERS TO THIRD PARTIES

>.1 A partner is the a+ent of the fir

for the p!rposes of the &!siness of the fir . in ordinar$ co!rse of &!siness, conferred &$ section 19 is

>.2 The a!thorit$ of a partner to &ind the fir called 2i plied a!thorit$2 of a partner.

>.3 The partners in a fir a$, &$ contract &etween the partners, extend or restrict the i plied a!thorit$ of an$ partner. *(er$ partner is lia&le @ointl$ with other partners and also se(erall$ for all acts of the fir done while he is a partner.

Q5. W#( .$ 0$4 )!(% 60 %!5$ i(6+! i%" r4)!% "8 W#( (r! #! 9(ri$4" 0*!" $- %!5$ i(6+! i%" r4)!% " r!/$5%i>!. 60 #! %!5$ i(6+! i%" r4)!% " (/ 2 1;;18 1M!(%i%52 0*!"3 32 ? A%"&!r, N!5$ i(6+! I%" r4)!% " 5ocuments that are freely used in commercial transactions and monetary dealings are known as negotiable instruments, if they satisfy certain conditions. 'he term Inegotiable instrumentJ refers to a written document transferable by mere delivery or by indorsement and delivery to enable the transferee to get a title in the instrument. An instrument may possess the characteristics of negotiability either by statute or usage. =aws relating to negotiable instruments are contained in the Negotiable -nstruments 'he history of the present Act is a long one. 'he Act was originally drafted in (DEE by the 6rd -ndia =aw !ommission and introduced in 5ecember, (DEC in the !ouncil and it was referred to a Select !ommittee. Ob*ections were raised by the mercantile community to the numerous deviations from the 0nglish =aw which it contained. 'he >ill had to be redrafted in (DCC. After the lapse of a sufficient period for criticism by the =ocal Governments, the 1igh !ourts and the chambers of commerce, the >ill was revised by a Select !ommittee. -n spite of this >ill could not reach the final stage. -n (DDA by the Order of the Secretary of State, the >ill had to be referred to a new =aw !ommission. On the recommendation of the new =aw !ommission the >ill was re7 drafted and again it was sent to a Select !ommittee which adopted most of the additions recommended by the new =aw !ommission. 'he draft thus prepared for the fourth time was introduced in the !ouncil and was passed into law in (DD( being the Negotiable -nstruments Act, (DD( Act No.2E of (DD()+(, 'he most important class of !redit -nstruments that evolved in -ndia were termed 1undi. 'heir use was most widespread in the twelfth century, and has continued till today. -n a sense, they represent the oldest surviving form of credit instrument. 'hese were used in trade and credit transactions9 they were used as remittance instruments for the purpose of transfer of funds from one place to another. -n <odern era 1undi served as 'ravellers !he$ues.+2,

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According to Section of the Negotiable -nstruments Act means &A negotiable instrument means a promissory note, bill of e"change or che$ue payable either to order or to bearer./ +6, >ut in Section (, it is also described that L$/(+ !' !% 2 S(9i%5 $- 4"(5! r!+( i%5 $ #4%.i"2 ! /.2 C$))!%/!)!% . 7-t e"tends to the whole of -ndia but nothing herein contained affects the -ndian ?aper !urrency Act, (DC(, Section 2, or affects any local usage relating to any instrument in an oriental language. ?rovided that such usages may be e"cluded by any words in the body of the instrument, which indicate and intention that the legal relations of the parties thereto shall be governed by this Act9 and it shall come into force on the first day of <arch, (DD2.+6, <ain 'ypes of Negotiable -nstruments are

(. -nland -nstruments 2. 3oreign -nstruments 6. >ank 5raft+4,+8, 4. bearer

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.e prefer to carry a small piece of paper known as !he$ue rather than carrying the currency worth the value of the !he$ue. >efore ()DD there being no provision to restrain the person issuing the !he$ue without having sufficient funds in his account. Of course on 5ishonoured che$ue there is a civil liability accrued. -n order to ensure promptitude and remedy against the defaulters of the Negotiable -nstrument a criminal remedy of penalty was inserted in Negotiable -nstruments Act, (DD( by amending it with Negotiable -nstruments Act, ()DD.+6, .ith the insertion of these provisions in the Act the situation certainly improved and the instances of dishonour have relatively come down but on account of application of different interpretative techni$ues by different 1igh !ourts on different provisions of the Act it further compounded and complicated the situation although on dishonour of che$ues the trends of the verdicts of the Supreme !ourt of -ndia ?arliament enacted the Negotiable -nstruments Amendment and <iscellaneous ?rovisions) Act, 2AA2 88 of 2AA2), which is intended to plug the loopholes. 'his amendment Act inserts five new sections from (46 to (4C touching various limbs of the parent Act and !he$ue truncation through digitally were also included and the amendment Act has been recently brought into force on 3eb. E, 2AA6 Pr!"4)* i$%" (" $ N!5$ i(6+! I%" r4)!% " 2ntil the contrary is proved, the following presumptions shall be made% a) of consideration. 7 that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration9 b) as to date. 7 that every negotiable instrument bearing a date was made or drawn on such date9 c) as to time of acceptance. 7 that every accepted bill of e"change was accepted within a reasonable time after its date and before its maturity9 d) as to time of transfer. 7 that every transfer of a negotiable instrument was made before its maturity9 e) as to order of indorsements. 7 that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon9 f) as to stamp. 7 that a lost promissory note, bill of e"change or che$ue was duly stamped9 g) that holder is a holder in due course. 7 that the holder of a negotiable instrument is a holder in due course9 ?rovided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him. Q=. W#$ i" ( /$%"4)!r8 E'()i%! #! ri5# " $- ( /$%"4)!r !%"#ri%!. 4%.!r #! /$%"4)!r *r$ !/ i$% (/ 2 1<;=. 1D!-i%i i$% $- /$%"4)!r2 Ri5# " $- /$%"4)!r"3 32 ? A%"&!r, D!-i%i i$%" -ndian consumers tend to be unaware of basic rights that are provided to them under law, compared to their .estern counterparts. 'his can be attributed to the lack of education as well as disciplined organi:ation to fight for one@s rights and a general attitude of apathy towards the system. 'he growth of legislation on protection of consumer rights has also been piecemeal in -ndia, spread over several

unrelated statutes such as the -ndian !ontracts Act, Sale of Goods Act, 0ssential !ommodities Act, 5rugs !ontrol Act, ?revention of 3ood Adulteration Act, Standard of .eights and <easures Act and <onopolies and ;estrictive 'rade ?ractices Act. 'his Act provided for the establishment of !onsumer C$%"4)!r Pr$ !/ i$% A/ 2 1<;= is an act of ?arliament of -ndia enacted in ()DE to protect interests of consumers in -ndia. -t makes provision for the establishment of consumer councils and other authorities for the settlement of consumers/ disputes and for matters connected therewith.

C$%"4)!r Pr$ !/ i$% C$4%/i+


!onsumer ?rotection !ouncils are established at the national, state and district level to increase consumer awareness.+(,

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-t is established by the !entral Government which consists of the following members% 'he <inister of !onsumer Affairs, K !hairman, and Such number of other official or non7official members representing such interests as may be prescribed.

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-t is established by the State Government which consists of the following members% 'he <inister in charge of consumer affairs in the State Government K !hairman. Such number of other official or non7official members representing such interests as may be prescribed by the State Government. such number of other official or non7official members, not e"ceeding ten, as may be nominated by the !entral Government. 'he State !ouncil is re$uired to meet as and when necessary but not less than two meetings every year.

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<ain article% !onsumer !ourt 5istrict !onsumer 5isputes ;edressal 3orum 5!5;3)% Also known as the &5istrict 3orum& established by the State Government in each district of the State. 'he State Government may establish more than one 5istrict 3orum in a district. -t is a district level court that deals with cases valuing up to 2 million 2SL6(,AAA).+(, State !onsumer 5isputes ;edressal !ommission S!5;!)% Also known as the &State !ommission& established by the State Government in the State. -t is a state level court that takes up cases valuing less than (A million 2SL(8A,AAA)+(, National !onsumer 5isputes ;edressal !ommission N!5;!)% 0stablished by the !entral Government. -t is a national level court that works for the whole country and deals with amount more than (A million 2SL(8A,AAA).+(,

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'he ob*ectives of the !entral !ouncil is to promote and protect the rights of the consumers such as%7 a) K the right to be protected against the marketing of goods and services which are ha:ardous to life and

property. b) K the right to be informed about the $uality, $uantity, potency, purity, standard and price of goods or services, as the case may be so as to protect the consumer against unfair trade practices. c) K the right to be assured, wherever possible, access to a variety of goods and services at competitive prices. d) K the right to be heard and to be assured that consumer/s interests will receive due consideration at appropriate forums. e) K the right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous e"ploitation of consumers9 and f) K the right to consumer education.

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'he ob*ects of every State !ouncil shall be to promote and protect within the State the rights of the consumers laid down in clauses a) to f) in central council ob*ectives.

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() K Sub*ect to the other provisions of this Act, the 5istrict 3orum shall have *urisdiction to entertain complaints where the value of the goods or services and the compensation, if any, claimed does not e"ceed rupees twenty lakhs. 2) K A complaint shall be instituted in a 5istrict 3orum within the local limits of whose *urisdiction%7 a) K the opposite party or each of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides or carries on business or has a branch office or personally works for gain, or b) K any of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides, or carries on business or has a branch office, or personally works for gain, provided that in such case either the permission of the 5istrict 3orum is given, or the opposite parties who do not reside, or carry on business or have a branch office, or personally work for gain, as the case may be, ac$uiesce in such institution9 or c) K the cause of action, wholly or in part, arises.

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() Sub*ect to the other provisions of this Act, the State !ommission shall have *urisdiction%7 a) K to entertain i) K complaints where the value of the goods or services and compensation, if any, claimed e"ceeds rupees twenty lakhs but does not e"ceed rupees onecrore9 and ii) K appeals against the orders of any 5istrict 3orum within the State9 and b) K to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any 5istrict 3orum within the State, where it appears to the State !ommission that such 5istrict 3orum has e"ercised a *urisdiction not vested in it by law, or has failed to e"ercise a *urisdiction so vested or has acted in e"ercise of its *urisdiction illegally or with material irregularity.

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Sub*ect to the other provisions of this Act, the National !ommission shall have *urisdictionM i) complaints where the value of the goods or services and compensation, if any, claimed e"ceeds rupees one crore9 and

ii) appeals against the orders of any State !ommission b) K to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any State !ommission where it appears to the National !ommission that such State !ommission has e"ercised a *urisdiction not vested in it by law, or has failed to e"ercise a *urisdiction so vested, or has acted in the e"ercise of its *urisdiction illegally or with material irregularity. ?rotection !ouncils as well as !onsumer 3orums for the settlement of consumer disputes. Other salient features of the Act are that it% Applies to all goods and services unless specifically e"empted by the !entral Government !overs all sectors whether private, public or co7operative !onfers certain rights on consumers 0nvisages establishment of consumer protection councils at the !entral and State levels to promote and protect the rights of consumers

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