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Xaviers Institute of Business Management Studies
MARKS: 80
SUB: CORPORATE LAW
N.B.: 1) Attempt any Ten Questions
2) Last two Questions are compulsory
Q.1. In the following statements only one is correct statement. Explain Briefly?
- i) An invitation to negotiate is a good offer.
- ii) A quasi-contract is not a contract at all.
iii) An agreement to agree is a valid 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 Shipment’s 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?
Answer: In this case, the ship-owner agreed to carry cargo belonging to A (a sugar merchant) from Constanza to Busrah, and the ship-owner knew that there was a sugar market in Busrah and that A was a sugar merchant. However, the ship-owner did not know that A intended to sell the cargo immediately upon arrival. Due to a delay caused by the ship-owner’s default, the sugar arrived late, and as a result, it fetched a lower price than it would have had the shipment arrived on time. A is claiming compensation for the full loss suffered due to the delay.
Legal Principles and Analysis
- Contract of Carriage: The ship-
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
Answer:
Q.4. Fazal consigned four cases of Chinese crackers at Kanpur to be carried to Allahabad on the 30th May, 1987. He intended to sell them at the Shabarat festival of 5th June 1987. The railway discovered that the consignment could not be sent by passenger train and asked Fazal either to remove them or authorize their dispatch by goods train. He took no action and the goods arrived at Allahabad a month after they were booked.
Fazal filed a suit against Railways for damages due to late delivery of the goods which deprived him of the special profits at the festival sale. Decide & explain briefly ?
Answer: Case Summary:
Fazal consigned four cases of Chinese crackers from Kanpur to Allahabad, intending to sell them at the Shab-e-Barat festival on 5th June 1987. The consignment was booked on 30th May 1987, but due to the railway’s decision to send the consignment by goods train rather than passenger train, and Fazal’s failure to take any action, the goods were delivered a month later than expected. Fazal filed a suit for damages against the
Q.5. ‘Lifeoy’ Soap company advertised that it would give a reward of Rs. 2000 who contracted skin disease after using the ‘Lifeoy’ soap of the company for a certain period according to the printed directions. Mrs. Jacob purchased the advertised ‘Lifeboy’ and contracted skin disease inspite of using this soap according to the printed instructions. She claimed reward of Rs. 2000. The claim is resisted by the company on the ground that offer was not made to her and that in any case she had not communicated her acceptance of the offer. Decide whether Mrs. Jacob can claim the reward or not. Give reasons. Explain briefly?
Answer: Case Summary:
The company (Lifeoy Soap) made a public advertisement offering a reward of Rs. 2000 to anyone who contracted a skin disease after using its soap according to the printed instructions. Mrs. Jacob purchased the soap and used it according to the instructions, but still contracted a skin disease. She now claims the reward of Rs. 2000, which
Q.6. In each set of statements, only one is correct. State the correct statements & Explain briefly?
- a) i) A bailee has a general lien on the goods bailed.
- ii) The ownership of goods pawned passes to the pawnee.
iii) 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 sub-
agent.
- ii) An ostensible agency is as effective as an express agency.
iii) A principal can always revoke an agent’s authority.
Answer:
Q.7. A, an unpaid seller, sends goods to B by railway. B becomes insolvent
And A sends a telegram to Railway authorities not to deliver the goods to B. B. goes to the Parcel office of Railway Yard and by presenting R. R. (Railway Receipt) takes delivery of the goods and starts putting them in the cart. Meanwhile the Station Master comes running with the telegram in hand and takes possession of the goods from B. Discuss the rights of A and B to the goods in possession of Railway authorities.
Answer: Case Summary:
- A, the unpaid seller, sends goods to B via railway.
- B becomes insolvent and A, concerned about the goods, sends a telegram to the railway authorities instructing them not to deliver the goods to B.
- Despite this, B goes to the Parcel office at the railway yard, presents the Railway Receipt (R.R.), and takes delivery of
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 demands payment from Y. Can Y refuse and plead the arrangement between him and X Explain briefly?
Answer: Case Summary:
- X needs Rs. 10,000 but cannot raise the amount due to poor credit.
- Y, whose credit is good, accommodates X by making a promissory note in favor of X (though Y owes no money to X).
- X endorses the promissory note to Z for value received.
- Z, who is a holder in due course,
Q.9. Will C has the right of further negotiation in the following cases: (B signs the endorsements) Explain briefly?
i)‘Pay C for my use’
ii)‘Pay C’)
iii)‘Pay C or order for the account of B’
Answer: In the context of negotiable instruments (such as promissory notes, bills of exchange, etc.), the right to further negotiation of the instrument depends on the endorsement made by the previous holder. Let’s analyze each of the three cases you provided to determine whether C has the right to further negotiate the
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? Answer: Legal Question:
A promissory note was made without mentioning any time for payment. The holder then added the words “on demand” on the face of the instrument. The question is whether this alteration amounts to a material alteration and what the effect of such an alteration is.
Key Legal Concepts:
- Material Alteration:
- A material alteration in the
Q.11. State whether the following instruments are valid promissory notes:
- i) I promise to pay Rs. 5000 to B on the dearth of ‘B’s 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.
iii) I acknowledge myself indebted to B in Rs. 5000 to be paid on demand for value received. Answer:
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?
Answer:
Q.13. Write a short note on the Doctrine of Indoor Management? Explain briefly? Answer:
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?
Answer:
Q.15. In a prospectus issued by a company the Managing Director stated that the company had paid dividend every year during 1921 – 27, which was a fact. However, the company had sustained losses during the relevant period and had paid dividends out of secret reserves accumulated in the past. Examine the consequences of the observation made by the Managing Director. Explain briefly?
Answer:
Q.16. In a prospectus issued by a company the Managing Director stated that the company had paid dividend every year during 1921-27, which was a fact. However, the company had sustained losses during the relevant period and had dividends out of secret reserves accumulated in the past. Examine the consequences of the observation made by the Managing Director. Explain briefly?
Answer:
Q.17. A buys from B 400 shares in a company on the faith of a share certificate issued by the company. A tender to the company a transfer deed duly executed together with B’s share certificate. The company discovers that the certificate in the name of B has been fraudulently obtained and refuses to register the transfer. Advise A. Explain briefly?
Answer:
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?
Answer:
Q.19. a) Satrang Singh admitted his only infant son in a private nursing home. As a result of strong dose of medicine administered by the nursing attendant, the child has become mentally retarded. Satrang Singh wants to make a complaint to the District Forum under the Consumer Protection Act, 1986 seeking relief by way of compensation on the ground that there was deficiency in service by the nursing home. Does his complaint give rise to a consumer dispute? Who is the consumer in the instant case? Explain briefly?
- b) Smart booked a motor vehicle through one of the dealers. He was informed subsequently that the procedure for purchasing the motor vehicle had changed and was called upon to make further payment to continue the booking before delivery. On being aggrieved, Smart filed a complaint with the State Commission under the Consumer Protection Act, 1986. Will he succeed? Explain briefly?
- c) Brittle and Company, a small-scale industry, sought nursing and financing facilities from its bankers by means of grant of further advances and adequate margin money in anticipation of good demand for its products. In failing to obtain this and having become sick, it proceeds against its bankers under the Consumer Protection Act, 1986, Will it succeed? Explain briefly?
Q.20. X who was working as a truck driver had taken a general insurance policy to cover the risk of injuries for a period from 1.11.1998 to 30.11.1999. He renewed the policy for a further period of one year on 10.11.1999. On the same day, he met with an accident and suffered multiple injuries including fractures. X submitted the claim along with documents to the insurance company. The insurance company repudiated the claim on the ground that the premium for the renewed policy was received in the office only at 2.30 p.m. on 10.11.1999, while the accident had taken place at 10.00 a.m. on that day and hence there was no policy at the time of accident. Will X succeed if he files a complaint against the insurance company for this claim? Explain briefly?
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 contention of the transporter tenable? Explain briefly?
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?
- ii) 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 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?
Answer : i) Sukh Dukh Ltd. vs. Fastrack Roadways Ltd.
Case Background: Sukh Dukh Ltd. sent goods via Fastrack Roadways Ltd., and while enroute, the goods were unloaded and stored in a godown on the suggestion of the consignee. A fire broke out in the neighbouring godown, leading to the destruction of the goods. Fastrack Roadways Ltd. claimed there was no negligence on their part and stated that the goods were being carried at “Owner’s Risk,” and thus they were not liable for the loss.
Legal Issue: Is Fastrack Roadways Ltd. liable to pay damages to Sukh Dukh Ltd. for the loss of goods?
Analysis: Under the Consumer Protection Act, 1986, a service provider like Fastrack Roadways Ltd. is required to provide adequate care and diligence while rendering their services. The key points to consider are:
- Liability under Carriage of Goods: When goods are carried by a transporter, they owe a duty of care to deliver the goods in the same condition in which they were entrusted to them unless there is an agreement that limits their responsibility.
- Terms of the Contract (Owner’s Risk Clause): The fact that Fastrack Roadways Ltd. claimed the goods were carried at “Owner’s Risk” is important. This clause, typically found in many transport agreements, means that
Q.23. With reference to the provisions of the Consumer Protection Act, 1986, decide the 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 post-dated 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. Pillai’s car met with an accident. Will Pillai succeed in getting a claim against the Bank ?
Answer: Analysis of each case in the context of the Consumer Protection Act, 1986 to determine whether the claims are valid and whether the parties can be held liable for deficiency in service or other issues:
- i) Sohan vs. Fast Service Couriers
Case Background: Sohan sent documents related to a consignment of goods to a buyer in the USA through Fast Service Couriers. The documents failed to reach the buyer on time, causing the buyer to miss the delivery of goods and resulting in a financial loss. By the time the duplicate copies of the documents arrived, the season for the goods had passed, and the buyer claimed a loss of US $5,000 due to the courier’s negligence. The State Commission initially ordered Fast Service Couriers to pay for the loss, but the National Commission, upon appeal, reversed the order and limited the payment to US $100, based on the receipt issued by the courier.
Legal Issue: Can Sohan challenge the decision of the National Commission, and should Fast Service Couriers be liable for the full loss?
Analysis:
- Deficiency in Service: Under the
Dear students, get fully solved assignments by professionals
Do send your query at :
or call us at : 08263069601
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