This article on 'Unfair Trade Practices in India: Legal Framework' was written by Shriharshini Balachandar, an intern at Legal Upanishad.

Introduction

Unfair trade practices refer to activities or practices that are deceptive, fraudulent, or unfair in nature and carried out by businesses or individuals to gain an unfair advantage over their competitors. These practices can cause harm to consumers, competitors, or the market as a whole. In India, various laws govern unfair trade practices, including the Consumer Protection Act, 2019, the Competition Act, 2002, and the Indian Contract Act, 1872. We will discuss the legal framework for unfair trade practices in India and analyze some significant case laws related to the topic. This article deals with the concept and laws regulating Unfair trade practices in India.

Unfair Trade Practices: Definition

The term "unfair trade practise" (UTP) broadly refers to a trade practise that adopts any unfair method or unfair or deceptive practise that is prohibited by a statute or has been recognised as actionable under law or by a court judgement in order to promote the sale, use, supply of any goods or the provision of any service.

LEGAL FRAMEWORK IN INDIA

The Consumer Protection Act, 2019 The Consumer Protection Act, 2019 (CPA) is a comprehensive legislation that aims to protect the interests of consumers in India. The Act defines unfair trade practices as any deceptive or unfair practice that is made by a seller in connection with the promotion, sale, or supply of any goods or services. It also provides for the establishment of the Central Consumer Protection Authority (CCPA) which has the power to investigate and prosecute unfair trade practices. Furthermore, the CPA has also introduced strict penalties for violations of consumer rights. The Act provides for imprisonment and hefty fines for entities found guilty of engaging in unfair trade practices. This has significantly deterred market players from engaging in such practices and has helped in promoting fair competition in the market. In the case of Hindustan Unilever Ltd. v. State of Rajasthan, the Supreme Court of India held that the promotion of a product by claiming that it has a unique or special property without any scientific basis is a deceptive trade practice. In this case, Hindustan Unilever promoted its product, "Pepsodent Germicheck," by claiming that it was "102% better" than other toothpaste brands, without providing any scientific evidence to support the claim. The Court held that such a claim was misleading and amounted to an unfair trade practice. Another important case that dealt with unfair trade practices under the CPA is the case of Cadila Healthcare Ltd. v. Dr. Reddy's Laboratories Ltd. In this case, Cadila Healthcare had challenged the marketing practices of Dr. Reddy's Laboratories, alleging that the latter had engaged in unfair and deceptive trade practices by making false and misleading claims about the efficacy of its product. The Court held that such claims were in violation of the CPA and directed Dr. Reddy's Laboratories to withdraw the advertisement and pay compensation to Cadila Healthcare. The Competition Act, 2002 The Competition Act, 2002 (CA) is another important legislation that deals with unfair trade practices in India. The Act aims to promote competition in the market by prohibiting anti-competitive practices. The act aims to promote and sustain competition in the market and protect the interests of consumers. The Competition Commission of India (CCI) is responsible for enforcing the provisions of the act and has been given the power to investigate and penalize entities that engage in anti-competitive practices. Under the CA, unfair trade practices are defined as those practices that distort competition in the market or are likely to do so. In the case of Maruti Suzuki India Ltd. v. Competition Commission of India, the Delhi High Court held that an agreement between two car manufacturers to fix the prices of their spare parts was an unfair trade practice. The Court held that such an agreement was anti-competitive in nature and violated the provisions of the CA. Another important case that dealt with unfair trade practices under the CA is the case of Pfizer Ltd. v. Union of India. In this case, Pfizer had challenged the decision of the National Pharmaceutical Pricing Authority (NPPA) to cap the prices of its drug. The Supreme Court of India held that Pfizer had engaged in an unfair trade practice by charging exorbitant prices for its drug, which was essential for the treatment of a life-threatening disease. The Court held that such a practice was exploitative and went against the public interest.

Unfair Trade Practices in India: Legal Framework Explained The Indian Contract Act, 1872 The Indian Contract Act, 1872 (ICA) deals with the formation and enforcement of contracts in India. the Indian Contract Act, 1872 plays a significant role in promoting fair and ethical business practices in India. The act provides for the requirement of free consent, the performance and discharge of contracts, and the enforceability of contracts. The effective implementation of the act would require the active participation of all stakeholders, including consumers, market players, and the authorities responsible for enforcing the law. Under the ICA, a contract that involves fraud or misrepresentation is voidable at the option of the aggrieved party. Therefore, any unfair trade practice that involves fraud or misrepresentation can be challenged under the ICA. In the case of A.V. Fernandez v. State of Kerala, the Supreme Court of India held that a seller who conceals material information about a product while selling it to a buyer is guilty of unfair trade practice. In this case, A.V. Fernandez had sold a car to the complainant without disclosing that the car had met with an accident in the past. The Court held that such a practice was fraudulent and amounted to an unfair trade practice. Another important case that dealt with unfair trade practices under the ICA is the case of Indian Oil Corporation Ltd. v. Amritsar Gas Service. In this case, Indian Oil Corporation terminated the dealership agreement with Amritsar Gas Service on the ground that the latter had engaged in malpractices and had indulged in black marketing of LPG cylinders. The Court held that the termination of the agreement without any prior notice or opportunity of being heard was an unfair trade practice and went against the principles of natural justice. Other relevant legislation Apart from the above-mentioned legislations, various other laws in India address specific unfair trade practices. For instance, the Drugs and Cosmetics Act, of 1940 prohibits misleading advertisements for drugs and cosmetics. The Securities and Exchange Board of India (SEBI) has also issued regulations to curb insider trading and other unfair trade practices in the securities market.

Suggestions

- The government and regulatory bodies should work to increase awareness among consumers and businesses about the legal framework regarding unfair trade practices in India. This can be done through various mediums like seminars, workshops, and social media campaigns. - There should be stricter enforcement of the existing laws, and the government should ensure that the regulatory authorities have the necessary resources to carry out their duties effectively. This will act as a deterrent to businesses engaging in unfair trade practices. - The complaint filing process should be simplified and made more accessible to consumers. This will encourage more people to come forward and report instances of unfair trade practices.

Conclusion

Unfair trade practices are a menace that can harm consumers, competitors, and the market as a whole. Therefore, it is essential to have a robust legal framework to deal with such practices. These laws provide stringent penalties and compensation mechanisms to deter businesses from engaging in such practices. Through the case laws discussed above, we can see that the courts in India have been vigilant in enforcing these laws and protecting the interests of consumers and competitors. It is essential for businesses to be aware of their obligations under these laws and to ensure that they do not engage in any unfair trade practices. In conclusion, the legal framework for unfair trade practices in India is robust, and the courts have been proactive in enforcing these laws to ensure a fair and competitive market.

References

This article on "Legal validity of Minor's agreement in India" was written by Shudhi Malhotra, an intern at Legal Upanishad.

Introduction

This article discusses the Legal Validity of the Minor's Agreement in India and its provisions and case laws related to it. The Indian Contract Act, 1972, Section 10, states that not all agreements qualify as contracts. Only agreements signed by parties who have the legal capacity to do so are considered contracts. Furthermore, Section 11 of the Indian Contract Act defines "capable" as including the following three criteria: - The individual must be of legal age, or at least 18 years old. - When the contract is made, he should be competent to enter into it. - Any law that he is subject to shouldn't prevent him from signing contracts. Before engaging in a contract, it might be argued that majority approval is necessary.

Who is a minor?

A minor is an individual who does not have the same legal rights as an adult because they are under the legal age of majority as defined by the regulation of the jurisdiction in which they live. Generally speaking, a minor is someone who has acquired all of the rights and obligations of an adult but has not yet achieved the age of majority. Minor cannot be held accountable or responsible for their conduct. The typical majority age is 18 years old. However, as the permitted drinking age in the United States is generally 21, even if a person is at least 18 years old, they may still be referred to as juvenile in alcohol legislation. A minor is a person who has not attained the age of 18 according to Section 3 of the Indian Majority Act of 1875. If a custodian of a minor's individual or belongings is assigned, the minor becomes 21 years old.

What is Minor's agreement?

Any person who is of legal age under the decree to which they are subject, who is of sound mind, and who is not prohibited from contracting by any ordinance to which they are subject is capable of agreeing, according to Section 11 of the Indian Contract Act of 1872. Therefore, a minor cannot engage in a contract. AGE OF MAJORITY: Section 3 of the Indian Contract Act of 1875 means that any individual residing in India reaches adulthood when they turn 18 years old. Exceptions: 21 years in the following lawsuits: - In cases where a guardian of a minor's individual or belongings has been assigned by the Guardian and Wards Act of 1890. - When property belonging to a juvenile has been transferred under the control of the bench of remarks.

The effects of minor's agreement

The results of this momentous decision can be stated by there is no contractual or tort liability: A minor is incapable of giving permission, and any agreement they make is invalid and cannot be implemented because of this. Rule of Estoppel: It is a lawful principle of proof that forbids a party from causing an allegation that is inconsistent with what he has already said. The tribunal ruled that the estoppel theory does not lay in cases when the individual involved already understands the existence; in this instance, the defendant's attorney was familiar that the complainant was a minor. This regulation does not thus lay on. Restitution of benefit: Section 64 of the Indian Contract Act means that when a party who has the opportunity to nullify an agreement does so, the further party is not required to fulfill their obligations under the contract. This is true for voidable contracts, but a minor's contract is void, thus he cannot be required to pay the finances back to the lender.

The exception in the generally applicable rule

For protecting minors. His agreement is unlawful since it shielded a child. But there are also some exceptions. Upon completion of the minor's duty: A minor may be both the promisee and the promisor in a contract, but not both. If the juvenile is in the role of the promisee and has upheld his end of the bargain but the other party hasn't, he or she may be able to enforce the contract. An agreement made by the minor's guardian for his advantage: A minor may then file a lawsuit against the other party if it breaks its assurance. In the lawsuit of Great American Insurance v. Madan Lal, the custodian of the minor's property signed an insurance contract on behalf of her son. The insurance refused to pay out when the belongings were sabotaged and the minor requested reimbursement, claiming that an agreement with the minor is invalid. Delinquent, however, the bench ruled that this agreement was valid, and he is now required to make restitution. The Contract of apprenticeship: A contract of apprenticeship entered into by a custodian on behalf of a child under 18 years is enforceable under the Indian Apprentices Act of 1850.

Legal validity of Minor's agreement in India

Necessity supplied to a minor

If someone unable to engage in a contract is given the requirements of life by another person, even a child, the person who assisted is entitled to compensation from the incompetent person's property. However, the youngster cannot be forced to pay back the other person if he has no property of his own.

Case Law

Mohribibi vs. Dharmodas Ghosh (1903) Facts The complainant, Dharmodas Ghosh, loaned a juvenile Rs. 20,000 while he was still a minor by pledging his belongings to the defendant, a moneylender. The defendant's attorney was then aware of the plaintiff's age. Later, the plaintiff consented to pay Rs 8000 but vetoed the balance. He sued the defendant, claiming that because he was a minor at the time the contract was formed and as such, he is not obligated by the agreement, on behalf of his next friend and current legal guardian, the plaintiff's mother. Decision According to section 11 of the Indian Contract Act of 1872, minors are not permitted to engage in contracts, the privy council ruled in its ruling. Section 11 of the Indian Contract Act of 1872 provides that every individual who is of the age required by the ruling to which they are subject is competent to contract. Any agreement with a minor is therefore Void ab initio. A valid contract is stated to satisfy all of the conditions outlined in section 11. The court further ruled that the agreement with the minor is void. A minor cannot enter into a contract, hence the mortgage was void. The minor is not obligated to keep any promises he made in connection with the contract, thus he cannot be forced to reimburse the finances that were granted to him. Additionally, the minor is not covered by estoppel legislation.

Can a minor be a partner?

The formation of a contract results in the formation of a partnership, and both parties to the contract must be of legal age. The minor may, however, be accepted to the advantage of the coalition for the period being with the proper approval of all the members, as an exemption under Section 30 of the Partnership Act. But he won't be held responsible for any of his actions.

Conclusion

A minor is not allowed to come into a contract under the Indian contract Act, of 1872 and such a contract would be null and void from the beginning. Minor cannot rely on the ratification of the agreement he reached during his minority when he becomes a member of the majority. A contract that was void in the past cannot be made lawful later on because ratification refers to a time when the individual was still a minor. After reaching the age of the majority, a new contract may be made with new considerations if necessary. Furthermore, a minor's agreement cannot be demanded to be performed specifically since doing so would mean carrying out a full agreement. A youngster will only be held accountable for claims for necessities, though.

References

This article on 'Negligence Under Contract' was written by Swaroopa Royadu an intern at Legal Upanishad.

Introduction

Negligence is civil wrong as well as criminal wrong. How will we determine whether the act was done negligently? Which acts are considered civil negligence and which acts falls under the category of criminal negligence? Are the Breach of contract and Negligent acts similar? What are the consequences if there is negligence in the contract? The answer to all these questions is covered in this article. The Article emphasizes negligence under contract.

Meaning of Contract and Negligence

To understand the concept better, it is essential to know the meaning of the contract and the meaning of negligence in brief. - Contract: An agreement between 2 or more people, which binds the parties with obligations and duties. Such contracts are enforceable under the law. Essentials of contract: - There must be an offer and acceptance between parties. - The agreement must be done with free consent. - The agreement must always have lawful consideration. - The objective must be lawful with the intention to create a legal relationship. - The parties to the contract must be competent. - Negligence: In simple words negligence means actions done carelessly. If such a matter is taken to court, it is called negligence. In legal terms, when a person fails to exercise the standard of care which the doer as a reasonable man should have exercised in the circumstance is considered negligence. Essentials of Negligence: - Existence of the duty that should be taken care of. - Such duty should be towards the plaintiff. - There should be a breach of duty by the defendant. - On failure to perform the duty by the defendant, the plaintiff should have suffered damages or harm.

What is Negligence Under Contract?

The term negligence under contract covers 2 aspects, breach of contract and professional negligence. - Breach of contract:  The term breach of contract is an act where the party fails to perform or act according to the contract agreed upon. Example: Zebo Company agreed to transfer 50 laptops to Bagrey Company on 15th December. Zebo failed to deliver 50 laptops on 15th December which resulted in financial loss for Bagrey Company. This is a breach of contract. -  Professional negligence: The term professional negligence is when the person fails to meet some standards that are been set. Example: The patient is admitted to a hospital that gives complete care to its patient including their food and medication. Nurse failing to give the patient medication and food on time results in professional negligence. Allegation or charge of Negligence in the profession can lead to a breach of contract. The difference between Contract and Negligence can be understood broadly under the following headings. - Relationship of parties: Under contract parties are legally binding according to the terms of the Agreement. Under negligence, parties are not binding by any agreement. The parties may know each other or the parties may not know each other . - Nature of obligation: The obligations of the parties in the contract are binding according to the terms and conditions of the agreement. The obligations under negligence are imposed by statute or by the law. - Remedies for damages: The remedies available for breach of contract are remedies of injection, remedies of specific performance, and monetary remedies. Once the negligence is established the next step is to provide the proper remedy. The remedy for negligence is determined by putting the claimant in the position that he would have been in had the breach of obligations not taken place.

Case laws on negligence under contract:

Union of India Vs Steel stockholders syndicate, Poona: The suit was filed by the plaintiff for recovery of the damages caused by the defendant , for breach of contract. Plaintiff carrying the iron business booked a consignment with the defendant on 15/Dec/1961 at Bhillai to be delivered to Poona in good condition. Defendant accepted the offer and provided the receipt for the same. The consignment did not reach on time and when the plaintiff inquired, he found the consignment delivery was delayed as the railway diverted the goods to Aurangabad instead of delivering the goods directly to Poona. Later, on the plaintiff delivering the notice to the defendant for the delay, the consignment was delivered in the Month of May/1962. Plaintiff held the defendant for gross negligence and breach of contract which caused the plaintiff damages and losses. The Trial court found that there was a delay in delivering the goods, and the railway has taken the diversion to a new route with consignment hence defendant was held guilty of gross negligence and is therefore responsible for the loss of Plaintiff.   In an appeal, the upper court upheld the decision of the trial court and held the defendant liable for gross negligence resulting in a breach of contract.

How will the court determine if the act was done negligently?

- If the party to the contract owes any duty towards the other party and fails to perform it or perform such acts which were not necessary to perform; - When the action performed is not to the normal standards set or there is a deficiency in the act or service performed - Such acts cause damages to the other party, by considering these 3 factors the court determines whether the act was done negligently.

Which acts are civil negligence and which acts are considered criminal negligence?

Contacts can be either expressed or implied. Implied contracts include the relationship between Doctor and Patient, where the doctor agrees to treat patients for consideration. The difference between civil and criminal negligence in the contract can be explained with an example of a Doctor and patient Civil negligence is the lack of care, knowledge, or skill of the Doctor that causes damage to the patient. Examples: Diagnosing wrongly, suggesting the wrong medication, prescribing overdosage, etc. The suits are filed in civil courts or consumer courts. Criminal negligence is gross negligence in treating the patient which results in severe injuries or damages to the patient resulting in death sometimes. Example: operations that lead to paralyzing the patient, doing operation wrong side, wrong medication resulting in the death of the patient, etc. The trial for criminal negligence is done in criminal court. Punishment will be granted under Sections 336, 337,338, and 304(A) of the Indian Penal Code.

Conclusion:

Charges of negligence in the profession can lead to a breach of contract. Negligence takes place when a person fails to meet the required standards. Negligence in contracts can be civil negligence or criminal negligence. For a negligent act, one can get monetary remedy under a civil suit or imprisonment under a criminal trial. Law does not protect the person performing a negligent act.  Contributory negligence can be used as a weapon by the defendant as a negligent act from both parties can reduce or remove the punishment of the defendant.

Reference:

This article on 'Contract of Pledge under the Indian Contract Act: All you need to know' was written by Rishabh Tyagi, an intern at Legal Upanishad.

Introduction

This article deals with the concept of the pledge as defined under the Indian Contract Act, of 1872 (hereinafter, “Act”). Pledge can be said to be a sub-species of bailment, which involves the delivery of goods in exchange for securing a loan or fulfillment of an obligation. The Act states several nuances important for the contract of pledges like the rights of the Pawnor, and Pawnee, and mentions situations where such rights can be exercised. Sections 172 to 179 of the Act deal with the concept of the pledge.

Ingredients of a pledge

- Delivery of Goods An important element of a contract of a pledge is the delivery of possession of goods by the Pawnor to the Pawnee. Delivery can be either actual or constructive as stated under Section 149 of the Act. In Revenue Authority vs Sudarsanam Picture, the producer took a loan from a financial distributor in exchange for the final print of the film to be delivered when ready. This contract was held to be not a pledge as there was no actual delivery of possession. In certain cases, the good pledged is allowed to remain in the custody of the pledger. In Bank of Chittoor vs Narasimbulu, certain pieces of equipment were allowed to remain with the Pawnor. They were essential for the running of Pawnor’s cinema. It was held to be a case of constructive delivery of possession and the contract came under the domain of pledge. - In pursuance of an agreement The delivery of goods in a pledge by a Pawnor to Pawnee shall be for the fulfillment of a contract. Although the advancement of loans and delivery of goods need not be synchronous. A pledge may be affected by the delivery of possession after an advance is made.

Rights of Pawnee

- Right to Retain Section 173 of the Act empowers a pawnee to retain goods bailed by the pawnor in case of default on interests of the debt and this right is also extended to expenses incurred by him in keeping and preserving the goods pledged. However, Section 174 puts this right in check by stating that a pawnee cannot keep the goods for a contract that was never executed between the Parties. The possession of goods shall remain with the pawnee only for the promise they were pledged. After the payment of debts or the performance of obligations on part of the pawnor, the goods shall be duly returned by the pawnee. Act under Sections 160 and 161 provide the remedy to the pawnor in relation to the return of bailed goods and puts the liability on the pawnee in case the return is not possible due to negligence on his part resulting in deterioration, loss, or damage to the bailed goods. - Extraordinary Expenses Sometimes it so happens that certain goods require preservation costs which fall upon the pawnee. For example, if a person delivers his aeroplane as a pledged good, its preservation would be expensive until the pawnor fulfills part of his obligations. So, Section 175 empowers the pawnee to receive remuneration for such maintenance or preservation of the pledged goods. - Default on the part of the pawnor When there is a default or breach on part of the pawnor in terms of payment, the Act via Section 176 empowers the pawnee via two pathways. Firstly, the pawnee may file a suit against the pawnor for default and keep the goods as collateral security. The right to sue is a personal act and a lot depends upon the terms of the loan contract. But, the pawnee can until the suit or debt is settled, retain the goods. Secondly, the pawnee is entitled to sell the good, provided reasonable notice is given to the pawnor. This requirement of giving a reasonable notice is statutory and it cannot be dispensed with by putting a contrary clause in the contract. These two rights of suing and selling goods are not related to each other and are disjunctive.

Right to Redeem

The provision under Section 177 gives the pawnor a right to redeem the goods pledged. Even if the pawnor fails to pay on time, the provision enables him to redeem the goods before the sale or another deadline provided that additional expenses must be paid by him that occurred due to default on his part. In case the goods are sold by the pawnee, two situations arise. In the first scenario, if the goods are sold at a loss, the pawnor would still be liable to pay the deficit amount. In the second case, if the sale is made for a profit, the excess amount shall be paid by the pawnee to the pawnor. What can be inferred from this provision is that the pawnor has an absolute right to redeem once the debt or the amount due is cleared. On satisfaction of a debt or arrangement between the pawnor and pawnee, the pawn extinguishes and the pawnee is obliged to return the pledged goods.

Contract of Pledge under the Indian Contract Act, 1872

Possession under Voidable Contract

Section 178A deals with a case where the possession of goods obtained by the pawnor is subject to a contract voidable under provisions of Section 19 or 19A. If such a contract hasn’t been rescinded at the time of pledge, the Act provides that the title of pawnor over such goods holds good.

Conclusion

There are different types of contracts that are mentioned in the Act, the pledge being a niche among them. It is a special type of contract which differs even from its nearest relative i.e., bailment. Two important factors determine whether a given arrangement is a pledge or not. There shall be a delivery of goods (either constructive or actual) and such a delivery shall be in line with a contract made for that specific arrangement agreed upon by both the pawnor and pawnee. The provisions in relation to the rights of the pawnor and pawnee seem to resemble those given in the Transfer of Property Act, of 1882 for the rights in a mortgage agreement (although both are different domains). On an overall view of the pledge-related provisions, the Act does seem to create a balance between the rights of the pawnor and pawnee.

References

Mohori Bibee v. Dharmodas Ghose(1903) - Case Analysis

By Amit Sheoran (Symbiosis Law School, Nagpur) Appellant:-Mohori Bibee Respondent:-DharmodasGhose Bench:-Sir Andrew Scoble, Lord Lindley, Lord Davy, Sir Andrew Wilson, Lord Mcnaughton, Sir Ford North Facts of the case In this case, Dharmodas was the defendant. He was minor and he was also the sole owner of the property (immovable). As per Calcutta High court, The mother of Dharmodas has…