Legal Aspects of Business April 2026 Solved Assignment
Description
Legal Aspect of Business | Applicable for April 2026 Examination
Q1. A chemical supplier provides industrial disinfectant to a cleaning company. The cleaning company’s contract with the supplier does not mention safety instructions, but the product requires special handling due to hazardous components. An accident occurs when the disinfectant is mishandled, resulting in injuries. It emerges that the supplier knew about the risk but did not communicate it to the buyer. The cleaning company wants to seek damages.Using the concept of implied warranties under Section 16(1) of the Sale of Goods Act, 1930, describe how the cleaning company should proceed with a claim for damages and what specific elements must be proven to establish the supplier’s liability. How should the company apply this framework to strengthen its case? (10 Marks)
Ans 1.
Introduction
In the context of commercial dealings concerning hazardous materials, legal frameworks implicitly assign a duty to sellers, obligating them to shield purchasers from undisclosed dangers. Even in the absence of explicit safety directives within a contract, legal safeguards can be invoked via implied warranties, as stipulated by the Sale of Goods Act of 1930. The chemical supplier’s omission of a warning regarding the industrial disinfectant’s hazardous properties, therefore, presents significant concerns regarding the seller’s potential liability. Section 16(1) is especially pertinent, as it offers protection to buyers who depend on the seller’s expertise and discretion. Understanding this provision is essential for determining how damages can be rightfully claimed.
Concept and Application:
Section 16(1) of the Sale of Goods Act, 1930 states that if a buyer tells the seller why they need the goods and relies on the seller’s skill or judgement, there is an implied warranty that the goods will be suitable for that specific purpose.
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Q2. Suhana & Sons, a well-known mobile phone manufacturer, launched an aggressive advertising campaign claiming their new smartphone was ‘5G enabled,’ ‘water resistant,’ and featured ‘fast-charging’ capabilities. However, after release, numerous buyers discovered the device was not 5G compatible, had no water resistance, and charged slowly. The company did not notify consumers of these discrepancies, and complaints flooded social media platforms. Facing mounting pressure, Suhana & Sons argued that due diligence was the consumers’ responsibility, citing the old common law doctrine of caveat emptor. Consumer groups countered by invoking the Consumer Protection Act, 2019, demanding product recall and compensation.Critically evaluate the applicability of caveat emptor and its statutory exceptions in this scenario. Assess the company’s liability for misleading advertisements and advise on how regulatory authorities and courts should adjudicate and remedy such a dispute under the Consumer Protection Act, 2019. (10 Marks)
Ans 2.
Introduction
The legal conflict concerning Suhana & Sons underscores the inherent conflict between established contract law and contemporary consumer protection statutes. Historically, the principle of caveat emptor placed the onus of prudent purchasing decisions solely on the consumer. However, today’s markets, distinguished by intricate products and compelling marketing strategies, necessitate more robust consumer protections. The Consumer Protection Act of 2019 embodies this evolution, mandating explicit responsibilities for manufacturers to guarantee accurate product descriptions and adherence to specifications. Statutory exceptions to caveat emptor are therefore essential in instances of deceptive
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Q3(A) Zenith Group, a real estate company, entered into several agreements which were later challenged on the grounds of absence of free consent, unlawful consideration, fraud, and illegality of object. Due to these defects, some agreements were held void while others were voidable under the Indian Contract Act, 1872, resulting in financial losses to the company.
With reference to the provisions of the Indian Contract Act, 1872, explain the essential elements of a valid contract and examine how the absence of these elements affects the validity of agreements. Also discuss the legal remedies available in cases of void and voidable contracts. (5 Marks)
Ans 3a.
Introduction
The Indian Contract Act of 1872 establishes that not all agreements are legally binding contracts. A contract’s validity and enforceability depend on the presence of specific essential elements. Zenith Group’s agreements faced challenges based on claims of absent free consent, unlawful consideration, fraudulent practices, and the illegality of their objectives. These identified defects directly impact a contract’s enforceability, thereby determining its status as either void or voidable. Consequently, a thorough understanding of these legal principles is essential for businesses to safeguard themselves against potential financial losses and legal conflicts.
Q3 (B) A construction company completed a commercial building for a client. Although the building was largely operational, certain minor works such as installation of fixtures remained incomplete. The client refused to make full payment, claiming that the contract had not been completely performed. The contract did not expressly deal with partial or substantial performance.
With reference to the Indian Contract Act, 1872, examine the concepts of performance, substantial performance, and partial performance of contracts. Discuss the rights and remedies available to the parties in such cases. (5 Marks)
Ans 3b.
Introduction
Contract performance refers to the parties fulfilling their agreed-upon obligations. In practice, especially in business, complete performance as originally planned isn’t always possible. For example, in the construction case, even though the building was mostly finished, some minor tasks weren’t completed, which led to a disagreement about payment. The Indian Contract Act of 1872 recognises different types of performance, including complete, substantial, and partial.
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