All India Management Association (AIMA) 2007 M.B.A Marketing Management Business Law - II - Question Paper

48. A The provisions of the info Technology Act, 2000 are not applicable to the subsequent set of documents:
• A negotiable instrument as described in part 13 of the Negotiable Instruments Act, 1881 (excluding cheques as amended);
• A power-of-attorney as described in part 1A of the Power of Attorney Act, 1882;
• A trust as described in part three of the Indian Trusts Act, 1882;
• A will as described in clause (h) of part two of the Indian Succession Act, 1925 including any other testamentary instrument ;
• Any contract for sale of conveyance of immoveable property or any interest in such property;
The provisions of the info Technology Act, 2000 are applicable to all the other choices. < TOP >
49. B The salient features of the Consumer Protection Act, 1986 are:
• The Act applies to all goods and services unless specifically exempted by the Central Government.
• It covers all the sectors whether private, public or cooperative.
• The provisions of the Act are compensatory in nature.
• A provision for problem of interim orders by the redressal forums.
• Power to problem punitive damages.
• Recovery of compensation amount through a certificate in the identical manner as arrears of land revenue.
• Creation of benches of State and National Commissions.
Hence, choice ‘B’ is accurate ans. < TOP >
50. E • Dispute resolution through ADR mechanism is generally faster and less expensive.
• Most ADR processes are based on an integrative approach.
• Some critics of the ADR mechanism believe that it encourages compromise that can be a good way to settle a few disputes but not improper for serious justice conflicts and cases of intolerable moral difference.
• ADR settlements are in private and not in the public record or exposed to public scrutiny which can be a reason for concern in a few cases.
• One of the advantages of ADR is that, participating in an ADR process will often ultimately improve, rather than worsen, the relationship ranging from disputing parties. < TOP >
51. A The replaced definition of manufacturer includes a person who puts or causes to be put his mark on any product (whether he manufactured it himself or not).
In the decided case of Namdeo Bajirao Raut vs. Hindustan Lever Ltd., the complainant established that the seeds purchased by him were defective. He alleged that the seeds were produced and marketed by the defendant company. The defendant contended that the seeds were in fact produced by a company in Gujrat. But the bag containing the seeds bore the words that the seeds were both produced and marketed by the defendant company. The State Commission held that the defendant by lending his brand name even to the production of seeds has made itself liable for the defect in the goods.
Therefore, in the provided case, Pyaremohan Prajapati can file a suit against CTC Ltd., for supplying defective seeds. Hence, choice ‘A’ is accurate ans. < TOP >
52. A Click-wrap or web-wrap agreements are commonly used in connection with e-commerce transactions. These agreements are typically used to specify the terms and conditions applicable to the use of the website as well as to the products and services purchased over the Internet. With these agreements, the buyer or user explicitly assents to these terms by clicking on a button ‘I agree’ or ‘I accept’ after having an opportunity to review the terms. An act by the buyer affirmatively assenting to the terms of the click-wrap agreement significantly enhances its enforceability.
Therefore, in the provided instance, as the agreement amounts to a ‘click-wrap’ agreement, Nilesh is bound to take delivery and make payment. Hence, choice ‘A’ is accurate ans. < TOP >
53. C The proximity of reason is an important element of insurance contract. The payment of compensation depends upon the nature and proximity of the reason that resulted in the loss of the asset. It is the reason without which the loss would not have occurred. It is the reason which is most closely and directly connected with the loss not necessarily in time but in efficiency and effectiveness. This doctrine is applicable when the insured peril need not be the initial reason and it is not direct outcome of the operation of an external peril, but then the risk insured against must actively take place. An insurer is liable for any loss proximately caused by a peril insured against.
Therefore, in the provided instance, Kushal can file a claim for loss by fire as his house got wrecked due to explosion by fire. Hence, choice ‘C’ is accurate ans. < TOP >
54. E A drawee bank is liable to make payment only if the cheque is presented to it during the usual banking hours. Where the bank holds sufficient funds of the customer but wrongfully dishonors the customer’s cheque, then it is liable not only for any monetary loss suffered by the customer but also for loss or injury to the reputation of the customer.
It should be noted that a drawee bank is liable only to the drawer in case of wrongful dishonor of a cheque. Thus, the holder of a cheque cannot enforce payment upon the identical from the bank as there is no privity of contract ranging from the two. This is the case, even when the bank has sufficient funds of the customer. The remedy of the holder of a cheque lies against the drawer of the cheque and not against the bank.
Hence, in the provided instance, the bank is liable not only to compensate for the monetary loss suffered by Amrita but also to pay compensation for the loss to Amrita’s reputation. The bank has no liability towards Bindu. < TOP >
55. B A insurance contract ranging from the owner of a factory and the insurer, whereby the insurer will compensate the owner from the liability of payment of compensation to the employees handling hazardous substances in classified as public liability insurance. < TOP >

56. E Consideration in the contract of insurance is the payment or the consent to pay the premium by the proposer and a promise to pay or compensate or indemnify by the insurer in accordance with the terms and conditions incorporated in the policy. Thus, there are 2 promises by the proposer and promisee. These are reciprocal promises undertaken and agreed by the parties.
Hence, choice ‘E’ is accurate ans. < TOP >
57. B An instrument should be payable either at maturity or after the date of maturity. An instrument paid before the date of maturity is not a payment in due course. It was held in Burbridge vs. Manners that a bill paid before maturity and subsequently endorsed is valid in the hands of a bona-fide endorsee. Hence, ‘B’ is accurate ans. < TOP >
58. B One creates a document when 1 composes an electronic mail message; it becomes a record when 1 sends it. < TOP >
59. B The National Commission is empowered under part 2(22) to review its own decision/order where there is a patent fault. This power is limited to review errors apparent from the records and not all errors. There is no similar power to the District Forum or the State Commission. < TOP >
60. D The natural causes of pollution include floods, cyclones, earthquakes and molten lava from volcanoes. Since, they are the agents of nature and the man has no control over them, they are known as natural causes.
Man-made causes include:
• Population growth and Industrialization
• Poverty and unhygienic settlements
• Urbanization
• Depleting natural resources and rising population
• Deforestation.
However afforestation is not a reason of environmental pollution. Hence, choice ‘D’ is accurate ans. < TOP >
61. D According to the Doctrine of Absolute Liability formulated by the Supreme Court in the decided case of M.C. Mehta vs. Union of India, when an enterprise is engaged in a hazardous or inherently dangerous industry, which poses a potential threat to the health and safety of the people, it owes an absolute and non-delegable duty to ensure that no harm outcomes to anyone from such activity. If the harm outcomes to anyone due to such activity, the enterprise must be absolutely liable to compensate for such harm and should not be allowed to avoid liability by pleading that it was not negligent.
Therefore, in the provided instance, the owners of the tannery can be held liable for polluting the atmosphere under the doctrine of absolute liability. Hence, choice ‘D’ is accurate ans. < TOP >
62. B Conduct of any contest, lottery, game of chance or skill for the purpose for promoting directly or indirectly the sale, use or supply of any product or any business interest is considered as an unfair trade practice.
Therefore, in the provided instance, the contest amounts to unfair trade practice as it assumes the character of a lottery in respect of the early-bird prizes as no skill or correctness of answers is needed. Hence, choice ‘B’ is accurate ans. < TOP >
63. B The IRDA is empowered to problem a certificate of registration, renew, modify, withdraw, suspend or cancel such registration to the applicant i.e., insurance company.
Therefore, in the provided instance, IRDA is empowered to issue, renew, modify, withdraw, suspend or cancel a certificate of registration. Hence, choice ‘B’ is accurate ans. < TOP >
64. A According to part 25 of the Negotiable Instruments Act, 1881, when the day on which a promissory note or bill of exchange is at maturity is a public holiday, the instrument shall be deemed to be due on the next preceding business day, i.e. January 25, 2009. Hence, ‘A’ is accurate ans. < TOP >
65. C Normally, only securities which are listed on the Exchange are permitted to be traded on the Exchange. But with a view to facilitate trading in securities of the companies which are traded at other Regional Stock Exchanges but not listed on the Exchange, it was decided to permit trading in securities given they meet the relevant norms specified by the Exchange. They are known as ‘Permitted Securities. < TOP >
66. C A reinsurance transaction can be described as an agreement ranging from a ‘Ceding company’ and a reinsurer, whereby the former agrees to ‘cede’ and the latter agrees to accept a certain specified share of risk or liability in return for premium upon terms as set out in the agreement. < TOP >
67. D The liability of the drawee does not arise until the bill is accepted. After the bill is accepted by the drawee he is known as acceptor accepting the instrument. In all other cases, the parties to the negotiable instrument are discharged from their liability. Hence, ‘D’ is accurate ans. < TOP >
68. E Under the info Technology Act, 2000, hacking with computer system causing wrongful loss or damage to public is punishable with imprisonment up to three years and fine up to Rs.2 lakh or both. < TOP >
69. A Anti-competitive agreements are classified into:
• Vertical agreements that include Tie-in arrangements, Exclusive supply agreements, Exclusive distribution agreements and Resale price maintenance.
• Horizontal agreements (in relevant markets) that include Prices, Quantities, Bids, Market sharing and Refusal to deal.
Hence, choice ‘A’ is accurate ans. < TOP >
70. A The subsequent table depicts the causes and the main effects of different pollutants in water:
Causes of pollution Main effects
• Organic pollutants: Waste coming from industries and agricultural fields. Water becomes toxic.
• Fluorides current in water Water cannot be used for drinking purposes; Bones and teeth of human beings get affected.
• Metals and complex compunds Metals disturb the water system. Algae cannot grow properly in such surroundings. This reduces photosynthesis and increases air pollution indirectly.
• Cyanides, hydrogen sulphides, carbon dioxide, nitrogen dioxide and sulphites Physical condition of water varies and becomes toxic for aquatic animals
• Algal nutrients Ponds get dried up due to eutrophication.

Earning:   Approval pending.