Tag: #blogwriting

CITATION

(1862) 11Cb (NS) 869, EWHC CP J35; 142 ER 1037

APELLANT

Bindley

RESPONDENT

Paul felthouse

DECIDED ON

8 th July 1862

COURT

Court of Exchequer chamber

JUDGES

Willies, byles and Keating JJ

AREA OF LAW

Acceptance

BACKGROUND

Uncle felthouse was quite interested with his nephew’s horse. So, he sends a letter to his
nephew as a proposal to buy the horse which stated: “if I hear no more about him, I’ll
consider the horse is mine for 30.15 shilling”. The nephew received the letter of Mr Felthouse
and decided to sell his horse to him. But he failed to respond to the offer. Suddenly, the
nephew faced an auction of the property and told the auctioneer, Mr.bindley to auction all his
property except the horse. On the day of auction, Bindley forgot to spare the horse from the
auction. As the horse was a good breed it had a great demand in the auction and Mr. Bindley
accidently sold the horse to another person for 33 shillings. When felthouse came to know
about the incident he sued the auctioneer under the tort of conversion (usage of someone
else’s property inconsistently with their right). This made felthouse to prove the contract
valid by showing that the horse was his property. Bindley stated that Mr. Felthouse doesn’t
have any ownership over the horse even though the nephew had an interest to sell the horse.

Since it wasn’t communicated properly, the contract doesn’t seem to be valid. The major
issue raised in this case was whether the silence or failure to reject an offer amounts to
acceptance. The court finally ruled that felthouse did not have any ownership over the horse
as there was no acceptance from his nephew’s side. This is a landmark case in the history of
contract law which states that no one can necessitate anyone to make a decision on to reject
or accept an offer and it also states that mere silence does not amounts to acceptance.

FACTS

1 Paul felthouse send a proposal to his nephew John felthouse in the form of a letter to
buy his horse, which stated: “if I hear no more about him, I’ll consider the horse is
mine for 30.15 shilling”.
2 Despite having the intention to sell the horse, the nephew never had accepted the
proposal. So, he told the auctioneer, Bindley to exempt the horse from the auction.
3 Mr. Bindley forgot about the condition and sold the horse for 33 shillings to another
person.
4 Paul felthouse sued Bindley under the tort of conversion by stating the horse as his
own.

ISSUE

1. Whether there exists any valid contract between the uncle felthouse and his nephew.
2. Whether the silence or failure to convey the rejection of an offer amounts to acceptance of the proposal.

JUDGEMENT

It was held by the court was there wasn’t any valid contract existed between felthouse and his
nephew. Despite having an intention to sell the horse, there wasn’t any acceptance to the
proposal from his nephew’s side. A proposal will only get emanated as a contract where there
is an acceptance to the proposal. Hence it was stated that silence or failure to convey the
rejection of a proposal will not amounts to acceptance of the offer.

RATIO DECENDI

1. You cannot exert your decisions on an unwilling party.
2. Silence or failure to convey rejection of an offer will not amounts to acceptance.
3. You cannot assume acceptance if there is no notification of acceptance or implied acceptance through action present.

CONCLUSION

The case Felthouse v. Bindley was a turning point in the history of contract law. In this case it
was proved that there wasn’t any contract between the uncle and his nephew.it thus proved
that silence will not amount to an acceptance to a contract.

This article is written by Nourizen Nizar, student of Government Law College, Ernakulam, Kerala

ABSTRACT

Child sexual abuse is a dark reality that is increasing in India and with numerous harmful impacts. It is a universal and human rights issue. It was not conceded as a serious crime before the “Protection of Children from Sexual Offences Act, 2012”. Child sexual abuse includes the provision concerning child rape, harassment and pornography. This article highlights the types of child sexual abuse and legal provisions related to child sexual abuse.

Introduction 

Child sexual abuse means the physically or mentally ill-treatment with a minor or a child with sexual intention. Children are abused by an outsider (unknown to the child) or an insider (family member and relatives). In India, many cases of child sexual abuse are not recorded because many parents prefer to stay quiet. 

It happens when a person uses a child for his/her sexual indulgence. Child sexual abuse is in the form of physical contact and non-physical contact. The child does not have the authority to give consent. Consent or dissent both are covered under child sexual abuse.

Various kinds of child sexual abuse:

• An adult revealing their private parts and forcing the child to do the same. 
• An adult touching child’s sexual organs and compelling them to do the same. 
• An adult initiating sexual intercourse with a child with or without consent.
• An adult showing or encouraging a child to hear and watch pornographic material.
• Obscene phone calls and indecent messages.
• Sharing and preserving indecent images of children. 
• Making child to listen sexual content that harms their mental and physical health.
• Adult married to minor and minor to minor is considered a forced relationship.

Laws relating to child sexual abuse

Before 2012, In India, there was no particular law for child sexual abuse. It was governed by the various provisions of the IPC. Section 377[i] deals with the sexual intercourse against the nature, Section 354 states the assault or criminal force on women with intention to indignant her modesty[ii]. Sec.509 deals with insulting women through word, or gesture or showing object which is inappropriate with the intention[iii]. Section 374 defines rape[iv]. The Protection of Children against Sexual Offences Act, 2012 was enacted by Parliament to save children or minors from sexual abuse and it is gender neutral.

Provision contained in POSCO Act

• Section 19 of the POSCO Act, states that the reporting of the cases child sexual abuse is obligatory.
• Section 30(iii) of the Juvenile Justice Act, 2015 states that when a child has been abused sexually, then Child Welfare Committee (CWC) should take actions for child’s rehabilitation. Such a case must be reported to SJPU or local police under POSCO Act, 2012.
• Section 19(6) of the POSCO Act, deals with sexual offence against a child and mandates that a report of the case should be presented in front of CWC within 24 hours after the filing of the case[v].
• Rule 4 (7) of POSCO Act, obliges the CWC to assist child and the family during investigation.
• The Special court should determine the age of child define under Sec. 34(2) of POSCO Act[vi].
• Section 40, POSCO Act 2012 deals with the victim child’s right to receive free legal counsel during the trial[vii].

Others-

• Minor has the liberty to state his statement only where he is comfortable.
• To provide a speedy trial and video recording to ensure confidentiality.
• The child should be medically examined by a female doctor, in the presence of a person whom the child trusted, with his/her guardian consent.
• Contact between the victim and the accused should be avoided during video recording.
• The accused defender can ask questions but those questions would be asked through a judge to a juvenile.

Punishment under POSCO

• Section 4 of the POSCO Act deals with the punishment for penetrative sexual assault, the accused shall be punished not less than 7 years or which may be extended to life imprisonment[viii].
• If a trusted authority or a person or police officer is committed an aggravated sexual assault with child, he will be punished under Sec.6 of the POSCO Act[ix].
•  If a person has committed non-penetrative assault, then he will be punished under Sec.10 of the POSCO Act[x].
• Section 12 of the POSCO Act prescribed punishment for three years with a fine[xi].

Further, The Act prescribes punishment in accordance with the gravity of the offence. Storing pornographic material related to the child is an offence, punishment for which imprisonment is in description form, which may be extended to three years or fine or with both.

Landmark Judgements

Ghanshyam Misra v. The state[xii]

In this case, Ghanshyam Misra was the school teacher of a 10-year-old and raped her at the school premises. The schoolteacher is the trusted authority of the child. The court sentenced the accused for seven-year imprisonment with a fine and ordered compensation to the father of the girl.

State v. Pankaj Chaudhary[xiii]

In this case, the court held the accused liable only for ‘outraging the modesty of a woman’. The case revolves around the digital penetration of anus and vagina of a girl child. Before 2012 digital penetration was not recognized as an offence under IPC. 

Misuse of POSCO Act

Many cases were reported based on false allegations. The Kerala High Court has held that the petitioner misused the provisions of the Protection of Children from Sexual Offences Act (POCSO Act) so she will be liable. The petition was filed by the victim’s mother. The allegation was that her 16-year-old daughter was alone at home the accused came to her house and hold her. In the investigation, the police officers found that the accused was far away from her house on the incident day. The court held that the allegation on the accused was fictitious. According to Section 22 of the POSCO Act, police can take action against the petitioner. The court dismissed the petition[xiv].

Conclusion

Sexual abuse of a child is a serious crime. POSCO Act has changed the scenario of child sexual abuse in India as prior to it there wasn’t any specific law dealing with said issue. Yet, the need to improve the trial and make it child-friendly is often felt.

---

[i] Pen. Cod.§ 377.

[ii] Pen. Cod. § 354.

[iii] Pen. Code.§. 509.

[iv] Pen. Code. § 374.

[v] POSCO Act, 2012, Bill No. 32 of 2012, §19(6).

[vi] POSCO Act, 2012, Bill No. 32 of 2012, §34(2).

[vii] POSCO Act, 2012, Bill No. 32 of 2012, § 40.

[viii] POSCO Act, 2012, Bill No. 32 of 2012,§ 4.

[ix] POSCO Act, 2012, Bill No. 32 of 2012,§ 6.

[x] POSCO Act, 2012, Bill No. 32 of 2012, §10.

[xi] POSCO Act, 2012, Bill No. 32 of 2012, § 12.

[xii] AIR 1957 Ori 78.

[xiii] Delhi High Court criminal appeal 813/2011.

[xiv] 27^th July 2018, Kerala High court comes out against misuse of provisions of POSCO Act, The Indian Express, https://www.newindian express.com.

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This article is written by Prachi Yadav, 2^nd Year student from Mody University of Science and Technology, Laxmangarh, Rajasthan

                                    

What are Swap contracts?

In the year 1982, Swap Contracts were introduced when the World Bank and IBM entered into an agreement. Swap contracts are one of the four types of financial derivative contracts, where two counter-parties exchange the cash flow of one party for those of the other party’s cash flow for a fixed period.

To understand the system of swap contracts, let us assume that there are two parties. A, who lives in India, goes to the market and notes that the cost of a Samsung mobile is Rs.40000 and the cost of an iPhone is Rs.65000 and B, who resides in the USA goes to the market and notes that the same model of phone that A checked is available for Rs.65000 and Rs.40000 for Samsung and iPhone respectively. Now, these two parties decided to enter into a contract to exchange their commodities and reduce their purchasing cost. This arrangement is defined as swap agreement.

These swap agreements are useful for the financial institutions who want to convert their floating rate to a fixed rate and vice versa. These contracts are executed through a swap bank that works as a matchmaker and assists the transactions between the parties.

Types of contracts

Countless swap agreements exist in the financial ecosystem. Here, we will discuss most commonly used variations:

1. Interest Rate Swap: Interest rate swap is one of the most commonly used methods in financial derivatives. These swaps do not include the retail investors and the contracts are of an OTC nature and are executed between businesses and financial institutions.

Let us consider an example, Company A, a newly incorporated company with no financial standing in the market, approaches the bank for a loan and the bank says that they will provide the loan but at a variable rate of interest. On the other hand, Company B, which has an excellent financial standing in the market, approaches the bank for a loan. The bank agrees to give the loan at a fixed interest rate with the same time and notional principle. Now, the companies observe that the interest rate for Company A is going to increase and the interest rate for Company B is going to drop, but due to the fixed rate of interest, the Company would still be paying more. Hence, both the companies agree and swap their interest rate nature and are executed between businesses and financial institutions.

Consider another example, where Company A is newly incorporated and does not have any financial standing in the market. It approaches the bank for a loan and the bank says that they will provide the loan but at a variable rate of interest. On the other hand, Company B, which has an excellent financial standing in the market, approaches the bank for a loan. The bank agrees to give the loan at a fixed interest rate with the same time and notional principle. Now, the companies observe that the interest rate for Company A is going to increase and the interest rate for Company B is going to drop, but due to the fixed rate of interest, the Company would still be paying more. Hence, both the companies agree and swap their interest rate.

2. Currency Swap: Currency swap agreements are used by financial institutions that are planning to expand their businesses internationally and require financing. Through swap contracts, the companies get a more favourable loan rate from their local banks as compared to the banks from that country and minimise the risk associated with the currency fluctuation. It involves the exchange of the principal amount along with the interest payments from one currency to another.

For example, an India based company “X” is planning to enter the Australian market and simultaneously, an Australia based company “Y” is planning to diversify their portfolio by purchasing a company in India. For company X, the expansion would require a funding of $22 million and for Y the acquisition would require the same amount of loan. Now, the Indian banks might give Company X a loan at 9% but for Company Y, it will be at 12%. Likewise, Australian banks will give a loan to Company Y at 9% but for Company X it will be at 11%. However, both companies could have an advantage if they borrow in their domestic currencies and enter into a swap contract. In this way, the companies will receive the desired foreign currency at a cheaper loan and the risk factor for currency fluctuation will reduce.

3. Debt-Equity Swap: Debt-Equity Swap agreements are one of the recent additions. They are used to trade the debt or obligations of a company for something that has an equivalent value such as equity, bonds or stocks. This type of contract is used to maintain the debt to equity ratio of the company to keep a good credit rating in the market. The debt-Equity swap value depends on the market rates but the lender may provide a much higher exchange offer. 

For example, Company X suffers a drop in the revenue because of the economic crisis and it has the potential to avoid going bankrupt but due to cash flow problems, they will not be able to make the scheduled instalment. So they approach the bank and offer them 5% equity in exchange for the remaining loan. This swap is called the debt-equity swap.

4. Commodities Swap: Commodities swaps are used to hedge the fluctuation in the commodities pricing and set a fixed price. This will benefit both the buyer and sellers in the market as there will be a fixed selling price and buying price. Generally, it is always the cash flow that swap and not the actual commodities.

For example, if a company is purchasing 1000 gallons of oil and has agreed to pay a fixed price of $2 per gallon, then, at the time of payment if the price increased by 20 cents, the company would be paying $200 extra if the price was not fixed. Now, if the price drops by 20 cents the company will have to pay $200 more. Hence, if the price of the commodities that a company uses as input is floating then the profits of that company will also be volatile, that is the reason the companies prefer to enter into the commodities swap agreements.

Applications of Swap

There are various applications of swaps in the financial markets. Some of them are :

1. Hedging of Risk: The most important and primary application of swaps is to hedge risk. For instance, Company A is in a contract with a floating interest rate and has reasons to believe that in near future the interest rates will increase significantly. So to save themselves from higher interest rates, the company has to exchange the floating interest rate for a fixed interest rate.

Similarly to hedge against the fluctuation in currency exchange, the enterprises involved in international business enter into currency swaps.

2. Low borrowing rate: The comparative advantage that one company has is exchanged with the advantages possessed by another company. Hence, both the companies are benefitted from the swap and the purchasing cost is significantly decreased.

3. Access to the International market: The companies enter the foreign markets by using the swap system which will help them in avoiding the fluctuation in financial transactions. For instance, if a company of Canadian origin wants to invest in a business entity in the Indian market, they will enter into an interest rate swap agreement with an Indian company, as the rate of interest for a domestic company would be lower compared to that for the company itself.

4. Avoiding bankruptcy: Using the debt-equity swap, a company can save itself from declaring bankrupt. For example, if a company suffers a revenue drop due to a crisis and the cash flow is not enough to pay company’s regular expense, they can offer the bank equity in their company in exchange for the loan to get approved.

Usage

Commercial and comparative advantages are the two basic categories in which swap contracts are used. When a company enters into an agreement where they have to pay a certain interest rate which can be fixed or floating rate, then swaps can reduce the risk of fluctuation in the financial market. Companies that are planning to enter a new market can have a comparative advantage by using the currency swap agreements.

For example, if Indian company wants to expand its business in Malaysia, it is more likely for the company to get a favourable agreement in India. So, by entering into a currency swap, the company can have the finances it needs to expand its business in Malaysia without paying extra interest rates.

Exiting a Swap Agreement

There are three frequently used ways to exit a swap contract before the expiration of the term period. They are:

1. Buy-out: With the consent of the counter-party the market value of the swap agreement can be calculated and the amount can be paid by the party and this way the company can exit the swap contract.
2. Sell the Swap: With the consent of the counter-party, the company can sell the swap to a third party at the current market value.
3. Offsetting Swap: A company can nullify the effect of a swap agreement by entering into a reverse swap contract. For example, if a company is in a swap where they receive a fixed interest rate, then they can enter into another swap with a third party to exchange the fixed interest with the floating interest rate.

The blog is written by Abhinav Bansal  ), B.A.LLB student at Trinity Institute of Professional Studies.

Edited by- Deeksha Arora

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