LEGAL PRINCIPLE: A master shall be liable for the fraudulent acts of his servants committed in the course of employment. However, the master and third parties must exercise reasonable care in this regard.

FACTUAL SITUATION: Rahul was a door to door salesman with United Manufacturing Company (the Company). The Company was manufacturing Water Purifiers. Rahul, along with the Company's products used to carry Water Purifiers manufactured by his cousin in a local Industrial Estate. He used to sell the local product at a lower rate giving the impression to the buyers that is is offering a discount on the Company's product. The Company Management detected the fraudulent activity of Rahul and dismissed him from service. Rahul still continued to carry on with his activity of selling the local product pretending that he was still a salesman of the Company. Several customers got cheated in this process. The fraud was noticed by the Company when the customers began to complain about the product. The customers demanded the Company to compensate their loss.

DECIDE.

The Company is liable to compensate all the customers as it did not inform the public about Rahul's fraudulent conduct and the subsequent dismissal.

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The liability rests with the local manufacturer as it was a defective product.

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The Company is not liable as Rahul was dismissed by the Company.

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The Company is liable to the customers who purchased the local product from Rahul only till he remained a salesman of the Company.

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Solution

The correct option is A The Company is liable to compensate all the customers as it did not inform the public about Rahul's fraudulent conduct and the subsequent dismissal.
Vicarious liability can be defined as a legal doctrine that assigns liability for an injury to a person who did not cause the injury who has a particular relationship to the person who did act negligently. It can also be called as imputed negligence. This doctrine arises under the common law doctrine of agency, respondeat superior, the responsibility of the superior for the acts of their subordinate or, in a broader sense, the responsibility of any third party that had the "right, ability or duty to control" the activities of a violator. Hence, in the above situation, the company will be liable.

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Q. Consists of legal proposition(s) principle(s) (herein after referred to as 'principle') and facts. Such principle may or may not be true in the real and legal sense, yet you have to conclusively assume them to be true for the purposes of this Section. In other words, in answering these questions, you must not rely on any principle except the principles those are given herein below for every question.
Further, you must not assume any facts other than those stated in the question. The objective of this section is to testy your interest towards study of law, research aptitude and problem solving ability, even if the 'most reasonable conclusion' arrived at may be absurd or unacceptable for any other reason. It is not the objective of this section to test your knowledge of law.
Therefore, to answer a question, principle is to be applied to the given facts and to choose the most appropriate option.
Principle: A master shall be liable for the fraudulent acts of his servants committed in the course of employment. However, the master and third parties must exercise reasonable care in this regard.
Facts: Rahul was a door to door salesman with United Manufacturing Company (the Company). The Company was manufacturing Water Purifiers. Rahul, along with the Company's products, used to carry Water Purifiers manufactured by his Cousin in a local Industrial Estate. He used to sell the local product at a lower rate giving the impression to the buyers that he is offering a discount the impression to the buyers that he is offering a discount on the Company's product. The Company Management detected the fraudulent activity of Rahul and dismissed him from service. Rahul still continued to carry on with his activity of selling the local product pretending that he was still a salesman of the Company. Several customers got cheated in this process. The fraud was noticed by the Company when the customers began to complain about the product. The customers demanded the Company to compensate their loss.

Q. Samir Gupta started a telecommunication company, 'Donira Ltd.' to manufacture economical mobile phones for the Indian rural market with 15 employees. The company did very well in its initial years. As the product was good and marketed well, the demand of its products went up. To increase production the company decided to recruit additional employees. Samir Gupta, who was earlier taking all decisions for the company had to selectively disperse the authority. He believed that subordinates are competent, capable and resourceful and can assume responsibility for effective implementation of their decisions. This paid off and the company was not only able to increase its production but also expanded its product range.
(a) Identify the concept used by Samir Gupta through which he was able to steer his company to greater heights.
(b) Also explain any three points of importance of this concept.

Q. A company was marketing 'water purifiers' which were very popular due to their quality and after sales services provided to the customers. The company was a leading company in the market and earning huge profit Because of huge profits the company ignored the after sales services. As a result its relations with the customers got spoiled and the image of the company was damaged in the public. Top Management become concerned when the profits for the current quarter fell steeply. On analysis it was revealed that ignoring the after sales services was it's reason. Therefore the company took all possible measures to protect and promote it's favourable image in the eyes of the public. As a result the goodwill of the company improved in the society.
(a) Name and state the communication tool used by the marketer in the above case to improve its image.
(b) Also explain role of the tool as identified in part (a).

Q. 'Coconut Joy Ltd.' are the manufacturer of vegetarian frozen dessert food products made with coconut milk, agave syrup and other certified ingredients. The founders of the company Lovely and Lalita originally developed this treat to meet their own needs but found that their friends and families around were also keen to use the products. It was not only the vegetarians, but also those who could not get enough environment friendly sustainable food, that appreciated the product.
It did not take long for Lovely and Lalita to recognise the potential of their little venture. In the beginning they started from their home with the product being sold through local family parties that enable guests to personally meet the owner. This helped to establish strong connections with the prospective buyers and the company could put the product on shelves of natural food store. The company used all marketing activities to grow and expand. The company began sponsoring booths at festivals, drawing attention to its newly created vegetarian products. It also disseminated relevant information to media about its products and the people who helped in building the company's reputation. Lovely and Lalita were invited for an interview with one of the leading TV channels in which they talked about their environment friendly vegetarian products. To show its gratitude to customers, local business and government officials who supported the company from the beginning, `Coconut Joy Ltd.' hosted a gala event and involved all of them to raise funds for a few local NGO's. The company also asked its fans and customers to send songs and poetry conveying their impression about 'Coconut Joy's Ltd.' products.
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(b) Briefly explain the role of the tool identified in (a) above.

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