wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

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.


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.
Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses
B
The liability rests with the local manufacturer as it was a defective product.
No worries! We‘ve got your back. Try BYJU‘S free classes today!
C
The Company is not liable as Rahul was dismissed by the Company.
No worries! We‘ve got your back. Try BYJU‘S free classes today!
D
The Company is liable to the customers who purchased the local product from Rahul only till he remained a salesman of the Company.
No worries! We‘ve got your back. Try BYJU‘S free classes today!
Open in App
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.

flag
Suggest Corrections
thumbs-up
0
similar_icon
Similar questions
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. '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.
(a) Identify and explain the communication tool used by 'Coconut Joy Ltd.'.
(b) Briefly explain the role of the tool identified in (a) above.
View More
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Methods of Flotation
BUSINESS STUDIES
Watch in App
Join BYJU'S Learning Program
CrossIcon