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Is Hijab necessary in Islam or not : an analytical study

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This article is written by Dhaaranee Karunagaran pursuing a Certificate Course in Advanced Commercial Contract Drafting, Negotiation & Dispute Resolution. This article has been edited by Zigishu (Associate, Lawsikho). 

This article has been published by Sneha Mahawar. 

Introduction

India, despite being a secular country, has faced a lot of religious issues and there have been many incidents where minorities have strived to overcome these incidents, but at present, we are concerned with the issue where wearing a Hijab was held to be not necessary by the Karnataka High court, which raised a lot of questions in the minds of various people, and one of the contentions or thoughts which was revolving in people’s mind after the judgment is, why is it only Hijab of Muslims and not turban of Punjabis? Does the word Secular in the Preamble only remain as documentation and will it not be practised in reality? These questions would be answered once we look into the aspects of the decision upheld by the Karnataka High court. Karnataka Highcourt has given the verdict considering 3 constitutional grounds. The first ground being wearing of Hijab is not an essential religious practice in Islam, secondly that the freedom of expression and privacy is not violated and the ban is a reasonable restriction upon the same and finally that the government order under the challenge is neutral and non-sectarian and thus there is no discrimination against the Muslim women students.

On grounds of essential religious practices

On this particular ground, the petitioners have contended that women would lose the identity of Islam if they don’t wear a hijab, if this is a case, the petitioners should have proved accordingly, but in the present case same has not been proved by the petitioners, thus concerning this, the court has upheld that on the matter of religious freedom, the state has neither insulted the practice of the religion nor it has discriminated against a particular religion and hence wearing a hijab does not fall under an essential religious practise of Islam. The analysis of the same wasn’t taken up  as a religious choice of the Muslim women, rather the court has only viewed it from the point of religious compulsion., The fundamental concept of religious freedom is now put into question mark due to the same ruling.

On grounds of freedom of expression and religious practices

Currently, when we look into the issue of Freedom of expression, in the case of Nalsa vs Union of India, the court has held that dress on certain occasions is a form of symbolic representation, and the same is protected under Article19(1)(a), but the same is not upheld in the same case. Indeed the practice of wearing a hijab is a form of symbolic expression only. Usually, when the freedom of expression and privacy comes into question, the court would look into the restrictions of the same rights, when looking into the same, they could have opted for the comparatively least restrictive measure, for which something less than the ban on the practice of wearing a hijab would suffice. Now banning the same leads to a lot of questions arising in people’s minds, which would lead them to question the practices of the majority religion alone. This indirectly would affect the unity and peace among various religions and communities. The Hon’ble Supreme Court in NALSA’s judgment used the doctrine of reasonable accommodation, the doctrine of reasonable accommodation states that the state could look into accommodating a practice reasonably in such a manner in which the same would not lose its characteristics, in the present case the possibility for reasonable accommodation was very well present, which the court could have resorted to.  

Grounds of non-discrimination

The present issue has been addressed by the court very briefly, only concerning the challenge of the government order stating that the same was neutral and non-sectarian and thus the same does not discriminate against any religion specifically. The present case has only used the principles of direct discrimination and did not consider the doctrine of indirect discrimination, the same doctrine has been accepted by the hon’ble supreme court long ago and it has also become a part of Indian jurisprudence. The point to be noted here is that facially neutral rules would be applied in different ways to different sectors of people, and the same was not taken into consideration while dealing with the case. In my respectful view, the failure of considering how indirect discrimination is being squarely applied to the case shall be one of the important reasons to set aside the present matter in appeal.

Freedom of conscience is not taken into consideration

In the present case, the court has not elucidated on the freedom of conscience, it is a matter of fact that, the freedom of conscience is upheld as an important subject matter when dealing with the case of religious freedom. The main judgment, of course, is the iconic Bijoe Emmanuel case, where the right of the Jehovah’s Witnesses not to participate in the singing of the national anthem was upheld. The court distinguishes Bijoe Emmanuel on two grounds. First, it argues that “conscience is by its very nature subjective. Whether the petitioners had the conscience of the kind and how they developed it is not averred in the petition with material particulars. In this case, perhaps, it may be necessary for the petitioners to spell out, perhaps in more concrete terms, the (subjective) reasons for wearing the hijab as a case of conscience – an argument that, of course, overlaps with the argument from symbolic expression. The consideration of the same would have a comparatively positive outcome in the present case.

What is the effect of religious clothes on other religions

Article 14 guarantees every person the right to equality. However, a reasonable classification can be made by the Government to achieve a specific goal. Now, take other religions. In Sikhism, there are five articles of faith, known as ‘the five K’s’, that Sikhs are commanded to wear at all times, including in educational institutions to demonstrate their religious faith. These include Kesh (uncut hair), Kara (a steel bracelet), Kanga (a wooden comb), Kuchera (cotton underwear), and Kirpan (steel sword). Wearing the five K’s is justifiably considered essential religious practice under Article 25 and thus, Sikhs are permitted to wear the five K’s in educational institutions.

Similarly, placed are Muslim women students who want to wear hijabs in educational institutions. The wearing of the hijab comes under essential religious practice under Article 25. Restricting such a practice by educational institutions on the premise of Article 19(1)(g) would have an equal effect on other religions too because both are at an equal pedestal. There seems to be no reason as to how the hijab is different from the religious clothing of other people. Thus, it seems that if the wearing of hijabs by Muslim women students is restricted, it would affect other religions, more specifically Sikhism. 

Comparison to international judgments 

There were similar controversies that were raised in European courts of Human rights regarding the veils(Burqa) in Belgium and France. The veil is something that covers the face fully and thus the case was in front of ECHR and the case and ECHR upheld the ban of the same, but in the present case, the Hijab is a piece of cloth that covers the head and hair alone and not the whole face, thus the doctrine of the international court is not applicable here.

The judgments of other courts in India 

Since the Karnataka Court has upheld the ban on Hijab recently, the other states in the country have not done the same. In 2016 in the AIPMT exam, the Kerala High court held that the students appearing for the exam with religious clothes should be present an hour before the exam so that they shall be checked properly as per the guidelines. Thus, when there are alternative measures that could be taken, the imposition of a ban on the same thing gives rise to a lot of misunderstandings between members of different states.

Conclusion

Now, the present judgment has been appealed in the Hon’ble Supreme Court, the decision of the Supreme court in this particular matter will be of extreme importance, because, the whole of the nation, would be looking into how the judiciary is protecting the rights of the minority in a majoritarian state. As Gandhiji has rightly quoted, the rights of minorities in majoritarian states, speak about the good governance of the country.

References


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Management Contract : what you need to know

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This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article provides a detailed analysis of management contracts that enable one company to have control of another business’s operations.

It has been published by Rachit Garg.

Introduction

Management contracts are legal agreements that allow one organisation to control the activities of another. These formal agreements are frequently signed by business owners directly with the management firm. This normally grants operational control to the management business for a set length of time, usually two to five years. The majority of management contracts are task-specific and centered on the work itself rather than pre-determined results. 

Are you a business owner who has been subjected to a term management contract? Perhaps you have been given the choice of having a management company look after all or part of your business. However, you should learn more about management contracts before deciding to transfer a portion of your firm to another organisation. In this article, we will go through what these agreements are and what functions they aim to serve.

Definition of a Management Contract

The Business Dictionary defines a Management Contract as an “agreement between investors or owners of a project, and a management company hired for coordinating and overseeing a contract”. A management contract is an arrangement in which an enterprise’s operational authority is delegated to a separate company that performs the necessary managerial duties in exchange for a fee. 

During the procurement planning phase, high-level planning for contract management begins. It stems from the contract management planning strategy, complexity assessment, market analysis and review, and market approach, and continues through contract negotiation, implementation, and results in the evaluation. Contract planning and management encompasses all activities before, during, and following the contract time. It’s the procedure for ensuring that both parties to a contract fulfil their respective commitments as effectively and efficiently as possible in order to accomplish the contract’s business and operational goals on a consistent basis.

How to draft a Management Contract 

If you are considering a Management Contract, you might want to consider hiring a third party to assist you with the contract’s design. Before signing a contract, it’s extremely crucial to seek legal guidance to ensure your company isn’t getting into a terrible arrangement. You can also find templates to guide you in the process, for example: here.

MANAGEMENT AGREEMENT

This MANAGEMENT AND OPERATIONS AGREEMENT (this “Agreement”) is made as of —————————(MONTH), effective as of —————–(DATE, by and between ———–(the “Company”), and——————– (the “Manager”).

RECITALS

WHEREAS, the Company desires to engage the Manager to manage its Business, and the Manager desires to retain, operate and manage the Business on the terms set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties contained herein, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

  1. Appointment of Manager; Relationship between the Company and the Manager.
  2. Management Services.
  3. Obligations of the Company.
  4. Additional Agreements of the Manager
  5. General and Administrative Activities.
  6. Location
  7. Term of Agreement; Termination of Rights
  8. Indemnification
  9. Additional Provisions

IN WITNESS WHEREOF, the parties have executed this Management Agreement as of the date first above written.

Signed this —————–(DATE AND MONTH).

MANAGER

Necessary points to be included in a Management Contract

  1. The management contracts specify how much authority the management firm will have over the business.
  • Include how much and how often the management company will be paid.
  • Describe job requirements in detail so that all parties are aware of what is expected of them and how their performance will be evaluated.
  1. Determine the length of time for which the management contract will be in effect.
  • The majority of management contracts are for one year, with the ability to renegotiate and extend them.
  1. Determine what happens if either side breaches the contract.
  • This includes how to suspend the contractor if the business owner has to pay a penalty.
  1. Some businesses prefer to begin a relationship with a management contract as a test run. The work’s specifics and scope should be included.
  2. All members must sign the agreement and receive a copy for themselves.

Important clauses of a Management Contract

A management contract will always consist of three core components. The three parts are the first things you will need to specify when seeking out a management contract. The parts to be included in such a contract are :

The duration of a Management Contract

This part of the management contract outlines how long the management contract companies will have control of the function, department, or enterprise. It could last anywhere from a few months to several years. You may also need to be precise about contract terms such as the length of the contract. For example, if the management company fails to reach its performance goals, the management contract can be cancelled even if the term has not yet expired. A normal management agreement can be as short as one or two years. However, it could be for as long as five or six years, if not longer. An agreement’s terms are generally constructed with a one-year minimum and various choices for subsequent years.

Conditions of a Management Contract

  1. This is the contract’s most thorough section, as well as the longest. The management contract must be very clear about a number of aspects, including the parties participating in the contract, the functions that are passed to the contractual company, and so on. 
  2. A thorough list of regulations, as well as a list of obligations that both parties must follow, should be included in the contract. 
  3. Once the contract has started, there should also be a mention of how much control each party has over the specific department or business function, as stipulated in the management contract. 
  4. The terms should be explicit, and the operational obligations of the management firm should be well-defined. This will assist in avoiding future confusion and conflict.

Method of computing the management fees

The pay system should also be discussed in the management contract. As previously stated, the management fee can be calculated using a set percentage, a set sum, or a specified sum based on performance. An example fee could be a percentage of total revenue and/or gross profit.

Why are Management Contracts significant

Contracts are the bedrock of all business dealings. From beginning to end, they lay out every detail of a commercial contract or supplier relationship. According to one survey, the average Fortune 1000 company had 40,000 active contracts on any given day. A contract must be written, reviewed, negotiated, and approved 40,000 times, and that’s only the beginning. After that, all contracts must be handled for the duration of their lives, taking advantage of any negotiated clauses, monitored for compliance, and then reviewed for renewal or revisions. 

A single contract brings together personnel from finance, legal, and procurement, all of whom must manually conduct tasks. For starters, this is time-consuming and costly, but these manual and repetitive operations are also prone to errors, resulting in additional costs, missed deadlines, and compliance difficulties. That is only for a single contract. You expose yourself to a slew of hazards, financial fines, and procurement contract compliance difficulties if you don’t handle your contracts properly. In the long term, a minor technical error or grammatical error can cost thousands of dollars. Therefore, management contracts play a key role in the everyday life of a contract. 

What are the functions of a Management Contract

The definition of a Management Contract provided at the beginning of this article, explains how, under such a contract, a firm’s operational functions are transferred to the management company. What functions, however, may an organisation or a company delegate to a management firm? The functions are numerous and varied, as provided hereunder :

  1. Technical operations such as the production of products.
  2. Management of human resources, including training of personnel.
  3. Financial management of the organisation such as accounting.
  4. Marketing services, including promotions.

Depending on its demands, a corporation can essentially identify the functions it passes over to the management company. Your company’s accounting, as well as a variety of financial responsibilities that belong under this operational area, may require the services of an outsider. Larger businesses, on the other hand, may enter into management contracts for much broader operations, such as overseeing a specific store or business entity.

Management contracts involving hotels

One of the most common industries for management contracts is construction. There have been countless instances where a huge corporation has delegated operational control of one of its hotels to a separate management firm. The contract is between the hotel owner and the management firm that will be in charge of the hotel’s operations. Sometimes the contract is for only one of the hotel’s outlets, while other times it is for the entire hotel network.

A hotel management contract is a legally enforceable agreement between the hotel owner and the management company. It should specify the expectations, responsibilities, and duties of both parties. All relevant provisions linked to the exchange of services should be included in the term sheet, which formally specifies the agreement.

Typically, the contract gives the management business power over things like property maintenance, marketing and promotion, guest service, and so on. The hotel’s human resources management, the formulation of operational procedures, and other functions will be handled by the management firm. Because of the nature of the hotel sector, such contracts will almost always be long-term. Due to the nature of the contract, the management business will usually have the upper hand in such contracts.

Many hotels in Asia operate under management contract arrangements because they can benefit from economies of scale, global reservation systems, brand awareness, and other benefits. Contracts lasting up to 30 years are common, with fees as high as 3.5 percent of total revenues and 6-10 percent of gross operating profit. When foreign government action inhibits other entrance techniques, management contracts have been widely used in the airline business. When there aren’t enough local resources to handle a project, management contracts are frequently developed. It is a viable alternative to foreign direct investment because it entails less risk and can result in larger profits for the company.

Management contracts involving property management

Another common application of management contracts is in the area of property management. Whether the properties are residential or commercial, property development businesses typically outsource property management to management organisations. Contracts in this industry are similar to those in the hotel industry. Property owners must ensure that they are aware of their own responsibilities, as well as the responsibilities of the property management and that they will be protected if the property manager fails to meet these obligations. Before engaging a property manager, property owners should carefully review the property management contract to ensure that all pertinent information is included.

Six things that should be included in a property management contract are provided hereunder :

  1. Fees and services:  The property management contract should provide a detailed breakdown and total of all services and associated fees. If a property owner is handed a contract with merely a generic management charge, he or she should request a breakdown of the various services and their costs. It is never a good idea for property owners to make assumptions about what services are offered.
  2. The responsibilities of the property owner: It is critical that the contract includes a provision outlining the property owner’s expectations as well as what they can and cannot do in contact with the management business.
  3. Equal opportunity housing: A property management agreement should clarify that both the owner and the management business support and adhere to state and federal regulations.
  4. Liability: The contract’s liability clause limits the property manager’s liability. In a property management contract, this is known as the ‘keep harmless provision.’ This clause protects the management business by restricting their liability, except in circumstances when the company has failed to meet its commitments.
  5. Contract duration: Property management companies typically sign one-year contracts with their clients. Before signing on for a one-year commitment, property owners should consult with a property lawyer to go over the contract provisions.
  6. Termination clause: A lawyer will examine the termination or cancellation provision to ensure that the owner has the right to end the contract before it expires. Obligations arising from termination, such as the payment of dues within a specified time frame, should also be included.

The case for association managers

Management contracts don’t necessarily entail handing over the complete responsibility of a function to a single management firm. They also don’t always involve two firms. The third form of structure, known as the association manager, is sometimes in place, which involves trade associations, NGOs, and other similar organisations. Typically, these organisations do not have a board of directors to oversee their day-to-day operations. These organisations may have budget constraints that prevent them from hiring full-time employees. In such instances, it may be more cost-effective to delegate control to a management firm. Typically, such contracts offer the management firm responsible for services like meeting planning, communication management, account administration, and so on. Depending on the company, the contract could also entail administering sponsorship programmes and managing a website.

Management contracts are also used in the entertainment and sports industries. Athletes and entertainers frequently require the services of a management company to handle endorsements, book sponsorships, public relations, personal money, and other elements of their existence. Meanwhile, athletes and artists may concentrate on the most important aspect of their careers: performing at their best. Typically, the fee is connected to the artist’s or athlete’s annual revenue, which the management company will strive to increase.

The case for food service managers

In the public sector, management contracts are also highly popular. The food service management contract, which is employed in nursing homes, public office buildings, and school sports facilities, and in which a management business provides food and amenities, is of particular relevance.

The management business will pay the building owner a lease and a portion of sales. They will prepare, serve, and advertise the food in the meantime. These contracts are sometimes employed in the private sector, where management corporations assume charge of a company’s feeding functions, ensuring that staff are well-fed. The management contract exists to ensure that a firm’s essential functions are delivered in a timely and efficient manner, even if the core function is not part of the main business.

Advantages of management contracts 

  1. The majority of the advantages of a management contract revolve around saving time, ensuring efficient operations, and bringing knowledge and experience to a business function. When a company delegated operational control of a function, the company no longer had to care about that function. The company may now concentrate on the more crucial aspects of its operations.
  2. If you are starting a startup, you are undoubtedly focused on getting your company off the ground. You don’t want to be in the situation of having to do your own bookkeeping when you might be focusing on product development and marketing instead. As a result, you might employ a management firm to handle your accounting, allowing you to save time and other resources.
  3. Another benefit of employing a management firm is that some functions may not be critical enough to warrant retaining a full-time employee to handle them. In the case of accounting, it’s possible that hiring an accountant isn’t necessary. It’s possible that pursuing a management contract would be a better option. As a result, you can save money in the process.
  4. A management contract also assists the company in effectively distributing its tasks. You will never have to worry about separate departments needing to handle their own accounts on top of their primary functions if you outsource your accounting function. For example, the HR department will no longer be required to keep its own books.
  5. Outsourcing to a management company also allows a company to benefit from the management company’s knowledge and skills. You might not be as good at money as you are at product development and marketing if you are establishing a startup. That is why outsourcing your accounting function to a management firm is an excellent choice. You are getting professional assistance. When you entrust your finances to a seasoned professional, you can rest assured that everything will go smoothly.
  6. A management contract also provides a benefit in terms of consistency. Because everything is handled by one business from the beginning, the same standards will be followed throughout, even if individual managers change.

Disadvantages of management contracts 

  1. Despite the obvious benefits listed above, you should not immediately enter into a management contract. Before entering into a contract with a management business, you should ask yourself a few questions about the contract. The privacy issue is the most obvious downside of a management contract.
  2. The company is effectively handing over information about its products, finances, and other concerns to a third party. While the contract addresses these concerns and ensures complete secrecy, the information is not limited to your company. If your company is in command of every area of operations, you can keep the information to in-house personnel and facilities.
  3. However, with a management firm, you put your information in the hands of someone, you haven’t personally verified and put your trust in handing over information outside of your company’s physical premises. Although the management contract can and should control this risk, it still exists.
  4. Furthermore, privacy concerns extend beyond your personal information and your relationship with the management firm. If your company uses third-party suppliers, make sure that your deal with them does not prevent you from making a management contract. Third parties may have specific objections to their information being handled by another corporation, or they may have concerns communicating with a third party rather than your company directly.
  5. Finally, keep in mind the bigger picture of conflict of interest difficulties. If you hire a huge management firm, keep in mind that it’s possible the firm also works with your competitors. You want to make sure that the management firm addresses any potential conflicts of interest in your company’s best interests. Your company’s performance should not be hampered by management contracts. When creating the contract, make sure to explicitly identify the persons in charge of your company and talk about how you want any potential conflicts of interest to be handled.
  6. While the transfer of operational responsibility of your organisation to the management company should be evident from the definition of a management contract, it’s worth repeating. As a result, you may or may not have a voice in many of the things the function does, depending on the terms of your contract. It’s vital to be conscious of this because, for example, you can find yourself trying to sway decisions when things aren’t going well. You don’t have operational control, so you just have to believe that you made the proper decision.

Management contracts vis-à-vis contract management 

Both the topics of management contracts and contract management are confusing and often mistakenly replaced by one another. As this article discusses the concept of management contracts, the writer feels the need to bring in the topic of contract management as well, so as to help the readers avoid misunderstanding two entirely different topics. 

What is the difference between management contracts and contract management

After a contract has been executed and entered into effect, contract management takes place. As a result, this requires working to guarantee that the contract’s terms and conditions are followed and that all of a party’s contractual duties are satisfied successfully. It’s entirely feasible that conditions will change throughout the contract management phase, forcing changes to the contract agreement. Of course, because the contract management team works closely with the other party to the agreement, they are in an excellent position to determine whether the connection is functioning or if it is required to look for other alternatives. As a result, if contract administrators and managers are indeed independent teams inside a corporation, it makes sense for them to maintain strong communication. 

A management contract is a legal agreement that allows the private sector to manage a portion or all of a public company, such as a specialised port terminal, for container handling at a port or a utility.

Components of contract management 

There are four key components in contract management :

  1. Risk analysis

This defines the level of risk as well as the criticality to business and behaves as a contract risk segmentation tool. Risk analysis is a general consideration that is given to risks and criticality. It is highly relevant in the case of contract planning. Risk analysis involves: 

  • Contract risk segmentation analysis.
  • Proximity to core analysis.
  1. Commercial components 
  • Benefits tracking: Both contract planning and contract management require benefit tracking. It’s all about setting your contract goals and how they’ll be evaluated and judged in terms of value for money. It’s all about utilising a consistent technique throughout the contract’s life cycle to report on all benefits, both quantitative (e.g. prices, transaction costs, response times) and qualitative (e.g. customer satisfaction, non-financial key performance indicators). Benefits tracking (price monitoring and compilation of other quantitative and qualitative data) at regular intervals and aligning review periods with major milestones are all part of the contract management phase.
  • Financial management: Both contract planning and management should take financial management/monitoring into account.
  • Pricing reviews: A price per unit of measure is usually included in most contracts. When contracts mention price reviews, the contract manager should make sure that pricing reviews are carried out in accordance with the contract’s terms and conditions and that they are identified at contract execution.
  • Financial risk: When risks are mitigated and minimized into lesser risk segments, such as ‘important to the company’ to ‘transactional,’ you can gain value from a contract. Financial risk management is a key value driver, especially for supply agreements in the ‘strategic’ and ‘high risk’ areas. Throughout the life of the contract, it is advised that a regular assessment be undertaken to assess the supplier’s financial sustainability and mitigate financial risks. An approach to reducing risk exposure is to ensure that suppliers have adequate insurance. Contract managers should carry out the following actions : 
  1. Acquire and monitor information about supplier currency certificates, such as their values and expiration dates, to ensure that they are at or above the insured amounts;
  2. Keep an eye on certifications to make sure they’re still valid;
  3. Seek updated certificates from the supplier at least 4 to 6 weeks before the current certificates expire;
  4. Include capping of liabilities in the contract segmentation analysis tool if the contract proposes it, as it changes the level of risk associated with the contract; and
  5. Ensure that currency certificates are properly stored.
  6. Suppliers and contract
  • Contract management plan: The goal of a contract management plan (CMP) is to identify and address the important areas of contract management and the achievement of defined goals. It summarises major contract elements and translates contract terms and conditions into a practical guide that outlines the entire contract management strategy.
  • Supplier relationship management: Clear lines of communication and duties between the organisation and the supplier are established with good relationship management.
  • Transaction management: Transition in and out processes should be considered in contract preparation, when relevant, with a clear programme of actions and a communications strategy for both suppliers and customers of the goods/services. 
  • Variation: A variation to a contract is an amendment to a contract for goods and services that are mutually agreed upon. There are various reasons to change a contract that already exists. Changes in technology, resources, organisational needs, market conditions, and so on.
  1. Reporting

The contract should include provisions for continuous monitoring and assessment, if applicable. For instance, how often should contract performance be reported (monthly, quarterly, annually, or in accordance with a contractual milestone) and how should performance be assessed. All contracts require performance management to determine whether a supplier is fulfilling their contractual responsibilities. Performance measurements should be developed as part of the contract planning phase and incorporated into the contract terms and conditions. Although the amount of performance management can be scaled, consistency in data recording is critical. Reporting involves the following: 

  • Key performance indicators.
  • Reporting frequency.
  • Reporting hierarchy.

What are the stages of contract lifecycle management (CLM)

The complexity of the particular procurement, its criticality to the organisation’s core activities, and the related risk profile all influence the contract planning and management process. Based on the nature of the purchase, the amount of relevance and frequency of the criteria can be scaled up or down. Contract planning is more important at the strategic end of the procurement complexity scale than at the transactional end of the procurement complexity scale. An average contract’s lifecycle can be split into two distinct parts, pre-signature and post-signature, each coming with its own challenges and responsibilities. 

Pre-signature

The initial authoring of a contract, as well as negotiating, revisions, and approvals, are all included in the pre-signature stage. This is mostly a cross-departmental project that relies heavily on manual labour and negotiating.

  1. Contract initiation: The need for a contract is identified at this point, and the contract lifecycle begins. If you are starting a new business relationship with a new supplier, you’ll need to have a contract in place to lay the ground rules.
  2. Authoring: It is necessary to draft a contract in written form. One must consider the same as a preliminary draft rather than a finished product. Both parties must examine the suggested document and rule out any necessary adjustments. Certain stipulations will have to be agreed upon to guarantee that both parties receive the most out of the deal.
  3. Negotiation: Both parties need to look at the proposed draft and rule out any changes that should be made. Certain clauses will need to be negotiated to ensure that each side is getting maximum value.
  4. Editing: It’s time to finish those revisions when all of the talks are finished. Contract management software comes in handy here because it tracks all modifications and allows for quick version comparisons.
  5. Approval: This is where the majority of bottlenecks occur. To keep the approvals process operating smoothly, you’ll need a clear procedure and workflows in place. Contract and workflow automation tools can help with this.

Post-signature

Contract management and enforcement, as well as contract renewal and amendment, are all handled by this department. This occurs throughout the contract’s duration, and subtleties can easily be overlooked when working with a large number of contracts of various complexity.

  1. Execution: It’s time to put the deal into action, now that it’s been signed. When done manually, however, this can result in a great deal of risk and missed chances. Contracts can be extensive, and some sections may be concealed. You can simply spot hazardous terms of possibilities for greater value by using contract management software.
  2. Tracking: Tracking performance throughout the contract lifespan is critical, not just to maintain compliance and maximize value, but also to determine whether the contract should be renewed or terminated.
  3. Auditing: You should do a complete audit of all open or recently closed contracts on a regular basis. This will provide you with a detailed analysis of your contract’s performance, open clauses, and future steps.
  4. Reporting: It’s one thing to track data; it’s another to access and analyse it without a central, user-friendly dashboard or repository. Good contract lifecycle management software will provide a ‘single source of truth’ for your contact data as well as actionable insights to assist you to make better decisions.
  5. Renewing: You’ve followed the contract from the beginning to that of the end. It’s time to make a choice as to whether you want to renew, renegotiate, or terminate your contract? Unfortunately, most businesses miss out on renewal opportunities and lose hundreds of dollars in potential value when they do it manually. Remember that many businesses have upwards of 40,000 open contracts at any given time, making it incredibly impossible to keep track of them manually. However, with automated workflows, you can keep an eye on approaching contract expirations at all times.

Big benefits of a contract management system

  1. Risk reduction: Overall contract compliance is improved by enforcing and operating under the most recent terms, conditions, controls, and policies. A contract management system improves compliance management by 55%. Traceable audit trails and compliance monitoring are essential for being compliant and being able to demonstrate it. Standardizing processes and procedures on the buy-side reduces maverick purchasing and supply risk while enhancing spend leverage. As a result, supply chain risks are eliminated, and purchases as a whole become less expensive and more valuable.
  2. Financial optimization: A contract management system can help you save money on legal fees and avoid unforeseen service renewals. Another high-value benefit is spending visibility. Companies that link their sourcing and contracting processes are more likely to keep a higher percentage of identified savings, add accounts payable automation solutions to the mix, and cash flow optimization improves even more.
  3. Productivity / operational effectiveness: With greater data and analytics, forecasting is dramatically enhanced. A contract management system keeps track of important dates and sends out automated alerts and features that allow users to schedule notifications as needed. You gain more control and enhance process and workflow efficiency by eliminating manual processes and centralising your document repository. Contract negotiations are merely the beginning of a relationship. Companies must guarantee that their commitments and agreements are properly managed. Using the right tools to track and monitor contracts will have a beneficial influence on your business, making a significant difference in how you manage supplier relationships and costs.

Contract management software : an insight

When you think of contract management, you probably picture a filing cabinet with dozens of folders. You are not alone if you still maintain your contracts in a filing cabinet, on a shared drive, or send scanned copies of the final form over email. It’s incredible how many multibillion-dollar corporations still use paper. However, as you have probably observed by now, that manual process is riddled with inefficiencies and hazards, detracting from the tremendous value that contract management can provide. Contract management software provides a computer-based solution to all of these manual issues. 

10 benefits of a contract management software

A contract management software provides critical insight into contract data, facilitates collaboration between parties, and saves time and money while posing minimal risks. The major 10 benefits of contract management software include :

  1. Reducing risks: Contracts frequently carry hidden hazards, ranging from authorised clauses to unfulfilled responsibilities. Contract management software mitigates various risks with:
  1. Pre-approved clauses.
  2. Easier contract audits.
  3. And a well-managed contract portfolio.
  1. Improve auditing: Contract management lifecycle software typically includes a digital portal with a number of capabilities, such as audit trails, which allow users to access the whole history of amendments with just a few clicks. Not only does this allow a company to track what has been done and when, but it also makes it easier to discover and remedy flaws and mistakes.
  2. Saving time: The major source of dissatisfaction for 65 percent of legal practitioners is time spent on repetitive administrative activities. Contract process automation will cut the time it takes to complete these administrative duties in half.
  3. Reducing contract costs: Reviewing and monitoring contracts adds significantly to labour costs, which can easily reach the tens of thousands of dollars. Based on average incomes, the average cost of a basic contract ranges from $6,900 to $49,000 for more sophisticated arrangements.
  4. Increasing transparency: Organizations that use paper-based systems must keep them in filing cabinets in their offices. Not only do employees have to travel around to obtain the right contracts and templates, but they also can’t see what other people are working on in real-time.
  5. Growth and scalability: Because it decreases the amount of manual labour required for accurate contract administration, automation is important to a company’s growth. As CLM software is configurable, it can scale with your organisation, avoiding the need to purchase expensive enterprise systems with a slew of sophisticated capabilities you may not require.
  6. Optimising finances: Contract management software reduces legal fees by eliminating spontaneous renewals of undesirable services. It allows users to see where their money is going, ensuring they get the best deal for their money.
  7. Better document management: Documents must not only be secure, but they must also be stored correctly for easy management. Co-workers can scan paper documents into the CLM system from anywhere, eliminating the need to keep paper papers in a filing cabinet.
  8. Easier to share, collaborate and retrieve: Day-to-day contractual work is more accessible and structured for everyone thanks to a single cloud-based contract administration system. Contracts may be accessed and retrieved by internal and external stakeholders from any place, which speeds up the workflow.
  9. Boost productivity: Organizations can automate and identify workflow bottlenecks, such as manual work or antiquated systems like Excel, by using a contract management process.

Frequently asked questions about management contracts

A list of frequently raised questions about management contracts has been addressed hereunder for the readers to be clear with the discussed concept in this article. 

What is the goal of a Management Contract?

The fundamental purpose of establishing a management contract is to lay out the rules under which the management company will take over control of another company. The contract allows the management company to take control of a portion of the company’s operations in exchange for payment, allowing it to operate the day-to-day operations.

How does the contract enable management companies to get things done?

The management contract grants the management company complete control over the company as long as it meets established goals and completes agreed-upon activities. This means that the corporation can do the work itself or hire contractors to do it.

What kind of tasks do management contracts include?

Management contracts can include nearly all of the business functions including providing technical support, personnel management, marketing, sales training, and accounting.

Is a management contract the same as a franchising deal?

Management contracts are frequently confused with franchising agreements because they entrust the management company with operational control of the organisation or function. However, the two are distinct from one another. Both management contracts and franchise agreements provide options to earn money by selling intangibles, and the agreements establish a partnership with another company.

A management contract, on the other hand, provides a company with structure and framework in the form of a deal, whereas a franchisee is a self-contained corporation. A franchise agreement is a contract between a franchiser, who owns a business, and the franchisee, who purchases the right to use the company’s name and other trademarks.

Let’s have a look at the differences using an example. If you operate a hotel chain A, you might consider entering into a management agreement with company B to take control of a certain hotel’s operations. B would assume operational control of the hotel as part of the management contract, and you would pay a fee to firm B in exchange. Company B would be free to operate the hotel according to the terms of the management contract. On the other side, you may enter into a franchise agreement with company C, allowing C to utilise A’s brand as well as certain of A’s business methods and tools. C would pay a specific fee to you, company A, for the rights.

How do management contracts set up payment structures?

Depending on the arrangement, most management contracts include a flat price for services. Payments aren’t reliant on collecting fees for anything other than fulfilling targets in this way. Establishing a remuneration structure like this reduces the risk for both parties because neither can manipulate it to their advantage.

What if I want to have a contract that is based on performance rather than the end result?

A management contract might be structured to focus on a pay-for-performance basis. The operator’s risk will be larger in this instance, which includes asset condition risk, equipment maintenance, and other potential costs.

Conclusion 

Management contracts are a creative way to distribute the responsibility of running a company. Certain operational responsibilities are entrusted to a management firm, which is an entity that specialises in the specialised industry. The management firm will be paid a certain price while guaranteeing that the function is carried out to the best possible standard. Because of their nature, these arrangements are common in areas including hospitality, property management, and even the airline and transportation industries. 

The operations delegated under the management contract might range from basic responsibilities, such as finances, to large-scale corporate management, such as overseeing a specific hotel. Management contracts help a company improve performance through increasing expertise and distributing tasks. Getting another entity involved, on the other hand, will almost always result in privacy concerns and other conflicts of interest. Nonetheless, the system can assist large-scale corporations in better managing their operations or providing more resources to smaller ones. If certain aspects of your business appear to be time-consuming or tough to manage, the contract is absolutely worth investigating.

References 

  1. https://www.cleverism.com/management-contract-definition/.
  2. https://www.upcounsel.com/management-contracts#:~:text=The%20management%20contract%20details%20just,how%20performance%20will%20be%20evaluated.
  3. https://www.procurious.com/procurement-news/benefits-of-a-contract-management-system.

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Cybercrime : types, consequences, laws, protection and prevention

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Cybercrime

This article is written by Jaya Vats, a practising advocate, Delhi. In this article, the author throws some light on all the aspects relating to cybercrime. The article examines many forms of cyberattacks, cybercrime in India, how to protect oneself from becoming prey to such crimes, and the necessity of cyber security.

This article has been published by Sneha Mahawar.

Introduction to cybercrime

The World Wide Web allows us to easily access a wide range of activities. In reality, our use of the internet is essential for the successful completion of our daily tasks and activities. However, accessing the internet can also lead to a number of online crimes, such as breach of data and account hacking.

A number of cybercrime cases including phishing, identity theft, and fraud, have surged in recent years. In the previous year alone, India saw a 16% increase in the number of cyberattacks throughout the Country. Cybercrime infiltration is anticipated to increase further. This emphasises the significance of creating more effective and deterrent legal structures, as well as stricter legislations, to combat cybercrime. In this situation, it becomes important to examine the country’s existing cybersecurity legislation to see if they provide adequate protection against these crimes.

What is cybercrime

Cybercrime is defined as any criminal misconduct carried out through a network, technical gadgets, or the internet. Although some cybercrimes are intended to cause harm to the victim, the vast majority are committed for financial gain.

Individuals and corporations are both targets. Individuals are typically part of a bigger assault in which the hacker tries to distribute malware across machines for-profit motive. Business assaults, on the other hand, are usually a one-shot deal. Businesses are also far more prone to be the subject of hacktivist demonstrations, which constitute a type of cybercrime in their own right.

Origin of cybercrime

Despite the fact that the internet is only roughly 30 years old, experts believe the 1834 hack to be the first cyberattack in history. Two crooks infiltrated the French Telegraph System and gained access to financial markets, conducting data theft.

Some early cyberattacks, which began in the late 1800s and the early 20th century, saw cybercriminals target telephone infrastructure. Only two years after the invention of the telephone, adolescent guys stole into Alexander Graham Bell’s telephone firm and wreaked havoc by misleading calls. Phone hacking, also known as phreaking, became popular in the 1960s and 1980s.

Rene Carmille, a French computer scientist, broke into the Nazi data registry in 1940 to disrupt their intentions to identify and monitor Jews. 

The introduction of email in the 1980s brought with it phishing schemes and viruses sent via attachments. Web browsers, like computer viruses, had grown prevalent by the 1990s.

Because of the nature of these platforms, the broad use of social media in the 2000s only exacerbated cyber crime, particularly data theft. Malware infections and data theft have surged rapidly over the last 10 years and show no indications of slowing down anytime soon.

With the evolution of the internet, hackers now have a plethora of novel attack vectors at their disposal. As more and more ordinary devices — refrigerators, washing machines, heating systems, light bulbs, and so on — go online, cybercriminals gain new weaknesses and possibilities.

Types of cybercrimes

The following are the various types of cybercrimes:

  • Theft via cyberspace: Cyber theft is a sort of cybercrime that includes an individual infiltrating another person’s or company’s system in order to steal wealth, private information, financial information, or proprietary information. Identity theft and embezzlement are examples of fraudulent crimes that might be classified as cyber theft crimes.
  • Cyberbullying: Bullying an individual online is referred to as cyberbullying. Cyberbullying includes any threat to a person’s safety, coercion of a person to say or do anything, and expressions of hatred or subjectivity against someone. While children are more likely to be victims of cyberbullying, adults are not exempt. According to a survey, 40% of polled teens said they had encountered online harassment, while 24% of adults aged 26–35 said they had experienced cyberbullying.
  • Malware: Malware is a term that refers to any software program that is meant to infiltrate or harm a device. Viruses are a type of software that falls under the malware category. Viruses may cause a range of problems once they enter a device. They may delete files, record your keystrokes, erase your disk drive, or otherwise corrupt your data.
  • Phishing: Phishing happens when fraudsters act as an organisation in order to dupe victims into disclosing important information. Scare techniques, such as notifying the victim that their bank account or personal device is under assault, are frequently used by cybercriminals to effectively fulfil their phishing aims.
  • Extortion via the internet: Cyber extortion is a type of blackmail that takes place through the internet. In these occurrences, cybercriminals target or try to harm the person and demand pay or a reaction in order to halt their threats.
  • Ransomware: Ransomware is a sort of cyber extortion that uses malware to achieve its purpose. This software threatens to disclose the victim’s data or to block the user from retrieving his/her data unless the cybercriminal gets a predetermined sum of money.
  • Cryptojacking: When hackers utilise other people’s processing resources to mine cryptocurrency without their permission, this is referred to as cryptojacking. Cryptojacking varies from cyber crimes that utilise malware to enter the device of a victim to steal data whereas the cryptojackers are not interested in stealing a victim’s data. Cryptojackers, on the other hand, employ the computing power of their victim’s gadget. Despite appearing to be less harmful than other cybercrimes, cryptojacking should not be taken lightly because falling prey to it can drastically delay one’s device and render it vulnerable to further cyber assaults.
  • Cyber spying: Cyber spying occurs when hackers target a public or private entity’s network in order to gain access to classified data, private information, or intellectual property.  Cybercriminals may utilise the sensitive information they discover for a variety of purposes, including blackmail, extortion, public humiliation, and monetary gain.
  • Spyware: Spyware is a software that cybercriminals employ to monitor and record their victims’ actions and personal information. Often, a victim unintentionally downloads spyware onto their device, giving a cybercriminal unwitting access to their data. Cybercriminals can access a victim’s credit card data, passwords, web cam, and microphone depending on the type of spyware employed.
  • Adware: Adware is software that you may unintentionally download and install when installing another program. Every time someone views or clicks on an advertisement window, the developers of adware programs profit financially from their actions on people’s computers. Although some adware software is lawful and innocuous, others are invasive due to the type and number of ads they display. Many nations consider some adware applications to be unlawful because they contain spyware, malware, and other dangerous software.
  • Botnets: Botnets are malware-infected computer networks. Malicious hackers infiltrate and gain control of these machines in order to do things online without the user’s consent, allowing them to commit fraudulent crimes while remaining undetected. They may send spam emails and conduct targeted hacks into a company’s assets, financial records, data analyses, and other vital information.
  • Dating hoodwinks: Some hackers utilise dating websites, chat rooms, and online dating apps to pose as possible mates and attract people in order to have access to their data. 
  • Hacking: Any illegal access to a computer system is generally referred to as hacking. When a hacker gains unauthorised access to a company’s or an individual’s computers and networks, they can obtain access to important corporate information as well as personal and private data. Despite this, not all hackers are crooks. Some “white hat” hackers are employed by software businesses to identify faults and gaps in their surveillance systems. These hackers get into a company’s network in order to uncover existing holes in their clients’ systems and provide fixes to such issues.

Cybercriminals or “black hat” hackers may desire to go clean and abandon their criminal activities occasionally. In these circumstances, one of the finest possibilities is to work as a security analyst for the organisations they used to torture. These individuals have greater expertise and experience with network intrusion than the majority of computer security specialists.

The consequences of cyber crimes

The actual extent of cyber crime is hard to determine. Because of the significant danger of data loss, the consequences of cyber crime may be disastrous. The consequences of cyber crime may be divided into three categories:

Individual

Individuals bear the brunt of the consequences of cyber crime. With the gadgets, there may be difficulties such as data breaches, identity theft, or trafficking to harmful websites, among other things. As a result, one may notice unusual purchases on their credit cards and lose access to their financial accounts. Furthermore, fraudsters may utilise data saved on smartphones to harass and blackmail victims.

Business

Businesses may suffer from the loss of sensitive data, financial loss, or brand harm, among other things. It can have a direct impact on the value of a firm, and the stock value can result in a loss of reputation, clients, and so on. Companies that fail to secure client data will face fines and penalties. Furthermore, a malicious user may discreetly sell critical data from the firm to other businesses.

Government

Gaining access to government information with the purpose of misusing it, is a serious breach of data. Cybercriminals employ cutting-edge tools and technology to obtain access to extremely sensitive government data. The primary goal of attacking government data is to corrupt or sell national defence and security information.

Cybercrime as a business

The dark web, which is distinct from the deep web, has its own economy where cybercrime occurs. Criminals purchase and sell adware, botnets, data lists, and other items in order to conduct fraud and identity theft. However, there is a darker side to the dark web.

The dark web is used for a variety of purposes, including sex trafficking, the spread of child pornography, hitmen, and much more. There’s a sector of the internet, hidden behind many redirection and encrypted pages, that allows such heinous actions to take place. We’re referring to it as the “cyber crime economy.”

Due to the extensive paper trail created by accessing the internet, criminals who engage in such operations are concerned about their identity. Access to relevant portions of the dark web is typically possible through a combination of TOR browsers (The Onion Router)  and a secure virtual private network, as well as the confidence of individuals who run in such circles.

The data, especially if it was compromised in a data breach, is almost certainly accessible for purchase on the dark web. According to Experian, a business that provides identity theft protection, someone’s social security number might be sold on the dark web for as low as $1. Credit card numbers may be purchased for as low as $5.

In the majority of cases, your identity is used to make fraudulent transactions as anybody could use a different identity on the internet. Securing our personal data is critical, not just for the money in the bank account, as well as for our liberty.

Cybercrime laws around the globe

Cybercrime is a worldwide issue that necessitates a cohesive global reaction. Different countries throughout the world have enacted several cyber laws that specify the offences and punishments for cyber crime. Some of these are as follows:

The United States of America

Computer fraud and abuse are prohibited under the Computer Fraud and Abuse Act (CFAA), 18 USC 1030. These are cyber defence legislations. It safeguards federal systems, bank computers, and Internet-connected systems. It protects them from intrusion, threats, vandalism, spying, and being corruptly utilised as fraud instruments. It is not a complete provision, but rather covers holes and crevices in the protection provided by other federal criminal statutes. 

Few other cyber legislations prevalent in the US are Cybersecurity Information Sharing Act (CISA), United States Code, and The Framework for Improving Critical Infrastructure Cybersecurity Version 1.1

Canada

A complicated legal and regulatory structure governs data protection and cybersecurity in Canada. Failure to comprehend this framework and actively mitigate risks (or the effect of such risks when they materialise) can have major legal and financial ramifications for a business. As a result, understanding this quickly growing area of law and governance is critical for enterprises that operate in Canada (in whole or in part) or have business partners operating in Canada.

The Personal Information Protection and Electronic Documents Act, SC 2000 c 5 (‘PIPEDA’) along with the Criminal Code of Canada is a data privacy act that essentially provides two key cybersecurity duties for Canadian private sector organisations. The PIPEDA mandates organisations to report specific cybersecurity events to the regulator and impacted persons, as well as to implement proper security protections.

European Union

The EU intends to create a single set of guidelines and laws covering cybersecurity and data protection. Directives are legislative actions that establish legally obligatory objectives for all member nations. Once enacted, each country must enact its own laws and regulations to fulfil these objectives.

The General Data Protection Regulation (GDPR) is the most comprehensive and unified piece of cyber law in the EU. It has a direct impact on foreign corporations doing business in the EU and applies to all organisations dealing with the personal data of EU residents, regardless of where the organisation is based. The GDPR, which was established in 2018 to harmonise data protection and privacy rules across member nations, is now in effect. It empowers member governments to impose severe penalties on organisations that fail to comply.

The Cybersecurity Act is another significant advancement in cybersecurity measures that directly affect enterprises. It went into effect on June 27, 2019, with the goal of boosting network security for vital industries.

China

When China’s Cybersecurity Law went into effect in June 2017, it created the groundwork for a defence plan against widespread cybercrime and possible nation-state strikes. The rule places a special emphasis on “critical information infrastructure operators,” requiring them to keep personal and essential network data within China. However, the criteria might be imprecise and wide, and even organisations in the financial industry may fall under the category of information infrastructure operator. Multinational firms must keep data generated in China within the country’s boundaries, collaborating with local cloud data centre providers or developing their own centres in partnership with a local company.

The Data Security Law (“DSL”) was passed by the People’s Republic of China’s National People’s Congress Standing Committee on June 10, 2021. The DSL’s primary goal is to safeguard and secure important data related to national security and the public interest.

The United Kingdom

In the United Kingdom, the Computer Misuse Act, of 2013, criminalises all “unauthorised” access, bolstered by even broader clauses criminalising preparatory conduct and the trafficking of technology used for unauthorised computer access.

Famous incidents relating to cyber crimes

Cyber assaults and data breaches are common occurrences. If we read tech news, we might have come across headlines indicating cybercriminals are continually developing and implementing new cyber risks.

In late 2019, the Australian Cyber Security Centre issued a warning to national businesses about the Emotet virus, a significant global cyber threat. Emotet was created to crack simple passwords, steal information, and inject other malware onto computers. This virus was a financial trojan with a variety of characteristics and capabilities that has been affecting governmental bodies, public enterprises, and private groups all over the world since 2014.

Cyber security risks are not limited to technology firms; they have also invaded the video gaming sector. An excellent example is Capcom, a Japanese video game creation business, which had a data breach. Capcom’s plans for the next four years were disclosed online in November 2020 when thieves stole its systems. Not only did the attack have an influence on the company’s 2021 releases, but it also raised concerns among its consumers about the security of their personal information.

The evidence presented above indicates that cybercrime may affect every type of company in any industry.

Yahoo was negotiating a transaction with Verizon at the time of the announcements. The transaction price was reduced by an estimated $350 million once the news surfaced. It’s frightening to believe that this was one of the greatest data breaches in history, and Yahoo delayed three years to announce anything about it.

The Blackshades RAT was a popular extortion tool about the same period, if not earlier. A Distant Access Tool, or RAT, allows a remote computer to operate yours without requiring a physical connection. The vast majority of RATs are used legally, such as when a computer maker gives the assistance.

A hacking gang called Blackshades customised a commercially available RAT and exploited it for extortion. Cassidy Wolf, Miss Teen USA in 2014, was one of the more well-known instances. Jared Abrahams, a student who had previously cyber-attacked 100-150 other women, hacked and monitored her webcam for a year.

Sextortion was carried out using photos of her dressed and undressing. Abrahams threatened to publish the webcam photos if she did not create sexual recordings. The Blackshades RAT, which was a prominent example in our article on how to secure your camera, affected nineteen additional nations.

Cybercrime in India

With approximately 658 million internet users as of February 2022, India has the world’s second-largest internet population. Cybercrime in India cost Rs.1.25 lakh crore in 2019, putting India in second place among nations hit by cyber-attacks between 2016 and 2018. Ransomware assaults are becoming more common, and many cybercriminals operate from their homes. In other words, cybercrime in India may be described as unlawful access to a computer system without the consent of the legitimate owner or location of criminal activity and can range from online cracking to denial of service assaults.

Phishing, spoofing, DoS (Denial of Service) attacks, credit card fraud, online transaction fraud, cyber defamation, child pornography, and other forms of cybercrime are examples.

There are several vulnerabilities in devices such as mobile phones that individuals use to access services. An examination of the attack vector in a mobile phone found that other than the programs, there are 15 distinct points through which a hacker might gain access to it. Bluetooth, communication modules, microchips, operating systems, CPUs, and Wi-Fi are all examples.

Hackers have devised a number of methods for acquiring user passwords by leveraging the inadequate IT infrastructure at employees’ residences. Indeed, the frequency of cyber assaults is growing, with 7 lakh documented intrusions through August of this year—a stunning 175 percent rise over the same period last year.

So, let’s take a closer look at India’s current cybersecurity regulations and what advances and improvements we may expect in the future.

Grounds of cybercrime in India

Even though it is unlawful, cybercriminals frequently select an easier approach to generate money. They target cash-rich organisations, like banks and other financial institutions, where large sums of money are handled on a daily basis. They hack sensitive information by taking advantage of flaws in IT security mechanisms. The following are the reasons why IT platforms are so vulnerable:

  • Accessibility– Due to the complexity of technology, there are several ways to breach a computer system. Hackers can obtain access codes, sophisticated voice recorders, retina scans, and other data that can be used to circumvent security measures.
  • Complex codes– Operating systems are used to run computers, and these operating systems are made up of millions of lines of code. Because the human mind is flawed, errors can occur at any time and in such cases, cybercriminals take advantage of every code error.
  • Ability to store data in a relatively small space– A computer has the unique ability to store data in a very tiny space. This makes it easier for someone to take data from other storage devices and utilise it for personal gain.
  • Carelessness– One of the hallmarks of human behaviour is negligence. As a result, there is a chance that when securing the computer system, we may make a mistake that allows cyber-criminal access and control over the computer system.
  • Evidence loss– Data relating to the crime can be readily deleted. As a result, evidence loss has become a very widespread and evident problem that paralyses the mechanism behind the cyber-crime investigation.

Cybercrime cases in India

The following are notable cybercrime incidents that have resulted in massive losses for well-known Indian firms.

In 2018, a cyber-attack on the Cosmos bank in Pune startled the whole banking industry. Hackers stole Rs 94.42 crore by breaking into the bank’s ATM server and stealing the personal information of numerous debit cardholders. Money was stolen, and hackers from 28 nations promptly withdrew it.

In 2018 again a massive data breach involving 1.1 billion Aadhar card users occurred. The hacked data contained personal information such as Aadhar, cellphone, PAN, and bank account numbers, as well as IFSC codes. Surprisingly, unknown merchants were quickly selling Aadhar information on WhatsApp for Rs 500 per individual. In addition, for a meagre Rs 300, one could obtain a printout of anyone’s Aadhar card.

Canara bank’s ATM servers were attacked in a cyber assault in mid-2018. The crooks have over Rs 20 lakhs stashed away in several bank accounts. Skimming devices were used by hackers to acquire information from 300 debit cards. The imposters targeted 50 people and took money ranging from Rs 10,000 to Rs 40,000.

Pegasus spyware is a type of malicious software that infiltrates a device, collects data, and then sends it to a third-party provider without the user’s permission. NSO Group, an Israeli cyber weaponry company, designed it. It mostly needed links to function. When a consumer clicks on one of these links, Pegasus is instantly installed on their phone. According to the Indian news portal The Wire, a leaked global database of 50,000 telephone numbers alleged to have been provided by different government clients of NSO Group includes over 300 verified Indian mobile telephone numbers, including those used by ministers, opposition leaders, journalists, the legal community, businesses, government employees, scientists, rights activists, and others.

Reporting a cybercrime in India

The initial step in reporting cybercrime in India is to register a complaint with a cybercrime cell in a police station in the city where the crime occurred, or where the affected device is located.

The second step is to know where to report cybercrime in India, which may be done both online and offline by filing a complaint against the perpetrator of the cybercrime. In India, one can file a complaint with either a cyber cell or a police station. One can go to your state’s police station or write an email to the police, who will pass your report to the Cyber Cell, or one can mail the complaint directly to the Cyber Cell.

The first step in learning how to report cybercrime in India is to file a complaint in accordance with India’s cybercrime regulations. There is no online letter style for filing a cybercrime report, however, the following papers must be provided:

To register a cybercrime report in the instance of hacking, the following information is required:

  1. Logs from the server.
  2. If a website is vandalised, make a soft and hard duplicate of the defaced web page.
  3. A soft copy of the original data and a soft copy of the compromised data are required if data on a server or computer is compromised.
  4. Details on the access control system, such as who had access and what sort of access.
  5. If the victim suspects anybody, compile a list of suspects.

To register a cybercrime report in the instance of email abuse, the following actions must be taken:

  1. The problematic email’s extended headers must be removed, and both the soft and hard copies must be saved.
  2. The problematic email should not be removed from the inbox.
  3. The objectionable email must be copied and stored on the computer’s hard disk.

Cyber Crime Complaint Online

In the past decades the advancement in technology and the number of internet users have grown at a great pace and upto a great extent. With the increase in use of internet it is obvious that there will be cons for excessive use as well. In lieu of the excessive use certain crimes online are also committed and thus, for the protection of the victim it is necessary to have provisions for registering the complaint and intimating the officials about the commission of the crime for punishing the accused.

Step 1 

One can submit a complaint about cybercrime both offline and online. Cyber Cell India is the department that deals with online and offline cyber complaints and thus, the first step is to report the complaint to this department. One can also give a call on the cybercrime helpline number. You can visit here to file an online cybercrime complaint.

Step 2

A written complaint has to be filed with the cybercrime cell by the victim in the city he or she is in. But since cybercrime comes under the purview of the global jurisdiction thus, it is implied from this that one can file a cyber complaint in the cybercrime cell of any city irrespective of the fact that the person originates from some other cities in India.

Step 3

Following information is required to be given by the victim at the time of filing the complaint with the cyber cell-

  • Name of the victim/person filing the complaint,
  • His contact details,
  • Address for mailing.

The written complaint shall be addressed to the head to the department.

Step 4 

In case of no access to the cyber cell India, one can report the matter to the local police station by filing a First Information Report. If the complaint due to any reason does not get accepted in the police station then in that case one can approach the judicial magistrate or the commissioner.

Step 5

One can also file a First Information Report under the provision of the Indian Penal Code if the offence falls under this Code. it is an  obligation of every police officer to lodge the complaint as it has been made mandatory under section 154 of Code of Criminal Procedure.

Since most of the cyber crimes under the Indian Penal Code are classified under the category of cognizable offences, thus, there is no requirement of any warrant for arresting the accused because cognizable offences are those offences in which for the purpose of carrying out the investigation or for making an arrest there is no requirement of any warrant.

  •   The Ministry of Home Affairs is in lieu of  establishing and launching a centralised online cyber crime registration portal. The purpose is to remove the requirement of moving to the police station for lodging any cyber crime complaint.
  • An online portal for registration of Cyber crime online has been launched by the Cyber crime cell of the Delhi police.
  • You can visit it here

Cyber crime legislation and agencies

To combat the threat posed by cybercriminals, the government created the Information Technology Act of 2000, the primary goal of which is to provide an enabling environment for successful internet use as well as to report cyber crime in India. The Information Technology Act (IT Act), which was enacted in 2000, governs Indian cyber legislation. The main goal of this Act is to provide eCommerce with trustworthy legal protection by making it easier to register real-time information with the government. However, as cyber attackers became more cunning, coupled with the human predisposition to manipulate technology, a number of adjustments were made.

The IT Act, which was passed by India’s Parliament, emphasises the harsh fines and penalties that protect the e-governance, e-banking, and e-commerce sectors. The scope of ITA has now been expanded to include all of the most recent communication devices.

The IT Act is a comprehensive piece of legislation that addresses technology in the areas of e-governance, e-commerce, and e-banking. In India, the cyber law also establishes sanctions and punishment for cyber crime.

The IT Act is the most important, as it directs all Indian legislation to strictly regulate cyber crime:

Section 43 – This section applies to those who destroy computer systems without the owner’s authorization. In such instances, the owner is entitled to full recompense for the total loss.

Section 66 – This section applies if a person is determined to have committed any of the acts listed in section 43 dishonestly or fraudulently. In such cases, the penalty might be up to three years in prison or a fine of up to Rs. 5 lakh.

Section 66B – Incorporates the penalties for obtaining stolen communication devices or computers in a dishonest manner, which affirms a possible three-year sentence. Depending on the severity, this sentence might also be followed by a fine of Rs. 1 lakh.

Section 66C – This section looks at identity thefts including impostor digital signatures, password hacking, and other unique identifying elements. If found guilty, a three-year sentence could be accompanied by a fine of Rs.1 lakh.

Section 66 D – This section was added on the spot to focus on penalising cheaters who use computer resources to impersonate others.

The Indian Penal Code was also updated to encompass crimes such as fraud, forgery, theft, and other similar offences committed through the internet or through electronic media.

Sections 43 and 66 of the IT Act penalise a person who commits data theft, transmits a virus into a system, hacks, destroys data, or denies an authorised person access to the network with up to three years in jail or a fine of Rs. five lacs, or both. Simultaneously, data theft is penalised under Sections 378 and 424 of the IPC, with maximum sentences of three years in jail or a fine, or both, and two years in prison or a fine, or both. Denying access to an authorised user or causing damage to a computer system is punishable under Section 426 of the IPC by imprisonment for up to three months, a fine, or both.

Section 65 of the IT Act makes it illegal to tamper with computer source materials. Section 66E specifies the penalty for invasion of privacy. It states that anyone who captures, publishes, or distributes an image of a person’s private area without his or her consent has committed a violation of privacy and is punishable by imprisonment for up to three years or a fine of up to two lacs, or both.

Section 66F addresses a critical issue, cyber terrorism, and sets penalties for it. It defines cyber terrorism as acts such as denial of access, breaching a network, or transmitting a virus/malware with the intent of causing death or injury to any person, all with the intent of undermining India’s integrity, sovereignty, unity, and security or instilling fear in the minds of its citizens.

The offence of deceitfully obtaining stolen computer resources or devices is dealt with under Section 66B of the IT Act and Section 411 of the IPC.

Section 66C of the IT Act specifies penalties for identity theft, stating that anybody who uses another person’s identification credentials for fraud or in a dishonest manner faces imprisonment for up to three years and a fine of up to Rs. three lacs. Cheating by impersonating another person while utilising a computer resource is a violation of Section 66D of the IT Act. Sections 419, 463, 465, and 468 of the IPC include similar prohibitions for these offences. The IT Act penalises not only individuals but also corporations, if they fail to build and implement a reasonable and attentive procedure to secure any person’s sensitive data in their control. Such a corporation is obligated to compensate the individual who has sustained a loss as a result of the corporation’s carelessness.

In addition to the measures for punishment, the IT Act authorises the Central Government to give orders to prevent access to any material on an intermediary or computer resource for the public if it deems it essential in the interests of the state. It can also intercept, decode, and monitor such data.

Protection against cybercrime

In order to protect ourselves from the perils of cybercrime, the following preventative actions can be taken:

  1. It is required to install an antivirus program. An antivirus program is designed to safeguard users against cybercrime. Modern programs monitor the machine’s data for harmful content and give real-time security against dangers like phishing.
  2. Making use of a Virtual Private Network. A VPN connection will protect your online privacy.   It’s an important tool for privacy, which protects people from identity theft.
  3. Unsolicited emails, text messages, and phone calls should be avoided, especially if they utilise the crisis to coerce people into circumventing standard security safeguards.
  4. Change the Wi-Fi network’s default password to something more secure. Limit the number of devices that may connect to the Wi-Fi network and only allow trustworthy devices to connect.
  5. Use lengthy and complicated passwords that incorporate numbers, letters, and special characters.
  6. Make sure to update all the systems and programs, as well as to install and maintain an antivirus software up to date.
  7. Data backup should be a routine procedure since data may be quickly destroyed, infected, or manipulated.

Prevention against cybercrime

To effectively combat cybercrime, multidimensional public-private alliances involving authorities, the digital tech industry, information security groups, internet firms, and financial institutions are required. Cyber thieves, unlike their counterparts in the physical world, do not compete for dominance or control. Instead, they collaborate to enhance their talents and even assist one another with new chances. As a result, traditional crime-fighting strategies cannot be employed to combat cyber crime in India. Mentioned below are some steps to prevent cyber crime:

  • Use complex passwords: Use various login details combinations for separate accounts and avoid writing them down.
  • Keeping online profiles secret: Make sure to keep your social networking profiles (Facebook, Twitter, YouTube, and so on) private. Make sure to double-check your security settings. Take caution with the information you put on the internet. Once it’s on the Internet, it’s there for good.
  • Safeguard mobile devices: Many individuals are unaware that their mobile devices are exposed to dangerous software such as computer viruses. An individual should only download software from reputable sites. It is also critical that your operating system is kept up to date. Install anti-virus software and utilize a secure lock screen in addition. Otherwise, if you misplace your phone or lay it down for a few seconds, anyone may see all of your personal information on it. Someone may even install malicious software that uses GPS to follow your every step.
  • Safeguarding data: Encrypt sensitive files such as financial documents and tax returns, to protect your data. 
  • Secure online identity: When it comes to protecting one’s identity online, an individual should be vigilant. When providing personal information such as your name, address, phone number, and/or financial information on the Internet, you must exercise extreme caution. While making an online purchase, etc., be sure to check whether the websites are safe. This includes turning on your privacy settings while using or visiting social networking sites.
  • Safeguarding computers with security software: For basic internet security, several types of security softwares are required. Firewall and antivirus software are key pieces of security software. A firewall is typically the first line of defence for your computer. It governs who can communicate, and access the computer via the internet. Assume a firewall to be a type of ‘policeman’ who monitors all data attempting to flow to and from the computer via the Internet, permitting transactions that it knows are secure while preventing ‘bad’ traffic such as cyberattacks.

Conclusion

As people’s reliance on technology grows, cyber laws in India and throughout the world must be constantly updated and refined. The epidemic has also driven a large portion of the workforce into a remote working mode, heightening the need for app security. Legislators must go above and beyond to keep ahead of the impostors and stop them in their tracks. cyber crime can be managed, but it takes the combined efforts of governments, Internet or network providers, intermediaries such as banks and shopping sites, and most crucially, consumers. 

References


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Double Irish and Dutch Sandwich strategy

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This article is written by Yuga Adarkar pursuing a Diploma in International Business Law. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho).

This article has been published by Sneha Mahawar.                                                                                       

Introduction

Avoidance of tax is always a major concern for developed and developing countries. Loopholes in tax laws enabled giant MNEs like Apple, Microsoft, Google to earn huge profits by using price-shifting strategies like Double Irish and Dutch Sandwich. CFCs rule allowed parent’s subsidiary holding companies which are incorporated overseas not to pay taxes except with implication of same country rule. To avoid taxes these MNEs used the Check-the box rules and Look-through regimes. This avoidance of tax has gained the spotlight throughout the world and needs a strong tax law. So OECD launched a project BEPS which framed some action plans to curb or put an end to the Double Irish and Dutch Sandwich strategy. In this article, we will learn what is Double Irish and Dutch strategy with examples, its benefits, implementation of 15% Corporate tax law residency, impacts after the abolition of the Double Irish and Dutch strategy, and various solutions adopted by the Indian Government.

Double Irish and Dutch Sandwich strategies have given ample profit to huge corporations like Apple, Google, Microsoft for over a decade. To abolish the same, the European countries with the US, enacted the rules of 15% corporate tax levied upon Ireland. It came into force in 2015 but the corporation could still benefit in 2020 from the DIDS. Since the DIDS is abolished, the corporations are searching for other loopholes like Single Malt. So, indirectly the DIDS continues to exist. To cease the same, the Indian Government has adopted a few measures which shall be discussed ahead in the article. 

How does Double Irish and Dutch Sandwich (DIDS) work

The Double Irish and Dutch Sandwich strategy is a tax avoidance scheme by giant corporations in the world by shifting their subsidiary holding corporations to a low tax country or offshore area.

“A” is a parent company based in the U.S. ” A” incorporated its subsidiary company “B” in Ireland to whom intellectual property license is being granted. In return “B” pays low royalties to “A”. Since “B” is in offshore territory it is rightly said as “B” incorporated in the tax haven and hence there is no need to pay tax to US corporation “A”.

To fall under the scheme of DIDS, Ireland law stated that a subsidiary corporation that falls under offshore jurisdiction cannot be treated as a resident hence classed as a tax haven but this subsidiary corporation shall wholly own another subsidiary to be classed under Irish resident.

Then “B” sub-licenses to “C” subsidiary corporation which will be incorporated in Ireland itself. Where “C” exploits the right and generates revenues. And pays license fees and royalties to “B”. Here all dividends are enjoyed by subsidiary ” B”. In the Double Dutch Sandwich strategy, there will be a third subsidiary shell corporation incorporated in the Netherlands namely “D” wherein there won’t be any employees, no physical existence of the corporation. The subsidiary “C” to avoid any Irish withholding tax payments transfer royalties to subsidiary “D” before “B”.

Live Examples of Giant corporations with Double Irish and Dutch Sandwich

MNEs like Google used the Double Irish and Dutch sandwich strategy to gain a huge profit for the company from taxation. This works like shifting royalties from an Irish subsidiary to a Dutch Company which has no employees, and then in return, the Dutch company forwards the royalties to a Bermuda mailbox owned by another company registered in Ireland. It is also noted that as per Washington Post, Google’s cash transfers to Bermuda reached $27b in 2016. Google’s parent company Alphabet announced that they will be abandoning the double Irish and Dutch sandwich loopholes. Apple Inc was always a central topic for tax affairs within EU countries and the US for decades. It is noticed that in 2009, earned $30 billion profit and didn’t pay taxes to both state Ireland-subsidiary corporations as well as to California.

Effect of Double Irish and Dutch Sandwich strategy on countries

The US and UK have high corporate tax rates i.e 35% and 19% tax rates respectively. And DIDS benefits the MNEs by reducing their taxes rate by profit shifting in tax haven jurisdiction. This creates chaos in the states like the US and the UK generating heavy losses in terms of revenue. This is because the subsidiary company gets an Intellectual property license from the parent company. And this subsidiary company is incorporated in a tax haven jurisdiction which means either paying low tax or no tax at all. Since the subsidiary company resides in a tax haven that falls under offshore, overseas jurisdiction does not come within the purview of US Tax laws. Hence, there is an increased rate of corporate tax levied on small and individual companies affecting their growth adversely.

Implementation of 15% Corporate tax and end to Double Irish and Dutch Sandwich

The G20 summit in Rome agreed upon a minimum 15% corporate tax rate globally marking the historical endorsement of this new regime. Under this regime, there are two pillars. Firstly, the 100 top companies which earn a profit above 10 percent, shall pay a 25% rate of corporate tax 

Secondly, the companies incorporated in tax havens or overseas and offshore jurisdictions shall pay a minimum of 15% of the corporate tax rate. This was done to tackle the issue of tax avoidance or to bridge the gap in loopholes provided by the double Irish and Dutch sandwich strategy. This means whether companies are physically operating or not, will not be a matter of consideration for avoiding tax. Irrespective of whether companies are incorporated in any jurisdictions, they have to pay the standard global minimum 15% corporate tax. The 15% corporate tax made a mandate to end the double Irish and Dutch strategy in 2015. However, companies were allowed to take benefits up to 2020.

Implementation of 15% corporate tax and BEPS action plan on Indian economy

The organization for Economic Co-operation and Development (OECD) introduced a set of 15 Base Erosion and Profit Shifting Action plans which brought ample benefits to the Indian economy by implementing bye-laws. Apart from the implementation of the BEPS action plan, India levied an Equalisation levy on companies irrespective of the parent company wherever it is incorporated but has transactions in India.

General Anti-Avoidance Rules (GAAR) have also been incorporated in Chapter X-A of the Income Tax Act, 1961 of India, implemented in the 2018-2019 financial year. India faced the issue of Treaty-Shopping with regards to the India-Mauritius DTAA. Now Indian authorities based on their discretion can tax Mauritius residents upon their transactions. India also entered Tax Information Exchange Agreements (TIEA) with several tax havens such as Bermuda, Bahamas, Liberia, Belize to disclose any secrecy and illicit gain tax-related information available in tax haven countries. So India can restrict such huge stores of black money in tax havens.

Due to the implementation of OECD’s BEPS action plans, Equalisation levy, and other digital taxes, India saw a steady decline from the year 2013-to 2017 in terms of illegitimate storage of black money in a tax haven by MNEs.

Conclusion

The Double Irish and Dutch Sandwich strategy was used to avoid tax by giant MNEs like Apple, and Google to shield the corporate profit by price shifting to tax haven jurisdictions. It ended due to the G20 summit held in Rome and the mandate of the rule to abolish the said strategy in the year 2015. The implementation of the OECD BEPS 15 action plan and Equalisation levy on giant corporations would bring steady growth to the economy. This would in return bring ample schemes for the welfare of the people of the state. Such regimes or rules to prevent tax avoidance or to curb the double Irish and Dutch Sandwich strategy are highly appreciable as they help in ushering in a better economy.


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All about Cristiano Ronaldo’s contract with Juventus

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This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article discusses about Cristiano Ronaldo’s contract with Juventus, its background, clauses, outcome, the binding nature, etc. 

It has been published by Rachit Garg.

Introduction 

Cristiano Ronaldo signed a four-year contract with Juventus when he joined Bianconeri in the summer of 2018. That contract will expire at the end of the 2021-2022 season, so Ronaldo has already entered the final year of his contract. So, if Juve tried to sell the superstar, they would probably not get a lot of money in return. Juventus is rumoured to be attempting to persuade Ronaldo to sign a new contract. Ronaldo currently earns around 31 million euros per year. He is by far the highest-paid player on the team, with no one else earning more than ten million euros per season. His cost is sometimes cited as a cause for Juve’s inability to make enhancements elsewhere, but they have paid a lot of other expensive wages to players who don’t even come close to Ronaldo’s contributions throughout the years. This article explores the contract between the two aforementioned parties and the surrounding aspects associated with it. 

Cristiano Ronaldo and Juventus : the relation

Before we delve into Ronaldo’s contract with Juventus, and other related aspects, it is necessary for the readers to be familiar with the relationship that Ronaldo had been sharing with the well-known club, Juventus. His contribution to the club, inclusive of success and defeats, has had a tremendous influence on his fans and football lovers as a whole. Irrespective of the fact that Ronaldo doesn’t continue to play under this club currently, the three consecutive years he had been with it must be made known to the readers of this article. 

Cristiano Ronaldo has scored a lot of goals in his two seasons with Juventus, and he continues to defy time as he crushes defenders at the age of 35 showing no signs of slowing down. While Ronaldo has continued to score goals and impress supporters, he has failed to cement his move to Juventus as a resounding success. Of course, 42 Serie A goals in two seasons is a figure for which practically any player would give anything, but, Ronaldo arrived in Turin with higher expectations and loftier aspirations. The anticipation that Ronaldo will end Juventus’ Champions League drought was foremost among them.

Ronaldo scored 21 goals in 30 Serie A matches, his lowest scoring season in almost fifteen years. Juventus fans never saw the real Ronaldo beyond his heroics against Atletico Madrid in the second leg. The 35-year-old had a dismal start to the season, scoring just four goals in ten appearances. The five-time Ballon d’Or winner was subbed off in successive games against Lokomotiv Moscow and Milan for the first time since joining Juve. Ronaldo was later diagnosed with a hamstring injury, according to reports. Just as many people were beginning to distrust Ronaldo, the Portuguese international stepped up to the plate. His return from the international break in December proved to be a watershed moment in his Juventus career.

After netting his fifth goal of the season against Sassuolo, the 35-year-old embarked on a scoring spree, equaling Gabriel Batistuta’s record of 11 straight league goals. The former Real Madrid striker has scored 21 goals this season, tying his tally from last year in nine fewer matches. Apart from his goal-scoring heroics, Ronaldo’s bounce in his stride appears to have returned. When you add in his growing rapport with Paulo Dybala, Juventus’ front line appears to be as deadly as ever.

Juventus is currently down a goal going into the second leg of its Champions League Round of 16 clashes against Lyon, but Ronaldo is a man on a mission. With last season’s failures on his mind, the Portuguese superstar will be eager to turn things around against the French outfit. Last season, Juventus had found themselves in a similar predicament when they returned home with a two-goal deficit against Atletico Madrid, but Ronaldo led by example, scoring a hat-trick in front of a sold-out Allianz Stadium. When the action continues, the 35-year-old will be expected to deliver heroics once more, as he and Juventus still have a chance to complete a truly remarkable triple.

Those concerned that Ronaldo’s time at Juventus will be a letdown should remember how his stint at Real Madrid started. Ronaldo’s time in Spain will be known for his European successes, but it’s easy to forget that it took Ronaldo four efforts in Madrid, including one Round of 16 elimination, to finally be named European champion. Time may not be on his side as it was in 2009, but if Ronaldo’s career has taught us anything, it’s that you can never rule him out.

Juventus’s investment in Ronaldo

Juventus paid EUR 116 million for Ronaldo in the summer of 2018, the largest transfer price ever paid by an Italian club, resulting in annual amortisation of EUR 29 million according to the 4-year contract agreement. According to reports in the media, Ronaldo earned a net compensation of EUR 31 million per year, equating to a gross salary expenditure of EUR 57 million for the club. This indicates that Juventus FC paid a total annual cost of EUR 86 million for Ronaldo alone, accounting for almost 22% of the club’s entire operational revenues at the time he arrived (EUR 400 million in 2017/18).

The total cost borne by Juventus FC until his departure, including the EUR 14 million loss recorded on his sale that summer, was calculated as the difference between the fixed fee paid by Manchester United FC (EUR 15 million) and the net book value of Ronaldo as of 30 June 2021 (EUR 29 million) was EUR 272 million over the past three seasons. The EUR 86 million in savings for the 2021/22 season, on the other hand, will provide crucial financial relief for the Turin club, which had a net loss of EUR 89.7 million in the previous financial year and is forecasting a loss of EUR 190 million in the coming season. Furthermore, Manchester United FC may enhance the fixed price paid to the player, up to a maximum of EUR 8 million, if particular performance criteria are met during the player’s work term.

Juventus management went “all-in” with Ronaldo’s historic entrance in order to close a gap with the European elite. At the time, the club’s operating revenues were EUR 400 million, well behind the EUR 650-750 million generated by Manchester United FC, Real Madrid FC, and FC Barcelona. While the club’s first season with CR7 showed good beginnings with a 25% increase, the pandemic had put the club’s objectives in jeopardy. This plan was principally supported by a EUR 175 million bond issued in February 2019 and a EUR 300 million capital raise completed in January 2020, right before the outbreak of COVID-19. The initial purpose of these liquidity injections was to boost the club’s global expansion, but they turned out to be a crucial lifeline against the pandemic’s losses, with a second EUR 400 million capital increase approved in recent weeks to cushion such losses.

Footballer contract : an insight

Cristiano Ronaldo’s contract with Juventus has been a private affair. Put simply, the contract entered between the two parties was nothing but a footballer’s contract which generally involves players and the clubs they play for. One can understand Ronaldo’s contract with Juventus if one can relate to the concept of a footballer’s contract, the clauses included in it, the guiding principles governing these contracts and the possible consequences these contracts hold. The article aims to provide its readers with all such relevant information discussed hereafter. 

Contracts with football players essentially give the club control of the player for the term of the deal. This means that unless another club makes a transfer offer, the player will be unable to leave the club. The offer is accepted by the selling club. If there arises refusal on the part of the player’s team, there remains nothing much on the player’s end to carry out, until the contract expires, which can allow the player to freely discuss terms with other interested clubs. In football, a transfer is a business transaction in which a player is moved from one club to another. If a player is under contract, the club that wants to obtain his or her services must pay compensation, sometimes known as a transfer fee. Unless a player is approaching their career end, they generally sign long-term contracts which can range between 4 to 5 years. This would in terms seem that the club has the authority or an upper hand over the players joining the same. 

Footballer contracts are complicated and include a lot of moving parts. The footballer’s agent is the one who negotiates contracts and looks for the best financial agreement for the athlete. At the same time, the freedom and power to play should be maximised. Football clubs make certain that the player gets the money he or she wants. But it’s also important that the player’s contract has plenty of time left on it at all times, as this helps to keep their market value up. 

Essentials of a footballer contract

  1. Salary: The salary, or wage, is the most important part of a player’s contract. This is commonly expressed as the weekly wage, rather than the annual wage, in footballer contracts. It is quite rare for footballers to accept pay decreases. Unless they are older and nearing the end of their careers, in which case they will join lower-level clubs. This means that if a player transfers to another club, his or her new salary will almost always be the same as or more than his or her prior salary. As a player’s contract nears its expiration, he or she will frequently re-sign with a greater wage to reflect market inflation. Increasing the player’s value, or simply persuading the player to stay with the club.
  2. Agents: Football agents represent footballers and negotiate their contracts, among other things. Agents typically represent a huge number of players at the same time since they represent a large number of clients. Agents who represent many of the game’s most elite and valued players are known as super agents. They represent players who are the game’s highest earnings. Agent fees, which are incorporated in player contracts, are one method by which agents make money. It’s normally a percentage of the player’s earnings, therefore the agent will try to get the best deal for his or her client. However, they also operate in their own best interests by attempting to increase their commission.
  3. Bonuses: Even while the earnings alone appear exorbitant in today’s game, footballer contracts almost always contain performance-related bonuses. A frequent bonus for an aggressive player, for example, is based on a goal-scoring target. Clean sheet bonuses are also employed for defenders and goalkeepers. Many contracts include competition bonuses, thus if a team wins a cup, league, or qualifies for the Champions League, players will typically receive a bonus if it is included in their contract. However, not all bonuses are based on performance, as practically every contract includes an ‘appearance fee.’ This is merely a bonus for each game the player participates in.
  4. Clauses: Footballer contracts include a number of conditions in addition to bonuses. Clauses are distinct in that they aren’t always about money, and they can contain pretty much anything that the athlete and the organisation agree on. The ‘Match Best Earner Clause’ is a typical clause seen in footballer contracts. A key player on a team, such as Messi or Ronaldo, may ask for this to be included in their contract. It essentially means that if a club adds a new player or renews an existing player’s contract at a higher wage than Ronaldo, Ronaldo’s salary will automatically rise to equal the top earnings. A yearly wage increase, a wage increase dependent on the number of games played, or a contract extension if a player plays a specified number of games in a season are all examples of common clauses that are included generally in a footballer’s contract.

Important clauses of a footballer’s contract

When a club and a player are negotiating a contract, stipulations in the contract are typical. They frequently include a minimum release amount or a condition saying that if the player is sold, he will receive a share of his future transfer fee. There are a plethora of terms in footballers’ contracts that affect anything from the player’s income to payments to one or more representation to prospective contract renewals, among other things. The number of games played, as well as the number of minutes played and the clubs for which the player plays, are all factors to be considered while drafting clauses for a footballer’s contract. Other factors that need to be taken into account while drafting a footballer’s contract include whether or not the player has started playing games/matches, whether his team has won all of the games in which he has played, whether the matches are part of a domestic, continental, or international tournament, etc. 

These clauses in football players’ contracts also consider much more subjective and non-statistical factors, such as the image that each football player represents and how that image influences the club’s image. Weight, food, daily training discipline, off-field behaviour, and even fan mood are all relevant grounds to be considered. There are variables that affect the representatives’ retributions, as well as those that affect the clubs of origin, which are dependent on an unlimited number of parameters.  With this type of condition in football player contracts, the complexity of follow-up for the finance department, as well as the financial department and sports management, increases. It is critical for these departments to visualise the club’s exact condition at all times and to create different scenarios that allow them to make the best decisions for each season while remaining compliant with Financial Fair Play. Here are a handful of the most common football clauses that practically every football player’s contract has.

The Release clause

  1. One of the easiest football contract clauses is the release clause. It specifies that if a club (offeror) makes an offer for a player or a coach that is equal to or greater than the stipulated value currently existing in the football industry, the club to whom the offer (offeree) has been made must take it. A release clause is a predetermined sum that a buying club can pay to a selling club to contractually obligate them to offload a player or coach. 
  2. The fee is fixed at the time the contract is signed, but it can be changed later with the approval of both the club and the player/coach. The least amount of money you are ready to take for that player is referred to as a release clause, also known as a buyout clause. However, they are usually relatively large sums, designed to deter other teams. It’s also a way for a player to go on if a big club offers him a contract.
  3. If a rival makes a bid that matches the player’s release clause, the player’s club must accept it immediately and give the player permission to begin negotiations with the interested party. It has been the usual practice in Spain to include large release clauses in the contracts of famous players. Lionel Messi is claimed to have a €250 million buyout clause, while Cristiano Ronaldo is said to have had a €1 billion buyout clause during his tenure at Real Madrid. 
  4. The goal of a release clause is to minimise contract parties’ risk assumptions. This safeguard, on the other hand, usually applies to one side and not the other. A club is contractually obligated to accept the sum given if an automatic release amount is triggered. If the club that has the player’s registration refuses to release him, the two clubs will almost certainly engage in an arbitration process to determine the validity of the release clause.
  5. In the Premier League, release clauses can be used, but only with the consent of both players and clubs. However, because British law currently prohibits players from buying themselves out of contracts, teams are wary of including them in transactions.

Buy-back clause

  1. The buy-back clause is another often used clause in football contracts. The selling club can pay a set amount if they want to bring the player back at a later date.  This clause is not as straightforward as it appears. They might be incredibly complicated at times, but they can also be very simple. To begin, let’s define the buyback clause in layman’s terms. It’s a clause in a contract that offers the property seller the first opportunity to repurchase the property if specific circumstances are met.
  2. When the selling club believes the player has the potential to be worth more in the future, this type of football contract clause is used. This allows them to repurchase the player at a lower price. They may do so to bolster their own squad, or they may do so with the intention of immediately selling the player for a profit. 
  3. A buy-back clause in most cases, automatically initiates the player’s transfer if certain contractual requirements are met. In actuality, if the condition is intended to be an automatic trigger and is properly structured, the selling club will have no means of declining the buy-back offer. For example, ‘A’ sells a house to ‘B’ and includes a buy-back clause in the contract. Now, if ‘B’ wants to sell the house to say ‘C,’ he has to ask ‘A’ first. ‘A’ gets to choose whether or not he wants to buy back his house first. If ‘A’ wishes to purchase the house back, he will be required to pay a fee to ‘B’ as specified in the contract. If ‘A’ refuses, ‘B’ is free to sell the house to ‘C’ or anybody else for a price agreed upon by both parties. This is how the buy-back clause functions. 
  4. The major goal of including a buy-back clause in transfer agreements is to provide the selling club with the assurance that they will be able to repurchase a player if he performs well in the future. Before a player can transfer, the buyback clause must be agreed upon. Depending on the contract, it may or may not be removed after a specified time period or set of criteria.
  5. The buy-back clause has recently been utilised to get around European Financial Fair Play regulations. This is accomplished by selling a player for a high price (typically overvalued) with a contract that includes a buy-back clause. As a result, the selling club receives a large amount of “new” incoming transfer money but is obligated to buy the player back a few years later. 

Percentage of Next Sale clause

  1. When selling a younger player, teams frequently employ football contract terms to lock in a share of the next sale. When the player makes their next move, they are entitled to a portion of the player’s next transfer fee. It’s a good clause to include in the contracts of young players who might or might not reach their full potential in the game. Under the rules of FIFA, five percent of any player transfer fee is to be automatically deducted from the total amount for the specific footballing league.
  2. The amount to be paid is determined by the percentage figure specified in the player’s new club’s contract. The percentage is determined by estimating the player’s present and long-term potential. The number must be agreed upon by the two teams discussing the agreement, and there is usually a considerable opportunity for negotiation. For example, in order to save money in the short term, the club buying the player may offer the club selling the player a larger sell-on clause in exchange for a lower transfer fee.
  3. As part of the player’s contract, a sell-on provision must be included. Managers and sporting directors frequently put a clause like this in the contracts of their most promising young players these days. Negotiating a larger sell-on percentage does, however, carry some risk. If the player develops into an exceptional player and leaves for a team of greater calibre, the majority of the transfer revenues will go to the club that sold him.
  4. The clause could be agreed to expire after a certain period of time. For example, the length of the player’s first contract with his new club after which it will no longer be in effect.
  5. If the player becomes world-class and moves for a team of better calibre, the clause’s move may backfire because the majority of the revenues obtained during the transfer will go to the club selling him. There have been a few cases where clubs have sold players without including a sell-on clause and have come to regret it. During Gareth Bale’s world-record, £86 million sale from Tottenham Hotspur to Real Madrid, Southampton was the losing team, missing out on a potential £20 million.

Why do players leave their clubs : monopolising the power in football 

The origins of the transfer system are directly related to the origins of football. In 1863, a small group of English clubs created the Football Association (FA), which still exists today, and began establishing formal rules for the sport. This structure was created to prevent wealthy teams from monopolising the league’s top talent. When a player’s contract ended under this system, the club had complete control over the option period. The player’s option contract could be as long as their original deal. Other teams were able to sign players from their current club under this method as long as they reimbursed the club for the remaining worth of the contract. This clause effectively obliterated this event. While this system severely limited a player’s ability to freely move within the market, it allowed smaller clubs to keep their great players and prevented larger, wealthier clubs from snatching up the best talent and damaging the league’s competitive dynamic.

The difference in the competition widens as player earnings rises. The enormous sums of money that teams must now spend to stay competitive has resulted in a small group of teams dominating each year. As players become more expensive, the gap widens. The massive flood of foreign investors and billionaire owners has fostered an ever-increasing “arms race.”  These affluent benefactors have allowed their individual teams to spend far above their means, thus jeopardising the financial security of their respective clubs. There has been a drive-in recent years to curb these excessive spending practices and force teams to budget responsibly. The possible reasons as to why players leave their clubs are provided hereunder: 

  1. They have progressed as players and want to compete for titles, so they leave their current club to join a larger one.
  2. If the club isn’t paying them enough, it’s for financial reasons they leave the club.
  3. Everyone aspires to play for a prestigious club, therefore when the opportunity occurs, the majority of players accept it.
  4. At their present club, the management is uninterested in them, and they are benched in critical games. As a result, they decide to join a club that will provide them with playing opportunities.

The most serious contractual issue arises when a player is approached by a larger club, or when the player is made aware of the interest by an agent or the media. Players want to improve themselves, but the Professional Footballers’ Association (PFA) urges them to always keep their contracts because clubs are expected to do the same. When a player accepts a four-year deal, there is no assurance that they will stay with the team for the entire period. The four years are more for the benefit of the club, who will be guaranteed money from another team, than for the player, who will invariably move on within those four years. Thus a reader will wonder what relevance does the signing of a contract hold in football. Let us check it out in the passage below. 

What’s the point of signing a contract

The player receives a large signing-on fee, and the team is squandering its resources on a player who is unlikely to stay with them for long. Then another club shows up, pays the player three times as much as the first, and takes them from the initial club. However, despite the notion that money can buy everything, replacing a player is tough. Even money can’t replace the hours of work that managers and coaches put in with the player, their understanding of the domestic game, and the fact that they were settled.

Further, players generally place a premium on consistency. Many things can go wrong in football, from injuries to a coach who doesn’t like you or a teammate who is in better shape than you. A long-term contract contains both negative and beneficial aspects. If something goes wrong, you will still be paid your full wage until the contract expires. And, because a sportsman’s career is limited, every amount counts. Thus signing a contract in football acts as a security for the player in the long run.  Along with this, it will be correct to point out that any athletes who sign such long-term contracts have a lot of incentives or have requested that their agent include a release clause or both. Clubs frequently comply with such demands if it means securing a key player on a long-term contract, effectively quieting/resolving both the fans’ and the players’ concerns.

Why waste all that money and just not let the player play on a rolling contract 

That appears to be what the insane world of football has devolved into. It’s a place where there’s no respect, where there’s no commitment. Players come and go, making promises and leaving right before your eyes, and you feel as if you have been shot in the kneecap and have no means of recovering.

All about the Webster clause

After taking the lead in the most major football freedom-of-contract case in more than a decade, Scotland’s Andy Webster has joined the ranks of Jean-Marc Bosman. The Court of Arbitration for Sport made a significant judgement, effectively stating that no player’s contract can be extended beyond three years. After the age of 28, players can join clubs or renew their contracts for a period of two years. Webster’s test case arose when he left Heart of Midlothian in May 2006, having completed three years of a four-year deal with the Scottish club. As a result, he became the first player to challenge Fifa’s transfer laws under Article 17.

The Webster clause is currently in effect for players over the age of 28 who have two years left on their contract. However, Arsenal’s manager, Arsene Wenger believes that all of this will result in anarchy for all of the clubs very soon. He had remarked that “at the moment, it’s either three or two years (the Webster Clause), but believe me, someone will question that shortly and ask why at 28 years old and not, say, 27. Then there’ll be the question of why it took two years instead of one. The transfer system is no longer functional once you reach that point. You’d put together a team for a year, and then you’d be in huge danger.”

Why did Ronaldo leave Juventus

Juventus is the favourite to win the Italian league title in the upcoming season, and the club is also expected to make a strong showing in the UEFA Champions League. So, why would Ronaldo quit one of Europe’s most illustrious clubs? Although Ronaldo has excelled both on and off the field since joining Juventus, his departure benefits both the player and the club. Despite having great talent, Juventus is clearly not on the same level as Chelsea, Manchester City, Paris Saint-Germain, or Bayern Munich in the UEFA Champions League battle. Ronaldo has won the Champions League five times, and if he wins two more, he will have won the most European club trophies by any player in history. He already has the most goals scored by any player in the competition’s history, with 134 goals and counting. Ronaldo is passionate about his brand and legacy, and he aspires to be remembered as the best player of all time. He still has a chance to control the narrative about how he will be remembered if he can spend the next two or three seasons with a side that can help him win the big title and outperform Messi and PSG. At Juventus, it was not going to happen.

The Juventus perspective

Ronaldo is a goal-scoring machine who led Serie A in goals last season (29 goals). Juventus won all three domestic titles during his stay at the club, with his 101 goals in 134 games, the fastest player to 100 goals in club history. However, the Turin-based club did not spend $120 million on Ronaldo in 2018 in order to win in Italy. The Bianconeri were hopeful that Ronaldo would help them go over the hump and win the UEFA Champions League for the first time since 1996. It hasn’t occurred, three new managers in three seasons haven’t helped and Juventus has experienced shock knockout round exits in each of his three seasons, never making it to the semifinals. Ronaldo was said to have taken the Round of 16 loss to Porto in March particularly hard, and now he is on his way out less than six months later.

The purchase of Cristiano Ronaldo in 2018 undoubtedly helped raise the Juventus brand. The club now has a stronger international reputation, treble the number of social followers, and has been able to utilise Ronaldo for considerable income and partnership growth. However, the pandemic has altered the club’s financial future, and on the pitch, Juventus is resetting and becoming younger. Ronaldo’s transfer was timed perfectly across the board.

The present status of the story

  1. Since Euro 2021, there have been early hints that a summer transfer is a definite possibility. There were photographs of moving trucks hauling Ronaldo’s automobiles away from his home in Turin, and there was also an Instagram post that felt like a farewell to Italy and Juve fans at that time.
  2. As the summer progressed, additional speculations of Real Madrid and Paris Saint-Germain showing interest appeared, depending on how the dominoes fell with the prospective signing of teenage French star Kylian Mbappe. Ronaldo’s enraged Instagram post in response to all the transfer rumours omitted to emphasise his resolve to stay with Juventus for his final season. However, on the day of Juventus’ first Italian Serie A encounter of the new season, the club’s management and head coach stated that Ronaldo would not be leaving, seemingly putting an end to the saga. Ronaldo had informed Juve head coach Allegri that he was staying. Then, as Allegri put it, “the transfer market happened. Things have changed, and we must accept that.” The most common explanation for the change was Manchester City’s failure to sign No. 1 forward Harry Kane, who chose to stay at Tottenham Hotspur that summer. Man City was connected with Ronaldo in an apparent attempt to fill Kane’s position as a centre forward. Last season, Pep Guardiola’s reigning English champions sometimes functioned without a genuine centre striker, with a variety of forwards filling the role and midfielders also taking up the goal-scoring slack.
  3. The Red Devils were there, paying $33 million to acquire Ronaldo to a group that already included Paul Pogba, Bruno Fernandes, Marcus Rashford, Edinson Cavani, and youngster Mason Greenwood. The $33 million transfer fee would please Juventus, who were apparently looking for a $35 million fee to avoid losing money on the Ronaldo deal. It’s not a bad deal for the Italians for a soon-to-be 37-year-old Ronaldo, who was in the final year of his contract. In addition, Juventus will be free of his large contract.
  4. It’s a move that could bring Ronaldo’s European career to a close. Manchester United also competed in the UEFA Champions League in the 2021-2022 season, in a group with Villarreal, Atalanta, and BSC Young Boys. The Red Devils had a strong chance to win the Champions League for the first time since 2008, when Ronaldo was still playing for them. Their most recent Champions League final was in May 2009, during Cristiano Ronaldo’s final season with Manchester United before joining Real Madrid.
  5. Cristiano Ronaldo returned to Manchester United amid much fanfare at the end of last season, pledging to restore the Premier League giants to their old glory, but his influence is fading six months later as his club’s stock sinks. After making a fairytale homecoming to the club where he won eight major titles from 2003 to 2009, everything seemed to be going so well for the Portuguese veteran. When he doesn’t score, the Champions League’s all-time leading goalscorer doesn’t provide much more, given his unwillingness to press opponents under a manager known for his predilection for high-intensity high-up-the-pitch defending. According to reports in the British press, Ronaldo may decide to leave at the end of the season, one year into his two-year contract. An early departure would be disastrous for the club’s marketing department, but given recent performances on the pitch, giving up on trying to get Ronaldo to produce the same level of performance he did as a young, hungry winger 15 years ago may be the most sensible approach for all parties involved.

Who has the power in world football transfers

In many ways, football is a world and a law unto itself, and no aspect of the game exemplifies this more than the murky world of player transfers. Every signing a team makes, particularly a top-flight squad in a well-established footballing country, is scrutinised. Every rumour reported in the media is rehashed ad nauseum by supporters on social media, forums, and everywhere else online while selling a player from the first team is reduced to being a microcosm of a club’s ambition, or lack thereof. Transfers are notoriously difficult to negotiate, with four parties with vested interests all trying to achieve the best deal for themselves; the selling club, the buying club, the player involved, and, in most cases, agents of the players.

Clubs

  1. Clubs, one would imagine, have a say in how each transaction is structured. After all, they own the player’s registration and can simply refuse to sell them if they don’t agree with any offer. While this is valid in theory, in practice, clubs are frequently pressured or compelled to accept bids for players who do not match their full value.
  2. There are a variety of reasons for this, including player pressure or external forces relating to the player, but the club’s own economics is probably the most important.
  3. Is it possible for a League One club to keep a £1 million-rated player if a Championship club only offers £700,000? Or is a South American team keeping a highly-rated talent because a Portuguese team won’t sell him under the correct terms? The answer is frequently no. The immediate injection of cash is more crucial to a team’s day-to-day operations than waiting for the extra 20% that may never arrive.
  4. Of course, the selling club will try to negotiate a number of stipulations into the agreement that will benefit them if the player’s success increases. The buyer is more likely to agree with them because they won’t mind paying for a player who is delivering. Sell-on clauses also benefit the selling club at an undefined point in the future, when the player is transferred to a new team and the selling club receives a windfall percentage. The super-rich clubs, on the other hand, can afford to just say no.
  5. Consider the case of Carlos Tevez. Midway through the 2011-12 season, the Argentinian forward suddenly hung up his boots and quit Manchester City. Of course, he was fined repeatedly and was attempting to negotiate his way out of the club, but no team could match City’s exorbitant valuation of what was, at the time, an outstanding top-flight striker, so they chose to keep him and compel Tevez to finish his contract. With no other choice, the striker returned to the team and helped them win the title, as well as lasting for another full season after that before his recent transfer to Juventus, at a fraction of the money his club was asking 18 months earlier.
  6. Financial specifics on transactions are rarely disclosed, but it seems reasonable to assume that if Team X offers Y, a million pounds for a player, and the offer is accepted, Team Z will simply match it. The selling side may try to take advantage of this, but it is unlikely to have a significant impact on the player’s overall price. It’s possible that the selling club will be able to dictate conditions more favourably.

Players

  1. The final decision on any individual transfer should be made by the athlete himself. While parties must agree on the financial components of a transfer, it is up to the player to determine whether or not to move. He may already desire to go, but he also has the option to reject. Nobody can force a player to sign a contract if he doesn’t want to sign, although the selling club can persuade him by telling him that if he remains, he won’t be part of the team.
  2. It is less entertaining for supporters to cope with a player who is actively pressing for a move. Take, for example, the case of Carlos Tevez, no supporter likes to hear that a famous striker has snoozed off midway through a crucial campaign to enjoy some sun and golf rather than giving it their all to their football game. Some players plainly put their hearts and souls into a club, while others openly acknowledge they play for the money rather than the love of the game while stating that this does not make them any less professional.
  3. Players can have their own provisions placed into contracts. If a Champions League club, for example, wants to sign a player, he might be free to leave for a certain fee. It’s possible that if he plays a particular amount of games, he will get an extra season on his contract, or that if the team gets relegated, he will be freed from his contract entirely. Of course, athletes aren’t always the ones who openly approach a club with their requests. Some people may lack confidence when it comes to statistics, while others may have no idea what is intended to be included in a contract. The agent, of course, enters the picture.

Agents

  1. In today’s world, what does an agent do? Are they acquaintances or businessmen? When reading a top player’s autobiography, the lines appear to be blurred at times. The main responsibility appears to be negotiating player contracts, but some go above and beyond. The power that certain agents appear to have over players, from securing commercial sponsorships to looking after the property and assisting with anything from personal purchases to informing the player when he should quit the team, borders on the terrifying.
  2. There are agents who are more well-known than others and appear to be significantly more effective at closing large deals for large sums of money, just as there are in other fields of life. While Jorge Mendes and Mino Raiola are referenced in almost every national publication every week while the transfer windows are open, Pini Zahavi is perhaps more well-known than half of Israel’s national team.
  3. Every year, reports emerge of a player intentionally seeking new representation from specific agencies in order to complete a transfer to a specific club, moves that enable the new agents to earn thousands, if not millions, of pounds from a single transaction.
  4. There is a school of thought that agents should represent clubs rather than players in order to ensure that all members of a team are treated equally. It is an intriguing concept, but one that the present agents, as well as the players, would most likely reject. Even if a player enjoys a team, he wants to know that he is being compensated fairly, and he trusts his agent to negotiate on his behalf. Having a club employee tell the player what he is worth is unlikely to pique the player’s interest.
  5. In today’s football transfers, the agency definitely plays a part, but it’s the acts and ethics of a select few that appear to cause the most controversy. Rumours planted with the intent of generating interest or pressuring a club to sell or offer greater wages are now frequent, though not always pleasant.

Possible complications involved

  1. The common set of complications ranges from ownership by a third party, to that of co-ownerships of Italian sports teams, followed by loans with buy-back options, sales with buy-back options, part exchanges, and who knows what else. When players arrive in the United Kingdom, there are additional work permits to consider, and the processes that teams must follow to obtain one are not always apparent.
  2. Overall, there is no one-size-fits-all approach to processing transfers. The lack of consistency and clarity makes things extremely unpleasant for everyone involved, especially supporters, who wait days upon days, in the modern-day of instant technology, hoping to see “confirmed” beneath the names of players their team has been linked to for weeks. Each of the three parties (players, agents, and clubs) has a role to perform and a certain level of influence in each specific transfer.
  3. The length of a contract is a tricky issue to consider; in the age of Bosman transfers, three years left on a deal is an eternity, two a balancing act between taking the big money and letting the contract run down, and one year remaining almost certainly equals a massive reduction in asking price. At that time, the power balance appears to shift completely in favour of the athlete, however, details like his age and position will all play a role. The next two months will show just how complicated transfer agreements can be in world football, with deals dragging on for days or weeks before coming to a satisfactory end.
  4. The squad lists at the end of the window are all that matters to supporters. Each agreement necessitates a large number of phone calls, meetings, and smart negotiations on the part of clubs, players, and agents alike. It’s a delicate balancing act that moves from window to window with each potential transfer, and it’s not going away any time soon.

Do footballers lose motivation after signing long-term contracts

Utility maximising clubs would be more aggressive in their pursuit of player talent than profit maximising clubs, and this buildup of player talent by larger teams could need to be curbed through income redistribution. The pressures to acquire more and better players in order to outperform rival teams on the football field leads to a requirement for teams to practice good contract management in a setting of rising revenues and high rewards.

To some extent, the belief that a player’s contribution diminishes once the ink on a new contract has dried is based on the notion that performance peaks before the extension of a  contract. Pierre-Emerick Aubameyang is an example of this discussion. His three-year contract, which he signed in September 2020, has been criticised because he failed to maintain the phenomenally high standards he had set during the 2019-20 season, when he scored 29 goals in 44 games, including match-winning contributions in both the FA Cup semi-final and final. The evidence for a “contract year,” in which a player’s performance improves during the final year of a contract, is mixed. According to a research on 275 players who spent two straight seasons in Serie A between 2012 and 2014, before and after signing a contract, players fared better in the last year of their contracts.

When looking at indicators like shooting and passing accuracy, successful tackles, and minutes played per match, a 2019 report found little evidence of a clear relationship between contract length and performance when looking at 249 Premier League, La Liga, Bundesliga, and Ligue 1 players between 2008 and 2015. Given the complexity of the subject matter, the polarity of viewpoints is somewhat unsurprising. According to the authors of “Analysis of elite soccer players’ performance before and after signing a new contract,” “individual performances could be influenced by collective strategies and tactics, potentially masking small effects that signing a new contract might have on observable individual performance indicators.”

One more instance we can consider in this regard is when James Ward-Prowse spoke with Southampton’s official website after signing a new five-year contract in August 2021 about how the Saints “sat down and told me their admiration for me and the way they want me to lead the squad.” The phrase demonstrates how a long-term contract can push a player to grow by recognising expertise. Ward-Prowse has been in his best form since his contract was extended in the summer, scoring six goals in 19 appearances. Jones had explained that “anecdotally, there are many people in the game who enhance their performance in the final year of their deal before dropping down after they get that contract, however, the requirement to offer hefty contracts is probably beneficial for the game as a whole because it favourably enhances a specific individual’s drive-in acknowledgment of their expertise.”

What happened in the case of Cristiano Ronaldo

Ronaldo said his goodbyes to Juventus before returning to Old Trafford, but he gave no reason for leaving the Italian club, where he had spent three years. Khabib Nurmagomedov, a former UFC fighter and close friend of Ronaldo, claims that the Portuguese striker left Juventus because he was bored. While conversing with Sport 24, Khabib had provided a solid reason for Ronaldo’s exit from Juventus. “I don’t want to make our private conversation public. He explained that he was bored in Italy and that he wanted to relocate to England. I’m not a fan of Italian football either, but I’m not going to go to the English Premier League. Any squad can put on a show there”, said he.

It is also necessary to mention that Ronaldo was dissatisfied with the team’s overall performance and demanded that the board restructure the roster and assemble a formidable lineup. This, however, was not possible due to the club’s deteriorating financial circumstances following the pandemic. Ronaldo was unsure about Juventus’ plans, and losing the Serie A title in 2020-21 was the final straw for him. The Juventus director also addressed the issues surrounding Paulo Dybala’s contract renewal, stating that they had achieved an agreement but that circumstances had changed.

Thus considering the two reasons that have been put forth by media reports, it can be concluded that Ronaldo might have left the Juventus club because of a lack of motivation resulting from a long-term contract that he had signed with the club, which is a common sight with several football players. Although this is a general assumption, it is difficult to put up reasons with evidence behind Ronaldo’s exit as the same has been covered under books throughout the entire episode of Ronaldo’s relation with Juventus and he leaving the same. 

Conclusion 

There have been several speculations about Ronaldo’s exit from Juventus, he lost motivation over the long-term contract he had entered with the well-known club, he demanded resources that were restricted by the club, and the list continues. What needs to be taken from this discussion is that the €30m-a-year contract that the globally recognised player had entered into with Juventus came to an end owing to the Portugal international’s repeated frustration at the end of the season. As have been discussed above, clubs, players and agents, all three parties to a footballer’s contract have a significant role to play in fulfilment of the contract. Ups and downs among these parties are often happening but the same should not be responsible for spinning the game at the end of the day.  Thus in this regard, a player’s decision to exit a club must be respected and focus should be placed on the player’s future games and the club’s continuing performance, instead of the detriments faced by both as a consequence of the player’s decision. 

References 

  1. https://oldjuve.com/2021/03/17/cristiano-ronaldo-contract-juventus-need-know-future/
  2. https://economictimes.indiatimes.com/news/sports/manchester-united-agree-deal-to-re-sign-cristiano-ronaldo-from-juventus/articleshow/85695120.cms.
  3. https://fieldinsider.com/footballer-contracts/#:~:text=Footballer%20contracts%20essentially%20mean%20that,submitted%20by%20another%20club.
  4. https://www.blackwhitereadallover.com/2021/8/31/22649867/cristiano-ronaldo-juventus-manchester-united-2021-serie-a-epl-summer-transfers-team-news-fee-details.

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Is euthanasia legal in India

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This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article provides a detailed analysis of whether euthanasia has received legal enforcement and backing in the democratic land of India or not. The article also witnesses a comparison of India with other nations on this subject matter. 

It has been published by Rachit Garg.

Table of Contents

Introduction 

Palliative care and quality of life difficulties in patients with terminal illnesses such as advanced cancer and AIDS have become a major source of worry for clinicians in our culture. Another contentious issue has evolved in response to this concern: euthanasia or “mercy killing” of terminally sick patients. Physician-assisted suicide (PAS) proponents believe that a person’s right to autonomy inherently rights him to a painless death. Opponents argue that a physician’s role in a patient’s death goes against the medical profession’s basic precept. Furthermore, untreated depression and the risk of social ‘coercion’ in persons seeking euthanasia cast doubt on the ethical foundations driving such a decision. As a result of these problems, specific criteria for adopting PAS have been established. Assessment of the mental health of the individual agreeing to PAS becomes required, and the psychiatrist’s role becomes critical in this regard. Despite the fact that PAS is illegal in our nation, it has a number of supporters in the form of non-profit organisations such as the “Death with Dignity” foundation. The recent judgement delivered by the Supreme Court of India, in the Aruna Shaunbag case (2011) has given this a boost. What remains to be seen is how long this sensitive matter will be debated in the Indian legislature.

What does euthanasia mean

Euthanasia, sometimes known as mercy killing, is the act or practice of putting to death people who are suffering from a terrible and incurable sickness or a physically incapacitating disorder without pain, or permitting them to die without treatment or artificial life-support measures. Because most legal systems do not have a specific provision for it, it is commonly seen as either suicide (if carried out by the patient themselves) or murder (if performed by another). Several European countries had unique provisions in their criminal laws in the late twentieth century for lenient sentencing and the consideration of extenuating circumstances in euthanasia proceedings.

The Netherlands and Belgium were the first countries to legalise euthanasia in 2001 and 2002, respectively. In 1997, Oregon became the first state in the United States to decriminalise physician-assisted suicide. Opponents, however, pushed to have the contentious law repealed. The Supreme Court of South Korea acknowledged the “right to die with dignity” in 2009 when it granted the family of a brain-dead woman’s request to have her life-support systems removed.

The ability of the modern medical practice to extend life through technological methods has raised the question of what courses of action should be accessible to the physician and family in times of acute physical or emotional pain, particularly if the patient is unable to make their own decisions. Criminal charges have been brought against physicians for passively doing nothing to prolong life or withdrawing life-support measures; on the other hand, the families of comatose and apparently terminal patients have taken legal action against the medical establishment to force them to stop using extraordinary life support.

Relevant terms with respect to euthanasia

  1. Physician Assisted Suicide (PAS): PAS, sometimes called as aid-in-dying, is a semi-passive method of euthanasia in which a medical practitioner prescribes or introduces the appropriate amount of lethal dose to end life at the patient’s request. The dose may be self-injected or made available to the patient, who then injects or inhales the lethal dose.
  2. Permanent Vegetative State (PVS): It is a state in which a patient is in a vegetative state, in which he or she is unable to sustain himself or herself and requires the assistance of one or more life support systems or even other people (including family, relatives, doctors, medical staff, and so on) to perform basic human functions.
  3. Terminal disease: It refers to a medically confirmed incurable and irreversible sickness or condition that will, within reasonable medical judgement, result in death.
  4. Advanced medical directive: It is also known as a ‘living will,’ and it is a direction issued by a person who wishes to avoid receiving extraordinary medical care if he or she is diagnosed with a fatal illness. To be legal, such a direction must be voluntary, competent, and given in advance.

Euthanasia in clinical practice

The Indian Penal Code, 1860, which deals with both active and passive euthanasia, as well as PAS, determines the legal position of the same in India. Active euthanasia is a crime under Section 302 (punishment for murder) of the 1860 Code or at the very least Section 304 of the Indian Penal Code 1860 which deals with punishment for culpable homicide not amounting to murder. The distinction between euthanasia and physician-assisted death lies in who administers the lethal dose. While in euthanasia, a doctor or a third party does so, but in physician-assisted death, the patient himself/herself carries out the same. 

In India, PAS’ legal standing would be abetment of suicide under Section 306 of the Indian Penal Code, 1860 which discusses abetment of suicide. Speaking technically, anyone considering euthanasia or PAS must go through Indian Courts, and the courts have never issued a clear ruling permitting a PAS to proceed. India is not alone in this regard. Most countries have been attempting to obtain rulings on this subject. In contrast to the general public in the United Kingdom, research of 3733 UK doctors on the legality of medically assisted death (euthanasia and PAS) indicated that the majority of doctors opposed PAS legislation and that a strong religious belief was independently related to resistance to assisted dying.

India is a healthy example of a diverse range of cultures, customs, and faiths that have all maintained their distinct identities while also blending with traditional Indian ideas and rituals. In the Indian setting, untangling religion and culture, customs and rituals, and beliefs and attitudes is a Herculean undertaking. A professional and public discussion of PAS will encounter a variety of problems, such as people’s moral standards, how religion and culture will interact in people’s brains, whether the intensity of religiosity will trump any kind of religion, and so on. According to a recent survey in Egypt, doctors assess whether PAS should be considered based on religiosity rather than a specific religion.

More religious doctors, whether Christians or Muslims, believed that PAS should not be considered since it would be against their faith. Only a small amount of information about Indian doctors’ attitudes toward euthanasia and PAS has been published. Although the study stated previously provides some insights, generalisations are impossible due to the small sample size. The attitudes of Indian doctors, particularly psychiatrists, oncologists, palliative care physicians, and geriatricians, concerning the notions of euthanasia and PAS, need to be studied further.

The majority of palliative medicine specialists oppose changing the law on assisted dying, according to a study undertaken by the Association for Palliative Medicine in the United Kingdom. They suggest that people who work with dying patients should be included since they have a plethora of knowledge about the subject. According to a qualitative observational study conducted in the Netherlands, one of the nations where assisted suicide is permitted, euthanasia practice entails lengthy considerations, the majority of which do not result in death. Discussions about euthanasia have two outcomes:

  1. Patients are encouraged to continue discussions about death resulting from euthanasia as a consequence of the talk.
  2. A socio-therapeutic component is present, which tends to reinforce social relationships and social life.

Another study in the Netherlands found that physical symptoms (62 percent), function loss (33 percent), reliance (28 percent), or deterioration (15 percent) were frequently cited as reasons for considering euthanasia. As many as 35% of physicians reported that there had been alternatives to relieve patients’ suffering which the majority refused. According to a Swedish study of physicians who had worked with adult dying patients, about half of them had addressed palliative care with all of their dying patients, and more than half had heard their patients express a desire to die. About a third of the doctors had administered analgesics or other medications in such high quantities that some of their patients died sooner. One-third had been requested to participate in active euthanasia, while 10% had been asked to aid in suicide.

There have always been a debate existing between those who support and oppose euthanasia and PAS. People claim that hospitals do not listen to patients’ requests, especially when they are terminally sick, crippled, or unable to respond to medical treatment. This medical culture will undoubtedly change as a result of the new legislation that may be enacted if the PAS is allowed. Psychiatrists must deal with mental capacity difficulties on a regular basis, therefore this topic is becoming increasingly significant with them. There is a need for empirical research in India on perceptions and attitudes toward euthanasia and PAS among a large number of professionals and the general public in order to develop meaningful conclusions on whether or not euthanasia and PAS should be legalised. Let us check out some of these arguments below. 

Arguments supporting legalisation of euthanasia

  1. Patrick Stuart, Patron of Dignity in Dying, once said, “We have no control over how we arrive in the world but at the end of life we should have control over how we leave it.” The three kinds of arguments supporting legalisation of euthanasia are provided hereunder: 
  1. The compassion argument (We need it): Supporters of assisted suicide argue that allowing people to ‘die with dignity’ is preferable to forcing them to live in pain. 
  2. The autonomy argument (We want it): Some people believe that each patient has the right to decide when they want to die. 
  3. The public policy argument (We can control it): Proponents argue that government law can safely regulate assisted suicide.
  4. Those who support euthanasia or assisted dying argue that in a civilised society, people should be able to choose when they want to die and should be assisted if they are unable to do it themselves.

Arguments opposing the legalisation of euthanasia

However, according to the BBC, some detractors take a moral stance opposing euthanasia and assisted suicide, claiming that life is given by God and only God has the power to take it away. Others believe that laws legalising euthanasia could be exploited, resulting in the death of persons who did not want to die.

India and euthanasia : the story so far

Suicide, in general, is defined as a reaction to situations that cannot be resolved at any cost at any given time. It is considered to be one of the last reactions a person might have when confronted with inner emotional suffering. The successful act of committing suicide is punishable under Section 309 of the Indian Penal Code, 1860. For a long time, the effectiveness of this clause has been at the focus of all disputes and is also vulnerable to judicial scrutiny. Furthermore, the Supreme Court of India and different High Courts have examined the constitutional validity of Section 309 of the Indian Penal Code in multiple cases since then. 

The timeline of events surrounding the right to die 

  1. 1994 (P. Rathinam v. Union of India): P. Rathinam and Nagbhushan Patnaik had filed petitions contesting Section 309 of the Indian Penal Code’s, 1860 constitutional validity. Anyone who tries to commit suicide is subject to a one-year sentence of simple imprisonment under Section 309. The Supreme Court made a connection between the other fundamental rights. As a result, Section 309 was declared unconstitutional.
  2. 1996 (Gian Kaur v. The State of Punjab): A Trial Court had found Gian Kaur and her husband Harbans Singh guilty of violating Section 306 of the Indian Penal Code, 1860. They were sentenced to six years in prison and a fine of Rs. 2,000/- for assisting Ms. Kulwant Kaur in her suicide. Anyone who aids in the act of suicide is punished under Section 306, whereas anyone who tries to commit suicide is punished under Section 309 of the Code. In this case, it was held that the right to life under Article 21 includes the freedom to die as well. Assisting in the implementation of Article 21 is thus the same as abetting suicide. P. Rathinam was overruled by a five-judge bench of the Apex Court of India.
  3. 2006 (Law Commission Report on Euthanasia): In its 196th Report, the Law Commission of India suggested that a law be enacted to safeguard terminally ill individuals who refuse medical care, artificial feeding, or hydration from being prosecuted under Section 309 of the Indian Penal Code, 1860. Furthermore, clinicians who obey such a patient’s decision, or who make such a decision for incompetent patients in their best interests, shall be shielded from prosecution under Section 306 or Section 299 of the Code. According to the report, the ‘patient’ must be suffering from a terminal illness, which is defined as an illness, injury, or degeneration of a physical or mental condition that causes extreme pain and suffering and, in the opinion of a reasonable medical expert, will inevitably result in the patient’s untimely death.
  4. 2008 (Law Commission Report on Decriminalisation of Attempt to Suicide): In its 210th Report, the Indian Law Commission determined Section 309 of the 1860 Code to be inhumane. Suicide attempts are described as a symptom of a ‘diseased mental condition,’ according to the report. It deserved to be treated with respect and not punished. It is unjust and unfair to impose more punishment on someone who is already in pain. It does not aid in the prevention of suicide attempts or the improvement of access to medical care for individuals who have attempted suicide.
  5. 2011 (Aruna Ramachandra Shanbaug v. Union of India): Ms. Aruna Shanbaug’s ‘next friend’ had petitioned before the Supreme Court, requesting that it order the hospital to cease feeding her and let her die peacefully. Since being sexually assaulted in 1973, Ms. Shanbaug has been in a Persistent Vegetative State (PVS). Ms. Shanbaug was examined by a team of three doctors, who submitted a report on her physical and mental state. Although the Court did not allow Ms. Shanbaug’s medical treatment to be withdrawn, it did go into great detail on euthanasia and permitted passive euthanasia. It decided that the Court is the ultimate decider of what is best for the patient, invoking the Parens Patriae principle (Latin for “parent of the nation,” where the Court can step in and function as a guardian). Under Article 226 of the Constitution, it expanded this power to the High Courts.

Landmark euthanasia cases in India

A list of ten landmark decisions surrounding the subject matter of euthanasia and the right to die has been elaborated hereunder. 

Maruti Shripati Dubal v. State Of Maharashtra (1986)

In the matter of Maruti Shripati Dubal v. State of Maharashtra (1986), the petitioner was a police officer who became mentally sick after being involved in a car accident. He was diagnosed with schizophrenia and had a history of mental illness, including mental depression and instability. Before being apprehended by the police, he poured kerosene on his body, attempted to light a match, and set himself on fire. He was charged with attempting to commit suicide under Section 309 of the Indian Penal Code, 1860. The legality of the clause was challenged before the Bombay High Court.

Issues raised before the Court of law

  1. Whether Section 309 of IPC criminalising attempts to suicide is constitutionally valid or not?
  2. Whether the petitioner liable under the section for an attempt to suicide?

The reasons given by the Bombay High Court

The Court ruled that Section 309 of the Indian Penal Code, 1860 is ultra-vires of the Constitution because it violates Articles 14, 19, and 21 of the same. Taking the same into account, the Court reached the following conclusion:

  1. Article 19 is violated by Section 309 because the right to life has a negative connotation, as in Maneka Gandhi v. Union of India (1978), Kharak Singh v. State of Uttar Pradesh (1962) and Sunil Batra v. Delhi Administration (1980), it guarantees the right to personal liberty and protection of life. Articles 19 and 21 must be construed in tandem and read in connection with one another. 
  2. Further, Section 309 violates Article 14 since the term “suicide” is not defined anywhere in the statute. There is a lot of ambiguity in the concept because suicide has varied meanings in different groups. Also, while some suicides are eulogised in religions, others are reviled.
  3. Terminating one’s life is not the same as ending one’s life in an unnatural manner, because the person may have exhausted their desire to live, which is not unnatural. To end one’s life is an act of living that must be regarded in the context of the individual’s circumstances that compel him to do so, which must be considered natural.

The Court finally decided that Section 309 was unconstitutional because it violated Articles 19, 21, and 14 of the Indian Constitution. As a result, the petitioner’s prosecution was dismissed, and he was found not guilty under Section 309 of the Code of 1806.

The leftovers of the case

The present case’s decision was overturned by the judgement delivered in the case of Gian Kaur v. State of Punjab (1996), where the Supreme Court had declared that Section 309 is constitutional and does not violate Articles 21 and 14. The Apex Court had also held that the right to life cannot be compared to the rights to freedom, business, movement, and so on because the latter rights are positive rights that include negative aspects, whereas the right to life enshrined in Article 21 is a negative right that protects against any intrusion and thus cannot be compared to include positive aspects. 

Following this, the case of State of Maharashtra v. Maruti Shripati Dubal (1996) was revisited. The criminal prosecution against the constable was quashed in 1996 by the Court due to the unusual circumstances of the case and the constable’s mental instability. It was decided that the respondent did not merit a trial 11 years after the incident occurred, and that even if the prosecution’s case was proven beyond a reasonable doubt, he deserved the moderate sentence of a nominal fine.

P. Rathinam v. Union of India (1994)

P. Rathinam and Nagbhushan Patnaik had filed petitions contesting the constitutional validity of Section 309 of the Indian Penal Code, 1860. The Supreme Court considered a variety of judicial and legal perspectives on the issue, some of which are briefly covered hereunder.

A person is freed of torment, pain, and suffering if he or she decides to end his or her life and dies as a result of that decision. If the person is unlucky enough to survive, they are charged with ‘attempted suicide’ and dragged before the court of law. To say the least, it is unjust that a person who is already suffering is penalised simply because a clause like Section 309 still exists in our supreme criminal code. The provision has been in place since the Code was created in 1860 during the British Raj, despite the fact that the Britishers have since long altered their laws to make attempting suicide illegal. 

The petitioners argued that Section 309 was unconstitutional because it violated Articles 14 and 21 of the Constitution, and they asked for the Section to be declared void. The petitioner (Nagbhushan) was also seeking to have the proceedings against him quashed under Section 309 of the Indian Penal Code, 1860.

Issues raised before the Court of law

The fundamental question before the Court was whether Section 309 of the Indian Penal Code, 1860 violated Articles 21 and 14 of the Constitution, and if Article 21 of the Constitution includes the “right to die” or not. The following are some of the other key issues that the Court discussed:

  1. Is it moral to commit suicide?
  2. Is suicide associated with negative societal consequences?
  3. Is it against the law to commit suicide?
  4. Is committing suicide a threat to the State’s monopolistic authority to take a life?

The reasoning of the Supreme Court of India

The Supreme Court took into consideration some of the observations of eminent personalities on the subject matter. Some of which are:

  1. After retiring as Chief Justice of the Delhi High Court, Shri V.S. Deshpande wrote an article titled ‘To Be or Not to Be’ in which he shared his thoughts on the subject of euthanasia. He pointed out that if Section 309 is limited to cowardly and unworthy attempts at suicide, then only this Section would be in accordance with Article 21 because if a person has no obligations to himself or others when he is terminally ill and decides to end his life to relieve himself of the pain of living and the burden of caring for him, prosecution of such a person would be adding insult to injury.
  2. The Court also cited an article published in the Illustrated Weekly of India (September 29, 1985) by Justice R.A. Jahagirdar of the Bombay High Court, in which the learned Judge stated that Section 309 was unconstitutional for four reasons: 
  1. Neither academicians nor jurists agree on what constitutes suicide, much less attempted suicide;
  2. Mens rea, without which no offence can be sustained, is not discernible in such acts; 
  3. Temporary insanity is the ultimate reason of such acts which is a valid defence even in homicides;
  4. Individuals driven to suicide require psychiatric care.
  5. In his famous track ‘On Liberty,’ J.S. Mill stated in this regard that the only reason for exercising power over any member of a civilised community against his will is to avoid harm to others. His goodness, whether physical or moral, is insufficient. The only aspect of a person’s behaviour that is acceptable to society is that which affects others. His freedom is absolute in the part of his life that is only concerned with himself. The individual is sovereign over himself, his own body and mind.

The Supreme Court’s observations

  1. The Supreme Court ruled that Section 309 of the Indian Penal Code, 1860 is violative of Article 21 of the Indian Constitution. The Court stated that Section 309 of the Penal Code should be repealed in order to make our penal rules more humane. It’s a cruel and unreasonable rule that could lead to a person being punished twice (doubly) for suffering misery and facing ignominy for failing to commit suicide.
  2. The Court further stated that the term “life” in Article 21 refers to the right to live in human dignity rather than simply existing as an animal. As a result, the right to live is followed by the right not to live a forced life. A person’s right to life cannot be taken away from him or made to be something he dislikes.
  3. The Court went on to say that Section 309 does not violate Article 14 since the notion that the Section regards diverse attempts to commit suicide with the same penalty is incorrect. As the Section only allows for a maximum punishment of one year or a fine, the sentence can be adjusted to the type, extent, and intensity of the attempt.
  4. The Court stated that in euthanasia, a third party is involved, either actively or passively, and it is possible to say that he assists or abets the killing of another person. Suicide, on the other hand, is the act of taking one’s own life. In this context, the Court examined the case of Mckay v. Bergstedt (1990), in which the Nevada Supreme Court held that the patient’s intention to remove his respirator did not constitute suicide, but rather an exercise of his rights.
  5. The Court stated that they do not agree with the Andhra Pradesh High Court’s conclusion that if Section 309 is declared unconstitutional, it is highly unlikely that Section 306 will survive because self-death is conceptually distinct from assisting others in killing themselves. They are on opposing sides because in one, a person takes his own life, while in the other, a third person is aided in taking his own life.
  6. The Court also used examples to demonstrate how harsh the clause is. It was stated that a student who jumps into a well after failing his exams, or a boy or girl who despises arranged marriage and would rather die, do not deserve to be tried as a criminal. The Court went on to say that a woman who tries to kill herself after being raped is not a criminal, but rather someone who deserves our pity. If they are forced to go through trials, it will just add insult to injury and make their lives even more unbearable.
  7. Finally, the Court clarified that the judgement does not imply that the fundamental rights contained or given by Article 21 can be waived, as a Constitution Bench held in Olga Tellis v. Bombay Municipal Corporation (1985) that such a right cannot be waived.

Gian Kaur v. The State of Punjab (1996)

Gian Kaur and her husband Harbans Singh were found guilty of aiding and abetting their daughter in suicide. The trial court found them guilty under Section 306 of the Indian Penal Code, 1860, and sentenced them to six years in prison and punishment of Rs. 2,000, with an additional nine months’ incarceration if the appellant cannot pay the fine. In the High Court, the appellant filed an appeal. It reaffirmed the trial court’s decision and lowered the sentence from six to three years in prison.

Issues raised before the Court of law

  1. Whether Section 306 of the Indian Penal Code, 1860 constitutionally valid?
  2. Whether Section 309 of the Indian Penal Code, 1860 violates Article 14 and 21 of the Indian Constitution?

Observations by the Supreme Court of India

  1. A five-judge Constitution Bench ruled in Gian Kaur v. The State of Punjab (1996), that the ‘right to life’ included in Article 21 of the Indian Constitution does not encompass the ‘right to die.’ The Supreme Court stressed that a person’s ‘right to life’ also includes the ‘right to a decent life’ until death. This must correspond to a dignified and natural death process. 
  2. The Court was implying that the ‘right to die’ with dignity at the end of a person’s life should not be confused with the ‘right to die’ in an unnatural manner. It was claimed that any act that hastens an individual’s natural death is illegal under Article 21. 
  3. The Apex Court also decided the question of whether Section 306 of the Indian Penal Code, 1860 is constitutional. For apparent considerations in the wider interest of society, the Court determined that “aided attempt to commit suicide” and “assisted suicide” are punishable. 
  4. The purpose of such a provision is to reduce the inherent hazard that exists in its absence. P. Rathinam v. the Union of India (1994) was thus overturned, rendering Sections 306 and 309 of the Indian Penal Code, 1860 constitutionally legitimate and declaring the accused liable for abetment of suicide.

Judgement delivered by the Apex Court

  1. Article 21, which deals with the ‘right to life,’ was deemed to exclude the ‘right to die.’
  2. The constitutionality of Sections 306 and 309 of the 1860 Code was confirmed.
  3. Arguments based on Article 14 of the Indian Constitution were found to be incompatible with the case’s main issues.

Ms. Taposhi Chakervarti v. State (2000)

The present case was a revision petition that appeared before the Delhi High Court concerning charges under Sections 306/498-A read with Section 34 of the Indian Penal Code, 1860, by the Additional Sessions Judge against the petitioner.  The petitioner was a relative of a deceased woman who had committed suicide out of angusih developed from her in-laws joint family with whom she was residing after her marriage. The only material available on record for the petitioner to show to the Court were two letters written by the deceased giving reasons as to why she had chosen to take the drastic step of ending her life.

Issues raised before the Court of law 

  1. Whether the act of suicide fall under the subject-matter of ‘right to die’? 
  2. Whether the charges framed against the petitioner stand valid owing to the circumstances of the case and the ingredients of Section 107 and 108 of the 1860 Code are made out to justify an offence under Section 306?

Reasoning opined by the Delhi High Court

  1. So long as the right to die is effectively exercised, the law recognises it. A failed effort to take one’s own life is punishable, yet, a successful attempt at self-destruction is not. However, where suicide is not a voluntary act but is carried out under duress, the law punishes those who may be held responsible for causing it, either directly or indirectly, through active suggestion or the creation of objective conditions that drive the victim to it, but only if these are intended to achieve the desired result. 
  2. Everyone has a different tolerance level. The coping strategy differs from person to person. Some people can handle certain types of pressures, while others can’t.  When someone commits suicide, it raises challenging issues about the reason for it, the compulsions for it, the circumstances that led to it, and those who were, wittingly or inadvertently, purposefully or unintentionally, responsible for it. The answers to these questions will determine whether a person is guilty of abetment or not, and these questions can be effectively answered not only with reference to the victim’s last words, which may or may not be unbiased, but also with material pertaining to the victim’s background, the state of the environments in which the act was committed, and the conduct of the suspect at the time of the act.
  3. The abettor must be demonstrated to have aided the commission of the crime on purpose, and mere proof that the act accused could not have been accomplished without the suspected abettor’s intervention is insufficient to meet Section 107’s standards. The same does not meet the requirements for the accused to be charged under Sections 306 and 498-A of the Penal Code. 
  4. The deceased in the present case was a “sensitive, pious, and devoted person who was finding the usual wear and tear of life to be difficult to cope with,” according to the remarks recorded at the most. This mentality is also reflected in the letters she left behind. As a result, reading more into the content than is necessary would be prohibited. In the absence of any other material, the trial of the accused on the charge stated above would appear to be an exercise in futility and hence should not be continued.

Judgement of the Delhi High Court

  1. The Court observed that if the accused must be acquitted on the evidence, subjecting her to the misery of trial would be a misuse of the court’s process, especially since the accused must have already suffered mental anguish and shame as a result of the sad occurrence. 
  2. The action or inaction of those who had the moral and legal obligation to keep the deceased happy and satisfied could not be described as anything other than impelled by judicial malice, however socially condemnable they were.
  3. As a result, the petition was granted. The accusation under Sections 306 and 498-A of the Indian Penal Code, 1860 were quashed, and the challenged order was set aside.

People for elimination of stray dogs v. The State of Goa by its Chief Secretary (2008)

The facts of the present case unfold that in a judgement and order dated October 5, 1998, a Division Bench of the Bombay High Court established certain rules for dealing with the problem of stray dogs. All parties, including the Municipal Corporation of Greater Bombay and the intervenors, agreed to the foregoing order. Comprehensive Guidelines for Dog Control and Management were therefore framed. The aforementioned Guidelines state that stray dogs should not be killed unless they are critically ill, violent, fatally injured, or rabid. It further states that aggressive, diseased, incurably ill, and mortally wounded dogs, as well as those capable of transmitting diseases as recognised and diagnosed by a certified veterinarian, must be euthanized in a humane way.

Meanwhile, under the Prevention of Cruelty to Animals Act, 1960, the Central Government had enacted the Animal Birth Control (Dogs) Rules 2001. Learned Counsel, Mrs.Norma Alvares had argued that Section 11(3)(b) of the Act should not be interpreted in isolation from the Act’s other sections dealing with animal cruelty prevention. By mentioning the same, she wanted to point out that it’s crucial to remember Article 51A(g) of the Indian Constitution, which states that every Indian citizen has a constitutional obligation to exhibit compassion to all living species. Homeless/abandoned stray dogs are especially deserving of societal compassion, therefore killing stray dogs only because they are ownerless would constitute a lack of compassion, and thus would be a violation of Article 51A (g). Similarly, outlawing euthanasia completely would be a breach of Article 21 of the Indian Constitution, as it would be a threat to everyone’s right to life.

Issues raised before the Court of law

  1. Whether the provisions of Sub-section (3) of Section 11 of the Prevention of Cruelty to Animals Act, 1960, and the relevant provisions of the Bombay Municipalities Act, Mumbai Municipal Corporation Act (MMC Act) and the Goa Municipalities Act and other enactments can be used in the circumstances and seriousness of the problem, the danger posed and the threat posed by stray dogs?
  2. Is it necessary to prohibit the killing of stray dogs in spite of the aforementioned requirements of sub-section (3) of Section 11 of the Prevention of Cruelty to Animals Act, 1960 and other Acts referred to above?

Judgement of the Court of law

  1. The Court of Law had observed that Section 11(3) of the Act of 1960 does not allow for the execution of “all” stray dogs in deadly chambers or by other means.
  2. The Bombay High Court further stated that if a veterinarian comes across dogs who are incurably ill, gravely injured, or rabid while implementing the dogs control scheme, he should not waste his time and energy treating them and is permitted to put them to sleep. Other than these types of dogs, this does not preclude them from being put to sleep under the provisions of Section 11(3) of the Act of 1960 and Section 191-BA of the Mumbai Municipal Corporation Act. Dogs that are detected or reported to be a source of public nuisance, and if the nuisance exists, the Commissioner has the authority to destroy the dog(s) in accordance with Section 191BA of the MMC Act.

Aruna Ramchandra Shanbaug v. Union of India (2011)

The petitioner, Aruna Ramachandra Shanbaug, was described as a staff nurse at King Edward Memorial Hospital in Parel, Mumbai. She was attacked by a hospital sweeper on the evening of November 27, 1973, who placed a dog chain around her neck and yanked her back with it. He attempted to rape her, but when he discovered she was menstruating, he sodomised her instead. He twisted the chain around her neck to immobilise her throughout the act. The next day, a cleaner discovered her lying on the floor with blood all over her. The supply of oxygen to the brain was said to have been cut off as a result of the dog chain strangulation, causing the brain to be injured. It had been 36 years after the aforementioned incident, she couldn’t move her hands or legs and was surviving on mashed food. It was claimed that there was no chance of her health improving and that she was completely reliant on KEM Hospital in Mumbai. It was prayed to direct that the respondents stop feeding Aruna and allow her to die in peace.

A counter-petition was filed by the respondents, KEM Hospital and the Bombay Municipal Corporation. Because there were discrepancies between the petitioner’s and respondents’ petitions, the Court decided to establish a team of three distinguished doctors to investigate and report on Aruna Shanbaug’s exact medical and mental conditions. 

They thoroughly examined Aruna Shanbaug’s medical history and concluded that she is not brain dead. She has her own style of reacting to particular events. For example, she likes mild religious music and fish dishes. She becomes agitated when there are a large number of people in the room. When there are fewer people around her, she is at ease. KEM Hospital’s personnel were providing her with adequate treatment. She was kept spotless at all times. They also didn’t notice anything in Aruna’s body language that suggested she was willing to end her life. Furthermore, the nurses at KEM Hospital were more than happy to assist her. Thus, the doctors opined that euthanasia in the instant matter is not necessary.

Issues raised before the Court of law 

  1. Should withholding or withdrawing life-sustaining therapies be permissible or ‘not unlawful’ when a person is in a permanent vegetative state (PVS)?
  2. Should the patient’s wishes be honoured if he or she has previously stated a desire to avoid life-sustaining treatments in the event of futile care or a PVS?
  3. Should a person’s family or next of kin make a request to withhold or discontinue ineffective life-sustaining therapies if he or she has not previously indicated such a wish?

Concept of medical ethics in Aruna Shanbaug’s case

As Aruna’s consent could not be acquired in this case, the subject of who should make decisions on her behalf became more apparent. This was decided by beneficence. Beneficence means behaving in the best interests of the patient. Following a course of action that is best for the patient and is not influenced by personal convictions, intentions, or other considerations is referred to as acting in the patient’s best interest. The public interest and the state’s interests were also taken into account. The Court looked at diverse jurisprudence to evolve with the protections because simply legalising euthanasia could lead to widespread misuse of the law.

Classification of euthanasia

  1. To be able to rule on the aforementioned issues, the Court first clarified what euthanasia is. There are two types of euthanasia, or mercy killing, namely, active and passive. Active euthanasia refers to the employment of lethal drugs or forces to kill a person, such as a lethal injection given to a terminally sick individual in excruciating pain. Passive euthanasia comprises withholding medical treatment in order to prolong life, such as withholding antibiotics when a patient is likely to die if they are not given, or disconnecting the heart-lung machine from a coma patient.
  2. Another distinction made in euthanasia is between voluntary and non-voluntary euthanasia. Voluntary euthanasia occurs when the patient’s consent is obtained, but non-voluntary euthanasia occurs when the patient’s consent is unavailable, such as when the patient is in a coma or otherwise incapable of giving consent. While the former has no legal ramifications, the latter has a number of issues. The current case involved non-voluntary passive euthanasia.

Judgement delivered by the Supreme Court of India

  1. On March 7, 2011, the Supreme Court of India’s Hon’ble Division Bench, consisting of Justice Markandey Katju and Justice Gyan Sudha Mishra, handed down this landmark decision. Aruna was not brain dead, according to the doctors’ findings and the definition of brain death under the Transplantation of Human Organs Act, 1994. She was able to breathe without the use of a machine, she had feelings, and she was able to provide the essential stimuli. Despite the fact that she was in a PVS, her condition has remained constant. As a result, putting an end to her life was unwarranted.
  2. Furthermore, KEM Hospital’s administration and employees, not Pinki Virani (the petitioner), have the authority to make decisions on her (Auna’s) behalf. The mashed meal was her life-saving strategy, and she was able to survive because of it. In this scenario, removing the life-saving treatment would have meant not feeding her. The Indian law made no provision for refusing to feed a person. The removal of ventilators and the removal of food, could not be compared. Allowing Aruna to die via euthanasia would entail undoing the years of work put in by the staff at KEM Hospital.
  3. Furthermore, in order to protect the parens patriae concept, the Court had lodged the right to determine the termination of a person’s life in the High Court. As a result, the Supreme Court approved passive euthanasia in specified conditions, subject to the High Court’s consent following the proper procedure. When a request for passive euthanasia is made, the Chief Justice of the High Court should convene a Bench of at least two judges to decide whether to approve it or not. Before doing so, the Bench should seek the advice of a committee of three reputable doctors, which it will appoint after consulting with any medical authorities or practitioners it deems appropriate.
  4. In addition to appointing the doctor’s committee, the High Court Bench must also issue notice to the State and the patient’s close relatives, such as parents, spouses, brothers/sisters, and in their absence, his/her next friend, and provide a copy of the doctor’s committee report as soon as it is available. The High Court should issue its decision after hearing them. Until Parliament passes laws on the matter, the approach outlined above should be followed throughout India.
  5. Aruna Shanbaug, on the other hand, was denied euthanasia because the Court ruled that the situation did not warrant it. If the personnel or management of KEM hospital ever felt the need for anything similar, they might go to the High Court using the procedure outlined. 
  6. This case highlighted the concerns surrounding euthanasia and also established standards for mass euthanasia. In addition, the Court recommended that Section 309 of the Indian Penal Code, 1860 be repealed. This case is significant because it established the procedure to be followed in an area where no legislation exists.

H. B. Karibasamma v. the Union Of India (2012)

The petitioner in the present case was a retired school teacher who is around 70 years old. She is currently residing at a nursing home for the elderly. The petitioner had been suffering from a serious health ailment known as ‘Intervertebral Disc Prolapse,’ or ‘Slip Disc.’ The condition in question was a disorder in which the outer fibrous ring of the spine tears, causing the soft, middle section of the spine to pop out. The disc ring rip may cause the release of inflammatory chemical mediators, which can cause significant discomfort. This ailment had plagued the petitioner for the past ten to eleven years. The petitioner was diabetic as well.

The petitioner appears to have sought the advice of several doctors, both neurologists and orthopaedic surgeons, in order to find a cure for her condition. However, due to the petitioner’s age and health condition, all of the doctors have recommended non-surgical, conservative treatments, whereas any possible improvement in her condition can only be achieved through invasive surgery.

The petitioner was not only in extreme bodily pain, but also suffers from mental anguish and is monetarily disadvantaged. The petitioner appears to have undertaken all of the necessary steps to alleviate the discomfort, but had failed, and was unwilling to endure a life of excruciating agony and sorrow. As a result, the petitioner has made the decision to end her life because it had been nothing but a continual drudgery of excruciating pain and mental anguish.

Issue raised before the Court of law 

Whether the petitioner in the present case can be termed as a person who is terminally ill or is in a permanent vegetative state, inasmuch as she requires the administration of euthanasia?

Judgement delivered by the Court

The Karnataka High Court delivered the following judgement: 

  1. The guidelines laid down in the Aruna Shanbaug were followed.
  2. The Court declared that the petitioner cannot be termed as a person who is terminally ill or is in a permanent vegetative state, inasmuch as she does not require the administration of euthanasia.

Common Cause v. the Union of India (2014)

The topic of the right to die with dignity was submitted to the Ministry of Law & Justice, Family Health & Welfare, and Company Affairs, by Common Cause, a recognised association. Common Cause petitioned before the Supreme Court under Article 32, requesting that the right to die with dignity be declared a fundamental right under Article 21. Appeals/prayers for terminally ill patients to be able to sign ‘living wills’ that direct what should be done if they are admitted to hospitals, were made. The Court then convened an expert committee of lawyers, doctors and scientists to investigate the issue of living will execution. 

A three-judge bench, consisting of then-Chairman of the Supreme Court P. Sathasiavn, Justice Ranjan Gogoi, and Justice Shiva Kirti Singh, had referred the case to a larger Bench to resolve the issue, citing inconsistent opinions in Aruna Shanbaug v. Union of India (2011) and Gian Kaur v. the State of Punjab (1996). The right to die with dignity was declared to be a fundamental right, according to a five-judge panel led by Chief Justice Dipak Misra and Justices A.K. Sikri, A.M. Khanwilkar, D.Y. Chandrachud, and Ashok Bhushan. The right to make prior medical directives is a statement of a person’s right to bodily integrity and self-determination, and it is independent of any state acknowledgment or regulation.

Issues raised before the Apex Court 

  1. Is it true that Article 21, which provides the right to life, also includes the right to die?
  2. Is it possible to make euthanasia legal just through legislation?
  3. What is the distinction between passive and active euthanasia?
  4. Can people offer ‘Advanced Directives,’ i.e., medical treatment directives, if they become incompetent or unable to speak in the future?

Passive euthanasia vis a vis active euthanasia

Passive euthanasia varies from active euthanasia as while the latter involves doing something to end the patient’s life, the former involves not doing anything that, if done, would have saved the patient’s life. Living wills, on the other hand, are written papers that allow patients to offer explicit instructions about medical care when they are unable to give informed permission. Passive euthanasia is a contentious notion that poses a slew of complex moral, ethical, social, philosophical, legal, and religious issues.

When it comes to passive euthanasia, there are two distinct factions. 

  1. The first is a regional sect that believes life is a divine gift and does not believe there is a right to die. 
  2. The second one has to do with the consent requirement. It is frequently questioned whether terminally ill patients are capable of giving informed consent for their own death. 

As a result, there have been numerous euthanasia campaigns in the past, some in support of the practice and others in opposition. However, legislation supporting euthanasia have been enacted, taking into account the interests of people. Though this philosophy is in opposition to religious beliefs, it is thought to be beneficial to society. There is a conflict between law and religion in this regard. In circumstances of irrational and unjustified behaviour, the law takes precedence over religion.

As a result, the decision made in this present case is an appropriate decision. Chronic disease patients are frequently subjected to excruciating pain and suffering, as well as therapies in which there is no cure and only medication and treatment that extends life. Denying them the right to a dignified death prolongs their agony. As a result, the Court is correct in proclaiming the right to die with dignity as a fundamental right, as it will alleviate the suffering of individuals who are undergoing chronic treatments and allow them to die in a dignified manner.

Judgement delivered by the Supreme Court of India 

In this case, the Supreme Court ruled that under Article 21 of the Indian Constitution, an individual has the right to die with dignity as part of his or her right to life and personal liberty. As a result of this judgement, life-support systems for the terminally ill or those in incurable comas can be removed. The Court also recognised the importance of writing a living will and allowed people to opt out of artificial life support. In this decision, the Court also established certain propositions regarding the procedure for executing advance directives and issued guidance for doing so in order to give effect to passive euthanasia. The judgement delivered by the Bench comprising of former Chief Justice Dipak Misra, Justices A.K. Sikri, A.M. Khanwilkar, D Y Chandrachud and Ashok Bhushan, can be categorised under the following heads:

  1. Death with dignity: A life without dignity is an unbearable defeat, whereas a life that faces death with dignity is a virtue to be aspired to and a reason to rejoice. Sanctioning under Article 21, the right to a dignified life in the face of adversity right to a dignified death.
  2. Sanctity of life vs. Quality of life: The right to life is the most important right, and the right to die with dignity is justified by “quality of life.” According to the Indian Constitution, human dignity is vital to safeguarding the sanctity of life, and dignity is harmed by pain, suffering, and the progressive loss of physiological functions, as stated by Justice Chandrachud in this case.
  3. Legal implications for doctors: In this opinion, J. Chandrachud found that a doctor’s decision to withhold or discontinue medical intervention for a terminally ill patient should not be intended to cause death. However, in order to alleviate the suffering, the conduct should not be classified as culpable homicide or murder.
  4. Hypocratic oath: “I will not offer a medication that is fatal,” says the Hypocratic Oath. This is frequently misinterpreted as a ban on euthanasia. So, in the name of oath, should a person be allowed to remain in such an incurable state of inactivity, suffering from pain and anguish? In contrast, the terminally ill patient should have the full right to close the doors of life and enter the dark tunnel of death painlessly and with dignity. Individual dignity should be preserved by smoothing the process of dying only permitted for passive euthanasia if medical technology exists and s/he is unaware of what is happening.
  5. Advanced directives: Advanced directives comprise two components, namely, living will (passive euthanasia) and durable power of attorney for health care (active euthanasia). Living willI, a person’s thoughts and preferences regarding medical care, assures the ‘Consent & Authenticity’ for termination of the treatment and smoothens its death process. Whereas durable power of attorney for healthcare, allows another individual to make medical decisions for a patient who is unable to do so themselves (unconscious, mentally unstable). The final outcome will be rendered by the high court after consultation with three panellists of the Medical Board, under the impression of close relatives.

Nikhil Soni v. Union of India and Others (2015)

India has long been famed for its religious tolerance. In India, Jainism has a lengthy history, and Jains are devout adherents of their faith. Jains are noted for practicing ‘Santhara’ or ‘Sallekhana,’ a delicate kind of passive euthanasia. The Jain Shwetambar Sangha, Tonk Road, Jaipur, has come to their aid and has arranged for a group of Jains to be provided with facilities. They have also scheduled a Mahotsav for the Jains, and they have begun their fasts.  The Right Foundation, an NGO, filed a writ petition in the public interest against the Sangha and the Union of India before the High Court of Rajasthan, claiming that Santhara should be declared illegal because it violated several provisions of the Constitution, and that the Court should investigate the practice and prosecute it appropriately. Furthermore, it was alleged that facilitating the activity is also considered a criminal conduct.

Issues raised before the Court of law

  1. Whether the petitioner’s special leave petition is maintainable  before the Honourable Court?
  2. Whether the Santhara’s tradition stands up to the test of Article 21 of the Indian Constitution?
  3. Whether Santhara is a necessary religious practice and is covered by Article 25 of the Indian Constitution?
  4. Whether Santhara is punishable under Section 309 of the Indian Penal Code, 1860, and facilitating its execution is punishable under Section 306 of the Indian Penal Code, 1860?

Decision given by the Rajasthan High Court

The Nikhil Soni decision has ramifications not just for the liberties provided by the Constitution to non-sectarian groups, but also for the ongoing argument over the right to die with dignity. The key takeaways from the judgement are provided hereunder: 

  1. The argument that Santhara or Sallekhana is an essential religious practice of the Jain religion has not been established in order to save the practice of Santhara or Sallekhana in the Jain religion from the vice of criminal offence under Section 309 IPC, 1806 which provides for the punishment of suicide, and Section 306 IPC, 1806 which provides for the punishment of abetment of suicide.
  2. Santhara or Sallekhana is not suicide because it is a voluntary act of giving up one’s body for salvation that is not violent in any way, but it is legal religious practice guaranteed by Articles 25 and 26 of the Indian Constitution. The right to freedom of conscience and the right to freely profess, practice, and promote religion are constrained by the overarching and controlling principles of public order, morality, and health. Article 25’s right is subject to Article 21 of the Indian Constitution.
  3. The writ petition is granted with instructions to the State authorities to put an end to the practice of ‘Santhara’ or ‘Sallekhana,’ and to treat it as suicide punishable under Section 309 of the Indian Penal Code, 1860 and abetment under Section 306 of the 1860 Code. In any form, the State shall prohibit and outlaw the practice of ‘Santhara’ and ‘Sallekhana’ in the Jain religion. Any complaint filed in this regard will be treated as a criminal matter and investigated by the police in accordance with the law, based on the recognition of law in the Indian Constitution and in accordance with Section 309 or Section 306 of the Indian Penal Code, 1860.

Chandrakant Narayanrao Tandale v. the State of Maharashtra (2020)

In the present case of Chandrakant Narayanrao Tandale v. the State of Maharashtra (2020), the petitioner made extraordinary prayer seeking permission for active euthanasia through a registered medical practitioner by invoking Article 226 of the Constitution of India, before the Bombay High Court. The petitioner, aged about 81 years old, decided to donate his body to the respondent, Government Medical College and Hospital, Aurangabad for the purpose of research. The petitioner was also not mentally and physically able to face severe pain because of back disc problems and was bed-ridden. 

Issues raised before the Court of law 

  1. Whose consent is required in the situation of patients who are unable to articulate their desires because of their mental state, or because they are in a lifelong persistent vegetative state, or because of some other reason?
  2. How should the decision be made in cases of mentally incompetent patients about the withdrawal of life-saving measures?
  3. Whether active euthanasia should be granted to the petitioner or not?

Judgement delivered by the Bombay High Court

  1. When an adult with mental ability can exercise his right to refuse treatment or withdraw from treatment, the aforementioned right cannot be taken away from a person who is unable to make an informed decision owing to terminal illness or being in a persistent vegetative condition (PVS). There are three stakeholders in the event of a person suffering from an illness and receiving medical treatment, namely, the patient, his family members, and the doctor treating the patient. No one can make decisions about another person’s life unless he/she has the authority to do so under the law.
  2. True, the petitioner is 81 years old and suffers from a variety of ailments. He is in excruciating pain and misery on a daily basis, and it is becoming increasingly difficult for him to deal with such medical issues. His desire is to experience a “happy death” through active euthanasia with the assistance of a qualified medical practitioner. But active euthanasia is not permitted in India, and the same was made clear in the landmark judgement in the case of Common Cause. The right to life is guaranteed under Article 21 of the Constitution, but it does not include the right to die. The Hon’ble Supreme Court has prescribed the method for passive euthanasia in extreme circumstances as well.
  3. Active euthanasia is a form of euthanasia that is illegal. The distinction between “active” and “passive” euthanasia is that active euthanasia involves doing something to end the patient’s life, whereas passive euthanasia involves not doing anything that would have saved the patient’s life. Although the Court expressed sympathy towards the petitioner in this case, his prayer was not allowed. 

Global euthanasia and assisted suicide laws

An overview of the status of euthanasia in different countries has been outlined hereunder:

  1. Canada: Sue Rodriguez, dubbed “Victoria Woman,” was diagnosed with Lou Gehrig’s disease in 1991 and petitioned politicians to modify the statute prohibiting assisted suicide in 1992. Despite the fact that Rodriguez was found guilty by the Supreme Court of Canada, she had committed suicide in 1994 with the help of an unknown doctor.
  2. The Netherlands: In 2002, the county passed legislation to make assisted suicide and active euthanasia legal. Since 1984, however, the courts have allowed them. Doctors were given strict guidelines by the Dutch government. Patients who are in excruciating pain and have little possibility of recovery may request to die. He or she must have a thorough understanding of the patient’s condition and prognosis, and a second doctor must concur with the choice to assist the patient in dying.
  3. Belgium: In 2002, Belgium made euthanasia lawful. If the patient’s competency is in dispute, two doctors must be involved, as well as a psychologist. The doctor and the patient can agree on a fatal injection or a prescription overdose as a method of death.
  4. Switzerland: Since 1941, assisted suicide by a physician and a non-physician has been legal, but euthanasia has been prohibited. Three right-to-die organisations in the country provide counselling and lethal medications to terminally ill persons. Injection-based death is prohibited.
  5. Britain: In May 2006, a Bill that would have legalised assisted suicide for terminally sick people was defeated in the House of Lords.
  6. United States: Passive euthanasia is authorised in only three US states, namely, Oregon, Washington, and Montana.

Countries where euthanasia is legal 

  1. Till date, euthanasia has been legalised in the Netherlands, Belgium, and Luxembourg. PAS is also legal in the Netherlands and Luxembourg. The states of Oregon and Washington authorised PAS in 1997 and 1999, respectively, but euthanasia remains illegal in the United States. The status in Montana is currently unclear. In 2010, the state legislature passed a law legalising PAS, but it was recently defeated by the State’s Senate Judiciary Committee.
  2. After over 30 years of public debate, euthanasia and assisted suicide were fully allowed in the Netherlands in 2001. The Royal Dutch Medical Association has collaborated with the country’s court system to develop and adapt standards and procedures for administering and controlling euthanasia since the 1980s. Despite strong resistance, especially from the Belgian Medical Association, Belgium legalised euthanasia in 2002, following a three-year public debate that included government commissions.
  3. The law was influenced by the experiences of the Netherlands and Oregon, and the public was assured that any flaws in Dutch law would be corrected in Belgian law. In 2009, Luxembourg approved euthanasia and assisted suicide. Switzerland is an outlier, in that aided suicide is allowed despite the fact that it is not technically legalised. This is due to a loophole in a statute that decriminalises suicide and dates back to the early 1900s. Euthanasia, on the other hand, is prohibited. A person who is committing suicide with the help of another person is allowed to do so as long as the other person has no selfish intentions and stands to benefit personally from the death. Unlike other jurisdictions, Switzerland enables non-physicians to help people die via euthanasia or assisted suicide.
  4. Safeguards, criteria, and procedures were implemented in all of these nations to regulate the practices, ensure social oversight, and prevent euthanasia and assisted suicide from being abused or misused. Some criteria and methods are consistent across jurisdictions, while others differ by country. A closer examination of the extent to which these rules and protections have been able to control practices and prevent abuse is warranted, particularly by states considering legalising euthanasia and PAS. 

Switzerland 

  1. Switzerland is probably the first country that springs to mind when it comes to physician-assisted suicide because it enables it without a minimum age requirement, diagnosis, or symptom state.
  2. Assisted suicide, on the other hand, is banned if the intentions are “selfish,” such as if the person assisting the death stands to inherit sooner or doesn’t want the responsibility of caring for a sick person. In this country, euthanasia is not permitted.
  3. In 2018, 221 people visited the Dignitas clinic in Switzerland for assisted suicide, 87 among them were from Germany, 31 from France, and 24 from the United Kingdom. According to the Campaign for Dignity in Dying, a British person used to travel to Dignitas for help to die every eight days.
  4. About 1.5% of Swiss deaths are the result of assisted suicide.

Netherlands

  1. In the Netherlands, euthanasia and assisted suicide are authorised in circumstances where someone is suffering unbearably and there is no hope of relief. There is no condition that you be terminally ill or that you wait for a certain amount of time.
  2. The Dutch government authorised proposals in October 2020 to allow euthanasia for terminally ill children aged one to twelve. According to the BBC, the health ministry stated that the rule modification would save some youngsters from “suffering endlessly and unbearably.”
  3. For those under the age of 16, parental permission is required. Before assisted dying can be allowed, a variety of checks must be completed. Doctors who are considering legalising assisted dying must speak with at least one other doctor to ensure that the patient fits the requirements.

Spain

  1. In March 2021, Spain made it lawful in certain situations for people to take their own lives.
  2. According to the BBC, the rule permits adults with “serious and incurable” conditions that inflict “unbearable suffering” to opt to end their lives. When making the request, the adult must be a Spanish national or legal resident who is “completely aware and conscious” of the situation. The request must be filed twice in writing.
  3. In Spain, aiding someone to die was punished with up to ten years in prison prior to the law’s passage.

Belgium 

  1. Belgium permits euthanasia and assisted suicide for people who are in excruciating pain with no hope of improvement. There is a one-month waiting time before euthanasia can be conducted if the patient is not terminally sick.
  2. Belgium does not have an age limit for children, but they must have a fatal illness to be approved.

Canada 

  1. Canada’s statute on assisted dying was expanded in March 2021. Adults with a chronic and incurable “disease, illness, or disability” who are in an advanced condition of dying and suffering can now request a medically assisted death, according to the New York Times.
  2. Previously, euthanasia and assisted suicide were only approved for persons suffering from “grievous and irreversible disorders” whose death was “reasonably foreseeable.”
  3. According to the BBC, medically assisted deaths accounted for 1.89 percent of all deaths in Canada in 2019.
  4. Only euthanasia is legal in Quebec.

Luxembourg

In Luxembourg, assisted suicide and euthanasia are both allowed for adults. Patients must be suffering from an incurable illness that causes them constant, terrible mental or physical pain with no hope of recovery.

Colombia 

  1. In 1997, Colombia became the first Latin American country to decriminalize euthanasia, with the first death occurring in 2015.
  2. According to the Rio Times, the Colombian Constitutional Court expanded the law on euthanasia or assisted death to include cases of non-terminal illnesses in July 2021, “provided that the patient is in intense physical or psychological suffering, resulting from bodily injury or serious and incurable illness.”

Australia

  1. After 20 years and 50 failed efforts, the Australian state of Victoria became the first in the country to enact voluntary euthanasia legislation in November 2017. In 1997, the Australian Senate abolished the law after a popular outcry against the 1995 Bill that enabled it.
  2. You must be an adult with decision-making ability, a resident of Victoria, and suffering from intolerable pain owing to a disease with a life expectancy of less than six months, or 12 months if suffering from a neurological illness, to qualify for legal approval for euthanasia.
  3. The idea of assisted dying cannot be brought up by a doctor; it must be brought up by the patient first. You must submit three requests to the scheme, one of which must be in writing. According to the Guardian, you must next be evaluated by two competent doctors, one of whom is a specialist, to determine your eligibility.
  4. If you qualify, you will be given medications that you must store in a “locked box” until a time that you specify. A doctor can provide a deadly injection if you are unable to administer the fatal medications yourself.
  5. Since then, Victoria has been joined by Western Australia, South Australia, and Tasmania in legalising voluntary assisted death. And, despite being one of the most conservative states in Australia, Queensland became the sixth to allow voluntary euthanasia in September 2021, with an overwhelming majority of MPs voting in favour.
  6. According to the Guardian, voluntary assisted dying will be limited to persons who have an advanced and progressive disease that causes intolerable suffering and is predicted to kill them within a year.

France 

  1. In France, palliative sedation, in which a person can want to be heavily drugged until death, is legal, but assisted dying is not.
  2. In April 2021, a proposal in the French parliament to legalise assisted dying for persons with terminal conditions was defeated.
  3. Neither President Emmanuel Macron nor his government has commented on the subject, though Macron was cited as saying in 2017 that “I myself wish to pick the end of my life,” according to France 24.

USA

  1. Assisted death is currently legal in some states. Doctor-assisted suicide for terminally ill patients is legal in Oregon, Washington, Vermont, California, Colorado, Washington, DC, Hawaii, New Jersey, Maine, Montana, and New Mexico, according to state statutes or court judgements.
  2. Doctors can issue people prescriptions for the lethal medications, but they must be administered by a healthcare practitioner.
  3. A 15-day waiting period is required between two spoken requests, and a two-day waiting period is required between a final written request and the fulfilment of the prescription in all states. 

New Zealand

  1. The BBC reported that New Zealanders decided to legalise euthanasia in October 2020, calling it a “win for compassion and generosity” by activists.
  2. If approved by two doctors, terminally ill persons with less than six months to live will be able to choose assisted death. It was scheduled to take effect in November of 2021.

Countries where euthanasia is not legal

Although it is clear from the aforementioned list of countries that the remaining countries not included in the list contribute to declare euthanasia illegal within their jurisdiction, a general, non-exhaustive list of such countries have been provided hereunder.

Chile

In Chile, active euthanasia and assisted suicide are illegal. However, passive euthanasia is legal. The right to informed consent has been in place since 2012, and it empowers people to accept or refuse any medical treatment. When a patient’s life is on the verge of ending, they have the option of refusing treatment. The Congress is currently debating a bill that would legalise active euthanasia and assisted suicide. On December 12, 2020, the Chamber of Deputies passed the bill in its entirety.

Czech Republic

Euthanasia and assisted suicide are prohibited in the Czech Republic. Both are deemed homicides in that jurisdiction. Articles 143 and 144 of the Czech Republic’s Criminal Code make it illegal.

Finland

Active euthanasia is not legal in Finland. Passive euthanasia, however, is legal.

United Kingdom

In the United Kingdom, active euthanasia is prohibited. Anyone caught assisting suicide or attempting suicide is breaking the law, and they can be charged with assisting suicide or attempted suicide. Lord Joffe attempted four times between 2003 and 2006 to introduce measures that would have legalised voluntary euthanasia, all of which were rejected by the UK Parliament. By way of advance decisions allowing patients the right to decline life-saving treatment, passive euthanasia is legal.

Turkey

In Turkey, euthanasia is severely prohibited. Under the provisions of Article 84 of the Turkish Criminal Law, an aide who assisted or encouraged a person to commit suicide or other means of self-destruction will be penalised for assisting and encouraging suicide. In the case of active euthanasia, Article 81 of the same legislation states that anyone who commits this act shall be tried and sentenced to life in prison, exactly as anyone who commits a simple murder.

India

In India, passive euthanasia is legal. The Supreme Court of India legalised passive euthanasia by withdrawing life support from people in a permanent vegetative condition on March 7, 2018. Active euthanasia, such as the delivery of fatal chemicals, is prohibited.

Ireland

A doctor (or anyone else) cannot actively contribute to someone’s death in Ireland. If a person (or their next of kin) requests it, it is not illegal to stop life support and other treatments (the “right to die”). According to a poll conducted by the Irish Times in September 2010, the majority of respondents (57%) felt that doctor-assisted suicide should be permitted for terminally ill patients who desire it. After being sedated, doctors can stop giving a patient life-sustaining therapies like ventilators and feeding tubes, enabling the patient to die peacefully in their sleep. This only happens in particular situations. The Dying with Dignity Bill passed its second reading on October 7, 2020, and a delaying amendment was defeated, bringing Ireland closer to legalising assisted dying.

Israel

The Israeli Penal Code prohibits causing another’s death, as well as causing another’s life to be cut short. In some situations, active euthanasia has been legalised in Israel. Passive euthanasia could be administered using a switch mechanism similar to Sabbath clocks, according to ideas made in 2005.

Italy

Active euthanasia is prohibited by Article 579 of the Italian Criminal Code. Following a petition signed by over a million individuals, the Constitutional Court dismissed a request to hold a referendum on the legalising of euthanasia in February 2022.

Latvia

Euthanasia is not legal in Latvia. However a doctor may refuse further treatment of a patient if they believe it is the best course of action.

Lithuania

Euthanasia is not legal in Lithuania. However, as of 2016 a draft of a law about the right to die has been produced

Moldova

All forms of euthanasia are banned in Moldova. They are prohibited by Articles 150 and 162 of the Criminal Code.

Mexico

Active euthanasia is illegal in Mexico, but since 7 January 2008, the law has allowed terminally ill people or their closest relatives if they are unconscious in Mexico City, the central state of Aguascalientes (since 6 April 2009), and the western state of Michoacán to refuse medication or further medical treatment in order to prolong their lives (also known as passive euthanasia).

Norway

Active voluntary euthanasia remains illegal, though a caregiver may receive a reduced punishment for taking the life of someone who consents to it.

Peru

Although there have been some attempts to alter Peruvian legislation, euthanasia is still considered a crime. The Reviser Special Commission of the Penal Code of the Parliament voiced its support for a proposal to change Article 112 of the Penal Code in October 2009, but the proposal failed. However, in early 2015, the situation of young Valentina Maureira, a Chilean woman suffering from cystic fibrosis, an incurable disease, and who requested that euthanasia be legalised in her country, drew the attention of Chilean and international media.

Philippines

In the Philippines, euthanasia is prohibited. The Philippine Senate debated whether or not to enact a measure authorising passive euthanasia in 1997. The Catholic Church in the country was outspoken in its opposition to the law. The Philippines would have become the first country to legalise euthanasia if it had been approved. Doctors who help a patient in dying might be imprisoned and punished with malpractice under present legislation.

Russia

Article 45 of Russian Federal Law No 323 prohibits euthanasia as of November 2011. However, there is no law that particularly punishes illegal euthanasia procedures. In Soviet Russia, active euthanasia was temporarily legalised in 1922.

Conclusion

Suicide prevention is not just a social and public health goal in India, but also a traditional mental health practice. As a result, the time has come for mental health practitioners to take a more proactive approach to suicide prevention. In addition, the government should initiate a national discourse on suicide prevention. Human life, however, is the most valuable gift of nature by its very nature. As a result, it should not be taken away by means that are not natural, such as suicide. However, one or two judgements by the judiciary will not be enough to fix this complex socio economic problem. To totally fix this challenge, consistent and concerted efforts will be required. In light of the growing problem of suicide, the three branches of government, namely, the judiciary, legislature, and executive branch, as well as citizens, must work together. Only then will the problem of suicide be addressed.

References

  1. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3440914/#:~:text=In%20India%2C%20euthanasia%20is%20a,the%20help%20of%20family%20members.
  2. https://thewire.in/health/passive-euthanasia-now-a-legal-reality-in-india.
  3. https://www.scconline.com/blog/post/2020/11/28/euthanasia-indian-view/.

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Doctrine of double effect

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This article is by Shivi Khanna, a student of the School of Law, Sushant University, Gurugram. This article is an attempt to understand the doctrine of double effect and its impact on English and Indian Law.

It has been published by Rachit Garg.

Introduction

Although the terms ‘ethics’ and ‘morality’ take on a synonymous meaning when used by laymen, these terms do in fact have different connotations. Morality is more inclined towards a person’s unique and individual outlook on what constitutes ‘good or bad.’ Whereas, ethics is the benchmark or standard by which the community or society determines what constitutes good or bad. Therefore, there is a possibility that ethics and morality may come into conflict in case of inconsistency.

For example, a patriarchal society may view women as inferior and subservient to men. Based on the ethics of the patriarchal society, a woman venturing out of the house to work in an office instead of staying home and looking after the children is considered bad. Whereas, an individual in the community may have the personal belief that impeding the empowerment of women is against his morals.

Therefore, we can see that the scope of morality applies to a narrower, individualistic level. On the other hand, ethics is determined by the community or society as a whole. Another example being that society as a whole considers the act of looting and killing as morally bad acts. However, a thief or murderer may not consider committing the aforementioned crimes as against his/her morals.

Morality has often been linked to religious themes and theology. Whereas, ethics has been applied to secular fields such as law, medicine and business. Ethics determines the code of conduct for these professions, creating a standard for what is considered correct and ethical to do. The doctrine of double effect is a concept that is relevant to both morality and ethics, and is most frequently used in medical cases where doctors often have to make difficult decisions with respect to the patient’s comfort versus the patient’s life.

Historical background of the doctrine of double effect

Sir Thomas Aquinas had propounded that the killing of one’s assailant in an act of self-defence was justified. This is because any action could have more than one effect, despite the intention of the person making the action. Similarly, self-defence would result in the intended effect of managing to preserve one’s life, while the side-effect would be to take the assailant’s life. However, Aquinas also laid down the condition that for self-defence to be lawful, it must not be in excess or inappropriate. For example, if the assailant has already been sufficiently subdued that he cannot attack again, it is not justifiable to continue to inflict fatal injuries upon him. Therefore, key elements of the doctrine of double effect come about – the action must not be in excess and the action should not be inappropriate with respect to the context of the situation.

Later, as the understanding of the doctrine evolved, it came to be understood as the side-effect caused as a result of a morally good action. However, the morally good action should not have been caused by means of the morally bad side-effect. It is still unlawful to do something that is morally bad with the justification that the result would be morally good. For example, robbing from the rich and giving to the poor would not be able to use this doctrine as justification. 

What is the doctrine of double effect

According to the doctrine of double effect, if a person’s behaviour or conduct is intended to achieve a goal which is morally good, however, as a result, there is a morally bad side-effect, then it is still acceptable to make that particular behaviour or conduct. Even if the person anticipated that his decision would result in the morally bad side-effect, his decision is still considered ethically acceptable.

Let us look at a few simple examples to understand the application of the doctrine of double effect:-

  • ‘B’ and ‘C’ are married couples. ‘A’ becomes aware of the fact that ‘B’ is committing adultery with ‘D’ and ‘C’ has no knowledge of it. ‘A’ with the intention of preventing ‘C’ from continuing to be deceived tells ‘C’ about ‘B’s’ adultery. ‘A’ has a morally good intention. However, as a result of his informing ‘C’ about ‘B’s’ adultery, the morally bad side-effect is that the couple gets divorced.
  • ‘X’ is driving ‘Y’s’ car. In order to avoid hitting ‘Z’ who suddenly appears on the road, ‘X’ swerves and hits a tree on the pavement. ‘X’ has achieved the morally good goal of saving ‘Z’s’ life but the morally bad side-effect is that ‘Y’s’ car ends up damaged.

The doctrine of double effect is closely tied to the fields of law and medicine. For example:-

  • If a doctor has to amputate a patient’s limb which has been infected in order to save the patient’s life.
  • A doctor prescribes certain drugs to terminally ill patients, which may provide some relief for their discomfort and pain. However, a side-effect of the medicine is that the patient’s body gets damaged or the patient’s life expectancy is negatively impacted.

The justification behind a doctor prescribing pain-relievers such as morphine to terminally ill patients is that the doctor does not intend to kill the patient. In fact, the doctor merely intends to relieve the patient’s pain which may be the most humane action in the case of terminally ill patients who suffer excruciating pain. The harmful impact on the patient’s body or the patient’s quicker death is only the resulting side-effect.

Scenarios where the doctrine may be applied

The doctrine of double effect may come up in the following scenarios:-

  • An extremist regime carrying out ethnic cleansing is an intentional act of committing systematic mass slaughter through genocide, and cannot be justified. Whereas, special forces soldiers from the military carrying out raids in hostile territories for the purpose of hunting down organised crime groups such as drug cartels is justified. Even if the military anticipated that the raid may cause a small number of civilian deaths, this is merely a negative side-effect of the action to eradicate dangerous criminals engaged in the drug trade.
  • A firefighter entering a building on fire to save the lives of the residents trapped in the building is an act of self-sacrifice. The firefighter acts to save lives while foreseeing that his actions may lead to his death as an unintended consequence. However, when a person commits suicide by self-immolation, he intends to take his own life. Therefore, the act of risking your life in an effort to rescue others is justified, whereas, taking your own life through suicide is not justified.
  • A doctor prescribes heavy painkillers to reduce the pain of a patient while foreseeing that the drugs may reduce the patient’s life span. Another case is where the doctor prescribes heavy painkillers in order to kill the patient and end his suffering. The former can be justified by the doctrine while the latter cannot.
  • In the case of a doctor performing an abortion to save the life of a pregnant mother, the intention is to save the mother’s life while the death of the foetus would be a foreseen yet unintended consequence. However, simply performing an abortion when there is no foetal abnormality or danger to the life of mother and child, the doctrine does not apply.

Principles of the doctrine of double effect

The following are the principles of the doctrine of double effect:-

  • There should be no causal relationship between the good and bad result i.e. doing something morally bad with the intention of getting a morally good outcome is not acceptable.
  • The doctrine cannot be applied in situations where the action is in excess or inappropriate.
  • In the case of terminally ill patients, there must be a guarantee that their condition is ‘terminal’ or ‘fatal.’
  • The person doing the action has the duty to minimise the risk.
  • The doctrine of double effect has restrictions and cannot be applied to justify all controversial actions.

Elements of the doctrine of double effect

The doctrine of double effect has the following ingredients:-

  • The good result should not have a causal relationship with the bad result. To put it in simpler terms, the good result must not come about as a result or consequence of a morally bad action. For example, if a doctor prescribes a drug as a painkiller to a terminally ill patient. However, the only way the painkiller alleviates pain is by killing the patient, then the doctrine does not apply.
  • Even if prescribing painkillers or other heavy drugs is necessary for pain relief, then the doctor cannot go beyond the necessary dosage needed to alleviate pain. Prescribing drugs in a large enough quantity to make the patient overdose cannot be justified by the doctrine. The doctrine cannot be used as a justification for the doctor to overdo the dosage, or make any other inappropriate prescription. Essentially, the action cannot be in excess or inappropriate.
  • The correct medicine must be prescribed for the relevant disease or ailment. For example, drugs that prevent blood from clotting should not be prescribed to a patient with heavy wounds.
  • Other than treating the root cause of the disease or ailment, it is also important to provide the correct treatment for the symptoms. For example, prescribing a fatal dose of drugs to treat headache, when the patient was not suffering from headache but heavy bleeding.
  • The patient’s condition must be fatal i.e. without hope for recovery.

Misinterpretation

The doctrine has been misunderstood as a valid excuse to allow an individual to cause harm to others as long as his intentions were inclined towards achieving something morally good. However, the individual making the action also has the responsibility to minimise the risk of the negative side-effect. Furthermore, the doctrine has restrictions as well, such as not acting in excess, inappropriately or without just cause.

Criticisms of the doctrine of double effect

The doctrine of double effect has been criticised on the following points:-

  • Just because an action or conduct has a morally good result does not absolve the individual from his liability when it comes to morally bad result. Being able to anticipate the consequences of your actions means that you must also take responsibility for them.
  • A school of thought believes that the intention of the doctor should not hold much weight. Some things are objectively right or wrong and the reasons or intentions of the person should not matter. This view is in contrast to the typical approach taken in criminal law where the intention of the accused is taken into consideration.
  • Another view contests the basis of the doctrine of double effect which assumes that death is a negative result. Sometimes, when taking a terminally ill patient’s point of view, being free from pain and agony is a good result. Therefore, this view challenges the basis of the doctrine.
  • The questions of morality with respect to the doctrine of double effect often yield unconventional results. For example, if a doctor aims to only relieve pain is compared to a doctor who aims to help the patient die faster, which one should be considered morally superior.

Sulmasy test

The doctor can check his intention by asking the question – after performing a set of actions, for example, prescribing a fatal dose of drugs, the patient miraculously survives. Would the survival of the patient lead the doctor to feel that his goal had not been accomplished?

The doctrine of double effect and war

War scenarios are inherently situations where common sense questions related to ethics and morality are subverted. Although it is understood as a part of international customary law that civilians of enemy countries should not be attacked, in the chaotic situation of fighting civilian fatalities inevitably do happen.

The doctrine of double effect is used to justify the military’s actions in cases where they do not directly target civilians but as a result of their actions civilians inevitably end up dying. For example, bombing a hostile military encampment leads to the death of civilians living in settlements nearby. The civilians’ deaths were merely a negative side-effect, thus, the military is not liable.

However, this doctrine does not condone weapons of mass slaughter such as nuclear, biological and chemical weapons – weapons that make no distinction between the target and civilians.

Doctrine of double effect and euthanasia

Euthanasia can be understood as the process of ending the life of a terminally ill patient suffering from the agony or pain of illness. Doctors can help the patient end their suffering by withdrawing life-support or prescribing drugs that relieve pain but hasten the patient’s death. In Vacco v. Quill (1997), the US Supreme Court observed that the doctrine of double effect can be used to give validity to the practice of prescribing painkillers to patients in palliative care and also the practice of terminal sedation.

In 1997, Oregon was the first state in the US to remove the practice of doctors euthanising patients from the category of criminal offences. Furthermore, in South Korea in 2009, in the case of a vegetative woman being removed from life-support, the right to die with dignity was recognised.

Active euthanasia is actively giving a fatal dose of drugs to terminally ill patients. Whereas, passive euthansia is withdrawing nutrition or life support to hasten the patient’s death.

The doctrine of double effect and English Law

Euthanasia has not received legal sanction in the United Kingdom. However, doctors are allowed to prescribe a fatal dose of painkillers to terminal patients. The key is that the doctor’s intention should be to relieve pain and the faster death of the patient should be a foreseen yet unintended consequence.

The doctrine of double effect and Indian Law

Article 21 of the Indian Constitution protects the individual’s life and liberty from encroachment by subjecting them to the procedure established by law. There has been some debate as to whether Article 21 encompasses the right to die with dignity.

In the Aruna Ramchandra Shanbaug v. Union of India (2011) judgement, a rape victim who had been in a vegetative state for decades had a petition filed on her behalf for euthanasia. The Supreme Court granted the appeal for euthanasia when passive euthanasia was legalised in India.

The decision to opt for passive euthanasia requires consent from parents, spouse, in their absence ‘next friend’. The court must also give its approval.

Conclusion

When it comes to ethics and morality, the waters run deep and murky, and the debate is endless. The doctrine of double effect has also been the subject matter of contention amongst scholars and philosophers – whether it holds weight as the justification for controversial actions taken in extreme scenarios. The doctrine of double effect and its validity with respect to justifying physician-assisted suicide and passive euthanasia also remains a topic of contention. 

References


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Difference between cheque and bill of exchange

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litigation strategy for 138 NI matters

This article is written by Akshaya V, pursuing LLB from CMR University, School of Legal Studies. This article explains in detail the concept and working of cheques and bill of exchange and the key differences and similarities between them.

This article has been published by Sneha Mahawar.

Introduction 

The Negotiable Instruments Act of 1881 deals with negotiable instruments such as bills of exchange, promissory notes, cheques, etc. Chapter XVII contains Sections 138 to 142, introduced to repose confidence in the efficacy of banking operations and thereby give credibility to negotiable instruments used in all the business transactions. According to Section 13 of the Negotiable Instruments Act of 1881, A “negotiable instrument” means a promissory note, bill of exchange, or cheque payable either to order or to bearer. Thus, a negotiable instrument simply means any written document transferable on delivery. 

Meaning of a cheque 

A cheque is a commonly used instrument for paying in all business transactions. A cheque that is dated, written, and signed directs a bank or a financial institution to pay a sum of money to the bearer. When a payee presents a cheque to a bank or a financial institution, the funds are drawn from the payer’s bank account as if an instruction is given to transfer a sum from the payer’s account to the payee’s account. The person who is paying the amount is called the “payer” and to whom it is paid is known as the “payee”. Cheques are usually written against an account to which it is to be paid but it is also used to negotiate funds from savings or any other type of account. 

Section 6 of the Negotiable Instruments Act of 1881 states that a “cheque” is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.

Explanation –

  1. “a cheque in the electronic form” means a cheque that contains the exact mirror image of a paper cheque, and is generated, written, and signed in a secure system ensuring the minimum safety standards with the use of a digital signature (with or without biometrics signature) and asymmetric cryptosystem; 
  2. “a truncated cheque” means a cheque that is truncated during a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on a generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing. 

Features of a cheque

Cheques are always drawn from a banker and are payable on demand even without a formal acceptance. It is payable either to a bearer on demand or to the drawer himself. In some cases, there may be more than two parties to a cheque. The name and the details of the person filling the cheque are found on the top-left-hand side. The bank’s name that has the drawer’s account also appears on the cheque. The drawer has to fill the following lines:

  1. The date is on the top–right corner of the cheque.
  2. The payee’s name is on the first line at the centre of the cheque by the phrase by giving the name of a person or business.
  3. The amount (in words) below the line of the name of the payee. 
  4. The amount in rupees is in the small box next to the payee’s name. 
  5. Signature on the bottom right-hand corner of the cheque. 

At the bottom edge of the cheque underneath the signature line of the drawer, the numbers represent the bank’s routing number, identification code, and the transit number where the account is held. 

Parties to a cheque

The parties to a cheque include a drawer, drawee, and payee. A drawer is a person who draws the cheque, the drawee is the banker on whom it is drawn and a payee is a person who is liable to pay the amount on the cheque. Apart from these parties, there can also be a holder who generally is the original payee. 

Types of cheques

  1. Certified cheque – This cheque verifies and certifies that the drawer’s account has sufficient funds to honour the cheque amount and is guaranteed not to bounce. It also verifies if the drawer’s signature is genuine or not. Certified cheques are used when the recipient is unsure of the creditworthiness of the drawer or does not want the cheque to bounce. 
  2. Cashier’s cheque – This cheque is given by the bank or a financial institution and signed by the cashier of the bank, shifting the burden on the bank to handle the funds. When the amount involved in a transaction is large, such as buying a property or an asset, a cashier’s cheque is required. 
  3. Payroll cheque –  A payroll cheque is also called a paycheque issued by an employer to compensate the employee for their work. It includes hours worked, employees’ pay, and distributing payments. However, in recent years, paycheques paved way for direct deposit systems and other forms of electronic transfer
  4. Bounced cheque – The cheque cannot be negotiated when it is written for an amount larger than what is in the bank account of the drawer. This is referred to as ‘cheque bounce’ because it cannot be processed further owing to insufficient funds in the account. A bounced cheque is bound to incur a penalty fee to the drawer and sometimes even to the payee.

Advantages of using cheques

  1. Simple: It is easier for some companies, particularly small ones or startups, to receive cheques as payment since they can leave the processing end to the bank instead of having to handle it themselves.
  2. Leeway of funds: Cheques require some time to clear. For small businesses, this is a positive aspect. In case of financial emergencies, the companies will have some lines of credit to fall back on during this period. You can then arrange for funds to make sure that the cheque clears. 
  3. Rectification of wrong transactions: Usually, it takes time for a cheque to be processed after it is written and deposited in a bank. If it is discovered that the cheque is not approved or that any of the data given is incorrect, it can be rectified before it gets cleared. However, because electronic transaction techniques are instantaneous, the procedure for resolving a problem can be more time-consuming.
  4. Widens customer base: It is important to remember that many people still prefer cheque payments. They could potentially be having technical difficulties with their online payment alternatives. The customer base becomes limited when the business refuses to consider opportunities such as cheque transactions. Due to limitations in the payment methods allowed, there may be a postponement of the conclusion of a contract. Because you include those who are more comfortable with cheque transactions, your consumer base expands as well.

Disadvantages of using cheques

  1. Potential fraud: Despite the security risks of internet banking, check fraud still accounts for a significant portion of all financial fraud. Someone can write and sign a check with ease, but it can be tough to track down. It’s incredibly difficult to recoup cash once they’ve been gained in this way, whether it’s by someone writing false cheques from the company or receiving bogus cheques for payments.
  2. Time for clearance: Many checks can take up to five days to clear, which means we have to wait for the money to arrive in our bank account. If we need money to keep our firm running, this is not an ideal option.
  3. Cheques may be returned or stopped: If we are into the business of selling, this is a critical consideration. The consumer or client might pay with a check and then pick up the products. They may then refuse to pay or may not have sufficient funds in their account for the cheque to clear. In that scenario, you will be responsible for paying for the goods. In most situations, recovering funds from such clients is likewise a lengthy process.
  4. Book-keeping: Whenever a cheque is written, we have to make a note of the cheque number as well as the account holder’s information. Otherwise, we will have to wait until the cheque clears before we can see the transaction information on our account statement. However, when we employ electronic banking techniques, we get records very quickly as we will receive a transaction ID as well as full payment details via SMS or email. It can be extremely useful if a transaction becomes disputed in the future.
  5. Reapply for cheque books: If we run out of cheque leaves in a chequebook, we will need to apply for a new one, especially when there are huge transactions. We  must also collect these cheques in person or create an authorisation letter allowing someone else to do so on our behalf.

Crossing of cheques

A cheque can be either open or crossed. An open cheque is the bearer cheque payable on the counter when presented by the payee to the paying bank. On the other hand, a crossed cheque is not payable on the counter but collected through a banker, which is then transferred to the payee’s bank account. By crossing a cheque, an instruction is given to the paying banker for payment to a particular banker and not over the counter. This not only provides security for the amount but also traces the person receiving the cheque. The inclusion of words like “Not negotiable” or “Account payee only” is necessary, and restricts the negotiability of the cheque. However, a crossed bearer cheque can be negotiated by delivery and a crossed order cheque by endorsement and delivery. 

There are four types of crossing cheques dealt with under Sections 123-131A of the Negotiable Instruments Act:

  1. General crossing – An addition of two parallel transverse lines across the face of the cheque. The words ‘and Co.’ or ‘not negotiable’ between them. The money is payable to any banker and for this purpose, two parallel transverses are necessary. The holder of the cheque will also receive the cheque through an authorised bank. The words ‘not negotiable’ is significant as they restrict the negotiability and the transferee will not be given any title better than that of a transferor. 
  2. Special crossing – In special crossing, the words ‘not negotiable’ is not required but the addition of the banker’s name must be on the face of the cheque. The paying bank will pay the banker whose name appears in the crossing or to his authorised agent. Therefore, the paying banker is entitled to honour only the name of the bank mentioned in the crossing and not otherwise. 
  3. Account payee crossing – This type of crossing restrains the negotiability of the cheque. It instructs the collecting banker that the amount should be credited only to the payee’s account or his agent. When a collector transfers the credit of the cheque bearing crossing to any other bank account, he shall be guilty of negligence. 
  4. Non-negotiable crossing – Non-negotiable crossing cheque is transferable and the person who takes the cheque with general or special crossing with the words ‘not negotiable’ is not entitled to give a better title than the person from whom the cheque has been taken at the time of transfer. However, a non-negotiable crossing cheque takes away the essential character of that of a person who receives it in good faith for a value without knowing the defects in the title and before maturity, gets a good title to the instrument. It ensures that both titles of the transferor and transferee are good and prevents any taint that may be in the title. 

Sample cheque

UTI Bank     (125678) KARAMANA                              KAIRALI PLAZA, NH-47, KARAMANA                          __ __ __ __ __ __ __ __            THIRUVANANTHAPURAM – 695002                              D  D   M  M   Y  Y  Y   Y            IFS CODE: SBIN0011234
PAY _____________________________________________________________ OR ORDER RUPEES 
______________________________________________________________Rs. 50,000 /-
A/c No.00012222345656767MULTI-CITY CHEQUE Payable at Par at All Branches of UTI                                Please sign
560049 798062 256587 0654498 31

*Disclaimer: This is just a sample of how a cheque is written.

Section 138 of the Negotiable Instruments Act, 1881    

Sections 138 – 142 of the Act deal with penal provisions of negotiable instruments to ensure that obligations undertaken by issuing cheques are honoured. Section 132 provides the ingredients for filing cheque dishonour cases. They are:

  1. a person must have drawn a cheque for discharging his liability or debt;
  2. the said cheque must have been presented to the bank within three months;
  3. it has been returned by the restricts to insufficient funds or that it exceeds the amount to be paid from that account of the bank;
  4. the payee has demanded the money within fifteen days of the receipt of information by him from the bank about the return of the cheque as unpaid, and
  5. the drawer fails to pay on the payee’s demand within fifteen from the date of the said notice.

Procedure followed in complying with Section 138 of the Act is as follows:

  1. A legal notice is issued to the drawer of the cheque within fifteen days of dishonour of the cheque through a registered post with all relevant details and facts. The drawer is given a further period of fifteen days to make the payment and if the payment is made, the matter gets settled. On the other hand, if payment is not made, criminal proceedings under Section 138 of the Act will be initiated against the drawer in a magistrate’s court within the jurisdiction. 
  2. The complainant is then required to appear in the witness box and provide details for filing the case. The court will then issue summons to the accused for appearing before the court. 
  3. If the accused failed to appear after issuing summons, the court may issue a bailable warrant, and subsequently, a non-bailable warrant may be issued if the accused does not appear. 
  4. Once the drawer appears, he may file a bail bond to ensure he appears during the trial. After which, the plea of the accused is recorded. If he pleads guilty, the court will decide his punishment. In denial of his charge, he will be served with a copy of his complaint. 
  5. The complainant will then place evidence and so will the accused with all the supporting documents. Cross-examination takes place after this process. 
  6. After final arguments, the accused may be acquitted or convicted. If convicted, adequate punishment is given. If the accused is not satisfied with the judgement, he may go for an appeal in the Sessions Court. 

Bill of exchange 

When goods are sold or bought for cash, payment is received immediately. However, when goods are sold/bought on credit, payment is deferred until a later date. In such a situation, generally, the firm relies on the part of the buyer. In general, the company relies on the party to pay on the due date. To avoid the possibility of any delay or default, some firms use an instrument of credit through which the buyer assures the seller that payment will be made following the agreed terms. In India, instruments of credit have been used in the form of Hundies written in Indian languages since time immemorial. Now, the credit instruments are called Bill of Exchange, containing an unconditional order, signed by the maker to pay a sum of money on a certain date. Bill of Exchange is governed by the Negotiable Instruments Act, 1881

Section 5 of the Negotiable Instruments Act, 1881 states that a “bill of exchange” is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or the bearer of the instrument. 

From this definition, the following characteristics of a bill of exchange can be inferred:

  1. It must be in writing;
  2. It is a demand or order to make payment;
  3. It is unconditional;
  4. It must be signed by the maker;
  5. The payment that is to be made must be complete;
  6. It must be payable to a certain person;
  7. It may be paid either on-demand or on the expiry of a fixed time and;
  8. It must be duly stamped as per the law.

In most cases, a bill of exchange is served and drawn by the creditor upon his debtor. The exchange amount is payable either on-demand or on the expiration of a set period. 

Illustration 1: Amit draws a draft on Rohit for Rs. 10,000 payable after three months. Once accepted and signed, the draft becomes a bill of exchange. 

Illustration 2: Mr Shiv sells goods worth Rs. 75,000 to Mr Ram. However, Mr Ram is not able to pay the sum immediately. So, Mr Shiv, the seller draws on Mr Ram and he accepts the same. The bill of exchange is hence drawn for trade purposes. 

Illustration 3: Mr Hari issues a bill of exchange for Mr Jerry who has purchased goods worth Rs. 50,000 on 12.12.2021 on credit. Mr Hari is the creditor for Mr Jerry, who has also drawn a bill of exchange. Mr Jerry however accepted the bill on 25.12.2022 only. The bill becomes a bill of exchange from the date of acceptance. 

Features of a bill of exchange

  1. It is an instrument in writing;
  2. It is drawn for a specific amount on a specific person;
  3. It should be certain and agreed upon by both the parties;
  4. It contains an unconditional order to a person, ie., drawee;
  5. It specified the date on which the bill matures;
  6. It is signed by the maker(drawer) of the bill;
  7. It mentions the name of the bearer of the bill; 
  8. It creates trust between the parties to the transaction; 
  9. It is properly revenue stamped;
  10. It must be paid in the legal currency of the country. 

Parties to a bill of exchange 

There are three parties to a bill of exchange:

  1. Drawer – A bill of exchange is created by a drawer. A seller/creditor who is entitled to money from the debtor might issue the buyer/debtor with a bill of exchange. After drafting the bill of exchange, the drawer must sign it as the bill of exchange’s maker.
  2. Drawee – The person on whom the bill of exchange is drawn is known as the drawee. The buyer or debtor of the commodities on which the bill of exchange is drawn is known as the drawee.
  3. Payee – The payee is the individual who will receive the money. If the drawer of the bill retains it with him until the day of payment, he will be the payee. In the following circumstances, the payee may change: 

(i) if the drawer has received the bill discounted, the person who discounted the bill becomes the payee;

(ii) if the bill is endorsed in the drawer’s creditor’s name, the drawer’s creditor becomes the payee.

Types of bill of exchange

  1. Documentary bill of exchange: A documentary bill is a bill of exchange that is always accompanied by supporting documentation that establishes the validity of the trade or transaction that has taken place between the seller and the buyer. Invoices, receipts, bills of lading, railway bills, and other papers may be included. Documentary bills of exchange can be further divided into – 
  1. Documents against acceptance bills(D/A): A D/A bill refers to papers that are only given in exchange for the acceptance of a bill to the drawing. Following the transmission of documents, the bill is nullified or becomes obvious.
  2. Documents against payment bills(D/P): A D/P bill is one in which documents are supplied in exchange for payment of a bill. The banker keeps the documents once they’ve been delivered until the bill’s maturity date.

2. Demand bill: A demand bill is a bill that is payable on demand or when it is presented for payment, because the demand bill does not include a payment due date or time, the payment can be made at the time the bill is presented.

3. Inland bill: An inland bill is a bill drawn in India and payable exclusively in India or a bill written by an Indian resident in India or any other country. The domestic bill is the polar opposite of the foreign bill.

4. Usance bill: This is also known as a time bill because it is a bill that specifies the time for payment as the exact time and term indicated on the usage bill, it is considered a time-bound charge.

5. Clean bill: Clean Bill refers to a bill that has no supporting documentation. Because there are no documents involved, clean bills have a higher interest rate than regular documentary bills.

6. Foreign bill: A foreign bill of exchange is drawn and paid outside India. That which is not an inland bill is termed a foreign bill. It can be further divided into

  1. Export bill: A bill of exchange drawn by an exporter for a party outside India is termed as an export bill.
  2. Import bill: A bill of exchange drawn by an exporter outside India is called an import bill.

7. Accommodation bill: The term accommodation bill refers to a bill of exchange that is drawn and accepted for mutual assistance. Without a business transaction, this bill is for mutual benefit. There is no sale or purchase of goods or services involved. This bill contains an agreement between two parties to provide financial assistance to others.

8. Trade bill: A trade bill is a bill of exchange that is drawn and accepted to settle a trading transaction. The seller of the goods creates this bill of exchange, which the buyer accepts.

9. Supply bill: A supply bill is a bill that is drawn on a government agency by a supplier or contractor to deliver certain goods. The purpose of supply is to collect cash from financial institutions in exchange for pending payments to meet financial obligations. Government departments normally do not accept this type of business, but due to its non-negotiable characteristics, it is suitable for cash loans from commercial banks.

10. Fictitious bill: A bill in which the name of either of the party that is drawer or drawee or both are fictitious, is termed as a fictitious bill.

Working of a bill of exchange

The drawer hands the bill to the drawee, who signs it and seals it with an official stamp. As a result, the bill becomes a tradable instrument. The creditor can now collect this instrument and exchange it for cash by extending a bank or a corporation by paying a commission. This process is known as discount. Before the due date for payment, the bill may pass through multiple hands before the debtor or drawee pays the sum agreed upon between them.

Sample bill of exchange

Bangalore 17th April 2022
Rs. 1,00,000
Two months after the date, pay to me or my order, the sum of Rupees One Lakh Only, for valued received

STAMP

Accepted                                                                                                                                (Signed)(Signed)                                                                                                                                   KarthikKiran                                                                                                                                     MG RoadBanaswadi, Bengaluru – 560043                                                                           Bangalore- 560001

*Disclaimer: This is just a sample of how a bill of exchange is written.

Advantages of a bill of exchange

Bills of exchange are commonly used as credit instruments in business because of the following benefits:

  1. Relationship structure: A bill of exchange is a device that provides a framework for enabling a credit transaction on an equitable basis between the seller/creditor and the buyer/debtor.
  2. Clarity of terms and conditions: Just as the creditor knows when he will receive the money, the debtor is fully aware of the date by which he must pay the money. This is because the bill of sale clearly states the terms and conditions of the debtor-creditor relationship, such as the amount due, the due date, the interest to be paid if any, and the payment location.
  3. Convenient means of credit: A bill of exchange is a convenient form of credit that allows a buyer to purchase things on credit and pay off the balance at the end of the credit period. Even after the credit has been extended, the seller of goods can obtain payment promptly by discounting the bill with the bank or endorsing it in favour of a third party.
  4. Conclusive proof: The bill of exchange is legal documentation of a credit transaction, implying that the buyer purchased by the credit of the seller of the goods in the course of the trade and is consequently obligated to pay the seller. When the debtor refuses to pay, the law requires the creditor to seek a certificate from a Notary for it to be conclusive proof. 
  5. Easy Transferability: A bill of exchange can be used to satisfy a debt by transferring it through endorsement and delivery. 

Disadvantages of a bill of exchange

  1. Bill of exchange can be availed only in large companies dealing in huge transactions. 
  2. They are used only for availing short term services and are not considered a good option for banking services.
  3. The discount allowed for this instrument becomes an additional cost for the drawee.
  4. It is burdensome for the drawee to make the payment as the time of payment is fixed. 
  5. When there are chains involved, the regulating laws that apply to all relevant parties (drawer, payee, and drawee) are often highly difficult. The legality of a contract is determined by many variables, including the nature of the parties, their location, and so on, and it must be applied in each local jurisdiction.

Maturity of a bill of exchange

The day on which a bill of exchange becomes due for payment is referred to as maturity. The grace period of three days must be added to the date on which the period of credit expires before the instrument is payable to arrive at the maturity date. For example, if a bill dated March 5th is payable 30 days after the date, it is due on 7th April, which includes the grace period. If the maturity date falls on a weekend or holiday, the instrument will be due the next business day. If 7th April falls on a public holiday, the maturity date will be 6th April in this situation. However, if the Government of India declares an emergency holiday under the Negotiable Instruments Act 1881 on a day that happens to be the day of maturity of a bill of exchange, the date of maturity will be the next working day after the holiday. Because 7th April was declared a holiday under the Negotiable Instruments Act, 8th April will be the day of maturity for a bill of exchange. 

Discounting and endorsement of a bill of exchange

If a holder of the bill needs money, he can go to the bank and have the bill encashed before the due date. The bank will pay the debt after deducting a certain amount of interest (called a discount in this case). Discounting a bill refers to the procedure of encashing it with a bank. On the due date, the bank receives the funds from the drawee. A bill may be transferred by any bearer unless it is restricted, i.e., the bill has been drafted to include words restricting its transfer. The drawer can initially endorse the bill by signing it and adding the name of the person to whom it is being transferred at the back of the bill. The act of signing and transferring the bill of exchange. 

Noting charges

On the due date, a bill of exchange should be properly provided for payment. If the bill is not properly presented, the drawee is discharged from his obligation. The bill should be properly presented to the acceptor on the maturity date during business hours. It may be preferable to have the bill noted by a Notary Public to establish beyond a reasonable doubt that the bill was dishonoured despite its proper presentation. The act of noting confirms the truth of dishonour. The Notary Public charges a fee known as Noting Charges for providing this service. The Notary usually takes note of the following aspects:

  1. The date, fact, and cause for the dishonour;
  2. If the bill is not expressly dishonoured, the reasons for the same, and;

      (c) The amount of noting charges.

Renewal of a bill of exchange

When the acceptor of a bill anticipates that meeting the payment obligation on maturity will be difficult, he or she may contact the drawer with a request for an extension of time to pay. If this is the case, the old bill is cancelled, and a new bill with updated payment terms is drafted, accepted, and delivered. This is referred to as bill renewal. The bill does not need to be noted because the cancellation is mutually agreed upon. For a long duration of credit, the drawee may be required to pay interest to the drawer. The interest is paid in cash or may be added to the new bill’s total. Occasionally, a portion of the sum due may be paid and a new bill may be drawn only for the balance sum. For example, a Rs. 10,000 bill may be cancelled in exchange for Rs. 3,000 cash payment and the receipt of a new bill for the balance of Rs. 7,000 plus interest, as negotiated between the parties. 

Retiring of a bill of exchange

A bill of exchange can be negotiated to be retired before the due date by mutual agreement between the drawer and the drawee in some cases. This occurs when the bill’s drawee has funds available and requests that the drawer or holder accept payment of the bill before its maturity date. The bill is said to be retired if the holder agrees to do so. The retirement of a bill puts an end to the bill’s transactions before its usual term expires. To encourage this, the holder offers a Rebate on bills for the period between the date of retirement and maturity. The rebate is based on a percentage of the purchase price. 

Liabilities of the parties to negotiable instruments

The provisions concerning the liabilities of the parties to the cheque are mentioned under Sections 30 to 32 and 35 to 41 of the Negotiable Instruments Act, 1881. 

  1. Liability of the drawer (Section 30)A drawer is a person who signs the cheque instructing the bank to pay the cheque amount to the payee. The drawer is responsible to compensate the amount to the holder in case of dishonour of cheque or bill of exchange on duly receiving the notice of dishonour. 
  2. Liability of the drawee of cheque (Section 31)The banker to whom the cheque is presented, will always be the drawee. When the cheque is drawn on a specified banker by the drawer, the banker is bound to pay the amount of the cheque and for which the following conditions have to be satisfied:
    (i) the drawee should have a sufficient amount of funds to the credit of the drawer’s account;

(ii) Such funds    are to be used only against the payment of the cheque amount and be free from liens;

(iii) The cheque must be duly paid during the banking hours on the date on which it is made payable; and

(iv) The drawee is responsible to honour the cheque, failing which it shall be liable for damages. 

  1. Liability of the acceptor of a bill (Section 32)Section 32 of the Negotiable Instrument Act states that in the absence of a contract to the contrary, the acceptor of the bill is liable to pay the amount thereof at maturity. The amount shall be paid as per the apparent tenor of the note to the holder on demand. The liability of the acceptor is unconditional and absolute subject to a contract on the contrary and may be modified by a collateral agreement. 
  2. Liability of the endorser (Section 35)The one who endorses and delivers a negotiable instrument before maturity is called the endorser. He has a liability to the parties that are after him for payment and also in case of dishonour of the instrument by the drawee to compensate such holder of loss or damage caused due to such dishonour after satisfying the following conditions:

(i) there shall be no contract to the contrary;

(ii) the endorser has not expressly excluded or limited his the liability; and

(iii) such endorser shall duly receive the notice of dishonour.

  1. Liability of prior parties (Section 36) The prior party includes the drawer, the acceptor, and all the intervening endorsers. Every prior party to a negotiable instrument has a liability with the holder in due course until the instrument is duly satisfied. The holder in due course may declare any or all prior parties liable for the amount in case of dishonour. 
  2. Liability of the acceptor in forged endorsement (Section 41)The acceptor is not relieved of any liability if the bill of exchange endorsed is forged, accepted with or without the knowledge of forgery at the time of acceptance of the bill.

Similarities between cheque and bill of exchange

  1. Both cheque and bill of exchange are negotiable instruments.
  2. Addresses the drawee to make the payment.
  3. Both are instruments in writing.
  4. Signed by the maker of the instrument
  5. Payable on express demand or order

Differences between cheque and bill of exchange

S.No.Basis of differenceChequeBill of exchange
1Meaning A cheque is a document, used to make payments on demand and can be transferred through delivery. A bill of exchange is a written document that shows the indebtedness of the debtor towards the creditor. 
2DefinitionA cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or the bearer.
3Governing SectionCheque is defined under Section 6 of the Negotiable Instruments Act, 1881.Bill of Exchange is defined under Section 5 of the Negotiable Instruments Act, 1881.
4Drawn A cheque is drawn only on a particular banker.A bill of exchange can be drawn on any person including a banker.
5ValidityA cheque is payable on demand to the bearer and hence, it is validA bill made payable on demand is void as per Section 31 of the Reserve Bank of India Act, 1934.
6PayabilityA cheque becomes payable on-demand only.A bill of exchange becomes payable on the expiry of a certain date or period.
7AcceptanceA cheque does not need any acceptance per se from the payee.Acceptance must be given by the drawee before he can be made liable on it.
8Grace periodNo grace period is allowed in case of payment being made by cheque for the simple reason that it is always payable on demand.A grace period of three days is allowed while calculating the maturity date in the case of a time bill.
9DiscountingA cheque cannot be discounted. A bill of exchange can be discounted with a bank. 
10StampingCheques need not be stamped before payment.A bill of exchange must be sufficiently stamped before payment.
11NoticeWhen a cheque is dishonoured, notice is not necessary.Notice of dishonour is necessary in case of a bill of exchange. 
12CrossingA cheque can be crossed to ensure payment to the rightful owner.Crossing a bill of exchange is not allowed.
13DishonourThere is no protest or noting for the dishonour of a cheque.The practice of noting and protesting is followed in case of dishonour of a bill.
14Discharge from liabilityThe drawer of a cheque is not discharged by the delay of the holder in presenting it for payment. The drawer of bills is discharged from liability if it is not duly presented for payment.

Conclusion

Both cheque and bill of exchange contain an unconditional order to pay a certain sum of money in favour of the person mentioned in the document. A cheque is not only used in business but government agencies, individuals and other institutions also undertake cheque transactions. However, a bill of exchange is the most commonly used instrument for business transactions.

References


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Smart contracts and their enforceability in India

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This article is written by Pratham Dave pursuing a Certificate Course in Advanced Commercial Contract Drafting, Negotiation & Dispute Resolution

This article has been published by Sneha Mahawar. 

Introduction

With the modernization of the world and innovation, we are heading toward a more technology-driven world in which automation is the norm. The blockchain, artificial intelligence, and big data ideas are revolutionary, and they are ready to transform the way corporate industry and human infrastructure operate. Today, these ideas are closer to us than you might realize, and they have the potential to forever impact our lives.

This leads us to the idea of smart contracts. Simply said, a smart contract is a self-executing contract that is initiated when certain predetermined events occur. The notion of a smart contract can be traced back to a 1996 paper titled “Smart Contracts: Building Blocks for Digital Markets” by American computer scientist Nick Szabo. In the work, Szabo investigates the idea of incorporating certain types of contractual provisions in the hardware and software of a computer algorithm, which are built in such a way that violation of contract would be extremely expensive, if not prohibitively so, for the breaching party. He illustrates this concept using the example of a vending machine, in which smart contracts pass through the machine to deliver the desired product: to function in a vending machine, you would need to enter a command, a certain amount of money (consideration), and then the machine would deliver the product (acceptance). Generally, you should get the same outcomes every time if you utilize the same resources to operate the machine. Vending machines are fundamentally automated machinery, and smart contracts are the automation of their software.

What are smart contracts

Smart Contracts are a set of blockchain-based codes that execute themselves when certain conditions are met. In layman’s terms, they define a contract’s rules and regulations and automatically carry out the specified tasks when the requirements are met. They are known as ‘If’ and ‘Then’ programs in computer language. “If” something happens, “then” that should be executed. Smart Contracts are also known as “E-contracts.” 

The Validity of contracts formed through electronic [i.e., Smart Contracts] means in India can be derived from Section 10A of the Information Technology Act,2000.

Smart contracts are treated the same as regular paper contracts, as long as they meet all of the essential conditions for the enforcement of a valid contract under the Indian Contract Act of 1872.

The IT Act, 2000 on the whole does not apply to: 

  • Negotiable Instruments 
  • Power of Attorney
  • Will
  • Trust Deeds
  • Any agreement for sale or conveyance of immovable property.

Difference between smart contracts and traditional contracts

Traditional contracts require someone to enforce them; smart contracts, on the other hand, are programs that execute exactly as they are set up (coded, programmed) by their creators. This way, all participants can be certain of the outcome right away, without the involvement of an intermediary or the loss of time. Smart Contracts can also automate a workflow by automatically triggering the next action when certain conditions are met.

Smart contracts are enforceable by code in the same way that traditional contracts are. In a nutshell, smart contracts allow people to transact with greater trust, speed, and security.

Here are two use cases for smart contracts

Real estate

Once the complete payment has been paid to the seller’s account, a smart contract can be formed to transfer ownership of the property. Sellers can direct the process. Smart contracts make property title management more transparent and cost-effective. Title problems can obstruct transfers, resulting in legal expenditures. On the other hand, smart contracts keep track of a property’s history, location, and any other crucial facts that will be required for title assessment. They help to prevent fraud by using tamper-proof and secure encrypted codes. This will lower the amount of money spent on brokerage and other middlemen and the number of fraudulent actions.

Democratic elections process

Blockchain voting technologies could be the way elections are conducted in the future. Smart contracts would be able to confirm voters’ identities, preventing fraudulent votes or duplicate votes from being cast, which is a common target of election hackers. Blockchain voting will boost system confidence, improve voter engagement, and speed upvotes to tally and reporting. Many Americans, for example, still believe the 2020 election was rigged, and this lack of trust in their institutions has resulted in a fragmented country. Blockchain technology can assist in mitigating these concerns.

Types of smart contracts

There are five types of Smart Contracts, they are as follows: 

Shrinkwrap agreements

Shrink Wrap Contracts are typically licensing agreements for software [Agreements packaged with products]. In general, the term Shrink Wrap Agreements refers to boilerplate or license agreements, as well as the terms and conditions that come with the products. The consumer’s acceptance of the contract in this sort of contract is determined by his or her use of the product.

Clickwrap agreements

The term Click Wrap Agreements means giving consent for any purpose or for not giving consent for any purpose by clicking the button. [i.e., “Accept” or “Reject”]

Browse wrap agreements

The term Browse Wrap Agreements means to use materials available on a website or to have access to the downloadable product. The individual can only access the contents of the web page if he agrees to the terms and conditions on the web page.

E-mails

Emails can also be electronically signed, which is a crucial factor in determining whether an agreement becomes a contract. Smart Contracts which are executed through e-mails have been ruled in several cases, to constitute a legally binding contract.

For example, in the case of Trimex International FZE vs. Vedanta Aluminium Limited, India 2010, the Supreme Court has ruled on the validity of an unregistered and unsigned contract discussed by email, confirming the contract’s enforceability via email.

Digitally executed agreements

Electronic signatures are the digital and verified equivalents of traditional wet signatures. Electronic signatures are used to sign documents online in one of two methods –

  • Aadhaar-based digital signatures with an OTP 
  • Digital signatures that use an asymmetric public key system and hash methodologies and allow users to sign documents with a password.

Features of smart contracts

Distributed and transparent

Smart contracts are maintained on a blockchain, they operate on a peer-to-peer network, which means they are dispersed among all nodes running the blockchain and anybody can read the contract’s information.

Customisable

Before implementation, smart contracts can be programmed in a variety of ways to meet the demands of the transacting parties.

Deterministic

No matter who executes smart contracts, the outcome is always the same depending on the actions they are designed to perform.

Benefits of smart contracts

Automation

Smart Contracts can help to automate a lot of processes.

Efficient

Since the contracts are saved on computers, they carry out the functions as soon as the prerequisites are met.

Security and storage

The contracts are recorded digitally on a blockchain, they are protected by encryption, and the possibility of losing or misplacing them is eliminated.

Immutable

Contracts that have been deployed cannot be modified, thereby removing the possibility of manipulation by other parties or any of the parties participating in the agreement.

Cheaper

Intermediaries typically charge a fee to facilitate transactions between two parties, which will be significantly reduced, if not eliminated, with smart contracts.

Limitations of smart contracts

Inability to adjust

Smart contracts are immutable, any errors or flaws in the contract cannot be fixed after they are stored on the blockchain. Contracts can be cancelled if a ‘SELF-DESTRUCT’ function is introduced while they are being created.

Software bugs

Since all of the data is stored in computer codes, it may be prone to software faults.

Third-party

Smart contracts cannot completely replace third parties as some processes do require human intelligence that cannot be replaced.

Vague terms

Since contracts include terms that are not always understood, smart contracts are not always able to handle terms and conditions that are vague.

Validity & enforceability of smart contracts

As per Section 10 of the Indian Contract Act, 1872, the following criteria must be satisfied for a legitimate contract: 

  1. The parties to the contract must be competent to contract.
  2. The Contract must be based on the free consent of the parties.
  3. The Consideration and Object must be lawful, and
  4. The Agreement must not be expressly declared to be void

The Indian Contract Act,1872 shows no evidence of the following requirements:

  • A written contract unless there is a legal requirement to have a contract in writing; 
  • A signature either physically or electronically.

Thus, Smart Contracts are enforceable in India as long as they meet the aforementioned criteria. 

Section 5 and 10 of the Indian Information Technology Act, 2000 legally recognize digital signatures and acknowledge a contract as authentic and enforceable through electronic methods. Furthermore, Section 65B of the Indian Evidence Act, 1872 stipulates that a contract that has been digitally signed is admissible in a court of law. As a result, the government can take legal action to resolve the issue between the parties.

Smart Contracts, in essence, give a framework for negotiating with parties who may or may not know each other and who may or may not be liable for the risk. Smart contracts may be enforceable under Indian law, but if caution is not exercised about the party with whom you are dealing, the repercussions of failed transactions must be carried alone, as the legal system lacks a detailed framework in place to control smart contracts.

Smart contracts may not be enforceable under Indian law if the consideration for the contract is not mutual. This can happen if the contract is unilateral. Contracts are not valid in Indian courts without mutual consideration; however, smart contracts without mutual consideration can still be enforced through code; however, a breach of such a contract would not be considered a breach in Indian courts because, in the eyes of the court, there would not have been a contract in the first place due to the lack of mutual consideration, an important factor of contract.

The legality of smart contracts in India permits the use of smart contracts; however, it does not provide the parties involved in the smart contract with legal protection if they become liable or incur damages because there is no supervisory framework in place to govern the smart contracts; however, the law will assist to the best of its ability if the smart contracts fall within the limits of contract law as defined in the statute.

Conclusion

There is no doubt that the application and expansion of smart contracts is the next stage in innovation and can directly lead to billions of dollars in overhead expenses being reduced while making the entire system more efficient.

However, regulatory concerns arise, particularly in India, where there are no regulations governing the finer aspects of smart contracts. If particular laws are not enacted, widespread usage of the technology will necessitate modifications to the Indian Evidence Act of 1872 and the Information Technology Act of 2000.

As a result, while there has been some progress in legislation and business sector adoption of the smart contract concept, the law is still operating in a murky area, and a strong commitment is necessary to develop an intricate structure to regulate the operation of smart contracts in India.


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Termination of a contract and its remedies

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This article is written by Ritika Sharma pursuing B.Com LLB (Hons.) from University Institute of Legal Studies, Panjab University. This article explains different ways of termination of a contract, remedies available in case of its termination along with the impact of COVID-19 pandemic on the contractual performance.

It has been published by Rachit Garg.

Introduction 

Section 2(h) of the Indian Contract, 1872 defines contract as “an agreement enforceable by law” and Section 2(e) states that, “every promise and every set of promises, forming the consideration for each other, is an agreement”. This implies that all agreements are contracts.

A contract can be terminated by either of the parties or both by consent or agreement. There are multifarious ways in which a contract comes to an end such as on its completion, impossibility of performance (frustration), breach, termination by prior agreement, rescission, novation of contract or force majeure. Certain remedies are available in case of termination of contract which include damages, quantum meruit, suit for injunction and specific performance.

Essential elements of a contract

For an agreement to be a valid contract, certain essential elements must be present. Section 10 of the Indian Contract Act, 1872 specifies the following essentials of a contract:

  • Offer- The first essential is that an offer or proposal should be communicated. Section 2(a) of the Indian Contract Act,1872 states that, “when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal”.
  • Acceptance- For a valid agreement, acceptance of the offer is must. Section 2(b) of the Indian Contract Act, 1872 states that, “when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise.”
  • Consideration- Section 2(d) of the Indian Contract Act, 1872 states that, “when, at the desire of the promisor or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing something, such act or abstinence or promise is called a consideration for the promise”.
  • Capacity to contract- Section 11 of the Indian Contract Act, 1872 lays down the categories of persons who are competent to contract. It states that the parties should be of the age of majority i.e. eighteen years of age, of sound mind and should not be disqualified from entering into a contract under any law.
  • Free consent- The parties should enter into a contract with free consent. Section 14 of the Indian Contract Act, 1872 defines free consent as the consent which is given without coercion, undue influence, fraud, misrepresentation and mistake.
  • Lawful object- According to Section 23 of the Indian Contract Act, 1972, the object and consideration should be lawful and if these are unlawful then the agreement is considered void.
  • Not expressly void- The contract should not be expressly declared void. Section 2(g) of the Indian Contract Act, 1872 states, “an agreement not enforceable by law is said to be void”. Void agreements include agreement in restraint of marriage, legal proceedings, uncertain agreements, etc.

Termination of a contract

It implies ending a contract between the parties which can be done in several  ways. The ways could be legitimate or illegitimate for which there are remedies to compensate the aggrieved party.

Events of termination of a contract

Completion of contract

The contract comes to an end when the parties have fulfilled their part of promises and carried out their obligations. Section 37 of the Act states that, “the parties to a contract must either perform or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or any other law”. When the parties to a contract perform their set of duties then the contract stands discharged.

Impossibility of performance

If a contract is or becomes impossible to perform then it leads to termination of the contract. Section 56 makes provisions regarding the impossibility of contract. The contract could be impossible from the very beginning or it could become impossible afterwards upon some change in circumstance. 

  • Initial impossibility: A part of Section 56 states, “An agreement to do an act impossible in itself is void”. A contract obligates parties to perform certain tasks and if those obligations are impossible to perform then the agreement is considered void. The maxim “les non cogit ad impossibilia” which means “the law does not compel a man to do what he cannot possibly perform”. For instance, A agrees with B to discover treasure by magic. Such an  agreement is void.
  • Subsequent impossibility: The second part of Section 56 which talks about “contract to do act afterwards becoming impossible or unlawful” reads as “a contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful”. The contracts are built on the premise that the parties are able to perform their set of duties and if the acts become impossible to perform the contract becomes void. 

For instance, ‘A’ contracts to take in cargo for ‘B’ at a foreign port. ‘A’s government afterwards declares war against the country where the port is situated, in such cases the contract becomes void. In the case of Punj Sons Pvt. Ltd. v. Union of India (1985) a contract was made between Punj Sons Pvt. Ltd. and the government where the former had to supply some milk containers which were to be duly coated with “hot dip coating” made from tin ingots. Despite efforts by the company the tin ingots could not be made available and the Court held that the contract has become impossible under Section 56. 

  • The doctrine of frustration: It applies when a party is ‘excused’ from performing their obligation due to subsequent change in the events. In other words, the object of the contract becomes frustrated due to its impossibility. In the case of Satyabrata Ghose v. Mugneeram (1953), the Court held, “the essential idea upon which the doctrine is based is that of impossibility of performance of the contract; in fact impossibility and frustration are often used as interchangeable expressions. The changed circumstances make the performance of the contract impossible and the parties are absolved from the further performance of it as they did not promise to perform an impossibility”. It was also observed that the Doctrine of Frustration nullifies the contract and therefore, it should not be invoked very easily.
  • Impossibility by introduction of new laws: If any new law is made after the parties enter into an agreement and it makes it impossible to perform, then the agreement becomes void. 
  • Impossibility of contracts demanding personal performance: The contracts which require some personal skills of the parties, become impossible to perform upon the death or incapacity of such parties and therefore, they come to an end upon happening of either of these two.
  • Non-fulfillment of object of the contract: Along with physical impossibility, the contracts become void owing to the change in circumstances, the purpose behind the contract has got tampered with. In the case of Har Prasad Chaubey v. Union of India (1973), a party purchased coal belonging to other parties’ railways and wanted to transport it to another city Firozabad. However, the seller refused to make any arrangement regarding transportation and said that the coal has to be consumed locally. The contract did not have any such condition. Therefore, the Court held that the object of the contract is void as the object that the buyers had in their mind has not been fulfilled.
  • Application to executory contracts only: The contracts which have been executed do not become void due to impossibility of performance as Section 56 applies only to the executory contracts. In the famous case of K.J. Coal Co. Ltd. v. Mercantile Bank (1981), K.J. Coal Co. took a huge loan from Mercantile Bank and the company got nationalised. Consequently, the company pleaded that their contract with the bank has been frustrated due to nationalisation of the company, hence they are not required to pay back the loan amount. The Calcutta High Court, however, held that a mere change in the management cannot frustrate a  contract or make it void, thus the company still stands  liable to pay the loan.

Breach of a contract

Breach of a contract occurs when one of the parties fails to fulfil their part of obligations. This leads to termination of the contract. There could be actual as well as anticipatory breach of contract.  

  • Anticipatory breach of contract: When the contract is breached before the due date of performance has arrived then it is called anticipatory breach of contract. Section 39 of the Indian Contract Act, 1872 makes provision regarding anticipatory breach of contract, and  states that, “when a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance”. It is pertinent to note that if the breach of contract is not in its entirety then it is not covered under this provision. For instance, ‘A’, a singer, enters into a contract with ‘B’, the manager of a theatre, to sing at his theatre two nights in every week during the next two months, and ‘B’ engages  to pay her 100 rupees for each night’s performance. On the sixth night, ‘A’ wilfully absents herself from the theatre. ‘B’ is at liberty to put an end to the contract.

Alternatives available: The aggrieved party has two options in case of breach of the contract.

  • Firstly, the party can rescind the contract before the due date of the contract has arrived and sue the other party for the same. In the case of Frost v. Knight (1872), a promise was made by the defendant to the plaintiff to marry the plaintiff on his father’s death but broke off the engagement when his father was alive. There was an anticipatory breach of contract and the plaintiff filed a suit against the defendant when the defendant’s father was still alive. 
  • Secondly, as the anticipatory breach does not directly terminate the contract before the due date so the aggrieved party has the second option to not terminate it until the due date. Illustration (b) of Section 39 of the Indian Contract Act, 1872 clarifies this part. It states, ‘A’, a singer, enters into a contract with ‘B’, the manager of a theatre, to sing at his theatre two nights in every week during the next two months, and ‘B’ engages to pay her at the rate of 100 rupees for each night. On the sixth night, ‘A’ wilfully absents herself. With the assent of ‘B’, ‘A’ sings on the seventh night. ‘B’ has signified his acquiescence in the continuance of the contract, and cannot now put an end to it, but is entitled to compensation for the damage sustained by him through ‘A’s failure to sing on the sixth night.

Termination by dispensing the promise

A contract comes to an end when the promisee dispenses with the performance of the obligation. Section 63 of the Act states, “every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him”

For instance, ‘A’ owes ‘B’ 5,000 rupees. ‘C’ pays ‘B’ 1,000 rupees, and ‘B’ accepts them, for satisfaction of his claim on ‘A’. This payment is a discharge of the whole claim.  As the contract gets terminated on the application of this provision, therefore, no party can sue the other for the breach of contract. 

Rescission of contract

Section 62 lays down that if both the parties agree to rescind the contract, then there is no obligation to perform the original contract. According to Merriam Webster dictionary, rescind means “to abrogate and restore the parties to the positions they would have occupied had there been no contract.” This rescission could be either express or implied. 

In the case of Raghumull v. Luchmondas (1916), it was observed that the burden to prove rescission is on the party who rescinds in order to show that it was correctly terminated. Further, in the case of Damodar Valley Corporation v. K.K. Kar (1973), the Supreme Court held that, “in certain circumstances it may be stated that there has been termination of the contract unilaterally and as a consequence all the parties may agree to rescind the contract. In such a situation, rescission would put an end to the performance of the contract in futuro, but it may remain alive for claiming damages either for previous breaches or for the breach which constituted termination”.

Novation of contract

When a new contract is formulated then it automatically leads to the termination of the previous contract. Section 62 talks about the effect of novation, rescission, and alteration of contract and it states, “if the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed”. As the new contract replaces the old contract, the old one stands discharged. 

Novation of contract is broadly of two types. 

  1. In the terms of the contract: When certain terms of the agreement are altered then it gives rise to a new agreement with the altered obligations. This could be a change in the terms related to liability or time period. 
  2. Change in the parties of the contract. In the case of Satish Chnadra Jain v. National Small Industries (2001), a person was a guarantor to funding done to his proprietary business but afterwards the business was converted into a private limited company by his son. The Court held that there is change in the parties and hence, the contract of guarantee of the person stands terminated. Similarly, in the case of Ayodhya Prasad v. Phalsara Bhagwan Das (1998), an agreement for sale entered between the vendor and vendee was to be executed after 6 years but before the execution, the vendor died and a new agreement was made in which the parties were daughters of the deceased vendor on one side and the vendee on the other. When the vendee filed a suit for specific performance of the previous contract, the Court held that due to the change in the parties, the earlier contract was terminated.

Remedies for termination of a contract

Damages

It is one of the most common remedies in case of breach of contract where the injured party is entitled to recover compensation for the loss from the party who has violated the contract. Damages can be compensatory, liquidation, punitive, general and nominal damages. While compensatory damages are the ones which are awarded with the aim of reimbursing the party who has suffered losses, punitive damages are awarded to punish the offending party for breaching the contract. Liquidated damages are damages which have been agreed upon by the parties while making the contract and therefore, the contract itself contains the provision regarding liquidated damages. General damages are calculated from the normal course of breach of events. Nominal damages reflect the injured party’s right to damages in case of breach and are provided even when it has not suffered any loss.

Section 73 to 75 of the Act contains provisions regarding the damages. Section 73 states, “when a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from breach of it.”

For this remedy, the following two aspects are to be considered. 

  • Remoteness of damages: First, it has to be determined that whether the loss was the proximate consequence of the breach as in the case of remote connection, the damages are not given. The famous case of Hadley v. Baxendale (1854), enunciated the rule regarding remoteness of damage. In this case, the mill of the aggrieved was stopped for a longer time period due to delay in the delivery of shafts by the defendants. However, the defendants were only aware about the whereabouts of the plaintiff and that the article which was to be delivered is a broken shaft mill. Therefore, the England and Wales High Court held that, “the loss of profit here cannot reasonably be considered such a consequence of the breach of contract as could have been fairly and reasonably contemplated by both the parties when they made this contract. For such loss would neither have flowed naturally from the breach of this contract in the great multitude of such cases occurring under ordinary circumstances nor were the special circumstances, which perhaps, would have made it a reasonable and natural consequence of such breach of contract, communicated to or known by the defendants”. 

Similarly, in the case of Wilson v. Lancashire and Yorkshire Railway (1917), the defendants delayed the delivery of the cloth at the destination, consequently, the plaintiff was not able to fulfil the orders of making caps within time. The County Court held that the plaintiff could claim only the difference between the value of the cloth between the agreed date of delivery and the actual date of delivery of the consignment. This rule was also applied in the case of Laxminarayan v. Sumitra (1994), where damages were awarded to a girl who had got pregnant by the person who had promised to marry her but refused afterwards. The damages included the factors such as physical pain, indignity, mental agony, etc. Another rule culled from the case of Hadley v. Baxendale (1854) was that in case of loss on breach of contract which has arisen due to ‘special circumstances’, provided those ‘special circumstances’ were notified to the other party when the contract was entered into, then the party breaching the contract could be made liable. 

  • Measure of damages: Another question is to assess the amount of compensation or damages for the breach of contract. The factor which has to be kept in mind while making this assessment is to put the aggrieved in the same position in which he/she would have been if the contract had been performed. This was highlighted in the case of Haji Abdul Sattar v. M.P. State, etc. Marketing Federation Ltd. (1998). The damages for the breach of contract are considered as on the date of breach of contract. 

In Bismi Abdullah v. Regional Manager, F.C.I. (1986), Trivandrum, a contract of sale was breached by the defendant as he was not able to purchase the rice from the plaintiff. The plaintiff sold the rice after a few months when the market was down and incurred losses. It was held by the Kerala Court that only nominal damages would be provided to the plaintiff by the defendant. 

In Brown v. Muller (1963), it was observed by the US Supreme Court that the amount of damages is the difference between the contract price and market price of a specific instalment in case of delivery by instalments.

Furthermore, Section 74 of the Indian Contract Act, 1872 stipulates the right of an aggrieved party to receive reasonable compensation in case of breach of contract, in spite of the fact that they have incurred any loss or not. The only pre-condition is that the contract should contain a provision regarding penalty in case of any breach. In Ashby v. White (1703), the Court observed that, “every injury imports a damage though it does not cost the party one farthing”. An illustration of this Section states, “A’ contracts with ‘B’ to pay ‘B’ Rs. 1000 if he fails to pay ‘B’ Rs. 500 on a given day. ‘A’ fails to pay ‘B’ Rs. 500  on that day. ‘B’ is entitled to recover from ‘A’ such compensation, not exceeding Rs. 1,000 as the Court considers reasonable.” 

In the case called Charter v. Sullivan (1957), there was a contract for the sale of the car but the buyer breached it. However, the car was disposed of by the seller within a few days so he did not suffer any loss due to the breach. Therefore, it was held that he can only get the nominal damages. Difference between “earnest money” and “amount deposited for the due performance of the contract” was highlighted in the case of Maula Bax v. Union of India (1969) and the Supreme Court pointed out that on the breach of contract, actual loss has not to be proved and the Court is competent to award reasonable compensation even when no actual damage was proved.

Suit for rescission

Rescission of contract refers to unwinding of a contract by putting the parties, as far as it is possible, into the position in which they were before they entered into a contract. It is an equitable remedy and the party who seeks this remedy offers to return all the benefits that it has received. Rescission of contract has been dealt with under Sections 27, 28, 29 and 30 of the Specific Relief Act, 1963

Section 27(1) lays down the cases in which the contract can be rescinded. The two cases that it states are, “where the contract is voidable or terminable by the plaintiff; where the contract is unlawful for causes not apparent on its face and the defendant is more to blame than the plaintiff.” Section 27(2) highlights the four cases where the court may refuse to rescind the contract. These include first, when the plaintiff has ratified the contract, second, where the parties cannot be restored to the position in which they stood when contract was formed, third, where third parties have gained rights in good faith from that contract, fourth, where the part which is to be rescinded is inseverable from the rest.

Quantum Meruit

Quantum Meruit is an exception to the rule that a person who has not fulfilled his/ her part of obligation is not to receive anything for the part which has been performed by him/ her. Quantum Meruit gives the right to the party who has carried out a part of the obligation under contract but could not complete the remaining part as he/ she was prevented by the other party from performing it. 

In the significant case of Puran Lal v. State of U.P (1971), it was highlighted that, “in order to avail of the remedy under quantum meruit, the original contract must have been discharged by the defendant in such a way as to entitle the plaintiff to regard himself as discharged from any further performance and he must have elected to do so”. However, this remedy is not for the party who has breached the contract. 

In the case of Planche v. Colburn (1831), there was a contract where the plaintiff agreed to write a volume on ‘Costume and Ancient Armour’ for a periodical called ‘The Juvenile Library’. When the plaintiff had commenced working on his part of obligation, the defendants ceased the publication, consequently, the Court held that the contract had terminated and by applying the principle of quantum meruit, remuneration was provided to the plaintiff.

Suit for specific performance

Section 10 of the Specific Relief Act, 1963 specifies that the specific performance of the contract could be enforced when the damages cannot be ascertained or when the compensation in money cannot afford adequate relief. Therefore, when the contract is terminated by one of the parties and the case falls under either of the above situations, specific performance of the contract could be enforced. For instance, in the case of Beswick v. Beswick (1968), a business was sold by an uncle to his nephew with the contract that regular payments would be made by the nephew to him and his wife.. However, when the uncle died, the nephew stopped making the payments to the uncle’s wife. The House of Lords granted specific performance of a contract as the compensation would not have provided adequate relief to the plaintiff. Similarly, in the case called Sky Petroleum v. VIP Petroleum (1974), during an oil crisis, the supply of oil to the plaintiffs was stopped by the defendants. Therefore, specific performance was granted to the plaintiff as damages would not have served the purpose of adequate relief at the time of the oil crisis. 

Suit for injunction

Suit for injunction is another way of dealing with the breach of contract wherein the aggrieved party could seek legal relief of performing or prohibiting certain tasks till the time the main dispute is solved.

COVID-19 and contractual performances

During the pandemic, the business suffered huge losses and several contracts were affected. Termination of contract due to impossibility or force majeure was very common. The fundamental question was whether the situation of pandemic would be considered force majeure. This question was answered differently around the globe. According to Merriam Webster Dictionary, force majeure refers to “an event or effect that cannot be reasonably anticipated or controlled”. This concept aids parties to save themselves from the bad consequences of not performing their part of obligation in a contract. In 2003, in KSRTC v. Mahadeva Shetty (2003), the Supreme Court held that the ‘Act of God’ cannot include all unexpected natural events.  In the case of Energy Watchdog v. Central Electricity Regulatory Commission and Ors. (2017), the Supreme Court highlighted the concept of force majeure by elucidating that the question regarding the discharge of the contract due to non-performance would be dealt in accordance with the terms of contract and in case of impossibility, Section 56 of the Indian Contract Act, 1872 could be referred. 

After the onset of pandemic, the notifications were released by the government stating that as COVID-19 is a natural calamity, the force majeure clause could be invoked which would suspend the performance of contract for a certain time period. In the case of Indrajit Power Private Limited v. Union of India (2020) the Delhi High Court refused to apply the concept of force majeure in the pandemic wherein the petitioner wanted to restrain the government from invoking the bank guarantee. Similarly, in Standard Retail Pvt. Ltd. v. GS Global Corp and Ors (2020), where Indian Steel importers sought an injunction on the encashment of Letter of Credits in favour of exporters of South Korea. The contract had the force majeure clause but it was applicable only to the suppliers and not exporters. As the petitioners were exporters, the court refused to grant ad-interim relief of force majeure to them during lockdown. Moreover, it was held that distribution of steel was an essential service. However, in certain other cases the force majeure plea was accepted which postponed the performance of contract for a limited period of time. The parties also invoked the provision of impossibility under Section 56 of the Act of 1872, where in this case the impossibility was not due to the fault of another party but due to natural calamity. 

Conclusion

A contract comes to an end in several ways, and judiciary has played a crucial role in interpreting and evolving the concept related to termination of contract. In case of termination by breach, it is essential to balance the rights of both the parties and settle the matter with equitable consequences for both sides. 

The remedies for the breach or termination of contract include damages, quantum meruit, suit for rescission, specific performance and injunction. The parties usually take legal advice so as to evaluate all the alternatives or remedies in their cases and choose the one which would be of optimum benefit to them.

References


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