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Do Look a Gift Horse in the Mouth

When sellers, not buyers have to beware

Gifting. Getting. Buying. Selling.  All in a day’s work. Or so we think. We need to think again.

There is a saying in law, ‘caveat emptor’. It means, ‘let the buyer beware’. The onus of a bad purchase is on the buyer, not the seller. True, the concept is changing these days and we need to be thankful for the turn of events. The shift is termed, ‘caveat venditor’. The seller is liable too.

For now, we will not consider contracts. What about gifts? What happens when the gift hits back?

The personnel in charge of a prison in Lancaster County wanted help. Obviously, they had seen the killer dogs, on leashes, that some American police use to control crowds. They decided they wanted one too. The decision was to get a Rottweiler. Now Wikipedia paints a rather placid picture of the Rottweiler; with reservations. The rest of the world looks upon them as killer dogs.

That is the breed that the handlers wanted. Stocky, tough, alert, the Rottweiler would be the best. So they got one and named him Diesel. Why? Maybe, because both have German origins. Diesel was trained to keep the prisoners in check. And, since the prisoners are no spring chickens, Diesel had to be mighty efficient.

So Diesel attacked all and sundry, including five of the guards. Remember our previous title, “Who will guard the guards”? Diesel was more than up to that job. But since Diesel was prone to literally bite the hand that fed it, he had to go. He was gifted to a security agency, while glossing over the fact that Diesel brooked no nonsense. Diesel bit his new keepers. The keepers sued.

You be the judge.

Those who gifted lost in court. They had to pay 1.5 million dollars.
Next, we have a case involving our local tradition of distributing mid-day meals. The meal is a gift to the schoolchildren, no matter that the food also ensures attendance. Very often, we read that the children have fallen ill due to contaminated stuff being served. Usually the school is held responsible.

What if, at a wedding feast, a number of invitees fall ill? Or, maybe, be fatally sick? Who should be held responsible? The caterer or the host? Can anyone be sued?
We fall back to an old axiom of ours. If there is a malady, in this case literally, there has to be a remedy.

Now, you be the judge.

As for the schoolchildren, the institution must be put in the dock. It is they that served the food. The care has to be theirs. The authorities are usually being indicted and that is how it should be.  However, in the matter of the wedding feast, is the host liable? To our mind, the answer is: ‘Yes’.

Why? When a person is invited and fed, he expects to be looked after, not poisoned. The host has a duty of care. He may, in turn, sue the caterer; but he cannot escape his obligation to his guests. Otherwise, all wedding feasts would be potential ‘Last Suppers’.

In the Rottweiler’s case, all that the donors had to do was warn the donees that Diesel was an attack dog and had been trained as such. The prison authorities concealed a fact that had the potential of harm. They had to pay. The argument may have been that it was a gift, not a purchase contract. No consideration (money) was involved. That would not have cut ice with the judge. He, obviously, saw it as the passing off of an unwanted and dangerous article onto another.

This was a case of caveat venditor, as are the other two. All without the basic ingredients of a contract. Yet, justice was served in one and must be so served in the others.  So, the next time you offer a gift, think twice. Please.

Bapoo Malcolm is a practising lawyer in Mumbai. Please email your comments to [email protected] or [email protected]


Nomura expects BJP-led coalition to form next government

Nomura’s political analyst, Alastair Newton, expects a BJP-led coalition to form a government at the centre. In addition Nomura sees India to begin economic recovery only from the second half of 2014, subject to a ‘stable government’

India’s economic recovery will happen only in second half of 2014 subject to a stable government says Nomura even as it sees the Bharatiya Janata Party (BJP)-led coalition forming government at the centre.

In a research note titled ‘Global Outlook 2014’, Nomura said one of the key reasons why it is cautious about Indian economy is politics in the country. “Political stability and policy credibility are paramount to corporates making long-term investment decisions. Politics is the key downside risk domestically. A third front government (a coalition consisting of neither BJP nor the Congress) or a fractured mandate in the upcoming elections would further slow the reform momentum and lower India’s potential growth,” the note said.

However, Nomura’s political analyst, Alastair Newton, expects a BJP-led coalition to form a government at the centre.

Talking about economic recovery and inflation worries, Nomura said, “With growth bottoming out and (Indian) inflation likely to remain stubbornly high, we expect another 50bp in cumulative repo rate hikes in 2014”.

Nomura said it expects the Indian economy to grow at 4.8% in 2014 and 5.7% in 2015, faster than global growth. Nomura expect global economy to expand 3.4% and 3.7% for 2014 and 2015 respectively, while the growth in Asian region would be 5.2% and 5.3% during the same period.

Nomura also forecast the Indian rupee touching 65.5 against the US dollar by 2015. However, it expects recovery to be a slow and gradual process. The note said, “Our forecast growth recovery is more gradual than India’s past cycles due to the leveraged balance sheets of corporates, higher non-performing assets on bank balance sheets and higher interest rates.”

“We expect inflation to remain stubbornly high due to elevated inflation expectations, food-related supply shocks and the recent upswing in rural wage growth,” stated the note.

Nomura has forecasted consumer price index (CPI), or inflation, hitting 9.3% (year-on-year) and 8.7% y-o-y for 2014 and 2015 respectively. Nomura also expects policy rates to be 8.25% by 2014 and 2015 as well. This is likely to slow down the Indian economy.

They feel that there is a likelihood of a bond index being introduced in India because the Indian economy cannot rely on external conditions for long, especially with risk of deficits widening and rupee depreciating. “Although external sector risks have fallen considerably, they could re-emerge early next year. India has managed to significantly lower its current account deficit due to external factors (better exports) and one-off policy restrictions (on gold imports). However, with the economy still running a deficit, capital outflows stoked by Fed tapering could put pressure the balance of payments once again. During this time, policymakers could announce India’s inclusion in global government bond indices,” it added.

The global report has opined other countries as well. They expect the US as well as Japan economies to sustain and grow, thanks to the monetary stimulus of the respective countries. The Euro area will be at a risk of “secular stagnation”, according to the Nomura note. Nomura isn’t bullish on China either, stating that tightening will happen which will slow down the economy. “We expect China's economic growth to slow amid policy tightening, while structural reform will gradually kick in, causing short-term pain,” the Nomura report said.


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