Bailment refers to the transter of ym BAILMENT AND PLE specific purpose. * Pledge on the other hand is a type COMPARISON CHART Meaning Defined in Parties Consideration Right to sell the goods Use of Goods Purpose Bailment When the goods are temporarily handed over from one person to another person fora specific purpose, it is known as bailment. Section 148 of the Indian Contract Act, 1872 The person who delivers the goods is known as the Bailor while the persan to whom the goods are delivered is known as Bailee. May or may not be present. The party whom goods are being delivered has no right to sell the goods. The party whom goods are being delivered can use the goods only, for the specified purpose. Safe keeping or repairs, etc. ‘sods from ene party to another party for seme oF bailment in which goods are transferred fram one party 10 unother party as security for payment ot @ debt owed by him. Pledge . When the goods are delivered to act as security against the debt owed by one ersan to another person, itis known as the pledge. Section 172 of the Indian Contract Act, 1872 ‘The person who delivers the goods is booun as Pawnor white hs person to whom the goods are delivered is known. as Pawnee. : Always present. The party whom goods are being delivered as security has the right to sell the goods if the party who delivers the goods fails to pay the debt The party whom goods are being delivered fas no right to use the goods. As security against payment of debt.quantum meruit-addresses the fair amount that should be paid Quantum Meruit vs. Unjust Enrichment itis not uncommon for people to confuse the principles of quantum meruit and unjust enrichment. Both theories have the goal of preventing one party from taking advantage of another, receiving services without Paying their fair value. The difference between the two is that, while unjust enrichment addresses the issue of failure to pay for services rendered, quantum meruit-addresses the fair amount that should be paid. To be successful in a quantum meruit claim, the service provider (plaintiff) must prove that the service recipient (defendant) agreed to the provided services, knowing that the plaintiff expected to be paid, and that the defendant was unjustly enriched, which means he received something for nothing, which was not the agreement. Legal Terms and Issues * Civil Lawsuit — A lawsuit brought about in court when one person claims to have suffered a loss due to the actions of another person. * Defendant — A party against whom a lawsuit has been filed in civil court, or who has been accused of, or charged with, a crime or offense. * Equitable Remedy — An action ordered by the court for a party to complete his duties under a contract. This is most often used when an award of money damages cannot sufficiently rectify the damages + Plaintiff — A person who brings a legal action against another person or entity, such as in a civil lawsuit, or criminal proceedings.QUASI CONTRACTS N.KHAN * A Quasi contract is not a contract at all, because the essential elements for the for atic of a contract are absent. itis an obligation imposed by law upon a person fer the beneftof another even in the absence of a contract. Is based on principle of equity. * Quas} means ‘almost’ or ‘apparently but not really’ or’as fit were’ * Obligation between parties isnot contractual but one whichis treated as contractual by law * Courts create quasi contracts to protect the unjust enrichment of the paties in dispute over Payment of goods or services, Sallent Features of Quasi Contractual Rights: * quasi contract is not a real contract. * It is not based upon the offer and acceptance rule. * Itdoes not arise from any formal agreement butit is imposed by law. {tis aright which is available not against the entire world, but against particular person(s) only. Sections In Law-The sections in law which cover the Quasi Contracts are * Supply of necessaries (section 68) * Payment of lawful dues by interested person (section 69) * Person enjoying benefit of a gratuitous act (section 70) * Finder of goods (section 71) * Goods or anything delivered by mistake or coercion (section 72) QUANTUM MERUIT The Latin term quantum meruit, translates to “as much as he has earned,” and refers to the actual value of services rendered. The legal theory of quantum meruit holds that a person should not be obliged to pay, nor should the other party receive, more than the value of the services exchanged. This concept may be used as an equitable remedy in a civil lawsuit, often where the transaction for goods or services was done without a written contract specifying the amount due. a reasonable sum of money to be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract. Quantum meruit is a Latin phrase meaning "what one has earned”. in the context of contract law, it means something along the lines of "reasonable value of services". In the United States, the elements of quantum merut are determined by state common law.Mistake of law: Mistake of law is further divided into three categories © Mistake of Indian law ® Mistake of foreign law © Mistake as to private rights of the parties — treated as mistake of fact. Mistake of fact: © Unilateral mistake © Bilateral mistake. Unilateral mistake. «Example: A agreed to buy certain wheat from B believing that they were old. In fact, wheat offered was new. It was held that A could not avoid the contract on the ground that he had a mistaken impression as to the oldness of wheat One party to a contract is under a mistake of fact, the contract is voidable .unilateral mistake do not affect the validity of contract unless they concern some fundamental. Bilateral Mistake Example: A agrees to buy certain horse from B .lt turns out that the horse was dead at the time of the agreement, though neither party was aware about this fact. The agreement is voi (0) should “= comrr ined by both thy parties. Se-tion 20 states that were both the parties an agreement are under a mistake as to a matter of fac, essential tothe agreement shal be Void, The mistake shall be termed as bilateral mistake of fact only when both of the follow conditions are satisfied here, (b) It should relate to a matter of fact essential to the agreement. The agreement will be vo in case of bilateral mistake only. Mistake as to possibility of performi a) Physical impossibility b) Legal impossibility the contract° Moral foree is used in undue influence relationship between the promisor, some sort of relationship must and the promisee is not necessary exist between the two pat, ar ll n the tWo parties Meaning of fraud See. 17 Committed by a party to contract or by anyone with his involvement or by his agent with intent to deceive another party thereto or his agent or to induce him to enter into contract. + Misrepresentation of facts muy be intentional or innocent. * Intentional misrepresentation has been termed as Fraud and innocent misrepresentation has been termed simply as ‘misrepresentation’ in the contract act Essential of fraud ‘© The other party must have relied upon the representation and must have been deceived. The other party must have been induced to act upon the representation ©The representation must have been made before the conclusion of the contract with the intention of inducing the other party to act upon it. * The representation must relate to material fact «There must be a representation and it must be false. Examples of fraud 1) The vendor of a piece of land told a prospective purchaser that, in his opinion the land would carry 2000 sheep. In fact the land could carry only a number less than this. Held there was no misrepresentation as the statement was one of opinion which was honestly held. 2) Manoj says to deepika his coat is made of pure wool though he knows that it is untrue .Deepika purchases the coat believing Manoj’s statement to be true ,It is a fraud by Manoj and therefore contract is voidable at deepika’s option. Misrepresentation (Section 18) « Non-disclosure of facts where there is a legal duty to disclose without intention to deceive «wrong statement of a material fact not known to be false « Misrepresentation is a false representation made innocently without any intention of deceiving the other party Mistake. Mistake is of two types: © Mistake of law © Mistake of fact@ ‘An agent refused to hand over the account books of a business to the new agent unless the Principal released him from all liabilities, The principal had to release deed as demanded. Held the release deed was given under coercion and was at the option of the principal Example: A man by giving a threat to commit suicide induces his wife and son to execute a deed in favour of him in respect of certain property and they execute, Held that the consent of the wife and son has obtained through coercion. Madras high court has held by a majority judgment that even a threat to commit suicide is coercion even though it is not punishable under the Indian penal code . 12. A railway company refuses to deliver certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.) Anuj executes a transfer bond for the house under fear of assault .[t will be a contract voidable at the option of Anuj since his consent was obtained by coercion. Example of effect of coercion UNDUE INFLUENCE-section16 © Uses that position to obtain an unfair advantage over the other. © The relations subsisting between the parties are such that one of the parties is in a position to dominate the will of other. * Undue influence is the improper use of any power possessed over the mind of the contracting party. Following are the parties that can be affected by undue influence. Teacher and student © Trustee and beneficiary e Guardian and ward © Lawyer and client © Doctor and patient Decided case on undue influence. In Karnal Distillery Co. Itd V. Ladli prasad .1958 Punj 190,confirmed by the supreme court in 1963 S.C 1279,the elder brother was shown to have exercised undue influence over his younger brother in respect of a compromise arrangement, the transaction was held to be voidable at the instance of the younger brother. Difference between coercion and undue influence The consent of the aggrieved party is taken by committing or is obtained by dominating the party threatening to commit an act by taking an unfair advantage of his forbidden by Indian penal code. fi * Physical force is exercised.EREE CONSENT A contract without free consent is voidable contract Flaw in consent * Coercion (Section -15) * Undue influence (Section -16) + Fraud * Misrepresentation (Scetion-:7 & 18) Fraudulent or wilful Innocent or Unintentional Mistake ( Seetion-20 & 21) Mistake of fact, Mistake of law Bala Debi vs Majumdar,A.1.R (1956)Cal 5” 5 An illiterate women executed a deed of gilt in favour of her nephew under the impression that she was executing a deed authorizing her nephew to manage her lands. ‘The evidence showed that the woman never intended to execute such a deed of gift, nor was the deed ever read or explained to her, Held the deed was void and inoperative. of mind (consensus ad idem) regarding the ‘This means that there should be perfect identi subject matter of the contract According to Section 13 two or more persons are said to consent when they agree upon the same thing in the sare sense. MEANING OF CONSENT id to be free when it is not caused by any of the following Section 13 says the consent © Coercion - see 15 © Undue influence - sec 16 © Fraud * Misrepresentation - see 17,18 © Mistake see 20,21 To make a contract valid not only consent is necessary but the consent should also be free Coercion Coercion is committing or threatening to commit any act forbidden by the Indian Penal Coc, or the unlawful detaining or threatening to detain any property to the prejudice of any perso: whatsoever with the intention of causing any person to enter into an agreement. An example of CoercionA contract in whi ich the goods ar © hande reason, whichis expressed or implied fora somone oY See! fora short period. Party for a specific * The person who delivers the goods is termed as lor whereas the receiver of (5 is livers the Boods i Bail 5 eceiver of the good: * When the purpose of deliver @ goods is accomplished, the bailee should return . pose of delivering th 8 the goods is accomplished, il r * Here the word goads may inclu he move ms, but property and money do not gt include all tt id do not e os jovable items, but y While the transfer of f goods the ownership of goo Possession of goods transfers for a limited period Deseret ith ce Gir ony he The receiver a sas hi re oF hi receiver of the goods shoul goods jd lake good Gat the “ & le tikes car is own goods as well as he should not use the goods with permission of its owner except for the purpose specifi . M sbi purpose specified. It is the duty of the bailor to tell the faults in the The Bailment is divided into two categori ¢ Gratuitous Bailment - Either for the sole benefit of Bailor or Bailee. © = Non-gratuitous Bailment ~ For the Mutual Benefit of both the part Example: Clothes given in laundry for cleaning are an example of bailment Definition of Pledge ©The pledge is @ variety of baiiment in which goods are transferred from one party to another party as security for the payment against debts owed by him The person who delivers the goods is Known as Pawnor whereas the recriver of goods is known as Pawnee. © When the objective of the transfer debt for which goods are pledged, 's ng the goods is completed or say when the payment for met, then the receiver shall return the goods to its real owner * However, ifhe right to sell the goods after giving a proper notice to its ownet © It is the duty of the Pawnee to take good care of the goods, as he takes care of his own goods as well as he should not use the goods without the permission of its owner Proreover, the pawnor must tellthe all the defects in the goods fails to redeem the goods within a reasonable time, then the receiver has the Example: Money taken as debt from the money lender by pledging gold as security against its an example of Pledge re for repairs, 1S bailment. ucion by pledging their stock as secunty rery bailment is not a pledge, «Caro motorcycles in the service cent © Busines-men take a loan from the financial: - J inshore, we can say that every pledge is 2 bailment, Dut evDamages? f Annages ot b, movelay Lompesiin', a s BHovwed te the a poly ig Riles the lox ov ty Axfperad. by tha ognunued. by ts breach, a hie Dab Quantum Mrnth ¢ ‘he rach O4 totrsh, fraught oe be pus ove b- vandums Wdne aninee where a. Conbierch, pan toa by ord fords, oe — anche by the brsocks of § a - by Yoffa ot Spaife ip é “Dawoge a. not age oe pepo. The Count way ook G out fh prermer sett & elk tg erecta, whieh a fot - _ peowinsd nat 4 do ade OF i ni lh lust orden ha GourleyoR EMEDIES ces BREACH Se ccnraner vo ¥ “Wl beke THERE i A RIGHT, HERE 6 + Kemeny’. Y" phew a Qubract & bisher, te 6 : Pe de ns pd Len 9 nn Enns te-einkh Sollonsag envadlies Oke oweilable tp pak by dow +) Say aay Se pom Maan nt . _Ueecisatonts sahusn ay Gudbiast Es bitline by one fark , the ob joaly may Ane te Lab the Contract an meee td ef fo ere—_— re = ———— . LEGAL RULES 4s Te CONSIDERA Tron) I \ Tt mob enone ab the deine of te jens q DT smay abe prom: the frreruiant a any ol forse. : DLL mung ar Aetursn promine “ Tt nay be prot, Leadub wv pale a A ata & ade gale ne 6) Lt munt be peal and nol il X) Tt mat met be legal, muta fp pate ae ee a Eyceprion) To THs pie Barts —_ a i) Love aed affection) a 2) Cormpowrabion, Li voluntony aaciees _ ad Promise th time bared obbl. 4) Covad a Ageneg '= HEE 2 muy 4 cate @) Chanifabl jubeo fie —_—— Nok! Be you fail tb a any jeiull : Hep. rt mg» bw AppCombottvabion, tafo4|anae - * Conaiduaten: & ong the, enswitiad) Bloyiovts Appel a lontract- | phe eptetnt mead tt mccain: @ muole Contract) anol ke void. + Couriduvation susans spncathing tn palin, fue bol the parbits te contrat are benspiled Gt A agrees to nett his ‘anrtas bikes B fou Re anpeo)- eB aaa Bue es Conarolevation fet ; + Conaidnadin, ets seri whik & of dome value tu ts eye of bond. aroy be ae’Depending upon happening of an uncertain event In a fixed period: At times Contingent Contract may de; pend upon happening of uncertain event in a fi Period. If such event happens within fixed period, the contract is Valid. If sch Son os not take place within fixed period, the contract is void. Example: As per the contract formed between A and B, A has to sell goods to B, if the ship comes back within 10 days. If it comes on 8th day (or) 9th day, the contract is valid and if it comes back on 12th day (or) 13th day, the contract is void, - Depending upon non-happening of an uncertain event in a fixed period: At times the Contingent Contract may depend upon non-happening of uncertain event in a fixed period then if such event place within that fixed period, the contract is void and if that event does not takes place within agreed period, and then it is valid. Example: A has to sell goods to B if the ship does not come back within 10 days. if it comes on 8th day (or) 9th day, the contract is void and if it comes back on 12th day (or) 13th Day, the contract is valid. Depending upon an impossible event: Sometimes the Contingent Contract may depend upon impossible event. Such a type of Contingent Contract is ab initio void. Example: there is a contract between A and B where A will pay Rs.100000/- to B if B marries C. Assume that C was dead 5 years ago, now element of impossibility can be seen and their contract is ab initio void.Contingent Contract According to Sec. 31 of indian Contracts Act, a Contract performance of which depends upon happening or non happening of an un-certain event Is called Contingent Contract. Contracts can be classified into two groups namely; . * Absolute Contracts (in case where there is na condition, iis called Absolute Contract.) ‘Contingent Contracts. (In case where there is condition, then such contract is called Contingent Contract.) Therefore Contingent Contract means Conditional Contract. = When imposed and condition is fulfilled, the Contingent Contract becomes valid and then parties have to perform their obligations. + Ifimposed and Condition is not fulfilled, the Contingent Contract become Void and then it need not be performed * So Contingent Contract is to be performed under some circumstances only. Example: There is a Contract between A and B according to which A has to sell his goods which are in voyage, to 8 if the ship reaches the harbour safely. Here condition can be seen and it is Contingent Contract. All indemnity contracts, guarantee contracts and insurance contracts are Contingent Contracts. « Types of Contingent Contracts Depending upon happening of an uncertain event: Sometimes Contingent Contract depends upon happening of uncertain event. Then if such uncertain event takes place, the Contingent Contract becomes valid and if that uncertain event does not take place, the Contingent Contract is Voi Example: According to Contract formed between A and B, A has to sell goods to 8, if ship comes there safely, their Contract is valid and if the ship gets drowned, their Contract is void. Depending upon non-happening of an uncertain event: o f uncertain event. At times the Contingent Contract may depend upon non-happening of Then if that event does not happen, the Contract #s Valid and if that event takes place, the contract is void. Example: There is a contract between A and B according to which A has to sell goods to B, if the ship does not come back. Here, if the ship comes back, the Contract is void and if the ship gets drowned away, then itis valid.prayed for refund of the amgunt by the minor. It was held that the money advanced to minor cafinot be recovered because minor’s agreement was void Minor can be a promise or, beneficiary- The courts regard ininor is capable or accepting, ‘A.who was.a minor sold some goods to B who benefits under. an agreement, Exanple: was 8 major person, now in this case after the selfing the good A hasthe right to recover “the price from 8, even he is a minor person. 6 Ruby Sharma 4. No Ratification- the term ratification means approving or confirming a past contract. One of the basic rules of ratification is that only valid acts may be ratified. A minor's agreement is void from beginning so it.canniot be ratified. 4. Generally a minor is not liable to compensate for any benefits which he has received 6. No Estoppel- A minor is not estopped from Setting up the plea of minority. Example: -A, was a minor person, by fraudulently representing he to be a major person, and inducing B to lend him 1000Rs. B lends the amount but now B cannot sue A for recovery because the rule of Estoppel does not apply against the miner. 7. The agreement made by a minor jointly‘with a major person is void vis-a-vis the minor but can be enforced against the major person. 8. ; A minor cannot become a partner in a partnership firm. He can sHate the profits only without incurring any personal liability 9. Aminor’s parert/ guardian/ ranager car enter into contract on behalf of the minor The parents or guardian of a minor’are not liable for agreements made by them for , 10. minor. 11. Minor cannot appoint an agent because only competent person can appoint agent. However a minor can be appointed as an agent by any person competent to contract PERSONS OF UNSOUND MIND. © . Section 11 requires that in order ta be competent to contract, a person must be of sound mind. * What is a Sound inind? A person Is said to be of sound mind for the purpose of making a contract if, at the time when he makes it, he is capable of understanding it and of forming a rational judgments as to its effect.spon his interest. (Sec 12) Position of a person Who Is usually of unsound mind but occasionally of sound mind , According to section 12,"A person who is usually of unsound mind but occasionally of sound mind may rake a contract, when he is Of sound mind. Moreover,’ A person who is usually. Of sound mind but occasionally of unsound mind may nok make a contract, when hé is OF ind, #-38re man wid Is so drunk that he cannot understand the terms ofa feira.@ rational judgment as to its effect on his interest, cannot enter into a linsstir contract while such drunkenness lastsN Position of Agreement with persons of ynsound mind af * Idiot: - An idiot is a person who'ls of unsound mind by birth. His incapacity is permanent. Such a person can never understand contract and make a rational judgments as to its effect upon his interests. Consequently. the agreement with an idiot is absolutely void from * beginning. . . . ‘ * Lunatic: - A lunatic is the person whose mental powers afe deranged due to some disease of brain or mental strain. The lufacy is not @ disease of permanent nature and of course care able. This tye of person can make a contract at time when he sane, but if he did some contracts during insanity they wil be void. ‘* Delirious person: A person delirious from fever is also not capable of understanding the, nature and implications of an agreement. * Drunken or intoxicated person: - ‘A drunken or intoxicated person is terhporarily incompetent to contract. 4 * Hypnotized person: - Hypnotism produces temporary incapacity till a person is under the . effect of artificial induced sleep. * Burden of proof Case the burden of proof lies on 1. Where a person is usually of sound mind the surden of proving that he was of unsound mind at the time of contract lies on the person who challenges the validity of contract. 2. Where a person is usually of unsound mind the burden of proving that he was of sound ‘mind at the time of contract, lies on the person who affirms it. 3. in case of drunkenness or delirium from fever or other causes. The burden of Proving lies on the person who challenges the validity of the contract. PERSONS DISQUALIFIED BY OTHER LAW + Alien Enemy-an alien whose country is at war with the Republic of India is called an alien . enemy. * Foreign sovereigns and ambassadors-They can enter into contracts and enforce those contracts in our country but cannot be sued withaut the sanction of the Central Govt. * Convicts- A person Is called a convict during his period of sentence. He cannot enter into a contract during that time but after that period or when he is on parole he can enter into pontrest. =. y= @ Insolvents-He cannot enter into contracts relating to his property, cannot be sue or sued.Capacity to contract Meaning of capacity to contract, + * According to sec. 10 of India law of contract, all agreements are contracts i they are madé by the parties’ competent to contract. Thus the competence or capacity to contract is the one of essentials of a valid contract. Who are competent to contract? +Section 11 reads,” Every person is competent to contract who is of the age of majority according ta the law to which he Is subject and whe Is sound mind and:is not disqualified from contracting by any law to which he |s subject” List of Non Competency Conversely, it tan be said that the persons falling, under the following categories are not campetent to contract:~ +) Minors . © Persons of unsound mind . + Person disqualified from contracting by any other law of the land. Who is a MINOR? not attained the age af majority prescribed by law, is generally known Any person, who’ as Minor. . + Section 3 of the Indian majority act prescribes the age limit for majority’and says “A minor is a person who has not completed Eighteen years of age”. « But this same act also applies that in the following two cases a person attains majority only after he completes his age of 21 years;- 1. Where a court has appointed guardian of a minor’s person or property for both (under the Guardians and wards Act 1890) 2. Where the minor's property has been placed under the superintendence of court of wards. Position of Agreement by a Minor “10 Minor's agreement is absolutely void from very beginning, Therefore it will be never, senforced by law. Leading case: Mohiri Bibi V. Dharmodas Ghosh D, a minor borrowed a sum from M by yD, sued for setting aside the mortgage. The court mortgage was not valid. M executing a mortgage. Subsequently D, paldcthatsageerant with a minor is void therefore the Ay+ I must be given within a reasonable ume * It must show an intention an. the part of the acy Ne ACeApIOF to full term cannot precede an offer Pere Herm of he prerisey 5 _tmust be given by the party or parties to whom the offer is made * Itmust be given before the offer lapses or before the offer is withdrawn + Iteannot be implied from silence ‘Agreement to agree in future is not a contract Communication of offer, acceptance and revocation Time for revocation of acceptance (Secs, para?) * An acceptance may be revoked at any lime before communication ot the acceptance is compiete as against the acceptor . but not afterwards * A proposal may be revoked at any time before the communication of its ‘acceptance is complete as against the proposer. but not afterwards. Time for revocation of offer and acceptance (SecS, parat) * Communication of revocation means ‘teking back’, recalling ar withdrawal is complete when it comes to the knowledge to whom itis made * When communication is put in the course of transmission When it comes to the knowledge of the person to whom it is madev When communication is complete (Secd) * Mode of communication (Sec3), may be communicated by words speken or written or by conduct Contracts over telephone or telex or oral communication have same effect as entered face to face but properly received ie. heard and understoad by the offeror Loss of letter of accentance Acceptance is complete a3ainst the offera: as sous as the letter of acceptance is posted even ff it goes astray or lost. But it should be correctly addressed, sufficiently stamped and posted When an offer come to an end «Revocation or lapse of offer By communication of notice of revocation by the offeror at any time before its acceptance is complete as against him By lapse of time if not accepted within the prescribed time By non fulfilment by the offeree of 2 condition precedent to acceptance By death or insanity of the offeror provided the offeree comes to know of it before acceptance * IFa.counter offer is made to it If an offer is not accepted according to the prescribed or usual mode If the law is changed Rejection of offer 1 Express . By words spoken or written, but notice of rejection must reach to re ota 2. Implie. © By Counter offer/Canditional acceptancey An offeree can reject the Once rejected cannot be subsequently accepted y Rejection of an offerOffer and Acceptance Types of offer: 1 Express 2. Implied 3. Specific Offer-made to a specific 4. General offer to wor at large, no #74 socepted by him only ‘An offer is @ proposal mad i Sareea yay hropesal made by one party to another to enter into a legally binding What constitutes an offer? Must be communicated to the offeree. * Offer must be definite * Offer made’ with a view of obtaining t alates ig the asset of the offeree to such act or * _ An obvious intention an the ‘of the offerer to be bo Legal rules as to an offer rar mye Offer must be such as in ralstionshp, 4s in law is capabie of being accepted and giving rise to legal e mau of offer must be definite, unambiguous and certain and not loose and * An offer may be distinguished from |) A declaration of intention and an announcement ii) An invitation to make an offer or do business: iil) A newspaper advertisement is not an offer Offer must be communicated Offer must be made with a view to obtaining the assent Offer should not contain 2 term the non-compliance of which be assumed to amount to acceptance + Asstatement of price is not an offer Tenders : A tender (in response to an invitation to offer) is an offer and may be either: «a definite offer to supply specified goods or services ;or © astanding offer Who can accept an offer? ‘= Acceptance of a general offer to the world at large can be accepted by any person to whom it is made ; ® Acceptance of a particular offer can be by the particular person only Cross offers are not acceptance of offer Its expressed when tf communicated by spoke ied when it Is ‘en or written or by doing some required act. It is imp! 3 need ‘om the surrounding circumstances or the conduct of the parties Eg, Auction sale Legal rules as to acceptance eae itmust be absolute and unqualified {Sec7(1) «It must be communicated to the offerer . Iruat be secording to the mode prescribed or usual and reasonable modeCase study: Jones vs. Padgett The buyer bought cloth for making uniforms. However, the seller was not aware of the pur} bose of buying the cloth. Later, the bu the cloth is not fit for making uniforms. It was, however, eee The seller was not found guilty as the principle of ‘cavea 49 The buyer and seller have equal access to information is able to make personal inspection Example: Suppose Ram bought 10 cows from a cattle broker. Out of those 10, 2 cows had defects. However, Ram did not know this because he didn’t check all 10 cows though he paid for them. Guess what happened? The 2 infected cows died within three days of the purchase. Now, as there was no tacit condition that the cows would be in great health at the time of the sale, Ram cannot hold the cattle broker as responsible or having sold him those infected cows. It was Rams basic duty to check the health of those cows and not expect the cattle broker to state all the defects. fit for other normal purposes. t emptor’ applied in this case about the item and the buyer Sale of goods by description. Where the goods are purchased by description from a seller, who deals in such class of goods, there will be an implied condition that the goods shall be of merchantable quality. Implied condition as to quality or fitness. Where the buyer has made know to the seller the purpose for which he requires the goods and depends on the seller's skill and judgment, there is an implied condition that the seller will supply the goods which are fit for that purpose. Section 16(1) buys a black yarn from B and finds that it has been damaged by white ants. ion as to merchantable quality is broken and therefore, the doctrine of broken and therefore, the doctrine of caveat emptor does not hold good. EXCEPTION OF CAVEAT EMPTOR Usage of trade An implied condition or warranty as to quality or fitness for a particular purpose may be annexed by the usage of trade and if the seller deviates from that, the rule of caveat emptor does not hold good. Example: A dealer sells a refrigerator to Mohit. The refrigerator performs all other functions except making ice. This would amount to breach of an implied condition and thus the doctrine of caveat emptor will not work. Example: English sainfoin seeds, duly exhibited by a sample, are sold. The bulk corresponds to the sample but the seeds supplied are giant sainfoins and not English sainfoin, There is a breach of condition as to description of goods. So the doctrine of caveat sors aot applicable. ‘Consent by fraud.Sales of goods act, 1930 This act lays down special provisions governing the contract of sales of goods -The general law of contract is also applicable to the contracts for the sale of goods unless they are inconsistent with the express provisions of the Sale of Goods Act, 1930. # In 1930, Sections 76 to 123 of the Contract Act was repealed and a separate Act known as the Sale of Goods Act, 1930 was passed. # The law relating to sale and purchase of goods, prior to 1930 were dealt by the Indian Contract Act, 1872. CONTRACT OF SALE Contract of Sale may be of two types CONTRACT OF SALE or AGREEMENT TO SELL. According to Section 4 of the Act, a contract of Sale means “a contract where the selle: transfers or agrees to transfer the property in goods to the buyer for price” SALE A contract where the ownership in the geods is transferred by seller to the buyer immediately at the conclusion contract. EXAMPLE: A sells his house to B for Rs. 10, 00,000. It is a sale since the ownership of the house has heen transferred from A to B. AGREEMENT TO SELL It is a contract of sale where the transfer of property in goods is to take place at a future date or subject to some condition thereafter to be fulfilled. EXAMPLE: A agreed to buy from Ba certain quantity of nitrate of soda. The ship carrying the nitrate of soda was yet to arrive. This is ‘an agreement to sale’. In this case, the ownership of nitrate of soda is to be to transferred to A on the arrival of the ship containing the specified goods (i.e. nitrate of soda) ESSENTIALS OF CONTRACT OF SALE All the essential elements of a valid contract must be present in the contract of sale. Two parties: There must be two parties- a buyer and a seller to constitute a contract of sale. Goods: Contract of sale relates to goods |.e., movable property. Transaction involving purchase and sale of immovable property are out of the purview of the Sale of Goods Act. Price: The cotisideration for the contract of sale called price must be money,“i ¢ PRFECTS OF NOTICE TO ACT yg PARTN ERS (SECTION 24) Notice £0 one partners relating en the anne Rg Operating as notice to the time. Soa noticg wee f © fa dormant or secping pen ing in the business at that Fad ‘would not operate as a notice to the ADVANTAGES OF PARTNERSHIP FIRM a ath i It is not necessary to get the firm registered. A rship deer ‘ mn * - partnership. P | cither oral or in writing, is sufficient to create a * Availability of large resources: business, it may be possible t Proprietorship. The partners can business. Since two or more partners join hands to start a partnership © pool together more resources as compared to a sole Contribute more capital, more effort and more time for the * Better decisions: The partners are the owners of the business. Each of them has equal right ‘0 participate in the management of the business. In case of any conflict, they can sit together to solve the problem. Since all partners participate in the decision-making process, there is less scope for reckless and hasty decisions * Flexibility in operations: A partnership firm is a exible organization. At any time, the partners can decide to chenge the size or nature of the business or aren of its operation. There is no need to follow any legal procedure. Only the consent of all the partners is requir DISADVANTAGE OF PARTNERSHIP FIRM. * Unlimited liability: All the partners are joinily liable for the debt of the firm. They can shure the Viability. amoag themselves or any ane car be asked! to pu all the debs even from his personal properties depensing ‘the arrangement made between the partners, + Uncertain life: The partnership flrm hus ne legal existence separate fron its pariners. It comes to un end with death, insolvency, incapacity or the retirement of a pastter. Further, any unsatisfied or discontent partner can also give notice at any time for the dissolution of the partnership. + No transferability of share: If you are a partner in amy firm you cannot trinsfer your share or parte the company to outsiders, without the eonsent of other partners. This ereates inconvenience tie the partner wh ‘¢ the firm or sell part of his share to others. + Lack of harmony: Ina partnership frm ¢ Also, every partner ean place his or her pi any time, Hecaus ppariner has an equal right to participate in the mans nn oF viewpoint before the managenvent re 4 possibility: of Difference of opinivn may lead to the end of Une partnership vind the business ng ay mater at of this, sometiones. ther ind discontent amang the partners + Limited capital: Since the total murober of partners cansot exceed 20, the vapital to be raised is always limited Homey ont be possible start a very large busines in pa 1* Right to interest on advances, * Right to indemnity, INCOMING AND OUTGOING PARTNERS, No partner can be admitted as a partner into a firm without the consent of all the Gxisting pariners. Mutual trust and confidence among the partners being an escent ingredient of an ideal partnership, itis essential that here must be consent all the partners. LIABILITY OF AN INCOMING PARTNER. A new partner becomes liable for the debts and acts of the firm only from the date he is admitted as a partner. He cannot be held liable for the acts of the old firm. A new Partner may, however, agree to be liable for the debts exi jing prior to his admission but such agreeing will not give to a prior creditor the right to sue him because of absence of ‘privity of contract.” RETIREMENT OF A PARTNER: A Partner is said to retire when the surviving partners continue to carry the business of the firm, and the retiring member ceases to be a partner. In case of ‘particular Partnership’, a partner may retire with the consent of all the other partners, unless otherwise agreed. In case of ‘partnership at will’, a partner may retire by giving a notice in writing to all the other partners of his intention to retire, unless otherwise agreed. A retiring partner continues to be liable for the acts of the firm done before his retirement. He may, however, free himself from his liability towards the third parties for the debts of the firm incurred before his retirement by an agreement with such third parties and the partners of the reconstituted firm discharging the outgoing partners from all liabilities. The remaining partners alone cannot give this freedom to the retiring partners. He may be discharged if the creditors agree. EXPULSION OF A PARTNER. A partner may be expelled from a firm by majority of the partner's only if © The power to expel has been conferred by contract between the partners, Such a power has been exercised in good faith for the benefit of the firm. The partner who has been expelled must be given reasonable opportunity to explain his position and to remove the cause of his expulsion. INSOLVENCY OF A PARTNER. ‘When a partner in the firm is adjudicated as insolvent, he ceases to be a partner ‘on the the order of adjudication is made, whether or not the firm is thereby enend upon the agreement of partnership between the partners. The= Re x When the buyer relies on false representation of the seller and suffers damages, ie, in a contract where the buyer's consent was obtained by the seller by fraud, the doctrine of caveat emptor will not hold well. Example: A bought 3000 tins of preserved milk from U.S.A. The tins were labelled in such a way as to infringe the Nestles trademark. As a result, they were detained by the custom authorities, To get the clearance certificate from the customs, A had to remove the labels and sell them at a loss. Now A can hold the seller responsible for fraud and claim damages. AUCTION OF SALE Where goods are put up for sale in lots, each lot is prima facie deemed to be the subject ofa separate contract of sale; MEANING: Sale of auction is the public sale where the goods are generally sold to the highest bidder RULES OF AUCTION SALE: The law on auction sales is contained in Sec.64 of the Sale of Goods Act. According to it, in the case of a sale of auction the following rules apply: Where the sale is not notified to be subject to right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the seller or any such person; A right to bid may be reserved expressly by or on behalf of the seller and, where such right is expressly so re-served, but not otherwise, the seller or any one person on his behalf may, subject to the provisions hereinafter contained, bid at the auction; The sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner; and, until such announcement is made, any bidder may retract his bid. Ifthe seller makes use of pretended bidding to raise the price, the sale is voidable at the option of the buyer. The sale may be notified to be subject to a reserved or upset price, and any sale contravening this rule may be treated as fraudulent by the buyer. CONDITIONS & WARRANTIES (CAVEAT EMPTOR) _WHAT IS CONDITION? + Acondition is a stipulation essential to the main purpose of the contract, the breach of which gives right to repudiate the contract and to claim damages. Example: Paltu goes to Remo, a horse dealer, and says, | wanta horse which can run at a speed of 30 km. per hour. The horse dealer points out a particular horse and says, this will suit you. Paltu buys the horse. Later on Paltu finds that the horse can run only at a speed of 20km. /hr. there is a breach of condition, Paltu can repudiate the contract, return the horse to _ Remo and ck the price. ‘SAAT. ATI PLIED CONDITIONS?Different Kinds / Types of Cheques 1. Bearer Cheque When the words “or bearer” appearing on the face of the cheque are not cancelled, the cheque calles a bearer cheque. The bearer cheque is payable to the person specified therein or to any seing else who presents it to the bank for payment. However, such cheques are risky, this is becsese ¢ such cheques are lost, the finder of the cheque can collect payment from the bank 2. Order Cheque ‘When the word "bearer" appearing on the face cf_a cheque is cancelled and when in its place the word "or order” is written on the face of the cheque, the cheque is called an order cheque. Such a cheque is payable to the person specified therein as the payee, of to any one else to whom it is endorsed (transferred). 3. Uncrossed / Open Cheque When a cheque is not crossed, it is known as an "Open Cheque" or an "Uncrossed Cheque". The payment of such a cheque can be obtained at the counter of the bank, An apen cheque may be a bearer cheque or an arder one. Crossed Cheque Crossing of cheque means drawing two parallel lines on the face of the cheque with or without additional words like "& CO." or "Account Payee” or "Not Negotiable”. A crossed cheque cannot be encashed at the cash counter of a bank but it can only be credited to the payee’s account. 5. Anti Dated Cheque If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as fated cheque”. Such a cheque is valid up to three months from the date of the cheque. ‘a 6, Post-Dated Cheque Ifa cheque bears a date which Is yet to come (future date) then it is known as post-dated cheque. A post dated cheque cannot be honoured earlier than the date on the cheque. 7. Stale Cheque Ifa cheque is presented for payment after three months from the date of the cheque it is called stale cheque. A stale cheque is not honoured by the bank. Grossing of Cheques A crossed cheque is a cheque that is payable on'y through a collecting banker and not directly at the counter of the bank, When two parallel transverse lines, with or without any words, are drawn generally, on the left hand top corner of the chequi The practice of crossing a cheque seems to have priginated in England, when cheques were likely to JD be stole: ‘sy rohienr: wets often robbed mail carried in slowly moving coaches. Crossing of cheques N ne § 1gradually reduced the number of Payment to th of time, crossing of cheques came to have |e @ wrongful holders of the cheque. With the Pi as: persons. These are the drawer, holder and the b me Bal recognition. Cheques may be crossed b: ankers, according to the section 125 of eae Types of Crossing (1) General crossing - comer. Words ene cheque bears two transverse parallel lines at the left hand of its top s ‘and company’ or any other abbreviation (such as & co.) may be written between these two parallel li i i ines, e i ‘ iable’, i: erecting ither with or without words ‘not negotiable’, is called General Effect - Payment can be paid through bank account only, and should not be made at counter of paying bank. (2) Special crossing - when a cheque bears the name of the bank in between the two parallel lines, with or without the words ‘not negotiable’ is called Special Crossing. Effect - The bank will pay to the banker whose name is written in between the crossing lines. Restrictive crossii Account payee crossing - in this, crossing of cheques is done by writing Account Payee or Account Payee only in between the crossing lines. Effect - Payment will be credited to the account of payee named in the cheque. {4) Double crossing - when a cheque bears two special crossing, is called double crossing. In this second bank act as agent of the first collecting banker. It is made when the banker in whose favour the cheque is crossed does not have branch where the cheque is paid.REMEDIES OF BREACH OF CONTRACT OF SALE, The sales of goods Act gives the following remedies to a seller and a buyer for breach of acontract of sale. Seller’s suits. © Suit for price.(Sec-55) Suit for damages for non-acceptance of the goods(Sec-56) * Suit for Repudiation of contract before due date.(60) * Suit for interest.Sec-61) Buyer’s Suit © Suit for damages for non-delivery of the goods(Sec-57) ¢ Suit for specific performance(Sec-58) © Suit for breach of warranties (59) « Suit for damages of Repudiation of contract by the seller before due date.(60) © Suit for interest.Sec-61) RIGHTS OF UNPAID SELLER UNPAID SELLER Seller :- A person who sells the goods or agrees to sell the goods is called seller. Unpaid: - It means payment is not made or without payment. In simple words, "Unpaid seller" means a person who has sold the goods for a price but price has not been paid to him, Sales act defines the "unpaid seller" in the following words: Unpaid Seller Is a Person:- © Towhom the whole price has not been paid or tendered. © And where a bill of exchange or other negotiable instruments has been accepted by him as a condition on which it was received has not been fulfilled by reason of dishonour of the instrument or otherwise. © EXAMPLE: Party A sells a car on cash basis to party B and the price has not been received yet. Rights of unpaid seller Right against goods. A. When the property in the goods has been transferred? Right of lien: The rank yy ti ns lawfully right to retain the goods possession until the full price \\ iszeceivod.Jn uuspaid seller can exercise his right of lien in following cases.{ Sec 47-49)© Po pay all charges and bearall risk subseq rent to delivery of the goods on board the ship, The CIE contract: is a cost, insurance and freight contract. “It is a type of contract which is: more Avidely and more frequently in-use than any other contract used for the purposes of seashore commence tinder a CIF contract the seller is req ured fo arrange the carriage of the goods and their in transit, and the cost of those arrangements is included in the contract price, The seller ill of lading and a policy of insu nd forwards them to the buyer, tagether with an tor the price, and the buyer pays om receipt of the documents insu obt invoie The CIE has many advantages. The buyer has the sidvantage of knowing fram the date of the contract the exact price he must pay’ to obain the geods: the contract price includes freight and insurance More importantly. the use of documents to perforin the contract and fepresent the goods allows the parties o deal with the goods afloat. ‘hus the buy." may resell the goods before they arrive. The tse ve documents facilitates the involvement of finan ial institutions: the documents can be transferred direct to the buyer's bank as security for the advance of the price: the bank will be willing to take up And hold documents where it would not be prepaicd fo take possession of the goods themselves and otmally. where the payment is to be by the bankers’ documentary credit. this is what happens, This, um, allows the seller to be assured of payment and to receive the goous. Indeed, he is assured of payment even if the goods are damages or never arrive at all for he is entitled to be paid on is generally protected against such losses by the bill of it, and the policy of insurance. covering most presemation of the documents: the bi lading, giving a contractual right against the ex jertal losses. addition the EvampleeA agrees 10 sell 100hags rice to B-@ Rts. S00 per bags of ree. London, freight is Rs 1000/-and! insurance premium is Rs 5¢0!- Tine price to be paid by B would be a) Price of goods b) fieight charges e) east of insurance 500 ~ Rs.S1S00/- So, 50000+1000 Seller's duty atthe port of shipment goods of the description contained in the contract Io ship «To procure a contract of affreightment, under which the goals witl be delivered at the destination contemplated by the contract ance upon the terms current in the trade which will be available for the pt © To arrange for a in: henelit af the buyer, Ifthe seller does not affect insurance, the buyer is ot bound 0 a and pay the goods even if the goods arrived safely at the destination. «To tender, within a reasonable time after shipment, the bill of lading, the policy of insurance: the invaice and other documents to the buyer, so that he may obtain delivery of the goods. Buyer's duty jess the freight, © Fe accept the documents if they are complete and regular, and pay the price | been + is bound to do so even if the goods have on delivers of the documents. ‘The b destroyed, for he has remedy against the 1st ice of the gevds, © At the port of destination. * To pay the unloading. wharf ape char ie X TH pay all eisioms and import dutiesWhat is a Marking of a cheque? ‘A cheque does not require acceptance in ordinary course of business as itis intended for immediate payment. Marking is the writing on a cheque by the drawee banker that it would be honoured when it is duly presented for payment. A person may nat like to part with goods in return for a cheque from a party not well known to him. In such context the banker on whom the cheques are drawn may be asked by the customers to mark the cheques as good for payment. This implies that cheque was drawn in good faith and on funds sufficient to meet it What is dishonour cheque? A cheque is an unconditional order to the Bank by its customer (account holder) to pay a sum of money to a person named in the order, if the cheque is drawn (written) correctly. If such a cheque is presented to the banker, and if the order is nat honoured by the banker, then the such a cheque is known is dishonoured cheque. What are the essential of a cheque? It must be in writing, "It must Singed by the drawer i.e account holder ‘It must contain an order. *It must be drawn on a banker. it must be drawn only by the customer of the bark. *The order relating to payable must be unconditior “The order must be for the payment of a certai It must be payable on demand. “The amount of the cheque must be made payable to certain person or to this order. What is ‘At par Cheque’? At par cheque is a cheque on which no charge is deducted by the bank for crediting to your account, even if your account is in a branch that is in a different city from where the cheque is issued. For example, if your account isin Mumbai, and a company with its account in Delhi gives you a cheque, the Bank will charge certain amount from the cheque, as the cheque will have to be sent to Delhi to get cleared. However, with the networking of branches of most banks, it is possible to get the cheque cleared without sending it to the issuing branch So, many private and some public sector banks are issuing at par chequebooks to their account holders. This means that you can pay a bill in Delhi by cheque even if your account is in some different city. The receiver of the cheque will not have to pay any charge on the credit of the cheque, meaning that he will be more willing to accept your cheque AMFille Note, Bills and Chequ ‘Cheque’ an instrument wh ich contains an unconditional order, drawn on a banker, directing to pay a certain sum of money to the person whose name i specified in the instrument. ® ‘Bill of Exchange’ is a document contains an unconditional order, directing a person, to pay a certain amount to a specified person. These two terms. sound the same, which becomes the cause of confusion for many people. Definition of Cheque A cheque is a type of bill of exchange, used for the purpose of making payment to any person. It is an unconditional order, addressing the drawee to make payment on behalf the drawer, a certain sum of money to the payee. A cheque is always payable on demand, i.e. the amount is paid to the bearer of the instrument at the time of presentment of the cheque. It is always in writing and signed by the drawer of the instrument. Specimen of Cheque Date Pay. = a sum of Rupees. AVC No, 12345678910 ABC Bank 622, Vijay Nagar, Indore (M.-P) Signature ‘There are three parties involved in case of cheque: Drawer: The maker or issuer of the cheque. Drawee: The bank, which makes payment of the cheque. oo Payee: The person who gets the payment of the cheque or whose name is mentioned. on the cheque. It should be noted that the issuer must have an account with the bank. There is a specified time limit of 3 months, during which the cheque must be presented oe payment. If a person presents the cheque after the expiry of 3 months, then the cheque will be dishonoured, The various types of cheques are: Electronic Cheque: A cheque in electronic form is known as an electronic cheque. Truncated Cheque: A cheque in paper form is known as truncated cheque. ART ATEContract involving sea routes In a contract of sale which invalves sea routes, eestain 5 toutes, ceitain special clauses and conditions are to be foun, Me meaning ofthese clauses fs Bee standardised of cat a ah SH be fn xl practices of merchants. Some oF these clauses which are quite allen foun! mo \d their legal effects are discussed below: “ customs a contracts FASS. Contract: Stands for (Free Alongside Ship.) The property in goods sold under an F-A. contract asses from the seller to the buyer when the goods are delivered alongside the ship named by the buyer under a ‘contract of carriage’. "Alongside" means that the goods are within reach of a ship's lifting tackle, When used in trade terms, the word “free” means the seller has an obligation to deliver goods to a named place for transfer to a carrier, Seller's duty * To deliver the goods alongside the ship. + To notify the buyer immediately that the goods have been Uelivered alongside the ship. Buyer's duty © Toarrange for the contract of alfreighunent nt notice of the name of the ship and time for delivery alongside the * To give the seller suffi ship. * To pay all charges and to bear all risk from the time the goods are delivered alongside the ship. F.0.B. Contract- Stands for (Free on Board)- The seller must put on voard ship goods which confor to.the contract an must pay all charges in comection with loading. The seller is not obliged to book shipping space in advance: the buyer must nominate the ship to carry the goods and notify the seller of the nomination in time to allow the seller to deliver the goods on board. The costs of carriave are for the buyer's account, However. the parties may, and frequently do, modify their obligations under any FOB contract. In paiticular, the relationship between seller. and buyer'and carrier may ‘cording to the nature of the arrangements made. Seller's duty To deliver the goods on board the ship named by the buyer: Onee the goods are put on hoard the ship. they are at the risk of the buyer © The duty of a seller ends when he delivers the goods at his own expense to the ship at the por oF shipment. Such delivery transfers the possession, property and risk to the buyer * To give notice of the shipment to the buyer so as to enable him to protect himself by insurance against loss during.the sea tran.it. If'seller’s fail to do this, goods will be at his risk Buyer's duty * To arrange for the contract of alfreightment * To name the ship to which the goods are to be delivered or authorise the seller to select the7 2. While the goods are out of actual possession of seller, but have not reached buyer's Possession i.e. goods are in transit with career, 3. The unpaid seller can stop the goods in transit only for payment of the price of the goods and not for any other charges. The unpaid seller cannot stop goods in transit in following cases. 1. When the goods reaches the destination. 2. While the buyer or his agent takes possession of delivery even if it is not reached destination. 3. In case the carrier is agent of the buyer, the transit comes to an end the instance carrier receives the goods and seller cannot stop the transition. 4. Carrier's wrongful refusal to deliver goods to the buyer Example:"A" sells TV set to “B’. "A" delivers the TV to the carrier to carry it to “B", Later on gets news that “B” has become insolvent;"A” can stop delivery. INDITIONS AND Condition: Acondition isa stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. [Sec 12(2) Warranty: A warranty is a stipulation collateral to the main purpose of the contract, breach of which gives rise to a claim for damages, but not a right to reject the goods and treat the contract as repudiated. (Sec 12(3) When condition to be treated as warranty [Sec.13] © Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty. [Section 13(1)}. © Where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, unless there is a term of the contract, express or implied, to that effect. [Section 13(2)] © Nothing in this section shall affect the case of any condition or warranty 3 fullest! UF Which is excused by law by reason of impossibility or otherwise. (Section 13(3)].Sale of Goods Act, 1930 (Condition and Warranty) Conditions: - a condition is a stipulated essential to the main Purpose of the contra breach of which gives rise to a right to treat the contract as repudiated .A condition ee a contract of sale is the stipulation which constitutes the hardcore of the conteact and is essential to the main purpose of the contract Kinds of conditions:- Express condition-a condition that has been expressly provided for agreed upon by both the parties at the time of the contract of sale. Implied conditions-conditions are said to be implied when the law incorporates their existence as implicit to a contract of sale unless otherwise agreed upon between parties both parties shall be bound by implied conditions unless they are excluded by an express ‘agreement between them Implied conditions are of following seven types:- * condition as to title * condition as to description * condition as to sample * condition as to sample as well as description * condition as to quality or fitness * condition as to merchantability * condition as to wholesomeness Warranties:- a warranty is a stipulation collateral to the main purpose of the contract ,the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated. Kinds of warrantie: Express warranties-a warranty is said to be express when the term of the contract expressly provides for it. At the time of contract of sale. both the parties may agree upon any number of express warranties Implied warranties-an implied warranty is one which the law incorporates into a contract of sale. Even when no express representations have been made in connection with a contract of sale, the law implies certain representations as having been made by the parties while entering into the contract .following are the three implied warranties:- * warranty as to quiet * warranty against encumbrances * warranty to disclose the dangerous nature of goods i iiss"his Act extends to whole of India (except the state of tammu &Kashmir) A contract of partnership is a special contract. Where the partnership act is silent on any Point the general principles of the law af contract apply (Section 3) ° The law of partnership is contained in the Indian Partnership Act, 1932, which came imto force on Ist October, 1932 Thus, partnership is the name of legal relationship between or among persons who have cmered into a contract. ~ “Partnership is the relation between persons who have agreed to share the profits of business carried on by all or any of them acting for all” MEANING OF “PARTNER” " FIRM” AND “FIRM NAME” + Section 4 of Indian Partnership Act, 1932 provides that: Persons who have agreed into Partnership with one another are called individually “PARTNER and collectively “FIRM” and the name under which their business is carried on is called the” FIRM NAME” “Partnership is thus Invisibility which binds the Partners together and firm is the visible form of those partners who are thus bound together”. MAXIMUM LIMIT ON NUMBER OF PARTNERS * Section 11 Companies Act provides that the maximum no. of persons, a firm can have: In case of partnership firm carrying on @ banking business 10 In case of partnership firm carrying on any other business 20, if the number of partners exceeds the aforesaid limit. the partnership firm becomes an illegal asscciation TYPES OF PARTNERS * Nominal partner (does not contribute any capital; but lends his name) Sleeping partner. Actual partner, Minor as a partner Pariner in profits only © Sub-partner and credit to the firm PARTNERSHIP DEED The partnership Deed is to be duly stamped as per the Indian Stamp Act, and duly signed by all the partners. A partnership is formed by un agreement. This agreement may be in writing or oral. Though the law does not express!y require that the partuership agreement should be in writing, it is desirable to have it in writing in order to avoid any dispute with regard to the terms of the partnership. The document which contains the term of a partnership as agreed among the partners is called “partnership deed”Conditions Warranty Stipulations that is essential for main purpose of contract. Non- fulfilment of such will mean loss of foundation of contract. These are termed as ‘Conditions’ A contract of sale cannot be fulfilled unless the condition to it, is fulfilled. In case of breach of condition, the aggrieved party can reject the contract Breach of condition can be treated as breach of warranty if the aggrieved party is happy with compensation. Warranty is collateral to the main purpose of contract. The main contract can be fulfilled even if the warranty is not fulfilled In case of breach of warranty, the aggrieved party can only claim for damages. Breach of warranty cannot be treated as breach of condition. Doctrine of caveat emptor is a Latin expression that means caution buyer i.e. ‘let the buyer beware’ the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made. So, the buyer must examine goods thoroughly. Doctrine of caveat venditor means ‘let the seller beware’. The seller shall be under an obligation to inform the buyer of any defeat in the goods sold at the time of the contract the defeat is obviously known to the buyer. This force the seller to except in a case where discourages sellers from vending products of take responsibility for the product and unreasonable quality or of dangerous nature* The goods have been sold without any stipulation as to credit, © The goods have been sold on credits, but the term of credit has expired. © The buyer becomes insolvent. Right of stoppage in transit: © Duration of transit. © When transit comes to an end. Right to resale: If a buyer fails to pay or offer the price within a reasonable time, the unpaid seller has the right to resell the goods in the following circumstances. «Where the goods are of perishable nature. © Where the unpaid seller has exercised his right of lien or stoppage in transit and gives a notice to buyer of his intension of resell the goods. © Where the unpaid seller has expressly reserved his right of resale. © Where seller gives notice to the buyer of his intension to resell and the buyer does not pay within a reasonable time, Right of an unpaid seller against the buyer personally © Suit for price. Suit for damages for non acceptance. « Repudiation of contract before due date. «Suit for special damage. © Suit for interest. Other rules to satisfy the conditions for this right are: IL The unpaid seller must be in actual possession of the goods sold. Ill. It can be exercised even If the documents of title have been delivered to the buyer. IV. It can be exercised for the price and not for other expenses. V. Ifthe seller delivers some goods, it can be exercised on the remaining Termination of right of lien Seller's right of lien is terminated in following cases.1. When he delivers the goods to the carrier or other bailey for transmission to the buyer RIGHT OF STOPPAGE IN TRANSIT (Sec. 50 to 52] It means stoppage of goods while they are in transit to take possession until the price is paid (sec.50-52) \Inpatd seller can stop the goods in transit in the following cases. 1. While the buyer becomes insolvent.* implied conditions are those, which are presumed by law to be present in th esent in the contract. + implied condition may be null and void or waived by an express agreement. plied conditi y be a 8 1. Condition as to title. 2. Sale by description 3. Sale by sample 4. Sale by sample as well as description 5. Condition as to quality or fitness 6. Condition as to wholesomeness CONDITION AND WARRANTY DISTINGUISHED [SEC.12 (2)(3)] CONDITION « _Itis essential to the main purpose of the contract. * The aggrieved party have a right to repudiate the contract and claim for damages. * This can be treated as a breach of warranty. WARRANTY * [tis collateral to the main purpose of the contract. © The aggrieved party have a right to claim for damages only. © This cannot be treated as a breach of condition. _WHAT IS WARRANTY? + A warranty isa stipulation collateral to the purpose of the contract, the breach of which gives the aggrieved party a right to sue for damages only, and not to avoid the contract. Example: Assume that a farmer, intending to plant no-till soybeans, approaches a seller to buy herbicide. Assume further that the buyer requests a particular herbicide mix but the seller suggests a less expensive mix. ifthe chemicals fal to kill crabgrass and the a low yield of soybeans, the farmer could sue the seller for breach of the farmer has knew what the farmer warranty of fitness for a particular purpose because the seller required. BREACH OF WAARANTY (SEC.13) When buyer waives the performance of the condition. . as breach of warranty and When buyer elects to treat breach of the condition does not treat the contract as void. © When the contract of is inseparable and the buyer has accepted the whole noutis “ir part thereof.AW Transfer of general property: The object of the contract must be the transfer of general property as distinguished from the special Property in the goods by one person to anather. The term ‘general property’ refers to ownership of goods. Goons: The subject matter of a contract of a sale must be goods According to Section 2(7) the term ‘goods’ means “every kind of movable property other than actionable claims and money and includes stock and shares, growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale” Specific Types of goods: * Exiting goods * Future goods Unascertained + Contingent goods 1 Existing goods: These are the goods which are owned or possessed by the seller at the time of sale, Only existing goods can be the subject of a sale. The existing goods may be- a) Specific goods: Goods identified and agreed upon at the time of making of the contract of sale of goods. b) Ascertained goods: Goods identified subsequent to the formation of the contract of sale. The terms ascertained and specific, are commonly used for same kind of goods. c) Unascertained or generic goods: Goods not identified or agreed upon at the time of making of the contract of sale. They are the goods defined for description only. Example: ‘A’ who wants to buy a television set goes to a showroom where four sets of Janta model of Oscar television are displayed? He sees the performance of a particular set, which he agrees to buy. The set so agreed to be bought is a specific set. If after having bought one set he marks particular set, the set so marked becomes ascertained. Till this all is done all sets are unascertained. 2, Future goods: Goods to be manufactured, produced or acquired after making of the contract are called future goods. Example: ‘A’ contract, on 1st January, to sell B 50 shares in Reliance Ltd., to be delivered and paid for on the 1st March of the same year. At the time of making of the contract, A is not in possession of any shares. The contract is a contract for the sale of future goods. 3. Contingent goods: Goods, the acquisition of which by the seller depends upon an uncertain contingency are called ‘contingent goods’. They are also a type of future goods, Example; ‘A’ agrees to sell 100 units of an article provided the ship which is bringing them, reaches the port safely. This is an agreement for the sale of contingent goods,Contract between the parti terminated by a contract, + By notis Where the partnership is at notice in writing to all the ot dissolution once given canni will. the firm may be dissolved by any partner giving the her partners of his intention to dissolve the firm. A notice of ot be withdrawn without the consent of all the other partners * On the happening of certain contingencies: Subject to a contract between the partners, a firm may be dissolved if: + Iconstituted for a fixed term, by the expiry of that term, * If constituted to carry out one or more adventures or undertakings, by the completion thereof. «By the death of the partner. * By the adjudication of partner as an insolvent. ‘© Compulsory Dissolution: A firm may be compulsorily dissolved if: © When all the parmers, or all the partners but one, are adjudged insolvent. When some event has happened which makes it unlawful for the business of the firm 10 be casried on? > Dissolution by the Court: Dissolution by the court is necessitated when there is a difference of opinion between the partners regarding the matter of dissolution in cases of: * Insanity * Permanent Incapacity * Misconduct «Persistent breach of agreement © Transfer of interest «Just and Equitable 'S OF ADMISSIONS BY A PARTNERS (SECTION 23) EFFE Admissions made by partners concerning the affairs of the firms if’ made in the ordinary course of the partnership business are evidence against the firm such admissions made by partners will bind the firm. An admission by a person betore he became a partner in the firm is not evidence against the firm fsCONTENTS OF PARTNES SHIP DEED, A partnership deed may contain any mati reliting 4 the reyulation of provisions in the deed should be within the limits of Indian Partnerstup A Partnership Deed should contain the following clause:- partnership, but all Act, 1992. However Pastner ¥ Nature of business ¥ Duration of partnership Name of the firm Capital Share of partners in profits and lossex Bank Account firm Books of account Powers of partners Retirement and expulsion of partners Death of partner Dissolution of firm Settlement of disputes ESSENTIAL ELEMENTS OF A PARTNERSHIP BAKER RR KKK * There must be a contract. ‘© Between two or more persons. © Who agree to carry on busine: © With the object of sharing profits, © The business must be carried on by ali or any of them acting for all 0 |ERSHIP: KINDS OF PAI © Partnership at will Where no provision is made by cont partnership, the partnership is ‘partnership at will. The essence of a partnership at will is that the partners do not fix any term of partnership and are free to break their relationship at their own sweet will. It is @ partnership for an indefinite period + Particular partnership: When a partnership is formed for a particular period or for a panicutar venture, itis called particular partnership. In such a case, the partnership is automatically dissolved at the expiry of the fixed term or on the completion of the venture. RIGHTS OF PARTNERS © Right to take part in the conduct of the business © Right to be consulted = Right to access the books. © Right to share the profits. © Right to interest on capital sis ct between the partners for the duration of theirREMEDIES OF BREACH OF CONTRACT OF SALE, The sales of goods Act gives the following remedies to a seller anda buyer for breach of a contract of sale. Seller's suits. Suit for price.(Sec-55) Suit for damages for non-acceptance of the goods(Sec-56) © Suit for Repudiation of contract before due date.(60) e Suit for interest.Sec-61) Buyer’s Suit © Suit for damages for non-delivery of the goods(Sec-57) Suit for specific performance(Sec-58) Suit for breach of warranties (59) Suit for damages of Repudiation of contract by the seller before due date.(60) Suit for interest.Sec-61)