 TheSal eofGoodsAct ,1930:movabl egoods( Act33of1963:“Indian” removedThe

I
ndianSal eofGoodsAct ,1930)
st
 TheActcamei ntoforceon1 Jul
y,1 930.
 TransferofPr opertyAct :immovabl egoods
 Gener alClauseAct ,1897
 Definit
ionsofmovabl eandi mmovabl epr oper
ty:
1.S.3Cl .26
2.S.3Cl .36
 Noi l
lustrat
ionsi nPar t
ner shipActandSal eofGoodsAct .
 LexMer chatur i
a:l
awofmer chant s
 El
ement sofCommer cialTransact ions:
1.Tr ansferofmovabl egoods
2.Negot iableInstrument sAct ,1891 :paymentofmovabl egoods
3.Car r
iage:modesoft ranspor tati
onofgoods
 HirePur chaseAct ,1972
Repeal edbyPar li
amenti n2005;Cont ractsActcoversit
;Bailment+OptiontoBuy:
Leev.But l
er
2014:Supr emeCour trevivedHi rePur chaseAct
 Cont r
actst hatshal l
bei nwr iti
ng:Fr audsAct1 677(12categori
es)
1.
2.Tr ansferofi mmovabl epr oper t
y

 Parol
eevidence:reasonforsuchcontractstobeinwri
ti
ng.
 Advocat
e’sl i
en
 Advocat
e’sAct
 S.46ofContractAct:Ti
mei sgeneral
l
yt heessenceofacontr
act
Sal
eofGoodsAct :Timei sgener
all
ynott heessenceofacontr
act
.
S.3
S.66
 M.C.Setal
vadCommi t
tee:t
ermIndianremovedf rom Sal
eofGoodsAct
 Amendmentmadei n1963

[
Mull
a:Sal
eofGoodsAct]
[
Khar
gam Bal
a:Negot
iabl
eInst
rument
sAct
]

 UNGA:1
984-COPRA

 Vi
ennaConvent
iononI
nter
nat
ional
Sal
eofGoods(
CISG)
.

SECTI
ON4
 Condi
ti
onsf
orCont
ractofSal
e:
 Ther
emustbeacont
ract
.Thecont
ractmustbebi
l
ater
al.
 Pur
poseofcont
ract
:tr
ansf
er.
 Pr
oper
tyi
nmovabl
egoodsi
str
ansf
err
ed.
 Ther
emustbemoneyconsi
der
ati
on(
pri
ce)
.

 Def
ini
ti
onofGoods:Sect
ion2(
7);Moneyi
snotgoods.Moneynoti
nci
rcul
ati
oncan
becal
ledgoods.

 Def
ini
ti
onofpr
oper
ty:Sect
ion2(
11)
 Romalpaclause(Sect
ion23)
-Reser
vat
ionofr
ightofdisposal
.Al
umini
um Indust
ri
es
Case,1975;j
udgementbyHouseofLor
ds-Reservat
ionofRightofDi
sposal.

 Absol
utet
ransf
erandCondi
ti
onal
transf
er.

 TCSv.Uni onofI ndi

a,2007:I
nformati
onstoredinCDsi nacustomi sedf ormisgood.
Transferofinf
ormationfr
om onecomput ertocomput er:quest
ionnotr aisedi
nthis
parti
cularcase,soitwasn’tanswer ed.Tangi
bil
it
yandi ntangi
bil
i
tyisnott hecri
ter
ia
forgoods.Goodsmustbemar ketabl
einnatur
e.Therefore,noquest i
onoft angi
bil
i
ty
i
nI ndi
a.

 BSNLv.Uni
onofI
ndi
a,2007

 IMagi
cv.Uni
onofI
ndi
a,2009

 Unr
ajv.Uni
onofI
ndi
a,1
986

 Vi
kasSal
esvUni
onofI
ndi
a

 Sunr
isevUni
onofI
ndi
a,2006

 Advocat
e’sf
il
esar
enotconsi
der
edgoods.Advocat
ecannotexer
cisel
i
en

 Fat
herofMer
cant
il
eLaw:Lor
dMansf
iel
d

 Fat
herofCont
ractLaw:McKi
nseyChal
mer
s

 Mer cantil
el aw:Law ofCont ractisthepr i
mar yrol
eofmer canti
l
elaw.
 Chalmer sdr af t
ed3l aws:
1.Sal eofGoodsAct .
2.Bi l
lofExchangeAct ,1882.(Inspiredfrom 2ndedit
ionof“Bi l
l
s” byByl es)
3.Mar ineI nsuranceAct ,1906
Theref or
eFat herofCommer cialLawi nBr it
ian.
 4inst r
ument sinNegot iableInstrument sAct1 881:Promissorynotes(4),bi
ll
of
exchange( 5) ,cheques( 6),bankdr aft(85A)
st
 Sour ceofNI A1 881:1 editi
onof“Bi l
l
s” byByl es.
 StatutoryTr ansact i
ons/Compul soryAcqui siti
ons:Consentnotr equi
redforcontract
.
 Par tyAut onomyessent ialinacont r
actofsalebuti snotessenti
alincaseof
st
atut orytransact i
ons.
 Cont actofSal e:cont ract+bar gai n
 New SugarI ndiaMi ll
svCommi ssionerofSalesTax
 Sal arjungSugarMi ll
sLt d.
 Bi shnuAgenci es
 Cof feeBoar dKar nataka
 J.Hidayat ullah’sdi ssent ingopi ni
oni nNew SugarI ndi
aMi l
l
scase.

Di
ff
erenceBet
weenSal
eandAgr
eementt
oSel
l
 Legal framewor kisSect ion4.
st
 1 di f
ference:Salecont ract-Contract+Conveyance;Agreementtosel
l
-pur e
agr eement .
nd
 2 di fference:Transferofpr oper
tyhastakenplaceincaseofsalecont
ract.
Agr eementt osell-t
ransferhasnott akenpl
ace.
 3rddi ff
er ence:r
iskpar i
tdomi no;Salecont
ract
-executedcontract
,ri
ski
stransfer
red;
 Agr eementt osel l
-execut or ycont r
act ,ri
skwi ll
passsubsequent ly
t
h
 4 di fferencei nt er msofr emedi es.Sal eCont act:ifpricenotpaid,suitf
orpr i
cewill
takepl ace;Agr eementt osel l:ifpr i
cenotpai d,damageswi l
lber equi
redtobepai d.
 CASELAW:
1.I nstallmentSuppl yPvt .Lt d.Case
2.GanonDunker l
ey( 1
959)
 Sect i
on26:Ri sk
1.Physi cal risk:goods
2.Financi al risk:price
3.Ri skofcr edi twor t
hi ness:abi li
tyt opay
4.Buyer ’saccept ancer i
sk:per f
or manceofcont ract[
Doct ri
neofconf ormi
tyof
cont r
act]
5.Legal
6.Pol iti
cal
 Sect i
on9:Ascer tai nmentofpr ice( 4met hods)
1.Fixedbyt hecont ract
2.Lef ttobef ixedinmannert her ebyagr eed
3.Det erminedbyt hecour seofdeal ings
4.Fixedbyt hi rdpar t
ies.
 Reasonabl epr ice:quest ionoff act;comesi ntopi ctureonl
ywhent heabove4ar e
absent
 Sect i
on1 0:Agr eementt osel latval uat i
on
 Becauseoft hirdpar ti
esf ixingpr ice,sect ion1 0isbei ngusedl esserandlesser.
 Pr i
cef l
uct uati
onsonl yincaseofi nt ernationalcont racts.
 Ar ti
cle79ofCI SG/Sect i
on39ofI CA,1 872:Fr ustrati
on/Commer cialHardship

CHANGESBROUGHTABOUTBYTHEACT
 Object i
veofSect ion1 3( a,b,c)
Overrelianceoni ntentiont ri
edtober emoved.
 “Ti meast heessence” dependsont hisandhencei snott hereinSal eofGoodsAct ,
1930( Sect i
on1 1).
 Thet ransferofpr oper tywi llt
akepl acewhent hepar t
iesintended( Secti
on1 9).
 Section27-30:Whent hesal eisdonebyost ensibleowner( di
sput edowner ).
 I
ntermedi ateTerms
 Rulesr elatedwi th(1)car ri
ers,(2)st oppageofgoodsi ntransit[Sect i
on51 ],(3)aucti
on
salehavebeencl ar i
fi
ed.
 Carri
ageofGoodsBySeaAct1 936gover nsBillofLading( documentoft itl
e)
 CharterPar tyCont r
act( CHP)
 I
thasf orgonei ll
ustrati
ons.New l exmer caturi
awasdevel oped.Lexmer cat uri
a
agenci es:ICC( Par i
s),FI CCI,ASSOCHAM,CI I
)
 I
nternat i
onal Commer cialTerms( I
NCOTERMS) :
Ithasbeenr ecogni sedbyI ndiain
Section39ofSal eofGoodsAct ,1930.Theexactnamesar enott her eintheActbut
thereexi stsexplanat i
on.
1.Ax-wor kscont ract:namedpl aceofdest i
nati
on;cer t
ainobl i
gat i
ononpar tofthe
buyerandcer tainot heronpar tofthesell
er,par t
ynotr equiredt onegot iate.
2.Fr eeonBoar d( FOB)
3.Cost ,InsuranceandFr eight(CI F)
 Negot iati
onpr iortot hemaki ngofcont r
actisgener al
lynotbi nding.Incertai n
cir
cumst anceswhenambi guit
ypr evail
sthenitcanbebi nding:Doct ri
neofSubst ant
ial
Reli
ance.
 Conf
li
ctofFor
m.Resol
vi
ngi
n3ways:(
1)Fi
rstshor
tRul
e(2)Lastshor
t(3)Bestshor
t

 Negot iat
ionsbi ndingornot :
Bindingifot herpar t
yhassubst anti
allyrel
iendont hatnegot i
ationforenter i
ng
DoctrineofSubst antialReliance( Sect i
on1 15ofIndianEvi denceAct -promi ssory
estoppel )
Reasonabl etimeper iodpasses.
Section44
Section35:Sel lernotboundt odel i
vergoodsunl essbuyerappl iesfordelivery.
Saleofgoodsi ssi l
entast owhowi l
lbeart hecostofdel ivery.Sect i
on36( 5):Sel
ler
will
beart hecostofput ti
ngt hegoodsi nadel i
verablestate.
 Whet herBi l
lofLadi ngi sanegot iableinstr
umentornot ?
 BasicRequi rement sforNegot i
at i
ons:
1.Fi xingt het ermsoft hecont r
actincludingcondi ti
onsofsal e
2.Ter msofpayment .(Timeofpayment ,modeofpayment ,currencyofpayment ,
placeofpayment );Instalment s;Punct ualpaymenti snott herul
e,readi ness
andwi lli
ngnessmustbet her e(Sections4,1 1,32,45)
3.Name,addr essoft hesel ler’sbankandaccountnumber .
4.Whet heri nsurancei sar r
angedandi farranged,whatki ndofi nsurance.
5.Met hodofshi pment .
6.Pr oductorgoodsdescr i
ption.
7.Quant i
ty,packagi ng,si zeandcodenumber .[WCO( Wor l
dCust oms
Or ganizat i
on)l ocatedi nBr ussels:HS( Harmoni sedsyst em ofpr eference)
classification-8di git]

 All
negot
iat
ionsmustbedonei
ngoodf
ait
h.(
Art
icl
e2ofUCCdef
ineswhati
sgood
fai
th)

CONDI
TIONSFORSALEOFGOODS:
 Movablegoods
 MoneyConsi derati
on
 Theremustbe2par ti
es:
1.AgricultureMar ketCo.v.Shal imarChemi calWor ksCo.Lt d.AI
R1997SC2502).
2.RvEngl and1 864( Sell
i
nggoodst oownf irmisasal eunderSOGA).
3.CITvHi ndConst ructi
onsLt dAIR1 9724SCC460.
 Transf
erofpr oper t
y:absoluteorcondi t
ional
1.Absolutet ransfer
 Assi gnmentcont ract:permanentt ransferofsof tware.
 Copyl eft
:Ownerofopensour cesof t
war e.Ther eisfreeandunrest
ri
cted
useofsof t
war euntilanychangei smade.Themomentdynami csofthis
sof t
war earechanged.Thi sconcepti sami snomer .
 Gi f
t.
2.Conditional t
ransfer:Secti
on4( 2)
 Forexampl e:Deli
veryofgoodonl yonpayment .
 Condi ti
onsr el
atedtopayment ,delivery,ti
me,et c.
3.Tempor aryTransfer
 Forexampl e:Bail
ment ,leaseagr eement ,mor tgage.
 Al lowedunderCont r
actActnotunderSOGA.

 Sal
eofGoodsActi
snotpr
e-empt
ive,syst
emat
ic,andcompr
ehensi
ve.
  Notacompl et
edi splacementf rom t
hepr evi
ousarrangement.
 Ambi guous.
 Notcompr ehensi veasf orsaleofdrugsthereisNDPSAct ,forsal
eofcar
s
thereisIndianPat entAct .SOGAi ssubjectedtootherlegi
sl
ati
onsandhence
notcompr ehensive.
 Predat
orypr i
cing:
 Domi nantposi ti
oni nt hemar ket.
 Selli
ngt hegoodsbel ownor mal costofproducts.
 I
ntent i
ontoel i
mi nat ecompet iti
on.
 I
ft hecompet i
torsar eel i
minated,rai
sethepr i
ce.
 EssoPetroleum Case,1 967

SECTI
ON5:CONTRACTOFSALEHOW MADE
SUBJECTMATTEROFSALE( S.6)->GOODS->MOVABLES->TYPES:
 Speci f
icGoods[ S.2( 1
4)]:goodsident i
fi
edandagr eeduponatt heti
meacontract
sal
eismade
 Un/ ascertainedgoods[ S.1
8] :exactnessofapar t
icul
arsgoodagreedand
identif
iedatt het imewhent hecont r
actismade.
Ascer t
ainedgoods:
 Notdef ined
 I nrewai t1927;Lor dAt kin;Goodsidenti
fi
edandagr eedupon
Unascer tainedgoods:
 Sect i
on23
 Futuregoods[ S.2( 6)]
:goodst obemanuf actur
edorpr oducedoracqui
redby
thesel l
eraf tert hemaki ngoft hecont r
actofsal
e.
 Quasispeci ficgoods
 Gener icgoods:Benj amin-whenmer elynameisment i
oned.
 RI GHTS:
1.Exami nati
on( S.41 )
2.Goodsmustbeoft hesamedescr i
pti
on
3.Ifsampl eist her e,thegoodshoul dbet hesame.
4.Mar ketablequal i
tymustbet her e.

Ni
bletvPr
ivat
eConf
ect
ionar
iesLt
d1921

Sect
ion27-30:Nemodatquodnonhabet
.
 CorpusJuris,HalsburyLaw,Amer i
canJur
ispr
udence(
Forpr
oject
)
 SYNOPSI S
1.LiteratureSurvey
2.Appr oval ofcaselaws
3.Tent ati
veChapt eri
zati
on/Par
tFor
m
4.Resear chObjecti
ves
5.Resear chQuestions

(Secti
on29ofRBIAct
)
Sect
ion2(
7) movabl
egoods i
ncl
usi
ve moneyacti
onabl
eclai
m
 (
Sect
ion3ofTPA)

 Choi
ceinpossessi
on
 Choi
ceinacti
on
 Sect
ion61ofBri
ti
shSal
eofGoodsAct

PERI
SHABI
LITY
 Sect
ion7:Goodsper i
shingbef oremaki ngofcont ract.
 Ingredi ent
s:
1.Subj ectmat termustbespeci fi
cgoods.
2.Per i
shedorsomuchdamagedasl ongertoanswert heirdescr ipti
oninthe
contractatthet imeofmaki ngoft hecont ract.
3.Thegoodsmusthavebeenper i
shedordamagedwi thouttheknowl edgeofthe
sel
ler.
4.Cont ractwi l
lbedecl aredt obevoi d( r
esultofabove3) .
5.Mi stakeast ot hespeci fi
cit
yoft hepr oductbyt hesell
er.
 Sect
ion8:Goodsper i
shingbef oresal ebutaf t
eragr eementt osell
 Ingredi ent
s:
1.Cont ractmustbeanagr eementt osel l
2.Goodsagr eedt obesol dmustbespeci fi
c.
3.Goodsper i
shedorwer esodamagedt hatnol ongeranswer edt othei
r
descripti
onint heagr eement .
4.Goodsmustper i
shbefor ether i
skpassest othebuyer .
5.Thel ossmusthavebeencausedbyt hewr ongf ulactordef aultofeitherpar
ty.
6.Ifther eisaf aultofapar ty,thenthepar tyatf ault
/defaul
tisliableforno-
del
iveryorf orpayment s.
7.Resul t:contractisherebyavoi ded.(voi
daspercommonl aw)

CASES:
1.Barrow,LanesBol l
ardLtd.v.Phi
li
pPhili
ps&Co.1KB574( 1929)
Stolengoodsar econsideredtobeperished.Goodsalr
eadysoldbyapar tyandthen
resold:per
ishabl
e.Goodsper i
shedinpar t
:Doctr
ineofSeverabi
l
ity;i
feasi
lysever
ed,
restofthegoodsbonaf i
de/speci
ficgoodsandincasenotsever abl
e,all
thegoods
areconsideredperishabl
e.

“SALEI
NMARKETOVERT”:Wasappl
i
cabl
einBr
it
ain,noti
nIndi
a.

ROLEOFCONSI
DERATI
ONI
NMODERNCONTRACTS(
???????????)

Bor
oli
necase:damageanddet
eri
orat
ionar
enotsame

Hornv.Mi ni
sterofFood,New Zealand:Potat
ogotdeter
ior
atedtosuchanext
entt
hati
t
wasn’tf i
tforhumanconsumpt i
on;hencedeclar
edperi
shable.
Randall
vTur nbull
:Dat
e-perishable.
Deter
iorat
iontotheextentofdamagi ngtheval
ueofthegood

BRI
TISHCASES:
1.Malonev.Const
ruct
ionWor
ks:spokenwor
dsassuchhavenoval
ue,andsomustnot
beconsi
der
edasgoods.
2.OxfordvMoss:i
nfor
mati
onnotgood.
 3.Cent
albal
mscase(
1996;r
efer
redi
nTCScase)
:Sof
twar
enotgoods.

SECTI
ON1
1:St
ipul
ati
onast
oti
me
 Twotypesofsti
pul
ati
on:condi
ti
onandwar r
ant
y.
 Recogni
ti
ontotheconceptofpart
yautonomy.
 Sti
pul
ati
onastotheti
meofdel i
ver
y
 Sti
pul
ati
onastotheti
meofpayment .
 Lastl
i
ne:dependsupontheint
enti
onofthepar
ties.

I
fpaymentisdueonacer t
aindat
e,t
hewhol
eday,unl
esscont
rar
ypr
ovi
dedf
or,i
s
consi
deredastheti
esti
pul
atedti
me.
[Gener
alClausesAct
:ti
me]

I
fpaymentdoneininst
alment,eachpaymentconsider
edasacontract
.
Delayedpaymenti
snotall
owed.
Secti
on32:paymentanddeli
veryareconcur
rentcondit
ions
Ti
mewi ll
notbetheessenceofthecontr
acti
fnotspecifi
edint
hecontr
act
.

Or
issaText i
l
esv.GaneshDas,1 961 :
 Mer canti
le,Labour ,Procur ement ,inf
rast
ructural
,JointVent ur
e,Def encecont racts.
 Wher epar tieshaveexpr essl ytreatedastheessence,del ayoper atesasani njur
y,
wher ethenat ureandnecessi tyofthecontractrequireitt
obesoconst rued,for
exampl e:labourcont racts,pr ocur ementcont r
acts.
 Ifgoodsar edeli
veredi nadvance,t heessencei svit
iated.
 Ext endeddat ewill
al sobeconsi deredasessencebuti tmustbebi laterall
yconst r
ued.
Extensionmustbeatl eastt wicebuti tmustnotber ecurri
ng( Briti
shpai ntscase) .
 Ifitisdecl aredthattimei st heessenceandt heotherpar t
yi snotper f
ormi ng,thenthe
partyhast her i
ghttor epudi atethecont r
act(Section13( 1
)).
 Ifthepar tywi shest onotr epudi atebutseekdamages,i tcanal sobedone.Oncea
conditi
on,al waysacondi ti
onbutt hatcondit
ioncanbewai ved.
 Tr eatbreachofcondi t
ionasbr eachofwar ranty(conditi
onwi ll
r emai ncondi t
ion,but
forpurposeofr emedyi nt hef orm ofdamages,i twillbetreatedaswar ranty.
)
 Wayst owai ve:Sections1 1 ,42,63.

PakkharSinghv.Kr i
shnaSi nghAIR1974,Rajast
han112:
Cri
ter
iatodeter
mi newhet hertimeistheessenceofthecont
ract
:
1.Languageoft heagr eement
2.Nat ureofthepr opertysold
3.Conductoft heparti
es
4.Sur r
oundingci r
cumst ancedatorbeforethecontr
act

BhagwatTendul
karcase(
Pol
l
ockandMul
l
a)

 Ti
mei sessence:Condi
ti
on(mainessenceforwhichgoodsarebei
ngbought)
 Compl ai
nantr
equiredt
oprovethatti
meistheessence.
 Anti
cipator
ybreachwhenti
mei stheessenceofthecontr
act
:“substant
ivebasi
s”;It
needst obeprovedonasubstant
ivebasi
sthatt
heper f
ormanceofthecontr
actcan
neverbedone.
  Repudiat
ionofcontr
actbefor
eduedat e:Secti
on40.
 Secti
ons46t o50and55:regardi
ngti
mei stheessence;t
odeci
dewhethert
imei
sthe
essenceofthecontr
act,SOGAwi l
lpr
evail(Secti
on3).
 Nachfri
st:addi
ti
onalti
meforperf
ormance[ Honnold-comment
aryonCISG]

Bl
ack’sLaw Dict
ionar
y
Ti
meastheessenceast heperf
ormancebyonepart
yatati
meorwit
hinaperi
odspeci
fi
ed
i
nthecont
racti
sessenti
altoenabl
ehimtorequi
reper
for
mancebyt
heotherpart
y.

Hartl
eyv.Hymans,1920(Mccar diJ.
)
I
nmer cant
il
econt
racts,st
ipul
ati
onast ot
het
imei
susual
l
ytheessenceoft
hecont
ract
exceptt
hetimeofpayment .

Li
mit
ati
onAct
,1963:(
??????)

“Simpl
excommel i
tznonobl igat”
1.General
opini
on:mer erepresent
ati
ons(merepuff
s)
2.Legal
opini
on:invol
velegalli
abil
i
ty(condi
ti
onsandwar
rant
y)-Sect
ion1
2.

Di
fferencesbet weenCondi ti
onandWar ranty(w. r.
t.Essentials,Const r
ucti
onandRemedy)
Astipulati
oninacont r
actofsal ewi thr eferencet ogoodswhi char ethesubjectt hereof
maybeacondi ti
onorawar ranty.
1.Acondi ti
oni sasti
pul at
ionessent i
al t
othemai npur poseoft hecont r
actwhi lea
war r
antyisast i
pulationiscol l
ateral/subsidiarytot hemai npur poseofthecont ract.
2.I nt hecaseofvi ti
ationofcondi ti
on:Repudi ati
on+damages( consequentialdamages) .
I
nt hecaseofvi ti
ationofwar ranty:claimf ordamagesmayr i
sebutt herighttor ej
ect
thegoodandt herightt otreatthecont r
actasr epudiateddonotar i
se.
3.Ast i
pulati
onmaybeacondi t
ion,t houghcal l
edawar rantyint hecontract( part
y
autonomy) .However ,awar rantycannotbet reatedasacondi ti
on.
4.Acont ractofsalecannotbef ulf
ill
edunl esscondi ti
ons,i fany,ar eful
fi
ll
ed.Mai n
contractcanbef ulfil
l
edeveni fthewar rantyisnotf ul
f i
ll
ed.
Whet herast i
pulationi
nacont ractofsal eisacondi t
ionorawar rantydependsi neachcase
ontheconst r
uctionofthecont r
act.
Conditiongivenby:seller,buyer ,mer cant i
l
eagent[ Section2( 9)]
CehaveN. V.v.Br emer1976( HoL)Lor dDenni ng

FUNDAMENTALBREACHOFCONTRACT

1.Nati
onalI
nsuranceCompanyLt d.vBharatammaandors.AI
R2008SC484
 Conceptof“f undamental
breachofcontr
act”recogni
zed.
2.LoonKaranSethiav.EvanB.John,1976(Supr
emeCour t
)
 Meaningoftheterm “Materi
alal
ter
ati
on”.

LEGALFRAMEWORKOFIMPLIEDCONDITI
ONS/
WARRANTY
(
Sect
ions14t
o17)
 Secti
on1 4:
i
. Ri ghttosel
l=owner
shi
p+noti
nfr
ingi
ngsomebody’sbet
tert
it
le(
non-
int
erfer
ence).
 ii
. Whengoodssol dbydescr i
pti
on,t hegoodsmustcor respondwi ththe
description.[Met hodofsel l
ing:Salebysampl e( Secti
on1 7)andsaleby
description(Sect i
on1 5:tal
ksaboutbot h)
].
i
ii
. Whengoodssol dbysampl e,thegoodssol dmustcor respondwi ththesample
i
nqual ity.
i
v. 2par t
sofSect i
on1 6:Openingsent ence-Caveatempt or;4except i
onsgiven-
CaveatVendi tor
[CASES:JonesvJust1 868,Priestv.Late1903,Gr antvAust r
ali
anKnitt
ing
Wear( endofcaveatempt or),AshingtonPerycase]
v. I
mpl i
edwar r
anty:(1)aftergoodsar ebought,buyermusthavequi et
possessi on non-i nterfer
encef rom anypar t
yincludi
ngsel l
er;(
2)Goodsmust
bef r
eef rom allchargesandencumbr ances:athir
dpar t
yhasnocl ai
m with
respectt othegoods,buyerdoesn’thavet opayanyt hi
ngt othe3rdparty.

PERI
SHABILI
TY
 Sect
ion7:Goodsper i
shingbef oremaki ngofcont ract.
 Ingredi ent
s:
6.Subj ectmat termustbespeci fi
cgoods.
7.Per i
shedorsomuchdamagedasnol ongert oanswert heirdescr i
pti
oninthe
contractatthet imeofmaki ngoft hecont ract.
8.Thegoodsmusthavebeenper i
shedordamagedwi thouttheknowl edgeofthe
sel
ler.
9.Cont ractwi l
lbedecl aredt obevoi d(resultofabove3) .
10.Mistakeast ot hespeci fi
cit
yoft heproductbyt hesell
er.
 Sect
ion8:Goodsper i
shingbef oresal ebutafteragr eementt osell
 Ingredi ent
s:
8.Cont ractmustbeanagr eementt osell
9.Goodsagr eedt obesol dmustbespeci fi
c.
10.Goodsper i
shedorwer esodamagedt hatnol ongeranswer edt otheir
descripti
onint heagr eement .
11.Goodsmustper i
shbefor ether i
skpassest othebuyer .
12.Thelossmusthavebeencausedbyt hewr ongf ulactordef aultofeit
herpart
y.
13.I
fther eisaf aultofapar ty,thenthepar tyatf ault
/defaul
tisliableforno-
del
iveryorf orpayment s.
14.Result:contractisherebyavoi ded.(
voidaspercommonl aw)

CASES:
2.Barrow,LanesBol l
ardLtd.v.Phi
li
pPhili
ps&Co.1KB574( 1929)
Stolengoodsar econsideredtobeperished.Goodsalr
eadysoldbyapar tyandthen
resold:per
ishabl
e.Goodsper i
shedinpar t
:Doctr
ineofSeverabi
l
ity;i
feasi
lysever
ed,
restofthegoodsbonaf i
de/speci
ficgoodsandincasenotsever abl
e,all
thegoods
areconsideredperishabl
e.

“SALEI
NMARKETOVERT”:Wasappl
i
cabl
einBr
it
ain,noti
nIndi
a.

ROLEOFCONSI
DERATI
ONI
NMODERNCONTRACTS(
???????????)

Bor
oli
necase:damageanddet
eri
orat
ionar
enotsame

Hornv.Mi
nist
erofFood,New Zealand:Pot
atogotdet
eri
orat
edtosuchanext
entt
hati
t
wasn’tfi
tforhumanconsumption;hencedecl
aredperi
shabl
e.
Randall
vTur nbul
l:Dat
e-perishabl
e.
Deter
iorat
iontotheextentofdamagingt
heval
ueoft
hegood

BRI
TISHCASES:
4.Malonev.Construct
ionWor ks:spokenwor
dsassuchhavenoval
ue,andsomustnot
beconsi
deredasgoods.
5.OxfordvMoss:infor
mat i
onnotgood.
6.Centalbal
mscase( 1996;ref
erredinTCScase)
:Sof
twar
enotgoods.

TI
MEI
STHEESSENCE
SECTI ON1 1
:St i
pulat
ionast oti
me
Unlessadi f
f er
entintenti
onappear sf
rom thetermsoft hecontr
act,st
ipul
ati
onsastoti
meof
paymentar enotdeemedt obeoft heessenceofacont r
actofsal
e.Whet heranyot
her
st
ipulati
onast ot i
mei softheessenceoft hecontractornotdependsont hetermsoft
he
contract.
 Twot ypesofst i
pulat
ion:condi
ti
onandwar r
anty.
 Recogni ti
ont otheconceptofpar t
yaut onomy.
 St i
pulati
onast othet i
meofdel i
very
 St i
pulati
onast othet i
meofpayment .
 Lastline:dependsupont heint
enti
onoft heparti
es.

Or
issaText i
l
esv.GaneshDas,1 961 :
 Cont r
act swher et imei stheessence:
1.Mer cant i
le
2.Labour
3.Pr ocur ement
4.I nfrast r
uct ural
5.Joi ntVent ure
6.Def encecont racts.
 Wher epar tieshaveexpr essl ytreatedast heessence,del ayoper atesasani njur
y,
wher ethenat ureandnecessi tyofthecont ractrequireitt
obesoconst rued,for
exampl e:l abourcont racts,pr ocur ementcont r
acts.
 Ifgoodsar edel i
veredi nadvance,t heessencei svit
iated.
 Ext endeddat ewi l
lalsobeconsi deredasessencebuti tmustbebi lat
erall
yconst r
ued.
Extensionmustbeatl eastt wicebuti tmustnotber ecurri
ng( Briti
shpaintscase) .
 Ifitisdecl aredt hattimei st heessenceandt heotherpar t
yi snotper for
mi ng,thenthe
partyhast her ightt orepudi atethecont ract(Section13( 1
)).
 Ifthepar tywi shest onotr epudi atebutseekdamages,i tcanal sobedone.Oncea
conditi
on,al waysacondi ti
onbutt hatcondi t
ioncanbewai ved.
 Tr eatbr eachofcondi t
ionasbr eachofwar ranty(conditi
onwi ll
r emaincondi t
ion,but
forpurposeofr emedyi nt hef orm ofdamages,i twillbetreatedaswar ranty.
)
 Wayst owai ve:Sect ions1 1 ,42,63.
 Mer el
yment i
oningt hecl ausesayi ngt i
mei stheessencedoesn’tmakeany
dif
ference.( 4condi ti
onsneedt obesat i
sfied).

PakkharSi
nghv.Kr
ishnaSinghAI
R1974,Rajast
han1
12:
Cri
ter
iatodet
ermi
newhethertimei
stheessenceoft
hecont
ract
:
5.Languageoftheagreement
 6.Natur
eoft heproper
tysol
d
7.Conductoftheparti
es
8.Sur
roundingcir
cumstancesatorbef
oret
hecont
ract

BhagwatTendul
karcase(
Pol
l
ockandMul
l
a)

 Ti
mei sessence:Condi t
ion(mainessencef orwhichgoodsar ebei
ngbought)
 Compl ainantrequir
edt oprovethatti
mei stheessence.
 Anti
cipatorybreachwhent imeistheessenceoft hecontract
:“substanti
vebasi
s”;It
needst obepr ovedonasubst ant
ivebasisthattheperfor
manceoft hecontr
actcan
neverbedone.
 Repudiat i
onofcont r
actbef or
eduedat e:Section40.
 Secti
ons46t o50and55:r egardi
ngtimeist heessence;t
odecidewhet hert
imeist
he
essenceoft hecont ract
,SOGAwi l
lprevai
l(Secti
on3).
 Nachfrist:addit
ionalti
mef orperf
ormance[ Honnold-comment aryonCI SG]

LeelaPar
ulkarv.SakalPaper
sPvt.Lt
d.AI
R2005SC4075
 Ti
mei stheessenceofcont
ract
.

Bl
ack’sLaw Dicti
onar
y
Ti
meistheessenceastheper
for
mancebyonepar
tyatati
meorwi
thi
naperiodspeci
fi
ed
i
nthecontr
acti
sessenti
alt
oenablehi
mtor
equi
reper
for
mancebyt
heotherpart
y.

Hartl
eyv.Hymans,1920(Mccar diJ.
)
I
nmer cant
il
econt
racts,st
ipul
ati
onast ot
het
imei
susual
l
ytheessenceoft
hecont
ract
exceptt
hetimeofpayment .

LEGALFRAMEWORKOFI
MPLI
EDCONDI
TIONS/
WARRANTY(
Sect
ions1
4to1
7)

 Secti
on1 4:
vi
. Ri ghttosel l=owner shi
p+noti nfri
ngingsomebody’sbet tertit
le(non-
int
erference) .
vii
. Whengoodssol dbydescr i
pti
on,t hegoodsmustcor respondwi t
ht he
description.[Met hodofsel l
ing:Salebysampl e( Secti
on1 7)andsal eby
description(Sect i
on1 5:tal
ksaboutbot h)
].
vii
i
. Whengoodssol dbysampl e,thegoodssol dmustcor respondwi t
ht hesample
inquality.
i
x. 2par tsofSect i
on1 6:Openingsent ence-Caveatempt or;4except i
onsgi ven-
CaveatVendi tor
[CASES:JonesvJust1 868,Priestv.Late1903,Gr antvAust r
ali
anKni tt
ing
Wear( endofcaveatempt or),AshingtonPerycase]
x. I mpli
edwar r
anty:(1)aftergoodsar ebought,buyermusthavequi et
possessi on non-i nterfer
encef rom anypar t
yincludi
ngsel ler;(
2)Goodsmust
bef r
eef rom allchargesandencumbr ances:athir
dpar t
yhasnocl aim with
respectt othegoods,buyerdoesn’thavet opayanyt hi
ngt othe3rdpar ty.

Wat
chmanv.Hi l
l(f
ir
stcasewheret
erm “descript
ion” defi
ned)
 Descr
ipt
ionusuall
ymeansaparti
cul
arclassorkindofgoodsbutital
soi
ncl
udesany
st
atementwhichconst
it
utesasubst
ant
ialingredi
entofthei
dent
it
yofthegoodssol
d.

Lor
dBl
ackbur
ninBowesv.Shand,1
877
  I
fyoucont racttosell
peasyoucannotobli
geapar t
ytot
akebeans.Ift
hedescr
ipt
ions
ofthearti
cletenderedisdi
ff
erenti
nanyrespect
,iti
snotthear
ti
clebar
gai
nedforand
theotherpartyisnotboundtoaccepti
t.

Lor
dWr i
ght:inGrantv.Austr al
i
anKni tt
ingMi l
l
s,AIR1937PC1 00
 Descripti
onincl
udesmanyt hings.Thegoods,eveni fshownont
het
abl
e,t
henal
soi
t
canbeapar tofdescri
pt i
on.
 Ti
me( t
imeofmanuf act ur
ing)aspar tofdescr
ipt
ion.
 Packagingcanbepar tofdescr i
ption.
 Placeofdeliver
ywillalsobeconsi deredasdescript
ion.

EssoPetr
oleum case:
Whethert
hereisfreeconsi
der
ati
onornoti
snotcl
ear
.

Hal
sbur
yLaw ofEngl
and-howcansampl esbegi
ven
1.Extr
acti
ngasmallquanti
tyfr
om alargerbul
k.
2.Sendingasmal
l r
epresentat
ivequanti
tyi
nadvance.
3.Showingapatt
ern.
4.Showingamodel.
5.Averagesampl
ing(notinHalsbur
y):commonlyusedingr
ainmar
ket
;

SECTI
ON1 4:I mpl iedunder taki ngast ot itl
e,et c.
 Trappingsofowner shi p
 Cont r
ar yintent i
ont ermsr arelyused,cannothavesi tuationwher esel l
ersell
ing
withoutt i
tle.
 Mar ketover t;commonl awpr i
nciple-sel lingi nopenmar ket;InIndiamar ketover tnot
all
owedsi ncet hebegi nni ng.
 Cont r
actl aw wi l
l beappl i
cabl etof i
nder s,pawnor ,pawnee,et c.
 Thissect ioni snotsubj ectt oexcl usioncl ause.
 Personsel li
ngt hegoodsmusthaver ightt osel l
 Section1 4( a):impl i
edcondi ti
on.
 Explanat i
onofMul l
aont heopeni ngofSect ion1 4(a)
 3situationsi nwhi chsel lerdoesn’thaver i
ghtt osel l
1.Whent hesel leri snott heowneroft hepar t
iculargoods.( l
aiddowni nRol l
andv.
Di wal (Lor dAt kinson:t hebuyerhasnotr ecei vedanypar tofwhi chhehas
cont ract edt or ecei venamel ythepr oper tyandt her ighttopossessi onandt hat
bei ngsot her ehasbeenat otalfailureofconsi deration sour ceofSect ion
14( a).)
2.Sel l
ermaybet heowner ,yetduet ocer t
ainr easonhemaynothavet her i
ghtt o
sell.(Ni bletv.Conf ect ionersPvt .Ltd. ,1921[ fi
rstti
meconceptof
mer chant abi lity];Nest le-“Ni ssley”;obj ect i
ont obonaf i
detitl
e)
3.Wher eissal ehasbeendecl aredi l
legal orwi t
houtj urisdict
ion.
 Sit
uat i
onswhent hesel l
erdi dnothavet itl
eandwhatt hebuyerwoul ddo:
1.Thef actt hehewasf raudul entlyinducedbyt hesel lertopayt hesum byf alse
repr esent at iont hathehadgoodt itlet othepr opertysol d(Fraudulent
inducement+Mi srepr esent ation)
2.Thef actt hatt hesel l
erwar rantedandcovenant edwi t
hthepur chaserthathe
hadagoodt itle.( Tar amat iAmant rayPr akashv.Gangar am Ramdad,1 975
MahaLJ) :fr i
vol ouscl aim byat hirdpar t
yagai nstthesel lerdoesnotgi veriseto
anabsenceofmar ket ablet it
le1 4(a)).
 Section1 4( b):Impl i
edwar r
ant ythatt hebuyershal lhaveandenj oythequi et
 possessi
onofgoods.
 Howel l v.Ri
chards,1809[ LordEl l
enborough]:thei
mpliedwar rantyofquiet
possessi on,ift
heanal ogyoft hecovenant sforqui
etpossessionunderl easebe
asoundonei sawar rantyagai nstdist
urbanceandi ti
snotbr okenunl essand
untildistur
bancet akespl ace.
 Buyershal lhaveandenj oy:fi
rstyouhave( ri
ghtofpossessi
on)andt henonly
enjoyitspossession.Ri ghttopossessonl ywhensel l
erhasri
ghtt osell.If
enjoyingwi thoutr
ighttopossessi on,thatwouldamountt odisturbance

Sect
ion14invol
vesbot
hsal
eandagreementt
osel
l
.
Ronaldv.Di
wal19232KB5:Not
it
le,Notr
ansf
er

 14(c):Freefrom al
lchar
gesandencumbr ances,enduresthathebuyer’sposi
ti
on
shal l
notbedi st
urbedbyreasonofexi
stenceofsuchencumbr ances.
 Wi thout(a)
,(b)and(c)havenoexist
ence.
 I
ft hereisachar georencumbranceonthegoods,itistheobli
gati
onofthesel
l
erto
disclosethem tothebuyerbefor
eorattheti
meoft hecont r
act.

Ni
bletv.Conf ect ioner sPvt .Lt d.,1921
 Lor dAt kinson,BankerandScr uton.
 Goodst ender edmustbet heonewhi cht hesel lerhasr i
ghttosel l
.(fir
stinstancewhen
ri
ghtt osel ldef i
ned;r ightt osel li
sapr esumpt i
on-whenevergoodssol d,noneedt o
expressl yment iont hatr i
ghtt osellisther e).Int hiscaser ightwasnott her e.
Owner shi pt herebutsomeone’sbet tert i
tl
ei nfri
nged-I mplicati
onofTr ademar ksAct .
 Mer chant abi l
i
ty:itincl udesst ateandcondi t
ionoft hegoods.I nthiscasest ateand
condi tioni ncludesl abel l
ingoft hepr oduct .(saleabi l
ityatfullcost)
 Itisimpl iedcondi tiont hatt hegoodsshal lbeofmer chantablequality.Inthiscase,f i
rst
ti
mer ecogni sedmer chant abili
tyasi mpl iedcondi ti
on.( Bri
ti
shTr amwaysv.Fi at
Motor s,1 91 5For wel l
l propoundedf ort hefirsttimet hatmer chantabili
tyisimpl i
ed
condi tion) .
 Whati smer chant abi l
ity:Gar denerv.Gr ey-I nor dert odefinethet erm mer chantabil
i
ty.
Definedmer chant abi li
tyasr easonabl eman’st est;mer chantablequal it
yi s
applicabl epr i
mar i
lyt ot hecompl icatedmachi nesbutt hatwi l
lnotpr eventacour tto
usei tf orconsumergoods.
 Scr ut on:I fthevendori sest oppedbyt hepr ocessofl aw( tr
ademar ksact )from sell
i
ng
goods,t hisi mpl i
est hathedoesnothavet her i
ghtt osel l
.
 At ki
nson:nor ightt osel lthegoodsowi ngt otheexi stenceofat i
tl
esuper i
ort othatof
thevendor .Ifanysal eget smade,t hevendee’sr ightwi l
lgetdisturbed( because
Nest l
ewi lltryt ointer fere).
 Remedi est ot hebuyer :repudi atethecont ract+damages.

 Refer
encesofNibl
etcasetakenbyIndi
a:
1.JosephMayorv.PaniBhushanGhoseAIR1939(Cal
)21
0
2.RanbirSi
nghvGurubakshSingh1979(PunandHarHC)pg.1
70

 Mi
crobedsA.
G.v.Vi
nhur
stRoadMar
kings1
975I
WLR21
8(pat
enti
nfr
ingement
)
 4TESTSOFMERCHANTABI
LITY
1.Ful
lknowl edgetest.
2.Usabil
it
yt est
.
3.Sati
sfactoryqual
it
yt est
4.Reasonabl eman’st est
Benj
ami
n’sPendul um test:addi
ti
onal
test

MERCHANTABLEQUALI
TY1
,JOHNLEVERMORE,JBLAr
ti
cle
MERCHANTABLEQUALI
TY2

Di
ff
erencebetweenarbitr
ationandval uat
ion
 Adjudi
cati
onoft hedisputeincaseofar bit
rat
ionwhil
efi
xi
ngthepr
iceincaseof
val
uat
ion.
 Adhocar bit
rat
ors,insti
tut
ionalarbi
trator
s.
 Incaseof2valuators,ifonlyoneeval uatordecidest
hepri
ce,i
twi
l
l notbeaval
i
d
val
uat
ion.

Whetherpr
icecl
ausecanbeconsi
der
edconf
idence?


JusticeDixeni nAust ral

ianKnot t
ingCaseAI R1 837PC1 87:FullKnowl
edget est
LordReedi nKendal landSonsv.Li ll
icoandSonsLt d.
:Usabi l
i
tyTest
Niblet:merchant abil
i
tytestorr easonabl enesstest
Satisfact
oryqual i
tytest
1.Fi t
nessf orallpurposesf orwhicht hegoodsoft heki ndinquest
ionarecommonl y
supplied.
2.I tr
efer stoappear anceandf i
nishingoft hepr oducts.
3.Fr eedom f rom all
def ects,andal ldefect
si nvolvelatentaswellaspatentdefects.
4.Saf etyoft hatparticulargood.
BIS;ISInor ms
SanitaryandPhyt o-sani tary(SPS)measur es
Societyf orepij
oti
c;st andar ds
5.Dur abi l
it
y
6.I ft
hebuyerdeal sasaconsumer ,anypubl i
cstatementont hespecif
iccharacteri
sti
cs
ofthegoodsmadeaboutt hem byt heseller,t
hepr oducerorhisrepr
esentati
ve,
parti
cular l
yinadver t
isingoronl abel l
i
ng.

1979amendment :sat
isf
act
oryqual
i
tyi
npl
aceofmer
chant
abi
l
ity,meani
ngbecomes
sati
sfact
oryqual
i
tybutnamer emai
nst
hesame.

For
eignManuf
act
urer
’sLegal
Liabi
l
ityAct
,201
0

SECTI
ON1
7:Sal
ebySampl
e
 Sal
ebysampl etakesplaceonlywhent er
msoft hecont
ractpr
ovideso,expr
esslyor
i
mpli
edly.
 Mereexhibi
ti
onisnotsalebysampl e.
 Al
waysr ef
erstoquali
tyinquesti
on
 3impl
iedconditi
ons:
a)Thebul kshal
lcorrespondwit
ht hesampl
ei nqual
i
ty.
b)Thebuyershallhavear easonableoppor
tunit
yofcomparingthebulkwit
hthe
 sampletosat i
sfyhimsel
fthatthegoodssuppliedarei
naccor dancewiththe
sample.
 Bef oredel i
very
 Att het i
meofdel i
very
 Af terthegoodshavebeendel i
vered
 I fopportunit
ynotgive:r
epudiati
on+damages
c)Thegoodsshal lbef r
eefr
om anydef ect,r
enderi
ngthem unmer chant
able,
whichwoul dnotbeappar entonreasonableexaminat
ionofthesampl e.

I
nnomi
nat
eandI
nter
medi
atet
erms(
Innomi
nat
e:cont
ractofcar
ri
age)

HongKongFurShi
ppi
ngCo.Lt
dv.KawasakiKasem Kai
shaLt
d.1
9622QB26

Lor
dDi
ppl
ock

Shi
vSi
nghCont
ract
orv.UoI

FourTermsDetermini
ngContract
ualRel
ati
onsBetweentheBuyerandt heSeller
1.Descr i
pti
onofthegoodsinter
msoftype,qual
i
tyandquanti
ty.Al
ternat
ively,sampl
e
ofthegoods.
2.Timeofdel i
very
3.Pr i
ce
4.Timeandmeansofpayment

Sor
abj
iHor
mushaandCo.v.V.
M.Ismai
l&Anr.AI
R1960Mad570
 Fi
nal
l
yaccept
edr
easonabl
eman’stest
/

RaghavMenonv.Kat
appanNairAIR1962Ker
alaHC31
8
 Reasonabl
eman’stestaccept
ed

Boar
dofTrust
eesofthePortofCal
cut
tav.BengalCor
por
ati
onPvt
.Lt
d.AI
R1979Kol1
42
 Ref
erredNi
bletandaccept
edmerchant
ablequal
i
tyt
est
.

Commerci
alAut
omobil
esv.SriMaharaj
aSi
nghBhat
iaandor
s.(
201
1)MPJR
 Accept
edsat
isf
actor
yquali
tyt
est.

Term sati
sfact
orywasmi ssi
ngearl
i
er,wasnott
hereinanystat
ute.I
tcameinthest at
utefor
thefi
rstti
me1 979.I
tisgett
ingmorepopul
arnow af
tert
he1994amendmenti nBrit
ishSale
ofGoodsAct .
Byimplicati
onsandapproachfol
lowed,t
heIndi
anCourtshaveti
lt
edtowar
dssatisfactor
y
quali
tytest
.

CAVEATEMPTOR
 Secti
on1 6:I
niti
alpart
:caveatempt or
;4points:caveatvendi
tor
 Jonesv.Just ,1868:I
mpor t
anceofcaveatempt or
.
 Cri
teri
afordet ermini
ngwhet hercaveatempt ororcaveatvendit
or
1.Nat ur
eofgoods.
2.Modeofpayment .
3.Knowl edgeandski l
lofthebuyerandsel l
er.
4.Exami nati
on.(r
easonableopportuni
tygiventobuyertoexaminet
hegoods)
5.Fit
nessandpar t
icul
arpurposeofthegoods.
  Caveatemptor:Reit
erat
ionofcommonlaw pr
inci
ple.
 “KHAYER-AL-AI B”?????
 New i
nter
pretati
on:merchant
abil
i
tywi
l
lbethereinbotht
hecasesofcaveatempt
or
andcaveatvenditor
.

[EC-SEALcaseofWTO:onepar t
icul
armethodofcut t
ingmeat-moral
i
tyaspect
;impor
ting
suchmeatcanbebannedasi tmayhurttherel
igioussent
iment
soft
hepeople.]
Caveatemptor,quii
gnorat
enodebui tquodjusalienum emit
 Letapurchaser,whooughtnott obeignorantoftheamountandnatureofthei
nterest
whichheisabouttobuy,exerci
sepropercaut i
on.

 Only duty on par t of t he sel

l
er: Gi
vi
ng pr
oper oppor
tuni
ty of
exami
nat
ion/
invest
igat
ion/i
nspect
ion.

 Chandel
orv.Lupos1
603(
fi
rstcasewhi
chr
ecogni
sedt
heconceptofcaveatempt
or)

 Pri
estv.Last(
caveatempt
orst
art
edt
odi
mini
sh)
:st
art
ingpoi
ntofSect
ion1
6(1
),(
2),(
3),
(4)
.

 Caveatvendi
torst
art
edget
ti
ngaccept
ed.

 I
ngr
edi
ent
sofSect
ion1
6orsi
tuat
ionswher
ecaveatempt
orappl
i
es:

1
.Thesel leri
sunderanobli
gati
ont oal
l
ow thebuyertoi
nspectt
hegoodssoasto
ensurethattheyaref
reefrom anydefectbef
oretheconcl
usi
onofthesal
eand
purchasecontract
.

2.Thesel
leri
sundernoobl
igat
iontodi
scl
osetot
hebuyeranyexi
sti
ngdef
ectonhi
s
goodsandthussel
l
erhastheri
ghtt
oremainsi
l
ent
.

3.Thebuyerhasnor
ightt
oreturnt
hegoodorseekdamagesforanydefectfound
i
nthegoodsaft
ert
heconcl
usionoft
hesai
dsal
eandpurchaseagreement.

4.Thesel
l
eri
sal
soundernodut
ytoinf
ormt
hebuyerofhi
smi
stakei
nhi
sinspect
ion
oft
hequal
i
tyoft
hegoodstobesol
d.

 Rightofi
nspect
ionevent houghgi
venandbuyerhadexami
nedt
henal
soi
tissel
l
er’s
dutytoensur
emer chant
ablequal
it
yofgoods.

 I
fthegoodsar
esoi
nher
ent
lydanger
ous,i
tist
hedut
yoft
hesel
l
ert
oinf
orm.

 Knowledgeandski
ll
,nat
ureofgoods,complexi
ti
esoft
rade,et
cwi
l
ldet
ermi
newhet
her
caveatempt
orwil
lbeappli
cabl
eorcaveatvendi
tor.

 Overr
eli
anceoncaveatvendi
tor
.

 Sel
lerdeal
swi
thnor
malbuyer
.Ext
raor
dinar
ypr
obl
em neednotbeaccount
edf
orunl
ess
i
nformed.

SECTI
ONS1 6(1
)AND1 6(
2)
 Gri
ff
it
hv.PeterCanwayLt
d.1
939Al
lER 685(
sel
l
erneednotdealwi
thabnor
mal
i
ty
unl
essinf
ormed)

 MedwayOi
landSt
orageCompanyLt
d.vSi
l
icaGel
Cor
por
ati
on1
92833CC1
95.
  Thebuyer
’sr
eli
ancei
saquest
ionoff
act

 Therel
iancemustbesubst
anti
alandef
fect
ivei
nducementwhi
chl
eadst
othe
buyert
oagreetothepur
chase.

 Pr
ovisoofSect
ion16(1)doesnotsay“mer chantabl
equali
ty” butSect
ion1
6(2)does.
Merchant
abl
equali
tyaspecti
sinherenti
ntheenti
resect
ion.

SECTIONS16(3)AND(4)
KHIYARALAIB
 BasicI
ngredi
ent
s:

1
.Exi
stenceofadef
ecti
nthegoodsshoul
dbebef
oreoratdel
i
ver
yoft
hegoods.

2.Thepur
chaser
/buyershoul
dnothavebeenawar
eoft
hedef
ectatt
het
imeoft
he
agr
eement.

3.Thereshoul
dnotbeanyst
ipul
ati
onbyt
hesel
l
erf
orwai
vi
ngt
hel
i
abi
l
ityoft
he
sel
lerf
orthedef
ect
.

4.Thedefectmusthaveexi
stedandbeenprovenatthet
imewhent hepur
chaser
wishest
oexerci
setheopt
ionei
thert
oacceptt
hegoodsorr
ejectt
hem.

5.Thereshouldnotanyagreementbythebuyertot
akeallr
esponsibi
l
ityforthe
defect
sinthegoodsthusexempt
ingt
hesell
erfr
om anyl
i
abi
li
tyari
si
ngf rom t
hat
defect
.

 CaveatEmptorv.Khi
yarAlAi
b-ADi
chot
omybyMohdMasum Bi
l
ahAr
abLaw Quar
ter
ly
Vol3,1
998,pg.278-299

TRANSFEROFPROPERTY
 Owner
shi
p

 Ri
ghtt
opossess

 I
nspi
redei
therf
rom economi
csorI
PR.

 Pr
oper
tyi
sabundl
eofexcl
usi
ver
ight
s:Owner
shi
pandPossessor
yri
ght
.

 LordDenning:Tr
ansf
erofPr
oper
tyandPr
otect
ionofBonaFi
deBuyer(
Pri
ntedNot
ices
AreGiven)

 Ati
ya demarcat
es di
ffer
ence bet
ween pr
oper
ty and t
it
le:subsequentaut
hor
s have
rej
ect
edhisproposal
.

 Essent
ial
sofTr
ansf
erofPr
oper
ty:

1
.Ri
skat
tachedwi
tht
hepr
oper
tyt
ransf
er.

2.Thebuyercanexerci
sepr
opr
iet
aryr
ight
sovert
hegoods.Pr
opr
iet
aryr
ight
s:can
resel
landcr
eat
eright
sinr
em.

3.Sell
ercannotsuef
ort
hepr
iceunl
esst
hegoodshavebecomet
hepr
oper
tyoft
he
buyer.
 4.I
fthebuyerbecomesinsol
vent
,thesel
l
ercanexer
ciser
ighti
nli
eni
fthegoodsar
e
st
il
li
nthepossessi
onofthesel
ler.

5.I
fthepossessi
onoft hesell
erhasbeent ermi
nat
edandt hegoodshavebeen
passedt
othebuyer
,thesel
lercannotexer
cisel
i
enbutcani
nit
iat
esui
tforpr
ice.

6.I
fthebuyermal
afi
del
ydoesn’tacceptt
hegoods,t
hesel
l
ercansuef
ornon-
accept
ance.

7.I
fthesell
erbecomesi nsolventandt hebuyerhasbeenenj oyingpossessionof
goodsevenbeforet hecont ractofsale,contractisnotter
mi natedofthegoods
arenor
malgoods.I fthegoodsar eper i
shable,thenhecansel lthem bygivinga
noti
ceandcanr ecoverlossesi ncur
redf r
om t hebuyerandr etainpr
ofi
ts.I
ncase
noti
cenotgi
ven,anyl ossincurredwil
lbeoft hesel l
er.

 Gener
alPr
oper
ty:Owner
shi
p(nor
equi
rementofpossessi
on,al
l
-encompassi
ngr
ight
s)

 Speci
alProperty:Ri
ghtofpl
edgee/bail
ee/
mor
tgageeorr
ighti
nli
en.(
possessor
yand
cust
odial
right
sbutnotowner
shipri
ghts)

 Sect
ion1
8:Goodsmustbeascer
tai
ned

 SeathvMoor e,1
886(Lor
dBlackburn)
:“Itisessenti
althatt
hear ti
cleshoul
dbespecif
ic
andascert
ainedinamannerbindi
ngonbot hpar t
iesforunlessthatbesot hecont
ract
cannotbeconstr
uedasacontr
acttopassthepropertyinthatart
icl
e”.

 Secondsubj
ectmat
ter
:unascer
tai
ned-Sect
ion1
4:t
ransf
erwon’tt
akepl
aceunl
esst
he
goodsare

 Sect
ion23:methodforconverti
ngunascer
tainedi
ntospeci
fi
cgoods:Appr
opr
iat
ion-
i
dent
ifi
cat
ionwi
ththeconsentofbot
hthepart
ies

 I
nr e Wai t1CH 606 (
Lord At
kin defi
nes)
:ascer
tai
ned probabl
ymeansi
dent
if
ied i
n
accordancewi t
htheagreementaf t
erthetimeacontractofsalei
smadandIshal l
assumet hatbethemeani
ng,

 Dan Singh v.JankiSaran Kai

l
ash Chandr
a di
ff
erent
iat
ed bet
ween speci
fi
c and
unascer
tai
nedgoods(f
oll
owedinreWai
tcase)
.

 Sect
ion1
9:Pr
oper
typasseswheni
ntendedt
opass

Forascer
tai
ningthei
ntent
ionoft
hepar
ti
es,r
egar
dshal
lbegi
vent
o(Sect
ion1
9(2)
):
1.Termsoft hecontr
act

2.Conductoft
hepar
ti
es

3.Ci
rcumst
ancesoft
hecase

 Agr
icul
tur
eMar
ketCommi
tt
eev.Shal
i
marChemi
calWor
ks1
9975SCC51
6.

 Bhagwat Narayan Tendul

kar v. Goa Cooper
ati
ve Mar
ket
ing and Suppl
y
Feder
ati
onLtd.19982MRLJ703

 Sacksv.Ti
l
ley1
91532TLR1
48.
  Fort
ransf
erofowner
shi
p,del
i
ver
yisnoti
mpor
tant
.

 Fort
ransf
erofpr
oper
ty,onl
ypossessi
oni
simpor
tant
.

 Foreg.
:BoEwhenaccept
ed,t
ransact
iont
akespl
ace.

 Secti
on1 9(2)
:Onl
yappl
i
cabl
eifal
lcondi
ti
onsof(
1)ar
enotf
ulf
il
led.Theyar
etobe
readtogether.

 Secti
on 19(
3):Tal
ksaboutS.24 (
Sal
e byappr
oval
) Sect
ion 42 (
int
imat
ion,
adopti
on,passi
ngofr
easonabl
eti
me.

 Sect
ion20

 Goodmustbespeci
fi
c.

 I
ndel
i
ver
abl
est
ate.

 Cont
ractmustbeuncondi
ti
onal
.

 Wi
thoutpaymentanddel
i
ver
y,t
ransf
erofpr
oper
tyt
akespl
ace.

 Henceher
e,possessi
oni
snoti
mpor
tant
,onl
ytr
ansf
erofowner
shi
p.

 “del i
verabl
e stat
e”:seller
’s dutyis onlyto keep them in such a st
ate
whereasbuyer ’sdut yi
st oapplyf
ordelivery Banker sLJ,inacasesai d
deli
verabledoesn’tmatterinal
li
tspar
ts,itdependsont heactualst
ateofthe
goodsatt hedateofcont
ractandthest
atei nwhichtheyaretobedel i
ver
edby
ter
msoft hecontr
act
.

 Del
i
ver
abl
eSt
ate

1
.Physi
cal
stat
e

2.Sel
l
erhast
oinf
orm buyerofdel
i
ver
abl
est
ate.

3.Buyerwi
l
lappl
yfordel
i
ver
y.

4.Sel
l
erwi
l
ldel
i
vert
hegoodsaccor
dingt
ospeci
fi
cat
ions.

 Uncondi
ti
onal
del
i
ver
y

 Concur
rentCondi
ti
ons:Sect
ion32

 Att
het
imeofdel
i
ver
y,buyermustbei
nast
ateofr
eadi
nesst
opay.

 Pr
oper
ty

 I
nsol
vencyandBankr
upt
cyCode:Pr
esi
dencyTownI
nsol
vencyAct
,1909

 Anypropert
yoverwhichandoverprofi
tsofwhi
chanyper
sonhasdisposi
ng
powerwhichanyper
sonhasadisposingpowerwhi
chhemayexer
ciseforhi
s
ownbenefi
t.

 BenamiTr
ansact
ionsAct
,1988

 Proper
ty:propertyofanykind whet
hermovabl
e orimmovabl
e,t
angi
ble or
i
ntangi
ble,i
ncludesanyr
ight
/i
nter
esti
nsuchpr
opert
y.
  Can any r
ightori
nter
estbe t
ransf
err
ed?  Compl
ete powert
o own and
t
ransf
er
st
 Ricardo 1 Best (
absolut
e ownershi
p r
ight
)- Ri
ght t
o Owner p; 2nd Best
shi
(possessor
yr ight
)-Rightt
oPossessi
on

OWNERSHIPDEFI
NITI
ON
 Bl
ack’sl
aw di
cti
onar
y

(
INTRAWEEKNOTES?????????)

SECTION23
 Wai tv.Baker1 948:Themomentt hegoodswhi chhavebeensel ectedinpur
suanceof
t
hecontractaredeli
veredtothecarr
ier
,thecarr
ierbecomet heagentofthevendeeand
i
ftherei
sabi ndingcontr
actbetweenthevendorandt hevendee,thenther
eisnodoubt
t
hatthepropertypassesbysuchdeli
verytothecarri
er.

 Buyerhadnomi
nat
edt
hecar
ri
er.

 Thegoodsar
enoti
ncont
rol
oft
hesel
l
er,cannotexer
cisel
i
enal
so.

SECTION26
 Resper
itdomi
no(
domi
nusanddomi
no)

 Asagener alrul
ethedoct r
inei
sanoldcivi
llaw maxi
m.Meaning;whenyoucanshow
the pr
opertypassed,t he r
iskofthe l
ossprima f
aci
eisi
nt he per
son t
o whom t
he
propert
yis.Theref
ore,dominusneedstobeshown.

 Domi
num escasusent
itdomi
nus;i
njur
yfal
l
sont
heowner
.

 Combi
nat
ionofcommonl
aw,ci
vi
ll
awandr
omanl
aw

 3except
ions;

1
.The conceptofpar t
y aut
onomy recogni
ti
on.(A.6 ofCI SG mot
herofpar t
y
aut
onomyclauses-part
yautonomyinthecontextofbr
ingi
ngmodif
icat
ioni
nthe
l
aw i
tsel
f.
)

2.I
ncasedel
ayofdel
i
ver
ybyanover
tactoft
hepar
ti
es,t
hensect
ion26wi
l
lnot
appl
y.

3.Bai
l
mentr
ulewi
l
lnotaf
fectt
hissect
ion.

 Execut
oryCont
ract
:Pr
oper
tyhasnotpassedanyt
hinghappeni
ngt
othepr
oper
tybor
ne
bythesel
ler

 Uncondi
ti
onalCont
ractOfSpeci
fi
cGoods:4,1
9and20sect
ions,buyer
’sr
esponsi
bil
i
ty

 Risk Wher
e Del
iver
yis Cont
ingenton Some Event;i
fthose event
s can be easi
l
y
perf
ormed-sect
ion26canbeapplied;i
fthoseevent
sar
eimpossibl
etobeper f
ormed-
Secti
on56ofICAwil
lcomeint
opictur
e.

 Ri
skwhengoodsar
einTr
ansi
t:3cont
ract
spossi
blewhengoodsar
eint
ransi
t:bet
ween
 buyerandsel
l
er,bet
weenbuyer
/sel
l
erandcar
ri
er,i
nsur
ancecont
ract
.

Ri
skofdet
eri
onati
ondur
ingt
ransi
t:
 Expr
essprovi
si
oni
scontr
act

 Owner
shi
pofgoodsdur
ingt
ransi
t

 Causeofsuchdet
eri
orat
ion:det
eri
orat
ionofcommer
cial
val
ueofgoods.

 Nat
ureandchar
act
erofgoods.

Ri
skwherebuyermayresci
ndthesal
e
 Ri
skwill
bebornebytheowner.I
twi
l
lal
sobeshar
edbyt
hebuyer
.

 Methodofresci
nding:i
nti
mat
iont
osel
l
ert
hatt
hegoodshavebeenr
eject
ed;r
iskwi
l
l
shi
ftt
othesell
er.

 Duri
ngthepossessi
onoft
hosepart
icul
argoods,buyer
’sr esponsi
bil
i
tywil
lbel
i
mit
ed
tothatofabail
ee.Iti
sdeter
minedont hebasisoffact
sandci rcumst
ancesoft
he
case.

 Super
veni
ng impossi
bil
i
ty(
ter
m f
orfr
ust
rat
ionusual
l
yused)
,commer
cialhar
dshi
p,
for
cemajeur
e.(Art
icl
e79ofCI
SG).

Ri
ski
nrelati
ont oReject
edgoods
 Fi
rstandf oremost:whet
herr
eject
iondonebonaf
idel
y(r
iskshi
ft
edt
osel
l
er)ormal
a
fi
dely(ri
skwithbuyer)
.

 Goodsi
nnon-conf
ormi
tyt
othecont
ract
.

 Aft
erbonafiderej
ecti
onwhengoodsarenottakenbackbysel
l
erwi
thi
nreasonabl
e
t
ime.Lossbornebythebuyercanber
ecover
edfrom sel
l
er.

 3pr
ovi
soi
nSect
ion26:

1
.Thel
ossmustaccr
uet
othegoods.

2.Thepr
oxi
mat
ecauseoft
hel
ossmustbedel
ayedi
ndel
i
ver
yoft
hegoods.

3.Thedel
aymustbeat
tri
but
abl
etot
hef
aul
tei
theroft
hebuyerort
hesel
l
er.

Nemodatnonquodhabet:noonecangi
veabet
tert
it
let
hanhehi
msel
fpossesses.
 Whist
lerv.For
est
er,1
863

 Except
ionst
othedoct
ri
ne:27-30ofSOGA pl
ussect
ions54,1
69(
fi
nderofgoods)
,
178ofI
CA.

 Except
ions:

1
.Sal
ewi
thconsentoraut
hor
it
yoft
heowner
.

2.Tr
ansf
eroft
it
lebyest
oppel
.(S.27)

3.Nonestf
act
um

4.Sal
ebymer
cant
il
eagent(
S.2(
9))
 5.Sal
ebyper
soni
npossessi
onunderavoi
dabl
econt
ract(
S.29)

6.Sal
ebysel
l
eri
npossessi
onaf
tersal
e.(
S.30(
1))

7.Sal
ebybuyeri
npossessi
onbef
orepr
oper
tyhasvest
edi
nhi
m.

8.Sal
ebyunpai
dsel
l
erwher
eheexer
ciseshi
sri
ghtofl
i
enorst
oppagei
ntr
ansi
t.

9.Thesal
einmar
ketover
t.

 Par
ti
es:Owner
,sel
l
er,buyer
,subsequentbuyer
.

 I
ntheabsenceofabet
tert
it
le,r
ight
soft
heor
igi
nal
owner
:

 Recover
yoft
hepossessi
onoft
hegoods-sui
tforpossessi
on(
comesoutof
cont
ract
).

 Ri
ghtagai
nstwr
ongf
uli
nter
fer
ence

 When goodshavenotbeenmi
xed up orhavebeenmi
xed up (
doct
ri
ne of
sever
abi
li
tyappl
i
es)

 Ri
ghtofr
est
it
uti
on.

 Rightt
otr
aceandf
oll
ow t
hegoods.[
ICLQRi
ghtt
oTr
aceandFol
l
ow t
heGoods
1989]

 Owner
shi
p

 Cont
ract
ual
Liabi
l
ity

 Tor
ti
ousLi
abi
l
ity(
Rightt
ofol
l
ow andRest
it
uti
o)

 Except
ions:

1
.Sal
ewi
thconsent

2.Sal
ewi
thest
oppel
(Bonaf
idebuyer
’sr
ight
swi
l
lnotbeaf
fect
ed)

 CI
SG-Ar
ti
cle7.
2(GoodFai
th)

 CI
SG-Ar
ti
cles1
6.2,20and39(
Cont
ract
ual
goodf
ait
h)

 UCC-honest
yinconducti
sgoodf
ait
h-Ar
ti
cle2.

 Ti
tl
ebyEstoppel:Cr
eati
nganimpressi
onorgivi
ngar
epr
esent
ati
ont
hatt
heper
son
whoissel
l
ingthegoodsist
heownerofthegoods.

Li
ckBar
row v.Mason,1787(AshrustJ.
)
 Forestoppelto be appli
ed in nemo datquod no habet
,the f
oll
owi
ng 2
condi
ti
onsneedtobef ul
fi
ll
ed:

1
.Repr esent
ati
onmadebyt
het
rueownert
hatt
hesel
l
eri
stheowneroft
he
par
ti
culargoods.

2.Bynegl
i
genceonthepartoft
het r
ueownerwhi
chenabl
ethesel
l
ert
o
cr
eat
eanappear
anceofownershi
p.
  Wher
everoneoft
he2innocentper
sonsmustsuff
erbytheactsoft het
hir
d,he
whohasenabl
edsucht
hir
dpersontooccasi
onthelossmustsust
ain.

 CONDI
TIONS:

1
.Ther
epr
esent
ati
onmustbecl
earandunequi
vocal
.

2.I
tmusti
nducet
hesubsequentbuyert
opur
chasei
t.

3.Ther
emustber
eli
anceont
her
epr
esent
ati
onoft
het
rueownerbyt
hebuyer
.

 I
ndorsi
ng ofdocument
s such as bi
l
lofl
adi
ng,r
ail
way r
ecei
pts,et
c.i
ndi
cat
e
ownershi
p.

 I
ndor
sementof2t
ypes:Gener
al/
BlankI
ndor
sementandFul
l
/Speci
alI
ndor
sement

 Bi
l
lofLadi
ngi
snotanegot
iabl
einst
rument

 Post
-dat
ed cheque i
sa bi
llofexchange and Sect
ion 1
38 ofNI
A wi
l
lappl
y-Ani
l
Sawhneyv.Uni
onofIndi
a,I
ndusAir
wayscase

 Lor
dDenni
ng:

 I
nthedevel
opmentofourl
aw,2pr
inci
pleshavest
ri
venf
ormast
ery:

1
.Pr ot
ection ofProper
ty:no one can gi
ve a bet
tert
it
let
han he hi
msel
f
possesses.(nemodatquodnonhabet)

2.Prot
ecti
onofCommer ci
alTransact
ions;t
heper
sonwhot akeingoodf ai
th
andforval
ue,wi
thoutnot
iceshouldgetagoodti
tl
e.(
prot
ecti
onofinnocent
buyers)

 Bishopgat
eMotorFinanceCor porat
ionLtd.v.Tr
anspor
tBr
akesLt
d.1KB pg.49
322:nemodat
,al
ltheexcept
ion,bonafide

 Sect
ion2(
2):meani
ngofdel
i
ver
y;Sect
ion33:ways/
modesofdel
i
ver
y.

 Sect
ion2(
2)canber
eadwi
thSect
ion35.

 Engl
i
sh Factors Act
,1889:possessi
on means cust
ody,I
ndi
an j
uri
spr
udence has
i
ncorpor
atedthi
smeaning.

 ‘Possession’ byPol
l
ockandWr i
ght:i
nallcasest
heessenceofdeli
ver
yisthatt
he
del
ivererbysomeaptormani festactputt hedel
iver
ereeint
hesameposi ti
onof
contr
oloverthethi
ngeit
herdir
ect l
yorthroughacustodian(
mercant
il
eagent
)which
heheldhimselfi
mmediat
elybeforetheact.

 Del
i
ver
ydonet
o:Buyer
,agent
,car
ri
er

 Forwar
derorFor
war
dingAgent
:whent
heagenthasonl
yther
oleofconsi
gneroft
he
goods.

 Sect
ions23(
2)and39ofSOGA:del
i
ver
ytocar
ri
err
ecogni
sed

 Sect
ion32:Paymentanddel
i
ver
yar
econcur
rentcondi
ti
ons
 Part
yAutonomy:modifyther ul
e( exceptpubl
i
cpoli
cy),pr
ovi
si
ons,appl
i
cabl
elaw,
courtwhi
chwil
lhavej
uri
sdict
ion,orousti
ngthej
uri
sdi
cti
onofacour
t

 Ar
ti
cle6ofCI
SG:Par
tyAut
onomy

 Claude Leel a Parulkarv.SakalPaper s Pvt

.Ltd.2005 1 1SCC 73: concur r
ent
conditi
ons:readinessandwi lli
ngnesst opayont hespeci f
ieddate.Readinessand
will
i
ngness t o pay i nvol
ve capacityt o pay.2 thi
ngs requi
red to be t
aken i
nto
considerati
on:Insolvency(requiresSection45:unpai
dsell
er’sr i
ghttoexercisel
i
en)
andr efusaltoacceptdel i
very( sui
tforacceptanceofthepar ti
culargoodscanbe
there;bonaf i
deormal afi
der efusalneedstoconsi
dered)
.

 DeviDayalSal
esPvt.Ltd.v.St
ateofMahar
asht
raAIR 2006Bombay37:Penalt
y
cl
ause:i
fgoodsnotdel
iver
edonspeci
fi
eddat
e,penal
tyofthespeci
fi
edamountwi
ll
beimposed

 Par
tDel
i
ver
y:Sect
ion34,[
48(
forl
i
en)
];Const
ruct
ivedel
i
ver
yoft
hewhol
e.

 I
nst
almentDel
i
very:Sect
ion38;i
tmustbementi
onedinthecont
ractt
hatgoodswi
l
l
bedel
iver
edi
ninstal
ments,ot
her
wisei
twi
l
lnotbeal
lowed.

 Br
etL.
J.i
nCoopercase:r
ecogni
sest
heconceptofpar
tdel
i
ver
y.

 Sect
ion36:Rul
esast
oDel
i
ver
y

1
)Pl
aceofdel
i
ver
y:Sel
l
er’spl
aceofbusi
ness.

2)Ti
meofdel
i
ver
y:r
easonabl
eti
me-busi
nesshour
s

3)Deli
ver
ybyAt t
ornment(physi
calpossessi
onofgoodshasnotchanged,cont
rol
over t he par ti
cul
ar goods has changed) acknowl edgement:
Fi
cti
ti
ous/Symboli
c/Const
ruct
ivedel
iver
y

4)ExpensesofDel
i
ver
y:Acti
ssi
l
ent
.

5)Expensesofani
nci
dent
alt
oput
ti
ngt
hegoodsi
ntoadel
i
ver
abl
est
ate:onsel
l
er

6)Expensef
orpr
epar
ingf
ororr
ecei
vi
ngdel
i
ver
y:onbuyer

7)Deli
veryinwr
ongquant
it
y:Sect
ion37(
bot
hquant
it
yinshor
tandexcessi
ve
quanti
ty)

Repudi
ati
onofcont
ractinbot
hcases.
Sect
ion39ofICA-Commer ci
alhardshi
p
8)I
fgooddeliver
edar
emi xed-doct
ri
neofsever
abi
l
ity;

9)Del
iver
y in inf
eri
or quant
it
y- not accept
abl
e because goods become
unmercant
ibl
e(Sect
ion2(
12)
).

 How dowedet erminegoodsar eofdeliverabl

equanti
ty?-demi nimis
rul
e(Benjami
n-mi cr
oscopicvar
iat
ionswillnotbeconsi
deredasdeli
very
ofinf
eri
orqual
it
y;2% vari
ati
onindeli
ver
edgoodsi sall
owedglobal
ly;not
i
ncaseofgold,diamondsandotherpreci
ousgoods)
  Sur
eshKumarv.K.AssanKoyaandSonsAI
R1990Ker
ala20.

 Forr
eject
ionofgoodsi
ncaseofnon-conf
ormi
ty,i
nti
mat
ionornot
icei
srequi
red.

 I
ncaseofcontr
acti
ninst
alment
s,i
fonei
nst
almentnotgi
ven,cant
heent
ir
econt
ract
ber
epudi
ated?

I
fonei nst
almentnotdeli
vered,general
lycontr
actisnotresci
nded;f
orr
escindi
ng
theremustberecurrence(conti
nuingcontract
)
I
MPORTANCEOFDELI VERY
 Thatdeli
verywhichsuffi
cestopasst heti
tl
esot hati
fthegoodsbedestroyedthel
oss
fal
lsuponthevendee.

 Thedeliver
ywhichsuffi
cestodest r
oythel
ienofthevendorwhi
chconsist
sint
otal
andunqualif
iedsur
renderofpossessi
onandofaspeci
alcl
aimtoret
aint
hegoodsby
thevendor.

 Thatdeli
verywhichrequir
esnotonlyanut t
erreli
nquishmentofpossessi
onbythe
vendorbutalsoanabsolut
eandf i
nalappr
opri
ati
on( examinat
ion;Sect
ion1
0and23-
ter
m appropri
ati
onused)bythevendee.

 Act
ualdel
i
very:invol
ves consi
derati
on oft
he per
son t
o whom goods areto be
del
i
ver
ed(Secti
on32and39) ;Place:sel
l
er’spl
aceofbusi
ness,Ti
me:r
easonabl
e

 Symbol
i
c/Constr
ucti
ve/ Fict
it
ious/Att
ornment/
Acknowl
edgement
- Sect
ion 36(
3):
put
ti
ngthegoodsinabsol
utecontrolofthevendee.

I
NCOTERMS
 Sect
ions1
2,1
3,59:onceacondi
ti
on,al
waysacondi
ti
on.

 Condi
ti
on:Essent
ial
fort
heexecut
ionoft
hecont
ract
.

 I
faclauset al
ksaboutjuri
sdi
cti
onofaparti
cularcourtfori
nit
iat
ingsui
ts-neit
hera
condi
ti
on nora warranty,si
mplya j
uri
sdi
cti
onalclause.Conditi
on orwarrantyi
s
al
waysinrefer
encetogood.

 Perf
ormance,wher
econt
ractconcl
ude,wher
eanyoft
hepar
ti
esr
esi
de,r
easonabl
e
nexus

 Scot
tv.evor y cl
ause;whi l
e det
ermi
ning j
uri
sdi
cti
on,t
he t
erm “onl
y” oust
s
j
uri
sdi
cti
onofal
ltheothercourt
sandisi
nval
id.

 Par
all
elImpor
tat
ion:r
ightofthemanufact
urerget
soverwhenthemanufactur
ingis
complet
edwit
hinthecountr
y.Ift
her
eisuniver
salt
rademar
k,t
hent
heproductcannot
bemodifi
edandsold.

MicrobeadsAGvVinhurstRoadMaki ngs(1
975JWLR21 8)
-caseonpatent
i
nfri
ngement.
 Greymar ket
:nor
ightt
osellbutst
il
ltheexerci
seofsel
l
ingi
scont
inued.

 Nat
ureandcompl
exi
ti
esofcommer
cial
transact
ions,nat
ureofgoods

 Typesofpr
oductl
i
abi
l
ity:
 Nof
aul
tli
abi
l
ityt
est
,mer
chant
abi
l
ityt
est
 NEGOTI
ABLEI
NSTRUMENTSACT
 I
tems45and46ofUni
onLi
st

 Sect
ion85A:I
ncl
udedbankdr
aftasanegot
iabl
einst
rument
.

 Amendment
s:27t
imes;Lat
est
-201
6:Di
shonourofcheques

 Mosti
mpor
tantchapt
er:Chapt
er1
7ofNI
A(Di
shonourofCheques)

 Lat
estLaw Commi
ssi
onRepor
t:48l
akhcasespendi
ngi
nthef
iel
dofdi
shonourof
cheques.

 Commencementoft :9thDecember1
heAct 881

st
 I
mpl
ement
ati
onoft
heAct
:1 Mar
ch,1
882

 Sour
ce:Bi
l
lofExchangeAct
,1882:bot
htheact
swer
eget
ti
ngpassedt
oget
her(
bil
l
s
i
ntr
oducedt
oget
her
);NI
Ajustgoti
mpl
ement
edf
ir
st.

 NI
Aissubj
ect
edt
oIndi
anPaperCur
rencyAct
,1871(
Now,RBIAct
,1934)

 Sect
ion3:t
alksaboutbanker
’sdef
ini
ti
on;NI
Asubj
ect
edt
oBanki
ngRegul
ati
onsAct
,
1
949

 Sect
ion31ofRBIAct
:Gover
nmentBoE,gover
nmentpr
omi
ssor
ynot
es

 Rupeeonenot
esi
ssuedbygover
nmentonl
ybecauseoft
her
easonofsover
eignt
y
andmai
ntai
ningmonopol
y.

 Rupee1not
eal
waysi
ssuedbygover
nment
;issuedi
nthenameofFi
nanceSecr
etar
y.

 Sedi
ti
on:notaccept
ingRupeeonepapercur
rency;r
eject
ionofGover
nmentmandat
e;
per
soncanbehanged.

Sect
ion85A:Bankdr af
t
Sect
ion14ofNIA:Negot i
ablemeansfr
eelyt
ransf
erabl
e
Sect
ion13:Negoti
ableinst
rumentmeansapromissorynot
e,BoE,andcheques.I
tonl
ygi
ves
awaythetypes,cannotbeconsider
edthemeaningofnegoti
abl
einst
ruments.

CERTAI
NTY
1.MakerorDr
awer
:pr
omi
ssor
ynot
e:maker
;dr
awer
:cheques
 2.Payee/Bear
er(
Except
ion;payee’snamei
snotment
ioned)

3.Amount
/Inchoat
e st
amped i
nst
rument
s (
Except
ion; even when amount not
ment
ioned,i
tisval
i
d)

4.Dat
e:I
nst
rumentwhenpayabl
e(ont
het
opofcheque)andi
nst
rumentwhendr
awn
(
alongwi
thsi
gnat
ure)

5.Pl
aceofPayment
:wher
ethei
nst
rumentwi
l
lbeencashed

6.Condi
ti
onofl
i
abi
l
ity/
payment
:ifi
nst
rumentsubj
ect
edt
oanycondi
ti
on:whet
hert
hat
condi
ti
oni
sboundt
otakepl
aceorcer
tai
ntot
akepl
ace

PROMISSORYNOTES/PNOTES
 Secti
on4

 Shal
lal
waysbei
nwr
it
ing

 I
tcanbewr
it
tenwi
thanyt
hingandcanbewr
it
tenanywher
e,i
tmustbedeci
pher
abl
e.

 I
tmustbet
ransf
err
abl
e

 St
atut
eofFr
audsAct
,1677:1
2cat
egor
iesofcont
ract
sthatshal
lbei
nwr
it
ing

 I
NGREDI
ENTS:

1
.Itmustbei
nwr
it
ing

2.Uncondi
ti
onal
under
taki
ngt
opay

3.Si
gnedbyt
hemaker

4.Makermustbecer
tai
n

5.Somepayabl
emustbecer
tai
n

6.Payee (
Sect
ion 7:someone ent
it
led t
orecei
ve money,whose name i
s
ment
ionedi
nthei
nst
rument
,whosenamei
snotment
ionedbuti
npossessi
on
(
bear
er)
,payeenamement
ionedbutt
henameoft
hehol
dert
owhom i
tist
obe
endor
sed i
slef
tbl
ank(
thi
sal
so becomesbear
er’si
nst
rument
),i
ndor
see-
subsequentpayee)mustbecer
tai
n

 Whyar
est
ampsf
ixedont
oinst
rument
s?-

 Tocr
eat
eevi
dent
iar
yval
ue(
tomakei
taper
fectevi
dence)

 Fi
nanci
alt
ransact
ionsar
ether
eandgover
nmenti
nvol
vementi
sal
sot
her
e.
 Nof
ixedf
ormatf
orwr
it
ingpr
omi
ssor
ynot
es.Onl
ythi
ngt
hati
srequi
redi
sint
ent
ion.

 2 essent
ial
s:Acknowl
edgementofdebtand Uncondi
ti
onalunder
taki
ng t
o pay.
Ther
efor
e,I
.O.
U.i
s di
ff
erentf
rom pr
omi
ssor
y not
es as i
tinvol
ves onl
ythe f
ir
st
el
ementandnott
hesecond.

 NawabMaj
orSi
rMohammadAkbarv.At
tarSi
ngh(
AkbarKhancase)
:

 Agr
eementcont
ainedt
hatt
heamountwoul
dbe“payabl
e” onapar
ti
cul
ar
day.Thi
sisnotsuf
fi
cientt
oamountt
ouncondi
ti
onalunder
taki
ngt
opay.I
twas
aver
ymi
l
ddi
rect
ion,t
hedi
rect
ionmustbeasser
ti
veandst
rong.

 Nor
equi
rementf
orusi
ngt
hewor
d“pr
omi
se” f
ort
hei
nst
rumentt
obeapr
omi
ssor
y
not
e.

 Kador
il
alv.SukhpalAI
R1968MP4

 Whol
edocumenti
srequi
redt
obeseent
oconst
ruewhet
hert
hedocumenti
sa
pr
omi
ssor
ynot
e.

 Appar
entt
enor(
paymenti
nduecour
se-Sect
ion1
0ofNI
A[‘paymenti
ndue
cour
se’ means paymenti
n accor
dance wi
tht
he appar
entt
enoroft
he
i
nst
rumenti
ngoodf
ait
handwi
thoutnegl
i
gencet
oanyper
soni
npossessi
on
t
her
eofunderci
rcumst
anceswhi
ch do notaf
for
dar
easonabl
e gr
ound f
or
bel
i
evi
ng t
hathe i
snotent
it
led t
orecei
ve paymentoft
he amountt
her
ein
ment
ioned]
)oft
hatpar
ti
cul
ari
nst
rumentmustbecl
ear
ed

 Thepur
posef
orwhi
cht
hepr
omi
ssor
ynot
ewasexecut
edasdescr
ibedont
he
i
nst
rumenti
srequi
redt
obeseen.

 Col
l
ater
alci
rcumst
ancewhi
chmaybecont
ainedi
nevi
dencecannotbel
ooked
i
ntof
orascer
tai
ning t
he pur
pose ofval
i
dit
y ofpr
omi
ssor
y not
es.Par
ole
evi
dencei
snotaccept
abl
efordet
ermi
nacyofpr
omi
ssor
ynot
es.

 Chhabi
l
dasMangal
dasv.LuharKohanAr
yaAI
R1967Guj7

 I
nci
dentofnegot
iabi
l
ityandr
equi
rement
sofSect
ion4ofNI
Aar
ethef
oremost
r
equi
rement
sfort
heval
i
dit
yofpr
omi
ssor
ynot
es.

 Bahadur
nisaBegum v.BasudevNayakAI
R1967AP1
23

 Cer
tai
ntyast
omaker
  Cer
tai
ntyast
opayee

 Cer
tai
ntyast
oamount

 Cer
tai
ntyast
ouncondi
ti
onal
under
taki
ng

 Cer
tai
ntyast
odat
e

 Cer
tai
ntyast
opl
aceofpayment

 JakaGopalReddyv.Neel
kant
am Venkat
aKr
ishnaAR2008AP255

 Whol
edocumentt
obet
akeni
ntoconsi
der
ati
on.

 I
ntent
ionoft
hepar
ti
es.

 Messr
sPacki
ngPaper
sv.Smt
.VeenaLat
aKhosl
a

 Pr
omi
ssor
ynot
esshal
lbewr
it
ing

 Uncondi
ti
onalunder
taki
ng by t
he makeroft
he documenti
s an essent
ial
r
equi
rementf
ori
tbeconsi
der
edasaval
i
dpr
omi
ssor
ynot
e.

 Suchuncondi
ti
onal
under
taki
ngmustbet
opaycer
tai
nsum ofmoneyt
ocer
tai
n
per
sonort
otheor
deroft
hatper
sonort
othebear
eroft
hei
nst
rument
.

 Makershoul
dsi
gni
t.

 Thepr
omi
set
opaymustbet
hesubst
anceoft
hei
nst
rument
.

 Ther
emustbenot
hingel
sei
nconsi
stentwi
tht
hechar
act
eroft
hedocumentas
subst
ant
ial
l
yapr
omi
set
opay.

 Thei
nst
rumentmustbei
ntendedbyt
hepar
ti
est
obeapr
omi
ssor
ynot
e.

 Sect
ion23:Cal
cul
ati
ngmat
uri
tyofbi
l
lornot
epayabl
esomanymont
hsaf
terdat
eor
si
ght

 Dat
e+3-daymat
uri
typer
iod

 NawabMaj
orSi
rMohammadAkbarv.At
tarSi
ngh(
MohammadAkbarKhancase)
(
Pri
vyCounci
ldeci
si
on)
:“Payabl
e” i
snotanuncondi
ti
onal
under
taki
ngt
opay.

 Cl
aydonv.Br
adl
ey,1
9871Al
lER522(
abovecaseaccept
edi
nthi
scase)

 BachhanSi
nghv.Ram AwadhAI
R1949Al
l71
3:Useoft
het
erms“asandwhen
needed” i
scr
eat
ing a pr
obl
em,cr
eat
ing uncer
tai
nty.Thussuch a phr
ase woul
d
 makei
tani
nval
i
dpr
omi
ssor
ynot
e.

 Twopar
ti
es

BI
LLSOFEXCHANGE-l
i
vebl
oodoft
rade
 SECTI
ON5

 I
NGREDI
ENTS:

1
.BoEmustbei
nwr
it
ing

2.I
tmustcont
ainanor
dert
opay

3.Theor
dercont
ainedi
nthebi
l
lshoul
dbeuncondi
ti
onal

4.Bi
l
lspayabl
eoutofapar
ti
cul
arf
und(
becomi
ngcont
rover
sial
,SCsaysnoneed
t
odr
awapar
ti
cul
arf
undal
readywi
tht
hedr
awee)

5.BoEmustbesi
gnedbyt
hedr
awer
.

6.Thedr
aweemustbecer
tai
n.

7.Thei
nst
rumentmustcont
ainanor
dert
opaymoneyandmoneyonl
y.

 3par
ti
es:Dr
awer
,dr
awee,payee

 Sect
ion7:

 Dr
aweebecomesaccept
or,onceheaccept
sthei
nst
rument
.

 “Dr
aweei
ncaseofneed”:al
ter
nat
edr
awee

 “Accept
orf
orhonour
” [
Chapt
erXI
]:r
oleofst
ranger
stot
hei
nst
rumenti
s
r
ecogni
sed.I
ncasedr
aweedoesnotacceptt
hegood(
noti
naposi
ti
ont
opay)
,
aper
sonwhoaccept
sitsupr
apr
otestf
orhonouroft
hedr
aweroranyoneof
t
hei
ndor
ser
sisknownasanaccept
orf
orhonour
.

[
Sect
ion99and1
00]

ELEMENTSOFNEGOTI ABLEI NSTRUMENTS

1.Transf
erable
2.Mustbei nwr i
ting
3.Canbeendor sedf reely
4.Whoeverhast hepossessi oncanclaim,eveni
fthepr
evi
ousowner
’sr
ighti
s
defect
ive(except iontonemodatquodnonhabet )
5.Contemplatest ransferofmoneyonly
6.Theremustbecer tai
ntyinall
aspects
7.PresumptionofConsi derat
ion(Sect
ion118)
  Al
l chequesar eBoE.Elect roniccheques:exactmi rr
ori mageofcheques;di gi
tal
si
gnat ur
e,wi t
horwi t
houtbi omet r
ics;drawerwi lluset hedigi
talsi
gnature.
 Negot i
atednegot i
ableinstrument :discharged(Sect ion82) :
1.Bypayment
2.Bycancel lat
ion
3.Byr elease:ofanyoft hepar ti
es;nor estr
ictioninendor sement,lastper
son
wantsthatoneper sonmustber eleasedf r
om t heliabi
li
ty,r
eleasecanbedone
bythelastendorsee.
4.Bymat eri
alalt
erati
on( Secti
on87)
 Banddr aftanddemanddr af t
:theset woar ethesame.Dr aweristhebankand
draweei sagainthebankandpayeecanbeanyper son.

CLASSIFICATI ONOFBI LLSOFEXCHANGE

1.UsanceBi l
l:Timef i
xedf ort hepaymentofbi ll
sdr awninonecount ryandpayabl ein
anot her .(
Al soknownasFor eignBi l
l
sandTi meI nstr
ument( Secti
on1 2ofNI A;Ar t
icl
e??
ofUNConvent i
on)
2.Accommodat ionBi l
ls:Bil
lwhi chisdr awnbyoneper sonandaccept edbyt heot her
wi thoutconsi deration,mer elyt oenabl ethedr awert orai
semoneyont hebill
.(Secti
on
41 )
3.Document ar yBi l
l:Whenal lthedocs.r el
atingt othesalet r
ansacti
onsal ongwi ththe
BoEi sat t
achedf orthepur posesofr eleasingt hemoneybyt hebank.Manneri n
whi chaBoEi sused,notat ype.
4.Cl ausedbi ll
:ABoEcl ausepr ovidedf orpaymentataspeci f
iedrateofexchangeor
addi ngt othesum payabl e,i nterestorspeci fi
edchar ges.
5.IrregularBi l
l:IfaBoEbear si rregularindor sement ,i
tisknownasi rregularbi
ll
.An
ir
r egularindor sementmakest heinstrumentvoi d.
6.Aval izedBi l
l ofExchange:dr awer ,drawee,payee+af ourthperson-i ncaseofnon-
paymentbydr awee,suchf our t
hper songuar ant eesorbackspayment .Theterm
usedi s“backi ng” t hepayment .
 Wi t
ness:notanecessar ypar t
y.
7.Finet r
adebi l
l:whent hebankwr it
esitsaccept ancei nthebankinglanguage.Not
basi call
yat ypebutanomencl aturegivent ot heaccept edbi l
lofexchangegi venby
thebank.
8.Tr easuryBi ll
:issuedbyf oreigngover nmentt oanot hergover nment

CLASSI
FICATIONOFNEGOTAI BLEI NSTRUMENTS
1.Orderinstrument :Section1 3cont emplatesit.Hol der’snamei sment i
oned.
a)Payabl et oapar ticularperson
b)Payabl et oapar ticularpersononhi sorder
c)Payabl et ot heor derofapar ti
cularper son( person’si dent i
tyisthere)
d)Payabl ebyt heor derofpayee.( payee’snamei sspecifi
c)
2.Bearerinstrument :Section1 3
a)Expr essedt obepayabl et othebear er.
b)Lasti ndor sementi sinblank.(Therear et wot ypesofendor sement :General
indor sement /endor sementi nblank-canbegi ventoanyone;whi chmeans
thati fapayee’snamei stherebutt herei sanendor sementi nblankitcango
from anor derinstrumentt oabear erinstrument )
3.DemandI nstrument
a)Chequei sal wayspayabl eondemandwi thintheperiodofi tsvali
dity.The
automat i
cper iodofval i
dityisthreemont hs.Thi si
swr i
tteninS1 38andS1 42.
b)Timef orpaymenti snotspeci f
ied.
c)Thei nst r
umenti sval i
dtil
lit
sval i
dit
yper i
od.
 d)Ift heinst r
umenti sademandi nstrument ,nogr aceper i
odisgi ven.Sect ion22.
(di
ffer
encei nmat ur i
tyandval i
dity.Mat uri
ty-dat ewhenpaymenti sdue,i .
e.t hedatewr itt
en
onthet op)
e)Maybepr esent edf orpaymentatanyt ime.( Withintheper iodofi t
svalidity)
Doesnothavet obeanexactdat e.Ther eisnol imit
ationont henumberof
ti
mesani nstrumentcanbepr esent ed.
f) Bankcansay" refert odr awer "or" stoppayment "or "accountcl osed"or
"Insuffici
encyoff unds"or" dormantaccount "(everybankhasadi ffer
entpol i
cy
ast owhati sador mantaccount ).Af terdishonoura30-daynot ice,then1 5-day
ti
met or eplyt oit,thenf urtherpr oceedi ngs.Sincet heremustbedebtand
l
iabili
ty-andonl yt hent her ecanbeanof fence.Soeveni fyoui ssueanot her
chequewi thinsuf ficientfunds,onl yf oronewi llyoubepr osecut ed. 
4.Inchoat est ampedi nstrument
a)Sect i
on20:i ncompl etenesst ot heext entofamountt obef il
led.Itisgener al
ly
expect edt hatt hehol derwi l
lfil
lthatamountwhi chisinconsonancewi t
ht he
stampt obef ixed
b)Sect i
on1 1
8( f):talksaboutst ampi ngbutovert heyear sstampi ngacti snot
appl i
cabl etocheques.Thuschequesdon’tcomeundert het ermsofSect ion
20.
c)St ampf i
xest hemaxi mum amountwhi chcanbet here.
d)Event houghanyexcessi vemoneyi sf i
ll
ed( previoushol der’sr ightisdef ect i
ve)
andi ndor sedt osomeoneel se,indor seehast olookf or3r equirement st obe
fulfi
l
led:( 1
)r ecei vedi ngoodf ait
h,( 2)bef oremat uri
tyandf orconsi der
at i
on.I f
these3ar ecumul at i
velyf ulfi
l
ledt hei ndor seebecomeshol deri nduecour se.
St ampl osesi mpor tancei nsuchacase.[ Pri
vil
ege]

5.Ti
meInst
rument -Secti
on21
a)Payableonspeci f
ieddate
b)Payableafterspecif
iedperi
od
c)Payableaftercert
ainperi
odafterpr
esentat
ion
d)Ont hehappeningofaneventwhi chiscert
aintohappen.Exampl
e:mar
ri
agei
s
uncertai
nanddeat hiscert
ain.

6.I
nlandInstr
ument
a)Drawer,drawee,payee,al
ll
ocat
edi
nIndi
a.(
agent
sappoi
ntedmaybel
ocat
ed
outsi
de)
b)Necessarypart
iesmustbelocat
edi
nIndi
a

7.For
eignI
nstrument
a)Secti
on1 2ofNI
A
b)Arti
cle2ofUNConvent
ion

8.Ambi
guousInst
rument
a)Secti
on17
b)Dif
fer
encebetweenambi
guousandi
nchoat
einst
rument
s.

FI
RSTTRANSFERI SNEGOTI ATION,SUBSEQUENTONESAREENDORSEMENTS.  
 Sanrecourseindor
sement- 
 Canaskanyoneexcepthi mself
.
 Incaseofacheque,  const
ructi
vepossessi
on 
isr
equired.
 
 S8par a2.
 Hol derandholderi
nduecour se(al
soknownaspr ot
ectedhol
der
)-Br
it
ishbi
l
ls
 ofexchangel awhasbeenourl aw.
 Restr
icti
veendor sement :cannotbei ndorsedf ur
ther
MI
NORS-
 Canmakeanegot i
ablei nstr
ument .Cannotbeadr awer-sincethedr
aweristheone
l
iabl
eandmi norscan’tbehel dliable.
 Canbeadr aweeorapayee.  
MODESOFTRANSFEROFPAYMENT
 Negotiati
on
 Roleofdel iveryinnegot i
ati
on( Secti
on1 4readwi th46and47)
 Del i
ver yisessent ialpartofnegot i
ation
 Whomaynegot i
ate-Sect ion51
 Negot i
ationback:makercani ndor se
 Fixingl i
abil
ityofdi rectorsincaseofdi shonour( Sect
ion141)
,ot
herwise
Compani esAct ,201 3wi l
lbegover ningBoEdr awnbyacompany/ corpor
ati
on.
 Escr owaccount
 Sect i
on1 5:makercani ndorse( 2Pr obabil
i
ties)
- Wheni nstrumentdr awnbyagent ,t
hent hemakerisrequi
redtoindor
seit
.
- Negot iat
ionback
 Assi
gnment
 Sect i
on1 30ofTr ansf erofPr oper t
yAct

DI
FFERENCBETWEENBI
LLSOFEXCHANGEANDPROMI
SSORYNOTE(
???????)

DI
FFERENCBETWEENBI
LLSOFEXCHANGEANDCHEQUES(
????????)

HOLDERANDHOLDERI NDUECOURSE-DI FFERENCE( ??????????)

HOLDER HOLDERI NDUECOURSE
NoConsi deration Consi derationismandat ory
Holdercangetpaymentaf t
ermat uri
ty Hol derinduecour sei sr equiredt or eceive
instrumentbef or emat ur i
ty.
Nogoodf ai
thr equi red Instrumenti srequi redt obeaccept edin
goodf ait
h
Natur e
Holderi nduecour se-t it
lecanneverbedef ect i
ve
Holderi nduecour sei sthei ndor see
Noticeofdef ectt herewi thhol derinduecour se-i nstrumentcont inuest obeval i
d
Pri
vilegesf orhol deri nduecour se-pr ot
ectedhol der .
PRIVILEGESOFHOLDERI NDUECOURSE
1 .Ever ypriorpar tytoanegot iableinst
rumenti sliabl
et ohol deri nduecour seandt hisis
pr ovidedunderSect i
on36.
2.Pr i
vilegei ncaseofi nchoat est ampedi nstrument sment ionedunderSect ion20.
3.Ahol derwhoder ivest het it
lef r
om thehol deri nduecour sehast hesamer ightsas
thatoft hehol deri nduecour se.Ifhef urthert ransfer,theper sont owhom i tis
transf erredwi l
l becomeahol derinduecour seonl y-Sect i
on53
4.Nopr i
orpar tycansetupadef encethatNIwasdr awn,madeori ndor sedbyhi m
wi thoutanyconsi deration-underSect ion43
5.Nopr i
orpar tycansetupadef encethatNIwasl ostorwasobt ainedf rom hi m byan
off enceorf r
audorf orunl awf ulconsider ation.Hol derinduecour seget saval i
dt i
tl
e
oft heNIevent hought het i
tl
eoft hetr ansf erorwasdef ect ive-underSect ion58
6.Nopr i
orpar tycanal l
eget hatNIwasdel iver edcondi ti
onal lyorf orspeci alpur pose
 onl
yandspecialpurposeherereferstopurposeotherthanpayment-Sect
ion46
7.Est
oppelagai
nstdenyingorigi
nalvali
dit
yoftheinstr
ument-Secti
on1 20
8.Est
oppelagai
nstdenyingthecapacityoftheindorsee-Secti
on121
9.Est
oppelagai
nstdenyingsignatureorcapacit
yofpr i
orpart
y-Secti
on122
UNConvent
ionusestheterm “ProtectedHolder”

PROVI
SIONSOFLOSTI NSTRUMENT
 Sections8,45A,81 ,58
 Finderofl osti nstr
ument :
 Incaseofbear erinstrument ,finderhast heright.
 Incaseofor derinst rument ,fi
nderdoesnotgett heright.
 Cr ossCheque:A  cr ossedcheck  isany 
check  thati
s crossed withtwopar al
lel
l
ines,ei t
heracr osst hewhol e check orthrought hetopl ef
t-handcor nerof
the check.Thi ssymbol means  thatthe 
check  canonl ybedeposi teddirect l
y
i
ntoabankaccountandcannotbei mmedi atel
ycashedbyabankoranyot her
credi tinsti
tution.
- I tcannotbeencashedatt hecounteroft hebank,canonl ybecr editedto
t
heaccountoft hepayee.
I
NDORSEMENT
 Section1 5-f urt
hert ransf eroft heinst r
ument .
 ModesofI ndor sement :
1.Gener al I
ndor sement -Whent hehol dermer elyputsasi gnature.Whent he
makerorhol derofanegot iablei nst
rumentsi gnsthesame,ot herwisethanas
suchmaker ,fort hepur poseofnegot i
ati
on,ont hebackorf acet hereoforona
sli
pofpaperannexedt hereto
2.Speci alorFul lIndor sement -Whent hemakerorhol dersosi gnsf orthesame
pur poseast ampedpaperi ntendedt obecompl et
edasanegot i
ableinstrument ,
hei ssai dt oindor set hesame,andi scall
edt he“i ndorser”.

DIFFERECEBETWEENNEGOTI ATIONANDASSI GNMENT

Secti
ons1 4,46,47and48-compl etednegot iati
on
Secti
on1 30ofTr ansferofPr oper t
yAct ,1 972-assi gnment
1.Wr it
tenDocument :Negot iati
onofbear erinstrumentcanbemadebymer edel i
very-
Sect ion47.Negot i
ationofor derinstrumentcanbemadebyendor sementordel iver
y
-Sect i
on46.Assi gnmenthast obemadebyasepar at
ewr itt
endocumentsi gnedby
thet ransferorandt hisprocedur eisr equiredi ncaseofbot hbear erandor der
instrument s.
2.Presumpt ion:Whenanegot i
ablei nstrumenti snegot iatedthereispr esumpt i
onthat
negot i
ati
onwast heref orconsi deration.Ther eisnopr esumpt i
oni ncaseof
assignmentandt hebur denofpr oofliesont hetr ansfereetoshowt hatt
het r
ansfer
wasf orconsi derati
on
3.Not i
ce:I nthecaseofassi gnmentnot i
cei srequiredt obegi ventot hepersonwhoi s
tomaket hepayment .Nosuchnot i
cei srequi redt obegi veni nthecaseof
negot i
ati
on.
4.Def ectiveTitl
e:Theassi gneeofadebtt akest hei nstrumentsubj ectt oal
lthedefects
andequi ti
est hatmayexi stint het it
leofhi sassi gnor .But,incaseofnegot iat
ion,
bettert i
tl
ei sgivenevent hought het itl
eoft hepr eviousownerwasdef ect
ive.
5.PaymentofSt ampDut y:Indor sementofanegot iableinstr
umentdoesnotr equir
eany
otherf ormal i
tyandal sodoesnotr equi rethepaymentofst ampdut y.Incaseof
assignment ,paymentofst ampdut yisr equired.

CHAPTERI
IIPARTI
ESTONOTES,BI
LLSANDCHEQUES
SECTION26
 Sect ion1 1ofI CAdoesnotappl yher e
SECTION27
 Agent ’sr ole-canbemaker -i nt hiscaset hepr i
nci pal isrequi r
edt oindorse.
 AgentunderI CA:empower edt odowhat evert heywant ;AgentunderNI A:nopower
tomakei ndor sement .
 Mer cantil
eagentcanaccepti nst rument ,buthi sliabilit
ymustbeunder stoodby
readi ngSect ion27wi th28.
 Mer cantil
eagentmer elycol l
ect st hei nst rument .Itdoesnoti mpl yaccept ance.
Accept ancecanbedoneonl ybyt hedr awee.
 Mer cantil
ei sconsi der edt obeast ranger( i
fmaki ngofi nstrumentmakeri nthe
capaci tyoft hei ndor ser
SECTION28
 Agentsi gnswi thouti ndi cat i
ngt hathei ssi gningasanagent -per sonal l
yhel dl i
able
 Ifhei ndicat es-pr incipal vicar iousl yliabl e
(7,1
5,27,28-r oleofagent )
SECTION29
 Hel dl i
ableper sonal lyincasehesi gns.
SECTION30
 Liabi l
i
tyoft hedr aweral wayssecondar y.
 Dr awee’sl i
abi li
tyi spr imar y.
 Whenr eadwi th82-dr awee’sl iabi l
ityisal wayst her et il
lthei nst
r umenti sdi schar ged.
 Not icet othatef fectmustbei ssuedbyt hehol dert othedr awer ,nott ot hedr awee
becausedr aweeal r
eadyknowst hef act sofdi shonour .
 Ifinstrumenthasbeendi shonour edbydr awee,dr aweewi l
l i
ndicat ethisdishonour .In
thiscasedr awer ’sl iabi l
itywi llarise.
 Hol derorhol deri nduecour secanappl ySect ion30.
 Dr aweecando2t hi
ngs-accept si ncaseofBoEandpaywi t
hinmat urit
yper iod,i n
chequesspeci fi
edbankeri st hedr awee.
 Not icer equi rementi sf oremost -hol derorhol derinduecour se
SECTION31
 Mustbehavi ngsuf f
icientf undsonbehal foft hedr awer .Thedr aweeofacheque
havi ngsuf ficientf undsoft hedr aweri nhi shandspr oper lyappl i
cabl etot hepayment
ofsuchchequemustpayt hechequewhendul yrequi redsot odo
 Incaseofdef aul tofsuchpayment ,hemustcompensat ethedr awerf oranyl ossor
damagecausedbysuchdef aul t.
SECTION32
 Liabi l
i
tyofmakerofnot eandaccept orofbi ll
.
 Liabi l
i
tyofmaker
 Liabi l
i
tyofaccept orar isesi ncaseofBoE-oncei nst rumentaccept ed,wi t
hinmat uri
ty
per i
od,asperappar ent enor ,hemustmakepayment .
NOTE:
 Accept orf orowner( Sect i
on7) -compl et est ranger .Af ternot i
ngandpr otestingi fany
strangercomef orwar d,hef itsintot heshoesoft hedr aweeandt henhei ssupposed
tomakepaymentwi thint heper iodofmat uriy.“Whenabi
t llofexchangehasbeen
not edorpr ot est edf ornon-accept anceorf orbet tersecur i
ty,]andanyper son
accept sitsupr apr otestf orhonouroft hedr awerorofanyoneoft heindor ser s,such
per soni scal ledanaccept orf orhonour .”
Acceptanceher emeansaccept ancef orpayment
 Dr aweei ncaseofneed( Sect ion7) -Al ter natedr aweewhosement ionedont he
instrumenti tsel f.“Wheni nt heBi llorinanyi ndor sementt hereont henameofany
per soni sgi veni naddi tiont ot hedr aweet ober esor tedt oincaseofneed,such
 per soni scal l
edadr aweei ncaseofneed. ”
SECTI
ON33
 Onl ydr aweecanbeaccept orexcepti nneedorf orhonour
 “Noper sonexceptt hedr aweeofabi l
lexchange,oral lorsomeofsever aldr awees,
oraper sonnamedt her einasadr aweei ncaseofneed,oranaccept orforhonour ,
canbi ndhi msel fbyanaccept ance. ”
SECTI
ON34
 Accept ancebysever al dr aweesnotpar tners
 “Wher ether ear esever aldr aweesofabi llofexchangewhoar enotpar tner s,each
ofthem canaccepti tforhi msel f,butnoneoft hem canaccepti tforanotherwi thout
hisaut hor it
y.”
 Readwi thSect i
on1 9ofPar tner shipAct -financi al t
ransact i
onsar enotnor mal
transact ions.Aut hor isationf oraccept i
ngt hei nstrumenti sr equired.Apar tnercannot
simpl yacceptonbehal fofal l
.
 Sect ion1 41 -par t
ner sconsi dereddi r
ect orsoft hepar tnership.
SECTI
ON35
 Liabi l
it
yofi ndor ser .(hol deri sindor ser,hol deri nduecour sei sthei ndorsee)
 Paymentt ohol deri nduecour sei st hel i
abilit
yoft hei ndorser .
 Indor see( lasthol derorhol deri nduecour se)wi l
lgot othei mmedi ate(previous)
indor serf orseeki ngpayment .Ifi mmedi atei ndor serdoesn’tmakepayment ,t henhe
canappr oacht hepr evi ouspar ti
es.
SECTI
ON37
 Maker ,dr awerandaccept orpr inci pals.
 Themakerofapr omi ssor ynot eorcheque,t hedr awerofabi llofexchangeunt il
accept ance,andt heaccept orar e,i ntheabsenceofacont ractt othecont rar y,
respect i
velyliabl et her eonaspr incipal debt ors,andt heot herpar ti
estheret oar eliable
ther eonassur etiesf ort hemaker ,dr aweroraccept or,ast hecasemaybe.
 Chai nf rom whom paymenti sr equi redt ober ecei ved.
 Debtst artsf r
om pr i
nci pal ordr awer .Lastper sonori ndorseewi llseekpaymentf r
om
thei mmedi atepar ty
 Ifchai nnotf oll
owed,val idityoft hei nstrumentbecomesquest i
onabl e[Sect ion1 18(e)]

DISCHARGEOFI
NSTRUMENTS
1.Payment

2.Cancel
l
ati
on

3.Rel
easeoft
hepar
ti
es.(
Sanr
ecour
sei
ndor
sement
)

4.Mat
eri
alAl
ter
ati
on

MATERI
ALALTERATI
ON-SECTION87
 Sect
ion87r
eadwi
th82.

 Ef
fect
:al
ter
ati
onmakest
hei
nst
rumentvoi
d.

 I
fanyoft
hepr
esumpt
ionsofSect
ion1
18i
sal
ter
ed,t
heni
tismat
eri
alal
ter
ati
on.But
t
his

 LoonKar
anSet
hiav.EvanA.John(
1977)
  Mat
eri
alal
ter
ati
oni
stheonewhi
chvar
iest
her
ight
s,l
i
abi
l
iti
esorl
egalposi
ti
on
oft
hepar
ti
esasascer
tai
nedbyt
hedeedi
nit
sor
igi
nalf
orm orot
her
wisevar
ies
t
he l
egalef
fect
s oft
he i
nst
rumentas or
igi
nal
l
y expr
essed orwhi
ch may
ot
her
wisepr
ejudi
cet
hepar
tyboundbyt
hedeedasor
igi
nal
l
yexecut
ed.

 Hal
sbur
y’sdef
ini
ti
on

 Al
ter
ati
onmustbemat
eri
al

 Al
ter
nat
ionmustbeaf
tert
heNIi
sexecut
ed.

 Absenceofconsentofapar
tyl
i
abl
eundert
hei
nst
rument
.

 Al
ter
ati
ondoesnoti
ncor
por
atet
hecommoni
ntent
ionoft
heor
igi
nal
par
ty.

 TypesofMat
eri
alAl
ter
ati
on

1
.Al
l
owedMat
eri
alAl
ter
ati
on

 Sect
ion87i
sincl
usi
ve

 I
nchoat
e st
amped i
nst
rument
s: consi
der
ed mat
eri
al al
ter
ati
on but
al
l
owed.

 Conver
ti
ngi
ndor
sementi
nbl
anki
ntoi
ndor
sementi
nful
l
.

 Hol
derofun-cr
ossedchequemaycr
ossi
tormayconver
titgener
all
y
i
ntospeci
alcr
ossi
ngort
omakei
tnotnegot
iabl
e.[
all
owedasperSect
ion
1
25]

 Al
ter
ati
onmadebef
oret
hecompl
eti
onoft
hei
nst
rument
.

 Al
ter
ati
onmadewi
tht
heconsentoft
hepar
ti
esl
i
abl
eont
hei
nst
rument
.

 Al
ter
ati
onmadef
ort
hepur
poseofcor
rect
ingami
stakeorcl
eri
cal
err
or.

 Al
ter
ati
onmadet
ocar
ryoutt
hecommoni
ntent
ionoft
hepar
ti
es.

 Maki
ngofaqual
i
fiedaccept
ance.

 Anal
ter
ati
onwhi
chi
sacci
dent
al,maki
ngt
heamountf
easi
ble.[
HDFCv.
LeeShi1
928AC1
81]

2.Pr
ohi
bit
edMat
eri
alAl
ter
ati
on

 Al
ter
ati
onoft
hedat
eofi
nst
rument
.

 Al
ter
ati
onoft
het
imeoft
hei
nst
rument
.
  Al
ter
ati
onoft
hepl
aceofpayment
.

 Al
ter
ati
onoft
hesum payabl
e.

 Al
ter
ati
onbyaddi
nganew par
tyt
othei
nst
rument
.(accept
orf
orhonour
i
sanexcept
ion)

 Al
ter
ati
onoft
her
ateofi
nter
est
.

 Al
ter
ati
onbyt
ear
ingmat
eri
alpar
toft
hei
nst
rument
.

 Al
ter
ati
onbyf
ixi
ngst
ampwi
thoutt
hepr
omi
sor
’sknowl
edge.[
Sect
ion
20]

 Mat
eri
alAl
ter
ati
onandFor
ger
y(?????????)

TYPESOFPRESENTMENT
1.Present
mentf
orAccept
ance

2.Pr
esent
mentf
orPayment

NOTI
CEOFDISHONOUR
 WaysofDi
shonour
:

1
.Sect
ion91
:Di
shonourbynon-accept
ance

a)Whent
hebi
l
lispr
oper
lyordul
ypr
esent
edf
oraccept
anceanddr
aweemakesa
def
aul
tinaccept
ingi
twi
thi
n48hour
s.Appl
i
cabl
eonl
yfort
hepur
posesofBoE.

b)I
fther
e ar
e sever
aldr
awees,notbei
ng par
tner
s,t
he bi
l
lis sai
dto be
di
shonour
edbynoaccept
ancei
fanyoft
hem r
efuset
oacceptt
hebi
l
l.

c)Whent
hepr
esent
menti
sexcusedandt
hebi
l
lisnotaccept
ed.(
Sect
ion61
)

d)When t
he dr
awee i
sincompet
entt
o cont
ractt
he bi
l
lmay be t
reat
ed as
di
shonour
ed.(
Sect
ion26:mi
norcanbedr
awer
,payeebutnotdr
awee)

2.Sect
ion92:Di
shonourbynon-payment

a)Whoi
ndi
cat
est
hatpr
omi
ssor
yhasnotbeenpai
d-Maker

b)Who i
ndi
cat
es t
hatBoE has notbeen pai
d:Dr
awee and Accept
or(
aft
er
mat
uri
ty,dr
aweebecomesaccept
or)i
nBoE

c)Whoi
ndi
cat
est
hatchequehasnotbeenpai
d:Bank(
drawee)

d)KVenkat
asubbayyav.P.
R.RaoTobaccoCo.
,AI
R1972AP72:nonaccept
ance
bypostamount
stodi
shonouroft
hei
nst
rument
.
 Remedyf
ornon-paymentanddi
shonour

1
.Gi
vest
hehol
derani
mmedi
ater
ightt
orecour
seagai
nstt
hedr
awer
sandi
ndor
sees.

2.Gi
vest
her
ightt
othehol
dert
ogi
veanot
icef
oraccept
ance.

 Requi
rement
sofanot
ice:

1
.Not
icei
srequi
redt
obegi
venbef
oreanyr
ecour
se.

2.Obj
ectoft
henot
icei
snott
odemandpaymentbutt
owar
nhi
m agani
stt
hel
egal
consequences.

3.Not
icebywhom:hol
der
,byaper
sonl
i
abl
eont
hei
nst
rument
,agentoft
hehol
der
,
st
rangert
othei
nst
rumentcannotgi
venot
ice

4.Not
icet
owhom:not
iceofdi
shonourmustbegi
vent
oal
lpar
ti
esot
hert
hanmaker
,
accept
orordr
aweewhom t
hehol
derseekst
omakel
i
abl
e.

5.Not
iceofdi
shonourcanbegi
vent
o adul
yaut
hor
ised agentoft
heper
sont
o
whom i
tisr
equi
redt
obegi
ven.

6.Not
icemaybegi
vent
ohi
slegalr
epr
esent
ati
vewhent
hedr
awerort
hei
ndor
seri
s
dead.

7.Wher
ether
ear
e2ormor
epar
ti
esj
oint
lyl
i
abl
easdr
awer
sori
ndor
ser
s,not
icet
o
oneoft
hem i
ssuf
fi
cientt
obi
ndal
l
.

 Ef
fect
sofomi
ssi
on t
o gi
ve not
ice:Di
schar
gef
rom l
i
abi
l
iti
es(
Drawer
:Sect
ion30;
I
ndor
ser
:Sect
ion35)

 ModeofNot
ice:Sect
ion94

1
.Or
al

2.Wr
it
ten

3.Par
tl
ywr
it
tenpar
tl
yor
al

4.Advi
sabl
etogi
vewr
it
tennot
ice:evi
dence.

 Cont
ent
soft
heNot
ice

1
.Inst
rumenthasbeendi
shonour
ed.

2.Thei
nst
rumentshoul
dbei
dent
if
iedi
nthenot
ice.
 3.Not
icemustst
atet
hewayi
nwhi
cht
henot
icehasbeendi
shonour
ed.

4.Hewi
l
lbehel
dli
abl
eont
hedi
shonour
edi
nst
rument
.

5.Amer
edemandf
orpaymenti
snotasuf
fi
cientnot
ice.(
thewayi
tispr
esent
edand
t
hel
egal
consequencesofnotpayi
ngmustbet
her
e)

6.Ti
meandpl
aceofnot
ice:(
1)r
easonabl
eti
meand(
2)speci
fi
edpl
ace,busi
ness
pl
ace,habi
tual
not
ice

NOTE:
 Sect
ion27ofGener
alCl
auseAct
:dul
yser
vednot
ice(
properaddr
ess[
lastknown
addr
ess]and pr
operst
ampi
ng [
stamp dut
ypai
d]t
oregi
ster
ed post
)-i
tdoesn’t
mat
terwhet
heri
tisr
ecei
vedornot
-deemedaccept
anceofnot
ice.

 1
47ofConstr
efer
eto

 Bar
rennot
ice:wi
thoutst
amp.

(27TH SEPTMI SSI

NGNOTES)
Ramawat iSharmav.UoIAi
r1929All21
-
 Const i
tuti
onal
val
i
dit
yofSect
ion138(
reasonabl
edi
ff
erent
iai
sther
e).

 Obj
ectcl
auseof1
38-

1
.Tocr
eat
einvest
mentcl
i
mat
eint
hecount
ry.

2.Topr
eventr
ampantdi
shonour
ingofcheques.

3.Topr
ovi
dest
abi
l
ityt
otheeconomy.

4.Toensur
ecr
edi
t-wor
thi
ness.

 Thecour
tthushel
dthatt
heSect
ioni
sconst
it
uti
onal
l
yval
i
d.

Raj
endr
aSteelLt
dv.UoICri
minalLJ2000p.625(Del
hi)
 Chal
l
engedonthegroundcrimi
nall
aw:138-1
42takesawayt
heel
ementofmensr
ea

 Cour
tsai
dthi
sgr
oundcannotbeconsi
der
ed.

 Si
nce1
39saysmensr
eai
snotr
equi
redandt
heobj
ectcl
ause,i
tcanbesai
dthat
mensr
eai
snotr
equi
redi
ncaseofdi
shonourofcheques.

I
NGREDI
ENTSOFSECTI
ON138-Onlycover
scheques,notBoE.
1
. Aper
son(
drawer
)musthavedr
awnachequeonanaccountmai
ntai
nedbyhi
mina
bankf
orpaymentofcer
tai
namountofmoneyt
oanot
herper
sonf
rom outoft
hat
 account
.

2.Thechequeshal
lhavebeeni
ssuedbyt
hedr
awerf
ort
hedi
schar
gei
nwhol
eori
npar
t
ofanydebtorot
herl
i
abi
l
ity.(
expl
anat
iont
oSect
ion1
38:Chequemustbei
ssuedf
or
l
egaldebtandl
i
abi
l
ity– gi
ftchequesorpar
ent
s’ chequeswi
l
lnotbecover
ed.Legal
debtandl
i
abi
l
ity-l
egal
l
yenf
orceabl
edebtorl
i
abi
l
ity

3.Chequehasbeenpr
esent
edt
othebankwi
thi
ntheper
iodofi
tsval
i
dit
y(f
rom t
hedat
e
onwhi
chi
tisdr
awnori
ssuedf
oraper
iodof3mont
hs[
wasr
educedt
o3f
rom 6i
n
201
2])I
fnot
hingment
ioned,3mont
hs,canbemor
eal
soi
fexpl
i
cit
lyment
ionedbyt
he
par
ti
es.

4.Thechequehasbeenr
etur
nedbyt
hebank(
drawee)unpai
d.[
Fact
sofdi
shonourar
e
al
waysst
atedbyt
hebank]

5.WhatBankwr
it
es?– I
tisr
arel
ywr
it
ten byt
he bankt
hatt
he cheque hasbeen
di
shonour
ed.“r
efer
red t
othe dr
awer
”,“accountcl
osed”,“i
nsuf
fi
ciency of
f
unds”,“dor
mantaccount
”,“st
op payment
” i
smostcommonl
yused byt
he
Bank.

6.Not
ice:Thepayeeort
hehol
dermakesademandf
ort
hepaymentwi
thi
n30days.
Thi
smeanst
hatt
henot
icet
othatef
fecti
srequi
redt
obeser
vedbyt
hehol
deror
payeet
othedr
awerwi
thi
n30days(
ti
mef
orpayment
-15days)

ESCROW ACCOUNT
 WhenanNIisendor
sedanddel
i
ver
edcondi
ti
onal
l
yorf
oraspeci
alpur
poseonl
yas
col
l
ater
alsecur
it
yorf
orsaf
ecust
odyandnotf
ort
hepur
poseoft
ransf
err
ingabsol
ute
pr
oper
tyt
her
eini
scal
l
edescr
ow.

PAYEMENTINDUECOURSE
 The paymentmustbe made accor
ding t
othe appar
entt
enoroft
he i
nst
rument
(
dir
ect
ionofpayment
)-bymakeri
npr
om not
e,bydr
aweri
nBoEandcheques

 Thepaymentmustbemadei
ngoodf
ait
handwi
thoutnegl
i
gence

 Thepaymentmustbemadet
oaper
soni
npossessi
onoft
hei
nst
rument(
hol
der
)-
Sect
ion78

 Thepaymentmustbemadei
nmoneyandmoneyonl
y-Sect
ions4,5,6and85A.

PAYMENTOFINTERST
 Ther
atet
hati
sspeci
fi
edbyt
hepar
ti
es.
  I
fnotspeci
fi
ed,1
8% asspeci
fi
edi
nSect
ion80.

 I
nter
estAct
,1878wi
l
lnotbeappl
i
cabl
ebecausef
orNI
,Sect
ion80i
sappr
opr
iat
e.

BI
LLINSETS
SECTI
ON138-1
42
 SECTI
ON1 39

 Pr
esumpt
ioni
ncaseofhol
der
:rever
sebur
denofpr
oof
-Whent
hechequei
s
pr
esent
edbyt
hehol
dert
odr
aweet
hatchequesi
sther
ebecauseofdebtand
l
i
abi
l
ity.Ot
herper
sonhast
opr
ovet
her
eisnol
egaldebtorl
i
abi
l
ity.(
Sect
ion1
38
expl
anat
ion)

 Pr
esumpt
ioni
nfavourofhol
dert
hatt
hei
nst
rumentdr
awni
sforl
egaldebtand
l
i
abi
l
ity

 SECTI
ON1
40

 Takesawayani
mpor
tantpr
ovi
si
oni
ncr
imi
nal
law,i
.e.mensr
ea

 Whenevera dr
aweri
ssues a cheques he cannott
ake a def
ence t
hathe
wasn’tawar
ethatt
hechequewi
l
lgetdi
shonour
ed.-t
husact
usr
eusni
simen
si
treacannotbepl
eaded.

 Pr
esumpt
ion:t
her
eissuf
fi
cientamounti
ntheaccount

 “PERSON” i
nSect
ion1
38

 Bot
hnat
ural
andj
uri
sti
cper
sons.

 Ani
lHada v.I
ndi
an Acr
yli
c Lt
d.2001CompanyCasesp.36:di
shonourof
chequesi
ncaseofcompanydi
rect
or’sl
i
abi
l
ity,al
sodi
scussed“per
son”.

 SECTI
ON1
41

 Companydi
rect
or’sl
i
abi
l
ityi
ncaseofdi
shonourofcheque-vi
car
iousl
i
abi
l
ity

 Ani
lHada v.I
ndi
an Acr
yli
c Lt
d.2001CompanyCasesp.36:di
shonourof
chequesi
ncaseofcompanydi
rect
or’sl
i
abi
l
ity

Thosei nchargeofchequeonl ywil

lbehel
dli
abl
e
I
ndependentdi rector
sareexof f
ici
o,t
heydonotparti
cipat
eindaytoday
acti
vi
t i
esandt huswon.Onlythoseinchar
geofaffai
rsofthecompanydeali
ng
wit
hchequeswi llbeli
abl
e.
 Fort he purposes ofdishonourofcheques,par t
nerwi l
lbe consi
der
ed as
di
rect
oroff
ir
m.(
Expl
anat
ion)
  Sect
ion1
9:onl
ythoseper
sonswhogetmandat
ebyot
herpar
tnerr
egar
ding
f
inanci
almat
ter
s

 SECTI
ON1
42

 Fr
om cogni
zanceofof
fencet
osummar
ypr
ocedur
es

 Wher
eist
hef
orum,how casecanber
egi
ster
ed,whi
chcour
thasj
uri
sdi
cti
on.

 Fort
heof
fenceofdi
shonour
-Chapt
er1
7ofNI
A:compl
etecodeondi
shonour
ofcheque

 CPCnotappl
i
cabl
e

 Compoundabi
l
ityhasbeenpr
ovi
dedf
or.

 ARTI
CLE1
38

Punishment :i
mpri
sonmentupt
otheext
entof2year
s
Fine:doubletheamount
 138-1 47:Ci
vili
nnatur
e

 NOTI
CE

 BI
LLI
NSETS

 Sect
ion1
32and1
33

 ABoEi
nset
sdr
awni
npar
tsorsequencedi
scal
l
edbi
l
linset
s.

 Bot
hthepar
ti
esar
elocat
edi
ndi
ff
erentcount
ri
es

 Pur
pose/Advant
age:

1
.Conveni
ence

2.I
fnotal
latl
eastonedocumentwi
l
lbeavai
l
abl
etot
heot
herpar
tysot
hat
t
heycancl
aimt
hegoodsf
rom t
hewar
ehouse.

 Sect
ion34and38ofSOGA-par
t-del
i
ver
yandi
nst
almentdel
i
ver
y.

 ESSENTI
ALSOFBI
LLI
NSETS

1
.BI
Sal
waysdr
awni
npar
tsandal
lthepar
tst
oget
hermakeasetandt
he
whol
esetconst
it
utesonl
yonebi
l
l.

2.Each par
toft
he bi
l
lin set
smustbe number
ed and mustcont
aina
pr
ovi
si
ont
hati
tshal
lcont
inuet
obepayabl
eonl
ysol
ongast
heot
her
 par
tsr
emai
nunpai
d.

3.Eachpar
tmustcont
ainar
efer
encet
otheot
herpar
ts.

4.I
fanypar
toft
hesetomi
tsr
efer
encet
otheot
herpar
tst
hatpar
tshal
lbe
const
ruedasasepar
atebi
l
lifi
tgoesi
ntot
hehandsofahol
deri
ndue
cour
se.

5.Theent
ir
ebi
l
lisext
ingui
shedordi
schar
gedwhent
hepaymenti
smade
onanyot
herpar
ts.

6.Thedr
awermustsi
gneachpar
toft
hebi
l
landdel
i
veral
lthepar
tst
othe
payee.

7.Ast
ampi
saf
fi
xedononepar
tonl
yandonl
yonepar
toft
hewhol
eset
needst
obeaccept
ed.

8.Whenaper
sonaccept
sthebi
l
landi
ndor
sesdi
ff
erentpar
tsoft
hebi
l
lin
f
avourofdi
ff
erentper
sons,heandt
hesubsequenti
ndor
ser
sofeach
par
tar
eli
abl
eonsuchpar
tsasi
fthesepar
tswer
esepar
atebi
l
ls.(
fort
he
pur
poseoff
urt
hert
ransf
er,eachpar
tisi
ndor
seabl
e-mosti
mpor
tant
f
eat
ure) I
n i
nter
nat
ionalt
rade t
ransact
ions, ever
yti
me t
he whol
e
consi
gnmenti
snott
ransf
err
ed.I
ftheconsi
gneewant
stot
ransf
erone
par
toft
heconsi
gnmentonl
y,t
henbi
l
linset
smakessucht
ransf
ereasy-
advant
ageofconveni
ence.

 ACCEPTANCEOFBI
LLI
NSETS

 Accept
anceofoneamount
stoaccept
anceofal
l
.

 Per
for
mancebond:r
elat
edwi
thbankguar
ant
eeaswel
lasover
all
per
for
manceoft
he
cont
ract
.

 Mat
eCer
ti
fi
cat
e:i
ssuedbyt
hecapt
ainoft
heshi
pasani
ndi
cat
iont
hatt
hecar
ri
erhas
r
ecei
vedt
hegoods.

 Bi
l
lofLadi
ng Act1
855r
epl
aced byCar
ri
ageofGoodsbyseaact
,1925– BoL:
evi
dencet
hatt
hegoodshavebeent
ransf
err
ed,f
reel
ytr
ansf
erabl
e-consi
der
edt
obe
negot
iabl
einst
rument

 Ex-wor
kscont
ract
:[Sect
ion 39 ofSOGA]named pl
ace ofdest
inat
ion;when t
he
buyergoest
othepl
aceofbusi
nessoft
hesel
l
ert
ocol
l
ectt
hegoods.Ex-war
ehouse,
 ex-f
act
ory-synonymoust
erms.

CROSSINGOFCHEQUES
A cr
ossedcheck i
sany check t
hatis crossed wi
thtwoparall
ell
ines,ei
theracrosst
he
whole 
check 
orthroughthetopleft-handcor nerofthe 
check.Thissymbolmeans that
the 
check 
canonlybedeposi t
eddi r
ectlyintoabankaccountandcannotbei mmediatel
y
cashedbyabankoranyot hercrediti
nsti
tuti
on.
- I tcannotbeencashedatt hecounterofthebank,canonlybecr edit
edt
o
t
heaccountoft
hepayee.

- Sect
ions1
23-1
31Adeal
wit
hthi
s.

- Cr
ossi
ngofchequesal
soi
nvol
vesbankdr
aft
-Sect
ion1
31A.when85A
wasi
ntr
oduced,1
31Awasal
sopr
ovi
ded

- PURPOSE OF CROSSI
NG:Secur
it
y and caut
ion:secur
it
yto payee
(
moneywi
l
lgoaspert
hedi
rect
ionandcaut
iont
obank

- Gener
alcr
ossi
ng:caut
iont
obank,“non-negot
iabl
e”-gener
alcr
ossi
ng
butr
est
ri
ctedi
nnat
ure

- Speci
alcr
ossi
ng:pr
esent
edf
orpaymenti
nthatpar
ti
cul
arbr
anchonl
y,
whent
hebank’snamei
sment
ioned

- Doubl
especi
alcr
ossi
ng:namesof2banksar
ement
ioned-2nd banki
s
agentoft
hef
ir
standt
her
eisanar
rangementbet
weent
he2banks.Thi
s
i
mpl
i
est
hatt
her
eanar
rangementt
hesubsi
diar
ybank

 Achequei
ssai
dtobecr
ossedwheni
tbear
sacr
ossi
tsf
ace2par
all
elt
raver
se
l
i
nes.

 The l
i
nesar
e usual
l
ydr
awn upon t
he l
eftsi
de t
op cor
neroft
he cheque-
cust
omar
ynotmandat
ory.

 Cr
ossi
ngi
sadi
rect
iont
othepayi
ngbankt
opayt
hemoneygener
all
ytoabank
ort
opar
ti
cul
arbanksast
hecasemaybe

 Cr
ossi
ngaf
fect
sthemodeofpaymentoft
hecheque-account
scr
ossi
ng-al
ter
s
t
hedi
rect
ionhow t
hechequeswi
l
lbepai
d

 Cr
ossi
nggener
all
ydoesnotaf
fectt
ransf
erabi
l
ityunl
esst
hechequebear
sthe
t
erm “notnegot
iabl
e”

 Mat
eri
alal
ter
ati
oni
sal
l
owedmat
eri
alal
ter
ati
on
  Whomaycr
oss:Dr
awer
,Hol
der
,Hol
deri
ndueCour
se,I
ndor
ser
-Sect
ion1
25.

 How wi
l
lbankpay:bank’l
i
abi
l
ity-pr
otect
ionoft
hebank,goodf
ait
h,wi
thout
negl
i
genceandpaymenti
sther
eaccor
dingt
opaymenti
nduecour
se-Sect
ion
1
28

 Sect
ion1
31-pr
otect
ionavai
l
abl
etot
hebank
TH
(4 OCTOBERNOTES) ????
SECTI
ON1 42:COGNI
ZANCEOFOFFENCE
 Sil
ImportUSAv.Exim Ai
desSi
l
kManu/
SC31
2199

 Sect
ion1
42i
scompul
sor
yinnat
ure.

 Nocour
tshal
ltakecogni
zanceoft
heof
fenceexceptuponacompl
aintmade
byt
hepayee/
hol
deri
nduecour
se.

 Thepr
ovi
si
onscont
ainedi
nSect
ion1
42ar
eindependentoft
hepr
ovi
si
onsof
Cr
PC.

 Thewor
dcompl
ainti
sdef
inedunderSect
ion2(
d)ofCr
PC,butt
hesect
ion
openswi
tht
hewor
ds“unl
esst
hecont
extot
her
wiser
equi
res”

 Suchcompl
aint
saccor
dingt
o142(
b)i
stobemadewi
thi
nonemont
hoft
he
dat
eonwhi
cht
heCoAar
isesundercl
ause(
c)oft
hepr
ovi
si
onsofSect
ion1
38

 Nocour
tinf
eri
ort
othemet
ropol
i
tanmagi
str
ateorj
udi
cialmagi
str
ateoft
hef
ir
st
cl
assshal
ltr
yanyof
fencepuni
shabl
eunderSect
ion1
38.

 I
fthepar
ti
esbef
oreoraf
tert
hedi
sput
eref
ert
hemat
tert
oar
bit
rat
ion,i
tshoul
d
beal
l
owed.(
Sect
ion1
47r
eadwi
thSect
ion7oft
heAr
bit
rat
ionandConci
l
iat
ion
Act
).

 Meani
ngof“mont
h”-sect
ion3(
35)def
inesmont
handt
hatmont
hisaccor
dingt
o
t
heBr
it
ishCal
endar
.

 Requi
rement
sofcompl
aintunderS.1
42(
Aft
err
equi
rement
sofSect
ion 1
38 have
beencompl
i
edwi
th;1
42cannotbeappl
i
edi
ndependentofSect
ion1
38)

1
.Theal
l
egat
ionmustbei
nwr
it
ing.

2.Thatal
l
egat
ionmustbet
her
eagai
nstt
hedr
aweroft
hecheque.(
nof
aul
tof
dr
awee)

3.Thesai
dcheque(
“sai
dcheque” i
dent
if
icat
ionofchequei
srequi
redt
obe
 ment
ioned,ambi
gui
tyont
echni
calgr
oundwi
l
lleadt
odi
smi
ssaloft
hesui
t)was
i
ssuedi
ndi
schar
geofal
egal
l
yenf
orceabl
edebtofl
i
abi
l
ity.

4.Thechequeswaspr
esent
ed t
othebankonwhi
chi
twasdr
awnwi
thi
nthe
per
iodoft
isval
i
dit
y.(
present
mentofcheque 21
,64and1
38andRBIci
rcul
ar)

5.Thechequehasbeendi
shonour
edbyt
hebank.

6.Theendor
sementbyt
hebankwhi
l
eret
urni
ngt
hechequeunpai
d,di
rect
lyor
i
ndi
rect
ly,l
eadst
othei
nfer
encet
hatt
heamountofmoneyst
andi
ng t
othe
cr
edi
toft
hataccounti
sinsuf
fi
cientt
ohonourt
hechequeori
texceedst
he
amountar
rangedt
obepai
dfr
om t
hataccount
.

7.A not
icewassentt
othedr
awerwi
thi
n15daysoft
her
ecei
ptofi
nfor
mat
ion
f
rom t
hebankaboutdi
shonourofcheque,demandi
ngpaymentoft
heamount
cover
edbyt
hecheque.

8.The dr
awerei
theract
ual
l
yrecei
ved t
he sai
d demand not
ice ori
ntent
ional
l
y
evadedt
heser
viceofnot
icet
houghpr
oper
lydi
rect
edandbecauseofsuch
i
ntent
ionalevasi
onoft
heser
viceofnot
ice,t
hesai
dnot
icemustbedeemedt
o
havebeenser
vedupont
hedr
awer
.

9.The dr
awerdi
d notmake paymentwi
thi
n15 daysf
rom t
he dat
e ofact
ual
r
ecei
ptoft
henot
iceorconst
ruct
iveser
viceoft
henot
ice.

1
0.Thecompl
ainti
smadewi
thi
nonemont
hoft
hedat
eonwhi
cht
heCoAar
ises
undercl
ause(
c)ofSect
ion1
38.

1
1.Thecompl
ainti
stof
il
edbef
oreamet
ropol
i
tanmagi
str
ateorj
udi
cialmagi
str
ate
oft
hef
ir
stcl
asshavi
ngt
err
it
ori
alj
uri
sdi
cti
ont
oent
ert
ainsuchacompl
aint
.

1
2.Sect
ion 1
42 oft
he Actpr
ovi
des f
oronl
y one mode ofcogni
zance on a
compl
ainti
nwr
it
ingbyt
hepayeeorhol
deri
nduecour
seoft
hecheque.

NOTI
CEINTERMSOFSECTI
ON138
 Not
icef
orP.Not
eisnotr
equi
redt
obei
nwr
it
ing(
sect
ion93 i
nti
mat
ion,canbe
wr
it
tenoror
al)

 Not
iceshal
lbewr
it
ingf
ort
hepur
posesofSect
ion1
38.

 Not
icebyt
elegr
am i
sval
i
dnot
ice.

 Not
icebyf
act
sisval
i
dnot
ice.
  Not
icemustbegi
venwi
thi
n30days(
per
iodofnot
ice)oft
her
ecei
ptofi
nfor
mat
ionby
t
hedr
aweet
othehol
deri
ndi
cat
ingt
hef
act
sofdi
shonour
.

 I
ftheamountment
ionedi
nnot
icei
sbi
ggert
hant
hatment
ionedi
nthecheque,t
he
not
icebecomei
l
legal
.

 I
fthenot
icecont
ainst
hel
umpsum money,cover
ingt
hemoneyr
equi
redt
obepai
d,
i
nter
estandot
herexpensesi
ncur
red,i
twi
l
lbeaval
i
dnot
ice.However
,ther
emustbe
cl
ari
fi
cat
ionr
egar
dingt
hesame.

 I
finst
eadofser
vingal
egalnot
ice,ar
egi
ster
edl
ett
eri
ssentcont
aini
ngt
hesame
i
nfor
mat
ion and det
ail
s,i
twi
l
lbe deemed t
o be a val
i
d not
ice.(
knowl
edge and
war
ningar
ethepr
imar
ymot
ivesofanot
ice)
.

1
.Not
icemustmakeademand

2.Not
icemustwar
nregar
dingt
hel
egal
consequences

3.Per
iodofnot
ice:wi
thi
n30days

4.Mannerofdel
i
ver
y const
ruct
ivedel
i
ver
y(Sect
ion27ofGCA)

5.I
fthepaymenthasbeenaskedt
obepai
dear
li
eri
nthenot
ice,i
twi
l
lbeval
i
dnot
ice
butt
heCoAwi
l
lar
iseaf
tert
heexpi
ryof1
5days.

6.Nomensr
ear
equi
red(
Sect
ion1
40)

 Lal
i
tKumarShar
mav.St
ateofUP[
2008,1
43CompanyCase,SCp.593]

 Second cheque doesnotcr

eat
e anyl
egaldebtand l
i
abi
l
ityand t
husi
t
won’tbecover
edunderSect
ion1
38.

 I
fthechequehasbeeni
ssuedf
orsecur
it
y,t
henal
soSect
ion1
38wi
l
lnotbe
appl
i
cabl
e.

5TYPESOFTERRI TORIALJURI
SDICTI
ONASPERK.BHASKARANCASE
 Ter
ri
tor
ial
Juri
sdi
cti
oni
nter
msofdishonouri
sther
einSect
ion1
38.

 TJ wher
ethe Cause ofAct
ion ar
ises:Wher
ethe dr
awer
/dr
awee/
payee/
hol
deri
s
l
ocat
ed

1
.Pl
aceofdr
awi
ngofcheque

2.Pr
esent
ati
onoft
hechequet
othebankbyt
hepayee

3.Ret
urni
ngt
hechequeunpai
dbyt
hedr
aweebank
 4.Gi
vi
ngnot
iceofdemand

5.Fai
l
uret
omakepaymentwi
thi
nnot
iceper
iod

 K.Bhasakar
anv.Sankar
anVai
dhyanBal
an1
9997SCCp.51
0

 Har
manEl
ect
roni
csPvt
.Lt
d.v.Nat
ional
Panasoni
cIndi
aPvt
.Lt
d.20091SCCp.720

 Dashr
athRoopSi
nghRat
hor
ev.St
ateofMahar
asht
ra201
49SCCp.1
29(
Over
rul
ed)

 Si
nce i
tis a cr
imi
nalpi
ece ofl
egi
sl
ati
on and t
hus t
her
e mustbe st
ri
ct
appl
i
cat
ion.Ther
eisj
ustone.

 Thecur
rentl
awhoweveri
sK.Bhaskar
anasdi
l
utedbyHar
manEl
ect
roni
cs

 Ter
ri
tor
ialJur
isdi
cti
oni
ncaseofdi
shonourofcheques Sect
ion1
38-1
47i
sthe
st
andal
onepi
eceofl
egi
sl
ati
on.Noot
herl
egi
sl
ati
onwi
l
lbeappl
i
cabl
eincaseof
di
shonourofcheques

BURDENOFPROOFINCASEOFDI SHNOUROFCHEQUE
 Sect
ion1
39:2t
ypesofBur
denofPr
oof

1
.per
sonwhoi
sal
l
egi
ngi
srequi
redt
opr
ovebypr
esent
ati
onoft
hedocument
s
(
chequesi
tsel
fist
hemosti
mpor
tantdocument
)

2.onceal
lthedocumentar
ether
e,t
hesecondst
epi
sRever
seBur
denofPr
oof

Cour
twi
l
lini
ti
all
ypr
esumei
tisl
egaldebtunderSect
ion1
38Expl
anat
ion.Then
ar
iser
ebut
tabl
epr
esumpt
ions(
theot
herpar
tywi
l
ltr
ytopr
ovet
hatt
hecheque
wasnotf
oral
egal
l
yenf
orceabl
edebt
)

SUCCESSI
VEPRESENTATIONOFCHEQUES
 No barpr
escr
ibed underChapt
er1
7regar
ding how many t
ime cheque can be
pr
esent
ed.

 I
tcanbepr
esent
edanynumberoft
imeswi
thi
ntheper
iodofi
tsval
i
dit
y.

 I
fthebankhasi
ndi
cat
edf
act
sofdi
shonourbef
oret
heval
i
dit
yper
iodi
sover
,itcanbe
pr
esent
edagai
n,event
hought
hatwi
l
lhavenouse.

 Causeofact
ionar
isesonl
ywhennot
icei
sser
vedandt
hepaymenti
snotmadewi
thi
n
1
5days.

 Kr
ishnaJanar
danBhat
tvDut
taRaiG.hedgeAI
R2008SC1
325

 Canbepr
esent
edanyno.oft
imes
  CoAar
isesonl
ywhennot
icehasbeenser
vedandpaymenthasnotbeenmade
wi
thi
n15days.

STOPPEDPAYMENT
 Drawerhasi
nst
ruct
edt
hedr
aweebankt
onotmakepayment

 Thi
spr
ovi
si
oni
snotment
ionedexcl
usi
vel
y

 I
tisaj
udi
cialconst
r :ModiCement
uct sLt
d.v.Kuchi
lKumarNandiAI
R1998SC1
057
 st
oppedpaymental
socomesundert
hepur
view ofdi
shonourofchequesbecause
i
tisf
orpr
event
ionofdi
shonest
y.Thi
sposi
ti
onwasr
eit
erat nMMTCl
edi td.v.Medi
cal
Chemi
cal
sandPhar
maPvt
.Lt
d2002Cr
imi
nalLJ266SC.

ACCOUNTCLOSED
 NEPC Mi
conLt
d.v.MagmaLeasi
ngLt
d.AI
R1999SC 1
952:accountcl
osedal
so
comesundert
hepur
viewofSect
ion1
38

SECTI
ON1 43:SUMMARYTRI AL
 Discr
eti
onofCour
tforspeedi
erj
ust
icei
ncaseofdayt
odayhear
ings.
 CARRIAGEBYSEA
COMMONCARRI ERANDPRI
VATECARRIER
 Def
ini
ti
onofcommoncar
ri
er:Car
ri
ersAct
,1865r
epeal
ed now underCar
ri
ageof
GoodsbyRoadAct
,2007

2TYPESOFCARRI
AGECONTRACT
 Uni
modal(Car
ri
age of Goods by Sea Act
,1925) and Mul
ti
modal(
Mul
ti
modal
Tr
anspor
tat
ionofGoodsAct
,1993.

CARRI
AGEOFGOODSBYSEAACT,1
925(
COGSA)I
SACOMPI
LATI
ONOF
 Hague

CONTRACTOFAFFREI GHTMENT
 Frei
ghti
stheconsi
der
ati
on.

 The momentt
he goodshave been handed overt
othe car
ri
er/
buyer
,possessi
on
passes.

 Ri
skpasseswi
thpossessi
on

 Whenashi
powneroraper
sonhavi
ngf
ort
het
imebei
ngasagai
nstt
heshi
powner
t
her
ightt
omakesuchanagr
eementagr
eest
ocar
rygoodsbyseaort
ofur
nisht
he
shi
pfort
hepur
poseofcar
ryi
nggoodsi
nret
urnf
orasum ofmoneypai
dtobepai
dto
hi
m,suchacont
racti
scal
l
edt
hecont
ractofaf
frei
ght
mentorcont
ractofcar
ri
agef
goodsbyseaandt
hesum t
obepai
disnor
mal
l
ycal
l
edf
rei
ght
.

 Ti
mei
sal
wayst
heessencei
nor
dert
o:

1
.Topr
ovi
det
heshi
pont
imeont
hedock

2.Tol
oadt
hegoodsont
ime

3.Tounl
oadt
hegoodsont
ime

 Penal
tyofdemur
ragei
ncaset
heabove3ar
enotabi
dedby.

 Capt
ainsi
gnsonbehal
foft
heshi
powner
.Capt
aini
stheagentandvi
car
iousl
i
abl
i
ty
appl
i
es.

I
MPLI
EDUNDERTAKI NGBYTHECARRIER
 Sea-wor
thi
ness-f
itf
orj
our
ney

 I
nchar
terpar
tycont
ract
ssea-wor
thi
nessi
sabsol
utet
her
ear
enoexcept
ions.
UnderBOL,duedi
l
igencei
srequi
red.
  Seawor
thi
nessatever
yst
age:2t
ypesofshi
ppi
ng-l
i
near(
fi
xedr
out
e-f
rom
one par
ti
cul
arpor
tofar
ri
valt
o a par
ti
cul
arpl
ace)and t
ramp shi
ppi
ng
(
oper
ati
onwher
evert
hecar
gopasses)

Thi
sisrel
atedwi
tht
rampshi ppi
nganthor
oughbi
l
lofl
adi
ng
 Excl
usi
onofsea-wort
hiness:Asper
,Sect
ion1
51r
eadwit
h159ofI
CA,1
872,sea
-wor
thi
nesscannotbeexcl
udedevenwi
thanexpr
esspr
ovi
si
oni
nthecont
ract
bet
weent
hepar
ti
es.

 3t
ypes:

1
.Techni
cal
sea-wor
thi
ness

2.Car
go-wor
thi
ness- f
itf
or par
ti
cul
ar car
go compet
ent cr
ew, r
equi
si
te
equi
pment(
mandat
oryundercar
gosea-wor
thi
ness)

3.Sea-wor
thi
nessf
ori
ntendedvoyage

 Reasonabl
edi
spat
ch

 Reasonabl
eDespat
ch:Anyunr
easonabl
edel
ayl
eadst
ovi
ti
ati
onofcont
ract

 Kehevv.Br
emmer
:innomi
nat
eter
ms:br
eachdet
ermi
neswhet
herapr
ovi
si
oni
s
condi
ti
onorwar
rant
y.Lor
dDenni
ng nobr
eachwhen

 Reasonabl
edi
spat
chi
snotacondi
ti
on

 Nodevi
ati
on

 I
tisar
uleunl
essi
ncaseofexi
genci
es

 Per
il
soft
hesea:Cer
tai
nper
il
sar
eexpect
ed.Onl
yincaseofabnor
malper
il
s,
t
her
ecanbedevi
ati
on.

 Nott
oloadt
hosegoodswhi
char
eli
abl
etocausedangerordel
ayt
otheshi
p.

SHI
PBROKERS,CHARTERPARTYBROKERS,FREI GHTBROKERS
 Rul
esandregul
ati
onunderdocumentknownasbr
oker
age(ast
andar
dfor
m ofr
ules
andr
egul
ati
ondeal
i
ngwi
thbr
oker
s).
 Thef
ixedchar
gei
sknownasbr
oker
age.
 Shi
ppi
ngcar
tel
sar
eal
l
owedwor
ldwi
de Becauseshi
ppi
ngmar
keti
snotdevel
oped,
r
egul
ati
oncanbet
her
eonl
yoncet
hemar
kethasdevel
oped.
 Shi
pbr
oker
s:bi
l
lofl
adi
ngaswel
lasf
orchar
terpar
rycont
ract
s
 Char
terpar
tybr
oker
s:excl
usi
vel
yther
eforchar
terpar
tycont
ract
sonl
y
  Fr
eightbr
oker
:fi
xi
ngoff
rei
ght
FREIGHTCONTRACTS
MATECERTIFICATE
SEAWAYBI LLS
SHIPDELI
VERYORDERS
BI
LLOFLADI NG-mosti
mpor
tant
 Deri
vedf r
om “bi
l
e”  awri
tt
endocument
/recei
pt1
inst
rument;l
aden goodsar
e
get
ti
ngl
oaded
 Doci
ndi
cat
ingt
hatgoodsar
eget
ti
ngl
oadedi
ntheshi
p
 Fi
rstt
imer
ecogni
sedi
n1794 Li
nkBar
rowv.Mansi
on(
Judge-LaughBor
ough)
 BOLi
sawr
it
tenevi
denceofcont
racti
fcar
ri
ageanddel
i
ver
yofgoodssentby
sea f
orcer
tai
nfr
eightand t
he cont
racti
nlegall
anguage i
sa cont
ractof
bai
l
ment
.Innomannerwhat
soeveri
trecogni
sest
ransf
erofpr
oper
ty.I
tisonl
y
acont
ractofcar
ri
ageandt
henat
urei
scont
ractofbai
l
ment
.
 COGSA,1
925 r
egul
atesonl
ybi
l
lofl
adi
ngt
ransact
ions
 I
nter
nat
ional
Regul
ati
on(
onl
yRot
ter
dam r
uleshavenotbeeni
mpl
ement
edi
nIndi
a):
1
.HagueRul
es1
924
2.HagueWi
sbyRul
e1968
3.Hambur
gRul
es,1
978(
UNConvent
iononCar
ri
ageofGoodsbySea,1
978)
4.Rot
ter
dam Rul
es2009
 Ar
ti
cle1(
7)ofUNConvent
iononCar
ri
ageofGoodbySea,1
978def
inesBOL
“Adocumentt hatevidencesacont ractofcarri
agebyseaandt hetaki
ngoveror
l
oadingofthegoodsbyt hecar r
ierandbywhi chthecar ri
erundert
akestodel
iverthe
goodsagainstthesurrenderofthedocument s,aprovisi
oninthedocumentthatthe
goodsar etobedeli
ver edtotheor derofanamedper sonort ot
heorder,ort
othe
bearerconsti
tut
essuchanunder taking.”
 HalsburyLaw ofEngland( Vol7):ABOLi sadocumentsi gnedbythesipownerorby
t
hemast
erort
heagentoft
heshi
pownerwhi
chst
atest
hatcer
tai
nspeci
fi
edgoods
havebeenshi
ppedi
napar
ti
cul
arshi
pandwhi
chpur
por
tst
osetoutt
het
ermson
whi
ch goodshave been del
i
ver
ed and r
ecei
ved byt
he shi
p af
tersi
gnat
ure,i
tis
handedovert
otheshi
pper(
sel
l
er)whomayei
therr
etai
nitort
ransf
eri
ttoat
hir
d
per
son.Theper
sonmaybenamedasaper
sont
owhom t
hedel
i
ver
yoft
hegoodsi
s
t
obemadeatar
ri
valatt
hei
rdest
inat
ioni
nwhi
chcasehei
sknownast
heconsi
gnee.
I
fhei
snotnamedi
nthebi
l
l,hei
susual
l
yknownast
hehol
derori
ndor
seeoft
heBOL.
 Hal
sbur
yLaw ofI
ndi
adef
inesBOLasani
nst
rumentsi
gnedbyt
hemast
eroft
heshi
p
i
nhi
scapaci
tyoft
hecar
ri
eracknowl
edgi
ngt
her
ecei
ptoft
hemer
chant
’sgoods.
Theyar
eusual
l
yin3par
ts.Onei
sret
ainedbyt
heconsi
gneroft
hegoods,onei
ssent
t
otheconsi
gneeandt
heot
heri
spr
eser
vedbyt
hemast
eroft
heshi
p.
 Or
deri
nter
ment
:speci
fi
cper
sonnamedont
hei
nst
rument
 Bear
erI
nst
rument
 LEGALNATUREOFBOL:
1
.For
mal
recei
ptbyt
heshi
powneracknowl
edgi
ngt
hegoodshavebeenr
ecei
ved
byt
hecar
ri
er
2.I
tisanevi
denceofcont
ractofcar
ri
age basi
ctr
anspor
tdocument
3.I
tis documentoft
it
lei
ndi
cat
ing t
he owner
shi
p oft
hatpar
ti
cul
argood as
speci
fi
edunderSect
ion2(
4)ofSOGA,1
930.
 BOLl
i
eswi
tht
hebuyersot
hathecancl
aimt
hegoodsf
rom t
hepor
taut
hor
it
iesMat
e
Cer
ti
fi
cat
eli
eswi
tht
hesel
l
er(
iti
sonl
yanacknowl
edgmentofr
ecei
ptofgoodsbyt
he
shi
powner
).BOLhasevi
dent
iar
yval
ue.
 Whet
herBOLi
sanegot
iabl
einst
rument
 BOLi
sanegot
iabl
einst
rument
Li
nkBar r
ow vMansi on:BOLi sawr i
tt
enevi denceofcontractifcarr
iageand
deli
veryofgoodssentbyseaf orcert
ainfreightandthecontractinlegal
l
anguagei sacont r
actofbai lment.
BOLi smer elyadel iverycont r
act
Whent hef ir
stt i
megoodsar ebeingcar r
ieriti
smer el
yacont ractofcarri
age,
notransferabili
tyquest ioncomes.Thi squest i
oncomesonl ywhengoodsar e
gett
ingsol ddur i
ngt ransitbytheonewhopossessest hegoods.Suchasal e
canbemadet hroughi ndorsement.Inthi
scaseBOLget stransferabil
i
ty.
Abiniti
oitisonl yar eceipt.
Whengoodsar eincar ri
er’spossessi onandt hengoodsar esoldint r
ansit
,
BOLat tainstransferabili
ty.
Propertyinthegood
 BOLnotanegot iableinstrument
Pat
ter
nv.Thompson
Sar
gentv.Morri
s
 Cl
eanBOL:Al
lthecl
ausement
ionedi
nBOLar
ecl
earandbeyonddoubt
.Ever
ythi
ngi
s
i
nor
derwi
thoutt
heext
entofdamage
 Cl
ause/
Dir
tyBOL:apar
ti
cul
arcl
ausei
ndi
cat
eshow muchdamage;over
lappi
ng i
n
t
ermsofwr
it
ingt
heBOL.I
fBOLi
scl
osedi
twi
l
lat
tractl
essat
tract
ion.
 PARTI
ES:Shi
pper(
sel
l
er)
,consi
gnee(
buyer
),car
ri
er(
shi
powner
).
 PROBLEMSWI
THBOL
1
.Cl
ausi
ngandnon-cl
ausi
ng
 Cl
ausedBOLdoesnotcl
ear
lyr
efl
ectt
hest
andar
doft
hepr
oductbei
ng
t
ranspor
ted.
2.BOLi
smostoft
het
imesbear
erBOL.Ther
ear
echancest
hatanunaut
hor
ised
per
sonmaycl
aim goods.
 3.Cangoodsbecl
aimedwi
thoutBOL?Becauseofdel
ayi
nthet
ranspor
tat
ionor
communi
cat
ion,BOLdoesnotr
eachbuyer
.Incaset
hecar
goar
ri
ves,cant
he
por
taut
hor
it
iesr
eleaset
hegoods.Somet
imet
heyr
eleasewi
thoutaBOL.Thi
s
mayr
esul
tinani
ssuei
nter
msofdamagest
othegoods.
4.For
gedBOL:2par
ti
esl
ocat
edi
n2di
ff
erentcount
ri
esandmanyat
imespar
ti
es
f
orget
hedocument
sandcl
aimt
hegoods.
 DI
FFERENCEBETWWENMATECERTI
FICATE,I
NVOI
CE,COMMERCI
ALI
NVOI
CEAND
BOL
 MCi
ssi
mil
art
oBOLbuti
thasnonegot
iabi
l
ity.
I
nvoi
ce/
Commer
cialI
nvoi
ce (
dif
fer
ence bet
ween t
hese t
wo i
sint
erms of
det
ail
i
ng-CIhascompl
etedet
ail
s)i
snon-negot
iabl
e,i
tismer
elyadocumentof
t
it
le.
 BOLi
sthemostcompr
ehensi
veofal
l
.
 CLAUSES
1
.Gener
alnat
ureoft
hegoods.(
alloft
hisi
nfor
mat
ioni
spr
ovi
dedbyt
heshi
pper
/sel
l
er
t
othecar
ri
er/
capt
ainoft
heshi
p/agentoft
hecapt
ainoft
heshi
p)
a)Thel
eadi
ngmar
ksnecessar
yfort
hei
dent
if
icat
ionoft
hegoods(
mostoft
he
t
imesgoodsar
eunascer
tai
nedgoodsi
nsal
etr
ansact
ions,t
husl
eadi
ngmar
ks
ar
enecessar
yfori
dent
if
icat
ion)
.
b)An expr
essagr
eement
,ifappl
i
cabl
e,ast
othe danger
ouschar
act
eroft
he
goods.
c)Numberofpackagesorpi
eces
d)Thewei
ghtoft
hegoodsorquant
it
y,whi
cheveri
sappl
i
cabl
e.
2.Appar
entCondi
ti
onsoft
hegoods.
3.Nameandpr
inci
pal
placeofbusi
nessoft
hecar
ri
er.Nameoft
heshi
pper
4.Name oft
he consi
gnee/
buyer
,ifnamed by t
he shi
pper
,ot
her
wise i
tmustbe
consi
der
edasbear
erBOL.
5.Nameoft
hepor
tofl
oadi
ngundert
hecont
ractofcar
ri
ageofgoodsbyseaandt
he
dat
eonwhi
chgoodswer
etakenoverbyt
heshi
powner
/car
ri
erf
ort
hepur
posesof
l
oadi
ng.
6.Nameofpor
tofdi
schar
geundert
hecont
ractofcar
ri
ageofgoodsbysea
7.Thenumberofor
igi
nal
soft
heBOL,i
fissuedmor
ethanonce.
8.Thepl
aceofi
ssuanceoft
heBOL.
9.Si
gnat
ureoft
hecapt
ainoft
heshi
p/car
ri
eroraper
sonact
ingonhi
sbehal
f.
1
0.Fr
eightt
otheext
entpayabl
ebyt
heconsi
gnee
 TYPESOFBOL
1
.Char
terPar
tyBOL:
2.Char
ter
er’sBOL.
:BOLi
ssuedbyt
heChar
ter
er.
3.Cl
eanBOL
4.Cl
ausedBOL
5.Li
nearBOL
6.Negot
iabl
eandNon-negot
iabl
eBOL
7.Shi
ppedandRecei
vedBOL
 Shi
ppedwi
l
lbemor
eexpensi
vebecausecer
tai
ntyi
sther
e.Recei
ved:
ambi
gui
tywhent
henavi
gat
ionwi
l
lst
art
.
 Hi
ghchanceofmi
sappr
opr
iat
ionofBOL.
8.Thor
oughBOL
9.HouseBOL
1
0.Gr
oupageBOL:Agr
oupofpeopl
easkf
ort
heBOL.sameasHouseBOL
1
1.Swi
tchBOL:ont
hei
ssuanceoft
heor
igi
nalBOL,i
fsomecar
ri
ager
uleschange,
basi
cal
l
ymodi
fi
edBOL.
1
2.OceanBOL
1
3.OceanThor
oughBOL
1
4.Or
derBOL
1
5.Fr
eightPr
epai
dBOL
1
6.Fr
eightFor
war
der
’sBOL
1
7.St
rai
ghtBOL:
 I
ssuedt
oapar
ti
cul
arconsi
gneeandi
tiswr
it
teni
nthebi
l
lthati
tisnot
negot
iabl
e.
1
8.Shi
powner
’sBOL
1
9.Longf
orm BOL
20. Shor
tFor
m BOL
21
.SeawayBi
l
ls:
 I
ssuedf
rom onecompanyt
oit
sel
f
22.
Stal
eBOL
 BOLhasal
readybeennegot
iat
ed
23.
Combi
nedTr
anspor
tBOL:l
i
kemul
ti
modal
transpor
tBOL.
 BROADCATEGORI
ESOFBOL
1
.Nomi
nat
eBOL
  Sameasst
rai
ghtBOL
2.Or
derBOL
 Goodsar
erequi
redt
obedel
i
ver
edt
otheor
derofaspeci
fi
edper
sonand
maybenegot
iat
edbyi
ndor
sementori
ndor
sementi
nbl
ank
3.Bear
erBOL
 I
tcanbenegot
iat
edbydel
i
ver
y.

STANDARDFORM OFCONTRACTS

EXWORKS-Duti
esofSell
er
 Mi
nimum l
i
abi
l
ityoft
hesel
l
er.

 Tosuppl
ythegoodsatt
hesel
l
er’spl
aceofbusi
nessoranydesi
gnat
edpl
aceas
speci
fi
edbyt
hecont
ractbutt
hatnecessar
il
ymustbet
her
eint
hesel
l
er’scount
ry.

 Goodsmustbewei
ghed,checked,measur
edandpr
oper
lypackaged.

 Suppl
ytheconf
ormi
nggoods

 Suppl
yal
lconf
ormi
ngdocument
s

 Buyerobt
ainsexpor
tli
cense.

 Ensur
edel
i
ver
yofgoodst
othebuyer

FOB:Fr
eeonBoar
d

 Par
ti
es:Consi
gner
/Shi
pper
,Car
ri
erandConsi
gnee

 SELLERSOBLI
GATI
ONS:

1
.Suppl
yconf
ormi
nggoodspackedappr
opr
iat
elyori
naccor
dancewi
tht
he
cont
ract
.

2.Suppl
yal
ldocument
sconf
ormi
ngt
othecont
ract
.

3.Del
i
vert
hegoodst
othebuyerbypl
aci
ngt
hem onboar
d.

4.Pl
acet
hegoodsonvessel
int
heposi
ti
onandt
hemannerr
equi
red

5.Payanycost
sinci
dent
alt
odel
i
ver
yoft
hegoods.

6.Obt
ainexpor
tli
cence

7.Pr
ovi
depr
oofofdel
i
ver
yint
hemanneragr
eed

8.Pr
ovi
deanyassi
stancef
orget
ti
nganydocument
sfaci
l
itat
ingt
heexpor
t.
  BUYERSOBLI
GATI
ONS

1
.Gi
vesuf
fi
cientnot
icet
othesel
l
eroft
het
imeandl
ocat
ionofdel
i
ver
y

2.Bearanyr
iskofl
ossordamageoft
hegoodsf
rom t
het
imeofl
oadi
ngoft
he
goodst
otheshi
p

3.Obt
ainanyl
i
censef
ori
mpor
tat
ion

4.Compl
i
ancewi
thal
lcust
omsf
ormal
i
ties.

5.Payanycosti
nci
dent
alt
othei
mpor
tat
ionofgoods

6.Beart
hecostofanyassi
stance

7.Payf
ort
hegoods.

8.I
nsur
ancebybuyer
.

CI
F:Cost
,Insur
ance,Fr
eight
 SELLER’SOBLI GATI
ONS

1
.Shi
pgoodsofdescr
ipt
ioncont
ainedi
nthecont
ract

2.To pr
ocur
e a cont
ractofcar
ri
age by sea underwhi
ch goods wi
l
lbe
del
i
ver
edatt
hedest
inat
ionagr
eedbyt
hecont
ract
.

3.Obt
aint
heBOLasanevi
denceofcont
ractofcar
ri
ageandsendi
ttot
he
buyert
hroughaspeedi
ermode

4.Toar
rangei
nsur
ancef
ort
hecont
ract
.

5.Toar
rangeal
ldocument
s

6.Todel
i
veral
lthedocument
stot
hebuyer
.

 BUYER’SOBLI
GATI
ONS

1
.Acceptgoodsanddocument
sift
heyar
einconf
ormi
tywi
tht
hecont
ract

2.Payaccor
dingt
othecont
ract
edpr
ice

3.Tor
ecei
vet
hegoodsatt
heagr
eedpor
tofdest
inat
ion.

4.Payal
lchar
gesi
ncl
udi
ngunl
oadi
ngandanyunl
oadi
ngdur
ingt
ransi
t.

5.Tobearal
lri
skf
rom t
het
imegoodspasst
othebuyer
.

6.Topayal
lthechar
gesi
nci
dent
alt
otr
anspor
tat
ion
 7.Topayal
lchar
gesf
ori
mpor
tat
ionandt
ogeti
mpor
tli
cense

PRI
VATECARRIER,PUBLI
CCARRIER,COMMONCARRI ER
 Sect
ion2(a)ofCarri
ageofGoodsbyRoad,2007 i
nspi
redbyI
ngat
ev.Chr
ist
ie,
1
863
 Cont
ractofbai
l
ment
-car
ri
agecont
ract
 “f
oral
lper
sonsundi
scr
imi
nat
ingl
y”
 Ri
ghtt
orej
ectoncer
tai
ngr
ounds
 Ri
verSt
eam Navi
gat
ionCo.Lt
d.v.Shyam SunderTeaandCo.(
1962)2SCRp.280

CHARTERPARTYCONTACT
 CPstandsf
oracont
ractbet
weent
heowneroft
hevesselandt
hechar
ter
erwhi
chi
s
t
heonewhi
cht
akesovert
hevesself
oracer
tai
namountoft
imeorvoyagewhen
t
her
eisanagr
eementorcont
ractt
ocar
rysomegoodsorpr
ovi
deashi
pforcar
ryi
ng
t
hesamedocumentcal
l
edchar
terpar
ty.Theshi
powner
,undert
hisdocument
,let
s
t
heshi
pfort
hepur
poseofcar
ryi
ngt
hecar
goorunder
takest
ocar
ryt
hef
ullcar
goon
t
heshi
p.
 Thef
istcase:Par
r adi
nev.Jane,1
647
 Absol
utel
i
abi
l
ityoft
he(
sel
l
er)
 TYPESOFCHARTERPARTYCONTRACT
1
.VoyageChar
terPar
ty
 Al
soknownasdemi
sechar
terpar
tyort
imechar
terpar
ty
 I
tisachar
terunderwhi
cht
heshi
pownerpr
ovi
dest
heshi
pandt
hecr
ew
andpl
acest
heshi
pont
hedi
sposaloft
hechar
ter
erf
ort
hecar
ri
ageoft
he
car
got
oadesi
gnat
edpor
t.
 2t
ypes:
a.Consecut
ive Voyage Char
terPar
ty:i
tisr
equi
red t
o be speci
fi
ed how
manyt
imet
heyar
etr
anspor
ted.
b.Speci
fi
cVoyageChar
terPar
ty:Speci
fi
cgoods,onet
ime
 Layt
imei
sfi
xedandf
uelandcr
ew wi
l
lbepr
ovi
dedbyt
heshi
pownerandi
f
t
hegoodsar
enotl
oadedont
ime,t
hepenal
tyi
spr
escr
ibed.
 CLAUSESUNDERVOYAGECHARTERPARTYCONTRACTS
a.I
ntr
oduct
ory cl
ause:t
he name oft
he par
ti
es,t
he vesseland agr
eed
voyage
b.Car
go capaci
tycl
ause:al
so knownasdead wei
ghtcl
ause,maxi
mum
 l
i
mitoft
hepar
ti
cul
arcar
goi
spr
ovi
ded.
c.Car
gocl
ause:t
het
ypeandquant
it
yoft
hecar
goar
especi
fi
ed.
d.Fr
eightcl
ause:amountoff
rei
ghti
sspeci
fi
ed
2.Por
t/Dock/Ber
thChar
terPar
ty
 I
ftheshi
powneri
srequi
redt
opr
ovi
det
heshi
ponapar
ti
cul
arpor
t/dock,
t
hent
hatcont
racti
scal
l
edpor
t/dock/
ber
thchar
terpar
tycont
ract
.
3.Bar
eBoatChar
terPar
ty
 Cr
ew,f
uel
,et
c.i
snotpr
ovi
ded,
 BearBoatChar
terPar
tywi
thpur
chaseopt
ion:l
i
kehi
repur
chase
4.Sl
ot/
PlaceChar
terPar
ty:Somespacei
slef
tandt
hatcanbeused
 CLAUSESUNDERCHATERPARTYCOTNRACT
 Readyt
oLoadCl
ause
 Fi
tforvoyagecl
ause:sea-wor
thi
ness
 Ful
landcompl
etecar
go:Char
ter
eri
srequi
redt
ogi
veanunder
taki
ngt
hatwhen
hehi
rest
heshi
p,hewi
l
lhavet
hef
ull
andcompl
etecar
gof
ort
ranspor
tat
ion.
 Ki
ng’sEnemi
esandRest
rai
ntofPr
ince/
Pri
ncesscl
ause:Anunder
taki
ngt
hat
youcannotdoanyt
hingt
hati
scont
rar
ytot
hei
nter
est
soft
hef
lag-st
ate.
 Per
il
soft
heseacl
ause
 Lawf
ulTr
adesandSaf
ePor
tscl
ause:onl
ythosegoodswhi
chcanl
egal
l
ybe
t
ranspor
ted
 I
ndemni
tycl
ause:i
n case anydamage t
akespl
ace,t
he par
tyatf
aul
tmust
i
ndemni
fyt
heot
herpar
ty.
 Par
amountcl
ause:mandat
orycl
ausewhi
cht
alksaboutt
heappl
i
cabl
elaw.
 Cancel
l
ati
oncl
ause:i
tdet
ail
sthecondi
ti
onsonwhi
chbot
hpar
ti
escancancel
t
hecl
ause.
 Fr
ust
rat
ionofChar
terPar
tycl
ause:t
her
ecannotbeaf
rust
rat
ioncl
ause.
 Di
schar
gePor
tcl
ause:t
henameoft
hedi
schar
gedpor
tmustbement
ioned.
 Speci
al Char
ter Par
ty Cont
ract
s/ St
andar
d f
orms of Char
ter Par
ty Cont
ract
(
dependi
ngupont
henat
ureofgoods)
1
.SHELLTI
ME4:t
imechar
terpar
tyofoi
ltanker
s.
2.NYPE1
993:Ti
mechar
terpar
tyofdr
ycar
go
3.BARECON2001
:Bar
eboatchar
terpar
tyofanyt
ime.
4.BOXTI
ME2004:Ti
mechar
terpar
tyofcont
ainervessel
s.
5.I
NTERTANKTI
ME80:Ti
meChar
terPar
tyf
ort
anker
s.
6.BPVOY4:voyagechar
terpar
tyf
ort
anker
s.
 7.GASVOY2005:voyagechar
terpar
tyf
orgas.
 MOSTPOPULARREASONSFORDI
SPUTES
1
.Pr
emat
uret
ermi
nat
ion
2.Demur
ragecl
aims
3.Commencementorcomput
ati
onofl
ayt
ime
4.Del
ayduet
opor
tcongest
ions
5.Br
eachf
orpaymentt
erms
 New Chal
l
engest
oChar
terPar
ty:
1
.Pi
racy
2.Del
aysandof
f-hi
recl
ausesf
ordet
ent
ionbypi
rat
es
3.Envi
ronment
alandPol
l
uti
onCont
rol
Regul
ati
ons

HI
REPURCHASEAGREEEMENT

 Hi
rePur
chaset
ransact
ionsar
egover
nedby:
1
.Sal
eofGoodsAct
2.I
ndi
anCont
ractAct
3.Hi
rePur
chaseAct
,1972:r
epeal
edbyHi
rePur
chaseRepeal
mentAct
,2005
 Hi
ckenBot
ham v.Gr
oves,1
826 f
ir
stt
ime
 LeevBut
lercasedef
ineshi
repur
chaset
ransact
ions
 Par
ti
es:Suppl
i
eroft
hegoods,Owneroft
hegoods,Hi
ree
 El
ementofbai
l
ment+Opt
iont
obuy
 Def
ini
ti
on:Sect
ion2(
c)ofHPA1
972 Theagr
eementunderwhi
cht
hegoodsar
elet
onhi
rewher
ehi
rerhasanopt
iont
opur
chaset
hem subsequent
ly.
 Possessi
onoft
hegoodsi
sdel
i
ver
edbyt
heownert
othehi
reroncondi
ti
ont
haton
f
ail
ureofpaymentofanyi
nst
almentt
hehi
rerwi
l
lret
urnt
hegoodst
otheowner
.
 Speci
alChar
act
eri
sti
cs:
1
.Paymenti
sal
waysdonebyi
nst
alment
s.
2.Opt
iont
obuycanal
waysbeexer
cised.
3.Avai
l
abi
l
ityoft
hecommodi
tyandpossessi
onmustbet
her
ewi
tht
heper
sonwho
hadhi
red
4.HPagr
eementshal
lal
waysbei
nwr
it
ing
5.Owner
shi
poft
heassetpassest
othehi
reeaf
tert
hepaymentoft
hel
asti
nst
alment
i
fthehi
reeexer
cisest
heopt
iont
opur
chaset
hegood.
6.Thehi
rerandt
hehi
reeent
eri
ntoal
egalcont
ractf
ort
hispur
posesoft
ransf
erof
pr
oper
tyi
nthose goodswhi
ch al
so st
ipul
ates t
he amountoft
he i
nst
alment
s
 r
equi
redt
obepai
d.
7.I
ncaseoff
ail
uret
opayt
hei
nst
alment
,theownerhast
her
ightt
orecl
aimt
he
goods.
8.Ther
emaybeapr
ovi
si
oni
ntheagr
eementt
hatt
hehi
rercanr
etur
nthegoodst
o
hi
reeaf
tert
hepaymentofi
nst
almenti
ftheagr
eementsoenvi
sages.
 Hi
stor
yofHPA,1
972
 Passedi
n1972
 Fi
rstnot
if
iedi
n1973butt
hatnot
if
icat
ioncont
inuedf
ort
womont
hs
 Agai
nin1
987f
or2mont
hs
 2005r
epeal
ed
 SunderRam Fi
nanceLt
d.v.St
ateofKer
ala,1
967
 K.
L.JoharandCo.v.Deput
yCommer
cialTaxOf
fi
cer
,Coi
mbat
ore
 AnupSar
mahvBhol
aNat
hShar
maandor
s.,201
31SCC400 r
epeal
edactcanbe
l
ookedi
nto
 Sur
yapalSi
nghv.Si
ddhiVi
nayakMot
ors& anr
.,201
212SCC535 r
efer
redt
othe
r
epeal
edact
.
 DI
FFERENCEBETWEENHI
REPURCHSEAGREEMENTANDAGREEMENTTOSELL

Agreementt oSell Hir

ePurchaseAgr
eement
Propert
yinthegoodsi stransfer
redtot he Theproper
tyint
hegoodspassest
othe
buyerimmediatel
yatt hetimeoft he hi
reeuponpaymentofthel
asti
nst
alment
contr
act
Thepositi
onofthebuyeri sthatofthe Theposi t
ionoft hehireei st
hatofthebailee
ownerofthegoods. ti
llhepayst helastinstalment.
Thebuyercannott er
mi natethecontractThehi reemayi fhesol i
kes,t
erminatethe
andisboundt opaythepr iceofthegoods.
cont r
actbyr et
uningt hegoodst otheowner
withoutanyl i
abil
it
yt opayt heremaini
ng
i
nst al
ment s.
I
nt hecaseofsale,sel
l
ertakesther
iskof Theownert akesnor i
sk.Ift
hehireefail
sto
anylossresul
ti
ngfrom thei
nsol
vencyoft
he payani nstal mentt heownerhast her i
ghtto
buyer takebackt hegoods.
Thebuyercanpassagoodt i
tl
etoabona Thehi rercannotpassanyt i
tl
eevent othe
fi
depurchaser. bonaf ideowner( init
ial
ly)
.

I
MPLIEDCONDITI
ONS
1
.Thepersonwhoisl
ett
ingt
hegoodsonhi
re,musthavet
her
ightl
ett
hem onhi
re.
2.Goodsmustbeofmer
chant
abl
equal
i
ty.
TEMRI
NATION
1.Aut
omatict
ermi
nat
ion
2.Ter
minat
ionbynot
ice:i
ncaseacl
ausei
sther
einacont
ract
.Not
icef
rom ei
thersi
de.
3.Whenduecar
enott
aken
4.Fr
ust
rat
ion