PYQ’s 2019

A1. An indemnity holder is a person who holds the right to be indemnified or

compensated for any loss or damage suffered by them. The rights of an
indemnity holder may vary depending on the specific agreement or contract that
establishes the indemnity relationship. However, in general, the following are
some of the rights of an indemnity holder:

Right to be indemnified: The most basic right of an indemnity holder is the right
to be indemnified or compensated for any loss or damage suffered by them as a
result of the actions of the indemnifier. This right is usually established in a
contract or agreement between the parties.

Right to choose the mode of indemnification: The indemnity holder may have
the right to choose the mode of indemnification that best suits their needs. For
example, they may choose to be compensated with cash, replacement of goods
or services, or any other form of compensation agreed upon.

Right to demand timely indemnification: The indemnity holder has the right to
demand timely indemnification for any loss or damage suffered by them. This
means that the indemnifier must provide compensation within a reasonable time
frame, as agreed upon in the contract or agreement.

Right to sue for indemnification: If the indemnifier fails to provide timely

indemnification, the indemnity holder may have the right to sue for
compensation. This right may be established in the contract or agreement
between the parties, or it may be provided by law.

Right to assign the indemnity right: In some cases, the indemnity holder may
have the right to assign their indemnity right to another party. This means that
they can transfer their right to be indemnified to someone else, such as a third-
party insurance provider.
Right to mitigate losses: The indemnity holder has the right and duty to mitigate
any losses or damages suffered as a result of the indemnifiable event. This
means that they must take reasonable steps to minimize the damage or loss
suffered, and they cannot seek compensation for losses that could have been
prevented.

Overall, the rights of an indemnity holder depend on the specific contract or

agreement between the parties. It is important for both parties to carefully
review and understand their rights and obligations before entering into an
indemnity relationship.

A2. The statement "The liability of the surety is co-extensive with that of the
principal debtor unless it is otherwise provided by the contract" means that a
surety's liability is as extensive as that of the principal debtor, unless the
contract or agreement between the parties specifies otherwise. This means that
if the principal debtor defaults on their obligation, the surety will be responsible
for fulfilling the entire obligation of the principal debtor.

In other words, the surety guarantees the performance of the principal debtor's
obligation and agrees to assume the same level of responsibility as the principal
debtor in fulfilling that obligation. If the principal debtor defaults on their
obligation, the surety becomes liable to the creditor for the amount of the debt,
interest, and other related costs.

However, the extent of the surety's liability can be limited by the terms of the
contract or agreement between the parties. For example, the contract may
specify a maximum limit to the surety's liability, or it may limit the surety's
liability to a specific portion of the obligation.
Furthermore, the surety's liability may also be limited by applicable laws and
regulations. For instance, some jurisdictions may have laws that limit the
amount of liability that a surety can assume.

In summary, the liability of a surety is generally co-extensive with that of the

principal debtor, but it can be limited by the terms of the contract or agreement
and by applicable laws and regulations. It is important for all parties involved to
carefully review and understand the terms of the contract or agreement before
entering into a surety relationship to ensure that each party's rights and
responsibilities are clearly defined.

A3. Under the Indian Contract Act, 1872, the position of a finder of goods is
governed by the provisions relating to bailment. Section 71 of the Act defines a
bailment as the delivery of goods by one person to another for some purpose,
upon a contract that they shall, when the purpose is accomplished, be returned
or otherwise disposed of according to the directions of the person delivering
them.

When a person finds goods belonging to someone else, he becomes a "bailor"

and the owner of the goods becomes the "bailee". In such a case, the finder of
the goods has a duty to take reasonable care of the goods and to return them to
the owner when he comes forward to claim them.

However, the finder of the goods is entitled to retain the goods against the
owner until he receives his lawful expenses incurred in preserving the goods
and in finding out the owner of the goods. This is in accordance with Section 71
of the Indian Contract Act, which provides that a person who has lawfully
expended his labour or skill in the service of another person may retain the
goods until he receives due remuneration for his services.
The finder of the goods may also have a right of lien over the goods if the
owner refuses to pay the expenses incurred in preserving the goods and finding
out the owner. Lien means the right to retain possession of goods until a debt
owed by the owner of the goods is paid.

It is important to note that the finder of the goods does not acquire ownership of
the goods by finding them. The owner of the goods retains ownership and is
entitled to claim the goods from the finder. The finder of the goods is merely a
bailee who has a duty to take reasonable care of the goods and return them to
the owner when he comes forward to claim them.

In summary, under the Indian Contract Act, the position of a finder of goods is
that of a bailee. The finder is entitled to retain the goods against the owner until
he receives his lawful expenses incurred in preserving the goods and finding out
the owner. The finder may also have a right of lien over the goods if the owner
refuses to pay the expenses incurred. However, the finder does not acquire
ownership of the goods by finding them and must return them to the owner
when he comes forward to claim them.

A5. A contract of agency is a special type of contract in which one party (the
principal) appoints another party (the agent) to act on their behalf in dealings
with third parties. The essentials of a contract of agency are as follows:

Consent of parties: Like all contracts, a contract of agency requires the free and
voluntary consent of both the principal and the agent. Both parties must agree to
the terms of the agency relationship, including the scope of the agent's authority
and the duties and responsibilities of both parties.

Capacity to contract: Both the principal and the agent must have the legal
capacity to enter into a contract. This means that they must be of legal age, of
sound mind, and not disqualified from contracting by any law or regulation.
Consideration: The agent is entitled to receive some form of consideration from
the principal in exchange for their services as an agent. This may include a
commission, a fee, or some other form of compensation.

Agency relationship: The contract must create a relationship of agency between

the principal and the agent. This means that the agent must be authorized to act
on behalf of the principal and must be subject to the principal's control and
direction.

The test for determining the existence of an agency relationship is whether the
agent has the authority to act on behalf of the principal and whether the
principal has the right to control the agent's actions. The following decided
cases illustrate this test:

Ram Narain v. Gauri Dutt (AIR 1951 All 257): In this case, the court held that
the test for determining the existence of an agency relationship is whether the
agent acts on behalf of the principal and subject to their control and direction.

Brij Mohan v. Ram Lal (AIR 1979 SC 115): In this case, the Supreme Court
held that the essential elements of agency are the creation of authority by the
principal and the acceptance of that authority by the agent.

Lalman Shukla v. Gauri Dutt (AIR 1913 All 476): In this case, the court held
that an agency relationship can be inferred from the conduct of the parties. If the
principal behaves towards a third party as if the agent had the authority to act on
their behalf, and the third party believes that the agent has such authority, then
an agency relationship may be found to exist.

In conclusion, the essentials of a contract of agency are the consent of parties,

capacity to contract, consideration, and the creation of an agency relationship.
The test for determining the existence of an agency relationship is whether the
agent has the authority to act on behalf of the principal and whether the
principal has the right to control the agent's actions. This test can be determined
by examining the conduct of the parties and any written agreement between
them.

A6.
In this scenario, J has received a delivery of goods from H that do not comply
with their description, which is a breach of contract. J is entitled to take certain
actions under the Indian Contract Act, 1872.
Firstly, J should inform H of the breach of contract as soon as possible. This can
be done through a formal notice or by making a phone call or sending an email.
J should provide details of the breach, such as the nature of the non-compliance
and any other relevant information.
Secondly, J can either reject the goods or accept them with compensation. If J
decides to reject the goods, they should inform H and arrange for the goods to
be returned. H will be liable for the cost of return transportation and any other
expenses incurred by J in connection with the contract.
If J decides to accept the goods with compensation, they should negotiate with
H to determine an appropriate amount of compensation. This could be a
reduction in the price paid for the goods, or H could provide replacement goods
that comply with the contract. If the parties cannot agree on compensation, J
may need to seek legal advice or take the matter to court.
Finally, J should keep all relevant documents and evidence related to the breach
of contract, such as the contract itself, delivery notes, and photographs of the
non-compliant goods. This will be important if J decides to take legal action
against H.
In summary, J should inform H of the breach of contract, reject the goods or
accept them with compensation, negotiate an appropriate amount of
compensation, and keep all relevant documents and evidence. These actions are
in line with the Indian Contract Act, 1872.

A8.
In this case, A had stood surety for B for any amount that C may lend to B
during the next three months, subject to a maximum of Rs.50,000. However,
one month later, A revoked the guarantee. Until then, C had already lent
Rs.5,000 to B.
The Indian Contract Act, 1872 provides that a surety may revoke their
guarantee at any time, unless there is an agreement to the contrary. In this case,
there is no indication that there was an agreement between A and C that the
guarantee would not be revoked.
Therefore, A is discharged from all liabilities to C for any subsequent loan that
C may lend to B after the revocation of the guarantee. This means that C cannot
claim any amount from A for any loan that C may extend to B after the
revocation.
However, A remains liable for the loan of Rs.5,000 that was already lent to B by
C before the revocation of the guarantee. A cannot escape liability for this loan,
as it was already disbursed by C before the revocation. Therefore, if B makes a
default in paying back the loan of Rs.5,000, A will be liable to pay the amount
to C.
In summary, A is discharged from all liabilities to C for any subsequent loan
that C may lend to B after the revocation of the guarantee, but A remains liable
for the loan of Rs.5,000 that was already lent to B by C before the revocation.

A9.
Under the Indian Contract Act, a bailee is a person who is entrusted with the
possession of goods by the owner. The bailee has certain rights and duties that
are outlined in the Act. Let's look at the rights and duties of a bailee with
suitable cases:
Rights of a Bailee:

Right to claim for damages: If the bailor delivers the goods to the bailee with
any defects or liabilities and the bailee suffers any damage due to such defects
or liabilities, the bailee has the right to claim for damages from the bailor.
Example: If a bailor delivers a car to a garage for repair, and the car gets
damaged due to any defect that was present in the car before it was handed over
to the garage, the bailee has the right to claim for damages from the bailor.
Right to retain goods: The bailee has the right to retain the goods until he
receives his lawful charges and expenses for the bailment.
Example: If a person deposits his gold jewellery with a pawnbroker as security
for a loan, the pawnbroker has the right to retain the jewellery until he receives
the loan amount and the interest.

Duties of a Bailee:

Duty to take reasonable care of goods: The bailee must take reasonable care of
the goods entrusted to him. He must use the goods only for the purpose for
which they were entrusted to him and must not misuse or damage them.
Example: If a person deposits his car with a garage for repair, the garage has a
duty to take reasonable care of the car and not damage it while it is in their
possession.
Duty not to mix goods: The bailee has a duty not to mix the goods of the bailor
with his own goods or with the goods of any other person.
Example: If a person deposits his wheat with a miller for grinding, the miller
has a duty not to mix the wheat with his own wheat or with the wheat of any
other person.
Duty to return goods: The bailee has a duty to return the goods to the bailor or
to deliver them according to the bailor's instructions.
Example: If a person deposits his furniture with a storage company, the storage
company has a duty to return the furniture to the owner or to deliver it to the
owner's new address if the owner has moved.
In conclusion, the Indian Contract Act provides for certain rights and duties of a
bailee. The bailee has the right to claim for damages and to retain the goods
until he receives his lawful charges and expenses for the bailment. The bailee
has a duty to take reasonable care of the goods, not to mix the goods, and to
return the goods to the bailor. These rights and duties are essential for the
proper functioning of a bailment contract.

A10.
An agency is a relationship between two parties, where one party (the agent) is
authorized to act on behalf of the other party (the principal). The agency
relationship can be terminated by various modes. The various modes of
termination of agency are:

By mutual agreement: The agency can be terminated by mutual agreement

between the principal and the agent. This is the most common mode of
termination of agency.
By the expiry of the agency period: If the agency is for a specific period of time,
the agency will come to an end when that period expires.
By completion of the specific purpose: If the agency is for a specific purpose,
the agency will come to an end when that purpose is completed.
By the death of the principal or the agent: If the principal or the agent dies, the
agency comes to an end.
By the bankruptcy of the principal or the agent: If the principal or the agent
becomes bankrupt, the agency comes to an end.
By the revocation of authority: The principal can revoke the authority of the
agent at any time. However, the revocation must be communicated to the agent.
By renunciation: The agent can renounce the agency at any time. However, the
renunciation must be communicated to the principal.
It is important to note that the termination of agency does not affect the liability
of the principal or the agent for any act done by the agent during the course of
the agency. The termination of agency only means that the agency relationship
is no longer in effect.
In conclusion, the various modes of termination of agency are by mutual
agreement, expiry of the agency period, completion of the specific purpose,
death of the principal or the agent, bankruptcy of the principal or the agent,
revocation of authority, and renunciation. It is important to follow the proper
legal procedures when terminating an agency to avoid any disputes between the
parties involved.

A11.
a. The first transaction involves a contract of sale of goods. The specific
essential elements for sale include:
Two parties: In this case, the parties are the seller (who is offering the new
mobile phone) and the buyer (who is offering the old mobile phone).
Goods: The subject matter of the contract is the mobile phones.
Transfer of ownership: The seller intends to transfer ownership of the new
mobile phone to the buyer, in exchange for the old mobile phone.
Consideration: The old mobile phone is the consideration offered by the buyer
to the seller in exchange for the new mobile phone.
b. The second transaction also involves a contract of sale of goods. The specific
essential elements for sale include:
Two parties: In this case, the parties are the seller (who is offering the handbag)
and the buyer (who is purchasing the handbag).
Goods: The subject matter of the contract is the handbag.
Transfer of ownership: The seller intends to transfer ownership of the handbag
to the buyer, in exchange for payment.
Consideration: The consideration offered by the buyer is the payment for the
handbag. Additionally, the cashback policy offered by the seller may also be
considered as part of the consideration.

A13.
The relationship between a principal and an agent is governed by the Indian
Contract Act, 1872. The principal is the person who authorizes the agent to act
on their behalf, while the agent is the person who acts on behalf of the principal.
Both the principal and the agent have certain rights and liabilities.

Rights and Liabilities of a Principal:

Right to control: The principal has the right to control the actions of the agent
within the scope of the agency. The principal can give directions to the agent
and the agent is bound to follow them.
Duty to indemnify: The principal has a duty to indemnify the agent for any
losses or expenses incurred by the agent while acting within the scope of the
agency.
Liability for unauthorized acts: The principal is liable for any unauthorized acts
committed by the agent, if such acts are within the apparent scope of the
agency.
Right to receive information: The principal has the right to receive information
from the agent regarding the activities performed by the agent on behalf of the
principal.
Right to terminate the agency: The principal has the right to terminate the
agency at any time.
Rights and Liabilities of an Agent:
Right to remuneration: The agent has a right to receive remuneration for their
services as agreed upon in the agency agreement.
Duty to act in good faith: The agent has a duty to act in good faith and in the
best interests of the principal.
Liability for breach of duty: The agent is liable for any losses or damages
caused to the principal due to the agent's breach of duty.
Right to receive reimbursement: The agent has a right to receive reimbursement
for any expenses incurred while acting within the scope of the agency.
Right to lien: The agent has a right to retain the goods or property of the
principal until the principal pays the agent's dues.
Relevant Provisions and Cases:
Section 186 of the Indian Contract Act, 1872 provides that the agent has a duty
to act in good faith and in the best interests of the principal.
Section 222 of the Indian Contract Act, 1872 provides that the principal is
bound to indemnify the agent for any losses or expenses incurred while acting
within the scope of the agency.
In the case of Laxmi Devi v. Smt. Kamla Devi, it was held that an agent is liable
for any losses caused to the principal due to the agent's breach of duty.
In the case of Cheshire County Council v. Bailey, it was held that the agent is
entitled to receive remuneration as agreed upon in the agency agreement.
In the case of Rama Corp. v. Procon Engineers, it was held that the principal is
liable for any unauthorized acts committed by the agent, if such acts are within
the apparent scope of the agency.
In conclusion, the principal-agent relationship is a complex one, with both
parties having certain rights and liabilities. It is important for both the principal
and the agent to understand their respective roles and responsibilities to avoid
any misunderstandings or disputes.

PYQ’s 2022

A1.
In the given scenario, Veena is a surety who has agreed to cover for any losses
that Radha may suffer in her business. Ismail fails to supply the goods on the
date of delivery, and Radha is forced to purchase the same for Rs.12,000 from
another buyer. Radha claims Rs.12,000 and Rs.5000 from Veena.
As per Section 128 of the Indian Contract Act, 1872, the liability of the surety is
co-extensive with that of the principal debtor, unless otherwise provided in the
contract. In other words, Veena is liable for the same amount that Ismail would
have been liable to pay to Radha for non-delivery of goods. Therefore, Veena is
liable to pay Rs.12,000 to Radha.
However, as per Section 130 of the Indian Contract Act, Veena's liability is
limited to the amount mentioned in the contract of supply of goods between
Radha and Ismail, i.e., Rs.10,500. Therefore, Veena is liable to pay Rs.10,500 to
Radha.
Regarding Radha's claim of Rs.5,000 as profit, it cannot be claimed from Veena
as it is a consequential loss and not a direct loss arising from non-supply of
goods by Ismail.
In the case of Punjab National Bank vs. Surendra Prasad Sinha (1992), the
Supreme Court held that the liability of the surety is co-extensive with that of
the principal debtor, but limited to the amount mentioned in the contract. Also,
the surety is not liable for any consequential loss arising from the default of the
principal debtor.
In conclusion, Veena is liable to pay Rs.10,500 to Radha as per the contract
between Ismail and Radha, and Radha cannot claim Rs.5,000 as profit from
Veena as it is a consequential loss.
A2.
In the given scenario, P, Q and R agreed to be jointly and severally liable as
sureties for all orders placed by K with H up to Rs. 1 lakh. P terminated her
guarantee for K after the first three orders, but K again orders goods from H for
Rs. 10,000 in Sept 2019, and fails to pay for it. As a result, H sues P, Q and R,
but only R appears in court and is ordered to pay Rs. 1 lakh.
Under Section 134 of the Indian Contract Act, 1872, a contract of guarantee is
discharged by the revocation of the guarantee by the surety, provided that such
revocation does not take place for a continuing guarantee or for a guarantee
which the creditor is aware of at the time of making the contract. In this case,
since P's guarantee was for a continuing guarantee, her revocation of the
guarantee did not discharge her from liability for any subsequent orders made
by K.
Under Section 128 of the Contract Act, the liability of the surety is co-extensive
with that of the principal debtor unless otherwise provided by the contract. In
this case, P, Q and R had agreed to be jointly and severally liable for all orders
placed by K with H up to Rs. 1 lakh. Therefore, the liability of P and Q would
be co-extensive with that of R.
Since R has paid the entire amount of Rs. 1 lakh, she has a right of contribution
against P and Q for their share of the liability. This right of contribution arises
under Section 140 of the Contract Act, which states that if there are multiple
sureties, they are each liable to contribute equally to the amount due under the
guarantee.
Therefore, R has the right to claim contribution from P and Q for their share of
the liability. However, if P and Q do not pay their share of the liability, R
cannot recover more than her own share of the liability from them.
In the case of Madan Lal v. Kalyan Das AIR 1948 All 139, the court held that a
surety who has paid more than his proportionate share of the debt has the right
to recover contribution from the other sureties for their share of the liability.
The court also held that the surety who has paid the debt is entitled to interest on
the amount paid from the date of payment until recovery of the contribution.
Therefore, R has the right to claim contribution from P and Q for their share of
the liability, and also has the right to claim interest on the amount paid by her
from the date of payment until recovery of the contribution.
A3.
A continuing guarantee is a type of guarantee that remains in force for an
extended period until it is specifically revoked by the guarantor. In a continuing
guarantee, the guarantor agrees to be liable for any debts or obligations that may
arise in the future between the principal debtor and the creditor, up to a certain
limit or for a specific period. It can be contrasted with a specific guarantee,
which is limited to a particular transaction.
The Indian Contract Act, 1872 defines a continuing guarantee as “a guarantee
which extends to a series of transactions, and which is intended to be a security
in respect of the transactions that may be entered into, from time to time,
between the creditor and the principal debtor”.
The modes of revocation of a continuing guarantee are as follows:
Revocation by notice: A continuing guarantee can be revoked by the guarantor
by giving a notice to the creditor. The revocation will take effect from the date
on which the notice is received by the creditor.
Revocation by death: A continuing guarantee is revoked by the death of the
guarantor. However, the revocation will only be effective for transactions that
take place after the date of the guarantor’s death.
Revocation by change in the terms of the contract: A continuing guarantee can
also be revoked by a change in the terms of the contract between the creditor
and the principal debtor, if the change is made without the consent of the
guarantor.
It is important to note that a continuing guarantee can only be revoked
prospectively, i.e. it does not affect liabilities that have already arisen. The
guarantor remains liable for all transactions that took place prior to the
revocation.
In the case of Bank of Bihar v. Damodar Prasad & Sons, the court held that a
continuing guarantee can be revoked by the guarantor at any time, provided that
it is done prospectively. The revocation of the guarantee is effective from the
date of receipt of notice by the creditor.
In conclusion, a continuing guarantee is a type of guarantee that remains in
force for an extended period until it is specifically revoked by the guarantor.
The modes of revocation of a continuing guarantee include revocation by
notice, by death of the guarantor, and by change in the terms of the contract.
The revocation is only effective prospectively and does not affect liabilities that
have already arisen.
A4.
A contract of bailment is a type of contract where the bailor delivers the
possession of his goods to the bailee for a specific purpose, with an obligation
on the part of the bailee to return the goods or deliver them according to the
bailor's directions. The essential elements of a contract of bailment under the
Indian Contract Act, 1872 are as follows:
Delivery of goods: The bailor must deliver the goods to the bailee. The delivery
may be actual or constructive, and it must be made with the intention of creating
a bailment.
Acceptance of goods: The bailee must accept the goods and agree to hold them
on behalf of the bailor. The acceptance may be expressed or implied, and it
must be made with the intention of creating a bailment.
Purpose of bailment: The bailment must be for a specific purpose. The purpose
may be for safe custody, for transportation, for repairs, or any other lawful
purpose.
Return of goods: The bailee must return the goods to the bailor or dispose of
them according to the bailor's directions once the purpose of the bailment is
fulfilled.
Duty of care: The bailee must take reasonable care of the goods while they are
in his possession. He must not use them for any purpose other than the one for
which they were bailed, and he must protect them from loss, damage or
destruction.
Gratuitous or for a reward: The bailment may be gratuitous, i.e., without any
reward, or for a reward, i.e., for a fee or other consideration.
The following sections of the Indian Contract Act, 1872 are relevant to the
contract of bailment:
Section 148 defines bailment as the delivery of goods by one person to another
for some purpose, upon a contract that they shall, when the purpose is
accomplished, be returned or otherwise disposed of according to the directions
of the person delivering them.
Section 151 imposes a duty on the bailee to take reasonable care of the goods
bailed to him.
Section 152 defines the rights of the bailor, including the right to receive back
the goods bailed, the right to claim damages for any loss caused to the goods by
the bailee's negligence, and the right to terminate the bailment in certain
circumstances.
Section 161 provides for the termination of the bailment by the death of the
bailor or bailee, by the completion of the purpose for which the goods were
bailed, or by the destruction of the goods.
One of the leading cases on bailment is Mulla v. Mahomed (1903) 5 Bom. LR
812, where the court held that a bailment must be distinguished from a sale or a
loan, and that the essential feature of a bailment is that the possession of the
goods is transferred to the bailee for a specific purpose, with an obligation to
return them to the bailor or to dispose of them according to his directions.

A5.
In the given scenario, P appointed Q as her agent to sell an antique painting for
not less than Rs. 1 crore. However, Q pledged the painting with H Co., Ltd. for
Rs. 25 lakhs and absconded with the money. Now, P is claiming recovery of the
painting from H Co., Ltd., but the company is refusing to return the painting till
Rs. 25 lakhs is paid, claiming to be a pawnee.
As per Section 178 of the Indian Contract Act, an agent cannot sell or pledge
the goods of the principal unless he/she is specifically authorized to do so. In
this case, P authorized Q to transfer the goods in any manner to any person, but
only for the purpose of selling them. Therefore, Q had no authority to pledge the
painting with H Co., Ltd., and H Co., Ltd., cannot claim the right of a pawnee.
Further, as per Section 178 of the Indian Contract Act, any disposition of the
goods by an agent, in violation of the terms of the agency, is voidable at the
option of the principal. In this case, P did not authorize Q to pledge the painting,
and therefore, the pledge is voidable at the option of P. P is entitled to recover
the painting from H Co., Ltd., without paying the amount of the pledge.
Additionally, as per Section 178 of the Indian Contract Act, the pawnee is only
entitled to retain the goods pledged as security for the payment of the debt.
Since the pledge is voidable at the option of P, H Co., Ltd. cannot claim to be a
pawnee and is bound to return the painting to P.
Therefore, P is entitled to recover the painting from H Co., Ltd., without paying
the amount of the pledge, and H Co., Ltd. cannot claim to be a pawnee. If H
Co., Ltd. fails to return the painting, P can take legal action against them for the
recovery of the same.

A6.
As per the Indian Contract Act, 1872, a person who has attained the age of
majority and is of sound mind can enter into a contract. The age of majority in
India is 18 years. However, Section 183 of the Act provides that a person who is
a minor can act as an agent, but he cannot be held personally liable under the
contract.
In the given scenario, D is aged 16 years, which means she is a minor and
cannot be held personally liable under the contract. However, she can act as an
agent for G. Therefore, the appointment of D as G's agent is valid.
Now, if G herself is aged 16 years, the validity of the transaction would depend
on whether she is of sound mind. If she is of sound mind, she can enter into a
contract and appoint D as her agent. However, if she is not of sound mind, the
contract would be voidable at her option under Section 12 of the Act.

A8.
Under the Indian Contract Act, a surety is a person who gives a guarantee to pay
the debt or perform an obligation in case of default by the principal debtor. A
surety's liability is co-extensive with that of the principal debtor, and the surety
is responsible for the same amount and under the same terms as the principal
debtor. However, there are certain circumstances under which a surety can be
discharged from liability by the conduct of the creditor. These circumstances are
explained below:
Release of principal debtor: If the creditor releases the principal debtor from the
obligation, the surety is also discharged from liability. Section 134 of the Indian
Contract Act provides that any contract between the creditor and the principal
debtor, by which the principal debtor is released, discharges the surety unless
the surety consents to such release.
Illustrative case: In the case of Union of India v. Shiv Narain, the principal
debtor was released from liability without the consent of the surety. The court
held that the surety was discharged from liability.
Variations in terms of contract: If there is any variation in the terms of the
contract between the creditor and the principal debtor, without the consent of
the surety, the surety is discharged from liability. Section 133 of the Indian
Contract Act provides that any change in the terms of the contract between the
creditor and the principal debtor, without the consent of the surety, discharges
the surety from liability.
Illustrative case: In the case of Haji Pir Mohammad v. State Bank of India, there
was a variation in the terms of the contract between the creditor and the
principal debtor without the consent of the surety. The court held that the surety
was discharged from liability.
Creditor's act or omission impairing surety's rights: If the creditor's act or
omission impairs the surety's rights, the surety is discharged from liability.
Section 141 of the Indian Contract Act provides that any act or omission of the
creditor which impairs the surety's rights discharges the surety from liability.
Illustrative case: In the case of State Bank of India v. Jagannath Nayak, the
creditor omitted to register the mortgage of property that had been offered as
security by the principal debtor. The court held that the surety was discharged
from liability as the creditor's act impaired the surety's rights.
Creditor's fraud: If the creditor commits fraud on the surety, the surety is
discharged from liability. Section 142 of the Indian Contract Act provides that
any fraud committed by the creditor on the surety discharges the surety from
liability.
Illustrative case: In the case of Juggilal Kamlapat Bankers v. Naraindas
Jethanand, the creditor obtained a guarantee from the surety by misrepresenting
the facts. The court held that the surety was discharged from liability as the
creditor committed fraud on the surety.
In conclusion, a surety's liability is co-extensive with that of the principal
debtor, but there are certain circumstances under which the surety can be
discharged from liability by the conduct of the creditor. These circumstances
include the release of the principal debtor, variations in the terms of the
contract, impairment of the surety's rights, and fraud committed by the creditor.

A9.
A bailee is a person who receives the goods from another person, known as a
bailor, for a specific purpose. The bailee has certain rights and duties under the
Indian Contract Act, which are explained below:
Rights of a Bailee:

Right of possession: The bailee has the right to retain the goods until the bailor
pays the necessary charges.
Right to sue third parties: If any third party wrongfully takes or detains the
goods, the bailee has the right to sue such party.
Right to claim damages: If the bailor does not disclose any known defects in the
goods, the bailee has the right to claim damages for any loss suffered due to
such defects.
Duties of a Bailee:

Duty to take reasonable care: The bailee must take reasonable care of the goods
bailed to him and keep them safe and secure.
Duty not to mix goods: The bailee must not mix the goods bailed with his own
goods, and if he does so, he will be liable for any loss caused to the bailor.
Duty to return the goods: The bailee must return the goods to the bailor after the
purpose for which they were bailed has been fulfilled.
Relevant sections and cases:

Section 151 of the Indian Contract Act: This section provides that the bailee is
bound to take as much care of the goods bailed to him as a man of ordinary
prudence would, under similar circumstances, take of his own goods of the
same bulk, quality, and value as the goods bailed.
Section 152 of the Indian Contract Act: This section provides that the bailee
must use the goods bailed only for the purpose for which they were bailed.
Section 169 of the Indian Contract Act: This section provides that the bailee is
bound to return the goods to the bailor, on the expiry of the time for which they
were bailed or on the accomplishment of the purpose for which they were
bailed.
In the case of Bhagwan Dutt v. M. L. Sudhir, the Supreme Court held that the
bailee is responsible for any loss or damage to the goods bailed due to his
negligence or lack of reasonable care.
A10.
(a) In this situation, P sold goods worth Rs. 80,000 to K without informing K
that the sale is for M's benefit. This is a case of undisclosed principal, where the
agent (P) acts on behalf of the principal (M) without disclosing the principal's
identity to the third party (K). Under Section 230 of the Indian Contract Act,
when an agent acts on behalf of an undisclosed principal, the third party has the
right to hold either the agent or the principal responsible for the contract, but not
both. However, in this case, P owes Rs. 50,000 to K, and the sale of goods
worth Rs. 80,000 can be considered as a mode of discharging the debt owed by
P to K. Therefore, K can hold P responsible for the contract and can recover the
debt of Rs. 50,000 from P.

(b) In this situation, D buys goods from K for the benefit of M, without
informing K that she is acting for M's benefit. This is also a case of undisclosed
principal. However, in this case, K bona fide believes that the sale is for D's
benefit. Under Section 237 of the Indian Contract Act, when an agent makes a
contract with a third party on behalf of an undisclosed principal, and the third
party makes the contract with the agent in good faith, the principal cannot
enforce the contract against the third party. Therefore, in this case, K can hold D
responsible for the contract and can recover the value of goods sold from D, as
K has entered into the contract with D in good faith, believing that D is the
actual buyer. M cannot enforce the contract against K as K had no knowledge of
M's involvement in the transaction.

A11.
(a) Contract for sale of goods and contract of work/material:
A contract for sale of goods is a contract where one party agrees to transfer the
ownership of goods to another party for a price. On the other hand, a contract of
work/material is a contract where one party agrees to do some work on the
materials supplied by the other party.

The key difference between the two is that in a contract for sale of goods, the
transfer of ownership of the goods is the primary objective of the contract, while
in a contract of work/material, the performance of the work is the primary
objective, and the transfer of ownership of the materials is incidental to the
contract.

Legal provisions:
Section 2(3) of the Indian Sale of Goods Act, 1930 defines a contract for sale of
goods, while Section 2(g) of the Indian Contract Act, 1872 defines a contract of
work/material.

Cases:
In the case of Poonam Chand Jain v. Deputy Commissioner of Sales Tax, the
court held that if the primary objective of the contract is the transfer of
ownership of goods, then it is a contract for sale of goods, and if the primary
objective is the execution of work, then it is a contract of work/material.

(b) Contract for sale of goods and agreement to sell goods:

A contract for sale of goods is a contract where the ownership of the goods is
transferred from the seller to the buyer immediately. On the other hand, an
agreement to sell goods is a contract where the ownership of the goods is to be
transferred at a future time, or subject to certain conditions.
The key difference between the two is that in a contract for sale of goods, the
ownership of the goods is immediately transferred, while in an agreement to sell
goods, the ownership of the goods is to be transferred at a future time, or subject
to certain conditions.

Legal provisions:
Section 4 of the Indian Sale of Goods Act, 1930 defines a contract of sale,
which includes both a contract for sale and an agreement to sell.

Cases:
In the case of Rameshwar Das Bagla v. Firm Ganesh Das Ramgopal, the court
held that in a contract for sale of goods, the property in the goods is transferred
from the seller to the buyer at the time of making the contract, while in an
agreement to sell goods, the property in the goods remains with the seller until
the conditions for transfer of ownership are fulfilled.

A13.
In the given situation, there are three parties involved - Farida, Beena, and Adil.
Beena stored a parcel in Farida's godown for a fee of Rs. 100 per day without
disclosing the contents of the parcel. Beena promised to reimburse Farida for
any loss caused by such a transaction. Adil comes to the godown, claiming to be
the lawful owner of the parcel and demanding it from Farida. Adil files a suit
against Farida to recover the parcel and Farida incurs litigation expenses to
defend herself.
The legal positions of the parties are as follows:
Farida: Farida is a bailee under the Indian Contract Act, 1872, as she has agreed
to store the parcel for Beena for a fee. As a bailee, she has certain rights and
duties. She is duty-bound to take reasonable care of the goods and return them
to the bailor (Beena) on demand. However, she has a right to retain the goods
until she receives the full amount of her lawful charges for storing the goods
(Section 170). In this case, Farida has a lien over the goods until Beena pays her
the full amount due. Farida can also claim compensation from Beena for any
loss suffered by her due to the storage of the goods (Section 180).
Beena: Beena is the bailor in this case, as she has entrusted the goods to Farida
for safekeeping. As per Section 148 of the Contract Act, the bailor is bound to
disclose to the bailee any faults in the goods or their nature which the bailee is
not likely to discover. However, Beena did not disclose the contents of the
parcel to Farida, which could result in legal issues. Additionally, Beena has
promised to reimburse Farida for any loss caused by the transaction, which
means that she is liable to compensate Farida for any expenses or losses
incurred by her in the course of the bailment.
Adil: Adil claims to be the lawful owner of the parcel and demands it from
Farida. He files a suit against Farida to recover the parcel. If Adil can prove his
ownership of the parcel, he has a right to recover it from Farida. However, since
Beena did not disclose the contents of the parcel to Farida, Farida can claim that
she was not aware of Adil's claim to the parcel and hence, cannot be held liable
for delivering the goods to him.
In conclusion, the legal positions of Farida, Beena, and Adil are interlinked and
dependent on each other. Farida's position is that of a bailee with certain rights
and duties, Beena is the bailor who has entrusted the goods to Farida and is
liable to compensate her for any loss, and Adil's position depends on his
ownership of the goods.