CONTENTS

PAGES

About the Author I-5

Preface to Eleventh Edition I-7
Syllabus I-9
Chapter-heads I-11
List of Cases I-29

UNIT I
INDIAN CONTRACT ACT, 1872

1
ICA, 1872 : NATURE, MEANING, ESSENTIALS
AND KINDS OF CONTRACT

1.1 Introduction 3
1.2 Extent and commencement 3
1.3 Limitations or nature 4
1.4 Definition of contract 5
1.5 All contracts are agreements but all agreements are not
contracts 6
1.6 Essentials of a Valid Contract 7
1.7 The law of contract is not the whole law of agreements nor is
it the whole law of obligations 10
1.8 Kinds of contracts (Classification of Contracts) 12
1.9 Some distinctions 17

I-15
 CONTENTS I-16
PAGES
Test Questions 19
Practical Problems 20
True or False Statements 21

2
ICA, 1872 : OFFER AND ACCEPTANCE

2.1 Introduction 22
2.2 Definition of offer 22
2.3 What constitutes valid offer ? 23
2.4 Distinction between offer and invitation to an offer 28
2.5 Kinds of offer 28
2.6 Special Terms and Conditions in a Contract 29
2.7 Agreement to agree in future enforceable or not 30
2.8 Acceptance 31
2.9 What constitutes valid acceptance ? 31
2.10 When does an offer lapse ? 35
2.11 Communication of offer and acceptance 38
2.12 Communication of Revocation (Sec. 4) 38
2.13 Revocation of offer and acceptance (Sec. 5) 39
2.14 Contracts through telephone, telex, fax or e-mail 39
2.15 “Acceptance is to an offer what a lighted match stick is to a
train of gun powder. It produces something which cannot
be recalled or undone” (Anson’s Law of Contract) 40
Test Questions 40
Practical Problems 41
True or False Statements 42

3
ICA, 1872 : CONSIDERATION

3.1 Introduction 43
3.2 Definition of consideration 43
3.3 Essentials of valid consideration 44
I-17 CONTENTS

PAGES
3.4 Rule of “no consideration, no contract” - Exceptions 49
3.5 Doctrine of privity of contract 53
Test Questions 56
Practical Problems 56
True or False Statements 59

4
ICA, 1872 : COMPETENCY OF THE
PARTIES TO CONTRACT

4.1 Introduction 60
4.2 Who are competent to contract ? 60
4.3 Who is a minor ? 61
4.4 Nature of minor’s agreements 62
4.5 Law relating to minor’s agreements 62
4.6 Persons of sound and unsound mind 69
4.7 Disqualified persons 71
Test Questions 73
Practical Problems 73
True or False Statements 75

5
ICA, 1872 : FREE CONSENT

5.1 Introduction 76
5.2 Definition of consent (Sec. 13) 76
5.3 Definition of free consent (Sec. 14) 77
5.4 Factors affecting (vitiating) free consent 77
5.5 Coercion 78
5.6 Features of coercion 78
5.7 Effect of coercion (Secs. 19 and 19A) 81
5.8 Distinction between coercion and duress 82
5.9 Undue influence 82
 CONTENTS I-18
PAGES
5.10 Elements of undue influence 83
5.11 Presumption of undue influence 85
5.12 Effect of undue influence (Sec. 19A) 87
5.13 Distinction between coercion and undue influence 87
5.14 Fraud 88
5.15 Elements of fraud 90
5.16 Silence does not constitute fraud 91
5.17 Effect of fraud (Sec. 19) 93
5.18 Misrepresentation 94
5.19 Constituents of misrepresentation 95
5.20 Essential elements of misrepresentation 96
5.21 Effects of misrepresentation 97
5.22 Distinction between fraud and misrepresentation 98
5.23 Exceptions to the right of rescission of the contract 98
5.24 Mistake 100
5.25 Types and effect of mistake 100
Test Questions 107
Practical Problems 108
True or False Statements 110

6
ICA, 1872 : LEGALITY OF OBJECT
AND CONSIDERATION

6.1 Introduction 111

6.2 What considerations and objects are unlawful ? 111
6.3 Doctrine of public policy 116
6.4 Agreements opposed to public policy 116
6.5 Object or consideration unlawful in part 120
6.6 Effects of illegal agreements 121
Test Questions 122
Practical Problems 123
True or False Statements 124
I-19 CONTENTS

PAGES
7
ICA, 1872 : VOID AGREEMENTS AND
CONTINGENT CONTRACTS

7.1 Introduction 125

7.2 Expressly declared void agreements 125
7.3 Collateral transactions in case of ‘expressly declared void
agreements’ 139
7.4 Doctrine of restitution 139
7.5 Contingent contracts 140
7.6 Rules regarding Performance of Contingent Contracts 142
7.7 Distinction between Wagering Agreements and Contingent
Contracts 144
Test Questions 145
Practical Problems 145
True or False Statements 146

8
ICA, 1872 : QUASI CONTRACTS

8.1 Introduction 148

8.2 Quasi contracts : Meaning 148
8.2A Quasi contract : Rationale 149
8.3 Kinds of quasi-contracts 150
Test Questions 154
Practical Problems 155
True or False Statements 156

UNIT II
DISCHARGE OF CONTRACT & REMEDIES
FOR BREACH OF CONTRACT

9
ICA, 1872 : DISCHARGE OF CONTRACT

9.1 Introduction 159

 CONTENTS I-20
PAGES
9.2 Modes of discharge of contract 159
9.3 Discharge of contract by performance 160
9.4 Discharge of contract by agreement (Sec. 62) 160
9.5 Impossibility of performance 162
9.6 Discharge of contract by lapse of time 166
9.7 Discharge by breach of contract 167
9.8 Discharge of contract by operation of law 167
Test Questions 168
True or False Statements 169

10
ICA, 1872 : REMEDIES FOR
BREACH OF CONTRACT

10.1 Introduction 171

10.2 Types of breach of contract 171
10.3 Remedies for breach of contract 174
10.4 Suit for damages 175
10.5 Suit for rescission 183
10.6 Suit upon quantum meruit 184
10.7 Suit for specific performance 187
10.8 Suit for injunction 188
Test Questions 189
Practical Problems 189
True or False Statements 191

UNIT III
INTRODUCTION TO SPECIAL CONTRACTS

11
ICA, 1872 : INDEMNITY AND GUARANTEE

11.1 Introduction 195

11.2 Contract of indemnity 195
I-21 CONTENTS

PAGES
11.3 Essentials of a contract of indemnity 197
11.4 Rights of indemnity-holder (Sec. 125) 197
11.5 When does the liability of indemnifier commence? 198
11.6 Contract of guarantee 198
11.7 Essentials of a contract of guarantee 199
11.8 Distinction between contract of indemnity and guarantee 201
11.9 Kinds of guarantee 202
11.10 Revocation of continuing guarantee 204
11.11 Nature and extent of surety’s liability 204
11.12 Rights of surety 206
11.13 Discharge of surety 210
Test Questions 214
Practical Problems 215
True or False Statements 216

12
ICA, 1872 : CONTRACT OF BAILMENT AND PLEDGE

12.1 Introduction 218

12.2 Bailment 218
12.3 Essentials of a valid contract of bailment 219
12.4 Kinds of bailment 221
12.5 Some distinctions 222
12.6 Duties of bailor 225
12.7 Duties of bailee 227
12.8 Rights of bailor 230
12.9 Rights of bailee 230
12.10 Right of lien and its types 231
12.11 Distinction between particular lien and general lien 234
12.12 Termination of bailment 234
12.13 Definition of pledge or pawn 235
12.14 Distinction between bailment and pledge 236
 CONTENTS I-22
PAGES
12.15 Rights of pawnee (Secs. 173-176) 236
12.16 Duties of pawnee 238
12.17 Rights of pawnor 238
12.18 Duties of pawnor 239
12.19 Pledge by non-owners 239
Test Questions 241
Practical Problems 242
True or False Statements 243

13
ICA, 1872 : CONTRACT OF AGENCY

13.1 Introduction 245

13.2 Definition of agent and principal 245
13.3 Principles regarding the law of agency 246
13.4 Essential features of a contract of agency 246
13.5 Some distinctions 247
13.6 Creation of agency 249
13.7 Extent of authority of an agent 255
13.8 Delegation of authority 256
13.9 Distinction between Sub-Agent and Substituted Agent 259
13.10 Duties of agent 259
13.11 Rights of agent 262
13.12 Liability of the Principal for the Acts of the Agent 265
13.13 Personal liability of agent 268
13.14 Termination of agency 270
Test Questions 271
Practical Problems 272
True or False Statements 273
I-23 CONTENTS

PAGES
UNIT IV
SALE OF GOODS ACT, 1930

14
SALE OF GOODS ACT, 1930 : NATURE AND
FORMATION OF CONTRACT OF SALE

14.1 Introduction 277

14.2 Provisions of the Indian Contract Act 278
14.3 Chapters and sections 278
14.4 Certain terms defined in the act 278
14.5 Definition of a contract of sale 280
14.6 Essentials of a valid contract of sale 281
14.7 Some distinctions 283
14.8 Subject-matter of the contract of sale 286
14.9 Classification of goods (Sec. 6) 287
14.10 Effect of perishing of specific goods 290
14.11 Ascertainment of price 291
14.12 Stipulations as to time 292
Test Questions 293
Practical Problems 294
True or False Statements 295

15
SALE OF GOODS ACT, 1930 : CONDITIONS
AND WARRANTIES

15.1 Introduction 296

15.2 Conditions and warranties 296
15.3 Distinction between condition and warranty 298
15.4 When breach of condition is to be treated as breach of warranty ? 298
15.5 Express and implied conditions and warranties 299
15.6 Doctrine of caveat emptor 307
Test Questions 309
 CONTENTS I-24
PAGES
Practical Problems 310
True or False Statements 312

16
SALE OF GOODS ACT, 1930 :
TRANSFER OF PROPERTY

16.1 Introduction 313

16.2 Rules regarding transfer of property (ownership) 314
16.3 Nemo dat quod non-habet (Sale by non-owners) 321
Test Questions 325
Practical Problems 325
True or False Statements 326

17
SALE OF GOODS ACT, 1930 : PERFORMANCE OF
CONTRACT OF SALE

17.1 Introduction 328

17.2 Meaning and modes of delivery 328
17.3 Rules relating to delivery of goods 329
Test Questions 333
True or False Statements 334

18
SALE OF GOODS ACT, 1930 : UNPAID
SELLER AND HIS RIGHTS

18.1 Who is an unpaid seller ? 336

18.2 Features of an unpaid seller 336
18.3 Rights (remedies) of unpaid seller 337
18.4 Buyer’s remedies against the seller 347
Test Questions 349
Practical Problems 350
True or False Statements 351
I-25 CONTENTS

PAGES
UNIT V
LIMITED LIABILITY PARTNERSHIP
ACT, 2008

19
INTRODUCTION TO LLP : NATURE AND SCOPE

19.1 Need for new corporate form (LLP) 355

19.2 Object of the LLP Act, 2008 355
19.3 Journey of the LLP Act, 2008 356
19.4 Global scenario of LLPs 356
19.5 Prospective users/beneficiaries of LLP 357
19.6 Legal framework 357
19.7 Meaning and nature of LLP [Secs. 3 and 4] 357
19.8 Features of LLP 358
19.9 LLP vs. Other forms of business 363
Test Questions 370
True or False Statements 371

20
FORMATION AND INCORPORATION OF LLP

20.1 Introduction 373

20.2 Pre-requisites for incorporating a LLP 373
20.3 Recent Amendments and LLP incorporation process 374
20.4 Registered office of LLP and change therein (Sec. 13) 384
20.5 Effect of registration [Sec. 14] 385
20.6 Provisions relating to name of LLP and changes therein
[Secs. 15 - 21] 385
Test Questions 386C
True or False Statements 386D
 CONTENTS I-26
PAGES
21
PARTNERS AND THEIR RELATIONS IN LLP

21.1 Introduction 387

21.2 Who is eligible to be a partner in a LLP (Sec. 22) 387
21.3 Definition of partner 388
21.4 Definition of body corporate 388
21.5 Disqualifications of becoming a partner (Sec. 5) 388
21.6 Designated partners 389
21.7 Partners and their relations 391
21.8 How can an existing partner cease to be a partner of a LLP ?
(Sec. 24) 393
21.9 Registration of changes in partners (Sec. 25) 394
21.10 Extent and limitation of liability of LLP and partners
(Secs. 26 and 27) 394
21.11 Extent of liability of partner (Secs. 28-30) 395
21.12 Whistle blowing (Sec. 31) 396
21.13 Contribution (Secs. 32 and 33) 397
Test Questions 401
True or False Statements 401

22
CONVERSION INTO LLP

22.1 Introduction 403

22.2 Conversion from partnership firm into LLP [Sec. 55] 403
22.3 Effects of registration of conversion of partnership into
LLP [Sec. 58] 406
22.4 Conversion from private company into LLP [Sec. 56] 406
22.5 Conversion from unlisted public company into LLP [Sec. 57] 409
Test Questions 412
True or False Statements 412
I-27 CONTENTS

PAGES
PRACTICAL EXERCISES
UNIT 1 : THE INDIAN CONTRACT ACT, 1872 417
UNIT 2 : DISCHARGE OF CONTRACT & REMEDIES FOR BREACH 433
UNIT 3 : INTRODUCTION TO SPECIAL CONTRACTS 433
UNIT 4 : SALE OF GOODS ACT, 1930 434
UNIT 5 : THE LIMITED LIABILITY PARTNERSHIP ACT, 2008 434

QUESTION PAPERS
B.COM. (HONS.) PART I/SEM.-I : 2012 437
B.COM. (HONS.) PART I/SEM.-I : 2013 440
B.COM. (HONS.) PART I/SEM.-I : 2014 443
B.COM. (HONS.) PART I/SEM.-I : 2015 447
B.COM. (HONS.) CBCS SEM.-I : 2016 451
B.COM. (PROG.) CBCS SEM.-II : 2016 455
B.COM. (HONS.) CBCS SEM.-I : 2017 458
B.COM. (PROG.) CBCS SEM.-II : 2017 462
B.COM. (HONS.) CBCS SEM.-I : 2018 465
B.COM. (PROG.) CBCS SEM.-II : 2018 469
B.COM. (HONS.) CBCS SEM.-I : 2019 472
B.COM. (PROG.) CBCS SEM.-II : 2019 475
B.COM. (PROG.) CBCS/SEM.-II : 2020 478
B.COM. (HONS.) CBCS SEM.-I : 2021 480
B.COM. (HONS.) CBCS SEM.-I : 2022 482
B.COM. (PROG.) CBCS/SEM.-II : 2022 484
B.COM. (HONS.) CBCS SEM.-I : 2023 487
B.COM. (PROG.) CBCS SEM.-I : 2023 490