Page 1 of 11 Contract Act - Semester 2 Kerala University ...

Contract Act 1872 1-74 General Principles 76-123 Sales of Good Act 1930 – repealed124 to147 Contract of Indemnity and Contract of Guarantee148-181 Contract of Bailment, Pledge and Pawn182-238 Contract of Agency239-266 Partnership – Repealed to partnership Act 1932

Definition of Contract of Indemnity sec 124 ( Insurance Company as an example – contingent events) Condition for contract

• Competent to contract, majority, not lunatic

• Lawful consideration

• Sound mind

• Free consent of parties

• Contract should not be expressly declared to be void by any law in forceMange ladha v Ganda mal- if no title of land will compensate by sellerGajanan Moreshwar v Moreshwar Madan 1942 –Bombay Municipality, ,Loss must be by human agency- contract of

insurance is not covered by the definition sec 124.- In English law it comes under this sectionUnited India insurance company v M/s Aman singh Munshilal Air 1994– Store, godown, fire, not contract ofIndemnityM Sham Singh v State of Mysore- Bond executed, employee gone abroad for training, doesn’t come back.

Rights of Indemnity holder ( indemnified) or Liability of Indemnifier( Promisor) - sec 125

• All damages

• All costso He acted under authority of indemnifiero He did not act contravention of order of the indemnifiero Acted in such a way a prudent man would act in a similar circumstance

• Recover all sumContract of Guarantee Sec 126

Surety , Guarantor, Principal debtor, Creditor Essentials of a valid Guarantee

o There should be a debt recoverable from the principal debtorManju & Mahadeo v Shivappa 1918 – guarantee for a debt already barred by limitation is void Minor’s debt- Kashiba v Shripat- Surety is liable as principal debtor

o There should be lawful considerationo Guarantee obtained by misrepresentation of concealment is invalid – Sec 142

▪ London general omni bus v Holloway 1912 – employee terminated- not liable

SL NO Indemnity Guarantee

1 There are two parties: Indemnifier Indemnity Holder

Surety, Creditor, Principal Debtor

2 One Contract Three Contract

3 Liability of Indemnifier happening on contingency

Liability arise if there is a default by Principal Debtor

4 Reimburse of Loss Security to Creditor

5 Stranger to contract cannot sue

Surety become Creditor to realise the money paid

6 Liability is primary and independent secondary and collateral

Different kind of Guarantee – RPF SCNDO 1. Retrospective Guarantee2. Prospective Guarantee3. Fidelity Guarantee4. Specific Guarantee5. Continuing Guarantee-129

Sec 130- Revocation of continuing guaranteeI. By notice

i. Offord v Davies 1862 – Surety discharged from liability, Guarantee 12 months for discounting bills not exceeding 600 pound

ii. Wingfield v De St croix 1919 – Employee left job, rent not paid, not liableiii. Hargopal Agarwal v SBI 1956 – director guarantee , company over draft, revoke notice, but

directors due up to date of resignation

of 11 Contract Act - Semester 2 Kerala University - 2017-2020

Read Anil K Nair Book, Before Reading This Short Notes ullaskrishnan.com/llb

II. By death of the surety- 131III. Any other mode

Surety Bank of Bihar v Damodar Prasad AIR 1969 SC 297 – No hard rule that creditor should first sue against principal debtor Union Bank of India v Manku Narayanan AIR 1987 SC 1078-When there is a decree against the principal debtor, the guarantor and also against the mortgaged property, the decree holder bank should first proceed against mortgaged property and then against the guarantor

Right and Liabilities of a Surety or Guarantor- sec 128 Liability of Surety is secondary – liability only after principal debtor Can sue the surety without suing the principal debtor Bank of Bihar v Damodar prasad (1969)- can sue surety first- to pay the decretal amount SBI v Indexport Rajasthan 1992- surety may be proceeded against without first proceed PDS

Rights of Surety – favoured Debtor 1. Liability arise only fulfilment of condition precedent – seC -144

Guarantee is not valid is other person not joined in co suretyNational Provincial Bank of England v Brackenburry – one of them didn’t sign , in total three so not validJames Graham & Co v Southgate sands – signature forged, not valid

2. Right to Subrogation Sec 140If surety Payed all debt, he will step in to the shoe of creditor

• Principal debtor should have default payment

• Surety have paid the guaranteed debt3. Right to securities ( right against creditor) –sec 141- has rights in every securities creditor has in hand against

principal debtorCondition invoking 144

• Surety paid the debt of principal debtor

• Security with the creditor against PD (Principal Debtor )at the time of contract of surety is made

• Existence of security may or may not known to surety4. Right of setoff and counter- claim

Surety is entitled to claim the setoff or counter claim the PD ( principal Debtor) has against creditor5. Right to get indemnity -Sec 145– (Right against principal debtor)6. Right to claim contribution ( right against co surety)-sec 146- equality of burden and benefit

Release of co-surety – sec 138-Bound in different sum –English law, the divide the amount according to the %, but in India its equally divided

7. Right to be Discharged ( Discharge of surety liability)( when will a surety be discharged from liability)a. Revocation for future liability- sec 130b. By Death sec 131c. By Novation Sec 62 – new agreementd. Variance made without surety consent sec 133

Anirudhan v Thomcos Bank (1963) – PD changed the document but before submitting to bank and its validKhatun bibi v Abdullah – 1880- Rent increased without surety consent so not validBonar v Macdonald – bank manager and pd change the agrement

e. Release or Discharge of Principal Debtor – sec 134i. If PD is released by contract between creditor and PD then surety discharged

ii. If legal consequence of any act or omission of the creditor release the PD the surety will be discharged

f. Compounding with principal debtor – Sec 135i. Creditor makes a Composition with PD

ii. Creditor promise to Give time to make paymentiii. Promise that he will not sue the PD

Croydon Gas co v Dickinson 1876 – gas supply, default, promissory note without consent ofsurety , surety was dischargedAmritlal v State Bank fo Travancore – sec 136-extend date by creditor to PD is valid and willnot discharge the duty of surety

g. Impairing the Surety’s RemedyBy virtue of sec 139 of the Act if the creditor does any act which inconsistent with right of surety.Surety is dischargedM R Chakarapani v Canara Bank 1997- land hypothecated to bank was sold by PD, Surety immediatelynotify this to bank, surety was discharged

h. Loss of securityState bank of Sourashtra v C R Raja 1908 – Bank negligence stock damage- security given loss, notliable, negligence of creditor

i. By Invalidation of contract- Misrepresentation made by creditor, transaction is invalid



Surety’s Right a. Right of surety against the creditors

i. Right to securities with the creditorii. Right to request to sue debtor first

b. Right of surety as against PDa. Right of subrogationb. Right of indemnityc. Right to be relieved

c. Right of Security against co-securitiesa. Right to security

Bailment – Sec 148-171 French word bailer- deliver

Delivery of goods on condition to redeliver them when condition is satisfied. Bailor -> Bailee

Essentials of Bailment 1. Delivery of possession- Sec 149 – bailor must transfer his possession of goods

a. Ultzen v Nicolls 1894- Coat lost, attender is liableb. Kaliaperumal pillai v visalakshi -1938-gold smith is not liable because no possession

2. Delivery of goods should be upon a contract – Sec 148- contract can be implied, not need to be completea. G G of Indian council v Jubilee Mills Ltd 1953- Railway platform, goods stored, station master

approved, spark and fire break out, goods damage, its liable for compensation b. Ram Gulam v State of UP - 1950- gold stored in police custody, stolen, government didn’t store this,

government is not act as a bailee, so not liablec. B K D patil v State of Mysore 1977- ornaments recovered by police and custody were stolen, then

liabled. Lasalgaon merchants co-operative Bank v Prabhudhas Hathibhai – tobacco seized , income tax due,

rain damage goods,, state liable3. Delivery must be for specific purpose4. Return of Goods

Kinds of bailment

• Bailment for the benefit of bailor

• Bailment for the benefit of bailee

• Bailment for the benefit of both bailee and bailor

• Gratuitous Bailment – no reward

• Non-Gratuitous Bailment - reward

SL NO Bailment Sale

1 Object Temporary possession Permanent transfer

2 Ownership does not change change

3 cannot appropriate property can

4 bailor pay nominal, service rendered full payment

5 bailee can exercise his right of lien seller has no right after sale,

if not unpaid sale

SL NO Bailment Agent

1 bailee no authority from bailor Permanent transfer

2 bailee cannot sell can sell

3 no contractual power yes

4 cannot transfer property ownership yes

5 bailee must have possession may or may not

Duties of Bailee 1. Take care of the goods – sec -151

Jain & Son v Comeron 1992- stayed hotel – hotel keeper liable, items lostLee cooper ltd v C H Jekins & Sons ltd 1965- involuntary bailee – bailee servant- lost items while carrying , liableNewman v Bourne & Hollingsworth 1951 – coat taken , diamond brooch lost, liable

2. Duty not to mix with his own goods- sec 1553. Duty not to set up jus tertii – bailee is estopped from challenging the right of bailor to get the goods back4. Duty to return Goods- sec 160

Shaw & Co v Symmons & sons 1917- book binding, burnt accident, liable5. Duty not to use the good is unauthorized manner – sec 1546. Duty to return an accretions of the goods7. Duty of finder of lost goods – sec8. Act in conformity with terms of condition – sec 153



Rights of Bailee

1. Right to compensation – sec 164 2. Right to recover expense or remuneration – sec 158 3. Right against third party ( subrogation) 4. Right to Lien - sec 171 & 172 – retain goods until his lawful claims are satisfied

Possessory liens i. Particular lien / special lien – sec 170- skill or labour are used

Chase v westmore 1816 – only the expense retails for the goods that made trouble not all goods in his custody Eduljee v café John Bros – refrigerator, repair , return , then not working , once return the lien lost, lien once lost cannot be revoked

ii. General lien –171- payment lawfully due to him 1. Bankers

a. Bankers general lien Bombay dyeing & mfg co ltd v State of Bombay- action for debt is time barred Union Bank of India v Venugopalan – FD not a general lien

Banker exercise lien

• Lien goods, document title to goods , fd receipts, insurance policy, negotiable instruments, interest warrant

Banker cannot exercise lien

• Safe deposit , money for specific purpose, negotiable customer has no valid title, when debit and credit in same capacity

2. Factors – agents entrusted possession for sale 3. Wharfingers- wharf , good loaded , wharf charge 4. Attorney of HC and - case fees , have no rights to hold client documents

R O Saxena v balaram prasad Sharma – lien unpaid, not to hold documents 5. Policy brokers - marine insurance

Duties of Bailor

• To disclose known facts of the goods bailed- gratuitous bailor Lyell v Ganga Dai – deliver explosive Hyman v Nye & sons- hire carriage and horse , carriage is defective

• To bear the extra ordinary expenses-

• To indemnify the loss

• To take back the goods Rights of Bailor

• Enforcement of rights

• To avoid contract- bailee act contrary

• Right to claim increase in profit

• Right against third party ( Subrogation) Finder of Lost Goods – Sec 71, 168 -169 – same responsibility as a bailee

• Right to retain- for true owner

• Right of Lien - 168 – expense incurred in preserving

• Right of sue for reward - 168

• Right of sale -169 o Owner cannot be found o Lawful charge more than 2/3 o When found he refuse to pay o Things danger will perish

Pawn or Pledge – sec 172-179- bailment of good as a security for the payment of a debt or performance of a profit

Bailor → bailee Pledger→ pledgee Pawnor→ pawnee

Lallan Prasad v Rahmat Ali – SC any movable and saleable can be subject matter of pledge Essential of Pledge or Pawn

• Delivery of Goods – actual or constructive Bank of Chitor v Narasimhah – pledge cinema projector and accessories- sold to third party and valid, because its constructive delivery

• Security for payment of debt Bank of India v Binod Steel – movable pledge by company, before satisfying creditor of company , need to close the bank claim

• The subject matter must be movable property



Rights of Pawnee

• Right of retainer – 173

• Right of retainer for subsequent advances – 174

• Right to extra ordinary expenses for good pledge – 174 Haridas Mundhra v National and Grindlays Bank

• Right in case of default of the pawnor o File suit amount due, and keep good as collateral security o Right to sue for sale of goods in possession o Right to sell after notice Bank of Bihar v State of Bihar

Right of Pawnor – sec 177 Before actual sale of goods pledged the default pawnor can pay the due amount if needed

SL NO Bailment Pledge

1 141 to 171 172 to 181

2 made of any purpose made for specific purpose

3 can use the goods cannot use

4 no right to sell goods bailed yes

5 bailee can lien only for labour and service even non-payment of interest

Definition of Contract of Agency – 182- 238

• Agent

• Servant Essential Elements of Agent

o Principal must be competent to contract o Any person may become an agent o Consideration not necessary

Kinds of Agent 1. Factor – mercantile agent to sell goods- possession of goods 2. Broker- negotiate and make contract sale of purchase- not possession of goods 3. Del credere Agent- agent responsible to the principal for the contract and liable even after creating a contract,

pay principal sum owned by third party 4. Agent coupled with interest- sell property according to meet the claim 5. Auctioneer 6. Sub Agent – 191 and Substitute Agent ( co – Agent) 194

a. Delegation of Authority- 190 -Delegatus non potest delegare or authority once delegated can not be further delegated

7. Pakka Adatia – actual sale become agents own affair, vogue in Bombay market Different Modes of Creation of Agency

1. By Express Agreement - 186 – Principal appoints agent - Power of Attorney 2. By Implied Agreement – 187- conduct or relationship of parties or circumstances

a. Agency of Estoppel- rule of evidence- sec 237 i. Agent incurred liability

ii. Agent not have authority iii. Induced the third person to believe that agent has authority

b. Agency of Holding out – Doctrine of Estopel – credit purchase done for another person receiving cash and allocated to current owner for paying it ,misappropriates the amount

c. Agency by Necessity -perishable goods i. Matheson v Smiley- medical operation , suicide ,save life, payable

ii. Sims & Co v Midland railway – Butter sold out 3. By Ratification- sec 196-200

a. William v North China Insurance Co – insure goods, not known to principal P ratifies Ratification may be express or implied – sec 197 – effect of ratification from the beginning Balton partners v lambert – managing director company, without authority accepted offer, withdrew the offer, company Ractified A’s acceptance Keighley maxsted & Co v Durant – wheat purchase low, but purchase high, and not behalf of owner, so not ractified Kelner v Baxter- on behalf company ratified, then company liquidated, but principal person exist so liable Requisite of valid Ratification

1. Agent must purport to act as agent for principal who is in contemplation 2. Principal must exist at the time of contract 3. Principal must have contractual capacity 4. Ratification must be a full knowledge of facts 5. Ratification done by reasonable time 6. Ratification must be lawful and not illegal or not void 7. Principal should ratify the whole transaction of agent 8. Ratification must be communicated 9. Principal must have power to do 10. Never put third party in damage

• By Operation of law – 197 – forming a company and partners are agent



Duties of An Agent 1. Duty to follow instructions -sec 211- principal business

Agent - Absolute liability Pannalal jankidas v Mohanlal – insure goods Lilley v Doubleday – godown, items in warehouse, divided and perished, agent liable

2. Duty to follow customs in the absence of instruction- act with care and skill Jayabharathi corporation v PNSN Rajesekar Nadar

3. Duty to exercise skill and diligence 4. Duty to render proper accounts 5. Duty to communicate difficulties 6. Not to deal on his own accounts 7. Duty to remit all money 8. Duty not to make secret profit

Happisley v knee brothers- sell property, discount from printers and advertisers 9. Duty to protect and preserve 10. Duty not to setup adverse title 11. Duty not to delegate authority 12. No to disclose confidential matters

Rights of an Agent217 - 223 1. Right of retainer- retain money or claim sec 217 2. Right of remuneration -sec -219-220 3. Right of Lien sec 221 4. Right to indemnity – 222,223 5. Right to compensation 225

Relation of Principle with Third parties sec 226- undisclosed principal- principal liability of an agent Principal is responsible if agent made a contract on his behalf. Presumption of contract to the contrary – in some case agent is responsible – personal liability

1. Foreign Principal 230(1)- U RMohana Krishnan v Chimmanlal Desai & co 2. Undisclosed Principal- 230(2) 3. Legal disability of the principal 4. If Agent is an auctioneer 5. Agreement- negotiable instrument

Liability pretended Agent – Sec 235 Termination of Agency or revocation of Agency– sec 201 to 210

1. By the Act of parties a. By agreement b. By revocation of the principal c. By revocation of an Agent

2. By Operation of Law a. By completion of agency b. By expiry of Time c. Death o Insanity of principal or Agent d. Insolvency of principal e. Destruction of subject matter f. Principal becoming an alien enemy g. Dissolution of company or firm

Contract of sales of Goods act 1930 Sec 4 define -Absolute sale, or conditional, transfer of property in goods to the buyer for a price. Definition

1. Buyer sec 2.1 2. Deliver 2.2 3. Document of title to goods 2.4

a. Bill of landing - J V Gokal v Ass Collector Sales Tax b. Dock Warrant c. Railway Receipt - Kerawalla v Dominion of India

4. Future Goods sec 2.6 5. Goods Sec 2.7

Arunachalam v A R Krishna Murthy – stock and shares are also goods Mahadeo v State of Bombay – timber, bamboo,soli for making brick cannot be contract of goods simpliciter

6. Mercantile Agent sec 2.9 Oppenheimer v Attenborough – make sure the agent was authorized to do it Lowther v Harris – agent sell goods fraud and get along with money

7. Price sec 2.10 8. Property 2.11 9. Quality of Goods 2.12 10. Seller 2.13 11. Specific goods 1.14- good identified and agreed upon at the time of contract of sale is made



Definition Contract of Sale- contains Sale and Agreement of Sale Essential Elements of Sale

a. There must be at least two parties seller ( vendor) and buyer ( vendee) b. There must be agreement between two parties c. Subject matter of contract is goods

Movable property other than actionable claim. 1. Existing Goods

a. Specific goods b. Ascertain goods c. Unascertained goods

2. Future Goods 3. Contingent goods

d. Transfers – seller to buyer- ownership- document title e. Lawful consideration – Price

Sale and Agreement to Sale

SL NO Sale Agreement to Sale

1 Property transfer Not transfer

2 executed contract executory contract

3 Right in rem Right in personam

4 seller can sue for breach of contract sue only for damage not for price

5 liable for sales tax not liable

6 no right for resale right for resale

7 goods destroyed, loss is borne by buyer loss falls on the seller even though the goods in possession of the buyer

Quasi contract

A person shall not be allowed to enrich himself unjustly at the expense of another Hart v Mills -send goods, buyer retain goods and enjoyed so its liable Cooper v shepherd- goods wrongfully taken and enjoyed

Sale and Hire Purchase

SL NO Sale Hire purchase

1 Full payment done Instalment, ownership only at the end of payment

2 Immediately become owner periodically after full payment

3 Right in rem Right in personam

4 Buyer will get title No title until full payment

5 buyer has right to pledge No right to pledge before complete payment

6 no right for resale right for resale

7 unpaid seller can look for dividend if buyer insolvent if hirer become insolvent then owner can take back

Helby v mathews – piano, 32 month instalment, hire purchase, he pledge the piano .No right to pledge piano Distinction Between sale and contract for work and labour

Lee v Griffin – Teeth artificial, not fitted, person died, not work or labour it comes under chattel ( goods) Conditions and Warranties Statement made by seller before or at the time of entering in to a contract of sale are called- representation If such representation forms integral part and other party relies upon it then it’s called – stipulation When it comes to good it was called warranty Conditions 12.2 Breach of stipulation – repudiate the contract

Bowes v Shand – ships rice, on monthly basis, not done on time, buyer reject and breach of condition, repudiate the contract Sundarabayamma v Venkateswara co- time of delivery treated as condtion, not met

Warranty 12.3 buyer cannot reject the goods and treat the contract as repudiated, only claim for damage



Distinction between condition and warranty

SL NO Condition Warranty

1 it is stipulation essential to main purpose it is stipulation collateral to main purpose

2 breach of condition repudiate the contract breach of warranty will not repudiate the contract but gives rise to claim of damage

3 breach of condition may be treated as breach of warranty

breach of warranty cannot be treated as breach of condition

When condition to be treated as warranty

• If buyer waves the condition – voluntary waiver

• If buyer elect to treat breach of condition as breach of warranty – difference to treatment

• When contract is not divisible or severable and the buyer has accepted the goods or part thereof breach of condition should be fulfilled by seller can be treated as breach of warranty

Implied conditions and warranty sec 14 – 17 Implied Conditions

1. Condition as to Title – Implied undertaking 14.a Rawland v Divall – purchase car, no title , return car and money

2. Goods must correspond to Description 15 Varley v whipp - reaping machine, not working , had reject machine Mooree & Co v Landaur & Co – 3000 tin canned food, case 30 each but only 24, reject

3. Condition Merchantability 16.2 Jakson v Rolex Motor and Cycle com ltd - 600 horns and its defective Grant v AK Mills Ltd- underwear, skin disease

4. Condition to wholesomeness Frost v Aylesbury Dairy Co Ltd – Purchase milk, contains typhoid germs, wife died recover damage

5. Condition as to fitness for a particular purpose sec 16 Priest v Last – hot bottle, stand boiling point, broken, pay for damage

6. Sale by Sample sec 17 a. Bulk of goods should be corresponded to sample b. Buyer have given reasonable opportunity permission to check al with the sample c. Free from any defect and latent defect unmarketable

7. Sale by Sample as well as description sec 15 Nichoi v Goths – Foreign refined olive Oil, but contains hemp oil

Implied Warranties 1. Quite Possession sec 14.b

Niblett v Confectioners Materials Co – nestle brand, not printed , buyers loss Mason v Burningham – type writer purchase second 20, repair 11 pound 10 shilling, stolen,unknown plaintiff to return and claim

2. Free from encumbrance 14.c 3. Quality or Fitness by usage of trade sec 16.4

Caveat Emptor- let the buyer beware sec -16 Exception in this act Implied conditions as to quality Priest v last -hot bottle Implied conditions as to merchantable quality Jackson v Rolex Motor- horn Conditions as wholesomeness Frost v Aylesbury Diary- purchase of Milk Passing of Property in the Goods or Transfer of Ownership

1. Specific ascertain goods a. Deliverable state b. Non deliverable state

2. Generic or unascertained goods Passing of Risk in goods- risk prima facie passes with the property Sale or Transfer of title by Non- Owners- Nemo dat quod non habet -“No one can pass a better title that what he himself has” Exception to this rule

1. Sale by Mercantile Agent -27 2. Sale under estopel-27- real owner is prevented by the conduct to deny the seller authority to sell the goods 3. Sale by co-owner-28 4. Sale by person with voidable title-29 5. Sale by seller in possession of goods after sale- 30.1 6. Sale by buyer in possession before sale 30.2 7. Sale by unpaid seller - 54



Exception to this 1. Sale by finder of lost goods 2. Sale by pawnee or pledgee 3. Sale by Official Receiver or Official Assignee

Rights of Unpaid seller or Vendor -45- 61 1. Right of unpaid seller against goods

a. Right of Lien 47-49 i. If goods are not sold on credit

ii. If the goods have been sold on credit, and period expired iii. Buyer become insolvent

b. Right of Stoppage in Transit -50-52

SL NO Lien Stoppage

1 only when goods are in possession if gives to middle man for transfer

2 buyer not insolvent, credit has expired buyer insolvent

3 retain possession regain possession

c. Right to resale 54

i. Goods are perishable ii. Buyer didn’t pay with reasonable time

d. Right to withhold delivery 46.2

2. Right of unpaid seller against the buyer personally a. Suit for price – buyer refuse to pray price 55 b. Suit for damage for nonacceptance 56 c. Suit for damage for breach of contract 60 d. Suit for interest 61

CIF contract – cost insurance and freight Duties of Seller

1. Ship the goods to port 2. Procure contract for shipment and delivery 3. Insurance 4. Prepare invoice 5. Shipping after bill of lading

Duties of Buyer 1. Pay price on delivery of the document 2. Cost unloading at destination

FOB – free on board FOR- Free on Rail Ex-Ship Contract- sellers risk during voyage

Partnership Act 1932 Essentials of Partnership

1. Partnership with two or more persons 2. Agreement 3. Business 4. Sharing profit 5. Mutual agency

Law of partnership is an extension of law agency Cox v Hickman- liability for all partner

• He is an agent

• He is a principal Test applied for existence partnership

1. Sharing of profit – prima facie No partnership if

1. Person lend money Mullow March v The court wards- lend money, 20% profit, not a partnership

2. Servant or agent engaged in business and earned profit Munshi latif v Gopeshwar – servant assigned ,loading unloading in railway, 75% profit

3. Widow of deceased partner receive profit 4. Sold business along his goodwill , receives profit



Partner – Implied authority Implied authority does not empower

1. Dispute relating to firm to arbitration 2. Open bank account of firm in his own name 3. Compromise or relinquish any claim of firm 4. Withdraw suit filed by firm 5. Admit any liability in a suit 6. Acquire immovable property on behalf 7. Transfer immovable property belong to firm 8. Enter into partnership of firm Liability of partner for act of the firm sec 25 Liability of the firm for wrongful act of partner sec 26

Partnership of Joint Hindu Family- joint family business Not partners in those business- se 5

1. Mode of creation – not by agreement, by operation of law 2. Interest in business -birth 3. Admission of new member – birth 4. Minor member – male minor 5. Membership fluctuation – birth and death 6. Number of members-no limit 7. Authority of member- karta 8. Liability – karta- others only to extend of their interest 9. Right to demand account-not right to ask karta

Duration of partnership 1. Partnership fixed term 2. Partnership at will

Jones v loyed Types of Partners

1. Actual -ostensible partner 2. Sleeping partner- dormant 3. Nominal partner 4. Minor partner 5. Partner by estopel or holding out – business use his name, or fame

Like v Duke of Argyll Position of Minor – partnership – 11 of contract its void, sec 30 partnership act its valid

1. Before attaining majority 2. On attaining majority

a. Public notice- six months Registration of Firm

1. Suit between partners and firm- not valid if not registered 2. Suit between third party-not valid

Ramkumar v Dominion of India 3. Claim of set off- cannot if not registered Procedure of Registration sec 58

Right of Duties of Partner Rights of partner

1. Right to take part in business 2. Right to be consulted 3. Access of accounts 4. Share profit 5. Interest on capital 6. Interest on advance 7. Right to be indemnified 8. Right to use the partnership property 9. New partner to be introduced 10. No liability before joining 11. Right to retire 12. Right to expelled 13. Right to carry on competing business 14. Right of outgoing partner to share in the profit

Duties of partner 1. To observe good faith 2. To indemnify of fraud 3. To attend diligently 4. Not to claim remuneration 5. To share losses



6. To indemnify for wilful neglect 7. To use property exclusively for the firm 8. To account the personal profit 9. To account profit in competing business 10. To act with authority 11. To be liable jointly and severally 12. Not to assign his rights

Partner restrain doing same business 11.2 Reconstitution of a Firm

1. Introducing new partner 31 2. Retirement of partner 32 3. Expulsion of partner 33 4. Insolvency of partner 34 5. Death of partner 35

Dissolution of a firm Without the order of court

1. Dissolution by agreement – sec 40 2. Compulsory dissolution 41 – insolvency 3. Dissolution by happening of contingencies sec 44 – death, expiry, completion of object 4. Dissolution by notice of partner 43

With court order 1. Insanity 2. Incapacity 3. Misconduct 4. Breach of agreement 5. Transfer of interest 6. To save business from losses 7. Any other ground – public interest

Settlement of accounts after dissolution sec 48 1. Losses 2. Asset 3. Sale of goodwill 4. Public notice



Page 1 of 11 Contract Act - Semester 2 Kerala University ...

Documents

Transcript of Page 1 of 11 Contract Act - Semester 2 Kerala University ...