logistics law and contract administration

8/13/2019 Logistics Law and Contract Administration

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Introduction and General Principles

of Contract

1


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Explanation of Contract According to

Contract Act, 1872

2

According to the Indian Contract Act, 1872 Section 2(h) defines a contract as agreement enforceable by

law.

Thus to make a contract there must be

a) An agreement shall be enforceable by lawb) All agreements are not enforceable by law and

therefore, all agreements are not contracts.


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Interpretation Clause

3

In this Act the following words andexpressions are used in the followingsenses, unless contrary intention appearsfrom the context: When one person signifies to another his

willingness to do or to abstain from doinganything, with a view to obtaining the assent ofthat other to such act or abstinence, he is said to

make a proposal; When a person to whom the proposal is made,

signifies his assent thereto, the proposal is saidto be accepted. A proposal, when a accepted,

becomes a promise;


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Contd.

4

The person making the proposal is called the"promisor", and the person accepting the proposal is

called "promisee",

When, at the desire of the promisor, the promisee or

any other person has done or abstained from doing,or does or abstains from doing, or promises to do or

to abstain from doing, something, such act or

abstinence or promise is called a consideration for

the promise; Every promise and every set of promises, forming

the consideration for each other, is an agreement;


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Contd.

5

Promises which form the consideration or part of the

consideration for each other, are called reciprocal

promises;

An agreement not enforceable by law is said to be void; An agreement enforceable by law is a contract;

An agreement which is enforceable by law at the option

of one or more of the parties thereto, but not at the

option of the other or others, is a voidable contract; A contract which ceases to be enforceable by law

becomes void when it ceases to be enforceable.


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Example

6

In an agreement there is a promisefrom both the sides. For example,A promises to deliver his radio toB and in return B promises topay a sum of Rs. 500 to A , thereis said to be an agreementbetween A and B


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Types of Contract

7

Types ofContract on

the basis of

Validity

PerformanceFormation


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Subtypes of Contract

8

Validity

Valid

Void

Voidable

Illegal

Unenforceable

Performance

Executed

Executory

Unilateral

Bilateral

Formation

Express

Implied

Quasi


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Contracts Based on Validity

9

Valid Contract :-A valid contract is an agreementenforceable by law. An agreement becomes

enforceable by law when all the essential elements

of a valid contract as enumerated above are present.

Voidable Contract :-According to section 2(i), anagreement which is enforceable by law at the option

of one or more of the parties thereto, but not at the

option of the order or others, is a voidable contract .

Thus, a voidable contract is one which is enforceableby law at the option of one of the parties.


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Contd.

10

Void Contract :- Section 2(j) defines: A contractwhich ceases to be enforceable by law becomesvoid, when it ceases to be enforceable.

Example :- Mr. X agrees to write a book with apublisher. After few days, X dies in an accident. Here

the contract becomes void due to the impossibility ofperformance of the contract.

Unenforceable contract :-An unenforceablecontract is one which is valid in itself, but is not

capable of being enforced in a court of law becauseof some technical defect such as absence of writing,registration, requisite stamp, etc.


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Contd..

11

Example :-An oral arbitration agreement is unenforceablebecause the law requires an arbitration agreement to be inwriting. Similarly, a bill of exchange or promissory note,though valid in itself, becomes unenforceable after threeyears from the date the bill or note falls due, being time

barred under the Limitation Act. Illegal or unlawful contract :- The word illegal means

contrary to law and the term contract means anagreement enforceable by law.

An agreement is illegal andvoid if its object or consideration: (a) is forbidden by law; or(b) is of such a nature that, if permitted, it would defeat theprovision of any law ; or (c) is fraudulent ; or (d) the courtregards it as immoral, or opposed to public policy (Sec.23).


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Contract Based on Formation

12

Express Contract :- Where both the offer andacceptance constituting an agreement enforceable at laware made in words spoken or written, it is an expresscontract. For example, A tells B on telephone that heoffers to sell his car for Rs. 20,000 and B in reply informs

A that he accepts the offer, there is an express contract. Implied Contract :- Where both the offers and

acceptance constituting an agreement enforceable at laware made otherwise than in words i.e. , by and conduct

of the parties. It is an implied contract . Thus , where A, acoolie in uniform takes up the luggage of B to carried outof the Railway station without being asked by B, and Ballows him to do so, then the law implies that B agrees topay for the services of A, and there is an implied

contract.


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Contd.

13

Constructive or Quasi Contract :- The termconstructive or Quasi contract is a misnomer. The

cases grouped under this type of contracts have little

or no affinity with contract.

A quasi contract is based upon the equitableprinciple that a person shall not be allowed to retain

unjust benefit at the expense of another. Sections 68-

72 of the Contract Act describe the cases which are to

be deemed quasi contracts.


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Contracts Based on Performance

14

Executed Contract :-A contract is said to be executedwhen both the parties to a contract have completelyperformed their share of obligation and nothing remainsto be done by either party under the contract. Forexample, when a bookseller sells a book on cash

payment it is an executed contract because both theparties have done what they were to do under thecontract.

Executory Contract :- It is one in which both theobligations are outstanding, one on either party to the

contract, either wholly or in part, at the time of theformation of the contract. For example, T agrees to coachR, a pre-medical student, from first day of the next monthand R in consideration promises to pay T Rs. 500 permonth, the contract is executory because it is yet to be

carried out.


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Contd..

15

Unilateral Contract :- This is a one sided contract inwhich only one party has to perform his duty or

obligation.

Bilateral Contract :-A bilateral contract is one

where the obligation or promise is outstanding onpart of both the parties.


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Contracts Classification as per English Law

16

Contract of Record :-A contract of record derivesits binding force from the authority of court. The

authority of court is invariably through judgment of a

or by way of recognizance.

Contract under Seal :-A under seal is one whichderives its binding force from its form alone. It is in

writing, duly signed and sealed and delivered to

parties. It is also referred to as a deed or a specialty

contract.


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Different Names of Contract

17

Contract of Indemnity Guarantee

Bailment

Pledge

Agency


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Contract of Indemnity

18

According to section 124 of the Indian Contract Act,a contract by which one party promises to save the

other from loss caused to him by the conduct of any

other person, is called a contract of Indemnity.

Example:-A contracts to indemnify B against the consequences

of any proceedings which C may take against B in

respect of a certain sum of 200 rupees. This is a

contract of Indemnity.


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Guarantee

19

According to section 126 of the Indian Contract Act,a contract of guarantee is a contract to perform the

promise, or discharge the liability, of a third person in

case of his default. The person who gives the

guarantee is called the surety; the person in

respect of whose default the guarantee is given is

called the principal debtor , and the person to

whom the guarantee is given is called the creditor.

A guarantee may be either oral or written.


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Bailment

20

According to section 148 of the Indian Contract Act,a bailment is 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. The person

delivering the goods is called the bailor. The person

to whom they are delivered is called the bailee.


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Pledge

21

Section 172 defines pledge: The bailment of goods as security for payment of a

debt or performance of a promise is called pledge.

The bailor is in this case called the pawnor. The

bailee is called the pawnee.


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Agency

22

According to section 182 An agent is a person employed to do any act for

another, or to represent another in dealings with third

persons. The person for whom such act is done,, or

who is so represented, is called the principal.


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Essentials of a valid contract

23

1. The agreement should be between two parties. An

agreement is the result of a proposalor offer by one

party followed by its acceptanceby the other.

2. The agreement should be between the parties whoare competent to contract.

3. There should be a lawful consideration and lawful

objectin respect of that agreement.

4. There should be free consent of the parties, whenthey enter into the agreement.

5. The agreement must not be one, which has been

declared to be void.


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Thank You

24


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General Principles of Contract

25


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DEVELOPMENT OF CONTRACT LAW

PRINCIPLES

26

Law of Obligation

Law ofobligations

Moralobligations contractualobligations


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Contd.

27

Law of unjust enrichment Law of restitution [Injurious reliance]

CONTRACT IS IN EFFECT THE INSTRUMENT BY

WHICH THE SEPARATE AND CONFLICTING INTERESTS

OF THE PARTICIPANTS CAN BE RECONCILED AND

BROUGHT TO A COMMON GOAL .


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OBJECT OF CONTRACT LAW

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To define contractual relationships

Facilitate forward planning

To determine respective responsibilities of parties

To allocate the economic risk involved in a

transaction To avoid litigation

To establish set of rules for compliance

To penalize defaulters


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Proposal or offer

29

The term proposal has been defined in section 2(a) as

follows:

When one person signifies to another his

willingness to do or abstain from doing anything

with a view to obtaining the assent of that otherto such act or abstinence, he is said to make a

proposal.

Example :- When A tells B that he desires to

marry B by the end of 2012, there is no offer madeunless, he also asks, will you marry me?, conveying

his willingness and tries to obtain the assent of B in

the same breadth.


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30

The willingness to do or abstain from doing

something, i.e. the proposal or offer must be made

with a view to obtain the assent of the other party

thereto. For example, As willingness to sell his

radio set to B for Rs. 500 if B accepts to purchase

the same, amounts to proposal by A for the sale of

the radio set. But if a statement is made without any

intention to obtain the assent of the other party

thereto that cannot be termed as proposal.


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Classification Of Offer

31

General Offer :- It is an offer made to public at large

with or without any time limit. In terms of Sec. 8 of

the Act, anyone performing the conditions of the offer

can be considered to have accepted the offer. Until

the general offer is retracted or withdrawn, it can be

accepted by anyone at any time as it is a continuing

offer.

Specific Offer :- Where are offer is made to a

particular and specified person, it is a specific offer.Only that person can accept such specific offer, as it

special and exclusive to him.


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Contd

32

Cross Offer :- As per section 2(b), when a person towhom proposal is made signifies his assent, theproposal is said to be accepted. Thus assent can beonly to o Proposal. If there was no proposal ,question of its acceptance cannot arise.

Counter Offer :- Upon receipt of an offer from anofferer, if the offeree instead of accepting itstraightway, imposes conditions which have theeffect of modifying or varying the offer, he is said to

have made a counter offer. Open Offer :- An offer which is made to public at

large and if it is kept open for public acceptance for acertain period of time, it is known as standing orcontinuing or open offer.


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Offer and invitation to treat distinguished

33

A proposal or an offer has to be distinguished from an

invitation to treat. Sometimes a person may not offer to sellhis goods, but may make some statements or give someinformation with a view to invite others to make offers onthat basis.

For example, a bookseller sends a catalogue of books

indicating prices of various books to many persons. Thiscatalogue is not an offer to sell those books at pricesindicated against those books. This is an Invitation to treat.If any person is interested in purchasing those booksmentioned in the catalogue he may make an offer.

Similarly, inviting persons to an auction where goods, whichare to be auctioned, are displayed is not an offer for the saleof goods. The intending buyers, who make the bid make anoffer. Such an offer, when accepted, by the fall of hammer orin some other customary way, will result in a contract.


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Intention to create legal relationship

34

In order that an offer, after acceptance, can result in a valid

contract it is necessary that the offer should be made with an

intention to create legal relationship. Promise in the case of a

social engagements is generally without an intention to create

legal relationship, such an agreement cannot be considered

to be a contract. Thus an agreement to go for a walk, to go tomovie, to play some game, or entertain another person with a

dinner, cannot be enforced in a court of law. Sometimes the

party may expressly mention that it is not a formal or legal

agreement, whereas in some other cases such an intentioncould be presumed from their agreement.


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Contd..

35

The test to know the intention of the parties isobjective and not subjective. Merely because

the promisor contends that there was no

intention to create obligation would not exempt

him from liability


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Acceptance

36

In terms of 2(b) of the Act, A proposal or offer issaid to have been accepted when the person towhom the proposal is made signifies his assent tothe proposal to do or not to do something. In short,act of acceptance lies in signifying ones assent to

the proposal. Relationship between offer and acceptance : It in

effect means that the offer can be withdrawn justbefore it is accepted. Acceptance converts the offer

into a promise and then it is too late to revoke it.An offer remains an offer so long as it is notaccepted, but becomes a contract as soon as it isaccepted.


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Effect of Acceptance

37

A contract is created only after an offer isaccepted. Before the acceptance is made

neither party is bound thereby. At that stage the

offeror is free to revoke or withdraw his offer, and

the offeree is free not to accept the offer or rejectthe same. After the offer has been accepted it

becomes a promise which, if other conditions of

a valid contract is satisfied, binds both the parties

to the promise. After acceptance each partybecomes legally bound by the promise made by

him through the medium of offer or acceptance

of it.


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Rule Governing Acceptance

38

Acceptance must be absolute and unqualified

The acceptance must be communicated

Acceptance must be in the prescribed mode

The acceptance must be given within a reasonable

time and before the offer lapses. Mere silence is not acceptance

Acceptance by conduct


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Communication of offer and Acceptance

39

One important common requirement for both offer

and acceptance is their effective communication.

Communication of offer:- In terms of Section 4 of the

Act, the communication of offer is complete when it

comes to the knowledge of the person to whom it ismade.

Communication of Acceptance :- Section 3 of the

Act prescribes in general terms two modes of

communication namely, (a) by any act and (b) byomission, intending thereby to, to communicate to

the other or which has the effect of communicating it

to the other.


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Acceptance should be communicated

40

We have seen above that when the person towhom the proposal is made signifies his assentthereto, the proposal is said to be accepted. Itmeans that the offeree must signify his assent, orcommunicate the acceptance.

When the parties are face to face,communication could be oral. When they are ata distant place communication could be made bypost, by telegram, by a message on phone,

through a messenger, or in any other reasonablemanner. Sometimes the conduct of a personmight indicate his assent. For example, when apassenger boards a bus and travels thereby, heimpliedly assents to pay the necessary fare.

Wh i i ti f t


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When is communication of acceptance

complete ?

41

As soon as the communication of acceptance iscomplete that results in a contract whereby both

the parties become bound. In case the parties to

the contract are present at the same place, one

making the offer and the other communicatingthe acceptance, both parties become bound

immediately. The problem arises when the

parties are at a distant place and the contract is

concluded through post


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Acceptance by post

42

Section 4 of the Act mentions the following rules when

the communication of acceptance is made by post :1. The communication of acceptance is complete as

against the proposer, when it is put in the course oftransmission to him, so as to be out of the power ofthe acceptor.

2. The communication of acceptance is complete asagainst the acceptor, when it comes to theknowledge of the proposer.

Illustration

B accepts As proposal by a letter sent by post. Thecommunication of the acceptance is complete, --As against A , when the letter is posted ;As against B, when the letter is received by A.

Off B d Wh L tt f A t


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Offeror Bound When Letter of Acceptance

Posted to Him

43

It has been noted that the communication of

acceptance is complete as against the proposer

when the letter of acceptance is posted to him.

Once the letter of acceptance is posted the

offeror becomes bound. He becomes boundimmediately on the posting of the letter to him

and it makes no difference that the receipt of the

letter is delayed in transit, or even if the letter is

lost in the post and the offeror never receives it.

A t B d h hi l tt h


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Acceptor Bound when his letter reaches

the offeror

44

It has been noted above that though the offeror

becomes bound when the letter of acceptance is

posted to him, the acceptor himself does not

become bound thereby. Acceptor becomes

bound by his acceptance when his letter ofacceptance comes to the knowledge of the

offeror.


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Revocation of Acceptance (India)

45

In India, since the acceptor does not become bound

immediately on posting his letter of acceptance, he isfree to revoke the acceptance by adopting speediermode of communication, whereby his communication ofrevocation of acceptance may reach earlier than hisletter of acceptance. Section 5 expressly permits therevocation of acceptance through the following provision

:Anacceptance may be revoked at any time before thecommunication of the acceptance is complete as againstthe acceptor, but not afterwards.

IllustrationA proposes, by a letter sent by post, to sell his house toB. B accepts the proposal by a letter sent by post. Bmay revoke his acceptance at any time before or at themoment when the letter communicating it reaches A,

but not afterwards.


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Revocation of Acceptance (England)

46

Under the English law, once the letter of

acceptance is posted it binds both the parties

and there appears to be no scope of revocation

of acceptance by sending a telegram or through

a phone call. Although there are no Englishcases on the subject are of the view that the

posting of the letter of acceptance once posted

cannot be revoked.


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What is Consideration?

47

The expression Consideration has to be understood

as a price paid for an obligation.

Section 2(d) of the Act defines consideration as

when at the desire of the promiser , the promisee or

any other person has done or abstained from doing,or does or abstains from doing or promises to do

abstain from doing something, such an act or

abstinence or promise is called consideration for the

promise.


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Legal Requirement Regarding Consideration

48

Consideration must move at the desire of the

promiser

Consideration can flow either from the promisee or

any other person

Executed and Executory consideration Past consideration

Adequacy of consideration

Performance of what one is legally bound to perform

Consideration must not be unlawful, immoral, or

opposed to public policy


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Free Consent

49

In terms of section 13 of the Act, two or more

persons are said to have consented when they

agree upon the same thing in the same manner.

Absence of identity of minds would arise when there

is an error on the part of parties regarding (a) nature

of transaction or (b) person dealt with or (b) subject

matter of agreement.

In such cases there would be no consent. However

cases of fundamental errors have to be distinguished

from cases of mutual mistakes.


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Capacity to Contract

50

Age of majority

1 An agreement entered into by a minor is altogether

void

2 Minor can be a beneficiary

3 Minor can always plead minority4 Ratification of agreement not permitted

5 Liability for necessaries

6 Contract by guardian are valid

Sound mind

Contract by disqualified persons


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Thank You

51


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Special Contracts

52


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Contract Of Indemnity

53

In this contract the person who gives the indemnity is

called the indemnifier and the person for whose

protection it is given is called the indemnity holder

or indemnified.

Insure Indemnity:- Almost all insurance other thanlife and personal accident insurance are contracts of

indemnity. The insurers promise to indemnify is an

absolute one . A suite can be filed immediately upon

failure of performance, irrespective of actual loss. If

the indemnity holder incurred liability and that liability

was absolute, he would be entitled call upon the

indemnifier to save him from that liability by paying it

off.


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Extent of Liability

54

Section 125 lays down the extent of liability.

Rights of indemnity-holder when sued

All damages which he may be compelled to pay in

any suit in respect of any matter to which the

promise to indemnify applies. All cost which he may be compelled to pay in any

such suit if, in bringing or defending it, he didnt

contravene the orders of the promisor, and acted as

it would have been prudent for him to act in thepromisor authorized him to bring or defend the suit.


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Contd.

55

All sums which he may have paid under the terms of

any compromise of any such suit, if the compromise

was not contrary to the orders of the promisor; and

was one which it would have been prudent for the

promisee to make in the absence of any contract of

indemnity, or if the promisor authorized him to

compromise the suit.


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Commencement of Liability

56

An important question in this connection is when

does the indemnifier become liable to pay or when is

the indemnity-holder entitled to recover his

indemnity? The original English rule was that

indemnity was payable only after the indemnity-

holder had suffered actual loss by paying off the

claim. The maxim of law was: you must be

damnified before you can claim to be indemnified.

But the law is now different .the process of

transformation is well-explained by CHAGLA J ofthe Bombay High Court in Gajanan Moreshwar vs.

Moreshwar Madan.


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Guarantee

57

Economic Functions of guarantee

The function of a contract of guarantee is to enable a

person to get a loan, or goods on credit, or the supplier or

the employer that he may be trusted and in case of any

default . For example:- In the old case of Birkmyr vs.

Darnell the court said,

If two come to a shop and one buys, and the other

to give him credit, promises the seller, If he does not pay

you, I will. Parties:- The person who gives the guarantee is called

the surety, the person in respect of whose default the

guarantee is given is called the principal debtor and

the person to whom the guarantee is given is called the


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Essential Features of Guarantee

58

Principal Debt:- The purpose of a guarantee being

to secure the payment of a debt, the existence of a

recoverable debt is necessary. It is of the essence of

a guarantee that there should be someone liable as

a principal debtor and the surety undertakes to be

liable on his default. A contract of guarantee is a

tripartite agreement which contemplates the principal

debtor, the creditor and the surety.

Consideration:-Anything done, or any promise

made, for the benefit of the principle debtor, may be

a sufficient consideration to the surety for giving the

guarantee.


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Contd

59

Misrepresentation and Concealment :-

Guarantee obtained by misrepresentation, invalid

Any guarantee obtained by means of

misrepresentation made by the creditor or with his

knowledge and assent, concerning a material part of

the transaction, is invalid.

Guarantee obtained by concealment, invalid Any

guarantee which the creditor has obtained by means

of keeping silence as to material circumstances isinvalid.

Writing not necessary:-Section 126 expressly

declares that a guarantee may be either oral or

written.


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Extent of Suretys Liability

60

Section 128. Suretys liability:- The liability of the

surety is co-extensive with that of the principal debtor,

unless it is otherwise provided by the contract.

Co-extensive

Section 144. Guarantee on contract that creditor shallnot act on it until co-surety joins.

Suretys right to limit his liability or make it

conditional

Joint-debtors and suretyship


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Discharge of surety From Liability

61

By Revocation (S. 130)

By Death of Surety (S. 131)

By Variance (S. 133)

Release or Discharge of Principal Debtor (S.134)

Composition, Extension of Time and Promise not toSue (S.135)

By Impairing Suretys Remedy (S.139)


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Rights Of Surety

62

Rights against Principal Debtor

1 Right of Subrogation (S.140)

2Right to Indemnity (S.145)

Rights against Creditor

1 Right to Securities (S.141)2Right to Share Reduction

3Right of set off

Rights against Co-sureties1 Effect of Releasing a Surety (S.138)

2Right to Contribution(S. 146-147)


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Bailment

63

Bailment etymologically means handing over or

change of possession. As per Section 148 of the

Act, bailment is an act whereby goods are delivered

by one person to another for some purpose, on a

contract, that the goods shall, when the purpose is

accomplished, be returned or otherwise disposed ofaccording to the directions of the person delivering

them. The person who delivers the goods is the

bailor and the person whom the goods are delivered

is the bailee.

For example :- Where X delivers his car for repair to

Y , X is the bailor and Y is the bailee.


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General Issues

64

In bailment both custody and possession must

change but not the ownership

Example :- Servants of a master who are in custody of

goods of the master do not become bailees.

Possession and custody do not however meanphysical delivery of goods.

Deposit of money in a bank is not bailment since the

money returned by the bank would not be identical

currency notes.


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Bailors Duties

65

The bailor must disclose all defects/faults in the

goods bailed.

Where the bailment is gratuitous, the bailor must

reimburse the bailee for any expenditure incurred in

keeping the goods.

The bailor should reimburse any expense which the

bailee may incur by way of loss in the process of

returning the goods or complying with other

directions for returning the goods. The bailor is bound to accept the goods after the

purpose is accomplished.


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Rights of bailor

66

Bailor has a right to enforce the duties of the bailee

such as

1 Right to claim damages for loss caused to the

goods by the negligence of bailee

2 Right to claim compensation for loss caused byan unauthorized use of the goods bailed

3 Right to claim damages arising out of mixing the

goods of the bailor with his own goods.

Bailor has a right to terminate the contract if thebailee does anything which is inconsistent with the

conditions of bailment.


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Duties of a Bailee

67

Bailee has no right to make unauthorized use of

goods bailed

Bailee has no right to mix the goods bailed with his

own goods without the consent of the bailor.

Bailee has to return the goods on expiration ofperiod of bailment.

Bailee has duty not to do anything inconsistent with

the condition of bailment.

Bailee has a duly to return any extra profit accuringfrom goods bailed.


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Rights of Bailee

68

To claim compensation for any loss arising from non-

disclosure of known defects in the goods.

To claim indemnification for any loss or damage as a

result of defective title.

To deliver back the goods to joint bailors accordingto the agreement or directions.

To deliver the goods back to the bailor whether or

not the bailor has the bailor has the right to the

goods. To take action against third parties if that party

wrongfuly denies the bailee of his right to use the

goods.


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Pledge

69

Section 172 defines pledge

Pledge is a variety or specie of bailment. It is bailment

of goods as security for payments of debt or

performance of a promise. The person who pledges is

known as pledger or also as pawnor, the bailee is

known as pledgee or also as pawnee. In pledge , there

is no change in ownership of the property. Under

exeptional circumstances, the pledgee has a right to

sell the property pledged.


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Pawnees Rights

70

Right of Retainer

Right to retention to subsequent debts

Right to seek reimbursement of extraordinary

expenses

Right to sue


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Rights of a Pawnor

71

Right to reedem

Right to sue

Suit against wrong doers


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Distinction between Bailment and Pledge

72

As to purpose : Pledge is a variety of bailment.

As to right of sale : The pledge enjoys the right to

sell only on default by the pledger to repay the debt

or perform his promise, that too only after giving due

notice.

As to right of using goods : Pledgee has a right to

use goods.


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Agency

73

The Indian Contract Act, 1872 does not define the

word Agency. However the word Agent is defined as a person employed to do any thing for another or

to represent is called principal.

Features of Agency :-

1 The basic essence of agency is that the principal is

bound by the acts of the agent and is answerable to

third party.

2 Consideration not necessary3 Capacity to employ an agent

4 Capacity to be an agent


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Modes of Creation of Agency

74

There are five general methods of creating agency

Agency by actual authority

Agency by ratification

Agency by ostensible authority

Agency by necessity Actual authority and apparent authority


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Extent of Agents Authority

75

Agents authority in normal circumstances : An agent

has the power and authority to do all acts lawful andnecessary in the normal circumstances in discharge

of his functions.

Agents authority in emergency : An agent has the

authority in an emergency to do all such acts as a

man of ordinary prudence would, for protecting his

principal from losses under similar circumstances.


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Duties and Obligations of an Agent

76

The agent should conduct the business of the

principal as per directions of the principal or in theabsence of any directions as per the custom prevent

in the business.

The agent is liable to the principal for any loss if he

deviates from the above duty/obligation where he

didnt act according to instruction of the principal.

Agents Duty to maintain and render proper accounts

to principal whenever demanded. Duty to communicate and contact the principal as a

man of ordinary diligence.


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Right of an Agent

77

Right of lien on principals property

Right of indemnification for lawful acts

Right of indemnification against acts done in good

faith

Right of retention Right of remuneration


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Thank You

78


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Words & Phrases occurring in

Contracts

79


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Words Occurring in Contract

80

Acceptance- the unconditional agreement to an

offer. This creates the contract. Before acceptance,any offer can be withdrawn, but once accepted the

contract is binding on both sides. Any conditions

have the effect of a counter offer that must be

accepted by the other party.

Agent- somebody appointed to act on behalf of

another person (known as the principal). The amount

of authority to deal that the agent has is subject to

agreement between the principal and the agent.

However, unless told otherwise, third parties can

assume the agent has full powers to deal.


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Contd.

81

Arbitration- using an independent third party to

settle disputes without going to court. The third partyacting as arbitrator must be agreed by both sides.

Contracts often include arbitration clauses

nominating an arbitrator in advance.

Breach of contract- failure by one party to a

contract to uphold their part of the deal. A breach of

contract will make the whole contract void and can

lead to damages being awarded against the party

which is in breach.


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Contd.

82

Collective agreement- term used for agreements

made between employees and employers, usuallyinvolving trade unions. They often cover more than

one organization. Although these can be seen as

contracts, they are governed by employment law, not

contract law.

Comfort letters- documents issued to back up an

agreement but which do not have any contractual

standing. They are often issued by a parent or

associate company stating that the group will back

up the position of a small company to improve its

trading position. They always state that they are not

intended to be legally binding. Also known as letters

of comfort.


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Contd.

83

Company seal- an embossing press used to

indicate the official signature of a company whenaccompanied by the signatures of two officers of the

company. Since 1989 it has been possible for a

company to indicate its agreement without use of the

seal, by two signatures (directors or companysecretary) plus a formal declaration. However, some

companies still prefer to use a seal and the articles

of a company can override the law and require a

seal to be used.


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Contd.

84

Conditions- major terms in a contract. Conditions

are the basis of any contract and if one of them failsor is broken, the contract is breached. These are in

contrast to warranties, the other type of contract

term, which are less important and will not usually

lead to the breach of the contract - but rather anadjustment in price or a payment of damages.

Consumer- a person who buys goods or services

but not as part of their business. A company can be

a consumer for contracts not related to its business -

especially for goods or services it buys for its

employees. Charities are also treated as consumers.

d


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Contd.

85

Consideration- in a contract each side must give

some consideration to the other. Often referred to asthe quid pro quo - see the Latin terms below. Usually

this is the price paid by one side and the goods

supplied by the other. But it can be anything of value

to the other party, and can be negative - eg someonepromising not to exercise a right of access over

somebody else's land in return for a payment would

be a valid contract, even if there was no intention of

ever using the right anyway.

C fid i li A


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Confidentiality Agreement

86

An agreement made to protect confidential

information if it has to be disclosed to another party.This often happens during negotiations for a larger

contract, when the parties may need to divulge

information about their operations to each other. In

this situation, the confidentiality agreement forms abinding contract not to pass on that information

whether or not the actual contract is ever signed.

Also known as a non-disclosure agreement.

E l i Cl


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Exclusion Clauses

87

Clauses in a contract that are intended to exclude

one party from liability if a stated circumstancehappens. They are types of exemption clauses.

The courts tend to interpret them strictly and, where

possible, in favor of the party that did not write them.

In customer dealings, exclusion clauses aregoverned by regulations that render most of them

ineffective but note that these regulations do not

cover you in business dealings.

E ti Cl


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Exemption Clauses

88

Clauses in a contract that try to restrict the liability of

the party that writes them. These are split intoexclusion clausesthat try to exclude liability

completely for specified outcomes, and limitation

clauses that try to set a maximum on the amount of

damages the party may have to pay if there is afailure of some part of the contract. Exemption

clauses are regulated very strictly in consumer

dealings but these don't apply for those who deal in

the course of their business.

I li d T


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Implied Terms

89

Are terms and clauses that are implied in a contract

by law or custom and practice without actually beingmentioned by any party. Terms implied by custom

and practice can always be overridden by express

terms, but some terms implied by law cannot be

overridden, particularly those relating to consumers(see exemption clauses).

I j ti


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Injunction

90

A remedy sometimes awarded by the court that

stops some action being taken. It can be used tostop another party doing something against the

terms of the contract. Injunctions are at the court's

discretion and a judge may refuse to give one and

award damagesinstead - see the finance contractterms below.

J i t d S l Li bilit


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Joint and Several Liability

91

Where parties act together in a contract as partners

they have joint and several liability. In addition to allthe partners being responsible together, each

partner is also liable individually for the entire

contract - so a creditor could recover a whole debt

from any one of them individually, leaving thatperson to recover their shares from the rest of the

partners.

J i di ti


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Jurisdiction

92

A jurisdiction clause sets out the country or state

whose laws will govern the contract and where anylegal action must take place. Don't forget that

England and Scotland have different legal codes,

and this may need to be specified.

D


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Damages

93

Money paid as the normal remedyin the law as

compensation for an individual or company's loss. Ifanother type of remedy is wanted (such as an

injunction- see general contract terms below) but

cannot be or is not given by the court, then damages

will be awarded instead.

Fl ti h


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Floating charge

94

A form of security for a debt. Instead of naming a

specific property, which can be taken by the creditorif the debtor defaults (as in a fixed charge like a

mortgage), a class of goods or assets is named,

such as the debtor's stock. This allows the debtor to

trade in the assets freely, but if the debtor fails tomake repayments then the floating charge becomes

a fixed charge (known as crystallization) over all the

stock at that time. The creditor can then take and sell

it to recover the debt.

Phrases in Contract


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Phrases in Contract

95

Ab initio (ab init) from the beginning. Can mean

that breaking some terms in a long-running contractresults in the contract having been broken from the

start.

Caveat emptor -buyer beware. This is a general

rule that it is up to the buyer to find out if what they

are buying is what they want. Consumer regulations

require certain information to be disclosed to

consumers and insurance contracts are covered by

the uberrimae fides- but many types of businesscontracts are covered by the caveat emptor rule.

Contd


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Contd.

96

Consensus ad idem- agreement on an idea. This is

the concept that the parties to the contract must allbe in agreement on the basis of the contract. If it isdiscovered that the parties were thinking differentthings, then there is no consensus and the contractis void.

De facto- in fact. The opposite of de jure(in law).Having a practical effect different from the legallyaccepted or expected situation. For example, aperson who deliberately or negligently gives the

impression to another party of being a companydirector, can be treated as a de facto director. So anyagreement or statements will bind the company theymake as if a properly appointed director made them.

Contd


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Contd.

97

De jure- in law. According to law, the opposite of de

facto.

De minimis- short for de minimis non curat lex: the

law does not concern itself with trifles. It basically

means insignificant or too small to bother with.

De novo- start afresh. Starting a new contract on

the same basis as the old.

Contd


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Contd.

98

Exempli gratia (eg)- for example. One or more

examples from a greater list of possibilities.Compares with id est (ie), that is, which indicates afull, definitive list of all possibilities.

Ex gratia- out of grace. A gift made without any

obligation on the part of the giver or any return fromthe receiver.

Ex parte- on behalf of. An action, usually a legalaction, taken by a party on someone else's behalf.

Ex post facto- because of some later event. Wherea later event or occurrence interferes with an earlieragreement.

Contd


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Contd.

99

Id est (ie)- that is. Is followed by a definition or list of

items or options that relate to a preceding statementor condition. Differs from exempli gratia (eg)- for

example - that gives some, but not all, examples of

the items or options.

Inter alia- among other things. This is often used in

contracts to indicate that what is being specifically

referred to is part of a larger group without having to

name all the elements.

Mala fides- bad faith, opposite of bona fide.

Contd


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Contd.

100

Nemo dat quod non habet- no one can give what

they do not have. The principle that a seller cannotpass on a better right to the property than theyactually have. So, if goods are stolen, the buyerdoes not get ownership even if there was noindication that they were stolen.

Non compos mentis- not of sound mind. A personwho is not of sound mind will not have full capacity toenter into a contract.

Non est factum- not my act. This is a denial by aperson that they were actually involved in someaction or dealings. In a contract, it can occur if aparty denies that they signed the contract - thatsomeone else forged their signature.

Contd


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Contd.

101

Pari passu- equal and even. This relates to shares to

denote that newly issued shares have the same rightsand restrictions as those of the same class alreadyexisting.

Prima facie- at first sight. A prima facie fact is one thatseems to be correct, but may subsequently be proved

wrong by other evidence. Pro rata- for the rate. Divided in proportion to some

existing split. For example, a pro rata share issue isoffered in proportion to the number of shares each

shareholder already has. Pro tanto- for so much. Means to the extent specified,

but not more.

Pro tempore (pro tem)- for the time being.

Contd


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Contd.

102

Quid pro quo- something for something. The usual

definition of consideration(see the generalcontracts terms above) in a contract, on the basis

that each party should offer something to the other.

Uberrima fides- utmost good faith. The concept

that a party to certain types of contract must act ingood faith and declare all relevant facts to the other

side even if they do not ask. This only usually applies

to insurance contracts where the insured person

must declare all known risks. It is an exemption tothe general contract rule of caveat emptor.


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Law of Insurance

103

Marine Insurance


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Marine Insurance

104

Marine insurance was the oldest type of insurance in

England and it was imported from the cities ofNorthern Italy where it probably began at about the

end of the 12thcentury.

On the passing of the bubble Act 1720, two

companies, London Assurance and Royal ExchangeAssurance obtained charters in the same year.

The Act created a monopoly in marine insurance to

these corporations by prohibiting other corporations,

partnerships and societies from engaging in marine

insurance as a business.

Nature of the Contract


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Nature of the Contract

105

A contract of marine insurance is a contract whereby

the insurer undertakes to indemnify the assured inthe manner and the extent thereby agreed, againstmarine losses.

A contract of marine insurance may, by its express

terms, or by usage of trade, be extended so as toprotect the assured against losses on inland watersor on any land risk which may be incidental to anysea voyage.

In modern times , the normal insurance of goodsinclude a transit clause, which covers the goodsfrom the warehouse of the manufacturer orwholesale seller to that of the consignee or thebuyer.

A slip in Marine Insurance


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A slip in Marine Insurance

106

In marine insurance generally the broker contracts

the parties and takes the particulars on a slip ofpaper. He takes that to different insurancecompanies and the insurance company which iswilling to insure makes a mark or initials of the officeron the slip. From that time it is called a slip proper.

In this context it is established that the Lioydsbrokeris the agent of the assured and not the agent of theunderwriter.

Section 21 of the Marine Insurance Act 1906 statesthat a contract of marine insurance is deemed to beconcluded when the proposal of the assured isaccepted by the insurer, whether the policy be thenissued or not.

Slip as Evidence


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Slip as Evidence

107

English Law Under English Law, where there is a

duly stamped policy, reference may be made, to theslip or covering note in any legal proceeding.

As the slip is clearly a contract for marine insurance,and is equally clearly not a policy it is by virtue of

these enactments not valid, that is , not enforceableat law or in equity; but it may be given in evidencewherever it is, though not valid, material.

Indian Law In India the practice is to issue covernotes which are similar to slips. As the practice isnot to stamp a cover note it is admissible only toprove the agreement.

Rules In India Regarding Marine Insurance


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Rules In India Regarding Marine Insurance

108

Before the Passing of the Marine Insurance Act, 1963

No contract of sea insurance shall be valid unless thesame is expressed in a sea policy.

No sea policy shall be valid for any time exceeding

twelve months.

No sea policy shall be valid unless it specifies theparticular risk or adventure or the time for which it is

made.

Where any sea insurance is made on a voyage and also

for time or to extend to or cover any time beyond thirtydays after the ship has arrived at her destination and

been moored at anchor the policy shall be charged with

duty as a policy for or upon a voyage and also with duty

as a policy for time.

Under the Marine Insurance Act 1963


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Under the Marine Insurance Act 1963

109

The Marine Insurance Act in its sec. 24 lays down that

a contract of marine insurance shall be admitted inevidence unless it is embodied in a marine insurance

shall be admitted in evidence unless it is embodied in

a marine policy according to the Act.

Section 25 lays down the contents of the marine policyand states that a marine policy must specify:

The name of the assured or the person who effects

the insurance

The subject matter insured and the risk insured

against

The voyage or the period of time or both

Contd


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Contd.

110

The sum or sums insured

The name of the insurer or insurers

Classification of Marine Policies


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Classification of Marine Policies

111

ValuedPolicy

UnvaluedPolicy

FloatingPolicy

Time

Policy

Voyage

Policy

Valued Policy


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Valued Policy

112

A valued policy is a policy specifies the agreed

value of the subject matter insured. In a valued policy; the value mentioned is conclusive

between the parties, unless there is a fraud whether

the loss be total or partial.

The value fixed by the policy is not conclusive for

the purpose of determining whether there has been

a constructive total loss.

A valued policy, resembles a wagering contract andon that ground its validity has been challenged for

some time.

Unvalued Policy


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Unvalued Policy

113

An valued policy is sometimes spoken of as an open

policy. Here there is a sharp difference betweenmercantile usage and law.

In mercantile usage the term open policy is

generally used to describe floating policies but in law

and under the statutes as open policy is denoted todescribe only an unvalued policy.

The Act defines an unvalued policy as a policy which

does not specify the value of the subject-matter

insured but leaves the insurable value to be

subsequently ascertained in the manner specified in

the Act.

Floating Policy


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Floating Policy

114

This type of policies are generally taken by carriers,

factors or warehousemen to cover their limitedinterests in the goods they carry or in their

possession or by the insured when he does not

know by which ship or ships his goods are

dispatched. These policies are taken in general terms and the

particulars as filled by subsequent declarations.

Floating policy is defined as a policy which describes

the insurance in general terms, and leaves the name

of the ship or ships and the other particulars to be

defined by subsequent declarations.

Time Policy


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Time Policy

115

Where a ship is insured for a particular time from a

particular date to a particular date, the policy iscalled a time policy.

The period should not exceed one year though it

may contain one or several voyages. Section 27 (2)

of the Indian Act lays down that a time policy whichis made for any time exceeding 12 months is invalid.

A time policy is defined as a policy in which the

contract is to insure the subjectmatter for a

definite period of time.

Voyage Policy


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Voyage Policy

116

Where the contract is to insure the insure the subject

matter at and from or from one place to another orothers, the policy is called a voyage policy.

A contract for both voyage and time may be included

in the same policy and such policies are in

mercantile usage called mixed policies, e.g., a shipmat be insured under the same policy, from Bombay

to London for six months or from Madras to New

York, and 90 days after arrival.

The voyage is to commence called terminus quo and

the port where the voyage is concluded called

terminus and quem.

Excuse For Deviation or Delay


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Excuse For Deviation or Delay

117

In the following cases the insurer is not discharged

from liability even tough there is deviation or delay:- If authorized by a special term in the policy

If caused by circumstances beyond the control of the

master or his employer

If it is reasonably necessary to comply with an

express or implied warranty

If it is reasonably necessary for the safety of the ship

or subject-matter insured If it is for the purpose of saving human life or aiding a

ship in distress where human life is in danger

Contd.


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Co td.

118

If it reasonably necessary for the purpose of

obtaining medical or surgical aid for person on boardthe ship

If it is due to the barratrous conduct of the master or

crew if barratry be one of the perils insured against

Warranties in Marine Insurance


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119

The term warranty is used in a peculiar sense in

marine insurance and is not used in the same senseas it has been in other areas of law.

For example :- In a contract of sale of goods it is usedin the sense of a stipulation made by the parties to a

contract of sale which is collateral to the contract, thebreach of which does not give rise to the other party aright to avoid the contract altogether but only a remedyto claim damages.

The effect of its breach is stated in 35 (3) of the IndianAct that a warranty is a condition which must beexactly complied with then, subject to any expressprovision in the policy.

Warranties dealt with under the Act


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120

The warranties expressly dealt with under the Act

may be grouped under three heads : warranties implied in every contract

warranties implied only when certain other

warranties are specified

warranties not implied


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Thank You

121


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Sale of Goods

122

Contract of Sale of Goods


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123

The law relating to sale of goods is contained in the

sale of goods Act, 1930. which came into force on 1stJuly, 1930 . The Act contains sixty- six Sections and

extends to the whole of India except the state of

Jammu and Kashmir. A few minor amendments in the

Act were made by sale of Goods(Amendment)Act,1963.

Section 4(1) of the Sale of Goods Act defines a

contract of sale of goods as a contract whereby the

seller transfers or agrees to transfer the property ingoods to the buyer for a price.

Characteristics of a Contract of Sale of

Goods


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124

Two Parties

Transfer of Property

Goods

Price

Includes both a sale and an agreement to sell

Sale and Agreement to Sell Distinguished


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g g

125

Transfer of property (ownership)

Risk of loss

Consequences of breach

Right of resale

Insolvency of buyer before he pays for the goods Insolvency of seller if the buyer has already paid the

price

Kinds of Goods


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126

Existing Goods

Future Goods

Contingent Goods

Existing Goods


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g

127

Goods which are physically in existence and which

are in sellers ownership and/or possession , at thetime of entering the contract of sale are called

existing goods.

Existing goods may again be either specific or

unascertained

Specific goods : Goods identified and agreed upon at

the time of the making of the contract of sale are called

Specific goods.[sec. 2(14)]

Unascertained goods : The goods which are not

separately identified or ascertained at the time of the

making of the contract are known as Unascertained

goods.

Future Goods


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128

Goods to be manufactured, produced or acquired by

the seller after the making of the contract of sale arecalled Future Goods {sec. 2(6)]. These goods may

be either not yet in existence or be in existence but

not yet acquired by the seller.

Illustration :- (a) A agrees to sell to B all the milk thathis cow may yield during the coming year. This is a

contract for the sale of future goods.

(b) X agrees to sell to Y all the mangoes which will be

produced in his garden next year. It is contract of saleof future goods, amounting to an agreement to sell.

Contingent Goods


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129

Goods , the acquisition of which the seller depends

upon an uncertain contingency are called contingent goods[sec. 6(2)]. In words , like the

future goods, in the case of contingent goods also

the property does not pass to the buyer at the time of

making the contract.Illustration :- (a) A agrees to sell to B a specific rare

painting provided he is able to purchase it from its

present owner. This is a contract for the sale of

contingent goods.

The Price


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130

The money consideration for a sale of goods is

known as price [Sec. 2(10)]. We have already seenthat the price is an essential element in every

contract of sale of goods , that is , no valid sale can

take place without a price. The price should be paid

or promised to be paid in legal tender money ,unless otherwise agreed. It may be paid in the form

of a cheque , hundi, bank deposit etc. For, it is not

the mode of payment of a price but the agreement to

pay a price in money that is requisite to constitute avalid contract of sale.

Modes of Fixing the Price


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131

According to Section 9 the price may be fixed by one

or the other of the following modes :- It may be expressly fixed by the contract itself .

This is the most usual mode of fixing the price . Theparties are to fix any price they like and the court will

not question as to the adequacy of price. It may be fixed in accordance with an agreed

manner provided by the contract. For example, itmay be agreed that the buyer would pay the marketprice prevailing on a particular date, or that the price

is to be fixed by a third party appointed by theconsent of the parties.

Contd.


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132

It may be determined by the course of dealings

between the parties. For example, if the buyer hasbeen previously paying to a particular seller the price

prevailing on the date of placing the order, the

course of dealings suggest that in subsequent

transactions also the price as on the date of orderwill be paid.

If the price is not capable of being determined in

accordance with any of the above modes, the

buyer is bound to pay to the seller a reasonableprice.

Conditions and Warranties


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133

Condition defined,A condition is a stipulation

essential to the main purpose of the contract, thebreach of which gives the aggrieved party a right to

repudiate the contract itself [12(2)]. In addition, he may

maintain an action for damages for loss suffered, if

any, on the footing that the whole contract is brokenand the seller is guilty of non-delivery.

Warranty Defined,Awarranty is a stipulation

collateral to the main purpose of the contract, the

breach of which gives the aggrieved party a right tosue for damages only, and not to avoid the contract

itself. [Sec. 12(3)]

Condition and Warranty Distinguished


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134

The point of distinction between a condition and a warranty

may be summed up as under : As to value.A condition is a stipulation which is essential

to the main purpose of the contract, whereas a warrantyis a stipulation which is collateral to the main purpose ofthe contract.

As to breach. The breach of condition gives theaggrieved party the right to repudiate the contract andalso to claim damages, whereas the breach of warrantygives the aggrieved party a right to claim damages only.

As to treatment.A breach of condition may be treated asa breach of warranty . But a breach of warranty cannotbe treated as a breach of condition.

Implied Condition of Contract of Sale of

Goods


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135

Condition as to title [Sec. 14 (a)]. In every contract

of sale, the first implied condition on the part of theseller is that, in the case of a sale, he has the right tosell the goods and that, in the case of an agreementto sell , he will have a right to sell the goods at thetime when the property is to pass.

Condition in a sale by description. When there isa contract of sale of goods by description, there is animplied condition that the goods shall correspondwith description.(Sec. 15)

Condition in a sale by sample (Sec. 17). Whenunder a contract of sale , goods are to be suppliedaccording to a sample agreed upon.

Contd.


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136

Condition in a sale by sample as well as by

description (Sec. 15). When goods are sold bysample as well as by description, there is an implied

condition that the bulk of the goods shall correspond

both with the sample and with the description.

Condition as to fitness or quality [Sec. 16(1)].Ordinarily, in a contract of sale there is no implied

condition or warranty as to quality or fitness for any

particular purpose of goods supplied; the rule of law

being Caveat Emptor, that is, let the buyer beware.

Contd.


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137

Condition as to merchantability [Sec. 16 (2)]. This

condition is implied only where the sale is bydescription. This subsection lays down another

implied condition in such cases, that is, that the

goods should be of merchantable quality.

Condition as to wholesomeness. This condition isimplied only in a contract of sale of eatables and

provisions. In such cases the goods supplied must

not only answer to description and be merchantable

but must also be wholesome.

Implied Warranties


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138

Unless otherwise agreed, the law also incorporates

into a contract of sale of goods the following impliedwarranties:

Warranty of quiet possession [Sec. 14(b)]. Inevery contract of sale, the first implied warranty onthe part of the seller is that the buyer shall have andenjoy quiet possession of the goods.

Warranty of freedom from encumbrances [Sec.14(c)]. The second implied warranty bon the part ofthe seller is that the goods shall be free from any

charge or encumbrance in favor of any third partynot declared or known to the buyer before or at thetime when the contract is made.

Contd


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139

Warranty of disclosing the dangerous nature of

goods to the ignorant buyer. The third impliedwarranty on the part of the seller is that in case the

goods sold are of dangerous nature he will warn the

ignorant buyer of the probable danger. If there is

breach of this warranty the buyer is entitled to claimcompensation for the injury caused to him.

Doctrine of Caveat Emptor


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140

The maxim of caveat emptor means let the buyer

beware.According to doctrine of caveat emptor it isthe duty of the buyer to be careful while purchasinggoods of his requirement and, in the absence of anyenquiry from the buyer, the seller is not bound todisclose every defect in goods of which he may be

cognizant. Illustration : A purchases a horse from B. A needed

the horse for riding but he didnt mention this fact toB. the horse is not suitable for riding but is suitable

only for being driven in the carriage. Caveat emptorbeing the rule, A can neither reject the horse nor canhe claim any compensation from B.

Performance of Contract of Sale


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141

Delivery : Delivery of goods means voluntary

possession of goods from one person to another [Sec.2(2)]. If transfer of goods is not voluntary, i.e. ,

possession is obtained under pistol point or by theft,

there is no delivery.

Modes of DeliveryDelivery of goods may be made in any of the following

ways:

Actual delivery, Where the goods are physically

handed over by the seller to the buyer , the delivery

is said to be actual. For example, the seller of a car

hands over the car to the buyer, there is actual

delivery of the goods.

Contd.


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142

Symbolic delivery, Here the goods remain where

they are, but the means of obtaining possession ofgoods is delivered. For example, the seller hands

over to the buyer the key of the godown where the

goods are stored, or transfers a document of title to

the buyer which will entitle him to obtain the goods. Constructive delivery or delivery by attornment.

Such a delivery takes place when the person in

possession of the goods of the seller acknowledges,

in accordance with the sellers order, that he holdsthe goods on behalf of the buyer and the buyer has

assented to it.

Rules as to Delivery of Goods


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Delivery may be either actual or symbolic or

constructive(Sec. 33).Delivery of goods sold maybe made by doing anything which the parties agree

shall be treated as delivery or which has the effect of

putting the goods in the possession of the buyer or

of any person authorized to hold them on his behalf. Delivery and payment are concurrent conditions

(Sec. 32).Unless otherwise agreed, delivery of the

goods and payment of the price are concurrent

conditions, that is, the seller should be ready andwilling to deliver the goods to the buyer in exchange

for the price and the buyer should be ready .

Contd..


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Effect of part delivery, when property in goods is

to pass on delivery (Sec. 34).A delivery of part ofthe goods, in progress of the delivery of the whole,

has the same effect, for the purpose of passing the

property in such goods, as a delivery of the whole.

Buyer to apply for delivery (Sec. 35).Although it isthe duty of the seller to delivery the goods according

to the contract, yet he is not bound to deliver them

until the buyer applies for delivery. It is the duty of

the buyer to demand delivery, and if he fails to do so,he cannot blame the seller for the non-delivery.

Contd.


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Time of Delivery [Sec. 36(2) & (4)]. Where under

the contract of sale the seller is bound to send thegoods to the buyer, but no time for sending them is

fixed, the seller is bound to send them within a

reasonable time.

Place of Delivery [Sec. 36(1)]. The place of deliverymay be stated in the contract of sale, and where it is

so stated, the goods must be delivered at the named

place during business hours on a working day.

Expenses of Delivery [ Sec. 36(5)]. Unlessotherwise agreed, the expenses of an incidental to

putting the goods into a deliverable state must be

borne by the seller.

Rights of Unpaid Seller


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Definition: The seller of goods is deemed to be an

unpaid seller (a) when the whole of the price hasnot been paid or tendered; or (b) where a bill of

exchange or other negotiable instrument has been

received as a conditional payment, i.e. , subject to

the realization thereof , and the same has beendishonored.

The term seller here includes any person who is in

the position of a seller, as, for instance, an agent of

the seller to whom the bill of lading had beenendorsed, or a consigner or agent who has himself

paid, or is directly responsible for, the price. {sec. 45}

Rights of an Unpaid Seller


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Rights of unpaidseller against thegoods

Rights of unpaid

seller against thebuyer personally

Rights of Unpaid Seller against the Goods


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Right of Lien

Right of Stoppage of goods in transit

Right of resale

Rights of Unpaid Seller Against the Buyer

Personally


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Suit for Price

Suit for damages fornon-acceptance

Suit for special damagesand interest

Auction Sale


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In an auction sale, the auctioneer invites bids from

prospective purchasers and sells the goods to thehighest bidder. Section 64 lays down the following

rules relating to an auction sale:

Each lot of goods is prima facie deemed to be the

subject of a separate contract of sale. The sale is complete when the auctioneer

announces its completion by the fall of the hammer

or in other customary manner.

A knock out agreement between intending buyers

not to bid against each other is not illigal.


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Thank You

151


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Carriage of Goods : Road

152

The Carriage by Road Act, 2007


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An to provide for the regulation of, common carriers,

limiting their liability and declaration of value of goodsdelivered to them to determine their liability for loss of, ordamage to, goods occasioned by such negligence orcriminal acts of themselves, their servants or agents andfor matters connected therewith or incidental thereto.

Be it enacted by parliament in the Fifty-eight year Republicof India as follows:-

This act may be called the carriage by Road Act, 2007.

It extends to the whole of India, except the State ofJammu and Kashmir.

It shall come into force on such date as the centralGovernment may, by notification in the Official Gazette.

Major Factors

C i d i h


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Common carrier means a person engaged in the

business of collecting, storing , forwarding ordistributing goods to be carried by goods carriagesunder a goods receipt or transporting for hire ofgoods from place to place by motorized transport onroad.

Consigneemeans the person named as consigneein the goods forwarding note.

Consignment means documents, goods or articlesentrusted by the consignor to the common carrier for

carriage. Consignor means a person named as consignor in

the goods forwarding note.

Contd..


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Goods includes:

1) Containers, pallets or similar articles of transportused to consolidate goods

2) Animals or livestock

Goods Forwarding Note means the document

executed under section 8.

Goods Receipt means the receipt issued under

section 9.

Registered Authority means a State TransportAuthority or a Regional Transport Authority

constituted under section 68 of the motor vehicles

Act, 1988.

Rules & Regulation


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No person shall engage in the business of a

common carrier, after the commencement of this Act.

Any person who is engaged , whether wholly or

partly, in the business of a common carrier,

immediately before the commencement of this Act,shall,-

1) apply for a registration within ninety days from the

date of such commencement.

2) cease to engage in such business on the expiry of

one hundred and eighty days from the date of such

commencement unless ha has applied for registration.

Contd.

A h i d i t d t i


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Any person, who is engaged or intends to engage in

the business of a common carrier, shall apply for thegrant or renewal of a certificate of registration forcarrying on the business of common carrier to theregistering authority.

An application for grant or renewal of certificate ofregistration for the main office shall contain thedetails of branch office, if any, to be operated outsidethe jurisdiction of the state or Union territory in whichthe main office is to be registered.

A registering authority shall, before granting orrenewing a certificate of registering, satisfy itself thatthe applicant fulfills such conditions as may beprescribed.

Contd.

f f


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A certificate of registration granted or renewed under

subsection shall contain the details of branchoffices to be operated in various states and union

territories, and shall be valid for a period of ten years

from the date of such grant or renewal as the case

may be. The holder of a certificate of registration shall-

a) maintain a registrar in such from and manner as

may be prescribed

b) for shifting the main office mentioned in the

certificate of registration submit an application to the

registering authority which granted the certificate of

registration.

Suspension or Cancelation of Registration

If th i t i th it i ti fi d th t th h ld


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If the registering authority is satisfied that the holder

of certificate of registration has failed to comply withany of the provisions of sub section (7) of section 4.

If a complaint is received by the registering authority

against a common carrier from a consignor in

respect of- non-is

logistics law and contract administration

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