Contract Act 1872
Revocation of continuing guarantee :_ A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.
Illustrations
(a) A, in consideration of B's discounting at A's request, bills of exchange for C, guarantees to B, for twelve months, the due payment of all such bills to the extent of 5,000 rupees. B discounts bills for C to the extent of 2,000 rupees. Afterwards, at the end of three months, A revokes the guarantee. This revocation discharges A from all liability to B for any subsequent discount. But A is liable to B for the 2,000 rupees, on default of C.
(b) A
Section 130 of the Indian Contract Act, 1872, governs the revocation of a continuing guarantee, a type of guarantee that extends to a series of transactions. It provides the legal framework enabling a surety to revoke his guarantee as to future transactions by giving notice to the creditor, thereby limiting his liability. This section plays a crucial role in the law of suretyship, balancing the rights of the surety and the creditor.
Section 130 states:"A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor."It emphasizes that the revocation is effective only with respect to future transactions, not past liabilities. The section allows the surety to unilaterally terminate his guarantee for any future liabilities by serving a notice in writing to the creditor.
Section 130 itself does not prescribe any punishment; it merely provides a procedural right to revoke a guarantee. However, failure to serve proper notice or wrongful revocation can lead to legal consequences, including liability for damages or breach of contract, especially if the creditor suffers loss due to improper revocation.
In conclusion, Section 130 of the Indian Contract Act, 1872, provides a vital mechanism for sureties to limit their liability in series of transactions. It emphasizes the importance of proper notice and timing, protecting the surety’s interests while maintaining contractual stability. The section’s effective application requires strict adherence to procedural requirements, and its breach can have significant legal consequences.
Rights of indemnity-holder when sued :_ The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor_
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any such suit, if in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if
Section 125 of the Indian Contract Act, 1872, codifies the statutory right of certain persons to claim maintenance from their relatives, emphasizing the importance of social justice, family obligations, and public policy. It aims to prevent starvation and vagrancy among dependents, especially women, children, and aged parents, by providing a quick and effective remedy through the criminal justice system.
Section 125 provides that if any person having sufficient means neglects or refuses to maintain:- his wife unable to maintain herself,- his legitimate or illegitimate minor child unable to maintain itself,- his major child unable to maintain itself due to physical or mental abnormality,- his father or mother unable to maintain themselves,
a Magistrate of the first class may, upon proof of such neglect or refusal, order such person to pay a monthly maintenance amount, not exceeding Rs. 500, to the person in need. The section also stipulates that the obligation is ongoing until the dependent can maintain themselves or remarry, and it is a statutory right protected by law.
The essential ingredients for invoking Section 125 include:- The person against whom the order is sought must have sufficient means.- There must be neglect or refusal to maintain.- The person in need must fall within the categories specified (wife, minor or major child, or parents).- The neglect or refusal must be proved; mere allegations are insufficient.- The person sought to be ordered must have the ability to pay.- The order is to be passed after due inquiry and proof of neglect/refusal.
The scope extends to:- Maintenance of wives, children (legitimate or illegitimate), and parents.- It covers both minor and major children, including those with disabilities.- It applies irrespective of the marriage status of the wife (including divorcees), provided the wife is unable to maintain herself.- It is applicable during the lifetime of the dependent and until their circumstances change.- The law is rooted in social justice, public policy, and the constitutional guarantee of protection of life and dignity (Article 21).- It is a summary remedy, not barred by other proceedings like divorce or mutual settlement, unless explicitly barred by law.
Failure to comply with a maintenance order can lead to:- Contempt of court proceedings,- Imprisonment (up to 1 month or fine),- The court may also attach property or earnings to satisfy the order.
Section 125 of the Indian Contract Act, 1872, embodies the social and legal recognition of the family’s duty to support its weaker members. It balances individual rights with public policy considerations, emphasizing that statutory rights to maintenance cannot be waived or contracted away in a manner opposed to public morality and policy. Its enforcement ensures social justice, family stability, and protection of vulnerable dependents, reinforcing the constitutional guarantee of life with dignity.
Effect of novation, rescission, and alteration of contract:_If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.
Illustrations
(a) A owes money to B under a contract. It is agreed between A, B and C, that B shall thenceforth accept C as his debtor, instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted.
(b) A owes B 10,000 rupees. A enters into an agreement with B, and gives B a mortgage of his (A's) estate for 5,000 Rupees in place of the debt of 10,000 Rupees. This is
Section 62 of the Indian Contract Act, 1872, deals with the legal effects of novation, rescission, and alteration of contracts through mutual agreement of the parties. It provides the legal framework for discharging an existing contract when the parties agree to substitute, rescind, or modify it, emphasizing the importance of mutual consent in such processes.
Section 62 states:"If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed."This means that upon mutual agreement, the parties can either replace the old contract with a new one, rescind it entirely, or make modifications, resulting in the discharge of the original contractual obligations.
Section 62 does not prescribe any specific punishment for violations. Instead, it provides a legal basis for discharging contractual obligations upon mutual agreement. Violations, such as unilateral modifications or fraudulent substitutions, may lead to legal disputes and liability under general principles of contract law, but no specific penal provisions are attached to Section 62 itself.
This comprehensive overview highlights that Section 62 emphasizes mutual consent for substituting, rescinding, or altering contracts, ensuring that such changes are legally valid, clear, and enforceable, thereby maintaining the integrity of contractual obligations within Indian law.
"Contract of guarantee", "surety", "principal debtor" and "creditor":_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.
Consideration for guarantee :_ Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee.
Illustrations
(a) B requests A to sell and deliver to him goods on credit. A agrees to do so, provided C will guarantee the payment of the price of the goods. C promises to guarantee the payment in consideration of A's promise to deliver the goods. This is a sufficient consideration for C's promise.
(b) A sells and delivers goods to B. C afterwards requests A to forbear to sue B for the debt for a year, and promises that, if he does so, C will pay for
Surety's liability :_The liability of the surety is co_extensive with that of the principal debtor, unless it is otherwise provided by the contract.
Illustration
A guarantees to B the payment of a bill of exchange by C, the acceptor. The bill is dishonoured by C. A is liable not only for the amount of the bill but also for any interest and charges which may have become due on it.
Continuing guarantee :_ A guarantee which extends to a series of transactions, is called, a "continuing guarantee".
Illustrations
(a) A, in consideration that B will employ C in collecting the rent ofB's zamindari, promises B to be responsible, to the amount of 5,000 rupees, for the due collection and payment by C of those rents. This is a continuing guarantee.
(b) A guarantees payment to B, a tea-dealer, to the amount of œ 100, for any tea he may from time to time supply to C. B supplies C with tea above the value of œ 100, and C pays B for it. Afterwards, B supplies C with tea to the valu
Revocation of continuing guarantee by surety's death :_ The death of the surety operates, in the absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future transactions.
Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other's default:_ Where two persons contract with a third person to undertake a certain liability, and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract, although such third person may have been aware of its existence.
Illustration
A and B make a joint and several promissory note to C. A makes it, in fact, as surety for B, and C knows this at the time when the no
Discharge of surety by variance in terms of contract:_ Any variance made without the surety's consent, in the terms of the contract between the principal debtor and the creditor, discharges the surety as to transactions subsequent to the variance.
Illustrations
(a) A becomes surety to C for B's conduct as a manager in C's bank. Afterwards, B and C contract, without A's consent, that B's salary shall be raised, and that he shall become liable for one-fourth of the losses on overdrafts. B allows a customer to over-draw, and the bank loses a sum of money. A is discharged from his suretyship by the variance made without his consent, and is not liable to make good this loss.
Discharge of surety by release or discharge of principal debtor :_ The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.
Illustrations
(a) A gives a guarantee to C for goods to be supplied by C to B. C supplies goods to B, and afterwards B becomes embarrassed and contracts either his creditors (including C) to assign to them his property in consideration of their releasing him from their demands. Here B is released from his debt by the contract with C, and A is discharged from his suret
Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor :_ A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract.
Surety not discharged when agreement made with third person to give time to principal debtor :_ Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.
Illustration
C, the holder of an overdue bill of exchange drawn by A as surety for B, and accepted by B, contracts with M to give time to B. A is not discharged.
Creditor's forbearance to sue does not discharge surety :_ Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him, does not, in the absence of any provision in the guarantee to the contrary, discharge the surety.
Illustration
B owes to C a debt guaranteed by A. The debt becomes payable. C does not sue B for a year after the debt has become payable. A is not discharged from his suretyship.
Release of one co_surety does not discharge others:_Where there are co_sureties, a release by the creditor of one of them does not discharge the others neither does it free the surety so released from his responsibility to the other sureties.
Discharge of surety by creditor's act or omission impairing surety's eventual remedy:_ If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged. Illustrations
(a) B contracts to build a ship for C for a given sum, to be paid by installments as the work reaches certain stages. A becomes surety to C for B's due performance of the contract. C, without the knowledge of A, prepays to B the last two installments. A is discharged by the prepayment.
(b) C<
Rights of surety on payment or performance:_Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor.
Surety's right to benefit of creditor's securities :_ A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and, if the creditor loses, or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security.
Illustrations
(a) C advances to B, his tenant, 2,000 rupees on the guarantee of A. C has also further security for the 2,000 rupees by a mortgage of B's furniture. C cancels the mortgage. B becomes insolvent and C sues A on his guarantee. A i
Guarantee obtained by misrepresentation, invalid:_ Any guarantee which has been 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 a material circumstances, is invalid.
Illustrations
(a) A engages B as clerk to collect money for him. B fails to account for some of his receipts and A in consequence calls upon him to furnish security for his duly accounting. C gives his guarantee for B's duly accounting. A does not acquaints C with B's previous conduct. B afterwards make default. The guarantee is invalid.
(b) A guarantees to C payment for iron to be supplied by him to B to the amount of 2,000 tons. B and C have privat
Guarantee on contract that creditor shall not act on it until co_surety joins :_ Where a person gives a guarantee upon a contract that the creditor shall not act upon it until another person has joined in it as co_surety, the guarantee is not valid that other person does not join.
Implied promise to indemnify surety :_ In every contract of guarantee there is an implied promise by the principal debtor to indemnify the surety, and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee, but no sums which he has paid wrongfully. Illustrations
(a) B is indebted to C, and A is surety for the debt. C demands payment from A, and on his refusal sues him for the amount. A defends the suit, having reasonable grounds for doing so, but he is compelled to pay the amount of the debt with costs. He can recover from B the amount paid by him for costs, as well as the principal debt.
(b) C lends B a
co_sureties liable to contribute equally:_ Where two or more persons are co_sureties for the same debt or duty, either jointly or severally, and whether under the same or different contracts, and whether with or without the knowledge of each other, the co_sureties, in the absence of any contract to the contrary, are liable, as between themselves, to pay each an equal share of the whole debt, or of that part of it which remains unpaid by the principal debtor.
Illustrations
(a) A, B and C are sureties to D for the sum of 3,000 rupees lent to E. E makes default in payment. A, B and C are liable, as between themselves, to pay 1,000 rupees each.
(b) A, B and C a
Liability of co_sureties bound in different sums:_ co_sureties who are bound in different sums are liable to pay equally as far as the limits of their respective obligations permit.
Illustrations
(a) A, B and C, as sureties for D, enter into three several bonds each in a different penalty namely, A in the penalty of 10,000 rupees, B in that of 20,000 rupees, C in that of 40,000 rupees, conditioned for D's duly accounting to E. D makes default to the extent of 30,000 rupees. A, B and C are each liable to pay 10,000 rupees.
(b) A, B and C, as sureties for D, enter into three several bonds each in a different penalty namely,
"Bailment", "bailor" and "bailee" defined :_ 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".
Explanation :_If a person already in possession of the goods of another contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment.
Delivery to bailee how made:_The delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf.
Bailor's duty to disclose faults in goods bailed:_The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults.
If such goods are bailed for hire, the bailor is responsible for such damage, whether he was or was not aware of the existence of such faults in the goods bailed.
Illustrations
(a) A lends a horse, which he knows to be vicious, to B. He does not disclose the fact that the horse is vicious. The horse runs away. B is thrown and i
Care to be taken by bailee:_In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed.
Bailee when not liable for loss, etc., of thing bailed:_ The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in Section 151.
Termination of bailment by bailee's act inconsistent with conditions :_ A contract of bailment is voidable at the option of the bailor, if the bailee does any act with regard to the goods bailed, inconsistent with the conditions of the bailment.
Illustration
A lets to B, for hire, a horse for his own riding. B drives the horse in his carriage. This is, at the option of A, a termination of the bailment.
Liability of bailee making unauthorised use of goods bailed :_If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them.
Illustrations
(a) A lends a horse to B for his own riding only. B allows C, a member of his family, to ride the horse. C rides with care, but the horse accidentally falls and is injured. B is liable to make compensation to A for the injury done to the horse.
(b) A hires a horse in Calcutta from B expressly to march to Banaras. A rides with due care, but marches t
Effect of mixture with bailor's consent, of his goods with bailee's :_ If the bailee, with the consent of the bailor, mixes the goods of the bailor with his own goods, the bailor and the bailee shall have an interest, in proportion to their respective shares, in the mixture thus produced.
Effect of mixture, without bailor's consent, when the goods can be separated :_ If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods and the goods can be separated or divided, the property in the goods remains in the parties respectively; but the bailee is bound to be bear the expense of separation or division, and any damage arising from the mixture.
Illustration
A bails 100 bales of cotton marked with a particular mark to B. B, without A's consent, mixes the 100 bales with other bales of his own, bearing a different mark; A is entitled to have his 100 bales returned, and B is bound to bear all the expenses incurred in the separation of the bales, and any other incidental
Effect of mixture, without bailor's consent, when the goods cannot be separated :_ If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods in such a manner that it is impossible to separate the goods bailed from the other goods, and deliver them back, the bailor is entitled to be compensated by the bailee for the loss of the goods.
Illustration
A bails a barrel of Cape flour worth Rs. 45 to B. B, without A's consent, mixes the flour with country flour of his own, worth Rs.25 a barrel. B must compensate A for the loss of his flour.
Repayment, by bailor, of necessary expenses:_ Where, by the conditions of the bailment, the goods are to be kept or to be carried, or to have work done upon them by the bailee for the bailor, and the bailee is to receive no remuneration, the bailor shall repay to the bailee the necessary expenses incurred by him for the purpose of the bailment.
Restoration of goods lent gratuitously :_ The lender of a thing for use may at any time require its return, if the loan was gratuitous, even through he lent it for a specified time or purpose. But if, on the faith of such loan made for a specified time or purpose, the borrower has acted in such a manner that the return of the thing lent before the time agreed upon would cause him loss exceeding the benefit actually derived by him from the loan, the lender must, if he compels the return, indemnify the borrower for the amount in which the loss so occasioned exceeds the benefit so derived.
Return of goods bailed, on expiration of time or accomplishment of purpose :_ It is the duty of the bailee to return, or deliver according to the bailor's directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished.
Bailee's responsibility when goods are not duly returned :_ If by the default of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time.
Termination of gratuitous bailment by death :_ A gratuitous bailment is terminated by the death either of the bailor or of the bailee.
Bailer entitled to increase or profit from goods bailed :_ In the absence of any contract to the contrary, the bailee is bound to deliver to the bailer, or according to his directions, any increase or profit which may have accrued from the goods bailed.
Illustration
A leaves a cow in the custody of B to be taken care of. The cow has a calf. B is bound to deliver the calf as well as the cow to A.
Bailor's responsibility to bailee :_ The bailor is responsible to the bailee for any loss which the bailee may sustain by reason that the bailor was not entitled to make the bailment, or to receive back the goods, or to give directions, respecting them.
Bailment by several joint owners :_ If several joint owners of goods bail them, the bailee may deliver them back to, or according to the directions of, one joint owner without the consent of all in the absence of any agreement to the contrary.
Bailee not responsible on redelivery to bailor without title :_ If the bailor has no title to the goods, and the bailee, in good faith, delivers them back to, or according to the directions of the bailor, the bailee is not responsible to the owner in respect of such delivery.
Right of third person claiming goods bailed:_ If a person, other than the bailor, claims goods bailed he may apply to the Court to stop the delivery of the goods to the bailor, and to decide the title to the goods.
Right of finder of goods-May sue for specific reward offered :_ The finder of goods has no right to sue the owner for compensation for trouble and expense voluntarily incurred by him to preserve the goods and to find out the owner; but he may retain the goods against the owner until he receives such compensation; and, where the owner has offered a specific reward for the return of goods lost, the finder may sue for such reward, and may retain the goods until he receives it.
When finder of thing commonly on sale may sell it :_ When a thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses upon demand, to pay the lawful charges of the finder, the finder may sell it_
(1) when the thing is in danger of perishing or of losing the greater part of its value, or,
(2) when the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value.
Bailee's particular lien :_ Where the bailee has, in accordance with the purpose of the bailment, rendered any service involving the exercise of labour or skill in respect of the goods bailed he has, in the absence of a contract to the contrary, a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them.
Illustrations
(a) A delivers a rough diamond to B, a jeweller, to be cut and polished, which is accordingly done. B is entitled to retain the stone till he is paid for the service he has rendered.
(b) A gives cloth to B, a tailor, to make into a coat, B promises A to deliver the coat as soon as it is finishe
General lien of bankers, factors, wharfingers, attorneys and policy brokers :_ Bankers, factors, wharfingers, attorneys of a High Court and policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other person have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.
"Pledge", "pawnor", and "pawnee" defined :_ 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".
Pawnee's right of retainer :_ The pawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise, but for the interest of the debt, and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged.
Pawnee not to retain for debt or promise other than that for which goods pledged_presumption in case of subsequent advances :_ The pawnee shall not, in the absence of a contract to that effect, retain the goods pledged for any debt or promise other than the debt or promise for which they are pledged; but such contract, in the absence of anything to the contrary, shall be presumed in regard to subsequent advances made by the pawnee.
Pawnee's right as to extraordinary expenses incurred :_ The pawnee is entitled to receive from the pawnor extraordinary expenses incurred by him for the preservation of the goods pledged.
Pawnee's right where pawnor makes default:_If the pawnor makes default in payment of the debt, or performance, at the stipulated time, of the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale.
If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor.
Defaulting pawnor's right to redeem :_ If a time is stipulated for the payment of the debt, or performance of the promise, for which the pledge is made, and the pawnor makes default in payment of the debt or performance of the promise at the stipulated time, he may redeem the goods pledged at any subsequent time before the actual sale of them; but he must, in that case, pay, in addition, any expenses which have arisen from his default.
Pledge by mercantile agent :_ Where a mercantile agent is, with the consent of the owner, in possession of goods or the documents of title to goods, any pledge made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the pawnee acts in good faith and has not at the time of the pledge notice that the pawnor has no authority to pledge.
Explanation :_ In this section, the expressions "mercantile agent" and "documents of title" shall have the meanings assigned to them in the Indian Sale of Goods Act, 1930 (3 of 1930).
Pledge by person in possession under voidable contract :_ When the pawnor has obtained possession of the goods pledged by him under a contract voidable under Section 19 or Section 19-A, but the contract has not been rescinded at the time of the pledge, the pawnee acquires a good title to the goods, provided he acts in good faith and without notice of the pawnor's defect of title.
Pledge where pawnor has only a limited interest :_ Where a person pledges goods in which he has only a limited interest, the pledge is valid to the extent of that interest.
Suit by bailor or bailee against wrong-doer :_ If a third person wrongfully deprives the bailee of the use or possession of the goods bailed, or does them any injury, the bailee is entitled to use such remedies as the owner might have used in the like case if no bailment has been made; and either the bailor or the bailee may bring a suit against a third person for such deprivation or injury.
Apportionment of relief or compensation obtained by such suits :_ Whatever is obtained by way of relief of compensation in any such suit shall, as between the bailor and the bailee, be dealt with according to their respective interests.
"Agent" and "principal" defined :_ An "Agent" is a person employed to do any act for another, or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the "principal".
Who may employ agent :_ Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent.
Who may be an agent :_ As between the principal and third persons, any person may become an agent, but no person who is not of the age of majority and of sound mind can become an agent, so as to be responsible to his principal according to the provisions in that behalf herein contained.
Consideration not necessary :_ No consideration is necessary to create an agency.
Agent's authority may be expressed or implied :_ The authority of an agent may be expressed or implied.
Definition of express and implied authority :_ An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.
Illustration
A owns a shop in Serampur, living himself in Calcutta, and visiting the shop occasionally. The shop is managed by B, and he is in the habit of ordering goods from C in the name of A for the purposes of the shop, and of paying for them out of A's funds with A's knowledge. B has an implied authority from A to order goods from C in the name of A fo
Extent of agent's authority :_ An agent, having an authority to do an act, has authority to do every lawful thing which is necessary in order to do so such act.
An agent having an authority to carry on a business, has authority to do every lawful thing necessary for the purpose, or usually done in the course of conducting such business.
Illustrations
(a) A is employed by B, residing in London, to recover at Bombay a debt due to B. A may adopt any legal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same.
(b) A constitutes B his agent to carry on his business of a ship-builder. B<
Agent's authority in an emergency :_ An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances.
Illustrations
(a) An agent for sale may have goods repaired if it be necessary.
(b) A consigns provisions to B at Calcutta, with directions to send them immediately to C, at Cuttack. B may sell the provisions at Calcutta, if they will not bear the journey to Cuttack without spoiling.
When agent cannot delegate :_ An agent cannot lawfully employ another to perform acts which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub_agent may, or, from the nature of agency, a sub_agent must, be employed.
"sub_agent" defined :_ A "sub_agent" is a person employed by, and acting under the control of, the original agent in the business of the agency.
Representation of principal by sub_agent properly appointed :_ Where a sub_agent is properly appointed, the principal is, so far as regards third persons, represented by the sub_agent, and is bound by and responsible for his acts, as if he were an agent originally appointed by the principal.
Agent's responsibility for sub_agent :_ The agent is responsible to the principal for the acts of the sub_agent.
sub_agent's responsibility :_ The sub_agent is responsible for his acts to the agent, but not to the principal, except in cases of fraud or wilful wrong.
Agent's responsibility for sub_agent appointed without authority :_ Where an agent, without having authority to do so, has appointed a person to act as a sub_agent, the agent stands towards such person in the relation of a principal to an agent, and is responsible for his acts both to the principal and to third persons; the principal is not represented by or responsible for the acts of the person so employed, nor is that person responsible to the principal.
Relation between principal and person duly appointed by agent to act in business of agency :_ Where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub_agent, but an agent of the principal for such part of the business of the agency as is entrusted to him.
Illustrations
(a) A directs B>, his solicitor, to sell his estate by auction, and to employ an auctioneer for the purpose. B names C, an auctioneer, to conduct the sale. C is not a sub_agent, but is A's agent for the conduct of the sale.
(b) A authorises B, a merchant
Agent's duty in naming such person :_ In selecting such agent for his principal, an agent is bound to exercise the same amount of discretion as a man of ordinary prudence would exercise in his own case; and, if he does this, he is not responsible to the principal for the acts of negligence of the agent so selected.
Illustrations
(a) A instructs B, a merchant, to buy a ship for him. B employs a ship-surveyor of good reputation to choose a ship for A. The surveyor makes the choice negligently and the ship turns out to be unseaworthy and is lost. B is not, but the surveyor is, responsible to A.
(b) A consigns goods to B, a merchant, for sale. B, in due
Right of person as to acts done for him without his authority_ Effect of ratification :_Where acts are done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts. If he ratifies them, the same effects will follow as if they had been performed by his authority.
Ratification may be expressed or implied :_ Ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done.
(a) AB. Afterwards B sells them to C on his own account B's conduct implies a ratification of the purchase made for him by A.
Knowledge requisite for valid ratification :_ No valid ratification can be made by a person whose knowledge of the facts of the case is materially defective.
Effect of ratifying unauthorised act forming part of a transaction :_ A person ratifying any unauthorised act done on his behalf ratifies the whole of the transaction of which such act formed a part.
Ratification of unauthorised act cannot injure third person :_ An act done by one person on behalf of another, without such other person's authority, which, if done with authority would have the effect of subjecting a third person to damages, or of terminating any right or interest of a third person, cannot, by ratification, be made to have such effect.
Illustrations
(a) A, not being authorised thereto by B, demands, on behalf of B, the delivery of a chattel, the property of B, from C who is in possession of it. This demand cannot be ratified by B, so as to make C liable for damages for his refusal to deliver.
(b) A holds a lease from B, terminable
Termination of agency :_ An agency is terminated by the principal revoking his authority, or by the agent renouncing the business of the agency; or by the business of the agency being completed; or by either the principal or agent dying or becoming of unsound mind; or by the principal being adjudicated an insolvent under the provisions of any Act for the time being in force for the relief of insolvent debtors.
Termination of agency, where agent has an interest in subject matter :_ Where the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.
Illustrations
(a) A, gives authority to B to sell A's land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death.
(b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires BA cannot revoke this authority, nor is it terminated by his insanity or d
When principal may revoke agent's authority :_ The principal may, save as is otherwise provided by the last preceding section, revoke the authority given to his agent at any time before the authority has been exercised so as to bind the principal.
Revocation where authority has been partly exercised :_ The principal cannot revoke the authority given to his agent after the authority has been partly exercised, so far as regards such acts and obligations as arise from acts already done in the agency.
Illustrations
(a) A authorises B to buy, 1,000 bales of cotton on account of A and to pay for it out of A's money remaining in B's hands. B buys, 1,000 bales of cotton in his own name, so as to make himself personally liable for the price. A cannot revoke B's authority so far as regards payment for the cotton.
(b) A authorises B to buy 1,000 bales of cotton on account of A, and to pay f
Compensation for revocation by principal, or renunciation by agent :_ Where there is an express or implied contract that the agency should be continued for any period of time, the principal must make compensation to the agent, or the agent to the principal, as the case may be, for any previous revocation or renunciation of the agency without sufficient cause.
Notice of revocation or renunciation:_ Reasonable notice must be given of such revocation or renunciation, otherwise the damage thereby resulting to the principal or the agent, as the case may be, must be made good to the one by the other.
Revocation and renunciation may be expressed or implied:_ Revocation or renunciation may be expressed or may be implied in the conduct of that principal or agent respectively.
Illustration
A empowers B to let A's house. Afterwards A lets it himself. This is an implied revocation of B's authority.
When termination of agent's authority takes effect as to agent, and as to third persons :_ The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, or, so far as regards third persons, before it becomes known to them.
Illustrations
(a) A directs B to sell goods for him, and agrees to give B five per cent commission on the price fetched by the goods. A afterwards by letter, revokes B's authority. B after the letter is sent, but before he receives it, sells the goods for 100 rupees. The sale is binding on A, and B is entitled to five rupees as his commission.
(b) A, at Madras, by le
Agent's duty on termination of agency by principal's death or insanity :_ When an agency is terminated by the principal dying or becoming of unsound mind, the agent is bound to take on behalf of the representatives, of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him.
Termination of sub_agent's authority :_ The termination of the authority of an agent causes the termination (subject to the rules herein contained regarding the termination of an agent's authority) of the authority of all sub_agents appointed by him.
Agent's duty in conducting principal's business :_ An agent is bound to conduct the business of his principal according to the directions given by the principal, or in the absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal and if any profit accrues, he must account for it.
Illustrations
(a) A, an agent engaged in carrying on for B a business, in which it is the custom to invest from time to time, at interest, the moneys which may be in hand, omits to make such investment. A must make good to B the interest usually obtained by
Skill and diligence required from agent:_ An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business unless the principal has notice of his want of skill. The agent is always bound to act with reasonable diligence, and to use such skill as he possesses; and to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill, or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want of skill, or misconduct.
Illustrations
(a) A, merchant in Calcutta, has an agent B, in London, to whom a sum of money is paid on A's account, with orders to remit. B reta
Agent's accounts :_ An agent is bound to render proper accounts to his principal on demand.
Agent's duty to communicate with principal :_ It is the duty of an agent in case of difficultly, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions.
Right of principal when agent deals, on his own account, in business of agency without principal's consent :_ If an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him.
Illustrations
(a) A directs B to sell A's estate. B buys the estate for himself in the name of C. A, on discovering that B has bought the estate for himself, may
Principal's right to benefit gained by agent dealing on his own account in business of agency :_ If an agent, without the knowledge of his principal, deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction.
Illustration
A directs B, his agent, to buy a certain house for him. B tells A it cannot be bought, and buys the house for himself. A may, on discovering that B has bought the house, compels him to sell it to A at the price he gave for it.
Agent's right of retainer out of sums received on principal's account :_ An agent may retain, out of any sum received on account of the principal in the business of the agency, all moneys due to himself in respect to advances made or expenses properly incurred by him in conducting such business, and also such remuneration as may be payable to him for acting as agent.
Agent's duty to pay sums received for principal :_ Subject to such deductions, the agent is bound to pay to his principal all sums received on his account.
When agent's remuneration becomes due :_ In the absence of any special contract, payment for the performance of any act is not due to the agent until the completion of such act; but an agent may detain moneys received by him on account of goods sold, although the whole of the goods consigned to him for sale may not have been sold, or although the sale may not be actually complete.
Agent not entitled to remuneration for business misconducted :_ An agent who is guilty of misconduct in the business of the agency, is not entitled to any remuneration in respect of that part of the business which he has misconducted.
Illustrations
(a) A employs B to recover 1,00,000 rupees from C, and to lay it out on good security. B recovers the 1,00,000 rupees and lays out 90,000 rupees on goods security, but lays out 10,000 rupees on security which he ought to have known to be bad, whereby A loses 2,000 rupees. B is entitled to remuneration for recovering the 1,00,000 rupees and for investing the 90,000 rupees. He is not entitled to any remuneration for investing the 10,000 rupees, and he must make good the 2,000
Agent's lien on principal's property :_ In the absence of any contract to the contrary, an agent is entitled to retain goods, papers, and other property, whether movable or immovable of the principal received by him, until the amount due to himself for commission, disbursement and services in respect of the same has been paid or accounted for to him.
Agent to be indemnified against consequences of lawful acts :_ The employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him.
Illustrations
(a) B, at Singapore under instructions from A of Calcutta, contracts with C to deliver certain goods to him. A does not send the goods to B, and C sues B for breach of contract. B informs A of the suit, and A authorises him to defend the suit. B defends the suit, and is compelled to pay damages and costs, and incurs expenses. A is liable to B for such damages, costs and expenses.
(b)
Agent to be indemnified against consequences of acts done in good faith :_ Where one person employs another to do an act, and the agent does the act in good faith, the employer is liable to indemnify the agent against the consequences of that act, though it causes an injury to the rights of third persons.
Illustrations
(a) A, a decree-holder and entitled to execution of B's goods requires the officer of the Court to seize certain goods, representing them to be the goods of B. The officer seizes the goods, and is sued by C, the true owner of the goods. A is liable to indemnify the officer for the sum which he is compelled to pay to C, in consequence of obeying A's directions.
Non-liability of employer of agent to do a criminal act :_ Where one person employs another to do an act which is criminal, the employer is not liable to the agent, either upon an express or an implied promise to indemnify him against the consequence of that act.
Illustrations
(a) A employs B to beat C, and agrees to indemnify him against all consequences of the act. B thereupon beats C, and has to pay damages to C for so doing. A is not liable to indemnify B for those damages.
(b) B, the proprietor of a newspaper, publishes, at A's request, a libel upon C in the paper, and A agrees to indemnify B against the consequences
Compensation to agent for injury caused by principal's neglect :_ The principal must make compensation to his agent in respect of injury caused to such agent by the principal's neglect or want of skill.
Illustration
A employs B as a bricklayer in building a house, and put up the scaffolding himself. The scaffolding is unskillfully put up, and B is in consequence hurt. A must make compensation to B. Effect of agency on contracts with third persons
Enforcement and consequences of agent's contracts :_ Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences as if the contracts had been entered into and the acts done by the principal in person.
Illustrations
(a) A buys goods from B, knowing that he is an agent for their sale, but not knowing who is the principal. B's principal is the person entitled to claim from A the price of the goods, and A cannot, in a suit by the principal, set-off against that claim a debt due to himself from B.
(b) A, being B's agent; with authority to receive money
Principal how far bound, when agent exceeds authority :_ When an agent does more than he is authorised to do, and when the part of what he does, which is within his authority, can be separated from the part which is beyond his authority, so much only of what he does as is within his authority is binding as between him and his principal.
Illustration
A, being owner of a ship and cargo, authorises B to procure an insurance for 4,000 rupees on the ship. B procures a policy for 4,000 rupees on the ship, and another for the like sum on the cargo. A is bound to pay the premium for the policy on the ship, but not the premium for the policy on the cargo.
Principal not bound when excess of agent's authority is not separable :_ Where an agent does more than he is authorised to do, and what he does beyond the scope of his authority cannot be separated from what is within it, the principal is not bound to recognise the transaction.
Illustration
A authorises B to buy 500 sheep for him. B buys 500 sheep and 200 lambs for one sum of 6,000 rupees. A may repudiate the whole transaction.
Consequences of notice given to agent :_ Any notice given to or information obtained by the agent, provided it be given or obtained in the course of the business transacted by him for the principal, shall, as between the principal and third parties, have the same legal consequences as if it had been given to or obtained by the principal.
Illustrations
(a) A is employed by B to buy from C certain goods, of which C is the apparent owner, and buys them accordingly. In the course of the treaty for the sale, A learns that the goods really belonged to D, but B is ignorant of that fact. B is not entitled to set-off a debt owing to him from C against the price of goods.
Agent cannot personally enforce, nor be bound by, contracts on behalf of principal :_ In the absence of any contract to that effect an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them.
Presumption of contract to contrary :_ Such a contract shall be presumed to exist in the following cases :_
(1) Where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad;
(2) Where agent does not disclose the name of his principal;
(3) Where the principal, though disclosed, cannot be sued.
Rights of parties to a contract made by agent not disclosed :_ If an agent makes a contract with a person who neither knows, nor has reason to suspect, that he is an agent, his principal may require the performance of the contract; but the other contracting party has, as against the principal, the same right as he would have had as against if the agent had been principal.
If the principal discloses himself before the contract is completed, the other contracting party may refuse to fulfil the contract, if he can show that, if he had known who was the principal in the contract, or if he had known that the agent was not a principal, he would not have entered into the contract.
Performance of contract with agent supposed to be principal :_ Where one man makes a contract with another, neither knowing nor having reasonable ground to suspect that the other is an agent, the principal, if he requires the performance of the contract, can only obtain such performance subject to the rights and obligations subsisting between the agent and the other party to the contract.
Illustration
A, who owes 500 rupees to B, sells 1,000 rupees worth of rice to B. A is acting as agent for C in the transaction, but B has no knowledge nor reasonable ground of suspicion that such is the case. C cannot compel B to take the rice without allowing him to set-off A's debt.
Right of person dealing with agent personally liable :_ In cases where the agent is personally liable, a person dealing with him may hold either him or his principal, or both of them liable.
Illustration
A enters into a contract with B to sell him 100 bales of cotton, and afterwards, discovers that B was acting as agent for C. A may sue either B or C, or both for the price of the cotton.
Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable :_ When a person who has made a contract with an agent induces the agent to act upon the belief that the principal only will be held liable, or induces the principal to act upon the belief that the agent only will be held liable, he cannot afterwards hold liable the agent or principal respectively.
Person falsely contracting as agent, not entitled to performance :_ A person with whom a contract has been entered into in the character of agent, is not entitled to require the performance of it, if he was in reality acting, not as agent, but on his own account.
Liability of principal inducing belief that agent's unauthorised acts were authorised :_ When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations, if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent's authority.
Illustrations
(a) A consigns goods to B for sale, and gives him instructions not to sell under a fixed price C, being ignorant of B's instructions, enters into a contract with B to buy the goods at a price lower than the reserved price. A is bound by the contract.
(b)
Effect, on agreement, of misrepresentation or fraud by agent :_ Misrepresentations made or frauds committed, by agents acting in the course of their business for their principals, have the same effect on agreements made by such agents as if such misrepresentations or frauds had been made or committed by the principals; but misrepresentations made, or frauds committed, by agents, in matters which do not fall within their authority, do not affect their principals.
Illustrations
(a) A, being B's agent for the sale of goods, induces C to buy them by a misrepresentation, which he was not authorised by B to make. The contract is voidable, as between B and C, at the option of C.
Repealed by the Indian Partnership Act, 1932 (9 of 1932) Section 73 and Sch. II.]
Short title:This Act may be called the Indian Contract Act, 1872.
Extent, commencementIt extends to the whole of India except the State of Jammu and Kashmir; and it shall come into force on the first day of September, 1872.
Enactments repealedNothing herein contained shall affect the provisions of any Statute, Act or Regulation not hereby expressly repealed, nor any usage or custom of trade, nor any incident of any contract, not inconsistent with the provisions of this Act.
Interpretation-clause: In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:
(a) Proposal When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal;
(b)Promise When the person to whom the proposal is made, signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise;
(c) Promisor and Promisee- The person making the proposal is called the "promisor", and the person accepting the proposal is called t
Communication, acceptance and revocation of proposals :_ The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it.
Communication when complete :_ The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.
The communication of an acceptance is complete_
as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor;
as against the acceptor, when it comes to the knowledge of the proposer.
The communication of a revocation is complete_
as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it;
Revocation of proposals and acceptances :_ A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.
An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
Illustrations
A proposes, by a letter sent by post, to sell his house to B.
B accepts the proposal by a letter sent by post.
A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards.
Revocation how made :_ A proposal is revoked,_
(1) by the communication of notice of revocation by the proposer to the other party;
(2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;
(3) by the failure of the acceptor to fulfil a condition precedent to acceptance; or
(4) by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.
Acceptance must be absolute :_In order to convert a proposal into a promise, the acceptance must,_
(1) be absolute and unqualified.
(2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but if he fails to do so, he accepts the acceptance.
Acceptance by performing conditions, or receiving consideration :Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.
Promises, express and implied :Insofar as the proposal or acceptance of any promise is made in words, the promise is said to be express. Insofar as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.
What agreements are contracts: All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
Nothing herein contained shall affect any law in force in India and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.
Who are competent to contract:Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject.
What is a sound mind for the purposes of contracting :-A person is said to be of sound mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests.
A person who is usually of unsound mind, but occasionally of sound mind, may make a contract when he is of sound mind.
A person who is usually of sound mind, but occasionally of unsound mind, may not make a contract when he is of unsound mind.
Illustrations
(a) A patient in a lunatic asylum, who is at intervals of sound mind, may contract during those intervals.
(b) A
"Consent" defined:- Two or more persons are said to consent when they agree upon the same thing in the same sense.
"Free consent" defined: Consent is said to be free when it is not caused by,_
(1) coercion, as defined in Section 15, or
(2) undue influence, as defined in Section 16, or
(3) fraud, as defined in Section 17, or
(4) misrepresentation, as defined in Section 18, or
(5) mistake, subject to the provisions of Sections 20, 21 and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.
"Coercion" defined :_ "Coercion" is the committing, or threatening to commit, any act forbidden by the Indian Penal Code (45 of 1860) or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.
Explanation :_ It is immaterial whether the Indian Penal Code (45 of 1860) is or is not in force in the place where the coercion is employed.
Illustration
A, on board an English ship on the high seas, causes B to enter into an agreement by an act amounting to criminal intimidation under the Indian Penal Code (45 of 1860).
A afterwards sues B
"Undue influence" defined: (1) A contract is said to be induced by "undue influence" where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.
(2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another,_
(a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or
(b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, i
"Fraud defined":_ "Fraud" means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:
(1) the suggestion as to a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
"Misrepresentation" defined:_ "Misrepresentation" means and includes,_
(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.
Voidability of agreements without free consent :_ When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.
Exception :_If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of Section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.
19-A. Power to set aside contract induced by undue influence :_ When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused.
Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the Court may deem just.
Illustrations
(a) A's son has forged B's name to a promissory note. B, under threat of prosecuting A's son, obtains a bond from A for the amount of the forged note. If B sues on this bond, the Court may set the bond aside.
(b)
Agreement void where both parties are under mistake as to matter of fact:_ Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. Explanation :_An erroneous opinion as to the value of the thing which forms the subject matter of the agreement, is not to be deemed a mistake as to a matter of fact.
Illustrations
(a) A agrees to sell to B a specific cargo of goods supposed to be on its way from England to Bombay. It turns out that, before the day of the bargain, the ship conveying the cargo had been cast away and the goods lost. Neither party was aware of these facts. The agreement is void.
(b) A agrees to buy from B<
Effect of mistake as to law :A contract is not voidable because it was caused by a mistake as to any law in force in India; but a mistake as to a law not in force in India has the same effect as a mistake of fact.
Illustration
A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation. The contract is not voidable.
Contract caused by mistake of one party as to matter of fact :_A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.
What considerations and objects are lawful, and what not :_The consideration or object of an agreement is lawful, unless,_
it is forbidden by law; or
is of such nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or
involves or implies injury to the person or property of another; or
the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.
Illustrations
Agreements void, if considerations and objects unlawful in part:_ If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.
Illustration
A promises to superintend, on behalf of B, a legal manufacture of indigo, and an illegal traffic in other articles. B promises to pay to A a salary of 10,000 Rupees a year. The agreement is void, the object of A's promise, and the consideration for B's promise, being in part unlawful.
Agreement without consideration, void, unless it is in writing and registered or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law :_ An agreement made without consideration is void, unless_
(1) it is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless;
(2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless;
(3) it
Agreement in restraint of marriage, void:_Every agreement in restraint of the marriage of any person, other than a minor, is void.
Agreement in restraint of trade, void:_Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
Exception :_Saving of agreement not to carry on business of which goodwill is sold_One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein : Provided that such limits appear to the Court reasonable, regard being had to the nature of the business.
Agreements in restraint of legal proceedings, void:_Every agreement,_
(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary Tribunals, or which limits the time within which he may thus enforce his rights; or
(b) which extinguishes the rights of any party thereto, or discharges any party thereto from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent.
Exception 1:_ Saving of contract to refer to arbitration dispute that may arise.This section shall not
Agreements void for uncertainty :Agreements, the meaning of which is not certain, or capable of being made certain, are void.
Illustrations
(a) A agrees to sell B "a hundred tons of oil". There is nothing whatever to show what kind of oil was intended. The agreement is void for uncertainty.
(b) A agrees to sell B one hundred tons of oil of a specified description, known as an article of commerce. There is no uncertainty here to make the agreement void.
(c) A, who is a dealer in coconut-oil only, agrees to sell to B "one hundred tons of oil". The nature of A's trade affords an indication of the meaning of the words, and A has e
Agreements by way of wager, void:_ Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made.
Exception in favour of certain prizes for horse-racing:_ This section shall not be deemed to render unlawful a subscription or contribution, or agreement to subscribe or contribute, made or entered into for or toward any plate, prize or sum of money, of the value or amount of five hundred rupees or upwards, to be awarded to the winner or winners of any horse-race.
Section 294-A of the Indian Penal Code not affected : Nothing in this section shall be d
"Contingent contract" defined:_ A "Contingent contract" is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.
Illustration
A contracts to pay B Rs. 10,000 if B's house is burnt. This is a contingent contract.
Enforcement of contracts contingent on an event happening:_Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened.
If the event becomes impossible, such contracts become void.
Illustrations
(a) A makes a contract with B to buy B's horse, if A survives C. This contract cannot be enforced by law unless and until C dies in A's lifetime.
(b) A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse has been offered, refuses to buy him. The contract cannot be enforced by l
Enforcement of contracts contingent on an event not happening:_ Contingent contracts to do or not to do anything if an uncertain future event does not happen, can be enforced when the happening of that event becomes impossible, and not before.
Illustration
A agrees to pay B a sum of money if a certain ship does not return. The ship is sunk. The contract can be enforced when the ship sinks.
When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person :_ If the future event on which a contract is contingent is the way in which a person will act at an unspecified time, the event shall be considered to become impossible when such person does anything which renders it impossible that he should so act within any definite time, or otherwise than under further contingencies.
Illustration
A agrees to pay B a sum of money if B marries C. C marries D. The marriage of B to C must now be considered impossible, although it is possible that D may die and that C may afterwards marry B.
When contracts become void, which are contingent on happening of a specified event within fixed time:_ Contingent contracts to do or not to do anything, if a specified uncertain event happens within a fixed time, become void, if, at the expiration of the time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible.
When contracts may be enforced, which are contingent on specified event not happening within fixed time._Contingent contracts to do or not to do anything, if a specified uncertain event does not happen within a fixed time, may be enforced by law when the time fixed has expired and such event has not happened or, before the time fixed has expired, if it becomes certain that such event will not happen.
Illust
Agreements contingent on impossible events void:_Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made.
Illustrations
(a) A agrees to pay B 1,000 rupees if two straight lines should enclose a space. The agreement is void.
(b) A agrees to pay B 1,000 Rupees if B will marry A's daughter C. C was dead at the time of the agreement. The agreement is void.
Obligation of parties to contracts:_ The parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law.
Promises bind the representatives of the promisors in case of the death of such promisors before performance, unless a contrary intention appears from the contract.
Illustrations
(a) A promises to deliver goods to B on a certain day on payment of Rs.1,000. A dies before that day. A's representatives are bound to deliver the goods to B, and B is bound to pay the Rs.1,000 to A's representatives.
Effect of refusal to accept offer of performance :_ Where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promisor is not responsible for non-performance, nor does he thereby lose his rights under the contract.
Every such offer must fulfil the following conditions,_
(1) it must be unconditional;
(2) it must be made at a proper time and place, and under such circumstances that the person to whom it is made may have a reasonable opportunity of ascertaining that the person by whom it is been made is able and willing there and then to do the whole of what he is bound by his promise to do;
(3) if t
Effect of refusal of party to perform promise wholly :_When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance.
Illustrations
(a) A, a singer, enters into contract with B, the manager of a theatre, to sing at his theatre two nights in every week during the next two months, and B engages to pay her 100 rupees for each night's performance. On the sixth night A wilfully absents herself from the theatre. B is at liberty to put an end to the contract.
(b) A, a singer, enters into contract with
Person by whom promise is to be performed:_ If it appears from the nature of the case that it was the intention of the parties to any contract that any promise contained in it should be performed by the promisor himself, such promise must be performed by the promisor. In other cases, the promisor or his representatives may employ a competent person to perform it.
Illustrations
(a) A promises to pay B a sum of money. A may perform this promise, either by personally paying the money to B or by causing it to be paid to B by another; and, if A dies before the time appointed for payment, his representatives must perform the promise, or employe some proper person to do so.
(b) A
Effect of accepting performance from third person :_ When a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor.
Devolution of joint liabilities :_ When two or more persons have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and, after the death of any of them, his representative jointly with the survivor or survivors, and, after the death of the last survivor, the representatives of all jointly, must fulfil the promise.
Any one of joint promisors may be compelled to perform :_ When two or more persons make a joint promise, the promisee may, in the absence of express agreement to the contrary, compel any one or more of such joint promisors to perform the whole of the promise.
Each promisor may compel contribution :_ Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.
Sharing of loss by default in contribution :_ If any one of two or more joint promisors makes default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.
Effect of release of one joint promisor :_ Where two or more persons have made a joint promise, a release of one of such joint promisors by the promisee does not discharge the other joint promisor or joint promisors, neither does it free the joint promisors so released from responsibility to the other joint promisor or joint promisors.
Devolution of joint rights :_When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any of them, with the representatives of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all jointly.
Illustration
A, in consideration of 5,000 Rupees lent to him by B and C, promises B and C jointly to repay them that sum with interest on a day specified. B dies. The right to claim performance rests with B's representative jointly with C duri
Time for performance of promise, where no application is to be made and no time is specified :_ Where, by the contract, a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.
Explanation :_ The question "what is a reasonable time" is, in each particular case, a question of fact.
Time and place for performance of promise, where time is specified and no application to be made:_ When a promise is to be performed on a certain day, and the promisor has undertaken to perform it without the application by the promisee, the promisor may perform it at any time during the usual hours of business on such day and at the place at which the promise ought to be performed.
Illustration
A promises to deliver goods at B's warehouse on the first January. On that day A brings the goods to B's warehouse, but after the usual hour for closing it, and they are not received. A has not performed his promise.
Application for performance on certain day to be at proper time and place:_ When a promise is to be performed on a certain day, and the promisor has not undertaken to perform it without application by the promisee, it is the duty of the promisee to apply for the performance at a proper place and within the usual hours of business.
Explanation :_ The question "what is proper time and place" is, in each particular case, a question of fact.
Place for performance of promise, where no application to be made and no place fixed for performance:_ When a promise is to be performed without application by the promisee, and no place is fixed for the performance of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such place.
Illustration
A undertakes to deliver a thousand maunds of jute to B on a fixed day. A must apply to B to appoint a reasonable place for the purpose of receiving it, and must deliver it to him at such place.
Performance in manner or at time prescribed or sanctioned by promisee:_ The performance of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions.
Illustrations
(a) B owes A 2,000 Rupees. A desires (b) A and B are mutually indebted. A and B settle an account by setting off one item against another, and B Promisor not bound to perform, unless reciprocal promisee ready and willing to perform :_ When a contract consists of reciprocal promises to be simultaneously performed, no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocal promise. Illustrations
(a) A and B contract that A shall deliver goods to B to be paid for by B on delivery. A need not deliver the goods, unless B is ready and willing to pay for the goods on delivery.
B need not pay for the goods, unless A is ready and willing to deliver them on payment.
(b) A and B contract that A shall Order of performance of reciprocal promises :_ Where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order; and where the order is not expressly fixed by the contract, they shall be performed in that order which the nature of the transaction requires. Illustrations
(a) A and B contract that A shall build a house for (b) A and B contract that A shall make over his stock-in-trade to B at a fixed price, and B promises to give security for the payment of the money. < Liability of party preventing event on which contract is to take effect :_ When a contract contains reciprocal promises, and one party to the contract prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented: and he is entitled to compensation from the other party for any loss which he may sustain in consequence of the non-performance of the contract. Illustration
A and B contract that B shall execute certain work for A for a thousand rupees. B is ready and willing to execute the work accordingly, but A prevents him from doing so. The contract is voidable at the option of B; and, if he elects to rescind it, he is entitled to recover from A Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises:_ When a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract. Illustrations
(a) A hires B's ship to take in and convey, from Calcutta to Mauritius, a cargo to be provided by A, B receiving a certain freight for its conveyance. Effect of failure to perform at fixed time, in contract in which time is essential :_ When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.
Effect of such failure when time is not essential :_If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensat Agreement to do impossible act :_An agreement to do an act impossible in itself is void.
Contract to do act afterwards becoming impossible or unlawful :_A contract to do an act which, after the contract is made, becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
Compensation for loss through non-performance of act known to be impossible or unlawful :_Where one person has promised to do something which he knew or, with reasonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains throu Reciprocal promises to do things legal, and also other things illegal :Where persons reciprocally promise, firstly, to do certain things which are legal, and, secondly under specified circumstances, to do certain other things which are illegal, the first set of promises is a contract, but the second is a void agreement. Illustration
A and B agree that A shall sell B a house for 10,000 Rupees, but that, if B uses it as a gambling house, he shall pay A 50,000 rupees for it.
The first set of reciprocal promises, namely, to sell the house and to pay 10,000 rupees for it, is a contract.
The second set is for an unlawful object, namely, th Alternative promise, one branch being illegal :_ In the case of an alternative promise, one branch of which is legal and the other illegal, the legal branch alone can be enforced. Illustration
A and B agree that A shall pay B 1,000 Rupees, for which B shall afterwards deliver to A either rice or smuggled opium.
This is a valid contract to deliver rice, and a void agreement as to the opium.S.51 Promisor not bound to perform, unless reciprocal promisee ready and willing to perform
S.52 Order of performance of reciprocal promises
S.53 Liability of party preventing event on which contract is to take effect
S.54 Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises
S.55 Effect of failure to perform at fixed time, in contract in which time is essential
S.56 Agreement to do impossible act
S.57 Reciprocal promises to do things legal, and also other things illegal
S.58 Alternative promise, one branch being illegal
Application of payment where debt to be discharged is indicated:_Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying, that the payment is to be applied to the discharge of some particular debt, the payment if accepted, must be applied accordingly.
Illustrations
(a) A owes B, among other debts, 1,000 Rupees upon a promissory note, which falls due on the first June. He owes B no other debt of that amount. On the first June, A pays to B 1,000 Rupees. The payment is to be applied to the discharge of the promissory note.
(b) A owes to B, among other debts, the sum of 567 Rupee
Application of payment where debt to be discharged is not indicated :_ Where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits.
Application of payment where neither party appropriates :_ Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportion.
Promisee may dispense with or remit performance of promise:_Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit.
Illustrations
(a) A promises to paint a picture for B. B afterwards forbids him to do so. A is no longer bound to perform the promise.
(b) A owes B 5,000 Rupees, A pays, to B, and B accepts, in satisfaction of the whole debt, 2,000 Rupees paid at the time and place at which the 5,000 Rupees were payable. The whole debt is discharged.
(c) A
Consequences of rescission of a voidable contract:_ When a person at whose option a contract is voidable rescinds it, the other party thereto need to perform any promise therein contained in which he is the promisor. The party rescinding a voidable contract shall, if he have received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received.
Obligation of person who has received advantage under void agreement or contract that becomes void:_When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it.
Illustrations
(a) A pays B 1,000 Rupees, in consideration of B's promising to marry C, A's daughter. C is dead at the time of promise. The agreement is void, but B must repay A the 1,000 Rupees.
(b) A contracts with B to deliver to him 250 maunds of rice before the first of May. A delivers 130 maunds o
Mode of communicating or revoking rescission of voidable contract :_The rescission of a voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as apply to the communication or revocation of a proposal.
Effect of neglect of promisee to afford promisor reasonable facilities for performance:_ If any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to any non-performance caused thereby.
Illustration
A contracts with B to repair B's house.
B neglects or refuses to point out to A the places in which his house requires repair.
A is excused for the non-performance of the contract, if it is caused by such neglect or refusal.
Claim for necessaries supplied to person incapable of contracting, or on his account :_If a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person.
Illustrations
(a) A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be reimbursed from B's property.
(b) A supplies the wife and children of B, a lunatic, with necessaries suitable to their condition in life. A is entitled to be reimbursed from
Reimbursement of person paying money due by another, in payment of which he is interested :_ A person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other.
Illustration
B holds land in Bengal, on a lease granted by A, the zamindar. The revenue payable by A to the Government being in arrears, his land is advertised for sale by the Government. Under the revenue law, the consequence of such sale will be the annulment of B's lease. B to prevent the sale and the consequent annulment of his own lease, pays to the Government the sum due from A. A is bound to make good to B the amount so paid.
Obligation of person enjoying benefit of non-gratuitous act :_ Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.
Illustrations
(a) A, a tradesman, leaves goods at B's house by mistake. B treats the goods as his own. He is bound to pay A for them.
(b) A saves B's property from fire. A is not entitled to compensation from B, if the circumstances show that he intended to act gratuitously.
Responsibility of finder of goods :_A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.
Liability of person to whom money is paid, or thing delivered, by mistake or under coercion :_A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
Illustrations
(a) A and B jointly owe 100 rupees to C, A alone pays the amount to C, and B, not knowing this fact, pays 100 rupees over again to C. C is bound to repay the amount to B.
(b) A railway company refuses to deliver up certain goods to the consignee except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally
Compensation for loss or damage caused by breach of contract :_When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
Compensation for failure to discharge obligation resembling those created by contract :_ When an obligation resembling those created by contract has been incurred and has not been disc
Compensation for breach of contract where penalty stipulated for :_When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
Explanation :_A stipulation for increased interest from the date of default may be a stipulation by way of penalty.
Exception :_When any person enters into any bail bond, recognis
Party rightfully rescinding contract, entitled to compensation:_A person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract.
Illustration
A, a singer, contracts with B, a manager of a theatre, to sing at his theatre for two nights in every week during the next two months, and B engages to pay her 100 rupees for each night's performance. On the sixth night, A wilfully absents herself from the theatre, and B, in consequence, rescinds the contract. B is entitled to claim compensation for the damage which he has sustained through the non-fulfilment of the contract.
76. to 123 :_[Sale of Goods] Rep. by the Sale of Goods Act, 1930 (3 of 1930) Section 65.
"Contract of indemnity" defined :_A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a "contract of indemnity".
Illustration
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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