The Indian Contract Act, 1872
This Act may be called the Indian Contract Act, 1872.
Extent, Commencement.--It extends to the whole of India 1[2***]; and it shall come into force on
the first day of September, 1872.
Saving--3*** Nothing 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not hereby expressly repealed, nor any usage or custom of trade, nor any incident of any contract, not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.
In this Act the following words and expressions are used in the following
senses, unless a contrary intention appears from the context:—
(a) 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) 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) The person making the proposal is called the "promisor", and the person accepting the
proposal is called the "promisee";
(d) When, at the desire of the promisor, the promisee or any other person has done or abstained
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.
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.
Illustration
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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.
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.
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.
In so far as the proposal or acceptance of any promise is made
in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise
than in words, the promise is said to be implied.
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 1
India and not hereby expressly repealed by which any contract is required to be made in writing2
or in the presence of witnesses, or any law
relating to the registration of documents.
Every person is competent to contract who is of the age of
majority according to the law to which he is subject1
, and who is of sound mind and is not disqualified
from contracting by any law to which he is subject.
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 sane man, who is delirious from fever or who is so drunk that he cannot understa
Two or more persons are said to consent when they agree upon the same
thing in the same sense.
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, u
"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. 1[16. 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. "Fraud" means and includes any of the following acts committed by a party
to a contract, or with his connivance, or by his agent1
, with intent to deceive another party thereto of his
agent, or to induce him to enter into the contract:— "Misrepresentation" means and includes— When consent to an agreement is caused by
coercion, 1
*** fraud or misrepresentation, the agreement is a contract voidable at the option of the party
whose consent was so caused. 1[19A. 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. 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. A contract is not voidable because it was caused by a mistake as
to any law in force in 1
India; but a mistake as to a law not in force in 1
India has the same effect as a
mistake 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. The consideration or object of an
agreement is lawful, unless— Every agreement in restraint of the marriage of any
person, other than a minor, is void. Agreements, the meaning of which is not certain, or capable
of being made certain, are void. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. When a promisee accepts performance
of the promise from a third person, he cannot afterwards enforce it against the promisor. 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. 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.1 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
representative of such deceased person jointly with the survivor or survivors, and, after the death of the
last survivor, with the representatives of all jointly.1 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. When a promise is to be performed on a certain day, and the promisor has undertaken to perform
it without 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. 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 performance at a proper place and
within the usual hours of business. 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. The performance
of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions. 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. 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. 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 nonperformance of the contract. 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. 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. 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. In the case of an alternative promise, one
branch of which is legal and the other illegal, the legal branch alone can be enforced. 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. 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 proportionally. 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. Every promisee may
dispense with or remit, wholly or in part, the performance of the promisee made to him, or may extend the
time for such performance1
, or may accept instead of it any satisfaction which he thinks fit. When a person at whose option a contract is
voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is
promisor. The party rescinding avoidable 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.1
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. 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 proposal1
. 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. If a
person, incapable of entering into a contract, or any one 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.1 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. 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 delivered1
. A person who finds goods belonging to another, and takes
them into his custody, is subject to the same responsibility as a bailee1
. A person to whom money has been paid, or anything delivered, by mistake or under coercion,
must repay or return it. 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. 1[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. 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. [Goods of defined.] Rep. by s. 65, ibid. [Sale defined.] Rep. by s. 65, ibid. [Sale how effected.] Rep. by s. 65, ibid. [Transfer of ownership of thing sold, which has yet to be ascertained, made or finished.] Rep. by
s. 65, ibid. [Completion of sale of goods which the seller is to put into state in which buyer is to take them.]
Rep. by s. 65, ibid. [Completion of sale of goods, when seller has to do anything thereto in order to as certain price.]
Rep. by s. 65, ibid.
[Completion of sale, when goods are uncertained at date of contract.] Rep. by s. 65, ibid. [Ascertainment of goods by subsequent appropriation.] Rep. by s. 65, ibid.
[Ascertainment of goods by seller’s selection.] Rep. by s. 65, ibid. [Transfer of ownership of moveable property, when sold together with immoveable.] Rep. by s. 65,
ibid. [Buyer to bear loss after good have become his property.] Rep. by s. 65, ibid
[Transfer of ownership of goods agreed to be sold while non existent.] Rep. by s. 65, ibid. [Contract to sell and deliver, at a future day, goods not in sellers possession at date of contract.]
Rep. by s. 65, ibid. [Determination of price not fixed by contract.] Rep. by s. 65, ibid. [Delivery how made.] Rep. by s. 65, ibid. [Effect of delivery to wharfinger or carrier.] Rep. by s. 65, ibid. [Effect of part-delivery.] Rep. by s. 65, ibid. [Seller not bound to deliver until buyer applies for delivery.] Rep. by s. 65, ibid. [Place of delivery.] Rep.by the Indian Sale of Goods Act, 1930 (3 of 1930), s. 65. [Seller's lien.] Rep. by s. 65, ibid.
[Lien where payment to be made at a future day, but no time fixed for delivery.] Rep. by s. 65,
ibid.
[Sellers lien where payment to be made at future day, and buyer allows goods to remain in
sellers possession.] Rep. by s. 65, ibid. [Seller’s lien against subsequent buyer.] Rep. by s. 65, ibid.@/@ [Power of seller to stop in transit.] Rep. by s. 65, ibid.
[When goods are to be deemed in transit.] Rep. by s. 65, ibid. [Continuance of right of stoppage.] Rep. by s. 65, ibid. [Cessation of right on assignment, by buyer, of document showing title.] Rep. by s. 65, ibid. [How seller may stop where instrument of title assigned to secure specific advance.] Rep. by s.
65, ibid. [Stoppage how effected.] Rep. by s. 65, ibid.
[Notice of sellers claim.] Rep. by s. 65, ibid.
[Right of seller on stoppage.] Rep. by s. 65, ibid.
[Resale on buyers failure to perform.] Rep. by s. 65, ibid. [Title conveyed by seller of goods to buyer.] Rep. by s. 65, ibid. [Seller’s responsibility for badness of title.] Rep. by s. 65, ibid. [Establishment of implied warranty of goodness or quality.] Rep. by s. 65, ibid. [Warranty of soundness implied on sale of provisions.] Rep. by s. 65, ibid. [Warranty of bulk implied on sale of goods by sample.] Rep. by s. 65, ibid. [Warranty implied where goods are sold as being of a certain denomination.] Rep. by s. 65, ibid. [Warranty where goods ordered for a specified purpose.] Rep. by s. 65, ibid. [Warranty on sale of article of well known ascertained kind.] Rep. by s. 65, ibid. [Seller when not responsible for latent defects.] Rep. by s. 65, ibid.
[Buyer’s right on breach of warranty.] Rep. by s. 65, ibid.
[Right of buyer on breach of warranty in respect of goods not ascertained.] Rep. by s. 65, ibid. [When buyer may refused to accept, if goods not ordered are sent with goods ordered.] Rep. by
s. 65, ibid. [Effect of wrongful refusal to accept.] Rep. by s. 65, ibid. [Right of seller as to rescission, on failure of buyer to pay price at time fixed.] Rep.by the Indian
Sale of Goods Act, 1930 (3 of 1930), s. 65. [Sale and transfer of lots sold by auction.] Rep. by s. 65, ibid. [Effect of use, by seller, of pretended biddings to raise price.] Rep. by s. 65, ibid.
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. The promise in a contract of indemnity, acting
within the scope of his authority, is entitled to recover from the promisor— 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.
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. A guarantee which extends to a series of transactions, is called a
"continuing guarantee". A continuing guarantee may at any time be revoked by
the surety, as to future transactions, by notice to the creditor. 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. 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. Any variance, made without the
suretys consent, in the terms of the contract between the principal 1
[debtor] and the creditor, discharges
the surety as to transactions subsequent to the variance. 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. 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.
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. 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. 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 sureties1
.
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. 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.
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. 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.
Any guarantee which the creditor has obtained
by means of keeping silence as to material circumstances, is invalid. 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 if that other person does not join. 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. 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 debtor1
. Co-sureties who are bound in different sums
are liable to pay equally as far as the limits of their respective obligations permit. 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". 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
authorized to hold them on his behalf. 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. A contract of
bailment is avoidable 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. 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. 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. 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 bear the expense of separation or division, and any damage arising from the mixture. 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. 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. The lender of a thing for use may at any time require
its return, if the loan was gratuitous, even though 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. It is the duty
of the bailee to return, or deliver according to the bailors 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. 1If, 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.2
A gratuitous bailment is terminated by the
death either of the bailor or of the bailee. In the absence of any contract to the
contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit
which may have accrued from the goods bailed. 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. 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. 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 delivery1
.
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. 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 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— 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. 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
persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an
express contract to that effect1
. 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.
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.
The pawnee is entitled to receive
from the pawnor extraordinary expenses incurred by him for the preservation of the goods pledged. 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 pledge as
a collateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale. If a time is stipulated for the payment of the debt, of
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 them1
; but he must, in that case, pay, in addition, any expenses
which have arisen from his default.
1Where a mercantile agent is, with the consent of the owner, in
possession of goods or the document 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 not authority to pledge. When the pawnor has obtained
possession of the goods pledged by him under a contract voidable under section 19 or section 19A, 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.] Where a person pledges goods in which
he has only a limited interest, the pledge is valid to the extent of that interest. 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 had been made; and either the
bailor or the bailee may bring a suit against a third person for such deprivation or injury.
Whatever is obtained by
way of relief or compensation in any such suit shall, as between the bailor and the bailee, be dealt with
according to their respective interests. An "agent" is a person employed to do any act for another,
or to represent another in dealings with third persons. The person for whom such act is done, or who is so
represented, is called the "principal".
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. 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.
No consideration is necessary to create an agency. The authority of an agent may be expressed
or implied1
. 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. An agent, having an authority to do an act, has authority to do
every lawful thing which is necessary in order to do such act. 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. 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 the agency, a sub-agent must, be employed. A "sub-agent" is a person employed by, and acting under the control of,
the original agent in the business of the agency.
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. 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. 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. 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 or negligence of the agent so
selected. 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 ratify them, the same effects will follow as if they had been
performed by his authority. Ratification may be expressed or may be implied
in the conduct of the person on whose behalf the acts are done.
A person ratifying any
unauthorized act done on his behalf ratifies the whole of the transaction of which such act formed a part. An act done by one person on
behalf of another, without such other persons 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. 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. 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. 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. 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. 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. 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 may be implied in the conduct of the principal or agent respectively. 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. 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. 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. 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. 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. An agent is bound to render proper accounts to his principal on demand. It is the duty of an agent, in cases of difficulty,
to use all reasonable diligence in communicating with his principal, and in seeking to obtain his
instructions.
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. 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. An agent may retain,
out of any sums received on account of the principal in the business of the agency, all moneys due to
himself in respect of 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. Subject to such deductions, the agent is
bound to pay to his principal all sums received on his account. 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. 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. 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, disbursements and services in respect
of the same has been paid or accounted for to him. 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. 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 cause an injury to the rights of third
persons. 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 consequences of that Act1
. The principal must make
compensation to his agent in respect of injury1
caused to such agent by the principal's neglect or want of
skill. 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. When an agent does more than he
is authorized 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. Where an agent
does more than he is authorized 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 recognize the transaction. 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. n 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. 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
rights as he would have had as against the agent if the agent had been 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. 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. 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.
A person untruly representing himself to be the authorized
agent of another, and thereby inducing a third person to deal with him as such agent, is liable, if his
alleged employer does not ratify his acts, to make compensation to the other in respect of any loss or
damage which he has incurred by so dealing. 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. 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. Misrepresentation 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. ['Partnership' defined.] Rep. by s. 73 and the Second Schedule, ibid. [Lender not a partner by advancing money for share of profits.] Rep. by s. 73 and the Second
Schedule, ibid. [Property left in business by retiring partner, or decreased partner's preventative.] Rep. by s. 73
and the Second Schedule, ibid. [Servant or agent remunerated by share of profits, not a partner.] Rep. by s. 73 and the Second
Schedule, ibid. [Widow or child of deceased partner receiving annuity out of profits, not a partner.] Rep. by s.
73 and the Second Schedule, ibid.
[Person receiving portion of profits for sale of good-will, no a partner.] Rep. by s. 73 and the
Second Schedule, ibid. [Responsibility of person leading another to believe him a partner.] Rep. by s. 73 and the Second
Schedule, ibid.
[Liability of person permitting him self to be represented as a partner.] Rep. by s. 73 and the
Second Schedule, ibid. [Minor partner not personally liable, but his share is.] Rep. by s. 73 and the Second Schedule,
ibid. [Liability of minor partner on attaining majority.] Rep. by s. 73 and the Second Schedule, ibid. [Partner's liability for debts of partnership.] Rep. by s. 73 and the Second Schedule, ibid.
[Partner's liability to third person for neglect or fraud of co-partner.] Rep. by s. 73 and the
Second Schedule, ibid. [Partners power to bind co-partner's.] Rep. by s. 73 and the Second Schedule, ibid.
[Annulment of contract defining partner's rights and obligations.] Rep. by s. 73 and the Second
Schedule, ibid. [Rules determining partner's mutual relations, where no contract to contrary.] Rep. by s. 73 and
the Second Schedule, ibid. [When Court may dissolve partnership.] Rep. by s. 73 and the Second Schedule, ibid. [Dissolution of partnership by prohibition of business.] Rep. by s. 73 and the Second Schedule,
ibid.
[Rights and obligations of partners in partnership continued after expiry of term for which it was
entered into.] Rep. by s. 73 and the Second Schedule, ibid. [General duties of partners.] Rep. by s. 73 and the Second Schedule, ibid. [Account, to firm, of benefit derived from transaction affecting partnership.] Rep. by s. 73 and
the Second Schedule, ibid. [Obligations, to firm, of partner carrying on business.] Rep. by s. 73 and the Second Schedule,
ibid. [Revocation of continuing guarantee by charge by change in firm.] Rep. by the Indian
Partnership Act, 1932 (9 of 1932), s. 73 and the Second Schedule.
[Non-liability of deceased partners estate for subsequent obligations.] Rep. by s. 73 and the
Second Schedule, ibid.
[Payment of partnership debts, and of separate debts.] Rep. by s. 73 and the Second Schedule,
ibid.
[Continuance, of partners rights and obligations after dissolution.] Rep. by s. 73 and the Second
Schedule, ibid. [Notice of dissolution.] Rep. by s. 73 and the Second Schedule, ibid. [Right of partners to apply for winding-up after termination of partnership.] Rep. by s. 73 and
the Second Schedule, ibid. [Limited-liability partnerships, incorporate partnerships, and joint-stock companies.] Rep. by s.
73 and the Second Schedule, ibid. An
agreement made without consideration is void, unless Section 25 of the Indian Contract Act, 1872, establishes a fundamental principle regarding the validity of agreements made without consideration. It delineates the circumstances under which such agreements are deemed void, with specific exceptions that recognize certain types of agreements as valid despite lacking consideration. This section is pivotal in understanding the enforceability of contractual obligations and the importance of consideration in contract law. Section 25 states: "Agreements without consideration are void, unless—(a) it is expressed in writing and registered under the law for the time being in force for the registration of documents; (b) it is a promise to compensate for something done; (c) it is a promise to pay a debt barred by limitation law." Essentially, the section emphasizes that, as a general rule, an agreement lacking consideration is void, but exceptions exist where such agreements are made in writing, are voluntary promises to compensate, or relate to time-barred debts. Section 25 applies to all types of agreements, whether oral or written, that are made without consideration. It excludes agreements that fall under its exceptions, which are deemed valid and enforceable. The section plays a crucial role in preventing gratuitous promises from being enforced unless they meet specific legal conditions, thereby safeguarding the doctrine of consideration as a cornerstone of contractual validity. There is no specific punishment prescribed under Section 25 for breach or violation. Instead, the section itself provides a legal consequence: agreements made without consideration, not falling under exceptions, are void and unenforceable in law. Section 25 of the Indian Contract Act, 1872, underscores the centrality of consideration in contract validity, while carving out specific exceptions that recognize the enforceability of certain gratuitous or social agreements. Its judicial interpretations have clarified the scope of enforceability, especially concerning acknowledgment of debts and agreements made out of love and affection, thus balancing the principles of fairness and legal certainty in contract law. 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. Section 24 of the Indian Contract Act, 1872, addresses the consequences of agreements where consideration or objects are unlawful in part. It is a fundamental provision that delineates the scope of enforceability of contracts with unlawful elements, emphasizing that the law considers such agreements void to prevent immoral or illegal activities from being sanctioned through enforceable contracts. Section 24 states: "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." In essence, if an agreement involves both lawful and unlawful considerations or objects, the entire agreement is rendered void, unless the unlawful part can be severed from the lawful part. Section 24 of the Indian Contract Act, 1872, serves as a safeguard against enforcing agreements that involve unlawful considerations or objects. It enforces the principle that contracts contrary to law, morality, or public policy are void and unenforceable in law. The doctrine of severability provides some flexibility, allowing lawful parts of an agreement to be enforced where they are capable of being separated from unlawful parts. This provision underscores the importance of legality in contractual obligations and acts as a deterrent against illicit activities cloaked in contractual form. Note: This commentary synthesizes legal principles from various judgments and legal texts, emphasizing the broad scope and critical importance of Section 24 in maintaining lawful and moral standards in contractual dealings.
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 for breach of contract at Calcutta.
(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 reS.17 "Fraud" defined.
(1) the suggestion, as 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;
(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.S.19 Voidability of agreements without free consent.
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.
Explanation.—A fraud S.19A Power to set aside contract induced by undue influence.
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 seem just.
Illustrations
(a) As son has forged Bs name to a promissory note. B under threat of prosecuting As 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) A, a money-lender, advances Rs. 100 to B, an agriculturist, and, by uS.20 Agreement void where both parties are under mistake as to matter of fact.
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 the
these facts. The agreement is void.
(b) A agrees to buy from B a certain horse. It turns out that the horse was dead at the time of the bS.21 Effect of mistakes as to law.
2
* * * * *
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.
3
* * * * *S.22 Contract caused by mistake of one party as to matter of fact.
S.23 What considerations and objects are lawful, and what not.
it is forbidden by law1
; or
is of such a 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 saS.26 Agreement in restraint of marriage, void.
S.29 Agreements void for uncertainty.
Illustrations
(a) A agrees to sell to 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 to 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 cocoanut-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 entered into a contract for the sale of one hundred tons of cocoanut-oil.
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 294A of the Indian Penal Code not affected.—Nothing in this section shall be deemed to
legalize any transaction connected with horse-racing, to which the provisions of section 294A of the
Indian Penal Code (45 of 1860) apS.31 "Contingent contract" defined.
Illustration
A contracts to pay B Rs. 10,000 if Bs house is burnt. This is a contingent contract.S.32 Enforcement of contracts contingent on an event happening.
If the event becomes impossible, such contracts become void.
Illustrations
(a) A makes a contract with B to buy Bs 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 law unless and until C refuses to buy the horse.
(c) A contracts to pay B a sum of money when B marries C. C dies without bS.33 Enforcement of contracts contingent on an event not happening.
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.
S.34 When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person.
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.S.35 When contracts become void which are contingent on happening of specified event within fixed time . When contracts may be enforced, which are contingent on specified event not happening within fixed time.
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.
Illustrations
(a) A promises to pay B a sum of money if a certain ship returns within a year. The contract may be enforced S.36 Agreement contingent on impossible events void.
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.
S.37 Obligation of parties to contracts.
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.
(b) A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The coS.38 Effect of refusal to accept offer of performance.
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 made is
able and willing there and then to do the whole of what he is bound by his promise to do;
(3) if the offer isS.39 Effect of refusal of party to perform promise wholly.
Illustrations
(a) A, a singer, enters into a 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 a contract with B, the manager of a theatre, to sing at his theatre two night' in every week during
the next two months, and B engages to pay her at the rate of 100 rupeS.40 Person by whom promise is to be performed.
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 employ some proper person to do so.
(b) A promises to paint a picture for B. A must perform this promise personally.S.41 Effect of accepting performance from third person.
S.42 Devolution of joint liabilities.
S.44 Effect of release of one joint promisor.
S.45 Devolution of joint rights.
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 during C's life, and after
the death of C with the representatives of B and C jointly.
S.46 Time for performance of promise, when no application is to be made and no time is specified.
Explanation.—The question "what is a reasonable time" is, in each particular case, a question of fact.S.47 Time and place for performance of promise
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. S.48 Application for performance on certain day to be at proper time and place.
Explanation.—The question "what is a proper time and place" is, in each particular case, a question
of fact.S.49 Place for performance of promise, where no application to be made and no place fixed for performance.
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.
S.50 Performance in manner or at time prescribed or sanctioned by promise.
Illustrations
(a) B owes A 2,000 rupees. A desires B to pay the amount to A's account with C, a banker. B, who also banks with C,
orders the amount to be transferred from his account to A's credit, and this is done by C. Afterwards, and before A knows of the
transfer, C fails. There has been a good payment by B.
(b) A and B are mutually indebted. A and B settle an account by setting off one item against another, and B pays A the
balance found to be due from him upon such settlement. This amounts to a payment by A and B, respectively, of the sums which
they owed to each other.
(c) A owes B 2,000 rupeesS.51 Promisor not bound to perform, unless reciprocal promisee ready and willing to perform.
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 deliver goods to B at a price to be paid by instalments, the first instalment to be paid on
delivery.
S.52 Order of performance of reciprocal promises.
Illustrations
(a) A and B contract that A shall build a house for B at a fixed price. As promise to build the house must be performed
before B's promise to pay for it.
(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. A's promise need not be performed until the security is given, for the nature of the transaction requires
that A should have security before he delivers up his stock.S.53 Liability of party preventing event on which the contract is to take effect.
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 compensation for any loss which he has incurred by its non-performance.S.54 Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises.
Illustrations
(a) A hires B's ship to take in and convey, from Calcutta to the Mauritius, a cargo to be provided by A, B receiving a certain
freight for its conveyance. A does not provide any cargo for the ship. A cannot claim the performance of B's promise, and must
make compensation to B for the loss which B sustains by the non-performance of the contract.
S.55 Effect of failure to perform at fixed time, in contract in which time is essential.
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 compensation from the promisor for
any loss occasioned to him by such failure.
Effect of acceptance of performance at time other than that agreed upon.-S.57 Reciprocal promise to do things legal, and also other things illegal.
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, that B may use the house as a gambling house, and is a void agreement.S.58 Alternative promise, one branch being illegal.
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.59 Application of payment where debt to be discharged is indicated.
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 rupees. B writes to A and demands payment of this sum. A sends to B
567 rupees. This payment is to be applied to the discharge of the debt of which B had demanded payment.
<S.61 Application of payment where neither party appropriates.
S.62 Effect of novation, rescission, and alteration of contract.
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 arrangement 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 a new contract and extinguishes the old.
(c) A owes B 1,000 rupees under a contract. B owes C 1,000 rupees, B orders A to credit C with 1,000 rupees in his books,
but C doesS.63 Promise may dispense with or remit performance of promise.
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 owes B 5,000 rupees. C pays to B 1,000 rupees, and B accepts them, in satisfaction of his claim on A. This payment is
a discharge of the whole claimS.64 Consequences of rescission of voidable contract.
S.65 Obligation of person who has received advantage under void agreement, or contract that becomes void.
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 the 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 only before that
day, and none after. B retains the 130 maunds after the first of May. He is bound to pay A for them.
(c) A, a singer, contracts with B, the manager of a thS.66 Mode of communicating or revoking rescission of voidable contract.
S.67 Effect of neglect of promisee to afford promisor reasonable facilities for performance.
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.S.68 Claim for necessaries supplied to person incapable of contracting, or on his account.
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 B's propertyS.69 Reimbursement of person paying money due by another, in payment of which he is interested.
Illustration
B holds land in Bengal, on a lease granted by A, the zamindar. The revenue payable by A to the Government being in arrear,
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.S.70 Obligation of person enjoying benefit of non-gratuitous act.
Illustrations
(a) A, a tradesman, leaves goods at Bs house by mistake. B treats the goods as his own. He is bound to pay A for them.
(b) A saves Bs property from fire. A is not entitled to compensation from B, if the circumstances show that he intended to
act gratuitously.
S.71 Responsibility of finder of goods.
S.72 Liability of person to whom money is paid, or thing delivered, by mistake or under coercion.
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 excessive.S.73 Compensation for loss or damage caused by breach of contract.
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 discharged, any
person injured by the failure to discharge it is entitled to receive the same compensation from the party in
default, as if such person had contracted to dischS.74 Compensation for breach of contract where 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, recognizance or other instrument of the
same nature, or, under the provisions of any law, or under the orders of the 2
[CentrS.75 Party rightfully rescinding contract, entitled to compensation.
Illustration
A, a singer, contracts with B, the 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 contractS.76 Repealed.
S.77 Repealed.
S.78 Repealed.
S.79 Repealed.
S.80 Repealed.
S.81 Repealed.
S.82 Repealed.
S.83 Repealed.
S.84 Repealed.
S.85 Repealed.
S.86 Repealed.
S.87 Repealed.
S.88 Repealed.
S.89 Repealed.
S.90 Repealed.
S.91 Repealed.
S.92 Repealed.
S.93 Repealed.
S.94 Repealed.
S.95 Repealed.
S.96 Repealed.
S.97 Repealed.
S.98 Repealed.
S.99 Repealed.
S.100 Repealed.
S.101 Repealed.
S.102 Repealed.
S.103 Repealed.
S.104 Repealed.
S.105 Repealed.
S.106 Repealed.
S.107 Repealed.
S.108 Repealed.
S.109 Repealed.
S.110 Repealed.
S.111 Repealed.
S.112 Repealed.
S.113 Repealed.
S.114 Repealed.
S.115 Repealed.
S.116 Repealed.
S.117 Repealed.
S.118 Repealed.
S.119 Repealed.
S.120 Repealed.
S.121 Repealed.
S.122 Repealed.
S.123 Repealed.
S.124 "Contract of indemnity" defined
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.S.125 Rights of indemnity-holder when sued.
(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 authorized 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 the
compromise was not contrary to the orders of the promisor, and was one which it would have been
prudent for the promisee toS.126 "Contract of guarantee", "surety", "principal debtor" and "creditor".
S.127 Consideration for 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 them in default of payment by B. A agrees to forbear as requested. This is a sufficient consideration for
C's promise.
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.S.129 "Continuing guarantee".
Illustrations
(a) A, in consideration that B will employ C in collecting the rent of B'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 £ 100, for any tea he may from time to time supply to C. B
supplies C with tea to above the value of £ 100, and C pays B for it. Afterwards, B supplies C with tea to the value of £ 200. C
fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to B to the extent of £ 100.
S.130 Revocation of continuing guarantee.
Illustrations
(a) A, in consideration of B's discounting, at As 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 guarantees to B, to the extent of 10,000 rupees, that C shall pay all the bills that B shall draw upon him. B draws upon
C. C accepts the bill. A gives notiS.131 Revocation of continuing guarantee by surety's death.
S.132 Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on others default.
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 note is made. The fact that A, to the knowledge of C, made the note as surety for B, is no answer to a suit by C against
A upon the note.S.133 Discharge of surety by variance in terms of contract.
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
overdraw, 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.
(b) A guarantees C against the misconduct of B in an office to which B is appointed by C, and of which tS.134 Discharge of surety by release or discharge of 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 with 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 suretyship.
(b) A contracts with B to grow a crop of indigo on A's land and to deliver it to B at a fixed rate, and C guarantees A'sS.135 Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor.
S.136 Surety not discharged when agreement made with third person to give time to principal debtor.
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.S.137 Creditor's forbearance to sue does not discharge 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.
S.138 Release of one co-surety does not discharge others.
S.139 Discharge of surety of creditor's act or omission impairing surety's eventual remedy.
Illustrations
(a) B contracts to build a ship for C for a given sum, to be paid by instalments 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 instalments. A is
discharged by this prepayment.
(b) C lends money to B on the security of a joint and several promissory note made in C's favour by B, and by A as surety
for B, together with a bill of sale of B's fS.140 Rights of surety on payment or performance.
S.141 Surety's right to benefit of creditor's securities.
Illustrations
(a) C, advances to B, his tenant, 2,000 rupees on the guarantee of A. C has also a 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 is discharged from
liability to the amount of the value of the furniture.
(b) C, a creditor, whose advaS.142 Guarantee obtained by misrepresentation invalid.
S.143 Guarantee obtained by concealment 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 acquaint C with
B's previous conduct. B afterwards makes 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 privately
agreed that B should pay five rupees per ton beyond the market price, such excess to be applied in liquidation of an old debt. This
agreement is concealed from A. A isS.144 Guarantee on contract that creditor shall not act on it until co-surety joins.
S.145 Implied promise to indemnify surety.
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 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 sum of money, and A, at the request of B, accepts a bill of exchange drawn by B upon A to secure the
amount. CS.146 Co-sureties liable to contribute equally.
Illustrationsbr
(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 are sureties to D for the sum of 1,000 rupees lent to E, and there is a contract between A, B and C that A is to
be responsible to the extent of one-qS.147 Liability of co-sureties bound in different sums.
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 each
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, 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 thS.148 "Bailment", "bailor" and "bailee" defined.
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 bailmentS.149 Delivery to bailee how made.
S.150 Bailor's duty to disclose faults in goods bailed.
If the 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 injured. A is responsible to B for damage sustained.
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.
S.153 Termination of bailment by bailee's act inconsistent with conditions.
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.S.154 Liability of bailee making unauthorized use of goods bailed.
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 Benares. A rides with clue care, but marches to Cuttack instead.
The horse accidentally falls and is injured. A is liable to make compensation to B for the injury to the horse.S.155 Effect of mixture, with bailor's consent, of his goods with bailee's.
S.156 Effect of mixture, without bailor's consent, when the good can be separated.
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 expense incurred
in the separation of the bales, and any other incidental damage.S.157 Effect of mixture, without bailor's consent, when the goods cannot be separated.
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 only Rs. 25 a barrel. B must compensate A for the loss of his flour.
S.158 Repayment, by bailor, of necessary expenses.
S.159 Restoration of goods lent gratuitously.
S.160 Return of goods bailed, on expiration of time or accomplishment of purpose.
S.161 Bailee's responsibility when goods are not duly returned.
S.162 Termination of gratuitous bailment by death.
S.163 Bailor entitled to increase or profit from 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.
S.164 Bailor's responsibility to bailee.
S.165 Bailment by several joint owners.
S.166 Bailee not responsible on re-delivery to bailor without title.
S.167 Right of third person claiming goods bailed.
S.168 Right of finder of goods.
S.169 When finder of thing commonly on sale 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.
S.170 Bailee's particular lien.
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 services 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 finished, and to give a
three months' credit for the price. B is not entitled to retain the coat untilS.171 General lien of bankers, factors, wharfingers, attorneys and policy-brokers.
S.173 Pawnee's right of retainer.
S.174 Pawnee not to retain for debt or promise other than that for which goods pledged.
S.175 Pawnee's right as to extraordinary expenses incurred.
S.176 Pawnee's right where pawnor makes default.
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.S.177 Defaulting pawnor's right to redeem.
S.178 Pledge by mercantile agent.
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).S.178A Pledge by person in possession under voidable contract.
S.179 Pledge where pawnor has only a limited interest.
S.180 Suit by bailor or bailee against wrong-doer.
S.181 Apportionment of relief or compensation obtained by such suits.
S.182 "Agent" and "principal" defined.
S.183 Who may employ agent.
S.184 Who may be an agent.
S.185 Consideration not necessary.
S.186 Agent's authority may be expressed or implied.
S.187 Definitions of express and implied authority.
Illustration
A owns a shop in Serampore, 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 for the purposes of the shopS.188 Extent of agent's authority.
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 shipbuilder. B may purchase timber and other materials, and hire
workmen, for the purpose of caS.189 Agent's authority in an emergency.
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.S.190 When agent cannot delegate.
S.191 "Sub-agent" defined.
S.192 Representation of principal by sub-agent properly appointed.
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.S.193 Agent's responsibility for sub-agent appointed without authority.
S.194 Relation between principal and person duly appointed by agent to act in business of agency.
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 authorizes B, a merchant in Calcutta, to recover the moneys due to A from C & Co. B instructs D, a solicitor, to take
legal proceedings against C & Co. for the recovery of the money. D is not a sub-agent, but is solicitor for A.S.195 Agent's duty in naming such person.
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 course, employs an auctioneer in good credit to sell the goods of
A, and allows the auctioneer to receive the proceeds of S.196 Right of person as to acts done for him without his authority.
S.197 Ratification may be expressed or implied.
Illustrations
(a) A, without authority, buys goods for B. Afterwards B sells them to C on his own account; B's conduct implies a
ratification of the purchase made for him by A.
(b) A, without B's authority, lends B's money to C. Afterwards B accepts interest on the money from C. B's conduct implies
a ratification of the loan.S.198 Knowledge requisite for valid ratification.
S.199 Effect of ratifying unauthorized act forming part of a transaction.
S.200 Ratification of unauthorized act cannot injure third person.
Illustrations
(a) A, not being authorized 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 on three months' notice. C, an unauthorized person, gives notice of termination to A.
The notice cannot be ratified by B, so as to be binding on A.S.201 Termination of agency.
S.202 Termination of agency, where agent has an interest in subject-matter.
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 B to sell the cotton,
and to repay himself out of the price, the amount of his own advances. A cannot revoke this authority, nor is it terminated by his
insanity or death.
S.203 When principal may revoke agent's authority.
S.204 Revocation where authority has been partly exercised.
Illustrations
(a) A authorizes B to buy 1,000 bales of cotton on account of A, and to pay for it out of A's moneys 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 authorizes B to buy 1,000 bales of cotton on account of A, and to pay for it out of A's moneys remaining in B's hands.
B buys 1,000 bales of cotton in A's name, and so as not to render himself personally liable for the price.S.205 Compensation for revocation by principal, or renunciation by agent.
S.206 Notice of revocation or renunciation.
S.207 Revocation and renunciation may be expressed or implied.
Illustration
A empowers B to let A's house. Afterwards A lets it himself. This is an implied revocation of
B's authority.S.208 When termination of agent's authority takes effect as to agent, and as to third persons.
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, revoke 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 letter, directs B to sell for him some cotton lying in a warehouse in Bombay, and afterwards, by letter,
revokes his authority to sell, and directs B to send the cotton to MadS.209 Agent's duty on termination of agency by principal's death or insanity.
S.210 Termination of sub-agent's authority.
S.211 Agent's duty in conducting principal's business.
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 such
investments.
(b) B, a broker, in whose business it S.212 Skill and diligence required from agent.
Illustrations
(a) 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 retains the money for a considerable time. A, in consequence of not receiving the money, becomes insolvent. B is liable
for the money and intereS.213 Agent's accounts.
S.214 Agent's duty to communicate with principal.
S.215 Right of principal when agent deals, on his own account, in business of agency without principals consent.
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 repudiate the sale, if he can show that B has dishonestly concealed any material fact, or that the sale has
been disadvantageous to him.
(S.216 Principal's right to benefit gained by agent dealing on his own account in business of agency.
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, compel him to sell it to A at the price he gave for it.S.217 Agent's right of retainer out of sums received on principal's account.
S.218 Agent's duty to pay sums received for principal.
S.219 When agent's remuneration becomes due.
S.220 Agent not entitled to remuneration for business 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 good 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 rupees to B.
(b) A employs B to recover 1,000 rupees from C. Through B's miscS.221 Agent's lien on principal's property.
S.222 Agent to be indemnified against consequences of lawful acts.
Illustrations
(a) B, at Singapur, 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 authorizes 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) B, a broker at Calcutta, by the orders of A, a merchant there, contracts with C for the purchase of 10 casks of oil for A.
Afterwards A refuses to receive the oil, and C sues B. S.223 Agent to be indemnified against consequences of acts done in good faith.
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.
(b) B, at the request of A, sells goods in the possession of A, but which A had no right to dispose of, B does not know this,
and hanS.224 Non-liability of employer of agent to do a criminal 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 As request, a libel upon C in the paper, and A agrees to indemnify B
against the consequences of the publication, and all costs and damages of any action in respect thereof. B is sued by C and has to
pay damages, and also incurs expenses. A is not liaS.225 Compensation to agent for injury caused by principal's neglect.
Illustration
A employs B as a bricklayer in building a house, and puts up the scaffolding himself. The scaffolding is unskilfully put up,
and B is in consequence hurt. A must make compensation to B.
S.226 Enforcement and consequences of agent's contracts.
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 on his behalf, receives from C a sum of money due to B. C is
discharged of his obligation to pay the sum in question to B.
S.227 Principal how far bound, when agent exceeds authority.
Illustration
A, being owner of a ship and cargo, authorizes 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.S.228 Principal not bound when excess of agent's authority is not separable.
Illustration
A authorizes 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.S.229 Consequences of notice given to agent.
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 the goods.
(b) A is employed by B to buy from C goods of which C is the apparent owner. A was, before he was so employeS.230 Agent cannot personally enforce, nor be bound by, contracts on behalf of principal.
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 the agent does not disclose the name of his principal;
(3) where the principal, though disclosed, cannot be sued.S.231 Rights of parties to a contract made by agent not disclosed.
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.
S.232 Performance of contract with agent supposed to be principal.
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.S.233 Right of person dealing with agent personally 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.S.234 Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable.
S.235 Liability of pretended agent.
S.236 Person falsely contracting as agent, not entitled to performance.
S.237 Liability of principal inducing belief that agent's unauthorized acts were authorized.
Illustrations
(a) A consigns goods to B for sale, and gives him instructions not to sell under a fixed price. C, being ignorant of Bs
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) A entrusts B with negotiable instruments endorsed in blank. B sells them to C in violation of private orders from A. The
sale is good.S.238 Effect, on agreement, of misrepresentation or fraud by agent.
Illustrations
(a) A, being B's agent for the sale of goods, induces C to buy them by a misrepresentation, which he was not authorized by
B to make. The contract is voidable, as between B and C, at the option of C.
(b) A, the captain of B's ship, signs bills of lading without having received on board the goods mentioned therein. The billsS.239 Repealed..
S.240 Repealed..
S.241 Repealed..
S.242 Repealed..
S.243 Repealed..
S.244 Repealed..
S.245 Repealed..
S.246 Repealed..
S.247 Repealed..
S.248 Repealed..
S.249 Repealed..
S.250 Repealed..
S.251 Repealed..
S.252 Repealed..
S.253 Repealed..
S.254 Repealed..
S.255 Repealed..
S.256 Repealed..
S.257 Repealed..
S.258 Repealed..
S.259 Repealed..
S.260 Repealed..
S.261 Repealed..
S.262 Repealed..
S.263 Repealed..
S.264 Repealed..
S.265 Repealed..
S.266 Repealed..
S.25 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.
(1) it is expressed in writing and registered under the law for the time being in force for the
registration of 1[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 is a promise, made in writing and signed by the person to be charged therewith, or by his
agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the
creditor might have enforced payment but for the law for the limitation Legal Commentary on Section 25 of the Indian Contract Act, 1872
Introduction
What does Section 25 Say?
Essential Ingredients
Scope of Section 25
Punishment for Section
Legal Comments (Summary with References)
Conclusion
S.24 Agreement void, if considerations and objects unlawful in part.
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 As promise, and the consideration for Bs
promise, being in part unlawful.Legal Commentary on Section 24 of the Indian Contract Act, 1872
Introduction
What does Section 24 Say?
Essential Ingredients
Scope of Section 24
Punishment for Violations
Legal Comments (Bullet Point Summary with References)
Conclusion
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. Section 60 of the Indian Contract Act, 1872, deals with the application of payments made by a debtor when the debtor does not specify to which debt the payment should be applied. It provides a legal framework for how creditors should allocate such payments in the absence of explicit instructions, ensuring clarity and fairness in debt discharges. Section 60 states that when a debtor makes a payment without indicating the specific debt it pertains to, and there are no other circumstances suggesting the application, the creditor has the discretion to apply the payment to any lawful debt due and payable by the debtor, regardless of whether its recovery is barred by law or not. Section 60 does not prescribe any punishment for violations. Instead, it establishes a default rule for the application of payments, with the onus on the creditor to act in good faith and in accordance with the law and contractual obligations. Section 60 of the Indian Contract Act, 1872, provides a vital legal mechanism to ensure that payments made without specific allocation do not lead to disputes or ambiguity. It empowers the creditor to apply such payments to any lawful debt due and payable, fostering fairness, clarity, and order in financial transactions. Judicial decisions have reinforced its role as a default rule, emphasizing the creditor's good faith and proper exercise of discretion. Note: This commentary synthesizes legal principles, judicial interpretations, and case law references to provide a comprehensive understanding of Section 60. It is intended for legal analysis and not as a substitute for professional legal advice.Legal Commentary on Section 60 of the Indian Contract Act, 1872
Introduction
What does Section 60 Say?
Essential Ingredients
Scope of Section 60
Punishment for Violations
Legal Comments (Summary with References)
Conclusion
An agreement to do an act impossible in itself is void. SupremeToday AI Service seems to be Down for a While!
Contract to do an 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.1
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 through the nonperformance of the promise.
Illustrations
<
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". Section 172 of the Indian Contract Act, 1872, defines and regulates the concept of pledge, a specific form of bailment involving the transfer of goods as security for a debt or performance of a promise. It forms a fundamental part of the law relating to security interests in movable property and establishes the legal framework for pledge transactions. Section 172 states:"The bailment of goods as security for payment of a debt or performance of a promise is called 'pledge'. The bailor in this case is called 'pawnor', and the person to whom goods are delivered is called 'pawnee'."It further elaborates that pledge involves the delivery of goods in possession of the pawnee as security for a debt or obligation. Section 172 itself does not prescribe specific punishments; it is a definitional provision. However, violations such as wrongful sale or illegal pledge may attract penalties under related sections of the Indian Penal Code or other applicable laws, including penalties for breach of trust or cheating. This concise commentary encapsulates the core legal principles, scope, and significance of Section 172 of the Indian Contract Act, 1872, along with relevant legal interpretations and implications.Legal Commentary on Section 172 of the Indian Contract Act, 1872
Introduction
What does Section 172 Say?
Essential Ingredients (Essentials of a Valid Pledge)
Scope of Section 172
Scope of Section 172
Punishment for Section 172
Legal Comments (Bullet Point Summary)
1
Every agreement,— Section 28 of the Indian Contract Act, 1872, is a fundamental provision that addresses the legality of agreements in restraint of legal proceedings. Its primary purpose is to safeguard the constitutional right of access to justice by prohibiting agreements that restrict or extinguish a party’s right to approach courts or limit the time within which such rights can be enforced. Over the years, amendments and judicial interpretations have refined its scope, especially concerning arbitration clauses, contractual limitations, and the enforceability of certain stipulations. Section 28 states that: "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 the extent of such restriction or extinguishment." It emphasizes that agreements which impose absolute restrictions on enforcing legal rights or extinguish such rights after a certain period are void, with specific exceptions. Section 28 of the Indian Contract Act, 1872, plays a pivotal role in safeguarding the right to legal recourse by invalidating agreements that impose absolute restrictions on enforcement or extinguish rights prematurely. Judicial interpretations, especially post-amendment, have clarified that such restrictions are void unless they fall within specific exceptions, notably arbitration clauses which are protected if they do not restrict access to courts or violate public policy. The amendments and case law collectively reinforce the principle that parties cannot contract out of the statutory and constitutional right to seek justice within reasonable limits, ensuring the integrity of legal proceedings and the rule of law.
(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 the extent.
Exception 1.—Saving of contract to refer to arbitration dispute that may arise.—This section
shall not render illegal a contract, by which two or more persons agree that any dispute which may arise
between them in Legal Commentary on Section 28 of the Indian Contract Act, 1872
Introduction
What does Section 28 Say
Essential Ingredients
Scope of Section
Punishment/Penalty for Violations
Legal Comments (Summary with References)
Final Observations
Every agreement by which any one is restrained from
exercising a lawful profession, trade or business of any kind, is to that extent void. Section 27 of the Indian Contract Act, 1872, is a fundamental provision that deals with agreements in restraint of trade, profession, or business. It establishes the principle that such agreements are generally void, aiming to promote free trade, individual liberty, and fair competition. Despite its broad scope, certain exceptions and legal nuances have evolved through case law and statutory interpretations. Section 27 states that: "Every agreement by which any one is restrained from exercising a lawful profession, trade, or business of any kind, is to that extent void." It also provides exceptions, notably: "Saving of agreement not to carry on business of which good-will is sold," allowing restraints in the sale of goodwill under reasonable limits. This comprehensive overview underscores that Section 27 aims to uphold free trade and individual liberty by declaring agreements in restraint of trade void, subject to specific exceptions. Courts emphasize reasonableness, public policy, and fairness in assessing the validity and enforceability of restrictive covenants, especially in employment and commercial contexts.
Exception 1.Saving of agreement not to carry on business of which good-will is sold.One
who sells the good-will 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 good-will
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.
1
* * * * *. Legal Commentary on Section 27 of the Indian Contract Act, 1872
Introduction
What does Section 27 Say
Essential Ingredients
Scope of Section 27
Punishment for Violating Section 27
Legal Comments
The communication of a proposal is complete when it comes
to the knowledge of the person to whom it is made. Legal Comments Definition of Section 4 - "Communication when complete" - Section 4 establishes when offer/acceptance are effective, essential for forming a contract; failure to complete communication affects validity of contract formation - [Trimex International FZE Ltd. Dubai VS Vedanta Aluminium Ltd. , India] Core principle: Acceptance complete when knowledge reaches proposer; as against acceptor, when sent in course of transmission - [Pothuraju Narasaiah VS Suroju Nagamani] Completion of communication key to treaties in arbitration—acceptance/offer timing determines enforceability of arbitration clauses and contract formation - [TRIMEX INTERNATIONAL FZE LTD. VS VEDANTA ALUMINIUM LTD. ] Essential ingredients for contract under Section 4 include a definite offer, unconditional acceptance, and proper communication; a rider or conditional acceptance may negate finality unless clarified and unconditionally accepted - [TRIMEX INTERNATIONAL FZE LTD. VS VEDANTA ALUMINIUM LTD. ] Importance of ouster/jurisdiction clauses: Once concluded contract, jurisdiction clauses come into play; Section 4 aids in determining when contract is formed, affecting jurisdiction analysis - [OK Play India Limited VS Pradeep Tayal] Forfeiture/security implications tied to valid acceptance: If acceptance complete and conditions unmet (e.g., failure to furnish performance guarantee), forfeiture may be justified under Section 4 - [Dinesh Chandra Patni VS State of Uttarakhand] In tender/works contracts, acceptance timing (posting vs transmission) determines contract formation; delays beyond validity period may nullify agreement absent mutual extension - [Sanghi Brothers VS Methodex System Ltd. ] The decision distinguishes between an executory contract (lease, sale) and a concluded transfer; after conveyance, Transfer of Property Act interacts with Contract Act; Section 4 does not import Contract Act provisions into all property transfers but governs contract formation for leases as well - [K. Viswanathan VS A. Ramesh] Read with related provisions, Section 4 supports the view that a concluded contract can exist even if a formal instrument is not signed; e-mails and exchanges can create binding contracts per Section 7/Section 4 - [Trimex International FZE Ltd. Dubai VS Vedanta Aluminium Ltd. , India] In cases of fraud/misrepresentation, Section 17 (fraud) and related pleadings require particulars; failure to plead with specifics can lead to dismissal, illustrating procedural interplays with Section 4 in determining when contract forms - [01800015440] Arbitration petitions under Section 11(6) rely on an earlier concluded contract; Section 4’s determination of when acceptance is complete underpins whether arbitration agreements are valid and enforceable - [Trimex International FZE Ltd. Dubai VS Vedanta Aluminium Ltd. , India] The principle that an offer may be revoked before acceptance is complete, per Section 5, complements Section 4 by defining the window during which contract formation is possible - [Pothuraju Narasaiah VS Suroju Nagamani] Jurisdictional disputes: Properly determined only after contract is concluded; Section 4 helps establish when a contract exists to determine the proper forum - [OK Play India Limited VS Pradeep Tayal] In government/tender contexts, acceptance communicated within the specified validity period is crucial; if the acceptance is transmitted after expiry, the contract may be deemed void for lack of consensus ad-idem - [Dalpatri Jhanjhnari VS West End Watch Co. , Bombay] Where parties rely on emails and letters to form a contract, the Act accepts these as valid forms of communication if they meet the requirements of offer/acceptance; formal signed agreements are not always necessary - [TRIMEX INTERNATIONAL FZE LTD. VS VEDANTA ALUMINIUM LTD. ] The Court recognizes that a concluded contract may be binding even if a formal instrument is not executed; drafting/initialing may be subsequent to the binding exchange - [Kali Prosonno Bhattacharyya VS Protap Singh Pattar] Section 4 interacts with other statutes like the Sale of Goods Act, Transfer of Property Act, and Arbitration Act to determine scope of remedies, performance, and defects in contract formation - [Bhabhuti Singh Tyagi VS Satya Prakash] The essential terms identified in commercial offers (price, quantity, delivery, payment terms, etc.) matter for contract formation; absence of essential terms would jeopardize formation under Section 4 - [TRIMEX INTERNATIONAL FZE LTD. VS VEDANTA ALUMINIUM LTD. ] In the context of bank guarantees and performance, complete acceptance (and compliance with preconditions) is necessary for a binding contract; non-compliance can lead to no binding contract and invalidity of subsequent claims - [VISHWA INDUSTRIAL COMPANY PVT. LTD VS MAHANADI COALFIELDS LTD] The principle that acceptance must be absolute and unconditional is reinforced by judgments interpreting Dresser Rand and related authorities; conditional acceptances may be transformed into binding agreements if subsequent unequivocal acceptance is communicated - [Trimex International FZE Ltd. Dubai VS Vedanta Aluminium Ltd. , India] The concept of “concluded contract” is central to arbitrations, disputes over jurisdiction, and enforceability of terms; Section 4 provides foundational timing for when a contract exists - [Abdus Salam Choudhury VS State of Assam and others] When considering revocation or withdrawal of offers, Section 4, in conjunction with Section 5, governs whether revocation is effective before acceptance is complete - [Pothuraju Narasaiah VS Suroju Nagamani] For reliefs like specific performance under the Specific Relief Act, readiness and willingness to perform, as required under contract formation, hinge on proof that the contract was validly created under Section 4 - [Parbati Choudhury VS Bhagwan Das Gupta] The Supreme Court views Section 4 as a mechanism to prevent disputes arising from mere drafts; once acceptance is communicated and comes to knowledge, obligations attach, influencing subsequent remedies and performance disputes - [Trimex International FZE Ltd. Dubai VS Vedanta Aluminium Ltd. , India] The textual emphasis across decisions is that the date of communication/transmission of acceptance (not merely the date of offer) fixes the moment of contract formation, guiding all downstream consequences under contract, arbitration, and remedies - [CENTRAL BANK OF INDIA VS N. GURUMURTHY] Note: The above points synthesize the provided sources focusing on Section 4 of the Indian Contract Act, 1872, and its implications for contract formation, communication, acceptance, and related procedural/interjurisdictional consequences. References are enclosed in square brackets after each point.
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
When two or more persons make
a joint promise, the promisee may, in the absence of express agreement to the contrary, compel any 1
[one
or more] of such joint promisors to perform the whole of the promise. Legal Comments Introduction - Section 43 governs joint promisors; it enables a promisee to compel any one or more joint promisors to perform the whole promise, making liability joint and several in absence of contrary agreement. [Rama Shankar Singh VS Shyamlata Devi - 1968 0 Supreme(SC) 293] What Section Says - Section 43: any one of joint promisors may be compelled to perform; each promisor may be compelled to contribute; sharing of loss by default in contribution. Essential ingredients - Existence of two or more joint promisors; a single contract/obligation; absence of express contrary agreement; ability of promisee to choose against one or more promissor(s). Scope of Section - Applies to contracts where two or more parties jointly promise; allows suing one or more without joining all; makes liability joint and several; applies across civil and arbitration contexts where relevant. [Delhi Airport Metro Express Pvt Ltd. VS CAF India Pvt Ltd. - 2014 0 Supreme(Del) 1911] Scope example - In tenancy/rent cases, a partner or joint promisor can be sued individually for arrears; Section 43 supports maintaining a suit against a single defendant in appropriate circumstances. [JATINDRA KUMAR DASS VS DHIRAJLAL VRAJLAL KANAKIA - 1974 0 Supreme(Cal) 247] Relationship with other statutes - Section 43 interacts with corporate/partnership provisions (e.g., Partnership Act, 1932, Section 25; Order 1 Rule 6 CPC) by ensuring joint and several liability extends to partners and firms where applicable. [JATINDRA KUMAR DASS VS DHIRAJLAL VRAJLAL KANAKIA - 1974 0 Supreme(Cal) 247], [HORACE WILLIAM DAVIS VS INTERNATIONAL INVESTMENTS AND FINANCE CORPN - 1986 0 Supreme(Kar) 152] Punishment for Section - Section 43 itself does not specify criminal punishment; it is a civil liability doctrine. Penalties arise in related contexts (e.g., breach damages under Section 73/74, or criminal sections in NI Act), but Section 43 presumes civil remedy. [Rameshbhai Chaturbhai Prajapati VS Minaxiben WD/o Rasiklal tilakram - 2011 0 Supreme(Guj) 278], [SARAYA DISTILLERY,SARDARBAGAR (DISTT. GORAKHPUR) U. P. VS UNION OF INDIA - 1984 0 Supreme(Del) 70] Judicial applications - Multiple cases illustrate: (a) Maintainability of suits against one partner in a firm for rent; (b) apportionment of mortgage liability between co-owners; (c) recovery against one promissor in a joint contract; (d) enforcement against co-promisors without joining all parties. [JATINDRA KUMAR DASS VS DHIRAJLAL VRAJLAL KANAKIA - 1974 0 Supreme(Cal) 247], [Bhairab Chandra Madak VS Nadyar Chand Pal - 1869 0 Supreme(Cal) 372], [Hemendro Coomar Mullick VS Rajendrolall Moonshee - 1878 0 Supreme(Cal) 212], [Ramanjulu Naidu VS Aramudu Iyengar - 1909 0 Supreme(Mad) 359], [Renuka Oliver VS Arulmudi Maheswari Raj Charitable Foundation Trust (AMR Charitable Foundation Trust), Thiruvanmiyur - 2022 0 Supreme(Mad) 1] Novation and assignment effects - Courts recognize that novation or assignment does not automatically extinguish joint liability; Section 43 liability can persist in the face of changes in performance, with the arbitration/contract still binding on remaining promisor(s). [Delhi Airport Metro Express Pvt Ltd. VS CAF India Pvt Ltd. - 2014 0 Supreme(Del) 1911], [SARAYA DISTILLERY,SARDARBAGAR (DISTT. GORAKHPUR) U. P. VS UNION OF INDIA - 1984 0 Supreme(Del) 70] Public policy and contract validity - Section 23 and 28 (Arbitration/Contract Act) may influence enforceability when joint liability interfaces with unlawful or void agreements; Section 43 does not override public policy prohibitions on certain transfers or arrangements. [Union of India, Ministry of Railways, Railway Board vs Jindal Rail Infrastructure Limited - Delhi (2022)], [DECD Shaikh Ismailbhai Hushainbhai Through Lh. VS Vankar Ambalal Dhanabhai - 2024 0 Supreme(Guj) 2206] Interplay with arbitration clauses - Courts treat Section 43 as enabling joint/several liability in arbitrations; arbitral awards can be challenged if they rewrite the contract terms or disregard joint liability principles, but Section 43 remains a robust framework for remedies against individual promissors. [Union of India, Ministry of Railways, Railway Board vs Jindal Rail Infrastructure Limited - Delhi (2022)], [Delhi Airport Metro Express Pvt Ltd. VS CAF India Pvt Ltd. - 2014 0 Supreme(Del) 1911] Interplay with payment/applications - When a dispute arises, a plaintiff may sue one or more joint promisors; Section 43 supports partial enforcement without duplicative suits, aligning with Rule 1 of Order I and Rule 6 CPC principles. [JATINDRA KUMAR DASS VS DHIRAJLAL VRAJLAL KANAKIA - 1974 0 Supreme(Cal) 247], [Hemendro Coomar Mullick VS Rajendrolall Moonshee - 1878 0 Supreme(Cal) 212] Calculation of liability - Courts may apportion liability among co-promisors based on value/participation or as equal shares, depending on contract terms and evidence; Section 43 permits contribution and sharing of loss among promissors. [Bhairab Chandra Madak VS Nadyar Chand Pal - 1869 0 Supreme(Cal) 372] Comparative precedent - King v. Hoare and Kendall v. Hamilton are cited in older doctrine as influencing the rule that a judgment against one joint promisor can affect subsequent actions; modern Indian treatment via Section 43 codifies joint/several liability differently. [Hemendro Coomar Mullick VS Rajendrolall Moonshee - 1878 0 Supreme(Cal) 212], [Muhammad Askari VS Radhe Ram Singh - 1900 0 Supreme(All) 21] Practical guidance - For plaintiffs: sue one or more joint promisors under Section 43 to recover the entire obligation, while preserving the ability to pursue others; for defendants: understand that absence of express contrary terms generally permits joint/several liability. [S. Ponnusamy @ S. P. Samy VS K. Mani - 2014 0 Supreme(Mad) 4000], [Jayalal C. D. @ Chandran VS State Of Kerala - 2023 0 Supreme(Ker) 678] Limitation considerations - Section 28 amendments and arbitration-related time-bars can influence when and how Section 43 relief is sought; courts may consider limitation periods and live disputes in concurrent forums. [Rameshbhai Chaturbhai Prajapati VS Minaxiben WD/o Rasiklal tilakram - 2011 0 Supreme(Guj) 278], [Jaipur Vidhyut Vitran Nigam Limited VS Office Of Electricity Ombudsman, Rajasthan - 2023 0 Supreme(Raj) 491], [01100141279] Minor/guardian contexts - Where contracts involve minors or guardians, Section 43 principles may still operate, but guardian/majority restrictions and validity of contracts (Sections 2, 11, 12, 35) must be addressed; courts have treated partnerships and firms as capable of being jointly liable under Section 43. [Lakhwinder Singh VS Miss Paramjit Kaur - 2003 0 Supreme(P&H) 537] Public-interest and equity considerations - While Section 43 enables expedient remedies, courts remain mindful of public policy, especially when joint liability interacts with void or voidable contracts, or where specific relief is sought in equity-driven suits. [Delhi Airport Metro Express Pvt Ltd. VS CAF India Pvt Ltd. - 2014 0 Supreme(Del) 1911], [Radha Kishan VS State of Rajasthan through the Chief Secretary - Current Civil Cases (2022)] Key caveat - Section 43 does not by itself create a defense or invalidity; it codifies the ability to compel performance from any joint promisor and to require contribution from others, subject to contract terms and applicable procedural rules. Practical takeaway - In litigation involving joint liability (partnerships, joint promissors, corporate guarantors), Section 43 is the primary tool to enforce performance from one or more parties, while preserving rights to recourse against others and aligning with applicable procedural law. [JATINDRA KUMAR DASS VS DHIRAJLAL VRAJLAL KANAKIA - 1974 0 Supreme(Cal) 247], [Delhi Airport Metro Express Pvt Ltd. VS CAF India Pvt Ltd. - 2014 0 Supreme(Del) 1911]
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.
Explanation.Nothing in this section shall prevent a surety from recovering from
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