Contact - II

CONTACT - II
Law Students Federation
Sultan-ul-Uloom, College of Law
Contact - II
Compiled by : Mohammed Abdul Kareem,
Emal : wecare.ak@gmail.com ; lawstudentsfederation@gmail.com
Phone : 7799224814
A.Kareem | Law of Contract | July 20, 2016 Page 1 of 36

CONTACT - II
Contact - II
Big Questions:
1. Define Contract of Indemnity and contract of guarantee and
distinguish between it.
2. Define Bailment and essential requisites of contract of bailment.
What are rights and duties of Bailee.
3. Explain the provisions of appointment. Kinds and Rights and duties
of agent in contract of agency. What are grounds to terminate
agent.
4. Define, agreement to sale, and sale and distinguish between it.
5. Explain the provisions of conditions and warranties specified under
Sale of Goods Act 1930
6. Briefly explain various rights of unpaid seller.
7. Define partnership and its requisites, how partnership differs from
Company and Joint Family Firm.
8. What are methods of dissolution of partnership firm and effects of
dissolution of the firm.
II Short Answers:
1. Continuing Guarantee
2. Non-Gratuitous Bailee

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3. Pledge
4. Del-credere agent
5. Sub – agent and substituted agent
6. Caveat emptor
7. Sale by Non – Owner
8. Nemo dat quod non habet
9. Kinds of Warranties.
10. Goods

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Define Contract of Indemnity and contract of guarantee and

distinguish between it ?
Contract of Indemnity:
Contract of Indemnity means a party makes promise to another
party to save from loss caused to him. Promise is called as
indemnifier and party to whom such promise is give or promise is
called as indemnified. Details of Contract of Indemnity is U/s 124
and 125 of Contract Act 1930.
Ex: - A losses his DD and he applies for duplicate DD, Bank may
obtained indemnity Bond from customer if earlier DD is encashed ,
then he has to indemnify the banker. The Customer is called as
indemnifier and banker is called indemnified.
Ex: - A entered into Contract to file a case against B, if he loses the
case then A promises to pay the loss caused to him. This is contract
of Indemnity between A and B.
Contract of Guarantee:
Contract of Guarantee means contract between two parties and
Third party take responsibility to perform the Contract. First party is
called Creditor, Second party is called Debtor and person who gave
Guarantee is called Guarantor Security.
Details of Guarantee is from Sec-126 to 147 of Contract Act 1930.

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Following are the essentials requisites of Contract of Guarantee:
1. Guarantee can be given orally or in writing. A guarantee given in
writing can be easily prove because there is Documentary
Evidence.
2. Guarantor should be competent person and he should not be
minor or unsound mind person or insolvent person.
3. When Guarantee is given for more no. of transactions then it is
called as Continuing Guarantee. This Guarantee can be revoked
by the surety by giving notice to creditor. But surety is liable for
transaction already done between the parties.
4. When there are more number of Guarantors then all are equally
liable if debtors make default or there is liability for the amount of
guarantee which they have given in the contract.
5. When debtor has paid part of the amount and made default for
balance of the amount surety is liable for only unpaid amount and
not complete amount.
6. Liability of Surety is Joint or several. It means collectively and
individually they are liable when debtor make default.
7. When there is death of guarantor then liability of payments pass
on to his heirs.
8. A single guarantee in a contract cannot be revoked but it can be
substituted by other guarantee if there is consent of creditor.

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9. When guarantee is given under fraud then surety claim is
discharge from guarantee.
S.No. Contract of Indemnity Contract of Guarantee
1. There are only two There are three parties in the
persons in the contract and Contract and they are Creditor,
they are indemnifier and Debtor and Surety.
indemnified.
2. There is Primary liability of There is Secondary liability of
indemnifier Surety.
3. Amount of indemnity may Amount of Guarantee should
be certain or uncertain be certain or definite.
4. Indemnity Contract cannot Continue guarantee can be
be revoked revoked.
5 There is only one There can be more Sureties.
indemnified
6. There is only one Contract There are three contracts b/w
between indemnifier and Creditor/Debtor, Debtor/Surety,
indemnified and Surety/Creditor.

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Gajanan v/s Morresswar
A party promised other party to file a case against a person and he
will pay the loss if the is losses the case when plaintiff lost the case
and he filed a case to claim loss caused to him, the Court held that
defendant have to pay the loss because it is contract of indemnity.
Aniruddin V/s Thomas Bank
A Creditor gave Rs.100,000/- loan to debtor later on credit against
advance so thousand overdraft to the debtor and he may default to
pay complete debt amount. When creditor filed a case again surety
to pay completed then court held that surety is available is only for
amount guarantee O.D. amount has been given without consent
and knowledge of surety and surety cannot be liable to pay the
amount for which he has not given guarantee.
Bushra v/s Suryanarayan and others:
Creditor advanced 3 lakhs rupees loan by taking guarantee of 3
persons and debtor make default creditors filed a case against all
the guarantor one of the guarantor become insolvent. The court held
that when there are more sureties there liability is joint and several.
Two sureties have to pay 1.5 lakhs each to the creditors.

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Aziz Ahmed v/s Sher Ali & Another:
Two persons gave guarantee for Rs. 50,000/- Chit amount the party
paid 20,000/- Rs. to Chit Fund and later on made default. Chit Fund
owner filed a case to recover complete Chit Fund and the court held
that sureties and liable only for unpaid amount and not complete
amount.
These are the details of Indemnity and Guarantee of distinguish
and relevant cases.
Non gratuitous Bailee:
It means such Bailee who has possession of articles for some
period without consideration.
Ex: - A gave scooter to B for few hours, B is non gratuitous Bailee.
It includes following point.
1. Bailee have return article to bailor otherwise it is of detention and
crime. Breach of Trust.
2. Bailor cannot claim any charge from Bailee (Rent, Consultation)
3. If Bailee causes any damage or loss of the article then there is
liability to pay the loss caused to bailor.
Therefore, Non gratuitous Bailee have liability for loss or
damage of the article Negotiable Instrument.

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4. Define Bailment and essential requisites of contract of bailment.
What are rights and duties of Bailee.
5. Explain the provisions of appointment. Kinds and Rights and duties
of agent in contract of agency. What are grounds to terminate agent.
6. Define agreement to sale and sale its essentials and
distinguish between it?
There is separate releasing to Sale of the goods and it is called Sale
of Goods Act 1950, Goods means all the articles of movable
property such as vehicle, ornaments, furniture, books, shares,
certificates but it does not include immovable property such as
house, land, shop etc.
Agreement to sale has denied U/sec 4(2) it means promises
between the parties to transfer the goods by sale. In this agreement
either goods are not delivered or prince is not paid partly or
complete.
Ex:- A gave 1000/- Advance to B and entered into contract to buy
10 bags of rice and to take delivery after payment of complete price
within one week. This is agreement to sale between A & B.
The term sale has been define U/Sec 4 (3) of Sale of Goods act.
Sale means transfer of ownership of the goods done by one party

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to other party by taking considered transfer is called as Seller or
Vendor are Transferee is called as buyer or vendee and
consideration is called as price of goods.
Ex: - A paid 1 lakh to B and purchase ........................... .l...........
......... ....... .............................................. ..........................................
amount is price of the car. This is sale because A has delivered the
goods and B has paid the price and there is transfer of ownership of
car done by A to B.
Essentials requisites of Sale:
1. Seller and buyer should be competent persons and they should
not be minor or unsound mind person.
2. Sale of goods can be done orally or in writing. When there is
specific provision then writing is necessary.
3. Consideration is necessary in sale of goods. If there is no
consideration then it may be gift and not the sale.
4. Seller should be either owner or having right to sale of the goods.
If his title of goods is defective then he cannot pass on better title
to buyer. It is called as “NEMO-DAT-QUOD” means nobody can
pass better title of the goods which he himself does not possess.
5. Consideration may be past or present or future.

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S.No. Agreement to Sale Sale
1. It is prior contract Sale is later contract
2. This contract executor contract This contract is executed
contract
3. There is not payment of Consideration is paid
consideration done completely complete
by the buyer
4. Possession of good to buyer is Possession of goods be
not compulsory given to buyer
5. Ownership will not pass on to Ownership pass on to buyer
buyer
6. Buyer cannot re-sell sale the Buyer can resell the goods
goods
7. Remedy given by the Court is In this contract remedy of
injunction to payment sale to damages can be claimed
other party
8. Risk of damage of goods lies Risk of good pass on to
with seller buyer
9. There is more scope to make There is less scope to make
breach of contract. breach of contract.

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These are the details relating to agreement to sale, Sale, Essential
and distinguished between it
*_(Law Students Federation)_*
7. Explain the provisions of conditions and warranties specified
under Sale of Goods Act 1930
There are lawful conditions which can be imposed either by seller or
buyer such conditions are relating to payment of price or delivery of
the goods. If any party violate the condition then other party can
revoke the contract.
Ex: - A entered into contract with B to supply crackers before festival.
If A supply after festival then A has violated the conditions of delivery
of goods and B can revoke the contract.
Warranty means implied conditions between the parties. Warranty is
given relating the quality, quantity, nature of goods. If warranty is
violated then contract cannot be revoked but party can claim only
damages.
Ex – A sells scooter to B and warranty is given for one year. If any
defect comes in the scooter within warranty period then seller have to
do free servicing or repairing in guarantee to ................ ........... mor

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responsibility on the Seller. Such as to deliver new goods or to refund
the price. In warranty there is limited responsibility or the seller.
There is details of conditions and Warranty from Sec 12 to 17 of Sale
of Goods Act 1930.
Following are the points of difference in conditions and warranty.
S.No. Condition Warranty
1. If condition is violated then If warranty is violated then
party can revoke the contract Contract cannot be revoked.
2. Condition is primary in the Warranty is secondary in the
contract contract
3. Condition may oral or in Warranty is generally in
writing writing otherwise buyer have
to prove it.
3. Condition can be imposed by Warranty is generally given
buyer as well as seller only by seller.
Kinds of Warranties:
Following are the kinds of Warranties:
1. Warranty of Quality: Warranty is given relating to quality of the
goods if there is less quality of the goods then there is breach of
Warranty.

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2. Warranty by quality: - Warranty is also given by description or quality
such as colour of cloth will not fade. Fruits are sweet.
3. Warranty by Title: - Seller gives warranty relating to product of
particulars company. It should not be product of other company.
4. Warranty by prize: - There is also warranty relating to free article
or prize. Such as a Soap is bournvita, 25% extra soap.
5. Warranty by sample: - In grain market warranty is given by examine
sample and goods should not be interior to the sample otherwise
there is breech of warranty.
8. Briefly explain various rights of unpaid seller.
9. Define partnership and its requisites, how partnership differs from
Company and Joint Family Firm.
10. What are methods of dissolution of partnership firm and
effects of dissolution of the firm.
II Short Answers:
11. Continuing Guarantee
12. Non-Gratuitous Bailee
13. Pledge
14. Del-credere agent
15. Sub – agent and substituted agent
16. Caveat emptor

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17. Sale by Non – Owner
18. Nemo dat quod non habet
19. Kinds of Warranties.
20. Goods

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Caveat emptor (Let the buyer by aware)
Meaning of Caveat emptor is “Let the buyer be beware”. When the
seller refuse to give any warranty. Then buyer should be careful to buy
the goods. If goods an inferior or improper then buyer cannot claim any
damages from the seller. Therefore according to rule of Caveat Emptor
responsibility of goods pass on the buyer. Buyer should be allowed to
examine the goods.
There are two exceptions to doctrine caveat emptor.
1) Fraud: When seller commit fraud or cheating to the buyer then
Caveat Emptor does not apply and buyer can claim.
Ex: Seller sold ornaments to buyer stating that this are Gold
ornaments if it is polished copper then rule of Caveat Emptor
does not apply and buyer can claim damages from the seller.
2) Industrial goods: When injuries good seller sales goods to buyer
which are injurious or harmful then Caveat emptor does not apply.
Ex: A sold expire date material to buyer this are harmful
goods and buyer can claim damages and Caveat Emptor
does not apply.

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Anderson V/s Buckton
A Party sold pigs to a buyer this pigs where suffering from disease
and many pigs were killed because of disease, the court held that seller
have commit fraud and buyer can claim damages without effect of
Caveat Emptor.
Grant V/s Australian co.
A knifing Co. Sold woollen clothes of second quality and buyer
purchased it. There where harmful chemicals in woollen clothes and those
who used it suffered from Skin diseases. The court held that Company
have sold harmful goods and buyer can claim damages.
Bristol Tarmways Co. V/s Fiat Motors Co.
A Company sold parts of Automobiles in a heap and buyers
purchased it some parts where useless and he filed a case to claim
damages the court held that according to rule of Caveat Emptor he cannot
claim damages.
Raghu Menon V/s Kutapam Iyer
A Company sold second quality watches by auction some watches
where not working and they become useless no damages can be claim
according to rule of Caveat Emptor.
This is details relating conditions, warranties, kinds of Warranties,
distinguish rule of Caveat Emptor and relevant cases

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Q. 21 Explain various Rights of unpaid seller? Specified under Sale
of Goods Act 1930.
Ans: Unpaid seller means such seller who did not received complete
payment or part of the payment relating to his goods. He has number of
rights before and after delivery of the goods. Specified from the Sec 45 to
54 of Sale of Goods Act. Some rights are enforceable before delivery of
the goods voluntary or by order of the court.
Following are the rights of unpaid seller:
1) Right of lien on goods: Lien means right over the goods. When
seller have not delivered the goods then he has lien on the goods.
After receiving complete payment he shall deliver goods to buyer.
For small amount also seller can refuse to deliver the goods.
2) Right of Stoppage transit: When goods have been dispatched and
party finds in security of his payment of price. From the buyer then
he as right to stop the delivery of goods anywhere before unloading
it.
3) Right of injunction: When there is possession of the goods given
to buyer and he wanted to sell it without payment to buyer partly or
completely then seller have right to file suit for remedy of injunction
he can prevent sale of goods by order of injunction.

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4) Right of specific performance: When buyer have given order to
seller to make specific goods and refuse to accept delivery. There
is right to unpaid seller to take remedy of specific performance of
contract against buyer.
5) Right to re-sale goods: When there is period mentioned for
payment of price of the goods, then after expire of the period there
is right of emptied seller to sale the goods sale the goods to third
party.
6) Right to forfeit Advance money: If buyer has given some earnest
payment or Advance payment and make default to pay balance of
the amount and take delivery of the goods unpaid seller can forfeit
advance payment unless there is contrary terms in the agreements.
7) Right to claim transport charges: When the seller have
dispatched the goods and buyer did not take delivery by payment
of price. Unpaid seller can claim transport charges from the buyer.
8) Right to claim damages: When loss has been caused to unpaid
seller when sells goods to other party because of non-acceptance
of goods then unpaid seller have right to claim damage charges
from the buyer.
These are the rights of unpaid seller against buyers specified in
Sale of Goods Act.

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Q 22. Define partnership and its requisites? How it differs
from company and joint family firm?
Ans: Partnership Act was enacted in 1932 to regularise relations
between partners the term partnership has been defined U/s 4.
When two or more person start in a lawful business by making
agreement then it is called partnership or such persons called as
partners and place of business is called as Partnership firms and
the documents executed between them is called as partnership
deed.
Essential requites of partnerships:
1) There should be minimum 2 persons and maximum 20 persons
as partner in the firm. If it is financial firm then maximum 10
members are allowed.
2) All partner should be competent persons and nobody should be
unsound mind person. Minor is allowed as partners U/s 30. But
he is sleeping partner and entitled only for profit.
3) There should be free consent of all the partners.
4) It is should be in writing and not oral.
5) All terms and condition agreed between them have to be
specified in partnership deed.
6) It should be only in lawful business.
7) Registration of partnership firm is optional and not compulsory.

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8) Partnership deed have to be signed by all the partners.
Distinguish between partnership & company
Partnership Company
1 Not a legal reason 1 Company is a legal
2 Property belongs to partners. 2 Property belongs to
company
3 Management is carried by 3 Management is carried by
partners Board of directors
4 Partners can interfere in the 4 Members cannot interfere
business unless then in the business of the
partners is a sleeping company unless there is
partners. Annual General meeting.
5 Registration is optional. 5 Registration is
compulsory.
6 Audit is optional. 6 Audit is compulsory
7 Partners can sue each other. 7 Members cannot sue each
other
8 There is unlimited liability of 8 There is limited liability of
partners called as Joint and members and there is no
Several liability risk to personal property.

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9 Death of any partner has 9 Death of any members on
effect on Partnership form director has no effect on
company.
10 Partners has to consult each 10 Company will not consults
other for their business with its members.
11 Cases can be field in name 11 Cases to be filed in name
of Partners of company and net name
of directors.
12 It is governed by Partnership 12 It is governed by Company
Act 1932 Law 1956
Distinguish between partnership & Joint family firm
Partnership Joint Family
1 There is necessity of 1 There is no necessity of
Partnership deed any agreement.
2 Management is carried by 2 Management is carried by
partners Karta of Head of family
3 Partners may get profit in 3 Family members may get
which may be equal or equal profit in family
unequal Account of business.
Partnership deed

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4 Cases can be filed against 4 Cases can be filed against
partners. Karta or Head of Family.
5 Partners can interfere in the 5 Family members cannot
business interfere in the business.
These are details about partnership and distinguish from
Company and Family Firm Act 1932.
Q. 23 Explain various methods of dissolution of Partnership firm
and effects of dissolution of partnership firm?
Ans: Dissolution means to close, wind-up, liquidate, Partnership firm.
There are members of grounds of dissolution of partnership specified from
Sec 45 to 54. There are two methods of dissolution of Partnership Firm.
1) Voluntary dissolution 2) Compulsory dissolution:
In voluntary dissolution one partners or all the partners take
decision to dissolve the firms following are the grounds of
Voluntary dissolution.
1) Less number: When there are two partners and one of the partners
discontinue form business then. Firm have to be dissolve because
minimum two persons are necessary to run partnership business.

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2) Specific period: When partnership business started firm for specific
period then after expire of the period they have to dissolve the firm.
3) Heavy lose: When heave lose caused to partnership firm and it is
likely to become unsolved then partner can take decision to disclose
the firm.
4) Management: When any partner or all the partners do mis-
management or fail to maintain proper account or make mis
appropriation then it is grand to dissolve the firm.
5) Incompetency: When any partner becomes unsound mind or
unable to do work because of old age or sickness then partners can
dissolve the firm.
6) No demand of product: When there is no demand to the goods
which are been sold by partnership then they have to close the
business.
7) Misconduct: When any partners commits Act of misconduct such
as betting others partners, using defamatory language then it is also
reason for dissolution.
Compulsory dissolution:
There are two methods of compulsory dissolution of partnership and
there are
a) By order of the court.
b) By order of the Government.

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A) By order of the court: When court passed an order to closed
the firm court may pass such order on the following grounds.
 When Partnership declared as insolvent.
 When they are unable to pay debt of creditor then creditor
can option injunction order and attach the property of firm
and they are forced to closed the business.
B) By order of the Government: When govt make any
registration and the business become unlawful then registration
and licence cancel they have to close the business.. When
activities of the partnership firm are illegal then Government
may order to close the business
Ex: Selling narcotise or black marketing.
Effects of dissolution of the firm:-
1) Relationship between partners come to end.
2) There is light to partners to start any other trade or business..
3) They can file cases for their claim and counter claim against each
other.
4) There is liability to pay all the lawful taxes and tax department can
file the case.
5) There are also liable to Pay rent, Electricity bill, Telephone bill even
after closer of the business.

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6) They have to settled Profit and loss account and if there is profit
they can claim it and if there is loss they have to pay it.
7) They can close in permanently or by making new partnership deed
same partners or new partners can start the business.
This is details about causes of dissolution of firm kinds of
dissolution and its effect in Partnership Act 1932.
Termination of Agents
1) When appoint is for fixed period and its over.
2) When he become unsound mind or unable to do work because of
old age.
3) When he violate terms and conditions of agreement.
4) When he committer’s any criminal act.
5) When the work of agent is over.
6) When there is closure of business done by principal
These are details about appointment rights and duties and
grounds of termination of agent in contract agency.

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Remedies for breach of contract:
It means one of the party may not perform the contract in such
case other party can remedy from the court. There are four types of
remedy available from the court.
1) Damages
2) Injunction
3) Quantum merits.
4) Specific performance.
9. Nemo dat quod non habet:
Meaning of this maximum is title or right of the seller should be better
otherwise title of buyer is also defective. Buyer have to verify that title of
the goods of seller is better. One person having defective title cannot pass
on better title to buyers.
Ex: Seller have sold stole articles to buyers police can book case
even against buyer because his title is defective. Purchasing stole articles
is crime under Sec 414 of IPC having 3 years imprisonment. Authorities
can also deprive possession of the goods. If buyers prove that he has
purchased in good faith then also goods are taken away. But criminal case
is not booked against the buyer.
Ex: Seller sold the goods without payment of Sale tax. When tax
authorities examined the documents then buyers have to pay Sales tax
and penalty because his title is defective.

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Q. Define Bailment and its requisites? What are rights and duties of
Bailee.
Ans: Bailment is specific contract between parties. When any articles or
goods are given for particular purpose then transfers is called bailor and
transferor is called Bailee and contract between bailor and Bailee is called
as Contract of Bailment. Details of contract of Bailment is from Sec 148 to
181 of Contract Act.
Ex: A has parked his vehicle @ place of parking. A is bailor and
parking owner is Bailee. Bailee have to return to vehicle to bailor.
Ex: State transport Co. Gives bus to conductor and driver to ply on
particular route when purpose is over then they have return the bus. This
is contract of bailment between co-operation and his employees.
Essential requisites contract of Bailments:
1) It is contract relating to moveable property.
2) It can be oral contract or written contract between bailor and
Bailee.
3) There should be consideration in the contract fixed @ the time of
contract and party have to pay it.
4) Possession of articles to be given by one party to to her party.
5) When purpose is over then Bailee have to return the article to
bailor.

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6) In some contract possession is given by bailee and is some contract
bailor have to takes possession.
7) If delay is caused then additional charges can be claimed,
according to nature of contract.
8) Bailee can used the articles according to nature of contract.
Rights of Bailer:
1) There is right of Bailee to claim return of the article.
2) When purpose is over Bailee have to return the article to bailor.
3) Bailee have right to fine charges for the contract.
4) When damages is caused to goods then Bailee has to right claim
it.
5) When charges are not fixed then he is non-gratuitous Bailee and
he cannot claim charges.
Duties of Bailee:
1) Bailee have duty to take reasonable care of the goods.
2) When purpose is over then he has duty to return it.
3) There is duty of Bailee to follow directions given by the bailor.
4) There is duty of Bailee not to mix in the goods. It generally happen
when grains are given on contract of bailment.
5) Bailee have duty not to question about titles of the goods to bailor.

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6) When there is increase in the goods then bailer have to return with
increase.
Ex: A have given cow to B to take care for (1) year. Cow delivered
calf B have to return both cow and calf to “A”.
Amar singh V/s South Central Railways
A party sent goods by Railway tr4ansport there was leakage in
bogie and goods were spoiled because of rain water. The court held that
Railway company to pay damage caused to bailor because it is contract
of bailments.
Memon Mohammed V/s State of Gujrat
Food Adulteration Officer of Govt. seized the goods and ground of
good Adulteration and unloaded in Govt. Godown. Adulteration was not
proved and court gave order to release the goods. Part of goods were
stolen the court gave order to pay the loss to bailor because it is contract
of bailment.
Phillips V/s Arnold
A customer entered in a star hotel for dinner waiter took his over
coat having gold buttons and hanged some where after dinner customer
found that coat was missing the court held that it is contract of bailment
and hotel owner have to pay damages to customer.
This details about contract of bailment requisites rights and duties
of Bailee and relevant with cases.

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Q. Explain the contract of agency and kinds of agents. What are
rights and duties of agents and grounds of termination of agent.
Ans: When there is contract between the parties through mediator then it
is called contract of agency and mediator is called as agent and the first
party is called principal and third party is customer. Agent carries business
on behalf of principal. Detail of contract of agency is from sections 182 to
238 of Contract Act.
Appointment of Agent: There are four methods of appointment of
agent.
1) By Authority: In this methods Principal appoints agent orally or in
writing. It is authority of principal to the agent, either on commission
basis or remuneration basis.
2) By Ratification: In this methods particular direction is not give to
agent. He is given direction to do buying or selling of particular
goods. Such as agent is grain market. He may buy any grain bags
and principal may approve it called as ratification.
3) By casual work: This agent is assigned casual work on commission
basis. After completion of work his appointment comes to end.
4) By necessity: There is also recognition of agent out of necessity and
there is no need of appointment. If wife buys necessary articles, then

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husband have to pay it. Because wife is just like agent of the
husband to enter into contract on his behalf.
Kinds of Agents: Following are different kinds of agents.
1) General Agent: This agent carry on business of goods of any
member of companies from the same place. Therefore is called
general agent.
2) Particular Agent: This agent deals with product of particulars
company he cannot deal with product of any other company .
Ex: Payment suiting, Agent, H.P. gas agent, etc.
3) Sub Agent: When principal gives target of this business to particular
agent. Then again agent appoint other agents to complete the
target. Such agent is called as sub-agent. Agent is like principal for
him.
4) Declared Agent: This is responsible agent. He takes orders from the
customers and direct the company to supply the goods. If customer
makes default, then agent is liable to make payment to company.
Commission of this agent is more than other agent. Because he
cover risk of the principle.
5) Adatia Agent: Adatia is agent he should be given possession of the
goods by the principals. If principal gives limit of the price to be
sold than Adatia have to obelise it. If no limit is given then he sells

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goods @ market prince and deduct its commission and makes
payment to principals. Adatia gives receipt in his own name.
6) Factor Agent: This agent has also possession of the goods. But he
sells it according to market rate to deducts commission and makes
payment to principals.
7) Brokers: This broker has no possession of the goods he takes
sample and enters into contract on behalf of principal. He can take
commission from one side or both the sides. If he may not enter into
contract then he cannot get commission.
8) Auctioneer: Auctioneer is agent who is given possession of the
goods to sell it by public auction. If there is sell he gets full
commission and if there is no sell he gets half commission.
Rights of Agents:
1) There is right of agent to claim his commission or remuneration fixed
at the time of contract.
2) If agents causes any damages because of defective goods then he
has right to claim from the principal.
3) Agent has rights to claim moorage charges from the principal for
delay period.
4) Agent have right to lien on the goods till he receives payment.
5) Agent have right to file case against principal for his claim amount.

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Duties of Agent:
1) There is duty of Agent to follow directions of the principals.
2) There is duty of agent to take care of the goods as reasonable
man.
3) There is duty to give information about transaction to principal.
4) There is duty of agent to make payment of money of principal
without delay.
5) Agent have a duty not to make the secret profit.
6) There is duty of agent to maintain accounts of transaction of show
to principal.
7) There is duty of agent not to delegate his power to other party.
1. Termination of agency.
2. Caveat Emptor
3. Unpaid seller lien: It means right over the goods when the seller
have not delivered the goods then he has lien over the goods. He
shall deliver only after receiving the complete payment of goods.
He can deny to delivery even for small ant.
4. Holder is due course.
5. Registration of partnership firm: It is ____________ by Partnership
Act 1932 entrust on 4th July was enacted from the British in 1893.

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6. Pledge: It is special kind of Bailment in which a person transfer the
possession of his property to another for securing the loan taken
furthers. When the purpose of the bailment in the secure a loan or
promise.
7. Surety’s liability.
8. Specific enforcement of a contract.
9. Particular lien: It means that the line holder has a right to keep
_______ of only that particulars property for which the charges are
owned.
Enpost facto agency: It is a Latin word “after the fact” which refer to
law adopted after an act is committed making it illegal although it was
legal when done, or increase the penalty for a crime after it is
committee such law are specifically prohibited by U.S. can articles
U/s 9.
Gratuitous Bailment: It is a type of Bailment in which the bailee
receives no compensation.
Bill of exchange: A written unconditional order by one party (The
drawer) to another (the drawee) to pay a certain sum, either
immediately (a sight bill) or on a fixed date (a term bill) for payment of

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goods and / or services received. The drawee accepts the bill by
signing it, thus community it into a past date check and a binding
contract. It is also called as draft.
Indemnity: It arises when one individual takes on the state obligation
to pay for any loss or damage that has been a might be incurred by
another individual. It generally protect against liability, loss or
damages.
Partner by Estoppels: Any person who is determined to be a partner
will be liable for all partnership debts should the partnership be unable
to pay it creditors. You can be held liable as a partner by Estoppels if
(1) You gave the thirty party an impression that you are in a partner
when you are really not and the third party entered credits, goods and
services to the company. Based on their belief. That you were in fact a
partner.
Inchoate instrument: Unregistered (unrecorded) ___________ that
must, by law be properly registered to be effective (Perfect). It means
unregistered unrecorded instrument that becomes effective to third
parties only he the instrument in recorded.
- The End -
*_ ( Law Student Federation )_*
All the Best; from Law Students Federation

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Law Students Federation

Sultan-ul-Uloom, College of Law

A.Kareem | Law of Contract | July 20, 2016 Page 1 of 36

1. Define Contract of Indemnity and contract of guarantee and

distinguish between it.

2. Define Bailment and essential requisites of contract of bailment.

What are rights and duties of Bailee.

3. Explain the provisions of appointment. Kinds and Rights and duties

of agent in contract of agency. What are grounds to terminate

4. Define, agreement to sale, and sale and distinguish between it.

5. Explain the provisions of conditions and warranties specified under

Sale of Goods Act 1930

6. Briefly explain various rights of unpaid seller.

7. Define partnership and its requisites, how partnership differs from

Company and Joint Family Firm.

8. What are methods of dissolution of partnership firm and effects of

dissolution of the firm.

A.Kareem | Law of Contract | July 20, 2016 Page 2 of 36

5. Sub – agent and substituted agent

7. Sale by Non – Owner

8. Nemo dat quod non habet

A.Kareem | Law of Contract | July 20, 2016 Page 3 of 36

Define Contract of Indemnity and contract of guarantee and

Contract of Indemnity means a party makes promise to another

party to save from loss caused to him. Promise is called as

indemnifier and party to whom such promise is give or promise is

called as indemnified. Details of Contract of Indemnity is U/s 124

and 125 of Contract Act 1930.

obtained indemnity Bond from customer if earlier DD is encashed ,

then he has to indemnify the banker. The Customer is called as

indemnifier and banker is called indemnified.

Ex: - A entered into Contract to file a case against B, if he loses the

of Indemnity between A and B.

Contract of Guarantee means contract between two parties and

Third party take responsibility to perform the Contract. First party is

Guarantee is called Guarantor Security.

Details of Guarantee is from Sec-126 to 147 of Contract Act 1930.

A.Kareem | Law of Contract | July 20, 2016 Page 4 of 36

Following are the essentials requisites of Contract of Guarantee:

1. Guarantee can be given orally or in writing. A guarantee given in

writing can be easily prove because there is Documentary

2. Guarantor should be competent person and he should not be

minor or unsound mind person or insolvent person.

3. When Guarantee is given for more no. of transactions then it is

called as Continuing Guarantee. This Guarantee can be revoked

by the surety by giving notice to creditor. But surety is liable for

transaction already done between the parties.

liable if debtors make default or there is liability for the amount of

guarantee which they have given in the contract.

not complete amount.

6. Liability of Surety is Joint or several. It means collectively and

individually they are liable when debtor make default.

7. When there is death of guarantor then liability of payments pass

8. A single guarantee in a contract cannot be revoked but it can be

substituted by other guarantee if there is consent of creditor.

A.Kareem | Law of Contract | July 20, 2016 Page 5 of 36

9. When guarantee is given under fraud then surety claim is

discharge from guarantee.

S.No. Contract of Indemnity Contract of Guarantee

1. There are only two There are three parties in the

persons in the contract and Contract and they are Creditor,

they are indemnifier and Debtor and Surety.