Indian Contract Act, 1872

THE INDIAN CONTRACT ACT, 1872

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THE INDIAN CONTRACT ACT, 1872 ____________ ARRANGEMENT OF SECTIONS ____________ SECTIONS PREAMBLE PRELIMINARY 1. CHAPTER I OF THE COMMUNICATION, ACCEPTANCE AND REVOCATION OF PROPOSALS 3. Communication, acceptance and revocation of proposals. Revocation of proposals and acceptances. Power to set aside contract induced by undue influence. Contract caused by mistake of one party as to matter of fact.

SECTIONS

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What considerations and objects are lawful, and what not. Agreement void, if considerations and objects unlawful in part. 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. Agreement in restraint of marriage, void. Agreement in restraint of trade, void. Saving of agreement not to carry on business of which good-will is sold.

SECTIONS

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Any one of joint promisors may be compelled to perform. Each promisor may compel contribution. Sharing of loss by default in contribution. Effect of release of one joint promisor. Time for performance of promise, when no application is to be made and no time is specified. Time and place for performance of promise, where time is specified and no application to be made.

CHAPTER V

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CHAPTER V OF CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT SECTIONS 68. Claim for necessaries supplied to person incapable of contracting, or on his account. Reimbursement of person paying money due by another, in payment of which he is interested. Obligation of person enjoying benefit of non-gratuitous act. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion. CHAPTER VI OF THE CONSEQUENCES OF BREACH OF CONTRACT 73.

SECTIONS

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Section 106 — [Repealed

Section 107 — [Repealed

Section 108 — [Repealed

Section 118 — [Repealed

106. [Repealed.]. [RESALE.][Repealed.]. 107. [Repealed.]. [TITLE.][Repealed.]. 108. [Repealed.]. [WARRANTY.]Repealed.]. 118. [Repealed.]. [MISCELLANEOUS.][Repealed.]. CHAPTERVIII OF INDEMNITY AND GUARANTEE 124. “Contract of indemnity” defined. Rights of indemnity-holder when sued.

SECTIONS

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Discharge of surety of creditor’s act or omission impairing surety’s eventual remedy. Rights of surety on payment or performance. Surety’s right to benefit of creditor’s securities. Guarantee obtained by misrepresentation invalid. Guarantee obtained by concealment invalid. Guarantee on contract that creditor shall not act on it until co-surety joins.

SECTIONS

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Pawnee not to retain for debt or promise other than that for which goods pledged. Presumption in case of subsequent advances. Pawnee’s right as to extraordinary expenses incurred. Pawnee’s right where pawnor makes default. Defaulting pawnor’s right to redeem. Pledge by person in possession under voidable contract.

Revocation of authority

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Revocation of authority SECTIONS 201. When principal may revoke agent’s authority. Revocation where authority has been partly exercised. Compensation for revocation by principal, or renunciation by agent. Notice of revocation or renunciation. Revocation and renunciation may be expressed or implied.

SECTIONS

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Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable. Person falsely contracting as agent not entitled to performance. Liability of principal inducing belief that agent’s unauthorized acts were authorized. Effect, on agreement, of misrepresentation or fraud by agent. CHAPTER XI OF PARTNERSHIP 239. [Repealed.].

THE INDIAN CONTRACT ACT, 1872

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Section 1 — Short title

Section 2 — Interpretation-clause

THE INDIAN CONTRACT ACT, 1872 1 ACT NO. 9 OF 1872 [25th April, 1872.] Preamble—WHEREAS it is expedient to define and amend certain parts of the law relating to contracts; It is hereby enacted as follows:— PRELIMINARY 1. Short title.—This Act may be called the Indian Contract Act, 1872. 2 3 Extent, Commencement.—It extends to the whole of India [ ***]; and it shall come into force on the first day of September, 1872. 4 Saving— *** 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. Interpretation-clause.—In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:— (a) 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; 1.

3.Communication, acceptance and revocation of proposals.—The communication of proposals,

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Section 4 — Communication when complete

CHAPTER I OF THE COMMUNICATION, ACCEPTANCE AND REVOCATION OF PROPOSALS 3.Communication, acceptance and revocation of proposals.—The communication of proposals, the acceptance of proposals, and the revocation of proposals and acceptances, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it. Communication when complete.—The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. The communication of an acceptance is complete,— as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor; as against the acceptor, when it comes to the knowledge of the proposer. The communication of a revocation is complete,— as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge. The communication of the proposal is complete when B receives the letter. (b) B accepts A’s proposal by a letter sent by post. The communication of the acceptance is complete, as against A when the letter is posted; as against B, when the letter is received by A. (c) A revokes his proposal by telegram.

5. Revocation of proposals and acceptances.—A proposal may be revoked at any time before the

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Section 5 — Revocation of proposals and acceptances

Section 6 — Revocation how made

Section 7 — Acceptance must be absolute

Section 8 — Acceptance by performing conditions, or receiving consideration

Section 9 — Promises, express and implied

Revocation of proposals and acceptances.—A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards. B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards. STATE AMENDMENT Uttar Pradesh Amendment of section 5 of Act (9 of 1872).—In section 5 of Indian contract Act, 1872, hereinafter in this Chapter referred to as the principal Act, at the end of the first paragraph, the following explanation shall inserted, namely:-- “Explanation—Where an invitation to a proposal contains a condition that any proposal made in response to such invitation shall be kept open for a specified time and a proposal is thereupon made accepting such condition, such proposal may not be revoked within such time.” [Vide Uttar Pradesh Act, 57 of 1976, s. Revocation how made.—A proposal is revoked— (1) by the communication of notice of revocation by the proposer to the other party; (2) by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance; (3) by the failure of the acceptor to fulfil a condition precedent to acceptance; or (4) by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.

10. What agreements are contracts.—All agreements are contracts if they are made by the free

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Section 10 — What agreements are contracts

Section 11 — Who are competent to contract

Section 12 — What is a sound mind for the purposes of contracting

Section 13 — “Consent” defined

Section 14 — “Free consent” defined

Section 15 — “Coercion” defined

CHAPTER II OF CONTRACTS, VOIDABLE CONTRACTS AND VOID AGREEMENTS 10. What agreements are contracts.—All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. 1 Nothing herein contained shall affect any law in force in [India] and not hereby expressly repealed 2 by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents. What is a sound mind for the purposes of contracting.—A person is said to be of sound mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests. 13. “Consent” defined.—Two or more persons are said to consent when they agree upon the same thing in the same sense. 14. “Free consent” defined.—Consent is said to be free when it is not caused by— (1) coercion, as defined in section 15, or (2) undue influence, as defined in section 16, or (3) fraud, as defined in section 17, or (4) misrepresentation, as defined in section 18, or (5) mistake, subject to the provisions of sections 20, 21 and 22.

Explanation.—It is immaterial whether the Indian Penal Code (45 of 1860) is or is not in force in the

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Section 17 — “Fraud” defined

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. A has employed coercion, although his act is not an offence by the law of England, and although section 506 of the Indian Penal Code (45 of 1860) was not in force at the time when or place where the act was done. 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. (2) In particular and without prejudice to the generality of the foregoing principle, a person is deemed to be in a position to dominate the will of another— (a) where he holds a real or apparent authority over the other, or where he stands in a fiduciary relation to the other; or (b) where he makes a contract with a person whose mental capacity is temporarily or permanently affected by reason of age, illness, or mental or bodily distress. (3) Where a person who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence shall lie upon the person in a position to dominate the will of the other. Nothing in this sub-section shall affect the provisions of section 111 of the Indian Evidence Act, 1872 (1 of 1872).

18. “Misrepresentation” defined.—“Misrepresentation” means and includes—

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Section 18 — “Misrepresentation” defined

Section 19 — Voidability of agreements without free consent

Section 19A — Power to set aside contract induced by undue influence

18. “Misrepresentation” defined.—“Misrepresentation” means and includes— (1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true; (2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him; (3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement. Voidability of agreements without free consent.—When consent to an agreement is caused by 1 coercion, *** fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to a contract whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true. Exception.—If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence. Explanation.—A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable. The contract is voidable at the option of B. (b) A, by a misrepresentation, leads B erroneously to believe that, five hundred maunds of indigo are made annually at A’s factory.

20.Agreement void where both parties are under mistake as to matter of fact.—Where both the

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Section 21 — Effect of mistakes as to law

Section 22 — Contract caused by mistake of one party as to matter of fact

Section 23 — What considerations and objects are lawful, and what not

100 with such interest as may seem just.] 20.Agreement void where both parties are under mistake as to matter of fact.—Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. Explanation.—An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement, is not to be deemed a mistake as to a matter of fact. The agreement is void. (b) A agrees to buy from B a certain horse. The agreement is void. (c) A, being entitled to an estate for the life of B, agrees to sell it to C. B was dead at the time of the agreement, but both parties were ignorant of the fact. Contract caused by mistake of one party as to matter of fact.—A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact.

24.Agreements void, if considerations and objects unlawful in part.—If any part of a single

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Every agreement of which the object or consideration is unlawful is void. The agreement is void, as its object is unlawful. (f) A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful. (g) A, being agent for a landed proprietor, agrees for money, without the knowledge of his principal, to obtain for B a lease of land belonging to his principal. The agreement is void, as its object is unlawful. (i) A’s estate is sold for arrears of revenue under the provisions of an Act of the Legislature, by which the defaulter is prohibited from purchasing the estate. Void agreements 24.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. The agreement is void, the object of A’s promise, and the consideration for B’s promise, being in part unlawful.

Explanation 1.—Nothing in this section shall affect the validity, as between the donor and donee, of

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Section 26 — Agreement in restraint of marriage, void

Section 27 — Agreement in restraint of trade, void

(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 of suits. In any of these cases, such an agreement is a contract. Explanation 1.—Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made. Explanation 2.—An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given. 2 28.Agreements in restraint of legal proceedings, void.— [Every agreement,— (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or (b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to 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 respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. 3 ***** Exception 2.—Saving of contract to refer questions that have already arisen.—Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the 4 time being as to references to arbitration .

[Exception 3.—Saving of a guarantee agreement of a bank or a financial institution.—This

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Section 29 — Agreements void for uncertainty

Section 30 — Agreements by way of wager void

1 [Exception 3.—Saving of a guarantee agreement of a bank or a financial institution.—This section shall not render illegal a contract in writing by which any bank or financial institution stipulate a term in a guarantee or any agreement making a provision for guarantee for extinguishment of the rights or discharge of any party thereto from any liability under or in respect of such guarantee or agreement on the expiry of a specified period which is not less than one year from the date of occurring or non-occurring of a specified event for extinguishment or discharge of such party from the said liability. Explanation.—(i) In Exception 3, the expression “bank” means— (a) a “banking company” as defined in clause (c) of section 5 of the Banking Regulation Act, 1949(10 of 1949); (b) “a corresponding new bank” as defined in clause (da) of section 5 of the Banking Regulation Act, 1949(10 of 1949); (c) “State Bank of India” constituted under section 3 of the State Bank of India Act, 1955 (23 of 1955); (d) “a subsidiary bank” as defined in clause (k) of section 2 of the State Bank of India (Subsidiary Banks) Act, 1959(38 of 1959); (e) “a Regional Rural Bank” established under section 3 of the Regional Rural Banks Act, 1976(21 of 1976); (f) “a Co-operative Bank” as defined in clause (cci) of section 5 of the Banking Regulation Act, 1949(10 of 1949); (g) “a multi-State co-operative bank” as defined in clause (cciiia) of section 5 of the Banking Regulation Act, 1949(10 of 1949); and (ii) In Exception 3, the expression “a financial institution” means any public financial institution within the meaning of section 4A of the Companies Act, 1956(1 of 1956).] 29. 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”. There is no uncertainty here to make the agreement void. (e) A agrees to sell B “one thousand maunds of rice at a price to be fixed by C”. As the price is capable of being made certain, there is no uncertainty here to make the agreement void. (f) A agrees to sell to B “my white horse for rupees five hundred or rupees one thousand”.

Exception in favour of certain prizes for horse-racing.—This section shall not be deemed to

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Section 31 — “Contingent contract” defined

Section 32 — Enforcement of contracts contingent on an event happening

Section 33 — Enforcement of contracts contingent on an event not happening

Section 294A — of the Indian Penal Code not affected

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) apply. Illustrations (a) A makes a contract with B to buy B’s horse if A survives C. This contract cannot be enforced by law unless and until C dies in A’s lifetime. (b) A makes a contract with B to sell a horse to B at a specified price, if C, to whom the horse has been offered, refuses to buy him. The contract cannot be enforced by law unless and until C refuses to buy the horse. (c) A contracts to pay B a sum of money when B marries C. Illustration A agrees to pay B a sum of money if a certain ship does not return.

fixed time.—Contingent contracts to do or not to do anything, if a specified uncertain event does not

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Section 36 — Agreement contingent on impossible events void

Section 37 — Obligation of parties to contracts

Section 38 — Effect of refusal to accept offer of performance

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. The contract may be enforced if the ship returns within the year, and becomes void if the ship is burnt within the year. (b) A promises to pay B a sum of money if a certain ship does not return within a year. The contract may be enforced if the ship does not return within the year, or is burnt within the year. Agreement contingent on impossible events void.—Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made. C was dead at the time of the agreement. 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 is an offer to deliver anything to the promisee, the promisee must have a reasonable opportunity of seeing that the thing offered is the thing which the promisor is bound by his promise to deliver.

39. Effect of refusal of party to perform promise wholly.—When a party to a contract has refused

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Section 39 — Effect of refusal of party to perform promise wholly

Section 41 — Effect of accepting performance from third person

Section 42 — Devolution of joint liabilities

Section 43 — Any one of joint promisors may be compelled to perform

Effect of refusal of party to perform promise wholly.—When a party to a contract has refused to perform, or disabled himself from performing, his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. By whom contracts must be performed 40.Person by whom promise is to be performed.—If it appears from the nature of the case that it was the intention of the parties to any contract that any promise contained in it should be performed by the promisor himself, such promise must be performed by the promisor. 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. Effect of accepting performance from third person.—When a promisee accepts performance of the promise from a third person, he cannot afterwards enforce it against the promisor. Devolution of joint liabilities.—When two or more persons have made a joint promise, then, unless a contrary intention appears by the contract, all such persons, during their joint lives, and, after the death of any of them, his representative jointly with the survivor or survivors, and, after the death of the last survivor, the representatives of all jointly, must fulfil the promise. 43.Any one of joint promisors may be compelled to perform.—When two or more persons make a 1 joint promise, the promisee may, in the absence of express agreement to the contrary, compel any [one or more] of such joint promisors to perform the whole of the promise.

Explanation.—Nothing in this section shall prevent a surety from recovering from his principal,

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Section 45 — Devolution of joint rights

Section 46 — Time for performance of promise, when no application is to be made and no time is specified

Section 48 — Application for performance on certain day to be at proper time and place

Explanation.—Nothing in this section shall prevent a surety from recovering from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payments made by the principal. Illustrations (a) A, B and C jointly promise to pay D 3,000 rupees. D may compel either A or B or C to pay him 3,000 rupees. (b) A, B and C jointly promise to pay D the sum of 3,000 rupees. A is insolvent, but his assets are sufficient to pay one-half of his debts. C is entitled to receive 500 rupees from A’s estate, and 1,250 rupees from B. (c) A, B and C are under a joint promise to pay D 3,000 rupees. Time for performance of promise, when no application is to be made and no time is specified.—Where, by the contract, a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.

Explanation.—The question “what is a proper time and place” is, in each particular case, a question

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Section 49 — Place for performance of promise, where no application to be made and no place fixed for performance

Section 50 — Performance in manner or at time prescribed or sanctioned by promisee

Explanation.—The question “what is a proper time and place” is, in each particular case, a question of fact. Place for performance of promise, where no application to be made and no place fixed for performance.—When a promise is to be performed without application by the promisee, and no place is fixed for the performance of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such place. Illustration A undertakes to deliver a thousand maunds of jute to B on a fixed day. A must apply to B to appoint a reasonable place for the purpose of receiving it, and must deliver it to him at such place. Performance in manner or at time prescribed or sanctioned by promisee.—The performance of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions. 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 rupees.

53. Liability of party preventing event on which the contract is to take effect.—When a contract

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Section 53 — Liability of party preventing event on which the contract is to take effect

Section 54 — Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises

Section 55 — Effect of failure to perform at fixed time, in contract in which time is essential

Liability of party preventing event on which the contract is to take effect.—When a contract contains reciprocal promises, and one party to the contract prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented; and he is entitled to 1 compensation from the other party for any loss which he may sustain in consequence of the non- performance of the contract. 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. Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises.—When a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract. 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. (b) A contracts with B to execute certain builder’s work for a fixed price, B supplying the scaffolding and timber necessary for the work. Effect of failure to perform at fixed time, in contract in which time is essential.—When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. Effect of such failure when time is not essential.—If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

56. Agreement to do impossible act.—An agreement to do an act impossible in itself is void.

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Section 56 — Agreement to do impossible act.—An agreement to do an act impossible in itself is void. Contract to do an act afterwards becoming impossible or unlawful

Section 57 — Reciprocal promise to do things legal, and also other things illegal

Section 58 — Alternative promise, one branch being illegal

Agreement to do impossible act.—An agreement to do an act impossible in itself is void. 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 1 could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. The agreement is void. (b) A and B contract to marry each other. 57.Reciprocal promise to do things legal, and also other things illegal.—Where persons reciprocally promise, firstly, to do certain things which are legal, and, secondly, under specified circumstances, to do certain other things which are illegal, the first set of promises is a contract, but the second is a void agreement. The second set is for an unlawful object, namely, that B may use the house as a gambling house, and is a void agreement. This is a valid contract to deliver rice, and a void agreement as to the opium.

60. Application of payment where debt to be discharged is not indicated.—Where the debtor has

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Section 60 — Application of payment where debt to be discharged is not indicated

Section 61 — Application of payment where neither party appropriates

Section 62 — Effect of novation, rescission, and alteration of contract

Section 63 — Promisee may dispense with or remit performance of promisee

Section 64 — Consequences of rescission of voidable contract

He owes B no other debt of that amount. 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. This payment is to be applied to the discharge of the debt of which B had demanded payment. Application of payment where debt to be discharged is not indicated.—Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits. Application of payment where neither party appropriates.—Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. The whole debt is discharged. (c) A owes B 5,000 rupees.

becomes void.—When an agreement is discovered to be void, or when a contract becomes void, any

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Section 65 — Obligation of person who has received advantage under void agreement, or contract that becomes void

Section 66 — Mode of communicating or revoking rescission of voidable contract

Section 67 — Effect of neglect of promisee to afford promisor reasonable facilities for performance

Section 68 — Claim for necessaries supplied to person incapable of contracting, or on his account

Obligation of person who has received advantage under void agreement, or contract that becomes void.—When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it. 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. On the sixth night, A wilfully absents herself from the theatre, and B, in consequence, rescinds the contract. Mode of communicating or revoking rescission of voidable contract.—The rescission of a voidable contract may be communicated or revoked in the same manner, and subject to the same rules, as 1 apply to the communication or revocation of a proposal . A is excused for the non-performance of the contract if it is caused by such neglector refusal. CHAPTER V OF CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT 68.

70.Obligation of person enjoying benefit of non-gratuitous act.—Where a person lawfully does

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Section 70 — Obligation of person enjoying benefit of non-gratuitous act

Section 71 — Responsibility of finder of goods

Section 72 — Liability of person to whom money is paid, or thing delivered, by mistake or under coercion

Illustration B holds land in Bengal, on a lease granted by A, the zamindar. 70.Obligation of person enjoying benefit of non-gratuitous act.—Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect 1 of, or to restore, the thing so done or delivered . 71.Responsibility of finder of goods.—A person who finds goods belonging to another, and takes 2 them into his custody, is subject to the same responsibility as a bailee . Liability of person to whom money is paid, or thing delivered, by mistake or under coercion.—A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it. 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 discharge it and had broken his contract. Explanation.—In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.

Illustrations

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Illustrations (a)A contracts to sell and deliver 50 maunds of saltpetre to B, at a certain price to be paid on delivery. B is entitled to receive from A, by way of compensation, the sum, if any, by which the contract price falls short of the price for which B might have obtained 50 maunds of saltpetre of like quality at the time when the saltpetre ought to have been delivered. (b)A hires B’s ship to go to Bombay, and there take on board, on the first of January, a cargo, which A is to provide, and to bring it to Calcutta, the freight to be paid when earned. B’s ship does not go to Bombay, but A has opportunities of procuring suitable conveyance for the cargo upon terms as advantageous as those on which he had chartered the ship. A avails himself of those opportunities, but is put to trouble and expense in doing so. A is entitled to receive compensation from B in respect of such trouble and expense. (c)A contracts to buy of B, at a stated price, 50 maunds of rice, no time being fixed for delivery. A afterwards informs B that he will not accept the rice if tendered to him.

74. Compensation for breach of contract where penalty stipulated for.— [When a contract has

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Section 74 — Compensation for breach of contract where penalty stipulated for

In estimating the compensation payable by A to B, the market price of the first of January, and not the profit which would have arisen to B from the sale to C, is to be taken into account. (p)A contracts to sell and deliver 500 bales of cotton to B on a fixed day. B is entitled to receive from A, by way of compensation, the difference between the contract price of the cloth and its market price at the time of delivery, but not the profits which he expected to obtain by making caps, nor the expenses which he has been put to in making preparation for the manufacture. (r)A, a ship-owner, contracts with B to convey him from Calcutta to Sydney in A’s ship, sailing on the first of January, and B pays to A, by way of deposit, one-half of his passage-money. Compensation for breach of contract where penalty stipulated for.— [When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. Explanation.—A stipulation for increased interest from the date of default may be a stipulation by way of penalty.] Exception.—When any person enters into any bail-bond, recognizance or other instrument of the 2 same nature, or, under the provisions of any law, or under the orders of the [Central Government] or of 3 any [State Government], gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein. Explanation.—A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested. B is entitled to recover from A such compensation, not exceeding Rs.

75.Party rightfully rescinding contract, entitled to compensation.—A person who rightfully

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This is a stipulation by way of penalty, and B is only entitled to recover from A such compensation as the Court considers reasonable. (e) A, who owes money to B a money-lender, undertakes to repay him by delivering to him 10 maunds of grain on a certain date, and stipulates that, in the event of his not delivering the stipulated amount by the stipulated date, he shall be liable to deliver 20 maunds. This is a stipulation by way of penalty, and B is only entitled to reasonable compensation in case of breach. (f) A undertakes to repay B a loan of Rs. This stipulation is not by way of penalty, and the contract may be enforced according to its terms. (g) A borrows Rs. This is a stipulation by way of penalty.] 75.Party rightfully rescinding contract, entitled to compensation.—A person who rightfully rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfilment of the contract. On the sixth night, A wilfully absents herself from the theatre, and B, in consequence, rescinds the contract. B is entitled to claim compensation for the damage which he has sustained through the non-fulfilment of the contract. [CHAPTER VII.—SALES OF GOODS.] Rep.by the Indian Sale of Goods Act, 1930 (3 of 1930), s.

91. [Effect of delivery to wharfinger or carrier.] Rep. by s. 65,ibid.

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Section 91 — [Effect of delivery to wharfinger or carrier

Section 92 — [Effect of part-delivery

Section 93 — [Seller not bound to deliver until buyer applies for delivery

Section 94 — [Place of delivery

Section 96 — [Lien where payment to be made at a future day, but no time fixed for delivery

91. [Effect of delivery to wharfinger or carrier.] Rep. by s. 92. [Effect of part-delivery.] Rep. by s. 93. [Seller not bound to deliver until buyer applies for delivery.] Rep. by s. 94.[Place of delivery.] Rep.by the Indian Sale of Goods Act, 1930 (3 of 1930), s.65. [SELLER’S LIEN.]Rep. by s. 96. [Lien where payment to be made at a future day, but no time fixed for delivery.] Rep. by s. 65,ibid. [STOPPAGE IN TRANSIT.] Rep. by s.

124.“Contract of indemnity” defined.—A contract by which one party promises to save the other

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Section 125 — Rights of indemnity-holder when sued

Section 126 — “Contract of guarantee”, “surety”, “principal debtor” and “creditor”

Section 127 — Consideration for guarantee

CHAPTER VIII OF INDEMNITY AND GUARANTEE 124.“Contract of indemnity” defined.—A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a “contract of indemnity”. Illustration A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees. 125.Rights of indemnity-holder when sued.—The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor— (1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies; (2) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor 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 to make in the absence of any contract of indemnity, or if the promisor authorized him to compromise the suit. 126. “Contract of guarantee”, “surety”, “principal debtor” and “creditor”.—A “contract of guarantee” is a contract to perform the promise, or discharge the liability, of a third person in case of his default. C promises to guarantee the payment in consideration of A’s promise to deliver the goods. 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.

128. Surety’s liability.—The liability of the surety is co- extensive with that of the principal debtor,

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Section 128 — Surety’s liability

Section 129 — “Continuing guarantee”

Section 130 — Revocation of continuing guarantee

Section 131 — Revocation of continuing guarantee by surety’s death

Section 132 — Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other’s default

Section 133 — Discharge of surety by variance in terms of contract

Surety’s liability.—The liability of the surety is co- extensive with that of the principal debtor, unless it is otherwise provided by the contract. 130.Revocation of continuing guarantee.—A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor. This revocation discharges A from all liability to B for any subsequent discount. 131.Revocation of continuing guarantee by surety’s death.—The death of the surety operates, in the absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future transactions. Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on other’s default.—Where two persons contract with a third person to undertake a certain liability, and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract, the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract, although such third person may have been aware of its existence. 133.Discharge of surety by variance in terms of contract.—Any variance, made without the 1 surety’s consent, in the terms of the contract between the principal [debtor] and the creditor, discharges the surety as to transactions subsequent to the variance.

134.Discharge of surety by release or discharge of principal debtor.—The surety is discharged by

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Section 134 — Discharge of surety by release or discharge of principal debtor

Section 135 — Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor

Section 136 — Surety not discharged when agreement made with third person to give time to principal debtor

Section 137 — Creditor’s forbearance to sue does not discharge surety

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 the duties are defined by an Act of the Legislature. A is discharged by the change from future liability under his guarantee, though the misconduct of B is in respect of a duty not affected by the later Act. (c) C agrees to appoint B as his clerk to sell goods at a yearly salary, upon A’s becoming surety to C for B’s duly accounting for moneys received by him as such clerk. 134.Discharge of surety by release or discharge of principal debtor.—The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor. Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor.—A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the principal debtor, discharges the surety, unless the surety assents to such contract. Surety not discharged when agreement made with third person to give time to principal debtor.—Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged. Creditor’s forbearance to sue does not discharge surety.—Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety.

138.Release of one co-surety does not discharge others.—Where there are co-sureties, a release by

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Section 138 — Release of one co-surety does not discharge others

Section 139 — Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy

Section 140 — Rights of surety on payment or performance

Section 141 — Surety’s right to benefit of creditor’s securities

Section 142 — Guarantee obtained by misrepresentation invalid

Section 143 — Guarantee obtained by concealment invalid

138.Release of one co-surety does not discharge others.—Where there are co-sureties, a release by the creditor of one of them does not discharge the others; neither does it free the surety so released from 1 his responsibility to the other sureties . Discharge of surety by creditor’s act or omission impairing surety’s eventual remedy.—If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged. A becomes surety to C for B’s due performance of the contract. 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 furniture, which gives power to C to sell the furniture, and apply the proceeds in discharge of the note. 140.Rights of surety on payment or performance.—Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor. 141.Surety’s right to benefit of creditor’s securities.—A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses, or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security.

144. Guarantee on contract that creditor shall not act on it until co-surety joins.—Where a

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Section 144 — Guarantee on contract that creditor shall not act on it until co-surety joins

Section 145 — Implied promise to indemnify surety

Section 146 — Co-sureties liable to contribute equally

(b)A guarantees to C payment for iron to be supplied by him to B to the amount of 2,000 tons. Guarantee on contract that creditor shall not act on it until co-surety joins.—Where a person gives a guarantee upon a contract that the creditor shall not act upon it until another person has joined in it as co-surety, the guarantee is not valid if that other person does not join. 145.Implied promise to indemnify surety.—In every contract of guarantee there is an implied promise by the principal debtor to indemnify the surety, and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee, but, no sums which he has paid wrongfully. Illustrations (a)B is indebted to C, and A is surety for the debt. Co-sureties liable to contribute equally.—Where two or more persons are co-sureties for the same debt or duty, either jointly or severally, and whether under the same or different contracts, and whether with or without the knowledge of each other, the co-sureties, in the absence of any contract to the contrary, are liable, as between themselves, to pay each an equal share of the whole debt, or of that part of 1 it which remains unpaid by the principal debtor . 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-quarter, B to the extent of one- quarter, and C to the extent of one-half.

148.“Bailment”“bailor” and “bailee” defined.—A “bailment” is the delivery of goods by one

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Section 149 — Delivery to bailee how made

Section 150 — Bailor’s duty to disclose faults in goods bailed

Section 151 — Care to be taken by bailee

Section 153 — Termination of bailment by bailee’s act inconsistent with conditions

Section 154 — Liability of bailee making unauthorized use of goods bailed

CHAPTER IX OF BAILMENT 148.“Bailment”“bailor” and “bailee” defined.—A “bailment” is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. Explanation.—If a person already in possession of the goods of another contracts to hold them as a bailee, he thereby becomes the bailee, and the owner becomes the bailor of such goods, although they may not have been delivered by way of bailment. Delivery to bailee how made.—The delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorized to hold them on his behalf. 150.Bailor’s duty to disclose faults in goods bailed.—The bailor is bound to disclose to the bailee faults in the goods bailed, of which the bailor is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults. Termination of bailment by bailee’s act inconsistent with conditions.—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. Liability of bailee making unauthorized use of goods bailed.—If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them.

155. Effect of mixture, with bailor’s consent, of his goods with bailee’s.—If the bailee, with the

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Section 155 — Effect of mixture, with bailor’s consent, of his goods with bailee’s

Section 156 — Effect of mixture without bailor’s consent, when the goods can be separated

Section 157 — Effect of mixture, without bailor’s consent, when the goods cannot be separated

Section 158 — Repayment, by bailor, of necessary expenses

Section 160 — Return of goods bailed, on expiration of time or accomplishment of purpose

Section 161 — Bailee’s responsibility when goods are not duly returned

Effect of mixture, with bailor’s consent, of his goods with bailee’s.—If the bailee, with the consent of the bailor, mixes the goods of the bailor with his own goods, the bailor and the bailee shall have an interest, in proportion to their respective shares, in the mixture thus produced. 156.Effect of mixture without bailor’s consent, when the goods can be separated.—If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, and the goods can be separated or divided, the property in the goods remains in the parties respectively; but the bailee is bound to bear the expense of separation or division, and any damage arising from the mixture. Effect of mixture, without bailor’s consent, when the goods cannot be separated.—If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, in such a manner that it is impossible to separate the goods bailed from the other goods, and deliver them back, the bailor is entitled to be compensated by the bailee for the loss of the goods. Repayment, by bailor, of necessary expenses.—Where, by the conditions of the bailment, the goods are to be kept or to be carried, or to have work done upon them by the bailee for the bailor, and the bailee is to receive no remuneration, the bailor shall repay to the bailee the necessary expenses incurred by him for the purpose of the bailment. 160.Return of goods bailed, on expiration of time or accomplishment of purpose.—It is the duty of the bailee to return, or deliver according to the bailor’s directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished. Bailee’s responsibility when goods are not duly returned.—If, by the default of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any 2 loss, destruction or deterioration of the goods from that time.

162. Termination of gratuitous bailment by death.—A gratuitous bailment is terminated by the

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Section 162 — Termination of gratuitous bailment by death

Section 163 — Bailor entitled to increase or profit from goods bailed

Section 164 — Bailor’s responsibility to bailee

Section 165 — Bailment by several joint owners

Section 170 — Bailee’s particular lien

Termination of gratuitous bailment by death.—A gratuitous bailment is terminated by the death either of the bailor or of the bailee. Bailor entitled to increase or profit from goods bailed.—In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed. Illustration A leaves a cow in the custody of B to be taken care of. Bailor’s responsibility to bailee.—The bailor is responsible to the bailee for any loss which the bailee may sustain by reason that the bailor was not entitled to make the bailment, or to receive back the goods, or to give directions respecting them. 165.Bailment by several joint owners.—If several joint owners of goods bail them, the bailee may deliver them back to, or according to the directions of, one joint owner without the consent of all in the absence of any agreement to the contrary. Bailee’s particular lien.—Where the bailee has, in accordance with the purpose of the bailment, rendered any service involving the exercise of labour or skill in respect of the goods bailed, he has, in the absence of a contract to the contrary, a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them.

171.General lien of bankers, factors, wharfingers, attorneys and policy-brokers.—Bankers,

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Section 171 — General lien of bankers, factors, wharfingers, attorneys and policy-brokers

Section 173 — Pawnee’s right of retainer

Section 174 — Pawnee not to retain for debt or promise other than that for which goods pledged

Section 175 — Pawnee’s right as to extraordinary expenses incurred

Section 176 — Pawnee’s right where pawnor makes default

Section 177 — Defaulting pawner’s right to redeem

Section 178 — Pledge by mercantile agent

Section 178A — Pledge by person in possession under voidable contract

171.General lien of bankers, factors, wharfingers, attorneys and policy-brokers.—Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an 1 express contract to that effect . Bailments of Pledges 172.“Pledge”“pawnor”,and “pawnee” defined.—The bailment of goods as security for payment of a debt or performance of a promise is called “pledge”. The bailor is in this case called the “pawnor”. 173.Pawnee’s right of retainer.—Thepawnee 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. 174.Pawnee not to retain for debt or promise other than that for which goods pledged. As to lien of a Railway Administration, see the Indian Railways Act, 1890 (9 of 1890), s.

179. Pledge where pawnor has only a limited interest.—Where a person pledges goods in which

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Section 179 — Pledge where pawnor has only a limited interest

Section 181 — Apportionment of relief or compensation obtained by such suits

Section 183 — Who may employ agent

Section 184 — Who may be an agent

Section 185 — Consideration not necessary.—No consideration is necessary to create an agency. 186. Agent’s authority may be expressed or implied

Section 187 — Definitions of express and implied authority

Section 188 — Extent of agent’s authority

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.] 179. Pledge where pawnor has only a limited interest.—Where a person pledges goods in which he has only a limited interest, the pledge is valid to the extent of that interest. Suits by bailees or bailors against wrong-doers 180.Suit by bailor or bailee against wrong-doer.—If a third person wrongfully deprives the bailee of the use or possession of the goods bailed, or does them any injury, the bailee is entitled to use such remedies as the owner might have used in the like case if no bailment had been made; and either the bailor or the bailee may bring a suit against a third person for such deprivation or injury. CHAPTER X AGENCY Appointment and authority of agents 182.“Agent” and “principal” defined.—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”. Who may employ agent.—Any person who is of the age of majority according to the law to which he is subject, and who is of sound mind, may employ an agent.

189.Agent’s authority in an emergency.—An agent has authority, in an emergency, to do all such

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Section 189 — Agent’s authority in an emergency

Section 190 — When agent cannot delegate

Section 191 — “Sub-agent” defined

Section 192 — Representation of principal by sub-agent properly appointed

Section 193 — Agent’s responsibility for sub-agent appointed without authority

Section 194 — Relation between principal and person duly appointed by agent to act in business of agency

Section 195 — Agent’s duty in naming such person

A may adopt any legal process necessary for the purpose of recovering the debt, and may give a valid discharge for the same. (b) A constitutes B his agent to carry on his business of a ship-builder. 189.Agent’s authority in an emergency.—An agent has authority, in an emergency, to do all such acts for the purpose of protecting his principal from loss as would be done by a person of ordinary prudence, in his own case, under similar circumstances. Illustrations (a) An agent for sale may have goods repaired if it be necessary. (b) A consigns provisions to B at Calcutta, with directions to send them immediately to C, at Cuttack. Agent’s responsibility for sub-agent appointed without authority.—Where an agent, without having authority to do so, has appointed a person to act as a sub-agent, the agent stands towards such person in the relation of a principal to an agent, and is responsible for his acts both to the principal and to third persons; the principal is not represented, by or responsible for the acts of the person so employed, nor is that person responsible to the principal. 194.Relation between principal and person duly appointed by agent to act in business of agency.—Where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub-agent, but an agent of the principal for such part of the business of the agency as is entrusted to him. Agent’s duty in naming such person.—In selecting such agent for his principal, an agent is bound to exercise the same amount of discretion as a man of ordinary prudence would exercise in his own case; and, if he does this, he is not responsible to the principal for the acts or negligence of the agent so selected.

196. Right of person as to acts done for him without his authority. Effect of ratification.—

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Section 196 — Right of person as to acts done for him without his authority. Effect of ratification

Section 197 — Ratification may be expressed or implied

Section 199 — Effect of ratifying unauthorized act forming part of a transaction

Section 200 — Ratification of unauthorized act cannot injure third person

Section 201 — Termination of agency

Right of person as to acts done for him without his authority. Effect of ratification.— Where acts are done by one person on behalf of another, but without his knowledge or authority, he may elect to ratify or to disown such acts. 197.Ratification may be expressed or implied.—Ratification may be expressed or may be implied in the conduct of the person on whose behalf the acts are done. 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. 199.Effect of ratifying unauthorized act forming part of a transaction.—A person ratifying any unauthorized act done on his behalf ratifies the whole of the transaction of which such act formed a part. 200.Ratification of unauthorized act cannot injure third person.—An act done by one person on behalf of another, without such other person’s authority, which, if done with authority, would have the effect of subjecting a third person to damages, or of terminating any right or interest of a third person, cannot, by ratification, be made to have such effect.

203.When principal may revoke agent’s authority.—The principal may, save as is otherwise

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Section 203 — When principal may revoke agent’s authority

Section 204 — Revocation where authority has been partly exercised

Section 206 — Notice of revocation or renunciation

Section 208 — When termination of agent’s authority takes effect as to agent, and as to third persons

Section 209 — Agent’s duty on termination of agency by principal’s death or insanity

A cannot revoke this authority, nor is it terminated by his insanity or death. 203.When principal may revoke agent’s authority.—The principal may, save as is otherwise provided by the last preceding section, revoke the authority given to his agent at any time before the authority has been exercised so as to bind the principal. 204.Revocation where authority has been partly exercised.—The principal cannot revoke the authority given to his agent after the authority has been partly exercised, so far as regards such acts and obligations as arise from acts already done in the agency. Notice of revocation or renunciation.—Reasonable notice must be given of such revocation or renunciation, otherwise the damage thereby resulting to the principal or the agent, as the case may be, must be made good to the one by the other. 208.When termination of agent’s authority takes effect as to agent, and as to third persons.— The termination of the authority of an agent does not, so far as regards the agent, take effect before it becomes known to him, or, so far as regards third persons, before it becomes known to them. 209.Agent’s duty on termination of agency by principal’s death or insanity.—When an agency is terminated by the principal dying or becoming of unsound mind, the agent is bound to take, on behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him.

210. Termination of sub-agent’s authority.—The termination of the authority of an agent causes

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Section 210 — Termination of sub-agent’s authority

Section 212 — Skill and diligence required from agent

Termination of sub-agent’s authority.—The termination of the authority of an agent causes the termination (subject to the rules herein contained regarding the termination of an agent’s authority) of the authority of all sub-agents appointed by him. Agent’s duty to principal 211.Agent’s duty in conducting principal’s business.—An agent is bound to conduct the business of his principal according to the directions given by the principal, or, in the absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and if any profit accrues, he must account for it. Illustrations (a) A, an agent engaged in carrying on for B a business, in which it is the custom to invest from time to time, at interest, the moneys which may be in hand, omits to make such investment. Skill and diligence required from agent.—An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business, unless the principal has notice of his want of skill. B is liable for the money and interest from the day on which it ought to have been paid, according to the usual rate, and for any further direct loss-as, e.g., by variation of rate of exchange-but not further. (b)A, an agent for the sale of goods, having authority to sell on credit, sells to B on credit, without making the proper and usual enquiries as to the solvency of B.

agency.—If an agent, without the knowledge of his principal, deals in the business of the agency on his

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Section 216 — Principal’s right to benefit gained by agent dealing on his own account in business of agency

Section 217 — Agent’s right of retainer out of sums received on principal’s account

Section 218 — Agent’s duty to pay sums received for principal

Section 220 — Agent not entitled to remuneration for business misconducted

Section 221 — Agent’s lien on principal’s property

Principal’s right to benefit gained by agent dealing on his own account in business of agency.—If an agent, without the knowledge of his principal, deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction. Illustration A directs B, his agent, to buy a certain house for him. 217.Agent’s right of retainer out of sums received on principal’s account.—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. Agent’s duty to pay sums received for principal.—Subject to such deductions, the agent is bound to pay to his principal all sums received on his account. 220.Agent not entitled to remuneration for business misconducted.—An agent who is guilty of misconduct in the business of the agency, is not entitled to any remuneration in respect of that part of the business which he has misconducted. Agent’s lien on principal’s property.—In the absence of any contract to the contrary, an agent is entitled to retain goods, papers and other property, whether movable or immovable of the principal received by him, until the amount due to himself for commission, disbursements and services in respect of the same has been paid or accounted for to him.

223.Agent to be indemnified against consequences of acts done in good faith.—Where one person

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Section 223 — Agent to be indemnified against consequences of acts done in good faith

Section 224 — Non-liability of employer of agent to do a criminal act

Section 226 — Enforcement and consequences of agent’s contracts

223.Agent to be indemnified against consequences of acts done in good faith.—Where one person employs another to do an act, and the agent does the act in good faith, the employer is liable to indemnify the agent against the consequences of that act, though it cause an injury to the rights of third persons. 224.Non-liability of employer of agent to do a criminal act.—Where one person employs another to do an act which is criminal, the employer is not liable to the agent, either upon an express or an implied 1 promise, to indemnify him against the consequences of that Act . Illustrations (a) A employs B to beat C, and agrees to indemnify him against all consequences of the act. A is not liable to indemnify B for those damages. (b)B, the proprietor of a newspaper, publishes, at A’s request, a libel upon C in the paper, and A agrees to indemnify B against the consequences of the publication, and all costs and damages of any action in respect thereof. Enforcement and consequences of agent’s contracts.—Contracts entered into through an agent, and obligations arising from acts done by an agent, may be enforced in the same manner, and will have the same legal consequences, as if the contracts had been entered into and the acts done by the principal in person. 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.

227. Principal how far bound, when agent exceeds authority.—When an agent does more than he

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Section 227 — Principal how far bound, when agent exceeds authority

Section 228 — Principal not bound when excess of agent’s authority is not separable

Section 229 — Consequences of notice given to agent

Section 230 — Agent cannot personally enforce, nor be bound by, contracts on behalf of principal

(b)A, being B’s agent, with authority to receive money on his behalf, receives from C a sum of money due to B. Principal how far bound, when agent exceeds authority.—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. 228.Principal not bound when excess of agent’s authority is not separable.—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. 229.Consequences of notice given to agent.—Any notice given to or information obtained by the agent, provided it be given or obtained in the course of the business transacted by him for the principal, shall, as between the principal and third parties, have the same legal consequences as if it had been given to or obtained by the principal. 230.Agent cannot personally enforce, nor be bound by, contracts on behalf of principal.—In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Presumption of contract to contrary—Such a contract shall be presumed to exist in the following cases:— (1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad; (2) where the agent does not disclose the name of his principal; (3) where the principal, though disclosed, cannot be sued.

232. Performance of contract with agent supposed to be principal.—Where one man makes a

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Section 232 — Performance of contract with agent supposed to be principal

Section 233 — Right of person dealing with agent personally liable

Section 234 — Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable

Section 235 — Liability of pretended agent

Section 236 — Person falsely contracting as agent not entitled to performance

Section 237 — Liability of principal inducing belief that agent’s unauthorized acts were authorized

Section 238 — Effect, on agreement, of misrepresentation of fraud, by agent

Performance of contract with agent supposed to be principal.—Where one man makes a contract with another, neither knowing nor having reasonable ground to suspect that the other is an agent, the principal, if he requires the performance of the contract, can only obtain such performance subject to the rights and obligations subsisting between the agent and the other party to the contract. 233.Right of person dealing with agent personally liable.—In cases where the agent is personally liable, a person dealing with him may hold either him or his principal, or both of them, liable. Illustration A enters into a contract with B to sell him 100 bales of cotton, and afterwards discovers that B was acting as agent for C. Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable.—When a person who has made a contract with an agent induces the agent to act upon the belief that the principal only will be held liable, or induces the principal to act upon the belief that the agent only will be held liable, he cannot afterwards hold liable the agent or principal respectively. 236.Person falsely contracting as agent not entitled to performance.—A person with whom a contract has been entered into in the character of agent, is not entitled to require the performance of it, if he was in reality acting, not as agent, but on his own account. 237.Liability of principal inducing belief that agent’s unauthorized acts were authorized.— 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.

CHAPTER XI.—[OF PARTNERSHIP.]Rep. by the Indian Partnership Act, 1932 (9 of 1932), s. 73

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Section 239 — [‘Partnership’ defined

Section 254 — [When Court may dissolve partnership

Section 255 — [Dissolution of partnership by prohibition of business

Section 256 — [Rights and obligations of partners in partnership continued after expiry of term for which it was entered into

CHAPTER XI.—[OF PARTNERSHIP.]Rep. by the Indian Partnership Act, 1932 (9 of 1932), s. 239. [‘Partnership’ defined.] Rep. by s. 73 and the Second Schedule, ibid 249. [Partner’s liability for debts of partnership.] Rep. bys. 254. [When Court may dissolve partnership.] Rep. by s. 255. [Dissolution of partnership by prohibition of business.] Rep. by s. 256. [Rights and obligations of partners in partnership continued after expiry of term for which it was entered into.] Rep. by s.

260. [Revocation of continuing guarantee by charge by change in firm.] Rep. by the Indian

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Section 260 — [Revocation of continuing guarantee by charge by change in firm

Section 261 — [Non-liability of deceased partner’s estate for subsequent obligations

Section 262 — [Payment of partnership debts, and of separate debts

Section 263 — [Continuance, of partners rights and obligations after dissolution

Section 264 — [Notice of dissolution

Section 265 — [Right of partners to apply for winding-up after termination of partnership

260. [Revocation of continuing guarantee by charge by change in firm.] Rep. by the Indian Partnership Act, 1932 (9 of 1932), s. 261. [Non-liability of deceased partner’s estate for subsequent obligations.] Rep. by s. 262. [Payment of partnership debts, and of separate debts.] Rep. by s. 263. [Continuance, of partners rights and obligations after dissolution.] Rep. by s. 264. [Notice of dissolution.] Rep. by s. 265. [Right of partners to apply for winding-up after termination of partnership.] Rep. by s.