Business laws

DIFFERENCE BETWEEN CONTRACT AND AGREEMENT

An agreement to carry out an illegal act is an example of a
void agreement. For example, an agreement between drug
dealers and buyers is a void agreement simply because the
terms of the contract are illegal. In such a case, neither party
can go to court to enforce the contract.
It is define as section 2(a)
When can a finder of the goods are sell
Right to sell (section169)
Where the owner of the goods cannot be found or if he
refuse to pay compensation or lawful charge of such goods
to the finder then the finder has the power to sell it where ;
The thing is of perishable nature or will loss the greater part
of its value
Where the lawful amount to two thirds of its value
And return the surplus to its true owner
A breach of contract occurs whenever a party who entered a
contract fails to perform their promised obligations. Due to the
frequency of breaches of contract, a robust body of law has
grown to resolve the ensuing disputes.

A promise to do or refrain from doing something in exchange

for something else. An offer must be stated and delivered in a
way that would lead a reasonable person to expect a binding
contract to arise from its acceptance
Consideration is a promise, performance, or forbearance
bargained by a promisor in exchange for their promise.
Consideration is the main element of a contract. Without
consideration by both parties, a contract cannot be
enforceable.
Different mode of discharge of contract
 Unit 2
Bailment – voluntary delivery of goods for the purpose
Bailor – party who deliver the goods or property
Bailee – who receive the goods or property

q) what are the rights and duties of

bailer
Rights of a Bailer:

1. Right to possession: The bailer has the right to

retain possession of the property and can
reclaim it at any time if the bailee breaches the
RIGHTS AND DUTY OF BAILE
  What is bailment .
Bailment is a legal term that refers to the act of
temporarily transferring possession of personal
property (such as goods or assets) from one person
(the bailor) to another person (the bailee) without
transferring ownership. The property remains the
property of the bailor, but the bailee has temporary
possession and control of it. Bailments can arise in a
variety of contexts, such as when property is
deposited for safekeeping, transported for delivery,
or loaned for temporary use. The terms of the
bailment are typically spelled out in a contract or
agreement between the bailor and bailee, and they
govern the rights and obligations of each party
during the period of possession.

q) what do you mean by contract of

pledge and what are the essential
features.
In this type of contract, the pledgor retains
ownership of the pledged asset, but transfers the
possession of the asset to the pledgee as security for
the loan.

A contract of pledge is a legally binding agreement

and is enforceable by law. Both parties must agree to
the terms of the contract and sign it to make it valid.
It is a common form of security for loans and is often
used in commercial transactions, such as business
financing or real estate loans.

The essential features of a contract of pledge include

the following:

1. Pledged Asset: The contract of pledge requires

the pledgor to provide a valuable asset or
property as collateral to secure the loan or debt.
This asset must have a tangible value that can be
 sold or liquidated by the pledgee if the borrower
defaults on the loan.
2. Transfer of Possession: The possession of the
pledged asset is transferred from the pledgor to
the pledgee. The pledgee has the right to hold,
use, or sell the asset in case of default by the
pledgor.
3. Retention of Ownership: The ownership of the
pledged asset remains with the pledgor. The
pledgee only has the right to hold and use the
asset as collateral for the loan or debt.
4. Security for the Loan: The purpose of the
contract of pledge is to provide security for the
loan or debt. The pledged asset serves as a
guarantee for the repayment of the loan, and
the pledgee has the right to sell the asset to
recover the debt if the pledgor fails to repay the
loan.
5. Voluntary Agreement: The contract of pledge is
a voluntary agreement between the pledgor and
pledgee. Both parties must agree to the terms of
the contract and sign it to make it legally
binding.
6. Enforceability: The contract of pledge is legally
enforceable, and the pledgee can take legal
action against the pledgor to recover the debt in
case of default.
Overall, a contract of pledge is a legally binding
agreement that provides security for a loan or debt
by using a valuable asset as collateral. It is essential
for both parties to clearly understand the terms and
conditions of the contract before signing it.

Bailment refers to the temporary transfer of

possession of personal property from one person
(the bailor) to another (the bailee) for a specific
purpose, without transferring ownership. The
property remains the property of the bailor, and the
bailee has temporary possession and control of it.
The bailment typically arises in situations where the
property is deposited for safekeeping, transported
for delivery, or loaned for temporary use.

Pledge, on the other hand, is a type of security

interest in which a borrower (pledgor) offers a
valuable asset or property as collateral to secure a
loan or debt to a lender (pledgee). The pledgor
retains ownership of the pledged asset, but transfers
the possession of the asset to the pledgee as security
for the loan.

The main differences between bailment and pledge

are:

1. Purpose: Bailment is for a specific purpose, while

pledge is to secure a loan or debt.
2. Ownership: In bailment, ownership of the
property remains with the bailor, while in pledge,
ownership of the property remains with the
pledgor.
3. Possession: In bailment, possession of the
property is transferred to the bailee, while in
pledge, possession of the property is transferred
to the pledgee.
4. Rights of the Parties: In bailment, the bailee has
limited rights to use or dispose of the property,
while in pledge, the pledgee has the right to sell
the property to recover the debt if the pledgor
defaults on the loan.

In summary, the key difference between bailment

and pledge is that bailment involves the temporary
transfer of possession of property for a specific
purpose, while pledge involves the transfer of
possession of property as collateral to secure a loan
or debt

Q) rights of pledger and pledgee

The rights of the pledgee in a contract of pledge
include:

1. Right to possession of the pledged asset: The

pledgee has the right to hold and possess the
pledged asset until the loan or debt is repaid.
2. Right to sell the pledged asset: If the pledgor
defaults on the loan or debt, the pledgee has the
right to sell the pledged asset to recover the
debt.
3. Right to recover the debt: The pledgee has the
right to recover the outstanding debt by selling
the pledged asset or taking other legal action.
4. Right to receive any deficiency proceeds: If the
pledged asset is sold by the pledgee to recover
the debt, and the sale proceeds are less than the
amount owed, the pledgee has the right to
receive the deficiency amount.
 The rights of the pledgor in a contract of pledge
include:

1. Right to retain ownership of the pledged asset:

The pledgor retains ownership of the pledged
asset, even though the possession is transferred
to the pledgee as security for the loan.
2. Right to redeem the pledged asset: The pledgor
has the right to redeem or retrieve the pledged
asset by repaying the loan or debt in full.
3. Right to receive any surplus proceeds: If the
pledged asset is sold by the pledgee to recover
the debt, and the sale proceeds exceed the
amount owed, the pledgor has the right to
receive the surplus amount.
4. Right to receive notice of any sale: The pledgor
has the right to receive notice from the pledgee
before the pledged asset is sold or disposed of
to recover the debt.
What is contract of guarantee . what
are the essential features . what are the
kind of contract of guarantee.
A contract of guarantee is a legal agreement
between three parties: the creditor (to whom the
debt is owed), the principal debtor (who owes the
debt), and the surety (who guarantees the payment
of the debt on behalf of the debtor).

In a contract of guarantee, the surety promises to

the creditor that if the debtor fails to full fill their
obligation to pay the debt, the surety will be
responsible for fulfilling the obligation on behalf of
the debtor. Essentially, the surety is agreeing to take
on the debt if the debtor is unable or unwilling to
pay.

The contract of guarantee can be either oral or

written, although a written contract is generally
preferred for evidentiary purposes. In addition, the
terms of the contract must be clear
The essential features of a contract of guarantee are
as follows:

1. Three parties: A contract of guarantee involves

three parties: the creditor (to whom the debt is
owed), the principal debtor (who owes the
debt), and the surety (who guarantees the
payment of the debt on behalf of the debtor).
2. Promise to pay: The surety promises to pay the
debt owed by the principal debtor to the
creditor in case the debtor fails to pay. The
promise to pay is the core of the guarantee
contract.
3. Secondary obligation: A contract of guarantee is
a secondary obligation. It means that the
surety's obligation to pay arises only when the
principal debtor defaults on the payment of the
debt.
4. Conditional liability: The liability of the surety is
conditional upon the principal debtor's failure to
pay. The surety is not liable to pay the debt
unless the debtor fails to fulfil their obligation to
pay.
5. Co-extensive liability: The liability of the surety
is co-extensive with that of the principal debtor.
It means that the surety is liable to pay the full
amount of the debt owed by the principal
debtor, along with any interest and costs.
 6. Written contract: A contract of guarantee can be
either oral or written, but it is advisable to have
a written contract for evidentiary purposes.
7. Consideration: Like any other contract, a
contract of guarantee also requires
consideration to be valid. The surety may receive
consideration in the form of a fee or commission
for guaranteeing the debt.

These are the essential features of a contract of

guarantee. It's important to understand these
features before entering into a guarantee contract.

There are various kinds of contracts of guarantee, some of which are:

1. Specific guarantee: A specific guarantee is a
contract of guarantee that covers a specific debt
or a specific transaction. It is usually entered into
when a creditor is not fully confident in the
debtor's ability to pay.
2. Continuing guarantee: A continuing guarantee is
a contract of guarantee that covers all
transactions between the creditor and the
debtor, regardless of whether they are current or
future. It remains in force until it is revoked by
the surety.
3. Limited guarantee: A limited guarantee is a
contract of guarantee that limits the liability of
the surety to a specific amount or a specific
period. It is commonly used when the creditor
requires a guarantee but the surety does not
wish to assume unlimited liability.
4. Performance guarantee: A performance
guarantee is a contract of guarantee that
guarantees the performance of a contract or a
project. It is commonly used in construction and
infrastructure projects to ensure that the work is
completed according to the terms of the
contract.
5. Financial guarantee: A financial guarantee is a
contract of guarantee that guarantees the
payment of financial obligations, such as loans
or bonds. It is commonly used by banks and
financial institutions to reduce their risk.
 6. Corporate guarantee: A corporate guarantee is a
contract of guarantee given by one company to
another company in respect of the obligations of
a third party. It is commonly used in corporate
finance transactions and joint ventures.

These are some of the common types of contracts of

guarantee. The terms and conditions of each
contract may vary depending on the specific
requirements of the parties involved.
contract of indemnity is a legal agreement in which
one party (the indemnifier) promises to compensate
or reimburse another party (the indemnitee) for any
loss or damage they may suffer as a result of a
specific event or action. In other words, it is a
contract in which one party agrees to protect
another party against any loss or liability that may
arise.

The essential features of a contract of indemnity are

as follows:

1. Two parties: A contract of indemnity involves

two parties - the indemnifier and the
indemnitee.
2. Promise to compensate: The indemnifier
promises to compensate the indemnitee for any
loss or damage they may suffer as a result of a
specific event or action.
3. Primary obligation: A contract of indemnity is a
primary obligation. It means that the
indemnifier's obligation to compensate arises as
soon as the event or action occurs.
4. Unilateral contract: A contract of indemnity is a
unilateral contract, meaning only one party (the
indemnifier) makes a promise to the other party
(the indemnitee).
5. No need for consideration: Unlike other
contracts, a contract of indemnity does not
require consideration to be valid.
6. Written or oral: A contract of indemnity can be
either oral or written, although it is advisable to
have a written contract for evidentiary purposes.
The indemnity holder has certain rights under a
contract of indemnity. These rights include:
1. Right to claim compensation: The indemnity holder has the
right to claim compensation from the indemnifier for any loss
or damage suffered as a result of the event or action covered
under the contract of indemnity.
2. Right to sue: If the indemnifier fails to compensate the
indemnity holder, the latter has the right to sue the
indemnifier to recover the compensation due.
3. Right to defend: In some cases, the indemnity holder may be
required to defend themselves against legal action or claims
arising from the event or action covered under the contract of
indemnity. In such cases, the indemnity holder has the right to
call upon the indemnifier to provide the necessary defines or
to reimburse them for any costs incurred in defending
themselves.
4. Right to recover costs: If the indemnity holder incurs any costs
while claiming compensation or defending themselves, they
have the right to recover these costs from the indemnifier.
5. Right to subrogation: If the indemnity holder receives
compensation from a third party for the loss or damage
suffered, they may assign their right to recover the
compensation to the indemnifier. This is known as the right of
subrogation.

In summary, the indemnity holder has the right to claim

compensation, sue for damages, defend themselves against legal
action, recover costs incurred, and assign their right of recovery to
the indemnifier in case of subrogation.

Unit 3
Who is an agent explain the classification of an
agent?
An agent neither personally enforced contact into
buy him on behalf of his principal, nor he is
personally bound to them. Discuss and enumerate
the exception if any
Section 230 in The Indian Contract Act, 1872
230. Agent cannot personally enforce, nor be bound by,
contracts on behalf of principal.—In the absence of any
contact 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. —In the absence of
any contact 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.

Based on the provided description, it seems that the

agent in question does not have the authority to
personally enforce contracts on behalf of their
principal, nor are they personally bound by the
contracts themselves. This type of agent is typically
known as a non-binding or non-enforcing agent.

In such cases, the agent acts as an intermediary or

facilitator between the principal and third parties,
but they lack the legal authority to create binding
contracts on behalf of the principal. Instead, they
assist in negotiations, provide information, and bring
the parties together, but the ultimate responsibility
for entering into and enforcing contracts lies with
the principal.

However, there are some exceptions or situations

where a non-binding agent may have certain
authorities or obligations:

1. Power of Attorney: If the principal grants a

power of attorney to the agent, it confers legal
authority for the agent to act on behalf of the
principal, including the ability to enter into
binding contracts.
2. Disclosed Agency: In some cases, the agent may
clearly disclose that they are acting as an agent
 for a specific principal. In such instances, the
principal may be bound by the contracts entered
into by the agent, even if the agent is not
personally bound.
3. Ratification: If the principal later affirms or
ratifies the actions of the agent, they may
become bound by the contracts entered into by
the agent, even if the agent initially lacked the
authority.
4. Apparent Authority: If the agent acts in a way
that creates a reasonable belief in third parties
that they have the authority to bind the
principal, the principal may be bound by the
contracts entered into by the agent based on the
principle of apparent authority.

It's important to note that the specific rules and

exceptions regarding the authority and obligations
of agents can vary depending on the legal
jurisdiction and the terms of the agency relationship
established between the principal and the agent.
Therefore, consulting legal counsel or referring to
relevant laws and regulations in a specific
jurisdiction is advisable to understand the exact
implications and exceptions that may apply.

Explain the condition and warranty implied by law in

contract of goods of sale
a condition refers to a specific term or requirement
that is crucial to the contract's performance. It is an
essential element that, if not fulfilled, may give rise
to certain rights, remedies, or consequences for the
parties involved.

Conditions are used to establish the core obligations

or fundamental aspects of a contract. They define
the key criteria or events that must occur for the
contract to be valid or for the parties' obligations to
be triggered. If a condition is not satisfied or is
breached, it may entitle the non-breaching party to
take certain actions, such as terminating the
contract, seeking damages, or pursuing other
remedies.
Explain the condition and warranty implied by law in
contract of goods of sale

In a contract of sale for goods, certain conditions

and warranties are implied by law to protect the
rights of buyers and sellers. These implied terms are
based on common law principles and statutory
provisions in many jurisdictions, such as the Sale of
Goods Act. Here's an explanation of the condition
and warranty implied by law in a contract of sale:

1. Condition: A condition is a fundamental term or

requirement that goes to the core of the
contract. If a condition is breached, the non-
breaching party may have the right to terminate
the contract, seek remedies, and claim damages.
In a contract of sale, the following conditions are
typically implied:
a. Condition of Title: The seller must have the
legal right to sell the goods, and the buyer will
obtain the title to the goods free from any
undisclosed liens, encumbrances, or adverse
claims. It is defined under section 14 a of the
Indian Contract Act
b. Condition of Description: The goods must
match the description provided by the seller. If
the goods do not correspond to the description,
the buyer may have the right to reject them. It is
defined under the section 15 of the Indian
Contract Act
c. Condition of sale by Sample The good must
match the sample provided by the seller. If the
good or not corresponded to the sample, the
buyer may have a right to reject them It is
defined under the section 17 of Indian contract
act
d. Condition of description and sale by sample It
is defined under the section 15 of Indian
contract act The good must be matched with the
description provided by the seller and The good
must be matched The sample provided by seller
If it is not corresponded to the sample and
description buyer may have right to reject them
e. Condition as to Quality or a fitness If buyer
put his requirement in front of seller Regarding
goods then seller must provide the good to the
buyer According to their requirement If the
good is not matched with the buyer requirement
then buyer may have a right to reject them
f. Condition has to wholesomeness It is
applicable only eatable items Buyer must
provide a good in a condition. They are eatable
in condition If good is not in a condition to eat
them then buyer have a right to reject them

Implied warranty
Warranties are subsidiary or collateral terms of
the contract that are not essential to its main
purpose. Breach of a warranty entitles the buyer
to claim damages but does not give the right to
reject the goods and terminate the contract. The
following warranties are implied by law in
contracts for the sale of goods:
a. Warranty as to undisturbed position
When seller sell his good to the buyer, then
the possession of the good in the hand of
buyer Then seller may not disturb to the buyer
relating Possession of the good in other words
seller warrants that the buyer will have
undisturbed possession of the goods, free
from any lawful claims of a third party. It is
defined under the section 14B of Indian
Contact Act
Define contract of agency discuss different
ways through which contract of agency can
created
A contract of agency is a legal agreement in
which one party, known as the principal,
authorizes another party, known as the agent,
to act on their behalf and represent their
interests in dealings with third parties. The
agent has the authority to enter into contracts
or perform acts on behalf of the principal,
subject to the scope and limitations specified
in the agency agreement
The contract of agency establishes the rights,
duties, and obligations of both the principal
and the agent
3.Agency by Necessity: Agency by necessity occurs in
emergency situations where there is a need to
protect the interests of the principal. If the principal
is unable to give instructions and the agent acts
reasonably in the principal's best interests, an agency
relationship may be implied to address the situation.
Agency by Ratification: Agency by ratification occurs
when a person (the purported agent) acts on behalf
of another without prior authorization, but the
principal later accepts or ratifies the acts performed.
The principal, after being aware of the agent's
actions, can choose to adopt and be bound by those
actions, creating a valid agency relationship