THE CONTRACT ACT, 1872 (IX of 1872) CONTENTS SECTIONS PRELIMINARY Short title Ete!t Co""e!#e"e!t E!$#t"e!t% E!$#t"e!t % re&e$le' I!ter&ret$tio!#l$%e
1.
2.
CHAPTER I O* THE COMM+NICATION, ACCEPTANCE AN RE-OCATION O* PROPOSALS 3. 4. 5. 6. 7. 8. 9.
Co""!i#$tio!, $##e&t$!#e $!' re.o#$tio! of &ro&o%$l% Co""!i#$tio! Co""!i#$t io! /he! #o"&lete Re.o#$tio! of &ro&o%$l% $!' $##e&t$!#e $##e&t$!#e% % Re.o#$tio! ho/ "$'e A##e&t$!#e "%t 0e $0%olte A##e&t$!#e 0 &erfor"i!, #o!'itio!%, or re#ei.i! #o!%i'er$tio! Pro"i%e%, e&re%% $!' i"&lie' CHAPTER II O* CONTRACTS, -OIA3LE CONTRACTS AN -OI A4REEMENTS
5h$t $ree"e!t% $re #o!tr$#t% 5ho $re #o"&ete!t to #o!tr$#t 11. 12. 5h$t i% $ %o!' "i!' for the &r&o%e% of #o!tr$#ti! 6Co!%e!t 'efi!e' 13. 14. 6*ree #o!%e!t6 'efi!e' 6Coer#io!6 'efi!e' 15. 16. 6+!'e i!fle!#e6 'efi!e' 6*r$'6 'efi!e' 17. 18. 6Mi%re&re%e!t$tio!6 'efi!e' 19. -io'$0ilit of $ree"e!t% /ithot free #o!%e!t 1A9 Po/er to %et $%i'e #o!tr$#t i!'#e' 0 !'e i!fle!#e Aree"e!t .oi' /here 0oth &$rtie% $re !'er "i%t$:e $% to "$tter of f$#t 20. 21. Effe#t of "i%t$:e% $% to l$/ Co!tr$#t #$%e' 0 "i%t$:e of o!e &$rt $% to "$tter of f$#t 22. 23. 5h$t #o!%i'er$tio!% $!' o0;e#t% $re l$/fl $!' /h$t !ot 10.
Void Agreements 24. 25.
26. 27. 28.
Aree"e!t% .oi', if #o!%i'er Aree"e!t% #o!%i'er$tio!% $tio!% $!' o0;e#t% !l$/fl i! &$rt Aree"e!t /ithot #o!%i'er$tio! .oi', !le%% it i% i! /riti! $!' rei%tere', or i% $ &ro"i%e to #o"&e!%$te for %o"ethi! 'o!e, or i% $ &ro"i%e to &$ $ 'e0t 0$rre' 0 li"it$tio! l$/ Aree"e!t i! re%tr$i!t of "$rri$e .oi' Aree"e!t i! re%tr$i!t of tr$'e .oi' S$.i! of $ree"e!t !ot to #$rr o! 0%i!e%% of /hi#h oo' /ill i% %ol' Aree"e!t% Aree"e!t % i! re%tr$i!t of le$l &ro#ee'i!% .oi' S$.i! of #o!tr$#t to refer to $r0itr$tio! 'i%&te th$t "$ $ri%e Sit% 0$rre' 0 %#h #o!tr$#t% S$.i! of #o!tr$#t to refer <e%tio!% th$t h$.e $lre$'
$ri%e! 29. Aree"e!t% .oi' for !#ert$i!t 30. Aree"e!t% 0 /$ of /$er .oi' E#e&tio!% i! f$.or of #ert$i! &ri=e% for hor%er$#i!9 hor%er$#i!9 Se#tio! 2>A of the Pe!$l Co'e !ot $ffe#te' ?@A9 Aree"e!t% #oll$ter$l to /$eri! $ree"e!t% .oi' ?@39 No %it for re#o.er of "o!e, #o""i%%io! et#9, i! re%&e#t of .oi' $ree"e!t% ?@C9 P$"e!t 0 $r'i$!, ee#tor, et#9, i! re%&e#t of .oi' $ree"e!t% !ot to 0e $llo/e' #re'it CHAPTER III O* CONTIN4ENT CONTRACTS 31. 32. 33. 34. 35.
36.
6Co!ti!e!t #o!tr$#t6 'efi!e' E!for#e"e!tt of #o!tr$#t% #o!ti!e!t o! $! e.e!t h$&&e!i! E!for#e"e! E!for#e"e!t of #o!tr$#t% #o!ti!e!t o! $! e.e!t !ot h$&&e!i! 5he! e.e!t o! /hi#h #o!tr$#t i% #o!ti!e!t to 0e 'ee"e' i"&o%%i0le, if it i% the ftre #o!'#t of $ li.i! &er%o! 5he! #o!tr$#t% 0e#o"e .oi' /hi#h $re #o!ti!e!t o! h$&&e!i! of %&e#ifie' e.e!t /ithi! fie' ti"e 5he! #o!tr$#t% "$ 0e e!for#e' /hi#h $re #o!ti!e!t o! %&e#ifie' e.e!t !ot h$&&e!i! /ithi! fie' ti"e Aree"e!t #o!ti!e!t o! i"&o%%i0le e.e!t% .oi' CHAPTER IO* THE PER*ORMANCE O* CONTRACTS Contracts which must be performed
37. 38. 39. 40. 41. 42. 43.
44. 45.
O0li$tio! of &$rtie% to #o!tr$#t%9 Effe#t of ref%$l to $##e&t offer of &erfor"$!#e Effe#t of ref%$l of &$rt to &erfor" &ro"i%e /holl By whom Contracts must be performed Per%o! 0 /ho" &ro"i%e i% to 0e &erfor"e' Effe#t of $##e&ti! &erfor"$!#e fro" thir' &er%o! e.oltio! of ;oi!t li$0ilitie% A! o!e of ;oi!t &ro"i%or% "$ 0e #o"&elle' to &erfor" E$#h &ro"i%or "$ #o"&el #o!tri0tio! Sh$ri! of lo%% 0 'ef$lt i! #o!tri0tio! Effe#t of rele$%e of o!e ;oi!t &ro"i%or9 e.oltio! of ;oi!t riht% Time and Place for Performance
46. 47. 48. 49. 50. 51. 52. 53. 54.
Ti"e for &erfor"$!#e of &ro"i%e /here !o $&&li#$tio! i% to 0e "$'e $!' !o ti"e i% %&e#ifie' Ti"e $!' &l$#e for &erfor"$!#e of &ro"i%e /here ti"e i% %&e#ifie' $!' !o $&&li#$tio! to 0e "$'e A&&li#$tio! for &erfor"$!#e &erfor"$!#e o! #ert$i! '$ to 0e $t &ro&er ti"e $!' &l$#e Pl$#e for &erfor"$!#e of &ro"i%e /ere !o $&&li#$tio! to 0e "$'e $!' !o &l$#e fie' for &erfor"$! &erfor"$!#e #e Perfor"$!#e Perfor"$! #e i! "$!!er or $t ti"e &re%#ri0e' or %$!#tio!e' 0 &ro"i%ee Performance of Reciprocal Promises Pro"i%or !ot 0o!' to &erfor", !le%% re#i&ro#$l &ro"i%ee re$' $!' /illi! to &erfor" Or'er of &erfor"$ &erfor"$!#e !#e of re#i&ro#$l &ro"i%e%9 Li$0ilit of &$rt &re.e!ti! e.e!t o! /hi#h the #o!tr$#t i% to t$:e effe#t Effe#t of 'ef$lt $% to th$t &ro"i%e /hi#h %hol' 0e fir%t &erfor"e', i! #o!tr$#t #o!%i%ti! of re#i&ro#$l &ro"i%e%
$ri%e! 29. Aree"e!t% .oi' for !#ert$i!t 30. Aree"e!t% 0 /$ of /$er .oi' E#e&tio!% i! f$.or of #ert$i! &ri=e% for hor%er$#i!9 hor%er$#i!9 Se#tio! 2>A of the Pe!$l Co'e !ot $ffe#te' ?@A9 Aree"e!t% #oll$ter$l to /$eri! $ree"e!t% .oi' ?@39 No %it for re#o.er of "o!e, #o""i%%io! et#9, i! re%&e#t of .oi' $ree"e!t% ?@C9 P$"e!t 0 $r'i$!, ee#tor, et#9, i! re%&e#t of .oi' $ree"e!t% !ot to 0e $llo/e' #re'it CHAPTER III O* CONTIN4ENT CONTRACTS 31. 32. 33. 34. 35.
36.
6Co!ti!e!t #o!tr$#t6 'efi!e' E!for#e"e!tt of #o!tr$#t% #o!ti!e!t o! $! e.e!t h$&&e!i! E!for#e"e! E!for#e"e!t of #o!tr$#t% #o!ti!e!t o! $! e.e!t !ot h$&&e!i! 5he! e.e!t o! /hi#h #o!tr$#t i% #o!ti!e!t to 0e 'ee"e' i"&o%%i0le, if it i% the ftre #o!'#t of $ li.i! &er%o! 5he! #o!tr$#t% 0e#o"e .oi' /hi#h $re #o!ti!e!t o! h$&&e!i! of %&e#ifie' e.e!t /ithi! fie' ti"e 5he! #o!tr$#t% "$ 0e e!for#e' /hi#h $re #o!ti!e!t o! %&e#ifie' e.e!t !ot h$&&e!i! /ithi! fie' ti"e Aree"e!t #o!ti!e!t o! i"&o%%i0le e.e!t% .oi' CHAPTER IO* THE PER*ORMANCE O* CONTRACTS Contracts which must be performed
37. 38. 39. 40. 41. 42. 43.
44. 45.
O0li$tio! of &$rtie% to #o!tr$#t%9 Effe#t of ref%$l to $##e&t offer of &erfor"$!#e Effe#t of ref%$l of &$rt to &erfor" &ro"i%e /holl By whom Contracts must be performed Per%o! 0 /ho" &ro"i%e i% to 0e &erfor"e' Effe#t of $##e&ti! &erfor"$!#e fro" thir' &er%o! e.oltio! of ;oi!t li$0ilitie% A! o!e of ;oi!t &ro"i%or% "$ 0e #o"&elle' to &erfor" E$#h &ro"i%or "$ #o"&el #o!tri0tio! Sh$ri! of lo%% 0 'ef$lt i! #o!tri0tio! Effe#t of rele$%e of o!e ;oi!t &ro"i%or9 e.oltio! of ;oi!t riht% Time and Place for Performance
46. 47. 48. 49. 50. 51. 52. 53. 54.
Ti"e for &erfor"$!#e of &ro"i%e /here !o $&&li#$tio! i% to 0e "$'e $!' !o ti"e i% %&e#ifie' Ti"e $!' &l$#e for &erfor"$!#e of &ro"i%e /here ti"e i% %&e#ifie' $!' !o $&&li#$tio! to 0e "$'e A&&li#$tio! for &erfor"$!#e &erfor"$!#e o! #ert$i! '$ to 0e $t &ro&er ti"e $!' &l$#e Pl$#e for &erfor"$!#e of &ro"i%e /ere !o $&&li#$tio! to 0e "$'e $!' !o &l$#e fie' for &erfor"$! &erfor"$!#e #e Perfor"$!#e Perfor"$! #e i! "$!!er or $t ti"e &re%#ri0e' or %$!#tio!e' 0 &ro"i%ee Performance of Reciprocal Promises Pro"i%or !ot 0o!' to &erfor", !le%% re#i&ro#$l &ro"i%ee re$' $!' /illi! to &erfor" Or'er of &erfor"$ &erfor"$!#e !#e of re#i&ro#$l &ro"i%e%9 Li$0ilit of &$rt &re.e!ti! e.e!t o! /hi#h the #o!tr$#t i% to t$:e effe#t Effe#t of 'ef$lt $% to th$t &ro"i%e /hi#h %hol' 0e fir%t &erfor"e', i! #o!tr$#t #o!%i%ti! of re#i&ro#$l &ro"i%e%
55.
56.
57. 58. 59. 60. 61.
Effe#t of f$ilre to &erfor" $t fie' ti"e, i! #o!tr$#t i! /hi#h ti"e i% e%%e!ti$l Effe#t of %#h f$ilre /he! ti"e i% !ot e%%e!ti$l Effe#t of $##e&t$!#e of &erfor"$!#e $t ti"e other th$! th$t $ree' &o! Aree"e!t to 'o i"&o%%i0le $#t Co!tr$#t to 'o $#t $fter/$r'% 0e#o"i! i"&o%%i0le or !l$/fl Co"&e!%$tio! for lo%% throh !o!&erfor"$!#e of $#t :!o/! to 0e i"&o%%i0le or !l$/fl Re#i&ro#$l &ro"i%e to 'o thi!% le$l, $!' $l%o other thi!% ille$l Alter!$ti.e &ro"i%e, o!e 0r$!#h 0ei! ille$l Appropriation of Payments A&&li#$tio! of &$"e!t, /here 'e0t to 0e 'i%#h$re' i% i!'i#$te' A&&li#$tio! of &$"e!t, /here 'e0t to 0e 'i%#h$re' i% !ot i!'i#$te i!'i#$te' ' A&&li#$tio! of &$"e!t /here !either &$rt $&&ro&ri$te% Contracts Which Need Not be Performed
62. 63. 64.
65. 66. 67.
Effe#t of !o.$tio!, re%#i%%io! $!' $lter$tio! of #o!tr$#t Pro"i%ee "$ 'i%&e!%e /ith or re"it &erfor"$!#e of &ro"i%e Co!%e<e!#e% Co!%e<e!#e % of re%#i%%io! of .oi'$0le #o!tr$#t O0li$tio! of &er%o! /ho h$% re#ei.e' $'.$!t$e !'er .oi' $ree"e!t or #o!tr$#t th$t 0e#o"e% .oi' Mo'e of #o""!i#$ti! or re.o:i! re%#i%%io! of .oi'$0le #o!tr$#t Effe#t of !ele#t of &ro"i%ee to $ffor' &ro"i%or re$%o!$0le f$#ilitie% for &erfor"$!#e CHAPTER O* CERTAIN RELATIONS RESEM3LIN4 THOSE CREATE 3Y CONTRACT
68. 69. 70. 71.
72.
Cl$i" for !e#e%%$rie% %&&lie' to &er%o! i!#$&$0le of #o!tr$#ti! or o! hi% $##o!t Rei"0r%e"e!t of &er%o! &$i! "o!e 'e 0 $!other i! &$"e!t of /hi#h he i% i!tere%te' i!tere%te' O0li$tio! of &er%o! e!;oi! 0e!efit of !o! r$tito% $#t Re%&o!%i0ilit of fi!'er of oo'% Li$0ilit of &er%o! to /ho" "o!e i% &$i' or thi! 'eli.ere' 0 "i%t$:e or !'er #oer#io! CHAPTER -I O* THE CONSE+ENCES O* 3REACH O* CONTRACT
73.
74. 75.
Co"&e!%$tio! for lo%% or '$"$e #$%e' 0 0re$#h of #o!tr$#t Co"&e!%$tio! for f$ilre to 'i%#h$re o0li$tio! re%e"0li! tho%e #re$te' 0 #o!tr$#t Co"&e!%$tio! for 0re$#h of #o!tr$#t /here &e!$lt %ti&l$te' for P$rt rihtfll re%#i!'i! #o!tr$#t e!title' to #o"&e!%$tio! CHAPTER -II SALE O* 4OOS
Re&e$le' CHAPTER -III O* INEMNITY AN 4+ARANTEE 76. 77. 78. 79. 80.
6Co!tr$#t of i!'e"!it6 'efi!e' Riht% of i!'e"!it hol'er /he! %e' 6Co!tr$#t of $r$!tee6, 6%ret6, 6&ri!#i&$l 'e0tor6 $!' 6#re'itor6 Co!%i'er$tio! for $r$!tee SretB% li$0ilit
81. 82. 83.
84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98.
99.
6Co!ti!i! $r$!tee6 Re.o#$tio! of #o!ti!i! $r$!tee Re.o#$tio! of #o!ti!i! $r$!tee 0 %retB% 'e$th Li$0ilit of t/o &er%o!% &ri"$ril li$0le, !ot $ffe#te' 0 $rr$!e"e!t 0et/ee! the" th$t o!e %h$ll 0e %ret o! other% 'ef$lt i%#h$re of %ret 0 .$ri$!#e i! ter"% of #o!tr$#t i%#h$re of %ret 0 rele$%e or 'i%#h$re of &ri!#i&$l 'e0tor i%#h$re of %ret /he! #re'itor #o"&o!'% /ith, i.e% ti"e to, or $ree% !ot to %e, &ri!#i&$l 'e0tor Sret !ot 'i%#h$re' /he! $ree"e!t "$'e /ith thir' &er%o! to i.e ti"e to &ri!#i&$l 'e0tor Cre'itorB% for0e$r$!#e for0e$r$!#e to %e 'oe% !ot 'i%#h$re %ret Rele$%e of o!e #o%ret 'oe% !ot 'i%#h$re other% i%#h$re of %ret 0 #re'itorB% $#t or o"i%%io! i"&$iri! %retB% e.e!t$l re"e' Riht% of %ret o! &$"e!t or &erfor"$!#e SretB% riht to 0e!efit of #re'itorB% %e#ritie% 4$r$!tee o0t$i!e' 0 "i%re&re%e!t$tio! i!.$li' 4$r$!tee o0t$i!e' 0 #o!#e$l"e!t i!.$li' 4$r$!tee o! #o!tr$#t th$t #re'itor %h$ll !ot $#t o! it !til #o%ret ;oi!% I"&lie' &ro"i%e to i!'e"!if %ret Co%retie% li$0le to #o!tri0te e<$ll Li$0ilit of #o%retie% 0o!' i! 'iffere!t %"% CHAPTER IX O* 3AILMENT
100. 101. 102. 103.
104. 105. 106. 107.
108. 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119.
120. 121. 122.
123.
63$il"e!t6, 60$ilor6, $!' 60$ilee6 'efi!e' eli.er to 0$ilee ho/ "$'e 3$ilor% 't to 'i%#lo%e f$lt% i! oo'% 0$ile' C$re to 0e t$:e! 0 0$ilee 3$ilee /he! !ot li$0le for lo%%, et#9, of thi! 0$ile' Ter"i!$tio! of 0$il"e!t 0 0$ileeB% $#t i!#o!%i%te!t /ith #o!'itio!% Li$0ilit of 0$ilee "$:i! !$thori%e' %e of oo'% 0$ile' Effe#t of "itre, /ith 0$ilorB% #o!%e!t, of hi% oo'% /ith 0$ileeB% Effe#t of "itre, /ithot 0$ilorB% #o!%e!t, /he! the oo'% #$! 0e %e&$r$te' Effe#t of "itre, /ithot 0$ilorB% #o!%e!t, /he! the oo'% #$!!ot 0e %e&$r$te' Re&$"e!t 0 0$ilor of !e#e%%$r e&e!%e% Re%tor$tio! of oo'% le!t r$tito% r$tito%l l Retr! of oo'% 0$ile' o! e&ir$tio! of ti"e or $##o"&li%h"e!t of &r&o%e 3$ileeB% re%&o!%i0ilit /he! oo'% $re !ot 'l retr!e' Ter"i!$tio! of r$tito% 0$il"e!t 0 'e$th 3$ilor e!title' to i!#re$%e or &rofit fro" oo'% 0$ile' 3$ilorB% re%&o!%i0ilit to 0$ilee 3$il"e!t 0 %e.er$l ;oi!t o/!er% 3$ilee !ot re%&o!%i0le o! re'eli.er to 0$ilor /ithot title Riht of thir' &er%o! #l$i"i! oo'% 0$ile' Riht of fi!'er of oo'%D "$ %e for %&e#ifi# re/$r' offere' 5he! fi!'er of thi! #o""o!l o! %$le "$ %ell it 3$ileeB% &$rti#l$r lie! 4e!er$l lie! of 0$!:er%, f$#tor%, /h$rfi!er%, $ttor!e% $!' &oli# 0ro:er% Bailments Of Pledges
124. 125.
6Ple'e6, 6P$/!or6 $!' 6P$/!ee6 'efi!e' P$/!eeB% riht of ret$i!er
126. 127. 128. 129. 130.
1?29 133. 134. 135.
P$/!ee !ot to ret$i! for 'e0t or &ro"i%e other th$! th$t for /hi#h oo'% &le'e' Pre%"&tio! i! #$%e of %0%e<e!t $'.$!#e% P$/!eeB% riht $% to etr$or'i!$r e&e!%e% i!#rre' P$/!ee% riht /here &$/!or "$:e% 'ef$lt ef$lti! &$/!orB% riht to re'ee" Ple'e 0 "er#$!tile $e!t Ple'e 0 &er%o! i! &o%%e%%io! !'er .oi'$0le #o!tr$#t Ple'e /here &$/!or h$% o!l $ li"ite' i!tere%t uits by Bailees or Bailors against Wrong!doers Sit 0 0$ilor or 0$ilee $$i!%t /ro!'oer A&&ortio!"e!t of relief or #o"&e!%$tio! o0t$i!e' 0 %#h %it% CHAPTER X A4ENCY Appointment and Authority of Agents
136. 137. 138. 139. 140. 141. 142. 143. 144. 145. 146.
147. 148. 149. 150. 151. 152. 153. 154. 155. 156. 157. 158. 159. 160. 161. 162. 163. 164. 165. 166. 167.
6Ae!t6 $!' 6&ri!#i&$l6 'efi!e' 5ho "$ e"&lo $e!t 5ho "$ 0e $! $e!t Co!%i'er$tio! !ot !e#e%%$r Ae!tB% $thorit "$ 0e e&re%%e' or i"&lie' efi!itio!% of e&re%% $!' i"&lie' $thorit Ete!t of $e!tB% $thorit Ae!tB% $thorit i! $! e"ere!# ub!Agents 5he! $e!t #$!!ot 'ele$te 6S0$e!t6 'efi!e' Re&re%e!t$tio! of &ri!#i&$l 0 %0$e!t &ro&erl $&&oi!te' Ae!tB% re%&o!%i0ilit for %0$e!t S0$e!tB% re%&o!%i0ilit Ae!tB% re%&o!%i0ilit for %0$e!t $&&oi!te' /ithot $thorit Rel$tio! 0et/ee! &ri!#i&$l $!' &er%o! 'l $&&oi!te' 0 $e!t to $#t i! 0%i!e%% of $e!# Ae!tB% 't i! !$"i! %#h &er%o! Ratification Riht of &er%o! $% to $#t% 'o!e for hi" /ithot hi% $thorit9 Effe#t of r$tifi#$tio! R$tifi#$tio! "$ 0e e&re%%e' or i"&lie' !o/le'e re<i%ite for .$li' r$tifi#$tio! Effe#t of r$tifi! !$thori=e' $#t for"i! &$rt of $ tr$!%$#tio! R$tifi#$tio! of !$thori=e' $#t #$!!ot i!;re thir' &er%o! Re"ocation of Authority Ter"i!$tio! of $e!# Ter"i!$tio! of $e!# /here $e!t h$% $! i!tere%t i! %0;e#t"$tter 5he! &ri!#i&$l "$ re.o:e $e!tB% $thorit Re.o#$tio! /here $thorit h$% 0ee! &$rtl eer#i%e' Co"&e!%$tio! for re.o#$tio! 0 &ri!#i&$l or re!!#i$tio! 0 $e!t Noti#e of re.o#$tio! or re!!#i$tio! Re.o#$tio! $!' re!!#i$tio! "$ 0e e&re%%e' or i"&lie' 5he! ter"i!$tio! of $e!tB% $thorit t$:e% effe#t $% to $e!t, $!' $% to thir' &er%o!% Ae!tB% 't o! ter"i!$tio! of $e!# 0 &ri!#i&$lB% 'e$th or i!%$!it Ter"i!$tio! of %0$e!t %0$e!tB% B% $thorit Agent#s $uty to Principal Ae!tB% 't i! #o!'#ti! &ri!#i&$lB% 0%i!e%% S:ill $!' 'ilie!#e re<ire' fro" $e!t $e!t Ae!tB% $##o!t%
168. Ae!t% 't to #o""!i#$te /ith &ri!#i&le 169. Riht of &ri!#i&$l /he! $e!t 'e$l%, o! hi% o/! $##o!t, i! 0%i!e%% of $e!# /ithot &ri!#i&$lB% #o!%e!t 170. Pri!#i&$lB% riht to 0e!efit $i!e' 0 $e!t 'e$li! o! hi% o/! $##o!t i! 0%i!e%% of $e!# 171. Ae!tB% riht of ret$i!er ot of %"% re#ei.e' o! &ri!#i&$lB% $##o!t 172. Ae!tB% 't to &$ %"% re#ei.e' for &ri!#i&$l 173. 5he! $e!tB% re"!er$tio! 0e#o"e% 'e 174. Ae!t !ot e!title' to re"!er$tio! for 0%i!e%% "i%#o!'#te' 175. Ae!tB% lie! o! &ri!#i&$lB% &ro&ert Principal%s $uty to Agent 176. Ae!t to 0e i!'e"!ifie' $$i!%t #o!%e<e!#e% of l$/fl $#t% 177. Ae!t to 0e i!'e"!ifie' $$i!%t #o!%e<e!#e% of $#t% 'o!e i! oo' f$ith 178. No!li$0ilit of e"&loer of $e!t to 'o $ #ri"i!$l $#t 179. Co"&e!%$tio! to $e!t for i!;r #$%e' 0 &ri!#i&$lB% !ele#t &ffect of agency on contract with third persons 180. E!for#e"e!t $!' #o!%e<e!#e% of $e!tB% #o!tr$#t% 181. Pri!#i&$l ho/ f$r 0o!', /he! $e!t e#ee'% $thorit 182. Pri!#i&$l !ot 0o!' /he! e#e%% of $e!tB% $thorit i% !ot %e&$r$0le 183. Co!%e<e!#e% of !oti#e i.e! to $e!t 184. Ae!t #$!!ot &er%o!$ll e!for#e, !or 0e 0o!' 0, #o!tr$#t% o! 0eh$lf of &ri!#i&$l 185. Pre%"&tio! of #o!tr$#t to #o!tr$r 186. Riht% of &$rtie% to $ #o!tr$#t "$'e 0 $e!t !ot 'i%#lo%e' 187. Perfor"$!#e of #o!tr$#t /ith $e!t %&&o%e' to 0e &ri!#i&$l 188. Riht of &er%o! 'e$li! /ith $e!t &er%o!$ll li$0le 189. Co!%e<e!#e of i!'#i! $e!t or &ri!#i&$l to $#t o! 0elief th$t &ri!#i&$l or $e!t /ill 0e hel' e#l%i.el li$0le 190. Li$0ilit of &rete!'e' $e!t 191. Per%o! f$l%el #o!tr$#ti! $% $e!t !ot e!title' to &erfor"$!#e 192. Li$0ilit of &ri!#i&$l i!'#i! 0elief th$t $e!tB% !$thori=e' $#t% /ere $thori=e' 193. Effe#t, o! $ree"e!t, of "i%re&re%e!t$tio! or fr$' 0 $e!t
CHAPTER XI O* PARTNERSHIP 194. Re&e$le'
TEXT THE CONTRACT ACT, 1872 (IX of 1872) [25th April, 1872]
Pre$"0le9 5here$% it is expedient to define and amend certain parts of the law relating to contracts; It is hereby enacted as follows:PRELIMINARY 1.
Short title9 This Act may be called the 1[***] ontract Act! 1"#
%$Ete!t Co""e!#e"e!t It extends to $[the whole of &a'istan]; and it shall come into force on the first day of (eptember! 1"#$% E!$#t"e!t% re&e$le' )othing herein contained shall affect the proisions of any (tat+te! Act or ,eg+lation not hereby expressly repealed! nor any +sage or c+stom of trade! nor any incident of any contract! not inconsistent with the proisions of this Act% I!ter&ret$tio!#l$%e9 In this Act the following words and expressions are +sed in the following senses! +nless a contrary intention appears from the context:(a)
(b)
(c) (d)
(e)
(f) (g) (h) (i)
(j)
hen one person signifies to another his willingness to do or to abstain from doing anything! with a iew to obtaining the assent of that other to s+ch act or abstinence! he is said to ma'e a proposal: hen the person to whom the proposal is made signifies his assent thereto! the proposal is said to be accepted% A proposal! when accepted becomes a promise: The person ma'ing the proposal is called the .promisor. and the person accepting the proposal is called the .promisee.: hen! at the desire of the promisor! the promisee or any other person has done or abstained from doing! or does or abstains from doing! or promises to do or to abstain from doing! something! s+ch act or abstinence or promise is called a consideration for the promise: /ery promise and eery set of promises! forming the consideration for each other! is an agreement: &romises which form the consideration or part of the consideration for each other are called reciprocal promises: An agreement not enforceable by law is said to be oid: An agreement enforceable by law is a contract: An agreement which is enforceable by law at the option of one or more of the parties thereto! b+t not at the option of the other or others! is a oidable contract: A contract which ceases to be enforceable by law becomes oid when it ceases to be enforceable%
CHAPTER I O* THE COMM+NICATION, ACCEPTANCE AN RE-OCATION O* PROPOSALS 1
Omitted by A.O; 1949 Sch. Subs. By the Centr! "#s $Sttus %e&'rm( Ordinnce) 1960 $21 '& 1960( S. 3 nd 2 nd Sch. $#ith e&&ect &r'm the 14 th Oct'ber) 1955() &'r *!! the +r',inces nd the C-it! '& the ederti'n/ #hich hd been subs. By A.O/ 1949) Arts. 3 $2( nd 4) &'r * the #h'!e '& British ndi/. 2
Co""!i#$tio!, $##e&t$!#e $!' re.o#$tio! of &ro&o%$l%9 The comm+nication of proposals! the acceptance of proposals! and the reocation of proposals and acceptances! respectiely! are deemed to be made by any act or omission of the party proposing! accepting or reo'ing by which he intends to comm+nicate s+ch proposal! acceptance or reocation! or which has the effect of comm+nicating it% 2.
Co""!i#$tio! /he! #o"&lete9 The comm+nication of a proposal is complete when it comes to the 'nowledge of the person to whom it is made% The comm+nication of an acceptance is complete!0 as against the proposer! when it is p+t in a co+rse of transmission to him! so as to be o+t of the power of the acceptor; as against the acceptor! when it comes to the 'nowledge of the proposer% The comm+nication of a reocation is complete!as against the person who ma'es it! when it is p+t into a co+rse of transmission to the person to whom it is made! so as to be o+t of the power of the person who ma'es it; as against the person to whom it is made! when it comes to his 'nowledge% 'llustrations (a) (b)
(c)
A proposes! by letter! to sell a ho+se to at a certain price% The comm+nication of the proposal is complete when receies the letter% accepts A2s proposal by a letter sent post% The comm+nication of the acceptance is complete!0 as against A! when the letter is posted; as against ! when the letters receied by A A reo'es his proposal telegram% The reocation is complete as against A when the telegram is despatched% It is complete as against when receies it% reo'es his acceptance by telegram% 2s reocation is complete as against when the telegram is dispatched! and as against A when it reaches him%
Re.o#$tio! of &ro&o%$l% $!' $##e&t$!#e%9 A proposal may be reo'ed at any time before the comm+nication of its acceptance is complete as against the proposer! b+t not afterwards% An acceptance may be reo'ed at any time before the comm+nication of the acceptance is complete as against the acceptor! b+t not afterwards% 'llustrations A proposes! by a letter sent by post! to sell his ho+se to % accepts the proposal by a letter sent by post% A may reo'e his proposal at any time before or at the moment posts his letter of acceptance! b+t not afterwards% may reo'e his acceptance as any time before or at the moment when the letter comm+nicating it reaches A! b+t not afterwards% 3.
Re.o#$tio! ho/ "$'e9 A proposal is reo'ed 0 by the comm+nication of notice of reocation by the proposer to the other 1. party; 2. by the laps of the time prescribed in s+ch proposal for its acceptance! or! if no time is so prescribed! by the lapse of a reasonable time! witho+t comm+nication of the acceptance; by the fail+re of the acceptor to f+lfil a condition precedent to acceptance; 3. or by the death or insanity of the proposer! if the fact of his death or insanity 4. comes to the 'nowledge of the acceptor before acceptance%
A##e&t$!#e "%t 0e $0%olte9 In order to conert a proposal into a promise! the acceptance m+stbe absol+te and +n3+alified; be expressed in some +s+al and reasonable manner! +nless the 29 proposal prescribes the manner in which it is to be accepted% If the proposal prescribes a manner in which it is to be accepted! and the acceptance is not made in s+ch manner! the proposer may! within a reasonable time after the acceptance is comm+nicated to him! insist that his proposal shall be accepted in the prescribed manner! and not otherwise; b+t if he fails to do so! he accepts the acceptance% A##e&t$!#e 0 &erfor"i!, #o!'itio!%, or re#ei.i! #o!%i'er$tio!9 &erformance of the conditions of a proposal! or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal! is an acceptance of the proposal% Pro"i%e%, e&re%% $!' i"&lie'9 In so far as the proposal or acceptance of any promise is made in words! the promise is said to be express% In so far as s+ch proposal or acceptance is made otherwise than in words! the promise is said to be implied% CHAPTER II O* CONTRACTS, -OIA3LE CONTRACTS AN -OI A4REEMENTS 79 5h$t $ree"e!t% $re #o!tr$#t%9 All agreements are contracts if they are made by the free consent of parties competent to contract! for a lawf+l consideration and with a lawf+l ob4ect! and are not hereby expressly declared to be oid% )othing herein contained shall affect any law in force in 5[&a'istan]! and not hereby expressly repealed! by which any contract is re3+ired to be made in writing or in the presence of witnesses! or any law relating to the registration of doc+ments% 5ho $re #o"&ete!t to #o!tr$#t9 /ery person is competent to contract who is of the age of ma4ority according to the law to which he is s+b4ect! and who is of so+nd mind! and is not dis3+alified from contracting by any law to which he is s+b4ect% 5h$t i% $ %o!' "i!' for the &r&o%e% of #o!tr$#ti!9 A person is said to be of so+nd mind for the p+rpose of ma'ing a contract if! at the time when he ma'es it! he is capable of +nderstanding it and of forming a rational 4+dgment as to its effect +pon his interests% A person who is +s+ally of +nso+nd mind! b+t occasionally of so+nd mind! may ma'e a contract when he is of so+nd mind% A person who is +s+ally of so+nd mind! b+t occasionally of +nso+nd mind! may not ma'e a contract when he is of +nso+nd mind% 'llustrations (a) (b)
A patient in a l+natic asyl+m! who is at interals of so+nd mind! may contract d+ring those interals% A sane man! who is delirio+s from feer or who is so dr+n' that he cannot +nderstand the terms of a contract or form a rational 4+dgment as to its effect on his interests! cannot contract whilst s+ch deliri+m or dr+n'enness lasts%
6Co!%e!t 'efi!e'9 Two or more persons are said to consent when they agree +pon 3
Subs. By the Centr! "#s $Sttus %e&'rm( Ordinnce) 1960 $21 '& 1960( S. 3 nd 2 nd Sch. $#ith e&&ect &r'm the 14 th Oct'ber) 1955() &'r *!! the +r',inces nd the C-it! '& the ederti'n/ #hich hd been subs. By A.O/ 1949) Arts. 3 $2( nd 4) &'r *the #h'!e '& British ndi/.
the same thing in the same sense%
6*ree #o!%e!t6 'efi!e'9 onsent is said to be free when it is not ca+sed bycoercion! as defined in section 16! or (1) +nd+e infl+ence! as defined in section 17!or (2) fra+d! as defined in section 1#! or (3) misrepresentation! as defined in section 1"! or (4) mista'e! s+b4ect to the proisions of sections $8! $1 and $$% (5) onsent is said to be so ca+sed when it wo+ld not hae been gien b+t for the existence of s+ch coercion! +nd+e infl+ence! fra+d! misrepresentation or mista'e% 6Coer#io!6 'efi!e'9 .oercion. is the committing! or threatening to commit! any act forbidden by the &enal ode or the +nlawf+l detaining or threatening to detain! any property! to the pre4+dice of any person whateer! with the intention of ca+sing any person to enter into an agreement% E&l$!$tio! - It is immaterial whether the &a'istan &enal ode is or is not in force in the place where the coercion is employed% 'llustration A! on board an /nglish ship on the high seas! ca+ses to enter into an agreement by an act amo+nting to criminal intimidation +nder the & a ' i s t a n &enal ode% A afterwards s+es for breach of contract at 9[arachi]% A has employed coercion! altho+gh his act is not an offence by the law of /ngland! and altho+gh section 687 of the &enal ode was not in force at the time when or place where the act was done% F
[1G9 6+!'e i!fle!#e6 'efi!e'9 17%1< A contract is said to be ind+ced by .+nd+e infl+ence. where the relations s+bsisting between the parties are s+ch that one of the parties is in a position to dominate the will of the other and +ses that position to obtain an +nfair adantage oer the other% In partic+lar and witho+t pre4+dice to the generality of the foregoing (2) principle! a person is deemed to be in a position to dominate the will of another where he holds a real or apparent a+thority oer the other or (a) where he stands in a fid+ciary relation to the other; or where he ma'es a contract with a person whose mental capacity (b) is temporarily or permanently affected by reason of age! illness! or mental or bodily distress% here a person who is in a position to dominate the will of another! enters (3) into a contract with him! and the transaction appears! on the face of it or on the eidence add+ced! to be +nconscionable! the b+rden of proing that s+ch contract was not ind+ced by +nd+e infl+ence shall lie +pon the person in a position to dominate the will of the other% )othing in this s+b-section shall affect the proisions of section 111 of the /idence Ac t! 1"#$%] 'llustrations (a)
4
A haing adanced money to his son! ! d+ring his minority! +pon 2s coming of age obtains! by mis+se of parental infl+ence! a bond from for a greater amo+nt than the s+m d+e in respect of the adance% A
Subs. by the eder! "#s $%e,isi'n nd ec!rti'n( Ordinnce) 1981 $27 '& 1981() s. 3 nd 2 nd Sch. 'r *Chtt'n/ #hich hd been subs. by the Centr! "#s $Sttus %e&'rm( Ordinnce) 1960 $21 '& 1960() s. 3 nd 2 nd Sch.) &'r * C!cutt/ $#ith e&&ect &r'm the 14th Oct'ber) 1955(. 5 Subs. by the ndin C'ntrct Act) Amdt. Act) 1899 $6 '& 1899( S.2) &'r the 'riin! s.16
(b)
(c)
(d)
employs +nd+e infl+ence% A! a man enfeebled by disease or age! is ind+ced! by 2s infl+ence oer him as his medical attendant! to agree to pay an +nreasonable s+m for his professional serices% employs +nd+e infl+ence% A! being in debt to ! the money-lender of his illage! contracts a fresh loan on terms which appear to be +nconscionable% It lies on to proe that the contract was not ind+ced by +nd+e infl+ence% A applies to a ban'er for a loan at a time when there is stringency in the money mar'et% The ban'er declines to ma'e the loan except at an +n+s+ally high rate of interest% A accepts the loan on these terms% This is a transaction in the ordinary co+rse of b+siness! and the contract is not ind+ced by +nd+e infl+ence%
6*r$'6 'efi!e'9 .=ra+d. means and incl+des any of the following acts committed by a party to a contract! or with his conniance! or by his agent! with intent to deceie another party thereto or his agent! or to ind+ce him to enter into the contract:the s+ggestion! as a fact! of that which is not tr+e! by one who does (1) not beliee it to be tr+e; the actie concealment of a fact by one haing 'nowledge or belief of (2) the fact; a promise made witho+t any intention of performing it; (3) any other act fitted to deceie; (4) any s+ch act or omission as the law specially declares to be fra+d+lent% (5) E&l$!$tio! 0 >ere silence as to facts li'ely to affect the willingness of a person to enter into a contract is not fra+d! +nless the circ+mstances of the case are s+ch that! regard being had to them! it is the d+ty of the person 'eeping silence to spea'! or +nless his silence is! in itself! e3+ialent to speech% 'llustrations (a) (b) (c) (d)
A sells! by a+ction! to ! a horse which A 'nows to be +nso+nd% A says nothing to abo+t the horse2s +nso+ndness% This is not fra+d in A% is A2s da+ghter and has 4+st come of age% ?ere! the relation between the parties wo+ld ma'e it A2s d+ty to tell if the horse is +nso+nd% says to A-.If yo+ do not deny it! I shall ass+me that the horse is so+nd%. A says nothing% ?ere! A2s silence is e3+ialent to speech% A and ! being traders! enter +pon a contract% A has priate information of a change in prices which wo+ld affect 2s willingness to proceed with the contract% A is not bo+nd to inform %
6Mi%re&re%e!t$tio!6 'efi!e'9 @>isrepresentation. means and incl+des0 the positie assertion! in a manner not warranted by the information of the (1) person ma'ing it! of that which is not tr+e! tho+gh he beliees it to be tr+e; any breach of d+ty which! witho+t an intent to deceie! gains an (2) adantage to the person committing it! or any one claiming +nder him! by misleading another to his pre4+dice or to the pre4+dice of any one claiming +nder him; ca+sing! howeer innocently! a party to an agreement to ma'e a mista'e (3) as to the s+bstance of the thing which is the s+b4ect of the agreement%
-oi'$0ilit of $ree"e!t% /ithot free #o!%e!t9 hen consent to an agreement is ca+sed by coercion! G[***] fra+d or misrepresentation! the agreement is a contract iodable at the option of the party whose consent was so ca+sed% 6
he #'rds *undue in&!uence/ re- by the ndin C'ntrct ct) Amdt. 1899 $6 '& 1899(
A party to a contract! whose consent was ca+sed by fra+d or misrepresentation! may! if he thin's fit! insist that the contract shall be performed! and that he shall be p+t in the position in which he wo+ld hae been if the representations made had been tr+e%
E#e&tio!9If s+ch consent was ca+sed by misrepresenta-tion or by silence! fra+d+lent within the meaning of section 1#! the contract! neertheless! is not oidable! if the party whose consent was so ca+sed had the means of discoering the tr+th with ordinary diligence% E&l$!$tio! 0 A fra+d or misrepresentation which did not ca+se the consent to a contract of the party on whom s+ch fra+d was practised! or to whom s+ch misrepresentation was made! does not render a contract oidable% 'llustrations (a)
(b)
(c)
(d)
(e)
A! intending to deceie ! falsely represents that fie h+ndred ma+nds of indigo are made ann+ally at A2s factory! and thereby ind+ces to b+y the factory% The contract is oidable at the option of % A! by a misrepresentation! leads erroneo+sly to beliee that fie h+ndred ma+nds of indigo are made ann+ally at A2s factory% examines the acco+nts of the factory! which show that only fo+r h+ndred ma+nds of indigo hae been made% After this b+ys the factory% The contract is not oidable on acco+nt of A2s misrepresentation% A fra+d+lently informs that A2s estate is free from enc+mbrance% there+pon b+ys the estate% The estate is s+b4ect to a mortgage% may either aoid the contract! or may insist on its being carried o+t and the mortgage- debt redeemed% ! haing discoered a ein of ore on the estate of A! adopts means to conceal! and does conceal! the existence of the ore from A% Thro+gh A2s ignorance is enabled to b+y the estate at an +nderal+e% The contract is oidable at the option of A% A is entitled to s+cceed to an estate at the death of ; dies: ! haing receied intelligence of 2s death! preents the intelligence reaching A! and th+s ind+ces A to sell him his interest in the estate% The sale is oidable at the option of A%
7
[19A Po/er to %et $%i'e #o!tr$#t i!'#e' 0 !'e i!fle!#e9 1A% hen consent to an agreement is ca+sed by +nd+e infl+ence! the agreement is a contract oidable at the option of the party whose consent was so ca+sed% Any s+ch contract may be set aside either absol+tely or! if the party who was entitled to aoid it has receied any benefit there+nder! +pon s+ch terms and conditions as to the o+rt may seem 4+st% (a)
(b)
A2s son has forged 2s name to a promissory note% ! +nder threat of prosec+ting A2s son! obtains a bond from A for the amo+nt of the forged note% If s+es on this bond! the o+rt may set the bond aside% A! a money-lender! adances ,+pees 188 to ! an agric+lt+rist! and! by +nd+e infl+ence! ind+ces to exec+te a bond for ,+pees $88 with interest at 7 per cent per month% The o+rt may set the bond aside! ordering to repay the ,+pees 188 with s+ch interest as may seem 4+st%]
Aree"e!t .oi' /here 0oth &$rtie% $re !'er "i%t$:e $% to "$tter of f$#t9 here both the parties to an agreement are +nder a mista'e as to a matter of fact essential to the agreement! the agreement is oid% 7
Secti'n 19A inserted by the ndin C'ntrct Act) Amdt. Act) 1899 $6 '& 1899(
E&l$!$tio! - An erroneo+s opinion as to the al+e of the thing which forms the s+b4ect-matter of the agreement is not to be deemed a mista'e as to a matter of fact% $(
$b(
$c(
A agrees to sell to a specific cargo of goods s+pposed to be on its way from /ngland to hittagong]% It t+rns o+t that! before the day of the bargain! the ship coneying the cargo had been cast away and the goods lost% )either party was aware of the facts% The agreement is oid% A agrees to b+y from a certain horse% It t+rns o+t that the horse was dead at the time of the bargain! tho+gh neither party was aware of the fact% The agreement is oid% A! being entitled to an estate for the life of ! agrees to sell it to % was dead at the time of the agreement! b+t both parties were ignorant of the fact% The agreement is oid%
Effe#t of "i%t$:e% $% to l$/9 A contract is not oidable beca+se it was ca+sed by a mista'e as to any law in force in angladesh; b+t a mista'e as to a law not in force in angladesh has the same effect as a mista'e of fact% 8
'llustration A and ma'e a contract gro+nded on the erroneo+s belief that a partic+lar debt is barred by the angladesh Baw of Bimitation: the contract is not oidable% [
Co!tr$#t #$%e' 0 "i%t$:e of o!e &$rt $% to "$tter of f$#t9 A contract is not oidable merely beca+se it was ca+sed by one of the parties to it being +nder a mista'e as to a matter of fact% 5h$t #o!%i'er$tio!% $!' o0;e#t% $re l$/fl $!' /h$t !ot9 The consideration or ob4ect of an agreement is lawf+l! +nless- it is forbidden by law; or is of s+ch a nat+re that! if permitted! it wo+ld defeat the proisions of any law; or is fra+d+lent; or inoles or implies in4+ry to the person or property of another; or the o+rt regards it as immoral! or opposed to p+blic policy% In each of these cases! the consideration or ob4ect of an agreement is said to be +nlawf+l% /ery agreement of which the ob4ect or consideration is +nlawf+l is oid% 'llustrations (a)
(b)
(c)
8
A agrees to sell his ho+se to for 18!888 ,+pees% ?ere 2s promise to pay the s+m of 18!888 ,+pees is the consideration for A2s promise to sell the ho+se! and A2s promise to sell the ho+se is the consideration for 2s promise to pay the 18!888 ,+pees% These are lawf+l considerations% A promises to pay 1!888 ,+pees at the end of six months; if ! who owes that s+m to ! fails to pay it% promises to grant time to accordingly% ?ere the promise of each party is the consideration for the promise of the other party and they are lawf+l considerations% A promises! for a certain s+m paid to him by ! to ma'e good to the al+e of his ship if it is wrec'ed on a certain oyage% ?ere A2s promise is the consideration for 2s payment and 2s payment is the
Sec'nd -rr-h 'mitted by eder! "#s $%e,is'n nd ec!rti'n( Ordinnce) 1981 $27 '& 1981() s.3 nd 2 nd Sch. 9 Sec'nd illustration '.s. 21) re-. by the %e-e!in nd Amendin Act) 1917 $24 '& 1917() s.3 nd Sch. .
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
consideration for A2s promise and these are lawf+l considerations% A promises to maintain 2s child and 2s promises to pay A 1!888 ,+pees yearly for the p+rpose% ?ere the promise of each party is the consideration for the promise of the other party% They are lawf+l considerations% A! and enter into an agreement for the diision among them of gains ac3+ired! or to be ac3+ired! by them by fra+d% The agreement is oid! as its ob4ect is +nlawf+l% A promises to obtain for an employment in the p+blic serice! and promises to pay 1!888 ,+pees to A% The agreement is oid! as the consideration for it is +nlawf+l% A! being agent for a landed proprietor! agrees for money! witho+t the 'nowledge of his principal! to obtain for a lease of land belonging to his principal% The agreement between A and is oid! as it implies a fra+d by concealment by A! on his principal% A promises to drop a prosec+tion which he has instit+ted against for robbery! and promises to restore the al+e of the things ta'en% The agreement is oid! as its ob4ect is +nlawf+l% A2s estate is sold for arrears of reen+e +nder the proisions of an Act of the Begislat+re! by which the defa+lter is prohibited from p+rchasing the estate% ! +pon an +nderstanding with A! becomes the p+rchaser! and agrees to coney the estate to A +pon receiing from him the price which has paid% The agreement is oid! as it renders the transaction! in effect! a p+rchase by the defa+lter! and wo+ld so defeat the ob4ect of the law% A! who is 2s m+'htar! promises to exercise his infl+ence! as s+ch! with in fao+r of ! and promises to pay 1!888 ,+pees to A% The agreement is oid! beca+se it is immoral% A agrees to let her da+ghter to hire to for conc+binage% The agreement is oid! beca+se it is immoral! tho+gh the letting may not be p+nishable +nder the &a'istan &ena l od e % Void Agreements
Aree"e!t% .oi', if #o!%i'er$tio!% $!' o0;e#t% !l$/fl i! &$rt9 If any part of a single consideration for one or more ob4ects! or any one or any part of any one of seeral considerations for a single ob4ect is +nlawf+l! the agreement is oid% A promises to s+perintend! on behalf of ! a legal man+fact+re of indigo! and an illegal traffic in other articles% promises to pay to A a salary of 18!888 ,+pees a year% The agreement is oid! the ob4ect of A2s promise and the considerations 2s promise being in part +nlawf+l% Aree"e!t /ithot #o!%i'er$tio! .oi', !le%% it i% i! /riti! $!' rei%tere', or i% $ &ro"i%e to #o"&e!%$te for %o"ethi! 'o!e, or i% $ &ro"i%e to &$ $ 'e0t 0$rre' 0 li"it$tio! l$/9 An agreement made witho+t consideration is oid! +nless0 it is expressed in writing and registered +nder the law for the time being in (1) force for the registration of doc+ments! and is made on acco+nt of nat+ral loe and affection between parties standing in a near relation to each other; or +nless it is a promise to compensate! wholly or in part! a person who has already (2) ol+ntarily done something for the promisor! or something which the promisor was legally compellable to do! or +nless it is a promise! made in writing and signed by the person to be charged (3) therewith! or by his agent generally or specially a+thoriCed i n that behalf! to pay wholly or in part a debt of which the creditor might hae enforced payment b+t for the law for the limitation of s+its%
In any of these cases! s+ch an agreement is a contract%
E&l$!$tio! 1 0 )othing in this section shall affect the alidity! as between the donor and donee! of any gift act+ally made% E&l$!$tio! $ 0 An agreement to which the consent of the promisor is freely gien is not oid merely beca+se the consideration is inade3+ate; b+t the inade3+acy of the consideration may be ta'en into acco+nt by the o+rt in determining the 3+estion whether the consent of the promisor was freely gien% 'llustrations (a) (b)
(c) (d) (e)
(f)
(g)
A promises! for no consideration! to gie to ,+pees 1!888% This is a oid agreement% A! for nat+ral loe and affection! promises to gie his son! ! ,+pees 1!888% A p+ts his promise to into writing and registers it% This is a contract% A finds 2s p+rse and gies it to him% promises to gie A ,+pees 68% This is a contract% A s+pports 2s infant son% promises to pay A2s expenses in so doing% This is a contract% A owes ,+pees 1!888! b+t the debt is barred by the Bimitation Act% A signs a written promise to pay ,+pees 688 on acco+nt of the debt% This is a contract% A agrees to sell a horse worth ,+pees 1!888 for ,+pees 18% A2s consent to the agreement was freely gien% The agreement is a contract notwithstanding the inade3+acy of the consideration% A agrees to sell a horse worth ,+pees 1!888 for ,+pees 18% A denies that his consent to the agreement was freely gien% The inade3+acy of the consideration is a fact which the o+rt sho+ld ta'e into acco+nt in considering whether or not A2s consent was freely gien%
Aree"e!t i! re%tr$i!t of "$rri$e .oi'9 /ery agreement in restrain of the marriage of any person! other than a minor! is oid% Aree"e!t i! re%tr$i!t of tr$'e .oi' S$.i! of $ree"e!t !ot to #$rr o! 0%i!e%% of /hi#h oo' /ill i% %ol'9 /ery agreement by which any one is restrained from exercising a lawf+l profession! trade or b+siness of any 'ind! is to that extent oid% E#e&tio! 19Dne who sells the good-will of a b+siness may agree with the b+yer to refrain from carrying on a similar b+siness! within specified local limits! so long as the b+yer! or any person deriing title to the good-will from him! carries on a li'e b+siness therein: &roided that s+ch limits appear to the o+rt reasonable! regard being had to the nat+re of the b+siness% E#e&tio! 2 $!' ?9 [,epealed by section #5 and $nd (ched+le of the &artnership Act! 15$ Act )o% IE of 15$<%] Aree"e!t% i! re%tr$i!t of le$l &ro#ee'i!% .oi' S$.i! of #o!tr$#t to refer to $r0itr$tio! 'i%&te th$t "$ $ri%e Sit% 0$rre' 0 %#h #o!tr$#t% S$.i! of #o!tr$#t to refer <e%tio!% th$t h$.e $lre$' $ri%e!9 /ery agreement! by which any party thereto is restricted absol+tely from enforcing his rights +nder or in respect of any contract! by the +s+al legal proceedings in the ordinary trib+nals! or which limits the time within which he may th+s enforce his rights! is oid to that extent% E#e&tio! 19This section shall not render illegal a contract by which two or more
persons agree that any disp+te which may arise between them in respect of any s+b4ect or class of s+b4ects shall be referred to arbitration! and that only the amo+nt awarded in s+ch arbitration shall be recoerable in respect of the disp+te so referred%
E#e&tio! 29)or shall this section render illegal any contract in writing! by which two or more persons agree to refer to arbitration any 3+estion between them which has already arisen! or affect any proision of any law in force for the time being as to references to arbitration% Aree"e!t% .oi' for !#ert$i!t9 Agreements! the meaning of which is not certain! or capable of being made certain! are oid% 'llustrations (a)
(b)
(c)
(d) (e)
(f)
A agrees to sell to .a h+ndred tons of oil.% There is nothing whateer to show what 'ind of oil was intended% The agreement is oid for +ncertainty% A agrees to sell to one h+ndred tons of oil of a specified description! 'nown as an article of commerce% There is no +ncertainty here to ma'e the agreement oid% A! who is a dealer in cocon+t-oil only! agrees to sell to .one h+ndred tons of oil.% The nat+re of A2s trade affords an indication of the meaning of the words! and A has entered into a contract for the sale of one h+ndred tons of ocon+t-oil% A agrees to sell .all the grain in my granary at 6[ ,angp+r].% There is no +ncertainty here to ma'e the agreement oid% A agrees to sell to .one tho+sand mo+nds of rice at a price to be fixed by .% As the price is capable of being made certain! there is no +ncertainty here to ma'e the agreement oid% A agrees to sell to .my white horse for ,+pees fie h+ndred or ,+pees one tho+sand.% There is nothing to show which of the two prices was to be gien% The agreement is oid%
Aree"e!t% 0 /$ of /$er .oi' E#e&tio!% i! f$.or of #ert$i! &ri=e% for hor%er$#i! Se#tio! 2>A of the Pe!$l Co'e !ot $ffe#te'9 Agreements by way of wager are oid; and no s+it shall be bro+ght for recoering anything alleged to be own on any wager! or entr+sted to any person to abide the res+lt of any game or other +ncertain eent on which wager is made% This section shall not be deemed to render +nlawf+l a s+bscription! or contrib+tion! or agreement to s+bscribe or contrib+te! made or entered into for or toward any plate! priCe or s+m of money! of the al+e or amo+nt of fie h+ndred ,+pees or +pwards! to be awarded to the winner or winners of any horse race% )othing in this section shall be deemed to legaliCe any transaction connected with horse-racing! to which the proisions of section $9A of the &a 'i st an &enal ode apply% ?@A9 Aree"e!t% #oll$ter$l to /$eri! $ree"e!t% .oi'9 58A% All agreements 'nowingly made to f+rther or assist the entering into! effecting or carrying o+t! or to sec+re or g+arantee the performance! of any agreement oid +nder section 58! are oid% ?@39 No %it for re#o.er of "o!e, #o""i%%io! et#, i! re%&e#t of .oi' $ree"e!t%9 58% )o s+it or other proceeding shall lie for the recoery of0 a< any s+m of money paid or payable in respect of any agreement oid
(b)
(c)
+nder section 58A! or any commission! bro'erage! fee! or reward in respect of 'nowingly effecting or carrying o+t! or aiding in effecting or carrying o+t! of any s+ch agreement or of any s+m of money otherwise claimed or claimable in respect thereof! or any s+m of money 'nowingly paid or payable on acco+nt of any person by way of commission! bro'erage! fee! reward or other claim in respect of any s+ch agreement%
?@C9 P$"e!t 0 $r'i$!, ee#tor, et#, i! re%&e#t of .oi' $ree"e!t% !ot to 0e $llo/e' #re'it9 )o g+ardian! exec+tor! administrator! heir or personal representatie of any minor or deceased person! as the case may be! shall be entitled to or allowed any credit in his acco+nt for or in respect of any payment made by him on behalf of s+ch minor or deceased person in respect of any s+ch agreement! or any s+ch commission! bro'erage! fee! reward or claim as is referred to in sections 58A and 58%] CHAPTER III O* CONTIN4ENT CONTRACTS 2F9 6Co!ti!e!t #o!tr$#t6 'efi!e'9 A .contingent contract. is a contract to do or not to do something! if some eent! collateral to s+ch contract! does or does not happen% 'llustration A contracts to pay ,+pees 18!888 if 2s ho+se is b+rnt% This is a contingent contract%
E!for#e"e!t of #o!tr$#t% #o!ti!e!t o! $! e.e!t h$&&e!i!9 ontingent contracts to do or not to do anything if an +ncertain f+t+re eent happens cannot be enforced by law +nless and +ntil that eent has happened% If the eent becomes impossible! s+ch contracts become oid% 'llustration (a)
(b)
(c)
A ma'es a contract with to b+y 2s horse if A s+ries % This contract cannot be enforced by law +nless and +ntil dies in A2s lifetime% A ma'es a contract with to sell a horse to at a specified price! if ! to whom the horse has been offered! ref+ses to b+y him% The contract cannot be enforced by law +nless and +ntil ref+ses to b+y the horse% A contracts to pay a s+m of money when marries % dies witho+t being married to % The contract becomes oid%
E!for#e"e!t of #o!tr$#t% #o!ti!e!t o! $! e.e!t !ot h$&&e!i!9 ontingent contracts to do or not to do anything if an +ncertain f+t+re eent does not happen can be enforced when the happening of that eent becomes impossible! and not before% 'llustration A agrees to pay a s+m of money if a certain ship does not ret+rn% The ship is s+n'% The contract can be enforced when the ship sin's%
5he! e.e!t o! /hi#h #o!tr$#t i% #o!ti!e!t to 0e 'ee"e' i"&o%%i0le, if it i% the
ftre #o!'#t of $ li.i! &er%o!9 If the f+t+re eent on which a contract is contingent is the way in which a person will act at an +nspecified time! the eent shall be considered to become impossible when s+ch person does anything which renders it impossible that he sho+ld so act within any definite time! or otherwise than +nder f+rther contingencies% 'llustration A agrees to pay a s+m of money if marries % marries F% The marriage of to m+st now be considered impossible! altho+gh it is possible that F may die and that may afterwards marry %
5he! #o!tr$#t% 0e#o"e .oi' /hi#h $re #o!ti!e!t o! h$&&e!i! of %&e#ifie' e.e!t /ithi! fie' ti"e9 ontingent contracts to do or not to do anything if a specified +ncertain eent happens within a fixed time become oid if! at the expiration of the time fixed! s+ch eent has not happened! or if! before the time fixed! s+ch eent becomes impossible% 5he! #o!tr$#t% "$ 0e e!for#e' /hi#h $re #o!ti!e!t o! %&e#ifie' e.e!t !ot h$&&e!i! /ithi! fie' ti"e9 ontingent contracts to do or not to do anything if a specified +ncertain eent does not happen within a fixed time may be enforced by law when the time fixed has expired and s+ch eent has not happened or! before the time fixed has expired! if it becomes certain that s+ch eent will not happen% (a)
(b)
A promises to pay a s+m of money if a certain ship ret+rns within a year% The contract may be enforced if the ship ret+rns within the year! and becomes oid if the ship is b+rnt within the year% A promises to pay a s+m of money if a certain ship does not ret+rn within a year% The contract may be enforced if the ship does not ret+rn within the year! or is b+rnt within the year%
Aree"e!t #o!ti!e!t o! i"&o%%i0le e.e!t% .oi'9 ontingent agreements to do or not to do anything! if an impossible eent happens! are oid! whether the impossibility of the eent is 'nown or not to the parties to the agreement at the time when it is made% 'llustration (a) (b)
A agrees to pay 1!888 ,+pees if two straight lines sho+ld enclose a space% The agreement is oid% A agrees to pay 1!888 ,+pees if will marry A2s da+ghter % was dead at the time of the agreement% The agreement is oid%
CHAPTER IO* THE PER*ORMANCE O* CONTRACTS Contracts which must be performed
O0li$tio! of &$rtie% to #o!tr$#t%9 The parties to a contract m+st either perform! or offer to perform! their respectie promises! +nless s+ch performance is dispensed with or exc+sed +nder the proisions of this Act! or of any other law%
&romises bind the representaties of the promisors in case of the death of s+ch promisors before performance! +nless a contrary intention appears from the contract% 'llustrations (a)
(b)
A promises to delier goods to on a certain day on payment of ,+pees 1!888% A dies before that day% A2s representaties are bo+nd to delier the goods to ! and is bo+nd to pay the ,+pees 1!888 to A2s representaties% A promises to paint a pict+re for by a certain day! at a certain price% A dies before the day% The contract cannot be enforced either by A2s representaties or by %
Effe#t of ref%$l to $##e&t offer of &erfor"$!#e9 here a promisor has made an offer of performance to the promisee! and the offer has not been accepted! the promisor is not responsible for non- performance! nor does he thereby lose his rights +nder the contract% /ery s+ch offer m+st f+lfil the following conditions:0 it m+st be +nconditional: (1) it m+st be made at a proper time and place! and +nder s+ch (2) circ+mstances that the person to whom it is made may hae a reasonable opport+nity 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 bo+nd by his promise to do: if the offer is an offer to delier anything to the promisee! the promisee (3) m+st hae a reasonable opport+nity of seeing that the thing offered is the thing which the promisor is bo+nd by his promise to delier% An offer to one of seeral 4oint promisees has the same legal conse3+ences as an offer to all of them% 'llustration A contracts to delier to at his wareho+se! on the 1st >arch! 1"#5! 188 bales of cotton of a partic+lar 3+ality% In order to ma'e an offer of a performance with the effect stated in this section! A m+st bring the cotton to 2s wareho+se! on the appointed day! +nder s+ch circ+mstances that may hae a reasonable opport+nity of satisfying himself that the thing offered is cotton of the 3+ality contracted for! and that there are 188 bales%
Effe#t of ref%$l of &$rt to &erfor" &ro"i%e /holl9 hen a party to a contract has ref+sed to perform! or disabled himself from performing his promise in its entirety! the promisee may p+t an end to the contract! +nless he has signified! by words or cond+ct! his ac3+iescence in its contin+ance% 'llustrations (a)
(b)
A! a singer! enters into a contract with ! the manager of a theatre! to sing at his theater two nights in eery wee' d+ring the next two months! and engages to pay her 188 ,+pees for each nights performance% Dn the sixth night A wilf+lly absents herself from the theatre% is at liberty to p+t an end to the contract% A! a singer! enters into a contract with ! the manager of a theatre! to sing at his theatre two nights in eery wee' d+ring the next two months! and engages to pay her at the rate of 188 ,+pees for each night% Dn the sixth night A wilf+lly absents herself% ith the assent of ! A sings on the seenth night% has signified his ac3+iescence in the contin+ance of the contract! and cannot now p+t an end to it! b+t is
entitled to compensation for the damage s+stained by him thro+gh A2s fail+re to sing on the sixth night% By whom Contracts must be performed
Per%o! 0 /ho" &ro"i%e i% to 0e &erfor"e'9 If it appears from the nat+re of the case that it was the intention of the parties to any contract that any promise contained in it sho+ld be performed by the promisor himself! s+ch promise m+st be performed by the promisor% In other cases! the promisor or his representaties may employ a competent person to perform it% 'llustrations (a)
(b)
A promises to pay a s+m of money% A may perform this promise! either by personally paying the money to or by ca+sing it to be paid to by another; and! if A dies before the time appointed for payment! his representaties m+st perform the promise! or employ some proper person to do so% A promises to paint a pict+re for % A m+st perform this promise personally%
Effe#t of $##e&ti! &erfor"$!#e fro" thir' &er%o!9 hen a promisee accepts performance of the promise from a third person! he cannot afterwards enforce it against the promisor% e.oltio! of ;oi!t li$0ilitie%9 hen two or more persons hae made a 4oint promise! then! +nless a contrary intention appears by the contract! all s+ch persons d+ring their 4oint lies! and after the death of any of them his representatie 4ointly with the s+rior or s+riors! and after the death of the last s+rior! the representaties of all 4ointly! m+st f+lfil the promise% A! o!e of ;oi!t &ro"i%or% "$ 0e #o"&elle' to &erfor" E$#h &ro"i%or "$ #o"&el #o!tri0tio! Sh$ri! of lo%% 0 'ef$lt i! #o!tri0tio!9 hen two or more persons ma'e a 4oint promise! the promisee may! in the absence of express agreement to the contrary! compel any one or more of s+ch 4oint promisors to perform the whole of the promise% /ach of two or more 4oint promisors may compel eery other 4oint promisor to contrib+te e3+ally with himself to the performance of the promise! +nless a contrary intention appears from the contract% If any one of two or more 4oint promisors ma'es defa+lt in s+ch contrib+tion! the remaining 4oint promisors m+st bear the loss arising from s+ch defa+lt in e3+al shares% E&l$!$tio! 0 )othing in this section shall preent a s+rety from recoering from his principal! payments made by the s+rety on behalf of the principal! or entitle the principal to recoer anything from the s+rety on acco+nt of payments made by the principal% 'llustrations (a) (b)
(c)
(d)
A! and 4ointly promise to pay F 5!888 ,+pees% F may compel either A or or to pay him 5!888 ,+pees% A! and 4ointly promise to pay F the s+m of 5!888 ,+pees% is compelled to pay the whole% A is insolent! b+t his assets are s+fficient to pay one-half of his debts% is entitled to receie 688 ,+pees from A2s estate! and 1!$68 ,+pees from % A! and are +nder a 4oint promise to pay F 5!888 ,+pees% is +nable to pay anything! and A is compelled to pay the whole% A is entitled to receie 1!688 ,+pees from % A! and are +nder a 4oint promise to pay F 5!888 ,+pees! A and
being only s+reties for % fails to pay% A and are compelled to pay the whole s+m% They are entitled to recoer it from %
Effe#t of rele$%e of o!e ;oi!t &ro"i%or9 here two or more persons hae made a 4oint promise! a release of one of s+ch 4oint promisors by the promisee does not discharge the other 4oint promisor or 4oint promisors; neither does it free the 4oint promisors so released from responsibility to the other 4oint promisor or 4oint promisors% e.oltio! of ;oi!t riht%9 hen a person has made a promise to two or more persons 4ointly! then! +nless a contrary intention appears from the contract! the right to claim performance rests! as between him and them! with them d+ring their 4oint lies! and! after the death of any of them! with the representatie of s+ch deceased person 4ointly with the s+rior or s+riors! and! after the death of the last s+rior! with the representaties of all 4ointly% 'llustration A! in consideration of 6!888 ,+pees lent to him by and ! promises and 4ointly to repay them that s+m with interest on a day specified% dies% The right to claim performance rests with 2s representatie 4ointly with d+ring 2s life! and after the death of with the representaties of and 4ointly% Time and Place for Performance
Ti"e for &erfor"$!#e of &ro"i%e /here !o $&&li#$tio! i% to 0e "$'e $!' !o ti"e i% %&e#ifie'9 here! by the contract! a promisor is to perform his promise witho+t application by the promisee! and no time for performance is specified! the engagement m+st be performed within a reasonable time% E&l$!$tio! The 3+estion .what is a reasonable time. is! in each partic+lar case! a 3+estion of fact% Ti"e $!' &l$#e for &erfor"$!#e of &ro"i%e /here ti"e i% %&e#ifie' $!' !o $&&li#$tio! to 0e "$'e9 hen promise is to be performed on a certain day! and the promisor has +nderta'en to perform it witho+t application by the promisee! the promisor may perform it at any time d+ring the +s+al ho+rs of b+siness on s+ch day and at the place at which the promise o+ght to be performed% 'llustration A promises to delier goods at 2s wareho+se on the first Gan+ary% Dn that day A brings the goods to 2s wareho+se! b+t after the +s+al ho+r for closing it! and they are not receied% A has not performed his promise%
A&&li#$tio! for &erfor"$!#e o! #ert$i! '$ to 0e $t &ro&er ti"e $!' &l$#e9 hen a promise is to be performed on a certain day! and the promisor has not +nderta'en to perform it witho+t application by the promisee! it is the d+ty of the promisee to apply for performance at a proper place and within the +s+al ho+rs of b+siness% E&l$!$tio! 0 The 3+estion .what is a proper time and place. is! in each partic+lar case! a 3+estion of fact% Pl$#e for &erfor"$!#e of &ro"i%e /ere !o $&&li#$tio! to 0e "$'e $!' !o &l$#e fie' for &erfor"$!#e9 hen a promise is to be performed witho+t application by the promisee! and no place is fixed for the performance of it! it is the d+ty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise! and to perform it at s+ch place% 'llustration
A +nderta'es to delier a tho+sand ma+nds of 4+te to on a fixed day% A m+st apply to to appoint a reasonable place for the p+rpose of receiing it! and m+st delier it to him at s+ch place%
Perfor"$!#e i! "$!!er or $t ti"e &re%#ri0e' or %$!#tio!e' 0 &ro"i%e9 The performance of any promise may be made in any manner! or at any time which the promisee prescribes or sanctions% 'llustrations (a)
(b)
(c) (d)
awes A $!888 ,+pees% A desires to pay the amo+nt to A2s acco+nt with ! a ban'er% ! who also ban's with ! orders the amo+nt to be transferred from his acco+nt to A2s credit! and this is done by % Afterwards! and before A 'nows of the transfer! fails% There has been a good payment by % A and are m+t+ally indebted% A and settle an acco+nt by setting off one item against another! and pays A the balance fo+nd to be d+e from him +pon s+ch settlement% This amo+nts to a payment by A and ! respectiely! of the s+ms which they owed to each other% A owes $!888 ,+pees% accepts some of A2s goods in red+ction of the debt% The deliery of the goods operates as a part payment% A desires ! who owes him ,+pees 188! to send him a note for ,+pees 188 by post% The debt is discharged as soon as p+ts into the post a letter containing the note d+ly addressed to A% Performance of Reciprocal Promises
Pro"i%or !ot 0o!' to &erfor", !le%% re#i&ro#$l &ro"i%ee re$' $!' /illi! to &erfor"9 hen a contract consists of reciprocal promises to be sim+ltaneo+sly performed! no promisor need perform his promise +nless the promisee is ready and willing to perform his reciprocal promise% 'llustrations (a)
(b)
A and contract that A shall delier goods to to be paid for by on deliery% A need not delier the goods! +nless is ready and willing to pay for the goods on deliery% need not pay for the goods! +nless A is ready and willing to delier them on payment% A and contract that A shall delier goods to at a price to be paid by installments! the first installment to be paid on deliery% A need not delier! +nless is ready and willing to pay the first installment on deliery% need not pay the first installment! +nless A is ready and willing to delier the goods on payment of the first installment%
Or'er of &erfor"$!#e of re#i&ro#$l &ro"i%e%9 here the order in which reciprocal promises are to be performed is expressly fixed by the contract! they shall be performed in that order; and! where the order is not expressly fixed by the contract! they shall be performed in that order which the nat+re of the transaction re3+ires% 'llustrations (a)
A and contract that A shall b+ild a ho+se for at a fixed price% A2s
(b)
promise to b+ild the ho+se m+st be performed before 2s promise to pay for it% A and contract that A shall ma'e oer his stoc'-in-trade to at a fixed price! and promises to gie sec+rity for the payment of the money% A2s promise need not be performed +ntil the sec+rity is gien! for the nat+re of the transaction re3+ires that A sho+ld hae sec+rity before he deliers +p his stoc'%
Li$0ilit of &$rt &re.e!ti! e.e!t o! /hi#h the #o!tr$#t i% to t$:e effe#t9 hen a contract contains reciprocal promises! and one party to the contract preents the other from performing his promise! the contract becomes oidable at the option of the party so preented; and he is entitled to compensation from the other party for any loss which he may s+stain in conse3+ence of the non-performance of the contract% 'llustrations A and contract that shall exec+te certain wor' for A for a tho+sand ,+pees% is ready and willing to exec+te the wor' accordingly! b+t A preents him from doing so% The contract is oidable at the option of ; and! if he elects to rescind it! he is entitled to recoer from A compensation for any loss which he has inc+rred by its nonperformance%
Effe#t of 'ef$lt $% to th$t &ro"i%e /hi#h %hol' 0e fir%t &erfor"e', i! #o!tr$#t #o!%i%ti! of re#i&ro#$l &ro"i%e%9 hen a contract consists of reciprocal promises! s+ch 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! s+ch promisor cannot claim the performance of the reciprocal promise! and m+st ma'e compensation to the other party to the contract for any loss which s+ch other party may s+stain by the non-performance of the contract% 'llustrations (a)
(b)
(c)
(d)
A hires 2s ship to ta'e in and coney! from hittagong to the >a+riti+s! a cargo to be proided by A! receiing a certain freight for its coneyance% A does not proide any cargo for the ship% A cannot claim the performance of 2s promise! and m+st ma'e compensation to for the loss which s+stains by the non-performance of the contract% A contracts with to exec+te certain b+ilder2s wor' for a fixed price! s+pplying the scaffolding and timber necessary for the wor'% ref+ses to f+rnish any scaffolding or timber! and the wor' cannot be exec+ted% A need not exec+te the wor'! and is bo+nd to ma'e compensation to A for any loss ca+sed to him by the non-performance of the contract% A contracts with to delier to him! at a specified price! certain merchandise on board a ship which cannot arrie for a month! and engages to pay for the merchandise within a wee' from the date of the contract% does not pay within the wee'% A2s promise to delier need not be performed! and m+st ma'e compensation% A promises to sell him one h+ndred bales of merchandise! to be deliered next day! and promises A to pay for them within a month% A does not delier according to his promise% 2s promise to pay need not be performed! and A m+st ma'e compensation%
Effe#t of f$ilre to &erfor" $t fie' ti"e, i! #o!tr$#t i! /hi#h ti"e i% e%%e!ti$l9 hen a party to a contract promises to do a certain thing at or before a specified time! or certain things at or before a specified times! and fails to do any s+ch thing at or before the specified time! the contract! or so m+ch of it as has not been performed!
becomes oidable at the option of the promisee! if the intention of the parties was that time sho+ld be of the essence of the contract%
Effe#t of %#h f$ilre /he! ti"e i% !ot e%%e!ti$l9 If it was not the intention of the parties that time sho+ld be of the essence of the contract! the contract does not become oidable by the fail+re to do s+ch thing at or before the specified time; b+t the promisee is entitled to compensation from the promisor for any loss occasioned to him by s+ch fail+re% Effe#t of $##e&t$!#e of &erfor"$!#e $t ti"e other th$! th$t $ree' &o!9 If! in case of a contract oidable on acco+nt of the promisor2s fail+re to perform his promise at the time agreed! the promisee accepts performance of s+ch promise at any time other than that agreed! the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed! +nless! at the time of s+ch acceptance he gies notice to the promisor of his intention to do so% Aree"e!t to 'o i"&o%%i0le $#t9 An agreement to do an act impossible in itself is oid% Co!tr$#t to 'o $#t $fter/$r'% 0e#o"i! i"&o%%i0le or !l$/fl9 A contract to do an act which! after the contract is made! becomes impossible! or! by reason of some eent which the promissor co+ld not preent! +nlawf+l! becomes oid when the act becomes impossible or +nlawf+l% Co"&e!%$tio! for lo%% throh !o!&erfor"$!#e of $#t :!o/! to 0e i"&o%%i0le or !l$/fl9 here one person has promised to do something which he 'new! or! with reasonable diligence! might hae 'nown! and which the promisee did not 'now to be impossible or +nlawf+l! s+ch promisor m+st ma'e compensation to s+ch promisee for any loss which s+ch promisee s+stains thro+gh the nonperformance of the promise% 'llustrations (a) (b) (c)
(d)
(e)
A agrees with to discoer treas+re by magic% The agreement is oid% A and contract to marry each other% efore the time fixed for the marriage! A goes mad% The contract becomes oid% A contracts to marry ! being already married to ! and being forbidden by the law to which he is s+b4ect to practise polygamy% A m+st ma'e compensation to for the loss ca+sed to her by the non-performance of his promise% A contracts to ta'e in cargo for at a foreign port% A2s Hoernment afterwards declares war against the co+ntry in which the port is sit+ated% The contract becomes oid when war is declared% A contracts to act at a theatre for six months in consideration of a s+m! paid in adance by % Dn seeral occasions A is too ill to act% The contract to act on those occasions becomes oid%
Re#i&ro#$l &ro"i%e to 'o thi!% le$l, $!' $l%o other thi!% ille$l9 here persons reciprocally promise! firstly! to do certain things which are legal! and! secondly! +nder specified circ+mstances! to do certain other things which are illegal! the first set of promises is a contract! b+t the second is a oid agreement% 'llustration A and agree that A shall sell a ho+se for 18!888 ,+pees b+t that! if +ses it as a gambling ho+se! he shall pay A 68!888 r+pees for it% The first set of reciprocal promises! namely! to sell the ho+se and to pay 18!888
r+pees for it! is a contract% The second set is for an +nlawf+l ob4ect! namely! that may +se the ho+se as a gambling ho+se! and is a oid agreement%
Alter!$ti.e &ro"i%e, o!e 0r$!#h 0ei! ille$l9 In the case of an alternatie promise! one branch of which is legal and the other illegal! the legal branch alone can be enforced% 'llustration A and agree that A shall pay 1!888 ,+pees for which shall afterwards delier to A either rice or sm+ggled opi+m% This is a alid contract to delier rice! and a oid agreement as to the opi+m% This is a alid contract to delier rice! and a oid agreement as to the opi+m% Appropriation of Payments
A&&li#$tio! of &$"e!t, /here 'e0t to 0e 'i%#h$re' i% i!'i#$te'9 here a debtor! owing seeral distinct debts to one person! ma'es a payment to him! either with express intimation! or +nder circ+mstances implying that the payment is to be applied to the discharge of some partic+lar debt! the payment! if accepted! m+st be applied accordingly% 'llustrations (a)
(b)
A owes ! among other debts! 1!888 ,+pees +pon a promissory note which falls d+e on the first G+ne% ?e owes no other debt of that amo+nt% Dn the first G+ne A pays to 1!888 ,+pees% The payment is to be applied to the discharge of the promissory note% A owes to ! among other debts the s+m of 67# ,+pees% writes to A and demands payment of this s+m% A sends to 67# ,+pees% This payment is to be applied to the discharge of the debt of which had demanded payment%
A&&li#$tio! of &$"e!t, /here 'e0t to 0e 'i%#h$re' i% !ot i!'i#$te'9 here the debtor has omitted to intimate and there are no other circ+mstances indicating to which debt the payment is to be applied! the creditor may apply it at his discretion to any lawf+l debt act+ally d+e and payable to him from the debtor! whether its recoery is or is not barred by the law in force for the time being as to the limitation of s+its% A&&li#$tio! of &$"e!t /here !either &$rt $&&ro&ri$te%9 here neither party ma'es 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 s+its% If the debts are of e3+al standing! the payment shall be applied in discharge of each proportionally% Contracts Which Need Not be Performed
Effe#t of !o.$tio!, re%#i%%io! $!' $lter$tio! of #o!tr$#t9 If the parties to a contract agree to s+bstit+te a new contract for it! or to rescind or alter it! the original contract need not be performed% 'llustrations (a)
A owes money to +nder a contract% It is agreed between A! and that shall thenceforth accept as his debtor! instead of A% The old debt of A to is at an end! and a new debt from to has been contracted%
(b)
(c)
A owes 18!888 ,+pees% A enters into an arrangement with ! and gies a mortgage of his A2s< estate for 6!888 ,+pees! in place of the debt of 18!888 ,+pees% This is a new contract and exting+ishes the old% A owes 1!888 ,+pees +nder a contract% owes 1!888 ,+pees% orders A to credit with 1!888 ,+pees in his boo's! b+t does not assent to the arrangement% still owes 1!888 ,+pees! and no new contract has been entered into%
Pro"i%ee "$ 'i%&e!%e /ith or re"it &erfor"$!#e of &ro"i%e9 /ery promisee may dispense with or remit! wholly or in part! the performance of the promise made to him or may extend the time for s+ch performance! or may accept instead of it any satisfaction which he thin's fit% 'llustrations (a) (b)
(c)
(d)
(e)
A promises to paint a pict+re for % afterwards forbids him to do so% A is no longer bo+nd to perform the promise% A owes 6!888 ,+pees% A pays to ! and accepts! in satisfaction of the whole debt! $!888 ,+pees paid at the time and place at which the 6!888 ,+pees were payable% The whole debt is discharged% A owes 6!888 ,+pees% pays to 1!888 ,+pees! and accepts them! in satisfaction of his claim on A% This payment is a discharge of the whole claim% A owes ! +nder a contract! a s+m of money! the amo+nt of which has not been ascertained% A! witho+t ascertaining the amo+nt! gies to ! and ! in satisfaction thereof! accepts! the s+m of $!888 ,+pees% This is a discharge of the whole debt! whateer may be its amo+nt% A owes $!888 ,+pees and is also indebted to other creditors% A ma'es an arrangement with his creditors! incl+ding ! to pay them a composition of eight annas in the ,+pees +pon their respectie demands% &ayment to be of 1!888 ,+pees is a discharge of 2s demand%
Co!%e<e!#e% of re%#i%%io! of .oi'$0le #o!tr$#t9 hen a person at whose option a contract is oidable rescinds it! the other party thereto need not perform any promise therein contained in which he is promisor% The party rescinding a oidable contract shall! if he hae receied any benefit there+nder from another party to s+ch contract! restore s+ch benefit! so far as may be! to the person from whom it was receied% O0li$tio! of &er%o! /ho h$% re#ei.e' $'.$!t$e !'er .oi' $ree"e!t or #o!tr$#t th$t 0e#o"e% .oi'9 hen an agreement is discoered to be oid! or when a contact becomes oid! any person who has receied any adantage +nder s+ch agreement or contract is bo+nd to restore it! or to ma'e compensation for it to the person from whom he receied it% 'llustrations (a)
(b)
(c)
A pays 1!888 ,+pees in consideration of 2s promising to marry ! A2s da+ghter% is dead at the time of promise% The agreement is oid! b+t m+st repay A the 1!888 ,+pees% A contracts with to delier to him $68 ma+nds of rice before the first of >ay% A deliers 158 ma+nds only before that day! and none after% retains the 158 ma+nds after the first of >ay% ?e is bo+nd to pay A for them% A! a singer! contracts with ! the manager of a theatre! to sing at his theatre for two nights in eery wee' d+ring the next two months! and engages to pay her a h+ndred ,+pees for each night2s performance% Dn the sixth night! A wilf+lly absents herself from the theatre! and ! in
(d)
conse3+ence! rescinds the contract% m+st pay A for the fie nights on which she had s+ng% A contracts to sing for at a concert for 1!888 ,+pees which are paid in adance% A is too ill to sing% A is not bo+nd to ma'e compensation to for the loss of the profits which wo+ld hae made if A had been able to sing! b+t m+st ref+nd to the 1!888 ,+pees paid in adance%
Mo'e of #o""!i#$ti! or re.o:i! re%#i%%io! of .oi'$0le #o!tr$#t9 The rescission of a oidable contract may be comm+nicated or reo'ed in the same manner! and s+b4ect to the same r+les! as apply to the comm+nication or reocation of a proposal% Effe#t of !ele#t of &ro"i%ee to $ffor' &ro"i%or re$%o!$0le f$#ilitie% for &erfor"$!#e9 If any promisee neglects or ref+ses to afford the promisor reasonable facilities for the performance of his promise! the promisor is exc+sed by s+ch neglect or ref+sal as to any non-performance ca+sed thereby% 'llustration A contracts with to repair 2s ho+se% neglects or ref+ses to point o+t to A the places in which his ho+se re3+ires repair% A is exc+sed for the non-performance of the contract if it is ca+sed by s+ch neglect or ref+sal%
CHAPTER O* CERTAIN RELATIONS RESEM3LIN4 THOSE CREATE 3Y CONTRACT 2G9 Cl$i" for !e#e%%$rie% %&&lie' to &er%o! i!#$&$0le of #o!tr$#ti! or o! hi% $##o!t9 If a person! incapable of entering into a contract! or any one whom he is legally bo+nd to s+pport! is s+pplied by another person with necessaries s+ited to his condition in life! the person who has f+rnished s+ch s+pplies is entitled to be reimb+rsed from the property of s+ch incapable person% 'llustration (a) (b)
A s+pplies ! a l+natic! with necessaries s+itable to his condition in life% A is entitled to be reimb+rsed from 2s property% A s+pplies the wife and children of ! a l+natic! with necessaries s+itable to their condition in life% A is entitled to be reimb+rsed from 2s property%
Rei"0r%e"e!t of &er%o! &$i! "o!e 'e 0 $!other i! &$"e!t of /hi#h he i% i!tere%te'9 A person who is interested in the payment of money which another is bo+nd by law to pay! and who therefore pays it! is entitled to be reimb+rsed by the other% 'llustration holds land in 1 8 [ (ind!] on a lease granted by A! the Camindar% The reen+e payable by A to the Hoernment being in arrear! his lands is adertised for sale by the Hoernment% nder the reen+e law! the conse3+ence of s+ch sale will be the ann+lment of 2s lease% ! to preent the sale and the conse3+ent ann+lment of his own lease! pays to the Hoernment the s+m d+e from A% A is bo+nd to ma'e good to the amo+nt so paid% 10
Subs. by the eder! "#s $%e,isi'n nd ec!rti'n() Ordinnce) 1981 $27 '& 1981() s. 3 2 nd Sch.) &'r *st +istn/ #hich #s subs. by A.O.) 1961) Art.2
O0li$tio! of &er%o! e!;oi! 0e!efit of !o! r$tito% $#t9 here a person lawf+lly does anything for another person! or deliers anything to him! not intending to do so grat+ito+sly! and s+ch other person en4oys the benefit thereof! the latter is bo+nd to ma'e compensation to the former in respect of! or to restore! the thing so done or deliered% 'llustrations (a) (b)
A! a tradesman! leaes goods at 2s ho+se by mista'e% treats the goods as his own% ?e is bo+nd to pay A for them% A saes 2s property from fire% A is not entitled to compensation from ! if the circ+mstances show that he intended to act grat+ito+sly%
Re%&o!%i0ilit of fi!'er of oo'%9 A person who finds goods belonging to another and ta'es them into his c+stody! is s+b4ect to the same responsibility as a bailee% Li$0ilit of &er%o! to /ho" "o!e i% &$i' or thi! 'eli.ere' 0 "i%t$:e or !'er #oer#io!9 A person to whom money has been paid or any thing deliered by mista'e or +nder coercion! m+st repay or ret+rn it% 'llustrations
(a) (b)
A and 4ointly owe 188 ,+pees to % A alone pays the amo+nt to ! and ! not 'nowing this fact! pays 188 ,+pees oer again to % is bo+nd to repay the amo+nt to % A railway company ref+ses to delier +p certain goods to the consignee! except +pon the payment of an illegal charge for carriage% The consignee pays the s+m charged in order to obtain the goods% ?e is entitled to recoer so m+ch of the charge as was illegally excessie%
CHAPTER -I O* THE CONSE+ENCES O* 3REACH O* CONTRACT 279 Co"&e!%$tio! for lo%% or '$"$e #$%e' 0 0re$#h of #o!tr$#t9 hen a contract has been bro'en! the party who s+ffers by s+ch breach is entitled to receie! from the party who has bro'en the contract! compensation for any loss or damage ca+sed to him thereby! which nat+rally arose in the +s+al co+rse of things from s+ch breach! or which the parties 'new! when they made the contract! to be li'ely to res+lt from the breach of it% (+ch compensation is not to be gien for any remote and indirect loss or damage s+stained by reason of the breach% Co"&e!%$tio! for f$ilre to 'i%#h$re o0li$tio! re%e"0li! tho%e #re$te' 0 #o!tr$#t9 hen an obligation resembling those created by contract has been inc+rred and has not been discharged! any person in4+red by the fail+re to discharge it is entitled to receie the same compensation from the party in defa+lt! as if s+ch person had contracted to discharge it and had bro'en his contract% E&l$!$tio! 0 In estimating the loss or damage arising from a breach of contract! the means which existed of remedying the inconenience ca+sed by the nonperformance of the contract m+st be ta'en into acco+nt% 'llustrations (a)
A contracts to sell and delier 68 ma+nds of saltpetre to ! at a certain price to be paid on deliery% A brea's his promise% is entitled to receie from A! by way of compensation! the s+m! if any! by which the
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
contract price falls short of the price for which might hae obtained 68 ma+nds of saltpetre of li'e 3+ality at the time when the saltpetre o+ght to hae been deliered% A hires 2s ship to go to halna! and there ta'e on board! on the first of Gan+ary! a cargo which A is to proide and to bring it to hittagong! the freight to be paid when earned% 2s ship does not go to halna! b+t A has opport+nities of proc+ring s+itable coneyance for the cargo +pon terms as adantageo+s as those on which he had chartered the ship% A aails himself of those opport+nities! b+t is p+t to tro+ble and expense in doing so% A is entitled to receie compensation from in respect of s+ch tro+ble and expense% A contracts to b+y of ! at a stated price! 68 ma+nds of rice! no time being fixed for deliery% A afterwards informs that he will not accept the rice if tendered to him% is entitled to receie from A! by way of compensation! the amo+nt! if any! by which the contract price exceeds that which can obtain for the rice at the time when A informs that he will not accept it% A contracts to b+y 2s ship for 78!888 ,+pees! b+t brea's his promise% A m+st pay to ! by way of compensation! the excess! if any! of the contract price oer the price which can obtain for the ship at the time of the breach of the promise% A! the owner of a boat! contracts with to ta'e a cargo of 4+te to >ymensingh! for sale at that place! starting on a specified day% The boat owing to some aoidable ca+se! does not start at the time appointed! where by the arrial of the cargo at >ymensingh is delayed beyond the time when it wo+ld hae arried if the boat had sailed according to the contract% After that date! and before the arrial of the cargo! the price of 4+te falls% The meas+re of the compensation payable to by A is the difference between the price which co+ld hae obtained for the cargo at >ymensingh at the time when it wo+ld hae arried if forwarded in d+e co+rse! and its mar'et price at the time when it act+ally arried% A contracts to repair 2s ho+se in a certain manner! and receies payment in adance% A repairs the ho+se! b+t not according to contract% is entitled to recoer from A the cost of ma'ing the repairs conform to the contract% A contracts to let his ship to for a year! from the first of Gan+ary! for a certain price% =reights rise! and! on the first of Gan+ary! the hire obtainable for the ship is higher than the contract price% A brea's his promise% ?e m+st pay to ! by way of compensation! a s+m e3+al to the difference between the contract price and the price for which co+ld hire a similar ship for a year on and from the first of Gan+ary% A contracts to s+pply with a certain 3+antity of iron at a fixed price! being a higher price than that for which A co+ld proc+re and delier the iron% wrongf+lly ref+ses to receie the iron% m+st pay to A! by way of compensation! the difference between the contract price of the iron and the s+m for which A co+ld hae obtained and deliered it% A deliers to ! a common carrier! a machine! to be coneyed! witho+t delay! to A2s mill informing that his mill is stopped for want of the machine% +nreasonably delays the deliery of the machine! and A! in conse3+ence! losses a profitable contract with the Hoernment% A is entitled to receie from ! by way of compensation! the aerage amo+nt of profit which wo+ld hae been made by the wor'ing of the mill d+ring the time that deliery of it was delayed! b+t not the loss s+stained thro+gh the loss of the Hoernment contract% A! haing contracted with to s+pply with 1!888 tons of iron at 188 ,+pees a ton! to be deliered at a stated time! contracts with for the
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
p+rchase of 1!888 tons of iron at "8 ,+pees a ton! telling that he does so for the p+rpose of performing his contract with % fails to perform his contract with A! who cannot proc+re other iron! and ! in conse3+ence! rescinds the contract% m+st pay to A $8!888 ,+pees! being the profit which A wo+ld hae made by the performance of his contract with % A contracts with to ma'e and delier to ! by a fixed day! for a specified price! a certain piece of machinery% A does not delier the piece of machinery at the time specified! and! in conse3+ence of this! is obliged to proc+re another at a higher price than that which he was to hae paid to A! and is preented from performing a contract which had made with a third person at the time of his contract with A b+t which had not been then comm+nicated to A
(ydney in A2s ship! sailing on the first of Gan+ary! and pays to A! by way of deposit! one-half of his passage-money% The ship does not sail on the first of Gan+ary! and ! after being! in conse3+ence! detained in hittagong for some time! and thereby p+t to some expense! proceeds to (ydney in another essel! and! in conse3+ence! arriing too late in (ydney! loses a s+m of money% A is liable to repay to his deposit! with interest! and the expense to which he is p+t by his detention in hittagong! and the excess! if any! of the passage- money paid for the second ship oer that agreed +pon for the first! b+t not the s+m of money which lost by arriing in (ydney too late% 11
[Co"&e!%$tio! for 0re$#h of #o!tr$#t /here &e!$lt %ti&l$te' for9 hen a contract has been bro'en! if a s+m is named in the contract as the amo+nt to be paid in case of s+ch breach! or if the contract contains any other stip+lation by way of penalty! the party complaining of the breach is entitled! whether or not act+al damage or loss is proed to hae been ca+sed thereby! to receie from the party who has bro'en the contract reasonable compensation not exceeding the amo+nt so named or! as the case may be! the penalty stip+lated for%
E&l$!$tio! 0 A stip+lation for increased interest from the date of defa+lt may be stip+lation by way of penalty%] E#e&tio!9 0hen any person enters into any bail-bond! recogniCance or other instr+ment of the same nat+re! or! +nder the proisions of any law! or +nder the orders of the 1 $ [ = e d e r a l Hoernment]! or of any 15[&roincial Hoernment] gies any bond for the performance of any p+blic d+ty or act in which the p+blic are interested! he shall be liable! +pon breach of the condition of any s+ch instr+ment! to pay the whole s+m mentioned therein% E&l$!$tio! -A person who enters into a contract with Hoernment does not necessarily thereby +nderta'e any p+blic d+ty! or promise to do an act in which the p+blic are interested% 'llustrations (a)
(b)
(c)
(d)
(e) 11
A contracts with to pay ,+pees 1!888! if he fails to pay ,+pees 688 on a gien day% A fails pay ,+pees 688 on that day% is entitled to recoer from A s+ch compensation! not exceeding ,+pees 1!888! as the o+rt considers reasonable% A contracts with that! if A practices as a s+rgeon within hittagong! he will pay ,+pees 6!888% A practices as a s+rgeon in hittagong% is entitled to s+ch compensation! not exceeding ,+pees 6!888! as the o+rt considers reasonable% A gies a recogniCance binding him in a penalty of ,+pees 688 to appear in co+rt on a certain day% ?e forfeits his recogniCance% ?e is liable to pay the whole penalty% A gies a bond for the repayment of ,+pees 1!888 with interest at 1$ per cent% at the end of six months! with a stip+lation that in case of defa+lt! interest shall be payable at the rate of #6 per cent% from the date of defa+lt% This is a stip+lation by way of penalty! and is only entitled to recoer from A s+ch compensation as the o+rt considers reasonable% A! who owes money to ! a money-lender! +nderta'es to repay him by
Subs. by s) 4 '& the ndin C'ntrct Act Amdt. Act) 1899 $6 '& 1899() &'r the &irst -r '& s. 74. Subs. by .A.O.) 1975) Art. 2 nd b!e) &'r *Centr! :',ernment/ #hich hd been subs. by A.O.) 1937) &'r *:. '& ./ 13 Subs. by A.O.) 1937 &'r *".:./ 12
(f)
(g)
deliering to him 18 ma+nds of grain on a certain date! and stip+lates that! in the eent of his not deliering the stip+lated amo+nt by the stip+lated date! he shall be liable to delier $8 ma+nds% This is a stip+lation by way of penalty! and is only entitled to reasonable compensation in case of breach% A +nderta'es to repay a loan of ,+pees 1!888 by fie e3+al monthly instalments with a stip+lation that! in defa+lt of payment of any installment! the whole shall become d+e% This stip+lation is not by way of penalty! and the contract may be enforced according to its terms% A borrows ,+pees 188 from and gies him a bond for ,+pees $88 payable by fie yearly instalments of ,+pees 98! with a stip+lation that! in defa+lt of payment of any installment! the whole shall become d+e% This is a stip+lation by way of penalty%
P$rt rihtfll re%#i!'i! #o!tr$#t e!title' to #o"&e!%$tio!9 A person who rightly rescinds a contract is entitled to compensation for any damage which he has s+stained thro+gh the non-f+lfilment of the contract% 'llustration A! a singer! contract with ! the manager of a theatre! to sing at his theatre for two nights in eery wee' d+ring the next two months! and engages to pay her 188 ,+pees for each night2s performance% Dn the sixth night! A wilf+lly absents herself from the theatre! and ! in conse3+ence! rescinds the contract% is entitled to claim compensation for the damage which he has s+stained thro+gh the non-f+lfilment of the contract%
CHAPTER -II SALE O* 4OOS 289
Re&e$le'J
[,epealed by the (ale of Hoods Act! 158 Act )o% III of 158
CHAPTER -III O* INEMNITY AN 4+ARANTEE 29 6Co!tr$#t of i!'e"!it6 'efi!e'9 A contract by which one party promises to sae the other from loss ca+sed to him by the cond+ct of the promisor himself! or by the cond+ct of any other person! is called a .contract of indemnity.% 'llustration A contracts to indemnify against the conse3+ences of any proceedings which may ta'e against in respect of a certain s+m of $88 ,+pees% This is a contract of indemnity%
Riht% of i!'e"!it hol'er /he! %e'9 The promisee in a contract of indemnity! acting within the scope of his a+thority! is entitled to recoer from the promisorall damages which he may be compelled to pay in any s+it in respect of (1) any matter to which the promise to indemnify applies; all costs which he may be compelled to pay in any s+ch s+it if! in bringing (2) or defending it! he did not contraene the orders of the promisor! and acted as it wo+ld hae been pr+dent for him to act in the absence of any contract of indemnity! or if the promisor a+thoriCed him to bring or defend the s+it; all s+ms which he may hae paid +nder the terms of any compromise of (3) any s+ch s+it! if the compromise was not contrary to the orders of the promisor! and was one which it wo+ld hae been pr+dent for the promisee to ma'e in the absence of any contract of indemnity! or if the promisor a+thoriCed him to compromise the s+it% 6Co!tr$#t of $r$!tee6, 6%ret6, 6&ri!#i&$l 'e0tor6 $!' 6#re'itor6 A .contract of g+arantee. is a contract to perform the promise! or discharge the liability! of a third
person in case of his defa+lt% The person who gies the g+arantee is called the .s+rety.: the person in respect of whose defa+lt the g+arantee is gien is called the .principal debtor.! and the person to whom the g+arantee is gien is called the .creditor.% A g+arantee may be either oral or written%
Co!%i'er$tio! for $r$!tee9 Anything done! or any promise made! for the benefit of the principal debtor may be a s+fficient consideration to the s+rety for giing the g+arantee% 'llustrations (a)
(b)
(c)
re3+ests A to sell and delier to him goods on credit% A agrees to do so! proided will g+arantee the payment of the price of the goods% promises to g+arantee the payment in consideration of A2s promise to delier the goods% This is a s+fficient consideration for 2s promise% A sells and deliers goods to % afterwards re3+ests A to forbear to s+e for the debt for a year! and promises that if he does so! will pay for them in defa+lts of payment by % A agrees to forbear as re3+ested% This is a s+fficient consideration for 2s promise% A sells and deliers goods to % afterwards! witho+t consideration! agrees to pay for them in defa+lt of % The agreement is oid%
SretB% li$0ilit9 The liability of the s+rety is co-extensie with that of the principal debtor! +nless it is otherwise proided by the contract% 'llustration A g+arantees to the payment of a bill of exchange by ! the acceptor% The bill is dishono+red by % A is liable not only for the amo+nt of the bill b+t also for any interest and charges which may hae become d+e on it%
6Co!ti!i! $r$!tee69 A g+arantee which extends to a series of transactions is called a .contin+ing g+arantee.% 'llustrations (a)
(b)
(c)
A! in consideration that will employ in collecting the rent of 2s Camindari! promises to be responsible! to the amo+nt of 6!888 ,+pees! for the d+e collection and payment by of those rents% This is a contin+ing g+arantee% A g+arantees payment to ! a tea-dealer! to the amo+nt of J 188! for any tea he may from time to time s+pply to % s+pplies with tea to aboe the al+e of J 188! and pay for it% Afterwards s+pplies with tea to the al+e of J $88% fails to pay% The g+arantee gien by A was a contin+ing g+arantee! and he is accordingly liable to to the extent of J 188% A g+arantees payment to of the price of fie sac's of flo+r to be deliered by to and to be paid for in a month% deliers fie sac's to % pays for them% Afterwards deliers fo+r sac's to ! which does not pay for% The g+arantee gien by A was not a contin+ing g+arantee! and accordingly he is not liable for the price of the fo+r sac's%
Re.o#$tio! of #o!ti!i! $r$!tee9 A contin+ing g+arantee may at any time be reo'ed by the s+rety! as to f+t+re transactions! by notice to the creditor% 'llustrations (a)
A! in consideration of 2s disco+nting! at A2s re3+est! bills of exchange for
(b)
! g+arantees to ! for twele months! the d+e payment of all s+ch bills to the extent of 6!888 ,+pees% disco+nts bills for to the extent of $!888 ,+pees% Afterwards! at the end of three months! A reo'es the g+arantee% This reocation discharges A from all liability to for any s+bse3+ent disco+nt% +t A is liable to for the $!888 ,+pees! on defa+lt of % A g+arantees to ! to the extent of 18!888 ,+pees! that shall pay all the bills that shall draw +pon him% draws +pon % accepts the bill% A gies notice of reocation% dishono+rs the bill at mat+rity% A is liable +pon his g+arantee%
Re.o#$tio! of #o!ti!i! $r$!tee 0 %retB% 'e$th9 The death of the s+rety operates! in the absence of any contract to the contrary! as a reocation of a contin+ing g+arantee! so far as regards f+t+re transactions% Li$0ilit of t/o &er%o!% &ri"$ril li$0le, !ot $ffe#te' 0 $rr$!e"e!t 0et/ee! the" th$t o!e %h$ll 0e %ret o! other% 'ef$lt9 here two persons contract with a third person to +nderta'e a certain liability! and also contract with each other that one of them shall be liable only on the defa+lt of the other! the third person not being a party to s+ch contract! the liability of each of s+ch two persons to the third person +nder the first contract is not affected by the existence of the second contract! altho+gh s+ch third person may hae been aware of its existence% 'llustration A and ma'e a 4oint and seeral promissory note to % A ma'es it! in fact! as s+rety for ! and 'nows this at the time when the note is made% The fact that A! to the 'nowledge of ! made the note as s+rety for ! is no answers to a s+it by against A +pon the note%
i%#h$re of %ret 0 .$ri$!#e i! ter"% of #o!tr$#t9 Any ariance! made witho+t the s+rety2s consents! in the terms of the contract between the principal debtor and the creditor! discharges the s+rety as to transactions s+bse3+ent to the ariance% 'llustrations (a)
(b)
(c)
(d)
A becomes s+rety to for 2s cond+ct as a manager in 2s ban'% Afterwards! and contract! witho+t A2s consent! that 2s salary shall be raised! and that he shall become liable for one-fo+rth of the losses on oerdrafts% allows a c+stomer to oerdraw! and the ban' loses a s+m of money% A is discharged from his s+retyship by the ariance made witho+t his consent! and is not liable to ma'e good this loss% A g+arantees against the miscond+ct of in an office to which is appointed by ! and of which the d+ties are defined by an Act of the Begislat+re% y a s+bse3+ent Act! the nat+re of the office is materially altered% Afterwards! miscond+cts himself% A is discharged by the change from f+t+re liability +nder his g+arantee! tho+gh the miscond+ct of is in respect of a d+ty not affected by the later Act% agrees to appoint as his cler' to sell goods at a yearly salary! +pon A2s becoming s+rety to for 2s d+ly acco+nting for moneys receied by him as s+ch cler'% Afterwards! witho+t A2s 'nowledge or consent! and agree that sho+ld be paid by a commission on the goods sold by him and not by a fixed salary% A is not liable for s+bse3+ent miscond+ct of % A gies to a contin+ing g+arantee to the extent of 5!888 ,+pees for any oil s+pplied by to on credit% Afterwards becomes embarrassed! and ! witho+t the 'nowledge of A! and contract that
(e)
shall contin+e to s+pply with oil for ready money! and that the payments shall be applied to the then existing debts between and % A is not liable on his g+arantee for any goods s+pplied after this new arrangement% contracts to lend 6!888 ,+pees on the 1st >arch% A g+arantees repayment% pays the 6!888 ,+pees to on the 1st Gan+ary% A is discharged from his liability! as the contract has been aried inasm+ch as might s+e for the money before the 1st of >arch%
i%#h$re of %ret 0 rele$%e or 'i%#h$re of &ri!#i&$l 'e0tor9 The s+rety is discharged by any contract between the creditor and the principal debtor! by which the principal debtor is released! or by any act or omission of the creditor! the legal conse3+ence of which is the discharge of the principal debtor% 'llustrations (a)
(b)
(c)
A gies a g+arantee to for goods to be s+pplied by to % s+pplies goods to ! and afterwards becomes embarrassed and contracts with his creditors incl+ding < to assign to them his property in consideration of their releasing him from their demands% ?ere is released from his debt by the contract with ! and A is discharged from his s+retyship% A contracts with to grow a crop of indigo on A2s land and to delier it to at a fixed rate! and g+arantees A2s performance of this contracts% dierts a stream of water which is necessary for irrigation of A2s land and thereby preents him from raising the indigo% is no longer liable on his g+arantee% A contracts with for a fixed price to b+ild a ho+se for within a stip+lated time! s+pplying the necessary timber% g+arantees A2s performance of the contract% omits to s+pply the timber% is discharged from his s+retyship%
i%#h$re of %ret /he! #re'itor #o"&o!'% /ith, i.e% ti"e to, or $ree% !ot to %e, &ri!#i&$l 'e0tor9 A contract between the creditor and the principal debtor! by which the creditor ma'es a composition with! or promises to gie time to! or not to s+e! the principal debtor discharges the s+rety! +nless the s+rety assents to s+ch contract% Sret !ot 'i%#h$re' /he! $ree"e!t "$'e /ith thir' &er%o! to i.e ti"e to &ri!#i&$l 'e0tor9 here a contract to gie time to the principal debtor is made by the creditor with a third person! and not with the principal debtor! the s+rety is not discharged% 'llustrations ! the holder of an oerd+e bill of exchange drawn by A as s+rety for ! and accepted by ! contracts with > to gie time to % A is not discharged%
?@9 Cre'itorB% for0e$r$!#e to %e 'oe% !ot 'i%#h$re %ret9 >ere forbearance on the part of the creditor to s+e the principal debtor or to enforce any other remedy against him does not! in the absence of any proision in the g+arantee to the contrary! discharge the s+rety% 'llustrations owes to a debt g+aranteed by A% The debt becomes payable% does not s+e for year after the debt has become payable% A is not discharged from his s+retyship%
Rele$%e of o!e #o%ret 'oe% !ot 'i%#h$re other%9 here there are co-s+reties! a
release by the creditor of one of them does not discharge the others; neither does it free the s+rety so released from his responsibility to the other s+reties%
i%#h$re of %ret 0 #re'itorB% $#t or o"i%%io! i"&$iri! %retB% e.e!t$l re"e'9 If the creditor does any act which is inconsistent with the rights of the s+rety! or omits to do any act which his d+ty to the s+rety re3+ires him to do! and the eent+al remedy of the s+rety himself against the principal debtor is thereby impaired! the s+rety is discharged% 'llustrations (a)
(b)
(c)
contracts to b+ild a ship for for a gien s+m! to be paid by instalments as the wor' reaches certain stages% A becomes s+rety to for 2s d+e performance of the contract% ! witho+t the 'nowledge of A! prepays to the last two instalments% A is discharged by this prepayment% lends money to on the sec+rity of a 4oint and seeral promissory note made in 2s fao+r by ! and by A as s+rety for ! together with a bill of sale of 2s f+rnit+re! which gies power to to sell the f+rnit+re! and apply the proceeds in discharge of the note% (+bse3+ently! sells the f+rnit+re! b+t! owing to his miscond+ct and wilf+l negligence! only a small price is realiCed% A is discharged from liability on the note% A p+ts > as apprentice to ! and gies a g+arantee to for >2s fidelity% promises on his part that he will! at least once a month! see > ma'e +p the cash% omits to see this done as promised! and > embeCCles% A is not liable to on his g+arantee%
Riht% of %ret o! &$"e!t or &erfor"$!#e9 here a g+aranteed debt has become d+e! or defa+lt of the principal debtor to perform a g+aranteed d+ty has ta'en place! the s+rety! +pon payment or performance of all that he is liable for! is inested with all the rights which the creditor had against the principal debtor% SretB% riht to 0e!efit of #re'itorB% %e#ritie%9 A s+rety is entitled to the benefit of eery sec+rity which the creditor has against the principal debtor at the time when the contract of s+retyship is entered into! whether the s+rety 'nows of the existence of s+ch sec+rity or not; and! if the creditor loses! or! witho+t the consent of the s+rety! parts with s+ch sec+rity! the s+rety is discharged to the extent of the al+e of the sec+rity% 'llustrations (a)
(b)
(c)
adances to ! his tenant! $!888 ,+pees on the g+arantee of A% has also! a f+rther sec+rity for the $!888 ,+pees by a mortgage of 2s f+rnit+re% cancels the mortgage% becomes insolent! and s+es A on his g+arantee% A is discharged from liability to the amo+nt of the al+e of the f+rnit+re% ! a creditor! whose adance to is sec+red by a decree! receies also a g+arantee for that adance from A% afterwards ta'es 2s goods in exec+tion +nder the decree! and then! witho+t the 'nowledge of A! withdraws the exec+tion% A is discharged% A! as s+rety for ! ma'es a bond 4ointly with to ! to sec+re a loan from to % Afterwards! obtains from a f+rther sec+rity for the same debt% (+bse3+ently! gies +p the f+rther sec+rity% A is not discharged%
4$r$!tee o0t$i!e' 0 "i%re&re%e!t$tio! i!.$li'9 Any g+arantee which has been obtained by means of misrepresentation made by the creditor! or with his 'nowledge and assent! concerning a material part of the transaction! is inalid%
4$r$!tee o0t$i!e' 0 #o!#e$l"e!t i!.$li'9 Any g+arantee which the creditor has obtained by means of 'eeping silence as to material circ+mstances is inalid% 'llustrations (a)
(b)
A engages as cler' to collect money for him% fails to acco+nt for some of his receipts! and A in conse3+ence calls +pon him to f+rnish sec+rity his d+ly acco+nting% gies his g+arantee for 2s d+ly acco+nting% A does not ac3+aint with 2s preio+s cond+ct% afterwards ma'es defa+lt% The g+arantee is inalid% A g+arantees to payment for iron to be s+pplied by him to to the amo+nt of $!888 tons% and hae priately agreed that sho+ld pay fie ,+pees per ton beyond the mar'et price! s+ch excess to be applied in li3+idation of an old debt% This agreement is concealed from A% A is not liable as a s+rety%
4$r$!tee o! #o!tr$#t th$t #re'itor %h$ll !ot $#t o! it !til #o%ret ;oi!%9 here a person gies a g+arantee +pon a contract that the creditor shall not act +pon it +ntil another person has 4oined in it as co-s+rety! the g+arantee is not alid if that other person does not 4oin% I"&lie' &ro"i%e to i!'e"!if %ret9 In eery contract of g+arantee there is an implied promise by the principal debtor to indemnify the s+rety; and the s+rety is entitled to recoer from the principal debtor whateer s+m he has rightf+lly paid +nder the g+arantee! b+t no s+ms which he has paid wrongf+lly% 'llustrations (a)
(b)
(c)
is indebted to ! and A is s+rety for the debt% demands payment from A! and on his ref+sal s+es him for the amo+nt% A defends the s+it! haing reasonable gro+nds for doing so! b+t is compelled to pay the amo+nt of the debt with costs% ?e can recoer from the amo+nt paid by him for costs! as well as the principal debt% lends a s+m of money! and A! at the re3+est of ! accepts a bill of exchange drawn by +pon A to sec+re the amo+nt% ! the holder of the bill! demands payment of it from A! and! on A2s ref+sal to pay! s+es him +pon the bill% A! not haing reasonable gro+nds for so doing! defends the s+it! and has to pay the amo+nt of the bill and costs% ?e can recoer from the amo+nt of the bill! b+t not the s+m paid for costs! as there was no real gro+nd for defending the action% A g+arantees to ! to the extent of $!888 ,+pees! payment for rice to be s+pplied by to % s+pplies to rice to a less amo+nt than $!888 ,+pees! b+t obtains from A payment of the s+m of $!888 ,+pees in respect of the rice s+pplied% A cannot recoer from more than the price of the rice act+ally s+pplied%
Co%retie% li$0le to #o!tri0te e<$ll9 here two or more persons are cos+reties for the same debt or d+ty! either 4ointly or seerally! and whether +nder the same or different contracts! and whether with or witho+t the 'nowledge of each other! the co-s+reties! in the absence of any contract to the contrary! are liable! as between themseles! to pay each an e3+al share of the whole debt! or of that part of it which remains +npaid by the principal debtor% 'llustrations (a)
A! and are s+reties to F for the s+m of 5!888 ,+pees lent to /% /
(b)
ma'es defa+lt in payment% A! and are liable! as between themseles! to pay 1!888 ,+pees each% A! and are s+reties to F for the s+m of 1!888 ,+pees lent to /! and there is a contract between A! and that A is to be responsible to the extent of one-3+arter! to the extent of one-3+arter and to the extent of one-half% / ma'es defa+lt in payment% As between the s+reties! A is liable to pay $68 ,+pees! $68 ,+pees and 688 ,+pees%
Li$0ilit of #o%retie% 0o!' i! 'iffere!t %"%9 o-s+reties who are bo+nd in different s+ms are liable to pay e3+ally as far as the limits of their respectie obligations permit% 'llustrations $(
$b(
$c(
A! and ! as s+reties for F! enter into three seeral bonds! each in a different penalty! namely! A in the penalty of 18!888 ,+pees! in that of $8!888 ,+pees! in that of 98!888 ,+pees! conditioned for F2s d+ly acco+nting to /% F ma'es defa+lt to the extent of 58!888 ,+pees% A! and are each liable to pay 18!888 ,+pees% A! and ! as s+reties for F! enter into three seeral bonds! each in a different penalty! namely! A in the penalty of 18!888 ,+pees! in that of $8!888 ,+pees! in that of 98!888 ,+pees! conditioned for F2s d+ly acco+nting to /%F ma'es defa+lt to the extent of 98!888 ,+pees% A is liable to pay 18!888 ,+pees! and and 16!888 ,+pees each% A! and ! as s+reties for F! enter into three seeral bonds! each in a different penalty! namely! A in the penalty of 18!888 ,+pees! in that of $8!888 ,+pees! in that of 98!888 ,+pees! conditioned for F2s d+ly acco+nting to /% F ma'es defa+lt to the extent of #8!888 ,+pees% A! and hae to pay each the f+ll penalty of his bond%
CHAPTER IX O* 3AILMENT ?19 63$il"e!t6, 60$ilor6, $!' 60$ilee6 'efi!e'9 A .bailment. is the deliery of goods by one person to another for some p+rpose! +pon a contract that they shall! when the p+rpose is accomplished! be ret+rned or otherwise disposed of according to the directions of the person deliering them% The person deliering the goods is called the .bailor.% The person to whom they are deliered is called the .bailee.% E&l$!$tio! 0 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 s+ch goods altho+gh they may not hae been deliered by way of bailment% eli.er to 0$ilee ho/ "$'e9 The deliery to the bailee may be made by doing anything which has the effect of p+tting the goods in the possession of the intended bailee or of any person a+thoriCed to hold them on his behalf% 3$ilor% 't to 'i%#lo%e f$lt% i! oo'% 0$ile'9 The bailor is bo+nd to disclose to the bailee fa+lts in the goods bailed! of which the bailor is aware! and which materially interfere with the +se of them! or expose the bailee to extraordinary ris's; and if he does not ma'e s+ch disclos+re! he is responsible for damage arising to the bailee directly from s+ch fa+lts% If the goods are bailed for hire! the bailor is responsible for s+ch damage! whether he was or was not aware of the existence of s+ch fa+lts in the goods bailed% 'llustrations
$(
$b(
A lends a horse! which he 'nows to be icio+s! to % ?e does not disclose the fact that the horse is icio+s% The horse r+ns away% is thrown and in4+red% A is responsible to for damage s+stained% A hires a carriage of % The carriage is +nsafe! tho+gh is not aware of it! and A is in4+red% is responsible to A for the in4+ry%
C$re to 0e t$:e! 0 0$ilee9 In all cases of bailment the bailee is bo+nd to ta'e as m+ch care of the goods bailed to him as a man of ordinary pr+dence wo+ld! +nder similar circ+mstances! ta'e of his own goods of the same b+l'! 3+ality and al+e as the goods bailed% 3$ilee /he! !ot li$0le for lo%%, et#, of thi! 0$ile'9 The bailee! in the absence of any special contract! is not responsible for the loss! destr+ction or deterioration of the thing bailed! if he has ta'en the amo+nt of care of it described in section 161% Ter"i!$tio! of 0$il"e!t 0 0$ileeB% $#t i!#o!%i%te!t /ith #o!'itio!%9 A contract of bailment is aoidable 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% 'llustration A lets to ! for hire! a horse for his own riding% dries the horse in his carriage% This is! at the option of A! a termination of the bailment%
Li$0ilit of 0$ilee "$:i! !$thori%e' %e of oo'% 0$ile'9 If the bailee ma'es any +se of the goods bailed! which is not according to the conditions of the bailment! he is liable to ma'e compensation to the bailor for any damage arising to the goods from or d+ring s+ch +se of them% 'llustrations (a)
(b)
A lends a horse to for his own riding only% allows ! a member of his family! to ride the horse% rides with care! b+t the horse accidentally falls and is in4+red% is liable to ma'e compensation to A for the in4+ry done to the horse% A hires a horse in Fha'a] from expressly to march to Tangail% A rides with d+e care! b+t marches to )arayangan4] instead% The horse accidentally falls and is in4+red% A is liable to ma'e compensation to for the in4+ry to the horse%
Effe#t of "itre, /ith 0$ilorB% #o!%e!t, of hi% oo'% /ith 0$ileeB%9 If the bailee! with the consent of the bailor! mixes the goods of the bailor with his own goods! the bailor and the bailee shall hae an interest! in proportion to their respectie shares! in the mixt+re th+s prod+ced% Effe#t of "itre, /ithot 0$ilorB% #o!%e!t, /he! the oo'% #$! 0e %e&$r$te'9 If the bailee! witho+t the consent of the bailor! mixes the goods of the bailor with his own goods! and the goods can be separated or diided! the property in the goods remains in the parties respectiely; b+t the bailee is bo+nd to bear the expense of separation or diision! and any damage arising from the mixt+re% 'llustration A bails 188 bales of cotton mar'ed with a partic+lar mar' to % ! witho+t A2s consent! mixes the 188 bales with other bales of his own! bearing a different mar'% A is entitled to hae his 188 bales ret+rned! and is bo+nd to bear all the expense inc+rred in the separation of the bales! and any other incidental damage%
Effe#t of "itre, /ithot 0$ilorB% #o!%e!t, /he! the oo'% #$!!ot 0e %e&$r$te'9 If the bailee! witho+t the consent of the bailor! mixes the goods of the bailor with his own goods! in s+ch a manner that it is impossible to separate the goods bailed from the other goods and delier them bac'! the bailor is entitled to be compensated by the bailee for the loss of the goods% 'llustration A bails a barrel of ape flo+r worth ,+pees 96 to % ! witho+t A2s consent! mixes the flo+r with co+ntry flo+r of his own! worth only ,+pees $6 a barrel% m+st compensate A for the loss of his flo+r%
Re&$"e!t 0 0$ilor of !e#e%%$r e&e!%e%9 here! by the conditions of the bailment! the goods are to be 'ept or to be carried! or to hae wor' done +pon them by the bailee for the bailor! and the bailee is to receie no rem+neration! the bailor shall repay to the bailee the necessary expenses inc+rred by him for the p+rpose of the bailment% Re%tor$tio! of oo'% le!t r$tito%l9 The lender of a thing for +se may at any time re3+ire its ret+rn! if the loan was grat+ito+s! een tho+gh he lent it for a specified time or p+rpose% +t! if! on the faith of s+ch loan made for a specified time or p+rpose! the borrower has acted in s+ch a manner that the ret+rn of the thing lent before the time agreed +pon wo+ld ca+se him loss exceeding the benefit act+ally deried by him from the loan! the lender m+st! if he compels the ret+rn! indemnify the borrower for the amo+nt in which the loss so occasioned exceeds the benefit so deried% Retr! of oo'% 0$ile' o! e&ir$tio! of ti"e or $##o"&li%h"e!t of &r&o%e9 It is the d+ty of the bailee to ret+rn! or delier according to the bailor2s direction! the goods bailed! witho+t demand! as soon as the time for which they were bailed has expired! or the p+rpose for which they were bailed has accomplished% 3$ileeB% re%&o!%i0ilit /he! oo'% $re !ot 'l retr!e'9 If! by the defa+lt of the bailee! the goods are not ret+rned! deliered or tendered at the proper time! he is responsible to the bailor for any loss! destr+ction or deterioration of the goods from that time% Ter"i!$tio! of r$tito% 0$il"e!t 0 'e$th9 A grat+ito+s bailment is terminated by the death either of the bailor or of the bailee% 3$ilor e!title' to i!#re$%e or &rofit fro" oo'% 0$ile'9 In the absence of any contract to the contrary! the bailee is bo+nd to delier to the bailor! or according to his directions! any increase or profit which may hae accr+ed from the goods bailed%
'llustration A leaes a cow in the c+stody of to be ta'en care of% The cow has a calf% is bo+nd to delier the calf as well as the cow to A%
3$ilorB% re%&o!%i0ilit to 0$ilee9 The bailor is responsible to the bailee for any loss which the bailee may s+stain by reason that the bailor was not entitled to ma'e the bailment! or to receie bac' the goods or to gie directions! respecting them% 3$il"e!t 0 %e.er$l ;oi!t o/!er%9 If seeral 4oint owners of goods bail them! the bailee may delier them bac' to! or according to the directions of! one 4oint owner
witho+t the consent of all! in the absence of any agreement to the contrary%
3$ilee !ot re%&o!%i0le o! re'eli.er to 0$ilor /ithot title9 If the bailor has no title to the goods! and the bailee! in good faith! deliers them bac' to! or according to the directions of! the bailor! the bailee is not responsible to the owner in respect of s+ch deliery% Riht of thir' &er%o! #l$i"i! oo'% 0$ile'9 If the person! other than the bailor! claims goods bailed! he may apply to the o+rt to stop the deliery of the goods to the bailor! and to decide the title to the goods% Riht of fi!'er of oo'%D "$ %e for %&e#ifi# re/$r' offere'9 The finder of goods has no right to s+e the owner for compensation for tro+ble and expense ol+ntarily inc+rred by him to presere the goods and to find o+t the owner; b+t he may retain the goods against the owner +ntil he receies s+ch compensation; and! where the owner has offered a specific reward for the ret+rn of goods lost! the finder may s+e for s+ch reward! and may retain the goods +ntil he receies it% 5he! fi!'er of thi! #o""o!l o! %$le "$ %ell it9 hen a thing which is commonly the s+b4ect of sale is lost! if the owner cannot with reasonable diligence be fo+nd! or if he ref+ses! +pon demand! to pay the lawf+l charges of the finder! the finder may sell it0 when the thing is in danger of perishing or of losing the greater part of its (1) al+e! or! when the lawf+l charges of the finder! in respect of the thing fo+nd! (2) amo+nt to two-thirds of its al+e% 3$ileeB% &$rti#l$r lie!9 here the bailee has! in accordance with the p+rpose of the bailment! rendered any serice inoling the exercise of labo+r or s'ill in respect of the goods bailed! he has! in the absence of a contract to the contrary! a right to retain s+ch goods +ntil he receies d+e rem+neration for the serices he has rendered in respect of them% 'llustrations (a)
(b)
A deliers a ro+gh diamond to ! A 4eweller! to be c+t and polished! which is accordingly done% is entitled to retain the stone till he is paid for the serices he has rendered% A gies cloth to ! a tailor! to ma'e into a coat% promises A to delier the coat as soon as it is finished! and to gie a three months2 credit for the price% is not entitled to retain the coat +ntil he is paid%
4e!er$l lie! of 0$!:er%, f$#tor%, /h$rfi!er%, $ttor!e% $!' &oli# 0ro:er%9 an'ers! factors! wharfingers! adocate of the (+preme o+rt] and policy-bro'ers may! in the absence of a contract to the contrary! retain! as a sec+rity for a general balance of acco+nt! any goods bailed to them; b+t no other persons hae a right to retain! as a sec+rity for s+ch balance! goods bailed to them! +nless there is an express contract to that effect% Bailments Of Pledges
6Ple'e6, 6P$/!or6 $!' 6P$/!ee6 'efi!e'9 The bailment of goods as sec+rity for payment of a debt or performance of a promise is called .pledge.% The bailor is in this case called the .pawnor.% The bailee is called the .pawnee.% P$/!eeB% riht of ret$i!er9 The pawnee may retain the goods pledged! not only for payment of the debt or the performance of the promise! b+t for the interest of the debt!
and all necessary expenses inc+rred by him in respect of the possession or for the preseration of the goods pledged%
P$/!ee !ot to ret$i! for 'e0t or &ro"i%e other th$! th$t for /hi#h oo'% &le'e' Pre%"&tio! i! #$%e of %0%e<e!t $'.$!#e%9 The pawnee shall not! in the absence of a contract to that effect retain the goods pledged for any debt or promise other than the debt or promise for which they are pledged; b+t s+ch contract! in the absence of anything to the contrary! shall be pres+med in regard to s+bse3+ent adances made by the pawnee% P$/!eeB% riht $% to etr$or'i!$r e&e!%e% i!#rre'9 The pawnee is entitled to receie from the pawnor extraordinary expenses inc+rred by him for the preseration of the goods pledged% P$/!ee% riht /here &$/!or "$:e% 'ef$lt9 If the pawnor ma'es defa+lt in payment of the debt! or performance! at the stip+lated time of the promise! in respect of which the goods were pledged! the pawnee may bring a s+it against the pawnor +pon the debt or promise! and retain the goods pledged as a collateral sec+rity; or he may sell the thing pledged! on giing the pawnor reasonable notice of the sale% If the proceeds of s+ch sale are less than the amo+nt d+e in respect of the debt or promise! the pawnor is still liable to pay the balance% If the proceeds of the sale are greater than the amo+nt so d+e! the pawnee shall pay oer the s+rpl+s to the pawnor%
ef$lti! &$/!orB% riht to re'ee"9 If a time is stip+lated for the payment of the debt! or performance of the promise! for which the pledge is made! and the pawnor ma'es defa+lt in payment of the debt or performance of the promise at the stip+lated time! he may redeem the goods pledged at any s+bse3+ent time before the act+al sale of them; b+t he m+st! in that case! pay! in addition! any expenses which hae arisen from his defa+lt% Ple'e 0 "er#$!tile $e!t9 here a mercantile agent is! with the consent of the owner! in possession of goods or the doc+ments of title to goods! any pledge made by him! when acting in the ordinary co+rse of b+siness of a mercantile agent! shall be as alid as if he were expressly a+thoriCed by the owner of the goods to ma'e the same; proided that the pawnee acts in good faith and has not at the time of the pledge notice that the pawnor has not a+thority to pledge% E&l$!$tio! 0 In this section! the expressions Kmercantile agent2 and Kdoc+ments of title2 shall hae the meanings assigned to them in the (al e of Hoods Act! 158% Ple'e 0 &er%o! i! &o%%e%%io! !'er .oi'$0le #o!tr$#t9 hen the pawnor has obtained possession of the goods pledged by him +nder a contract oidable +nder section 1 or section 1A! b+t the contract has not been rescinded at the time of the pledge! the pawnee ac3+ires a good title to the goods! proided he acts in good faith and witho+t notice of the pawnor2s defect of title%] Ple'e /here &$/!or h$% o!l $ li"ite' i!tere%t9 here a person pledges goods in which he has only a limited interest! the pledge is alid to the extent of that interest% uit by bailor or bailee against wrong!doer
Sit 0 0$ilor or 0$ilee $$i!%t /ro!'oer9 If a third person wrongf+lly depries the bailee of the +se or possession of the goods bailed! or does them any in4+ry! the baliee is entitled to +se s+ch remedies as the owner might hae +sed in the li'e case if no bailment had been made; and either the bailor or the bailee may bring a s+it against a third person for s+ch depriation or in4+ry%
A&&ortio!"e!t of relief or #o"&e!%$tio! o0t$i!e' 0 %#h %it%9 hateer is obtained by way of relief or compensation in any s+ch s+it shall! as between the bailor and the bailee! be dealt with according to their respectie interests% CHAPTER X A4ENCY Appointment and Authority of Agents 6Ae!t6 $!' 6&ri!#i&$l6 'efi!e'9 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 s+ch act is done! or who is so represented! is called the .principal.% 5ho "$ e"&lo $e!t9 Any person who is of the age of ma4ority according to the law to which he is s+b4ect! and who is of so+nd mind! may employ an agent% 5ho "$ 0e $! $e!t9 As between the principal and third persons any person may become an agent! b+t no person who is not of the age of ma4ority and of so+nd mind can become an agent! so as to be responsible to his principal according to the proisions in that behalf herein contained% Co!%i'er$tio! !ot !e#e%%$r9 )o consideration is necessary to create an agency% Ae!tB% $thorit "$ 0e e&re%%e' or i"&lie'9 The a+thority of an agent may be expressed or implied% efi!itio!% of e&re%% $!' i"&lie' $thorit9 An a+thority is said to be express when it is gien by words spo'en or written% An a+thority is said to be implied when it is to be inferred from the circ+mstances of the case; and things spo'en or written! or the ordinary co+rse of dealing! may be acco+nted circ+mstances of the case% 'llustrations A owns a shop in >ymensingh! liing himself in Fha'a! and isiting the shop occasionally% The shop is managed by ! and he is in the habit of ordering goods from in the name of A for the p+rposes of the shop! and of paying for them o+t of A2s f+nds with A2s 'nowledge% has an implied a+thority from A to order goods from in the name of A for the p+rposes of the shop%
Ete!t of $e!tB% $thorit9 An agent haing an a+thority to do an act has a+thority to do eery lawf+l thing which is necessary in order to do s+ch act% An agent haing an a+thority to carry on a b+siness has a+thority to do eery lawf+l thing necessary for the p+rpose! or +s+ally done in the co+rse of cond+cting s+ch b+siness% 'llustrations (a)
(b)
A is employed by ! residing in Bondon! to recoer at hittagong a debt d+e to % A may adopt any legal process necessary for the p+rpose of recoering the debt! and may gie a alid discharge for the same% A constit+tes his agent to carry on his b+siness of a ship-b+ilder% may p+rchase timber and other materials! and hire wor'men! for the p+rposes of carrying on the b+siness%
Ae!tB% $thorit i! $! e"ere!#9 An agent has a+thority! in an emergency! to do all s+ch acts for the p+rpose of protecting his principal from loss as wo+ld be done by a person of ordinary pr+dence! in his own case! +nder similar circ+mstances%
'llustrations (a) (b)
An agent for sale may hae goods repaired if it be necessary% A consigns proisions to at hittagong! with directions to send them immediately to at Fha'a% may sell the proisions at hittagong! if they will not bear the 4o+rney to Fha'a witho+t spoiling% ub!Agents
5he! $e!t #$!!ot 'ele$te9 An agent cannot lawf+lly employ another to perform acts which he has expressly or impliedly +nderta'en to perform personally! +nless by the ordinary c+stom of trade a s+b-agent may! or! from the nat+re of the agency! a s+bagent m+st! be employed% 6S0$e!t6 'efi!e'9 A .s+b-agent. is a person employed by! and acting +nder the control of! the original agent in the b+siness of the agency% Re&re%e!t$tio! of &ri!#i&$l 0 %0$e!t &ro&erl $&&oi!te'9 here a s+b-agent is properly appointed! the principal is! so far as regards third persons! represented by the s+b-agent! and is bo+nd by and responsible for his acts! as if he were an agent originally appointed by the principal% Ae!tB% re%&o!%i0ilit for %0$e!t9 The agent is responsible to the principal for the acts of the s+b-agent% S0$e!tB% re%&o!%i0ilit9 The s+b-agent is responsible for his acts to the agent! b+t not to the principal! except in case of fra+d or wilf+l wrong% Ae!tB% re%&o!%i0ilit for %0$e!t $&&oi!te' /ithot $thorit9 here an agent! witho+t haing a+thority to do so! has appointed a person to act as a s+b-agent! the agent stands towards s+ch 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% Rel$tio! 0et/ee! &ri!#i&$l $!' &er%o! 'l $&&oi!te' 0 $e!t to $#t i! 0%i!e%% of $e!#9 here an agent! holding an express or implied a+thority to name another person to act for the principal in the b+siness of the agency! has named another person accordingly! s+ch person is not a s+b-agent! b+t an agent of the principal for s+ch part of the b+siness of the agency as is entr+sted to him% (a)
(b)
A directs ! his solicitor! to sell his estate by a+ction! and to employ an a+ctioneer for the p+rpose% names ! an a+ctioneer! to cond+ct the sale% is not a s+b-agent! b+t is A2s agent for the cond+ct of the sale% A a+thoriCes ! a merchant in hittagong! to recoer the moneys d+e to A from L o% instr+cts F! a solicitor! to ta'e legal proceedings against L o% for the recoery of the money% F is not a s+b-agent! b+t is solicitor for A%
Ae!tB% 't i! !$"i! %#h &er%o!9 In selecting s+ch agent for his principal! an agent is bo+nd to exercise the same amo+nt of discretion as a man of ordinary pr+dence wo+ld 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% 'llustrations
(a)
(b)
A instr+cts ! a merchant! to b+y a ship for him% employs a ship s+reyor of good rep+tation to choose a ship for A% The s+reyor ma'es the choice negligently and the ship t+rns o+t to be +nseaworthy and is lost% is not! b+t the s+reyor is! responsible to A% A consigns goods to ! a merchant! for sale% in d+e co+rse! employs an a+ctioneer in good credit to sell the goods of A! and allows the a+ctioneer to receie the proceeds of the sale% The a+ctioneer afterwards becomes insolent witho+t haing acco+nted for the proceeds% is not responsible to A for the proceeds% Ratification
Riht of &er%o! $% to $#t% 'o!e for hi" /ithot hi% $thorit Effe#t of r$tifi#$tio!9 here acts are done by one person on behalf of another! b+t witho+t his 'nowledge or a+thority! he may elect to ratify or to disown s+ch acts% If he ratify them! the same effects will follow as if they had been performed by his a+thority% R$tifi#$tio! "$ 0e e&re%%e' or i"&lie'9 ,atification may be expressed or may be implied in the cond+ct of the person on whose behalf the acts are done% 'llustrations (a)
(b)
A! witho+t a+thority! b+ys goods for % Afterwards sells them to on his own acco+nt; 2s cond+ct implies a ratification of the p+rchase made for him by A% A! witho+t 2s a+thority! lends 2s money to % Afterwards accepts interest on the money from % 2s cond+ct implies a ratification of the loan%
!o/le'e re<i%ite for .$li' r$tifi#$tio!9 )o alid ratification can be made by a person whose 'nowledge of the facts of the case is materially defectie% Effe#t of r$tifi! !$thori=e' $#t for"i! &$rt of $ tr$!%$#tio!9 A person ratifying any +na+thoriCed act done on his behalf ratifies the whole of the transaction of which s+ch act formed a part% R$tifi#$tio! of !$thori=e' $#t #$!!ot i!;re thir' &er%o!9 An act done by one person on behalf of another! witho+t s+ch other person2s a+thority! which! if done with a+thority! wo+ld hae the effect of s+b4ecting a third person to damages! or of terminating any right or interest of a third person! cannot! by ratification! be made to hae s+ch effect% 'llustrations (a)
(b)
A! not being a+thoriCed thereto by ! demands! on behalf of ! the deliery of a chattle! the property of ! from ! who is in possession of it% This demand cannot be ratified by ! so as to ma'e liable for damages for his ref+sal to delier% A holds a lease from ! terminable on three months2 notice% ! an +na+thoriCed person! gies notice of termination to A% The notice cannot be ratified by ! so as to be binding on A% Re"ocation of Authority
Ter"i!$tio! of $e!#9 An agency is terminated by the principal reo'ing his a+thority; or by the agent reno+ncing the b+siness of the agency; or by the b+siness of the agency being completed; or by either the principal or agent dying or becoming of +nso+nd mind; or by the principal being ad4+dicated an insolent +nder
the proisions of any Act for the time being in force for the relief of insolent debtors%
Ter"i!$tio! of $e!# /here $e!t h$% $! i!tere%t i! %0;e#t"$tter9 here the agent has himself an interest in the property which forms the s+b4ect-matter of the agency! the agency cannot! in the absence of an express contract! be terminated to the pre4+dice of s+ch interest% illustrations (a)
(b)
A gies a+thority to to sell A2s land! and to pay himself! o+t of the proceeds! the debts d+e to him from A% A cannot reo'e this a+thority nor can it be terminated by his insanity or death% A consigns 1!888 bales of cotton to ! who has made adances to him on s+ch cotton! and desires to sell the cotton! and to repay himself! o+t of the price! the amo+nt of his own adances% A cannot reo'e this a+thority! nor is it terminated by his insanity or death%
5he! &ri!#i&$l "$ re.o:e $e!tB% $thorit9 The principal may! sae as is otherwise proided by the last preceding section! reo'e the a+thority gien to his agent at any time before the a+thority has been exercised so as to bind the principal% Re.o#$tio! /here $thorit h$% 0ee! &$rtl eer#i%e'9 The principal cannot reo'e the a+thority gien to his agent after the a+thority has been partly exercised so far as regards s+ch acts and obligations as arise from acts already done in the agency% 'llustrations (a)
(b)
A a+thoriCes to b+y 1!888 bales of cotton on acco+nt of A! and to pay for it o+t of A2s money remaining in 2s hands% b+ys 1!888 bales of cotton in his own name! so as to ma'e himself personally liable for the price% A cannot reo'e 2s a+thority so far as regards payment for the cotton% A a+thoriCes to b+y 1!888 bales of cotton on acco+nt of A! and to pay for it o+t of A2s money remaining in 2s hands% b+ys 1!888 bales of cotton in A2s name and so as not to render himself personally liable for the price% A can reo'e 2s a+thority to pay for the cotton%
Co"&e!%$tio! for re.o#$tio! 0 &ri!#i&$l or re!!#i$tio! 0 $e!t9 here there is an express or implied contract that the agency sho+ld be contin+ed for any period of time! the principal m+st ma'e compensation to the agent! or the agent to the principal! as the case may be! for any preio+s reocation or ren+nciation of the agency witho+t s+fficient ca+se% Noti#e of re.o#$tio! or re!!#i$tio!9 ,easonable notice m+st be gien of s+ch reocation or ren+nciation; otherwise the damage thereby res+lting to the principal or the agent! as the case may be! m+st be made good to the one by the other% Re.o#$tio! $!' re!!#i$tio! "$ 0e e&re%%e' or i"&lie'9 ,eocation and ren+nciation may be expressed or may be implied in the cond+ct of the principal or agent respectiely% 'llustrations A empowers to let A2s ho+se% Afterwards A lets it himself% This is an implied reocation of 2s a+thority%
5he! ter"i!$tio! of $e!tB% $thorit t$:e% effe#t $% to $e!t, $!' $% to thir' &er%o!%9 The termination of the a+thority of an agent does not! so far as regards the agent! ta'e effect before it becomes 'nown to him! or! so far as regards third persons! before it becomes 'nown to them% 'llustrations (a)
(b)
(c)
A directs to sell goods for him! and agrees to gie fie per cent% commission on the price fetched by the goods% A afterwards! by letter! reo'es 2s a+thority% ! after the letter is sent! b+t before he receies it! sells the goods for 188 ,+pees% The sale is binding on A! and is entitled to fie ,+pees as his commission% A! at 1 9 [M+etta]! by letter! directs to sell from him some cotton lying in a wareho+se in 16[arachi]! and afterwards! by letter! reo'es his a+thority to sell! and directs to send the cotton to Fha'a% ! after receiing the second letter! enters into a contract with ! who 'nows of the first letter! b+t not of the second! for the sale to him of the cotton% pays the money! with which absconds% 2s payment is good as against A% A directs ! his agent! to pay certain money to % A dies! and F ta'es o+t probate to his will% ! after A2s death! b+t before hearing of it! pays the money to % The payment is good as against F! the exec+tor%
Ae!tB% 't o! ter"i!$tio! of $e!# 0 &ri!#i&$lB% 'e$th or i!%$!it9 hen an agency is terminated by the principal dying or becoming of +nso+nd mind! the agent is bo+nd to ta'e! on behalf of the representaties of his late principal! all reasonable steps for the protection and preseration of the interests entr+sted to him% Ter"i!$tio! of %0$e!tB% $thorit9 The termination of the a+thority of an agent ca+ses the termination s+b4ect to the r+les herein contained regarding the termination of an agent2s a+thority< of the a+thority of all s+b-agents appointed by him% Agent#s $uty to Principal
Ae!tB% 't i! #o!'#ti! &ri!#i&$lB% 0%i!e%%9 An agent is bo+nd to cond+ct the b+siness of his principal according to the directions gien by the principal! or! in the absence of any s+ch directions! according to the c+stom which preails in doing b+siness of the same 'ind at the place where the agent cond+cts s+ch b+siness% hen the agent acts otherwise! if any loss be s+stained! he m+st ma'e it good to his principal! and! if any profit accr+es! he m+st acco+nt for it% 'llustrations (a)
(b)
A! an agent engaged in carrying on for a b+siness! in which it is the c+stom to inest from time to time! at interest! the moneys which may be in hand! omits to ma'e s+ch inestment% A m+st ma'e good to the interest +s+ally obtained by s+ch inestments% ! a bro'er! in whose b+siness it is not the c+stom to sell on credit! sells goods of A on credit to ! whose credit at the time was ery high% ! before payment! becomes insolent% m+st ma'e good the loss to A%
S:ill $!' 'ilie!#e re<ire' fro" $e!t9 An agent is bo+nd to cond+ct the b+siness of the agency with as m+ch s'ill as is generally possessed by persons engaged in similar b+siness! +nless the principal has notice of his want of s'ill% The agent is 14
Subs. by the eder! "#s $%e,isi'n nd ec!rti'n( Ordinnce) 1981 $27 '& 1981() s. 3 nd 2 nd Sch.) &'r *cc/ #hich #s subs. by the Centr! "#s $Sttus %e&'rm( Ordinnce) 1960 $21 '& 1960() s. 3 nd 2 nd sch.) &'r *drs/ $#ith e&&ect &r'm the 14th Oct'ber) 1955( 15 Subs. by Ord. 21 '& 1960) s. 3 nd 2 nd Sch.) &'r *B'mby/ $#ith e&&ect &r'm the 14 th Oct'ber) 1955(
always bo+nd to act with reasonable diligence! and to +se s+ch s'ill as he possesses; and to ma'e compensation to his principal in respect of the direct conse3+ences of his own neglect! want of s'ill or miscond+ct! b+t not in respect of loss or damage which are indirectly or remotely ca+sed by s+ch neglect! want of s'ill or miscond+ct% 'llustrations (a)
(b)
(c)
(d)
A! a merchant in hittagong has an agent! ! in Bondon to whom a s+m of money is paid on A2s acco+nt! with orders to remit% retains the money for a considerable time% A! in conse3+ence of not receiing the money! becomes insolent% is liable for the money and interest from the day on which it o+ght Nto hae been paid! according to the +s+al rate! and for any f+rther direct loss--- as e%g%! by ariation of rate of exchange--- b+t not f+rther% A! an agent for the sale of goods! haing a+thority to sell on credit! sells to on credit! witho+t ma'ing the proper and +s+al en3+iries as to the solency of % ! at the time of s+ch sale! is insolent% A m+st ma'e compensation to hi s principal in respect of any loss thereby s+stained% A! an ins+rance-bro'er employed by to effect an ins+rance on a ship! omits to see that the +s+al cla+ses are inserted in the policy% The ship is afterwards lost% In conse3+ence of the omission of the cla+ses nothing can be recoered from the +nderwriters% A is bo+nd to ma'e good the loss to % A! a merchant in /ngland! directs ! his agent at hittagong! who accepts the agency! to send him 188 bales of cotton by a certain ship% ! haing it in his power to send the cotton! omits to do so% The ship arries safely in /ngland% (oon after her arrial the price of cotton rises% is bo+nd to ma'e good to A the profit which he might hae made by the 188 bales of cotton at the time the ship arried! b+t not any profit he might hae made by the s+bse3+ent rise%
Ae!tB% $##o!t%9 An agent is bo+nd to render proper acco+nts to his principal on demand% ?29 Ae!t% 't to #o""!i#$te /ith &ri!#i&le9 It is the d+ty of agent! in cases of diffic+lty! to +se all reasonable diligence in comm+nication with his principle! and in see'ing to obtain his instr+ction% Riht of &ri!#i&$l /he! $e!t 'e$l%, o! hi% o/! $##o!t, i! 0%i!e%% of $e!# /ithot &ri!#i&$lB% #o!%e!t9 If an agent deals on his own acco+nt in the b+siness of the agency! witho+t first obtaining the consent of his principal and ac3+ainting him with all material circ+mstances which hae come to his own 'nowledge on the s+b4ect! the principal may rep+diate the transaction! if the case shows either that any material fact has been dishonestly concealed from him by the agent! or that the dealings of the agent hae been disadantageo+s to him% 'llustrations (a)
(b)
A directs to sell A2s estate% b+ys the estate for himself in the name of % A! on discoering that has bo+ght the estate for himself! may rep+diate the sale! if he can show that has dishonestly concealed any material fact! or that the sale has been disadantageo+s to him% A directs to sell A2s estate% ! on loo'ing oer the estate before selling it! finds a mine on the estate which is +n'nown to A% informs A that he wishes to b+y the estate for himself! b+t conceals the discoery of the mine% A allows to b+y in ignorance of the existence of the mine% A! on discoering that 'new of the mine at the time he bo+ght the estate!
may either rep+diate or adopt the sale at his option%
Pri!#i&$lB% riht to 0e!efit $i!e' 0 $e!t 'e$li! o! hi% o/! $##o!t i! 0%i!e%% of $e!#9 If an agent! witho+t the 'nowledge of his principal! deals in the b+siness of the agency on his own acco+nt instead of on acco+nt of his principal! the principal is entitled to claim from the agent any benefit which may hae res+lted to him from the transaction% 'llustrations A directs ! his agent! to b+y a certain ho+se for him% tells A it cannot be bo+ght! and b+ys the ho+se for himself% A may! on discoering that has bo+ght the ho+se! compel him to sell it to A at the price he gae for it%
Ae!tB% riht of ret$i!er ot of %"% re#ei.e' o! &ri!#i&$lB% $##o!t9 An agent may retain! o+t of any s+ms receied on acco+nt of the principal in the b+siness of the agency! all moneys d+e to himself in respect of adances made or expenses properly inc+rred by him in cond+cting s+ch b+siness! and also s+ch rem+neration as may be payable to him for acting as agent% Ae!tB% 't to &$ %"% re#ei.e' for &ri!#i&$l9 (+b4ect to s+ch ded+ctions! the agent is bo+nd to pay to his principal all s+ms receied on his acco+nt% 5he! $e!tB% re"!er$tio! 0e#o"e% 'e9 In the absence of any special contract! payment for the performance of any act is not d+e to the agent +ntil the completion of s+ch act; b+t an agent may detain moneys receied by him on acco+nt of goods sold! altho+gh the whole of the goods consigned to him for sale may not hae been sold! or altho+gh the sale may not be act+ally complete% Ae!t !ot e!title' to re"!er$tio! for 0%i!e%% "i%#o!'#te'9 An agent who is g+ilty of miscond+ct in the b+siness of the agency is not entitled to any rem+neration in respect of that part of the b+siness which he has miscond+cted% 'llustrations (a)
(b)
A employs to recoer 1!88!888 ,+pees from ! and to lay it o+t on good sec+rity% recoers the 1!88!888 ,+pees and lays o+t 8!888 ,+pees on good sec+rity! b+t lays o+t 18!888 ,+pees on sec+rity which he o+ght to hae 'nown to be bad! whereby A loses $!888 ,+pees% is entitled to rem+neration for recoering the 1!88!888 ,+pees and for inesting the 8!888 ,+pees% ?e is not entitled to any rem+neration for inesting the 18!888 ,+pees! and he m+st ma'e good the $!888 ,+pees to % A employs to recoer 1!888 ,+pees from % Thro+gh 2s miscond+ct the money is not recoered% is entitled to no rem+neration for his serices! and m+st ma'e good the loss%
Ae!tB% lie! o! &ri!#i&$lB% &ro&ert9 In the absence of any contract to the contrary! an agent is entitled to retain goods! papers and other property! whether moeable or immoeable! of the principal receied by him! +ntil the amo+nt d+e to himself for commission! disb+rsements and serices in respect of the same has been paid or acco+nted for to him% Principal%s $uty to Agent
Ae!t to 0e i!'e"!ifie' $$i!%t #o!%e<e!#e% of l$/fl $#t%9 The employer of an agent is bo+nd to indemnify him against the conse3+ences of all lawf+l acts done by
s+ch agent in exercise of the a+thority conferred +pon him% 'llustrations (a)
! at (ingap+r! +nder instr+ctions from A of hittagong! contracts with to delier certain goods to him% A does not send the goods to ! and s+es for breach of contract% informs A of the s+it! and A a+thoriCes him to defend the s+it% defends the s+it! and is compelled to pay damages and costs! and inc+rs expenses% A is liable to for s+ch damages! costs and expenses%
(b)
! a bro'er at hittagong! by the orders of A! a merchant there contracts with for the p+rchases of 18 cas's of oil for A% Afterwards A ref+ses to receie the oil! and s+es % informs A! who rep+diates the contract altogether% defends! b+t +ns+ccessf+lly! and has to pay damages and costs and inc+rs expenses% A is liable to for s+ch damages! costs and expenses%
Ae!t to 0e i!'e"!ifie' $$i!%t #o!%e<e!#e% of $#t% 'o!e i! oo' f$ith9 here 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 conse3+ences of that act! tho+gh it ca+se an in4+ry to the rights of third persons% 'llustrations (a)
(b)
A! a decree-holder and entitled to exec+tion of 2s goods! re3+ires the officer of the o+rt to seiCe certain goods! representing them to be the goods of % The officer seiCes the goods! and is s+ed by ! the tr+e owner of the goods% A is liable to indemnify the officer for the s+m which he is compelled to pay to ! in conse3+ence of obeying A2s directions% ! at the re3+est of A! sells goods in the possession of A! b+t which A had no right to dispose of% does not 'now this! and hands oer the proceeds of the sale to A% Afterwards ! the tr+e owner of the goods! s+es and recoers the al+e of the goods and costs% A is liable to indemnify for what he has been compelled to pay to and for 2s own expenses%
No!li$0ilit of e"&loer of $e!t to 'o $ #ri"i!$l $#t9 here one person employs another to do an act which is criminal! the employer is not liable to the agent! either +pon an express or an implied promise! to indemnify him against the conse3+ences of that Act% 'llustrations (a)
(b)
A employs to beat ! and agrees to indemnify him against all conse3+ences of act% there+pon beats ! and has to pay damages to for so doing% A is not liable to indemnify for those damages% ! the proprietor of a newspaper! p+blishes! at A2s re3+est! liable +pon in the paper! and A agrees to indemnify against the conse3+ences of the p+blication! and all costs and damages of any action in respect thereof% is s+ed by and has to pay damages! and also inc+rs expenses% A is not liable to +pon the indemnity%
Co"&e!%$tio! to $e!t for i!;r #$%e' 0 &ri!#i&$lB% !ele#t9 The principal m+st ma'e compensation to his agent in respect of in4+ry ca+sed to s+ch agent by the principal2s neglect or want of s'ill%
'llustration A employs as a bric'layer in b+ilding a ho+se! and p+ts +p the scaffolding himself% The scaffolding is +ns'ilf+lly p+t +p! and is in conse3+ence h+rt% A m+st ma'e compensation to % &ffect of agency on contract with third persons
E!for#e"e!t $!' #o!%e<e!#e% of $e!tB% #o!tr$#t%9 ontracts entered into thro+gh an agent! and obligations arising from acts done by an agent! may be enforced in the same manner! and will hae the same legal conse3+ences! as if the contracts had been entered into and the acts done by the principal in person% 'llustrations (a)
(b)
A b+ys goods from ! 'nowing that he is an agent for their sale! b+t not 'nowing who is the principal% 2s principal is the person entitled to claim from A the price of the goods! and A cannot! in a s+it by the principal! set off against that claim a debt d+e to himself from % A! being 2s agent with a+thority to receie money on his behalf! receies from a s+m of money d+e to % is discharged of his obligation to pay the s+m in 3+estion to %
Pri!#i&$l ho/ f$r 0o!', /he! $e!t e#ee'% $thorit9 hen an agent does more than he is a+thoriCed to do! and when the part of what he does! which is within his a+thority! can be separated from the part which is beyond his a+thority! so m+ch only of what he does as is within his a+thority is binding as between him and his principal% 'llustrations A! being owner of a ship and cargo! a+thoriCes to proc+re an ins+rance for 9!888 ,+pees on the ship% proc+res a policy for 9!888 ,+pees on the ship! and another for the li'e s+m on the cargo% A is bo+nd to pay the premi+m for the policy on the ship! b+t not the premi+m for the policy on the cargo%
Pri!#i&$l !ot 0o!' /he! e#e%% of $e!tB% $thorit i% !ot %e&$r$0le9 here an agent does more than he is a+thoriCed to do! and what does beyond the scope of his a+thority cannot be separated from what is within it! the principal is not bo+nd to recogniCe the transaction% 'llustrations A a+thoriCes to b+y 688 sheep for him% b+ys 688 sheep and $88 lambs for one s+m of 7!888 ,+pees% A may rep+diate the whole transaction%
Co!%e<e!#e% of !oti#e i.e! to $e!t9 Any notice gien to or information obtained by the agent! proided it be gien or obtained in the co+rse of the b+siness transacted by him for the principal! shall! as between the principal and third parties! hae the same legal conse3+ences as if it had been gien to or obtained by the principal% 'llustrations (a)
A is employed by to b+y from certain goods! of which is the apparent owner! and b+ys them accordingly% In the co+rse of the treaty for the sale! A learns that the goods really belonged to F! b+t is
(b)
ignorant of that fact! is not entitled to set off a debt owing to him from against the price of the goods% A is employed by to b+y from goods of which is the apparent owner% A was! before he was so employed! a serant of ! and then learnt that goods really belonged to F! b+t is ignorant of that fact% In spite of the 'nowledge of his agent! may set off against the price of the goods a debt owing to him from %
Ae!t #$!!ot &er%o!$ll e!for#e, !or 0e 0o!' 0, #o!tr$#t% o! 0eh$lf of &ri!#i&$l9 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 bo+nd by them% Pre%"&tio! of #o!tr$#t to #o!tr$r9 (+ch a contract shall be pres+med to exist in the following cases:0 (1) (2) (3)
where the contract is made by an agent for the sale or p+rchase of goods for a merchant resident abroad: where the agent does not disclose the name of his principal: where the principal! tho+gh disclosed! cannot be s+ed%
Riht% of &$rtie% to $ #o!tr$#t "$'e 0 $e!t !ot 'i%#lo%e'9 If an agent ma'es a contract with a person who neither 'nows! nor has reason to s+spect! that he is an agent! his principal may re3+ire the performance of the contract; b+t the other contracting party has! as against the principal! the same rights as he wo+ld hae had as against the agent if the agent had been principal% If the principal discloses himself before the contract is completed! the other contracting party may ref+se to f+lfil the contract! if he can show that! if he had 'nown who was the principal in the contract! or if he had 'nown that the agent was not a principal! he wo+ld not hae entered into the contract%
Perfor"$!#e of #o!tr$#t /ith $e!t %&&o%e' to 0e &ri!#i&$l9 here one man ma'es a contract with another! neither 'nowing nor haing reasonable gro+nd to s+spect that the other is an agent! the principal! if he re3+ires the performance of the contract! can only obtain s+ch performance s+b4ect to the rights and obligations s+bsisting between the agent and the other party to the contract% 'llustrations A! who owes 688 ,+pees to ! sells 1!888 ,+pees worth of rice to % A is acting as agent for in the transaction! b+t has no 'nowledge nor reasonable gro+nd of s+spicion that s+ch is the case% cannot compel to ta'e the rice witho+t allowing him to set off A2s debt%
Riht of &er%o! 'e$li! /ith $e!t &er%o!$ll li$0le9 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% 'llustrations A enters into a contract with to sell him 188 bales of cotton! and afterwards discoers that was acting as agent for % A may s+e either or ! or both! for the price of the cotton%
Co!%e<e!#e of i!'#i! $e!t or &ri!#i&$l to $#t o! 0elief th$t &ri!#i&$l or $e!t /ill 0e hel' e#l%i.el li$0le9 hen a person who has made a contract with an agent ind+ces the agent to act +pon the belief that the principal only will be held
