Q. Contact of guarantee and indemnity. explain the main Q what is bailment?

at is bailment? discuss the rights and duties of a Billi and Q What agency? Meaning of agent and principal. Discuss rights
feature and distinguished and rights ? belar under the bailment? and duties of an agent towards and termination of agency?
Ans:- definition of guarantee Section 126 defines the term Ans:-Definition of builment:-Section 148 of the contract Act Ans:-An agency is a business which provides a service on behalf
contract of guarantee in the following words, defines Baitment in the fallowing words: of other businesses. We had to hire maids through an agency.
" a contract of guarantee is a contract to perform the promise "A bamitenent is the delivering of goods by person, another for ... a successful advertising agency.
,or research the liability, of third person in case of his default." some purpose upon a contract they shall, when the purpose is * Definition of Agent & Principal:-
A guarantee maybe other oral or written. the person who accomplished be returned or otherwise disposed of mccording [Link] agent is a person employed to do any act for another or to
give the guarantees is called the "surety." The person in respect to the. -directions of the person delivering them. represent another in dealings with third persons.
of whole default the guarantee is given is called the principle [Link] person for whom such acts are done or who is
debtor. the person to whom the guarantee is given is called the * Duties of Bailor- represented is called the principal.
creditor. • The various duties of bailor are as follows- [Link] contract which creates relationship of principal & agent is
a) Duties to disclose defects, Sec 151 called an agency.
* The main features of the contract of guarantee as follows as:- b) Duty to bear expenses, Sec 158
1) Principal debt:- for contract of guarantee the c) Duty to indemnify the Bailee in case of premature * Right of agent:-
essential requirement is that there must be a principal debt termination of gratuitous bailment, Sec 159 1) Rights to remuneration (sec.219):- an agent is Intel to get a
there cannot be principal-debtor and consequently there can d) Duty to indemnify the Bailee against the defective title of the grid reuniation from his principal. In case of absence of any
be no contract of guarantee. Bailor, Sec 164 agreement, the agent will be Intel to get responsible
2)Consideration:- In a contact of guarantee, acc to sec. 127 e) Duty to receive back the Goods, Sec 164 remuneration.
"anything done or any promise made for the benefit of the f) Duty to bear the risk of loss, Sec 152. 2) Right to retain sums(sec.217):- the agent has a duty to pay to
principal - debtor may be a sufficient consideration to the his principal all sums recent on principles account. But he has
surety for giving the guarantee. * duties of Bailee:- also the principal in the business of the agency all money due to
3)No misrepresentations:- a contract of guarantee is not a 1. Care of Goods :-It is the duty of the bailee that he should take himself in respect of adventures mode or expenses property in
contract of "Luberrime fider" or one of absolute good Faith. as much care of the goods as a man of ordinary prudence takes crude by him in conducting.
4)Escentials of vaild contract :- At a contract of indemnity, the care about his own goods. 3) Right to lien on principal property (sec.221):- according to
contract of guarantee must also satisfy all the essentials 2. Act According the Bailment:-Any act of the bailee should not Section 221 in the absence of any contract to the country, and
elements of a valid contact like considerations, competency, of be against the conditions of the contract. agent is Intel to return goods, papers, and other property,
parties, free consent and lawful object. 3. Mixing is not allowed:-It is the duty of the bailee that he weather mobile or emovable of the principal receipt by him
5)Writing not necessary: - Ace to See 126 of of the Indian should keep the bailor goods separate from his own goods. until the amount due to himself for composition.
contract Act, the guarantee may be then oral or written. 4. Should Not Deny the Title:-It is the duty of the bailee that he
* difference between Guarantee and Indemity should not deny or change the title of the bailor about the * duties of agent:-
1) there are there parties in guarantee, a principal debtor, a ownership of goods. 1) Duty not to delegate his authority.
creditor and a surety. but, in Indemnity only two parties are 2)Duty to protect and preserve the interest.
necessary, immediter and immediated. * Rights of Bailee:- 3)Duty to execute the mandate.
2) a contract of guarantee is entered into for the Shirdi of the Bailee has right of indemnity, for making involvement in 4)Duty to act with care and skill.
creditors. but in case implemented it is insert into for the bailment Contract, bailer can make bailee answerable. • Bailee 5)Duty to render proper account.
reimbursement of loss only. has right of lien. It is only particular lien. That means he can 6)Duty to communicate with the principal.
3) a contract of guarantee is only a course essential contract the exercise right of lien against those goods only on which amount 7)Duty not to deal on his account.
original contact is between the creditor and the debtor but in it is due.
is an original and direct contact between indemnifior and • Bailee can return the goods to any one of the joint owners. * agency may be terminated as follows as:-
indemnified. • In times of need Bailee has right to approach Court of law. 1) termination by act of parties such as:-
4) in a contract of guarantee guarantors liability is secondary. a) agreement, b) by revocation,c) revocation by the agent.
consequently it principal debtor is not liable also be not live * RIGHTS OF BAILOR : 2) termination by operation of law sauces follow:-
liable, but a contract of intimentary primary liability for 1. Right to the enforcement of Performance: When the bailor a) competition of the business of agency.
indemnifirs . sends the goods to the baillee for a particular purpose, and in b) expiry of time
the instance of no gratuitous ballent. c) death or insanity of the principal or the agent.
* Rights of surety:- 2. Right to Demand For Damages: Balo has the right to demand d) Insolvency of the principal.
1) Rights of subrogation ( sec. 140 provides ) damages against the goods if they are caused by builee e) Distraction of the subject metter.
2) right to indemnity ( sec.145 ) carelessness. f) principal or agent sccoming alien enemy.
3) Rights against co-sureties to contribute equally ( sec 146) 3. Return of Goods (section 159): When the goods are delivered
4) sueritys rights to benifit of creditors security . under the agreement of balment under section 159.
4. Compensation from wrong Doer (section 180):
If a third person damages the goods both beilor and baile have
the right of deprives the right of the ballee to use goods.
[Link] contact of sale? Essential of valid contact and Rights Q Define partnership & essential of partnership? Distinguish Q. CONDITION & WARRANTY:-Condition:The Sale of Goods Act
and duties of seller and buyer? between partnership and company & co- ownership? rights & 1930 provides the definition for a Condition as "A condition is a
duties of partner.? stipulation essential to the main purpose of the contract, the
Ans:-Introduction:-Contract of Sale breach of which gives rise to a right to treat the contract as
Section 4 (1) of the Sale of Goods Act, 1930 defines the term as Ans:- Introduction:- A partnership is a relationship where two or repudiated"
a contract of sale of goods is a contract whereby the seller more parties, having compatible goals, form an agreement to ______Warranty:"A warranty is a stipulation collateral to the
transfers or agrees to transfer the property in goods to the share the work, share the risk and share the results or main purpose of the contract, the breach of which gives rise to
buyer for a price. proceeds. a claim for damages but not to a right to reject the goods and
treat the contract as repudiated".
ESSENTIAL OF VALID CONTACT:- * Essential of partnership:-
1) Agreement:- according to Section 4 the first Essential Q. RIGHTS OF INDEMNITY HOLDER.:-
1) Two parties __ a seller and buyer:- For constituting a sale elements of partnership is agreement. Section 4 makes it clear Ans:-Section 125 states rights ---
there must be at least two parties __ a seller and buyer and that partnership is a relation between person who have agreed 1. Claim for damages.-SEC 125(1)
they must be different persons for a person can not buy his to share profits. 2. Claim for cost of suit.-sec125(2)
own goods . 2) Business:- the second Essential elements of partnership is 3. Recovery of sums paid under conditions of compromise.-
2) Goods__ the subject metter of the contract:- At it is obvious business because without business their can be no partnership. sec125(3)
from the definition of the contract of sele, the subject matter of according to section 2 (1) business includes every trade,
the contract of sale must always be goods. occupation and profession. Q. Caveat emptor.
3) Agreement:-To constitution a transaction of sale there 3) Sharing of profits:- another Essential elements of partnership Ans:-Caveat emptor is a Latin phrase that translates to "let the
should be an agreement express or implied, relating to goods to is sharing of profits of a business. If two or more persons agree buyer beware." It means that an individual buys at their own
be completed by passing of tittle in those goods. to carry on a business but their objective or motive is not to risk. Potential buyers are warned by the phrase to do their
4) Transfer of property:- One of the most essential elements of share profits. research and ask pointed questions of the seller.
a contract of sale is the transfer of the property in goods to the 4) Mutual agency:- if two or more persons agree to carry on a
buyer. Indeed, it is the essence of a contract of sale. business to share profits, it is still possible that the partnership Q. Unpaid seller.
5) Money consideration:--Another essential in the contract of may not come into existence. Ans:- A contract comprises of reciprocal promises. In a contract
sale is money consideration. The consideration for sale of goods of sale, if seller is under an obligation to deliver goods, buyer
must be money i.e price. *PARTNERSHIP &CO-OWNERSHIP has to pay for it. In case buyer fails or refuses to pay, the seller,
1) It arises from an agreement. as an unpaid seller, shall have certain rights
1) It arises from agreement or operation of law.
SELLER RIGHTS:- 2) It is formed to carry on business. Q. Disadvantage of limited liability partnership.
1) Right to reserve disposal of goods (sec. 25) 2) It may or may not involve carrying on a business. Ans:-Disadvantages of LLP:-
2) right to assume buyers acceptance. 3) It involves profit or loss. 1)Any act of a partner without the other partner may bind the
3) right to delivery goods upon buyers application {sec. 35 of 3) It may or may not involve profit or loss. LLP.
the seller of goods act 1930} 4) Partners have a mutual agency relationship. 2) LLP cannot raise money from public.
4) right to deliver goods in installment( sec.39(1)) 4) Co-owners do not have a mutual agency relationship. 3)Angel investors and venture capital firms generally prefer not
5) right to exercise lien retain possession (sec.47(1) umm 5) Maximum partners can be 50. to invest in LLP.
6) right to stop goods in transit {sec.49(2) and 50} sweet transfor
7) right to sue for price ( sec 55) 5) No such limit is applicable here. Q. Factor
6) A co-owner can transfer his. Ans:-An intermediary agent that provides cash or financing to
SELLER DUTIES:- companies by purchasing their accounts receivables.
1) duty to arrange for Transfer of Property. * COMPANY & PARTNERSHIP
2) duty to deliver goods as per contract terms (section 31) 1)A company is regulated and controlled by Companies Act. Que:- write the salient features of the LLP Act 2008.
3) duty to deliver goods in a timely (section 36(2) and (4) 1)A partnership is regulated by Partnership Act, 1932. Ans- A limited liability partnership or LLP is an alternative
4) duty to bar experiences of delivery (section 36(5) corporate business from which offers the benefits of limited
5) duty to deliver a agreed quantity (section 37(1) 2)Company should be compulsorily registered under the liability to the partners at low compliance [Link] also allows
6) duty to deliver goods in installments per buyer desire( sec Companies Act. the partners to organize their internal structure like a
38(1) 2)Registration of partnership firm is not compulsory. traditional partnership.
7) duty to arrange for insurance during transmission ( sec 39(2)
3)A member of a company can enter into a contract with the The salient features of LLP Act ,2008 , started as follows -
BUYER RIGHTS:- same company. 1) It is a body corporate with separate legal entity from its
1) right to delivery of goods as per contract (sec31 &32) 3)A partner of a firm cannot enter into contract with the same [Link] mutual rights and duties of the partner of an LLP
2) right to reject non- conforming goods( sec.37) partnership firm. are governed by LLP Agreement.
3) right to be inform and arrange for insurance (sec39(3) 2) LLP is Liable to the extent of its [Link]'s liability is
4) right to sue for price recovery. 4)Shares of a company are freely transferable unless restricted limited to the extent of agreed contribution (capital) in the LLP
5) right to sue for demage for non delivery. by the Articles. agreement.
4)A partner cannot transfer his share without the consent of all 3) No partner is liable on account of the independent or
BUYER DUTIES:- other partners. unauthorised action of other partners or for their misconduct.
1) duty to pay the price for possession. 4) Every LLP should have at least two partners with at least two
2) duty to apply for delivery.(sec35) 5)The accounts of a company should be audited by a qualified individuals as "designated partners" of whom at least one must
3) duty to demand delivery at responsible.(sec36(4) auditor. be resident in India. Only designated partners are responsible
4) duty to accept goods in installments.(sec38(2) 5)The accounts need not be audited. The partners decide to for compliance with the act.
5) duty to inform the seller of refusal or rejection.(sec43) arrange for the audit of their firm, the auditor need not be a 5) A firm private company or an unlisted public company can be
6) duty to pay damage for non payment (sec56) qualified person. converted in to LLP .
6) the act empower central Government to apply provisions of
• Rights of partner:- the companies Act,1956 as appropriate,by notification with
1) right to take part in the conduct of the business (sec 12(a) such changes as deemed necessary, in the LLP act 2008.
2) right to express opinion (sec12(c) 7) The winding up of LLP is either voluntary or by the high court.
3) right to have access to books of the firm (sec 12(d)
4) right to share profits(sec13(b)
5) right to indemnity (sec13(c)
* Duties of partner:-
1) duty to good faith (sec9)
2) duty to render accounts (sec 9)
3) duty to indemnity ( sec 10)
4) duty to due diligence (sec 12(f) & 13(f)
5) duty to properly use the firms property (sec14&15)
Que :- what is limited liability partnership (LLP) ? Discuss the Q::Explain the rule of 'Nemo dat quod non. habet' with its Q::Discus the procedures for registrantion of a partnership firm
nature ,scope, and salient features of the limited liability act exceptions. and effects of non-registration. Can registration be exempt?
2008 .How limited liability partnership firm different from Ans:Meaning of 'Nemo dat quod non haber ::—'Nemo dat quod Ans::-Procedure for registration of a Ratnership firm-Chapter vil
partnership firm and company. non #210 one habet literally gives what he doen't have", the (Sections 56 to 71) deals with the regis tration of partnership
Ans:- Nature of limited liability of partnership -: ane sold by a means general ante is used where good's person firms. Sections 58 and 59 the procedure for the registration
1)sec-3 limited liability partnership to be corporate-(1)A without the consent of the original owner. It means that a seller dents with of a firm. The registration of a firms a Gatement in
limited liability partnership is a body corporate formed of and of goods cannot give the buyer a better title in goods than he the prescribed form and accompanied by the prescribed fee.
incorporated under this Act and is a legal entity separate from himself has. The Registrars of firms are appointed by the State Gout. and
that of its partners. The in sec. is found 1930. This nemo 23 dat quod non of the Sec State Gort. is also to define the areas within suche which the
2) (2) A limited liability partnership shall have perfetual States theart: habet aute Sale of Goods Act, Registrars shall escorcise their pocoers and perform their
succession . "Where goods are sold by a person Who is not the owner mere duties. The application for registration has to be made in the
3) sec 5 - any individual or body corporate may be a partner of, and who does not Sell then under the authority or with the prescribed form, and the same has to be accomm- panied by
in a limited liability partnership. consent of the owner, the buyer acquires no better title to the the prescribedy fee. The State Gout, has been autho rised to
4) sec - 6 every limited liability partnership shall have At least goods than the seller had, unless the owner If the goods is by make rules prescribing the fee but that shall not exceed the
two partners. his conduct precluded from denying the sellers authority to sell! maximum fees specified in schedule 1, which is Rs. 31 for the
5) sec .7 (1) every limited liability partnership shall have at The nemo dat rule protects the nightfert Owner of goods purpose the application must state the following:
least two designated partners who are individuals and at least against one who buys goods. frain a person who has sold to (1) the firm name
one of them shall be a resident of India. them without his authority or having any right in them. [Link] place or poincipal place of business of the firm,
6) sec. 8 provides of designated partners. Situations where the seller doesnot have the right to pass the [Link] names of any other places where the fison, carries on
7) sec-9 provides the nature of changes in designated title possession include: business,
partners. 1. Where on thief sells goods to a person Wire by buys them in [Link] date when each partner joined the firm,
good fnith without knowledge If the defect in title. 5. the names in full and permament addresses of the pastriers,
The important scope of limited liability partnership act 2008 2. Where goods are handed over to an agent to abtain offers and
sumed up as follows. but the agent sells them Without authority to do so. [Link] duration of the fism.
1) The limited liability partnership is viewed as an alternative 3. Where a swindler induces the seller to sell on credit and then The Statement shall be signed by all the their agents specially
corporate business vehicle that provides the benefits of limited the swindler resells ar pledges with thare goods. antirosised in this partners, or by behalf. Each person signing
liability but allows it's members the flexibility of organising their 4. Where a person having sold goods but retains their the Aatement shall abo verify it in the mannes prescribed.
internal structure as a partnership based on a mutually arrived possession or documents of title fraud- olently, then revells When the Regtstour is satisfied that the above anca
agreement. them to a 3rd party. Honed orequirements have been complied with, the shell
2) the LLP will have perpetual succession. The rule usually stays valid even if the buyer does not know that record an entry of the statement in the register called the
The LLP shall ba a body corporate and a legal entity separate the seller has noright to claim aionership of the goods. Register of Firms, and shall file the statement. This amounts to
from its partners. In these circumstances the law has to balance and decide which the registration of the firm.
3) The another scope of LLP governed by the provisions of of the two innocent parties to favour: the buyer who bought in Effect of non-registration:::—
proposed legislation. good faith or the original owner who has a night to his Section 69 Contains the provisions describing the expects of of
The mutual rights and duties of partners of an LLP interest property. This led to exceptions to the nemo dat non quod non-registration of a partnership form;
and those of the LLP and its partners shall be governed by an habet general sille. and there is no necessary at Registration of firm is not
agreement between the LLP and partners subject to the Exception of this rule & compensory. It is optional penalty for non-registration. Yet
provisions of the proposed legislation. 1. Qurner is Estopped from Denying. Seller's Antharity (Sec. registration becomes one time or the other, because sec. 69 of
4) the LLP will be a separate legal entity. 23(1)-- the Partner- ship Act seriously cats shart the capacity of an
5) every LLP shall have at least two partners and shall have at Estopped is found in the concluding Wards of Section 23(1): unregistered firm and its partners to sue. The firm consist, for
least two individuals as designated also partners, of whom at "Unless the owner of goods is by conduct precluded fram example, Sue any person for the price of of me good's supplied
least one shall be resident in India. denying the seller authority to sell! by This disability is a campelling force to bring the firm it. the
6) the duties and obligation of designated partners shall be as In a contract of of sale, estopped may arise where the owner register. This deability caused by the section are in the nature
provided in the law. leads a buyer to belive that the seller has the right to sell by any of a penalty for mat non-registortion and therefore, the
7) the compromise or agreement including merger and act or Amission. In such circumstances, the buyer gets good title provision have to be strictly construed so as to cause only, that
analgamation of LLP shall be in accordance with the provisions and the owner is estopped fram denying the authority of the much disability as seems to have been usitatively sanctioned-
of the proposed legislation. seller to sell. Commonwealth Trust limited Vs. Akotey (1926). folkoows:- fo
8) A firm, private company or an unlisted public company 2. Sale by an agent (sec. 23(2)@)] The effect of non-registration may be stated as
would be allowed to be converted in to LLP in accordance with A mercantile agent is an agent authority authorized by a ① Shits beth partnere and firm: [Beer 69(1)] A partner of an
the provisions of the proposal bill. principal to buy or sell goods, and/or to raise a loan by using the
unregistered firmn firm of his present or past co-partners for
9) the winding up of the LLP may be either voluntary or by the principal's goods as callateral. He is entrusted with passession
the Can not sue the inforcement of any sight arising from a
tribunal to the established under the companies Act,1956. of goods and sells in his own name.
contract or conferred by The Partnership Acti only a partner of
defines Section 26(3) of the Sale of Goods Act mercantile agents
registered firm whose Nand appears in such rights. registration
as one who has anthority to sell the goods or to confine goods
can sue for me enforceonent of
The difference between LLP and partnership act stated follows - for purpose s of sale, to buy goods ar to raise money goods. : on
2.) Buit beth finom Third parties; sec. 69(2)An unregistered firm
1) the LLP shall be a body corporate and a legal entity separate Security Therefore, if a mercantile, agent in possessin on of the
can not
from its partners. principals goods sells them to a third party. in the ordinarily She any party for the enforcement of omy sight arising from
But ,a partnership firm is only a collective group and it is not a course of business, the buyer acquires a good title, provided he
Contract. A suit can be brought only by or on behalf of a
legal entity. receives them in good faith and without notice of right of registered fimm and that abo by persons whose name appear
2) A partnership firm can be allowed to be converted into LLP original. Seller in respect of the goods.
as partners in the Register of Firms.
accordance with the [Link] LLP Never can be allowed to ar A person who buys goods from a factor, broker. auctioneer
be converted in to partnership firm. will get a has exceeded his ant good title even if the seller ③ Bar to claim of set-off and other proceedings." (Sec. 69(3)]
3) partnership firm came in to force under sec 4 of the Indian authority or the authority has been revoked by the tque awner. Ace to sec. 69(3), the provisions of Sub-sections (1) and (2) shall
partnership act ,1932. Weiner vs. Harris. apply abo to a claim of set-off proceedings to enforce a sight.
The LLP act came in to force in 2008. 3' Sale Under Special powers of sale (sec.23 (2)-(b) arising from a contract. The term of or other tither proceedings,
4) the limited liability arise limited duties and rights but Where goods are sold under special common law, statutory is very colde. But there has been some contros versy whether it
unlimited liability arise of the partner according to the Indian power of sale or on sale by onder of a court of competent includes arbitration. In Jagdish Chandra Gupta v. Kajaria Traders
partnership firm. jurisdiction, the buyer gets a good titte. (India) Ltd., the Supreme Court ended this controversy and held
5) the partnership firm may be dissolved by the different (a) Common Law power of sale. that the words "other proceeding to enforce a right arising
modes,but LLP may be dissolved either voluntary or by the b) Statutory power of sale fromna contract" include arbitration proceeding because the
tribunal. (c) Sale by Court order. sight to refer to arbitration depends. on the Contract bet
4..Sale in a Market overt parties.
Market overt is an open, public and legally constituted market.
In the eighteenth century, sales in an open market were an
exxception to the remo dat principle. A common law, buyers in
a market overt acquired a good title even in
relation to stolen goods provided that:
(a) the buyer took them in good faith without notice of any
defect in title and
(b) the sale took place in public place.
5. Sale Under Voidable Title (zec. 24)
The Act provides that when the seller thus voidable title to
goods but the title is not avoided at the time of the sale, me
bhayer ac quines a good title. Siis is provided that the buyer
bujes in good Zaith and without notice of the sellers defect of
title. Lewis vs Avery (1972).
6. Resale by seller in Possession (sec. 26) Acc. to Sec. 26, if a
seller has already Sold goods but retains possession of the
goods ar doccuments of title to the goods and then again zeralls
them to another genuine buyer or pledgess by them. by himself
or through mercantithe agenthout person who takes them in
good faith and without notice
7::Sale by buyer in possession (sec.26(2) ::If a person who has
agreed to buy goods obtains possession of thare goods" ar
documents of title to them before aronership passes to them
but he bells them to a genuine purchaser who takes in good
furth without notice of the original sellers lien, he acquises
a good title