1 Table of Contents 1.1 MEANING OF INTERPRETATION OR CONSTRUCTION .
Specific relief Act, 1963 Chapter I Introduction Specific Relief Act was enacted in 1877. The Act was originally drafte
CONTRACT & SPECIFIC RELIEF Avtar Singh
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By the same author. Law of Arbitration and Conciliation Laws of Banking and Negotiable Instruments
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Introduction to Law of Negotiable Instruments
Law of Partnership (Principles, Practice & Taxation) Introduction to Partnership (including Limited Liability Partnership) Law of Sale of Goods
P.S.A. PiLLAi's Law of Tort [Ed]
Works in Hindi: Bank Kari Vidhi evam Parkramya Likhat Adhiniyam Bhagidari Vidhi evam Seemit Dayetav Bhagidari Adhiniyam Company Vidhi
Company Vidhi (Ek Parichay)
Madhyastham, Sulah evam Anukalpi Vivad Niptan Vidhi Mal Vikraya evam Avkraya Vidhi Parkramya Likhat
Samvida Vidhi Ke Sidhant Tatha Vinirdisht Anutosh Adihiniyam, 1963 Samvida Vidhi Evam Vinirdisht Anutosh Adhiniyam—Ek Parichay
Vanijyik Vidhi ke Sidhant ViDHiK Upchar—Legal Remedies
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LAW OF CONTRACT (A Study of the Contract Act, 1872) and
Dr Avtar Singh Advocate
BCom, LLM, LLD, (Lucknow), Saraswati Samman (UP Govt.)
Vidya Bhushan (Hindi Sansthan, UP) Ex-Visiting Professor of Business Laws, IIM, Lucknow Ex-Reader in Law, Lucknow University
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The Contract Act, 1872 provides the legal framework for formulation of trade, business and commercial relations and transactions in which contract is involved. It has completed its history of 144 years. The provisions of the Act and principles enshrined therein and the application of such principles
by the courts to enormous and ever changing fact-situations constitute the body of the Law of Contract of the country. The court decisions provide the basic source material of development of this subject and also for finding out the recent trends, some of the important rulings of the period between the present and preceding editions are to be seen in the following areas of the subject: A contract means bilateral rela tions, not just only unilateral. But exceptionally, one of the parties may be given the right to do things unilaterally, e.g., a banker was given the right to appoint an arbitrator all by himself under the loan arrangement. This special position may be allowed to protect the interest of lending bankers.
An agreement entered into by the e-mail process has binding effect, though not signed by parties. Some new decisions have been delivered on withdrawal of bids. No bidder can insist that his bid should be accepted because it is the lowest. All that he can say is that there should be no bias, and there should be fairness, in the decision-making process. The mere deposit of 20 per cent of the bid amount does not make the bidder owner of the property. He has to wait for approval of his bid. Letters of intent that the tender would be accepted does not have binding effect either way. A contrac tor can be blacklisted only because of grave misperformance of the contract, not because of his impropriety at the stage of bids or tenders. No binding obligation emerges on the part of the Government where the contract is in conflict with constitutional provisions. Where the owner of land had enjoyed considerable benefits after his land was freed from acqui sition and before it was transferred to the Government for school making purpose without price, he was not allowed to assail the transaction by say ing that it was without consideration. Mortgage in favour of a minor is void ab initio. Alienation by de facto guardian of minor's land was reversible at the instance of the minor on attaining majority and the price paid was [VII]
Law of Contract
recoverable from the guardian and not the minor. Beneficial rights under the Employees' State Insurance Act cannot be contracted out. Controllers
of Cricket cannot have an interest in the events organised by the Board. It is something awfully against public policy. Restraint upon a former employee as a ladies hairdresser from practising the same profession for 12 months and within half a mile of the employer's place has been held to be reasonable. An arbitration agreement restraining parties from approaching court over the same issue has been held to be not opposed to public policy or being in restraint of trade. A Lok Adalat is not a court. Restrictions upon jurisdiction are not applicable to it. A contract for CCTV services at Railway stations which happen to display vulgar material
was terminated. The forfeit of the whole of his deposit money might be ruin ous to him whereas the Railway's loss was not of monetary nature.
A bank guarantee was not allowed to be encashed because the Authority had made good its losses otherwise. The controversial point whether the surety alone be allowed to be sued without touching the principal debtor though the latter is in possession of means which comfortably enable him to pay, continues to engage attention of the courts. The right to encash a bank guarantee was held to have been lost when the contract had expired without encashment of the bank guarantee. Pledgee's right for his dues prevails over all other rights and claims. If an LIC agent does not deposit the amount received by him from the insured, LIC has to bear the consequences.
Privity of contract is necessary for seeking specific performance. A con tract requiring a retrospective date for execution was held to be not specif ically enforceable. Specific enforcement cannot be claimed against a person who is devoid of title or any right to transfer: Nemo dat quod non habet. A person who becomes entitled to specific performance also becomes entitled to an injunction to prevent the other party from dealing with the property in any manner whatsoever.
All these and many more rulings have been absorbed into the text at their aippropriate places.
1. Agreement, Contract and Proposal
4. Capacity to Contract
7. Legality of Object
8. Discharge of Contract
9. Discharge by Breach
10. Certain Relations Resembling Those Created by Contract
Law of Contract
11. Contract of Indemnity
LAW OF SPECIFIC RELIEF
16. Specific Relief Act, 1963
Agreement, Contract and Proposal 1. Agreement, Contract and Proposal Definition of contract Offer and invitation to treat . Catalogues and display of goods Announcement to hold When agreement becomes contract Bilateral relation, not unilateral Free distribution of articles Proposal or offer 5 Communication of proposal . 6 Implied proposals 6 Intention to contract Family and social matters . . 12 Objectivity, not subjectivity, test of contractual intention Business matters Communication of acceptance Acceptance by external manifestation or overt act Acceptance by conduct . Offer cannot impose burden of refusal Communication by acceptor When communication not Mode of communication General offer of continuing nature Proposals acceptable by conduct Communication to offeror Supreme Court's view of requirement of "intention" . 16 Letters of intent Definiteness of proposal . 23 Contract as civil obligation . . 5 Law of Contract Acceptance [contd.) Preventing from tendering Acceptance (contd.) Acceptance should be made in prescribed manner Effect of departure from prescribed manner and blacklisting 30 Where no manner prescribed: reasonable and usual manner When contract concluded (postal communication) . 32 Difference between English and Indian laws . 34 When parties in direct communication Supreme Court approval of "Entores case" Absolute and unqualified . 36 Counter proposals 37 Partial acceptance 38 Inquiry into terms of proposal 38 Some instances Acceptance with condition subsequent Acceptance of counter proposal Provisional acceptance Provisional or tentative Liability for failure to consider tender Tender with concessional rate Communication of revocation should be from offerer himself . Revocation of general offers Superseding proposal by fresh proposal Cancellation of allotment of land Revocation of bid 2. Lapse of time 3. By failure to accept condition precedent 4. By death or insanity of offerer Exploitation of weaker party 1. Reasonable notice Difference between contractual documents Refund of earnest money . 54 Non-compliance with Requirements Agreement to keep offer open for specified period Standard form contracts Letter of intent to Withdrawal before expiry of fixed period Acceptance of proposal under Voluntary Revocation of acceptance Jurisdiction No obligation to accept tender or lowest tender . . 1. Notice of revocation Acceptance and withdrawal of tenders and bids and receipts, etc Contract signed by acceptor Notice of unusual terms . . 2. Notice should be 55 Certainty of terms 56 Government contracting . 56 contemporaneous with contract 3. Theory of fundamental breach "Core" of contract Departure from main purpose Rule of construction Definition of breach in Unfair Contract Terms Act Resort to "fundamental 4. Strict construction Contra proferentem Interpretation of price review and escalation Purposive interpretation 91 5. Liability in tort 92 Liability for negligence . 92 6. Unreasonable terms Statutory definition of reasonableness Removal simpliciter clauses in contracts of employment Compromise of existing contract 7. Exemption clauses and third parties Unfair Contract Terms Act, 1977 (UK) Exclusion of right of set-off Discretion to lender to set interest rates Promissory estoppel and Government agencies . Estoppel of licensee . . . consideration "Promisee or any other person" Position of beneficiary wrho is not party Fundamental propositions of English Law Privity of consideration . Privity of contract Decisions following Enghsh Law Decisions not following Enghsh Law Supreme Court upholds 112 113 113 114 trust or charge or other arrangements 120 2. Marriage settlement, partition or other family arrangements . 122 3. Acknowledgment or estoppel 123 4. Covenants running Past act at request good Position in India ". Has done or abstained "At the desire of the promisor" (promissory estoppel) privity 119 Exceptions to privity rule . . 120 Definition and its Position in India: Revocation of unilateral 1. Beneficiaries under Exclusion clauses and disclaimer Privity of contract and of breach" no longer necessary Unilateral promises 80 Promises of charitable 1. Past voluntary service . 126 Law of Contract Consideration (contd.) 2. Past service at request 1. Natural love and affection 2. Past voluntary service . 149 Past and executed consideration Executory consideration . 128 "Such act, abstinence or promise is called consideration" Consideration must be of some value 3. Time-barred debt . Gift actually made [S. 25 (Expln. I)] Inadequacy of consideration [S. 25 (Expln. II)] Value need not be 4. Capacity to Contract adequate (adequacy of consideration) Inadequacy as evidence of imposition Forbearance to sue Compromise good irrespective of merits . 133 Performance of existing duties Performance of legal obligations Performance of contractual obligations 135 A. Pre-existing contract with promisor 135 Promise to pay less than amount due Exceptions to the rule in 138 1. Part-payment by third party 139 139 139 139 2. Composition 3. Payment before time 4. Promissory estoppel Position under Indian . with third party . . . 143 Absence of consideration Nature of minor's Effects of minor's agreement 1. No estoppel against minor 2. No liability in contract or in tort arising out of contract 3. Doctrine of restitution Minor seeking relief, compellable to restore . 159 Amended provisions in the Specific Relief Act, Beneficial contracts Contracts of marriage . . 166 Marriage of Muslim minor girl 167 Contracts of Trade contracts not B. Pre-existing contract Consideration and motive Age of majority Contract Act different included in beneficial contracts Option to retire from beneficial contracts on Exceptions to consideration . . 146 Section 25, Contract Act . Liability for necessaries Contracts under seal in Enghsh Law Exceptions under Meaning of "necessaries" Nature of liability Position in India Disability at the time of agreement Some instances of unconscionableness in moneylending 174 Position of dominance Definition of free consent [S. 14] Vitiating factors and their effect Definition [S. 15] Techniques of causing Acts forbidden by IPC . . 177 Detention of property . . 179 Comparison with English Law Definition [S. 16] Ability to dominate will of other Consent under pressure . 181 Subtle species of fraud . . 181 Relations which involve Real or apparent authority Fiduciary relation Urgent need of money, no distress Statutory compulsion, no distress Burden of proof Presumption of undue 1. Unconscionable bargains, inequality of bargaining duress . Influence distinguished from persuation Economic duress by forcing renegotiation of terms Exploitation of needy . 195 Technique of judicial intervention in unfair bargains Rescuing employees and others from unreasonable terms 2. Contracts with pardanashin women . Rescission [S. 19-A] . . . Misrepresentation [S. 18] . Definition 1. Unwarranted statements 2. Breach of duty 3. Inducing mistake about subject-matter Suppression of vital facts Of material facts Expression of opinion . . Representation of state Change of circumstances Means of discovering truth power or economic Unconscionableness necessary for presumption to arise Unconscionable gifts Relationship of blood, marriage or adoption not sine qua non Inequality of bargaining Law of Contract Free Consent (contd.) Fraud Definition Assertion of facts without belief in truth Active concealment Mere silence is no fraud . . . Misdeclaration in What facts are essential Mistake as to identity Assumption of false identity Mistake caused by takeover When silence is fraud 1. Duty to speak (contracts uberrima fides) Where fraud does not lead to mistake of identity . 232 Where identity specially important 233 Mistake as to subject-matter . 234 1. Non-existent intention of performing . . 216 Any other act fitted to deceive Any act or omission specially declared to be Distinction between fraud and misrepresentation . . . Limits of rescission [Ss. 19 andl9-A] Loss of right of rescission 1. By affirmation 2. By lapse of time 3. Intervention of rights of third parties 220 220 221 221 Mode of rescission Damages for innocent misrepresentation Rescission for failure to perform within time 225 2. Mistake as to title or rights 3. Different subject-matters in mind 2. Where silence is 4. Half-truths Promise made without Mistake of identity caused by fraud 229 Distinction between identity and attributes deceptive 3. Change of 4. Mistake as to substance of subject-matter Mistake as to quality of subject-matter as distinguished from substance Misapprehension as to parties' respective rights . . 241 Mistake as to nature of Where the contract fails to express parties' intention . 245 Documents mistakenly signed or non est factum . 247 Limitations Definition of "consent" [S. 13] 1. Mistake of both parties . 251 2. Erroneous opinion about value of subject matter . . 253 Definition of "mistake" 3. Mistake of fact and not of 7. Legality of Object Unlawful agreements 255 Object and consideration . . 256 1. Forbidden by law 257 Violation of licences and permits Violation of enactments . Assignment of copyright Stay order 2. Defeat any law Law of friendly country . Innocent violations Fruits of crime 5. Immoral Interference in marital relations 262 262 262 263 induced by fraud or corruption 279 Things done under statutory provisions . .. 279 Divorce by mutual 279 Heads of public policy . . 279 1. Trading with enemy 279 . 2. Trafficking in public 280 offices 3. Interference with administration of justice (a) Interference limited to sex outside extraneous influences . . Price escalation and interest clauses Dealings with prostitutes 270 Illegal cohabitation . 270 Dancing girls 272 "Immorality" to be marriage 6. Public policy Observations in English Law about public policy Indian cases adopting English view Surrender of rights Marriage of minor girl . . Payment out of black money Grabbing of privileges by 4. Injurious to person or public policy of friendly foreign state Alienation of land by member of depressed involved in transactions Undercutting of statutory privileges Agreements contrary to Scope of the term "law" . 265 Money and property defeating law Agreement to evade Legality of Object (contd.) 272 272 272 273 274 275 275 with the Course of Justice 280 (b) Stifling prosecution . 280 (c) Maintenance and champerty . 282 4. Marriage brokage contracts 5. Unfair, unreasonable or unconscionable dealings [Dealings with employees] . 285 Surreptitious transfer of shares Parties with matching bargaining powers . 287 Void agreements Agreements in which a part of consideration or object 276 Agreements without 276 consideration [S. 25] Law of Contract Restraint of trade [S. 27] . 291 Protection of freedom of trade and commerce All restraints covered whether partial or general Developments in English Law General principle in India . and England same "Profession, trade or business" Knock-out agreements . 296 Restrictions for long period 297 Restriction upon use of trade mark Restrictions in lease Exceptions Statutory exceptions 1. Sale of goodwill Meaning of good-will Limits of restraint 2. Partnership Act dealing agreements . . . 302 3. Restraints upon employees 306 Restraints during 306 employment Restraints after Agreement between employers courts on matters of Provision for foreign jurisdiction Exceptions . 1. Reference of future disputes to arbitration 2. Reference of existing Uncertain agreements [S.29] 327 Agreement to agree or negotiate 328 Undefined property . 330 Preliminary negotiations taking definite shape . . 331 Partial uncertainty: "Capable of being made certain" Protection of trade secrets Agreement to increase jurisdiction Right to approach restriction as to 2. Solus or exclusive employment Recovery of training of rights "Absolutely": partial 1. Trade combinations Limitation of time Effect of amendment Forfeiture and surrender Under judicial interpre tation Restraint of legal proceedings [S. 28] Restriction on legal proceedings Compromise outside Agreement not capable of being enforced 334 Lock-out agreement . 335 Option for renewal of tenancy Contract linked with repeal of an Act Discharge of Contract Legality of Object Wagering agreements [S. 30] 335 Requirements of definition . 336 1. Uncertain event 2. Mutual chances of gain or loss 3. Neither party to have control over the event . 4. No other interest in the event Right to seek perfor mance Speculative transactions . 339 Effects of wagering transactions 1. Horse race [S. 30 (exception)] 2. Crossword competitions and lottery Illegal and void agreements . . 342 Main transaction void in either case No action under the main transaction 1. Where the contract is 2. Parties not "in Cause of action under void contract 3. Where recovery possible without relying on illegal contract 4. Collateral transactions . . 5. Severance 8. Discharge of Contract . Modes of discharge Contingency depending upon will of a person . Contingency to be condition precedent Where enforcement depends upon happening of an event [S. 32] When performance depends upon non-happening of an event [S. 33] Events linked with human Performance of contracts . Obligation of parties to perform Submission of tender is Clause for renewal Offer of performance [S. 38] 1. Tender of performance must be unconditional 2. The tender of performance must be made at proper time and place, and Obligation to return security documents on payment Obligation to return security money on rejection of bid 362 By whom contracts must be performed [S. 40] . 362 Performance of joint Performance of contingent contracts Definition Contingency to be collateral Devolution of liabilities Joint and several Law of Contract Discharge of Contract (contd.) Any one compellable to perform Right of contribution [S. 43 (Para 2)] Sharing of deficiency [S. 43 (Para 3)] Release of one joint promisor 365 365 365 366 Joint promisees [S. 45] . 366 Either or survivor saving account Time and place for performance [Ss. 46-50] . 367 Debtor to seek his creditor . Where no time specified and performance is to be without apphcation . 369 Usual business hours Application for performance to be at proper place and time . 370 Application for reasonable place of performance . . 370 Time and manner of performance, promisee's choice Order of performance . . 372 Liability of party preventing performance 373 Effect of one party's default Promises comprising of legal and illegal parts . . 376 Time for performance [S. 55] . 377 Factors which make time of essence Right of renewal and other personal privileges Agreement of Carriage by air 387 Completion of term . 387 Sale of shares Time of reporting Non-commercial matters Extension of time Consequences of failure . 389 Impossibility of performance and frustration Initial impossibility [S. 56] . 390 Subsequentimpossibility [S.56] General principle of judicial non-interference Frustration Commercial hardship Specific grounds of subject-matter 2. Change of 3. Non-occurrence of contemplated event . . . 402 4. Death or incapacity of party Application to industrial relations . 403 5. Government, administrative or In business matters time generally of essence 1. Destruction of Performance of reciprocal promises [Ss. 51-54] importance to time . 379 legislative intervention . 404 6. Intervention of war 7. Application to leases English cases Indian cases Theories of frustration . 1. Theory of implied term Discharge of Contract Rescission and restoration Theories not applicable in India Effects of frustration 1. Frustration should not be self-induced 2. Frustration operates automatically 417 3. Adjustment of rights . . 418 Discovered to be void . . . Quantum meruit claims . 423 Becomes void Remission of performance . . . 439 Acceptance of less sum . 440 Acceptance of payment under protest and additional work Extension of time Accord and satisfaction Estoppel: Acceptance of final bill 9. Discharge by Breach (Frustrated Contracts) Act (English) 425 Appropriation of payments [Ss. 59-61] 1. Appropriation by debtor 426 2. Appropriation by creditor 428 3. Appropriation by law . 428 Assignment of contracts 428 Assignment of liabilities . . . 429 Assignment of rights 430 Unilateral cancellation of sale deed Effect and formalities of Subject to equities 432 Notice of assignment . . . 432 Discharge by agreement Contracts which need not be 1. Change of parties . 434 Novation and rescission . 2. Substitution of new agreement 435 No effect upon arbitration clause Discharge by breach Anticipatory breach Meaning Effect upon rights Innocent party excused from further performance Options of injured party Immediate right of action Anticipatory breach of a contingent contract Consequences of aggrieved party waiting for performance 452 Party repudiating may choose to perform . 453 Premature employment 453 Negative injunction . 454 Where negative injunction not issued Law of Contract Discharge by Breach [contd.) Discharge by Breach Discharge by any other event .may Section 73 incorporates two rules of "Hadley v Date of assessment of acceptance of repudiation What amounts to repudiation Breach in entirety Partial failure going to the root Aggrieved party's liability to offer restitution Damages for breach 465 Remoteness of damage . 465 The rule in "Hadley v Baxendale" (i) General damages . 467 (ii) Special damages . i . . 467 No recovery of special damages when special circumstances not Special circumstances already within knowledge of contract plots 481 Auction sale of property . 482 Difference between market price and contract price (sale and supply transactions) Whether actual purchase or sale of goods necessary . . 484 Getting work done through other sources . 485 Physical injury resulting Interest by way of damages 486 Loss of profits is special loss 486 Loss of expected profit . . 487 Consequences of delay in transit Meaning of market price .. 488 489 Section 73 of the Contract 474 Compensation for liability to third party before payment Unfair or wrongful dismissal of employee 491 Agreement by employee to release all claims Damages for negligent survey report Award of interest on original vitality of two Agreement to provide House of Lords restore Incomplete execution . 485 Escalation of costs Relationship between two 478 479 479 481 Premature termination of Scheme for allotment of Liability in ordinary cases . Proof of loss is necessary Building contracts Delay suffered by builder Measure of damages Claim for damages is not debt Damages are compensatory, not penal Discharge by Breach [contd.) Discharge by Breach [contd.) Inconvenience caused by breach Loss caused by misrepresentation Incidence of taxation Nominal damages (no loss situation) Compensation in no loss situations Delay in payment 513 Dishonour of cheques . 513 514 Damages for breach of confidence Pre-contract expenditure . . 500 Agreement to provide scientific process 502 Mental pain and suffering and punitive damages (non-pecuniary loss) 502 Three cases listed by the House of Lords Breach of promise of marriage 504 Mental distress caused by negligent survey report or advice Compensation for nonpecuniary loss Housing service Negligent surgical operation Negligence in electricity lines Contracts for providing peace of mind or preventing mental distress Photographer's failure to appear at wedding . Failure by band to attend wedding reception . Cancellation of wedding reception Holiday cases Package tour Injunction to restrain breach of confidence Injunction for restraining breach of contract Injunction for restraining alienation of property . . . 518 "Writ remedy against termination of dealership . 518 Termination of contract by Government and writ remedy Direction for payment in writ jurisdiction Withdrawal of letter of intent and writ remedy . 519 Waiver and writ remedy . 519 Non-performance of Government contract by Refund on partial cancellation of contract Loss of pets due to carrier's negligence . 513 Demotion of employee 509 509 510 510 511 512 contractor and writ Impact of inflation on damages Duty to mitigate [S. 73 (Explanation)] Auction sales and duty of mitigation Contract of employment and duty of mitigation . Stigma compensation . . . Advantage out of one's own wrong not allowed Aggrieved party increasing loss by unreasonable conduct Law of Contract Discharge by Breach Discharge by Breach Negligent valuation . 527 Aggrieved party not to be inflicted with unusual burdens Forfeiture of earnest money on non-fulfilment of conditions of expand scope of duty of mitigation under bills Whether actual loss Contributory negligence . 529 Arbitrator's award Exclusion of right to arrears of land revenue Exclusion of Section 73: Arbitration clause Forfeiture of earnest money only when reasonable to do so money where wrong specification provided earnest and deposit, Applicable whether stipulation is for payment in cash or kind Section 74, Contract Act . . 535 .. extra costs otherwise recovered No forfeiture where contract still not formulated Stipulation for refund Conditions of membership . 534 536 One party not to be adjudicating authority . . . 538 . Breach and right to compensation must be established Unilateral deduction from final bill not permissible Common features between English and Indian laws . . 540 Forfeiture of earnest money 541 No forfeiture where breach of contract Heavy amount as evidence on events extraneous to Refund of earnest of penalty Fixed figure constitutes ceiling Stipulation for payment Loss caused by mutual delay 548 Where profit follows . . . 548 Liquidated damages and penalty [S. 74] 530 English Law 530 Court's power to reduce specified amount 531 Application to hire-purchase Where no loss caused . . . Recovery of damages as Rule stated in Section 74 Withholding of payment Reluctance of courts to of double amount of earnest and interest . . . Security money under other contracts Show-cause notice before forfeiture Consent decrees Clear notice of clause requisite Minimum charges Interest by way of damages Bank's service charges . Compensation for giving wrong destination to ship 554 554 555 555 Discharge by Breach (contd.) Statutory compensation . 555 Termination of contract for 10. Certain Relations Resembling Those Created by Contract Theory of unjust . enrichment Theory of "implied-in-fact" contract Restoration of theory of unjust enrichment Provisions of the Indian Contract Act 1. Supply of necessaries [S. 68] 2. Payment by interested person [S.69] But should not be bound to Defendant should be under legal compulsion to pay . . 563 Payment should be by one to another 3. Liability to pay for non-gratuitous acts [S. 70] Conditions of liability under the section Work done after termination of contract 570 Contracts void under "Lawfully does" Non-gratuitous acts Lender of money Provision for refund of price Appropriate pleadings . 4. Finder of goods [S. 71] 572 573 573 573 Mistake of fact or of law Excess stamp duty Limitation and latches Request for services creates implied promise to pay . 566 Some other examples of mistake Discovery of mistake after long period 580 Change of position by payee in reliance on payment . 581 Acceptance of less sum under court orders Quasi-contracts in English Law 583 Payments to the defendant's Voluntary payments Payments made under mistake of fact Payments made under an inieffective contract . officious interference in Refund of tax money paid without being due 575 Scope of the word "mistake" in context of overpaid "Not intending to do so gratuitously" 565 Section would not encourage affairs of others Non-compliance of constitutional requirements of contracting with State . 568 Recovery under Oral or non-provable contracts .. . 569 Conditions of liability . 561 Payer must be interested in making payment 561 pay Certain Relations Resembling Those Created by Contract [contd.) Payments made under 587 compulsion Quantum meruit . 588 Law of Contract 11. Contract of Indemnity . . . 591 Definition and nature Definition in English Law Definition in Section 124 narrower Extent of liability Commencement of liability . . 595 Specified time for notice . . . 597 12. Guarantee Definition Economic functions of Independent liability different from guarantee . 600 Essential features of 1. Principal debt Guarantee for void debt, when enforceable Guarantee of minor's debt 2. Consideration Guarantee for past debt 4. Writing not necessary Extent of surety's liability Condition precedent . 610 Proceeding against surety without exhausting remedies against debtor 611 Action against principal debtor alone Suit against surety alone 615 Proceeding against guarantor's mortgaged property 616 Agreement to be bound by any acknowledgement, etc by principal debtor about indebtedness . . . . Prosecution of guarantorsurety for bouncing of his cheque Death of principal debtor Winding up of principal debtor company 2. Surety's right to hmit his liability or make it conditional upon collateral security Bank's failure to obtain other securities Impossibility of main 605 Benefit of principal debtor, enough Counter-guarantee . . 3. Misrepresentation and Past as well as future debt Novation of main contract . Changes in surety 605 606 Liability under continuing 606 608 Liability under bank guarantee Guarantee [contd.) Variation in terms of contract Bank guarantee separate transaction Letters of credit and bank guarantees Bank guarantee and Rights of surety Rights against principal debtor Period of limitation (expiry of guarantee period) Joint-debtors and suretyship [S. 132] Effect of decree against surety 4. Release or discharge of principal debtor [S. 134] (/) Release of principal debtor Effect of Debt Relief Acts [ii] Act or omission . . . 5. Composition, extension of time and promise not to sue [S. 135] Composition Promise to give time . When right to Hypothecation is only equitable charge 2. Right to share reduction 3. Right of set-off . 665 Rights against co-sureties . 665 1. Effect of releasing a surety [S. 138] 2. Right to contribution [Ss. 146-147] Indemnity and guarantee distinguished Application of insolvency laws Rights against creditor . 660 1. Right to securities Advance authorisation of alteration Rights before payment . . 658 2. Right to indemnity [S. 145] Liability of legal heirs . . . 640 3. By variance [S. 133] . 640 1. Delivery of possession .. 671 Bank locker Promise not to sue Forbearance to sue Reserving rights against surety Promise to give time to Contract, express or debtor made with third Actual or constructive delivery 2. Delivery should be upon contract 1. Right of subrogation Discharge of surety from Hability 1. By revocation [S. 130] 2. By death of surety implied 3. Delivery should be upon some purpose Law of Contract Bailment (contd.) Bailment compared with Other similar relations Post office, bailee Duty of bailor 678 Duty of gratuitous bailor . . 678 Duty of bailor for reward . . 679 Duties of bailee 1. Duty of reasonable care [Ss. 151-152] 680 Uniform standard of care Loss by theft Burden of proof Loss due to act of bailee's servant Misdelivery by Railway . 686 Goods carried at owner's risk Involuntary bailee Contract to the contrary 2. Duty not to make [S. 154] 3. Duty not to mix [Ss. 155-157] 4. Duty to return [Ss. 160-161] Bailment by joint owners [S. 165] 5. Duty not to set up "justertii" 6. Duty to return increase [S. 163] . or skill bestowed Finder [Ss. 168-169] under the SARFAESI Act 3. Wharfingers 4. Attorney of High 5. Policy brokers Lien against time-barred debt Lien of Port Trust Pre-deposit for entertaining appeal Finder's rights Rights of bailee 1. Right to compensation Lien of chit fund Finders are bailees Possessory Right . . . 699 General lien [S. 171] 700 Parties entitled to general Goods on which labour "General balance of Transfer of shipping In accordance with Exercise of labour or Termination of gratuitous Particular lien [S. 170] . 698 Bailee's own goods lost with those of bailor remuneration [S. 158] . 696 3. Right of lien Types of lien covered by the Act 14. Pledge Definition 1. Delivery of possession . . 714 Pledge by hypothecation 716 Pledge (contd.) 2. In pursuance of contract Rights of pawnee 1. Right of retainer [Ss. 173-174] Special and paramount interest of pledgee . Hypothecatee has no direct right of seizure . . Duty of care 2. Right to extraordinary expenses [S. 175] 3. Right to sell [S. 176] The two rights are disjunctive Priority of employees' PF dues 718 720 721 722 722 724 725 Requirement of notice . 725 Loss of security due to pledgee's negligence . . . 727 Pawner's right to redeem [S. 177] Legal heir's right to redeem Who can pledge 728 1. Pledge by mercantile agent [S. 178] 729 1. Mercantile agent . 730 2. Possession with owner's consent 3. In the course of business Pledge by documents of title [S. 178] 2. Person in possession 3. Pledge by pledgee [S. 179] Additional exceptions under the Sale of Representative capacity, hallmark of agency Test of determining existence of agency relationship Agency in hire-purchase transactions Co-agents and coprincipals agency principal should be competent to contract . . . 740 Agent need not be competent 742 Consideration for appointment not necessary Agent Agent Agent Kinds and servant and bailee and buyer of agent 742 742 744 .• • • • 744 744 Del credere agent Creation of agency Express appointment Implied agencies Estoppel 746 747 749 749 Husband and wife Husband not implied agent of wife Agencies of necessity Originated with marine And then became under voidable contract 15. Agency Definition of "agent" principle of general application Pre-existing agency not necessary 753 Relief of injured persons 754 Conditions for application of the principle 754 Law of Contract Inability to Communicate with Bona fide in the interest of party concerned Relations of principal and agent Duties of agent 1. Duty to execute mandate 2. Duty to follow 3. Duty of reasonable care and skill [S. 212] 4. Duty to avoid conflict of interest 5. Duty not to make secret profit 6. Duty to remit sums [S. 218] 7. Duty to maintain accounts [S. 213] Inspection of agent's accounts 764 765 765 767 8. Duty not to delegate [S. 190] 1. Nature of work 2. Trade custom 3. Ministerial action . Rights of agent 1. Right to remuneration Effect of misconduct instructions or customs Substituted agent [Ss. 194-195] Remedies of principal for breach of duty 4. Principal's consent . . . 769 1. Improper delegation [S. 193] 769 2. Proper delegation [S. 192] 770 1. Principal represented by sub-agent 770 2. Agent's responsibility for sub-agent 771 3. Sub-agent's liability to principal 771 [S. 220] 2. Right of retainer 3. Right of lien [S. 221] 4. Right to indemnity [Ss. 222-223] Liability of agent under dishonoured cheque 5. Right to compensation [S.225] Relations of principal with third parties Agent's authority Actual authority Express authority Implied authority . Scope of authority Authority of special agents 783 783 785 785 786 788 789 Estate or House Agent . . 790 Auctioneer Power of attorney holder Agent of Life Insurance Corporation Ostensible or apparent authority Apparent authority is real authority Agency (contd.) Appearance of authority arising from course of deaUng 793 Representation "of authority by conduct . . 794 Continuance of apparent authority till termination Agent's possession 795 Employer's undertaking to pay insurance premia . 795 Statutory provision about Actual or constructive notice of lack of authority Just and reasonable solution Agent's authority in emergency [S. 189] . Where agent exceeds authority Effect of notice to agent . Knowledge of broker . Liability for agent's wrongful acts [S. 238] . Misrepresentations and frauds Rights and liabilities of undisclosed principal Where the principal is disclosed Unnamed principal Undisclosed principal Subject to equities Third party's right to repudiate executory contract 799 800 801 801 801 Agent cannot sue or be sued unless contrary contract . . 811 Presumption of contrary contract 1. Foreign principal ! 2. Principal unnamed Liability of dealer under the Consumer Protection Act 3. Non-existent or incompetent principal . . 815 Directors of company . .. 815 Election by third party . [S. 233] 816 Estoppel of third party [S.234] 4. Pretended agent [S. 235] 5. Breach of warranty of authority Requirements of ratification 1. On behalf of another 2. Competence of principal . 3. What acts can be 803 ratified (Act should be lawful) [S. 200] . 822 Only lawful acts can be 806 Acts which would 806 become injurious by Acts done on behalf of Government 4. Knowledge of facts [S. 198] 809 Undisclosed principal cannot intervene against express terms 810 Third party's right against undisclosed principal . . 810 5. Whole transaction [S.199] 6. Within reasonable time Effects of ratification Doctrine of relation back Law of Contract Agency [contd.) Protection of existing interest, primary purpose of agency . . . Renunciation by agent Determination of agency . 827 By revocation [S. 203] . 827 Withdrawal of vakalatnama [S.206] Completion of business prospectively [S. 204] . 830 Notice precedent to revocation [S. 206] Death or insanity [S. 201] Principal's insolvency Liability to compensate [Ss. 205-206] Power of attorney On expiry of time [S. 201] sub-agency Agent's duty on termination [S. 209] Interest existing at the time of creation of Effects of termination Agency coupled with interest [S. 202] LAW OF SPECIFIC RELIEF 16. Specific Relief Act, 1963 .. Act not exhaustive Introduction to the outline of the Act 1. Recovery of possession of property 2. Specific performance of contracts No appeal or review [Sub-s. (3)] Application of Limitation Act Six months limitation not applicable to proceedings under instruments and rescission of 4. Preventive relief gratuitous [S. 6] Prayer for declaration of title 3. Rectification and 5. Declaratory relief . 844 Recovery of possession of immovable property 844 CrPC Counterclaim and court fee Recovery of possession of movable property [Ss. 7-48] . . ,s851 Specific Relief Act, 1963 Liability to deliver possession to person 853 Difference between Sections 7 and 8 Defences under law of contracts Validity of original 856 Delay as ground of defence under law of contract Contracts which are specificallyenforceable [S. 10] Where no other suitable Specific performance of part of contract [S. 12] . 865 Rights of purchaser or lessee where seller's or lessor's title imperfect [S. 13] [S.14(l)(c)] 4. Contract requiring constant supervision [S. 14(1)(J)] Lack of free consent and situation of no contract repurchase 860 Delay 860 Sale by joint owners . 862 3. Contracts of determinable nature Performance of trusts Enforcement of 1. Where compensation is adequate [S. 14(l)(fl)] . 873 2. Contracts involving personal skill [S. 14(l)(fc)] 873 Valid contract in in unpartitioned property Specific performance of part of contract Contracts which cannot be Specific performance of Purchaser of share Amendment of plaint for relinquishment of performance of remaining part Family settlement 877 Persons for or against whom contracts may be specificallyenforced [S. 15] 878 Assignee from legal heir . 878 Lease or sale in favour of company before incorporation All buyers or contractees must join Persons not entitled to relief of specific performance . . Ready and willing [Cl.(c)] Unregistered sale agreement Amendment of plaint . Law of Contract available as defence to subsequent buyer Necessary or proper Jurisdiction Decree, ex p Selling or letting property without title [S. 17] Where performance not possible without Buyer with notice of previous sale Transfer by unauthorised person 900 Oral agreement . 900 Memorandum of understandings 2. Hardship vendor Limitation Limitation for execution of decree Pre-emptive orders under 912 Amendment of plaint . . . 912 Nature of jurisdiction under the Act Impleadment (addition of party) compensation [S. 21] . 913 Compensation in addition specific performance . 914 Order for delivery of goods 916 Loss of right to compensation 5. Mutuality of remedy (ready and willing) . 909 Protecting interest of to or substitution of Incomplete Transfer by Power of court to award 894 1. Unfair contracts Agreement opposed to public policy . . . 908 Object forbidden . 908 Relief against parties, legal representatives or subsequent transferee . 889 Relief against legal unconscionable Plaintiff to come with clean hands representative [S. 19] Relief of possession, partition, etc. [S. 22] . 917 Relief for possession has to be pleaded (alternative relief) 917 Refusal of relief Alternative relief Amendment of plaint . 919 Liquidation of damages no bar [S. 23] 919 Earnest money ; . 919 Specific Relief Act, 1963 awards and direction to execute settlements Rescission of contracts When rescission 921 Loss of right of rescission third parties Inbuilt remedy of rescission in decree of specific performance payment under decree . 925 Appealable order Alternative prayer for rescission in suit for specific performance [S. 29] Rescission and equity Rectification of instruments Cancellation of instruments Who can seek cancellation . When suit for declaration does not lie [iii) Further relief where plaintiff entitled to it (proviso) Power to do justice Transfer by partner of Suit for declaration and injunction without seeking relief of possession Suit for declaration of possession and injunction complaint and civil suit Declaration as to status of wife Declaration as to title as [S.26] 927 Essentials to be proved . . 928 Extension of time relief Partial cancellation Extension of time for Limitation Reasonable apprehension . . 934 Requirements of ground of [ii] Frame of plaint automatically extinguished on decree of specific performance ." for relief under 3. Intervention of 4. Severance 2. Where restitution When agreement void When contract voidable . . . Enforcement of arbitral Declaration as to Will Who can seek relief (locus standi) Questioning sale deed on ground of fraud Right of way cancellation, only by Effect of limitation Law of Contract Specific Relief Act, 1963 [contd.) Specific Relief Act, 1963 [contd.) statement is defamatory Parties who are bound by declaration . . Amendment of plaint and limitation Kinds of injunction Temporary injunctions . Cases in which temporary injunction may be granted 1. For protection of interest in property . . . 2. Injunction to restrain repetition or continuance of breach Discretionary relief Interim injunction when perpetual injunction is prayed for Injunction to restrain possession Suppression of material 959 Order for rescuing arbitration process 959 Refusal of injunctive relief . 959 Illustrations in preceding 1877 Act Mandatory injunctions 950 Illustrations in preceding Disobedience or breach of Restraint on person or property outside jurisdiction Permanent injunction Requirements for applicability Illustrations in old Act of 1877 When not granted Damages in lieu of or in addition to injunction [S.40] INDIAN CONTRACT ACT, 1872 Preamble "Misrepresentation" defined . . .200 19-A. Power to set aside contract induced by undue influence . . . 200 1. Short title, extent and 19. Voidability of agreements Agreement void where both parties are under mistake as to Effect of mistakes as to law OF THE COMMUNICATION, ACCEPTANCE AND REVOCATION Contract caused by mistake of What considerations and objects Agreements void, if 2. Interpretation clause without free consent are lawful, and what not considerations and objects unlawful in part 5. Revocation of proposals and one party as to matter of fact . 3. Communication, acceptance and revocation of proposals 6 4. Communication when complete . 10, 7. Acceptance must be absolute . 8. Acceptance by performing An agreement made without consideration is void, unless 6. Revocation how made it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by conditions, or receiving consideration 9. Promises, express and implied . . . 7 OF CONTRACTS, VOIDABLE CONTRACTS AND VOID AGREEMENTS 10. What agreements are contracts . . 3 11. "Who are competent to contract . 153 Agreement in restraint of marriage void Agreement in restraint of Agreements in restraint of legal proceedingsvoid Agreements void for uncertainty Agreements by way of wager, 12. What is a sound mind for the purposes of contracting . . . . . 174 13. 14. 15. 16. "Consent" defined "Free consent" defined "Coercion" defined Undue influence 226 176 177 180 OF CONTINGENT CONTRACTS 31. "Contingent contract" defined . . 351 Law of Contract 32. Enforcement of contracts 49. Place for performance of promise, where no application to contingent on an event 34. When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person . . 35. When contracts become void, which are contingent on happening of specified event within fixed time 36. Agreements contingent on impossible events, void . . . . 50. Performance in manner or at contingent on an event not be made and no place fixed for performance 33. Enforcement of contracts time prescribed or sanctioned by promisee 51. Promisor not bound to perform, unless reciprocal promisee ready and willing to perform 52. Order of performance of 53. Liability of party preventing 357 event on which contract is to 54. Effect of default as to that 358 promise which should be first performed in contract consisting of reciprocal promises 55. Effect of failure to perform at fixed time, in contract in which time is essential OF THE PERFORMANCE 37. Obligation of parties 39. Effect of refusal of party to perform promise wholly 40. Person by whom promise is to be performed 41. Effect of accepting performance from third person 45. Devolution of joint rights . . . . 366 46. Time for performance of promise, where no application is to be made and no time is 47. Time and place for performance of promise, where time is 48. Application for performance on certain day to be at proper time and place 60. Application of payment where debt to be discharged is not indicated 61. Application of payment where neither party appropriates . . 62. Effect of novation, rescission and alteration of contract 63. Promisee may dispense with or remit performance of promise 64. Consequences of rescission of voidable contract 65. Obligation of person who has received advantage under void agreement, or contract that becomes void 66. Mode of communicating or specified and no application to be made 58. Alternative promise, one branch being illegal 59. Application of payment where debt to be discharged is indicated 42. Devolution of joint liabilities . . . 364 43. Any one of joint promisors may be compelled to perform 44. Effect of release of one joint legal and also other things 358 38. Effect of refusal to accept offer of performance 56. Agreement to do impossible act 57. Reciprocal promise to do things revoking rescission of voidable 367 67. Effect of neglect of promisee 368 to afford promisor reasonable facilities for performance . . . .438 https://t.me/LawCollegeNotes_Stuffs Section-wise Contents 170. Bailee's particular lien Chapter IX OF BAILMENT 148. "Bailment", "bailor" and "bailee" defined 149. Delivery to bailee how made . . . 673 150. Bailor's duty to disclose faults in wharfingers, attorneys and policy brokers 700 172. "Pledge", "pawnor" and "pawnee" defined 714 173. Pawnee's right of retainer . . . . 718 174. Pawnee not to retain for debt 151. Care to be taken by bdlee . . . . 680 or promise other than that 152. Bailee when not liable for loss, for which goods pledged: Presumption in case of etc, of thing bailed 153. Termination of bailment by bailee's act inconsistent with conditions 154. Liability of bailee making unauthorised use of goods bailed 178-A. Pledge by person in possession under voidable contract 178. Pledge by mercantile agent . . . . 729 179. Pledge where pawnor has only a limited interest 180. Suit by bailor or bailee against bailor's consent, when the goods wrongdoer 181. Apportionment of relief or compensation obtained by such suits 159. Restoration of goods lent makes default redeem 157. Effect of mixture, without cannot be separated 158. Repayment by bailor of necessary expenses 177. Defaulting pawnor's right to 156. Effect of mixture, without bailor's consent when the goods can be separated 175. Pawnee's right as to extraordinary expenses 176. Pawnee's right where pawnor 155. Effect of mixture, with bailor's consent, of his goods with bailee's 171. General lien of bankers, factors, 160. Return of goods bailed, on expiration of time or accomplishment of purpose . 691 161. Bailee's responsibility when goods are not duly returned . . . 692 162. Termination of gratuitous bailment by death 164. Bailor's responsibility to bailee . . 696 165. Bailment by several joint owners 68. Claim for necessaries supplied to or on his account 167. Right of third person claiming goods bailed 694 168. Right of finder of goods: May sue for specific reward offered . . 695 169. When finder of thing commonly on sale may sell it 695 69. Reimbursement of person payingmoney due by another, in payment of which he is interested 166. Bailee not responsible on re-delivery to bailor without title OF CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT person incapable of contracting, 163. Bailor entitled to increase or profitfrom goods bailed 70. Obligation of person enjoying benefit of non-gratuitous act . . . 564 71. Responsibility of finder of goods 72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion Law of Contract 198. Knowledge requisite for valid OF THE CONSEQUENCES OF 199. Effect of ratifying unauthorised act forming part of a transaction BREACH OF CONTRACT 73. Compensation for loss or 474 74. Compensation for breach 75. Party rightfully rescinding contract entitled to of contract where penalty stipulated for Chapter VII SALE OF GOODS 200. Ratification of unauthorised act damage caused by breach of contract cannot injure third person . . . . 822 Termination of agency 827 Termination of agency, where agent has an interest in subject-matter 832 When principal may revoke agent's authority . 827 Revocation where authority has been partly exercised 830 Compensation of revocation by principal, or renunciation by agent 206. Notice of revocation or 207. Revocation and renunciation authority takes effect as to agent, and as to third persons . 182. 183. 184. 185. 186. "Agent" and "principal" defined . 736 Who may employ agent 740 Who may be an agent . 742 Consideration not necessary . 742 Agent's authority may be expressed or implied . . . . 785 187. Definitions of express and implied authority 785 188. Extent of agent's authority . 788 189. Agent's authority in an may be expressed or implied . . When termination of agent's Agent's duty on termination of agency by principal's death or insanity Termination of sub-agent's authority Agent's duty in conducting principal's business Skill and diligence required from agent 190. When agent cannot delegate 191. "Sub-agent" defined . . . . Agent's duty to communicate with principal Right of principal when agent deals, on his own account, in business of agency without 192. Representation of principal by sub-agent properly appointed 193. Agent's responsibility for sub-agent appointed without authority 194. Relation between principal and person duly appointed by agent to act in business of agency . 195. Agent's duty in naming such person own account in business of 772 217. Agent's right of retainer out of 772 sums received on principal's account for him without his authority: 819 197. Ratification may be expressed or implied principal's consent 216. Principal's right to benefit gained by agent dealing on his 196. Right of person as to acts done Effect of ratification 218. Agent's duty to pay sums received for principal 219. When agent's remuneration becomes due https://t.me/LawCollegeNotes_Stuffs Section-wise Contents 125. Rights of indemnity-holder 220. Agent not entitled to remuneration for business misconducted 221. Agent's lien on principal's "surety", "principal debtor" 778 222. Agent to be indemnified against consequences of lawful acts . . 223. Agent to be indemnified against consequences of acts done in good faith 224. Non-liability of employer of agent to do a criminal act . . . 225. Compensation to agent for injury caused by principal's neglect 226. Enforcement and consequences of agent's contracts 227. Principal how far bound, when agent exceeds authority . . . . 228. Principal not bound when excess of agent's authority is not separable 229. Consequences of notice given to acts were authorised guarantee by surety's death . . . 640 .primarily liable,not affected by arrangement between them that one shall be surety in other's 637 133. Discharge of surety by variance 641 134.- Discharge of surety by release or discharge of principal debtor . . . 646 135. Discharge of surety when creditor compounds with, gives principal debtor 136. Surety not discharged when agreementmade with third person to give time to principal debtor does not discharge surety 138. Release of one co-surety does 817 817 not discharge others 139. Discharge of surety by creditor's act or omission impairing agent, not entitled to 238. Effect, on agreement, of misrepresentation or fraud by agent guarantee 131. Revocation of continuing 137. Creditor's forbearance to sue 236. Person falsely contracting as performance 237. Liability of principal inducing belief that agent's unauthorised 130. Revocation of continuing time to, or agrees not to sue or principal to act on beliefthat principal or agent will be held exclusively liable in terms of contract 234. Consequence of inducing agent 235. Liability of pretended agent . . 128. Surety's liability 129. Continuing guarantee 232. Performance of contract with agent supposed to be principal . 233. Right of person deahng with agent personally liable 132. Liability of two persons, 230. Agentcannot personally enforce, nor be bound by, contracts on behalf of principal 127. Consideration for guarantee . . . 603 126. "Contract of guarantee", surety's eventual remedy 818 performance 141. Surety's right to benefit of 797 140. Rights of surety on payment or 142. Guarantee obtained by OF INDEMNITY AND GUARANTEE 124. "Contract of Indemnity" defined 592 misrepresentation, invalid . . . . 606 145. Implied promiseto indemnify surety 659 146. Co-sureties liable to contribute equally 147. Liability of co-sureties bound in different sums Law of Contract SPECIFIC RELIEF ACT, 1963 22. Power to grant relief for 1. Short title, extent and commencement 2. Definitions 3. Savings possession,partition, refund of 841 earnest money, etc Liquidation of damages no bar to specific performance 4. Specific relief to be granted only ^4. Bar ofsuit for compensation for for enforcing individual civil rights and notfor enforcing penal laws 5. Recovery of specific immovable property 6. Suit by person dispossessed of immovable property 7. Recovery of specific movable property 8. Liability of personin possession, not as owner, to deliver to person entitled to immediate possession breach after dismissal of suit for specific performance 842 845 9. Defences respecting suits for relief based on contract 10. Cases in which specific performance of contract enforceable 11. Cases in which specific 12. Specific performance ofpart of coritract decreed 922 29. Alternative prayer for rescission in suit for specific performance . 925 30. Court may require parties rescinding to do equity 926 31. When cancellation may be ordered 929 partially cancelled to be made when instrument 15. Who may obtain specific performance 17. Contractto sell or let property 18. Non-enforcement except with variation 19. Relief against parties and persons claiming under them by subsequent title 20. Discretion as to decreeing specific performance 33. Power to require benefit to berestored or compensation iscancelled or issuccessfully resisted as being void or 21. Power to award compensation in performance of which has been by one who has no title, not specifically enforceable 28. Rescission in certain circumstances of contracts for the sale or lease of immovable 14. Contracts notspecifically enforceable 16. Personal bars torelief 32. What instruments may be 864 13. Rights of purchaser or lessee against person with no title or imperfect title testamentary directions to execute settlements When instrumentmay be rectified 27. When rescission may be adjudged or refused property, the specific 855 performance of contracts connected with trusts enforceable Application of preceding sections to certain awards and voidable . . .~ 34. Discretion of court as to 35. Effect of declaration declaration ofstatus orright . 936 36. Preventive relief how granted . . 948 37 Temporary and perpetual injunctions 38. Perpetual injunction when granted 39. Mandatory injunctions 40. Damages inlieu of, orin addition to, injunction 41. Injunction when refused 42. Injunction to perform negative agreement The cases in bold can be accessed on SCC Online® from, the Case Pilot feature on EBC Explorer™. CASE PILOT A.L. Mustaneer Establishment v Varuna A.A. Singh v Union of India, AIR 1970 Mani 16 A. Abdul Rashid Khan v P.A.K.A. Shahul Hamid, (2000) 10 SCC 636 A. 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Parakh v King Emperor, AIR 1926 Duncan Fox 8c Co y North 8c South Wales Duni Chand Rataria v Bhuwalka Bros Ltd, AIR 1955 SC 182: (1955) SCR 1071 Dunlop VHiggins, (1848) 1 HLC 381 32 Dunlop PneumaticTyre Co v Selfridge ScCo Ltd, 1915 AC 847 112,116 Dunlop PneumaticTyre Co Ltd v New Garage and Motor Co Ltd, 1915 AC 79 (HL) 530 Dunn VBucknall Bros, (1902) 2 KB E.R. Kalavian v Inspector General of Dunton v Dunton, (1892) 18 VLR 114 (SC of Victoria) Durga Dass v Sansar Singh, 2003 AIHC Durga Prasad v Baldeo, ILR (1881) 3 All 221 Durga Priya Chowdhury v Durga Pada Roy, AIR 1928 Cal 204: ILR (1928) 55 Call54 E.I.D. Parry (India) Ltd v Far Eastern MarineTransport Co Ltd, (1988) 2 TAC387 • E.I.D. Parry (India) Ltd v Far Eastern Marine Transport Co Ltd, 1983 SCC OnLineMad61:(1988)lLW320 E.I.D. Parry (India) Ltd v Savani Transport (P) Ltd, AIR 1980 AP 30 E.P. George v Bank of India, AIR 2001 Registration, AIR 2010 Mad 18 E.S. Rajan v R. 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Revenue & Endowments Deptt, (2003) 2 BC 4 (AP) . 51 Gur Bhag, 96 PR 1911; 11IC 213 953 Gurbax Rai v Punjab National Bank, (1984) 703,727 Gurdashan Singh v Bishen Singh, (1962) 2 Punj5(FB) Gurdial Singh v Pearey Lai Malhan, AIR 1982 Del 120 Habib Mian v Mukhtar Ahmad, AIR 1969 Haddock v Humphrey, (1900) 1 QB Hadley v Baxendale, (1854) 9 Exch 341 . . 466, 477 Haesen Banu v Syed Habeeb Sayeeduddin, Hagami Lai Ram Prasad v Bhuralal Ram Narain, AIR 1961 Raj 52 339 Hagedorn v Oliverson, (1814) 2 M&S 485 . 821 Gurmel Singh v Ujagar Singh, (1991) 99 Gurpreet Singh v Union of India, <2006) 8 SCC 457 Civ 630: (2014) 4 Mah LJ 74; (2014) 3 PunjLR571 Gurratt v Cullum, 1710 Bull NP 42: 1997 AIHC 135 (AP) Hairoon Bibi v United India Life Insurance Guru Narayan v Sheo Lai Singh, (1918-19) : Gurubax Singh Gorowara v Begum Rafiya Khurshid, AIR 1979 MP 66 540,552 Gustavus Couturier v Robert Hastie, (1856) 5 HL Cas 673: 10 ER 1065 Guthing VLynn, (1831) 2 B Sc Ad 232 . 327 Guwahati Municipal Corpn v International Construction Ltd, AIR 2014 Gau 101 . . . 221 GVPREL-MEE(JV) v Govt of A.R, (2006) 3 ALD 703 (DB) 46 Gwalior Rayon Silk Mfg (Wvg) Co v Shri Andavar & Co, AIR 1991 Ker 134 Gwilliam v Twist, (1895) 2 QB 84 (CA) 8c Co, 1978 QB 791: (1977) 3 WLR 990 . 472 H.R. 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Trustees Ltd v Power Packing Services Ltd, (1970) 2 Lloyd's Rep 65 . 765 Harrison v W. Gardner, 369 F 2d 172 Harse v Pearl Life Assurance Co, (1904) 1 Harold Fielding Ltd v Mansi, (1974) 1 Ali Hargopal v People's Bank of Northern India Harnath Kaur v Indar Bahadur Singh, PC 403 Hardman v Booth, (1862) 1 H8CC 803: 32 LJExl05 229,231 Hare v Nicoll, (1966) 2 QB 130: (1966) 2 WLR 441 (CA) 386 Hare and O'More, re, (1901) 1 Ch 93 830 Hari Singh v Dewani Vidyawati, AIR 1960 (2004) 4 AIHC 2728 (Bom) 320 Hans Raj v Ran Singh, AIR 2011 NOC (2011) 1 SCC (Civ) 540: AIR 2011 SC952 ;. 955 Hari Shanker Jain v Sonia Gandhi, (2001) 8 Haribhau S. Watane v Raju D. 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SCC 175: AIR 2007 SC 2883 Ruby General Insurance Co Ltd v Bharat Bank Ltd, AIR 1950 EP 352 Rudra Pratap Duttaa v Satendra Nath Duttaa,AIR2012Pat78 (2003) 1 CLT 414 (Kant) 67 (CA) AIR 1960 Ass 71 Ruppa Gurkul v Dorasami, ILR (1882) 6 Mad 76 Rutherford v Acton Adams, 1915 AC 866 (PC) Ruxley Electronics and Construction Ltd v Forsyth, 1996 AC 344: (1995) 3 480, 481, 492, 508 Ryan v Mutual Tontine Westminister Ryan v Pilkington, (1959) 1 WLR 403: (1959) 1 All ER 689 (CA) Ryan 1/Sams, (1848) 12 QB 460 Rogers Sons &cCov Lambert & Co, (1891) 1QB318(CA) 693, 694 Rohit Dhawan v G.K. Malhotra, AIR 2002 Rodocanachi v Milburn, (1886) LR 18 QBD Rukmanand Ajitsaria v Airways India Ltd, Rutther v Palmer, 1922 2 KB 87 (CA) Rocklines Constructions v Trupti K. Patel, Chambers Assn, (1893) 1 Ch 116 (CA) . 875 787 795 Ryder v Woombwell, (1868) 38 LJ Ex 8 . 171 Rojasara Ramjibhai Dahyabhai Jani Narottamdas Lallubhai, (1986) 3 SCC 300: AIR 1986 SC 1912 .. 352,355,869,898 Roper t/Johnson, (1873) LR 8 CP 167 Roscor VThomas, (1842) 3 QB 234: ILR (1904) 29 Bom 107 Rose & Frank Co v J.R. Crompton & Bros Ltd, (1923) 2 KB 261 (CA) . 11,12,14,314 Rose Fernandez v Joseph Gonsalves, ILR (1924) 48 Bom 673: AIR 1925 Rose Valley Real Estate & Construction S. Brahmanand v K.R. Muthugopal, (2005) 12 SCC 764 S. Chattanatha Karayalar v Central Bank of India Ltd, AIR 1965 SC 1856: (1965) 3 SCR 318 S.D. Katherine Stiffles v M.P. Carr Mackertich, 164 IC 732 Ltd VUnited Commercial Bank, AIR 2008 Gau38 S.B. Eraser 8c Co f Bombay Ice Mfg Co, S. Dutt (Dr) VUniversity of Delhi, AIR 1958 43 SC 1050: 1959 SCR 236 S. Ganapathy K,Kunjammal', AIR 2004, • 2611 (Mad),. . . . . r ' - 9 5 7 S.Jaffarval v B. Pedda Siddaiah, AIR 2003 !.r: S;K. Engg Works f New Bank,of India, , , AIR.198,7 P8cH90:-. S.K. Gupta VKuldeep ;SinghvA:IR,2011 > S.Y.C.W. & S. Mills, re, AIR 1969 ., •Mys280 r-v. 719,721 Sabina D'Costa f Joseph Antony Noronha, ^ AIR 1984 Kant 122 ;.. ,'547 Sacha VMilkos, (1948) 2,KB 23 (CA)- .> 75;4, 755 Sachchidananda Banerjee v Moly Gupta;, AIR 2015:N.OC 552 ( C a l ) 8 . 7 7 Sachidananda Patnik v G.P., 8c Co, AIR 1964 Ori 269 ; . ; . : . ; ; ;; v. 379 8.Del, 54 •.^.'924 S.K. Shariria?!/Union'of;Iridiai?A'IR'2009 • ..'i:.; ' Sachindra Nath'f Gopal Chandra-. -. A contract to underwrite the shares of a company, i.e., to take up that portion ofthe shares which is not applied for by the public, was notallowed to be enforced by the undisclosed principal of the underwriter because an engagement ofthiskind proceeds upon thepersonal reputation andintegrity of the underwriter.^''^ But where the third party does not believe the agent to be a principal or there are suspicious circumstances he may not be able to claim a set-off. Thus, for example, in Isaac Cooke v Henry Douglas Eshelby:^^" L & Co sold cotton to C, in their own names, but really on behalf of an undisclosed principal. C knew that L & Co were in the habit of deal ing both for principals and on their own account and had no belief on the subject whether they made this contract on their own account or for a principal. It was held that C could not, in an action brought by the principal for the price of cotton, set-off a debt due from L & Co. Third party's right to repudiate executory contract Secondly, if the principal discloses himself before the contract is com pleted, the third party may repudiate the contract if he can show that if he had known who the principal was or that the agent was not the principal, he would not have contracted.^^^ The right of the third party to repudiate thecontract arises only when theidentity oftheundisclosed principal would 349. Collins v Associated Greyhound Racecourses Ltd, (1930) 1 Ch 1 (CA). 350. (1887) LR 12 AC 271 (HL). 351. S. 231. Govt of Goa v Goa Urban Co-operative Bank Ltd, (2011) 2 Mah LJ 37 (Bom), the act should be within the scope of the agent's authority. https://t.me/LawCollegeNotes_Stuffs 810 Chapter 15 Agency have been so material to him that if he had known the true facts, he would not have contracted. Thus in Said v A theatre ticket was purchased by a person through an undisclosed agent knowing full well that a ticket would not have been issued to him on personal grounds. It was held that the theatre-owner had the right to repudiate the contract and exclude him from admission. It means that an undisclosed principal cannot intervene when he knows that the other partywould not have dealt with him. This principle will apply only when "some personal consideration (forms) a material ingredient".^^^ In Dyster v Randall and Sons^^'^ a piece oflandwas purchased bysomebody for an undisclosed principal. The owner would not have sold the land to him, yet he was allowed to intervene and enforce the contract.^^^ Undisclosed principal cannot intervene against express terms Lastly, an undisclosed principal cannot intervene if some express or implied term of the contract excludes him from doing so. Where, for exam ple, an agent described himself in the contract as "owner'V^^ "proprietor'V^^ it shows an intention to make a personal contract and consequently precludes the undisclosed principal from intervening. But where, in a con tract of letting out, the agent described himself as the "landlord", evidence was allowed to show that he was only an agent. Similarly, "the description in a charter-party of one ofthe contracting parties as 'charterer' does not, of itself, designate him as the only person to fill that position", and the undis closed principal was allowed to sue for the breach ofthe charter-party. Third party's rightagainst undisclosed principal Just as the undisclosed principal has the right to sue the third party, the latterhasthe rightto sue the principal. Difficult questions in thisconnection have arisen where the principal has already paid the agent, trusting that he has paid or will pay the third party, but the agent has defaulted or has gone bankrupt before payment. This happened in Davison v Donaldson.^^^ Themanaging owner andtheship's husband purchased goods on credit from the plaintiff for the purposes of the ship. The undisclosed partner settled his account with the husband believing that the latter had paid the 352. (1920) 3 KB 497. 353. Dyster v Randall and Sons, 1926 Ch 932, 939. 354. 1926 Ch 932. 355. Even vifhere no personal considerations are involved and the third party was told that the agent was not acting for any principal, the third party can avoid the contract for fraud. Archer v Stone, (1898) 78LT 34, cfBerg v Sadler & Moore, (1937) 2 KB 158 (CA). 356. Humble v Hunter, (1848) 12 QB 310, 317. 357. Formby Bros v Formby, (1910) 102 LT 116. 358. Fred Drughorn Ltd v Rederiaktieb Olaget Transatlantic,1919 AC203. 359. (1882) LR 9 QBD 623. https://t.me/LawCollegeNotes_Stuffs [S. 230] Personal liability of agent 811 plaintiff. But he had not done so and had gone bankrupt. The plaintiff sued the principal. The courtsaid: "Where a person issupplied withgoods it is hisdutyto see that the seller is paid. Partners ought not to settle with their co-partners without satisfying themselves that the payments have been actually made." PERSONAL LIABILITY OF AGENT [S. 230] S. 230. Agent cannot personally enforce, nor be bound by, contracts on behalf of principal.—In the absence of any contract to that effect, an agent cannot personally enforce contract entered into by him on behalf of his princi pal, nor is he personally bound by them. Presumption of contract to contrary. —Such a contract shall be presumed to exist in the following cases — (1) where the contract ismade by an agent for the sale or purchase of goods for a merchant resident abroad; (2) where the agent does not disclose the name of his principal; (3) where the principal, though disclosed, cannot be sued. Agent cannot sue or be sued unless contrary contract It has already been seen that the chief function of an agent is to establish contractual relationship between his principal and third parties. The agent then drops out. He can neither sue nor be sued on contracts made by him on his principal's behalf. Section 230 accordingly provides: In the absence of any contract to that effect, an agent cannot personally enforce contracts enteredinto by him on behalf of his principal, nor is he personally bound by them.^®" Where a consignment was landedfrom a ship but the consignee did not take delivery and the question arose as to who was liableto pay demur rage, it was held that the liability was solely that of the consignee and not that of the shipping agent.^^^ Similarly, in a case before the Calcutta High Court^^^ it was apparent from the bill of lading that the document was signed by the agent of a principal who was named in the document. There was no contract to the effect that the agent would be bound by the contract. Thus, unless it is shown that there is a contract to the effect of binding the agent, entered into on behalf of the named principal, the agent cannot be bound 360. See Marine Container Services South (P) Ltd v Go Go Garments, (1998) 3 SCC 247: AIR 1999 SC 80, an agent of a contractor against whom there was a complaint under the Consumer Protection Act, 1986 for deficient services was held to be entitled to raise the defence of immunity and that defence could not be brushed aside without due consideration. Tropic Shipping Co Ltd v Kothari Global Ltd, (2002) 2 Bom CR 93, an agent not allowed to enforce an arbitration award. 361. Port of Madras v Southern Shipping Corpn (P) Ltd, AIR 2001 Mad 413 at p. 417. Tashi Delek Gaming Solutions Ltd v State of Karnataka, (2006) 1 SCC 442: AIR 2006 SC 661, advertising and other agents had the right to challenge the validity by means of a writ the ban on their work without the principal joining as a party. 362. Jaytee Exports v Natvar Parekh Industries Ltd, AIR 2001 Cal 150. https://t.me/LawCollegeNotes_Stuffs 812 Chapter 15 Agency by it. The attachment of the bank account of the agent was not allowed to be continued. Earning of commission by the agent cannot make his agency as one coupled with interest. The mere fact that some of the persons were directors in the principal company as well as in the agencycompany was not a material fact when the principal was fully disclosed. This is known as the principle of the agent's immunity from personal liability. This rule applies even where the agent has contracted beyond his authority and the principal would not be liable. Even then the agent cannot be sued on the contract if he professed to act for the principal,though he will then be Uable to compensate the third party for his loss.^" But there are certain circumstances in which the agent incurs personal liability. Section 230, which incorporates the principle of agent's immunity for personal liability, says that there may be a contract to the contrary. In other words, the agent may contract to undertake personal liability. The section further goes on to provide that such contract is presumed in the following cases: Presumption of contrary contract In the following cases there is presumption of a contract to the contrary: 1. Foreign principal When an agent contracts for "a merchant resident abroad" there is the presumption that the agent undertakes personal liability. [S. 230(1)] The original presumption of English lawwas that the agent alone was liable and he had no right to pledge the credit of a foreign principal. The presump tion still stands, but it has declined in importance. The presumption was needed at a time when it was difficult to sue foreign principals and for the convenience of merchants a usage came into existence that the agent of a 363. Another case to the same effect Midland Overseas v C.M.B.T. Tana, AIR 1999 Bom 401, the contract of carriage was entered into by agent on behalf of foreign principal who was named and disclosed. The agent did not undertake any personal liability. The agent could not be sued personally for the alleged breach of contract. K.M. Sankaran v DC, (2004) 2 CTC 101, a power of attorney holder agent working as a disclosed agent was not allowed to be sued personally for dues against the principal. The judgment in the case of Mackinnon Mackenzie & Co v Lang, Moir & Co, ILR (1881) 5 Bom 584 an admitted position that the company was aware of the fact that the other contractingparty was acting as an agentfor a third party whosenamewas alreadyknown to the contractingparty. PremNath Motors Ltd VAnuragMittal, (2009) 16 SCC274:AIR2009 SC567, the principalcalledapplications for bookingcars. The agentreceived applications with cheques drawn in favour of the principal. The claim of the petitioner was that he filed an application alongwith the cheque, but neither he received the car nor refund. The plea of the agent that the liability was of the principal and not his was held to be proper. National Textile Corpn Ltd v Nareshkumar Badrikumar Jagad, (2011) 12 SCC 695; AIR 2012 SC 264, agent sued when principal known, the agent challenged it beforethe Supreme Court for the first time. It beinga question of fact, the chal lenge was not entertained. 364. Lewis v Nicholson, (1852) 18 QB 503. Where the matter is doubtful as to who between the two is sueable, both should be sued. (1989) Malaysian LJ 187, SC Kuala Lumpur. 365. This liability arises under S. 235 as that of a pretended agent. He may be also sued for deceit. https://t.me/LawCollegeNotes_Stuffs [S. 230] Personal liability of agent 813 foreign principal incurs personal liability. But now on account of changed conditions of international trade, merchants trust each other and agents do not like to incur personal liability. The resulting position has been summed up by SCRUTTON LJ in the following words: "While I think that one cannot at the present day attach the importance which used to be attached forty or fifty years ago to the fact that the supposedprincipal is a foreigner, it is still a matter to be taken into account in deciding whether the person said to be an English agent has or has not made himself personally liable."^^^ The presumption being still a part of the law, an agent can only over throw it by contracting in a manner showing an intention not to incur per sonal liability. Thus, where a contract was signed "by the authority of our principals. as agents", or "Greenwich Marihe Incorporated as agents for Trader Export S.A."^^^ it was held that this was sufficient manifestation of the intention to exclude personal liability.^^® Where a charter-party contract was signed by agents "for and on behalf of J.M. & Co (as agents), J.A.M." they were held to be not personally liable under the charter-party, although they were described as charterers.Where a contract made through an agent for the import of metallic recovery expressly provided that the obli gations of the principal or seller were not enforceable against the agent, a claim for shortage in metallic recovery against the agent was held to be not maintainable.^^" Where there was a short landing of goods and a suit for damages was filed against the foreign principal, the carrier, it was held that the Indian agent was automaticallydischarged of liability. The court saidthat both the principal and agent could not be sued together.^^^ 366. H.O. Brandt & Co v H.N. Morris & Co Ltd, (1917) 2 KB 784, 797, in some of the cases, however, it has beenstated that the presumption has ceasedto exist altogetherand the whole question turns upon the intention of the parties. See, for example, Pritchard J in Holt & Mosley Ltd v Cunningham & Partners, (1949) 83 LILReports 141; quoted in Powell, The Law of Agency, 252 (1961). A.H. Hudson in his three contributions, namely. Agent of a Foreign Principal, (1960) 23 Mod LR 695, and (1957) 35 Can BR 336; Agents for Foreign Principals, (1966) 29Mod LR353 has argued thatthepresumption still exists as part ofthe law. See also Teheran Europe Co Ltd v S.T. Belton (Tractors) Ltd, (1968) 2 QB 545. The matter depends upon as to whom the third party gave credit or may be presumed to have given credit. Hecannot bepresumed to have given credit to a foreign principal about whom he knows nothing. James Mackintosh & Co v Sree Yamuna Mills Co Ltd, (1990) 2 KLJ 141. 367. Tudor Marine Ltd v Tradax Export S.A., (1976) 2 Lloyd's Rep 135. 368. Miller, Gibb & Co v Smith & Tyre Ltd, (1917) 2 KB 141. See also Lilly, Wilson & Co v Smales, Eeles & Co, (1892) 1 QB 456, where alsothe mode of signature excluded liability of the agent who mistakenly quoted a wrong rate of freight. 369. Universal Steam Navigation Co v James McElvie & Co, 1923 AC 492 (HL). MV X-press Annapurna v Gitanjali Woolens (P) Ltd,AIR 2011 Bom 105,agent sued under a contract for carriage ofgoods by sea for non-delivery ofgoods. It was nota contract forsale or purchase ofgoods with a merchant resident abroad. Agent acted on behalf ofa disclosed principal. No decree for damages could be passed against him. 370. Nandan Iron and Metal Industries v Fenesty Inc, AIR 1992 Del 364. 371. W.B. Essential Commodities Supply Corpn Ltd v Koren Foreign Transportation Corpn, AIR 2002 Cal 211. https://t.me/LawCollegeNotes_Stuffs 814 Chapter 15 Agency By virtue of the provision in Section 230 the presumption has statutory force in India. A company registered in England, and having a place of busi ness in India, has been held to be a foreign principal for the purposes of this presumption and the Indian agent acting for it was held personally liable.^^^ 2, Principal unnamed The presumption of agent's personal liability arises w^hen he "does not disclose the name of his principal". Where an agent contracts for an undis closed principal, he definitely is personally liable, being a party to the con tract.But when he contracts for an unnamed principal, there is only a presumption of his personal liability. The presumption may arise even where the agent discloses his representative character, but not the name of his principal. Accordingly, the honorary secretary of a school was held per sonally liable for the rent of a house hired by him in his own name though for purposes of the school.^^'' But where an agent disclosed his character as the secretary of a club, personal liability could not be imposed on him.^''^ The same result would follow where the representative character is already known to the third party.^^^ But in every such case the form of contract will be the deciding factor. In an English case, a broker signed a contract in his own name, but had added: "Messrs Southwell, to my principal, etc." It was held that he was not personally liable."There is nothing whatever in the contract to show that the defendant intended to act otherwise than as broker." Where an order was placed over telephone by a-broker to another broker for the supply of bunkers, the ordering broker washeld to be not per sonally liable. Thegeneral practice in placing orders bytelephone was not to disclose the name of the principal and, moreover, the supplier already knew that the order was sent by a broker.^^^ Where, on the other hand, the usual mode of operation over telex of a forwarding agent was to remark, without disclosing the name of the principal, "We can do this for you", he was held 372. Tutika Basavraju v Parry & Co, ILR (1904) 27 Mad 315. Shaw Wallace & Co Ltd v Vnion of India, (2004) 5 CTC 308, where the agent was the first party liable for damage to the goods in transit and the second defendant was the owner of the vessel and, therefore, both being jointly liable invocation of S. 230 was not necessary. Girish Chander v American Consolidation Services Ltd, 2004 All LJ 3098; Cochin frozen Food Exports (P) Ltd v Vanchinad Agencies, (2004) 13 SCC 434, disclosure or non-disclosure of principal, so far as S. 230 Exception (1) is concerned, is immaterial, the only requirement being that the principal should be resident abroad. See Ian Brown, Thesignificance of General and Special Authorityin theDevelopment of the Agent's AuthorityExternalAuthorityin English Law, 2004 JBL 391. 373. CastrolLtd v Admiral Shipping Ltd, (2005) 3 Bora CR507,orders placed by agent without disclosing that hewas acting for a principal and accepting all bills andinvoices without any protest, nothing to showthat he was actingfor a foreign principal,the agenthimselfliableas a principal. 374. 375. 376. 377 Bhojabhai v Hayen Samuel, ILR (1898) 22 Bom 754. NWP Club v Sadullah, ILR (1898) 20 All 497. Mackinnon Mackenzie &Cow Lang, Moir & Co, ILR (1881) 5 Bom 584. Southwell v Bowditch, (1875) LR 1 CPD 374. https://t.me/LawCollegeNotes_Stuffs [S. 230] Personal liability of agent 815 personally liable, though in that case he indicated the name of the liner to whom he was forwarding the goods. Liability of dealer under the Consumer Protection Act A dealer of motor vehicles was held personally liable under the Consumer Protection Act, 1986 for passing a defective vehicle to a consumer buyer. His defence was that the real liability should be that of the manufacturer. The National Commission said that the dealer may have his reimbursement from his principal against any such liability but so far as the consumer is concerned he was bound either to rectify the defect or take back the vehicle and refund the price.^^" 3. Non-existent or incompetent principal An agent is presumed to incur personal liability where he contracts on behalf of a principal who, "though disclosed cannot be sued". An agent who contracts for a minor, the minor being not liable, the agent becomes personally liable. Thisresultmay not, however, follow where the other party already knows that the principal is minor.^^^ Similarly, where promoters buy goods on behalf of a projected company they become personally liable to pay for them. The company, being not in existence at the time of the con tract, cannot be sued.^®^ Now, by virtue of the provision in Section 9(2) of the European Communities Act, 1972, an agent of an unformed principal will be deemed to be contracting personally so as to entitle him to sue and be also sued on the contract. The Calcutta High Court did not permit an agent of the Russian Government to be sued personally because it was nei ther averred nor proved that the Government of Russia could not be suedin India or elsewhere.The mere fact that such a suit required permission of the Government of India could not be taken to mean that no suit was possible. Directors of company Directors of a company are not agents of the company in the conven tional sense ofthe principal-agent relationship ordinarily, therefore, theyare not liable in damages for breach of contract committed by their company. Even if they are agents. Section 230 confers immunity on an agent against personal liability provided only that the contract has been made in the rep resentative capacity for and on behalf of the principal. There are no doubt some exceptions. But it is a general principal and not an exception that an 379. Salsi v Jetspeed Air Services Ltd, (1977) 2 Lloyd's Rep 57. Shriniwas Shankar Potnis v Raghukul Sahakari Griharachana Sanstha Maryadit, (2010) 1 Mah LJ 368,third party can refuse to perform contractmade by agent withoutdisclosing for whom he was contracting. 380. Marikar (Motors) Ltd v Lalan Carmu, (2004) 1 All LJ 522 (NC). 381. Shet Manibhai v Bai Rupaliba, ILR (1899) 24 Bom 160. 382. Kelnerv Baxter, (1866) LR 2 CP 174.By virtue of S.9(2)of the EuropeanCommunities Act, an agent of an unformed company becomes personally liable. See Phonogram Ltd v Lane, 1982 QB 938: (1981) 3 WLR 736 (CA). 383. Unionof India v Chinoy Chablani &c Co, AIR 1976 Cal 467. https://t.me/LawCollegeNotes_Stuffs 816 Chapter 15 Agency agent committing tort or some other wrong, for example, inducing a person to make a loan to the company by making a fraudulent representation, the director would be personally liable.^^'' Election by third party [S. 233] S. 233. Right of person dealing witli agent personally liable. —In cases where the agent is personally liable, a person dealing with him may hold either him or his principal, or both of them liable. In all the above situations "where the agent is personally liable, a person dealing with him may hold either him or his principal, or both of them, lia ble." The only illustration given in the section says: A enters Into a contract with 6 to sell him 100 bales of cotton and afterwards discov ers that fiwas acting as agent for C. A maysue either Bor C, or both, for the price of the cotton. This seems to be a departure from the English law, where the third party has to elect between the liability of the principal or agent and the election once made is final and binding on him.^®^ If, for example, he has obtained judgment against the agent, he cannot afterwards sue the principal even if the judgment against the agent has remained unsatisfied.^®^ But this rule has been criticised.^®^ Clearly it is contrary to justice that T should not be able to sue P if his judgment against A is unsatisfied. The rule works particu larly harshly where T does not even know of P's existence until after he has obtained judgment against It is perhaps for this reason that the Indian Legislature marked a depar ture from the English rule and allowed the third party to sue the agent and the principal jointly. Coutts-Trotter CJ of the Madras High Court doubted whether this was the intention of the Legislature and opined that the English rule should be followed.^®® But a subsequent Division Bench of the sameHigh Court disagreed with him. Leach CJ said: "There is no ambi guity in the language used in the section and I am unable to see anything unreasonable in the rule, which it embodies. What would be the position if a suit is brought against the principal after judgment had been obtained against the agent in an earlier suit is another matter, but we are not called upon to consider that question here.''^^" Earlier the Bombay High Court had also held that the section plainly intends to create jointliability. 384. Tristar Consultants v Customer Service India (P) Ltd, AIR 2007 Del 157. 385. Kendall v Hamilton, (1879) LR 4 AC 504 (HL). 386. Mere commencement of proceedings constitutes evidence of election but that is rebuttable. ClarksonBookerLtd v Andjel, (1964) 2 QB775: (1964) 3 WLR 466 (CA). 387 Seethe dissenting judgment of Lord Penzance in Kendallv Hamilton, (1879) LR 4 AC504 (HL), where he described it as "unbending and indiscriminate". 388. Powell, The Law of Agency (2nd Edn, 1961) 270. 389. Kuttikrishnan Nair v Appa Nair, ILR (1926) 49 Mad 900, 902: AIR 1926 Mad 1213. 390. Shamsuddin v Shaw Wallace & Co, ILR 1939 Mad 282: AIR 1939 Mad 520. 391. Shivlal Motilal v Birdichand Jivraj, 1917 SCC OnLine Bom 68: AIR 1917 Bom 268. https://t.me/LawCollegeNotes_Stuffs [Ss. 234-235] Personal liability of agent 817 But it seems that even under this section some kind of election is likely to be involved. The third party has to choose between the liability of the agent, or the principal or both and the choice once made shall bind him. Election may be express or implied from conduct. An implied election takes place when the third party debits the account of the principal or the agent,receives a negotiable instrument from one or the other in payment of the price, or sues one or the other. Filing of a suit is a strong prima facie evidence of election, but is not conclusive.^®^ Estoppel of third party [S. 234] S. 234. Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable.—When a person who has made a contract with an agent induces the agent to act upon the belief that the principal only will be held liable, or induces the principal to act upon the belief that the agent only will be held liable, he cannot afterwards hold liable the agent or principal respectively. One method of electing between the principal and the agent is indicated by Section 234. If the third party leads the agent to believe that only the principal will be held liable or the principal to believe that only the agent will be held liable, he cannot afterwards change his stance. He would have to confine himself to the liability of a person whom he has selected by that process. Thus where a purchaser of goods gave notice to the seller's agent that the agent alone would be held responsible if the goods did not turn out to be of contract quality, he could not proceed against the principal.^^'* 4. Pretended agent [S. 235] S. 235. Liability of pretended agent.—A person untruly representing himselfto be the authorised agent of another, and thereby inducing a third per son to deal with him as such agent, is liable,ifhis alleged employer does not rat ify his acts,to make compensationto the other in respect of any loss or damage which he has incurred by so dealing. Thus where a person pretends to act as the agent of another, he may be saved bythe principal byratifying his act. But if no ratification is forthcom ingthe pretended agent becomes personally liable to the third party for any loss that he mayhave suffered by relying upon the representation of author ity. It would make no difference to his liability that hehonestly believed that he had the authority in question or that, even if he did not haveit, his princi pal would ratify his act.^'^ The false representation must be the cause of the 392. Addison v Gandasequi, (1812) 4 Taunt 574. 393. Scarfy Jardine, (1882) LR 7 AC 345; Clarkson Booker Ltd v Andjel, (1964) 2 QB 775: (1964) 3 WLR466(CA). 394. MadhadevGangaPrasadvGouriShankarSanganaria,lLK(1949) 1Cut453:AIR1950Ori42. 395. Collins v Wright, Collins v Wright, (1857) 8 E&B 647, approved in Starkey v Bank of England, 1903 AC 114 (HL). https://t.me/LawCollegeNotes_Stuffs 818 Chapter 15 Agency contract. A person who acknowledged the liabiUty of a firm pretending to be one of its partners was held to have incurred personal liability under the acknowledgment.^®^ Since the action in such cases is under the tort of deceit, tort principles as to damages would apply rather than those applicable to breach of contract.^'^ If the truth is already known to the other party, no hability arises. Where the pretension is as to a matter of law, the agent would not.be liable. For example, the borrowing power of a company is a matter of inter pretation of its constitutional documents and governing statutes. A mis representation as to this will not create liability.^'' But whether borrowing powers have been exhausted, is a question of fact. Liability would follow if this fact is misrepresented.''"® The agenthimself cannot sueon a contract whichhe has madepretending to be an agent. This disability is clinched upon him by Section 236. S. 236. Person falsely contracting as agent, not entitled to perfor mance.—A person with whom a contract has been entered into the character of agent is not entitled to require the performance of it, if he was in reality act ing, not as agent, but on his own account. "When a person has, in fact, no principal, yet persuades the other to con tract with him as an agent of another, he is estopped from saying that he had no principal, and since the contract was with his principal and not with him he has no locus standi to sue under that right. This will be so whether he feigns a named or unnamed principal.''®^ Where a shipping agent gave a personal commitment of issuing a bill of lading after mate's receipt but did not do so, he was held personally liable to the principal for the tort of con version and for breach of contract under Section 73 of the Contract Act.'*"^ 5. Breach of warranty of authority Closely allied to the liability of a pretended agent is the liability of an agent for breach ofwarranty of authority. Where a person isin fact an agent, but exceeds his authority, or represents to have a kind of authority which he in fact does not have, he commits breach of warranty of authority and is per sonally liable to the third party for any loss caused to him by reason of act ing on the false representation.'"'^ This is the principle of Collins v Wright. 396. Bheek Chand v Farbhuji, AIR 1963 Raj 84: ILR (1963) 13 Raj 84. 397. Vairavan Chettiar v Avicha Chettiar, ILR (1915) 38 Mad 275. 398. ShetManibhai v Bai Rupaliba, ILR (1899) 24 Bom 160,a motherrepresenting herself to be theagent ofherminor son,was held notliable asthe otherparty already knew theprincipal's minority. 399. Saffron WaldenBenefitBuildingSociety v Rayner, (1880) LR 14 Ch D 406 (CA). 400. Oliver v Bank of England, (1901) 1 Ch 652, 660 (CA). 401. Gopal Sridhar v Sashi Bhushan, ILR (1933) 60 Cal 111: AIR 1933 Cal 109. 402. Nepal Food Corpn v U.P.T. Import and Export Ltd, AIR 1988 Cal 283. 403. Ganpat Prasad v Sarju, (1912) 9 All LJ 8. 404. (1857) 8 E&B 647: 27 LJ QB 215: 30 LT 209. https://t.me/LawCollegeNotes_Stuffs [S. 196] W was land agent for one G. W agreed to grant to the plaintiff a lease of G's farm for llVi years. He honestly believed that he had the authority to do so. But G refused to execute the lease and he proved that he had given no such authority to the agent. W, having died in the meantime, the plaintiff sued his executors for the loss he had suffered in entering upon the farm, and they were held liable. WiLLES J said:'"'^ "The fact that the professed agent honestly thinks that he has authority that affects the moral character of his act; but his moral inno cence, so far as the person whom he has induced to contract is concerned, in no way aids such person, or alleviates the inconvenience and damage which he sustains. The obligation arising in such a case is well expressed by saying that a person, professing to contract as agent for another, impliedly, if not expressly, undertakes to or promises the person who enters into such con tract, upon the faith to the professed agent being duly authorised, that the authority which he professes to have does in point of fact exist.'"*"® Similarly, in Yonge v Toynbee'*°'' an agent was held liable for prosecuting an action even after his principal, though unknown to him, had become insane, for the insanity had determined the agent's authority at once. An agent was held liable to a person to whom he chartered his principal's ship without authority of the principal who repudiated the transaction.'"'® An agent gives warranty of his authority; he does not guarantee that, if the con tract is within authority, the principal would not commit breach. RATIFICATION The doctrine of ratification comes into play when a person has done an act on behalf of another without his knowledge or consent. The doctrine gives the person on whose behalf the act is done an option either to,adopt the act by ratification or to disown it. Ratification is thus a kind of affirma tion of unauthorised acts. It is thus explained in Section 196: S. 196. Right of person as to acts done for him without his author ity: Effect of ratification.—Where acts are done by one person on behalf of another, but without his l after book on the subject. The book deals with the intricacies of rnnh-=, t i sought • straightforward and lucid style. It covers many new develonint. a ^ ®"eas ,n contrac. law Dy ttie author. The book covers recent decisions onissues ariciinor r. f trade ar.d commerce, which have thereby contributed^1^7 , though not signed by parHes has bindingeffect; whetherBCacan hav on the subject^ For example, whether anVelTe^rd i^rlT-^'f events organised by the Board; whether pledge's risrt for S, H other rights and claims; and whether privi^ oS^tr «^ '7'''"r T ®necessary for seeking Freeaccess to importantcaselaw as indicated by Case Pilot™. Discussion Forum™ provides a platform outside classroom to post comments, discuss and explore ideas. see Online' Blog to stay updated on recent happenings of the legal world. •mis work reveals the rich experience and pragmatic approach of the author, which renders the book indispensjible for the legal fraternity and stadents alike. The book ,s greatly admired and read by students, lawyers, judges, academicians, researchers and has been extolled by reviewers inIndia and abroad Reviews • "This book on the law of Contract by Avtar Singh, a distinguished author ismore comprehensive than an equivalent American book asit covers additional topics such as agency, some aspects of partnerships, bank guarantees andbailment." - Law Books in Review, U.S.A. • "The book includes chapters on quasi-contracts, contracts of indemnity, guarantee, bailment, pledge, and agency. Copious reference is also made to English as well as to the Indian cases and statutes."- Malaya Law Review (Facultyof Law, National University of Singapore) Rs 775 Reader /ivod Mmwnnh Apply