Corporate And Regulatory

Contract Act, 1872 (Pt. 2 of 4)

Status: In force


Illustrations

 (a)         A promises to pay B a sum of money. A may perform this promise, either by personally paying the money to B or by causing it to be paid to B by another; and, if A dies before the time appointed for payment, his representatives must perform the promise, or employ some proper person to do so.

 (b)         A promises to paint a picture for B. A must perform this promise personally.

41.          Effect of accepting performance from third person. When a promisee accepts performance of the promise from third person, he cannot afterwards enforce it against the promisor.

42.          Devolution of joint liabilities. When two or more persons have made a joint promise, then unless a contrary intention appears by the contract, all such persons during their joint lives, and after the death of any of them, his representative jointly with the survivor or survivors, and after the death of the last survivor, the representatives of all jointly, must fulfill the promise.

43.          Any one of joint promisors may be compelled to perform. When two or more persons make a joint promise, the promisee may, in the absence of express agreement to contrary compel any one or more of such joint promisors to perform the whole of the promise.

Each promisor may compel contribution. Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.

Sharing of loss by default in contribution. If any one of two or more joint promisors makes default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.

Explanation. Nothing in this section shall prevent a surety from recovering from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payments made by the principal.

Illustrations

 (a)         A, B and C jointly promise to pay D 3,000 rupees. D may compel either A or B or C to pay him 3,000 rupees.

 (b)         A, B and C jointly promise to pay D the sum of 3,000 rupees. C is compelled to pay the whole. A is insolvent, but his assets are sufficient to pay one-half of his debts. C is entitled to receive 500 rupees from A's estate and 1,250 rupees from B.

 (c)          A, B and C are under a joint promise to pay D 3,000 rupees. C is unable to pay anything, and A is compelled to pay the whole. A is entitled to receive 1,500 rupees from B.

 (d)         A, B and C are under a joint promise to pay D 3,000 rupees. A and B being only sureties for C. C fails to pay. A and B are compelled to pay the whole sum. They are entitled to recover it from C.

44.          Effect of release of one joint promisor. Where two or more persons have made joint promise, a release of such joint promisors by the promisee, does not discharge the other joint promisor or joint promisors; neither does it free the joint promisors so released from responsibility to the other joint promisor or joint promisors.

45.          When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and after the death of any of them, with the representative of such deceased person jointly with the surveyor or survivors, and, after the death of the last survivor, with the representatives of all jointly.

Illustration

A in consideration of 5,000 rupees lent to him by B and C, 'promises B and C jointly to repay them that sum with, interest on a day specified, B dies. The right to claim performance rests with B's representative jointly with C during C's life, and after the death of C with the representatives of B and C jointly.

Time and Place for Performance

46.          Time for performance of promise where no application is to be made and no time is specified. Where, by the contract, a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.

Explanation. The question 'what is a reasonable time', is in each particular case, a question of fact.

47.          Time and place for performance of promise where time is specified and no application to be made. When promise is to be performed on a certain day, and the promisor has undertaken to perform it without application by the promisee, the promisor may perform it at any time during the usually hours of business on such day and at the place at which the promise ought to be performed.

Illustration

A promises to deliver goods at B's warehouse on the first January. On that day A brings the goods to B's warehouse, but after the us usual hour for closing it, and they are not received. A has not performed his promise.

48.          Application for performance on certain day to be at proper time and place. When a promise is to be performed on a certain day, and the promisor has not undertaken to perform it without application by the promisee, it is the duty of the promisee to apply for the performance at a proper place and within the usual hours of business.

Explanation. The question 'what is a proper time and place' is, in each particular case, a question of fact.

49.          Place for performance of promise where no application to be made and no place fixed for performance. When a promise is to be performed without application by the promisee, and no place is fixed for the performance of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such place.

Illustration

A undertakes deliver a thousand maunds of jute to B on a fixed day. A must apply to B to appoint a reasonable place for the purpose of receiving it, and must deliver it to him at such place.

50.          Performance in manner or at time prescribed or sanctioned by promisee. The performance of any promise may be made in any manner, or at any time which the promisee prescribes or sanctions.

Illustrations

 (a)         B owes A 2,000 rupees. A desires B to pay the amount to A's account with C, a Banker. B, who also Banks with C, orders the amount to be transferred from his account to A's credit, and this is done by C. Afterwards, and before A knows of the transfer, C fails. There has been a good payment by B.

 (b)         A and B are mutually indebted. A and B settle an account by setting off one item against another and B pays A the balance found to be due from him upon such settlement. This amounts to a payment by A and B respectively, of the sums which they owed to each other.

 (c)          A owes B 2,000 rupees. B accepts some of A's goods in reduction of the debt. The delivery of the goods operates as a part payment.

 (d)         A desires B. who owes him Rs. 100 to send him a note for Rs. 100 by post. The debt is discharged as soon as B puts into the post a letter containing the note duly addressed to A.

Performance of Reciprocal Promises

51.          Promisor not bound to perform, unless reciprocal promisee ready and willing to perform. When a contract consists of reciprocal promises to be simultaneously performed, no promisor need perform his promise unless the promisee is ready and willing to perform his reciprocal promise.

Illustrations

 (a)         A and B contract that A shall deliver goods to B to be paid for by B on delivery. A need not deliver the goods, unless B is ready and willing to pay for the goods on delivery’s need not pay for the goods, unless a is ready and willing to deliver them on payment.

 (b)         A and B contract that A shall deliver goods to B at a price to be paid by installments, the first installment to be paid on delivery. A need not deliver, unless B is ready and willing to pay the first installment on delivery’s need not pay the first installment, unless A is ready and willing to deliver the goods on payment of the first installment.

52.          Order of performance of reciprocal promises. Where .he order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order, and, where the order is not expressly fixed by the contract, they shall be performed in that order which the nature of the transaction requires.

Illustrations

 (a)         A and B contract that A shall build a house for B at fixed price. A's promise to build the house must be performed before B's promise to pay for it.

 (b)         A and B contract that A shall make over his stock-trade to B at a fixed price, and B promise to give security for the payment of the money. A's promise need not be performed until the security is given for the nature of the transaction requires that A would have security before he delivers up his stock.

53.          Liability of party preventing event on which the contract is to take effect. When contract contains reciprocal promises, and one party to the contract prevents the other from performing his promise the contract becomes voidable at the option of the party so prevented; and he is entitled to compensation from the other party for any loss which is may sustain in consequence of the nonperformance of the contract.

Illustration

A and B contract that B shall execute certain work for A for a thousand rupees. B is ready and willing to execute the work accordingly, but A prevents him from doing so. The contract is voidable at the option of B; and if he elects to rescind it, he is entitled to recover from A compensation for any loss which he has incurred by its non-performance.

54. Effect of default as to that promise which should be first performed, in contract consisting of reciprocal promises. When contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last-mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract.

Illustrations

 (a)         A heirs B's shop to take in and convey from [Karachi] to the Mauritius, a cargo to be provided by A, B receiving certain freight for its conveyance. A does not provide any cargo for the ship. A cannot claim the performance of B's promise, and must make compensation to B for the loss which B sustain by the non-performance of the contract.

 (b)         A contracts with B to execute certain builder's work for a fixed price, B supplying the scaffolding and timber necessary for the work. B refuses to furnish any scaffolding or timber, and the work cannot be executed. A need not execute the work, and B is bound to make compensation to A for any loss Caused to him by the non-performance of the contract.

 (c)          A contracts with B to deliver to him, at a specified price, certain merchandise on board a ship which cannot arrive for a month, and B engages to pay for the merchandise within a week from the date of the contract. B does not pay within the week. A's promise to deliver need not be performed, and B must make compensation.

 (d)         A promises B to sell him one hundred bales of merchandise, to be delivered next day, and B promises A to pay for them within a month. A does not deliver according to his promise. B's promise to pay need not be performed and A must make compensation.

55.          Effect of failure to perform at fixed time, in contract in which time is essential. When a party to a contract promise to do a certain thing at or before, a specified time, or certain things at or before specified time, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promise if the intention of the parties was that time should be of the essence of the contract.

Effect of such failure when time is not essential. If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor of any loss occasioned to him by such failure.

Effect of acceptance of performance at time other than that agreed upon. If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of acceptance he gives notice to the promisor of his intention to do so.

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

Contract to do act afterwards becoming impossible or unlawful. A contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful becomes void when the act becomes impossible or unlawful.

Compensation for loss through non-performance of an act known to be impossible or unlawful. Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not known to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise.

Illustrations

 (a)         A agrees with B to discover treasure by magic. The agreement is void.

 (b)         A and B contract to marry each other. Before the time fixed for the marriage, A goes mad. The contract becomes void.

 (c)          A contracts to marry B, being already married to C, and being forbidden by the law which he is subject to practice polygamy. A must make compensation to B for the loss caused to her by the non-performance of his promise.

 (d)         A contracts to take in cargo for B at foreign port. A's Government afterwards declares war against the contrary in which the port is situated. The contract becomes void when war is declared.

 (e)         A contracts to act at a theater for six months in consideration of a sum, paid in advance by B. On several occasions A is too ill to act. The contract to act on those occasions becomes void.

57.          Reciprocal promise to do things legal, and also other, things illegal. Where persons reciprocally promise, firstly, to do certain things which are legal, and, secondly under specified circumstances, to do certain other thin which are illegal, the first set of promises is a contract, but the second is a void agreement.

Illustrations

 (a)         A and B agree that A shall sell B a house for 10,000 rupees, but that, if B uses it as a gambling house, he shall pay A 50,000 rupees for it.

 (b)         The first set of reciprocal promises namely, to sell the house and to pay 10,000 rupees for it, is a contract. The second set is for an unlawful object, namely, that B may use the house as a gambling house, and is a void agreement.

58.          Alternative promise, one branch being illegal. In the case of an alternative promise, one branch of which is legal and the other illegal, the legal branch alone can be enforced.

Illustrations

A and B agree that A shall pay B 1,000 rupees for which B shall afterwards deliver to A either rice or smuggled opium. This is a valid contract to deliver rice, and a void agreement as to the opium.

Appropriations of Payments

59.          Application of payment where debt to be discharged is indicated. Where a debtor, owing several district debts to one person, makes a payment to him, either with express intimation, or under circumstances implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted must be applied accordingly.

Illustrations

 (a)         A owes B, among other debts, 1,000 rupees upon a promissory note which falls due on the first June. He owes B no other debt of that amount. On the first June A pay to B 1,000 rupees. The payment is to be applied to the discharge of the promissory note.

 (b)         A owes B, among other debts, the sum of 567 rupees. B writes to A and demands payment of this sum. A sends to B 567 rupees. This payment is to be applied to the discharge of the debt of which B had demanded payment.

60.          Application of payment, where debt to be discharged is not indicated. Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits.

61.          Application of payment where neither party appropriates. Where neither party makes any appropriation the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionally.

Contracts which need not be performed

62.          Effect of novation, rescission and alteration of contract. If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.

Illustrations

 (a)         A owes money to B under a contract, it is agreed between A, B and C that B shall thenceforth accept C as his debtor, instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted.

 (b)         A owes B 10,000 rupees. A enters into an arrangement with B, and gives mortgagee of his (A's estate for 5,000 rupees in place of the debt of 10,000 rupees). This is a new contract and extinguishes the old.

 (c)          A owes B 1,000 rupees under a contract. B owes C 1,000 rupees, B orders A to credit C with 1,000 rupees in his books, but C does not assent to the arrangement. B still owes C 1,000 rupees, and no new contract has been entered into.

63.          Promisee may dispense with or remit performance of promise. Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance or may accept instead of it any satisfaction which he thinks fit.

Illustrations

 (a)         A promises to paint a picture of B. B afterwards forbids him to do so. A is no longer bound to perform the promise.

 (b)         A owes B 5.000 rupees. A pays to B, and B accepts, in satisfaction of whole debt, 2,000 rupees paid at the time and place at which the 5,000 rupees were payable. The whole debt is discharged.

 (c)          A owes B 5,000 rupees. C pays to B 1,000 rupees, and B accepts them in satisfaction of his claim on A. This payment is a discharge of the whole claim.

 (d)         A owes B, under a contract, a sum of money, the amount of which has not been ascertained. A without ascertaining the amount, gives to B , and B, in satisfaction thereof, accepts, the sum of 2,000 rupees. This is a discharge of the whole debt, whatever may be its amount.

 (e)         A owes B 2,000 rupees, and is also indebted to other creditors. A makes an arrangement with his creditors, including B, to pay them a composition of fifty paisa in the rupee upon their respective demands. Payment to B of 1,000 rupees is a discharge of B's demand.

64.          Consequences of rescission of voidable contract. When a person at whose option a contract is voidable rescinds it the other party thereto need not perform any promise therein contained-in which he is promisor. The party residing a voidable contract shall, if he has received any benefit thereunder from another party to such-contract, restore such benefit, so far as may be, to the person from whom it was received.

65.          Obligation of person who has received advantage under void agreement or contract that becomes void. When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.

Illustrations

 (a)         A pays B 1,000 rupees in consideration of B's promising to marry C, A's daughter. C is dead at the time of the promise. The agreement is void, but B must repay A the 1,000 rupees.

 (b)         A contracts with B to deliver to him 250 maunds of rice before the first of May. A delivers 130 maunds only before that day and none after. B retains the 130 maunds after the first of May. He is bound to pay A for them.

 (c)          A, singer, contracts with B, the manager of a theater, to sing at his theater for two nights in every week during the next two months, and B engages to pay her a hundred rupees for each night's performance. On the sixth night, A willfully absents herself from the theater, and B, in consequences, rescinds the contract. B must pay A for the five nights or which she had sung.

 (d)         A contracts to sing for B at a concert for 1,000 rupees, which are paid in advance. A is too ill to sing. A is not hound to make compensation to B for the loss of the profits which B would have made if A had been able to sing but must refund to B the 1,000 rupees paid in advance.

66.          Mode of communicating or revoking rescission of voidable contract. The rescission of voidable contract may be communicated or revoked in the same manner and subject to the same rules, as apply to the communication or revocation of a proposal.

67.          Effect of neglect promises to afford promisor reasonable facilities of performance. If any promise neglects or refuses to afford, the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to any non-performance caused thereby.

Illustrations

A.            contracts with B to repair B's house.

B.            neglects or refuses to point out to A the places in which his house requires repair. A is excused for the non-performance of the contract if it is caused by such neglect or refusal.

CHAPTER V

THE CONTRACT ACT

Of certain Relations Resembling those created by Contract

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

69.          Reimbursement of person paying money due by another in payment of which he is interested

70.          Obligation of person enjoying benefit of non-gratuitous Act

71.          Responsibility of finder of goods

72.          Liability of persons to whom money is paid or thing delivered by mistake or under coercion

CHAPTER VI

Of the Consequences of Breach of Contract

73           Compensation for loss or damage caused by breach of contract Compensation for failure to discharge obligations resembling those created by contract

74.          Compensation for breach of contract where penalty stipulated for.

75.          Party rightfully rescinding contract entitled to compensation

CHAPTER VII

Sale of Goods

76 to 123.             (Repealed)

CHAPTER VIII

Of Indemnity and Guarantee

124.        'Contract of indemnity' defined

125.        Right of indemnity -holder when sued

126.        'Contract of guarantee', 'surety', 'principal debtor' and” creditor.”

127.        Consideration for guarantee.

128.        Surety's liability.

129.        'Continuing guarantee'.

130.        Revocation of continuing guarantee.

131.        Revocation of continuing guarantee by surety's death.

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

133.        Discharge of surety by variance in terms of contracts.

134.        Discharge of surety by release or discharge of principal debtor.

135.        Discharge of surety when creditor compounds with, give'., time to, or agrees not to sue, principal debtor

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

137.        Creditor' forbearance to sue does not discharge surety.

138.        Release of one co-surety does not discharge others.

139.        Discharge of surety by creditor's Act or omission impairing surety's eventual remedy.

140.        Rights of surety on payment or performance.

141.        Surety's right to benefit of creditor's securities.

142.        Guarantee obtained by misrepresentation invalid.

143.        Guarantee obtained by concealment invalid.

144.        Guarantee on contract that creditor shall not Act on it until co-surety joins.

145.        Implied promise to indemnify surety.

146.        Co-sureties liable to contribute equally.

147.        Liability of co-sureties bound in different sums.

CHAPTER IX

Of Bailment

148.        'Bailment' 'bailor,' and 'bailee', defined.

149.        Delivery to bailee how made.

150.        Bailor's duty to disclose faults in goods bailed.

151.        Care to be taken by bailee.

152.        Bailee when not liable for loss, etc., of thing bailed.

153.        Termination of bailment by bailee's Act inconsistent with conditions.

154.        Liability, of bailee making unauthorized use of goods bailed.

155.        Effect of mixture, with bailor's consent, of his goods with bailee's.

156.        Effect of mixture, without bailor's consent, when the goods can be separated.

157.        Effect of mixture, without bailor's consent, when the goods cannot be separated.

158.        Repayment by bailor of necessary expenses.

159.        Restoration of goods lent gratuitously.

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

161.        Bailee's responsibility when goods are not duly returned.

162.        Termination of gratuitous bailment by death.

163.        Bailor entitled to increase of profit from goods bailed

164.        Bailor's responsibility to bailee

165.        Bailment by several joint owners

166.        Bailee not responsible on re-delivery to bailor without title

167.        Right of third person claiming goods bailed

168.        Right of finder of goods ; may sue for specific reward offered

169.        When finder of thing commonly on sale may sell it

170.        Bailee's particular lien

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

Bailments of pledges

172.        'Pledge', 'Pawnor' and 'Pawnee' defined

173.        Pawnee's right of retainer

174.        Pawnee not to retain for debt or promise other than that for which goods pledged Presumption in case of subsequent advances

175.        Pawnee's right as to extra-ordinary expenses incurred

176.        Pawnee's right where pawnor makes default

177.        Defaulting pawnor's right to redeem

178.        Pledge by mercantile agent

178-A.   Pledge by person in possession under voidable contract.

179.        Pledge where pawnor has only a limited interest

Suits by Bailees or Bailors against Wrongdoer

180.        Suit by bailor or bailee against wrong-doer

181.        Apportionment of relief or compensation obtained by such suits

THE CONTRACT ACT

(IX OF 1872)

CHAPTER V

OF CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT

68. Claim for necessaries supplied to person incapable of contracting on his account. If a person incapable of entering not contract, or any one whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person.

Illustrations

(a)          A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be reimbursed from B's property.

(b)          A supplies the wife and children of B, a lunatic with necessaries suitable to their condition in life. A is entitled to be reimbursed from B's property.

69.          Reimbursement of person paying money due by another in payment of which he is interested. A person who is interested in the payment of money which another is bound by law to pay, and who, therefore pays it, entitled to be reimbursed by the other.

Illustration

B holds lands in '[Karachi] on a lease granted by A, the zamindar. The revenue payable by A to the Government being in arrear, his land is advertised for sale by the Government. Under the revenue law, the consequence of such sale will be the annulment of B's lease. B to prevent the sale and the consequent annulment of his own lease, pays to the Government the sum due from A. A is bound to make good to B the amount so paid.

70.          Obligation of person enjoying benefit of non-gratuitous act. Where a person lawfully does not anything for another person or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of or to restore, the thing so done or delivered.

Illustrations

(a)          A, a tradesman, leaves goods at B's house by mistake. B treats the goods as his own. He is bound to pay A for them.

(b)          A saves B's property from fire. A is not entitled to compensation from B, if the circumstances show that he intended to act gratuitously.

71.          Responsibility of finder of goods. A person who finds goods belonging to another and takes them into his own custody, is subject to the same responsibility as a bailee.

72.          Liabilities of person to whom money is paid or thing delivered by mistake or under coercion. A person to whom money has been paid or anything delivered by mistake or under coercion, must repay or return it.

Illustrations

(a)          A and B jointly owe 100 rupees to C. A alone pays the amount to C, and B, not knowing this fact, pays 100 rupees over again to C, C is bound to repay the amount to B.

(b)          A railway company refuses to deliver up certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.

CHAPTER VI

OF THE CONSEQUENCES OF BREACH OF CONTRACT

73.          Compensation for loss or damage caused by breach of contract. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.

Compensation for failure to discharge resembling those created by contract. When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.

Explanation. In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.

Illustrations

(a)          A contracts to sell and deliver 50 maunds of saltpetre to B, at a certain price to be paid on delivery. A breaks his promise. B is entitled to receive from A, by way of compensation, the sum, if any, by which the contract price falls short of the price for which B might have obtained 50 maunds of saltpetre of like quality at the time when the saltpetre ought to have been delivered.

(b)          A hires B's ship to go to Karachi, and there take on board, on the first of January, a cargo which A is to provide and to bring it to Chittagong the freight to be paid when earned; B's ship does not go to Karachi but A has opportunities of procuring suitable conveyance for the cargo terms as advantageous as those on which he had chartered the ship. A avails himself of those opportunities, but is put to trouble and expense in doing so. A is entitled to receive compensation from B is respect of such trouble and expense.

(c)           A contracts to buy from B, at a stated price, 50 maunds of rice. no time being fixed for delivery. A afterwards informs B that he will not accept the rice if tendered to him. B is entitled to receive from A, by way of compensation the amount, if any. by which the contract price exceeds that which B can obtain for the rice at the time when A informs. B (hat he will not accept it.

(d)          A contracts to buy B's ship for 60,000 rupees, but breaks his promise. A must pay to B by way of compensation, the excess. If any, of the contract price over price which B can obtain for the ship at the time of the breach of promise.

(e)          A, the owner of a boat, contracts with B to take a cargo of jute to Mymensingh. for sale at that place, starting on a specified day. The boat, owing to some avoidable cause, does not start at the time appointed, whereby the arrival of the cargo at Mymensigh is delayed beyond the time when it would have arrived if the boat had sailed according to the contract. After that date, and before the arrival of he cargo, the price of jute falls. The measure of the compensation payable to B by A is the difference between the price which A could have obtained for the cargo at Mymensingh at the time when it would have arrived if forwarded in due course, and its market price at the time when it actually arrived.

(f)           A contracts to repair B's house in a certain manner, and receives payment in advance. A repairs the house, but not according to contract. B is entitled to recover from A the cost of making the repairs conform to the contract.

(g)          A contracts to let his ship to B for a year, from the first of January, for a certain price. Freights rise. and, on the first of January, the hire obtained for the ship is higher than the contract price. A breaks his promise. He must pay to B, by way of compensation, a sum equal to the difference between the contract price and the price for which B could hire a similar ship for a year on and from the first of January.

(h)          A contracts to supply B with a certain quantity of lion at a fixed price, being a higher price than that for which A could procure and deliver the iron. B wrongfully refuses to receive the iron. B must pay to A, by way of compensation, the difference between the contract price of the iron and the sum for which A could have obtained and deliver it.

(i)            A delivers to B, a common carrier, a machine, to be conveyed, without delay, to A's mill informing B that his mill is stopped for want of the machine. B unreasonably delays the delivery of the machine, and A, in consequences, loses a profitable contract with the Government. A is entitled to receive from B, by way of compensation, the average amount of profit which would have been made by the working of the mill during the time that at delivery of it was delayed, but not he loss unstained through the loss of the Government contract.

(j)           A, having contracted with B to supply B with 1,000 tons of iron at 100 rupees a ton, to be delivered at a stated time, contracts with C for the purchase of 1,000 tons of iron at 80 rupees a ton, telling C that he does so for the purpose of performing his contract with B. C fails to perform his contract with A, who cannot procure other iron, and B, in consequence, rescinds the contract, C must pay to A 20,000 rupees, being the profit which A would have made by the performance of his contract with B.

(k)          A contracts with B to make and deliver to B, by a fixed day, for a specified price, a certain piece of machinery. A does not deliver the piece of machinery at the time specified and in consequence of this, B is obliged to procure another at a higher price than that which he was to have paid to A, and is prevented from performance a contract which B had made a third person at the time of his contract with A (but which had not been then communicated to A), and is compelled to make compensation for breach of that contract. A must pay to B, by way of compensation, the difference between the contract price of the piece of machinery and the sum paid by B for another, but not the sum paid by B to the third person by way of compensation.

(l)            A, a builder, contracts to erect and finish a house by the first of January, in order that B may give possession of it at that time to C, to whom B has contracted to let it. A is informed of the contract between B and C. A builds the house so badly that, before the first of January, it falls down and has to be re-built by B, who, in consequence, loses the rent which he was to have received from C, and is obliged to make compensation to C, for the breach of his contract. A must make compensation to B for the cost of re-building the house, for the rent lost, and for the compensation made to C.

(m)         A sells certain merchandise to B, warranting it to be of a particular quality, and B, in reliance upon this warranty, sells it to C with a similar warranty. The goods prove to be not according to the warranty, and B becomes liable to pay C a sum of money by way of compensation B is entitled to reimbursed this sum by A.

(n)          A contracts to pay a sum of money to B on a day specified. A does not pay the money on that day; B, in consequence of not receiving the money on that day, in unable to pay his debts, and is totally ruined. A is not liable to make good to B anything except the principal sum he contracted to pay, together with interest up to the day of payment.

(o)          A contracts to deliver 50 maunds of saltpetre to B on the first of January, at a certain price. B afterwards, before the first of January, contracts to sell the saltpetre to C at price higher than the market price of the first of January. A breaks his promise. In estimating the compensation payable by A to B, the market price of the first of January, and not be profit which would have arisen to B from the sale to C, is to be taken into account.

(p)          A contracts to sell and deliver 500 bales of contain to be on a fixed day. A knows nothing of B's mode of conducting his business. A breaks his promise, and B having no cotton, is obliged to close his mill. A is not responsible to B for the loss caused to B by the closing of the mill.

(q)          A contracts to sell and deliver to B, on the first of January, certain cloth which B intends to manufacture into case of a particular kind, for which there is no demand, except at that season. The cloth is delivered till after the appointed time, and too late to be used that year in making caps. B is entitled to receive from A, by way of compensation, difference between the contract price of the cloth and its marked price at the time of delivery, but not the profits which he expected to obtain by making caps, nor the expenses which he has been put to in making preparation for the manufacture.

(r)           A, ship-owner, contracts with B to convey him from [Karachi] to Sydney in A's ship, sailing on the first day of January, and B pays to A, by way of deposit, one half of his passage-money. The ship does no sail on first of January, and B, after being, in consequence, detained in [Karachi]' for some time and thereby put to some expense proceeds to Sydney in another vessel, and, in consequence, arriving too late in Sydney, loses a sum of money. A is liable to repay to B his deposit, with interest, and the expense which he is put by his detention in [Karachi] and the excess, if any, of the passage-money paid for the second ship over that agreed upon for the first, but not the sum of money which B lost by arriving in Sydney too late.

74.          Compensation for breach of contract where penalty stipulated for. Where a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the arty who was broken into the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.

Exception. A stipulation for increased interest from the date of default may be a stipulation by way of penalty.

Explanation I. When any person enters into any bail-bond, recognizance or other instrument of the same nature, or, under the provisions of any law, or under the order of the Federal Government or of any Provincial Government, gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein.

Explanation II. A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested.

(a)          A contracts with B to pay B Rs. 1,000, if he fails to pay B Rs. 500 on a given day. A fails to pay B Rs. 500 on that day. B is entitled to recover from A such compensation not exceeding Rs. 1,000 as the Court considers reasonable.

(b)          A contracts with B that, if A practices as a surgeon within [Peshawar] he will pay B Rs. 5,000. A practices as a surgeon in Peshawar. B is entitled to such compensation not exceeding Rs. 5,000, as the Court considers reasonable.

(c)           A gives a recognizance binding him in a penalty of Rs. 500 to appear in Court on a certain day. He forfeits his recognizance. He is liable to pay the whole penalty.

(d)          A gives B a bond for the repayment of Rs. 1,000 with interest at 12 per cent at the end of six months, with a stipulation that in case of default, interest shall be payable at the rate of 75 per cent from the date of default. This is a stipulation by way of penalty, and B is only entitled to recover from A such compensation as the Court considers reasonable.

(e)          A who owes money to B, a money-lender, undertakes to repay him by delivering to him 10 maunds of grain on a certain date, and stipulated that, in the event of his not delivering the stipulated amount by the stipulated date, he shall be liable to deliver 20 maunds. This is a stipulated by way of penalty, and B is only entitled to reasonable compensation in case of breach.

(f)           A undertakes to repay B, a loan of Rs. 1,000 by five equal monthly installments with stipulation that, in default of payment of any installment the whole shall become due. This stipulation is not by way of penalty, and the contract may be endorsed according to its terms.

(g)          A borrows Rs. 100 from B and gives him a bond for Rs. 200 payable by five-yearly installments of Rs. 40, with a stipulation that, in default of payment of any installment, the whole shall become due. This is a stipulation by way of penalty.

 

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