Corporate And Regulatory

Contract Act, 1872 (Pt. 3 of 4)

Status: In force


75.          Party rightfully residing contract entitled to compensation. A person who rightly rescinds a contract is entitled to compensation for any damage which he has sustained through the non-fulfillment of the contract.

Illustration

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 100 rupees for each night's performance. On the sixth night. A, willfully absents herself from the theater and B, in consequence, rescinds the contract. B is entitled to claim compensation for the damage which he has sustained through the non-fulfillment of the contract.

CHAPTER VII

[Sale of Goods]

Rep.       by the Sale of Goods Act, 1930 (III of 1930). S. 65.

CHAPTER VIII

OF INDEMNITY AND GUARANTEE

124.        'Contract of Indemnity' defined. A contract by which one party promises to save the other from lose caused to him by the conduct of the promisee himself, or by the conduct of any other person, is called a 'contract of indemnity'.

Illustration

A contracts to indemnity B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees. This is a contract of indemnity.

125.        Rights of indemnity-holder when sued. The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor-

 (a)         all damages which he may be compelled to pay in any such suit in respect of any matter to which the promise to indemnify applies;

 (b)         all costs which he may be compelled to pay in any suit if, in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorized him to bring or defend the suit;

 (c)          all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contrary to the orders of the promisor, and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorized him to compromise the suit.

126.        'Contract of guarantee', 'surety', 'principal debtor' and 'creditor'. A 'contract of guarantee' is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the 'surety'; the persons in respect of whose default the guarantee is given is called the 'principal debtor' and the person to whom the guarantee is given is called the 'creditor.' A guarantee may be either oral or written.

127.        Consideration for guarantee. Anything done, or any promise made, for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee.

Illustrations

 (a)         B requests A to sell and deliver to him goods on credit. A agrees to do so, provided C will guarantee the payment of the price of the goods. C promises to guarantee the payment in consideration A's promise to deliver the goods. This is a sufficient consideration for C's promise.

 (b)         A sells and delivers goods' to B. C afterwards requests A to forbear to sue B for the debt for a year, and promises that if he does so. C will pay for them in default of payment by B. A agrees to forbear as requested. This is a sufficient consideration for C's promise.

 (c)          A sells and delivers goods to B. C afterwards, without consideration, agrees to pay for them in default of B. The agreement is void.

128.        Surety's liability. The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.

Illustration

A guarantees to B the payment of a bill of exchange by C, the acceptor. The bill is dishonoured by C. A is liable not only for the amount of the bill but also for any interest and charge which may have becomes due on it.

129.        'Continuing guarantee'. A guarantee which extents to a series of transactions is called 'continuing guarantee.'

Illustrations

 (a)         A, in consideration that B will employ C in collecting the rent of B's zamindari, promises B to be responsible, to the amount of 5,000 rupees, for the due collection and payment by C of those rents. This is a continuing guarantee.

 (b)         A guarantees payment to B, a tea-dealer, to the amount of £100, for any tea he may from time to time supply to C. B supplies C with tea to above the value of £100, and C pays B for it. Afterwards B supplies C with tea to the value of £200. C fails to pay. The guarantee given by A was a continuing guarantee, and he is accordingly liable to B to the extent of £100.

 (c)          A guarantees payment to B of the price of five sacks of flour to be delivered by B to C and to be paid for in a month. B delivers five sacks to C. C pays from them. Afterwards B delivers four sacks to C, which C does not pay for. The guarantee given by A was not a continuing guarantee of, and accordingly he is not liable for the price of the four sacks.

130.        Revocation of continuing guarantee. A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor.

Illustrations

 (a)         A, in consideration of B's discounting, at A's request, bills of exchange for C, guarantees to B. for twelve months, the due payment of all such bills to the extent of 5,000 rupees. B discounts bills of C to the extent of 2.000 rupees. Afterwards at the end of three months, A revokes the guarantee. This revocation discharges A from all liability to B for any subsequent discount. But A is liable to B for the 2,000 rupees, on default of C.

 (b)         A guarantees to B, to the extent of 10,000 rupees, that C shall pay all the bills that B shall draw upon him. B draws upon C, accepts the bill. A gives notice of revocation. C dishonours the bill at maturity, A is liable upon his guarantee.

131.        Revocation of continuing guarantee by surety's death. The death of the surety operates, in the absence of any contract to the contrary, as a revocation of a continuing guarantee, so far as regards future of transactions.

132.        Liability of two persons primarily liable, not affected by arrangement between them that one shall be surety on other's default. Where two persons contract with a third person to undertake a certain liability and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract, the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract, although such third person may have been aware of its existence.

Illustration

A and B make a joint and several promissory note to C. A makes it, in fact, as surety for B, and C knows this at the item when the note is made. The fact that A, to the knowledge of C made the note as surety for B, is no answer to a suit by C against A upon the note.

133.        Discharge of surety by variance in terms of contract. Any variance, made without the surety's consent, in the terms of the contract between the principal debtor and the creditor, discharges the surety as to transactions subsequent to the variance.

 (a)         A becomes surety to C for B's conduct as a manager in C's bank. Afterwards, B and C contract, without, without consent, that B's salary shall be raised, and that he shall become liable for one-fourth of the loses on overdrafts. B allows a customer to overdraw, and the bank loses a sum of money. A is discharged from his suretyship by the variance made without his consent, and is not liable to make good this loss.

 (b)         A guarantees C against the misconduct of B in an office to which B is appointed by C, and of which the duties are defined by an Act of the Legislature. By a subsequent Act, the nature of the office is materially altered. Afterwards, B misconducts himself. A is discharged by the change from future liability under his guarantee, though the misconduct of B is in respect of a duty not affected by the later Act.

 (c)          C agrees to appoint B as his clerk to sell goods at a yearly salary, upon A's becoming surety to C for B's duly accounting for moneys received by him as such clerk. Afterwards, without A's knowledge or consent, C and B agree that B should be paid by a commission on the goods sold b) him and not be a fixed salary. A is not liable for subsequent misconduct of B.

 (d)         A gives to C a continuing guarantee to the extent of 3,000 rupees for any oil supplied by C to B on credit. Afterwards B becomes embarrassed, and, without knowledge of A, B and C contract that C shall continue to supply B with-oil for ready money, and that the payments shall be applied to the then existing debts between B and C. A is not liable on his guarantee for any goods supplied after this new arrangement.

 (e)         C contracts to lend B 5,000 rupees on the 1st March. A guarantees repayment. C pays the 5,000 rupees to B on the 1st January. A is discharged from his liability, as the contract has been varied inasmuch as C might sue B for the money before the 1st of March.

134.        Discharge of surety by release or discharge of principal debtor. The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor.

Illustrations

 (a)         A gives a guarantee to C for goods to be supplied by C to B. C supplied goods (o B, and afterwards B becomes embarrassed and contracts with his creditors (including C to assign to them his property in consideration of their releasing him. from their demands. Here B is released from his debt by the contract with C, and A is discharged from his suretyship.

 (b)         A contracts with B to grow a crop of indigo on A's land and to delivery it to B at a fixed rate, and C guarantees A's performance of this contract. B diverts stream of water which is necessary for irrigation of A's land and thereby prevents him from raising the indigo. C is no longer liable on his guarantee.

 (c)          A contracts with B for a fixed price to build a house for B within a stipulated time. B supplying the necessary timber. C guarantees A's performance of the contract. U omits to supply the timber. C is discharged from his suretyship.

135.        Discharge of surety when creditor compounds with, gives time to, or agrees not to sue principal debtor. A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to sue, the principal debtor discharges the surety, unless the surety assents to such contract.

136.        Surety not discharged when agreement made with third person to give time to principal debtor. Where a contract to give time to the principal debtor is made by the creditor with a third person, and not with the principal debtor, the surety is not discharged.

Illustration

C, the holder of an overdue bill of exchange drawn by A as surety for B and accepted by A. contracts with M to give time to B. A is not discharged.

137.        Creditor's forbearance to sue does not discharge surety. Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety.

Illustration

B owes to C a debt guaranteed by A. The debt becomes payable. C does not sue B for a year after the debtor has become payable. A is not discharged from his suretyship.

138.        Release of one co-surety does not discharge others. Where-there are co-sureties, a release by the creditor of one of them does not discharge the other; neither does it free the surety so released from his responsibility to the other sureties.

139.        Discharge of surety by creditor's act or omission impairing surety's eventual remedy. If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged.

Illustrations

(a)          B contracts to build a ship for C for a given sum, to be paid by installments as (he work reaches certain stages. A becomes surety to C for B's due performance of the contract. C, without the knowledge of A, prepays to B the last two installments. A is discharged by this prepayment.

 (b)         C lends money to B on the security of a joint and several promissory note made in C's favour by B, and by A as surety for B, together with a hill of sale of B's furniture, which gives power to C to sell the furniture, and supply the proceeds in discharge of the note. Subsequently, C sells furniture, but, owing to the misconduct and willful negligence, only a small price is realized A is discharged from liability on the note.

 (c)          A puts M as apprentice to B, and gives a guarantee to B for M's fidelity. B promises on his part that he will, at least once a month see M make up the cash. B omits to see this done as promised, and M embezzles. A is not liable to B on his guarantee.

140.        Rights of surety on payment or performance. Where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor.

141.        Surety's right to benefit of creditor's securities. A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and, if the creditor loses, or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security.

Illustrations

 (a)         C advances to B, his tenant, 2,000 rupees on the guarantee of A. C has also, a further security for the 2,000 rupees by mortgage of B's furniture, C cancels the mortgage. B becomes insolvent, and C sues A on his guarantee. A is discharge from liability to the amount of the value of the furniture.

 (b)         C, a creditor, whose advance to B is secured by a decree receives also a guarantee for that advance from A. C afterward take B's goods in execution under the decree, and then without the knowledge the of A, withdraws the execution. A is discharged.

 (c)          A, as surety for B, make a bond jointly with B to C to secure a loan from C to B. Afterwards, C obtains from B a further security for the came debt subsequently C gives up the further security. A s not discharged.

142.        Guarantee obtained by misrepresentation invalid. Any guarantee which has been obtained by means of misrepresentation made by the creditor, or with his knowledge the and assent, concerning a material part of the transaction, is invalid.

143.        Guarantee obtained by concealment invalid. Any guarantee which the creditor has obtained by means of keeping silence as to material circumstances is invalid.

Illustrations

 (a)         A engages B as clerk to collect money for him. B fails to account for same of his receipts, and A in consequence calls upon him to furnish security for his duly accounting, C gives his guarantee for B's duly accounting. A does not acquaint C with B's previous conduct. B afterwards makes default. The guarantee is valid.

 (b)         A guarantees to C payment for iron to be supplied by him to B to the amount of 2,000 tons. B and C have privately agreed that B should pay five rupees per ton beyond the market price, such excess to be applied in liquidation of an old debt. This agreement is concealed from A. A is not liable as a surety.

144.        Guarantee on contract that creditor shall not act on its until co-surety joins. Where a person gives a guarantee upon a contract that the creditor shall not act upon it until another person has joined in it as co-surety, the guarantee is not valid if that other person does not join.

145.        Implied promise to indemnify surety. In every contract of guarantee there is an implied promise by the principal debtor to indemnify the surety, and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee, but no sums which he has paid wrongful.

Illustrations

(a)          B is indebted to C, and A is surety for the debt. C demands payment from A, and on his refusal sues him for the amount. A defends the suit, having reasonable grounds for doing so, but is compelled to pay the amount of the debt with costs. He can recover from the amount paid by him for costs, as well as the principal.

 (b)         C lends B a sum of money, and A, at the request of B, accepts a bill of exchange drawn by B upon A to secure the amount. C, the holder of the bill D demands payment of it from A, and on A's refusal to pay, sues him upon the bill. A not having reasonable grounds for so doing, defends the suit, and has to pay the amount of the bill and costs. He can recover from B the amount of the bill but not the sum paid for costs, as there was not real ground for defending the action.

 (c)          A guarantees to C, to the extent of 2,000 rupees, payment for rice to be supplied by C to B. C supplies to B rice to a less amount than 2,000 rupees, but obtains from A payment of the sum of 2,000 rupees in respect to rice supplied. A cannot recover from B more than the price of the rice actually supplied.

146.        Co-sureties liable to contribute equally. Where two or more persons are co-sureties for the same debt or duty. either jointly or severally, and whether under the same or different contracts, and whether with or without the knowledge of each other, the co-sureties, in the absence of any contract to the contrary, are liable, as between themselves, to pay each an equal share of the whole debt, or of that part of it which remains unpaid by the principal debtor.

Illustrations

 (a)         B and C are sureties to D for the sum of 3,000 rupees lent to E. E makes default in payment. A, B and C are liable, as between themselves, to pay 1,000 rupees each.

 (b)         A, B and C are sureties to D for the sum of 1,000 rupees lent to E, and there is a contract between A, B and C that A is to be responsible to the extent of one-quarter, B to the extent of one-quarter and C to the extent of one-half. E makes default in payment. As between the securities A is liable to pay 250 rupees B 250 rupees, and C 500 rupees.

147.        Liability of co-sureties bound in different sums. Co-sureties who are bound in different sums are liable to pay equally as far as the limits of their respective obligations permit.

Illustrations

 (a)         A, B, and C, as sureties for D, enter into three several bonds, each in a different penalty, namely. A in the penalty of 10,000 rupees. B is that of 20,000 rupees, C in that of 40,000 rupees, conditioned fro D's duly accounting to E. D makes default to the extent of 3,000 rupees. A, B and C are each liable to pay 10,000 rupees.

 (b)         A, B and C, as sureties for D, enter into three several bonds, each in a different penalty, namely, A in penalty of 10,000 rupees. B in that of 20.000 rupees, C in that of 40,0000 rupees conditioned for D's duly accounting to E. D., makes default to the extent of 40,000 rupees. A is liable to pay 10,000 rupees, and B and C 15,000 rupees each.

 (c)          A. B and C as sureties for D, enter into three several bond, each in a different penalty, namely, A in the penalty of 10,000 rupees, B in that of 20,000 rupees. C in that of 40,000 rupees conditioned for D's duly accounting to E. D makes default to the extent of 70,000 rupees. A, B and C have to pay each the full penalty of his bond.

CHAPTER IX

OF BAILMENT

148.        'Bailment', 'bailor' and 'bailee' defined. A 'bailment' is the delivery of goods by one person to another for some purpose, upon a contract that they .shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the persons delivering them. The person delivering the goods is called the 'bailor'. The person to whom they are delivered is called the 'bailee'.

Explanation. If a person already in possession of the goods of another contracts to hold them as a bailee, lie thereby becomes the bailee, and the owner becomes the bailor, of such goods although they may not have been delivered by way of bailment.

149.        Delivery to bailee how made. The delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorized to hold them on his behalf.

150.        Bailor's duty to disclose faults in goods bailed. The bailer is bound to disclose to the bailee faults in the goods bailed, of which the bailer is aware, and which materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for damage arising to the bailee directly from such faults. If the goods are bailed for hire, the bailer is responsible for such damage, whether he was or was not aware of the existence of such faults in the goods bailed.

Illustrations

 (a)         A lends a horse, which he knows to be vicious, to B. He does not disclose the fact that the horse is vicious. The horse runs away. B is thrown and injured. A is responsible to B for damage sustained.

 (b)         A hires a carriage of B. The carriage is unsafe, though B is not aware of it, and A is injured. B is responsible to A for the injury.

151.        Care to be taken by bailee. In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods bailed.

152.        Bailee when not liable for loss, etc, of thing bailed. The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken the amount of care of it described in Section 151.

153.        Termination of bailment by bailee's act inconsistent with condition. A contract of bailment is avoidable at the option of the bailor, if the bailee does any act with regard to the goods bailed inconsistent with the conditions of the bailment.

Illustrations

A lets to B for hire, a horse for his own riding. B drives the horse in his carriage. This is, at the option of A, a termination of the bailment.

154.        Liability of bailee making unauthorized use of goods bailed. If the bailee make any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to bailor for any damage arising to the goods from or during such use of them.

Illustrations

 (a)         A lends a horse to B for his own riding only. B allows C. a member of his family, to ride the horse. C rides with care, but the horse accidentally falls and is injured. B is liable to make compensation to A for the injury done to the horse.

 (b)         A hires a horse in Karachi from B expressly to march to Hyderabad A rides with due care, but marches to Khairpur instead. The horse accidentally falls and is injured. A is liable to make compensation to B for the injury to the horse.

155.        Effect of mixture, with bailor's consent, of his goods with bailee's. If the bailee, with the consent of the bailor, mixes the goods of the bailor with his own goods, the bailor and bailee shall have an interest, in proportion to their respective shares, in the mixture thus produced.

156.        Effect of mixture, without bailor's consent, when the goods can be separated. If the bailee, with the consent of the bailor, mixes the goods of the bailor with his own goods, and the goods can be separated or divided, the property in the goods remains in the parties respective possession; but the bailee is bound to bear the expense of parties respective possession; but the bailee is bound to bear the expense of separation of division, and any damage arising from the mixture.

Illustration

A bails 100 bales of cotton market with a particular mark to B. B, without A's consent, mixes the 100 bales with other bales of his own, bearing a different mark. A is entitled to have his 100 bales returned, and B is bound to bear all the expense incurred in the separation of the bales, and any other incidental damage:

157.        Effect of mixture without bailor's consent when the goods cannot be separated. If the bailee, without the consent of the bailor, mixes the goods of the bailor with his own goods, in such manner that it is impossible to separate the goods bailed from the other goods and deliver them back, the bailor is entitled to be compensated by the bailee for the loss of the goods.

Illustration

A bails a barrel of Cape flour worth Rs. 45 to B. B, without A's consent mixes the flour of his own, only Rs. 25a barrel. B must compensate A for the loss of his flour.

158.        Repayment by bailor of necessary expenses. Where by the conditions of bailment, the goods are to be kept or be carried or to have work done upon them by the bailee for the bailor, and the bailee is to receive no remuneration, the bailor shall repay to the bailee the necessary expenses incurred by him for the purpose of the bailment.

159.        Restoration of goods lent gratuitously. The lender of a thing for use may at any time required its return, if the loan was gratuitous even though he lent it for a specified time or purpose. But, if, on the faith of such loan made for a specified time or purpose, the borrower has acted in such a manner that the return of the thing lent before the time agreed upon would cause him loss exceeding the benefit actually derived by him from the loan, the lender must, if he compels the return, indemnify the borrower for the amount in which the loss so occasioned exceeds the benefit so derived.

160.        Return of goods bailed on expiration of time or accomplishment of purpose. It is the duty of the bailee to return, or deliver according to the bailor's directions, the goods bailed, without demand, as soon as the time for which they were bailed, has expired, or the purpose for which they were bailed had been accomplished.

161.        Bailee's responsibility when goods are not duly returned. If, by the default of the bailee, the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time.

162.        Termination of gratuitous bailment by death. A gratuitous bailment is terminated by the death either of the bailor or of the bailee.

163.        Bailor entitled to increase or profit from goods bailed. In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor, or according to his directions, any increase or profit which may have accrued from the goods bailed.

Illustration

A leaves a cow in the custody of B to be taken care of. The cow has a calf. B is bound to deliver the calf as well as the cow to A.

164.        Bailor's responsibility to bailee. The bailor is responsible to the bailor for any loss which the bailee may sustain by reason that the bailor was not entitled to make the bailment, or to receive back the goods or to give directions, respecting them.

165.        Bailment by several joint owners. If several joint owners of goods bail them, the bailee may deliver them back to or according to the directions of, one joint owner without the consent of all, in the absence of any agreement to the contrary.

166.        Bailee not responsible on re-delivery to bailor without title. If the bailor has no title to the goods, and the bailee, in good faith, delivers them back to, or according of the bailor the bailee is not responsible to the owner in respect of such delivery.

167.        Right of third person claiming goods bailed. If a person, other than the bailor, claims goods bailed he may apply to the Court to stop the delivery of the goods to the bailor, and to decide the title to the goods.

168.        Right of finder of goods; may sue for specific reward offered. The finder of goods has no right to sue the owner for compensation for trouble and expense voluntarily incurred by him to preserve the goods and to find out the owner; but he may retain the goods against the owner until he receives such compensation; and, where the owner has offered a specific reward, for the return of goods lost, the finder may sue for each such reward, and may retain the goods until be receives it.

169.        When finder of thing commonly on sale may sell it. When a thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses, upon demand to pay the lawful charges of the finder, the finder may sell it-

 (1)         when the thing is in danger of perishing or of losing the greater part of its value, or

 (2)         when the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value.

170.        Bailee's particular lien. Where the bailee has, in accordance with the purpose of the bailment, rendered any services involving the exercise of labour or skill in respect of the goods bailed, he has, in the absence of a contract to the contrary, a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them.

Illustrations

 (a)         A delivers a rough diamond to B; a jeweller, to be cut and polished, which is accordingly done. B is entitled to retain the stone till he is paid for the services he has rendered.

 (b)         A gives cloth to B, a tailor, to make into a coat, B, promises A to deliver the coat as soon as it is finished, and to give a .three months' credit for the price. B is not entitled to retain the coat until he is paid.

171.        General lien of bankers, factors, wharfingers, attorneys and policy-brokers. Bankers, factors, wharfingers attorneys of High Court and policy-brokers may, in the absence of a contract to the contrary, retain, as a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.

Bailment of Pledges

172.        'Pledge', 'pawnor' and 'Pawnee' defined. The bailment of goods as security for payment of a debt or performance of a promise is called 'pledge'. The bailor is in this case called the 'pawnor'. The bailee is called the 'Pawnee'.

173.        Pawnee's right of retainer. The pawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise, but for the interest of the debt, and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged.

174.        Pawnee not to retain for debt or promise other than that for which goods pledged; Presumption in case of subsequent advances. The pawnee shall not, in the absence of a contract to that effect retain the goods pledged for any debt or promise other than the debt or promise for which they are pledged; but such contract, in the absence of anything to the contrary, shall be presumed in regard to subsequent advances made by the pawnee.

175.        Pawnee's right as to extraordinary expenses incurred. The Pawnee is entitled to receive from the pawn or extraordinary expenses incurred by him for the preservation of the goods pledged.

176.        Pawnee's right where pawnor makes default. If the pawnor makes default in payment of the debt, or performance, at the stipulated time of the promise in respect of which the goods were pledged, the pawnor may bring a suit against the pawnor upon the debt of promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged on giving the pawnor reasonable notice of the sale.

If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, pawnee shall pay over the surplus to the pawnor.

177.        Defaulting pawnor's right to redeem. .If a time is stipulated for the payment of the debt, or performance of the promise, for which the pledge is made, and the pawnor makes default in payment of the debt or performance of the promise at the stipulated time, he may redeem the goods pledged at any subsequent time before the actual sale of them; but he must, in that case, pay, in addition, any expenses which have arisen from his default.

178.        Pledge by mercantile agent. Where a mercantile agent is, with the consent of the owner, in possession of goods or the documents of title to goods, any pledge made by him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorized by the owner of the goods to make the same; provided that the pawnee acts in good faith and not at the time of the pledge notice that the pawnor has not authority to pledge.

Explanation. In this section the expressions 'mercantile agent' and 'documents of title' shall have the meanings assigned to them in the Sales of Goods Act, 1930.

178-A.   Pledge by person in possession under voidable contract. When the pawnor has obtained possession of the goods pledged by him under a contract voidable under Section 19 or Sec. 19-A but the contract has not been rescinded at time of the pledge, the pawnee acquires a good title to the goods, provided he acts in good faith and without notice of the pawnor's defect of title.

179.        Pledge where pawnor has only a limited interest. Where a person pledges in which he has only a limited interest, the pledge is valid to the extent of that interest.

Suits by Bailees or Bailors against! Wrong-doers

180.        Suit by bailor or bailee against wrong-doers. If a third wrongfully deprives the bailee of the use or possession of the goods bailed, or does them any injury, the bailee is entitled to use such remedies as the. owner might have used in the like case if no bailment had been made; and either the bailer or the bailee may bring a suit against a third person for such deprivation or injury.

181.        Apportionment of relief or compensation obtained by such suits. Whatever is obtained by way of relief or compensation in any suit shall, as between the bailer and the bailee, be dealt with according to their respective interests.

THE CONTRACT ACT

CHAPTER X

Agency Appointment and Authority of Agents

182.        'Agent' and 'principal' defined

183.        Who may employ agent

184.        Who may be an agent

185.        Consideration not necessary

186.        Agent's authority may be expressed or implied

187.        Definitions of express and implied authority

188.        Extent of agent's authority

189.        Agent's authority in an emergency

Sub-agents

190.        When agent cannot delegate

191.        'Sub-agent' defined.

192.        Representation of principal by sub-agent properly appointed Agent's responsibility for sub-agent Sub-agent's responsibility

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

Ratification

196.        Right of person as to acts done for him without his authority Effect of ratification

197.        Ratification may be expressed or implied

198.        Knowledge requisite for valid ratification

199.        Effect of ratifying unauthorized Act forming part of a transaction.

200.        Ratification of an unauthorized Act cannot injure third person

Revocation of Authority

201.        Termination of agency

202.        Termination of agency where agent has an interest in subject-matter.

203.        When principal may revoke agent's authority

204.        Revocation where authority has been partly exercised

205.        Compensation for revocation by principal, or renunciation by agent.

206.        Notice of revocation or renunciation

207.        Revocation and renunciation may be expressed or implied

208.        When termination of agent's authority takes effect as to agent, and to third persons

209.        Agent's duty on termination of agency by principal's death or insanity

210.        Termination of sub-agent's authority

Agent's duty to Principal

211.        Agent's duty in conducting principal's business

212.        Skill and diligence required from agent

213.        Agent's accounts

214.        Agent's duty to communicate with principal

215.        Right of principal when agent deals, on his own account, in business of agency without principal’s consent

216         Principal's right to benefit gained by agent dealing on his own account in business of agency

217.        Agent's right of retainer but of sums received on principal's account.

218.        Agent' s duty to pay sums received for principal

219.        When agent's remuneration becomes due

220.        Agent not entitled to remuneration for business misconducted

221.        Agents lien on principal's property

Principal's duty to Agent

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

Effect of Agency on contract with third persons

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 agent'.

230.        Agent cannot personally enforce, not be bound by, contracts on behalf of principal ,

Presumption of contract to contrary

231.        Rights of parties to a contract made by agent not disclosed

232.        Performance of contract with agent supposed to be principal

233.        Right of person dealing with agent personally liable

234.        Consequence of inducing agent or principal to act on belief that principal or agent will be held exclusively liable

235.        Liability of pretended agent

236.        Person falsely contracting as agent not entitled to performance

237.        Liability of principal inducing belief that agent's unauthorized act were authorized

238.        Effect, on agreement, of misrepresentation of fraud by agent

 

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