(Act no. 9 of 1872)
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Preamble
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Preliminary
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1
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Short title
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2
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InterDretation clause
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Chapter
I
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Of
the communication, acceptance and revocation of proposals
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3
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Communication,
acceptance and revocation of proposals
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4
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Communication when
complete
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5
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Revocation of proposals
and acceptances
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6
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Revocation how made
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7
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Acceptance must be
absolute
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8
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Acceptance by performing
conditions, or receiving consideration
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9
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Promises, express or
implied
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Chapter
II
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Of
contracts, violable contracts and void agreements
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10
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What agreements are
contracts
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11
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Who are competent to
contract
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12
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What is a sound mind for
the purposes of contracting
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13
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"Consent"
defined
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14
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"Free consent"
defined
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15
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"Coercion"
defined
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16
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"Undue influence"
defined
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17
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"Fraud"
defined
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18
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"Misrepresentation"
defined
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19
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Voidability of
agreements without free consent
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19A
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Power to set aside
contract induced by undue influence
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20
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Agreement void where
both parties are under mistake as to matter of
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fact
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21
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Effect of mistakes as to
law
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22
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Contract caused by
mistake of one party as to matter of fact
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23
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What considerations and
objects are lawful, and what not
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24
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Agreements void, if
consideration and objects unlawful in part
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25
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Agreement without consideration
void, unless it is in writing and
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registered, or is a
promise to compensation for something done, or is a
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promise to pay a debt
barred by limitation law
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26
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Agreement in restraint
of marriage void
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27
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Agreement in restraint
of trade void
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28
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Agreements in restraint
of legal proceedings void
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29
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Agreement void for
uncertainty
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30
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Agreements by way of
wager, void
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Chapter
III
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Of
contingent contracts
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31
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"Contingent
contract" defined
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32
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Enforcement of contracts
contingent on an event happening
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33
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Enforcement of contracts
contingent on an event not happening
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34
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When event on which
contract is contingent to be deemed impossible, if
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it is the future conduct
of a living person
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35
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When contracts become
void, which are contingent on happening of
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specified event within
fixed time
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36
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Agreements contingent on
impossible events, void
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Chapter
IV
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Of
the performance of contracts Contracts which must be performed
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37
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Obligation of parties to
contracts
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38
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Effect of refusal to
accept offer of performance
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39
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Effect of refusal of
party to perform promise wholly
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40
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Person by whom promise
is to be performed
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41
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Effect of accepting
performance from third person
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42
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Devolution of joint
liabilities
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43
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Any one of joint
promisors may be compelled to perform
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44
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Effect of release of one
joint promisor
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45
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Devolution of joint
rights
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46
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Time for performance of
promise, where no application is to be made
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and no time is specified
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47
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Time and place for
performance of promise, where time is specified and
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no application to be
made
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48
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Application for
performance on certain day to be at proper time and
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place
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49
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Place for performance
of promise, where no application to be made and
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no place fixed for
performance
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50
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Performance in manner
or at time prescribed or sanctioned by promisee
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51
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Promisor not bound to
perform, unless reciprocal promisee ready and
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willing to perform
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52
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Order of performance of
reciprocal promises
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53
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Liability of party
preventing event on which contract is to take effect
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54
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Effect of default as to
taht promise which should be first performed, in
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contract consisting of
reciprocal promises
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55
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Effect of failure to
perform at fixed time, in contract in which time is
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essential
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56
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Agreement to do impossible
act
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57
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Reciprocal promise to
do things legal and also other things illegal
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58
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Alternative promise,
one brach being illegal
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59
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Application of payment
where debt to be discharged is indicated
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60
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Application of payment
where debt to be discharged is not indicated
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61
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Application of payment
neither party appropriates
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62
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Effect of novation,
rescission and alteration of contract
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63
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Promisee may dispense
with or remit performance of promise
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64
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Consequences of
rescission of voidable contract
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65
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Obligation of person
who has received advantage under void
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agreement, or contract
that becomes void
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66
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Mode of communicating
or revoking recission of voidable contract
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67
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Effect of neglect of
promisee to afford promisor reasonable facilities for
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performance
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Chapter
V
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Of
certain relations resembling those created by contract
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68
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Claim for necessaries
supplied to person incapable of contracting, or on
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his account
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69
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Reimburesement of
person paying money due by another, in payment
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of which he is
interested
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70
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Obligation of person
enjoying benefit of non-grauitous act
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71
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Responsibility of
finder of goods
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72
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Liability of person to
whom money is paid, or thing delivered, by
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mistake or under
coercion
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Chapter
VI
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Of
the consequences of breach of contract
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73
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Compensation for loss
or damage caused by breach of contract
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74
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Compensation for breach
of contract where penalty stipulated for
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75
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Party rightfully
rescinding contract entitled to compensation
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Chapter
VII
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Sale
of goods
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76
to 123
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Repealed
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Chapter
VIII
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Of
indemnity and guarantee
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124
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"Contract of
indemnity" defined
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125
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Rights of
indemnity-holder when sued
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126
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"Contract of
guarantee", "surety", principal debtor" and
"Creditor"
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127
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Consideration for guarantee
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128
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Surety's liability
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129
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"Continuing
guarantee"
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130
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Revocation of
continuing guarantee
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131
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Revocation of
continuing guarantee by surety's death
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132
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Liability of two
persons, primarily liable, not affected by arrangement
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between them that one
shall be surety in other's default
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133
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Discharge of surety by
variance in terms of contract
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134
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Discharge of surety by
release of discharge of principal debtor
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135
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Discharge of surety
shen cerditor compounds with, gives time to, or
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agrees not to sue
principal debtor
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136
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Surety not discharged
when agreement made with third person to give
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time to principal
debtor
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137
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Creditor's forbearance
to sue does not discharge surety
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138
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Release of one
co-surety does not discharge others
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139
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Discharge of surety by
creditor's act or omission impairing surety's
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eventual remedy
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140
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Rights of surety on
payment or performance
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141
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Surety's right to
benefit of creditor's securities
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142
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Guarantee obtaiend by
misrepresentation, invalid
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143
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Guarantee obtained by
concealment, invalid
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144
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Guarantee on contract
that creditor shall not act on it until co-sureties
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joins
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145
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Implied promise to
indemnify surety
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146
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Co-sureties liable to
contribute equally
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147
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Liability of co-sureties
bound in different sums
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Chapter
IX
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Of
bailment
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148
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"Bailment",
"bailor" and "bailee" defined
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149
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Delivery to bailee how
made
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150
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Bailor's duty to
disclose faults in goods bailed
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151
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Care to be taken by
bailee
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152
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Bailee when not liable
for loss, etc. of thing bailed
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153
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Termination of bailment
by bailee's act inconsistent with conditions
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154
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Liability of bailee
making unauthorized use of goods bailed
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155
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Effect of mixture, with
bailor's consent, of his goods with bailee's
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156
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Effect of mixture,
without bailor's consent when the goods can be
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separated
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157
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Effect of mixture,
without bailor's consent, when the goods cannot be
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separated
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158
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Repayment, by bailor, of
necessary expenses
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159
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Restoration of goods
bailed, on expiration of time or accomplishment of
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purpose
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160
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Return of goods bailed,
on expiration of time or accomplishment of
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purpose
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161
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Bailee's responsibility
when goods are not duly returned
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162
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Termination of
gratuitours bailment by death
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163
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Bailor entitled to
increase or profit from goods bailed
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164
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Bailor's responsibility
to bailee
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165
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Bailment by several
joint owners
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166
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Bailee not responsible
on re-delivery to bailor without title
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167
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Right of third person
claiming goods bailed
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168
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Right of finder of goods
may sue for specific reward offered
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169
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When Finder of thing
commonly on sale may sell it
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170
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Bailee's particular lien
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171
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General lien of bankers,
factors, wharfingers, attorneys, and policy
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brokers
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172
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"Pledge",
"pownor" and "pawnee" defined
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173
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Pawnee's right of retainer
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174
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Pawnee not to retain for
debt or promise other than that for which
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goods pledged:
Presumption in case of subsequent advances
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175
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Pawnee's right to
extraordinary expenses incurred
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176
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Pawnee's right where
pawnor makes default
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177
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Defaulting pawnor's
right to redeem
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178
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Pledge by mercantile
agent
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178A
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Pledge by person in
possession under voidable contract
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179
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Pledge where pawnor has
only a limited interest suits by bailors against
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wrong-doers
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180
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Suit by bailor or bailee
against wrong-doer
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181
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Apportionment of relief
or compensation obtained by such suits
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Chapter
X
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Agency,
Appointment and authority of agents
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182
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"Agent" and
"Principal" defined
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183
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Who may employ agent
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184
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Who may be an agent
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185
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Consideration not necessary
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186
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Agent's authority may be
expressed or implied
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187
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Definitions of express
and implied authority
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188
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Extent of agent's
authority
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189
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Agent's authority in an
emergency
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190
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When agent cannot
delegate
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191
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"Sub-agent"
defined
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192
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Representation of
principal by sub-agent properly appointed
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193
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Agent's responsibility
for sub-agent appointed without authority
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194
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Relation between
principal and person duly appointed by agent to act in
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business of agency
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195
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Agent's duty in naming such
person
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196
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Right of person as to
acts done for him without his authority: effect of
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ratification
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197
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Ratification may be
expressed or implied
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198
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Knowledge requisite for
valid ratification
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199
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Effect of ratifying
unauthorized act forming part of transaction
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200
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Ratification of
unauthorized act cannot injure third person
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201
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Termination of agency
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202
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Termination of agency,
where agent has an interest in subject-matter
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203
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When principal may
revoke agent's authority
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204
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Revocation where authority
has been partly exercised
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205
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Compensation for
revocation by principal, or renunciation by agent
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206
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Notice of revocation or
renunciation
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207
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Revocation and
renunciation may be expressed or implied
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208
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When termination of
agent's authority takes effect as to agent, and as
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to third persons
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209
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Agent's duty on
termination of agency by principal's death or insanity
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210
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Termination of
sub-agent's authority
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211
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Agent's duty in
conducting principal's business
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212
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Skill and diligence
required from agent
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213
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Agent's accounts
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214
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Agent's duty to
communicate with principal
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215
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Right of principal when
agent deals, on his own account, in business of
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agency without
principal's consent
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216
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Principal's right to
benefit gained by agent dealing on his own account in
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business of agency
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217
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Agent's right of
retainer out of sums received on principal's account
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218
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Agent's duty to pay sums
received for principal
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219
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When agent's
remuneration becomes due
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220
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Agent not entitled to
remuneration for business misconducted
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221
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Agent's lien on
principal's property
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222
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Agent to be indemnified
against consequences of lawful acts
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223
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Agent to be indemnified
against consequences of acts done in good faith
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224
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Non-liability of
employer of agent to do a criminal act
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225
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Compensation to agent
for for injury caused by principal's neglect
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226
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Enforcement and
consequences of agent's contracts
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227
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Principal how far bound,
when agent exceeds authority
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228
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Principal not bound when
excess of agent's authority is not separable
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229
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Consequences of notice
given to agent
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230
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Agent cannot personally
enforce, nor be bound by, contracts on behalf
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of principal
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231
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Rights of parties to a
contract made by agent not disclosed
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232
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Performance of contract with
agent supposed to be principal
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233
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Right of person dealing
with agent personally liable
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234
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Consequence of inducing
agent or principal to act on belief that principal
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or agent will be held
exclusively liable
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235
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Liability of pretended
agent
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236
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Person falsely
contracting as agent, not entitled to performance
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237
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Liability of principal
inducing belief that agent's unauthorised acts were
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authorised
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238
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Effect, on agreement, of
misrepresentation or fraud by agent
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Chapter
XI
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Of
partnership
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239
to 266
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Repealed
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Schedule
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Repealed
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[9 OF 1872]
Whereas it is expedient to define and amend certain parts
of the law relating to contract; it is hereby enacted as follows :-
This Act may be called be the Indian Contract Act, 1872.
Extent, commencement - It extends to the whole of except
the State of Jammu and Kashmir; and it shall come into force on the first day
of September, 1872.
Enactment repealed - Nothing herein contained shall affect
the provisions of any Statute, Act or Regulation not hereby expressly repealed,
nor any usage or customs of trade, nor any incident of any contract, not
inconsistent with the provisions of this Act.
In this Act the following words and expressions are used in
the following senses, unless contrary intention appears from the context:
(a)
When
one person signifies to another his willingness to do or to abstain from doing
anything, with a view to obtaining the assent of that other to such act or
abstinence, he is said to make a proposal;
(b)
When
a person to whom the proposal is made, signifies his assent thereto, the
proposal is said to be accepted. A proposal, when a accepted, becomes a
promise;
(c) The person making the proposal is
called the "promisor", and the person accepting the proposal is
called "promisee",
(d)
When,
at the desire of the promisor, the promisee or any other person has done or
abstained from doing, or does or abstains from doing, or promises to do or to
abstain from doing, something, such act or abstinence or promise is called a
consideration for the promise;
(e)
Every
promise and every set of promises, forming the consideration for each other, is
an agreement;
(f)
Promises
which form the consideration or part of the consideration for each other, are
called reciprocal promises;
(g)
An
agreement not enforceable by law is said to be void;
(h)
An
agreement enforceable by law is a contract;
(i)
An
agreement which is enforceable by law at the option of one or more of the
parties thereto, but not at the option of the other or others, is a voidable
contract;
(j) A contract which ceases to be enforceable by law
becomes void when it ceases to be enforceable.
The
communication of proposals, the acceptance of proposals, and the revocation of
proposals and acceptance, respectively, are deemed to be made by any act or
omission of the party proposing, accepting or revoking, by which he intends to
communicated such proposal, acceptance or revocation, or which has the effect
of communicating it.
The communication of a proposal is complete when it becomes
to the knowledge of the person to whom it is made.
The communication of an acceptance is
complete -as against the proposer, when it is put in a course of transmission
to him so at to be out of the power of the acceptor; as against the acceptor,
when it comes to the knowledge of the proposer.
The communication of a revocation is complete -as against
the person who makes it, when it is put into a course of transmission to the
person to whom it is made, so as to be out of the power of the person who makes
it;as against the person to whom it is made, when it comes to his knowledge.
A proposal may be revoked at any time before the
communication of its acceptance is complete as against the proposer, but not
afterwards.
An
acceptance may be revoked at any time before the communication of the
acceptance is complete as against the acceptor, but no afterwards.
A proposal is revoked -
(1)
by
the communication of notice of revocation by the proposer to the other party;
(2)
by
the lapse of the time prescribed in such proposal for its acceptance, or, if no
time is so prescribed, by the lapse of a reasonable time, without communication
of the acceptance;
(3)
by
the failure of the acceptor to fulfil a condition precedent to acceptance; or
(4)
by
the death or insanity of the proposer, if the fact of the death or insanity
comes to the knowledge of theacceptor before acceptance.
In order to convert a proposal into a promise the
acceptance must -
(1) be absolute and unqualified.
(1) be absolute and unqualified.
(2)
be expressed in some usual and reasonable manner, unless the proposal
prescribes the manner in which it is to be accepted. If the proposal prescribes
a manner in which it is to be accepted; and the acceptance is not made in such
manner, the proposer may, within a reasonable time after the acceptance is
communicated to him, insist that his proposal shall be accepted in the
prescribed manner, and not otherwise; but; if he fails to do so, he accepts the
acceptance.
Performance of the conditions of proposal, for the
acceptance of any consideration for a reciprocal promise which may be offered
with a proposal, is an acceptance of the proposal.
In so
far as the proposal or acceptance of any promise is made in words, the promise
is said to be express. In so far as such proposal or acceptance is made
otherwise than in words, the promise is said to be implied.
All
agreements are contracts if they are made by the free consent of parties
competent to contract, for a lawful consideration and with a lawful object, and
are not hereby expressly declared to be void. Nothing herein contained shall affect
any law in force in India, and not hereby expressly repealed, by which any
contract is required to be made in writing or in the presence of witnesses, or
any law relating to the registration of documents.
Every
person is competent to contract who is of the age of majority according to the
law to which he is subject, and who is sound mind and is not disqualified from
contracting by any law to which he is subject.
A person is said to be of sound mind for the propose of
making a contract, if, at the time when he makes it, he is capable of
understanding it and of forming a rational judgement as to its effect upon his
interest.A person who is usually of unsound mind, but occasionally of sound
mind, may make a contract when he is of sound mind. A person who is usually of
sound mind, but occasionally of unsound mind, may not make a contract when he
is of unsound mind.
Two
or more person are said to consent when they agree upon the same thing in the
same sense.
Consent is said to be free when it is not caused by -
(1) coercion, as defined in section 15, or
(2)
undue
influence, as defined in section 16, or
(3) fraud, as defined in section 17, or
(4)
misrepresentation,
as defined in section 18, or
(5)
mistake,
subject to the provisions of section 20,21, and 22.
Consent is said to be so caused when it would not have been
given but for the existence of such coercion, undue influence, fraud,
misrepresentation, or mistake.
"Coercion"
is the committing, or threating to commit, any act forbidden by the Indian
Penal Code (45 of 1860) or the unlawful detaining, or threatening to detain,
any property, to the prejudice of any person whatever, with the intention of
causing any person to enter into an agreement.
(1)
A
contract is said to be induced by "under influence" where the
relations subsisting between the parties are such that one of the parties is in
a position to dominate the will of the other and uses that position to obtain
an unfair advantage over the other.
(2)
In
particular and without prejudice to the generally of the foregoing principle, a
person is deemed to be in a position to dominate the will of another -
(a)
where
he hold a real or apparent authority over the other, or where he stands in a
fiduciary relation to the other; or
(b)
where
he makes a contract with a person whose mental capacity is temporarily or
permanently affected by reason of age, illness, or mental or bodily distress.
(3)
Where
a person who is in a position to dominate the will of another, enters into a
contract with him, and the transaction appears, on the face of it or on the
evidence adduced, to be unconscionable, the burden of proving that such contract
was not induced by undue influence shall be upon the person in a position to
dominate the will of the other.
Nothing in the sub-section shall affect the provisions of
section 111 of the Indian Evidence Act, 1872 (1 of 1872)
"Fraud" means and includes
any of the following acts committed by a party to a contract, or with his
connivance, or by his agents, with intent to deceive another party thereto his
agent, or to induce him to enter into the contract;
(1)
the
suggestion as a fact, of that which is not true, by one who does not believe it
to be true;
(2)
the
active concealment of a fact by one having knowledge or belief of the fact;
(3)
a
promise made without any intention of performing it;
(4)
any
other act fitted to deceive;
(5)
any
such act or omission as the law specially declares to be fraudulent.
"Misrepresentation" means and includes -
(1) the positive assertion, in a manner not warranted by
the information of the
person making it, of that whichis not
true, though he believes it to be true;
(2)
any
breach of duty which, without an intent to deceive, gains an advantage to the
person committing it, or anyone claiming under him; by misleading another to
his prejudice, or to the prejudice of any one claiming under him;
(3)
causing,
however innocently, a party to an agreement, to make a mistake as to the
substance of the thing which is subject of the agreement.
When consent to an agreement is caused by coercion, fraud
or misrepresentation, the agreement is a contract voidable at the option of the
party whose consent was so caused. A party to contract, whose consent was
caused by fraud or mispresentation, may, if he thinks fit, insist that the
contract shall be performed, and that he shall be put on the position in which
he would have been if the representations made had been true.
Exception : If such consent was caused by misrepreentation
or by silence, fraudulent within the meaning of section 17, the contract,
neverthless, is not voidable, if the party whose consent was so caused had the
means of discovering the truth with ordinary diligence.
Explanation : A fraud or misrepresentation which did not
cause the consent to a contract of the party on whom such fraud was practised,
or to whom such misrepresentation was made, does not render a contract
voidable.
19-A. Power to set aside contract induced by undue influence
- When consent to an
agreement is caused by undue influence, the agreement is a contract voidable at
the option of the party whose consent was so caused.
Any such contract may be set aside either absolutely or, if
the party who was entitled to avoid it has received any benefit thereunder,
upon such terms and conditions as to the Court may seem just.
Explanation : An erroneous opinion as to the value of the
things which forms the subject-matter of the agreement,is not be deemed a
mistake as to a matter of fact.
A
contract is not voidable because it was caused by a mistake as to any law in
force in India; but mistake as to a law not in force in India has the same
effect as a mistake of fact.
A contract is not voidable merely because it was caused by
one of the parties to it being under a mistake as to a matter of fact.
The consideration or object of an
agreement is lawful, unless -It is forbidden by law; oris of such nature that,
if permitted it would defeat the provisions of any law or is fraudulent;
ofinvolves or implies, injury to the person or property of another; orthe Court
regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an
agreement is said to be unlawful. Every agreement of which the object or
consideration is unlawful is void.
If any part of a single consideration for one or more
objects, or any one or any part of any one of several consideration of a single
object, is unlawful, the agreement is void.
An agreement made without
consideration is void, unless -
(1)
it
is expressed in writing and registered under the law for the time being in
force for the registration of documents, and is made on account of natural love
and affection between parties standing in a near relation to each other; or
unless.
(2)
it
is a promise to compensate, wholly or in part, a person who has already
voluntarily done something for the promisor, or something which the promisor
was legally compellable to do; or unless.
(3)
it
is a promise, made in writing and signed by the person to be charged therewith
or by his agent generally or specially authorised in that behalf, to pay wholly
or in part debt of which the creditor might have enforced payment but for the
law for the limitation of suits. In any of these cases, such an agreement is a
contract.
Explanation 1 : Nothing in this
section shall affect the validity, as between the donor and donee, of any gift
actually made.
Explanation 2 : An agreement to which
the consent of the promisor is freely given is not void merely because the
consideration is inadequate; but the inadequacy of the consideration may be
taken into account by the Court in determining the question whether the consent
of the promisor was freely given.
Every agreement in restraint of the marriage of any person,
other than a minor, is void.
Every agreement by which anyone is
restrained from exercising a lawful profession, trade or business of any kind,
is to that extent void.
Exception 1 : Saving of agreement not
to carry on business of which good will is sold - One who sells the goodwill of
a business may agree with the buyer to refrain from carrying on a similar
business, within specified local limits, so long as the buyer, or any person
deriving title to the goodwill from him, carries on a like business therein,
provided that such limits appear to the court reasonable, regard being had to
the nature of the business.
Every agreement, by which any party thereto is restricted
absolutely from enforcing his rights under or in respect of any contract, by
the usual legal proceedings in the ordinary tribunals, or which limits the time
within which he may thus enforce his rights, is void to the extent.
Exception 1 : Saving of contract to refer to arbitration
dispute that may arise.This section shall not render illegal contract, by which
two or more persons agree that any dispute which may arise between them in
respect of any subject or class of subject shall be referred to arbitration,
and that only and amount awarded in such arbitration shall be recoverable in
respect of the dispute so referred.
Exception 2: Saving of contract to refer question that have
already arisen - Nor shall this section render illegal any contract in writing,
by which two or more persons agree to refer to arbitration any question between
them which has already arisen, or affect any provision of any law in force for
the time being as to reference to arbitration.
Agreements, the meaning of which is not certain, or capable
of being made certain, are void.
Agreements by way of wager are void; and no suit shall be
brought for recovering anything alleged to be won on any wager, or entrusted to
any person to abide the result of any game or other uncertain event on which
may wager is made. Exception on favour of certain prizes for horse-racing: This
section shall not be deemed to render unlawful a subscription or contribution,
or agreement to subscribe or contribute, made or entered into for or toward any
plate, prize or sum of money, of the value or amount of five hundred rupees or
upwards, to be rewarded to the winner or winners of any horse-race.
Section 294A of the Indian Penal Code not affected :
Nothing in this section shall be deemed to legalize any transaction connected
with horse-racing, to which the provisions of section 294A of the Indian Penal
Code (45 of 1860) apply.
A
"contingent contract" is a contract to do or not to do something, if
some event, collateral to such contract, does or does not happen.
Contingent
contracts to do or not to do anything in an uncertain future event happens,
cannot be enforced by law unless and until that event has happened. If the
event becomes impossible, such contracts become void.
Contingent
contracts to do or not to do anything if an uncertain future event does not
happen, can be enforced when the happening of that event becomes impossible,
and not before.
If the future event on which a contract is contingent is
the way in which a person will act at an unspecified time, the event shall be
considered to become impossible when such person does anything which renders it
impossible that the should so act within any definite time, or otherwise than
under further contingencies.
Contingent contracts to do or not to do anything, if a
specified uncertain event happens within a fixed time, become void, if, at the
expiration of the time fixed, such event has not happened, or if, before the
time fixed, such event becomes impossible.
When
contracts may be enforced, which are contingent on specified event not
happening within fixed time : Contingent contract tutu or not to do anything,
if a specified uncertain event does not happen within a fixed time, may be
enforced by law when the time fixed has expired and such event has not
happened, or before the time fixed has expired, if it become certain that such
event will not happen.
Contingent
agreements to do or not to do anything, if an impossible event happens, are
void, whether the impossibility of the event is known or not to the parties to
agreement at the time when it is made.
The parties to a contract must either perform, or offer to
perform, their respective promises, unless such performance in dispensed with
or excused under the provision of this Act, or of any other law.
Promises bind the representative of the promisor in case of
the death of such promisors before performance, unless a contrary intention
appears from the contract.
Where a promisor has made an offer of performance to the
promisee, and the offer has not been accepted, the promisor is not responsible
for non-performance, nor does he thereby lose his rights under the contract.
Every such offer must fulfil the following conditions -
(1)
it
must be unconditional;
(2)
it
must be made at a proper time and place, and under such circumstances that the
person to whom it is made may have a reasonable opportunity of ascertaining
that the person by whom it is been made is able and willing there and then to
do the whole of what he is bound by his promise to do;
(3)
if
the offer is an offer to deliver anything to the promisee, the promisee must
have a reasonable opportunity of seeing that the thing offered is the thing
which the promisor is bound by his promise to deliver. An offer to one of
several joint promisees has the same legal consequences as an offer to all of
them.
When a party to a contract has refused to perform, or
disabled himself from performing, his promise in its entirety, the promisee may
put an end to the contract,unless he has signified, by words or conduct, his
acquiescence in its continuance.
If it appears from the nature of the
case that it was the intention of the parties to any contract that any promise
contain in it should be performed by the promisor himself, such promise must be
performed by the promisor.
In other cases, the promisor or his representative may
employ a competent person to perform it.
When
a promisee accepts performance of the promise from a third person, he cannot
afterwards enforce it against the promisor.
When
two or more person 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 fulfil the promise.
When two or more persons make a joint promise, the promise
may, in the absence of express agreements to the contrary, compel any one or
more of such joint promisors to perform the whole 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 make default in such
contribution, the remaining joint promisors mus 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.
Where
two or more persons have made a joint promise, a release of one of such joint
promisors by the promisee does not discharge the other joint promisor,neither
does it free the joint promisor so released from responsibility to the other
joint promisor or joint promisors.
When
a person has made a promise to two or more persons jointly, then unless
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 one of them, with the representative of such deceased person
jointly with the survivor or survivors, and, after the death of the last
survivor, with the representatives of all jointly.
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
a promise is to be performed on a certain day, and the promisor has undertaken
to perform it without the application by the promisee, the promisor may perform
it at any time during the usual hours of business on such day and at the place
at which the promise ought to be performed.
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
within the usual hours of business.
Explanation : The question "what is proper time and
place" is, in each particular case, a question of fact.
When
a promise is to be performed without application by the promisee, and not 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 a place.
The
performance of any promise may be made in any manner, or at any time which the
promisee prescribes or sanctions.
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.
Where
the order in which reciprocal promises are to be performed is expressly fixed
by the contract, they shall be performed in that order, and where the orders is
not expressly fixed by the contract, they shall be performed in that order
which the nature of transaction requires.
When
a 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 he may sustain in consequence of the non-performance
of the contract.
When
a 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.
When a party to a contract promises to do a certain thing
at or before a specified time, or certain thins at or before a specified time
and fails to do such thing at or before a specified time, and fails to do such
thing at or before a specified time, the contract or so much of it as has not
been performed, becomes voidable at the option of the promisee, if the
intention of the parties was that time should be of 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 for any loss occasioned to him by such failure.
Effect of acceptance of performance at
time other than 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 agree, the promisee
cannot claim compensation of any loss occasioned by the non-performance of the
promise at the time agreed, unless, at the time of acceptance, he give notice
to the promisor of his intention to do so.
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 act known
to be impossible or unlawful: Where one person has promised to be something
which he knew or, with reasonable diligence, might have known, and which the
promisee did not know to be impossible or unlawful, such promisor must make
compensation to such promise for any loss which such promisee sustains through
the non-performance of the promise.
Where
persons reciprocally promise, firstly to do certain things which are legal,
and, secondly under specified circumstances, to do certain other things which
are illegal, the first set of promise is a contract, but the second is a void
agreement.
In
the case of an alternative promise, one branch of which is legal and other
other illegal, the legal branch alone can be enforced.
Where
a debtor, owing several distinct 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.
Where
the debtor has ommitted 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 limitations of suits.
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
proportionably.
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.
Every
promise 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.
When
a person at whose option a contract is voidable rescinds it, the other party
thereto need to perform any promise therein contained in which he is the
promisor. The party rescinding a voidable contract shall, if he have 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.
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.
The rescission of a voidable contract may be communicated
or revoked in the same manner, and subject to some rules, as apply to the
communication or revocation of the proposal.
If any promisee neglects or refuses to afford the promisee
reasonable facilities for the performance of his promise, the promisor is
excused by such neglect or refusal as to non-performance caused thereby.
If a person, incapable of entering into a contract, or
anyone 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.
A person who is interested in the payment of money which
another is bound by law to pay, and who therefore pays it, is entitled to be
reimbursed by the other.
Where a person lawfully does anything for another person,
or delivers anything to him, not intending to do so gratuitously, and such
another person enjoys the benefit thereof, the letter is bound to make
compensation to the former in respect of, or to restore, the thing so done or
delivered.
A person who finds goods belonging to another, and takes
them into his custody, is subject to the same responsibility as a bailee.
A person to whom money has been paid, or anything
delivered, by mistake or under coercion, must repay or return it.
When a contract has been broken, the party who suffers by
such breach is entitled to receive, form 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 of damage sustained by reason of the breach.
Compensation for failure to discharge obligation 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 non-performance of the contract must be taken into account.
When a contract has been broken, if a sum is named in the
contract as the amount 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 or proved to have been
caused thereby, to receive from the party who has broken the contract
reasonable compensation not exceeding the amount so named or, as the case may
be, the penalty stipulated for.
Explanation : A stipulation for increased interest from the
date of default may be a stipulation by way of penalty.
Explanation
: When any person enters into any bail bond, recognisance or other instrument
of the same nature or, under the provisions of any law, or under the orders of
the Central Government or of any State 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.
A person
who rightfully rescinds a contract is entitled to consideration for any damage
which he has sustained through the no fulfillment of the contract.
Chapter VII Sale of goods
Section 76 to 123 - Repealed
A contract by which one party promises to save the other
from loss caused to him by the contract of the promisor himself, or by the
conduct of any other person, is called a "contract of indemnity".
The promisee in a contract of
indemnity, acting within the scope of his authority, is entitled to recover
from the promisor-
(1)
all
damages which he may be compelled to pay in any suit in respect of any matter
to which the promise to indemnify applies;
(2)
all
costs which he may be compelled to pay in any such suit, if in bringing of
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 authorised him to bring or defend the suit;
(3)
all
sums which he may have paid under the terms of any compromise of any such suit,
if the compromise was not contract to the orders of the promisor, and was one
which it would have been prudent for the promise to make in the absence of any
contract of indemnity, or if the promisor authorised him to compromise the
suit.
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 person 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.
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.
The liability of the surety is co-extensive with that of
the principal debtor, unless it is otherwise provided by the contract.
A
guarantee which extends to a series of transaction, is called, a
"continuing guarantee".
A
continuing guarantee may at any time be revoked by the surety, as to future
transactions, by notice to the creditor.
The death of the surety operates, in the absence of any
contract to the contrary, as a revocation of ma continuing guarantee, so far as
regards future 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 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.
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.
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.
A
contract between the creditor and the principal debtor, by which the creditor
make a composition with, or promises to give time, or not to sue, the principal
debtor, discharges the surety, unless the surety assents to such contract.
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.
Mere
forbearance on the part of the creditor to sue the principal debtor or to
enforce any other remedy against him, dies not, in the absence of any provision
in the guarantee to the contrary, discharge the surety.
Where
there are co-sureties, a release by the creditor of one of them does not
discharge the others neither does set free the surety so released from his
responsibility to the other sureties.
If
the creditor does any act which is inconsistent with the right 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.
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.
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 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
existence of such security or not; and if the creditor loses, or without the
consent of the surety, parts with such security, the surety, the surety is
discharged to the extent of the value of the security.
Any
guarantee which has been obtained by means of misrepresentation made by the
creditor, or with his knowledge and assent, concerning a material part of the
transaction, is invalid.
Any
guarantee which the creditor has obtained by means of keeping silence as to
meterial circumstances, is invalid.
Where
a person gives a guarantee upon a contract that the creditor shall not act upon
it until another person has jointed in it as co-surety, the guarantee is not
valid that other person does not join.
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 wrongfully.
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
contract, 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.
Co-sureties who are bound in different sums are liable to
pay equally as far as the limits of their respective obligations permit.
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
direction of the person 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 other contracts hold them as a bailee, he thereby becomes the bailee,
and the owner becomes the bailor of such goods, although they may not have been
delivered by way of bailment.
The
delivery to be 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
authorised to hold them on his behalf.
The
bailor is bound to disclose to the bailee faults in the goods bailed, of which
the bailor is aware, and which materially interfere with the use of them, or
expose the bailee to extraordinary risk; and if he does not make such
disclosure, he is responsible for damage arising to the bailee directly from
such faults.
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, quantity and
value as the goods 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.
A contract of bailment is voidable at the option of the
bailor, if the bailee does any act with regard to the foods bailed,
inconsistent with the conditions of the bailment.
If
the bailee makes any use of the goods bailed which is not according to the
conditions of the bailment, he is liable to make compensation to the bailor for
any damage arising to the goods from or during such use of them.
If
the bailee, with the consent of the bailor, mixes the goods of the bailor with
his own goods, the bailor and the bailee shall have an interest, in proportion
to their respective shares, in the mixture thus produced.
If
the bailee, without 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 respectively; but the bailee is bound to be
bear the expense of separation or division, and any damage arising from the
mixture.
If the bailee, without the consent of the bailor, mixes the
foods of the bailor with his own goods in such a 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.
Where,
by the conditions of the bailment, the goods are to be kept or to be carried,
or to have work done upon them by the bailee for the bailor, and the bailee is
to receive no remuneration, the bailors shall repay to the bailee the necessary
expenses incurred by him for the purpose of the bailment.
The
lender of a thing for use may at any time require its return, if the loan was
gratuitous, even through 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 losses 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 benefits so derived.
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 has been accomplished.
If by the fault 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.
A gratuitous bailment is terminated by the death either of
the bailor or of the bailee.
In the absence of any contract to the contrary, the bailee
is bound to deliver to the bailer, or according to his directions, any increase
or profit which may have accrued from the goods bailed.
The bailor is responsible to the bailee for any loss which
the bailee may sustain the reason that the bailor was not entitled to make the
bailment, or to receive back the goods, or to give directions, respecting them.
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.
If the bailor has no title to the goods, and the bailee, in
good faith, delivers them back to, or according to the directions of the
bailor, the bailee is not responsible to the owner in respect of such deliver.
If a person, other than the bailor, claims goods bailed he
may apply to the court to stop delivery of the goods to the bailor, and to
decide the title to the goods.
The finder of goods has no right to use the owner for
compensation for trouble and expense, voluntary incurred by him to preserve the
goods and to find out the owner; but he may retain the goods again the owner
until he receive such compensation; and where the owner has offered a specific
required for the return of goods lost, the finder may sue for such reward, and
may retain the goods until he received it.
When 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.
Where
the bailee has, in accordance with the purpose of the bailment, rendered any
service 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.
Bankers, factor, wharfingers, attorneys of a High Court and
policy brokers may, in the absence of a contract to the contrary, retain as a
security for a general balance of account, any goods bailed to them; but no
other person have a right retain, as a security for which balance, goods,
bailed to them, unless is an express contract to that effect.
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
"pawnor". The bailee is called "pawnee".
The
pawnee may retain the goods pledged, not only for payment of the debt or the performance
of the promise, but for the interests of the debt, and all necessary expenses
incurred by him in respect to the possession or for the preservation of the
goods pledged.
174.
Pawnee not to retain for debt or promise other than 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 of other than the debtor 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.
The
pawnee is entitled to receive from the pawnor extraordinary expenses incurred
by him for the preservation of the goods pledged.
If the pawnor makes default in payment of the debt, or
performance, at the stipulated time, or the promise, in respect of which the
goods were pledged, the pawnee may bring as suit against the pawnor upon the
debt or 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
that the amount so due, the pawnee shall pay over the surplus to the pawnor.
If
a time is stipulated for the payment of the debt, or performance of the
promise, for which the pledged 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, on that case, pay, in addition, any expenses which have arisen from his
default.
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 authorised by the owner of the goods
to make the same; provided that the pawnee acts in good faith and has not at
the time of the pledge notice that the pawnor has not authority to pledge.
Explanation : In this section, the expression
"mercantile agent" and "documents of title" shall have the
meanings assigned to them in the Indian Sale of Goods Act, 1930 (3 of 1930).
When the pawnor has obtained possession of the other goods
pledged by him under a contract voidable under section 19 of section 19A, but
the contract has not been rescinded at the time of the pledge, the pawnee
acquired a goods title to the goods, provided he acts in good faith and without
notice of the pawnor's defect of title.
Where
person pledges goods in which he has only a limited interest, the pledge is
valid to the extent of that interest.
If
a third person wrongfully deprives the bailee of the use of possession of 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 has been made; and
either the bailor or the bailee may bring a suit against a third person for
such deprivation or injury.
Whatever
is obtained by way of relief of compensation in any such suit shall, as between
the bailor and the bailee, be dealt with according to their respective
interests.
An "agent" is a person employed to do any act for
another, or to represent another in dealing with third persons. The person for
whom such act is done, or who is so represented, is called the
"principal".
Any person who is of the age of majority according to the
law to which he is subject, and who is of sound mind, may employ an agent.
As
between the principal and third persons, any person may become an agent, but no
person who is not of the age of majority and sound mind can become an agent, so
as to be responsible to the principal according to the provisions in that
behalf herein contained.
No consideration is necessary to create an agency;
An
authority is said to be express when it is given by words spoken or written. An
authority is said to be implied when it is to be inferred from the
circumstances of the case; and things spoken or written, or the ordinary course
of dealing, may be accounted circumstances of the case.
An agent, having an authority to do an act, has authority
do every lawful thing which is necessary in order to do so such act.An agent
having an authority to carry on a business, has authority to do every lawful
thing necessary for the purpose, or usually done in the course, of conducting
such business.
An
agent has authority, in an emergency, to do all such acts for the purpose of
protecting his principal from loss and would be done by a person or ordinary
prudence, in his own case, under similar circumstances.
An agent cannot lawful employ another
to perform acts which he has expressly or
impliedly
undertaken to perform personally, unless by the ordinary custom of trade a
sub-agent may, or, from the nature or agency, a sub-agent must, be employed.
A
"sub-agent" is a person employed by, and acting undue the control of,
the original agent in the business of the agency.
Where a
sub-agent is properly appointed, the principal is, so far as regards third
persons, represented by the sub-agent, and is bound by and responsible for his
acts, as if he were an agent originally appointed by the principal.Agent's
responsibility for sub-agent: The agent is responsible to the principal for the
acts of the sub- agent.Sub-agent's responsibility: The sub-agent is responsible
for his acts to the agent, but not to the principal, except in cases of fraud,
or wilful wrong.
authorityWhere
an agent, without having authority to do so, has appointed a person to act as a
sub-agent stands towards such person in the relation of a principal to an
agent, and is responsible for his act both to the principal and to third
person; the principal is not represented, by or responsible for the acts of the
person so employed, nor is that person responsible to the principal.
When an
agent, holding an express or implied authority to name another person to act
for the principal in the business of the agency, has named another person
accordingly, such person is not a sub-agent, but an agent of the principal for
such part of the business of the agency as is entrusted to him.
In
selecting such agent for his principal, an agent is bound to exercise the same
amount of discretion as a man or ordinary prudence would exercise in his own
case; and, if he does this, he is not responsible to the principal for the acts
of negligence of the agent so selected.
Where
acts are done by one person on behalf of another, but without his knowledge or
authority, he may elect to ratify or to disown such acts. If he ratifies them,
the same effects will follow as if they had been performed by his authority.
Ratification
may be expressed or may be implied in the conduct of the person on whose behalf
the acts are done.
No
valid ratification can be made by a person whose knowledge of the facts of the
case is materially defective.
A
person ratifying any unauthorized act done on his behalf ratifies the whole of
the transaction of which such act formed a part.
An
act done by one person on behalf of another, without such other person's
authority, which, if done with authority, would have the effect of subjecting a
third person to damages, or of terminating any right or interest of a third
person, cannot, by ratification, be made to have such effect.
An
agency is terminated by the principal revoking his authority, or by the agent
renouncing the business of the agency; or by the business of the agency being
completed; or by either the principal or agent dying or becoming of unsound
mind; or by the principal being adjudicated an insolvent under the provisions
of any Act for the time being in force for the relief of insolvent debtors.
Where the agent has himself an interest in the property
which forms the subject- matter of the agency, the agency cannot, in the
absence of an express contract, be terminated to the prejudice of such
interest.
The
principal may, save as is otherwise provided by the last preceding section,
revoke the authority given to his agent at any time before the authority has
been exercised so as to bind the principal.
The principal cannot revoke the authority given to his
agent after the authority has been partly exercised, so far as regards such
acts and obligations as arise from acts already done in the agency.
Where
there is an express or implied contract that the agency should be continued for
any period of time, the principal must make compensation to the agent, or the
agent to the principal, as the case may be, for any previous revocation or
renunciation of the agency without sufficient cause.
Reasonable notice must be given of such revocation or
renunciation; otherwise the damage thereby resulting to the principal or the
agent, as the case may be, must be made good to the one by the other.
Revocation and renunciation may be expressed or may be
implied in the conduct of the principal or agent respectively.
The
termination of the authority of an agent does not, so far as regards the agent,
take effect before it becomes known to him, or, so far as regards third
persons, before it becomes known to them.
When
an agency is terminated by the principal dying or becoming of unsound mind, the
agent is bound to take, on behalf of the representatives of his late principal,
all reasonable steps for the protection and preservation of the interests
entrusted to him.
The
termination of the authority of an agent causes the termination (subject to the
rules herein contained regarding the termination of an agent's authority) of
the authority of all sub-agents appointed by him.
An
agent is bound to conduct the business of his principal according to the
directions given by the principal, or, in the absence of any such directions,
according to the custom which prevails in doing business of the same kind at
the place where the agent conducts such business. When the agent acts
otherwise, if any loss be sustained, he must make it good to his principal,
and, if any profit accrues, he must account for it.
An
agent is bound to conduct the business of the agency with as much skill as is
generally possessed by persons engaged in similar business, unless the
principal has notice of his want of skill. The agent is always bound to act
with reasonable diligence, and to use such skill as he possesses; and to make
compensation to his principal in respect of the direct consequences of his own
neglect, want of skill or misconduct, but not in respect of loss or damage
which are indirectly or remotely caused by such neglect, want of skill or
misconduct.
An
agent is bound to render proper accounts to his principal on demand.
It is
the duty of an agent, in cases of difficulty, to use all reasonable diligence
in communicating with his principal, and in seeking to obtain his instructions.
If an
agent deals on his own account in the business of the agency, without first
obtaining the consent of his principal and acquainting him with all material
circumstances which have come to his own knowledge on the subject, the
principal may repudiate the transaction, if the case shows either that any
material fact has been dishonestly concealed from him by the agent, or that the
dealings of the agent have been disadvantageous to him.
216.
Principal's right to benefit gained by agent dealing on his own account
in business of agency -
If an agent, without the knowledge of his principal, deals
in the business 6f the agency on his own account instead of on account of his
principal, the principal is entitled to claim from the agent any benefit which
may have resulted to him from the transaction.
An agent
may retain, out of any sums received on account of the principal in the
business of the agency, all moneys due to himself in respect of advances made
or expenses properly incurred by him in conducting such business, and also such
remuneration as may be payable to him for acting as agent.
Subject
to such deductions, the agent is bound to pay to his principal all sums received
on his account.
In the
absence of any special contract, payment for the performance of any act is not
due to the agent until the completion of such act; but an agent may detain
moneys received by him on account of goods sold, although the whole of the
goods consigned to him for sale may not have been sold, or although the sale
may not be actually complete.
An agent
who is guilty of misconduct in the business of the agency is not entitled to
any remuneration in respect of that part of the business which he has
misconducted.
In the absence of any contract to the contrary, an agent is
entitled to retain goods, papers, and other property, whether movable or
immovable, of the principal received by him, until the amount due to himself
for commission, disbursements and services in respect of the same has been paid
or accounted for to him.
The employer of an agent is bound to indemnify him against
the consequences of all lawful acts done by such agent in exercise of the
authority conferred upon him.
Where one person employs another to do an act, and the
agent does the act in good faith, the employer is liable to indemnify the agent
against the consequences of that act, though it causes an injury to the rights
of third persons
Where one person employs another to do an act which is
criminal, the employer is not liable to the agent, either upon an express or an
implied promise, to indemnify him against the consequences of that act.
The principal must make compensation to his agent in
respect of injury caused to such agent by the principal's neglect or want of
skill.
Contracts
entered into through an agent, and obligations arising from acts done by an
agent, may be enforced in the same manner, and will have the same legal
consequences, as if the contracts had been entered into and the acts done by
the principal in person.
When an agent does more than he is authorised to do, and
when the part of what he does, which is within his authority, can be separated
from the part which is beyond his authority, so much only of what he does as is
within his authority is binding as between him and his principal.
Where an agent does more than he is authorised to do, and
what he does beyond the scope of his authority cannot be separated from what is
within it, the principal is not bound to recognise the transaction.
Any
notice given to or information obtained by the agent, provided it be given or
obtained in the course of the business transacted by him for the principal,
shall, as between the principal and third parties, have the same legal
consequence as if it had been given to or obtained by the principal.
In the absence of any contract to that
effect, an agent cannot personally enforce contracts entered into by him on
behalf of his principal, nor is he personally bound by them.
PRESUMPTION OF CONTRACT TO THE CONTRARY. -
Such a contract shall be presumed to exist in the following
cases :-
(1)
where
the contract is made 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; and
(3)
where
the principal, though disclosed, cannot be sued.
If
an agent makes a contract with a person who neither knows, nor has reason to
suspect, that he is an agent, his principal may require the performance of the
contract; but the other contracting party has, as against the principal, the
same rights as he would have had as against the agent if the agent had been the
principal. If the principal discloses himself before the contract is completed,
the other contracting party may refuse to fulfil the contract, if he can show
that, if he had known who was the principal in the contract, or if he had known
that the agent was not a principal, he would not have entered into the
contract.
Where
one man makes a contract with another, neither knowing nor having reasonable
ground to suspect that the other is an agent, the principal, if he requires the
performance of the contract, can only obtain such performance subject to the
rights and obligations subsisting between the agent and the other party to the
contract.
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.
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.
A
person untruly representing himself to be the authorised agent of another, and
thereby inducing a third person to deal with him as such agent, is liable, if
his alleged employer does not ratify his acts, to make compensation to the
other in respect of any loss or damage which he has incurred by so dealing.
A
person with whom a contract has been entered into in the character of agent, is
not entitled to require the performance of it if he was in reality acting, not
as agent, but on his own account.
When
an agent has, without authority, done acts or incurred obligations to third
persons on behalf of his principal, the principal is bound by such acts or
obligations, if he has by his words or conduct induced such third persons to
believe that such act and obligations were within the scope of the agent's
authority.
Misrepresentations
made, or frauds committed, by agents acting in the course of their business for
their principals, have the same effect on agreements made by such agents as if
such misrepresentations or frauds had been made or committed, by the principals;
but misrepresentations made, or frauds, committed, by agents, in matters which
do not fall within their authority, do not affect their principals.
Of partnership
239-266 [Rep. By the Indian Partnership Act, 1932 (9 OF
1932), SEC. 73 And Sch. II].
Schedule
Sch. THE THE SCHEDULE Enactments repealed -
[Repealed by the Repealing and
Amending Act, 1914 (10 of 1914) sec. 3 and Sch. II.
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