The Indian Contract Act, 1872
(Act no. 9 of 1872)
CONTENTS
Preamble
Preliminary
1 Short title
2 Interpretation clause
Chapter I Of the communication, acceptance and
revocation of proposals
3 Communication, acceptance and revocation of
proposals
4 Communication when complete
5 Revocation of proposals and acceptances
6 Revocation how made
7 Acceptance must be absolute
8 Acceptance by performing conditions, or
receiving consideration
9 Promises, express or implied
Chapter II Of contracts, violable contracts and
void agreements
10 What agreements are contracts
11 Who are competent to contract
12 What is a sound mind for the purposes of
contracting
13 "Consent" defined
14 "Free consent" defined
15 "Coercion" defined
16 "Undue influence" defined
17 "Fraud" defined
18 "Misrepresentation" defined
19 Voidability of agreements without free consent
19A Power to set aside contract induced by undue
influence
20 Agreement void where both parties are under
mistake as to matter of fact
21 Effect of mistakes as to law
22 Contract caused by mistake of one party as to
matter of fact
23 What considerations and objects are lawful,
and what not
24 Agreements void, if consideration and objects
unlawful in part
25 Agreement without consideration void, unless
it is in writing and registered, or is a promise to compensation for something
done, or is a promise to pay a debt barred by limitation law
26 Agreement in restraint of marriage void
27 Agreement in restraint of trade void
28 Agreements in restraint of legal proceedings
void
29 Agreement void for uncertainty
30 Agreements by way of wager, void
Chapter III Of contingent contracts
31 "Contingent contract" defined
32 Enforcement of contracts contingent on an
event happening
33 Enforcement of contracts contingent on an
event not happening
34 When event on which contract is contingent to
be deemed impossible, if it is the future conduct of a living person
35 When contracts become void, which are
contingent on happening of specified event within fixed time
36 Agreements contingent on impossible events,
void
Chapter IV Of the performance of contracts which
must be performed
37 Obligation of parties to contracts
38 Effect of refusal to accept offer of
performance
39 Effect of refusal of party to perform promise
wholly
40 Person by whom promise is to be performed
41 Effect of accepting performance from third
person
42 Devolution of joint liabilities
43 Any one of joint promisors may be compelled to
perform
44 Effect of release of one joint promisor
45 Devolution of joint rights
46 Time for performance of promise, where no
application is to be made and no time is specified
47 Time and place for performance of promise,
where time is specified and no application to be made
48 Application for performance on certain day to
be at proper time and place
49 Place for performance of promise, where no
application to be made and no place fixed for performance
50 Performance in manner or at time prescribed or
sanctioned by promisee
51 Promisor not bound to perform, unless
reciprocal promisee ready and willing to perform
52 Order of performance of reciprocal promises
53 Liability of party preventing event on which
contract is to take effect
54 Effect of default as to that promise which
should be first performed, in contract consisting of reciprocal promises
55 Effect of failure to perform at fixed time, in
contract in which time is essential
56 Agreement to do impossible act
57 Reciprocal promise to do things legal and also
other things illegal
58 Alternative promise, one branch being illegal
59 Application of payment where debt to be
discharged is indicated
60 Application of payment where debt to be
discharged is not indicated
61 Application of payment neither party
appropriates
62 Effect of novation, rescission and alteration
of contract
63 Promisee may dispense with or remit
performance of promise
64 Consequences of rescission of voidable
contract
65 Obligation of person who has received
advantage under void agreement, or contract that becomes void
66 Mode of communicating or revoking rescission
of voidable contract
67 Effect of neglect of promisee to afford
promisor reasonable facilities for performance
Chapter V Of certain relations resembling those
created by contract
68 Claim for necessaries supplied to person
incapable of contracting, or on his account
69 Reimbursement of person paying money due by
another, in payment of which he is interested
70 Obligation of person enjoying benefit of
non-gratuitous act
71 Responsibility of finder of goods
72 Liability of person to whom money is paid, or
thing delivered, by mistake or under coercion
Chapter VI Of the consequences of breach of
contract
73 Compensation for loss or damage caused by
breach of contract
74 Compensation for breach of contract where
penalty stipulated for
75 Party rightfully rescinding contract entitled
to compensation
Chapter VII Sale of goods
76 to 123 Repealed
Chapter VIII Of indemnity and guarantee
124 "Contract of indemnity" defined
125 Rights of indemnity-holder when sued
126 "Contract of guarantee",
"surety", principal debtor" and "Creditor"
127 Consideration for guarantee
128 Surety's liability
129 "Continuing guarantee"
130 Revocation of continuing guarantee
131 Revocation of continuing guarantee by
surety's death
132 Liability of two persons, primarily liable,
not affected by arrangement between them that one shall be surety in other's
default
133 Discharge of surety by variance in terms of
contract
134 Discharge of surety by release of discharge
of principal debtor
135 Discharge of surety when creditor compounds
with, gives time to, or agrees not to sue principal debtor
136 Surety not discharged when agreement made
with third person to give time to principal debtor
137 Creditor's forbearance to sue does not
discharge surety
138 Release of one co-surety does not discharge
others
139 Discharge of surety by creditor's act or
omission impairing surety's eventual remedy
140 Rights of surety on payment or performance
141 Surety's right to benefit of creditor's
securities
142 Guarantee obtained by misrepresentation,
invalid
143 Guarantee obtained by concealment, invalid
144 Guarantee on contract that creditor shall not
act on it until co-sureties joins
145 Implied promise to indemnify surety
146 Co-sureties liable to contribute equally
147 Liability of co-sureties bound in different
sums
Chapter IX Of bailment
148 "Bailment", "bailor" and
"bailee" defined
149 Delivery to bailee how made
150 Bailor's duty to disclose faults in goods
bailed
151 Care to be taken by bailee
152 Bailee when not liable for loss, etc. of
thing bailed
153 Termination of bailment by bailee's act
inconsistent with conditions
154 Liability of bailee making unauthorized use
of goods bailed
155 Effect of mixture, with bailor's consent, of
his goods with bailee's
156 Effect of mixture, without bailor's consent
when the goods can be separated
157 Effect of mixture, without bailor's consent,
when the goods cannot be separated
158 Repayment, by bailor, of necessary expenses
159 Restoration of goods bailed, on expiration of
time or accomplishment of purpose
160 Return of goods bailed, on expiration of time
or accomplishment of purpose
161 Bailee's responsibility when goods are not
duly returned
162 Termination of gratuitous bailment by death
163 Bailor entitled to increase or profit from
goods bailed
164 Bailor's responsibility to bailee
165 Bailment by several joint owners
166 Bailee not responsible on re-delivery to
bailor without title
167 Right of third person claiming goods bailed
168 Right of finder of goods may sue for specific
reward offered
169 When Finder of thing commonly on sale may
sell it
170 Bailee's particular lien
171 General lien of bankers, factors,
wharfingers, attorneys, and policy brokers
172 "Pledge", "pawnor" and
"pawnee" defined
173 Pawnee's right of retainer
174 Pawnee not to retain for debt or promise
other than that for which goods pledged: Presumption in case of subsequent
advances
175 Pawnee's right to extraordinary expenses
incurred
176 Pawnee's right where pawnor makes default
177 Defaulting pawnor's right to redeem
178 Pledge by mercantile agent
178A Pledge by person in possession under
voidable contract
179 Pledge where pawnor has only a limited
interest suits by bailors against wrong-doers
180 Suit by bailor or bailee against wrong-doer
181 Apportionment of relief or compensation
obtained by such suits
Chapter X Agency, Appointment and authority of
agents
182 "Agent" and "Principal"
defined
183 Who may employ agent
184 Who may be an agent
185 Consideration not necessary
186 Agent's authority may be expressed or implied
187 Definitions of express and implied authority
188 Extent of agent's authority
189 Agent's authority in an emergency
190 When agent cannot delegate
191 "Sub-agent" defined
192 Representation of principal by sub-agent
properly appointed
193 Agent's responsibility for sub-agent
appointed without authority
194 Relation between principal and person duly
appointed by agent to act in business of agency
195 Agent's duty in naming such person
196 Right of person as to acts done for him
without his authority: effect of ratification
197 Ratification may be expressed or implied
198 Knowledge requisite for valid ratification
199 Effect of ratifying unauthorized act forming
part of transaction
200 Ratification of unauthorized act cannot
injure third person
201 Termination of agency
202 Termination of agency, where agent has an
interest in subject-matter
203 When principal may revoke agent's authority
204 Revocation where authority has been partly
exercised
205 Compensation for revocation by principal, or
renunciation by agent
206 Notice of revocation or renunciation
207 Revocation and renunciation may be expressed
or implied
208 When termination of agent's authority takes
effect as to agent, and as to third persons
209 Agent's duty on termination of agency by
principal's death or insanity
210 Termination of sub-agent's authority
211 Agent's duty in conducting principal's
business
212 Skill and diligence required from agent
213 Agent's accounts
214 Agent's duty to communicate with principal
215 Right of principal when agent deals, on his
own account, in business of agency without principal's consent
216 Principal's right to benefit gained by agent
dealing on his own account in business of agency
217 Agent's right of retainer out of sums
received on principal's account
218 Agent's duty to pay sums received for principal
219 When agent's remuneration becomes due
220 Agent not entitled to remuneration for
business misconducted
221 Agent's lien on principal's property
222 Agent to be indemnified against consequences
of lawful acts
223 Agent to be indemnified against consequences
of acts done in good faith
224 Non-liability of employer of agent to do a
criminal act
225 Compensation to agent for for injury caused
by principal's neglect
226 Enforcement and consequences of agent's
contracts
227 Principal how far bound, when agent exceeds
authority
228 Principal not bound when excess of agent's
authority is not separable
229 Consequences of notice given to agent
230 Agent cannot personally enforce, nor be bound
by, contracts on behalf of principal
231 Rights of parties to a contract made by agent
not disclosed
232 Performance of contract with agent supposed
to be principal
233 Right of person dealing with agent personally
liable
234 Consequence of inducing agent or principal to
act on belief that principal or agent will be held exclusively liable
235 Liability of pretended agent
236 Person falsely contracting as agent, not
entitled to performance
237 Liability of principal inducing belief that
agent's unauthorised acts were authorised
238 Effect, on agreement, of misrepresentation or
fraud by agent
Chapter XI Of partnership
239 to 266 Repealed
Schedule Repealed
PREAMBLE
[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 :-
1. Short title
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.
2. Interpretation -clause
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.
Chapter I Of the communication, acceptance and revocation of proposals
3. Communication, acceptance and revocation of proposals
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.
4. Communication
when complete
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.
5. Revocation of Proposals and acceptance
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.
6. Revocation how made
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 fulfill 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 the acceptor before acceptance.
7. Acceptance must be absolute
In order to convert a proposal into a promise the acceptance must -
(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.
8. Acceptance by performing conditions, or receiving consideration
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.
9. Promise, express and implied
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.
Chapter
II Of contracts, violable contracts and void agreements
10. What agreements are contracts
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.
11. Who are competent to contract
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.
12. What is a sound mind for the purposes of contracting
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 judgment 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.
13. "Consent" defined -
Two or more person are said to consent when they agree upon the same
thing in the same sense.
14. "Free consent" defined -
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.
15. "Coercion" defined
"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.
16. "Undue influence" defined
(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)
17. "fraud defined
"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.
18. "Misrepresentation" defined
"Misrepresentation" means and includes -
(1) the positive assertion, in a manner not warranted by the
information of the person making it, of that which is 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.
19. Voidability of agreements without free consent
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 practiced, 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.
20. Agreement void where both parties are under mistake as to matter
of fact
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.
21. Effect of mistake as to law
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.
22. Contract caused by mistake of one party as to matter 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.
23. What consideration and objects are lawful, and what not
The consideration or object of an agreement is lawful, unless -It is
forbidden by law; or is of such nature that, if permitted it would defeat the
provisions of any law or is fraudulent; of involves or implies, injury to the
person or property of another; or the 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.
24. Agreements void, if consideration are objects unlawful in part
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.
25. Agreement without consideration, void, unless it is in writing and
registered or is a promise to compensate for something done or is a promise to
pay a debt barred by limitation law -
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.
26. Agreement in restraint of marriage, void
Every agreement in restraint of the marriage of any person, other than
a minor, is void.
27. Agreement in restraint of trade, 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.
28. Agreements in restrain of legal proceedings, void
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.
29. Agreements void for uncertainty
Agreements, the meaning of which is not certain, or capable of being
made certain, are void.
30. Agreements by way of wager, 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.
Chapter
III Of contingent contracts
31. "Contingent contract" defined
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.
32. Enforcement of Contracts contingent on an event happening
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.
33. Enforcement of contract contingent on an event not happening
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.
34. When event on which contract is contingent to be deemed
impossible, if it is the future conduct of a living person
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 they should so act within any definite time, or otherwise than under
further contingencies.
35. When contracts become void, which are contingent on happening of specified
event within fixed time
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 became certain that such
event will not happen.
36. Agreements contingent on impossible event void
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.
Chapter IV
Of the performance of contracts which must be performed
37. Obligations of parties to contract
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.
38. Effect of refusal to accept offer of performance
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 fulfill 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.
39. Effect of refusal of party to perform promise wholly
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.
40. Person by whom promises is to be performed
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.
41. Effect of accepting performance from this person
When a promisee accepts performance of the promise from a third
person, he cannot afterwards enforce it against the promisor.
42. Devolution of joint liabilities
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 fulfill the promise.
43. Any one of joint promisors may be compelled to perform
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 must bear the loss arising from such default in equal shares.
Explanation : Nothing in this section shall prevent a surety from
recovering, from his principal, payments made by the surety on behalf of the
principal, or entitle the principal to recover anything from the surety on
account of payments made by the principal.
44. Effect of release of one joint promisor
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.
45. Devolution of joint rights
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.
46. Time for performance of promise, where no application is to be
made and no time is specified
Where, by the contract, a promisor is to perform his promise without
application by the promisee, and no time for performance is specified, the
engagement must be performed within a reasonable time.
Explanation : The question "what is a reasonable time" is,
in each particular case, a question of fact.
47. Time and place for performance of promise, where time is specified
and no application to be made
When 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.
48. Application for performance on certain day to be at proper time
and place
When a promise is to be performed on a certain day, and the promisor
has not undertaken to perform it without application by the promisee, it is the
duty of the promisee to apply for the performance at a proper place within the
usual hours of business.
Explanation : The question "what is proper time and place"
is, in each particular case, a question of fact.
49. Place for the performance of promise, where no application to be
made and no place fixed for performance
When a promise is to be performed without application by the promisee,
and 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.
50. Performance in manner or at time prescribed or sanctioned by
promise
The performance of any promise may be made in any manner, or at any
time which the promisee prescribes or sanctions.
51. Promisor not bound to perform, unless reciprocal promisee ready
and willing to perform
When a contract consists of reciprocal promises to be simultaneously
performed, no promisor need perform his promise unless the promisee is ready
and willing to perform his reciprocal promise.
52. Order of performance of reciprocal promises
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.
53. Liability of party preventing event on which contract is to take
effect
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.
54. Effect of default as to the promise which should be performed, in contract
consisting or reciprocal promises
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.
55. Effect of failure to perform a fixed time, in contract in which
time is essential
When a party to a contract promises to do a certain thing at or before
a specified time, or certain things 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.
56. Agreement to do impossible act
An agreement to do an act impossible in itself is void. Contract to do
act afterwards becoming impossible or unlawful: A contract to do an act which,
after the contract is made, becomes impossible or, by reason of some event
which the promisor could not prevent, unlawful, becomes void when the act
becomes impossible or unlawful.
Compensation for loss through non-performance of 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.
57. Reciprocal promise to do things legal, and also other things
illegal
Where persons reciprocally promise, firstly to do certain things which
are legal, and, secondly under specified circumstances, to do certain other
things which are illegal, the first set of promise is a contract, but the
second is a void agreement.
58. Alternative promise, one branch being illegal
In the case of an alternative promise, one branch of which is legal
and other illegal, the legal branch alone can be enforced.
59. Application of payment where debt to be discharged is indicated
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.
60. Application of payment where debt to be discharged is not
indicated
Where the debtor has omitted to intimate, and there are no other
circumstances indicating to which debt the payment is to be applied, the
creditor may apply it at his discretion to any lawful debt actually due and
payable to him from the debtor, whether its recovery is or is not barred by the
law in force for the time being as to the limitations of suits.
61. Application of payment where neither party appropriates
Where neither party makes any appropriation, the payment shall be
applied in discharge of the debts in order of time, whether they are or are not
barred by the law in force for the time being as to the limitation of suits. If
the debts are of equal standing, the payment shall be applied in discharge of
each proportionably.
62. Effect of novation, rescission, and alteration of contract
If the parties to a contract agree to substitute a new contract for
it, or to rescind or alter it, the original contract need not be performed.
63. Promise may dispense with or remit performance of promise
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.
64. Consequence of rescission of voidable contract
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 avoidable 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.
65. Obligation of person who has received advantage under void
agreement, or contract that becomes void
When an agreement is discovered to be void, or when a contract becomes
void, any person who has received any advantage under such agreement or
contract is bound to restore, it, or to make compensation for it, to the person
from whom he received it.
66. Mode of communicating or revoking rescission of voidable contract
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.
67. Effect of neglect or promise to afford promisor reasonable
facilities for performance
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.
Chapter V Of certain relations resembling those created by contract
68. Claim for necessaries supplied to person incapable of contracting,
or on his account
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.
69. Reimbursement of person paying money due by another, in payment of
which he is interested
A person who is interested in the payment of money which another is
bound by law to pay, and who therefore pays it, is entitled to be reimbursed by
the other.
70. Obligation of person enjoying benefit of non-gratuitous act
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.
71. Responsibility of finder of goods
A person who finds goods belonging to another, and takes them into his
custody, is subject to the same responsibility as a bailee.
72. Liability of person to whom money is paid, or thing delivered, by mistake
or under coercion
A person to whom money has been paid, or anything delivered, by
mistake or under coercion, must repay or return it.
Chapter VI Of the consequences of breach of contract
73. Compensation of loss or damage caused by breach of contract
When a contract has been broken, the party who suffers by such breach
is entitled to receive, 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.
74. Compensation of breach of contract where penalty stipulated for
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.
75. Party rightfully rescinding contract, entitled to compensation
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
Chapter VIII Of indemnity and guarantee
124. "Contract of indemnity" defined
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".
125. Right of indemnity-holder when sued -
The promisee in a contract of indemnity, acting within the scope of
his authority, is entitled to recover from the promisor-
(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.
126. "Contract of guarantee", "surety",
"principal debtor" and "creditor" -
A "contract of guarantee" is a contract to perform the
promise, or discharge the liability, of a third person in case of his default.
The person who gives the guarantee is called the "surety", the 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.
127. Consideration for guarantee
Anything done, or any promise made, for the benefit of the principal
debtor, may be a sufficient consideration to the surety for giving the
guarantee.
128. Surety's liability
The liability of the surety is co-extensive with that of the principal
debtor, unless it is otherwise provided by the contract.
129. Continuing guarantee
A guarantee which extends to a series of transaction, is called, a
"continuing guarantee".
130. Revocation of continuing guarantee
A continuing guarantee may at any time be revoked by the surety, as to
future transactions, by notice to the creditor.
131. Revocation of continuing guarantee by surety' death -
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.
133. Discharge of surety by variance in terms of contract
Any variance made without the surety's consent, in the terms of the
contract between the principal [debtor] and the creditor, discharges the surety
as to transactions subsequent to the variance.
134. Discharge of surety by release or discharge of principal debtor -
The surety is discharged by any contract between the creditor and the
principal debtor, by which the principal debtor is released, or by any act or
omission of the creditor, the legal consequence of which is the discharge of
the principal debtor.
135. Discharge of surety when creditor compounds with, gives time to,
or agrees not to sue, principal debtor
A contract between the creditor and the principal debtor, by which the
creditor 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.
136. Surety not discharged when agreement made with third person to
give time to principal debtor
Where a contract to give time to the principal debtor is made by the
creditor with a third person, and not with the principal debtor, the surety is
not discharged.
137. Creditor's forbearance to sue does not discharge surety
Mere forbearance on the part of the creditor to sue the principal
debtor or to enforce any other remedy against him, dies not, in the absence of
any provision in the guarantee to the contrary, discharge the surety.
138. Release of one co-surety does not discharge other -
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.
139. Discharge of surety by creditor's act or omission impairing
surety's eventual remedy-
If the creditor does any act which is inconsistent with the 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.
140. Rights of surety on payment or performance -
Where a guaranteed debt has become due, or default of the principal
debtor to perform a guaranteed duty has taken place, the surety upon payment or
performance of all that he is liable for, is invested with all the rights which
the creditor had against the principal debtor.
141. Surety's right to benefit of creditor's securities -
A surety is entitled to the benefit of every security which the
creditor has against the principal debtor at the time when the contract of
suretyship 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.
142. Guarantee obtained by misrepresentation, invalid
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.
143. Guarantee obtained by concealment, invalid -
Any guarantee which the creditor has obtained by means of keeping
silence as to meterial circumstances, is invalid.
144. Guarantee on contract that creditor shall not act on it until
co-surety joins -
Where a person gives a guarantee upon a contract that the creditor
shall not act upon it until another person has jointed in it as co-surety, the
guarantee is not valid that other person does not join.
145. Implied promise to indemnify surety -
In every contract of guarantee there is an implied promise by the
principal debtor to indemnify the surety, and the surety is entitled to recover
from the principal debtor whatever sum he has rightfully paid under the
guarantee, but no sums which he has paid wrongfully.
146. Co-sureties liable to contribute equally -
Where two or more persons are co-sureties for the same debt or duty,
either jointly or severally, and whether under the same or different 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.
147. Liability of co-sureties bound in different sums -
Co-sureties who are bound in different sums are liable to pay equally
as far as the limits of their respective obligations permit.
Chapter IX Of bailment
148. "Bailment", "bailor" and "bailee"
defined -
A "bailment" is the delivery of goods by one person to
another for some purpose, upon a contract that they shall, when the purpose is
accomplished, be returned or otherwise disposed of according to the 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.
149. Delivery to bailee how made -
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.
150. Bailor's duty to disclose faults in goods bailed -
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.
151. Care to be taken by bailee -
In all cases of bailment the bailee is bound to take as much care of
the goods bailed to him as a man of ordinary prudence would, under similar
circumstances, take of his own goods of the same bulk, quantity and value as
the goods bailed.
152. Bailee when not liable for loss, etc, of thing bailed -
The bailee, in the absence of any special contract, is not responsible
for the loss, destruction or deterioration of the thing bailed, if he has taken
the amount of care of it described in section 151.
153. Termination of bailment by bailee's act inconsistent with
conditions -
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.
154. Liability of bailee making unauthorised use of goods bailed -
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.
155. Effect of mixture with bailor's consent, of his goods with
bailee's -
If the bailee, with the consent of the bailor, mixes the goods of the
bailor with his own goods, the bailor and the bailee shall have an interest, in
proportion to their respective shares, in the mixture thus produced.
156. Effect of mixture, without bailor's consent, when the goods can
be separated -
If the bailee, 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.
157. Effect of mixture, without bailor's consent, when the goods
cannot be separated -
If the bailee, without the consent of the bailor, mixes the 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.
158. Repayment, by bailor, of necessary expenses -
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.
159. Restoration of goods lent gratuitously -
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.
160. Return of goods bailed, on expiration of time or accomplishment
of purpose -
It is the duty of the bailee to return, or deliver according to the
bailor's directions, the goods bailed, without demand, as soon as the time for
which they were bailed has expired, or the purpose for which they were bailed
has been accomplished.
161. Bailee's responsibility when goods are not duly returned -
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.
162. Termination of gratuitous bailment by death -
A gratuitous bailment is terminated by the death either of the bailor
or of the bailee.
163. Bailer entitled to increase or profit from goods bailed -
In the absence of any contract to the contrary, the bailee is bound to
deliver to the bailer, or according to his directions, any increase or profit
which may have accrued from the goods bailed.
164. Bailor's responsibility to bailee -
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.
165. Bailment by several joint owners -
If several joint owners of goods bail them, the bailee may deliver
them back to, or according to the directions of, one joint owner without the
consent of all in the absence of any agreement to the contrary.
166. Bailee not responsible on redelivery to bailor without title -
If the bailor has no title to the goods, and the bailee, in good
faith, delivers them back to, or ccording to the directions of the bailor, the
bailee is not responsible to the owner in respect of such deliver.
167. Right of third person claiming goods bailed -
If a person, other than the bailor, claims goods bailed he may apply
to the court to stop delivery of the goods to the bailor, and to decide the
title to the goods.
168. Right to finder of goods may sue for specified reward offered -
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.
169. When finder of thing commonly on sale may sell 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.
170. Bailee's particular lien -
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.
171. General lien of bankers, factors, wharfinger, attorneys and
policy brokers -
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.
172. "Pledge", "Pawnor", and "Pawnee"
defined -
The bailment of goods as security for payment of a debt or performance
of a promise is called "pledge". The bailor is in this case called
"pawnor". The bailee is called "pawnee".
173. Pawnee's right of retainer -
The pawnee may retain the goods pledged, not only for payment of the
debt or the performance of the promise, but for the 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.
175. Pawnee's right as to extraordinary expenses incurred -
The pawnee is entitled to receive from the pawnor extraordinary
expenses incurred by him for the preservation of the goods pledged.
176. Pawnee's right where pawnor makes default -
If the pawnor makes default in payment of the debt, or performance, at
the stipulated time, 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.
177. Defaulting pawnor's right to redeem -
If a time is stipulated for the payment of the debt, or performance of
the promise, for which the 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.
178. Pledge by mercantile agent -
Where a mercantile agent is, with the consent of the owner, in
possession of goods or the documents of title to goods, any pledge made by him,
when acting in the ordinary course of business of a mercantile agent, shall be
as valid as if he were expressly 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 no 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).
178A. Pledge by person in possession under voidable contract -
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.
179. Pledge where pawnor has only a limited interest -
Where person pledges goods in which he has only a limited interest,
the pledge is valid to the extent of that interest.
180. Suit by bailor or bailee against wrong-doer -
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.
181. Appointment of relief or compensation obtained by such suit -
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.
Chapter X Agency, Appointment and authority of agents
182. "Agent" and "principal" defined -
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".
183. Who may employ agent -
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.
184. Who may be 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.
185. Consideration not necessary -
No consideration is necessary to create an agency;
186. Agent's authority may be expressed or implied -
The authority of an agent may be expressed or implied.
187. Definitions of express and implied -
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.
188. Extent of agent's authority -
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.
189. Agent's authority in an emergency -
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.
190. When agent cannot delegate -
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.
191. "Sub-agent" defined -
A "sub-agent" is a person employed by, and acting undue the
control of, the original agent in the business of the agency.
192. Representation of principal by sub-agent properly appointed -
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 subagent. 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.
193. Agent's responsibility for sub-agent appointed without -
Where 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.
194. Relation between principal and person duly appointed by agent to
act in business of agency -
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.
195. Agent's duty in naming such person -
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.
196. Right of person as to acts done for him without his authority,
effect of ratification -
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.
197. Ratification may be expressed or implied -
Ratification may be expressed or may be implied in the conduct of the
person on whose behalf the acts are done.
198. Knowledge requisite for valid ratification -
No valid ratification can be made by a person whose knowledge of the
facts of the case is materially defective.
199. Effect of ratifying unauthorized act forming part of a
transaction -
A person ratifying any unauthorized act done on his behalf ratifies
the whole of the transaction of which such act formed a part.
200. Ratification of unauthorized act cannot injure third person -
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.
201. Termination of Agency -
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.
202. Termination of Agency, where agent has an interest in subject-matter
-
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.
203. When principal may revoke agent's authority -
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.
204. Revocation where authority has been partly exercised -
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.
205. Compensation for revocation by principal, or renunciation by
agent -
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.
206. Notice of revocation or renunciation -
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.
207. Revocation and Renunciation may be expressed or implied -
Revocation and renunciation may be expressed or may be implied in the
conduct of the principal or agent respectively.
208. When termination of agent's authority takes effect as to agent,
and as
to third persons -
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.
209. Agent's duty on termination o agency by principal's death or
insanity -
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.
210. Termination of Sub-agent's authority -
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.
211. Agent's duty in conducting principal's business -
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.
212. Skill and Diligence required from agent -
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.
213. Agent's accounts -
An agent is bound to render proper accounts to his principal on
demand.
214. Agent's duty of communicate with principal -
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.
215. Right to principal when agent deals, on his own account, in
business of agency without principal's consent -
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.
217. Agent's right of retainer out of sums received on principal's
account -
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.
218 . Agent's duty to pay sums received for principal -
Subject to such deductions, the agent is bound to pay to his principal
all sums received on his account.
219. When agent's remuneration becomes due -
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.
220. Agent not entitled to remuneration for business misconducted -
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.
221. Agent's lien on principal property -
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.
222. Agent to be indemnified against consequences of lawful acts -
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.
223. Agent to be indemnified against consequences of acts done in good
faith -
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
224. Non-Liability of employer of agent to do a Criminal Act -
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.
225. Compensation to agent for injury caused by principal's neglect -
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.
226. Enforcement and Consequences of agent's contracts -
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.
227. Principal how far bound, when agent exceeds authority -
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.
228. Principal not bound when excess of agent's authority is not
separable -
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.
229. Consequences of notice given to agent -
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.
230. Agent cannot personally enforce, nor be bound by, contracts on
behalf of principal -
In the absence of any contract to that effect, an agent cannot
personally enforce 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.
231. Rights of Parties to a contract made by agent not disclosed -
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.
232. Performance of contract with agent supposed to be principal -
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.
233. Right of person dealing with agent personally liable -
In cases where the agent is personally liable, a person dealing with
him may hold either him or his principal, or both of them, liable.
234. Consequence of Inducing agent or principal to act on belief that principal
or agent will be held exclusively liable -
When a person who has made a contract with an agent induces the agent
to act upon the belief that' the Principal only will be held liable, or induces
the principal to act upon the belief that the agent only will be held liable,
he cannot afterwards hold liable the agent or principal respectively.
235. Liability of pretended agent -
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.
236. Person falsely contracting as agent not entitled to performance -
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.
237. Liability of principal inducing belief that agent's unauthorized
acts were authorized-
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.
238. Effect, on agreement, of misrepresentation or fraud by agent -
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.
Chapter XI Of partnership
239-266 [Rep. By the Indian Partnership Act, 1932 (9 OF 1932), SEC. 73
And Sch. II].
Schedule
Sch. THE SCHEDULE Enactments repealed -
[Repealed by the Repealing and Amending Act, 1914
(10 of 1914) sec. 3 and Sch. II.]
