Introduction and General Principles of Contract

Explanation of Contract According to Contract Act, 1872

According

to the Indian Contract Act, 1872 Section 2 (h) defines a contract as agreement enforceable by law. Thus to make a contract there must be a) An agreement shall be enforceable by law b) All agreements are not enforceable by law and therefore, all agreements are not contracts.

Interpretation Clause
In this Act the following words and expressions are used in the following senses, unless contrary intention appears from the context:

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; 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;

Contd.

The person making the proposal is called the "promisor", and the person accepting the proposal is called "promisee", 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; Every promise and every set of promises, forming the consideration for each other, is an agreement;
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Contd.

Promises which form the consideration or part of the consideration for each other, are called reciprocal promises; An agreement not enforceable by law is said to be void; An agreement enforceable by law is a contract; 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; A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable.
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Example

In an agreement there is a promise from both the sides. For example, A promises to deliver his radio to B and in return B promises to pay a sum of Rs. 500 to A , there is said to be an agreement between A and B

Types of Contract

Validity

Types of Contract on the basis of Formation

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Performance

Subtypes of Contract
Validity
Valid Void Voidable

Performance
Executed Executory

Formation
Express

Implied

Illegal
Unenforceable
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Unilateral
Bilateral

Quasi

Contracts Based on Validity

Valid Contract :- A valid contract is an agreement enforceable by law. An agreement becomes enforceable by law when all the essential elements of a valid contract as enumerated above are present. Voidable Contract :- According to section 2(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 order or others, is a voidable contract . Thus, a voidable contract is one which is enforceable by law at the option of one of the parties.

Contd.
Void Contract :- Section 2(j) defines: A contract which ceases to be enforceable by law becomes void, when it ceases to be enforceable. Example :- Mr. X agrees to write a book with a publisher. After few days, X dies in an accident. Here the contract becomes void due to the impossibility of performance of the contract. Unenforceable contract :- An unenforceable contract is one which is valid in itself, but is not capable of being enforced in a court of law because of some technical defect such as absence of writing, registration, requisite stamp, etc.

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Contd..
Example :- An oral arbitration agreement is unenforceable because the law requires an arbitration agreement to be in writing. Similarly, a bill of exchange or promissory note, though valid in itself, becomes unenforceable after three years from the date the bill or note falls due, being time barred under the Limitation Act. Illegal or unlawful contract :- The word illegal means contrary to law and the term contract means an agreement enforceable by law. An agreement is illegal and void if its object or consideration: (a) is forbidden by law; or (b) is of such a nature that, if permitted, it would defeat the provision of any law ; or (c) is fraudulent ; or (d) the court regards it as immoral, or opposed to public policy (Sec. 11 23).

Contract Based on Formation

Express Contract :- Where both the offer and acceptance constituting an agreement enforceable at law are made in words spoken or written, it is an express contract. For example, A tells B on telephone that he offers to sell his car for Rs. 20,000 and B in reply informs A that he accepts the offer, there is an express contract. Implied Contract :- Where both the offers and acceptance constituting an agreement enforceable at law are made otherwise than in words i.e. , by and conduct of the parties. It is an implied contract . Thus , where A, a coolie in uniform takes up the luggage of B to carried out of the Railway station without being asked by B, and B allows him to do so, then the law implies that B agrees to pay for the services of A, and there is an implied 12 contract.

Contd.
Constructive or Quasi Contract :- The term constructive or Quasi contract is a misnomer. The cases grouped under this type of contracts have little or no affinity with contract. A quasi contract is based upon the equitable principle that a person shall not be allowed to retain unjust benefit at the expense of another. Sections 6872 of the Contract Act describe the cases which are to be deemed quasi contracts.

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Contracts Based on Performance

Executed Contract :- A contract is said to be executed when both the parties to a contract have completely performed their share of obligation and nothing remains to be done by either party under the contract. For example, when a bookseller sells a book on cash payment it is an executed contract because both the parties have done what they were to do under the contract. Executory Contract :- It is one in which both the obligations are outstanding, one on either party to the contract, either wholly or in part, at the time of the formation of the contract. For example, T agrees to coach R, a pre-medical student, from first day of the next month and R in consideration promises to pay T Rs. 500 per month, the contract is executory because it is yet to be carried out. 14

Contd..

Unilateral Contract :- This is a one sided contract in which only one party has to perform his duty or obligation. Bilateral Contract :- A bilateral contract is one where the obligation or promise is outstanding on part of both the parties.

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Contracts Classification as per English Law

Contract of Record :- A contract of record derives its binding force from the authority of court. The authority of court is invariably through judgment of a or by way of recognizance. Contract under Seal :- A under seal is one which derives its binding force from its form alone. It is in writing, duly signed and sealed and delivered to parties. It is also referred to as a deed or a specialty contract.

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Different Names of Contract

Contract of Indemnity Guarantee Bailment Pledge Agency

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Contract of Indemnity
According to section 124 of the Indian Contract Act, a contract by which one party promises to save the other from loss caused to him by the conduct of any other person, is called a contract of Indemnity. Example:A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees. This is a contract of Indemnity.

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Guarantee

According to section 126 of the Indian Contract Act, 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.

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Bailment

According to section 148 of the Indian Contract Act, a bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor. The person to whom they are delivered is called the bailee.

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Pledge
Section 172 defines pledge: The bailment of goods as security for payment of a debt or performance of a promise is called pledge. The bailor is in this case called the pawnor. The bailee is called the pawnee.

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Agency
According to section 182 An agent is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done,, or who is so represented, is called the principal.

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Essentials of a valid contract

1.

2.

3.

4.

5.

The agreement should be between two parties. An agreement is the result of a proposal or offer by one party followed by its acceptance by the other. The agreement should be between the parties who are competent to contract. There should be a lawful consideration and lawful object in respect of that agreement. There should be free consent of the parties, when they enter into the agreement. The agreement must not be one, which has been declared to be void.
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Thank You

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General Principles of Contract

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DEVELOPMENT OF CONTRACT LAW PRINCIPLES

Law of Obligation

Law of obligations Moral obligations

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contractual obligations

Contd.

Law of unjust enrichment Law of restitution [Injurious reliance]

CONTRACT IS IN EFFECT THE INSTRUMENT BY WHICH THE SEPARATE AND CONFLICTING INTERESTS OF THE PARTICIPANTS CAN BE RECONCILED AND BROUGHT TO A COMMON GOAL .

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OBJECT OF CONTRACT LAW

To define contractual relationships Facilitate forward planning To determine respective responsibilities of parties To allocate the economic risk involved in a transaction To avoid litigation To establish set of rules for compliance To penalize defaulters

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Proposal or offer
The term proposal has been defined in section 2(a) as follows: When one person signifies to another his willingness to do or 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. Example :- When A tells B that he desires to marry B by the end of 2012, there is no offer made unless, he also asks, will you marry me?, conveying his willingness and tries to obtain the assent of B in the same breadth.
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The willingness to do or abstain from doing something, i.e. the proposal or offer must be made with a view to obtain the assent of the other party thereto. For example, As willingness to sell his radio set to B for Rs. 500 if B accepts to purchase the same, amounts to proposal by A for the sale of the radio set. But if a statement is made without any intention to obtain the assent of the other party thereto that cannot be termed as proposal.

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Classification Of Offer

General Offer :- It is an offer made to public at large with or without any time limit. In terms of Sec. 8 of the Act, anyone performing the conditions of the offer can be considered to have accepted the offer. Until the general offer is retracted or withdrawn, it can be accepted by anyone at any time as it is a continuing offer. Specific Offer :- Where are offer is made to a particular and specified person, it is a specific offer. Only that person can accept such specific offer, as it special and exclusive to him.
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Contd

Cross Offer :- As per section 2(b), when a person to whom proposal is made signifies his assent, the proposal is said to be accepted. Thus assent can be only to o Proposal. If there was no proposal , question of its acceptance cannot arise. Counter Offer :- Upon receipt of an offer from an offerer, if the offeree instead of accepting it straightway, imposes conditions which have the effect of modifying or varying the offer, he is said to have made a counter offer. Open Offer :- An offer which is made to public at large and if it is kept open for public acceptance for a certain period of time, it is known as standing or continuing or open offer.
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Offer and invitation to treat distinguished

A proposal or an offer has to be distinguished from an invitation to treat. Sometimes a person may not offer to sell his goods, but may make some statements or give some information with a view to invite others to make offers on that basis. For example, a bookseller sends a catalogue of books indicating prices of various books to many persons. This catalogue is not an offer to sell those books at prices indicated against those books. This is an Invitation to treat. If any person is interested in purchasing those books mentioned in the catalogue he may make an offer. Similarly, inviting persons to an auction where goods, which are to be auctioned, are displayed is not an offer for the sale of goods. The intending buyers, who make the bid make an offer. Such an offer, when accepted, by the fall of hammer or in some other customary way, will result in a contract.

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Intention to create legal relationship

In order that an offer, after acceptance, can result in a valid contract it is necessary that the offer should be made with an intention to create legal relationship. Promise in the case of a social engagements is generally without an intention to create legal relationship, such an agreement cannot be considered to be a contract. Thus an agreement to go for a walk, to go to movie, to play some game, or entertain another person with a dinner, cannot be enforced in a court of law. Sometimes the party may expressly mention that it is not a formal or legal agreement, whereas in some other cases such an intention could be presumed from their agreement.

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Contd..

The test to know the intention of the parties is objective and not subjective. Merely because the promisor contends that there was no intention to create obligation would not exempt him from liability

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Acceptance
In terms of 2(b) of the Act, A proposal or offer is said to have been accepted when the person to whom the proposal is made signifies his assent to the proposal to do or not to do something. In short, act of acceptance lies in signifying ones assent to the proposal. Relationship between offer and acceptance : It in effect means that the offer can be withdrawn just before it is accepted. Acceptance converts the offer into a promise and then it is too late to revoke it. An offer remains an offer so long as it is not accepted, but becomes a contract as soon as it is accepted.

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Effect of Acceptance

A contract is created only after an offer is accepted. Before the acceptance is made neither party is bound thereby. At that stage the offeror is free to revoke or withdraw his offer, and the offeree is free not to accept the offer or reject the same. After the offer has been accepted it becomes a promise which, if other conditions of a valid contract is satisfied, binds both the parties to the promise. After acceptance each party becomes legally bound by the promise made by him through the medium of offer or acceptance of it.
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Rule Governing Acceptance

Acceptance must be absolute and unqualified The acceptance must be communicated Acceptance must be in the prescribed mode The acceptance must be given within a reasonable time and before the offer lapses. Mere silence is not acceptance Acceptance by conduct

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Communication of offer and Acceptance

One important common requirement for both offer and acceptance is their effective communication. Communication of offer:- In terms of Section 4 of the Act, the communication of offer is complete when it comes to the knowledge of the person to whom it is made. Communication of Acceptance :- Section 3 of the Act prescribes in general terms two modes of communication namely, (a) by any act and (b) by omission, intending thereby to, to communicate to the other or which has the effect of communicating it to the other.
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Acceptance should be communicated

We have seen above that when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. It means that the offeree must signify his assent, or communicate the acceptance.

When the parties are face to face, communication could be oral. When they are at a distant place communication could be made by post, by telegram, by a message on phone, through a messenger, or in any other reasonable manner. Sometimes the conduct of a person might indicate his assent. For example, when a passenger boards a bus and travels thereby, he impliedly assents to pay the necessary fare.
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When is communication of acceptance complete ?

As soon as the communication of acceptance is complete that results in a contract whereby both the parties become bound. In case the parties to the contract are present at the same place, one making the offer and the other communicating the acceptance, both parties become bound immediately. The problem arises when the parties are at a distant place and the contract is concluded through post

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Acceptance by post
Section 4 of the Act mentions the following rules when the communication of acceptance is made by post : 1. The communication of acceptance is complete as against the proposer, when it is put in the course of transmission to him, so as to be out of the power of the acceptor. 2. The communication of acceptance is complete as against the acceptor, when it comes to the knowledge of the proposer. Illustration B accepts As proposal by a letter sent by post. The communication of the acceptance is complete, -As against A , when the letter is posted ; As against B, when the letter is received by A.
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Offeror Bound When Letter of Acceptance Posted to Him

It has been noted that the communication of acceptance is complete as against the proposer when the letter of acceptance is posted to him. Once the letter of acceptance is posted the offeror becomes bound. He becomes bound immediately on the posting of the letter to him and it makes no difference that the receipt of the letter is delayed in transit, or even if the letter is lost in the post and the offeror never receives it.

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Acceptor Bound when his letter reaches the offeror

It has been noted above that though the offeror becomes bound when the letter of acceptance is posted to him, the acceptor himself does not become bound thereby. Acceptor becomes bound by his acceptance when his letter of acceptance comes to the knowledge of the offeror.

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Revocation of Acceptance (India)

In India, since the acceptor does not become bound immediately on posting his letter of acceptance, he is free to revoke the acceptance by adopting speedier mode of communication, whereby his communication of revocation of acceptance may reach earlier than his letter of acceptance. Section 5 expressly permits the revocation of acceptance through the following provision : An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. Illustration A proposes, by a letter sent by post, to sell his house to B. B accepts the proposal by a letter sent by post. B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but 45 not afterwards.

Revocation of Acceptance (England)

Under the English law, once the letter of acceptance is posted it binds both the parties and there appears to be no scope of revocation of acceptance by sending a telegram or through a phone call. Although there are no English cases on the subject are of the view that the posting of the letter of acceptance once posted cannot be revoked.

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What is Consideration?
The expression Consideration has to be understood as a price paid for an obligation. Section 2(d) of the Act defines consideration as when at the desire of the promiser , the promisee or any other person has done or abstained from doing, or does or abstains from doing or promises to do abstain from doing something, such an act or abstinence or promise is called consideration for the promise.

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Legal Requirement Regarding Consideration

Consideration must move at the desire of the promiser Consideration can flow either from the promisee or any other person Executed and Executory consideration Past consideration Adequacy of consideration Performance of what one is legally bound to perform Consideration must not be unlawful, immoral, or opposed to public policy
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Free Consent
In terms of section 13 of the Act, two or more persons are said to have consented when they agree upon the same thing in the same manner. Absence of identity of minds would arise when there is an error on the part of parties regarding (a) nature of transaction or (b) person dealt with or (b) subject matter of agreement. In such cases there would be no consent. However cases of fundamental errors have to be distinguished from cases of mutual mistakes.

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Capacity to Contract
Age of majority 1 An agreement entered into by a minor is altogether void 2 Minor can be a beneficiary 3 Minor can always plead minority 4 Ratification of agreement not permitted 5 Liability for necessaries 6 Contract by guardian are valid Sound mind Contract by disqualified persons

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Thank You

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Special Contracts

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Contract Of Indemnity
In this contract the person who gives the indemnity is called the indemnifier and the person for whose protection it is given is called the indemnity holder or indemnified. Insure Indemnity:- Almost all insurance other than life and personal accident insurance are contracts of indemnity. The insurers promise to indemnify is an absolute one . A suite can be filed immediately upon failure of performance, irrespective of actual loss. If the indemnity holder incurred liability and that liability was absolute, he would be entitled call upon the indemnifier to save him from that liability by paying it off. 53

Extent of Liability
Section 125 lays down the extent of liability. Rights of indemnity-holder when sued All damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies. All cost which he may be compelled to pay in any such suit if, in bringing or defending it, he didnt contravene the orders of the promisor, and acted as it would have been prudent for him to act in the promisor authorized him to bring or defend the suit.

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Contd.

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

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Commencement of Liability

An important question in this connection is when does the indemnifier become liable to pay or when is the indemnity-holder entitled to recover his indemnity? The original English rule was that indemnity was payable only after the indemnityholder had suffered actual loss by paying off the claim. The maxim of law was: you must be damnified before you can claim to be indemnified. But the law is now different .the process of transformation is well-explained by CHAGLA J of the Bombay High Court in Gajanan Moreshwar vs. Moreshwar Madan.
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Guarantee
Economic Functions of guarantee The function of a contract of guarantee is to enable a person to get a loan, or goods on credit, or the supplier or the employer that he may be trusted and in case of any default . For example:- In the old case of Birkmyr vs. Darnell the court said, If two come to a shop and one buys, and the other to give him credit, promises the seller, If he does not pay you, I will. Parties:- 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 57 person to whom the guarantee is given is called the

Essential Features of Guarantee

Principal Debt:- The purpose of a guarantee being to secure the payment of a debt, the existence of a recoverable debt is necessary. It is of the essence of a guarantee that there should be someone liable as a principal debtor and the surety undertakes to be liable on his default. A contract of guarantee is a tripartite agreement which contemplates the principal debtor, the creditor and the surety. Consideration:- Anything done, or any promise made, for the benefit of the principle debtor, may be a sufficient consideration to the surety for giving the guarantee.
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Contd
Misrepresentation and Concealment :Guarantee obtained by misrepresentation, invalid Any guarantee obtained by means of misrepresentation made by the creditor or with his knowledge and assent, concerning a material part of the transaction, is invalid. Guarantee obtained by concealment, invalid Any guarantee which the creditor has obtained by means of keeping silence as to material circumstances is invalid. Writing not necessary:- Section 126 expressly declares that a guarantee may be either oral or written. 59

Extent of Suretys Liability

Section 128. Suretys liability:- The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract. Co-extensive Section 144. Guarantee on contract that creditor shall not act on it until co-surety joins. Suretys right to limit his liability or make it conditional Joint-debtors and suretyship

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Discharge of surety From Liability

By Revocation (S. 130) By Death of Surety (S. 131) By Variance (S. 133) Release or Discharge of Principal Debtor (S.134) Composition, Extension of Time and Promise not to Sue (S.135) By Impairing Suretys Remedy (S.139)

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Rights Of Surety
Rights against Principal Debtor 1 Right of Subrogation (S.140) 2 Right to Indemnity (S.145) Rights against Creditor 1 Right to Securities (S.141) 2 Right to Share Reduction 3 Right of set off Rights against Co-sureties 1 Effect of Releasing a Surety (S.138) 2 Right to Contribution(S. 146-147)
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Bailment
Bailment etymologically means handing over or change of possession. As per Section 148 of the Act, bailment is an act whereby goods are delivered by one person to another for some purpose, on a contract, that the goods shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person who delivers the goods is the bailor and the person whom the goods are delivered is the bailee. For example :- Where X delivers his car for repair to Y , X is the bailor and Y is the bailee.

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General Issues
In bailment both custody and possession must change but not the ownership Example :- Servants of a master who are in custody of goods of the master do not become bailees. Possession and custody do not however mean physical delivery of goods. Deposit of money in a bank is not bailment since the money returned by the bank would not be identical currency notes.

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Bailors Duties

The bailor must disclose all defects/faults in the goods bailed. Where the bailment is gratuitous, the bailor must reimburse the bailee for any expenditure incurred in keeping the goods. The bailor should reimburse any expense which the bailee may incur by way of loss in the process of returning the goods or complying with other directions for returning the goods. The bailor is bound to accept the goods after the purpose is accomplished.
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Rights of bailor
Bailor has a right to enforce the duties of the bailee such as 1 Right to claim damages for loss caused to the goods by the negligence of bailee 2 Right to claim compensation for loss caused by an unauthorized use of the goods bailed 3 Right to claim damages arising out of mixing the goods of the bailor with his own goods. Bailor has a right to terminate the contract if the bailee does anything which is inconsistent with the conditions of bailment.

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Duties of a Bailee

Bailee has no right to make unauthorized use of goods bailed Bailee has no right to mix the goods bailed with his own goods without the consent of the bailor. Bailee has to return the goods on expiration of period of bailment. Bailee has duty not to do anything inconsistent with the condition of bailment. Bailee has a duly to return any extra profit accuring from goods bailed.

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Rights of Bailee

To claim compensation for any loss arising from nondisclosure of known defects in the goods. To claim indemnification for any loss or damage as a result of defective title. To deliver back the goods to joint bailors according to the agreement or directions. To deliver the goods back to the bailor whether or not the bailor has the bailor has the right to the goods. To take action against third parties if that party wrongfuly denies the bailee of his right to use the goods.
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Pledge
Section 172 defines pledge Pledge is a variety or specie of bailment. It is bailment of goods as security for payments of debt or performance of a promise. The person who pledges is known as pledger or also as pawnor, the bailee is known as pledgee or also as pawnee. In pledge , there is no change in ownership of the property. Under exeptional circumstances, the pledgee has a right to sell the property pledged.

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Pawnees Rights

Right of Retainer Right to retention to subsequent debts Right to seek reimbursement of extraordinary expenses Right to sue

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Rights of a Pawnor

Right to reedem Right to sue Suit against wrong doers

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Distinction between Bailment and Pledge

As to purpose : Pledge is a variety of bailment. As to right of sale : The pledge enjoys the right to sell only on default by the pledger to repay the debt or perform his promise, that too only after giving due notice. As to right of using goods : Pledgee has a right to use goods.

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Agency
The Indian Contract Act, 1872 does not define the word Agency. However the word Agent is defined as a person employed to do any thing for another or to represent is called principal. Features of Agency :1 The basic essence of agency is that the principal is bound by the acts of the agent and is answerable to third party. 2 Consideration not necessary 3 Capacity to employ an agent 4 Capacity to be an agent

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Modes of Creation of Agency

There are five general methods of creating agency Agency by actual authority Agency by ratification Agency by ostensible authority Agency by necessity Actual authority and apparent authority

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Extent of Agents Authority

Agents authority in normal circumstances : An agent has the power and authority to do all acts lawful and necessary in the normal circumstances in discharge of his functions. Agents authority in emergency : An agent has the authority in an emergency to do all such acts as a man of ordinary prudence would, for protecting his principal from losses under similar circumstances.

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Duties and Obligations of an Agent

The agent should conduct the business of the principal as per directions of the principal or in the absence of any directions as per the custom prevent in the business. The agent is liable to the principal for any loss if he deviates from the above duty/obligation where he didnt act according to instruction of the principal. Agents Duty to maintain and render proper accounts to principal whenever demanded. Duty to communicate and contact the principal as a man of ordinary diligence.
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Right of an Agent

Right of lien on principals property Right of indemnification for lawful acts Right of indemnification against acts done in good faith Right of retention Right of remuneration

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Thank You

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Words & Phrases occurring in Contracts

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Words Occurring in Contract

Acceptance - the unconditional agreement to an offer. This creates the contract. Before acceptance, any offer can be withdrawn, but once accepted the contract is binding on both sides. Any conditions have the effect of a counter offer that must be accepted by the other party. Agent - somebody appointed to act on behalf of another person (known as the principal). The amount of authority to deal that the agent has is subject to agreement between the principal and the agent. However, unless told otherwise, third parties can assume the agent has full powers to deal.
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Contd.

Arbitration - using an independent third party to settle disputes without going to court. The third party acting as arbitrator must be agreed by both sides. Contracts often include arbitration clauses nominating an arbitrator in advance. Breach of contract - failure by one party to a contract to uphold their part of the deal. A breach of contract will make the whole contract void and can lead to damages being awarded against the party which is in breach.

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Contd.
Collective agreement - term used for agreements made between employees and employers, usually involving trade unions. They often cover more than one organization. Although these can be seen as contracts, they are governed by employment law, not contract law. Comfort letters - documents issued to back up an agreement but which do not have any contractual standing. They are often issued by a parent or associate company stating that the group will back up the position of a small company to improve its trading position. They always state that they are not intended to be legally binding. Also known as letters 82 of comfort.

Contd.

Company seal - an embossing press used to indicate the official signature of a company when accompanied by the signatures of two officers of the company. Since 1989 it has been possible for a company to indicate its agreement without use of the seal, by two signatures (directors or company secretary) plus a formal declaration. However, some companies still prefer to use a seal and the articles of a company can override the law and require a seal to be used.

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Contd.

Conditions - major terms in a contract. Conditions are the basis of any contract and if one of them fails or is broken, the contract is breached. These are in contrast to warranties, the other type of contract term, which are less important and will not usually lead to the breach of the contract - but rather an adjustment in price or a payment of damages. Consumer - a person who buys goods or services but not as part of their business. A company can be a consumer for contracts not related to its business especially for goods or services it buys for its employees. Charities are also treated as consumers.
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Contd.

Consideration - in a contract each side must give some consideration to the other. Often referred to as the quid pro quo - see the Latin terms below. Usually this is the price paid by one side and the goods supplied by the other. But it can be anything of value to the other party, and can be negative - eg someone promising not to exercise a right of access over somebody else's land in return for a payment would be a valid contract, even if there was no intention of ever using the right anyway.

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Confidentiality Agreement

An agreement made to protect confidential information if it has to be disclosed to another party. This often happens during negotiations for a larger contract, when the parties may need to divulge information about their operations to each other. In this situation, the confidentiality agreement forms a binding contract not to pass on that information whether or not the actual contract is ever signed. Also known as a non-disclosure agreement.

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Exclusion Clauses

Clauses in a contract that are intended to exclude one party from liability if a stated circumstance happens. They are types of exemption clauses. The courts tend to interpret them strictly and, where possible, in favor of the party that did not write them. In customer dealings, exclusion clauses are governed by regulations that render most of them ineffective but note that these regulations do not cover you in business dealings.

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Exemption Clauses

Clauses in a contract that try to restrict the liability of the party that writes them. These are split into exclusion clauses that try to exclude liability completely for specified outcomes, and limitation clauses that try to set a maximum on the amount of damages the party may have to pay if there is a failure of some part of the contract. Exemption clauses are regulated very strictly in consumer dealings but these don't apply for those who deal in the course of their business.

88

Implied Terms

Are terms and clauses that are implied in a contract by law or custom and practice without actually being mentioned by any party. Terms implied by custom and practice can always be overridden by express terms, but some terms implied by law cannot be overridden, particularly those relating to consumers (see exemption clauses).

89

Injunction

A remedy sometimes awarded by the court that stops some action being taken. It can be used to stop another party doing something against the terms of the contract. Injunctions are at the court's discretion and a judge may refuse to give one and award damages instead - see the finance contract terms below.

90

Joint and Several Liability

Where parties act together in a contract as partners they have joint and several liability. In addition to all the partners being responsible together, each partner is also liable individually for the entire contract - so a creditor could recover a whole debt from any one of them individually, leaving that person to recover their shares from the rest of the partners.

91

Jurisdiction

A jurisdiction clause sets out the country or state whose laws will govern the contract and where any legal action must take place. Don't forget that England and Scotland have different legal codes, and this may need to be specified.

92

Damages

Money paid as the normal remedy in the law as compensation for an individual or company's loss. If another type of remedy is wanted (such as an injunction - see general contract terms below) but cannot be or is not given by the court, then damages will be awarded instead.

93

Floating charge

A form of security for a debt. Instead of naming a specific property, which can be taken by the creditor if the debtor defaults (as in a fixed charge like a mortgage), a class of goods or assets is named, such as the debtor's stock. This allows the debtor to trade in the assets freely, but if the debtor fails to make repayments then the floating charge becomes a fixed charge (known as crystallization) over all the stock at that time. The creditor can then take and sell it to recover the debt.

94

Phrases in Contract

Ab initio (ab init) from the beginning. Can mean that breaking some terms in a long-running contract results in the contract having been broken from the start. Caveat emptor - buyer beware. This is a general rule that it is up to the buyer to find out if what they are buying is what they want. Consumer regulations require certain information to be disclosed to consumers and insurance contracts are covered by the uberrimae fides - but many types of business contracts are covered by the caveat emptor rule.
95

Contd.

Consensus ad idem - agreement on an idea. This is the concept that the parties to the contract must all be in agreement on the basis of the contract. If it is discovered that the parties were thinking different things, then there is no consensus and the contract is void. De facto - in fact. The opposite of de jure (in law). Having a practical effect different from the legally accepted or expected situation. For example, a person who deliberately or negligently gives the impression to another party of being a company director, can be treated as a de facto director. So any agreement or statements will bind the company they make as if a properly appointed director made them.
96

Contd.

De jure - in law. According to law, the opposite of de facto. De minimis - short for de minimis non curat lex: the law does not concern itself with trifles. It basically means insignificant or too small to bother with. De novo - start afresh. Starting a new contract on the same basis as the old.

97

Contd.

Exempli gratia (eg) - for example. One or more examples from a greater list of possibilities. Compares with id est (ie), that is, which indicates a full, definitive list of all possibilities. Ex gratia - out of grace. A gift made without any obligation on the part of the giver or any return from the receiver. Ex parte - on behalf of. An action, usually a legal action, taken by a party on someone else's behalf. Ex post facto - because of some later event. Where a later event or occurrence interferes with an earlier agreement.
98

Contd.

Id est (ie) - that is. Is followed by a definition or list of items or options that relate to a preceding statement or condition. Differs from exempli gratia (eg) - for example - that gives some, but not all, examples of the items or options. Inter alia - among other things. This is often used in contracts to indicate that what is being specifically referred to is part of a larger group without having to name all the elements. Mala fides - bad faith, opposite of bona fide.

99

Contd.

Nemo dat quod non habet - no one can give what they do not have. The principle that a seller cannot pass on a better right to the property than they actually have. So, if goods are stolen, the buyer does not get ownership even if there was no indication that they were stolen. Non compos mentis - not of sound mind. A person who is not of sound mind will not have full capacity to enter into a contract. Non est factum - not my act. This is a denial by a person that they were actually involved in some action or dealings. In a contract, it can occur if a party denies that they signed the contract - that someone else forged their signature.
100

Contd.

Pari passu - equal and even. This relates to shares to denote that newly issued shares have the same rights and restrictions as those of the same class already existing. Prima facie - at first sight. A prima facie fact is one that seems to be correct, but may subsequently be proved wrong by other evidence. Pro rata - for the rate. Divided in proportion to some existing split. For example, a pro rata share issue is offered in proportion to the number of shares each shareholder already has. Pro tanto - for so much. Means to the extent specified, but not more. Pro tempore (pro tem) - for the time being.
101

Contd.

Quid pro quo - something for something. The usual definition of consideration (see the general contracts terms above) in a contract, on the basis that each party should offer something to the other. Uberrima fides - utmost good faith. The concept that a party to certain types of contract must act in good faith and declare all relevant facts to the other side even if they do not ask. This only usually applies to insurance contracts where the insured person must declare all known risks. It is an exemption to the general contract rule of caveat emptor.
102

Law of Insurance

103

Marine Insurance

Marine insurance was the oldest type of insurance in England and it was imported from the cities of Northern Italy where it probably began at about the end of the 12th century. On the passing of the bubble Act 1720, two companies, London Assurance and Royal Exchange Assurance obtained charters in the same year. The Act created a monopoly in marine insurance to these corporations by prohibiting other corporations, partnerships and societies from engaging in marine insurance as a business.
104

Nature of the Contract

A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured in the manner and the extent thereby agreed, against marine losses. A contract of marine insurance may, by its express terms, or by usage of trade, be extended so as to protect the assured against losses on inland waters or on any land risk which may be incidental to any sea voyage. In modern times , the normal insurance of goods include a transit clause, which covers the goods from the warehouse of the manufacturer or wholesale seller to that of the consignee or the buyer.
105

A slip in Marine Insurance

In marine insurance generally the broker contracts the parties and takes the particulars on a slip of paper. He takes that to different insurance companies and the insurance company which is willing to insure makes a mark or initials of the officer on the slip. From that time it is called a slip proper. In this context it is established that the Lioyds broker is the agent of the assured and not the agent of the underwriter. Section 21 of the Marine Insurance Act 1906 states that a contract of marine insurance is deemed to be concluded when the proposal of the assured is accepted by the insurer, whether the policy be then issued or not.
106

Slip as Evidence

English Law Under English Law, where there is a duly stamped policy, reference may be made, to the slip or covering note in any legal proceeding. As the slip is clearly a contract for marine insurance, and is equally clearly not a policy it is by virtue of these enactments not valid, that is , not enforceable at law or in equity; but it may be given in evidence wherever it is, though not valid, material. Indian Law In India the practice is to issue cover notes which are similar to slips. As the practice is not to stamp a cover note it is admissible only to prove the agreement.
107

Rules In India Regarding Marine Insurance

Before the Passing of the Marine Insurance Act, 1963 No contract of sea insurance shall be valid unless the same is expressed in a sea policy. No sea policy shall be valid for any time exceeding twelve months. No sea policy shall be valid unless it specifies the particular risk or adventure or the time for which it is made. Where any sea insurance is made on a voyage and also for time or to extend to or cover any time beyond thirty days after the ship has arrived at her destination and been moored at anchor the policy shall be charged with duty as a policy for or upon a voyage and also with duty 108 as a policy for time.

Under the Marine Insurance Act 1963

The Marine Insurance Act in its sec. 24 lays down that a contract of marine insurance shall be admitted in evidence unless it is embodied in a marine insurance shall be admitted in evidence unless it is embodied in a marine policy according to the Act. Section 25 lays down the contents of the marine policy and states that a marine policy must specify: The name of the assured or the person who effects the insurance The subject matter insured and the risk insured against The voyage or the period of time or both
109

Contd.

The sum or sums insured The name of the insurer or insurers

110

Classification of Marine Policies

Valued Policy

Unvalued Policy

Floating Policy

Time Policy

Voyage Policy

111

Valued Policy

A valued policy is a policy specifies the agreed value of the subject matter insured. In a valued policy; the value mentioned is conclusive between the parties, unless there is a fraud whether the loss be total or partial. The value fixed by the policy is not conclusive for the purpose of determining whether there has been a constructive total loss. A valued policy, resembles a wagering contract and on that ground its validity has been challenged for some time.
112

Unvalued Policy

An valued policy is sometimes spoken of as an open policy. Here there is a sharp difference between mercantile usage and law. In mercantile usage the term open policy is generally used to describe floating policies but in law and under the statutes as open policy is denoted to describe only an unvalued policy. The Act defines an unvalued policy as a policy which does not specify the value of the subject-matter insured but leaves the insurable value to be subsequently ascertained in the manner specified in the Act.
113

Floating Policy

This type of policies are generally taken by carriers, factors or warehousemen to cover their limited interests in the goods they carry or in their possession or by the insured when he does not know by which ship or ships his goods are dispatched. These policies are taken in general terms and the particulars as filled by subsequent declarations. Floating policy is defined as a policy which describes the insurance in general terms, and leaves the name of the ship or ships and the other particulars to be defined by subsequent declarations.
114

Time Policy

Where a ship is insured for a particular time from a particular date to a particular date, the policy is called a time policy. The period should not exceed one year though it may contain one or several voyages. Section 27 (2) of the Indian Act lays down that a time policy which is made for any time exceeding 12 months is invalid. A time policy is defined as a policy in which the contract is to insure the subject matter for a definite period of time.

115

Voyage Policy

Where the contract is to insure the insure the subject matter at and from or from one place to another or others, the policy is called a voyage policy. A contract for both voyage and time may be included in the same policy and such policies are in mercantile usage called mixed policies, e.g., a ship mat be insured under the same policy, from Bombay to London for six months or from Madras to New York, and 90 days after arrival. The voyage is to commence called terminus quo and the port where the voyage is concluded called terminus and quem.
116

Excuse For Deviation or Delay

In the following cases the insurer is not discharged from liability even tough there is deviation or delay: If authorized by a special term in the policy If caused by circumstances beyond the control of the master or his employer If it is reasonably necessary to comply with an express or implied warranty If it is reasonably necessary for the safety of the ship or subject-matter insured If it is for the purpose of saving human life or aiding a ship in distress where human life is in danger
117

Contd.

If it reasonably necessary for the purpose of obtaining medical or surgical aid for person on board the ship If it is due to the barratrous conduct of the master or crew if barratry be one of the perils insured against

118

Warranties in Marine Insurance

The term warranty is used in a peculiar sense in marine insurance and is not used in the same sense as it has been in other areas of law. For example :- In a contract of sale of goods it is used in the sense of a stipulation made by the parties to a contract of sale which is collateral to the contract, the breach of which does not give rise to the other party a right to avoid the contract altogether but only a remedy to claim damages. The effect of its breach is stated in 35 (3) of the Indian Act that a warranty is a condition which must be exactly complied with then, subject to any express provision in the policy.

119

Warranties dealt with under the Act

The warranties expressly dealt with under the Act may be grouped under three heads : warranties implied in every contract warranties implied only when certain other warranties are specified warranties not implied

120

Thank You

121

Sale of Goods

122

Contract of Sale of Goods

The law relating to sale of goods is contained in the sale of goods Act, 1930. which came into force on 1st July, 1930 . The Act contains sixty- six Sections and extends to the whole of India except the state of Jammu and Kashmir. A few minor amendments in the Act were made by sale of Goods(Amendment) Act,1963. Section 4(1) of the Sale of Goods Act defines a contract of sale of goods as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.
123

Characteristics of a Contract of Sale of Goods

Two Parties Transfer of Property Goods Price Includes both a sale and an agreement to sell

124

Sale and Agreement to Sell Distinguished

Transfer of property (ownership) Risk of loss Consequences of breach Right of resale Insolvency of buyer before he pays for the goods Insolvency of seller if the buyer has already paid the price

125

Kinds of Goods

Existing Goods

Future Goods

Contingent Goods
126

Existing Goods
Goods which are physically in existence and which are in sellers ownership and/or possession , at the time of entering the contract of sale are called existing goods. Existing goods may again be either specific or unascertained Specific goods : Goods identified and agreed upon at the time of the making of the contract of sale are called Specific goods.[sec. 2(14)] Unascertained goods : The goods which are not separately identified or ascertained at the time of the making of the contract are known as Unascertained goods. 127

Future Goods
Goods to be manufactured, produced or acquired by the seller after the making of the contract of sale are called Future Goods {sec. 2(6)]. These goods may be either not yet in existence or be in existence but not yet acquired by the seller. Illustration :- (a) A agrees to sell to B all the milk that his cow may yield during the coming year. This is a contract for the sale of future goods. (b) X agrees to sell to Y all the mangoes which will be produced in his garden next year. It is contract of sale of future goods, amounting to an agreement to sell.

128

Contingent Goods
Goods , the acquisition of which the seller depends upon an uncertain contingency are called contingent goods[sec. 6(2)]. In words , like the future goods, in the case of contingent goods also the property does not pass to the buyer at the time of making the contract. Illustration :- (a) A agrees to sell to B a specific rare painting provided he is able to purchase it from its present owner. This is a contract for the sale of contingent goods.

129

The Price

The money consideration for a sale of goods is known as price [Sec. 2(10)]. We have already seen that the price is an essential element in every contract of sale of goods , that is , no valid sale can take place without a price. The price should be paid or promised to be paid in legal tender money , unless otherwise agreed. It may be paid in the form of a cheque , hundi, bank deposit etc. For, it is not the mode of payment of a price but the agreement to pay a price in money that is requisite to constitute a valid contract of sale.

130

Modes of Fixing the Price

According to Section 9 the price may be fixed by one or the other of the following modes : It may be expressly fixed by the contract itself . This is the most usual mode of fixing the price . The parties are to fix any price they like and the court will not question as to the adequacy of price. It may be fixed in accordance with an agreed manner provided by the contract. For example, it may be agreed that the buyer would pay the market price prevailing on a particular date, or that the price is to be fixed by a third party appointed by the consent of the parties.
131

Contd.

It may be determined by the course of dealings between the parties. For example, if the buyer has been previously paying to a particular seller the price prevailing on the date of placing the order, the course of dealings suggest that in subsequent transactions also the price as on the date of order will be paid. If the price is not capable of being determined in accordance with any of the above modes, the buyer is bound to pay to the seller a reasonable price.
132

Conditions and Warranties

Condition defined, A condition is a stipulation essential to the main purpose of the contract, the breach of which gives the aggrieved party a right to repudiate the contract itself [12(2)]. In addition, he may maintain an action for damages for loss suffered, if any, on the footing that the whole contract is broken and the seller is guilty of non-delivery. Warranty Defined, A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives the aggrieved party a right to sue for damages only, and not to avoid the contract itself. [Sec. 12(3)]
133

Condition and Warranty Distinguished

The point of distinction between a condition and a warranty may be summed up as under : As to value. A condition is a stipulation which is essential to the main purpose of the contract, whereas a warranty is a stipulation which is collateral to the main purpose of the contract. As to breach. The breach of condition gives the aggrieved party the right to repudiate the contract and also to claim damages, whereas the breach of warranty gives the aggrieved party a right to claim damages only. As to treatment. A breach of condition may be treated as a breach of warranty . But a breach of warranty cannot be treated as a breach of condition.
134

Implied Condition of Contract of Sale of Goods

Condition as to title [Sec. 14 (a)]. In every contract of sale, the first implied condition on the part of the seller is that, in the case of a sale, he has the right to sell the goods and that, in the case of an agreement to sell , he will have a right to sell the goods at the time when the property is to pass. Condition in a sale by description. When there is a contract of sale of goods by description, there is an implied condition that the goods shall correspond with description.(Sec. 15) Condition in a sale by sample (Sec. 17). When under a contract of sale , goods are to be supplied according to a sample agreed upon.
135

Contd.

Condition in a sale by sample as well as by description (Sec. 15). When goods are sold by sample as well as by description, there is an implied condition that the bulk of the goods shall correspond both with the sample and with the description. Condition as to fitness or quality [Sec. 16(1)]. Ordinarily, in a contract of sale there is no implied condition or warranty as to quality or fitness for any particular purpose of goods supplied; the rule of law being Caveat Emptor, that is, let the buyer beware.

136

Contd.

Condition as to merchantability [Sec. 16 (2)]. This condition is implied only where the sale is by description. This subsection lays down another implied condition in such cases, that is, that the goods should be of merchantable quality. Condition as to wholesomeness. This condition is implied only in a contract of sale of eatables and provisions. In such cases the goods supplied must not only answer to description and be merchantable but must also be wholesome.

137

Implied Warranties
Unless otherwise agreed, the law also incorporates into a contract of sale of goods the following implied warranties: Warranty of quiet possession [Sec. 14(b)]. In every contract of sale, the first implied warranty on the part of the seller is that the buyer shall have and enjoy quiet possession of the goods. Warranty of freedom from encumbrances [Sec. 14(c)]. The second implied warranty bon the part of the seller is that the goods shall be free from any charge or encumbrance in favor of any third party not declared or known to the buyer before or at the time when the contract is made.
138

Contd

Warranty of disclosing the dangerous nature of goods to the ignorant buyer. The third implied warranty on the part of the seller is that in case the goods sold are of dangerous nature he will warn the ignorant buyer of the probable danger. If there is breach of this warranty the buyer is entitled to claim compensation for the injury caused to him.

139

Doctrine of Caveat Emptor

The maxim of caveat emptor means let the buyer beware. According to doctrine of caveat emptor it is the duty of the buyer to be careful while purchasing goods of his requirement and, in the absence of any enquiry from the buyer, the seller is not bound to disclose every defect in goods of which he may be cognizant. Illustration : A purchases a horse from B. A needed the horse for riding but he didnt mention this fact to B. the horse is not suitable for riding but is suitable only for being driven in the carriage. Caveat emptor being the rule, A can neither reject the horse nor can he claim any compensation from B.
140

Performance of Contract of Sale

Delivery : Delivery of goods means voluntary possession of goods from one person to another [Sec. 2(2)]. If transfer of goods is not voluntary, i.e. , possession is obtained under pistol point or by theft, there is no delivery. Modes of Delivery Delivery of goods may be made in any of the following ways: Actual delivery, Where the goods are physically handed over by the seller to the buyer , the delivery is said to be actual. For example, the seller of a car hands over the car to the buyer, there is actual delivery of the goods. 141

Contd.

Symbolic delivery, Here the goods remain where they are, but the means of obtaining possession of goods is delivered. For example, the seller hands over to the buyer the key of the godown where the goods are stored, or transfers a document of title to the buyer which will entitle him to obtain the goods. Constructive delivery or delivery by attornment. Such a delivery takes place when the person in possession of the goods of the seller acknowledges, in accordance with the sellers order, that he holds the goods on behalf of the buyer and the buyer has assented to it.
142

Rules as to Delivery of Goods

Delivery may be either actual or symbolic or constructive(Sec. 33). Delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorized to hold them on his behalf. Delivery and payment are concurrent conditions (Sec. 32). Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is, the seller should be ready and willing to deliver the goods to the buyer in exchange for the price and the buyer should be ready .
143

Contd..

Effect of part delivery, when property in goods is to pass on delivery (Sec. 34). A delivery of part of the goods, in progress of the delivery of the whole, has the same effect, for the purpose of passing the property in such goods, as a delivery of the whole. Buyer to apply for delivery (Sec. 35). Although it is the duty of the seller to delivery the goods according to the contract, yet he is not bound to deliver them until the buyer applies for delivery. It is the duty of the buyer to demand delivery, and if he fails to do so, he cannot blame the seller for the non-delivery.
144

Contd.
Time of Delivery [Sec. 36(2) & (4)]. Where under the contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time. Place of Delivery [Sec. 36(1)]. The place of delivery may be stated in the contract of sale, and where it is so stated, the goods must be delivered at the named place during business hours on a working day. Expenses of Delivery [ Sec. 36(5)]. Unless otherwise agreed, the expenses of an incidental to putting the goods into a deliverable state must be borne by the seller. 145

Rights of Unpaid Seller

Definition: The seller of goods is deemed to be an unpaid seller (a) when the whole of the price has not been paid or tendered; or (b) where a bill of exchange or other negotiable instrument has been received as a conditional payment, i.e. , subject to the realization thereof , and the same has been dishonored. The term seller here includes any person who is in the position of a seller, as, for instance, an agent of the seller to whom the bill of lading had been endorsed, or a consigner or agent who has himself paid, or is directly responsible for, the price. {sec. 45}
146

Rights of an Unpaid Seller

Rights of unpaid seller against the goods

Rights of unpaid seller against the buyer personally
147

Rights of Unpaid Seller against the Goods

Right of Lien

Right of Stoppage of goods in transit

Right of resale
148

Rights of Unpaid Seller Against the Buyer Personally

Suit for Price

Suit for damages for non-acceptance

Suit for special damages and interest

149

Auction Sale
In an auction sale, the auctioneer invites bids from prospective purchasers and sells the goods to the highest bidder. Section 64 lays down the following rules relating to an auction sale: Each lot of goods is prima facie deemed to be the subject of a separate contract of sale. The sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner. A knock out agreement between intending buyers not to bid against each other is not illigal.
150

Thank You

151

Carriage of Goods : Road

152

The Carriage by Road Act, 2007

An to provide for the regulation of, common carriers, limiting their liability and declaration of value of goods delivered to them to determine their liability for loss of, or damage to, goods occasioned by such negligence or criminal acts of themselves, their servants or agents and for matters connected therewith or incidental thereto. Be it enacted by parliament in the Fifty-eight year Republic of India as follows: This act may be called the carriage by Road Act, 2007. It extends to the whole of India, except the State of Jammu and Kashmir. It shall come into force on such date as the central Government may, by notification in the Official Gazette.

153

Major Factors

Common carrier means a person engaged in the business of collecting, storing , forwarding or distributing goods to be carried by goods carriages under a goods receipt or transporting for hire of goods from place to place by motorized transport on road. Consignee means the person named as consignee in the goods forwarding note. Consignment means documents, goods or articles entrusted by the consignor to the common carrier for carriage. Consignor means a person named as consignor in the goods forwarding note.
154

Contd..
Goods includes: 1) Containers, pallets or similar articles of transport used to consolidate goods 2) Animals or livestock Goods Forwarding Note means the document executed under section 8. Goods Receipt means the receipt issued under section 9. Registered Authority means a State Transport Authority or a Regional Transport Authority constituted under section 68 of the motor vehicles Act, 1988.

155

Rules & Regulation

No person shall engage in the business of a common carrier, after the commencement of this Act.

Any person who is engaged , whether wholly or partly, in the business of a common carrier, immediately before the commencement of this Act, shall,1) apply for a registration within ninety days from the date of such commencement. 2) cease to engage in such business on the expiry of one hundred and eighty days from the date of such commencement unless ha has applied for registration.

156

Contd.

Any person, who is engaged or intends to engage in the business of a common carrier, shall apply for the grant or renewal of a certificate of registration for carrying on the business of common carrier to the registering authority. An application for grant or renewal of certificate of registration for the main office shall contain the details of branch office, if any, to be operated outside the jurisdiction of the state or Union territory in which the main office is to be registered. A registering authority shall, before granting or renewing a certificate of registering, satisfy itself that the applicant fulfills such conditions as may be prescribed.
157

Contd.
A certificate of registration granted or renewed under sub- section shall contain the details of branch offices to be operated in various states and union territories, and shall be valid for a period of ten years from the date of such grant or renewal as the case may be. The holder of a certificate of registration shalla) maintain a registrar in such from and manner as may be prescribed b) for shifting the main office mentioned in the certificate of registration submit an application to the registering authority which granted the certificate of registration. 158

Suspension or Cancelation of Registration

If the registering authority is satisfied that the holder of certificate of registration has failed to comply with any of the provisions of sub section (7) of section 4. If a complaint is received by the registering authority against a common carrier from a consignor in respect ofnon-issuance of receipt of goods non-disclosure of the whereabouts of the goods in transit when asked by consignor consignee Detention of goods for delivery without valid reasons Non-payment of charges agreed and payable to truck-owners
159

Contd.

If the registering authority or any other authority so authorized under the Motor Vehicles Act, 1988 has proof of violation of provision of sub- section 194 of the Act on the common carrier, not with standing the fact that such penalty have been already imposed on and realised from the driver or the owner of the goods vehicle or the consignor. Any action for revocation of certificate of registration shall not be taken under sub- sections (1) and (2) unless the holder of the certificate of registertion is given an opportunity of being heard in the enquiry and reasons for such action are given in writing by the registering authority.
160

Appeal

Any person aggrieved by an order of the registering authority refusing to grant or renew a certificate or registration or suspending or revoking a registration under this Act. An appeal under sub- section (1) shall be preferred in duplicate in the form of a memorandum setting forth the grounds of objection to the order of the registering authority. Without prejudice to the provisions of sub- sections (1) and (2) of 59 and the provisions of sub- sections (1) and (2) of section 89 of the Act, as in force immediately before the commencement of this Act.
161

Goods Forwarding Note

Every consignor shall execute a goods forwarding note, in such form and manner as may be prescribed, which shall include a deceleration about the value of the consignment and goods of dangerous or hazardous nature. The consigner shall be responsible for the correctness of the particulars furnished by him in the goods forwarding note. The consignor shall indemnify the common carrier against any damage suffered by him by reason of incorrectness of the particulars on the goods forwarding note.
162

Goods Receipt
A common carrier shall In case where the goods are to be loaded by the consigner, on the completion of such loading In any other case, on the acceptance of the goods by him, issue a goods receipt in such form and manner as may be prescribed. The goods receipt shall be issued in triplicate and the original shall be given to the consigner. The goods receipt shall be prima facie evidence of the weight or measure and other particulars of the goods and the number of packages stated therein.

163

Liability of Common Carrier

164

The liability of the common carrier for loss of, damage to any consignment, shall be limited to such amount as may be prescribed having regard to the value, freight and nature of goods, documents or articles of the consignment, unless the consignor or any person duly authorized in that behalf have expressly undertaken to pay higher risk rate fixed by the common carrier under section 11. The liability of the common carrier in case of any delay up to such period as may be mutually agreed upon by and between the consignor and the common carrier and specifically provided in the goods forwarding note including the consequential loss or damage to such consignment.

Rates of Charge to be fixed by Common Carrier for Carriage of Consignment at higher risk rate

Every common carrier may require payment for the higher risk undertaken by him in carrying a particular consignment at such rate of charge as he may fix and correspondingly, his liability would be accordance with the term as may be agreed upon with the consignor.

165

Conditions Limiting exonerating the liability of common carrier

Every common carrier shall be liable to the consignor for the loss or damage to any consignment in accordance with the goods forwarding notes, where such loss or damage has arisen on account of any criminal act of the common carrier, or any of his servants or agents. In any suit brought against the common carrier for the loss, damage or non- delivery of consignment, it shall not be necessary for the plaintiff to prove that such loss, damage or non-delivery was owing to the negligence or criminal act of the common carrier, or any of his servants or agents.
166

Power of Central Government to prohibit carriage of certain class of goods

The central government may, by notification in the official Gazette, specify, in public interest, the goods or class or classes of goods which shall not be carried by a common carrier.

167

Notice for institution of a suit

No suit or other legal proceeding shall be instituted against a common carrier for any loss of, or damage to, the consignment, unless notice in writing of the loss or damage to the consignment has been served on the common carrier before the institution of the suit or the other legal proceedings and within one hundred and eighty days from the date of booking of the consignment by the consignor.

168

Power to Make Rules

The Central Government may, by notification in the official gazette, make rules for carrying out the provisions of this Act. In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters : The form and manner of making an application for grant or renewal of a certificate of registration for main office or branch office and fee thereof under sub-sections (2) and (3) of sec. 4 The form in which and the conditions subject to which certificate of registration or renewal may be granted under sub-sec. (4) of sec.4
169

Repeal and Saving

The Carries Act, 1865, is hereby repealed. Notwithstanding the repeal of the Act, anything done or any action taken under the said Act shall, in so far as such thing or action is not inconsistent with the provisions of this Act, be deemed to have been done or taken under the provisions of this Act and shall continue in force accordingly until superseded by anything done or any action taken under this Act.. The mention of particular matters in this section shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeals.
170

Thank You

171

Carriage of Goods : Sea

172

THE INDIAN CARRIAGE OF GOODS BY SEA ACT, 1925

An Act to amend the Law with respect to the carriage of goods by sea. It extends to the whole of India. Application of Rules -- Subject to the provisions of this Act, the rules set out in the Schedule (hereinafter referred to as the Rules) shall have effect in relation to and in connection with the carriage of goods by sea in ships carrying goods from any port in India to any other port whether in or outside India.

173

Contd..
Absolute warranty of seaworthiness not to be implied in contracts to which Rules apply There shall not be implied in any contract for the carriage of goods by sea to which the Rules apply any absolute undertaking by the carrier of the goods to provide a seaworthy ship. Statement as to application of rules to be included in bills of lading Every bill of lading, or similar document of title, issued in India which contains or is evidence of any contract to which the Rules apply, shall contain an express statement that it is to have effect subject to the provisions of the said Rules and applied by this Act. 174

Contd..
Modification of Article VI of Rules in relation to goods carried in sailing ships and by prescribed routes Article VI of the Rules shall, in relation to-(a)The carriage of goods by sea in sailing ships carrying goods from any port in India to any other port whether in or outside India, and (b)The carriage of goods by sea in ships carrying goods from a port in India notified in this behalf in the Official Gazette by the Central Government to a port of Ceylon specified in the said notification. Have effect as though the said Article referred to goods of any class instead of to particular goods and as though the proviso to the second paragraph of the said Article were omitted.

175

Contd..
Modification of Rules 4 and 5 of Article III in relation to bulk cargoes Where under the custom of any trade the weight of any bulk cargo inserted in the bill of lading is a weight ascertained or accepted by a third party other than the carrier or the shipper and the fact that the weight is so ascertained or accepted is stated in the bill of lading, then, notwithstanding anything in the Rules, the bill of lading shall not be deemed to be prima facie evidence against the carrier of the receipt of goods of the weight so inserted in the bill of lading, and the accuracy thereof at the time of shipment shall not be deemed to have been guaranteed by the shipper.

176

RULES RELATING TO BILL OF LADING

In the Rules the following expressions have the meanings hereby assigned to them respectively, that is to say Carrier includes the owner or the charterer who enters into a contract of carriage with a shipper. Contract of carriage applies only to contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by sea including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same
177

Contd.

Carriage of goods covers the period from the time when the goods are loaded on to the time when they are discharged from the ship. Goods includes any property including live animals as well as containers, pallets or similar articles of transport or packaging supplied by the consignor, irrespective of whether such property is to be or is carried on or under deck. Ship means any vessel used for carriage of goods by sea.

178

Risks

Subject to provisions of Article cover every contract of carriage of goods by sea the carrier, in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities, and entitled to the rights and immunities hereinafter set forth.

179

Responsibilities and Liabilities

Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried. Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraph 3 (a), (b) and (c). However, proof to the contrary shall not be admissible when the bill of lading has been transferred to a third party acting in good faith.

180

Contd

The Shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity, and weight, as furnished by him, and the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and liability under the contract of carriage to any person other than the shipper.

181

Rights and Immunities

Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation in accordance with the provisions of paragraph 1 of Article III.

182

Contd..
Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from act, neglect, or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of ship; fire, unless caused by the actual fault or privity of the carrier; perils, dangers and accidents of the sea or other navigable waters; act of God; act of war; act of public enemies; arrest or restraint of princes, rulers of people or seizure under legal process;
183

Contd..

quarantine restrictions; act or omission of the shipper or owner of the goods, his agent, or representative; strikes or lock-outs or stoppage or restraint of labour from whatever cause, whether partial or general; riots and civil commotions; saving or attempting to save life or property at sea; wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods; insufficiency of packing; insufficiency or inadequacy of marks;
184

Contd.

The shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising or resulting from any cause without the act, fault, or neglect of the shipper, his agents or his servants. Any deviation in saving or attempting to save life or property at sea, or any reasonable deviation shall not be deemed to be an infringement or breach of these Rules or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting there from. Neither the carrier nor the ship shall in any event be or become liable for any loss of damage to or in connection with goods in an amount exceeding 666.67 Special Drawing Rights per package or unit or two Special Drawing Rightsper kilogram of gross weight of the goods lost or damaged, whichever is higher.
185

Surrender of Rights and Immunities, and Increase of Responsibilities and Liabilities

A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities or to increase any of his responsibilities and liabilities under the Rules contained in any of these Articles, provided such surrender or increase shall be embodied in the bill of lading issued to the shipper. The provisions of these Rules shall not be applicable to charter parties, but if bills of lading are issued in the case of a ship under a charter party, they shall comply with the terms of these Rules. Nothing in these Rules shall be held to prevent the insertion in a bill of lading of any lawful provision regarding general average. 186

Special Conditions

Notwithstanding the provisions of the preceding Articles, a carrier, master or agent of the career, and a shipper shall, in regard to any particular goods, be at liberty to enter into any agreement in any terms as to the responsibility and liability of the carrier for such goods, and as to the rights and immunities of the carrier in respect of such goods, or his obligation as to seaworthiness so far as the stipulation is not contrary to public policy, or the care or diligence of his servants or agents in regard to the loading, handling, stowage, carriage, custody, care, and discharge of the goods carried by sea
187

Contd.
provided that in this case no bill of lading has been or shall be issued and that the terms agreed shall be embodied in a receipt which shall be non-negotiable document and shall be marked as such. Any agreement so entered into shall have full legal effect: Provided that this Article shall not apply to ordinary commercial shipments made in the ordinary course of trade, but only to other shipments where the character or condition of the property to be carried or the circumstances, terms and conditions under which the carriage is to be performed as such, are reasonable to justify a special agreement.

188

Limitations on the Application of the Rules

Nothing herein contained shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by sea.

189

Limitation of Liability

The provisions of these Rules shall not affect the right and obligation of the carrier under any Statute for the time being in force relating to the limitation of the liability of owners of sea-going vessels.

190

REPORT OF JOINT COMMITTEE

The legislation was referred to a Joint Committee, which had this to say, -- We the undersigned, Members of the Joint Committee to which the Bill to amend the law with respect to the carriage of goods by sea was referred,have considered the Bill and the papers noted in the margin and have now the honour to submit this our Report, with the Bill as amended by us annexed thereto. We have made one change in the Bill the substitution of new clause 5.

191

Contd..
Original clause 5, following lines of the English Act, exempted the whole of the coasting trade from the requirement that in all cases a bill of lading should be issued subject to the conditions prescribed in the Rules, that is to say, such trade was excluded from the operation of the Rules. It is clear from the opinion received that, contrary to the English practice, bills of lading are almost invariably issued by steamship companies engaged in the Indian Coasting trade, and that it is the desire of the mercantile community that the provisions of the Bill relating to bills of lading should apply to such trade. 192

Contd

It is not, however the practice for sailing vessels engaged in the coasting trade or proceeding from Indian ports to issue bills of lading and these have been exempted accordingly. The provision in clause (b) is intended to cover the care of goods carried by the South India Railway ferryboat from Dhanushkodi to Talaimannar. Bills of Lading are not issued for the short sea journey and cargo is carried subject to the provisions of the Railways Act.

193

MINUTE OF DISSENT

The meaning and import of any statue, is sometimes deciphered by reference to the deliberations that resulted in the passage of the same. Hence it would be of immense importance to refer to the note of dissent recorded in the report of the Joint Committee, by Purshotamdas Thakurdas, in these words, --The construction of Article 6 under the Schedule will be extremely difficult to decide. How the Courts are to come to a satisfactory conclusion as to whether the stipulation mentioned in the first part of the Article is or is not contrary to public opinion, I do not know.
194

Contd..

And further, the ordinary trader is bound to be put in very great doubt as to the difference between the receipt mentioned therein which is ruled to be a non-negotiable and to be so marked and, the ordinary bill of lading, which is, by custom, largely a formally printed document. The only reason that I know of for recommending the Indian Legislature to adopt the Rules given in the Schedule to this Bill is to ensure uniformity in a matter which has been under discussion between experts of the various countries for a number of years.
195

Contd

But in this long protracted discussion, it must be noted that, Indian interests had no direct say or representation. Whilst I see no reason, so far, to oppose the Bill as amended by the Select Committee, I deem it my duty to bring the opinion expressed by Justice Cunliffee to the notice of the Legislature by a separate minute.

196

Thank You

197

Carriage of Goods : Air

198

THE CARRIAGE BY AIR ACT, 1972

An Act to give effect to the Convention for the unification of certain rules relating to international carriage by air signed at Warsaw on the 12th day of October, 1929 and to the said Convention as amended by the Hague Protocol on the 28th day of September, 1955 a[and also to the Montreal Convention signed on the 28th day of May, 1999] and to make provision for applying the rules contained in the said Convention in its original form and in the amended form (subject to exceptions, adaptations and modification) to non- international carriage by air and for matters connected therewith.
199

Short Title, Extent and Commencement

This Act may be called the Carriage by Air Act, 1972. It extends to the whole of India. It shall come into force on such data as the Central Government may, by notification in the Official Gazette, appoint.

200

Definitions
In this Act, unless the context otherwise requires amended Convention means the Convention as amended by the Hague Protocol on the 28th day of September 1955. Convention means the Convention for the unification of certain rules relating to international carriage by air signed at Warsaw on the 12th day of October,1929. Montreal Convention means the Convention for the unification of certain rules relating to international carriage by air signed at Montreal on the 28th day of May, 1999. Annexure means the Annexure annexed to this Act. 201

Application of Convention to India

The rules contained in the First Schedule, being the provisions of the Convention relating to the rights and liabilities of carriers, passengers, consignors, consignees and other persons, shall, subject to the provisions of this Act, have the force of law in India in relation to any carriage by air to which those rules apply, irrespective of the nationality of the aircraft performing the carriage. For the purpose of this Act, the High Contracting Parties to the Convention and the date of enforcement of the said Convention shall be such as are included in Part I of the Annexure.
202

Contd..

Any reference in the First Schedule to the territory of any High Contracting Party to the Convention shall be construed as a reference to all the territories in respect of which he is a party. Any reference in the First Schedule to agents of the carrier shall be construed as including a reference to servants of the carrier. The Central Government may, having regard to the objects of this Act, and if it considers necessary or expedient so to do, by notification in the Official Gazette, add to, or, as the case may be, omit from, Part I of the Annexure, any High Contracting Party and on such addition, or as the case may be, omission, such High Contracting Party shall be or shall cease to be, a High Contracting Party.
203

Application of amended Convention to India

The rules contained in the Second Schedule, being the provisions of the amended Convention relating to the rights and liabilities of carriers, passengers, consignors, consignees and other persons shall, subject to the provisions of this Act, have the force of law in India in relation to any carriage by air to which those rules apply, irrespective of the nationality of the aircraft performing the carriage. For the purpose of this Act, the High Contracting Parties to the amended Convention and the date of enforcement of the said amended Convention shall be such as are included in Part II of the Annexure.
204

Contd..
The Central Government may, having regard to the objects of this Act, and if it considers necessary or expedient so to do, by notification in the Official Gazette, add to, or, as the case may be, omit from, Part II of the Annexure, any High Contracting Party and on such addition, or, as the case may be, omission, such High Contracting Party shall be or shall cease to be, a High Contracting Party. Any reference in the Second Schedule to the territory of any High Contracting party to the amended Convention shall be construed as a reference to all the territories in respect of which he is a party. 205

Application of Montreal Convention to India

The rules contained in the Third Schedule, being the provisions of the Montreal Convention relating to the rights and liabilities of carriers, passengers, consignors, consignees and other persons, shall, subject to the provisions of this Act, have the force of law in India in relation to any carriage by air to which those rules apply, irrespective of the nationality of the aircraft performing the carriage. For the purpose of this Act, the State Parties to the Montreal Convention and the date of enforcement of the said Montreal Convention shall be such as are included in Part III of the Annexure.
206

Contd..

Any reference in the Third Schedule to the territory of any State Party to the Montreal Convention shall be construed as a reference to all the territories in respect of which he is a party. Any reference in the Third Schedule to agents of the carrier shall be construed as including a reference to servants of the carrier. The Central Government may, having regard to the objects of this Act, and if it considers necessary or expedient so to do, by notification in the Official Gazette, add to, or, as the case may be, omit from, Part III of the Annexure, any State Party and on such addition or, as the case may be, omission, such Party shall be or shall cease to be, a State Party.]
207

Liability in case of death

Notwithstanding anything contained in the Fatal Accidents Act, 1855 (13 of 1855) or any other enactment or rule of law in force in any part of India, the rules contained in the First Schedule, the Second Schedule a[and the Third Schedule] shall, in all cases to which those rules apply, determine the liability of a carrier in respect of the death of a passenger. The liability shall be enforceable for the benefit of such of the members of the passengers family as sustained damage by reason of his death.
208

Contd..
Explanation. In this sub-section, the expression member of a family means wife or husband, parent, step-parent, grand parent, brother, sister, halfbrother, half-sister, child, step-child and grand-child: Provided that in deducing any such relationship as aforesaid any illegitimate person and any adopted person shall be treated as being, or as having been, the legitimate child of his mother and reputed father or, as the case may be, of his adopters.

209

Contd

The Court before which any such action is brought may, at any stage of the proceedings, make any such order as appears to the Court to be just and equitable in view of the provisions of the First Schedule or the Second Schedule b[or the Third Schedule], as the case may be, limiting the liability of a carrier and of any proceedings which have been or are likely to be commenced outside India in respect of the death of the passenger in question.

210

Conversion of francs

Any sum in francs mentioned in rule 22 of the First Schedule or of the Second Schedule, as the case may be, shall, for the purpose of any action against a carrier, be converted into rupees at the rate of exchange prevailing on the date on which the amount of damages to be paid by the carrier is ascertained by the Court. Conversion of Special Drawing Rights Any sum in Special Drawing Rights mentioned in rules 21 and 22 of the Third Schedule shall, for the purpose of any action against a carrier, be converted into rupees at the rate of exchange prevailing on the date on which the amount of damages to be paid by the carrier is ascertained by the Court in accordance with the provisions of rule 23 of the said Third Schedule.
211

Provisions regarding suits against High Contracting Parties who undertake carriage by air

Every High Contracting Party to the Convention or the amended Convention, as the case may be, who has not availed himself of the provisions of the Additional Protocol thereto shall, for the purposes of any suit brought in a Court in India in accordance with the provisions of rule 28 of the First Schedule, or of the Second Schedule, as the case may be, to enforce a claim in respect of carriage undertaken by him, be deemed to have submitted to the jurisdiction of that Court and to be a person for the purposes of the Code of Civil Procedure, 1908 (5 of 1908).
212

Application of Act to carriage by air which is not international

The Central Government may, by notification in the Official Gazette, apply the rules contained in the First Schedule and any provision of section 3 or section 5 or section 6 to such carriage by air, not, being international carriage by air as defined in the First Schedule, as may be specified in the notification, subject, however, to such exceptions, adaptations and modifications, if any, as may be so specified. The Central Government may, by notification in the Official Gazette, apply the rules contained in the Second Schedule and any provision of section 4 or section 5 or section 6 to such carriage by air, 213

Contd..
not being international carriage by air as defined in the Second Schedule, as may be specified in the notification, subject, however, to such exceptions, adaptations and modifications, if any, as may be so specified. The Central Government may, by notification in the Official Gazette, apply the rules contained in the Third Schedule and any provision of section 4A or section 5 or section 6A to such carriage by air, not being international carriage by air as defined in the Third Schedule, as may be specified in the notification, subject, however, to such exceptions, adaptations and modifications, if any, as may be so 214 specified.

Documents of Carriage
For the carriage of passengers the carrier must deliver a passenger ticket which shall contain the following particulars: the place and date of issue; the place of departure and of destination; the agreed stopping places, provided that the carrier may reserve the right to alter the stopping places in case of necessity, and that if he exercises that right, the alteration shall not have the effect of depriving the carriage of its international character; the name and address of the carrier or carriers; a statement that the carriage is subject to the rules relating to liability contained in the Schedule.
215

Luggage ticket
For the carriage of luggage, other small personal objects of which the passenger take charge himself, the carrier must deliver a luggage ticket. The luggage ticket shall be made out in duplicate, one part for the passenger and the other part for the carrier. The luggage ticket shall contain the following particulars:-(a)the place and date of issue; (b) the place of departure and of destination; (c) the name and address of the carrier of carriers; (d) the number of the passenger ticket; (e) a statement that delivery of the luggage will be made to the bearer of the luggage ticket;

216

Contd.
(f)the number and weight of the packages; (g) the amount of the value declared in accordance with rule 22(2); (h) a statement that the carriage is subject to the rules relating to liability contained in this Schedule.

217

LIABILITY OF THE CARRIER

The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking. The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air.
218

Contd.

In the carriage of passengers the liability of the carrier for each passenger is limited to the sum of 1,25,000 francs. Where damages may be awarded in the form of periodical payments, the equivalent capital value of the said payments shall not exceed1,25,000 francs. Nevertheless, by special contract the carrier and the passenger may agree to a higher limit of liability. As regards objects of which the passenger takes charge himself the liability of the carrier is limited to 5,000 francs per passenger.
219

Air waybill
Every carrier of cargo has right to require the consignor to make out and hand over to him a document called an air- way-bill; every consignor has the right to require the carrier to accept this document. The absence, irregularity or loss of this document does not affect the existence or the validity of the contract of carriage which shall, subject to the provisions of rule 9, be nonetheless governed by these rules. The air waybill shall he made out by the consignor in three original parts and be handed over with the cargo. 220

LIABILITY OF THE CARRIER

The carrier is liable for damage sustained in. the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking. The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the carriage by air.
221

Contd..

The carrier is not liable if he proves that he and his servants or agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures. . If the carrier proves that the damage caused by or contributed to by the negligence of the injured person the Court may, in accordance with the provisions of its own law, exonerate the carrier wholly or partly from his liability. The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo.

222

Thank You

223

Performance of Contract

224

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.

225

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 It must be unconditional; 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.

226

Contd

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.

227

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.

228

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.

229

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 fulfil the promise.

230

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.

231

Contd.

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.

232

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.

233

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.

234

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.

235

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.

236

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.

237

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 nonperformance of the contract.

238

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 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.

239

Contd..
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.

240

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 nonperformance of the promise.

241

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.

242

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.

243

Application of Payment Where Neither Party Appropriates

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

244

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 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.

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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.

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Thank You

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Discharge of Contract

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Discharged

A contract may be discharged By performance (section 37 to 67). By impossibility of performance. (S 56). By agreement. (Section 62 to 67). By breach. (S 39 and S 73).

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Obligation Of Parties
37.Obligation of parties to contracts.The parties to a contract must either perform, or offer to perform, their respective promises, unless such performance' is dispensed with or excused under the provisions of this Act, or of any other law.

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Illustration

A promises to deliver goods to B on a certain day on payment of Rs. 1,000. A dies before that day. A's representatives are bound to deliver the goods to B, and B is bound to pay the Rs. 1,000 to A's representatives.

251

Illustration

A promises to paint a picture for B by a certain day, at a certain price. A dies before the day. The contract cannot be enforced either by A's representatives or by B.

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Effect of Refusal
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 nonperformance, nor does he thereby lose his rights under the contract.

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Effect Of Refusal Of Party To Perform

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.

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Person By Whom Promise is to be Performed

40.Person by whom promise 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 contained in it should be performed by the promisor himself, such promise must be performed by the promisor. In other cases, the promisor or his representatives may employ a competent person to perform it.

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Time For Performance

46.Time for performance of promise, when no application is to bemade 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

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Time And Place

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

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Time For Performance

55. Effect of failure to perform at 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 specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

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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.

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AGREEMENT TO DO IMPOSSIBLE ACT

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

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ILLUSTRATION

A agrees with B to discover treasure by magic. The agreement is void. A and B contract to marry each other. Before the time fixed for the marriage, A goes mad.The contract becomes void.

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GROUNDS OF FRUSTRATION

DESTRUCTION OF THE SUBJECT MATTER. CHANGE OF CIRCUNSTANCES. NON OCCURRENCE OF A CONTEMPLATED EVENT. DEATH OR INCAPACITY OF PARTY. GOVERNMENT OR LEGISLATIVE INTERVENTION. INTERVENTION OF WAR.

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DISCHARGE BY AGREEMENT
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.

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NOVATION

WHEN THE PARTIES TO THE CONTRACT AGREE TO SUBSTITUTE THE EXISTING CONTRACT FOR A NEW CONTRACT, THATS CALLED NOVATION.

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Time: Essence of Contract

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TIME IS OF THE ESSENCE

A common feature of logistics contracts is a clause stating that "time is of the essence". In some instances the clause will be inserted as boilerplate or from a precedent without discussion, while in other cases one or both of the parties will expressly request the clause be inserted into the contract. Contract drafters should take care as "time is of the essence" clauses may not operate in the same manner in a contract as they do in other situations, potentially leading to unexpected results during the project.
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Contd.

Contracts of all sorts specify dates for the performance of various obligations and even absent an express date, there is usually an implied term calling for performance within a reasonable time. When the date is missed, it is a matter of construction as to whether the obligation is a condition such that there has been a fundamental breach entitling the innocent party to rescind or terminate the contract, or whether time is not of the essence meaning only an action for damages lies.

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Contd..
"Time is of the essence" clauses are used with regularity in other areas of the law, particularly real estate and sale of goods where the courts generally apply a strict approach in enforcing the clause even in the face of potentially harsh results. For example, in Union Eagle Ltd. v. Golden Achievement Ltd., [1997] 2 All E.R. 215 (P.C.), the purchaser in a conveyancing transaction delivered a deposit cheque ten minutes late. In response, the vendors elected to rescind the contract, relying on the missed time deadline and the "time is of the essence" clause in the contract.

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Importance in logistics Sector

Time is of the essence" clauses generally carry far heavy weight in logistics contracts. The reasons include the distinctive nature of logistics contracts, the fact logistics contracts typically contain internal remedies addressing delay and because of the disproportionate effect of the remedy as compared to the breach, particularly when a logistics contract is partially preformed.

270

Contd.

logistics contracts are different from agreements for the sale of goods or real estate as they involve various stages of development, numerous parties and countless variables. Additionally, delay is often consequential, expected and outside the control of either party. Moreover, most logistics contracts incorporate a variety of terms compelling the contractor to perform its duties in a timely fashion.

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Example

liquidated damages and express termination provisions specifically address delays in performance. These specific clauses may well override a generic clause declaring time to be of the essence as they raise the question as to whether the parties intended the clause to operate in a field occupied by an express provision. Indeed, there is a good argument that where a party stipulates for liquidated damages, it has declared an intention that damages are an adequate remedy, meaning the time obligation is not a condition that would entitle that party to terminate the contract.
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Difficulty in effect of Time

Another difficulty in giving effect to "time is of the essence" clauses in logistics contracts as compared to real estate contracts is the sheer number of time reference in logistics contracts for various duties, obligations and notices. At that point, it is a matter of logistics as to the scope of the clause. Is it intended to apply to every time stipulation in the contract or only the really important ones? And, how does one determine which deadlines are important and which ones are unimportant? It is likely a court will construe the clause narrowly and in a manner that avoids permitting termination of the contract.
273

Contd.

Unlike a missed deposit in a convincing transaction, a missed time deadline in a logistics contract may well arise after substantial performance, leading to concerns of unjust enrichment. Accordingly, there may be reluctance in arriving at an interpretation that permits termination.

274

Example

To a relatively trivial delay after completion, and also that upon fixing of the work to the soil the property in it will have passed to the owner irrespective of the degree of payment, thus conferring a major and irretrievable benefit on the owner as against a possibly only minor or nominal loss suffered by him. No doubt for these reasons the courts have shown an exceptional assiduity in avoiding a time of the essence interpretation of the contractor's completion obligation in logistics contracts, it would seem even in cases where express language has been used in the contract.
275

Contd.

on the one hand, the parties would probably not expect the contract to be terminated where a contractor is a day late for some matter or the other on a contract of long duration, and, equally, on the other hand, probably not expect the contract to be terminated where the owner is a day late with a progress payment. More difficult are the cases of significant delay on a significant matter. Even then, however, it is suggested that the use of a general "time is of the essence" clause is ambiguous and therefore suspect.

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Conclusion

In conclusion, the insertion of a clause declaring time to be of the essence in logistics contract, unlike its insertion in other contract forms, will not normally, in and of itself, allow the innocent party to rescind or terminate the contract for any breach of a time condition. In determining the party's intentions, the court will look to all the particular terms and circumstances and may well import little meaning to the "time is of the essence" clause.

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