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Kabul Universit

y

2015-16

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• MADE BY • NIAZ SAHIL ZURMATI STUDENT OF: BBA AT KABUL UNIVERSITY• E-MAIL: NIAZ.0077@GMAIL.COM• NIAZ.0077@YAHOO.COM• TWITTER: HTTPS://TWITTER.COM/NIAZSAHIL• FACEBOOK

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Law

• Law is a term which does not have a universally accepted definition,[2] but one definition is that law is a system of rules and guidelines which are enforced through social institutions to govern behaviour.

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Commercial law

• Commercial law is a branch of law that governs business and commercial transactions. This law is responsible for governing sale and distribution of goods, and proper procedure for payment of transactions.

• business law refers to the laws that apply to business entities, such as partnerships and corporations.

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institutions that enforce law

• Government and its three organs

• Legislature - make law – bill passes – become an act

• Executive – enforce law – eg police

• Judiciary –interpret and applies law

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Where do the laws come from

• Legislature { parliament } makes law bill become an Act – its called statutory law

• Judges also make laws

• Rule of law • Equality before law , e.g. no one is above the law • Equal protection of law , eg the law applies equally To all citizens irrespective ,religions , language etc

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Types of legal system

• Sharia law • Civil law – roman Dutch law ,South Africa Sari lanka • Common law UK,USA ,Canada ,and other

former English colonies include India – had its origins in English customs and practices that were common among people all over England

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CONTRACT

• CONTRACT :- "A contract is an agreement enforceable by law".Or "An agreement creating and defining obligations between the parties". So there are two conditions for the contract.1. An Agreement.2. Enforceable by law.

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CONTRACT

• Explanation :- Promise = Proposal + Acceptance.Agreement = Promise + Consideration of both the partiesContract = Agreement enforceable at law.

Important Note :- All agreements are not contract but all contract are agreement. Because agreement is not enforceable by law. It may exist without any legal obligation.

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Types of CONTRACT

• 1. VALID CONTRACT :-Valid contract is that which is enforceable at law. It creates legal obligations between the parties. It enables one party to compel another party to do something or not to do something.

Parties Obligations :-In case of valid contract all the parties to the contract are legally responsible for the performance of a contract. If one party breaks the contract other has right to be enforced through the court.

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Types of CONTRACT

•Example :- Amun proposes sell his one acre land to Nasir for one lac and the parties are capable to do the contract by law. So this contract is valid. If Amun fails to deliver the land Nasir can sue him in the court for the delivery of land. On other hand Nasir fails to make the payment, Amun can sue him for the recovery of payment.

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Types of CONTRACT

• 2. VOID CONTRACT :-Definition :- "An agreement not enforceable at law is a void contract".

Originally it is a valid contract but due to certain reasons it becomes void after its formation. A void contract cannot be enforced by either party.

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,• Features of Void Contract :-a. It is not enforceable by law.b. It creates no legal rights.c. It creates no obligations on any party.d. An agreement which is against the public policy or against any law is also void.e. Under this contract no compensation can be paid to any party.An agreement in restraint of marriage and trade are common examples of void contract.

Example :- Sachin and Isha contract to marry on next Sunday. Isha dies before the Sunday. The contract becomes void.

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VOIDABLE CONTRACT

"An agreement which is enforceable by law at the option of one or more of the parties, there to but not at the option of the other or others is a voidable contract“• Example :- Mr. Qadir threatens to shoot Mr.

Shah to purchase a car for one lac. Mr. Shah agrees the contract was made by coercion and is voidable at the option of Mr. Shah.

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• 4. UNENFORCEABLE CONTRACT :-Contract is called unenforceable when due to some technical difficulty or lack of any formality required by the special provisions of law a valid contract is not enforced by the court

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• Executed contract – Where both the parties have performed their obligations, it is executed contract. Executory Contract - Where neither of the parties have performed their obligations, i.e. both the parties are yet to perform their promises, the contract is executory.

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.• Implied contract - When contracts are

neither in writing nor in oral.• Express contract - When contracts are either in

writing or in oral.• Absolute contract - A contract which is not dependent

on fulfillment of any condition.Quasi Contract – Certain relations resemble those created by a contract. Certain obligations which are not contracts in fact but are so in contemplation of law are Quasi Contracts. Contingent Contract - It is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen

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Essential elements of a Valid Contract.

1. Proposal & Acceptance. 2. Consideration. 3. Capacity of parties to contract. 4. Free Consent. 5. Agreement should not be expressly declared void. 6. Writing & Registration, if so required by law. 7. Legal Relationship. 8. Certainty. 9. Possibility of Performance. 10. Enforceable by law.

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Free Consent "Free consent" - Consent is said to be free when it is not caused by – 1) coercion, 2) undue influence 3) fraud, 4) misrepresentation, 5) mistake. Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.

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those contracts which have been declared void by law

• Void Contract :- • Agreement in Restraint of Marriage • Agreement in Restraint of Business• Mistake of Both Parties :• Agreement By Way of Wager • Uncertainty in Agreement • Unlawful Object• Immoral • Agreement To Do Impossible Acts• Agreement in Restraint of Legal Proceedings• Fraudulent Case

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AGREEMENT :-:" Every promise or every set of promises forming the consideration for each other" Contract act and its kind is an agreement.There are two conditions for agreement :1. Promise.2. Consideration of both the parties.

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PROPOSAL or OFFER :-

"When one person signifies to another his willingness to do or to abstain from doing anything with a view to abstaining the ascent of that other such or such act or abstinence he is said to make a proposal." ( i ). The person who makes the proposal is called proposer offerer or promisor.

( ii ). The person to whom offer is made is called offer or promisee.

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Social agreement

• In social agreement the presumption is that the parties do not intend to create legal relations .

• Ex : offer to take friend to restaurant for dinner is not valid offer under the act as law presumed that parties did not intend to create legal relations

Business agreement • In Business agreement the presumption is that

the parties intend to create legal relations .

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TYPES OF OFFER

Express offer Implied offer Specific offer General offer Cross offer Counter offer Standing offer

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KINDS OF offer•

1. General Proposal :-When proposal is made with the entire world it is called general proposal. But contract is made only with the person who performs the conditions of the proposal.2. Specified Proposal :-It is made to specific person or specific class. It is also accepted by specific person.3. Express Proposal :-When the proposal is expressed in words or in writing it is called express proposal.4. Implied Proposal :-When the proposal is conveyed by the contract of the offerer, it is called implied proposal.

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KINDS OF offer

Cross offer - When both the persons are making identical offers to each other in ignorance of other’s offer.

Counter offer - When both the persons are making offers to each other which are not identical in ignorance of other’s offer.

Standing offer -  An offer which remains continuously enforceable for a certain period of time.

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ESSENTIAL OF VALID PROPOSAL :-

• 1. Legal Relationship :-It is essential for a valid proposal that it must be made with the intention of creating legal relationship otherwise it will be only invitation. A social invitation may not create legal relationship.

•Example :- Mr. Jhon invites Mr. Robbin t dinner and he accepts. It does not create any legal relations.

2. Clear Terms and Conditions :-Proposal should be certain clear, understandable and simple. It may not create any confusion in the mind of proposee should be precised and definite.

Example :- Mr. Agha offers to sell his house to Miss. Peenu for Rs. 10 lac she agrees. It is a contract and create legal relationship

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ESSENTIAL OF VALID PROPOSAL :-• 3. General and Specific Offer :-

When proposal is opened to the general public it is called general proposal on the other hand when it is made to the specific person, it is called specific offer. In case of general proposal contract is made with person who accepts the offer.

4. Must be Communicated :-It is also an important rule for the validity of proposal. Without communication acceptance of proposal by the proposee is not possible. How an offer can be accepted unless it has been bought to the knowledge of a person to whom it is made.

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ESSENTIAL OF VALID PROPOSAL :-

• 5. Assent Must be an Object :-Proposal without object will not be valid. The object of the proposal must be to get the assent of the other party to whom the offer has been made.

6. Distinction Between Proposal and Invitation :-Proposal is different than the invitation of tenders. Price list of goods and quotation. These are only invitation of an offer and not the proposal.

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ESSENTIAL OF VALID PROPOSAL :-

• 7. Communication Method :-There are three methods of communication proposal can be made orally, in writing or by conduct. Generally proposals are made orally or writing.

8. Acceptable Proposal :-If the acceptance of the proposal is not possible then it will be not a valid proposal. It is essential that acceptance must be possible.

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ACCEPTANCE :-

“When the person to whom the proposal is made signifies his assent there to the proposal is said to be accepted. Proposal and acceptance both can be made by words or by conduct. Without the acceptance of a proposal no agreement come into existence."

Example :- Suppose Mr. Shah offers to sell his hotel to Mr. Salman for Rs. 50 lac. Mr. Salman accepts the offer to purchase the hotel for Rs. 50 lac. This is acceptance.

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ESSENTIAL OF ACCEPTANCE :• 1. Acceptance by Authorized Person :-Communication of acceptance should be made by a person who has the authority to accept it. If unauthorized person provides the information it is ineffective.

Example :- Mr. Akram sold his company to Mr. Nawaz for Rs. 10 million. Mr Ashraf now gives the supply order for the goods to Mr. Akram by name. Mr. Nawaz received the order and supplied. There was no contract between Mr. Nawaz and Mr. Ashraf because offer was not made to Mr. Ashraf.

2. Specific Time :-If time limit is specified then acceptance must be given within that period. Otherwise within a reasonable time it must be given

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ESSENTIAL OF ACCEPTANCE :

• 3. Acceptance Before Offer Lapses :-If the acceptance is made after the withdrawn or lapses of offer, then it is not a valid acceptance. Acceptance must be made before the offer lapses.

4. Acceptance After Communication :-Before the communication of offer, acceptance cannot be given. Acceptance cannot be valid if it is given before the communication of offer.

Example :- Mr. Awan is thinking to sell his car to Mr. Ram. But Mr. Ram writes him a letter of acceptance. The acceptance is not valid as it has been given before offer.

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ESSENTIAL OF ACCEPTANCE :

• 5. Particular Manner :-Acceptance must be given according the particular manner prescribed in the offer, if acceptance is not given according to that then it can be rejected by the offer. If there is no such type of any condition then it can be made in a reasonable way.

6. Intention Must be Shown :-Acceptance must show the intention of the acceptor to accept the offer. Intention to accept the offer can be shown by words, or by conduct. Silence does not show acceptance.

Example :- Mr. Rana offers to sell his house to Mr. Jhon. If Mr. Jhon accepts it by writing a letter. This is an express acceptance.

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ESSENTIAL OF ACCEPTANCE :

• 7. Acceptance Informed :-When acceptance comes to the knowledge of the proposer it becomes irrevocable and it becomes a valid acceptance.

8. Complete Acceptance :-All the terms and conditions of the offer should be accepted by the acceptor. If any part of the offer is rejected then acceptance can not be called valid.

Example :- Mr. Farid offers to sell his three horses for Rs. 3 lac to Mr. Khan. Mr. Khan agrees to purchase one horse only. It is not a valid acceptance.

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, ESSENTIAL OF ACCEPTANCE :

•9. Case of Refusal :-If once the offer is rejected by the acceptor, then it can not be accepted by the acceptor. Unless it is renewed by the proposer. Renewal is necessary for a valid acceptance.

10. According to Act :-Acceptor must accept the proposal according to the requirements of the act. If he ignores the requirements of act then it is not a valid acceptance.

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CONSIDERATION

"When at the desire of the promiser the promisee has done or abstained from doing or does or abstains from doing such act is called a consideration for the promise."

In other words "Consideration is a reward accepted or given in return for the promise. it is a fact that without consideration agreement is not valid."

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ESSENTIALS OF CONSIDERATION• LEGAL RULES AS TO CONSIDERATION• It must move at the desire of the promisor.• [Durga Prasad v. Baldeo]• It may move by the promisee.• [Chinnaya v. Ramayya]• It must be past, present or future.• It need not be adequate.• It must be real.• It must not be illegal , immoral or opposed to public

policy.

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EXCEPTIONS

•1. Case of Love :-Consideration is not compulsory if an agreement made between the parties for natural love and affection.

2. Case of An Agent :-The contract of agency requires consideration, where the contract is a promise to appoint an agent.

3. Case of Voluntary Services :-In case of compensation for voluntary services there is a relaxation of consideration.

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EXCEPTIONS

• 4. Case of Donation :-Agreement made for donation is not enforceable for want of consideration. A promised amount can not be legally recovered where the promisee has done nothing on the basis of promise.

Example :- If Mr. Shah promised to donate one lac for the repair of college.College principal did nothing for repair. Mr. Shah refused to pay. On a suit by principal it was held the Mr. Shah is not liable because it did not result any loss to promisee.

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EXCEPTIONS•

5. Case of Gift :-In case of gift there is no need of any consideration. According the law any gift which is actually delivered will be valid. It cannot be demanded back on the ground that there was no consideration for him.

6. Extension in Time Limit :-There is no need of any consideration if agreement is made to extend time for the enforcement of the contract.

Example :- Mr. Chun agrees to construct the shop for Mr. Raju within one year against Rs. 20 lac. Later on the request to Mr. Raju to extend the time period for the completion of the shop. Mr. Raju accepts the request. It is a valid agreement without consideration.

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EXCEPTIONS

•7. Case of Time Barred Debt :-If a debtor promises to pay a time barred debt, then there is no need of consideration. The promise must be in written and signed by the debtor or his agent.

8. Contract Under Seal :-A contract without consideration is valid if it is made under seal.

Example :- Mr. Nehra and Mr. Adit enter into agreement by writing the partnership deed to form a partnership. This contract is valid.

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Quasi Contract or Implied Contracts

Sometimes on the basis of equity and justice legal sanction is given to some contracts. In fact these contracts are not between the parties and mutual consent of the parties is also not required. Rights and duties between the parties are created by law. So quasi contract or implied contract is a contract which is constituted by law. Quasi contract is applicable on the following cases :

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Quasi contract is applicable on the following cases :

• Finder of Goods Finder of Goods :-Sometimes a person finds the goods on the roads or on any place which belong to any other person.

• Liability of One Person But Paid By Other Can Be Recovered .Sometimes one person pays the money for the other person but not as a free gift. Any person on whose behalf money is paid enjoys benefits. So he is also bound to make compensation to his benefactor.

• Mistake and Coercion . If money or any other thing delivered by mistake or coercion to another person can be recovered

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Termination or Discharge of Contract

When we say that contract has been discharged or terminated, it means that rights and and liabilities created by law under contract has been finished.

METHODS TO DISCHARGE THE CONTRACT

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METHODS TO DISCHARGE THE CONTRACT

•1. Discharge By Performance :-When all the duties required in the contract are performed by all the parties, the contract comes to an end. It is called discharge by performance.

Example :- Mr. Nick agree to sell a piece of land to Mr. Ram for Rs. One lac. Mr. Nick delivers the plot and Mr. Ram makes the payment.

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METHODS TO DISCHARGE THE CONTRACT

• 2. Discharge By Breach of Contract :-When one party violates the conditions of lawful contract it is called breach of contract. When there is a breach by one party the other party gets a right not to perform his obligations it may also take action against the other party who has failed to perform.

Example :- "A" agrees to deliver one cycle to "B" on Sunday. He does not deliver the cycle on Sunday. There is breach of contract.

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METHODS TO DISCHARGE THE CONTRACT

• 3. Contract Declared Void :-If any contract is declared void by law then the parties involved to such contract are discharged from the liabilities.

4. Discharge By Lapse of Time :-Contract also discharges by lapse of time. Sometimes contract is not performed within prescribed period. In that case injured party should bring suit within three years as mentioned in the limitation act for the recovery of debt.

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METHODS TO DISCHARGE THE CONTRACT

• 5. Discharge Due to Impossibility :-If the performance of contract is not possible then contract is void and contracting parties are discharged from their obligations.

Example :- Suppose Mr. Carry and Miss. Niky contract to marry each other, on 10th March, 2011. Miss Niky dies before the 10th March. The contract becomes void because now marriage is impossible.

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METHODS TO DISCHARGE THE CONTRACT

• 6. Discharge By Insolvency :-If court declares insolvent to any person, he gets free from debts payable to others.

Example :- Mr. Heris promises to sell his factory to Mr. Frank for Rs. 70 lac. Before the performance of the contract Mr. Heris is declared insolvent by court. The contract is discharged.

7. Discharge By Alteration :-When the alteration is made in the written contract without mutual consent it becomes unauthorized. Such type of alteration discharges the contract by law.

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METHODS TO DISCHARGE THE CONTRACT

•8. Discharge By Merger :-When you merge the smaller contract in the larger contract it is called merger. The smaller contract is discharged by law automatically.

Example :- When ad-hock doctor is made permanent doctor the contract of ad-hock doctor-ship is discharged by merger.

9. Discharge By Consent :-A contract may be terminated with the mutual consent of the contracting parties.

10. Discharge By Remission :-Remission means pardoning of offense or cancelling of the whole or any part of some obligation.

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METHODS TO DISCHARGE THE CONTRACT•

11. Discharge By Waiver :-It means to relinquish the claim or right. Sometimes promisee himself surrenders his rights to the contract and releases the promisor from his obligations.

12. Discharge By Novation :-If the parties substitute a new contract it is called novation. In this case contract may be discharged by such as an alteration in its condition as substitutes a new contract, for the old one.

13. Discharge By Recession :-It means remedy for inducing a contract which is rejected one or all the terms of the contract are cancelled. It discharges to parties from obligations of the original contract.

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Breach of Contract :-

Breach means violation of law. The breach of contract means to break the contract or not to act upon the contract. When any party fails to perform its duties in a lawful contract it is called breach of contract. The injured party has a right to take action against the party who has failed to perform his part of contract.

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REMEDIES or RIGHTS OF AGGRIEVED PARTY :-

• 1. Claim for Damages :-If contract is broken, the injured party has a remedy to claim for damages and losses suffered by him. Injured party is entitled to receive compensation of loss from the party who has broken the contract.The aim of this remedy is to provide the injured party the same benefits which it would receive in case of the performance of contract.

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Following are important types of damages :

• i. :- Special Damage :- Under a special circumstances special damages takes place from breach of contract.

Example :- If the machinery of any factory arrives late and due to this reason one party suffers a loss or profits it is called special damage.

ii. General Damage :- If injured party suffers a loss due to non performance of the contract it is called general damage. The injured party can recover from the guilty party the ordinary damages suffered by him.

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Following are important types of damages :

• iii. Exemplary Damages :- These damages are awarded in order to punish the guilty party for the breach of contract and not to compensate the loss of the injured party.

These damages are awarded in dishonor of cheque and case of breach of contract to marry.

iv :- Nominal Damages :- When the injured party suffers no loss the contract may award him nominal damages to recognize his right.

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REMEDIES or RIGHTS OF AGGRIEVED PARTY :-

• 2. Suit For Injunction :-Injunction means the order of the court. It may be used to prevent any wrongful act. In case of contract it is used to prevent that act which is involved in breach of contract.

Example :- Suppose Mr. Yuvraj a film producer contracts with Miss. Neha to sign in his movies for ten years and not to sign in any other film. After one year she contacts with other film producer Mr. Sethy during the period of contract. The court may issue injunction on a suit by Mr. Yuvraj to restrain Miss. Neha from signing in film of Mr. Sethy.

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REMEDIES or RIGHTS OF AGGRIEVED PARTY :-

• 3. Specific Performance :-A degree of specific performance is an order of the court. It is usually granted in those contracts related to house, land and plot. In some cases compensation to pay. So court may issue the degree of specific performance and can compel to defaulter party the performance of contract.

Example :- Mr. Tipu agrees to sell his house to Mr. Amir, who agrees to purchase. But due to some reasons Mr. Tipu commits breach . At the suit of Mr. Amir court may ask Mr. Tipu to carry out the contract.

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REMEDIES or RIGHTS OF AGGRIEVED PARTY :-

• 4. Recession Of The Contract :-For the breach of contract it is an equitable remedy. When one party of the contract commits breach and other party may rescued the contract that he may get free from all its obligations for the performance of contract. Due to such recession and non performance injured party is entitled to get compensation for the damages and loss.

Example :- Mr. Sanjay pledges the defence savings certificates to Mr. Panday and get loan. But Mr. Sunjay does not return the loan. Mr. Panday may file a suit for recession of the contract responsibility to return the defence savings certificates on payment.

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REMEDIES or RIGHTS OF AGGRIEVED PARTY :-

• 5. Quantum Merit :-It means"So much as deserves" we can explain it by the following example :

Example :- Suppose Mr. Ali entered into contract with Mr. Shawn that they will construct one room jointly. Mr. Ali will construct the wall while Mr . Shawn will build the roof. Now Mr. Ali completes his job but Mr. Shawn fails to build the roof of the room. Now in this case Mr. Ali is entitled to receive the award according to his work done by him.This claim of Mr. Ali will be called a claim of "Quantum Merit." The court will award to Mr. Ali keeping in view the work or services performed by him.

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Indemnity Contract :-

It is defined in the following words, "A contract by which one party promises to save the other from the loss caused to him by the contract of the promisor himself or by the conduct of other person."

Insurance contracts are the common examples of indemnity.

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Indemnity Contract :-

• Example :- Mr. Jhon makes a contract of indemnity with Mr. Rymond against the consequences of any proceeding. Which Mr. Chand may take against Mr. Rymond in respect of certain sum of Rs. 100,000. The contract between Mr. Jhon and Mr. Rymond is called the contract of indemnity.

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Indemnity Contract :-

•Parties :-There are two parties involved in this contract. A person who gives the indemnity of protection to other person is called indemnifies. On the other hand a person whom protection is provided is called indemnity holder.

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Indemnity Contract :-

• RIGHTS OF INDEMNITY HOLDER :-Following are the important rights of indemnity holder :

1. Suit Expenditure Recovery :-Holder has right to recover all the expenditure spent by him on suits defending his case. It is necessary that holder had acted according the direction of the indemnifies.

2. Rights of Loss Recovery :-It is a right of the indemnity holder to recover all the losses for theindemnifies which he is compelled to pay in the related suit.

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Indemnity Contract :-

• 3. Compromise Cost Recovery :-Under the terms of any compromise in such suit sometimes money is also paid. Holder is entitled to recover all the sum of money paid by him for this purpose.

4. Rights of Indemnifies :-He is entitled to the benefit of all the securities which the creditor has against the principal debtor, whether he was aware of them or not?.

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Contract of Guarantee :-It is defined in the following words, "A contract of guarantee is a contract to perform the promise or discharge the liability of the third person in cause of default. 1. Surety.2. Creditor.3. Principal Debtor.Example :- Mr. Bean takes a loan of Rs. 10,000 from City Bank, and Mr. Riz gives guarantee of repayment of loan. Here Mr. Bean is the principaldebtor. City Bank is creditor and Mr. Riz is a surety.

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TYPES OF GUARANTEE

• SPECIFIC GUARANTEE :• When a guarantee extends to a single

transaction or debt it is known as a specific or simple guarantee

• • CONTINUING GUARANTEE :• When a guarantee extends to a series of

transactions. It is called continuing guarantee

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Distinguish or Difference between the Contract of Indemnity and Contract of Guarantee

• 1. Difference in Meaning :-

Contract of indemnity : In the contract of indemnity one person promises to save the other from any loss.

Contract of guarantee : In the contract of guarantee one person gives guarantee for the performance of the contract.

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• 2. Difference

Contract of indemnity : Under the contract of indemnity there are two parties.

Contract of guarantee : Under the contract of guarantee there are three parties.

3. Difference in the Liability :-

Contract of indemnity : Under indemnity contract the basic liability falls on the indemnifies.

Contract of guarantee : In case of guarantee contract surety has the secondary liability.

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• 4. Difference

Contract of indemnity : Under the indemnity contract there is one contract only.

Contract of guarantee : Under the contract of guarantee there must be at least three contracts.

5. Difference in the Nature of Interest :-

Contract of indemnity : In case of indemnity contract, indemnifies has the interest in earning commission and premium.

Contract of guarantee : In case of guarantor he has no any other interest except guarantee.

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• 6. Difference in the Right of Claim :-

Contract of indemnity : The indemnifies cannot sue the third party.

Contract of guarantee : Guarantor is entitled to proceed against the principal debtor in his own name. If he has paid the debt.

7. Difference in the Performance of Contract :-

Contract of indemnity : Contract of indemnity depends upon the possibility of risk or loss.

Contract of guarantee : In case of guarantee there is an existing debt or duty performance about which guarantee is given.

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CONTRACT OF SALE :-

• ,

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INTRODUCTION

Sales of Goods Act came into force on 1st July 1930

It contains 66 sections and extend to whole of India except the state of Jammu and Kashmir.

Section4(1) defines a contract of sales of goods as-

“A contract whereby the seller transfers or agrees to transfers the property in goods to the buyer for a price”

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CONTRACT OF SALE :-

• CONTRACT OF SALE :-" A contract whereby the seller transfers or agrees to transfer the property or the goods to the buyer for a price.

• A contract to transfer the ownership of goods from seller to the buyer is known as contract of sale.

• There are two parts of this definition : 1. An actual Sale :-1. An Agreement to Sell :-

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CONTRACT OF SALE :-

• 1. An actual Sale :-An actual sale property in goods transfers from sellers to buyers under the contract of sale.

Example :- Suppose Miss. Rina enters into contract of sale of horse in the hand of Mr. Guru against Rs. 30,000. Mr. Guru pays Rs. 30,000 to Miss. Rina and she delivers her horse to Mr. Guru. It is a sale.

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CONTRACT OF SALE :-

• 2. An Agreement to Sell :-The contract is called agreement to sell when transfer of property takes place at a future time subject to some condition to be fulfilled.

Example :- Suppose Miss. Poonam agrees with Mr. Mirza to sell him her house against Rs. 30 lac after the construction next year.

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the essential characteristics of a contract of sales of goods

•1. Buyer and Seller :-One person cannot become buyer and also the seller, there are always two parties to a contract of sale, buyer and seller.

2. Goods :-Every kind of movable property except actionable claims (which can be enforced by legal action) and money is regarded as goods.

3. Price :-Price must be the consideration in the contract of sale. If goods are exchanged with goods it is barter and not a contract of sale.

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the essential characteristics of a contract of sales of goods

• 4. Transfer of Ownership :-To constitute the sale contract the seller must transfer or agree to transfer the property ownership to the buyers. So possession and ownership both will be transferred to buyer.5. Sale :-When ownership and possession of the good is immediately transferred from seller to buyer it is called contract of sale.6. Agreement to Sell :-When the transfer of ownership in the goods is to take place at a future date the contract is called agreement to sell.

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DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL

• We can analyses the difference by the following facts :

1. Transfer of Goods :-

Sale : In case of sale property is transfers from seller to buyer.

Agreement to sell : In case of agreement only promise is made to transfer the goods.

2. Nature of Performance :-

Sale : A sale is a contract which is being performed.

Agreement to sell : An agreement to sell is a contract which is to be performed.

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DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL

• 3. Rights of Buyer and Seller :-

Sale : Goods become the property of the buyer in case of sale.

Agreement to sell : Goods remain the property of the seller in case of agreement.

4. Insolvency of Buyer :-

Sale : In a sale case seller can use his right of lien or stoppage.

Agreement to sell : In case of agreement seller can refuse to deliver the goods if price is not paid.

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DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL

• 5. Buyer's Default :-

Sale : In case of sale, a seller can claim for the price of goods.

Agreement to sell : In case an agreement the seller can claim only for damages.

6. Seller's Insolvency :-

Sale : In case of sale a buyer has no risk.

Agreement to sell : In case of agreement a buyer can claim only dividend.

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DIFFERENCE BETWEEN SALE AND AGREEMENT TO SELL

• 7. Seller's Default :-

Sale : In case of sale the buyer has a personal remedy.

Agreement to sell : In case of agreement the buyer can claim only for damages.

8. Responsibility of Loss :-

Sale : In case of sale the responsibility of loss by accident falls on the buyers.

Agreement to sell : In case an agreement to sell responsibility of loss falls on the sellers.

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CONDITION with reference to the contract of the sale of the goods act

• CONDITION :-"A condition is stipulation essential breach to the main purpose of the contract, the breach of which give rise to a right to treat the contract as repudiated."

So according the above definition it is clear that condition is very essential for the performance of a contract. The breach of condition will be regarded as the breach of the whole contract.

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warranty with reference to the contract of the sale of the goods act

• WARRANTY :-"A warranty is a stipulation collateral to the main purpose of the contract the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated."

The above definition shows that for the implementation of a contract warranty is not essential. For the breach of warranty only damages can be claimed.

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Distinction Between Condition and Warranty

• 1. Difference In Importance :-

Condition : A condition is essential to the main purpose of a contract.

Warranty : Breach of warranty gives right to the party to claim the damage only.

2. Difference in Rights :-

Condition : Breach of condition gives right to the party to reject the contract.

Warranty : Breach of warranty gives right to the party to claim the damages only.

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Distinction Between Condition and Warranty

• 3. Superiority of Condition :-

Condition : A breach of condition may be treated as a breach of warranty.

Warranty : A breach of warranty may not be treated as a breach of condition.

4. Link With Contract :-

Condition : A condition has a direct link with the essential party of the contract.

Warranty : A warranty has no direct link with the essential part of the contract.

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DOCTRINE OF CAVEAT EMPTOR

Caveat emptor means “let the buyer be aware”According to the doctrine of caveat emptor it is the

duty of buyer to be careful while purchasing goods of his requirement and the seller is not bound to disclose every defect in goods of which he may be cognizant.

While making purchase the buyer depends on his own skills and makes a bad choice and hence he can’t hold the seller liable for the same, as there is no implied undertaking by the seller.

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Transfer of Property

• Transfer of Property :-

Transfer of property means transfer of goods ownership. While transfer of possession of goods refers to the custody of goods.

i. The ownership of the goods may pass to the buyer but possession may remain with the seller.

ii. In other case possession may pass to the buyer but ownership remain with the seller.

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RULES OF TRANSFER :-• Following are the important rules regarding the transfer of

property :1. Transfer of Specific Property :-In this case the parties may intend to pass the ownership at once on the delivery of goods or at the time of payment. Parties intention can be judged from the terms of the contract and then conduct

• 2. Transfer of Property Of Future Goods :-It does not pass to the buyer unless and until the goods are ascertained or unconditionally appropriated to the contract to bring then to deliverable state. Either by the seller with the permission of the buyer or by the buyer with the permission of the seller.

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• A seller cannot convey a better title to the buyer then he has himself or Discuss the rule of law owned point out the exception

• Example :- Mr. Nonee steal a car and sells to Mr. Rao for sale. Mr. Rao cannot become the owner of a car because Mr. Nonee seller was not the owner of car.

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UNPAID SELLER :-

Seller :- A person who sells the goods or agrees to sell the goods is called seller.

Unpaid :- It means payment is not made or without payment.

In simple words, "Unpaid seller" means a person who has sold the goods for a price but price has not been paid to him.

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Rights Of Unpaid Seller or Lien Of Unpaid Seller :-• 1. Right of Lien :-

For the recovery of price an unpaid seller has a right to keep the goods in his own possession.

Example :- Mr. Hunny sells the goods to Mr. Abhijit for Rs. 10 lac. Mr. Abhijit pays 5 lac and promises to pay the remaining 5 lac after two month. Mr. Hunny has a right of lien on the goods.

2. Right of Stopping :-If buyer becomes insolvent, an unpaid seller has a right of stopping the goods in transit.

Example :- "X" sells 100 bales of cotton to "Y" but delivery will be two stages. "X" delivers 50 bales first. Later on he comes know that "Y" has become insolvent. "X" can stop delivery of bales in transit.

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Rights Of Unpaid Seller or Lien Of Unpaid Seller :-

• 3. Right of Resale :-An unpaid seller is considered the owner of the goods until he is not paid by the buyer. So he has a right to sell his goods subject to few conditions.Example :- "X" sells one horse to "Y" on credit. "Y" does not pay. "X" can resell to other person.

4. Right of Delivery :-The unpaid seller has a right of with holding the delivery of goods where the property in the goods has not passed to the buyer.5. Right of Claim :-The unpaid seller has also a right to claim the buyer for the prices of goods.

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Termination Of Lien :-An unpaid seller loses the lien in the following cases :

• . Termination By Waiver :-If an unpaid seller himself waives his right of lien then it will be terminated.

2. Goods in Buyer's Possession :-When a buyer or his agent obtains the possession for goods lawfully, unpaid seller lien terminates.

3. Does Not Reserve The Right of Disposal :-When unpaid seller fails to reserve the right of disposal of the goods at the times of delivery to the bailee for transferring it to the buyer. Then this right of lien terminates.

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REMEDIES FOR SELLER

• REMEDIES FOR SELLER

• 1. Suit For the Price :-When the goods are passed to the buyer under the contract of sale and buyer refuses or neglects to pay, then a seller may sue him for the payment.

2. Goods Not Transferred :-If goods are not passed to the buyer but according to the contract if the payment is not made in time, a seller has a right to sue for price..

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REMEDIES FOR SELLER

• 3. Suit For Damages :-If a buyer refuses to accept the goods or neglects to make payment, a seller has right to sue for damages for non-acceptance.

4. Liability of Buyer :-A buyer is liable to the seller for any loss occurred by his negligence or refusal in taking the delivery.

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REMEDIES FOR BUYER • 1. Recovery of Prices & Interest :-

The seller or buyer may recover interest or special damages if these are recoverable by law. If the seller has received the price but does not deliver the goods to the buyer. The buyer can sue the seller for price.

Example :- "M" agrees to buy a bus from "N" and makes the payment in advance. "M" does not supply the bus. "M" can sue for refund of price with interest.

2. Suit For Losses :-A buyer may sue the seller for damages if a seller refuses or wrongfully neglects to deliver the goods.

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REMEDIES FOR BUYER •

4. Suit For Breach Warranty •

5. Suit For Cancellation :-If there is a breach of condition by the seller, the buyer can avoid the contract and claim damages.

Example :- "X" agrees to sell to "Y" the Honda car. "X" sends Toyota car to "Y". "Y" can avoid the contract and claim damages.

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Negotiable Instruments :-

• ,

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Negotiable Instruments :-

• 2. Negotiable Instruments Documents of a certain type, used in commercial transactions and monetary dealings, are called Negotiable instruments.

• “ Negotiable” means transferable by delivery and “instrument” means a written document by which a right is created in favor of some person. Thus, negotiable instrument means “ a document transferable by delivery”

Example :- Cheques, Bill of Exchange and Promissory Notes are the important examples of negotiable instruments.

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Negotiable Instruments Definition

• : Negotiable Instruments Act , 1881 states that, “ A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer”. ---Sec. 13(1)

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Characteristics Of Negotiable Instruments :-

•1. In Writing :-It is the basic condition of the negotiable instrument that it is always in writing. It can not be verbal.

2. Unconditional :-It is an unconditional instrument if any condition is attached then it can not be called negotiable instrument.

3. Transferable :-It can easily transferable from one person to another. In these instruments right of ownership passes either by delivery or by endorsement.

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• 4. Payable On Demand :-The amount of the instrument is payable on demand or at any predetermination future time.

5. Payable In Money :-The amount must be written on the instrument and it is always payable in terms of money.

•6. Payable To The Bearer :-The amount written on it is payable to the bearer or to a specified person.

• 7. Payment of Debt :-It can be very easily used for the payment of debt. It is very simple and convenient method of payment.

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• 8. Right of Recovery :-A cheque or Note gives the right to the creditor to recover the written amount from the debtor. He can recover this amount by himself or he can transfer this right to another.

•9. Better Title :-If there is a defect in the title of the previous holder it does not affect the holder in due course. So it is abetter little than others.

•10. Exception of General Law :-In case of transfer of property the general concept of law is that "No body can transfer a better title than that of his own.“

•11. Specified Amount :-It is also a characteristic of negotiable instrument that specified and definite amount is written on the instrument.

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Types of Negotiable Instruments

Promissory note.

Bill of exchange.

Cheque.

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Promissory Note :-

It is an unconditional written promise by one person to another in which the maker (Payer) promises to pay on demand on any future date, a stated sum of money to the specified person or to the bearer of the instrument.

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Characteristics Of Promissory Note

1. Written :2Maker's Signature :3Unconditional4 Definite Sum of Money5Decision 6 Payee To be Certain 7Payee To be Certain

. Important Point :-1. The promise to pay must be lawful.2. The pro-note must be properly stamped.3. The stamps must be cancelled.4. The date must be mentioned.5. The place must be stated where it is made.

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Parties MAKER : The person who makes the promissory note and

promises to pay is called the Maker.

PAYEE: The person to whom the payment is to be made is called the Payee.

HOLDER: The holder is either the payee or someone to whom he may have indorsed (transfer) the note is known as Holder.

ENDORSER: The person who indorses the note to another is called the Endorser .

ENDORSEE: The person to whose favor the note is endorsed is called the Endorsee

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. Bill of Exchange

• : “ A Bill of Exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument.” ----Sec. 5 e.g. To A.B. “ Six months after date pay P.Q. or order Rs. 1000” Sd/X.Y. Date……………….. Stamp…

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Characteristics of the Bill of Exchange

The amount payable must be certain.

The payment must be made in money.

The bill payable may be either on demand or after a specified period.

The bill may be payable either to the bearer or to the order of payee.

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PartiesDRAWER: The person who makes the bill of

exchange is called drawer.

DRAWEE: The person who is directed to pay is called drawee.

PAYEE: The person to whom the payment is to be made is called payee.

ACCEPTOR: When the drawee accepts the bill is called acceptor.

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CHEQUE :-

A written order of a depositor upon a bank to pay the designated party or the bearer a specified sum of money on demand. The person who draws the cheque is called drawer and the person whom the payment is made called payee. The bank will be called drawee.

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ESSENTIALS OF CHEQUE

• 1. In Writing :-The cheque must be in writing. It can not be oral.

•2. Unconditional :-The order to pay must be unconditional.

3. Signature of the Drawer :-It must be signed by the maker.

4. Certain Sum of Money :-The amount in the cheque must be certain.

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ESSENTIALS OF CHEQUE

• 5. Payees Must be Certain :-It must be payable to specified person.

6. Only Money :-The payment should be of money only.

7. Payable On Demand :-It must be payable on demand.

8. Upon a Bank :-It is an order of a depositor on a bank.

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Parties

DRAWER: The person who makes a cheque is called Drawer.

DRAWEE: The person who is directed to pay is called Drawee.

PAYEE: The person to whom the payment is to be made.

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Types of Check

We have two types of checks;– Open Check– Crossed check

• Open Check:• Open checks are those checks which are paid

across the counter of the bank. • Open checks has further two types– Bearer check– Order check

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Crossing of Cheque• A cheque is said to be crossed when it bears across

its face two parallel transverse lines which are usually drawn on the left hand top corner of the Cheque.

General crossing: The drawing up of two parallel lines on the face of the check at the top left hand corner with or without the words & Co not negotiable or Account payee only is known as a General Crossing.

Special crossing: A check is deemed to be crossed specially when it bears across its face the name of the banker either with or without the words not negotiable.

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Difference between cheque and promissory note•

1. Order And Promise :-

Cheque : It contains order to pay.

Promissory note : A promissory note contains promise to pay.

2. Number Of Parties :-Cheque : In case of cheque there may be three parties, the drawer, drawee and payee.Promissory note : In case of promissory note are only two parties, the maker and the payee.3. Object :-Cheque : Cheque is used because it is a simple and easy medium of exchange and serving of metalic money.

Promissory note : It is used for receiving and giving credit.

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Indorsement or Endorsement :

• A cheque or a bill is endorsed when the transferer puts his signature on the back or on an along with a cheque and a bills as a part of negotiation. If the cheque is bearer it needs no endorsement.

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holder and holder in due course

• HOLDER :-

Holder has three characteristics :

1. Document is in hand.

2. He is entitled to receive the amount written on the document.

3. He is entitled to sue against the refusal.

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holder in due course• 1. A holder in due course must have become a holder of the instrument before

the date of its maturity. He must be entitled to transfer it.

• 2. He must be a holder for a valuable consideration.

• 3. He must be valid holder of the instrument.

• 4. He must be a holder of the instrument in good faith.

• 5. Amount of document will be payable on that date when it will be presented.

• 6. He should be entitled to sue in case of refusal of payment.

• 7. He must have taken instrument complete and regular on the face of it.

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Negotiation

• An instrument is said to be negotiated:

When a promissory note, BOE, cheque is transferred to any person so as to constitute that person the holder of the instrument

• Transfer with an intention to transfer the title of the instrument.

Negotiation by deliveryNegotiation by endorsement and delivery

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Dishonor

• A negotiable instrument is said to be dishonored by non-payment when the maker, acceptor or drawee, as the case maybe makes default in payment upon being duly required to pay the same.

Dishonor by non paymentDishonor by non acceptance

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.

• Indian partnership act 1932

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Introduction

• This act was earlier covered indian-contract act 1872.

• This act, extends all over india excepts jammu & kashmir.

• This act was became effective 1 october, 1932

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Partnership

• According to section 4 of the Partnership Act of 1932, which applies in both India and Pakistan, "Partnership is defined as the relation between two or more persons who have agreed to share the profits and losses according to their ratio of business run by all or any one of them acting for all". 

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Essential elements of partneship

1.Agreeement –an agreement from which relationship of partnership arises may be express,oral or in writing.

2.Sharing profit of business – generally sharing of profit in equal ratio.

3.Business carried on by all or any of them acting for all.4 The business to carried out must be legal and acceptable by law.5 Minor cannot be a partner.

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“PARTNERSHIP NOT CREATED BY STATUS.”

• The relation of partnership arises from contract and not from status

• E.g. the members of a Hindu undivided family carrying on a family business as such, or a Burmese Buddhist husband and wife carrying on business as such are not partners in such business.

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Kinds of Partnership Partnership at will :- According to SECTION-7 of the act, it is a

partnership when:-

1. No fixed period has been agreed upon for the duration of the partnership and

2. There is no provisions made as to the determination of the partnership.

Partnership for a fixed period :- Where a provision is made by a

contract for the duration of the partnership, the partnership is called ‘partnership for a fixed period’.

Particular partnership :- a partnership may be organized for the prosecution of a single adventure as well as the conduct of a continuous business.

General partnership :- where a partnership is constituted with respect to the business in general, it is called a general partnership.

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Types of partners

• Actual/ ostensible Partner• Sleeping/dormant partner• Nominal Partner• Partner in profits only• Sub-Partner• Partner by Estoppel/ Holding out• Minor as a Partner

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Partnership deed The document containing the agreement between

the partners are called Partnership Deed.

Contents of Partnership Deed:1. Nature of the business2. Place of the business3. Name and address of the partners4. Profit sharing ratio5. Interest on capital etc….

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Rights of Partner• Take part in the conduct of business• To share equally in the profits of the business• To access to and to inspect and copy from any

books of the firm• To be joint owner of the property of the firm• In emergency, take all actions to safeguard firm• To resist introduction or admission of new

partner• Right not to be expelled

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Duties of Partner

• General Duties: To carry on the business of the firm, to be just and faithful, to give true accounts and complete information.

• To indemnify the firm for the loss caused by him during the conduct of the firm’s business

• To contribute to the losses of the firm in equal proportion.

• Not to assign his own share to some other party

• To attend to his duties diligently

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Liabilities of the Partner• General Liabilities arise when: oHe fails to be just and faithful to all other

partners, oHe fails to carry on the business of the

firm in highest common interest,oHe fails to give true accounts.• To indemnify

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Liability of a Firm for wrongful acts of a partner

The firm is liable in the given below situations:• If a loss or injury occurs to a third party due the

act of the partner in course of business of the Firm

• If a partner acting within his apparent authority receives money or property and misappropriates it.

• If money received by the Firm in course of business and the partners misappropriate it.

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Dissolution of a firm

It means complete break down or extinction of the relationship between all the partners of a firmWithout the order of the court

1. By Agreement2. By Compulsory Dissolution3. On the happening of certain contingencies4. By Notice

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.By Agreement

By AgreementWith the consent of all the partiesIn accordance with the contact between themCompulsory dissolution

1. When one or all partners become insolvent2. By the happening of any event which makes it

unlawful for the business firm to continue

Dissolution on the happening of certain contingenciesExpiry of the termCompletion of a particular adventureDeath of a partner

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• Dissolution by noticeFirm may be dissolved by any partner who gives

notice that the partnership will no longer exists.In such case, dissolution is counted from the day

when the notice is issued by the partners• Dissolution by court• Insolvent• Incapacity• Misconduct• Persistent Breach• Business working at loss• etc Niaz sahil