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1CONTRACT : DEFINITION AND CONCEPT
PAGE
1.1 Introduction 11.2 What is contract 2
1.2-1 Agreement 2
1.2-2 Legal enforceability of an agreement 3
1.2-3 All agreements are not contracts 5
1.3 Essential Elements of a valid contract 51.4 Writing and registration of contract 8
1.5 Classification of contracts 9
1.5-1 English law 91.5-2 Indian law 9
1.6 Some important comparisons 151.6-1 Agreement and Contract 151.6-2 Illegal and Void Agreements 151.6-3 Void and Voidable Contract 151.6-4 Void Agreement and Void Contract 16
2AGREEMENT : OFFER AND ACCEPTANCE
2.1 Introduction 192.2 Offer/Proposal 20
2.3 Offer should be distinguished from 262.3-1 Cross offers 262.3-2 Counter offers 272.3-3 Invitation to offer 272.3-4 Standing offer 29
I-7
PAGE
2.4 Termination of offer 30
2.4-1 Instances of termination of offer as per section 6of the Act 30
2.4-2 Other instances when an offer gets terminated 32
2.5 Acceptance of an offer 32
2.6 Communication of offer, acceptance and revocation 37
2.6-1 Communication of offer - When complete 37
2.6-2 Communication of acceptance - When complete 38
2.6-3 Effect of delay or loss of letter of acceptance inpostal transit 38
2.6-4 Communication of revocation - When complete 39
3CONSIDERATION AND LEGALITY
3.1 Introduction 43
3.2 What is consideration 443.2-1 Essential elements of consideration 45
3.2-2 Rules regarding consideration 48
3.3 Exceptions to the doctrine of consideration 503.4 Stranger to contract vis-a-vis stranger to consideration 52
3.4-1 Stranger to the contract 52
3.4-2 Stranger to consideration 53
3.4-3 Exceptions to the Doctrine of privity to contract 53
3.5 Legality of object and consideration 56
3.6 Agreements opposed to public policy 57
3.7 Effect of unlawful object and consideration 613.7-1 Object and consideration wholly unlawful 61
3.7-2 Objects and consideration unlawful in part 62
4CAPACITY OF PARTIES
4.1 Introduction 66
4.2 Minors 67
4.2-1 Who is a minor 674.2-2 Status of the contracts entered into by a minor 67
4.2-3 The status of a minor with respect to the agree-ments entered into by him 68
CONTENTS I-8
PAGE
4.2-4 Minor and Special Contracts/Agreements 72
4.3 Persons of unsound mind 744.3-1 Who is a person of unsound mind 74
4.3-2 Unsoundness of mind may take various forms 74
4.3-3 Effect of the agreement entered into by the personsof unsound mind 75
4.3-4 Burden of proof 75
4.4 Disqualified persons 75
5FREE CONSENT
5.1 Introduction 79
5.2 Coercion 80
5.2-1 Acts amounting to coercion 80
5.2-2 Features of coercion 81
5.2-3 Special Points to be noted 81
5.2-3a Threat to commit suicide 82
5.2-3b Threat to prosecution 82
5.2-4 Effect of coercion 82
5.2-5 Burden of proof 82
5.3 Undue influence 83
5.3-1 What is undue influence 83
5.3-2 Features of undue influence 84
5.3-3 Special point : Transaction with Pardanashinwoman 85
5.3-4 Effect of undue influence 85
5.3-5 Burden of proof 86
5.4 Fraud 86
5.4-1 Definition of fraud 86
5.4-2 Acts which constitute fraud 87
5.4-3 Mere silence is not Fraud 88
5.4-4 Effect of fraud 90
5.4-5 Burden of proof 90
5.5 Misrepresentation 91
5.5-1 What is misrepresentation 91
5.5-2 When a consent is said to be caused by mis-representation 92
I-9 CONTENTS
PAGE
5.5-3 Effect of misrepresentation 92
5.5-4 Burden of proof 93
5.6 Limitations to the right of rescission 93
5.7 Mistake 93
5.7-1 Mistake of law 94
5.7-1a Mistake of Indian Law 94
5.7-1b Mistake of Foreign Law 94
5.7-2 Mistake of fact 94
5.7-2a Bilateral mistake 94
5.7-2b Unilateral Mistake 97
5.7-3 Effect of mistake 98
5.8 Some important comparisons 99
5.8-1 Fraud and misrepresentation 99
5.8-2 Coercion and undue influence 99
6VOID AGREEMENTS
6.1 Introduction 102
6.2 Agreements in restraint of marriage 103
6.3 Agreements in restraint of trade 103
6.3-1 What is an agreement in restraint of trade 103
6.3-2 Exceptions to the rule that agreements in restraintof trade are void 104
6.3-2a Exception under the Indian ContractAct, 1872 - Sale of goodwill 104
6.3-2b Exceptions under the PartnershipAct, 1932 105
6.3-2c Exceptions established by judicialdecisions 106
6.4 Uncertain agreements 107
6.5 Agreements in restraint of legal proceedings 107
6.5-1 Restrictions must be absolute 107
6.5-2 Curtailing the period of limitation 108
6.5-3 Exceptions in the agreements against legalproceedings 108
6.6 Wagering agreements 109
6.6-1 What is a wager 109
CONTENTS I-10
PAGE
6.6-2 Essentials of a wager 109
6.6-3 Effect of wagering agreements 110
6.6-3a Main transaction 110
6.6-3b Collateral transaction 110
6.6-4 Exception in the wagering agreements 111
6.6-5 Special transactions resembling to wagering 111
6.7 Agreements contingent on impossible events 112
6.8 Agreements to do impossible acts 113
7CONTINGENT CONTRACTS
7.1 Introduction 116
7.2 What is a contingent contract 117
7.3 Rules regarding a contingent contract 118
7.4 Effect of contingent contracts 120
7.5 An important comparison 120
7.5-1 Wagering agreement and contingent contract 120
8QUASI CONTRACTS
8.1 Introduction 122
8.2 Various forms a quasi contract may take 123
8.2-1 Supply of necessaries 123
8.2-2 Payment of lawful dues by interested person 123
8.2-3 Obligation of a person enjoying benefit of agratuitous act 125
8.2-4 Responsibility of finder of goods 126
8.2-5 Liability of a recipient of goods delivered bymistake or under coercion 127
8.3 Failure to discharge obligations created by quasi contracts 128
9PERFORMANCE OF CONTRACTS
9.1 Introduction 130
9.2 Actual or attempted performance 131
I-11 CONTENTS
PAGE
9.2-1 Actual performance 131
9.2-2 Attempted performance 131
9.2-2a Essentials of a valid tender of perfor-mance 131
9.2-2b Effect of refusal to ‘Tender of perfor-mance’ 133
9.3 When law excuses non-performance of contract 133
9.4 Who should perform the contract 133
9.5 Who can demand performance 135
9.6 Time and place for performance 135
9.6-1 Rules as to time and place for performance 135
9.6-2 Effect of failure to perform in time 137
9.7 Joint promises 138
9.7-1 What is a joint promise 138
9.7-2 Who can demand performance of joint promi-ses 139
9.7-3 Who should perform a joint promise 139
9.7-4 Rights and liabilities amongst joint promisors 140
9.8 Reciprocal promises 141
9.8-1 What is reciprocal promise 141
9.8-2 Rules regarding performance of reciprocalpromises 141
9.9 Appropriation of payments 143
9.10 Assignment of a contract 145
9.11 An important comparison 146
9.11-1 Succession and Assignment 146
10DISCHARGE OF CONTRACT
10.1 Introduction 150
10.2 Discharge by performance 151
10.3 Discharge by impossibility of performance 151
10.3-1 Where impossibility is existent at the time ofmaking contract 151
10.3-2 Where impossibility arises subsequently afterthe formation of contract 151
10.3-3 Factors causing impossibility to performance 152
CONTENTS I-12
PAGE
10.3.4 Effect of doctrine of supervening impossibility 153
10.3.5 Non-applicability of the Doctrine of Superven-ing Impossibility 154
10.4 Discharge by mutual agreement 155
10.4-1 Novation 155
10.4-2 Alteration 156
10.4-3 Rescission 156
10.4-4 Remission 156
10.4-5 Waiver 157
10.5 Discharge by lapse of time 157
10.6 Discharge by operation of law 157
10.7 Discharge by breach of contract 158
10.7-1 Actual breach 158
10.7-2 Anticipatory Breach 159
11REMEDIES FOR BREACH OF CONTRACT
11.1 Introduction 163
11.2 Rescission of a Contract 164
11.2-1 What is Rescission 164
11.2-2 Consequences of rescission 164
11.2-3 Different options to avail relief in case of rescission 164
11.3 Suit for damages 165
11.3-1 Kinds of damages and rules to assess their quantum 165
11.3-2 Measuring interest damages 170
11.3-3 Other relevant provisions 171
11.4 Suit for specific performance 172
11.5 Suit for an injunction 173
11.6 Suit upon ‘quantum meruit’ and ‘restitution’ 173
11.6-1 ‘Quantum Meruit’ 173
11.6-2 Restitution 174
11.6-3 Generalisations based upon the doctrine of‘Quantum Meruit’ and ‘Restitution’ 174
I-13 CONTENTS
PAGE
12INDEMNITY AND GUARANTEE
12.1 Introduction 178
12.2 Contract of indemnity 179
12.3 Contract of Guarantee 181
12.4 Kinds of Guarantee 182
12.4-1 Retrospective and prospective guarantee 182
12.4-2 Specific and continuing guarantee 182
12.5 Nature and Extent of Surety’s liability 184
12.6 Rights of surety 185
12.6-1 Rights against the principal debtor 185
12.6-2 Rights against the creditor 186
12.6-3 Rights against co-sureties 187
12.7 Discharge of surety 188
12.8 An Important comparison 192
12.8-1 Contract of Indemnity and Contract of Guarantee 192
13BAILMENT AND PLEDGE
13.1 Introduction 196
13.2 Basic elements of bailment 196
13.3 Types of Bailment 19713.3-1 Classification on the basis of profit that each
party to the transaction receives 197
13.3-2 Classification on the basis of expectation ofreward by the parties 198
13.4 Duties of a bailor 19813.5 Rights of a bailor 199
13.6 Duties of Bailee 200
13.7 Rights of bailee 203
13.8 Bailee’s right of lien 204
13.8-1 Particular lien 205
13.8-2 General lien 206
13.8-3 How right of general lien is exercised byspecified bailees 206
13.9 Termination of bailment 207
CONTENTS I-14
PAGE
13.10 Finder of lost goods 208
13.10-1 Duties of a finder of goods 208
13.10-2 Rights of a finder of goods 208
13.11 Pledge or pawn 209
13.11-1 What is a pledge 209
13.11-2 Essential features of a pledge 209
13.11-3 Who can make a pledge 210
13.11-4 Duties of a Pawnor 212
13.11-5 Rights of a Pawnor 212
13.11-6 Duties of a Pawnee 213
13.11-7 Rights of a Pawnee 213
13.12 Some important comparisons 214
13.12-1 Bailment and pledge 214
13.12-2 Particular lien and general lien of a bailee 215
13.12-3 Pledge and lien 215
14AGENCY
14.1 Introduction 218
14.2 Contract of agency 219
14.3 Test of agency 220
14.4 Classification of agents 220
14.4-1 Classification based on the extent of agents’authority 220
14.4-2 Classification based on the nature of workperformed by agents 221
14.5 Creation of agency 222
14.5-1 Agency by express agreement 222
14.5-2 Agency by implied agreement 222
14.5-3 Agency by operation of law 225
14.5-4 Agency by ratification 225
14.6 Extent of agent’s authority 227
14.6-1 Actual or real authority 227
14.6-2 Ostensible or apparent authority 228
14.6-3 Authority in emergency 228
14.7 Delegation of authority by an agent 229
I-15 CONTENTS
PAGE
14.7-1 An agent cannot delegate his authority 229
14.8 Sub-agent 229
14.8-1 Who is a sub-agent 229
14.8-2 Consequences of appointing a sub-agent 230
14.9 Substituted agent 230
14.10 Pretended agent 231
14.11 Duties of an agent 231
14.12 Rights of an agent 234
14.13 Rights of a principal 237
14.14 Duties of a principal 237
14.15 Position of principal towards third parties 237
14.15-1 Position of named principal 237
14.15-2 Position of unnamed principal 239
14.15-3 Position of undisclosed principal 239
14.16 Position of an agent towards third parties 240
14.16-1 Circumstances where an agent becomes per-sonally liable to third parties 240
14.17 Termination of agency 241
14.17-1 Termination by act of the parties 241
14.17-2 Termination by operation of law 243
14.17-3 When termination of agency takes effect 244
14.18 Irrevocable agency 244
14.18-1 Agency coupled with interest [Section 202] 244
14.18-2 Agent incurs personal liability 245
14.18-3 Agent partly exercise the authority [Section 204] 246
14.19 Some important comparisons 246
14.19-1 Agent and servant 246
14.19-2 Agent and independent contractor 246
14-19-3 Agent and bailee 247
15CONTRACT OF SALE OF GOODS
15.1 Introduction 250
15.2 Contract of sale 251
15.3 Sale and agreement to sell 253
15.3-1 Sale 253
CONTENTS I-16
PAGE
15.3-2 Agreement to sell 253
15.3-3 Comparison between sale and ‘agreement to sell’ 254
15.4 Kind of Goods 255
15.4-1 Existing goods [Section 6(1)] 255
15.4-2 Future goods [Section 2(6)] 255
15.4-3 Contingent goods [Section 6(2)] 256
15.5 Perishing of goods 256
15.5-1 When goods are considered to be perished 256
15.5-2 Effect of perishing of the subject-matter of acontract 256
15.6 Determination of price of goods 259
15.6-1 How to fix the price 259
15.6-2 Situation when price fixation is to be done by thirdparty [Section 10] 260
15.6-3 ‘Earnest money’ and ‘Security deposit’ 260
15.7 Consequences of not adhering to the time in a salescontract 261
15.7-1 When time is stipulated regarding the payment ofprice 261
15.7-2 When time is stipulated regarding delivery ofgoods 261
15.8 Documents of title to goods [Section 2(4)] 261
15.9 Some important comparisons 262
15.9-1 Sale and hire purchase 262
15.9-2 Agreement to sell and hire purchase 263
15.9-3 Sale and bailment 264
15.9-4 Sale of goods and contract for work and labour 264
15.9-5 Barter, Exchange and Sale 265
16CONDITIONS AND WARRANTIES
16.1 Introduction 268
16.2 Condition and warranty defined 269
16.2-1 Condition 269
16.2-2 Warranty 269
16.3 Implied conditions and implied warranties 270
16.3-1 Implied Conditions 270
I-17 CONTENTS
PAGE
16.3-2 Implied Warranties 275
16.4 Change of a condition into warranty 27616.5 Exclusion of implied conditions and warranties 277
16.6 Doctrine of caveat emptor 278
16.6-1 Meaning 27816.6-2 Exceptions to the doctrine of caveat emptor 278
16.7 Some important comparisons 279
16.7-1 Condition and warranty 279
16.7-2 Condition as to Fitness of goods for buyer’spurpose and condition as to Merchantability 280
17TRANSFER OF PROPERTY
17.1 Introduction 283
17.2 Significance of transfer of ownership 284
17.3 Rules regarding transfer of property 28517.3-1 Transfer of ownership in the sale of specific goods 285
17.3-2 Transfer of ownership in the sale of unascer-tained or future goods 288
17.4 Transfer of title 29017.4-1 No one can transfer better title then he him-
self possess 290
17.4-2 Exceptions to the rule 290
18PERFORMANCE OF CONTRACT OF SALE
18.1 Introduction 295
18.2 Delivery of goods by seller 296
18.2-1 What is the meaning of ‘delivery’ 296
18.2-2 Modes of delivery 296
18.2-3 Rules regarding effective delivery of goods 297
18.3 Acceptance of delivery by the buyer 301
18.3-1 What is meant by acceptance of delivery of goods 301
18.3-2 Rules regarding acceptance of delivery of goods 301
18.4 Duties of the buyer 302
CONTENTS I-18
PAGE
19REMEDIES
19.1 Introduction 306
19.2 Buyer’s breach 307
19.3 Unpaid seller’s remedies 30719.3-1 Who is an ‘unpaid seller’ 307
19.3-2 Rights of an ‘unpaid seller’ 308
19.3-2a Right of an ‘unpaid seller’ against thegoods 308
19.3-2b Rights of ‘unpaid seller’ against thebuyer 312
19.4 Seller’s breach : Buyer’s remedies 313
19.4-1 Ways in which a seller may breach 313
19.4-2 Remedies available to a buyer 314
19.5 Anticipatory breach of contract 31519.6 Auction sale 315
19.6-1 Meaning 315
19.6-2 Rules 31519.6-3 Some important terms used in an auction sale 316
19.7 An important comparison 317
19.7-1 Seller’s right of lien and seller’s right of stoppagein transit 317
20PARTNERSHIP : AN INTRODUCTION
20.1 Introduction 320
20.2 What is a partnership 321
20.2-1 Definition 321
20.2-2 Essential elements of a partnership 321
20.3 Test of partnership 324
20.3-1 How to test existence of partnership 324
20.3-2 Sharing profits is not a conclusive evidenceof a partnership 325
20.3-3 The mutual agency test is an important test ofpartnership 326
20.4 Partners, firm and firm name 326
20.5 Some important comparisons 327
I-19 CONTENTS
PAGE
20.5-1 Partnership and Joint Stock Company 327
20.5-2 Partnership and Hindu Undivided Family (HUF) 328
20.5-3 Partnership and co-ownership 329
20.5-4 Partnership and a Club 330
21FORMATION OF PARTNERSHIP
21.1 Introduction 333
21.2 Partnership Deed 334
21.3 Registration of firms 334
21.3-1 Registration of a firm is discretionary 334
21.3-2 Procedure for registration of a firm 33521.3-3 Recording of alterations 335
21.3-4 Penalty for furnishing false particulars [Section 70] 336
21.3-5 Register of firms 336
21.4 Effects of Non-Registration 336
21.4-1 Disabilities of a firm due to non-registration 336
21.4-2 Exceptions as to disabilities of non-registration 337
21.5 Kinds of Partnership 338
21.6 Kinds of Partners 339
22RIGHTS AND OBLIGATIONS OF PARTNERS
22.1 Introduction 343
22.2 Mutual rights of partners 344
22.3 Mutual duties and limitations of partners 345
22.3-1 Absolute duties 345
22.3-2 General duties 346
22.4 Minor as a partner 348
22.4-1 General Status 348
22.4-2 Rights of a minor partner 348
22.4-3 Limitations and liabilities of minor partner 349
22.4-4 Position of a minor on attaining majority 349
22.5 Relations of partners with third parties 349
22.5-1 A partner binds himself and his firm providedhe acts within his authority 349
CONTENTS I-20
PAGE
22.5-2 Authority of a partner 350
22.6 Liabilities of a firm and its partners to third parties 353
22.6-1 Liability of a partner for acts of the firm 353
22.6-2 Liability of a firm for acts of the partners 353
22.6-3 Liability of a firm for misapplication by partners 353
22.7 Reconstitution of a firm 354
22.7-1 Admission of a partner 354
22.7-2 Retirement of a partner 355
22.7-3 Expulsion of a partner 357
22.7-4 Insolvency of a partner 357
22.7-5 Death of a partner 357
22.7-6 Transfer of partner’s interest 357
22.8 Effect of change in firm on mutual rights and duties ofpartners 358
22.9 Effect of change in firm on continuing guarantee 358
22.10 Partnership property 358
23DISSOLUTION OF A PARTNERSHIP FIRM
23.1 Introduction 363
23.2 Modes of dissolution of a firm 364
23.2-1 By agreement [Section 40] 36423.2-2 By notice [Section 43] 364
23.2-3 On the happening of certain contingencies[Section 42] 364
23.2-4 Compulsory dissolution [Section 41] 365
23.2-5 By court [Section 44] 365
23.3 Consequences of Dissolution 36723.3-1 Continuing liability of partners after dissolu-
tion of a firm 367
23.3-2 Rights of partners after dissolution of the firm 368
23.4 Settlement of accounts upon dissolution 369
23.5 Sale of goodwill after dissolution 371
23.6 Public notice 371
I-21 CONTENTS
PAGE
24NEGOTIABLE INSTRUMENTS
24.1 Introduction 375
24.2 What is a negotiable instrument 376
24.3 Characteristics of a Negotiable Instrument 377
24.4 Kinds of negotiable instruments 378
24.5 Hundis 37924.6 Classification of Negotiable Instruments 380
24.7 Presumptions as to the negotiable instruments 384
24.8 Law overriding the provisions of the Negotiable InstrumentsAct, 1881 385
25PROMISSORY NOTES, BILLS OF EXCHANGE AND CHEQUES
25.1 Introduction 388
25.2 Promissory Note 38925.2-1 Definition 389
25.2-2 Parties to a Promissory Note 389
25.2-3 Essentials of a valid Promissory Note 38925.2-4 Specimen of a Promissory Note 395
25.3 Bill of exchange 395
25.3-1 Definition 395
25.3-2 Parties to a bill of exchange 395
25.3-3 Essentials of a valid bill of exchange 396
25.3-4 Specimen of a bill of exchange 397
25.3-5 Different kinds of Bill of Exchange 397
25.4 Cheque 402
25.4-1 Definition 402
25.4-2 Parties to a cheque 402
25.4-3 Essentials of a valid cheque 403
25.4-4 Specimen of a cheque 40325.5 Some important comparisons 403
25.5-1 Promissory Note and Bill of Exchange 403
25.5-2 Bill of Exchange and Cheque 404
CONTENTS I-22
PAGE
26PARTIES TO A NEGOTIABLE INSTRUMENT
26.1 Introduction 410
26.2 Holder 411
26.2-1 Definition 41126.2-2 Status of a holder 411
26.2-3 Who is not a holder 412
26.3 Holder in due course 41226.3-1 Definition 412
26.3-2 Essentials to become a holder in due course 413
26.4 Privileges of being of a holder in due course 41426.5 Capacity of parties 418
26.5-1 Minor’s position as a drawer, indorser, etc. 419
26.5-2 Persons of unsound mind 419
26.5-3 Insolvent 419
26.5-4 Corporations and companies 420
26.5-5 Agents 420
26.5-6 Legal Representative 421
26.6 Liability of parties 421
26.6-1 Liability of drawer of the instrument [Section 30] 422
26.6-2 Liability of a banker as a drawee [Sections 31 & 77] 422
26.6-3 Liability of maker of note and acceptor of bill[Section 32] 422
26.6-4 Liability of indorser [Section 35] 423
26.6-5 Liability of prior parties [Section 36] 423
26.6-6 Liability inter se [Sections 37 to 40] 423
26.7 Important Comparison 425
26.7-1 Holder and holder in due course 425
27HOW TO NEGOTIATE AN INSTRUMENT
27.1 Introduction 430
27.2 What is negotiation 431
27.3 Assignment 431
27.4 Who may negotiate an instrument 432
27.5 When a negotiable instrument stops to be negotiable 432
I-23 CONTENTS
PAGE
27.6 Methods of negotiation 433
27.6-1 Negotiation of bearer instruments 434
27.6-2 Negotiation of order instruments 434
27.7 Delivery of a negotiable instrument 434
27.7-1 What constitutes delivery of an instrument 434
27.7-2 Kinds of delivery 434
27.7-3 Who can make delivery to whom 435
27.8 Indorsement 435
27.8-1 What constitutes an indorsement 435
27.8-2 Essentials of a valid indorsement 436
27.8-3 Effect of indorsement 436
27.8-4 Types of indorsements 436
27.9 Negotiation back 440
27.10 Negotiation by unauthorized parties 440
27.11 Negotiation of dishonoured and overdue instruments 442
27.12 Important comparison 443
27.12-1 Negotiation and assignment 443
28DISCHARGE, PRESENTMENT AND DISHONOUR
OF A NEGOTIABLE INSTRUMENT
28.1 Introduction 447
28.2 Discharge 448
28.2-1 How to get a discharge on a negotiable instrument 448
28.2-2 What is payment in due course 452
28.3 Presentment 453
28.3-1 Presentment for acceptance 454
28.3-2 Presentment for sight 456
28.3-3 Presentment for payment 457
28.4 Dishonour 460
28.4-1 Dishonour by non-acceptance [Section 91] 460
28.4-2 Dishonour by non-payment [Section 92] 460
28.4-3 Effect of dishonour of a negotiable instrument 460
28.4-4 Notice of dishonour 461
28.5 Noting 463
CONTENTS I-24
PAGE
28.6 Protest 464
28.7 Rules as to compensation in case of dishonour 466
29BANKER AND CUSTOMER
29.1 Introduction 471
29.2 Banker and customer 47229.2-1 Who is a banker 472
29.2-2 Who is a customer 473
29.2-3 Legal relationship between a banker and acustomer 473
29.3 Crossing of a cheque 473
29.3-1 General crossing 473
29.3-2 Special crossing 474
29.3-3 Not negotiable crossing 475
29.3-4 Restrictive crossing 476
29.3-5 Who can cross the cheque 477
29.3-6 Opening or cancellation of a crossing 477
29.4 Rights and obligations of a banker 477
29.4-1 When banker must refuse payment on hiscustomer’s cheques 478
29.4-2 When banker may refuse payment on hiscustomer’s cheques 479
29.4-3 Special provisions relating to electronic cheques 480
29.5 Protection granted to bankers 481
29.5-1 Protection given to a paying banker 481
29.5-2 Protection given to a collecting banker 482
29.6 Wrongful dishonour of cheques by a banker 483
29.6-1 Liability towards the drawer of the cheque 483
29.6-2 Liability towards the payee (or holder) of thecheque 484
29.7 Obligations of a customer 48429.8 Bouncing of cheques 485
29.8-1 When an offence under section 138 is constituted 485
29.8-2 Procedure to seek redressal 48729.8-3 Parties punishable for offence under section 138 489
29.8-4 Presumption in favour of holder 489
29.8-5 Defence which is specifically barred 490
I-25 CONTENTS
PAGE
30SOME IMPORTANT PROVISIONS
30.1 Introduction 493
30.2 Maturity of negotiable instruments 493
30.2-1 When negotiable instruments payable on demandmature 494
30.2-2 When negotiable instruments payable on or afterspecified date mature 494
30.2-3 Computation of date of maturity 494
30.3 What is meant by acceptance of a bill of exchange 495
30.3-1 Essentials of a valid acceptance 495
30.3-2 Types of acceptance 496
30.4 Acceptance for honour 497
30.4-1 Certain conditions must be satisfied for acceptingthe bill for honour 497
30.4-2 Rights and liabilities of acceptor for honour 497
30.5 Payment for honour 497
30.6 Consideration in a negotiable instrument 498
30.6-1 Effect of absence or failure of consideration in anegotiable instrument 498
30.6-2 Partial absence or failure of consideration 499
30.7 Payment of interest 500
30.8 Applicability of international law 500
30.9 Important comparison 502
30.9-1 Acceptance for honour and payment for honour 502
31CONSUMER PROTECTION ACT : A MUCH
NEEDED LEGISLATION
31.1 Introduction 505
31.2 Who is a consumer 506
31.2-1 Consumer of goods 507
31.2-2 Consumer of services 508
31.3 Complaint 510
31.3-1 What Constitutes a complaint [Section 2(1)(c)] 510
31.3-2 Who can file a complaint [Sections 2(b) & 12] 510
CONTENTS I-26
PAGE
31.3-3 What a complaint must contain [Section 2(1)(c)] 511
31.3-4 Time frame within which a complaint can befiled 513
31.3-5 Relief available against complaint [Section 14] 513
31.3-6 When a complaint cannot be filed 514
31.3-7 Dismissal of frivolous and vexatious complaints[Section 26] 515
31.4 Unfair Trade Practice and Restrictive Trade Practice[Section 2(1)(r) & (nnn)] 515
31.4-1 What is an Unfair Trade Practice 515
31.4-2 What is a Restrictive Trade Practice 517
31.5 Goods and Defect [Section 2(1)(i) & (f)] 51831.5-1 Goods 518
31.5-2 Defect 518
31.6 Service and Deficiency [Section 2(1)(o) & (g)] 519
31.6-1 What can be termed as a service 519
31.6-2 What is meant by “deficiency” in service 521
31.7 Trader and Manufacturer [Section 2(1)(q) &(j)] 522
31.7-1 Trader 522
31.7-2 Manufacturer 522
31.7-3 Who should be sued by a consumer - Manufactureror seller 523
32CONSUMER PROTECTION COUNCILS
32.1 Introduction 526
32.2 Objects of the Councils [Sections 6, 8, & 8B] 527
32.3 Central Council 528
32.4 State Consumer Protection Councils (State Councils)[Section 7] 529
32.5 District Consumer Protection Councils (District Councils)[Section 8A] 530
32.6 Working Groups [Rule 3] 530
33CONSUMER FORUMS
33.1 Introduction 533
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33.2 Constitution of the Forums 533
33.2-1 Constitution of District Forum [Section 10] 534
33.2-2 Constitution of State Commission [Section 16] 535
33.2-3 Constitution of National Commission [Section 20] 537
33.3 Jurisdiction 540
33.3-1 Jurisdiction of District Forum [Section 11] 540
33.3-2 Jurisdiction of State Commission [Section 17] 541
33.3-3 Jurisdiction of National Commission 542
33.4 Procedures Relating to Consumer complaints[Sections 12 & 13] 543
33.4-1 How a complaint is dealt by ConsumerForums 544
33.4-2 Procedure to be followed by the National Commis-sion [Sections 22 & 22A] 546
33.5 Service of Notice [Section 28A] 546
33.6 Powers of the Consumer Forums [Sections 13(4), 14(1)& Rule 10] 547
33.7 Sitting of the Forums 549
33.7-1 Sitting of the District Forum [Section 14(2)] 549
33.7-2 Sitting of the State Commission 549
33.7-3 Sitting of the National Commission 550
33.8 Orders of the Forums 550
33.8-1 Signing of orders of the Forums 550
33.8-2 Appeals against orders 551
33.8-3 Finality of orders 552
33.8-4 Penalties for non-compliance of orders 552
34ARBITRATION AND CONCILIATION ACT, 1996
34.1 Background of the Act 554
34.1-1 Scheme of the Act 555
34.2 Domestic Arbitration 556
34.2-1 Arbitration Agreement 557
34.3 Court must refer the matter to arbitration in some cases 557
34.3-1 Matter not to be split if partly covered underagreement 558
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34.3-2 Consumer Forum can entertain complaintirrespective of arbitration 559
34.3-3 Application for winding up cannot be referred 559
34.3-4 Matter can be referred even if appeal is pending 559
34.3-5 Unregistered partnership firm can apply forarbitration 559
34.3-6 Challenge to jurisdiction or validity of arbitrationagreement 560
34.4 Arbitration clause in agreement 560
34.5 Formation of Arbitral Tribunal 561
34.5-1 Appointment of Arbitrator 561
34.5-2 Challenge to appointment of Arbitrator 562
34.5-3 Termination or substitution of Arbitrator 563
34.6 Conduct of Arbitral Proceedings 563
34.6-1 Cost of Arbitration 564
34.6-2 Settlement during arbitration 565
34.7 Arbitral Award 565
34.7-1 Law applicable to Arbitration 565
34.7-2 Requirement of Award 565
34.7-3 Stamp Duty on Arbitration Award 566
34.7-4 Finality and enforcement of arbitration award 566
34.7-5 Termination of arbitration proceedings 566
34.8 Intervention by Court in Arbitration proceedings 567
34.9 Setting aside arbitral award by Court 568
34.9-1 Setting aside if contrary to law 570
34.9-2 Appeal against order of District Court 570
34.10 Conciliation 570
34.11 Enforcement of Foreign Awards 572
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